Medicare and Medicaid Programs; CY 2025 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Prescription Drug Inflation Rebate Program; and Medicare Overpayments

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Health and Human Services (HHS).

ACTION:

Proposed rule.

SUMMARY:

This major proposed rule addresses: changes to the physician fee schedule (PFS); other changes to Medicare Part B payment policies to ensure that payment systems are updated to reflect changes in medical practice, relative value of services, and changes in the statute; codification of, and proposing policies for, the Medicare Prescription Drug Inflation Rebate Program under the Inflation Reduction Act of 2022; updates to the Medicare Diabetes Prevention Program expanded model; payment for dental services inextricably linked to specific covered medical services; updates to drugs and biological products paid under Part B including immunosuppressive drugs and clotting factors; Medicare Shared Savings Program requirements; updates to the Quality Payment Program; Medicare coverage of opioid use disorder services furnished by opioid treatment programs; updates to policies for Rural Health Clinics and Federally Qualified Health Centers; electronic prescribing for controlled substances for a covered Part D drug under a prescription drug plan or a Medicare Advantage Prescription Drug (MA-PD) plan under the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act); update to the Ambulance Fee Schedule regulations; codification of the Inflation Reduction Act and Consolidated Appropriations Act, 2023 provisions; updates to Clinical Laboratory Fee Schedule regulations; updates to the diabetes payment structure and PHE flexibilities; expansion of colorectal cancer screening and Hepatitis B vaccine coverage and payment; establishing payment for drugs covered as additional preventive services; Medicare Parts A and B Overpayment Provisions of the Affordable Care Act.

DATES:

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on September 9, 2024.

ADDRESSES:

In commenting, please refer to file code CMS-1807-P.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

1. Electronically. You may submit electronic comments on this regulation to https://www.regulations.gov. Follow the “Submit a comment” instructions.

2. By regular mail. You may mail written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1807-P, P.O. Box 8016, Baltimore, MD 21244-8016.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3. By express or overnight mail. You may send written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1807-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

FOR FURTHER INFORMATION CONTACT:

MedicarePhysicianFeeSchedule@cms.hhs.gov, for any issues not identified below. Please indicate the specific issue in the subject line of the email.

Michael Soracoe, (410) 786-6312, Morgan Kitzmiller, (410) 786-1623, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to practice expense, work RVUs, conversion factor, and PFS specialty-specific impacts.

Kris Corwin, (410) 786-8864, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to strategies for updates to practice expense data collection and methodology.

Hannah Ahn, (814) 769-0143, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to potentially misvalued services under the PFS.

Kris Corwin, (410) 786-8864, Patrick Sartini, (410) 786-9252, Mikayla Murphy, (667) 414-0093, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to direct supervision using two-way audio/video communication technology, telehealth, and other services involving communications technology.

Tamika Brock, (312) 886-7904, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to teaching physician billing for services involving residents in teaching settings.

Sarah Leipnik, (410) 786-3933, Mikayla Murphy, (667) 414-0093, Regina Walker-Wren, (410) 786-9160, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to payment for caregiver training services and addressing health-related social needs (community health integration, principal illness navigation, and social determinants of health risk assessment).

Erick Carrera, (410) 786-8949, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to office/outpatient evaluation and management visit inherent complexity add-one.

Sarah Irie, (410) 786-1348, Emily Parris (667) 414-0418, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to payment for advanced primary care management service.

Sarah Leipnik, (410) 786-3933, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to global surgery payment accuracy.

Pamela West, (410) 786-2302, for issues related to supervision of outpatient therapy services in private practices, certification of therapy plans of care, and KX modifier threshold.

Lindsey Baldwin, (410) 786-1694, Regina Walker-Wren, (410) 786-9160, Erick Carrera, (410) 786-8949, Mikayla Murphy, (667) 414-0093, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to advancing access to behavioral health services.

Laura Ashbaugh, (410) 786-1113, and Erick Carrera, (410) 786-8949, Zehra Hussain, (214) 767-4463, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to dental services inextricably linked to specific covered medical services.

Zehra Hussain, (214) 767-4463, or MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to payment of skin substitutes.

Laura Kennedy, (410) 786-3377, Adam Brooks, (202) 205-0671, Rachel Radzyner, (410) 786-8215, Rebecca Ray, (667) 414-0879, and Jae Ryu, (667) 414-0765 for issues related to Drugs and Biological Products Paid Under Medicare Part B.

MedicarePhysicianFeeSchedule@cms.hhs.gov, for issues related to complex drug administration.

Glenn McGuirk, (410) 786-5723, or CLFS_Inquiries@cms.hhs.gov for issues related to Clinical Laboratory Fee Schedule.

Lisa Parker, (410) 786-4949, or FQHC-PPS@cms.hhs.gov, for issues related to FQHC payments.

Heidi Oumarou, (410) 786-7942, for issues related to the FQHC market basket.

Michele Franklin, (410) 786-9226, or RHC@cms.hhs.gov, for issues related to RHC payments.

Kianna Banks (410) 786-3498 and Cara Meyer (667) 290-9856, for issues related to RHCs and FQHCs and Conditions for Certification or Coverage.

Colleen Barbero (667) 290-8794, for issues related to Medicare Diabetes Prevention Program.

Ariana Pitcher, (667) 290-8840, or OTP_Medicare@cms.hhs.gov, for issues related to Medicare coverage of opioid use disorder treatment services furnished by opioid treatment programs.

Sabrina Ahmed, (410) 786-7499, or SharedSavingsProgram@cms.hhs.gov, for issues related to the Medicare Shared Savings Program (Shared Savings Program) Quality performance standard and quality reporting requirements.

Janae James, (410) 786-0801, or SharedSavingsProgram@cms.hhs.gov, for issues related to Shared Savings Program beneficiary assignment and benchmarking methodology.

Richard (Chase) Kendall, (410) 786-1000, or SharedSavingsProgram@cms.hhs.gov, for issues related to reopening ACO payment determinations, and mitigating the impact of significant, anomalous, and highly suspect billing activity on Shared Savings Program financial calculations.

Lucy Bertocci, (410) 786-3776, or SharedSavingsProgram@cms.hhs.gov, for issues related to Shared Savings Program prepaid shared savings, advance investment payments, beneficiary notice and eligibility requirements.

Rachel Radzyner, (410) 786-8215, for issues related to payment for preventative services, including preventive vaccine administration and drugs covered as additional preventive services.

Elisabeth Daniel, (667) 290-8793, for issues related to the Medicare Prescription Drug Inflation Rebate Program.

Genevieve Kehoe, Ambulatoryspecialtycare@cms.hhs.gov, or 1-844-711-2664 (Option 4) for issues related to the Request for Information: Building upon the MIPS Value Pathways (MVPs) Framework to Improve Ambulatory Specialty Care.

Kimberly Long, (410) 786-5702, for issues related to expanding colorectal cancer screening.

Rachel Katonak, (410) 786-8564, for issues related to expanding Hepatitis B vaccine coverage.

Mei Zhang, (410) 786-7837, for issues related to requirement for electronic prescribing for controlled substances for a covered Part D drug under a prescription drug plan or an MA-PD plan (section 2003 of the SUPPORT Act).

Katie Parker, (410) 786-0537, for issues related to Parts A and B overpayment provisions of the Affordable Care Act.

Amy Gruber, (410) 786-1542, for issues related to low titer O+ whole blood transfusion therapy during ground ambulance transport.

Renee O'Neill, (410) 786-8821, or Sophia Sugumar, (410) 786-1648, for inquiries related to Merit-based Incentive Payment System (MIPS) track of the Quality Payment Program.

Danielle Drayer, (516) 965-6630, for inquiries related to Alternative Payment Models (APMs).

SUPPLEMENTARY INFORMATION:

Addenda Available Only Through the Internet on the CMS website: The PFS Addenda along with other supporting documents and tables referenced in this proposed rule are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html. Click on the link on the left side of the screen titled, “PFS Federal Regulations Notices” for a chronological list of PFS Federal Register and other related documents. For the CY 2025 PFS proposed rule, refer to item CMS-1807-P. Readers with questions related to accessing any of the Addenda or other supporting documents referenced in this proposed rule and posted on the CMS website identified above should contact MedicarePhysicianFeeSchedule@cms.hhs.gov.

CPT (Current Procedural Terminology) Copyright Notice: Throughout this proposed rule, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2020 American Medical Association. All Rights Reserved. CPT is a registered trademark of the American Medical Association (AMA). Applicable Federal Acquisition Regulations (FAR) and Defense Federal Acquisition Regulations (DFAR) apply.

I. Executive Summary

A. Purpose

This major annual rule proposes to revise payment policies under the Medicare PFS and makes other policy changes, including proposals to implement certain provisions of the Further Continuing Appropriations and Other Extensions Act of 2024 (Pub. L. 118-22, November 16, 2023), Consolidated Appropriations Act, 2023 (Pub. L. 117-328, September 29, 2022), Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169, August 16, 2022), Consolidated Appropriations Act, 2022 (Pub. L. 117-103, March 15, 2022), Consolidated Appropriations Act, 2021 (CAA, 2021) (Pub. L. 116-260, December 27, 2020), Bipartisan Budget Act of 2018 (BBA of 2018) (Pub. L. 115-123, February 9, 2018) and the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act) (Pub. L. 115-271, October 24, 2018), related to Medicare Part B payment. In addition, this major proposed rule includes proposals regarding other Medicare payment policies described in sections III. and IV.

This rulemaking also proposes to codify policies previously established in guidance for the Medicare Prescription Drug Inflation Rebate Program at new parts 427 and 428, including clarifications to certain existing policies, consistent with sections 1847A(i) and 1860D-14B of the Act. This rulemaking also proposes new policies for the Medicare Prescription Drug Inflation Rebate Program, including removal of units of drugs subject to discarded drug refunds from the Part B rebate amounts, exclusion of units for which a manufacturer provides a discount under the 340B Program from the Part D inflation rebate amount starting on January 1, 2026, the process for reconciliation of a Part B or Part D rebate amount to incorporate certain revised information, and procedures for imposing civil money penalties on manufacturers that do not pay Part B or Part D inflation rebate amounts within a specified period of time.

This rulemaking proposes to update the Rural Health Clinic (RHC) and Federally Qualified Health Clinic (FQHC) Conditions for Certification and Conditions for Coverage (CfCs), respectively, by clarifying the requirements and intent of the program regarding the provision of services. We also aim to ensure RHCs are provided flexibility in the services they offer, including specialty and laboratory services.

This rulemaking also proposes to further advance Medicare's overall value-based care strategy of growth, alignment, and equity through the Medicare Shared Savings Program (Shared Savings Program) and the Quality Payment Program. The structure of the programs enables us to develop a set of tools for measuring and encouraging improvements in care, which may support a shift to clinician payment over time into Advanced Alternative Payment Models (APMs) and accountable care arrangements which reduce care fragmentation and unnecessary costs for patients and the health system.

This rulemaking also proposes changes to Medicare regulations regarding requirements for reporting and returning Parts A and B overpayments.

B. Summary of the Major Provisions

Please note, some sections of this proposed rule contain a request for information (RFI). In accordance with the implementing regulations of the Paperwork Reduction Act of 1995 (PRA), specifically 5 CFR 1320.3(h)(4), these general solicitations are exempt from the PRA. Facts or opinions submitted in response to general solicitations of comments from the public, published in the Federal Register or other publications, regardless of the form or format thereof, provided that no person is required to supply specific information pertaining to the commenter, other than that necessary for self-identification, as a condition of the agency's full consideration, are not generally considered information collections and therefore not subject to the PRA. Respondents are encouraged to provide complete but concise responses. These RFIs are issued solely for information and planning purposes; they do not constitute a Request for Proposal (RFP), applications, proposal abstracts, or quotations. These RFIs do not commit the U.S. Government to contract for any supplies or services or make a grant award. Further, CMS is not seeking proposals through these RFIs and will not accept unsolicited proposals. Responders are advised that the U.S. Government will not pay for any information or administrative costs incurred in response to these RFIs; all costs associated with responding to these RFIs will be solely at the interested party's expense. Not responding to these RFIs does not preclude participation in any future procurement, if conducted. It is the responsibility of the potential responders to monitor these RFI announcements for additional information pertaining to these requests. Please note that CMS will not respond to questions about the policy issues raised in these RFIs. CMS may or may not choose to contact individual responders. Such communications would only serve to further clarify written responses. Contractor support personnel may be used to review RFI responses. Responses to this notice are not offers and cannot be accepted by the U.S. Government to form a binding contract or issue a grant. Information obtained as a result of these RFIs may be used by the U.S. Government for program planning on a non-attribution basis. Respondents should not include any information that might be considered proprietary or confidential. These RFIs should not be construed as a commitment or authorization to incur cost for which reimbursement would be required or sought. All submissions become U.S. Government property and will not be returned. CMS may publicly post the comments received, or a summary thereof.

Section 1848 of the Social Security Act (the Act) requires us to establish payments under the PFS, based on national uniform relative value units (RVUs) that account for the relative resources used in furnishing a service. The statute requires that RVUs be established for three categories of resources: work, practice expense (PE), and malpractice (MP) expense. In addition, the statute requires that each year we establish, by regulation, the payment amounts for physicians' services paid under the PFS, including geographic adjustments to reflect the variations in the costs of furnishing services in different geographic areas.

In this major proposed rule, we are proposing to establish RVUs for CY 2025 for the PFS to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services, as well as changes in the statute. This proposed rule also includes discussions and provisions regarding several other Medicare Part B payment policies, Medicare and Medicaid provider and supplier enrollment policies, and other policies regarding programs administered by CMS.

Specifically, this proposed rule addresses:

• Background (section II.A.)
• Determination of PE RVUs (section II.B.)
• Potentially Misvalued Services Under the PFS (section II.C.)
• Payment for Medicare Telehealth Services Under Section 1834(m) of the Act (section II.D.)
• Valuation of Specific Codes (section II.E.)
• Evaluation and Management (E/M) Visits (section II.F.)
• Enhanced Care Management (section II.G.)
• Supervision of Outpatient Therapy Services in Private Practices, Certification of Therapy Plans of Care with a Physician or NPP Order, and KX Modifier Thresholds (section II.H.)
• Advancing Access to Behavioral Health Services (section II.I.)
• Proposals on Medicare Parts A and B Payment for Dental Services Inextricably Linked to Specific Covered Services (section II.J.)
• Payment for Skin Substitutes (section II.K.)
• Drugs and Biological Products Paid Under Medicare Part B (section III.A.)
• Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) (section III.B.)
• Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) Conditions for Certification and Conditions for Coverage (CfCs) (section III.C.)
• Clinical Laboratory Fee Schedule: Revised Data Reporting Period and Phase-in of Payment Reductions (section III.D.)
• Medicare Diabetes Prevention Program (MDPP) (section III.E.)
• Modifications Related to Medicare Coverage for Opioid Use Disorder (OUD) Treatment Services Furnished by Opioid Treatment Programs (OTPs) (section III.F.)
• Medicare Shared Savings Program (section III.G.)
• Medicare Part B Payment for Preventive Services (§§ 410.10, 410.57, 410.64, 410.152) (section III.H.)
• Medicare Prescription Drug Inflation Rebate Program (section III.I.)
• Request for Information: Building upon the MIPS Value Pathways (MVPs) Framework to Improve Ambulatory Specialty Care (section III.J.)
• Expand Colorectal Cancer Screening (section III.K.)
• Requirements for Electronic Prescribing for Controlled Substances for a Covered Part D Drug under a Prescription Drug Plan or an MA-PD Plan (section III.L.)
• Expand Hepatitis B Vaccine Coverage (section III.M.)
• Low Titer O+ Whole Blood Transfusion Therapy During Ground Ambulance Transport (section III.N.)
• Medicare Parts A and B Overpayment Provisions of the Affordable Care Act (section III.O.)

Updates to the Quality Payment Program (section IV.)

• Collection of Information Requirements (section V.)
• Response to Comments (section VI.)
• Regulatory Impact Analysis (section VII.)

C. Summary of Costs and Benefits

We have determined that this proposed rule is economically significant. We estimate the CY 2025 PFS conversion factor to be 32.3562 which reflects a 0.05 percent positive budget neutrality adjustment required under section 1848(c)(2)(B)(ii)(II) of the Act, the 0.00 percent update adjustment factor specified under section 1848(d)(19) of the Act, and the removal of the temporary 2.93 percent payment increase for services furnished from March 9, 2024, through December 31, 2024, as provided in the CAA, 2024. For a detailed discussion of the economic impacts, see section VII., Regulatory Impact Analysis, of this proposed rule.

II. Provisions of the Proposed Rule for the PFS

A. Background

In accordance with section 1848 of the Social Security Act (the Act), CMS has paid for physicians' services under the Medicare physician fee schedule (PFS) since January 1, 1992. The PFS relies on national relative values that are established for work, practice expense (PE), and malpractice (MP), which are adjusted for geographic cost variations. These values are multiplied by a conversion factor (CF) to convert the relative value units (RVUs) into payment rates. The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act of 1989 (OBRA '89) (Pub. L. 101-239, December 19, 1989), and the Omnibus Budget Reconciliation Act of 1990 (OBRA '90) (Pub. L. 101-508, November 5, 1990). The final rule published in the November 25, 1991 Federal Register (56 FR 59502) set forth the first fee schedule used for Medicare payment for physicians' services.

We note that throughout this proposed rule, unless otherwise noted, the term “practitioner” is used to describe both physicians and nonphysician practitioners (NPPs) who are permitted to bill Medicare under the PFS for the services they furnish to Medicare beneficiaries.

B. Determination of PE RVUs

1. Overview

Practice expense (PE) is the portion of the resources used in furnishing a service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages, but excluding malpractice (MP) expenses, as specified in section 1848(c)(1)(B) of the Act. As required by section 1848(c)(2)(C)(ii) of the Act, we use a resource-based system for determining PE RVUs for each physicians' service. We develop PE RVUs by considering the direct and indirect practice resources involved in furnishing each service. Direct expense categories include clinical labor, medical supplies, and medical equipment. Indirect expenses include administrative labor, office expense, and all other expenses. The sections that follow provide more detailed information about the methodology for translating the resources involved in furnishing each service into service specific PE RVUs. We refer readers to the CY 2010 Physician Fee Schedule (PFS) final rule with comment period (74 FR 61743 through 61748) for a more detailed explanation of the PE methodology.

2. Practice Expense Methodology

a. Direct Practice Expense

We determine the direct PE for a specific service by adding the costs of the direct resources (that is, the clinical staff, medical supplies, and medical equipment) typically involved with furnishing that service. The costs of the resources are calculated using the refined direct PE inputs assigned to each CPT code in our PE database, which are generally based on our review of recommendations received from the American Medical Association (AMA) Relative Value Scale Update Committee (RUC) and those provided in response to public comment periods. For a detailed explanation of the direct PE methodology, including examples, we refer readers to the 5-year review of work RVUs under the PFS and proposed changes to the PE methodology in the CY 2007 PFS proposed rule (71 FR 37242) and the CY 2007 PFS final rule with comment period (71 FR 69629).

b. Indirect Practice Expense Per Hour Data

We use survey data on indirect PEs incurred per hour worked to develop the indirect portion of the PE RVUs. Prior to CY 2010, we primarily used the PE/HR by specialty obtained from the AMA's Socioeconomic Monitoring System (SMS). The AMA administered a new survey in CY 2007 and CY 2008, the Physician Practice Information Survey (PPIS). The PPIS is a multispecialty, nationally representative, PE survey of physicians and NPPs paid under the PFS using a survey instrument and methods highly consistent with those used for the SMS and the supplemental surveys. The PPIS gathered information from 3,656 respondents across 51 physician specialty and health care professional groups. We believe the PPIS is the most comprehensive source of PE survey information available. We used the PPIS data to update the PE/HR data for the CY 2010 PFS for almost all of the Medicare-recognized specialties that participated in the survey.

When we began using the PPIS data in CY 2010, we did not change the PE RVU methodology or how the PE/HR data are used. We only updated the PE/HR data based on the new survey. Furthermore, as we explained in the CY 2010 PFS final rule with comment period (74 FR 61751), because of the magnitude of payment reductions for some specialties resulting from the use of the PPIS data, we transitioned its use over a 4-year period from the previous PE RVUs to the PE RVUs developed using the new PPIS data. As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), the transition to the PPIS data was complete for CY 2013. Therefore, PE RVUs from CY 2013 forward are developed based entirely on the PPIS data, except as noted in this section.

Section 1848(c)(2)(H)(i) of the Act requires us to use the medical oncology supplemental survey data submitted in 2003 for oncology drug administration services. Therefore, the PE/HR for medical oncology, hematology, and hematology/oncology reflects the continued use of these supplemental survey data.

Supplemental survey data on independent labs from the College of American Pathologists were implemented for payments beginning in CY 2005. Supplemental survey data from the National Coalition of Quality Diagnostic Imaging Services (NCQDIS), representing independent diagnostic testing facilities (IDTFs), were blended with supplementary survey data from the American College of Radiology (ACR) and implemented for payments beginning in CY 2007. Neither IDTFs nor independent labs participated in the PPIS. Therefore, we continue to use the PE/HR that was developed from their supplemental survey data.

Consistent with our past practice, the previous indirect PE/HR values from the supplemental surveys for these specialties were updated to CY 2006 using the Medicare Economic Index (MEI) to put them on a comparable basis with the PPIS data.

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

Previously, we established PE/HR values for various specialties without SMS or supplemental survey data by crosswalking them to other similar specialties to estimate a proxy PE/HR. For specialties that were part of the PPIS for which we previously used a crosswalked PE/HR, we instead used the PPIS based PE/HR. We use crosswalks for specialties that did not participate in the PPIS. These crosswalks have been generally established through notice and comment rulemaking and are available in the file titled “CY 2025 PFS proposed rule PE/HR” on the CMS website under downloads for the CY 2025 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.

For CY 2025, we have incorporated the available utilization data for two new specialties, Marriage and Family Therapist (MFT) and Mental Health Counselor (MHC), which we recognized effective January 1, 2024, in accordance with section 4121 of the CAA, 2023. We are proposing to use proxy PE/HR values for these new specialties, as there are no PPIS data for these specialties, by crosswalking the PE/HR as follows from specialties that furnish similar services in the Medicare claims data:

• Marriage and Family Therapist (MFT) from Licensed Clinical Social Workers; and
• Mental Health Counselor (MHC) from Licensed Clinical Social Workers

These updates are reflected in the “CY 2025 PFS proposed rule PE/HR” file available on the CMS website under the supporting data files for the CY 2025 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.

c. Allocation of PE to Services

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

(1) Direct Costs

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

(2) Indirect Costs

We allocate the indirect costs at the code level based on the direct costs specifically associated with a code and the greater of either the clinical labor costs or the work RVUs. We also incorporate the survey data described earlier in the PE/HR discussion. The general approach to developing the indirect portion of the PE RVUs is as follows:

• For a given service, we use the direct portion of the PE RVUs calculated as previously described and the average percentage that direct costs represent of total costs (based on survey data) across the specialties that furnish the service to determine an initial indirect allocator. That is, the initial indirect allocator is calculated so that the direct costs equal the average percentage of direct costs of those specialties furnishing the service. For example, if the direct portion of the PE RVUs for a given service is 2.00 and direct costs, on average, represent 25 percent of total costs for the specialties that furnish the service, the initial indirect allocator would be calculated so that it equals 75 percent of the total PE RVUs. Thus, in this example, the initial indirect allocator would equal 6.00, resulting in a total PE RVU of 8.00 (2.00 is 25 percent of 8.00 and 6.00 is 75 percent of 8.00).
• Next, we add the greater of the work RVUs or clinical labor portion of the direct portion of the PE RVUs to this initial indirect allocator. In our example, if this service had a work RVU of 4.00 and the clinical labor portion of the direct PE RVU was 1.50, we would add 4.00 (since the 4.00 work RVUs are greater than the 1.50 clinical labor portion) to the initial indirect allocator of 6.00 to get an indirect allocator of 10.00. In the absence of any further use of the survey data, the relative relationship between the indirect cost portions of the PE RVUs for any two services would be determined by the relative relationship between these indirect cost allocators. For example, if one service had an indirect cost allocator of 10.00 and another service had an indirect cost allocator of 5.00, the indirect portion of the PE RVUs of the first service would be twice as great as the indirect portion of the PE RVUs for the second service.
• Then, we incorporate the specialty specific indirect PE/HR data into the calculation. In our example, if, based on the survey data, the average indirect cost of the specialties furnishing the first service with an allocator of 10.00 was half of the average indirect cost of the specialties furnishing the second service with an indirect allocator of 5.00, the indirect portion of the PE RVUs of the first service would be equal to that of the second service.

(3) Facility and Nonfacility Costs

For procedures that can be furnished in a physician's office, as well as in a facility setting, where Medicare makes a separate payment to the facility for its costs in furnishing a service, we establish two PE RVUs: facility and nonfacility. The methodology for calculating PE RVUs is the same for both the facility and nonfacility RVUs but is applied independently to yield two separate PE RVUs. In calculating the PE RVUs for services furnished in a facility, we do not include resources that would generally not be provided by physicians when furnishing the service. For this reason, the facility PE RVUs are generally lower than the nonfacility PE RVUs.

(4) Services With Technical Components and Professional Components

Diagnostic services are generally comprised of two components: a professional component (PC); and a technical component (TC). The PC and TC may be furnished independently or by different healthcare providers, or they may be furnished together as a global service. When services have separately billable PC and TC components, the payment for the global service equals the sum of the payment for the TC and PC. To achieve this, we use a weighted average of the ratio of indirect to direct costs across all the specialties that furnish the global service, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expenses to the global service, PCs, and TCs for a service. (The direct PE RVUs for the TC and PC sum to the global.)

(5) PE RVU Methodology

For a more detailed description of the PE RVU methodology, we direct readers to the CY 2010 PFS final rule with comment period (74 FR 61745 through 61746). We also direct readers to the file titled “Calculation of PE RVUs under Methodology for Selected Codes” which is available on our website under downloads for the CY 2025 PFS proposed rule at https://www.cms.gov/ Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. This file contains a table that illustrates the calculation of PE RVUs as described in this proposed rule for individual codes.

(a) Setup File

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

(b) Calculate the Direct Cost PE RVUs

Sum the costs of each direct input.

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

Step 2: Calculate the aggregate pool of direct PE costs for the current year. We set the aggregate pool of PE costs equal to the product of the ratio of the current aggregate PE RVUs to current aggregate work RVUs and the projected aggregate work RVUs.

Step 3: Calculate the aggregate pool of direct PE costs for use in ratesetting. This is the product of the aggregate direct costs for all services from Step 1 and the utilization data for that service.

Step 4: Using the results of Step 2 and Step 3, use the CF to calculate a direct PE scaling adjustment to ensure that the aggregate pool of direct PE costs calculated in Step 3 does not vary from the aggregate pool of direct PE costs for the current year. Apply the scaling adjustment to the direct costs for each service (as calculated in Step 1).

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

(c) Create the Indirect Cost PE RVUs

Create indirect allocators.

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

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

We generally use an average of the three most recent years of available Medicare claims data to determine the specialty mix assigned to each code. Codes with low Medicare service volume require special attention since billing or enrollment irregularities for a given year can result in significant changes in specialty mix assignment. We finalized a policy in the CY 2018 PFS final rule (82 FR 52982 through 59283) to use the most recent year of claims data to determine which codes are low volume for the coming year (those that have fewer than 100 allowed services in the Medicare claims data). For codes that fall into this category, instead of assigning a specialty mix based on the specialties of the practitioners reporting the services in the claims data, we use the expected specialty that we identify on a list developed based on medical review and input from expert interested parties. We display this list of expected specialty assignments as part of the annual set of data files we make available as part of notice and comment rulemaking and consider recommendations from the RUC and other interested parties on changes to this list annually. Services for which the specialty is automatically assigned based on previously finalized policies under our established methodology (for example, “always therapy” services) are unaffected by the list of expected specialty assignments. We also finalized in the CY 2018 PFS final rule (82 FR 52982 through 52983) a policy to apply these service-level overrides for both PE and MP, rather than one or the other category.

Step 8: Calculate the service level allocators for the indirect PEs based on the percentages calculated in Step 7. The indirect PEs are allocated based on the three components: the direct PE RVUs; the clinical labor PE RVUs; and the work RVUs.

For most services the indirect allocator is: indirect PE percentage * (direct PE RVUs/direct percentage) + work RVUs.

There are two situations where this formula is modified:

• If the service is a global service (that is, a service with global, professional, and technical components), then the indirect PE allocator is: indirect percentage (direct PE RVUs/direct percentage) + clinical labor PE RVUs + work RVUs.
• If the clinical labor PE RVUs exceed the work RVUs (and the service is not a global service), then the indirect allocator is: indirect PE percentage (direct PE RVUs/direct percentage) + clinical labor PE RVUs.

( Note: For global services, the indirect PE allocator is based on both the work RVUs and the clinical labor PE RVUs. We do this to recognize that, for the PC service, indirect PEs would be allocated using the work RVUs, and for the TC service, indirect PEs would be allocated using the direct PE RVUs and the clinical labor PE RVUs. This also allows the global component RVUs to equal the sum of the PC and TC RVUs.)

For presentation purposes, in the examples in the download file titled “Calculation of PE RVUs under Methodology for Selected Codes”, the formulas were divided into two parts for each service.

• The first part does not vary by service and is the indirect percentage (direct PE RVUs/direct percentage).
• The second part is either the work RVU, clinical labor PE RVU, or both depending on whether the service is a global service and whether the clinical PE RVUs exceed the work RVUs (as described earlier in this step).

Apply a scaling adjustment to the indirect allocators.

Step 9: Calculate the current aggregate pool of indirect PE RVUs by multiplying the result of step 8 by the average indirect PE percentage from the survey data.

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

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

Calculate the indirect practice cost index.

Step 12: Using the results of Step 11, calculate aggregate pools of specialty specific adjusted indirect PE allocators for all PFS services for a specialty by adding the product of the adjusted indirect PE allocator for each service and the utilization data for that service.

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

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

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

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

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

(d) Calculate the Final PE RVUs

Step 18: Add the direct PE RVUs from Step 5 to the indirect PE RVUs from Step 17 and apply the final PE budget neutrality (BN) adjustment. The final PE BN adjustment is calculated by comparing the sum of steps 5 and 17 to the aggregate work RVUs scaled by the ratio of current aggregate PE and work RVUs. This adjustment ensures that all PE RVUs in the PFS account for the fact that certain specialties are excluded from the calculation of PE RVUs but included in maintaining overall PFS BN. (See “Specialties excluded from ratesetting calculation” later in this proposed rule.)

Step 19: Apply the phase-in of significant RVU reductions and its associated adjustment. Section 1848(c)(7) of the Act specifies that for services that are not new or revised codes, if the total RVUs for a service for a year would otherwise be decreased by an estimated 20 percent or more as compared to the total RVUs for the previous year, the applicable adjustments in work, PE, and MP RVUs shall be phased in over a 2-year period. In implementing the phase-in, we consider a 19 percent reduction as the maximum 1-year reduction for any service not described by a new or revised code. This approach limits the year one reduction for the service to the maximum allowed amount (that is, 19 percent), and then phases in the remainder of the reduction. To comply with section 1848(c)(7) of the Act, we adjust the PE RVUs to ensure that the total RVUs for all services that are not new or revised codes decrease by no more than 19 percent, and then apply a relativity adjustment to ensure that the total pool of aggregate PE RVUs remains relative to the pool of work and MP RVUs. For a more detailed description of the methodology for the phase-in of significant RVU changes, we refer readers to the CY 2016 PFS final rule with comment period (80 FR 70927 through 70931).

(e) Setup File Information

• Specialties excluded from ratesetting calculation: To calculate the PE and MP RVUs, we exclude certain specialties, such as NPPs paid at a percentage of the PFS and low volume specialties, from the calculation. These specialties are included to calculate the BN adjustment. They are displayed in Table 1.

• Crosswalk certain low volume physician specialties: Crosswalk the utilization of certain specialties with relatively low PFS utilization to the associated specialties.
• Physical therapy utilization: Crosswalk the utilization associated with all physical therapy services to the specialty of physical therapy.
• Identify professional and technical services not identified under the usual TC and 26 modifiers: Flag the services that are PC and TC services but do not use TC and 26 modifiers (for example, electrocardiograms). This flag associates the PC and TC with the associated global code for use in creating the indirect PE RVUs. For example, the professional service, CPT code 93010 (Electrocardiogram, routine ECG with at least 12 leads; interpretation and report only), is associated with the global service, CPT code 93000 (Electrocardiogram, routine ECG with at least 12 leads; with interpretation and report).
• Payment modifiers: Payment modifiers are accounted for in creating the file consistent with the current payment policy as implemented in claims processing. For example, services billed with the assistant at surgery modifier are paid 16 percent of the PFS amount for that service; therefore, the utilization file is modified to only account for 16 percent of any service that contains the assistant at surgery modifier. Similarly, for those services to which volume adjustments are made to account for the payment modifiers, time adjustments are applied as well. For time adjustments to surgical services, the intraoperative portion in the work time file is used; where it is not present, the intraoperative percentage from the payment files used by contractors to process Medicare claims is used instead. Where neither is available, we use the payment adjustment ratio to adjust the time accordingly. Table 2 details the manner in which the modifiers are applied.

We also adjust volume and time that correspond to other payment rules, including special multiple procedure endoscopy rules and multiple procedure payment reductions (MPPRs). We note that section 1848(c)(2)(B)(v) of the Act exempts certain reduced payments for multiple imaging procedures and multiple therapy services from the BN calculation under section 1848(c)(2)(B)(ii)(II) of the Act. These MPPRs are not included in the development of the RVUs.

Beginning in CY 2022, section 1834(v)(1) of the Act required that we apply a 15 percent payment reduction for outpatient occupational therapy services and outpatient physical therapy services that are provided, in whole or in part, by a physical therapist assistant (PTA) or occupational therapy assistant (OTA). Section 1834(v)(2)(A) of the Act required CMS to establish modifiers to identify these services, which we did in the CY 2019 PFS final rule (83 FR 59654 through 59661), creating the CQ and CO payment modifiers for services provided in whole or in part by PTAs and OTAs, respectively. These payment modifiers are required to be used on claims for services with dates of service beginning January 1, 2020, as specified in the CY 2020 PFS final rule (84 FR 62702 through 62708). We applied the 15 percent payment reduction to therapy services provided by PTAs (using the CQ modifier) or OTAs (using the CO modifier), as required by statute. Under sections 1834(k) and 1848 of the Act, payment is made for outpatient therapy services at 80 percent of the lesser of the actual charge or applicable fee schedule amount (the allowed charge). The remaining 20 percent is the beneficiary copayment. For therapy services to which the new discount applies, payment will be made at 85 percent of the 80 percent of allowed charges. Therefore, the volume discount factor for therapy services to which the CQ and CO modifiers apply is: (0.20 + (0.80* 0.85), which equals 88 percent.

We note that for CY 2025, we are proposing mandatory use of the 54 and 55 modifiers when practitioners furnishing global surgery procedures share in patient care and intend only to furnish preoperative/intraoperative or postoperative portions of the total global procedure. If finalized, this proposal will likely increase the number of claims subject to the adjustment described in the discussion above. We discuss this proposal in section II.G. of this proposed rule.

For anesthesia services, we do not apply adjustments to volume since we use the average allowed charge when simulating RVUs; therefore, the RVUs as calculated already reflect the payments as adjusted by modifiers, and no volume adjustments are necessary. However, a time adjustment of 33 percent is made only for medical direction of two to four cases since that is the only situation where a single practitioner is involved with multiple beneficiaries concurrently, so that counting each service without regard to the overlap with other services would overstate the amount of time spent by the practitioner furnishing these services.

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

(6) Equipment Cost per Minute

The equipment cost per minute is calculated as:

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

Where:

minutes per year = maximum minutes per year if usage were continuous (that is, usage=1); generally, 150,000 minutes.

usage = variable, see discussion below in this proposed rule.

price = price of the particular piece of equipment.

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

maintenance = factor for maintenance; 0.05.

interest rate = variable, see discussion below in this proposed rule.

Usage: We currently use an equipment utilization rate assumption of 50 percent for most equipment, with the exception of expensive diagnostic imaging equipment, for which we use a 90 percent assumption as required by section 1848(b)(4)(C) of the Act.

Useful Life: In the CY 2005 PFS final rule we stated that we updated the useful life for equipment items primarily based on the AHA's “Estimated Useful Lives of Depreciable Hospital Assets” guidelines (69 FR 66246). The most recent edition of these guidelines was published in 2018. This reference material provides an estimated useful life for hundreds of different types of equipment, the vast majority of which fall in the range of 5 to 10 years, and none of which are lower than two years in duration. We believe that the updated editions of this reference material remain the most accurate source for estimating the useful life of depreciable medical equipment.

In the CY 2021 PFS final rule, we finalized a proposal to treat equipment life durations of less than 1 year as having a duration of 1 year for the purpose of our equipment price per minute formula. In the rare cases where items are replaced every few months, we noted that we believe it is more accurate to treat these items as disposable supplies with a fractional supply quantity as opposed to equipment items with very short equipment life durations. For a more detailed discussion of the methodology associated with very short equipment life durations, we refer readers to the CY 2021 PFS final rule (85 FR 84482 through 84483).

• Maintenance: We finalized the 5 percent factor for annual maintenance in the CY 1998 PFS final rule with comment period (62 FR 33164). As we previously stated in the CY 2016 PFS final rule with comment period (80 FR 70897), we do not believe the annual maintenance factor for all equipment is precisely 5 percent, and we concur that the current rate likely understates the true cost of maintaining some equipment. We also noted that we believe it likely overstates the maintenance costs for other equipment. When we solicited comments regarding data sources containing equipment maintenance rates, commenters could not identify an auditable, robust data source that CMS could use on a wide scale. We noted that we did not believe voluntary submissions regarding the maintenance costs of individual equipment items would be an appropriate methodology for determining costs. As a result, in the absence of publicly available datasets regarding equipment maintenance costs or another systematic data collection methodology for determining a different maintenance factor, we did not propose a variable maintenance factor for equipment cost per minute pricing as we did not believe that we have sufficient information at present. We noted that we would continue to investigate potential avenues for determining equipment maintenance costs across a broad range of equipment items.
• Interest Rate: In the CY 2013 PFS final rule with comment period (77 FR 68902), we updated the interest rates used in developing an equipment cost per minute calculation (see 77 FR 68902 for a thorough discussion of this issue). The interest rate was based on the Small Business Administration (SBA) maximum interest rates for different categories of loan size (equipment cost) and maturity (useful life). The Interest rates are listed in Table 3.

We are not proposing any changes to the equipment interest rates for CY 2025.

3. Adjusting RVUs To Match the PE Share of the Medicare Economic Index (MEI)

In the past, we have stated that we believe that the MEI is the best measure available of the relative weights of the three components in payments under the PFS—work, practice expense (PE), and malpractice (MP). Accordingly, we believe that to ensure that the PFS payments reflect the relative resources in each of these PFS components as required by section 1848(c)(3) of the Act, the RVUs used in developing rates should reflect the same weights in each component as the cost share weights in the Medicare Economic Index (MEI). In the past, we have proposed (and subsequently finalized) to accomplish this by holding the work RVUs constant and adjusting the PE RVUs, MP RVUs, and CF to produce the appropriate balance in RVUs among the three PFS components and payment rates for individual services, that is, that the total RVUs on the PFS are proportioned to approximately 51 percent work RVUs, 45 percent PE RVUs, and 4 percent MP RVUs. As the MEI cost shares are updated, we would typically propose to modify steps 3 and 10 to adjust the aggregate pools of PE costs (direct PE in step 3 and indirect PE in step 10) in proportion to the change in the PE share in the rebased and revised MEI cost share weights, and to recalibrate the relativity adjustment that we apply in step 18 as described in the CY 2023 PFS final rule (87 FR 69414 and 69415) and CY 2014 PFS final rule (78 FR 74236 and 74237). The most recent recalibration was done for the CY 2014 RVUs.

In the CY 2014 PFS proposed rule (78 FR 43287 through 43288) and final rule (78 FR 74236 through 74237), we detailed the steps necessary to accomplish this result (see steps 3, 10, and 18). The CY 2014 proposed and final adjustments were consistent with our longstanding practice to make adjustments to match the RVUs for the PFS components with the MEI cost share weights for the components, including the adjustments described in the CY 1999 PFS final rule (63 FR 58829), CY 2004 PFS final rule (68 FR 63246 and 63247), and CY 2011 PFS final rule (75 FR 73275).

In the CY 2023 PFS final rule (87 FR 69688 through 69711), we finalized to rebase and revise the MEI to reflect more current market conditions faced by physicians in furnishing physicians' services (referred to as the “2017-based MEI”). We also finalized a delay of the adjustments to the PE pools in steps 3 and 10 and the recalibration of the relativity adjustment in step 18 until the public had an opportunity to comment on the rebased and revised MEI (87 FR 69414 through 69416). Because we finalized significant methodological and data source changes to the MEI in the CY 2023 PFS final rule and significant time has elapsed since the last rebasing and revision of the MEI in CY 2014, we believed that delaying the implementation of the finalized CY 2023 rebased and revised MEI was consistent with our efforts to balance payment stability and predictability with incorporating new data through more routine updates. We refer readers to the discussion of our comment solicitation in the CY 2023 PFS final rule (87 FR 69429 through 69432), where we reviewed our ongoing efforts to update data inputs for PE to aid stability, transparency, efficiency, and data adequacy. We also solicited comment in the CY 2023 PFS proposed rule on when and how to best incorporate the CY 2023 rebased and revised MEI into PFS ratesetting, and whether it would be appropriate to consider a transition to full implementation for potential future rulemaking. We presented the impacts of implementing the rebased and revised MEI in PFS ratesetting through a 4-year transition and through full immediate implementation, that is, with no transition period in the CY 2023 PFS proposed rule. We also solicited comment on other implementation strategies for potential future rulemaking in the CY 2023 PFS proposed rule. In the CY 2023 PFS final rule, we discussed that many commenters supported our proposed delayed implementation, and many commenters expressed concerns with the redistributive impacts of the implementation of the rebased and revised MEI in PFS ratesetting. Many commenters also noted the AMA's intent to collect practice cost data from physician practices, which could be used to derive cost share weights for the MEI and RVU shares.

In light of the AMA's current data collection efforts and because the methodological and data source changes to the MEI finalized in the CY 2023 PFS final rule would have significant impacts on PFS payments, similar to our discussion of this topic in the CY 2024 PFS rulemaking cycle (88 FR 78829 through 78831), we continue to believe that delaying the implementation of the finalized 2017-based MEI cost share weights for the RVUs is consistent with our efforts to balance payment stability and predictability with incorporating new data through more routine updates. For these reasons, we did not propose to incorporate the 2017-based MEI in PFS ratesetting for CY 2024. As we noted in the CY 2024 PFS final rule, many commenters on the CY 2024 PFS proposed rule supported our continued delayed implementation of the 2017-based MEI in PFS ratesetting (88 FR 78830). Most of these commenters urged us to pause consideration of other sources for the MEI until the AMA's efforts to collect practice cost data from physician practices have concluded, although a few commenters recommended that we implement the MEI for PFS ratesetting as soon as possible. We agree with the commenters that it would be prudent, and avoid potential duplication of effort, to wait to consider other data sources for the MEI while the AMA's data collection activities are ongoing. As we discussed in the CY 2024 PFS final rule, we continue to monitor the data available related to physician services' input expenses, but we are not proposing to update the data underlying the MEI cost weights at this time. Given our previously described policy goal to balance PFS payment stability and predictability with incorporating new data through more routine updates to the MEI, we are not proposing to incorporate the 2017-based MEI in PFS ratesetting for CY 2025. We invite comments on this approach as well as any information on the timing of the AMA's practice cost data collection efforts and other sources of data we could consider for updating the MEI.

4. Changes to Direct PE Inputs for Specific Services

This section focuses on specific PE inputs. The direct PE inputs are included in the CY 2025 direct PE input public use files, which are available on the CMS website under downloads for the CY 2025 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.

a. Standardization of Clinical Labor Tasks

As we noted in the CY 2015 PFS final rule with comment period (79 FR 67640 through 67641), we continue to make improvements to the direct PE input database to provide the number of clinical labor minutes assigned for each task for every code in the database instead of only including the number of clinical labor minutes for the preservice, service, and post service periods for each code. In addition to increasing the transparency of the information used to set PE RVUs, this level of detail would allow us to compare clinical labor times for activities associated with services across the PFS, which we believe is important to maintaining the relativity of the direct PE inputs. This information would facilitate the identification of the usual numbers of minutes for clinical labor tasks and the identification of exceptions to the usual values. It would also allow for greater transparency and consistency in the assignment of equipment minutes based on clinical labor times. Finally, we believe that the detailed information can be useful in maintaining standard times for particular clinical labor tasks that can be applied consistently to many codes as they are valued over several years, similar in principle to physician preservice time packages. We believe that setting and maintaining such standards would provide greater consistency among codes that share the same clinical labor tasks and could improve the relativity of values among codes. For example, as medical practice and technologies change over time, standards could be updated simultaneously for all codes with the applicable clinical labor tasks instead of waiting for individual codes to be reviewed.

In the CY 2016 PFS final rule with comment period (80 FR 70901), we solicited comments on the appropriate standard minutes for the clinical labor tasks associated with services that use digital technology. After consideration of comments received, we finalized standard times for clinical labor tasks associated with digital imaging at 2 minutes for “Availability of prior images confirmed”, 2 minutes for “Patient clinical information and questionnaire reviewed by technologist, order from physician confirmed and exam protocoled by radiologist”, 2 minutes for “Review examination with interpreting MD”, and 1 minute for “Exam documents scanned into PACS” and “Exam completed in RIS system to generate billing process and to populate images into Radiologist work queue.” In the CY 2017 PFS final rule (81 FR 80184 through 80186), we finalized a policy to establish a range of appropriate standard minutes for the clinical labor activity, “Technologist QCs images in PACS, checking for all images, reformats, and dose page.” These standard minutes will be applied to new and revised codes that make use of this clinical labor activity when they are reviewed by us for valuation. We finalized a policy to establish 2 minutes as the standard for the simple case, 3 minutes as the standard for the intermediate case, 4 minutes as the standard for the complex case, and 5 minutes as the standard for the highly complex case. These values were based upon a review of the existing minutes assigned for this clinical labor activity; we determined that 2 minutes is the duration for most services and a small number of codes with more complex forms of digital imaging have higher values. We also finalized standard times for a series of clinical labor tasks associated with pathology services in the CY 2016 PFS final rule with comment period (80 FR 70902). We do not believe these activities would be dependent on number of blocks or batch size, and we believe that the finalized standard values accurately reflect the typical time it takes to perform these clinical labor tasks.

In reviewing the RUC-recommended direct PE inputs for CY 2019, we noticed that the 3 minutes of clinical labor time traditionally assigned to the “Prepare room, equipment and supplies” (CA013) clinical labor activity were split into 2 minutes for the “Prepare room, equipment and supplies” activity and 1 minute for the “Confirm order, protocol exam” (CA014) activity. We proposed to maintain the 3 minutes of clinical labor time for the “Prepare room, equipment and supplies” activity and remove the clinical labor time for the “Confirm order, protocol exam” activity wherever we observed this pattern in the RUC-recommended direct PE inputs. Commenters explained in response that when the new version of the PE worksheet introduced the activity codes for clinical labor, there was a need to translate old clinical labor tasks into the new activity codes, and that a prior clinical labor task was split into two of the new clinical labor activity codes: CA007 ( Review patient clinical extant information and questionnaire) in the preservice period, and CA014 ( Confirm order, protocol exam) in the service period. Commenters stated that the same clinical labor from the old PE worksheet was now divided into the CA007 and CA014 activity codes, with a standard of 1 minute for each activity. We agreed with commenters that we would finalize the RUC-recommended 2 minutes of clinical labor time for the CA007 activity code and 1 minute for the CA014 activity code in situations where this was the case. However, when reviewing the clinical labor for the reviewed codes affected by this issue, we found that several of the codes did not include this old clinical labor task, and we also noted that several of the reviewed codes that contained the CA014 clinical labor activity code did not contain any clinical labor for the CA007 activity. In these situations, we believe that the three total minutes of clinical staff time would be more accurately described by the CA013 “Prepare room, equipment and supplies” activity code, and we finalized these clinical labor refinements. We direct readers to the discussion in the CY 2019 PFS final rule (83 FR 59463 through 59464) for additional details.

Following the publication of the CY 2020 PFS proposed rule, one commenter expressed concern with the published list of common refinements to equipment time. The commenter stated that these refinements were the formulaic result of applying refinements to the clinical labor time and did not constitute separate refinements; the commenter requested that CMS no longer include these refinements in the table published each year. In the CY 2020 PFS final rule, we agreed with the commenter that these equipment time refinements did not reflect errors in the equipment recommendations or policy discrepancies with the RUC's equipment time recommendations. However, we believed it was important to publish the specific equipment times that we were proposing (or finalizing in the case of the final rule) when they differed from the recommended values due to the effect these changes can have on the direct costs associated with equipment time. Therefore, we finalized the separation of the equipment time refinements associated with changes in clinical labor into a separate table of refinements. We direct readers to the discussion in the CY 2020 PFS final rule (84 FR 62584) for additional details.

Historically, the RUC has submitted a “PE worksheet” that details the recommended direct PE inputs for our use in developing PE RVUs. The format of the PE worksheet has varied over time, and among the medical specialties developing the recommendations. These variations have made it difficult for the RUC's development and our review of code values for individual codes. Beginning with its recommendations for CY 2019, the RUC mandated the use of a new PE worksheet for its recommendation development process that standardizes the clinical labor tasks and assigns them a clinical labor activity code. We believe the RUC's use of the new PE worksheet in developing and submitting recommendations helps us simplify and standardize the hundreds of clinical labor tasks currently listed in our direct PE database. As in previous calendar years, to facilitate rulemaking for CY 2025, we are continuing to display two versions of the Labor Task Detail public use file: one version with the old listing of clinical labor tasks and one with the same tasks crosswalked to the new listing of clinical labor activity codes. These lists are available on the CMS website under downloads for the CY 2025 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.

b. Updates to Prices for Existing Direct PE Inputs

In the CY 2011 PFS final rule with comment period (75 FR 73205), we finalized a process to act on public requests to update equipment and supply price and equipment useful life inputs through annual rulemaking, beginning with the CY 2012 PFS proposed rule. Beginning in CY 2019 and continuing through CY 2022, we conducted a market-based supply and equipment pricing update using information developed by our contractor, StrategyGen, which updated pricing recommendations for approximately 1300 supplies and 750 equipment items currently used as direct PE inputs. Given the potentially significant changes in payment that would occur, in the CY 2019 PFS final rule, we finalized a policy to phase in our use of the new direct PE input pricing over a 4-year period using a 25/75 percent (CY 2019), 50/50 percent (CY 2020), 75/25 percent (CY 2021), and 100/0 percent (CY 2022) split between new and old pricing. We believed that implementing the proposed updated prices with a 4-year phase-in would improve payment accuracy while maintaining stability and allowing interested parties to address potential concerns about changes in payment for particular items. This 4-year transition period to update supply and equipment pricing concluded in CY 2022; for a more detailed discussion, we refer readers to the CY 2019 PFS final rule with comment period (83 FR 59473 through 59480).

For CY 2025, we are proposing to update the price of 17 supplies and one equipment item in response to the public submission of invoices following the publication of the CY 2024 PFS final rule. The 18 supply and equipment items with proposed updated prices are listed in the valuation of specific codes section of the preamble under Table 16, CY 2025 Invoices Received for Existing Direct PE Inputs.

An interested party submitted 30 invoices to update pricing for the human amniotic membrane allograft mounted on a non-absorbable self-retaining ring (SD248) supply. We previously updated the price of this supply in the CY 2024 final rule (88 FR 78901) based on averaging together the price of the Prokera Slim, Prokera Classic, and Prokera Plus devices. The interested party submitted new invoices for all three of these devices which averaged to a new price of $1149.00 which we are proposing for the SD248 supply. We are soliciting additional comments from interested parties regarding the price of the SD248 supply as well as any information as far as whether one of these three devices (the Prokera Slim, Prokera Classic, and Prokera Plus) would be more typical than the other two for use as a supply in CPT code 65778.

In the case of the indocyanine green (25ml uou) (SL083) supply, we noticed that there was a clear bimodal distribution of prices on the eight submitted invoices, clustered around $91.00 and $141.67, respectively, with no pricing in between $100 and $140. We are proposing the updated total average price of $125.11 based on the eight submitted invoices for the SL083 supply, however, we are soliciting comments on why there was such divergence in the pricing on the submitted invoices, as well as whether these may represent pricing for two different supplies.

Regarding the Reaction buffer 10X (Ventana 950-300) (SL478) supply, we are proposing to update the price from $0.037 to $0.045, which is less than the $0.075 contained on the invoice submitted by interested parties. We were able to find this product readily available for purchase online at a quantity of 10 liters for $453 or a price of $0.045. We do not believe that it would be typical for providers to pay a higher price based on smaller unit quantities; therefore, we are proposing to update the price of the SL478 supply but only to $0.045, which is the price to purchase this supply online, as stated above.

Interested parties also alerted CMS to a technical correction for pricing the Atomizer tips (disposable) (SL464) supply. We previously finalized a price of $2.66 for the SL464 supply, which was included in the table of Invoices Received for Existing Direct PE Inputs in the CY 2018 final rule (82 FR 53162). However, due to a technical error, the updated pricing for the SL464 supply was never implemented. We are proposing to make this correction for CY 2025; the corrected price of $2.66 for the SL464 supply is included in Table 16.

We are not proposing to update the price of another ten supplies, which were the subject of public submission of invoices. Our reasons for not proposing updates to these prices are detailed below, and we are seeking additional information from interested parties for assistance in pricing these supplies:

• Liposorber supplies: Tubing set (SC083), Plasma LDL adsorption column (SD186), and Plasma separator (SD188): We received invoices for these three Liposorber supplies from an interested party. However, it was unclear from the invoice submissions what the unit quantity size is for each product. We require additional information regarding the unit size of each supply included on these invoices to establish updated pricing, and therefore, we are not proposing updates to the prices for these supplies. We are seeking additional comments regarding the pricing of these supplies and whether the pricing has increased so dramatically, as it seems unlikely that prices have tripled in the five years since we most recently updated the pricing for these supplies.
• Congo Red kits (SA110): We received three invoices from interested parties requesting an increase in the price of the SA110 supply from $6.80 to $18.78. However, we were able to find Congo Red staining kits readily available online at a price of 100 for $410 or $4.10 per kit. The unit size of these kits was also unclear, which made price comparisons with the submitted invoices difficult. Based on the three invoices and the online price of 100 for $410 or $4.10 per kit, we do not believe there is enough pricing data to support an increase in the price of the SA110 supply from $6.80 to $18.78, and we are not proposing an increase in the price of this supply.
• Gauze, non-sterile 4in x 4in (SG051): We received one invoice from interested parties requesting an increase in the price of the SG051 supply from $0.03 to $0.04. However, the submitted invoice price appeared to be for surgical gauze, not non-sterile gauze. We were able to find the 4x4 non-sterile gauze readily available online at less than the invoice price. Based on this information, we do not believe there is enough pricing data to support an increase in the price of the SG051 supply from $0.03 to $0.04, and we are not proposing an increase in the price of this supply.
• Permanent marking pen (SL477): We received one invoice from interested parties requesting an increase in the price of the SL477 supply from $2.81 to $4.62. However, we found black marking pens, such as Sharpies, widely available at unit prices around $2.00 when purchased in larger quantities. Based on this information, we do not believe there is enough pricing data to support an increase in the price of the SL477 supply from $2.81 to $4.62, and we are not proposing an increase in the price of this supply.
• Hematoxylin II (Ventana 790-2208) (SL483): We received four invoices from interested parties requesting an increase in the price of the SL483 supply from $0.780 to $2.722. However, we were able to find hematoxylin II stains readily available online at cheaper prices, such as $52.00 for 500 ml ($0.104 per ml). Based on this information, we do not believe there is enough pricing data to support an increase in the price of the SL483 supply from $0.780 to $2.722, and we are not proposing an increase in the price of this supply.
• Bluing reagent (Ventana 760-2037) (SL484): We received three invoices from interested parties requesting an increase in the price of the SL484 supply from $4.247 to $6.130. While researching the pricing of the SL484 supply, we were unable to determine the unit quantity size on invoices, which made it difficult to evaluate if the requested price accurately reflected market pricing. As best we could tell, the requested price increase to $6.130 was more expensive than comparable online bluing reagents available for purchase. Based on this information, we do not believe there is enough pricing data to support an increase in the price of the SL484 supply from $4.247 to $6.130, and we are not proposing an increase in the price of this supply.
• EZ Prep (10X) (Ventana 950-102) (SL481) and 250 Test Prep Kit # 78 (Ventana 786-3034) (SL486): In each of these cases, we received invoices from interested parties requesting substantial increases in the price of the associated supplies, from $0.034 to $0.509 for the SL481 supply and from $0.309 to $2.134 for the SL486 supply. We do not believe that it is reasonable to expect that the typical market prices for these supplies have increased by 1400 percent and 600 percent, respectively, in the 5 years since we most recently updated the pricing for these supplies. The limited pricing information we could find online for each product also failed to support these drastic increases in pricing. Based on this information, we do not believe there is enough pricing data to support the requested increases for the SL481 and SL486 supplies, and we are not proposing increases to the prices for these supplies.

(1) Invoice Submission

We remind readers that we routinely accept public submissions of invoices as part of our process for developing payment rates for new, revised, and potentially misvalued codes. Often, these invoices are submitted in conjunction with the RUC-recommended values for the codes. To be included in a given year's proposed rule, we generally need to receive invoices by the same February 10th deadline we noted for consideration of RUC recommendations. However, we will consider invoices submitted as public comments during the comment period following the publication of the PFS proposed rule and would consider any invoices received after February 10th or outside of the public comment process as part of our established annual process for requests to update supply and equipment prices. Interested parties are encouraged to submit invoices with their public comments or, if outside the notice and comment rulemaking process, via email at PE_Price_Input_Update@cms.hhs.gov.

In recent years, we have noticed a growing number of invoice submissions for use in updating supply and equipment pricing. Although we continue to believe in the importance of using the most recent and accurate invoice data to reflect current market pricing, we do have some concerns that the increased use of these submissions may distort relativity across the fee schedule. Relying on voluntary invoice submissions to update pricing for a small subset of the total number of supply and equipment items in our database, while leaving the overwhelming majority of prices untouched, could be distorting pricing in favor of the most recent submissions. We believe that it may be more efficient, and more accurate, to update supply and equipment pricing in a more comprehensive fashion similar to the pricing update that took place from CY 2019 to CY 2022. For example, future updates to supply and equipment pricing could take place in tandem with updates to clinical labor pricing after the current clinical labor update concludes in CY 2025. We welcome public comments on this general topic of more comprehensive updates to supply and equipment pricing, and we may consider comments we receive to inform future rulemaking.

(2) Supply Pack Pricing Update

Interested parties previously notified CMS that they identified numerous discrepancies between the aggregated cost of some supply packs and the individual item components contained within. The interested parties indicated that CMS should rectify these mathematical errors as soon as possible to ensure that the sum correctly matches the totals from the individual items, and they recommended that we resolve these pricing discrepancies in the supply packs during CY 2024 rulemaking. The AMA RUC convened a workgroup on this subject and submitted recommendations to update pricing for a series of supply packs along with the RUC's comment letter for the CY 2024 rule cycle.

We appreciated the additional information and RUC workgroup recommendations regarding discrepancies in the aggregated cost of some supply packs. However, due to the projected significant cost revisions in the pricing of supply packs and because we did not propose to address supply pack pricing in the CY 2024 proposed rule, we stated that this issue would be better addressed in future rulemaking. For example, the cleaning and disinfecting endoscope pack (SA042) is included as a supply input in more than 300 HCPCS codes, which could have a sizable impact on the overall valuation of these services, and which was not incorporated into the proposed RVUs published for the CY 2024 proposed rule. We stated that interested parties would be better served if we comprehensively addressed this topic during future rulemaking in which commenters could provide feedback in response to proposed pricing updates (88 FR 78833 through 78834).

For CY 2025, we are proposing to implement the supply pack pricing update and associated revisions as recommended by the RUC's workgroup. We are proposing to update the pricing of the “pack, cleaning and disinfecting, endoscope” (SA042) supply from $19.43 to $31.29, to update the pricing of the “pack, drapes, cystoscopy” (SA045) supply from $17.33 to $14.99, to update the pricing of the “pack, ocular photodynamic therapy” (SA049) supply from $16.35 to $26.35, to update the pricing of the “pack, urology cystoscopy visit” (SA058) supply from $113.70 to $37.63, and to update the pricing of the “pack, ophthalmology visit (w-dilation)” (SA082) supply from $3.91 to $2.33. As recommended by the RUC workgroup, we are also proposing to delete the “pack, drapes, laparotomy (chest-abdomen)” (SA046) supply entirely. The proposed updated prices for these supply packs are listed in the valuation of specific codes section of the preamble under Table 16, CY 2025 Invoices Received for Existing Direct PE Inputs.

In accordance with the RUC workgroup's recommendations, we are also proposing to create eight new supply codes, including components contained within previously existing supply packs. Aside from the SB056 supply, which is a replacement in several HCPCS codes for the deleted SA046 supply pack, all of these new supplies are not included as standalone direct PE inputs in any current HCPCS codes, as they are, again, components contained within previously existing supply packs. We are proposing to add:

• The kit, ocular photodynamic therapy (PDT) (SA137) supply at a price of $26.00 as a component of the SA049 supply pack;
• The Abdominal Drape Laparotomy Drape Sterile (100 in x 72 in x 124 in) (SB056) supply at a price of $8.049 as a replacement for the SA046 supply pack;
• The drape, surgical, legging (SB057) supply at a price of $3.284 as a component of the SA045 supply pack;
• The drape, surgical, split, impervious, absorbent (SB058) supply at a price of $8.424 as a component of the SA045 supply pack;
• The post-mydriatic spectacles (SB059) supply at a price of $0.328 as a component of the SA082 supply pack;
• The y-adapter cap (SD367) supply at a price of $0.352 as a component of the SA049 supply pack;
• The ortho-phthalaldehyde 0.55% (e.g., Cidex OPA) (SM030) supply at a price of $0.554 as a component of the SA042 supply pack; and
• The ortho-phthalaldehyde test strips (SM031) supply at a price of $1.556 as a component of the SA042 supply pack.

The proposed new supply pack component items are listed in the valuation of specific codes section of the preamble under Table 17, CY 2025 New Invoices.

We are also proposing the following additional supply substitutions based on the recommendations of the RUC workgroup. We are proposing to remove the deleted SA046 supply pack and replace it with the drape, sterile, fenestrated 16in x 29in (SB011) supply for CPT codes 19020, 19101, 19110, 19112, 20101, and 20102. We are proposing to remove the deleted SA046 supply pack and replace it with two supplies—the drape, sterile, three-quarter sheet (SB014) and the drape, towel, sterile 18in x 26in (SB019)—for CPT codes 19000 and 60300. We are proposing to remove the deleted SA046 supply pack and replace it with two supplies—the drape, towel, sterile 18in × 26in (SB019) and the newly created Abdominal Drape Laparotomy Drape Sterile (100 in × 72 in × 124 in) (SB056) supply—for CPT codes 22510, 22511, 22513, and 22514. We are proposing to remove the deleted SA046 supply pack without replacing it with anything for CPT code 22526; the RUC workgroup did not make a recommendation on what to do with CPT code 27278, which also previously contained the SA046 supply pack. Therefore, we are also proposing not to replace the SA046 supply pack with any supplies for this code. The RUC workgroup also recommended removing the SA046 supply pack from CPT code 64595 with no replacement; however, this code was recently reviewed at the April 2022 RUC meeting and it no longer includes the SA046 supply.

The RUC workgroup also reviewed the issue of skin adhesives and identified several generic alternatives to using the skin adhesive (Dermabond) (SG007) supply. The workgroup stated that there are multiple skin adhesive products, at different price points, available that work similarly to Dermabond and requested that generic alternatives be used overall in place of brand names in the CMS direct PE database. The workgroup made a series of suggestions for CMS to create new medical supply item codes to encompass the generic formulations of cyanoacrylate skin adhesive in multidose form and single use sterile application.

We appreciate the recommendations from the RUC workgroup and concur that generic alternatives be used in place of brand names, where appropriate, in the CMS direct PE database. However, we have no pricing information or submitted invoices for the four generic formulations of cyanoacrylate skin adhesive requested by the RUC workgroup (2-Octyl-cyanoacrylate, n-Butyl-2-cyanoacrylate, Combined n-Butyl and 2-Octylcyanoacrylate, and Ethyl-2-cyanoacrylate). Since these four potential new supplies have no pricing information and are not currently included as direct PE inputs for any HCPCS codes, we have not added them to our direct PE database for the CY 2025 proposed rule due to lack of available information.

c. Clinical Labor Pricing Update

Section 220(a) of the PAMA provides that the Secretary may collect or obtain information from any eligible professional or any other source on the resources directly or indirectly related to furnishing services for which payment is made under the PFS and that such information may be used in the determination of relative values for services under the PFS. Such information may include the time involved in furnishing services; the amounts, types, and prices of PE inputs; overhead and accounting information for practices of physicians and other suppliers, and any other elements that would improve the valuation of services under the PFS.

Beginning in CY 2019, we updated the supply and equipment prices used for PE as part of a market-based pricing transition; CY 2022 was the final year of this 4-year transition. We initiated a market research contract with StrategyGen to conduct an in-depth and robust market research study to update the supply and equipment pricing for CY 2019, and we finalized a policy in CY 2019 to phase in the new pricing over a period of 4 years. However, we did not propose to update the clinical labor pricing, and the pricing for clinical labor has remained unchanged during this pricing transition. Clinical labor rates were last updated for CY 2002 using Bureau of Labor Statistics (BLS) data and other supplementary sources where BLS data were not available; we refer readers to the full discussion in the CY 2002 PFS final rule for additional details (66 FR 55257 through 55262).

Interested parties raised concerns that the long delay since clinical labor pricing was last updated created a significant disparity between CMS' clinical wage data and the market average for clinical labor. In recent years, several interested parties suggested that certain wage rates were inadequate because they did not reflect current labor rate information. Some interested parties also stated that updating the supply and equipment pricing without updating the clinical labor pricing could create distortions in the allocation of direct PE. They argued that since the pool of aggregated direct PE inputs is budget neutral, if these rates are not routinely updated, clinical labor may become undervalued over time relative to equipment and supplies, especially since the supply and equipment prices are in the process of being updated. There was considerable interest among interested parties in updating the clinical labor rates, and when we solicited comment on this topic in past rules, such as in the CY 2019 PFS final rule (83 FR 59480), interested parties supported the idea.

Therefore, we proposed to update the clinical labor pricing for CY 2022, in conjunction with the final year of the supply and equipment pricing update (86 FR 39118 through 39123). We believed updating the clinical labor pricing was important to maintain relativity with the recent supply and equipment pricing updates. We proposed to use the methodology outlined in the CY 2002 PFS final rule (66 FR 55257), which draws primarily from BLS wage data, to calculate updated clinical labor pricing. As we stated in the CY 2002 PFS final rule, the BLS' reputation for publishing valid estimates that are nationally representative led to the choice to use the BLS data as the main source. We believe that the BLS wage data continues to be the most accurate source to use as a basis for clinical labor pricing and this data will appropriately reflect changes in clinical labor resource inputs for setting PE RVUs under the PFS. We used the most current BLS survey data (2019) as the main source of wage data for our CY 2022 clinical labor proposal.

We recognized that the BLS survey of wage data does not cover all the staff types contained in our direct PE database. Therefore, we crosswalked or extrapolated the wages for several staff types using supplementary data sources for verification whenever possible. In situations where the price wages of clinical labor types were not referenced in the BLS data, we used the national salary data from the Salary Expert, an online project of the Economic Research Institute that surveys national and local salary ranges and averages for thousands of job titles using mainly government sources. (A detailed explanation of the methodology used by Salary Expert to estimate specific job salaries can be found at www.salaryexpert.com.) We previously used Salary Expert information as the primary backup source of wage data during the last update of clinical labor pricing in CY 2002. If we did not have direct BLS wage data available for a clinical labor type, we used the wage data from Salary Expert as a reference for pricing, then crosswalked these clinical labor types to a proxy BLS labor category rate that most closely matched the reference wage data, similar to the crosswalks used in our PE/HR allocation. For example, there is no direct BLS wage data for the Mammography Technologist (L043) clinical labor type; we used the wage data from Salary Expert as a reference and identified the BLS wage data for Respiratory Therapists as the best proxy category. We calculated rates for the “blend” clinical labor categories by combining the rates for each labor type in the blend and then dividing by the total number of labor types in the blend.

As in the CY 2002 clinical labor pricing update, the proposed cost per minute for each clinical staff type was derived by dividing the average hourly wage rate by 60 to arrive at the per minute cost. In cases where an hourly wage rate was not available for a clinical staff type, the proposed cost per minute for the clinical staff type was derived by dividing the annual salary (converted to 2021 dollars using the Medicare Economic Index) by 2080 (the number of hours in a typical work year) to arrive at the hourly wage rate and then again by 60 to arrive at the per minute cost. We ultimately finalized the use of median BLS wage data instead of mean BLS wage data in response to comments in the CY 2022 PFS final rule. To account for the employers' cost of providing fringe benefits, such as sick leave, we finalized a benefits multiplier of 1.296 based on a BLS release from June 17, 2021 (USDL-21-1094). As an example of this process, for the Physical Therapy Aide (L023A) clinical labor type, the BLS data reflected a median hourly wage rate of $12.98, which we multiplied by the 1.296 benefits modifier and then divided by 60 minutes to arrive at the finalized per-minute rate of $0.28.

After considering the comments on our CY 2022 proposals, we agreed with commenters that the use of a multi-year transition would help smooth out the changes in payment resulting from the clinical labor pricing update, avoiding potentially disruptive changes in payment for affected interested parties, and promoting payment stability from year-to-year. We believed it would be appropriate to use a 4-year transition, as we have for several other broad-based updates or methodological changes. While we recognized that using a 4-year transition to implement the update means that we will continue to rely in part on outdated data for clinical labor pricing until the change is fully completed in CY 2025, we agreed with the commenters that these significant updates to PE valuation should be implemented in the same way, and for the same reasons, as for other major updates to pricing such as the recent supply and equipment update. Therefore, we finalized the clinical labor pricing update implementation over four years to transition from current prices to the final updated prices in CY 2025. We finalized the implementation of this pricing transition over 4 years, such that one-quarter of the difference between the current price and the fully phased-in price is implemented for CY 2022, one-third of the difference between the CY 2022 price and the final price is implemented for CY 2023, and one-half of the difference between the CY 2023 price and the final price is implemented for CY 2024, with the new direct PE prices fully implemented for CY 2025. (86 FR 65025) An example of the transition from the current to the fully-implemented new pricing that we finalized in the CY 2022 PFS final rule is provided in Table 4.

(1) CY 2023 Clinical Labor Pricing Updates

For CY 2023, we received information from one interested party regarding the pricing of the Histotechnologist (L037B) clinical labor type. The interested party provided data from the 2019 Wage Survey of Medical Laboratories which supported an increase in the per-minute rate from the $0.55 finalized in the CY 2022 PFS final rule to $0.64. This rate of $0.64 for the L037B clinical labor type is a close match to the online salary data that we had for the Histotechnologist and matches the $0.64 rate that we initially proposed for L037B in the CY 2022 PFS proposed rule. Based on the wage data provided by the commenter, we proposed this $0.64 rate for the L037B clinical labor type for CY 2023; we also proposed a slight increase in the pricing for the Lab Tech/Histotechnologist (L035A) clinical labor type from $0.55 to $0.60 as it is a blend of the wage rate for the Lab Technician (L033A) and Histotechnologist clinical labor types. We also proposed the same increase to $0.60 for the Angio Technician (L041A) clinical labor type, as we previously established a policy in the CY 2022 PFS final rule that the pricing for the L041A clinical labor type would match the rate for the L035A clinical labor type (86 FR 65032).

Based on comments received on the CY 2023 proposed rule, we finalized a change in the descriptive text of the L041A clinical labor type from “Angio Technician” to “Vascular Interventional Technologist”. We also finalized an update in the pricing of three clinical labor types: from $0.60 to $0.84 for the Vascular Interventional Technologist (L041A), from $0.63 to $0.79 for the Mammography Technologist (L043A), and from $0.76 to $0.78 for the CT Technologist (L046A) based on submitted wage data from the 2022 Radiologic Technologist Wage and Salary Survey (87 FR 69422 through 69425).

(2) CY 2024 Clinical Labor Pricing Updates

We did not receive new wage data or other additional information for use in clinical labor pricing from interested parties prior to the publication of the CY 2024 PFS proposed rule. Therefore, our proposed clinical labor pricing for CY 2024 was based on the clinical labor pricing that we finalized in the CY 2023 PFS final rule, incremented an additional step for Year 3 of the update. Based on comments received on the CY 2024 proposed rule, we finalized an update in the clinical labor pricing of the cytotechnologist (L045A) clinical labor type from $0.76 to $0.85 based on submitted data from the 2021 American Society of Clinical Pathologists (ASCP) Wage Survey of Medical Laboratories (88 FR 78838).

(3) CY 2025 Clinical Labor Pricing Update Proposals

We did not receive new wage data or other additional information for use in clinical labor pricing from interested parties prior to the publication of the CY 2025 PFS proposed rule. Therefore, our proposed clinical labor pricing for CY 2025 in Table 5 is based on the clinical labor pricing that we finalized in the CY 2024 PFS final rule, incremented an additional step for the final Year 4 of the update:

As was the case for the market-based supply and equipment pricing update, the clinical labor rates will remain open for public comment during the 60-day comment period for this CY 2025 PFS proposed rule. We expect to set the updated clinical labor rates for CY 2025 in the final rule. We updated the pricing of some clinical labor types in the CY 2022, CY 2023, and CY 2024 PFS final rules in response to information provided by commenters. For the full discussion of the clinical labor pricing update, we direct readers to the CY 2022 PFS final rule (86 FR 65020 through 65037).

5. Development of Strategies for Updates to Practice Expense Data Collection and Methodology

a. Background

The AMA PPIS was first introduced in 2007 as a means to collect comprehensive and reliable data on the direct and indirect PEs incurred by physicians (72 FR 66222). In considering the use of PPIS data, the goal was to improve the accuracy and consistency of PE RVUs used in the PFS. The data collection process included a stratified random sample of physicians across various specialties, and the survey was administered between August 2007 and March 2008. Data points from that period of time are integrated into PFS calculations today. In the CY 2009 PFS proposed rule (73 FR 38507 through 3850), we discussed the indirect PE methodology that used data from the AMA's survey that predated the PPIS. In CY 2010 PFS rulemaking, we announced our intent to incorporate the AMA PPIS data into the PFS ratesetting process, which would first affect the PE RVU. In the CY 2010 PFS proposed rule, we outlined a 4-year transition period, during which we would phase in the AMA PPIS data, replacing the existing PE data sources (74 FR 33554). We also explained that our proposals intended to update survey data only (74 FR 33530 through 33531). In our CY 2010 final rule, we finalized our proposal, with minor adjustments based on public comments (74 FR 61749 through 61750). We responded to the comments we received about the transition to using the PPIS to inform indirect PE allocations (74 FR 61750). In the responses, we acknowledged concerns about potential gaps in the data, which could impact the allocation of indirect PE for certain physician specialties and suppliers, which are issues that remain important today. The CY 2010 PFS final rule explains that section 212 of the Balanced Budget Refinement Act of 1999 (Pub. L. 106-113, November 29, 1999) (BBRA) directed the Secretary to establish a process under which we accept and use, to the maximum extent practicable and consistent with sound data practices, data collected or developed by entities and organizations to supplement the data we normally collect in determining the PE component. BBRA required us to establish criteria for accepting supplemental survey data. Since the supplemental surveys were specific to individual specialties and not part of a comprehensive multispecialty survey, we had required that certain precision levels be met in order to ensure that the supplemental data was sufficiently valid, and acceptable for use in the development of the PE RVUs. At the time, our rationale included the assumption that because the PPIS is a contemporaneous, consistently collected, and comprehensive multispecialty survey, we do not believe similar precision requirements are necessary, and we did not propose to establish them for the use of the PPIS data (74 FR 61742). We noted potential gaps in the data, which could impact the allocation of indirect PE for certain physician and suppliers. The CY 2010 final rule adopted the proposal, with minor adjustments based on public comments, and explained that these minor adjustments were in part due to non-response bias that results when the characteristics of survey respondents differ in meaningful ways, such as in the mix of practices sizes, from the general population (74 FR 61749 through 61750).

Throughout the 4-year transition period, from CY 2010 to CY 2013, we gradually incorporated the AMA PPIS data into the PFS rates, replacing the previous data sources. The process involved addressing concerns and making adjustments as necessary, such as refining the PFS ratesetting methodology in consideration of interested party feedback. For background on the refinements that we considered after the transition began, we refer readers to discussions in the CY 2011 through 2014 final rules (75 FR 73178 through 73179; 76 FR 73033 through 73034; 77 FR 98892; 78 FR 74272 through 74276).

In the CY 2011 PFS proposed rule, we requested comments on the methodology for calculating indirect PE RVUs, explicitly seeking input on using survey data, allocation methods, and potential improvements (75 FR 40050). In our CY 2011 PFS final rule, we addressed comments regarding the methodology for indirect PE calculations, focusing on using survey data, allocation methods, and potential improvements (75 FR 73178 through 73179). We recognized some limitations of the current PFS ratesetting methodology but maintained that the approach was the most appropriate at the time. In the CY 2012 PFS final rule, we responded to comments related to indirect PE methodology, including concerns about allocating indirect PE to specific services and using the AMA PPIS data for certain specialties (76 FR 73033 through 73034). We indicated that CMS would continue to review and refine the methodology and work with interested parties to address their concerns. In the CY PFS 2014 final rule, we responded to comments about fully implementing the AMA PPIS data. By 2014, the AMA PPIS data had been fully integrated into the PFS, serving as the primary source for determining indirect PE inputs (78 FR 74235). We continued to review data and the PE methodology annually, considering interested party feedback and evaluating the need for updates or refinements to ensure the accuracy and relevance of PE RVUs (79 FR 67548). In the years following the full implementation of the AMA PPIS data, we further engaged with interested parties, thought leaders and subject matter experts to improve our PE inputs' accuracy and reliability. For further background, we refer readers to our discussions in final rules for CY 2016 through 2022 (80 FR 70892; 81 FR 80175; 82 FR 52980 through 52981; 83 FR 59455 through 59456; 84 FR 62572; 85 FR 84476 through 84478; 86 FR 62572).

In our CY 2023 PFS final rule, we issued an RFI to solicit public comment on strategies to update PE data collection and methodology (87 FR 69429 through 69432). We solicited comments on current and evolving trends in health care business arrangements, the use of technology, or similar topics that might affect or factor into PE calculations. We reminded readers that we have worked with interested parties and CMS contractors for years to study the landscape and identify possible strategies to reshape the PE portion of physician payments. The fundamental issues are clear but thought leaders and subject matter experts have advocated for more than one tenable approach to updating our PE methodology.

As described in previous rulemaking, we have continued interest in developing a roadmap for updates to our PE methodology that account for changes in the health care landscape. Of various considerations necessary to form a roadmap for updates, we reiterate that allocations of indirect PE continue to present a wide range of challenges and opportunities. As discussed in multiple cycles of previous rulemaking, our PE methodology relies on AMA PPIS data, which may represent the best aggregated available source of information at this time. However, we acknowledge the limitations and challenges interested parties have raised about using the current data for indirect PE allocations, which we have also examined in related ongoing research. We noted in our CY 2023 and CY 2024 rules that there are several competing concerns that CMS must take into account when considering updated data sources, which also should support and enable ongoing refinements to our PE methodology.

b. Preparation for Incorporating Refreshed Data and Request for Information on Timing To Effectuate Routine Updates

In the CY 2024 PFS proposed rule, we continued to encourage interested parties to provide feedback and suggestions to CMS that give an evidentiary basis to shape optimal PE data collection and methodological adjustments over time. Considering our ratesetting methodology and prior experiences implementing new data, we issued a follow-up from the CY 2023 comment solicitation for general information. We solicited comments from interested parties on strategies to incorporate information that could address known challenges we experienced in implementing the initial AMA PPIS data. Our current methodology relies on the AMA PPIS data, legislatively mandated supplemental data sources (for, example, we use supplemental survey data collected in 2003, as required by section 1848(c)(2)(H)(i) of the Act to set rates for oncology and hematology specialties), and in some cases crosswalks to allocate indirect PE as necessary for certain specialties and provider types. We also sought to understand whether, upon completion of the updated PPIS data collection effort by the AMA, contingencies or alternatives may be necessary and available to address the lack of data availability or response rates for a given specialty, set of specialties, or specific service suppliers who are paid under the PFS.

In response to last year's RFI, most commenters stated that CMS should defer significant changes until the AMA PPIS results become available. For further background, refer to 88 FR 78841 to 78843. In responding to our RFI, the AMA RUC provided a set of responses, which many other commenters repeated in their separate, individual comments. In summary, the AMA RUC letter submission from CY 2024 suggested that CMS should not consider further changes until PPIS data collection and analysis is complete. Overall, the AMA comments generally do not support any change to the methodology and stated that CMS should wait to consider any further changes until PPIS updates become available. Further, we noted that through its contractor, Mathematica, the AMA secured an endorsement for the PPIS updates from each State society, national medical specialty society, and others prior to fielding the survey (88 FR 78843). Refer to the AMA's summary of the PPIS, available at https://www.ama-assn.org/system/files/physician-practice-information-survey-summary.pdf. The AMA expects analysis, reporting, and documentation to complete by the end of CY 2024, and the AMA would share data with CMS when results become available.

We believe the AMA's approach may possibly mitigate nonresponse bias, which created challenges using previous PPIS data. However, we remain uncertain about whether endorsements prior to fielding the survey may inject other types of bias in the validity and reliability of the information collected. We believe it remains important to reflect on the challenges with our current methodology, and to continue to consider alternatives that improve the stability and accuracy of our overall PE methodology. We reiterate our discussion summarizing the responses to previous years' RFIs in each of the CY 2023 and CY 2024 final rules (refer to 87 FR 69429 through 69432 and 88 FR 78841 to 78843). We have started new work under contract with the RAND Corporation to analyze and develop alternative methods for measuring PE and related inputs for implementation of updates to payment under the PFS. We continue to study possible alternatives, and would include analysis of updated PPIS data, as part of our ongoing work. In the meantime, we request general information from the public on ways that CMS may continue work to improve the stability and predictability of any future updates. Specifically, we request feedback from interested parties regarding scheduled, recurring updates to PE inputs for supply and equipment costs.

We believe that establishing a cycle of timing to update supply and equipment cost inputs every 4 years may be one means of advancing shared goals of stability and predictability. CMS would collect available data, including, but not limited to, submissions and independent third-party data sources, and propose a phase-in period over the following 4 years. The phase-in approach maps to our experience with previous updates. Additionally, we believe that more frequent updates may have the unintended consequence of disproportionate effects of various supplies and equipment that have newly updated costs.

Further, we seek feedback on possible mechanisms to establish a balance whereby our methodology would account for inflation and deflation in supply and equipment costs. We remain uncertain how economies of scale (meaning a general principle that cost per unit of production decreases as the scale of production increases) should or should not factor into future adjustments to our methodology. There remains a diversity of perspectives among interested parties about such effects. We seek information about specific mechanisms that may be appropriate, and in particular, approaches that would leverage verifiable and independent, third-party data that is not managed or controlled by active market participants.

C. Potentially Misvalued Services Under the PFS

1. Background

Section 1848(c)(2)(B) of the Act directs the Secretary to conduct a periodic review, not less often than every 5 years, of the relative value units (RVUs) established under the PFS. Section 1848(c)(2)(K) of the Act requires the Secretary to periodically identify potentially misvalued services using certain criteria and to review and make appropriate adjustments to the relative values for those services. Section 1848(c)(2)(L) of the Act also requires the Secretary to develop a process to validate the RVUs of certain potentially misvalued codes under the PFS, using the same criteria used to identify potentially misvalued codes, and to make appropriate adjustments.

As discussed in section II.E. of this proposed rule, under Valuation of Specific Codes, each year we develop appropriate adjustments to the RVUs taking into account recommendations provided by the American Medical Association (AMA) Resource-Based Relative Value Scale (RBRVS) Update Committee (RUC), MedPAC, and other interested parties. For many years, the RUC has provided us with recommendations on the appropriate relative values for new, revised, and potentially misvalued PFS services. We review these recommendations on a code-by-code basis and consider these recommendations in conjunction with analyses of other data, such as claims data, to inform the decision-making process as authorized by statute. We may also consider analyses of work time, work RVUs, or direct PE inputs using other data sources, such as the Veterans Health Administration (VHA), National Surgical Quality Improvement Program (NSQIP), the Society for Thoracic Surgeons (STS), and the Merit-based Incentive Payment System (MIPS) data. In addition to considering the most recently available data, we assess the results of physician surveys and specialty recommendations submitted to us by the RUC for our review. We also consider information provided by other interested parties such as from the general medical-related community and the public. We conduct a review to assess the appropriate RVUs in the context of contemporary medical practice. We note that section 1848(c)(2)(A)(ii) of the Act authorizes the use of extrapolation and other techniques to determine the RVUs for physicians' services for which specific data are not available and requires us to take into account the results of consultations with organizations representing physicians who provide the services. In accordance with section 1848(c) of the Act, we determine and make appropriate adjustments to the RVUs.

In its March 2006 Report to the Congress ( https://www.medpac.gov/document/report-to-the-congress-2006-medicare-payment-policy/ ), MedPAC discussed the importance of appropriately valuing physicians' services, noting that misvalued services can distort the market for physicians' services, as well as for other health care services that physicians order, such as hospital services. In that same report, MedPAC postulated that physicians' services under the PFS can become misvalued over time. MedPAC stated, “When a new service is added to the physician fee schedule, it may be assigned a relatively high value because of the time, technical skill, and psychological stress that are often required to furnish that service. Over time, the work required for certain services would be expected to decline as physicians become more familiar with the service and more efficient in furnishing it.” We believe services can also become overvalued when PE costs decline. This can happen when the costs of equipment and supplies fall, or when equipment is used more frequently than is estimated in the PE methodology, reducing its cost per use. Likewise, services can become undervalued when physician work increases, or PE costs rise.

As MedPAC noted in its March 2009 Report to Congress ( https://www.medpac.gov/docs/default-source/reports/march-2009-report-to-congress-medicare-payment-policy.pdf ), in the intervening years since MedPAC made the initial recommendations, CMS and the RUC have taken several steps to improve the review process. Also, section 1848(c)(2)(K)(ii) of the Act augments our efforts by directing the Secretary to specifically examine, as determined appropriate, potentially misvalued services in the following categories:

• Codes that have experienced the fastest growth.
• Codes that have experienced substantial changes in PE.
• Codes that describe new technologies or services within an appropriate time-period (such as 3 years) after the relative values are initially established for such codes.
• Codes which are multiple codes that are frequently billed in conjunction with furnishing a single service.
• Codes with low relative values, particularly those that are often billed multiple times for a single treatment.
• Codes that have not been subject to review since implementation of the fee schedule.
• Codes that account for the majority of spending under the PFS.
• Codes for services that have experienced a substantial change in the hospital length of stay or procedure time.
• Codes for which there may be a change in the typical site of service since the code was last valued.
• Codes for which there is a significant difference in payment for the same service between different sites of service.
• Codes for which there may be anomalies in relative values within a family of codes.
• Codes for services where there may be efficiencies when a service is furnished at the same time as other services.
• Codes with high intraservice work per unit of time.
• Codes with high PE RVUs.
• Codes with high cost supplies.
• Codes as determined appropriate by the Secretary.

Section 1848(c)(2)(K)(iii) of the Act also specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. In addition, the Secretary may conduct surveys, other data collection activities, studies, or other analyses, as the Secretary determines to be appropriate, to facilitate the review and appropriate adjustment of potentially misvalued services. This section also authorizes the use of analytic contractors to identify and analyze potentially misvalued codes, conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of potentially misvalued services. Additionally, this section provides that the Secretary may coordinate the review and adjustment of any RVU with the periodic review described in section 1848(c)(2)(B) of the Act. Section 1848(c)(2)(K)(iii)(V) of the Act specifies that the Secretary may make appropriate coding revisions (including using current processes for consideration of coding changes), which may involve consolidating individual services into bundled codes for payment under the PFS.

2. Progress in Identifying and Reviewing Potentially Misvalued Codes

To fulfill our statutory mandate, we have identified and reviewed numerous potentially misvalued codes as specified in section 1848(c)(2)(K)(ii) of the Act, and we intend to continue our work examining potentially misvalued codes in these areas over the upcoming years. As part of our current process, we identify potentially misvalued codes for review, and request recommendations from the RUC and other public commenters on revised work RVUs and direct PE inputs for those codes. The RUC, through its own processes, also identifies potentially misvalued codes for review. Through our public nomination process for potentially misvalued codes established in the CY 2012 PFS final rule with comment period (76 FR 73026, 73058 through 73059), other individuals and groups submit nominations for review of potentially misvalued codes as well. Individuals and groups may submit codes for review under the potentially misvalued codes initiative to CMS in one of two ways. Nominations may be submitted to CMS via email or through postal mail. Email submissions should be sent to the CMS emailbox at MedicarePhysicianFeeSchedule@cms.hhs.gov, with the phrase “Potentially Misvalued Codes” and the referencing CPT code number(s) and/or the CPT descriptor(s) in the subject line. Physical letters for nominations should be sent via the U.S. Postal Service to the Centers for Medicare & Medicaid Services, Mail Stop: C4-01-26, 7500 Security Blvd., Baltimore, Maryland 21244. Envelopes containing the nomination letters must be labeled “Attention: Division of Practitioner Services, Potentially Misvalued Codes.” Nominations for consideration in our next annual rule cycle should be received by our February 10th deadline. Since CY 2009, as a part of the annual potentially misvalued code review and Five-Year Review process, we have reviewed over 1,700 potentially misvalued codes to refine work RVUs and direct PE inputs. We have assigned appropriate work RVUs and direct PE inputs for these services as a result of these reviews. A more detailed discussion of the extensive prior reviews of potentially misvalued codes is included in the CY 2012 PFS final rule with comment period (76 FR 73052 through 73055). In the same CY 2012 PFS final rule with comment period, we finalized our policy to consolidate the review of physician work and PE at the same time and established a process for the annual public nomination of potentially misvalued services.

In the CY 2013 PFS final rule with comment period (77 FR 68892, 68896 through 68897), we built upon the work we began in CY 2009 to review potentially misvalued codes that have not been reviewed since the implementation of the PFS (so-called “Harvard-valued codes” ). In the CY 2019 PFS proposed rule (73 FR 38589), we requested recommendations from the RUC to aid in our review of Harvard-valued codes that had not yet been reviewed, focusing first on high-volume, low intensity codes. In the fourth Five-Year Review of Work RVUs proposed rule (76 FR 32410, 32419), we requested recommendations from the RUC to aid in our review of Harvard-valued codes with annual utilization of greater than 30,000 services. In the CY 2013 PFS final rule with comment period, we identified specific Harvard-valued services with annual allowed charges that total at least $10,000,000 as potentially misvalued. In addition to the Harvard-valued codes, in the CY 2013 PFS final rule with comment period we finalized for review a list of potentially misvalued codes that have stand-alone PE (codes with physician work and no listed work time and codes with no physician work that have listed work time). We continue each year to consider and finalize a list of potentially misvalued codes that have or will be reviewed and revised as appropriate in future rulemaking.

3. CY 2025 Identification and Review of Potentially Misvalued Services

In the CY 2012 PFS final rule with comment period (76 FR 73058), we finalized a process for the public to nominate potentially misvalued codes. In the CY 2015 PFS final rule with comment period (79 FR 67548, 67606 through 67608), we modified this process whereby the public and interested parties may nominate potentially misvalued codes for review by submitting the code with supporting documentation by February 10th of each year. Supporting documentation for codes nominated for the annual review of potentially misvalued codes may include the following:

• Documentation in peer reviewed medical literature or other reliable data that demonstrate changes in physician work due to one or more of the following: technique, knowledge and technology, patient population, site-of-service, length of hospital stay, and work time.
• An anomalous relationship between the code being proposed for review and other codes.
• Evidence that technology has changed physician work.
• Analysis of other data on time and effort measures, such as operating room logs or national and other representative databases.
• Evidence that incorrect assumptions were made in the previous valuation of the service, such as a misleading vignette, survey, or flawed crosswalk assumptions in a previous evaluation.
• Prices for certain high cost supplies or other direct PE inputs that are used to determine PE RVUs are inaccurate and do not reflect current information.
• Analyses of work time, work RVU, or direct PE inputs using other data sources (for example, VA, NSQIP, the STS National Database, and the MIPS data).
• National surveys of work time and intensity from professional and management societies and organizations, such as hospital associations.

We evaluate the supporting documentation submitted with the nominated codes and assess whether the nominated codes appear to be potentially misvalued codes appropriate for review under the annual process. In the following year's PFS proposed rule, we publish the list of nominated codes and indicate for each nominated code whether we agree with its inclusion as a potentially misvalued code. The public has the opportunity to comment on these and all other proposed potentially misvalued codes. In each year's final rule, we finalize our list of potentially misvalued codes.

a. Public Nominations

In each proposed rule, we seek nominations from the public and from interested parties of codes that they believe we should consider as potentially misvalued. We receive public nominations for potentially misvalued codes by February 10th and we display these nominations on our public website, where we include the submitter's name, their associated organization, and the submitted studies for full transparency. We sometimes receive submissions for specific, PE-related inputs for codes, and discuss these PE-related submissions, as necessary under the Determination of PE RVUs section of the rule. We summarize below this year's submissions under the potentially misvalued code initiative. For CY 2025, we received 5 nominations concerning various codes. The nominations are as follows:

(1) CPT Codes 22210, 22212, 22214, 22216

An interested party nominated CPT codes 22210 ( Osteotomy of spine, posterior or posterolateral approach, 1 vertebral segment; cervical) (090 day global code), 22212 ( Osteotomy of spine, posterior or posterolateral approach, 1 vertebral segment; thoracic) (090 day global code), 22214 ( Osteotomy of spine, posterior or posterolateral approach, 1 vertebral segment; lumbar) (090 day global code), and 22216 ( Osteotomy of spine, posterior or posterolateral approach, 1 vertebral segment; each additional vertebral segment (List separately in addition to primary procedure) (add-on ZZZ) as potentially misvalued for six reasons: (1) incorrect global period; (2) incorrect inpatient days; (3) incorrect intraservice work description; (4) overvalued intraservice times; (5) changed surgical practice; and (6) incorrect use of posterior osteotomy codes. The posterior osteotomy codes were last valued by the RUC in 1995. Currently, CPT code 22210 has a work RVU of 25.38, CPT code 22212 has a work RVU of 20.99, CPT code 22214 has a work RVU of 21.02, and CPT code 22216 has a work RVU of 6.03. CPT codes 22210, 22212, and 22214 have 7 inpatient days each, while CPT code 22216 has 0 inpatient days, and it is an add-on code.

First, the nominator stated that these posterior osteotomies are always performed as an optional addition to a spinal fusion and should be valued as add-on services and not as 90-day global services. We note that no references are provided to support the statement that the service is always performed as an optional addition to a spinal fusion. Second, the nominator explained that the average hospital stay for scoliosis fusion with osteotomy is 4 to 5 days according to the current literature, in contrast with the currently included 7 inpatient days. We note that the majority of the medical literature submitted by the nominator presented outcome information on adolescent patients, which may be different from the Medicare population. Furthermore, the nominator stated that the intraservice work description for CPT code 22216 describes removal of the pedicle, which is not a typical part of a Ponte/Schwab II osteotomy. Among the posterior osteotomy codes, only CPT code 22216 had vignettes and we do not have information to decide whether the code descriptor is correct. We believe this issue would benefit from further review by the medical community and welcome comments and considerations, including from the AMA CPT.

The nominator also asserted that intraservice times were too high, particularly for these osteotomy services furnished with scoliosis fusion procedures. The nominator explained that a typical scoliosis fusion would be billed with an intraservice time of up to 840 minutes for pediatric scoliosis fusion and 915 minutes for adult cases. However, referencing current literature, they observed that a typical scoliosis fusion in a child requires approximately 278 minutes (243-296 minutes), which contrasts significantly with the durations indicated for the current codes. The nominator provided no studies to support a typical scoliosis fusion time in adults. Drawing from the literature, the nominators assert that intraservice times are overvalued for these services and propose that these times should be adjusted to align more closely with average and/or typical surgery times.

The nominator further asserted that this code family is potentially misvalued because surgical practice for these procedures has evolved since 1995. Approximately 30 years ago, osteotomies were infrequently performed and usually reserved for addressing completely ankylosed or fused spinal segments. However, according to the nominator, contemporary surgical techniques often involve posterior osteotomies to release multiple stiff vertebral segments, thereby enhancing coronal correction and reducing thoracic hypokyphosis. In addition to changes in surgical techniques over time, there are notable shifts in the trends regarding the utilization of osteotomies. For instance, between 2007 and 2015, the use of posterior osteotomies in scoliosis cases nearly doubled, increasing from 17 percent to 35 percent. Additionally, 73 percent of patients undergoing scoliosis surgery received posterior osteotomies.⁴ This information supports the nominator's assertion that there have been notable changes in the surgical practice for these codes over time.

Lastly, the nominator highlighted incorrect usage of posterior osteotomy codes. They noted instances where facet/soft tissue releases, such as Schwab type I osteotomies, are inaccurately reported with these codes. According to the nominator, isolated partial facetectomy and soft tissue release are already included in spinal fusion procedures and should not be separately billed with an osteotomy code. Additionally, CMS in reviewing data for these services identified potential bundling of services within this code family. For instance, CPT code 22210 is frequently billed alongside CPT code 22600 ( Arthrodesis, posterior or posterolateral technique, single interspace; cervical below C2 segment) (090-day global code), approximately 83 percent of the time. This indicates a common billing pattern, suggesting potential for coding revisions, including the consideration of consolidating individual services into bundled codes. Overall, based on the six reasons provided by the nominator, along with the fact that these codes were last valued almost 30 years ago, and given the identified billing practices, we concur that CPT codes 22210, 22212, 22214, and 22216 are potentially misvalued. The nominator suggested two options to address this concern: (1) developing add-on codes to differentiate between the number of vertebral segments involved in the osteotomy procedure and whether it occurs in the cervical, thoracic, or lumbar regions; and (2) removing the current posterior osteotomy codes and incorporating osteotomies into new deformity fusion codes, both with and without osteotomy. We are proposing to consider this code family as potentially misvalued and we appreciate the detailed information submitted by the nominator with sufficient supporting evidence. We believe that this code family would benefit from a comprehensive review by the RUC, and we welcome comments on a broader understanding of these codes. Additionally, we seek input on current standard billing practices. For example, information on whether the standard of practice has evolved over time, and if so, how it has evolved, could aid in identifying potential coding issues related to this matter.

(2) CPT Code 27279

CPT code 27279 ( Arthrodesis, sacroiliac joint, percutaneous or minimally invasive (indirect visualization), with image guidance, includes obtaining bone graft when performed, and placement of transfixing device) (090 day global code) has been re-nominated as potentially misvalued based on the absence of separate direct PE inputs for this 090 day global code in the nonfacility setting. Currently, CPT code 27279 is only priced under the PFS in the facility setting, but the nominator is requesting that we establish separate direct PE inputs for this service to value the service when performed in the nonfacility/office setting (for example, in an office-based lab). The nominator stated that establishing payment for direct PE inputs in the nonfacility/office setting would increase access to this service for Medicare patients.

We did not nominate CPT code 27279 as potentially misvalued in the CY 2024 PFS final rule, mainly due to a lack of consensus on whether these services may be safely and effectively furnished in the nonfacility/office setting. In this year's submission, the nominator provided three post-market surveillance publications and two independent reviews of minimally invasive sacroiliac (SI) joint fusion procedures to support their assertion that this 90-day surgical service could be safely and effectively furnished in the nonfacility/office setting. Based on the studies, the nominator stated that the current medical literature provides evidence supporting the conclusion that percutaneous or minimally invasive SI joint arthrodesis (CPT code 27279) carries a complication rate that is acceptably low, comparable to other spinal procedures commonly performed in the office-based lab (OBL). For instance, the risk of major complications during lateral trans iliac (LTI) SI joint fusion (CPT code 27279) is lower than the risks associated with other OBL procedures. These include the risk of iliac perforation during angioplasty, the risk of death, myocardial infarction (MI), and stroke during diagnostic cardiac catheterization. The nominator did not reference literature regarding the rates of major complications for other OBL procedures in their submission.

Based on the information submitted we recognize the possibility that CPT code 27279 may be potentially misvalued, given the nominator's assertion that its complication rate is acceptably low based on the five studies they submitted. The results of the studies may suggest that CPT code 27279 can be safely performed in the office-based lab setting, as asserted by the nominator, with a relatively low complication rate. However, upon reviewing the submitted information, we also note that these studies collectively report heterogeneous safety outcomes. The large variabilities in safety outcomes reported in the studies, coupled with several unreported outcomes, may indicate that we have little knowledge about the effect of the service on safety outcomes, prompting the need for further investigation. Therefore, we are not proposing to consider this code as potentially misvalued, and we are instead seeking comments and additional studies from the broader medical community regarding whether this code should be priced under the PFS for the non-facility/office setting.

(3) CPT code 95800

An interested party re-nominated CPT code 95800 ( Sleep study, unattended, simultaneous recording; heart rate, oxygen saturation, respiratory analysis (e.g., by airflow or peripheral arterial tone), and sleep time) to update practice expenses that were last reviewed in 2017. This code was nominated as potentially misvalued in the CY 2024 PFS proposed rule (88 FR 52283). For the CY 2024 final rule, we stated that we were unable to properly assess whether CPT code 95800 is potentially misvalued based on the evidence submitted with the original nominations and subsequent comments that CMS received (88 FR 78849-78850). This year, an interested party re-nominated CPT code 59800 noting two significant changes: (1) in the technologies available to perform home sleep apnea testing (HSAT) services; and (2) in clinical practice that leads to the typical procedure reported with the CPT code 95800. According to the nominator, the current practice utilizes disposable HSAT technology, such as the WatchPat One device, more often than the reusable equipment currently included in the procedure's direct practice expense (PE) inputs.

To account for these changes, the nominator requested the deletion of three direct PE input codes: (1) equipment code EQ335 ( WatchPAT 200 Unit with strap, cables, charger, booklet, and patient video); (2) equipment code EQ336 ( Oximetry and Airflow Device); and (3) supply code SD263 ( WatchPAT pneumo-opt sleep probes), which are WatchPAT probes used with the reusable WatchPAT unit. Instead, the nominator requested the addition of a supply code SD362 (the WatchPAT ONE device), a disposable HSAT technology, as a replacement. According to our PE supply list, the combined price of the items that the nominator requested to delete (EQ335, EQ336, and SD263) is $4.71 + $4.55 + $73.32 = $82.58, which is $15.62 less than the price of the item that the nominator requested to add (SD362), priced at $98.20. The price of $98.20 is mentioned in the nomination letter without an accompanying specific invoice. Last year, the nominator submitted invoices, showing a price of $99.00 each (a case of 12 totaling $1,188.00) for the WatchPat One Device (SD362) (see Table 6).

The nominator asserted that testing trends have shifted away from traditional airflow-based tests, with a noticeable rise in peripheral arterial tone (PAT)-based (non-airflow) tests. The traditional airflow-based tests use the reusable supplies and equipment, whereas the PAT-based non-airflow tests use the disposable HSAT device. While describing these changes in trends, the nominator did not provide us with their internal data, thus we are unable to verify its validity. The nominator also stated that disposable HSAT devices were used for nearly 50 percent of CPT code 95800 services in 2023 and attributed the increased use of disposable devices to the COVID-19 public health emergency (PHE). Furthermore, the nominator projected that over 50 percent of CPT code 95800 services will be furnished using disposable devices in 2024 and 2025. Explaining the patterns and predictions, the nominator concluded that the pandemic significantly altered the delivery of HSAT services, with many sleep physicians transitioning to single-use, disposable sleep tests as an alternative to the reusable testing equipment that is shipped from patient-to-patient after post-use cleaning. The nominator believes that, going forward, the typical procedure described by CPT code 95800 in CY 2024 and beyond will be furnished using disposable HSAT devices rather than reusable equipment.

Since the COVID-19 PHE ended in 2023, we are still unclear as to whether the typical procedure reported with CPT code 95800 involves the use of a reusable or disposable HSAT device. Given that we only have access to the nominator's summary of their internal data to observe changes in usage trends, which may not be generalizable, we propose to maintain the current direct PE supply and equipment inputs for CPT code 95800. While we are not currently proposing to review CPT code 95800 as potentially misvalued for CY 2025, we seek public comments on this nomination. In particular, we seek comments on whether the typical procedure described by CPT code 95800 now involves the use of a disposable HSAT device rather than reusable equipment.

(4) CPT codes 10021, 10004, 10005, 10006

An interested party nominated the CPT code 10021 ( Fine needle aspiration biopsy, without imaging guidance; first lesion), CPT code 10004 ( Fine needle aspiration biopsy, without imaging guidance; each additional lesion), CPT code 10005 ( Fine needle aspiration biopsy, including ultrasound guidance; first lesion) and CPT code 10006 ( Fine needle aspiration biopsy, including ultrasound guidance; each additional lesion) as potentially misvalued. We note that this code family has been nominated several times in recent years. We discussed our review of these codes and our rationale for finalizing the current values extensively in the CY 2019 PFS final rule (83 FR 59517), and CY 2021 PFS final rule (85 FR 84602). Furthermore, this code family was nominated as potentially misvalued and discussed in the CY 2020 PFS final rule (84 FR 62625). For more information we encourage the interested parties to go to our previous PFS final rules.

The nominator specifically requested that we revisit our work RVU decisions for these codes, stating that the underpinnings of the reduction in work RVUs from the RUC-recommended values were flawed. The nominator suggested that CMS should adopt the RUC-recommended work RVUs. For CPT code 10021, the RUC recommended a work RVU of 1.20, but we adopted a lower value of 1.03. Similarly, for CPT code 10005, the RUC recommended a work RVU of 1.63, but we adopted 1.46. The nominator disagreed with these reductions from the RUC-recommended values by CMS, raising particular concerns about our choice for the RVU crosswalk for CPT code 36440 ( Push blood transfusion, patient 2 years or younger). According to the nominator, the CPT code we chose is not comparable to fine needle aspiration in any respect other than service time. The nominator raised several points, including that CPT code 36440 is rarely utilized and is almost never billed to Medicare because it pertains to a pediatric procedure conducted on neonates, while CPT code 10021 is never performed on neonates. They further asserted that the training and experience levels required to properly perform these procedures differ significantly; neonatal transfusions can be conducted by less experienced personnel, while performing a thyroid fine needle aspiration demands more experience. Specifically, they argued that there is a notable difference in the work intensity between the two procedures. The thyroid is closely positioned to vital structures such as the carotid artery, jugular vein, lymphatic vessels, nerves, trachea, and esophagus. When sampling thyroid nodules, they are often in proximity to the carotid artery, jugular vein, or both. According to the nominator, even a slight deviation of 1-2 millimeters during the sampling procedure can result in accidental puncture of these critical blood vessels or other nearby structures. Factors such as respiratory movements, patient swallowing, or anxiety may cause the thyroid to move, further increasing the risk during the procedure. In contrast, neonatal phlebotomy does not require such measures. Also, the CPT code 36440 is designated as facility-only, meaning it does not include any clinical staff pre-service time and has no associated practice expense inputs. According to the nominator, fine needle aspiration is a very complex and high-risk procedure that may require significant physician work and a higher level of clinical expertise to furnish the service, which is very different from CPT code 36440. We appreciated the survey (N=74) results that the nominator submitted to support their statements. The nominator-conducted survey, and their survey questions aimed to gather information on the practitioners' experiences, opinions, and practices related to fine needle aspiration procedures. However, no other references such as peer reviewed medical literature or other nationally representative survey data were provided to reinforce their argument.

The nominator further stated that thyroid fine needle aspiration should exclusively be performed as an outpatient procedure and does not require hospitalization. The nominator emphasized that the reduction in payment for the code family due to the reduction in work RVUs from the RUC-recommended values has led endocrinologists in office-based practices, those who are not affiliated with facilities, to discontinue furnishing this service. According to the nominator, as a consequence of this payment decrease, patients are now being referred to hospital-based radiology practices, despite the fact that thyroid fine needle aspiration should ideally be conducted exclusively in nonfacility outpatient settings. The nominator asserted that radiologists in hospital settings are often unfamiliar with the patient's medical history and risk factors for suspected thyroid cancer. The nominator further noted that radiologists' training in thyroid cancer primarily emphasizes imaging and procedures, rather than considering the patient's overall health perspective. This result may further lead to an increase in medically unnecessary procedures. Additionally, the nominator believes that the payment reduction for this code family has the potential to diminish the specialist workforce trained to perform these procedures, thereby presenting future challenges in patient care and access to specialized services.

Overall, we appreciate the comprehensive information and level of detail provided by the nominator. The nominator disagreed with the choice of crosswalk CPT code 36440 made by CMS, emphasizing the differences in provider training, procedure risk, and patient population. They noted the rarity of Medicare billing for this code. Additionally, they emphasized the importance of outpatient thyroid fine needle aspiration being performed by endocrinologists. The shift to facility settings, prompted by reduced work RVUs, could raise Medicare costs. This, along with a potential decline in specialist workforce, may hinder patient access. However, in discussing this group of codes, we must note that these codes have been recently reviewed multiple times through the annual PFS rulemaking process. We would like to clarify once again that we disagree with the nominator that this code family is potentially misvalued. We acknowledge the possibility that there could be significant changes in the practice of delivering services described by these codes that were not fully reflected in the current work RVU. In such cases, it would be appropriate to refer the codes to the RUC to conduct a new survey to capture these changes accurately. However, we note that these codes underwent thorough RUC survey and review processes during the October 2017 and January 2018 RUC meetings. Based on these considerations, we disagree with the assertion that this code family is potentially misvalued. Nevertheless, we welcome comments on whether these codes should be re-reviewed in light of the arguments made by the nominator.

(5) Tympanostomy codes

CMS routinely interacts with interested parties, and in our most recent review, we have observed several new devices that could be beneficial for populations but are not currently included in our coding system. While there are variations in the described devices, they commonly share the following descriptions. This device uses an innovative surgical technology that combines the separate functions of creating a myringotomy (incision in the eardrum), and positioning and placing a ventilation tube across the tympanic membrane. The new device is intended to deliver a tympanostomy tube (also referred to as a ventilation tube) through the tympanic membrane of the patient and is indicated to be used in office settings for pediatric patients 6 months and older. This device allows the tympanostomy service to be furnished to patients without general anesthesia and the service could therefore be performed in the office setting.

Regarding the delivery of this service using innovative surgical technology, CMS recognizes that CPT code 69433 ( Tympanostomy (requiring insertion of ventilating tube), local or topical anesthesia) (010-day global code) may serve as a sufficient base code, adequately describing the majority of the surgeon's work and facility resources. However, a practitioner may incur additional resources, due to the higher expected intraservice work driven by both time and intensity factors, especially when furnishing a service to a child, and the cost of the device when using these devices as part of the performed procedure. While the existing CPT code 69433 is not age-specific, both the vignette and the RVU associated with this procedure are established for adult patients who can respond to surgeon direction, and do not have risk of movement during the procedure. We believe that potentially establishing additional coding and payment for tympanostomy services may enable the provision of these services utilizing new technologies to a broader patient population who may benefit from innovative surgical technology. To improve the accuracy of the payment for these services, we are soliciting comments on several alternatives that we are considering for adoption in the CY 2025 PFS final rule or future rulemaking. First, we are seeking comment on whether to establish a new G code that accounts for the work and practice expense for a procedure involving the positioning and placement of a ventilation tube across the tympanic membrane using an innovative surgical technology that combines the separate functions of creating a myringotomy (incision in the eardrum). We could assign contractor pricing to this potential G code for generalizable innovative tympanostomy tube delivery devices and/or systems falling under emerging technology and services categories. Alternatively, we are seeking comment on whether we should establish an add-on payment for the service using inputs from CPT code 69433 as a crosswalk reference, plus direct costs from invoices for the surgical devices referenced above. We are seeking comments regarding these potential approaches, particularly on whether there is additional information we should consider if we were to establish additional coding and payment for these services.

D. Payment for Medicare Telehealth Services Under Section 1834(m) of the Act

As discussed in prior rulemaking, several conditions must be met for Medicare to make payment for telehealth services under the PFS. See further details and full discussion of the scope of Medicare telehealth services in the CY 2018 PFS final rule (82 FR 53006), the CY 2021 PFS final rule (85 FR 84502) and the CY 2024 PFS final rule (88 FR 78861 through 78866) and in 42 CFR 410.78 and 414.65. For a discussion of Telemedicine Evaluation and Management (E/M) Services, we refer readers to section II.E.4.18 of this proposed rule.

1. Payment for Medicare Telehealth Services Under Section 1834(m) of the Act

a. Changes to the Medicare Telehealth Services List

In the CY 2003 PFS final rule with comment period (67 FR 79988), we established a regulatory process for adding services to or deleting services from the Medicare Telehealth Services List in accordance with section 1834(m)(4)(F)(ii) of the Act. This process provides the public with an ongoing opportunity to submit requests for adding services, which are then reviewed by us and assigned to categories established through notice and comment rulemaking. Under the process we established beginning in CY 2003, we evaluated whether a service meets the following criteria:

• Category 1: Services similar to professional consultations, office visits, and office psychiatry services currently on the Medicare Telehealth Services List. In reviewing these requests, we looked for similarities between the requested and existing telehealth services for the roles of, and interactions among, the beneficiary, the physician (or other practitioner) at the distant site, and, if necessary, the telepresenter, a practitioner who was present with the beneficiary in the originating site. We also looked for similarities in the telecommunications system used to deliver the service, for example, the use of interactive audio and video equipment.
• Category 2: Services that are not similar to those on the current Medicare Telehealth Services List. Our review of these requests included assessing whether the service was accurately described by the corresponding code when furnished via telehealth and whether using a telecommunications system to furnish the service produces demonstrated clinical benefit to the patient. Submitted evidence should have included both a description of relevant clinical studies that demonstrated the service furnished by telehealth to a Medicare beneficiary improves the diagnosis or treatment of an illness or injury or improves the functioning of a malformed body part, including dates and findings, and a list and copies of published peer-reviewed articles relevant to the service when furnished via telehealth. Our evidentiary standard of clinical benefit did not include minor or incidental benefits. Some examples of other clinical benefits that we considered include the following:
• Ability to diagnose a medical condition in a patient population without access to clinically appropriate in-person diagnostic services.
• Treatment option for a patient population without access to clinically appropriate in-person treatment options.
• Reduced rate of complications.
• Decreased rate of subsequent diagnostic or therapeutic interventions (for example, due to reduced rate of recurrence of the disease process).
• Decreased number of future hospitalizations or physician visits.
• More rapid beneficial resolution of the disease process treatment.
• Decreased pain, bleeding, or other quantifiable signs or symptoms.
• Reduced recovery time.

In the CY 2021 PFS final rule (85 FR 84507), we created a third category of criteria for adding services to the Medicare Telehealth Services List on a temporary basis following the end of the PHE for the COVID-19 pandemic. This new category described services that were added to the Medicare Telehealth Services List during the PHE, for which there was likely to be clinical benefit when furnished via telehealth, but there was not yet sufficient evidence available to consider the services for permanent addition under the Category 1 or Category 2 criteria. Services added on a temporary, Category 3 basis ultimately needed to meet the criteria under Category 1 or 2 in order to be permanently added to the Medicare Telehealth Services List. To add specific services on a Category 3 basis, we would conduct a clinical assessment to identify those services for which we could foresee a reasonable potential likelihood of clinical benefit when furnished via telehealth.

In the CY 2024 PFS final rule (88 FR 78861 through 78866), we consolidated these three categories and implemented a revised 5-step process for making additions, deletions, and changes to the Medicare Telehealth Services List (5-step process), beginning for the CY 2025 Medicare Telehealth Services List. Rather than categorizing a service as “Category 1” or “Category 2,” each service is now assigned a “permanent” or “provisional” status. As described further below, a service is assigned a “provisional” status if there is not enough evidence to demonstrate that the service is of clinical benefit, but there is enough evidence to suggest that further study may demonstrate such benefit. The 5-step process review criteria are set forth in the CY 2024 PFS final rule (88 FR 78861 through 78866), listed at https://www.cms.gov/medicare/coverage/telehealth/criteria-request , and summarized below. Consistent with the deadline for our receipt of code valuation recommendations from the American Medical Association's Relative Value Scale Update Committee (AMA RUC) and other interested parties (83 FR 59491) and with the process set forth in prior calendar years, for CY 2025, requests to add services to the Medicare Telehealth Services List must have been submitted to and received by CMS by February 10, 2024. Each request to add a service to the Medicare Telehealth Services List must have included any supporting documentation the requester wishes us to consider as we review the request. Because we use the annual PFS rulemaking process to make changes to the Medicare Telehealth Services List, requesters are advised that any information submitted as part of a request is subject to public disclosure for this purpose. For more information on submitting a request to add services to the Medicare Telehealth Services List, including where to send these requests, and to view the current Medicare Telehealth Service List, see our website at https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html .

Step 1. Determine whether the service is separately payable under the PFS.

When considering whether to add, remove, or change the status of a service on the Medicare Telehealth Services List, we first determine whether the service, as described by the individual HCPCS code, is separately payable under the PFS because, as further discussed in CY 2024 PFS final rule (88 FR 78861 through 78866), Medicare telehealth services are limited to those services for which separate Medicare payments can be made under the PFS. Before gathering evidence and preparing to submit a request to add a service to the Medicare Telehealth Services List, the submitter should therefore first check the payment status for a given service and ensure that the service (as identified by a HCPCS code), is a covered and separately payable service under the PFS (as identified by payment status indicators A, C, T, or R on our public use files).

Step 2. Determine whether the service is subject to the provisions of section 1834(m) of the Act.

If we determine at Step 1 that a service is separately payable under the PFS, we apply Step 2 under which we determine whether the service at issue is subject to the provisions of section 1834(m) of the Act. Section 1834(m) of the Act provides for payment to a physician (or other practitioner) for a service furnished via an interactive telecommunications system, notwithstanding that the furnishing practitioner and patient are not in the same location, at the same amount that would have been paid if the service was furnished without the telecommunications system. We have historically interpreted this to mean that only services that are ordinarily furnished with the furnishing practitioner and patient in the same location can be classified as a “telehealth service” for which payment can be made under section 1834(m) of the Act. Given that there may be a range of services delivered using certain telecommunications technology that, though they are separately payable under the PFS, do not fall within the definition of telehealth service set forth in section 1834(m) of the Act, the aim of Step 2 is therefore to determine whether the service at issue is, in whole or in part, inherently a face-to-face service. Such services generally include services that do not require the presence of, or involve interaction with, the patient (for example, remote interpretation of diagnostic imaging tests, and certain care management services). Other examples include virtual check-ins, e-visits, and remote patient monitoring services which involve the use of telecommunications technology to facilitate interactions between the patient and practitioner, but do not serve as a substitute for an in-person encounter, for example, to assess whether an in-person or telehealth visit is needed or to transmit health information to the practitioner.

In determining whether a service is subject to the provisions of section 1834(m) of the Act, we therefore review during this Step 2 whether one or more of the elements of the service, as described by the particular HCPCS code at issue, ordinarily involve direct, face-to-face interaction between the patient and practitioner such that the use of an interactive telecommunications system to deliver the service would be a substitute for an in-person visit.

Step 3. Review the elements of the service as described by the HCPCS code and determine whether each of them is capable of being furnished using an interactive telecommunications system as defined in § 410.78(a)(3).

Step 3 is corollary to Step 2, and is used to determine whether one or more elements of a service are capable of being delivered via an interactive telecommunication system as defined in § 410.78(a)(3). In Step 3, we consider whether one or more face-to-face component(s) of the service, if furnished via audio-video communications technology, would be equivalent to the service being furnished in-person, and we seek information from requesters to demonstrate evidence of substantial clinical improvement in different beneficiary populations that may benefit from the requested service when furnished via telehealth, including, for example, in rural populations. The services are not equivalent when the clinical actions, or patient interaction, would not be of similar content as an in-person visit, or could not be completed.

Step 4. Consider whether the service elements of the requested service map to the service elements of a service on the list that has a permanent status described in previous final rulemaking.

The purpose of Step 4 is to simplify and reduce the administrative burden of submission and review. For Step 4, we review whether the service elements of a code that we are considering for addition to, or removal from, the Medicare Telehealth Services List map to the service elements of a service that is already on the list and is assigned permanent status. Any code that satisfies this criterion would require no further analysis. If the service elements of a code maps to the service elements of a code that is already included on the Medicare Telehealth Services List and is assigned permanent basis, we will add the code to the Medicare Telehealth Services List and assign it permanent status. While we have not previously found that the service elements of a code we are considering for addition to the list map to the elements of a service that was previously added to the list and assigned permanent basis, we believe that it is appropriate to apply this step 4 analysis to compare the candidate service with any permanent code that is on the list on a permanent basis. When Step 4 is met, further evidence review is not necessary. We continue to Step 5 if Step 4 is not met.

Step 5. Consider whether there is evidence of clinical benefit analogous to the clinical benefit of the in-person service when the patient, who is located at a telehealth originating site, receives a service furnished by a physician or practitioner located at a distant site using an interactive telecommunications system.

Similar to Steps 3, 4, and 5 above, the purpose of the proposed step 5 is to simplify and reduce the administrative burden. Under Step 5, we review the evidence provided with a submission to determine the clinical benefit of a service. We then compare the clinical benefit of that service, when provided via telehealth, to the clinical benefit of the service if it were to be furnished in person. If there is enough evidence to suggest that further study may demonstrate that the service, when provided via telehealth, is of clinical benefit, CMS will assign the code a “provisional” status on the Medicare Telehealth Services List. Where the clinical benefit of a service, when provided via telehealth, is clearly analogous to the clinical benefit of the service when provided in person, CMS will assign the code “permanent” status on the Medicare Telehealth Services List, even if the code's service elements do not map to the service elements of a service that already has permanent status. We reminded readers that our evidentiary standard of demonstrated clinical benefit does not include minor or incidental benefits (81 FR 80194). We review the evidence submitted by interested parties, and other evidence that CMS has on hand. The evidence should indicate that the service can be safely delivered using two-way interactive audio-video communications technology. Clinical practice guidelines, peer-reviewed literature, and similar materials, should illustrate specifically how the methods and findings within the material establish a foundation of support that each element of the defined, individual service described by the existing face-to-face service code has been studied in the typical setting of care, typical population of beneficiaries, and typical clinical scenarios that practitioners would encounter when furnishing the service using only interactive, two-way audio-video communications technology to complete the visit or encounter with Medicare beneficiaries. General evidence may also answer the question of whether a certain beneficiary population requiring care for a specific illness or injury may benefit from receiving a service via telehealth versus receiving no service at all, but must establish that the service is a substitute for an equivalent in-person service. Evidence should demonstrate how all elements described by the individual service code can be met when two-way, interactive audio-video communications technology is used as a complete substitute for any face-to-face interaction required between the patient and practitioner that are described in the individual code descriptor. We further remind readers that submissions reflecting practitioner services furnished to Medicare beneficiaries are helpful in our considerations.

b. Requests To Add Services to the Medicare Telehealth Services List for CY 2025

We received several requests to permanently add various services to the Medicare Telehealth Services List, effective for CY 2025. The requested services are listed in Table 7.

Many services were added to the Medicare Telehealth Services List on a temporary basis as discussed in the March 31st COVID-19 interim final rule with comment period (IFC) (85 FR 19235 through 19237) for the PHE for Covid-19, and we subsequently retained these services on a provisional basis. All of the received submissions were requests for addition on a permanent basis. We believe that, rather than selectively adjudicating only those services for which we received requests for potential permanent status, it would be appropriate to complete a comprehensive analysis of all provisional codes currently on the Medicare Telehealth Services List before determining which codes should be made permanent. We are therefore not making determinations to recategorize provisional codes as permanent until such time as CMS can complete a comprehensive analysis of all such provisional codes which we expect to address in future rulemaking.

The following is a discussion of the requests received for addition of services to the Medicare Telehealth Services List:

(1) Continuous Glucose Monitoring

We received a request to add CPT code 95251 ( Ambulatory continuous glucose monitoring of interstitial tissue fluid via a subcutaneous sensor for a minimum of 72 hours; analysis, interpretation and report) to the Medicare Telehealth Services List and assign it permanent status. This code is not on the Medicare Telehealth Services List, nor had it been previously added and removed. The requester stated that the ability of the practitioner to interpret continuous glucose monitoring data and communicate changes in the diabetes care plan to our patients is enhanced by the availability of video visits, and the code should therefore be added to the Medicare Telehealth Services List. This service does not meet the criteria described by Step 2 of the 5-step process: determination of whether the service is subject to the provisions of section 1834(m) of the Act. Section 1834(m) of the Act limits the definition of Medicare telehealth services to those services that would ordinarily be furnished with the furnishing practitioner and patient in the same location (88 78863). In other words, as stated above, for a service to be considered a Medicare telehealth service subject to and payable under section 1834(m) of the Act, the service must be so analogous to in-person care such that the telehealth service, as defined in § 410.78, is essentially a substitute for a face-to-face encounter. We do not consider this service a Medicare telehealth service because it is not an inherently face-to-face service; the patient does not need to be present for the service to be furnished in its entirety. CPT code 95251 describes sensor placement and monitoring over a 72-hour period. We do not consider CPT code 95251 a telehealth service under section 1834(m) of the Act or our regulation at § 410.78. Therefore, we are not proposing to add this service to the Medicare Telehealth Services List.

(2) Cardiovascular and Pulmonary Rehabilitation

We received requests to permanently add cardiovascular rehabilitation services (CPT codes 93797 and 93798) and pulmonary rehabilitation services (CPT codes 94625 and 94626) to the Medicare Telehealth Services List. These services are currently on the Medicare Telehealth List and are assigned provisional status. We had originally added CPT codes 93797 and 93798 and HCPCS codes G0422 and G0423 on a temporary basis in the CY 2022 PFS final rule (FR 86 65054 through 65055). A requester cited studies that they say demonstrate that the availability of these services via telehealth enhances access and patient equity. Another requester cited evidence of improved outcomes for patients that had access to these services via telehealth. As explained previously, we are not proposing to revise the status of codes from provisional to permanent in this proposed rule because we intend to conduct a comprehensive review. While considering these issues for future rulemaking, we are not proposing to assign CPT codes 93797 and 93798 or CPT codes 94625 and 94626 permanent status on the Medicare Telehealth Services List and would instead maintain the services on the Medicare Telehealth Services List on a provisional basis for CY 2025.

(3) Health and Well Being-Coaching

We received a request to add Health and Well-Being Coaching (CPT codes 0591T-0593T) to the Medicare Telehealth Services List with permanent status. These services are currently on the Medicare Telehealth Services List and are assigned a provisional status. We originally added these codes on a provisional basis in the CY 2024 PFS final rule (FR 88 78859 and 78860). One requester stated that health and well-being coaching, including content education, delivered in a telehealth modality is an evidence-based, cost- effective, sustainable, and common sense approach to facilitating lifestyle/behavioral intervention and treating the Medicare population with or at heightened risk for chronic diseases. As explained previously, we are not proposing to revise the status of codes from provisional to permanent in this proposed rule because we intend to conduct a comprehensive review. Therefore, we are not proposing to assign them to the Medicare Telehealth Services List with permanent status.

(4) Psychological Testing and Developmental Testing

We received a request to add Psychological Testing and Developmental Testing (CPT codes 96112, 96113, 96130, 96136, and 96137) to the Medicare Telehealth Services List on a permanent basis. These services are currently on the Medicare Telehealth Services List and are assigned provisional status. In the March 31, 2020 interim final rule with comment period (IFC-1) (85 FR 19239), we originally added CPT codes 96130, 96136, and 96137 to the Medicare Telehealth Services List for the duration of the PHE for COVID-19, and in the CY 2021 PFS final rule (85 FR 85003), we stated we were retaining them on the list on a category 3 basis. In the CY 2023 PFS final rule (87 FR 69460), we added CPT codes 96112 and 96113 on a temporary basis.

As explained previously, we are not proposing to revise the status of codes from provisional to permanent in this proposed rule because we intend to conduct a comprehensive review. Therefore, we are not proposing to either remove these services from or to assign them permanent status on the Medicare Telehealth Services List.

(5) Therapy/Audiology/Speech Language Pathology

We received multiple requests to add the Therapy services described by CPT codes 97110, 97112, 97116, 97161 through 97164, 97530 and 97535, 97165 through 97168, and Audiology and Speech Language Pathology services CPT codes 92507, 92508, 92521 through 92524, 92526, 92607 through 92610, 96105 92626, 92627, 96125, 97129, 97130, 92607 through 92609 92550 through 92557, 92563, 92565 92567, 92568, 92570, 92587, 92588, 92601 through 92604, 92625 through 92627, and 92651 and 92652 to the Medicare Telehealth Services List on a permanent basis stating that continuing Telehealth flexibilities for these services could lead to reduced health care expenditures, increased patient access, and improved management of chronic disease and quality of life. These services are currently available on the Medicare Telehealth Services List and are assigned provisional status, and we refer readers to section II.D.1. for further discussion of these services. In the CY 2023 PFS final rule (87 FR 69451), we originally added CPT codes 90901, 97150, 97530, 97537, 97542, 97763, and 98960-98962 to the Medicare Telehealth Services List on a Category 3 basis. As explained previously, we are not proposing to revise the status of codes from provisional to permanent in this proposed rule because we intend to conduct a comprehensive review. Therefore, we are not proposing to assign them permanent status on the Medicare Telehealth Services List.

(6) Care Management

We received a request to permanently add General Behavioral Health Integration (CPT code 99484) and Principal Care Management (CPT codes 99424-99427) to the Medicare Telehealth Services List. These services are not on the Medicare Telehealth Services List, nor have they been previously added and removed. These services do not meet the criteria described by Step 2 of the 5-step process: determination of whether the service is subject to the provisions of section 1834(m) of the Act. As stated above, the scope of section 1834(m) of the Act is limited to services that would ordinarily be furnished with the furnishing practitioner and patient in the same location (88 78863), and for a service to be considered a telehealth service subject to and payable under section 1834(m) of the Act, the service must be so analogous to in-person care such that the telehealth service, as defined in § 410.78, is essentially a substitute for a face-to-face encounter. We do not consider these services to be Medicare telehealth services because they are not inherently face-to-face services, and the patient need not be present for the services to be furnished in its entirety. Therefore, we do not consider CPT codes 99484 and 99424-99427 to be telehealth services under section 1834(m) of the Act or our regulation at § 410.78. Therefore, we are not proposing to add this service to the Medicare Telehealth Services List.

(7) Posterior Tibial Nerve Stimulation for Voiding Dysfunction

We received a request to permanently add Posterior tibial neurostimulation (CPT code 64566) to the Medicare Telehealth Services List. This code is not on the Medicare Telehealth Services List, nor had it been previously added and removed. This service does not meet the criteria for addition described by Step 3 of the 5-step process, namely the review the elements of the service as described by the HCPCS code and determine whether each of them is capable of being furnished using an interactive telecommunications system as defined in § 410.78(a)(3). The requestor describes the services underlying CPT code 64566 as the continual or recurring treatments over a period of time consisting of the remote monitoring of device utilization and bladder diary for the generation of reports for review by the care provider. Based on our review, this description does not align with the elements of the service as described by CPT code 64566. CPT code 64566 describes a single treatment provided by a clinician who has direct contact with the patient and inserts an electrode into the skin overlying the posterior tibial nerve. Upon conclusion of the treatment, the clinician removes the electrode and examines and dresses the puncture wound. Providing these services would require in-person interaction. We are therefore not proposing to add the service to the Medicare Telehealth Services List because we do not believe the service elements can be met in full using two-way audio-video telecommunications technology.

(8) Radiation Treatment Management

We received requests to permanently add Radiation Treatment Management (CPT code 77427) to the Medicare Telehealth Services List. The code is currently on the Medicare Telehealth List with provisional status. In the March 31, 2020 IFC (85 FR 9240), we originally added CPT code 77427 on the Medicare Telehealth Services List for the duration of the PHE for Covid-19. A requester stated that data collected during the PHE demonstrates that the telehealth option is as safe as the in-person equivalent. We also received a request that we remove this code from the Medicare Telehealth Services List, citing the importance of in-person physical examination to ensure quality of care and stating that a telehealth modality presents patient safety concerns such as those related to the ability of the practitioner to address side effects of radiation therapy. Given the safety concerns raised by members of the practitioner community, we believe this service may not be safely and effectively furnished, and therefore believe that such concerns merit removing this item from the telehealth list. We are therefore proposing to remove this code from the Medicare Telehealth Services List, and we are soliciting comment on these quality of care concerns.

(9) Home International Normalized Ratio (INR) Monitoring

We received a request to permanently add Home INR Monitoring (HCPCS code G0248) to the Medicare Telehealth Services List. This service is not on the Medicare Telehealth Services List, nor had it been previously added and removed. We are proposing to add HCPS code G0248 to the Medicare Telehealth Services List with provision status because our clinical analyses of these services indicate that they can be furnished in full using two-way, audio and video technology, and information provided by requesters indicates that there may be clinical benefit; however, there is not yet sufficient evidence available to consider the services for permanent status. This service as described by the HCPCS code describes face-to-face demonstration of use and care of the INR monitor, obtaining at least one blood sample, provision of instructions for reporting home INR test results, and documentation of patient's ability to perform testing and report results, and we believe each of these service elements the elements is capable of being furnished using an interactive telecommunications system. Adding this service on a provisional basis will allow additional time for the development of evidence of clinical benefit when this service is furnished via telehealth for CMS to consider when evaluating this service for potential permanent addition to the Medicare Telehealth Services List.

(10) Caregiver Training

We received a request to permanently add Caregiver Training services, as described by HCPCS codes 97550 ( Caregiver training in strategies and techniques to facilitate the patient's functional performance in the home or community (eg, activities of daily living [ADLs], instrumental ADLs [iADLs], transfers, mobility, communication, swallowing, feeding, problem solving, safety practices) (without the patient present), face to face; initial 30 minutes) and CPT code 97551 (Caregiver training in strategies and techniques to facilitate the patient's functional performance in the home or community (eg, activities of daily living [ADLs], instrumental ADLs [iADLs], transfers, mobility, communication, swallowing, feeding, problem solving, safety practices) (without the patient present), face to face; each additional 15 minutes (List separately in addition to code for primary service)) to the Medicare Telehealth Services List. These codes do not currently appear on the Medicare Telehealth Services List nor had they previously been added or removed. We are proposing to add these services to the Medicare Telehealth List with provisional status for CY 2025, in addition to the other currently payable caregiver training service codes (CPT codes 97550, 97551, 97552, 96202, 96203). These codes are new services that were added to the PFS beginning in 2024. Given the limited utilization of those codes added for 2024, there are not peer-reviewed studies supporting these codes' ability to be furnished remotely. Adding these services on a provisional basis will allow additional time for the development of evidence of clinical benefit when these services are furnished via telehealth for CMS to consider when evaluating these services for potential permanent addition to the Medicare Telehealth Services List. Contingent upon finalizing the service code descriptions that we propose in section II.E. of this proposed rule, we also propose that HCPCS code GCTD1-3 and GCTB1-2 be added to the Medicare Telehealth Services list for CY 2025 on a provisional basis. We believe that these codes are similar to other services already available on the Medicare Telehealth Services List, including education and training for patient self-management (CPT codes 98960-98962), self-care/home management training (CPT codes 97535), and caregiver-focused health risk assessment (CPT code 96161). Further, it appears that all elements of these services may be furnished when using two-way interactive communications technology. Adding these services on a provisional basis will allow additional time for the development of evidence of clinical benefit when this service is furnished via telehealth for CMS to consider when evaluating these services for potential permanent addition to the Medicare Telehealth Services List.

c. Other Services Proposed for Addition to the Medicare Telehealth Services List

(1) Preexposure Prophylaxis (PrEP) of Human Immunodeficiency Virus (HIV)

As discussed in Section II.E. of this proposed rule, we are proposing national rates for HCPCS codes G0011 (Individual counseling for pre-exposure prophylaxis (PrEP) by physician or QHP to prevent human immunodeficiency virus (HIV), includes: HIV risk assessment (initial or continued assessment of risk), HIV risk reduction and medication adherence, 15-30 minutes) and G0013 (Individual counseling for pre-exposure prophylaxis (PrEP) by clinical staff to prevent human immunodeficiency virus (HIV), includes: HIV risk assessment (initial or continued assessment of risk), HIV risk reduction and medication adherence) pending the future finalization of the NCD for Pre-Exposure Prophylaxis (PrEP) for Human Immunodeficiency Virus (HIV) Infection. We believe these services are similar to services currently on the Medicare Telehealth Services list, specifically HCPCS codes G0445 (High intensity behavioral counseling to prevent sexually transmitted infection; face-to-face, individual, includes: education, skills training and guidance on how to change sexual behavior; performed semi-annually, 30 minutes) and CPT code 99211 (Office or other outpatient visit for the evaluation and management of an established patient that may not require the presence of a physician or other qualified health care professional) as these codes are the codes from which HCPCS codes G0011 and G0013 were unbundled, respectively. As similarity to services currently on the Medicare telehealth list is one of our criteria for permanent addition, we are proposing to add HCPCS codes G0011 and G0013 to the Medicare Telehealth Services List with a permanent status.

The services that we are proposing to add to the Medicare Telehealth Services List are listed in Table 8.

d. Frequency Limitations on Medicare Telehealth Subsequent Care Services in Inpatient and Nursing Facility Settings, and Critical Care Consultations

When adding some services to the Medicare Telehealth Services List in the past, we have included certain frequency restrictions on how often practitioners may furnish the service via Medicare telehealth. These include a limitation of one subsequent hospital care service furnished through telehealth every 3 days, added in the CY 2011 PFS final rule (75 FR 73317 through 73318), one subsequent nursing facility visit furnished through telehealth every 14 days, added in the CY 2011 PFS final rule (75 FR73318), and one critical care consultation service furnished through telehealth per day, added in the CY 2017 final rule (81 FR 80198). In establishing these limits, we cited concerns regarding the potential acuity and complexity of these patients.

We temporarily removed these frequency restrictions during the PHE for COVID-19. In the March 31, 2020 COVID-19 interim final rule with comment period (IFC) (85 FR 19241), we stated that we did not believe the frequency limitations for certain subsequent inpatient visits, subsequent NF visits, and critical care consultations furnished via Medicare telehealth were appropriate or necessary for the duration of the PHE because this would have been a patient population who would have otherwise not had access to clinically appropriate in-person treatment. Although the frequency limitations resumed effect on May 12, 2023 (upon expiration of the PHE), through enforcement discretion during the remainder of CY 2023 and notice-and-comment rulemaking for CY 2024, Medicare telehealth frequency limitations have been suspended for CY 2024 (88 FR 78876 through 78878) for the following codes relating to Subsequent Inpatient Visits, Subsequent Nursing Facility Visits, and Critical Care Consultation Services:

1. Subsequent Inpatient Visit CPT Codes

2. Subsequent Nursing Facility Visit CPT Codes

3. Critical Care Consultation Services: HCPCS Codes

We are proposing to remove the frequency limitations for these codes for CY 2025.

In the CY 2024 PFS final rule (88 FR 78877), we solicited comments from interested parties on how practitioners have been ensuring that Medicare beneficiaries receive subsequent inpatient and nursing facility visits, as well as critical care consultation services since the expiration of the PHE. As discussed in that final rule, many commenters supported permanently removing these frequency limitations, stating that they are arbitrary and re-imposing the limitations would result in decreased access to care; that practitioners should be allowed to use their clinical judgment to determine the type of visit, how many visits, and the type of treatment that is the best fit for the patient so long as the standard of care is met; and that lifting these limitations during the PHE has been instructive and demonstrates the value of continuing such flexibilities. Many commenters urged us to permanently remove them. That said, some commenters did not support removing these frequency limitations citing patient acuity and safety, some commenters cited the importance of in-person care for patients in acute care settings. Some commenters stated that telehealth patient assessments and evaluations are never the same as in-person, hands on visits and should not be considered a viable replacement with no limitations for in-person care. We are continuing to consider what changes we should be making to how telehealth services are reimbursed under Medicare in light of the way practice patterns may have changed following the PHE for COVID-19. Taking into account the information received from commenters in the CY 2024 PFS final rule, we believe it is reasonable to continue to pause certain pre-pandemic restrictions, such as the frequency limitations for the abovementioned codes for CY 2025. Removing such restrictions for CY 2025 will allow us to gather an additional year of data to determine how practice patterns are evolving and what changes, if any, to frequency limitations should be made. We do not believe pausing such frequency limitations for another year presents a level of safety risk requiring us to immediately reinstate the limitations. Our analysis of claims data indicates that the volume of services that would be affected by implementing these limitations is relatively low; in other words, these services are not being furnished via telehealth with such frequency that frequency limits are being met or exceeded very often or for many beneficiaries (claims data from 2020—2023 suggest that less than five percent received one or more of these services as a telehealth service). Therefore, while claims data does not suggest that lifting these limitations during the PHE has led to an increase in utilization, we continue to be interested in information from interested parties on our concerns regarding the potential acuity and complexity of these patients and how such acuity and complexity should complexity should influence our implementation of frequency limitations.

e. Audio-Only Communication Technology To Meet the Definition of “Telecommunications System”

Through our regulation at § 410.78(a)(3), we define “interactive telecommunications system” as multimedia communications equipment that includes, at a minimum, audio and video equipment permitting two-way, real-time interactive communication between the patient and distant site physician or practitioner. Through emergency regulations and waiver authority under section 1135(b)(8) of the Act, in response to the PHE for COVID-19, we allowed the use of audio-only communications technology to furnish services described by the codes for audio-only telephone evaluation and management services and behavioral health counseling and educational services. Section 4113 of the CAA, 2023, extended the availability of telehealth services that can be furnished using audio-only technology and provided for the extension of other PHE-related flexibilities including removal of the geographic and location limitations under section 1834(m) of the Act through December 31, 2024.

In the CY 2022 PFS final rule (86 FR 65060), in part to recognize the changes made by section 123 of the CAA, 2021 that removed the geographic restrictions for Medicare telehealth services for the diagnosis, evaluation, or treatment of a mental health disorder and the addition of the patient's home as a permissible originating site for these services, we revisited our regulatory definition of “interactive telecommunications system” beyond the circumstances of the PHE. Specifically, we finalized a policy to allow for audio-only services under certain circumstances and revised the regulation at § 410.78(a)(3) to permit the use of audio-only equipment for telehealth services furnished to established patients in their homes for purposes of diagnosis, evaluation, or treatment of a mental health disorder (including substance use disorders) if the distant site physician or practitioner is technically capable of using an interactive telecommunications system as defined previously, but the patient is not capable of, or does not consent to, the use of video technology. We also established this policy in part because mental health services are different from most other services on the Medicare telehealth services list in that many of the services primarily involve verbal conversation where visualization between the patient and furnishing physician or practitioner may be less critical to the provision of the service.

However, with the successive statutory extensions of the telehealth flexibilities implemented in response to the PHE for COVID-19, most recently by the CAA, 2023, and our adoption of other extensions where we have had authority to do so, we have come to believe that it would be appropriate to allow interactive audio-only telecommunications technology when any telehealth service is furnished to a beneficiary in their home (when the patient's home is a permissible originating site) and when the distant site physician or practitioner is technically capable of using an interactive telecommunications system as defined previously, but the patient is not capable of, or does not consent to, the use of video technology. While practitioners should always use their clinical judgment as to whether the use of interactive audio-only technology is sufficient to furnish a Medicare telehealth service, we recognize that there is variable broadband access in patients' homes, and that even when technologically feasible, patients simply may not always wish to engage with their practitioner in their home using interactive audio and video. Under current statute, with the expiration of the PHE-related telehealth flexibilities on December 31, 2024, the patient's home is a permissible originating site only for services for the diagnosis, evaluation, or treatment of a mental health or substance use disorder, and for the monthly ESRD-related clinical assessments described in section 1881(b)(3)(B) of the Act.

We are proposing to revise the regulation at § 410.78(a)(3) to state that an interactive telecommunications system may also include two-way, real-time audio-only communication technology for any telehealth service furnished to a beneficiary in their home if the distant site physician or practitioner is technically capable of using an interactive telecommunications system as defined as multimedia communications equipment that includes, at a minimum, audio and video equipment permitting two-way, real-time interactive communication, but the patient is not capable of, or does not consent to, the use of video technology. Additionally, a modifier designated by CMS must be appended to the claim for services described in this paragraph to verify that these conditions have been met. These are CPT modifier “93” and, for RHCs and FQHCs, Medicare modifier “FQ” (Medicare telehealth service was furnished using audio-only communication technology). Practitioners have the option to use the “FQ” or the “93” modifiers or both where appropriate and true, since they are identical in meaning.

f. Distant Site Requirements

In the CY 2024 PFS final rule (88 FR 78873 through 78874) we discussed that many commenters expressed concerns regarding the expiring flexibility for telehealth practitioners to bill from their currently enrolled location instead of their home address when providing telehealth services from their home. CMS issued an FAQ, available at https://www.cms.gov/files/document/physicians-and-other-clinicians-cms-flexibilities-fight-covid-19.pdf , which extended the flexibility for telehealth practitioners to bill from their currently enrolled location instead of their home address when providing telehealth services from their home through December 31, 2023. Interested parties suggested that the expiration of this flexibility poses a potential and imminent threat to the safety and privacy of health professionals who work from home and furnish telehealth services. Commenters cited recent examples of workplace violence in health care facilities, where direct harm to nurses and other medical staff occurred. In addition to safety and privacy concerns, interested parties explained that a significant number of practitioners would need to change their billing practices or add their home address to the Medicare enrollment file, coordinating with the appropriate Medicare Administrative Contractor in their jurisdiction, and this would present administrative burden. To address these concerns, commenters requested that CMS take steps to protect telehealth practitioners by adjusting enrollment requirements so that individual practitioners do not have to list their home addresses on enrollment forms.

In response, CMS finalized, through CY 2024, that we would continue to permit a distant site practitioner to use their currently enrolled practice location instead of their home address when providing telehealth services from their home.

We have continued to hear from interested parties who have stressed the importance of continuing this flexibility for the safety and privacy of health care professionals. Given the shift in practice patterns toward models of care that include the practitioner's home as the distant site, we believe it would be appropriate to continue this flexibility as CMS considers various proposals that may better protect the safety and privacy of practitioners. We are therefore proposing that through CY 2025 we will continue to permit the distant site practitioner to use their currently enrolled practice location instead of their home address when providing telehealth services from their home.

2. Other Non-Face-to-Face Services Involving Communications Technology Under the PFS

a. Direct Supervision Via Use of Two-Way Audio/Video Communications Technology

Under Medicare Part B, certain types of services, including diagnostic tests described under § 410.32 and services incident to a physician's (or other practitioner's) professional service described under § 410.26 (incident-to services), are required to be furnished under specific minimum levels of supervision by a physician or other practitioner. We define three levels of supervision in our regulation at § 410.32(b)(3): General Supervision, Direct Supervision, and Personal Supervision. Notwithstanding the temporary measures implemented in response to the PHE for COVID-19, direct supervision requires the physician (or other supervising practitioner) to be present in the office suite and immediately available to furnish assistance and direction throughout the performance of the service. It does not mean that the physician (or other supervising practitioner) must be present in the room when the service is performed. Again, notwithstanding the temporary measures implemented in response to the PHE for COVID-19, we have established this “immediate availability” requirement to mean in-person, physical, not virtual, availability (please see the April 6, 2020 IFC (85 FR 19245) and the CY 2022 PFS final rule (86 FR 65062)).

Direct supervision is required for various types of services, including most incident-to services under § 410.26, many diagnostic tests under § 410.32, pulmonary rehabilitation services under § 410.47, cardiac rehabilitation and intensive cardiac rehabilitation services under § 410.49, and certain hospital outpatient services as provided under § 410.27(a)(1)(iv). In the March 31, 2020 COVID-19 IFC, we amended the definition of “direct supervision” for the duration of the PHE for COVID-19 (85 FR 19245 through 19246) at § 410.32(b)(3)(ii) to state that the necessary presence of the physician (or other practitioner) for direct supervision includes virtual presence through audio/video real-time communications technology. Instead of requiring the supervising physician's (or other practitioner's) physical presence, the amendment permitted a supervising physician (or other practitioner) to be considered “immediately available” through virtual presence using two-way, real-time audio/visual technology for diagnostic tests, incident-to services, pulmonary rehabilitation services, and cardiac and intensive cardiac rehabilitation services. We made similar amendments at § 410.27(a)(1)(iv) to specify that direct supervision for certain hospital outpatient services may include virtual presence through audio/video real-time communications. The CY 2021 PFS final rule (85 FR 84538 through 84540) and the CY 2024 PFS final rule (88 FR 78878) subsequently extended these policies through December 31, 2024. As stated in the CY 2024 PFS final rule, we extended this definition of direct supervision through December 31, 2024, in order to align the timeframe of the policy with other PHE-related telehealth policies that were extended most recently under the provisions of the CAA, 2023.

We note that in the CY 2021 PFS final rule (85 FR 84539) we clarified that, to the extent our policy allows direct supervision through virtual presence using audio/video real-time communications technology, the requirement could be met by the supervising physician (or other practitioner) being immediately available to engage via audio/video technology (excluding audio-only), and would not require real-time presence or observation of the service via interactive audio and video technology throughout the performance of the service. We noted that this was the case during the PHE and would continue to be the case following the PHE. While flexibility to provide direct supervision through audio/video real-time communications technology was adopted to be responsive to critical needs during the PHE for COVID-19 to ensure beneficiary access to care, reduce exposure risk and to increase the capacity of practitioners and physicians to respond to COVID-19, we expressed concern that direct supervision through virtual presence may not be sufficient to support PFS payment on a permanent basis, beyond the PHE for COVID-19, due to issues of patient safety. For instance, in complex, high-risk, surgical, interventional, or endoscopic procedures, or anesthesia procedures, a patient's clinical status can quickly change; in-person supervision would be necessary for such services to allow for rapid on-site decision-making in the event of an adverse clinical situation. In addition to soliciting comment in the CY 2021 PFS proposed rule on whether there should be any additional “guardrails” or limitations to ensure patient safety/clinical appropriateness, beyond typical clinical standards, as well as restrictions to prevent fraud or inappropriate use, we solicited comment in the CY 2024 PFS proposed rule on whether we should consider extending the definition of direct supervision to permit virtual presence beyond December 31, 2024. Specifically, we stated that we were interested in input from interested parties on potential patient safety or quality concerns when direct supervision occurs virtually; for instance, if direct supervision of certain types of services with virtual presence of the supervising practitioner is more or less likely to present patient safety concerns, or if this flexibility would be more appropriate for certain types of services, or when certain types of auxiliary personnel are performing the supervised service. We were also interested in potential program integrity concerns that interested parties may have regarding this policy, such as overutilization or fraud and abuse.

(1) Proposal To Extend Definition of “Direct Supervision” To Include Audio-Video Communications Technology Through 2025

As discussed in the CY 2024 PFS final rule (88 FR 78878), in the absence of evidence that patient safety is compromised by virtual direct supervision, we are concerned about an abrupt transition to our pre-PHE policy that defines direct supervision to require the physical presence of the supervising practitioner. We noted that an immediate reversion to the pre-PHE definition of direct supervision would prohibit virtual direct supervision, which may present a barrier to access to many services, such as incident-to services, and that physicians and/or other supervising practitioners, in certain instances, would need time to reorganize their practice patterns established during the PHE to reimplement the pre-PHE approach to direct supervision without the use of audio/video technology. We acknowledge the utilization of this flexibility and recognize that many practitioners have stressed the importance of maintaining it, however we seek additional information regarding potential patient safety and quality of care concerns. This flexibility has been available and widely utilized since the beginning of the PHE, and we recognize that may enhance patient access. However, given the importance of certain services being furnished under direct supervision in ensuring quality of care and patient safety, and in particular the ability of the supervising practitioner to intervene if complications arise, we believe an incremental approach is warranted, particularly in instances where unexpected or adverse events may arise for procedures which may be riskier or more intense. In light of these potential safety and quality of care implications, and exercising an abundance of caution, we are extending this flexibility for all services on a temporary basis only. We are therefore proposing to continue to define direct supervision to permit the presence and “immediate availability” of the supervising practitioner through real-time audio and visual interactive telecommunications through December 31, 2025.

(2) Proposal To Permanently Define “Direct Supervision” To Include Audio-Video Communications Technology for a Subset of Services

In the CY 2024 PFS proposed rule, we solicited comment on extending or permanently establishing the virtual presence flexibility for certain services valued under the PFS given that these services typically are performed in their entirety by auxiliary personnel as defined at § 410.26(a)(1). We stated such services would include incident-to services wholly furnished by auxiliary personnel, Level I office or other outpatient E/M visits for established patients. We also mentioned Level I Emergency Department (ED) visits in this list, but have since concluded that ED services would not be wholly furnished by auxiliary personnel and, for that reason, have excluded them from the discussion in this proposed rule. Based on our review, these specific services present less of a patient safety concern than services for which there may be a need for immediate intervention of the supervising practitioner; as noted in the CY 2024 PFS proposed rule, allowing virtual presence for direct supervision of these services could balance patient safety concerns with the interest of supporting access and preserving workforce capacity for medical professionals while considering potential quality and program integrity concerns. After reviewing the various comments in response to this solicitation, additional feedback provided by interested parties, and conducting our own independent review, we believe these services are low risk by their nature, do not often demand in-person supervision, are typically furnished entirely by the supervised personnel, and allowing virtual presence for direct supervision of these services would balance patient safety concerns with the interest of supporting access and preserving workforce capacity.

We are proposing to adopt a definition of direct supervision that allows “immediate availability” of the supervising practitioner using audio/video real-time communications technology (excluding audio-only), but only for the following subset of incident-to services described under § 410.26: (1) services furnished incident to a physician or other practitioner's service when provided by auxiliary personnel employed by the billing practitioner and working under their direct supervision, and for which the underlying HCPCS code has been assigned a PC/TC indicator of `5'; and (2) services described by CPT code 99211 ( Office or other outpatient visit for the evaluation and management of an established patient that may not require the presence of a physician or other qualified health care professional). As provided in the code descriptor for CPT code 99211, an office or other outpatient visit for the evaluation and management of an established patient may not require the presence of a physician or other practitioner and may be furnished incident to a physicians' service by a nonphysician employee of the physician under direct supervision. The service described by CPT code 99211 and the services that are identified with a PC/TC indicator of `5' as listed in the PFS Relative Value Files are services that are nearly always performed in entirety by auxiliary personnel. The vignette for CPT code 99211 describes the provision of supervision and guidance to the clinical staff as necessary. The code descriptor for this service specifies an E/M service that may not require the presence of a physician or other professional; and the current valuation, which is relatively low compared to other office and outpatient E/M services, suggests that this service would primarily be provided by auxiliary personnel.

We are proposing an incremental approach whereby we will adopt without any time limitation the definition of direct supervision permitting virtual presence for services that are inherently lower risk: that is, services that do not ordinarily require the presence of the billing practitioner, do not require direction by the supervising practitioner to the same degree as other services furnished under direct supervision, and are not services typically performed directly by the supervising practitioner.

For all other services required to be furnished under the direct supervision of the supervising physician or other practitioner, we are proposing, as described above, to continue to define “immediate availability” to include real-time audio and visual interactive telecommunications technology only through December 31, 2025.

We are proposing to revise the regulations at § 410.32(b)(3)(ii) to state that through December 31, 2025, the presence of the physician (or other practitioner) would include virtual presence through audio/video real-time communications technology (excluding audio-only).

We are proposing to revise the regulation at § 410.26(a)(2) to state that for the following services furnished after December 31, 2025, the presence of the physician (or other practitioner) required for direct supervision shall continue to include virtual presence through audio/video real-time communications technology (excluding audio-only): services furnished incident to a physician's service when they are provided by auxiliary personnel employed by the physician and working under his or her direct supervision and for which the underlying HCPCS code has been assigned a PC/TC indicator of `5'; and office and other outpatient visits for the evaluation and management of an established patient that may not require the presence of a physician or other qualified health care professional.

(3) Teaching Physician Billing for Services Involving Residents With Virtual Presence

In the CY 2021 PFS final rule (85 FR 84577 through 84584), we established a policy that, after the end of the PHE for COVID-19, teaching physicians may meet the requirements to be present for the key or critical portions of services when furnished involving residents through audio/video real-time communications technology (virtual presence), but only for services furnished in residency training sites located outside of an Office of Management and Budget (OMB)-defined metropolitan statistical area (MSA). We made this location distinction consistent with our longstanding interest in increasing beneficiary access to Medicare-covered services in rural areas. We noted the ability to expand training opportunities for residents in rural settings. For all other locations, we expressed concerns that continuing to permit teaching physicians to bill for services furnished involving residents when they are virtually present, outside the conditions of the PHE for COVID-19, may not allow the teaching physician to have personal oversight and involvement over the management of the portion of the case for which the payment is sought, under section 1842(b)(7)(A)(i)(I) of the Act. In addition, we stated concerns about patient populations that may require a teaching physician's experience and skill to recognize specialized needs or testing and whether it is possible for the teaching physician to meet these clinical needs while having a virtual presence for the key portion of the service. We refer readers to the CY 2021 PFS final rule (85 FR 84577 through 84584) for a more detailed description of our specific concerns. At the end of the PHE for COVID-19, and as finalized in the CY 2021 PFS final rule, we intended for the teaching physician to have a physical presence during the key portion of the service personally provided by residents in order to be paid for the service under the PFS, in locations that were within a MSA. This policy applied to all services, regardless of whether the patient was co-located with the resident or only present virtually (for example, the service was furnished as a 3-way telehealth visit, with the teaching physician, resident, and patient in different locations). However, interested parties expressed concerns regarding the requirement that the teaching physician be physically present with the resident when a service is furnished virtually (as a Medicare telehealth service) within an MSA. Some interested parties stated that during the PHE for COVID-19, when residents provided telehealth services, and the teaching physician was virtually present, the same safe and high-quality oversight was provided as when the teaching physician and resident were physically co-located. In addition, these interested parties stated that during telehealth visits, the teaching physician was virtually present during the key and critical portions of the telehealth service, available immediately in real-time, and had access to the electronic health record. After review of the public comments, we finalized a policy that allowed the teaching physician to have a virtual presence in all teaching settings, only in clinical instances when the service was furnished virtually (for example, a 3-way telehealth visit, with all parties in separate locations). This permitted teaching physicians to have a virtual presence during the key portion of the Medicare telehealth service for which payment was sought, through audio/video real-time communications technology, in all residency training locations through December 31, 2024.

