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Title 42

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Title 42

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PART 414 - PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES
Authority:

42 U.S.C. 1302, 1395hh, and 1395rr(b)(l).

Source:

55 FR 23441, June 8, 1990, unless otherwise noted.

Subpart A - General Provisions
§ 414.1 Basis and scope.

This part implements the following provisions of the Act:

1802 - Rules for private contracts by Medicare beneficiaries.

1833 - Rules for payment for most Part B services.

1834(a) and (h) - Amounts and frequency of payments for durable medical equipment and for prosthetic devices and orthotics and prosthetics.

1834(l) - Establishment of a fee schedule for ambulance services.

1834(m) - Rules for Medicare reimbursement for telehealth services.

1834A - Improving policies for clinical diagnostic laboratory tests

1842(o) - Rules for payment of certain drugs and biologicals.

1847(a) and (b) - Competitive bidding for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

1848 - Fee schedule for physician services.

1881(b) - Rules for payment for services to ESRD beneficiaries.

1887 - Payment of charges for physician services to patients in providers.

[67 FR 9132, Feb. 27, 2002, as amended at 69 FR 1116, Jan. 7, 2004; 71 FR 48409, Aug. 18, 2006; 81 FR 41098, June 23, 2016]

§ 414.2 Definitions.

As used in this part, unless the context indicates otherwise -

AA stands for anesthesiologist assistant.

AHPB stands for adjusted historical payment basis.

CF stands for conversion factor.

CRNA stands for certified registered nurse anesthetist.

CY stands for calendar year.

FY stands for fiscal year.

GAF stands for geographic adjustment factor.

GPCI stands for geographic practice cost index.

HCPCS stands for CMS Common Procedure Coding System.

Health Professional Shortage Area (HPSA) means an area designated under section 332(a)(1)(A) of the Public Health Service Act as identified by the Secretary prior to the beginning of such year.

Major surgical procedure means a surgical procedure for which a 10-day or 90-day global period is used for payment under the physician fee schedule and section 1848(b) of the Act.

Physician services means the following services to the extent that they are covered by Medicare:

(1) Professional services of doctors of medicine and osteopathy (including osteopathic practitioners), doctors of optometry, doctors of podiatry, doctors of dental surgery and dental medicine, and chiropractors.

(2) Supplies and services covered “incident to” physician services (excluding drugs as specified in § 414.36).

(3) Outpatient physical and occupational therapy services if furnished by a person or an entity that is not a Medicare provider of services as defined in § 400.202 of this chapter.

(4) Diagnostic x-ray tests and other diagnostic tests (excluding diagnostic laboratory tests paid under the fee schedule established under section 1833(h) of the Act).

(5) X-ray, radium, and radioactive isotope therapy, including materials and services of technicians.

(6) Antigens, as described in section 1861(s)(2)(G) of the Act.

(7) Bone mass measurement.

RVU stands for relative value unit.

(8) Screening mammography services.

[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 58 FR 63686, Dec. 2, 1993; 59 FR 63463, Dec. 8, 1994; 60 FR 63177, Dec. 8, 1995; 63 FR 34328, June 24, 1998; 66 FR 55322, Nov. 1, 2001; 75 FR 73616, Nov. 29, 2010]

§ 414.4 Fee schedule areas.

(a) General. CMS establishes physician fee schedule areas that generally conform to the geographic localities in existence before January 1, 1992.

(b) Changes. CMS announces proposed changes to fee schedule areas in the Federal Register and provides an opportunity for public comment. After considering public comments, CMS publishes the final changes in the Federal Register.

[59 FR 63463, Dec. 8, 1994]

§ 414.5 Hospital services paid under Medicare Part B when a Part A hospital inpatient claim is denied because the inpatient admission was not reasonable and necessary, but hospital outpatient services would have been reasonable and necessary in treating the beneficiary.

(a) If a Medicare Part A claim for inpatient hospital services is denied because the inpatient admission was not reasonable and necessary, or if a hospital determines under § 482.30(d) of this chapter or § 485.641 of this chapter after a beneficiary is discharged that the beneficiary's inpatient admission was not reasonable and necessary, the hospital may be paid for any of the following Part B inpatient services that would have been reasonable and necessary if the beneficiary had been treated as a hospital outpatient rather than admitted as an inpatient, provided the beneficiary is enrolled in Medicare Part B:

(1) Services described in § 419.21(a) of this chapter that do not require an outpatient status.

(2) Physical therapy services, speech-language pathology services, and occupational therapy services.

(3) Ambulance services, as described in section 1861(v)(1)(U) of the Act, or, if applicable, the fee schedule established under section 1834(l) of Act.

(4) Except as provided in § 419.2(b)(11) of this chapter, prosthetic devices, prosthetics, prosthetic supplies, and orthotic devices.

(5) Except as provided in § 419.2(b)(10) of this chapter, durable medical equipment supplied by the hospital for the patient to take home.

(6) Clinical diagnostic laboratory services.

(7)

(i) Effective December 8, 2003, screening mammography services; and

(ii) Effective January 1, 2005, diagnostic mammography services.

(8) Effective January 1, 2011, annual wellness visit providing personalized prevention plan services as defined in § 410.15 of this chapter.

(b) If a Medicare Part A claim for inpatient hospital services is denied because the inpatient admission was not reasonable and necessary, or if a hospital determines under § 482.30(d) of this chapter or § 485.641 of this chapter after a beneficiary is discharged that the beneficiary's inpatient admission was not reasonable and necessary, the hospital may be paid for hospital outpatient services described in § 412.2(c)(5), § 412.405, § 412.540, or § 412.604(f) of this chapter or § 413.40(c)(2) of this chapter that are furnished to the beneficiary prior to the point of inpatient admission (that is, the inpatient admission order).

(c) The claims for the Part B services filed under the circumstances described in this section must be filed in accordance with the time limits for filing claims specified in § 424.44(a) of this chapter.

[78 FR 50968, Aug. 19, 2013]

Subpart B - Physicians and Other Practitioners
Source:

56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. 15, 1992, unless otherwise noted.

§ 414.20 Formula for computing fee schedule amounts.

(a) Participating supplier. The fee schedule amount for a participating supplier for a physician service as defined in § 414.2 is computed as the product of the following amounts:

(1) The RVUs for the service.

(2) The GAF for the fee schedule area.

(3) The CF.

(b) Nonparticipating supplier. The fee schedule amount for a nonparticipating supplier for a physician service as defined in § 414.2 is 95 percent of the fee schedule amount as calculated in paragraph (a) of this section.

[62 FR 59101, Oct. 31, 1997]

§ 414.21 Medicare payment basis.

Medicare payment is based on the lesser of the actual charge or the applicable fee schedule amount.

[62 FR 59101, Oct. 31, 1997]

§ 414.22 Relative value units (RVUs).

CMS establishes RVUs for physicians' work, practice expense, and malpractice insurance.

(a) Physician work RVUs -

(1) General rule. Physician work RVUs are established using a relative value scale in which the value of physician work for a particular service is rated relative to the value of work for other physician services.

(2) Special RVUs for anesthesia and radiology services) -

(i) Anesthesia services. The rules for determining RVUs for anesthesia services are set forth in § 414.46.

(ii) Radiology services. CMS bases the RVUs for all radiology services on the relative value scale developed under section 1834(b)(1)(A) of the Act, with appropriate modifications to ensure that the RVUs established for radiology services that are similar or related to other physician services are consistent with the RVUs established for those similar or related services.

(b) Practice expense RVUs.

(1) Practice expense RVUs are computed for each service or class of service by applying average historical practice cost percentages to the estimated average allowed charge during the 1991 base period.

(2) The average practice expense percentage for a service or class of services is computed as follows:

(i) Multiply the average practice expense percentage for each specialty by the proportion of a particular service or class of service performed by that specialty.

(ii) Add the products for all specialties.

(3) For services furnished beginning calendar year (CY) 1994, for which 1994 practice expense RVUs exceed 1994 work RVUs and that are performed in office settings less than 75 percent of the time, the 1994, 1995, and 1996 practice expense RVUs are reduced by 25 percent of the amount by which they exceed the number of 1994 work RVUs. Practice expense RVUs are not reduced to less than 128 percent of 1994 work RVUs.

(4) For services furnished beginning January 1, 1998, practice expense RVUs for certain services are reduced to 110 percent of the work RVUs for those services. The following two categories of services are excluded from this limitation:

(i) The service is provided more than 75 percent of the time in an office setting; or

(ii) The service is one described in section 1848(c)(2)(G)(v) of the Act, codified at 42 U.S.C. 1395w-4(c)(2)(G). Section 1848(c)(2)(G)(v) of the Act refers to the 1998 proposed resource-based practice expense RVUs (as specified in the June 18, 1997 physician fee schedule proposed rule (62 FR 33158)) for the specific site, either in-office or out-of-office, increased from its 1997 practice expense RVUs.)

(5) For services furnished in 2002 and subsequent years, the practice expense RVUs are based entirely on relative practice expense resources.

(i) Usually there are two levels of practice expense RVUs that correspond to each code.

(A) Facility practice expense RVUs. The facility practice expense RVUs apply to services furnished to patients in a hospital, a skilled nursing facility, a community mental health center, a hospice, or an ambulatory surgical center, or in a wholly owned or wholly operated entity providing preadmission services under § 412.2(c)(5) of this chapter, or via telehealth under § 410.78 of this chapter.

(B) Nonfacility practice expense RVUs. The nonfacility practice expense RVUs apply to services furnished to patients in all locations other than those listed in paragraph (b)(5)(i)(A) of this section, but not limited to, a physician's office, the patient's home, a nursing facility, or a comprehensive outpatient rehabilitation facility (CORF).

(C) Outpatient therapy and CORF services. Outpatient therapy services (including physical therapy, occupational therapy, and speech-language pathology services) and CORF services billed under the physician fee schedule are paid using the nonfacility practice expense RVUs.

(ii) [Reserved]

(6)

(i) CMS establishes criteria for supplemental surveys regarding specialty practice expenses submitted to CMS that may be used in determining practice expense RVUs.

(ii) Any CMS-designated specialty group may submit a supplemental survey.

(iii) CMS will consider for use in determining practice expense RVUs for the physician fee schedule survey data and related materials submitted to CMS by March 1, 2004 to determine CY 2005 practice expense RVUs and by March 1, 2005 to determine CY 2006 practice expense RVUs.

(c) Malpractice insurance RVUs.

(1) Malpractice insurance RVUs are computed for each service or class of services by applying average malpractice insurance historical practice cost percentages to the estimated average allowed charge during the 1991 base period.

(2) The average historical malpractice insurance percentage for a service or class of services is computed as follows:

(i) Multiply the average malpractice insurance percentage for each specialty by the proportion of a particular service or class of services performed by that specialty.

(ii) Add all the products for all the specialties.

(3) For services furnished in the year 2000 and subsequent years, the malpractice RVUs are based on the relative malpractice insurance resources.

[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42493, Sept. 15, 1992; 58 FR 63687, Dec. 2, 1993; 62 FR 59102, Oct. 31, 1997; 63 FR 58910, Nov. 2, 1998; 64 FR 59441, Nov. 2, 1999; 65 FR 25668, May 3, 2000; 65 FR 65440, Nov. 1, 2000; 67 FR 43558, June 28, 2002; 68 FR 63261, Nov. 7, 2003; 72 FR 66932, Nov. 27, 2007; 73 FR 69935, Nov. 19, 2008; 76 FR 73471, Nov. 28, 2011; 81 FR 79879, Nov. 14, 2016; 81 FR 80553, Nov. 15, 2016]

§ 414.24 Publication of RVUs and direct PE inputs.

(a) Definitions. For purposes of this section, the following definitions apply:

Existing code means a code that is not a new code under paragraph (c)(2) of this section, and includes codes for which the descriptor is revised and codes that are combinations or subdivisions of previously existing codes.

New code means a code that describes a service that was not previously described or valued under the PFS using any other code or combination of codes.

(b) Revisions of RVUs and Direct PE Inputs. For valuations for calendar year 2017 and beyond, CMS publishes, through notice and comment rulemaking in the Federal Register (including proposals in a proposed rule), changes in RVUs or direct PE inputs for existing codes.

(c) Establishing RVUs and Direct PE inputs for new codes -

(1) General rule. CMS establishes RVUs and direct PE inputs for new codes in the manner described in paragraph (b) of this section.

(2) Exception for new codes for which CMS does not have sufficient information. When CMS determines for a new code that it does not have sufficient information to include proposed RVUs or direct PE inputs in the proposed rule, but that it is in the public interest for Medicare to use a new code during a payment year, CMS will publish in the Federal Register RVUs and direct PE inputs that are applicable on an interim basis subject to public comment. After considering public comments and other information on interim RVUs and PE inputs for the new code, CMS publishes in the Federal Register the final RVUs and PE inputs for the code.

(d) Values for local codes (HCPCS Level 3).

(1) Carriers establish relative values for local codes for services not included in HCPCS levels 1 or 2.

(2) Carriers must obtain prior approval from CMS to establish local codes for services that meet the definition of “physician services” in § 414.2.

[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 79 FR 68003, Nov. 13, 2014]

§ 414.26 Determining the GAF.

CMS establishes a GAF for each service in each fee schedule area.

(a) Geographic indices. CMS uses the following indices to establish the GAF:

(1) An index that reflects one-fourth of the difference between the relative value of physicians' work effort in each of the different fee schedule areas as determined under § 414.22(a) and the national average of that work effort.

(2) An index that reflects the relative costs of the mix of goods and services comprising practice expenses (other than malpractice expenses) in each of the different fee schedule areas as determined under § 414.22(b) compared to the national average of those costs.

(3) An index that reflects the relative costs of malpractice expenses in each of the different fee schedule areas as determined under § 414.22(c) compared to the national average of those costs.

(b) Class-specific practice cost indices. If the application of a single index to different classes of services would be substantially inequitable because of differences in the mix of goods and services comprising practice expenses for the different classes of services, more than one index may be established under paragraph (a)(2) of this section.

(c) Adjusting the practice expense index to account for the Frontier State floor -

(1) General criteria. Effective on or after January 1, 2011, CMS will adjust the practice expense index for physicians' services furnished in qualifying States to recognize the practice expense index floor established for Frontier States. A qualifying State must meet the following criteria:

(i) At least 50 percent of counties located within the State have a population density less than 6 persons per square mile.

(ii) The State does not receive a non-labor related share adjustment determined by the Secretary to take into account the unique circumstances of hospitals located in Alaska and Hawaii.

(2) Amount of adjustment. The practice expense value applied for physicians' services furnished in a qualifying State will be not less than 1.00.

(3) Process for determining adjustment.

(i) CMS will use the most recent population estimate data published by the U.S. Census Bureau to determine county definitions and population density. This analysis will be periodically revised, such as for updates to the decennial census data.

(ii) CMS will publish annually a listing of qualifying Frontier States receiving a practice expense index floor attributable to this provision.

(d) Computation of GAF. The GAF for each fee schedule area is the sum of the physicians' work adjustment factor, the practice expense adjustment factor, and the malpractice cost adjustment factor, as defined in this section:

(1) The geographic physicians' work adjustment factor for a service is the product of the proportion of the total relative value for the service that reflects the RVUs for the work component and the geographic physicians' work index value established under paragraph (a)(1) of this section.

(2) The geographic practice expense adjustment factor for a service is the product of the proportion of the total relative value for the service that reflects the RVUs for the practice expense component, multiplied by the geographic practice cost index (GPCI) value established under paragraph (a)(2) of this section.

(3) The geographic malpractice adjustment factor for a service is the product of the proportion of the total relative value for the service that reflects the RVUs for the malpractice component, multiplied by the GPCI value established under paragraph (a)(3) of this section.

[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 75 FR 73616, Nov. 29, 2010]

§ 414.28 Conversion factors.

CMS establishes CFs in accordance with section 1848(d) of the Act.

(a) Base-year CFs. CMS established the CF for 1992 so that had section 1848 of the Act applied during 1991, it would have resulted in the same aggregate amount of payments for physician services as the estimated aggregate amount of these payments in 1991, adjusted by the update for 1992 computed as specified in § 414.30.

(b) Subsequent CFs. For calendar years 1993 through 1995, the CF for each year is equal to the CF for the previous year, adjusted in accordance with § 414.30. Beginning January 1, 1996, the CF for each calendar year may be further adjusted so that adjustments to the fee schedule in accordance with section 1848(c)(2)(B)(ii) of the Act do not cause total expenditures under the fee schedule to differ by more than $20 million from the amount that would have been spent if these adjustments had not been made.

[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 60 FR 53877, Oct. 18, 1995; 60 FR 63177, Dec. 8, 1995]

§ 414.30 Conversion factor update.

Unless Congress acts in accordance with section 1848(d)(3) of the Act -

(a) General rule. The CF update for a CY equals the Medicare Economic Index increased or decreased by the number of percentage points by which the percentage increase in expenditures for physician services (or for a particular category of physician services, such as surgical services) in the second preceding FY over the third preceding FY exceeds the performance standard rate of increase established for the second preceding FY.

(b) Downward adjustment. The downward adjustment may not exceed the following:

(1) For CYs 1992 and 1993, 2 percentage points.

(2) For CY 1994, 2.5 percentage points.

(3) For CYs 1995 and thereafter, 5 percentage points.

[55 FR 23441, June 8, 1990, as amended at 60 FR 63177, Dec. 8, 1995; 61 FR 42385, Aug. 15, 1996]

§ 414.34 Payment for services and supplies incident to a physician's service.

(a) Medical supplies.

(1) Except as otherwise specified in this paragraph, office medical supplies are considered to be part of a physician's practice expense, and payment for them is included in the practice expense portion of the payment to the physician for the medical or surgical service to which they are incidental.

(2) If physician services of the type routinely furnished in provider settings are furnished in a physician's office, separate payment may be made for certain supplies furnished incident to that physician service if the following requirements are met:

(i) It is a procedure that can safely be furnished in the office setting in appropriate circumstances.

(ii) It requires specialized supplies that are not routinely available in physicians' offices and that are generally disposable.

(iii) It is furnished before January 1, 1999.

(3) For the purpose of paragraph (a)(2) of this section, provider settings include only the following settings:

(i) Hospital inpatient and outpatient departments.

(ii) Ambulatory surgical centers.

(4) For the purpose of paragraph (a)(2) of this section, “routinely furnished in provider settings” means furnished in inpatient or outpatient hospital settings or ambulatory surgical centers more than 50 percent of the time.

(5) CMS establishes a list of services for which a separate supply payment may be made under this section.

(6) The fee schedule amount for supplies billed separately is not subject to a GPCI adjustment.

(b) Services of nonphysicians that are incident to a physician's service. Services of nonphysicians that are covered as incident to a physician's service are paid as if the physician had personally furnished the service.

[56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. 15, 1992, as amended at 63 FR 58911, Nov. 2, 1998]

§ 414.36 Payment for drugs incident to a physician's service.

Payment for drugs incident to a physician's service is made in accordance with § 405.517 of this chapter.

§ 414.39 Special rules for payment of care plan oversight.

(a) General. Except as specified in paragraphs (b) and (c) of this section, payment for care plan oversight is included in the payment for visits and other services under the physician fee schedule. For purposes of this section a nonphysician practitioner (NPP) is a nurse practitioner, clinical nurse specialist or physician assistant.

(b) Exception. Separate payment is made under the following conditions for physician care plan oversight services furnished to beneficiaries who receive HHA and hospice services that are covered by Medicare:

(1) The care plan oversight services require recurrent physician supervision of therapy involving 30 or more minutes of the physician's time per month.

(2) Payment is made to only one physician per patient for services furnished during a calendar month period. The physician must have furnished a service requiring a face-to-face encounter with the patient at least once during the 6-month period before the month for which care plan oversight payment is first billed. The physician may not have a significant ownership interest in, or financial or contractual relationship with, the HHA in accordance with § 424.22(d) of this chapter. The physician may not be the medical director or employee of the hospice and may not furnish services under an arrangement with the hospice.

(3) If a physician furnishes care plan oversight services during a postoperative period, payment for care plan oversight services is made if the services are documented in the patient's medical record as unrelated to the surgery.

(c) Special rules for payment of care plan oversight provided by nonphysician practitioners for beneficiaries who receive HHA services covered by Medicare.

(1) An NPP can furnish physician care plan oversight (but may not certify a patient as needing home health services) only if the physician who signs the plan of care provides regular ongoing care under the same plan of care as does the NPP billing for care plan oversight and either -

(i) The physician and NPP are part of the same group practice; or

(ii) If the NPP is a nurse practitioner or clinical nurse specialist, the physician signing the plan of care also has a collaborative agreement with the NPP; or

(iii) If the NPP is a physician assistant, the physician signing the plan of care is also the physician who provides general supervision of physician assistant services for the practice.

(2) Payment may be made for care plan oversight services furnished by an NPP when:

(i) The NPP providing the care plan oversight has seen and examined the patient;

(ii) The NPP providing care plan oversight is not functioning as a consultant whose participation is limited to a single medical condition rather than multi-disciplinary coordination of care; and

(iii) The NPP providing care plan oversight integrates his or her care with that of the physician who signed the plan of care.

[59 FR 63463, Dec. 8, 1994; 60 FR 49, Jan. 3, 1995; 60 FR 36733, July 18, 1995, as amended at 69 FR 66423, Nov. 15, 2004; 70 FR 16722, Apr. 1, 2005]

§ 414.40 Coding and ancillary policies.

(a) General rule. CMS establishes uniform national definitions of services, codes to represent services, and payment modifiers to the codes.

(b) Specific types of policies. CMS establishes uniform national ancillary policies necessary to implement the fee schedule for physician services. These include, but are not limited to, the following policies:

(1) Global surgery policy (for example, post- and pre-operative periods and services, and intra-operative services).

(2) Professional and technical components (for example, payment for services, such as an EEG, which typically comprise a technical component (the taking of the test) and a professional component (the interpretation)).

(3) Payment modifiers (for example, assistant-at-surgery, multiple surgery, bilateral surgery, split surgical global services, team surgery, and unusual services).

§ 414.42 Adjustment for first 4 years of practice.

(a) General rule. For services furnished during CYs 1992 and 1993, except as specified in paragraph (b) of this section, the fee schedule payment amount or prevailing charge must be phased in as specified in paragraph (d) of this section for physicians, physical therapists (PTs), occupational therapists (OTs), and all other health care practitioners who are in their first through fourth years of practice.

(b) Exception. The reduction required in paragraph (d) of this section does not apply to primary care services or to services furnished in a rural area as defined in section 1886(d)(2)(D) of the Act that is designated under section 332(a)(1)(A) of the Public Health Service Act as a Health Professional Shortage Area.

(c) Definition of years of practice.

(1) The “first year of practice“ is the first full CY during the first 6 months of which the physician, PT, OT, or other health care practitioner furnishes professional services for which payment may be made under Medicare Part B, plus any portion of the prior CY if that prior year does not meet the first 6 months test.

(2) The “second, third, and fourth years of practice“ are the first, second, and third CYs following the first year of practice, respectively.

(d) Amounts of adjustment. The fee schedule payment for the service of a new physician, PT, OT, or other health care practitioner is limited to the following percentages for each of the indicated years:

(1) First year - 80 percent

(2) Second year - 85 percent

(3) Third year - 90 percent

(4) Fourth year - 95 percent

[57 FR 42493, Sept. 15, 1992, as amended at 58 FR 63687, Dec. 2, 1993]

§ 414.44 Transition rules.

(a) Adjusted historical payment basis -

(1) All services other than radiology and nuclear medicine services. For all physician services other than radiology services, furnished in a fee schedule area, the adjusted historical payment basis (AHPB) is the estimated weighted average prevailing charge applied in the fee schedule area for the service in CY 1991, as determined by CMS without regard to physician specialty and as adjusted to reflect payments for services below the prevailing charge, adjusted by the update established for CY 1992.

(2) Radiology services. For radiology services, the AHPB is the amount paid for the service in the fee schedule area in CY 1991 under the fee schedule established under section 1834(b), adjusted by the update established for CY 1992.

(3) Nuclear medicine services. For nuclear medicine services, the AHPB is the amount paid for the service in the fee schedule area in CY 1991 under the fee schedule established under section 6105(b) of Public Law 101-239 and section 4102(g) of Public Law 101-508, adjusted by the update established for CY 1992.

(4) Transition adjustment. CMS adjusts the AHPB for all services by 5.5 percent to produce budget-neutral payments for 1992.

(b) Adjustment of 1992 payments for physician services other than radiology services. For physician services furnished during CY 1992 the following rules apply:

(1) If the AHPB determined under paragraph (a) of this section is from 85 percent to 115 percent of the fee schedule amount for the area for services furnished in 1992, payment is at the fee schedule amount.

(2) If the AHPB determined under paragraph (a) of this section is less than 85 percent of the fee schedule amount for the area for services furnished in 1992, an amount equal to the AHPB plus 15 percent of the fee schedule amount is substituted for the fee schedule amount.

(3) If the AHPB determined under paragraph (a) of this section is greater than 115 percent of the fee schedule amount for the area for services furnished in 1992, an amount equal to the AHPB minus 15 percent of the fee schedule amount is substituted for the fee schedule amount.

(c) Adjustment of 1992 payments for radiology services. For radiology services furnished during CY 1992 the following rules apply:

(1) If the AHPB determined under paragraph (a) of this section is from 85 percent to 109 percent of the fee schedule amount for the area for services furnished in 1992, payment is at the fee schedule amount.

(2) If the AHPB determined under paragraph (a) of this section is less than 85 percent of the fee schedule amount for the area for services furnished in 1992, an amount equal to the AHPB plus 15 percent of the fee schedule amount is substituted for the fee schedule amount.

(3) If the AHPB determined under paragraph (a) of this section is greater than 109 percent of the fee schedule amount for the area for services furnished in 1992, an amount equal to the AHPB minus 9 percent of the fee schedule amount is substituted for the fee schedule amount.

(d) Computation of payments for CY 1993. For physician services subject to the transition rules in CY 1992 and furnished during CY 1993, the fee schedule is equal to 75 percent of the amount that would have been paid in the fee schedule area under the 1992 transition rules, adjusted by the amount of the 1993 update, plus 25 percent of the 1993 fee schedule amount.

(e) Computation of payments for CY 1994. For physician services subject to the transition rules in CY 1993, and furnished during CY 1994, the fee schedule is equal to 67 percent of the amount that would have been paid in the fee schedule area under the 1993 transition rules, adjusted by the amount of the 1994 update, plus 33 percent of the 1994 fee schedule amount.

(f) Computation of payments for CY 1995. For physician services subject to the transition rules in CY 1994 and furnished during CY 1995, the fee schedule is equal to 50 percent of the amount that would have been paid in the fee schedule area under the 1994 transition rules, adjusted by the amount of the 1995 update, plus 50 percent of the 1995 fee schedule amount.

§ 414.46 Additional rules for payment of anesthesia services.

(a) Definitions. For purposes of this section, the following definitions apply:

(1) Base unit means the value for each anesthesia code that reflects all activities other than anesthesia time. These activities include usual preoperative and postoperative visits, the administration of fluids and blood incident to anesthesia care, and monitoring services.

(2) Anesthesia practitioner, for the purpose of anesthesia time, means a physician who performs the anesthesia service alone, a CRNA who is not medically directed who performs the anesthesia service alone, or a medically directed CRNA.

(3) Anesthesia time means the time during which an anesthesia practitioner is present with the patient. It starts when the anesthesia practitioner begins to prepare the patient for anesthesia services and ends when the anesthesia practitioner is no longer furnishing anesthesia services to the beneficiary, that is, when the beneficiary may be placed safely under postoperative care. Anesthesia time is a continuous time period from the start of anesthesia to the end of an anesthesia service. In counting anesthesia time, the anesthesia practitioner can add blocks of anesthesia time around an interruption in anesthesia time as long as the anesthesia practitioner is furnishing continuous anesthesia care within the time periods around the interruption.

(b) Determinations of payment amount - Basic rule. For anesthesia services performed, medically directed, or medically supervised by a physician, CMS pays the lesser of the actual charge or the anesthesia fee schedule amount.

(1) The carrier bases the fee schedule amount for an anesthesia service on the product of the sum of allowable base and time units and an anesthesia-specific CF. The carrier calculates the time units from the anesthesia time reported by the anesthesia practitioner for the anesthesia procedure. The physician who fulfills the conditions for medical direction in § 415.110 (Conditions for payment: Anesthesiology services) reports the same anesthesia time as the medically-directed CRNA.

(2) CMS furnishes the carrier with the base units for each anesthesia procedure code. The base units are derived from the 1988 American Society of Anesthesiologists' Relative Value Guide except that the number of base units recognized for anesthesia services furnished during cataract or iridectomy surgery is four units.

(3) Modifier units are not allowed. Modifier units include additional units charged by a physician or a CRNA for patient health status, risk, age, or unusual circumstances.

(c) Physician personally performs the anesthesia procedure.

(1) CMS considers an anesthesia service to be personally performed under any of the following circumstances:

(i) The physician performs the entire anesthesia service alone.

(ii) The physician establishes an attending physician relationship in one or two concurrent cases involving an intern or resident and the service was furnished before January 1, 1994.

(iii) The physician establishes an attending physician relationship in one case involving an intern or resident and the service was furnished on or after January 1, 1994 but prior to January 1, 1996. For services on or after January 1, 1996, the physician must be the teaching physician as defined in §§ 415.170 through 415.184 of this chapter.

(iv) The physician and the CRNA or AA are involved in a single case and the services of each are found to be medically necessary.

(v) The physician is continuously involved in a single case involving a student nurse anesthetist.

(vi) The physician is continuously involved in a single case involving a CRNA or AA and the service was furnished prior to January 1, 1998.

(2) CMS determines the fee schedule amount for an anesthesia service personally performed by a physician on the basis of an anesthesia-specific fee schedule CF and unreduced base units and anesthesia time units. One anesthesia time unit is equivalent to 15 minutes of anesthesia time, and fractions of a 15-minute period are recognized as fractions of an anesthesia time unit.

(d) Anesthesia services medically directed by a physician.

(1) CMS considers an anesthesia service to be medically directed by a physician if:

(i) The physician performs the activities described in § 415.110 of this chapter.

(ii) The physician directs qualified individuals involved in two, three, or four concurrent cases.

(iii) Medical direction can occur for a single case furnished on or after January 1, 1998 if the physician performs the activities described in § 415.110 of this chapter and medically directs a single CRNA or AA.

(2) The rules for medical direction differ for certain time periods depending on the nature of the qualified individual who is directed by the physician.

(i) If more than two procedures are directed on or after January 1, 1994, the qualified individuals could be AAs, CRNAs, interns, or residents. The medical direction rules apply to student nurse anesthetists only if the physician directs two concurrent cases, each of which involves a student nurse anesthetist or the physician directs one case involving a student nurse anesthetist and the other involving a CRNA, AA, intern, or resident.

(ii) For services furnished on or after January 1, 2010, the medical direction rules do not apply to a single anesthesia resident case that is concurrent to another case which is paid under the medical direction payment rules as specified in paragraph (e) of this section.

(3) Payment for medical direction is based on a specific percentage of the payment allowance recognized for the anesthesia service personally performed by a physician alone. The following percentages apply for the years specified:

(i) CY 1994 - 60 percent of the payment allowance for personally performed procedures.

(ii) CY 1995 - 57.5 percent of the payment allowance for personally performed services.

(iii) CY 1996 - 55 percent of the payment allowance for personally performed services.

(iv) CY 1997 - 52.5 percent of the payment allowance for personally performed services.

(v) CY 1998 and thereafter - 50 percent of the payment allowance for personally performed services.

(e) Special payment rule for teaching anesthesiologist involved in a single resident case or two concurrent cases. For physicians' services furnished on or after January 1, 2010, if the teaching anesthesiologist is involved in the training of physician residents in a single anesthesia case or two concurrent anesthesia cases, the fee schedule amount must be 100 percent of the fee schedule amount otherwise applicable if the anesthesia services were personally performed by the teaching anesthesiologist and the teaching anesthesiologist fulfilled the criteria in § 415.178 of this chapter. This special payment rule also applies if the teaching anesthesiologist is involved in one resident case that is concurrent to another case paid under the medical direction payment rules.

(f) Physician medically supervises anesthesia services. If the physician medically supervises more than four concurrent anesthesia services, CMS bases the fee schedule amount on an anesthesia-specific CF and three base units. This represents payment for the physician's involvement in the pre-surgical anesthesia services.

(g) Payment for medical or surgical services furnished by a physician while furnishing anesthesia services.

(1) CMS allows separate payment under the fee schedule for certain reasonable and medically necessary medical or surgical services furnished by a physician while furnishing anesthesia services to the patient. CMS makes payment for these services in accordance with the general physician fee schedule rules in § 414.20. These services are described in program operating instructions.

(2) CMS makes no separate payment for other medical or surgical services, such as the pre-anesthetic examination of the patient, pre- or post-operative visits, or usual monitoring functions, that are ordinarily included in the anesthesia service.

(h) Physician involved in multiple anesthesia services. If the physician is involved in multiple anesthesia services for the same patient during the same operative session, the carrier makes payment according to the base unit associated with the anesthesia service having the highest base unit value and anesthesia time that encompasses the multiple services. The carrier makes payment for add-on anesthesia codes according to program operating instructions.

[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 58 FR 63687, Dec. 2, 1993; 60 FR 63177, Dec. 8, 1995; 64 FR 59441, Nov. 2, 1999; 67 FR 80041, Dec. 31, 2002; 68 FR 63261, Nov. 7, 2003; 74 FR 62006, Nov. 25, 2009]

§ 414.48 Limits on actual charges of nonparticipating suppliers.

(a) General rule. A supplier, as defined in § 400.202 of this chapter, who is nonparticipating and does not accept assignment may charge a beneficiary an amount up to the limiting charge described in paragraph (b) of this section.

(b) Specific limits. For items or services paid under the physician fee schedule, the limiting charge is 115 percent of the fee schedule amount for nonparticipating suppliers. For items or services CMS excludes from payment under the physician fee schedule (in accordance with section 1848 (j)(3) of the Act), the limiting charge is 115 percent of 95 percent of the payment basis applicable to participating suppliers as calculated in § 414.20(b).

[58 FR 63687, Dec. 2, 1993, as amended at 62 FR 59102, Oct. 31, 1997]

§ 414.50 Physician or other supplier billing for diagnostic tests performed or interpreted by a physician who does not share a practice with the billing physician or other supplier.

(a) General rules.

(1) For services covered under section 1861(s)(3) of the Act and paid for under part 414 of this chapter (other than clinical diagnostic laboratory tests paid under section 1833(a)(2)(D) of the Act, which are subject to the special billing rules set forth in section 1833(h)(5)(A) of the Act), if a physician or other supplier bills for the technical component (TC) or professional component (PC) of a diagnostic test that was ordered by the physician or other supplier (or ordered by a party related to such physician or other supplier through common ownership or control as described in § 413.17 of this chapter) and the diagnostic test is performed by a physician who does not share a practice with the billing physician or other supplier, the payment to the billing physician or other supplier (less the applicable deductibles and coinsurance paid by the beneficiary or on behalf of the beneficiary) for the TC or PC of the diagnostic test may not exceed the lowest of the following amounts:

(i) The performing supplier's net charge to the billing physician or other supplier. For purposes of this paragraph (a)(1) only, with respect to the TC, the performing supplier is the physician who supervised the TC, and with respect to the PC, the performing supplier is the physician who performed the PC.

(ii) The billing physician or other supplier's actual charge.

(iii) The fee schedule amount for the test that would be allowed if the performing supplier billed directly.

(2) The following requirements are applicable for purposes of paragraph (a)(1) of this section:

(i) The net charge must be determined without regard to any charge that is intended to reflect the cost of equipment or space leased to the performing supplier by or through the billing physician or other supplier.

(ii) A performing physician shares a practice with the billing physician or other supplier if he or she furnishes substantially all (which, for purposes of this section, means “at least 75 percent”) of his or her professional services through such billing physician or other supplier. The “substantially all” requirement will be satisfied if, at the time the billing physician or other supplier submits a claim for a service furnished by the performing physician, the billing physician or other supplier has a reasonable belief that:

(A) For the 12 months prior to and including the month in which the service was performed, the performing physician furnished substantially all of his or her professional services through the billing physician or other supplier; or

(B) The performing physician will furnish substantially all of his or her professional services through the billing physician or other supplier for the next 12 months (including the month in which the service is performed).

(iii) A physician will be deemed to share a practice with the billing physician or other supplier with respect to the performance of the TC or PC of a diagnostic test if the physician is an owner, employee or independent contractor of the billing physician or other supplier and the TC or PC is performed in the office of the billing physician or other supplier. The “office of the billing physician or other supplier” is any medical office space, regardless of number of locations, in which the ordering physician or other ordering supplier regularly furnishes patient care, and includes space where the billing physician or other supplier furnishes diagnostic testing, if the space is located in the same building (as defined in § 411.351) in which the ordering physician or other ordering supplier regularly furnishes patient care. With respect to a billing physician or other supplier that is a physician organization (as defined in § 411.351 of this chapter), the “office of the billing physician or other supplier” is space in which the ordering physician provides substantially the full range of patient care services that the ordering physician provides generally. The performance of the TC includes both the conducting of the TC as well as the supervision of the TC.

(b) Restriction on payment.

(1) The billing physician or other supplier must identify the performing supplier and indicate the performing supplier's net charge for the test. If the billing physician or other supplier fails to provide this information, CMS makes no payment to the billing physician or other supplier and the billing physician or other supplier may not bill the beneficiary.

(2) Physicians and other suppliers that accept Medicare assignment may bill beneficiaries for only the applicable deductibles and coinsurance.

(3) Physicians and other suppliers that do not accept Medicare assignment may not bill the beneficiary more than the payment amount described in paragraph (a) of this section.

[72 FR 66400, Nov. 27, 2007, as amended at 73 FR 2432, Jan. 15, 2008; 73 FR 69935, Nov. 19, 2008]

§ 414.52 Payment for physician assistants' services.

Allowed amounts for the services of a physician assistant furnished beginning January 1, 1992 and ending December 31, 1997, may not exceed the limits specified in paragraphs (a) through (c) of this section. Allowed amounts for the services of a physician assistant furnished beginning January 1, 1998, may not exceed the limits specified in paragraph (d) of this section.

(a) For assistant-at-surgery services, 65 percent of the amount that would be allowed under the physician fee schedule if the assistant-at-surgery service was furnished by a physician.

(b) For services (other than assistant-at-surgery services) furnished in a hospital, 75 percent of the physician fee schedule amount for the service.

(c) For all other services, 85 percent of the physician fee schedule amount for the service.

(d) For services (other than assistant-at-surgery services) furnished beginning January 1, 1998, 85 percent of the physician fee schedule amount for the service. For assistant-at-surgery services, 85 percent of the physician fee schedule amount that would be allowed under the physician fee schedule if the assistant-at-surgery service were furnished by a physician.

[56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. 15, 1992, as amended at 63 FR 58911, Nov. 2, 1998]

§ 414.54 Payment for certified nurse-midwives' services.

(a) For services furnished after December 31, 1991, allowed amounts under the fee schedule established under section 1833(a)(1)(K) of the Act for the payment of certified nurse-midwife services may not exceed 65 percent of the physician fee schedule amount for the service.

(b) For certified nurse-midwife services furnished on or after January 1, 2011, allowed amounts may not exceed 100 percent of the physician fee schedule amount that would be paid to a physician for the services.

[75 FR 73616, Nov. 29, 2010]

§ 414.56 Payment for nurse practitioners' and clinical nurse specialists' services.

(a) Rural areas. For services furnished beginning January 1, 1992 and ending December 31, 1997, allowed amounts for the services of a nurse practitioner or a clinical nurse specialist in a rural area (as described in section 1861(s)(2)(K)(iii) of the Act) may not exceed the following limits:

(1) For services furnished in a hospital (including assistant-at-surgery services), 75 percent of the physician fee schedule amount for the service.

(2) For all other services, 85 percent of the physician fee schedule amount for the service.

(b) Non-rural areas. For services furnished beginning January 1, 1992 and ending December 31, 1997, allowed amounts for the services of a nurse practitioner or a clinical nurse specialist in a nursing facility may not exceed 85 percent of the physician fee schedule amount for the service.

(c) Beginning January 1, 1998. For services (other than assistant-at-surgery services) furnished beginning January 1, 1998, allowed amounts for the services of a nurse practitioner or clinical nurse specialist may not exceed 85 percent of the physician fee schedule amount for the service. For assistant-at-surgery services, allowed amounts for the services of a nurse practitioner or clinical nurse specialist may not exceed 85 percent of the physician fee schedule amount that would be allowed under the physician fee schedule if the assistant-at-surgery service were furnished by a physician.

[63 FR 58911, Nov. 2, 1998]

§ 414.58 Payment of charges for physician services to patients in providers.

(a) Payment under the physician fee schedule. In addition to the special conditions for payment in §§ 415.100 through 415.130, and § 415.190 of this chapter, CMS establishes payment for physician services to patients in providers under the physician fee schedule in accordance with §§ 414.1 through 414.48.

(b) Teaching hospitals. Services furnished by physicians in teaching hospitals may be made on a reasonable cost basis set forth in § 415.162 of this chapter if the hospital exercises the election described in § 415.160 of this chapter.

[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 60 FR 63189, Dec. 8, 1995]

§ 414.60 Payment for the services of CRNAs.

(a) Basis for payment. The allowance for the anesthesia service furnished by a CRNA, medically directed or not medically directed, is based on allowable base and time units as defined in § 414.46(a). Beginning with CY 1994 -

(1) The allowance for an anesthesia service furnished by a medically directed CRNA is based on a fixed percentage of the allowance recognized for the anesthesia service personally performed by the physician alone, as specified in § 414.46(d)(3); and

(2) The CF for an anesthesia service furnished by a CRNA not directed by a physician may not exceed the CF for a service personally performed by a physician.

(b) To whom payment may be made. Payment for an anesthesia service furnished by a CRNA may be made to the CRNA or to any individual or entity (such as a hospital, critical access hospital, physician, group practice, or ambulatory surgical center) with which the CRNA has an employment or contract relationship that provides for payment to be made to the individual or entity.

(c) Condition for payment. Payment for the services of a CRNA may be made only on an assignment related basis, and any assignment accepted by a CRNA is binding on any other person presenting a claim or request for payment for the service.

[60 FR 63178, Dec. 8, 1995, as amended at 62 FR 46037, Aug. 29, 1997; 64 FR 59441, Nov. 2, 1999; 77 FR 69363, Nov. 16, 2012]

§ 414.61 Payment for anesthesia services furnished by a teaching CRNA.

(a) Basis for payment. Beginning January 1, 2010, anesthesia services furnished by a teaching CRNA may be paid under one of the following conditions:

(1) The teaching CRNA, who is not under medical direction of a physician, is present with the student nurse anesthetist for the pre and post anesthesia services included in the anesthesia base units payment and is continuously present during anesthesia time in a single case with a student nurse anesthetist.

(2) The teaching CRNA, who is not under the medical direction of a physician, is involved with two concurrent anesthesia cases with student nurse anesthetists. The teaching CRNA must be present with the student nurse anesthetist for the pre and post anesthesia services included in the anesthesia base unit. For the anesthesia time of the two concurrent cases, the teaching CRNA can only be involved with those two concurrent cases and may not perform services for other patients.

(b) Level of payment. The allowance for the service of the teaching CRNA, furnished under paragraph (a) of this section, is determined in the same way as for a physician who personally performs the anesthesia service alone as specified in § 414.46(c) of this subpart.

[74 FR 62006, Nov. 25, 2009]

§ 414.62 Fee schedule for clinical psychologist services.

The fee schedule for clinical psychologist services is set at 100 percent of the amount determined for corresponding services under the physician fee schedule.

[62 FR 59102, Oct. 31, 1997]

§ 414.63 Payment for outpatient diabetes self-management training.

(a) Payment under the physician fee schedule. Except as provided in paragraph (d) of this section, payment for outpatient diabetes self-management training is made under the physician fee schedule in accordance with §§ 414.1 through 414.48.

(b) To whom payment may be made. Payment may be made to an entity approved by CMS to furnish outpatient diabetes self-management training in accordance with part 410, subpart H of this chapter.

(c) Limitation on payment. Payment may be made for training sessions actually attended by the beneficiary and documented on attendance sheets.

(d) Payments made to those not paid under the physician fee schedule. Payments may be made to other entities not routinely paid under the physician fee schedule, such as hospital outpatient departments, ESRD facilities, and DME suppliers. The payment equals the amounts paid under the physician fee schedule.

(e) Other conditions for fee-for-service payment. The beneficiary must meet the following conditions:

(1) Has not previously received initial training for which Medicare payment was made under this benefit.

(2) Is not receiving services as an inpatient in a hospital, SNF, hospice, or nursing home.

(3) Is not receiving services as an outpatient in an RHC or FQHC.

[65 FR 83153, Dec. 29, 2000]

§ 414.64 Payment for medical nutrition therapy.

(a) Payment under the physician fee schedule. Medicare payment for medical nutrition therapy is made under the physician fee schedule in accordance with subpart B of this part. Payment to non-physician professionals, as specified in paragraph (b) of this section, is the lesser of the actual charges or 80 percent of 85 percent of the physician fee schedule amount.

(b) To whom payment may be made. Payment may be made to a registered dietician or nutrition professional qualified to furnish medical nutrition therapy in accordance with part 410, subpart G of this chapter.

(c) Effective date of payment. Medicare pays suppliers of medical nutrition therapy on or after the effective date of enrollment of the supplier at the carrier.

(d) Limitation on payment. Payment is made only for documented nutritional therapy sessions actually attended by the beneficiary.

(e) Other conditions for fee-for-service payment. Payment is made only if the beneficiary:

(1) Is not an inpatient of a hospital, SNF, nursing home, or hospice.

(2) Is not receiving services in an RHC, FQHC or ESRD dialysis facility.

[66 FR 55332, Nov. 1, 2001]

§ 414.65 Payment for telehealth services.

(a) Professional service. The Medicare payment amount for telehealth services described under § 410.78 of this chapter is equal to the current fee schedule amount applicable for the service of the physician or practitioner, subject to paragraphs (a)(1) and (2) of this section, but must be made in accordance with the following limitations:

(1) Only the physician or practitioner at the distant site may bill and receive payment for the professional service via an interactive telecommunications system.

(2) Payments made to the physician or practitioner at the distant site, including deductible and coinsurance, for the professional service may not be shared with the referring practitioner or telepresenter.

(b) Originating site facility fee. For telehealth services furnished on or after October 1, 2001:

(1) For services furnished on or after October 1, 2001 through December 31, 2002, the payment amount to the originating site is the lesser of the actual charge or the originating site facility fee of $20. For services furnished on or after January 1 of each subsequent year, the facility fee for the originating site will be updated by the Medicare Economic Index (MEI) as defined in section 1842(i)(3) of the Act.

(2) Only the originating site may bill for the originating site facility fee and only on an assignment-related basis. The distant site physician or practitioner may not bill for or receive payment for facility fees associated with the professional service furnished via an interactive telecommunications system.

(3) No originating site facility fee payment is made to an originating site described in § 410.78(b)(3)(x), (xi), or (xii); or to an originating site for services furnished under the exception at § 410.78(b)(4)(iv)(A) or (B) of this chapter.

(c) Deductible and coinsurance apply. The payment for the professional service and originating site facility fee is subject to the coinsurance and deductible requirements of sections 1833(a)(1) and (b) of the Act.

(d) Assignment required for physicians, practitioners, and originating sites. Payment to physicians, practitioners, and originating sites is made only on an assignment-related basis.

(e) Sanctions. A distant site practitioner or originating site facility may be subject to the applicable sanctions provided for in chapter IV, part 402 and chapter V, parts 1001, 1002, and 1003 of this title if he or she does any of the following:

(1) Knowingly and willfully bills or collects for services in violation of the limitation of this section.

(2) Fails to timely correct excess charges by reducing the actual charge billed for the service in an amount that does not exceed the limiting charge for the service or fails to timely refund excess collections.

(3) Fails to submit a claim on a standard form for services provided for which payment is made on a fee schedule basis.

(4) Imposes a charge for completing and submitting the standard claims form.

[66 FR 55332, Nov. 1, 2001, as amended at 67 FR 80041, Dec. 31, 2003; 69 FR 66424, Nov. 15, 2004; 70 FR 70332, Nov. 21, 2005; 72 FR 66401, Nov. 27, 2007; 73 FR 69936, Nov. 19, 2008; 74 FR 62006, Nov. 25, 2009; 75 FR 73617, Nov. 29, 2010; 76 FR 73471, Nov. 28, 2011; 77 FR 69363, Nov. 16, 2012; 78 FR 74812, Dec. 10, 2013; 83 FR 60074, Nov. 23, 2018]

§ 414.66 Incentive payments for physician scarcity areas.

(a) Definition. As used in this section, the following definitions apply.

Physician scarcity area is defined as an area with a shortage of primary care physicians or specialty physicians to the Medicare population in that area.

Primary care physician is defined as a general practitioner, family practice practitioner, general internist, obstetrician or gynecologist.

(b) Physicians' services furnished to a beneficiary in a Physician Scarcity Area (PSA) for primary or specialist care are eligible for a 5 percent incentive payment.

(c) Primary care physicians furnishing services in primary care PSAs are entitled to an additional 5 percent incentive payment above the amount paid under the physician fee schedule for their professional services furnished on or after January 1, 2005 and before January 1, 2008.

(d) Physicians, as defined in section 1861(r)(1) of the Act, furnishing services in specialist care PSAs are entitled to an additional 5 percent payment above the amount paid under the physician fee schedule for their professional services furnished on or after January 1, 2005 and before January 1, 2008.

[69 FR 66424, Nov. 15, 2004]

§ 414.67 Incentive payments for services furnished in Health Professional Shortage Areas.

(a) Health Professional Shortage Area (HPSA) physician bonus program. A HPSA physician incentive payment will be made subject to the following:

(1) HPSA bonuses are payable for services furnished by physicians as defined in section 1861(r) of the Act in areas designated as of December 31 of the prior year as geographic primary medical care HPSAs as defined in section 332(a)(1)(A) of the Public Health Service Act.

(2) HPSA bonuses are payable for services furnished by psychiatrists in areas designated as of December 31 of the prior year as geographic mental health HPSAs if the services are not already eligible for the bonus based on being in a geographic primary care HPSA.

(3) Physicians eligible for the HPSA physician bonus are entitled to a 10 percent incentive payment above the amount paid for their professional services under the physician fee schedule.

(4) Physicians furnishing services in areas that are designated as geographic HPSAs prior to the beginning of the year but not included on the published list of zip codes for which automated HPSA bonus payments are made must use the AQ modifier to receive the HPSA physician bonus payment.

(b) HPSA surgical incentive payment program. A HPSA surgical incentive payment will be made subject to the following:

(1) A major surgical procedure as defined in § 414.2 of this part is furnished by a general surgeon on or after January 1, 2011 and before January 1, 2016 in an area recognized for the HPSA physician bonus program under paragraph (a)(1) of this section.

(2) Payment will be made on a quarterly basis in an amount equal to 10 percent of the Part B payment amount for major surgical procedures furnished as described in paragraph (b)(1) of this section, in addition to the amount the physician would otherwise be paid.

(3) Physicians furnishing services in areas that are designated as geographic HPSAs eligible for the HPSA physician bonus program under paragraph (a)(1) of this section prior to the beginning of the year but not included on the published list of zip codes for which automated HPSA surgical incentive payments are made should report HCPCS modifier -AQ to receive the HPSA surgical incentive payment.

(4) The payment described in paragraph (b)(2) of this section is made to the surgeon or, where the surgeon has reassigned his or her benefits to a critical access hospital (CAH) paid under the optional method, to the CAH based on an institutional claim.

[75 FR 73617, Nov. 29, 2010]

§ 414.68 Imaging accreditation.

(a) Scope and purpose. Section 1834(e) of the Act requires the Secretary to designate and approve independent accreditation organizations for purposes of accrediting suppliers furnishing the technical component (TC) of advanced diagnostic imaging services and establish procedures to ensure that the criteria used by an accreditation organization is specific to each imaging modality. Suppliers of the TC of advanced diagnostic imaging services for which payment is made under the fee schedule established in section 1848(b) of the Act must become accredited by an accreditation organization designated by the Secretary beginning January 1, 2012.

(b) Definitions. As used in this section, the following definitions are applicable:

Accredited supplier means a supplier that has been accredited by a CMS-designated accreditation organization as specified in this part.

Advanced diagnostic imaging service means any of the following diagnostic services:

(i) Magnetic resonance imaging.

(ii) Computed tomography.

(iii) Nuclear medicine.

(iv) Positron emission tomography.

CMS-approved accreditation organization means an accreditation organization designated by CMS to perform the accreditation functions specified in section 1834(e) of the Act.

(c) Application and reapplication procedures for accreditation organizations. An independent accreditation organization applying for approval or reapproval of authority to survey suppliers for purposes of accrediting suppliers furnishing the TC of advanced diagnostic imaging services is required to furnish CMS with all of the following:

(1) A detailed description of how the organization's accreditation criteria satisfy the statutory standards authorized by section 1834(e)(3) of the Act, specifically -

(i) Qualifications of medical personnel who are not physicians and who furnish the TC of advanced diagnostic imaging services;

(ii) Qualifications and responsibilities of medical directors and supervising physicians (who may be the same person), such as their training in advanced diagnostic imaging services in a residency program, expertise obtained through experience, or continuing medical education courses;

(iii) Procedures to ensure the reliability, clarity, and accuracy of the technical quality of diagnostic images produced by the supplier, including a thorough evaluation of equipment performance and safety;

(iv) Procedures to ensure the safety of persons who furnish the TC of advanced diagnostic imaging services and individuals to whom such services are furnished;

(v) Procedures to assist the beneficiary in obtaining the beneficiary's imaging records on request; and

(vi) Procedures to notify the accreditation organization of any changes to the modalities subsequent to the organization's accreditation decision.

(2) An agreement to conform accreditation requirements to any changes in Medicare statutory requirements authorized by section 1834(e) of the Act. The accreditation organization must maintain or adopt standards that are equal to, or more stringent than, those of Medicare.

(3) Information that demonstrates the accreditation organization's knowledge and experience in the advanced diagnostic imaging arena.

(4) The organization's proposed fees for accreditation for each modality in which the organization intends to offer accreditation, including any plans for reducing the burden and cost of accreditation to small and rural suppliers.

(5) Any specific documentation requirements and attestations requested by CMS as a condition of designation under this part.

(6) A detailed description of the organization's survey process, including the following:

(i) Type and frequency of the surveys performed.

(ii) The ability of the organization to conduct timely reviews of accreditation applications, to include the organizations national capacity.

(iii) Description of the organization's audit procedures, including random site visits, site audits, or other strategies for ensuring suppliers maintain compliance for the duration of accreditation.

(iv) Procedures for performing unannounced site surveys.

(v) Copies of the organization's survey forms.

(vi) A description of the accreditation survey review process and the accreditation status decision-making process, including the process for addressing deficiencies identified with the accreditation requirements, and the procedures used to monitor the correction of deficiencies found during an accreditation survey.

(vii) Procedures for coordinating surveys with another accrediting organization if the organization does not accredit all products the supplier provides.

(viii) Detailed information about the individuals who perform evaluations for the accreditation organization, including all of the following information:

(A) The number of professional and technical staff that are available for surveys.

(B) The education, employment, and experience requirements surveyors must meet.

(C) The content and length of the orientation program.

(ix) The frequency and types of in-service training provided to survey personnel.

(x) The evaluation systems used to monitor the performance of individual surveyors and survey teams.

(xi) The policies and procedures regarding an individual's participation in the survey or accreditation decision process of any organization with which the individual is professionally or financially affiliated.

(xii) The policies and procedures used when an organization has a dispute regarding survey findings or an adverse decision.

(7) Detailed information about the size and composition of survey teams for each category of advanced medical imaging service supplier accredited.

(8) A description of the organization's data management and analysis system for its surveys and accreditation decisions, including the kinds of reports, tables, and other displays generated by that system.

(9) The organization's procedures for responding to and for the investigation of complaints against accredited facilities, including policies and procedures regarding coordination of these activities with appropriate licensing bodies and CMS.

(10) The organization's policies and procedures for the withholding or removal of accreditation status for facilities that fail to meet the accreditation organization's standards or requirements, and other actions taken by the organization in response to noncompliance with its standards and requirements. These policies and procedures must include notifying CMS of Medicare facilities that fail to meet the requirements of the accrediting organization.

(11) A list of all currently accredited suppliers, the type and category of accreditation currently held by each supplier, and the expiration date of each supplier's current accreditation.

(12) A written presentation that demonstrates the organization's ability to furnish CMS with electronic data in ASCII comparable code.

(13) A resource analysis that demonstrates that the organization's staffing, funding, and other resources are adequate to perform the required surveys and related activities.

(14) A statement acknowledging that, as a condition for approval of designation, the organization agrees to carry out the following activities:

(i) Prioritize surveys for those suppliers needing to be accredited by January 1, 2012.

(ii) Notify CMS, in writing, of any Medicare supplier that had its accreditation revoked, withdrawn, revised, or any other remedial or adverse action taken against it by the accreditation organization within 30 calendar days of any such action taken.

(iii) Notify all accredited suppliers within 10 calendar days of the organization's removal from the list of designated accreditation organizations.

(iv) Notify CMS, in writing, at least 30 calendar days in advance of the effective date of any significant proposed changes in its accreditation requirements.

(v) Permit its surveyors to serve as witnesses if CMS takes an adverse action based on accreditation findings.

(vi) Notify CMS, in writing (electronically or hard copy), within 2 business days of a deficiency identified in any accreditation supplier from any source where the deficiency poses an immediate jeopardy to the supplier's beneficiaries or a hazard to the general public.

(vii) Provide, on an annual basis, summary data specified by CMS that relates to the past year's accreditations and trends.

(viii) Attest that the organization will not perform any accreditation surveys of Medicare-participating suppliers with which it has a financial relationship in which it has an interest.

(ix) Conform accreditation requirements to changes in Medicare requirements.

(x) If CMS withdraws an accreditation organization's approved status, work collaboratively with CMS to direct suppliers to the remaining accreditation organizations within a reasonable period of time.

(d) Determination of whether additional information is needed. If CMS determines that additional information is necessary to make a determination for approval or denial of the accreditation organization's application for designation, the organization must be notified and afforded an opportunity to provide the additional information.

(e) Visits to the organization's office. CMS may visit the organization's offices to verify representations made by the organization in its application, including, but not limited to, reviewing documents and interviewing the organization's staff.

(f) Formal notice from CMS. The accreditation organization will receive a formal notice from CMS stating whether the request for designation has been approved or denied. If approval was denied the notice includes the basis for denial and reconsideration and reapplication procedures.

(g) Ongoing responsibilities of a CMS-approved accreditation organization. An accreditation organization approved by CMS must carry out the following activities on an ongoing basis:

(1) Provide CMS with all of the following in written format (either electronic or hard copy):

(i) Copies of all accreditation surveys, together with any survey-related information that CMS may require (including corrective action plans and summaries of findings with respect to unmet CMS requirements).

(ii) Notice of all accreditation decisions.

(iii) Notice of all complaints related to suppliers.

(iv) Information about all accredited suppliers against which the accreditation organization has taken remedial or adverse action, including revocation, withdrawal, or revision of the supplier's accreditation.

(v) Notice of any proposed changes in its accreditation standards or requirements or survey process. If the organization implements the changes before or without CMS' approval, CMS may withdraw its approval of the accreditation organization.

(2) Within 30 calendar days after a change in CMS requirements, the accreditation organization must submit an acknowledgment of receipt of CMS' notification to CMS.

(3) The accreditation organization must permit its surveyors to serve as witnesses if CMS takes an adverse action based on accreditation findings.

(4) Within 2 business days of identifying a deficiency of an accredited supplier that poses immediate jeopardy to a beneficiary or to the general public, the accreditation organization must provide CMS with written notice of the deficiency and any adverse action implemented by the accreditation organization.

(5) Within 10 calendar days after CMS' notice to a CMS-approved accreditation organization that CMS intends to withdraw approval of the accreditation organization, the accreditation organization must provide written notice of the withdrawal to all of the organization's accredited suppliers.

(6) The organization must provide, on an annual basis, summary data specified by CMS that relate to the past year's accreditation activities and trends.

(h) Continuing Federal oversight of approved accreditation organizations. This paragraph establishes specific criteria and procedures for continuing oversight and for withdrawing approval of a CMS-approved accreditation organization.

(1) Validation audits.

(i) CMS or its contractor may conduct an audit of an accredited supplier to validate the survey accreditation process of approved accreditation organizations for the TC of advanced diagnostic imaging services.

(ii) The audits must be conducted on a representative sample of suppliers who have been accredited by a particular accrediting organization or in response to allegations of supplier noncompliance with the standards.

(A) When conducted on a representative sample basis, the audit is comprehensive and addresses all of the standards, or may focus on a specific standard in issue.

(B) When conducted in response to an allegation, CMS audits any standards that CMS determines are related to the allegations.

(2) Notice of intent to withdraw approval.

(i) If, during the audit specified in paragraph (h)(1) of this section, CMS identifies any accreditation programs for which validation audit results indicate -

(A) A 10 percent or greater rate of disparity between findings by the accreditation organization and findings by CMS on standards that do not constitute immediate jeopardy to patient health and safety if unmet; or

(B) Any disparity between findings by the accreditation organization and findings by CMS on standards that constitute immediate jeopardy to patient health and safety if unmet; or,

(C) Irrespective of the rate of disparity, widespread or systemic problems in an organization's accreditation process such that accreditation by that accreditation organization no longer provides CMS with adequate assurance that suppliers meet or exceed the Medicare requirements; then CMS will give the organization written notice of its intent to withdraw approval as specified in paragraph (h)(3) of this section.

(ii) CMS may also provide the organization written notice of its intent to withdraw approval if an equivalency review, onsite observation, or CMS' daily experience with the accreditation organization suggests that the accreditation organization is not meeting the requirements of this section.

(3) Withdrawal of approval. CMS may withdraw its approval of an accreditation organization at any time if CMS determines that -

(i) Accreditation by the organization no longer adequately assures that the suppliers furnishing the technical component of advanced diagnostic imaging service are meeting the established industry standards for each modality and that failure to meet those requirements could jeopardize the health or safety of Medicare beneficiaries and could constitute a significant hazard to the public health; or

(ii) The accreditation organization has failed to meet its obligations with respect to application or reapplication procedures.

(i) Reconsideration. An accreditation organization dissatisfied with a determination that its accreditation requirements do not provide or do not continue to provide reasonable assurance that the suppliers accredited by the accreditation organization meet the applicable quality standards is entitled to a reconsideration. CMS reconsiders any determination to deny, remove, or not renew the approval of designation to accreditation organizations if the accreditation organization files a written request for reconsideration by its authorized officials or through its legal representative.

(1) Filing requirements.

(i) The request must be filed within 30 calendar days of the receipt of CMS notice of an adverse determination or non-renewal.

(ii) The request for reconsideration must specify the findings or issues with which the accreditation organization disagrees and the reasons for the disagreement.

(iii) A requestor may withdraw its request for reconsideration at any time before the issuance of a reconsideration determination.

(2) CMS response to a filing request. In response to a request for reconsideration, CMS provides the accreditation organization with -

(i) The opportunity for an informal hearing to be conducted by a hearing officer appointed by the Administrator of CMS and provide the accreditation organization the opportunity to present, in writing and in person, evidence or documentation to refute the determination to deny approval, or to withdraw or not renew designation; and

(ii) Written notice of the time and place of the informal hearing at least 10 business days before the scheduled date.

(3) Hearing requirements and rules.

(i) The informal reconsideration hearing is open to all of the following:

(A) CMS.

(B) The organization requesting the reconsideration including -

(1) Authorized representatives;

(2) Technical advisors (individuals with knowledge of the facts of the case or presenting interpretation of the facts); and

(3) Legal counsel.

(ii) The hearing is conducted by the hearing officer who receives testimony and documents related to the proposed action.

(iii) Testimony and other evidence may be accepted by the hearing officer even though such evidence may be inadmissible under the Federal Rules of Civil Procedure.

(iv) The hearing officer does not have the authority to compel by subpoena the production of witnesses, papers, or other evidence.

(v) Within 45 calendar days of the close of the hearing, the hearing officer presents the findings and recommendations to the accreditation organization that requested the reconsideration.

(vi) The written report of the hearing officer includes separate numbered findings of fact and the legal conclusions of the hearing officer.

(vii) The hearing officer's decision is final.

[74 FR 62006, Nov. 25, 2009]

§ 414.80 Incentive payment for primary care services.

(a) Definitions. As defined in this section -

Eligible primary care practitioner means one of the following:

(i) A physician (as defined in section 1861(r)(1) of the Act) who meets all of the following criteria:

(A) Enrolled in Medicare with a primary specialty designation of 08-family practice, 11-internal medicine, 37-pediatrics, or 38-geriatrics.

(B) At least 60 percent of the physician's allowed charges under the physician fee schedule (excluding hospital inpatient care and emergency department visits) during a reference period specified by the Secretary are for primary care services.

(ii) A nurse practitioner, clinical nurse specialist, or physician assistant (as defined in section 1861(aa)(5) of the Act) who meets all of the following criteria:

(A) Enrolled in Medicare with a primary specialty designation of 50-nurse practitioner, 89-certified clinical nurse, or 97-physician assistant.

(B) At least 60 percent of the practitioner's allowed charges under the physician fee schedule (excluding hospital inpatient care and emergency department visits) during a reference period specified by the Secretary are for primary care services.

Primary care services means -

(i) New and established patient office or other outpatient evaluation and management (E/M) visits;

(ii) Initial, subsequent, discharge, and other nursing facility E/M services;

(iii) New and established patient domiciliary, rest home (for example, boarding home), or custodial care E/M services;

(iv) Domiciliary, rest home (for example, assisted living facility), or home care plan oversight services; and

(v) New and established patient home E/M visits.

(b) Payment. (1) For primary care services furnished by an eligible primary care practitioner on or after January 1, 2011 and before January 1, 2016, payment is made on a quarterly basis in an amount equal to 10 percent of the payment amount for the primary care services under Part B, in addition to the amount the primary care practitioner would otherwise be paid for the primary care services under Part B.

(2) The payment described in paragraph (b)(1) of this section is made to the eligible primary care practitioner or, where the physician has reassigned his or her benefits to a critical access hospital (CAH) paid under the optional method, to the CAH based on an institutional claim.

[75 FR 73617, Nov. 29, 2010]

§ 414.84 Payment for MDPP services.

(a) Definitions. In addition to the definitions specified at § 410.79(b) and § 424.205(a) of this chapter, the following definitions apply to this section.

Bridge payment means a one-time payment to an MDPP supplier for furnishing its first MDPP session to an MDPP beneficiary who has previously received one or more MDPP services from a different MDPP supplier.

Performance goal means an attendance or weight loss goal that an MDPP beneficiary must achieve during the MDPP services period for an MDPP supplier to be paid a performance payment.

Performance payment means a payment made to an MDPP supplier for furnishing certain MDPP services to an MDPP beneficiary when the MDPP beneficiary achieves the applicable performance goal.

(b) Performance payment. CMS makes one or more types of performance payments to an MDPP supplier as specified in this paragraph (b). Each type of performance payment is made only if the beneficiary achieves the applicable performance goal and only once per MDPP beneficiary. A performance payment is made only on an assignment-related basis in accordance with § 424.55 of this chapter, and MDPP suppliers must accept the Medicare allowed charge as payment in full and may not bill or collect from the beneficiary any amount. CMS will make a performance payment only to an MDPP supplier that complies with all applicable enrollment and program requirements and only for MDPP services that are furnished by an eligible coach, on or after his or her coach eligibility start date and, if applicable, before his or her coach eligibility end date. As a condition of payment, the MDPP supplier must report the NPI of the coach who furnished the session on the claim for the MDPP session. The seven types of performance payments are as follows:

(1) Performance Goal 1: Attends the first core session that initiates the MDPP services period. CMS makes a performance payment to an MDPP supplier if an MDPP beneficiary attends the first core session, which initiates the MDPP services period, and that first core session was furnished by that supplier. An MDPP supplier that has been paid this performance payment for an MDPP beneficiary is not eligible to be paid a bridge payment described in paragraph (c) of this section for that MDPP beneficiary. The amount of this performance payment is determined as follows:

(i) For a first core session furnished April 1 through December 31, 2018. $25.

(ii) For a first core session furnished during a calendar year subsequent to CY 2018. The performance payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(2) Performance Goal 2: Attends four core sessions. CMS makes a performance payment to an MDPP supplier if an MDPP beneficiary achieves attendance at the fourth core session upon attendance at a core session furnished by that supplier. The amount of this performance payment is determined as follows:

(i) For a fourth core session furnished April 1 through December 31, 2018. $50.

(ii) For a fourth core session furnished during a calendar year subsequent to CY 2018. The performance payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(3) Performance Goal 3: Attends nine core sessions. CMS makes a performance payment to an MDPP supplier if an MDPP beneficiary achieves attendance at the ninth core session upon attendance at a core session furnished by that supplier. The amount of this performance payment is determined as follows:

(i) For a ninth core session furnished April 1 through December 31, 2018. $90.

(ii) For a ninth core session furnished during a calendar year subsequent to CY 2018. The performance payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(4) Performance Goal 4: Attends two core maintenance sessions during a core maintenance session interval. CMS makes a performance payment to an MDPP supplier if an MDPP beneficiary attends two core maintenance sessions in a core maintenance session interval and achieves attendance at the second core maintenance session upon attendance at a core maintenance session furnished by that supplier. CMS makes this performance payment to an MDPP supplier only once per MDPP beneficiary per core maintenance session interval. The amount of this performance payment is determined as follows:

(i) If the beneficiary also achieves or maintains the required minimum weight loss as measured in-person during a core maintenance session furnished during the applicable core maintenance session interval:

(A) For a second core maintenance session furnished April 1 through December 31, 2018. $60.

(B) For a second core maintenance session furnished during a calendar year subsequent to CY 2018. The performance payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(ii) If the beneficiary does not achieve or maintain the required minimum weight loss as measured in-person during a core maintenance session furnished during the applicable core maintenance session interval:

(A) For a second core maintenance session furnished April 1 through December 31, 2018. $15.

(B) For a second core maintenance session furnished during a calendar year subsequent to CY 2018. The performance payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(5) Performance Goal 5: Attends two ongoing maintenance sessions and maintains the required minimum weight loss during an ongoing maintenance session interval. CMS makes a performance payment to an MDPP supplier if an MDPP beneficiary attends two ongoing maintenance sessions during an ongoing maintenance session interval, achieves attendance at that second ongoing maintenance session upon attendance at an ongoing maintenance session furnished by that supplier, and achieves or maintains the required minimum weight loss as measured in-person during an ongoing maintenance session furnished during the applicable ongoing maintenance session interval. CMS makes this performance payment to an MDPP supplier only once per MDPP beneficiary per ongoing maintenance session interval. The amount of this performance payment is determined as follows:

(i) For a second ongoing maintenance session furnished April 1 through December 31, 2018. $50.

(ii) For a second ongoing maintenance session furnished during a calendar year subsequent to CY 2018. The performance payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(6) Performance Goal 6: Achieves the required minimum weight loss. CMS makes a performance payment to an MDPP supplier for an MDPP beneficiary who achieves the required minimum weight loss as measured in-person during a core session or core maintenance session furnished by that supplier. The amount of this performance payment is determined as follows:

(i) For a core session or core maintenance session, as applicable, furnished April 1 through December 31, 2018. $160.

(ii) For a core session or core maintenance session, as applicable, furnished during a calendar year subsequent to CY 2018. The performance payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(7) Performance Goal 7: Achieves 9-percent weight loss. CMS makes a performance payment to an MDPP supplier for an MDPP beneficiary who achieves at least a 9-percent weight loss as measured in-person during a core session, core maintenance session, or ongoing maintenance session furnished by that supplier. The amount of this performance payment is determined as follows:

(i) For a core session, core maintenance session, or ongoing maintenance session, as applicable, furnished April 1 through December 31, 2018. $25.

(ii) For a core session, core maintenance session, or ongoing maintenance session, as applicable, furnished during a calendar year subsequent to CY 2018. The performance payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(c) Bridge payment. CMS makes a bridge payment to an MDPP supplier only for a core session, core maintenance session, or ongoing maintenance session furnished to an MDPP beneficiary who has previously received MDPP services from a different MDPP supplier. An MDPP supplier that has previously been paid either a bridge payment or a performance payment for an MDPP beneficiary is not eligible to be paid a bridge payment for that beneficiary. A bridge payment is made only on an assignment-related basis in accordance with § 424.55 of this chapter, and MDPP suppliers must accept the Medicare allowed charge as payment in full and may not bill or collect from the beneficiary any amount. CMS will make a bridge payment only to an MDPP supplier that complies with all applicable enrollment and program requirements, and only for MDPP services furnished by an eligible coach, on or after his or her coach eligibility start date and, if applicable, before his or her coach eligibility end date. As a condition of payment, the MDPP supplier must report the NPI of the coach who furnished the session on the claim for the MDPP session. The amount of the bridge payment is determined as follows:

(1) For a core session, core maintenance session, or ongoing maintenance session, as applicable, furnished April 1 through December 31, 2018. $25.

(2) For a core session, core maintenance session, or ongoing maintenance session, as applicable, furnished during a calendar year subsequent to CY 2018. The bridge payment amount specified in this paragraph for the prior year, adjusted as specified in paragraph (d) of this section.

(d) Updating performance payments and the bridge payment. The performance payments and bridge payment will be adjusted each calendar year by the percent change in the Consumer Price Index for All Urban Consumers (CPI-U) (U.S. city average) for the 12-month period ending June 30th of the year preceding the update year. The percent change update will be calculated based on the level of precision of the index as published by the Bureau of Labor Statistics and applied based on one decimal place of precision. The annual MDPP services payment update will be published by CMS transmittal.

[82 FR 53360, Nov. 15, 2017]

§ 414.90 Physician Quality Reporting System (PQRS).

(a) Basis and scope. This section implements the following provisions of the Act:

(1) 1848(a) - Payment Based on Fee Schedule.

(2) 1848(k) - Quality Reporting System.

(3) 1848(m) - Incentive Payments for Quality Reporting.

(b) Definitions. As used in this section, unless otherwise indicated -

Administrative claims means a reporting mechanism under which an eligible professional or group practice uses claims to report data on PQRS quality measures. Under this reporting mechanism, CMS analyzes claims data to determine which measures an eligible professional or group practice reports.

Certified survey vendor means a vendor that is certified by CMS for a particular program year to transmit survey measures data to CMS.

Covered professional services means services for which payment is made under, or is based on, the Medicare physician fee schedule as provided under section 1848(k)(3) of the Act and which are furnished by an eligible professional.

Direct electronic health record (EHR) product means an electronic health record vendor's product and version that submits data on PQRS measures directly to CMS.

Electronic health record (EHR) data submission vendor product means an entity that receives and transmits data on PQRS measures from an EHR product to CMS.

Eligible professional means any of the following:

(i) A physician.

(ii) A practitioner described in section 1842(b)(18)(C) of the Act.

(iii) A physical or occupational therapist or a qualified speech-language pathologist.

(iv) A qualified audiologist (as defined in section 1861(ll)(3)(B) of the Act).

Group practice means a physician group practice that is defined by a TIN, with 2 or more individual eligible professionals (or, as identified by NPIs) that has reassigned their billing rights to the TIN.

Group practice reporting option (GPRO) web interface means a web product developed by CMS that is used by group practices that are selected to participate in the group practice reporting option (GPRO) to submit data on PQRS quality measures.

Maintenance of Certification Program means a continuous assessment program, such as qualified American Board of Medical Specialties Maintenance of Certification Program or an equivalent program (as determined by the Secretary), that advances quality and the lifelong learning and self-assessment of board certified specialty physicians by focusing on the competencies of patient care, medical knowledge, practice-based learning, interpersonal and communication skills, and professionalism. Such a program must include the following:

(i) The program requires the physician to maintain a valid unrestricted license in the United States.

(ii) The program requires a physician to participate in educational and self-assessment programs that require an assessment of what was learned.

(iii) The program requires a physician to demonstrate, through a formalized secure examination, that the physician has the fundamental diagnostic skills, medical knowledge, and clinical judgment to provide quality care in their respective specialty.

(iv) The program requires successful completion of a qualified maintenance of certification program practice assessment.

Maintenance of Certification Program Practice Assessment means an assessment of a physician's practice that -

(i) Includes an initial assessment of an eligible professional's practice that is designed to demonstrate the physician's use of evidence-based medicine.

(ii) Includes a survey of patient experience with care.

(iii) Requires a physician to implement a quality improvement intervention to address a practice weakness identified in the initial assessment under paragraph (h) of this section and then to remeasure to assess performance improvement after such intervention.

Measures group means a subset of six or more PQRS measures that have a particular clinical condition or focus in common. The denominator definition and coding of the measures group identifies the condition or focus that is shared across the measures within a particular measures group.

Physician Quality Reporting System (PQRS) means the physician reporting system under section 1848(k) of the Act for the reporting by eligible professionals of data on quality measures and the incentive payment associated with this physician reporting system.

Performance rate means the percentage of a defined population who receives a particular process of care or achieve a particular outcome for a particular quality measure.

Qualified clinical data registry means a CMS-approved entity that has self-nominated and successfully completed a qualification process that collects medical and/or clinical data for the purpose of patient and disease tracking to foster improvement in the quality of care provided to patients. A qualified clinical data registry must perform the following functions:

(i) Submit quality measures data or results to CMS for purposes of demonstrating that, for a reporting period, its eligible professionals have satisfactorily participated in PQRS. A qualified clinical data registry must have in place mechanisms for the transparency of data elements and specifications, risk models, and measures.

(ii) Submit to CMS, for purposes of demonstrating satisfactory participation, quality measures data on multiple payers, not just Medicare patients.

(iii) Provide timely feedback, at least four times a year, on the measures at the individual participant level for which the qualified clinical data registry reports on the eligible professional's behalf for purposes of the individual eligible professional's satisfactory participation in the clinical quality data registry.