As stated in the CY 2024 PFS final rule (88 FR 78880), we are concerned that an abrupt transition to our pre-PHE policy may present a barrier to access to many services. We also understand that teaching physicians have gained clinical experience providing services involving residents with virtual presence during the PHE for COVID-19 and could help us to identify circumstances where the teaching physician can routinely provide sufficient personal and identifiable services to the patient through their virtual presence during the key portion of the Medicare telehealth service. We sought comment and information to help us consider other clinical treatment situations where it may be appropriate to continue to permit the virtual presence of the teaching physician, while continuing to support patient safety, meeting the clinical needs for all patients, and ensuring burden reduction without creating risks to patient care or increasing opportunities for fraud. As summarized in the CY 2024 PFS final rule (88 FR 78881 through 78882), commenters encouraged us to establish this policy permanently and include in-person services to promote access to care, stated that teaching physicians should be allowed to determine when their virtual presence would be clinically appropriate, based on their assessment of the patient's needs and the competency level of the resident. While we continue to consider clinical scenarios where it may be appropriate to permit the virtual presence of the teaching physician, we are proposing to continue our current policy to allow teaching physicians to have a virtual presence for purposes of billing for services furnished involving residents in all teaching settings, but only when the service is furnished virtually (for example, a 3-way telehealth visit, with the patient, resident, and teaching physician in separate locations). This would permit teaching physicians to have a virtual presence during the key portion of the Medicare telehealth service for which payment is sought in any residency training location through December 31, 2025. The teaching physician's virtual presence would continue to require real-time observation (not mere availability) and excludes audio-only technology. The documentation in the medical record must continue to demonstrate whether the teaching physician was physically present or present through audio/video real-time communications technology at the time of the Medicare telehealth service, which includes documenting the specific portion of the service for which the teaching physician was present through audio/video real-time communications technology.

(a) Request for Information for Teaching Physician Services Furnished Under the Primary Care Exception

The so-called primary care exception set forth at § 415.174 permits the teaching physician to bill for certain lower and mid-level complexity physicians' services furnished by residents in certain types of residency training settings even when the teaching physician is not present with the resident during the services as long as certain conditions are met, including that the services are furnished by residents with more than 6 months of training in the approved residency program; and that the teaching physician directs the care of no more than four residents at a time, remains immediately available and has no other responsibilities while directing the care, assumes management responsibility for beneficiaries seen by the residents, ensures that the services furnished are appropriate, and reviews certain elements of the services with each resident during or immediately after each visit. For a more detailed description of the list of services currently allowed under the primary care exception policy, we refer readers to the CY 2021 PFS final rule (85 FR 84585 through 84590).

We have received feedback from interested parties requesting that we permanently expand the list of services that can be furnished under the primary care exception to include all levels of E/M services and additional preventive services. These interested parties have stated that the fact that high-value primary care and preventive services are not included in the scope of the primary care exception discourages their integration in residency training in these primary care settings, which has a negative impact on physician training, patient access, and longer-term outcomes. Additionally, these interested parties have suggested that including all levels of E/M services under the primary care exception could support primary care workforce development and improve patient continuity of care without compromising patient safety; furthermore, including additional preventive services within the primary care exception would increase the utilization of high-value services.

We believe the primary care exception was intended to broaden opportunities for teaching physicians to involve residents in furnishing services under circumstances that preserve the direction of the care by the teaching physician and promote safe, high-quality patient care. As such, we are requesting information to help us consider whether and how best to expand the array of services included under the primary care exception in future rulemaking. We are interested in hearing more about the types of services that could be allowed under the primary care exception, specifically preventive services, and whether the currently required six months of training in an approved program is sufficient for residents to furnish these types of services without the presence of a teaching physician. We are seeking comment to help us consider whether adding certain preventive services or higher level E/M services to the primary care exception would hinder the teaching physician from maintaining sufficient personal involvement in the care to warrant PFS payment for the services being furnished by up to four residents at any given time. Similarly, we are requesting information on whether the inclusion in the primary care exception of specific higher-level or preventive services would impede the teaching physician's ability to remain immediately available for up to four residents at any given time, while directing and managing the care furnished by these residents.

3. Telehealth Originating Site Facility Fee Payment Amount Update

Section 1834(m)(2)(B) of the Act established the Medicare telehealth originating site facility fee for telehealth services furnished from October 1, 2001, through December 31, 2002 at $20.00, and specifies that, for telehealth services furnished on or after January 1 of each subsequent calendar year, the telehealth originating site facility fee is increased by the percentage increase in the Medicare Economic Index (MEI) as defined in section 1842(i)(3) of the Act. The proposed MEI increase for CY 2025 is 3.6 percent and is based on the expected historical percentage increase of the 2017-based MEI. For the final rule, we propose to update the MEI increase for CY 2025 based on historical data through the second quarter of 2024. Therefore, for CY 2025, the proposed payment amount for HCPCS code Q3014 ( Telehealth originating site facility fee) is $31.04. Table 9 shows the Medicare telehealth originating site facility fee and the corresponding MEI percentage increase for each applicable time period.

4. Payment for Outpatient Therapy Services, Diabetes Self-Management Training, and Medical Nutrition Therapy When Furnished by Institutional Staff to Beneficiaries in Their Homes Through Communication Technology

For information related to outpatient physical therapy, occupational therapy, speech-language pathology, diabetes self-management training (DSMT) and medical nutritional therapy (MNT) services furnished by institutional staff in hospitals and other institutional settings to beneficiaries in their homes through communication technology, please refer to section X.A. in the CY 2025 Hospital Outpatient Prospective Payment System (OPPS) proposed rule (FR Doc. 2024-15087), on public inspection July 10, 2024, and publishing in the Federal Register of July 22, 2024.

E. Valuation of Specific Codes

1. Background: Process for Valuing New, Revised, and Potentially Misvalued Codes

Establishing valuations for newly created and revised CPT codes is a routine part of maintaining the PFS. Since the inception of the PFS, it has also been a priority to revalue services regularly to make sure that the payment rates reflect the changing trends in the practice of medicine and current prices for inputs used in the PE calculations. Initially, this was accomplished primarily through the 5-year review process, which resulted in revised work RVUs for CY 1997, CY 2002, CY 2007, and CY 2012, and revised PE RVUs in CY 2001, CY 2006, and CY 2011, and revised MP RVUs in CY 2010, CY 2015, and CY 2020. Under the 5-year review process, revisions in RVUs were proposed and finalized via rulemaking. In addition to the 5-year reviews, beginning with CY 2009, CMS and the RUC identified a number of potentially misvalued codes each year using various identification screens, as outlined in section II.C. of this proposed rule, Potentially Misvalued Services under the PFS. Historically, when we received RUC recommendations, our process had been to establish interim final RVUs for the potentially misvalued codes, new codes, and any other codes for which there were coding changes in the final rule with comment period for a year. Then, during the 60-day period following the publication of the final rule with comment period, we accepted public comment about those valuations. For services furnished during the calendar year following the publication of interim final rates, we paid for services based upon the interim final values established in the final rule. In the final rule with comment period for the subsequent year, we considered and responded to public comments received on the interim final values, and typically made any appropriate adjustments and finalized those values.

In the CY 2015 PFS final rule with comment period (79 FR 67547), we finalized a new process for establishing values for new, revised and potentially misvalued codes. Under the new process, we include proposed values for these services in the proposed rule, rather than establishing them as interim final in the final rule with comment period. Beginning with the CY 2017 PFS proposed rule (81 FR 46162), the new process was applicable to all codes, except for new codes that describe truly new services. For CY 2017, we proposed new values in the CY 2017 PFS proposed rule for the vast majority of new, revised, and potentially misvalued codes for which we received complete RUC recommendations by February 10, 2016. To complete the transition to this new process, for codes for which we established interim final values in the CY 2016 PFS final rule with comment period (81 FR 80170), we reviewed the comments received during the 60-day public comment period following release of the CY 2016 PFS final rule with comment period (80 FR 70886), and re-proposed values for those codes in the CY 2017 PFS proposed rule. We considered public comments received during the 60-day public comment period for the proposed rule before establishing final values in the CY 2017 PFS final rule. As part of our established process, we will adopt interim final values only in the case of wholly new services for which there are no predecessor codes or values and for which we do not receive recommendations in time to propose values.

As part of our obligation to establish RVUs for the PFS, we thoroughly review and consider available information including recommendations and supporting information from the RUC, the Health Care Professionals Advisory Committee (HCPAC), public commenters, medical literature, Medicare claims data, comparative databases, comparison with other codes within the PFS, as well as consultation with other physicians and healthcare professionals within CMS and the Federal Government as part of our process for establishing valuations. Where we concur that the RUC's recommendations, or recommendations from other commenters, are reasonable and appropriate and are consistent with the time and intensity paradigm of physician work, we proposed those values as recommended. Additionally, we continually engage with interested parties, including the RUC, with regard to our approach for accurately valuing codes, and as we prioritize our obligation to value new, revised, and potentially misvalued codes. We continue to welcome feedback from all interested parties regarding valuation of services for consideration through our rulemaking process.

2. Methodology for Establishing Work RVUs

For each code identified in this section, we conduct a review that includes the current work RVU (if any), RUC-recommended work RVU, intensity, time to furnish the preservice, intraservice, and postservice activities, as well as other components of the service that contribute to the value. Our reviews of recommended work RVUs and time inputs generally include, but have not been limited to, a review of information provided by the RUC, the HCPAC, and other public commenters, medical literature, and comparative databases, as well as a comparison with other codes within the PFS, consultation with other physicians and health care professionals within CMS and the Federal Government, as well as Medicare claims data. We also assess the methodology and data used to develop the recommendations submitted to us by the RUC and other public commenters and the rationale for the recommendations. In the CY 2011 PFS final rule with comment period (75 FR 73328 through 73329), we discussed a variety of methodologies and approaches used to develop work RVUs, including survey data, building blocks, crosswalks to key reference or similar codes, and magnitude estimation (see the CY 2011 PFS final rule with comment period (75 FR 73328 through 73329) for more information). When referring to a survey, unless otherwise noted, we mean the surveys conducted by specialty societies as part of the formal RUC process.

Components that we use in the building block approach may include preservice, intraservice, or postservice time and post-procedure visits. When referring to a bundled CPT code, the building block components could include the CPT codes that make up the bundled code and the inputs associated with those codes. We use the building block methodology to construct, or deconstruct, the work RVU for a CPT code based on component pieces of the code. Magnitude estimation refers to a methodology for valuing work that determines the appropriate work RVU for a service by gauging the total amount of work for that service relative to the work for a similar service across the PFS without explicitly valuing the components of that work. In addition to these methodologies, we frequently utilize an incremental methodology in which we value a code based upon its incremental difference between another code and another family of codes. Section 1848(c)(1)(A) of the Act specifically defines the work component as the resources that reflect time and intensity in furnishing the service. Also, the published literature on valuing work has recognized the key role of time in overall work. For particular codes, we refine the work RVUs in direct proportion to the changes in the best information regarding the time resources involved in furnishing particular services, either considering the total time or the intraservice time.

Several years ago, to aid in the development of preservice time recommendations for new and revised CPT codes, the RUC created standardized preservice time packages. The packages include preservice evaluation time, preservice positioning time, and preservice scrub, dress and wait time. Currently, there are preservice time packages for services typically furnished in the facility setting (for example, preservice time packages reflecting the different combinations of straightforward or difficult procedure, and straightforward or difficult patient). Currently, there are three preservice time packages for services typically furnished in the nonfacility setting.

We developed several standard building block methodologies to value services appropriately when they have common billing patterns. In cases where a service is typically furnished to a beneficiary on the same day as an E/M service, we believe that there is overlap between the two services in some of the activities furnished during the preservice evaluation and postservice time. Our longstanding adjustments have reflected a broad assumption that at least one-third of the work time in both the preservice evaluation and postservice period is duplicative of work furnished during the E/M visit.

Accordingly, in cases where we believe that the RUC has not adequately accounted for the overlapping activities in the recommended work RVU and/or times, we adjust the work RVU and/or times to account for the overlap. The work RVU for a service is the product of the time involved in furnishing the service multiplied by the intensity of the work. Preservice evaluation time and postservice time both have a long-established intensity of work per unit of time (IWPUT) of 0.0224, which means that 1 minute of preservice evaluation or postservice time equates to 0.0224 of a work RVU.

Therefore, in many cases when we remove 2 minutes of preservice time and 2 minutes of postservice time from a procedure to account for the overlap with the same day E/M service, we also remove a work RVU of 0.09 (4 minutes × 0.0224 IWPUT) if we do not believe the overlap in time had already been accounted for in the work RVU. The RUC has recognized this valuation policy and, in many cases, now addresses the overlap in time and work when a service is typically furnished on the same day as an E/M service.

The following paragraphs discuss our approach to reviewing RUC recommendations and developing proposed values for specific codes. When they exist, we also include a summary of interested party reactions to our approach. We noted that many commenters and interested parties have expressed concerns over the years with our ongoing adjustment of work RVUs based on changes in the best information we had regarding the time resources involved in furnishing individual services. We have been particularly concerned with the RUC's and various specialty societies' objections to our approach given the significance of their recommendations to our process for valuing services and since much of the information we used to make the adjustments is derived from their survey process. We note that we are obligated under the statute to consider both time and intensity in establishing work RVUs for PFS services. As explained in the CY 2016 PFS final rule with comment period (80 FR 70933), we recognize that adjusting work RVUs for changes in time is not always a straightforward process, so we have applied various methodologies to identify several potential work values for individual codes.

We have observed that for many codes reviewed by the RUC, recommended work RVUs have appeared to be incongruous with recommended assumptions regarding the resource costs in time. This has been the case for a significant portion of codes for which we recently established or proposed work RVUs that are based on refinements to the RUC-recommended values. When we have adjusted work RVUs to account for significant changes in time, we have started by looking at the change in the time in the context of the RUC-recommended work RVU. When the recommended work RVUs do not appear to account for significant changes in time, we have employed the different approaches to identify potential values that reconcile the recommended work RVUs with the recommended time values. Many of these methodologies, such as survey data, building block, crosswalks to key reference or similar codes, and magnitude estimation have long been used in developing work RVUs under the PFS. In addition to these, we sometimes use the relationship between the old time values and the new time values for particular services to identify alternative work RVUs based on changes in time components.

In so doing, rather than ignoring the RUC-recommended value, we have used the recommended values as a starting reference and then applied one of these several methodologies to account for the reductions in time that we believe were not otherwise reflected in the RUC-recommended value. If we believe that such changes in time are already accounted for in the RUC's recommendation, then we do not make such adjustments. Likewise, we do not arbitrarily apply time ratios to current work RVUs to calculate proposed work RVUs. We use the ratios to identify potential work RVUs and consider these work RVUs as potential options relative to the values developed through other options.

We do not imply that the decrease in time as reflected in survey values should always equate to a one-to-one or linear decrease in newly valued work RVUs. Instead, we believe that, since the two components of work are time and intensity, absent an obvious or explicitly stated rationale for why the relative intensity of a given procedure has increased, significant decreases in time should be reflected in decreases to work RVUs. If the RUC's recommendation has appeared to disregard or dismiss the changes in time, without a persuasive explanation of why such a change should not be accounted for in the overall work of the service, then we have generally used one of the aforementioned methodologies to identify potential work RVUs, including the methodologies intended to account for the changes in the resources involved in furnishing the procedure.

Several interested parties, including the RUC, have expressed general objections to our use of these methodologies and suggested that our actions in adjusting the recommended work RVUs are inappropriate; other interested parties have also expressed general concerns with CMS refinements to RUC-recommended values in general. In the CY 2017 PFS final rule (81 FR 80272 through 80277), we responded in detail to several comments that we received regarding this issue. In the CY 2017 PFS proposed rule (81 FR 46162), we requested comments regarding potential alternatives to making adjustments that would recognize overall estimates of work in the context of changes in the resource of time for particular services; however, we did not receive any specific potential alternatives. As described earlier in this section, crosswalks to key reference or similar codes are one of the many methodological approaches we have employed to identify potential values that reconcile the RUC-recommend work RVUs with the recommended time values when the RUC-recommended work RVUs did not appear to account for significant changes in time.

In response to comments, in the CY 2019 PFS final rule (83 FR 59515), we clarified that terms “reference services”, “key reference services”, and “crosswalks” as described by the commenters are part of the RUC's process for code valuation. These are not terms that we created, and we do not agree that we necessarily must employ them in the identical fashion for the purposes of discussing our valuation of individual services that come up for review. However, in the interest of minimizing confusion and providing clear language to facilitate feedback from interested parties, we stated that we would seek to limit the use of the term, “crosswalk,” to those cases where we are making a comparison to a CPT code with the identical work RVU. (83 FR 59515) We note that we also occasionally make use of a “bracket” for code valuation. A “bracket” refers to when a work RVU falls between the values of two CPT codes, one at a higher work RVU and one at a lower work RVU.

We look forward to continuing to engage with interested parties and commenters, including the RUC, as we prioritize our obligation to value new, revised, and potentially misvalued codes; and we will continue to welcome feedback from all interested parties regarding valuation of services for consideration through our rulemaking process. We refer readers to the detailed discussion in this section of the valuation considered for specific codes. Table 13 contains a list of codes and descriptors for which we are proposing work RVUs for CY 2025; this includes all codes for which we received RUC recommendations by February 10, 2024. The proposed work RVUs, work time and other payment information for all CY 2025 payable codes are available on the CMS website under downloads for the CY 2025 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html ).

3. Methodology for the Direct PE Inputs To Develop PE RVUs

a. Background

On an annual basis, the RUC provides us with recommendations regarding PE inputs for new, revised, and potentially misvalued codes. We review the RUC-recommended direct PE inputs on a code-by-code basis. Like our review of recommended work RVUs, our review of recommended direct PE inputs generally includes, but is not limited to, a review of information provided by the RUC, HCPAC, and other public commenters, medical literature, and comparative databases, as well as a comparison with other codes within the PFS, and consultation with physicians and health care professionals within CMS and the Federal Government, as well as Medicare claims data. We also assess the methodology and data used to develop the recommendations submitted to us by the RUC and other public commenters and the rationale for the recommendations. When we determine that the RUC's recommendations appropriately estimate the direct PE inputs (clinical labor, disposable supplies, and medical equipment) required for the typical service, are consistent with the principles of relativity, and reflect our payment policies, we use those direct PE inputs to value a service. If not, we refine the recommended PE inputs to better reflect our estimate of the PE resources required for the service. We also confirm whether CPT codes should have facility and/or nonfacility direct PE inputs and refine the inputs accordingly.

Our review and refinement of the RUC-recommended direct PE inputs includes many refinements that are common across codes, as well as refinements that are specific to particular services. Table 14 details our refinements of the RUC's direct PE recommendations at the code-specific level. In section II.B. of this proposed rule, Determination of Practice Expense Relative Value Units (PE RVUs), we address certain refinements that will be common across codes. Refinements to particular codes are addressed in the portions of that section that are dedicated to particular codes. We note that for each refinement, we indicate the impact on direct costs for that service. We note that, on average, in any case where the impact on the direct cost for a particular refinement is $0.35 or less, the refinement has no impact on the PE RVUs. This calculation considers both the impact on the direct portion of the PE RVU, as well as the impact on the indirect allocator for the average service. In this proposed rule, we also note that many of the refinements listed in Table 14 result in changes under the $0.35 threshold and would be unlikely to result in a change to the RVUs.

We note that the direct PE inputs for CY 2025 are displayed in the CY 2025 direct PE input files, available on the CMS website under the downloads for the CY 2025 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html . The inputs displayed there have been used in developing the CY 2025 PE RVUs as displayed in Addendum B (see https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates ).

b. Common Refinements

(1) Changes in Work Time

Some direct PE inputs are directly affected by revisions in work time. Specifically, changes in the intraservice portions of the work time and changes in the number or level of postoperative visits associated with the global periods result in corresponding changes to direct PE inputs. The direct PE input recommendations generally correspond to the work time values associated with services. We believe that inadvertent discrepancies between work time values and direct PE inputs should be refined or adjusted in the establishment of proposed direct PE inputs to resolve the discrepancies.

(2) Equipment Time

Prior to CY 2010, the RUC did not generally provide CMS with recommendations regarding equipment time inputs. In CY 2010, in the interest of ensuring the greatest possible degree of accuracy in allocating equipment minutes, we requested that the RUC provide equipment times along with the other direct PE recommendations, and we provided the RUC with general guidelines regarding appropriate equipment time inputs. We appreciate the RUC's willingness to provide us with these additional inputs as part of its PE recommendations.

In general, the equipment time inputs correspond to the service period portion of the clinical labor times. We clarified this principle over several years of rulemaking, indicating that we consider equipment time as the time within the intraservice period when a clinician is using the piece of equipment plus any additional time that the piece of equipment is not available for use for another patient due to its use during the designated procedure. For those services for which we allocate cleaning time to portable equipment items, because the portable equipment does not need to be cleaned in the room where the service is furnished, we do not include that cleaning time for the remaining equipment items, as those items and the room are both available for use for other patients during that time. In addition, when a piece of equipment is typically used during follow-up postoperative visits included in the global period for a service, the equipment time will also reflect that use.

We believe that certain highly technical pieces of equipment and equipment rooms are less likely to be used during all of the preservice or postservice tasks performed by clinical labor staff on the day of the procedure (the clinical labor service period) and are typically available for other patients even when one member of the clinical staff may be occupied with a preservice or postservice task related to the procedure. We also noted that we believe these same assumptions will apply to inexpensive equipment items that are used in conjunction with and located in a room with non-portable highly technical equipment items since any items in the room in question will be available if the room is not being occupied by a particular patient. For additional information, we referred readers to our discussion of these issues in the CY 2012 PFS final rule with comment period (76 FR 73182) and the CY 2015 PFS final rule with comment period (79 FR 67639).

(3) Standard Tasks and Minutes for Clinical Labor Tasks

In general, the preservice, intraservice, and postservice clinical labor minutes associated with clinical labor inputs in the direct PE input database reflect the sum of particular tasks described in the information that accompanies the RUC-recommended direct PE inputs, commonly called the “PE worksheets.” For most of these described tasks, there is a standardized number of minutes, depending on the type of procedure, its typical setting, its global period, and the other procedures with which it is typically reported. The RUC sometimes recommends a number of minutes either greater than or less than the time typically allotted for certain tasks. In those cases, we review the deviations from the standards and any rationale provided for the deviations. When we do not accept the RUC-recommended exceptions, we refine the proposed direct PE inputs to conform to the standard times for those tasks. In addition, in cases when a service is typically billed with an E/M service, we remove the preservice clinical labor tasks to avoid duplicative inputs and to reflect the resource costs of furnishing the typical service.

We refer readers to section II.B. of this proposed rule, Determination of Practice Expense Relative Value Units (PE RVUs), for more information regarding the collaborative work of CMS and the RUC in improvements in standardizing clinical labor tasks.

(4) Recommended Items That Are Not Direct PE Inputs

In some cases, the PE worksheets included with the RUC's recommendations include items that are not clinical labor, disposable supplies, or medical equipment or that cannot be allocated to individual services or patients. We addressed these kinds of recommendations in previous rulemaking (78 FR 74242), and we do not use items included in these recommendations as direct PE inputs in the calculation of PE RVUs.

(5) New Supply and Equipment Items

The RUC generally recommends the use of supply and equipment items that already exist in the direct PE input database for new, revised, and potentially misvalued codes. However, some recommendations include supply or equipment items that are not currently in the direct PE input database. In these cases, the RUC has historically recommended that a new item be created and has facilitated our pricing of that item by working with the specialty societies to provide us copies of sales invoices. For CY 2025 we received invoices for several new supply and equipment items. Tables 17 and 18 detail the invoices received for new and existing items in the direct PE database. As discussed in section II.B. of this proposed rule, Determination of Practice Expense Relative Value Units, we encourage interested parties to review the prices associated with these new and existing items to determine whether these prices appear to be accurate. Where prices appear inaccurate, we encourage interested parties to submit invoices or other information to improve the accuracy of pricing for these items in the direct PE database by February 10th of the following year for consideration in future rulemaking, similar to our process for consideration of RUC recommendations.

We remind interested parties that due to the relativity inherent in the development of RVUs, reductions in existing prices for any items in the direct PE database increase the pool of direct PE RVUs available to all other PFS services. Tables 17 and 18 also include the number of invoices received and the number of nonfacility allowed services for procedures that use these equipment items. We provide the nonfacility allowed services so that interested parties will note the impact the particular price might have on PE relativity, as well as to identify items that are used frequently, since we believe that interested parties are more likely to have better pricing information for items used more frequently. A single invoice may not be reflective of typical costs, and we encourage interested parties to provide additional invoices so that we might identify and use accurate prices in the development of PE RVUs.

In some cases, we do not use the price listed on the invoice that accompanies the recommendation because we identify publicly available alternative prices or information that suggests a different price is more accurate. In these cases, we include this in the discussion of these codes. In other cases, we cannot adequately price a newly recommended item due to inadequate information. Sometimes, no supporting information regarding the price of the item has been included in the recommendation. In other cases, the supporting information does not demonstrate that the item has been purchased at the listed price (for example, vendor price quotes instead of paid invoices). In cases where the information provided on the item allows us to identify clinically appropriate proxy items, we might use existing items as proxies for the newly recommended items. In other cases, we include the item in the direct PE input database without any associated price. Although including the item without an associated price means that the item does not contribute to the calculation of the final PE RVU for particular services, it facilitates our ability to incorporate a price once we obtain information and are able to do so.

(6) Service Period Clinical Labor Time in the Facility Setting

Generally speaking, our direct PE inputs do not include clinical labor minutes assigned to the service period because the cost of clinical labor during the service period for a procedure in the facility setting is not considered a resource cost to the practitioner since Medicare makes separate payment to the facility for these costs. We address code-specific refinements to clinical labor in the individual code sections.

(7) Procedures Subject to the Multiple Procedure Payment Reduction (MPPR) and the OPPS Cap

We note that the list of services for the upcoming calendar year that are subject to the MPPR on diagnostic cardiovascular services, diagnostic imaging services, diagnostic ophthalmology services, and therapy services; and the list of procedures that meet the definition of imaging under section 1848(b)(4)(B) of the Act, and therefore, are subject to the OPPS cap; are displayed in the public use files for the PFS proposed and final rules for each year. The public use files for CY 2025 are available on the CMS website under downloads for the CY 2025 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html . For more information regarding the history of the MPPR policy, we refer readers to the CY 2014 PFS final rule with comment period (78 FR 74261 through 74263).

Effective January 1, 2007, section 5102(b)(1) of the Deficit Reduction Act of 2005 (Pub. L. 109-171) (DRA) amended section 1848(b)(4) of the Act to require that, for imaging services, if—(i) The TC (including the TC portion of a global fee) of the service established for a year under the fee schedule without application of the geographic adjustment factor, exceeds (ii) The Medicare OPD fee schedule amount established under the prospective payment system (PPS) for HOPD services under section 1833(t)(3)(D) of the Act for such service for such year, determined without regard to geographic adjustment under section 1833(t)(2)(D), the Secretary shall substitute the amount described in clause (ii), adjusted by the geographic adjustment factor under the PFS, for the fee schedule amount for such TC for such year. As required by section 1848(b)(4)(A) of the Act, for imaging services furnished on or after January 1, 2007, we cap the TC of the PFS payment amount for the year (prior to geographic adjustment) by the Outpatient Prospective Payment System (OPPS) payment amount for the service (prior to geographic adjustment). We then apply the PFS geographic adjustment to the capped payment amount. Section 1848(b)(4)(B) of the Act defines imaging services as “imaging and computer-assisted imaging services, including X-ray, ultrasound (including echocardiography), nuclear medicine (including PET), magnetic resonance imaging (MRI), computed tomography (CT), and fluoroscopy, but excluding diagnostic and screening mammography.” For more information regarding the history of the cap on the TC of the PFS payment amount under the DRA (the “OPPS cap”), we refer readers to the CY 2007 PFS final rule with comment period (71 FR 69659 through 69662).

For CY 2025, we identified new and revised codes to determine which services meet the definition of “imaging services” as defined at section 1848(b)(4)(B) of the Act for purposes of this cap. Beginning for CY 2025, we are proposing to include the following services on the list of codes to which the OPPS cap applies: CPT codes 0868T ( High-resolution gastric electrophysiology mapping with simultaneous patient-symptom profiling, with interpretation and report), 0876T (Duplex scan of hemodialysis fistula, computer-aided, limited (volume flow, diameter, and depth, including only body of fistula) ), 74263 (Computed tomographic (ct) colonography, screening, including image postprocessing), 9X059 ( Computerized ophthalmic diagnostic imaging (eg, optical coherence tomography [OCT]), posterior segment, with interpretation and report, unilateral or bilateral; retina including OCT angiography), 93X94 ( Vasoreactivity study performed with transcranial Doppler study of intracranial arteries, complete (List separately in addition to code for primary procedure)), 93X95 ( Emboli detection without intravenous microbubble injection performed with transcranial Doppler study of intracranial arteries, complete (List separately in addition to code for primary procedure)), and 93X96 ( Venous-arterial shunt detection with intravenous microbubble injection performed with transcranial Doppler study of intracranial arteries, complete (List separately in addition to code for primary procedure)). We believe that these codes meet the definition of imaging services under section 1848(b)(4)(B) of the Act, and thus, should be subject to the OPPS cap.

In the CY 2024 PFS final rule (88 FR 78894), we noted that in response to the CY 2024 PFS proposed rule, commenters requested that CMS remove CPT code 92229 ( Imaging of retina for detection or monitoring of disease; point-of-care autonomous analysis and report, unilateral or bilateral) from the OPPS cap list because it does not include an associated PC or physician interpretation and it is primarily utilized in the physician office setting. We are soliciting comment on the appropriateness of applying the OPPS cap to services such as this for which the interpretation component is not captured by work RVUs, and the service is not split into technical and professional components. We are more broadly evaluating how services involving assistive technologies are most accurately valued. We note that the OPPS rate for this service is currently higher than what would be paid in a physician office setting, and therefore the OPPS cap does not currently apply to CPT code 92229 as of 2024.

4. Valuation of Specific Codes for CY 2025

(1) Skin Cell Suspension Autograft (CPT codes 15XX1, 15XX2, 15XX3, 15XX4, 15XX5, 15XX6, 15XX7, and 15XX8)

In September 2023, the CPT Editorial Panel approved the creation of eight new CPT codes to describe skin cell suspension autograft (SCSA) procedures. The code set includes a 000-day global base code (CPT code 15XX1 ( Harvest of skin for skin cell suspension autograft; first 25 sq cm or less)) and an add-on code (CPT code 15XX2 ( Harvest of skin for skin cell suspension autograft; each additional 25 sq cm or part thereof (List separately in addition to code for primary procedure))) describing the harvesting component of the procedure, an XXX global base code (CPT code 15XX3 ( Preparation of skin cell suspension autograft, requiring enzymatic processing, manual mechanical disaggregation of skin cells, and filtration; first 25 sq cm or less of harvested skin) and an add-on code (CPT code 15XX4 ( Preparation of skin cell suspension autograft, requiring enzymatic processing, manual mechanical disaggregation of skin cells, and filtration; each additional 25 sq cm of harvested skin or part thereof (List separately in addition to code for primary procedure))) describing the preparation component of the procedure, and two 090-day global base codes and two add-on codes for the application component to distinguish between body areas: trunk, arms, and legs with CPT codes 15XX5 ( Application of skin cell suspension autograft to wound and donor sites, including application of primary dressing, trunk, arms, legs; first 480 sq cm or less) and 15XX6 ( Application of skin cell suspension autograft to wound and donor sites, including application of primary dressing, trunk, arms, legs; each additional 480 sq cm or part thereof (List separately in addition to code for primary procedure)); and face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, or multiple digits with CPT codes 15XX7 ( Application of skin cell suspension autograft to wound and donor sites, including application of primary dressing, face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits; first 480 sq cm or less) and 15XX8 ( Application of skin cell suspension autograft to wound and donor sites, including application of primary dressing, face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits; each additional 480 sq cm or part thereof (List separately in addition to code for primary procedure)).

We disagree with the RUC-recommended work RVUs of 3.00, 2.00, 2.51, 2.00, 10.97, 2.50, 12.50, and 3.00 for CPT codes 15XX1 through 15XX8, respectively, and are proposing contractor-pricing for these CPT codes due to concerns with the coding structure of the code family and the total physician time that results when these codes are billed multiple times on the same date of service for the typical patient.

We note that our concerns with these CPT codes are expansive. Firstly, we note that these CPT codes represent a segmentation of a single service that is performed sequentially on the same date of service. We are seeking comment on whether the segmentation of the harvest, preparation, and application is necessary when these are sequential service parts of one episode of care, and could be simplified by having just two codes that encompass all three service parts (harvest, preparation, and application), to differentiate the two different application areas. We also are soliciting comment on the base and add-on codes' incremental square centimeters, considering that the typical size treatment area described in the vignettes could result in the add-on codes being billed multiple times, particularly for the base application CPT code 15XX5 and add-on CPT code 15XX6. Based on the meeting notes from the September 2023 CPT Editorial Panel meeting, the specialty society initially structured their coding request to “bundle” the service components into fewer codes, but it is unclear to us why these codes were further segmented. We believe that the very large range of intraservice times from the 33 burn surgeons may have been exacerbated by the harvest, preparation, and application components of the service being segmented in this manner. Most notably, CPT code 15XX1, which describes the first 25 sq cm of harvest, base code, had an intraservice survey time range of 5 to 480 minutes, and CPT code 15XX7, which describes the first 480 sq cm of application to the face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, had an intraservice survey time range of 10 to 360 minutes.

We note that the survey median intraservice times for CPT codes 15XX1 through 15XX8 contradict numerous publicly available sources that describe much lower times for this service or specific service parts. Most notably, the manufacturer of the RECELL Autologous Cell Harvesting Device (RECELL® System) used in this service, indicates that a suspension of Spray-On Skin^TM Cells using a small sample of the patient's own skin for the treatment of thermal burn wounds and full-thickness skin defects is “prepared and applied at the point of care in as little as 30 minutes.” Additionally, Temple University Hospital published a news article on December 20, 2019, just 11 months after the U.S. Food and Drug Administration (FDA) approval of the RECELL® System for the treatment of acute thermal second and third-degree burns in adult patients in January 2019, stating that the entire process of skin sample collection, enzyme solution preparation, and suspension spraying/application “can take as little as 30 minutes” and “treat a wound up to 80 times the size of the donor skin sample.” Additionally, an article published in Europe PubMed Central states that the procedure takes approximately 30 minutes and is performed by a burn surgeon trained in how to use RECELL® System, and does not require specialized laboratory staff. Additionally, a 2007 study aimed at comparing the results from the RECELL® System and the classic skin grafting for epidermal replacement in deep partial thickness burns showed a total procedure time of 59±4 minutes for the RECELL® System group.

More granularly, the FDA's Instructions for Use of the RECELL® Autologous Cell Harvesting Device state that “if a skin sample is harvested and processed according to these instructions, it should require between 15 and 30 minutes of contact with the Enzyme”. Additionally, the National Institute for Health and Care Excellence (NICE) produced guidance on using the RECELL® System based on the consideration of evidence submitted and the views of expert advisers, and stated that the harvested skin is added to the proprietary enzyme solution in a processing unit and heated for 15 to 30 minutes to disaggregate the cells. The skin is then removed and scraped with a scalpel to develop a plume of cells. These cells are added to a buffer solution, aspirated and filtered to create a cell suspension that contains keratinocytes, melanocytes, fibroblasts and Langerhans cells. This correlates to the preparation component of the service described by CPT codes 15XX3 and 15XX4, for which the RUC recommended the survey median time of 33 and 28 minutes, respectively.

We believe that the publicly available sources that make representations about the total service and preparation times contradict the RUC-recommended median times based on the survey of 33 burn surgeons. Moreover, when we considered how the add-on CPT codes 15XX2, 15XX4, 15XX6, and 15XX8 would be billed based on the typical patient described in the vignettes, we believe the survey times are inflated compared to the publicly available sources, likely due to how the survey respondents considered the service given the segmentation of the code set. For example, the vignette for CPT code 15XX5 describing the application to the trunk, arms, and legs says “A 35-year-old male sustained partial-thickness thermal burns on his trunk and arms measuring 3,600 sq cm. A skin cell suspension autograft is applied to 480 sq cm of the wound bed.” Of the 33 burn surgeons surveyed, 96 percent found this vignette to be typical. Given the typical sq cm application area of 3,600 sq cm and the expansion ratio of harvested and prepared skin to treatment skin for application of 1:80, the typical episode of care would constitute 1 unit of both CPT codes 15XX1 and 15XX2 for harvesting, 1 unit of both CPT codes 15XX3 and 15XX4 for preparation, 1 unit of CPT code 15XX5 for the first 480 sq cm of application, and 7 units of CPT code 15XX6 for the remaining 3,120 sq cm of application area. When the RUC-recommended intraservice and total times (not including the post-operative visit time for CPT code 15XX5) for all the units billed on the same date of service as sequential service parts are summed, the intraservice time totals to 399 minutes and total time (not including the post-operative visit time included in the global period for CPT code 15XX5) totals to 529 minutes. The intraservice time total alone is nearly 6 and 2/3 hours.

We note the RUC recommended that CPT codes 15XX1 through 15XX8 be placed on the New Technology list to be re-reviewed by the RUC for both work and PE for the September 2026 or January 2027 RUC meeting when 2025 Medicare utilization data is available, and at that time, the RUC would consider if other specialties were performing the service and if the service was performed in the non-facility setting. We look forward to re-reviewing these CPT codes when recommendations are re-submitted with more robust and inclusive survey data. In the meantime, we encourage the reconsideration of the family's coding structure by the CPT Editorial Panel given the challenging aspects of this service, including the fact that the current coding structure represents a severely segmented single episode of care with troublesome billing patterns for the typical patient, particularly for the add-on CPT code 15XX6 describing the additional 480 sq cm increments of application on the trunk, arms, and legs. This code is particularly concerning because the coding structure of the family requires 7 units of add-on CPT code 15XX6 to be billed for the typical patient. Similarly, the typical patient described in the vignettes for this family of codes would require 3 units of add-on CPT code 15XX8 due to the coding structure.

We are also seeking feedback on the recommended global period for CPT code 15XX3. The RUC recommended an XXX global period, which indicates that the global concept does not apply, but we believe a 000-day global period, indicating an endoscopic or minor procedure with related preoperative and postoperative relative values on the day of the procedure only in the fee schedule payment amount, may be more appropriate given the nature of the service (which is intertwined with the other codes in the series) and that the entire service cannot be completed without 15XX3. This would allow the entire service to run within a surgical global period.

We note that we believe contractor-pricing is appropriate for CPT codes 15XX1 through 15XX8 until reconsideration of the coding structure and re-survey is complete, given the concerning aspects of the CPT codes. We note that this service is currently billed for using contractor-priced CPT code 17999 ( Unlisted procedure, skin, mucous membrane and subcutaneous tissue ) and the eight new codes are expected to be a very low utilization.

(2) Hand, Wrist, & Forearm Repair & Recon (CPT Codes 25310, 25447, 2X005, and 26480)

In September 2022, the RUC referred CPT codes 26480 and 25447 to the CPT Editorial Panel for a code bundling solution. In May 2023, the CPT Editorial Panel approved a new bundled code (CPT code 2X005) to report intercarpal or carpometacarpal joint suspension arthroplasty, including transfer or transplant of tendon, with interposition when performed while CPT code 25447 was revised to clarify that the code only included interposition of a tendon and not suspension. This family of codes was surveyed for the September 2023 RUC meeting.

We disagree with the RUC-recommended work RVU of 9.50 for CPT code 25310 ( Tendon transplantation or transfer, flexor or extensor, forearm and/or wrist, single; each tendon) and we are instead proposing a work RVU of 9.00 based on the survey 25th percentile result. In reviewing CPT code 25310, we noted that the recommended intraservice time was unchanged at 60 minutes in the new survey; however, the RUC-recommended work RVU is increasing from the current 8.08 to 9.50. Although we do not imply that changes in work time as reflected in survey values must equate to a one-to-one or linear change in the valuation of work RVUs, we believe that since the two components of work are time and intensity, increases in the recommended work RVU should typically be reflected in increases in the surveyed work time. We recognize that the total time for CPT code 25310 is increasing from 235 minutes to 263 minutes (an increase of 12 percent) due to changes in the code's post-operative office visits which will now take place at a higher level. However, this again does not match the increase in the recommended work RVU, which is increasing from 8.08 to 9.50 (approximately 18 percent). We believe that it would be more accurate to propose the survey 25th percentile work RVU of 9.00 for CPT code 25310 which matches this increase in the total work time. We also note that the intensity of CPT code 25310 is decreasing, not increasing, as recommended by the RUC which further suggests that a work RVU of 9.50 would not be appropriate for this code given the surveyed work times.

We disagree with the RUC-recommended work RVU of 11.14 for CPT code 25447 ( Arthroplasty, intercarpal or carpometacarpal joints; interposition (eg, tendon)) and we are instead proposing a work RVU of 10.50 based on the survey 25th percentile result. In reviewing CPT code 25447, we noted that the recommended intraservice time was decreasing from 100 minutes to 75 minutes in the new survey; however, the RUC recommended maintaining the current work RVU of 11.14. Although we do not imply that changes in work time as reflected in survey values must equate to a one-to-one or linear change in the valuation of work RVUs, we believe that since the two components of work are time and intensity, decreases in the surveyed work time should typically be reflected in decreases to the work RVU. We recognize that the total time for CPT code 25447 is slightly increasing from 278 minutes to 281 minutes (an increase of about 1 percent) due to changes in the code's post-operative office visits which will now take place at a higher level. However, we believe that the sizable decrease in surveyed intraservice work time (a reduction of approximately 33 percent) better supports proposing the survey 25th percentile work RVU of 10.50 instead of maintaining the current work RVU of 11.14. We also disagree with the RUC that the intensity of CPT code 25447 is unchanged due to increases in the post-operative work; we believe that the sizable decrease in surveyed intraservice work time indicates a modest decrease in intensity. We note again that the intensity of CPT code 25310 is decreasing, not increasing, as recommended by the RUC which suggests that a similar pattern is likely taking place with clinically similar procedures elsewhere in the same code family.

We disagree with the RUC-recommended work RVU of 13.90 for CPT code 2X005 ( Arthroplasty, intercarpal or carpometacarpal joints; suspension, including transfer or transplant of tendon, with interposition, when performed) and we are instead proposing a work RVU of 11.85 based on the survey 25th percentile result. We note that the RUC typically values new codes such as CPT code 2X005 using this survey 25th percentile work RVU as opposed to the survey median work RVU that it recommended. The RUC's recommendations stated that CPT code 2X005 should be valued higher than CPT code 25447 due to having higher intensity, a relationship which is preserved at our proposed work RVUs of 11.85 and 10.50 respectively. The RUC also stated in its recommendations that CPT code 2X005 should be valued higher than reference CPT code 29828 ( Arthroscopy, shoulder, surgical; biceps tenodesis) because it has more intraservice time and total work time. However, the RUC also stated elsewhere in its recommendations that the arthroscopy described by CPT code 29828 is more intense than the arthroplasty procedures described by this family of codes, which we believe supports CPT code 29828 having a higher work RVU despite its lower work times. Based on this information, we believe that proposing the survey 25th percentile work RVU of 11.85 is the most accurate valuation for CPT code 2X005.

We disagree with the RUC-recommended work RVU of 9.50 for CPT code 26480 ( Transfer or transplant of tendon, carpometacarpal area or dorsum of hand; without free graft, each tendon) and we are instead proposing a work RVU of 9.00 based on the survey 25th percentile result. In reviewing CPT code 26480, we noted that the recommended intraservice time was unchanged at 60 minutes in the new survey; however, the RUC-recommended work RVU is increasing from the current 6.90 to 9.50. Although we do not imply that changes in work time as reflected in survey values must equate to a one-to-one or linear change in the valuation of work RVUs, we believe that since the two components of work are time and intensity, increases in the recommended work RVU should typically be reflected in increases in the surveyed work time. We recognize that the total time for CPT code 26480 is increasing from 227 minutes to 263 minutes (an increase of 16 percent) due to changes in the code's post-operative office visits which will now take place at a higher level. However, this again does not match the increase in the recommended work RVU, which is increasing from 6.90 to 9.50 (approximately 38 percent). We believe that it would be more accurate to propose the survey 25th percentile work RVU of 9.00 for CPT code 26480 which more closely matches this increase in the total work time. We also note that CPT codes 25310 and 26480 were surveyed as having identical work times and identical survey 25th percentile and survey median work RVUs. We concur with the RUC that these two codes should be valued at the same work RVU, however we continue to believe that the survey 25th percentile work RVU of 9.00 is a more accurate choice in both cases. We are proposing the RUC-recommended direct PE inputs for all four codes in the family without refinement.

(3) CAR-T Therapy Services (CPT Codes 3X018, 3X019, 3X020, and 3X021)

In September 2023, the CPT Editorial Panel deleted four category III codes (0537T-0540T) and approved the addition of four new codes (3X018-3X021) that describe only steps of the complex CAR-T Therapy process performed and supervised by physicians. The RUC recommended four different work RVUs for codes 3X018, 3X019, 3X020, and 3X021 and only recommended direct PE values for code 3X021.

For CPT code 3X018 (Chimeric antigen receptor T-cell (CAR-T) therapy; harvesting of blood-derived T lymphocytes for development of genetically modified autologous CAR-T cells, per day) the RUC recommended a work RVU of 1.94. For CPT code 3X019 ( Chimeric antigen receptor T-cell (CAR-T) therapy; preparation of blood-derived T lymphocytes for transportation (eg, cryopreservation, storage)) the RUC recommended a work RVU of 0.79. For CPT code 3X021 ( Chimeric antigen receptor T-cell (CAR-T) therapy; CAR-T cell administration, autologous) the RUC recommended a work RVU of 3.00. For CPT code 3X020 ( Chimeric antigen receptor T-cell (CAR-T) therapy; receipt and preparation of CAR-T cells for administration) the RUC recommended a work RVU of 0.80 and for CPT code 3X020, we are proposing the RUC-recommended work RVU of 0.80. We are proposing the RUC-recommended work RVUs for CPT codes 3X018, 3X019, and 3X021 respectively.

As mentioned previously, the RUC recommended direct PE values for only one code, CPT code 3X021, and the RUC recommended that the non-facility PE RVU for CPT codes 3X018-3X020 should be contractor-priced. However, contractor pricing can only be applied at the whole code level, not to a single component of the valuation. Therefore, for CPT codes 3X018-3X020 we are treating these codes as having no recommended direct PE values and are seeking comment on direct PE values for these codes. We are proposing the RUC-recommended direct PE inputs for CPT code 3X021.

(4) Therapeutic Apheresis and Photopheresis (CPT Codes 36514, 36516, and 36522)

In the CY 2024 PFS final rule, we finalized CPT codes 36514 ( Therapeutic apheresis; for plasma pheresis), 36516 ( Therapeutic apheresis; with extracorporeal immunoadsorption, selective adsorption or selective filtration and plasma reinfusion), and 36522 ( Photopheresis, extracorporeal) as potentially misvalued, as we believed there may have been a possible disparity with the clinical labor type (88 FR 78848). As a result, the PE clinical labor type was reviewed for these three codes at the January 2024 RUC meeting, with no work review. The PE Subcommittee and the RUC agreed that clinical staff code L042A (RN/LPN) did not appropriately represent the work of an Apheresis Nurse Specialist. There is not a clinical staff code for an Apheresis Nurse Specialist; however, the RUC agreed with the specialty societies' recommendation that the training and experience of an oncology nurse (clinical staff code L056A, RN/OCN) would more accurately reflect the work of an apheresis nurse for these CPT codes. The RUC submitted new PE recommendations for these three codes based on the use of the L056A clinical labor type.

We are proposing the RUC-recommended direct PE inputs for CPT codes 36514, 36516, and 36522 without refinement. The RUC did not make recommendations and we are not proposing any changes to the work RVU for CPT codes 36514, 36516, and 36522.

(5) Intra-Abdominal Tumor Excision or Destruction (CPT Codes 4X015, 4X016, 4X017, 4X018, and 4X019)

In May 2023, the CPT Editorial Panel created five new codes to describe the sum of the maximum length of intra-abdominal (that is, peritoneal, mesenteric, retroperitoneal), primary or secondary tumor(s) or cyst(s) excised or destroyed: CPT code 4X015 ( Excision or destruction, open, intra-abdominal (i.e., peritoneal, mesenteric, retroperitoneal), primary or secondary tumor(s) or cyst(s), sum of the maximum length of tumor(s) or cyst(s); 5 cm or less), CPT code 4X016 ( Excision or destruction, open, intra-abdominal (i.e., peritoneal, mesenteric, retroperitoneal), primary or secondary tumor(s) or cyst(s), sum of the maximum length of tumor(s) or cyst(s); 5.1 to 10 cm), CPT code 4X017 ( Excision or destruction, open, intra-abdominal (i.e., peritoneal, mesenteric, retroperitoneal), primary or secondary tumor(s) or cyst(s), sum of the maximum length of tumor(s) or cyst(s); 10.1 to 20 cm), CPT code 4X018 ( Excision or destruction, open, intra-abdominal (i.e., peritoneal, mesenteric, retroperitoneal), primary or secondary tumor(s) or cyst(s), sum of the maximum length of tumor(s) or cyst(s); 20.1 to 30 cm), and CPT code 4X019 ( Excision or destruction, open, intra-abdominal (i.e., peritoneal, mesenteric, retroperitoneal), primary or secondary tumor(s) or cyst(s), sum of the maximum length of tumor(s) or cyst(s); greater than 30 cm). These new CPT codes will replace existing CPT codes 49203 ( Excision or destruction, open, intra-abdominal tumors, cysts or endometriomas, 1 or more peritoneal, mesenteric, or retroperitoneal primary or secondary tumors; largest tumor 5 cm diameter or less), 49204 ( Excision or destruction, open, intra-abdominal tumors, cysts or endometriomas, 1 or more peritoneal, mesenteric, or retroperitoneal primary or secondary tumors; largest tumor 5.1-10.0 cm diameter), and 49205 ( Excision or destruction, open, intra-abdominal tumors, cysts or endometriomas, 1 or more peritoneal, mesenteric, or retroperitoneal primary or secondary tumors; largest tumor greater than 10.0 cm diameter) that described tumor excision or destruction based on the size of the single largest tumor, cyst, or endometrioma removed, no matter the number of tumors. For CY 2025, the RUC recommended a work RVU of 22.00 for CPT code 4X015, a work RVU of 28.65 for CPT code 4X016, a work RVU of 34.00 for CPT code 4X017, a work RVU of 45.00 for CPT code 4X018, and a work RVU of 55.00 for CPT code 4X019.

We are proposing the RUC-recommended work RVUs of 22.00 for CPT code 4X015, 28.65 for CPT code 4X016, and 34.00 for CPT code 4X017.

We disagree with the RUC-recommended work RVU of 45.00 for CPT code 4X018 and we are proposing a work RVU of 40.00 based on the survey 25th percentile. Compared to the predecessor CPT code 49205, the intra-service time ratio for CPT code 4X018 suggests a work RVU of 41.51 and the total time ratio suggests a work RVU of 38.02. These changes in surveyed work time as compared with predecessor CPT code 49205 suggest that the recommended work RVU of 45.00 is inappropriately high. We also note that the RUC recommended the survey 25th percentile work RVU for CPT codes 4X015, 4X016, and 4X017. Therefore, we believe that proposing a work RVU of 40.00 for CPT code 4X018 keeps the valuation consistent with the other CPT codes in this family. Our proposed work RVU of 40.00 for CPT code 4X018 is supported by the following reference CPT codes with similar intra-service time (310 minutes) and similar total time (814 minutes): reference CPT code 69970 ( Removal of tumor, temporal bone) with a work RVU of 32.41 with 330 minutes intra-service time and 793 minutes of total time, and reference CPT code 33864 ( Ascending aorta graft, with cardiopulmonary bypass with valve suspension, with coronary reconstruction and valve-sparing aortic root remodeling (e.g., David Procedure, Yacoub Procedure) ) with a work RVU of 60.80 with 300 minutes of intra-service time and 838 minutes of total time. We believe the proposed work RVU of 40.00 is a more appropriate value overall than 45.00 when compared to the range of codes with similar intra-service time and similar total time.

We disagree with the RUC-recommended work RVU of 55.00 for CPT code 4X019 and we are proposing a work RVU of 50.00 based on the survey 25th percentile. Compared to the predecessor CPT code 49205, the intra-service time ratio for CPT code 4X019 suggests a work RVU of 48.21 and the total time ratio suggests a work RVU of 48.86. These changes in surveyed work time as compared with predecessor CPT code 49205 suggest that the recommended work RVU of 55.00 is inappropriately high. We also note again that the RUC recommended the survey 25th percentile work RVU for CPT codes 4X015, 4X016, and 4X017. Therefore, we believe that proposing a work RVU of 50.00 for CPT code 4X019 keeps the valuation consistent with the other CPT codes in this family. Our proposed work RVU of 50.00 for CPT code 4X019 is supported by the following reference CPT codes with similar intra-service time (360 minutes) and similar total time (1,046 minutes): reference CPT code 61598 ( Transpetrosal approach to posterior cranial fossa, clivus or foramen magnum, including ligation of superior petrosal sinus and/or sigmoid sinus) with a work RVU of 36.53 with 377.7 minutes intra-service time and 1,048.1 minutes of total time, and reference CPT code 47140 ( Donor hepatectomy (including cold preservation), from living donor; left lateral segment only (segments II and III)) with a work RVU of 59.40 with 355 minutes of intra-service time and 1,073 minutes of total time. We believe the proposed RVU of 50.00 is a more appropriate value overall than 55.00 when compared to the range of codes with similar intra-service time and similar total time.

We also note that the RUC's recommendations for the first three codes in the family (CPT codes 4X015-4X017) maintained the same amount of intensity as their respective predecessor codes, and in fact slightly decreased in intensity in the case of CPT codes 4X015 and 4X016. However, the RUC recommended a notable increase in intensity for CPT codes 4X018 and 4X019 over predecessor code 49205 due to its selection of the survey median work RVU in both cases. We do not believe that this increase in intensity for CPT codes 4X018 and 4X019 is warranted due to their clinical similarities to the previous coding in the family, especially given that CPT code 49205 had the lowest intensity in the family. We believe that this intensity argument further supports our choice to propose the survey 25th percentile work RVU for these two codes, matching the RUC recommendations for CPT code 4X015-4X017.

We are proposing the RUC-recommended direct PE inputs for CPT codes 4X015, 4X016, 4X017, 4X018, and 4X019 without refinement.

(6) Bladder Neck and Prostate Procedures (CPT Codes 5XX05 and 5XX06)

In September 2023, the CPT Editorial Panel created two Category I CPT codes to describe the insertion or removal of a temporary device to remodel the bladder neck and prostate using pressure to create necrosis and relieve lower urinary tract symptoms (LUTS) secondary to benign prostate hyperplasia (BPH). These two new 000-day global Category I codes were surveyed and reviewed for the January 2024 RUC meeting.

At the January 2024 RUC meeting, the specialty society indicated that CPT code 5XX05's survey 25th percentile work RVU of 3.91 was too high for this procedure compared to other services in the physician fee schedule with similar intra-service time. The specialty society recommended, and the RUC agreed that the recommended work RVU for CPT code 5XX05 should be crosswalked to CPT code 52284 ( Cystourethroscopy, with mechanical urethral dilation and urethral therapeutic drug delivery by drug-coated balloon catheter for urethral stricture or stenosis, male, including fluoroscopy, when performed). Because these procedures are similar in intensity and both require precise placement of an intraurethral device, we concur with the RUC and we are proposing the RUC recommended work RVU of 3.10 for CPT code 5XX05.

At the January 2024 RUC meeting, the specialty society indicated that CPT code 5XX06's survey 25th percentile work RVU of 2.00 was too high for this procedure compared to other services in the physician fee schedule with similar intra-service time. The specialty society recommended, and the RUC agreed, that CPT code 5XX06 should have a direct work RVU crosswalk to CPT code 27096 ( Injection procedure for sacroiliac joint, anesthetic/steroid, with image guidance (fluoroscopy or CT) including arthrography when performed). We are proposing the RUC recommended work RVU of 1.48 for CPT code 5XX06.

We are also proposing the RUC-recommended direct PE inputs for CPT codes 5XX05 and 5XX06 without refinement. However, we note possible duplications in two of the supply items within CPT code 5XX05. Specifically, supply item SB027 ( gown, staff, impervious) is already included in supply item SA042 ( pack, cleaning and disinfecting, endoscope), and supply item SB024 ( gloves, sterile) is included in supply items SA058 (pack, urology cystoscopy visit). We are seeking comments on whether a total of three SB027 impervious staff gowns and two SB024 pairs of sterile gloves would be typical and necessary when providing this procedure.

(7) MRI-Monitored Transurethral Ultrasound Ablation of Prostate (CPT Codes 5X006, 5X007, and 5X008)

At the April 2023 CPT Editorial Panel meeting, three new CPT codes were approved for MRI-monitored transurethral ultrasound ablation (TULSA). These codes were surveyed for the September 2023 RUC meeting and recommendations submitted to CMS for inclusion in the CY 2025 PFS proposed rule.

For CY 2025, we are proposing the RUC-recommended work RVUs for all three CPT codes. However, we note that interested parties may have concerns regarding the experience of the survey respondents and the intra-service times provided in the survey data. We welcome commenters to provide additional data that we could consider in the valuation of the work and direct PE inputs for these CPT codes. We are proposing a work RVU of 4.05 for CPT code 5X006 ( Insertion of transurethral ablation transducers for delivery of thermal ultrasound for prostate tissue ablation, including suprapubic tube placement during the same session and placement of an endorectal cooling device, when performed), a work RVU of 9.80 for CPT code 5X007 ( Ablation of prostate tissue, transurethral, using thermal ultrasound, including magnetic resonance imaging guidance for, and monitoring of, tissue ablation), and a work RVU of 11.50 for CPT code 5X008 ( Ablation of prostate tissue, transurethral, using thermal ultrasound, including magnetic resonance imaging guidance for, and monitoring of, tissue ablation; with insertion of transurethral ultrasound transducers for delivery of the thermal ultrasound, including suprapubic tube placement and placement of an endorectal cooling device, when performed). We are also proposing the RUC-recommended direct PE inputs for CPT codes 5X006, 5X007, and 5X008 without refinement.

(8) Insertion of Cervical Dilator (CPT Code 59200)

In the CY 2024 PFS final rule, we finalized CPT Code 59200 ( Insertion of cervical dilator (e.g., laminaria, prostaglandin) (separate procedure)) as potentially misvalued. The code is to be used to report the total duration of time spent on a patient history and physical, reviewing lab resulting, discussing risk and benefits of the procedure, obtaining consent, performing the procedure, and assessing the patient post-procedure. The RUC reviewed the work RVU and PE inputs for CPT code 59200 at their January 2024 meeting. We are proposing the RUC-recommended work RVU of 1.20 for CPT code 59200. We are also proposing the RUC-recommended direct PE inputs for CPT code 59200 without refinements.

(9) Guided High Intensity Focused Ultrasound (CPT Code 6XX00)

In September 2023, the CPT Editorial Panel created a new Category I code to describe magnetic resonance image guided high intensity focused ultrasound intracranial ablation for treatment of a severe central tremor that is recalcitrant to other medical treatments. This service is typically performed by a neurosurgeon without the involvement of a separate radiologist. This new code replaces the existing Category III code 0398T.

We are not proposing the RUC-recommended work RVU of 18.95 for CPT code 6XX00 and are instead proposing a work RVU of 16.60 based on a crosswalk to CPT code 61626 ( Transcatheter permanent occlusion or embolization (e.g., for tumor destruction, to achieve hemostasis, to occlude a vascular malformation), percutaneous, any method; non-central nervous system, head or neck (extracranial, brachiocephalic branch)), which describes a similar tumor destruction service that has similar time and intensity values to this service, and we support this value by referencing CPT code 33889 ( Open subclavian to carotid artery transposition performed in conjunction with endovascular repair of descending thoracic aorta, by neck incision, unilateral) and 33894 ( Endovascular stent repair of coarctation of the ascending, transverse, or descending thoracic or abdominal aorta, involving stent placement; across major side branches). We do not believe that this service is significantly more intense than the key reference codes, CPT codes 61736 ( Laser interstitial thermal therapy (LITT) of lesion, intracranial, including burr hole(s), with magnetic resonance imaging guidance, when performed; single trajectory for 1 simple lesion) and 61737 ( Laser interstitial thermal therapy (LITT) of lesion, intracranial, including burr hole(s), with magnetic resonance imaging guidance, when performed; multiple trajectories for multiple or complex lesion(s)), as the RUC-recommended work value implies. Our proposed work RVU of 16.60 for CPT code 6XX00 largely matches the intensity of CPT code 61736 which we believe is a more accurate valuation for this service, as opposed to the RUC recommendation which would have significantly more intensity.

We are proposing the RUC-recommended direct PE inputs for CPT code 6XX00 without refinement.

(10) Percutaneous Radiofrequency Ablation of Thyroid (CPT Codes 6XX01 and 6XX02)

In January 2024, the RUC surveyed codes 6XX01 ( Ablation of 1 or more thyroid nodule(s), one lobe or the isthmus, percutaneous, including imaging guidance, radiofrequency) and its respective add-on code 6XX02 ( Ablation of 1 or more thyroid nodule(s), additional lobe, percutaneous, with imaging guidance, radiofrequency (List separately in addition to code for primary service) and recommended both work RVUs and PE values for this code family.

For CPT code 6XX01, the RUC recommended a work RVU of 5.75 and we are proposing the RUC-recommended work RVU of 5.75.

For add-on code CPT 6XX02, the RUC recommended a work RVU of 4.25 and we are proposing the RUC-recommended work RVU for this code. We are also proposing the RUC-recommended direct PE values for both codes 6XX01 and 6XX02.

(11) Fascial Plane Blocks (CPT Codes 6XX07, 6XX08, 6XX09, 6XX10, 6XX11, 6XX12, 64486, 64487, 64488, and 64489)

In September 2023, the CPT Editorial Panel created six new Category I CPT codes, CPT code 6XX07 ( Thoracic fascial plane block, unilateral; by injection(s), including imaging guidance, when performed), 6XX08 ( Thoracic fascial plane block, unilateral; by continuous infusion(s), including imaging guidance, when performed), 6XX09 ( Thoracic fascial plane block, bilateral; by injection(s), including imaging guidance, when performed), 6XX10 ( Thoracic fascial plane block, bilateral; by continuous infusion(s), including imaging guidance, when performed), 6XX11 ( Lower extremity fascial plane block, unilateral; by injection(s), including imaging guidance, when performed), and 6XX12 ( Lower extremity fascial plane block, unilateral; by continuous infusion(s), including imaging guidance, when performed) to report thoracic or lower extremity fascial plane blocks, typically used for post-operative pain management. Four existing CPT codes describing transversus abdominis plane (TAP) blocks, 64486 ( Transversus abdominis plane (TAP) block (abdominal plane block, rectus sheath block) unilateral; by injection(s) (includes imaging guidance, when performed)), 64487 ( Transversus abdominis plane (TAP) block (abdominal plane block, rectus sheath block) unilateral; by continuous infusion(s) (includes imaging guidance, when performed)), 64488 ( Transversus abdominis plane (TAP) block (abdominal plane block, rectus sheath block) bilateral; by injections (includes imaging guidance, when performed)) 64489 ( Transversus abdominis plane (TAP) block (abdominal plane block, rectus sheath block) bilateral; by continuous infusions (includes imaging guidance, when performed)), were included as part of this code family for RUC review in January 2024.

We are proposing the RUC-recommended work RVU for all ten codes in this family. We are proposing a work RVU of 1.50 for CPT code 6XX07, 1.74 for CPT code 6XX08, 1.67 for CPT code 6XX09, 1.83 for CPT code 6XX10, 1.34 for CPT code 6XX11, 1.67 for CPT code 6XX12, 1.20 for CPT code 64486, 1.39 for CPT code 64487, 1.40 for CPT code 64488, and 1.75 for CPT code 64489.

We are also proposing the RUC recommended direct PE inputs for CPT codes 6XX08, 6XX09, 6XX10, 6XX12, 64487, 64488, and 64489. We disagree with one of the RUC recommended direct PE inputs for CPT codes 6XX07, 6XX11, and 64486. The RUC stated they believe that there is a rounding error in the CA019 clinical labor time, “Assist physician or other qualified healthcare professional—directly related to physician work time (67%)”, for these three codes. We disagree with the RUC that there are rounding errors in these codes and we are proposing to maintain the current 7 minutes of CA019 clinical labor time for CPT codes 6XX07, 6XX11, and 64486. We note that this matches the pattern of CA019 clinical labor time for the rest of the codes in the family, which remained the same or slightly decreased in each case. This refinement to the CA019 clinical labor time also means that we are proposing a decrease of 0.5 minutes to the equipment time for the stretcher (EF018) and 3-channel ECG (EQ011) which decreases from 25.5 to 25 minutes for these three codes. We are proposing all of the other RUC-recommended direct PE inputs for CPT codes 6XX07, 6XX11, and 64486 without refinement.

(12) Skin Adhesives (CPT Codes 64590 and 64595 and HCPCS Codes G0168, G0516, G0517, and G0518)

In April 2022, the RUC approved the use of SG007 ( adhesive, skin (Dermabond)) for CPT code 64590 ( insertion or replacement of peripheral, sacral, or gastric neurostimulator pulse generator or receiver, requiring pocket creation and connection between electrode array and pulse generator or receiver) and 64595 ( revision or removal of peripheral, sacral, or gastric neurostimulator pulse generator or receiver, with detachable connection to electrode array). In April 2023, the PE Subcommittee reviewed the following six codes on the Medicare Physician Fee Schedule 64590, 64595, G0168, G0516, G0517, G0518 that utilize Dermabond (supply code S6007) in order to identify justification for its use versus the generic version and present its findings to the RUC for approval. The RUC reviewed all six codes for PE only and did not submit work recommendations.

For CPT codes 64590 and 64595 and HCPCS code G0168 ( Wound closure utilizing tissue adhesive(s) only), the RUC recommends that CMS remove the supply input SG007 adhesive, skin (Dermabond) and add one unit of SH076 adhesive, cyanoacrylate (2ml uou). We are proposing the RUC-recommended direct PE inputs for CPT codes 64590 and 64595 and HCPCS code G0168. Similarly, for HCPCS codes G0516 ( Insertion of non-biodegradable drug delivery implants, 4 or more (services for subdermal rod implant), G0517 ( Removal of non-biodegradable drug delivery implants, 4 or more (services for subdermal implants), and G0518 ( Removal with reinsertion, non-biodegradable drug delivery implants, 4 or more (services for subdermal implants), the RUC recommends that CMS remove the supply input SG007 adhesive, skin (Dermabond) and add one unit of SH076 adhesive, cyanoacrylate (2ml uou). We are proposing the RUC-recommended direct PE inputs for HCPCS codes G0516-G0518.

(13) Iris Procedures (CPT Codes 66680, 66682, and 6X004)

In April 2023, the CPT Editorial Panel deleted three related Category III CPT codes, CPT code 0616T ( Insertion of iris prosthesis, including suture fixation and repair or removal of iris, when performed; without removal of crystalline lens or intraocular lens, without insertion of intraocular lens), CPT code 0617T ( with removal of crystalline lens and insertion of intraocular lens), and CPT code 0618T (with secondary intraocular lens placement or intraocular lens exchange). At the same time, CPT created a new Category I code 6X004 ( Implantation of iris prosthesis, including suture fixation and repair or removal of iris, when performed) which describes insertion of an artificial iris into an eye with a partial or complete iris defect due to a congenital defect or surgical or non-surgical trauma. The new Category I CPT code 6X004 replaced the three Category III codes to simplify reporting. Concurrent with these updates, the RUC surveyed the two other 90-day global iris repair codes, CPT code 66680 ( Repair of iris, ciliary body (as for iridodialysis)) and CPT code 66682 ( Suture of iris, ciliary body (separate procedure) with retrieval of suture through small incision (e.g., McCannel suture)).

We disagree with the RUC-recommended work RVU of 10.25 for CPT code 66680. We are proposing a work RVU of 7.97 for CPT code 66680 based on a crosswalk to CPT code 67904 ( Repair of blepharoptosis; (tarso) levator resection or advancement, external approach). When we reviewed CPT code 66680, we found that the RUC recommended work RVU does not maintain relativity with other 90-day global period codes with the same intraservice time of 45 minutes and similar total time around 182 minutes. The total time ratio between the current time of 159 minutes and the recommended time established by the RUC survey of 182 minutes equals 1.145 percent. This ratio, 1.145 percent, when applied to the current work RVU of 6.39 would suggest a work RVU of 7.31 which is far below the RUC's recommended work RVU of 10.25. Based on this total time ratio, we believe a more appropriate work valuation for CPT code 66680 is 7.97 based on a crosswalk to CPT code 67904.

We disagree with the RUC-recommended work RVU of 10.87 for CPT code 66682. We are proposing a work RVU of 8.74 based on the total time ratio between the current time of 169.5 minutes and the recommended time established by the RUC survey of 202 minutes. This ratio equals 1.192 percent, and 1.192 percent of the current work RVU of 7.33 suggests a work RVU of 8.74 for CPT code 66682. When we reviewed CPT code 66682, we found that the recommended work RVU was higher than nearly all of the other 90-day global codes with similar time values. The RUC's recommended work RVU does not maintain relativity with other 90-day global period codes with the same intraservice time value of 45 minutes and similar total time of 202. We found that work RVU crosswalks to CPT codes of similar intraservice and total time were too low, such as CPT code 45171 with a work RVU of 8.13. A more appropriate work RVU for CPT code 66682 is 8.74 based on the total time ratio.

The RUC recommended a work RVU of 12.80 for CPT 6X004, the RUC survey 25th percentile result, with an intraservice time of 60 minutes and a total time of 224 minutes. We disagree with the RUC-recommended work RVU of 12.80 for CPT code 6X004. Although we disagree with the RUC-recommended work RVU, we concur that the relative difference in work between CPT codes 66682 and 6X004 is equivalent to the recommended interval of 1.93 RVUs. Therefore, we are proposing a work RVU of 10.67 for CPT code 6X004, based on the recommended interval of 1.93 additional RVUs above our proposed work RVU of 8.74 for CPT code 66682. This proposed work RVU of 10.67 falls between the work RVU values of existing codes with similar intraservice and total time values. For example, CPT code 65850 (60 minutes of intraservice time and 233 minutes of total time) has a work RVU of 11.39 and CPT code 24164 with the same intraservice time and 228 minutes of total time has a work RVU of 10.00. We believe that the work valuation of these CPT codes, which bracket our proposed work RVU of 10.67, provide additional support for our proposed valuation.

We also disagree with the RUC's recommended work RVUs for the codes in this family because they suggest that there has been a tremendous increase in intensity as compared to how these services have historically been valued. CPT code 66680 is more than doubling in intensity at the RUC's recommended work RVU of 10.25, which we do not believe to be the case given that the code descriptor remains unchanged and the surveyed intraservice work time is unchanged at 45 minutes. This same pattern holds true for CPT code 66682, which would be increasing in intensity by more than 50% at the RUC's recommended work RVU of 10.87, and which similarly has no change in its code descriptor and a modest increase in its surveyed work time. We concur that the intensity of these services has likely gone up over time, which is why we are proposing modest intensity increases for both codes, however we continue to disagree that the very substantial intensity increases recommended by the RUC would be accurate for this code family. We believe that our proposed work RVUs are more in line with how these services have historically been valued and better maintain relativity with the rest of the fee schedule.

We are proposing the direct PE inputs as recommended by the RUC for all three codes in the family without refinement.

(14) Magnetic Resonance Examination Safety Procedures (CPT Codes 7XX00, 7XX01, 7XX02, 7XX03, 7XX04, and 7XX05)

In September 2023, the CPT Editorial Panel created a new code family to describe magnetic resonance (MR) examination safety procedures and capture the physician work involving patients with implanted medical devices that require access to MR diagnostic procedures: CPT code 7XX00 ( MR safety implant and/or foreign body assessment by trained clinical staff, including identification and verification of implant components from appropriate sources (e.g., surgical reports, imaging reports, medical device databases, device vendors, review of prior imaging), analyzing current MR conditional status of individual components and systems, and consulting published professional guidance with written report; initial 15 minutes), CPT code 7XX01 ( MR safety implant and/or foreign body assessment by trained clinical staff, including identification and verification of implant components from appropriate sources (e.g., surgical reports, imaging reports, medical device databases, device vendors, review of prior imaging), analyzing current MR conditional status of individual components and systems, and consulting published professional guidance with written report; each additional 30 minutes (List separately in addition to code for primary procedure)), CPT code 7XX02 ( MR safety determination by a physician or other qualified health care professional responsible for the safety of the MR procedure, including review of implant MR conditions for indicated MR exam, analysis of risk versus clinical benefit of performing MR exam, and determination of MR equipment, accessory equipment, and expertise required to perform examination with written report), CPT code 7XX03 ( MR safety medical physics examination customization, planning and performance monitoring by medical physicist or MR safety expert, with review and analysis by physician or qualified health care professional to prioritize and select views and imaging sequences, to tailor MR acquisition specific to restrictive requirements or artifacts associated with MR conditional implants or to mitigate risk of non-conditional implants or foreign bodies with written report), CPT code 7XX04 ( MR safety implant electronics preparation under supervision of physician or other qualified health care professional, including MR-specific programming of pulse generator and/or transmitter to verify device integrity, protection of device internal circuitry from MR electromagnetic fields, and protection of patient from risks of unintended stimulation or heating while in the MR room with written report), and CPT code 7XX05 ( MR safety implant positioning and/or immobilization under supervision of physician or qualified health care professional, including application of physical protections to secure implanted medical device from MR-induced translational or vibrational forces, magnetically induced functional changes, and/or prevention of radiofrequency burns from inadvertent tissue contact while in the MR room with written report). For CY 2025, new CPT codes 7XX00 and 7XX01 are PE only services that represent the preparatory research and review completed by clinical staff (that is, MRI technologist and/or a medical physicist) that will be utilized by the physician or qualified health professional for the other four services (CPT codes 7XX02, 7XX03, 7XX04, and 7XX05) in this code family.

We are proposing the RUC-recommended work RVU of 0.60 for CPT code 7XX02, the work RVU of 0.76 for CPT code 7XX03, the work RVU of 0.75 for CPT code 7XX04, and the work RVU of 0.60 for CPT code 7XX05.

We are proposing the following refinements to the direct PE inputs. For CPT codes 7XX00, 7XX01, 7XX02, 7XX04, and 7XX05, we are proposing to refine the clinical labor for the CA034 activity ( Document procedure (nonPACS) (e.g., mandated reporting, registry logs, EEG file, etc.)) performed by the MRI Technologist from 2 minutes to 1 minute. We note that the clinical labor for the CA032 activity ( Scan exam documents into PACS. Complete exam in RIS system to populate images into work queue.) included in the direct PE inputs for reference CPT code 70543 ( Magnetic resonance (e.g., proton) imaging, orbit, face, and/or neck; without contrast material(s), followed by contrast material(s) and further sequences) is a similar clinical labor activity and has 1 minute of time. We also note that the Medical Physicist has 1 minute of recommended clinical labor time for the CA034 activity for CPT code 7XX03. Therefore, we believe that the MRI Technologist should have the same time (1 minute) for the CA034 activity for the remaining codes in the family to maintain consistency across these services.

For CPT code 7XX01, we are proposing to refine the clinical labor for the CA021 activity ( Perform procedure/service—NOT directly related to physician work time) from 27 minutes to 14 minutes. We believe this clinical labor time should be double the 7 minutes assigned to the CA021 activity for CPT code 7XX00. The description for CPT code 7XX00 is for the “initial 15 minutes” and CPT code 7XX01 is for “each additional 30 minutes,” that is, double the time of CPT code 7XX00. We believe that the clinical labor associated with the CA021 activity should match this pattern in which CPT code 7XX01 contains double the time of CPT code 7XX00. This proposed refinement to the CA021 clinical labor also results in a proposed decrease to the equipment time for the Technologist PACS workstation (ED050) from 45 minutes to 32 minutes.

For CPT code 7XX03, the RUC recommended 13 minutes of equipment time for the Professional PACS Workstation (ED053) listed as a Facility PE input. We believe this was an unintended technical error and we are proposing to remove this time from the direct PE inputs for CPT code 7XX03.

For CPT codes 7XX04 and 7XX05, we proposing to refine the clinical labor time for the CA024 activity ( Clean room/equipment by clinical staff) from 2 minutes to 1 minute. According to the PE recommendations, only the new equipment code EQ412 ( Vitals monitoring system (MR Conditional)) is being cleaned and not the entire room. We believe that 1 minute of clinical labor time would be typical for cleaning the EQ412 equipment. Our proposed clinical labor refinement also results in a proposed decrease to the equipment time for EL008 ( room, MR) and EQ412 by 1 minute for these two codes.

For CPT code 7XX05, we are proposing to remove supply item SL082 ( impression material, dental putty (per bite block)). We believe this was an error since the PE recommendations did not list SL082 as one of the included supplies for CPT code 7XX05 and it does not appear as a supply input for any of the other codes in the family.

(15) Screening Virtual Colonoscopy (CPT Code 74263)

As discussed in section III.K. of this proposed rule, we are proposing to exercise our authority at section 1861(pp)(1)(D) of the Act to update and expand coverage for colorectal cancer screening and adding coverage for the computed tomography colonography procedure. Accordingly, we are assigning an active payment status for CPT code 74263 (Computed tomographic (ct) colonography, screening, including image postprocessing). We note that, as proposed above, the OPPS cap would apply to this code, and payment for the TC of this service would be capped at the OPPS payment rate.

(16) Ultrasound Elastography (CPT Codes 76981, 76982, and 76983)

This code family was flagged for re-review at the April 2023 RUC meeting by the new technology/new services screen. Due to increased utilization of CPT code 76981 ( Ultrasound, elastography; parenchyma (e.g., organ)), the entire code family was resurveyed for the September 2023 RUC meeting. We are proposing the RUC-recommended work RVUs of 0.59, 0.59, and 0.47 for CPT codes 76981, 76982 ( Ultrasound, elastography; first target lesion), and 76983 ( Ultrasound, elastography; each additional target lesion (List separately in addition to code for primary procedure)), respectively. We are proposing the RUC-recommended direct PE inputs for CPT codes 76981, 76982, and 76983 without refinement.

(17) CT Guidance Needle Placement (CPT Code 77012)

CPT code 77012 ( Computed tomography guidance for needle placement (e.g., biopsy, aspiration, injection, localization device), radiological supervision and interpretation) was reviewed at the September 2023 RUC meeting to account for deferred updates to the vignette to reflect the typical patient until updated utilization data was available to reflect coding changes that occurred in 2019. We are proposing the RUC-recommended work RVU of 1.50 for CPT code 77012.

We are proposing to refine the equipment time for the CT room (EL007) to maintain the current time of 9 minutes. CPT code 77012 is a radiological supervision and interpretation (RS&I) procedure and there has been a longstanding convention in the direct PE inputs, shared by 38 other codes, to assign an equipment time of 9 minutes for the equipment room in these procedures. We made the same refinement in the CY 2019 PFS final rule (83 FR 59553 through 59554) and continue to believe that it would not serve the interests of relativity to increase the equipment time for the CT room in CPT code 77012 without also addressing the equipment room time for the other radiological supervision and interpretation procedures. In response to the CY 2019 proposal, several commenters stated that they agreed with CMS that other RS&I codes use the 9 minutes for room time as a precedent, but that it is specific to angiographic rooms. We agreed with the commenters that at least some portion of the procedure is performed in the CT room, but we continue to believe that it would not serve the interests of relativity to increase the equipment time for the CT room in CPT code 77012 without also addressing the equipment room time for the other radiological supervision and interpretation procedures in a more comprehensive fashion. We also disagreed with the commenters that this policy is specific to angiography rooms, as CPT codes 75989 ( Radiological guidance (i.e., fluoroscopy, ultrasound, or computed tomography), for percutaneous drainage (e.g., abscess, specimen collection), with placement of catheter, radiological supervision and interpretation) and 77012 both employ CT rooms and currently utilize the standardized 9 minutes of equipment time, and CPT code 76080 ( Radiologic examination, abscess, fistula or sinus tract study, radiological supervision and interpretation) employs a radiographic-fluoroscopic room with the 9 minute standard equipment time. We continue to believe that 9 minutes for EL007 is appropriate for this RS&I code, therefore, we are proposing to maintain the current equipment room time of 9 minutes for EL007 until this group of procedures can be subject to a more comprehensive review. We are proposing all other RUC-recommended direct PE inputs for CPT code 77012.

(18) Telemedicine Evaluation and Management (E/M) Services (CPT Codes 9X075, 9X076, 9X077, 9X078, 9X079, 9X080, 9X081, 9X082, 9X083, 9X084, 9X085, 9X086, 9X087, 9X088, 9X089, 9X090, and 9X091)

In February 2023, the CPT Editorial Panel added a new Evaluation and Management (E/M) subsection to the draft CPT codebook for Telemedicine Services. The Panel added 17 codes for reporting telemedicine E/M services: CPT code 9X075 ( Synchronous audio-video visit for the evaluation and management of a new patient, which requires a medically appropriate history and/or examination and straightforward medical decision making. When using total time on the date of the encounter for code selection, 15 minutes must be met or exceeded.); CPT code 9X076 ( Synchronous audio-video visit for the evaluation and management of a new patient, which requires a medically appropriate history and/or examination and low medical decision making. When using total time on the date of the encounter for code selection, 30 minutes must be met or exceeded.); CPT code 9X077 ( Synchronous audio-video visit for the evaluation and management of a new patient, which requires a medically appropriate history and/or examination and moderate medical decision making. When using total time on the date of the encounter for code selection, 45 minutes must be met or exceeded.); CPT code 9X078 ( Synchronous audio-video visit for the evaluation and management of a new patient, which requires a medically appropriate history and/or examination and high medical decision making. When using total time on the date of the encounter for code selection, 60 minutes must be met or exceeded. (For services 75 minutes or longer, use prolonged services code 99417)); CPT code 9X079 ( Synchronous audio-video visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination and straightforward medical decision making. When using total time on the date of the encounter for code selection, 10 minutes must be met or exceeded.); CPT code 9X080 ( Synchronous audio-video visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination and low medical decision making. When using total time on the date of the encounter for code selection, 20 minutes must be met or exceeded.); CPT code 9X081 ( Synchronous audio-video visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination and moderate medical decision making. When using total time on the date of the encounter for code selection, 30 minutes must be met or exceeded.); CPT code 9X082 ( Synchronous audio-video visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination and high medical decision making. When using total time on the date of the encounter for code selection, 40 minutes must be met or exceeded.); CPT code 9X083 ( Synchronous audio-only visit for the evaluation and management of a new patient, which requires a medically appropriate history and/or examination, straightforward medical decision making, and more than 10 minutes of medical discussion. When using total time on the date of the encounter for code selection, 15 minutes must be met or exceeded. )); CPT code 9X084 ( Synchronous audio-only visit for the evaluation and management of a new patient, which requires a medically appropriate history and/or examination, low medical decision making, and more than 10 minutes of medical discussion. When using total time on the date of the encounter for code selection, 30 minutes must be met or exceeded.)); CPT code 9X085 ( Synchronous audio-only visit for the evaluation and management of a new patient, which requires a medically appropriate history and/or examination, moderate medical decision making, and more than 10 minutes of medical discussion. When using total time on the date of the encounter for code selection, 45 minutes must be met or exceeded.); CPT code 9X086 ( Synchronous audio-only visit for the evaluation and management of a new patient, which requires a medically appropriate history and/or examination, high medical decision making, and more than 10 minutes of medical discussion. When using total time on the date of the encounter for code selection, 60 minutes must be met or exceeded. (For services 75 minutes or longer, use prolonged services code 99417)); CPT code 9X087 ( Synchronous audio-only visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination, straightforward medical decision making, and more than 10 minutes of medical discussion. When using total time on the date of the encounter for code selection, 10 minutes must be exceeded.)); CPT code 9X088 ( Synchronous audio-only visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination, low medical decision making, and more than 10 minutes of medical discussion. When using total time on the date of the encounter for code selection, 20 minutes must be met or exceeded.)); CPT code 9X089 ( Synchronous audio-only visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination, moderate medical decision making, and more than 10 minutes of medical discussion. When using total time on the date of the encounter for code selection, 30 minutes must be met or exceeded.)) CPT code 9X090 ( Synchronous audio-only visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination, high medical decision making, and more than 10 minutes of medical discussion. When using total time on the date of the encounter for code selection, 40 minutes must be met or exceeded. (For services 55 minutes or longer, use prolonged services code 99417)); CPT code 9X091 ( Brief communication technology-based service (e.g., virtual check-in) by a physician or other qualified health care professional who can report evaluation and management services, provided to an established patient, not originating from a related evaluation and management service provided within the previous 7 days nor leading to an evaluation and management service or procedure within the next 24 hours or soonest available appointment, 5-10 minutes of medical discussion)).

In April 2023, the AMA-RUC noted that the survey instrument they used to develop valuation recommendations for the telemedicine E/M codes did not include the time (when time is used for code selection) in the new telemedicine E/M services descriptors, or the E/M services displayed on the reference service list. The AMA-RUC made interim valuation recommendations and conducted a new survey for September 2023, which included the minimum required times in the code descriptors, and those minimum times were the same as appear in existing O/O E/M services code descriptors (CPT codes 99202-99205, 99212-99215); the new survey in September 2023 included code descriptors and times approved by the CPT Editorial Panel in May 2023. Also, additional specialties who perform E/M services participated in the second round of this survey. For CY 2025, the RUC recommended the following work RVUs: a work RVU of 0.93 for CPT code 9X075, a work RVU of 1.6 for CPT code 9X076, a work RVU of 2.6 for CPT code 9X077, a work RVU of 3.50 for CPT code 9X078, a work RVU of 0.70 for CPT code 9X079, a work RVU of 1.30 for CPT code 9X080, a work RVU of 1.92 for CPT code 9X081, a work RVU of 2.60 for CPT code 9X082, a work RVU of 0.90 for CPT code 9X083, a work RVU of 1.60 for CPT code 9X084, a work RVU of 2.42 for CPT code 9X085, a work RVU of 3.20 for CPT code 9X086, a work RVU of 0.65. for CPT code 9X087, a work RVU of 1.20 for CPT code 9X088.

In April 2023, the AMA-RUC Practice Expense Subcommittee approved the direct practice expense inputs as recommended by the specialty societies without modification, and CMS received these inputs as recommendations from the RUC. The specialty societies detailed their methodology for making some changes to specific clinical activity codes to adapt those clinical activity codes for telemedicine. The AMA edited both CA009 and CA013. The AMA revision to CA009 deletes, “ greet patient, provide gowning ”; the AMA revision to CA013 deletes, “Prepare room, equipment and supplies”. CA009 now reads, “ Ensure appropriate medical records are available ” and CA013 now reads, “ Prepare patient for the visit (i.e., check audio and/or visual ”. The RUC, using the Practice Expense subcommittee recommendations, also recommended to CMS that a camera and microphone “should be considered typical in the computer contained in the indirect overhead expense.” This determination is consistent with CMS' longstanding position that items that are not specifically attributable to the individual services should not be included for valuation of specific codes.

The AMA-RUC recommended the direct practice expense inputs as submitted by the AMA-member specialty societies, and as affirmed by the AMA-RUC Practice Expense Subcommittee. All supply and equipment costs were zeroed out from the reference services, and as a result, the new telemedicine E/M codes did not include any supply or equipment costs in the recommended direct practice expense inputs that the AMA submitted to CMS. The direct PE inputs removed from the reference services to create the new telemedicine E/M codes are: CA010 (obtain vital signs), CA024 (clean room/equipment by clinical staff), SA047 (pack, EM visit), SM022 sanitizing cloth-wipe (surface, instruments, equipment), EQ189 (otoscope-ophthalmoscope [wall unit]), EF048 (Portable stand-on scale), and EF023 (table, exam).

Sixteen of the telemedicine E/M codes describe use of either audio-video or audio-only telecommunications technology to furnish the individual service. The CPT Editorial Panel finalized eight codes for synchronous audio-video services (CPT codes 9X075 to 9X082), and eight codes for synchronous audio-only services (CPT codes 9X083 to 9X0890), and one code for an asynchronous service (CPT code 9X091). The audio-video and audio-only code family subsets have parallel codes for new patients and established patients. Like other E/M codes, these codes may be reported based on the level of medical decision making (MDM) or total time on the date of the encounter. For each set of four codes, there is a code that may be reported for a straightforward, low, moderate and high level of MDM.

The CPT Editorial Panel also established new CPT code 9X091 describing a brief virtual check-in encounter that is intended to evaluate the need for a more extensive visit (that is, a visit described by one of the office/outpatient E/M codes). The code descriptor for CPT code 9X091 mirrors existing HCPCS code G2012 ( Brief communication technology-based service, e.g., virtual check-in, by a physician or other qualified health care professional who can report evaluation and management services, provided to an established patient, not originating from a related e/m service provided within the previous 7 days nor leading to an e/m service or procedure within the next 24 hours or soonest available appointment; 5-10 minutes of medical discussion) and, per the CPT Editorial Panel materials, is intended to replace that code. As described in CPT Editorial Panel final edits, CPT code 9X091 does not require the use of audio or video technology and is expected to be patient-initiated. Furnishing the complete service described by CPT code 9X091 must involve 5-10 minutes of medical discussion (and the code descriptor does not include MDM as means of code selection). CPT code 9X091 should not be reported if it originates from a related E/M service furnished within the previous 7 days, or, if the clinical interaction leads to another E/M or procedure within the next 24 hours or the soonest available appointment. The final CPT Editorial Panel draft language explains that if the virtual check-in described by CPT 9X091 leads to an E/M visit in the next 24 hours, and if that E/M is reported based on time, then the time from the virtual check-in may be added to the time of the resulting E/M visit to determine the total time on the date of encounter for the resulting E/M. The RUC recommended a work RVU of 0.30 for 9X091.

The CPT Editorial Panel also deleted three codes (99441-99443) for reporting telephone E/M services. We note that CPT codes 99441, 99442, and 99443, each are assigned provisional status on the Medicare telehealth services list, and would return to bundled status when the telehealth flexibilities expire on December 31, 2024. For further background, we refer readers to our discussions in previous rulemaking, where CMS explains the rationale for this policy (88 FR 78871-78878).

CMS has a long-standing interpretation of section 1834(m) of the Act as specifying the circumstances under which Medicare makes payment for services that would otherwise be furnished in person but are instead furnished via telecommunications technology. Specifically, section 1834(m)(2)(A) of the Act expressly requires payment to the distant site physician or practitioner of an amount equal to the amount that such physician or practitioner would have been paid had such service been furnished without the use of a telecommunications system. This means that we must pay an equal amount for a service furnished using a “telecommunications system” as for a service furnished in person (without the use of a telecommunications system). In the CY 2019 PFS final rule, we stated that “[w]e have come to believe that section 1834(m) of the Act does not apply to all kinds of physicians' services whereby a medical professional interacts with a patient via remote communication technology. Instead, we believe that section 1834(m) of the Act applies to a discrete set of physicians' services that ordinarily involve, and are defined, coded, and paid for as if they were furnished during an in-person encounter between a patient and a health care professional” (83 FR 59483). Under this interpretation, services that are coded and valued based on the understanding that they are not ordinarily furnished in person, such as remote monitoring services and communication technology-based services, are not considered Medicare telehealth services under section 1834(m) of the Act and thus not subject to the geographic, site of service, and practitioner restrictions included therein.

Information provided to CMS from the RUC indicates that CPT codes 9X075-9X090 describe services that would otherwise be furnished in person, and as such the services described by these codes are subject to section 1834(m) of the Act. In the summary of the coding changes, the AMA states that these services are “patterned after the in-person office visit codes.” The draft CPT prefatory language states that “[t]elemedicine services are used in lieu of an in-person service when medically appropriate to address the care of the patient and when the patient and/or family/caregiver agree to this format of care.” The draft CPT prefatory language likewise states that when a telemedicine E/M is billed on the same day as another E/M service “the elements and time of these services are summed and reported in aggregate, ensuring that any overlapping time is only counted once,” which indicates that the work of the telemedicine E/M service is identical to the work associated with an in-person, non-telehealth E/M. The code descriptors and requirements for billing the codes generally mirror the existing office/outpatient E/M codes with the exception of the technological modality used to furnish the service. The audio-video telemedicine E/M codes have nearly identical recommended work RVUs to parallel office/outpatient E/M codes. In general, the audio-only telemedicine E/M codes have lower recommended work RVUs than parallel office/outpatient E/M codes. The RUC stated that this is because, when surveyed, specialty societies indicated that “the audio-video and in-person office visits require more physician work than the audio-only office visits.”

Table 10 describes the similarities between 16 of 17 telemedicine E/M codes and the parallel office/outpatient E/M codes. The table shows that except for the element of “modality” (that is, audio-video or audio-only), the service elements of the new telemedicine E/M code family are no different than the O/O E/M codes (for each enumerated row 1 through 16 the columns display the analogous elements). When comparing code descriptors, as described at the start of this section, the only difference (as represented in Table 10 when comparing the elements of E/M services represented by columns C, D, E, and F) is that these new telemedicine E/M code descriptors lead with the phrase “synchronous audio-video” or “synchronous audio only” before describing the visit in full exactly as the existing office/outpatient E/M visit codes describe a visit in the long descriptor of the analogous service.

There are services already describing audio-video and audio-only telemedicine E/M codes on the Medicare telehealth services list—the office/outpatient E/M code set—that can be furnished via synchronous two-way, audio/video communication technology generally and via audio-only communication technology under certain circumstances to furnish Medicare telehealth services in the patient's home for the purpose of diagnosis and treatment of a mental health disorder or SUD. Additionally, as stated above, section 1834(m)(2)(A) of the Act requires us to pay an equal amount for a service furnished using a “telecommunications system” as for a service furnished in person (without the use of a telecommunications system). Were we to accept the AMA's recommendations and add the telemedicine E/M codes to the Medicare telehealth services list, we would need to establish RVUs for the telemedicine E/M codes to equal the corresponding non-telehealth services to satisfy the requirements for payment under section 1834(m)(2)(A) of the Act.

We do not believe that there is a programmatic need to recognize the audio/video and audio-only telemedicine E/M codes for payment under Medicare. We are proposing to assign CPT codes 9X075-9X090 a Procedure Status indicator of “I”, meaning that there is a more specific code that should be used for purposes of Medicare, which in this case would be the existing office/outpatient E/M codes currently on the Medicare telehealth services list when billed with the appropriate POS code to identify the location of the beneficiary and, when applicable, the appropriate modifier to identify the service as being furnished via audio-only communication technology.

Section 4113 of the Consolidated Appropriations Act (CAA), 2023 extended the availability of Medicare telehealth services to beneficiaries regardless of geographic location or site of service by temporarily removing such statutory restrictions under section 1834(m) of the Act until the end of 2024. Under the current statute, the geographic location and site of service restrictions on Medicare telehealth services will once again take effect for services furnished beginning January 1, 2025. Although there are some important exceptions, including for behavioral health services and ESRD-related clinical assessments, most Medicare telehealth services will once again, in general, be available only to beneficiaries in rural areas and only when the patient is located in certain types of medical settings. As previously discussed, the introduction of new CPT coding to describe telemedicine E/M services does not change our authority to pay for visits furnished through interactive communications technology in accordance with section 1834(m) of the Act. We recognize that there are significant concerns about maintaining access to care through the use of Medicare telehealth services with the expiration of the statutory flexibilities that were successively extended by legislation following the PHE for COVID-19. We understand that millions of Medicare beneficiaries have utilized interactive communications technology for visits with practitioners for a broad range of health care needs for almost 5 years. We are seeking comment from interested parties on our understanding of the applicability of section 1834(m) of the Act to the new telemedicine E/M codes, and how we might potentially mitigate negative impact from the expiring telehealth flexibilities, preserve some access, and assess the magnitude of potential reductions in access and utilization. On the latter point, we note that we have developed proposed PFS payment rates for CY 2025, including the statutory budget neutrality adjustment, based on the presumption that changes in telehealth utilization will not affect overall service utilization. We also note that historically we have not considered changes in the Medicare telehealth policies to result in significant impact on utilization such that a budget neutrality adjustment would be warranted. However, we are unsure of the continuing validity of that premise under the current circumstances where patients have grown accustomed over several years to broad access to services via telehealth. We are seeking comment on what impact, if any, the expiration of the current flexibilities would be expected to have on overall service utilization for CY 2025. We refer readers to section IV.B. of this proposed rule for our discussion of budget neutrality adjustments.

Given the similarity between CPT code 9X091 and HCPCS code G2012, we are proposing to accept the RUC-recommended values for CPT code 9X091, and we are proposing to delete HCPCS code G2012. For CPT code 9X091, we propose to accept the RUC- recommended work RVU of 0.30, and are proposing the RUC-recommended direct PE inputs. We note that our proposal does maintain the same direct PE inputs, which the RUC recommendations leave unchanged from the current G2012 in total amount, and allocate the same 3 minutes of time to the same level of staff (Clinical Staff code L037D, RN/LPN/MTA). We believe that the coding and payment recommendations for CPT code 9X091, submitted to CMS by the AMA RUC, accurately reflect the resources associated with this service and believe that maintaining separate coding for purposes of Medicare payment could create confusion. We note that, similar to our current policy for payment of HCPCS code G2012, CPT code 9X091 would be considered a communication technology-based service that is not subject to the requirements in section 1834(m) of the Act applicable to Medicare telehealth services.

(19) Genetic Counseling Services (CPT Code 9X100)

In September 2023, the CPT Editorial Panel deleted CPT code 96040 ( Medical genetics and genetic counseling services, each 30 minutes face-to-face with patient/family) and created CPT code 9X100 ( Medical genetics and genetic counseling services, each 30 minutes of total time provided by the genetic counselor on the date of the encounter) for medical genetics and genetic counseling services to be provided by the genetic counselor. Prior to its deletion, CPT code 96040 would only be reported by genetic counselors for genetic counseling services, though genetic counselors are not among the practitioners who can bill Medicare directly for their professional services. As we stated in the CY 2012 PFS final rule (76 FR 73096 through 73097), physicians and NPPs who may independently bill Medicare for their services and who are counseling individuals would generally report office or other outpatient E/M CPT codes for office visits that involve significant counseling, including genetic counseling; therefore CPT code 96040 was considered bundled into O/O E/M visits.

For CPT code 9X100, we are proposing the RUC-recommended direct PE inputs. We note that the code descriptor now specifies that the service is provided by a genetic counselor, therefore we considered assigning Procedure Status “X” to CPT code 9X100. Because the PE RVUs would not display for the code with that assignment and that may impact access to the service with other payors, we are instead proposing bundled status (Procedure Status “B”) for CPT code 9X100 to maintain the status of predecessor CPT code 96040, and we are seeking feedback from interested parties regarding the appropriate procedure status for this code. CPT guidelines for CPT code 9X100 state that a physician or other qualified healthcare professional (QHP) who may report evaluation and management services would not be able to report CPT code 9X100. Instead, these physicians and QHPs would use the appropriate evaluation and management code.

(20) COVID Immunization Administration (CPT Code 90480)

On August 14, 2023, new CPT codes were created to consolidate over 50 previously implemented codes and streamline the reporting of immunizations for the novel coronavirus (SARS-CoV-2, also known as COVID-19). The CPT Editorial Panel approved the addition of a single administration code (CPT code 90480) for administration of new and existing COVID-19 vaccine products. The RUC reviewed the specialty societies' recommendations for this code at the September 2023 RUC meeting.

We are proposing the RUC-recommended work RVU of 0.25 for CPT code 90480 ( Immunization administration by intramuscular injection of severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) (coronavirus disease [COVID-19]) vaccine, single dose). We are also proposing the RUC-recommended direct PE inputs for CPT code 90480 without refinement.

(21) Optical Coherence Tomography (CPT Codes 92132, 92133, 92134, and 9X059)

At the February 2023 CPT Editorial Panel meeting, CPT code 9X059 ( Computerized ophthalmic diagnostic imaging (eg, optical coherence tomography [OCT]), posterior segment, with interpretation and report, unilateral or bilateral; retina including OCT angiography) was created in response to new technology that allows imaging of the retina using optical coherence tomography (OCT) with and without non-dye OCT angiography (OCT-A). This code family also includes CPT code 92132 ( Computerized ophthalmic diagnostic imaging (eg, optical coherence tomography [OCT]), anterior segment, with interpretation and report, unilateral or bilateral), CPT code 92133 ( Computerized ophthalmic diagnostic imaging (eg, optical coherence tomography [OCT]), posterior segment, with interpretation and report, unilateral or bilateral; optic nerve), and CPT code 92134 ( Computerized ophthalmic diagnostic imaging (eg, optical coherence tomography [OCT]), posterior segment, with interpretation and report, unilateral or bilateral; retina ). These codes were reviewed at the April 2023 RUC meeting. The RUC determined the survey results were inaccurate due to underestimation of time, so the entire code family was re-surveyed and reviewed at the September 2023 RUC meeting.

We are proposing the RUC-recommended work RVUs for all codes within the Optical Coherence Tomography code family. We are proposing a work RVU of 0.29 for CPT code 92132, a work RVU of 0.31 for CPT code 92133, a work RVU of 0.32 for CPT code 92134, and a work RVU of 0.64 for CPT code 9X059. We are also proposing the RUC-recommended direct PE inputs for all four codes in the family.

(22) Transcranial Doppler Studies (CPT Codes 93886, 93888, 93892, 93893, 93X94, 93X95, 93X96, and 93890)

The RUC's Relativity Assessment Workgroup (RAW) requested action plans in September 2022 to determine if specific code bundling solutions should occur for CPT codes 93890/93886, 93890/93892, 93892/93886, and 93892/93890. The RAW referred this issue to the CPT Editorial Panel which created three new add-on codes to report when additional studies are performed on the same date of services as a complete transcranial Doppler study. The RUC reviewed these three new add-on codes, as well as CPT codes 93886, 93888, 93892 and 93893 for the September 2023 RUC meeting.

We are proposing the RUC-recommended work RVU for all seven codes in the Transcranial Doppler Studies code family. We are proposing a work RVU of 0.90 for CPT code 93886 ( Transcranial Doppler study of the intracranial arteries; complete study), a work RVU of 0.73 for CPT code 93888 ( Transcranial Doppler study of the intracranial arteries; limited study), a work RVU of 1.15 for CPT code 93892 ( Transcranial Doppler study of the intracranial arteries; emboli detection without intravenous microbubble injection), a work RVU of 1.15 for CPT code 93893 ( Transcranial Doppler study of the intracranial arteries; venous-arterial shunt detection with intravenous microbubble injection), a work RVU of 0.81 for CPT code 93X94 ( Vasoreactivity study performed with transcranial Doppler study of intracranial arteries, complete), a work RVU of 0.73 for CPT code 93X95 ( Emboli detection without intravenous microbubble injection performed with transcranial Doppler study of intracranial arteries, complete), and a work RVU of 0.85 for CPT code 93X96 ( Venous-arterial shunt detection with intravenous microbubble injection performed with transcranial Doppler study of intracranial arteries, complete). We are also proposing the direct PE inputs as recommended by the RUC for all seven codes in this family.

We note that the billing instructions for this code family specify that the three new add-on codes should be used in conjunction with CPT code 93886, and that CPT code 93888 should not be used in conjunction with CPT codes 93886, 93892, 93893, 93X94, 93X95, and 93X96. However, we believe that it would be beneficial for the CPT Editorial Panel to state more explicitly that CPT code 93X95 should not be used in conjunction with CPT code 93892 and that CPT code 93X96 should not be used in conjunction with CPT code 93893. The work performed in the add-on codes would be duplicative of the base codes in these situations and result in unnecessary overbilling of services.

(23) RSV Monoclonal Antibody Administration (CPT Codes 96380 and 96381)

At the September 2023 CPT meeting, the CPT Editorial Panel created two codes to report passive administration of respiratory syncytial virus, monoclonal antibody, seasonal dose, with and without counseling. CPT codes 96380 and 96381 were reviewed the following week at the September 2023 RUC meeting and the RUC submitted recommendations to CMS.

We are proposing the RUC-recommended work RVU of 0.24 for CPT code 96380 ( Administration of respiratory syncytial virus, monoclonal antibody, seasonal dose by intramuscular injection, with counseling by physician or other qualified health care professional) and the RUC-recommended work RVU of 0.17 for CPT code 96381 ( Administration of respiratory syncytial virus, monoclonal antibody, seasonal dose by intramuscular injection). We understand that these are interim work recommendations from the RUC, and that the RUC intends to conduct a more complete review at a future RUC meeting which we would then consider in future rulemaking. We are also proposing the direct PE inputs as recommended by the RUC for both codes.

(24) Hyperthermic Intraperitoneal Chemotherapy (CPT Codes 96547 and 96548)

In September 2022, the CPT Editorial Panel created two time-based add-on Category I codes, CPT code 96547 ( Intraoperative hyperthermic intraperitoneal chemotherapy (HIPEC) procedure, including separate incision(s) and closure, when performed; first 60 minutes (List separately in addition to code for primary procedure)) and CPT code 96548 ( Intraoperative hyperthermic intraperitoneal chemotherapy (HIPEC) procedure, including separate incision(s) and closure, when performed; each additional 30 minutes (List separately in addition to code for primary procedure)), to report HIPEC procedures for 2024. At the January 2023 RUC meeting, the RUC reached the conclusion that the survey data was flawed due to a lack of work definition and guidelines, and the RUC recommended contractor pricing for CPT codes 96547 and 96548 for CY 2024 with further clarification from the CPT editorial panel. CMS proposed and finalized contractor pricing for CPT codes 96547 and 96548 for 2024. At the May 2023 CPT Editorial Panel meeting, new guidelines and descriptions of work activities were approved and the codes were resurveyed for the September 2023 RUC meeting with recommendations for national pricing.

We are proposing the RUC-recommended work RVU of 6.53 for CPT code 96547 and the RUC-recommended work RVU of 3.00 for CPT code 96548. The RUC did not recommend, and we are not proposing, any direct PE inputs for the Hyperthermic Intraperitoneal Chemotherapy codes (CPT codes 96547 and 96548).

(25) Laser Treatment—Skin (CPT Codes 96920, 96921, and 96922)

In April 2022, the RUC referred CPT codes 96920 ( Excimer laser treatment for psoriasis; total area less than 250 sq cm), 96921 ( Excimer laser treatment for psoriasis; 250 sq cm to 500 sq cm), and 96922 ( Excimer laser treatment for psoriasis; over 500 sq cm) to the CPT Editorial Panel to capture expanded indications beyond what was currently noted in the codes' descriptions to include laser treatment for other inflammatory skin disorders such as vitiligo, atopic dermatitis, and alopecia areata, which could result in changed physician work based on the expanded indications. The coding change application was subsequently withdrawn from the September 2023 CPT Editorial meeting when it was determined that existing literature was insufficient and did not support expanded indications at that time. Therefore, these CPT codes were re-surveyed and reviewed at the April 2023 RUC meeting without any revisions to their code descriptors.

We disagree with the RUC-recommended work RVUs for CPT codes 96920, 96921, and 96922 of 1.00, 1.07, and 1.32, respectively. The RUC noted that there have been multiple reviews of these CPT codes, and the valuation of the codes is currently based on the original valuation over two decades ago in 2002 where the physician time values were lower than the current times. A subsequent review in 2012 adopted new survey times while maintaining the work RVUs from 2002 for CPT codes 96920 and 96922. The RUC noted that, for both CPT code 96920 and 96922 with the largest treatment area, the total times have not changed since first implemented more than 20 years ago. While we understand that the physician times have fluctuated over the course of several years and several reviews, yet the work RVUs have remained mostly constant as shown in Table 11, this was not addressed in the 2012 recommendations, and we believe that our operating assumption regarding the validity of the existing values as a point of comparison is critical to the integrity of the relative value system as currently constructed. The work times currently associated with codes play a very important role in PFS ratesetting, both as points of comparison in establishing work RVUs and in the allocation of indirect PE RVUs by specialty. If we were to operate under the assumption that previously recommended work times had been routinely over or underestimated, this would undermine the relativity of the work RVUs on the PFS in general, in light of the fact that codes are often valued based on comparisons to other codes with similar work times. We also believe that, since the two components of work are time and intensity, absent an obvious or explicitly stated rationale for why the relative intensity of a given procedure has increased, significant decreases in time should be reflected in decreases to work RVUs.

For CPT code 96920, we are proposing a work RVU of 0.83 based on a crosswalk to CPT code 11104 ( Punch biopsy of skin (including simple closure, when performed); single lesion), which has the same 10 minutes of intraservice time and 23 minutes of total time as CPT code 96920. We note that of the 15 other 000-day global codes with a total time of 20 to 25 minutes, only four codes fall above the RUC-recommended work RVU of 1.00. While we understand that commenters will dispute the validity of the current time values, we note that the 2002 intraservice time was 17 minutes, which yields an intraservice time ratio between the 2002 intraservice time and the recommended intraservice time of 10 minutes of 0.68 work RVUs ((10 minutes/17 minutes) * 1.15). We note our proposed work RVU of 0.83 maintains the intensity associated with the 2002 review of CPT code 96920, which we believe to be more appropriate than the significant increase in intensity that results from the RUC-recommended work RVU of 1.00 which nearly doubles the current intensity of the code. We have no evidence to indicate that the intensity of CPT code 96920 is increasing to this degree given how the surveyed work time is substantially decreasing.

For CPT code 96921, we are proposing a work RVU of 0.90 based on a total time ratio to CPT code 96920 ((25/23) * 0.83) and a crosswalk to CPT code 11301 ( Shaving of epidermal or dermal lesion, single lesion, trunk, arms or legs; lesion diameter 0.6 to 1.0 cm), which has 3 additional minutes of intraservice time and 1 additional minute of total time compared to CPT code 96921. We also note that our proposed work RVU of 0.90 for CPT code 96921 maintains the RUC-recommended incremental difference between CPT codes 96920 and 96921 of 0.07 work RVUs. Like CPT code 96920, we understand that commenters will dispute the validity of the current time values, but we note that the 2002 intraservice time was 20 minutes, which yields an intraservice time ratio between the 2002 intraservice time and the recommended intraservice time of 12 minutes of 0.70 work RVUs ((12 minutes/20 minutes) * 1.17). Like CPT code 96920, we note that proposed work RVU of 0.90 for CPT code 96921 maintains the intensity associated with the 2002 review of CPT code 96921, which we believe is more appropriate than the intensity increase that results from the RUC-recommended work RVU of 1.07 which again nearly doubles the current intensity of the code.

For CPT code 96922, we are proposing a work RVU of 1.15 based on the RUC-recommended incremental difference between CPT codes 96921 and 96922 of 0.25 work RVUs. Like CPT code 96920 and 96921, we understand that commenters will dispute the validity of the current time values, but we note that the 2002 intraservice time was 30 minutes, which yields an intraservice time ratio between the 2002 intraservice time and the recommended intraservice time of 18 minutes of 1.26 work RVUs ((18 minutes/30 minutes) * 2.10). We note that the RUC recommended CPT code 96922 as having the lowest intensity of the three codes in this family and that our proposed work RVU of 1.15 maintains in relationship to the other codes.

For the direct PE inputs, we are proposing to refine the clinical staff time for the CA024 activity “Clean room/equipment by clinical staff” to the standard of 3 minutes for CPT codes 96920, 96921, and 96922. We note that 3 minutes is the current CA024 time for these three CPT codes. A rationale for extending clinical staff beyond the standard 3 minutes for the CA024 activity was absent from the PE Summary of Recommendations, therefore we believe the current and standard 3 minutes is more appropriate than the RUC-recommended 5 minutes. We are also proposing equipment times of 36, 38, and 44 minutes for the power table (EF031) and exam light (EQ168) equipment for CPT codes 96920, 96921, and 96922, respectively, to account for the proposed refinement for CA024 to the standard 3 minutes.

We also disagree with the RUC-recommended creation of new supply items for the excimer laser and are proposing to re-include the equipment time for the excimer laser (EQ161) using the current methodology where its cost is accounted for in the equipment of these CPT codes' direct PE. The RUC submitted recommendations to change this equipment item to new supply items to account for the per-use cost to rent the equipment, stating that the business model has changed from the standard equipment ownership that CMS recognizes using standardized equipment formulas to a per-use rental or subscription model. While we understand that there may have been a change in business model, we do not believe a rental, subscription, or per-use fee of an equipment item that is still available to be purchased and is already accounted for with our equipment methodology is appropriate, especially given its implications for direct PE costs for these CPT codes. Therefore, we are proposing reincorporating equipment times of 36, 38, and 44 minutes for the EQ161 equipment for CPT codes 96920, 96921, and 96922, respectively, based on the refined service period clinical labor times. We are proposing to remove the three pay-per-use excimer lasers listed as supplies and recommended by the RUC for these three codes.

We have repeatedly stated in past rulemaking that rental and licensing fees are typically considered forms of indirect PE under our methodology. In the CY 2020 PFS final rule, we omitted the inclusion of several invoices for the monthly rental price of a PET infusion cart (ER109), and only accounted for the four purchase invoices for the equipment. We noted as well for future reference that although we appreciated the submission of the rental invoices, we were unable to use invoices for a monthly rental fee to determine the typical purchase price for equipment. We believe that invoices for a monthly rental fee would not be representative of the purchase price for equipment, in the same fashion that the rental fee for a car differs from its purchase price (84 FR 62771). Similarly, while we appreciate the submission of per-use, rental, and partnership invoices for the excimer laser, we believe that the excimer laser is appropriately and adequately accounted for in the equipment formula, and note that EQ161 has a very high cost per minute of $0.5895/minute. Compared to the nearly 700 other equipment items in our database, only 55 equipment items have higher costs per minute (based on our standardized formula which accounts for years of useful life, utilization rate, purchase price, and minutes per year of use, discussed in detail in section II.B. of this proposed rule, Determination of PE RVUs) and only 53 equipment items have higher purchase prices than the excimer laser at $151,200. We do not believe that CPT codes 96920 through 96922 should be valued based on a significantly more expensive pay-per-use rental version of the excimer laser when the same treatment is cheaper and available as a purchasable form of equipment.

Therefore, we are seeking comment on the difference in direct PE costs between the purchase and per-use rental of the laser. We note that using the equipment cost per minute formula, discussed in detail of section II.B. of this proposed rule, Determination of PE RVUs, yields direct PE costs of about $21.22, $22.40, and $25.94 for CPT codes 96920, 96921, 96922, respectively. Alternatively, the new supply items for the per-use fee of the laser yielded direct PE costs of $80, $83, and $100 for CPT codes 96920, 96921, 96922, respectively. These direct PE disparities represent a 277 percent, 270.5 percent, and 285.5 percent increase for CPT codes 96920, 96921, 96922, respectively. Given this, we are interested in feedback from interested parties on the payment disparity between this equipment as a per-use or rental versus how we currently account for the purchase of equipment using the standard equipment formula, as we understand that both manufacturers and physicians may be inclined to shift to a per-use or rental business models to limit overhead for purchase and maintenance of expensive equipment.

(26) Physical Medicine and Rehabilitation (CPT Codes 97012, 97014, 97016, 97018, 97022, 97032, 97033, 97034, 97035, 97110, 97112, 97113, 97116, 97140, 97530, 97533, 97535, 97537, and 97542 and HCPCS Code G0283)

The RUC's Health Care Professionals Advisory Committee (HCPAC) previously reviewed 19 physical medicine and rehabilitation codes in February 2017. In the CY 2024 PFS proposed rule, CMS received public nominations on these same 19 therapy codes as potentially misvalued (88 FR 78851-78852). An interested party asserted that the direct PE clinical labor minutes reflected inappropriate multiple procedure payment reductions (MPPR), which were duplicative of the CMS MPPR policy implemented in CMS' claims processing systems. CMS reviewed the clinical labor time entries for these 19 therapy codes and concluded that a payment reduction should not have been applied in some instances to the 19 nominated therapy codes' clinical labor time entries since the payment valuation reduction would be duplicative of the MPPR applied during claims processing. CMS indicated that the valuation of these services would benefit from additional review through the RUC's HCPAC valuation process; they were therefore reviewed by the HCPAC for PE only, with no work review, at the January 2024 RUC meeting for inclusion in the CY 2025 PFS proposed rule.

The HCPAC's direct PE recommendations were based on the typical number of services reported per session, which was 3.5 units according to CMS data, to ensure that there was no duplication in the standard inputs for preservice and postservice time. To account for the MPPR, the HCPAC determined that 3.5 codes are billed per session, with the first paid at 100% and the second and subsequent units paid at half and so forth for PE (for example, 1.00 + 0.5 + 0.5 + 0.25 = 2.25). This resulted in the HCPAC recommending that many of the standard clinical labor times be divided by 2.25 to account for the MPPR, such as taking the standard 3 minutes for greeting and gowning the patient and dividing it by 2.25 to arrive at the recommended time of 1.33 minutes (1.33 + 0.67 + 0.67 + 0.34 = 3 minutes). In most cases, the HCPAC recommended using the standard equipment time formula aside from a few exceptions such as the use of the whirlpool in CPT code 97022 which would require additional time for the cleaning of the equipment.

Following the January 2024 RUC meeting, representatives from the American Physical Therapy Association (APTA) and the American Occupational Therapy Association (AOTA) met with CMS to express concern with the HCPAC's recommended direct PE inputs for this family of codes. Representatives from these trade associations stated that the HCPAC had inappropriately recommended too few equipment minutes for these procedures. These interested parties requested utilizing an alternate equipment time formula for the 19 reviewed therapy codes based on adding together the intraservice work time together with the clinical labor for the preservice and postservice portion of the service period. For 17 of the 19 reviewed therapy codes, this alternate equipment time formula would result in an increase over the HCPAC's equipment time recommendations. Table 12 lists the direct PE costs of each HCPCS code under their current pricing, under the HCPAC recommendations, and the alternate APTA and AOTA recommendations:

After consideration of these recommendations, we are proposing the direct PE inputs as recommended by the HCPAC for all 19 codes in the Physical Medicine and Rehabilitation code family. We believe that the HCPAC's equipment time recommendations better maintain relativity with the rest of the fee schedule through primarily using standard equipment time formulas, along with limited exceptions for additional equipment time in cases where more time for equipment cleaning or patient positioning would be typical. We also believe that the alternate equipment time formula recommended by APTA and AOTA leads to inconsistent equipment times for many of these procedures, such as recommending 23.98 equipment minutes for CPT code 97110 which is a timed code billed in 15-minute increments. Although we agree that some additional equipment time beyond the timed 15 minutes would be typical for setup and cleaning, 9 additional minutes for each billing of CPT code 97110 would not appear to reflect typical equipment usage.

Given the complexity of determining appropriate direct PE inputs across multiple billings of these therapy codes, and the need to factor in the MPPR, we believe that this code family may benefit from additional review, specifically review focused on the subject of appropriate equipment minutes. The HCPAC review of these codes was primarily focused on the clinical labor portion of the PE inputs and the equipment times did not receive the same degree of scrutiny as the clinical labor. We believe that the HCPAC's recommended direct PE inputs are the most accurate values based on the current information that we have available, however this is a topic that may warrant additional review to ensure that this family of codes is properly valued.

(27) Acupuncture—Electroacupuncture (CPT Codes 97810, 97811, 97813, and 97814)

In September 2022, the RUC's Relativity Assessment Workgroup identified the acupuncture codes with 2020 Medicare utilization over 10,000 where the service was surveyed by one specialty but is now performed by a different specialty. CPT codes 97810-97814 were selected and surveyed for the April 2023 RUC meeting.

For CY 2025, we are proposing the RUC-recommended work RVUs for all four CPT codes. We are proposing a work RVU of 0.61 for CPT code 97810 ( Acupuncture, 1 or more needles; without electrical stimulation, initial 15 minutes of personal one-on-one contact with the patient), a work RVU of 0.46 for CPT code 97811 ( Acupuncture, 1 or more needles; without electrical stimulation, each additional 15 minutes of personal one-on-one contact with the patient, with re-insertion of needle(s) (List separately in addition to code for primary procedure) ), a work RVU of 0.74 for CPT Code 97813 ( Acupuncture, 1 or more needles; with electrical stimulation, initial 15 minutes of personal one-on-one contact with the patient), and a work RVU of 0.47 for CPT code 97814 ( Acupuncture, 1 or more needles; with electrical stimulation, each additional 15 minutes of personal one-on-one contact with the patient, with re-insertion of needle(s) (List separately in addition to code for primary procedure)). We are also proposing the RUC-recommended direct PE inputs for CPT codes 97810, 97811, 97813 and 97814 without refinement.

(28) Annual Alcohol Screening (HCPCS Codes G0442 and G0443)

In April 2022, the Relativity Assessment Workgroup identified services with Medicare utilization of 10,000 or more that have increased by at least 100 percent from 2015 through 2020, including HCPCS codes G0442 ( Annual alcohol misuse screening, 5 to 15 minutes) and G0443 ( Brief face-to-face behavioral counseling for alcohol misuse, 15 minutes). In September 2022, the RUC recommended that these services be surveyed for April 2023 after CMS published the revised code descriptor for HCPCS code G0442 in the CY 2023 PFS final rule (87 FR 69523).

We are proposing the RUC-recommended work RVU of 0.18 for HCPCS code G0442 ( Annual alcohol misuse screening, 5 to 15 minutes). We are also proposing the RUC-recommended work RVU of 0.60 for HCPCS code G0443 ( Brief face-to-face behavioral counseling for alcohol misuse, 15 minutes).

The RUC recommended an increase in the work RVU for HCPCS code G0443 from 0.45 to 0.60 which we believe is warranted based on time and intensity of the service in preventing alcohol misuse. In valuing this code, the time and work valuation is for separate and distinct services from same-day E/M services since HCPCS codes G0442 and G0443 are typically billed with an annual wellness visit (AWV) or office visit. We believe that the codes in the adjacent Behavioral Counseling & Therapy family, which includes HCPCS codes G0445 ( High intensity behavioral counseling to prevent sexually transmitted infection; face-to-face, individual, includes: education, skills training and guidance on how to change sexual behavior; performed semi-annually, 30 minutes), G0446 ( Annual, face-to-face intensive behavioral therapy for cardiovascular disease, individual, 15 minutes), and G0447 ( Face-to-face behavioral counseling for obesity, 15 minutes), may be undervalued as their respective intensities may be lower than what is warranted for these services. We believe that the intensity for these G-codes may be more in line with the intensity of HCPCS code G0443 which we noted had an increase in intensity as recommended by the RUC. As such, we believe that the Behavioral Counseling & Therapy codes may benefit from additional review in the future to recognize the intensity of these services.

We are proposing to maintain the current 15 minutes of clinical labor time for the CA021 “Perform procedure/service—NOT directly related to physician work time” activity for HCPCS code G0442. This clinical labor activity is specifically noted as not corresponding to the surveyed work time of 5 minutes, and we do not believe that it would be typical for the clinical staff to administer the questionnaire, clarify questions as needed, and record the answers in the patient's electronic medical record in the RUC-recommended 5 minutes. We believe that the current 15 minutes of clinical labor time would be more typical to ensure the accuracy of this screening procedure. We are also proposing to maintain 15 minutes of corresponding equipment time for the EF023 exam table as a result of our proposed clinical labor time refinement. We are proposing the RUC-recommended direct PE inputs for HCPCS code G0443 without refinement.

We thank the RUC for their review of this code family and for highlighting an important consideration specifically for services that fall under the Medicare preventive services benefit. We are now considering how best to implement and maintain payment for preventive services and may develop new payment policies in future rulemaking to address this issue more comprehensively to ensure consistent access to these services. We considered the recommended PE inputs for this code family, as well as for the Annual Depression Screening (HCPCS code G0444) and Behavioral Counseling & Therapy services (HCPCS codes G0445, G0446, and G0447) within this context, as noted below.

(29) Annual Depression Screening (HCPCS Code G0444)

In 2012, HCPCS code G0444 ( Annual depression screening, 5 to 15 minutes) was added to the PFS (77 FR 68955 and 68956) to report annual depression screening for adults in primary care settings that have staff-assisted depression care supports in place to assure accurate diagnosis, treatment and follow up. In April 2022, the Relativity Assessment Workgroup identified this service with Medicare utilization of 10,000 or more that have increased by at least 100 percent from 2015 through 2020. In September 2022, the RUC recommended that this service be surveyed for April 2023 after CMS published the revised code descriptor in the CY 2023 PFS final rule (87 FR 69523).

We are proposing the RUC-recommended work RVU of 0.18 for HCPCS code G0444.

We are proposing to maintain the current 15 minutes of clinical labor time for the CA021 “Perform procedure/service—NOT directly related to physician work time” activity for HCPCS code G0444. This clinical labor activity is specifically noted as not corresponding to the surveyed work time of 5 minutes, and we do not believe that it would be typical for the clinical staff to administer the questionnaire, clarify questions as needed, and record the answers in the patient's electronic medical record in the RUC-recommended 5 minutes. We believe that the current 15 minutes of clinical labor time would be more typical to ensure the accuracy of this screening procedure. We are also proposing to maintain 15 minutes of corresponding equipment time for the EF023 exam table as a result of our proposed clinical labor time refinement.

(30) Behavioral Counseling & Therapy (HCPCS Codes G0445, G0446, and G0447)

CMS created HCPCS codes G0445 ( High intensity behavioral counseling to prevent sexually transmitted infection; face-to-face, individual, includes education, skills training and guidance on how to change sexual behavior; performed semi-annually, 30 minutes), G0446 ( Annual, face-to-face intensive behavioral therapy for cardiovascular disease, individual, 15 minutes), and G0447 ( Face-to-face behavioral counseling for obesity, 15 minutes) effective with the 2012 Medicare PFS (77 FR 68892). HCPCS codes G0445-G0447 were identified to be reviewed at the April 2023 RUC meeting because they were services with Medicare utilization of 10,000 or more that had increased by at least 100% from 2015 through 2020.

The specialty societies surveyed HCPCS codes G0445-G0447 for the April 2023 RUC meeting but did not obtain the required number of survey responses. After the resurvey, which occurred after the April 2023 RUC meeting, the specialty societies were again unable to achieve the required minimum number of survey responses for any of the codes in this family for the September 2023 RUC meeting. The RUC reviewed HCPCS codes G0445-G0447 at the September 2023 RUC meeting. Given the insufficient number of survey responses and considering that these are CMS-created time-based codes, the RUC determined it would be most appropriate to maintain the current work values and flagged these codes for review in 3 years. We are proposing the RUC-recommended work RVU of 0.45 for each of these three HCPCS codes, G0445-G0447.

We are not proposing the RUC-recommended direct PE inputs for these codes because of the insufficient number of survey responses, and further, we do not agree with some of the RUC's refinements to the direct PE inputs for this service. We are not proposing the RUC-recommended direct PE inputs for G0445, G0446, and G0447, which include the SK062 patient education booklet being eliminated in favor of the SK057 paper, laser printing (each sheet) in the amount of 10 sheets and the equipment minutes being modified to equal the sum of clinical staff time plus the physician/QHP time as reflected by the survey median. We do not agree that these changes are substantiated given the insufficient number of survey responses and we are proposing to maintain the current values for each of these direct PE inputs.

We are proposing the RUC recommended refinements to clinical staff time for HCPCS code G0445. We are proposing to move two minutes from CA021 Perform procedure/service—NOT directly related to physician work time to CA035 Review home care instructions, coordinate visits/prescriptions. We agree with the RUC that this more accurately reflects the clinical work involved in arranging follow-up and/or referrals with clinical and community resources and providing educational materials. Currently, for HCPCS code G0445, PE includes a whip mixer (EP086) and biohazard hood (EP016) among the equipment assigned to the code. We are also proposing the RUC recommendations to eliminate both of these pieces of equipment from the PE for HCPCS code G0445.

We note that the Behavioral Counseling & Therapy code family (HCPCS codes G0445-G0447) should be reviewed in the future by the RUC and we anticipate the recommendations that will come from the review for this family.

(31) Autologous Platelet Rich Plasma (HCPCS Code G0465)

HCPCS code G0465 ( Autologous platelet rich plasma (prp) or other blood-derived product for diabetic chronic wounds/ulcers, using an fda-cleared device for this indication, (includes as applicable administration, dressings, phlebotomy, centrifugation or mixing, and all other preparatory procedures, per treatment)) was created for CY 2022 (retroactively dated back to the effective date of the policy, April 13, 2021) and assigned contractor pricing (NCD 270.3, CR 12403).

Following the publication of the CY 2023 PFS proposed rule, we received two comments on the pricing of HCPCS code G0465, and the 3C patch system supply which is topically applied for the management of exuding cutaneous wounds, such as leg ulcers, pressure ulcers, and diabetic ulcers and mechanically or surgically debrided wounds (87 FR 69420). One commenter submitted invoices associated with the pricing of the 3C patch system (SD343) supply for which we established a price of $625.00 in the CY 2021 PFS final rule (85 FR 84498). The commenter requested that CMS update its supply database based on invoices submitted for SD343 to reflect an updated price of $750.00 per unit. The commenter also requested national pricing for HCPCS code G0465, expressing concern that insufficient payment disproportionately impacts vulnerable populations. The commenter requested a payment rate of $1,408.90 for HCPCS G0465 in the office setting, stating that this rate would appropriately account for the purchase of the 3C patch, as well as the other related costs and supply inputs required for point of care creation and administration.

In response, we stated in the CY 2023 PFS final rule that we did not have enough information to establish national pricing at this time for HCPCS code G0465 (87 FR 69420). We stated that we would consider the commenters' feedback for future rulemaking while maintaining contractor pricing for CY 2023, which would allow for more flexibility for contractors to establish appropriate pricing using available information. We appreciated the invoice submission with additional pricing information for the SD343 supply and we updated our supply database for supply code SD343 at a price of $678.57 based on an average of the submitted invoices.

Since the publication of the CY 2023 PFS final rule, interested parties have continued to request national pricing for HCPCS code G0465 due to their perception of inconsistent and insufficient payment for this service by the MACs. CMS has asked the interested parties to engage with the MACs to establish adequate payment for HCPCS code G0465. The interested parties have continued to state that most MACs have not established consistent payment rates and the rates are heterogeneous; some are significantly below the cost of performing this service, leading to an unpredictable process and inadequate rates, creating barriers to access this service.

Due to these concerns, we are therefore proposing to establish national pricing for HCPCS code G0465 for CY 2025. We are proposing to value HCPCS code G0465 using a crosswalk to CPT code 15271 ( Application of skin substitute graft to trunk, arms, legs, total wound surface area up to 100 sq cm; first 25 sq cm or less wound surface area ), drawing from a selection of relevant studies. We are proposing a work RVU of 1.50 for HCPCS code G0465 based on the crosswalk to CPT code 15271 because wound surface area sizes in current literature appear to be less than 100 sq cm for patients with diabetes and/or chronic ulcers. We are also proposing to use the direct PE inputs included with CPT code 15271 for valuing HCPCS code G0465, with the additional inclusion of the 3C patch system (SD343) supply that we priced in CY 2023. We note that the payment includes debridement, which may involve a wound reaching the bone. Therefore, debridement may not be billed separately. In addition, we are currently seeking comments on other available crosswalks from the broader medical community. For example, CPT code 15277 ( Application of skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, total wound surface area greater than or equal to 100 sq cm; first 100 sq cm wound surface area, or 1% of body area of infants and children) with a work RVU of 4.00 and CPT code 15273 ( Application of skin substitute graft to trunk, arms, legs, total wound surface area greater than or equal to 100 sq cm; first 100 sq cm wound surface area, or 1% of body area of infants and children ) with a work RVU of 3.50 could also be viable crosswalk options. We are soliciting comments regarding our selection of CPT code 15271 as a crosswalk code, as well as general comments and available studies regarding the appropriate valuation of HCPCS code G0465.

(32) Temporary Female Intraurethral Valve-Pump (CPT Codes 0596T and 0597T)

In the CY 2024 PFS proposed rule, an interested party nominated two Category III CPT codes, CPT codes 0596T ( Initial insertion of temporary valve-pump in female urethra) and 0597T ( Replacement of temporary valve-pump in female urethra), as potentially misvalued. The nominator expressed concern about variability in MAC pricing for the contractor-priced service. Additionally, the nominator highlighted that the payment amounts determined by MACs were inadequately low and did not account for the time and effort required to furnish the services. In their submission, the nominator discussed their anticipated inputs for both codes. For CPT code 0596T, the nominator stated that a physician typically spends 60 minutes inserting the Vesiflo inFlow System. The nominator stated that CPT code 0596T included various supplies, equipment, and clinical labor time totaling $1,902.76, with the inflow supply items making up about 99 percent of the total cost of supplies. For CPT code 0597T, the nominator stated that a physician spends 25 minutes replacing the Vesiflo inFlow System and PE items were similar, with supplies, equipment and clinical labor time costing $505.30, with the inflow supply items making up about 98 percent of the total cost of supplies. We direct interested parties to the CY 2024 PFS final rule (88 FR 78850) for more detailed submission information regarding CPT codes 0596T and 0597T. After reviewing, we concluded that these codes were not potentially misvalued because they are Category III codes describing relatively new and low-volume services. Category III codes are contractor priced under the PFS, meaning that each MAC can establish pricing for the code within its jurisdiction, resulting in variability in payments.

This year, the nominator newly informed CMS that their analysis of national payment rates showed that in most CMS jurisdictions, not only are these codes misvalued, but in most cases, they are not valued at all, with fee schedule amounts in most CMS jurisdictions at or near zero dollars. The nominator further emphasized that three physician experts, all employed in major university medical centers, have highlighted the challenges posed by the combination of high supply costs and inadequate fee schedule payments, which have hindered their ability to provide services covered by these codes over several years. According to the nominator, these selected physicians also expressed frustration with the reluctance of MACs to address or discuss this issue. Moreover, the nominator highlighted high access barriers as a significant concern. These barriers primarily affect Medicare's most vulnerable beneficiaries, particularly women experiencing permanent urinary retention (PUR), although we note that no quantifiable evidence was provided to support these statements. We acknowledge and appreciate the nominator's efforts in reaching out to experts in the field and patients who rely on these services to elucidate their significant needs.

Since these two Category III CPT codes were not identified as potentially misvalued and were consequently priced by contractors, each MAC can set pricing for the code within its jurisdiction. This could result in inevitable variability in MAC pricings until they receive a higher number of claims, as stated by the nominator. Through our engagement with MACs, we found that claims for the two Category III CPT codes are reviewed on a case-by-case basis for medical necessity. If the claim is payable, the price will be determined at that time by the MAC. Additionally, these codes were a topic of discussion within the MAC pricing workgroup, and we observed that there was not a significant difference among the MACs in terms of allowances based on the proposed pricing methodologies. However, there is variance in how MACs load pricing for Category III codes. For instance, some MACs publish the price for the service before they receive any claims, while others set the price only after they receive claims that help determine the appropriate pricing. If a MAC does not load a price for a code before receiving any claims, the service can still be paid, but the allowance has not been published.

We continue to hear concerns about these payment inconsistencies for CPT codes 0596T and 0597T. As a result, we are recommending that the MACs establish more consistency in pricing, enabling the appropriate inclusion of the Vesiflo system in the code's PE valuation. Therefore, for CY 2025, we encourage interested parties to provide more accurate and appropriate cost data, along with additional information regarding work RVU, work time, indicators, and utilization estimates for the MACs. This should complement the information provided by the nominator in the CY 2024 final rule (88 FR 78850) and will facilitate the process. To aid in this process, we are adding three new supplies to our direct PE database based on invoices submitted by interested parties: the inFlow Measuring Device at a price of $140 (SD370), the inFlow Valve-Pump Device at a price of $495 (SD371), and the inFlow Activator Kit at a price of $1,250 (SD372). Although we are not proposing national pricing for these two Category III codes, we do note for the benefit of the MACs that CPT code 0596T would typically include one of each of these supplies, whereas CPT code 0597T would typically include only one of the supplies (SD371).

We encourage the MACs to continue to engage with interested parties by providing information on how they price these services. We welcome additional comments from the broader medical community regarding the usage of this service, particularly concerning its safety and effectiveness, as well as potential factors contributing to its low utilization.

(33) PE-Only Replacement Code for Heart Failure System

Interested parties have expressed concern about the lack of coding and a billing mechanism when practitioners incur costs replacing identified components of the CardioMEMS^TM Heart Failure System used in the physician service described by CPT code 33289 ( Transcatheter implantation of wireless pulmonary artery pressure sensor for long-term hemodynamic monitoring, including deployment and calibration of the sensor, right heart catheterization, selective pulmonary catheterization, radiological supervision and interpretation, and pulmonary artery angiography, when performed).

The CardioMEMS^TM Heart Failure System furnished during this service allows practitioners treating heart failure patients to wirelessly monitor and measure pulmonary artery pressure and heart rate in patients with heart failure and transmit the information to the physician to inform the treatment plan for the patient. The system includes two critical components: first, a miniaturized, wireless monitor, which is implanted into a patient's pulmonary artery, and second, a smart pillow (the CardioMEMS^TM Patient Electronics System), which captures and transmits readings via safe radio frequency from the patient's implanted CardioMEMS^TM Heart Failure System. Overall, the CardioMEMS^TM Heart Failure System enables patients to transmit critical heart failure status information to clinicians regularly, potentially eliminating the need for frequent clinic or hospital visits.

Interested parties have highlighted the critical importance of the device for heart failure patients who require close monitoring of weight and blood pressure to prevent fluid buildup around the heart, and have requested that CMS establish coding to describe when practitioners incur costs during clinical scenarios when crucial components of the system require replacement. Given that these components are crucial for system functionality and there is no existing coding framework to address their replacement, we believe that establishing appropriate coding and payment mechanisms can facilitate the provision of these services more effectively in the office and hospital settings. Given provided information, we propose assigning contractor pricing to this PE-only code for CY 2025. We are proposing a new code, HCPCS code GMEM1 (Provision of replacement patient electronics system (for example, system pillow) for home pulmonary artery pressure monitoring including provision of materials for use in the home and reporting of test results to physician or qualified health care professional). We are seeking feedback from interested parties on our contractor pricing approach with the aim of establishing national pricing through future rulemaking that can be billed under the OPPS and PFS specifying an ongoing care visit for the CardioMEMS^TM Heart Failure System along with the provision of the replacement part. We are specifically looking for information from the broader medical community regarding direct costs from invoices for the replacement component referenced above, utilization estimates, and potential indicators. Additionally, we solicit comments on additional direct PE inputs that we should consider.

(34) Portable X-Ray (HCPCS Codes R0070-R0075)

Several Portable X-Ray (PXR) suppliers and trade organizations continue to express longstanding concerns with how payment is established for transportation related to these services (HCPCS codes R0070-R0075). CMS has worked with interested parties over the past several years to understand the costs of these services while taking into consideration the MACs perspective on pricing of these costs. Through recent ongoing discussions with interested parties, we learned that interested parties are concerned with the recognition of costs incurred from PXR services and are wanting more consistency in the pricing of these services, including the application of an inflation factor.

We acknowledge the interested parties' concerns and clarify that interested parties may best engage with the MACs through appropriate reporting of cost data in the MAC requested format. This information provided by interested parties can help MACs establish payment rates that are more reflective of costs incurred. MACs are then able to consider this cost information and apply an inflation factor to update changes in costs year over year.

However, CMS recognizes that we should maintain consistency in pricing these services that are more indicative of changes in costs that occur yearly. While still preserving MAC discretion, CMS highlights the usage of an ambulance inflation factor (AIF) that is typically used to adjust ambulance services, which include transportation costs. The AIF is updated annually, and we believe MACs may consider using the AIF to price PXR services when establishing payment rates that are more consistent and reflective of costs incurred.

Additionally, interested parties highlighted inconsistency with language found in our manual and program memoranda policies related to transportation costs. Therefore, to remain consistent and transparent in the pricing of PXR services, we are proposing to revise language in our Medicare Claims Processing manual (Chapter 13, 90.3 and Chapter 23, 30.5) to reflect any updates to our guidance for these services.

(35) Non-Chemotherapy Administration

CMS received inquiries from several external parties with concerns that MACs have developed local coverage determinations (LCDs) and local coverage articles (LCAs) that down code or restrict payment for complex and non-chemotherapeutic drug administration for CPT code series 96401-96549, when used for the administration of several biologic and infusion drugs, including drugs furnished to treat, for example, rheumatology related conditions.

CMS requested information in the CY 2024 PFS proposed rule (88 FR 52837) seeking public feedback regarding the concerns of down coding or denials for the administration of non-chemotherapeutic infusion drugs. We received comments that asked for additional clarification from CMS regarding the payment guidelines for the complex non-chemotherapeutic administration code series and updates to the IOM. Commenters urged CMS to provide additional guidance clarifying the conditions under which these complex infusion drugs should be payable.

In response to the comments received, and in response to continuing inquiries on downcoding and or restrictions on payment for non-chemotherapy complex infusion services, we are proposing an updated policy based largely on the IOM Medicare Claims Processing Manual, Chapter 12, section 30.5, to include language currently consistent with CPT code definitions for the complex non-chemotherapy infusion code series stating that the administration of infusion for particular kinds of drugs and biologics can be considered complex and may be appropriately reported using the chemotherapy administration CPT codes 96401-96549. We note that CPT guidance describes requirements for these non-chemotherapy complex drugs or biologic agents to include the need for staff with advanced practice training and competency, such as, a physician or other qualified health care professional to monitor the patient during these infusions due to the incidence of severe adverse reactions. There are also special considerations for preparation, dosage, or disposal for these infusion drugs. These services do involve serious patient risk which requires frequent consults with a physician or other qualified healthcare professional. Based on these facts and comments, we are proposing to update our subregulatory guidance accordingly.

This will also provide complex clinical characteristics for the MACs to consider as criteria when determining payment of claims for these services. The current IOM language does not include the unique characteristics of the administration of these drugs that could provide additional context to the MACs when they are determining appropriate payment. Updating the IOM with the increased detail of these codes would be responsive to the concerns and requests of external parties and will ensure the IOM is consistent with published guidance.

Therefore, we are soliciting and welcome comments on our proposal to revise the IOM to better reflect how complex non-chemotherapeutic drug administration infusion services are furnished and billed.

(36) Hospital Inpatient or Observation (I/O) Evaluation and Management (E/M) Add-On for Infectious Diseases (HCPCS Code GIDXX)

Interested parties have continued to engage with CMS and provide recommendations to recognize the increased work associated with diagnosis, management, and treatment of infectious diseases that may not be adequately accounted for in current hospital inpatient or observation E/M codes. Infectious diseases are unique in that they present infection control risks for the patient and close contacts, including healthcare staff, that require attention to safely care for the patient. They present unique challenges in diagnosis in that any previous healthcare interaction could affect the individual resistance patterns of pathogens infecting the individual patient and require close contact with public health agencies since resistance patterns are constantly changing, so a much more extensive medical review is required. Additionally, individual decisions regarding treatment are unique in that use in one patient affects resistance patterns of the entire population, which requires additional expertise to inform antimicrobial selection and management.

We believe that the timing is appropriate for establishing a payment rate for infectious disease physician services since the COVID-19 PHE has ignited a hypervigilance for infectious diseases. Therefore, for CY 2025, we are proposing a new HCPCS code to describe intensity and complexity inherent to hospital inpatient or observation care associated with a confirmed or suspected infectious disease performed by a physician with specialized training in infectious diseases. The full proposed descriptor for the hospital I/O E/M visit complexity add-on code is HCPCS code GIDXX ( Visit complexity inherent to hospital inpatient or observation care associated with a confirmed or suspected infectious disease by an infectious diseases consultant, including disease transmission risk assessment and mitigation, public health investigation, analysis, and testing, and complex antimicrobial therapy counseling and treatment. (add-on code, list separately in addition to hospital inpatient or observation evaluation and management visit, initial, same day discharge, or subsequent). We anticipate that HCPCS code GIDXX would be reported by physicians with specialized infectious disease training.

We do not believe we should limit the scope of codes with which this proposed add-on HCPCS code could be billed based on visit level; or initial, same day discharge, or subsequent hospital inpatient or observation codes. We are proposing HCPCS code GIDXX as an add-on code (ZZZ global period) separately reportable in addition to CPT codes 99221 ( Initial hospital inpatient or observation care, per day, for the evaluation and management of a patient, which requires a medically appropriate history and/or examination and straightforward or low level medical decision making. When using total time on the date of the encounter for code selection, 40 minutes must be met or exceeded.), 99222 ( Initial hospital inpatient or observation care, per day, for the evaluation and management of a patient, which requires a medically appropriate history and/or examination and moderate level of medical decision making. When using total time on the date of the encounter for code selection, 55 minutes must be met or exceeded.), 99223 ( Initial hospital inpatient or observation care, per day, for the evaluation and management of a patient, which requires a medically appropriate history and/or examination and high level of medical decision making. When using total time on the date of the encounter for code selection, 75 minutes must be met or exceeded.), 99231 ( Subsequent hospital inpatient or observation care, per day, for the evaluation and management of a patient, which requires a medically appropriate history and/or examination and straightforward or low level of medical decision making. When using total time on the date of the encounter for code selection, 25 minutes must be met or exceeded.), 99232 ( Subsequent hospital inpatient or observation care, per day, for the evaluation and management of a patient, which requires a medically appropriate history and/or examination and moderate level of medical decision making. When using total time on the date of the encounter for code selection, 35 minutes must be met or exceeded.), 99233 ( Subsequent hospital inpatient or observation care, per day, for the evaluation and management of a patient, which requires a medically appropriate history and/or examination and high level of medical decision making. When using total time on the date of the encounter for code selection, 50 minutes must be met or exceeded.), 99234 ( Hospital inpatient or observation care, for the evaluation and management of a patient including admission and discharge on the same date, which requires a medically appropriate history and/or examination and straightforward or low level of medical decision making. When using total time on the date of the encounter for code selection, 45 minutes must be met or exceeded.), 99235 ( Hospital inpatient or observation care, for the evaluation and management of a patient including admission and discharge on the same date, which requires a medically appropriate history and/or examination and moderate level of medical decision making. When using total time on the date of the encounter for code selection, 70 minutes must be met or exceeded.), and 99236 ( Hospital inpatient or observation care, for the evaluation and management of a patient including admission and discharge on the same date, which requires a medically appropriate history and/or examination and high level of medical decision making. When using total time on the date of the encounter for code selection, 85 minutes must be met or exceeded.). Based on feedback from commenters on the CY 2022 PFS proposed rule comment solicitation regarding infectious diseases (86 FR 65125 through 65126) and feedback from interested parties, HCPCS code GIDXX would include the following proposed service elements:

1. Disease Transmission Risk Assessment and Mitigation

• Developing, following, and supervising specialized, individualized infection control protocols for an individual patient based on their diagnosis and risks in order to reduce risk of disease transmission.
• Coordinating with human resources regarding infection prevention and control measures to enable healthcare facility staff to safely care for patient.
• Counseling patients, family members and caregivers regarding infection prevention.
• Managing infection prevention and treatment protocols associated with transitions of care for complex patients.

2. Public Health Investigation, Analysis, and Testing

• In-depth patient chart review that entails going back farther in time and assessing the complete breadth of all health care interactions, with higher-level synthesis for complex diagnoses.
• Communicating with the clinical microbiology lab and directly reviewing specimens.
• Coordinating specialized diagnostic evaluations (for example, identifying and facilitating diagnostic laboratory tests only available at specialized laboratories, the state health department, and/or the Centers for Disease Control & Prevention).
• Coordinating with Federal, State and local public health agencies and laboratories to assist with contact tracing, obtaining specimens for specialized testing, and/or identifying prior testing and treatment for communicable diseases in other jurisdictions.

3. Complex Antimicrobial Therapy Counseling & Treatment

• Counseling patients, family members, and caregivers regarding antimicrobial stewardship and resistance for the patient.
• Engaging in complex medical decision-making associated with antimicrobial prescribing including considerations such as antimicrobial resistance patterns, emergence of new variants/strains, recent antibiotic exposure, interactions/complications from comorbidities including concurrent infections, public health considerations to minimize development of antimicrobial resistance, and emerging and re-emerging infections.

For HCPCS code GIDXX, we are proposing a work RVU of 0.89 based on the work RVU for HCPCS code G2211 ( Visit complexity inherent to evaluation and management associated with medical care services that serve as the continuing focal point for all needed health care services and/or with medical care services that are part of ongoing care related to a patient's single, serious condition or a complex condition. (add-on code, list separately in addition to office/outpatient evaluation and management visit, new or established)), which is 0.33, multiplied by a ratio of the work RVUs for CPT codes 99223 and 99213 ( Office or other outpatient visit for the evaluation and management of an established patient, which requires a medically appropriate history and/or examination and low level of medical decision making. When using total time on the date of the encounter for code selection, 20 minutes must be met or exceeded.), 3.50 and 1.30, respectively. (This ratio is the work RVU of CPT code 99223 divided by the work RVU of CPT code 99213, 3.50 divided by 1.30, which equals 2.69. Multiplying the 0.33 work RVU of HCPCS code G2211 times 2.69 results in our proposed work RVU of 0.89.) We believe the relationship between the complexity add-on HCPCS code G2211 and a common base code for the add-on code, CPT code 99213, would strike the correct balance to estimate the time and complexity associated with the new HCPCS code GIDXX, compared to what we believe will be a common base code for this new add-on code, CPT code 99223. HCPCS code G2211 has a total time of 11 minutes, therefore, we are proposing a total time of 30 minutes for HCPCS code GIDXX based on the same ratio (11 minutes times the same 2.69 ratio equals 30 minutes). HCPCS code G2211 has no direct PE inputs, and we are proposing the same for HCPCS code GIDXX.

We believe that the proposed work RVU appropriately falls between the following bracket add-on codes: HCPCS code G0316 ( Prolonged hospital inpatient or observation care evaluation and management service(s) beyond the total time for the primary service (when the primary service has been selected using time on the date of the primary service); each additional 15 minutes by the physician or qualified healthcare professional, with or without direct patient contact (list separately in addition to CPT codes 99223, 99233, and 99236 for hospital inpatient or observation care evaluation and management services). (do not report g0316 on the same date of service as other prolonged services for evaluation and management 99358, 99359, 99418, 99415, 99416). (do not report g0316 for any time unit less than 15 minutes)) with a work RVU of 0.61 and the professional principal care management, chronic care management, and complex chronic care management CPT codes 99425 ( Principal care management services, for a single high-risk disease, with the following required elements: one complex chronic condition expected to last at least 3 months, and that places the patient at significant risk of hospitalization, acute exacerbation/decompensation, functional decline, or death, the condition requires development, monitoring, or revision of disease-specific care plan, the condition requires frequent adjustments in the medication regimen and/or the management of the condition is unusually complex due to comorbidities, ongoing communication and care coordination between relevant practitioners furnishing care; each additional 30 minutes provided personally by a physician or other qualified health care professional, per calendar month (List separately in addition to code for primary procedure)), 99437 ( Chronic care management services with the following required elements: multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient, chronic conditions that place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline, comprehensive care plan established, implemented, revised, or monitored; each additional 30 minutes by a physician or other qualified health care professional, per calendar month (List separately in addition to code for primary procedure)), and 99489 ( Complex chronic care management services with the following required elements: multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient, chronic conditions that place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline, comprehensive care plan established, implemented, revised, or monitored, moderate or high complexity medical decision making; each additional 30 minutes of clinical staff time directed by a physician or other qualified health care professional, per calendar month (List separately in addition to code for primary procedure)) with work RVUs of 1.00.

To help inform whether our proposed descriptor is appropriate and reflects the typical service, we are seeking comment on the typical amount of time infectious disease physicians spend on the proposed service elements and the relative intensity compared to similar service elements of other CPT codes. We note that the valuation of HCPCS code GIDXX is meant to capture the visit complexity inherent to hospital inpatient or observation care associated with a confirmed or suspected infectious disease by an infectious diseases consultant that is not accounted for in the appropriate hospital inpatient or observation E/M base code billed by the infectious disease physician.

Interested parties have stated that consultations are a common E/M service performed by infectious disease clinicians, particularly in the inpatient setting, but stated that these services are no longer recognized by Medicare. Interested parties have also stated that this has resulted in a significant reduction in reporting and payment for infectious disease physician services. We note that we address this in the CMS Claims Processing Manual, Chapter 12, section 30.6.9 F, stating that “Physicians may bill initial hospital care service codes (99221-99223), for services that were reported with CPT consultation codes (99241-99255) prior to January 1, 2010, when the furnished service and documentation meet the minimum key component work and/or medical necessity requirements. Physicians may report a subsequent hospital care CPT code for services that were reported as CPT consultation codes (99241-99255) prior to January 1, 2010, where the medical record appropriately demonstrates that the work and medical necessity requirements are met for reporting a subsequent hospital care code (under the level selected), even though the reported code is for the provider's first E/M service to the inpatient during the hospital stay.” Accordingly, we are seeking comment on any potential barriers for infectious disease physicians to use the initial and subsequent day hospital inpatient or observation codes, CPT codes 99221 through 99223 and 99231 through 99233, for consultations if they meet the coding requirements for time and/or medical decision making (MDM). We note that understanding the barriers to utilizing these codes is important, as these codes will serve as the base codes for HCPCS code GIDXX, and will need to be billed by the infectious disease physician prior to billing HCPCS code GIDXX.

Finally, we recognize that historically, the CPT Editorial Panel has frequently created CPT codes describing services that we originally established using G codes and adopted them through the CPT Editorial Panel process. We note that we would consider using any newly available CPT coding to describe services similar to those described here in future rulemaking.

(37) Preexposure Prophylaxis (PrEP) of Human Immunodeficiency Virus (HIV)

To facilitate prompt beneficiary access to PrEP for CY 2024, we established 3 HCPCS G codes that describe the service of counseling and administration of Human Immunodeficiency Virus (HIV) pre-exposure prophylaxis drugs. Specifically, HCPCS codes G0011 ( Individual counseling for pre-exposure prophylaxis (PrEP) by physician or QHP to prevent human immunodeficiency virus (HIV), includes: HIV risk assessment (initial or continued assessment of risk), HIV risk reduction and medication adherence, 15-30 minutes) and G0013 ( Individual counseling for pre-exposure prophylaxis (PrEP) by clinical staff to prevent human immunodeficiency virus (HIV), includes: HIV risk assessment (initial or continued assessment of risk), HIV risk reduction and medication adherence) describe the counseling portion of the service, and G0012 ( Injection of pre-exposure prophylaxis (PrEP) drug for HIV prevention, under skin or into muscle) describes the injection of the medication.

CMS released a Proposed NCD for Pre-Exposure Prophylaxis (PrEP) for Human Immunodeficiency Virus (HIV) Infection Prevention on July 12, 2023. This proposed NCD announced CMS' intent to cover and pay for those drugs under the 1861(ddd) additional preventive services authority, and a final decision on the NCD is forthcoming. For CY 2025, we are proposing national rates for these HCPCS codes that reflect the relative resource costs associated with the counseling and drug administration portions of the service, pending finalization of the NCD. For HCPCS code G0011, we are proposing a work RVU of 0.45 based off work and direct PE inputs crosswalked from HCPCS code G0445 ( High intensity behavioral counseling to prevent sexually transmitted infection; face-to-face, individual, includes: education, skills training and guidance on how to change sexual behavior; performed semi-annually, 30 minutes). For HCPCS code G0012, we are proposing a work RVU of 0.17 based on the work and direct PE crosswalked from CPT code 96372 ( Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); subcutaneous or intramuscular), and for HCPCS code G0013 we are proposing a work RVU of 0.18 based on the work and direct PE inputs crosswalked from CPT code 99211 ( Office or other outpatient visit for the evaluation and management of an established patient that may not require the presence of a physician or other qualified health care professional). We appreciate having this opportunity for interested parties to provide feedback on the most accurate way to value these services.

(38) Opfolda

For CY 2024, to facilitate beneficiary access to treatment of late-onset Pompe disease with miglustat in combination with cipaglucosidae alfa-atga, we created a new HCPCS code, G0138, describing the service of administration of cipaglucosidase alfa-atga (Pombiliti), which includes the intravenous administration of cipaglucosidase alfa-atga, the provider or supplier's acquisition cost of miglustat, clinical supervision, and oral administration of miglustat. HCPCS code G0138 ( Intravenous infusion of cipaglucosidase alfaatga, including provider/supplier acquisition and clinical supervision of oral administration of miglustat in preparation of receipt of cipaglucosidase alfa-atga) was added to the PFS effective April 1, 2024, as a contractor priced service. More information regarding the creation of HCPCS code G0138 can be found at https://www.cms.gov/files/document/2023-hcpcs-application-summary-quarter-4-2023-drugs-and-biologicals-updated-1/30/2024.pdf .

For CY 2025, we are proposing national pricing for this service that reflects the relative resource costs associated with the infusion administration of Cipaglucosidae alfa-atga and clinical supervision and provision of Miglustat oral with acquisition costs. We are proposing a work RVU of 0.21 for HCPCS code G0138 based on a crosswalk from CPT code 96365 ( Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); initial, up to 1 hour). This includes a crosswalked total time of 9 minutes and an intraservice time of 5 minutes. We are also proposing to crosswalk the direct PE inputs from CPT code 96365 for use in valuing HCPCS code G0138. However, we are adding 1 minute of L056A clinical staff time during the preservice portion of the service period to capture the RN/OCN observation of the patient during administration of the Opfolda pill. In addition, to account for the cost of the provision of the self-administered Opfolda as a direct PE input, we are incorporating the wholesale acquisition cost (WAC) data from the most recent available quarter. We are proposing a price of $32.50 for the supply input that describes a 65mg capsule of Opfolda (supply code SH111). We are seeking feedback from interested parties on our proposal of national pricing, as well as our proposed work RVU and direct PE inputs for HCPCS code G0138 to ensure proper payment for this service.