(iv) Possess benchmarking capacity that measures the quality of care an eligible professional provides with other eligible professionals performing the same or similar functions.

Qualified registry means a medical registry or a maintenance of certification program operated by a specialty body of the American Board of Medical Specialties that, with respect to a particular program year, has self-nominated and successfully completed a vetting process (as specified by CMS) to demonstrate its compliance with the PQRS qualification requirements specified by CMS for that program year. The registry may act as a data submission vendor, which has the requisite legal authority to provide PQRS data (as specified by CMS) on behalf of an eligible professional to CMS. If CMS finds that a qualified registry submits grossly inaccurate data for reporting periods occurring in a particular year, CMS reserves the right to disqualify a registry for reporting periods occurring in the subsequent year.

Reporting rate means the percentage of patients that the eligible professional indicated a quality action was or was not performed divided by the total number of patients in the denominator of the measure.

(c) Incentive payments. For 2007 to 2014, with respect to covered professional services furnished during a reporting period by an eligible professional, an eligible professional (or in the case of a group practice under paragraph (i) of this section, a group practice) may receive an incentive if -

(1) There are any quality measures that have been established under the PQRS that are applicable to any such services furnished by such professional (or in the case of a group practice under paragraph (i) of this section, such group practice) for such reporting period; and

(2) If the eligible professional (or in the case of a group practice under paragraph (j) of this section, the group practice) satisfactorily submits (as determined under paragraph (g) of this section for the eligible professional and paragraph (i) of this section for the group practice) to the Secretary data on such quality measures in accordance with the PQRS for such reporting period, in addition to the amount otherwise paid under section 1848 of the Act, there also must be paid to the eligible professional (or to an employer or facility in the cases described in section 1842(b)(6)(A) of the Act or, in the case of a group practice under paragraph (i) of this section, to the group practice) from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 of the Act an amount equal to the applicable quality percent (as specified in paragraph (c)(3) of this section) of the eligible professional's (or, in the case of a group practice under paragraph (i) of this section, the group practice's) total estimated allowed charges for all covered professional services furnished by the eligible professional (or, in the case of a group practice under paragraph (i) of this section, by the group practice) during the reporting period.

(3) The applicable quality percent is as follows:

(i) For 2007 and 2008, 1.5 percent.

(ii) For 2009 and 2010, 2.0 percent.

(iii) For 2011, 1.0 percent.

(iv) For 2012, 2013, and 2014, 0.5 percent.

(4) For purposes of this paragraph (c) -

(i) The eligible professional's (or, in the case of a group practice under paragraph (i) of this section, the group practice's) total estimated allowed charges for covered professional services furnished during a reporting period are determined based on claims processed in the National Claims History (NCH) no later than 2 months after the end of the applicable reporting period;

(ii) In the case of the eligible professional who furnishes covered professional services in more than one practice, incentive payments are separately determined for each practice based on claims submitted for the eligible professional for each practice;

(iii) Incentive payments to a group practice under this paragraph must be in lieu of the payments that would otherwise be made under the PQRS to eligible professionals in the group practice for meeting the criteria for satisfactory reporting for individual eligible professionals. For any program year in which the group practice (as identified by the TIN) is selected to participate in the PQRS group practice reporting option, the eligible professional cannot individually qualify for a PQRS incentive payment by meeting the requirements specified in paragraph (g) of this section.

(iv) Incentive payments earned by the eligible professional (or in the case of a group practice under paragraph (i) of this section, by the group practice) for a particular program year will be paid as a single consolidated payment to the TIN holder of record.

(5) The Secretary must treat an individual eligible professional, as identified by a unique TIN/NPI combination, as satisfactorily submitting data on quality measures (as determined under paragraph (g) of this section), if the eligible professional is satisfactorily participating (as determined under paragraph (h) of this section), in a qualified clinical data registry.

(d) Additional incentive payment. Through 2014, if an eligible professional meets the requirements described in paragraph (d)(2) of this section, the applicable percent for such year, as described in paragraphs (c)(3)(iii) and (iv) of this section, must be increased by 0.5 percentage points.

(1) In order to qualify for the additional incentive payment described in paragraph (d) of this section, an eligible professional must meet all of the following requirements:

(i) Satisfactorily submits data on quality measures, or, for 2014, in lieu of satisfactory reporting, satisfactorily participates in a qualified clinical data registry for purposes of this section for the applicable incentive year.

(ii) Have such data submitted on their behalf through a Maintenance of Certification program that meets:

(A) The criteria for a registry (as specified by CMS); or

(B) An alternative form and manner determined appropriate by the Secretary.

(iii) The eligible professional, more frequently than is required to qualify for or maintain board certification status -

(A) Participates in a maintenance of certification program for a year; and

(B) Successfully completes a qualified maintenance of certification program practice assessment for such year.

(2) In order for an eligible professional to receive the additional incentive payment, a Maintenance of Certification Program must submit to the Secretary, on behalf of the eligible professional, information -

(i) In a form and manner specified by the Secretary, that the eligible professional has successfully met the requirements of paragraph (d)(1)(iii) of this section, which may be in the form of a structural measure.

(ii) If requested by the Secretary, on the survey of patient experience with care.

(iii) As the Secretary may require, on the methods, measures, and data used under the Maintenance of Certification Program and the qualified Maintenance of Certification Program practice assessment.

(e) Payment adjustments. For 2015 through 2018, with respect to covered professional services furnished by an eligible professional, if the eligible professional does not satisfactorily submit data on quality measures for covered professional services for the quality reporting period for the year (as determined under section 1848(m)(3)(A) of the Act), the fee schedule amount for such services furnished by such professional during the year (including the fee schedule amount for purposes for determining a payment based on such amount) must be equal to the applicable percent of the fee schedule amount that would otherwise apply to such services under this paragraph (e).

(1) The applicable percent is as follows:

(i) For 2015, 98.5 percent.

(ii) For 2016 through 2018, 98 percent.

(2) The Secretary must treat an individual eligible professional, as identified by a unique TIN/NPI combination, as satisfactorily submitting data on quality measures (as determined under paragraph (h) of this section), if the eligible professional is satisfactorily participating, in a qualified clinical data registry.

(f) Use of appropriate and consensus-based quality measures. For measures selected for inclusion in the PQRS quality measure set, CMS will use group practice measures determined appropriate by CMS and consensus-based quality measures that meet one of the following criteria:

(1) Be such measures selected by the Secretary from measures that have been endorsed by the entity with a contract with the Secretary under section 1890(a) of the Act. In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.

(2) For each quality measure adopted by the Secretary under this paragraph, the Secretary ensures that eligible professionals have the opportunity to provide input during the development, endorsement, or selection of quality measures applicable to services they furnish.

(g) Use of quality measures for satisfactory participation in a qualified clinical data registry. For measures selected for reporting to meet the criteria for satisfactory participation in a qualified clinical data registry, CMS will use measures selected by qualified clinical data registries based on parameters set by CMS.

(h) Satisfactory reporting requirements for the incentive payments. In order to qualify to earn a PQRS incentive payment for a particular program year, an individual eligible professional, as identified by a unique TIN/NPI combination, must meet the criteria for satisfactory reporting specified by CMS under paragraph (h)(3) of (h)(5) of this section for such year by reporting on either individual PQRS quality measures or PQRS measures groups identified by CMS during a reporting period specified in paragraph (h)(1) of this section, using one of the reporting mechanisms specified in paragraph (h)(2) or (4) of this section, and using one of the reporting criteria specified in paragraph (h)(3) or (5) of this section.

(1) Reporting periods. For purposes of this paragraph, the reporting period is -

(i) The 12-month period from January 1 through December 31 of such program year.

(ii) A 6-month period from July 1 through December 31 of such program year.

(A) For 2011, such 6-month reporting period is not available for EHR-based reporting of individual PQRS quality measures.

(B) For 2012 and subsequent program years, such 6-month reporting period from July 1 through December 31 of such program year is only available for registry-based reporting of PQRS measures groups by eligible professionals.

(2) Reporting mechanisms for individual eligible professionals. An individual eligible professional who wishes to participate in the PQRS must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Claims. Reporting PQRS quality measures or PQRS measures groups to CMS, by no later than 2 months after the end of the applicable reporting period, on the eligible professional's Medicare Part B claims for covered professional services furnished during the applicable reporting period.

(A) If an eligible professional re-submits a Medicare Part B claim for reprocessing, the eligible professional may not attach a G-code at that time for reporting on individual PQRS measures or measures groups.

(B) [Reserved]

(ii) Registry. Reporting PQRS quality measures or PQRS measures groups to a qualified registry in the form and manner and by the deadline specified by the qualified registry selected by the eligible professional. The selected registry must submit information, as required by CMS, for covered professional services furnished by the eligible professional during the applicable reporting period to CMS on the eligible professional's behalf.

(iii) Direct EHR product. Reporting PQRS quality measures to CMS by extracting clinical data using a secure data submission method, as required by CMS, from a direct EHR product by the deadline specified by CMS for covered professional services furnished by the eligible professional during the applicable reporting period.

(iv) EHR data submission vendor. Reporting PQRS quality measures to CMS by extracting clinical data using a secure data submission method, as required by CMS, from an EHR data submission vendor product by the deadline specified by CMS for covered professional services furnished by the eligible professional during the applicable reporting period.

(v) Although an eligible professional may attempt to qualify for the PQRS incentive payment by reporting on both individual PQRS quality measures and measures groups, using more than one reporting mechanism (as specified in paragraph (g)(2) of this section), or reporting for more than one reporting period, he or she will receive only one PQRS incentive payment per TIN/NPI combination for a program year.

(3) Satisfactory reporting criteria for individual eligible professionals for the 2014 PQRS incentive. An individual eligible professional who wishes to qualify for the 2014 PQRS incentive must report information on PQRS quality measures data in one of the following manners:

(i) Via Claims. For the 12-month 2014 PQRS incentive reporting period -

(A) Report at least 9 measures covering at least 3 National Quality Strategy domains, and report each measure for at least 50 percent of the Medicare Part B FFS patients seen during the reporting period to which the measure applies; or if less than 9 measures covering at least 3 National Quality Strategy domains apply to the eligible professional, report 1 to 8 measures covering 1 to 3 National Quality Strategy domains and report each measure for at least 50 percent of the Medicare Part B FFS patients seen during the reporting period to which the measure applies. For an eligible professional who reports fewer than 9 measures covering at least 3 NQS domains via the claims-based reporting mechanism, the eligible professional would be subject to the Measures Applicability Validation process, which would allow us to determine whether an eligible professional should have reported quality data codes for additional measures and/or covering additional National Quality Strategy domains. Measures with a 0 percent performance rate would not be counted.

(B) [Reserved]

(ii) Via Qualified Registry.

(A) For the 12-month 2014 PQRS incentive reporting period -

(1) Report at least 9 measures covering at least 3 of the National Quality Strategy domains report each measure for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies; or, if less than 9 measures covering at least 3 NQS domains apply to the eligible professional, report 1 to 8 measures covering 1 to 3 National Quality Strategy domains for which there is Medicare patient data and report each measure for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. For an eligible professional who reports fewer than 9 measures covering at least 3 NQS domains via the qualified registry-based reporting mechanism, the eligible professional will be subject to the Measures Applicability Validation process, which would allow us to determine whether an eligible professional should have reported on additional measures and/or measures covering additional National Quality Strategy domains. Measures with a 0 percent performance rate would not be counted.

(2) Report at least 1 measures group and report each measures group for at least 20 patients, a majority of which much be Medicare Part B FFS patients. Measures with a 0 percent performance rate or measures groups containing a measure with a 0 percent performance rate will not be counted.

(B) For the 6-month 2014 PQRS incentive reporting period, report at least 1 measures group and report each measures group for at least 20 patients, a majority of which much be Medicare Part B FFS patients. Measures groups containing a measure with a 0 percent performance rate will not be counted.

(iii) Via EHR Direct Product. For the 12-month 2014 PQRS incentive reporting period, report 9 measures covering at least 3 of the National Quality Strategy domains. If an eligible professional's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the eligible professional must report the measures for which there is Medicare patient data. An eligible professional must report on at least 1 measure for which there is Medicare patient data.

(iv) Via EHR Data Submission Vendor. For the 12-month 2014 PQRS incentive reporting period, report 9 measures covering at least 3 of the National Quality Strategy domains. If an eligible professional's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the eligible professional must report the measures for which there is Medicare patient data. An eligible professional must report on at least 1 measure for which there is Medicare patient data.

(4) Reporting mechanisms for group practices. With the exception of a group practice who wishes to participate in the PQRS using the certified survey vendor mechanism (as specified in paragraph (h)(4)(v) of this section), a group practice must report information on PQRS quality measures identified by CMS in one of the following reporting mechanisms:

(i) Web interface. For 2013 and subsequent years, reporting PQRS quality measures to CMS using a CMS web interface in the form and manner and by the deadline specified by CMS.

(ii) Registry. For 2013 and subsequent years, reporting on PQRS quality measures to a qualified registry in the form and manner and by the deadline specified by the qualified registry selected by the eligible professional. The selected registry must submit information, as required by CMS, for covered professional services furnished by the eligible professional during the applicable reporting period to CMS on the eligible professional's behalf.

(iii) Direct EHR product. For 2014 and subsequent years, reporting PQRS quality measures to CMS by extracting clinical data using a secure data submission method, as required by CMS, from a direct EHR product by the deadline specified by CMS for covered professional services furnished by the eligible professional during the applicable reporting period.

(iv) EHR data submission vendor. For 2014 and subsequent years, reporting PQRS quality measures to CMS by extracting clinical data using a secure data submission method, as required by CMS, from an EHR data submission vendor product by the deadline specified by CMS for covered professional services furnished by the eligible professional during the applicable reporting period.

(v) Certified survey vendors. For 2014 and subsequent years, reporting CAHPS for PQRS survey measures to CMS using a vendor that is certified by CMS for a particular program year to transmit survey measures data to CMS. Group practices that elect this reporting mechanism must select an additional group practice reporting mechanism in order to meet the criteria for satisfactory reporting for the incentive payments.

(vi) Although a group practice may attempt to qualify for the PQRS incentive payment by using more than one reporting mechanism (as specified in paragraph (g)(3) of this section), or reporting for more than one reporting period, the group practice will receive only one PQRS incentive payment for a program year.

(5) Satisfactory reporting criteria for group practices for the 2014 PQRS incentive. A group practice who wishes to qualify for the 2014 PQRS incentive must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Via the GPRO web interface.

(A) For the 12-month 2014 PQRS incentive reporting period, for a group practice of 25 to 99 eligible professionals, report on all measures included in the web interface and populate data fields for the first 218 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 218, then report on 100 percent of assigned beneficiaries.

(B) For the 12-month 2014 PQRS incentive reporting period, for a group practice of 100 or more eligible professionals, report on all measures included in the web interface and populate data fields for the first 411 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 411, then report on 100 percent of assigned beneficiaries. In addition, for the 12-month 2014 PQRS incentive reporting period, the group practice must report all CAHPS for PQRS survey measures via a CMS-certified survey vendor, and report at least 6 measures covering at least 2 of the National Quality Strategy domains using a qualified registry, direct EHR product, or EHR data submission vendor.

(ii) Via Qualified Registry. For the 12-month 2014 PQRS incentive reporting period, for a group practice of 2 or more eligible professionals, report at least 9 measures, covering at least 3 of the National Quality Strategy domains and report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies; or, if less than 9 measures covering at least 3 NQS domains apply to the group practice, then the group practice must report 1-8 measures for which there is Medicare patient data and report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies. For a group practice who reports fewer than 9 measures covering at least 3 NQS domains via the qualified registry-based reporting mechanism, the group practice would be subject to the Measures Applicability Validation process, which would allow us to determine whether a group practice should have reported on additional measures and/or measures covering additional National Quality Strategy domains. Measures with a 0 percent performance rate would not be counted.

(iii) Via EHR Direct Product. For the 12-month 2014 PQRS incentive reporting period, for a group practice of 2 or more eligible professionals, report 9 measures covering at least 3 of the National Quality Strategy domains. If a group practice's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is Medicare patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.

(iv) Via EHR Data Submission Vendor. For the 12-month 2014 PQRS incentive reporting period, for a group practice of 2 or more eligible professionals, report 9 measures covering at least 3 of the National Quality Strategy domains. If a group practice's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is Medicare patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.

(v) Via a Certified survey vendor, in addition to the GPRO web interface, qualified registry, direct EHR product, or EHR data submission vendor reporting mechanisms. For the 12-month 2014 PQRS incentive reporting period, for a group practice of 25 or more eligible professionals, report all CAHPS for PQRS survey measures via a CMS-certified survey vendor, and report at least 6 measures covering at least 2 of the National Quality Strategy domains using a qualified registry, direct EHR product, EHR data submission vendor, or GPRO web interface.

(i) Satisfactory participation requirements for the incentive payments for individual eligible professionals. To qualify for the 2014 PQRS incentive using a qualified clinical data registry, an individual eligible professional, as identified by a unique TIN/NPI combination, must meet the criteria for satisfactory participation as specified under paragraph (i)(3) of this section by reporting on quality measures identified by a qualified clinical data registry during a reporting period specified in paragraph (i)(1) of this section, and using the reporting mechanism specified in paragraph (i)(2) of this section.

(1) Reporting period. For purposes of this paragraph, the reporting period is the 12-month period from January 1 through December 31.

(2) Reporting Mechanism. An individual eligible professional who wishes to meet the criteria for satisfactory participation in a qualified clinical data registry must use a qualified clinical data registry to report information on quality measures identified by the qualified clinical data registry.

(3) Satisfactory participation criteria for individual eligible professionals for the 2014 PQRS incentive. An individual eligible professional who wishes to qualify for the 2014 PQRS incentive through satisfactory participation in a qualified clinical data registry must report information on quality measures identified by the qualified clinical data registry in the following manner:

(i) For the 12-month 2014 PQRS incentive reporting period, report at least 9 measures designated for reporting under a qualified clinical data registry covering at least 3 of the National Quality Strategy domains and report each measure for at least 50 percent of the eligible professional's patients. Of the measures reported via a qualified clinical data registry, the eligible professional must report on at least 1 outcome measure.

(ii) [Reserved]

(j) Satisfactory reporting requirements for the payment adjustments. In order to satisfy the requirements for the PQRS payment adjustment for a particular program year, an individual eligible professional, as identified by a unique TIN/NPI combination, or a group practice must meet the criteria for satisfactory reporting specified by CMS for such year by reporting on either individual PQRS measures or PQRS measures groups identified by CMS during a reporting period specified in paragraph (j)(1) of this section, using one of the reporting mechanisms specified in paragraph (j)(2) or (4) of this section, and using one of the reporting criteria specified in section (j)(3) or (5) of this section.

(1) For purposes of this paragraph (j), the reporting period for the payment adjustment, with respect to a payment adjustment year, is the 12-month period from January 1 through December 31 that falls 2 years prior to the year in which the payment adjustment is applied.

(i) For the 2015 and 2016 PQRS payment adjustments only, an alternative 6-month reporting period, from July 1-December 31 that fall 2 years prior to the year in which the payment adjustment is applied, is also available.

(ii) Secondary Reporting Period for the 2017 PQRS payment adjustment for certain eligible professionals or group practices- Individual eligible professionals or group practices, who bill under the TIN of an ACO participant if the ACO failed to report data on behalf of such EPs or group practices during the previously established reporting period for the 2017 PQRS payment adjustment, may separately report during a secondary reporting period for the 2017 PQRS payment adjustment. The secondary reporting period for the 2017 PQRS payment adjustment for the affected individual eligible professionals or group practices is January 1, 2016 through December 31, 2016.

(2) Reporting mechanisms for individual eligible professionals. An individual eligible professional participating in the PQRS must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Claims. Reporting PQRS quality measures or PQRS measures groups to CMS, by no later than 2 months after the end of the applicable reporting period, on the eligible professional's Medicare Part B claims for covered professional services furnished during the applicable reporting period.

(A) If an eligible professional re-submits a Medicare Part B claim for reprocessing, the eligible professional may not attach a G-code at that time for reporting on individual PQRS measures or measures groups.

(B) [Reserved]

(ii) Registry. Reporting PQRS quality measures or PQRS measures groups to a qualified registry in the form and manner and by the deadline specified by the qualified registry selected by the eligible professional. The selected registry must submit information, as required by CMS, for covered professional services furnished by the eligible professional during the applicable reporting period to CMS on the eligible professional's behalf.

(iii) Direct EHR product. Reporting PQRS quality measures to CMS by extracting clinical data using a secure data submission method, as required by CMS, from a direct EHR product by the deadline specified by CMS for covered professional services furnished by the eligible professional during the applicable reporting period.

(iv) EHR data submission vendor. Reporting PQRS quality measures to CMS by extracting clinical data using a secure data submission method, as required by CMS, from an EHR data submission vendor product by the deadline specified by CMS for covered professional services furnished by the eligible professional during the applicable reporting period.

(v) Administrative claims. For 2015, reporting data on PQRS quality measures via administrative claims during the applicable reporting period. Eligible professionals that are administrative claims reporters must meet the following requirement for the payment adjustment:

(A) Elect to participate in the PQRS using the administrative claims reporting option.

(B) Reporting Medicare Part B claims data for CMS to determine whether the eligible professional has performed services applicable to certain individual PQRS quality measures.

(3) Satisfactory reporting criteria for individual eligible professionals for the 2016 PQRS payment adjustment. An individual eligible professional who wishes to meet the criteria for satisfactory reporting for the 2016 PQRS payment adjustment must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Via Claims.

(A) For the 12-month 2016 PQRS payment adjustment reporting period -

(1)

(i) Report at least 9 measures covering at least 3 National Quality Strategy domains and report each measure for at least 50 percent of the Medicare Part B FFS patients seen during the reporting period to which the measure applies; or if less than 9 measures covering at least 3 NQS domains apply to the eligible professional, report 1-8 measures covering 1-3 National Quality Strategy domains, and report each measure for at least 50 percent of the Medicare Part B FFS patients seen during the reporting period to which the measure applies. For an eligible professional who reports fewer than 9 measures covering at least 3 NQS domains via the claims-based reporting mechanism, the eligible professional would be subject to the Measures Applicability Validation process, which would allow us to determine whether an eligible professional should have reported quality data codes for additional measures and/or covering additional National Quality Strategy domains; or

(ii) Report at least 3 measures covering at least 1 NQS domain, or, if less than 3 measures covering at least 1 NQS domain apply to the eligible professional, report 1-2 measures covering at least 1 NQS domain; and report each measure for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies.

(2) Measures with a 0 percent performance rate would not be counted.

(ii) Via Qualified Registry.

(A) For the 12-month 2016 PQRS payment adjustment reporting period -

(1)

(i) Report at least 9 measures covering at least 3 of the National Quality Strategy domains; or if less than 9 measures covering at least 3 NQS domains apply to the eligible professional, report 1 to 8 measures covering 1 to 3 National Quality Strategy domains for which there is Medicare patient data, and report each measure for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. For an eligible professional who reports fewer than 9 measures covering at least 3 NQS domains via the qualified registry-based reporting mechanism, the eligible professional would be subject to the Measures Applicability Validation process, which would allow us to determine whether an eligible professional should have reported on additional measures and/or measures covering additional National Quality Strategy domains; or

(ii) Report at least 3 measures covering at least 1 of the NQS domains; or if less than 3 measures covering at least 1 NQS domain apply to the eligible professional, report 1 to 2 measures covering 1 National Quality Strategy domain for which there is Medicare patient data, and report each measure for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. For an eligible professional who reports fewer than 3 measures covering 1 NQS domain via the registry-based reporting mechanism, the eligible professional would be subject to the Measures Applicability Validation process, which would allow us to determine whether an eligible professional should have reported on additional measures; or

(iii) Report at least 1 measures group and report each measures group for at least 20 patients, a majority of which much be Medicare Part B FFS patients.

(2) Measures with a 0 percent performance rate or measures groups containing a measure with a 0 percent performance rate will not be counted.

(B) For the 6-month 2016 PQRS payment adjustment reporting period -

(1) Report at least 1 measures group and report each measures group for at least 20 patients, a majority of which much be Medicare Part B FFS patients. Measures groups containing a measure with a 0 percent performance rate will not be counted.

(iii) Via EHR Direct Product. For the 12-month 2016 PQRS payment adjustment reporting period, report 9 measures covering at least 3 of the National Quality Strategy domains. If an eligible professional's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the eligible professional must report the measures for which there is Medicare patient data. An eligible professional must report on at least 1 measure for which there is Medicare patient data.

(iv) Via EHR Data Submission Vendor. For the 12-month 2016 PQRS payment adjustment reporting period, report 9 measures covering at least 3 of the National Quality Strategy domains. If an eligible professional's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the eligible professional must report the measures for which there is Medicare patient data. An eligible professional must report on at least 1 measure for which there is Medicare patient data.

(4) Satisfactory Reporting Criteria for Individual Eligible Professionals for the 2017 PQRS Payment Adjustment. An individual eligible professional who wishes to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Via Claims.

(A) For the 12-month 2017 PQRS payment adjustment reporting period -

(1)

(i) Report at least 9 measures, covering at least 3 of the NQS domains and report each measure for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Of the 9 measures reported, if the eligible professional sees at least 1 Medicare patient in a face-to-face encounter, the eligible professional must report on at least 1 measure contained in the cross-cutting measure set specified by CMS. If less than 9 measures apply to the eligible professional, report up to 8 measures and report each measure for at least 50 percent of the Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a 0 percent performance rate would not be counted.

(ii) [Reserved]

(ii) Via Qualified Registry.

(A) For the 12-month 2017 PQRS payment adjustment reporting period -

(1)

(i) Report at least 9 measures, covering at least 3 of the NQS domains and report each measure for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Of the 9 measures reported, if the eligible professional sees at least 1 Medicare patient in a face-to-face encounter, the eligible professional must report on at least 1 measure contained in the cross-cutting measure set specified by CMS. If less than 9 measures apply to the eligible professional, report up to 8 measures and report each measure for at least 50 percent of the Medicare Part B FFS patients seen during the reporting period to which the measure applies.

(ii) Report at least 1 measures group and report each measures group for at least 20 patients, a majority of which much be Medicare Part B FFS patients.

(2) Measures with a 0 percent performance rate or measures groups containing a measure with a 0 percent performance rate will not be counted.

(iii) Via EHR Direct Product. For the 12-month 2017 PQRS payment adjustment reporting period, report 9 measures covering at least 3 of the NQS domains. If an eligible professional's direct EHR product does not contain patient data for at least 9 measures covering at least 3 domains, then the eligible professional must report the measures for which there is Medicare patient data. An eligible professional must report on at least 1 measure for which there is Medicare patient data.

(iv) Via EHR Data Submission Vendor. For the 12-month 2017 PQRS payment adjustment reporting period, report 9 measures covering at least 3 of the NQS domains. If an eligible professional's EHR data submission vendor product does not contain patient data for at least 9 measures covering at least 3 domains, then the eligible professional must report the measures for which there is Medicare patient data. An eligible professional must report on at least 1 measure for which there is Medicare patient data.

(v) Paragraphs (j)(8)(ii), (iii), and (iv) of this section apply to individuals reporting using the secondary reporting period established under paragraph (j)(1)(ii) of this section for the 2017 PQRS payment adjustment.

(5) Reporting mechanisms for group practices. With the exception of a group practice who wishes to participate in the PQRS using the certified survey vendor mechanism, a group practice participating in the PQRS must report information on PQRS quality measures identified by CMS in one of the following reporting mechanisms:

(i) Web interface. For the 2015 payment adjustment and subsequent payment adjustments, reporting PQRS quality measures to CMS using a CMS web interface in the form and manner and by the deadline specified by CMS.

(ii) Registry. For the 2015 subsequent adjustment and subsequent payment adjustments, reporting on PQRS quality measures to a qualified registry in the form and manner and by the deadline specified by the qualified registry selected by the eligible professional. The selected registry will submit information, as required by CMS, for covered professional services furnished by the eligible professional during the applicable reporting period to CMS on the eligible professional's behalf.

(iii) Direct EHR product. For the 2016 subsequent adjustment and subsequent payment adjustments, reporting PQRS quality measures to CMS by extracting clinical data using a secure data submission method, as required by CMS, from a direct EHR product by the deadline specified by CMS for covered professional services furnished by the eligible professional during the applicable reporting period.

(iv) EHR data submission vendor. For the 2016 subsequent adjustment and subsequent payment adjustments, reporting PQRS quality measures to CMS by extracting clinical data using a secure data submission method, as required by CMS, from an EHR data submission vendor product by the deadline specified by CMS for covered professional services furnished by the group practice during the applicable reporting period.

(v) Administrative claims. For 2015, reporting data on PQRS quality measures via administrative claims during the applicable reporting period. Group practices that are administrative claims reporters must meet the following requirement for the payment adjustment:

(A) Elect to participate in the PQRS using the administrative claims reporting option.

(B) Reporting Medicare Part B claims data for CMS to determine whether the group practice has performed services applicable to certain individual PQRS quality measures.

(vi) Certified Survey Vendors. For 2016 and subsequent years, reporting CAHPS for PQRS survey measures to CMS using a vendor that is certified by CMS for a particular program year to transmit survey measures data to CMS. Group practices that elect this reporting mechanism must select an additional group practice reporting mechanism in order to meet the criteria for satisfactory reporting for the payment adjustment.

(6) Satisfactory reporting criteria for group practices for the 2016 PQRS payment adjustment. A group practice who wishes to meet the criteria for satisfactory reporting for the 2016 PQRS payment adjustment must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Via the GPRO web interface.

(A) For the 12-month 2016 PQRS payment adjustment reporting period, for a group practice of 25 to 99 eligible professionals, report on all measures included in the web interface and populate data fields for the first 218 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 218, then report on 100 percent of assigned beneficiaries.

(B) For the 12-month 2016 PQRS payment adjustment reporting period, for a group practice of 100 or more eligible professionals, report on all measures included in the Web interface and populate data fields for the first 411 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 411, then report on 100 percent of assigned beneficiaries. In addition, the group practice must also report all CAHPS for PQRS survey measures via certified survey vendor.

(ii) Via Qualified Registry.

(A) For the 12-month 2016 PQRS payment adjustment reporting period, for a group practice of 2 or more eligible professionals -

(1) Report at least 9 measures, covering at least 3 of the National Quality Strategy domains and report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies; or If less than 9 measures covering at least 3 NQS domains apply to the eligible professional, then the group practices must report 1-8 measures for which there is Medicare patient data and report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies. For a group practice who reports fewer than 9 measures covering at least 3 NQS domains via the registry-based reporting mechanism, the group practice would be subject to the Measures Applicability Validation process, which would allow us to determine whether a group practice should have reported on additional measures. Measures with a 0 percent performance rate would not be counted; or

(2) Report at least 3 measures, covering at least 1 of the National Quality Strategy domains and report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies; or if less than 3 measures covering at least 1 NQS domain apply to the group practice, then the group practice must report 1-2 measures for which there is Medicare patient data and report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies. For a group practice who reports fewer than 3 measures covering at least 1 NQS domain via the registry-based reporting mechanism, the group practice would be subject to the Measures Applicability Validation process, which would allow us to determine whether a group practice should have reported on additional measures. Measures with a 0 percent performance rate would not be counted.

(iii) Via EHR Direct Product. For a group practice of 2 or more eligible professionals, for the 12-month 2016 PQRS payment adjustment reporting period, report 9 measures covering at least 3 of the National Quality Strategy domains. If a group practice's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is Medicare patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.

(iv) Via EHR Data Submission Vendor. For a group practice of 2 or more eligible professionals, for the 12-month 2016 PQRS payment adjustment reporting period, report 9 measures covering at least 3 of the National Quality Strategy domains. If a group practice's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is Medicare patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.

(v) Via a Certified survey vendor, in addition to the GPRO Web interface, qualified registry, direct EHR product, or EHR data submission vendor reporting mechanisms. For a group practice of 25 or more eligible professionals, for the 12-month 2016 PQRS payment adjustment reporting period, report all CAHPS for PQRS survey measures via a CMS-certified survey vendor and report at least 6 measures covering at least 2 of the National Quality Strategy domains using a qualified registry, direct EHR product, EHR data submission vendor, or GPRO Web interface.

(7) Satisfactory reporting criteria for group practices for the 2017 PQRS payment adjustment. A group practice who wishes to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Via the GPRO web interface. For the 12-month 2017 PQRS payment adjustment reporting period, for a group practice of 25 to 99 eligible professionals, report on all measures included in the web interface and populate data fields for the first 248 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 248, then report on 100 percent of assigned beneficiaries. A group practice must report on at least 1 measure for which there is Medicare patient data.

(ii) Via Qualified Registry. For a group practice of 2 to 99 eligible professionals, for the 12-month 2017 PQRS payment adjustment reporting period, report at least 9 measures, covering at least 3 of the NQS domains and report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies; or if less than 9 measures covering at least 3 NQS domains apply to the eligible professional, then the group practice must report up to 8 measures for which there is Medicare patient data and report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Of the measures reported, if any eligible professional in the group practice sees at least 1 Medicare patient in a face-to-face encounter, the group practice must report on at least 1 measure contained in the cross-cutting measure set specified by CMS. Measures with a 0 percent performance rate would not be counted; or

(iii) Via EHR Direct Product. For a group practice of 2 to 99 eligible professionals, for the 12-month 2017 PQRS payment adjustment reporting period, report 9 measures covering at least 3 of the NQS domains. If a group practice's direct EHR product does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is Medicare patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.

(iv) Via EHR Data Submission Vendor. For a group practice of 2 to 99 eligible professionals, for the 12-month 2017 PQRS payment adjustment reporting period, report 9 measures covering at least 3 of the NQS domains. If a group practice's EHR data submission vendor product does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is Medicare patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.

(v) Via a Certified Survey Vendor in addition to a Qualified Registry. For a group practice of 2 or more eligible professionals, for the 12-month 2017 PQRS payment adjustment reporting period, report all CAHPS for PQRS survey measures via a CMS-certified survey vendor and report at least 6 additional measures covering at least 2 of the NQS domains using a qualified registry. If less than 6 measures apply to the group practice, the group practice must report up to 5 measures. Of the additional measures that must be reported in conjunction with reporting the CAHPS for PQRS survey measures, if any eligible professional in the group practice sees at least 1 Medicare patient in a face-to-face encounter, the group practice must report on at least 1 measure in the cross-cutting measure set specified by CMS.

(vi) Via a Certified Survey Vendor in addition a Direct EHR Product or EHR Data Submission Vendor. For a group practice of 2 or more eligible professionals, for the 12-month 2017 PQRS payment adjustment reporting period, report all CAHPS for PQRS survey measures via a CMS-certified survey vendor and report at least 6 additional measures, outside of CAHPS for PQRS, covering at least 2 of the NQS domains using the direct EHR product that is CEHRT or EHR data submission vendor product that is CEHRT. If less than 6 measures apply to the group practice, the group practice must report up to 5 measures. Of the additional measures that must be reported in conjunction with reporting the CAHPS for PQRS survey measures, the group practice must report on at least 1 measure for which there is Medicare patient data.

(vii) Via a Certified Survey Vendor in addition to the GPRO Web interface.

(A) For a group practice of 25 or more eligible professionals, for the 12-month 2017 PQRS payment adjustment reporting period, report all CAHPS for PQRS survey measures via a CMS-certified survey vendor and report on all measures included in the GPRO web interface; AND populate data fields for the first 248 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 248, then the group practice would report on 100 percent of assigned beneficiaries. A group practice must report on at least 1 measure for which there is Medicare patient data.

(B) [Reserved]

(viii) Paragraphs (j)(9)(ii), (iii), and (iv) of this section apply to group practices reporting using the secondary reporting period established under paragraph (j)(1)(ii) of this section for the 2017 PQRS payment adjustment.

(8) Satisfactory reporting criteria for individual eligible professionals for the 2018 PQRS payment adjustment . An individual eligible professional who wishes to meet the criteria for satisfactory reporting for the 2018 PQRS payment adjustment must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Via claims .

(A) For the 12-month 2018 PQRS payment adjustment reporting period -

(1)

(i) Report at least 6 measures and report each measure for at least 50 percent of the eligible professional's Medicare Part B Fee-for-Service patients seen during the reporting period to which the measure applies. If less than 6 measures apply to the eligible professional, the eligible professional must report on each measure that is applicable, and report each measure for at least 50 percent of the Medicare Part B Fee-for-Service patients seen during the reporting period to which the measure applies. Measures with a 0 percent performance rate will not be counted (unless they are inverse measures where a lower rate reflects better performance).

(ii) [Reserved]

(2) [Reserved]

(B) [Reserved]

(ii) Via qualified registry .

(A) For the 12-month 2018 PQRS payment adjustment reporting period -

(1)

(i) Report at least 6 measures and report each measure for at least 50 percent of the eligible professional's Medicare Part B Fee-for-Service patients seen during the reporting period to which the measure applies. If less than 6 measures apply to the eligible professional, the eligible professional must report on each measure that is applicable, and report each measure for at least 50 percent of the Medicare Part B Fee-for-Service patients seen during the reporting period to which the measure applies.

(ii) Report at least 1 measures group and report each measures group for at least 20 patients, a majority of which must be Medicare Part B FFS patients.

(2) Measures with a 0 percent performance rate or measures groups containing a measure with a 0 percent performance rate will not be counted (unless they are inverse measures where a lower rate reflects better performance).

(B) [Reserved]

(iii) Via EHR direct product. For the 12-month 2018 PQRS payment adjustment reporting period, report 6 measures. If an eligible professional's direct EHR product or EHR data submission vendor product does not contain patient data for at least 6 measures, then the eligible professional must report all of the measures for which there is Medicare patient data. An eligible professional must report on at least 1 measure for which there is Medicare patient data.

(iv) Via EHR data submission vendor. For the 12-month 2018 PQRS payment adjustment reporting period, report at least 6 measures. If an eligible professional's direct EHR product or EHR data submission vendor product does not contain patient data for at least 6 measures, then the eligible professional must report all of the measures for which there is Medicare patient data. An eligible professional must report on at least 1 measure for which there is Medicare patient data.

(9) Satisfactory reporting criteria for group practices for the 2018 PQRS payment adjustment . A group practice who wishes to meet the criteria for satisfactory reporting for the 2018 PQRS payment adjustment must report information on PQRS quality measures identified by CMS in one of the following manners:

(i) Via the GPRO web interface . For the 12-month 2018 PQRS payment adjustment reporting period, for a group practice of 25 or more eligible professionals, report on all measures included in the web interface; AND populate data fields for the first 248 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 248, then the group practice must report on 100 percent of assigned beneficiaries. In some instances, the sampling methodology will not be able to assign at least 248 patients on which a group practice may report, particularly those group practices on the smaller end of the range of 25-99 eligible professionals. If the group practice is assigned less than 248 Medicare beneficiaries, then the group practice must report on 100 percent of its assigned beneficiaries. A group practice must report on at least 1 measure for which there is Medicare patient data.