(39) Payment for Caregiver Training Services

a. Background

In the CY 2017 PFS final rule (81 FR 80330 through 80331), we finalized payment for new CPT code(s) describing administration of a patient-focused health risk assessment instrument as well as administration of a caregiver-focused health risk assessment instrument. In the CY 2024 PFS final rule (88 FR 78914), we finalized the assignment of a payable status for caregiver training services (CTS) for therapy and behavior management/modification services (without the patient present) and finalized the RUC-recommended valuations for these services to better recognize the role that caregivers play in reasonable and necessary care for Medicare beneficiaries. These codes allow treating practitioners to report the training furnished to a caregiver, in tandem with the diagnostic and treatment services furnished directly to the patient, in strategies and specific activities to assist the patient in carrying out the treatment plan.

We finalized in the CY 2024 PFS final rule that payment may be made for CTS services when the treating practitioner identifies a need to involve and train one or more caregivers to assist the patient in carrying out a patient-centered treatment plan. We also finalized that because CTS services are furnished outside the patient's presence, the treating practitioner must obtain the patient's (or representative's) consent for the caregiver to receive the CTS. Additionally, we finalized that the identified need for CTS and the patient's (or representative's) consent for one or more specific caregivers to receive CTS must be documented in the patient's medical record. These finalized policies apply to current CTS coding and we are also proposing for them to apply to the newly proposed CTS coding that follows. We continue to receive questions and requests from interested parties about how we can refine payment for these services.

b. Caregiver Assessment

In response to interested parties' requests for assessment of a caregiver's knowledge to be included in caregiver training, we are clarifying that when reasonable and necessary, assessing the caregiver's skills and knowledge for the purposes of caregiver training services could be included in the service described by CPT code 96161 (Administration of caregiver-focused health risk assessment instrument (e.g., depression inventory) for the benefit of the patient, with scoring and documentation, per standardized instrument) to determine if caregiver training services are needed. We also note that CPT code 96161 is currently on the Medicare Telehealth list.

We note that, as specified in the CY 2017 PFS final rule (81 FR 80330), in particular cases, caregiver-focused health risk assessments can be necessary components of services furnished to Medicare beneficiaries. Examples where this service may be reasonable and necessary may include assessment of maternal depression in the active care of infants, assessment of parental mental health as part of evaluating a child's functioning, assessment of caretaker conditions as indicated where atypical parent/child interactions are observed during care, and assessment of caregivers as part of care management for adults whose physical or cognitive status renders them incapable of independent living and dependent on another adult caregiver. Commenters cited that some examples of such individuals might include intellectually disabled adults, seriously disabled military veterans, and adults with significant musculoskeletal or central nervous system impairments (81 FR 80331).

We are proposing that because the caregiver-focused health risk assessment may be furnished outside the patient's presence, the treating practitioner must obtain the patient's (or representative's) consent for the caregiver to receive the assessment. We are also proposing that the definition of “caregiver” specified in the CY 2024 PFS final rule (88 FR 78917) will be the same for caregiver training services and the caregiver-focused health risk assessment.

We are seeking comment on these proposals and clarifications.

c. Proposals and New Coding

(A) Proposed Direct Care Caregiver Training Services

i. Coding

We are proposing to establish new coding and payment for caregiver training for direct care services and supports. The topics of training could include, but would not be limited to, techniques to prevent decubitus ulcer formation, wound dressing changes, and infection control. Unlike other caregiver training codes that are currently paid under the PFS, the caregiver training codes for direct care services and support focus on specific clinical skills aimed at the caregiver effectuating hands-on treatment, reducing complications, and monitoring the patient. For example, in the direct care CTS codes, a caregiver could be taught how to properly change wound dressings to promote healing and prevent infection. This skill, among other direct care services, would not fall into the categories of CTS codes that currently exist (behavior management/modification or strategies and techniques to facilitate the patient's functional performance in the home or community) but is integral in effectuating the patient's treatment plan. Like other codes describing caregiver training services, these proposed new codes would reflect the training furnished to a caregiver, in tandem with the diagnostic and treatment services furnished directly to the patient, in strategies and specific activities to assist the patient to carry out the treatment plan. We believe that CTS may be reasonable and necessary when they are integral to a patient's overall treatment and furnished after the treatment plan is established. The CTS themselves need to be congruent with the treatment plan and designed to effectuate the desired patient outcomes. We believe this is especially the case in medical treatment scenarios where assistance by the caregiver receiving the CTS is necessary to ensure a successful treatment outcome for the patient—for example, when the patient cannot follow through with the treatment plan for themselves.

We are proposing three new HCPCS codes: GCTD1 ( Caregiver training in direct care strategies and techniques to support care for patients with an ongoing condition or illness and to reduce complications (including, but not limited to, techniques to prevent decubitus ulcer formation, wound dressing changes, and infection control) (without the patient present), face-to-face; initial 30 minutes), GCTD2 ( Caregiver training in direct care strategies and techniques to support care for patients with an ongoing condition or illness and to reduce complications (including, but not limited to, techniques to prevent decubitus ulcer formation, wound dressing changes, and infection control) (without the patient present), face-to-face; each additional 15 minutes (List separately in addition to code for primary service) (Use GCTD2 in conjunction with GCTD1)), and GCTD3 ( Group caregiver training in direct care strategies and techniques to support care for patients with an ongoing condition or illness and to reduce complications (including, but not limited to, techniques to prevent decubitus ulcer formation, wound dressing changes, and infection control) (without the patient present), face-to-face with multiple sets of caregivers)).

We continue to believe that CTS may be reasonable and necessary when they are integral to a patient's overall treatment and furnished after the treatment plan is established. The medical or direct care CTS themselves need to be congruent with the treatment plan and designed to effectuate the desired patient outcomes. We believe this is especially the case in medical treatment scenarios where assistance by the caregiver receiving the CTS is necessary to ensure a successful treatment outcome for the patient—for example when the patient cannot follow through with the treatment plan for themselves. Direct care training for caregivers of Medicare beneficiaries should be directly relevant to the person-centered treatment plan for the patient in order for the services to be considered reasonable and necessary under the Medicare program. Each training activity should be clearly identified and documented in the treatment plan. Additionally, this would not be billable for patients under home health plan of care, receiving at-home therapy, or receiving DME services for involved medical equipment and supplies.

We are seeking additional information from commenters about potential service overlaps and potential examples of direct care services to receive caregiver training to inform our final policy. We are soliciting public comment on each of our proposals for direct care CTS.

ii. Valuation

For GCTM1, we propose a direct crosswalk to CPT Code 97550 ( Caregiver training in strategies and techniques to facilitate the patient's functional performance in the home or community (e.g., activities of daily living [ADLs], instrumental ADLs [iADLs], transfers, mobility, communication, swallowing, feeding, problem-solving, safety practices) (without the patient present), face to face; initial 30 minutes), with a work RVU of 1.00 as we believe this service reflects the resource costs associated when the billing practitioner performs HCPCS code GCTM1. CPT code 97550 has an intraservice time of 30 minutes, and the physician work is of similar intensity to our proposed HCPCS code GCTM1. Therefore, we are proposing a work time of 30 minutes intraservice time (40 minutes of total time) for HCPCS code GCTM1 based on this same crosswalk to CPT 97550. We are also proposing to use this crosswalk to establish the direct PE inputs for HCPCS code GCTM1.

For GCTM2, we are proposing a direct crosswalk to CPT Code 97551 ( Caregiver training in strategies and techniques to facilitate the patient's functional performance in the home or community (e.g., activities of daily living [ADLs], instrumental ADLs [iADLs], transfers, mobility, communication, swallowing, feeding, problem solving, safety practices) (without the patient present), face to face; each additional 15 minutes (List separately in addition to code for primary service)), with a work RVU of 0.54 as we believe this service reflects the resource costs associated when the billing practitioner performs HCPCS code GCTM2. CPT code 97551 has an intraservice time of 17 minutes, and the physician work is of similar intensity to our proposed HCPCS code GCTM2. Therefore, we are proposing a work time of 17 minutes for HCPCS code GCTM2 based on this same crosswalk to CPT 97551. We also propose to use this crosswalk to establish the direct PE inputs for HCPCS code GCTM2.

For GCTM3, we propose a direct crosswalk to CPT Code 97552 ( Group caregiver training in strategies and techniques to facilitate the patient's functional performance in the home or community (e.g., activities of daily living [ADLs], instrumental ADLs [iADLs], transfers, mobility, communication, swallowing, feeding, problem solving, safety practices) (without the patient present), face to face with multiple sets of caregivers), with a work RVU of 0.23 as we believe this service reflects the resource costs associated when the billing practitioner performs HCPCS code GCTM3. CPT code 97552 has an intraservice time of 9 minutes, and the physician work is of similar intensity to our proposed HCPCS code GCTM1. Therefore, we are proposing a work time of 9 minutes intraservice time (14 minutes total time) for HCPCS code GCTM3 based on this same crosswalk to CPT 97552. We are also proposing to use this crosswalk to establish the direct PE inputs for HCPCS code GCTM3.

We are seeking comment on supplies/equipment that would be typical for the newly created direct care strategies and techniques CTS codes.

We believe these services would largely involve contact between the billing practitioner and the caregiver through in-person interactions, which could be conducted via telecommunications, as appropriate. Therefore, we are proposing to add these codes to the Medicare Telehealth Services List to accommodate a scenario in which the practitioner completes the caregiver training service via telehealth. Please see section II.D. for more information on Medicare Telehealth Services.

We are seeking comments on these proposals.

(B) Individual Behavior Management/Modification Caregiver Training Services

i. Coding

We are proposing to establish new coding and payment for caregiver behavior management and modification training that could be furnished to the caregiver(s) of an individual patient. Current CPT coding (CPT 96202 and 96203) allows for “multiple-family group behavior management/modification training services,” meaning that this caregiver training service can only be furnished in a group setting with multiple sets of caregivers of multiple beneficiaries (please reference 88 FR 78818 for discussion of CPT 96202 and 96203). We are proposing two new HCPCS codes: GCTB1 ( Caregiver training in behavior management/modification for caregiver(s) of a patient with a mental or physical health diagnosis, administered by physician or other qualified health care professional (without the patient present), face-to-face; initial 30 minutes) and GCTB2 ( Caregiver training in behavior management/modification for caregiver(s) of a patient with a mental or physical health diagnosis, administered by physician or other qualified health care professional (without the patient present), face-to-face; each additional 15 minutes (List separately in addition to code for primary service) (Use GCTB2 in conjunction with GCTB1)).

We continue to believe that CTS may be reasonable and necessary when they are integral to a patient's overall treatment and furnished after the treatment plan is established. The behavior management/modification CTS themselves need to be congruent with the treatment plan and designed to effectuate the desired patient outcomes. We believe this is especially the case in medical treatment scenarios where assistance by the caregiver receiving the CTS is necessary to ensure a successful treatment outcome for the patient—for example when the patient cannot follow through with the treatment plan for themselves. Behavior management/modification training for caregivers of Medicare beneficiaries should be directly relevant to the person-centered treatment plan for the patient in order for the services to be considered reasonable and necessary under the Medicare program. Each training activity should be clearly identified and documented in the treatment plan. All other policies and procedures surrounding CPT 96202 and 96203 will also apply to these services (88 FR 78914-78920).

We are seeking comment on these proposals.

ii. Valuation

For GCTB1, we propose a direct crosswalk to CPT Code 97550 ( Caregiver training in strategies and techniques to facilitate the patient's functional performance in the home or community (e.g., activities of daily living [ADLs], instrumental ADLs [iADLs], transfers, mobility, communication, swallowing, feeding, problem solving, safety practices) (without the patient present), face to face; initial 30 minutes), with a work RVU of 1.00 as we believe this service reflects the resource costs associated when the billing practitioner performs HCPCS code GCTB1. CPT code 97550 has an intraservice time of 30 minutes, and the physician work is of similar intensity to our proposed HCPCS code GCTB1. Therefore, we are proposing a work time of 30 minutes intraservice time (40 minutes of total time) for HCPCS code GCTB1 based on this same crosswalk to CPT 97550. We also propose to use this crosswalk to establish the direct PE inputs for HCPCS code GCTB1. We are seeking comment on supplies/equipment that would be typical for the newly created individual behavior management/modification CTS codes.

For GCTB2, we propose a direct crosswalk to CPT Code 97551 ( Caregiver training in strategies and techniques to facilitate the patient's functional performance in the home or community (e.g., activities of daily living [ADLs], instrumental ADLs [iADLs], transfers, mobility, communication, swallowing, feeding, problem solving, safety practices) (without the patient present), face to face; each additional 15 minutes (List separately in addition to code for primary service)), with a work RVU of 0.54 as we believe this service reflects the resource costs associated when the billing practitioner performs HCPCS code GCTB2. CPT code 97551 has an intraservice time of 17 minutes, and the physician work is of similar intensity to our proposed HCPCS code GCTB2. Therefore, we are proposing a work time of 17 minutes for HCPCS code GCTB2 based on this same crosswalk to CPT 97551. We also propose to use this crosswalk to establish the direct PE inputs for HCPCS code GCTB2.

We are seeking comment on supplies/equipment that would be typical for the newly created individual behavior management/modification CTS codes.

We believe these services would largely involve contact between the billing practitioner and the caregiver through in-person interactions, which could be conducted via telecommunications as appropriate. Therefore, we are proposing to add these codes to the Medicare Telehealth Services List to accommodate a scenario in which the practitioner completes the caregiver training service via telehealth. Please see section II.D. for more information on Medicare Telehealth Services.

We are seeking comments on these proposals.

(C) Patient Consent

In the CY 2024 PFS final rule (88 FR 78916), we finalized a requirement that the treating practitioner must obtain the patient's (or representative's) consent for the caregiver to receive the CTS and that the identified need for CTS and the patient's (or representative's) consent for one or more specific caregivers to receive CTS be documented in the patient's medical record.

We are proposing that consent for CTS can be provided verbally by the patient (or representative). This would align consent requirements with other services paid under the PFS that may be furnished without the patient present, such as certain care management services. This proposal would apply to CPT codes 97550, 97551, 97552, 96202, and 96203, as well as any caregiver training services HCPCS codes finalized in this year's rule, and any subsequently created caregiver training service codes. We are seeking comment on this proposal.

(D) Addition to Telehealth List

Please see section II.D. of this proposed rule, Payment for Medicare Telehealth Services, for the discussion related to proposals to add CTS to the Medicare Telehealth list.

(40) Request for Information for Services Addressing Health-Related Social Needs (Community Health Integration (G0019, G0022), Principal Illness Navigation (G0023, G0024), Principal Illness Navigation—Peer Support (G0140, G0146), and Social Determinants of Health Risk Assessment (G0136))

a. Background

In the CY 2024 PFS final rule (88 FR 78920), we finalized G-codes to reflect new coding and payment for services describing Community Health Integration (CHI), G0019 (Community health integration services performed by certified or trained auxiliary personnel, including a community health worker, under the direction of a physician or other practitioner; 60 minutes per calendar month), and G0022 (Community health integration services, each additional 30 minutes per calendar month), which may include a community health worker (CHW), incident to the professional services and under the general supervision of the billing practitioner. We finalized a new stand-alone G code describing a SDOH Risk Assessment, G0136 (Administration of a standardized, evidence-based Social Determinants of Health Risk Assessment, 5-15 minutes, not more often than every 6 months). SDOH risk assessment refers to a review of the individual's SDOH or identified social risk factors that influence the diagnosis and treatment of medical conditions. We also finalized PIN services, described by HCPCS code G0023 (Principal Illness Navigation services by certified or trained auxiliary personnel under the direction of a physician or other practitioner, including a patient navigator or certified peer specialist; 60 minutes per calendar month) and G0024 ( Principal Illness Navigation services, additional 30 minutes per calendar month); G0140 ( Principal Illness Navigation—Peer Support by certified or trained auxiliary personnel under the direction of a physician or other practitioner, including a certified peer specialist; 60 minutes per calendar month) and G0146 ( Principal Illness Navigation—Peer Support, additional 30 minutes per calendar month), to better recognize through coding and payment policies when certified or trained auxiliary personnel under the direction of a billing practitioner, which may include a patient navigator or certified peer support specialist, are involved in the patient's health care navigation as part of the treatment plan for a serious, high-risk disease expected to last at least 3 months, that places the patient at significant risk of hospitalization or nursing home placement, acute exacerbation/decompensation, functional decline, or death.

b. Request for Information on Services Addressing Health-Related Social Needs

For CY 2025 we are issuing a broad request for information (RFI) on the newly implemented Community Health Integration (CHI) (HPCCS codes G0019, G0022), Principal Illness Navigation (PIN) (HCPCS codes G0023, G0024), Principal Illness Navigation—Peer Support (PIN-PS) (HCPCS codes G0140, G0146), and Social Determinants of Health Risk Assessment (SDOH RA) (HCPCS code G0136) services to engage interested parties on additional policy refinements for CMS to consider in future rulemaking.

We are interested in better addressing the social needs of beneficiaries and requesting information on the codes we created and finalized beginning in CY 2024 to fully encompass what interested parties and commenters believe should be included in the coding and payment we recently established. We are seeking comment on any related services that may not be described by the current coding that we finalized in the CY 2024 PFS final rule and that are medically reasonable and necessary “for the diagnosis or treatment of illness or injury” under section 1862(a)(1)(A) of the Act. We believe we can work within the current coding framework and explore additional opportunities to create codes that describe reasonable and necessary services furnished by billing practitioners and the auxiliary personnel under their general supervision. We are interested in feedback regarding any barriers to furnishing the services addressing health-related social needs, and if the service described by the codes we established are allowing practitioners to better address unmet social needs that interfere with the practitioners' ability to diagnose and treat the patient. This could include barriers specific to certain populations, including rural and tribal communities, residents of the U.S. Territories, individuals with disabilities, individuals with limited English proficiency, or other populations who experience specific unmet social needs.

In response to the CY 2024 PFS proposed rule, we heard from commenters that CSWs often connect individuals with community-based resources to address unmet social needs that affect the diagnosis and treatment of medical problems. CSWs can bill Medicare directly for services they personally perform for the diagnosis or treatment of mental illness but are not authorized by statute to bill for services that are provided by auxiliary personnel incident to their professional services. Since CHI and PIN codes are typically provided by auxiliary personnel supervised by the billing practitioner, CSWs could serve as the auxiliary personnel. CSWs could not directly bill Medicare for CHI and PIN services if they were provided by auxiliary personnel, as they are not authorized to supervise, bill, and be paid directly by Medicare for services that are provided by auxiliary personnel incident to their professional services. We believe the current CHI and PIN coding accurately captures the services CSWs currently provide, including the work involved in connecting beneficiaries with community-based resources for unmet social needs that affect the diagnosis or treatment of medical problems. As we stated previously in the CY 2024 PFS final rule (88 FR 78926), “the codes do not limit the types of other health care professionals, such as registered nurses and social workers, that can perform CHI services (and PIN services, as we discuss in the next section) incident to the billing practitioner's professional services, so long as they meet the requirements to provide all elements of the service included in the code, consistent with the definition of auxiliary personnel at § 410.26(a)(1).” We are clarifying that when we refer to “certified or trained auxiliary personnel” in the following codes: G0019, G0022, G0023, G0024, G0140, G0146, this also includes CSWs.

We are requesting information if there are other types of auxiliary personnel, other certifications, and/or training requirements that are not adequately captured in current coding and payment for these services. We are also interested in hearing more about what types of auxiliary personnel are typically furnishing these services, including the certifications and/or licensure that they have. We are also interested in whether there are nuances or considerations that CMS should understand related to auxiliary personnel and training, certifications or licensure barriers or requirements that are specifically experienced by practitioners serving underserved communities. This could include settings such as community mental health centers, community health clinics including FQHCs and RHCs, tribal health centers, migrant farmworker clinics, or facilities located in and serving rural and geographically isolated communities including the U.S. Territories.

As noted in the CY 2023 PFS final rule (87 FR 69790) and explained in the CY 2023 PFS proposed rule (87 FR 46102), when we refer to community-based organizations, we mean public or private not-for-profit entities that provide specific services to the community or targeted populations in the community to address the health and social needs of those populations. They may include community-action agencies, housing agencies, area agencies on aging, centers for independent living, aging and disability resource centers or other non-profits that apply for grants or contract with healthcare entities to perform social services. They may receive grants from other agencies in the U.S. Department of Health and Human Services, including Federal grants administered by the Administration for Children and Families (ACF), Administration for Community Living (ACL), the Centers for Disease Control and Prevention (CDC), the Substance Abuse and Mental Health Services Administration (SAMHSA), or State-funded grants to provide social services. We stated that, generally, we believe such organizations know the populations and communities they serve and may have the infrastructure or systems in place to assist practitioners to provide CHI and PIN services. We stated that we understood that many community-based organizations (CBOs) provide social services and do other work that is beyond the scope of CHI and PIN services, but we believed they are well-positioned to develop relationships with practitioners for providing reasonable and necessary CHI and PIN services.

We are interested in hearing more about CBOs and their collaborative relationships with billing practitioners. The new codes for CHI and PIN services recognized CBOs and their role in providing auxiliary personnel under the general supervision of the billing practitioners. We are seeking comment regarding the extent to which practitioners are contracting with CBOs (including current or planned contracting arrangements) for auxiliary personnel purposes, and if there is anything else CMS should do to clarify services where auxiliary personnel can be employed by the CBO, so long as they are under the general supervision of the billing practitioner. Given that the CHI and PIN services may be provided incident to the billing practitioner's professional services, we are also seeking comment on whether the incident to billing construct is appropriate for CBOs to supplement pre-existing staffing arrangements and the CBO/provider interface. We are also seeking comment on CBOs' roles, the extent to which practitioners are contracting with CBOs, incident to billing, and auxiliary personnel employed by CBOs under general supervision of practitioners serving and located in rural, tribal and geographically isolated communities, including the U.S. Territories.

We are also interested in any comments from interested parties across provider types and from practitioners in geographically isolated communities (for example, rural, tribal, and island communities) and otherwise underserved communities about coding Z codes on claims associated with billing for CHI, PIN, and SDOH risk assessment codes. We recognize that when screening for social needs, such needs may be identified and are interested in learning whether practitioners are also capturing unmet social needs on claims using Z codes for social risk factors or in some other way, and any barriers or opportunities to increase coding of Z codes when social risk factors screen positive.

Over the past several years, we have worked to develop payment mechanisms under the PFS to improve the accuracy of valuation and payment for the services furnished by physicians and other health care professionals, especially in the context of evolving models of care and addressing unmet social needs that affect the diagnosis and treatment of medical problems. Given the Agency's broader policy goals of increasing access to care, we are requesting information from interested parties and commenters on anything else that we should consider in the context of these codes and what else we could consider to be included in this newly established code set.

We are seeking comments on ways to identify specific services and to recognize possible barriers to improved access to these kinds of high-value, potentially underutilized services by Medicare beneficiaries.

We are seeking public comment to understand more clearly how often evidence-based care for persons with fractures, for example, is not provided and the reasons for this, and how recent or new PFS codes, or their revaluation, might help resolve specific barriers to its provision. The PFS currently includes many codes that pay for various components of care to manage patients with fractures over a course of treatment, such as transitional care management (TCM) and other care management services, evaluation and management visits (including the inherent complexity add-on for office/outpatient visits), principal illness navigation services, community health integration services, and the social determinants of health risk assessment. We refer readers to our recent guidance on these services on the CMS website at https://www.cms.gov/files/document/health-related-social-needs-faq.pdf . Medicare also pays for bone mass measurement/density tests ( MLN006559—https://www.cms.gov/medicare/prevention/prevntiongeninfo/medicare-preventive-services/mps-quickreferencechart-1.html#BONE_MASS , and for outpatient osteoporosis medication under Part D and, in some cases, Part B ( https://www.medicare.gov/coverage/osteoporosis-drugs ). These services can be billed on their own, or in combination, where applicable. We note that in the CY 2020 PFS final rule (84 FR 62685) and CY 2021 PFS final rule (85 FR 84547), CMS indicated that TCM may be billed concurrently with other care management codes when relevant, medically necessary, and not duplicative.

We are proposing new coding in other sections of this CY 2025 proposed rule that might be used to bill for managing fractures under a treatment plan, including the global post-operative add-on code, HCPCS code GPOC1, in section II.G.5 of this proposed rule and the advanced primary care management codes in section II.G.2 of this proposed rule. Interested parties have indicated that orthopedic surgeons, skilled nursing facilities (SNFs), and other practitioners and providers may not be providing comprehensive patient centered fracture management care for quality, payment, or administrative reasons, and that there is inadequate “hand-off” when post-discharge fracture care is transferred to practitioners in the community. They indicate a systemic disconnect on which provider and/or specialty is responsible for osteoporosis diagnosis and treatment, and that global surgical periods focus on acute fracture recovery rather than addressing osteoporosis. We are interested in hearing if the proposed global postop add-on code could help resolve these issues.

F. Evaluation and Management (E/M) Visits

1. Office/Outpatient (O/O) Evaluation and Management (E/M) Visit Complexity Add-On

In the CY 2024 PFS final rule (88 FR 78970 through 78982), we finalized separate payment for the O/O E/M visit complexity add-on code. The full descriptor for the O/O E/M visit complexity add-on code, HCPCS code G2211, is ( Visit complexity inherent to evaluation and management associated with medical care services that serve as the continuing focal point for all needed health care services and/or with medical care services that are part of ongoing care related to a patient's single, serious condition or a complex condition. (Add-on code, list separately in addition to office/outpatient evaluation and management visit, new or established)).

The O/O E/M visit complexity add-on code “reflects the time, intensity, and PE resources involved when practitioners furnish the kinds of O/O E/M visit services that enable them to build longitudinal relationships with all patients (that is, not only those patients who have a chronic condition or single high-risk disease) and to address the majority of a patient's health care needs with consistency and continuity over longer periods of time.” (88 FR 78970 through 78971). We explained in the CY 2024 PFS final rule that it is the relationship between the patient and the practitioner that is the determining factor for when the add-on code should be billed. The add-on code captures the inherent complexity of the visit that is derived from the longitudinal nature of the practitioner and patient relationship. The first part of the code descriptor, the “continuing focal point for all needed health care services,” describes a relationship between the patient and the practitioner when the practitioner is the continuing focal point for all health care services that the patient needs. The second part of the add-on code also describes a relationship involving medical services that are part of ongoing care related to a patient's single, serious condition or a complex condition. There is previously unrecognized but important cognitive effort of utilizing the longitudinal relationship in making a diagnosis, developing a treatment plan, and weighing the factors that affect a longitudinal doctor-patient relationship. The practitioner must decide what course of action and choice of words in the visit itself would lead to the best health outcome in the single visit while simultaneously building up an effective, trusting longitudinal relationship with the patient. Weighing these various factors, even for a seemingly simple condition, makes the entire visit inherently complex, which is what this add-on code is intended to capture (88 FR 78973 through 78974).

We responded to concerns raised by commenters about potential duplicative payment and potential misreporting of the code, noting that when procedures or other services are reported on the same day by the same billing practitioner as a significant, separately identifiable O/O E/M visit (the base codes that the visit complexity add-on code can be billed with), we believed that the services involve resources that are sufficiently distinct from the costs associated with furnishing stand-alone O/O E/M visits to warrant a different payment policy (88 FR 78971). We finalized our proposal that the O/O E/M visit complexity add-on code is not payable when the O/O E/M visit is reported with CPT Modifier-25, which denotes a significant, separately identifiable O/O E/M visit by the same physician or other qualified health care professional on the same day as a procedure or other service (88 FR 78974).

Some commenters expressed concern about our proposal to exclude payment for the visit complexity add-on code when the O/O E/M base code is reported with Modifier-25 because some preventive services such as the annual wellness visit (AWV) or a preventive vaccine are often provided on the same day as a separately identifiable O/O E/M visit, appropriately billed with Modifier-25. The commenters were concerned that practitioners might avoid the policy by not providing a preventive service on the same day as another O/O E/M service. We acknowledged that immunizations and AWVs were sometimes furnished on the same day as an O/O E/M visit and that our policy would prevent payment of the add-on code with such office visits billed with Modifier-25 and indicated that we would monitor utilization of the visit complexity add-on code and continue engagement with interested parties as the policy is implemented (88 FR 78975).

We have begun to monitor utilization of HCPCS code G2211 and are continuing to engage with interested parties. We continue to hear from some practitioners that our non-payment of the O/O E/M visit complexity add-on code when the O/O E/M base code is reported on the same day as a preventive immunization or other Medicare preventive service is disruptive to the way such care is usually furnished and contrary to our policy objective for establishing the add-on payment. An early analysis of practitioner claims from the first few months of 2024 shows relatively few Medicare preventive services being billed on the day preceding or following an O/O E/M visit. We cannot conclude from this analysis that our policy to deny payment of the O/O E/M visit complexity add-on code when the O/O E/M base code is reported on the same day as a preventive immunization or other Medicare preventive service is disruptive to the way such care is usually furnished. However, we do agree with practitioners expressing concerns that the current policy is not well-aligned with our policy objective for establishing the add-on payment.

In response to these concerns, we are proposing to refine our current policy for services furnished beginning in CY 2025. We are proposing to allow payment of the O/O E/M visit complexity add-on code when the O/O E/M base code is reported by the same practitioner on the same day as an AWV, vaccine administration, or any Medicare Part B preventive service furnished in the office or outpatient setting. Allowing payment for the O/O E/M visit complexity add-on code in this scenario as proposed would support our policy aims, which include paying for previously unaccounted resources inherent in the complexity of all longitudinal primary care office visits. In part, the O/O E/M visit complexity add-on code recognizes the inherent costs of building trust in the practitioner-patient relationship. We believe that trust-building in the longitudinal relationship is more significant than ever in making decisions about the administration of immunizations and other Medicare Part B preventive services. We welcome comments on this proposal.

G. Enhanced Care Management

1. Background

The CMS Center for Medicare and Medicaid Innovation (CMS Innovation Center) tests innovative payment and service delivery models to reduce program expenditures while preserving or enhancing quality of care. CMS Innovation Center models are assessed for their impact on quality of care and expenditures under Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) and the scope and duration of the model test may be expanded through rulemaking if expected to either reduce spending without compromising quality of care or enhance quality of care without increasing spending (section 1115A of the Act). After more than a decade of testing over 50 innovative payment and service delivery models, the CMS Innovation Center has enabled broad transformative changes to service delivery and payment in the Medicare, Medicaid, and CHIP programs which inspire additional transformation throughout the health care delivery system. Participants in CMS Innovation Center models have demonstrated improvements in care delivery and patient experience. The CMS Innovation Center undertook a retrospective review and synthesis of select model evaluations where care delivery changes have been observed, and the review indicated demonstrable evidence of enhanced care delivery in several areas, such as care coordination, team-based care, and leveraging data to risk-stratify patients.

Under the Medicare Physician Fee Schedule (PFS) statute at section 1848 of the Act, we establish payment amounts for covered physicians' services, and update our payment policies to address changes, including changes in medical practice. In this proposed rule, we are proposing to incorporate key payment and service delivery elements from CMS Innovation Center models tested and evaluated over the prior decade into permanent coding and payment under the PFS. Specifically, we are proposing to recognize a primary care practice delivery model trend which we will refer to as “advanced primary care” and which we propose to define using the 2021 National Academies of Sciences, Engineering, and Medicine (NASEM) report on Implementing High-Quality Care as: “whole-person, integrated, accessible, and equitable health care by interprofessional teams that are accountable for addressing the majority of an individual's health and wellness needs across settings and through sustained relationships with patients, families, and communities.” Using this definition, we are proposing to recognize the resources involved in furnishing services using an “advanced primary care” approach to care under the PFS. Under this approach, the delivery of care is supported by a team-based care structure and involves a restructuring of the primary care team, which includes the billing practitioner and the auxiliary personnel under their general supervision, within practices. This restructuring creates several advantages for patients, and provides more broad accessibility and alternative methods for patients to communicate with their care team/practitioner about their care outside of in-person visits (for example, virtual, asynchronous interactions, such as online chat), which can lead to more timely and efficient identification of, and responses to, health care needs (for example, practitioners can route patients to the optimal clinician and setting—to a synchronous visit, an asynchronous chat, or a direct referral to the optimal site of care). Practitioners using an advanced primary care delivery model can more easily collaborate across clinical disciplines through remote interprofessional consultations with specialists as well as standardize condition management into evidence-based clinical workflows, which allow for closed-loop follow-up and more real-time management for patients with acute or evolving complex issues. Practitioners can then use synchronous interactions to build rapport with patients and families, partner on complex decisions, and personalize their patients' care plans.

Specifically, we are proposing to adopt coding and payment policies to recognize advanced primary care management (APCM) services for use by practitioners who are providing services under this specific model of advanced primary care, when the practitioner is the continuing focal point for all needed health care services and responsible for all primary care services. This new proposed coding and payment makes use of lessons learned from the CMS Innovation Center's testing of a series of advanced primary care models, such as Comprehensive Primary Care (CPC), Comprehensive Primary Care Plus (CPC+), and Primary Care First (PCF) (see discussion in section II.G.2.a.(1) in this proposed rule) to inform the elements upon which the delivery of APCM services under an advanced primary care delivery model depend. As detailed below in sections II.G.2.b. through II.G.2.d., this proposed coding and payment will incorporate elements of several specific, existing care management and communication technology-based services (CTBS) into a bundle of services, that reflects the essential elements of the delivery of advanced primary care, for payment under the PFS starting in 2025.

In the context of the proposal, we are also interested in feedback on other related policies for our consideration in future rulemaking. To gather information from interested parties to inform potential future proposals, we have included an Advanced Primary Care Hybrid Payment Request for Information (RFI) (Advanced Primary Care RFI) in this proposed rule. The Advanced Primary Care RFI seeks feedback on whether and how we should consider additional payment policies that reflect our efforts to recognize the delivery of advanced primary care, including bundling of additional individual services, which may currently be furnished together as primary care services but paid separately. This focused approach to seeking feedback on advanced primary care payment policies is an important step in our ongoing efforts to emphasize accountable care and supports CMS' goal of having 100 percent of Traditional Medicare beneficiaries in accountable care relationships by 2030.

In addition to recognizing advanced primary care, this proposed rule also recognizes physician and practitioner work that draws from evidence generated by the CMS Innovation Center's Million Hearts® model. The Million Hearts® model found that quantitative assessment of patients' atherosclerotic cardiovascular disease (ASCVD) risk and providing high-risk beneficiaries with cardiovascular-focused care management services improved quality of care, including mortality. We discuss a proposal in this section to establish coding and PFS payment for these services based in part on the evidence generated by the Million Hearts® model.

2. Advanced Primary Care Management (APCM) Services (HCPCS Codes GPCM1, GPCM2, and GPCM3)

a. Background

We have been analyzing opportunities to strengthen and invest in primary care in alignment with the goals of the U.S. Department of Health and Human Services (HHS) Initiative to Strengthen Primary Care. Research has demonstrated that greater primary care physician supply is associated with improved population-level mortality and reduced disparities, and also, that establishing a long-term relationship with a primary care provider leads to reduced emergency department (ED) visits, improved care coordination, and increased patient satisfaction. HHS recognizes that effective primary care is essential for improving access to healthcare, for the health and wellbeing of individuals, families, and communities, and for achieving health equity. The first coordinated set of HHS-wide actions to strengthen primary care, as part of the Initiative, is in primary care payment; for example, adjusting payment to ensure it supports delivery of advanced primary care. CMS Innovation Center models, described in section II.G.2.a.(1) in this proposed rule, reflect the ongoing work within HHS and the unified, comprehensive approach to HHS primary care activities that we are accomplishing through our current statutory authorities and funding.

Over the last decade, we have updated PFS payment policies as appropriate, and we remain committed to improving how Medicare payment recognizes the resources involved in furnishing covered services that encompass aspects of advanced primary care furnished by interprofessional care teams and typically concentrating on the delivery of appropriate preventive care to patients and the management of individuals' chronic conditions as they progress over time. As part of the CY 2014 PFS final rule, we reaffirmed our support of primary care and recognized care management as one of the critical components of primary care that contributes to better health outcomes for individuals and reduced expenditure growth, and explained our prioritization of the development and implementation of several initiatives (such as those discussed in section II.G.2.a.(1) in this proposed rule) (77 FR 68978). Since then, we have implemented coding and payment for many care management services to better recognize the resources involved in furnishing medically necessary care management activities that generally are performed outside the context of a face-to-face, in-person visit—most often by the billing practitioner's clinical staff on behalf of patients with complex health care needs, including transitional care management in the CY 2013 PFS final rule (77 FR 68979); non-complex and complex chronic care management (CCM) in the CY 2015, 2017, and 2019 PFS final rules (78 FR 74414, 83 FR 58577, and 81 FR 80244); and principal care management (PCM) in the CY 2020 PFS final rule (84 FR 62962). The CCM and PCM code families now include 5 sets of codes which are reported monthly on a timed basis, each set with a base code of 20 to 60 minutes and an add-on code for each additional 30 minutes. The code sets vary by the degree of complexity of patient conditions (that is, non-complex and complex CCM for multiple chronic conditions or PCM for a single high-risk condition), and whether the number of minutes spent by clinical staff or the physician or non-physician practitioner (NPP) is used to meet time thresholds for billing.

Additionally, we have established coding and payment for certain services where a medical professional evaluates a patient's medical information remotely using communication technology. As discussed in the CY 2019 PFS final rule, this set of services is defined by and inherently involves the use of communications technology, and includes certain remote patient monitoring services, virtual check-in services, remote evaluation of pre-recorded patient information, remote interpretations of diagnostic imaging tests, and interprofessional consultations. We recognize that technological advances have changed and continue to change the practitioner-patient care delivery interaction. We have recognized these technology-enabled interactions through separately billable CTBS over the last several years. However, we acknowledge, as we learn more about how advanced primary care services are furnished to patients, that in some clinical care delivery scenarios, practitioners furnishing the type of care highlighted in this discussion may furnish certain aspects of the CTBS services in complement to care management services (for example, by allowing interprofessional care teams to answer patient questions, refer patients to higher levels of care, view and interpret patient images, order needed treatments, and offer reassurance or advice), in an effort to more efficiently manage the quantity and quality of medical information that is necessary to support effective patient-centered treatment plans.

Despite these important steps to pay separately for these care management services, there has been limited uptake of care management services and Medicare still overwhelmingly pays for primary care through traditional office/outpatient (O/O) Evaluation and Management (E/M) visit codes, which describe a broad range of physicians' services but do not fully distinguish and account for the resources associated with primary care and other longitudinal care. As we stated in the CY 2024 PFS final rule, we believe that because E/M visit codes are intended to be used very broadly, the complexity of services required to provide this type of care is not fully incorporated as part of the valuation of the work RVUs when the E/M code itself is used as the primary way to report the work of the professional (88 FR 78972). In the CY 2024 PFS final rule, we took steps to better recognize the inherent complexity of visits associated with primary and longitudinal care of patients by finalizing a new add-on code (HCPCS code G2211) for use by practitioners furnishing services as the continuing focal point for all the patient's needed health care services, such as a primary care practitioner (88 FR 78969). When furnishing primary and longitudinal care, practitioners must be attuned to the factors that develop and maintain trusting practitioner-patient relationships that enable effective diagnosis, management, and treatment on an ongoing basis. In finalizing the O/O E/M visit complexity add-on code, we recognized the feedback from interested parties indicating that the care management codes alone may not have mitigated the deficiencies in the ability of existing E/M codes to reflect the time and resources involved in furnishing visits in the context of longitudinal care—of which, advanced primary care is one model. Many commenters responded, as reflected in the CY 2024 PFS final rule, that they did not view the coding and payment currently available under the PFS as capable of recognizing the broad range of elements that define primary care (88 FR 52326). Other commenters responded that they did not believe that the existing E/M service codes alone reflect the work and resources involved in furnishing non- procedural care to Medicare beneficiaries (88 FR 78976).

Over the years, interested parties have focused attention on the ongoing need to improve how practitioners are paid, in and outside of payment bundles, including but not limited to the possibility of E/M codes designed specifically to be billed in conjunction with care management codes and the elimination of multiple disparities between the payment for E/M services in global periods and those furnished individually. Based on feedback from the physician and practitioner community, we understand that advanced primary care encompasses the work of interprofessional teams who are accountable for addressing the majority of an individual's health and wellness needs across settings and through sustained relationships, which necessarily involves time spent by primary care practitioners and their clinical staff outside of individual E/M visits.

As with many services paid under the PFS, we balance making payment that recognizes and supports technological developments in healthcare and the resources involved in evolving medical practice to allow for appropriate and expanded access to innovative technologies and newer services with promoting stability and efficiency in coding and billing rules for practitioners and institutions. We recognize the important role of gathering input and information from the CMS Innovation Center models (described in more detail in section II.G.2.a.(1) in this proposed rule), comment solicitations, research from other public and private entities, the work of all parties involved in furnishing primary care, and from the public at large. As previously noted, interested parties have given ample feedback over the years to inform our recognition of care management services; for example, as part of the CY 2022 PFS rulemaking, interested parties specifically requested our consideration of a “30-day global period bundling care management services” and we responded that we would consider this suggestion for future rulemaking (86 FR 65118). We have continued to incorporate feedback into our rulemaking and strengthen our care management code sets with the goal of better recognizing the elements of advanced primary care as part of a multi-year strategy. Based on this feedback, we are proposing to establish a set of codes to better describe advanced primary care management services broadly, to provide more stability in payment and coding for practitioners in the context of continued evolution in advanced primary care, as well as to provide us with a mechanism for continued and intentional improvements to advanced primary care payment.

(1) Key Care Delivery Methods in Select CMS Innovation Center Models

We have prioritized the implementation or testing of a series of initiatives designed to improve payment for, and encourage long-term investment in, primary care and care management services. By supporting enhanced care management and coordination, these initiatives contributed to the growing practice of advanced primary care and have also provided valuable lessons learned that we are incorporating into our proposals.

Several CMS Innovation Center models address payment for care management services and CTBS. The CPC initiative, the CPC+ model, and the PCF model all included payments for care management services that closely aligned with the care management services included in the PFS. In these initiatives, primary care practices received risk-adjusted, per beneficiary per month (PBPM) payments for care management services furnished to Medicare FFS beneficiaries attributed to their practices. These model payments were designed to offer practices a stable, predictable revenue stream that supported required infrastructure and appropriately compensated practices for the enhanced services they would provide. Practices participating in CPC+ consistently cited these payments as the most useful type of model payment support they received; these stable, prospectively paid payments typically served as the main funding source for compensating care managers, behavioral health providers, and other staff hired to improve care delivery. Because these payments were paid prospectively and could be used to support a range of care management and coordination activities, they provided participants with greater financial stability and flexibility to develop and expand capabilities to meet patients' care needs. Table 19 identifies a number of CMS Innovation Center models and key care delivery methods from each.

b. Proposed HCPCS G-Codes for Advanced Primary Care Management (APCM)

We are proposing to establish coding and make payment under the PFS for a newly defined set of APCM services described and defined by three new HCPCS G-codes. To recognize the resource costs associated with furnishing APCM services to Medicare beneficiaries, we are proposing to establish and pay for three new G-codes that describe a set of care management services and CTBS furnished under a broader application of advanced primary care. This new coding and payment would reflect the recognized effectiveness and growing adoption of the advanced primary care approach to care. It would also encompass a broader range of services and simplify the billing and documentation requirements, as compared to existing care management and CTBS codes, for clinicians who care for their patients using an advanced primary care model. We recognize that there are primary care physicians, practitioners, and practices beyond those that have participated in CMS Innovation Center primary care models (such as those discussed in section II.G.2.a.(1) in this proposed rule), that may incur resource costs associated with their treatment of patients based on the advanced primary care delivery model. Providing care using an advanced primary care delivery model involves resource costs associated with maintaining certain practice capabilities and continuous readiness and monitoring activities to support a team-based approach to care, where significant resources are used on virtual, asynchronous patient interactions, collaboration across clinical disciplines, and real-time management of patients with acute and complex concerns, that are not fully recognized or paid for by the existing care management codes. We have observed medical practice trends in primary care for several years. We note that in prior rulemaking, for example, in the CY 2013 PFS final rule, we stated, “we further consider[ed] how advanced primary care practices can fit within a fee-for-service model” (77 FR 68987), and in the CY 2015 PFS final rule, we stated our commitment “to supporting advanced primary care, including the recognition of care management as one of the critical components of primary care that contributes to better health for individuals and reduced expenditure growth” (79 FR 67715). In the CY 2017 PFS final rule, we discussed changes to retain elements of the CCM service that are “most characteristic of the changes in medical practice toward advanced primary care” (81 FR 80251). As the delivery of primary care has evolved to embrace advanced primary care more fully, we believe that it is prudent to now adopt specific coding and payment policy to better recognize the resources involved in care management under an advanced primary care delivery model.

Below, we explain the proposed new codes and their descriptors. In the next section, we propose to define the elements of the scope of service for APCM that would be required for a practitioner to bill Medicare for the APCM service, and we explain the proposed standards for practices that furnish APCM services to ensure that the physicians and practitioners who bill for these services have the capability to fully furnish advanced primary care, including APCM services (see section II.G.2.c. of this proposed rule). At this time, we are proposing to identify specific care management and CTBS services that are a part of advanced primary care delivery and would be bundled into the PFS payment for the APCM services. As such, we will identify the services that we are proposing would overlap substantially with the new codes and which would not be separately billable with the APCM codes under our proposal (see section II.G.2.d. of this proposed rule). Finally, we propose to establish relative values for these codes for purposes of payment under the PFS (see section II.G.2.e. of this proposed rule).

We are proposing to establish the following G-codes and descriptors for APCM services, and as explained in the next section, due to the similar scope of APCM and other care management and CTBS services, we are proposing to include some of the same language from the CCM and PCM service elements in the APCM code descriptors, as well as emphasize that certain practice capabilities and requirements are inherent in these elements and must be met in order to bill for APCM services:

HCPCS code GPCM1 ( Advanced primary care management services provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the following elements, as appropriate:

• Consent;

++ Inform the patient of the availability of the service; that only one practitioner can furnish and be paid for the service during a calendar month; of the right to stop the services at any time (effective at the end of the calendar month); and that cost sharing may apply.

++ Document in patient's medical record that consent was obtained.

• Initiation during a qualifying visit for new patients or patients not seen within 3 years;
• Provide 24/7 access for urgent needs to care team/practitioner, including providing patients/caregivers with a way to contact health care professionals in the practice to discuss urgent needs regardless of the time of day or day of week;
• Continuity of care with a designated member of the care team with whom the patient is able to schedule successive routine appointments;
• Deliver care in alternative ways to traditional office visits to best meet the patient's needs, such as home visits and/or expanded hours;
• Overall comprehensive care management;

++ Systematic needs assessment (medical and psychosocial).

++ System-based approaches to ensure receipt of preventive services.

++ Medication reconciliation, management and oversight of self-management.

• Development, implementation, revision, and maintenance of an electronic patient-centered comprehensive care plan;

++ Care plan is available timely within and outside the billing practice as appropriate to individuals involved in the beneficiary's care, can be routinely accessed and updated by care team/practitioner, and copy of care plan to patient/caregiver;

• Coordination of care transitions between and among health care providers and settings, including referrals to other clinicians and follow-up after an emergency department visit and discharges from hospitals, skilled nursing facilities or other health care facilities as applicable;

++ Ensure timely exchange of electronic health information with other practitioners and providers to support continuity of care.

++ Ensure timely follow-up communication (direct contact, telephone, electronic) with the patient and/or caregiver after an emergency department visit and discharges from hospitals, skilled nursing facilities, or other health care facilities, within 7 calendar days of discharge, as clinically indicated.

• Ongoing communication and coordinating receipt of needed services from practitioners, home- and community-based service providers, community-based social service providers, hospitals, and skilled nursing facilities (or other health care facilities), and document communication regarding the patient's psychosocial strengths and needs, functional deficits, goals, preferences, and desired outcomes, including cultural and linguistic factors, in the patient's medical record;
• Enhanced opportunities for the beneficiary and any caregiver to communicate with the care team/practitioner regarding the beneficiary's care through the use of asynchronous non-face-to-face consultation methods other than telephone, such as secure messaging, email, internet, or patient portal, and other communication-technology based services, including remote evaluation of pre-recorded patient information and interprofessional telephone/internet/EHR referral service(s), to maintain ongoing communication with patients, as appropriate;

++ Ensure access to patient-initiated digital communications that require a clinical decision, such as virtual check-ins and digital online assessment and management and E/M visits (or e-visits).

• Analyze patient population data to identify gaps in care and offer additional interventions, as appropriate;
• Risk stratify the practice population based on defined diagnoses, claims, or other electronic data to identify and target services to patients;
• Be assessed through performance measurement of primary care quality, total cost of care, and meaningful use of Certified EHR Technology.).

HCPCS code GPCM2 ( Advanced primary care management services for a patient with multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient, which place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline, provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the elements included in GPCM1, as appropriate) and HCPCS code GPCM3 ( Advanced primary care management services for a patient that is a Qualified Medicare Beneficiary with multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient, which place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline, provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the elements included in GPCM1, as appropriate).

HCPCS codes GPCM1 through GPCM3 would describe APCM services furnished per calendar month, following the initial qualifying visit (see section II.G.2.c.(1) for more on the initiating visit). Physicians and NPPs, including nurse practitioners (NPs), physician assistants (PAs), certified nurse midwives (CNMs) and clinical nurse specialists (CNSs), could bill for APCM services. As we will describe in more detail in section II.G.2.c., within the code descriptors for GPCM1, GPCM2, and GPCM3, we are including the elements of the scope of service for APCM as well as the practice capabilities and requirements that we believe to be inherent to care delivery by the care team/practitioner who is billing under a practice using an advanced primary care delivery model, and necessary to fully furnish and, therefore, bill for APCM services.

As described in more detail below, within the code descriptors for GPCM1, GPCM2, and GPCM3, we are proposing that the practitioner who bills for APCM services intends to be responsible for the patient's primary care and serves as the continuing focal point for all needed health care services. We anticipate that most practitioners furnishing APCM services will be managing all the patient's health care services over the month and have either already been providing ongoing care for the beneficiary or have the intention of being responsible for the patient's primary care and serving as the continuing focal point for all the patient's health care services. We anticipate that these codes will mostly be used by the primary care specialties, such as general medicine, geriatric medicine, family medicine, internal medicine, and pediatrics, but we are also aware that, in some instances, certain specialists function as primary care practitioners—for example, an OB/GYN or a cardiologist. In contrast to situations where the patient's overall, ongoing care is being managed, monitored, and/or observed by a practitioner, we believe that there are situations when care is provided by a practitioner who would not serve as “the continuing focal point for all needed health care services.”

Similarly, there are some time- or condition-limited practitioner-patient relationships that are clearly not indicative of the ongoing care that we anticipate practitioners would be responsible for when furnishing APCM services. As we stated in the CY 2021 PFS proposed rule and CY 2024 PFS final rule in the context of our policies for the O/O E/M visit complexity add-on code (HCPCS code G2211), a practitioner whose “relationship with the patient is of a discrete, routine, or time-limited nature; such as, but not limited to, a mole removal or referral to a physician for removal of a mole; for treatment of a simple virus, for counseling related to seasonal allergies, initial onset of gastroesophageal reflux disease; treatment for a fracture; and where comorbidities are either not present or not addressed, and/or when the billing practitioner has not taken responsibility for ongoing medical care for that particular patient with consistency and continuity over time, or does not plan to take responsibility for subsequent, ongoing medical care for that particular patient with consistency and continuity over time” (85 FR 84570 and 84571, 88 FR 78971). For example, a patient who spends one month of the year in another location could require physicians' services in that location if they experience exacerbation of one of their chronic conditions, but the practitioner who treats them would not intend to manage or monitor that patient's overall, ongoing care. Finally, HCPCS code G2211 can also be billed when medical services are “part of ongoing care related to a patient's single, serious condition or complex condition,” but this is different from the APCM requirement. A practitioner's management of one or more serious conditions (as is often the case with specialty care), without more, does not mean that the practitioner is also responsible for all primary care services and the focal point for all needed care (the requirement for APCM), and thus would not necessarily mean that the practitioner could bill for APCM.

As is our current policy for other care management services, and consistent with both CPT guidance and Medicare rules for CPT codes 99487, 99489, 99490, we are proposing that HCPCS codes GPCM1, GPCM2, and GPCM3 may only be reported once per service period (calendar month) and only by the single practitioner who assumes the care management role with a particular beneficiary for the service period. That is, based on a patient's status, a physician or practitioner would identify the patient to receive Level 1, Level 2, or Level 3 APCM services during a given service period (calendar month), and we would make payment for only one claim for APCM services for that service period. At this time, we do not see the need or value of proposing restrictions or complex operational mechanisms to identify a single physician or NPP who may bill for APCM services for a specific beneficiary. However, we recognize that other initiatives, such as the Medicare Shared Savings program, have operational mechanisms in place to attribute patients to certain ACOs (§ 425.400). While a similar approach could be used to attribute patients for APCM services, we are reluctant to introduce unnecessary complexity for these services. As we continue to develop our policies in this area, we are seeking feedback from interested parties on methodologies that could allow for identification of the beneficiary's primary care practitioner. We are also seeking comment on whether there should be additional requirements to prevent potential care fragmentation or service duplication.

We anticipate that APCM services would ordinarily be provided by clinical staff incident to the professional services of the billing practitioner in accordance with our regulation at § 410.26. We are proposing that APCM services would be considered a “designated care management service” under § 410.26(b)(5) and, as such, could be provided by auxiliary personnel under the general supervision of the billing practitioner.

Unlike the current coding to describe care management services, we are further proposing that the code descriptors for GPCM1, GPCM2, and GPCM3 would not be time-based. Based on feedback from the physician and practitioner community, we understand that ongoing care management and coordination services are standard parts of advanced primary care, even in months when documented clinical staff or billing professional minutes may not reach the required thresholds for billing or the patient's condition does not meet the clinical conditions for care management services under the existing code set. In consideration of the extensive feedback from interested parties, we have learned that practitioners who currently furnish monthly care management services may already be providing APCM services in a variety of clinical circumstances, documenting all necessary aspects of the patient-centered care furnished monthly to the patient without meeting the requirements to bill for care management services, such as satisfying the administrative requirement to count clinical staff minutes to reach specific time-based thresholds. As we stated in the CY 2024 PFS final rule in the context of the O/O E/M visit complexity add-on code (HCPCS code G2211), primary care physicians may diagnose and treat a condition in an O/O E/M visit that is not expected to last as long as three months or would not reasonably be expected to result in a risk of hospitalization, and the practitioner's clinical staff may provide significant care management and coordination services relating to that condition. For example, COVID-19 cases are clinical circumstances that generally do not last three months but may require significant acute management, care coordination, and follow-up within a given month, particularly for patients with comorbidities (88 FR 78973). Practitioners may also provide care management and coordination services to a patient whose condition meets the criteria in one or more care management codes, but the documented minutes of service may not reach the minimum time threshold to bill for a care management service. For example, the practitioner might provide care coordination for a month that includes 20 minutes of consulting with the patient's other healthcare providers and modifying medications to address an acute exacerbation of hypertension, but would not meet the requirements for billing the PCM service. We also note that, unlike the current coding to describe certain CTBS services, we are proposing that the code descriptors for GPCM1, GPCM2, and GPCM3 would not include the timeframe restrictions for billing certain CTBS (for example, the restriction for virtual check-in services that there is not a related E/M service provided within the previous 7 days or an E/M service or procedure within the next 24 hours or the soonest available appointment). As addressed in the CY2019 Final Rule, we have heard from interested parties that the timeframe restrictions for billing certain CTBS are administratively burdensome (83 FR 59686).

We are also proposing that not all elements included in the code descriptors for APCM services must be furnished during any given calendar month for which the service is billed. APCM services are largely designed to be person-centered and focused on the individual patient, such that the elements that are provided depend on medical necessity and individual patient need. Therefore, we anticipate that all the APCM scope of service elements (for example, comprehensive care management and care coordination) will be routinely provided, as deemed appropriate for each patient, acknowledging that not all elements may be necessary for every patient during each month (for example, the beneficiary may have no hospital admissions that month, so there is no management of a care transition after hospital discharge). We also anticipate that there may be some months where it may be appropriate for some service elements to be performed more than once for the patient. For example, in one month a patient with heart failure and chronic kidney disease receiving APCM Level 2 services (GPCM2) may be on a stable medication regimen, receive communication about their care plan, but no virtual check-ins. The next month, the patient may experience a heart failure exacerbation requiring inpatient admission, and then receive as part of their APCM service timely communication and follow-up with new labs ordered, multiple virtual check-ins ensuring that the patient understands their new medications, a phone call to help the patient understand the lab results, and an interprofessional consultation with the patient's cardiologist to help decide if the patient's diuretic dosage should be changed.

However, even if not all elements of the APCM service are furnished each month for which APCM is billed, we propose that billing practitioners and auxiliary personnel must have the ability to furnish every service element and furnish these elements as is appropriate for any individual patient during any calendar month. As described in more detail in section II.G.2.c. of this proposed rule, we believe that maintaining certain advanced primary care practice capabilities and requirements is inherent in these elements and must be met to fully furnish and bill APCM. For example, if in our previous example, the patient with heart failure and chronic kidney disease receiving Level 2 APCM experiences swollen legs, the patient should be able to submit a photo or video to the practitioner via a secure communications system, and the practitioner must be able to interpret and communicate remotely with the patient about those images.

While we are proposing that specific minutes spent furnishing APCM services for purposes of billing HCPCS codes GPCM1-GPCM3 need not be documented in the patient's medical record, we would expect that any actions or communications that fall within the APCM elements of service would be described in the medical record and, as appropriate, its relationship to the clinical problem(s) they are intended to resolve and the treatment plan, just as all clinical care is documented in the medical record.

We are seeking feedback on these service descriptions, and on whether there are elements of other care management services that should be removed or altered for purposes of APCM services.

Finally, while the service descriptors above are consistent across all three APCM levels because the scope of service elements are consistent across all levels of APCM and the elements that are provided depend on medical necessity and individual patient need, we are proposing that the APCM codes would be stratified into three levels based on certain patient characteristics that are broadly indicative of patient complexity and the consequent resource intensity involved in the provision of these services in the context of advanced primary care. We are proposing that the new APCM coding schema would be stratified based on APCM services being furnished using the advanced primary care model to patients with one or fewer chronic conditions (“Level 1”); patients with two or more chronic conditions (“Level 2”); and Qualified Medicare Beneficiaries (QMBs) with two or more chronic conditions (“Level 3”) (see Table 20 for the three APCM code levels). This stratification of APCM into three levels allows us to distinguish among different levels of patient complexity and more accurately reflect the resources required to furnish APCM services for certain categories of beneficiaries. We anticipate that a practitioner using the advanced primary care model would bill for APCM services for all or nearly all the patients for whom they intend to assume responsibility for primary care.

Furthermore, we recognize the ways in which this new APCM coding intersects with current care management codes around number of chronic conditions. We note that the current care management codes are generally stratified in a similar, though more granular way, by the degree of complexity of care based on the presence of chronic conditions and complexity of medical decision making, who directly performs the service, and the time spent furnishing the service. In establishing separate payment for CCM services in the CY 2014 PFS final rule, we recognized that the resources involved in furnishing comprehensive, coordinated care management services to patients with multiple (two or more) chronic conditions were greater than those included in a typical non-face-to-face care management service, which we continued to consider as bundled into the payment for face-to-face E/M visits (78 FR 43337). In the CY 2017 PFS final rule, based on robust feedback from interested parties indicating that the new CCM codes did not fully capture the service time required to furnish care to beneficiaries with more complex conditions, we finalized new codes for patients with complex care management needs. In the CY 2016 PFS final rule, in considering how to improve the accuracy of our payments for care coordination, particularly for patients requiring more extensive care management, we stated that we believe the care coordination and management for Medicare beneficiaries with multiple chronic conditions, a particularly complicated disease or acute condition, or certain behavioral health conditions often requires extensive discussion, information-sharing, and planning between a primary care physician and a specialist (for example, with a neurologist for a patient with Alzheimer's disease plus other chronic diseases) (80 FR 70919).

(1) Level 1 APCM

We are proposing the Level 1 APCM code for patients with one or fewer chronic conditions because of the increased import and use of non-face-to-face interactions in advanced primary care even for patients with relatively fewer health needs, which has increased over time for several observable reasons, including broad evolution in information and communication technology in everyday life, diffusion of practices first adopted for higher-acuity patients, and continuing practices widely adopted during the COVID-19 pandemic that reduce reliance on in-person interactions. We believe APCM services for a patient diagnosed with one or fewer chronic conditions will require significantly less time and resources than one with two or more chronic conditions since, in general, there would be fewer ongoing health needs and other health care resources to coordinate, a lower risk of drug interactions, and less complicated physiology. Based on CY 2010 Medicare claims data, the difference in annual expenditures per beneficiary between patients with one or fewer chronic conditions and those with two or three chronic conditions was $3,673. Our current care management coding similarly delineates patient complexity between patients with a single serious chronic condition (PCM codes) and those with two or more serious chronic conditions (CCM codes). We anticipate that practitioners who would furnish APCM services may have already had experience with care management services coding and payment for much of this population. The Level 1 APCM code would also address the current gap in coding and payment for care management services furnished using an advanced primary care model for patients without multiple chronic conditions.

(2) Level 2 APCM

We are proposing the Level 2 APCM code for patients with two or more chronic conditions because of the frequency of chronic conditions in the Medicare population. In fact, nearly four in five Medicare beneficiaries have two or more chronic conditions. Furthermore, as noted previously, our current care management coding delineates patient complexity for the CCM codes for patients with two or more serious chronic conditions, and we anticipate that practitioners who would furnish APCM services may have already had experience with care management services coding and payment for much of this population.

For example, someone with chronic kidney disease and heart failure requires regular check-ins, coordination with specialty care, follow-up after hospital admissions for heart failure exacerbations, regular modifications of the care plan, and more. These services are typically described by the existing CCM services. The patient may also typically need to reach out more often to their primary care practitioner with questions or new symptoms via the patient portal. For instance, the person sends a message through the patient portal to ask whether or not they should come into the primary care office after gaining ten pounds in the last week—which could be a sign of increased fluid retention and the need for increased diuretic dosages to avoid pleural edema (an accumulation of fluid in the lungs). The primary care team books the patient for a same-day urgent care appointment to assess for signs of swelling and pleural edema. Again, this on-demand access to their primary care team can help treat the patient's chronic conditions in a patient-centered way and avoid unnecessary complications.

(3) Level 3 APCM

We are proposing the Level 3 APCM code for patients with QMB status and two or more chronic conditions based on our understanding that people with both multiple chronic conditions and social risk factors generally require even more time and resources from primary care practitioners and their teams to ensure that the patient's chronic conditions are managed appropriately and effectively. We are proposing to use a patient's QMB status as a method to identify beneficiaries with social risk factors that generally necessitate relatively greater resource requirements to effectively furnish advanced primary care than people without such risk factors. There is significant evidence that such dually eligible beneficiaries, on average, are more medically complex and have higher healthcare needs; for example, dually eligible beneficiaries are more likely to have poor functional status and recent expenditure data found that the difference in Medicare spending on a per person per year basis between dually eligible and non-dually eligible Medicare beneficiaries was $13,198 in CY 2021.

QMBs are the largest eligibility group within the Medicare-Medicaid dually eligible enrollee population, comprising of 66 percent of the 12.8 million individuals per the most recent available data. For the approximately 8.5 million dually eligible beneficiaries who are QMBs, Medicaid provides assistance for patients to meet Medicare's cost-sharing requirements. The QMB eligibility group helps to ensure full access to the Medicare benefit for the lowest income enrollees by covering these costs. Individuals can qualify for QMB status if their income is below 100 percent of the Federal Poverty Level ($15,300/year in 2024) and assets are no more than $9,430/$14,130 (one person/married couple in 2024), although states can request CMS approval to disregard certain income and assets. Beneficiaries apply for this benefit with their State's Medicaid program and must be redetermined eligible at least annually.

There is growing recognition that social risk factors—such as income, education, access to food and housing, and employment status—play a major role in health, such that social risk factors may affect a person's ability to reach their health goals, as well as the diagnosis and treatment of their medical problems. A report submitted to Congress by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) in response to the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 (Pub. L. 113-185) found that dual Medicare-Medicaid enrollment as a marker for low income was typically the most powerful predictor of poor outcomes on quality measures among social risk factors examined. Beneficiaries with social risk factors may have worse health outcomes due to a host of factors, including higher levels of medical risk, worse living environments (for example, availability of community services, pollution, safety), greater challenges in adherence to medication regimens and medical recommendations (for example, diet/lifestyle), and/or bias or discrimination. Evidence suggests that many health outcomes are related more to social, environmental, and economic factors (which may be beyond practitioners' control) than to clinical interventions. Dual enrollees, and more specifically, QMBs, are therefore a category of Medicare beneficiaries who we believe to be the most socially at-risk of poorer clinical outcomes. As stated in the ASPE report, “Some of the observed relationship between social risk factors and outcomes may be the result of underlying differences in medical complexity, frailty, disability, and/or functional status. For example, dually-enrolled beneficiaries are more likely to have poor functional status, and therefore, may be more likely to be readmitted after a hospitalization.” As another example, a patient with diabetes, heart failure, and QMB status may experience food, transportation, or housing insecurity that contributes to difficulty maintaining blood glucose control which can contribute to medical complications including potentially preventable heart failure exacerbations. The primary care practitioner's team may need to check-in regularly to ensure, for example, that the patient gets needed specialty care such as an ophthalmologic examination to avoid the ocular manifestations of diabetes; and consider the availability of transportation vouchers so the patient can attend the ophthalmology appointment. We are proposing the Level 3 APCM code to recognize the unique characteristics of QMBs as beneficiaries with social risk factors for whom significantly more resources are involved in comprehensive care management by practitioners that furnish advanced primary care services to them.

Additionally, we note that patients with QMB status are not responsible for the Medicare cost-sharing associated with covered Medicare Part A or B services, including for any APCM services. Generally, States cover such cost-sharing on behalf of QMBs, although many states use a “lesser-of” policy through which states pay less than the full cost sharing amounts. We solicit comments from States on how they would cover cost sharing for the proposed APCM bundle, considering lesser-of policies.

We are also seeking feedback on the use of QMB status and multiple (two or more) chronic conditions as the basis to bill for APCM Level 3 (GPCM3), whether QMB status is an appropriate indicator to identify beneficiaries with added social risk, and whether there is an equivalent marker of social deprivation for use in commercial markets that might be a possible alternative identifier.

c. APCM Service Elements and Practice-Level Capabilities

All the elements within the scope of APCM services are included in the service descriptors for GPCM1, GPCM2, and GPCM3, listed in Table 22, and described in this section. As described above, we are proposing that APCM services would include nearly the same scope of service elements and conditions we established for CCM and PCM services (including elements of 24/7 access and care continuity, care management and care plan, care coordination, management of care transitions, and enhanced communication). We believe this is appropriate because care management is a key component of care delivery using an advanced primary care model. The proposed phrasing in the code descriptors for APCM services generally tracks the code descriptors for CCM and PCM services, except for references to “time spent” or “minutes” of service.

We are seeking to ensure that the APCM codes would fully and appropriately capture the care management and CTBS services that are characteristic of the changes in medical practice toward advanced primary care, as demonstrated in select CMS Innovation Center models. As we do for CCM and PCM services, we propose to require for APCM services that the practitioner provide an initiating visit and obtain beneficiary consent (see section II.G.2.c.(1) and II.G.2.c.(2) of this proposed rule). As described in more detail below, we are proposing to incorporate as elements of APCM services “Management of Care Transitions” and “Enhanced Communications Opportunities.” For the “Management of Care Transitions” APCM service element, we are proposing to specify timely follow-up during care transitions (see section II.G.2.c.(6) of this proposed rule). For the “Enhanced Communications Opportunities” APCM service element, we are proposing to incorporate access to CTBS services, including remote evaluation of pre-recorded patient information and interprofessional telephone/internet/EHR referral service(s), to maintain ongoing communication with the patient, as well as access to patient-initiated digital communications that require a clinical decision, such as virtual check-ins and digital online assessment and management and E/M visits (or e-visits) (see section II.G.2.c.(8) of this proposed rule).

We are also proposing to specify for APCM services the practice-level characteristics and capabilities that are inherent to, and necessarily present when a practitioner is providing covered services using an advanced primary care delivery model. As described in more detail below, included in the service descriptors for GPCM1, GPCM2, and GPCM3, and listed in Table 22, our proposed practice-level capabilities that reflect care delivery using an advanced primary care model are focused around 24/7 access and continuity of care (see section II.G.2.c.(3) of this proposed rule), patient population-level management (see section II.G.2.c.(9) of this proposed rule), and performance measurement (see section II.G.2.c.(10) of this proposed rule). These practice capabilities are indicative of, and necessary to, care delivery using an advanced primary care model. Further, APCM services, as we propose to define them, could not be fully performed in the absence of these practice capabilities; and, in such cases, APCM services should not be billed.

We are proposing that practitioners participating in the ACO REACH model, the Making Care Primary model, and the Primary Care First model would satisfy the proposed initiating visit, patient population-level management, and performance measurement APCM service elements and practice-level capabilities by virtue of their model participation. These CMS Innovation Center models promote advanced primary care delivery consistent with the proposed APCM service elements and practice-level capabilities described in Table 21. The models all utilize attribution methods that review the most recently available two years of Medicare claims to identify whether a model participant is responsible for a Medicare beneficiary's primary care, aligning with the initiating visit requirements for APCM services. Additionally, these three models also include risk stratification and quality and cost performance metrics that are aligned or overlap with the Value in Primary Care MVP. Around-the-clock access and continuity of care, patient population-level management, and performance measurement are indicative of, and necessary to, care delivery using an advanced primary care model. We are also considering whether certain practitioners in other types of CMS Innovation Center models also satisfy the proposed service elements and requirements and seek comments on this question.

We are seeking comment on whether the proposed elements and requirements are appropriately reflective of care management services for advanced primary care, and whether there are proposed elements of APCM services or proposed practice capabilities that should be modified or removed. We are also seeking feedback on ways to align the APCM services with other Medicare programs and initiatives, such as the Shared Savings Program, ACO REACH, and advanced primary care models, and the Quality Payment Program, including MIPS and Advanced Alternative Payment Models (Advanced APMs). We seek to create a low burden way for practitioners to furnish APCM services by appropriately recognizing ways in which they may meet APCM billing requirements as part of these programs and initiatives. We note that under the Quality Payment Program, practitioners who are MIPS eligible clinicians would report measures and activities as specified by CMS under the four MIPS performance categories: quality, cost, improvement activities, and Promoting Interoperability (PI). To report to MIPS for a performance period (§ 414.1320(i)) for the PI performance category, a MIPS eligible clinician must use Certified EHR Technology (CEHRT), as defined at paragraph (2) under CEHRT at § 414.1305, report on the objectives and associated measures as specified by CMS, and submit required attestations as specified in § 414.1375(b)(3) (§ 414.1375(b)). Eligible clinicians who participate in Advanced APMs under the Quality Payment Program are required under the terms of those APMs to use CEHRT as specified in § 414.1415(a)(1)(iii); and are paid under the terms of those APMs based on MIPS-comparable quality measures as specified in § 414.1415(b).

As described in the sections below, we are proposing that a billing practitioner who is part of a Shared Saving Program ACO, or CMS Innovation Center ACO or participating in Making Care Primary or Primary Care First would already satisfy the proposed practice-level requirements for patient population-level management (see section II.G.2.c.(9) of this proposed rule), and performance measurement (see section II.G.2.c.(10) of this proposed rule) by meeting separately applicable participation requirements within the Shared Savings Programs and models. As noted previously, we are considering whether practitioners in other types of CMS Innovation Center models also satisfy certain proposed service elements and practice-level requirements through their participation in the models, and seek comments on this question.

(1) Beneficiary Consent

Consistent with other care management services, we are proposing that the beneficiary's consent to receive APCM services must be documented in the medical record as a condition of payment for APCM services, as not all Medicare beneficiaries for whom APCM services would be medically necessary may want to receive these services. As we do for CCM and PCM services, we are proposing to require billing practitioners to inform the beneficiary of the availability of APCM services, and ensure the beneficiary is aware that Medicare cost-sharing usually applies (though these costs may be covered through supplemental health coverage). The practitioner should also inform the beneficiary that, by providing APCM services, they intend to assume responsibility for all of the patient's primary care services and serve as the continuing focal point for all needed health care services; and that only one practitioner can furnish and be paid for APCM services during a calendar month, but that their consent to receive APCM services does not limit their option to receive Medicare covered health care services from other practitioners. The practitioner should inform the beneficiary that APCM is an ongoing, monthly service and of their right to stop APCM services at any time (effective at the end of the calendar month), and that they only need to provide consent once to receive APCM services from the practitioner. We are proposing that the practitioner would document in the beneficiary's medical record that this information was explained and note whether the beneficiary accepted or declined APCM services. We note that practitioners can still elect to obtain written consent rather than verbal consent.

Practitioners have informed us that beneficiary cost sharing is a significant barrier to provision of similar care management services, such as CCM services. The proposed patient consent requirement is intended to ensure that patients do not incur unexpected expenses for care that is largely, or in significant part, non-face-to-face in nature. The proposed requirement for patient consent would also help to avoid duplicative practitioner billing, as the patient would understand that the practitioner intends to serve as the focal point for all their care, and that only one practitioner can furnish and be paid for APCM services in any particular month.

We seek feedback on these proposed requirements, including how best to effectively educate both practitioners and beneficiaries on the benefits of APCM, especially as it reflects a new bundle of services that may have previously been separately billed, and whether a CMS-provided template to facilitate patient consent would be helpful. We also seek feedback on whether CMS should require practitioners to revisit consent for APCM services on an ongoing basis with patients.

(2) Initiating Visit

Consistent with CCM services (CPT codes 99437, 99439, 99487, and 99489-99491) and PCM services (CPT codes 99424-99427), we are proposing to require an initiating visit for APCM services only for new patients instead of for all beneficiaries receiving APCM services. Consistent with the definition of “new patient” as described in the CPT® 2024 Professional Edition Code Book on page 4, we are proposing to define a “new patient” as a person who did not receive any professional services from the physician or other qualified health care professional or another practitioner in the same group practice within the previous 3 years. The initiating visit furnished in advance of APCM services establishes the beneficiary's relationship with the billing practitioner, ensures the billing practitioner assesses the beneficiary prior to initiating APCM services, facilitates collection of comprehensive health information to inform the care plan, and provides an opportunity to obtain beneficiary consent (although beneficiary consent can be obtained outside of the initiating visit). We are proposing that the same services that can serve as the initiating visit for CCM services could serve as the initiating visit for APCM, including a Level 2 through 5 E/M visit, initial preventive physician exam (IPPE), or TCM service, and we propose that the initiating visit could be provided in person or as a Medicare telehealth service.

We are proposing that an initiating visit would not be required for “established patients” based on certain circumstances that we believe demonstrate an established patient-practitioner relationship in advance of furnishing APCM services: (1) if the beneficiary is not a new patient (has been seen by the practitioner or another practitioner in the same practice within the past three years) or (2) if the beneficiary received another care management service (including an APCM service, non-complex or complex CCM service (CPT codes 99487, 99489, 99490, 99491, 99439, 99437), or PCM service (CPT codes 99424, 99425, 99426, 99427)) within the previous year with the practitioner or another practitioner in the same practice. We do not believe there necessarily is a need for an initiating visit for APCM services for patients with whom the practitioner (or another in the same practice) has an established relationship; and we would not want to require an initiating visit under circumstances where a visit may not be medically necessary. The proposed policy not to require an initiating visit for beneficiaries who have received any professional service from the physician or other qualified health care professional or another practitioner in the same group practice within the previous 3 years is consistent with CPT's definition of the term “established patient,” such that we believe this captures patients who have been seen relatively recently and who have an existing relationship with the practice. In the case of beneficiaries who have received care management services from a practitioner within the practice in the past year, we believe this indicates that the patient is also an “established patient” in that the patient has an existing relationship with the practice, and the patient previously has consented to the receipt of care management services, which have overlapping service elements with APCM services.

We note that these standards would be consistent with applicable Shared Savings Program and CMS Innovation Center patient attribution standards in ACO REACH, Making Care Primary, and Primary Care First. Any beneficiary eligible to be assigned to an ACO because of an established care relationship between the beneficiary and a billing practitioner who would be billing for APCM services under the ACO participant's TIN, including beneficiaries who voluntarily aligned to a practitioner in the ACO, would not be considered a new patient and would not require an initiating visit. Medicare rules governing patient attribution to an ACO on the basis of care provided by an ACO-participating clinician similarly establishes where an existing care relationship exists. Similarly, beneficiaries eligible to be assigned to a REACH ACO, or a Making Care Primary or Primary Care First practice because of an established care relationship between the beneficiary and a billing practitioner who would be billing for APCM services under the model participant's TIN, including beneficiaries who voluntarily aligned to a practitioner participating in one of these three models would not be considered a new patient and would not require an initiating visit. While we are proposing certain exceptions to the initiating visit requirement for APCM services, we note that an initiating visit may still be needed even when not required, and the billing practitioner can always furnish and bill for medically necessary visits, including before initiating APCM services.

We seek feedback on these proposed requirements, including whether additional services could serve as the initiating visit and whether a different period of time (for example, patients not seen within one or two years) would be more appropriate.

(3) 24/7 Access and Continuity of Care

Access and continuity build on the patient-practitioner relationship to ensure patients receive the right care at the right time from the right care team member. We are proposing to include for APCM services the same scope of service elements we established for CCM and PCM services for 24/7 Access and Continuity of Care with some modifications. For 24/7 Access to Care, the scope of the service element we propose for APCM services would be to provide 24/7 access for urgent needs to the care team/practitioner with real-time access to patient's medical records, including providing patients/caregivers with a way to contact health care professionals in the practice to discuss urgent needs regardless of the time of day or day of week.

As described in the CY 2017 PFS final rule, this accurately reflects the potential role of clinical staff or call-sharing services in addressing after-hours care needs, and that after-hours services typically would and should address any urgent needs and not only those explicitly related to the beneficiary's chronic conditions (79 FR 67722). In advanced primary care models of care, primary care practices should be at the center of that care—providing an effective “first contact” for patients, supporting patients in their management of care, and coordinating across different settings of care. Achieving this level of access to primary care requires timeliness and an effective relationship with those in the practice who are providing that care. True access is fully informed by knowledge about the patient and their care, which is only possible through real-time access to the patient's electronic health information. Access to primary care, informed by health information technology (IT), makes the right care at the right time possible, potentially avoiding costly urgent and emergent care. Practices can achieve 24/7 access to care informed by health IT through call coverage by a practitioner with health IT system access. This can be a practitioner from the practice or a covering practitioner who has system access. Many practices and systems use nurse call lines or answering services working with standard protocols to provide the initial point of contact after hours and effectively address common problems. In this situation, an escalation protocol will engage a practitioner with system access when needed for decision making. Other successful practices expand hours, add urgent care services or partner with other practices to provide these services, or contract with existing urgent care providers to manage and coordinate care after regular office hours.

For Continuity of Care, the scope of service element would be to provide continuity of care with a designated member of the care team with whom the patient is able to schedule successive routine appointments. Continuity of care refers to the ability of patients to receive care from practitioners who know them and are known by them. This continuity builds and reinforces a relationship based in trust and shared experience that is highly valued by both practitioners and patients. Practice focus on continuity of care can translate to improved preventive and chronic care, patient and practitioner satisfaction, lower hospital utilization, and lower costs. Depending on the type and setting of care, there are three components of continuity that improve patient outcomes and experience: relational continuity (defined as the “ongoing therapeutic relationship between a patient (and often their family/caregiver)” which is foundational in advanced primary care), informational continuity (where practitioners have access to information on patients' past events and personal circumstances to inform current care decisions); and longitudinal continuity (which refers to ongoing patterns of healthcare visits that occur with the same practice over time). A key strategy to optimize continuity is ensuring that all practitioners and/or the care team have access to the same patient information to guide care within health IT, and successful practices start with a review and discussion of the practice-level data developed through measurement of continuity. Practices can develop the capability to measure continuity of care between the patient and the practitioner/care team using health IT, practice management software, or other tracking mechanisms, allowing them to track improvements over time.

As included in the APCM code descriptors, we are proposing to specify for the “24/7 Access to Care” APCM service element that the practice would maintain the capability to deliver care in alternative ways to traditional office visits to best meet the patient population's needs, such as e-visits, phone visits, home visits, and/or expanded hours. This proposed standard for alternatives to office visits is similar to several requirements tested in CMS Innovation Center models (such as the CPC+ model's requirement that participating practices regularly offer at least one alternative to traditional office visits ), and reflects the understanding that providing alternatives to traditional office visits is an essential element of the delivery of care under an advanced primary care model of care. Moving care out of traditional office visits can reduce demand and open supply for prioritized visits. By changing where and how care is delivered, practices may have increased availability for patients with complex needs who may be better served by more time-intensive visits in the office, at home, or in a nursing home. We are not proposing that a practice would need to regularly deliver care in all these alternative ways—for example, a practice may routinely offer e-visits and phone visits, but not regularly furnish home visits, and still demonstrate this primary care practice capability. Another practice might offer extended hours on certain days to help patients who may find it hard to take off work to see their clinician, and this would satisfy this practice requirement.

We seek feedback on these proposed requirements.

(4) Comprehensive Care Management

We are proposing for APCM services the “Comprehensive Care Management” service element we established for CCM and PCM services with some modifications. Rather than “care management for chronic conditions,” the APCM service element would be “overall comprehensive care management” which, like the element for CCM and PCM services, may include, as applicable, “systematic assessment of the patient's medical, functional, and psychosocial needs; system-based approaches to ensure timely receipt of all recommended preventive care services; medication reconciliation with review of adherence and potential interactions; and oversight of patient self-management of medications.” This care management standard is similar to several requirements tested in CMS Innovation Center models (such as the CPC+ model's requirement that participating practices provide targeted, proactive, relationship-based care management to all patients identified as at increased risk and likely to benefit from intensive care management and provide short-term care management, including medication reconciliation, to patients following hospital admission/discharge/transfer, including observation stays, and, as appropriate, following an ED discharge) and is an essential element of the delivery of care under an advanced primary care model of care. Care management is a resource-intensive process of working with patients, generally outside of face-to-face office visits, to help them understand and manage their health, navigate the health system, and meet their health goals. Practices working with patients who have complex care needs have found care management to be an effective and necessary strategy for mitigating risk and improving health outcomes. Practices have found it valuable to think in terms of two broad types of patients who might benefit from different approaches to care management: patients with some combination of multiple comorbidities, complex treatment regimens, frailty and functional impairment, behavioral and social risks, and serious mental illness who would often benefit from long-term, proactive, and relationship-based longitudinal care management; and patients who are otherwise stable and will benefit from short-term, goal-oriented episodic care management during periods of increased risk like transitions of care; diagnosis of a new, serious illness or injury involving complex treatment regimens; or newly unstable chronic illness.

Successful practices use on-site, non-physician, practice-based, or integrated shared care managers to provide longitudinal care management for the highest risk cohort of patients, with assistance from other practice staff, as needed. Multiple team members may engage in care management, but each patient identified as eligible should have a clinically trained individual in the practice who is accountable for active, ongoing care management that goes beyond office-based clinical diagnosis and treatment. Longitudinal care management is captured in health IT and includes providing proactive care that moves beyond traditional office visits or crisis-driven care (for example, ED care or hospitalization) and is not primarily visit-based. Although office visits are opportunities to define goals, plan patient care, engage in shared decision making, and build a trusting relationship, most care management activities take place by phone, patient portal, email, mail, or home visits (and through visits to skilled nursing facilities or hospitals to support transitional care).

Practices use the concept of episodic care management to identify patients who have acute or urgent needs using “triggering events” (for example, hospital discharge, new diagnoses, medical crisis, major life event, decompensation in otherwise controlled chronic condition) for short-term, problem-focused care management services. Episodic care management is generally time-limited and problem focused and most often includes coordination of services and follow-up, patient education and support for self-management, and medication reconciliation.

We seek feedback on these proposed requirements.

(5) Patient-Centered Comprehensive Care Plan

We are proposing for APCM services the “Comprehensive Electronic Care Plan” service element we established for CCM and PCM services with some modifications. As included in the APCM code descriptors, we are proposing to specify that the care plan is “patient-centered” which, as for CCM and PCM services, “is available timely within and outside the billing practice” as appropriate to individuals involved in the beneficiary's care, can be routinely accessed and updated by care team/practitioner, and “copy of care plan to patient/caregiver.”

Providing longitudinal care management, which is an essential element of the delivery of care under an advanced primary care model of care, includes the process of personalized care planning. The personalized care planning process helps practices engage and collaborate with patients to ensure that their care aligns with patient preferences, goals, and values. A care plan is a mutually agreed-upon document that outlines the patient's health goals, needs, and self-management activities and is accessible to all team members providing care for the patient. The care plan should be patient-friendly, accessible to the patient, and should limit use of unfamiliar medical jargon and acronyms. The care plan should also be structured and standardized, documented in health IT to enable sharing among patient, caregivers, and care team members. All high-risk patients receiving longitudinal care management should have a personalized care plan developed in a joint, open-ended conversation between the patient and care team. Personalized care planning is a dynamic process; therefore, the care plan document should be updated at regularly defined intervals by the care team and patient. In addition, when patients' health status, preferences, goals, and values change, their plans of care should, too.

As described in the CY 2020 final rule, we proposed language to describe the “typical” care plan elements which do not comprise a set of strict requirements that must be included in a care plan for purpose of billing but are intended to reflect those that are typically included in a care plan as medically appropriate for a particular beneficiary. The comprehensive care plan for all health issues typically includes, but is not limited to, the following elements: problem list; expected outcome and prognosis; measurable treatment goals; cognitive and functional assessment; symptom management; planned interventions; medical management; environmental evaluation; caregiver assessment; interaction and coordination with outside resources and practitioners and providers; requirements for periodic review; and when applicable, revision of the care plan.

We seek feedback on these proposed requirements.

(6) Management of Care Transitions

We are proposing to adopt for APCM services the “Management of Care Transitions” service element we established for CCM and PCM services with some modifications. Rather than requiring that the practice must facilitate communication of relevant patient information through electronic exchange of continuity of care documents with other health care providers regarding these transitions, we are proposing more simply to require the billing practitioner to “ensure timely exchange of electronic health information” with other practitioners and providers. As included in the APCM code descriptors, we are also proposing to specify for the “Management of Care Transitions” APCM service element that the care team/practitioner would follow up with the patient and/or caregiver within 7 days after each ED visit and hospital discharge. This proposed timely follow-up standard is similar to several requirements tested in CMS Innovation Center models (such as the CPC+ model's requirement that participating practices ensure patients with ED visits received a follow-up interaction within one week of discharge and the MCP model's requirement that participating practices implement episodic care management to provide timely follow-ups for high-risk patients post ED visit and hospitalization ), and we patterned the timely follow-up element after our policy for TCM services which requires, for example, “communication (direct contact, telephone, electronic) with the patient and/or caregiver with 2 business days of discharge” and a “face-to-face visit within 7 calendar days of discharge.” Providing timely follow-ups for patients is an essential element of the delivery of care under an advanced primary care model of care, and we believe this will help achieve timely, seamless care across settings especially after discharge from a facility. Key aspects of follow-up after ED visits and hospitalizations include identifying and partnering with target hospitals and EDs where the majority of a practice's patients receive services to achieve timely notification and transfer of information following hospital discharge and ED visits. When developing a standardized process for data exchange and timely follow-up, successful practices include the following processes: information and data exchange about patients seen in an ED or admitted to/discharged from a hospital (for example, via HIE, hospital portal, hospital-generated report, EHR, or additional health IT system); definition for “timely” follow-up after discharge (for example, no later than within 2 days of discharge from hospital admission or observation stay and within 1 week of discharge from the ED); protocols for when follow-up will be done (for example, before discharge or following a standardized follow-up protocol); process of incorporating into the patient's medical record so the information is available at the time of the follow-up visit or other patient contact; and standardized processes and protocols for data exchange and formalized partnerships to develop an efficient workflow to ensure timely follow-up and facilitate efficient and safe transitions of care.

Practices use a variety of scheduling strategies to prioritize same-day or next-day access for acutely ill patients and to provide timely follow-up for patients experiencing care transitions. Successful practices are those that can strike the right balance between timely access to visits and the offering patients a provider of their choice (Continuity of Care). Establishing standardized protocols and pathways to improve and ensure responsiveness and timely callbacks to patients is an effective way to impact patient-practitioner/care team communication and to ensure a safeguard for addressing emergent and urgent patient phone calls. Successful practices routinely evaluate the degree to which patients' phone calls are answered promptly or returned within a practices' established guidelines (for example, non-urgent, emergent, urgent) and routed to the appropriate practitioner or care team member, incorporating patients' clinical needs and preferences. Such strategies are paramount for practices whose patients may be contacting the practice with care needs that require care team prioritization and urgent reply.

We seek feedback on these proposed requirements.

(7) Practitioner, Home-, and Community-Based Care Coordination

We are proposing to adopt for APCM services the “Home- and Community-Based Care Coordination” service element we established for CCM and PCM services with some modifications. As included in the APCM code descriptors, we are proposing to specify that the “ongoing communication and coordinating receipt of needed services” is with not only with home- and community-based service providers, but also with “practitioners,” “community-based social service providers, hospitals, and skilled nursing facilities (or other health care facilities), as applicable.” We are also proposing to add more detail about the communication documented in the patient's medical record in that it would include “the patient's psychosocial strengths and needs, and functional deficits, goals, preferences, and desired outcomes, including cultural and linguistic factors.”

Coordinated referral management with specialty groups and other community or healthcare organizations ensures referrals are properly managed, coordinated, and communicated. These efforts help practices achieve goals of enhancing the quality of patient care, improving the patient's care experience, and lowering cost, particularly for practices serving high-risk patient populations. Evidence suggests that the development of formal relationships (for example, collaborative care agreements) between the primary care practice and referred groups/organizations that define shared goals and responsibilities, facilitate the coordinated referral management process. The foundation of successful coordinated referral management with specialty groups and other community or healthcare organizations is the development of processes and procedures to ensure high-value referrals, such as collaborative care agreements and electronic consultations (e-Consults). Establishing clear and agreed-upon expectations regarding communication and clinical responsibilities with specialty practices and other care organizations, through a collaborative care agreement, improves the process. Collaborative care agreements often include the following elements: defining the types of referrals, consultation, and co-management arrangements available; specifying who is accountable for which processes and outcomes for care within the referral, consultation, or co-management arrangement; and specifying what clinical and other information should be provided, how the information is transferred, and timeliness expectations. The electronic e-Consults process is typically conducted through a system-wide EHR or a secure, web-based system by which a practice receives guidance from a specialty provider or other care organization. In this process, a practitioner sends a clinical question and relevant clinical information to the specialist (or other care organization), who responds by providing a clinical opinion and guidance and/or confirms the need for a face-to-face appointment with the patient. This tool and process has the potential to streamline consultations, reduce cost and burden for patients, and improve access to specialty care for high-value referrals. As part of the CY 2019 PFS final rule, we finalized interprofessional consultation services codes, which support payment both to the treating, requesting (primary care) practitioner (CPT code 99452) and the receiving, consultative specialist (CPT codes 99446-99449 and 99451) who engage in e-Consults, and so some practitioners have already become accustomed to providing and billing for these services.

Strategies for addressing common health-related social needs (HRSNs) for a practice's high-risk patients include conducting needs assessments at regular intervals, creating a resource inventory for the most pressing needs of the patient population, and establishing relationships with key community organizations. Practices can focus on developing relationships with community-based organizations that support patients' most significant HRSNs. Practices can also seek to find common ground with community and social service organizations, focus on the structure and process of referrals, and develop a bidirectional flow of information. Successful practices work with their patients to ensure there is a shared understanding of the purpose of the referral and aim to understand bottlenecks and barriers to meeting their needs through the process. Many practices identify a care team member to be a community referral resource for their patients. Successful referrals can help practices determine the most useful and available resources in their community.

We seek feedback on these proposed requirements.

(8) Enhanced Communications Opportunities

We are proposing to include for APCM services the element of “Enhanced Communications Opportunities” we established for CCM and PCM services with some modifications. Specifically, we would add “internet and patient portal” as examples of asynchronous non-face-to-face consultation methods and specify that the practitioner would provide “other communication technology-based services, including remote evaluation of pre-recorded patient information and interprofessional telephone/internet/EHR referral service(s), to maintain ongoing communication with patients, as appropriate” as well as specify “access to patient-initiated digital communications that require a clinical decision, such as virtual check-ins and digital online assessment and management and E/M visits (or e-visits).” Providing asynchronous non-face-to-face consultation methods and other CTBS services is an essential element of the delivery of care under an advanced primary care model of care, and we believe this will allow patients to access their usual source of care more conveniently (see section II.G.2.c.(3) of this proposed rule). There is growing consensus that incorporating telehealth into primary care will allow patients to access their usual source of care more conveniently. Patients using telehealth visits have reported high satisfaction, identifying convenience and perceived high quality of care as contributors, such that these may be a good alternative and, in some cases, preferable to in-person communication. Expansion of telehealth to address episodic and chronic conditions has been a significant trend in the evolution of telehealth applications, and there is some evidence that video visits may enable more timely communication of test results than in-person appointments.

As noted in section II.G.2.b. of this proposed rule, we are not proposing timeframe restrictions for this proposed element, which includes access to certain CTBS (for example, the restriction for virtual check-in services that there is not a related E/M service provided within the previous 7 days or an E/M service or procedure within the next 24 hours or the soonest available appointment).

We seek feedback on these proposed requirements.

(9) Patient Population-Level Management

As specified in the proposed APCM code descriptors, we are proposing to establish an APCM service element for Patient Population-Level Management that would include practice capabilities for population-based, data-driven approaches to manage preventive and chronic care for their patient population and to plan and implement strategies to improve care and outcomes. We are proposing that all practices would use data to develop clear improvement strategies and analytic processes to proactively manage population health, including analyzing patient population data to identify gaps in care and risk-stratifying the practice population based on defined diagnoses, claims, or other electronic data to identify and target services to patients (such as those at risk for poor health outcomes), and then would offer additional interventions, as appropriate.

These proposed patient population-level management standards are similar to several requirements tested in CMS Innovation Center models, including CPC+, which found that model participants used data to identify and resolve gaps in care. We have modeled the proposed patient population-level management standards on the CPC+ care delivery requirements. In the CPC+ Model, participating practices were required, for example, to “use a two-step risk stratification process for all empaneled patients, addressing medical need, behavioral diagnoses, and health-related social needs” and “define at least one subpopulation of patients with specific complex needs, develop capabilities necessary to better address those needs, and measure and improve the quality of care and utilization of this subpopulation.” Central to the delivery of advanced primary care is the organization of the practice into care teams that have the data they need to manage their patient populations and that have time allocated to plan and implement practice improvement strategies. Using evidence-based protocols, registries, and the registry functionality of the EHR, reminders and outreach help practices deliver appropriate preventive care and consistent evidence-based management of chronic conditions for the entire patient population. Measurement of clinically relevant data at the practice-level guides testing and implementing strategies to improve care and outcomes. Patient population-level management capabilities are essential to the delivery of care under an advanced primary care model of care and enable practices to meet the preventive and chronic care needs of their entire patient population. Regular use of data to identify populations or groups of patients with similar needs allows practices and care teams to use streamlined strategies, including setting goals with measurable outcomes, to positively impact their patient populations. Evidence shows that primary care teams supported with real-time, population-level clinical outcomes data effectively manage population health and address care gaps which eliminates external costs to close gaps in care. More specifically, risk stratification allows practitioners to identify beneficiaries for longitudinal care management, track beneficiaries with higher levels of need and manage their conditions, and prevent beneficiaries from falling through the cracks, while developing strategies to address those patients who are at increased and rising risk and most likely to benefit from targeted, proactive, relationship-based care management and other strategies essential to APCM. Empanelment, which assigns each active patient to a practitioner and/or care team with consideration of patient and caregiver preferences, allows practices to build responsive care teams to optimize patient care and to address the preventive, chronic, and acute needs of all patients, and provides a way for practices to identify care gaps and proactively reach out to patients who have not been seen or contacted in a while. For example, we believe these elements of advanced primary care management could increase screening rates and ultimately improve care of chronic conditions, such as hypertension and diabetes.

We note that this Patient Population-Level Management requirement of the APCM services would be met for practitioners billing for APCM services through a TIN that is participating in an ACO in the Shared Savings Program by virtue of the practitioner's participation in the ACO which must meet eligibility requirements for population management, care coordination and quality improvement, including required processes and patient-centeredness criteria in § 425.112. We note that ACOs in the Shared Savings Program and their practitioners are already engaged in analyzing the patient population for care gaps, risk-stratifying patients to further identify those at risk for poor health outcomes, and identifying patients for whom additional interventions are appropriate. Similarly, the ACO REACH, Making Care Primary, and Primary Care First CMS Innovation Center Models all require their participants to deploy population health strategies to identify and offer interventions to mitigate health risks. Participants in these models and their practitioners are already engaged in population health management as described in Table 21.

We seek feedback on these proposed requirements.

(10) Performance Measurement

We are proposing for the APCM services a practice-level requirement of performance measurement of primary care quality, total cost of care, and meaningful use of CEHRT. Performance measurement is a critical element of care management services delivered in the context of advanced primary care, and it forms the basis for practice improvement efforts by enabling practices to identify key measures for improvement activities (for example, cost and utilization data, clinical quality measures, patient experience of care data). Quality measurement improves care delivery, including prevention of heart attacks, increasing vaccination rates, and improving patient safety, and quality measures are also effective tools to ensure that high-quality advanced primary care, including care management, is being delivered. Several performance measurement requirements were tested in CMS Innovation Center models (such as the CPC+ model's requirement that participating practices use data at both the practice- and panel-level to set goals to improve population health management and to continuously improve patients' health, experience, and quality of care, and decrease cost). Using data resources and developing workflows and analytics to guide practice changes can help practices achieve reductions in total utilization and cost of care, and improvements in patient experience and quality of care. Improving upon key outcome measures requires engaged clinical and administrative leadership and a commitment to continuous, data-driven improvement. In the context of the PFS, performance management through quality measurement as a practice-level requirement also ensures integrity to the provision of advanced primary care because it holds billing practitioners accountable to factors that are affected by several service elements of APCM coding. For example, effective patient-population level management can mean the practices close care gaps in diabetes management, and the billing practitioner would perform better on diabetes quality measures that assess for a patient's control of hemoglobin A1c.

We are proposing that this performance measurement practice-level requirement can be met in several ways. For MIPS-eligible clinicians, the requirement would be met by registering for and reporting the “Value in Primary Care” MIPS Value Pathway (MVP). A practitioner who is part of a TIN that is participating as a Shared Savings Program ACO or a REACH ACO, or a Primary Care First or Making Care Primary practice would meet these requirements by virtue of the Shared Savings Program and CMS Innovation Center quality reporting, assessment of quality performance, accountability for total cost of care, and other program and model requirements.

In the CY 2024 PFS final rule (88 FR 80042 through 80047), we finalized “The Value in Primary Care” Merit-based Incentive Payment System (MIPS) Value Pathway (MVP), which focuses on the clinical theme of promoting quality care for patients in order to reduce the risk of diseases, disabilities, and death; and it includes cost measures, Promoting Interoperability (PI) measures, improvement activities, and quality measures for common chronic conditions (for example, hypertension, diabetes, depression). The Value in Primary Care MVP contains the Adult Universal Foundation quality measure set, which is consistent with the National Quality Strategy goal of using the Universal Foundation measures across as many programs as is feasible. This MVP is especially well-suited to reflect the delivery of care using the advanced primary care model as it was developed to include quality metrics that reflect clinical actions that should be considered the foundations of primary care. The quality measures include key elements such as cancer screening, immunization, blood pressure management, behavioral health, care coordination, person-centered care, and screening for social drivers of health. The improvement activities include engaging community resources to address drivers of health, implementing changes in the practice's patient portal to improve communication and patient engagement, reviewing practices in place on targeted patient population needs, and chronic care and preventive care management for empaneled patients, aspects of advanced primary care already discussed in this proposal. The cost measures include costs for common chronic conditions, such as asthma/chronic obstructive pulmonary disease (COPD), diabetes, depression, and heart failure, as well as the Total Per Capita Cost (TPCC) measure, which assesses the overall cost of care delivered to a patient with a focus on the primary care they receive from their provider(s) and captures the broader healthcare costs influenced by primary care. The Value in Primary Care MVP serves to demonstrate performance measurement that is reflective of the care furnished using advanced primary care delivery. To ensure performance measurement consistent with the delivery of advanced primary care services, we are proposing as an element of the APCM services that a practitioner who is a MIPS eligible clinician as defined in § 414.1305 can satisfy the performance measurement requirement by registering for and reporting the Value in Primary Care MVP for the performance year in which they bill for APCM services. A MIPS eligible clinician can report to MIPS as an individual, subgroup, group, APM Entity, or in any combination of these four participation options, and can participate in multiple ways to report MVPs.

MIPS-eligible clinicians who report the MVP are also required to report the PI performance category measures and attestations throughout the performance period in which they bill for APCM services, as required under § 414.1375(b) (§ 414.1365(c)(4)(i)) (see section IV of this proposed rule for details on reporting the objectives and measures for the MIPS PI performance category for CY 2025 performance period/2027 MIPS payment year). The measures in the MIPS PI performance category include measures such as electronic referral loops, receiving and reconciling health information, and providing patients with electronic access to their health information, all of which are reflective of important communication and coordination channels between primary care, other specialist practitioners caring for the patient, and the patient themselves. In addition, as set forth in 42 CFR 414.1375(b)(3), the MIPS PI performance category also requires submission of affirmative attestations: (1) regarding their cooperation in good faith with ONC direct review of their CEHRT; and (2) that they did not knowingly and willfully take action (such as to disable functionality) to limit or restrict the compatibility or interoperability of CEHRT.

For CCM services (CPT codes 99437, 99439, 99487, and 99489-99491) and PCM services (CPT codes 99424-99427), we established that practitioners must use CEHRT to record certain patient health information in a structured format, provide patients with access to their health information, and exchange all relevant patient health information, including in providing the “Management of Care Transitions” element of CCM services. For the APCM services, which are furnished as part of a practitioner's care delivery using the advanced primary care model, we are proposing for practitioners who are MIPS eligible clinicians a practice-level requirement to register for and report the MVP, including but not limited to the PI performance category measures which focus on meaningful use of CEHRT, ensuring that patients/caregivers and physicians or other qualified practitioners or clinical staff have real-time access to patient's medical information. We believe that comprehensive CEHRT use is a critical element of care management services delivered in the context of advanced primary care.

As we stated in adopting the CEHRT use element for CCM and PCM services, we believe that the meaningful use of CEHRT is vital to ensure that practitioners are capable of providing the full scope of services, such as timely care coordination and continuity of care (see our prior discussion of this issue at 79 FR 67723 and 84 FR 62696), and we believe that flexibility in how practices can provide the requisite 24/7 access to care, continuity of care, and management of care transitions, can facilitate appropriate access to these services for Medicare beneficiaries. The meaningful use of CEHRT helps ensure that members of the care team have timely access to the patient's most updated health information and offer an integrated view of a patient's clinical history from different points of care, supporting continuing, quality, and integrated healthcare while avoiding duplication of efforts and costs, such as repeated exams. For example, practices use EHRs to identify high-risk patients with chronic conditions to better coordinate care and can supplement the practice's EHR data with data from external sources (for example, State-level quality organizations) to obtain a more comprehensive view of patients. Practices can also integrate clinical data from EHRs, health plan claims data, and county-level social services data to evaluate population needs, stratify by risk, and assess what programs would be most effective for supporting at-risk patients. Standardized communication methods, enabled by CEHRT, are a significant part of the advanced primary care delivery model. Health IT systems that include remote access to the care plan or the full EHR after hours, or a feedback loop that communicates back to the primary care physician and others involved in the beneficiary's care regarding after-hours care or advice provided, are extremely helpful. They help ensure that the beneficiary receives necessary follow up, particularly if the patient is referred to the ED, and follow up after an ED visit is required under the element of “Management of Care Transitions.” Accordingly, we believe the use of CEHRT or remote access to the care plan is fundamental to providing the APCM service elements of 24/7 Access to Care, Continuity of Care, and Management of Care Transitions under an advanced primary care delivery model. Requiring performance of the requirements in these measures and attestations to the meaningful use of CEHRT is similar to several requirements tested in CMS Innovation Center models (such as the PCF model's requirement that participating practices adopt and maintain CEHRT for electronic clinical quality measure reporting, support data exchange with other providers and health systems, and connect to their regional health information exchange (HIE), and the MCP model's requirement that participating practices use EHR technology that has been certified under the ONC Health IT Certification Program ). Furthermore, the Shared Savings Program requires practitioners (that is, MIPS eligible clinicians, QPs and Partial QPs) in all ACOs to demonstrate meaningful CEHRT use through the reporting of the MIPS Promoting Interoperability annually beginning in 2025.

We recognize that many practitioners who are not MIPS eligible clinicians for a year would be excluded from MIPS by achieving Qualifying APM Participant (QP) status based on their levels of participation in an Advanced APM. Based on the characteristics of Advanced APMs detailed in § 414.1415, including the requirement that payment is based on MIPS or MIPS-comparable quality measures, practitioners who with QP status are necessarily engaging in performance measurement through the Advanced APMs in which they participate in a way that is consistent with advanced primary care. We also recognize there are other practitioners who are not MIPS eligible clinicians for other reasons, such as practitioners who are newly enrolled in Medicare or bill a low volume of Medicare services. These practitioners technically could bill for APCM services. However, newly enrolled practitioners are only excluded from MIPS for one year, after which the practitioner would either be a MIPS eligible clinician who would need to report the MVP in order to bill for APCM services, or excluded from MIPS on another basis such as QP status. In the case of practitioners with low Medicare volume, we anticipate that they would be unlikely to bill for APCM services since the delivery of advanced primary care generally involves time and resources to establish practice-level infrastructure, and the economies of scale usually make this a more likely investment if the infrastructure can be utilized across a larger patient panel.

We are also proposing that the performance measurement element of the APCM services would be satisfied for practitioners billing for APCM services through a TIN that is participating in a Shared Savings Program ACO for a performance year in which they furnish APCM services. ACOs are currently required to report the APP quality measure set on behalf of their practitioners, and would be required to report the APP Plus quality measure set as proposed in Section III.G. of this proposed rule. Practitioners in ACOs are also already being held accountable for reporting and performance and outcomes on many of the Universal Foundation measures already, which are used in the Value in Primary Care MVP, and the APP Plus quality measure set would fully align the Shared Savings Program's quality performance standard with the Universal Foundation measures upon the complete implementation of the APP Plus measure set.

We propose to include the performance measurement requirement as an element of APCM services furnished by practitioners. MIPS eligible clinicians who intend to report on the Value in Primary Care MVP for the CY 2025 must register to report the Value in Primary Care MVP as described under § 414.1365(b), a MIPS eligible clinician must register for an MVP during between April 1 and November 30 of the applicable CY performance period to report the MVP. MIPS eligible clinicians submit data on measures and activities in the first quarter of the year following (CY 2026) the MIPS performance period. Under this proposal, a MIPS eligible clinician billing for APCM services furnished in 2025 and who is satisfying the performance measurement requirement through reporting the Value in Primary Care MVP, would need to register for the MVP between April and November of 2025 and report data between January and March 2026 on measures and activities in the Value in Primary Care MVP relating to services furnished in 2025. A MIPS eligible clinician billing for APCM services furnished in 2026 and who is satisfying the performance measurement requirement through reporting the Value in Primary Care MVP, would need to register for the Value in Primary Care MVP between April and November of 2026, and report data between January and March of 2027 on measures and activities in the Value in Primary Care MVP relating to services furnished in 2026, and so on in subsequent years.

As described above, we are seeking feedback on ways to align the APCM services with other Medicare programs and initiatives, such as the Shared Savings Program and the Quality Payment Program, including MIPS and Advanced APMs. We seek to create a low burden way for practitioners to furnish APCM services by appropriately recognizing ways in which they may meet APCM billing requirements as part of these programs and initiatives, including other ways that practitioners may be fulfilling these performance measurement requirements. We are seeking feedback on whether there are areas of duplication within the APCM service elements and practice capabilities that we should consider addressing. We are also seeking comment on how to appropriately align the time period for which the practitioner bills the monthly APCM code with the calendar year reporting period covered by the MVP, and how we would verify and enforce the performance measurement requirement of the APCM service.

We seek feedback on these proposed requirements.

d. Duplicative Services and Concurrent Billing Restrictions

In this section, we identify the services that would overlap substantially with APCM services based on the proposed elements of the scope of service for APCM which we have built into the service descriptors for GPCM1, GPCM2, and GPCM3 (see sections II.G.2.b. and II.G.2.c. of this proposed rule). As such, we are proposing that APCM services could not be billed by the same practitioner or another practitioner within the same practice for the same patient concurrent with these other services: CCM, PCM, TCM, interprofessional consultation, remote evaluation of patient videos/images, virtual check-in, and e-visits. Given that we have intentionally designed the proposed elements of APCM services to track closely with the elements of several other care management service and CTBS codes, these services are substantially duplicative of APCM services. Further, these specific services (shown in Table 19) are duplicative with APCM services because there is significant overlap in the patient populations included in the code descriptors for these services and APCM services, such as patients who have chronic conditions, high-risk conditions, or both complex and chronic conditions.

As we have described in the sections above, comprehensive care management services are essential to providing advanced primary care in the context of this proposal, and many of the service elements for CCM/PCM/TCM shown in Table 19 are substantially the same as the elements we are proposing for APCM services.

Also described above, providing CTBS is an essential element of the delivery of care under an advanced primary care model of care. Recognizing this, we designed the proposed APCM service elements to substantially overlap with the elements of the CTBS (for example, interprofessional consultation and e-Visits) shown in Table 22. CTBS are used in delivery of advanced primary care to maintain ongoing communication with patients and enable interprofessional care teams to provide comprehensive support to manage chronic conditions over time, which we believe will allow patients to access their usual source of care more conveniently. We also believe that interprofessional consultation can help promote integration of behavioral health and primary care.

We also considered whether other care management services (such as Behavioral Health Integration (BHI)), services addressing HRSNs (Community Health Integration (CHI), Social Determinants of Health Risk Assessment, and Principal Illness Navigation (PIN)), and/or other CTBS (Remote Physiologic Monitoring (RPM) and Remote Therapeutic Monitoring (RTM)) would be duplicative of the proposed APCM services. We believe that these services, when appropriate, may complement APCM services rather than substantially overlap or duplicate services, and that these other services are sufficiently different from the APCM services in the nature and extent of the interventions and the qualifications of individuals providing the services, to allow concurrent billing for services when appropriate. While these may be services that a practitioner using the advanced primary care model would be likely to furnish, when appropriate, they are not part of the core, routinely and universally essential elements of the advanced primary care model. We also believe that several of these other services (such as BHI, CHI, SDOH Risk Assessment, and PIN) could be supplemental to APCM for patients that have very specific identified health care needs.

We are seeking more information from interested parties through our Advanced Primary Care RFI about whether to consider incorporating additional service elements into the APCM service elements and valuation for APCM codes; and whether and, if so, how to best incorporate E/M services into future coding (see section II.G.3. of this proposed rule). We note that, for BHI services, there is an established evidence base for approaches to caring for beneficiaries with behavioral health conditions which involve integration in the primary care setting, are typically provided by a primary care team, and include structured care management with regular assessments of clinical status and modification of treatment. BHI is a term that refers broadly to collaborative care that integrates behavioral health services with primary care. BHI is a team-based approach to care that focuses on integrative treatment of patients with medical and mental or behavioral health conditions. For BHI in particular, including CPT codes 99492, 99493, 99494, and 99484 and HCPCS code G0323, we are also seeking information regarding how evolving changes in practice may warrant reconsideration of payment and coding policies.

We propose that the care management and CTBS codes that are identified in Table 19 could not be separately billed with the APCM codes for the same beneficiary by the same practitioner, or a different one within the same practice, for the same service period. This would prevent duplicative payments for substantially similar services and is consistent with how we have paid for potentially overlapping care management services in the past.

As we refine our APCM policies, we note that we are not currently proposing to make changes to the coding and payment policies for the existing care management and CTBS services, other than to prohibit concurrent billing for the same patient during the same month by the same practitioner or another in the same practice. For CY 2025, those codes would still be available for practitioners who do not furnish care using the advanced primary care model or who may prefer to document the existing care management and CTBS codes rather than use the new proposed APCM codes.

We are also seeking comment on potential overlap between APCM services and other services currently paid under the PFS, including but not limited to care management and care coordination and other CTBS. If interested parties identify overlaps between APCM and other services, we are seeking comment on whether the degree of overlap would warrant a policy to restrict the services from being billed concurrently with APCM. We also seek comment on whether any overlap would depend upon whether the same or a different practitioner reports the services.

As we test new CMS Innovation Center models that include payments for the services defined above, including CCM, PCM, TCM, interprofessional consultation, remote evaluation of patient videos/images, virtual check-in, and e-visits, or as changes in the advanced primary care model of care or more general changes to Medicare payment policy take place that affect existing CMS Innovation Center models, consistent with existing policy, we will address potential overlaps between payments made to model participants with our proposed payment for APCM, elements of the proposed APCM service, and these duplicative services, and seek to implement appropriate payment policies.

e. Valuation of APCM Services—GPCM1, GPCM2, and GPCM3

To improve the accuracy of payment for the kinds of services furnished as part of advanced primary care and reduce the administrative burden associated with current coding and billing rules, we are proposing to create three HCPCS codes to use for reporting the proposed APCM service (GPCM1, GPCM2, and GPCM3) (sections II.G.2.b. and II.G.2.c. of this proposed rule). Although these codes are unique in that they would be created to differentially pay for advanced primary care management, the proposed APCM services incorporate elements of existing services with the understanding that some patients will require more resources and some fewer based on variability in patient complexity and needs (see section II.G.2.b of this proposed rule). As we ordinarily do, we are proposing to base the PFS valuation for APCM codes on the resources involved in furnishing the typical case of the service which may not necessarily reflect the actual resources involved in furnishing every individual service.

In this section, we detail our proposed methods to identify a typical case and set of resources involved in furnishing APCM, and the proposed valuation of these codes. To value APCM, we compared the service elements described by the proposed APCM codes to the values we have established for the specific care management and CTBS codes on which we modeled the proposed the service elements of the APCM codes and which we built into the service descriptors for GPCM1, GPCM2, and GPCM3 (see Table 19 and sections II.G.2.b. through II.G.2.d. of this proposed rule). As stated above, we believe that the proposed elements of APCM services reflect the comprehensive approach to care management involved in care delivery using the advanced primary care model. This is a model of primary care that is being integrated into current medical practice. As such, we believe that it would be appropriate to use the current valuation and uptake of the codes on which we modeled the APCM codes to inform our valuation of APCM services. Using Medicare FFS claims data and evidence from our primary care models, we sought to understand how these different services have been used historically and relate that information to the way we are thinking about the service elements for APCM and the valuation of the three APCM code levels. We know that for Medicare beneficiaries who receive care management services during a year, the non-complex CCM base code is billed on average for five months and with three add-on codes during those five months. We also know that initial information from practitioner interviews conducted as part of our CCM evaluation efforts indicates that practitioners overwhelmingly meet and exceed the 20-minute threshold time for billing the non-complex CCM base code; typically, these practitioners reported spending between 45 minutes and an hour per month on CCM services for each patient, with times ranging between 20 minutes and several hours per month (81 FR 80244). However, this does not account for the care management services that are provided beyond one time-based billing interval and without reaching the next; nor does it account for the resources involved in maintaining certain advanced primary care practice capabilities and continuous readiness and monitoring activities, including patient population monitoring and care needs assessment, to fully furnish and bill APCM services as is medically reasonable and necessary for any individual patient during any calendar month. Finally, this does not account for changes to utilization of APCM that may occur as a result of the billing and documentation requirements for APCM services when compared to the current coding and payment for care management and CTBS services. While our aim is to value APCM services based on refined assumptions that we believe better recognize likely utilization of the new proposed codes and the work required to furnish APCM services, this is challenging without more information. We welcome comments on ideas for other sources of data that would help us to assess APCM services valuation.

We considered various alternatives for valuing the APCM services and how these may impact the broader health care landscape given that primary care is of such import across the country. We are proposing to set baseline APCM code values for this first year based on historical utilization of the care management services we have drawn upon in designing the APCM codes. We note that utilization of the care management services has been significantly higher than CTBS, and we found that CTBS are not typically billed for a patient in the same month as care management services. It is unclear whether the kinds of services described by the CTBS are not typically provided during these months or whether they are being provided but not separately reported. We will continue to seek information, including from public comments on this proposed rule, to help us identify the best approach to reflecting the proposed CTBS elements incorporated into the APCM monthly bundle, and we are particularly interested in data that could illuminate differences between what services are furnished and what is being reported separately. We will continue to consider refinements to the valuation of APCM codes to reflect available information about changes in the volume and mix of care management and communication activities being furnished as part of APCM services in the delivery of advanced primary care.

For APCM Level 1, we assumed the typical case would involve fewer resources than the current care management services based upon the proposed GPCM1 code descriptor and a broad eligible population that would require limited monthly APCM services; however, it would also involve certain resources inherent to maintaining advanced primary care practice capabilities and continuous readiness and monitoring activities, including patient population monitoring and care needs assessment, to fully furnish and bill APCM. As described in sections II.G.2.b. and II.G.2.c. above, certain elements of the APCM service require resources to maintain continuous readiness and monitoring activities to furnish covered services consistent with the advanced primary care model of care. We concluded that the APCM Level 1 services would be similar in work to that of two billing units of the non-complex code for CCM services (CPT code 99490 ( CCM services provided by clinical staff per calendar month)) over the course of a year, and therefore based the proposed inputs on CPT code 99490 multiplied by 1/6 (or 2 units over 12 months). Specifically, we proposed a work RVU for GPCM1 of 0.17, which is the work RVU for CPT code 99490 multiplied by 1/6 . The resulting proposed PE and MP RVUs are proportionately similar to those for CPT code 99490 and are available in Addendum B (see https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates ). Table 23 displays payment amount estimates using the 2024 PFS Conversion Factor.

For APCM Level 2, which describes APCM services to patients with two or more chronic conditions we assumed the typical, higher intensity work associated with managing a patient with multiple chronic conditions would involve significantly more resources and require more, and more frequent, APCM service elements. We concluded that the APCM Level 2 services would be similar to current utilization assumptions of five billing units of the non-complex CCM code (CPT codes 99490) ( CCM services provided by clinical staff per calendar month) and three billing units of add-on codes annually, given that, for Medicare beneficiaries who receive these CCM services during a year, the non-complex CCM base code is billed on average for five months and with three add-on codes during those 5 months. Additionally, we are proposing to account for what we believe to be continued underutilization of CCM services in this patient population by adding one billing unit of the complex CCM code (CPT code 99490 ( CCM services provided by clinical staff per calendar month) annually. As we noted in the CY 2020 PFS final rule, “utilization [of CCM services] has reached approximately 75 percent of the level we initially assumed under the PFS when we began paying for CCM services separately under the PFS; while these are positive results, we believe that CCM services (especially complex CCM services) continue to be underutilized”, 81 FR 80244 and 84 FR 62688, considering the number of eligible Medicare beneficiaries. In 2019, approximately 22.6 million FFS beneficiaries were identified as being potentially eligible for CCM (or 63.4 percent of the 35.6 million Medicare FFS beneficiaries); however, the use of CCM services was low among potentially eligible beneficiaries, such that just 4.0 percent of beneficiaries potentially eligible for CCM received any CCM services. Therefore, we based the proposed inputs on CPT code 99490 multiplied by 5/12 (or, five units over 12 months), plus CPT add-on code 99439 ( CCM services each additional 30 minutes by clinical staff directed by a physician or other qualified health care professional, per calendar month) multiplied by 1/6 (or two units), plus CPT add-on code 99489 ( Complex CCM services each additional 30 minutes by clinical staff directed by a physician or other qualified health care professional, per calendar month) multiplied by 1/12 (one unit), plus CPT code 99487 ( Complex CCM services provided by clinical staff directed by a physician or other qualified health care professional, per calendar month) multiplied by 1/12 (one unit). Specifically, we proposed a work RVU for GPCM2 of 0.77, which is the sum of the work RVU for CPT codes 99490, 99439, 99489, and 99487 multiplied by their respective proportions above. The resulting proposed PE and MP RVUs are proportionately similar and are available in Addendum B (see https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates ). Table 23 displays payment amount estimates using the 2024 PFS Conversion Factor.

For APCM Level 3 (HCPCS code GPCM3), which describes APCM services to patients with QMB status and two or more chronic conditions, we are proposing to value the service as a relative increase to the valuation of APCM Level 2 based on recent Medicare expenditure data for dually eligible Medicare beneficiaries. In CY 2021, per person per year spending on dually eligible beneficiaries was $24,370 and for non-dually eligible beneficiaries was $11,172. The difference between these two amounts is 218 percent. We have considered the likely resource demands and intensity of the practitioner-patient interaction for this patient population, consistent with our coding and valuation policies that reflect variations in resource cost and patient-centered care delivery policies. By taking into consideration the difference in Medicare spending on a per person per year basis between dually eligible and non-dually eligible Medicare beneficiaries, we believe that we can capture the increased resources involved in furnishing APCM services to patients with QMB status and multiple chronic conditions. Therefore, we based the proposed inputs for the APCM Level 3 code on the APCM Level 2 inputs multiplied by 218 percent. Specifically, we proposed a work RVU for GPCM3 of 1.67, which is the proposed work RVU for GPCM2 multiplied by 218 percent. The resulting proposed PE and MP RVUs are proportionately similar to those and are available in Addendum B (see https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates ). Table 23 displays payment amount estimates using the 2024 PFS Conversion Factor.

Table 23 includes the proposed placeholder codes (which, if finalized, will be replaced with numeric G-codes announced in the final rule), short descriptors, crosswalk codes, proposed RVUs (work, PE, and MP), and approximate payment rate. For illustration purposes, we multiplied the proposed APCM relative values for work, practice expense (PE), and malpractice (MP), without geographic adjustment, by the CY 2024 conversion factor (CF) ($32.7442) to convert the proposed relative value units (RVUs) into approximate national payment rates.

We are seeking feedback on whether these proposed values appropriately reflect the resource costs involved in furnishing these services, or whether adjustments to the proposed values or additional coding may be needed. We are broadly interested in public comments and input from interested parties on potential refinements in code and service definitions, including how we might refine our utilization assumptions for these codes, and other important information involving coding and payment for APCM services to better reflect the current practice of advanced primary care, including elements of CTBS and care management services. We are interested in developing a better understanding of the resource costs involved in furnishing comprehensive care management as part of advanced primary care to various patient populations, including specifically QMBs.

We intend to engage in further discussions with the public over the next several years to potentially refine our policies for 2025 and future years, and we expect that having APCM utilization data, once the proposed codes are established, would inform future refinement of the valuations for these codes.

Finally, as described in the Advanced Primary Care RFI that follows, we note that there is potential for the valuation of these codes and future related codes to change and/or scale into larger units if we expand them to incorporate more service elements (see section II.G.3. of this proposed rule). As we receive more information about how these codes are being used and implemented in medical practice, we anticipate that these codes and future related codes will be refined over time. We note that the development of payment and coding policies for these and other kinds of services under the PFS is typically an iterative process that responds to changes in medical practice and may be best refined over several years through annual rulemaking for the PFS, and through the development of CPT codes by the AMA's CPT Editorial Committee.

As described in the next section, we believe that this new proposed APCM code set could serve as a chassis to incorporate primary care model learnings over time under the PFS and an additional pathway to accountable care for primary care practitioners.

3. Request for Information: Advanced Primary Care Hybrid Payment

a. Background

Recent evidence reviews show that while primary care is the only part of the health system in which investments routinely result in not only improved outcomes but also increased equity, the practice and sustainability of the primary care sector is under significant strain. The NASEM found that many of these challenges relate to a primary care payment system that principally rewards visit volume versus creation and maintenance of longitudinal care relationships over time. We have set a goal of having 100 percent of traditional Medicare beneficiaries and the vast majority of Medicaid beneficiaries in accountable care relationships by 2030. Accountable care occurs when a person-centered care team takes responsibility for improving quality of care, care coordination and health outcomes for a defined group of individuals, to reduce care fragmentation and avoid unnecessary costs for individuals and the health system. Advanced primary care is a core mechanism for achieving this goal. With this goal, we acknowledge the need to increase the capability of primary care clinicians to engage, maintain, and promote longitudinal and accountable relationships with beneficiaries through incentives and flexibilities to manage quality and total cost of care.

Over the past 11 years, the CMS Innovation Center has tested a number of primary care models: CPC, CPC+, Maryland Primary Care Program, PCF, as well as the upcoming MCP and ACO Primary Care Flex. Each of these primary care models has focused on testing what happens when we pay for primary care services with hybrid payments (a mix of fee-for-service and population-based payments), as described earlier. While these models have not met the criteria for expansion to date, the findings suggest advanced primary care may reduce unnecessary utilization and improve diabetes care and cancer screening rates.

In addition to testing new approaches to improve care for beneficiaries by supporting primary care, we have focused on approaches to incorporating these innovations into Medicare programs. For example, lessons learned from the CMS Innovation Center's ACO models may be incorporated into the Shared Savings Program. As such, part of the intent of our proposal to create new APCM payment and coding is that we would have a similar foundation to scale advanced primary care model learnings over time.

Previous Innovation Center primary care model tests have helped us learn lessons to inform our current and future work. For example, participants in primary care models have indicated difficulty investing in and maintaining primary care redesign activities due to a range of challenges. First, additional non-visit-based primary care payments have been generally layered upon base payments still predominantly FFS in structure. As such, the incentives and abilities of practices to focus on proactive, population-based non-visit activities may be limited if the funding stream for these activities is limited in scope and duration. (Examples of non-visit-based activities include, but are not limited to: activities to improve care coordination, implement data-driven quality improvement, or enhance targeted care management for beneficiaries identified as high-risk.) Further, model funding for the clinical and administrative staff needed to accomplish advanced primary care coordination and population health functions is contingent on continued participation in these models. Once the models end, practices are left without the funding that they received under the models for the clinical and administrative staff that had supported population health functions under the model. Moreover, because these models involve additional payments tied to performance rather than changes to base primary care payment, practices report that the funding they use to support non-visit activities is sometimes received well after the non-visit services have occurred, leading to further challenges sustaining these efforts fiscally. Solving these challenges is a key goal of future Innovation Center model work.

To strengthen the primary care infrastructure within FFS Medicare, we are exploring opportunities to create new sustainable pathways to support advanced primary care, equitable access to high-quality primary care, and continued transformation among a wide variety of practices. One potential strategy to increase access to advanced primary care and prepare practitioners in traditional Medicare to engage in more accountable care is through the creation and ongoing refinement of specific billing and coding under the PFS that better recognizes advanced primary care and incorporates the resources involved in furnishing longitudinal care and maintaining relationships with patients over time. In section II.G.2. of this proposed rule, we are proposing a set of APCM services that make use of lessons learned from the CMS Innovation Center's primary care models, grouping existing care management and CTBS service elements into a bundle for use starting in CY 2025.

We are seeking feedback regarding potential further evolution in coding and payment policies to better recognize advanced primary care. Through this Advanced Primary Care RFI, we are committed to collaborating with interested parties to lay the path for a more transparent movement to value-based care. Specifically, we are requesting input on a broader set of questions related to care delivery and incentive structure alignment and five foundational components:

• Streamlined Value-Based Care Opportunities
• Billing Requirements
• Person-Centered Care
• Health Equity, Clinical, and Social Risk
• Quality Improvement and Accountability

We encourage input on the questions below from diverse voices, including beneficiaries and advocates, community-based organizations, providers, clinicians, researchers, unions, and all other interested parties.

b. Solicitation of Public Comments

We are seeking feedback regarding potential changes to coding and payment policies for advanced primary care services to be incorporated in traditional Medicare. For example, in the future, coding for APCM services (proposed in section II.G.2. of this proposed rule) could be revised to include additional service elements, including traditional E/M services. This Advanced Primary Care RFI is designed to solicit feedback on how we can further the goals of reducing administrative burden to refocus time on patient care; better recognizing the relative resources involved in furnishing care; recognizing interdisciplinary, team-based primary care; and supporting primary care sustainability and stability (especially for underserved communities). Whenever possible, respondents are requested to draw their responses from objective, empirical, and actionable evidence and to cite this evidence within their responses. We anticipate potential changes to primary care coding and payment policies, such as use of coding that recognizes groups of services furnished over a fixed time period, that would offer a new opportunity within the PFS for primary care clinicians to move to payment structures that are not fully dependent on billing for each discrete component of overall care and act as a step toward accountability for the cost and quality of patient care. Therefore, we are seeking feedback on building advanced primary care payment mechanisms that create pathways to recognize how primary care practice has moved away from an encounter-based orientation toward population-based care. This Advanced Primary Care RFI is the first step in ensuring ample opportunity for public input, followed by notice and comment rulemaking in subsequent years.

(1) Streamlined Value-Based Care Opportunities

We are seeking to create a steppingstone for primary care clinicians, including those new to value-based care, to move away from either encounters or other discrete components of overall care as the dominant method of primary care payment and toward payments in larger units that are better tied to the relative resource costs involved in population-based, longitudinal care. Feedback from interested parties has been helpful when considering how to scale the availability of payments into larger units, and incorporate population-based variability in resources, all while driving toward accountability, and person-centered care. Ultimately, to create more opportunities for beneficiaries to receive high-quality, accountable primary care, we are focused on creating multiple pathways to recognize delivery of integrated care across settings, and engagement in comprehensive, team-based, longitudinal care.

When considering the evolution of a hybrid payment system within the PFS, we seek input on the following questions:

• How can CMS better support primary care clinicians and practices who may be new to population-based and longitudinal care management?
• What are the primary barriers to providing particular strategies or supports needed for pediatric clinicians and practices?
• How can CMS ensure that potential future advanced primary care payment will not induce clinicians to leave effective accountable care relationships and clinician networks that already produce positive results? Additionally, how can CMS support growth over time in existing effective accountable care relationships and clinician networks?
• Should CMS evolve the proposed APCM services into an advanced primary care payment that includes E/M and other relevant services, or maintain a separate code set for APCM?
• If E/M services are bundled together for advanced primary care payments, how can CMS ensure that there is not a disincentive for primary care clinicians to continue to provide E/M visits, or increase accountability to E/M visits as warranted?
• As many codes depend on E/M visits (for example, as the base code for an add-on code, or to initiate specific care management activities), how should CMS consider the downstream impacts of incorporating E/M visits into advanced primary care payments?
• Should CMS consider incorporating other CTBS services into advanced primary care hybrid payments, such as Remote Physiologic Monitoring and/or Remote Therapeutic Monitoring?
• Should CMS consider incorporating other services that involve comprehensive care management and care coordination, such as Behavioral Health Integration, End-Stage Renal Disease Monthly Capitation Payment (ESRD MCP), Assessment/Care Planning for Cognitive Impairment, and/or Advance Care Planning?
• Should CMS consider incorporating other services while the patient is under care of home health agencies or hospices, such as Care Plan Oversight?
• Newly finalized HCPCS codes are eligible for use by other payers, including commercial insurers, state Medicaid agencies, and others. We note that value-based alignment is a key goal of CMS. If the APCM codes are finalized, they would be eligible for use by these other payers as well. To what extent are other payers interested in adopting the APCM codes? Are there any other changes that would be necessary for other payers to adopt the codes?
• CMS has historically used information presented by the Relative Value Scale Update Committee to determine PFS payment rates. Are there other sources of data on the relative value of primary care services that CMS should consider when setting hybrid payment rates?

(2) Billing Requirements

Previous CMS Innovation Center primary care models have provided key lessons learned about how to increase comfort with population-based payments, the importance of reducing the administrative burden of billing, and how to begin addressing gaps in equitable access to population-based payments. Specifically, we have learned through Innovation Center initiatives that retrospective reconciliation or adjustment of payments for services rendered can be especially frustrating for practitioners, as it reduces the predictability and stability of payments.

For these reasons, we are seeking to understand how advanced primary care hybrid payments can balance program integrity, high-quality care, payment stability, and clinician burden.

We seek input on the following questions:

• How can CMS reduce the potential burden of billing for population-based and longitudinal care services?
• Are there particular types of items or services that should be excluded from the advanced primary care bundle?
• Are there particular services paid under the PFS today that should be included in the advanced primary care bundle?
• Care management activities are currently billed monthly. What episode lengths should CMS consider when thinking about an advanced primary care bundle of services for hybrid payment? Include evidence to support the proposed episode length.
• Should CMS attribute the advanced primary care clinical episode to a single clinician, or consider weighted attribution and payment for multiple entities or clinicians? How could weighted attribution and payment work? What rules or processes should CMS consider to attribute the episode?
• Care management coding and payment have historically required an initiating visit prior to starting monthly billing, to ensure that the services are medically reasonable and necessary and consistent with the plan of care. Are there other ways that CMS could ensure the clinician billing APCM is responsible for the primary care of the Medicare beneficiary?
• Care management coding and payment require beneficiary cost sharing. Has beneficiary cost sharing been a barrier to practitioners providing such services?
• Consistent with the initiating visit requirement in the APCM proposal, should CMS require the billing of specific qualifying services for billing of an advanced primary care bundle that is larger in scale and scope than APCM?
• Are there Health IT functions beyond what is proposed for APCM services that clinicians should be required to have to bill for an advanced primary care bundle? What should CMS consider in the design of the advanced primary care bundle to effectively incorporate Health IT standards and functionality, to support interoperability and the aims of advanced primary care?
• Should CMS limit the types of non-physician clinicians that can bill for an advanced primary care bundle that is larger in scale and scope than APCM? If so, include evidence to support the restriction.
• How should CMS reconcile instances where an advanced primary care bundle is billed, but primary care services are then billed for and provided by separate entities?

(3) Person-Centered Care

Person-centered care integrates individuals' clinical needs across providers and settings, while addressing their social needs. We strive for better, more affordable care and improved health outcomes. Key to this mission are care innovations that empower beneficiaries and clinicians, while reducing the administrative burden of providing episode-based and longitudinal care management. We are seeking comment on how an advanced primary care code(s) could be structured to both increase efficiency and promote the use of high-value services.

We seek input on the following questions:

• What activities that support the delivery of care that is coordinated across clinicians, support systems, and time should be considered for payment in an advanced primary care bundle that are not currently captured in the PFS?
• How can CMS structure advanced primary care hybrid payments to improve patient experience and outcomes?
• How can CMS structure advanced primary care hybrid payments to ensure appropriate access to telephonic and messaging primary care services?
• What is the best reporting structure to ensure that targeted services are delivered without causing undue or excessive documentation?
• How can CMS facilitate coordination between primary care clinicians that bill for advanced primary care bundles and specialists to reduce costs and improve patient outcomes?

(4) Health Equity, Social and Clinical Risk

We define health equity as, “the attainment of the highest level of health for all people, where everyone has a fair and just opportunity to attain their optimal health regardless of race, ethnicity, disability, sexual orientation, gender identity, socioeconomic status, geography, preferred language, or other factors that affect access to care and health outcomes.” The CMS Framework for Health Equity lays out how we are working to advance health equity by designing, implementing, and operationalizing policies and programs that support health for all the people served by our programs, eliminating avoidable differences in health outcomes experienced by people who are disadvantaged or underserved, and providing the care and support that our beneficiaries need to thrive. For advanced primary care hybrid payments, this may mean incorporating different types of social and clinical risk into the payment than have typically been considered in traditional E/M or care management codes.

Recent models such as ACO REACH and Making Care Primary have incorporated risk adjustment for social risk factors, such as Part D Low Income Subsidy enrollment status and Area Deprivation Index, to better capture factors relevant to care of the patient. We seek input on how advanced primary care billing and payment policy could be used to reduce health disparities and social risk. Furthermore, we are seeking to balance a simple payment structure that encourages the uptake of advanced primary care services, while ensuring that the risk adjustment method used to develop the payment rates incentivizes the appropriate coding of patient conditions and needs, including those that have previously been under-documented, such as dementia and patient frailty.

We seek input on the following questions:

• What non-claims-based indicators could be used to improve payment accuracy and reduce health disparities, and how can CMS ensure that they are collected uniformly and documented consistently without unduly increasing administrative burden?
• What risk factors, including clinical or social, should be considered in developing payment for advanced primary care services?
• How can CMS account for apparent changes in risk that are due to changes in coding patterns rather than changes in health status?
• What risk adjustments should be made to proposed payments to account for higher costs of traditionally underserved populations?
• What indicators are used to capture added social risk in commercial insurance? Should CMS consider using these?
• What metrics should be used or monitored to adjust payment to ensure that health disparities are not worsened as an unintended consequence?
• How can CMS ensure that advanced primary care hybrid payment increases access to health care services for patients without a usual source of primary care?
• Are there steps CMS can take to ensure advanced primary care billing and coding is utilized for dually eligible beneficiaries, and by safety net providers?
• Should CMS incorporate Community Health Integration and/or Principal Illness Navigation services and payment into an advanced primary care bundle?

(5) Quality Improvement and Accountability

We are committed to affordable quality health care for all people with Medicare. We seek feedback regarding how we can continue to strengthen beneficiary access to high-quality health services within FFS Medicare. One goal of the CMS Innovation Center Strategy Refresh is to increase the capability of practitioners furnishing advanced primary care to engage in accountable care relationships with beneficiaries through incentives and flexibilities to manage clinical quality, outcomes, patient experience, and total cost of care. As such, part of the intent of evolving and creating over time advanced primary care hybrid payments is that the practitioners who bill for these services are engaged in a relationship where they are responsible for the quality and cost of care for the beneficiary, counting toward the overall 2030 goal of every person with Traditional Medicare being in an accountable care relationship. This Advanced Primary Care RFI seeks input from beneficiaries and their caregivers, primary care and other clinicians, and health plans on how advanced primary care bundles could support that goal.

We seek input on the following questions:

• How can CMS ensure clinicians will remain engaged and accountable for their contributions to managing the beneficiary's care?
• What are key patient-centered measures of quality, outcomes and experience that would help ensure that hybrid payment enhances outcome and experience for patients?
• How could measures of quality, outcomes, and experience guard against and decrement in access or quality?
• As described in the APCM proposal, reporting of the “Value in Primary Care” MVP would be an APCM service element for MIPS eligible clinicians beginning in 2026. Since this MVP contains measures focused on both the total cost and quality of care, would its inclusion as an APCM service element be sufficient to count as “accountable care?” If not, what other service delivery or quality reporting would be expected in “accountable care?”
• What should CMS consider so that that advanced primary care bundles could be used to promote accountable care across payers, both commercial and Medicaid?
• What quality measures are other payers using to drive improvements in primary care?
• What utilization measures are other payers using to drive improvements in primary care?
• What patient experience measures are other payers using to drive improvements in primary care?
• Should CMS consider flexibilities for smaller practices to bill the advanced primary care bundle? Should CMS consider flexibilities for entities exempt from MIPS to bill the advanced primary care bundle?
• Would clinicians be willing to take on more accountability to further reduce the frequency and/or administrative burden of billing?
• For APCM services, are there other key practice-level elements of the service that should be considered for advanced primary care practices to bill for advanced primary care?

4. Cardiovascular Risk Assessment and Risk Management

a. Background

Cardiovascular disease (CVD) is a leading cause of death, disability, and health care expenditures in the U.S. The burden of CVD is unequal, with black Americans experiencing higher rates of CVD-related morbidity than white Americans. Atherosclerotic CVD is also distinct among leading causes of death for Americans in the proportion of CVD attributable to behavioral causes, making improvement in modifiable CVD risk factors (for example, diet, exercise, smoking cessation) is a key treatment target to reduce the burden of CVD across populations.

The CMS Innovation Center's Million Hearts® Cardiovascular Disease (CVD) Risk Reduction model (hereafter referred to as Million Hearts® model) was launched in 2017 as part of the ongoing HHS Million Hearts® Initiative. The model's goals were to decrease the incidence of first-time heart attacks and strokes among medium and high-risk Medicare beneficiaries over five years and reduce Medicare spending on cardiovascular events. The model was implemented as a randomized design where participant organizations in the intervention group agreed to (1) calculate traditional Medicare beneficiaries' risk of having a heart attack or stroke over 10 years, and (2) provide cardiovascular care management services to high-risk patients (defined as a risk of a cardiovascular event in the next decade of greater than thirty percent). The model also identified medium-risk patients (more than fifteen percent risk of an event in the next decade) in its evaluation. In exchange for doing so, CMS paid participant organizations $10 for each eligible traditional Medicare beneficiary for whom the organizations assessed risk, and in the first year of the model, $10 for each high-risk beneficiary during each month when cardiovascular care management services were provided. In subsequent years of the model (2018 to 2022) participants were expected to reassess cardiovascular risk and were paid based on cardiovascular risk reduction ($0 to $10 per beneficiary per month) for high-risk beneficiaries.

All CMS Innovation Center models are independently evaluated and the evaluation of the Million Hearts® model found the model reduced the rate of death from any cause for medium and high-risk beneficiaries by four percent, as well as reduced the risk of death from a cardiovascular event (that is, heart attack or stroke) by eleven percent. We consider this to be due to increased rates of cardiovascular risk assessment, discussion of cardiovascular risk by participants' clinicians, and the use of appropriate medications to reduce cardiovascular risk (for example, aspirin and statins).

During the Million Hearts® (MH) model (which was tested from 2017-2022), there was a recently-introduced ASCVD risk assessment tool to incorporate demographic (age, sex, race), clinical (blood pressure, cholesterol, history of diabetes), and risk behavior (smoking status, use of anti-hypertensives, use of statins, use of aspirin) established by the American College of Cardiology (ACC), as well as a longitudinal re-assessment tool used within the model. This tool calculated the 10-year risk of a cardiovascular event for beneficiaries ages 40-79. Subsequently, additional ASCVD risk assessment tools have been developed.

Today in clinical practice, ASCVD risk is generally calculated using a tool combining demographic data, personal history (risk behaviors and medical history), and laboratory data (lipid panel). This information is used to calculate into a 10-year estimate of a patient's ASCVD risk for use in determining treatment advice provided by the treating practitioner. This determination requires both data collection at a visit and laboratory data, which may not be available at an initial visit. This change in clinical practice occurred over time after a series of guidelines from the American Heart Association (AHA) recommended using ASCVD risk in determining treatment decisions for patients without a prior history of CVD. This treatment guideline also includes recommendations for lifestyle modifications for all patients. The CMS Innovation Center Million Hearts® model contributed to this change in clinical practice by demonstrating through a rigorous randomized control trial that the quantitative assessment of 10-year cardiovascular risk improves quality of care, including mortality, compared to prior practice.

In the Million Hearts® model, cardiovascular-focused care management services included an initiating visit where an ASCVD risk assessment is performed, structured recording of patient health information using CEHRT, and a comprehensive care plan focused on cardiovascular risk reduction (including the ABCS focused on in the Million Hearts® model), but did not require 24/7 access to care, management of care transitions, or home and community-based coordination because these services are necessary for the management of complex conditions placing a beneficiary at high risk of death, acute exacerbation/decompensation, or functional decline, and these services are provided to prevent the development of these complex chronic conditions. In the Million Hearts® model, cardiovascular-focused risk management services were provided to beneficiaries at high risk for CVD (more than a thirty percent risk of a cardiovascular event in the next 10 years).

We interpret the findings of the Million Hearts® model to be both reflective of and perhaps augmenting an evolution in clinical practice toward quantitative ASCVD risk assessment. We also do not believe the resources involved in these activities are appropriately reflected in current coding and payment policies. As such, we are proposing to establish codes to describe a separately billable cardiovascular disease risk assessment that is furnished in conjunction with an E/M visit and cardiovascular-focused risk management, when reasonable and necessary due to the presence of increased cardiovascular risk factors identified for the individual patient.

b. ASCVD Risk Assessment

We are proposing a new stand-alone G-code, HCPCS code GCDRA, Administration of a standardized, evidence-based Atherosclerotic Cardiovascular Disease (ASCVD) Risk Assessment for patients with ASCVD risk factors on the same date as an E/M visit, 5-15 minutes, not more often than every 12 months. Atherosclerotic Cardiovascular Disease (ASCVD) Risk Assessment refers to a review of the individual's demographic factors, modifiable risk factors for CVD, and risk enhancers for CVD. We are proposing this new code to identify and value the work involved in administering an ASCVD risk assessment when medically reasonable and necessary in relation to an E/M visit.

We further propose that the ASCVD risk assessment must be furnished by the practitioner on the same date they furnish an E/M visit, as the ASCVD risk assessment would be reasonable and necessary when used to inform the patient's diagnosis, and treatment plan established during the visit. ASCVD risk assessment is reasonable and necessary for a patient who has at least one predisposing condition to cardiovascular disease that may put them at increased risk for future ASCVD diagnosis. These conditions could include but are not limited to, obesity, a family history of CVD, a history of high blood pressure, a history of high cholesterol, a history of smoking/ alcohol/drug use, pre-diabetes, or diabetes. We further propose that the ASCVD risk assessment would not be separately billable for patients with a cardiovascular disease diagnosis or those who have history of a heart attack or stroke.

We are not proposing any specific tool that would have to be used for the ASCVD risk assessment, although the assessment tool must be standardized and evidence-based. Proposed elements of the ASCVD risk assessment service would include:

• Current (from the last 12 months) laboratory data (lipid panel) for inputs needed for the risk assessment tool.
• Administration of a standardized, evidence-based ASCVD risk assessment tool that has been tested and validated through research, and includes the following domains:

++ The output of the tool must include a 10-year estimate of the patient's ASCVD risk. This output must be documented in the patient's medical record.

++ Demographic factors (such as age, sex).

++ Modifiable risk factors for CVD (such as blood pressure & cholesterol control, smoking status/history, alcohol and other drug use, physical activity and nutrition, obesity).

++ Possible risk enhancers (such as pre-eclampsia, pre-diabetes, family history of CVD).

++ Billing practitioners may choose to assess for additional domains beyond those listed above if the tool used requires additional domains. Examples of tools include but are not limited to, the ACC ASCVD Risk Estimator and the ACC PREVENT tool. CMS expects that the tool that is used would not introduce discriminatory bias, consistent with Section 1557 final rule.

We are proposing for HCPCS code GCDRA to have a duration of 5-15 minutes for the administration of an ASCVD risk assessment tool, billed no more often than once every 12 months.

We are requesting comments on these proposals, as well as information pertaining to potential clinician education for these proposed codes.

(1) Proposed Valuation for ASCVD Risk Assessment GCDRA

We propose a direct crosswalk to HCPCS Code G0136 ( Administration of a standardized, evidence-based SDOH assessment, 5-15 minutes, not more often than every 6 months), with a work RVU of 0.18 as we believe this service reflects the resource costs associated when the billing practitioner performs the service described. HCPCS code G0136 has an intra-service time of 15 minutes, and the physician work is of similar intensity to proposed HCPCS code GCDRA. Therefore, we are proposing a work time of 15 minutes for HCPCS code GCDRA based on this same crosswalk to G0136. We are also proposing to use this crosswalk to establish the direct PE inputs for HCPCS code GCDRA.

We are seeking comments on these proposals.

c. Atherosclerotic Cardiovascular Disease Risk Management Services (GCDRM)

Over the past several years, we have worked to develop payment mechanisms under the PFS to improve the accuracy of valuation and payment for the services furnished by physicians and other healthcare professionals, especially in the context of evolving changes in medical practice using evidence-based models of care, such as the Million Hearts® model. We are proposing to establish a G-code to describe ASCVD risk management services that incorporate the “ABCS” of CVD risk reduction (aspirin, blood pressure management, cholesterol management, and smoking cessation) for beneficiaries at medium or high risk for ASCVD (>15 percent in the next 10 years) as previously identified through an ASCVD risk assessment. We believe that ASCVD risk management services include continuous care and coordination to reduce or eliminate further elevation of ASCVD risk over time, and potentially prevent the development of future cardiovascular disease diagnoses or first-time heart attacks or strokes.

We are proposing new G-code, GCDRM, Atherosclerotic Cardiovascular Disease (ASCVD) risk management services with the following required elements: patient is without a current diagnosis of ASCVD, but is determined to be at medium or high risk for CVD (>15 percent in the next 10 years) as previously determined by the ASCVD risk assessment; ASCVD-Specific care plan established, implemented, revised, or monitored that addresses risk factors and risk enhancers and must incorporate shared decision-making between the practitioner and the patient; clinical staff time directed by physician or other qualified health care professional; per calendar month. Atherosclerotic Cardiovascular Disease (ASCVD) risk management services refer to the development, implementation, and monitoring of individualized care plans for reducing cardiovascular risk, including shared decision-making and the use of the ABCS of cardiovascular risk reduction, as well as counseling and monitoring to improve diet and exercise. We propose that the elements of the Atherosclerotic Cardiovascular Disease (ASCVD) risk management service would include:

• ASCVD Specific Risk Management, which may include:

++ Promoting receipt of preventive services (including tobacco cessation counseling, diabetes screening, diabetes self-management training)

++ Medication management (including aspirin or statins to maintain or decrease risk of CVD)

++ Ongoing communication and care coordination via certified electronic health record (EHR) technology

—Synchronous, non-face-to-face communication methods must be offered

• ASCVD-Specific, Individualized, Electronic Care Plan

++ Must address modifiable risk factors and risk enhancers specific to CVD, as applicable, such as:

—blood pressure and cholesterol control

—smoking, alcohol, and other drug use status, history, and cessation

—physical activity and nutrition

—obesity

++ Plan must be established, implemented, and monitored and must incorporate shared decision-making between the practitioner and the patient

Although there is no minimum service time requirement for ASCVD risk management services in a month, each of the proposed elements must be addressed to bill for the service, unless a particular element is not medically indicated or necessary at that time for that specific patient. For example, the element of smoking cessation would not be addressed for a patient who does not use tobacco. Documentation of each service element in the patient's medical record is required.

Physicians and non-physician practitioners (NPPs) who can furnish E/M services could bill for ASCVD risk management services. We anticipate that ASCVD risk management services would ordinarily be provided by clinical staff incident to the professional services of the billing practitioner in accordance with our regulation at § 410.26. We are proposing that ASCVD risk management services would be considered a “designated care management service” under § 410.26(b)(5) and, as such, could be provided by auxiliary personnel under the general supervision of the billing practitioner.

We are proposing that patient consent must be obtained before starting ASCVD risk management services. Like other care management services, ASCVD risk management services would typically be provided by clinical staff outside of face-to-face patient visits. Consent can be written or verbal and must be documented in the medical record. Consent should also include informing the patient about these services, as well as potentially applicable Medicare cost-sharing.

We are proposing that ASCVD risk management services could be billed no more often than once per calendar month, and that payment is limited to one practitioner per beneficiary per month. Patients must be determined to be at medium or high risk for CVD (>15 percent in the next 10 years) as previously determined by the ASCVD risk assessment and must not have a current diagnosis of cardiovascular disease or have a history of heart attack or stroke.

We are seeking comments on each of these proposals.

(1) Proposed Valuation for ASCVD Risk Management Services (GCDRM)

We propose a direct crosswalk to CPT Code 99211 ( Office or other outpatient visit for the evaluation and management of an established patient that may not require the presence of a physician or other qualified health care professional), with a work RVU of 0.18 as we believe this service reflects the resource costs associated when the billing practitioner performs HCPCS code GCDRM. CPT code 99211 has a physician intraservice time of 5 minutes, and the physician work is of similar intensity to our proposed HCPCS code GCDRM. Therefore, we are proposing a work time of 5 minutes for HCPCS code GCDRM based on this same crosswalk to CPT 99211. We are also proposing to use this crosswalk to establish the direct PE inputs for HCPCS code GCDRM, with modifications to reflect non-face-to-face services. These modifications include eliminating PE inputs used in face-to-face services such as preparing and cleaning the room. We are seeking comments on these proposals.

5. Strategies for Improving Global Surgery Payment Accuracy

a. Background

Currently, there are approximately 4,100 physicians' services that are coded and valued under the PFS as global surgical packages (herein “global packages”). Global packages are single codes that are valued to include all services provided during a specified period of days (0-day, 10-day, or 90-day global packages) by a physician (or another practitioner in the same group practice (as defined at 42 CFR 411.352)) for a specific surgical procedure. The Medicare Physician Fee Schedule (MPFS) look-up tool provides information on each procedure code, including the global surgery indicator. This tool is available at https://www.cms.gov/medicare/physician-fee-schedule/search/overview .

The global packages include:

• The surgical procedure itself, including day-of pre-service activities and day-of recovery care;
• Post-operative evaluation and management (E/M) visits and discharge services provided during specified post-operative periods (10- or 90-day periods for most minor and major procedures, respectively; 0-day global packages do not include post-operative visits);
• Pre-operative visits on the day of the procedure (for services with 10- and 90-day periods) and pre-operative visits on the day prior to the procedure (for major procedures with 90-day periods only);
• Services provided during the post-operative period (for services with 10- and 90-day periods) related to the procedure (for example, treatment of complications, pain management).

Any medical care that requires a return to the operating room during the global period is paid separately and starts a new global period. Like other services paid under the PFS, post-operative visits that are part of the global packages can vary by level and site of service. Global packages, including the pre-operative, day-of, and post-operative visits associated with the surgical procedure, are valued using our annual PFS rulemaking process.

As we discussed in the CY 2015 PFS final rule, we have identified and articulated several concerns with the global packages related to the accuracy of valuation and payment under the PFS. Foremost, we have longstanding concerns regarding whether the packages are valued based on estimates consistent with the number and kind of services actually being furnished. Findings from multiple OIG reports suggest that practitioners perform fewer post-operative visits than are expected and accounted for in the valuation of the global packages. We provided a detailed discussion of these concerns in the CY 2015 PFS final rule (79 FR 67582 through 67591). Similarly, we described concerns that global packages as currently constructed may cause potential distortions in valuation among PFS services, and that the structure of the current packages assumes a single model of care delivery (a single practitioner or other practitioners in the same group practice furnishing the surgical procedure and all associated care) and does not appropriately address scenarios where the surgical procedure and follow-up care are provided by different practitioners in different group practices. Taking these findings and concerns into account, we finalized a policy to transition all 10-day and 90-day global packages to 0-day global packages, which would allow any post-operative visits furnished after the day of the procedure to be billed separately as standalone visits by any practitioner who furnishes them. However, in 2015, through amendments made by section 523 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; Pub. L. 114-10, enacted April 16, 2015), we were prohibited under section 1848(c)(8)(A) of the Act from implementing this finalized policy. Further, under section 1848(c)(8)(B), we were required to collect data beginning in 2017 on the number and level of post-operative visits typically provided to patients during 10- and 90-day global periods and to use this newly collected data and other data beginning in 2019 to improve the accuracy of global package valuation.

In response to these requirements, over the past 9 years, we have:

• Initiated research contracts and implemented a data-collection process to analyze data to understand the extent to which post-operative visits are furnished to patients and improve the accuracy of payment rates for the global surgical packages. This research contract was funded by CMS (HHSM-500-2014-00036I) and carried out within the Payment, Cost, and Coverage Program in RAND Health Care.
• Released three reports (located at https://www.cms.gov/medicare/payment/fee-schedules/physician/global-surgery-data-collection ) on the number of E/M visits furnished during post-operative periods, the most recent finding that only 4 percent of expected post-operative visits in 10-day global packages and 38 percent of expected post-operative visits following 90-day global packages were furnished to patients.
• Fielded and released a report on a survey of selected global packages, collecting information related to the level and complexity of medical visits furnished during post-operative periods. This research contract was funded by CMS (HHSM-500-2014-00036I) and carried out within the Payment, Cost, and Coverage Program in RAND Health Care.
• Released two reports on potential approaches for revaluing the global packages based on these findings.
• Analyzed the prevalence of transfer of care modifiers (-54 for surgical care only; -55 for post-operative management only; and -56 pre-operative management only) applied to global packages.

More recently, in the CY 2023 PFS proposed and final rules, we reviewed the prior work and conversations around the accuracy of global package valuations and solicited comments from the public on (1) suggested strategies for revaluing these services, (2) information on how changes to healthcare delivery and payment may be impacting the relevance or accuracy of global package payments, and (3) possible impact of changes to global packages on health care access for beneficiaries (see 87 FR 69432 through 69437). In response to the comment solicitation in the CY 2023 PFS proposed rule, some commenters generally disagreed with our findings that the post-operative visits in the global packages are not performed as frequently as assumed in our valuation of global surgical packages. However, opposition from commenters was based on anecdotal assertions rather than alternative data. Many of these commenters' specific points restated earlier comments submitted in response to our request for feedback in the CY 2020 PFS proposed rule on claims-based reporting of post-operative visits, survey findings on the level of visits, and potential revaluation approaches. Some commenters supported eliminating 10-day global package periods and requested that the AMA RUC review these services. However, these commenters also acknowledged that the AMA RUC review process could take years. In addition to the comments we received in response to the CY 2023 PFS proposed rule, we have received feedback over several years from many interested parties regarding the findings from claims-based reporting of post-operative visits and considered revaluation methodologies presented in our prior reports.

Overall, we have continued exploring ways to improve the accuracy of valuation and payment for global packages to ensure appropriate payments to the practitioners providing pre-operative, surgery, and post-operative care to Medicare beneficiaries while considering feedback from interested parties. In addition, commenters have not proposed specific alternative strategies to revalue global surgical packages.

Separately, we continue to review approaches to better describe physicians' services in the context of the evolving care delivery landscape and to allow practitioners to furnish patient-centered care. Our review work includes considering care delivery models discussed with interested parties (and developed though our CMS Innovation Center work), reviewing our policies and billing requirements, identifying care elements that could serve as the building blocks for describing newer, impactful services, and seeking opportunities to reduce administrative burdens for practitioners while ensuring accurate payment. Through this lens, we have also recently reviewed our billing requirements and payment policies for the global packages, concurrent with continued analysis of the Medicare claims data.

While ongoing, our review highlights opportunities for us to clarify or revise longstanding policy and billing instructions for global packages, using data and experience gathered over the last several years, consistent with our overall objectives to pay more accurately for services and to right-size the valuation of PFS services based on how practitioners currently furnish these services. In this proposed rule, we discuss proposals (1) to revise our transfer of care policy for global packages to address instances where one practitioner furnishes the surgical procedure and another practitioner furnishes related post-operative E/M visits during the global period, and (2) to develop a new add-on code that would account for resources involved in post-operative care provided by a practitioner who did not furnish the surgical procedure. We believe that addressing the use of transfer of care modifiers, and the resources involved when practitioners who do not furnish the surgical procedure provide post-operative care, are essential steps in aligning payment with the way in which surgical procedures are currently furnished as evidenced in our data, and would make meaningful progress toward more accurate payment for these services in particular and improve relative valuation for PFS services overall.

b. Clarifying the Scope of Global Surgical Packages

We have valued global packages to include the surgical procedure and services furnished during the specified global period related to the surgical procedure when furnished by the practitioner who performs the surgery (hereafter in this section, the proceduralist) or by another practitioner in the same group practice as the proceduralist.

Under current Medicare payment policy, certain services furnished during the global period by the proceduralist or by another practitioner in the same group practice may be separately billed with an appropriate modifier:

• Initial decision for surgery: E/M service billed with modifier -57 (Decision for Surgery).
• E/M services unrelated to the procedure: billed with modifier -24 (Unrelated E/M Service During a Global Period).
• Other services unrelated to the procedure (including underlying condition treatment, diagnostic tests, distinct procedures) not including care for complications/returns to the operating room: no modifier required.
• Failure of a less extensive procedure requiring a more extensive procedure: no modifier required.
• Organ transplant immunosuppressive therapy: no modifier required.
• Critical care services unrelated to surgery: billed with modifier -FT if in the post-operative period.

In general, except where a formal transfer of care modifier applies, a practitioner other than the proceduralist or a practitioner in the same group practice as the proceduralist can bill separately for an E/M visit for services they furnish during the global period for a global package, including post-operative E/M visits related to the procedure. We established formal transfer of care modifiers to apply in cases where the work, time, and resources involved in furnishing services included in the global packages are split between the proceduralist (or another practitioner in the same group practice) and other practitioners providing related post-operative visits during the global period. Under our current transfer of care policy, transfer of care modifiers must be reported when a formal transfer of care arrangement is documented by both the proceduralist and another practitioner providing the related post-operative visits. Based on our analysis of Medicare fee-for-service claims data, these formal transfer of care modifiers are rarely used and, when they are, it is often with respect to certain ophthalmologic procedures (for example, cataract surgery).

Based on our analysis of claims data, we believe that it may be helpful to review our current policy regarding the applicability of transfer of care modifiers for the medical and billing communities. Under our current policy, the scope of the global package extends to services furnished by the entire group practice of the proceduralist, including services furnished by practitioners in the group practice who are a different specialty from the proceduralist. In other words, the PFS payment for post-operative visits and other services furnished during the global period that are related to the surgical procedure and provided by the proceduralist or a practitioner in the same group practice as the proceduralist is bundled into the global package, and those services are not separately billable. If the proceduralist or a practitioner in the same group practice as the proceduralist wants to bill during the global period for a service furnished to the surgical patient, but unrelated to the global package, the correct modifier must be used to indicate that the service is not related to the global package. Without a modifier to indicate otherwise, during the global period for a global package, all E/M services furnished to the patient by the proceduralist or another practitioner in the same group practice as the proceduralist are presumed to be related to, and included in the payment for, the global package. Modifiers for separate payment (such as modifier -24) are required when services unrelated to the global package are billed by the proceduralist or a practitioner in the same group practice as the proceduralist during the global period.

c. Strategies To Address Global Package Valuation

We recognize that we are precluded under section 1848(c)(8)(A) of the Act from revisiting the policy we established in the CY 2015 PFS final rule to revalue all 10-day and 90-day global packages to 0-day global packages (79 FR 67582-67591). Further, we note that transitioning all global packages to 0-day global periods could take several years and require substantial CMS resources (see CY 2014 PFS final rule (77 FR 44737 through 44738) for previous discussion). We have also considered revaluing 10-day and 90-day global packages to reflect the observed number of post-operative visits furnished to patients based on data we have collected over nearly a decade and note that this approach would be quicker to implement, assuming there would be straightforward ways to revalue the services with the data. However, interested parties have continued to express uncertainty about the validity of claims-based counts of post-operative visits. This uncertainty stems primarily from CMS not having complete information surrounding the use of the transfer of care modifiers since they are not currently routinely used. The same interested parties also object conceptually to revaluing the 10-day and 90-day global packages using the “building block” framework, where each component of a service, including bundled post-operative visits, contributes to total valuation to align valuation with the number of post-operative visits typically provided to patients. Some interested parties have expressed larger concerns about the redistributive impacts across the PFS among specialties if we were to implement and revalue all global packages.

We acknowledge the practical challenges involved in revaluing 10-day and 90-day global packages, whether they remain as 10-day and 90-day periods with fewer post-operative visits or are transitioned to 0-day global packages, and continue to carefully consider how to best improve global package valuation given access to administrative claims data and other inputs that help us understand the scope of services provided to patients within global packages. Ultimately, we want to ensure payments to practitioners and the relative values assigned to global surgical packages are accurate and, to the extent possible, driven by real-world objective and updatable information regarding the relative resources involved in furnishing the services.

For CY 2025, we are focused on different aspects of our policy objectives for global packages and propose the following policies, which are not mutually exclusive, to obtain information and allow for more accurate payment to reflect time and resources spent on post-operative care associated with the current global packages. We will continue to assess and monitor for potential future opportunities to improve our payment approach for the global packages more broadly.

Additionally, in developing our proposed policies to pay more accurately for the global packages, we also considered whether, when, or how our policies may be affected when services are provided by the proceduralist, versus another practitioner who did not perform the procedure but is providing follow up care. We also recognize that there may be multiple practitioners in the same or different specialties in the same group practice and considered how our policies should apply to practitioners in a range of specialties within the same group practice. We are seeking comment on these considerations in the context of our proposed policies and welcome feedback that may further inform our payment policy for global packages. Additionally, as we continue to better understand what services are being furnished in the global period, by whom, and how the global surgical packages are valued and billed, we are seeking comment on how remote monitoring and other types of new technologies represent new resource costs and/or produce efficiencies and effectiveness of post-operative care. This information could be useful both for purposes of valuation for surgical and post-operative care, as well as for policies regarding when specific PFS codes should be reported during global periods for global packages.

d. Expand Applicability of Transfer of Care Modifiers

We created transfer of care payment modifiers at the inception of the PFS. Under our current policy, these modifiers are required to be appended to the relevant global package code when billing for services that are within the scope of the global package (within the global period and related to the surgical procedure) only when the proceduralist and one or more other practitioners who are not in the same group practice as the proceduralist formally document their agreement to provide distinct portions of the global package.

The following transfer of care modifiers describe the different portions of the global surgical package that could be provided by different practitioners:

• Modifier -54 Surgical Care Only: this modifier is appended to the relevant global package code to indicate that the proceduralist performed only the surgical procedure portion of the global package.
• Modifier -55 Post-operative Management Only: this modifier is appended to the relevant global package code to indicate that the practitioner performed only the post-operative management portion of the global package.
• Modifier -56 Pre-operative Management Only: this modifier is appended to the relevant global package code to indicate that the practitioner performed only the pre-operative portion of the global package.

For each of these modifiers, the payment for the global package is adjusted based on the applicable percentage noted in the PFS Relative Value files ( https://www.cms.gov/medicare/payment/fee-schedules/physician/pfs-relative-value-files ).

As previously noted, we currently require the transfer of care modifiers (-56 pre-operative care, -54 for procedures, and -55 for post-operative care) to be appended in cases where there is a formal documented transfer of care agreement, that is, “in the form of a letter or an annotation in the discharge summary, hospital record, or Ambulatory Surgical Center (ASC) record” (CMS Manual System, Pub 100-04 Medicare Claims Processing, Transmittal 11287). In our recent analyses of 2022 Medicare claims data, we identified that these modifiers were rarely used other than for certain ophthalmology global packages. We found over 99 percent of claim lines for 90-day surgical procedures billed with modifier -54 were ophthalmology services (primarily cataract-related procedures). We also identified a difference in the number of claim lines annually for a given 90-day global package with modifier -54 and with modifier -55. In other words, there are sometimes more claim lines billed with modifier -54 than there are corresponding lines with modifier -55 and vice versa during a year. We note that modifier -56 (pre-operative management only) is only very rarely used in practice. These recent observations suggest (1) the overwhelming concentration of reported transfer of care modifiers is in ophthalmology procedures, and (2) a potential mismatch in billing for formal transfer of care cases between proceduralists and other practitioners providing post-operative care.

While we recognize the benefits to continuity of care when the proceduralist also provides pre-operative and follow-up care for the procedure, we also recognize that it is not always feasible, or even perhaps typical practice for the same practitioner to furnish all portions of the global package; for example, in instances when the practitioner furnishing the procedure does not schedule a post-operative visit(s) on the day of the procedure or plans for the patient to follow up with their primary care provider, or when the practitioner performing the surgery arranges alternative follow-up care because it would be difficult for the beneficiary to travel to return for follow-up care. Because our current policies require use of the transfer of care modifiers only where there is a formal documented agreement between practitioners to provide specific portions of the global package, we believe there are many practical and potentially common circumstances under which the transfer of care modifiers would not be required or used.

Beginning for services furnished in 2025, we are proposing to broaden the applicability of the transfer of care modifiers for the 90-day global packages. We are proposing to require the use of the appropriate transfer of care modifier (modifier -54, -55, or -56) for all 90-day global surgical packages in any case when a practitioner plans to furnish only a portion of a global package (including but not limited to when there is a formal, documented transfer of care as under current policy, or an informal, non-documented but expected, transfer of care). Practitioners billing for a global package procedure code with modifier -54 and other practitioners in the same group practice as that practitioner would still be able to bill during the global period for any separately identifiable E/M services they furnish to the patient that are unrelated to the global package procedure. To do so, the practitioner would append modifier -24 to the claim line for the E/M service.

This proposed policy, which would be a first step toward improved valuation and payment while retaining the fundamental structure of the global packages, would provide us with more accurate information on the resources involved in furnishing components of global surgical packages. This proposal would prevent duplicative Medicare payment for post-operative care because the global surgical package payment would be adjusted based on the appended modifier, and payment for post-operative care would not be made both as part of a global surgical package and through separately billed E/M visits. We also anticipate that the proposed policy would provide us with insight into changes in standards of practice and post-operative patient care for services that are not billed with transfer of care modifiers pursuant to our current policy (that is, services other than certain ophthalmology procedures).

We acknowledge the potential challenge associated with anticipating whether other practitioners will furnish portions of the global package and, accordingly, appending the appropriate modifier when billing global package services.

We are interested in understanding and are seeking comment on the circumstances under which practitioners in separate group practices furnish different portions of the care included in global packages, and what that means for reporting the transfer of care modifiers. While we are making proposals related to the 90-day global periods beginning for services furnished in 2025, we are also seeking comment on whether we should consider proposing these changes for the 10-day global packages in future rulemaking.

e. Payment for Global Packages

Under our current policy for global packages where the transfer of care modifiers are used (required only where there is a formal transfer of care arrangement), the total combined PFS payment made for the global package during the global period does not exceed the total global surgical package payment established for the procedure when billed without any transfer of care modifier. In general, we continue to believe this is the appropriate result when more than one practitioner furnishes portions of a global package. Under our proposal, we would require that practitioners performing the surgical procedure but not intending to furnish the post-operative portions of a 90-day global service would appropriately append the -54 modifier that we have previously discussed, which would adjust the portion of payment received to accurately reflect the service furnished.

More specifically, as noted in the discussion above, the transfer of care modifiers correspond to three distinct portions of the global package (pre-operative services, the surgical procedure itself, and post-operative care). We have assigned a proportion of the global package payment to each portion of the service based on longstanding assumptions. Under our current policy, the payment for the entire global package is paid to the billing practitioner unless a transfer of care modifier is included on the claim. Payment is only adjusted if a transfer of care modifier is included on the claim. We are requesting comments, as we further develop our payment policies for global packages, on how best to determine the appropriate payment proportions for the three portions of the global package, which impact payment to the different practitioners who furnish the different portions of the service.

We are continuing to consider approaches to establishing the payment allocations for portions of the global package when the transfer of care modifiers are used, and anticipate revising the allocations through future rulemaking. We are seeking comment on potential approaches to revise these payment allocations and how they could be established to better reflect current medical practice and conventions for post-operative follow-up care. We seek to identify a procedure-specific, data-driven method for assigning shares to portions of the global package payment to more appropriately reflect the resources involved in each portion. We would appreciate and carefully consider recommendations from interested parties, including the AMA RUC, on what those allocation percentages should be, based on how the global package codes are valued and any other relevant information.

We have contracted with RAND to support data collection and analysis in the past and, as identified in RAND's prior reports and described in detail, we surmise that the policy to apportion and pay for the three portions of the global package based on the presence of transfer of care modifiers does not always work smoothly. In considering RAND's reports, one reason for this is that fewer post-operative visits are provided to patients compared to the number of visits reflected in the valuation of global packages. The global packages reflect a certain number of post operative visits (noted in the Physician Time File) that typically occur during the post-operative global period. However, there is no easy way within a global package to separate the RVUs for the procedure itself from the RVUs for post-operative visits that are not typically provided to patients. If our allocation of the global package payment based on the presence of transfer of care modifiers were to undervalue the surgical procedure portion or the post-operative care portion of the global package, we are concerned that we could unintentionally introduce incentives that influence current medical practice for transfers of care. This gets at RAND's prior recommendation that we revalue global packages to reflect the actual number of post-operative visits provided to patients. After revaluation, separating the procedure and post-operative payments would reflect observed data and mitigate any possible inappropriate incentives in place for practitioners to initiate transfers of care and support use of transfer of care modifiers as medically appropriate. This approach has the advantage of anchoring the valuation of separate -54 and -55 components using real-world information on post-operative visits reported to CMS rather than on historical assumptions or current survey data reflecting estimates of the typical number and level of visits.

In our internal review of the percentages assigned for the pre-operative, surgical care, and post-operative portions of the global package, we found that there are a small number of codes that do not have any assigned percentages in our files even though these codes are identified as global packages. HCPCS codes 77750 ( Infusion or instillation of radioelement solution (includes 3-month follow-up care)), HCPCS code 77761 ( Intracavitary radiation source applic simple), HCPCS code 77762 ( Intracavitary radiation source applic intermed), and HCPCS code 77763 ( Intracavitary radiation source applic complex) do not have assigned percentages in our RVU files. It is our understanding, however, that the MACs have local edits in place to ensure appropriate payment for these services when billed with the transfer of care modifiers. We are seeking comment on whether we should consider, first, whether these codes are appropriately categorized as 90-day global package codes. If these are appropriately considered to be 90-day global package codes, we are seeking comment on what the assigned percentages should be for the pre-operative, surgical care, and post-operative portions of the service.

f. Post-Operative Care Services Add-On Code

We recognize the importance of continuity in surgical and post-operative care. However, we recognize that there are instances where post-operative care is not furnished by the proceduralist or another practitioner in the same group practice, or even by a practitioner who is in the same specialty as the proceduralist, despite there being no formal transfer of care. We also recognize that there is an extra level of complexity involved when a practitioner sees a patient post-operatively after a surgical procedure performed by another practitioner in those circumstances. The practitioner providing the post-operative care may not be involved in creating the surgical plan, and may not have access to the operative notes to know how the surgery went or be abreast of any particular considerations related to the procedure that may factor in medical care decisions for the post-operative care. As such, we recognize that there are comparatively more resource costs incurred when a practitioner who did not furnish the surgical procedure in a global package provides the follow-up care. We are proposing to address these scenarios, which can occur in a few different ways, by establishing a new add-on code that would account for resources involved in post-operative care for a global package provided by a practitioner who did not furnish the surgical procedure and does not have the benefit of a formal transfer of care. However, we note that when a patient is seen by practitioners in the same group practice or specialty as the surgeon, the same resources are not incurred during follow-up and therefore, the add-on code should not be billed by another practitioner in the same group practice as the practitioner who performed the surgical procedure, or in the same specialty as the practitioner who performed the surgical procedure. In the case of a practitioner providing follow up care who is of a different specialty and not within the same group practice as the proceduralist, researching the procedure to determine expected post-operative course and potential complications may be needed, which would warrant using the add-on code. We also acknowledge that sometimes the proceduralist does not schedule the patient to follow up with them post-operatively and directs the patient to follow up with other practitioners as needed, such as with the patient's primary care provider. The patient may independently choose to follow up with their primary care provider or another practitioner based on other considerations such as convenience of the practice location or ease of scheduling. We understand and acknowledge that the patient can choose to see another practitioner without the knowledge of the practitioner who performed the procedure.

To more appropriately reflect the time and resources involved in these kinds of visits, we are proposing to make payment using a new add-on code to be billed with an office/outpatient E/M visit for post-operative follow-up care during the global period of a global package to capture additional resources associated with practitioners who were not involved in furnishing the surgical procedure. This follow-up care may include, but is not limited to, obtaining and reviewing the surgical notes and surgical history, monitoring for signs and symptoms of infection, taking into account any considerations from the surgical procedure that may affect the medical care, and monitoring for any potential post-operative complications that may arise. It is often difficult in these circumstances for the practitioner who did not perform the surgical procedure to know how the wound looked after the procedure, and so it is more challenging to recognize possible changes that may have occurred since the time of the procedure (when this is something the operating surgeon would have been able to know). This new code would be billed by the practitioner who furnishes the post-operative office/outpatient E/M visits when that practitioner is not the proceduralist and is not in the same specialty or group practice as the proceduralist. Documentation in the medical record must justify use of the add-on code and that the E/M visit was, as clinically understood by the reporting practitioner, related to a post-operative visit furnished during the 90-day post operative period. As noted earlier, we are proposing to expand the required use of the transfer of care modifiers as a first step toward improving payment for the global packages to promote improved valuation and payment for these services. Instituting an add-on code to capture the time and intensity of post-operative work absent a formal transfer of care, would be an essential step in recognizing how the services are currently furnished and make meaningful progress toward `right-sizing' the structure of the global packages.

Given the history of the global packages since data collection began, as specified in section 1848(c)(8) of the Act, and in consideration of our policies for post-operative care and our proposal requiring the use of the transfer of care modifiers in a broader set of circumstances, we believe that the timing is appropriate to establish an add-on code and payment for post-operative care provided in the office/outpatient setting by a practitioner other than the proceduralist (or another practitioner in the same specialty) to account for the additional time, intensity, and resources that are involved in post-operative care. We are proposing a new HCPCS code, GPOC1, to capture the additional time and resources spent in providing follow up post-operative care by a practitioner who did not perform the surgical procedure and who has not been involved in a formal transfer of care agreement.

We propose the following code and descriptor for the proposed add-on code: GPOC1 ( Post-operative follow-up visit complexity inherent to evaluation and management services addressing surgical procedure(s), provided by a physician or qualified health care professional who is not the practitioner who performed the procedure (or in the same group practice), and is of a different specialty than the practitioner who performed the procedure, within the 090-day global period of the procedure(s), once per 090-day global period, when there has not been a formal transfer of care and requires the following required elements, when possible and applicable:

• Reading available surgical note to understand the relative success of the procedure, the anatomy that was affected, and potential complications that could have arisen due to the unique circumstances of the patient's operation.
• Research the procedure to determine expected post-operative course and potential complications (in the case of doing a post-op for a procedure outside the specialty).
• Evaluate and physically examine the patient to determine whether the post-operative course is progressing appropriately.
• Communicate with the practitioner who performed the procedure if any questions or concerns arise. (List separately in addition to office/outpatient evaluation and management visit, new or established)).

We are proposing that HCPCS code GPOC1 would be reported by a physician or other practitioner who did not perform the surgical procedure for a global package and provides related post-operative visits during the global period despite the absence of a formal transfer of care. We are proposing that the add-on code (HCPCS code GPOC1) would only be reported with an office or other outpatient E/M visit for the evaluation and management of a new or established patient. We would expect the documentation in the medical record to indicate the relevant surgical procedure, to the extent the billing practitioner can readily identify it, in order to aid in our understanding of the post-operative care being furnished and when there is no transfer of care modifier appended on the claim.

We are proposing that this code could be billed only once during the 90-day global period for the global package because we believe the practitioner would only have additional resource costs upon the first visit following the procedure. We are proposing to assign a ZZZ global period payment indicator for HCPCS code GPOC1, as this allows the add-on code to be billed during the post-operative time frame that applies to payment for each surgical procedure and, under our proposed policy, this code would be reportable with an E/M visit. The ZZZ global period payment indicator would identify this code as a service that is related to another service paid under the PFS and is always included in the global period of the other service.

g. Proposed Valuation for GPOC1 Add-On Code

We note that the proposed valuation of HCPCS code GPOC1 is meant to capture the additional resource costs, including for visit complexity inherent to office/outpatient care associated with a post-operative visit that is not accounted for in the appropriate office/outpatient E/M base code billed by the physician or practitioner. Therefore, we believe that CPT code 90785 (Interactive complexity (List separately in addition to the code for primary procedure)) serves as an appropriate reference for the purposes of valuing HCPCS code GPOC1. CPT code 90785 was created to capture additional work that occurs during diagnostic psychiatric evaluation, psychotherapy, psychotherapy performed with an E/M service and group psychotherapy sessions, and the service refers to specific communication factors that complicate the delivery of a psychiatric/psychotherapy procedure. However, we believe there may be relatively less work involved for GPOC1 when compared to the work of CPT code 90785, considering the amount of time needed to gather the operative history and conduct the elements discussed above. Therefore, we are proposing a work RVU of 0.16, which represents approximately half of the assigned work for minutes of CPT code 90785. Additionally, we are proposing a work time of 5.5 minutes (or half of the 11 minutes established for CPT code 90785), personally performed by the billing practitioner including the elements discussed above during the post-operative E/M visit furnished during the global period, that is, no later than 90-days following a 90-day global code, respectively. CPT code 90785 has no direct PE inputs, and we are proposing the same for HCPCS code GPOC1.

To help inform whether our proposed valuation reflects the typical service, we are seeking comment the typical time and intensity physicians and practitioners spend over and above a separately billed E/M visit when providing post-operative care to a patient when they did not perform the surgical procedure, gathering the surgical history as well as the pre-operative, intra-operative, and post-operative, and on the proposed service elements and the relative intensity compared to similar service elements of other CPT codes. For the individual practitioner, not having an intimate knowledge of the procedure itself and not having a before/after comparison to look at for the wound can all complicate their E/M visit. The proposed work RVUs are intended to account for the additional relative resource costs in time and intensity in addition to those involved in the E/M visit.

Finally, we recognize that historically, the CPT Editorial Panel has frequently created CPT codes describing services for which we originally established G-codes and adopted them through the CPT Editorial Panel process. We note that we would consider using any newly available CPT coding to describe services similar to those described here in future rulemaking.

For discussion of our expected utilization assumptions for this service, see the discussion in the Regulatory Impact Analysis section of this proposed rule.

H. Supervision of Outpatient Therapy Services in Private Practices, Certification of Therapy Plans of Care With a Physician or NPP Order, and KX Modifier Thresholds

1. Supervision of Outpatient Therapy Services in Private Practices

In the CY 2024 PFS final rule, we finalized our proposal to allow remote therapeutic monitoring (RTM) services to be furnished by occupational therapy assistants (OTAs) and physical therapy assistants (PTAs) under the general supervision of occupational therapists (OTs) and physical therapists (PTs) in private practice, in an effort to align with the general supervision policy for these services for physicians and other practitioners described in the CY 2023 final rule (88 FR 78990). We also noted that we would consider for possible future rulemaking the commenters' responses to our request for information (RFI) on changing the supervision of therapy assistants in the private practice setting to general supervision for all therapy services (88 FR 78990 through 78992).

In the CY 2024 PFS proposed rule, we reviewed the statutory provisions at sections 1861(p) and 1861(g) (by cross-reference to section 1861(p)) of the Act that describe outpatient physical therapy and occupational therapy services furnished to individuals by physical therapists (PTs) and occupational therapists (OTs) meeting licensing and other standards prescribed by the Secretary if the services meet the necessary conditions for health and safety. These statutory provisions refer separately to outpatient therapy services furnished by a provider of services (such as a rehabilitation agency) and those services furnished in the therapist's office or the individual's home, thus distinguishing therapists who work for an institutional provider of therapy services from therapists who furnish and bill independently for these outpatient therapy services (88 FR 52358 through 52359). In regulations, we have addressed these therapists as physical or occupational therapists in private practice (PTPPs and OTPPs) (63 FR 58868 through 58870). The regulations specific to services furnished by occupational or physical therapists in private practice are found at §§ 410.59(c) and 410.60(c), respectively.

We also summarized a history of related regulatory provisions in the CY 2024 PFS proposed rule. In the CY 2005 PFS final rule with comment period (69 FR 66236, 66351 through 66354), we explained that the personnel requirements that are applicable for Home Health Agencies (HHAs) at 42 CFR part 484 for therapists, therapy assistants and speech-language pathologists (SLPs) apply to all outpatient physical therapy, occupational therapy, and speech-language pathology services. In the CY 2005 PFS final rule, we also added a basic rule at §§ 410.59(a) and 410.60(a), respectively, by cross-referencing the qualifications for OTs and their OTAs and PTs and their PTAs for all occupational therapy and physical therapy services, respectively, including those who work in private practices, to 42 CFR part 484. Later, in the CY 2008 PFS final rule (72 FR 66328 through 66332), we updated the qualification standards at 42 CFR part 484 for OTs, OTAs, PTs, PTAs, and SLPs.

In the CY 2024 PFS proposed rule, through our RFI on general supervision of OTAs and PTAs by OTPPs and PTPPs, respectively, we solicited public comment, along with supporting data, for our consideration for possible future rulemaking about the following: (a) the questions and concerns we highlighted related to access, patient safety, and utilization; (b) revising §§ 410.59(a)(3)(ii) and (c)(2) and 410.60(a)(3)(ii) and (c)(2) to permit general supervision of OTAs and PTAs by the OTPP and PTPP, respectively, when furnishing therapy services; and (c) any appropriate exceptions to allowing general supervision in the furnishing of therapy services (88 FR 52358 through 52359).

In the CY 2024 PFS final rule, we reviewed the comments we received in response to the proposed rule (please refer to (88 FR 78990 through 78992)). We noted that we would consider these comments for possible future rulemaking—see our review of comments on the RFI in the CY 2024 PFS final rule (88 FR 78992).

Over the past several years and again more recently, we have heard from interested parties that the direct supervision requirements in the private practice setting are problematic for OTPPs and PTPPs who must remain on-site and immediately available when Medicare patients are treated in order to bill for therapy services furnished by their supervised OTAs and PTAs. As a remedy to this situation, interested parties have requested that we revise our requirement for PTPPs and OTPPs to provide direct supervision of OTAs and PTAs to align with the general supervision policies for OTs and PTs that work in Medicare institutional settings that provide therapy services (for example, rehabilitation agencies, outpatient hospitals, SNFs and comprehensive outpatient rehabilitation facilities (CORFs), etc.), to allow for the general supervision of their therapy assistants. These interested parties tell us that their respective State laws and policies allow general supervision of therapy assistants (most often requiring the OT or PT to be in touch with their therapy assistants via telecommunication) in at least 44 States for PTAs, and all but one State for OTAs.

Some interested parties have reported that allowing for general supervision of OTAs and PTAs by OTPPs and PTPPs, respectively, would allow for patients to have increased access to outpatient therapy services, even with ongoing healthcare workforce shortages. The shortages of OTs and OTAs, PTs, and PTAs, are noted by the United States Bureau of Labor Statistics, which shows thousands of open positions in all of these fields. Interested parties noted that over 22,000 PTs left the workforce in 2021. Additionally, these interested parties noted that workforce shortages have greater impact on private practices in rural and underserved areas where hourly wages are lower, and the OTPPs and PTPPs in these areas tend to have small practices. The interested parties stated that Medicare's direct supervision policy, which requires the PTPP and the PTA to both be present when a Medicare patient is treated, does not allow small practices with one PT and one or two PTAs, for example, to work different or overlapping schedules in order to accommodate all patients' availability by allowing the OTA/PTA to work before or after the OTPP/PTPP normal hours. The interested parties also stated that the direct supervision requirement can unfairly delay care for Medicare patients when, for example, a PTPP or OTPP is out sick, the practice does not have alternative coverage, and appointments for Medicare patients must be canceled.

In light of this input, we believe that the direct supervision requirement for OTPPs and PTPPs of OTAs and PTAs, respectively, may have had an unintended consequence of limiting access to needed therapy services. As noted by interested parties, both the OTPP/PTPP and their respective OTA/PTA must be present in the office in order to bill and receive Medicare payment for therapy services furnished by OTAs and PTAs. This means, for example, that an OTPP/PTPP cannot bill and receive payment for therapy services furnished to a Medicare patient in their home when furnished by an OTA/PTA, without the presence of the OTPP/PTPP. The direct supervision requirement for OTAs and PTAs in the private practice setting is more stringent than the supervision requirements for OTAs and PTAs in institutional settings. For example, as we noted in the CY 2024 PFS proposed rule, 42 CFR 485.713 specifies that when an OTA or PTA provides services at a location that is off the premises of a clinic, rehabilitation agency, or public health agency, those services are supervised by a qualified occupational or physical therapist who makes an onsite supervisory visit at least once every 30 days. We also cited Table 4 in our Report to Congress, titled “Standards for Supervision of PTAs and the Effects of Eliminating the Personal PTA Supervision Requirement on the Financial Caps for Medicare Therapy Services,” in the CY 2024 PFS proposed rule to demonstrate that the minimum level of supervision by PTs and OTs for services performed by PTAs and OTAs working in institutional settings is a general level of supervision, in accordance with various regulations (88 FR 52359). Therefore, we believe that a change from direct to general supervision would allow OTPPs and PTPPs the flexibility to better accommodate patients' availability and act to ensure access to necessary therapy services. A change from direct to general supervision would also allow OTPPs and PTPPs to bill and receive Medicare payment for therapy services furnished by their OTAs and PTAs when they are not in the office or patient's home at the same time.

We also believe that it is important to better align our supervision policies for OTPPs and PTPPs with the majority of state-established supervision levels for therapy assistants providing occupational therapy and physical therapy services. We note that the majority of states allow OTs and PTs to provide general supervision of their respective OTAs and PTAs when furnishing occupational therapy and physical therapy services. We believe that States are well aware of the health and safety needs for their residents who receive therapy services from OTs and their supervised OTAs, and PTs and their supervised PTAs. Given these beliefs and the input from interested parties, we are proposing to revise our regulations at §§ 410.59(a)(3)(ii) and (c)(2) and 410.60(a)(3)(ii) and (c)(2) to allow for general supervision of OTAs and PTAs by OTPPs and PTPPs, when the OTAs and PTAs are furnishing outpatient occupational and physical therapy services, respectively. We expect that this proposal would both increase access to therapy services and more closely align Medicare policy with the majority of State practice acts for occupational therapy and physical therapy. This will parallel the 44 States that allow general supervision of PTAs and the 49 States that allow general supervision of OTAs (most often described as requiring the PT or OT to be in touch via telecommunication). For the States with more restrictive supervision levels, such as direct supervision, those therapy services are always furnished to the extent that is permitted under State law. We note that while we are proposing to allow for general supervision by OTPPs and PTPPs of their OTAs/PTAs, an OTPP or PTPP would still be required to provide direct supervision to unenrolled OTs and PTs, respectively, in accordance with §§ 410.59(c)(2) and 410.60(c)(2).

We are soliciting comment on our proposals.

2. Certification of Therapy Plans of Care With a Physician or NPP Order

Sections 1861(p), (g), and (ll)(2) of the Act require that an individual outpatient is under the care of a physician and for whom a plan for the physical therapy, occupational therapy, or speech-language pathology services that are to be furnished has been established by a physician or by a qualified PT, OT, or SLP and is periodically reviewed by a physician. Sections 1835(a)(2)(C) and 1835(a)(2)(D) of the Act require that payment for Medicare therapy services may be made for outpatient physical therapy, occupational therapy, and speech-language pathology services only if a physician certifies (and recertifies, where such services are furnished over a period of time) that: (a) the services are or were required because the patient needs or needed therapy services; (b) a plan for furnishing such services was established by a physician or qualified therapist providing such services, and is periodically reviewed by the physician; and (c) the services are or were furnished while the individual was under the care of a physician.

In accordance with the statute and § 424.24(b), Medicare Part B pays for outpatient physical therapy and speech-language pathology services furnished by providers only if a physician certifies the content specified in § 424.24(c)(1) or (4). We recognize that it may not be clear that § 424.24(c) applies to the occupational therapy services furnished by providers, since occupational therapy services are currently only explicitly mentioned in the recertification requirements at § 424.24(c)(4).

We note that there are multiple references to § 424.24(c) in the Medicare Benefit Policy Manual, Pub. 100-02, chapter 15, sections 220.1—Conditions of Coverage and Payment for Outpatient Physical Therapy, Occupational Therapy, or Speech-Language Pathology Services, 220.1.2—Plans of Care for Outpatient Physical Therapy, Occupational Therapy, or Speech-Language Pathology Services, and 220.1.3—Certification and Recertification of Need for Treatment and Therapy Plans of Care, which convey our current policy that all outpatient physical therapy, occupational therapy, and speech- language pathology services are subject to requirements for certification and recertification at § 424.24, whether furnished by providers or by suppliers such as therapists in private practice (TPPs). We note that while section 1835 of the Act explicitly refers to services furnished by providers of services, which would include hospitals and other institutional providers as defined in section 1861(u) of the Act, and clinics, rehabilitation agencies, or public health agencies as further described in section 1835(a) of the Act, we have interpreted the requirements of section 1835(a)(2)(C) and 1835(a)(2)(D) as applying to therapy services furnished by both providers and suppliers. See Medicare Benefit Policy Manual, Pub. 100-02, chapter 15, sections 220.1, 220.1.2, and 220.1.3. We believe that this interpretation is based on the certification and recertification requirements under section 1835(a) of the Act as a way to effectuate the requirement in sections 1861(p), (g), and (ll)(2) of the Act that the patient is under the care of a physician, and that the plan of treatment/care for the physical therapy, occupational therapy, or speech-language pathology services has been established by a physician or by a qualified PT, OT, or SLP and is periodically reviewed by a physician. Additionally, we thought it was important to establish conforming policies for these therapy services in both the outpatient provider and private practice settings.

Due to the foregoing concerns, we are proposing to revise the headings of paragraphs (c) introductory text and (c)(1)(i) to include the term “occupational therapy” after physical therapy. We propose to replace the term speech pathology with the accepted term speech-language pathology in 42 CFR 424.24(c)(1)(i). We are also proposing to add the term “occupational therapist” to 42 CFR 424.24(c)(3)(ii) between physical therapist and speech-language pathologist.

The regulations at 42 CFR 424.24(c) require that a physician, nurse practitioner (NP), physician assistant (PA), or clinical nurse specialist (CNS) who has knowledge of the case sign the initial certification for the patient's plan of treatment. We remind readers that plan of treatment is synonymous with the “plan of care” mentioned above. This terminology appears in several sections of Pub. 100-02, chapter 15, and both terms may be used interchangeably. In accordance with § 424.24(c)(2), the initial certification must be obtained as soon as possible after the plan is established by a PT, OT, or SLP. In Pub. 100-02, chapter 15, section 220.1.3 for Certification and Recertification of Need for Treatment and Therapy Plans of Care, we specify that the physician or nonphysician practitioner (NPP) must sign the initial plan of care (POC) with a dated signature or verbal order within 30 days from the first day of treatment, including evaluation (or 14 days if a verbal order), in order for the PT, OT, or SLP to be paid for the services. For this reason, the manual also states that the therapist should forward the treatment plan to the physician/NPP as soon as it is established rather than waiting to do so. The manual allows for a delayed certification when the physician or NPP completes certification and includes a reason for the delay, and delayed certifications are accepted without justification up to 30 days after the due date.

The regulations at § 424.24(c)(4) require recertification at least every 90 days, and the plan or other documentation in the patient's medical record must indicate the continuing need for physical therapy, occupational therapy, or speech-language pathology services. The physician, nurse practitioner, clinical nurse specialist, or physician assistant who reviews the plan must recertify the plan by signing the medical record. Pub. 100-02, chapter 15, section 220.1.4.C clarifies that payment and coverage conditions require that the plan of care be reviewed as often as necessary but at least whenever it is certified or recertified, in order to meet the certification requirements. We explained in the CY 2008 PFS final rule, when changing the plan of care recertification interval from 30 to 90 days, this was done in order to allow more flexibility to the physician/NPP to order the appropriate amount of therapy for each patient's needs (72 FR 66333). Thus, a physician or non-physician practitioner (NPP) may certify or recertify a plan of care at an interval the physician or NPP determines is appropriate, as long as the amount of time between each recertification does not exceed 90 calendar days. As many episodes of therapy treatment are completed in less than 30 calendar days, we expect that physicians and NPPs will continue to certify plans of care that appropriately estimate the duration of needed therapy treatment for a patient, even if the duration is less than 90 days.

Over the past two years, representatives of several therapy-related organizations have requested that CMS reduce the administrative burden involved with attempting to obtain signed plans of treatment from the physician/NPP. They expressed concern that therapists are held accountable for the action or inaction of physicians/NPPs who may be overwhelmed with paperwork. These interested parties report that therapists make exhaustive efforts to obtain the physician/NPP's signature—some reporting that they contact physician offices (via phone, email, or fax, etc.) more than 30 times. Without the required signature, the therapist will not meet the conditions to be paid for the services they deliver. These interested parties recommend that payment for therapy services should be determined by the medical necessity of the service and whether the therapist has met their statutory and regulatory requirements. Some of these interested parties have noted that Pub. 100-02, chapter 15, section 220.1.1, states that the physician/NPP order provides evidence that the patient is under the care of a physician and that the services are medically necessary. Interested parties told us that while CMS allows treatment to begin before the physician's/NPP's signature is obtained, PTs, OTs, and SLPs in private practice do so at their own risk, knowing that they might not be paid for the services if the physician's office does not send back the signed plan of treatment. Accordingly, such interested parties have said that care is delayed while awaiting a physician's signature, which could place the beneficiary's health at risk due to the delay in obtaining outpatient therapy services.

While we do not require an order or referral for a Medicare patient to see a PT, OT, or SLP, we have explained that the presence of a signed order from the treating physician satisfies statutory requirements that therapy is/was medically necessary and the patient is/was under the care of a physician (Pub. 100-02, chapter 15, section 220.1.1). However, with this order documented in the medical record, after the therapist evaluates the patient and establishes the plan of treatment, based on the evaluation's findings, the therapist forwards the patient's plan of treatment back to the referring physician/NPP to obtain a dated signature for the same patient with the same diagnosis to meet coverage and payment conditions to satisfy the initial certification requirement—creating an administrative burden for both the physician/NPP and the therapist. Interested parties have reported to us that most patients seeking outpatient therapy services have written orders from their physician, not to be confused with a written plan of treatment. These interested parties have suggested that we amend the regulation at § 424.24(c) to permit the presumption of a physician/NPP signature for purposes of certification and recertification in cases where a signed written order or referral from the patient's physician/NPP is on file and there is written documentation in the patient's medical record to substantiate the method and date (such as a fax, email, etc.) that the therapist forwarded the plan of care to the physician/NPP.

Additionally, interested parties representing all therapy disciplines requested that CMS allot time for plan of treatment changes. Interested parties requested that when a physician/NPP orders the therapy services, the physician/NPP be allotted ten business days to modify the plan of treatment by contacting the therapist directly after receiving it from the therapist. For patients without a physician/NPP order, interested parties requested that physician/NPPs be given 30 days after receipt of the plan of treatment to modify the treatment plan.

After reviewing our current regulatory requirements and considering the suggestions of interested parties, we believe it would be appropriate to propose to amend the regulation at § 424.24(c) for those cases when a patient has a signed and dated order/referral from a physician/NPP for outpatient therapy services. Since our policy has been to accept the physician or NPP's signature on the plan of treatment to be their certification of the treatment plan's conditions in the content requirements of § 424.24(c)(1)—that the patient needs or needed physical therapy, occupational therapy or speech-language pathology services, the services were furnished while the individual was under the care of a physician, NP, PA, or CNS, and the services were furnished under a plan of treatment that meets the requirements of § 410.61—we propose that a signed and dated order/referral from a physician/NPP combined with documentation of such order/referral in the patient's medical record along with further evidence in the medical record that the therapy plan of treatment was transmitted/submitted to the ordering/referring physician or NPP is sufficient to demonstrate the physician or NPP's certification of these required conditions. Rather than characterizing this proposal as a “presumption,” we are taking the view that when the patient's medical record includes a signed and dated written order or referral indicating the type of therapy needed, CMS (and our contractors) would treat the signature on the order or referral as equivalent to a signature on the plan of treatment. We believe our proposal would be reflective of the intent of the ordering/referring physician/NPP when that order/referral is on file in the patient's medical record. We further believe that this would still be consistent with the initial certification required under section 1835(a) of the Act for providers of therapy services and our current policy for therapy in the private practice setting. When the ordering/referring physician writes the referral for the type of therapy services they determine their patient needs or needed, they also review the treatment plan the therapist established at the time it is forwarded to them, and they verify that the services are or were furnished while the patient is or was under their care. As such, we propose to carve out an exception to the physician signature requirement at § 424.24(c) by adding a new paragraph (c)(5). The proposed policy would be an exception to the physician signature requirement for purposes of an initial certification in cases where a signed and dated order/referral from a physician, NP, PA, or CNS is on file and the therapist has documented evidence that the plan of treatment has been delivered to the physician, NP, PA, or CNS within 30 days of completion of the initial evaluation. However, at this time, we are not proposing and do not intend to establish an exception to the signature requirement for purposes of recertification of the therapy plan of treatment. We believe that physicians and NPPs should still be required to sign a patient's medical record to recertify their therapy treatment plans, in accordance with § 424.24(c)(4), to ensure that a patient does not receive unlimited therapy services without a treatment plan signed and dated by the patient's physician/NPP.

Under our proposal, CMS or its contractors would be able to treat the physician/NPP signature on the order or referral as equivalent to a signature on the plan of treatment for purposes of the initial certification if that physician/NPP has not signed and returned the patient's plan of treatment to the therapist within 30 days of the initial evaluation, but only in cases where the patient's physician/NPP has signed and dated the written order or referral and indicated the type of therapy needed, and that written order or referral is on file in the medical record. This proposed policy would not affect a contractor's ability or authority to determine whether therapy services are reasonable and necessary for a given beneficiary. Lastly, because there is no requirement for a physician/NPP order or referral for patients to obtain outpatient therapy services, we propose to make clear in proposed § 424.24(c)(5) that the references to an order or referral in § 424.24(c)(5) shall not be construed to require an order or referral for outpatient physical therapy, occupational therapy, or speech-language pathology services. We welcome comments on this proposal.

In addition, we are soliciting comments to gather more information about the need for a regulation that would address the amount of time for changes to plans of treatment. Our regulations at 42 CFR 410.61(d), which are further clarified in our manual provisions in Pub. 100-02, chapter 15, section 220.1.2.C, currently allow for changes to the treatment plan by the physician/NPP without time restrictions. Interested parties have suggested that CMS allow physicians/NPPs to have just ten business days from the date of receipt of a plan of care to modify that plan of care (in the case of a patient with an order for the therapy services). Additionally, we are also soliciting comment as to whether there should be a 90 calendar day time limit on the order/referral for outpatient therapy services in cases where the order/referral is intended to be used in relation to the proposed regulatory amendment for the initial certification of the treatment plan at § 424.24(c)(5) discussed above—that 90-day limit would span from the order/referral date until the initial treatment of the patient, including the evaluation furnished by the PT, OT, or SLP. We also seek feedback about whether this limit, or one of a different duration, should be incorporated into the regulatory provision we proposed above for § 424.24(c)(5).

We want to clarify that we are not proposing to amend § 424.27 for CORF physical therapy, occupational therapy, and speech-language pathology treatment plans to align with our proposed amendments at § 424.24 because section 1861(cc) of the Act and regulation at 42 CFR 410.105(c) require these treatment plans to be established by a physician.

We are soliciting comments on these proposals and comment solicitations.

3. KX Modifier Thresholds

The KX modifier thresholds were established through section 50202 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123, February 9, 2018) (BBA) and were formerly referred to as the therapy cap amounts. These per-beneficiary amounts under section 1833(g) of the Act (as amended by section 4541 of the Balanced Budget Act of 1997) (Pub. L. 105-33, August 5, 1997) are updated each year based on the percentage increase in the Medicare Economic Index (MEI). Specifically, these amounts are calculated by updating the previous year's amount by the percentage increase in the MEI for the upcoming calendar year and rounding to the nearest $10.00. Thus, for CY 2025, we propose to increase the CY 2024 KX modifier threshold amount by the most recent forecast of the 2017-based MEI. For CY 2025, the proposed MEI increase is estimated to be 3.6 percent and is based on the expected historical percentage increase of the 2017-based MEI. Multiplying the CY 2024 KX modifier threshold amount of $2,330 by the proposed CY 2025 percentage increase in the MEI of 3.6 percent ($2,330 × 1.036) and rounding to the nearest $10.00 results in a proposed CY 2025 KX modifier threshold amount of $2,410 for physical therapy and speech-language pathology services combined and $2,410 for occupational therapy services. We propose to update the MEI increase for CY 2025 based on historical data through the second quarter of 2024, and we would use such data, if appropriate, to determine the final MEI percentage increase and the CY 2025 KX modifier threshold amounts in the CY 2025 PFS final rule.

Section 1833(g)(7)(B) of the Act describes the targeted medical review (MR) process for services of physical therapy, speech-language pathology, and occupational therapy services. The threshold for targeted MR is $3,000 through CY 2027. Effective beginning with CY 2028, the MR threshold levels would be annually updated by the percentage increase in the MEI, per section 1833(g)(7)(B) of the Act. Consequently, for CY 2025, the MR threshold is $3,000 for physical therapy and speech-language pathology services combined and $3,000 for occupational therapy services. Section 1833(g)(5)(E) of the Act states that CMS shall identify and conduct targeted medical review using factors that may include the following:

(1) The therapy provider has had a high claims denial percentage for therapy services under this part or is less compliant with applicable requirements under this title.

(2) The therapy provider has a billing pattern for therapy services under this part that is aberrant compared to peers or otherwise has questionable billing practices for such services, such as billing medically unlikely units of services in a day.

(3) The therapy provider is newly enrolled under this title or has not previously furnished therapy services under this part.

(4) The services are furnished to treat a type of medical condition.

(5) The therapy provider is part of a group that includes another therapy provider identified using the factors described previously in this section.

We track each beneficiary's incurred expenses for therapy services annually and count them towards the KX modifier and MR thresholds by applying the PFS rate for each service less any applicable MPPR amount for services of CMS-designated “always therapy” services (see the CY 2011 PFS final rule at 75 FR 73236). We also track therapy services furnished by critical access hospitals (CAHs), applying the same PFS-rate accrual process, even though they are not paid for their therapy services under the PFS and may be paid on a cost basis (effective January 1, 2014) (see the CY 2014 PFS final rule at 78 FR 74406 through 74410).

When the beneficiary's incurred expenses for the year for outpatient therapy services exceed one or both of the KX modifier thresholds, therapy suppliers and providers use the KX modifier on claims for subsequent medically necessary services. Using the KX modifier, the therapist and therapy provider attest that the services above the KX modifier thresholds are reasonable and necessary and that documentation of the medical necessity for the services is in the beneficiary's medical record. Claims for outpatient therapy services exceeding the KX modifier thresholds without the KX modifier included are denied.

I. Advancing Access to Behavioral Health Services

1. Safety Planning Interventions and Post-Discharge Telephonic Follow-up Contacts

a. Background

In the CY 2024 PFS proposed rule, we sought comment on whether there is a need for potential separate coding and payment for interventions initiated or furnished in the emergency department (ED) or other crisis settings for patients with suicidality or at risk of suicide, such as safety planning interventions and/or telephonic post-discharge follow-up contacts after an emergency department visit or crisis encounter, or whether existing payment mechanisms are sufficient to support furnishing such interventions when indicated. Several commenters encouraged CMS to enable wider implementation under Medicare of the Safety Planning Intervention (SPI) and the Post-Discharge Telephonic Follow-up Contacts Intervention (FCI) and expressed that the current payment mechanisms are not sufficient, noting that the lack of adequate payment mechanisms and suitable billing codes for these interventions are barriers that are essential to address. The commenters noted that EDs are not the only care setting where there is need and opportunity to enhance suicide prevention, but that elevated suicide risk is particularly prevalent among ED patients. One commenter noted that a designated code for SPI would make it significantly easier to document that SPI was furnished, including in quality reporting and value-based payment programs.

More than 49,000 people died by suicide in 2022 and death by suicide is growing significantly in older adults, who comprise most of the Medicare population. We recognize data showing that suicide by intentional overdose is a growing concern, particularly among young people, older people, and Black women, although researchers acknowledge the complexities of distinguishing intentional from unintentional death.

b. Safety Planning Interventions (SPI)

Safety planning interventions involve a patient working with a clinician to develop a personalized list of coping strategies and sources of support that the person can use in the event of experiencing thoughts of harm to themselves or others. This is not a suicide risk assessment, but rather, an intervention provided to people determined to have elevated risk. Safety planning interventions have also been used to reduce the risk of overdose. The basic components of a safety plan include the following: (1) recognizing warning signs of an impending suicidal crisis or actions that increase the risk of suicide; (2) employing internal coping strategies; (3) utilizing social contacts and social settings as a means of distraction from suicidal thoughts and/or taking steps to reduce the risk of suicide; (4) utilizing family members, significant others, caregivers, and/or friends to help resolve the crisis; (5) contacting mental health professionals, crisis services, or agencies; and (6) making the environment safe, including restricting access to lethal means, as applicable. One important aspect of making an environment safe could be, for example, addressing a person's access to lethal means, such as firearms.

We understand that safety planning is consistent with current practice standards and that many hospitals and clinicians in other settings are already providing some or all of these services to the people who need them, including through the Department of Veterans Affairs (VA). However, in one survey of EDs, only 15.3 percent could confirm routinely implementing safety planning with all of the structured elements mentioned above. Provision of individual safety planning elements ranged from 24.8 percent (n = 492) to 79.2 percent (n = 1710), with 2 of 6 elements being routinely provided more than 50 percent of the time: lists of professionals or agencies to contact in a crisis (1710 [79.2 percent]) and helping patients to recognize warning signs of suicide (1075 [52.2 percent]). Suicide risk among people with substance use disorders who also are at high risk for or may have experienced an intentional overdose is not well recognized.

Therefore, we are proposing to establish separate coding and payment under the PFS describing safety planning interventions. Specifically, we are proposing to create an add-on G-code that would be billed along with an E/M visit or psychotherapy when safety planning interventions are personally performed by the billing practitioner in a variety of settings. We recognize that training and expertise are needed to perform these interventions safely and appropriately and are seeking comment regarding whether clinical staff who meet the definition of auxiliary personnel defined at 42 CFR 410.26(a)(1) or who are employed by a hospital could participate in furnishing this service under the supervision of the billing practitioner in certain settings with the relevant training needed to perform the service as well as what sort of training would be needed.

The proposed G-code is HCPCS code GSPI1: Safety planning interventions, including assisting the patient in the identification of the following personalized elements of a safety plan: recognizing warning signs of an impending suicidal crisis; employing internal coping strategies; utilizing social contacts and social settings as a means of distraction from suicidal thoughts; utilizing family members, significant others, caregivers, and/or friends to help resolve the crisis; contacting mental health professionals or agencies; and making the environment safe; (List separately in addition to an E/M visit or psychotherapy). We welcome comments on the proposed elements of the safety planning code.

We are proposing to value HCPCS code GSPI1 based on the valuation for CPT code 90839 ( Psychotherapy for crisis), which describes 60 minutes, and which we believe describes a similar level of intensity as HCPCS code GSPI1. For HCPCS code GSPI1, we are assuming a typical time of 20 minutes, resulting in a proposed work RVU of 1.09 (based on one third of the work value currently assigned to CPT code 90839, which is 3.28). We welcome comments on whether 20 minutes accurately captures the typical amount of time spent with a patient on safety planning interventions, including all six elements enumerated in this section. Additionally, we welcome comments on whether these interventions typically occur in the context of an encounter, such as an E/M visit or psychotherapy, or whether there may be times when they may be furnished as a standalone service and whether we should consider allowing this code to be billed on its own. We also welcome comments regarding which clinician types might be most likely to bill such a code on its own.

c. Post-Discharge Telephonic Follow-Up Contacts Intervention (FCI)

Some research suggests that patients seen in the ED with deliberate self-harm, intentional overdose, and/or suicidal ideation have been associated with substantially increased risk of suicide and other mortality during the year following their visit to the ED. FCI is a specific protocol of services for individuals with suicide risk involving a series of telephone contacts between a provider and patient in the weeks and sometimes months following discharge from the emergency department and other relevant care settings, that occurs when the person is in the community and is designed to reduce the risk for subsequent adverse outcomes. FCI calls are typically 10-20 minutes in duration and aim to encourage use of the Safety Plan (as needed in a crisis) and updating it to optimize effectiveness, expressing psychosocial support, and helping to facilitate engagement in any indicated follow-up care and services. We note that this service would not be within the scope of Medicare telehealth services and not subject to the restrictions described in Section 1834(m) because these services are specifically structured to be delivered via audio-only phone calls and are not a substitute for an in-person service.

In a recent study led by the Joint Commission, which surveyed a national sample of hospitals to assess the prevalence of SPI and several other recommended suicide prevention services, fewer than half of responding hospitals reported furnishing any post-discharge follow-up contacts. Of these, only 33 percent (16 percent of responding hospitals overall) reported reaching discharged patients “most of the time.” Further, among hospitals that furnish follow-up contacts, fewer than half reported covering any of the main aims of FCI, for example, 41 percent review the Safety Plan, 49 percent provide psychosocial support, and 38 percent facilitate outpatient care.

However, some studies have demonstrated that SPI and other services may be able to reduce suicidal behaviors. For example, in the ED-SAFE trial for emergency department (ED) patients identified with elevated suicide risk, the intervention included SPI and up to seven post-discharge follow-up calls with the patient “focused on identifying suicide risk factors, clarifying values and goals, safety and future planning, facilitating treatment engagement/adherence, and facilitating patient-significant other problem-solving.” In the SAFE VET study of ED patients identified with elevated suicide risk, the intervention included SPI and at least two follow-up calls with patients “to monitor suicide risk, review and revise the SPI, and support treatment engagement.” Each of these studies reported significantly lower suicide behaviors—attempts and/or deaths—among intervention patients compared to the respective control conditions.

In light of this, we are proposing to create a monthly billing code to describe the specific protocols involved in furnishing post-discharge follow-up contacts that are performed in conjunction with a discharge from the emergency department for a crisis encounter, as a bundled service describing four calls in a month, each lasting between 10-20 minutes. The proposed G-code is HCPCS code GFCI1: Post discharge telephonic follow-up contacts performed in conjunction with a discharge from the emergency department for behavioral health or other crisis encounter, per calendar month. We seek comment on whether we should consider finalizing a specified duration that HCPCS code GFCI1 could be billed) following discharge, for example, allowing this code to be billed for up to two months following discharge or whether a longer duration would be appropriate, the number of calls per month, the billing structure (for example, four calls for each discharged patient), and any other relevant feedback.

We are proposing to price this service based on a direct crosswalk to CPT code 99426 ( Principal care management; first 30 minutes of clinical staff time directed by a physician or other qualified healthcare professional), which is assigned a work value of 1.00 work RVUs. Since CPT code 99426 describes care management for a single condition, we believe the work would be similar in nature and intensity. We note that under this proposal, proposed HCPCS code GFCI1 could be billed regardless of whether proposed HCPCS code GSPI1 was also furnished and billed for the same patient. We propose that the billing practitioner would need to meet a threshold of at least one real-time telephone interaction with the patient in order to bill HCPCS code GFCI1, and that unsuccessful attempts to reach the patient would not qualify as a real-time telephone interaction. We welcome comments on this proposed threshold to bill HCPCS code GFCI1, recognizing that while practitioners may attempt to reach the patient, there may be times when the patient cannot be reached. We are also proposing that the billing practitioner could not count time or effort more than once for the purposes of billing this code and another service.

Additionally, as we recognize that behavioral health practitioners, training programs, and institutions have worked conscientiously to have risk assessment and safety planning for high-risk patients integrated into their workflows for many years and that discharge instructions and after visit planning may represent one of many final products from the synthesis of all the steps involved in these encounters, we note that we do not intend to unnecessarily disaggregate aspects of streamlined clinical workflows that providers are successfully using to treat high risk patients. Moreover, we also recognize that practitioners may currently be billing for safety planning activities using existing coding, such as E/M visits, psychotherapy, and crisis management codes or potentially for follow-up calls using existing care management services. However, to the extent that this intervention is part of the standard of care, we believe that Medicare payment should accurately reflect the additional resource costs involved in furnishing this service.

Lastly, as applicable Part B cost sharing would apply for HCPCS code GFCI1, we are proposing to require the treating practitioner to obtain verbal (or written) beneficiary consent in advance of furnishing the services described by GFCI1, which would be documented by the treating practitioner in the medical record, similar to the conditions of payment associated with care management and other non-face-to-face services paid under the PFS. We note that under this proposal, obtaining advance consent would include: (1) ensuring that the patient is aware that Medicare cost sharing applies to these services; (2) furnishing and receiving the necessary information to enable the patient to receive these services (for example, obtaining the patient's telephone number(s)); and (3) confirming that the patient consents to the contacts.

2. Digital Mental Health Treatment (DMHT)

We are proposing Medicare payment to billing practitioners for digital mental health treatment (DMHT) devices furnished incident to or integral to professional behavioral health services used in conjunction with ongoing behavioral health care treatment under a behavioral health treatment plan of care. We are refining the digital cognitive behavioral therapy “digital CBT” terminology that we have used previously (88 FR 52262, 52370 through 52371, 88 FR 78818, 79012 and 79013). We are proposing Medicare payment to billing practitioners for digital mental health treatment (DMHT) devices furnished incident to or integral to professional behavioral health services used in conjunction with ongoing. In this proposed rule we use the term “digital mental health treatment (DMHT) device” to include the term “digital CBT” we used in prior rulemaking and in general to refer to software devices cleared by the Food and Drug Administration (FDA) that are intended to treat or alleviate a mental health condition, in conjunction with ongoing behavioral health care treatment under a behavioral health treatment plan of care, by generating and delivering a mental health treatment intervention that has a demonstrable positive therapeutic impact on a patient's health. We note first that the Diagnostic and Statistical Manual of Mental Disorders-5 (DSM) does not refer to psychiatric disorders but to mental disorders. In this section, following the DSM, we use the term behavioral health conditions and mental disorders interchangeably and to mean psychiatric disorders as referenced in FDA regulation, 21 CFR 882.5801. Second, we note that FDA guidance refers to computerized behavioral therapy by the acronym CBT. We aim to both provide access to vital behavioral health services and gather further information about the delivery of digital behavioral health therapies, their effectiveness, their adoption by practitioners as complements in the care they furnish, and their use by patients for the treatment of behavioral health conditions. We also recognize that there are certain statutory limitations on payment for products under the broader category of “digital health interventions.” We acknowledge that the field of digital therapeutics is evolving and are open to feedback from the public on this topic, including the CPT Editorial Panel. Additionally, we recognize that historically, the CPT Editorial Panel has frequently created CPT codes describing services that we originally established using G codes and adopted them through the CPT Editorial Panel process. We note that we would consider using any newly available CPT coding to describe services similar to those described here in future rulemaking.

a. Background

Over the last 5 years the AMA CPT Editorial Panel and CMS have developed coding and separate payment for monitoring physiologic status using software enabled devices that capture and record or transmit data that may be reported to and interpreted by practitioners to manage a patient under a specific treatment plan. (83 FR 59452, 59574) Medicare payment has long been available for practitioner provision of monitoring equipment and other kinds of devices provided incident to or integral to the practitioner's professional services. Most recently we have finalized payment for devices which record data related to signs, symptoms, and functions of a therapeutic response (typically for use in association with physical or occupational therapy care) (86 FR 64996, 65114-65116).

However, technologies that rely primarily on software, licensing, and analysis fees, with minimal costs in equipment and hardware may not have been typical and are not well accounted for in our practice expense (PE) methodology. PE resources involved in furnishing services are characterized as either direct or indirect costs. Direct costs of the PE resources involved in furnishing a service are estimated for each HCPCS code and include clinical labor, medical supplies, and medical equipment. Indirect costs include administrative labor, office expenses, and all other expenses. Indirect PE is allocated to each service based on physician work, direct costs, and a specialty-specific indirect percentage. The source of the specialty specific indirect percentage is the Physician Practice Information Survey (PPIS), last administered in 2007 and 2008, prior to the adoption of digital therapy technologies (86 FR 65037). Nevertheless, in past rulemaking, we have recognized that in some cases practitioners do incur resource costs for the purchase and ongoing use of software (86 FR 65038).

In the CY 2023 PFS final rule, we finalized our proposal to accept the RUC recommendation to contractor price CPT code 98978 ( Remote therapeutic monitoring (e.g., therapy adherence, therapy response); device(s) supply with scheduled (e.g., daily) recording(s) and/or programmed alert(s) transmission to monitor cognitive behavior therapy, each 30 days), a PE-only device code (86 FR 69523, 69646). At the time, specialty societies indicated that the technologies for this service are still evolving, and that as a result, there were no invoices for devices specific to the cognitive behavioral therapy monitoring services described by the code that could be shared. There was no professional work associated with the code.

In the CY 2024 PFS proposed rule, we requested information on digital therapeutics for behavioral health. Among many questions, we asked how practitioners determine which patients might be best served by digital therapeutics and how practitioners monitor the effectiveness of prescribed interventions on an ongoing basis once the intervention has begun. We also asked how the treating clinician was involved in the services received. We asked what scientific and clinical evidence of effectiveness CMS should consider when determining whether digital therapeutics for behavioral health, including care for substance use disorders, depression, sleep disorders and other conditions are reasonable and necessary. We asked whether DMHT devices were used as incident to supplies or independent of a patient visit with a practitioner and if practitioners in such cases issued an order for such devices (88 FR 52262, 52370 through 52371). These factors related to the nature of this treatment compared to other PFS services pose challenges for fitting DMHT services into the existing benefit structure under the PFS.

Setting appropriate pricing under the PFS has also presented challenges. As noted previously, technologies that rely primarily on software, licensing, and analysis fees, with minimal costs in equipment and hardware are not well accounted for in our practice expense (PE) methodology, even though these items may be appropriately considered practice expenses. Consequently, over the past several years, we have relied on a crosswalk methodology to approximate relative resource costs for these kinds of services relative to other PFS services, or contractor pricing.

Interested parties requested that we adopt coding specifically for DMHT devices, where the digital software device is the actual therapy/intervention (the algorithm software is the DMHT) as opposed to a therapeutic monitoring device that transmits patient data as described by CPT code 98978 for which we finalized contractor pricing in CY 2023. Interested parties have also asked us to set national pricing for the service to supply the DMHT device and education/onboarding that reflects the direct practice expense incurred by practitioners when furnishing DMHT. One of the interested parties submitted invoices to provide data we could use as the basis to set payments for DMHT coding. The interested party submitted four invoices reflecting considerable variation in the cost of the DMHT treatment over 30-day and 90-day periods. There is still more variation in pricing for comparable products that are available for considerably lower prices in various markets, with prices ranging from free to $140 per year, based on an online search ( https://www.carepatron.com/app/cbt-therapy-apps , accessed March 20, 2024).

As the field of innovative products including digital therapeutics and computerized behavioral therapy devices for psychiatric or mental disorders develops and expands, the FDA and Substance Abuse and Mental Health Services Administration (SAMHSA) among other agencies such as the Veterans Health Administration (VHA) are also monitoring the development of the field of digital therapeutic devices, including for behavioral health purposes. For example, VHA is providing digital behavioral health applications as self-help tools, not independent treatment interventions. The FDA has a regulatory framework, discussed below in this section, to classify devices and review computerized behavioral therapy devices for psychiatric disorders.

b. Payment for Digital Mental Health Treatment (DMHT) Devices

We recognize that digital therapeutics may offer innovative means to access certain behavioral health care services. The FDA definition of devices encompasses software intended by the manufacturer to be used, alone or in combination for the specific medical purpose of diagnosis, prevention monitoring treatment or alleviation of disease and does not achieve its primary intended action by pharmacological, immunological or metabolic means. SAMHSA has defined digital therapeutics (DTx) in the behavioral health context as “health software intended to treat or alleviate a disease, disorder, condition, or injury by generating and delivering a medical intervention that has a demonstrable positive therapeutic impact on a patient's health.” SAMHSA also notes that “DTx may be used independently or in concert with medications, devices, or other therapies to optimize patient care and health outcomes.” Given nationwide behavioral health workforce shortages combined with increasing demand for behavioral health care services, some Medicare beneficiaries may have limited access to these services. This proposal encompasses only part of what may be a spectrum of broadly similar products, most of which might require a new statutory Medicare benefit category. Our proposed coding and payment policy only applies to DMHT devices that have been cleared by the FDA. Many digital platforms and applications are marketed as behavioral health and wellness interventions; this proposal does not extend to such platforms and applications in part because other than some DTx, few have evidence demonstrating improved behavioral health outcomes.

We propose to create three new HCPCS codes for DMHT devices modeled on coding for RTM services. Effective beginning in CY 2025, we propose that physicians and practitioners who are authorized to furnish services for the diagnosis and treatment of mental illness would be able to bill a new HCPCS code: GMBT1 ( Supply of digital mental health treatment device and initial education and onboarding, per course of treatment that augments a behavioral therapy plan) for furnishing a DMHT device. GMBT1 would be payable only if the DMHT device has been FDA cleared and the billing practitioner is incurring the cost of furnishing the DMHT device to the beneficiary. Furnishing of the DMHT device must be incident to the billing practitioner's professional services in association with ongoing treatment under a plan of care by the billing practitioner. The billing practitioner must diagnose the patient and prescribe or order the DMHT device. The patient could then use the DMHT device at home or perhaps in an office or other outpatient setting, if that is how the device has been cleared by FDA for use under 21 CFR 882.5801. The DMHT device furnished must have demonstrated a reasonable assurance of safety and effectiveness. The FDA makes a determination of safety and effectiveness under 21 CFR 860.7. When making this determination, the FDA will consider a variety of factors including users, conditions of use, probable benefit to health weighed against probable injury, and reliability. The regulation at 21 CFR 860.7, states that “[t]here is reasonable assurance that a device is safe when it can be determined, based upon valid scientific evidence, that the probable benefits to health from use of the device for its intended uses and conditions of use, when accompanied by adequate directions and warnings against unsafe use, outweigh any probable risks.” GMBT1 would not be payable in cases where the billing practitioner incurs no cost in acquiring and furnishing the DMHT device, or a patient procures the DMHT device independent of the practitioner. We will continue to monitor how DMHT devices are used as part of overall care.

We seek comment about other parameters that we should consider regarding the services described by GMBT1:

• Whether payment should be made if the practitioner furnishes a digital device that has not been cleared by FDA for mental health treatment for a specific use, even if the digital device has been cleared by the FDA for another specific use;
• Whether payment should be made for DMHT devices cleared by the FDA not only under21 CFR 882.5801 but also under other regulations;
• Whether and how payment might be limited if a patient discontinues use of the DMHT device before completing a course of treatment; and
• Whether and how payment might be limited to a set number of DMHT devices per calendar month per patient.

In light of the pricing variability, as discussed above, we are proposing contractor pricing for code GMBT1. We seek comment regarding what national pricing methodology we might consider, including what potential crosswalks would be appropriate.

We are also proposing to establish payment for two additional new codes. These proposed codes are GMBT2 ( First 20 minutes of monthly treatment management services directly related to the patient's therapeutic use of the digital mental health treatment (DMHT) device that augments a behavioral therapy plan, physician/other qualified health care professional time reviewing data generated from the DMHT device from patient observations and patient specific inputs in a calendar month and requiring at least one interactive communication with the patient/caregiver during the calendar month) and GMBT3 ( Each additional 20 minutes of monthly treatment management services directly related to the patient's therapeutic use of the digital mental health treatment (DMHT) device that augments a behavioral therapy plan, physician/other qualified health care professional time reviewing data generated from the DMHT device from patient observations and patient specific inputs in a calendar month and requiring at least one interactive communication with the patient/caregiver during the calendar month). Under this proposal, GMBT1 requires that the billing practitioner who diagnosed the patient and prescribed or ordered the DMHT device or that billing practitioner's clinical staff must monitor the patient's therapeutic response to the DMHT device and adjust the behavioral health therapy plan as needed. GMBT2 and GMBT3 should only be billed when there is ongoing use of the DMHT device and should not be billed in cases where the patient discontinues use of the DMHT device.

For GMBT2 (first 20 minutes of monthly treatment management services directly related to use of the DMHT device), we propose valuing the first 20 minutes of treatment management services based on a direct crosswalk to CPT code 98980 (remote therapeutic monitoring first 20 minutes), which is assigned a work RVU of .62. For GMBT3 (each additional 20 minutes of monthly treatment management services directly related to DMHT device), we propose to value this code based on a crosswalk to CPT code 98981 (remote therapeutic monitoring each additional 20 minutes), which is assigned a work RVU of .61. We believe that the work and PE described by these crosswalk codes are analogous to the services described in GMBT2 and GMBT3, respectively, because they include similar physician/other qualified health care professional time in a calendar month requiring at least one interactive communication with the patient/caregiver during the calendar month. We welcome comments on the proposed RVUs.

3. Interprofessional Consultation Billed by Practitioners Authorized by Statute To Treat Behavioral Health Conditions

a. Background

In the CY 2019 PFS final rule (83 FR 59489), we finalized payment for six CPT codes regarding interprofessional consultations (99451, 99452, 99446, 99447, 99448, 99449). The six codes describe assessment and management services conducted through telephone, internet, or electronic health record consultations furnished when a patient's treating physician or other qualified healthcare professional requests the opinion and/or treatment advice of a consulting physician or qualified healthcare professional with specific specialty expertise to assist with the diagnosis and/or management of the patient's condition without the need for the patient's face-to-face contact with the consulting physician or qualified healthcare professional. We established coding and payment for these services to reflect changing healthcare practices, technology, and the shift to treatment of chronic conditions in the Medicare population. In the CY 2019 PFS final rule (83 FR 59491), we established a policy to limit billing of these codes to the types of practitioners who can independently bill Medicare for E/M visits. We did not finalize the expansion of practitioners beyond those who can furnish E/M visits in the CY 2019 PFS final rule due to our belief that interprofessional consultations are primarily for the ongoing evaluation and management of the patient, including collaborative medical decision making among practitioners (83 FR 59491).

In the CY 2024 PFS proposed rule (88 FR 52369), we sought comment on expanding access to behavioral health services, including whether we should consider new coding to allow interprofessional consultation to be billed by practitioners in specialties whose covered services are limited by statute (Clinical psychologists at section 1861(ii) of the Act, Clinical social workers at section1861(hh) of the Act, Marriage and Family Therapists and Mental Health Counselors at sections 1861(lll)(1) and 1861(lll)(3) of the Act, respectively) to services for the diagnosis and treatment of mental illness (which includes substance use disorders). The CPT codes describing interprofessional consultation (CPT codes 99451, 99452, 99446, 99447, 99448, 99449) are currently limited to being billed by practitioners who can independently bill Medicare for E/M visits. As such, they cannot be billed by clinical psychologists, clinical social workers, marriage and family therapists, or mental health counselors because these practitioners cannot independently bill Medicare for E/M visits. We are proposing new codes that would allow clinical psychologists, clinical social workers, marriage and family therapists, and mental health counselors to bill for interprofessional consultations with other practitioners whose practice is similarly limited, as well as with physicians and practitioners who can bill Medicare for E/M services and would use the current CPT codes to bill for interpersonal consultations. These new codes would facilitate interprofessional consultations between treating/requesting practitioners and consultant practitioners, whether one or both of the practitioners is in a specialty whose practice is limited to the diagnosis and treatment of mental illness. When the treating/requesting practitioner or consultant practitioner is a physician or practitioner authorized to bill Medicare for E/M services, the practitioner would continue to bill using the current CPT codes that describe interprofessional consultation, listed previously in this section. Depending on which practitioner type is billing, and assuming all service requirements of the code descriptors are met, the consulting practitioner could bill the applicable codes, either HCPCS code (GIPC1-5) or CPT code (99451, 99452, 99446, 99447), determined by the amount of time spent on the consultation and whether a written and verbal consultation is provided or only a written consultation is provided. Similarly, depending on which practitioner type is billing, and assuming all service requirements of the code descriptors are met, the treating/requesting practitioner could bill either HCPCS code GIPC6 or CPT code 99449 for the time spent on their referral service.

We believe that proposing payment for these interprofessional consultations performed via communications technology such as telephone or internet (including videoconference) is consistent with our ongoing efforts to appropriately recognize and reflect behavioral health care within the PFS. Currently, there is no payment mechanism to recognize the time and effort of performing these services by clinical psychologists, clinical social workers, marriage and family therapists, or mental health counselors. We have also previously received comments from interested parties that by not making separate payment for these services, CMS would not be accurately paying for the work of both the treating and consulting practitioner in a consultative scenario. With the proliferation of team-based approaches to care that are often facilitated by electronic medical record technology, we believe that making separate payment for interprofessional consultations undertaken for the benefit of treating a patient will contribute to payment accuracy under the PFS for behavioral health services.

b. Coding

To further expand access to behavioral health services, we are proposing payment for six new G codes: GIPC1 ( Interprofessional telephone/internet/electronic health record assessment and management service provided by a practitioner in a specialty whose covered services are limited by statute to services for the diagnosis and treatment of mental illness, including a verbal and written report to the patient's treating/requesting practitioner; 5-10 minutes of medical consultative discussion and review), GIPC2 ( Interprofessional telephone/internet/electronic health record assessment and management service provided by a practitioner in a specialty whose covered services are limited by statute to services for the diagnosis and treatment of mental illness, including a verbal and written report to the patient's treating/requesting practitioner; 11-20 minutes of medical consultative discussion and review), GIPC3 ( Interprofessional telephone/internet/electronic health record assessment and management service provided by a practitioner in a specialty whose covered services are limited by statute to services for the diagnosis and treatment of mental illness, including a verbal and written report to the patient's treating/requesting practitioner; 21-30 minutes of medical consultative discussion and review), GIPC4 ( Interprofessional telephone/internet/electronic health record assessment and management service provided by a practitioner in a specialty whose covered services are limited by statute to services for the diagnosis and treatment of mental illness, including a verbal and written report to the patient's treating/requesting practitioner; 31 or more minutes of medical consultative discussion and review), GIPC5 ( Interprofessional telephone/internet/electronic health record assessment and management service provided by a practitioner in a specialty whose covered services are limited by statute to services for the diagnosis and treatment of mental illness, including a written report to the patient's treating/requesting practitioner, 5 minutes or more of medical consultative time), and GIPC6 ( Interprofessional telephone/internet/electronic health record referral service(s) provided by a treating/requesting practitioner in a specialty whose covered services are limited by statute to services for the diagnosis and treatment of mental illness, 30 minutes). We welcome comments on this proposal.

Additionally, since these codes describe services that are furnished by the treating/requesting practitioner and the consultant practitioner without the involvement of the patient, we are proposing to require the treating practitioner to obtain the patient's consent in advance of these services, which would be documented by the treating practitioner in the medical record, similar to the conditions of payment associated with the CPT interprofessional consultation codes and certain other non-face-to-face services paid under the PFS. Obtaining advance patient consent includes ensuring that the patient is aware that Medicare cost sharing applies to these services, including informing the patient that there may be cost sharing for two services (one for the treating/requesting practitioner's service and another for the consultant practitioner's service). We welcome comments on this proposal.

c. Valuation

We are proposing to value the six proposed new G codes based on crosswalks to the six CPT codes for interprofessional consultations for practitioners who can independently bill Medicare for E/M visits (CPT codes 99451, 99452, 99446, 99447, 99448, 99449). We are proposing a work RVU of 0.35 for GIPC1 based on a crosswalk to CPT code 99446, a work RVU of 0.70 for GIPC2 based on a crosswalk to CPT code 99447, a work RVU of 1.05 for GIPC3 based on a crosswalk to CPT code 99448), a work RVU of 1.40 for GIPC4 based on a crosswalk to CPT code 99449, a work RVU of 0.70 for GIPC5 based on a crosswalk to CPT code 99451, and a work RVU of 0.70 for GIPC6 based on a crosswalk to 99452. Since there are no direct PE inputs assigned to the six CPT codes describing interprofessional consultation services on which we are basing the proposed valuation for the new HCPCS codes GIPC1 through GIPC6, we are not proposing any direct PE inputs for these codes. We welcome comments on this proposal.

4. Comment Solicitation on Payment for Services Furnished in Additional Settings, Including Freestanding SUD Treatment Facilities, Crisis Stabilization Units, Urgent Care Centers, and Certified Community Behavioral Health Clinics (CCBHCs)

In the CY 2024 OPPS final rule (88 FR 81809 through 81858), we finalized payment for IOP services furnished in hospital outpatient departments (HOPDs), Community Mental Health Centers (CMHCs), Federally Qualified Health Centers (FQHCs), and Rural Health Clinics (RHCs), and Opioid Treatment Programs (OTPs). We note that Section 4124 of the Consolidated Appropriations Act (CAA), 2023, authorized payment for IOP services in HOPDs, CMHCs, FQHCs, RHCs, and that we additionally used existing statutory authority to propose and finalize payment for IOP services furnished in OTPs. CMS is monitoring utilization and uptake of IOP services in these settings. We have heard from other treatment settings that furnish IOP services that do not fall into the categories of HOPDs, CMHCs, FQHCs, RHCs, or OTPs, such as freestanding SUD facilities, that have an interest in billing Medicare for these services. In light of this, we are seeking comment on whether IOP services are furnished in other settings in order to determine whether potential coding and payment for IOP services under the PFS would facilitate these services being billed in additional settings.

In particular, we are interested in feedback on the following questions, as well as any other relevant feedback:

• To what extent do freestanding SUD facilities or other entities that furnish IOP services employ practitioner types who can supervise auxiliary personnel and bill Medicare for their services? For example, do they typically employ physicians, clinical psychologists, nurse practitioners, clinical nurse specialists, certified nurse midwives and physician assistants who are eligible to provide general supervision to auxiliary personnel who furnish behavioral health services?
• Would bundled payments under the PFS similar to those finalized in the CY 2024 OPPS final rule (88 FR 81809-81858) better facilitate billing for IOP services in a broader range of settings?
• If CMS outlined how freestanding SUD facilities could bill Medicare under the PFS, would there be an impact in underserved areas?
• To what extent do freestanding SUD facilities see patients with Medicare or who are dually eligible for Medicare and Medicaid?

Additionally, we are seeking comment on entities that offer community-based crisis stabilization, including 24/7 receiving and short-term stabilization centers, that provide immediate access to voluntary and/or involuntary care, without the need for a referral. Regarding such crisis stabilization units, we are interested in feedback on the following questions, as well as any other relevant feedback:

++ What kind of services do crisis stabilization units provide? Do crisis stabilization units provide services similar to those described by the psychotherapy for crisis codes (CPT codes 90839 and 90840)?

++ Does the definition of crisis stabilization unit vary by State? If so, what are the variations and similarities across States?

++ If CMS outlined how crisis stabilization units could bill Medicare under the PFS, would there be an impact in underserved areas?

++ To what extent do crisis stabilization units see patients with Medicare or who are dually eligible for Medicare and Medicaid?

++ To what extent do crisis stabilization units employ practitioner types who can supervise auxiliary personnel and bill Medicare for their services. For example, do crisis stabilization units typically employ physicians, clinical psychologists, nurse practitioners, clinical nurse specialists, certified nurse midwives and physician assistants who are eligible to provide general to auxiliary personnel who furnish behavioral health services?

Additionally, as a separate example, we've received information from interested parties that there is a similar concern regarding urgent care centers more broadly. These interested parties note that hospital emergency departments are often used by beneficiaries to address non-emergent urgent care needs that could be appropriately served in less acute settings, but where other settings, such as physician offices, urgent care centers or other clinics, are not available or readily accessible. Patients enter EDs to treat common conditions like allergic reactions, lacerations, sprains and fractures, common respiratory illnesses (for example, flu or RSV), and bacterial infections (for example, strep throat, urinary tract infections or foodborne illness). Conditions like these often can be treated in less acute settings. We are interested in system capacity and workforce issues broadly and are interested in hearing more on those issues, including how entities such as urgent care centers can play a role in addressing some of the capacity issues in emergency departments. In particular, we are interested in feedback on the following questions, as well as any other relevant feedback:

• What types of services would alternative settings to EDs need to offer to meet beneficiaries' non-emergent, urgent care needs?
• Does the current “Urgent Care Facility” Place of Service code (POS 20) adequately identify and define the scope of services furnished in such settings? Is this place of service code sufficiently distinct from others such as “Walk-in Retail Health Clinic (POS 17) and “Office” (POS 11)? If not, how might these Place of Service code definitions be modified?
• Does the existing code set accurately describe and value services personally performed by professionals and costs incurred by the facility in these settings?
• How might potential strategies to reduce overcrowding and wait times in EDs advance equity in access to health care services?

Lastly, we are seeking comment regarding Certified Community Behavioral Health Clinics (CCBHCs). Specifically, we are interested in feedback on the following questions:

++ What kind of services do CCBHCs provide? Do they provide IOP services, services for the treatment of substance use disorders, psychotherapy, behavioral health integration, community health integration, or principal illness navigation services to patients with either Medicare or another payer?

++ If CMS outlined how CCBHCs could bill Medicare under the PFS, would there be an impact in underserved areas?

++ To what extent do CCBHCs see patients with Medicare or who are dually eligible for Medicare and Medicaid?

++ To what extent do CCBHCs employ practitioner types who can supervise auxiliary personnel and bill Medicare for their services? For example, do CCBHCs employ physicians, clinical psychologists, nurse practitioners, clinical nurse specialists, certified nurse midwives and physician assistants who are eligible to provide general supervision to auxiliary personnel who furnish behavioral health services?

J. Proposals on Medicare Parts A and B Payment for Dental Services Inextricably Linked to Specific Covered Services

1. Medicare Payment for Dental Services

a. Overview

Section 1862(a)(12) of the Act generally precludes payment under Medicare Parts A or B for any expenses incurred for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth. (Collectively here, we will refer to “the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth” as “dental services.”) That section of the statute also includes an exception to allow payment to be made for inpatient hospital services in connection with the provision of such dental services if the individual, because of their underlying medical condition and clinical status or because of the severity of the dental procedure, requires hospitalization in connection with the provision of such services. Our regulation at § 411.15(i) similarly excludes payment for dental services except for inpatient hospital services in connection with dental services when hospitalization is required because of: (1) the individual's underlying medical condition and clinical status; or (2) the severity of the dental procedure.

Fee for service (FFS) Medicare Parts A and B also make payment for certain dental services in circumstances where the services are not considered to be in connection with dental services within the meaning of section 1862(a)(12) of the Act. In the CY 2023 PFS final rule (87 FR 69663 through 69688), we clarified and codified at § 411.15(i)(3) that Medicare payment under Parts A and B could be made when dental services are furnished in either the inpatient or outpatient setting when the dental services are inextricably linked to, and substantially related and integral to the clinical success of, other covered services. We also added several examples of clinical scenarios that are considered to meet that standard under § 411.15(i)(3) and amended that regulation to add more examples in the CY 2024 PFS final rule (88 FR 79022 through 79029).

In the CY 2023 PFS final rule, we also established a process whereby we accept and consider submissions from the public (the “public submission process”) to assist us to identify additional dental services that are inextricably linked to, and substantially related and integral to the clinical success of, other covered services (87 FR 69663 through 69688). Hereafter in this section we will refer to these services as dental services that are “inextricably linked to other covered services.”

We also note that the examples provided in our regulation at § 411.15(i)(3)(i) are not exclusive. Medicare administrative contractors (MACs) retain discretion to determine on a claim-by-claim basis whether a patient's circumstances do or do not fit within the terms of the preclusion or exceptions specified in section 1862(a)(12) of the Act and § 411.15(i).

In the CY 2024 PFS final rule, we discussed our plans to issue educational and outreach materials to inform billing and payment for finalized policies for dental services. We reiterated our commitment to review submissions we receive through the public submissions process. We also expressed our intention to continue to engage in discussions with the public on a wide spectrum of issues relating to Medicare payment for dental services that may be inextricably linked to other covered services. We also described our partnership with the Agency for Healthcare Research and Quality (AHRQ) to assist us to review available clinical evidence and consider the relationship between dental services and specific covered medical services and to identify other potential clinical circumstances in which dental services are inextricably linked to other covered services (88 FR 79029).

In this proposed rule, we (1) describe recent literature review conducted by our partner agency, AHRQ, on the potential connection between sickle cell disease and hemophilia and dental services; (2) summarize submissions we received through the public submission process for consideration in CY 2025 rulemaking; (3) propose to codify in section § 411.15(i)(3)(i)(A) additional policies to permit payment for certain dental services that are inextricably linked to other covered services (certain dental services for patients receiving dialysis services to treat end-stage renal disease (ESRD)); (4) request public comment and information related to other clinical scenarios that may involve dental services that are inextricably linked to other covered services; and (5) include proposals related to Medicare billing and payment policy for dental services. We also include a request for information regarding oral sleep apnea appliances.

b. Consideration of Dental Services That May Be Inextricably Linked to Other Covered Services

We have partnered with AHRQ to help us consider the relationship between dental services and other specific covered services. Specifically, AHRQ reviews available clinical evidence regarding this relationship, and provides analysis of clinical scenarios where dental services may be inextricably linked to other covered services. To better address the public's immediate dental needs, AHRQ conducted rapid response reports instead of comprehensive assessments. With these rapid response reports, we can better specify which payments can be made under Medicare Parts A and B for certain dental services that are inextricably linked to other covered services.

Through the public submissions process for consideration in CY 2024 rulemaking, interested parties nominated dental services for individuals living with sickle cell disease (SCD) or hemophilia, urging us to consider adding payment for these services (88 FR 52374). The submissions included information and references supporting the inclusion of dental services that are inextricably linked to, and substantially related and integral to the clinical success of, the covered services used in the treatment of SCD or hemophilia, because such dental services serve to mitigate the substantial risk to the success of the medical services. Submissions supported the importance of preventing dental infections among individuals with SCD to reduce the need for the extensive procedures that may lead to bleeding complications and hospitalization. They also provided information detailing increased dental caries and periodontal disease in people with SCD, many of whom lose a number of teeth, which greatly limits nutrition, general well-being, and overall quality of life. Interested parties recommended that we adopt a policy to allow payment for dental services for individuals with hemophilia (88 FR 79032). They emphasized that periodic dental care reduces the risks of dental complications that may require hemostatic therapy or oral surgeries requiring clotting factor replacement treatment. Many submitters suggested that maintaining good oral health leads to improved outcomes for patients with these two conditions.

Acknowledging the importance of dental health to overall well-being of patients with these two types of diseases, in the CY 2024 proposed rule, we summarized information provided by submitters utilizing the public submission process and solicited comment on whether certain dental services are inextricably linked to covered services in the treatment of SCD (88 FR 52374). In the CY 2024 PFS final rule, we noted that several commenters suggested expanding dental service coverage for individuals with SCD. They supported covering dental services essential for treating SCD, including hydroxyurea therapy. Another commenter advocated for expanding coverage for dental services in cases of pain crises or dental abscesses in individuals with SCD. They emphasized that improved access to dental care could improve the quality of life for individuals with SCD and reduce healthcare costs by enabling more suitable treatment options and decreasing hospital stays. One commenter questioned the clinical basis for providing dental benefits for SCD or hemophilia due to their low prevalence in the Medicare population. Ultimately, after consideration of public comments, we did not expand the examples under § 411.15(i)(3)(i) to include additional covered medical services for SCD. We concluded that the information provided by commenters did not sufficiently demonstrate that dental services are essential to the clinical success of hydroxyurea therapy or other treatments for SCD (88 FR 79032). Please refer to CY 2024 final rule (88 FR 79031 through 79032) for more detailed information.

In the CY 2024 PFS proposed rule, we similarly solicited comments on hemophilia regarding whether certain dental services are considered so integral to the primary covered services that the necessary dental interventions are inextricably linked to, and substantially related and integral to clinical success of, the primary covered services for individuals with hemophilia (88 FR 52382). Several commenters advocated for allowing Medicare Part A and Part B payment for dental services for individuals with hemophilia citing guidelines from Hemophilia Treatment Centers (HTCs), the Centers for Disease Control and Prevention (CDC), and the World Federation of Hemophilia (WFH). They emphasized the importance of good oral health to prevent complications like gum bleeding and major dental surgeries, especially in those with severe/moderate hemophilia. Another commenter supported this perspective, noting that regular dental care reduces the need for clotting factor replacement therapy. While we acknowledged the importance of maintaining oral health to prevent complications such as serious gum bleeding, especially problematic for those with hemophilia, we also reiterated that for the purposes of the PFS payment policy for dental services inextricably linked to covered medical services, our statute and regulations require that specific evidence supports the integral connection between dental services and clinical success in managing hemophilia-related medical services, and, therefore, we did not expand the examples under § 411.15(i)(3)(i) to include additional covered medical services for hemophilia. Please refer to CY 2024 final rule (88 FR 79032 through 79033) for more detailed information.

While interested parties have suggested the interaction of oral health care for SCD or hemophilia, we noted that further research is necessary to find specific evidence supporting specific medical services for which dental services are inextricably linked to their clinical success. To gain further understanding of any potential relationship between dental services and specific covered SCD or hemophilia medical services, we again partnered with researchers at the Agency for Healthcare Research and Quality (AHRQ) to review available clinical evidence regarding the relationship between dental services and covered SCD or hemophilia medical services. AHRQ created two rapid response reports, which summarized recent evidence, aiming to inform CMS policy development related to the possible linkage between dental services and treatment modalities and services for SCD or hemophilia patients. For more detailed information about the search strategies and findings, please refer to the two AHRQ rapid response reports available at https://effectivehealthcare.ahrq.gov/products/sickle-cell-dental/research and https://effectivehealthcare.ahrq.hgov/products/hemophilia-dental/research.

1. Consideration of Dental Services That May Be Inextricably Linked to Covered Services for the Treatment of Sickle Cell Disease

As stated in the AHRQ rapid response report, SCD is a genetic hematologic disorder affecting approximately 100,000 individuals in the U.S., characterized by abnormal hemoglobin formation in red blood cells, leading to complications such as pain, infection, acute chest syndrome, and stroke. Hydroxyurea, a commonly used therapeutic measure, which increases fetal hemoglobin levels, which has a higher affinity for oxygen than adult hemoglobin. This therapy can prevent sickling or curvature of red blood cells and help SCD patients. SCD patients can experience dental complications due to ischemia, including delayed tooth eruption, enamel disorders, and tongue cell changes. Ischemic and inflammation affects enamel, gums, and jawbones that can cause paresthesia and tooth pain. In response to a producing more red blood cells to make up for anemia, bone marrow expansion can lead to malocclusion and reduced bone density. The AHRQ's rapid response report highlights that despite hydroxyurea's long-term use to treat SCD, uncertainty remains regarding whether dental care before, during, or after treatment of SCD with hydroxyurea (and other lesser prescribed treatments) influences clinical outcomes in patients.

In their rapid response, the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) flow diagram, a flow diagram used in systematic reviews and meta-analyses intended to describe findings of the review, revealed that initially, 762 records were identified from large databases, and 934 records were identified from grey literature sources covering 57 years. Following the exclusion of ineligible studies, a total of five unique records were included, extracted, and evaluated in the rapid response report. The rapid response report found that no studies examined the specific impact of dental care on SCD treatment outcomes; however, the rapid response identified three relevant clinical practice guidelines and two reviews with recommendations for dental care for patients with SCD. According to the rapid response, all guidelines and reviews highlighted the importance of preventive dental measures, with the Sickle Cell Society in the UK recommending the inclusion of a hematologist in the dental care team for SCD patients. However, these guidelines primarily focused on managing SCD during dental services rather than the impact of dental care on the improvement of SCD treatment outcomes, which differs from the regulatory standard in § 411.15(i)(3)(i) that the dental services are inextricably linked to, and substantially related and integral to the clinical success of, other covered services.

The two rapid reviews with recommendations highlighted several key areas of dental management for SCD patients. They emphasized the importance of preventive dental care to reduce the risk of oral infections, periodontal diseases, and major dental procedures. Additionally, the studies recommended that a complete blood count should be evaluated prior to invasive dental procedures to mitigate infection risks in SCD patients. Overall, the findings from the AHRQ rapid response reports underscore the gaps in the current literature concerning the management of oral health care for individuals with SCD. The body of evidence evaluating dental services before, during, or after the treatment of SCD is lacking in primary clinical data and is limited to available clinical practice guidelines and reviews with recommendations. While guidelines and reviews have addressed particular aspects of dental care, such as early intervention and the importance of collaboration between dentists and hematologists, there is an absence of primary evidence that informed the potential effect of dental care on SCD treatment outcomes.

2. Consideration of Dental Services That May Be Inextricably Linked to Covered Services for the Treatment of Hemophilia

As stated in their report, hemophilia is a rare inherited disorder characterized by the deficiency or absence of blood-clotting proteins, affecting approximately 20,000-33,000 males in the U.S. There are three distinct types of hemophilia (A, B, and C) according to the specific clotting factor that is deficient or missing (VIII, IX, and XI, respectively). Treatment for all three types of hemophilia is similar but may vary based on the severity of disease, and typically involves replacing the deficient or missing clotting factor. Anticoagulation issues in hemophilia patients can pose challenges for dental specialists due to the increased risk of secondary bleeding after oral surgery. Severe hemophilia patients face spontaneous bleeding in joints, muscles, or soft tissues, sometimes life-threatening, while mild to moderate cases may experience excessive bleeding, including after dental extractions.

According to the rapid response reports provided by AHRQ, clotting factor replacement therapy is the standard treatment for individuals with hemophilia. Replacement therapy, which can be self-administered or given at a hemophilia treatment center, can be used to stop a spontaneous bleeding episode (episodic care), or to prevent bleeding from occurring (prophylactic care). However, consistent/prolonged factor replacement can cause antibody inhibitor development. While clotting factor replacement therapy remains the standard treatment for hemophilia, uncertainty persists regarding whether dental care before, during, or after treatment of hemophilia improves clinical outcomes in patients. Excessive bleeding, often associated with invasive or traumatic dental procedures, poses challenges when treating patients with hemophilia. Hence, the timing of dental treatment in relation to factor replacement therapy may influence outcomes.

In AHRQ's rapid response, a total of 1,414 records from large databases and 2,238 records from grey literature, spanning 73 years, were identified. Strictly following the exclusion criteria depicted in the PRISMA diagram, the response included, extracted, and evaluated a total of four unique publications in this rapid response. The rapid response report identified four publications: two practice guidelines and two reviews with recommendations. The included publications advised hemophilia patients to consult hematologists or hemophilia treatment centers before dental procedures. They emphasized interdisciplinary collaboration between dentists and hematologists for treatment planning. Included guidelines recommended performing dental services during hemophilia treatment with coagulation factor replacement therapy. However, all four reviewed publications mainly addressed hemophilia A and B, with little mention of hemophilia C. Similar to the findings related to SCD, the body of evidence evaluating dental services before, during, or after the treatment of hemophilia is lacking in primary clinical data and is currently limited to available guidelines. These guidelines emphasize the importance of professional dental care during hemophilia treatment with clotting factor replacement therapy to reduce bleeding complications, rather than the inextricable link between certain dental services and covered services for hemophilia, which is the regulatory standard in § 411.15(i)(3)(i) for clinical scenarios under which payment can be made for dental services under Medicare Parts A and B.

After reviewing AHRQ's comprehensive rapid reviews for both SCD and hemophilia, we found the evidence related to the linkage between dental services and outcomes for covered medical services for both SCD and hemophilia lacking in the current research and literature. Both rapid responses noted a limited number of studies examining the impact of dental care on outcomes for individuals with SCD or hemophilia. Currently, the evidence base does not appear to support that dental services may be inextricably linked to covered services for SCD or hemophilia. Also, the body of evidence evaluating dental services before, during, or after the treatment of SCD and hemophilia lacks primary clinical data and relies on available guidelines and reviews. Given limited information, however, both the SCD and hemophilia rapid responses support the need for preventive care and patient education as essential practices for both SCD and hemophilia patients to minimize the likelihood of oral infections, periodontal disease, and major dental procedures. In addition, both rapid response reports recommend collaborative efforts between dentists, hematologists, and specialized clinics as crucial for improved patient care, despite the lack of primary evidence informing the potential effect of dental care on treatment. While both rapid response reports discuss their findings on the importance of a multidisciplinary approach, both rapid response reports also found that the current reviews and guidelines do not address dental care as a standard of care that is inextricably linked to hemophilia or SCD treatment. Instead, their focus was on managing the respective conditions during dental services, not on the inextricable linkage between the dental and medical services.

In conclusion, interested parties, including industry organizations, public commenters, and organizations submitting through the public submissions process, requested that CMS consider the conditions of SCD and hemophilia for the purposes of the Medicare Parts A and B payment policy for dental services that are inextricably linked to other covered services. As part of our commitment to exploring the inextricable link between dental and covered services associated with SCD and hemophilia, we partnered with AHRQ to generate comprehensive rapid responses on these topics. However, the AHRQ's rapid response reports show that the current evidence base does not appear to support that dental services may be inextricably linked to services for SCD or hemophilia within the meaning of the standard at § 411.15(i)(3), and we are not proposing to add these conditions to our regulation. Moreover, the findings of the AHRQ rapid response reports highlight that this area merits further study by researchers and industry in order to further explore potential connections between dental services and improved outcomes for individuals with SCD or hemophilia. Given the new and evolving therapies and treatments in this space, we will consider conducting additional evaluations as new studies are carried out to examining the impact of dental services on SCD and hemophilia outcomes and will take any future studies into consideration.

We continue to seek clinical evidence demonstrating the integral connection between dental services and other covered services for SCD and hemophilia, and we welcome any comments or literature regarding these two conditions. We are not proposing to amend § 411.15(i)(3)(i) as we have not identified additional dental services that are inextricably linked to certain services associated with SCD or hemophilia. However, we remain open to considering any such services identified by public commenters, and, if sufficient evidence is presented, we may consider adding such services to our regulations in the final rule. In addition, we encourage interested parties to supply additional submissions for consideration in future PFS rulemaking through the public submission process, which may include relevant medical evidence, peer-reviewed literature, clinical guidelines, or supporting documentation as described in section II.J.1.c. of this proposed rule.

c. Submissions Received Through Public Submission Process

As we have in the CY 2023 and CY 2024 PFS final rules, we continue to encourage interested parties to engage with us regularly and to submit recommendations through our public submissions process for our consideration of additional clinical scenarios where dental services may be inextricably linked to covered services under § 411.15(i)(3)(i). Through our annual public submissions process, interested parties should provide clinical evidence and other documentation to support their recommendations (87 FR 69685). We are using the PFS annual rulemaking process to discuss public submissions and to consider whether the clinical scenario described in the submissions should be added to § 411.15(i)(3)(i) as an example of a circumstance where payment can be made for dental services inextricably linked to other covered services. Using our annual notice and comment rulemaking process to discuss submitted recommendations allows the public to comment and submit further medical evidence and important feedback to assist us in evaluating whether certain dental services furnished in certain clinical scenarios would meet the standard to permit Medicare payment for the dental services.

We review clinical evidence included in submissions and public comments in rulemaking, as well as information and analysis provided by AHRQ in rapid response reports, to assess whether there is an inextricable link between certain dental services and certain covered services. We would find that there is an inextricable link where the standard of care for a service is such that the practitioner would not proceed with the procedure or service without performing the dental service(s), for example, because the covered services would or could be significantly and materially compromised absent the provision of the inextricably-linked dental services, or where dental services are a clinical prerequisite to proceeding with the primary medical procedure and/or treatment. As such, documentation accompanying recommendations should include medical evidence to support that certain dental services are inextricably linked to certain covered services. Specifically, as we specified in the CY 2023 PFS final rule, we request that the medical evidence included in submissions through the public submissions process should:

(1) Provide support that the provision of certain dental services leads to improved healing, improved quality of surgery outcomes, and the reduced likelihood of readmission and/or surgical revisions because an infection has interfered with the integration of the medical implant and/or interfered with the medical implant to the skeletal structure;

(2) Be clinically meaningful and demonstrate that the dental services result in a material difference in terms of the clinical outcomes and success of the procedure such that the dental services are inextricably linked to other covered services; and,

(3) Be compelling to support that certain dental services would result in clinically significant improvements in quality and safety outcomes (for example, fewer revisions, fewer readmissions, more rapid healing, quicker discharge, and quicker rehabilitation for the patient) (87 FR 69686).

This evidence should include at least one of the following:

(1) Relevant peer-reviewed medical literature and research/studies regarding the medical scenarios requiring medically necessary dental care;

(2) Evidence of clinical guidelines or generally accepted standards of care for the suggested clinical scenario;

(3) Other ancillary services that may be integral to the covered services; and/or

(4) Other supporting documentation to justify the inclusion of the proposed medical clinical scenario requiring dental services (87 FR 69686).

Submissions should focus on the inextricably linked relationship between dental services and other services necessary to diagnose and treat the individual's underlying medical condition and clinical status, and whether it would not be clinically advisable to move forward with the other covered services without performing certain dental services. To be considered for purposes of CY 2026 PFS rulemaking, submissions through our public submissions process should be received by February 10, 2025, via email at MedicarePhysicianFeeSchedule@cms.hhs.gov. To facilitate processing, interested parties should include the words “dental recommendations for CY 2026 review” in the subject line of their email submission. We continue to stress to submitters that recommendations must include at least one of the types of evidence listed earlier. We further note that we may also consider recommendations that are submitted as public comments during the comment period following the annual publication of the PFS proposed rule.

We thank all those who submitted recommendations for additional clinical scenarios for which they believe Medicare payment for dental services will be consistent with the policies we codified at § 411.15(i)(3)(i), under which Medicare payment may be made for dental services when they are inextricably linked to other covered services. We received thirteen submissions from various organizations and individuals on or before February 10, 2024. Several submitters represented dozens or hundreds of other organizations in making these recommendations. We received one submission after the deadline that presented nominations for clinical scenarios addressed by other submitters, and a proposal outside the scope of clinical scenarios where dental services may be inextricably linked to covered medical services under § 411.15(i)(3)(i).

One submitter recommended that oral health care is essential to the success of treatments for individuals with sickle cell disease and other hematologic disorders. The submitter asserted that providing appropriate and timely dental care is a crucial component for the successful treatment of many hematologic diseases, including SCD, hemophilia, and many blood cancers, such as acute myeloid leukemia, acute lymphoblastic leukemia, chronic lymphocytic leukemia, chronic myeloid leukemia, and multiple myeloma. The submitter noted that we finalized that payment can be made for certain dental services prior to or contemporaneously with chemotherapy, CAR T-Cell therapy, and the administration of high-dose bone-modifying agents (anti-resorptive therapy), when used in the treatment of cancer. The evidence submitted showed that among individuals with a sickle cell crisis, those with dental infections were 72% more likely to be admitted to the hospital than those without dental infections. The same submitter also requested that we consider payment of dental services following organ transplantations (including bone marrow or hematopoietic stem cell transplantation (HSTC)) because maintenance of oral hygiene after HSCT minimizes the severity of oral and dental infections, which is important because chronic graft versus host disease (cGVHD) is common following allogeneic HSCT. The submitter stated that frequent dental evaluations of patients with cGVHD are critical because of the increased rate of dental caries associated with this disease; furthermore, gingivitis and periodontal disease should be monitored and managed appropriately to avoid additional infection. Finally, the submitter also stated that multiple tooth extractions without replacement of dentition leave patients with a poor capacity to eat and may negatively impact the success of the transplant and quality of life. This submitter also recommended including cell and gene therapy for SCD as a clinical treatment scenario for future consideration of potentially inextricably linked dental services.

Another submitter asserted that patients frequently present with complications extending three years or more following the direct treatment of not only head and neck cancers but also other cancer types. The submitter also asserted that a comparable trend may be seen in patients experiencing complications following anti-resorptive drug therapy, for non-cancer-related conditions. They recommended that payment be available for specific dental services during a minimum of 2 years post-treatment for head and neck cancer and up to 5 years for those who have received radiotherapy. They emphasized the current evidence and literature as supporting the provision of Medicare payment for a minimum of 2 years, with the understanding that some patients may require dental or oral healthcare beyond this period due to delayed or late-onset complications, and that the timeline for the emergence of oral or dental complications post- treatment is not uniformly linear and can significantly vary among patients. They also stated that literature supports the extension of Medicare payment to include certain dental services furnished post-anti-resorptive therapy, when used in the treatment of cancer for at least two years following treatment. Lastly, this submitter stated there is an inextricable risk of the development of severe dental and oral complications, such as osteoradionecrosis/medication-related osteonecrosis of the jaw, in patients who have undergone the specific treatments for which we have identified certain inextricably linked dental services. They suggested that once patients receive these treatments, patients are perpetually at risk for developing such complications and recommended that current Medicare payment for dental services should align with the long-term healthcare needs of these patients.

We are not accepting the commenters' suggestion to include specific time limits within the exception in § 411.15(i)(3). We note again that MACs have the flexibility to determine on a claim-by-claim basis whether payment can be made for certain dental services for beneficiaries, such as those receiving other immunotherapies that may involve a lymphodepleting component, consistent with § 411.15(i)(3). That regulation states the general rule that Medicare Parts A and B payment can be made for certain dental services that are inextricably linked to, and substantially related and integral to the clinical success of, covered services; and then provides a non-exclusive list of examples of clinical scenarios under which payment can be made. Thus, a MAC has discretion to decide on a case-by-case basis that payment can be made for certain dental services in other circumstances not specifically addressed under § 411.15(i)(3)(i)

Several submitters recommended that we provide for payment of medically necessary dental services for individuals with autoimmune diseases who are initiating or undergoing immunosuppressive or immunomodulator therapy (“immunosuppressive therapy”). They stated that immunosuppressive therapy can be severely complicated and compromised by oral/dental disease and conditions. The submitters provided references to numerous clinical studies and other supporting documentation in support of dental services in these clinical circumstances being inextricably linked to immunosuppressive therapies for which payment may be made in accordance with § 411.15(i)(3). They noted that while higher dosing is used for cancer chemotherapy and organ transplant rejection prevention, the therapy's duration is generally much shorter than when used in autoimmune disease therapy and that the longer-term duration of use for managing symptoms of autoimmune disease can expose patients to ongoing serious risk of complicating infections for decades. They relayed that the American College of Rheumatology states it is vital for patients to receive appropriate dental evaluation and prompt treatment so they can continue their immune suppressant medications. The submitter explained that dental infections could spread more easily, and therefore faster, when host immunity is compromised by immunosuppressing/immunomodulating drugs via three pathways for the bacteria to spread: locally through facial spaces, through the bloodstream, and by aspiration. They stated that outcomes similar to systemic infection or sepsis and other complications can follow for those receiving immunosuppressive therapy to treat autoimmune diseases. They recommended immunosuppressive therapy to treat autoimmune diseases should not proceed until a dental or oral exam is performed to address the oral complications and/or clear the patient of an oral or dental infection. We discuss these recommendations and supporting evidence in section II.J.4. of this proposed rule.

Several submitters recommended that dental treatments can be integral to the clinical success of covered nephrology-related medical services including services received by beneficiaries who are immunocompromised by end-stage renal disease (ESRD), chronic kidney disease (CKD), other renal diseases, as well as kidney transplant candidates maintained on immunosuppressive medications. They stated that all of these patients are at increased risk of infection, complications, and malnutrition from dentally sourced pathogens. Submitters stated that Medicare ESRD beneficiaries on dialysis are at greater risk for developing complications such as cardiovascular conditions, malnutrition, anemia, and infections, making dental services more critical to the success of kidney care treatments. They further stated that pre-transplantation dental care involves eliminating possible sources of oral infection that can lead to a systemic infection following transplant and that without access to dental services, individuals on dialysis may not qualify for kidney transplantation or may have severe complications after the transplant. One of the submitters noted that dialysis clinicians report that many bloodstream infections (BSI) begin with bacteria in the mouth and that regular dental visits could have a positive impact on reducing BSI. They added that the Society for Vascular Surgery has noted that transient bacteremia from dental infections can seed hemodialysis access grafts. Among strategies to prevent infection of vascular grafts, recommended preoperative measures include identifying and treating remote site infections, including dental sites. We discuss these recommendations and supporting evidence in section II.J.2. of this proposed rule.

More than half of the submissions expressed support for almost identical proposals from a couple of other submitters, recommending that dental services are inextricably linked to covered medical services used for the treatment of Medicare beneficiaries with diabetes. They agreed that the delivery of appropriate dental services in accordance with clinical guidelines and standard of care is substantially related and integral to the optimal outcome of these covered medical services. They offered clinical studies documenting that treatment of oral infections, such as periodontitis and its related inflammation, meaningfully improves the treatment and management of diabetes. They stated, by contrast, the absence of treatment of chronic dental infections complicates covered medical treatment for the management of diabetes and exacerbates insulin resistance, worsens glycemic control, and other diabetes related complications. They noted that the relationship between oral diseases and diabetes mellitus is complex. Diabetes is known to increase the risk and severity of oral diseases, such as periodontitis (gum inflammation and bone loss), tooth loss, dry mouth, and oral fungal infections. Additionally, oral diseases are documented as affecting blood glucose control and contributing to the development of diabetes complications, such as retinopathy, neuropathy, cardiovascular disease, and kidney disease. They believe reciprocal management of glycemic control and periodontal disease decreases risk for and actual cases and severity of diabetes and periodontal disease. We discuss these recommendations and the supporting clinical evidence in section II.J.3 of this proposed rule.

2. Proposed Additions to Current Policies Permitting Payment for Dental Services Inextricably Linked to Other Covered Services

We have received information and requests from interested parties, including entities submitting information through the public submissions process as well as organizations providing comments in response to prior rulemaking efforts, that an inextricable linkage exists between dental services and dialysis treatment services for individuals diagnosed with end-stage renal disease (ESRD) who are receiving dialysis services, particularly those experiencing comorbidities. Commenters and submitters have stated that dental treatment is inextricably linked and integral, and substantially related to the clinical success and outcomes of covered dialysis medical services.

In the CY 2024 PFS final rule, we stated that commenters had provided comments in response to the CY 2024 PFS proposed rule supporting the coverage of annual dental examinations, and treatment as clinically indicated, for individuals with chronic kidney disease and ESRD. The commenters stated that chronic immunosuppression increases the risk of dental infections leading to potentially deadly complications including BSI, peritoneal dialysis-associated peritonitis, and the exacerbation of chronic cardiovascular conditions. They also stated that when established by patient-specific medical and dental parameters, dental services can be unquestionably integral to the outcome of covered medical procedures. We thanked the commenters for the information they submitted regarding these suggestions; however, at that time, commenters did not provide sufficient evidence to support an inextricable link between certain dental services and certain covered services for chronic kidney disease and ESRD (88 FR 79034).

Additionally, submitters provided information through the public submissions process as described in section II.J.1.c. of this proposed rule for our consideration in CY 2025 rulemaking. The submitters stated that there is a connection between dental services to identify and address dental or oral infections and covered medical services for individuals receiving dialysis in the treatment of ESRD.

ESRD is a medical condition in which a person's kidneys successively experience loss of functionality on a permanent basis, leading to the need for a regular course of long-term dialysis or a kidney transplant to maintain life.

Chronic kidney disease (CKD) is a progressively debilitating disease and is marked by the presence of kidney damage or reduction in the kidneys' filtration rate. CKD is a state of progressive loss of kidney function, in that the disease worsens over time and cannot be reversed, ultimately resulting in the need for renal replacement therapy, generally dialysis or transplantation. The Kidney Disease Improving Global Outcomes (KDIGO) Foundation established guidelines that define five stages of CKD using kidney damage markers, including factors that determine proteinuria (level of protein in the urine) and glomerular filtration rate (level of kidney function/filtration) in its KDIGO 2012 Clinical Practice Guideline for the Evaluation and Management of Chronic Kidney Disease. Chronic kidney disease is generally defined as the presence of two factors (glomerular filtration rate [GFR] less than 60 mL/min and albumin greater than 30 mg per gram of creatinine) along with abnormalities of kidney structure or function for greater than three months. Stage 5 of CKD is labeled end-stage renal disease (ESRD) with a GFR of less than 15 mL/min. According to the NIH, more than 500,000 people in the United States live with ESRD.

Per the American Academy of Family Physicians, individuals with ESRD are typically referred to nephrologists for the development of treatment plans. Collectively the various modalities utilized to replicate kidney function are referred to as renal replacement therapy (RRT). Most ESRD patients are treated with dialysis, regardless of whether transplantation ultimately occurs. Generally, kidney transplantation typically yields the best patient outcomes; however, not all patients with ESRD are eligible for or able to undergo transplantation, and therefore continue dialysis treatment. Standards of medical care for CKD outline the need for monitoring for signs of progression of the disease and early referral to specialists for RRT. Dialysis is generally supplied via two primary modes: hemodialysis or peritoneal dialysis. In hemodialysis, blood is filtered through a dialyzer, outside of the body. A dialyzer is sometimes referred to as an “artificial kidney.” To access the circulatory system, several access points may be placed and utilized, including an arteriovenous (AV) fistula, AV graft, and in some cases a central venous catheter. In peritoneal dialysis, a fixed catheter is placed in the abdomen, and dialysis solution is administered into the abdomen. The solution absorbs wastes and excess fluid from the patient's body.

Submissions we received through the public submissions process for consideration in CY 2025 rulemaking provided information regarding the potential linkage between dental services and specific covered medical services associated with ESRD and dialysis including:

• CPT codes 36901-36906: Dialysis circuit procedures;
• CPT codes 90935, 90937, 90940: Hemodialysis procedures;
• CPT code 90961: Physician or other qualified healthcare professional visits for ESRD;
• CPT codes 90989-90999: Other dialysis procedures; and,
• DRG code 872: Hospitalization for septicemia or severe sepsis.

We note that Medicare provides coverage for individuals with ESRD, regardless of age, when certain requirements are met.

We also note that dialysis procedures may be utilized for individuals who do not have ESRD in the treatment of acute intoxication or poisoning. For example, in the case of a patient experiencing poisoning, dialysis hemoperfusion may be employed, which passes the blood through a column packed with granules that include a resin that act as absorbents. In this procedure, physicochemical properties of an absorbent are used to remove toxins. Conversely, in hemodialysis utilized in the treatment of ESRD, there is a concentration gradient between the blood and the solvent across the dialysis membrane. We note that the patient accessing dialysis treatment for the treatment of acute intoxication or poisoning would not present with the same diagnostic profile, treatment needs, nor face the same risks of immunodeficiency and infection as individuals with ESRD as described below.

Periodontal diseases and dental caries are the main chronic infectious diseases of the oral cavity. Periodontal diseases include a group of chronic inflammatory diseases that affect the periodontal supporting tissues of teeth and encompass destructive and nondestructive diseases. Gingivitis is inflammation of the soft tissue without apical migration of the junctional epithelium. It is a reversible, nondestructive disease that does not involve loss of periodontal tissues. Periodontitis is inflammation of the periodontium that is accompanied by apical migration of the junctional epithelium, leading to destruction of the connective tissue attachment and alveolar bone loss.

Periodontitis serves as a prime example of a disrupted balance between the local microbiome and the host's inflammatory response, a condition known as dysbiosis. Although the inflammatory response is ostensibly triggered to manage the microbial threat, it proves to be ineffective and inadequately regulated in individuals prone to the condition. This leads to the inflammatory destruction of the periodontium, which encompasses the tissues that encase and support the teeth, including the gingiva, periodontal ligament, and alveolar bone. Without appropriate treatment, this disease can progress to tooth loss, adversely affecting chewing, appearance, and overall quality of life.

In 2017, the American Academy of Periodontology (AAP) and the European Federation of Periodontology (EFP) co-presented the 2017 Classification of Periodontal and Peri-Implant Diseases and Conditions. This disease classification framework serves to guide treatment planning for periodontitis and aims to support customized approaches to patient care. The revised classification includes a multi-dimensional staging and grading system for periodontitis classification, a recategorization of various forms of periodontitis, and a classification for peri-implant diseases and conditions.

Individuals with ESRD experience compromised immune systems as the immune system and the kidneys are closely integrated and interdependent. In healthy individuals, the kidneys contribute to immune homeostasis and regulation, while components of the immune system mediate many acute forms of renal disease and play a central role in the progression of chronic kidney disease. A dysregulated immune system can have either direct or indirect renal effects. Moreover, uremia, the buildup of waste products in the blood that occurs as a result of declining or decreasing kidney function, can lead to inflammation and reduction in the immune system's ability to function as evidenced by an increased risk of viral-associated cancers, increased susceptibility to infections, and decreased vaccination responses in patients with ESRD. ESRD is also characterized by diminished endocrine and metabolic functions of the kidney with subsequent retention and accumulation of toxic metabolites. Additionally, the presence of indwelling catheters and grafts utilized for the administration of dialysis, malnutrition, dysregulated inflammation, and acquired immune dysfunction due to uremia contribute to the immune deficiency in ESRD and increase susceptibility to infection. Notably, infection is the second leading cause of death in hemodialysis patients.

Several submitters providing information through the public submissions process stated that comorbidities frequently occur in the ESRD patient population and can cause complications for the patient, potentially jeopardizing the outcomes of the dialysis treatment. For example, submitters stated that comorbid diabetes can result in clinical complications for individuals receiving dialysis services in the treatment of ESRD, stating that periodontitis can worsen blood glucose control in diabetics by increasing levels of inflammatory mediators and may interfere with insulin, resulting in clinical complications. Additionally, periodontitis is associated with oral health-related quality of life in individuals with ESRD. One study evaluated whether periodontitis may be independently associated with oral health-related quality of life (OHRQoL) in individuals with ESRD. Researchers assessed 180 adults with ESRD and evaluated for impacts on various domains, and found that periodontitis exerts an influence on OHRQoL in individuals with ESRD, with a more severe condition impacting different domains. Moreover, a prospective cohort study aimed to determine the association between an index of radiographically assessed oral health, Panoramic Tomographic Index (PTI), and cardiovascular and all-cause mortality, major adverse cardiovascular events (MACEs) and episodes of bacteremia and laboratory measurements during a three-year prospective follow-up in chronic kidney disease (CKD) stage 4-5 patients not on maintenance dialysis at baseline. The study showed that radiographically assessed and indexed dental health is independently associated with all-cause and cardiovascular mortality and MACEs in CKD stage 4-5 patients transitioning to maintenance dialysis and renal transplantation during follow-up (but not with the incidence of bacteremia).

Submitters providing information through the public process also stated that BSI, poor glycemic control, and other complications arising from dental infection can jeopardize the clinical success of medical therapies employed to manage ESRD. Research provided by submitters described that issues and changes in the mouth and oral cavity, such as periodontitis and other consequences of poor oral health, frequently occur in patients with CKD and may contribute to increased morbidity and mortality because of systemic consequences such as inflammation, infections, protein-energy wasting, and atherosclerotic complications.

Several submitters also stated that addressing oral health issues, including identifying and resolving dental infections through the provision of dental and oral services, can be inextricably linked and integral and related to the clinical success of Medicare covered dialysis services for the treatment of ESRD. The submitters stated that the consequences of poor oral health are worse for ESRD patients than the general population due to ESRD patient characteristics such as advanced age, higher prevalence of comorbid diabetes, polypharmacy, and impaired immune function, and that medically necessary dental care may improve the clinical success of the dialysis services.

A few submitters supplied a general position paper on the need for dental care and services in the ESRD patient population receiving dialysis services, describing the unique risks for individuals with ESRD and the increased risk of infection from oral sources. Specifically, the position paper states that “oral diseases represent a potential and preventable cause of poor health outcomes in people with ESRD due to their relation to infection, inflammation, and malnutrition. Oral health represents a potential determinant of health outcomes in patients with end-stage renal diseases (ESRD).” Several submitters also provided a cohort outcomes study of 675 randomly selected individuals receiving peritoneal dialysis services. The study outcomes described that “poor oral health was associated with lower educational levels, diabetes, older age, marriage, and worse nutritional indicators (including lower time-averaged serum albumin and phosphate concentrations).”

The research further isolated that poor oral health is independently associated with an increased risk of peritonitis, an infection of the peritoneum where the peritoneal access graft is placed, and mortality in patients receiving peritoneal dialysis. The authors describe that “after adjusting for age, sex, comorbidities, serum albumin, shared frailty by study sites, and PD vintage, poor oral health was associated with increased risks of peritonitis (adjusted hazard ratio [HR] = 1.45, 95 percent confidence interval [CI]: 1.06-2.00) and all-cause mortality (adjusted HR = 1.55, 95 percent CI: 1.04-2.32) but not hemodialysis (HD) transfer (adjusted HR = 1.89, 95 percent CI: 0.87-4.10) compared to participants with good oral health.” Furthermore, the study explained that “poor oral health status was present in one-fourth of peritoneal dialysis patients and was independently associated with a higher risk of peritonitis and death.” Moreover, submitters provided information that suggests that patients with ESRD receiving hemodialysis services and receiving preventive oral and dental services experience increased survival while those not receiving dental services were associated with increased mortality. A prospective cohort outcomes study of 4,205 hemodialysis patients assessed the impact of dental health on mortality from 2010 to 2012. The study described that “in adults treated with hemodialysis, poorer dental health was associated with early death, whereas preventive dental health practices were associated with longer survival.”

Additionally, in a systematic review supplied by several submitters, studies show that patients on RRT (for example hemodialysis, peritoneal dialysis, and/or transplantation) experience a high prevalence of dental caries, common chronic infection resulting from tooth-adherent cariogenic bacteria. The observational data presented in the review suggests a link between oral health and mortality in patients on RRT. The review highlighted the need for further research in this area but also stated that improved, multidisciplinary, patient-centered dental care concepts are required to support dental and overall oral health in individuals on RRT.

Several submitters also noted that the Society for Vascular Surgery has stated that transient bacteremia from dental infections can seed hemodialysis access grafts. Among strategies to prevent infection of vascular grafts, recommended preoperative measures include identifying and treating remote site infections, including dental or oral sites of infection. Statements regarding best practices for managing infection control advise that sources of infection, including those within the oral cavity, should be addressed in order to minimize the risk of broader infection in the ESRD patient receiving hemodialysis.

In conclusion, the evidence base indicates that evaluation for and treatment of oral infection leads to improved outcomes and reduced risk of mortality for individuals with ESRD receiving covered dialysis services.

In the CY 2023 PFS final rule, we agreed with commenters that there is clinical evidence to support that medically necessary dental care may advance the clinical success of organ transplants and finalized that payment can be made under Medicare Parts A and B for dental services such as dental examinations, including necessary treatment, performed as part of a comprehensive workup prior to organ transplant surgery and medically necessary diagnostic and treatment services immediately necessary to eliminate or eradicate the infection or its source that are provided before transplantation because such services are inextricably linked to, and substantially related and integral to the clinical success of, the organ transplant procedure (87 FR 69676).

Furthermore, we stated that we appreciated commenters' feedback regarding those individuals who are awaiting organ transplantation and the commenters' request that Medicare provide payment for medically necessary dental services prior to transplantation. We described that in a case where an individual is awaiting organ transplantation, we believe that it is appropriate for Medicare to provide payment for, including but not limited to, an oral or dental examination, and medically necessary diagnosis and treatment for only those services that are considered immediately necessary to eliminate or eradicate the infection or its source prior to the organ transplant (87 FR 69676).

In consideration of research and recommendations provided by the public and our analyses of the studies and research available regarding the connection between dental services and the clinical success of dialysis services for individuals with ESRD, we believe that dental services to diagnose and treat infection prior to dialysis services in the treatment of ESRD represent a clinically analogous scenario to dental services for which Medicare payment under Parts A and B is currently permitted when furnished in the inpatient or outpatient setting, such as prior to organ transplant. The clinical evidence supports that the medically necessary dental care may similarly advance the clinical success of dialysis services in the treatment of ESRD because an oral or dental infection can present substantial risk to the success and outcomes of these procedures (including the risk of systemic infection, BSI, sepsis, and death).

As such, we believe that if a patient requiring dialysis services in the treatment of ESRD has an oral infection, the success of those dialysis services could be compromised if the infection is not properly diagnosed and treated prior to the covered medical services. Without an oral or dental examination to identify such an infection and the provision of necessary treatment, such as restorative dental services, to eradicate the infection prior to the dialysis procedure, the patient's ability to complete the dialysis services could be seriously complicated or compromised and the risk of infection would further increase the risk of mortality for the patient.

Examples of restorative dental services to eradicate infection could include: extractions (removal of the entire infection, such as pulling of teeth—for example, CDT D7140, D7210), restorations (removal of the infection from tooth/actual structure, such as fillings—for example, CDT D2000-2999), periodontal therapy (removal of the infection that is surrounding the tooth, such as scaling and root planning—for example, CDT D4000-4999, more specifically D4341, D4342, D4335 and D4910), or endodontic therapy (removal of infection from the inside of the tooth and surrounding structures, such as root canal—for example, CDT D3000-3999).

If such an infection is not treated prior to dialysis services in the treatment of ESRD, then there is an increased likelihood for morbidity and mortality resulting from spreading of the local infection to BSI and sepsis. Likewise, we believe that infections occurring during the course of dialysis treatment should similarly be addressed and resolved in order to minimize the risk of infection and death for the patient with ESRD receiving dialysis services.

Because an oral or dental infection can present substantial risk to the success of dialysis treatment for ESRD, we believe dental services furnished to identify, diagnose, and treat oral or dental infections prior to or contemporaneously with dialysis services in the treatment of ESRD are not in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth, but instead are inextricably linked to, and substantially related and integral to the clinical success of, these other covered medical services. We note that, in these circumstances, the necessary treatment to eradicate an infection may not be the totality of recommended dental services for a given patient. For example, if an infected tooth is identified in a patient requiring dialysis services in the treatment of ESRD, the necessary treatment would be to eradicate the infection, which could result in the tooth being extracted. Additional dental services, such as a dental implant or crown, may not be considered immediately necessary to eliminate or eradicate the infection or its source prior to surgery. Therefore, such additional services would not be inextricably linked to, and substantially related and integral to the clinical success of, Medicare-covered dialysis services when used in the treatment of ESRD. As such, no Medicare payment would be made for the additional services that are not immediately necessary prior to or contemporaneously with dialysis for ESRD to eliminate or eradicate the infection.

In conclusion, we are proposing to add this clinical scenario to the examples of clinical scenarios under which payment can be made for certain dental services in our regulation at § 411.15(i)(3)(i)(A). Specifically, we propose to amend the regulation at paragraph A to include dental or oral examination performed as part of a comprehensive workup in either the inpatient or outpatient setting prior to Medicare-covered dialysis services when used in the treatment of ESRD; and medically necessary diagnostic and treatment services to eliminate an oral or dental infection prior to, or contemporaneously with Medicare-covered dialysis services when used in the treatment of ESRD. We seek comments on all aspects of this proposal.

3. Request for Comment on Dental Services Integral To Specific Covered Services to Treat Diabetes

As described in section II.J.1.c. of this proposed rule, we have received information from interested parties, including submitters providing evidence through the public submissions process as well as commenters on prior proposed rules suggesting that dental services are inextricably linked to treatment services for individuals with diabetes mellitus. Several interested parties using the public submissions process have urged us to provide Medicare payment for dental services for individuals diagnosed with diabetes for consideration in CY 2025 rule making. These submissions included information and references supporting oral and dental treatment of advanced periodontitis among individuals with diabetes to improve markers related to management of the diabetes.

Submitters stated that clinical studies demonstrate that dental treatments for oral infections, such as advanced periodontitis and related inflammation, meaningfully advance and improve the treatment of, management of, and outcomes for patients with diabetes. Submitters also stated that conversely, the absence of treatment of chronic dental infections in turn complicates covered medical treatment for the management of diabetes and potentially exacerbates insulin resistance, worsens glycemic control, and other diabetes-related complications, leading to poor outcomes for the individuals with diabetes. Submitters also noted that studies demonstrate cost savings when dental services are employed in the treatment of individuals with diabetes and also serve to advance health equity among vulnerable populations.

Submitters provided information detailing the increased risk of dental caries and periodontal disease in people with diabetes, many of whom lose teeth, which greatly limits nutrition, general well-being, and overall quality of life. Submitted studies demonstrated the bidirectional nature of periodontal disease and diabetes, suggesting that both conditions influence each other and can worsen or conversely improve outcomes.

As described by submitters, numerous basic and clinical studies describe the relationship between oral diseases and inflammation in persons with diabetes, which increases risks for micro- and macrovascular complications including retinopathy, nephropathy, neuropathy, cardiovascular diseases, and stroke. Several submitters stated that there is a documented reduction in hospitalizations in persons with diabetes who receive conservative periodontal treatment. Consequently, submitters stated that periodontal treatment is recommended for patients with diabetes by American Diabetes Association Clinical Guidelines and is also promoted by the American Association of Clinical Endocrinologists and others.

Diabetes mellitus is a chronic, metabolic disease characterized by elevated levels of blood glucose (or blood sugar), which, over time, may lead to serious damage to the heart, blood vessels, eyes, kidneys, and nerves. Type 2 diabetes, which usually occurs in adults, causes the body to become resistant to insulin or not to make enough insulin. Type 1 diabetes, previously referred to as juvenile diabetes or insulin-dependent diabetes, is a chronic condition in which the pancreas produces little or no insulin.

A primary goal for the treatment of diabetes is glycemic control and requires accurate individualization and customization of available treatment options. Interventions to address lipoproteins, blood pressure, weight control, mental health, and lifestyle are important factors that contribute to quality of life and the frequency of diabetes-associated complications. According to recent statistics from the Centers for Disease Control and Prevention, approximately 38 million people in the United States may have diabetes, and the CDC estimates that 1 in 5 of them do not know they have the condition. Approximately 98 million U.S. adults likely have prediabetes, and more than 8 in 10 of them may not know they have prediabetes. Notably, diabetes is the eighth leading cause of death in the United States (and may be underreported). Type 2 diabetes accounts for approximately 90 to 95 percent of all diagnosed cases of diabetes, while Type 1 diabetes accounts for approximately 5-10 percent. The CDC reports that over the last 20 years, the number of adults diagnosed with diabetes has more than doubled as the American population has aged and become more overweight or obese.

One key marker for the measurement of glycemic control, a key goal in the treatment of diabetes, in individuals with diabetes is the hemoglobin A1c test. The hemoglobin A1c (also referred to as glycated hemoglobin, glycosylated hemoglobin, HbA1c, or A1c) test is used to evaluate a person's level of glucose control and shows an average of the blood sugar level over the past 90 days and represents a percentage.

Submitters through the public submissions process provided multiple research studies regarding the interaction between dental services and outcomes for medical services to treat diabetes. The Cochrane Library (ISSN 1465-1858) is a collection of databases that contain high-quality, independent evidence to inform healthcare decision-making. The Cochrane Library is owned by Cochrane and published by Wiley. In the Cochrane Review entitled Treatment of periodontitis for glycaemic control in people with diabetes mellitus, evidence from 30 trials (results from 2,443 participants) showed that periodontitis treatment reduces blood sugar levels (measured by HbA1c) in diabetic patients on average by 0.43 percentage points (for example, from 7.43 to 7 percent; 4.7 mmol/mol) 3 to 4 months after receiving the treatment compared with no active treatment or usual care. A difference of 0.30 percent (3.3 mmol/mol) was seen after 6 months (12 studies), and 0.50 percent (5.4 mmol/mol) at 12 months (one study). All studies in the review used a parallel randomized controlled trials (RCT) design and followed participants for between 3 and 12 months. The studies generally focused on people with type 2 diabetes, save one study that included participants with type 1 or type 2 diabetes. Most studies were mixed in terms of whether metabolic control of participants at baseline was good, fair, or poor and were carried out in secondary care. Researchers compared periodontitis treatment with control, which could be no (or delayed) treatment or usual care (oral hygiene instruction (OHI) or supragingival scaling with or without OHI). The degree and nature of advanced periodontitis were not specifically defined in the context of the studies. Additionally, the studies did not control for other types of interventions deployed in the treatment of diabetes (that is, strategies used to manage glycemic control), so patients may have been receiving other types of treatment during the study periods.

The types of periodontal treatment provided covered a wide range of oral services: subgingival instrumentation, surgical periodontitis treatment-flap surgery or gingivectomy; antimicrobial therapy (encompassing antibacterials and antibiotics), either locally applied (including mouth rinses, gels, or dentifrices) or systemically administered; other drug therapy with a possible benefit of improving the periodontal condition of the participant; other novel interventions to manage periodontitis; supragingival scaling (also known as professional mechanical plaque removal (PMPR)); oral hygiene instruction; and/or, education or support sessions to improve self‐help or self‐awareness of oral hygiene.

In summary, the Cochrane review demonstrated that individuals with diabetes who have periodontitis who receive dental services for the treatment of the periodontitis experience a statistically significant reduction of HbA1c. Again, measurement of HbA1c is a metric for gauging glycemic control and is a primary goal of treatment for all individuals with diabetes. The study suggests that individuals with diabetes who also have a diagnosis of periodontitis who receive treatment to address the periodontitis subsequently experience a reduction in HbA1c. The study authors described the clinical outcomes related to preventive dental care, conservative periodontal treatment, and reduction in HbA1c as statistically and clinically significant. Moreover, the authors of the research stated that “further trials evaluating no treatment vs usual care are unlikely to change this conclusion.”

Submitters providing information through the public submissions process suggested that dental services could be inextricably linked to the following specific medical services in the treatment of diabetes:

• CPT 36901-36906: Dialysis circuit procedures.
• CPT 82947: Chemistry procedures, blood glucose testing.
• CPT 83036: Hemoglobin A1C testing.
• CPT 90935, 90937, 90940: Hemodialysis procedures.
• CPT 90961: Physician or other qualified healthcare professional visits for ESRD.
• CPT 90989-90999: Other dialysis procedures.
• CPT 92227-92229: Diabetic retinopathy screening.
• CPT 99091: Collection and interpretation of physiologic data.
• CPT 99202-99215: Evaluation and Management (E/M) Services.
• CPT 99211: Office visit for an established patient.
• CPT 99487: Complex chronic care management services.
• CPT 99490-99491: Chronic care management services.
• CPT 99497: Remote physiologic monitoring services.
• CPT 99605-99607: Medication Management.
• CPT 99802-99804: Assessment, Intervention, Face to Face (F2F).
• DRG 637: Hospitalization for diabetes with major complications.
• G0108: Diabetes Self-Management Training.
• G0109: Group Diabetes Self-Management Training.
• G0270: Nutrition Therapy.
• G0466: FQHC visit new patient.
• G0467: FQHC visit established patient.

As described in this section, research provided by submitters suggests that periodontal treatment for an individual with both a diagnosis of diabetes and periodontitis led to improved HbA1c measures.

We have explained that there are instances where dental services are so integral to other medically necessary services that they are inextricably linked to the clinical success of that medical service(s), and, as such, they are not in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth within the meaning of section 1862(a)(12) of the Act. Rather, these dental services are inextricably linked to the clinical success of an otherwise covered medical service and are payable under Medicare Parts A and B.

In the case of an individual with diabetes who also has a diagnosis of periodontitis, oral services and treatment to address the periodontitis potentially lead to a reduction in HbA1c, a marker of glycemic control that may be used to determine the effectiveness of interventions for treatment of diabetes. In the description of the studies submitted, the research seems to indicate that the improvement of glycemic control as evidenced by the HbA1c is due to the provision of treatment for the periodontitis. The dental and oral services may not be integral to other specific medically necessary, covered services, but rather the dental and oral services may serve to influence clinical outcomes directly. The studies compare the impact of the treatment for the periodontitis to the impact of pharmacological interventions.

We recognize that evidence submitted by interested parties demonstrates that an individual with both a diagnosis of diabetes and a diagnosis of periodontitis who in turn receives periodontal treatment services may experience improvements in markers for HbA1c, which is a key target outcome for the patient population with diabetes. However, the interaction between these diagnoses and the potential improvements due to periodontal treatment services does not appear to align with the framework we have established to pay for dental services inextricably linked to covered services; in our framework, the delivery of certain dental services are integral to the successful completion of or outcomes related to the covered services.

Under § 411.15(i)(3), we have specified that payment can be made for certain dental services that are inextricably linked to other services when the specific covered services with which the dental services are inextricably linked are identified. The studies that have been provided to CMS through submissions have not identified any specific covered services for the treatment of diabetes to which dental services are inextricably linked. Rather, the studies indicate that the primary treatment of periodontal disease in patients with diabetes generally leads to better outcomes in the management of the patients' diabetes. While the research makes the case that the dental services are medically necessary for patients with diabetes, medical necessity alone does not permit payment for dental services given the broad statutory prohibition under section 1862(a)(12) on payment for services “in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth.” In the case of patients with diabetes, the research does not appear to show that certain dental services are inextricably linked with certain other covered services for the treatment of diabetes, in accordance with our regulation at § 411.15(i)(3) such that the statutory prohibition under section 1862(a)(12) does not apply.

We note that some of the examples of medical services for diabetes treatment provided by submitters are general in nature and not specific to patients with diabetes who may also have periodontal disease, including CPT codes 99202-99215: Evaluation and Management (E/M) Services that broadly describe outpatient office visits for the diagnosis and medical management of practically any illness, disease, or condition.

Additionally, submitters providing evidence for our consideration suggested that the services described by codes for diabetes self-management training (for example, G0108: Diabetes Self-Management Training, and G0109: Group Diabetes Self-Management Training) are services with which dental services may be inextricably linked. However, we were not persuaded by this evidence and do not believe that dental services would be inextricably linked to improved outcomes for services for DSMT. Therefore, we seek comment from the public regarding specific covered services for management of patients with diabetes with which dental services may be inextricably linked. At this time, we are not proposing to amend § 411.15(i)(3)(i) as we have not identified additional dental services that are inextricably linked to certain services in the treatment of diabetes. However, we note that we remain open to considering any such services identified by public commenters, and, if sufficient evidence is presented, we may consider adding such services to our regulations in the final rule.

In the context of payment for dental services for an individual with diabetes, we seek information from the public regarding what the coordination between a medical and dental professional would entail in the scenario where an individual with a diagnosis of diabetes presents with suspected periodontitis. In the CY 2023 PFS final rule, we explained that we would make payment when a doctor of dental medicine or dental surgery (referred to as a dentist) furnishes dental services that are an integral part of the covered primary procedure or service furnished by another physician, or non-physician practitioner, treating the primary medical illness. However, if there is no exchange of information, or integration, between the medical professional (physician or other non-physician practitioner) in regard to the primary medical service and the dentist in regard to the dental services, then there would not be an inextricable link between the dental and covered medical service within the meaning of our regulation at § 411.15(i)(3). Without both integration between the Medicare enrolled medical and dental professional, and the inextricable link between the dental and covered services, Medicare payment for dental services would be prohibited under section 1862(a)(12) because the services are in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth; though they may be covered by types of supplemental health or dental coverage (87 FR 69687 through 69688).

In a situation where a medical professional believes that an individual with a diagnosis of diabetes may also have a diagnosis of periodontitis, how are recommendations conveyed between the medical and dental professionals? What coordination, if any, occurs between the medical and dental professionals? We expect that inextricably linked services related to the treatment of periodontitis in an individual with diabetes would require significant communication between the medical and dental professionals.

Additionally, we have stated that an inextricable linkage may exist between dental services and covered services when the standard of care for the medical service is such that the practitioner would not proceed with the medical procedure or service without performing the dental services, because the covered medical services would or could be significantly and materially compromised, or where dental services are a clinical prerequisite to proceeding with the primary medical procedure and/or treatment (87 FR 69669). While evidence supports that individuals with diabetes and periodontitis who receive periodontal treatment experience improvements in their HbA1c markers, dental services do not appear to serve as a precondition to overall treatment for the diabetes. We seek information from the public on how oral treatment services may be a clinical prerequisite in the treatment protocol for the care of individuals with diabetes.

We note that there does not appear to be a clear or singular definitional framework for categorizing the state of diabetes, such as “controlled” or “uncontrolled” diabetes. Research submitted by the public discusses improvements in glycemic control as evidence by HbA1c markers, but does not delineate the characteristics of a patient that would require direct clinical intervention (pharmacological, behavioral, usage of DME such as insulin pumps, etc.) versus a patient that would not require interventions given that their disease state is not within a concerning range requiring direct medical treatment.

In the current literature, there are two types of severity measures that can help categorizing the state of diabetes: the severity of diabetes itself and the severity of periodontal disease among individuals with diabetes. With respect to the severity of diabetes, the American Diabetes Association recommends that most adults with diabetes aim for a HbA1c level below 7.0% (<53 mmol/mol), along with other recommended targets such as blood pressure below 130/80 mmHg and LDL cholesterol below 100 mg/dL. In the current literature, uncontrolled hyperglycemia is typically defined as a HbA1c level above 8.0% (>64 mmol/mol), according to guidelines from various medical organizations including the ADA, American College of Physicians, Association of Clinical Endocrinologists, and American College of Endocrinology. Based on the literature, this threshold serves as a “take action” point in managing diabetes and has been used in previous studies to indicate poor glycemic control. Achieving and maintaining target HbA1c levels is essential for individuals with diabetes (as well as the general population) and is a key goal of treatment. Moreover, we note that for the purposes of Quality Payment Program (QPP) measures, CMS has issued measures for diabetes ( e.g. Quality ID #1 (NQF 0059): Diabetes: Hemoglobin A1c (HbA1c) Poor Control (>9%)). The measure is described as “Percentage of patients 18-75 years of age with diabetes who had hemoglobin A1c > 9.0% during the measurement period.” Furthermore, measures of HbA1c may fluctuate over time; therefore, a strict threshold could lead to incentives for multiple rounds of testing in order to aim for the levels established. In general, guidelines exist, but standards vary for defining diabetes states based on multiple severity measures.

In addition, the severity of periodontal disease is not uniformly defined. ICD-10 codes, such as K05.2 for Aggressive Periodontitis and K05.3 for Chronic Periodontitis may be utilized to describe more severe instances of periodontitis (and in this instance when such diagnosis codes are also partnered with diagnoses related to diabetes for a particular individual). Another approach involves using the Armitage criteria for periodontal diagnosis. Severity assessment can be based on the clinical attachment level (CAL), with CAL between 1 mm and 2 mm classified as slight, 3 mm and 4 mm as moderate, and ≥5 mm as severe. Again, some standards exist relative to the staging of periodontitis, but such criteria vary. Additionally, we believe that the current practice of medicine would allow for variation in clinical attributes as well as judgment and discernment by the referring practitioner regarding the clinical status of the individual when determining the need for consultation with other practitioner types, including the dentist. We seek comment on whether clinical standards exist that describe and define the disease state of diabetes that would serve to inform the selection of treatment modalities, including potential referrals to dental professionals with respect to concerns related to oral health. We also seek comment from the public regarding the ways that CMS could ensure that practitioners do not decrease the quality of diabetes treatment in an effort to maintain a beneficiary's potential access to Medicare payment for dental services.

Evidence supplied by submitters also described periodontitis but without clear and consistent definitional structure. The 2017 World Workshop on the Classification of Periodontal and Peri-Implant Diseases and Conditions resulted in a new classification of periodontitis characterized by a multidimensional staging and grading system. The staging considers the aspects of severity, complexity, extent, and distribution while the grading contemplates primary criteria such as progression and grade modifiers, including risk factors such as smoking and diabetes.

For the purposes of our consideration of medical services for the treatment of diabetes for individuals with diabetes who have periodontitis, we seek comment from the public on clinical criteria that would determine eligibility for effectiveness of periodontal treatment as described in the Cochrane review and other studies. We do not believe that a condition such as gingivitis or early stages of periodontitis would require oral treatment that in turn would influence the outcomes for an individual with diabetes. However, we seek information to address the following questions. At what stages and grading would the periodontitis be considered advanced and/or requiring dental and oral treatment intervention? What types of practitioners are able to make determinations regarding the staging of periodontitis? We also seek comment on patient eligibility. What determines patient eligibility for treatment for advanced periodontitis? Are there other criteria for consideration?

Additionally, we seek comment on the duration of potential periodontal treatment. How is the length of treatment determined? If a patient's clinical status improves with respect to the periodontal disease, what factors determine when periodontal treatment comes to an end? What does maintenance treatment entail? What services are provided in treatment of advanced periodontal disease? What is the service definition? Are services bundled? If yes, what is included in the bundle? When are the services provided and over what period? Is it provided over a calendar month period? A single day? Multiple days? Are services timed? Who provides the services? What specific terminology is involved? Are these services ever provided under supervision? Or “incident to” by other clinical staff?

We also seek information on how services for advanced periodontal disease are provided. Where and how are services for treatment of advanced periodontal disease provided? Are there any special rules, such as obtaining advance consent or performance of an initiating visit?

We also seek information regarding coding and billing of periodontal services. What coding is utilized for the treatment services for advanced periodontal disease? What claims format is employed for the submission of claims with related oral and dental services (for example, 837D and/or 837P)?

Additionally, we seek comment from the public regarding the risk of recurrence of periodontal disease for this patient population. What is the level of risk for re-development of advanced periodontitis and likelihood of recurrence?

We also seek information regarding the role of caries in management of diabetes. What is the prevalence of caries in this patient population? What is the impact of caries on management of diabetes?

We also seek information regarding the disease state of the diabetes itself and its interaction with dental services. Does evidence exist to support that certain characteristics related to diabetes management (for example, maintenance of HbA1c) are more closely tied to certain oral interventions' ability to yield clinical improvements?

We reiterate that section 1862(a)(12) of the Act generally precludes payment under Medicare Parts A or B for any expenses incurred for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth. Thus, payment is permitted only where the dental services are inextricably linked to covered medical services. We believe that general maintenance and management of oral disease processes clearly falls within the statutory exclusion and therefore Medicare would not permit payment for routine dental and oral services.

We note that many submitters stated that good dental and oral health benefits a patient's overall health in general. Several commenters responding to the CY 2023 PFS proposed rule also expressed that good oral hygiene, along with routine dental services, contributes to better outcomes for patients. We recognized in the CY 2023 PFS final rule in response to those comments that there is a great deal of evidence suggesting that dental health is generally an important component of overall health; however, we are interested in comments on whether certain dental services are considered so integral to the primary covered services that the necessary dental interventions are inextricably linked to, and substantially related and integral to clinical success of, the primary covered services such that they are not subject to the statutory preclusion on Medicare payment for dental services under section 1862(a)(12) of the Act (88 FR 79033).

In summary, we seek comment on whether certain dental services are inextricably linked to certain other covered services for diabetes, supported by clinical evidence as described in section II.J.1.c. of this proposed rule. We also seek comment specifically on whether dental services such as prophylaxis are a standard of care in the management of diabetes. We are committed to continuing to explore the potential inextricable relationship between dental services and covered medical services utilized in treatment for individuals with diabetes. We thank submitters for the information they provided through the public submissions process and may consider revisions to the clinical examples codified in our regulations at § 411.15(i)(3)(i) based upon additional data and information received in response to this proposed rule.

4. Request for Comment on Dental Services Integral To Specific Covered Services To Treat Systemic Autoimmune Disease Requiring Immunosuppressive Therapies

We have received information from submitters suggesting that certain dental services are inextricably linked to immunosuppressive therapies for individuals with autoimmune disorders.

According to the NIH's National Institute of Environmental Health Sciences, a healthy immune system is able to defend the body against disease and infection. However, if the immune system malfunctions, it may mistakenly attack healthy cells, tissues, and organs. This scenario is called autoimmune disease, and these attacks can affect any part of the body, weaken bodily function, and in some cases become life-threatening. There are over 100 autoimmune diseases, including Type 1 diabetes, multiple sclerosis, lupus, rheumatoid arthritis, and inflammatory bowel disease. There are also other autoimmune diseases that are rare and difficult to diagnose. In some cases, patients may suffer for years before receiving a proper diagnosis, and most of these diseases have no cure. Additionally, some autoimmune diseases require lifelong treatment for system management.

Autoimmune diseases are continuously affecting more people. Estimates indicate that as many as 50 million people in the U.S. have an autoimmune disease, making it the third most prevalent disease category, surpassed only by cancer and cardiac disease. Generally speaking, a person's genes in combination with infections and other environmental exposures likely play a significant role in disease development, though in some instances pathology may be unknown. Additionally, nearly 80 percent of people with a chronic autoimmune condition are women. Symptoms of autoimmune diseases can include: fatigue, pain, dermatologic manifestations, weight loss or gain, insomnia, fever, and myriad other symptoms.

Many treatment modalities are employed in the management of autoimmune diseases. Treatments could include use of oral medications, including steroids, anti-inflammatory medications, as well as infusion immunotherapy. Some autoimmune conditions may present in a localized fashion, such as Sjogren's, and many of the independent organ inflammations, require immunosuppressive therapies, and may progress to a more systemic involvement. Conversely, some systemic autoimmune diseases, like sarcoidosis, may not require immunosuppression in mild cases.

Submissions through the public submissions process urged us to provide that payment can be made for dental services for individuals with autoimmune diseases receiving immunosuppressive therapy. In submissions, several interested parties have asserted that immunosuppressive therapies utilized in the treatment of autoimmune disease have similar immunosuppressive effects as those of toxic chemotherapy utilized in the treatment of cancer and that these treatments are analogous to the clinical examples finalized in CY 2024 PFS rulemaking for dental services inextricably linked to covered medical services in the treatment of cancer.

Submitters stated that oral and dental treatment is also often integral to the successful care and management of beneficiaries with autoimmune diseases who are initiating or undergoing immunosuppressive or immunomodulator therapy because the absence of medically necessary oral and dental treatment can pose serious complications to those beneficiaries and the covered medical services they receive. Submitters state that, for example, dental infections can spread quickly when host immunity is compromised by immunosuppressing or immunomodulating drugs utilized in treatment. As such, submitters note that the American College of Physicians has described that the implications of dental disease in patients who are undergoing immunosuppressive therapy extend beyond their oral disease, with potentially life-threatening complications if the dental problems are not treated. For these reasons, submitters state that the covered services upon which immunocompromised patients depend (for example, immunosuppressive therapy) should not proceed until a dental or oral exam is performed to address the oral complications and/or clear the patient of an oral or dental infection.

Submitters provided information regarding specific covered services that they believe could be associated with treatments for immunosuppressive therapy for the treatment of autoimmune disease and that may increase infection risk, such as:

• CPT codes 99212-99215: Evaluation and Management (E/M) Services.
• CPT codes 96365-96368: Infusion services.

Submitters also provided coding information related to drug therapies, such as CPT codes for immunosuppressant drugs, including:

• J0129: Abatacept (Orencia) for Rheumatoid Arthritis.
• J0135: Adalimumad (Humira) for Crohn's, Ulcerative Colitis, Rheumatoid Arthritis.
• J0490: Belimumab (Benlysta) for systemic lupus erythematosus (SLE), Lupus Nephritis, and Sjögren's.
• J0491: Anifrolumab-fnia (Saphnelo) for systemic lupus erythematosus (SLE).
• J1303: Ravulizumab-cwvz (Ultomiris) for Generalized Myasthenia Gravis.
• J1438: Etanercept (Enbrel) for Rheumatoid Arthritis, Ankylosing Spondylitis.
• J1595: Glatiramer (Copaxone) for Multiple Sclerosis.
• J1602: Golimumab (Simponi) for Rheumatoid Arthritis, UC, Ankylosing Spondylitis.
• J1745: Infliximab (Remicade) for Crohn's, Ulcerative Colitis, Rheumatoid Arthritis.
• J2250: Upadacitinib (Rinvoq) for Rheumatoid Arthritis, Ulcerative Colitis, Crohn's.
• J2323: Natalizumab (Tysabri) for Multiple Sclerosis.
• J2350: Ocrelizumab (Ocrevus) for Multiple Sclerosis.
• J3262: Tocilizumab (Actemra) for Scleroderma-associated lung fibrosis.
• J3357: Ustekinumab (Stelara) for Crohn's, Ulcerative Colitis, Psoriatic Arthritis.
• J3380: Vedolizumab (Entyvio) for Crohn's, Ulcerative Colitis.
• J3590: Secukinumab (Cosentyx) for Plaque Psoriasis.
• J7500: Azathioprine (Imuran) for Lupus, Crohn's, Sjögren's.
• J7517: Mycophenolate (Cellcept) for Lupus, Sjögren's.
• J9070: Cyclophosphamide (Cytoxan) for Sjögren's, Vasculitis.
• J9250: Methotrexate for Sjögren's, Rheumatoid Arthritis (unresponsive to other treatment).
• J9302: Ofatumumab (Kesimpta) for Multiple Sclerosis.
• J9312: Rituximab (Rituxan) for Rheumatoid Arthritis, Sjögren's.
• J9332: Efgartigimod (Vyvgart) for Myasthenia Gravis.

Submitters also provided coding information for potential medical services for medical treatment for pulmonary diseases when aspiration of dental pathogens risk or cause the initiation and/or recurrence of complications, such as:

• CPT codes 99212-99215: Evaluation and Management (E/M) Services.
• CPT code 99291: Critical Care Services.
• DRG code 177: Hospitalization for respiratory infections and inflammation.
• DRG code 190: COPD with complications.

Submitters also provided coding regarding medical treatment for dentally sourced dissecting maxillofacial space infections:

• CPT 41000: Intraoral incision and drainage of abscess.
• CPT 87181: Antibiotic susceptibility study.
• CPT 96365: Infusion of antibiotic.
• CPT codes 99281-99285: Emergency department services.
• CPT codes 99291-99292: Critical care services.
• DRG code 135: Sinus procedures with CC/MCC.
• DRG code 141: Major head and neck procedures with CC.
• DRG code 872: Hospitalization for septicemia or severe sepsis.

Submitters providing information through the public submissions process stated that if dental or oral infections are left undetected or untreated in the population of individuals undergoing immunosuppressive therapy for autoimmune disease, serious complications may occur and negatively impact the course and outcome of the covered medical procedures, which submitters state is analogous to previously finalized policies for dental services inextricably linked to covered cancer treatment for the patient. Several submitters pointed out that we stated in the CY 2024 PFS final rule that proceeding without a dental or oral exam of the mouth prior to chemotherapy could lead to systemic infection or sepsis, among other complications, and that similar outcomes can follow for those receiving immunosuppressive therapy to treat autoimmune diseases.

The submitters noted that in the CY 2024 PFS final rule, we described that AHRQ identified evidence to support that dental evaluation/treatment prior to cancer treatment led to decreased incidence and/or less severity of serious oral infections and complications like oral mucositis and encouraged CMS to explore this connection to confirm that dental evaluations and treatment prior to immunosuppressive therapy would lead to decreased incidence of serious oral infections in a similar fashion. The submitters also stated that they believe it is critical that beneficiaries with an autoimmune disease that requires immunosuppressive therapy have access to necessary dental services, as proper dental care for this population can reduce the incidence of serious infection and improve overall patient outcomes for the covered service.

We appreciate the evidence and information provided by submitters and agree that we should continue to research whether there is a connection between dental and oral evaluations and treatment prior to immunosuppressive therapy and outcomes for said therapies, including the potential decreased incidence of serious oral infections.

However, we seek comment on whether the level of immunosuppression utilized in the treatment of autoimmune diseases is analogous to the immunosuppression levels employed in the treatment of cancer. We believe that the level of immunosuppression for systemic autoimmune disease has different characteristics versus therapies utilized in chemotherapy used in the treatment of cancer. For example, the usage of monoclonal antibodies in the treatment of autoimmune disease may not render the same level of immunosuppression and subsequent susceptibility to infection as chemotherapy used in the treatment of cancer.

We also seek information on the connection between immunosuppressive therapy in the treatment of autoimmune disease and the likelihood of systemic infection and sepsis. Specifically, we seek information regarding the likelihood of dental and oral sources as the locus of the seeding of infection in this patient population. Additionally, we seek information regarding standards of care or clinical guidelines that recommend that a dental infection be addressed before proceeding with the immunosuppressive treatment or the administration of drugs or whether oral antibiotics would be prescribed to resolve the infection and that the therapy would advance without direct dental or oral services to address the infection.

We also seek information regarding whether there is differential impact between drugs that are administered in an office setting or similar versus those medications that are taken in an oral fashion.

We thank submitters for the information they provided through the public submissions process. We believe that additional information is necessary to consider whether there is an inextricable link between dental services and covered services to treat systemic autoimmune disease requiring immunosuppressive therapies and seek comment from the public. We remain open to considering any such services identified by public commenters, and, if sufficient evidence is presented, we may consider adding such services to § 411.15(i)(3) in the final rule.

5. Implementation of Payment for Dental Services Inextricably Linked to Other Specific Covered Services

In the CY 2024 PFS final rule (88 FR 79035 through 79039), we solicited comments on whether we should provide additional guidance that would aid in processing claims for dental services that are inextricably linked to a Medicare-covered medical service. Some commenters suggested the usage of a modifier on the dental claim format that would better identify when dental services are inextricably linked to specific covered medical services. As we continue to consider improvements to our payment policies and have gained experience around the provision of dental services inextricably linked to covered medical services, we have explored tools and resources that may help to facilitate the implementation and coordination of dental services that are currently covered under Medicare, including the possible usage of modifiers and diagnosis codes. The usage of modifiers on a dental claim would seek to identify the dental service as a service the billing practitioner identifies as inextricably linked to a specific covered medical service and for which there was an exchange of information, or integration, between the medical and dental professional (physician, including a dentist, or other non-physician practitioner) as specified in the CY 2023 PFS final rule (87 FR 69663 through 69688). We have explained that if there is no exchange of information, or integration, between the medical professional (physician or other non-physician practitioner) regarding the primary medical service and the practitioner furnishing the dental services, then there would not be an inextricable link between the dental and covered medical service within the meaning of our regulation at § 411.15(i)(3). Furthermore, integration between medical and dental professionals can occur when these professionals coordinate care. This level of coordination can occur in various forms such as, but not limited to, a referral or exchange of information between the medical professional (physician or non-physician practitioner) and the dentist. This coordination should occur between a dentist and another medical professional (physician or other non-physician practitioner) regardless of whether both individuals are affiliated with or employed by the same entity.

Currently, the KX modifier is submitted on a Medicare Part B claim to indicate that the service or item is medically necessary, and that the healthcare provider has included appropriate documentation in the medical record to support or justify the medical necessity of the service or item. We believe that usage of the KX modifier in the context of claims for dental services inextricably linked to covered services would be appropriate and support claims processing and program integrity efforts.