(ii) Via qualified registry. For a group practice of 2 or more eligible professionals, for the 12-month 2018 PQRS payment adjustment reporting period, report at least 6 measures and report each measure for at least 50 percent of the group practice's Medicare Part B Fee-for-Service patients seen during the reporting period to which the measure applies. If less than 6 measures apply to the group practice, the group practice must report on each measure that is applicable, and report each measure for at least 50 percent of the Medicare Part B Fee-for-Service patients seen during the reporting period to which the measure applies. Measures with a 0 percent performance rate would not be counted (unless they are inverse measures where a lower rate reflects better performance).

(iii) Via EHR direct product. For a group practice of 2 or more eligible professionals, for the 12-month 2018 PQRS payment adjustment reporting period, report 6 measures. If the group practice's direct EHR product or EHR data submission vendor product does not contain patient data for at least 6 measures, then the group practice must report all of the measures for which there is Medicare patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.

(iv) Via EHR data submission vendor. For a group practice of 2 or more eligible professionals, for the 12-month 2018 PQRS payment adjustment reporting period, report 6 measures. If the group practice's direct EHR product or EHR data submission vendor product does not contain patient data for at least 6 measures, then the group practice must report all of the measures for which there is Medicare patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.

(v) Via a certified survey vendor in addition to a qualified registry. For a group practice of 2 or more eligible professionals that elects to report via a certified survey vendor in addition to a qualified registry for the 12-month 2018 PQRS payment adjustment reporting period, the group practice must have all CAHPS for PQRS survey measures reported on its behalf via a CMS-certified survey vendor. In addition, the group practice must report at least 3 additional measures using the qualified registry and report each measure for at least 50 percent of the group practice's Medicare Part B Fee-for-Service patients seen during the reporting period to which the measure applies. If less than 3 measures apply to the group practice, the group practice must report on each measure that is applicable, and report each measure for at least 50 percent of the Medicare Part B Fee-for-Service patients seen during the reporting period to which the measure applies. Measures with a 0 percent performance rate would not be counted (unless they are inverse measures where a lower rate reflects better performance).

(vi) Via a certified survey vendor in addition to a direct EHR product or EHR data submission vendor. For a group practice of 2 or more eligible professionals that elects to report via a certified survey vendor in addition to a direct EHR product or EHR data submission vendor for the 12-month 2018 PQRS payment adjustment reporting period, the group practice must have all CAHPS for PQRS survey measures reported on its behalf via a CMS-certified survey vendor. In addition, the group practice must report at least 3 additional measures using the direct EHR product or EHR data submission vendor product. If less than 3 measures apply to the group practice, the group practice must report all of the measures for which there is patient data. Of the additional 3 measures that must be reported in conjunction with reporting the CAHPS for PQRS survey measures, a group practice must report on at least 1 measure for which there is Medicare patient data.

(vii) Via a certified survey vendor in addition to the GPRO web interface .

(A) For a group practice of 25 or more eligible professionals, for the 12-month 2018 PQRS payment adjustment reporting period, the group practice must have all CAHPS for PQRS survey measures reported on its behalf via a CMS-certified survey vendor. In addition, the group practice must report on all measures included in the GPRO web interface; AND populate data fields for the first 248 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 248, then the group practice must report on 100 percent of assigned beneficiaries. A group practice will be required to report on at least 1 measure for which there is Medicare patient data.

(B) [Reserved]

(viii) If the CAHPS for PQRS survey is applicable to the practice, group practices comprised of 100 or more eligible professionals that register to participate in the GPRO may administer the CAHPS for PQRS survey, regardless of the GPRO reporting mechanism selected.

(k) Satisfactory participation requirements for the payment adjustments for individual eligible professionals and group practices. In order to satisfy the requirements for the PQRS payment adjustment for a particular program year through participation in a qualified clinical data registry, an individual eligible professional, as identified by a unique TIN/NPI combination, or group practice must meet the criteria for satisfactory participation as specified in paragraph (k)(3) of this section for such year, by reporting on quality measures identified by a qualified clinical data registry during a reporting period specified in paragraph (k)(1) of this section, using the reporting mechanism specified in paragraph (k)(2) of this section.

(1) Reporting period. For purposes of this paragraph, the reporting period is -

(i) The 12-month period from January 1 through December 31 that falls 2 years prior to the year in which the payment adjustment is applied.

(ii) [Reserved]

(2) Reporting mechanism . An individual eligible professional or group practice who wishes to meet the criteria for satisfactory participation in a qualified clinical data registry must use the qualified clinical data registry to report information on quality measures identified by the qualified clinical data registry.

(3) Satisfactory participation criteria for individual eligible professionals for the 2016 PQRS payment adjustment. Satisfactory participation criteria for individual eligible professionals for the 2016 PQRS payment adjustment. An individual eligible professional who wishes to meet the criteria for satisfactory participation in a qualified clinical data registry for the 2016 PQRS payment adjustment must report information on quality measures identified by the qualified clinical data registry in one of the following manners:

(i) For the 12-month 2016 PQRS payment adjustment reporting period -

(A) Report at least 9 measures available for reporting under a qualified clinical data registry covering at least 3 of the National Quality Strategy domains and report each measure for at least 50 percent of the eligible professional's patients; or

(B) Report at least 3 measures available for reporting under a qualified clinical data registry covering at least 1 of the National Quality Strategy domains and report each measure for at least 50 percent of the eligible professional's patients.

(4) Satisfactory participation criteria for individual eligible professionals for the 2017 PQRS payment adjustment. An individual eligible professional who wishes to meet the criteria for satisfactory participation in a QCDR for the 2017 PQRS payment adjustment must report information on quality measures identified by the QCDR in one of the following manner:

(i) For the 12-month 2017 PQRS payment adjustment reporting period, report at least 9 measures available for reporting under a QCDR covering at least 3 of the NQS domains, and report each measure for at least 50 percent of the eligible professional's patients. Of these measures, report on at least 2 outcome measures, or, if 2 outcomes measures are not available, report on at least 2 outcome measures and at least 1 of the following types of measures - resource use, patient experience of care, efficiency/appropriate use or patient safety.

(ii) Section 414.90(k)(5) applies to individuals and group practices reporting using the secondary reporting period established under paragraph (j)(1)(ii) of this section for the 2017 PQRS payment adjustment.

(5) Satisfactory participation criteria for individual eligible professionals and group practices for the 2018 PQRS payment adjustment . An individual eligible professional or group practice who wishes to meet the criteria for satisfactory participation in a QCDR for the 2018 PQRS payment adjustment must report information on quality measures identified by the QCDR in the following manner:

(i) Individual eligible professional. For the applicable 12-month reporting period, report at least 6 measures available for reporting under a QCDR and report each measure for at least 50 percent of the eligible professional's patients seen during the reporting period to which the measure applies. If less than 6 measures apply to the eligible professional, the eligible professional must report on each measure that is applicable, and report each measure for at least 50 percent of the eligible professional's patients.

(ii) Group practices. For the applicable 12-month reporting period, report at least 6 measures available for reporting under a QCDR and report each measure for at least 50 percent of the group practice's patients seen during the reporting period to which the measure applies. If less than 6 measures apply to the group practice, the group practice must report on each measure that is applicable, and report each measure for at least 50 percent of the group practice's patients. If a group practice reports the CAHPS for PQRS survey measures, apply reduced criteria as follows: 3 measures, as applicable.

(l) Requirements for group practices. Under the PQRS, a group practice must meet all of the following requirements:

(1) Meet the participation requirements specified by CMS for the PQRS group practice reporting option.

(2) Report measures in the form and manner specified by CMS.

(3) Meet other requirements for satisfactory reporting specified by CMS.

(4) Meet participation requirements.

(i) If an eligible professional, as identified by an individual NPI, has reassigned his or her Medicare billing rights to a group practice (as identified by the TIN) selected to participate in the PQRS group practice reporting option for a program year, then for that program year the eligible professional must participate in the PQRS via the group practice reporting option.

(ii) If, for the program year, the eligible professional participates in the PQRS as part of a group practice (as identified by the TIN) that is not selected to participate in the PQRS group practice reporting option for that program year, then the eligible professional may individually participate and qualify for a PQRS incentive by meeting the requirements specified in paragraph (g) of this section under that TIN.

(m) Informal review. Eligible professionals or group practices may seek an informal review of the determination that an eligible professional or group practices did not satisfactorily submit data on quality measures under the PQRS, or, for individual eligible professionals, in lieu of satisfactory reporting, did not satisfactorily participate in a qualified clinical data registry.

(1) To request an informal review for reporting periods that occur prior to 2014, an eligible professional or group practice must submit a request to CMS within 90 days of the release of the feedback reports. To request an informal review for reporting periods that occur in 2014 and subsequent years, an eligible professional or group practice must submit a request to CMS within 60 days of the release of the feedback reports. The request must be submitted in writing and summarize the concern(s) and reasons for requesting an informal review and may also include information to assist in the review.

(2) CMS will provide a written response within 90 days of the receipt of the original request.

(i) All decisions based on the informal review will be final.

(ii) There will be no further review or appeal.

(3) If, during the informal review process, CMS finds errors in data that was submitted by a third-party vendor on behalf of an eligible professional or group practice using either the qualified registry, EHR data submission vendor, or QCDR reporting mechanisms, CMS may allow for the resubmission of data to correct these errors.

(i) CMS will not allow resubmission of data submitted via claims, direct EHR, and the GPRO web interface reporting mechanisms.

(ii) CMS will only allow resubmission of data that was already previously submitted to CMS.

(iii) CMS will only accept data that was previously submitted for the reporting periods for which the corresponding informal review period applies.

(n) Limitations on review. Except as specified in paragraph (i) of this section, there is no administrative or judicial review under section 1869 or 1879 of the Act, or otherwise of -

(1) The determination of measures applicable to services furnished by eligible professionals under the PQRS;

(2) The determination of satisfactory reporting; and

(3) The determination of any Physician Quality Reporting System incentive payment and the PQRS payment adjustment.

(o) Public reporting of an eligible professional's or group practice's PQRS data. For each program year, CMS will post on a public Web site, in an easily understandable format, a list of the names of eligible professionals (or in the case of reporting under paragraph (g) of this section, group practices) who satisfactorily submitted PQRS quality measures.

[78 FR 74812, Dec. 10, 2013, as amended at 79 FR 68003, Nov. 13, 2014; 81 FR 34913, June 1, 2016; 81 FR 77537, Nov. 4, 2016; 81 FR 80554, Nov. 15, 2016; 82 FR 53362, Nov. 15, 2017]

§ 414.92 Electronic Prescribing Incentive Program.

(a) Basis and scope. This section implements the following provisions of the Act:

(1) Section 1848(a) - Payment Based on Fee Schedule.

(2) Section 1848(m) - Incentive Payments for Quality Reporting.

(b) Definitions. As used in this section, unless otherwise indicated -

Certified electronic health record technology means an electronic health record vendor's product and version as described in 45 CFR 170.102.

Covered professional services means services for which payment is made under, or is based on, the Medicare physician fee schedule which are furnished by an eligible professional.

Electronic Prescribing Incentive Program means the incentive payment program established under section 1848(m) of the Act for the adoption and use of electronic prescribing technology by eligible professionals.

Eligible professional means any of the following healthcare professionals who have prescribing authority:

(i) A physician.

(ii) A practitioner described in section 1842(b)(18)(C) of the Act.

(iii) A physical or occupational therapist or a qualified speech-language pathologist.

(iv) A qualified audiologist (as defined in section 1861(ll)(3)(B) of the Act).

Group practice means a group practice that is -

(i)(A) Defined at § 414.90(b), that is participating in the Physician Quality Reporting System; or

(B) In a Medicare-approved demonstration project or other Medicare program, under which Physician Quality Reporting System requirements and incentives have been incorporated; and

(ii) Has indicated its desire to participate in the electronic prescribing group practice option.

Qualified electronic health record product means an electronic health record product and version that, with respect to a particular program year, is designated by CMS as a qualified electronic health record product for the purpose of the Physician Quality Reporting System (as described in § 414.90) and the product's vendor has indicated a desire to have the product qualified for purposes of the product's users to submit information related to the electronic prescribing measure.

Qualified registry means a medical registry or a Maintenance of Certification Program operated by a specialty body of the American Board of Medical Specialties that, with respect to a particular program year, is designated by CMS as a qualified registry for the purpose of the Physician Quality Reporting System (as described in § 414.90) and that has indicated its desire to be qualified to submit the electronic prescribing measure on behalf of eligible professionals for the purposes of the Electronic Prescribing Incentive Program.

(c) Incentive payments and payment adjustments.

(1) Incentive payments. Subject to paragraph (c)(3) of this section, with respect to covered professional services furnished during a reporting period by an eligible professional, if the eligible professional is a successful electronic prescriber for such reporting period, in addition to the amount otherwise paid under section 1848 of the Act, there also must be paid to the eligible professional (or to an employer or facility in the cases described in section 1842(b)(6)(A) of the Act) or, in the case of a group practice under paragraph (e) of this section, to the group practice, from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 of the Act an amount equal to the applicable electronic prescribing percent (as specified in paragraph (c)(1)(ii) of this section) of the eligible professional's (or, in the case of a group practice under paragraph (e) of this section, the group practice's) total estimated allowed charges for all covered professional services furnished by the eligible professional (or, in the case of a group practice under paragraph (e) of this section, by the group practice) during the applicable reporting period.

(i) For purposes of paragraph (c)(1) of this section,

(A) The eligible professional's (or, in the case of a group practice under paragraph (e) of this section, the group practice's) total estimated allowed charges for covered professional services furnished during a reporting period are determined based on claims processed in the National Claims History (NCH) no later than 2 months after the end of the applicable reporting period;

(B) In the case of an eligible professional who furnishes covered professional services in more than one practice, incentive payments are separately determined for each practice based on claims submitted for the eligible professional for each practice;

(C) Incentive payments earned by an eligible professional (or in the case of a group practice under paragraph (e) of this section, by a group practice) for a particular program year will be paid as a single consolidated payment to the TIN holder of record.

(ii) Applicable electronic prescribing percent. The applicable electronic prescribing percent is as follows:

(A) For the 2011 and 2012 program years, 1.0 percent.

(B) For the 2013 program year, 0.5 percent.

(iii) Limitation with respect to electronic health record (EHR) incentive payments. The provisions of this paragraph do not apply to an eligible professional (or, in the case of a group practice under paragraph (e) of this section, a group practice) if, for the electronic health record reporting period the eligible professional (or group practice) receives an incentive payment under section 1848(o)(1)(A) of the Act with respect to a certified electronic health record technology (as defined in section 1848(o)(4) of the Act) that has the capability of electronic prescribing.

(2) Payment adjustment. Subject to paragraphs (c)(1)(ii) and (c)(3) of this section, with respect to covered professional services furnished by an eligible professional during 2012, 2013, or 2014, if the eligible professional (or in the case of a group practice under paragraph (e) of this section, the group practice) is not a successful electronic prescriber (as specified by CMS for purposes of the payment adjustment) for an applicable reporting period (as specified by CMS) the fee schedule amount for such services furnished by such professional (or group practice) during the program year (including the fee schedule amount for purposes of determining a payment based on such amount) is equal to the applicable percent (as specified in paragraph (c)(2)(i) of this section) of the fee schedule amount that would otherwise apply to such services under section 1848 of the Act.

(i) Applicable percent. The applicable percent is as follows:

(A) For 2012, 99 percent;

(B) For 2013, 98.5 percent; and

(C) For 2014, 98 percent.

(ii) Significant hardship exception. CMS may, on a case-by-case basis, exempt an eligible professional (or in the case of a group practice under paragraph (e) of this section, a group practice) from the application of the payment adjustment under paragraph (c)(2) of this section if, CMS determines, subject to annual renewal, that compliance with the requirement for being a successful electronic prescriber would result in a significant hardship. Eligible professionals (or, in the case of a group practice under paragraph (e) of this section, a group practice) may request consideration for a significant hardship exemption from a eRx payment adjustment if one of the following circumstances apply:

(A) From the 2012 payment adjustments by meeting one of the following:

(1) The practice is located in a rural area without high speed internet access.

(2) The practice is located in an area without sufficient available pharmacies for electronic prescribing.

(3) Registration to participate in the Medicare or Medicaid EHR Incentive Program and adoption of Certified EHR Technology.

(4) Inability to electronically prescribe due to local, State or Federal law or regulation.

(5) Eligible professionals who achieve meaningful use during the respective 6 or 12-month payment adjustment reporting periods.

(6) Eligible professionals who have registered to participate in the EHR Incentive Program and adopted Certified EHR Technology prior to application of the respective payment adjustment.

(B) From the 2013 and 2014 payment adjustments by meeting one of the following:

(1) The eligible professional or group practice is located in a rural area without high speed internet access.

(2) The eligible professional or group practice is located in an area without sufficient available pharmacies for electronic prescribing.

(3) The eligible professional or group practice is unable to electronically prescribe due to local, State, or Federal law or regulation.

(4) The eligible professional or group practice has limited prescribing activity, as defined by an eligible professional generating fewer than 100 prescriptions during a 6-month reporting period.

(iii) Other limitations to the payment adjustment. An eligible professional (or in the case of a group practice under paragraph (b) of this section, a group practice) is exempt from the application of the payment adjustment under paragraph (c)(2) of this section if one of the following applies:

(A) The eligible professional is not an MD, DO, podiatrist, nurse practitioner, or physician assistant.

(B) The eligible professional does not have at least 100 cases containing an encounter code that falls within the denominator of the electronic prescribing measure for dates of service during the 6-month reporting period specified in paragraph (f)(1) of this section.

(3) Limitation with respect to electronic prescribing quality measures. The provisions of paragraphs (c)(1) and (c)(2) of this section do not apply to an eligible professional (or, in the case of a group practice under paragraph (e) of this section, a group practice) if for the reporting period the allowed charges under section 1848 of the Act for all covered professional services furnished by the eligible professional (or group, as applicable) for the codes to which the electronic prescribing measure applies are less than 10 percent of the total of the allowed charges under section 1848 of the Act for all such covered professional services furnished by the eligible professional (or the group practice, as applicable).

(d) Requirements for individual eligible professionals to qualify to receive an incentive payment. In order to be considered a successful electronic prescriber and qualify to earn an electronic prescribing incentive payment (subject to paragraph (c)(3) of this section), an individual eligible professional, as identified by a unique TIN/NPI combination, must meet the criteria for being a successful electronic prescriber under section 1848(m)(3)(B) of the Act and as specified by CMS during the reporting period specified in paragraph (d)(1) of this section and using one of the reporting mechanisms specified in paragraph (d)(2) of this section. Although an eligible professional may attempt to qualify for the electronic prescribing incentive payment using more than one reporting mechanism (as specified in paragraph (d)(2) of this section), the eligible professional will receive only one electronic prescribing incentive payment per TIN/NPI combination for a program year.

(1) Reporting period. For purposes of this paragraph, the reporting period with respect to a program year is the entire calendar year.

(2) Reporting mechanisms. An eligible professional who wishes to participate in the Electronic Prescribing Incentive Program must report information on the electronic prescribing measure identified by CMS to -

(i) CMS, by no later than 2 months after the end of the applicable reporting period, on the eligible professional's Medicare Part B claims for covered professional services furnished by the eligible professional during the reporting period specified in paragraph (d)(1) of this section;

(ii) A qualified registry (as defined in paragraph (b) of this section) in the form and manner and by the deadline specified by the qualified registry selected by the eligible professional. The selected qualified registry will submit information, as required by CMS, for covered professional services furnished by the eligible professional during the reporting period specified in paragraph (d)(1) of this section to CMS on the eligible professional's behalf; or

(iii) CMS by extracting clinical data using a secure data submission method, as required by CMS, from a qualified electronic health record product (as defined in paragraph (b) of this section) by the deadline specified by CMS for covered professional services furnished by the eligible professional during the reporting period specified in paragraph (d)(1) of this section. Prior to actual data submission for a given program year and by a date specified by CMS, the eligible professional must submit a test file containing real or dummy clinical quality data extracted from the qualified electronic health record product selected by the eligible professional using a secure data submission method, as required by CMS.

(e) Requirements for group practices to qualify to receive an incentive payment.

(1) A group practice (as defined in paragraph (b) of this section) will be treated as a successful electronic prescriber for covered professional services for a reporting period if the group practice meets the criteria for successful electronic prescriber specified by CMS in the form and manner and at the time specified by CMS.

(2) No double payments. Payments to a group practice under this paragraph must be in lieu of the payments that would otherwise be made under the Electronic Prescribing Incentive Program to eligible professionals in the group practice for being a successful electronic prescriber.

(i) If an eligible professional, as identified by an individual NPI, has reassigned his or her Medicare billing rights to a TIN selected to participate in the electronic prescribing group practice reporting option for a program year, then for that program year the eligible professional must participate in the Electronic Prescribing Incentive Program via the group practice reporting option. For any program year in which the TIN is selected to participate in the Electronic Prescribing Incentive Program group practice reporting option, the eligible professional cannot individually qualify for an electronic prescribing incentive payment by meeting the requirements specified in paragraph (d) of this section.

(ii) If, for the program year, the eligible professional participates in the Electronic Prescribing Incentive Program under a TIN that is not selected to participate in the Electronic Prescribing Incentive Program group practice reporting option for that program year, then the eligible professional may individually qualify for an electronic prescribing incentive by meeting the requirements specified in paragraph (d) of this section under that TIN.

(f) Requirements for individual eligible professionals and group practices for the payment adjustment. In order to be considered a successful electronic prescriber for the electronic prescribing payment adjustment, an individual eligible professional (or, in the case of a group practice under paragraph (b) of this section, a group practice), as identified by a unique TIN/NPI combination, must meet the criteria for being a successful electronic prescriber specified by CMS, in the form and manner specified in paragraph (f)(2) of this section, and during the reporting period specified in paragraph (f)(1) of this section.

(1) Reporting periods.

(i) For purposes of this paragraph (f), the reporting period for the 2013 payment adjustment is either of the following:

(A) The 12-month period from January 1, 2011 through December 31, 2011.

(B) The 6-month period from January 1, 2012 through June 30, 2012.

(ii) For purposes of this paragraph (f), the reporting period for the 2014 payment adjustment is either of the following:

(A) The 12-month period from January 1, 2012 through December 31, 2012.

(B) The 6-month period from January 1, 2013 through June 30, 2013.

(2) Reporting mechanisms. An eligible professional (or, in the case of a group practice under paragraph (e) of this section, a group practice) who wishes to participate in the Electronic Prescribing Incentive Program must report information on the electronic prescribing measure identified by CMS to one of the following:

(i) For the 6- and 12-month reporting periods under paragraph (f)(1) of this section, CMS, by no later than 2 months after the end of the applicable 12-month reporting period or by no later than 1 month after the end of the applicable 6-month reporting period, on the eligible professional's Medicare Part B claims for covered professional services furnished by the eligible professional during the reporting period specified in paragraph (f)(1) of this section.

(A) If an eligible professional re-submits a Medicare Part B claim for reprocessing, the eligible professional may not attach a G-code at that time for reporting on the electronic prescribing measure.

(B) [Reserved]

(ii) For the 12-month reporting period under paragraph (f)(1) of this section, a qualified registry (as defined in paragraph (b) of this section) in the form and manner and by the deadline specified by the qualified registry selected by the eligible professional. The selected qualified registry submits information, as required by CMS, for covered professional services furnished by the eligible professional during the reporting period specified in paragraph (f)(1) of this section to CMS on the eligible professional's behalf.

(iii) For the 12-month reporting period under paragraph (f)(1) of this section, CMS by extracting clinical data using a secure data submission method, as required by CMS, from a qualified electronic health record product (as defined in paragraph (b) of this section) by the deadline specified by CMS for covered professional services furnished by the eligible professional during the reporting period specified in paragraph (f)(1) of this section. Prior to actual data submission for a given program year and by a date specified by CMS, the eligible professional must submit a test file containing dummy clinical quality data extracted from the qualified electronic health record product selected by the eligible professional using a secure data submission method, as required by CMS.

(g) Informal review. Eligible professionals (or in the case of reporting under paragraph (e) of this section, group practices) may seek an informal review of the determination that an eligible professional (or in the case of reporting under paragraph (e) of this section, group practices) did not meet the requirements for the 2012 and 2013 incentives or the 2013 and 2014 payment adjustments.

(1) To request an informal review for the 2012 and 2013 incentives, an eligible professional or group practice must submit a request to CMS via email within 90 days of the release of the feedback reports. The request must be submitted in writing and summarize the concern(s) and reasons for requesting an informal review and may also include information to assist in the review.

(2) To request an informal review for the 2013 and 2014 payment adjustments, an eligible professional or group practices must submit a request to CMS via email by February 28 of the year in which the eligible professional is receiving the applicable payment adjustment. The request must be submitted in writing and summarize the concern(s) and reasons for requesting an informal review and may also include information to assist in the review.

(3) CMS will provide a written response of CMS' determination.

(i) All decisions based on the informal review will be final.

(ii) There will be no further review or appeal.

(h) Public reporting of an eligible professional's or group practice's Electronic Prescribing Incentive Program data. For each program year, CMS will post on a public Web site, in an easily understandable format, a list of the names of eligible professionals (or in the case of reporting under paragraph (e) of this section, group practices) who are successful electronic prescribers.

[75 FR 73620, Nov. 29, 2010, as amended at 76 FR 54968, Sept. 6, 2011; 76 FR 73472, Nov. 28, 2011; 77 FR 69368, Nov. 16, 2012; 80 FR 71379, Nov. 16, 2015]

§ 414.94 Appropriate use criteria for advanced diagnostic imaging services.

(a) Basis and scope . This section implements the following provisions of the Act:

(1) Section 1834(q) - Recognizing Appropriate Use Criteria for Certain Imaging Services.

(2) Section 1834(q)(1) - Program Established.

(3) Section 1834(q)(2) - Establishment of Applicable Appropriate Use Criteria.

(b) Definitions. As used in this section unless otherwise indicated -

Advanced diagnostic imaging service means an imaging service as defined in section 1834(e)(1)(B) of the Act.

Applicable imaging service means an advanced diagnostic imaging service (as defined in section 1834(e)(1)(B) of the Act) for which the Secretary determines -

(i) One or more applicable appropriate use criteria apply;

(ii) There are one or more qualified clinical decision support mechanisms listed; and

(iii) One or more of such mechanisms is available free of charge.

Applicable payment system means the following:

(i) The physician fee schedule established under section 1848(b) of the Act;

(ii) The prospective payment system for hospital outpatient department services under section 1833(t) of the Act; and

(iii) The ambulatory surgical center payment systems under section 1833(i) of the Act.

Applicable setting means a physician's office, a hospital outpatient department (including an emergency department), an ambulatory surgical center, an independent diagnostic testing facility, and any other provider-led outpatient setting determined appropriate by the Secretary.

Appropriate use criteria (AUC) means criteria only developed or endorsed by national professional medical specialty societies or other provider-led entities, to assist ordering professionals and furnishing professionals in making the most appropriate treatment decision for a specific clinical condition for an individual. To the extent feasible, such criteria must be evidence-based. An AUC set is a collection of individual appropriate use criteria. An individual criterion is information presented in a manner that links: a specific clinical condition or presentation; one or more services; and, an assessment of the appropriateness of the service(s).

Clinical decision support mechanism (CDSM) means the following: an interactive, electronic tool for use by clinicians that communicates AUC information to the user and assists them in making the most appropriate treatment decision for a patient's specific clinical condition. Tools may be modules within or available through certified EHR technology (as defined in section 1848(o)(4)) of the Act or private sector mechanisms independent from certified EHR technology or established by the Secretary.

Furnishing professional means a physician (as defined in section 1861(r) of the Act) or a practitioner described in section 1842(b)(18)(C) of the Act who furnishes an applicable imaging service.

Ordering professional means a physician (as defined in section 1861(r) of the Act) or a practitioner described in section 1842(b)(18)(C) of the Act who orders an applicable imaging service.

Priority clinical areas means clinical conditions, diseases or symptom complexes and associated advanced diagnostic imaging services identified by CMS through annual rulemaking and in consultation with stakeholders which may be used in the determination of outlier ordering professionals.

Provider-led entity (PLE) means a national professional medical specialty society or other organization that is comprised primarily of providers or practitioners who, either within the organization or outside of the organization, predominantly provide direct patient care.

Specified applicable appropriate use criteria means any individual appropriate use criterion or AUC set developed, modified or endorsed by a qualified PLE.

(c) Qualified provider-led entity . To be qualified by CMS, a PLE must adhere to the evidence-based processes described in paragraph (c)(1) of this section when developing or modifying AUC. A qualified PLE may develop AUC, modify AUC developed by another qualified PLE, or endorse AUC developed by other qualified PLEs.

(1) Requirements for qualified PLEs developing or modifying AUC . A PLE must perform all of the following when developing or modifying AUC:

(i) Utilize an evidentiary review process when developing or modifying AUC that includes:

(A) A systematic literature review of the clinical topic and relevant imaging studies; and

(B) An assessment of the evidence using a formal, published and widely recognized methodology for grading evidence. Consideration of relevant published consensus statements by professional medical specialty societies must be part of the evidence assessment.

(ii) Utilize at least one multidisciplinary team with autonomous governance, decision-making and accountability for developing or modifying AUC. At a minimum the team must be comprised of seven members including at least one practicing physician with expertise in the clinical topic related to the appropriate use criterion being developed or modified, at least one practicing physician with expertise in the imaging studies related to the appropriate use criterion, at least one primary care physician or practitioner as described in sections 1833(u)(6), 1833(x)(2)(A)(i)(I), and 1833(x)(2)(A)(i)(II) of the Act, at least one expert in statistical analysis and at least one expert in clinical trial design. A given team member may be the team's expert in more than one domain.

(iii) Utilize a publicly transparent process for identifying potential conflicts of interest and for resolving conflicts of interest of members on the multidisciplinary team, the PLE and any other party participating in AUC development or modification, to include recusal or exclusion of individuals as appropriate. The PLE must document the following information and make it available in timely fashion to a public request, for a period of not less than 5 years after the most recent published update of the relevant AUC:

(A) Direct or indirect financial relationships that exist between individuals or the spouse or minor child of individuals who have substantively participated in the development of AUC and companies or organizations including the PLE and any other party participating in AUC development or modification that may financially benefit from the AUC. These financial relationships may include, for example, compensation arrangements such as salary, grant, speaking or consulting fees, contract, or collaboration agreements.

(B) Ownership or investment interests between individuals or the spouse or minor child of individuals who have substantively participated in the development of AUC and companies or organizations including the PLE or any other party participating in AUC development or modification that may financially benefit from the AUC.

(iv) Publish each individual criterion on the PLE's Web site and include an identifying title, authors (at a minimum, all members of the multidisciplinary AUC development team must be listed as authors), and key references used to establish the evidence.

(v) Identify each appropriate use criterion or AUC subset that are relevant to a priority clinical area with a statement on the PLE's Web site. To be identified as being relevant to a priority clinical area, the criterion or AUC subset must reasonably address the entire clinical scope of the corresponding priority clinical area.

(vi) Identify key points in an individual criterion as evidence-based or consensus-based, and grade such key points in terms of strength of evidence using a formal, published and widely recognized methodology.

(vii) Utilize a transparent process for the timely and continual updating of each criterion. Each criterion must be reviewed and, when appropriate, updated at least annually.

(viii) Publicly post the process for developing or modifying the AUC on the PLE's Web site.

(ix) Disclose parties external to the PLE when such parties have involvement in the AUC development process.

(2) Process to identify qualifying PLEs . PLEs must meet all of the following criteria:

(i) PLEs must submit an application to CMS for review that documents adherence to each of the AUC development requirements outlined in paragraph (c)(1) of this section;

(ii) Applications will be accepted by CMS only from PLEs that meet the definition of PLE in paragraph (b) of this section;

(iii) Applications must be received by CMS annually by January 1;

(iv) All approved qualified PLEs in each year will be included on the list of qualified PLEs posted to the CMS Web site by June 30 of that year; and

(v) Approved PLEs are qualified for a period of 5 years.

(vi) Qualified PLEs are required to re-apply. The application must be received by CMS by January 1 of the 5th year after the PLE's most recent approval date.

(d) Endorsement . Qualified PLEs may endorse the AUC set or individual criteria of other qualified PLEs, under agreement by the respective parties, in order to enhance an AUC set.

(e) Identifying priority clinical areas .

(1) CMS identifies priority clinical areas through annual rulemaking and in consultation with stakeholders.

(2) CMS will consider incidence and prevalence of disease, the volume and variability of use of particular imaging services, and strength of evidence supporting particular imaging services. We will also consider applicability of the clinical area to a variety of care settings and to the Medicare population.

(3) The Medicare Evidence Development & Coverage Advisory Committee (MEDCAC) may make recommendations to CMS.

(4) Priority clinical areas will be used by CMS to identify outlier ordering professionals (section 1834(q)(5) of the Act).

(5) Priority clinical areas include the following:

(i) Coronary artery disease (suspected or diagnosed).

(ii) Suspected pulmonary embolism.

(iii) Headache (traumatic and non-traumatic).

(iv) Hip pain.

(v) Low back pain.

(vi) Shoulder pain (to include suspected rotator cuff injury).

(vii) Cancer of the lung (primary or metastatic, suspected or diagnosed).

(viii) Cervical or neck pain.

(f) Identification of non-evidence-based AUC or other non-adherence to requirements for qualified PLEs .

(1) CMS will accept public comment to facilitate identification of AUC sets, subsets or individual criterion that are not evidence-based, giving priority to AUC associated with priority clinical areas and to AUC that conflict with one another. CMS may also independently identify AUC of concern.

(2) The evidentiary basis of the identified AUC may be reviewed by the MEDCAC.

(3) If a qualified PLE is found non-adherent to the requirements in paragraph (c) of this section, CMS may terminate its qualified status or may consider this information during re-qualification.

(g) Qualified clinical decision support mechanisms (CDSMs). Qualified CDSMs are those specified as such by CMS. Qualified CDSMs must adhere to the requirements described in paragraph (g)(1) of this section.

(1) Requirements for qualification of CDSMs. A CDSM must meet all of the following requirements:

(i) Make available specified applicable AUC and its related supporting documentation.

(ii) Identify the appropriate use criterion consulted if the CDSM makes available more than one criterion relevant to a consultation for a patient's specific clinical scenario.

(iii) Make available, at a minimum, specified applicable AUC that reasonably address common and important clinical scenarios within all priority clinical areas identified in paragraph (e)(5) of this section.

(iv) Be able to incorporate specified applicable AUC from more than one qualified PLE.

(v) Determines, for each consultation, the extent to which the applicable imaging service is consistent with specified applicable AUC.

(vi) Generate and provide a certification or documentation at the time of order that documents which qualified CDSM was consulted; the name and national provider identifier (NPI) of the ordering professional that consulted the CDSM; whether the service ordered would adhere to specified applicable AUC; whether the service ordered would not adhere to specified applicable AUC; or whether the specified applicable AUC consulted was not applicable to the service ordered. Certification or documentation must:

(A) Be generated each time an ordering professional consults a qualified CDSM.

(B) Include a unique consultation identifier generated by the CDSM.

(vii) Modifications to AUC within the CDSM must comply with the following timeline requirements:

(A) Make available updated AUC content within 12 months from the date the qualified PLE updates AUC.

(B) A protocol must be in place to expeditiously remove AUC determined by the qualified PLE to be potentially dangerous to patients and/or harmful if followed.

(C) Specified applicable AUC that reasonably address common and important clinical scenarios within any new priority clinical area must be made available for consultation through the qualified CDSM within 12 months of the priority clinical area being finalized by CMS.

(viii) Meet privacy and security standards under applicable provisions of law.

(ix) Provide to the ordering professional aggregate feedback regarding their consultations with specified applicable AUC in the form of an electronic report on at least an annual basis.

(x) Maintain electronic storage of clinical, administrative, and demographic information of each unique consultation for a minimum of 6 years.

(xi) Comply with modification(s) to any requirements under paragraph (g)(1) of this section made through rulemaking within 12 months of the effective date of the modification.

(xii) Notify ordering professionals upon de-qualification.

(2) Process to specify qualified CDSMs.

(i) The CDSM developer must submit an application to CMS for review that documents adherence to each of the CDSM requirements outlined in paragraph (g)(1) of this section;

(ii) Receipt of applications.

(A) Applications must be received by CMS annually by January 1 (except as stated in paragraph (g)(2)(ii)(B) of this section).

(B) For CDSM applicants seeking qualification in CY 2017, applications must be submitted by March 1, 2017; and

(1) Applications that document current adherence to qualified CDSM requirements will receive full qualification.

(2) Applications that do not document current adherence to each qualified CDSM requirement, but that document how and when each requirement is reasonably expected to be met, will receive preliminary qualification.

(3) A preliminary qualification period begins under paragraph (2) on June 30, 2017 and ends on the effective date of the requirements under sections 1834(q)(4)(A) and 1834(q)(4)(B) of the Act.

(4) A CDSM with preliminary qualification will become fully qualified by the end of the preliminary qualification period, or earlier if CMS determines that the CDSM has demonstrated adherence to each qualified CDSM requirement, unless we determine that the CDSM fails to meet all requirements (including those requirements they expected to meet in paragraph (g)(2)(ii)(B)(2) of this section) by the end of the preliminary qualification period.

(iii) All qualified CDSMs specified by CMS in each year will be included on the list of specified qualified CDSMs posted to the CMS Web site by June 30 of that year; and

(iv) Qualified CDSMs are specified by CMS as such for a period of 5 years.

(v) Qualified CDSMs are required to re-apply during the fifth year after they are specified by CMS in order to maintain their status as qualified CDSMs. This application must be received by CMS by January 1 of the 5th year after the most recent approval date.

(h) Identification of non-adherence to requirements for qualified CDSMs. (1) If a qualified CDSM is found non-adherent to the requirements in paragraph (g)(1) of this section, CMS may terminate its qualified status or may consider this information during requalification.

(i) Exceptions. Consulting and reporting requirements are not required for orders for applicable imaging services made by ordering professionals under the following circumstances:

(1) Emergency services when provided to individuals with emergency medical conditions as defined in section 1867(e)(1) of the Act.

(2) For an inpatient and for which payment is made under Medicare Part A.

(3) Significant hardships for ordering professionals who experience any of the following:

(i) Insufficient internet access.

(ii) EHR or CDSM vendor issues.

(iii) Extreme and uncontrollable circumstances.

(j) Consulting.

(1) Except as specified in paragraphs (i) and (j)(2) of this section, ordering professionals must consult specified applicable AUC through qualified CDSMs for applicable imaging services furnished in an applicable setting, paid for under an applicable payment system, and ordered on or after January 1, 2020.

(2) Ordering professionals may delegate the consultation with specified applicable AUC required under paragraph (j)(1) of this section to clinical staff acting under the direction of the ordering professional.

(k) Reporting. The following information must be reported on Medicare claims for advanced diagnostic imaging services furnished in an applicable setting, paid for under an applicable payment system defined in paragraph (b) of this section, and ordered on or after January 1, 2020:

(1) The qualified CDSM consulted by the ordering professional.

(2) Information indicating:

(i) Whether the service ordered would adhere to specified applicable AUC;

(ii) Whether the service ordered would not adhere to specified applicable AUC; or

(iii) Whether the specified applicable AUC consulted was not applicable to the service ordered.