Based on comments received and summarized in the CY 2024 PFS final rule (88 FR 79037), interested parties requested that we provide more guidance on how a practitioner submitting claims for dental services can attest that the dental and medical services are inextricably linked, and that the criteria have been met to support payment. We believe that the use of the KX modifier would allow practitioners to signal that the dental services meet the criteria to support payment. Also, use of the KX modifier may improve the MACs' ability to ascertain the volume of claims that are being submitted for dental services inextricably linked to covered services.

Therefore we are proposing that, effective January 1, 2025, the KX modifier would be required for claims submission for dental services inextricably linked to covered medical services on both the dental claim format 837D and the professional claim format 837P. We are proposing that practitioners who bill for dental services for which they seek payment in accordance with § 411.15(i)(3) must include the KX modifier on the 837D or 837P claim to indicate that they believe that the dental service meets the established payment criteria; that the practitioner has included appropriate documentation in the medical record to support or justify the medical necessity of the service or item and that demonstrates the inextricable linkage to covered medical services; and that coordination of care between the medical and dental practitioners has occurred. To help with this transition to potentially requiring use of the KX modifier for claims submission for dental services inextricably linked to covered medical services beginning in 2025, practitioners now have the option to utilize the KX modifier as proposed, for services with dates of service in CY 2024. This optional usage in CY 2024 would not be mandatory and would serve to support both clinician and MAC claims processing activities. We intend to provide additional instruction and education through subregulatory guidance regarding this voluntary phase of the usage of the KX modifier on claims submitted for dental services inextricably linked to covered medical services. We seek comment on all aspects of this proposal.

While the KX modifier indicates that the services are medically necessary, the GY modifier (along with three other HCPCS denial modifiers) serves to indicate that a service is not covered because it is outside of the scope of Medicare coverage authorized by the statute. We reiterate that denial modifiers should be used when physicians, practitioners, or suppliers want to indicate that the item or service is statutorily non-covered.

Use of the GY modifier could support MAC efforts to adjudicate claims and remove from the claims processing pipeline those claims that do not require further processing. We are seeking comment on whether we should recommend the usage of the GY modifier on the 837D or 837P dental claim format in instances where a Medicare claim denial is sought for purposes of submission to third party payers or when the service does not fit within a Medicare benefit category and is statutorily excluded from coverage.

Additionally, in general, the Act and our regulations mandate the submission of diagnostic coding (for example, ICD-10 codes) on Medicare claims. Section 1842(p)(1) of the Act states that “each request for payment, or bill submitted, for an item or service furnished by a physician or practitioner specified in subsection (b)(18)(C) for which payment may be made under this part shall include the appropriate diagnosis code (or codes) as established by the Secretary for such item or service.” Under this section, each bill or request for payment for physicians' services under Medicare Part B must include the appropriate diagnostic code “as established by the Secretary” for each item or service for which the Medicare beneficiary received treatment. In the March 4, 1994 final rule entitled Medicare Program; Diagnosis Codes on Physician Bills, we codified that each bill or request for payment for a service furnished by a physician under Medicare Part B must include appropriate diagnostic coding for the diagnosis or the symptoms of the illness or injury for which the Medicare beneficiary received care and revised our regulations at § 424.32, Basic requirements for all claims, to state specifically that a claim for physician services must include appropriate diagnostic coding using diagnostic information (59 FR 10290).

Additionally, in the CY 2023 PFS final rule, we stated that dentists are included in the statutory definition of physician at section 1861(r)(2) of the Act and would generally be considered and treated as a physician for purposes of enrollment, compliance, and other administrative programs (87 FR 69673). Therefore, dentists, who are physicians for the purposes of the Medicare program, are required to submit diagnosis codes on claims for physician services as described in the statute and regulations. Furthermore, we note that diagnosis code information is currently required on the submission of the professional claim form 837P; professional claims lacking such information are returned to the healthcare provider and are not processed.

In the CY 2023 PFS final rule (87 FR 69679 through 69680), we acknowledged the need to address and clarify certain operational issues related to Medicare payment for dental services inextricably linked to covered services and noted that we were working to address these issues, including claims processing questions raised by the commenters. We stated that we anticipated resolving many of the additional operational issues raised by commenters potentially as soon as CY 2024, including efforts to adopt the dental claim form (837D). Similarly, in the CY 2024 PFS final rule (88 FR 79036), we stated that we continue to work to address issues raised by commenters, such as questions related to claims processing and efforts to accommodate the dental claim form within our claims processing systems, effective 2024. The efforts related to adopting the dental claim form are ongoing, and as efforts advance to address the implementation and functionality of claims processing systems for the dental claim form, we intend to provide appropriate guidance and education to interested parties.

We anticipate that our systems will be able to process claims submitted using the dental claim form 837D (OMB Control No. 0938-1471) by January 1, 2025. Consistent with the statutory and regulatory requirements discussed above, we intend to require a diagnosis code to be included on claims submitted for physicians' services for dental services inextricably linked to covered medical services on both the 837P and 837D formats, beginning on January 1, 2025. However, given the complexities related to the operational launch of and transition to the 837D dental claims format, we are also considering further delaying the requirement to include a diagnosis code on the 837D form. For example, interested parties have indicated that in current dental practice, claims processing systems may not require the submission of a diagnosis code on claims for dental services, and therefore dental practices may need time to adjust to this requirement for the 837D form. We believe that it may be appropriate to delay this requirement for a limited time to support clinicians and billing entities as they seek to change their workflows and transition to using the 837D form. We seek comment on our intention to require the inclusion of a diagnosis code on the 837D form beginning on January 1, 2025. We are particularly interested in any operational challenges that interested parties may face in attempting to comply, as well as other considerations that we should take into account with regard to the timing of this requirement.

In the CY 2023 PFS final rule, we stated that we believed that MACs are appropriately situated to establish contractor prices for dental services inextricably linked to covered services until we have additional pricing data that could enable national pricing (87 FR 69680). Therefore, dental services inextricably linked to covered services are currently contractor priced. However, we have received feedback from the MACs regarding pricing information for dental services inextricably linked to covered services, and the MACs have requested information that would support their efforts to assign payment amounts for such dental services. The MACs retain broad flexibility with respect to assigning payment amounts to claims for dental services inextricably linked to covered services; however, we seek to facilitate the sharing of available pricing information with the MACs for these purposes. Thus, we seek comment from the public on potential sources of payment information for the pricing of dental services inextricably linked to covered services. We note, for example, that publicly available data (such as Fair Health cost data) are available for purchase; however, we understand that this information may not directly inform payment amounts in a manner useful for the payment of Medicare claims for dental services. According to Fair Health's website, cost estimate information is based on claims for medical and dental services paid for by private insurance plans, including the country's largest insurers. We are also aware of other fee schedules, such as those used by state governments for state employees, or discount fee schedules, such as discount dental programs (for example, https://www.dentalbenefitprogram.com/groupfees.php?id=NEV ). We aim to support the ongoing efforts by the MACs to price these services and seek any information from the public that may serve to support and inform the MAC development of payment amounts for dental services inextricably linked to covered services.

6. Request for Information: Services Associated With Furnishing Oral Appliances Used for the Treatment of Obstructive Sleep Apnea

Section 1861(s) of the Act defines the term “medical and other health services” that may be covered under Medicare, including physicians' services under section 1861(s)(1), services and supplies furnished incident to a physician's professional service under section 1861(s)(2)(A), and durable medical equipment (DME) under section 1861(s)(6) of the Act.

In addition to the statutory definition of DME, § 414.202 of our regulations defines DME as equipment furnished by a supplier or a home health agency that meets the following conditions:

• Can withstand repeated use.
• Effective with respect to items classified as DME after January 1, 2012, has an expected life of at least 3 years.
• Is primarily and customarily used to serve a medical purpose.
• Generally is not useful to an individual in the absence of an illness or injury.
• Is appropriate for use in the home.

For items to be considered DME, all five criteria of the definition must be met. The CMS policies for determining whether an item meets the definition of DME are further outlined in the Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 15, section 110.1. With respect to the first and second criteria, DME items must be able to withstand repeated use in the home, potentially by successive patients.

Different types of oral appliances are fabricated and furnished by licensed dentists (DDS or DMD) to reposition oral and pharyngeal tissues in an effort to create and maintain a patient's airway during sleep for treatment of obstructive sleep apnea. Obstructive sleep apnea is a medical disorder in which a person frequently stops breathing during sleep. It results from an obstruction of the upper airway during sleep that occurs because of inadequate motor tone of the tongue and/or airway dilator muscles. A treating practitioner may prescribe use of an oral appliance as the first line of treatment for obstructive sleep apnea, or in cases where other treatments, such as use of a continuous positive airway pressure (CPAP) device and/or bi-level positive airway pressure device have been tried and failed.

The following two HCPCS Level II codes were established effective January 1, 2006, for these devices:

• E0485 “Oral device/appliance used to reduce upper airway collapsibility, adjustable or non-adjustable, prefabricated, includes fitting and adjustment”.
• E0486 “Oral device/appliance used to reduce upper airway collapsibility, adjustable or non-adjustable, custom fabricated, includes fitting and adjustment”.

A very limited subset of custom fabricated oral appliances used to treat obstructive sleep apnea (HCPCS code E0486) have been covered for Medicare beneficiaries by the Durable Medical Equipment Medicare Administrative Contractors (DME MACs) under the DME benefit. These devices are considered durable equipment by the DME MACs because of the presence of a fixed mechanical hinge.

An additional HCPCS code was established effective April 1, 2022, to describe custom fabricated oral appliances without a fixed mechanical hinge:

• K1027 “Oral device/appliance used to reduce upper airway collapsibility, without fixed mechanical hinge, custom fabricated, includes fitting and adjustment”.

The DME MACs have not covered any of the prefabricated devices (HCPCS code E0485) based on a determination that there is insufficient evidence to support that these items are effective therapy for obstructive sleep apnea. The DME MAC Local Coverage Determination for the devices is available at https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?lcdId=33611&ver=25 .

For several years, manufacturers of products without fixed mechanical hinges that dentists use in custom fabricating oral appliances have raised concerns regarding why their versions of the custom fabricated oral appliances have not been classified as DME. There have been an increasing number of requests for HCPCS codes and Medicare benefit category determinations from several different manufacturers of these products. Using the public meeting consultation process outlined in regulations at § 414.240, we obtained public consultation regarding these various products. National Medicare benefit category determinations have not been established for these appliances because we have not been able to confirm that any of the custom fabricated devices can withstand repeated use. As indicated above, equipment must be able to withstand repeated use in order to be classified as DME, which means they are items that can normally be rented and used by successive patients (repeated use).

We are not aware of any oral appliances used to treat obstructive sleep apnea, regardless of whether they include a fixed mechanical hinge, that are prefabricated, or custom fabricated, and can withstand repeated use. These are oral appliances that do not seem to be the kind of equipment that could potentially be rented and used by successive patients. In addition, national fee schedule amounts have not been established for the devices with the mechanical hinge because of complexities related to pricing of the professional services of the dentist that are integral to the fabrication and furnishing of the device. The DME MACs have been paying claims for devices they have been covering as DME under code E0486 using local fee schedule amounts. Before making a final determination regarding whether these devices could be classified as DME, we are requesting information that would help us determine if oral appliances used to treat obstructive sleep apnea can withstand repeated use (furnished as rental equipment for use by successive patients).

As described in section II.J.1.a. of this proposed rule, section 1862(a)(12) of the Act generally precludes payment under Medicare Parts A or B for any expenses incurred for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth. Oral sleep apnea appliances and similar appliances are used in the direct treatment of sleep apnea. A treating practitioner may prescribe the use of an oral sleep apnea appliance as the first line of treatment for obstructive sleep apnea, a medical condition, or in instances where other treatments, such as use of a CPAP device and/or bi-level positive airway pressure device have been tried and failed. Therefore, we believe that these appliances and related services, while utilized in the mouth and situated on the teeth, would not be considered services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting the teeth. Rather, we believe that oral sleep apnea appliances, when prescribed by a practitioner for the treatment of a medical condition such as obstructive sleep apnea, as medically reasonable and necessary and therefore may be payable by Medicare. Further, we believe that payment for oral sleep apnea appliances would not fall within the payment policy for dental services inextricably linked to covered medical services, as the appliances are not services for dental care, but are instead services and supplies for the purposes of directly treating a medical condition unrelated to teeth or structures directly supporting the teeth (for example, sleep apnea).

The statutory definition of physician includes a doctor of dental surgery or of dental medicine in section 1861(r)(2) of the Act, and, to the extent payment for dental services is not precluded under section 1862(a)(12) of the Act, medically necessary services furnished by a dentist may be covered and paid as physicians' services under section 1861(s)(1) and (2), and section 1848 of the Act.

We are requesting information regarding the types of services furnished by a dentist or other practitioner related to oral sleep apnea appliances. Specifically, we are seeking information regarding details that may inform or support a future proposal regarding a code assignment for services related to oral sleep apnea appliances under the Medicare physician fee schedule.

We are requesting details and information regarding the services related to the furnishment of oral appliances used to treat obstructive sleep apnea, as described in the questions below:

• Patient eligibility criteria: to whom is the service related to the furnishing of oral appliances being provided? How is the nuisance snorer differentiated from the medical condition of sleep apnea? What criteria are used to determine whether the provision of these services may be medically reasonable and necessary?
• Services provided: What is the service definition for oral sleep apnea appliances? Is a bundle of services provided? If yes, what services are included in the bundle? What does the process for evaluating, furnishing, and fitting of oral sleep apnea appliances involve? What work is involved? Which elements of the services are essential (particularly in terms of what work is essential to the effectiveness of the device)? What are the costs associated with providing these services? What are the payment amounts for these services?
• Timing of services: What is the service period? Are the services provided over a period of time? Are services timed in any way?
• Practitioner type: Who provides these services? What credentialing is required? Is supervision required? Who would be billing for these services? Would incident to payment policy rules apply?
• Location of services: Where and how are services for oral sleep apnea appliances provided? Are all services provided in an in-person setting? Does the patient have to be present for all elements of this service? Does the service involve direct contact with the patient in each instance?
• Considerations for Telehealth: Are any of these services provided, or capable of being provided, via telehealth?
• Site of service: Can services related to oral sleep apnea appliances be provided by hospital-based physicians?
• Other considerations: What billing procedures exist for these oral sleep apnea appliances? What existing and/or additional coding may currently describe these types of services? In addition to the HCPCS Level II codes described above (for example, E0485 and E0486), we believe that the CDT codes D9947 through D9957 may describe both the fabrication of the appliance as well as services provided during and after fabrication.

We will review any information provided by the public and consider potential refinements to PFS payment policy accordingly. We reiterate that we do not believe the evaluation services or fabrication and fitting of oral sleep apnea appliances by dentists or other physicians or non-physician practitioners would be subject to the prohibition on payment for dental services under section 1862(a)(12) or the payment policy for dental services inextricably linked to covered services. However, we seek information regarding the services associated with the provision of these appliances and may consider code creation or other refinements in the context of the Medicare physician fee schedule. Additionally, we note that as described in section II.C. of this proposed rule, individuals and groups may nominate codes that they believe may be potentially misvalued codes through our public nomination process for potentially misvalued codes, which was established in the CY 2012 PFS final rule with comment period (76 FR 73026, 73058 through 73059). Individuals could consider nominating codes related to oral sleep apnea appliances for consideration under this process. Nominations may be submitted to CMS in one of two ways: via email or through postal mail. Email submissions should be sent to the CMS email box at MedicarePhysicianFeeSchedule@cms.hhs.gov, with the phrase “Potentially Misvalued Codes” and the referencing CPT code number(s) and/or the CPT descriptor(s) in the subject line. Physical letters for nominations should be sent via the U.S. Postal Service to the Centers for Medicare & Medicaid Services, Mail Stop: C4-01-26, 7500 Security Blvd., Baltimore, Maryland 21244. Envelopes containing the nomination letters must be labeled “Attention: Division of Practitioner Services, Potentially Misvalued Codes.” Nominations for consideration in our next annual rule cycle should be received by our February 10th deadline.

K. Payment for Skin Substitutes

In the CY 2023 PFS proposed rule (87 FR 46027 through 46029), we outlined several objectives related to refining skin substitute policies under Medicare, including: (1) ensuring a consistent payment approach for skin substitute products across the physician office and hospital outpatient department settings; (2) ensuring that appropriate HCPCS codes describe skin substitute products; (3) using a uniform benefit category across products within the physician office setting, regardless of whether the product is synthetic or comprised of human or animal-based material, to incorporate more consistent payment methodologies; and (4) maintaining clarity for interested parties on CMS skin substitutes policies and procedures. When considering potential changes to policies involving skin substitutes, we noted that we believe it would be appropriate to take a phased approach over multiple rulemaking cycles to examine how we could appropriately incorporate skin substitutes as supplies under the PFS ratesetting methodology. After receiving feedback from commenters requesting more information on how CMS intends to achieve a consistent payment approach for skin substitute products, we did not finalize any policies in the CY 2023 PFS final rule.

In alignment with our objectives, in the CY 2024 PFS final rule, we solicited comments on different approaches CMS could use to identify appropriate practice expense (PE) direct costs for skin substitute products, such as reviewing various sources for price information, including performing market research, reviewing invoices submitted by interested parties, or cost information on Medicare claims. Discussing these approaches in the CY 2024 PFS final rule provided interested parties with more details about payment mechanisms CMS is considering under our PFS ratesetting methodology.

The CY 2024 PFS proposed rule did not contain a specific proposal for changing how skin substitute products are paid under the PFS; however, we continue to pursue our objectives for refining skin substitute payment policies under Medicare, as mentioned above. More specifically, we continue examining ways to treat skin substitute products as incident-to supplies under the PFS ratesetting methodology. Additionally, we believe continuing this dialogue with interested parties on payment for skin substitute products will help inform potential policy changes for future rulemaking.

We recognize that skin substitute products may vary in composition, size, and applicability and will continue to consider these distinct characteristics in proposing a consistent payment approach and policy. We also note an increase in HCPCS Level II coding request applications for newly developed skin substitute products and are considering broadly all of our relevant payment policies. Such policies, for example, include the discarded drug refund policy and the Part B drug inflation rebate policy and how these policies may align with the usage and payment for skin substitute products. In the CY 2024 PFS final rule (88 FR 79060 through 79061), we finalized that billing and payment codes that describe products currently referred to as skin substitutes are not counted for identifying refundable drugs for calendar quarters during 2023 and 2024. While we continue to consider making changes to the Medicare Part B payment policies for such products, similar to last year, for CY 2025, we are proposing that billing and payment codes that describe products currently referred to as skin substitutes would not be counted for purposes of identifying refundable drugs for calendar quarters in 2025. We plan to revisit discarded drug refund obligations for skin substitutes in future rulemaking. In section III.I. of this proposed rule, CMS is proposing to codify existing policy by including products currently referred to as skin substitutes on the list of product categories that are not considered Part B rebatable drugs in proposed § 427.101(b)(5).

III. Other Provisions of the Proposed Rule

A. Drugs and Biological Products Paid Under Medicare Part B

1. Requiring Manufacturers of Certain Single-Dose Container or Single-Use Package Drugs to Provide Refunds with Respect to Discarded Amounts (§§ 414.902 and 414.940)

a. Background

Section 90004 of the Infrastructure Investment and Jobs Act (Pub. L. 117-58, November 15, 2021) (hereinafter referred to as “the Infrastructure Act”) amended section 1847A of the Act to redesignate subsection (h) as subsection (i) and insert a new subsection (h), which requires manufacturers to provide a refund to CMS for certain discarded amounts from a refundable single-dose container or single-use package drug (hereinafter referred to as “refundable drug”) for calendar quarters beginning January 1, 2023.

In the CY 2023 PFS final rule (87 FR 69710 through 69734), we finalized many policies to implement this provision. First, we finalized the requirement that billing providers and suppliers report the JW modifier for all separately payable drugs and biologicals (hereinafter referred to as “drugs”) with discarded drug amounts from single use vials or single use packages payable under Part B, beginning January 1, 2023 (87 FR 69719). We also finalized the requirement that billing providers and suppliers report the JZ modifier for all such drugs with no discarded amounts beginning no later than July 1, 2023, and we stated that we would begin claims edits for both the JW and JZ modifiers beginning October 1, 2023 (87 FR 69718 through 69719). After the issuance of the CY 2023 PFS final rule, CMS published a JW Modifier and JZ Modifier Policy Frequently Asked Questions (FAQ) document to provide further guidance on the correct use of these modifiers.

Second, we adopted a definition of “refundable single-dose container or single-use package drug” at § 414.902, which also specifies exclusions from this definition (87 FR 69724). These three exclusions are: radiopharmaceutical or imaging agents, certain drugs requiring filtration, and drugs approved by FDA on or after November 15, 2021 for which payment has been made under Part B for fewer than 18 months.

Third, regarding reports to manufacturers, we specified that we would send reports (including information described in section 1847A(h)(1) of the Act) for each calendar quarter, on an annual basis, to each manufacturer of a refundable drug (87 FR 69726).

Fourth, we finalized how the refund amount will be calculated, which is specified in regulation at § 414.940 (87 FR 69731). We stated we would issue a preliminary report based on available claims data from the first two quarters of CY 2023 to provide manufacturers information regarding discarded amounts of refundable drugs prior to the initial refund report (87 FR 69725). In these reports, which were sent in December of 2023, we included preliminary information on estimated discarded amounts of refundable drugs for each labeler code based on available claims data from the first 2 quarters of CY 2023 for any refundable drug for which discarded units were billed using the JW modifier. More information about discarded drugs, including the discarded drug refund and the JW and JZ modifier policy, can be found at https://www.cms.gov/medicare/payment/part-b-drugs/discarded-drugs.

Fifth, we addressed drugs with unique circumstances for which we can, through notice-and-comment rulemaking, increase the applicable percentage otherwise applicable for determining the refund. Section 1847A(h)(3)(B)(ii) of the Act provides that, in the case of a refundable drug that has unique circumstances involving similar loss of product as that described in section 1847A(h)(8)(B)(ii) of the Act, the Secretary may increase the applicable percentage otherwise applicable as determined appropriate by the Secretary. We adopted an increased applicable percentage of 35 percent for drugs reconstituted with a hydrogel and with variable dosing based on patient- specific characteristics (87 FR 69731). Lastly, we adopted a dispute resolution process through which manufacturers can challenge refund calculations, and we established enforcement provisions, including manufacturer audits, provider audits, and civil money penalties required by statute (87 FR 69732 through 69734).

In the CY 2024 PFS final rule (88 FR 79047 through 79064), we finalized the date of the initial refund report to manufacturers, the date for subsequent reports, method of calculating refunds for discarded amounts in lagged claims data, method of calculating refunds when there are multiple manufacturers for a refundable drug, increased applicable percentages for certain drugs with unique circumstances, and a future application process by which manufacturers may apply for an increased applicable percentage for a drug, which would precede proposals to increase applicable percentages in rulemaking.

We also finalized that drugs separately payable under Part B from single-dose containers that are furnished by a supplier who is not administering the drug are required to be billed with the JZ modifier, since we believe it is unreasonable to collect discarded drug data from beneficiaries. We were concerned that claim rejections may occur in the absence of a claims modifier to designate that a drug was dispensed, but not administered, by the billing supplier.

b. Application for Increased Applicable Percentage

Section 1847A(h)(3)(B)(ii) of the Act permits the Secretary to increase the applicable percentage for a refundable drug that has unique circumstances through notice and comment rulemaking. In the CY 2024 PFS final rule (88 FR 79057 through 79060), we finalized an application process (CMS-10835, OMB 0938-1435) by which manufacturers could apply for an increased applicable percentage for a drug and may request that we consider an individual drug to have unique circumstances for which an increased applicable percentage is appropriate. We explained that manufacturers could benefit from a formal process through which they can provide information, including that which may not be publicly available, in order to request an increase in their refundable drug's applicable percentage and provide justification for why the drug has unique circumstances for which such an increase is appropriate, including in the case of a drug with an applicable percentage that has already been increased by virtue of its unique circumstances. We finalized the application deadline of February 1 of each year, adopted a deadline of August 1 for the FDA-approval of the drug and the deadline for notifying and submitting the FDA-approved label to CMS of September 1 of the year before the year in which the increased applicable percentages would apply. We codified this process in regulation at § 414.940(e). The application process requires the applicant to provide a written request comprising FDA-approved labeling for the drug; justification for the consideration of an increased applicable percentage based on such unique circumstances; and justification for the requested increase in the applicable percentage.

We received one application for increased applicable percentage for CY 2025 from the manufacturer of Leukine® (sargramostim). Leukine® is a leukocyte growth factor that is primarily used in hematological malignancies to increase white blood cell counts. The applicant submitted the information required under § 414.940(e)(1), including its justification for consideration for increased applicable percentage, and justification for the requested applicable percentage of 72 percent. The applicant did not submit FDA-approved labeling for the drug for the particular adjuvant uses described in the application (further described below in this paragraph) due to ongoing cancer vaccine adjuvant trials. The applicant states that there are several manufacturers in late-stage (Phase II and Phase III) development using Leukine® as a vaccine adjuvant in oncology indications, specifically in stimulating the immune response of dendritic cells when used alongside these vaccines. Cancer treatment vaccines are different from the vaccines that work against viruses (for example, influenza). These vaccines try to get the immune system to mount an attack against cancer cells in the body. Instead of preventing disease, they are meant to get the immune system to attack a disease that already exists. The applicant stated that it has no ownership stake in the development of these vaccines and does not possess control or influence over the design and execution of the clinical trials. The estimated completion dates for Phase III clinical trials vary, with the earliest expected in March 2025 and the latest in March 2029. The adjuvant use of Leukine® in predetermined dosage introduces a new use of the drug that is distinct from its six FDA-approved indications, all of which have dosages that are based on body weight or body surface area (BSA). The adjuvant use dosages of Leukine® in clinical trials are generally much smaller than dosages for indications in the FDA-approved labeling. The smallest dose of Leukine® used for vaccine adjuvant purposes of which the applicant is aware (that is, 70 mcg) would lead to as much as 72 percent of the drug being discarded from a single-dose 250 mcg lyophilized vial, which is the only size available commercially. The applicant suggested that if use of these small doses were to become more common, the percentage of discarded units could increase the discarded drug refund amount that could be owed by the applicant, even though the applicant lacks control or knowledge of the potential variability of the discarded amounts that may occur if Leukine® were used for such purposes. If an FDA approval for adjuvant use of Leukine® were to occur by another manufacturer, the available presentations of Leukine® would likely not be optimized for the small doses being studied in these trials.

As part of CMS's review of the application, we analyzed existing claims data from the first quarter of 2023 through the first quarter of 2024 and found the percentage of units discarded for the Healthcare Common Procedure Coding System (HCPCS) code for Leukine® (J2820) ranged from 1.2 percent to 3.8 percent, which is below the applicable percentage of 10 percent. Since we do not yet know the impact of a new adjuvant indication with a type of immunotherapy commonly referred to as cancer vaccines on the current percentage of units discarded, we are not proposing an increased applicable percentage without additional information. Because it is not yet known whether Leukine® will be approved for additional indications with varying dosage requirements and the information provided by the applicant; and available data does not provide enough information for CMS to determine whether Leukine® has unique circumstances that would prompt an increase in the applicable percentage, we are not proposing an increase in the applicable percentage for the drug at this time.

The applicant may reapply in a future application cycle when more information becomes available.

c. Clarifications for the Definition of Refundable Single-Dose Container or Single-Use Package Drug

(1) Exclusions for Drugs for Which Payment Has Been Made Under Part B for Fewer Than 18 Months

Section 1847A(h)(8)(B)(iii) of the Act excludes from the definition of refundable drug a drug approved or licensed by FDA on or after November 15, 2021, and for which payment has been made under Part B for fewer than 18 months. This is codified in the definition of refundable single-dose container or single-use package drug in § 414.902. In the CY 2023 PFS final rule (87 FR 69720 through 69731), we finalized that the 18-month period begins on the first day of the calendar quarter following the date of first sale as reported to CMS for the first National Drug Code (NDC) assigned to the HCPCS code. We expected that the first date of sale would approximate the date of payment of the first Part B claim, and we finalized that we would use the first date of sale because it is more operationally feasible than identifying the date when the first Part B claim was paid for a new drug. We did not receive any opposing comments to this approach when the policy was proposed (87 FR 69719 through 69724). Since then, however, we have found one instance where the date of first sale for a drug, as reported to CMS, does not adequately approximate the first date for which payment was made under Part B.

We propose that, while we would continue to use the first date of sale reported to CMS for most refundable drugs, we would use the date on which the drug is first paid under Part B if the date of first sale as reported to CMS does not adequately approximate the first date of payment under Part B due to an applicable National Coverage Determination (NCD). Under the exception, the first date for which the drug is actually paid under Part B (not the date of first sale) would be used to determine the beginning of the 18-month exclusion period.

For example, in the case of Leqembi® (lecanemab-irmb), the second drug targeting cerebral amyloid-beta plaques in Alzheimer's disease to receive FDA approval, the first date of sale reported to CMS via the Average Sales Price (ASP) portal was in January 2023, as it was marketed and sold under accelerated approval granted on January 6, 2023. However, because Leqembi® is subject to the NCD for Monoclonal Antibodies Directed Against Amyloid for the Treatment of Alzheimer's Disease under coverage with evidence development (CED), and because Leqembi® was initially marketed and sold under accelerated approval, Leqembi® coverage under Part B required the product to be furnished in a randomized controlled trial (RCT) conducted under an investigational new drug (IND) application. In public comments on the CY 2024 proposed rule, the manufacturer of Leqembi® explained that Leqembi®'s Phase III confirmatory trial was already fully enrolled and complete prior to FDA granting accelerated approval, and as such, there was no RCT in which to enroll Medicare beneficiaries. Leqembi® received traditional approval on July 6, 2023. The first Part B payments for Leqembi® did not occur until after traditional FDA approval of the drug on July 6, 2023, and Medicare paid for the drug beginning that month in CED studies using a registry. Under policies finalized in the CY 2023 PFS final rule, the 18-month exclusion period for Leqembi® would begin on April 1, 2023, which marks the first day of the calendar quarter after the drug's first date of sale as reported to CMS in January 2023. We believe that, in this situation, our current policy of using the date of first sale as reported in ASP data does not adequately approximate the beginning of the 18-month period for which payment has been made for the drug under Part B.

Under this proposed rule, the 18-month exclusion for Leqembi® would be October 1, 2023, through March 31, 2025 (that is, six full calendar quarters following the date that the drug was first paid under Medicare Part B).

To maintain operational feasibility of this provision and better align the policy with statutory language when the date of first sale reported to CMS does not adequately approximate the date of first payment under Medicare Part B, we are proposing to amend the exclusions in the definition of refundable single-dose container or single-use package drug at § 414.902. We note that we are also proposing to revise the structure of the definition of Refundable single-dose container or single-use package drug and as part of that restructuring, we are proposing that exclusions would be defined at paragraph (2) of the definition. Moreover, we are proposing to add a fourth exclusion to paragraph (2) to address drugs for which the date of first sale does not adequately approximate the first date of payment under Part B due to an applicable NCD. We anticipate that instances of inadequately approximating the date of first payment under Medicare Part B based on the date of first sale due to an applicable NCD will be rare, as coverage of a drug under Part B is not often restricted by an NCD.

(2) Clarification for Identifying Single-Dose Containers

In the CY 2023 PFS final rule (87 FR 69719), we finalized that the definition of refundable drug would apply to drugs paid under Medicare Part B (that is, under any payment methodology) that are described in FDA-approved labeling as being supplied in a “single-dose” container or “single-use” package. This definition also includes drugs described in FDA-approved labeling as a part of a “kit” that is intended for a single dose or single use. We also finalized that for a drug to meet the definition of refundable drug, all NDCs assigned to the drug's billing and payment code must be single-dose containers, as described in each product's labeling.

During our analysis in identifying refundable drugs for the preliminary reports (which are based on available JW modifier data from the first and second quarters of 2023), we learned that some product labeling does not specify the package type terms (for example, whether the product is supplied in a single-dose or single-use package or a multiple-dose preparation). This may occur in drugs that were approved prior to October 2018 because at that time, FDA issued guidance regarding the selection of the appropriate package terms to address bacterial and viral infections among patients resulting from improper use of single-dose containers such as vials, ampules, and prefilled syringes. The guidance defines a single-dose container as a container of a sterile medication for parenteral administration (injection or infusion) that is not required to meet the antimicrobial effectiveness testing requirements. The guidance further states a single-dose container is designed for use with a single patient as a single injection/infusion and, when space permits, the label should include the correct package type term and appropriate discard statements. Discard statements include instruction for discarding or, if appropriate, storage guidance for drugs remaining after preparation. The guidance defines a multiple-dose container as a container of sterile medication for parenteral administration that has met antimicrobial effectiveness testing requirements or is excluded from such testing requirements. In addition, the guidance defines the term “single-patient-use” container, which describes a package that contains multiple doses of an injectable medical product that is intended to be used in a single patient.

Some drugs approved prior to the release of this guidance (that is, those prior to October 2018) and some Orphan drugs do not include the package type terms and explicit discard statements. Examples of drugs without the package type terms and discard statements include certain manufacturers of digoxin (approved in 1954), oxytocin (approved in 1980), diphenhydramine (approved in 1982), phenobarbital (orphan drug without FDA approval). Several of these drugs are available in small containers with only a few mL of labeled drug in the containers.

In this proposed rule, we are proposing to include injectable drugs with a labeled volume of 2 mL or less and that lack the package type terms and explicit discard statements in their product labeling to be single-dose containers in the definition of refundable single-dose container or single-use package drugs. We identified 2 mL as a threshold for this proposal for several reasons. For intramuscular administration, the maximum volume administered at one time for diphenhydramine and digoxin is less than or equal to 2 mL. We also note that for adults, the maximum volume for intramuscular administration is typically limited to 3 mL. For drugs administered intravenously and supplied in containers containing 2 mL or less, like digoxin and phenobarbital, dosages are calculated based on body weight, potentially leading to discarded amounts. We believe that preparation of these drugs would likely be used for a single dose based on the range of dose sizes for these drugs and the amount of drug in the container. In other words, it is unlikely that more than one dose could be prepared from the amount of drug in the container.

Another category of drugs approved before 2018 that lack discard statements is drugs contained in ampules (also spelled as ampoules or ampuls, hereinafter referred to as “ampules”). The term ampule is an airtight vial made of glass, plastic, metal, or any combination of these materials. Examples of drugs currently contained in ampules include epinephrine (approved in 1939), lidocaine hydrochloride (1948), dicyclomine (1950), digoxin (1954), chlorpromazine (1957), fentanyl citrate (1968), promethazine (1973), alprostadil (1981), nalbuphine (1993), and tacrolimus (1994). Drugs contained in ampules are accessed by breaking the concaved part (“the neck”), and the content should be passed through a sterile filter to remove any residual glass particles.

Therefore, we are proposing to amend the definition of refundable single-dose container or single-use package drug to include drugs contained in ampules and for which there is no discard statement. We are proposing to classify drugs supplied in ampules to be drugs in single-dose containers for purposes of this discarded drug policy because this approach would be consistent with the description of single-dose container in the October 2018 FDA guidance. We note that some drugs contained in ampules may be excluded from the definition of refundable drug under section 1847A(h)(8)(B)(ii) of the Act because dosage and administration instructions included in the product labeling require filtration during the drug preparation process, prior to dilution and administration, and require that any unused portion of such drug after the filtration process be discarded after the completion of such filtration process. This exclusion would still be applicable for ampules that can demonstrate that they meet that exclusion. However, this is not the case for the product labeling of all drugs contained in ampules.

In summary, we are proposing to amend the definition of Refundable single-dose container or single-use package drug at § 414.902 by including “single-patient-use container” as a package type term and adding three types of products that may be considered refundable single-dose container or single-use package drugs under paragraph (1). These are:

(1) Product furnished from a single-dose container or single-use package based on FDA-approved labeling or product information.

(2) Product furnished from an ampule for which product labeling does not have discard statement or language indicating the package type term, like “single-dose container,” “single-use package,” “multiple-dose container,” or “single-patient-use container”.

(3) Product furnished from a container with a total labeled volume 2 ml or less for which product labeling does not have language indicating the package type term, like “single-dose container,” “single-use package,” “multiple-dose container,” or “single-patient-use container”.

As noted above, we are also revising the organization of this definition in the regulatory text. We welcome comments on these proposals.

(3) Skin Substitutes

As discussed in the CY 2023 PFS final rule (87 FR 69650 through 69655), CMS aims to create a consistent coding and payment approach for the suite of products currently referred to as skin substitutes. In the CY 2024 PFS final rule (88 FR 79060 through 79061), we finalized that billing and payment codes that describe products currently referred to as skin substitutes are not counted for purposes of identifying refundable drugs for calendar quarters during 2023 and 2024. While we continue to consider making changes to the Medicare Part B payment policies for such products, similar to last year, for CY 2025, we are proposing again that billing and payment codes that describe products currently referred to as skin substitutes not be counted for purposes of identifying refundable drugs for calendar quarters in 2025. We plan to revisit discarded drug refund obligations for skin substitutes in future rulemaking. More information regarding the payment of skin substitutes is available in section II.K. of this proposed rule.

d. Discarded Amounts

Effective January 1, 2017, providers and suppliers were required to report the JW modifier on all claims that bill for drugs separately payable under Medicare Part B with unused and discarded amounts (that is, discarded amounts) from single-dose containers or single-use packages. In the CY 2023 PFS, we finalized the requirement to use the JW modifier for single-dose container drugs that are separately payable under Part B, and we finalized the use of the JW modifier (or any successor modifier that includes the same data) to identify discarded billing units of a billing and payment code for the purpose of calculating the refund amount as described in section 1847A(h)(3) of the Act. In that final rule, to align with the JW modifier policy, we also finalized the requirement that, beginning July 1, 2023, the JZ modifier is required when there are no discarded amounts of a single-dose container drug for which the JW modifier would be required if there were discarded amounts.

In the CY 2023 PFS final rule (87 FR 69723), we discussed the applicability of the JW and JZ modifiers to drugs that are not administered by the billing supplier, including drugs furnished through a covered item of DME that may be administered by the beneficiary. In such cases, we stated that the reporting requirement does not apply to drugs that are self-administered by a patient or caregiver in the patient's home. In the JW Modifier and JZ Modifier Policy FAQ document released on January 5, 2023, we reiterated that suppliers who dispense but do not actually administer a separately payable drug are not expected to report the JW or JZ modifier.

Then, in the CY 2024 PFS final rule (88 FR 79062), we finalized a change to this policy, such that drugs separately payable under Part B from single-dose containers that are furnished by a supplier who is not administering the drug be billed with the JZ modifier. This meant that the JW modifier would not be used on these claims. As we stated in that rule, in the absence of a claims modifier to designate that a drug was dispensed, but not administered, by the billing supplier (as finalized in the CY 2023 PFS), we were concerned that claims rejections may occur. Therefore, this change in policy required the JZ modifier on all such claims to ensure claims rejections did not occur unnecessarily. On October 16, 2023, we updated the JW Modifier and JZ Modifier Policy FAQ document to include the requirement of the JZ modifier by the supplier.

However, after this policy was finalized, interested parties have requested further clarification on how to appropriately bill for discarded amounts from single-dose containers when there are amounts discarded during preparation by the billing supplier who is not administering the drug. To provide additional clarity, we are now proposing to require the JW modifier if a billing supplier is not administering a drug, but there are amounts discarded during the preparation process before supplying the drug to the patient. Such a supplier would report the JZ modifier if no amounts were discarded during the preparation process before supplying the drug to the patient.

We believe this proposal is appropriate because drug preparation occurs before supplying a drug to the beneficiary and the billing supplier can determine the discarded amount at the site of drug preparation. These discarded units should be billed using the JW modifier in the same way as a drug that is administered incident-to physician service. In addition, suppliers and other interested parties have expressed that suppliers are accustomed to using the JW modifier in this context already. Therefore, we propose to require the JW modifier if a billing supplier is not administering a drug, but there are amounts discarded during the preparation process before supplying the drug to the patient. For example, if a billing supplier prepares a dose from a single-dose vial labeled as containing a total of 50 billing units such that 45 billing units of the drug are used in the prepared dose and 5 billing units are discarded during preparation, and then the drug is supplied to the patient (but not administered by the supplier), the claim should be submitted on two lines: 45 units (without a modifier) and 5 units with the JW modifier. We reiterate that suppliers who dispense a drug, but do not actually administer the drug, are not expected to monitor or bill for discarded amounts that are discarded after the drug is supplied because they are not at the site of administration to measure discarded amounts. For example, if the patient who was supplied the above dose with 45 billing units subsequently only receives 35 of those billing units, the above billing supplier would not be expected to account for the 10 subsequently discarded billing units on the claim.

We welcome comments on this proposal.

2. Payment Limit Calculation When Manufacturers Report Negative or Zero Average Sales Price (ASP) Data (§ 414.904)

a. Background

Drugs payable under Medicare Part B fall into three general categories: those furnished incident to a physician's service (hereinafter referred to as “incident to”) (section 1861(s)(2) of the Act), those furnished via a covered item of durable medical equipment (DME) (section 1861(s)(6) of the Act), and other drugs for which coverage is specified by statute (for example, certain vaccines described in sections 1861(s)(10)(A) and (B) of the Act). Payment limits for most drugs separately payable under Medicare Part B are determined using the methodology in section 1847A of the Act, and in many cases, payment is based on the average sales price (ASP) plus a statutorily mandated 6 percent add-on. If CMS determines a payment limit for a drug, it is published in the ASP pricing file or Not Otherwise Classified (NOC) pricing file, which are both updated quarterly.

CMS generally calculates the payment limits for drugs payable under Part B on a quarterly basis using the manufacturer's ASP (as defined in § 414.902). Manufacturers are required to report ASP to CMS pursuant to sections 1847A(f)(2) and 1927(b)(3) of the Act. Manufacturers are instructed to calculate ASP in accordance with section 1847A(c) of the Act and § 414.804(a).

For each NDC, in most cases, the manufacturer's ASP is a positive dollar value, along with a positive number of units sold (hereinafter referred to as “positive manufacturer's ASP data”). However, sometimes the reported data is not positive manufacturer's ASP data. Specifically, a manufacturer could report that an NDC has a negative or zero-dollar value for the manufacturer's ASP with a positive, negative, or zero number of units sold, or a positive dollar value for the manufacturer's ASP with a negative or zero number of units sold (each of these scenarios is hereinafter referred to as “negative or zero manufacturer's ASP data”). Such negative or zero manufacturer's ASP data could occur because of lagged discounts, units returned to the manufacturer, drug shortages, discontinuation of a drug, or other reasons that are not known to CMS. Negative or zero manufacturer's ASP data can occur when a manufacturer calculates its ASP in accordance with section 1847A of the Act.

First, section 1847A(c)(3) of the Act requires that the manufacturer's calculation of its ASP for an NDC must include volume discounts, prompt pay discounts, cash discounts, free goods that are contingent on any purchase requirement, chargebacks, and rebates (other than rebates under the Medicaid drug rebate program or the Medicare Prescription Drug Inflation Rebate Program) (hereinafter referred to as “price concessions”). Second, section 1847A(c)(5)(A) of the Act requires each manufacturer to apply a methodology based on a 12-month rolling average for the manufacturer to estimate costs attributable to price concessions if there is a lag in the reporting of the information on rebates and chargebacks under section 1847A(c)(3) of the Act. These provisions may result in the inclusion of large price concessions from a quarter or quarters with a higher sales price prior to price concessions in the ASP calculation for a subsequent quarter with a much lower sales price, which can result in negative dollar value ASP. The same situation could happen in a quarter if more units were returned to the manufacturer than are sold, which can result in a negative dollar value ASP as well as a negative number of units sold. The requirement to use a rolling average for lagged price concessions is codified at § 414.804(a)(3), which states that, to the extent data on price concessions are available on a lagged basis, the manufacturer must estimate its ASP in accordance with the described methodology in that paragraph. In certain instances, as stated above, lagged price concessions can lead to negative or zero manufacturer's ASP data.

In 2022, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a report assessing potential inaccuracies in manufacturer reporting of ASP and noted that manufacturers believe additional guidance may be needed to reduce distortions and inconsistencies in the calculation of payment limits. The report found that several manufacturers would like additional guidance regarding reporting of negative ASP data and how CMS uses negative ASP data in payment limit calculations. CMS concurred with the OIG's recommendation to actively review current guidance and determine whether additional guidance would ensure more accurate and consistent ASP calculations.

Accordingly, we reviewed our current guidance and determined that it is appropriate for us to provide additional guidance regarding how CMS will handle payment for drugs separately payable under Part B when the manufacturer's ASP for at least one NDC within the billing and payment code (that is, HCPCS code) of the drug is negative or zero. Currently, when all NDCs assigned to a HCPCS code have negative or zero manufacturer's ASP data, CMS establishes the payment limit in other ways. As appropriate given the data available for a drug, CMS will either calculate a payment limit for a billing and payment code based on other applicable and available pricing data or not include a payment limit for the billing and payment code on the ASP pricing file. When a payment limit for a drug separately payable under Part B is not included in the ASP pricing file, the payment limit is based on either the published or Wholesale Acquisition Cost (WAC) or invoice pricing, as described in section 20.1.3, Chapter 17 of the Medicare Claims Processing Manual.

CMS previously contemplated how to set a payment limit in certain situations in which ASP data is “not available” for multiple source drugs. In the CY 2011 PFS final rule (75 FR 73461 through 73465), CMS addressed situations in which ASP data for some, but not all, NDCs in a multiple source drug billing and payment code are not available for the calculation of an ASP payment limit (for example, if a manufacturer's entire submission of data was not received or manufacturer's ASP data for specific NDCs was not reported). In that rule, we finalized a process, consistent with authority in section 1847A(c)(5)(B) of the Act, to update payment limits based on the manufacturer's ASP reported for the most recent quarter for which data is available. We specified that if manufacturer's ASP data is not available for some but not all NDCs in a multiple source drug billing and payment code prior to the publication deadline for quarterly payment limits and such unavailability of manufacturer's ASP data significantly changes the quarterly payment limit for the billing and payment code when compared to the prior quarter's payment limit, CMS will calculate the payment limit by carrying over the most recent available manufacturer's ASP price from a previous quarter for an NDC, adjusted by the weighted average of the change in the manufacturer's ASPs for the NDCs that were reported for both the most recently available previous quarter and the current quarter, and codified this policy in § 414.904(i). In that final rule, we explained that such circumstances are limited to when a manufacturer's data for a multiple source drug product with sales during a quarter is missing, and efforts to obtain manufacturer reported ASP data before Medicare ASP payment limits publication deadlines have not been successful. We continue to believe that this process, which we apply in cases ASP data is “not available” for some but not all NDCs associated with a multiple source billing and payment code, is appropriate.

b. Approach to Payment Limit Calculations When Manufacturer's ASP Data is Not Available

As described in the previous section, we determined that it is appropriate for CMS to provide additional guidance regarding how we will handle payment for drugs separately payable under Part B when the reported manufacturer's ASP for at least one NDC within the billing and payment code (that is, HCPCS code) of the drug is negative or zero (that is, has negative or zero manufacturer's ASP data). As detailed below, we are proposing to consider ASP data to be not “available” for the purposes of calculating a payment limit in circumstances in which negative or zero manufacturer's ASP data is reported, consistent with section 1847A(c)(5)(B) of the Act. We are also proposing how CMS would calculate a payment limit in these circumstances, consistent with section 1847A(c)(5)(B) of the Act.

Our current policy does not address how payment limits are calculated for several situations in which a drug separately payable under Part B does not have available ASP data. The set of situations in which this might occur include circumstances in which either some or all NDCs for a billing and payment code have a negative or zero manufacturer's ASP data; in which negative or zero manufacturer's ASP data is reported for a drug which has been discontinued; and vary further depending on whether a drug is multiple source or single source (both as defined in § 414.902). In each of these circumstances, there are various other pricing data available that we believe can appropriately be used to calculate a payment limit.

Therefore, we are proposing, consistent with section 1847A(c)(5)(B) of the Act, a methodology for calculating payment limits in certain circumstances based on manufacturer's ASP for the most recent quarter for which data is available. Specifically, we propose to specify that positive manufacturer's ASP data are considered “available” and that negative or zero manufacturer's ASP data are considered “not available” for purpose of CMS calculating a payment limit under the statute. We believe it is appropriate to consider negative or zero manufacturer's ASP data to be not available because if used to calculate a payment limit, this data can result in a negative or zero payment limit, which would require CMS to collect payment from providers and suppliers for a drug, rather than make payment for a drug. Negative or zero payment limits for a drug are not reasonable because Medicare does not expect to collect payment from providers and suppliers for their provision of separately payable drugs. Therefore, we are proposing to specify the methodology we will use for calculating the payment limit in such circumstances to ensure reasonable payment amounts based on the best available data for separately payable drugs. Below, we propose how payment limits would be determined using available ASP data for each scenario.

c. Single and Multiple Source Drugs When Negative or Zero Manufacturer's ASP Data Is Reported for Some, But Not All NDCs

In the case that a drug separately payable under Part B has negative or zero manufacturer's ASP data reported for some, but not all, NDCs associated with a billing and payment code for that drug, we are proposing to calculate a payment limit using only NDCs with positive manufacturer's ASP data (and omitting NDCs with negative or zero manufacturer's ASP data) for that drug and propose to codify this at § 414.904(i). We are proposing this policy to apply to both single source drugs, including biosimilar biological products, and multiple source drugs. We believe this is appropriate because it would result in payment limits based on the most recent positive manufacturer's ASP data reported by manufacturers with NDCs associated with a billing and payment code.

However, we note that, as discussed in section III.A.2.a of this proposed rule, CMS already has a policy in place for multiple source drugs for which the absence of ASP data would result in a significant change (that is, a 10 percent or greater change) in the ASP payment limit compared to the payment limit of the previous quarter, as finalized in the CY 2011 PFS final rule (75 FR 73461 through 73465). In that discussion (75 FR 73462), we noted several examples of situations in which data is not available to be included in the calculation of a payment limit, such as when a manufacturer's entire submission was not received or when the manufacturer's ASP data for specific NDCs has not been reported. We do not intend for our proposed policy to override that existing policy; rather, we intend for the proposed policy described above to address circumstances not addressed in that rulemaking (that is, we intend to address circumstances of single source drugs when negative or zero manufacturer's ASP data is reported for some, but not all NDCs, and of multiple source drugs when negative or zero manufacturer's ASP data is reported for some, but not all NDCs and the absence of such data from the calculation of the payment limit does not result in a significant change in the payment limit compared to the payment limit of the previous quarter) and thus fill a policy gap. In addition, the circumstances we provided as examples in which ASP data is not available in the CY 2011 PFS final rule continue to be circumstances we consider manufacturer's ASP data not available under current § 414.904(i) (which we propose to move within § 414.904(i) to fit within the structure of the proposed new set of payment limit methodologies); but, as noted in section III.A.2.b, we are expanding what we consider to be not available to include circumstances in which negative or zero manufacturer's ASP data is reported.

d. Multiple Source Drugs With Only Negative or Zero Manufacturer's ASP Data

In the case of a multiple source drug (as defined in § 414.902) separately payable under Part B that has negative or zero manufacturer's ASP data reported for all NDCs associated with a billing and payment code for that drug (and at least one NDC for the is actively being marketed (that is, not discontinued)), we are proposing to carry over all positive manufacturer's ASP data from the most recently available previous quarter with positive manufacturer's ASP data for at least one NDC until at least one NDC for the drug has positive manufacturer's ASP data for a quarter. Specifically, we are proposing to calculate the payment limit for the applicable quarter using data from the most recent calendar quarter for which data is available, i.e., for which there is positive manufacturer's ASP data. We believe this is appropriate because, similar to the methodology described in section III.A.2.c, it would result in payment limits based on the most recent positive manufacturer's ASP data reported by manufacturers with NDCs associated with a billing and payment code. Similarly, we believe the most recent available positive manufacturer's ASP data from NDCs associated with a billing and payment code are more likely to be reflective of providers' acquisition costs for drugs associated with that billing and payment code in a given quarter than other pricing data, and unlikely to result in challenges to access for these drugs for providers and beneficiaries.

We note that because section 1847A of the Act provides for payment limit calculations that differ between single-source drugs (as defined in section 1847A(c)(6)(D) of the Act and § 414.902) and multiple source drugs (as defined in section 1847A(c)(6)(C) of the Act and § 414.902), we are proposing different ways to determine payment limits for each, in cases in which only negative or zero manufacturer's ASP data is reported, to reflect these differences. Specifically, the payment limit for single source drugs is described in section 1847A(b)(1)(B) of the Act; for multiple source drugs, the payment limit is described in section 1847A(b)(1)(A) of the Act. The payment limit for single source drugs is determined using the lesser of ASP or WAC; but WAC is not used for multiple source drugs whose ASP exceeds WAC. Nonetheless, our proposals for the calculation of the payment limit for single source and multiple source drugs with only negative or zero manufacturer's ASP data are consistent in that, where ASP is used, we propose to use the most recent available positive manufacturer's ASP data from at least one NDC for the drug. We believe using similar input data in our calculation of the payment limit is consistent with our goal to ensure reasonable payment amounts based on the best available data for separately payable drugs.

We are proposing to amend § 414.904(i) to include the above proposal regarding how CMS would calculate the payment limit in circumstances in which only negative or zero manufacturer's ASP data is reported for a multiple source drug.

e. Single Source Drugs With Only Negative or Zero Manufacturer's ASP Data, Excluding Biosimilar Biological Products

In the case of a single source drug, excluding biosimilar biological products (both as defined in § 414.902), separately payable under Part B that has negative or zero manufacturer's ASP data reported for all NDCs associated with a billing and payment code for that drug (and at least one NDC for the drug is actively being marketed (that is, not discontinued)), we are proposing to set the payment limit for the given quarter for the single source drug at the lesser of the following until at least one NDC for the drug has positive manufacturer's ASP data for a quarter:

• 106 percent of the volume-weighted average of the most recent available positive manufacturer's ASP data from a previous quarter in which at least one NDC for the drug has positive manufacturer's ASP data for a quarter. If the payment limit from the quarter with the most recent available positive manufacturer's ASP data was based on 106 percent of the WAC because of the application of § 414.904(d)(1), that payment limit would be carried over; or
• 106 percent of the WAC for the given quarter. If there is more than one WAC per billing unit for the drug, the payment limit would be set using the lowest WAC per billing unit.

We would only use the lesser of the positive manufacturer's ASP or WAC data from that previous quarter or the WAC data from the given quarter until positive manufacturer's ASP data is available for a future quarter. Once positive manufacturer's ASP data for a drug is available again in a future quarter, CMS will have data available to input into the routinely used methodologies described in section 1847A(b) of the Act and § 414.904.

As discussed above, we believe it is appropriate to propose different policies for determining payment limits for single and multiple source drugs when negative or zero manufacturer's ASP data is reported because of statutory differences in the payment limit calculations.

f. Biosimilars With Only Negative or Zero Manufacturer's ASP Data

In circumstances in which negative or zero manufacturer's ASP data is reported for all NDCs for a biosimilar biological product (defined at § 414.902) (hereinafter referred to as a “biosimilar”) for a given quarter (and at least one NDC for the biosimilar is actively being marketed (that is, not discontinued)), and positive manufacturer's ASP data is available for another biosimilar(s) with the same reference biological product (hereinafter referred to as a “reference product”) for the given quarter, we are proposing to set the payment limit for the given quarter equal to the sum of the following until at least one NDC for the particular biosimilar for which all NDCs report negative or zero manufacturer's ASP data has positive manufacturer's ASP data for a quarter:

• The volume-weighted average of the positive manufacturer's ASP data from all other biosimilars with the same reference product, and
• 6 percent (or 8 percent for qualifying biosimilar biologicals as defined in § 414.902, as appropriate) of the amount determined under section 1847A(b)(4) of the Act for the reference biological product (as defined in § 414.902) for the given quarter.

We believe this is appropriate because Section 351(i)(2) of the Public Health Service Act defines the terms biosimilar and biosimilarity to mean that a biosimilar is highly similar to its reference product, notwithstanding minor differences in clinically inactive components, and that there are no clinically meaningful differences between the biosimilar and the reference product in terms of the safety, purity, and potency of the product. In addition, biosimilars with the same reference product likely compete in the marketplace since both rely on FDA's previous determination of safety, purity, and potency for the reference product clinical data for approval. For these reasons, we believe that when a biosimilar has only negative or zero manufacturer's ASP data, the volume-weighted average of positive manufacturer's ASP data of biosimilars with the same reference product would be an appropriate payment limit for a biosimilar that, under this proposal, would be considered to have ASP data that is not available. As such, we are proposing to calculate the payment limit for a biosimilar with only negative or zero manufacturer's ASP data based on the positive manufacturer's ASP data of other biosimilars with the same reference product.

We note that in the CY 2016 PFS final rule (80 FR 71096 through 71101), we finalized that we would group all biosimilars with a common reference product in a single billing and payment code with a single payment rate, in a manner similar to how we price multiple source or generic drugs because of the significant similarities between each biosimilar and its reference product. In the CY 2018 PFS final rule (82 FR 53182 through 53187), we changed the initial policy and finalized separate coding and payment for biosimilars. In that final rule, we stated that that there is a program need for assigning Part B biosimilars into separate billing and payment codes; specifically, that this policy change addressed concerns about the public interest in a stronger marketplace, access to these drugs in the United States marketplace, and provider and patient choice and competition. Our proposal for biosimilars with negative or zero manufacturer's ASP data reported for all NDCs is consistent with the CY 2018 PFS rulemaking, as it would not result in grouping biosimilars with a shared reference product in a single billing and payment code. Rather, it would allow CMS to calculate an operationally reasonable payment limit using positive manufacturer's ASP data for highly similar products in limited instances.

This proposal would also provide payment limit stability that could help avoid potential access issues for providers and beneficiaries that could otherwise occur if we were to calculate a payment limit for a drug with negative or zero manufacturer's ASP data that is far below the provider's cost for acquiring the drug. If a biosimilar's ASP falls below zero only after several quarters of declining but still positive manufacturer's ASP data, the most recent positive manufacturer's ASP data from a previous quarter for a drug may be significantly lower than the volume-weighted average of the biosimilars with the same reference product as the biosimilar with negative ASP data. In such a case, the payment limit based on the ASPs of competitor biosimilars would be higher than if we were constrained to use ASP data only from the biosimilar that has most recently reported negative or zero manufacturer's ASP data. We note that under the methodology proposed in section III.A.2.c, in circumstances in which some, but not all NDCs of a single or multiple source drug are negative or zero, we would similarly calculate the payment limit using only NDCs with positive manufacturer's ASP data from the given quarter and omitting those that had declined to zero or a negative value in ASP or sales. Likewise, we believe that such an approach would likely result in a payment limit reflective of providers' acquisition costs of biosimilars and be helpful in avoiding access issues for providers and beneficiaries.

In circumstances in which negative or zero manufacturer's ASP data is reported for all NDCs for a biosimilar for a given quarter and either no other biosimilars have been approved for the same reference product or no other biosimilars with the same reference product report positive manufacturer's ASP data for the given quarter, we propose that we would set the payment limit for the given quarter equal to the sum of the following until at least one NDC for the biosimilar has positive manufacturer's ASP data for a quarter:

• The volume-weighted average of the most recent available positive manufacturer's ASP data from a previous quarter, and
• 6 percent (or 8 percent for qualifying biosimilar biologicals, as appropriate) of the amount determined under section 1847A(b)(4) of the Act for the reference biological product (as defined in § 414.902) for the given quarter.

In situations in which CMS would use the volume-weighted average of the most recent available positive manufacturer's ASP data from a previous quarter, we would only use positive manufacturer's ASP data from that previous quarter until positive manufacturer's ASP data is available for a future quarter. This proposed methodology is similar to the proposed methodology for multiple source drugs and single source drugs that are not biosimilars when manufacturers report negative or zero manufacturer's ASP for all NDCs.

In addition to the payment approaches we are proposing for biosimilars with only negative or zero manufacturer's ASP data, we considered two alternatives for which we are seeking public comment. Under the first alternative, the volume-weighted ASP calculation would include the ASP data and billing units sold of its reference product for a given quarter along with those of the other biosimilars that reference the same reference product in the volume-weighted average calculation. We believe including the reference product's data in the blended calculation for a biosimilar's payment limit in the limited circumstance described could be appropriate in determining an operationally reasonable payment limit because the FDA approval for the biosimilar relies in part on FDA's previous determination of safety, purity, and potency for the reference product, and the biosimilar and reference product are necessarily approved for at least one shared condition of use, as required under the 351(k) approval pathway; therefore, the case that the two are comparable is at least as strong as that for any two biosimilars with the same reference product. If it is preferable, as we propose, to base the payment limit on the available positive manufacturer's ASP data submitted by manufacturers of market competitor biosimilars (in this context, biosimilars that reference the same reference product), then including the ASP data and billing units sold of the reference product would also increase the likelihood that positive data in such a group is available, particularly in the case that a reference product only has one biosimilar. Under this alternative, the payment limit would be set equal to the sum of the volume-weighted average of the positive manufacturer's ASP data from all other biosimilars with the same reference product and the reference product plus 6 or 8 percent, as appropriate, of the amount determined under section 1847A(b)(4) of the Act for the reference biological product for the given quarter. We are seeking public comments about whether including ASP data from the reference product in a variant of the proposed calculation would produce a more appropriate payment limit for a biosimilar with only negative or zero manufacturer's ASP data.

Under the second alternative, we would calculate payment limits for all biosimilars with only negative or zero manufacturer's ASP data in the manner described above for biosimilars when either no other biosimilars have been approved for the same reference product or no other biosimilars with the same reference product report positive manufacturer's ASP data for the given quarter. That is, under this alternative we would not consider the manufacturer's ASP data of other biosimilars with the same reference product; rather, we would base the payment limit of the biosimilar on the volume-weighted average of the its own most recent available positive manufacturer's ASP data from a previous quarter and either 6 or 8 percent, as appropriate, of the amount determined under section 1847A(b)(4) of the Act for the reference biological product for the given quarter. We are interested in comments from interested parties about whether, and if so, why, it is preferable for the payment limit to be calculated only using manufacturer's ASP data from the biosimilar that reports negative or zero manufacturer's ASP data in a given quarter.

g. Discontinued Drugs

Generally, for single source drugs and multiple source drugs for which negative or zero manufacturer's ASP data is reported for all NDCs and for which all relevant applications (for example, new drug applications (NDAs), biologics license applications (BLAs), or abbreviated new drug applications (ANDAs)) have a marketing status of “discontinued” on the FDA website, we propose that the drug be priced by MACs consistent with section 20.1.3 in Chapter 17 of the Medicare Claims Processing Manual for developing payment limits for covered drugs when CMS does not supply the payment allowance limit on the ASP drug pricing file.

Once a drug is discontinued, as indicated by the marketing status on the FDA website (either at Drugs@FDA for drugs or the Purple Book for biologicals), the manufacturer might not have sales to calculate an ASP and, therefore, the manufacturer often reports zero sales for the drug or a negative number for its calculated ASP or number of sales. However, even if a drug has a marketing status of discontinued on the FDA website, there may theoretically be available product that could be billed by the provider until the expiration date of the last lot sold for the drug. Relatedly, we have observed that very few claims are paid for drugs following their discontinuation. For these reasons, setting a payment limit for drugs with a marketing status of discontinued on the FDA website is not expected to be practically useful for claims processing and is not a prudent use of CMS resources.

h. Summary

We are proposing to amend § 414.904(i) to reflect CMS's approach to setting a payment limit in circumstances in which negative or zero manufacturer's ASP data is reported by a manufacturer for a drug. Specifically, we are proposing to codify that in cases where negative or zero manufacturer's ASP data is reported for some, but not all, NDCs of a multiple source drug, we would calculate the payment limit using the positive manufacturer's ASP data reported for the drug, except for the existing carryover policy for multiple source drugs that we would apply when unavailable data results in a significant change in the ASP payment limit. We are proposing to move this carryover policy for multiple source drugs within § 414.904(i) to fit within the structure of the proposed new set of payment limit methodologies. We are also proposing to codify that in the case of a multiple source drug for which negative or zero manufacturer's ASP data is reported for all NDCs, we would set the payment limit using the most recent available positive manufacturer's ASP data from a previous quarter until at least one NDC for the drug has positive manufacturer's ASP data for a quarter.

We are proposing to codify that in cases where negative or zero manufacturer's ASP data is reported for some, but not all, NDCs of a single source drug that is not a biosimilar, we would calculate the payment limit using the positive manufacturer's ASP data reported for the drug. We are proposing to codify that for single source drugs that are not biosimilars with all negative or zero manufacturer's ASP data for a given quarter, the payment limit would be, until at least one NDC for the drug has positive manufacturer's ASP data for a quarter, the lesser of 106 percent of the volume-weighted average of the most recent available positive manufacturer's ASP data for at least one NDC from a previous quarter and 106 percent of the WAC, and we would use 106 percent of the lowest WAC per billing unit if there is more than one WAC per billing unit available.

We are also proposing to codify that in cases where negative or zero manufacturer's ASP data is reported for some, but not all, NDCs of a biosimilar, we would calculate the payment limit using the positive manufacturer's ASP data reported for the biosimilar. Lastly, we are proposing to codify two scenarios when the manufacturer reports negative or zero manufacturer's ASP for all NDCs for a biosimilar for a given quarter:

• When positive manufacturer's ASP data is available for another biosimilar(s) with the same reference product for the given quarter, we are proposing to set the payment limit equal to the sum of the volume-weighted average of the positive manufacturer's ASP data from all other biosimilars with the same reference product plus 6 percent (or 8 percent for a qualifying biosimilar biological) of the amount determined under section 1847A(b)(4) of the Act for the reference biological product for the given quarter; and
• When either no other biosimilars have been approved for the same reference product or no other biosimilars with the same reference product report positive manufacturer's ASP data for the given quarter, we are proposing to set the payment limit equal to the sum of the volume-weighted average of the most recent available positive manufacturer's ASP data from a previous quarter plus 6 percent (or 8 percent for a qualifying biosimilar biological) of the amount determined under section 1847A(b)(4) of the Act for the reference biological product for the given quarter.

We welcome comments on these proposals.

3. Payment of Radiopharmaceuticals in the Physician Office

Section 303(c) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted December 8, 2003) revised the payment methodology for most Medicare-covered Part B drugs by adding section 1847A to the Act, which established a new average sales price (ASP) drug payment methodology for separately payable Medicare Part B drugs, beginning January 1, 2005. Specifically, section 303(h) of the MMA states, “Nothing in the amendments made by this section [303 of the MMA] shall be construed as changing the payment methodology under [Medicare] Part B . . . for radiopharmaceuticals, including the use by carriers of invoice pricing methodology.”

In accordance with the law, radiopharmaceuticals are not required to be paid using payment methodology under section 1847A of the Act, as currently described in the Medicare Claims Processing Manual (MCPM) Chapter 17, section 20.1.3. The manual instructs MACs to determine payment limits for radiopharmaceuticals based on the methodology in place as of November 2003, before the passage of the MMA, in the case of radiopharmaceuticals furnished in settings other than the hospital outpatient department. Currently, payment can vary by MAC. For example, payment can be based on 95 percent of Average Wholesale Price (AWP), invoices, or other reasonable payment methods/data made available when the product is contractor priced.

CMS has heard from MACs and other interested parties that there is confusion about which exact methodologies are available to MACs for pricing of radiopharmaceuticals in the physician office setting, as different MACs had different methodologies in place as of November 2003. MACs are uncertain whether they can use any of these payment policies that were in place, or only the policy that was in place for their jurisdiction as of November 2003.

Accordingly, while we evaluate our broader policies in this space for future rulemaking, we are proposing to clarify that any payment methodology that was being used by any MAC prior to the enactment of the MMA can continue to be used by any MAC, including the use of invoice pricing. That is, we are proposing to clarify that any methodology that was in place to set pricing of radiopharmaceuticals in the physician office setting prior to November 2003 can be used by any MAC, whether or not that specific MAC used the methodology prior to November 2003.

Thus, we are proposing to codify in regulations at § 414.904(e)(6) that, for radiopharmaceuticals furnished in a setting other than the hospital outpatient department, MACs shall determine payment limits for radiopharmaceuticals based on any methodology used to determine payment limits for radiopharmaceuticals in place on or prior to November 2003. Such methodology may include, but is not limited to, the use of invoice-based pricing.

We welcome comments on these proposals.

4. Immunosuppressive Therapy (§§ 410.30 and 414.1001)

a. Background

Medicare Part B coverage of drugs used in immunosuppressive therapy was established by section 9335(c) of the Omnibus Budget Reconciliation Act of 1986 (Pub. L. 99-509) (OBRA '86). OBRA '86 added subparagraph (J) to section 1861(s)(2) of the Act to provide Medicare Part B coverage for immunosuppressive drugs, furnished to an individual who receives an organ transplant for which Medicare payment is made, for a period not to exceed 1 year after the transplant procedure. Coverage of these drugs under Medicare Part B began January 1, 1987. Section 4075 of the Omnibus Budget Reconciliation Act of 1987 (Pub. L. 100-203) (OBRA '87) revised section 1861(s)(2)(J) of the Act so that the scope of coverage was expanded from coverage of “immunosuppressive drugs” to coverage of “prescription drugs used in immunosuppressive therapy.” For the purposes of this proposed rule, we refer to this benefit as the immunosuppressive drug benefit.

In the Medicare Coverage of Prescription Drugs Used in Immunosuppressive Therapy final rule (60 FR 8951 through 8955), we finalized policies for the scope of drugs for which payment may be made under this benefit. We finalized that payment may be made for prescription drugs used in immunosuppressive therapy that have been approved for marketing by the U.S. Food and Drug Administration (FDA) and meet one of the following conditions:

(1) The approved labeling includes the indication for preventing or treating the rejection of a transplanted organ or tissue.

(2) The approved labeling includes the indication for use in conjunction with immunosuppressive drugs to prevent or treat rejection of a transplanted organ or tissue.

(3) Have been determined by a Part B carrier, in processing a Medicare claim, to be reasonable and necessary for the specific purpose of preventing or treating the rejection of a patient's transplanted organ or tissue, or for use in conjunction with immunosuppressive drugs for the purpose of preventing or treating the rejection of a patient's transplanted organ or tissue. (In making these determinations, the carriers may consider factors such as authoritative drug compendia, current medical literature, recognized standards of medical practice, and professional medical publications.)

We also finalized the period of coverage eligibility for a transplant patient. Lastly, we established the policy that drugs are covered under this provision irrespective of whether they can be self-administered. We codified these policies at § 410.31 (later redesignated as § 410.30).

We note that we do not maintain a list of drugs covered under this benefit; rather, MACs are expected to maintain a list of these drugs, as stated in section 80.3, Chapter 17 of the Medicare Claims Processing Manual. MACs are expected to keep informed of FDA approvals of immunosuppressive drugs and update guidance as applicable.

While the eligibility timeframe has been extended and eligibility has been expanded since the immunosuppressive drug benefit under Medicare Part B was revised by OBRA '87, the scope of drugs payable under this benefit has not changed. Some examples of how the benefit has been extended and expanded include: section 13565 of the Omnibus Reconciliation Act of 1993 (OBRA '93) (Pub. L. 103-66), amended section 1861(s)(2)(J) of the Act to extend the duration of coverage for the immunosuppressive drug benefit to 36 months from the hospital discharge date following a covered transplant procedure for drugs furnished after CY 1997; section 113 of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554) (BIPA) revised section 1861(s)(2)(J) of the Act to eliminate the time limits for coverage of prescription drugs used in immunosuppressive therapy under the Medicare program; and most recently, section 402 of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) amended section 226A(b)(2) to allow certain individuals whose Medicare entitlement based on ESRD would otherwise end 36 months after a kidney transplant to continue enrollment under Medicare Part B only for the coverage of immunosuppressive drugs described in section 1861(s)(2)(J) of the Act.

After reviewing our longstanding policies for the immunosuppressive drug benefit and engaging with interested parties about current practices and challenges, we are proposing policies aimed to reduce barriers faced by beneficiaries receiving immunosuppressive drugs under this benefit, as described below.

b. Compounded Immunosuppressive Drugs With Oral or Enteral Routes of Administration

As discussed in the previous section, the immunosuppressive drug benefit currently includes immunosuppressive therapies that have been approved for marketing by the FDA (and meet other regulatory requirements at § 410.30). Interested parties have expressed concern that compounded formulations of immunosuppressive drugs (for example, a liquid formulation of an immunosuppressive drug not commercially available from a manufacturer but prepared by a pharmacist) are not included in the immunosuppressive therapy benefit because these formulations are not approved by the FDA (that is, FDA does not review these drugs to evaluate their safety, effectiveness, or quality before they reach patients), which is a regulatory requirement under the current benefit. These interested parties communicated that compounded formulations are frequently used in the treatment of transplant recipients who cannot swallow oral capsules or tablets due to age or oral-motor dysfunction. Some examples of drugs compounded for preventing or treating the rejection of a transplanted organ or tissue include, but are not limited to, azathioprine, cyclophosphamide, and tacrolimus.

We recognize certain patient groups, such as those with dysphagia, those with enteral feeding tubes (for example, a nasogastric feeding tube or a percutaneous endoscopic gastrostomy (PEG) tube), and many pediatric patients covered under Medicare rely on compounded immunosuppressive drugs for maintenance therapy and believe that their inclusion in the immunosuppressive drug benefit would help to ensure that each beneficiary is able to access the most clinically appropriate formulation of an immunosuppressive drug. Nonadherence to lifelong maintenance immunosuppressive therapy contributes to unfavorable post-transplant outcomes, with obstacles to accessing medication being a prominent risk factor for such nonadherence. ²⁷⁷ Therefore, we are proposing revisions at § 410.30 to include orally and enterally administered compounded formulations with active ingredients derived only from FDA-approved drugs where approved labeling includes an indication for preventing or treating the rejection of a transplanted organ or tissue, or for use in conjunction with immunosuppressive drugs to prevent or treat rejection of a transplanted organ or tissue, or have been determined by a MAC, in processing a Medicare claim, to be reasonable and necessary for this specific purpose as outlined in the immunosuppressive drug benefit. As we intend this proposal to enhance access and address adherence concerns for patients who are not able to swallow capsules or tablets and we do not believe there are access concerns with other types of formulations, we propose to limit the included compounded formulations to those products with oral and enteral routes of administration (for example, oral suspensions or solutions).

We solicit comment on these proposals.

c. Immunosuppressive Refill Policy and Supplying Fee

Section 303(e)(2) of the MMA added section 1842(o)(6) of the Act which requires the Secretary to pay a supplying fee (less applicable deductible and coinsurance) to pharmacies for certain Medicare Part B drugs and biologicals, as determined appropriate by the Secretary, including for immunosuppressive drugs described in section 1861(s)(2)(J) of the Act.

In the CY 2005 PFS, we established a supplying fee of $50 for the initial oral immunosuppressive prescription supplied in the first month after a transplant (69 FR 66312 through 66313). In the CY 2006 Physician Fee Schedule, we established a supplying fee of $16 for all subsequent prescriptions after the initial prescription supplied during a 30-day period (70 FR 70233 through 70236).

Following the CY 2006 rulemaking, we issued program instruction to the MACs that prohibits payment for refills of immunosuppressive drug prescriptions in most circumstances and limits payment for prescriptions to 30-day supplies. We state in Chapter 17 of the Medicare Claims Processing Manual that contractors should limit payment for prescriptions to those of 30-day supplies, except in special circumstances, because dosage frequently diminishes over time; it is not uncommon for the provider to change the prescription from one drug to another; and coinsurance liability on unused drugs could be a financial burden to the beneficiary.

We have heard from interested parties that both the 30-day limit on supplies and prohibition on payment for refills no longer align with current practice for treating patients on maintenance immunosuppression regimens who are prescribed a stable dosage for months or years and receive refillable supplies for several months' use at a time. Frequent dosage adjustments for some immunosuppressive drugs that require therapeutic drug monitoring and dose titration based on blood concentrations, such as tacrolimus, tend to occur more often in newly transplanted recipients, and less frequently once patients are on stable regimens. Other immunosuppressive drugs, such as mycophenolate mofetil, do not require routine therapeutic drug monitoring and have fixed recommended dosages per labeling where patients may be maintained on stable dosages for several months unless patients experience complications. Transplant recipients must take immunosuppressive drugs on a lifelong basis to prevent rejection, maintain allograft function, and, for some transplanted organs, prevent death. Most patients are eventually prescribed stable maintenance immunosuppressive drug dosages post-transplant for extended periods of time. For example, liver transplant guidelines recommend review of the immunosuppressive drug regimen at least every 6 months. For transplant beneficiaries, we believe that the limitation on payment to a maximum 30-day supply of immunosuppressive therapy by our program instruction is an unnecessary burden that poses a greater risk to adherence than does the potential for a sudden change in dosage needs. There is considerable concern among providers and advocates that interrupted access to immunosuppressive drugs caused by running out of or having insufficient medication supply can decrease medication adherence, increase risk of organ transplant rejection, and ultimately decrease the rate of survival of transplant recipients. We agree with interested parties that it would be beneficial to patients to reduce barriers that complicate access to immunosuppressive medication and reasonable for CMS to make programmatic changes consistent with this objective.

Accordingly, we are proposing two changes regarding supplying fees and refills for immunosuppressive drugs. First, we are proposing to allow payment of a supplying fee for a prescription of a supply of up to 90 days. To reflect this proposal, we are proposing to revise § 414.1001 to allow payment of a supplying fee to a pharmacy for first prescriptions and for prescriptions following the first prescription for greater than a 30-day supply. We are proposing additional modifications at § 414.1001 to combine paragraphs (a) (for supplying fees) and (b) (for supplying fees following a transplant). Accordingly, we are also proposing to remove paragraph (b) and redesignate paragraphs (c) and (d) as paragraphs (b) and (c), respectively. We intend to further study the supplying fee schedule for immunosuppressive drugs and are not proposing to make any changes to the supplying fee amounts at this time (meaning the current 30-day supplying fees would apply to any amount of days' supply). The dispensing and supplying fees under Part B (§ 414.1001) have been shown to be higher than dispensing fees paid in the commercial market. So, until additional study is done regarding input costs for dispensing drugs billed to Medicare Part B and subsequent notice-and-comment rulemaking can be done, if appropriate, in response to such information, we aim to continue the current fee schedule regardless of the days' supply dispensed. Second, we are proposing to allow payment of refills for these immunosuppressive drugs. Under our proposal, if finalized, the prescribing healthcare provider may adjust the days' supply up to 90 days and allow refills for an immunosuppressive drug based on the individual circumstance of the beneficiary in accordance with applicable state laws.

We welcome comments on these proposals.

5. Blood Clotting Factors (§ 410.63)

a. Background

Hemophilia is a genetic bleeding disorder resulting in a deficiency of coagulation Factor VIII (hemophilia A) or coagulation Factor IX (hemophilia B) due to mutations in the respective clotting factor genes. Prophylactic use of clotting factors has been proven to improve quality of life by preventing joint bleeds but requires maintenance therapy, usually throughout the life of the patient. Preventing joint damage early is crucial because the initial damage will progress, irrespective of whether further bleeds occur in the affected joints. Currently, clotting factor treatments include: plasma-derived products, which are virally inactivated and made from human donor plasma; recombinant products, such as recombinant Factors VIIa, VIII, IX, X, XIII, which are created using genetically engineered cells and recombinant technology; and a monoclonal antibody product that binds to specific receptor sites of missing clotting factor, which is needed for effective hemostasis. Individuals with hemophilia generally self-infuse clotting factor at home, often learning to do so in childhood.

Section 2324 of the Deficit Reduction Act of 1984 (Pub. L. 98-369) added subparagraph (I) to section 1861(s)(2) of the Act to provide Medicare Part B coverage of blood clotting factor treatments for hemophilia patients who are competent to use such factors to control bleeding without medical supervision (that is, self-administered), and items related to the administration of such factors; this is codified at § 410.63(b). As set forth in 1842(o)(1)(C) of the Act, payment for clotting factor product is the amount provided for under section 1847A of the Act.

In January of 2003, the Comptroller General of the United States published a report entitled “Payment for Blood Clotting Factor Exceeds Providers Acquisition Cost” (hereinafter referred to the January 2003 report). Among other things, the report found that “providers incur additional costs associated with delivering clotting factor that are not separately reimbursed by Medicare.” Specifically, the report cited delivery costs generated in inventory management, specialized refrigerated storage, shipping, and the provision of ancillary supplies such as needles, syringes, and tourniquets to patients that were not accounted for by Medicare payment for the clotting factor product alone.

After the release of the January 2003 report, section 303I(1) of the MMA amended section 1842(o) of the Act by adding a new paragraph (5), requiring the Secretary to establish a furnishing fee for the items and services associated with the furnishing of blood clotting factor. Specifically, section 1842(o)(5) of the Act requires that for clotting factors furnished on or after January 1, 2005, the Secretary shall provide for a separate payment to the entity which furnishes blood clotting factors for items and services related to the furnishing of such factors in an amount that the Secretary determines to be appropriate. Accordingly, the clotting factor furnishing fee was codified at § 410.63(c), which states that the furnishing fee is added on a per unit basis to the clotting factor.

In 2005, CMS established a furnishing fee of $0.14 per unit of clotting factor. The clotting factor furnishing fee is increased by the percentage increase in the Consumer Price Index (CPI) for Medical Care for the 12-month period ending with June of the previous year, as required by Section 1842(o)(5)(C) of the Act, and updated annually in chapter 17, section 80.4.1 of the Medicare Claims Processing Manual. For 2024, the clotting factor furnishing fee is $0.250 per unit. Chapter 17 of the Medicare Claims Processing Manual, section 80.4.1 indicates that “CMS includes this clotting factor furnishing fee in the nationally published payment limit for clotting factor billing codes” along with the pricing file, which denotes which HCPCS codes have the furnishing fee added. The payment limit in the pricing file includes the payment limit for the clotting factor product (under methodology in section 1847A of the Act) plus furnishing fee.

As was the case at the time the clotting factor furnishing fee regulations were originally finalized, we continue to believe the products eligible for payment of the clotting factor furnishing fee and those eligible for payment as clotting factor products are the same subset of products: that is, self-administered clotting factor products, as described above. Similar to section 1861(s)(2)(I) of the Act, section 1842(o)(5) of the Act specifically contemplates that clotting factors are self-administered. In particular, section 1842(o)(5)(A)(ii) of the Act specifies that the furnishing fee can take into account “ancillary supplies and patient training for the self-administration of such factors.” As stated in the CY 2005 PFS final rule, the furnishing fee accounts for the costs associated with supplying the clotting factor, including patient training necessary for self-administration of such factors (69 FR 47523; 69 FR 66311). Thus, the clotting factor furnishing fee, as implemented, pays for services and supplies in connection with the patient's self-administration of the product.

We note that section 1842(o)(5)(A) of the Act directed the Secretary to “review [. . .] the January 2003 report” when establishing the separate payment for entities which furnish blood clotting factors to the patient. The January 2003 report refers to self-administration of clotting factor and the benefits beneficiaries receive from home-use of the product throughout the report. For example, the report states, “Individuals with hemophilia generally self-infuse clotting factor. Clotting factor can be infused on demand, when a bleeding episode occurs, or for prevention, known as prophylactic use. By self-infusing, individuals can avoid waiting for care at a medical facility.”

Most notably, for purposes of understanding the Medicare clotting factor payment inadequacy that was addressed by Congress by adding the furnishing fee, the report states “[t]he method of delivery of clotting factor has implications for Medicare payment. Most outpatient drugs covered by Medicare are administered in a physician's office. When a beneficiary visits a physician in order to receive a drug, the physician receives one payment from Medicare for the drug and another payment through the physician fee schedule for administering the drug. Clotting factor, however, is generally not administered in a physician's office.” That is, the report highlighted that Medicare payment for clotting factor, in particular, was inadequate because there are costs associated with supplying the clotting factor, but because it is self-administered, the furnishing of clotting factor was generally not eligible for the administration fee. Generally, the report noted that payment for supplying other outpatient drugs covered by Medicare Part B were adequate because they are eligible for the administration fee. Again, as stated above, Congress addressed this issue by creating the furnishing fee for these self-administered clotting factor products in the MMA.

More recently, gene therapies have been FDA-approved for the treatment of hemophilia. These gene therapies introduce a functional gene to the patient, which provides the genetic information needed for the patient to produce the missing or nonfunctional protein. A viral vector in the gene therapies, engineered with adeno-associate virus, delivers the functional copy of the clotting factor gene into the patient's liver cells. The viral vector then releases the functional gene which integrates into the cell's DNA and starts producing the missing clotting factor protein (that is, Factor VIII or Factor IX) to restore normal clotting function.

In the case of hemophilia A or B, the gene therapy introduces the functional gene that enables the patient to produce Factor VIII or Factor IX, respectively, on their own. Unlike clotting factors, which promptly restore balance in the coagulation cascade at the point of deficiency or bridge activated Factor IX and Factor X to restore the function of missing activated Factor VIII, allowing for stable blood clot formation and hemostasis, the gene therapies do not directly integrate into the coagulation cascade. In the coagulation cascade, clotting factors become activated in response to damaged tissues or exposure to collagen at the injury site. This activation initiates the conversion of prothrombin to thrombin. Thrombin then converts fibrinogen into fibrin strands, forming the blood clot. Clotting factors restore normal clotting function by replacing deficient factors through repeated, dose-adjustable infusions or injections. In contrast, a single administration of gene therapies maintains a consistent and adequate level of clotting factors over the long term by enabling the self-production of the clotting factor proteins—an indirect method that relies on the patient's cells to increase clotting factor levels. However, as the self-production of clotting factor proteins takes time, the sustained outcomes of gene therapies may take several weeks to fully manifest. Interested parties have asked if CMS considers these gene therapies to be clotting factors for which the clotting factor furnishing fee would be paid.

Gene therapies for hemophilia are administered via a one-time, single-dose intravenous infusion in a setting where personnel and equipment are immediately available to treat infusion-related reactions. They are not typically administered by the patient in his or her home, and close monitoring is required for at least three hours after the end of the infusion. While these gene therapy products may have a similar goal to clotting factor products, in that both products are designed to improve outcomes for patients with hemophilia, gene therapy products prompt the body to make clotting factors, but are not clotting factors themselves. Given that the administration would occur incident to a physician service (that is, the product is not self-administered), the differing mechanism of action from replacing deficient factors (that is, triggering the body to make clotting factors rather than infusing clotting factors into the body), and the requirement of close monitoring by a healthcare professional post-infusion, these gene therapies do not have the characteristics described in the January 2003 report that is referenced in section 1842(o)(5) of the Act, which the Secretary relied on in drafting § 410.63(c). Therefore, they do not constitute “clotting factors” for purposes of Medicare payment.

Accordingly, gene therapies for hemophilia are eligible for payment as drugs or biologicals under Part B as part of (or incident to) a physician's service. The “incident to” coverage is limited to drugs that are not usually self-administered and the physician generally must incur a cost for the drug and must bill for it. Furnishing entities will bill for its administration, and the administration fees will reflect the resources necessary to furnish the drug. For example, certain CPT codes for administering drugs include preparation of the dose and patient monitoring. Specifically, CPT codes 96401-96549 (chemotherapy administration and nonchemotherapy injections and infusions) include clinical labor activities such as clinical staff preparation of chemotherapy agent(s) as well as evaluation and management services.

For the reasons explained above, we do not believe gene therapies for hemophilia meet the definition of a clotting factor for purposes of Medicare payment, but even if they did, they still would not be eligible for the furnishing fee because the costs associated with furnishing these gene therapies would already be reflected in applicable administration codes paid under the Physician Fee Schedule. In accordance with § 410.63(c)(1), a clotting factor furnishing fee is not payable when the costs associated with furnishing a clotting factor are paid through another payment system. In this case, the payment system is the payment system established under the Physician Fee Schedule. Furnishing fees for drugs that are physician administered would result in physicians being paid twice for incidental costs of administering the drug because the furnishing fee is intended to compensate for supplies like needles, syringes, and tourniquets as well as storage costs, and so is the Part B payment for administering the drug. We do not believe this double payment is appropriate, nor do we believe this is what Congress intended in directing CMS to establish a clotting factor furnishing fee.

Accordingly, in this proposed rule, we are proposing to update § 410.63(b) to clarify existing CMS policy that blood clotting factors must be self-administered to be considered clotting factors for which the furnishing fee applies. Additionally, we are proposing to clarify at § 410.63(c) that the furnishing fee is only available to entities that furnish blood clotting factors, unless the costs associated with furnishing the clotting factor are paid though another payment system, including the Physician Fee Schedule. That is, we are proposing to clarify through revisions to § 410.63 that clotting factors (as specified in section 1861(s)(2)(I) of the Act) and those eligible to receive the clotting factor furnishing fee (as specified in section 1842(o)(5) of the Act) are the same subset of products.

B. Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)

1. Background on RHC and FQHC Payment Methodologies

As provided in 42 CFR part 405, subpart X, of our regulations, RHC and FQHC visits generally are defined as face-to-face encounters between a patient and one or more RHC or FQHC practitioners during which one or more RHC or FQHC qualifying services are furnished. RHC and FQHC practitioners are physicians, NPs, PAs, CNMs, clinical psychologists (CPs), licensed marriage and family therapists, mental health counselors, and clinical social workers, and under certain conditions, a registered nurse or licensed practical nurse furnishing care to a homebound RHC or FQHC patient in an area verified as having shortage of home health agencies. Transitional Care Management (TCM) services can also be paid by Medicare as an RHC or FQHC visit. In addition, Diabetes Self-Management Training (DSMT) or Medical Nutrition Therapy (MNT) sessions furnished by a certified DSMT or MNT program may also be considered FQHC visits for Medicare payment purposes. Only medically necessary medical, mental health, or qualified preventive health services that require the skill level of an RHC or FQHC practitioner are RHC or FQHC billable visits. Services furnished by auxiliary personnel (for example, nurses, medical assistants, or other clinical personnel acting under the supervision of the RHC or FQHC practitioner) are considered incident to the visit and are included in the per-visit payment.

RHCs generally are paid an all-inclusive rate (AIR) for all medically necessary medical and mental health services and qualified preventive health services furnished on the same day (with some exceptions). The AIR is subject to a payment limit, meaning that an RHC will not receive any payment beyond the specified limit amount. As of April 1, 2021, all RHCs are subject to upper payment limits determined in accordance with section 1833(f) of the Act.

FQHCs were paid under the same AIR methodology until October 1, 2014. Beginning on that date, in accordance with section 1834(o) of the Act (as added by section 10501(i)(3) of the Patient Protection and Affordable Care Act (Pub. L. 111-148)), FQHCs began to transition to the FQHC PPS system, in which they are paid based on the lesser of the FQHC PPS rate or their actual charges. The FQHC PPS rate is adjusted for geographic differences in the cost of services by the FQHC PPS geographic adjustment factor (GAF). The rate is increased by 34 percent when an FQHC furnishes care to a patient that is new to the FQHC, or to a beneficiary receiving an initial preventive physical examination (IPPE) or has an annual wellness visit (AWV).

Both the RHC AIR and FQHC PPS payment rates were designed to reflect the cost of all services and supplies that an RHC or FQHC furnishes to a patient in a single day. The rates are not adjusted at the individual level for the complexity of individual patient health care needs, the length of an individual visit, or the number or type of practitioners involved in the patient's care. Instead for RHCs, all costs for the facility over the course of the year are aggregated and an AIR is derived from these aggregate expenditures. The FQHC PPS base rate is updated annually by the percentage increase in the FQHC market basket reduced by a productivity adjustment. For CY 2025, CMS is proposing to rebase and revise the FQHC market basket to reflect a 2022 base year; see section III.B.7 of this proposed rule.

2. General Care Management Services in RHCs and FQHCs

a. Background

We have been engaged in a multi-year examination of coordinated and collaborative care services in professional settings, and as a result established codes and separate payment in the PFS to independently recognize and pay for these important services. The care coordination included in services, such as office visits, does not always adequately describe the non-face-to-face care management work involved in primary care and similar care relationships. Payment for office visits may not reflect all the services and resources required to furnish comprehensive, coordinated care management for certain categories of beneficiaries, such as those who are returning to a community setting following discharge from a hospital or skilled nursing facility (SNF) stay.

Before we get into the detailed background of our RHC and FQHC payment policies for care coordination services, we want to acknowledge that we have used several terms to describe these services and are providing clarification. We use the terms “care coordination” services interchangeably with the term “care management” services in preamble and manual guidance to describe the type of work discussed above. We began to use the term “general care management” when we established the HCPCS code G0511 for CY 2018. Use of “general care management” is meant to describe certain non-face-to-face care management work involved in primary care that we have identified as appropriate for separate payment as discussed in the following paragraphs.

As we discussed in the CY 2016 PFS final rule (80 FR 71081 through 71088), to address the concern that the non-face-to-face care management work involved in furnishing comprehensive, coordinated care management for certain categories of beneficiaries is not adequately paid for as part of an office visit, beginning on January 1, 2015, practitioners billing under the PFS are paid separately for chronic care management (CCM) services when CCM service requirements are met. We explained that RHCs and FQHCs cannot bill under the PFS for RHC or FQHC services and individual practitioners working at RHCs and FQHCs cannot bill under the PFS for RHC or FQHC services while working at the RHC or FQHC. Although many RHCs and FQHCs pay for coordination of services within their own facilities and may sometimes help to coordinate services outside their facilities, the type of structured care management services that are now payable under the PFS for patients with multiple chronic conditions, particularly for those who are transitioning from a hospital or SNF back into their communities, are generally not included in the RHC or FQHC payment. Therefore, separate payment was established in the CY 2016 PFS final rule (80 FR 71080 through 71088) for RHCs and FQHCs that furnish CCM services. We believe the non-face-to-face time required to coordinate care is not captured in the RHC AIR or the FQHC PPS payment, particularly for the rural and/or low-income populations served by RHCs and FQHCs. Allowing separate payment for CCM services in RHCs and FQHCs is intended to reflect the additional resources necessary for the unique components of CCM services.

In the CY 2018 PFS final rule (82 FR 53169 through 53180), we finalized revisions to the payment methodology for CCM services furnished by RHCs and FQHCs and established requirements for general behavioral health integration (BHI) and psychiatric collaborative care management (CoCM) services furnished in RHCs and FQHCs, beginning on January 1, 2018. We also initiated the use of HCPCS codes G0511 and G0512. HCPCS code G0511 is a general care management code for use by RHCs or FQHCs when at least 20 minutes of qualified CCM or general BHI services are furnished to a patient in a calendar month. HCPCS code G0512 is for psychiatric CoCM and can be billed by RHCs or FQHCs when at least 60 minutes of qualified psychiatric CoCM services are furnished to a patient in a calendar month.

For CY 2018 the payment amount for HCPCS code G0511 was set at the average of the 3 national non-facility PFS payment rates for the CCM and general BHI codes and updated annually based on the PFS amounts. That is, for CY 2018 the 3 codes that comprised HCPCS code G0511 were CPT code 99490 ( 20 minutes or more of CCM services), CPT code 99487 ( 60 minutes or more of complex CCM services), and CPT code 99484 ( 20 minutes or more of BHI services).

In the CY 2019 PFS final rule (83 FR 59683), we explained that another CCM code was introduced for practitioners billing under the PFS, CPT code 99491, which would correspond to 30 minutes or more of CCM furnished by a physician or other qualified health care professional and is similar to CPT codes 99490 and 99487. Therefore, for RHCs and FQHCs, we added CPT code 99491 as a general care management service and included it in the calculation of HCPCS code G0511. Starting on January 1, 2019, RHCs and FQHCs were paid for HCPCS code G0511 based on the average of the national non-facility PFS payment rates for CPT codes 99490, 99487, 99484, and 99491 (83 FR 59687).

In the CY 2021 PFS final rule (85 FR 84697 through 84699), we explained that the requirements described by the codes for principal care management (PCM) services were similar to the requirements for the services described by HCPCS code G0511; therefore, we added HCPCS codes G2064 and G2065 to HCPCS code G0511 as general care management services for RHCs and FQHCs. Consequently, effective January 1, 2021, RHCs and FQHCs are paid when a minimum of 30 minutes of qualifying PCM services are furnished during a calendar month. The payment rate for HCPCS code G0511 for CY 2021 was the average of the national non-facility PFS payment rate for the RHC and FQHC care management and general behavioral health codes (CPT codes 99490, 99487, 99484, and 99491), and PCM codes (HCPCS codes G2064 and G2065). We noted that in the CY 2022 PFS final rule (86 FR 65118), HCPCS codes G2064 and G2065 were replaced by CPT codes 99424 and 99435. Therefore, for CY 2022 the payment rate for HCPCS code G0511 was the average of the national non-facility PFS payment rate for CPT codes 99490, 99487, 99484, 99491, 99424, and 99425).

In the CY 2023 PFS final rule (87 FR 69735 through 69737), we included chronic pain management (CPM) services described by HCPCS code G3002 in the general care management HCPCS code G0511 when at least 30 minutes of qualifying non-face-to-face CPM services are furnished during a calendar month. We explained since HCPCS code G3002 is valued using a crosswalk to the PCM CPT code 99424, which is currently one of the CPT codes that comprise HCPCS code G0511, there was no change made to the average used to calculate the HCPCS code G0511 payment rate to reflect CPM services.

Most recently, in the CY 2024 PFS final rule (88 FR 79071 through 79073) we included the CPT codes that are associated with the suite of services that comprise remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM) in the general care management HCPCS code G0511 when these services are furnished by RHCs and FQHCs. In addition, we included community heath integration (CHI), principal illness navigation (PIN), and PIN—peer support services in HCPCS code G0511 when these services are furnished by RHCs and FQHCs (88 FR 79073 through 79081). We noted that for each of these newly included services that they must be medically reasonable and necessary, meet all requirements, and not be duplicative of services paid to RHCs and FQHCs under the general care management code for an episode of care in a given calendar month. We also clarified RHCs and FQHCs may bill HCPCS code G0511 multiple times in a calendar month, as long as all of the requirements are met and resource costs are not counted more than once (88 FR 79075).

Additional information on care management requirements is available on the CMS Care Management web page and on the CMS RHC and FQHC web pages.

b. Proposed Regulatory Update (§ 405.2464(c))

During our development of the proposals discussed in section III.B.2.c. and III.B.2.d. of this proposed rule, we determined that the language located in § 405.2464(c) could use additional information to streamline and provide clarity on our payment policy for care coordination services. For example, using consistent terms, effective dates, and the description of the basis of payment. Therefore, we propose technical changes to § 405.2464(c) to accurately reflect the iterations of our payment policy for care coordination services as detailed in this background section.

c. Proposed Payment Policy for General Care Management Services

As discussed previously, in the last few years of PFS payment rules we have expanded the scope of care management services billable using HCPCS code G0511. Prior to CY 2024, HCPCS code G0511 was based on the national average non-facility PFS payment rate for each base code identified as billable general care management services. That is, we added each payment rate divided by the total number of codes to arrive at the payment amount for HCPCS code G0511. This payment amount was a flat rate that was not subsequently adjusted for locality.

In the CY 2024 PFS final rule (88 FR 79076 through 79079), we explained continuing to calculate the value of HCPCS code G0511 using an approach based on an average may no longer be appropriate payment for those services since we are simply dividing by the number of codes that comprise HCPCS code G0511 and as that number of services with lower payment rates increases, the payment rate decreases. We noted that while the policy may address providing a payment for furnishing non-face-to-face services, the magnitude of the value may not appropriately account for the costs. Therefore, we finalized a revised methodology for the calculation of HCPCS code G0511 by looking at the actual utilization of the services. We used a weighted average of the services that comprise HCPCS code G0511. For the utilization data of the services, we used the most recently available utilization data from the services paid under the PFS in the physician office setting. We explained that the physician office setting may provide an appropriate proxy for utilization of these services in the absence of actual data because this setting most closely aligns with the types of services furnished in RHCs and FQHCs since they typically furnish primary care.

To ensure we accounted for payments accurately, we explained that we looked at PFS utilization of the base code for the service and any applicable add-on codes used in the same month as well as any base codes reported alone in a month for all of the services comprising general care management (that is, the array of services that made up HCPCS code G0511). We believed we needed to account for the payment associated with the base code along with an applicable add-on code in our calculation as this demonstrates a complete encounter. Then to arrive at the payment rate for HCPCS code G0511 for CY 2024, we took the weighted average of the base code and add-on code pairs, in addition to the individual base codes for all of the services that comprise HCPCS code G0511 by using the CY 2021 PFS utilization.

We determined that this approach was a more accurate representation of the payment since it is consistent with practitioners billing under the PFS, and it accounts for the additional time spent in care coordination.

Subsequent to the issuance of the CY 2024 PFS final rule, interested parties have requested that CMS give them the ability to bill Medicare for each of the care management services that comprise HCPCS code G0511 when they are furnished in RHCs and FQHCs. RHCs, FQHCs, and associations supporting access to health care for rural populations have expressed concerns regarding the transparency of the services being billed with HCPCS code G0511. We note, in the CY2024 PFS final rule we stated that HCPCS code G0511 could be billed multiple times in a calendar month for each care management code that comprised HCPCS code G0511 as long as all requirements were met, there was no overlapping of resource time and services were furnished in accordance with CPT coding guidelines and conventions. However, providing this guidance triggered questions on how CMS tracks which general care management service is being furnished if the bundled code is reported so they would know when it was appropriate to bill multiple care management services on a single claim. RHCs and FQHCs have also requested the ability to bill the add-on codes that describe additional minutes spent on furnishing care management services and often ask for guidance on how to account for additional time spent.

We have also heard from interested parties that RHCs and FQHCs would not find it burdensome to report the actual HCPCS code that describes the care management service furnished, which was the main concern we had when we implemented HCPCS code G0511 (82 FR 53172). We understand that RHCs and FQHCs have become more sophisticated with billing and therefore reporting multiple codes has become less burdensome than in CY 2018 when we implemented G0511. In addition, we have heard that RHCs and FQHCs are interested in having more exposure and recognition in playing their part the delivery of quality primary care and believe that this could be achieved with data that shows their utilization of services which could also be used in future payment refinements.

Due to these concerns, we have reevaluated our payment policy for care management services. We agree with interested parties that it is important to identify the actual services being furnished and understand the utilization of these services, especially given our strong interest in their volume and their contribution to initiatives on health equity and social needs of services in the care coordination space. Therefore, we are proposing to require RHCs and FQHCs to bill the individual codes that make up the general care management HCPCS code, G0511. The current list of base and add-on codes that make-up G0511 are listed in Table 24, titled “General Care Management HCPCS Codes and Descriptors.” Under this proposal, HCPCS code G0511 would no longer be payable when billed by RHCs and FQHCs. We note that the payment amounts for some services that made up G0511 are less than the payment amount for G0511 and if an RHC or FQHC mostly furnishes these services, they could see a potential decline in payment. We are also proposing to allow RHCs and FQHCs to bill the add-on codes for additional time spent once the minimum threshold of time was met to account for a complete encounter. This could potentially offset any decrease in payments. Payment for these services would be the national non-facility PFS payment rate when the individual code is on an RHC or FQHC claim, either alone or with other payable services and the payment rates are updated annually based on the PFS amounts for these codes. We believe that these proposals promote transparency in billing and payment and allowing RHCs and FQHCs to bill the individual care management codes would take into account the complexity of the service and the time spent furnishing the service.

We are proposing revisions at § 405.2464(c) to reflect the proposed payment method for care management services furnished in RHCs and FQHCs beginning January 1, 2025. We welcome comments on this proposed payment methodology.

d. New Codes for Advanced Primary Care Management (APCM) Services

As discussed in section II.G of this proposed rule, HHS and CMS have been analyzing opportunities to strengthen and invest in primary care in alignment with the goals of the HHS Initiative to Strengthen Primary Care. Research has demonstrated that greater primary care physician supply is associated with improved population-level mortality and reduced disparities, and also that establishing a long-term relationship with a primary care provider leads to reduced emergency department (ED) visits, improved care coordination, and increased patient satisfaction. HHS recognizes that effective primary care is essential for improving access to healthcare, for the health and wellbeing of individuals, families, and communities, and for achieving health equity. The first coordinated set of HHS-wide actions to strengthen primary care, as part of the Initiative, is in primary care payment; for example, adjusting payment to ensure it supports delivery of advanced primary care. CMS Innovation Center models, described in section II.G.2.a.(1) of this proposed rule, reflect the ongoing work within HHS and the unified, comprehensive approach to HHS primary care activities that we are accomplishing through our current statutory authorities and funding.

In recent years, CMS has implemented significant changes aimed at better capturing the resources required for care management services, including chronic care management (CCM), principal care management (PCM), and transitional care management (TCM) and more recently, community health integration (CHI), principal illness navigation (PIN) and PIN-peer support services. For RHCs and FQHCs, we have established payment for these suites of care management services outside of the RHC AIR and FQHC PPS. The policy requirements for RHCs and FQHCs furnishing these various care coordination services are consistent with those finalized under the PFS.

In section II.G.2.b. of this proposed rule, we are proposing to establish coding and make payment under the PFS for a newly defined set of APCM services described and defined by three new HCPCS G-codes. This new coding would reflect the recognized effectiveness and growing adoption of the advanced primary care approach to care. It would also encompass a broader range of services and simplify the billing and documentation requirements, as compared to existing care management codes. The proposed coding for APCM incorporates elements of several existing care management services into a bundle that we have already considered to be care coordination services paid separately to RHCs and FQHCs using HCPCS code G0511. For example, CCM and PCM. In addition, the coding for APCM incorporates elements of communication technology-based services (CTBS) into a bundle that we have already considered to be virtual communications paid separately to RHCs and FQHCs using HCPCS code G0071. For example, remote evaluation of patient videos/images, virtual check-in, and e-visits. Therefore, to allow RHCs and FQHCs the ability to simplify the billing and documentation requirements associated with furnishing APCM services we are proposing to allow RHCs and FQHCs to bill for these services and receive separate payment. Consistent with section II.G.2.b. of this proposed rule, the APCM code sets vary by the degree of complexity of patient conditions (that is, non-complex and complex CCM for multiple chronic conditions or PCM for a single high-risk condition), and whether the number of minutes spent by clinical staff or the physician or non-physician practitioner (NPP) is used to meet time thresholds for billing. The proposed HCPCS codes are described below:

HCPCS code GPCM1 ( Advanced primary care management services provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the following elements, as appropriate:

• Consent;

++ Inform the patient of the availability of the service; that only one practitioner can furnish and be paid for the service during a calendar month; of the right to stop the services at any time (effective at the end of the calendar month); and that cost sharing may apply.

++ Document in patient's medical record that consent was obtained.

• Initiation during a qualifying visit for new patients or patients not seen within 3 years;
• Provide 24/7 access for urgent needs to care team/practitioner, including providing patients/caregivers with a way to contact health care professionals in the practice to discuss urgent needs regardless of the time of day or day of week;
• Continuity of care with a designated member of the care team with whom the patient is able to schedule successive routine appointments;
• Deliver care in alternative ways to traditional office visits to best meet the patient's needs, such as home visits and/or expanded hours;
• Overall comprehensive care management;

++ Systematic needs assessment (medical and psychosocial).

++ System-based approaches to ensure receipt of preventive services.

++ Medication reconciliation, management and oversight of self-management.

• Development, implementation, revision, and maintenance of an electronic patient-centered comprehensive care plan;

++ Care plan is available timely within and outside the billing practice as appropriate to individuals involved in the beneficiary's care, can be routinely accessed and updated by care team/practitioner, and copy of care plan to patient/caregiver;

• Coordination of care transitions between and among health care providers and settings, including referrals to other clinicians and follow-up after an emergency department visit and discharges from hospitals, skilled nursing facilities or other health care facilities as applicable;

++ Ensure timely exchange of electronic health information with other practitioners and providers to support continuity of care.

++ Ensure timely follow-up communication (direct contact, telephone, electronic) with the patient and/or caregiver after an emergency department visit and discharges from hospitals, skilled nursing facilities, or other health care facilities, within 7 calendar days of discharge, as clinically indicated.

• Ongoing communication and coordinating receipt of needed services from practitioners, home- and community-based service providers, community-based social service providers, hospitals, and skilled nursing facilities (or other health care facilities), and document communication regarding the patient's psychosocial strengths and needs, functional deficits, goals, preferences, and desired outcomes, including cultural and linguistic factors, in the patient's medical record;
• Enhanced opportunities for the beneficiary and any caregiver to communicate with the care team/practitioner regarding the beneficiary's care through the use of asynchronous non-face-to-face consultation methods other than telephone, such as secure messaging, email, internet, or patient portal, and other communication-technology based services, including remote evaluation of pre-recorded patient information and interprofessional telephone/internet/EHR referral service(s), to maintain ongoing communication with patients, as appropriate;

++ Ensure access to patient-initiated digital communications that require a clinical decision, such as virtual check-ins and digital online assessment and management and E/M visits (or e-visits).

• Analyze patient population data to identify gaps in care and offer additional interventions, as appropriate;
• Risk stratify the practice population based on defined diagnoses, claims, or other electronic data to identify and target services to patients;
• Be assessed through performance measurement of primary care quality, total cost of care, and meaningful use of Certified EHR Technology.).

HCPCS code GPCM2 ( Advanced primary care management services for a patient with multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient, which place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline, provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the elements included in GPCM1, as appropriate) and HCPCS code GPCM3 ( Advanced primary care management services for a patient that is a Qualified Medicare Beneficiary with multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient, which place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline, provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the elements included in GPCM1, as appropriate).

As we've established previously, care coordination services are RHC/FQHC services and as such, we are proposing to align once again with the PFS and adopt the new codes for APCM services. Additionally, allowing separate payment for APCM services in RHCs and FQHCs is intended to reflect the additional time and resources necessary for the unique components of care coordination services.

Further, in alignment with our proposal earlier in this section to require RHCs and FQHCs to utilize the same coding as when billing under the PFS and no longer use HCPCS code G0511, which described many care coordination services, we are proposing to require RHCs and FQHCs when furnishing APCM to use the codes created for the PFS, that is, the three HCPCS G-codes described above. We would pay for these services in addition to the RHC AIR or FQHC PPS because we consider these services as non-face-to-face services and similar to other care management services such as chronic care management, principal care management, and remote physiological monitoring, where these services are not captured in the RHC AIR or FQHC PPS payment. Similarly, we are proposing that payment for these services would be paid at the PFS non-facility rate.

It is important to note that if RHCs and FQHCs report these new codes, they are per calendar month bundles. If the RHC/FQHC decides to bill for APCM then they would not bill for individual services. For further discussion on duplicative services and concurrent billing restrictions with regard to APCM policies, we refer readers to section II.G.2.d. of this proposed rule.

e. Request for Information—Aligning With Services Paid Under the PFS

As we discuss in section III.B.2.a. of this proposed rule, over the last several years we have been increasing our focus on care coordination. These services have evolved to focus on preventing and managing chronic disease, improving a beneficiary's transition from the hospital to the community setting, or on integrative treatment of patients with behavioral health conditions. We have acknowledged that the care coordination included in services such as office visits does not always describe adequately the non-face-to-face care management work involved and may not reflect all the services and resources required to furnish comprehensive, coordinated care management for certain categories of beneficiaries. Therefore, under the PFS we have proposed new services over the years that practitioners billing under the PFS can be paid separately under the PFS. We have noted previously that RHCs and FQHCs cannot bill under the PFS for RHC or FQHC services and individual practitioners working at RHCs and FQHCs cannot bill under the PFS for RHC or FQHC services while working at the RHC or FQHC. Therefore, we have proposed payment policies for RHCs and FQHCs that complement the new services for care coordination under the PFS to align the RHC and FQHC resource cost for those services with payment.

The increase in frequency of this complementary rulemaking has triggered us to consider operational efficiencies internally that we believe could result in more transparency and clarity for interested parties. Since RHCs and FQHCs are generally paid under encounter-based payment systems, we have not systematically analyzed all services paid under the PFS (nor do we analyze all new services proposed) to determine if they are included as a part of the visit versus are eligible for additional payment. Another reason that we do not analyze every code is because frequently codes created under the PFS for billing practitioners are to more appropriately account for resources paid under the PFS. Codes for these purposes are not applicable for RHCs and FQHCs since they are not paid under the PFS.

Generally, for PFS services that are a part of the office visit, there is no separate payment under the RHC AIR or FQHC PPS methodologies. On the contrary, care coordination services where the focus is on care management, coordination, or certain activities needed to manage chronic illnesses or adapt to new models of care, we have allowed separate payment for RHCs and FQHCs.

We are seeking comment on how we can improve the transparency and predictability regarding which HCPCS codes are considered care coordination services. Our goal is to classify care coordination services on the PFS in a way that makes it automated in the downstream effect on RHCs and FQHCs. We believe establishing a streamlined policy regarding which services are separately paid for RHCs and FQHCs versus included as part of the visit is more transparent. In addition, a policy where codes are communicated and updated through sub-regulatory guidance may be more efficient.

3. Telecommunication Services

a. Background

Section 3704 of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) (Pub. L. 116-136, March 27, 2020) directed the Secretary to establish Medicare payment for telehealth services provided by RHCs and FQHCs serving as a distant site (that is, where the practitioner is located) during the PHE for COVID-19. Separately, section 3703 of the CARES Act expanded CMS' emergency waiver authority to allow for a waiver of any of the statutory telehealth payment requirements under section 1834(m) of the Act for telehealth services furnished during the PHE. Specifically, section 1834(m)(8)(B) of the Act, as added by the CARES Act, requires that the Secretary develop and implement payment methods for FQHCs and RHCs that serve as a distant site during the PHE for the COVID-19 pandemic. The payment methodology outlined in the CARES Act requires that rates shall be based on rates that are similar to the national average payment rates for comparable telehealth services under the Medicare PFS. CMS established rates based on the average amount for all PFS telehealth services on the telehealth list, weighted by volume.

In the CY 2022 PFS final rule with comment (86 FR 65211), we revised the regulatory requirement that an RHC or FQHC mental health visit must be a face-to-face (that is, in-person) encounter between an RHC or FQHC patient and an RHC or FQHC practitioner. We revised the regulations under § 405.2463 to state that an RHC or FQHC mental health visit can also include encounters furnished through interactive, real-time, audio/video telecommunications technology or audio-only interactions in cases where beneficiaries are not capable of, or do not consent to, the use of devices that permit a two-way, audio/video interaction for the purposes of diagnosis, evaluation or treatment of a mental health disorder. We noted that these changes aligned with similar mental health services furnished under the PFS. We also noted that this change allows RHCs and FQHCs to report and be paid for mental health visits furnished via real-time, telecommunication technology in the same way they currently do when these services are furnished in-person.

In addition, we revised the regulation under § 405.2463 to state that there must be an in-person mental health service furnished within 6 months prior to the furnishing of the telecommunications service and that an in-person mental health service (without the use of telecommunications technology) must be provided at least every 12 months while the beneficiary is receiving services furnished via telecommunications technology for diagnosis, evaluation, or treatment of mental health disorders, unless, for a particular 12-month period, the physician or practitioner and patient agree that the risks and burdens outweigh the benefits associated with furnishing the in-person item or service, and the practitioner documents the reasons for this decision in the patient's medical record (86 FR 65210 and 65211).

As discussed in the CY 2023 PFS final rule (87 FR 69738), the Consolidated Appropriations Act, 2022 (CAA, 2022) (Pub. L. 117-103, March 15, 2022) included the extension of several Medicare telehealth flexibilities established during the public health emergency (PHE) for COVID-19 for a limited 151-day period beginning on the first day after the end of the PHE for COVID-19. Specifically, Division P, Title III, section 304 of the CAA, 2022, delayed the in-person requirements under Medicare for mental health services furnished through telehealth under the PFS and for mental health visits furnished by RHCs and FQHCs via telecommunications technology until the 152nd day after the end of the PHE for COVID-19. Therefore, in the CY 2023 PFS final rule (87 FR 69737), we revised the regulations under §§ 405.2463 and 405.2469 again to reflect these provisions.

Further, in the CY 2024 PFS final rule (88 FR 79065), we discussed that the CAA, 2023 (Pub. L. 117-328, December 29, 2022) further extended the Medicare telehealth flexibilities enacted in the CAA, 2022 for a period beginning on the first day after the end of the PHE for COVID-19 and ending on December 31, 2024, if the PHE ends prior to that date. Specifically related to RHCs and FQHCs, section 4113(c) of the CAA, 2023 amended section 1834(m)(8) of the Act to extend payment for telehealth services furnished by FQHCs and RHCs for the period beginning on the first day after the end of the COVID-19 PHE and ending on December 31, 2024, if the PHE ends prior to that date. We noted that payment continued to be made under the methodology established for telehealth services furnished by FQHCs and RHCs during the PHE, which is based on payment rates that are similar to the national average payment rates for comparable telehealth services under the PFS.

We explained that section 4113(d) of the CAA, 2023 continues to delay the in-person requirements under Medicare for mental health services furnished through telehealth under the PFS and for mental health visits furnished by RHCs and FQHCs via telecommunications technology. That is, for RHCs and FQHCs, in-person visits will not be required until January 1, 2025, or, if later, the first day after the end of the PHE for COVID-19. Therefore, we stated that we will continue to apply the delay of the in-person requirements under Medicare for mental health services furnished by RHCs and FQHCs. We noted that the Department of Health and Human Services declared an end to the Federal PHE for COVID-19 under section 319 of the Public Health Service Act on May 11, 2023. Therefore, we revised the regulations under §§ 405.2463 and 405.2469 again to reflect these provisions (88 FR 79066 through 79067).

b. Direct Supervision Via Use of Two-Way Audio/Video Communications Technology

Under Medicare Part B, certain types of services are required to be furnished under specific minimum levels of supervision by a physician or practitioner. See section II.D.2.a. for the discussion regarding direct supervision for services provided using telecommunications technologies under the PFS.

In the CY 2024 PFS final rule (88 FR 79067), we explained that extending this definition of direct supervision for RHCs and FQHCs under our regulations at §§ 405.2413, 405.2415, 405.2448, and 405.2452 through December 31, 2024, would align the timeframe of this policy with many of the previously discussed PHE-related telehealth policies that were extended under provisions of the CAA, 2023. In addition, we were concerned about an abrupt transition to the pre-PHE policy of requiring the physical presence of the supervising practitioner beginning after December 31, 2023, given that RHCs and FQHCs have established new patterns of practice during the PHE for COVID-19. We also believed that RHCs and FQHCs would need time to reorganize their practices established during the PHE to reimplement the pre-PHE approach to direct supervision without the use of audio/video technology. Similar to services furnished in physician office setting, RHC and FQHC services and supplies furnished incident to physician's services are limited to situations in which there is direct physician supervision of the person performing the service, except for certain care coordination services which may be furnished under general supervision. For CY 2024, we continued to define “immediate availability” as including real-time audio and visual interactive telecommunications through December 31, 2024, and solicited comment on whether we should consider extending the definition of “direct supervision” to permit virtual presence beyond December 31, 2024.

(1) Proposal for CY 2025

In the CY 2024 PFS proposed rule, we solicited comment on potential patient safety or quality concerns when direct supervision occurs virtually in RHCs and FQHCs; for instance, if certain types of services are more or less likely to present patient safety concerns, or if this flexibility would be more appropriate when certain types of auxiliary personnel are performing the supervised service. We were also interested in potential program integrity concerns such as overutilization or fraud and abuse that interested parties may have in regard to this policy.

Comments provided were overall supportive of our proposal to continue to define “immediate availability” to include availability through virtual means, stating that it will benefit healthcare providers while greatly enhancing patient access to quality care, particularly in underserved areas. Commenters also noted that direct supervision has become increasingly challenging and the option to provide virtual direct supervision has enhanced the quality and provision of healthcare services beneficiaries have received in medically underserved, rural communities.

We note that in section II.D.2.a. of this proposed rule, there is a proposal to permanently adopt a definition of direct supervision that allows “immediate availability” of the supervising practitioner using audio/video real-time communications technology (excluding audio-only), but only for the following subset of incident-to services described under § 410.26, (1) services furnished incident to a physician or other practitioner's service when provided by auxiliary personnel employed by the billing practitioner and working under their direct supervision, and for which the underlying HCPCS code has been assigned a Professional Component/Technical Component indicator of `5'; and (2) services described by CPT code 99211 ( Office or other outpatient visit for the evaluation and management of an established patient that may not require the presence of a physician or other qualified health care professional). In addition, under the PFS we are proposing for all other services required to be furnished under the direct supervision of the supervising physician or other practitioner, to continue to define “immediate availability” to include real-time audio and visual interactive telecommunications technology only through December 31, 2025.

After evaluating the information gathered through the comment solicitation, we believe that we should maintain the current flexibility in RHCs and FQHCs as it continues to support access and preserve workforce capacity. We believe that there is value in allowing RHC and FQHC services to be furnished under direct supervision where virtual presence meets the definition of “immediately available” as status quo, so that we may further evaluate the services along with the analysis occurring for the remaining services that we are contemplating under the PFS. We note that there may be nuances in the RHC and FQHC settings since generally payment is at the AIR or PPS rate and not at the individual service code level to carve out services limited/obvious services from other services. We could seek to establish a final policy in RHCs and FQHCs once a final policy is determined under the PFS, to avoid confusion since they are taking an incremental approach at the code level for CY 2025.

Therefore, we are proposing to maintain the virtual presence flexibility on a temporary basis, that is, the presence of the physician (or other practitioner) would include virtual presence through audio/video real-time communications technology (excluding audio-only) through December 31, 2025.

c. Telecommunications Technology

As discussed above, section 3704 of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) (Pub. L. 116-136, March 27, 2020) directed the Secretary to establish Medicare payment for telehealth services provided by RHCs and FQHCs serving as a distant site (that is, where the practitioner is located) during the PHE for COVID-19. Separately, section 3703 of the CARES Act expanded CMS' emergency waiver authority to allow for a waiver of any of the statutory telehealth payment requirements under section 1834(m) of the Act for telehealth services furnished during the PHE. Specifically, section 1834(m)(8)(B) of the Act, as added by the CARES Act, required that the Secretary develop and implement payment methods for FQHCs and RHCs that serve as a distant site during the PHE for the COVID-19 pandemic. The payment methodology outlined in the CARES Act requires that rates shall be based on rates that are similar to the national average payment rates for comparable telehealth services under the Medicare PFS. Therefore, CMS established rates based on the average amount for all PFS telehealth services on the telehealth list, weighted by volume. RHCs and FQHCs bill for these Medicare telehealth services using HCPCS code G2025.

In the CY 2022 PFS final rule with comment (86 FR 65211), we revised the regulatory requirement that an RHC or FQHC mental health visit must be a face-to-face (that is, in person) encounter between an RHC or FQHC patient and an RHC or FQHC practitioner. We revised the regulations under § 405.2463 to state that an RHC or FQHC mental health visit can also include encounters furnished through interactive, real-time, audio/video telecommunications technology or audio-only interactions in cases where beneficiaries are not capable of, or do not consent to, the use of devices that permit a two-way, audio/video interaction for the purposes of diagnosis, evaluation or treatment of a mental health disorder. We noted that these changes aligned with similar mental health services furnished under the PFS. We also noted that this change allows RHCs and FQHCs to report and be paid for mental health visits furnished via real-time, telecommunication technology in the same way they currently do when these services are furnished in-person.

The temporary authority under section 1834(m)(8) of the Act was extended by statute through the end of CY 2024, meaning under current law, and absent additional changes in regulation, RHCs and FQHCs could not be paid for non-behavioral health services furnished remotely to beneficiaries enrolled in fee-for-service Medicare after December 31, 2024.

(1) Payment Proposal for Non-Behavioral Health Telecommunication Technology Services

Widespread use of telecommunications technology to furnish services during the PHE has illustrated interest within the medical community and among Medicare beneficiaries in furnishing and receiving care through the use of technology beyond the PHE. During the PHE, RHCs and FQHCs, much like other provider types, have had to change how they furnish care in order to meet the needs of their patients, and use of the temporary authority to bill Medicare for PFS telehealth services has been widely utilized by RHCs and FQHCs during the PHE. Eliminating flexibilities under which RHC and FQHC services have been furnished to beneficiaries via telecommunication technologies for over four years and resuming solely in-person, face-to-face medical visits after December 31, 2024, would cause disruptions in access to services from RHC and FQHC practitioners. This would be particularly problematic for the underserved populations that these settings furnish services to since it could fragment care. We believe that we need to preserve the flexibilities under which RHC and FQHC services have been furnished to beneficiaries via telecommunication technologies temporarily and to do so through an approach that these settings are familiar with in order to mitigate burden. Technologies used in this space and the quality of care associated with them continue to evolve. We believe that it would be prudent to allow time to engage interested parties while we consider how to incorporate telecommunication technology services on a more permanent basis.

For these reasons, we propose, on a temporary basis, to allow payment for non-behavioral health visits furnished via telecommunication technology. We propose to facilitate payments using an approach that closely aligns with the mechanisms mandated by the statute but ends December 31, 2024. That is, RHCs and FQHCs would continue to bill for RHC and FQHC services furnished using telecommunication technologies by reporting HCPCS code G2025 on the claim, including services furnished using audio-only communications technology. Since the costs associated with non-behavioral health visits furnished via telecommunication technology are not included in the calculations for the RHC AIR methodology and FQHC PPS, we believe that we need to propose a proxy that would represent such resources used when furnishing these services. Therefore, we propose to continue to calculate the payment amount based on the average amount for all PFS telehealth services on the telehealth list, weighted by volume for those services reported under the PFS. We believe that using this weighted average is appropriate during this interim while we contemplate permanent policies for these services since there is a wide range of values for the telehealth services under the PFS. We believe that RHCs and FQHCs generally furnish services that are similar to and at a frequency the same as physicians and other practitioners paid under the PFS. While we do not have actual cost information, we believe that this weighted average is an appropriate proxy since it addresses certain resource costs experienced by professionals and would mitigate any potential over or under payments. Costs associated with these services would continue to not be used in determining payments under the RHC AIR methodology or the FQHC PPS.

We believe that these proposals would preserve the telecommunication technology flexibility under which RHC and FQHC services have been furnished for over 4 years and would not impact access to care for Medicare beneficiaries who currently benefit from these services while CMS contemplates next steps. We solicit comment on whether there may be other payment methodologies that may be a proxy for costs associated with non-behavioral health visits furnished via telecommunication technology and why those payment methodology may be more appropriate than the weighted average of the telehealth services list under PFS.

We propose to amend § 405.2464 by adding new paragraph (g) to reflect our proposed payment policy for non-behavioral health services furnished in RHCs and FQHCs via telecommunication technology for CY 2025.

(2) Alternative Proposal Considered for Payment of Medical Visits Furnished Via Telecommunication Technology

We considered reevaluating the regulations regarding face-to-face visit requirements for encounters between a beneficiary and an RHC or FQHC practitioner in light of contemporary medical practices. That is, we considered proposing a revision to the regulatory requirement that an RHC or FQHC medical visit must be a face-to-face (that is, in-person) encounter between a beneficiary and an RHC or FQHC practitioner to also include encounters furnished through interactive, real-time, audio and video telecommunications technology. This would result in payment for services furnished via telecommunication technology to be made under the RHC AIR methodology and under the FQHC PPS, similar to how we revised the regulations for mental health visits. We believe interested parties may prefer the per visit payment that aligns with the RHC AIR or FQHC PPS. However, we did not propose this alternative because we determined that it would have unintended consequences, especially in cases where the RHC AIR or FQHC PPS per-visit rates would be significantly higher than the PFS rate that would apply if other entities furnished the same service to the same beneficiary in the same location.

We believe that continuing to pay temporarily for RHC and FQHC services furnished via telecommunication technologies in the same manner as we have done over the past several years preserves the flexibility for RHCs and FQHCs to continue access to care, mitigates administrative burden, and mitigates potential program integrity concerns. However, we solicit comment on the alternative proposal we considered. That is, revising the definition of a visit to include interactive, real-time, audio/video telecommunication technology which would result in a capitated payment under the RHC AIR methodology or FQHC PPS.

d. In-Person Visit Requirements for Remote Mental Health Services Furnished by RHC and FQHCs

The CAA, 2021, stipulated that the beneficiary needed to receive an in person, non-telehealth service 6 months prior to initiation of the telehealth mental health services and that the Secretary should determine an appropriate frequency for provision of subsequent periodic in person, non-telehealth services.

In the CY 2022 PFS final rule with comment (86 FR 65210), we revised the regulation under § 405.2463 to state that there must be an in-person mental health service furnished within 6 months prior to the furnishing of the telecommunications service and that an in-person mental health service (without the use of telecommunications technology) must be provided at least every 12 months while the beneficiary is receiving services furnished via telecommunications technology for diagnosis, evaluation, or treatment of mental health disorders, unless, for a particular 12-month period, the physician or practitioner and patient agree that the risks and burdens outweigh the benefits associated with furnishing the in-person item or service, and the practitioner documents the reasons for this decision in the patient's medical record.

As discussed in the CY 2023 PFS final rule (87 FR 69738), the CAA, 2022 included the extension of a number of Medicare telehealth flexibilities established during the PHE for COVID-19 for a limited 151-day period beginning on the first day after the end of the PHE. Division P, Title III, section 304 of the CAA, 2022, delayed the in-person requirements under Medicare for mental health services furnished through telehealth under the PFS and for mental health visits furnished by RHCs and FQHCs via telecommunications technology until the 152nd day after the end of the PHE for COVID-19.

The CAA, 2023 (Pub. L. 117-328, December 29, 2022) extended the Medicare telehealth flexibilities enacted in the CAA, 2022 for a period beginning on the first day after the end of the PHE for COVID-19 and ending on December 31, 2024, if the PHE ended prior to that date. While the CAA, 2021 only applied to the PFS, we implemented similar policies for RHCs, FQHCs, and hospital outpatient departments. The in-person visit requirements are currently set to take effect for services furnished on or after January 1, 2025.

However, given concerns from interested parties on the impact of enforcing these requirements after multiple years of delay, we are proposing an additional extension. We are proposing to continue to delay the in-person visit requirement for mental health services furnished via communication technology by RHCs and FQHCs to beneficiaries in their homes until January 1, 2026.

4. Intensive Outpatient Program Services (IOP)

a. Background

As we discussed in the CY 2024 OPPS final rule (88 FR 81838) section 4124 of Division FF of the CAA, 2023 established Medicare coverage for intensive outpatient program (IOP) services furnished by a hospital to its outpatients, or by a community mental health center (CMHC), a FQHC or a RHC, as a distinct and organized intensive ambulatory treatment service offering less than 24-hour daily care in a location other than an individual's home or inpatient or residential setting, effective January 1, 2024.

IOP is a distinct and organized outpatient program of psychiatric services provided for individuals who have an acute mental illness, which includes, but is not limited to conditions such as depression, schizophrenia, and substance use disorders. We noted an IOP is thought to be less intensive than a partial hospitalization program (PHP).

This new provision mandated several areas of policy to implement an IOP program, including scope of benefits and services, certification and plan of care requirements, and special payment rules for IOP services in RHCs and FQHCs, all of which are discussed in the CY2024 OPPS final rule (88 FR 81838 through 81845). We made corresponding regulation changes for IOP services at §§ 405.2400, 405.2401, 405.2410, 405.2411, 405.2446, 405.2462, 405.2463, 405.2464, 405.2468, and 405.2469.

b. Update to Special Payment Rules for Intensive Outpatient Services

As we discussed in the CY 2024 OPPS final rule (88 FR 81841), section 4124(c) of the CAA, 2023 further amended section 1834(o) of the Act and section 1834(y) of the Act, to provide special payment rules for both FQHCs and RHCs, respectively, for furnishing IOP services. Section 4124(c)(1) of the CAA, 2023 amended section 1834(o) of the Act to add a new paragraph (5)(A) to require that payment for IOP services furnished by FQHCs be equal to the amount that would have been paid under Medicare for IOP services had they been covered outpatient department services furnished by a hospital. In addition, section 4124(c)(2) of the CAA, 2023 amended section 1834(y) of the Act to add a new paragraph (3)(A) to require that payment for IOP services furnished by RHCs be equal to the amount that would have been paid under Medicare for IOP services had they been covered outpatient department services furnished by a hospital.

In the CY 2024 OPPS final rule (88 FR 81841), we provided a detailed discussion of the final CY 2024 payment rate methodology for IOP. CMS finalized two payment rates, a 3- and a 4- or more services per day, for IOP services for hospitals and CMHCs. However, for RHCs and FQHCs we established a 3-service per day payment rate. We stated that we believed it was appropriate to establish the payment rate where the utilization is typically structured to be days with 3 or fewer services and solicited comment on whether the hospital-based IOP payment rate for 4-service days would be appropriate for RHCs and FQHCs. Although we previously stated that we would review the data and consider a 4 or more services per day for future rulemaking, we have since considered this further. We believe that we should provide parity for IOP services across the various settings with site neutral payments while continuing to monitor access to these services. Therefore, we are proposing to provide a payment rate for 4 or more services per day in an RHC/FQHC setting. Additionally, as required in section 4124(c)(2) of the CAA, 2023 we would align with the 4 or more-services per day payment rate for hospital outpatient departments. As with the 3-services per day, the 4 or more services per day payment rates will be updated annually.

c. Technical Correction (§§ 405.2410 and 405.2462)

In the CY 2024 Hospital Outpatient Prospective Payment (OPPS) and Ambulatory Surgical Center (ASC) Payment Systems final rule with comment (88 FR 81844) we finalized revisions to §§ 405.2410, 405.2462, and 405.2464 in the regulations to reflect the payment amount for IOP services and how the Medicare Part B deductible and coinsurance are applied in RHC's and FQHC's. For RHCs, the beneficiary is responsible for the Medicare Part B deductible and coinsurance amounts at an amount not to exceed 20 percent of the clinic's reasonable charges for IOP services. For FQHC's, the beneficiary is responsible for a coinsurance amount of 20 percent of the lesser of the FQHC's actual charge for the service or the IOP rate. We revised the regulatory requirements at § 405.2410, Application of Part B deductible and coinsurance and § 405.2462, Application of deductible and coinsurance for RHCs and FQHCs paid on the basis of the special payment rule under § 405.2462(j) to reflect how the Medicare Part B deductible and coinsurance are applied.

During a recent review of our regulations at §§ 405.2410(c) and 405.2462(j), we noticed that both sections had errors. That is, § 405.2410(c) does not reflect the correct policy that is applicable for beneficiary coinsurance when they receive IOP services in RHCs and FQHCs. With regard to the error at § 405.2462(j), we inadvertently left language specific to RHCs in the introductory text when it should have been its own paragraph. Therefore, we propose revisions to § 405.2410 to reflect the correct policy applicable for beneficiary coinsurance as described above in the previous paragraph. We also propose revisions to § 405.2462(j) to accommodate the new paragraph (j)(1).

5. Payment for Preventive Vaccine Costs in RHCs and FQHCs

a. Background

Section 1833(a)(3)(A) of the Act specifies that services described in section 1861(s)(10)(A)—pneumococcal, influenza and COVID-19 vaccines and their administration—are exempt from the RHC and FQHC payment limit of 80 percent of reasonable costs. Therefore, payment for pneumococcal, influenza and COVID-19 vaccines and their administration in RHCs and FQHCs is governed by the statute at Section 1833(b) of the Act, which requires payment at 100 percent of reasonable cost. For RHCs, this means that costs associated with these vaccines and their administration are not included in determining the AIR or subject to the payment limit, and for FQHCs, these costs are not included under the FQHC PPS. We note that the hepatitis B vaccine, which is described at section 1861(s)(10)(B) of the Act, is not specified at 1833(a)(3)(A) as exempt from the RHC/FQHC payment limit of 80 percent of reasonable costs, and therefore, payment for a hepatitis B vaccine and its administration is included in the FQHCs PPS rate and the RHC AIR. However, since hepatitis B vaccines and their administration are considered a Part B preventive service, no coinsurance or deductible is charged when a hepatitis B vaccine is administered in an RHC or FQHC. Please see section III.H.2.c. of this proposed rule for more information on hepatitis B vaccines in RHCs and FQHCs.

In the April 3, 1996 FQHC final rule (61 FR 14657), we codified at § 405.2466(b)(1)(iv) that, for RHCs and FQHCs, payment for pneumococcal and influenza vaccine and their administration is 100 percent of Medicare reasonable cost, which is paid as part of the annual reconciliation through the cost report. In the CY 2022 PFS final rule (86 FR 65207), we made conforming changes in that section to include the COVID-19 vaccine and its administration.

b. Revisions to Current Policy

In the May 2, 2014 RHC/FQHC PPS final rule (79 FR 25449), we addressed commenters' recommendations that CMS apply a consistent approach to payment for Part B vaccines. One commenter specifically recommended that CMS allow RHCs and FQHCs to bill for Part B vaccines at the time of service, either with or without an encounter for a visit. The commenter stated that those bills could be paid using national Part B rates, to be followed by an annual reconciliation on the cost report between the payments and the reasonable costs of the vaccines and their administration. This commenter wished to reduce the time between vaccine administration and payment, and to enable the documentation on individual patient claims that these vaccines were furnished. Commenters generally asserted that streamlining Part B vaccine payment would help ensure broad vaccine access for Medicare beneficiaries.

In response to these comments, we responded that we did not believe that any changes in our billing policies were necessary. We stated that RHCs and FQHCs are accustomed to reporting and receiving payment for the reasonable costs of Part B vaccines and their administration through the annual cost report, and we believed that an annual reconciliation between vaccine payments and reasonable costs would create an additional administrative burden for FQHCs and MACs. We also noted that as of January 1, 2011, FQHCs have been required to report pneumococcal and influenza vaccines and their administration on a patient claim with the appropriate HCPCS and revenue codes when furnished during a billable visit. Please note that this is not a requirement for RHCs.

In the CY 2022 PFS final rule (86 FR 65207), in which we made conforming regulatory changes at § 405.2466(b)(1)(iv) to include the COVID-19 vaccine, we received several comments regarding the timing of vaccine payments for RHCs and FQHCs. These comments echoed the sentiments expressed by the commenters on the same topic in the 2014 final rule mentioned above, and while they were out of the scope of our proposals for CY2022, we will elaborate on them here. These commenters expressed appreciation for measures taken by CMS in April 2021 to make lump-sum payments for COVID-19 vaccine administration available to RHCs and FQHCs in advance of cost report settlement, but commenters emphasized that those payments were only a temporary solution. Commenters urged CMS to update the RHC and FQHC cost report to ensure adequate, permanent reimbursement for COVID-19 vaccines. Commenters added that RHCs and FQHCs have experienced challenges with burdensome reporting requirements and data collection, as well as slow distribution of payments from MACs. Another commenter stated that RHCs and FQHCs should not have to wait until settlement of cost report to be reimbursed for other preventive vaccines, and that delayed payment may hinder them from immunizing Medicare beneficiaries.

While we did not respond directly to those comments in the CY 2022 PFS final rule, as they were out of scope of the policies that were finalized at the time, we did make clarifications regarding payment for preventive vaccines and their administration in the RHC and FQHC Frequently Asked Questions (FAQs) that accompanied the publication of the CY 2022 PFS final rule. In those FAQs, we clarified that the conforming change made to § 405.2466(b)(1)(iv) to reflect coverage and payment for COVID-19 vaccines in RHCs and FQHCs did not reflect any other payment policy changes regarding payment for Part B vaccines and administration in those settings. We reiterated that RHCs and FQHCs are paid 100 percent of reasonable cost through their cost report for Part B vaccines and their administration. Since there is a gap in time from when costs are incurred in RHCs and FQHCs for furnishing vaccines and when payment is received, the Medicare Administrative Contractors (MACs) could provide early payments in the form of lump sum payments to RHCs and FQHCs in March of 2021 to facilitate COVID-19 vaccinations. RHCs and FQHCs can request additional lump sum payments from their MAC at any time.

Since the publication of the CY 2022 PFS final rule, we have given additional consideration to the comments discussed above. During and since the COVID-19 PHE, CMS has especially promoted efforts aimed at facilitating increased access to vaccinations for both Medicare enrollees and all Americans. Vaccination promotion efforts also dovetail with CMS' overarching strategic priorities of expanding health care access and advancing health equity. For CY 2025, CMS has identified the issue of vaccination in RHCs and FQHCs as an area where payment policy can be updated to improve access to preventive vaccines for Medicare enrollees.

We are proposing to allow RHCs and FQHCs to bill for the administration of Part B preventive vaccines at the time of service. Based on the proposed changes in section III.M. and III.H.2.c. of this proposed rule, this revision in policy would include all four Part B preventive vaccines: pneumococcal, influenza, hepatitis B, and COVID-19 vaccines. These claims would initially be paid like other Part B vaccine and vaccine administration claims, whose payments are discussed at section III.H.1. of this proposed rule: vaccine products would be paid at 95 percent of their Average Wholesale Price (AWP), and vaccine administration would be paid according to the National Fee Schedule for Medicare Part B Vaccine Administration. The fee schedule's locality-adjusted payment rate files for CY 2024 can be found on the CMS Vaccine Pricing website at https://www.cms.gov/medicare/payment/all-fee-service-providers/medicare-part-b-drug-average-sales-price/vaccine-pricing. Payment rate files for influenza, pneumococcal and hepatitis B vaccine administration can be found under the “Seasonal Flu Vaccine” tab, and payment rate files for COVID-19 vaccines can be found under the “COVID-19 Vaccines & Monoclonal Antibodies” tab. The CY 2025 payment rates for Part B vaccine HCPCS codes G0008, G0009, G0010 and 90480, with the annual update applied for CY 2025, will be made available at the time of publication of the CY 2025 PFS final rule, and Tables 45 and 46 in section III.H.1.f. of this proposed rule provide the CY 2025 projected payment rates for those amounts.

We are also clarifying that RHC or FQHC providers are eligible to bill HCPCS code M0201 for an in-home additional payment for Part B preventive vaccine administration, provided that a home visit meets all the requirements of both part 405, subpart X, for RHCs and FQHCs services provided in the home, and § 410.152(h)(3)(iii) for the in-home additional payment for Part B preventive vaccine administration. More information regarding the in-home additional payment can be found at section III.H.1.d of this proposed rule, and current and projected payment rates for M0201 can be found together with Part B vaccine administration payment rates mentioned above.

We emphasize that the statute at section 1833(b) of the Act requires that RHCs and FQHCs be paid at 100 percent of reasonable cost for Part B vaccines and their administration. Therefore, payments for these services received at the time they are furnished in RHCs and FQHCs will need to be annually reconciled with the facilities' actual vaccine and vaccine administration costs, including the in-home additional costs, on their cost reports. Due to the operational systems changes needed to facilitate payment through claims, we propose that RHCs and FQHCs begin billing for preventive vaccines and their administration at the time of service, for dates of service beginning on or after July 1, 2025. This will also allow ample time for CMS to release cost reporting instructions and sub-regulatory guidance with additional billing instructions for RHCs and FQHCs to bill Medicare Part B for preventive vaccines and their administration at the time of service.

We believe that this proposal addresses the comments and requests of stakeholders who have suggested this payment approach over the last several years. We note that this payment approach was mentioned in the Senate Appropriations Committee's “Explanatory Statement For Departments Of Labor, Health And Human Services, And Education, And Related Agencies Appropriations Bill, 2021.” That report referenced a December 2019 white paper by the National Association of Community Health Centers, which noted that “FQHCs can face significant delays in reimbursement for influenza and pneumococcal vaccines.” The Committee thus encouraged CMS to promote the ability of FQHCs to bill Part B directly for vaccinations at the time of service, with reconciliation of payments at the time of cost report settlement.

We invite public comment on these proposals. We would especially appreciate comments on the benefits of payments for vaccine costs billed at the time of service, weighed against the potential additional burdens of annual reconciliation of vaccine claims payments against actual vaccine costs.

6. Productivity Standards

a. Background

Productivity standards for RHCs were first established on March 1, 1978 (43 FR 8260), and updated on December 1, 1982 (47 FR 54163-54165), to help determine the average cost per patient for Medicare reimbursement in RHCs. These productivity screening guidelines were intended to identify situations where costs would not be allowed without acceptable justification by the clinic and limits on the amount of payment (57 FR 24967). Physicians, nurse practitioners (NPs), physician assistants (PAs), and certified nurse midwives (CNMs) are held to a minimum number of visits per full time employee (FTE), as discussed in section 80.4, chapter 13 of the Medicare Benefit Policy Manual. The productivity standards policy requires 4,200 visits per full-time equivalent (FTE) physician and 2,100 visits per FTE non-physician practitioner ( e.g., nurse practitioner, physician assistant, or certified nurse midwife). Physician and non-physician practitioner productivity may be combined and if so, the number of visits per full-time equivalent team is 6,300. If actual visits are less than the productivity standards, the average cost per visit will be computed based on the productivity standards rather than actual visits, which would result in the cost per visit to be lower than if actual visits were used. In other words, if the current productivity standards are not met, the results would be a reduction in the cost per visit, which could negatively impact the RHC AIR and reduce payments. There are exceptions to the productivity standards that can be made based on individual circumstances that is at the discretion of the MAC. We note that these standards of 4,200 visits per FTE physician and 2,100 visit per FTE nonphysician practitioner and 6,300 visits per combined FTE have not been updated since 1982. We also note similar requirements to contain costs in this way were not required in FQHCs or other settings paid on reasonable cost.

Interested parties have requested that CMS re-evaluate or remove the productivity standards policy for RHCs because they believe that the environment today is very different than when the RHC benefit began and that the “visit per FTE” is too high for practitioners to meet and results in reducing the AIR. They also shared that the productivity standards matter even less now since the implementation of the CAA, 2021 established payment limits for all RHCs.

During the COVID-19 PHE, CMS issued a combination of emergency authority waivers, regulations, enforcement discretion, and subregulatory guidance to ensure and expand access to care and to give health care providers the flexibilities needed to help keep people safe. RHCs expressed concerns about how the productivity standards might impact them during the PHE. For example, many RHCs had trouble meeting the productivity standards due to a change in the way they staffed their clinics and billed for RHC services with increased telecommunications services. RHCs claimed that they were negatively impacted even more so than other health care settings because of these requirements. We have long standing guidance in the Medicare Benefit Policy Manual, chapter 13, section 80.4 that describes the MAC's role in providing flexibility to grant productivity exceptions to RHCs who experienced disruptions in staffing and services to minimize the burden on RHCs. During the PHE we reminded RHCs of the exception process in FAQs, and provided instructions to MACs to proactively reach out to RHCs reminding them of the exception process and to proactively grant exceptions as necessary.

Section 130 of the CAA, 2021 restructured the payment limits for RHCs beginning April 1, 2021. That is, independent RHCs, provider-based RHCs in a hospital with 50 or more beds, and RHCs enrolled under Medicare on or after January 1, 2021, will receive a prescribed national statutory payment limit per visit increase over an 8-year period for each year from 2021 through 2028. This provision also established payment limits for provider-based RHCs in a hospital with less than 50 beds. See CY 2022 PFS final rule (86 FR 65199 through 65202) for more detailed discussion.

Since the CAA, 2021 restructured the payment limits for RHCs, and in some cases established payment limits for RHCs beginning April 1, 2021, we believe that applying productivity standards may no longer be necessary with the payment limits set out by Congress. We believe that the productivity standards are outdated and redundant with the CAA, 2021 provisions. Therefore, we are proposing to remove productivity standards for RHCs.

7. Proposed Rebasing of the FQHC Market Basket

a. Background

Section 10501(i)(3)(A) of the Affordable Care Act added section 1834(o) of the Act to establish a payment system for the costs of FQHC services under Medicare Part B based on prospectively set rates. In the Prospective Payment System (PPS) for FQHC final rule published in the May 2, 2014 Federal Register (79 FR 25436), we implemented a methodology and payment rates for the FQHC PPS. Beginning on October 1, 2014, FQHCs began to transition to the FQHC PPS based on their cost reporting periods, and as of January 1, 2016, all FQHCs have been paid under the FQHC PPS.

Section 1834(o)(2)(B)(ii) of the Act requires that the payment for the first year after the implementation year be increased by the percentage increase in the Medicare Economic Index (MEI). Therefore, in CY 2016, the FQHC PPS base payment rate was increased by the MEI. The MEI at that time was based on 2006 data from the American Medical Association (AMA) for self-employed physicians and was used in the PFS sustainable growth rate (SGR) formula to determine the conversion factor for physician service payments. (See the CY 2014 PFS final rule (78 FR 74264) for a complete discussion of the 2006-based MEI.) Section 1834(o)(2)(B)(ii) of the Act also requires that beginning in CY 2017, the FQHC PPS base payment rate will be increased by the percentage increase in a market basket of FQHC goods and services, or if such an index is not available, by the percentage increase in the MEI.

Beginning with CY 2017, FQHC PPS payments were updated using a 2013-based market basket reflecting the operating and capital cost structures for freestanding FQHC facilities (hereafter referred to as the FQHC market basket). A complete discussion of the 2013-based FQHC market basket can be found in the CY 2017 PFS final rule (81 FR 80393 through 80403). In the CY 2021 PFS final rule (85 FR 84699 through 84710), we rebased and revised the FQHC market basket to reflect a 2017 base year.

For this CY 2025 PFS proposed rule, we are proposing to rebase and revise the 2017-based FQHC market basket to reflect a 2022 base year, which would maintain our historical frequency of rebasing the market basket every four years. The proposed 2022-based FQHC market basket is primarily based on Medicare cost report data for FQHCs for 2022, which are for cost reporting periods beginning on and after October 1, 2021, and prior to October 1, 2022. We propose to use data from cost reports beginning in FY 2022 because these data are the latest available complete set of Medicare cost report data for purposes of calculating cost weights for the FQHC market basket at the time of rulemaking.

In the following discussion, we provide an overview of the proposed FQHC market basket, describe the methodologies for developing the proposed 2022-based FQHC market basket, and provide information on the proposed price proxies. We then present the CY 2025 FQHC market basket update based on the proposed 2022-based FQHC market basket.

b. Overview of the Proposed 2022-Based FQHC Market Basket

Similar to the 2017-based FQHC market basket, the proposed 2022-based FQHC market basket is a fixed-weight, Laspeyres-type price index. A Laspeyres price index measures the change in price, over time, of the same mix of goods and services purchased in the base period. Any changes in the quantity or mix (that is, intensity) of goods and services purchased over time are not measured. The index itself is constructed using three steps. First, a base period is selected (we propose to use 2022 as the base period) and total base period expenditures are estimated for a set of mutually exclusive and exhaustive expenditure categories, with the proportion of total costs that each category represents being calculated. These proportions are called cost weights. Second, each cost category is matched to an appropriate price or wage variable, referred to as a “price proxy.” In almost every instance, these price proxies are derived from publicly available statistical series that are published on a consistent schedule (preferably at least on a quarterly basis). Finally, the cost weight for each cost category is multiplied by the level of its respective price proxy. The sum of these products (that is, the cost weights multiplied by their price index levels) for all cost categories yields the composite index level of the market basket in a given period. Repeating this step for other periods produces a series of market basket index levels over time. Dividing an index level for a given period by an index level for an earlier period produces a rate of growth in the input price index over that timeframe. As previously noted, the market basket is described as a fixed-weight index because it represents the change in price over time of a constant mix (quantity and intensity) of goods and services needed to furnish FQHC services. The effects on total expenditures resulting from changes in the mix of goods and services purchased subsequent to the base period are not measured. For example, a FQHC hiring more nurse practitioners to accommodate the needs of patients would increase the volume of goods and services purchased by the FQHC but would not be factored into the price change measured by a fixed-weight FQHC market basket. Only when the index is rebased would changes in the quantity and intensity be captured, with those changes being reflected in the cost weights. Therefore, we rebase the market basket periodically so that the cost weights reflect recent changes in the mix of goods and services that FQHCs purchase (FQHC inputs) to furnish care between base periods.

c. Development of the Proposed 2022-Based FQHC Market Basket Cost Categories and Weights

We are inviting public comments on our proposed methodology, discussed in this section of this rulemaking, for deriving the proposed 2022-based FQHC market basket.

(1) Use of Medicare Cost Report Data

The major types of costs underlying the proposed 2022-based FQHC market basket are derived from the Medicare cost reports (CMS Form 224-14, OMB Control Number 0938-1298) for freestanding FQHCs. Specifically, we use the Medicare cost reports for eleven specific costs: FQHC Practitioner Wages and Salaries, FQHC Practitioner Employee Benefits, FQHC Practitioner Contract Labor, Clinical Staff Wages and Salaries, Clinical Staff Employee Benefits, Clinical Staff Contract Labor, Non-Health Staff Compensation, Medical Supplies, Pharmaceuticals, Fixed Assets, and Movable Equipment. A residual category is then estimated and reflects all remaining costs not captured in the 11 types of costs identified previously (such as non-medical supplies and utilities).

The resulting proposed 2022-based FQHC market basket cost weights reflect Medicare allowable costs. We propose to define Medicare allowable costs centers for freestanding FQHC facilities as the expenses reported on: Worksheet A, lines 1 through 7, lines 9 through 12, lines 23 through 36, and line 66. For the proposed 2022-based FQHC market basket, we are proposing to include data from the cost center from Worksheet A, line 66 (Telehealth) as effective for CY 2022 since CMS finalized a proposal to revise the current regulatory language for RHC or FQHC mental health visits to include visits furnished using interactive, real-time telecommunications technology and for RHCs and FQHCs to report and be paid for mental health visits furnished via real-time, telecommunication technology in the same way they currently do when these services are furnished in-person (86 FR 65208 through 62511). As done with the 2017-based FQHC market basket, we are proposing to continue to exclude Professional Liability Insurance (PLI) costs from the total Medicare allowable costs because FQHCs that receive section 330 grant funds also are eligible to apply for medical malpractice coverage under Federally Supported Health Centers Assistance Act (FSHCAA) of 1992 (Pub. L. 102-501) and FSHCAA of 1995 (Pub. L. 104-73 amending section 224 of the Public Health Service Act).

Later in this section, we explain in more detail how the costs for each of the 11 categories are derived. Prior to estimating any costs, we apply three basic edits. First, we only include the last submitted cost report so there is no double counting of a FQHC provider. Second, we exclude providers that have less than half a year of reported cost data; this edit excludes 175 FQHC providers for 2022. Finally, we remove any providers that did not report net direct patient care expenses on the FQHC cost report Worksheet A, line 37, column 7; this edit excludes 717 FQHC cost reports, or about 29 percent of FQHC providers. If a provider does not have reported costs, then we are unable to use that provider's costs to calculate cost weights. We encourage providers to report net direct patient care expenses when reporting the data. After the three edits, there are 1,713 remaining FQHC providers in the 2022 data set that we use to estimate cost expenditures for, or roughly two-thirds of the total FQHCs in the original Medicare cost report data set.

(a) FQHC Practitioner Wages and Salaries Costs

A FQHC practitioner is defined as one of the following occupations: physicians; nurse practitioners (NPs); physician assistants (PAs); certified-nurse midwife (CNMs); clinical psychologist (CPs); and clinical social workers (CSWs). We propose to calculate FQHC Practitioner Wages and Salaries Costs using three steps. First, we propose to calculate FQHC Practitioner Compensation Costs as equal to the net expenses (that is, costs after reclassifications and adjustments) as reported on Worksheet A, column 7, lines 23, 25, 26, 29, 30, and 31. These lines represent the total net costs (after reclassifications and adjustments) for physicians, PAs, NPs, CNMs, CPs, and CSWs.

Second, we propose to further divide the FQHC Practitioner Compensation Costs for these occupations into wages and salaries, employee benefits, and contract labor costs based on the ratios of practitioner wages and salaries, practitioner employee benefits, and practitioner contract labor costs to the sum of these three groups of costs. We do this by applying the ratios of practitioner wages and salaries, practitioner employee benefits, and practitioner contract labor to the net expense FQHC Practitioner Compensation Costs, and the determination of these ratios is described below. We propose to derive the practitioner wages and salaries costs as the sum of direct care wages and salaries reported on Worksheet A, column 1, lines 23, 25, 26, 29, 30, and 31. These lines represent the wages and salaries costs for physicians, PAs, NPs, CNMs, CPs, and CSWs. We propose to derive the practitioner employee benefits costs for these occupations as the sum of costs reported on Worksheet S-3, part II, column 2, lines 2, 3, 4, 7, 8, and 9. These lines represent the employee benefits costs for physicians, PAs, NPs, CNMs, CPs, and CSWs. We propose to derive the practitioner contract labor costs for these occupations as the costs reported on Worksheet S-3, part II, column 1, lines 2, 3, 4, 7, 8, and 9. These lines represent the contract labor costs for physicians, PAs, NPs, CNMs, CPs, and CSWs. This was the same method used to calculate the ratios to split the FQHC Practitioner Compensation Costs as was done for the 2017-based FQHC market basket. Approximately 56 percent of FQHCs that reported direct patient care wages and salaries costs also reported employee benefits costs data and approximately 99 percent of FQHCs that reported direct patient care wages and salaries costs also reported contract labor cost data on Worksheet S-3, part II for 2022. This is higher reporting than the percent of FQHCs reporting the same data compared to the 2017-based FQHC market basket, which had a 45 percent and 66 percent reporting incidence for the 2017 cost report data. We are encouraged by this improvement in the data and continue to encourage all providers to report these data on the Medicare cost report.

The final step in the process to derive the FQHC Practitioner Wages and Salaries costs is to apply the ratio of practitioner wages and salaries to the sum of practitioner wages and salaries costs, practitioner employee benefits costs, and practitioner contract labor costs times the FQHC Practitioner Compensation costs (representing the net expenses for each occupation as reported on Worksheet A column 7) as described above. This calculation is done for each occupation individually (physicians, PAs, NPs, CNMs, CPs, and CSWs). The resulting proposed FQHC Practitioner Wages and Salaries costs are equal to the sum of each occupation's wages and salary costs. This is the same methodology that was used for the 2017-based FQHC market basket.

As stated in the CY 2022 PFS final rule (86 FR 65209), effective for CY 2022 FQHC mental health visits furnished using interactive, real-time telecommunications technology are paid for at the same rate as other FQHC visits when these services are furnished in-person; therefore, we propose to include telehealth wages and salaries costs in the FQHC Practitioner Wages and Salaries cost category. We propose to derive telehealth wages and salaries by multiplying the net telehealth costs (as reported on Worksheet A, column 7, line 66) times the ratio of telehealth wages and salaries (as reported on Worksheet A, column 1, line 66) to the sum of telehealth costs (the sum of Worksheet A, column 1 and 2, line 66).

(b) FQHC Practitioner Employee Benefits Costs

To calculate FQHC Practitioner Employee Benefits costs, we propose to use a similar methodology as used to calculate the FQHC Practitioner Wages and Salaries costs. We propose to apply the ratio of practitioner employee benefits as described above to the FQHC Practitioner Compensation costs (representing the net expenses for each occupation as reported on Worksheet A column 7) as defined in the section III.B.7.(c)(1)(a). This calculation is done for each occupation individually (physicians, PAs, NPs, CNMs, CPs, and CSWs). The FQHC Practitioner Employee Benefits costs are equal to the sum of each occupation's employee benefits costs. This is the same methodology that was used for the 2017-based FQHC market basket. As stated previously, effective for CY 2022, telehealth services are covered under the FQHC PPS; therefore, we propose to also include in the FQHC Practitioner Employee Benefits the telehealth employee benefits. We propose to estimate telehealth employee benefits by multiplying telehealth wages and salaries (as described in section III.B.7.(c)(1)(a)) times the ratio of total direct patient care facility benefits (Worksheet S3 Part II, column 2, line 1) to total facility direct patient care salaries (the sum of Worksheet A, columns 1 and 2, lines 23 and 25 through 36), which is estimated to be 21 percent on average. This ratio is referred to as the overall employee benefit share and represents the ratio of employee benefits to wages and salaries for all patient care costs reported by FQHCs.

(c) FQHC Practitioner Contract Labor Costs

To calculate FQHC Practitioner Contract Labor Costs, we propose to use a similar methodology as used to calculate FQHC Practitioner Wages and Salaries and FQHC Practitioner Employee Benefit Costs. We propose to multiply the ratio of practitioner contract labor, as described above, by the FQHC Practitioner Compensation costs (representing the net expenses for each occupation as reported on Worksheet A column 7) as defined in section III.B.7.(c)(1)(a). This calculation is done for each occupation individually (physicians, PAs, NPs, CNMs, CPs, and CSWs). The FQHC Practitioner Contract Labor costs are equal to the sum of each occupation's contract labor costs plus all net expenses reported for Physicians Services Under Agreement from Worksheet A, column 7, line 24. This is the same methodology used for the 2017-based FQHC market basket.

(d) Clinical Staff Wages and Salaries Costs

We propose to calculate Clinical Staff Wages and Salaries Costs using three steps. First, we propose to define Clinical Staff Compensation costs as the sum of net expenses (that is, costs after reclassifications and adjustments) as reported on Worksheet A, column 7, lines 27, 28, 32, 33, 34, 35, and 36. Clinical Staff Compensation includes any health-related clinical staff who do not fall under the definition of a FQHC Practitioner. These lines represent the net expenses for visiting RNs, visiting LPNs, laboratory technicians, registered dietician/Certified DSMT/MNT educators, PTs, OTs, and other allied health personnel.

Second, we propose to further divide the Clinical Staff Compensation costs for these occupations into wages and salaries, employee benefits, and contract labor costs based on the ratio of clinical staff wages and salaries, clinical staff employee benefits, and clinical staff contract labor costs to the sum of these three groups of costs. We do this by applying the ratio of clinical staff wages and salaries, clinical staff employee benefits, and clinical staff contract labor to the net expense Clinical Staff Compensation costs, and the determination of these ratios is described later in this section. We propose to derive clinical staff wages and salaries costs as the sum of direct care cost salaries as reported on Worksheet A, column 1, lines 27, 28, 32, 33, 34, 35, and 36. These lines represent the wages and salaries costs for visiting registered nurses (RNs), visiting licensed practical nurses (LPNs), laboratory technicians, registered dietician/Certified DSMT/MNT educators, physical therapists (PTs), occupational therapists (OTs), and other allied health personnel. We propose to derive the clinical staff employee benefits costs for these occupations as the sum of costs reported on Worksheet S-3, part II, column 2, lines 5, 6, 10, 11, 12, 13, and 14. These lines represent the employee benefits costs for visiting RNs, visiting LPNs, laboratory technicians, registered dietician/Certified DSMT/MNT educators, PTs, OTs, and other allied health personnel. Similarly, we propose to calculate clinical staff contract labor costs for these occupations as the costs reported on Worksheet S-3, part II, column 1, lines 5, 6, 10, 11, 12, 13, and 14. These lines represent the contract labor costs for visiting RNs, visiting LPNs, laboratory technicians, registered dietician/Certified DSMT/MNT educators, PTs, OTs, and other allied health personnel. This was the same method used to calculate the ratios to split the Clinical Staff Compensation net expenses as was done for the 2017-based FQHC market basket.

The final step in the process to derive the Clinical Staff Wages and Salaries costs is to apply the ratio of clinical staff wages and salaries calculated in the prior step to the Clinical Staff Compensation costs (representing the net expenses for each occupation as reported on Worksheet A column 7) as described above. This calculation is done for each occupation individually (visiting RNs, visiting LPNs, laboratory technicians, registered dietician/Certified DSMT/MNT educators, PTs, OTs, and other allied health personnel). The Clinical Staff Wages and Salaries costs is equal to the sum of each occupation's wages and salary costs. This is the same methodology that was used for the 2017-based FQHC market basket.

(e) Clinical Staff Employee Benefits Costs

To calculate Clinical Staff Employee Benefit costs, we propose to use a similar methodology as used to calculate the Clinical Staff Wages and Salaries costs. We propose to multiply the ratio of clinical staff employee benefits, as described above by the Clinical Staff Compensation costs (representing the net expenses for each occupation as reported on Worksheet A column 7) as defined in the section III.B.7.(c)(1)(d). This calculation is done for each occupation individually (visiting RNs, visiting LPNs, laboratory technicians, registered dietician/Certified DSMT/MNT educators, PTs, OTs, and other allied health personnel). The Clinical Staff Employee Benefits costs are equal to the sum of each occupation's Employee Benefits costs. This is the same methodology that was used for the 2017-based FQHC market basket.

(f) Clinical Staff Contract Labor Costs

To calculate Clinical Staff Contract Labor costs, we propose to use a similar methodology as used to calculate Clinical Staff Wages and Salaries Costs and Clinical Staff Benefit Costs. We propose to multiply the ratio of clinical staff contract labor costs, as described above, by the Clinical Staff Compensation costs (representing the net expenses for each occupation as reported on Worksheet A column 7) as defined in the section III.B.7.(c)(1)(d). This calculation is done for each occupation individually (visiting RNs, visiting LPNs, laboratory technicians, registered dietician/Certified DSMT/MNT educators, PTs, OTs, and other allied health personnel). The Clinical Staff Contract Labor costs are equal to the sum of each occupation's contract labor costs. This is the same methodology that was used for the 2017-based FQHC market basket.

(g) Non-Health Staff Compensation Costs

We propose to define Non-Health Staff Compensation costs using net expenses (that is, costs after reclassifications and adjustments) as the estimated share of compensation costs from Worksheet A, column 7 for lines 3, 4, 5, 6, 7, 9, 10, 11, and 12. These lines represent the net expenses for the employee benefits department, administrative & general services, plant operations & maintenance, janitorial, medical records, pharmacy, medical supplies, transportation, and other general services. Since the net expenses for the General Service Cost centers include both compensation and other costs, we estimate the share of net expenses for each general service cost center that reflects compensation costs. First, we estimate a share of non-health staff wages and salaries costs for each general service cost center as reported on Worksheet A, column 1 for lines 3, 4, 5, 6, 7, 9, 10, 11, and 12 divided by Worksheet A, column 1 and 2 for lines 3, 4, 5, 6, 7, 9, 10, 11, and 12. Then, we multiply the Non-Health Staff net expenses (that is, costs after reclassifications and adjustments) by the non-health staff wages and salaries share to derive estimated Non-Health Staff Wages and Salaries costs for each general service cost center (lines 3-7 and lines 9-12). Second, we estimate Non-Health Staff Employee Benefit costs by multiplying the Non-Health Staff Wages and Salaries costs (step one) by the overall employee benefit share as described in section III.B.7.(c)(1)(b), or 21 percent. Finally, we sum the derived Non-Health Staff Wages and Salaries costs and the derived Non-Health Staff Employee Benefits costs for each general service cost center (lines 3-7 and lines 9-12) to calculate Non-Health Staff Compensation costs. This is the same methodology used for the 2017-based FQHC market basket.

(h) Pharmaceutical Costs

We propose to calculate Pharmaceutical costs as the non-compensation costs for the Pharmacy cost center. We define this as Worksheet A, column 7, line 9 less derived pharmacy compensation costs. Derived pharmacy compensation costs are included in the Non-health Staff Compensation costs described in section III.B.7.(c)(1)(g). We note that the only pharmaceutical costs eligible for inclusion in the FQHC PPS market basket are those reported on line 9 of Worksheet A. These pharmaceutical costs would include only the costs of routine drugs (both prescription and over the counter), pharmacy supplies, and pharmacy services, provided incident to an FQHC visit. Other types of drugs and pharmacy supplies costs not included in this category are those reported on line 67 (drugs charged to patients), line 77 (retail pharmacy), line 48 (pneumococcal vaccine), and line 49 (influenza vaccine, COVID-19, and monoclonal antibody products for treatment of COVID-19), as these costs are reimbursed to FQHC providers outside of the FQHC PPS payment. The derived pharmacy compensation costs are equal to the sum of the estimated pharmacy wages and salaries and pharmacy employee benefits costs. This is the same methodology used for the 2017-based FQHC market basket.

(i) Medical Supplies Costs

We propose to calculate Medical Supplies costs as the non-compensation costs for the Medical Supplies costs center. We define this as Worksheet A, column 7, line 10 less derived medical supplies compensation costs. Derived medical supplies compensation costs are included in the Non-health Staff Compensation costs described in section III.B.7.(c)(1)(g). The derived medical supplies compensation costs are equal to the sum of the estimated medical supplies wages and salaries and medical supplies benefits costs. This is the same methodology used for the 2017-based FQHC market basket.

(j) Fixed Assets Costs

We propose to define Fixed Asset costs to be equal to costs reported on Worksheet A, line 1, column 7 of the Medicare cost report. This is the same methodology used for the 2017-based FQHC market basket.

(k) Movable Equipment Costs

We propose to define Movable Equipment costs to be equal to the capital costs as reported on Worksheet A, line 2, column 7. This is the same methodology used for the 2017-based FQHC market basket.

(2) Proposed Major Cost Category Computation

After we derive costs for the major cost categories for each provider using the Medicare cost report data as previously described, we propose to trim the data for outliers. For each of the 11 major cost categories, we propose to divide the calculated costs for the category by total Medicare allowable costs calculated for the provider to obtain cost weights for the universe of FQHC providers after basic trims described in section III.B.7.(c). For the proposed 2022-based FQHC market basket, total Medicare allowable costs would be equal to total net expenses (after reclassifications and adjustments) reported on: Worksheet A, column 7, for lines 1 through 7, lines 9 through 12; lines 23 through 36, and line 66. This is the same method used to derive total Medicare allowable costs for the 2017-based FQHC market basket with the only difference being that we now include the net expenses for line 66, telehealth because as previously described, effective for CY 2022 CMS finalized the policy for mental health visits furnished using interactive, real-time telecommunications technology to be paid in the same way they currently do when these services are furnished in-person (86 FR 65208 through 62511).

For the FQHC Practitioner Wages and Salaries, FQHC Practitioner Employee Benefits, FQHC Practitioner Contract Labor, Clinical Staff Wages and Salaries, Clinical Staff Employee Benefits, Clinical Staff Contract Labor, Non-Health Staff Compensation, Pharmaceuticals, Medical Supplies, Fixed Assets, and Movable Equipment cost weights, after excluding cost weights that are less than or equal to zero, we propose to then remove those providers whose derived cost weights fall in the top and bottom 5 percent of provider-specific derived cost weights to ensure the exclusion of outliers. A 5 percent trim is the standard trim applied to the mean cost weights in most CMS market baskets and is consistent with the trimming used in the 2017-based FQHC market basket. After the outliers have been excluded, we sum the costs for each category across all remaining providers. We propose to then divide this by the sum of total Medicare allowable costs across all remaining providers to obtain a cost weight for the proposed 2022-based FQHC market basket for the given category. This trimming process is done for each cost weight separately.

Finally, we propose to calculate the residual “All Other” cost weight that reflects all remaining costs that are not captured in the 11 major cost categories listed. Table 25 provides the resulting cost weights for these major cost categories derived from the Medicare cost reports.

Table 25 displays the proposed 2022-based FQHC market basket cost weights compared to the 2017-based FQHC market basket cost weights.

As we did for the 2017-based FQHC market basket, we propose to allocate the Contract Labor cost weight to the Wages and Salaries and Employee Benefits cost weights based on their relative proportions under the assumption that contract labor costs comprise both wages and salaries and employee benefits for both FQHC Practitioners and Clinical Staff. The contract labor allocation proportion for Wages and Salaries is equal to the Wages and Salaries cost weight as a percent of the sum of the Wages and Salaries cost weight and the Employee Benefits cost weight. This percentage based on the proposed 2022-based FQHC cost weights is 82.5 percent for FQHC practitioners and 80.8 percent for clinical staff. Therefore, we propose to allocate 82.5 percent of the FQHC Practitioner Contract Labor cost weight to the FQHC Practitioner Wages and Salaries cost weight and 17.5 percent to the FQHC Practitioner Employee Benefits cost weight. Similarly, we propose to allocate 80.8 percent of the Clinical Staff Contract Labor cost weight to the Clinical Staff Wages and Salaries cost weight and 19.2 percent to the Clinical Staff Employee Benefits cost weight. Table 26 shows the FQHC Practitioner and Clinical Staff Wages and Salaries and Employee Benefits proposed 2022-based cost weights after the contract labor cost weight has been allocated. Table 26 also includes the comparison of the weights to the 2017- based cost weights for the same categories.

(3) Derivation of the Detailed Operating Cost Weights

To further divide the “All Other” residual cost weight estimated from the 2022 Medicare cost report data into more detailed cost categories, we propose to use the 2017 Benchmark Input-Output (I-O) “Use Tables/Before Redefinitions/Purchaser Value” for NAICS 621100, Offices of Physicians, published by the Bureau of Economic Analysis (BEA). We note that the BEA benchmark I-O data is used to further disaggregate residual costs in other CMS market baskets. Therefore, we note that we believe the data from this industry are the most technically appropriate for disaggregation of the residual net expenses since both physician offices and FQHCs provide similar types of care. These data are publicly available at https://www.bea.gov/industry/input-output-accounts-data . For the 2017-based FQHC market basket, we used the 2012 Benchmark Input-Output (I-O) “Use Tables/Before Redefinitions/Purchaser Value” for NAICS 621100, Offices of Physicians, published by the BEA.

The BEA Benchmark I-O data are scheduled for publication every 5 years with the most recent data available for 2017. The 2017 Benchmark I-O data are derived from the 2017 Economic Census and are the building blocks for BEA's economic accounts. Therefore, they represent the most comprehensive and complete set of data on the economic processes or mechanisms by which output is produced and distributed. BEA also produces Annual I-O estimates. However, while based on a similar methodology, these estimates reflect less comprehensive and less detailed data sources and are subject to revision when benchmark data become available. Instead of using the less detailed Annual I-O data, we propose to inflate the 2017 Benchmark I-O data forward to 2022 by applying the annual price changes from the respective price proxies to the appropriate market basket cost categories that are obtained from the 2017 Benchmark I-O data. We repeat this practice for each year. We then calculate the cost shares that each cost category represents of the 2017 data inflated to 2022. These resulting 2022 cost shares were applied to the “All Other” residual cost weight to obtain the detailed cost weights for the proposed 2022-based FQHC market basket. For example, the cost for Medical Equipment represents 7.8 percent of the sum of the “All Other” 2017 Benchmark I-O Offices of Physicians Expenditures inflated to 2022. Therefore, the proposed Medical Equipment cost weight represents 7.8 percent of the proposed 2022-based FQHC market basket's “All Other” cost category (18.7 percent), yielding a Medical Equipment cost weight of 1.5 percent in the proposed 2022-based FQHC market basket (0.078 × 18.7 percent = 1.5 percent).

Using this methodology, we propose to derive six detailed FQHC market basket cost category weights from the proposed 2022-based FQHC market basket residual cost weight (18.7 percent). These categories are: (1) Utilities; (2) Medical Equipment; (3) Miscellaneous Products; (4) Professional, Scientific, and Technical Services; (5) Administrative and Facilities Support Services; and (6) All Other Services.

(4) Proposed 2022-Based FQHC Market Basket Cost Categories and Weights

Table 27 shows the cost categories and cost weights for the proposed 2022-based FQHC market basket compared to the 2017-based FQHC market basket. The Total Compensation cost weight of 68.5 percent (sum of FQHC Practitioner Compensation, Clinical Staff Compensation, and Non-health Staff Compensation) calculated from the Medicare cost reports for the proposed 2022-based FQHC market basket is 4.1 percentage points lower than the total compensation cost weight for the 2017-based FQHC market basket (72.6 percent). The decrease in the compensation cost weight between the 2017-based and the proposed 2022-based market basket is stemming from the decreasing FQHC Practitioner and Clinical Staff Compensation cost weights. The proposed 2022-based cost weights for FQHC Practitioner and Clinical Staff Compensation are 5.3 percentage points lower compared to the 2017-based FQHC market basket, while the Non-Health Staff Compensation cost weight is 1.2 percentage points higher. Analysis of the cost report data shows that the decline in the health-related compensation cost weights is stemming from a change in the mix of health-related workers from higher-paid to lower-paid occupations. Specifically, there has been a shift in full time equivalents (FTEs) from physicians to nurse practitioners and a shift from registered and licensed practical nurses to other allied health personnel. Additionally, the proposed 2022-based Pharmaceuticals cost weight, Non-Health Staff Compensation costs weight, and the Capital cost weight, are each roughly 1 percentage point higher than the cost weight in the 2017-based FQHC market basket.

We note that our analysis of the Medicare cost report data over time shows the general trends in these cost weights (particularly for the Total Compensation and Pharmaceuticals cost weights) began after 2017 with about half of the cost weight changes occurring between 2017 and 2019. Consistent with our historical frequency of rebasing the other CMS market baskets, we believe it is important to rebase the FQHC market basket every four to five years to reflect the more recent data and changing cost structure. We are soliciting comments on our proposal to rebase and revise the market basket to reflect a 2022 base year.

d. Selection of Price Proxies

After developing the cost weights for the proposed 2022-based FQHC market basket, we selected the most appropriate wage and price proxies currently available to represent the rate of price change for each expenditure category. For most of the cost categories, we rely on using the price proxies based on U.S. Bureau of Labor Statistics (BLS) data, as they produce indexes that best meet the criteria of reliability, timeliness, availability, and relevance, and group them into one of the following BLS categories:

• Employment Cost Indexes. Employment Cost Indexes (ECIs) measure the rate of change in employment wage rates and employer costs for employee benefits per hour worked. These indexes are fixed-weight indexes and strictly measure the change in wage rates and employee benefits per hour. ECIs are superior to Average Hourly Earnings (AHE) as price proxies for input price indexes because they are not affected by shifts in occupation or industry mix, and because they measure pure price change and are available by both occupational group and by industry. The industry ECIs are based on the North American Industry Classification System (NAICS) and the occupational ECIs are based on the Standard Occupational Classification System (SOC).
• Producer Price Indexes. Producer Price Indexes (PPIs) measure the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services ( https://www.bls.gov/ppi/ ).
• Consumer Price Indexes. Consumer Price Indexes (CPIs) measure the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services ( https://www.bls.gov/cpi/ ). CPIs are only used when the purchases are similar to those of retail consumers rather than purchases at the producer level, or if no appropriate PPIs are available.

We evaluate the price proxies using the criteria of reliability, timeliness, availability, and relevance:

• Reliability. Reliability indicates that the index is based on valid statistical methods and has low sampling variability. Widely accepted statistical methods ensure that the data were collected and aggregated in a way that can be replicated. Low sampling variability is desirable because it indicates that the sample reflects the typical members of the population. (Sampling variability is variation that occurs by chance because only a sample was surveyed rather than the entire population.)
• Timeliness. Timeliness implies that the proxy is published regularly, preferably at least once a quarter. The market baskets are updated quarterly, and therefore, it is important for the underlying price proxies to be up-to-date, reflecting the most recent data available. We believe that using proxies that are published regularly (at least quarterly, whenever possible) helps to ensure that we are using the most recent data available to update the market basket. We strive to use publications that are disseminated frequently, because we believe that this is an optimal way to stay abreast of the most current data available.
• Availability. Availability means that the proxy is publicly available. We prefer that our proxies are publicly available because this will help ensure that our market basket updates are as transparent to the public as possible. In addition, this enables the public to be able to obtain the price proxy data on a regular basis.
• Relevance. Relevance means that the proxy is applicable and representative of the cost category weight to which it is applied.

The CPIs, PPIs, and ECIs that we have selected to use in the proposed 2022-based FQHC market basket meet these criteria. Therefore, we believe that they continue to be the best measures of price changes for the cost categories to which they would be applied.

Table 28 lists all price proxies we propose to use in the proposed 2022-based FQHC market basket. Below is a detailed explanation of the price proxies we propose for each cost category.

(1) Price Proxies for the Proposed 2022-Based FQHC Market Basket

(a) FQHC Practitioner Wages and Salaries

We propose to use the ECI for Wages and Salaries for Private Industry Workers in Professional and Related (BLS series code CIU2010000120000I) to measure price growth of this category. There is no specific ECI for physicians or FQHC Practitioners, and therefore, we propose to use an index that is based on professionals that receive advanced training similar to those performing at the FQHC Practitioner level of care. This index is consistent with the price proxy used to measure wages and salaries inflation pressure for physicians own time in the Medicare Economic Index (MEI) and is based on the MEI technical panel recommendation from 2012 for more details see the CY 2014 PFS final rule (78 FR 74266 through 74271). Additionally, this is the same price proxy used for the FQHC Practitioner Wages and Salaries cost category in the 2017-based FQHC market basket (85 FR 84708).

(b) FQHC Practitioner Employee Benefits

We propose to use the ECI for Total Benefits for Private Industry Workers in Professional and Related to measure price growth of this category. This ECI is calculated using the ECI for Total Compensation for Private Industry Workers in Professional and Related (BLS series code CIU1016220000000I) and the relative importance of wages and salaries within total compensation. This is the same price proxy used for the FQHC Practitioner Employee Benefits cost category in the 2017-based FQHC market basket (85 FR 84708).

(c) Clinical Staff Wages and Salaries

We propose to use the ECI for Wages and Salaries for all Civilian Workers in Health Care and Social Assistance (BLS series code CIU1026200000000I) to measure the price growth of this cost category. This cost category consists of wage and salary costs for Nurses, Laboratory Technicians, and all other healthcare staff not included in the FQHC Practitioner compensation categories. Based on the clinical staff composition of these workers, we believe that the ECI for health-related workers is an appropriate proxy to measure wage and salary price pressures for these workers. This is the same price proxy used for the Clinical Staff Wages and Salaries cost category in the 2017-based FQHC market basket (85 FR 84708).

(d) Clinical Staff Employee Benefits

We propose to use the ECI for Total Benefits for all Civilian Workers in Health Care and Social Assistance to measure price growth of this category. This ECI is calculated using the ECI for Total Compensation for all Civilian Workers in Health Care and Social Assistance (BLS series code CIU1016220000000I) and the relative importance of wages and salaries within total compensation. This is the same price proxy used for the Clinical Staff Employee Benefits cost category in the 2017-based FQHC market basket (85 FR 84708).

(e) Non-Health Staff Compensation

We propose to use the ECI for Total Compensation for Private Industry Workers in Office and Administrative Support (BLS series code CIU2010000220000I) to measure the price growth of this cost category. The Non-health Staff Compensation cost weight is predominately attributable to administrative and facility type occupations, as reported in the data from the Medicare cost reports. This is the same price proxy used for the Non-Health Staff Compensation cost category in the 2017-based FQHC market basket (85 FR 84708).

(f) Pharmaceuticals

We propose to use the PPI Commodities for Pharmaceuticals for Human Use, Prescription (BLS series code WPUSI07003) to measure the price growth of this cost category. This price proxy is used to measure prices of Pharmaceuticals in other CMS market baskets, such as the 2018-based Inpatient Prospective Payment System market basket and is the same price proxy used for the Pharmaceuticals cost category in the 2017-based FQHC market basket (85 FR 84708).

(g) Utilities

We propose to use the CPI for Fuel and Utilities (BLS series code CUUR0000SAH2) to measure the price growth of this cost category. This is the same price proxy used for the Utilities cost category in the 2017-based FQHC market basket (85 FR 84708).

(h) Medical Equipment

We propose to use the PPI Commodities for Surgical and Medical Instruments (BLS series code WPU1562) as the price proxy for this category. This is the same price proxy used for the Medical Equipment cost category in the 2017-based FQHC market basket (85 FR 84708).

(i) Medical Supplies

We propose to use a 50/50 blended index that comprises the PPI Commodities for Medical and Surgical Appliances and Supplies (BLS series code WPU156301) and the CPI-U for Medical Equipment and Supplies (BLS series code CUUR0000SEMG). The 50/50 blend is used in all market baskets where we do not have an accurate split available. We note that we believe FQHCs purchase the types of supplies contained within these proxies, including such items as bandages, dressings, catheters, intravenous equipment, syringes, and other general disposable medical supplies, via wholesale purchase, as well as at the retail level. Consequently, we propose to combine the two aforementioned indexes to reflect those modes of purchase. This is the same price proxy used for the Medical Supplies cost category in the 2017-based FQHC market basket (85 FR 84708 through 84709).

(j) Miscellaneous Products

We propose to use the CPI for All Items Less Food and Energy (BLS series code CUUR0000SA0L1E) to measure the price growth of this cost category. We believe that using the CPI for All Items Less Food and Energy is appropriate as it reflects a general level of inflation. This is the same price proxy used for the Miscellaneous cost category in the 2017-based FQHC market basket (85 FR 84709).

(k) Professional, Scientific, and Technical Services

We propose to use the ECI for Total Compensation for Private Industry Workers in Professional, Scientific, and Technical Services (BLS series code CIU2015400000000I) to measure the price growth of this cost category. This is the same price proxy used for the Professional, Scientific, and Technical Services cost category in the 2017-based FQHC market basket (85 FR 84709).

(l) Administrative and Facilities Support Services

We propose to use the ECI Total Compensation for Private Industry Workers in Office and Administrative Support (BLS series code CIU2010000220000I) to measure the price growth of this cost category. This is the same price proxy used for the Administrative and Facilities Support Services cost category in the 2017-based FQHC market basket (85 FR 84709).

(m) All Other Services

We propose to use the ECI for Total Compensation for Private Industry Workers in Service Occupations (BLS series code CIU2010000300000I) to measure the price growth of this cost category. This is the same price proxy used for the All Other Services cost category in the 2017-based FQHC market basket (85 FR 84709).

(n) Fixed Assets

We propose to use the PPI Industry for Lessors of Nonresidential Buildings (BLS series code PCU531120531120) to measure the price growth of this cost category (81 FR 80398). We believe this continues to be the most appropriate price proxy since fixed asset costs in FQHCs should reflect inflation for the rental and purchase of business office space. This is the same price proxy used for the Fixed Assets cost category in the 2017-based FQHC market basket (85 FR 84709).

(o) Movable Equipment

We propose to continue to use the PPI Commodities for Machinery and Equipment (BLS series code WPU11) to measure the price growth of this cost category as this cost category represents nonmedical movable equipment. This is the same price proxy used for the Movable Equipment cost category in the 2017-based FQHC market basket (85 FR 84709).

(2) Summary of Price Proxies of the Proposed 2022-Based FQHC Market Basket

Table 28 shows the cost categories and associated price proxies for the proposed 2022-based FQHC market basket.

We are soliciting comments on our proposal to rebase and revise the FQHC market basket to reflect a 2022 base year.

e. Proposed CY 2025 Productivity-Adjusted Market Basket Update for FQHCs

For CY 2025 (that is, January 1, 2025, through December 31, 2025), we propose to use an estimate of the proposed 2022-based FQHC market basket to update payments to FQHCs based on the best available data. We propose to use the update based on the most recent historical data available at the time of publication of the final rule. For example, the final CY 2025 FQHC update would be based on the four-quarter moving-average percent change of the proposed 2022-based FQHC market basket through the second quarter of 2024 (based on the final rule's statutory publication schedule). At the time of this proposed rule, we do not have the second quarter of 2024 historical data, and therefore, we propose to use the most recent projection available at the time. Consistent with CMS practice, we estimate the market basket update for the FQHC PPS based on the most recent forecast from IHS Global, Inc. (IGI). IGI is a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast the components of the market baskets and total factor productivity (TFP).

Based on IGI's first quarter 2024 forecast with historical data through the fourth quarter of 2023, the proposed 2022-based FQHC market basket increase factor for CY 2025 is 4.0 percent. For comparison, the 2017-based FQHC market basket percentage increase is also projected to be 4.0 percent in CY 2025; this estimate is based on IGI's first quarter 2024 forecast (with historical data through the fourth quarter of 2023). Table 29 compares the proposed 2022-based FQHC market basket and the 2017-based FQHC market basket annual percent changes from 2021 through 2028.

Over the historical update time period covering CY 2021 through CY 2024, the average growth rate of the proposed 2022-based FQHC market basket is the same as the average growth rate of the 2017-based FQHC market basket. Over the forecasted time period covering CY 2025 through CY 2028, the average growth rate of the proposed 2022-based FQHC market basket is also the same as the average growth rate of the 2017-based FQHC market basket. So, although the compensation cost weights in the proposed 2022-based FQHC market basket is lower than in the 2017-based FQHC market basket, and the weights for other products and services is higher, there is little impact on the historical or projected FQHC market basket percentage increase.

Section 1834(o)(2)(B)(ii) of the Act describes the methods for determining updates to FQHC PPS payment. We have included a productivity adjustment to the FQHC PPS annual payment update since implementation of the FQHC PPS (81 FR 80393) and we propose to continue to include a productivity adjustment to the proposed 2022-based FQHC market basket. We propose to use the most recent estimate of the 10-year moving average of changes in annual private nonfarm business (economy-wide) total factor productivity (TFP), which is the same measure of TFP applied to other CMS market basket updates including the MEI. The U.S. Department of Labor's Bureau of Labor Statistics (BLS) publishes the official measures of productivity for the U.S. economy. We note that previously the productivity published by BLS was referred to as multifactor productivity. Beginning with the November 18, 2021, release of productivity data, BLS replaced the term “multifactor productivity” (MFP) with “TFP.” Please see https://www.bls.gov/productivity/data.htm for the BLS historical published TFP data. For the final FQHC market basket update, we propose to use the most recent historical estimate of annual TFP as published by the BLS. Generally, the most recent historical TFP estimate is lagged two years from the payment year.

Therefore, we propose to use the 10-year moving average percent change in annual private nonfarm business TFP through 2023 as published by BLS in the CY 2025 FQHC market basket update. We note that TFP is derived by subtracting the contribution of labor and capital input growth from output growth. Since at the time of development of this proposed rule the measure of TFP for 2023 had not yet been published by BLS, we propose to use IGI's first quarter 2024 forecast of TFP. A complete description of IGI's TFP projection methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information .

Using IGI's first quarter 2024 forecast, the productivity adjustment for CY 2025 (the 10-year moving average of TFP for the period ending CY 2023) is projected to be 0.5 percent. Therefore, the proposed CY 2025 productivity-adjusted proposed 2022-based FQHC market basket update is 3.5 percent, based on IGI's first quarter 2024 forecast with historical data through the fourth quarter of 2023. This reflects a 4.0 percent increase in the proposed 2022-based FQHC market basket reduced by a 0.5 percentage point productivity adjustment. Finally, we propose that the CY 2025 market basket update and the productivity adjustment will be updated to reflect the most recent historical data available for the final rule.

8. Clarification for Dental Services Furnished in FQHCs

a. Payment for Dental Services Furnished in FQHCs

Section 1862(a)(12) of the Act generally precludes payment under Medicare Parts A or B for any expenses incurred for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth. (Collectively here, we will refer to “the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth” as “dental services.”) That section of the statute also includes an exception to allow payment to be made for inpatient hospital services in connection with the provision of such dental services if the individual, because of their underlying medical condition and clinical status or because of the severity of the dental procedure, requires hospitalization in connection with the provision of such services. Our regulation at 42 CFR 411.15(i) similarly excludes payment for dental services except for inpatient hospital services in connection with dental services when hospitalization is required because of: (1) the individual's underlying medical condition and clinical status; or (2) the severity of the dental procedure.

Fee for service (FFS) Medicare Parts A and B also make payment for certain dental services in circumstances where the services are not considered to be in connection with dental services within the meaning of section 1862(a)(12) of the Act. In the CY 2023 PFS final rule (87 FR 69663 through 69688), we clarified and codified at § 411.15(i)(3) that Medicare payment under Parts A and B could be made when dental services are furnished in either the inpatient or outpatient setting when the dental services are inextricably linked to, and substantially related and integral to the clinical success of, other covered services. We also added several examples of clinical scenarios that are considered to meet that standard under § 411.15(i)(3) and amended that regulation to add more examples in the CY 2024 PFS final rule (88 FR 79022 through 79029).

In the CY 2024 PFS final rule (88 FR 79038), we received comments requesting we provide payment for inextricably linked dental services in the FQHC setting. Commenters stated that it is critical that CMS consider FQHCs' unique Medicare payment structure and that CMS ensure that policy changes for FQHCs are analogous to any changes made under the PFS. Commenters noted that many FQHCs provide dental services on-site, and health center patients could benefit from the payment policies for dental services inextricably linked to other covered services and suggested that the FQHC billing codes should be edited in tandem. Commenters further noted that “physicians' services” component of the Medicare FQHC benefit includes services furnished by dentists. Several commenters urged that the list of billable dental visit codes modified in the proposed rule be added to the list of codes that may be billed in the FQHC setting and requested that any expansion in codes recognized under the PFS for dental-related services also be applied to FQHCs. We acknowledged the commenters concerns and noted our intention to modify operational procedures in the FQHC setting to reflect the expansion of this PFS policy, including updates to billable code lists.

We agree that RHC and FQHC Medicare beneficiaries could benefit from the payment policies established under the PFS for dental services that are inextricably linked to specific medical services. Dentists are defined as physicians in Medicare statute (42 CFR 491.2). Services furnished by physicians are billable visits in RHCs and FQHCs and they could bill for a face-to-face, medically necessary visit furnished by a dentist within their scope of practice. Therefore, we are clarifying in this proposed rule that dental services exactly as described in section II.J and furnished in an RHC or FQHC are RHC and FQHC visits and as such can be paid under the RHC AIR methodology or FQHC PPS.

We would apply and operationalize the dental policies finalized in the CY 2023 and 2024 PFS final rules as applicable also to RHCs and FQHCs and update the FQHC qualifying visit list as appropriate. Consistent with the discussion in section II.J of this proposed rule, if an RHC or FQHC practitioner believes the dental services for which they submit Medicare claims are inextricably linked to a covered service, a modifier may be reported on an RHC or FQHC claim for payment purposes. The KX modifier is reported on an RHC or FQHC claim to indicate that the service is medically necessary, and that the provider has included appropriate documentation in the medical record to support or justify the medical necessity of the service or item. We believe that usage of the KX modifier in the context of claims for dental services inextricably linked to covered services to indicate that the clinician attests that the service is medically necessary, and that the provider has included appropriate documentation is appropriate and will support claims processing and program integrity efforts.

We are clarifying that when RHCs and FQHCs furnish dental services that align with the policies and operational requirements in the physician setting, we would consider those services to be a qualifying visit and the RHC would be paid at the RHC AIR methodology and the FQHC would be paid under the FQHC PPS.

b. Medical and Dental Visits Furnished on the Same Day

If an RHC or FQHC patient has a medically-necessary face-to-face visit with an RHC or FQHC practitioner, and is then seen by another RHC or FQHC practitioner, including a specialist, for further evaluation of the same condition on the same day, or is then seen by another RHC or FQHC practitioner, including a specialist, for evaluation of a different condition on the same day, the multiple encounters would constitute a single RHC or FQHC visit and be payable as one visit regardless of the length or complexity of the visit, whether the second visit is a scheduled or unscheduled appointment, or whether the first visit is related or unrelated to the subsequent visit.

If the RHC or FQHC patient suffers an illness or injury that requires additional diagnosis or treatment on the same day subsequent to the first visit, or has a medical and a mental health visit on the same day, or an RHC patient has an initial preventive physical exam (IPPE) and a separate medical and/or mental health visit on the same day, then the RHC or FQHC would be paid separately for each visit.

We are seeking comment on whether the multiple visits policy should apply to patients who have an encounter with an RHC or FQHC practitioner and a dentist on the same day or should a subsequent encounter with a dentist be considered an exception to this policy and be paid as a separate billable visit. We are interested in understanding when these situations could occur.

9. “Grandfathered” Technical Refinement

a. Background

We have conducted a review of our regulations and guidance to determine where preferred terms may be used. We found several sections in part 405, subpart X, that use the term “grandfathered.” For example, in § 405.2462(f)(1) a “grandfathered tribal FQHC” is a FQHC that is operated by a tribe or tribal organization under the Indian Self-Determination and Education Assistance Act (ISDEAA); was billing as if it were provider-based to an IHS hospital on or before April 7, 2000, and is not currently operating as a provider-based department of an IHS hospital.

b. Technical Refinement

We believe language in communication products should reflect and speak to the needs of people in the audience of focus. In an effort to represent an ongoing shift to non-stigmatizing language, we are proposing to make a technical change to remove the term “grandfathered” from the regulation text in §§ 405.2462, 405.2463, 405.2464, and 405.2469 and replace it with “historically excepted” to describe a level of protection provided to certain tribal FQHCs that predates applicable restrictions.

C. Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) Conditions for Certification and Conditions for Coverage (CfCs)

1. Background and Statutory Authority

The Rural Health Clinic Services Act of 1977 (Pub. L. 95-210 enacted December 13, 1977) amended the Social Security Act (the Act) by enacting section 1861(aa) to extend Medicare and Medicaid entitlement and payment for outpatient services and emergency care services furnished at a rural health clinic (RHC) by physicians and certain other practitioners, and for services and supplies incidental to their services. Other practitioners include nurse practitioners and physician assistants, and subsequent legislation extended the definition of covered RHC services to include the services of clinical psychologists, clinical social workers, certified nurse midwives, marriage and family therapists, and mental health counselors.

We have broad statutory authority to establish health and safety standards for most Medicare and Medicaid participating provider and supplier types. Section 1861(aa) of the Act authorizes the Secretary to establish the requirements that an RHC and Federally Qualified Health Center (FQHC) must meet to participate in the Medicare Program. As required by subparagraph (iv) of the flush material set out after section 1861(aa)(2)(K) of the Act, Medicare certified RHCs must not be a rehabilitation agency or a facility which is primarily for the care or treatment of mental diseases. These statutory CfC requirements are codified in regulations at 42 CFR part 491. RHCs and FQHCs must meet these requirements to receive Medicare payment for services. These regulations are intended to protect the health and safety of patients receiving care from these facilities. We note that there are approximately 5,462 Medicare-certified RHCs and 11,853 Medicare-certified FQHCs.

In this proposed rule, we also aim to ensure RHCs are provided flexibility in the services they offer, including specialty and laboratory services.

2. Proposed Changes to the RHC and FQHC Conditions for Certification and Conditions for Coverage (CfCs)

a. Provision of Services (42 CFR 491.9)

In accordance with section 1861(aa) of the Act, § 491.9, Provision of services, establishes the basic requirements for services RHCs and FQHCs must provide in accordance with applicable Federal, State, and local laws. This CfC also outlines patient care policies, including the development of written policies and the establishment of guidelines for medical management, record-keeping, and drug administration. Additionally, this section specifies the diagnostic, therapeutic, laboratory, and emergency services that RHCs and FQHCs must offer, as well as the necessary agreements or arrangements with other healthcare providers to furnish additional services not available onsite.

RHCs and FQHCs play a crucial role in providing accessible and comprehensive healthcare services in underserved areas, often serving as the primary point of contact for healthcare services for residents living in these communities. Approximately 20 percent of the U.S. population lives in rural areas. When compared to their urban counterparts, rural residents are more likely to be living in poverty, unhealthy, older adults, uninsured or underinsured, and medically underserved. Accounting for the unique circumstances of individuals living in rural areas and the broad array of services RHCs and FQHCs provide to their communities, it is imperative to support rural facilities so they may continue to provide healthcare services to medically underserved populations.

Research shows that accessing primary care is associated with positive health outcomes. Individuals who receive primary care services are more likely to receive preventive care, which results in lower rates of illness and premature death. Furthermore, without access to primary care services, an individual may delay seeking treatment until their illness has worsened. In such cases, they may end up receiving care in the emergency department, which costs more and leads to poorer health outcomes. Rural residents also report difficulty accessing specialty care due to having to travel considerable distances, exacerbated by rural hospitals closing and provider shortages. RHC practitioners have also reported additional barriers to receiving specialized care, which include a shortage of specialty providers, limited availability of the specialty providers, lack of transportation, and not accepting patients who are uninsured or specialists not accepting insurance coverage (Medicare, Medicaid, or private insurance).

Based on feedback from interested parties, including RHC providers and rural health associations, we identified a discrepancy in the guidance, statute, and regulations. Specifically, interested parties questioned the language in the CMS State Operations Manual RHC interpretative guidance as it relates to § 491.9(a)(2), which states that “RHCs may not be primarily engaged in specialized services.” The guidance goes on to state that, in this context, “primarily engaged” is determined by considering the total hours of an RHC's operation and whether a majority, i.e., more than 50 percent, of those hours involve the provision of RHC services, whereas section 1861(aa)(2)(A) of the Act only reference being primarily engaged in “furnishing to outpatients” physician services and services furnished by a physician assistant or a nurse practitioner, clinical psychologist or by a clinical social worker, as cross-referenced by sections 1861(aa)(1)(A) and (B) of the Act. This is codified in the CfCs at § 491.9(a)(2), requiring RHCs and FQHCs to be primarily engaged in “providing outpatient health services.” We have enforced a standard requiring that RHCs be primarily engaged in providing primary care services based on the interpretive guidance.

To clarify the requirements and intent of the program regarding the services provided by RHCs and FQHCs, we are proposing changes to the Provision of services CfCs. We also aim to ensure RHCs are provided flexibility in the services they offer, including specialty services. To align the requirements and preserve access to primary care services in rural areas, we are proposing to add standards to § 491.9(a)(2) explicitly requiring RHCs and FQHCs to provide primary care services (at § 491.9(a)(2)(i)) and explicitly noting that RHCs cannot be a rehabilitation agency or a facility which is primarily for the care and treatment of mental diseases (at § 491.9(a)(2)(ii)). Under our proposal, RHCs and FQHCs would continue to be required to provide primary care services to their patient populations, but CMS would no longer determine or enforce the standard of RHCs “being primarily engaged in furnishing primary care services” and would no longer consider the total hours of an RHC's operation and whether a majority, that is, more than 50 percent, of those hours involve primary care services through the survey process. These proposed requirements, as well as the subsequent proposal discussed in section III.C.2.b. of this proposed rule, will be enforced in accordance with section 1864 of the Act, which requires that CMS use state surveyors to determine whether a provider or supplier subject to certification qualifies for an agreement to participate in Medicare. However, under section 1865 of the Act, providers and suppliers subject to certification may instead elect to be accredited by private accrediting organizations whose Medicare accreditation programs have been approved by CMS as having standards and survey procedures that meet or exceed all applicable Medicare requirements.

This proposal would allow RHCs to provide more outpatient-specialty services within the practitioner's scope of practice to meet the needs of the patient population—for example, internal medicine, pediatrics, geriatrics, obstetrics and gynecology, dermatology, cardiology, neurology, endocrinology, and ear, nose and throat. Section 1861(aa) of the Act does not explicitly state that RHCs must provide primary care services, though we believe this is the intended purpose of the statute. Clause (i) of the second sentence of the flush material after section 1861(aa)(2)(K) of the Act, requires RHCs to be located in an area designated as either an area with a shortage of personal health services under section 330(b)(3) or 1302(7) of the Public Health Service Act or as a health professional shortage area described in section 332(a)(1)(A) of that Act because of its shortage of primary medical care manpower. Additionally, we use the phrase “the entry point into the health care system” in the RHC and FQHC CfCs at § 491.9(c)(1). We note that this language is consistent with language used in the Rural Emergency Hospital Conditions of Participation (CoPs) under the requirement for Additional outpatient medical and health services (§ 485.524(a)), and the Critical Access Hospital CoPs under the requirement for Provision of services (§ 485.635(b)(1)(i)). The American Academy of Family Physicians (AAFP) defines primary care practice as “A primary care practice serves as the patient's entry point into the health care system and as the continuing focal point for all needed health care services.” Therefore, we expect RHCs and FQHCs to offer a range of primary health care services to ensure that patients receive the necessary care at the earliest possible point of contact. Primary care services are critical in promoting health, preventing illness, and managing chronic conditions.

This proposal also provides clarification regarding the requirement that RHCs cannot be a rehabilitation agency or a facility which is primarily for the care and treatment of mental diseases. While this requirement is included under § 491.2, Definitions—Rural health clinic or clinic, including this requirement under the Provision of services CfC at § 491.9(a)(2)(ii) as a separate standard more clearly cites the requirement and allows for a clearer evaluation of compliance with the specific requirement. CMS defines a rehabilitation agency as “[a]n agency that provides an integrated, multidisciplinary program designed to upgrade the physical functions of handicapped, disabled individuals by bringing together, as a team, specialized rehabilitation personnel.” Rehabilitation services may include physical therapy, occupational therapy, and speech-language pathology services.

CMS acknowledges that the term “mental diseases” is outdated and not often used in the field of mental health today. This term can cause stigma against people with mental health conditions and can be a major barrier to seeking help or treatment and can be a cause of reduced likelihood of engaging in ongoing treatment. As discussed in section III.C.1 of this proposed rule, the U.S. Congress passed Public Law 95-210 (enacted December 13, 1977) that established criteria for the establishment of Medicare-certified RHCs and has included the term “mental diseases” since that time. As we are bound by the current statutory requirements, we have included the term in the RHC CfCs as it appears in the statute. We note that the statute is enacted by Congress and it would take an Act of Congress to make statutory changes.

For the purpose of this proposed rule, the term “mental diseases” refers to behavioral health conditions (that is, mental and substance use disorders). As part of the Coverage to Care (C2C) initiative, CMS published the Roadmap to Behavioral Health, which defines behavioral health conditions to include mental and substance use disorders. The guide defines mental disorders as changes in a person's thinking, mood, and/or behavior and can only be diagnosed based on the person's ability to function as a result of their symptoms. The guide defines “substance use disorder” as when a person's repeated use of alcohol and/or drugs causes clinically significant impairment. This may include health problems, disability, and failure to meet major responsibilities at home, school, or work.

These proposed changes to the RHC CfCs should not be construed as CMS prohibiting or discouraging the provision of RHC specialty services or behavioral health services. An RHC or FQHC may offer such specialty services and behavioral health services to its patients in addition to the primary care services it already provides. However, RHCs cannot be a rehabilitation agency or a facility, which is primarily for the care and treatment of mental diseases. As noted, the term “mental diseases” is outdated; therefore, this proposed rule aims to define “mental diseases” for the purpose of the RHC and FQHC health and safety standards and future guidance will clarify how CMS will determine whether an RHC is primarily providing care and treatment of mental diseases. CMS would assess a facility's compliance with this proposed requirement based on policies published in subsequent interpretative guidance, which we would publish if this revision is adopted in a final rule.

As we continue to focus on improved access to care for the rural communities served by RHCs, and to ensure that the proposed provisions do not have unintended consequences, we are soliciting public comment on the following questions to gain insight on the anticipated impact of this proposed policy on access to primary care services, behavioral health services, and specialty care services:

• What types of behavioral health services are currently offered by RHCs (that is, therapy, counseling, medication management, substance use disorder treatment, etc.), and how often are these services provided?
• For those RHCs that are currently providing behavioral health services, who provides those services (that is, physician, psychologist, social worker, marriage and family therapist, or mental health counselor)? What is the clinic's capacity to accept new behavioral health patients? What potential impacts do you anticipate for RHCs and the community if they were able to provide more behavioral health services? How would these impacts be addressed?
• Are there specific behavioral health conditions that your clinic is better equipped to treat than others, and if so, what are those behavioral health conditions?
• For those RHCs that are not currently providing behavioral health services, what barriers or challenges does the RHC face that limit the ability to furnish behavioral health services (that is, geographic location, transportation issues, service area size, staffing issues, stigma, regulatory or survey concerns)?
• What standards or criteria should surveyors use to evaluate whether a RHC is operating as a “facility which is primarily for the care and treatment of mental diseases”?

b. Laboratory Requirements (42 CFR 491.9)

Section 1861(aa)(2)(G) of the Act requires RHCs to provide routine diagnostic services directly (that is, they must be furnished at the RHC, by RHC personnel), including clinical laboratory services. We have implemented this statutory provision through regulations at § 491.9(c)(2), which require RHCs to provide six specific diagnostic laboratory tests directly; chemical examinations of urine by stick or tablet method or both (including urine ketones); hemoglobin or hematocrit; blood glucose; examination of stool specimens for occult blood; pregnancy tests; and primary culturing for transmittal to a certified laboratory. This list reflects the same tests that have been required since RHCs were established in 1978 (43 FR 30529) and were chosen because they were commonly performed in physicians' offices at that time.

The Clinical Laboratory Improvement Amendments of 1988 (CLIA) (Pub. L. 100-578), revised section 353 of the Public Health Service Act to require all clinical laboratories that test human specimens for health purposes to meet certain requirements. CLIA requires that the complexity of tests and the skill in interpreting results determine the extent of supervision and review. Tests are categorized from “waived” (those needing minimal supervision) to “high complexity” (those requiring the highest level of supervision and review). Regulations implementing CLIA are contained in 42 CFR part 493. Under these regulations, laboratories performing specified tests categorized as waived, physician-performed microscopy moderate or high complexity must obtain a certificate that shows they meet specific standards. All tests RHCs are required to perform are classified as waived under CLIA, as published in the 1992 Federal Register and listed at 42 CFR 493.15(c).

We are proposing to remove hemoglobin and hematocrit (H&H) from the listed laboratory services in § 491.9(c)(2) that RHCs must perform directly. In addition, we are proposing to revise paragraph (c)(2)(vi) to reflect current practice for microbiology specimens. Interested parties have expressed concerns with the existing laboratory requirements, citing the financial and physical burdens associated with maintaining the lab equipment that is used for laboratory tests that are ordered infrequently for patients receiving services at the RHC. RHC providers have reported that the H&H laboratory test in particular is overly burdensome. We are therefore proposing to remove the H&H laboratory test from the list of required laboratory tests to increase flexibility in the services offered by RHCs.

A hemoglobin test evaluates the amount of hemoglobin in the blood, which is responsible for carrying oxygen to a person's organs and tissues and transporting carbon dioxide back to the lungs. Hematocrit is the percentage of red blood cells in a person's blood and is tested to evaluate red blood cells. ³²⁸ Doctors test hemoglobin and hematocrit levels to evaluate overall health, diagnose a medical condition, or monitor an existing medical condition. While RHCs are currently required to have and maintain the equipment and supplies for these tests onsite, H&H blood tests are typically performed as part of a comprehensive blood count (CBC) and are not ordered separately in accordance with current clinical standards of practice. RHCs report that when laboratory tests are ordered that are not provided by the RHC, such as a CBC, their patients are often sent to the nearest hospital that would have a full-service laboratory available to perform the test. As a result, some RHCs located near hospitals may not be utilizing their laboratory equipment and supplies, or they may be utilizing them on a limited basis. This is because when laboratory tests are ordered by the RHC, and the order includes hemoglobin and hematocrit, and other tests that are not provided by the RHC, the patient will receive all of their ordered laboratory tests at the nearby hospital. Additionally, removing the requirement for these tests to be performed at the RHC limits the number of venipunctures the patient must experience.

In 2021, 66 percent of all RHCs were designated as provider-based RHCs, meaning they are owned and operated as an integral part of a hospital, nursing home, or home health agency. Provider-based RHCs are governed, supervised, and licensed by the parent organization, and most provider-based RHCs are hospital-owned. The remaining 34 percent of RHCs are independent clinics owned by a healthcare provider or entity and though not as common, may be owned and/or operated by a healthcare system. Therefore, we believe a large majority of provider-based—and some independent—RHCs have access to a full-service laboratory, thereby maintaining access to the H&H laboratory test, even if it is no longer required to be provided directly by RHCs.

We have also received feedback that the current requirement at § 491.9(c)(2)(vi) does not reflect current clinical laboratory standards of practice and laboratory techniques. This standard currently lists the laboratory services that must be provided by RHCs, with the list specifically including “primary culturing for transmittal to a certified laboratory.” Primary culturing is an outdated microbiology practice that is no longer performed due to modern lab techniques. Instead, RHCs collect specimens using appropriate collection and storage techniques and send them to a certified laboratory without initial culturing. Therefore, we are proposing to update the language in this standard such that the laboratory services RHCs would be required to provide include the “collection of patient specimens for transmittal to a certified laboratory for culturing.” This proposal, along with the proposal removing the H&H from the list of required labs, would require that an RHC provide the remaining following laboratory services at § 491.9(c)(2): (1) chemical examinations of urine by stick or tablet methods or both (including urine ketones); (2) blood glucose; (3) examination of stool specimens for occult blood; (4) pregnancy tests; and (5) collection of patient specimens for transmittal to a certified laboratory for culturing. RHCs would still be required under § 491.9(d)(1)(iii) to provide prompt access to a Medicare or Medicaid participating provider or supplier that can furnish an H&H laboratory test and any additional and specialized diagnostic and laboratory services the RHC is not equipped to perform.

This proposal does not prevent RHCs from providing tests not listed in § 491.9. An RHC is free to provide tests consistent with its CLIA certification and can choose a higher level CLIA certification than the certificate of waiver if it wishes to provide tests of higher complexity and comply with all CLIA requirements.

Little information on RHC laboratory utilization is available, so while we are proposing to remove the H&H laboratory test from the list of diagnostic services RHCs are required to provide, we solicit public comment on how this may impact access to H&H laboratory tests in rural areas. We also are soliciting comments on data, evidence, and experience related to laboratory services in RHCs and alternative basic lab services that would be appropriate for RHCs to provide to meet the needs of underserved rural communities.

D. Clinical Laboratory Fee Schedule: Revised Data Reporting Period and Phase-in of Payment Reductions

1. Background on the Clinical Laboratory Fee Schedule

Prior to January 1, 2018, Medicare paid for clinical diagnostic laboratory tests (CDLTs) on the Clinical Laboratory Fee Schedule (CLFS) under section 1833(a), (b), and (h) of the Act. Under the previous payment system, CDLTs were paid based on the lesser of: (1) the amount billed; (2) the local fee schedule amount established by the Medicare Administrative Contractor (MAC); or (3) a national limitation amount (NLA), which is a percentage of the median of all the local fee schedule amounts (or 100 percent of the median for new tests furnished on or after January 1, 2001). In practice, most tests were paid at the NLA. Under the previous payment system, the CLFS amounts were updated for inflation based on the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) and reduced by a productivity adjustment and other statutory adjustments but were not otherwise updated or changed. Coinsurance and deductibles generally do not apply to CDLTs paid under the CLFS.

Section 1834A of the Act, as established by section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA), required significant changes to how Medicare pays for CDLTs under the CLFS. A final rule entitled “Medicare Clinical Diagnostic Laboratory Tests Payment System” (CLFS final rule), which appeared in the Federal Register on June 23, 2016 (81 FR 41036), implemented section 1834A of the Act at 42 CFR part 414, subpart G.

Under the CLFS final rule, “reporting entities” must report to CMS during a “data reporting period” “applicable information” collected during a “data collection period” for their component “applicable laboratories.” The first data collection period occurred from January 1, 2016, through June 30, 2016. The first data reporting period occurred from January 1, 2017, through March 31, 2017. On March 30, 2017, we announced a 60-day period of enforcement discretion for the application of the Secretary's potential assessment of civil monetary penalties for failure to report applicable information with respect to the initial data reporting period.

In the CY 2018 PFS proposed rule (82 FR 34089 through 34090), we solicited public comments from applicable laboratories and reporting entities to better understand the applicable laboratories' experiences with data reporting, data collection, and other compliance requirements for the first data collection and reporting periods. We discussed these comments in the CY 2018 PFS final rule (82 FR 53181 through 53182) and stated that we would consider the comments for potential future rulemaking or guidance.

As part of the CY 2019 Medicare PFS rulemaking, we finalized two changes to the definition of “applicable laboratory” at § 414.502 (see 83 FR 59667 through 59681, 60074; 83 FR 35849 through 35850, 35855 through 35862). First, we excluded Medicare Advantage plan payments under Part C from the denominator of the Medicare revenues threshold calculation to broaden the types of laboratories qualifying as an applicable laboratory. Second, consistent with our goal of obtaining a broader representation of laboratories that could potentially qualify as an applicable laboratory and report data, we also amended the definition of applicable laboratory to include hospital outreach laboratories that bill Medicare Part B using the CMS-1450 14x Type of Bill.

2. Payment Requirements for Clinical Diagnostic Laboratory Tests

In general, under section 1834A of the Act, the payment amount for each CDLT on the CLFS furnished beginning January 1, 2018, is based on the applicable information collected during the data collection period and reported to CMS during the data reporting period and is equal to the weighted median of the private payor rates for the test. The weighted median is calculated by arraying the distribution of all private payor rates, weighted by the volume for each payor and each laboratory. The payment amounts established under the CLFS are not subject to any other adjustment, such as geographic, budget neutrality, or annual update, as required by section 1834A(b)(4)(B) of the Act. Additionally, section 1834A(b)(3) of the Act, implemented at § 414.507(d), provides for a phase-in of payment reductions, limiting the amounts the CLFS rates for each CDLT (that is not a new advanced diagnostic laboratory test (ADLT) or new CDLT) can be reduced as compared to the payment rates for the preceding year. Under the original provisions enacted by section 216(a) of PAMA, for the first 3 years after implementation (CY 2018 through CY 2020), the reduction could not be more than 10 percent per year. For the next 3 years after implementation (CY 2021 through CY 2023), section 216(a) of PAMA stated that the reduction could not be more than 15 percent per year. Under sections 1834A(a)(1) and (b) of the Act, as enacted by PAMA, for CDLTs that are not ADLTs, the data collection period, data reporting period, and payment rate update were to occur every 3 years. As such, the second data collection period for CDLTs that are not ADLTs occurred from January 1, 2019, through June 30, 2019, and the next data reporting period was originally scheduled to take place from January 1, 2020, through March 31, 2020, with the next update to the Medicare payment rates for those tests based on that reported applicable information scheduled to take effect on January 1, 2021.

Section 216(a) of PAMA established a new subcategory of CDLTs known as ADLTs, with separate reporting and payment requirements under section 1834A of the Act. The definition of an ADLT is set forth in section 1834A(d)(5) of the Act and implemented at § 414.502. Generally, under section 1834A(d) of the Act, the Medicare payment rate for a new ADLT is equal to its actual list charge during an initial period of 3 calendar quarters. After the new ADLT initial period, ADLTs are paid using the same methodology based on the weighted median of private payor rates as other CDLTs. However, under section 1834A(d)(3) of the Act, updates to the Medicare payment rates for ADLTs occur annually instead of every 3 years.

Additional information on the private payor rate-based CLFS is detailed in the CLFS final rule, which implemented section 1834A of the Act as required by PAMA (81 FR 41036 through 41101), and this information is also available on the CMS website.

3. Previous Statutory Revisions to the Data Reporting Period and Phase-In of Payment Reductions

Beginning in 2019, Congress passed a series of legislation to modify the statutory requirements for the data reporting period and phase-in of payment reductions under the CLFS. First, section 105(a)(1) of the Further Consolidated Appropriations Act, 2020 (FCAA) (Pub. L. 116-94, December 20, 2019) amended the data reporting requirements in section 1834A(a) of the Act to delay the next data reporting period for CDLTs that are not ADLTs by 1 year so that data reporting would be required during the period of January 1, 2021, through March 31, 2021, instead of January 1, 2020, through March 30, 2020. The 3-year data reporting cycle for CDLTs that are not ADLTs would resume after that data reporting period. Section 105(a)(1) of the FCAA also specified that the data collection period that applied to the data reporting period of January 1, 2021, through March 30, 2021, would be the period of January 1, 2019, through June 30, 2019, which was the same data collection period that would have applied absent the amendments. In addition, section 105(a)(2) of the FCAA amended section 1834A(b)(3) of the Act regarding the phase-in of payment reductions to provide that payments may not be reduced by more than 10 percent as compared to the amount established for the preceding year through CY 2020, and for CYs 2021 through 2023, payment may not be reduced by more than 15 percent as compared to the amount established for the preceding year. These statutory changes were consistent with our regulations implementing the private payor rate-based CLFS at § 414.507(d) (81 FR 41036).

Subsequently, section 3718 of the Coronavirus Aid, Relief, and Economic Security Act, 2020 (CARES Act) (Pub. L. 116-136, March 27, 2020) further amended the data reporting requirements for CDLTs that are not ADLTs and the phase-in of payment reductions under the CLFS. Specifically, section 3718(a) of the CARES Act amended section 1834A(a)(1)(B) of the Act to delay the next data reporting period for CDLTs that are not ADLTs by one additional year, to require data reporting during the period of January 1, 2022, through March 31, 2022. The CARES Act did not modify the data collection period that applied to the next data reporting period for these tests. Thus, under section 1834A(a)(4)(B) of the Act, as amended by section 105(a)(1) of the FCAA, the next data reporting period for CDLTs that are not ADLTs would have been based on the data collection period of January 1, 2019, through June 30, 2019.

Section 3718(b) of the CARES Act further amended the provisions in section 1834A(b)(3) of the Act regarding the phase-in of payment reductions under the CLFS. First, it extended the statutory phase-in of payment reductions resulting from private payor rate implementation by an additional year, that is, through CY 2024 instead of CY 2023. It further amended section 1834A(b)(3)(B)(ii) of the Act to specify that the applicable percent for CY 2021 is 0 percent, meaning that the payment amount determined for a CDLT for CY 2021 shall not result in any reduction in payment as compared to the payment amount for that test for CY 2020. Section 3718(b) of the CARES Act further amended section 1834A(b)(3)(B)(iii) of the Act to state that the applicable percent of 15 percent would apply for CYs 2022 through 2024, instead of CYs 2021 through 2023. In the CY 2021 PFS rulemaking (85 FR 50210 through 50211; 85 FR 84693 through 84694), in accordance with section 105(a) of the FCAA and section 3718 of the CARES Act, we proposed and finalized conforming changes to the data reporting and payment requirements at 42 CFR part 414, subpart G.

Section 4 of the Protecting Medicare and American Farmers from Sequester Cuts Act (PMAFSCA) (Pub. L. 117-71, December 10, 2021) made additional revisions to the CLFS requirements for the next data reporting period for CDLTs that are not ADLTs and to the phase-in of payment reductions under section 1834A of the Act. Specifically, section 4(b) of PMAFSCA amended the data reporting requirements in section 1834A(a) of the Act to delay the next data reporting period for CDLTs that are not ADLTs by 1 year, so that data reporting would be required during the period of January 1, 2023, through March 31, 2023. The 3-year data reporting cycle for CDLTs that are not ADLTs would resume after that data reporting period. As amended by section 4 of PMAFSCA, section 1834A(a)(1)(B) of the Act provided that in the case of reporting with respect to CDLTs that are not ADLTs, the Secretary shall revise the reporting period under subparagraph (A) such that—(i) no reporting is required during the period beginning January 1, 2020, and ending December 31, 2022; (ii) reporting is required during the period beginning January 1, 2023, and ending March 31, 2023; and (iii) reporting is required every 3 years after the period described in clause (ii).

Section 4 of PMAFSCA did not modify the data collection period that applies to the next data reporting period for these tests. Thus, under section 1834A(a)(4)(B) of the Act, as amended by section 105(a)(1) of the FCAA, the next data reporting period for CDLTs that are not ADLTs (January 1, 2023, through March 31, 2023) would continue to be based on the data collection period of January 1, 2019, through June 30, 2019, as defined in § 414.502.

Section 4 of PMAFSCA further amended the provisions in section 1834A(b)(3) of the Act regarding the phase-in of payment reductions under the CLFS. First, it extended the statutory phase-in of payment reductions resulting from private payor rate implementation by an additional year, that is, through CY 2025. It further amended section 1834A(b)(3)(B)(ii) of the Act to specify that the applicable percent for each of CY 2021 and 2022 is 0 percent, meaning that the payment amount determined for a CDLT for CY 2021 and 2022 shall not result in any reduction in payment as compared to the payment amount for that test for CY 2020. Section 4(a) of PMAFSCA further amended section 1834A(b)(3)(B)(iii) of the Act to state that the applicable percent of 15 percent would apply for CYs 2023 through 2025, instead of CYs 2022 through 2024. In the CY 2023 PFS rulemaking (87 FR 46068 through 46070; 87 FR 69741 through 69744, 70225), in accordance with section 4 of PMAFSCA, we proposed and finalized conforming changes to the data reporting and payment requirements at 42 CFR part 414, subpart G.

Section 4114 of the Consolidated Appropriations Act, 2023 (CAA, 2023) (Pub. L. 117-328, December 29, 2022) made further revisions to the CLFS requirements for the next data reporting period for CDLTs that are not ADLTs and to the phase-in of payment reductions under section 1834A of the Act. Specifically, section 4114(b) of the CAA, 2023 amended the data reporting requirements in section 1834A(a)(1)(B) of the Act to delay the next data reporting period for CDLTs that are not ADLTs by 1 year, so that data reporting would be required during the period of January 1, 2024, through March 31, 2024, instead of the data reporting period of January 1, 2023, through March 31, 2023. The 3-year data reporting cycle for CDLTs that are not ADLTs would resume after that data reporting period. As amended by section 4114(b) of the CAA, 2023, section 1834A(a)(1)(B) of the Act now provides that in the case of reporting with respect to CDLTs that are not ADLTs, the Secretary shall revise the reporting period under subparagraph (A) such that—(i) no reporting is required during the period beginning January 1, 2020, and ending December 31, 2023; (ii) reporting is required during the period beginning January 1, 2024, and ending March 31, 2024; and (iii) reporting is required every 3 years after the period described in clause (ii).

Section 4114 of the CAA, 2023 did not modify the data collection period that applies to the next data reporting period for CDLTs. Thus, under section 1834A(a)(4)(B) of the Act, the next data reporting period for CDLTs that are not ADLTs (January 1, 2024, through March 31, 2024) would continue to be based on the data collection period of January 1, 2019, through June 30, 2019, as reflected in the definitions of data collection period and data reporting period at § 414.502.

Section 4114(a) of the CAA, 2023 further amended the provisions in section 1834A(b)(3) of the Act regarding the phase-in of payment reductions under the CLFS. First, it extended the statutory phase-in of payment reductions resulting from private payor rate implementation by an additional year, that is, through CY 2026. It further amended section 1834A(b)(3)(B)(ii) of the Act to specify that the applicable percent for CY 2023 is 0 percent, meaning that the payment amount determined for a CDLT for CY 2023 shall not result in any reduction in payment as compared to the payment amount for that test for CY 2022. Section 4114(a) of the CAA, 2023 further amended section 1834A(b)(3)(B)(iii) of the Act to state that the applicable percent of 15 percent will apply for CYs 2024 through 2026, instead of CYs 2023 through 2025. In the CY 2024 PFS rulemaking (88 FR 79083 through 79087; 88 FR 79531), in accordance with section 4114 of the CAA, 2023, we proposed and finalized conforming changes to the data reporting and payment requirements at 42 CFR part 414, subpart G.

4. Additional Statutory Revisions to the Data Reporting Period and Phase-In of Payment Reductions

On November 17, 2023, section 502 of the Further Continuing Appropriations and Other Extensions Act, 2024 (Pub. L. 118-22) (FCAOEA, 2024) was passed and delayed data reporting requirements for CDLTs that are not ADLTs, and it also delayed the phase-in of payment reductions under the CLFS from private payor rate implementation under section 1834A of the Act. Specifically, section 502(b) of the FCAOEA, 2024 amended the data reporting requirements in section 1834A(a)(1)(B) of the Act to delay the next data reporting period for CDLTs that are not ADLTs by one year, so that data reporting would be required during the period of January 1, 2025, through March 31, 2025, instead of the data reporting period of January 1, 2024, through March 31, 2024. The 3-year data reporting cycle for CDLTs that are not ADLTs would resume after that data reporting period. As amended by section 502(b) of the FCAOEA, 2024, section 1834A(a)(1)(B) of the Act now provides that in the case of reporting with respect to CDLTs that are not ADLTs, the Secretary shall revise the reporting period under subparagraph (A) such that—(i) no reporting is required during the period beginning January 1, 2020, and ending December 31, 2024; (ii) reporting is required during the period beginning January 1, 2025, and ending March 31, 2025; and (iii) reporting is required every 3 years after the period described in clause (ii).

Section 502 of the FCAOEA, 2024 does not modify the data collection period that applies to the next data reporting period for these tests. Thus, under section 1834A(a)(4)(B) of the Act, the next data reporting period for CDLTs that are not ADLTs (January 1, 2025, through March 31, 2025) will continue to be based on the data collection period of January 1, 2019, through June 30, 2019, as reflected in the definitions of data collection period and data reporting period at § 414.502.

Section 502(a) of the FCAOEA, 2024 further amends the provisions in section 1834A(b)(3) of the Act regarding the phase-in of payment reductions under the CLFS. First, it extends the statutory phase-in of payment reductions resulting from private payor rate implementation by an additional year, that is, through CY 2027. It further amends section 1834A(b)(3)(B)(ii) of the Act to specify that the applicable percent for CY 2024 is 0 percent, meaning that the payment amount determined for a CDLT for CY 2024 shall not result in any reduction in payment as compared to the payment amount for that test for CY 2023. Section 502(a) of the FCAOEA, 2024 further amends section 1834A(b)(3)(B)(iii) of the Act to state that the applicable percent of 15 percent will apply for CYs 2025 through 2027.

As a result of the statutory revisions under the FCAA, CARES Act, PMAFSCA, the CAA, 2023, and the FCAOEA, 2024, there have only been two data collection periods for CDLTs that are not ADLTs to date. The first data collection period for these tests occurred from January 1, 2016, through June 30, 2016, and the second occurred from January 1, 2019, through June 30, 2019. Thus far, there has been only one data reporting period for these tests, which took place from January 1, 2017, through March 31, 2017. We have established CLFS payment rates for these tests using the methodology established in PAMA only one time, effective January 1, 2018, based on the applicable information collected by applicable laboratories during the 2016 data collection period and reported to CMS during the 2017 data reporting period.

Additionally, we have applied the phase-in of payment reductions for the first 3 years of PAMA implementation, CY 2018 through CY 2020, whereby reduction of payment rates could not be more than 10 percent per year as compared to the amount established the prior year. However, the phase-in of payment reductions set forth in PAMA for years 4 through 6 after PAMA implementation, whereby payment cannot exceed 15 percent per year as compared to the amount established the prior year, has not yet occurred.

5. Proposed Conforming Regulatory Changes

In accordance with section 502 of the FCAOEA, 2024, we are proposing to make conforming changes to the data reporting and payment requirements at 42 CFR part 414, subpart G. Specifically, we are proposing to revise the definitions of both the “data collection period” and “data reporting period” at § 414.502 to specify that for the data reporting period of January 1, 2025, through March 31, 2025, the data collection period is January 1, 2019, through June 30, 2019. We are also proposing to revise § 414.504(a)(1) to indicate that initially, data reporting begins January 1, 2017, and is required every 3 years beginning January 2025. In addition, we are proposing to make conforming changes to our requirements for the phase-in of payment reductions to reflect the amendments in section 502(a) of the FCAOEA, 2024. Specifically, we are proposing to revise § 414.507(d) to indicate that for CY 2024, payment may not be reduced by more than 0.0 percent as compared to the amount established for CY 2023, and for CYs 2025 through 2027, payment may not be reduced by more than 15 percent as compared to the amount established for the preceding year.

We note that the CYs 2024 and 2025 CLFS payment rates for CDLTs that are not ADLTs are based on applicable information collected in the data collection period of January 1, 2016, through June 30, 2016. Under current law, the CLFS payment rates for CY 2026 through CY 2028 will be based on applicable information collected during the data collection period of January 1, 2019, through June 30, 2019, and reported to CMS during the data reporting period of January 1, 2025, through March 31, 2025.

E. Medicare Diabetes Prevention Program (MDPP)

The Centers for Medicare & Medicaid Services' (CMS) Medicare Diabetes Prevention Program Expanded Model (hereafter, “MDPP” or “MDPP expanded model”) is an evidence-based behavioral intervention that aims to prevent or delay the onset of type 2 diabetes for eligible Medicare beneficiaries diagnosed with prediabetes. MDPP is an expansion in duration and scope of the Diabetes Prevention Program (DPP) model test, which was initially tested by CMS through a Round One Health Care Innovation Award (2012-2016). MDPP was established in 2017 as an “additional preventive service,” covered by Medicare and not subject to beneficiary cost-sharing, in addition to being available once per lifetime to eligible beneficiaries. To facilitate delivery of MDPP in a non-clinical community setting (to align with the certified DPP model tested by The CMS Innovation Center), CMS created a new MDPP supplier type through rulemaking in the CY 2017 PFS final rule (81 FR 80471), in addition to requiring organizations that wish to participate in MDPP to enroll in Medicare separately, even if they are already enrolled in Medicare for other purposes.

MDPP is a non-pharmacological behavioral intervention consisting of up to 22 intensive sessions furnished over 12 months by a trained Coach who provides training on topics that include long-term dietary change, increased physical activity, and behavior change strategies for weight control and diabetes risk reduction. MDPP sessions must be one hour in length and adhere to a Centers for Disease Control and Prevention (CDC) approved National Diabetes Prevention Recognition Program (National DPP) curriculum. The primary goal of the MDPP expanded model is to help Medicare beneficiaries reduce their risk for developing type 2 diabetes by achieving at least 5 percent weight loss from the first core session (81 FR 80465).

Eligible organizations seeking to furnish MDPP began enrolling in Medicare as MDPP suppliers on January 1, 2018, and began furnishing MDPP on April 1, 2018. As of May 13, 2024, there were 301 approved MDPP suppliers. The most recent MDPP evaluation report, reflected that between April 2018 and December 31, 2021, 4,848 Medicare beneficiaries participated in MDPP, including 2,325 FFS beneficiaries and 2,523 MA beneficiaries. Through the Diabetes Prevention Recognition Program (DPRP), CDC administers a national quality assurance program recognizing eligible organizations that furnish the National DPP through its evidence based DPRP Standards, which are updated every 3 years. The CDC established the DPRP in 2012 and possesses significant experience assessing the quality of program delivery by organizations throughout the United States, applying a comprehensive set of national quality standards. For further information on the DPP model test, the CDC's National DPP, and DPRP Standards, please refer to the CY 2017 (81 FR 80471) and CY 2018 PFS (82 FR 52976) final rules and related websites.

The Public Health Emergency (PHE) for COVID-19 prompted changes to allow virtual delivery of the MDPP, among other changes (85 FR 84830 through 84841). Changes to MDPP in the CY 2024 PFS final rule (88 FR 78818) included a simplified payment structure to allow for fee-for-service (FFS) payments for beneficiary attendance while retaining the performance-based payments for diabetes risk reduction (that is, weight loss). Beginning January 1, 2024, payments are made to an MDPP supplier if an MDPP beneficiary attends any core session in the first 6 months or core maintenance session in the second 6 months, allowing payment for up to 22 sessions in a 12-month timeframe. The CY 2024 PFS final rule also extended certain PHE flexibilities, including the option to deliver some or all MDPP sessions via distance learning and for beneficiaries to virtually self-report weight for MDPP distance learning sessions, until December 31, 2027 (88 FR 79241).

CDC released the 2024 DPRP Standards to replace the 2021 DPRP Standards in June 2024. To align MDPP with the 2024 CDC DPRP Standards, we are proposing conforming changes to align with CDC delivery modes. These changes are expected to reduce administrative burden, ensure compliance with existing MDPP regulations, and streamline data reporting for MDPP suppliers. In this year's rule, we are also proposing an additional option for self-reporting weight in an MDPP distance learning session, removing the MDPP bridge payment, and making minor edits to align current rule language pertaining to MDPP with previous rulemaking.

1. Proposed Changes to § 410.79 by Amending Paragraphs (b) and (d)(1)

We established MDPP as an expanded model in 2018 based on a Health Care Innovation Award (HCIA) to the National Young Men's Christian Association (YMCA) of the USA (Y-USA), who tested the CDC's National DPP in the Medicare population through their network of YMCAs in multiple U.S. markets (DPP model test). The DPP model test successfully met statutory criteria for model expansion, demonstrating 5 percent weight loss from their starting weight by participants (a key metric of the program's success) along with statistically significant reductions in Medicare spending, emergency department (ED) visits, and inpatient stays. The MDPP expanded model was implemented through the rulemaking process in two phases, in the CY 2017 PFS (81 FR 80459 through 80483) and CY 2018 PFS final rules (82 FR 53234 through 53339).

MDPP went into effect in 2018, with supplier enrollment starting January 1, 2018, and beneficiary enrollment starting April 1, 2018 (82 FR 53237). After nearly 6 years of implementation, through the CY 2024 PFS final rule, we finalized updates to MDPP based on lessons learned since the expanded model's launch, including updates to definitions and the core services period and extended the flexibilities allowed under the PHE for COVID-19 for a period of 4 years (88 FR 79241).

This year we propose to make conforming changes to § 410.79(b), Conditions of Coverage, to align with the 2024 CDC DPRP Standards. In the CY 2018 PFS final rule, we stated our intention to align MDPP with CDC DPRP Standards whenever possible (82 FR 53245). Several commenters encouraged CMS to consider adopting the same definitions for MDPP as CDC uses for the National DPP, including distance learning, online, and combination modalities to better align MDPP and the National DPP. Commenters indicated that the addition of definitions that are consistent with the CDC's definitions will reduce confusion about MDPP (88 FR 79247). To increase this alignment, we worked closely with CDC to update the National DPP and MDPP for CY 2024 final rule (88 FR 79240 through 79256), as well as the 2024 DPRP Standards. We agree in aligning terminology where applicable.

The CY 2024 PFS final rule introduced and defined “distance learning” and “combination delivery” for MDPP and provided a definition for “online delivery” (88 FR 79243). The 2024 CDC DPRP Standards include the following delivery modes with definitions: “in-person,” “distance learning (live),” “in-person with a distance learning component,” “online (non-live),” and “combination with an online component.” These delivery modes also serve as organization codes for CDC DPRP recognition. Through this proposed rule, we are proposing to amend § 410.79(b) to add a new term for MDPP, “in-person with a distance learning component,” defined as “MDPP sessions that are delivered in person by trained Coaches where participants have the option of attending sessions via MDPP distance learning. These sessions must be furnished in a manner consistent with DPRP Standards for in-person and distance learning sessions.” The following examples of an acceptable delivery model for the “in-person with a distance learning component” delivery mode are provided in the 2024 CDC DPRP Standards: a combination of in-person and distance learning during the core (first 6 months) and core maintenance (second 6 months) phases; some participants within a cohort using the in-person delivery mode and some participants using the distance learning delivery mode; or participants choosing from session to session which mode (in-person or distance learning) they wish to use.

To further align with 2024 CDC DPRP Standards, we also propose to add a new term at § 410.79(b), “combination with an online component,” defined as “sessions that are delivered as a combination of online (non-live) with in-person or distance learning. These sessions must be furnished in a manner consistent with the DPRP Standards for the modality being used.” Furthermore, we propose to remove the “combination delivery” term from § 410.79(b), which was added in the CY 2024 PFS final rule (88 FR 79241) and is defined as “MDPP sessions that are delivered by trained Coaches and are furnished in a manner consistent with the DPRP Standards for distance learning and in-person sessions for each individual participant.” We believe that the MDPP “combination delivery” term and definition are no longer needed with the addition of “in-person with a distance learning component,” which includes any combination of in-person and distance learning sessions.

Lastly, we are proposing to modify the current term and definition for “online delivery” at § 410.79(b), also added by the CY 2024 PFS final rule (88 FR 79241), to align with the 2024 CDC DPRP Standards. First, we are proposing to update the term from “online delivery” to “online” to align with both the MDPP “distance learning” term and CDC DPRP “online (non-live)” term. We propose to revise the definition for the MDPP “online” delivery mode to provide that sessions that are delivered one hundred percent (100%) through the internet via phone, tablet, or laptop in an asynchronous (non-live) classroom where participants are experiencing the content on their own time without a live (including non-artificial intelligence (AI)) Coach teaching the content. These sessions must be furnished in a manner consistent with the DPRP Standards for online sessions. Live Coach interaction must be offered to each participant during weeks when the participant has engaged with content. Emails and text messages can count toward the requirement for live Coach interaction if there is bi-directional communication between the Coach and participant. Chat bots and AI forums do not count as live Coach interaction. This modified definition adds the term “non-live” and further clarifies that Chat bots and AI forums do not constitute live interaction.

In summary, we are revising the “online” definition and adding the “combination with an online component” term and definition to help align terminology between MDPP and DPRP and prevent confusion about acceptable CDC delivery modes for MDPP. We are confirming that only MDPP “in-person,” “distance learning,” and “in-person with a distance learning component” delivery modes, can be used during the extension of the flexibilities allowed under the COVID-19 PHE, as finalized in the CY 2024 PFS final rule (88 FR 79241), not “online” nor “combination with an online component” delivery modes.

Furthermore, in the CY 2021 PFS final rule, we established that virtual sessions performed under flexibilities finalized in that rule could only be performed by MDPP suppliers who offered in-person services (85 FR 84830). For the MDPP Extended flexibilities period, we finalized in the CY 2024 PFS final rule to limit virtual delivery to the CDC DPRP definition of “distance learning” (88 FR 79243). We stated that the MDPP Extended flexibilities do not include online delivery (or asynchronous virtual), as defined in the CDC DPRP Standards through the “online” modality, including virtual make-up sessions (88 FR 79244). A make-up session in MDPP was described in CY 2018 PFS final rule (82 FR 53241) and at § 410.79(a) as “a core session or a core maintenance session furnished to an MDPP beneficiary when the MDPP beneficiary misses a regularly scheduled core session or core maintenance session.” The 2024 CDC DPRP Standards allow for National DPP make-up sessions to be furnished using any delivery mode, including online. In alignment with the CY 2024 final rule, we are proposing to amend § 410.79(d)(1) to clarify that MDPP make-up sessions can only be furnished using the modalities permitted by the CY 2024 final rule for MDPP sessions: distance learning and in-person delivery (88 FR 79243 through 79246). Specifically, we propose to add the following: “MDPP make-up sessions may only use in-person or distance learning delivery.”

We are proposing to amend § 410.79(b) and (d)(1) and seek comment on these proposals.

2. Proposed Changes to § 410.79(e)(3)(iii)

As part of MDPP's Emergency Policy finalized in the CY 2021 PFS final rule, we allowed for virtual weight collection (88 FR 79249). We summarized our policies for alternatives to the requirement for in-person weight collection at Alternatives to the requirement for in-person weight measurement (§ 410.79(e)(3)(iii)), which permit an MDPP supplier to obtain weight measurements for MDPP beneficiaries for the baseline weight and any weight loss-based performance achievement goals in the following manner: (1) via digital technology, such as scales that transmit weights securely via wireless or cellular transmission; or (2) via self-reported weight measurements from the at-home digital scale of the MDPP beneficiary (88 FR 79243). We stated that self-reported weights must be obtained during live, synchronous online video technology, such as video chatting or video conferencing, wherein the MDPP Coach observes the beneficiary weighing themselves and views the weight indicated on the at-home digital scale. Alternatively, the MDPP beneficiary may self-report their weight by submitting to the MDPP supplier a date-stamped photo or video recording of the beneficiary's weight, with the beneficiary visible in their home. The photo or video must clearly document the weight of the MDPP beneficiary as it appears on the digital scale on the date associated with the billable MDPP session. This flexibility has allowed suppliers to bill for MDPP beneficiaries achieving weight loss performance goals.

Overall, commenters on the proposed MDPP Extended flexibilities in the CY 2024 PFS rule were very supportive of CMS continuing to allow virtual weight collection (88 FR 79240 through 79256). However, we received several comments regarding barriers suppliers experienced relating to virtual weight collection during the PHE for COVID-19. For example, several commenters recommended that CMS no longer require date-stamped photos to document the self-reported beneficiary weights (88 FR 79249). The commenters also reported that many of their beneficiaries are unable to take a picture while standing on their home scales due to risk of injury and physical health limitations. Commenters stated that this risk has prevented organizations from submitting claims accurately, since they have several participants who live alone and attend sessions via distance learning (88 FR 79249). We acknowledged in our responses to these comments that some MDPP beneficiaries may lack the technology or capacity to provide a date-stamped photograph to document their body weight measurements. We stated that in situations in which beneficiaries may be unable to self-report their weight according to the MDPP conditions of coverage, suppliers may want to consider collecting weight measurements from the MDPP beneficiary in person.

We have continued to hear from MDPP suppliers and interested parties that the requirement to submit a photo with both the beneficiary's weight on the scale and the beneficiary visible is not physically possible. This problem has become even more relevant in CY 2024 as suppliers continue to expand distance learning to help reach beneficiaries in rural and underserved areas, sometimes across state lines. We previously responded that for situations in which beneficiaries may be unable to self-report their weight according to the MDPP conditions of coverage, suppliers may want to consider collecting weight measurements from the MDPP beneficiary in person (88 FR 79249). However, this may not be a practical option for beneficiaries who have chosen distance learning based on not living within driving distance from an MDPP supplier location. Therefore, we propose revising § 410.79(e)(3)(iii)(C) to provide that self-reported weights must be obtained during live, synchronous online video technology, such as video chatting or video conferencing, wherein the MDPP Coach observes the beneficiary weighing themselves and views the weight indicated on the at-home digital scale, or the MDPP supplier receives 2 (two) date-stamped photos or a video recording of the beneficiary's weight, with the beneficiary visible on the scale, submitted by the MDPP beneficiary to the MDPP supplier. Photo or video must clearly document the weight of the MDPP beneficiary as it appears on their digital scale on the date associated with the billable MDPP session. If choosing to submit 2 photos, one photo must show the beneficiary's weight on the digital scale, the second photo must show the beneficiary visible in their home, and both photos must be date-stamped. Similar to options in paragraphs (e)(3)(iii)(A) and (B) in § 410.79, this revised option in paragraph (e)(30(iii)(C) is only available for MDPP beneficiaries reporting their weight for an MDPP distance learning session. We are continuing to require the date-stamp on both photos to ensure program integrity in the virtual setting. We are proposing to amend § 410.79(e)(3)(iii). We seek comment on these proposals.

Lastly, we finalized in the CY 2021 PFS final rule that the flexibilities under § 410.79(e)(3)(iii) and (iv) would only apply only to MDPP suppliers that have and maintain CDC DPRP “in-person” recognition (85 FR 84831). In the CY 2024 PFS final rule, we extended flexibilities allowed during the PHE for COVID-19 or 4 years, or through December 31, 2027 (88 FR 79241). We also confirmed that that the Extended flexibilities would continue to only apply to MDPP suppliers that have and maintain CDC DPRP “in-person” recognition, and that virtual only suppliers were not permitted to furnish the Set of MDPP services because MDPP beneficiaries may elect to return to in-person services, and MDPP suppliers need to be able to accommodate their request (88 FR 79248).

To reduce confusion as MDPP suppliers transition to the new CDC DPRP recognition for “in-person with a distance learning component,” we are clarifying that MDPP suppliers can have and maintain either CDC's “in-person” or the new “in-person with a distance learning component” CDC DPRP code. The 2024 CDC DPRP Standards, implemented in June 2024, introduced and defined the new “in-person with a distance learning component” modality and associated code. This new modality and code for recognition include a combination of in-person and distance learning delivery, which are both modalities currently permitted until December 31, 2027 (88 FR 79241). The new MDPP term and definition for “in person with a distance learning component” that we are proposing to align with the 2024 CDC DPRP Standards will replace the current MDPP “combination delivery” term, which we are proposing to remove in this rulemaking. Aligning terminology for delivery of MDPP that involves a combination of in-person and distance learning delivery with the 2024 CDC DPRP Standards would reduce administrative burden to MDPP suppliers and allow them to streamline CDC DPRP data submission (that is, they will not have to submit data for two CDC organization codes). MDPP suppliers will not be required to switch to this new code if they already have an in-person code; it is only being made available for their convenience.

3. Proposed Changes to § 414.84(a), (c), (d), and (e)

We further propose to amend § 414.84(a), (d), and (e) to remove the MDPP bridge payment. This payment is no longer necessary in MDPP's CY 2024 FFS payment structure for attendance and could introduce the potential for fraud, waste, or abuse.

The CY 2017 PFS final rule confirmed that a beneficiary may change MDPP suppliers at any time (81 FR 80470). The MDPP bridge payment was introduced in the CY 2018 PFS final rule at § 414.84(a) and is defined as follows: “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” (81 FR 80470). The CY 2018 PFS final rule specified that an MDPP supplier that had previously been paid either a bridge payment or a performance payment for an MDPP beneficiary was not eligible to be paid a bridge payment for that beneficiary, along with other conditions. An MDPP supplier may only receive one bridge payment per MDPP beneficiary, however, there is no limit on how many MDPP suppliers can receive a bridge payment for the same beneficiary (82 FR 53361).

The CY 2018 PFS final rule also noted that the MDPP bridge payment was intended to be similar (that is, the same amount) to the payment for the first core session furnished by the previous supplier and would be received only if the subsequent supplier did not furnish the first core session to the MDPP beneficiary (82 FR 53361). In the performance-based payment structure, the bridge payment was intended to prevent scenarios where subsequent MDPP suppliers would receive no payment for sessions furnished to MDPP beneficiaries who changed suppliers during the MDPP services period in the absence of the bridge payment. We stated that the bridge payment was not intended to be a performance payment; rather, it would account for the financial risk a subsequent MDPP supplier took on by furnishing services to a beneficiary changing MDPP suppliers during the MDPP services period (82 FR 53293). However, such risk is not applicable in an FFS payment structure.

Along with the performance payments for weight loss, the MDPP bridge payment was retained in the CY 2024 Fee Schedule for MDPP (88 FR 79252). Currently, a subsequent MDPP supplier can receive both an attendance payment and a bridge payment for the first session attended by an MDPP beneficiary who switches suppliers. For example, in CY 2024, if a beneficiary changed suppliers on MDPP session 8, the subsequent supplier could receive both the attendance payment for session 8 ($25) and the bridge payment ($25). The bridge payment for this beneficiary could only be received by this supplier once, but if the beneficiary changed suppliers again (for example, on session 17), the new (second) subsequent supplier could also receive the bridge payment in addition to the payment for session 17 ($25). This could continue as many times as the beneficiary changed suppliers until they have the maximum of 22 sessions paid, across all suppliers, with no maximum on the total number of bridge payments. In the CY 2018 PFS final rule, we noted some program integrity risk that organizations could coordinate to bill multiple bridge payments that would ultimately increase total MDPP payments to separately enrolled MDPP suppliers to serve the financial interests of the umbrella organization. This scenario could occur if MDPP suppliers systematically encouraged beneficiaries to change suppliers for the purpose of being paid the bridge payment (82 FR 53294). Due to these reasons, we propose to amend § 414.84(a), (d), and (e) to remove reference to, and requirements of the MDPP bridge payment. Per our Regulatory Impact Analysis, we expect removal of the MDPP bridge payment to be budget neutral for the Medicare program. We seek comment on these proposals.

Additionally, at § 414.84(c), facilitate Medicare Administrative Contractors (MACs) in processing claims for same day make-up sessions in MDPP, we are proposing to require MDPP suppliers to append an existing claim modifier to any claim for G9886 or G9887 that indicates a make-up session that was held on the same day as a regularly scheduled MDPP session. The CY 2018 PFS final rule permits an MDPP beneficiary to have one make-up session on the same day as a regularly scheduled session and for a beneficiary to have one make-up session per week (82 FR 53360), consistent with CDC DPRP Standards. In the CY 2024 PFS final rule, we stated that we wanted to encourage suppliers to schedule make-up sessions on days other than the same day of a regularly scheduled session to avoid claims being rejected or denied under the new CY 2024 FFS payment schedule and to allow beneficiaries to receive the benefit as intended by having access to the full 12 months MDPP service period to build the skills needed to reduce their risk for diabetes (88 FR 79250).

However, since then, we have heard from MDPP suppliers that same day make-up sessions are an essential flexibility that assist an MDPP beneficiary in staying on track with the curriculum and their cohort after an MDPP beneficiary needs to miss a regularly scheduled session. To help prevent potential claim rejections for duplicate services, we are proposing to require MDPP suppliers to append a modifier to the applicable G-code for the second session held on the same day as a regularly scheduled MDPP session. Specifically, we are proposing to add § 414.84(c)(4), which states that “Current Procedural Terminology (CPT) Modifier 79 (repeat services by same physician) must be appended to any claim for G9886 or G9887 to identify a MDPP make-up session that was held on the same day as a regularly scheduled MDPP session.” We believe this new requirement would contribute minimal additional complexity to the payment structure while creating a flexibility that would have value for the program, particularly for beneficiaries in the core phase of MDPP who may not have transportation to 2 in-person sessions in one week or have the flexibility to make time on more than one day per week for a distance learning session. Additionally, we believe the existing limitation on one make-up session per week would be sufficient to ensure program benefit because whether the make-up session is held on the same day, or the next day would likely have minimal impact on program duration and intensity. To clarify, we are proposing that the CPT Modifier 79 would only need to be appended to the HCPCS code (G9886 or G9887) that identifies the session that included content from a previously held session that serves as a makeup session for the session the MDPP beneficiary missed, which was held on the same day as a regularly scheduled MDPP session. This modifier would not need to be included on claims for make-up sessions held on different days than regularly scheduled MDPP sessions.

Lastly, with the removal of § 414.84(d), we are proposing to amend the current § 414.84(e) to be the new § 414.84(d). We are also removing from the new § 414.84(d) the reference to updating the MDPP bridge payment, as the bridge payment has been proposed to be removed from this CY 2025 Physician Fee Schedule rulemaking.

We also seek comment on these proposals.

4. Aligning language with previous rulemaking in §§ 410.79, 424.205, and 414.84

We are proposing minor edits throughout §§ 410.79, 424.205, and 414.84 to update outdated references and align with previous rulemaking pertaining to MDPP terminology, payment structure, and requirements. This includes updating references to the performance-based payments for attendance and ongoing maintenance sessions, which were both removed from the 2024 MDPP Fee Schedule by the CY 2024 PFS final rule (88 FR 79252), as well as including the clarification that suppliers can offer MDPP sessions via distance learning, a flexibility extended by the CY 2024 PFS final rule (88 FR 79241), where applicable.

At § 410.79(b), we propose to update the definition for the “Set of MDPP services” to remove the reference to “ongoing maintenance” sessions. All references to and requirements for the MDPP “ongoing maintenance” phase were removed by the CY 2024 PFS finale rule (88 FR 79256). We are revising this definition to read: “Set of MDPP services means the series of MDPP sessions, composed of core sessions and core maintenance sessions, and subject to paragraph (c)(3) of this section offered over the course of the MDPP services period.”

We also propose § 410.79(e)(3)(iv)(F)( 3) to state that no more than 12 virtual sessions offered monthly during the ongoing maintenance session intervals, months 13 through 24 for beneficiaries enrolled before January 1, 2022.

This proposed revision adds the date that the CY 2022 PFS final rule was effective, which is the date when no more MDPP beneficiaries could enroll in ongoing maintenance sessions (86 FR 65317).

At § 410.79(e)(3)(v)(F)( 2), we propose to remove the reference to weight measurement at an ongoing maintenance session, so the paragraph provides that for an MDPP beneficiary who began receiving the Set of MDPP services on or after January 1, 2021, has suspended services during an applicable 1135 waiver event, the MDPP supplier must use the baseline weight recorded at the beneficiary's first core session.

At § 424.205(c)(10), we propose revision to specify in-person and distance learning delivery for MDPP core and core maintenance sessions, to provide that, except as allowed under § 424.205(d)(8), the MDPP supplier must offer an MDPP beneficiary no fewer than all of the following:

• 16 in-person or distance learning core sessions no more frequently than weekly for the first 6 months of the MDPP services period, which begins on the date of attendance at the first such core session.
• 1 in-person or distance learning core maintenance session each month during months 7 through 12 (6 months total) of the MDPP services period.

At § 424.205(f)(1)(ii), we propose to remove reference to the HICN, as Medicare is now using Medicare Beneficiary Identifiers (MBIs), to state: Basic beneficiary information for each MDPP beneficiary in attendance, including but not limited to beneficiary name, MBI, and age.

At § 424.205(f)(2)(i), we propose to replace “whether a core session, a core maintenance session, an in-person make-up session, or a virtual make-up session” with the two currently permitted types of sessions (that is, in-person and distance learning), to state: Documentation of the type of session (in-person or distance learning).

At § 424.205(f)(5), we propose to remove the references to the MDPP performance-based payments for attendance in paragraphs (f)(5)(i) and (ii) because these payments were removed in the CY 2024 Fee Schedule for MDPP (88 FR 79252). In their place, we are adding references to the performance payment for the required minimum 5 percent weight loss (82 FR 53289). We also propose to correct the references to § 414.84(b), and also to remove the reference to the ongoing maintenance sessions from 424.205(f)(5)(iv).

At § 414.84(b)(1), we propose to clarify that the performance payment for the required minimum weight loss is made for 5 percent weight loss, as reflected in the CY 2024 Fee Schedule (88 FR 79252), and can be made for a distance learning, as well as an in-person MDPP session, as allowed by the COVID-19 PHE flexibilities (85 FR 84830 through 84841) and their extension (88 FR 79241). Performance Goal 1 provides that it achieves the required minimum 5-percent 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 or during a distance learning session during a core session or core maintenance session furnished by that supplier.

Similarly, we propose to revise § 414.84(b)(2) for 9 percent weight loss. Performance Goal 2 provides that it 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 or in a distance learning session during a core session or core maintenance session furnished by that supplier.

We seek comment on these proposals.

F. Modifications Related to Medicare Coverage for Opioid Use Disorder (OUD) Treatment Services Furnished By Opioid Treatment Programs (OTPs)

1. Background

Section 2005 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (SUPPORT Act) (Pub. L. 115-271, October 24, 2018) established a new Medicare Part B benefit for OUD treatment services furnished by OTPs during an episode of care beginning on or after January 1, 2020. In the CY 2020 PFS final rule (84 FR 62630 through 62677 and 84 FR 62919 through 62926), we implemented Medicare coverage and provider enrollment requirements and established a methodology for determining the bundled payments for episodes of care for the treatment of OUD furnished by OTPs. We also established in the CY 2020 PFS final rule new codes and finalized bundled payments for weekly episodes of care that include methadone, oral buprenorphine, implantable buprenorphine, injectable buprenorphine or naltrexone, and non-drug episodes of care, as well as add-on codes for intake and periodic assessments, take-home dosages for methadone and oral buprenorphine, and additional counseling.

Since the CY 2020 PFS final rule, we have made several refinements and expansions to services covered under the Medicare OTP benefit. Specifically, we adopted new add-on codes for take home supplies of nasal naloxone and injectable naloxone (85 FR 84683 through 84692) in the CY 2021 PFS final rule, and a new add-on code and payment for a higher dose of nasal naloxone (86 FR 65340 and 65341) in the CY 2022 PFS final rule. We have also finalized various telecommunications flexibilities, including: to allow OTPs to furnish individual and group therapy and substance use counseling via two-way interactive audio-video telecommunications (84 FR 62630 through 62677 and 84 FR 62919 through 62926) in the CY 2020 PFS final rule, and via audio-only telephone calls when audio-video telecommunications are not available to the beneficiary (86 FR 65342) in the CY 2022 PFS final rule; to allow the OTP intake add-on code to be furnished via two-way interactive audio-video telecommunications when billed for the initiation of treatment with buprenorphine, and via audio-only telecommunications when audio-video telecommunications are not available to the beneficiary, to the extent that these technologies are authorized by the Drug Enforcement Administration (DEA) and the Substance Abuse and Mental Health Services Administration (SAMHSA) at the time the service is furnished (87 FR 69775 through 69777) in the CY 2024 final rule; and to allow periodic assessments to be furnished via two-way interactive audio-video telecommunications as clinically appropriate (85 FR 84690) in the CY 2021 final rule. OTPs may furnish these aforementioned services via telecommunications systems provided all other applicable requirements are met. Additionally, for the purposes of the geographic adjustment, we have clarified, in the CY 2023 final rule, that services furnished via OTP mobile units will be treated as if the services were furnished in the physical location of the OTP for purposes of determining payments to OTPs under the Medicare OTP bundled payment codes and/or add-on codes, as long as services are medically reasonable and necessary and comply with SAMHSA and DEA guidance (87 FR 69768 through 69777). Lastly, we have made a few changes to various pricing methodologies under the OTP benefit in the 2023 PFS final rule, including: revising our methodology for pricing the drug component of the methadone weekly bundle and the add-on code for take-home supplies of methadone by using the Producer Price Index (PPI) for Pharmaceuticals for Human Use (Prescription) to better reflect the changes in methadone costs for OTPs over time (87 FR 69768 through 69777); and modifying the payment rate for individual therapy in the non-drug component of the bundled payment to base the payment rate on the rate for longer therapy sessions that better account for the greater severity of needs for patients with an OUD (87 FR 69768 through 69777).

More recently, for CY 2024, CMS made further modifications and expansions to covered services for the treatment of OUD by OTPs. In the CY 2024 PFS final rule (88 FR 79089 through 79093), CMS finalized an extension to allow periodic assessments to be furnished audio-only through the end of CY 2024 when video is not available to the extent that use of audio-only communications technology is permitted under the applicable SAMHSA and DEA requirements at the time the service is furnished, and all other applicable requirements are met. In the final rule, we noted that extending these flexibilities another year would allow CMS time to further consider this issue, including whether periodic assessments should continue to be furnished using audio-only communication technology following the end of CY 2024. Lastly, in the CY 2024 Outpatient Prospective Payment System (OPPS) final rule (88 FR 81845 through 81858), CMS finalized an add-on code for intensive outpatient program (IOP) services furnished by OTPs for the treatment of OUD and added a new paragraph (ix) in the definition of “Opioid disorder treatment service” at § 410.67(b) to describe such services. We stated that Medicare would pay for IOP services provided by OTPs if each service is medically reasonable and necessary and not duplicative of any service paid for under any bundled payments billed for an episode of care in a given week, and other applicable requirements are met. We believe that payment for IOP services will improve continuity of care between different treatment settings and levels of care, and further promote health equity for Medicare beneficiaries that may face barriers to accessing treatment, such as racial/ethnic minorities and/or beneficiaries aged 65 or older. We continue to monitor utilization of OUD treatment services furnished by OTPs to ensure that Medicare beneficiaries have appropriate access to care. For CY 2025, we are proposing several modifications to the policies governing Medicare coverage and payment for OUD treatment services furnished by OTPs.

2. Telecommunication Flexibilities for Periodic Assessments and Initiation of Treatment With Methadone

We have finalized several flexibilities for OTPs regarding the use of telecommunications, both during the Public Health Emergency (PHE) for the Coronavirus Disease 2019 (COVID-19) and outside of the PHE. In the CY 2020 PFS final rule, we finalized a policy allowing OTPs to furnish substance use counseling and individual and group therapy via two-way interactive audio-video communication technology. In the interim final rule with comment period (IFC) entitled “Medicare and Medicaid Programs: Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency,” which appeared in the April 6, 2020 Federal Register (85 FR 19258), we revised paragraphs (iii) and (iv) in the definition of opioid use disorder treatment service at § 410.67(b) on an interim final basis to allow the therapy and counseling portions of the weekly bundles, as well as the add-on code for additional counseling or therapy, to be furnished using audio-only telephone calls rather than via two-way interactive audio-video communication technology during the PHE for the COVID-19 if beneficiaries do not have access to two-way audio-video communications technology, provided all other applicable requirements are met. In the CY 2022 PFS final rule (86 FR 65341 through 65343), we finalized that after the conclusion of the PHE for COVID-19, OTPs are permitted to furnish substance use counseling and individual and group therapy via audio-only telephone calls when audio and video communication technology is not available to the beneficiary. As we explained in the CY 2022 PFS final rule (86 FR 65342), we interpret the requirement that audio/video technology is “not available to the beneficiary” to include circumstances in which the beneficiary is not capable of or has not consented to the use of devices that permit a two-way, audio/video interaction because in each of these instances audio/video communication technology is not able to be used in furnishing services to the beneficiary. In the CY 2023 PFS final rule (87 FR 69775 through 69777), we further extended telecommunication flexibilities for the initiation of treatment with buprenorphine outside of the PHE for COVID-19 in paragraph (vi) in the definition of opioid use disorder treatment service at § 410.67(b). Specifically, we allowed the OTP intake add-on code to be furnished via two-way, audio-video communications technology when billed for the initiation of treatment with buprenorphine, to the extent that the use of audio-video telecommunications technology to initiate treatment with buprenorphine is authorized by DEA and SAMHSA at the time the service is furnished. We also permitted the use of audio-only communication technology to initiate treatment with buprenorphine in cases where audio-video technology is not available to the beneficiary, provided all other applicable requirements are met.

a. Proposal To Allow Periodic Assessments To Be Furnished Via Audio-Only Telecommunications on a Permanent Basis

In recent years, we have finalized several telecommunication flexibilities for periodic assessments furnished by OTPs. In the IFC entitled “Medicare and Medicaid Programs, Basic Health Program, and Exchanges; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency and Delay of Certain Reporting Requirements for the Skilled Nursing Facility Quality Reporting Program,” which appeared in the May 8, 2020 Federal Register (85 FR 27558), we revised paragraph (vii) in the definition of “Opioid use disorder treatment service” at § 410.67(b) on an interim final basis to allow periodic assessments to be furnished during the PHE for COVID-19 via two-way interactive audio-video telecommunication technology and, in cases where beneficiaries do not have access to two-way audio-video communication technology, to permit the periodic assessments to be furnished using audio-only telephone calls rather than via two-way interactive audio-video communication technology, provided all other applicable requirements are met. In the CY 2021 PFS final rule (85 FR 84690), we finalized our proposal to revise paragraph (vii) in the definition of “Opioid use disorder treatment service” at § 410.67(b) to provide that periodic assessments (HCPCS code G2077) must be furnished during a face- to-face encounter, which includes services furnished via two-way interactive audio-video communication technology, as clinically appropriate, provided all other applicable requirements are met, on a permanent basis.

Furthermore, in the CY 2023 PFS proposed rule (87 FR 46093), we sought comment on whether we should allow periodic assessments to continue to be furnished using audio-only communication technology following the end of the PHE for COVID-19 for patients who are receiving treatment via buprenorphine, and if this flexibility should also continue to apply to patients receiving methadone or naltrexone. In response, several commenters advocated for CMS to continue to allow periodic assessments to be furnished audio-only when video is not available after the end of the PHE. Commenters highlighted that allowing audio-only flexibilities would further promote health equity for individuals who are economically disadvantaged, live in rural areas, are members of racial and ethnic minorities, lack access to reliable broadband or internet access, or do not possess devices with video capability. Commenters also indicated that periodic assessments are no less complex than intake/initial assessments, and thus are equally appropriate for audio-video and audio-only care, and that permitting audio-only flexibilities would allow an opportunity for both the provider and patient to jointly determine that the patient would individually benefit from telehealth services. After considering these comments, we determined that it would be appropriate to allow periodic assessments to be furnished audio-only when video is not available through the end of CY 2023, to the extent that it is authorized by SAMHSA and DEA at the time the service is furnished and, in a manner consistent with all applicable requirements. We stated our belief that this modification would allow continued beneficiary access to these services for the duration of CY 2023 in the event the PHE terminated before the end of 2023 and that it would also grant additional time for CMS to further consider telecommunication flexibilities associated with periodic assessments.

Moreover, section 4113 of Division FF, Title IV, Subtitle A of the Consolidated Appropriations Act, 2023 (CAA, 2023) (Pub. L. 117-328, December 29, 2022) extended the telehealth flexibilities enacted in the Consolidated Appropriations Act, 2022 (CAA, 2022) (Pub. L. 117-103, March 15, 2022). Specifically, it amended sections 1834(m), 1834(o), and 1834(y) of the Act to delay the requirement for an in-person visit prior to furnishing certain mental health services via telecommunications technology by physicians and other practitioners, Rural Health Clinics (RHCs), and Federally Qualified Health Centers (FQHCs) until dates of service on or after January 1, 2025, if the PHE for COVID-19 had ended prior to that date. Additionally, it extended the flexibilities that were available during the PHE that allowed for certain Medicare telehealth services defined in section 1834(m)(4)(F)(i) of the Act to be furnished via an audio-only telecommunications system through December 31, 2024, if the PHE for COVID-19 had ended prior to that date. The PHE for COVID-19, which was declared under section 319 of the Public Health Service Act, expired at the end of the day on May 11, 2023, so the aforementioned flexibilities were extended through the end of CY 2024.

To better align coverage for periodic assessments furnished by OTPs with the telehealth flexibilities described in section 4113 of the CAA, 2023 for other settings under Medicare, in the CY 2024 PFS final rule (88 FR 79089 through 79093; 79528), we finalized extending the audio-only flexibilities for periodic assessments furnished by OTPs through the end of CY 2024 in paragraph (vii) in the definition of “Opioid use disorder treatment service” at § 410.67(b). We finalized to allow periodic assessments to be furnished audio-only when video is not available to the extent that use of audio-only communications technology is permitted under the applicable SAMHSA and DEA requirements at the time the service is furnished, and all other applicable requirements are met. In submitted comments supporting the proposal, commenters reiterated evidence showing that audio-only telehealth encounters are more prominent among individuals who are older, Black, Hispanic, American Indian/Alaska Native, Spanish-speaking, living in areas with low broadband access, low-income, and with public insurance, suggesting that the proposal would have positive health equity implications for these populations. Several other commenters raised that audio-only flexibilities are important since many underserved populations may experience challenges in partaking in video-based telehealth services, due to not possessing the needed technological proficiencies to operate video-based services, not having a caregiver able to assist them with appointments, feeling discomfort with the use of video, and because of the cost of high-speed internet and data required for video technologies. Several other commenters shared evidence that audio-only visits produce many of the same benefits as video-based visits, and that patients often report that audio-only visits left them feeling supported and with greater privacy, provided increased access to behavioral health professionals, and helped reduce transportation barriers. Lastly, a large number of commenters requested that CMS make the extension for audio-only periodic assessments permanent beyond CY 2024. Commenters stated that extending this policy permanently would retain a beneficiary's right to decide with their provider how best to receive their care and would curtail existing barriers that Medicare beneficiaries with an OUD may face in accessing care. In response to these comments that requested indefinitely extending these audio-only flexibilities for periodic assessments, CMS stated that extending these flexibilities for one additional year at the time would allow the agency time to further examine the issue, including to understand if a permanent extension would be appropriate for patients who are receiving treatment via buprenorphine, methadone, and/or naltrexone at OTPs, and whether proper safeguards are in place so these services can be delivered in a way that would not diminish safety or quality of care for Medicare beneficiaries with an OUD.

We continue to monitor the services provided under the OTP benefit to ensure flexibilities for OUD treatment services are consistent with flexibilities authorized in other settings under Medicare, as medically reasonable and necessary for the diagnosis and treatment of OUD. In the CY 2022 PFS final rule, we revised the regulatory definition of “interactive telecommunications system” at § 410.78(a)(3) for Medicare Telehealth services paid under the PFS beyond the termination of the PHE for COVID-19 to allow for inclusion of audio-only services under certain circumstances. Specifically, we redefined “interactive telecommunications system” to include audio-only communications technology when used for telehealth services for the diagnosis, evaluation, or treatment of mental health disorders furnished to a patient in their home. We also finalized to limit payment for audio-only services to services furnished by a physician or practitioner that has the technical capability at the time of the service to use two-way audio-video telecommunications, but where the patient is not capable of, or does not consent to, the use video technology for the service, and the patient is located at their home at the time of service. Lastly, we clarified that SUD services are considered mental health services for purposes of the expanded definition of “interactive telecommunications system” to include audio-only services under § 410.78(a)(3). In short, these flexibilities and policy clarifications that permit audio-only telecommunication flexibilities for the treatment of a SUD, which can include an OUD, already exist under other payment systems in Medicare.

Therefore, to better align coverage for periodic assessments furnished by OTPs with other telehealth services furnished under the PFS for the diagnosis, evaluation, or treatment of a mental health disorder including SUDs, and in response to many supportive comments received in response to the CY 2024 PFS proposed rule that advocated for allowing OTPs to furnish periodic assessments via audio-only telecommunications on a permanent basis, we are proposing to allow OTPs to furnish periodic assessments using audio-only communications technology when video is not available on a permanent basis beginning January 1, 2025. Under this proposal, we would allow periodic assessments to be furnished via audio-only when video is not available to the extent that use of audio-only communications technology is permitted under the applicable SAMHSA and DEA requirements at the time the service is furnished, and all other applicable requirements are met.

We believe permanently extending this flexibility would meaningfully promote access to care for the Medicare population, as supported by our analysis of claims data showing the proportion of telephonic audio-only visits increases with the age of the patient, with 17-percent of visits delivered via audio-only interaction for patients 41-60 years of age, 30-percent for patients 61 to 80 years of age, and 47 percent of visits for patients over 81 years of age. Evidence further reveals that Medicare beneficiaries who are older than 65 years old, racial/ethnic minorities, dual-enrollees in Medicare and Medicaid, or living in rural areas, or who experience low broadband access, low-income, and/or for whom English in not their primary language, are more likely to be offered and use audio-only telemedicine services than audio-video services. Other evidence also suggests that while Tribal populations, including American Indian and Alaska Natives, have the highest rates of OUD prevalence among Medicare beneficiaries, one-third of these populations do not have adequate access to high-speed broadband and continue to rely on audio-only visits. Telemedicine flexibilities have been shown to be feasible and effective for rural patients with an OUD with data supporting that telemedicine flexibilities have helped improve treatment retention in OUD treatment, especially for rural patients who are older and covered by Medicare. Lastly, these audio-only flexibilities would be meaningful for OTPs and their patients because telehealth services have become widely used among SUD treatment facilities as regular service offerings. During the COVID-19 pandemic, SUD treatment facilities increased telemedicine offerings by 143 percent, and as of 2021, almost 60 percent of SUD treatment facilities offer telehealth. Now, telephone-based (that is, audio-only) therapy provided by SUD programs has been found to be one of the most common modes of telehealth for treatment of OUD. Given the prevalence of audio-only modalities of care for the treatment of OUD, permanently extending this flexibility could help prevent disruptions to care in OTP settings that may regularly provide periodic assessments via audio-only telehealth to Medicare beneficiaries. For these reasons, we believe a permanent extension would be appropriate for patients who are receiving buprenorphine, methadone, and/or naltrexone at OTPs, and that proper safeguards are in place so these services can be delivered in a way that would not diminish safety or quality of care for Medicare beneficiaries with an OUD.

Accordingly, we are proposing to revise paragraph (vii) of the definition of “Opioid treatment services” at § 410.67(b) of the regulations to remove the references to the “Public Health Emergency, as defined in § 400.200 of this chapter” and “through the end of CY 2024,” in order to reflect that this flexibility would be implemented on a permanent basis. We would continue to state that “in cases where a beneficiary does not have access to two-way audio-video communications technology, periodic assessments can be furnished using audio-only telephone calls if all other applicable requirements are met.” We welcome comments on this proposal to permanently extend this audio-only flexibility for periodic assessments.

b. Proposal To Allow OTPs To Use Audio-Visual Telecommunications for Initiation of Treatment With Methadone

Prior to the PHE for COVID-19, the Ryan Haight Online Pharmacy Consumer Protection Act of 2008 (Pub. L. 110-425) amended the Controlled Substances Act and instructed the DEA to promulgate regulations that required healthcare providers to conduct an in-person examination in the presence of a practitioner prior to prescribing controlled substances (for example, methadone, buprenorphine, etc.) to patients, with certain exceptions. These statutory provisions prevented the distribution and dispensing of controlled substances by means of the internet without at least one in-person medical evaluation before writing a prescription. Similarly, SAMHSA regulations under 42 CFR 8.12(f)(2) have historically required a complete physical evaluation before a patient begins treatment at an OTP. However, after the declaration of the PHE for COVID-19, the DEA and SAMHSA jointly issued flexibilities for prescribing of controlled substances via telehealth to ensure patient therapies would remain accessible. Consequently, OTPs were exempted from the requirement to perform an in-person physical evaluation for any patient who would be treated by the OTP with buprenorphine if a program physician, primary care physician, or an authorized healthcare professional under the supervision of a program physician, determines that an adequate evaluation of the patient can be accomplished via telehealth through an audio-video or audio-only evaluation. At the time, this exemption applied exclusively to patients with an OUD being treated at an OTP with buprenorphine, and it did not apply to new patients initiating treatment with methadone. This meant that new OTP patients starting treatment with methadone would need to still receive an in-person physical evaluation prior to the OTP prescribing methadone. Accordingly, in the CY 2023 PFS final rule (87 FR 69775 through 69777), we revised the regulation in paragraph (vi) of the definition of “Opioid treatment services” at § 410.67(b) to allow the OTP intake add-on code to be furnished via two-way audio-video communications technology when billed for the initiation of treatment with buprenorphine, to the extent that the use of audio-video telecommunications technology to initiate treatment with buprenorphine is authorized by DEA and SAMHSA at the time the service is furnished. We also permitted the use of audio-only communication technology to initiate treatment with buprenorphine in cases where audio-video technology is not available to the beneficiary. We stated that section 1834(m)(7) of the Act allows telehealth services for the treatment of a diagnosed SUD or co-occurring mental health disorder to be furnished to individuals at any telehealth originating site, including in a patient's home, and that some codes describing new patient office/outpatient visits are already under the Medicare Telehealth list (CPT codes 99202 through 99205). Therefore, we believed that these changes for the initiation of treatment with buprenorphine via audio-only or audio-video telecommunications would also be consistent with existing flexibilities under the PFS. Consistent with SAMHSA and DEA requirements at the time of CY 2023 PFS rulemaking, we also noted that this exemption applied exclusively to OTP patients treated with buprenorphine and did not apply to new patients treated with methadone. Notably, SAMHSA recently finalized and codified this flexibility at 42 CFR 8.12(f)(2)(v)(B), so that OTPs may use audio-visual or audio-only platforms when evaluating patients who are being admitted for treatment at the OTP with schedule III medications (such as buprenorphine) on a permanent basis.

Furthermore, in their recent final rule published in the Federal Register in February of 2024 (89 FR 7528), SAMHSA made reforms to full examination requirements for initiation of treatment with methadone at § 8.12(f)(2)(v)(A). Specifically, SAMHSA now allows for audio-visual telehealth initiation for any new patient who will be treated by the OTP with methadone if a practitioner or primary care provider determines that an adequate evaluation of the patient can be accomplished via an audio-visual telehealth platform. When audio-visual technologies are not available or their use is not feasible for a patient, it is acceptable to use audio-only devices, but only when the patient is in the presence of a licensed practitioner who is registered to prescribe (including dispense) controlled medications. In finalizing this new flexibility, SAMHSA reasoned that “evidence underlying the initiation of buprenorphine using telehealth also is applicable to the treatment of OUD with methadone, and warrants expanding access to methadone therapy by applying some of the buprenorphine in-person examination flexibilities to treatment with methadone in OTPs (89 FR 7533).” They also noted that video-based telehealth was overwhelmingly supported by commenters for medical intake, periodic medical assessments, and methadone or buprenorphine initiation by OTP practitioners. SAMHSA did not extend the flexibility to allow the use of audio-only telehealth platforms in assessing new patients who will be treated by the OTP with methadone due to safety concerns, as they stated “methadone, in comparison to buprenorphine, holds a higher risk profile for sedation in patients presenting with mild somnolence which may be easier to identify through an audio-visual telehealth platform (89 FR 7533).”

These new flexibilities to allow new patients to initiate treatment with methadone via audio-visual telehealth is significant, as the majority of patients who are being treated at an OTP receive methadone. Methadone is used to treat those with a confirmed diagnosis of OUD, and is a synthetic opioid agonist that eliminates withdrawal symptoms and relieves drug cravings by acting on opioid receptors in the brain. Methadone has been associated with reducing the risk of drug overdose, opioid-related acute care, all-cause mortality, and opioid-related mortality. It has also been shown to retain patients in treatment, reduce consequences of injection drug use such as HIV/Hepatitis C transmission, and contribute to quality of life improvements for patients. However, many barriers currently exist for patients seeking to receive methadone treatment. Currently, only SAMHSA-certified OTPs can dispense and administer methadone for the treatment of OUD as provided under section 303(g)(1) of the Controlled Substances Act (21 U.S.C. 823(g)(1)) and 42 CFR part 8. This often means that daily travel might be necessary if it is determined that the risks of giving take-home doses outweigh the benefits, unless patients are eligible to receive take-home doses after meeting certain conditions. Most adults in methadone treatment report at least one barrier to accessing treatment, including lack of reliable transportation, distance from home to treatment, and work schedule conflicts. Frequent travel to an OTP also disproportionately impacts rural residents who already face lower odds of finding an OTP in their area, and therefore, must spend nearly 2-5 times the amount of average drive time to access the closest OTP compared to their urban counterparts. Research has also shown that the number of missed doses of methadone increases for residents living longer distances from an OTP. Additionally, people living with disabilities are less likely to receive Medications for Opioid Use Disorder (MOUDs), and some data also shows that many SUD treatment programs are not physically accessible for these populations. The existence of these physical barriers to accessing methadone and treatment at OTP facilities, especially among historically underserved populations, warrants additional considerations to the extent that telehealth flexibilities can mitigate these barriers to accessing care, as long as these flexibilities are medically appropriate and reasonable for the diagnosis and treatment of OUD.

To be consistent with SAMHSA's reforms to telehealth flexibilities for initiation of treatment with methadone at § 8.12(f)(2)(B)(v), past conforming regulations under the Medicare OTP benefit to allow telecommunication flexibilities for initiation of treatment with buprenorphine, and to contribute towards efforts to reduce barriers in accessing care for Medicare beneficiaries seeking treatment with methadone, we are proposing to make similar telecommunication flexibilities under the Medicare OTP benefit. Specifically, we are proposing to allow the OTP intake add-on code (HCPCS code G2076) to be furnished via two-way audio-video communications technology when billed for the initiation of treatment with methadone, to the extent that the use of audio-video telecommunications technology to initiate treatment with methadone is authorized by DEA and SAMHSA at the time the service is furnished. We note that under this proposal, the initiation of treatment with methadone using telecommunications technology would be considered an intake activity for purposes of paragraph (vi) of the definition of “Opioid treatment services” at § 410.67(b) only to the extent that the use of such telecommunications technology is permitted under the applicable DEA and SAMHSA regulations and guidance at the time the services are furnished. However, at this time, we are not proposing to extend the flexibility to allow the use of audio-only telecommunications for intake activities described in paragraph (vi) of the definition of “Opioid treatment services” at § 410.67(b) for initiation of treatment with methadone, as these flexibilities are not currently permitted by SAMHSA and the DEA. We recognize that methadone is characterized as a schedule II controlled substance, which means that it still has higher potential for misuse with potential physical dependence. Unlike buprenorphine that is a schedule III controlled substance, methadone is a full agonist and does not have a “ceiling effect,” which provides more protective overdose factors when taking additional doses of the drug. Thus, use of audio-visual telecommunications for initiation of treatment with methadone would balance potential safety concerns associated with methadone, such as its higher potential for misuse and risk for sedation in patients presenting with mild somnolence which may be easier to identify via a audio-visual telehealth platform, while still allowing patients the flexibility of initiating treatment via (audio-visual) telehealth at an OTP.

We believe that this proposal may meaningfully improve access to care, promote positive health outcomes, and advance health equity among Medicare beneficiaries. Data indicate that expanded use of telehealth and flexibilities for the provision of MOUD during the COVID-19 pandemic was associated with improved care retention and a reduction in medically treated overdoses among Medicare beneficiaries. Similarly, telehealth initiation for buprenorphine to treat OUD was associated with improved treatment retention in a subset of U.S states. Other research has not found significant differences in clinical severity and complexity markers (for example, OUD-related emergency department visits) between patients receiving telemedicine inductions into treatment versus in-person examinations, suggesting that quality of care can be maintained through initiation of treatments via telehealth. Thus, many of these benefits associated with telehealth flexibilities for initiating treatment with other MOUDs can be potentially replicated by allowing initiation of treatment with methadone via audio-visual telecommunications. Additionally, we believe this proposal would meaningfully impact health equity. Individuals from Black, American Indian and Alaska Native, and Hispanic populations are significantly less likely to initiate treatment for a SUD, as well as individuals from economically disadvantaged communities. Despite these disparities, during the COVID-19 pandemic, the odds of initiating treatment for a SUD increased for most age, race, ethnicity, and socioeconomic status subgroups, which may have been explained by increases in treatment initiation occurring through telehealth. Thus, promoting flexibilities for telecommunication modalities of treatment initiation in regards to methadone may provide additional options for accessing treatment, especially for populations who often experience barriers in beginning treatment. Lastly, we believe this proposal is in alignment with the HHS Overdose Prevention Strategy, which aims to broaden access to evidence-based care that increases willingness to engage and remain in treatment. Similarly, this proposal would further the goals of the National Drug Control Strategy, which strives to expand policies that improve SUD treatment engagement by lowering various barriers to enter and participate in treatment, such as through telemedicine treatment initiation.

Accordingly, we are proposing to revise the regulations for intake activities at paragraph (vi) within the definition of “opioid use disorder treatment service” at § 410.67(b). We are proposing to add a new paragraph (vi)(A) within the description of intake activities to separately list flexibilities for intake activities furnished via communications technology, and we are proposing to add and reserve a new paragraph (vi)(B). We are proposing to move the language related to the existing flexibilities for the initiation of treatment with buprenorphine to paragraph (vi)(A)( 1). Additionally, in the definition of “opioid use disorder treatment service” at § 410.67(b), we are proposing to codify telecommunications flexibilities for initiation of treatment with methadone at paragraph (vi)(A)( 2). Specifically, we propose that services to initiate treatment with methadone may be furnished via two-way interactive audio-video communication technology, as clinically appropriate, and in compliance with all applicable requirements, if an OTP determines that an adequate evaluation of the patient can be accomplished through audio-video communication technology. We look forward to comments related to this proposal.

3. Proposals Related to Reforms to 42 CFR Part 8

In the CY 2020 PFS final rule, we implemented payment and coverage for opioid use disorder treatment services, including services such as substance use counseling by a professional to the extent authorized under State law to furnish such services, individual and group therapy with a physician, psychologist (or other mental health professional to the extent authorized under State law), and other items and services that the Secretary determines are appropriate (but in no event to include meals or transportation), as authorized by section 1861 of the Act (84 FR 62630 through 62677 and 84 FR 62919 through 62926). Consequently, we included these services within the definition of OUD treatment services at § 410.67(b) and incorporated payment for these services as part of the non-drug component at § 410.67(d)(2)(ii). We also created an add-on code described by HCPCS code G2080 to reflect an additional 30 minutes of counseling or individual or group therapy provided in a week. We further finalized additional adjustments to the bundled payment for an episode of care, such as intake activities and periodic assessments. At the time, we noted that both initial and periodic assessments are required under SAMHSA regulations, and that they were integral services for the establishment and maintenance of OUD treatment for a beneficiary at an OTP (84 FR 62634). We codified definitions of these services within the definition of OUD treatment services at § 410.67(b); at paragraph (vi), we stated that intake activities include initial medical examination services required under 42 CFR 8.12(f)(2) and initial assessment services required under § 8.12(f)(4); at paragraph (vii) we stated that periodic assessment services include those required under § 8.12(f)(4). Services under § 8.12(f) are required services as part of Federal opioid treatment standards for OTPs, as regulated by SAMHSA. Accordingly, we created HCPCS code G2076 [ Intake activities, including initial medical examination that is a complete, fully documented physical evaluation and initial assessment conducted by a program physician or a primary care physician, or an authorized healthcare professional under the supervision of a program physician or qualified personnel that includes preparation of a treatment plan that includes the patient's short-term goals and the tasks the patient must perform to complete the short-term goals; the patient's requirements for education, vocational rehabilitation, and employment; and the medical, psycho-social, economic, legal, or other supportive services that a patient needs, conducted by qualified personnel (provision of the services by a Medicare-enrolled Opioid Treatment Program); List separately in addition to code for primary procedure], and code G2077 [ Periodic assessment; assessing periodically by qualified personnel to determine the most appropriate combination of services and treatment (provision of the services by a Medicare-enrolled Opioid Treatment Program); List separately in addition to code for primary procedure] in order to have a mechanism to make payment under Medicare to OTPs for these required services. In the CY 2021 and CY 2022 PFS final rules (85 FR 84682 through 84690; 86 FR 65338 through 65341), we also established payment for take-home supplies of naloxone and overdose education furnished in conjunction with providing an opioid antagonist medication.

Additionally, in the CY 2020 PFS final rule, we codified requirements specified in the section 1861(jjj)(2) of the Act for OTPs. Specifically, we defined an “opioid treatment program” at § 410.67(b) as an entity that is an OTP as defined in § 8.2 (or any successor regulation) that meets the applicable requirements for an OTP. For an OTP to participate and receive payment under the Medicare program, the OTP must be enrolled in Medicare under section 1866(j) of the Act, have in effect a certification by SAMHSA for such a program, and be accredited by an accrediting body approved by SAMHSA. Lastly, an OTP must meet additional conditions as the Secretary may find necessary to ensure the health and safety of individuals being furnished services under such program and the effective and efficient furnishing of such services.

Recently, SAMHSA issued a new final rule (89 FR 7528), which made major reforms to 42 CFR part 8, governing requirements for OTPs in providing medications for the treatment of OUD and many other services. The rule provides significant refinements, as 42 CFR part 8 was published over 21 years ago, by reflecting new paradigms of care for OUD that have become increasingly patient-centered and evidence-based. The regulatory reforms for opioid treatment standards reflect an understanding that OUD is a chronic condition, and to be successful, treatment interventions should be individualized and include harm reduction and recovery support services, among other services. Consequently, SAMHSA redefined comprehensive treatment at § 8.2 to specify that treatment at OTPs includes “the continued use of MOUD provided in conjunction with an individualized range of appropriate harm reduction, medical, behavioral health, and recovery support services.” At the same time, SAMHSA constructed a new definition of harm reduction services at § 8.2. In particular, harm reduction “refers to practical, evidence-based strategies, including: overdose education; testing and intervention for infectious diseases including counseling and risk mitigation activities forming part of a comprehensive, integrated approach to address human immunodeficiency virus (HIV), viral hepatitis, sexually transmitted infections, and bacterial and fungal infections; distribution of opioid overdose reversal medications; linkage to other public health services; and connecting those who have expressed interest in additional support to peer services.” Harm reduction approaches are especially important to reduce certain health and safety issues associated with drug use through care that is intended to be free of stigma and centered on the needs of people who use drugs. Decades of research have shown that harm reduction strategies provide significant benefits in preventing drug overdose deaths and transmission of infectious diseases among those who use drugs, educate individuals and community members about reducing the negative consequences associated with drug use, and link individuals to SUD treatment and other recovery resources. Harm reduction is also a crucial component of the HHS Overdose Prevention Strategy, which aims to promote evidence-based harm reduction services, including those that are integrated within healthcare delivery, and to expand sustainable funding strategies for harm reduction services. Besides defining harm reduction, SAMHSA also finalized a new definition for “recovery support services” at § 8.2. Specifically, recovery is the process of change through which people improve their health and wellness, live self-directed lives, and strive to reach their full potential. Recovery support services can include, but are not limited to, community-based recovery housing, peer recovery support services, social support, linkage to and coordination among allied service providers and a full range of human services that facilitate recovery and wellness contributing to an improved quality of life. The services extend the continuum of care by strengthening and complementing substance use disorder (SUD) treatment interventions in different settings and stages. Recovery support services are a vital part SUD treatment, as they take into account the relapsing and chronic nature of a SUD, and emphasize the need for continuous care to keep individuals engaged in treatment, especially along different stages of recovery. Recovery support services are also a component of the HHS Overdose Prevention Strategy, which recognizes that treatment alone may not be enough to support long-term recovery, and that enabling access to quality integrated and coordinated recovery support services is important to prevent drug overdoses.

Furthermore, SAMHSA made updates to existing definitions that include some of the services currently covered under the Medicare OTP benefit. For example, a psychoeducational service element was added to the definition of counseling services at § 8.12(f)(5), so that both counseling and psychoeducational services would also include harm reduction education and recovery-oriented counseling. New guidelines on counseling related to preventing exposure to and transmission of various infectious diseases were also added. As part of these services, at § 8.12(f)(5)(iii), OTPs also must continue to provide directly, or through referral to adequate and reasonably accessible community resources, vocational training, education, and employment services for patients who request such services or for whom these needs have been identified and mutually agreed-upon as beneficial by the patient and program staff. Notably, SAMHSA also made updates to their descriptions of initial and periodic assessment activities at § 8.12(f)(4), which initially informed the definitions of intake activities and periodic assessments in the definition of “OUD treatment services” at § 410.67(b) and the creation of codes describing these services (HCPCS codes G2076 and G2077) when CMS first implemented the Medicare OTP benefit in the CY 2020 PFS final rule. When introducing these changes in their proposed rule in December 2022 (87 FR 77330), SAMHSA noted that “changes to the initial and periodic medical services sections are intended to promote key issues for OTP medical practitioners and the OTP multi-disciplinary team to address with a patient as part of treatment. This includes areas that may increase the risk of a patient leaving care prematurely, such as unmet mental health or other disability, medical and oral health needs, the need for culturally supportive care that addresses race, ethnicity, sexual orientation, religion or gender identity, and social determinants of health, such as housing and transportation, that may pose barriers to treatment engagement, or harm reduction and recovery support service needs.” New changes to the definition of initial assessments now include patient-centered language regarding the need for care plans to include the patient's goals and mutually agreed-upon actions for the patient to meet those goals, and new references are added for harm reduction interventions and recovery support services to be included as components of care plans if a patient needs and wishes to pursue these services. For example, patient-centered care plans developed during initial assessments may reflect a “patient's goals and mutually agreed-upon actions for the patient to meet those goals, including harm reduction interventions; the patient's needs and goals in the areas of education, vocational training, and employment; and the medical and psychiatric, psychosocial, economic, legal, housing, and other recovery support services that a patient needs and wishes to pursue (89 FR 73558).” Lastly, regarding periodic assessment services at § 8.12(f)(4)(ii), SAMHSA requires that these examinations should occur not less than one time each year and be conducted by an OTP practitioner. The periodic physical examination should include review of MOUD dosing, treatment response, other SUD treatment needs, responses and patient-identified goals, and other relevant physical and psychiatric treatment needs and goals. The periodic physical examination should be documented in the patient's clinical record. In whole, these regulatory changes largely reflect significant changes in evidence-based practice and towards patient-centered care in the treatment of OUD that have occurred in the past couple of decades, including considerations of the need to address unmet health related social needs (HRSN) that impose barriers on a patient's ability to initiate, engage, and remain in treatment, including in areas of education, employment, and housing as well as in harm reduction strategies that decrease the negative consequences associated with a patient's use or abuse of opioids, and recovery support services that address the chronic nature of OUD and the need for supports across the full continuum of care.

In addition to these reforms to opioid treatment standards at 42 CFR part 8, there have been recent activities under the PFS, and through other CMS programs, that have addressed the social determinants of health (SDOH), which often affect the diagnosis and treatment of a patient's medical problem. Healthy People 2030, which is a 10-year HHS initiative to identify public health priorities that help individuals, organizations, and communities across the U.S improve health and well-being, defines the SDOH, as the “conditions in the environments where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.” SDOH include many domains that largely impact health, including economic stability, education, healthcare, the neighborhood and built environment, and social and community context. Some studies have estimated that SDOH can affect as much as 50 percent of the variation in health outcomes compared to clinical care impacting only 20 percent. For example, individuals with a higher income have been found to exhibit lower mortality, higher life expectancy, and slower declines in physical mobility; individuals who lack insurance are less likely to obtain necessary medical care and prescription medications; and, food insecurity is associated with higher rates of birth defects, cognitive problems, hospitalization rates, asthma, and behavioral health problems. Moreover, SDOH act as structural and contextual factors that shape the conditions impacting health, and their unequal distribution impacts the development of HRSNs at the individual level, which refer to an individual's needs that might include housing, healthy foods, transportation, financial assistance, etc. An inability to address these HRSNs put individuals at a higher risk for exacerbating health conditions, and it is a major driver of health inequities. Health equity is the attainment of the highest level of health for all people, where everyone has a fair and just opportunity to attain their optimal health regardless of race, ethnicity, disability, sexual orientation, gender identity, socioeconomic status, geography, preferred language, or other factors that affect access to care and health outcomes, which is complicated by SDOH such as poverty, unequal access to healthcare, lack of education or employment, stigma, and discrimination. Therefore, in light of decades of research showing that these upstream factors drive health outcomes, and evidence suggesting interventions in healthcare settings that address social needs can improve the treatment of an individual's condition, CMS recently finalized coding and payment for SDOH risk assessments in the CY 2024 PFS final rule (88 FR 78932). HCPCS code G0136 describes SDOH risk assessments ( Administration of a standardized, evidence-based Social Determinants of Health Risk Assessment, 5-15 minutes, not more often than every 6 months) that may be billed when practitioners spend time and resources assessing HRSNs that interfere with the practitioner's ability to diagnose or treat the patient. These assessments, which may also be provided during a behavioral health visit, are often administered as part of an assessment of patient histories, risk, and in informing medical decision-making around the care and treatment of the disease or illness. They are often accomplished through the use of a standardized evidence-based tool that include the domains of food insecurity, housing insecurity, transportation needs, and utility difficulties. Besides establishing standalone payment for SDOH risk assessments, in the CY 2024 PFS final rule, CMS also created coding and payment for community health integration (CHI) (HCPCS codes G0019 & G0022) and principal illness navigation services (PIN) (HCPCS codes G0023, G0024, G0140, and G0146). Both CHI and PIN services involve a person-centered assessment to better understand the patient's life story, care coordination, contextualizing health education, building patient self-advocacy skills, health system navigation, facilitating behavioral change, providing social and emotional support, and facilitating access to community-based social services (for example, housing, utilities, transportation, food assistance) to address unmet SDOH needs. The services described by the CHI codes address unmet SDOH needs that affect the diagnosis and treatment of the patient's medical problems. PIN services focus on Medicare beneficiaries diagnosed with high-risk conditions (for example, dementia, HIV/AIDS, and cancer) in order to identify and connect them with appropriate clinical and support resources.

Moreover, many of these aforementioned services, including harm reduction interventions, recovery support services, addressing HRSN, and facilitating access to community-based social services to address these needs, ordinarily occur in OTP settings. In 2022, approximately 92 percent of OTP facilities offered various recovery support services, including peer support (59.6 percent), assistance locating housing for clients (75.0 percent), employment counseling (49.5 percent), and assistance helping patients obtain social services (81.2 percent). The majority of OTPs also offered various types of harm reduction services, including testing for various types of infectious diseases (>55 percent), health education (>77%), and naloxone and overdose education (92.3 percent). Many OTPs also conduct community outreach services to those in need of OUD treatment (76.1 percent) and case management services (87.8 percent). Additionally, as part of initial and periodic assessment services at § 8.12(f)(4), OTPs must designate in the care plan a patient's needs and goals in the areas of harm reduction interventions, education, vocational training, and employment, along with the medical and psychiatric, psychosocial, economic, legal, housing, and other recovery support services that a patient needs and wishes to pursue, which all reflect consideration to various health-related social needs. The new definitions of harm reduction and recovery support services at § 8.2 are also inclusive of activities that involve linkage to and coordination with providers that address a full range of human and public health services to facilitate recovery and wellness for a SUD. Lastly, in the CY 2020 PFS final rule we responded to public comments pertaining to the above-mentioned activities. Specifically, several commenters stated that OTPs often provide case management and/or care management services and requested that CMS consider reimbursing for these services either as part of the standard bundle or as an adjustment to the bundled payment, as applicable. A few commenters stated that OTPs serve as a fixed point of responsibility in the provision of whole person-centered care and improving health outcomes through collaborative arrangements with health care providers outside of the OTP and that the goal of care management is to reduce health care costs, specifically preventable hospital admissions, readmissions, and avoidable emergency room visits. The commenters also stated in the CY 2020 final rule that OTP staff also help patients with accessing food benefits, housing, and employment searches, which are critical components for sustained recovery, as part of the goal of complete case management (84 FR 62648). At the time, CMS stated that we would consider making payment for these type of care management activities for future rulemaking, including activities whereby OTPs collaborate with providers outside the OTPs to help patients access social services. We believed it was appropriate to work with OTPs to better understand how these services are furnished in an OTP setting, as well as to continue to look at data on specific items and services that may fit within the scope of OUD treatment services.

a. Proposal To Establish Payment for Social Determinants of Health Risk Assessments

The recent refinements to initial assessments under § 8.12(f)(4)(i) likely necessitate additional resource costs for OTPs in order to comply with the opioid treatment standards for assessing various SDOHs (for example, education, vocational training, employment, economic, legal, housing, etc.) that impact a patient's HRSNs, and to identify a patient's goals for harm reduction interventions and needs for recovery support services as they relate to the treatment of an OUD. We recognize that the paradigm for OUD treatment and care has evolved rapidly since the implementation of the Medicare OTP benefit in CY 2020, and that providers have increasingly incorporated interventions to address HRSNs that increase the risk of a patient leaving OUD treatment prematurely or that pose barriers to treatment engagement. We additionally acknowledge that coding already exists under the PFS that accounts for the resources involved in conducting these types of assessments. For these reasons, we are proposing to establish payment for SDOH risk assessments as part of intake activities within OUD treatment services, as long as these assessments are medically reasonable and necessary for the diagnosis or treatment of an OUD, and OTPs have a reason to believe unmet HRSNs or the need for harm reduction intervention or recovery support services identified during such an assessment could interfere with the OTP's ability to diagnose or treat the patient's OUD. As previously stated, the SDOH include broad structural and contextual domains that may impact health (for example, economic stability, education, healthcare, neighborhood and built environment, and social and community context) and the development of HRSNs at the individual-level (for example, housing and utilities assistance, transportation assistance, financial assistance, healthy foods, personal safety, employment, recovery support and harm reduction services). We understand that there are multiple standardized, evidence-based SDOH risk-assessment tools utilized across the healthcare system that are structured to assess a patient across various SDOH domains. If an OTP furnishes SDOH risk assessments as part of initial assessments under § 8.12(f)(4)(i), we would expect that the assessment tools used would allow the OTP to identify more specific individual-level HRSNs as part of the care plan, including giving consideration to potential harm reduction and recovery support services needs.

Specifically, we are proposing to update the payment rate for intake activities described by HCPCS code G2076 by adding in the value of the non-facility rate for SDOH risk assessments described by HCPCS code (G0136). We believe HCPCS code G0136 may serve as a reasonable proxy to reflect the value and resources required for the type of assessment service activities that OTPs are required to provide according to SAMHSA requirements under § 8.12(f)(4)(i), including an assessment to identify a patient's unmet HRSNs or the need for harm reduction intervention and recovery support services that are critical to the treatment of an OUD. We understand that OTPs have been involved in collaborative agreements with organizations who address HRSN sand offer various recovery support services (84 FR 62648), and we believe that for OTPs to appropriately identify these types of organizations that target a specific need, identifying these HRSNs as part of SDOH risk assessments is likely needed prior to engaging in activities to coordinate service delivery. However, we seek comment on whether these types of SDOH assessments ordinarily complement the type of community coordination activities that OTPs perform.

Establishing payment to account for SDOH risk assessments as part of intake activities under the OTP benefit is important, as unmet HRSNs identified as part of such assessments significantly impact outcomes for OUD treatment. Evidence shows that healthcare providers who screen for SDOH in their settings have found that patients who screen positive for a HRSN were significantly more likely to have a history of substance use or mental illness compared to patients who did not have an HRSN. For example, one review found that between 50 to 90 percent of patients in publicly funded OTPs were unemployed, and that older adults identified to have misused opioids were 22-percent less likely to be employed. Patients with an OUD are also more likely to have a lower educational attainment, encounter financial hardship, and housing instability. Even more, food insecurity has been indicated to be a strong predictor of prescription opioid misuse and abuse. The SDOH and their contribution to unmet HRSNs have also heavily impacted the rates of drug overdoses. For example, one study examined 28 different SDOH measures that collectively explained 89-percent of the variance in drug-overdose mortality across states. Housing insecurity, in particular, negatively affects the population with an OUD, as this risk factor has been increasing over time among those seeking treatment with an OUD. One analysis conducted by the State of Massachusetts has revealed alarming evidence that the risk of death from an opioid overdose is 30-times higher for those who have experienced homelessness. Lower median household income and unemployment have also been associated with an increase in opioid death rates. Moreover, unmet HRSNs have also hampered access to treatment among Medicare beneficiaries with a SUD, as evidence has shown that among Medicare beneficiaries with an SUD who were not receiving treatment, one-third reported financial barriers and one-fifth reported logistical barriers such as lack of access to transportation as rationales for not receiving treatment. Lastly, many of these SDOH factors have impaired treatment retention and completion rates. Those with lower levels of educational attainment and who are unemployed are less likely to complete SUD treatment, and individuals who are experiencing homelessness are significantly less likely to remain in treatment. Therefore, screening for the SDOH and identifying these unmet HRSNs as part of intake assessments may help OTPs link patients with an identified social need to appropriate resources that can impact the diagnosis of an OUD or address barriers to treating an OUD.

As previously stated above, we are proposing to update the adjustment to the bundled payment for an episode of care for intake activities (G2076) by adding in the value of the non-facility rate for SDOH risk assessments (G0136: Administration of a standardized, evidence-based Social Determinants of Health Risk Assessment, 5-15 minutes, not more often than every 6 months ), which is currently assigned a non-facility rate of $18.66 under the PFS. Currently, the CY 2024 payment rate for the intake add-on code (G0276) is $201.73 and adding the value of a crosswalk to the CY 2024 non-facility rate of $18.66 would result in a payment rate of approximately $220.39. We believe that incorporating the value of G0136 into the intake activities adjustment would be the most appropriate, as we believe assessment activities related to SDOH are more likely to occur during intake assessments when a new patient is admitted to an OTP. SAMHSA treatment guidelines recommend that during initial screenings, OTPs should identify barriers and medical and psychosocial risk-factors that may hinder a patient's ability to meet treatment requirements, including co-occurring health conditions, and vocational, legal, financial, transportation, and family concerns. We note that intake activities (G2076) should only be billed for new patients (that is, patients starting treatment at the OTP), and since SDOH risk assessments would be bundled into the code describing intake activities, this billing requirement would similarly apply. However, we seek comment on the frequency with which these SDOH risk assessments occur, and whether it would be more appropriate if these assessments occur when OTPs furnish periodic assessments described by HCPCS code G2077.

When OTPs bill the intake add-on code (G2076), we are not proposing to require that OTPs performed SDOH risk assessments in a specific manner, but rather that OTPs continued to perform initial assessment services consistent with SAMHSA certification requirements at § 8.12(f)(4)(i) that already largely reflect these type of SDOH risk assessment activities; and, that OTPs abided by other applicable requirements under the Medicare OTP benefit at § 410.67, including those listed in the definition of intake activities at paragraph (vi) within the definition of “OUD treatment service” at § 410.67(b). This also means that for the purposes of Medicare payment, if SDOH risk assessments are furnished, they must be related to the diagnosis or treatment of OUD, and any HRSNs identified through SDOH risk assessments performed should be documented in the patient's medical record to indicate how assessing and addressing the HRSN relates to the treatment and diagnosis of an OUD. We reiterate that our proposal to incorporate the value of HCPCS code G0136 into the OTP intake add-on code (G2076) is meant to serve as a reasonable proxy to reflect the value and resources of the type of initial assessment service activities that OTPs are required to provide under SAMHSA requirements, which now include more specific updates to a patient's care plan with considerations of a patient's goals related to harm reduction interventions, needs for recovery support services, and other HRSNs. However, if OTPs utilize SDOH risk assessments during intake activities, CMS is not proposing to require OTPs to utilize a specific type of SDOH risk assessment tool, consistent with similar existing requirements under the PFS for these services. If OTPs do furnish these assessment services, CMS encourages OTPs to adopt evidence-based, validated tools that are already available (such as the CMS Accountable Health Communities tool, the Protocol for Responding to and Assessing Patients Assets, Risks and Experiences (PRAPARE), and instruments identified for Medicare Advantage Special Needs Population Health Risk Assessment); that include the domains of food insecurity, housing insecurity, transportation needs, and utility difficulties, and that can be furnished in a manner appropriate for the patient's educational, developmental, and health literacy level, and that are culturally and linguistically appropriate. We understand that there is not a national consensus around one specific tool, and OTPs should choose the tool that fits their needs and allows them to appropriately detect unmet HRSNs, as well as other needs for harm reduction interventions and recovery support services that are integral to the treatment of an OUD.

Lastly, in light of these proposed changes, we are proposing to revise the current descriptor for the intake add-on code for consistency with revisions to § 8.12(f)(4)(i) and to reflect furnishing an SDOH risk assessment: G2076 ( Intake activities, including initial medical examination that is a complete, fully documented physical evaluation and initial assessment conducted by a program physician or a primary care physician, or an authorized healthcare professional under the supervision of a program physician or qualified personnel that includes preparation of a care plan, which may be informed by administration of a standardized, evidence-based Social Determinants of Health Risk Assessment to identify unmet health-related social needs, and that includes the patient's goals and mutually agreed-upon actions for the patient to meet those goals, including harm reduction interventions; the patient's needs and goals in the areas of education, vocational training, and employment; and the medical and psychiatric, psychosocial, economic, legal, housing, and other recovery support services that a patient needs and wishes to pursue, conducted by qualified personnel (provision of the services by a Medicare-enrolled Opioid Treatment Program); List separately in addition to code for primary procedure). We welcome public comments related to this proposal.

b. Request for Information on Payment for Coordinated Care and Referrals to Community-Based Organizations That Address Unmet Health-Related Social Needs, Provide Harm Reduction Services, and/or Provide Recovery Support Services

In the discussion above, we noted that SAMHSA's recent reforms to 42 CFR part 8 finalized new definitions for harm reduction and recovery support services, which are included as components of the type of services that OTPs may provide. Some examples of harm reduction strategies include overdose education, distribution of opioid overdose reversal medications, and linkage to other public health services. Recovery support services can include, but are not limited to, community-based recovery housing, social support, and linkage to and coordination among allied service providers and a full range of human services that facilitate recovery and wellness. Under the Medicare OTP benefit, we have already established payment for some of these services, including take-home supplies of opioid antagonist medications for emergency treatment of known or suspected opioid overdose (for example, naloxone), overdose education furnished in conjunction with opioid antagonist medications, and social support via group therapy. However, we do not currently have specific coding for activities that OTPs may conduct to coordinate care and make referrals or “link” to community-based organizations (CBOs) that help facilitate a patient's needs and goals related to harm reduction and recovery support services, as well as to address unmet HRSNs. We understand that a referral is an important aspect of following up on unmet HRSNs identified during an initial assessment service and/or SDOH risk assessment so that a patient can be connected to resources or services that may help address their unmet HRSN that interferes with treatment of their OUD. Additionally, we have received previous comments that OTPs often have collaborative agreements with providers outside of the OTP. For these reasons, we are seeking comment to understand how OTPs are currently coordinating care and making referrals to CBOs that address unmet HRSNs, provide harm reduction services, and/or provide recovery support services.

Some evidence has indicated that providers who coordinate care with CBOs to address HRSNs (for example, housing, transportation, care management, etc.) can positively influence health outcomes, and that SUD treatment facilities establishing relationships with community-based peer support services, educational and employment agencies, housing agencies, and other organizations have been able to better support a patient's engagement in SUD treatment. Additionally, harm reduction organizations, including syringe service programs, function as important facilitators of entry to treatment, as individuals who partake in these programs are five times more likely to enter treatment, more likely to remain engaged in treatment, and more likely to reduce their injection drug use. Additionally, recovery support services, such as those linking individuals in SUD treatment who are also experiencing homelessness with supportive or transitional housing, have resulted in improved uptake of behavioral health visits; and, recovery support services facilitated by peers who have recovered from a SUD have been shown to reduce relapse rates, improve treatment retention, enhance the provider and patient relationship, and boost overall treatment experience. Therefore, there is evidence to suggest that linkage to these types of community-based resources may contribute to improved outcomes related to OUD treatment; however, we seek comment on additional evidence that demonstrates how this type of services would directly help OTPs address the diagnosis or treatment of an OUD. CMS would also be interested in additional evidence describing how these community-based resources and coordination of these services with MOUD provided by OTPs would impact access to treatment for Medicare beneficiaries who may face barriers in accessing treatment, such as those who are residents of rural areas, racial/ethnic minorities, living with a disability, dual-enrollees in Medicare and Medicaid, and low-income, or other populations who may face barriers in accessing treatment. Additionally, we seek to identify the types of entities, service providers, and organizations that OTPs may interact with on a regular basis to address a patient's unmet HRSNs and needs or goals related to harm reduction and recovery support services. For example, we seek to understand if these entities would typically include housing or transportation agencies, local support groups, syringe service programs, non-profits that provide financial assistance, etc. We are also seeking information on the types of collaborative arrangements that OTPs typically have with these CBOs, including how frequently (for example, weekly, monthly, annually, etc.) OTPs coordinate care or make referrals to these CBOs for patients with an OUD, the types of circumstances that warrant an OTP interacting with these CBOs, and the workflows originating from the initial SDOH assessment to identify these HRSNs to a beneficiary successfully receiving referred services. We are also interested in learning to what extent some of these programs are already integrated into OTP settings.

Moreover, we are also interested in learning when these coordinated activities and/or referrals occur in the process of furnishing care to a beneficiary. For example, a component of SAMHSA's new revised standards for MOUD treatment under counseling and psychoeducational services at § 8.12(f)(5)(iii) suggests that OTPs must provide directly, or through referral to adequate and reasonably accessible community resources, vocational training, education, and employment services for patients who request such services or for whom these needs have been identified and mutually agreed upon as beneficial by the patient and program staff. Thus, we are soliciting comment on whether these coordination and referral services typically occur during SUD counseling session services, or if they may occur during initial or periodic assessments, therapy sessions, or as part of other services. We are also interested in understanding if, when billing for intake activities (G2076), periodic assessments (G2077), additional therapy/counseling (G2080), and/or the non-drug component code (G2074) under the Medicare OTP benefit, OTPs are already accounting for these coordinated care and referral services as part of those codes.

We are also interested in additional information related to payment for these types of coordinated care or referral services. Specifically, we seek comment on the resource costs that OTPs must expend to coordinate or make referrals to community-based services that address HRSNs, harm reduction, or recovery support needs. We are also especially interested in whether there is existing coding that properly describes these types of coordinated care or referral services, or whether there are elements to these types of services that are unique to OTPs and require new coding. We seek comment on if any of the following codes below may describe the type of coordinated care or referral activities that OTPs may provide, or if there are other codes that more precisely match the type of coordinated care or referral activities at OTPs: community health integration (G0019& G0022), principal illness navigation (G0023, G0024, G0140, G0146), chronic care management (99437, 99439, 99490, 99491), complex chronic care management (99487, 99489), principal care management (99424, 99425, 99426, 99427), or other codes, including any other relevant codes used by other payers.

Lastly, we are seeking information on whether OTPs already receive funding for these types of coordinated care or referral services from other public or private sources, and if additional payment would be duplicative or unnecessary. We are interested in learning, for example, if OTPs already receive state or Federal grants for these types of activities (for example, the SAMHSA Harm Reduction Grant Program, Rural Communities Opioid Response Program, State Opioid Response Grants, Building Communities of Recovery, Substance Use Prevention, Treatment, and Recovery Services Block Grant, etc.). Additionally, CMS would like to understand if OTPs already receive payment from states who might already cover these services under state Medicaid programs, including through section 1115 waiver demonstrations and delivery system reform incentive payments, state plan amendments, managed care contracts, or other service benefits and payment arrangements, and if new coding under the Medicare OTP benefit may unintentionally supplant coverage for dually eligible beneficiaries. We appreciate any feedback submitted by the public on these questions and issues to better understand activities that OTPs conduct to coordinate care and make referrals to CBOs that address unmet health-related social needs, provide harm reduction services, and/or provide recovery support services.

4. Establishing Payment for New FDA-Approved Opioid Agonist and Antagonist Medications

Section 1861(jjj)(1)(A) of the Act establishes Medicare payment for opioid agonist and antagonist treatment medications (including oral, injected, or implanted versions) that are approved by the Food and Drug Administration under section 505 of the Federal Food, Drug, and Cosmetic Act (FFDCA) for use in the treatment of OUD and as part of OUD treatment services under the OTP benefit. Additionally, section 1834(w)(2) of the Act granted CMS the authority to establish multiple bundled payments in stating that the “Secretary may implement this subsection through one or more bundles based on the type of medication provided (such as buprenorphine, methadone, naltrexone, or a new innovative drug), the frequency of services, the scope of services furnished, characteristics of the individuals furnished such services, or other factors as the Secretary determine appropriate.” In the CY 2020 PFS final rule, we finalized basing the OTP bundled payments, in part, on the type of medication used for treatment that reflect those drugs currently approved by the FDA under section 505 of the FFDCA for use in treatment of OUD. Accordingly, at § 410.67(d)(1) we specified that CMS would establish categories of bundled payments for OTPs for an episode of care, including categories for each type of opioid agonist and antagonist treatment medication, a category for medications not otherwise specified, and a category for episodes of care in which no medication is provided. At § 410.67(d)(2) we finalized that the bundled payment amounts for an episode of care would be based on both a drug and non-drug component, and we codified the payment methodology for determining these components. At § 410.67(d)(4), we described various adjustments that could be made to the bundled payment. Since the implementation of the Medicare OTP benefit on January 1, 2020, we have established bundled payments and/or add-on codes for the following medications: methadone (G2067 & G2078), oral buprenorphine (G2068 & G2079), injectable buprenorphine (G2069), buprenorphine implants (G2070 through G2072), naltrexone (G2073), nasal naloxone (G2215 & G1028), injectable naloxone (G2216), and medication not otherwise specified (G2075) (for new FDA-approved opioid agonist or antagonist medications for OUD treatment that is not specified in one of our existing codes). In this CY 2025 PFS proposed rule, we are proposing new payment for injectable buprenorphine and nalmefene hydrochloride products furnished by OTPs.

a. Coding and Payment for a New Nalmefene Hydrochloride Product, Opvee®

In May of 2023, the FDA approved the first nalmefene hydrochloride (nalmefene) nasal spray (under the brand name Opvee®), which is indicated for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids. This is the first FDA approval of a nasal spray for nalmefene hydrochloride for health care and community use, and it is intended for immediate administration as emergency therapy in settings where opioids may be present. Nalmefene acts as an opioid receptor antagonist and when administered quickly, it can reverse the effects of an opioid overdose including respiratory depression, sedation, and low blood pressure. Newly approved Opvee® delivers 2.7 milligrams (mg) of nalmefene in a single spray into the nasal cavity. After the first dose is administered, if the patient does not respond, or responds and then relapses into respiratory depression, additional doses of the Opvee® nasal spray may be administered with an additional spray every 2 to 5 minutes until emergency medical assistance arrives. Compared to naloxone which has a half-life of approximately 2 hours and also rapidly reverses the effects of an opioid overdose, nalmefene has a half-life of 11 hours which means that it remains in the body much longer than other overdose reversal drugs. The rise of dangerous synthetic opioids, such as fentanyl and its analogs sufentanil and carfentanil, have made it increasingly difficult for first responders to reverse the effects of an overdose. These synthetics have a high potency and longer half-lives than naloxone (7-8 hours for fentanyl; 6-9 hours for sufentanil; 5-6 hours for carfentanil; and 1.3-2.4 hours for naloxone), which means that very high doses of naloxone are often required to treat opioid overdose and prevent recurring overdose symptoms, which further demonstrates the necessity for new overdose reversal products that can counter these highly potent opioid synthetics. In one study, 2.7 mg of Opvee® reversed respiratory depression to baseline levels within 5 minutes, whereas 4 mg of intranasal naloxone did so within 20 minutes, demonstrating the effectiveness of Opvee® in quickly reversing symptoms of opioid overdose.