(3) The NPI of the ordering professional who consulted specified applicable AUC as required in paragraph (j) of this section, if different from the furnishing professional.

[80 FR 71380, Nov. 16, 2015, as amended at 80 FR 80554, Nov. 15, 2016; 82 FR 53363, Nov. 15, 2017; 83 FR 60074, Nov. 23, 2018]

Subpart C - Fee Schedules for Parenteral and Enteral Nutrition (PEN) Nutrients, Equipment and Supplies, Splints, Casts, and Certain Intraocular Lenses (IOLs)
Source:

66 FR 45176, Aug. 28, 2001, unless otherwise noted.

§ 414.100 Purpose.

This subpart implements fee schedules for PEN items and services, splints and casts, and IOLs inserted in a physician's office as authorized by section 1842(s) of the Act.

[78 FR 72252, Dec. 2, 2013]

§ 414.102 General payment rules.

(a) General rule. For PEN items and services furnished on or after January 1, 2002, and for splints and casts and IOLs inserted in a physician's office on or after April 1, 2014, Medicare pays for the items and services as described in paragraph (b) of this section on the basis of 80 percent of the lesser of - -

(1) The actual charge for the item or service; or

(2) The fee schedule amount for the item or service, as determined in accordance with §§ 414.104 thru 414.108.

(b) Payment classification.

(1) CMS or the carrier determines fee schedules for parenteral and enteral nutrition (PEN) nutrients, equipment, and supplies, splints and casts, and IOLs inserted in a physician's office, as specified in §§ 414.104 thru 414.108.

(2) CMS designates the specific items and services in each category through program instructions.

(c) Updating the fee schedule amounts. For the years 2003 through 2010 for PEN items and services, the fee schedule amounts of the preceding year are updated by the percentage increase in the CPI-U for the 12-month period ending with June of the preceding year. For each year subsequent to 2010 for PEN items and services and for each year subsequent to 2014 for splints and casts, and IOLs inserted in a physician's office, the fee schedule amounts of the preceding year are updated by the percentage increase in the CPI-U for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act.

[66 FR 45176, Aug. 28, 2001, as amended at 78 FR 72252, Dec. 2, 2013]

§ 414.104 PEN Items and Services.

(a) Payment rules. Payment for PEN items and services is made in a lump sum for nutrients and supplies that are purchased and on a monthly basis for equipment that is rented.

(b) Fee schedule amount. The fee schedule amount for payment for an item or service furnished in 2002 is the lesser of -

(i) The reasonable charge from 1995; or

(ii) The reasonable charge that would have been used in determining payment for 2002.

§ 414.105 Application of competitive bidding information.

For enteral nutrients, equipment and supplies furnished on or after January 1, 2011, the fee schedule amounts may be adjusted based on information on the payment determined as part of implementation of the programs under subpart F using the methodologies set forth at § 414.210(g).

[79 FR 66262, Nov. 6, 2014]

§ 414.106 Splints and casts.

(a) Payment rules. Payment is made in a lump sum for splints and casts.

(b) Fee schedule amount. The fee schedule amount for payment for an item or service furnished in 2014 is the reasonable charge amount for 2013, updated by the percentage increase in the CPI-U for the 12-month period ending with June of 2013.

[78 FR 72253, Dec. 2, 2013]

§ 414.108 IOLs inserted in a physician's office.

(a) Payment rules. Payment is made in a lump sum for IOLs inserted in a physician's office.

(b) Fee schedule amount. The fee schedule amount for payment for an IOL furnished in 2014 is the national average allowed charge for the IOL furnished from in calendar year 2012, updated by the percentage increase in the CPI-U for the 24-month period ending with June of 2013.

[78 FR 72253, Dec. 2, 2013]

§ 414.110 Continuity of pricing when HCPCS codes are divided or combined.

(a) General Rule. If a new HCPCS code is added, CMS or contractors make every effort to determine whether the item and service has a fee schedule pricing history. If there is a fee schedule pricing history, the previous fee schedule amounts for the old code(s) are mapped to the new code(s) to ensure continuity of pricing.

(b) Mapping fee schedule amounts based on different kinds of coding changes. When the code for an item is divided into several codes for the components of that item, the total of the separate fee schedule amounts established for the components must not be higher than the fee schedule amount for the original item. When there is a single code that describes two or more distinct complete items (for example, two different but related or similar items), and separate codes are subsequently established for each item, the fee schedule amounts that applied to the single code continue to apply to each of the items described by the new codes. When the codes for the components of a single item are combined in a single global code, the fee schedule amounts for the new code are established by totaling the fee schedule amounts used for the components (that is, use the total of the fee schedule amounts for the components as the fee schedule amount for the global code). When the codes for several different items are combined into a single code, the fee schedule amounts for the new code are established using the average (arithmetic mean), weighted by allowed services, of the fee schedule amounts for the formerly separate codes.

[84 FR 60806, Nov. 8, 2019]

§ 414.112 Establishing fee schedule amounts for new HCPCS codes for items and services without a fee schedule pricing history.

(a) General rule. If a HCPCS code is new and describes items and services that do not have a fee schedule pricing history (classified and paid for previously under a different code), the fee schedule amounts for the new code are established based on the process described in paragraphs (b) or (c) of this section.

(b) Comparability. Fee schedule amounts for new HCPCS codes for items and services without a fee schedule pricing history are established using existing fee schedule amounts for comparable items when items with existing fee schedule amounts are determined to be comparable to the new items and services based on a comparison of: Physical components; mechanical components; electrical components; function and intended use; and additional attributes and features. If there are no items with existing fee schedule amounts that are comparable to the items and services under the new code, the fee schedule amounts for the new code are established in accordance with paragraph (c) of this section.

(c) Use of supplier or commercial price lists.

(1) Fee schedule amounts for items and services without a fee schedule pricing history described by new HCPCS codes that are not comparable to items and services with existing fee schedule amounts may be established using supplier price lists, including catalogs and other retail price lists (such as internet retail prices) that provide information on commercial pricing for the item. Potential appropriate sources for such commercial pricing information can also include payments made by Medicare Advantage plans, as well as verifiable information from supplier invoices and non-Medicare payer data. If the only available price information is from a period other than the fee schedule base period, deflation factors are applied against current pricing in order to approximate the base period price.

(i) The annual deflation factors are specified in program instructions and are based on the percentage change in the consumer price index for all urban consumers (CPI-U) from the mid-point of the year the prices are in effect to the mid-point of the fee schedule base period, as calculated using the following formula: ((base CPI-U minus current CPI-U) divided by current CPI-U) plus one.

(ii) The deflated amounts are then increased by the update factors specified in § 414.102(c).

(2) If within 5 years of establishing fee schedule amounts using supplier or commercial prices, the supplier or commercial prices decrease by less than 15 percent, a one-time adjustment to the fee schedule amounts is made using the new prices. The new supplier or commercial prices would be used to establish the new fee schedule amounts in the same way that the older prices were used, including application of the deflation formula in paragraph (c)(1) of this section.

[84 FR 60806, Nov. 8, 2019]

Subpart D - Payment for Durable Medical Equipment and Prosthetic and Orthotic Devices
§ 414.200 Purpose.

This subpart implements sections 1834(a), (h) and (i) of the Act by specifying how payments are made for the purchase or rental of new and used durable medical equipment, prosthetic and orthotic devices, and surgical dressings for Medicare beneficiaries.

[78 FR 72253, Dec. 2, 2013]

§ 414.202 Definitions.

For purposes of this subpart, the following definitions apply:

Complex rehabilitative power-driven wheelchair means a power-driven wheelchair that is classified as -

(1) Group 2 power wheelchair with power options that can accommodate rehabilitative features (for example, tilt in space); or

(2) Group 3 power wheelchair.

Covered item update means the percentage increase in the consumer price index for all urban consumers (U.S. city average) (CPI-U) for the 12-month period ending with June of the previous year.

Durable medical equipment means equipment, furnished by a supplier or a home health agency that meets the following conditions:

(1) Can withstand repeated use.

(2) Effective with respect to items classified as DME after January 1, 2012, has an expected life of at least 3 years.

(3) Is primarily and customarily used to serve a medical purpose.

(4) Generally is not useful to an individual in the absence of an illness or injury.

(5) Is appropriate for use in the home.

Prosthetic and orthotic devices means -

(1) Devices that replace all or part of an internal body organ, including ostomy bags and supplies directly related to ostomy care, and replacement of such devices and supplies;

(2) One pair of conventional eyeglasses or contact lenses furnished subsequent to each cataract surgery with insertion of an intraocular lens; and

(3) Leg, arm, back, and neck braces, and artificial legs, arms, and eyes, including replacements if required because of a change in the beneficiary's physical condition.

The following are neither prosthetic nor orthotic devices -

(1) Parenteral and enteral nutrients, supplies, and equipment;

(2) Intraocular lenses;

(3) Medical supplies such as catheters, catheter supplies, ostomy bags, and supplies related to ostomy care that are furnished by an HHA as part of home health services under § 409.40(e) of this chapter;

(4) Dental prostheses.

Region means, for the purpose of implementing § 414.210(g), geographic areas defined by the Bureau of Economic Analysis in the United States Department of Commerce for economic analysis purposes, and, for the purpose of implementing § 414.228, those contractor service areas administered by CMS regional offices.

Rural area means, for the purpose of implementing § 414.210(g), a geographic area represented by a postal zip code if at least 50 percent of the total geographic area of the area included in the zip code is estimated to be outside any metropolitan area (MSA). A rural area also includes a geographic area represented by a postal zip code that is a low population density area excluded from a competitive bidding area in accordance with the authority provided by section 1847(a)(3)(A) of the Act at the time the rules at § 414.210(g) are applied.

[57 FR 57689, Dec. 7, 1992, as amended at 75 FR 73622, Nov. 29, 2010; 76 FR 70314, Nov. 10, 2011; 79 FR 66262, Nov. 6, 2014]

§ 414.210 General payment rules.

(a) General rule. For items furnished on or after January 1, 1989, except as provided in paragraphs (c), (d), and (g) of this section, Medicare pays for durable medical equipment, prosthetics and orthotics, including a separate payment for maintenance and servicing of the items as described in paragraph (e) of this section, on the basis of 80 percent of the lesser of -

(1) The actual charge for the item;

(2) The fee schedule amount for the item, as determined in accordance with the provisions of §§ 414.220 through 414.232

(b) Payment classification.

(1) The carrier determines fee schedules for the following classes of equipment and devices:

(i) Inexpensive or routinely purchased items, as specified in § 414.220.

(ii) Items requiring frequent and substantial servicing, as specified in § 414.222.

(iii) Certain customized items, as specified in § 414.224.

(iv) Oxygen and oxygen equipment, as specified in § 414.226.

(v) Prosthetic and orthotic devices, as specified in § 414.228.

(vi) Other durable medical equipment (capped rental items), as specified in § 414.229.

(vii) Transcutaneous electrical nerve stimulators (TENS), as specified in § 414.232.

(2) CMS designates the items in each class of equipment or device through its program instructions.

(c) Exception for certain HHAs. Public HHAs and HHAs that furnish services or items free-of-charge or at nominal prices to a significant number of low-income patients, as defined in § 413.13(a) of this chapter, are paid on the basis of 80 percent of the fee schedule amount determined in accordance with the provision of §§ 414.220 through 414.230.

(d) Prohibition on special limits. For items furnished on or after January 1, 1989 and before January 1, 1991, neither CMS nor a carrier may establish a special reasonable charge for items covered under this subpart on the basis of inherent reasonableness as described in § 405.502(g) of this chapter.

(e) Maintenance and servicing -

(1) General rule. Except as provided in paragraph (e)(3) of this section, the carrier pays the reasonable and necessary charges for maintenance and servicing of beneficiary-owned equipment. Reasonable and necessary charges are those made for parts and labor not otherwise covered under a manufacturer's or supplier's warranty. Payment is made for replacement parts in a lump sum based on the carrier's consideration of the item. The carrier establishes a reasonable fee for labor associated with repairing, maintaining, and servicing the item. Payment is not made for maintenance and servicing of a rented item other than the maintenance and servicing fee for oxygen equipment described in paragraph (e)(2) of this section or for other durable medical equipment as described in § 414.229(e).

(2) Maintenance and servicing payment for certain oxygen equipment furnished after the 36-month rental period from January 1, 2009 through June 30, 2010. The carrier makes a maintenance and servicing payment for oxygen equipment other than liquid and gaseous equipment (stationary and portable) as follows:

(i) For the first 6-month period following the date on which the 36-month rental period ends in accordance with § 414.226(a)(1) of this subpart, no payments are made.

(ii) For each succeeding 6-month period, payment may be made during the first month of that period for 30 minutes of labor for routine maintenance and servicing of the equipment in the beneficiary's home (including an institution used as the beneficiary's home).

(iii) The supplier must visit the beneficiary's home (including an institution used as the beneficiary's home) to inspect the equipment during the first month of the 6-month period.

(3) Exception to maintenance and servicing payments. For items purchased on or after June 1, 1989, no payment is made under the provisions of paragraph (e)(1) of this section for the maintenance and servicing of:

(i) Items requiring frequent and substantial servicing, as defined in § 414.222(a);

(ii) Capped rental items, as defined in § 414.229(a), that are not beneficiary-owned in accordance with § 414.229(d), § 414.229(f)(2), or § 414.229(h); and

(iii) Capped rental items, as defined in § 414.229(a), that are not beneficiary-owned in § 414.229(d), § 414.229(f)(2), or § 414.229(h); and

(iv) Oxygen equipment, as described in § 414.226.

(4) Supplier replacement of beneficiary-owned equipment based on accumulated repair costs. A supplier that transfers title to a capped rental item to a beneficiary in accordance with § 414.229(f)(2) is responsible for furnishing replacement equipment at no cost to the beneficiary or to the Medicare program if the carrier determines that the item furnished by the supplier will not last for the entire reasonable useful lifetime established for the equipment in accordance with § 414.210(f)(1). In making this determination, the carrier may consider whether the accumulated costs of repair exceed 60 percent of the cost to replace the item.

(5) Maintenance and servicing payment for certain oxygen equipment furnished after the 36-month rental period and on or after July 1, 2010. For oxygen equipment other than liquid and gaseous equipment (stationary and portable), the carrier makes payment as follows:

(i) For the first 6-month period following the date on which the 36-month rental period ends in accordance with § 414.226(a)(1) of this subpart, no payments are made.

(ii) For each succeeding 6-month period, payment may be made during the first month of that period for routine maintenance and servicing of the equipment in the beneficiary's home (including an institution used as the beneficiary's home).

(iii) Payment for maintenance and servicing is made based on a reasonable fee not to exceed 10 percent of the purchase price for a stationary oxygen concentrator. This payment includes payment for maintenance and servicing of all oxygen equipment other than liquid or gaseous equipment (stationary or portable).

(iv) The supplier must visit the beneficiary's home (including an institution used as the beneficiary's home) to inspect the equipment during the first month of the 6-month period.

(f) Payment for replacement of equipment. If an item of DME or a prosthetic or orthotic device paid for under this subpart has been in continuous use by the patient for the equipment's reasonable useful lifetime or if the carrier determines that the item is lost, stolen, or irreparably damaged, the patient may elect to obtain a new piece of equipment.

(1) The reasonable useful lifetime of DME or prosthetic and orthotic devices is determined through program instructions. In the absence of program instructions, carriers may determine the reasonable useful lifetime of equipment but in no case can it be less than 5 years. Computation is based on when the equipment is delivered to the beneficiary, not the age of the equipment.

(2) If the beneficiary elects to obtain replacement oxygen equipment, payment is made in accordance with § 414.226(a).

(3) If the beneficiary elects to obtain a replacement capped rental item, payment is made in accordance with § 414.229(a)(2) or (a)(3).

(4) For all other beneficiary-owned items, if the beneficiary elects to obtain replacement equipment, payment is made on a purchase basis.

(g) Application of Competitive Bidding Information and Limitation of Inherent Reasonableness Authority. For items furnished on or after January 1, 2011, the fee schedule amounts may be adjusted, and for DME items furnished on or after January 1, 2016, the fee schedule amounts shall be adjusted, based on information on the payment determined as part of implementation of the programs under subpart F, of this part, excluding information on the payment determined in accordance with the special payment rules at § 414.409. In the case of such adjustments, the rules at § 405.502(g) and (h) of this chapter shall not be applied. The methodologies for adjusting fee schedule amounts are provided below. In any case where application of these methodologies results in an increase in the fee schedule amount, the adjustment to the fee schedule amount is not made.

(1) Payment adjustments for areas within the contiguous United States using information from competitive bidding programs. For an item or service subject to the programs under subpart F of this part, the fee schedule amounts for such item or service for areas within the contiguous United States shall be adjusted as follows:

(i) CMS determines a regional price for each state in the contiguous United States and the District of Columbia equal to the un-weighted average of the single payment amounts for an item or service established in accordance with § 414.416 for competitive bidding areas that are fully or partially located in the same region that contains the state or District of Columbia.

(ii) CMS determines a national average price equal to the un-weighted average of the regional prices determined under paragraph (g)(1)(i) of this section.

(iii) A regional price determined under paragraph (g)(1)(i) of this section cannot be greater than 110 percent of the national average price determined under paragraph (g)(1)(ii) of this section nor less than 90 percent of the national average price determined under paragraph (g)(1)(ii) of this section.

(iv) The fee schedule amount for all areas within a state that are not defined as rural areas for purposes of this subpart is adjusted to the regional price determined under paragraphs (g)(1)(i) and (iii) of this section.

(v) The fee schedule amount for all areas within a state that are defined as rural areas for the purposes of this subpart is adjusted to 110 percent of the national average price determined under paragraph (g)(1)(ii) of this section.

(2) Payment adjustments for areas outside the contiguous United States using information from competitive bidding programs. For an item or service subject to the programs under subpart F, the fee schedule amounts for areas outside the contiguous United States are reduced to the greater of -

(i) The average of the single payment amounts for the item or service for CBAs outside the contiguous United States.

(ii) 110 percent of the national average price for the item or service determined under paragraph (g)(1)(ii) of this section.

(3) Payment adjustments for items and services included in no more than ten competitive bidding programs. Notwithstanding paragraph (g)(1) of this section, for an item or service that is included in ten or fewer competitive bidding programs as defined at § 414.402, the fee schedule amounts applied for all areas within and outside the contiguous United States are reduced to 110 percent of the un-weighted average of the single payment amounts from the ten or fewer competitive bidding programs for the item or service in the areas where the ten or fewer competitive bidding programs are in place.

(4) Payment adjustments using data on items and services included in competitive bidding programs no longer in effect. In the case where adjustments to fee schedule amounts are made using any of the methodologies described, other than paragraph (g)(10) of this section, if the adjustments are based solely on single payment amounts from competitive bidding programs that are no longer in effect, the single payment amounts are updated before being used to adjust the fee schedule amounts. The single payment amounts are updated based on the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) from the mid-point of the last year the single payment amounts were in effect to the month ending 6 months prior to the date the initial fee schedule reductions go into effect. Following the initial adjustments to the fee schedule amounts, if the adjustments continue to be based solely on single payment amounts from competitive bidding programs that are no longer in effect, the single payment amounts used to reduce the fee schedule amounts are updated every 12 months using the percentage change in the CPI-U for the 12-month period ending 6 months prior to the date the updated payment adjustments would go into effect.

(5) Adjusted payment amounts for accessories used with different types of base equipment. In situations where a HCPCS code that describes an item used with different types of base equipment is included in more than one product category in a CBA under competitive bidding, a weighted average of the single payment amounts for the code is computed for each CBA based on the total number of allowed services for the item on a national basis for the code from each product category prior to applying the payment adjustment methodologies in this section.

(6) Adjustments of single payment amounts resulting from price inversions under the DMEPOS Competitive Bidding Program.

(i) In situations where a price inversion defined in § 414.402 occurs under the DMEPOS Competitive Bidding Program in a competitive bidding area (CBA) following a competition for a grouping of similar items identified in paragraph (g)(6)(ii) of this section, prior to adjusting the fee schedule amounts under paragraph (g) of this section the single payment amount for each item in the grouping of similar items in the CBA is adjusted to be equal to the weighted average of the single payment amounts for the items in the grouping of similar items in the CBA.

(ii) The groupings of similar items subject to this rule include -

(A) Hospital beds (HCPCS codes E0250, E0251, E0255, E0256, E0260, E0261, E0290, E0291, E0292, E0293, E0294, E0295, E0301, E0302, E0303, and E0304).

(B) Mattresses and overlays (HCPCS codes E0277, E0371, E0372, and E0373)

(C) Power wheelchairs (HCPCS codes K0813, K0814, K0815, K0816, K0820, K0821, K0822, and K0823).

(D) Seat lift mechanisms (HCPCS codes E0627 and E0629).

(E) TENS devices (HCPCS codes E0720 and E0730).

(F) Walkers (HCPCS codes E0130, E0135, E0141, and E0143).

(iii) The weight for each item (HCPCS code) used in calculating the weighted average described in paragraph (g)(6)(ii) of this section is equal to the proportion of total nationwide allowed services furnished in calendar year 2012 for the item (HCPCS code) in the grouping of similar items, relative to the total nationwide allowed services furnished in calendar year 2012 for each of the other items (HCPCS codes) in the grouping of similar items.

(7) Payment adjustments for mail order items furnished in the Northern Mariana Islands. The fee schedule amounts for mail order items furnished to beneficiaries in the Northern Mariana Islands are adjusted so that they are equal to 100 percent of the single payment amounts established under a national mail order competitive bidding program. Beginning on or after the date that the Northern Mariana Islands are included under a national mail order competitive bidding program, the fee schedule adjustment methodology under this paragraph no longer applies.

(8) Updating adjusted fee schedule amounts. The adjusted fee schedule amounts are revised each time a single payment amount for an item or service is updated following one or more new competitions and as other items are added to programs established under Subpart F of this part.

(9) Transition rules. The payment adjustments described above are phased in as follows:

(i) For applicable items and services furnished with dates of service from January 1, 2016 through December 31, 2016, based on the fee schedule amount for the area is equal to 50 percent of the adjusted payment amount established under this section and 50 percent of the unadjusted fee schedule amount.

(ii) For items and services furnished with dates of service from January 1, 2017, through May 31, 2018, the fee schedule amount for the area is equal to 100 percent of the adjusted payment amount established under this section.

(iii) For items and services furnished in rural areas and non-contiguous areas (Alaska, Hawaii, and U.S. territories) with dates of service from June 1, 2018 through December 31, 2020 or through the duration of the emergency period described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), whichever is later, based on the fee schedule amount for the area is equal to 50 percent of the adjusted payment amount established under this section and 50 percent of the unadjusted fee schedule amount.

(iv) For items and services furnished in areas other than rural or noncontiguous areas with dates of service from June 1, 2018 through March 5, 2020, based on the fee schedule amount for the area is equal to 100 percent of the adjusted payment amount established under this section.

(v) For items and services furnished in areas other than rural or noncontiguous areas with dates of service from March 6, 2020, through the remainder of the duration of the emergency period described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), based on the fee schedule amount for the area is equal to 75 percent of the adjusted payment amount established under this section and 25 percent of the unadjusted fee schedule amount. For items and services furnished in areas other than rural or noncontiguous areas with dates of service from the expiration date of the emergency period described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), through December 31, 2020, based on the fee schedule amount for the area is equal to 100 percent of the adjusted payment amount established under this section.

(10) Payment adjustments for items and services furnished in former competitive bidding areas during temporary gaps in the DMEPOS CBP. During a temporary gap in the entire DMEPOS CBP and/or National Mail Order CBP, the fee schedule amounts for items and services that were competitively bid and furnished in areas that were competitive bidding areas at the time the program(s) was in effect are adjusted based on the SPAs in effect in the competitive bidding areas on the last day before the CBP contract period of performance ended, increased by the projected percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) for the 12-month period ending on the date after the contract periods ended. If the gap in the CBP lasts for more than 12 months, the fee schedule amounts are increased once every 12 months on the anniversary date of the first day of the gap period based on the projected percentage change in the CPI-U for the 12-month period ending on the anniversary date.

[57 FR 57689, Dec. 7, 1992, as amended at 71 FR 65932, Nov. 9, 2006; 73 FR 69936, Nov. 19, 2008; 73 FR 80304, Dec. 31, 2008; 74 FR 62009, Nov. 25, 2009; 79 FR 66262, Nov. 6, 2013; 81 FR 77965, Nov. 4, 2016; 83 FR 21925, May 11, 2018; 83 FR 57070, Nov. 14, 2018; 85 FR 27623, May 8, 2020]

§ 414.220 Inexpensive or routinely purchased items.

(a) Definitions.

(1) Inexpensive equipment means equipment the average purchase price of which did not exceed $150 during the period July 1986 through June 1987.

(2) Routinely purchased equipment means equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period July 1986 through June 1987.

(3) Accessories. Effective January 1, 1994, accessories used in conjunction with a nebulizer, aspirator, or ventilator excluded from § 414.222 meet the definitions of “inexpensive equipment” and “routinely purchased equipment” in paragraphs (a)(1) and (a)(2) of this section, respectively.

(b) Payment rules.

(1) Subject to the limitation in paragraph (b)(3) of this section, payment for inexpensive and routinely purchased items is made on a rental basis or in a lump sum amount for purchase of the item based on the applicable fee schedule amount.

(2) Effective January 1, 1994, payment for ostomy supplies, tracheostomy supplies, urologicals, and surgical dressings not furnished as incident to a physician's professional service or furnished by an HHA is made using the methodology for the inexpensive and routinely purchased class.

(3) The total amount of payments made for an item may not exceed the fee schedule amount recognized for the purchase of that item.

(c) Fee schedule amount for 1989 and 1990. The fee schedule amount for payment of purchase or rental of inexpensive or routinely purchased items furnished in 1989 and 1990 is the local payment amount determined as follows:

(1) The carrier determines the average reasonable charge for inexpensive or routinely purchased items that were furnished during the period July 1, 1986 through June 30, 1987 based on the mean of the carrier's allowed charges for the item. A separate determination of an average reasonable charge is made for rental equipment, new purchased equipment, and used purchased equipment.

(2) The carrier adjusts the amount determined under paragraph (c)(1) of this section by the change in the level of the CPI-U for the 6-month period ending December 1987.

(d) Updating the local payment amounts for years after 1990. For each year subsequent to 1990, the local payment amounts of the preceding year are increased or decreased by the covered item update. For 1991 and 1992, the covered item update is reduced by 1 percentage point.

(e) Calculating the fee schedule amounts for years after 1990. For years after 1990, the fee schedule amounts are equal to the national limited payment amount.

(f) Calculating the national limited payment amount. The national limited payment amount is computed as follows:

(1) The 1991 national limited payment amount is equal to:

(i) 100 percent of the local payment amount if the local payment amount is neither greater than the weighted average nor less than 85 percent of the weighted average of all local payment amounts;

(ii) The sum of 67 percent of the local payment amount plus 33 percent of the weighted average of all local payment amounts if the local payment amount exceeds the weighted average of all local payment amounts; or

(iii) The sum of 67 percent of the local payment amount plus 33 percent of 85 percent of the weighted average of all local payment amounts if the local payment amount is less than 85 percent of the weighted average of all local payment amounts.

(2) The 1992 national limited payment amount is equal to:

(i) 100 percent of the local payment amount if the local payment amount is neither greater than the weighted average nor less than 85 percent of the weighted average of all local payment amounts;

(ii) The sum of 33 percent of the local payment amount plus 67 percent of the weighted average of all local payment amounts if the local payment amount exceeds the weighted average; or

(iii) The sum of 33 percent of the local payment amount plus 67 percent of 85 percent of the weighted average of all local payment amounts if the local payment amount is less than 85 percent of the weighted average.

(3) For 1993, the national limited payment amount is equal to one of the following:

(i) 100 percent of the local payment amount if the local payment amount is neither greater than the weighted average nor less than 85 percent of the weighted average of all local payment amounts.

(ii) 100 percent of the weighted average of all local payment amounts if the local payment amount exceeds the weighted average of all local payment amounts.

(iii) 85 percent of the weighted average of all local payment amounts if the local payment amount is less than 85 percent of the weighted average of all local payment amounts.

(4) For 1994 and subsequent years, the national limited payment amount is equal to one of the following:

(i) If the local payment amount is not in excess of the median, nor less than 85 percent of the median, of all local payment amounts - 100 percent of the local payment amount.

(ii) If the local payment amount exceeds the median - 100 percent of the median of all local payment amounts.

(iii) If the local payment amount is less than 85 percent of the median - 85 percent of the median of all local payment amounts.

(g) Payment for surgical dressings. For surgical dressings furnished after December 31, 1993, the national limited payment amount is computed based on local payment amounts using average reasonable charges for the 12-month period ending December 31, 1992, increased by the covered item updates for 1993 and 1994.

[57 FR 57689, Dec. 7, 1992, as amended at 60 FR 35497, July 10, 1995]

§ 414.222 Items requiring frequent and substantial servicing.

(a) Definition. Items requiring frequent and substantial servicing in order to avoid risk to the beneficiary's health are the following:

(1) Ventilators (except those that are either continuous airway pressure devices or respiratory assist devices with bi-level pressure capability with or without a backup rate, previously referred to as “intermittent assist devices with continuous airway pressure devices”).

(2) Continuous and intermittent positive pressure breathing machines.

(3) Continuous passive motion machines.

(4) Other items specified in CMS program instructions.

(5) Other items identified by the carrier.

(b) Payment rule. Rental payments for items requiring frequent and substantial servicing are made on a monthly basis, and continue until medical necessity ends.

(c) Fee schedule amount for 1989 and 1990. The fee schedule amount for items requiring frequent and substantial servicing is the local payment amount determined as follows:

(1) The carrier determines the average reasonable charge for rental of items requiring frequent and substantial servicing that were furnished during the period July 1, 1986 through June 30, 1987 based on the mean of the carrier's allowed charges for the item.

(2) The carrier adjusts the amounts determined under paragraph (c)(1) of this section by the change in the level of the CPI-U for the 6-month period ending December 1987.

(d) Updating the fee schedule amounts for years after 1990. For years after 1990, the fee schedules are determined using the methodology contained in paragraphs (d), (e), and (f) of § 414.220.

(e) Transition to other payment classes. For purposes of calculating the 15-month rental period, beginning January 1, 1994, if an item has been paid for under the frequent and substantial servicing class and is subsequently paid for under another payment class, the rental period begins with the first month of continuous rental, even if that period began before January 1, 1994. For example, if the rental period began on July 1, 1993, the carrier must use this date as beginning the first month of rental. Likewise, for purposes of calculating the 10-month purchase option, the rental period begins with the first month of continuous rental without regard to when that period started. For example, if the rental period began in August 1993, the 10-month purchase option must be offered to the beneficiary in May 1994, the tenth month of continuous rental.

(f) Multi-function ventilators -

(1) Definition. For the purpose of this paragraph (f), a multi-function ventilator is a ventilator as defined in paragraph (a)(1) of this section that also performs medically necessary functions for the patient at the same time that would otherwise be performed by one or more different items classified under § 414.220, § 414.226, or § 414.229.

(2) Payment rule. Effective for dates of service on or after January 1, 2019, the monthly rental fee schedule amount for a multi-function ventilator described in paragraph (f)(1) of this section is equal to the monthly rental fee schedule amount for the ventilator established in paragraph (c) and paragraph (d) of this section plus the average of the lowest monthly cost for one additional function determined under paragraph (f)(3) of this section and the monthly cost of all additional functions determined under paragraph (f)(3) of this section, increased by the annual covered item updates of section 1834(a)(14) of the Act.

(3) Monthly cost for additional functions.

(i) For functions performed by items classified under this section prior to 1994, the monthly cost is equal to the monthly rental fee schedule amount established in paragraphs (c) and (d) of this section increased by the covered item update of section 1834(a)(14) of the Act.

(ii) For functions performed by items classified under § 414.220, the monthly cost is equal to the fee schedule amount for purchased equipment established in § 414.220(c), (d), (e), and (f), adjusted in accordance with § 414.210(g), divided by 60 months or total number of months of the reasonable useful lifetime of the equipment.

(iii) For functions performed by items classified under § 414.226, the monthly cost is equal to the monthly payment amount established in § 414.226(e) and (f), adjusted in accordance with § 414.210(g), multiplied by 36 and divided by 60 months or total number of months of the reasonable useful lifetime of the oxygen equipment.

(iv) For functions performed by items classified under § 414.229, the monthly cost is equal to the purchase price established in § 414.229(c), adjusted in accordance with § 414.210(g), divided by 60 months or total number of months of the reasonable useful lifetime of the equipment.

[57 FR 57690, Dec. 7, 1992, as amended at 60 FR 35497, July 10, 1995; 71 FR 4525, Jan. 27, 2006; 83 FR 57071, Nov. 14, 2018]

§ 414.224 Customized items.

(a) Criteria for a customized item. To be considered a customized item for payment purposes under paragraph (b) of this section, a covered item (including a wheelchair) must be uniquely constructed or substantially modified for a specific beneficiary according to the description and orders of a physician and be so different from another item used for the same purpose that the two items cannot be grouped together for pricing purposes.

(b) Payment rule. Payment is made on a lump sum basis for the purchase of a customized item based on the carrier's individual consideration and judgment of a reasonable payment amount for each customized item. The carrier's individual consideration takes into account written documentation on the costs of the item including at least the cost of labor and materials used in customizing an item.

[56 FR 65998, Dec. 20, 1991, as amended at 58 FR 34919, June 30, 1993]

§ 414.226 Oxygen and oxygen equipment.

(a) Payment rules -

(1) Oxygen equipment. Payment for rental of oxygen equipment is made based on a monthly fee schedule amount during the period of medical need, but for no longer than a period of continuous use of 36 months. A period of continuous use is determined under the provisions in § 414.230.

(2) Oxygen contents. Payment for purchase of oxygen contents is made based on a monthly fee schedule amount until medical necessity ends.

(b) Monthly fee schedule amount for items furnished prior to 2007.

(1) Monthly fee schedule amounts are separately calculated for the following items:

(i) Stationary oxygen equipment and oxygen contents (stationary and portable oxygen contents).

(ii) Portable oxygen equipment only.

(iii) Stationary and portable oxygen contents only.

(iv) Portable oxygen contents only.

(2) For 1989 and 1990, the monthly fee schedule amounts are the local payment amounts determined as follows:

(i) The carrier determines the base local average monthly payment rate equal to the total reasonable charges for the item for the 12-month period ending December 1986 divided by the total number of months for all beneficiaries receiving the item for the same period. In determining the local average monthly payment rate, the following limitations apply:

(A) Purchase charges for oxygen systems are not included as items classified under paragraph (b)(1)(i) of this section.

(B) Purchase charges for portable equipment are not included as items classified under paragraph (b)(1)(ii) of this section.

(ii) The carrier determines the local monthly payment amount equal to 0.95 times the base local average monthly payment amount adjusted by the change in the CPI-U for the six-month period ending December 1987.

(3) For 1991 through 2006, the fee schedule amounts for items described in paragraphs (b)(1)(iii) and (iv) of this section are determined using the methodology contained in § 414.220(d), (e), and (f).

(4) For 1991 through 2006, the fee schedule amounts for items described in paragraphs (b)(1)(i) and (ii) of this section are determined using the methodology contained in § 414.220(d), (e), and (f).

(5) For 2005 and 2006, the fee schedule amounts determined under paragraph (b)(4) of this section are reduced using the methodology described in section 1834(a)(21)(A) of the Act.

(c) Monthly fee schedule amount for items furnished from 2007 through 2018.

(1) For 2007, national limited monthly payment rates are calculated and paid as the monthly fee schedule amounts for the following classes of items:

(i) Stationary oxygen equipment (including stationary concentrators) and oxygen contents (stationary and portable).

(ii) Portable equipment only (gaseous or liquid tanks).

(iii) Oxygen generating portable equipment only.

(iv) Stationary oxygen contents only.

(v) Portable oxygen contents only.

(2) The national limited monthly payment rate for items described in paragraph (c)(1)(i) of this section is equal to the weighted average fee schedule amount established under paragraph (b)(5) of this section reduced by $1.44.

(3) The national limited monthly payment rate for items described in paragraph (c)(1)(ii) of this section is equal to the weighted average of the fee schedule amounts established under paragraph (b)(5) of this section.

(4) The national limited monthly payment rate for items described in paragraph (c)(1)(iii) of this section is equal to the national limited monthly payment rate established under paragraph (c)(5) of this section, multiplied by 24, and divided by 36.

(5) The national limited monthly payment rate for items described in paragraphs (c)(1)(iv) and (c)(1)(v) of this section is equal to 50 percent of the weighted average fee schedule amounts established under paragraph (b)(3) of this section for items described in paragraph (b)(1)(iii) of this section.

(6) For 2008 through 2018, CMS makes an annual adjustment to the national limited monthly payment rate for items described in paragraph (c)(1)(i) of this section to ensure that such payment rates do not result in expenditures for any year that are more or less than the expenditures that would have been made if such classes had not been established.

(d) Application of monthly fee schedule amounts for items furnished from 2007 through 2018.

(1) The fee schedule amount for items described in paragraph (c)(1)(i) of this section is paid when the beneficiary rents stationary oxygen equipment.

(2) Subject to the limitation set forth in paragraph (g)(2) of this section, the fee schedule amount for items described in paragraphs (c)(1)(ii) and (c)(1)(iii) of this section is paid when the beneficiary rents portable oxygen equipment.

(3) The fee schedule amount for items described in paragraph (c)(1)(iv) of this section is paid when the beneficiary -

(i) Owns stationary oxygen equipment that requires delivery of gaseous or liquid oxygen contents; or

(ii) Rents stationary oxygen equipment that requires delivery of gaseous or liquid oxygen contents after the period of continuous use of 36 months described in paragraph (a)(1) of this section.

(4) The fee schedule amount for items described in paragraph (c)(1)(v) of this section is paid when the beneficiary -

(i) Owns portable oxygen equipment described in (c)(1)(ii) of this section;

(ii) Rents portable oxygen equipment described in paragraph (c)(1)(ii) of this section during the period of continuous use of 36 months described in paragraph (a)(1) of this section and does not rent stationary oxygen equipment; or

(iii) Rents portable oxygen equipment described in paragraph (c)(1)(ii) of this section after the period of continuous use of 36 months described in paragraph (a)(1) of this section.

(e) Monthly fee schedule amount for items furnished for years after 2018.

(1) For 2019, national limited monthly payment rates are calculated and paid as the monthly fee schedule amounts for the following classes of items:

(i) Stationary oxygen equipment (including stationary concentrators) and oxygen contents (stationary and portable).

(ii) Portable gaseous equipment only.

(iii) Portable liquid equipment only.

(iv) Oxygen generating portable equipment only.

(v) Stationary oxygen contents only.

(vi) Portable oxygen contents only, except for portable liquid oxygen contents for prescribed flow rates greater than four liters per minute.

(vii) Portable liquid oxygen contents only for prescribed flow rates of more than 4 liters per minute.

(2) The monthly payment rate for items described in paragraphs (e)(1)(i), (ii), (iv), (v), and (vi) of this section are determined using the applicable methodologies contained in § 414.210(g).

(3) The monthly payment rate for items described in paragraph (e)(1)(iii) of this section is determined initially based on the monthly payment rate for items described in paragraph (e)(1)(iv) of this section and is subsequently adjusted using the applicable methodologies contained in § 414.210(g).