In the CY 2021 PFS final rule (85 FR 84683 through 84692), we adopted new add-on codes for take-home supplies of nasal naloxone (G2215) and injectable naloxone (G2216). Additionally, we used our discretionary authority in section 1861(jjj)(1)(F) of the Act (which generally authorizes us to include as an OTP treatment service other items and services we determine are appropriate) to extend the definition of OUD treatment services to include short-acting opioid antagonist medications for the emergency treatment of known or suspected opioid overdose, such as naloxone, and overdose education furnished in conjunction with opioid antagonist medication. We also established an adjustment at § 410.67(d)(4)(i)(E) to the weekly bundled payments when the OTP furnishes take-home supplies of these medications. This adjustment includes both a drug component and a non-drug component for overdose education. The payment methodology for the drug component of the adjustment was finalized at § 410.67(d)(2)(i) and is updated annually using the most recent data available at the time of ratesetting. The amount of the non-drug component of the adjustment, which includes overdose education, is based on the CY 2020 Medicare payment rate for CPT code 96161 ( Administration of caregiver focused health risk assessment instrument (e.g., depression inventory) for the benefit of the patient, with scoring and documentation, per standardized instrument). We also finalized that any payment to an OTP for naloxone would be duplicative if a claim for the same medication is separately paid under Medicare Part B or Part D for the same beneficiary on the same date of service, and that we would recoup any duplicative payment made to an OTP for naloxone.

Furthermore, in the CY 2022 PFS final rule (86 FR 65340 and 65341), we established a new add-on code and payment for a higher dose of nasal naloxone (G0128). We also finalized that the adjustment includes take-home supplies of opioid antagonist medications in the list of items for which the non-drug component will be geographically adjusted using the Geographic Adjustment Factor (GAF) and the payment amount will be updated annually by the growth in the Medicare Economic Index (MEI). Lastly, we revised our regulations at § 410.67(d)(5) to state explicitly that payments for medications that are delivered, administered or dispensed to a beneficiary as part of an adjustment to the bundled payment are considered a duplicative payment if a claim for delivery, administration or dispensing of the same medication(s) for the same beneficiary on the same date of service was also separately paid under Medicare Part B or Part D. We clarified that this revision would apply not only to duplicative payments for take-home supplies of naloxone, but also to duplicative payments for additional take-home supplies of other medications that are made under § 410.67(d)(4)(i)(D).

In light of a novel nalmefene product, Opvee®, receiving FDA approval as an opioid antagonist medication for the emergency treatment of known or suspected opioid overdose, we are proposing to make payment for this new drug under the Medicare OTP benefit. Expanding access to overdose reversal medications, such as nalmefene, is a critical component to confronting the opioid crisis. The number of drug overdose deaths involving prescription opioids has grown by nearly five-fold in the past two decades. In 2021, almost 81,000 opioid overdose deaths occurred in the U.S, and nearly 88 percent of opioid-involved deaths involved synthetic opioids like fentanyl and fentanyl analogs (acetylfentanyl, furanylfentanyl, and carfentanil). Due to the high potency of drugs in the nation's drug supply, this has often meant that higher doses, or even multiple doses, of overdose reversal medications are needed per overdose event to revive a patient. These increasing rates of drug overdose deaths has also been seen among the Medicare-eligible population with adults aged 65 and over experiencing the largest percentage increase (28 percent) in drug overdose deaths rates between 2020 and 2021, and the rate of drug overdose deaths involving synthetic opioids among this age group increased by over 53 percent in only one year (between 2019 and 2020). Over 50,000 Medicare Part D beneficiaries were estimated to have experienced an opioid overdose in 2021, and the number of these beneficiaries receiving naloxone has grown. Not only has the opioid crisis impacted the Medicare-eligible population, but health disparities in drug overdose deaths have persisted. Non-Hispanic Black men aged 65 and over have experienced drug overdose death rates that are more than four times higher than Hispanics and non-Hispanic whites. In addition, death rates from drug overdoses among people aged 65 and over have increased at faster rates for men than women. Expanding access to overdose reversal medications is important, including for populations at a greater risk for drug overdose, as overdose reversal medications have been regarded as an evidence-based strategy to help individuals quickly respond to an overdose to reduce drug overdose deaths, increase survival rates, and reduce opioid-related emergency department visits. Lastly, we believe this proposal to pay for Opvee® under the OTP benefit would further the objectives of the HHS Overdose Prevention Strategy and the National Drug Control Strategy, which both aim to widen availability and access to opioid overdose reversal treatments.

Section 1861(jjj)(1)(A) of the Act recognizes opioid agonist and antagonist treatment medications (including oral, injected, or implanted versions) that are approved by the FDA under section 505 of the FFDCA for the use in treatment of OUD, but nalmefene is not on the list of drugs for the treatment of OUD. When CMS first finalized payment for nasal and injectable naloxone under the OTP benefit in the CY 2021 PFS final rule (85 FR 84682 through 84689 and 85026 through 85027), we used our discretionary authority under section 1861(jjj)(1)(F) of the Act to finalize and extend the definition of OUD treatment services to include short acting opioid antagonist medications (e.g naloxone) that are approved by the FDA under section 505 of the FFDCA for the emergency treatment of known or suspected opioid overdose. Since nalmefene was approved by the FDA under section 505(b)(2) authority, and is an opioid antagonist and on the list of overdose reversal drugs approved by the FDA, we believe nalmefene is consistent with our definition of OUD treatment service at § 410.67(d), which describes opioid antagonist medications that are approved by the FDA under section 505 of the FFDCA for the emergency treatment of known or suspected opioid overdose at paragraph (viii). Therefore, we believe it is appropriate to propose new payment for nalmefene as it would align with existing authority under § 410.67(b) that recognizes opioid antagonist medications which treat known or suspected opioid overdose as an OUD treatment service.

We are proposing to create a new adjustment to the bundled payment for nalmefene hydrochloride (Opvee®) described by GOTP1 [Take-home supply of nasal nalmefene hydrochloride; one carton of two, 2.7 mg per 0.1 mL nasal sprays (provision of the services by a Medicare-enrolled Opioid Treatment Program); (List separately in addition to each primary code)]. We would price this new add-on code based on the established methodology under the OTP benefit for determining the adjustment for take-home supplies of opioid antagonist medications at § 410.67(d)(4)(i)(E). This adjustment would include both a drug component and a non-drug component. The amount of the drug component would be determined using the methodology for pricing the drug component of an episode of care at § 410.67(d)(2)(i), which tends to use ASP data when available (with certain exceptions). Accordingly, consistent with the approach used to price the drug component for nasal naloxone (HCPCS code G2215 & G1028), we would apply the average sales price (ASP) payment methodology set forth in section 1847A of the Act to determine the payment for the new naloxone hydrochloride nasal spray product, except that payment amounts would not include any add-on percentages if either ASP or wholesale acquisition cost (WAC) is used. As stated in the CY 2021 PFS final rule (85 FR 84685), we continue to believe that using ASP provides a transparent and public benchmark for manufacturers' actual pricing as it reflects the manufacturers' actual sales prices to all purchasers (with limited exceptions as noted in section 1847A(c)(2) of the Act) and is the only pricing methodology that includes off-invoice rebates and discounts as described in section 1847A(c)(3) of the Act. Therefore, we believe ASP to be the most market-based approach to set drug prices, including for the new nalmefene nasal product. As we stated in the CY 2020 PFS final rule, we also continue to believe that limiting the payment amount to 100-percent of the volume-weighted ASP for a HCPCS code will incentivize the use of the most clinically appropriate drug for a given patient (84 FR 62651 through 62656). We understand that many OTPs purchase medications directly from manufacturers, thereby limiting the markup from distribution channels.

Furthermore, as stated in the CY 2020 PFS final rule (84 FR 62650), we usually use the typical maintenance dose to calculate the drug component for the OTP benefit. As part of determining a payment rate for the proposed bundles for OUD treatment services, a dosage of the applicable medication is often selected to calculate the costs of the drug component of the bundle. According to the product information for Opvee®, each unit-dose nasal spray device delivers 2.7 mg of nalmefene in 0.1 mL. Each unit-dose device contains a single dose of nalmefene, so it delivers its entire contents automatically and cannot be reused. Each carton contains two unit-dose nasal spray devices to allow for an additional repeat dose if needed. Thus, we are proposing to price the drug component of the code for nalmefene based on an assumption of a typical dosage for this new product to be a carton containing two 2.7 mg nasal sprays. We would, therefore, multiply the payment amount of 100-percent of the volume-weighted ASP reported for 2.7 mg of nalmefene by two in order to reflect a carton of two nasal spray devices. We seek comment on whether this amount (a carton of two, 2.7 mg nasal sprays) reflects the typical maintenance dosage for this drug when administered. The payment limit for Opvee® in the April 2024 ASP pricing file is $92.033, which reflects a carton of two, 2.7mg nasal sprays and would be used to price the drug component of GOTP1.

Additionally, consistent with the methodology established in § 410.67(d)(4)(i)(E), we propose to include a non-drug component for GOTP1 that would include payment for overdose education. Overdose education is an important component of overdose prevention and includes educating patients and caregivers on how to recognize respiratory depression, the signs and symptoms of a possible opioid overdose, how to administer overdose reversal medications, and the importance of calling 911 or getting emergency medical help right away, even after the overdose reversal medication is administered. Additionally, overdose education paired with distribution of overdose reversal medications has been found to be effective in improving knowledge about opioid overdose, improving attitudes toward using overdose reversal medications, training individuals to safely and effectively manage overdoses, and reducing opioid-related mortality. For these reasons, we are proposing to include a non-drug component to GOTP1 based on the CY 2020 Medicare payment rate for CPT code 96161 (Administration of caregiver-focused health risk assessment instrument (e.g., depression inventory) for the benefit of the patient, with scoring and documentation, per standardized instrument) and updated to reflect the MEI updates that have been applied since that time. This is consistent with the payment methodology for naloxone and the language in § 410.67(d)(4)(i)(E). In addition, the language at § 410.67(d)(4)(ii) currently states that the non-drug component of the adjustments for take-home supplies of opioid antagonist medications will be geographically adjusted using the geographic adjustment factor described in § 414.26. Separately, § 410.67(d)(4)(iii) states that the non-drug component of the adjustments for take-home supplies of opioid antagonist medications will be updated annually using the Medicare Economic Index described in § 405.504. Since we are proposing to establish payment for Opvee® through an adjustment to the bundled payment, and since Opvee® is also considered an opioid antagonist medication, we are also proposing to update the non-drug component for the adjustment of GOTP1 annually based on the GAF and MEI.

Furthermore, consistent with our established criteria for opioid antagonist medications at § 410.67(d)(4)(i)(E), we are also proposing to limit payment for Opvee® to one add-on code (GOTP1) every 30 days. However, we believe that access to Opvee® should not be limited when it is medically reasonable and necessary as part of the treatment for OUD and known or suspected opioid overdose. Therefore, similar to flexibilities established for frequency limits for naloxone, we are proposing to allow exceptions to this limit in the case where the beneficiary overdoses and uses the initial supply of nalmefene dispensed by the OTP to the extent that it is medically reasonable and necessary to furnish additional nalmefene. We note that section 1862(a)(1)(A) of the Act requires that for payment to be made for most Part A and Part B services furnished to Medicare beneficiaries, those services must be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the malfunctioning of a malformed body member. If an additional supply of Opvee® is needed within 30 days of the original supply being provided, we propose that OTPs must document in the medical record the reason for the exception. Moreover, section 1834(w)(1) of the Act, added by section 2005(c) of the SUPPORT Act, requires the Secretary to ensure, as determined appropriate by the Secretary, that no duplicative payments are made under Medicare Part B or Part D for items and services furnished by an OTP. Similar to naloxone, we recognize that nalmefene may also be appropriately available to beneficiaries through other Medicare benefits, including under Medicare Part D. At § 410.67(d)(5), we define duplicative payment to involve circumstances when medications are delivered, administered or dispensed to a beneficiary are paid as part of the OTP bundled payment, and where the delivery, administration or dispensing of the same medication (that is, same drug, dosage and formulation) is also separately paid under Medicare Part B or Part D for the same beneficiary on the same date of service. Consistent with § 410.67(d)(5), we propose that CMS recoup duplicative payments made to an OTP for Opvee®. CMS expects that if the OTP provides reasonable and necessary medications for an OUD as part of an episode of care, the OTP will take measures to ensure that there is no claim for payment for these drugs other than as part of the OTP bundled payments. Thus, Opvee® billed by an OTP as an add-on to the bundled payment should not be reported to or paid under a Medicare Part D plan.

We welcome comments related to this proposal to establish an adjustment to the bundled payment for Opvee® [ (GOTP1: Take-home supply of nasal nalmefene hydrochloride; one carton of two, 2.7 mg per 0.1 mL nasal sprays (provision of the services by a Medicare-enrolled Opioid Treatment Program); (List separately in addition to each primary code)], as well as comments related to applicable requirements and criteria for billing this code.

b. Coding and Payment for New Injectable Buprenorphine Product Brixadi®

Another medication for the treatment of OUD for which the Secretary may establish payment is buprenorphine, which is a partial opioid agonist that is FDA approved to treat OUD. Buprenorphine is a schedule III substance, meaning it has low to moderate potential for physical dependence. When taken as prescribed, it can diminish the effects of opioid withdrawal symptoms and cravings. In the CY 2020 PFS final rule (84 FR 62630 through 62677 and 84 FR 62919 through 62926), we established a weekly bundled payment under the Medicare OTP benefit for injectable buprenorphine (HCPCS G2069: Medication assisted treatment, buprenorphine (injectable); weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program)). CMS also established payment for other formulations of buprenorphine, including weekly bundles for oral buprenorphine (G0268), buprenorphine implants (G2070 through G2072), and take-home supplies of oral buprenorphine (G2079), as well as other medications like methadone and naltrexone. At § 410.67(d)(2), we codified that the bundled payment for episodes of care in which a medication is provided will consist of a payment for a drug component, reflecting payment for the applicable FDA-approved opioid agonist or antagonist medication in the patient's treatment plan, and a non-drug component, reflecting payment for all other OUD treatment services reflected in the patient's treatment plan (including dispensing/administration of the medication, if applicable). The payments for the drug component and non-drug component are added together to create the bundled payment amount. In the CY 2020 PFS final rule, CMS finalized a payment methodology for the drug component related to implantable and injectable medications at 42 CFR 410.67(d)(2)(i)(A), which applied to the bundled payment for injectable buprenorphine (G2069).

For implantable and injectable medications paid under the OTP benefit, the payment is determined using the methodology set forth in section 1847A of the Act, except that the payment amount must be 100 percent of the ASP, if ASP is used; and the payment must be 100 percent of the WAC, if WAC is used. We also stated in the CY 2020 PFS final rule that the typical maintenance dose to calculate the drug component for payment under the OTP benefit, as dosing for some, but not all, of the drugs varies considerably (84 FR 62650). As part of determining a payment rate for the proposed bundles for OUD treatment services, a dosage of the applicable medication must be selected to calculate the costs of the drug component of the bundle. In the CY 2020 PFS final rule, we finalized using a 100 mg monthly dose for the extended-release buprenorphine injection to use as the typical or average maintenance dose to calculate the drug component of the bundle for injectable buprenorphine (G2069). At the time of ratesetting for the CY 2020 PFS rule, the only injectable extended-release buprenorphine drug available and approved by the FDA under section 505 of the FFDCA for the treatment of OUD was Sublocade®; and, the drug component for the bundle was based on a crosswalk to its respective HCPCS codes Q9991 (Buprenorphine XR 100 mg or less) and Q9992 (Buprenorphine XR over 100 mg) using the methodology set forth in section 1874A of the Act, except that the payment amount was 100-percent of the ASP. In the CY 2020 PFS final rule, we noted that the HCPCS codes for extended-release buprenorphine injection had the same payment rate, thus we did not believe it was necessary to establish a second typical maintenance dose to calculate the payment rate for the drug. For the non-drug component of the weekly bundle for injectable buprenorphine (G2069), we finalized that in addition to services for substance use counseling, individual and group therapy, and toxicology testing, we would include the Medicare non-facility rate for administration of an injection in our determination of the payment rate based on CPT code 96372 ( Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); subcutaneous or intramuscular).

In May of 2023, the FDA approved a new drug application (NDA) under section 505(b)(2) of the FFDCA for another extended-release buprenorphine injection (Brixadi®) for subcutaneous use to treat moderate to severe OUD. Clinical data suggest that Brixadi® likely contributes to high rates of treatment retention, reductions in opioid withdrawal and cravings, and fewer levels of illicit opioid use. Brixadi® is available in two formulations, a weekly injection (containing 50 mg of buprenorphine per mL) that can be used in patients who have started treatment with a single dose of a transmucosal buprenorphine product or who are already being treated with buprenorphine-containing products, and a monthly injection (containing 356 mg of buprenorphine per mL) for patients already being treated with buprenorphine. The weekly and monthly formulations of the drug are available at varying doses, including lower doses that may be appropriate for those who do not tolerate higher doses of extended-release buprenorphine that are currently available. The weekly doses are 8 mg, 16 mg, 24 mg, and 32 mg, and should be administered in 7-day intervals; and the monthly doses are 64 mg, 96 mg, and 128 mg, and should be administered in 28-day intervals.

Buprenorphine is associated with decreasing the risk for overdose, opioid-related mortality, and all-cause mortality. Data also shows that buprenorphine helps retain individuals in treatment, lowers illicit opioid use, and reduces drug-related behaviors that increase the risk for HIV transmission. In particular, long-acting (for example, extended-release) injectable forms of buprenorphine have been shown to promote adherence to treatment while reducing the need for daily dosing, and to enhance patient-reported outcomes through improvements in quality of life, accessibility, social relationships, participation in employment, more flexible personal and professional schedules, and other treatment satisfaction measures. Finally, a large percentage of Medicare beneficiaries with an OUD continue to face challenges in accessing medication, especially enrollees who are older, female, and who identify as racial/ethnic minorities. The most common reasons for not receiving SUD treatment include financial barriers in affordability and coverage. Establishing coverage and payment for a new medication to treat OUD may provide more MOUD treatment options, reduce financial barriers to accessing medication, and aid health equity efforts among Medicare beneficiaries. Accordingly, for these reasons and because sections 1861(s)(2), 1861(jjj)(1)(A), and 1833(a)(1) of the Act provide that the Secretary is to provide coverage and payment for OUD treatment services including opioid agonist and antagonist medications that are FDA approved for use in the treatment of OUD, we are proposing to establish payment for the weekly and monthly formulations for this new FDA-approved injectable buprenorphine product, Brixadi®, which we believe would further efforts to address the opioid crisis and expand access to evidence-based treatment for OUD.

We are proposing to establish two different payments, one for each of the weekly and monthly injectable formulations of Brixadi®. To establish payment for the weekly and monthly formulations of Brixadi®, we are proposing to use the existing payment methodology for implantable and injectable medications codified at § 410.67(d)(2)(i)(A). This regulation specifies that payment is determined using the methodology set forth in section 1847A of the Act, except that the payment amount must be 100 percent of the ASP, if ASP is used; and the payment must be 100 percent of the WAC, if WAC is used.

Payment limits for most drugs and biologicals separately payable under Medicare Part B are determined using the methodology in section 1847A of the Act, and in many cases, payment is based on the ASP plus a statutorily mandated 6 percent add-on. Most drugs payable under Part B are paid under the “incident to” benefit under section 1861(s)(2) of the Act, which includes drugs and biologicals not usually self-administered by the patient. The ASP payment limit determined under section 1847A of the Act reflects a volume-weighted ASP for all national drug codes (NDCs) that are assigned to a HCPCS code. The ASP is calculated quarterly using manufacturer-submitted data on sales to all purchasers (with limited exceptions as articulated in section 1847A(c)(2) of the Act, such as for sales at nominal charge and sales exempt from best price) with manufacturers' rebates, discounts, and price concessions reflected in the manufacturer's determination of ASP.

Paragraphs (4)(A) and (6) of sections 1847A(b) of the Act require that the Medicare Part B payment limit for a single-source drug or biological be determined using all of the NDCs assigned to it. Section 1847A(b)(5) of the Act further states that the payment limit shall be determined without regard to any special packaging, labeling, or identifiers on the dosage form or product or package. In 2007, CMS issued a program instruction, as permitted under section 1847A(c)(5)(C) of the Act, stating that the payment limit for a single source drug or biological will be based on the pricing information for products produced or distributed under the applicable FDA approval (such as a New Drug Application (NDA) or Biologics License Application (BLA)). Therefore, all versions of a single source drug or biological product (or NDCs) marketed under the same FDA approval number (for example, NDA or BLA, including supplements) are considered the same drug or biological for purposes of payments made under section 1847A of the Act and are crosswalked to the same billing and payment code.

We continue to believe that use of ASP provides a transparent and public benchmark for manufacturers' pricing as it reflects the manufacturers' actual sales prices to all purchasers (with limited exceptions) and is the only pricing methodology that includes off invoice rebates and discounts as described in section 1847A(c)(3) of the Act. Additionally, since many other injectable drugs are paid for under Medicare part B through the ASP payment methodology in 1847A, we presume that this methodology is appropriate for pricing Brixadi®. We also propose to limit the payment amount to 100-percent of ASP without a 6-percent add-on percentage since, as we have previously noted, it is our understanding that many OTPs purchase directly from drug manufacturers, thereby limiting the markup from distribution channels.

As we stated in our discussion above, we use the typical or average maintenance dose of a drug to determine the drug costs for each of the bundles. In the CY 2020 PFS final rule, we noted that there are often variations in the dosage and frequency of administration of medications, but that “payment based on the typical dose means that, across the Medicare beneficiaries served by the OTP, the payment amount should be reasonable and represent the average costs incurred in furnishing the drug component of the OUD treatment services.” (84 FR 62650). Therefore, in the CY 2020 PFS final rule, we finalized using the typical maintenance dose to establish the drug costs for each of the bundles as our approach to addressing variable dosing of medications. (84 FR 62650).

In the CY 2020 PFS final rule, we finalized a 100 mg monthly dose for the extended-release buprenorphine injection as the typical maintenance dose, which we used to calculate the drug component of the weekly bundle for injectable buprenorphine (G2069). At the time, we did not establish a second typical maintenance dose because both HCPCS codes for the extended release buprenorphine injection, that is, Sublocade® [Q9991 ( Buprenorphine XR 100 mg or less) and Q9992 ( Buprenorphine XR over 100 mg)] had the same payment limit because, as explained above in this section, all NDCs marketed under the same FDA approval number are considered the same drug or biological for purposes of payments made under section 1847A of the Act and are crosswalked to the same billing and payment code. The weekly and monthly formulations of Brixadi® are described by HCPCS codes J0577 ( Injection, buprenorphine extended release (brixadi), less than or equal to 7 days of therapy) and J0578 ( Injection, buprenorphine extended release (brixadi), greater than 7 days and up to 28 days of therapy ). In the same manner as Sublocade®, and as explained in the coding announcement for HCPCS codes J0577 and J0578, because all versions of a single source drug or biological product (or NDCs) marketed under the same FDA approval number are considered the same drug or biological for purposes of payments made under section 1847A of the Act, the payment limits for both J0577 and J0578 are calculated using all the NDCs marketed under the applicable FDA approval. However, since the dose descriptions for these codes are based on days of therapy (and not a measurement of the amount of drug, like per 1 mg, as is the case with Sublocade®), the payment limits for the two codes are different; in the April 2024 ASP pricing file, the payment limit for J0577 is $404.086 and the payment limit for J0578 is $1,616.346. Therefore, we do not believe it is appropriate to bundle the weekly and monthly formulations into a single bundled payment since, unlike the drug Sublocade®, the Brixadi® formulations have different payment limits, and pricing them under the same bundle would not adequately represent the average costs incurred in furnishing these different formulations in an OTP setting. Additionally, creating a single bundled payment rate that does not reflect the type and cost of the drug used could result in access issues for beneficiaries, especially in the event that the bundled payment amount for one drug significantly drops and unintentionally incentivizes treatment towards a drug with a higher bundled payment amount.

In establishing the two different payments for the weekly and monthly injectable buprenorphine formulations of Brixadi®, first, we propose to crosswalk the monthly formulation of Brixadi® (J0578: Injection, buprenorphine extended release (brixadi), greater than 7 days and up to 28 days of therapy) to the drug component of our existing bundled payment for injectable buprenorphine described by HCPCS code G2069 ( Medication assisted treatment, buprenorphine (injectable); weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program ). We propose to average the payment limits of Sublocade® and monthly Brixadi® by adding their two payment limits together and dividing the sum by two, in order to update the payment for the drug component of HCPCS code G2069. We believe including the average of the payment limits of Sublocade® and Brixadi® in the drug component of G2069 rather than the sum of their respective individual payment limits is appropriate because we do not expect that a beneficiary would receive two different types of buprenorphine monthly medication injections simultaneously from an OTP (for example, both Sublocade® and Brixadi® during the same episode of care and date of service). We believe that averaging the price of the two types of buprenorphine monthly medication injections would be further be appropriate because the individual payment limits for each of the drug codes (Q9991, Q9992, and J0578) would both be informed by ASP data and comparable as they would be priced by the same ASP payment methodology (ASP+0). We also note that bundling the monthly formulation of Brixadi® into the existing HCPCS code (G2069) for injectable buprenorphine would be appropriate and no more administratively complex for OTPs since G2069 is already billed on a monthly basis; Sublocade®, which is already reflected in the drug component of G2069 is administered on a monthly basis to beneficiaries as would be the monthly formulation of Brixadi®, so OTPs could continue to bill G2069 once each month when either monthly Brixadi® or Sublocade® is administered, as appropriate.

Additionally, the average typical dose of G2069 is 100mg of buprenorphine administered monthly, as finalized in the CY 2020 PFS final rule (84 FR 62651). The monthly formulations of Brixadi® can range from 64 mg, to 96 mg, to 128 mg. The median of these different doses for the monthly formulation of Brixadi® (96 mg) would approximate the average typical dose of the current injectable buprenorphine bundle (100 mg). We note that the different monthly doses of Brixadi® are assigned to the same HCPCS code J0578 ( Injection, buprenorphine extended release (brixadi), greater than 7 days and up to 28 days of therapy) and have the same payment limit regardless of the monthly dose (64 mg, 96 mg, or 128 mg), so selecting a typical dose of monthly Brixadi® to potentially adjust the drug component of G2069 would not meaningfully change the payment rate. Therefore, we are not proposing to establish an average typical dose different than 100 mg for injectable buprenorphine administered on a monthly basis for purposes of calculating the drug component under the OTP benefit, though we seek comment on whether this average typical dose (100 mg) is close to the dose for the monthly formulation of Brixadi® that patients receive on average.

In all, we believe that bundling the monthly formulation of Brixadi® into our current injectable buprenorphine coding under the OTP benefit would be appropriate for several reasons, including: the costs for furnishing these drugs, as shown by similar ASP payment limits for monthly Brixadi® (J0578) and the two HCPCS codes for Sublocade® (Q9991 and Q9992) ($1,616.346 and $1,874.902, respectively, are comparable as reflected in the April 2024 ASP file); the average maintenance dosage for Sublocade® (100 mg) is comparable to the median monthly dosage for Brixadi® (96 mg) and; both drugs have similar frequencies and costs of administration (on a monthly basis) with a fee paid to the OTP for one administration of an injection once a month. We believe that our proposed payment methodology would be consistent with section 1834(w)(2) of the Act, which allows the Secretary to implement bundled payments for OUD treatment services with considerations to the type of medication provided and the frequency of the services, and thus permit multiple bundles that represent injectable buprenorphine (proposed GOTP2 and G2069) and the frequency with which injectable buprenorphine is administered (weekly versus monthly). We propose to still calculate the non-drug component of HCPCS code G2069 consistent with the methodology we use to calculate the non-drug component, which is specified at § 410.67(d)(2)(ii). We are proposing to change the code descriptor for HCPCS code G2069 to take out references to a “weekly bundle” to make it clear that the code is to be billed on a monthly basis. Specifically, we would revise the code descriptor to state the following: HCPCS code G2069 (Medication assisted treatment, buprenorphine (injectable) administered on a monthly basis; bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program) ). Lastly, consistent with current guidance in Chapter 39 of the Medicare Claims Processing Manual, we would still expect that HCPCS code G2069 “would be billed for the week during which the injection was administered and that HCPCS code G2074, which describes a bundle not including the drug, would be billed during any subsequent weeks that at least one non-drug service is furnished until the injection is administered again, at which time HCPCS code G2069 would be billed again for that week.”

For the weekly formulation of Brixadi®, we propose to calculate a new bundled payment described by GOTP2 ( Medication assisted treatment, buprenorphine (injectable) administered on a weekly basis; weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program). For the drug component of HCPCS code GOTP2, we propose to base the payment on a crosswalk to the weekly Brixadi® formulation described by HCPCS code J0577 (Injection, buprenorphine extended release (brixadi), less than or equal to 7 days of therapy), which would also be based on the payment methodology specified at § 410.67(d)(2)(i)(A) for implantable and injectable medications, consistent with the existing monthly injectable buprenorphine bundle. We believe that establishing a separate weekly bundled payment reflecting the weekly formulation of Brixadi® would more appropriately pay for the subset of beneficiaries who receive less than a monthly dosage of injectable buprenorphine on average, or who choose to discontinue treatment for the drug before the end of the month. Additionally, establishing a separate weekly bundled payment would contribute to stabilizing the payment of the drug component for the monthly bundle of injectable buprenorphine (G2069) since the ASP payment limit for weekly Brixadi® costs less than the payment for the drug component of G2069 ($404.086 April 2024 ASP payment limit versus $1,780.167 for the CY 2024 payment rate of the drug component of G2069) and may decrease payment after the weekly Brixadi payment limit is averaged into the drug component of G2069®. Establishing a separate weekly bundled payment is also more appropriate because weekly Brixadi® requires more frequent administration costs than monthly injectable buprenorphine (weekly Brixadi® must be injected at least once every 7 days compared to once a month for Sublocade® and monthly Brixadi®). Thus, a different bundle for weekly Brixadi® may more closely reflect the costs incurred by OTPs. Furthermore, as noted above in this section, different weekly doses are assigned to the same HCPCS code J0577 (Injection, buprenorphine extended release (brixadi), less than or equal to 7 days of therapy) and have the same payment limit regardless of the weekly dose. Therefore, we do not believe it is appropriate to propose an average typical dose for the weekly formulation of Brixadi® for purposes of calculating the drug component of GOTP2 under the OTP benefit.

Second, we propose to also establish payment for the non-drug component of GOTP2 consistent with the methodology utilized for the monthly bundle of injectable buprenorphine (G2069). Specifically, we would continue to pay for substance use counseling, individual and group therapy, and toxicology testing that are included in the non-drug components for each of the bundled payments reflecting an episode of care, but we would include the Medicare non-facility rate for administration of an injection in our determination of the non-drug component payment rate based on CPT code 96372 ( Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); subcutaneous or intramuscular). Consistent with the payment amounts for the non-drug component of other bundled payments for an episode of care, we also propose to continue to update the value of this non-drug component for GOTP2 by the GAF as described in § 410.67(d)(4)(ii), and by the MEI as described in § 410.67(d)(4)(iii).

We welcome comments on these proposals to establish payment for the weekly and monthly formulations of the new injectable buprenorphine drug, Brixadi®.

5. Clarification To Require an Opioid Use Disorder Diagnosis on Claims for OUD Treatment Services

Section 1861(s)(2)(HH) of the Act, as amended by section 2005 of the SUPPORT Act, implemented Medicare coverage for “opioid use disorder treatment services.” Section 1861(jjj)(1) of the Act describes opioid use disorder treatment services as items and services that are furnished by an opioid treatment program for the treatment of opioid use disorder. Section 1834 of the Act specifies payments to OTPs for providing opioid use disorder treatment services. We interpreted these statutory provisions to mean that services paid to OTPs under Medicare Part B must be for the treatment of opioid use disorder. Consequently, at § 410.67(a) we reflect that those statutory provisions provide for coverage and payment to OTPs for OUD treatment services, which we define at § 410.67(b).

In August of 2023, an Office of Inspector General (OIG) report (A-09- 22-03005) found that Medicare made over $1.3 million in payments to 70 OTPs for OUD treatment services that were claimed without an OUD diagnosis. Of the claims paid without an OUD diagnosis code, 39 percent were for alcohol dependence, uncomplicated (F1020), 7 percent were for cocaine dependence, uncomplicated (F1420), and 5 percent were for generalized anxiety disorder (F411). As a result of these findings, OIG recommended that CMS “develop billing requirements for OTPs to include OUD diagnosis codes on claims for OUD treatment services to indicate that enrollees have OUD diagnoses and consider working with MACs to implement a system edit to ensure that OTP payments are made for enrollees only when OUD diagnosis codes are included on claims.” OIG also stated that “requiring OTPs to include OUD diagnosis codes on claims could be a way for CMS to monitor whether OTPs furnished OUD treatment services to enrollees who had an OUD.” In our response to the OIG report, we raised that the lack of an OUD diagnosis code on a claim is not conclusive evidence of an improper claim because an OUD diagnosis code is not required for payment when an OTP submits a claim for OUD treatment services. However, we agreed to explore ways to educate providers about including an OUD diagnosis on claims.

We continue to monitor claims paid by Medicare to OTPs for furnishing OUD treatment services, including for potential fraud and abuse. In analyzing our claims data at the beginning of CY 2024, we found data indicating that the majority of claims paid to OTPs have an OUD diagnosis code appended, meaning that only a small number of OTPs do not append an OUD diagnosis code to claims. However, we do intend to ensure that payments made to OTPs are in alignment with statutory requirements, which is that payments made must be for services furnished for the treatment of an OUD.

Therefore, we are clarifying that all claims submitted to Medicare, on Form CMS-1450 for institutional providers, and on Form CMS-1500 for professional providers, or the electronic equivalents, under the OTP benefit must include an OUD diagnosis. These diagnosis codes must apply to HCPCS G-codes representing both the bundled payments (G2067 through G2075) and add-on codes to the bundled payments (G2076-G2080, G2215-G2216, G1028, and G0137). Applicable diagnosis codes for an OUD that must be submitted on claims include ICD-10-CM codes in the F11 range for “disorders related or resulting from abuse or misuse of opioids.” CMS plans to issue additional guidance on appending these diagnosis codes to claims. We believe clarifying these billing requirements is consistent with CMS's strategic pillars to be a responsible steward of public funds, and that these requirements are consistent with statutory provisions under sections 1861(s)(2)(HH), 1861(jjj)(1), and 1834 of the Act.

G. Medicare Shared Savings Program

1. Executive Summary and Background

a. Purpose

Eligible groups of providers and suppliers, including physicians, hospitals, and other healthcare providers, may participate in the Medicare Shared Savings Program (Shared Savings Program) by forming or joining an accountable care organization (ACO) and in so doing agree to become accountable for the total cost and quality of care provided under Traditional Medicare to an assigned population of Medicare fee-for-service (FFS) beneficiaries. Under the Shared Savings Program, providers and suppliers that participate in an ACO continue to receive Traditional Medicare FFS payments under Parts A and B, and the ACO may be eligible to receive a shared savings payment if it meets specified quality and savings requirements, and in some instances may be required to share in losses if it increases health care spending.

As of January 1, 2024, the Shared Savings Program has 480 ACOs with over 634,000 health care providers and organizations providing care to over 10.8 million assigned beneficiaries, making it the largest value-based care program in the country. The policy changes to the Shared Savings Program finalized in the CY 2023 PFS final rule (87 FR 69777 through 69979) and CY 2024 PFS final rule (88 FR 79093 through 79232) are expected to grow participation in the program and increase the number of beneficiaries assigned to ACOs by up to four million in the next 10 years (that is, between 2024-2034). These policies are expected to drive growth in participation, particularly in rural and underserved areas, promote equity, and advance alignment across accountable care initiatives, and are central to achieving CMS' goal of having 100 percent of people with Traditional Medicare in a care relationship with accountability for quality and total cost of care by 2030. Of note, 19 newly formed ACOs in the Shared Savings Program are participating in a new, permanent payment option beginning in 2024 that is enabling these ACOs to receive more than $20 million in advance investment payments (AIPs) for caring for underserved communities. ACOs are now delivering care to people with Traditional Medicare in 9,032 Federally Qualified Health Centers, Rural Health Clinics, and critical access hospitals, an increase of 27 percent from 2023.

Section III.G. of this proposed rule addresses changes to the Shared Savings Program regulations to further advance Medicare's value-based care strategy of growth, alignment, and equity and includes changes to allow for timely improvements to program policies and operations.

We are proposing modifications to the Shared Savings Program to require ACOs, beginning in performance year 2025 and subsequent performance years, to report the APM Performance Pathway (APP) Plus quality measure set proposed in section III.G.4. of this proposed rule. The APP Plus quality measure set would incrementally grow to comprise of eleven measures, consisting of the six measures in the existing APP quality measure set and five newly proposed measures from the Adult Universal Foundation measure set that would be incrementally incorporated into the APP Plus quality measure set over performance years 2025 through 2028. We are also proposing to focus the collection types available to Shared Savings Program ACOs for reporting the APP Plus quality measure set to eCQMs and Medicare CQMs. In adopting the APP Plus quality measure set, we are also proposing several changes to the methodology for calculating the MIPS Quality performance category score for Shared Savings Program ACOs reporting the APP Plus quality measure set. These include proposing that Shared Savings Program ACOs that report the APP Plus quality measure set and MIPS eligible clinicians, groups, and APM Entities that choose to report the APP Plus quality measure set, will be required to report on all measures in the APP Plus quality measure set, as applicable; establishing a Complex Organization Adjustment for Virtual Groups and APM Entities, including Shared Savings Program ACOs, when reporting eCQMs; and scoring Medicare CQMs using flat benchmarks in their first 2 performance periods in MIPS. Additionally, we are proposing to extend the eCQM reporting incentive for meeting the Shared Savings Program quality performance standard to performance year 2025 and subsequent performance years. Collectively, these proposals aim to align the quality measures that Shared Savings Program ACOs would be required to report with the quality measures under the Adult Universal Foundation measure set incrementally beginning in performance year 2025 and prioritize the eCQM collection type as the gold standard collection type that underlies CMS' Digital Quality Measurement Strategic Roadmap while using Medicare CQMs as the transition step on our building block approach for ACOs' progress to adopt digital quality measurement.

We propose to establish a new “prepaid shared savings” option to assist eligible ACOs with a history of earning shared savings. Eligible ACOs that apply and are approved to receive prepaid shared savings will receive advances of earned shared savings that they can use to make investments that would aid beneficiaries, such as investments in direct beneficiary services and investments to improve care coordination through staffing or healthcare infrastructure. At least 50 percent of prepaid shared savings would be reserved to be spent on direct beneficiary services not otherwise payable in Traditional Medicare, such as meals, dental, vision, hearing, and Part B cost-sharing support. Additionally, up to 50 percent of the prepaid shared savings can be spent on staffing and infrastructure. Further, we propose refinements to advance investment payment policies to allow ACOs receiving advance investment payments to voluntarily terminate from the payment option while remaining in the Shared Savings Program, and to specify that if CMS terminates an ACO's participation agreement, the ACO must repay any outstanding advance investment payments it received.

We propose modifications to the Shared Savings Program's financial methodology to encourage ACO participation in the Shared Savings Program by removing barriers for ACOs serving underserved communities, and by providing greater specificity and clarification on how CMS would perform certain financial calculations in the Shared Savings Program. We would ensure the benchmarking methodology includes sufficient incentive for ACOs serving underserved communities to enter and remain in the program through the application of a proposed health equity benchmark adjustment. We propose to specify a calculation methodology to account for the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations, upon reopening a payment determination pursuant to § 425.315(a). We propose to establish a methodology for excluding payment amounts for HCPCS and CPT codes exhibiting significant, anomalous, and highly suspect billing activity during CY 2024 or subsequent calendar years that warrant adjustment. We also propose modifications to provide clarity on the methodology for capping the ACO's risk score growth and regional risk score growth. Additionally, building off of a comment solicitation in CY 2024 PFS rulemaking, through a new request for information in this proposed rule, we are seeking comments on financial arrangements that could allow for higher risk and potential reward under a revised ENHANCED track within the Shared Savings Program, including the designs of and trade-offs between financial model features.

We are proposing changes in connection with Shared Savings Program eligibility requirements and application procedures. To better align program policies with our goal of increasing the number of beneficiaries in an accountable care relationship with a health care provider, we propose to sunset the requirement that CMS terminates the participation agreement if the ACO's population is not at least 5,000 by the end of the performance year specified by CMS in its request for a Corrective Action Plan (CAP) while continuing to require ACOs to meet the minimum threshold of 5,000 assigned beneficiaries to begin a new agreement. We are proposing to update provisions of the Shared Savings Program regulations on application procedures to reflect the latest approach Antitrust Agencies (the Department of Justice and the Federal Trade Commission ) use to evaluate ACOs and enforce the antitrust laws. We are proposing changes to the Shared Savings Program beneficiary assignment methodology, to revise the definition of primary care services to align with payment policy proposals described elsewhere in this proposed rule, and to broaden the existing exception to the program's voluntary alignment policy to allow for beneficiaries to be assigned to entities participating in certain Innovation Center ACO models.

We propose modifications to the beneficiary information notification requirements under § 425.312(a)(2)(v)(A) to reduce administrative burden on ACOs while maintaining beneficiary protections. First, we propose to modify the requirements for the timing of the follow-up communication to a beneficiary who has received the standardized written notice under § 425.312(a)(2)(iii) or (iv). Under the proposed approach, an ACO would be required to provide the follow-up communication within 180 days from the date the standardized written notice was provided, as opposed to no later than the earlier of the beneficiary's next primary care service visit or 180 days from the date the standardized written notice was provided. In addition, we propose to modify § 425.312(a)(2)(iii) to require ACOs under preliminary prospective assignment with retrospective reconciliation to provide the standardized written notification to a subset of the Medicare FFS beneficiary population that is more likely to be assigned to the ACO, when compared to the population of beneficiaries who must receive the written notification under current § 425.312(a)(2)(iii). If finalized, this proposal would reduce the burden on ACOs and confusion for beneficiaries resulting from the current requirement under which ACOs are required to send this notification to a greater number of beneficiaries who may not ultimately be assigned to the ACO.

b. Statutory and Regulatory Background on the Shared Savings Program

On March 23, 2010, the Patient Protection and Affordable Care Act (Pub. L. 111-148) was enacted, followed by enactment of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) on March 30, 2010, which amended certain provisions of the Patient Protection and Affordable Care Act (hereinafter collectively referred to as “the Affordable Care Act”). Section 3022 of the Affordable Care Act amended Title XVIII of the Act (42 U.S.C. 1395 et seq.) by adding section 1899 of the Act to establish the Medicare Shared Savings Program to facilitate coordination and cooperation among healthcare providers to improve the quality of care for Medicare FFS beneficiaries and reduce the rate of growth in expenditures under Medicare Parts A and B. (See 42 U.S.C. 1395jjj.)

Section 1899 of the Act has been amended through subsequent legislation. The requirements for assignment of Medicare FFS beneficiaries to ACOs participating under the program were amended by the 21st Century Cures Act (the CURES Act) (Pub. L. 114-255). The Bipartisan Budget Act of 2018 (Pub. L. 115-123), further amended section 1899 of the Act to provide for the following: expanded use of telehealth services by physicians or practitioners participating in an applicable ACO to furnish services to prospectively assigned beneficiaries; greater flexibility in the assignment of Medicare FFS beneficiaries to ACOs by allowing ACOs in tracks under retrospective beneficiary assignment a choice of prospective assignment for the agreement period; permitting Medicare FFS beneficiaries to voluntarily identify an ACO professional as their primary care provider and requiring that such beneficiaries be notified of the ability to make and change such identification, and mandating that any such voluntary identification will supersede claims-based assignment; and allowing ACOs under certain two-sided models to establish CMS-approved beneficiary incentive programs.

The Shared Savings Program regulations are codified at 42 CFR part 425. The final rule establishing the Shared Savings Program appeared in the November 2, 2011 Federal Register (Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations; final rule (76 FR 67802) (hereinafter referred to as the “November 2011 final rule”)). A subsequent major update to the program rules appeared in the June 9, 2015 Federal Register (Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations; final rule (80 FR 32692) (hereinafter referred to as the “June 2015 final rule”)). The final rule entitled “Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations—Revised Benchmark Rebasing Methodology, Facilitating Transition to Performance-Based Risk, and Administrative Finality of Financial Calculations,” which addressed changes related to the program's financial benchmark methodology, appeared in the June 10, 2016 Federal Register (81 FR 37950) (hereinafter referred to as the “June 2016 final rule”). A final rule, “Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2019; Medicare Shared Savings Program Requirements; Quality Payment Program; Medicaid Promoting Interoperability Program; Quality Payment Program—Extreme and Uncontrollable Circumstance Policy for the 2019 MIPS Payment Year; Provisions From the Medicare Shared Savings Program—Accountable Care Organizations—Pathways to Success; and Expanding the Use of Telehealth Services for the Treatment of Opioid Use Disorder Under the Substance Use-Disorder Prevention That Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act”, appeared in the November 23, 2018 Federal Register (83 FR 59452) (hereinafter referred to as the “November 2018 final rule” or the “CY 2019 PFS final rule”). In the November 2018 final rule, we finalized a voluntary 6-month extension for existing ACOs whose participation agreements would otherwise expire on December 31, 2018; allowed beneficiaries greater flexibility in designating their primary care provider and in the use of that designation for purposes of assigning the beneficiary to an ACO if the clinician they align with is participating in an ACO; revised the definition of primary care services used in beneficiary assignment; provided relief for ACOs and their clinicians impacted by extreme and uncontrollable circumstances in performance year 2018 and subsequent years; established a new Certified Electronic Health Record Technology (CEHRT) use threshold requirement; and reduced the Shared Savings Program quality measure set from 31 to 23 measures (83 FR 59940 through 59990 and 59707 through 59715).

A final rule redesigning the Shared Savings Program appeared in the December 31, 2018 Federal Register (Medicare Program: Medicare Shared Savings Program; Accountable Care Organizations—Pathways to Success and Uncontrollable Circumstances Policies for Performance Year 2017; final rule (83 FR 67816) (hereinafter referred to as the “December 2018 final rule”)). In the December 2018 final rule, we finalized a number of policies for the Shared Savings Program, including a redesign of the participation options available under the program to encourage ACOs to transition to two-sided models; new tools to support coordination of care across settings and strengthen beneficiary engagement; and revisions to ensure rigorous benchmarking.

In the interim final rule with comment period (IFC) entitled “Medicare and Medicaid Programs; Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency,” which was effective on the March 31, 2020 date of display and appeared in the April 6, 2020 Federal Register (85 FR 19230), we removed the restriction that prevented the application of the Shared Savings Program extreme and uncontrollable circumstances policy for disasters that occur during the quality reporting period if the reporting period is extended to offer relief under the Shared Savings Program to all ACOs that may be unable to completely and accurately report quality data for 2019 due to the PHE for COVID-19 (85 FR 19267 and 19268).

In the IFC entitled “Medicare and Medicaid Programs; Basic Health Program, and Exchanges; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency and Delay of Certain Reporting Requirements for the Skilled Nursing Facility Quality Reporting Program,” which was effective on May 8, 2020, and appeared in the May 8, 2020 Federal Register (85 FR 27573 through 27587) (hereinafter referred to as the “May 8, 2020 COVID-19 IFC”), we modified Shared Savings Program policies to: (1) allow ACOs whose agreement periods expired on December 31, 2020, the option to extend their existing agreement period by 1-year, and allow ACOs in the BASIC track's glide path the option to elect to maintain their current level of participation for performance year 2021; (2) adjust program calculations to remove payment amounts for episodes of care for treatment of COVID-19; and (3) expand the definition of primary care services for purposes of determining beneficiary assignment to include telehealth codes for virtual check-ins, e-visits, and telephonic communication. We also clarified the applicability of the program's extreme and uncontrollable circumstances policy to mitigate shared losses for the period of the PHE for COVID-19 starting in January 2020.

We have also made use of the annual CY PFS rules to address quality reporting for the Shared Savings Program and certain other issues. For summaries of certain policies finalized in prior PFS rules, refer to the CY 2020 PFS proposed rule (84 FR 40705), the CY 2021 PFS final rule (85 FR 84717), the CY 2022 PFS final rule (86 FR 65253 and 65254), the CY 2023 PFS final rule (87 FR 69779 and 69780), and the CY 2024 PFS final rule (88 FR 79094 and 79095). In the CY 2024 PFS final rule (88 FR 79093 through 79232), we finalized changes to Shared Savings Program policies, including to: continue to move ACOs toward digital measurement of quality by revising the quality performance standard and reporting requirements under the APP within the Quality Payment Program (QPP); add a third step to the step-wise beneficiary assignment methodology under which we use an expanded period of time to identify whether a beneficiary has met the requirement for having received a primary care service from a physician who is an ACO professional in the ACO to allow additional beneficiaries to be eligible for assignment, as well as related changes to how we identify assignable beneficiaries used in certain Shared Savings Program calculations; update the definition of primary care services used for purposes of beneficiary assignment to remain consistent with billing and coding guidelines; refine the financial benchmarking methodology for ACOs in agreement periods beginning on January 1, 2024, and in subsequent years to (1) cap the risk score growth in an ACO's regional service area when calculating regional trends used to update the historical benchmark at the time of financial reconciliation for symmetry with the cap on ACO risk score growth, (2) apply the same CMS-HCC risk adjustment methodology applicable to the calendar year corresponding to the performance year in calculating risk scores for Medicare FFS beneficiaries for each benchmark year, (3) further mitigate the impact of the negative regional adjustment on the benchmark to encourage participation by ACOs caring for medically complex, high-cost beneficiaries, and (4) specify the circumstances in which CMS would recalculate the prior savings adjustment for changes in values used in benchmark calculations due to compliance action taken to address avoidance of at-risk beneficiaries, or as a result of the issuance of a revised initial determination of financial performance for a previous performance year following a reopening of ACO shared savings and shared losses calculations; refine our policies for the newly established advance investment payments (AIP); make updates to other programmatic areas including the program's eligibility requirements; and make timely technical changes to the regulations for clarity and consistency. Further, we also summarized comments received in response to a comment solicitation on potential future developments to Shared Savings Program policies, including incorporating a track with higher risk and potential reward than the ENHANCED track.

Policies applicable to Shared Savings Program ACOs for purposes of quality reporting for other programs have also continued to evolve based on changes in the statute. For instance, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10) established the Quality Payment Program. In the CY 2017 Quality Payment Program final rule with comment period (81 FR 77008), we established regulations for the MIPS and Advanced APMs and related policies applicable to eligible clinicians who participate in APMs, including the Shared Savings Program. We have also made updates to policies under the Quality Payment Program through the annual CY PFS rules.

c. Summary of Shared Savings Program Proposals

In sections III.G.2. through III.G.8. of this proposed rule, we propose modifications to the Shared Savings Program's policies, and describe comment solicitations. As a general summary, we are proposing the following changes to Shared Savings Program policies to:

• Update Shared Savings Program eligibility requirements and application procedures, including the following (section III.G.2 of this proposed rule):

++ Update compliance obligations for the requirement that ACOs maintain at least 5,000 assigned beneficiaries by the end of the performance year specified by CMS in its request for a CAP (section III.G.2.b of this proposed rule).

++ Revise the requirement that newly formed ACOs must agree to allow CMS to share a copy of their application with the Antitrust Agencies (section III.G.2.c of this proposed rule).

• Revise the policies for determining beneficiary assignment, including the following (section III.G.3 of this proposed rule):

++ Update the definition of primary care services used in beneficiary assignment at § 425.400(c) (section III.G.3.a of this proposed rule).

++ Revise the Shared Savings Program regulations to broaden a limited exception to the program's voluntary alignment policy and allow a voluntarily aligned Shared Savings Program beneficiary to be claims-based assigned to an entity participating in a disease- or condition-specific CMS Innovation Center model when that model uses claims-based assignment that is based on primary care and/or other services and the Secretary has determined that a waiver is necessary solely for purposes of testing the model, in order for beneficiaries with certain diseases or conditions to benefit from the focused attention and care coordination related to the disease or condition that an entity participating in such a model can offer (section III.G.3.b of this proposed rule).

• Revise the quality reporting and the quality performance standard requirements, including the following (section III.G.4. of this proposed rule):

++ Propose to require Shared Savings Program ACOs to report the APP Plus quality measure set (section III.G.4.b.(2)(a) of this proposed rule).

++ Propose to focus the collection types available to Shared Savings Program ACOs for reporting the APP Plus quality measure set to eCQMs and Medicare CQMs (section III.G.4.b.(2)(b) of this proposed rule).

++ Propose that Shared Savings Program ACOs that report the APP Plus quality measure set and MIPS eligible clinicians, groups, and APM Entities that choose to report the APP Plus quality measure set, will be required to report on all measures in the APP Plus quality measure set, as applicable (section III.G.4.c.(2)(a) of this proposed rule).

++ Propose to establish a Complex Organization Adjustment for Virtual Groups and APM Entities, including Shared Savings Program ACOs, when reporting eCQMs (section III.G.4.c.(2)(b) of this proposed rule).

++ Propose to score Medicare CQMs using flat benchmarks in their first two performance periods in MIPS (section III.G.4.c.(2)(c) of this proposed rule).

++ Propose to extend the eCQM reporting incentive for meeting the Shared Savings Program quality performance standard to performance year 2025 and subsequent performance years (section III.G.4.d of this proposed rule).

• Allow eligible ACOs to receive prepaid shared savings (section III.G.5 of this proposed rule).
• Refine AIP policies, including the following (section III.G.6 of this proposed rule):

++ Allow ACOs receiving advance investment payments to voluntarily terminate from the payment option while remaining in the Shared Savings Program (section III.G.6.a of this proposed rule).

++ Codify a policy for recouping advance investment payments from ACOs whose participation agreements are terminated by CMS (section III.G.6.b of this proposed rule).

• Revise the policies on the Shared Savings Program's financial methodology, including the following (section III.G.7 of this proposed rule):

++ Apply a health equity benchmark adjustment (HEBA) which would adjust upward an ACO's historical benchmark, based on the number of beneficiaries they serve who are dually eligible or enrolled in the Medicare Part D Low-Income Subsidy (LIS). This would encourage and sustain participation by ACOs serving underserved populations that do not benefit from existing benchmark adjustments for regional efficiency or from generating prior savings (section III.G.7.b of this proposed rule).

++ Establish a calculation methodology to account for the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations upon reopening a payment determination pursuant to § 425.315(a) (section III.G.7.c of this proposed rule).

++ Establish an approach to identify significant, anomalous, and highly suspect (SAHS) billing activity occurring in CY 2024 or subsequent calendar years, and specify approaches to mitigating the impact of the SAHS billing activity on Shared Savings Program financial calculations in CY 2024 or subsequent calendar years. Under the proposed approach we would exclude payment amounts from expenditure and revenue calculations for the relevant calendar year for which the SAHS billing activity is identified, as well as from historical benchmarks used to reconcile the ACO for a performance year corresponding to the calendar year for which the SAHS billing activity is identified (section III.G.7.d of this proposed rule).

++ Seek comment on establishing a higher risk/reward option than the current ENHANCED track (section III.G.7.e of this proposed rule).

++ Propose technical changes, for consistency and clarity in provisions of the Shared Savings Program regulations on financial calculations, to align and clarify the language used to describe weights applied to the growth in ACO and regional risk scores for each Medicare enrollment type, as part of the calculation for capping ACO and regional risk score growth, respectively. The weight for a given enrollment type would be equal to the product of the ACO's historical benchmark expenditures after the application any adjustment applied under § 425.652(a)(8) of the regulations (that is, the regional adjustment, prior savings adjustment or proposed HEBA (if finalized), or no adjustment) for that enrollment type and the ACO's performance year assigned beneficiary person years for that enrollment type (section III.G.7.f of this proposed rule).

• Modify beneficiary notification requirements, including the following (section III.G.8 of this proposed rule):

++ ACOs must provide the follow-up beneficiary communication no later than 180 days after the date that the ACO provided the standardized written notice to the beneficiary (section III.G.8.a of this proposed rule).

++ For ACOs that select preliminary prospective assignment with retrospective reconciliation, limit the distribution of the standardized written beneficiary information notification to beneficiaries who are more likely to be assigned to the ACO, when compared to the beneficiaries who must receive the written notification under current regulations (section III.G.8.b of this proposed rule).

Taken together, the Shared Savings Program proposals in this proposed rule are anticipated to improve ACOs' incentives to join the program and continue participating in future years and earn shared savings. The proposals are projected to reduce program spending by $260 million in total over the 10-year period 2025 through 2034. These changes are anticipated to support the goals outlined in the CY 2023 PFS final rule (87 FR 69777 through 69978) and CY 2024 PFS final rule (88 FR 79093 through 79232) for growing the program, with a particular focus on including underserved communities.

Certain policies, including both existing policies and the proposed new policies described in this proposed rule, rely upon the authority granted in section 1899(i)(3) of the Act to use other payment models that the Secretary determines will improve the quality and efficiency of items and services furnished under the Medicare program, and that do not result in program expenditures greater than those that would result under the statutory payment model. The following proposals require the use of our authority under section 1899(i) of the Act: the proposal to allow eligible ACOs to receive prepaid shared savings; the proposal to use a calculation methodology to account for the impact of improper payments in recalculating expenditures and payment amounts for certain Shared Savings Program financial calculations, upon reopening an ACO's payment determination and issuing a revised initial determination pursuant to § 425.315(a); the proposal to use a methodology for certain Shared Savings Program financial calculations to mitigate the impact of SAHS billing activity occurring in CY 2024 or subsequent calendar years; and the proposed technical changes to the provision describing how we calculate the weights applied when capping growth in regional risk scores as part of the regional component of the three-way blended benchmark update factor. As described in the Regulatory Impact Analysis in section VII. and elsewhere in this proposed rule, these proposed changes to our payment methodology are expected to improve the quality and efficiency of care and are not expected to result in a situation in which the payment methodology under the Shared Savings Program, including all policies adopted under the authority of section 1899(i) of the Act, results in more spending under the program than would have resulted under the statutory payment methodology in section 1899(d) of the Act. We will continue to reexamine this projection in the future to ensure that the requirement under section 1899(i)(3)(B) of the Act that an alternative payment model not result in additional program expenditures continues to be satisfied. In the event that we later determine that the payment model that includes policies established under section 1899(i)(3) of the Act no longer meets this requirement, we would undertake additional notice and comment rulemaking to make adjustments to the payment model to assure continued compliance with the statutory requirements.

2. Eligibility Requirements and Application Procedures

a. Overview

We are proposing two modifications to the Shared Savings Program eligibility and application procedures that will be implemented for performance years beginning on or after January 1, 2025. Specifically, we propose the following, which are discussed in more detail in sections (b) and (c) below:

• Sunset the requirement after January 1, 2025, at § 425.110(b)(2) that CMS terminates the participation agreement and the ACO is not eligible to share in savings for that performance year if the ACO's assigned population is not at least 5,000 by the end of the performance year specified by CMS in its request for a CAP and
• Revise the antitrust language in the application procedures at §§ 425.202(a)(3) and 425.224(a)(3) for the Shared Savings Program.

b. Monitoring Compliance With the Requirement That ACOs Maintain at Least 5,000 Assigned Beneficiaries

Section 1899(b)(2)(D) of the Act requires participating ACOs to include primary care ACO professionals that are sufficient for the number of Medicare FFS beneficiaries assigned to the ACO and that at a minimum, the ACO shall have at least 5,000 such beneficiaries assigned to it. In the November 2011 final rule (76 FR 67808), in alignment with the statutory requirement at section 1899(b)(2)(D) of the Act, CMS established that, at a minimum, an ACO shall have at least 5,000 such beneficiaries assigned to it to be eligible to participate in the Shared Savings Program under § 425.110. We described the importance of maintaining at least 5,000 assigned beneficiaries with respect to both eligibility of the ACO to participate in the program and the statistical stability for purposes of calculating per capita expenditures and assessing financial and quality performance. We noted, however, that we understood circumstances may change during the agreement period, and that an ACO's assigned population may vary accordingly.

To enforce program requirements under § 425.110, while still recognizing that variations may occur for an ACO's assigned population, CMS generally issues a warning notice and request the ACO submit a Corrective Action Plan (CAP) should the ACO's assigned population fall below 5,000 beneficiaries. Few ACOs have had a beneficiary population that fell below 5,000. Between calendar year 2020 and 2023, based on the program's compliance monitoring review, 24 ACOs have been below this assignment threshold at the start of one or more performance years within an agreement period, which led CMS to issue compliance actions. Approximately 55 percent of these ACOs opted to voluntarily terminate ahead of the CAP deadline imposed by CMS, while approximately 40 percent were able to increase their beneficiary assignment over the threshold and remain in the program. Given additional time, more ACOs likely would be able to increase their beneficiary assignment, keeping more beneficiaries in accountable care relationships, and maintain their participation in the Shared Savings Program.

Separately, we had established a policy in the December 2018 final rule (83 FR 67925) providing for an ACO to select the Minimum Savings Rate (MSR)/Minimum Loss Rate (MLR) that CMS would use when performing shared savings and shared losses calculations for the ACO. As we have previously discussed, the MSR/MLR protects against an ACO earning shared savings or being liable for shared losses when the change in expenditures represents normal, or random, variation rather than an actual change in performance (see, for example, 83 FR 67923 through 67926).

In the December 2018 final rule (83 FR 67925 through 67929), we revised § 425.110(b) to provide for the use of a variable MSR/MLR when performing shared savings and shared losses calculations if an ACO's assigned beneficiary population fell below 5,000 for the performance year regardless of whether the ACO had previously selected a fixed or variable MSR/MLR. This policy protects the statistical stability of the program's expenditure calculations. As an ACO's assigned beneficiary population decreases, variability in the population's expenditures increases. We thus expressed concern that the reduction in the size of the ACO's assigned beneficiary population would cause shared savings payments made to the ACO to not reflect true cost savings, but normal expenditure fluctuations (83 FR 67926). The use of a variable MSR/MLR thus made it more difficult for an ACO under performance-based risk that falls below the 5,000-beneficiary threshold to earn shared savings or be responsible for shared losses to ensure that the savings or losses reflected the ACO's actual performance and not merely statistical noise. This policy provided additional protection to the Medicare Trust Funds and greater protection for ACOs against owing shared losses.

As described above, an ACO's failure to maintain at least 5,000 assigned beneficiaries may result in compliance actions, up to and including termination of the ACO from the Shared Savings Program. When originally developed, this program policy was intended in part to protect both CMS and the ACO from variability in the expenditure calculations caused by a small assigned beneficiary population. With the MSR and MLR adjustments finalized in the December 2018 final rule, we developed protections against issues with the benchmark calculation for ACOs with fewer assigned beneficiaries, which provide adequate protection against variability in the short term. The MSR and MLR sliding scale varies based on the number of beneficiaries assigned to the ACO from 1 up to 60,000. Currently, this adjustment to the MSR/MLR protects both CMS and the ACO from inappropriate over or underpayments, reducing the financial risk of allowing ACOs to continue to participate in the Shared Savings Program if they experience a reduction in assigned beneficiaries.

In light of the effectiveness of the variable MSR/MLR policy described above, we are proposing to sunset the requirement at § 425.110(b)(2) that CMS will terminate an ACO's participation agreement and determine that an ACO is not eligible to share in savings for that performance year if an ACO's assigned population is not at least 5,000 by the end of the performance year specified by CMS in its request for a CAP. Specifically, we propose to revise § 425.110(b)(2) to limit its application to performance years starting before January 1, 2025. Thus, for performance years beginning on or after January 1, 2025, if the ACO's assigned population is not at least 5,000 by the end of the performance year specified by CMS in its request for a CAP, CMS will not be required to terminate the participation agreement.

This proposal would not modify the requirement at § 425.110(a), which implements the statutory requirement at section 1899(b)(2)(D) of the Act that ACOs have 5,000 beneficiaries at critical points in CMS's determination of the ACO's eligibility to participate in the Shared Savings Program, including: at the time of application in order to be eligible for the Shared Savings Program, and at any point when an ACO elects to renew its participation in the program. As discussed in the November 2011 final rule (76 FR 67808), CMS has found “[a] minimum threshold is important with respect to both the eligibility of the ACO to participate in the program and to the statistical stability for purposes of calculating per capita expenditures and assessing quality performance”. A 5,000 beneficiary minimum, paired with a variable MSR/MLR, enables ACOs to have their work of improving beneficiary care best reflected in their financial performance and shared savings results. Additionally, we would retain § 425.110(b), which states that an ACO may be subject to actions under §§ 425.216 and 425.218 if its assigned population falls below 5,000 at any time during the performance year. This proposed approach provides CMS with additional flexibility in the compliance actions that we take in working with ACOs to help them return to the 5,000 beneficiary threshold.

The proposed modification aligns with CMS's broader goals to expand the number of beneficiaries in accountable care relationships. We anticipate this flexibility will provide ACOs with additional time and opportunities to recruit additional providers and suppliers to increase their assigned beneficiary population rather than being required to exit the Shared Savings Program due to their beneficiary attribution. We seek comment on this proposal. If finalized, this proposed change would be effective beginning on January 1, 2025.

c. Update Antitrust Language

Section 425.202(a)(3) requires that ACOs that are newly formed after March 23, 2010, agree to allow CMS to share a copy of their application with the Antitrust Agencies (the Federal Trade Commission (FTC) and the Department of Justice (DOJ), as defined in the Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program). This policy has been in effect since the enactment of the November 2011 final rule (76 FR 67822). We stated at the time that this policy was in the public interest to harmonize the eligibility criteria for ACOs that wished to participate in the Shared Savings Program with similar antitrust criteria on clinical integration, because competition among ACOs was expected to have significant benefits for Medicare beneficiaries.

In 2023, both the DOJ and the FTC withdrew the outdated Antitrust Enforcement Policy Statement because the policy no longer served its intended purpose of providing useful guidance to market participants. Instead, both Antitrust Agencies have stated that they will continue to vigorously enforce the antitrust laws in the health care markets by evaluating mergers and conduct that harm competition on a case-by-case basis.

As a result, we propose to modify the Shared Savings Program eligibility requirements that will be implemented on January 1, 2025, by removing the reference to the Antitrust Enforcement Policy Statement in § 425.202(a)(3), and also in § 425.224(a)(3). This proposal aligns the Shared Savings Program with the Antitrust Agencies' decisions to withdraw the Antitrust Enforcement Policy Statement. We propose to edit § 425.202(a)(3) to state, “An ACO that seeks to participate in the Shared Savings Program must agree that CMS can share a copy of their application with the Antitrust Agencies.” Similarly, we propose to edit § 425.224(a)(3) to state, “An ACO that seeks to enter a new participation agreement under the Shared Savings Program must agree that CMS can share a copy of its application with the Antitrust Agencies.” We also plan to remove guidance from the Shared Savings Program website detailing how an ACO could calculate their share of services in each applicable Primary Service Area (PSA), as described in the Antitrust Policy Statement, as this is no longer useful to ACOs.

As we stated in 76 FR 67822, we intend to coordinate closely with the Antitrust Agencies throughout the application process and the operation of the Shared Savings Program to ensure there are no detrimental impacts to competition. CMS will share application and participation information including aggregate claims data regarding allowed charges and fee-for-service payments for all ACOs accepted in the Shared Savings Program, with the Antitrust Agencies needed to further any investigations or support their enforcement of the antitrust laws.

We seek comment on this proposal. If finalized, this proposed change would be effective beginning on January 1, 2025.

3. Beneficiary Assignment Methodology

a. Proposed Revisions to the Definition of Primary Care Services

(1) Background

Section 1899(c)(1) of the Act, as amended by the CURES Act and the Bipartisan Budget Act of 2018, provides that for performance years beginning on or after January 1, 2019, the Secretary shall assign beneficiaries to an ACO based on their utilization of primary care services provided by a physician who is an ACO professional and all services furnished by Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs). However, the statute does not specify a list of services considered to be primary care services for purposes of beneficiary assignment.

In the November 2011 final rule (76 FR 67853), we established the initial list of services, identified by Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes, that we considered to be primary care services. In that final rule, we indicated that we intended to monitor CPT and HCPCS codes and would consider making changes to the definition of primary care services to add or delete codes used to identify primary care services if there were sufficient evidence that revisions were warranted. We have updated the list of primary care service codes in subsequent rulemaking (refer to 80 FR 32746 through 32748; 80 FR 71270 through 71273; 82 FR 53212 and 53213; 83 FR 59964 through 59968; 85 FR 27582 through 27586; 85 FR 84747 through 84756; 85 FR 84785 through 84793; 86 FR 65273 through 65279; 87 FR 69821 through 69825; 88 FR 79163 through 79174) to reflect additions or modifications to the codes that have been recognized for payment under the PFS and to incorporate other changes to the definition of primary care services for purposes of the Shared Savings Program. For the performance year beginning on January 1, 2024, and subsequent performance years, we defined primary care services for purposes of assigning beneficiaries to ACOs under § 425.402 in § 425.400(c)(1)(viii).

(2) Proposed Revisions

Based on feedback from ACOs and our further review of the HCPCS and CPT codes that are currently recognized for payment under the PFS or that we are proposing to recognize for payment starting in CY 2025, we believe it would be appropriate to amend the definition of primary care services used in the Shared Savings Program assignment methodology to include certain additional codes for the performance year starting on January 1, 2025, and subsequent performance years, in order to remain consistent with billing and coding under the PFS.

We propose to specify a revised definition of primary care services used for assignment in a new provision of the Shared Savings Program regulations at § 425.400(c)(1)(ix) to include the list of HCPCS and CPT codes specified in § 425.400(c)(1)(viii), as well as the following additions: (1) Safety Planning Interventions (HCPCS code GSPI1) when the base code is also a primary care service code, if finalized under Medicare FFS payment policy; (2) Post-Discharge Telephonic Follow-up Contacts Intervention (HCPCS code GFCI1), if finalized under Medicare FFS payment policy; (3) Virtual Check-in Service (CPT code 9X091), if finalized under Medicare FFS payment policy; (4) Advanced Primary Care Management Services (HCPCS GPCM1, GPCM2, and GPCM3), if finalized under Medicare FFS payment policy; (5) Cardiovascular Risk Assessment and Risk Management Services (HCPCS codes GCDRA and GCDRM), if finalized under Medicare FFS payment policy; (6) Interprofessional Consultation Services (CPT codes 99446, 99447, 99448, 99449, 99451, 99452); (7) Direct Care Caregiver Training Services (HCPCS codes GCTD1, GCTD2 and GCTD3), if finalized under Medicare FFS payment policy; and (8) Individual Behavior Management/Modification Caregiver Training Services (HCPCS codes GCTB1 and GCTB2), if finalized under Medicare FFS payment policy.

We propose that the new provision at § 425.400(c)(1)(ix) would be applicable for use in determining beneficiary assignment for the performance year starting on January 1, 2025, and subsequent performance years.

The following provides additional information about the CPT and HCPCS codes that we are proposing to add to the definition of primary care services used for purposes of beneficiary assignment:

Safety Planning Interventions (SPI) (HCPCS code GSPI1 (Safety planning interventions, including assisting the patient in the identification of the following personalized elements of a safety plan: recognizing warning signs of an impending suicidal crisis; employing internal coping strategies; utilizing social contacts and social settings as a means of distraction from suicidal thoughts; utilizing family members, significant others, caregivers, and/or friends to help resolve the crisis; contacting mental health professionals or agencies; and making the environment safe; (List separately in addition to an E/M visit or psychotherapy)): In section II.I of this proposed rule, we are proposing under the PFS to create an add-on G-code that would be billed along with an E/M visit or psychotherapy visit when safety planning interventions are personally performed by the billing practitioner in a variety of settings. Safety planning interventions involve a person working with a clinician to develop a personalized list of coping strategies and sources of support that the person could use in the event of experiencing thoughts of harm to themselves or others. This is not a suicide risk assessment, but rather, an intervention provided to people determined to have elevated risk. Safety planning interventions have also been used to reduce the risk of suicide. The basic components of a safety plan include the following: (1) recognizing warning signs of an impending suicidal crisis or actions that increase the risk of overdose; (2) employing internal coping strategies; (3) utilizing social contacts and social settings as a means of distraction from suicidal thoughts and/or taking steps to reduce the risk of suicide; (4) utilizing family members or friends to help resolve the crisis; (5) contacting mental health professionals, crisis services, or agencies; and (6) making the environment safe, including restricting access to lethal means, if applicable.

Refer to section II.I of this proposed rule for detailed, technical discussion regarding the proposed description, payment, and utilization of this HCPCS code.

In the CY 2019 PFS final rule (83 FR 59965 through 59966), we finalized the addition of prolonged evaluation and management or psychotherapy service(s) beyond the typical service time of the primary procedure (CPT codes 99354 and 99355) to the definition of primary care services used for purposes of assignment because these two codes are “add-on codes” that describe additional resource components of a broader service furnished in the office or other outpatient setting that are not accounted for in the valuation of the base codes. For the same reason, we believe it would be appropriate to also include HCPCS code GSPI1, if finalized under Medicare FFS policy since GSPI1 is being proposed as an add-on service to an E/M or psychotherapy visit. Evaluation and management visits are included in the definition of primary care services used for purposes of assignment and so we believe it would be appropriate to also include GSPI1, when billed with an E/M visit, in the definition of primary care services used for purposes of assignment to assign beneficiaries more accurately to ACOs participating in the Shared Savings Program. We further believe the services billed under this code reflect the types of services we expect primary care providers to provide in order to improve continuity of care. Including Safety Planning Intervention services in the definition of primary care services used for purposes of assignment would also align with the CMS Behavioral Health Strategy, the mission of which is to ensure that high-quality behavioral health services and supports are accessible to Medicare beneficiaries.

We note that, as proposed, HCPCS code GSPI1 could also be billed with psychotherapy services, which are not considered for purposes of beneficiary assignment under § 425.400(c). Therefore, we propose to include the allowed charges for HCPCS code GSPI1, for purposes of assigning beneficiaries to ACOs, only when billed with a service which is also included in the definition of primary care services.

• Post-Discharge Telephonic Follow-up Contacts Intervention (FCI) (HCPCS code GFCI1: Post discharge telephonic follow-up contacts performed in conjunction with a discharge from the emergency department for behavioral health or other crisis encounter, per calendar month). In section II.I of this proposed rule, we describe FCI as a specific protocol of services for individuals with suicide risk involving a series of telephone contacts between a provider and person in the weeks and sometimes months following discharge from the emergency department and other relevant care settings, that occurs when the person is in the community and is designed to reduce the risk of subsequent adverse outcomes. FCI calls are typically 10-20 minutes in duration and aim to encourage use of the Safety Plan (as needed in a crisis) and updating it to optimize effectiveness, expressing psychosocial support, and helping to facilitate engagement in any indicated follow-up care and services. We are proposing to create a monthly billing code to describe the specific protocols involved in furnishing post-discharge telephonic follow-up contacts that are performed in conjunction with a discharge from the emergency department for a crisis encounter, as a bundled service describing four calls in a month, each lasting between 10-20 minutes. We are proposing to price this service based on a direct crosswalk to CPT code 99426 ( Principal care management; first 30 minutes of clinical staff time directed by a physician or other qualified healthcare professional) because we believe the work would be similar in nature and intensity.

Refer to section II.I. of this proposed rule for detailed, technical discussion regarding the proposed description, payment, and utilization of this HCPCS code.

These services are similar to TCM services (CPT codes 99495 and 99496), which are included in the definition of primary care services used for purposes of assignment under § 425.400(c), in that these services help eligible people transition back to a community setting after a stay at certain facility types like TCM. Similar to the rationale described December 2014 proposed rule (79 FR 72792) and later finalized in the June 2015 final rule (80 FR 32746 through 32748) where we finalized the inclusion of TCM services in the definition of primary care services used for purposes of assignment, providing separate payment for the work of community physicians and practitioners in treating a patient following discharge from a hospital or nursing facility would ensure better continuity of care for these patients and help reduce avoidable readmissions. Therefore, we believe that FCI services should also be included in the definition of primary care services used for beneficiary assignment since FCI services are designed to assist in the transition from the emergency department into the community. We believe the services billed under this code reflect the types of services we expect primary care providers to provide in order to improve care coordination and care management. Thus, we believe that FCI services should also be included.

Further, in determining the recommended pricing for HCPCS code GFCI1, we recommend pricing this service based on a direct crosswalk to Principal Care Management (PCM) service (CPT code 99426) because we believe the work would be similar in nature, as well as time and intensity. In the CY 2021 PFS final rule (85 FR 84749), we finalized the inclusion of HCPCS codes G2064 and G2065 in the definition of primary care services used for purposes of assignment since we expect that most services billed under these codes will be billed by specialists who are focused on managing patients with a single complex chronic condition requiring substantial care management. These HCPCS codes were replaced by CPT codes 99424, 99425, 99426, and 99427 in the CY 2022 PFS final rule (86 FR 65275). PCM services (CPT codes 99424, 99425, 99426, and 99427 and HCPCS codes G2064 and G2065) are included in the definition of primary care services used for purposes of assignment and since FCI services are similar in nature, time, and intensity to PCM services, we believe it would be appropriate to include these services in the definition of primary care services used for purposes of assignment. Including FCI services in the definition of primary care services used for purposes of assignment would also align with the CMS Behavioral Health Strategy as the FCI services are designed to support beneficiaries with follow-up care related to suicide risk.

• Virtual Check-in Service (CPT code 9X091):

++ CPT code 9X091 ( Brief communication technology-based service (e.g., virtual check-in) by a physician or other qualified health care professional who can report evaluation and management services, provided to an established patient, not originating from a related evaluation and management service provided within the previous 7 days nor leading to an evaluation and management service or procedure within the next 24 hours or soonest available appointment, 5-10 minutes of medical discussion).

The CPT Editorial Panel established a new CPT code 9X091 describing a brief virtual check-in encounter that is intended to evaluate the need for a more extensive visit. The code descriptor for CPT code 9X091 mirrors that of existing HCPCS code G2012 ( Brief communication technology-based service, e.g., virtual check-in, by a physician or other qualified health care professional who can report evaluation and management services, provided to an established patient, not originating from a related E/M service provided within the previous 7 days nor leading to an E/M service or procedure within the next 24 hours or soonest available appointment; 5-10 minutes of medical discussion) and, per the CPT Editorial Panel materials, is intended to replace that code. HCPCS code G2012 is included in the Shared Savings Program definition of primary care services used for purposes of assignment.

In section II.E of this proposed rule, we are proposing separate payment for CPT code 9X091. Because the code description for CPT code 9X091 mirrors HCPCS code G2012 and because, per CPT Editorial Panel materials, is intended to replace HCPCS code G2012, we are proposing to make CPT code 9X091 separately payable under Medicare. We note we are proposing to delete HCPCS code G2012 for purposes of Medicare PFS payment policy, however, HCPCS code G2012 will continue to be included in the definition of primary care services used for purposes of assignment, consistent with how deleted CPT and HCPCS codes have been handled historically and to allow for consistency with calculating historical benchmarks.

We propose that we would include CPT code 9X091 in the definition of primary care services used for purposes of assignment as the code description of brief communication technology-based service mirrors the description of HCPCS code G2012, which is included in the definition of primary care services used for purposes of assignment since these services are furnished to established patients by physicians or qualified health care professionals that can report E/M services in lieu of an in person primary care visit (85 FR 84753). Since CPT code 9X091 is a direct replacement of HCPCS code G2012, 9X091 would be included in the definition of primary care services used for purposes of assignment, under proposed § 425.400(c)(1)(ix)(C). In the CY 2022 Physician Fee Schedule file rule (86 FR 65277 through 65279), we finalized a policy wherein we would incorporate into the definition of primary care services a permanent CPT code when it directly replaces another CPT code or a temporary HCPCS code (for example, a G-code) that is already included in the definition of primary care services for purposes of determining beneficiary assignment under the Shared Savings Program. Additionally, CPT code 9X091, per the CPT Editorial Panel materials, is intended to be reported instead of HCPCS code G2012, which is already included in the definition of primary care services used for purposes of assignment. We further believe the services billed under this code reflect the types of services we expect primary care providers to provide in order to improve care coordination and care management.

We explained that this approach would help to ensure the appropriate identification of primary care services used in the Shared Savings Program's assignment methodology by allowing for the immediate inclusion of replacement CPT codes in the determination of beneficiary assignment and lead to continuity in the assignment of beneficiaries receiving those services based on current coding. This continuity would improve predictability for ACOs, while also increasing the consistency of care coordination for their assigned beneficiaries. We further finalized that such replacement codes would be incorporated into the definition of the primary care services for purposes of determining beneficiary assignment for the performance year, when the assignment window for a benchmark or performance year (as defined in § 425.20) includes any day on or after the effective date of the replacement code for payment purposes under FFS Medicare. CPT code 9X091 has an effective date of January 1, 2025.

• Advanced Primary Care Management (HCPCS codes GPCM1, GPCM2, and GPCM3);

(1) HCPCS code GPCM1: ( Advanced primary care management services provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the following elements, as appropriate:

• Consent;

++ Inform the patient regarding availability of the service; that only one practitioner can furnish and be paid for the service during a calendar month; of the right to stop the services at any time (effective at the end of the calendar month); and that cost sharing may apply.

++ Document in patient's medical record that consent was obtained.

• Initiation during a qualifying visit for new patients or patients not seen within 3 years;
• Provide 24/7 access for urgent needs to care team/practitioners, including providing patients/caregivers with a way to contact health care professionals in the practice to discuss urgent needs regardless of the time of day or day of week;
• Continuity of care with a designated member of the care team with whom the patient is able to schedule successive routine appointments;
• Deliver care in alternative ways to traditional office visits to best meet the patient's needs, such as home visits, and/or expanded hours;
• Overall comprehensive care management;

++ Systematic needs assessment (medical and psychosocial).

++ System-based approaches to ensure receipt of preventive services.

++ Medication reconciliation, management and oversight of self-management.

• Development, implementation, revision, and maintenance of an electronic patient-centered comprehensive care plan;

++ Care plan is available timely within and outside the billing practice as appropriate to individuals involved in the beneficiary's care, can be routinely accessed and updated by care team/practitioner, and copy of care plan to patient/caregiver.

• Coordination of care transitions between and among health care providers and settings, including referrals to other clinicians and follow-up after an emergency department visit and discharges from hospitals, skilled nursing facilities or other health care facilities as applicable;

++ Ensure timely exchange of electronic health information with other practitioners and providers to support continuity of care.

++ Ensure timely follow-up communication (direct contact, telephone, electronic) with the patient and/or caregiver after an emergency department visit and discharges from hospitals, skilled nursing facilities, or other health care facilities, within 7 calendar days of discharge, as clinically indicated.

• Ongoing communication and coordinating receipt of needed services from practitioners, home- and community-based service providers, community-based social service providers, hospitals, and skilled nursing facilities (or other health care facilities), and document communication regarding the patient's psychosocial strengths and needs, functional deficits, goals, preferences, and desired outcomes, including cultural and linguistic factors, in the patient's medical record;
• Enhanced opportunities for the beneficiary and any caregiver to communicate with the care team/practitioner regarding the beneficiary's care through the use of asynchronous non-face-to-face consultation methods other than telephone, such as secure messaging, email, internet, or patient portal, and other communication-technology based services, including remote evaluation of pre-recorded patient information and interprofessional telephone/internet/EHR referral service(s), to maintain ongoing communication with patients, as appropriate;

++ Ensure access to patient-initiated digital communications that require a clinical decision, such as virtual check-ins and digital online assessment and management and E/M visits (or e-visits).

• Analyze patient population data to identify gaps in care and offer additional interventions, as appropriate;
• Risk stratify the practice population based on defined diagnoses, claims, or other electronic data to identify and target services to patients;
• Be assessed through performance measurement of primary care quality, total cost of care, and meaningful use of Certified EHR Technology.

(2) HCPCS code GPCM2 ( Advanced primary care management services for a patient with multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient, which place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline, provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the elements included in GPCM1, as appropriate), and

(3) HCPCS code GPCM3 ( Advanced primary care management services for a patient who is a Qualified Medicare Beneficiary with multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient, which place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline, provided by clinical staff and directed by a physician or other qualified health care professional who is responsible for all primary care and serves as the continuing focal point for all needed health care services, per calendar month, with the elements included in GPCM1, as appropriate).

In section II.G. of this proposed rule, we are proposing to establish coding and make payment under the PFS for a newly defined set of APCM services as described and defined by three HCPCS codes (GPCM1, GPCM2, and GPCM3) to recognize the resource costs associated with furnishing services using an “advanced primary care approach” supported by a team-based care structure under the PFS. Delivery of care using an advanced primary care model involves restructuring of the primary care team, which includes the billing practitioner and the auxiliary personnel under their general supervision, within practices. This restructuring creates several advantages for patients, and provides more broad accessibility and alternative methods for patients to communicate with their care team/practitioner about their care outside of in-person visits (for example, virtual, asynchronous interactions, such as online chat), which can lead to more timely and efficient identification of, and responses to, health care needs (for example, practitioners can route patients to the optimal clinician and setting—to a synchronous visit, an asynchronous chat, or a direct referral to the optimal site of care). Practitioners using an advanced primary care delivery model can more easily collaborate across clinical disciplines through remote interprofessional consultations with specialists, as well as standardize condition management into evidence-based clinical workflows, which allow for closed-loop follow-up and more real-time management for patients with acute or evolving complex issues, partner on complex decisions, and personalize their patients' care plans.

Specifically, we are proposing to adopt specific coding and payment policies for APCM services for use by practitioners who are providing services under this specific model of advanced primary care, when the practitioner is the continuing focal point for all needed health care services and responsible for all primary care services.

Providing care using an advanced primary care delivery model involves resource costs associated with maintaining certain practice capabilities and continuous readiness and monitoring activities to support a team-based approach to care, where significant resources are used on virtual, asynchronous patient interactions, collaboration across clinical disciplines, and real-time management of patients with acute and complex concerns that are not fully recognized or paid for by the existing care management codes. As the delivery of primary care has evolved to embrace advanced primary care more fully, we believe that it is prudent to now adopt specific coding and payment policies to better recognize the resources involved in care management under an advanced primary care delivery model.

We are seeking to ensure that the APCM codes would fully and appropriately capture the care management and CTBS services that are characteristic of the changes in medical practice toward advanced primary care, as demonstrated in select CMS Innovation Center models. As we do for CCM and PCM services, we propose to require for APCM services that the practitioner provide an initiating visit and obtain beneficiary consent (see section II.G.2.c.(1) and II.G.2.c.(2) of this proposed rule). We are proposing to incorporate as elements of APCM services “Management of Care Transitions” and “Enhanced Communications Opportunities.” For the “Management of Care Transitions” APCM service element, we are proposing to specify timely follow-up during care transitions (see section II.G.2.c.(6) of this proposed rule). For the “Enhanced Communications Opportunities” APCM service element, we are proposing to incorporate digital access through CTBS services, such as virtual check-ins and remote evaluation of images, to maintain ongoing communication with the patient (see section II.G.2.c.(8) of this proposed rule). We are also proposing to specify for APCM services the practice-level characteristics and capabilities that we believe to be inherent to, and necessarily present when a practitioner is providing covered services using, the “advanced primary care” model. Included in the service descriptors for GPCM1, GPCM2, and GPCM3 are proposed practice-level capabilities that reflect care delivery using an advanced primary care model that focused around 24/7 access and continuity of care (see section II.G.2.c.(3) of this proposed rule), patient population-level management (see section II.G.2.c.(9) of this proposed rule), and performance measurement (see section II.G.2.c.(10) of this proposed rule). We believe these practice capabilities are indicative of, and necessary to, care delivery using the advanced primary care model.

Refer to section II.G. of this proposed rule for detailed, technical discussion regarding the proposed description, payment and utilization of these HCPCS codes as well as information about requirements for billing providers participating in ACOs.

As described in section II.G., HCPCS codes GPCM1 through GPCM3 would describe APCM services furnished per calendar month, following the initial qualifying visit (see section II.G.2.c.(1) for more on the initiating visit). Physicians and NPPs, including nurse practitioners (NPs), physician assistants (PAs), certified nurse midwives (CNMs) and clinical nurse specialists (CNSs), could bill for APCM services. As we describe in more detail in section II.G.2.c., within the code descriptors for GPCM1, GPCM2, and GPCM3, we are including the elements of the scope of service for APCM as well as the capabilities and requirements that we believe to be inherent to care delivery by the practitioner using an advanced primary care model, and necessary to fully furnish and, therefore, bill for APCM services.

We are proposing that the practitioner who bills for APCM services must intend to be responsible for the patient's primary care and serve as the continuing focal point for all needed health care services. We anticipate that most practitioners furnishing APCM services would be managing all the patient's health care services over the month and have either already been providing ongoing care for the patient or have the intention of being responsible for the patient's primary care and serving as the continuing focal point for all of the patient's health care services. As detailed in sections II.G.2.b. through II.G.2.d., this proposed coding and payment will incorporate elements of several specific, existing care management and communication technology-based services (CTBS) into a bundle of services, that reflects the essential elements of the delivery of advanced primary care, for payment under the PFS starting in 2025.

These new codes are designed to bundle the individual utilization of codes that are already included in the definition of primary care services used for purposes of assignment, specifically CCM (CPT codes 99437, 99487, 99489, 99490, 99491, and 99439 and HCPCS codes G0506 and G2058), PCM (CPT codes 99424, 99425, 99426, and 99427 and HCPCS codes G2064 and G2065), TCM (CPT codes 99495 and 99496), remote evaluation of patient videos/images (HCPCS code G2010), and virtual check-in and e-visits (HCPCS codes G2012 and G2252). These new codes also bundle IPC (CPT Codes 99446, 99447, 99448, 99449, 99451, 99452), which we are proposing to include in the definition of primary care services used for purposes of assignment in this section of the rule. Further, as proposed, this new APCM bundle represents a broader application of advanced primary care and incorporates elements included in care management and CTBS services. We believe the services billed under these codes reflect the types of services we expect primary care providers to provide in order to improve care coordination and care management and so it would be appropriate to include HCPCS codes GPCM1, GPCM2, and GPCM3 in the definition of primary care services used for purposes of assignment since these HCPCS codes bundle services furnished under CPT and HCPCS codes already included in the definition of primary care services used for purposes of assignment.

As described in section II.G, we anticipate that these codes would mostly be used by primary care specialties, such as general medicine, geriatric medicine, family medicine, internal medicine, and pediatrics, or in some instances, certain specialists functioning as primary care practitioners—for example, an OB/GYN or a cardiologist. Since primary care specialties, such as general medicine, geriatric medicine, family medicine, internal medicine, and pediatrics are primary care physicians (as defined in § 425.20) and OB/GYN or a cardiologist are two of the specialty designations (as described in § 425.402(c)) used for purposes of assignment we believe it would be appropriate to include HCPCS codes GPCM1, GPCM2, and GPCM3 in the definition of primary care services used for purposes of assignment. Inclusion of these APCM services in the definition of primary care services used for purposes of assignment would also strengthen and invest in primary care in alignment with the goals of the U.S. Department of Health and Human Services (HHS) Initiative to Strengthen Primary Care. We also believe that updating the definition of primary care services used for purposes of assignment to include the APCM bundle would increase the accuracy of assignment based on the provision of primary care.

• Cardiovascular Risk Assessment and Risk Management—

++ Cardiovascular Disease Risk Assessment HCPCS code GCDRA (Administration of a standardized, evidence-based Atherosclerotic Cardiovascular Disease (ASCVD) Risk Assessment for patients with ASCVD risk factors on the same date as an E/M visit, 5-15 minutes, not more often than every 12 months): As described in section II.G. of this proposed rule, we are proposing a new stand-alone HCPCS code, GCDRA, to identify and value the work involved in administering an ASCVD risk assessment when medically reasonable and necessary in relation to an E/M visit. Atherosclerotic Cardiovascular Disease (ASCVD) Risk Assessment refers to a review of the individual's demographic factors, modifiable risk factors for CVD, and risk enhancers for CVD.

We are proposing that the ASCVD risk assessment must be furnished by the practitioner on the same date they furnish an E/M visit, as the ASCVD risk assessment would be reasonable and necessary when used to inform the patient's diagnosis, and treatment plan established during the visit. ASCVD risk assessment is reasonable and necessary for a patient who has at least one predisposing condition to cardiovascular disease that may put them at increased risk for future ASCVD diagnosis.

++ Atherosclerotic Cardiovascular Disease Prevention Risk Management Services HCPCS code GCDRM (Atherosclerotic Cardiovascular Disease (ASCVD) risk management services with the following required elements: patient is without a current diagnosis of ASCVD, but is determined to be at medium or high risk for CVD (>15 percent in the next 10 years) as previously determined by the ASCVD risk assessment; ASCVD-Specific care plan established, implemented, revised, or monitored that addresses risk factors and risk enhancers and must incorporate shared decision-making between the practitioner and the patient; clinical staff time directed by physician or other qualified health care professional; per calendar month). As described in section II.G of this proposed rule, over the past several years, we have worked to develop payment mechanisms under the PFS to improve the accuracy of valuation and payment for the services furnished by physicians and other healthcare professionals, especially in the context of evolving changes in medical practice using evidence-based models of care, such as the Million Hearts® model. We are proposing to establish a G-code, GCDRM, for ASCVD risk management services which refers to the development, implementation, and monitoring of individualized care plans for reducing cardiovascular risk, including shared decision-making and the use of the “ABCS” of cardiovascular risk reduction, as well as counseling and monitoring to improve diet and exercise.

We believe that ASCVD risk management services include continuous care and coordination to reduce or eliminate further elevation of ASCVD risk over time, and potentially prevent the development of future cardiovascular disease diagnoses or first-time heart attacks or strokes. Physicians and Non-Physician Practitioners (NPPs) who can furnish E/M services could bill for ASCVD risk management services. We anticipate that ASCVD risk management services would ordinarily be provided by clinical staff incident to the professional services of the billing practitioner in accordance with our regulation at § 410.26. We are proposing that ASCVD risk management services would be considered a “designated care management service” under § 410.26(b)(5) and, as such, could be provided by auxiliary personnel under the general supervision of the billing practitioner.

Refer to section II.G of this proposed rule for detailed, technical discussion regarding the proposed description, payment and utilization of HCPCS codes GCDRA and GCDRM.

Because HCPCS codes GCDRA and GCDRM are proposed to be care management services similar to CCM (CPT codes 99437, 99439, 99487, 99489, 99490, and 99491) which are included in the Shared Savings Program definition of primary care services used for purposes of assignment, we believe it would be consistent and appropriate to include GCDRA and GCDRM in the definition of primary care services used for purposes of assignment. In earlier rulemaking, we finalized the inclusion of CCM CPT codes 99487, 99489, 99490, and 99491 (codes for chronic care management) in the definition of primary care services for the Shared Savings Program. Refer to the June 2015 final rule (80 FR 32746 through 32748), CY 2018 PFS final rule (82 FR 53212 through 53213), and CY 2021 PFS final rule (85 FR 84749 through 84750 and 84754). “Complex” CCM services (CPT codes 99487 and 99489) and “non-complex” CCM services (CPT codes 99490 and 99491) share a common set of service elements, including the following: (1) Initiating visit, (2) structured recording of patient information using certified electronic health record technology (EHR), (3) 24/7 access to physicians or other qualified health care professionals or clinical staff and continuity of care, (4) comprehensive care management including systematic assessment of the patient's medical, functional, and psychosocial needs, (5) comprehensive care plan including a comprehensive care plan for all health issues with particular focus on the chronic conditions being managed, and (6) management of care transitions.

Elements of care management services include: (1) an initial visit, which can be an E/M service, Annual Wellness Visit (AWV) or initial preventive physical exam (IPPE or “Welcome to Medicare”); (2) continuity of care with a designated practitioner; (3) comprehensive care management; (4) comprehensive care plan; (5) management of care transitions; and (6) care coordination. In the November 2011 final rule (76 FR 67852 through 67853), we finalized the inclusion of E/M services, the AWV, and the IPPE since those services aligns the definition of primary care services with the definition in section 5501 of the Affordable Care Act. Because care management, E/M services, the AWV, and the IPPE are all included in the definition of primary care services used for purposes of assignment, we believe GCDRA and GCDRM reflect the types of services we expect primary care providers to provide in order to improve care coordination and care management. Additionally, GCDRA and GCDRM are care and risk management services that include elements of continuous and coordinated care, which the Shared Savings Program is intended to promote.

• Interprofessional Consultation (IPC) (CPT codes 99446, 99447, 99448, 99449, 99451, 99452): In the CY 2019 PFS final rule (83 FR 59489), CMS finalized six codes:

++ 99446 ( Interprofessional telephone/internet assessment and management service provided by a consultative physician including a verbal and written report to the patient's treating/requesting physician or other qualified health care professional; 5-10 minutes of medical consultative discussion and review);

++ 99447 ( Interprofessional telephone/internet assessment and management service provided by a consultative physician including a verbal and written report to the patient's treating/requesting physician or other qualified health care professional; 11-20 minutes of medical consultative discussion and review);

++ 99448 ( Interprofessional telephone/internet assessment and management service provided by a consultative physician including a verbal and written report to the patient's treating/requesting physician or other qualified health care professional; 21-30 minutes of medical consultative discussion and review);

++ 99449 ( Interprofessional telephone/internet assessment and management service provided by a consultative physician including a verbal and written report to the patient's treating/requesting physician or other qualified health care professional; 31 minutes or more of medical consultative discussion and review);

++ 99451 ( Interprofessional telephone/internet/electronic health record assessment and management service provided by a consultative physician including a written report to the patient's treating/requesting physician or other qualified health care professional, 5 or more minutes of medical consultative time); and

++ 99452 ( Interprofessional telephone/internet/electronic health record referral service(s) provided by a treating/requesting physician or qualified health care professional, 30 minutes).

These CPT codes describe assessment and management services conducted through telephone, internet, or electronic health record consultations furnished when a patient's treating physician or other qualified healthcare professional requests the opinion and/or treatment advice of a consulting physician or qualified healthcare professional with specific specialty expertise to assist with the diagnosis and/or management of the patient's problem without the need for the patient's face-to-face, in-person contact with the consulting physician or qualified healthcare professional. We believe that payment for these interprofessional consultations performed via communications technology such as telephone or internet is consistent with our ongoing efforts to recognize and reflect medical practice trends in primary care and patient-centered care management within the PFS. Accordingly, because these CPT codes 99446, 99447, 99448, 99449, 99451, and 99452 recognize and reflect medical practice trends in primary care and patient-centered care, we believe they should be included in the definition of primary care services used for purposes of assignment.

Beginning in the CY 2012 PFS proposed rule (76 FR 42793), we recognized the changing focus in medical practice toward managing patients' chronic conditions, many of which particularly challenge the Medicare population, including heart disease, diabetes, respiratory disease, breast cancer, allergies, Alzheimer's disease, and factors associated with obesity. Current E/M coding does not adequately reflect the changes that have occurred in medical practice, and the activities and resource costs associated with the treatment of these complex patients in the primary care setting In the years since 2012, we have acknowledged the shift in medical practice away from an episodic treatment-based approach to one that involves comprehensive patient-centered care management, and have taken steps through rulemaking to better reflect that approach in payment under the PFS. In the CY 2013 PFS final rule (77 FR 68979), we established new codes to pay separately for TCM services. Next, in the CY 2015 PFS final rule (79 FR 67715), we finalized new coding and separate payment beginning in CY 2015 for CCM services provided by clinical staff. In the CY 2017 PFS final rule (81 FR 80225), we established separate payment for complex CCM services, an add-on code to the visit during which CCM is initiated to reflect the work of the billing practitioner in assessing the beneficiary and establishing the CCM care plan and established separate payment for Behavioral Health Integration (BHI) services (81 FR 80226 through 80227). As part of this shift in medical practice, and with the proliferation of team-based approaches to care that are often facilitated by electronic medical record technology, we believe that making separate payment for interprofessional consultations undertaken for the benefit of treating a patient would contribute to payment accuracy for primary care and care management services. Refer to the CY 2019 PFS Final rule (83 FR 59489) for detailed, technical discussion regarding the description, payment and utilization of these CPT codes.

Since the services associated with CPT codes 99446, 99447, 99448, 99449, 99451, and 99452 include TCM, CCM, and BHI services, which are included in our definition of primary care services and are included in the proposed APCM bundle that we propose to be included in the definition of primary care services used for purposes of assignment, we believe that the services associated with CPT codes 99446, 99447, 99448, 99449, 99451, and 99452 should be included in the definition of primary care services for purposes of assignment. We additionally believe the services billed under this code reflect the types of services we expect primary care providers to provide in order to improve care coordination and care management. These IPC services were also designed to reimburse for comprehensive patient-centered care management and primary care, which the Shared Savings Program is intended to promote.

• Direct Care Caregiver Training Services (HCPCS codes GCTD1, GCTD2, and GCTD3 ): GCTD1 ( Caregiver training in direct care strategies and techniques to support care for patients with an ongoing condition or illness and to reduce complications (including, but not limited to, techniques to prevent decubitus ulcer formation, wound dressing changes, and infection control) (without the patient present), face-to-face; initial 30 minutes)), GCTD2 ( Caregiver training in direct care strategies and techniques to support care for patients with an ongoing condition or illness and to reduce complications (including, but not limited to, techniques to prevent decubitus ulcer formation, wound dressing changes, and infection control) (without the patient present), face-to-face; each additional 15 minutes (List separately in addition to code for primary service) (Use GCTD2 in conjunction with GCTD1)), and GCTD3 ( Group caregiver training in direct care strategies and techniques to support care for patients with an ongoing condition or illness and to reduce complications including, but not limited to, techniques to prevent decubitus ulcer formation, wound dressing changes, and infection control) (without the patient present), face-to-face with multiple sets of caregivers). In section II.E. of this proposed rule, we are proposing to establish new coding and payment for caregiver training services (CTS) for direct care services and supports. The topics of training could include, but would not be limited to, techniques to prevent decubitus ulcer formation, wound dressing changes, and infection control. Refer to section II.E. of this proposed rule for detailed, technical discussion regarding the proposed description, payment, and utilization of this HCPCS code.

Unlike other caregiver training codes that are currently paid under the PFS, the caregiver training codes for direct care services and support focus on specific clinical skills aimed at the caregiver effectuating hands-on treatment, reducing complications, and monitoring the patient. Like other codes describing caregiver training services, these proposed new codes would reflect the training furnished to a caregiver, in tandem with the diagnostic and treatment services furnished directly to the patient, in strategies and specific activities to assist the patient to carry out the treatment plan. We believe that CTS may be reasonable and necessary when they are integral to a patient's overall treatment and furnished after the treatment plan is established. The CTS themselves need to be congruent with the treatment plan and designed to effectuate the desired patient outcomes. Direct care training for caregivers of Medicare beneficiaries should be directly relevant to the person-centered treatment plan for the patient in order for the services to be considered reasonable and necessary under the Medicare program. We believe that since CTS may be integral to a patient's overall treatment and furnished after the treatment plan is established, these services should be included in the definition of primary care services for purposes of beneficiary assignment in support of the Shared Savings Program's goal to promote coordinated, high quality care to an ACO's assigned beneficiaries. In the CY 2024 PFS final rule (88 FR 79168 through 79169), we finalized the inclusion of other caregiver training services (CPT codes 96202, 96203, 97550, 97551, and 97552) in the definition of primary care services used for purposes of assignment in the Shared Savings Program. These new caregiver training services codes (HCPCS GCTD1, GCTD2, and GCTD3) are similar to the caregiver training services currently included in the Shared Savings Program definition of primary care services in that these codes allow treating practitioners to report the training furnished to a caregiver, in tandem with the diagnostic and treatment services furnished directly to the patient, in strategies and specific activities to assist the patient to carry out the treatment plan. We also believe the services billed under these codes reflect the types of services we expect primary care providers to provide in order to improve care coordination and care management.

• Individual Behavior Management/Modification Caregiver Training Services (HCPCS codes GCTB1 and GCTB2): GCTB1 ( Caregiver training in behavior management/modification for caregiver(s) of a patient with a mental or physical health diagnosis, administered by physician or other qualified health care professional (without the patient present), face-to-face; initial 30 minutes) and GCTB2 ( Caregiver training in behavior management/modification for caregiver(s) of a patient with a mental or physical health diagnosis, administered by physician or other qualified health care professional (without the patient present), face-to-face; each additional 15 minutes (List separately in addition to code for primary service) (Use GCTB2 in conjunction with GCTB1)). In section II.E of this proposed rule, we are proposing to establish new coding and payment for caregiver behavior management and modification training that could be furnished to the caregiver(s) of an individual patient. Behavior management/modification training for caregivers of Medicare beneficiaries should be directly relevant to the person-centered treatment plan for the patient in order for the services to be considered reasonable and necessary under the Medicare program. Each training activity should be clearly identified and documented in the treatment plan. All other policies and procedures surrounding CPT 96202 and 96203 will also apply to these services (88 FR 78914-78920). Refer to section II.E. of this proposed rule for detailed, technical discussion regarding the proposed description, payment and utilization of this HCPCS code.

We believe that, since CTS may be reasonable and necessary when they are integral to a patient's overall treatment and furnished after the treatment plan is established especially in the case of medical treatment scenarios where assistance by the caregiver receiving the CTS is necessary to ensure a successful treatment outcome for the patient, (for example when the patient cannot follow through with the treatment plan for themselves), these services should be included in the definition of primary care services for purposes of beneficiary assignment in support of the Shared Savings Program's goal to promote coordinated, high quality care to an ACO's assigned beneficiaries. In the CY 2024 PFS final rule (88 FR 79168 through 79169), we finalized the inclusion of other caregiver training services (CPT codes 96202, 96203, 97550, 97551, and 97552) in the definition of primary care services used for purposes of assignment in the Shared Savings Program. These new caregiver training services codes (HCPCS codes GCTD1, GCTD2, GCTD3, GCTB1, and GCTB2) are similar to the caregiver training services currently included in the Shared Savings Program definition of primary care services in that these codes allow treating practitioners to report the training furnished to a caregiver, in tandem with the diagnostic and treatment services furnished directly to the patient, in strategies and specific activities to assist the patient to carry out the treatment plan, which is integral to care coordination. We also believe the services billed under these codes reflect the types of services we expect primary care providers to provide in order to improve care coordination and care management.

As part of this revised definition of primary care services used for assigning beneficiaries under § 425.402, we propose to incorporate a provision in § 425.400(c)(1)(ix)(C), specifying that the primary care service codes for purposes of assigning beneficiaries include a CPT code identified by CMS that directly replaces a CPT code specified in § 425.400(c)(1)(ix)(A) or a HCPCS code specified in § 425.400(c)(1)(ix)(B), when the assignment window or expanded assignment window (as defined in § 425.20) for a benchmark or performance year includes any day on or after the effective date of the replacement code for payment purposes under FFS Medicare.

We seek comment on these proposed changes to the definition of primary care services used for assigning beneficiaries under § 425.400(c)(1)(ix) to Shared Savings Program ACOs for the performance year starting on January 1, 2025, and subsequent performance years. We also welcome comments on any other existing HCPCS or CPT codes and new HCPCS or CPT codes proposed elsewhere in this proposed rule that we should consider adding to the definition of primary care services for purposes of assignment in future rulemaking.

b. Proposed Revisions to Criteria for ACO Models To Waive Shared Savings Program Statutory Requirements Giving Precedence for Assignment Based on Beneficiary Voluntary Alignment

(1) Background

Section 50331 of the Bipartisan Budget Act of 2018 amended section 1899(c) of the Act to add a new paragraph (2)(B) that requires the Secretary, for performance year 2018 and each subsequent performance year, to permit a Medicare FFS beneficiary to voluntarily identify an ACO professional as the primary care provider of the beneficiary for purposes of assigning such beneficiary to an ACO. A voluntary identification by a Medicare FFS beneficiary under this provision supersedes any claims-based assignment. In earlier rulemaking (81 FR 80501 through 80510 and 83 FR 59959 through 59964) CMS finalized modifications to the Shared Savings Program regulations at § 425.402(e) to implement the statutory requirements governing voluntary alignment.

In the November 2018 final rule (83 FR 59959 through 59964), we finalized changes to the beneficiary voluntary alignment policies (refer to § 425.402(e)) to revise the requirements previously established for the voluntary alignment process. We explained that it could be appropriate, in limited circumstances, to align a beneficiary to an entity participating in certain specialty and disease-specific CMS Innovation Center models to test a new system of payment and service delivery that CMS believes would lead to better health outcomes for Medicare beneficiaries while lowering costs to Medicare Parts A and B. Additionally, we explained that it could be difficult for the CMS Innovation Center to conduct a viable test of a specialty or disease-specific model, if we were to require that beneficiaries who have previously designated an ACO professional as their primary clinician remain assigned to the Shared Savings Program ACO under all circumstances. We applied this exception for the Comprehensive ESRD Care (CEC) model, which assigned beneficiaries to entities participating in the model through the beneficiaries' first treatment at a participating dialysis facility.

Currently, under § 425.402(e)(2)(ii)(D), we would not assign a beneficiary who has voluntarily identified a Shared Savings Program ACO professional to a Shared Savings Program ACO when the beneficiary is also eligible for claims-based assignment to an entity participating in a model tested or expanded under section 1115A of the Act under which claims-based assignment is based solely on claims for services other than primary care services and for which there has been a determination by the Secretary that a waiver under section 1115A(d)(1) of the Act of the requirement in section 1899(c)(2)(B) of the Act is necessary solely for purposes of testing the model.

(2) Proposed Revisions

Since finalization of this limited exception to the Shared Savings Program's voluntary alignment policy, disease-specific CMS Innovation Center models have been developed that use claims for both primary care services and services other than primary care in determining claims-based assignment to entities participating in these models. We believe it would be appropriate to propose to broaden this limited exception and allow a voluntarily aligned Shared Savings Program beneficiary to be claims-based assigned to an entity participating in a disease- or condition-specific CMS Innovation Center model when that model uses claims-based assignment that is based on primary care and/or other services. Disease- or condition-specific CMS Innovation Center models are designed to support condition management, coordination, and services for patients that have a specific disease or condition that often requires coordination of care across specialties and settings. For example, the CMS Innovation Center has tested disease- and condition-based episode payment models, such as those focused on oncology and kidney disease. Doing so would help beneficiaries with certain diseases or conditions benefit from the focused attention and care coordination related to the disease or condition that an entity participating in such a model could provide. We would identify models for which the exception would apply in our Shared Savings and Losses and Assignment Methodology and Quality Performance Specifications document, which is located on the Shared Savings Program website, https://www.cms.gov/medicare/payment/fee-for-service-providers/shared-savings-program-ssp-acos . This proposed expanded exception would be applicable to beneficiaries assigned to entities participating in CMS Innovation Center models under which assignment is based solely on (1) claims for primary care and/or other services related to treatment of one or more specific diseases or conditions targeted by the model, or (2) claims for services other than primary care services, when the Secretary has determined that a waiver is necessary solely for purposes of testing the model.

An example of a CMS Innovation Center model whose assigned beneficiaries may be impacted by the proposed expanded exception is the Kidney Care Choices (KCC) model, which is designed to help health care providers reduce the cost and improve the quality of care for patients with late-stage chronic kidney disease and ESRD. The KCC model builds on the previous CEC model by adding strong financial incentives for health care providers to manage the care for Medicare beneficiaries with chronic kidney disease (CKD) stage 4 and ESRD, to delay the onset of dialysis and to incentivize kidney transplantation. Under the CEC model, the CMS Innovation Center worked with groups of health care providers, dialysis facilities, and other suppliers involved in the care of ESRD beneficiaries to improve the coordination and quality of care that these individuals received. We determined that an ESRD beneficiary, who was otherwise eligible for assignment to an entity participating in the CEC model, could benefit from the focused attention on and increased care coordination for their ESRD available under the CEC model. As described above, we created a narrow exception to the general policy that a beneficiary who had voluntarily aligned to a Shared Savings Program ACO professional would supersede their alignment to a CMS Innovation Center model. Specifically, we did not assign a beneficiary to the ACO when the beneficiary was also eligible for alignment to an entity participating in the CEC model.

KCC is more complex than CEC and is designed to capture multiple care relationships and uses a mix of E/M codes for alignment of beneficiaries with CKD and managing clinician Monthly Capitation Payments for aligning ESRD beneficiaries. The existing exception is not applicable to KCC in part because claims for primary care and other services related to the treatment of one or more specific diseases or conditions targeted by the model (chronic kidney disease (CKD) stage 4 and ESRD) are considered as part of the model's beneficiary alignment methodology, which takes into consideration where a beneficiary receives the majority of their kidney care as well as the beneficiary's diagnosis of CKD stages 4 or ESRD receiving maintenance dialysis. KCC's alignment methodology could align beneficiaries receiving primary care services that are also considered for Shared Savings Program assignment if furnished and billed under one of the HCPCS/CPT codes included in § 425.400(c) by ACO professionals who are primary care physicians, physicians with one of the primary specialty designations in § 425.402(c), NPs, PAs, and/or CNSs. We note that outpatient/office E/M services are included in § 425.400(c) and that nephrology is one of the primary specialty designations under § 425.402(c) so we anticipate that, if this proposal is finalized, most, if not all, beneficiaries who voluntarily align to a physician that participates in a Shared Savings Program ACO and meet the KCC alignment criteria would be claims-based align to the KCC model, assuming there is a determination by the Secretary that waiver of the requirement in section 1899(c)(2)(B) of the Act is necessary solely for purposes of testing the model.

We propose expanding upon current Shared Savings Program regulations to broaden the existing exception to the program's voluntary alignment policy, which would allow the exception to apply to beneficiaries assigned to entities in a CMS Innovation Center model under which claims-based assignment is based solely on (1) claims for primary care and/or other services related to treatment of one or more specific diseases or conditions targeted by the model, or (2) claims for services other than primary care services, and for which there has been a determination by the Secretary that waiver of the requirement in section 1899(c)(2)(B) of the Act is necessary for purposes of testing the model. Under the proposed revisions, if a beneficiary voluntarily aligns to a Shared Savings Program ACO under § 425.402(e), we would not assign the beneficiary to that Shared Savings Program ACO when the beneficiary is also eligible for claims-based assignment to an entity participating in a model tested or expanded under section 1115A of the Act under which claims-based assignment is based solely on (1) claims for primary care and/or other services related to treatment of one or more specific diseases or conditions targeted by the model or (2) claims for services other than primary care service, and for which there has been a determination by the Secretary that waiver of the requirement in section 1899(c)(2)(B) of the Act is necessary for purposes of testing the model. We would not supersede voluntary alignment for CMS Innovation Center models that are not designed to target a specific disease or condition, such as ACO REACH. While ACO REACH contains design features for organizations serving high needs beneficiaries, it is designed more broadly, and not for beneficiaries with a specific disease or condition. Such models do not target a specific disease or condition. Therefore, a beneficiary's claims-based assignment to an entity participating in such a model would not supersede their voluntary alignment to a Shared Savings Program ACO under our proposal.

For example, under the KCC model, alignment is based on where a beneficiary receives the majority of their nephrology services and/or dialysis management services. Claims for those kidney care services could include claims for services that, under the Shared Savings Program's claims-based assignment policies, would lead a beneficiary to be assigned to a Shared Savings Program ACO. Since under the KCC model, claims-based assignment is based solely on claims for primary care and/or other services (kidney care services) related to the treatment of one or more specific diseases or conditions targeted by the model (chronic kidney disease (CKD) stage 4 and ESRD), our proposed exception would apply and a beneficiary who voluntarily aligned to a Shared Savings Program ACO and who received kidney care services from an entity participating in the KCC model would nonetheless be claims-based assigned to the KCC model, if there is a determination by the Secretary that waiver of the requirement in section 1899(c)(2)(B) of the Act is necessary solely for purposes of testing the KCC model. This proposed expansion of the voluntary alignment exception would support assignment of beneficiaries to entities participating in CMS Innovation Center models, which would reduce barriers for the CMS Innovation Center to conduct viable tests of disease-or condition-specific models and thereby improve access to high-quality, value-based specialty care, such as that provided by an entity participating in a model focused on diabetes care or care provided by specific specialists, such as cardiologists or gastroenterologists.

This proposal would also support CMS's goals of improving patient care, lowering costs, and better aligning payment systems to promote patient-centered practices through accountable and value-based care. We believe that specific subpopulations of Medicare beneficiaries who are otherwise eligible for assignment to an entity participating in a disease or condition-specific CMS Innovation Center model, but who may not be captured by § 425.402(e)(2)(ii)(D) because their models consider primary care services for purposes of assignment, could benefit from the focused attention and increased care coordination offered by an entity participating in a disease or condition-specific model. Application of this exception would require a determination from the Secretary to waive the voluntary alignment provision.

Under this proposal, if a beneficiary designated an ACO professional participating in a Shared Savings Program ACO as the physician or practitioner they consider responsible for coordinating their overall care (that is, their primary clinician), but the beneficiary is also eligible for assignment to an entity participating in a model tested or expanded under section 1115A of the Act under which claims-based assignment is based solely on (1) claims for primary care and/or other services related to treatment of one or more specific diseases or conditions targeted by the model, or (2) claims for services other than primary care services, and for which there has been a determination that a waiver of the requirement in section 1899(c)(2)(B) of the Act is necessary solely for purposes of testing the model, the CMS Innovation Center or its designee would notify the beneficiary of their assignment to an entity participating in the model. Additionally, although such a beneficiary may still voluntarily identify an ACO professional participating in a Shared Savings Program ACO as their primary clinician and seek care from any clinician, the beneficiary would not be assigned to a Shared Savings Program ACO even if the designated primary clinician is an ACO professional in a Shared Savings Program ACO.

For PY 2024, there are approximately 152,000 beneficiaries with a primary clinician selection who is a Shared Savings Program ACO professional as defined at § 425.20, and approximately 83,000 are voluntarily aligned to a Shared Savings Program ACO after meeting all the assignment eligibility criteria as described at § 425.401(a). Overall, this represents an exceedingly small share of the overall Shared Savings Program assigned beneficiary population, currently 10.8 million ⁴⁶⁷ beneficiaries. Additionally, simulating our proposed § 425.402(e)(2)(ii)(D) using PY 2024 data, less than 1 percent (703) of beneficiaries who are voluntarily aligned to a Shared Savings Program ACO would instead be claims-based assigned to an entity participating in a CMS Innovation Center model.

The benefit of allowing beneficiaries who voluntarily align to a Shared Savings Program ACO to be claims-based assigned to an entity participating in a CMS Innovation Center tailored to the needs of their specific disease or condition far outweighs any cost to the Shared Savings Program. The impact of assigning these beneficiaries to a CMS Innovation Center model notwithstanding their voluntary designation would be minimal because so few beneficiaries would be impacted by this proposed expansion of the exception (for PY 2024, less than 1 percent of all beneficiaries who voluntarily align to a Shared Savings Program ACO). As explained earlier in this section, this proposal would enable us to better test CMS Innovation Center models and ultimately improve health outcomes for Medicare beneficiaries with the specific diseases and conditions targeted by CMS Innovation Center models. We also recognize the importance of continuing to allow beneficiaries to voluntarily identify an ACO professional as their primary clinician for purposes of assignment to a Shared Savings Program ACO, and we reiterate that, based on PY 2024 data, this proposal would impact very few beneficiaries who voluntarily align to Shared Savings Program ACOs (less than .01 percent of all such beneficiaries). Beneficiaries who voluntarily align to a Shared Savings Program ACO but are, pursuant to our proposal, ultimately claims-based assigned to an entity participating in a CMS Innovation Center model would be notified of this in accordance with the CMS Innovation Center model's participation agreement. We propose to apply these modifications to our policies under the Shared Savings Program regarding voluntary alignment beginning for performance year 2025, and subsequent performance years. We propose to incorporate these new requirements into new regulations at § 425.402(e)(2)(iii). We solicit comments on this proposal.

Accordingly, since the new proposed provisions § 425.402(e)(2)(iii) will supersede the existing provisions at § 425.402(e)(2)(ii) for performance year 2025 and subsequent performance years, we propose to revise the introductory text at § 425.402(e)(2)(ii) to designate that provision's applicability for performance years starting on January 1, 2019, through 2024.

4. Quality Performance Standard & Other Reporting Requirements

a. Background

Section 1899(b)(3)(C) of the Act states that the Secretary shall establish quality performance standards to assess the quality of care furnished by ACOs and seek to improve the quality of care furnished by ACOs over time by specifying higher standards, new measures, or both for purposes of assessing such quality of care. As we stated in the November 2011 final rule establishing the Shared Savings Program (76 FR 67872), our principal goal in selecting quality measures for ACOs has been to identify measures of success in the delivery of high-quality health care at the individual and population levels. In the November 2011 final rule, we established a quality measure set spanning four domains: patient experience of care and wherever practicable, caregiver experience of care, care coordination/patient safety, preventative health, and at-risk population (76 FR 67872 through 67891). We have subsequently updated the measures that comprise the quality performance measure set for the Shared Savings Program through rulemaking in the CY 2015, 2016, 2017, 2019, 2023, and 2024 PFS final rules (79 FR 67907 through 67921, 80 FR 71263 through 71268, 81 FR 80484 through 80489, 83 FR 59708 through 59715, 87 FR 69860 through 69863, and 88 FR 79112 through 79114, respectively).

b. Proposal to Require Shared Savings Program ACOs to Report the Alternative Payment Model (APM) Performance Pathway (APP) Plus Quality Measure Set

(1) Background

In the CY 2021 PFS final rule, we finalized modifications to the Shared Savings Program quality reporting requirements and quality performance standard for performance year 2021 and subsequent performance years (85 FR 84720 through 84743). For performance year 2021 and subsequent years, ACOs are required to report quality data via the APP codified at § 414.1367. Pursuant to policies finalized under the CY 2022 and CY 2023 PFS (86 FR 65685; 87 FR 69858), to meet the quality performance standard under the Shared Savings Program through performance year 2024, ACOs must report the ten CMS Web Interface measures or the three electronic clinical quality measures (eCQMs)/Merit-based Incentive Payment System (MIPS) clinical quality measures (CQMs), and administer the Consumer Assessment of Healthcare Providers and Systems (CAHPS) for MIPS survey. In performance year 2025 and subsequent performance years, ACOs must report the three eCQMs/MIPS CQMs and administer the CAHPS for MIPS survey. In the CY 2024 PFS final rule, we established the Medicare Clinical Quality Measures for Accountable Care Organizations Participating in the Medicare Shared Savings Program (Medicare CQMs) as a new collection type for Shared Savings Program ACOs reporting on the Medicare CQMs within the APP quality measure set for performance year 2024 and subsequent performance years (88 FR 79107). Shared Savings Program ACOs have the option to report on Medicare CQMs, which are reported on an ACO's eligible Medicare fee-for-service beneficiaries, instead of the ACO's all payer/all patient population. Medicare CQMs are aligned with MIPS standards for data completeness, measure benchmarking, and scoring (88 FR 79099 and 88 FR 79108). In the CY 2024 PFS final rule, we stated that Medicare CQMs would serve as a transition collection type to help some ACOs build the infrastructure, skills, knowledge, and expertise necessary to report all payer/all patient eCQMs/MIPS CQMs and support ACOs in the transition to digital quality measure reporting (88 FR 79097 through 79098).

Since the CY 2021 PFS final rule was issued, ACOs and other interested parties have continued to express concerns about requiring ACOs to report all payer/all patient eCQMs/MIPS CQMs due to the cost of purchasing and implementing a system wide infrastructure to aggregate data from multiple ACO participant taxpayer identification numbers (TINs) and varying electronic health record (EHR) systems (86 FR 65257). In the CY 2022 PFS final rule, commenters supported our acknowledgement of the complexity of the transition to all payer/all patient eCQMs/MIPS CQMs (86 FR 65259). In public comments on the CY 2023 PFS proposed rule, some commenters expressed multiple concerns regarding the requirement to report all payer/all patient eCQMs/MIPS CQMs beginning in performance year 2025, such as issues related to meeting all payer data requirements, data completeness requirements, data aggregation and deduplication issues, and interoperability issues among different EHRs (87 FR 69837).

ACOs face continued difficulties in aggregating data on the three all payer/all patient eCQMs/MIPS CQMs that are part of the existing APP quality measure set. The Shared Savings Program continues to receive feedback from ACOs and other stakeholders about the difficulties with reporting on the three all payer/all patient eCQMs/MIPS CQMs and meeting data management requirements given their muti-practice/multi EHR structure. Additionally, we continue to receive feedback on the challenges of aggregating data due to the health information technology (IT) infrastructure in use by ACOs and the current state of interoperability. Building on our goal to provide technical support to ACOs and help ACOs build the skills necessary to aggregate and match patient data to report all payer/all patient eCQMs/MIPS CQMs, in December 2022, we hosted a webinar to support ACOs in the transition to reporting all payer/all patient eCQMs/MIPS CQMs and released a guidance document on the topic. Resources from the “Reporting MIPS CQMs and eCQMs in the APM Performance Pathway” webinar are available at https://youtu.be/LDrpoGnnRQs . The guidance document, entitled “Medicare Shared Savings Program: Reporting MIPS CQMs and eCQMs in the Alternative Payment Model Performance Pathway (APP)” is available in the Quality Payment Program Resource Library at https://qpp-cm-prod-content.s3.amazonaws.com/uploads/2179/APP%20Guidance%20Document%20for%20ACOs.pdf . Over the past 2 years, we have learned that there are complexities and hurdles concerning ACOs adopting the all payer/all patient collection types; as a result, the widespread adoption of the all payer/all patient collection types require further time and support. For example, our internal data indicate that in performance year 2021, 12 out of 475 ACOs reported eCQMs/MIPS CQMs under the APP, while 37 out of 482 ACOs reported eCQMs/MIPS CQMs in performance year 2022. Submission data for performance year 2023 indicate that 73 out of 456 ACOs reported eCQMs/MIPS CQMs under the APP. Further, we have come to understand that additional maturation processes are needed to support large, complex organizations like ACOs that participate in the Shared Savings Program to fully and equitably participate in the all payer/all patient collection types.

CMS' goal, as stated in the CY 2024 PFS final rule, is to support ACOs in the adoption of all payer/all patient measures (88 FR 79098). In that rule, we described our intention to monitor the reporting of quality data utilizing the Medicare CQM collection type, which would include assessing if any Medicare CQMs qualify as topped out as described at § 414.1380(b)(1)(iv) (88 FR 79098). We also noted that, “[s]eparately, we may specify higher standards, new measures, or both—up to and including proposing to sunset the Medicare CQM collection type in future rulemaking—to ensure that Medicare CQMs conform to the intent of section 1899(b)(3)(C) of the Act and the priorities established in the CMS National Quality Strategy” (88 FR 79098).

Under the goals of the CMS National Quality Strategy to improve the quality and safety of healthcare for everyone, CMS is implementing a building-block approach and aligning the measures used to establish the Shared Savings Program quality performance standard with the Universal Foundation of quality measures and streamlining quality measures across CMS quality programs for measuring primary care clinician performance in the adult and pediatric populations. In the CY 2024 PFS proposed rule, we stated that “we intend to propose future policies aligning the APP measure set for Shared Savings Program ACOs with the quality measures under the `Universal Foundation' beginning in performance year 2025” (88 FR 52423). A few commenters were supportive of aligning the APP quality measure set with the Universal Foundation measures, while other commenters were opposed. Several commenters urged CMS to first test measures before making them required and scored measures for ACOs. Commenters were concerned about balancing the alignment of the Universal Foundation measures with efforts to reduce administrative burden, potential growth in the number of measures ACOs would have to report, and implementing multiple major changes to the APP quality measure set in performance year 2025. In the CY 2024 PFS final rule, we stated that we will take the comments under consideration in future rulemaking, as we evaluate the impact of aligning the APP quality measure set with the Universal Foundation measures (88 FR 79114).

(2) Proposed Revisions

(a) Proposal To Require Shared Savings Program ACOs To Report the APP Plus Quality Measure Set

To further advance Medicare's overall value-based care strategy and maintain alignment within and across CMS' quality programs, in section IV.A.4.c.(2) of this proposed rule, we are proposing to create the APP Plus quality measure set to align with the Adult Universal Foundation measures. Out of the ten Adult Universal Foundation measures, five of the measures are already in the APP quality measure set for performance year 2025 under policies finalized in the CY 2024 PFS final rule (88 FR 79112 through 79113). There is one measure—Clinician and Clinician Group Risk-standardized Hospital Admission Rates for Patients with Multiple Chronic Conditions (Measure # 484)—in the APP quality measure set that is not an Adult Universal Foundation measure, resulting in a total of six measures that are in the APP quality measure set.

Under the proposed approach, the APP Plus quality measure set would incrementally grow to comprise of eleven measures, consisting of the six measures in the existing APP quality measure set and five newly proposed measures from the Adult Universal Foundation measure set that would be incrementally incorporated into the APP Plus quality measure set over performance years 2025 through 2028. The proposed new measures and the timeline for incorporating the measures into the APP Plus quality measure set are described in section IV.A.4.c.(3) of this proposed rule and below. The proposal in section IV.A.4.c.(2) is to make the APP Plus quality measure set an optional measure set for APP reporters. For performance year 2025 and subsequent performance years, we are proposing to require Shared Savings Program ACOs to report the APP Plus quality measure set as proposed in section III.G.4.b.(2)(a) of this proposed rule. Consequently, the APP quality measure set would no longer be available for reporting by Shared Savings Program ACOs beginning in performance year 2025. Our proposal would align the quality measures that Shared Savings Program ACOs would be required to report with the quality measures under the Adult Universal Foundation measure set incrementally beginning in performance year 2025.

Creating alignment with the Adult Universal Foundation would better align the quality measures reported by Shared Savings Program ACOs with the Medicaid Core Sets and the Marketplace Quality Rating System, which have previously adopted the quality measures in the Universal Foundation. As discussed in section IV.A.4.c.(2) of this proposed rule, alignment of quality measures across CMS programs allows practitioners to better focus their quality efforts, reduce administrative burden, and drive digital transformation and stratification of a focused quality measure set to assess impact on disparities. Our proposed alignment with the Adult Universal Foundation would also better align the quality measures reported by Shared Savings Program ACOs with the Value in Primary Care MIPS Value Pathway (MVP), which contains the same Universal Foundation measures. This may create a smoother transition for clinicians from MIPS to the Shared Savings Program. Alignment would allow clinicians to leverage their familiarity and experience with the Adult Universal Foundation quality measures among primary care clinicians participating in this MVP as they transition to reporting the APP Plus quality measure set in the Shared Savings Program. Experience and familiarity with the same quality measures, redesigned care processes, and quality improvement activities that are commonplace in ACOs would streamline the pathway for clinicians to join ACOs in the future and is consistent with our goal to have all beneficiaries in an accountable care relationship by 2030.

Section 1899(b)(3)(C) of the Act requires CMS to seek to improve the quality of care furnished by ACOs over time by specifying higher standards, new measures, or both for purposes of assessing such quality of care. In the November 2011 final rule, we finalized 33 quality measures for use in establishing the quality performance standard measure set for ACOs: including 22 measures that were actively reported by ACOs via the Group Practice Reporting Option (GPRO) Web Interface (76 FR 67889). As we stated in the November 2011 final rule establishing the Shared Savings Program, our principal goal in selecting quality measures for ACOs has been to identify measures of success in the delivery of high-quality health care at the individual and population levels, with a focus on outcomes (76 FR 67872). As we sought to improve the quality of care furnished by ACOs over time, we have subsequently updated this measure set through rulemaking in the CY 2015, 2016, 2017, 2019, and 2023 PFS final rules (79 FR 67907 through 67921, 80 FR 71263 through 71268, 81 FR 80484 through 80489, 83 FR 59707 through 59715, and 87 FR 69860 through 69763, respectively). We have also sometimes increased the number of measures reported by ACOs through rulemaking. For example, in the CY 2016 PFS final rule, we increased the Shared Savings Program quality measure set from 33 total measures to 34 total measures (80 FR 71265). In the CY 2016 PFS final rule, we noted that since the November 2011 Shared Savings Program final rule, we have continued to review the quality measures used for the Shared Savings Program to ensure that they are up to date with current clinical practice and aligned with other CMS quality reporting programs (80 FR 71264). Also, through rulemaking, we sometimes reduced the number of measures reported by ACOs. For example, in the CY 2019 PFS final rule, we finalized policies which reduced the Shared Savings Program quality performance measure set to 23 measures in PY 2019 (83 FR 59715). In developing our proposals in the CY 2019 PFS final rule, we stated that we considered the agency's efforts to streamline quality measures, reduce regulatory burden, and promote innovation as part of broader CMS initiatives (83 FR 59711). In the CY 2021 PFS final rule, we again reduced the total number of measures that ACOs must report (85 FR 84733). Specifically, through the adoption of the APP quality measure set, we reduced the total number of measures from 23 to either 6 or 13 measures (depending on the ACO's chosen reporting option) for PY 2021 (85 FR 84723).

Our proposal to adopt the APP Plus quality measure set for ACOs that participate in the Shared Savings Program would increase the number of measures reported by ACOs that currently report the eCQM/MIPS CQM measure set from three measures in performance year 2024 to five measures in performance year 2025. For ACOs that reported the CMS Web Interface measures, our proposal to adopt the APP Plus quality measure set would decrease the number of measures reported from ten measures in performance year 2024 to eight measures in performance year 2025. While we acknowledge that the increase in the number of measures for ACOs that currently report the eCQM/MIPS CQM measure set may be an increased burden for those ACOs, we are using a phased-in approach to expand the APP Plus quality measure set between performance years 2025 and 2028, which should help to minimize the impact of increased burden associated with reporting additional measures. The option for ACOs to report Medicare CQMs, which are MIPS CQMs that are reported on an ACO's fee-for-service population, may also alleviate the reporting burden for ACOs that report Medicare CQMs by focusing an ACO's patient matching and data aggregation efforts only on an ACO's eligible Medicare fee-for-service population. Additionally, we believe that the benefits of scoring an increased number of measures may offset the increased burden that some ACOs may face in adopting the additional measures. For example, as the number of measures in the measure set increases, the individual weight of each measure on the ACO's quality performance score decreases. Each measure in a six-measure set would account for roughly 16.67 percent of an ACO's MIPS Quality performance category score while each measure in an eight-measure set would account for 12.5 percent of an ACO's MIPS Quality performance category score. The scoring of more measures, in concert with the scoring policies proposed in sections IV.A.4.f.(1)(b)(iii) and IV.A.4.f.(1)(c)(i) of this proposed rule, may result in improved quality performance scores for the ACOs as each individual measure carries less weight.

The proposed APP Plus quality measure sets for Shared Savings Program ACOs for performance year 2025, performance years 2026 and 2027, and performance year 2028 and subsequent performance years are displayed in Tables 34, 35, and 36, respectively. Under our proposal, there would be eight measures (five eCQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in the APP Plus quality measure set for Shared Savings Program ACOs in performance year 2025 (Table 34), nine measures (six eCQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in performance years 2026 and 2027 (Table 35), and eleven measures (eight eCQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in performance years 2028 and subsequent performance years (Table 36). We intend to update the APP Plus quality measure set as new measures are added to or removed from the Adult Universal Foundation measure set in the future.

(b) Proposed Collection Types Available for Shared Savings Program ACOs Reporting the APP Plus Quality Measure Set

We are proposing to streamline the collection types available for Shared Savings Program ACOs reporting the APP Plus quality measure set to the eCQM and Medicare CQM collection types for performance year 2025 and subsequent performance years. We believe that our proposal to establish the APP Plus quality measure set to align with the Adult Universal Foundation measure set should also aim to prioritize the eCQM collection type—the gold standard collection type that underlies the Digital Quality Measurement (dQM) Strategic Roadmap (available at https://ecqi.healthit.gov/sites/default/files/CMSdQMStrategicRoadmap_032822.pdf )—and use Medicare CQMs as the transition step on our building-block approach for ACOs' progress to adopt digital quality measurement. We are also seeking to reduce reporting burden on ACOs by using a phased-in approach to expand the APP Plus quality measure set between performance years 2025 and 2028. We will also continue to provide the Medicare CQM reporting option as ACOs increase their experience and overcome their challenges with reporting all payer/all patient measures. As discussed more fully below, we are proposing not to include the MIPS CQM collection type for Shared Savings Program ACOs reporting the APP Plus quality measure set to focus ACOs' efforts on the implementation of the APP Plus quality measure set, while continuing to encourage the adoption of eCQMs. We believe that our proposed approach would recognize the investments ACOs have made to report eCQMs and their benefits (that is, more efficient data collection, real time provider feedback, and less burden through the use of digital data) and allow ACOs that have invested in eCQMs to continue on that track and align with long term goals of digital quality measurement.

Since Medicare CQMs are MIPS CQMs that are reported on an ACO's eligible Medicare fee-for-service population, ACOs that have invested in the infrastructure to report MIPS CQMs would be able to report Medicare CQMs on a subset of their all payer/all patient population. Furthermore, as noted in the CY 2024 PFS final rule, Medicare CQMs address ACO concerns related to the difficulty of matching and aggregating patient data across multiple EHR systems (88 FR 79106). Medicare CQMs also provide a transition path and alternative for ACOs that have difficulty reporting patient data by limiting the beneficiaries for which an ACO must match and aggregate data to only the ACO's eligible Medicare fee-for-service beneficiaries, instead of their all payer/all patient population (88 FR 79106). As a logical next step in the reporting of digital quality measures, this population is larger than the sample currently used in the CMS Web Interface, but not as large as the all payer/all patient population that must be reported for an eCQM or MIPS CQM (88 FR 79106).

We aim to fully transition to digital quality measurement in CMS quality reporting and value-based purchasing programs, and we are working to convert current eCQMs to the Fast Healthcare Interoperability Resources (FHIR) standard (86 FR 65379). Including eCQMs as a collection type for Shared Savings Program ACOs reporting the APP Plus quality measure set aligns with our goal to transition to digital quality measurement including the alignment and development of FHIR standards and tools for eCQM reporting in the dQM Strategic Roadmap. There are numerous benefits to using eCQMs, including their use of electronic standards that reduce the burden of manual extraction and reporting for measured entities, their use of clinical data to assess the outcomes of treatment by measured entities, and their fostering of access to real-time data for point of care quality improvement and decision support. Furthermore, eCQMs align with the Meaningful Measures Framework 2.0 goal of improving quality reporting efficiency by transitioning to digital quality measures. A recent study noted the resource intensity of quality reporting, underscoring the high cost of claims-based measures relative to others and recommended that policy makers shift to electronic metrics to “optimize resources spent in the overall pursuit of higher quality.” For these reasons, and to continue encouraging ACOs on their progress to adopt digital quality measurement, we are not modifying the availability of eCQMs as a collection type for ACOs that reported the APP quality measure set by including eCQMs as a collection type in the APP Plus quality measure set in performance year 2025 and subsequent performance years. In section III.G.7.e. of this proposed rule, we seek comment on a higher risk, higher reward track for Shared Savings Program ACOs participating in the ENHANCED track. In this request for information, we seek comment on questions relevant to our long-term goals of supporting ACOs in their transition to reporting all payer/all patient quality measures: How should a revised ENHANCED track with higher risk and potential reward also require additional accountability for quality? Should ACOs in this revised track be required to report all payer/all patient quality measures?

In the CY 2024 PFS final rule, we stated that “Medicare CQMs are intended to serve as a transition to all payer/all patient reporting and not as a permanent collection type. We acknowledge that ACOs are at different stages of readiness to adopt all payer/all patient measures, and we intend for Medicare CQMs to be available to ACOs during their transition to all payer/all patient reporting.” (88 FR 79106). In the CY 2024 PFS final rule, we also stated that “[w]e expect that the sunsetting of the Medicare CQM collection type may be paced with the uptake of FHIR Application Programming Interface (API) technology, but this will be assessed on industry readiness and CMS requirements” (88 FR 79106). Specifically, we anticipate that the increased use of FHIR API technology will facilitate ACOs' reporting of eCQMs and thus increase their uptake of them. Future advancements in FHIR API technology and its uptake among Shared Savings Program ACOs may accelerate our future plans to sunset Medicare CQMs. As discussed earlier in this section, we are proposing to streamline the collection types available for Shared Savings Program ACOs reporting the APP Plus quality measure set to the eCQM and Medicare CQM collection types for performance year 2025 and subsequent performance years and use Medicare CQMs as the transition step on our building-block approach for ACOs' progress to adopt digital quality measurement. As we continue to support ACOs in fully and equitably participating in all payer/all patient collection types with our proposed creation of the APP Plus quality measure set, our commitment to monitor ACOs' reporting of quality data using Medicare CQMs and to assess their appropriateness as a collection type remains the same.

As we stated in the CY 2024 PFS final rule, ACOs that include or are composed solely of FQHCs or RHCs must report quality data on behalf of the FQHCs or RHCs that participate in the ACO. To clarify, while FQHCs and RHCs that provide services that are billed exclusively under FQHC or RHC payment methodologies are exempt from reporting traditional MIPS, FQHCs and RHCs that participate in APMs, such as the Shared Savings Program, are considered APM Entity groups as described at § 414.1370 (88 FR 79099). If our proposal is finalized, FQHCs and RHCs that participate in Shared Savings Program ACOs would have to report the APP Plus quality measure set through their ACO for performance year 2025 and subsequent performance years.

We seek comment on all of the proposals described in this section.

(3) Proposed Changes to Regulation Text

As discussed in section III.G.4.b.(2)(a) of this proposed rule, for performance year 2025 and subsequent performance years, we are proposing to require Shared Savings Program ACOs to report the APP Plus quality measure set as proposed in section IV.A.4.c.(3) of this proposed rule. The APP Plus quality measure set would comprise of eleven measures, consisting of six measures from the APP quality measure set and five newly proposed measures from the Adult Universal Foundation measure set that would be incrementally incorporated into the APP Plus quality measure set over performance years 2025 through 2028. We are also proposing to focus the collection types available to Shared Savings Program ACOs for reporting the APP Plus quality measure set to eCQMs and Medicare CQMs. We refer readers to sections IV.A.4.c, IV.A.4.e.(1)(b)(i), IV.A.4.f.(1)(b)(iii), and IV.A.4.f.(1)(c)(i). of this proposed rule for changes to the regulation text at 42 CFR part 414. We are proposing conforming changes to the regulation text at 42 CFR part 425 as described below in this section. We seek comment on our proposed regulation text changes.

• We are proposing to sunset the requirement that ACOs must submit quality data via the APP to satisfactorily report on behalf of the eligible clinicians who bill under the TIN of an ACO participant for purposes of the MIPS Quality performance category of the Quality Payment Program, and to revise § 425.508(b) to indicate that the requirement will be applicable for performance years beginning in 2021-2024. We are also proposing to replace the phrase “Alternative Payment Model Performance Pathway (APP)” with the phrase “APM Performance Pathway (APP)” to conform with the phrase used at § 414.1367.
• We are adding a new paragraph (c) at § 425.508 to establish that, for performance years beginning on or after January 1, 2025, ACOs must submit quality data via the APM Performance Pathway (APP) on the quality measures contained in the APP Plus quality measure set established under § 414.1367 to satisfactorily report on behalf of the eligible clinicians who bill under the TIN of an ACO participant for purposes of the MIPS Quality performance category of the Quality Payment Program.
• We are proposing to revise the section heading at § 425.510 to “Application of the APM Performance Pathway (APP) quality measure set or the APP Plus quality measure set (as applicable) to Shared Savings Program ACOs for performance years beginning on or after January 1, 2021.”
• We are proposing to sunset the requirement that ACOs must report quality data on the APP quality measure set according to the method of submission established by CMS and to revise § 425.510(b). We are adding a new paragraph (b)(1) at § 425.510 to indicate that the requirement will be applicable for performance years beginning in 2021-2024.
• We are adding a new paragraph (b)(2) at § 425.510 to establish that, for performance years beginning on or after January 1, 2025, ACOs must report quality data on the APP Plus quality measure set established under § 414.1367, according to the submission method established by CMS.
• We are revising § 425.512(a)(2)(iii) to establish that, for performance year 2025 and subsequent performance years, an ACO in the first performance year of the ACO's first agreement period under the Shared Savings Program will meet the quality performance standard if the ACO reports the APP Plus quality measure set and meets the data completeness requirement on all eCQMs/Medicare CQMs, and the CAHPS for MIPS survey (except as specified in § 414.1380(b)(1)(vii)(B)), and receives a MIPS Quality performance category score for the applicable performance year.
• We are revising the introductory paragraph (a)(5)(i) to § 425.512 to read as follows: “Except as specified in paragraphs (a)(2) and (7) of this section, CMS designates the quality performance standard as:”.
• We are revising the introductory paragraph (a)(5)(i)(A) to read as follows: “For performance year 2024, the ACO reporting quality data on the APP quality measure set established under § 414.1367 of this subchapter, according to the method of submission established by CMS and -”.
• We are revising the introductory paragraph (a)(5)(i)(B) to read as follows: “For performance year 2025 and subsequent performance years, the ACO reporting quality data on the APP Plus quality measure set established under § 414.1367 of this subchapter, according to the method of submission established by CMS and -”.
• We are adding a new paragraph (a)(5)(ii)(A) to § 425.512 to indicate that an ACO will meet the alternative quality performance standard for performance year 2024 if the ACO reports quality data on the APP quality measure set established under § 414.1367 according to the method of submission established by CMS and achieves a quality performance score equivalent to or higher than the 10th percentile of the performance benchmark on at least one of the four outcome measures in the APP quality measure set.
• We are adding a new paragraph (a)(5)(ii)(B) to § 425.512 to establish that an ACO will meet the alternative quality performance standard for performance year 2025 and subsequent years if the ACO reports the quality data on the APP Plus quality measure set established under § 414.1367 according to the method of submission established by CMS and achieves a quality performance score equivalent to or higher than the 10th percentile of the performance benchmark on at least one of the four outcome measures in the APP Plus quality measure set.
• We are revising § 425.512(a)(5)(iii)(B) to indicate that for performance year 2025 and subsequent performance years, an ACO will not meet the quality performance standard or the alternative quality performance standard if the ACO does not report any of the eCQMs/Medicare CQMs in the APP Plus quality measure set and does not administer a CAHPS for MIPS survey (except as specified in § 414.1380(b)(1)(vii)(B)).
• We are revising § 425.512(a)(7) introductory text and (a)(7)(i) and adding new paragraphs (a)(7)(i)(A) and (B) to indicate for performance year 2024, CMS will use the higher of the ACO's health equity adjusted Quality performance category score or the equivalent of the 40th percentile MIPS Quality performance category score when an ACO reports all of the required measures, meeting the data completeness requirement for each measure in the APP quality measure set and receiving a MIPS Quality performance category score and the ACO meets either of the following:

++ The ACO's total available measure achievement points used to calculate the ACO's MIPS Quality performance category score are reduced under § 414.1380(b)(1)(vii)(A).

++ At least one of the eCQMs/MIPS CQMs/Medicare CQMs does not have a benchmark as described at § 414.1380(b)(1)(i)(A).

• We are revising § 425.512(a)(7)(ii) and adding new paragraphs (a)(7)(ii)(A) and (B) to indicate for performance year 2025 and subsequent performance years, an ACO will receive the higher of the ACO's health equity adjusted quality performance category score or the equivalent of the 40th percentile MIPS Quality performance category score when an ACO reports all of the required measures in the APP Plus quality measure set, meeting the data completeness requirement for each measure in the APP Plus quality measure set, and receiving a MIPS Quality performance category score, and the ACO meets either of the following:

++ The ACO's total available measure achievement points used to calculate the ACO's MIPS Quality performance category score are reduced under § 414.1380(b)(1)(vii)(A).

++ At least one of the eCQMs/Medicare CQMs does not have a benchmark as described at § 414.1380(b)(1)(i)(A).

• We are revising § 425.512(b)(1) and (2) and (b)(4)(i) by removing the phrase “APP measure set” and replacing with the phrase “APP quality measure set” to align naming conventions for the two quality measure sets within the APP: the APP quality measure set and the APP Plus quality measure set.
• We are revising § 425.512(b)(1) to update a renumbered cross reference.
• We are revising the heading for § 425.512(b)(2) by removing the phrase “and subsequent performance years.”
• We are renumbering the current paragraph (b)(3) of § 425.512 to paragraph (b)(4) and revising the cross references therein to reflect this renumbering.
• We are adding a new paragraph (b)(3) to § 425.512 to establish for performance year 2025 and subsequent performance years that for an ACO that reports all of the eCQMs/Medicare CQMs in the APP Plus quality measure set, meeting the data completeness requirement for all of the eCQMs/Medicare CQMs, and administers the CAHPS for MIPS survey (except as specified in § 414.1380(b)(1)(vii)(B)), CMS calculates the ACO's health equity adjusted quality performance score as the sum of the ACO's MIPS Quality performance category score for all measures in the APP Plus quality measure set and the ACO's health equity adjustment bonus points. The sum of these values may not exceed 100 percent.
• We are renumbering the current paragraph (b)(4) of § 425.512 to paragraph (b)(5) and revising the cross references therein to reflect this renumbering.
• We are revising renumbered § 415.512(b)(5)(iv) to add reference to new paragraph (c)(3)(iv).
• We are revising § 425.512(c)(3) introductory text by removing the phrase “via the APP” and adding in its place the phrase “on the APP quality measure set or APP Plus quality measure set (as applicable)”.
• We are revising § 425.512(c)(3)(iii) by removing the phrase “and subsequent performance years” after “For performance year 2024”.
• We are adding new paragraph (c)(3)(iv) to § 425.512 to establish for performance year 2025 and subsequent performance years, if CMS determines the ACO meets the requirements of the Extreme and Uncontrollable Circumstances policy and the ACO reports the APP Plus quality measure set, meets the data completeness requirement, and receives a MIPS Quality performance category score, CMS will calculate the ACO's quality score as the higher of the ACO's health equity adjusted quality performance score or the equivalent of the 40th percentile MIPS Quality performance category score across all MIPS Quality performance category scores, excluding entities/providers eligible for facility-based scoring, for the relevant performance year.

c. Proposed Changes to the Methodology for Calculating the MIPS Quality Performance Category Score for Shared Savings Program ACOs Reporting the APP Plus Quality Measure Set

(1) Background

Consistent with the authority to establish the quality reporting and other reporting requirements for the Medicare Shared Savings Program set forth in section 1899(b)(3) of the Act and the statutory requirements for the Quality Payment Program set forth in section 1848(q) and (r) of the Act for MIPS and section 1833(z) of the Act for Advanced APMs, since the Shared Savings Program's alignment with the APP in performance year 2021, MIPS eligible clinicians identified on the Participation List or Affiliated Practitioner List of an APM Entity participating in a MIPS APM—including ACOs that participate in the Medicare Shared Savings Program—that report data via the APP have been scored according to the APP scoring methodology described at § 414.1367. The MIPS Quality performance category score is calculated according to the APP scoring methodology at § 414.1367(c)(1) (85 FR 84864). Under the waiver authority at section 1115A(d)(1) of the Act for CMS Innovation Center APMs and at section 1899(f) of the Act for the Medicare Shared Savings Program, the Cost performance category weight is zero percent as described at § 414.1367(c)(2) (85 FR 84864) for MIPS eligible clinicians that report via the APP. As noted in section 1848(q)(5)(C)(ii) of the Act, a MIPS eligible clinician in an APM for a performance period automatically earns a minimum score of one half of the highest potential score for the MIPS Improvement activities category for their participation in an APM for the performance period. These baseline scores are automatically applied to the MIPS Improvement activities performance category score for MIPS eligible clinician in an APM—including ACOs that participate in the Medicare Shared Savings Program—that report via the APP as described at § 414.1367(c)(3) (85 FR 84865). The Promoting Interoperability performance category under the APP is reported and calculated in the same manner described at § 414.1375 (85 FR 84865).

As described in the CY 2021 PFS final rule, we waived the requirement to weight each MIPS performance category as described in section 1848(q)(5)(E) of the Act using the waiver authority in section 1899(f) of the Act for Medicare Shared Savings Program for MIPS eligible clinicians that report via the APP—including ACOs that participate in the Medicare Shared Savings Program (85 FR 84865). The performance category weights used to calculate the final score for a MIPS eligible clinician who is scored through the APP at § 414.1367(d)(1) are:

• Quality: 50 percent.
• Cost: 0 percent.
• Improvement Activities: 20 percent.
• Promoting Interoperability: 30 percent.

Additionally, in the CY 2021 PFS final rule, we also stated that under the authority provided in section 1848(q)(5)(F) of the Act, it may become necessary to reweight one or more performance categories (85 FR 84866). As described at § 414.1367(d)(2), if CMS determines, in accordance with § 414.1380(c)(2), that a different scoring weight should be assigned to the Quality or Promoting Interoperability performance category, CMS will redistribute the performance category weights as follows:

• If CMS reweights the Quality performance category to 0 percent: Promoting Interoperability performance category is reweighted to 75 percent, and Improvement activities performance category is reweighted to 25 percent.
• If CMS reweights the Promoting Interoperability performance category to 0 percent: Quality performance category is reweighted to 75 percent, and Improvement activities performance category is reweighted to 25 percent.

Lastly, as codified at § 414.1367(e), final scoring for APM participants reporting to MIPS through the APP—including ACOs that participate in the Medicare Shared Savings Program—would follow the same methodology as established for MIPS generally at § 414.1380 (85 FR 84866).

In performance year 2024, ACOs are scored on either the three eCQMs/MIPS CQMs/Medicare CQMs or the ten CMS Web Interface measures, the CAHPS for MIPS survey, and two administrative claims-based measures. Under this methodology, an ACO's MIPS Quality performance category score is calculated according to MIPS scoring rules for the Quality performance category established at § 414.1380(b)(1) with exceptions for (1) measures that do not have a benchmark or do not meet the case minimum requirement and (2) measures that are identified as topped out. Specifically, each submitted measure that does not have a benchmark or does not meet the case minimum requirement is excluded from an ACO's total measure achievement points (numerator) and total available measure achievement points (denominator). Additionally, any measure that is identified as topped out is not subject to the scoring cap described at § 414.1380(b)(1)(iv). Under current APP scoring rules, each required measure of the APP quality measure set that is not submitted by an ACO via the APP receives zero measure achievement points.

(2) Proposed Revisions

(a) Proposal To Establish the Data Submission Criteria for the APP Plus Quality Measure Set

As discussed in section IV.A.4.e.(1)(b)(i) of this proposed rule, for the APP Plus quality measure set, we are proposing that Shared Savings Program ACOs that report the APP Plus quality measure set and MIPS eligible clinicians, groups, and APM Entities that choose to report the APP Plus quality measure set, will be required to report on all measures in the APP Plus quality measure set, as applicable. Specifically, in § 414.1335(b), we are proposing to establish the data submission criteria for the APP Plus quality measure set, which would require the reporting of all measures within the APP Plus quality measure set, except for administrative claims-based quality measures.

The MIPS Quality performance category score is calculated according to the APP scoring methodology at § 414.1367(c)(1) (85 FR 84864 through 85 FR 84865). As such, an ACO's MIPS Quality performance category score is calculated according to MIPS scoring rules for the Quality performance category established at § 414.1380(b)(1) with exceptions for (1) measures that do not have a benchmark or do not meet the case minimum requirement and (2) measures that are identified as topped out. Consistent with our proposal described above, under § 414.1380(b)(1), for performance year 2025 and subsequent performance years, ACOs would be scored on all required measures in the APP Plus quality measure set.

We are proposing that the policies related to MIPS performance category scoring in the APP at § 414.1367(c) would apply to Shared Savings Program ACOs that report the APP Plus quality measure set for the purpose of meeting the Shared Savings Program's quality performance standard. Specifically, we are proposing that the APP scoring policies at § 414.1367(c)(1) for the calculation of the ACO's MIPS Quality performance category, § 414.1367(c)(2) for the calculation of an ACO's MIPS Cost performance category, § 414.1367(c)(3) for the calculation of an ACO's MIPS Improvement activities performance category, and § 414.1367(c)(4) for the calculation of an ACO's MIPS Promoting Interoperability performance category would apply to ACOs that report the APP Plus quality measure set in performance year 2025 and subsequent performance years. Additionally, we are proposing that § 414.1367(d) for the performance category weights and § 414.1367(e) for the calculation of the final score would apply to Shared Savings Program ACOs that report the APP Plus quality measure set in performance year 2025 and subsequent performance years.

If our proposals are finalized, then in performance year 2025, ACOs would be scored on the required eight measures in the APP Plus quality measure set: five eCQMs/Medicare CQMs, the CAHPS for MIPS survey, and two administrative claims-based measures. In performance years 2026 and 2027, ACOs would be scored on the required nine measures: six eCQMs/Medicare CQMs, the CAHPS for MIPS survey, and two administrative claims-based measures. In performance year 2028 and subsequent performance years, ACOs would be scored on the required eleven measures: eight eCQMs/Medicare CQMs, the CAHPS for MIPS survey, and two administrative claims-based measures. We refer readers to Tables 34, 35, and 36 in Section III.G.4.f of this proposed rule for additional detail on the required measures in each performance year.