(4) The monthly payment rate for items described in paragraph (e)(1)(vii) of this section is determined initially based on 150 percent of the monthly payment rate for items described in paragraph (e)(1)(vi) of this section and is subsequently adjusted using the applicable methodologies contained in § 414.210(g).

(5) Beginning in 2019, CMS makes an annual adjustment to the monthly payment rate for items described in paragraphs (e)(1)(i) through (e)(1)(vii) of this section to ensure that such payment rates do not result in expenditures for any year that are more or less than the expenditures that would have been made if such classes had not been established.

(f) Application of monthly fee schedule amounts for items furnished for years after 2018.

(1) The fee schedule amount for items described in paragraph (e)(1)(i) of this section is paid when the beneficiary rents stationary oxygen equipment.

(2) Subject to the limitation set forth in paragraph (g)(2) of this section, the fee schedule amount for items described in paragraphs (e)(1)(ii), (iii), and (iv) of this section is paid when the beneficiary rents portable oxygen equipment.

(3) The fee schedule amount for items described in paragraph (e)(1)(v) of this section is paid when the beneficiary -

(i) Owns stationary oxygen equipment that requires delivery of gaseous or liquid oxygen contents; or

(ii) Rents stationary oxygen equipment that requires delivery of gaseous or liquid oxygen contents after the period of continuous use of 36 months described in paragraph (a)(1) of this section.

(4) The fee schedule amount for items described in paragraph (e)(1)(vi) of this section is paid when the beneficiary -

(i) Owns portable oxygen equipment described in paragraphs (e)(1)(ii) or (e)(1)(iii) of this section; or Code of Federal Regulations/Title 42 - Public Health/Vol. 3/2017-10-0166

(ii) Rents portable oxygen equipment described in paragraphs (e)(1)(ii) or (e)(1)(iii) of this section during the period of continuous use of 36 months described in paragraph (a)(1) of this section and does not rent stationary oxygen equipment; or

(iii) Rents portable oxygen equipment described in paragraphs (e)(1)(ii) or (e)(1)(iii) of this section after the period of continuous use of 36 months described in paragraph (a)(1) of this section.

(5) The fee schedule amount for items described in paragraph (e)(1)(vii) of this section is paid when the beneficiary has a prescribed flow rate of more than 4 liters per minute and -

(i) Owns portable liquid oxygen equipment described in paragraph (e)(1)(iii) of this section; or Code of Federal Regulations/Title 42 - Public Health/Vol. 3/2017-10-0166

(ii) Rents portable liquid oxygen equipment described in paragraph (e)(1)(iii) of this section during the period of continuous use of 36 months described in paragraph (a)(1) of this section and does not rent stationary oxygen equipment; or

(iii) Rents portable liquid oxygen equipment described in paragraph (e)(1)(iii) of this section after the period of continuous use of 36 months described in paragraph (a)(1) of this section.

(g) Volume adjustments.

(1) The fee schedule amount for an item described in paragraph (c)(1)(i) of this section is adjusted as follows:

(i) If the attending physician prescribes an oxygen flow rate exceeding four liters per minute, the fee schedule amount is increased by 50 percent, subject to the limit in paragraph (g)(2) of this section.

(ii) If the attending physician prescribes an oxygen flow rate of less than one liter per minute, the fee schedule amount is decreased by 50 percent.

(2) If portable oxygen equipment is used and the prescribed oxygen flow rate exceeds four liters per minute, the total fee schedule amount recognized for payment is limited to the higher of -

(i) The sum of the monthly fee schedule amount for the items described in paragraphs (c)(1)(i) and (c)(1)(ii) or (c)(1)(iii) of this section; or

(ii) The adjusted fee schedule amount described in paragraph (g)(1)(i) of this section.

(3) In establishing the volume adjustment for those beneficiaries whose physicians prescribe varying flow rates, the following rules apply:

(i) If the prescribed flow rate is different for stationary oxygen equipment than for portable oxygen equipment, the flow rate for the stationary equipment is used.

(ii) If the prescribed flow rate is different for the patient at rest than for the patient at exercise, the flow rate for the patient at rest is used.

(iii) If the prescribed flow rate is different for nighttime use and daytime use, the average of the two flow rates is used.

(h) Furnishing oxygen and oxygen equipment after the 36-month rental cap.

(1) The supplier that furnishes oxygen equipment for the 36th continuous month during which payment is made under this section must -

(i) Continue to furnish the equipment during any period of medical need for the remainder of the reasonable useful lifetime established for the equipment in accordance with § 414.210(f)(1); or

(ii) Arrange for furnishing the oxygen equipment with another supplier if the beneficiary relocates to an area that is outside the normal service area of the supplier that initially furnished the equipment.

(2) The supplier that furnishes liquid or gaseous oxygen equipment (stationary or portable) for the 36th continuous month during which payment is made under this section must -

(i) Continue to furnish the oxygen contents necessary for the effective use of the liquid or gaseous equipment during any period of medical need for the remainder of the reasonable useful lifetime established for the equipment in accordance with § 414.210(f)(1); or

(ii) Arrange for furnishing the oxygen contents with another supplier if the beneficiary relocates to an area that is outside the normal service area of the supplier that initially furnished the equipment.

(i) Additional supplier requirements for rentals that begin on or after January 1, 2007.

(1) The supplier that furnishes oxygen equipment for the first month during which payment is made under this section must continue to furnish the equipment for the entire 36-month period of continuous use, unless medical necessity ends or -

(i) The item becomes subject to a competitive acquisition program implemented in accordance with section 1847(a) of the Act;

(ii) The beneficiary relocates to an area that is outside the normal service area of the supplier that initially furnished the equipment;

(iii) The beneficiary elects to obtain oxygen equipment from a different supplier prior to the expiration of the 36-month rental period; or

(iv) CMS or the carrier determines that an exception should apply in an individual case based on the circumstances.

(2) Oxygen equipment furnished under this section may not be replaced by the supplier prior to the expiration of the reasonable useful lifetime established for the equipment in accordance with § 414.210(f)(1) unless:

(i) The supplier replaces an item with the same, or equivalent, make and model of equipment because the item initially furnished was lost, stolen, irreparably damaged, is being repaired, or no longer functions;

(ii) A physician orders different equipment for the beneficiary. If the order is based on medical necessity, then the order must indicate why the equipment initially furnished is no longer medically necessary and the supplier must retain this order in the beneficiary's medical record;

(iii) The beneficiary chooses to obtain a newer technology item or upgraded item and signs an advanced beneficiary notice (ABN); or

(iv) CMS or the carrier determines that a change in equipment is warranted.

(3) Before furnishing oxygen equipment, the supplier must disclose to the beneficiary its intentions regarding whether it will accept assignment of all monthly rental claims for the duration of the rental period. A supplier's intentions could be expressed in the form of a written agreement between the supplier and the beneficiary.

[57 FR 57690, Dec. 7, 1992, as amended at 71 FR 65933, Nov. 9, 2006; 73 FR 69936, Nov. 19, 2008; 78 FR 72253, Dec. 2, 2013; 83 FR 57071, Nov. 14, 2018]

§ 414.228 Prosthetic and orthotic devices.

(a) Payment rule. Payment is made on a lump-sum basis for prosthetic and orthotic devices subject to this subpart.

(b) Fee schedule amounts. The fee schedule amount for prosthetic and orthotic devices is determined as follows:

(1) The carrier determines a base local purchase price equal to the average reasonable charge for items purchased during the period July 1, 1986 through June 30, 1987 based on the mean of the carrier's allowed charges for the item.

(2) The carrier determines a local purchase price equal to the following:

(i) For 1989 and 1990, the base local purchase price is adjusted by the change in the level of the CPI-U for the 6-month period ending December 1987.

(ii) For 1991 through 1993, the local purchase price for the preceding year is adjusted by the applicable percentage increase for the year. The applicable percentage increase is equal to 0 percent for 1991. For 1992 and 1993, the applicable percentage increase is equal to the percentage increase in the CPI-U for the 12-month period ending with June of the previous year.

(iii) For 1994 and 1995, the applicable percentage increase is 0 percent.

(iv) For all subsequent years the applicable percentage increase is equal to the percentage increase in the CPI-U for the 12-month period ending with June of the previous year.

(3) CMS determines the regional purchase price equal to the following:

(i) For 1992, the average (weighted by the relative volume of all claims among carriers) of the local purchase prices for the carriers in the region.

(ii) For 1993 and subsequent years, the regional purchase price for the preceding year adjusted by the applicable percentage increase for the year.

(4) CMS determines a purchase price equal to the following:

(i) For 1989, 1990 and 1991, 100 percent of the local purchase price.

(ii) For 1992, 75 percent of the local purchase price plus 25 percent of the regional purchase price.

(iii) For 1993, 50 percent of the local purchase price plus 50 percent of the regional purchase price.

(iv) For 1994 and subsequent years, 100 percent of the regional purchase price.

(5) For 1992 and subsequent years, CMS determines a national average purchase price equal to the unweighted average of the purchase prices determined under paragraph (b)(4) of this section for all carriers.

(6) CMS determines the fee schedule amount equal to 100 percent of the purchase price determined under paragraph (b)(4) of this section, subject to the following limitations:

(i) For 1992, the amount cannot be greater than 125 percent nor less than 85 percent of the national average purchase price determined under paragraph (b)(5) of this section.

(ii) For 1993 and subsequent years, the amount cannot be greater than 120 percent of the national average nor less than 90 percent of the national average purchase price determined under paragraph (b)(5) of this section.

(c) Payment for therapeutic shoes. The payment rules specified in paragraphs (a) and (b) of this section are applicable to custom molded and extra depth shoes, modifications, and inserts (therapeutic shoes) furnished after December 31, 2004.

[57 FR 57691, Dec. 7, 1992, as amended at 60 FR 35498, July 10, 1995; 73 FR 69937, Nov. 19, 2008]

§ 414.229 Other durable medical equipment - capped rental items.

(a) General payment rule. Payment is made for other durable medical equipment that is not subject to the payment provisions set forth in § 414.220 through § 414.228 as follows:

(1) For items furnished prior to January 1, 2006, payment is made on a rental or purchase option basis in accordance with the rules set forth in paragraphs (b) through (e) of this section.

(2) For items other than power-driven wheelchairs furnished on or after January 1, 2006, payment is made in accordance with the rules set forth in paragraph (f) of this section.

(3) For power-driven wheelchairs furnished on or after January 1, 2006 through December 31, 2010, payment is made in accordance with the rules set forth in paragraphs (f) or (h) of this section.

(4) For power-driven wheelchairs that are not classified as complex rehabilitative power-driven wheelchairs, furnished on or after January 1, 2011, payment is made in accordance with the rules set forth in paragraph (f) of this section.

(5) For power-driven wheelchairs classified as complex rehabilitative power-driven wheelchairs, furnished on or after January 1, 2011, payment is made in accordance with the rules set forth in paragraphs (f) or (h) of this section.

(b) Fee schedule amounts for rental.

(1) For 1989 and 1990, the monthly fee schedule amount for rental of other covered durable medical equipment equals 10 percent of the purchase price recognized as determined under paragraph (c) of this section subject to the following limitation: For 1989 and 1990, the fee schedule amount cannot be greater than 115 percent nor less than 85 percent of the prevailing charge, as determined under § 405.504 of this chapter, established for rental of the item in January 1987, as adjusted by the change in the level of the CPI-U for the 6-month period ending December 1987.

(2) For 1991 and subsequent years, the monthly fee schedule amount for rental of other covered durable medical equipment equals 10 percent of the purchase price recognized as determined under paragraph (c) of this section for each of the first 3 months and 7.5 percent of the purchase price for each of the remaining months.

(3) For power-driven wheelchairs furnished on or after January 1, 2011, the monthly fee schedule amount for rental equipment equals 15 percent of the purchase price recognized as determined under paragraph (c) of this section for each of the first 3 months and 6 percent of the purchase price for each of the remaining months.

(c) Determination of purchase price. The purchase price of other covered durable medical equipment is determined as follows:

(1) For 1989 and 1990.

(i) The carrier determines a base local purchase price amount equal to the average of the purchase prices submitted on an assignment-related basis of new items supplied during the 6-month period ending December 1986.

(ii) The purchase price is equal to the base local purchase price adjusted by the change in the level of the CPI-U for the 6-month period ending December 1987.

(2) For 1991.

(i) The local payment amount is the purchase price for the preceding year adjusted by the covered item update for 1991 and decreased by the percentage by which the average of the reasonable charges for claims paid for all other items described in § 414.229, is lower than the average of the purchase prices submitted for such items during the final 9 months of 1988.

(ii) The purchase price for 1991 is the national limited payment amount as determined using the methodology contained in § 414.220(f).

(3) For years after 1991. The purchase price is determined using the methodology contained in paragraphs (d) through (f) of § 414.220.

(d) Purchase option. Suppliers must offer a purchase option to beneficiaries during the 10th continuous rental month and, for power-driven wheelchairs, the purchase option must also be made available at the time the equipment is initially furnished.

(1) Suppliers must offer beneficiaries the option of purchasing power-driven wheelchairs at the time the supplier first furnishes the item. On or after January 1, 2011, this option is available only for complex rehabilitative power-driven wheelchairs. Payment must be on a lump-sum fee schedule purchase basis if the beneficiary chooses the purchase option. The purchase fee is the amount established in paragraph (c) of this section.

(2) Suppliers must offer beneficiaries the option of converting capped rental items (including power-driven wheelchairs not purchased when initially furnished) to purchased equipment during their 10th continuous rental month. Beneficiaries have one month from the date the supplier makes the offer to accept the purchase option.

(i) If the beneficiary does not accept the purchase option, payment continues on a rental basis not to exceed a period of continuous use of longer than 15 months. After 15 months of rental payments have been paid, the supplier must continue to provide the item without charge, other than a charge for maintenance and servicing fees, until medical necessity ends or Medicare coverage ceases. A period of continuous use is determined under the provisions in § 414.230.

(ii) If the beneficiary accepts the purchase option, payment continues on a rental basis not to exceed a period of continuous use of longer than 13 months. On the first day after 13 continuous rental months during which payment is made, the supplier must transfer title to the equipment to the beneficiary.

(e) Payment for maintenance and servicing.

(1) The carrier establishes a reasonable fee for maintenance and servicing for each rented item of other durable medical equipment. The fee may not exceed 10 percent of the purchase price recognized as determined under paragraph (c) of this section.

(2) Payment of the fee for maintenance and servicing of other durable medical equipment that is rented is made only for equipment that continues to be used after 15 months of rental payments have been made and is limited to the following:

(i) For the first 6-month period, no payments are to be made.

(ii) For each succeeding 6-month period, payment may be made during the first month of that period.

(3) Payment for maintenance and servicing DME purchased in accordance with paragraphs (d)(1) and (d)(2)(ii) of this section, is made on the basis of reasonable and necessary charges.

(f) Rules for capped rental items furnished beginning on or after January 1, 2006.

(1) For items furnished on or after January 1, 2006, payment is made based on a monthly rental fee schedule amount during the period of medical need, but for no longer than a period of continuous use of 13 months. A period of continuous use is determined under the provisions in § 414.230.

(2) The supplier must transfer title to the item to the beneficiary on the first day that begins after the 13th continuous month in which payments are made under paragraph (f)(1) of this section.

(3) Payment for maintenance and servicing of beneficiary-owned equipment is made in accordance with § 414.210(e).

(g) Additional supplier requirements for capped rental items that are furnished beginning on or after January 1, 2007.

(1) The supplier that furnishes an item for the first month during which payment is made using the methodology described in paragraph (f)(1) of this section must continue to furnish the equipment until medical necessity ends, or the 13-month period of continuous use ends, whichever is earlier, unless -

(i) The item becomes subject to a competitive acquisition program implemented in accordance with section 1847(a) of the Act;

(ii) The beneficiary relocates to an area that is outside the normal service area of the supplier that initially furnished the equipment;

(iii) The beneficiary elects to obtain the equipment from a different supplier prior to the expiration of the 13-month rental period; or

(iv) CMS or the carrier determines that an exception should apply in an individual case based on the circumstances.

(2) A capped rental item furnished under this section may not be replaced by the supplier prior to the expiration of the 13-month rental period unless:

(i) The supplier replaces an item with the same, or equivalent, make and model of equipment because the item initially furnished was lost, stolen, irreparably damaged, is being repaired, or no longer functions;

(ii) A physician orders different equipment for the beneficiary. If the need for different equipment is based on medical necessity, then the order must indicate why the equipment initially furnished is no longer medically necessary and the supplier must retain this order in the beneficiary's medical record;

(iii) The beneficiary chooses to obtain a newer technology item or upgraded item and signs an advanced beneficiary notice (ABN); or

(iv) CMS or the carrier determines that a change in equipment is warranted.

(3) Before furnishing a capped rental item, the supplier must disclose to the beneficiary its intentions regarding whether it will accept assignment of all monthly rental claims for the duration of the rental period. A supplier's intentions could be expressed in the form of a written agreement between the supplier and the beneficiary.

(4) No later than two months before the date on which the supplier must transfer title to a capped rental item to the beneficiary, the supplier must disclose to the beneficiary whether it can maintain and service the item after the beneficiary acquires title to it. CMS or its carriers may make exceptions to this requirement on a case-by-case basis.

(h) Purchase of power-driven wheelchairs furnished on or after January 1, 2006.

(1) Suppliers must offer beneficiaries the option to purchase power-driven wheelchairs at the time the equipment is initially furnished.

(2) Payment is made on a lump-sum purchase basis if the beneficiary chooses this option.

(3) On or after January 1, 2011, this option is available only for complex rehabilitative power-driven wheelchairs.

[57 FR 57691, Dec. 7, 1992, as amended at 60 FR 35498, July 10, 1995; 71 FR 65934, Nov. 9, 2006; 75 FR 73622, Nov. 29, 2010]

§ 414.230 Determining a period of continuous use.

(a) Scope. This section sets forth the rules that apply in determining a period of continuous use for rental of durable medical equipment.

(b) Continuous use.

(1) A period of continuous use begins with the first month of medical need and lasts until a beneficiary's medical need for a particular item of durable medical equipment ends.

(2) In the case of a beneficiary receiving oxygen equipment on December 31, 2005, the period of continuous use for the equipment begins on January 1, 2006.

(c) Temporary interruption.

(1) A period of continuous use allows for temporary interruptions in the use of equipment.

(2) An interruption of not longer than 60 consecutive days plus the days remaining in the rental month in which use ceases is temporary, regardless of the reason for the interruption.

(3) Unless there is a break in medical necessity that lasts lnnger than 60 consecutive days plus the days remaining in the rental month in which use ceases, medical necessity is presumed to continue.

(d) Criteria for a new rental period. If an interruption in the use of equipment continues for more than 60 consecutive days plus the days remaining in the rental month in which use ceases, a new rental period begins if the supplier submits all of the following information -

(1) A new prescription.

(2) New medical necessity documentation.

(3) A statement describing the reason for the interruption and demonstrating that medical necessity in the prior episode ended.

(e) Beneficiary moves. A permanent or temporary move made by a beneficiary does not constitute an interruption in the period of continuous use.

(f) New equipment.

(1) If a beneficiary changes equipment or requires additional equipment based on a physician's prescription, and the new or additional equipment is found to be necessary, a new period of continuous use begins for the new or additional equipment. A new period of continuous use does not begin for base equipment that is modified by an addition.

(2) A new period of continuous use does not begin when a beneficiary changes from one stationary oxygen equipment modality to another or from one portable oxygen equipment modality to another.

(g) New supplier. If a beneficiary changes suppliers, a new period of continuous use does not begin.

(h) Oxygen equipment furnished after the 36-month rental period. A new period of continuous use does not begin under any circumstance in the case of oxygen equipment furnished after the 36-month rental period in accordance with § 414.226(h) until the end of the reasonable useful lifetime established for such equipment in accordance with § 414.210(h).

[56 FR 50823, Oct. 9, 1991, as amended at 57 FR 57111, Dec. 3, 1992; 71 FR 65935, Nov. 9, 2006; 73 FR 69937, Nov. 19, 2008; 83 FR 57072, Nov. 14, 2018]

§ 414.232 Special payment rules for transcutaneous electrical nerve stimulators (TENS).

(a) General payment rule. Except as provided in paragraph (b) of this section, payment for TENS is made on a purchase basis with the purchase price determined using the methodology for purchase of inexpensive or routinely purchased items as described in § 414.220. The payment amount for TENS computed under § 414.220(c)(2) is reduced according to the following formula:

(1) Effective April 1, 1990 - the original payment amount is reduced by 15 percent.

(2) Effective January 1, 1991 - the reduced payment amount in paragraph (a)(1) is reduced by 15 percent.

(3) Effective January 1, 1994 - the reduced payment amount in paragraph (a)(1) is reduced by 45 percent.

(b) Exception. In order to permit an attending physician time to determine whether the purchase of the TENS is medically appropriate for a particular patient, two months of rental payments may be made in addition to the purchase price. The rental payments are equal to 10 percent of the purchase price.

[57 FR 57692, Dec. 7, 1992, as amended at 60 FR 35498, July 10, 1995]

§ 414.234 Prior authorization for items frequently subject to unnecessary utilization.

(a) Definitions. For the purpose of this section, the following definitions apply:

Prior authorization is a process through which a request for provisional affirmation of coverage is submitted to CMS or its contractors for review before the item is furnished to the beneficiary and before the claim is submitted for processing.

Provisional affirmation is a preliminary finding that a future claim meets Medicare's coverage, coding, and payment rules.

Required Prior Authorization List is a list of DMEPOS items selected from the Master List and subject to the requirements of prior authorization as a condition of payment.

Unnecessary utilization means the furnishing of items that do not comply with one or more of Medicare's coverage, coding, and payment rules.

(b) Master List of Items Potentially Subject to Face-To-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements.

(1) Master List Inclusion Criteria are as follows:

(i) Any DMEPOS items included in the DMEPOS Fee Schedule that have an average purchase fee of $500 (adjusted annually for inflation using consumer price index for all urban consumers (CPI-U), and reduced by the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost reporting period, or other annual period)) or greater, or an average monthly rental fee schedule of $50 (adjusted annually for inflation using consumer price index for all urban consumers (CPI-U), and reduced by the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost reporting period, or other annual period)) or greater, or are identified as accounting for at least 1.5 percent of Medicare expenditures for all DMEPOS items over a 12-month period that are:

(A) Identified as having a high rate of potential fraud or unnecessary utilization in an Office of Inspector General (OIG) or Government Accountability Office (GAO) report that is national in scope and published in 2015 or later, or

(B) Listed in the 2018 or later Comprehensive Error Rate Testing (CERT) Medicare Fee-for-Service (FFS) Supplemental Improper Payment Data report as having a high improper payment rate, or

(ii) The annual Master List updates shall include any items with at least 1,000 claims and 1 million dollars in payments during a recent 12-month period that are determined to have aberrant billing patterns and lack explanatory contributing factors (for example, new technology or coverage policies). Items with aberrant billing patterns would be identified as those items with payments during a 12-month timeframe that exceed payments made during the preceding 12-months, by the greater of:

(A) Double the percent change of all DMEPOS claim payments for items that meet the above claim and payment criteria, from the preceding 12-month period, or

(B) Exceeding a 30 percent increase in payment, or

(iii) Any item statutorily requiring a face-to-face encounter, a written order prior to delivery, or prior authorization.

(2) The Master List is self-updating at a minimum annually, and is published in the Federal Register.

(3) DMEPOS items identified as having a high rate of fraud or unnecessary utilization in any of the following reports that are national in scope and meeting the payment threshold criteria set forth in paragraph (b)(1) of this section are added to the Master List:

(i) OIG reports published after 2020.

(ii) GAO reports published after 2020.

(iii) Listed in the CERT Medicare FFS Supplemental Improper Payment Data report(s) published after 2020 as having a high improper payment rate.

(4) Items are removed from the Master List after 10 years from the date the item was added to the Master List, unless the item was identified in an OIG report, GAO report, or having been identified in the CERT Medicare FFS Supplemental Improper Payment Data report as having a high improper payment rate, within the 5-year period preceding the anticipated date of expiration.

(5) Items that are discontinued or are no longer covered by Medicare are removed from the Master List.

(6) An item is removed from the list if the cost drops below the payment threshold criteria set forth in paragraph (b)(1)(i) of this section.

(7) An item is removed from the Master List and replaced by its equivalent when the Healthcare Common Procedure Coding System (HCPCS) code representing the item has been discontinued and cross-walked to an equivalent item.

(c) Condition of payment -

(1) Items requiring prior authorization. CMS publishes in the Federal Register and posts on the CMS Prior Authorization Web site a list of items, the Required Prior Authorization List, that require prior authorization as a condition of payment.

(i) The Required Prior Authorization List specified in paragraph (c)(1) of this section is selected from the Master List. CMS may consider factors such as geographic location, item utilization or cost, system capabilities, emerging trends, vulnerabilities identified in official agency reports, or other analysis and may implement prior authorization nationally or locally.

(ii) CMS may elect to limit the prior authorization requirement to a particular region of the country if claims data analysis shows that unnecessary utilization of the selected item(s) is concentrated in a particular region. CMS may elect to exempt suppliers from prior authorization upon demonstration of compliance with Medicare coverage, coding, and payment rules through such prior authorization process.

(iii) The Required Prior Authorization List is effective no less than 60 days after publication and posting.

(2) Denial of claims.

(i) CMS or its contractors denies a claim for an item that requires prior authorization if the claim has not received a provisional affirmation.

(ii) Claims receiving a provisional affirmation may be denied based on either of the following:

(A) Technical requirements that can only be evaluated after the claim has been submitted for formal processing.

(B) Information not available at the time of a prior authorization request.

(d) Submission of prior authorization requests. A prior authorization request must do the following:

(1) Include all relevant documentation necessary to show that the item meets applicable Medicare coverage, coding, and payment rules, including those outlined in § 410.38 and all of the following:

(i) Written order/prescription.

(ii) Relevant information from the beneficiary's medical record.

(iii) Relevant supplier produced documentation.

(2) Be submitted before the item is furnished to the beneficiary and before the claim is submitted for processing.

(e) Review of prior authorization requests.

(1) After receipt of a prior authorization request, CMS or its contractor reviews the prior authorization request for compliance with applicable Medicare coverage, coding, and payment rules.

(2) If applicable Medicare coverage, coding, and payment rules are met, CMS or its contractor issues a provisional affirmation to the requester.

(3) If applicable Medicare coverage, coding, and payment rules are not met, CMS or its contractor issues a non-affirmation decision to the requester.

(4) If the requester receives a non-affirmation decision, the requester may resubmit a prior authorization request before the item is furnished to the beneficiary and before the claim is submitted for processing.

(5) A prior authorization request for an expedited review must include documentation that shows that processing a prior authorization request using a standard timeline for review could seriously jeopardize the life or health of the beneficiary or the beneficiary's ability to regain maximum function. If CMS or its contractor agrees that processing a prior authorization request using a standard timeline for review could seriously jeopardize the life or health of the beneficiary or the beneficiary's ability to regain maximum function, then CMS or its contractor expedites the review of the prior authorization request and communicates the decision following the receipt of all applicable Medicare required documentation.

(f) Suspension of prior authorization requests.

(1) CMS may suspend prior authorization requirements generally or for a particular item or items at any time and without undertaking rulemaking.

(2) CMS provides notification of the suspension of the prior authorization requirements via -

(i) Federal Register notice; and

(ii) Posting on the CMS prior authorization Web site.

[80 FR 81706, Dec. 30, 2015, as amended at 84 FR 60807, Nov. 8, 2019]

§ 414.236 Continuity of pricing when HCPCS codes are divided or combined.

(a) General rule. If a new HCPCS code is added, CMS or contractors make every effort to determine whether the item and service has a fee schedule pricing history. If there is a fee schedule pricing history, the previous fee schedule amounts for the old code(s) are mapped to the new code(s) to ensure continuity of pricing.

(b) Mapping fee schedule amounts based on different kinds of coding changes. When the code for an item is divided into several codes for the components of that item, the total of the separate fee schedule amounts established for the components must not be higher than the fee schedule amount for the original item. When there is a single code that describes two or more distinct complete items (for example, two different but related or similar items), and separate codes are subsequently established for each item, the fee schedule amounts that applied to the single code continue to apply to each of the items described by the new codes. When the codes for the components of a single item are combined in a single global code, the fee schedule amounts for the new code are established by totaling the fee schedule amounts used for the components (that is, use the total of the fee schedule amounts for the components as the fee schedule amount for the global code). When the codes for several different items are combined into a single code, the fee schedule amounts for the new code are established using the average (arithmetic mean), weighted by allowed services, of the fee schedule amounts for the formerly separate codes.

[84 FR 60808, Nov. 8, 2019]

§ 414.238 Establishing fee schedule amounts for new HCPCS codes for items and services without a fee schedule pricing history.

(a) General rule. If a HCPCS code is new and describes items and services that do not have a fee schedule pricing history (classified and paid for previously under a different code), the fee schedule amounts for the new code are established based on the process described in paragraphs (b) or (c) of this section.

(b) Comparability. Fee schedule amounts for new HCPCS codes for items and services without a fee schedule pricing history are established using existing fee schedule amounts for comparable items when items with existing fee schedule amounts are determined to be comparable to the new items and services based on a comparison of: Physical components; mechanical components; electrical components; function and intended use; and additional attributes and features. If there are no items with existing fee schedule amounts that are comparable to the items and services under the new code, the fee schedule amounts for the new code are established in accordance with paragraph (c) of this section.

(c) Use of supplier or commercial price lists.

(1) Fee schedule amounts for items and services without a fee schedule pricing history described by new HCPCS codes that are not comparable to items and services with existing fee schedule amounts may be established using supplier price lists, including catalogs and other retail price lists (such as internet retail prices) that provide information on commercial pricing for the item. Potential appropriate sources for such commercial pricing information can also include payments made by Medicare Advantage plans, as well as verifiable information from supplier invoices and non-Medicare payer data. If the only available price information is from a period other than the fee schedule base period, deflation factors are applied against current pricing in order to approximate the base period price.

(i) The annual deflation factors are specified in program instructions and are based on the percentage change in the consumer price index for all urban consumers (CPI-U) from the mid-point of the year the prices are in effect to the mid-point of the fee schedule base period, as calculated using the following formula: ((base CPI-U minus current CPI-U) divided by current CPI-U) plus one.

(ii) The deflated amounts are then increased by the update factors specified in section 1834(a)(14) of the Act for DME, section 1834(h)(4) of the Act for prosthetic devices, prosthetics, orthotics, and therapeutic shoes and inserts, and section 1834(i)(1)(B) of the Act for surgical dressings.

(2) If within 5 years of establishing fee schedule amounts using supplier or commercial prices, the prices decrease by less than 15 percent, a one-time adjustment to the fee schedule amounts is made using the new prices. The new prices would be used to establish the new fee schedule amounts in the same way that the older prices were used, including application of the deflation formula in paragraph (c)(1) of this section.

[84 FR 60808, Nov. 8, 2019]

Subpart E - Determination of Reasonable Charges Under the ESRD Program
§ 414.300 Scope of subpart.

This subpart sets forth criteria and procedures for payment of the following services furnished to ESRD patients:

(a) Physician services related to renal dialysis.

(b) Physician services related to renal transplantation.

(c) Home dialysis equipment, supplies, and support services.

(d) Epoetin (EPO) furnished by a supplier of home dialysis equipment and supplies to a home dialysis patient for use in the home.

[55 FR 23441, June 8, 1990, as amended at 56 FR 43710, Sept. 4, 1991; 59 FR 1285, Jan. 10, 1994]

§ 414.310 Determination of reasonable charges for physician services furnished to renal dialysis patients.

(a) Principle. Physician services furnished to renal dialysis patients are subject to payment if the services are otherwise covered by the Medicare program and if they are considered reasonable and medically necessary in accordance with section 1862(a)(1)(A) of the Act.

(b) Scope and applicability -

(1) Scope. This section pertains to physician services furnished to the following patients:

(i) Outpatient maintenance dialysis patients who dialyze -

(A) In an independent or hospital-based ESRD facility, or

(B) At home.

(ii) Hospital inpatients for which the physician elects to continue payment under the monthly capitation payment (MCP) method described in § 414.314.

(2) Applicability. These provisions apply to routine professional services of physicians. They do not apply to administrative services performed by physicians, which are paid for as part of a prospective payment for dialysis services made to the facility under § 413.170 of this chapter.

(c) Definitions. For purposes of this section, the following definitions apply:

Administrative services are physician services that are differentiated from routine professional services and other physician services because they are supervision, as described in the definition of “supervision of staff” of this section, or are not related directly to the care of an individual patient, but are supportive of the facility as a whole and of benefit to patients in general. Examples of administrative services include supervision of staff, staff training, participation in staff conferences and in the management of the facility, and advising staff on the procurement of supplies.

Dialysis session is the period of time that begins when the patient arrives at the facility and ends when the patient departs from the facility. In the case of home dialysis, the period begins when the patient prepares for dialysis and generally ends when the patient is disconnected from the machine. In this context, a dialysis facility includes only those parts of the building used as a facility. It does not include any areas used as a physician's office.

Medical direction, in contrast to supervision of staff, is a routine professional service that entails substantial direct involvement and the physical presence of the physician in the delivery of services directly to the patient.

Routine professional services include all physicians' services furnished during a dialysis session and all services listed in paragraph (d) of this section that meet the following requirements:

(1) They are personally furnished by a physician to an individual patient.

(2) They contribute directly to the diagnosis or treatment of an individual patient.

(3) They ordinarily must be performed by a physician.

Supervision of staff, in contrast to medical direction, is an administrative service that does not necessarily require the physician to be present at the dialysis session. It is a general activity primarily concerned with monitoring performance of and giving guidance to other health care personnel (such as nurses and dialysis technicians) who deliver services to patients.

(d) Types of routine professional services. Routine professional services include at least all of the following services when medically appropriate:

(1) Visits to the patient during dialysis, and review of laboratory test results, nurses' notes and any other medical documentation, as a basis for -

(i) Adjustment of the patient's medication or diet, or the dialysis procedure;

(ii) Prescription of medical supplies; and

(iii) Evaluation of the patient's psychosocial status and the appropriateness of the treatment modality.

(2) Medical direction of staff in delivering services to a patient during a dialysis session.

(3) Pre-dialysis and post-dialysis examinations, or examinations that could have been furnished on a pre-dialysis or post-dialysis basis.

(4) Insertion of catheters for patients who are on peritoneal dialysis and do not have indwelling catheters.

(e) Payment for routine professional services. Beginning August 7, 1990, routine professional services furnished by physicians may be paid under either the “initial method” of payment described in § 414.313, (if all of the physicians at the facility elect the initial method) or under the “physician MCP method” described in § 414.314. Physician services furnished after July 31, 1983 and before August 6, 1990, are payable only under the MCP method described in § 414.314.

§ 414.313 Initial method of payment.

(a) Basic rule. Under this method, the intermediary pays the facility for routine professional services furnished by physicians. Payment is in the form of an add-on to the facility's composite rate payment, which is described in part 413, subpart H of this subchapter.

(b) Services for which payment is not included in the add-on payment.

(1) Physician administrative services are considered to be facility services and are paid for as part of the facility's composite rate.

(2) The carrier pays the physician or the beneficiary (as appropriate) under the reasonable charge criteria set forth in subpart E of part 405 of this chapter for the following services:

(i) Physician services that must be furnished at a time other than during the dialysis session (excluding pre-dialysis and post-dialysis examinations and examinations that could have been furnished on a pre-dialysis or post-dialysis basis), such as monthly and semi-annual examinations to review health status and treatment.

(ii) Physician surgical services other than insertion of catheters for patients who are on peritoneal dialysis and do not have indwelling catheters.

(iii) Physician services furnished to hospital inpatients who were not admitted solely to receive maintenance dialysis.

(iv) Administration of hepatitis B vaccine.

(c) Physician election of the initial method.

(1) Each physician in a facility must submit to the appropriate carrier and intermediary that serve the facility a statement of election of the initial method of payment for all the ESRD facility patients that he or she attends.

(2) The initial method of payment applies to dialysis services furnished beginning with the second calendar month after the month in which all physicians in the facility elect the initial method and continues until the effective date of a termination of the election described in paragraph (d) of this section.

(d) Termination of the initial method.

(1) Physicians may terminate the initial method of payment by written notice to the carrier(s) that serves each physician and to the intermediary that serves the facility.

(2) If the notice terminating the initial method is received by the carrier(s) and intermediary -

(i) On or before November 1, the effective date of the termination is January 1 of the year following the calendar year in which the termination notice is received by the carrier(s) and intermediary; or

(ii) After November 1, the effective date of the termination is January 1 of the second year after the calendar year in which the notice is received by the carrier(s) and intermediary.

(e) Determination of payment amount. The factors used in determining the add-on amount are related to program experience. They are re-evaluated periodically and may be adjusted, as determined necessary by CMS, to maintain the payment at a level commensurate with the prevailing charges of other physicians for comparable services.

(f) Publication of payment amount. Revisions to the add-on amounts are published in the Federal Register in accordance with the Department's established rulemaking procedures.

[55 FR 23441, June 8, 1990, as amended at 62 FR 43674, Aug. 15, 1997]

§ 414.314 Monthly capitation payment method.

(a) Basic rules.

(1) Under the monthly capitation payment (MCP) method, the carrier pays an MCP amount for each patient, to cover all professional services furnished by the physician, except those listed in paragraph (b) of this section.

(2) The carrier pays the MCP amount, subject to the deductible and coinsurance provisions, either to the physician if the physician accepts assignment or to the beneficiary if the physician does not accept assignment.

(3) The MCP method recognizes the need of maintenance dialysis patients for physician services furnished periodically over relatively long periods of time, and the capitation amounts are consistent with physicians' charging patterns in their localities.

(4) Payment of the capitation amount for any particular month is contingent upon the physician furnishing to the patient all physician services required by the patient during the month, except those listed in paragraph (b) of this section.

(5) Payment for physician administrative services (§ 414.310) is made to the dialysis facility as part of the facility's composite rate (part 413, subpart H of this subchapter) and not to the physician under the MCP.

(b) Services not included in the MCP.

(1) Services that are not included in the MCP and which may be paid in accordance with the reasonable charge rules set forth in subpart E of part 405 of this chapter are limited to the following:

(i) Administration of hepatitis B vaccine.

(ii) Covered physician services furnished by another physician when the patient is not available to receive, or the attending physician is not available to furnish, the outpatient services as usual (see paragraph (b)(3) of this section).

(iii) Covered physician services furnished to hospital inpatients, including services related to inpatient dialysis, by a physician who elects not to continue to receive the MCP during the period of inpatient stay.

(iv) Surgical services, including declotting of shunts, other than the insertion of catheters for patients on maintenance peritoneal dialysis who do not have indwelling catheters.

(v) Needed physician services that are -

(A) Furnished by the physician furnishing renal care or by another physician;

(B) Not related to the treatment of the patient's renal condition; and

(C) Not furnished during a dialysis session or an office visit required because of the patient's renal condition.

(2) For the services described in paragraph (b)(1)(v) of this section, the following rules apply:

(i) The physician must provide documentation to show that the services are not related to the treatment of the patient's renal condition and that additional visits are required.

(ii) The carrier's medical staff, acting on the basis of the documentation and appropriate medical consultation obtained by the carrier, determines whether additional payment for the additional services is warranted.

(3) The MCP is reduced in proportion to the number of days the patient is -

(i) Hospitalized and the physician elects to bill separately for services furnished during hospitalization; or

(ii) Not attended by the physician or his or her substitute for any reason, including when the physician is not available to furnish patient care or when the patient is not available to receive care.

(c) Determination of payment amount. The amount of payment for the MCP is determined under the Medicare physician fee schedule described in this part 414.

[55 FR 23441, June 8, 1990, as amended at 59 FR 63463, Dec. 8, 1994; 62 FR 43674, Aug. 15, 1997]

§ 414.316 Payment for physician services to patients in training for self-dialysis and home dialysis.

(a) For each patient, the carrier pays a flat amount that covers all physician services required to create the capacity for self-dialysis and home dialysis.

(b) CMS determines the amount on the basis of program experience and reviews it periodically.

(c) The payment is made at the end of the training course, is subject to the deductible and coinsurance provisions, and is in addition to any amounts payable under the initial or MCP methods set forth in §§ 414.313 and 414.314, respectively.

(d) If the training is not completed, the payment amount is proportionate to the time spent in training.

§ 414.320 Determination of reasonable charges for physician renal transplantation services.

(a) Comprehensive payment for services furnished during a 60-day period.

(1) The comprehensive payment is subject to the deductible and coinsurance provisions and is for all surgeon services furnished during a period of 60 days in connection with a renal transplantation, including the usual preoperative and postoperative care, and for immunosuppressant therapy if supervised by the transplant surgeon.

(2) Additional sums, in amounts established on the basis of program experience, may be included in the comprehensive payment for other surgery performed concurrently with the transplant operation.

(3) The amount of the comprehensive payment may not exceed the lower of the following:

(i) The actual charges made for the services.

(ii) Overall national payment levels established under the ESRD program and adjusted to give effect to variations in physician's charges throughout the nation. (These adjusted amounts are the maximum allowances in a carrier's service area for renal transplantation surgery and related services by surgeons.)

(4) Maximum allowances computed under these instructions are revised at the beginning of each calendar year to the extent permitted by the lesser of the following:

(i) Changes in the economic index as described in § 405.504(a)(3)(i) of this chapter.

(ii) Percentage changes in the weighted average of the carrier's prevailing charges (before adjustment by the economic index) for -

(A) A unilateral nephrectomy; or

(B) Another medical or surgical service designated by CMS for this purpose.

(b) Other payments. Payments for covered medical services furnished to the transplant beneficiary by other specialists, as well as for services by the transplant surgeon after the 60-day period covered by the comprehensive payment, are made under the reasonable charge criteria set forth in § 405.502 (a) through (d) of this chapter. The payments for physicians' services in connection with renal transplantations are changed on the basis of program experience and the expected advances in the medical art for this operation.

§ 414.330 Payment for home dialysis equipment, supplies, and support services.

(a) Equipment and supplies -

(1) Basic rule. Except as provided in paragraph (a)(2) of this section, Medicare pays for home dialysis equipment and supplies only under the prospective payment rates established at § 413.210.

(2) Exception for equipment and supplies furnished prior to January 1, 2011. If the conditions in subparagraphs (a)(2) (i) through (iv) of this section are met, Medicare pays for home analysis equipment and supplies on a reasonable charge basis in accordance with subpart E (Criteria for Determination of Reasonable Charges; Reimbursement for Services of Hospital Interns, Residents, and Supervising Physicians) of part 405, but the amount of payment may not exceed the limit for equipment and supplies in paragraph (c)(2) of this section.

(i) The patient elects to obtain home dialysis equipment and supplies from a supplier that is not a Medicare approved dialysis facility.

(ii) The patient certifies to CMS that he or she has only one supplier for all home dialysis equipment and supplies. This certification is made on CMS Form 382 (the “ESRD Beneficiary Selection” form).

(iii) In writing, the supplier -

(A) Agrees to receive Medicare payment for home dialysis supplies and equipment only on an assignment-related basis; and

(B) Certifies to CMS that it has a written agreement with one Medicare approved dialysis facility or, if the beneficiary is also entitled to military or veteran's benefits, one military or Veterans Administration hospital, for each patient. (See part 494 of this chapter for the requirements for a Medicare approved dialysis facility.) Under the agreement, the facility or military or VA hospital agrees to the following:

(1) To furnish all home dialysis support services for each patient in accordance with part 494 (Conditions for Coverage for End-Stage Renal Disease Facilities) of this chapter. (§ 410.52 sets forth the scope and conditions of Medicare Part B coverage of home dialysis services, supplies, and equipment.)

(2) To furnish institutional dialysis services and supplies. (§ 410.50 sets forth the scope and conditions for Medicare Part B coverage of institutional dialysis services and supplies.)

(3) To furnish dialysis-related emergency services.

(4) To arrange for a Medicare approved laboratory to perform dialysis-related laboratory tests that are covered under the composite rate established at § 413.170 and to arrange for the laboratory to seek payment from the facility. The facility then includes these laboratory services in its claim for payment for home dialysis support services.

(5) To arrange for a Medicare approved laboratory to perform dialysis-related laboratory tests that are not covered under the composite rate established at § 413.170 and for which the laboratory files a Medicare claim directly.

(6) To furnish all other necessary dialysis services and supplies (that is, those which are not home dialysis equipment and supplies).

(7) To satisfy all documentation, recordkeeping and reporting requirements in part 494 (Conditions for Coverage for End-Stage Renal Disease Facilities) of this chapter. This includes maintaining a complete medical record of ESRD related items and services furnished by other parties. The facility must report, on the forms required by CMS or the ESRD network, all data for each patient in accordance with subpart U.

(iv) The facility with which the agreement is made must be located within a reasonable distance from the patient's home (that is, located so that the facility can actually furnish the needed services in a practical and timely manner, taking into account variables like the terrain, whether the patient's home is located in an urban or rural area, the availability of transportation, and the usual distances traveled by patients in the area to obtain health care services).

(C) Agrees to report to the ESRD facility providing support services, at least every 45 days, all data (meaning information showing what supplies and services were provided to the patient and when each was provided) for each patient regarding services and items furnished to the patient in accordance with § 494.100(c)(2) of this chapter.

(b) Support services -

(1) Basic rule. Except as provided in paragraph (b)(2) of this section, Medicare pays for support services only under the prospective payment rates established in § 413.210 of this chapter.

(2) Exception for home support services furnished prior to January 1, 2011. If the patient elects to obtain home dialysis equipment and supplies from a supplier that is not an approved ESRD facility, Medicare pays for support services, other than support services furnished by military or VA hospitals referred to in paragraph (a)(2)(iii)(B) of this section, under paragraphs (b)(2) (i) and (ii) of this section but in no case may the amount of payment exceed the limit for support services in paragraph (c)(1) of this section:

(i) For support services furnished by a hospital-based ESRD facility, Medicare pays on a reasonable cost basis in accordance with part 413 of this chapter.

(ii) For support services furnished by an independent ESRD facility, Medicare pays on the basis of reasonable charges that are related to costs and allowances that are reasonable when the services are furnished in an effective and economical manner.

(c) Payment limits for support services, equipment and supplies, and notification of changes to the payment limits apply prior to January 1, 2011 as follows:

(1) Support services. The amount of payment for home dialysis support services is limited to the national average Medicare-allowed charge per patient per month for home dialysis support services, as determined by CMS, plus the median cost per treatment for all dialysis facilities for laboratory tests included under the composite rate, as determined by CMS, multiplied by the national average number of treatments per month.

(2) Equipment and supplies. Payment for home dialysis equipment and supplies is limited to an amount equal to the result obtained by subtracting the support services payment limit in paragraph (c)(1) of this section from the amount (or, in the case of continuous cycling peritoneal dialysis, 130 percent) of the national median payment as determined by CMS that would have been made under the prospective payment rates established in § 413.170 of this chapter for hospital-based facilities.

(3) Notification of changes to the payment limits. Updated data are incorporated into the payment limits when the prospective payment rates established at § 413.170 of this chapter are updated, and changes are announced by notice in the Federal Register without a public comment period. Revisions of the methodology for determining the limits are published in the Federal Register in accordance with the Department's established rulemaking procedures.

[57 FR 54187, Nov. 17, 1992, as amended at 73 FR 20474, Apr. 15, 2008; 75 FR 49202, Aug. 12, 2010]

§ 414.335 Payment for EPO furnished to a home dialysis patient for use in the home.

(a) Prior to January 1, 2011, payment for EPO used at home by a home dialysis patient is made only to either a Medicare approved ESRD facility or a supplier of home dialysis equipment and supplies. Effective January 1, 2011, payment for EPO used at home by a home dialysis patient is made only to a Medicare-approved ESRD facility in accordance with the per treatment payment as defined in § 413.230.

(b) After January 1, 2011, a home and self training amount is added to the per treatment base rate for adult and pediatric patients as defined in § 413.230

[75 FR 49202, Aug. 12, 2010]

Subpart F - Competitive Bidding for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
§ 414.400 Purpose and basis.

This subpart implements competitive bidding programs for certain DMEPOS items as required by sections 1847(a) and (b) of the Act.

[72 FR 18084, Apr. 10, 2007]

§ 414.402 Definitions.

For purposes of this subpart, the following definitions apply:

Affected party means a contract supplier that has been notified that their DMEPOS CBP contract will be terminated for a breach of contract.

Bid means an offer to furnish an item or items for a particular price and time period that includes, where appropriate, any services that are directly related to the furnishing of the item or items.

Bidding entity means the entity whose legal business name is identified in the “Form A: Business Organization Information” section of the bid.

Breach of contract means any deviation from contract requirements, including a failure to comply with a governmental agency or licensing organization requirements, constitutes a breach of contract.

Competitive bidding area (CBA) means an area established by the Secretary under this subpart.

Competitive bidding program means a program established under this subpart within a designated CBA.

Composite bid means the bid submitted by the supplier for the lead item in the product category.

Contract supplier means an entity that is awarded a contract by CMS to furnish items under a competitive bidding program.

Corrective action plan (CAP) means a contract supplier's written document with supporting information that describes the actions the contract supplier will take within a specified timeframe to remedy a breach of contract.

Covered document means a financial, tax, or other document required to be submitted by a bidder as part of an original bid submission under a competitive acquisition program in order to meet the required financial standards.

Covered document review date means the later of -

(1) The date that is 30 days before the final date for the closing of the bid window; or

(2) The date that is 30 days after the opening of the bid window.

DMEPOS stands for durable medical equipment, prosthetics, orthotics, and supplies.

Grandfathered item means all rented items within a product category for which payment was made prior to the implementation of a competitive bidding program to a grandfathered supplier that chooses to continue to furnish the items in accordance with § 414.408(j) of this subpart and that fall within the following payment categories for competitive bidding:

(1) An inexpensive or routinely purchased item described in § 414.220 of this part.

(2) An item requiring frequent and substantial servicing, as described in § 414.222 of this part.

(3) Oxygen and oxygen equipment described in § 414.226 of this part.

(4) Other DME described in § 414.229 of this part.

Grandfathered supplier means a noncontract supplier that chooses to continue to furnish grandfathered items to a beneficiary in a CBA.

Hearing officer means an individual, who was not involved with the CBIC recommendation to take action for a breach of a DMEPOS Competitive Bidding Program contract, who is designated by CMS to review and make an unbiased and independent recommendation when there is an appeal of CMS's initial determination to take action for a breach of a DMEPOS Competitive Bidding Program contract.

Hospital has the same meaning as in section 1861(e) of the Act.

Item means a product included in a competitive bidding program that is identified by a HCPCS code, which may be specified for competitive bidding (for example, a product when it is furnished through mail order), or a combination of codes and/or modifiers, and includes the services directly related to the furnishing of that product to the beneficiary. Items that may be included in a competitive bidding program are:

(1) Durable medical equipment (DME) other than class III devices under the Federal Food, Drug and Cosmetic Act, as defined in § 414.202 of this part and group 3 complex rehabilitative wheelchairs and further classified into the following categories:

(i) Inexpensive or routinely purchased items, as specified in § 414.220(a).

(ii) Items requiring frequent and substantial servicing, as specified in § 414.222(a).

(iii) Oxygen and oxygen equipment, as specified in § 414.226(c)(1).

(iv) Other DME (capped rental items), as specified in § 414.229.

(2) Supplies necessary for the effective use of DME other than inhalation and infusion drugs.

(3) Enteral nutrients, equipment, and supplies.

(4) Off-the-shelf orthotics, which are orthotics described in section 1861(s)(9) of the Act that require minimal self-adjustment for appropriate use and do not require expertise in trimming, bending, molding, assembling or customizing to fit a beneficiary.

Item weight is a number assigned to an item based on its beneficiary utilization rate using national data when compared to other items in the same product category.

Lead item is the item in a product category with multiple items with the highest total nationwide Medicare allowed charges of any item in the product category prior to each competition.

Mail order contract supplier is a contract supplier that furnishes items through the mail to beneficiaries who maintain a permanent residence in a competitive bidding area.

Mail order item means any item (for example, diabetic testing supplies) shipped or delivered to the beneficiary's home, regardless of the method of delivery.

Metropolitan Statistical Area (MSA) has the same meaning as that given by the Office of Management and Budget.

Minimal self-adjustment means an adjustment that the beneficiary, caretaker for the beneficiary, or supplier of the device can perform and does not require the services of a certified orthotist (that is, an individual certified by either the American Board for Certification in Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist Certification) or an individual who has specialized training.

National mail order DMEPOS competitive bidding program means a program whereby contracts are awarded to suppliers for the furnishing of mail order items across the nation.

Nationwide competitive bidding area means a CBA that includes the United States, its Territories, and the District of Columbia.

Nationwide mail order contract supplier means a mail order contract supplier that furnishes items in a nationwide competitive bidding area.

Network means a group of small suppliers that form a legal entity to provide competitively bid items throughout the entire CBA.

Noncontract supplier means a supplier that is not awarded a contract by CMS to furnish items included in a competitive bidding program.

Non-mail order item means any item (for example, diabetic testing supplies) that a beneficiary or caregiver picks up in person at a local pharmacy or supplier storefront.

Parties to the hearing means the DMEPOS contract supplier and CMS.

Physician has the same meaning as in section 1861(r) of the Act.

Pivotal bid means the lowest composite bid based on bids submitted by suppliers for a product category that includes a sufficient number of suppliers to meet beneficiary demand for the items in that product category.

Price inversion means any situation where the following occurs: One item (HCPCS code) in a grouping of similar items (e.g., walkers, enteral infusion pumps, or power wheelchairs) in a product category includes a feature that another, similar item in the same product category does not have (e.g., wheels, alarm, or Group 2 performance); the average of the 2015 fee schedule amounts (or initial, unadjusted fee schedule amounts for subsequent years for new items) for the code with the feature is higher than the average of the 2015 fee schedule amounts for the code without the feature; and, following a competition, the SPA for the code with the feature is lower than the SPA for the code without that feature.

Product category means a grouping of related items that are used to treat a similar medical condition.

Regional competitive bidding area means a CBA that consists of a region of the United States, its Territories, and the District of Columbia.

Regional mail order contract supplier means a mail order contract supplier that furnishes items in a regional competitive bidding area.

Single payment amount means the allowed payment for an item furnished under a competitive bidding program.

Small supplier means, a supplier that generates gross revenue of $3.5 million or less in annual receipts including Medicare and non-Medicare revenue.

Supplier means an entity with a valid Medicare supplier number, including an entity that furnishes an item through the mail.

Total nationwide allowed services means the total number of services allowed for an item furnished in all states, territories, and the District of Columbia where Medicare beneficiaries reside and can receive covered DMEPOS items and services.

Treating practitioner means a physician assistant, nurse practitioner, or clinical nurse specialist, as those terms are defined in section 1861(aa)(5) of the Act.

Weighted bid means the item weight multiplied by the bid price submitted for that item.

[72 FR 18084, Apr. 10, 2007, as amended at 74 FR 2880, Jan. 16, 2009; 74 FR 62009, Nov. 25, 2009; 75 FR 73622, Nov. 29, 2010; 76 FR 70314, Nov. 10, 2011; 81 FR 77966, Nov. 4, 2016; 83 FR 21925, May 11, 2018; 83 FR 57072, Nov. 14, 2018]

§ 414.404 Scope and applicability.

(a) Applicability. Except as specified in paragraph (b) of this section, this subpart applies to all suppliers that furnish the items defined in § 414.402 to beneficiaries, including providers, physicians, treating practitioners, physical therapists, and occupational therapists that furnish such items under Medicare Part B.

(b) Exceptions.

(1) Physicians, treating practitioners, and hospitals may furnish certain types of competitively bid durable medical equipment without submitting a bid and being awarded a contract under this subpart, provided that all of the following conditions are satisfied:

(i) The items furnished are limited to crutches, canes, walkers, folding manual wheelchairs, blood glucose monitors, and infusion pumps that are DME, and off-the-shelf (OTS) orthotics.

(ii) The items are furnished by the physician or treating practitioner to his or her own patients as part of his or her professional service or by a hospital to its own patients during an admission or on the date of discharge.

(iii) The items are billed under a billing number assigned to the hospital, physician, the treating practitioner (if possible), or a group practice to which the physician or treating practitioner has reassigned the right to receive Medicare payment.

(2) A physical therapist in private practice (as defined in § 410.60(c) of this chapter) or an occupational therapist in private practice (as defined in § 410.59(c) of this chapter) may furnish competitively bid off-the-shelf orthotics without submitting a bid and being awarded a contract under this subpart, provided that the items are furnished only to the therapist's own patients as part of the physical or occupational therapy service.

(3) Payment for items furnished in accordance with paragraphs (b)(1) and (b)(2) of this section will be paid in accordance with § 414.408(a).

[72 FR 18084, Apr. 10, 2007, as amended at 74 FR 2880, Jan. 16, 2009; 75 FR 73623, Nov. 29, 2010; 76 FR 70314, Nov. 10, 2011]

§ 414.406 Implementation of programs.

(a) Implementation contractor. CMS designates one or more implementation contractors for the purpose of implementing this subpart.

(b) Competitive bidding areas. CMS designates through program instructions or by other means, such as the request for bids, each CBA in which a competitive bidding program may be implemented under this subpart.

(c) Revisions to competitive bidding areas. CMS may revise the CBAs designated under paragraph (b) of this section.

(d) Competitively bid items. CMS designates the items that are included in a competitive bidding program through program instructions or by other means

(e) Claims processing. The Durable Medical Equipment Medicare Administrative Contractor designated to process DMEPOS claims for a particular geographic region also processes claims for items furnished under a competitive bidding program in the same geographic region.

[71 FR 48409, Aug. 18, 2006, as amended at 72 FR 18085, Apr. 10, 2007]

§ 414.408 Payment rules.

(a) Payment basis.

(1) The payment basis for an item furnished under a competitive bidding program is 80 percent of the single payment amount calculated for the item under § 414.416 for the CBA in which the beneficiary maintains a permanent residence.

(2) If an item that is included in a competitive bidding program is furnished to a beneficiary who does not maintain a permanent residence in a CBA, the payment basis for the item is 80 percent of the lesser of the actual charge for the item, or the applicable fee schedule amount for the item, as determined under subpart C or subpart D.

(b) No changes to the single payment amount. The single payment amount calculated for each item under each competitive bidding program is paid for the duration of the competitive bidding program and will not be adjusted by any update factor.

(c) Payment on an assignment-related basis. Payment for an item furnished under this subpart is made on an assignment-related basis.

(d) Applicability of advanced beneficiary notice. Implementation of a program in accordance with this subpart does not preclude the use of an advanced beneficiary notice.

(e) Requirement to obtain competitively bid items from a contract supplier.

(1) General rule. Except as provided in paragraph (e)(2) of this section, all items that are included in a competitive bidding program must be furnished by a contract supplier for that program.

(2) Exceptions.

(i) A grandfathered supplier may furnish a grandfathered item to a beneficiary in accordance with paragraph (j) of this section.

(ii) Medicare may make a secondary payment for an item furnished by a noncontract supplier that the beneficiary is required to use under his or her primary insurance policy. The provisions of this paragraph do not supersede Medicare secondary payer statutory and regulatory provisions, including the Medicare secondary payment rules located in §§ 411.32 and 411.33 of this subchapter, and payment will be calculated in accordance with those rules.

(iii) If a beneficiary is outside of the CBA in which he or she maintains a permanent residence, he or she may obtain an item from a -

(A) Contract supplier, if the beneficiary obtains the item in another CBA and the item is included in the competitive bidding program for that CBA; or

(B) Supplier with a valid Medicare billing number, if the beneficiary obtains the item in an area that is not a CBA, or if the beneficiary obtains the item in another CBA but the item is not included in the competitive bidding program for that CBA.

(iv) A physician, treating practitioner, physical therapist in private practice, occupational therapist in private practice, or hospital may furnish an item in accordance with § 414.404(b) of this subpart.

(3) Unless paragraph (e)(2) of this section applies:

(i) Medicare will not make payment for an item furnished in violation of paragraph (e)(1) of this section, and

(ii) A beneficiary has no financial liability to a noncontract supplier that furnishes an item included in the competitive bidding program for a CBA in violation of paragraph (e)(1) of this section, unless the beneficiary has signed an advanced beneficiary notice.

(4) CMS separately designates the Medicare billing number of all noncontract suppliers to monitor compliance with paragraphs (e)(1) and (e)(2) of this section.

(f) Purchased equipment.

(1) The single payment amounts for new purchased durable medical equipment, including power wheelchairs that are purchased when the equipment is initially furnished and enteral nutrition equipment are calculated based on the bids submitted and accepted for these items. For contracts entered into beginning on or after January 1, 2011, payment on a lump sum purchase basis is only available for power wheelchairs classified as complex rehabilitative power wheelchairs.

(2) Payment for used purchased durable medical equipment and enteral nutrition equipment is made in an amount equal to 75 percent of the single payment amounts calculated for new purchased equipment under paragraph (f)(1) of this section.

(g) Purchased supplies and orthotics. The single payment amounts for the following purchased items are calculated based on the bids submitted and accepted for the following items:

(1) Supplies used in conjunction with durable medical equipment.

(2) Enteral nutrients.

(3) Enteral nutrition supplies.

(4) OTS orthotics.

(h) Rented equipment -

(1) Capped rental DME. Subject to the provisions of paragraph (h)(2) of this section, payment for capped rental durable medical equipment is made in an amount equal to 10 percent of the single payment amounts calculated for new durable medical equipment under paragraph (f)(1) of this section for each of the first 3 months, and 7.5 percent of the single payment amounts calculated for these items for each of the remaining months 4 through 13.

(2) For contracts entered into beginning on or after January 1, 2011, the monthly fee schedule amount for rental of power wheelchairs equals 15 percent of the single payment amounts calculated for new durable medical equipment under paragraph (f)(1) of this section for each of the first 3 months, and 6 percent of the single payment amounts calculated for these items for each of the remaining months 4 through 13.

(3) Additional payment to certain contract suppliers for capped rental DME.

(i) Except as specified in paragraph (h)(3)(ii) of this section, Medicare makes 13 monthly payments to a contract supplier that furnishes capped rental durable medical equipment to a beneficiary who would otherwise be entitled to obtain the item from a grandfathered supplier under paragraph (j) of this section. Payment is made using the methodology described in paragraph (h)(1) of this section. The contract supplier must transfer title to the item to the beneficiary on the first day that begins after the 13th continuous month in which payments are made in accordance with this paragraph.

(ii) Medicare does not make payment to a contract supplier under paragraph (h)(3)(i) of this section if the contract supplier furnishes capped rental durable medical equipment to a beneficiary who previously rented the equipment from another contract supplier.

(4) Maintenance and servicing of rented DME. Separate maintenance and servicing payments are not made for any rented durable medical equipment.

(5) Payment for rented enteral nutrition equipment. Payment for rented enteral nutrition equipment is made in an amount equal to 10 percent of the single payment amounts calculated for new enteral nutrition equipment under paragraph (f)(1) of this section for each of the first 3 months, and 7.5 percent of the single payment amount calculated for these items under paragraph (f)(1) of this section for each of the remaining months 4 through 15. The contract supplier to which payment is made in month 15 for furnishing enteral nutrition equipment on a rental basis must continue to furnish, maintain and service the equipment until a determination is made by the beneficiary's physician or treating practitioner that the equipment is no longer medically necessary.

(6) Maintenance and servicing of rented enteral nutrition equipment. Payment for the maintenance and servicing of rented enteral nutrition equipment beginning 6 months after 15 months of rental payments is made in an amount equal to 5 percent of the single payment amounts calculated for these items under paragraph (f)(1) of this section.

(7) Payment for inexpensive or routinely purchased durable medical equipment. Payment for inexpensive or routinely purchased durable medical equipment furnished on a rental basis is made in an amount equal to 10 percent of the single payment amount calculated for new purchased equipment.

(8) Payment amounts for rented DME requiring frequent and substantial servicing -

(i) General rule. Except as provided in paragraph (h)(7)(ii) of this section, the single payment amounts for rented durable medical equipment requiring frequent and substantial servicing are calculated based on the rental bids submitted and accepted for the furnishing of these items on a monthly basis.

(ii) Exception. The single payment amounts for continuous passive motion exercise devices are calculated based on the bids submitted and accepted for the furnishing of these items on a daily basis.

(i) Monthly payment amounts for oxygen and oxygen equipment -

(1) Basic payment amount. Subject to the provisions of paragraph (i)(2) of this section, the single payment amounts for oxygen and oxygen equipment are calculated based on the bids submitted and accepted for the furnishing on a monthly basis of each of the five classes of oxygen and oxygen equipment described in § 414.226(c)(1).

(2) Additional payment to certain contract suppliers.

(i) Except as specified in paragraph (i)(2)(iii) of this section, Medicare makes monthly payments to a contract supplier that furnishes oxygen equipment to a beneficiary who would otherwise be entitled to obtain the item from a grandfathered supplier under paragraph (j) of this section as follows:

(A) If Medicare made 26 or less monthly payments to the former supplier, Medicare makes a monthly payment to the contract supplier for up to the number of months equal to the difference between 36 and the number of months for which payment was made to the former supplier.

(B) If Medicare made 27 or more monthly payments to the former supplier, Medicare makes 10 monthly payments to the contract supplier.

(ii) Payment is made using the methodology described in paragraph (i)(1) of this section. On the first day after the month in which the final rental payment is made under paragraph (i)(2)(i) of this section, the contract supplier must transfer title of the oxygen equipment to the beneficiary.

(iii) Medicare does not make payment to a contract supplier under paragraph (i)(2) of this section if the contract supplier furnishes oxygen equipment to a beneficiary who previously rented the equipment from another contract supplier.

(j) Special rules for certain rented durable medical equipment and oxygen and oxygen equipment -

(1) Supplier election.

(i) A supplier that is furnishing durable medical equipment or is furnishing oxygen or oxygen equipment on a rental basis to a beneficiary prior to the implementation of a competitive bidding program in the CBA where the beneficiary maintains a permanent residence may elect to continue furnishing the item as a grandfathered supplier.

(ii) A supplier that elects to be a grandfathered supplier must continue to furnish the grandfathered items to all beneficiaries who elect to continue receiving the grandfathered items from that supplier for the remainder of the rental period for that item.

(2) Payment for grandfathered items furnished during the first competitive bidding program implemented in a CBA. Payment for grandfathered items furnished during the first competitive bidding program implemented in a CBA is made as follows:

(i) For inexpensive and routinely purchased items described in § 414.220(a), payment is made in the amount determined under § 414.220(b).

(ii) For other durable medical equipment or capped rental items described in § 414.229, payment is made in the amount determined under § 414.229(b).

(iii) For items requiring frequent and substantial servicing described in § 414.222, payment is made in accordance with paragraph (a)(1) of this section.

(iv) For oxygen and oxygen equipment described in § 414.226(c)(1), payment is made in accordance with paragraph (a)(1) of this section.

(3) Payment for grandfathered items furnished during all subsequent competitive bidding programs in a CBA. Beginning with the second competitive bidding program implemented in a CBA, payment is made for grandfathered items in accordance with paragraph (a)(1) of this section.

(4) Choice of suppliers.

(i) Beneficiaries who are renting an item that meets the definition of a grandfathered item in § 414.402 of this subpart may elect to obtain the item from a grandfathered supplier.

(ii) A beneficiary who is otherwise entitled to obtain a grandfathered item from a grandfathered supplier under paragraph (j) of this section may elect to obtain the same item from a contract supplier at any time after a competitive bidding program is implemented.

(iii) If a beneficiary elects to obtain the same item from a contract supplier, payment is made for the item accordance with paragraph (a)(1) of this section.

(5) Notification of beneficiaries and CMS by suppliers that choose to become grandfathered suppliers.

(i) Notification of beneficiaries by suppliers.

(A) Requirements of notification. A noncontract supplier that elects to become a grandfathered supplier must provide a 30-day written notification to each Medicare beneficiary that resides in a competitive bidding area and is currently renting a competitively bid item from that supplier. The 30-day notification to the beneficiary must meet the following requirements:

(1) Be sent by the supplier to the beneficiary at least 30 business days before the start date of the implementation of the competitive bidding program for the CBA in which the beneficiary resides.

(2) Identify the grandfathered items that the supplier is willing to continue to rent to the beneficiary.

(3) Be in writing (for example, by letter or postcard) and the supplier must maintain proof of delivery.

(4) State that the supplier is willing to continue to furnish certain rented Durable Medical Equipment (DME), oxygen and oxygen equipment, and supplies that the supplier is currently furnishing to the beneficiary (that is, before the start of the competitive bidding program) and is willing to continue to provide these items to the beneficiary for the remaining rental months.

(5) State that the beneficiary has the choice to continue to receive a grandfathered item(s) from the grandfathered supplier or may elect to receive the item(s) from a contract supplier after the end of the last month for which a rental payment is made to the noncontract supplier.

(6) Provide the supplier's telephone number and instruct the beneficiary to call the supplier with any questions and to notify the supplier of his or her decision to use or not use the supplier as a grandfathered supplier.

(7) State that the beneficiary can obtain information about the competitive bidding program by calling 1-800-MEDICARE or on the Internet at http://www.Medicare.gov.

(B) Record of beneficiary's choice. The supplier should obtain an election from the beneficiary regarding whether to use or not use the supplier as a grandfathered supplier. The supplier must maintain a record of its attempts to communicate with the beneficiary to obtain the beneficiary's election regarding grandfathering. When the supplier obtains such an election, the supplier must maintain a record of the beneficiary decision including the date the choice was made, and how the beneficiary communicated his or her choice to the supplier.

(C) Notification. If the beneficiary chooses not to continue to receive a grandfathered item(s) from their current supplier, the supplier must provide the beneficiary with 2 more notices in addition to the 30-day notice prior to the supplier picking up its equipment.

(1) 10-day notification: Ten business days prior to picking up the item, the supplier should have direct contact (for example, a phone call) with the beneficiary or the beneficiary's caregiver and receive acknowledgement that the beneficiary understands their equipment will be picked up. This should occur on the first anniversary date after the start of the CBP or on another date agreed to by the beneficiary or the beneficiary's caregiver. The beneficiary's anniversary date occurs every month and is the date of the month on which the item was first delivered to the beneficiary by the current supplier. When a date other than the anniversary date is chosen by the beneficiary or the beneficiary's caregiver, the noncontract supplier will still receive payment up to the anniversary date after the start of the CBP, and the new contract supplier may not bill for any period of time before the anniversary date.

(2) 2-day notification: Two business days prior to picking up the item the supplier should contact the beneficiary or the beneficiary's caregiver by phone to notify the beneficiary of the date the supplier will pick up the item. This date should not be before the beneficiary's first anniversary date that occurs after the start of the competitive bidding program unless an alternative arrangement has been made with the beneficiary and the new contract supplier.

(D) Pickup procedures.

(1) The pickup of the noncontract supplier's equipment and the delivery of the new contract supplier's equipment should occur on the same date, that is, the first rental anniversary date of the equipment that occurs after the start of the competitive bidding program unless an alternative arrangement has been made with the beneficiary and the new contract supplier.

(2) Under no circumstance should a supplier pick up a rented item prior to the supplier's receiving acknowledgement from the beneficiary that the beneficiary is aware of the date on which the supplier is picking up the item and the beneficiary has made arrangements to have the item replaced on that date by a contract supplier.

(3) When a beneficiary chooses to switch to a new contract supplier, the current noncontract supplier and the new contract supplier must make arrangements that are suitable to the beneficiary.

(4) The contract supplier may not submit a claim with a date of delivery for the new equipment that is prior to the first anniversary date that occurs after the beginning of the CBP, and the contract supplier may not begin billing until the first anniversary date that occurs after the beginning of the CBP.

(5) The noncontract supplier must submit a claim to be paid up to the first anniversary date that occurs after the beginning of the CBP. Therefore, they should not pick up the equipment before that date unless an alternative arrangement has been made with the beneficiary and the new contract supplier.

(ii) Notification to CMS by suppliers. A noncontract supplier that elects to become a grandfathered supplier must provide a written notification to CMS of this decision. This notification must meet the following requirements:

(A) State that the supplier agrees to continue to furnish certain rented DME, oxygen and oxygen equipment that it is currently furnishing to beneficiaries (that is, before the start of the competitive bidding program) in a CBA and will continue to provide these items to these beneficiaries for the remaining months of the rental period.

(B) Include the following information:

(1) Name and address of the supplier.

(2) The 6-digit NSC number of the supplier.

(3) Product category(s) by CBA for which the supplier is willing to be a grandfathered supplier.

(C) State that the supplier agrees to meet all the terms and conditions pertaining to grandfathered suppliers.

(D) Be provided by the supplier to CMS in writing at least 30 business days before the start date of the implementation of the Medicare DMEPOS Competitive Bidding Program.

(6) Suppliers that choose not to become grandfathered suppliers.

(i) Requirement for non-grandfathered supplier. A noncontract supplier that elects not to become a grandfathered supplier is required to pick up the item it is currently renting to the beneficiary from the beneficiary's home after proper notification.

(ii) Notification. Proper notification includes a 30-day, a 10-day, and a 2-day notice of the supplier's decision not to become a grandfathered supplier to its Medicare beneficiaries who are currently renting certain DME competitively bid item(s) and who reside in a CBA.

(iii) Requirements of notification. These notifications must meet all of the requirements listed in paragraph (j)(5)(i) of this section for the 30-day, 10-day and 2-day notices that must be sent by suppliers who decide to be grandfathered suppliers, with the following exceptions for the 30-day notice.

(A) State that, for those items for which the supplier has decided not to be a grandfathered supplier, the supplier will only continue to rent these competitively bid item(s) to its beneficiaries up to the first anniversary date that occurs after the start of the Medicare DMEPOS Competitive Bidding Program.

(B) State that the beneficiary must select a contract supplier for Medicare to continue to pay for these items.

(C) Refer the beneficiary to the contract supplier locator tool on and to 1-800-MEDICARE to obtain information about the availability of contract suppliers for the beneficiary's area.

(iv) Pickup procedures.

(A) The pick-up of the noncontract supplier's equipment and the delivery of the new contract supplier's equipment should occur on the same date, that is, the first rental anniversary date of the equipment that occurs after the start of the competitive bidding program unless an alternative arrangement has been made with the beneficiary and the new contract supplier.

(B) Under no circumstance should a supplier pick up a rented item prior to the supplier's receiving acknowledgement from the beneficiary that the beneficiary is aware of the date on which the supplier is picking up the item and the beneficiary has made arrangements to have the item replaced on that date by a contract supplier.

(C) When a beneficiary chooses to switch to a new contract supplier, the current noncontract supplier and the new contract supplier must make arrangements that are agreeable to the beneficiary.

(D) The contract supplier cannot submit a claim with a date of delivery for the new equipment that is prior to the first anniversary date that occurs after the beginning of the CBP.

(7) Payment for accessories and supplies for grandfathered items. Accessories and supplies that are used in conjunction with and are necessary for the effective use of a grandfathered item may be furnished by the same grandfathered supplier that furnishes the grandfathered item. Payment is made in accordance with paragraph (a)(1) of this section.

(k) Payment for maintenance, servicing and replacement of beneficiary-owned items.

(1) Payment is made for the maintenance and servicing of beneficiary-owned items, provided the maintenance and servicing is performed by a contract supplier or a noncontract supplier having a valid Medicare billing number, as follows:

(i) Payment for labor is made in accordance with § 414.210(e)(1) of subpart D.

(ii) Payment for parts that are not items (as defined in § 414.402) is made in accordance with § 414.210(e)(1) of subpart D.

(iii) Payment for parts that are items (as defined in § 414.402) is made in accordance with paragraph (a)(1) of this section.

(2) Additional payments are made in accordance with § 414.210(e)(2), (e)(3) and (e)(5) of this part for the maintenance and servicing of oxygen equipment if performed by a contract supplier or a noncontract supplier having a valid Medicare billing number.

(3) Beneficiaries must obtain a replacement of a beneficiary-owned item, other than parts needed for the repair of beneficiary-owned equipment from a contract supplier. Payment is made for the replacement item in accordance with paragraph (a)(1) of this section.

(l) Exceptions for certain items and services paid in accordance with special payment rules. The payment rules in paragraphs (f) thru (h), (j)(2), (j)(3), and (j)(7), and (k) of this section do not apply to items and services paid in accordance with the special payment rules at § 414.409.

[72 FR 18085, Apr. 10, 2007, as amended at 74 FR 2880, Jan. 16, 2009; 74 FR 62009, Nov. 25, 2009; 75 FR 73623, Nov. 29, 2010; 76 FR 70315, Nov. 10, 2011; 79 FR 66264, Nov. 6, 2014]

§ 414.409 Special payment rules.

(a) Payment on a bundled, continuous rental basis. In no more than 12 CBAs, in conjunction with competitions that begin after January 1, 2015, payment is made on a bundled, continuous monthly rental basis for standard power wheelchairs and continuous positive airway pressure (CPAP) devices. The CBAs and competitions where these payment rules apply are announced in advance of each competition, with the payment rules in this section used in lieu of the payment rules at § 414.408(f) thru (h), (j)(2), (j)(3), and (j)(7), and (k). The single payment amounts are established based on bids submitted and accepted for furnishing rented standard power wheelchairs and CPAP devices on a monthly basis for each month of medical need during the contract period. The single payment amount for the monthly rental of the DME includes payment for the rented equipment, maintenance and servicing of the rented equipment, and replacement of supplies and accessories necessary for the effective use of the rented equipment. Separate payment for replacement of equipment, repair or maintenance and servicing of equipment, or for replacement of accessories and supplies necessary for the effective use of equipment is not allowed under any circumstance.

(b) Payment for grandfathered DME items paid on a bundled, continuous rental basis. Payment to a supplier that elects to be a grandfathered supplier of DME furnished in CBPs where these special payment rules apply is made in accordance with § 414.408(a)(1).

(c) Supplier transitions for DME paid on a bundled, continuous rental basis. Changes from a non-contract supplier to a contract supplier at the beginning of a CBP where payment is made on a bundled, continuous monthly rental basis results in the contract supplier taking on responsibility for meeting all of the monthly needs for furnishing the covered DME. In the event that a beneficiary relocates from a CBA where these special payment rules apply to an area where rental cap rules apply, a new period of continuous use begins for the capped rental item as long as the item is determined to be medically necessary.

(d) Responsibility for repair and maintenance and servicing of power wheelchairs. In no more than 12 CBAs where payment for power wheelchairs is made on a capped rental basis, for power wheelchairs furnished in conjunction with competitions that begin after January 1, 2015, contract suppliers that furnish power wheelchairs under contracts awarded based on these competitions shall continue to repair power wheelchairs they furnish following transfer of title to the equipment to the beneficiary. The responsibility of the contract supplier to repair, maintain and service beneficiary-owned power wheelchairs does not apply to power wheelchairs that the contract supplier did not furnish to the beneficiary. For power wheelchairs that the contract supplier furnishes during the contract period, the responsibility of the contract supplier to repair, maintain and service the power wheelchair once it is owned by the beneficiary continues until the reasonable useful lifetime of the equipment expires, coverage for the power wheelchair ends, or the beneficiary relocates outside the CBA where the item was furnished. The contract supplier may not charge the beneficiary or the program for any necessary repairs or maintenance and servicing of a beneficiary-owned power wheelchair it furnished during the contract period.

[79 FR 66264, Nov. 6, 2014]

§ 414.410 Phased-in implementation of competitive bidding programs.

(a) Phase-in of competitive bidding programs. CMS phases in competitive bidding programs so that competition under the programs occurs -

(1) In CY 2009, in Cincinnati - Middletown (Ohio, Kentucky and Indiana), Cleveland - Elyria - Mentor (Ohio), Charlotte - Gastonia - Concord (North Carolina and South Carolina), Dallas - Fort Worth - Arlington (Texas), Kansas City (Missouri and Kansas), Miami - Fort Lauderdale - Miami Beach (Florida), Orlando (Florida), Pittsburgh (Pennsylvania), and Riverside - San Bernardino - Ontario (California).

(2) In CY 2011, in an additional 91 MSAs (the additional 70 MSAs selected by CMS as of June 1, 2008, and the next 21 largest MSAs by total population based on 2009 population estimates, and not already phased in as of June 1, 2008). CMS may subdivide any of the 91 MSAs with a population of greater than 8,000,000 into separate CBAs, thereby resulting in more than 91 CBAs.

(3) After CY 2011, additional CBAs (or, in the case of national mail order for items and services, after CY 2010).

(4) For competitions (other than for national mail order items and services) after CY 2011 and prior to CY 2015, the following areas are excluded:

(i) Rural areas.

(ii) MSAs not selected under paragraphs (a)(1) or (a)(2) of this section with a population of less than 250,000.

(iii) An area with low population density within an MSA not selected under paragraphs (a)(1) or (a)(2) of this section.

(b) Selection of MSAs for CY 2007 and CY 2009. CMS selects the MSAs for purposes of designating CBAs in CY 2007 and CY 2009 by considering the following variables:

(1) The total population of an MSA.

(2) The Medicare allowed charges for DMEPOS items per fee-for-service beneficiary in an MSA.

(3) The total number of DMEPOS suppliers per fee-for-service beneficiary who received DMEPOS items in an MSA.

(4) An MSA's geographic location.

(c) Exclusions from a CBA. CMS may exclude from a CBA a rural area (as defined in § 412.64(b)(1)(ii)(C) of this subchapter), or an area with low population density based on one or more of the following factors -

(1) Low utilization of DMEPOS items by Medicare beneficiaries receiving fee-for-service benefits relative to similar geographic areas;

(2) Low number of DMEPOS suppliers relative to similar geographic areas; or

(3) Low number of Medicare fee-for-service beneficiaries relative to similar geographic areas.

(d) Selection of additional CBAs after CY 2009.

(1) Beginning after CY 2009, CMS designates through program instructions or by other means additional CBAs based on CMS' determination that the implementation of a competitive bidding program in a particular area would be likely to result in significant savings to the Medicare program.

(2) Beginning after CY 2009, CMS may designate through program instructions or by other means a nationwide CBA or one or more regional CBAs for purposes of implementing competitive bidding programs for items that are furnished through the mail by nationwide or regional mail order contract suppliers.

[72 FR 18085, Apr. 10, 2007, as amended at 74 FR 2880, Jan. 16, 2009; 75 FR 73623, Nov. 29, 2010; 76 FR 70315, Nov. 10, 2011]

§ 414.411 Special rule in case of competitions for diabetic testing strips conducted on or after January 1, 2011.

(a) National mail order competitions. A supplier must demonstrate that their bid submitted as part of a national mail order competition for diabetic testing strips covers the furnishing of a sufficient number of different types of diabetic testing strip products that, in the aggregate, and taking into account volume for the different products, includes at least 50 percent of all the different types of products on the market. A type of diabetic testing strip means a specific brand and model of testing strips.

(b) Other competitions. CMS may apply this special rule to non-mail order or local competitions for diabetic testing strips.

[75 FR 73623, Nov. 29, 2010]

§ 414.412 Submission of bids under a competitive bidding program.

(a) Requirement to submit a bid. Except as provided under § 414.404(b), in order for a supplier to receive payment for items furnished to beneficiaries under a competitive bidding program, the supplier must submit a bid to furnish those items and be awarded a contract under this subpart.

(b) Grouping of items into product categories.

(1) Composite bids, as defined in § 414.402, are submitted for lead items, as defined in § 414.402.

(2) The bid submitted for each lead item and product category cannot exceed the payment amount that would otherwise apply to the lead item under subpart C of this part, without the application of § 414.210(g), or subpart D of this part, without the application of § 414.105.

(3) The bids submitted for standard power wheelchairs paid in accordance with the special payment rules at § 414.409(a) cannot exceed the average monthly payment for the bundle of items and services that would otherwise apply to the item under subpart D of this part.

(4) The bids submitted for continuous positive airway pressure (CPAP) devices paid in accordance with the special payment rules at § 414.409(a) cannot exceed the 1993 fee schedule amounts for these items, increased by the covered item update factors provided for these items in section 1834(a)(14) of the Act.

(5) Suppliers shall take into consideration the special payment rules at § 414.409(d) when submitting bids for furnishing power wheelchairs under competitions where these rules apply.

(c) Furnishing of items. A bid must include all costs related to furnishing all items in the product category, including all services directly related to the furnishing of the items.

(d) Commonly-owned or controlled suppliers.

(1) For purposes of this paragraph -

(i) An ownership interest is the possession of equity in the capital, stock or profits of another supplier;

(ii) A controlling interest exists if one or more of owners of a supplier is an officer, director or partner in another supplier; and

(iii) Two or more suppliers are commonly-owned if one or more of them has an ownership interest totaling at least 5 percent in the other(s).

(2) A supplier must disclose in its bid each supplier in which it has an ownership or controlling interest and each supplier which has an ownership or controlling interest in it.

(3) Commonly-owned or controlled suppliers must submit a single bid to furnish a product category in a CBA. Each commonly-owned or controlled supplier that is located in the CBA for which the bid is being submitted must be included in the bid. The bid must also include any commonly-owned or controlled supplier that is located outside of the CBA but would furnish the product category to the beneficiaries who maintain a permanent residence in the CBA.

(e) Mail order suppliers.

(1) Suppliers that furnish items through the mail must submit a bid to furnish these items in a CBA in which a mail order competitive bidding program that includes the items is implemented.

(2) Suppliers that submit one or more bids under (e)(1) of this section may submit the same bid amount for each item under each competitive bidding program for which it submits a bid.

(f) Applicability of the mail order competitive bidding program. Suppliers that do not furnish items through the mail are not required to participate in a nationwide or regional mail order competitive bidding program that includes the same items. Suppliers may continue to furnish these items in -

(1) A CBA, if the supplier is awarded a contract under this subpart; or

(2) An area not designated as a CBA.

(g) Requiring bid surety bonds for bidding entities -

(1) Bidding requirements. For competitions beginning on or after January 1, 2017, and no later than January 1, 2019, a bidding entity may not submit a bid(s) for a CBA unless it obtains a bid surety bond for the CBA from an authorized surety on the Department of the Treasury's Listing of Certified Companies and provides proof of having obtained the bond by submitting a copy to CMS by the deadline for bid submission.

(2) Bid surety bond requirements.

(i) The bid surety bond issued must include at a minimum:

(A) The name of the bidding entity as the principal/obligor;

(B) The name and National Association of Insurance Commissioners number of the authorized surety;

(C) CMS as the named obligee;

(D) The conditions of the bond as specified in paragraph (g)(3) of this section;

(E) The CBA covered by the bond;

(F) The bond number;

(G) The date of issuance; and

(H) The bid bond value of $50,000.00.

(ii) The bid surety bond must be maintained until it is either collected upon due to forfeiture or the liability is returned for not meeting bid forfeiture conditions.

(3) Forfeiture of bid surety bond.

(i) When a bidding entity is offered a contract for a CBA/product category (“competition”) and its composite bid for the competition is at or below the median composite bid rate for all bidding entities included in the calculation of the single payment amounts within the competition and the bidding entity does not accept the contract offer, its bid surety bond submitted for that CBA will be forfeited and CMS will collect on the bond via Electronic Funds Transfer (EFT) from the respective bonding company. As one bid surety bond is required for each CBA in which the bidding entity is submitting a bid, the failure to accept a contract offer for any product category within the CBA when the entity's bid is at or below the median composite bid rate will result in forfeiture of the bid surety bond for that CBA.

(ii) Where the bid(s) does not meet the specified forfeiture conditions in paragraph (h)(3)(i) of this section, the bid surety bond liability will be returned within 90 days of the public announcement of contract suppliers for the CBA. CMS will notify the bidding entity that it did not meet the specified forfeiture requirements and the bid surety bond will not be collected by CMS.

(4) Penalties .

(i) A bidding entity that has been determined to have falsified its bid surety bond may be prohibited from participation in the DMEPOS Competitive Bidding Program for the current round of the Competitive Bidding Program in which it submitted a bid and also from participating in the next round of the Competitive Bidding Program. Offending suppliers will also be referred to the Office of Inspector General and Department of Justice for further investigation.

(ii) A bidding entity, whose composite bid is at or below the median composite bid rate, that -

(A) Accepts a contract award; and

(B) Is found to be in breach of contract for nonperformance of the contract to avoid forfeiture of the bid surety bond will have its contract terminated and will be precluded from participation in the in the next round of the DMEPOS Competitive Bidding Program.

[72 FR 18085, Apr. 10, 2007, as amended at 79 FR 66264, Nov. 6, 2014; 81 FR 77966, Nov. 4, 2016; 83 FR 21925, May 11, 2018; 83 FR 57072, Nov. 14, 2018]

§ 414.414 Conditions for awarding contracts.

(a) General rule. The rules set forth in this section govern the evaluation and selection of suppliers for contract award purposes under a competitive bidding program.

(b) Basic supplier eligibility.

(1) Each supplier must meet the enrollment standards specified in § 424.57(c) of this chapter.

(2) Each supplier must disclose information about any prior or current legal actions, sanctions, revocations from the Medicare program, program-related convictions as defined in section 1128(a)(1) through (a)(4) of the Act, exclusions or debarments imposed against it, or against any members of the board of directors, chief corporate officers, high-level employees, affiliated companies, or subcontractors, by any Federal, State, or local agency. The supplier must certify in its bid that this information is completed and accurate.

(3) Each supplier must have all State and local licenses required to perform the services identified in the request for bids. CMS may not award a contract to any entity in a CBA unless the entity meets applicable State licensure requirements.

(4) Each supplier must submit a bona fide bid that complies with all the terms and conditions contained in the request for bids.

(5) Each network must meet the requirements specified in § 414.418.

(c) Quality standards and accreditation. Each supplier furnishing items and services directly or as a subcontractor must meet applicable quality standards developed by CMS in accordance with section 1834(a)(20) of the Act and be accredited by a CMS-approved organization that meets the requirements of § 424.58 of this subchapter, unless a grace period is specified by CMS.

(d) Financial standards -

(1) General rule. Each supplier must submit along with its bid the applicable covered documents (as defined in § 414.402) specified in the request for bids.

(2) Process for reviewing covered documents -

(i) Submission of covered documents for CMS review. To receive notification of whether there are missing covered documents, the supplier must submit its applicable covered documents by the later of the following covered document review dates:

(A) The date that is 30 days before the final date for the closing of the bid window; or

(B) The date that is 30 days after the opening of the bid window.

(ii) CMS feedback to a supplier with missing covered documents.

(A) For Round 1 bids. CMS has up to 45 days after the covered document review date to review the covered documents and to notify suppliers of any missing documents.

(B) For subsequent Round bids. CMS has 90 days after the covered document review date to notify suppliers of any missing covered documents.

(iii) Submission of missing covered documents. Suppliers notified by CMS of missing covered documents have 10 business days after the date of such notice to submit the missing documents. CMS does not reject the supplier's bid on the basis that the covered documents are late or missing if all the applicable missing covered documents identified in the notice are submitted to CMS not later than 10 business days after the date of such notice.

(e) Evaluation of bids. CMS evaluates composite bids submitted for a lead item within a product category by -

(1) Calculating the expected beneficiary demand in the CBA for the lead item in the product category;

(2) Calculating the total supplier capacity that would be sufficient to meet the expected beneficiary demand in the CBA for the lead item in the product category;

(3) Arraying the composite bids from the lowest composite bid price to the highest composite bid price;

(4) Calculating the pivotal bid for the product category; and

(5) Selecting all suppliers and networks whose composite bids are less than or equal to the pivotal bid for that product category, and that meet the requirements in paragraphs (b) through (d) of this section.

(f) Expected savings. A contract is not awarded under this subpart unless CMS determines that the amounts to be paid to contract suppliers for an item under a competitive bidding program are expected to be less than the amounts that would otherwise be paid for the same item under subpart C or subpart D.

(g) Special rules for small suppliers -

(1) Target for small supplier participation. CMS ensures that small suppliers have the opportunity to participate in a competitive bidding program by taking the following steps:

(i) Setting a target number for small supplier participation by multiplying 30 percent by the number of suppliers that meet the requirements in paragraphs (b) through (d) of this section and whose composite bids are equal to or lower than the pivotal bid calculated for the product category;

(ii) Identifying the number of qualified small suppliers whose composite bids are at or below the pivotal bid for the product category;

(iii) Selecting additional small suppliers whose composite bids are above the pivotal bid for the product category in ascending order based on the proximity of each small supplier's composite bid to the pivotal bid, until the number calculated in paragraph (g)(1)(i) of this section is reached or there are no more composite bids submitted by small suppliers for the product category.

(2) The bids by small suppliers that are selected under paragraph (g)(1)(iii) of this section are not used to calculate the single payment amounts for any items under § 414.416 of this subpart.

(h) Sufficient number of suppliers.

(1) Except as provided in paragraph (h)(3) of this section. CMS will award at least five contracts, if there are five suppliers satisfying the requirements in paragraphs (b) through (f) of this section; or

(2) CMS will award at least two contracts, if there are less than five suppliers meeting these requirements and the suppliers satisfying these requirements have sufficient capacity to satisfy beneficiary demand for the product category calculated under paragraph (e)(1) of this section.

(3) The provisions of paragraph (h)(1) of this section do not apply to regional or nationwide mail order CBAs under § 414.410(d)(2) of this subpart.

(i) Selection of new suppliers after bidding.

(1) Subsequent to the awarding of contracts under this subpart, CMS may award additional contracts if it determines that additional contract suppliers are needed to meet beneficiary demand for items under a competitive bidding program. CMS selects additional contract suppliers by -

(i) Referring to the arrayed list of suppliers that submitted bids for the product category included in the competitive bidding program for which beneficiary demand is not being met; and

(ii) Beginning with the supplier whose composite bid is the first composite bid above the pivotal bid for that product category, determining if that supplier is willing to become a contract supplier under the same terms and conditions that apply to other contract suppliers in the CBA.

(2) Before CMS awards additional contracts under paragraph (i)(1) of this section, a supplier must submit updated information demonstrating that the supplier meets the requirements under paragraphs (b) through (d) of this section.

[72 FR 18085, Apr. 10, 2007, as amended at 74 FR 2880, Jan. 16, 2009; 76 FR 70315, Nov. 10, 2011; 79 FR 66264, Nov. 6, 2014; 81 FR 77967, Nov. 4, 2016; 83 FR 21925, May 11, 2018; 83 FR 57072, Nov. 14, 2018]

§ 414.416 Determination of competitive bidding payment amounts.

(a) General rule. CMS establishes a single payment amount for each item furnished under a competitive bidding program.

(b) Methodology for setting payment amount.

(1) The single payment amount for a lead item furnished under a competitive bidding program is equal to the maximum bid submitted for that item by suppliers whose composite bids for the product category that includes the item are equal to or below the pivotal bid for that product category.

(2) The single payment amount for a lead item must be less than or equal to the amount that would otherwise be paid for the same item under subpart C or subpart D of this part.

(3) The single payment amount for an item in a product category furnished under a competitive bidding program that is not a lead item for that product category is equal to the single payment amount for the lead item in the same product category multiplied by the ratio of the average of the 2015 fee schedule amounts for all areas (that is, all states, the District of Columbia, Puerto Rico, the United States Virgin Islands), for the item to the average of the 2015 fee schedule amounts for all areas for the lead item.

[72 FR 18085, Apr. 10, 2007, as amended at 81 FR 77967, Nov. 4, 2016; 83 FR 57072, Nov. 14, 2018]

§ 414.418 Opportunity for networks.

(a) A network may be comprised of at least 2 but not more than 20 small suppliers.

(b) The following rules apply to networks that seek contracts under this subpart:

(1) Each network must form a single legal entity that acts as the bidder and submits the bid. Any agreement entered into for purposes of forming a network must be submitted to CMS. The network must identify itself as a network and identify all of its members.

(2) Each member of the network must satisfy the requirements in § 414.414(b) through (d).

(3) A small supplier may join one or more networks but cannot submit an individual bid to furnish the same product category in the same CBA as any network in which it is a member. A small supplier may not be a member of more than one network if those networks submit bids to furnish the same product category in the same CBA.

(4) The network cannot be anticompetitive, and this section does not supersede any Federal law or regulation that regulates anticompetitive behavior.

(5) A bid submitted by a network must include a statement from each network member certifying that the network member joined the network because it is unable independently to furnish all of the items in the product category for which the network is submitting a bid to beneficiaries throughout the entire geographic area of the CBA.

(6) At the time that a network submits a bid, the network's total market share for each product category that is the subject of the network's bid cannot exceed 20 percent of the Medicare demand for that product category in the CBA.

(c) If the network is awarded a contract, each supplier must submit its own claims and will receive payment directly from Medicare for the items that it furnishes under the competitive bidding program.

[72 FR 18085, Apr. 10, 2007]

§ 414.420 Physician or treating practitioner authorization and consideration of clinical efficiency and value of items.

(a) Prescription for a particular brand item or mode of delivery.

(1) A physician or treating practitioner may prescribe, in writing, a particular brand of an item for which payment is made under a competitive bidding program, or a particular mode of delivery for an item, if he or she determines that the particular brand or mode of delivery would avoid an adverse medical outcome for the beneficiary.

(2) When a physician or treating practitioner prescribes a particular brand or mode of delivery of an item under paragraph (a)(1) of this section, the physician or treating practitioner must document the reason in the beneficiary's medical record why the particular brand or mode of delivery is medically necessary to avoid an adverse medical outcome.

(b) Furnishing of a prescribed particular brand item or mode of delivery. If a physician or treating practitioner prescribes a particular brand of an item or mode of delivery, the contract supplier must -

(1) Furnish the particular brand or mode of delivery as prescribed by the physician or treating practitioner;

(2) Consult with the physician or treating practitioner to find an appropriate alternative brand of item or mode of delivery for the beneficiary and obtain a revised written prescription from the physician or treating practitioner; or

(3) Assist the beneficiary in locating a contract supplier that can furnish the particular brand of item or mode of delivery prescribed by the physician or treating practitioner.

(c) Payment for a particular brand of item or mode of delivery. Medicare does not make an additional payment to a contract supplier that furnishes a particular brand or mode of delivery for an item, as directed by a prescription written by the beneficiary's physician or treating practitioner.

(d) Prohibition on billing for an item different from the particular brand of item or mode of delivery prescribed. A contract supplier is prohibited from submitting a claim to Medicare if it furnishes an item different from that specified in the written prescription received from the beneficiary's physician or treating practitioner. Payment will not be made to a contract supplier that submits a claim prohibited by this paragraph.

[72 FR 18085, Apr. 10, 2007]

§ 414.422 Terms of contracts.

(a) Basic rule. CMS specifies the terms and conditions of the contracts entered into with contract suppliers under this subpart. A contract supplier must comply with all terms of its contract, including any option exercised by CMS, for the full duration of the contract period.

(b) Recompeting competitive bidding contracts. CMS recompetes competitive bidding contracts at least once every 3 years.

(c) Nondiscrimination. The items furnished by a contract supplier under this subpart must be the same items that the contract supplier makes available to other customers.

(d) Change of ownership (CHOW).

(1) CMS may transfer a contract to a successor entity that merges with, or acquires, a contract supplier if the successor entity -

(i) Meets all requirements applicable to contract suppliers for the applicable competitive bidding program;

(ii) Submits to CMS the documentation described under § 414.414(b) through (d) if documentation has not previously been submitted by the successor entity or if the documentation is no longer sufficient for CMS to make a financial determination. A successor entity is not required to duplicate previously submitted information if the previously submitted information is not needed to make a financial determination. This documentation must be submitted prior to the effective date of the CHOW; and

(iii) Submits to CMS a signed novation agreement acceptable to CMS stating that it assumes all obligations under the contract. This documentation must be submitted no later than 10 days after the effective date of the CHOW.

(2) Except as specified in paragraph (d)(3) of this section, CMS may transfer the entire contract, including all product categories and competitive bidding areas, to a successor entity.

(3) For contracts issued in the Round 2 Recompete and subsequent rounds in the case of a CHOW where a contract supplier sells a distinct company (for example, a subsidiary) that furnishes a specific product category or services a specific CBA, CMS may transfer the portion of the contract performed by that company to a successor entity, if the following conditions are met:

(i) Every CBA, product category, and location of the company being sold must be transferred to the successor entity that meets all competitive bidding requirements; that is, financial, accreditation, and licensure;

(ii) All CBAs and product categories in the original contract that are not explicitly transferred by CMS remain unchanged in that original contract for the duration of the contract period unless transferred by CMS pursuant to a subsequent CHOW;

(iii) All requirements of paragraph (d)(1) of this section are met;

(iv) The sale of the distinct company includes all of the contract supplier's assets associated with the CBA and/or product category(s); and

(v) CMS determines that transfer of part of the original contract will not result in disruption of service or harm to beneficiaries.

(e) Furnishing of items. Except as otherwise prohibited under section 1877 of the Act, or any other applicable law or regulation:

(1) A contract supplier must agree to furnish items under its contract to any beneficiary who maintains a permanent residence in, or who visits, the CBA and who requests those items from that contract supplier.

(2) A skilled nursing facility defined under section 1819(a) of the Act or a nursing facility defined under section 1919(a) of the Act that has elected to furnish items only to its own residents and that is also a contract supplier may furnish items under a competitive bidding program to its own patients to whom it would otherwise furnish Part B services.

(3) Contract suppliers for diabetic testing supplies must furnish the brand of diabetic testing supplies that work with the home blood glucose monitor selected by the beneficiary. The contract supplier is prohibited from influencing or incentivizing the beneficiary by persuading, pressuring, or advising them to switch from their current brand or for new beneficiaries from their preferred brand of glucose monitor and testing supplies. The contract supplier may not furnish information about alternative brands to the beneficiary unless the beneficiary requests such information.

(f) Disclosure of subcontracting arrangements.

(1) Initial disclosure. Not later than 10 days after the date a supplier enters into a contract under this section the supplier must disclose information on both of the following:

(i) Each subcontracting arrangement that the supplier has in furnishing items and services under the contract.

(ii) Whether each subcontractor meets the requirement of section 1834(a)(20)(F)(i) of the Act if applicable to such subcontractor.

(2) Subsequent disclosure. Not later than 10 days after the date a supplier enters into a subcontracting arrangement subsequent to contract award with CMS, the supplier must disclose information on both of the following:

(i) The subcontracting arrangement that the supplier has in furnishing items and services under the contract.

(ii) Whether the subcontractor meets the requirement of section 1834(a)(20)(F)(i) of the Act, if applicable to such subcontractor.

(g) Breach of contract.

(1) Any deviation from contract requirements, including a failure to comply with governmental agency or licensing organization requirements, constitutes a breach of contract.

(2) In the event a contract supplier breaches its contract, CMS may take one or more of the following actions, which will be specified in the notice of breach of contract:

(i) Suspend the contract supplier's contract;

(ii) Terminate the contract;

(iii) Preclude the contract supplier from participating in the competitive bidding program; or

(iv) Avail itself of other remedies allowed by law.

[72 FR 18085, Apr. 10, 2007, as amended at 74 FR 2881, Jan. 16, 2009; 75 FR 73623, Nov. 29, 2010; 76 FR 70315, Nov. 10, 2011; 79 FR 66264, Nov. 6, 2014; 81 FR 77967, Nov. 4, 2016; 83 FR 57073, Nov. 14, 2018; 84 FR 60808, Nov. 8, 2019]

§ 414.423 Appeals process for breach of a DMEPOS competitive bidding program contract actions.

This section implements an appeals process for suppliers that CMS has determined are in breach of their Medicare DMEPOS Competitive Bidding Program contract and where CMS has issued a notice of breach of contract indicating its intent to take action(s) pursuant to § 414.422(g)(2).

(a) Breach of contract. CMS may take one or more of the actions specified in § 414.422(g)(2) as a result of a supplier's breach of their DMEPOS Competitive Bidding Program contract.

(b) Notice of breach of contract -

(1) CMS notification. If CMS determines a supplier to be in breach of its contract, it will notify the supplier of the breach of contract in a notice of breach of contract.

(2) Content of the notice of breach of contract. The CMS notice of breach of contract will include the following:

(i) The details of the breach of contract.

(ii) The action(s) that CMS is taking as a result of the breach of the contract pursuant to § 414.422(g)(2), and the duration of or timeframe(s) associated with the action(s), if applicable.

(iii) The right to request a hearing by a CBIC hearing officer and, depending on the nature of the breach, the supplier may also be allowed to submit a corrective action plan (CAP) in lieu of requesting a hearing by a CBIC hearing officer, as specified in paragraph (c)(1)(i) of this section.

(iv) The address to which the written request for a hearing must be submitted.

(v) The address to which the CAP must be submitted, if applicable.

(vi) The effective date of the action(s) that CMS is taking is the date specified by CMS in the notice of breach of contract, or 45 days from the date of the notice of breach of contract unless:

(A) A timely hearing request has been filed; or

(B) A CAP has been submitted within 30 days of the date of the notice of breach of contract where CMS allows a supplier to submit a CAP.

(c) Corrective action plan (CAP) -

(1) Option for a CAP.

(i) CMS has the option to allow a supplier to submit a written CAP to remedy the deficiencies identified in the notice at its sole discretion, including where CMS determines that the delay in the effective date of the breach of contract action(s) caused by allowing a CAP will not cause harm to beneficiaries. CMS will not allow a CAP if the supplier has been excluded from any Federal program, debarred by a Federal agency, or convicted of a healthcare-related crime, or for any other reason determined by CMS.

(ii) If a supplier chooses not to submit a CAP, if CMS determines that a supplier's CAP is insufficient, or if CMS does not allow the supplier the option to submit a CAP, the supplier may request a hearing on the breach of contract action(s).

(2) Submission of a CAP.

(i) If allowed by CMS, a CAP must be submitted within 30 days from the date on the notice of breach of contract. If the supplier decides not to submit a CAP the supplier may, within 30 days of the date on the notice, request a hearing by a CBIC hearing officer.

(ii) Suppliers will have the opportunity to submit a CAP when they are first notified that they have been determined to be in breach of contract. If the CAP is not acceptable to CMS or is not properly implemented, suppliers will receive a subsequent notice of breach of contract. The subsequent notice of breach of contract may, at CMS' discretion, allow the supplier to submit another written CAP pursuant to paragraph (c)(1)(i) of this section.

(d) The purpose of the CAP. The purpose of the CAP is:

(1) For the supplier to remedy all of the deficiencies that were identified in the notice of breach of contract.

(2) To identify the timeframes by which the supplier will implement each of the components of the CAP.

(e) Review of the CAP.

(1) The CBIC will review the CAP. Suppliers may only revise their CAP one time during the review process based on the deficiencies identified by the CBIC. The CBIC will submit a recommendation to CMS for each applicable breach of contract action concerning whether the CAP includes the steps necessary to remedy the contract deficiencies as identified in the notice of breach of contract.

(2) If CMS accepts the CAP, including the supplier's designated timeframe for its completion, the supplier must provide a follow-up report within 5 days after the supplier has fully implemented the CAP that verifies that all of the deficiencies identified in the CAP have been corrected in accordance with the timeframes accepted by CMS.

(3) If the supplier does not implement a CAP that was accepted by CMS, or if CMS does not accept the CAP submitted by the supplier, then the supplier will receive a subsequent notice of breach of contract, as specified in paragraph (b) of this section.

(f) Right to request a hearing by the CBIC Hearing Officer .

(1) A supplier who receives a notice of breach of contract (whether an initial notice of breach of contract or a subsequent notice of breach of contract under § 414.422(e)(3)) has the right to request a hearing before a CBIC hearing officer who was not involved with the original breach of contract determination.

(2) A supplier that wishes to appeal the breach of contract action(s) specified in the notice of breach of contract must submit a written request to the CBIC. The request for a hearing must be submitted to the CBIC within 30 days from the date of the notice of breach of contract.

(3) A request for hearing must be in writing and submitted by an authorized official of the supplier.

(4) The appeals process for the Medicare DMEPOS Competitive Bidding Program is not to be used in place of other existing appeals processes that apply to other parts of Medicare.

(5) If the supplier is given the opportunity to submit a CAP and a CAP is not submitted and the supplier fails to timely request a hearing, the breach of contract action(s) will take effect 45 days from the date of the notice of breach of contract.

(g) The CBIC Hearing Officer schedules and conducts the hearing .

(1) Within 30 days from the receipt of the supplier's timely request for a hearing the hearing officer will contact the parties to schedule the hearing.

(2) The hearing may be held in person or by telephone at the parties' request.

(3) The scheduling notice to the parties must indicate the time and place for the hearing and must be sent to the parties at least 30 days before the date of the hearing.

(4) The hearing officer may, on his or her own motion, or at the request of a party, change the time and place for the hearing, but must give the parties to the hearing 30 days' notice of the change.

(5) The hearing officer's scheduling notice must provide the parties to the hearing the following information:

(i) A description of the hearing procedure.

(ii) The specific issues to be resolved.

(iii) The supplier has the burden to prove it is not in violation of the contract or that the breach of contract action(s) is not appropriate.

(iv) The opportunity for parties to the hearing to submit additional evidence to support their positions, if requested by the hearing officer.

(v) A notification that all evidence submitted, both from the supplier and CMS, will be provided in preparation for the hearing to all affected parties at least 15 days prior to the scheduled date of the hearing.

(h) Burden of proof and evidence submission .

(1) The burden of proof is on the Competitive Bidding Program contract supplier to demonstrate to the hearing officer with convincing evidence that it has not breached its contract or that the breach of contract action(s) is not appropriate.

(2) The supplier's evidence must be submitted with its request for a hearing.

(3) If the supplier fails to submit the evidence at the time of its submission, the Medicare DMEPOS supplier is precluded from introducing new evidence later during the hearing process, unless permitted by the hearing officer.

(4) CMS also has the opportunity to submit evidence to the hearing officer within 10 days of receiving the scheduling notice.

(5) The hearing officer will share all evidence submitted by the supplier and/or CMS, with all parties to the hearing at least 15 days prior to the scheduled date of the hearing.

(i) Role of the hearing officer. The hearing officer will conduct a thorough and independent review of the evidence including the information and documentation submitted for the hearing and other information that the hearing officer considers pertinent for the hearing. The role of the hearing officer includes, at a minimum, the following:

(1) Conduct the hearing and decide the order in which the evidence and the arguments of the parties are presented;

(2) Determine the rules on admissibility of the evidence;

(3) Examine the witnesses, in addition to the examinations conducted by CMS and the contract supplier;

(4) The CBIC may assist CMS in the appeals process including being present at the hearing, testifying as a witness, or performing other, related ministerial duties;

(5) Determine the rules for requesting documents and other evidence from other parties;

(6) Ensure a complete record of the hearing is made available to all parties to the hearing;

(7) Prepare a file of the record of the hearing which includes all evidence submitted as well as any relevant documents identified by the hearing officer and considered as part of the hearing; and

(8) Comply with all applicable provisions of Title 18 and related provisions of the Act, the applicable regulations issued by the Secretary, and manual instructions issued by CMS.

(j) Hearing officer recommendation.

(1) The hearing officer will issue a written recommendation(s) to CMS within 30 days of the close of the hearing unless an extension has been granted by CMS because the hearing officer has demonstrated that an extension is needed due to the complexity of the matter or heavy workload. In situations where there is more than one breach of contract action presented at the hearing, the hearing officer will issue separate recommendations for each breach of contract action.

(2) The recommendation(s) will explain the basis and the rationale for the hearing officer's recommendation(s).

(3) The hearing officer must include the record of the hearing, along with all evidence and documents produced during the hearing along with its recommendation(s).

(k) CMS' final determination.

(1) CMS' review of the hearing officer's recommendation(s) will not allow the supplier to submit new information.

(2) After reviewing the hearing officer's recommendation(s), CMS' decision(s) will be made within 30 days from the date of receipt of the hearing officer's recommendation(s). In situations where there is more than one breach of contract action presented at the hearing, and the hearing officer issues multiple recommendations, CMS will render separate decisions for each breach of contract action.

(3) A notice of CMS' decision will be sent to the supplier and the hearing officer. The notice will indicate:

(i) If any breach of contract action(s) included in the notice of breach of contract, specified in paragraph (b)(1) of this section, still apply and will be effectuated, and

(ii) The effective date for any breach of contract action specified in paragraph (k)(3)(i) of this section.

(4) This decision(s) is final and binding.

(l) Effect of breach of contract action(s) -

(1) Effect of contract suspension.

(i) All locations included in the contract cannot furnish competitive bid items to beneficiaries within a CBA and the supplier cannot be reimbursed by Medicare for these items for the duration of the contract suspension.

(ii) The supplier must notify all beneficiaries who are receiving rented competitive bid items or competitive bid items on a recurring basis of the suspension of their contract.

(A) The notice to the beneficiary from the supplier must be provided within 15 days of receipt of the final notice.

(B) The notice to the beneficiary must inform the beneficiary that they must select a new contract supplier to furnish these items in order for Medicare to pay for these items.

(2) Effect of contract termination.

(i) All locations included in the contract can no longer furnish competitive bid items to beneficiaries within a CBA and the supplier cannot be reimbursed by Medicare for these items after the effective date of the termination.

(ii) The supplier must notify all beneficiaries, who are receiving rented competitive bid items or competitive bid items received on a recurring basis, of the termination of their contract.

(A) The notice to the beneficiary from the supplier must be provided within 15 days of receipt of the final notice of termination.

(B) The notice to the beneficiary must inform the beneficiary that they are going to have to select a new contract supplier to furnish these items in order for Medicare to pay for these items.

(3) Effect of preclusion. A supplier who is precluded will not be allowed to participate in a specific round of the Competitive Bidding Program, which will be identified in the original notice of breach of contract, as specified in paragraph (b)(1) of this section.

(4) Effect of other remedies allowed by law. If CMS decides to impose other remedies under § 414.422(g)(2)(iv), the details of the remedies will be included in the notice of breach of contract, as specified in paragraph (b)(2) of this section.

[81 FR 77967, Nov. 4, 2016, as amended at 83 FR 57073, Nov. 14, 2018; 84 FR 60809, Nov. 8, 2019]

§ 414.424 Administrative or judicial review.

(a) There is no administrative or judicial review under this subpart of the following:

(1) Establishment of payment amounts.

(2) Awarding of contracts.

(3) Designation of CBAs.

(4) Phase-in of the competitive bidding programs.

(5) Selection of items for competitive bidding.

(6) Bidding structure and number of contract suppliers selected for a competitive bidding program.

(b) A denied claim is not appealable if the denial is based on a determination by CMS that a competitively bid item was furnished in a CBA in a manner not authorized by this subpart.

[72 FR 18085, Apr. 10, 2007]

§ 414.425 Claims for damages.

(a) Eligibility for filing a claim for damages as a result of the termination of supplier contracts by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).

(1) Any aggrieved supplier, including a member of a network that was awarded a contract for the Round 1 Durable Medical Prosthetics, Orthotics, and Supplies Competitive Bidding Program (DMEPOS CBP) that believes it has been damaged by the termination of its competitive bid contract, may file a claim under this section.

(2) A subcontractor of a contract supplier is not eligible to submit a claim under this section.

(b) Timeframe for filing a claim.

(1) A completed claim, including all documentation, must be filed within 90 days of January 1, 2010 (the effective date of these damages provisions), unless that day is a Federal holiday or Sunday in which case it will fall to the next business day.

(2) The date of filing is the actual date of receipt by the CBIC of a completed claim that includes all the information required by this rule.

(c) Information that must be included in a claim.

(1) Supplier's name, name of authorized official, U.S. Post Office mailing address, phone number, email address and bidding number, and National Supplier Clearinghouse Number;

(2) A copy of the signed contract entered into with CMS for the Round 1 DMEPOS Competitive Bidding Program;

(3) A detailed explanation of the damages incurred by this supplier as a direct result of the termination of the Round 1 competitive bid contract by MIPPA. The explanation must include all of the following:

(i) Documentation of the supplier's damages through receipts.

(ii) Records that substantiate the supplier's damages and demonstrate that the damages are directly related to performance of the Round 1 contract and are consistent with information the supplier provided as part of their bid.

(4) The supplier must explain how it would be damaged if not reimbursed.

(5) The claim must document steps the supplier took to mitigate any damages they may have incurred due to the contract termination, including a detailed explanation of the steps of all attempts to use for other purposes, return or dispose of equipment or other assets purchased or rented for the use in the Round 1 DMEPOS CBP contract performance.

(d) Items that will not be considered in a claim. The following items will not be considered in a claim:

(1) The cost of submitting a bid.

(2) Any fees or costs incurred for consulting or marketing.

(3) Costs associated with accreditation or licensure.

(4) Costs incurred before March 20, 2008.

(5) Costs incurred for contract performance after July 14, 2008 except for costs incurred to mitigate damages.

(6) Any profits a supplier may have expected from the contract.

(7) Costs that would have occurred without a contract having been awarded.

(8) Costs for items such as inventory, delivery vehicles, office space and equipment, personnel, which the supplier did not purchase specifically to perform the contract.

(9) Costs that the supplier has recouped by any means, and may include use of personnel, material, suppliers, or equipment in the supplier's business operations.