We refer readers to section IV.A.4.e.(1)(b)(i) of this proposed rule for a discussion of our proposal to establish the data submission criteria for the APP Plus quality measure set, specifically the proposal to require the reporting of all measures within the APP Plus quality measure set.

(b) Proposal To Establish a Complex Organization Adjustment for Virtual Groups and APM Entities

To account for the organizational complexities faced by Virtual Groups and APM Entities, including Shared Savings Program ACOs, when reporting eCQMs, in section IV.A.4.f.(1)(b)(iii) of this proposed rule, we are proposing to establish a Complex Organization Adjustment beginning in the CY 2025 performance period/2027 MIPS payment year. A Virtual Group and an APM Entity would receive one measure achievement point for each submitted eCQM that meets the case minimum requirement at § 414.1380(b)(1)(iii) and the data completeness requirement at § 414.1340. Each reported eCQM may not score more than 10 measure achievement points and the total achievement points (numerator) may not exceed the total available measure achievement points (denominator) for the quality performance category. The Complex Organization Adjustment for a Virtual Group or APM Entity may not exceed 10 percent of the total available measure achievement points in the quality performance category. The adjustment would be added for each measure submitted at the individual measure level.

Since Shared Savings Program ACOs are APM Entities, this proposal would be applicable to Shared Savings Program ACOs reporting the APP Plus quality measure set beginning in performance year 2025. We refer readers to section IV.A.4.f.(1)(b)(iii) of this proposed rule for discussion of our proposal to establish the Complex Organization Adjustment for Virtual Groups and APM Entities.

As the Adult Universal Foundation measures are phased into the APP Plus quality measure set, ACOs that participate in the Shared Savings Program would be required to report on a larger measure set relative to other eCQM reporters. Under our proposal as described in section III.G.4.f of this proposed rule, the APP Plus quality measure set for Shared Savings Program ACOs would include eight measures (five eCQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in performance year 2025 (Table 34); nine measures (six eCQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in performance years 2026 and 2027 (Table 35); and eleven measures (eight eCQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in performance years 2028 and subsequent performance years (Table 36).

(c) Proposal To Score Shared Savings Program ACOs Reporting Medicare CQMs Using Flat Benchmarks

In the CY 2024 PFS final rule, we finalized our proposal to establish new benchmarks for scoring ACOs on the Medicare CQMs under MIPS in alignment with MIPS benchmarking policies (88 FR 79110). As historical Medicare CQM data would not be available, we finalized that for performance years 2024 and 2025, we will score Medicare CQMs using performance period benchmarks. We also finalized that, for performance year 2026 and subsequent performance years, when baseline period data are available to establish historical benchmarks in a manner that is consistent with the MIPS benchmarking policies at § 414.1380(b)(1)(ii), we will score Medicare CQMs using historical benchmarks.

A few commenters noted in our proposal in the CY 2024 PFS proposed rule (88 FR 79109-79110) their concern about ACOs being compared only to other ACOs that report Medicare CQMs since the Medicare CQMs would be available only to Shared Savings Program ACOs. One commenter stated their preference to have their quality performance compared to all other participants on these measures, while another commenter stated that CMS should stop measuring ACOs against each other and instead measure ACOs on a national standard so that all ACOs can pass and do not lose out on savings due to arbitrary quality decile cut points. In our response to these comments, we stated that given that benchmarks are specific to each collection type and that we proposed to establish Medicare CQMs as a new collection type for only Shared Savings Program ACOs, only ACO data will be available to benchmark Medicare CQMs. Additionally, the health equity adjustment would be applicable to Medicare CQMs for purposes of determining shared savings payments/losses. The application of the health equity adjustment would help improve performance when ACOs deliver high quality care to underserved patient populations. For these reasons, it is appropriate to establish benchmarks for Medicare CQMs that are consistent with MIPS benchmarking policies. ACOs that prefer to be compared to clinicians at large may do so by reporting eCQMs or MIPS CQMs, for which CMS calculates a benchmark using data reported by MIPS eligible clinicians reporting under the chosen collection type.

In performance year 2022, ACOs had a higher average performance on quality measures they were required to report in order to share in savings compared to other similarly sized clinician groups not in the Shared Savings Program. This includes statistically significant higher performance for quality measures related to diabetes and blood pressure control; breast cancer and colorectal cancer screening; tobacco screening and smoking cessation; and depression screening and follow-up. In shifting to Medicare CQMs, ACO performance would be benchmarked against other ACOs only reporting Medicare CQMs. Since ACOs are high performers relative to comparably sized MIPS groups, benchmarking Medicare CQMs using only ACO data would lower some ACOs' MIPS measure achievement points on those measures. In other words, high-performing ACOs could earn lower measure achievement points relative to comparable MIPS groups because the Medicare CQM benchmarking pool is comprised of higher-than-average performance data-in effect, creating a “tournament approach” to scoring Medicare CQMs wherein ACOs must compete with other ACOs to earn measure achievement points. This could be particularly disadvantageous for ACOs that serve a high proportion of underserved populations because, while ACOs that report eCQMs and/or Medicare CQMs and serve a high proportion of underserved populations are eligible for health equity adjustment points, ACOs must score in the top or middle thirds of ACO measure performers to earn health equity adjustment points.

As described in section III.G.4.b.(2)(b) of this proposed rule, for performance year 2025 and subsequent performance years, we are proposing to streamline the collection types available for Shared Savings Program ACOs reporting the APP Plus quality measure set to the eCQM and Medicare CQM collection types. Therefore, as discussed in section IV.A.4.f.(1)(c)(i) of this proposed rule, we are proposing to add § 414.1380(b)(1)(ii)(F) to state that beginning in the CY 2025 performance period/2027 MIPS payment year, measures of the Medicare CQM collection type would be scored using flat benchmarks for their first two performance periods in MIPS. Our proposal in section IV.A.4.f.(1)(c)(i) of this proposed rule would expand the use of flat benchmarks to Medicare CQMs in their first two performance periods in MIPS. The use of flat benchmarks would allow ACOs with high scores to earn maximum or near maximum achievement points while allowing room for quality improvement and rewarding that improvement in subsequent years. Use of flat benchmarks also helps to ensure that ACOs with high quality performance on a measure are not penalized as low performers. As discussed in section IV.A.4.f.(1)(c)(i) of this proposed rule, we are proposing to add § 414.1380(b)(1)(ii)(F) to incorporate this proposal. The use of historical benchmarks, when data are available, is consistent with MIPS benchmarking policies at § 414.1380(b)(1)(ii), allow ACOs to know benchmarks prior to start of the performance year, and create opportunities for improvement.

Table 30 lists the Medicare CQMs in the APP Plus quality measure set that would be eligible for flat benchmarks in performance year 2025 through performance year 2029 under our proposal.

A quality performance benchmark is the performance rate an ACO must achieve to earn the corresponding quality points for each measure. Flat benchmarks assign a performance rate range to each decile. In flat benchmarks for non-inverse measures, any performance rate at or above 90 percent would be in the top decile; any performance rate between 80 percent and 89.99 percent would be in the second highest decile, and so on. For inverse measures, this would be reversed—any performance rate at or below 10 percent would be in the top decile; any performance rate between 10.01 percent and 20 percent would be in the second highest decile, and so on. The number of measure achievement points received for each measure is determined based on the applicable benchmark decile category and the percentile distribution.

For non-inverse measures, better quality performance is indicated by a higher performance rate. For example, Quality #: 001 Controlling High Blood Pressure is a non-inverse measure that measures the percentage of patients 18-85 years of age who had a diagnosis of hypertension and whose blood pressure was adequately controlled (<140/90 mmHg) during the measurement period. Better quality performance on this measure is demonstrated by having a higher percentage of patients whose blood pressure was adequately controlled. Table 31 lists the flat benchmarks for a non-inverse Medicare CQM under our proposal described in section IV.A.4.f.(1)(c)(i) of this proposed rule.

For example, if an ACO reports a non-inverse Medicare CQM in its first two performance periods in MIPS in performance year 2025 and earns a performance rate of 55.25 percent, then the ACO would score in the 6th decile on that measure.

For inverse measures, better quality performance is indicated by a lower performance rate. This is reflected in flat benchmark such that lower quality performance rates are found in higher deciles. For example, Quality #: 001 Diabetes: Hemoglobin A1c (HbA1c) Poor Control is an inverse quality measure that measures the percentage of patients 18-75 years of age with diabetes who had hemoglobin A1c >9.0 percent during the measurement period. Better quality performance on this measure is demonstrated by having a lower percentage of patients whose HbA1c was >9.0 percent. Table 32 lists the flat benchmarks for an inverse Medicare CQM under our proposal described in section IV.A.4.f.(1)(c)(i) of this proposed rule.

For example, if an ACO reports an inverse Medicare CQM in its first two performance periods in MIPS in performance year 2025 and earns a performance rate of 12.25 percent, then the ACO would score in the 9th decile on that measure. In performance year 2025, Quality #: 001 Diabetes: Hemoglobin A1c (HbA1c) Poor Control is the only inverse Medicare CQM measure.

There are scoring scenarios in which ACOs would earn higher measure achievement points under flat benchmarks compared to those they would earn under performance period benchmarks. Most notable are scenarios in which ACOs have a tight distribution of performance rates on a measure. For example, a non-inverse measure for which a performance rate of 90.00 percent is in the 8th decile. In this example, an ACO that reported a performance rate of 90.00 percent would be scored in the 8th decile when the hypothetical performance period benchmark is applied. Using the flat benchmarks described in Table 31 of this proposed rule, an ACO that reported a performance rate of 90.00 percent would be scored in the 10th decile, resulting in greater measure achievement points than under the hypothetical performance period benchmarks described in this example. For more details on the calculation of measure achievement points, we refer readers to the “APM Performance Pathway (APP) Toolkit” which is updated for each performance year and posted in the QPP Resource Library.

We seek comment on our proposal to score ACOs reporting Medicare CQMs using flat benchmarks in performance year 2025 and subsequent performance years.

(3) Proposed Changes to Regulation Text

As discussed in sections III.G.4.c.(2)(a), III.G.4.c.(2)(b), and III.G.4.c.(2)(c) of this proposed rule, we are proposing to establish scoring rules to calculate the MIPS Quality performance category score for ACOs reporting the APP Plus quality measure set for performance year 2025 and subsequent performance years. We believe that these proposed scoring rules would incentivize the reporting of eCQMs in the APP Plus quality measure set while continuing to support ACOs that report Medicare CQMs as they build the infrastructure, skills, knowledge, and expertise necessary to aggregate patient data to report digital quality measures. We refer readers to sections IV.A.4.e.(1)(b)(i), IV.A.4.f.(1)(b)(iii), and IV.A.4.f.(1)(c)(i) of this proposed rule for changes to the regulation text at 42 CFR part 414.

d. Proposal To Extend the eCQM Reporting Incentive for Meeting the Shared Savings Program Quality Performance Standard

(1) Background

In the CY 2023 PFS final rule, we extended the incentive for reporting eCQMs/MIPS CQMs through performance year 2024 to align with the timeline for sunsetting of the CMS Web Interface reporting option and to allow ACOs an additional year to gauge their performance on the eCQMs/MIPS CQMs before full reporting of the measures are required beginning in performance year 2025 (87 FR 69836 through 69838). We originally adopted this incentive in the CY 2022 PFS final rule to encourage ACOs to begin the transition to eCQM/MIPS CQM reporting in performance years 2022 and 2023 (86 FR 65269). We finalized an update to the incentive for performance year 2024 such that:

• If an ACO reports the three eCQMs/MIPS CQMs, meets the data completeness requirement at § 414.1340 and the case minimum requirement at § 414.1380 for all three eCQMs/MIPS CQMs, and:
• Achieves a quality performance score equivalent to or higher than the 10th percentile of the performance benchmark on at least one of the four outcome measures in the APP measure set and;
• Achieves a quality performance score equivalent to or higher than the 40th percentile of the performance benchmark on at least one of the remaining five measures in the APP measure set, the ACO will meet the quality performance standard used to determine eligibility for shared savings and to avoid maximum shared losses, if applicable.

We received a few comments on our proposal in the CY 2023 PFS proposed rule to extend the incentive for reporting eCQMs/MIPS CQMs through performance year 2024 suggesting that we extend the incentive beyond 2024 to facilitate the national shift towards eCQMs. In our response in the CY 2023 PFS final rule (87 FR 69836), we stated that “We are not extending the incentive beyond performance year 2024 at this time because this policy is intended to align with the timeline for sunsetting of the CMS Web Interface reporting option at the end of performance year 2024. We will continue to monitor the impact of this policy as we gain more experience with ACOs reporting eCQMs/MIPS CQMs and may revisit the policy in future rulemaking.”

(2) Proposed Revisions

We are committed to continuing to support ACOs in the transition to all payer/all patient eCQMs and digital quality measurement reporting. As described in section III.G.4.b.(2)(a) of this proposed rule, for performance year 2025 and subsequent performance years, we are proposing to require Shared Savings Program ACOs to report the APP Plus quality measure set as proposed in section IV.A.4.c.(3) of this proposed rule. The APP Plus quality measure set would incrementally grow to comprise of eleven measures, consisting of six measures from the APP quality measure set and five newly proposed measures from the Adult Universal Foundation measure set that would be incrementally incorporated into the APP Plus quality measure set over performance years 2025 through 2028. We are also proposing to focus the collection types available to Shared Savings Program ACOs for reporting the APP Plus quality measure set to all payer/all patient eCQMs and Medicare CQMs (while not adding the MIPS CQM as an available collection type for Shared Savings Program ACOs under the APP Plus quality measure set).

The Shared Savings Program continues to hear from ACOs and other stakeholders about the challenges with reporting on all payer/all patient measures and meeting data management requirements given their muti-practice/multi EHR structure, the challenges to aggregate data with the health IT infrastructure in use by ACOs and current state of interoperability. Shared Savings Program quality reporting data over the past two performance years indicate that ACOs have been slow to report eCQMs. In performance year 2021, 5 of 475 ACOs reported eCQMs under the APP. In performance year 2022, among ACOs that reported quality data under the APP, 24 out of 482 reported eCQMs with 7 of these ACOs reporting a combination of eCQMs and MIPS CQMs. We encourage ACOs, especially those ACOs serving large, underserved populations, to leverage interoperability and digital data more fully and to more quickly transition to eCQMs. As such, we are proposing to extend the eCQM reporting incentive to performance year 2025 and subsequent performance years to support ACOs in meeting the Shared Savings Program quality performance standard for sharing in savings at the maximum rate under its track.

Specifically, we are proposing that for performance year 2025 and subsequent performance years, an ACO will meet the quality performance standard used to determine eligibility for maximum shared savings and to avoid maximum shared losses, if applicable:

• If the ACO reports all of the eCQMs in the APP Plus quality measure set applicable for a performance year, meeting the data completeness requirement at § 414.1340 for all eCQMs, and;
• Achieves a quality performance score equivalent to or higher than the 10th percentile of the performance benchmark on at least one of the four outcome measures in the APP Plus quality measure set, and;
• Achieves a quality performance score equivalent to or higher than the 40th percentile of the performance benchmark on at least one of the remaining measures in the APP Plus quality measure set.

The eCQM reporting incentive would apply only to those ACOs that report all of the eCQMs in the APP Plus quality measure set applicable for a performance year and meet the data completeness requirement for all of the eCQMs. The reporting incentive would not apply to ACOs that report a combination of eCQMs/Medicare CQMs or report only Medicare CQMs. We will further assess the need for the eCQM reporting incentive in the future as ACOs continue the transition to adopting eCQMs and may make refinements as needed in future rulemaking. The proposed APP Plus quality measure set for Shared Savings Program ACOs for performance year 2025, performance years 2026 and 2027, and performance year 2028 and subsequent performance years are displayed in Tables 34, 35, and 36, respectively. We included the measure type in these tables for each measure in the APP Plus quality measure set to provide ACOs with a list of the outcome measures for purposes of qualifying for the eCQM reporting incentive.

(3) Proposed Changes to Regulation Text

We are proposing to add paragraphs (a)(5)(i)(B)( 1) and ( 2) to § 425.512 to incorporate our proposal to extend the eCQM reporting incentive to performance year 2025 and subsequent performance years into the regulation text.

We seek comment on our proposal to extend the eCQM reporting incentive to performance year 2025 and subsequent performance years.

e. Summary of Proposals

In Table 33 of this proposed rule, we summarize the proposed changes to the regulation at § 425.512(a)(5) to reflect the changes we are proposing to the quality reporting requirements and quality performance standard for performance year 2025 and subsequent performance years.

f. Proposed APP Plus Quality Measure Set

(1) Background

The APP quality measure set for performance year 2024 and subsequent performance years was finalized in the CY 2024 PFS final rule (88 FR 79112 through 79114). In that final rule, for performance year 2024 and subsequent performance years, we also finalized the addition to the APP quality measure set of the Medicare CQM collection type for Diabetes: Hemoglobin A1c (HbA1c) Poor Control (Quality #: 001), Preventive Care and Screening: Screening for Depression and Follow-up Plan (Quality #: 134), and Controlling High Blood Pressure (Quality #: 236).

(2) Proposed Revisions

As described in section III.G.4.b.(2)(a) of this proposed rule, for performance year 2025 and subsequent performance years, we are proposing to require Shared Savings Program ACOs to report the APP Plus quality measure set as proposed in section IV.A.4.c.(3) of this proposed rule. The APP Plus quality measure set would comprise of eleven measures, consisting of six measures from the APP quality measure set and five newly proposed measures from the Adult Universal Foundation measure set that would be incrementally incorporated into the APP Plus quality measure set over performance years 2025 through 2028. We are also proposing to focus the collection types available to Shared Savings Program ACOs for reporting the APP Plus quality measure set to all payer/all patient eCQMs and Medicare CQMs.

The proposed APP Plus quality measure set for Shared Savings Program ACOs for performance year 2025, performance years 2026 and 2027, and performance year 2028 and subsequent performance years are displayed in Tables 34, 35, and 36, respectively. In these tables, we also included the measure type for each measure in the APP Plus quality measure set to provide ACOs with a list of the outcome measures for purposes of qualifying for the eCQM reporting incentive, as described in section III.G.4.d. of this proposed rule. This information is also relevant to the alternative quality performance standard under which ACOs that fail to meet the quality performance standard to qualify for the maximum sharing rate, but that achieve a quality performance score equivalent to or higher than the 10th percentile of the performance benchmark on at least one of the four outcome measures in the APP Plus quality measure set, may be eligible to share in savings on a sliding scale, as discussed in the current § 425.512(a)(4)(ii).

g. Survey Modes for the Administration of the Consumer Assessment of Healthcare Providers and Systems (CAHPS) for MIPS Survey Request for Information

We seek public comment on the potential expansion of the survey modes of the CAHPS for MIPS Survey from a mail-phone protocol to a web-mail-phone protocol. During the 2023 CAHPS for MIPS Web Mode Field Test, adding the web-based survey mode to the current mail-phone protocol of CAHPS for MIPS survey administration resulted in an increased response rate. Additional information on the CAHPS for MIPS Survey Request for Information is available in section IV.A.4.e.(1)(e) of this proposed rule.

5. Providing the Option of Prepaid Shared Savings

a. Background

In the CY 2023 PFS final rule (87 FR 69782 through 69805), CMS finalized a new payment option for eligible Shared Savings Program ACOs entering agreement periods beginning on or after January 1, 2024, to receive advance shared savings payments. This payment option is referred to as advance investment payment (AIP) and the payments themselves are referred to as advance investment payments.

These payments are intended to improve the quality and efficiency of items and services furnished to Medicare beneficiaries by reducing the barriers to participation in the Shared Savings Program by supporting investments in increased staffing, healthcare infrastructure, and the provision of accountable care for underserved beneficiaries. Accordingly, advance investment payments must be spent on one of the following categories: increased staffing, healthcare infrastructure, and the provision of accountable care for underserved beneficiaries, which may include addressing social determinants of health (42 CFR 425.630(e)(1)).

Advance investment payments are only available to ACOs newly entering the Shared Savings Program in their first agreement period (§ 425.630(b)(1)). Many commentors on the CY 2023 PFS final rule (87 FR 69782 through 69805) suggested that CMS should expand access to advance investment payments by expanding the eligibility criteria to include currently participating ACOs as well as high revenue ACOs. While we do not believe that it is appropriate to expand the eligibility criteria for advance investment payments at this time, as CMS still needs time to assess the impact of the new payment option, there is persuasive evidence that investment in staffing, healthcare infrastructure, and accountable care for underserved beneficiaries could be valuable for all ACOs, not just those that are new to the program. Investment in care coordination for beneficiaries reduces costs and improve the quality of care received. Investment in health information technology can be leveraged to empower individuals, address patients' full range of health needs, promote healthy behaviors, and facilitate better health outcomes for individuals, families, and communities. Additionally, there is evidence that investment in services not currently covered by Medicare may improve beneficiary health and reduce avoidable health care utilization costs over time, including coverage of dental hearing and vision care.

Furthermore, we have come to understand that, for beneficiaries, the benefits of receiving services from providers associated with ACOs—such as improvements in quality and coordinated care—may not be immediately apparent. By encouraging ACOs to invest in new services that beneficiaries otherwise would not receive, like hearing, vision and dental services, the benefits of receiving care from providers who are part of an ACO would become more tangible. This would encourage beneficiaries to receive care from providers participating in an ACO and may ultimately result in improved quality and efficiency of care for beneficiaries.

For ACOs that are currently participating in the Shared Savings Program and that reinvest their earned shared savings payments in activities that reduce costs and improve quality of care, it could be more valuable to gain access to those shared savings payments early in and/or throughout each performance year, instead of waiting months after the end of each performance year when any earned shared savings payments are distributed. Currently, CMS completes the financial reconciliation calculations for each ACO during the summer after the end of each performance year, which allows time for claims runout and other necessary data to become available. CMS compares the updated historical benchmark to an ACO's assigned beneficiaries' per capita expenditures during the performance year to determine whether the ACO may share in savings or losses, if owed. CMS then notifies the ACO in writing regarding whether the ACO qualifies for a shared savings payment, and if so, the amount of the payment due. These payments are generally distributed to ACOs in the early fall following the end of each performance year. This is the sole payment CMS makes to an ACO in the Shared Savings Program and generally an ACO's sole source of revenue. Distributing prepaid shared savings during a performance year would allow ACOs to invest these payments in additional services for assigned beneficiaries, staffing, and healthcare infrastructure earlier and reap the benefits from that investment earlier.

The CMS Innovation Center tested a number of strategies for providing more experienced ACOs with advances of funding during each performance year. One of the innovations was the infrastructure payments available in the Next Generation ACO model, a CMS Innovation Center model that was intended for more experienced ACOs. Most Next Generation ACOs (82 percent) that participated in the Next Generation ACO model in 2018 had prior experience as Medicare ACOs before starting in the model, and the majority (56 percent) previously participated in the Shared Savings Program. ACOs selecting the infrastructure payment option received $6 per assigned beneficiary per month to support ACO Activities, which was later recouped during financial settlement following each performance year. The model defined ACO Activities as activities related to promoting accountability for the quality, cost, and overall care for the population of beneficiaries assigned to the Next Generation ACO, including managing, and coordinating care; encouraging investment in healthcare infrastructure and redesigned care processes for high quality and efficient service delivery; or carrying out any other obligation or duty of the ACO under the terms of the Next Generation ACO model. Examples of these activities included, but were not limited to, providing direct patient care in a manner that reduces costs and improves quality; promoting evidence-based medicine and patient engagement; reporting on quality and cost measures; coordinating care, such as through the use of telehealth, remote patient monitoring, and other enabling technologies; establishing and improving clinical and administrative systems for the ACO; meeting the quality performance standards; evaluating health needs; communicating clinical knowledge and evidence-based medicine; and developing standards for beneficiary access and communication, including beneficiary access to medical records. In interviews performed as part of the CMS Innovation Center's evaluation of the model, Next Generation ACO leaders described using these funds to support upfront operating costs and healthcare infrastructure and clinical process enhancements such as new staff, health information technology, data analytic capacity, population health management, or care coordination.

Despite these ACOs' prior experience as Medicare ACOs and the meaningful investments many had made in their own healthcare infrastructure and providers, they still found value in access to funding during the performance year. Almost all Next Generation ACOs used the funds to develop workflows informed by data analytics and clinical staff input. Most Next Generation ACOs also reported using the funds to support care management, such as acquiring tools and developing healthcare infrastructure to support care coordination. Leaders from many Next Generation ACOs described how the payments facilitated new processes for seamless patient care handoffs between health care providers, enabled the creation of better workflows for scheduling follow-up visits, and supported provision of screenings and assessments. Data from a clinician survey suggested that the payments were likely helpful in improving the delivery or coordination of care, with 63 percent of providers agreeing that additional resources to support practice changes made their day-to-day work easier. Separately, the ACO Investment Model (AIM), a model run by the CMS Innovation Center which informed development of the advance investment payments, gave participating ACOs upfront and quarterly funding to spend on ACO start-up costs. These ACOs primarily invested in staffing and healthcare infrastructure including care management, ACO administration, health IT and data analysis, and these ACOs generated an estimated net aggregate reduction in spending by Medicare of $381.5 million after accounting for Medicare's payment of AIM funds and participating ACOs' earned shared savings.

Section 1899(i)(3) of the Act authorizes the Secretary to use other payment models instead of the one-sided model described in section 1899(d) of the Act so long as the Secretary determines that the other payment model will improve the quality and efficiency of items and services furnished to Medicare beneficiaries without additional program expenditures. We are interested in building on experience from the Next Generation ACO model, and we agree, in part, with comments on the CY 2023 PFS final rule that encouraged CMS to expand AIP to additional ACOs. While we do not believe it is appropriate to expand the eligibility criteria for AIPs at this time as explained earlier in this section, we agree with commenters that additional ACOs could benefit from expanded access to performance year funding that encourages investment in staffing, healthcare infrastructure, and additional services for beneficiaries. Prepaid shared savings would be required to be spent at least partially on direct beneficiary services, improving the quality of care beneficiaries receive.

Consequently, under the authority provided to the Secretary by section 1899(i)(3) of the Act, we are proposing to provide prepaid shared savings to certain ACOs that meet the eligibility criteria described in section III.G.5.b of this proposed rule. Such payments would be made pursuant to the standards we propose to establish in new § 425.640. This new payment option would provide prepaid shared savings to ACOs with a history of earning shared savings while participating in the Shared Savings Program. These payments would be distributed on a quarterly basis and would be recouped from shared savings CMS determines the ACO to have earned during the annual financial reconciliation cycle. Prepaid shared savings would be the advance payment of shared savings that are expected to be earned by the ACO and are covered under the Shared Savings Distribution Waiver (76 FR 66726). If the ACO does not earn sufficient shared savings to offset the advanced payment of shared savings during the applicable performance year, CMS may withhold or terminate the ACO's prepaid shared savings under proposed § 425.640(h)(1)(iii).

We have determined that the other payment model CMS has adopted under section 1899(i)(3) of the Act would continue to improve the quality and efficiency of care should this proposal be finalized. Section 1899(i)(3)(A) of the Act requires CMS determine that the other payment model will improve the quality and efficiency of items furnished under the Medicare program. Based on the evidence for direct beneficiary services noted above, our experience administering the Shared Savings Program, and the CMS Innovation Center's experience with the ACO Investment Model and infrastructure payments in the Next Generation ACO model, we have determined that allowing ACOs access to funding earlier than currently available, in the form of prepaid shared savings, would allow ACOs to more rapidly achieve the benefits of investing in staffing, healthcare infrastructure, and direct beneficiary services. Improvement in these areas would improve the quality and efficiency of beneficiary care therefore meeting the standard of section 1899(i)(3)(A) of the Act. As we explained earlier in this section, ACOs have expenditures throughout the PY, particularly when implementing care coordination and beneficiary management strategies, and having access to their shared savings early can help ensure the ACO has adequate funding to perform these services throughout the year.

Section 1899(i)(3)(B) of the Act requires CMS to determine that prepaid shared savings, when implemented in combination with existing modifications made to the Shared Savings Program payment model specified in section 1899(d) of the Act, will not result in additional program expenditures. The addition of prepaid shared savings meets this standard in part because the eligibility criteria for prepaid shared savings have been selected to only permit ACOs that CMS estimates are most likely to earn shared savings to receive payments. Additionally, any payments the ACO receives under this proposal must be repaid to CMS, and CMS would be protected by the ACOs' repayment mechanisms in the event that an ACO does not earn shared savings or cannot otherwise repay the amount owed to CMS. Based on this design, we estimate that there would be no additional program expenditures stemming from the implementation of prepaid shared savings under this proposal. Please review section VII of this proposed rule for a more complete discussion of the financial impact of the Shared Savings Program payment model, including the findings necessary to demonstrate compliance with section 1899(i)(3)(B) of the Act.

We intend to periodically reassess whether a payment model established under section 1899(i)(3) of the Act, including the payment of prepaid shared savings, continues to improve the quality and efficiency of items and services furnished to Medicare beneficiaries without resulting in additional program expenditures. If we determine that the payment model no longer satisfies the requirements of section 1899(i)(3) of the Act (for example if the payment model results in net program costs), we would undertake additional notice and comment rulemaking to adjust our payment methodology to assure continued compliance with the statutory requirements.

b. Eligibility

To ensure that prepaid shared savings are provided only to ACOs that are well-positioned to use prepaid shared savings to improve the quality and efficiency of care to their assigned beneficiaries while minimizing the risk of an ACO being unable to repay prepaid shared savings, we propose to limit the availability of prepaid shared savings to those ACOs that have a track record of success in the Shared Savings Program. This approach is also consistent with our compliance with section 1899(i)(3)(B) of the Act as such ACOs are most likely to be able to repay the upfront funding through earned shared savings.

We propose to establish the eligibility criteria for prepaid shared savings in § 425.640(b). CMS must determine that an ACO meets all of the following criteria for the ACO to be eligible to receive prepaid shared savings during an agreement period:

• The ACO is a renewing ACO as defined under § 425.20 entering an agreement period beginning on January 1, 2026, or in subsequent years.
• The ACO must have received a shared savings payment for the most recent performance year that:

(A) Occurred prior to the agreement period for which the ACO has applied to receive prepaid shared savings; and

(B) CMS has conducted financial reconciliation.

• The ACO must have a positive prior savings adjustment as calculated per § 425.658 at application disposition for the agreement period in which they would receive prepaid shared savings.
• The ACO does not have any outstanding shared losses or advance investment payments that have not yet been repaid to CMS after reconciliation for the most recent performance year for which CMS completed financial reconciliation.
• If the ACO received prepaid shared savings in the current agreement period or a prior agreement period, the ACO must have fully repaid the amount of prepaid shared savings received through the most recent performance year for which CMS has completed financial reconciliation.
• The ACO is participating in Levels C-E of the BASIC track or the ENHANCED track during the agreement period in which they would receive prepaid shared savings.
• The ACO has in place an adequate repayment mechanism in accordance with § 425.204(f) that can be used to recoup outstanding prepaid shared savings.
• During the agreement period immediately preceding the agreement period in which the ACO would receive prepaid shared savings, the ACO:

(A) Met the quality performance standard as specified under § 425.512; and

(B) Has not been determined by CMS to have avoided at-risk beneficiaries as specified under § 425.316(b)(2).

These eligibility criteria have been selected to allow only ACOs with a record of meeting the quality performance standard, not avoiding at risk beneficiaries, and recent success in earning shared savings to receive prepaid shared savings. This is for the protection of both CMS and the ACOs, as CMS does not want to overestimate an ACO's ability to earn future shared savings and burden an ACO with debt that they would not be able to repay. Our experience administering the Shared Savings Program leads us to determine that ACOs with prior success in the program—that is, ACOs with a record of meeting the quality performance standard, not avoiding at risk beneficiaries, and recent success in earning shared savings—are well positioned to identify beneficiary needs and invest prepaid shared savings to improve beneficiary care and are therefore most likely to benefit from prepaid shared savings. These ACOs would also be reasonably confident they will be able to repay CMS through their earned shared savings and would therefore be comfortable spending the funding they receive. Accordingly, CMS would only permit ACOs that are currently participating in the Shared Savings Program, that have earned shared savings in the most recent performance year for which financial reconciliation has been completed, and that have a positive prior savings adjustment at application disposition to receive prepaid shared savings, as they have the history of success that provides CMS with a more reasoned expectation that they will earn shared savings in the future. New ACOs would not be eligible for prepaid shared savings, as they do not have a recent performance history we can use to estimate future performance. Many new ACOs are eligible to receive advance investment payments, which are not available to ACOs currently participating in the Shared Savings Program. Advance investment payments are more tailored to the needs of a new ACO as there is more flexibility in the use of funding and advance investment payments do not need to be repaid in the event that the ACO does not earn shared savings.

Additionally, ACOs that did not meet the quality performance standard as specified under § 425.512 or were subject to a pre-termination action from CMS after determining an ACO avoided at-risk beneficiaries as specified under § 425.316(b)(2) in the agreement period preceding the agreement period in which they would receive prepaid shared savings would be prohibited from participating in the prepaid shared savings payment option, as these compliance issues can prevent an ACO from earning shared savings that would be used to repay the prepaid shared savings.

CMS also proposes to limit participation in the prepaid shared savings payment option to ACOs that have fully repaid all shared losses they may owe and any advance investment payments they may have received in a prior agreement period, and to ACOs that participate in a two-sided risk track (Levels C-E of the BASIC track or the ENHANCED track), as these tracks require a repayment mechanism in accordance with § 425.204(f), which could be used to recoup prepaid shared savings. CMS also proposes these criteria in part to limit participation to ACOs that are most likely to be able to repay any prepaid shared savings they receive. Similarly, if the ACO received prepaid shared savings in a current or previous agreement period, they must have fully repaid the amount of prepaid shared savings received though the most recent performance year for which CMS has completed financial reconciliation before they would be able to renew their participation in prepaid shared savings for another agreement period. For example, if an ACO is in the fifth year of its 5-year agreement period during which they have been receiving prepaid shared savings and is in the process of renewing for a new agreement period, CMS would ensure they have fully repaid the prepaid shared savings received from the first four performance years of their current agreement period through earned shared savings before they are approved to receive prepaid shared savings in a new agreement period. As CMS intends to provide prepaid shared savings to ACOs if they improve and maintain performance and continue to see success in the program on an annual basis, ACOs that are not initially eligible would have the option to participate in the prepaid shared savings payment option in future years if they demonstrate a more recent history of success in the program and meet the other eligibility criteria. These criteria also provide an additional incentive for ACOs to improve their performance in the program. CMS would also continue to review the eligibility criteria over time and may expand eligibility in future years if we determine that doing so is in the interests of the Shared Savings Program, participating ACOs, and their beneficiaries, and all requirements under section 1899(i)(3) of the Act are satisfied. Additionally, to standardize timelines for payment, spending, and recoupment of prepaid shared savings, ACOs would only be eligible for prepaid shared savings if they renew or early renew to begin a new agreement period. The proposed policies for the calculation, spending and recoupment of prepaid shared savings allow for up to five years for ACOs to receive, spend and repay the funding through earned shared savings. We propose to create a new paragraph in § 425.100(e) to establish that an ACO may receive prepaid shared savings if it meets the criteria under § 425.640(b). We propose in § 425.640(b) to specify the eligibility criteria for an ACO to receive prepaid shared savings. We seek comments on these proposals.

c. Application Procedure & Contents

We propose to establish the process for an ACO to apply for prepaid shared savings in § 425.640(c). Specifically, we propose that an ACO must submit to CMS supplemental application information sufficient for CMS to determine whether the ACO is eligible to receive prepaid shared savings. The application cycle for prepaid shared savings would be conducted as part of, and in conjunction with, the Shared Savings Program application process under § 425.202, with instructions and timelines published on the Shared Savings Program website. We propose the initial application cycle to apply for prepaid shared savings would be for a January 1, 2026, start date. We intend to provide further information regarding the process, including the application contents and specific requirements such as the deadline for submitting applications and all supplemental application information that would be required, through subregulatory guidance. The prepaid shared savings application procedure would also include a process by which CMS provides an applicant with feedback and an opportunity to clarify or revise their application.

CMS would provide preliminary information to the applicant ACO about its eligibility to receive prepaid shared savings during the Phase 1 application cycle requests for information, and a final determination about its eligibility to receive prepaid shared savings at the time of final application dispositions. For example, for ACOs applying in 2025 for an agreement period beginning in 2026, we would provide preliminary information identifying whether an ACO is likely to earn shared savings in the 2024 performance year and have a positive prior savings adjustment as calculated per § 425.658 at application disposition.

We propose at § 425.640(d)(1) that an ACO would be required to submit a spend plan as part of its application for prepaid shared savings. We propose that the plan must describe how the ACO would spend the prepaid shared savings during the first performance year of the agreement period during which the ACO would receive prepaid shared savings, including the breakdown of how the funding would be spent consistent with the allowable uses as described in section III.G.5.d of this proposed rule and information about: (1) direct beneficiary services that would be provided to ACO beneficiaries; and (2) investments that would be made in the ACO with prepaid shared savings. ACOs must also include their communication strategy for informing both CMS and any impacted beneficiaries if the ACO will no longer be providing any direct beneficiary services (as described in section III.G.5.d of this proposed rule) that had previously been provided by the ACO using prepaid shared savings. This communication strategy must include when and how the ACO intends to notify CMS and the impacted beneficiaries as well as any available alternatives for impacted beneficiaries to access similar services. ACOs would be able to limit the distribution of direct beneficiary services to subgroups of assigned beneficiaries including those with specific medical conditions or specific socioeconomic needs. ACOs would be required to attest that they will not discriminate on the basis of race, color, religion, sex, national origin, disability, or age with respect to their use of prepaid shared savings. ACOs would have flexibility to alter their use of prepaid shared savings from their submitted spend plans during each performance year but would be required to ensure than any changes to proposed spending aligns with the restrictions on spending discussed in section III.G.5.d of this proposed rule. CMS would review mid-year changes of the use of prepaid shared savings at the end of each performance year. CMS would also be able to review an ACO's spend plan at any time and require the ACO to modify its spend plan to comply with the requirements of § 425.640(d) and (i).

As discussed in greater detail in section III.G.5.h of this proposed rule, we would reserve the right to withhold or terminate an ACO's ability to receive the prepaid shared savings if it is not in compliance with the requirements of the Shared Savings Program codified in part 425 of our regulations, pursuant to proposed § 425.640(h)(1)(i). In addition, by certifying their application under § 425.202(a)(2), the ACO certifies that the information contained in the application, including information related to the intended use of prepaid shared savings, is accurate, complete, and truthful.

We propose at § 425.640(d) that we would review the information submitted in the ACO's prepaid shared savings application to determine whether an ACO meets the criteria for prepaid shared savings and would approve or deny the application accordingly. We would review the ACO's Shared Savings Program renewal application simultaneously with the prepaid shared savings application.

As discussed in section III.G.5.g of this proposed rule, we are also proposing to update our public reporting requirements under § 425.308 by adding new paragraph (b)(10) to require an ACO to publicly report its spend plan. We propose to require that the ACO post on its dedicated public reporting web page: (1) the total amount of prepaid shared savings received from CMS for each performance year; (2) the ACO's spend plan; and (3) an itemization of how the prepaid shared savings were actually spent during each performance year, including expenditure categories, the dollar amounts spent on the various categories, information about which groups of beneficiaries received direct beneficiary services that were purchased with prepaid shared savings and investments that were made in the ACO with prepaid shared savings, how these direct beneficiary services were provided to beneficiaries and how the direct beneficiary services and investments supported the care of beneficiaries, any changes to the spend plan as submitted under § 425.640(d)(2) (if applicable), and such other information as may be specified by CMS. Additionally, we are proposing that the ACO would be required to report the same information to CMS under § 425.640(i) to facilitate efficient monitoring. This would help ensure that CMS efficiently obtains information in a consistent manner from all ACOs receiving prepaid shared savings and thereby support CMS's monitoring and analysis of the use of prepaid shared savings. CMS will also make this data publicly available through a public use file. Further, we expect to use the submitted data as the template that ACOs can use to populate their public reporting web page early in each performance year to minimize administrative burden for ACOs. We also intend to use the information submitted to CMS to generate a public use file that can be used to quickly review the use of prepaid shared savings across all participating ACOs.

We propose to add § 425.640(c) and (d) to establish standards for the contents of an application to be determined eligible for prepaid shared savings as well as the procedures for filing such an application. We seek comments on these proposals.

d. Allowable and Prohibited Uses of Prepaid Shared Savings

We propose in § 425.640(e) to specify how an ACO may use prepaid shared savings. Similar to advance investment payments, prepaid shared savings are intended to improve quality and efficiency of items and services furnished to Medicare beneficiaries. We recognize that there are many ways to do this, and that the most effective ways would vary by ACO. Our proposal intends to provide ACOs with flexibility to use payments consistent with broad allowable uses. However, as prepaid shared savings are only available to ACOs that are currently successfully participating in the Shared Savings Program, we intend to place restrictions on the amount of total annual prepaid shared savings that can be spent on each category of spending. Financially successful ACOs are likely to have already made significant investments in staffing and healthcare infrastructure, as they are necessary for the functioning of an ACO, and we intend to encourage ACOs receiving prepaid shared savings to invest in direct beneficiary services that are not already offered by the ACO. Direct beneficiary services like vision, hearing and dental, and other services that have a reasonable expectation of improving or maintaining the health or overall function of ACO beneficiaries, have the potential to further improve beneficiary outcomes, reduce costs, and improve beneficiary engagement and willingness to receive care from a provider affiliated with an ACO. However, staffing and healthcare infrastructure are still important expenses that can have positive impacts on healthcare costs, ACO efficiency, the quality of beneficiary care, regardless of an ACO's experience in the Shared Savings Program. Accordingly, we also intend to allow ACOs to use some of their prepaid shared savings to invest in these areas. For each performance year, ACOs would be permitted to use up to 50 percent of their estimated annual prepaid shared savings on staffing and healthcare infrastructure and up to 100 percent of their estimated annual prepaid shared savings on direct beneficiary services. ACOs must use a minimum of 50 percent of their prepaid shared savings on direct beneficiary services.

We note that an ACO may use prepaid shared savings for staffing, healthcare infrastructure and direct beneficiary services in a manner that complies with the beneficiary incentives provision at § 425.304(a), (b), and newly proposed (d) as discussed in section III.G.5.i of this proposed rule, and all other applicable laws and regulations. Permitted uses for “staffing and healthcare infrastructure” include but are not limited to the following:

• Staffing. Examples could include, but are not limited to, hiring physicians, physicians' assistants, nurse practitioners, clinical nurse specialists, nutrition professionals, case managers, licensed clinical social workers, community health workers, patient navigators, health equity officers, psychiatrists, clinical psychologists, therapists, mental health counselors, licensed professional counselors, substance use counselors, peer support specialists, and other behavioral health clinicians, or staff education.
• Healthcare Infrastructure: Examples could include, but are not limited to, investments in or improvements to existing case or practice management systems, clinical data registries, electronic quality reporting, health information exchange participation, certified electronic health record technology (CEHRT), health IT to support behavioral health or dental services, IT-enabled screening tools, closed-loop referral tools, audiovisual interpreter technology, or practice physical accessibility improvements. Investments can be made for individual ACO providers/suppliers (as defined in § 425.20) or ACO wide.
• Direct beneficiary services include in-kind items or services provided to an ACO beneficiary that are not otherwise covered by Traditional Medicare but have a reasonable expectation of improving or maintaining the health or overall function of ACO beneficiaries. Direct beneficiary services can also include cost sharing support including the reduction of beneficiary copay or deductibles for Traditional Medicare beneficiaries. In advance of the application deadline for agreement periods beginning on January 1, 2026, we intend to release sub regulatory guidance with more specific information about permitted uses of funding for direct beneficiary services. Permitted uses for direct beneficiary services could include, but are not limited to the following: beneficiary meals, nutrition support, tenancy support and sustaining services, housing assistance, utility support, caregiver support services, services to address social isolation, home visits, transportation services, home or environmental modifications like air conditioners, bathroom safety devices, personal emergency response systems or medical alert systems, and vision, hearing or dental care directly provided by ACO providers/suppliers (as defined in § 425.20) or covered under a health insurance plan purchased by the ACO on behalf of the beneficiary. While some of these services are covered in some form by Traditional Medicare, prepaid shared savings funding reserved for direct beneficiary services would only be permitted to be used for those services if the version of the service offered by the ACO is not currently covered by Traditional Medicare and there is a reasonable expectation that those services will improve or maintain the health or overall function of ACO beneficiaries. For example, some types of home visits are covered by Traditional Medicare, but an ACO would be able to extend the number of home visits offered to beneficiaries beyond the number covered by Traditional Medicare with prepaid shared savings. Direct beneficiary services would also include cost-sharing support, including the reduction of beneficiary copay or deductibles for Traditional Medicare beneficiaries for Part B primary care services. ACOs would be able to provide cost-sharing support for primary care services (as defined in § 425.20) with respect to which coinsurance applies under Part B.

As discussed in section III.G.5.i of this proposed rule, if this rulemaking is finalized, CMS expects to make a determination that the anti-kickback statute safe harbor for CMS-sponsored model patient incentives (§ 1001.952(ii)(2)) is available to protect direct beneficiary services that are made in compliance with this policy and the conditions for use of the antikickback statute safe harbor set out at § 1001.952(ii)(2). As noted earlier in this preamble, ACOs that wish to provide direct beneficiary services beneficiaries through prepaid shared savings will need to submit a spend plan with information including the groups of beneficiaries they intend to provide with direct beneficiary services, how the direct beneficiary services will be provided to beneficiaries and how such services support the care of beneficiaries, and attest that they will not discriminate on the basis of race, color, religion, sex, national origin, disability, or age with respect to how they propose to spend prepaid shared savings. As proposed, ACOs will also be required to report their actual use of prepaid shared savings after the end of each performance year, including which groups of beneficiaries received direct beneficiary services, how such services were provided to beneficiaries, and how these services supported the care of beneficiaries.

Many direct beneficiary services may be provided by staff working for an ACO or its participating providers or suppliers. If a staff member is hired or directed to provide these services, ACOs may use dollars designated for direct beneficiary services to cover the percentage of their salary that aligns with the percentage of time the staff member spends providing direct beneficiary services that are not otherwise covered by Traditional Medicare. This funding may also be used to contract with a community-based organization (CBO) or other external entity to pay their staff to provide direct beneficiary services. Additionally, ACOs should take care to ensure that a direct beneficiary service that is provided to a beneficiary does not impact other Federal, state, or local means-tested benefits a beneficiary is already receiving and should provide beneficiaries with any necessary documentation regarding their receipt of the direct beneficiary service. If CMS finalizes this proposal, we would include additional information in our sub regulatory guidance regarding the approved uses for direct beneficiary services and potential impacts on beneficiary eligibility for other Federal means tested programs.

We propose in § 425.640(e)(2) that an ACO may not use prepaid shared savings for any expense other than those allowed under paragraph (e)(1). Prohibited uses of prepaid shared savings would include management company or parent company profit, performance bonuses, provision of medical services covered by Traditional Medicare, cash or cash equivalent payments to patients, and items or activities unrelated to the management and operations of an ACO or care of beneficiaries. Similar to advance investment payments, prepaid shared savings are intended to help an ACO put care processes in place to directly care for the unique needs of the ACO's beneficiary population, it is not intended to solely increase profits or to be spent on items unrelated to the management and operations of the ACO or the beneficiaries it serves. Additionally, we propose that an ACO participating in Levels C-E of the BASIC track or the ENHANCED track may not use any prepaid shared savings to pay back any shared losses that it would have incurred as specified in a written notice from CMS under § 425.605(e)(2) or § 425.610(h)(2), respectively.

To the extent that an ACO is addressing unmet social needs, including food insecurity and transportation problems, through direct beneficiary services, we encourage ACOs to coordinate with a community-based organization to provide these services. As explained in the CY 2023 PFS proposed rule (87 FR 46102), where we refer to CBO, we mean public or private not-for-profit entities that provide specific services to the community or targeted populations in the community to address the health and social needs of those populations. They may include community-action agencies, housing agencies, area agencies on aging, or other non-profits that apply for grants to perform social services. They may receive grants from other agencies in the U.S. Department of Health and Human Services, including Federal grants administered by the Center for Disease Control and Prevention (CDC), Administration for Children and Families (ACF), Administration for Community Living (ACL), or other Federal or State funded grants to provide social services.

Generally, such organizations know the populations they serve and their communities and may have the infrastructure or systems in place to help coordinate supportive services that address social determinants of health or serve as a source from which ACOs can receive information regarding community needs. Since CBOs have developed such an expertise, we believe it would be impactful for ACOs in the delivery of high-quality direct beneficiary services to contract with CBOs in the provision of these services. CMS further encourages ACOs to work with community care hubs, which are community-focused entities supporting a network of CBOs that provide services addressing health-related social needs and centralize administrative functions and operational infrastructure. Working directly with a community care hub can help connect the ACO with multiple smaller CBOs in the provision of direct beneficiary services. If an ACO works with a CBO to provide these types of services and this is reflected in its plan to address the needs of its population, we would consider them to be in compliance with the requirement at § 425.112(b)(2)(iii)(A), which requires an ACO to, in its plan to address the needs of its population, describe how it intends to partner with community stakeholders to improve the health of its population.

We also propose in § 425.640(f)(6) to allow ACOs receiving prepaid shared savings to request a smaller quarterly payment amount from CMS. For example, if an ACO is eligible for a maximum quarterly prepaid shared savings amount of one million dollars, we would estimate their annual prepaid shared savings to be four million dollars. This allows the ACO to spend up to two million dollars on staffing and healthcare infrastructure and up to their full $4 million payment amount on direct beneficiary services. However, the ACO may request a lower quarterly payment of $500,000 that results in the ACO only receiving two million dollars over the full performance year. This would also reduce the amount the ACO can spend on staffing and healthcare infrastructure as an ACO may not spend more than 50 percent of the prepaid shared savings they receive on staffing and healthcare infrastructure. In the event that CMS stops or reduces an ACOs quarterly payments during the performance year below the quarterly payment amount previously requested by the ACO, the reduction does not impact the total maximum amount they are permitted to spend on each category of allowable uses identified at the start of each year, as it would not be appropriate to subject ACOs to mid-year spend plan changes when they may have entered into contracting or other arrangements with staff or suppliers which could impact continuity of care. We would monitor how ACOs are spending these funds and, as necessary, revisit these guidelines in future rulemaking if changes are required.

We seek comment on these proposals.

e. Calculation of Prepaid Shared Savings

As noted in section III.G.5.a of this proposed rule, we have determined that prepaid shared savings would not result in additional program expenditures. While ACOs would be required to repay the prepaid shared savings they receive through earned shared savings, it is also important for CMS to avoid paying ACOs an amount of prepaid shared savings that they are unlikely to be able to repay through earned shared savings. While prepaid shared savings would be helpful in providing successful ACOs with additional cash flow that would encourage their investment in activities that could potentially reduce ACOs' costs and improve the quality of care that ACOs provide to their beneficiaries, overpaying ACOs might result in a level of outstanding debt for some ACOs that could disrupt their operations and potentially their participation in the Shared Savings Program as well as generate unnecessary financial risk for CMS. Our proposed policies on the calculation and distribution of the prepaid shared savings payments are intended to balance the benefit for the ACOs of receiving funding earlier with the risk of overpayment both for CMS and the ACO, while helping to ensure that prepaid shared savings do not result in additional program expenditures.

We are proposing a new § 425.640(f) to provide an ACO that CMS determines meets the eligibility criteria described in section III.G.5.b of this proposed rule with a prepaid shared savings payment for each quarter of an agreement period that they are determined to be eligible for prepaid shared savings equal to the maximum quarterly payment amount calculated pursuant to the methodology outlined in § 425.640(f)(2) (as further explained elsewhere in this section), the ACO elects to receive a lesser amount as described in § 425.640(f)(6) (as further explained in section III.G.5.d. of this proposed rule) or the payment is withheld or terminated pursuant to § 425.640(h). If an ACO's quarterly payment is withheld or terminated (as further explained in section III.G.5.f.(2) of this proposed rule), we would not provide ACOs with additional or catch-up payments if quarterly payments of prepaid shared savings are later resumed. We propose that under new § 425.640(f), CMS would notify in writing each ACO of its determination of the amount of prepaid shared savings. The notice would inform the ACO of its right to request reconsideration review in accordance with the procedures specified in subpart I of our regulations. If CMS does not make any prepaid shared savings payment, the notice would specify the reason(s) why and inform the ACO of its right to request reconsideration review in accordance with the standards specified in subpart I of our regulations. Thus, prior to each quarterly payment, we propose to provide the ACO with the notice described above in the form of a report that shows our calculation of the ACO's quarterly prepaid shared savings amount. We propose to coincide the timing of these notices with the timing of existing report packages sent to ACOs for informational purposes, in December (after initial assignment prior to a given performance year), May (after quarter 1 assignment for a given performance year), and August (after quarter 2 assignment for a given performance year). Accordingly, notice regarding the first and second quarterly payments that an eligible ACO would receive in a given performance year would be provided in December of the immediately preceding year. Subsequent notices regarding the third and fourth quarterly payments that an eligible ACO would receive in a given performance year would then be provided in May and August, respectively, of that performance year.

We are also proposing a new § 425.640(f)(2) to specify the calculation of an ACO's maximum quarterly prepaid shared savings payment. To calculate this payment, we propose calculating a prepaid shared savings multiplier, adjusting it by several factors explained later in this section, and then multiplying one-fourth of the adjusted multiplier by an ACO's assigned beneficiary person years. We propose to calculate the prepaid shared savings multiplier as the simple average of per capita savings or losses generated by the ACO during the two most recent performance years that have been financially reconciled at the time of the ACO's renewal application disposition, which constitute benchmark year (BY) 1 and BY2 of the agreement period in which the ACO may receive prepaid shared savings (“current agreement period,” hereafter). That is, we would exclude BY3 from the calculation of an ACO's average per capita savings or losses because the performance year that constitutes BY3 of the ACO's current agreement period would not have been financially reconciled at the time of the ACO's application disposition. Accordingly, the per capita savings for each performance year would be determined as the quotient of the ACO's total updated benchmark expenditures minus total performance year expenditures divided by performance year assigned beneficiary person years. For purposes of calculating the simple average of per capita savings or losses generated by the ACO during the two most recent performance years that have been financially reconciled, we would use all savings generated during each of the 2 performance years in the prepaid shared savings multiplier, not just savings that met or exceeded the ACO's minimum savings rate (MSR) for that prior performance year.

Under new § 425.640(f)(2)(iii), we propose to apply a proration factor to the prepaid shared savings multiplier to account for situations where an ACO's assigned beneficiary population is larger in BY1 and BY2 when calculated using the ACO's certified ACO participant list and assignment methodology for a given performance year within the current agreement period, as compared to the ACO's assigned beneficiary population when the ACO was reconciled for the performance years that constitute BY1 and BY2 of the current agreement period. Mathematically, to apply this proration factor we would calculate the ratio between: (1) the ACO's average assigned beneficiary person years for the 2 performance years that constitute BY1 and BY2 for the ACO's current agreement period (regardless of whether these performance years occurred over one or multiple prior agreement periods, which would occur if the ACO early renews immediately before the current agreement period) and (2) the average assigned beneficiary person years in BY1 and BY2 for the ACO's current agreement period calculated using the ACO's certified ACO participant list and assignment methodology for a given performance year within the current agreement period. Increases in the size of the ACO's assigned beneficiary population during the current agreement period would therefore result in a ratio less than 1, while decreases in the assigned beneficiary population would result in a ratio greater than 1. This ratio would be capped at 1 to avoid increasing the adjusted prepaid shared savings multiplier if the average number of beneficiaries assigned to the ACO across the 2 benchmark years of its current agreement period is lower than the average number of beneficiaries assigned during the 2 performance years that constitute BY1 and BY2. Prorating for growth in assignment would ensure that the prepaid shared savings amount does not exceed the amount of cumulative savings generated by the ACO during the performance years that constitute BY1 and BY2 for its current agreement period.

It is necessary to calculate a proration factor at the start of the ACO's current agreement period to account for several possible circumstances in which the ACO's assigned beneficiary population may be different in BY1 and BY2 when calculated using the ACO's certified ACO participant list and assignment methodology for a given performance year within the current agreement period, as compared to the ACO's assigned beneficiary population when the ACO was reconciled for the performance years that constitute BY1 and BY2 of the current agreement period. Specifically, changes in the size of the ACO's assigned beneficiary population at the start of the ACO's current agreement period could be due to the addition and removal of ACO participants or ACO providers/suppliers in accordance with § 425.118(b), a change to the ACO's beneficiary assignment methodology selection under § 425.226(a)(1), or changes to the beneficiary assignment methodology specified in 42 CFR part 425, subpart E.

Additionally, these circumstances could potentially arise after the start of the ACO's current agreement period. In turn, changes in the size of the ACO's assigned beneficiary population could potentially occur throughout the course of the current agreement period. Therefore, we propose in new § 425.640(f)(3)(ii) that for the second and each subsequent performance year during the term of the current agreement period, we would redetermine this proration factor.

In addition to pro-rating the prepaid shared savings multiplier, we also propose to adjust it in two ways. First, under new § 425.640(f)(2)(iv), we would apply a sharing rate scaling factor of 1/2 (or 50 percent). This sharing rate scaling factor would be similar to the scaling factor we apply under § 425.658(c)(1)(i) when calculating the prior savings adjustment, applicable to agreement periods beginning on or after January 1, 2024, as finalized in the CY 2023 final rule (refer to 87 FR 69899 through 69915). As with the prior savings adjustment calculation, it is important to consider a measure of the sharing rate used in determining the shared savings payment the ACO earned in the applicable performance years under the agreement period immediately before it would receive prepaid shared savings. Consistent with the prior savings adjustment scaling factor, 50 percent represents an appropriate multiplier in this context because it represents a middle ground between the maximum sharing rate of 75 percent under the ENHANCED track and the lower sharing rates available under the BASIC track.

Second, under new § 425.640(f)(2)(v)(A), we would apply a financial risk scaling factor equal to 2/3 . The purpose of the financial risk scaling factor would be to mitigate financial risk to the Medicare Trust Funds and to ACOs by reducing the possibility that an ACO's prepaid shared savings payments exceed the ACO's actual earned shared savings. The rationale for a financial risk scaling factor of this magnitude is that it enables us to account for a scenario in which an ACO earned zero per capita savings in the performance year that constitutes BY3 of the current agreement period, which is necessarily excluded from the calculation of an ACO's average per capita savings or losses for purposes of the prepaid shared savings multiplier because, as mentioned previously, the performance year that constitutes BY3 of the ACO's current agreement period would not have been financially reconciled at the time of the ACO's application disposition. Thus, by multiplying an ACO's average per capita savings or losses across BY1 and BY2 by a financial risk scaling factor equal to 2/3 , we are imposing a downward reduction on the prepaid shared savings multiplier by assuming that it would have been possible, in principle, for an ACO to have not earned any per capita savings in the performance year that constitutes BY3 of the current agreement period. By doing so, we are reducing the probability of distributing excessive prepaid shared savings. As discussed previously, it is important to avoid distribution of excessive prepaid shared savings because doing so could result in several undesirable outcomes, such as ACOs accruing debt to CMS that they are unable to repay, which could disruption the ACOs' operations and participation in the Shared Savings Program.

Consistent with calculations of the prior savings adjustment (refer to § 425.658), the positive regional adjustment (refer to § 425.656), and the proposed health equity benchmark adjustment (refer to section III.G.7.b of this proposed rule), we propose under new § 425.640(f)(2)(v)(B), to cap the pro-rated, adjusted prepaid shared savings multiplier at 5 percent of national per capita FFS expenditures for Parts A and B services in order to ensure that the amount of prepaid shared savings that an ACO receives does not exceed an amount that the ACO is able to repay through earned shared savings. Specifically, we propose to calculate the cap as 5 percent of national per capita FFS expenditures for Parts A and B services in BY2 for assignable beneficiaries identified for the 12-month calendar year corresponding to BY2. Consequently, under new § 425.640(f)(2)(v), the pro-rated, adjusted, and capped prepaid shared savings multiplier that would ultimately be used to calculate a given maximum quarterly prepaid shared savings payment would be equal to the lesser of (A) the pro-rated, adjusted prepaid shared savings multiplier or (B) 5 percent of national per capita FFS expenditures for Parts A and B services in BY2 for assignable beneficiaries.

To calculate a given maximum quarterly prepaid shared savings payment, we propose under new § 425.640(f)(4), to multiply one-fourth of the pro-rated, adjusted, and capped prepaid shared savings multiplier (to account for four quarterly payments) by the ACO's assigned beneficiary person years for the latest available assignment list for a given performance year within the current agreement period. Varying the maximum quarterly payment to reflect the latest available assigned beneficiary person years is similar to how we calculate the AIP quarterly payment calculation (refer to § 425.630(f), CY 2023 PFS final rule (87 FR 69797)), for which we use the latest available assignment list to calculate the quarterly advance investment payment amount. We propose to use the latest available beneficiary assigned person years for the maximum quarterly prepaid shared savings payment because an ACO's assigned beneficiary person years change over the course of a performance year and over the course of an agreement period. Because later assignment lists more closely reflect the final assignment list that would be used for calculating shared savings and losses for a given performance year within the current agreement period, later assignment lists are more likely than earlier assignment lists to facilitate calculation of quarterly prepaid shared savings payment amounts that closely align with the earned shared savings or losses that an ACO actually generates in the contemporaneous performance year. Using the latest available assigned beneficiary person years mitigates a financial risk that an ACO experiencing declining person years over the course of a performance year could receive excessive prepaid shared savings. As mentioned previously, overpaying prepaid shared savings could result in ACOs accruing a level of debt to CMS that they are unable to repay through earned shared savings which could, in turn, disrupt ACOs' operations and participation in the Shared Savings Program.

We propose to use assigned beneficiary person year values that CMS provides to ACOs in annual and quarterly informational reports. For ACOs under preliminary prospective assignment with retrospective reconciliation, Medicare assigns beneficiaries in a preliminary manner at the beginning of a performance year based on the most recent data available (§ 425.400(a)(2)(i)). Assignment is updated quarterly based on the most recent 12 or 24 months of data, as applicable, under the methodology described in §§ 425.402 and 425.404 (§ 425.400(a)(2)(ii)). ACOs under preliminary prospective assignment with retrospective reconciliation receive an assigned beneficiary person years value based on the most recent 12 or 24 months of data, as applicable, in annual and quarterly informational reports. For ACOs under prospective assignment, Medicare FFS beneficiaries are prospectively assigned to an ACO at the beginning of each benchmark or performance year based on the beneficiary's use of primary care services in the most recent 12 or 24 months, as applicable, for which data are available, using the assignment methodology described in §§ 425.402 and 425.404 (§ 425.400(a)(3)(i)). Each quarter, CMS excludes any prospectively assigned beneficiaries that meet the exclusion criteria under § 425.401(b). ACOs under prospective assignment receive a year-to-date assigned beneficiary person years value with each quarterly report package. For ACOs under prospective assignment, we would annualize the quarterly year-to-date assigned beneficiary person years values for use in the maximum quarterly prepaid shared savings payment calculation. For example, a year-to-date person years value of 1,500 with quarter 1 informational reports would be annualized by multiplying 1,500 by 4. A year-to-date person years value of 3,000 with quarter 2 information reports would be annualized by multiplying 3,000 by 2.

We further propose to account for circumstances when an ACO was not reconciled for the performance year that constitutes BY1 in the calculation of average per capita prior savings and the proration factor. For instance, ACOs that renew their agreement periods early or are re-entering may not be reconciled for one or more of the years preceding the start of their current agreement period depending upon the timing of the expiration or termination of their prior agreement period and the start of their current agreement period. We propose under new § 425.640(f)(2)(i), that if an ACO was not reconciled during one of the 2 performance years that constitute BY1 or BY2 of its current agreement period, the ACO would receive zero savings or losses for the BY corresponding to the performance year that was not financially reconciled in the calculation of the prepaid shared savings multiplier. CMS has no way to determine whether the ACO would have generated savings or losses during a performance year for which it was not reconciled. We believe this is appropriate because it enables us to obtain a more conservative prediction of the ACO's financial performance for a given performance year within the current agreement period than we would be able to obtain if we were to exclude the BY corresponding to the performance year that was not financially reconciled from the calculation of the prepaid shared savings multiplier. Excluding this year entirely from the calculation of average per capita prior savings would unduly increase the weight on the other year included in the prepaid shared savings multiplier calculation. This would be problematic in a case where the ACO's financial performance in the BY corresponding to the performance year that was financially reconciled is atypically high because it would upwardly bias the prediction of the ACO's financial performance for a given performance year within the current agreement period. Thus, by imputing zero savings or losses for a BY corresponding to a performance year that was not financially reconciled in the calculation of the prepaid shared savings multiplier, we are reducing the probability of overpredicting the financial performance of the ACO for a given performance year within the current agreement period and, in turn, the probability of distributing excessive prepaid shared savings. As mentioned previously, excessive distribution of prepaid shared savings could result in several undesirable outcomes, such as ACOs accruing debt to CMS that they are unable to repay, which could disrupt the ACOs' operations and participation in the Shared Savings Program.

In contrast, we determined that it would also be appropriate to exclude a year for which the ACO was not reconciled when calculating the proration factor. The purpose of the proration factor is to account for situations where an ACO's assigned beneficiary population calculated at financial reconciliation for the 2 performance years that constitute BY1 and BY2 of the ACO's current agreement period (numerator) is smaller than the ACO's assigned beneficiary population identified for those same years using the ACO's certified ACO participant list and assignment methodology for a given performance year within the current agreement period (denominator). If an ACO was not reconciled for one of the 2 performance years that constitute BY1 and BY2 of the current agreement period, it would naturally have zero assigned beneficiary person years determined at financial reconciliation for such year, which would factor into the numerator of the proration factor if such year was considered. However, the ACO would have positive beneficiary counts in the 2 performance years that constitute BY1 and BY2 of the current agreement period generated using the ACO's certified ACO participant list and assignment methodology for a given performance year within the current agreement period, which would factor into the denominator of the proration factor if such year was considered. Thus, if the numerator and the denominator were both calculated as averages over 2 years, incorporating a year for which the ACO was not reconciled in the calculation of the proration factor would artificially decrease the proration factor and lead to a smaller pro-rated average per capita prior savings for the ACO. Alternatively, if the numerator were calculated in a manner that excludes a performance year for which the ACO was not reconciled (that is, calculated in a manner that includes only the year for which the ACO was reconciled from among the 2 performance years that constitute BY1 and BY2 of the current agreement period) and the denominator was calculated as an average that included both of the 2 performance years that constitute BY1 and BY2 of the current agreement period, then the direction of the impact on the proration factor would depend on whether the number of assigned beneficiaries calculated using an ACO's current certified ACO participant list and assignment methodology in the benchmark year for which the ACO was not reconciled exceeds the number of assigned beneficiaries in the other benchmark year, and by how much. Therefore, we see no compelling reason to include a performance year immediately preceding the start of an ACO's current agreement period for which the ACO was not reconciled in the numerator or the denominator of the proration factor. Excluding such a year would ensure that the proration factor compares average person years determined for prior performance years at financial reconciliation (numerator) to average person years for those performance years determined using the ACO's current certified ACO participant list and assignment methodology (denominator) across a consistent set of years preceding the start of the ACO's current agreement period.

We also propose to account for certain circumstances where there could be changes to the values used in calculating the prepaid shared savings multiplier as a result of issuance of a revised initial determination of financial performance under § 425.315.

To account for these situations and for the need to recalculate the proration factor as described elsewhere in this section, we propose to specify in new § 425.640(f)(3) when CMS would recalculate the prepaid shared savings multiplier during the current agreement period. For the first performance year in the current agreement period, the ACO's prepaid shared savings multiplier would be recalculated for changes in per capita shared savings or losses for the performance years that constitute BY1 or BY2 and that are used in the calculation of the prepaid shared savings multiplier as a result of issuance of a revised initial determination under § 425.315. For the second and each subsequent performance year during the term of the current agreement period, the ACO's prepaid shared savings multiplier would be recalculated due to redetermining the proration factor for the addition and removal of ACO participants or ACO providers/suppliers in accordance with § 425.118(b), for a change to the ACO's beneficiary assignment methodology selection under § 425.226(a)(1), for a change to the beneficiary assignment methodology specified in subpart E of this part, and for changes in per capita shared savings or losses for the performance years that constitute BY1 or BY2 and that are used in the calculation of the prepaid shared savings multiplier as a result of issuance of a revised initial determination under § 425.315.

The specific computations involved in arriving at the maximum prepaid shared savings payment amount for a given ACO in a given quarter are described below.

• Step 1: Calculate a prepaid shared savings multiplier as the average per capita savings across the performance years that constitute BY1 and BY2 of the ACO's current agreement period. First, calculate the total per capita savings amount for each applicable performance year by subtracting assigned beneficiary expenditures from total benchmark expenditures and divide the difference by assigned beneficiary person years. Then, sum the resulting quotients and divide by 2. The per capita savings or losses would be set to zero for a performance year if the ACO was not reconciled for the performance year.
• Step 2: Apply a proration factor to the prepaid shared savings multiplier calculated in Step 1. The proration factor is equal to the ratio of the ACO's average assigned beneficiary person years for the 2 performance years that constitute BY1 and BY2 for the ACO's current agreement period (regardless of whether these performance years occurred over one or multiple prior agreement periods) and the ACO's average assigned beneficiary person years in BY1 and BY2 for the ACO's current agreement period calculated using the ACO's certified ACO participant list and assignment methodology for a given performance year within the current agreement period, capped at one. If the ACO was not reconciled for the performance year that constitutes BY1, the person years from that year (or years) would be excluded from the averages in the numerator and the denominator of this ratio. This ratio would be redetermined for each performance year during the agreement period in the event of any changes to the number of average person years in the benchmark years as a result of changes to the ACO's certified ACO participant list, a change to the ACO's beneficiary assignment methodology selection under § 425.226(a)(1), or changes to the beneficiary assignment methodology specified in 42 CFR part 425, subpart E.
• Step 3: Adjust the pro-rated prepaid shared savings multiplier calculated in Step 2. First, apply a shared savings scaling factor by multiplying the pro-rated prepaid shared savings multiplier by 0.50. Then, multiply the resulting value by 2/3 to apply a financial risk scaling factor.
• Step 4: Cap the pro-rated, adjusted prepaid shared savings multiplier at 5 percent of national per capita FFS expenditures for Parts A and B services in BY2 for assignable beneficiaries identified for the 12-month calendar year corresponding to BY2.
• Step 5: Multiply one-fourth of the pro-rated, adjusted, and capped prepaid shared savings multiplier by the assigned beneficiary person years derived from the ACO's latest available assignment list. The resulting product would serve as the ACO's total maximum prepaid shared savings payment for the applicable quarter. As discussed previously, an ACO's latest available assignment list is updated quarterly. For ACOs under preliminary prospective assignment with retrospective reconciliation, assignment is updated quarterly based on the most recent 12 or 24 months of data, as applicable, under the methodology described in §§ 425.402 and 425.404 (§ 425.400(a)(2)(ii)). For ACOs under prospective assignment, assignment is updated quarterly to exclude any prospectively assigned beneficiaries that meet the exclusion criteria under § 425.401(b) (§ 425.401(b)). Thus, consistent with the methodology that we apply in the case of advance investment payments, quarterly variations in an ACO's assignment list would translate to variations in the maximum quarterly total prepaid shared savings payments that an ACO may receive in any given quarter, in order to help ensure that the payments accurately reflect the attributes of the ACO's assigned beneficiary population throughout the current agreement period.

Table 37 presents a hypothetical example to demonstrate how the prepaid shared savings calculation would work in practice.

The ACO's maximum quarterly prepaid shared savings payments would set a ceiling on the amount of quarterly prepaid shared savings that an ACO could receive from CMS for each quarter. ACOs will be able to request to receive an amount of funding under this maximum amount. Prior to each performance year, ACOs would notify CMS of the amount of prepaid shared savings they want to receive in the first quarter under the maximum quarterly prepaid shared savings amount and the first quarterly payment will be used to determine the total amount of prepaid shared savings the ACO will use to budget for that performance year. We are proposing in new § 425.640(f)(5) that for the purposes of determining the amount of prepaid shared savings permitted to be allocated to the uses specified in § 425.640(e), the estimated annual prepaid shared savings amount can be calculated by multiplying the first quarterly payment amount the ACO would receive in each performance year by four. This allows the ACO to calculate the total amount of funding they are permitted to spend on each allowable use at the start of each performance year. If an ACO's maximum quarterly payments decrease over the performance year and result in the ACO receiving less than the estimated annual prepaid shared savings amount, the ACO would not be subject to compliance actions solely because it spent more than 50 percent of the actual annual amount of prepaid shared savings it received during that PY on staffing and healthcare infrastructure, as long as it did not spend more than 50 percent of the originally estimated annual prepaid shared savings amount on staffing and healthcare infrastructure. For example, if an ACO is eligible for a maximum quarterly prepaid shared savings payment of $300,000 for quarter 1 of a performance year, but only wishes to receive $250,000 for quarter 1 of a performance year, their estimated annual prepaid shared savings amount would be $1,000,000. This allows the ACO to spend up to $500,000 on staffing and healthcare infrastructure, or up to the full amount of $1,000,000 on direct beneficiary services. If an ACO has a reduction in assigned beneficiaries and is only eligible for a maximum quarterly prepaid shared savings payment of $200,000 for quarters 2, 3 and 4, this results in an actual total of $850,000 in received prepaid shared savings for the performance year. However, the ACO would still be permitted to spend up to $500,000 on staffing and healthcare infrastructure in that performance year, as that is 50 percent of the original estimated amount and we do not want to change budget maximums retroactively for an ACO.

f. Duration, Frequency and Withholding or Termination of Prepaid Shared Savings Payments

(1) Duration and Frequency

CMS anticipates that the vast majority of ACOs receiving prepaid shared savings would fully repay the amount they receive of prepaid shared savings from their earned shared savings on an annual basis. This would allow CMS to distribute prepaid shared savings to ACOs continually, throughout an agreement period in which the ACO is deemed eligible to participate, without withholding prepaid shared savings pursuant to § 425.640(h). We are proposing at § 425.640(f)(1) that ACOs would receive quarterly prepaid shared savings payments for the entirety of the ACO's agreement period unless withheld or terminated pursuant to § 425.640(h). However, we are also proposing at § 425.640(h)(3) that if CMS withholds or terminates a quarterly payment pursuant to paragraph (h), the ACO would not receive additional or catch-up payments if quarterly prepaid shared savings payments are later resumed. As discussed later in this section, prepaid shared savings payments would generally be withheld from ACOs when CMS has information that the ACO may not generate sufficient earned shared savings to repay the prepaid shared savings in current or future performance years or has other Shared Savings Program compliance issues. Once prepaid shared savings payments are withheld, if an ACO earns shared savings in a future year, then prepaid shared savings can resume at the time of the next scheduled quarterly payment, but catch-up payments would not be provided. This protects CMS from distributing payments that the ACOs may not be able to repay and the ACOs from accumulating more debt than they can repay through earned shared savings. An ACO would be notified if CMS is willing to resume prepaid shared savings payments, and would have the ability to elect to resume payments as well as select the payment amount they would like to receive under the maximum quarterly payment, if desired.

(2) Withholding and Termination

In order to ensure orderly administration of the Shared Savings Program, including protection of the Medicare Trust Funds, we intend to monitor the performance of ACOs receiving prepaid shared savings and propose that we may withhold or terminate quarterly prepaid shared savings payments under a variety of specified circumstances. Many of the circumstances under which we propose that CMS may withhold to terminate the payments directly relate to circumstances under which CMS would be concerned that the ACO has not or will not meet the standards for the use prepaid shared savings, such as an ACO's failure to comply with the requirements of proposed § 425.640. Other circumstances would address situations where it becomes apparent that the ACO's is likely to lack the ability to repay prepaid shared savings to CMS. For example, we propose that CMS may withhold or terminate the payments if CMS predicts that the ACO will not generate sufficient earned shared savings to repay the prepaid shared savings in future performance years or has other Shared Savings Program compliance issues. These predictions would be based on a rolling 12-month window of beneficiary claims data or year-to-date beneficiary claims data, depending on whether an ACO selects prospective Assignment or preliminary prospective assignment with retrospective reconciliation. We propose that CMS may also withhold quarterly payments if an ACO fails to earn enough shared savings in a performance year to fully repay the prepaid shared savings the ACO received during that performance year, in order to avoid the ACO accruing debt they would be unable to repay. As noted earlier in this section, an ACO would be notified if CMS determines the ACO is sufficiently likely to earn additional shared savings such that CMS could resume prepaid shared savings payments, in which case the ACO would have the ability to elect to resume payments and select the payment amount they would like to receive. Additionally, while unspent funds received for a performance year must be reallocated in the spend plan for the ACO's next performance year as noted in § 425.640(e)(3), if an ACO fails to spend a majority of the prepaid shared savings they receive in a performance year, CMS may withhold future quarterly payments until the ACO spends the funding they have already received and reports this spending to CMS through an updated spend plan. An ACO may also request that CMS withhold their future quarterly payments until the ACO is ready for payments to resume. ACOs that elect to have CMS withhold their prepaid shared savings payments would have the ability to later elect to resume payments as well as select the payment amount they would like to receive. If an ACO has unspent funding at the end of their agreement period, that funding must be repaid to CMS pursuant to proposed § 425.640(e)(3).

Accordingly, we propose at § 425.640(h)(1) that CMS may withhold or terminate prepaid shared savings during an agreement period if:

• The ACO fails to comply with any of the prepaid shared savings requirements of § 425.640;
• The ACO meets any of the grounds for ACO termination set forth in § 425.218(b);

• The ACO fails to earn sufficient shared savings from a performance year to repay the prepaid shared savings they received during that performance year;
• CMS determines that the ACO is not expected to earn shared savings in a performance year during the agreement period in which the ACO received prepaid shared savings, based on a rolling 12-month window of beneficiary claims data or year-to-date beneficiary claims data;
• The ACO falls below 5,000 assigned beneficiaries;
• The ACO fails to spend the majority of prepaid shared savings they receive in a performance year; or
• The ACO requests that CMS withhold a future quarterly payment

Additionally, we propose at § 425.640(h)(2) that CMS must terminate an ACO's prepaid shared savings during an agreement period if:

• The ACO fails to maintain an adequate repayment mechanism in accordance with § 425.204(f); or
• The ACO fails to meet the quality performance standard as specified under § 425.512 or is subject to a pre-termination action after CMS determined the ACO avoided at-risk beneficiaries as specified under § 425.316(b)(2).

We further propose under § 425.640(h)(4) that CMS may immediately terminate an ACO's prepaid shared savings under § 425.640(h)(1) and (2) without taking any of the pre-termination actions set forth in § 425.216.

In general, if an ACO is complying with the Shared Savings Program and prepaid shared savings requirements but is not achieving, or is not predicted to achieve, success in earning shared savings, CMS may withhold payments while the ACO works to improve their financial performance. For example, if an ACO is eligible to receive quarterly prepaid shared savings payments in an agreement period beginning in 2026 but does not earn shared savings during 2025 reconciliation that occurs in mid-2026, the ACO's quarterly payments would be withheld until the ACO earns shared savings in a future performance year reconciliation. Similar to our rationale for the eligibility requirement described at § 425.640(b)(2), we believe that recent past performance in earning shared savings provides information on the ACO's potential to earn future shared savings, and we would not distribute prepaid shared savings to ACOs that have not earned sufficient shared savings in their most recent reconciled performance year to repay the prepaid shared savings they received during that performance year.

Additionally, if CMS, through its financial monitoring of ACOs, predicts that an ACO would not earn shared savings in its current performance year, quarterly prepaid shared savings may be withheld until the ACO generates earned shared savings in the future. We expect that immediate termination of prepaid shared savings during an agreement period, without a possibility of resumption of payments during that agreement period, would be invoked only in cases of serious noncompliance with the requirements of § 425.640, including deliberately spending prepaid shared savings on a prohibited use, or when the ACO's actions or inaction poses a risk of harm to beneficiaries or negatively affects their access to care. We seek comment on these proposals.

g. Monitoring ACO Eligibility for and Use of Prepaid Shared Savings

To provide CMS with a clear indication of how ACOs intend to spend prepaid shared savings, help provide adequate protection to the Medicare Trust Funds, and prevent funds from being misdirected or appropriated for activities that do not fall within the parameters set forth within proposed § 425.640(e), we propose in § 425.316(f)(1) to monitor ACOs receiving prepaid shared savings for compliance with § 425.640(e) and to determine whether it would be appropriate to withhold or terminate an ACO's prepaid shared savings under § 425.640(h)(1) and (h)(2). For the first performance year of the current agreement period, we would monitor the ACO's use of prepaid shared savings by comparing the anticipated spending as set forth in the spend plan submitted with an ACO's application against the actual spending as reported by the ACO, including any expenditures not identified in the spend plan. ACOs would be required to submit a revised spend plan with updated anticipated spending annually, as well as annually report their actual expenditures to CMS and on their public reporting web page as noted in §§ 425.308(b)(10) and 425.640(i), and we would similarly monitor the ACO's use of prepaid shared savings during the current agreement period using the updated spend plan and those reports. The reported annual spending must include any expenditures of prepaid shared savings on items not identified in the spend plan. In the event that an ACO uses prepaid shared savings for uses not permitted by § 425.640(e), CMS would require them to reallocate the funding to a permitted use and may take compliance action as specified in §§ 425.216, 425.218 or withhold or terminate payments as specified in proposed § 425.640(h)(1).

Similar to the policy for advance investment payments (§ 425.630), we additionally believe that transparency of information in the healthcare sector facilitates more informed patient choice and offers incentives and feedback that help improve the quality and lower the cost of care and improve oversight with respect to program integrity. As CMS has discussed in previous final rules, improved transparency supports a number of program requirements. In particular, increased transparency is consistent with and supports the requirement under section 1899(b)(2)(A) of the Act for an ACO to be willing to “become accountable for the quality, cost, and overall care” of the Medicare beneficiaries assigned to it. Therefore, we believe it is desirable and consistent with section 1899(b)(2)(A) of the Act for several aspects of an ACO's use of prepaid shared savings to be available to the public. Making this information available would provide both Medicare beneficiaries and the general public with insight into the use of prepaid shared savings by an ACO.

Accordingly, we are proposing to modify § 425.308 to require that an ACO publicly report information annually regarding prepaid shared savings on its public reporting web page. Specifically, under proposed new § 425.308(b)(10), we are proposing that, for each performance year, an ACO would be required to report (in a standardized format specified by CMS) its spend plan for each performance year, the total amount of prepaid shared savings received, and an itemization of how any prepaid shared savings were actually spent during each year, including expenditure categories, the dollar amounts spent on the various categories, information about which beneficiaries received direct beneficiary services that were purchased with prepaid shared savings and investments that were made in the ACO with prepaid shared savings, any changes to the spend plan as submitted under § 425.640(d)(1), and such other information as may be specified by CMS. We propose that this itemization would include expenditures not identified or anticipated in the ACO's submitted spend plan, and any amounts remaining unspent. We are also proposing at § 425.640(i) that ACOs also be required to report this information directly to CMS.

Under this proposal, if CMS determined that an ACO used prepaid shared savings for a prohibited use under proposed § 425.640(e)(2), allocated over 50 percent of their annual maximum prepaid shared savings on staffing and healthcare infrastructure as proposed at § 425.640(e)(1)(i), or failed to spend at least 50 percent of the annual maximum prepaid shared savings on direct beneficiary services, CMS would require the ACO to reallocate the funding in compliance with § 425.640(e) and submit an updated spend plan demonstrating the reallocation by a deadline specified by CMS and may withhold or terminate the ACO's receipt of prepaid shared savings under proposed § 425.640(h)(1). CMS could also take compliance action as specified in §§ 425.216 and 425.218. If an ACO fails to reallocate prepaid shared savings it received by a deadline specified by CMS, the ACO must repay all prepaid shared savings it received and may be subject to compliance action as specified in §§ 425.216 and 425.218. CMS would provide written notification to the ACO of the amount due and the ACO must pay such amount no later than 90 days after the receipt of such notification.

Additionally, we note that under existing § 425.314, ACOs would be required to retain and provide CMS with access to adequate books, contracts, records, and other evidence to ensure that CMS has the information necessary to conduct appropriate monitoring and oversight of ACOs' use of prepaid shared savings (for example, invoices, receipts, and other supporting documentation of prepaid shared savings disbursements). To protect the Shared Savings Program and the Medicare Trust Funds, we would reserve the right under §§ 425.314 and 425.316(a) to audit and monitor ACO compliance with Shared Savings Program requirements, including with respect to prepaid shared savings. We would conduct audits as necessary to monitor and assess an ACO's use of prepaid shared savings and compliance with program requirements related to such payments. We seek comment on these proposals.

h. Recoupment of Prepaid Shared Savings

CMS anticipates that a vast majority of ACOs receiving prepaid shared savings would fully repay the amount they receive prepaid shared savings from their earned shared savings on an annual basis. However, as prepaid shared savings are an advance of the shared savings payments an ACO is expected to earn, we propose to recoup prepaid shared savings from ACOs that are unable to fully repay prepaid shared savings through their earned shared savings. This approach will also help ensure that prepaid shared savings would not result in additional expenditures for the Shared Savings Program, as required by section 1899(i)(3)(B) of the Act.

We are proposing to add a new § 425.640(g)(1) to recoup prepaid shared savings from earned shared savings, as defined in § 425.20, in each performance year. If there are insufficient shared savings to recoup the prepaid shared savings made to an ACO for a performance year, we would hold paying future prepaid shared savings payments and carry forward the remaining balance owed to subsequent performance year(s) in which the ACO achieves shared savings.

Under new § 425.640(g)(2), we propose that in circumstances where the amount of shared savings earned by the ACO is revised upward by CMS for any reason, we would reduce the redetermined amount of shared savings by the amount of prepaid shared savings made to the ACO as of the date of the redetermination. If the amount of shared savings earned by the ACO is revised downward by CMS for any reason, we propose that the ACO would not receive a refund of any portion of the prepaid shared savings previously recouped or otherwise repaid, and any prepaid shared savings that are now outstanding due to the revision in earned shared savings must be repaid to CMS upon request.

We propose under § 425.640(g)(3) that if an ACO has an outstanding balance of prepaid shared savings after the calculation of shared savings or losses for the final performance year of an agreement period in which an ACO receives prepaid shared savings, the ACO must repay any outstanding amount of prepaid shared savings it received in full upon request from CMS. CMS would provide written notification to the ACO of the amount due and the ACO must pay such amount no later than 90 days after the receipt of notification. If an ACO fails to repay any outstanding amount of prepaid shared savings within 90 days of the notification, CMS would recoup that amount from the ACO's repayment mechanism established under § 425.204(f).

For example, if an ACO received $300,000 in prepaid shared savings payments and earned shared savings of $500,000 for the first performance year, we would recoup $300,000 in prepaid shared savings payments and make $200,000 in reconciliation shared savings payments to the ACO. Alternatively, if an ACO received $300,000 in prepaid shared savings and earned shared savings of $200,000 for the first performance year, we would recoup only $200,000 in prepaid shared savings payment and not make a reconciliation shared savings payment to the ACO. The ACO would have future prepaid shared savings payments placed on hold, and the outstanding balance of $100,000 would be carried forward, to be recouped in a future performance year in which the ACO achieves shared savings. Under a third scenario, if the ACO does not earn sufficient shared savings in all 5 performance years of its agreement period, CMS would recoup the outstanding balance directly from the ACO under new § 425.640(g)(3). If the ACO fails to repay the funding to CMS, we would recoup the outstanding balance from the ACO's repayment mechanism.

Under the new § 425.640(g)(4), we propose that if an ACO or CMS terminates its participation agreement during the agreement period in which it received prepaid shared savings, the ACO must repay all outstanding prepaid shared savings received in full. In such a case, CMS would provide written notification to the ACO of the amount due and the ACO must pay such amount no later than 90 days after the receipt of notification. If an ACO fails to repay any outstanding amount of prepaid shared savings within 90 days of the notification, CMS would recoup that amount from the ACO's repayment mechanism established under § 425.204(f). We also propose edits to § 425.204(f) replacing the phrase “shared losses” with “shared losses and any prepaid shared savings” in several paragraphs to clarify that CMS would be able to recoup outstanding prepaid shared savings from an ACO's repayment mechanism. If the ACO terminates its participation agreement early in order to renew under a new participation agreement, CMS may also recover the amount owed by reducing the amount of any future shared savings the ACO may be eligible to receive.

In the event the ACO enters into proceedings relating to bankruptcy, whether voluntary or involuntary, we are proposing under § 425.630(g)(5) that the ACO must provide written notice of the bankruptcy to CMS and to the U.S. Attorney's Office in the district where the bankruptcy was filed, unless final payment for the agreement period has been made by either CMS or the administrative or judicial review proceedings relating to any payments under the Shared Savings Program have been fully and finally resolved. The notice of bankruptcy must be sent by certified mail no later than 5 days after the petition has been filed and must contain a copy of the filed bankruptcy petition (including its docket number). The notice to CMS must be addressed to the CMS Office of Financial Management at 7500 Security Boulevard, Mailstop C3-01-24, Baltimore, MD 21244, or such other address as may be specified on the CMS website for purposes of receiving such notices.

i. OIG Safe Harbor Authority

CMS expects to make a determination, if this rulemaking is finalized, that the anti-kickback statute safe harbor for CMS-sponsored model patient incentives (§ 1001.952(ii)(2)) is available to protect patient incentives that may be permitted under the final rule, if issued. Specifically, we expect to determine that the CMS-sponsored models safe harbor would be available to protect direct beneficiary services provided to beneficiaries through the prepaid shared savings payment option.

We propose to add a new paragraph (d) to § 425.304 that notes that CMS has determined that the Federal anti-kickback statute safe harbor for CMS-sponsored model patient incentives (42 CFR 1001.952(ii)(2)) is available to protect remuneration furnished in the prepaid shared savings program option of the Shared Savings Program in the form of direct beneficiary services that meets all safe harbor requirements set forth in § 1001.952(ii)(2).

We are seeking comment on all aspects of our proposals.

6. Advance Investment Payment Policies

a. Proposal To Allow ACOs Receiving Advance Investment Payments to Voluntarily Terminate Payments While Continuing Participation in the Shared Savings Program

Beginning January 1, 2024, CMS implemented a new payment option in the Shared Savings Program, advance investment payments (AIP), and codified AIP requirements at § 425.630. In the CY 2023 PFS final rule (87 FR 69803 through FR 69805), we discussed policies for termination of advance investment payments from ACOs whose participation agreements are terminated for noncompliance with certain requirements and finalized a recoupment policy in which all advance investment payments must be repaid to CMS within 90 days from the date CMS provided the ACO whose participation agreement was terminated with written notice of the amount due. These regulations are codified at § 425.630(g) and (h).

Currently, there are no regulations that account for an ACO that seeks to voluntarily terminate receipt of advance investment payments from CMS, but that wishes to remain in the Shared Savings Program for the rest of their agreement period. While we expect advance investment payment terminations to be an uncommon occurrence, since advance investment payments are a voluntary payment option, ACOs should be able to decline further participation. To accommodate voluntary terminations of advance investment payments for ACOs that wish to continue participating in the Shared Savings Program, CMS proposes to modify program regulations at § 425.630(g) and (h). CMS proposes to allow ACOs who wish to voluntarily terminate receipt of advance investment payments to do so and remain in the Shared Savings Program. An ACO may have justified business reasons for terminating receipt of advance investment payments (such as an ACO's desire to enter a CMS Innovation Center model whose eligibility criteria exclude ACOs that receive AIP). CMS wishes to amend its termination policies to account for such a scenario. It is the best interest of the Medicare Trust Funds and the Shared Savings Program to allow continued program participation by ACOs that terminate receipt of advance investment payments, especially among ACOs and ACO participants in, or that serve, underserved communities. Therefore, CMS proposes new regulations effective January 1, 2025, to allow ACOs to voluntarily terminate receipt of advance investment payments while remaining in the Shared Savings Program. Under this proposal, CMS would develop an advance investment payment voluntary termination notification process to allow ACOs to voluntarily terminate receipt of these payments. If this proposal is finalized, CMS would issue guidance regarding this process to participating Shared Savings Program ACOs shortly after publication of the CY 2025 PFS final rule.

We propose to update § 425.630(g) to state that if an ACO opts to voluntarily terminate from the advance investment payment option, they would be required to return any outstanding advance investment payments to CMS. Upon an ACO notifying CMS that it wants to terminate from the advance investment payment option, CMS would then provide a written notification to the ACO of the total amount of recoupment due. CMS would then require the ACO to repay the amount due no later than 90 days after the receipt of such notification. This aligns with how CMS recoups advance investment payments from ACOs whose advance investment payments are involuntarily terminated due to failure to comply with advance investment payment eligibility requirements under § 425.316(e)(3) and with the repayment requirements under § 425.630(g)(4), if an ACO chooses to terminate from the Shared Savings Program.

ACOs that terminate from the advance investment payment option would no longer be monitored for their appropriate use of advance investment payments once the payments are repaid to CMS. As such, ACOs that terminate would no longer be subject to annual reporting requirements for their spend plans once the payments are repaid to CMS. This proposal would allow an ACO additional flexibility to determine its best payment and participation options, making it easier for an ACO receiving advance investment payments to continue their participation in the Shared Savings Program long-term. As noted in the CY 2023 PFS final rule (87 FR 69784), advance investment payments were designed to assist ACOs that face difficulty funding the start-up costs for forming ACOs, caring for beneficiaries in underserved communities, and achieving long term success in the Shared Savings Program. Allowing these ACOs more flexibility would have the effect of supporting continued Shared Savings Program participation among these ACOs, including those serving rural and underserved populations.

CMS proposes to update § 425.630(g)(5) to state that if an ACO notifies CMS that it no longer wants to participate in the advance investment payment option but does want to continue its participation in the Shared Savings Program, the ACO must repay all outstanding advance investment payments it received. CMS would provide written notice to the ACO of the amount due and the ACO must pay such amount no later than 90 days after the receipt of such notification.

Additionally, CMS proposes conforming revisions to § 425.630(h) to clarify that ACOs can voluntarily terminate from the advance investment payment option. Specifically, CMS proposes to add a paragraph (h)(1)(iv) to read “Voluntarily terminates payments of advance investment payments but continues its participation in the Shared Savings Program.” CMS also proposed conforming revisions to § 425.630(h)(1)(ii) and (iii). We seek comment on these proposals. If finalized, the proposed changes would be effective beginning January 1, 2025.

b. Proposal To Recoup Advance Investment Payments When CMS Terminates the Participation Agreement of an ACO

Under current advance investment payment recoupment regulations, there is no clear pathway for CMS to recoup outstanding advance investment payments if CMS terminates an ACO's participation agreement in accordance with § 425.218(b). To address this and reduce the risk to the Trust Fund, CMS proposes to add new § 425.630(g)(6) to require ACOs to repay any outstanding advance investment payments in the event that CMS terminates the ACO's Shared Savings Program participation agreement.

Upon the termination of their Shared Savings Program participation agreement, the ACO's advance investment payments would cease immediately under § 425.630(h)(1)(ii). CMS would provide the ACO with written notification of the total amount due for the full recoupment of advance investment payments, and the ACO must pay such amount within 90 days after the receipt of such notification. This approach aligns with how CMS recoups advance investment payments for ACOs under § 425.630(g)(4) if an ACO receiving advance investment payments chooses to voluntarily terminate from the Shared Savings Program. This proposal protects CMS from not being able to recoup outstanding advance investment payments in the event CMS terminates an ACO's participation agreement in accordance with § 425.218(b).

Specifically, CMS proposes to add § 425.630(g)(6) to state that if CMS terminates the participation agreement of an ACO that has an outstanding balance of advance investment payments owed to CMS, the ACO must repay any outstanding advance investment payments it received. CMS would provide written notification to the ACO of the amount due and the ACO must pay such amount no later than 90 days after the receipt of such notification. If an ACO fails to fully repay the advance investment payments they received, CMS would carry forward any remaining balance owed to subsequent performance year(s) in which the ACO achieves shared savings, including in any performance year(s) in a subsequent agreement period.

We also propose conforming edits to § 425.630(g)(3) to remove the phrase “paragraph (g)(4) of this section” and adding in its place the phrase “paragraphs (g)(4) through (g)(6) of this section.” This would allow CMS to recoup more than the amount of shared savings earned by an ACO in a particular performance year in the event that an ACO or CMS terminates an ACO from the advance investment payment option or the Shared Savings Program as a whole. This proposal also would require CMS to renumber regulations at § 425.630(g). Therefore, we propose a conforming change to redesignate § 425.630(g)(5) as § 425.630(g)(7). We seek comment on these proposals. If finalized, these proposals would be effective beginning January 1, 2025.

7. Financial Methodology

a. Overview

In this section of this proposed rule, we are proposing modifications to the financial methodologies used under the Shared Savings Program. The modifications we propose would encourage participation in the program by removing barriers for ACOs serving underserved communities as well as provide greater specificity and clarity on how CMS would perform certain financial calculations in the Shared Savings Program. Specifically, we are proposing to create a health equity benchmark adjustment, to potentially provide an upward adjustment to an ACO's historical benchmark based on the proportion of beneficiaries they serve who are dually eligible or enrolled in the Medicare Part D low-income subsidy (LIS). We are also proposing to establish a calculation methodology to account for the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations, upon reopening a payment determination pursuant to § 425.315(a). We are proposing to establish an approach to identify significant, anomalous, and highly suspect (“SAHS”) billing activity in CY 2024 or subsequent calendar years. We are proposing to specify how we would exclude payment amounts from expenditure and revenue calculations for the relevant calendar year for which the SAHS billing activity is identified as well as from historical benchmarks used to reconcile the ACO for a performance year corresponding to the calendar year for which the SAHS billing activity was identified to mitigate the impact of SAHS billing activity. We seek comment on a financial model that would allow for higher risk and potential reward than currently available under the ENHANCED track while still meeting the requirements for use of our authority under section 1899(i)(3) of the Act, among other considerations for the financial model design. We are also proposing certain modifications for clarity and consistency in provisions of the Shared Savings Program regulations on calculation of the ACO risk score growth cap in risk adjusting the benchmark each performance year and the regional risk score growth cap in calculating the regional component of the three-way blended benchmark update factor.

b. Health Equity Benchmark Adjustment

(1) Background

(a) Summary of Statutory and Regulatory Background on Adjusting the Historical Benchmark

Section 1899(d)(1)(B)(ii) of the Act addresses how ACO benchmarks are to be established, updated, and reset at the start of each agreement period under the Shared Savings Program. This provision specifies that the Secretary shall estimate a benchmark for each agreement period for each ACO using the most recent available 3 years of per beneficiary expenditures for Parts A and B services for Medicare FFS beneficiaries assigned to the ACO. The benchmark shall be reset at the start of each agreement period. Section 1899(d)(1)(B)(ii) of the Act also provides the Secretary with discretion to adjust the historical benchmark by “such other factors as the Secretary determines appropriate.” Pursuant to this authority, over time we have adopted a variety of methods to adjust the historical benchmark to meet certain policy goals.

Benchmarking policies applicable to all ACOs in agreement periods beginning on January 1, 2024, and in subsequent years, are specified in § 425.652. We refer readers to discussions of the benchmark calculations in earlier rulemaking for details on the development of the current policies (see November 2011 final rule, 76 FR 67909 through 67927; June 2015 final rule, 80 FR 32785 through 32796; June 2016 final rule, 81 FR 37953 through 37991; December 2018 final rule, 83 FR 68005 through 68030; CY 2023 PFS final rule, 87 FR 69875 through 69928; and CY 2024 PFS final rule, 88 FR 79174 through 79208).

In the CY 2023 PFS final rule, we adopted policies to modify the regional adjustment under § 425.656 (refer to 87 FR 69915 through 69923) and to reinstate a prior savings adjustment under § 425.658 (refer to 87 FR 69898 through 69915). The modifications to the regional adjustment are designed to limit the impact of negative regional adjustments on ACO historical benchmarks and further incentivize program participation among ACOs serving high-cost beneficiaries. In the CY 2024 PFS final rule (refer to 88 FR 79185 through 79196), we modified the regional adjustment policy further to prevent any ACO from receiving an adjustment that would cause its benchmark to be lower than it would have been in the absence of a regional adjustment. The prior savings adjustment policy was developed such that a renewing or re-entering ACO may be eligible to receive an adjustment to its benchmark to account for savings generated in performance years that correspond to the benchmark years of its new agreement period. In the CY 2024 PFS final rule (refer to 88 FR 79196 through 79200), we modified the prior savings adjustment policy further to account for the following: a change in savings earned by the ACO in a benchmark year due to compliance action taken to address avoidance of at-risk beneficiaries or a change in the amount of savings or losses for a benchmark year as a result of a reopening of a prior determination of ACO shared savings or shared losses and the issuance of a revised initial determination under § 425.315.

(b) Methodology for Determining the Applicability of a Regional Adjustment or Prior Savings Adjustment to the ACO's Historical Benchmark, for Agreement Periods Beginning on or After January 1, 2024

Under the benchmarking methodology for agreement periods beginning on January 1, 2024, and in subsequent years, CMS calculates two adjustments to the historical benchmark, a regional adjustment (refer to § 425.656) and a prior savings adjustment (refer to § 425.658). We determine which adjustment is applied to the benchmark, either the regional adjustment, prior savings adjustment, or no adjustment (refer to § 425.652(a)(8) and (c)).

Under the current methodology, the adjustment that will apply in the establishment of benchmarks for ACOs entering an agreement period beginning on January 1, 2024, and in subsequent years, is calculated as follows:

• Step 1: Calculate capped regional adjustment expressed as a single dollar value as specified in § 425.656. CMS calculates the regional adjustment to the historical benchmark based on the ACO's regional service area expenditures, making separate calculations for the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual eligible Medicare and Medicaid beneficiaries.

++ Under § 425.656(c)(3), CMS caps the per capita dollar amount for each Medicare enrollment type at a dollar amount equal to a percentage of national per capita expenditures for Parts A and B services under the original Medicare fee-for-service (FFS) program in BY3 for assignable beneficiaries in that enrollment type identified for the 12-month calendar year corresponding to BY3 using data from the CMS Office of the Actuary.

-- Under § 425.656(c)(3)(i), for positive adjustments, the per capita dollar amount for a Medicare enrollment type is capped at 5 percent of the national per capita expenditure amount for the enrollment type for BY3.

-- Under § 425.656(c)(3)(ii), for negative adjustments, the per capita dollar amount for a Medicare enrollment type is capped at negative 1.5 percent of the national per capita expenditure amount for the enrollment type for BY3.

++ Under § 425.656(d)(1), CMS expresses the regional adjustment as a single value by taking a person year weighted average of the Medicare enrollment type-specific regional adjustment values.

• Step 2: For eligible ACOs, calculate the capped prior savings adjustment as specified in § 425.658. Under § 425.658(c)(1), CMS calculates an adjustment to the historical benchmark to account for savings generated in the 3 years prior to the start of the ACO's current agreement period for renewing or re-entering ACOs that were reconciled for one or more performance years in the Shared Savings Program during this period.
• Step 3: Determine the final adjustment to the benchmark, as specified in § 425.652(a)(8). Compare the regional adjustment in accordance with § 425.656 and the prior savings adjustment in accordance with § 425.658.

++ Under § 425.652(a)(8)(ii), if an ACO is not eligible to receive a prior savings adjustment under § 425.658(b)(3)(i), and the regional adjustment, expressed as a single value as described in § 425.656(d), is positive, the ACO will receive an adjustment to its benchmark equal to the positive regional adjustment amount. The adjustment will be calculated as described in § 425.656(c) and applied separately to the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual eligible Medicare and Medicaid beneficiaries. Under § 425.652(a)(8)(iii), if an ACO is not eligible to receive a prior savings adjustment under § 425.658(b)(3)(i), and the regional adjustment, expressed as a single value as described in § 425.656(d), is negative or zero, the ACO will not receive an adjustment to its benchmark.

++ Under § 425.652(a)(8)(iv), if an ACO is eligible to receive a prior savings adjustment and the regional adjustment, expressed as a single value as described in § 425.656(d), is positive, the ACO will receive an adjustment to its benchmark equal to the higher of the following:

-- Under § 425.652(a)(8)(iv)(A), the positive regional adjustment amount. The adjustment will be calculated as described in § 425.656(c) and applied separately to the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual eligible Medicare and Medicaid beneficiaries.

-- Under § 425.652(a)(8)(iv)(B), the prior savings adjustment. The adjustment will be calculated as described in § 425.658(c) and applied as a flat dollar amount to the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual eligible Medicare and Medicaid beneficiaries.

++ Under § 425.652(a)(8)(v), if an ACO is eligible to receive a prior savings adjustment and the regional adjustment, expressed as a single value as described in § 425.656(d), is negative or zero, the ACO will receive an adjustment to its benchmark equal to the prior savings adjustment. The adjustment will be calculated as described in § 425.658(c) and applied as a flat dollar amount to the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual eligible Medicare and Medicaid beneficiaries.

(c) Background on Incorporating Health Equity Data Within the Shared Savings Program

Development of a health equity benchmark adjustment builds upon Shared Savings Program policies finalized in the CY 2023 and CY 2024 PFS final rules to advance health equity, including the establishment of the health equity adjustment to an ACO's MIPS quality performance category score (applicable to all ACOs beginning with performance year 2023) (87 FR 69838 through 69857 and 88 FR 79114 through 79117); the availability of advance investment payments to eligible new, low revenue ACOs entering a new agreement period beginning on January 1, 2024, and in subsequent years (87 FR 69782 through 69805 and 88 FR 79208 through 79216); as well as changes to the benchmarking methodology aimed to facilitate participation by ACOs serving medically complex or underserved beneficiaries (87 FR 69915 through 69924 and 88 FR 79185 through 79195).

Further, in a Request for Information in the CY 2023 PFS final rule (87 FR 69977 through 69979), we discussed addressing health equity through benchmarking and summarized related comments. In the CY 2023 PFS final rule (87 FR 69978), we explained our interest in considering how direct modification of benchmarks to account for existing inequities in care can be used to advance health equity. The vast majority of commenters expressed support for exploring methodologies to address health equity via benchmarking changes. Specifically, many of these commenters noted that benchmark adjustments could be an effective tool to redirect resources to ACOs serving underserved communities. Multiple commenters commented specifically on the health equity benchmark adjustment approach utilized by the ACO Realizing Equity, Access, and Community Health (REACH) Model. Several of these commenters expressed support for using a similar methodology in implementing a health equity benchmark adjustment in the Shared Savings Program. In response, we stated that we will consider these comments in the development of policies for future rulemaking. Based on our experience with adjustments under the current benchmarking methodology, our experience establishing policies to advance health equity in the Shared Savings Program, and the support received for addressing health equity through benchmarking in response to the Request for Information, we have determined that it would be timely to implement a health equity benchmark adjustment (HEBA) into the Shared Savings Program's benchmarking methodology. Implementing a HEBA would ensure benchmarks continue to serve as a reasonable baseline when ACOs serve high proportions of beneficiaries who are members of underserved communities and incentivize ACOs to provide coordinated care to beneficiaries who are members of underserved communities.

A health equity benchmark adjustment is likely to encourage more participation in the Shared Savings Program by ACOs that serve beneficiaries who are members of rural and underserved communities by allowing them to participate with potentially higher benchmarks. That, in turn, would increase the likelihood that they could earn shared savings and increase the amount of those shared savings payments and reduce the financial barriers to forming ACOs that providers who serve underserved communities face. Benchmarks based on historically observed spending could be set too low if they are based on the spending of a population of underserved communities. An ACO serving such communities could be harmed financially if they are successful at improving access to high-value care during the performance period. Additionally, the Congressional Budget Office (CBO) recently reported high start-up costs for providers in rural and underserved communities as a barrier to forming ACOs. These providers may want to participate in ACOs but are disincentivized due to steep start-up costs.

A health equity benchmark adjustment would also encourage currently participating ACOs to attract more beneficiaries who are members of underserved communities and remain in the Shared Savings Program. Direct increases to benchmarks for ACOs serving higher proportions of beneficiaries who are members of underserved communities would grant additional financial resources to health care providers accountable for the care of these populations and may work to offset historical patterns of underspending that influence benchmark calculations.

The ACO REACH Model incorporates a HEBA to test a way to address historical health inequities within CMS ACO initiatives, with the intent of incentivizing ACOs to seek out and form relationships with beneficiaries who are members of underserved communities. The adjustment is intended to mitigate the disincentive for ACOs to serve underserved communities by accounting for historically suppressed spending levels for these populations. It is a critical step towards enabling ACOs to serve underserved communities in a manner that reflects their health needs. Likewise, the Shared Savings Program aims to design a health equity benchmark adjustment that achieves those same goals while aligning the program's benchmarking policies and health equity initiatives. The HEBA proposal is informed by CMS' initial experience with the ACO REACH Model, which includes a HEBA, that has been associated with increased participation in ACOs by safety net providers. Increasing access to providers participating in ACOs in rural and other underserved areas remains a priority for CMS to help address inequities in ACO participation and grow accountable care.

(2) Proposed Revisions

Relying on our authority under section 1899(d)(1)(B)(ii) of the Act, we are proposing a HEBA applicable to ACOs in agreement periods beginning on January 1, 2025, and in subsequent years. The proposed HEBA would offer a third method of upwardly adjusting an ACO's historical benchmark, in addition to the existing regional adjustment and prior savings adjustment. This upward adjustment to the historical benchmark is designed to benefit ACOs serving larger proportions of beneficiaries from underserved communities and receiving lower regional adjustments (§ 425.656) or lower prior savings adjustments (§ 425.658) or receiving neither adjustment. Under proposed § 425.652(a)(8)(ii), an ACO would receive the highest of the positive adjustments for which it is eligible, either the regional adjustment, prior savings adjustment, or health equity benchmark adjustment. If an ACO is not eligible to receive a prior savings adjustment or a HEBA, and the regional adjustment, expressed as a single value, is negative or zero, then the ACO would not receive an adjustment to its benchmark.

By increasing the likelihood that an ACO would earn shared savings and by potentially increasing the amount of shared savings earned, the HEBA is meant to provide a greater financial incentive for ACOs to serve more beneficiaries from underserved communities and to encourage ACOs already serving higher proportions of beneficiaries from underserved communities to enter and remain in the Shared Savings Program. Practices that serve large proportions of beneficiaries who are members of underserved communities that may otherwise see financial risk in joining the program may be incentivized to form an ACO and join the program with a health equity benchmark adjustment policy in place. In addition, currently participating ACOs that may otherwise see risk in attracting additional beneficiaries from underserved communities to their ACOs may be incentivized to do so with a health equity benchmark adjustment policy in place. We note that, if finalized, the proposed prepaid shared savings option (see section III.G.5 of this proposed rule) would operate synergistically with the proposed HEBA, in that ACOs that have been successful in earning shared savings while serving larger proportions of beneficiaries from underserved communities would in subsequent years have additional capabilities through prepaid shared savings to address the unmet health-related social needs of the beneficiaries they serve and may have higher benchmarks due to the HEBA.

We propose to calculate the HEBA as the multiplicative product of the HEBA scaler and the proportion of the ACO's assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid. We propose to calculate the HEBA scaler as a measure of the difference between the following two per-capita dollar values:

• 5 percent of national per capita expenditures for Parts A and B services under the original Medicare FFS program in BY3 for assignable beneficiaries identified for the 12-month calendar year corresponding to BY3 using data from the CMS Office of the Actuary, expressed as a single value by taking a person year weighted average of the Medicare enrollment type-specific values: ESRD, disabled, aged/dually eligible for Medicare and Medicaid, and aged/non-dually eligible for Medicare and Medicaid, and
• the higher of the regional adjustment expressed as a single value, the prior savings adjustment, or no adjustment, in the case where the regional adjustment is negative and the ACO is not eligible for the prior savings adjustment.

This approach would ensure that the value of the HEBA itself cannot exceed 5 percent of national assignable per capita expenditures expressed as a single value using the ACO's BY3 enrollment proportions, similar to the cap applied to the regional adjustment under § 425.656(c)(3) and the cap applied to the prior savings adjustment under § 425.658(c)(1)(ii).

For this proposed health equity benchmark adjustment, we propose to identify beneficiaries from underserved communities as those who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid. Furthermore, we propose to determine the proportion of the ACO's assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid using the ACO's performance year assigned population. Because a higher proportion of assigned beneficiaries who are enrolled in Medicare Part D LIS or dually eligible would result in a higher HEBA, using the performance year assigned population is expected to incentivize ACOs to provide coordinated care to beneficiaries who are members of underserved communities while accounting for changes in the ACO's population over the agreement period.

We propose to provide ACOs with a preliminary calculation of the HEBA near the start of their agreement period when final historical benchmarks are determined, using the ACO's BY3 assigned population in this preliminary calculation of the proportion of the ACO's assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid. We would then update the calculation when the ACO's historical benchmark is updated at the time of financial reconciliation for the performance year to reflect the ACO's performance year-assigned population in the calculation of the proportion of the ACO's assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid.

We propose that ACOs with a proportion of assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid of less than 20 percent would be ineligible for a HEBA. We believe that imposing this threshold of 20 percent would reinforce that the HEBA is intended for ACOs serving higher proportions of beneficiaries who are members of underserved communities. Based on data from 2022, the average proportion of ACO-assigned beneficiaries enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid was roughly 15 percent. Thus, ACOs meeting the threshold of 20 percent are serving a larger-than-average proportion of beneficiaries from underserved communities. Absent such a threshold, an ACO with a lower than average regional adjustment or prior savings adjustment (and therefore a larger HEBA scaler) that is providing care for relatively few beneficiaries from underserved communities may receive a sizable HEBA, which would reward the ACO despite it not serving a significant proportion of beneficiaries from underserved communities. This would not support the purpose of the HEBA, which is to provide a greater financial incentive for ACOs to serve more beneficiaries from communities and encourage practices already serving higher proportions of beneficiaries from underserved communities to enter and/or remain in the Shared Savings Program.

Under this proposed approach, simulation analysis based on 456 ACOs using historical benchmark data from 2023 indicates that 20 ACOs would receive a HEBA greater than either the prior savings adjustment or regional adjustment. With the HEBA applied, the average increase to historical benchmarks among these 20 ACOs would be $230 per capita, which corresponds to an increase of 1.57 percent to their historical benchmarks on average.

Tables 38 through 40 present hypothetical examples to demonstrate how the HEBA would work in practice.

We propose to implement the changes described in this section through revisions to § 425.652 and the addition of § 425.662. Specifically, within § 425.652, which sets forth the methodology for establishing, adjusting, and updating the benchmark for agreement periods beginning on January 1, 2024, and in subsequent years, we propose revisions to § 25.652(a)(8). As proposed, this revised provision would describe how we would determine and apply the adjustment to an ACO's benchmark, if any, based on a comparison of the ACO's regional adjustment expressed as a single value, prior savings adjustment, and the proposed health equity benchmark adjustment. Furthermore, we propose to amend § 425.652 by redesignating paragraphs (a)(9)(v) and (vi) as paragraphs (a)(9)(vi) and (vii), respectively, and to specify in a new paragraph (a)(9)(v) the adjustments made to the health equity benchmark adjustment for the first performance year during the term of the agreement period and in the second and each subsequent performance year during the term of the ACO's agreement period, if applicable. We also propose conforming changes in newly redesignated § 425.652(a)(9)(vi), specifying that CMS redetermines the adjustment to benchmark in accordance with § 425.652(a)(8), to list the HEBA along with the regional adjustment and prior savings adjustment. In the proposed new section of the regulation at § 425.662 we describe the calculation of the HEBA. We also propose to make conforming changes to § 425.658(d), which describes the applicability of the prior savings adjustment, to include consideration of the HEBA in addition to the regional adjustment, in determining the adjustment (if any) that would be applied to the ACO's benchmark. We seek comment on these proposals.

In combination with the proportion of ACO-assigned beneficiaries who are enrolled in the Medicare Part D LIS or are dually eligible for Medicare and Medicaid, we are seeking comment on the use of the Area Deprivation Index (ADI) to identify beneficiaries from underserved communities for purposes of determining eligibility for and the amount of any health equity benchmark adjustment. For example, similar to how the ADI is used in the underserved multiplier as part of the calculation of the health equity adjustment to an ACO's MIPS Quality performance category score (87 FR 69838 through 69857 and 88 FR 79114 through 79117), we are considering taking the higher of either the proportion of the ACO's assigned beneficiaries residing in a census block group with an ADI national percentile rank of at least 85 or the proportion of the ACO's assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid to determine eligibility for and the amount of any health equity benchmark adjustment. CMS will explore how best to incorporate geographic parameters into Shared Savings Program benchmark adjustments, informed by the current use of the ADI in other health equity provisions of the Shared Savings Program. CMS will also consider learnings from the Innovation Center's ACO REACH Model, which is testing the use of the ADI as a component of the model's HEBA. By considering the ADI in addition to the proportion of ACO-assigned beneficiaries who are enrolled in the Medicare Part D LIS or are dually eligible for Medicare and Medicaid, the HEBA would more closely align with existing Shared Savings Program policies to advance health equity, such as the health equity adjustment to an ACO's MIPS Quality performance category score (87 FR 69838 through 69857 and 88 FR 79114 through 79117) and the calculation of the amount of quarterly advance investment payments made available to eligible new, low revenue ACOs (87 FR 69782 through 69805 and 88 FR 79208 through 79216).

Additionally, recent analyses have found that the ADI weights 2 variables (median home value and median income) higher relative to the weights associated with the other 15 variables in the index, which may have limited contributions in determining the ADI. In many indexes, variables are standardized to the same range for ease of comparison, prior to incorporation into the index. The ADI does not standardize its variables; median home value and median income are measured on their local area dollar-value scales, which are larger than the scales on which the other variables are measured. Some researchers have reported that, without standardization, the ADI overemphasizes the 2 variables (median home value and median income), a finding that may underscore the importance of using standardized values. We seek comment on considering the ADI for purposes of determining eligibility for and the amount of any health equity benchmark adjustment, and related factors including the calculation of the ADI.

c. Reopening ACO Payment Determinations

(1) Background

(a) Statutory Background on Shared Savings Program Financial Calculations

Section 1899(d)(1)(B)(ii) of the Act provides for the calculation and update of ACO benchmarks under the Shared Savings Program. This provision specifies that the Secretary shall estimate a benchmark for each agreement period for each ACO using the most recent available 3 years of per beneficiary expenditures for Parts A and B services for Medicare FFS beneficiaries assigned to the ACO. Such benchmark shall be adjusted for beneficiary characteristics and such other factors as the Secretary determines appropriate and updated by the projected absolute amount of growth in national per capita expenditures for Parts A and B services under the original Medicare FFS program, as estimated by the Secretary. Further, an ACO's benchmark must be reset at the start of each agreement period. Section 1899(d)(1)(B)(i) of the Act specifies that, in each year of the agreement period, an ACO is eligible to receive payment for shared savings only if the estimated average per capita Medicare expenditures under the ACO for Medicare FFS beneficiaries for Parts A and B services, adjusted for beneficiary characteristics, is at least the percent specified by the Secretary below the applicable benchmark under section 1899(d)(1)(B)(ii) of the Act.

Section 1899(i)(3) of the Act authorizes the Secretary to use other payment models, if the Secretary determines it is appropriate, and if the Secretary determines that doing so would improve the quality and efficiency of items and services furnished under Title XVIII and the alternative methodology would result in program expenditures equal to or lower than those that would result under the statutory payment model. As discussed in earlier rulemaking, we have used the authority under section 1899(i)(3) of the Act to adopt alternative policies to the provisions of section 1899(d)(1)(B) of the Act for updating the historical benchmark and calculating performance year expenditures, among other factors. We have also used our authority under section 1899(i)(3) of the Act to establish the Shared Savings Program's two-sided payment models, and to mitigate shared losses owed by ACOs affected by extreme and uncontrollable circumstances during PY 2017 and subsequent performance years.

(b) Background on Shared Savings Program Reopening Policy and Financial Calculation Methodology

Under § 425.315(a)(1), if CMS determines that the amount of shared savings due to the ACO or the amount of shared losses owed by the ACO has been calculated in error CMS may reopen the initial determination or a final agency determination under subpart I and issue a revised initial determination: (i) at any time in the case of fraud or similar fault as defined in § 405.902; or (ii) not later than 4 years after the date of the notification to the ACO of the initial determination of savings or losses for the relevant performance year, for good cause.

In accordance with § 425.315(a)(2), good cause may be established when (i) there is new and material evidence that was not available or known at the time of the payment determination and may result in a different conclusion, or (ii) the evidence that was considered in making the payment determination clearly shows on its face that an obvious error was made at the time of the payment determination. Section 425.315(a)(3) specifies that a change of legal interpretation or policy by CMS in a regulation, CMS ruling or CMS general instruction, whether made in response to judicial precedent or otherwise, is not a basis for reopening a payment determination under the Shared Savings Program regulations. CMS has sole discretion to determine whether good cause exists for reopening a payment determination (§ 425.315(a)(4)).

We first adopted a reopening policy in the November 2011 final rule, where we finalized at § 425.314(a)(4) a provision reserving the right for CMS to reopen the initial determination and issue a revised initial determination, if as a result of any inspection, evaluation, or audit, it is determined that the amount of shared savings due to the ACO or amount of shared losses owed by the ACO has been calculated in error (see 76 FR 67957 through 67958, and 67982). In the June 2016 final rule, we revised the Shared Savings Program regulations, including to remove the provision in § 425.314(a)(4), and further specify the reopening policy in a new section of the regulation at § 425.315 (81 FR 37997 through 38002, and 38013 through 38014). We subsequently revised § 425.315 to apply the policies on reopening determinations to payment determinations for a 6-month performance year or 6-month performance period during CY 2019 (refer to the November 2018 final rule, 83 FR 59958 and 60092, and the December 2018 final rule, 83 FR 67955 through 67967), and to ACOs participating in the BASIC track (refer to the December 2018 final rule, 83 FR 67842 and 68068). In the CY 2023 PFS final rule, we clarified the circumstances in which CMS would exercise discretion to reopen the initial determination of an ACO's financial performance for good cause to correct errors in the determination of MIPS Quality performance category scores that affect the determination of whether an ACO is eligible for shared savings, the amount of shared savings due to the ACO, or the amount of shared losses owed by the ACO (see 87 FR 69868 through 69869).

Most recently, in the CY 2024 PFS final rule, we finalized an approach to recalculating the prior savings adjustment for changes in values used in benchmark calculations due to compliance action taken to address avoidance of at-risk beneficiaries, or as a result of the issuance of a revised initial determination of financial performance for a previous performance year following a reopening of ACO shared savings and shared losses calculations (88 FR 79195 through 79200). In the CY 2024 PFS final rule, we also discussed a proposed timing cutoff such that changes to savings or losses for a benchmark year that were finalized after notification to the ACO of the initial determination of shared savings or shared losses for a given performance year would be reflected in the adjusted benchmark applied to any subsequent performance year during the relevant agreement period but would not be retroactively applied to completed performance years in the agreement period (88 FR 79198 through 79200). We stated that we believed it would be appropriate to consider new information that could impact the prior savings adjustment up to the point at which an ACO receives its initial determination. However, we also noted that we would continue to consider the complexities surrounding reopening initial determinations for multiple prior performance years throughout the program's benchmarking and financial reconciliation methodologies and may address this issue in future rulemaking (88 FR 79199). We refer readers to these discussions in past rulemaking for additional details.

In our earlier rulemaking, we did not discuss the specific methodology that would be employed for recalculating an ACO's shared savings or shared losses in the event of a reopening in order to issue a revised initial determination. As additional background, in the following discussion, we summarize the general approach to identification and use of payment amounts from Medicare FFS Parts A and B FFS claims and certain other payment amounts in Shared Savings Program calculations.

Under the Shared Savings Program, providers and suppliers continue to bill for services furnished to Medicare beneficiaries and receive FFS payments under traditional Medicare. CMS uses payment amounts for Parts A and B FFS claims for calculating benchmark and performance year expenditures and determining benchmark update factors as specified in the Shared Savings Program regulations in subpart G. These operations typically require the determination of expenditures for Parts A and B services under the original Medicare FFS program for a specified population of Medicare FFS beneficiaries or the Medicare Parts A and B FFS revenue of ACO participants. The Medicare FFS beneficiary population for which expenditures are determined may differ depending on the specific program operation being performed and may reflect expenditures for the ACO's assigned beneficiaries, assignable beneficiaries, or all Medicare FFS beneficiaries. The applicable Medicare FFS beneficiary population is specified in the regulations governing each program operation.

In calculating expenditures for Medicare FFS beneficiaries used in Shared Savings Program calculations, CMS uses payment amounts included on Parts A and B FFS claims with dates of service in the relevant benchmark or performance year, allowing for a 3-month claims run out, as follows: claim payment amounts identified for inpatient, Skilled Nursing Facility (SNF), outpatient, Home Health Agency (HHA), and hospice claims at any provider; and line item payment amounts identified for carrier (including physician/supplier Part B) and Durable Medical Equipment, Prosthetics, Orthotics & Supplies (DMEPOS) claims. For both Parts A and B claims, CMS excludes payments on denied claims or line items from the calculation, for claims or line items with dates of service within the relevant benchmark year or performance year, processed before the end of the 3-month claims run out period. In calculating expenditure amounts for Medicare FFS beneficiaries under the Shared Savings Program, CMS makes certain adjustments, which if applicable, exclude indirect medical education (IME) and disproportionate share hospital (DSH) payments, and the supplemental payment for IHS/Tribal hospitals and Puerto Rico hospitals, and take into consideration individually beneficiary identifiable final payments made under a demonstration, pilot or time limited program. We also account for certain population-based payments or other similarly structured payments made under other Medicare shared savings initiatives, specifically the Pioneer ACO Model, Next Generation ACO Model, Vermont All-Payer ACO Model, and ACO REACH Model (as applicable). Population-based payments are a per-beneficiary per month payment amount intended to replace some or all of the FFS payments with prospective monthly payment.

The Shared Savings Program's existing financial methodology does not fully account for actions taken to protect the integrity of the Medicare program, or address the impact of improper payments, including improper payments resulting from fraud or similar fault on program calculations. For instance, demanded overpayment determinations resulting in adjusted claim or line item payment amounts after the 3-month claims run out period, or aggregate amounts that are not linked to specific claims or line items, are not accounted for in Shared Savings Program expenditure calculations. Additionally, under the existing financial methodology for the Shared Savings Program, we lack a means to account for improper payment amounts identified in a settlement agreement between a provider or supplier and the Government or a court's judgment, including pursuant to conduct by individuals or entities performing functions or services related to an ACO's activities. Under the proposed approach described in section III.G.7.c.(2).(c) of this proposed rule, the term “improper payment” for purposes of the Shared Savings Program would include an amount associated with a demanded overpayment determination and certain amounts identified in a settlement agreement or judgment that have the potential to impact program financial calculations. Since January 2023, we have evaluated several cases where such improper payments may have impacted one or more reconciled performance years for an ACO under the Shared Savings Program, including cases where ACOs reported concerns about alleged fraud or similar fault to CMS. It is thus timely and appropriate to undertake notice and comment rulemaking to establish a calculation methodology to account for the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations, upon reopening a payment determination pursuant to § 425.315(a); to describe factors that we may consider in exercising our discretion to reopen an ACO's payment determination under which we apply the proposed methodology to recalculate the ACO's financial performance; and to propose to establish a process by which an ACO could request a reopening of an initial determination of shared savings or shared losses. Our experience reviewing several cases supported the development of our proposed revisions to Shared Savings Program policies.

(2) Proposed Revisions

This section of this proposed rule includes a proposed change to the provision specifying CMS' discretion to reopen payment determinations under § 425.315(a)(4) (as described in section III.G.7.c.(2).(a) of this proposed rule). We discuss and seek comment on the circumstances in which we would exercise our discretion to reopen a payment determination and issue a revised initial determination to account for the impact of identified improper payments on Shared Savings Program calculations (as described in section III.G.7.c.(2).(b) of this proposed rule). We propose modifications to the Shared Savings Program regulations to specify a calculation methodology to account for the impact of identified improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations, upon reopening a payment determination pursuant to § 425.315(a) (as described in section III.G.7.c.(2).(c) of this proposed rule). We also propose certain adjustments to Shared Savings Program benchmark calculations to account for the impact of identified improper payments, in the event a performance year for which we issue a revised initial determination becomes a benchmark year of an ACO's current agreement period, and when CMS has not yet issued an initial determination for a performance year of the ACO's current agreement period (as described in section III.G.7.c.(2).(d) of this proposed rule). Lastly, we propose a process for ACOs to request that CMS reopen a payment determination (as described in section III.G.7.c.(2).(e) of this proposed rule), and briefly discuss the role of ACOs in preventing and reporting Medicare fraud (as described in section III.G.7.c.(2).(f) of this proposed rule). Our specific proposals are discussed in detail in the following sections.

We propose that the policy changes discussed in this section of this proposed rule would be effective January 1, 2025, unless specified otherwise. Should the proposed policies be finalized, the policies would apply to reopening requests made on or after January 1, 2025. As described in section III.G.7.c.(2).(e) of this proposed rule, we propose to establish a process by which an ACO may request a reopening review. If finalized, we anticipate continuing to evaluate previously received reopening requests for performance years for which initial determinations were issued prior to January 1, 2025, consistent with the timeframes specified under § 425.315(a)(1). We anticipate consistently applying the recalculation methodology to account for the impact of improper payments, described in section III.G.7.c.(2).(c) of this proposed rule, if finalized, in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations, upon reopening a payment determination pursuant to § 425.315(a).

(a) Proposed Change to Provision Specifying CMS' Discretion To Reopen Payment Determinations

In earlier rulemaking we explained that CMS would have discretion to reopen a payment determination for fraud or similar fault, or good cause, as reflected in the provisions in § 425.315(a)(1) and (4). The latter provision expressly provides that CMS has sole discretion to determine whether good cause exists for reopening a payment determination. In the June 2016 final rule, in restating the discussion of the proposal from the February 2016 proposed rule, we explained that CMS would have discretion to reopen a payment determination at any time in the case of fraud or “similar fault,” as defined in § 405.902 (81 FR 37998).

We continue to believe that it is important to maintain CMS' sole discretion in determining whether to reopen a payment determination. We also believe it is important to preserve CMS' flexibility in determining whether reopening is warranted to address the impact of fraud or similar fault on Shared Savings Program calculations, in particular given the potential for various actions to be taken by CMS, law enforcement agencies and courts in response to fraud or similar fault. Thus, we are proposing revisions to § 425.315(a)(4) to make clear CMS' discretion to determine whether to reopen a payment determination applies in the case of fraud or similar fault, as well as to determining whether good cause exists to reopen a payment determination.

(b) Considerations for Reopening a Payment Determination To Account for Improper Payments

In the discussion that follows we describe factors CMS may consider to inform our decision of whether to reopen an initial determination of an ACO's financial performance pursuant to § 425.315(a)(1)(i) or (ii) to account for the impact of improper payments that affect the determination of whether an ACO is eligible for shared savings or liable for shared losses, and the amount of shared savings due to the ACO or the amount of shared losses owed by the ACO. We welcome comments on these considerations. We also anticipate revisiting these considerations as we gain experience with processing ACO reopening requests as described in section III.G.7.c.(2).(e) of this proposed rule, reopening payment determinations and applying the calculation methodology described in section III.G.7.c.(2).(c) of this proposed rule and applying the benchmark adjustment described in section III.G.7.c.(2).(d) of this proposed rule. If appropriate, we may revisit these considerations for exercising our discretion to reopen payment determinations in future notice and comment rulemaking.

As an initial matter, the Shared Savings Program would need to identify improper payments that have the potential to impact program financial calculations. The Shared Savings Program depends on input from the CMS Center for Program Integrity (CPI) and law enforcement agencies (including the Department of Justice) to identify and quantify improper payments potentially impacting expenditures used in program calculations that are not otherwise accounted for in Shared Savings Program expenditure calculations as described in this section of this proposed rule. This could include: (1) certain demanded overpayment determinations, such as demanded overpayment amounts that result in adjusted claim or line item payment amounts associated with dates of service during a performance year or benchmark year, where the adjustment occurs after the 3-month claims run out period, and demanded extrapolated overpayment amounts which are aggregate amounts that are not linked to specific claims or line items and are not currently accounted for in Shared Savings Program expenditures; and (2) improper payments resulting from conduct by individuals or entities performing functions or services related to an ACO's activities as identified in certain settlement agreements or judgments. Refer to section III.G.7.c.(2).(c) of this proposed rule for discussion of considerations for identifying these amounts. Further, as discussed in greater detail in section III.G.7.c.(2).(e) of this proposed rule, ACOs can play an important role in identifying for CMS improper payments that may impact Shared Savings Program calculations. ACO reopening requests submitted to CMS may be another means by which the Shared Savings Program becomes aware of improper payments impacting ACO financial calculations; however, CMS would retain discretion over whether to reopen payment determinations after reviewing information provided in such requests.

Second, we anticipate needing to perform an initial analysis of whether the improper payments would warrant reopening the ACO's payment determination. This analysis may include a number of factors, such as whether the improper payments meet the requirements for reopening for fraud or similar fault in accordance with § 425.315(a)(1)(i), or for good cause in accordance with § 425.315(a)(1)(ii) and (a)(2). A variety of circumstances could lead CMS, law enforcement agencies or courts to determine whether good cause exists or whether fraud or similar fault has occurred. The timelines associated with the related investigations, and the potential for various actions to be taken in response, can make it challenging to identify a one-size-fits-all approach to addressing the impact of improper payments on Shared Savings Program calculations. We note that once we are notified of potential improper payments impacting Shared Savings Program calculations, it may take months or years to determine the actual amount of any improper payments impacting an ACO's payment determination, particularly if we are awaiting the conclusion of program integrity and law enforcement investigations, among other possible determinations about the related conduct of providers or suppliers. Additionally, administrative action and judicial action leading to the identification of improper payments may be subject to appeal, and ultimately the amount of the improper payments may be redetermined or otherwise amended. It would further protract the timeline for considering use of improper payments in recalculating ACO financial performance results to await the outcome of any appeal of an improper payment.

Since there could be a variety of reasons for which CMS seeks to recoup an overpayment amount from a provider or supplier, there are many possible circumstances that could warrant reopening under § 425.315. As an example, we may consider a combination of factors in evaluating whether demanded overpayment determinations would be the basis for reopening for fraud or similar fault under § 425.315(a)(1)(i). For instance, we may consider whether there is “reliable evidence” (as defined according to § 405.902, which means evidence that is relevant, credible, and material) of similar fault to warrant reopening a Shared Savings Program payment determination. For purposes of the Shared Savings Program's reopening policy, we may find there is reliable evidence of similar fault when a demanded overpayment determination was issued to a provider or supplier for which CMS has revoked or deactivated their Medicare billing privileges, or for which there is a closed law enforcement investigation, among other possible factors. Although demanded overpayment determinations are subject to appeal, we believe use of these amounts in reopening and recalculating an ACO's financial performance under the Shared Savings Program would allow us to more timely address the impact of improper payments on Shared Savings Program calculations, rather than waiting to consider the outcome of any possible appeal of the amounts (as discussed in section III.G.7.c.(2).(c) of this proposed rule).

As part of our initial analysis to evaluate whether to reopen an ACO's initial determination, we may also consider the significance of the improper payments to an ACO's financial calculations by estimating the financial impact of improper payments on an ACO's payment determination. If we estimate that the improper payments have impacted the dollar amount of earned shared savings, or the amount of shared losses that the ACO owes or has paid to CMS, we anticipate reopening an ACO's payment determination. When determining whether to reopen an ACO's payment determination, we anticipate considering a combination of factors including:

• The dollar value of improper payments and the number of claims or line items impacted (if applicable).
• How any related impact on performance year expenditures may compare to the impact on the ACO's updated historical benchmark (which could include considering the impact on benchmark year expenditures and factors used to establish, adjust and update the benchmark). In particular, we may consider whether comparing performance year expenditures to the updated benchmark expenditures used in financial reconciliation, once adjusted to account for the estimated impact of the improper payments, would result in a significant change in the amount of shared savings paid to or shared losses owed by the ACO. For purposes of this analysis we may consider the following:

++ The MSR/MLR applicable to the ACO for the relevant performance year.

++ Whether the ACO met or exceeded the applicable MSR/MLR with the initial determination.

++ Whether accounting for improper payments would cause a change in the ACO's financial performance compared to its performance under the initial determination, including:

-- Causing an ACO to meet or exceed its MSR/MLR when it did not do so under its initial determination, or no longer meet or exceed the relevant threshold when it did so under its initial determination.

-- Causing an ACO that shared savings or owed losses under the initial determination to share in either a higher or lower amount of savings or losses (respectively).

-- Causing an ACO to continue to generate savings or losses less than the MSR/MLR threshold, as it did under its initial determination, and therefore the ACO would remain ineligible for shared savings, except in cases where certain low revenue ACOs participating in the BASIC track may qualify for a shared savings payment in accordance with § 425.605(h), and would not be held liable for shared losses.

We note that the existing reopening authority at § 425.315 and the proposed financial methodology to address improper payments in such a reopening are not intended to address particular instances of low-value improper payments which, in an individual case may be to the benefit of either the ACO or CMS and in the aggregate are likely have a de minimis net effect on program expenditures in the long run. CMS would be highly unlikely to reopen in such cases under § 425.315. We believe that considering the significance of the potential impact of the improper payments on the ACO's payment determination, in deciding whether to reopen the payment determination, is a key component of striking a balance between improving the accuracy of the calculations and ACOs' and CMS' interest in administrative finality of payment determinations. We discuss related concerns and considerations elsewhere in this section of this proposed rule. Therefore, we would seek to reopen an ACO's payment determination only in cases where the impact of improper payments warrants disrupting the initial determination.

Consider, for example, that in our initial determination we found that an ACO generated savings below its minimum savings rate (MSR) and, therefore, did not qualify for a shared savings payment according to the policies for determining the ACO's eligibility for shared savings applicable to its agreement period under the Shared Savings Program. If, based on an initial analysis, we estimate that the ACO's savings, though higher once adjusted to remove improper payments from performance year expenditure calculations, would still fall below the minimum savings rate, it would not be necessary to reopen an ACO's payment determination because the ACO would still not qualify for a shared savings payment. Under such circumstances, we would not reopen the initial determination or proceed with the recalculations described in section III.G.7.c.(2).(c) of this proposed rule. We anticipate that this particular type of situation could occur in cases where the improper payments at issue are relatively small and the differential between an ACO's generated shared savings and minimum savings rate as calculated in the initial determination is relatively large such that recalculating the amounts would not produce a different outcome to the payment determination.

It is also possible that improper payments would have no impact on Shared Savings Program financial calculations as they may consist of claims or payment amounts that were not used in reaching the initial determination of the ACO's financial performance. For instance, if a demanded overpayment determination was for a payment amount on a claim with a HCPCS or CPT code identified as having significant, anomalous, and highly suspect billing activity, and therefore the payment amount was excluded from certain financial calculations used in determining the ACO's financial performance under the proposed adjustment discussed in section III.G.7.d of this proposed rule, we would not include this amount as part of a reopening for the same performance year. As another example, if the demanded overpayment determination was for a claim or line item that was initially paid after the end of the 3-month claims run out period, we would not take into account through the reopening process a payment amount that was not included in Shared Savings Program calculations to begin with. We anticipate improper payments identified in these circumstances would not merit reopening the ACO's initial determination.

A number of steps would follow after CMS has decided to reopen the initial determination. We would recalculate the ACO's financial performance for a performance year by applying the methodology as described in section III.G.7.c.(2).(c) of this proposed rule. With this recalculation we would determine the amount of shared savings payment the ACO may be eligible to receive or the amount of shared losses the ACO may owe for the performance year after accounting for the impact of the improper payments. We would issue a revised initial determination to the ACO with the recalculated payment determination for the performance year. We would notify the ACO of savings and losses in accordance with § 425.604(f), § 425.605(e), § 425.606(h), § 425.609(e), or § 425.610(h) (as applicable). Depending on the outcome of the recalculation as specified in the revised initial determination, we would engage in payment activities and recoupment activities, as needed. As explained in earlier rulemaking, we anticipate considering ways to minimize program disruptions for ACOs that could result from one or more reopenings (see for example, 81 FR 38001 through 38002; see also, 87 FR 69868 through 69872). CMS may require considerable time after deciding to reopen an initial determination before it can complete the process described above for a variety of reasons. For example, additional time may be necessary for CMS or other agencies to ascertain the precise amount of improper payments that affected the initial determination.

In reopening a payment determination, we note that improper payments may impact either performance year expenditures, the ACO's updated historical benchmark used in determining the ACO's financial performance (including calculation of benchmark expenditures and factors used to establish, adjust and update the ACO's historical benchmark), or both. The recalculation of the ACO's financial performance may have varying effects on the ACO's payment determination for the performance year. In some scenarios, the recalculation may change the determination of whether the ACO earned shared savings or owes shared losses, or may change the amount of any shared savings earned or shared losses owed. It is also possible that we may observe there is no impact on the amount of shared savings earned or amount of shared losses owed by the ACO, once we have performed the recalculation of the ACO's financial performance.

Under the Shared Savings Program's benchmarking methodology, there are potential interactions between performance of an ACO under the program for a performance year during an agreement period and resetting the ACO's benchmark for a subsequent agreement period. Specifically, an ACO's performance year may correspond to a benchmark year of its subsequent agreement period, such that improper payments impacting expenditures for Medicare FFS beneficiaries used to determine performance year expenditures may similarly impact expenditures for the same period used to establish the ACO's historical benchmark. For instance, for ACOs that have participated in the Shared Savings Program over multiple agreement periods, improper payments may impact the amount of a prior savings adjustment to the historical benchmark (if applicable). We discussed the complexity around some related interactions in CY 2024 PFS rulemaking, in regard to recalculating the prior savings adjustment, as described in section III.G.7.c.(1).(b) of this proposed rule (see 88 FR 79198 through 79200). We note that reopenings at any time for fraud or similar fault could extend to any prior performance year of the Shared Savings Program. Since Shared Savings Program policies have changed over time, in performing the recalculation we would apply the relevant financial model and benchmarking policy for the ACO for that performance year, in accordance with the applicable provisions of subpart G.

Third, we are considering limiting the instances in which we reopen an initial determination to account for improper payments, pursuant to § 425.315(a), to strike a balance between improving the accuracy of the calculations and ACOs' and CMS' interest in administrative finality of payment determinations. In rulemaking for the Shared Savings Program during 2016, we considered factors for balancing the need to reopen and correct Shared Savings Program payment determinations with the need for administrative finality, which has implications for both ACOs and CMS (81 FR 5853 through 5858, and 81 FR 37997 through 38002). Some of these factors were discussed more generally, in the February 2016 proposed rule, with respect to our consideration of options for further developing our reopening policy (see, for example, 81 FR 5854 and 5855). We explained that an approach of correcting even very minor errors might result in significant operational burdens for ACOs and CMS, including multiple financial reconciliation re-runs and off-cycle payment/recoupment activities that could have the potential for significant and unintended operational consequences, and could jeopardize the certainty of performance results for both ACOs and CMS. We explained our concern that a relatively broad scope and extended timeframe for reopening could introduce financial uncertainty that could limit an ACO's ability to invest in additional improvements to increase quality and efficiency of care. This uncertainty could also limit an ACO's ability to get a clean opinion from its financial auditors and/or to obtain funds from lenders or investors.

We remain especially concerned about the potential for financial uncertainty resulting from a broad scope and extended timeframe for reopening for ACOs and CMS, particularly if correcting minor errors resulting from improper payments. We are concerned that reopening payment determinations for minor issues impacting calculations for one or several performance years of an ACO's earlier agreement period could in turn disrupt the administrative finality of calculations for multiple performances years, in one or more subsequent agreement period, if the impacted year(s) become benchmark year(s) used in resetting the ACO's historical benchmark. We also note that since an ACO's performance can vary from year to year (in terms of whether the ACO generates savings or losses and is eligible for shared savings or owes shared losses), it is possible for there to be a mixed effect across reopening payment determinations for multiple performance years. If the recalculation of financial performance identifies relatively small changes in the amount of shared savings or shared losses, it could be possible for these changes to balance out over a span of multiple performance years. This raises further questions about the utility of reopening payment determinations versus maintaining administrative finality of initial determinations.

A relatively straight-forward case would be to reopen a single performance year that we identify as having been impacted by improper payments. When a performance year for which we issue a revised initial determination becomes a benchmark year of an ACO's subsequent agreement period, whether we reopen an ACO's payment determination to account for the impact of improper payments in Shared Savings Program calculations would differ depending on whether or not we have issued an initial determination for a performance year of the ACO's subsequent agreement period. If the subsequent agreement period is the ACO's current agreement period, and CMS has not yet issued an initial determination for a performance year within the current agreement period, we would account for the impact of improper payments on future financial calculations pursuant to the proposed benchmark adjustment specified in modifications to §§ 425.601(a)(9) and 425.652(a)(9). See section III.G.7.c.(2).(d) of this proposed rule for a discussion of our proposals related to modifying these provisions.

CMS' decision to reopen an initial determination for a performance year is independent of a determination by CMS to reopen an initial determination for any other performance year, including in cases where multiple performance years are impacted by the same improper payments, whether within the ACO's current agreement period, or a past agreement period. In these circumstances, we would need to potentially consider reopening initial determinations for multiple performance years, which may span multiple agreement periods, in cases where an ACO has continued its participation in the Shared Savings Program over time. Therefore, we are considering applying a combination of the following factors in determining whether to reopen an initial determination: (1) consideration of the timing of reopening and recalculating the payment determination for a performance year, and the timing of financial reconciliation for one or more performance year of a subsequent agreement period that includes the affected period as a benchmark year, and (2) consideration of whether the improper payments result from conduct of individuals or entities performing functions or services related to the ACO's activities.

Regarding the timing for reopening, we may consider whether a performance year that is being reopened corresponds to a benchmark year of an ACO's subsequent agreement period. We may consider whether we have completed financial reconciliation for a subsequent performance year, using a benchmark that is impacted by the same improper payments that were accounted for in reopening a payment determination for a performance year corresponding to a benchmark year.

We expect ACOs continuing their participation over multiple agreement periods in the Shared Savings Program have a heightened interest in administrative finality of payment determinations, which would provide greater financial certainty to the continued operation of ACOs and progress towards meeting the program's goals. In such cases, we believe (1) reopening payment determinations for a performance year to account for the impact of improper payments remains important to improving the accuracy of the Shared Savings Program's calculations, and (2) maintaining the administrative finality of subsequent payment determinations, if the same improper payments impact a benchmark year of an ACO's subsequent agreement period, could provide ACOs greater financial certainty with respect to their participation which may outweigh the benefits of reopening the calculations. Maintaining administrative finality of the payment determinations for these subsequent performance years may be warranted in cases where the improper payments are not a result of the conduct of individuals or entities within the ACO. On the other hand, in cases where improper payments impacting Shared Savings Program calculations results from conduct by individuals or entities within the ACO, CMS' interest in addressing program integrity concerns would warrant reopening all affected payment determinations. In these cases, if left unaddressed, ACOs, ACO participants and ACO providers/suppliers, among others, may have incentives to continue to engage in conduct, which could include fraud or similar fault, in a way that could improve the ACO's performance under the Shared Savings Program.

Although not expressly stated in § 425.315, we note that improper payments that are the basis of a reopening may result from the conduct of individuals or entities including but not limited to: (1) conduct of an ACO, ACO participant, ACO provider/supplier, ACO professional, or other individuals or entities performing functions or services related to the ACO's activities; or (2) conduct of a provider or supplier, or other individuals or entities outside the ACO. For purposes of the discussion within this section of this proposed rule, we refer to the former as improper payments originating “inside the ACO”, and the latter as improper payments originating “outside the ACO”.

To follow is a brief summary of the approach we are considering for differentiating between cases where improper payments originate inside the ACO versus outside the ACO. If we identify a single performance year for which we have issued an initial determination that has been impacted by improper payments, we would seek to reopen the payment determination if the improper payments originated either inside the ACO or outside the ACO.

When a performance year for which we issue a revised initial determination becomes a benchmark year of an ACO's subsequent agreement period, we would consider whether to reopen each initial determination for a subsequent performance year that is impacted. We are considering taking the following approach as one means to operate reopenings in an equitable and manageable manner:

• In cases where improper payments originated outside the ACO: Generally, we would not seek to reopen payment determinations for any performance year of the ACO's subsequent agreement period in order to mitigate the extent to which we disrupt the administrative finality of payment determinations for ACOs when the improper payments impacting Shared Savings Program calculations originate outside the ACO. However, we may consider reopening the initial determination for the performance year upon the ACO's request for a reopening if the improper payments are anticipated to result in significant adjustment to the ACO's initial determination upon recalculation.
• In cases where improper payments originated inside the ACO: As a means to address our program integrity concerns, we would reopen the payment determination for any performance year of the ACO's subsequent agreement period issued prior to the revised initial determination for the performance year corresponding to the benchmark year impacted by improper payments originating inside the ACO, if the improper payments are anticipated to result in significant adjustment to the ACO's initial determination upon recalculation. We believe this approach would guard against circumstances where an ACO may benefit from improper payments remaining in its benchmark calculations that result from conduct by individuals or entities performing functions or services related to the ACO's activities.

We seek comment on the factors we have described in this section of this proposed rule, that may inform our decision of whether to reopen an initial determination of an ACO's financial performance to account for the impact of improper payments. In particular, we seek comment on the approach we outlined for conducting initial analysis of whether the improper payments would warrant reopening the ACO's payment determination. We also seek comment on approaches to, and considerations in connection with, balancing the need for accuracy in payment calculations with the need for administrative finality in payment determinations.

(c) Methodology for Recalculating Expenditures To Account for Improper Payments

We propose to establish a financial calculation methodology that may be used to account for the impact of improper payments on Shared Savings Program financial calculations, upon reopening a payment determination pursuant to § 425.315(a). We propose to add to subpart G a new section of the Shared Savings Program regulation at § 425.674 specifying provisions on accounting for the impact of improper payments on Shared Savings Program financial calculations.

As a general rule, we propose to specify in paragraph (a) of § 425.674, that upon the reopening of an initial determination pursuant to § 425.315(a)(4), CMS will use the methodology set forth in § 425.674 to account for the impact of improper payments when: (1) determining savings or losses for the relevant performance year in accordance with § 425.315 in order to issue a revised initial determination, and (2) adjusting the benchmark by recalculating benchmark year expenditures in the event that we recalculate a payment determination and issue a revised initial determination for the corresponding performance year in a prior agreement period (as discussed in section III.G.7.c.(2).(d) of this proposed rule).

We propose to specify in paragraph (b) of § 425.674 that for the purpose of the Shared Savings Program, “improper payment” includes: (1) an amount associated with a demanded overpayment determination, and (2) an amount identified in a settlement agreement or judgment, pursuant to conduct of individuals or entities performing functions or services related to an ACO's activities, less any penalties or damages.

We propose to establish a methodology under § 425.674 under which we would adjust Medicare Parts A and B FFS expenditure values used in certain Shared Savings Program financial calculations to account for a per capita amount of improper payments for an identified population used in calculating performance year or benchmark year expenditures, and in calculating county-level FFS expenditures used in factors based on regional expenditures.

We propose to specify under § 425.674 a generalized approach to calculating the per capita amounts of improper payments that accounts for the fact that improper payments may be associated with specific claims or line items, or may be aggregate amounts. A number of factors informed our consideration of this approach. For one, we considered the need to establish a calculation methodology to account for demanded overpayment determinations that result in adjustments to payment amounts associated with claims and line items used in Shared Savings Program calculations, such as the denial of claims or line items that occur after the 3-month claims run out period, or in an aggregate amount, such as based on extrapolated overpayment demands that do not result in adjustments to claim or line item payment amounts. Medicare Parts A and B FFS claim adjustments for overpayments would be reflected in current Shared Savings Program expenditure calculations if processed before the end of the 3-month claims run out period but are not included in calculations if processed after the 3-month claims run out period. Regarding the latter, the amounts of the claims adjusted overpayments can be identified for Medicare FFS beneficiaries, and can be aggregated across a population of Medicare FFS beneficiaries that is the basis for certain Shared Savings Program calculations. Additionally, aggregate amounts of demanded overpayment determinations, such as extrapolated overpayment demands, may be used to identify the amount of improper payments for a large set of claims for a particular provider or supplier and a certain time period, since error rates are extrapolated and applied to a universe of claims rather than individual claims. In these cases, an aggregate amount of a demanded overpayment determination is attributable to a provider or supplier and would have to be further prorated to determine its relevance to a particular population of Medicare FFS beneficiaries that is the basis for certain Shared Savings Program calculations.

Second, we considered the need for the calculation methodology to account for improper payments resulting from conduct by an ACO, ACO participant, ACO provider/supplier, ACO professional, or other individuals or entities performing functions or services related to the ACO's activities identified in certain settlements, or judgments. With respect to the Shared Savings Program calculations, we anticipate that a key focus would be on improper payments pursuant to conduct of individuals or entities performing functions or services related to an ACO's activities as identified in certain False Claims Act (31 U.S.C. 3729 et seq.) settlement agreements, or judgments. In considering the amount of improper payments that are relevant to Shared Savings Program calculations, we would exclude the amount of any penalties or damages included in the settlement or judgment. In addition, we may seek to attribute an aggregate improper payment amount to a provider or supplier that is specified within a settlement agreement, or judgment, across a population of Medicare FFS beneficiaries that is the basis for the applicable Shared Savings Program calculation.

Further, we anticipate there may be circumstances that warrant adjustment to payment amounts used in Shared Savings Program calculations, at the claims level, instead of or in addition to accounting for the amount of demanded overpayment determinations or an aggregate amount in a settlement agreement or judgment. For instance, in analyzing improper payments impacting Shared Savings Program calculations, we may conclude that a provider's or supplier's billings for a particular HCPCS or CPT code for a population of Medicare FFS beneficiaries resulted in inaccuracies in payment amounts used in Shared Savings Program calculations. We propose that we may address these circumstances by decreasing or entirely removing the value of HCPCS or CPT code payment amounts for certain claims or line items used in Shared Savings Program calculations, in reopening and recalculating the ACO's payment determination. We anticipate using all information available to us from an investigation, settlement agreement, or judgment to determine the correct payment amount or level of billing. This could include considering the nature of the remedy in the case and how any related amount would be applied in the proposed methodology to account for improper payments impacting Shared Savings Program financial calculations. In particular, we would consider if it would be a more precise adjustment to Shared Savings Program financial calculations to adjust the claim or line item payment amounts, instead of or in addition to accounting for the amount of demanded overpayment determinations or an aggregate amount in a settlement agreement or judgment (if applicable). For instance, in cases where an investigation, settlement agreement, or judgement has determined inaccurate use of a higher paying code that is reflected in payment amounts used in Shared Savings Program calculations, we may identify use of a code with lower reimbursement within a HCPCS or CPT code category that would result in a more precise adjustment to the ACO's payment determination.

We propose to specify in paragraphs (c) and (d) of § 425.674 the general approach for adjusting Medicare Parts A and B FFS expenditures for improper payments, according to the following steps:

• Step 1—Identify calculation for adjustment: Identify each Shared Savings Program expenditure calculation for a performance year or benchmark year, as calculated according to the standard methodology described in subpart G and expressed as a per capita dollar amount, that would be adjusted for the impact of improper payments (as proposed in § 425.674(c)(1)).
• Step 2—Determine the relevant population for adjustment: Determine each specific population of Medicare FFS beneficiaries used to calculate the expenditure amount identified in Step 1, expressed as person years (as proposed in § 425.674(c)(2)). The populations relevant for a specific expenditure calculation may include:

++ The population of beneficiaries assigned to the ACO for calculating the ACO's performance year or benchmark year expenditures.

++ The population of assignable beneficiaries in each county in the ACO's regional service area for calculating county-level expenditures.

++ The national population of assignable beneficiaries for calculating national assignable expenditures.

++ The national population of Medicare FFS beneficiaries for calculating national expenditures.

• Step 3—Determine per capita amount of improper payments attributable to the relevant population: Determine the per capita amount of improper payments for the performance year or benchmark year included in the per capita Medicare Parts A and B FFS expenditure amount for a population identified in Step 2 (as proposed in § 425.674(c)(3)). We may use one or more of the following approaches to determine the per capita amount of improper payments, for all providers or suppliers with improper payments, that would be used to adjust the expenditure calculations identified in Step 1 (as proposed in § 425.674(d)):

++ Step 3(i): Calculate aggregate improper payments attributable to a population identified in Step 2 for each provider or supplier that had improper payments.

--For improper payments associated with specific claims, we would do the following:

(A) For improper payments to a provider or supplier that correspond to payment amounts on claims or line items that were used in a Shared Savings Program calculation identified in Step 1, and subsequently adjusted after the 3-month claims run out period, we would sum the improper payment amounts across all such claims or line items with dates of service during the period used to calculate performance year or benchmark year expenditures, for a population identified in Step 2.

To allow for this approach, we propose to adjust Shared Savings Program expenditure calculations to reflect adjustments occurring after the original 3-month claims run out period for claim or line item payment amounts associated with improper payments. We would not capture payments or payment adjustments occurring outside the original 3-month claims run out period for claims or line items unrelated to improper payments.

(B) In the event that CMS determines it is necessary to account for the impact of improper payments on Shared Savings Program financial calculations by adjusting the payment amounts for a specific HCPCS or CPT code billed by the provider or supplier for the population identified in Step 2, we would do the following: identify the applicable claims or line items with dates of service during the period used to calculate performance year or benchmark year expenditures processed before the end of the applicable 3-month claims run out period, and sum the claim or line item payment amounts on the claims or line items identified; and if applicable, multiply the resulting sum by a scaling factor to compute the payment differential between the HCPCS or CPT code that was improperly billed and a CMS-identified alternate code. We would apply a scaling factor in cases where it is determined that the provider or supplier did not bill the correct code for a particular service. In cases where we determine it is appropriate to remove payments for the billed HCPCS or CPT code in their entirety, we would not apply a scaling factor.

--For aggregate improper payment amounts that are not linked to specific claims or line items, we would calculate the amount attributable to the population identified in Step 2 by applying a proration factor to the aggregate improper payment amount identified for that provider or supplier. We would calculate the proration factor as follows:

(A) The denominator of the proration factor would be total Medicare Parts A and B claim or line item payment amounts to the provider or supplier for all FFS beneficiaries on claims of specified claim types for the time period associated with the aggregate improper payment amount identified for the provider or supplier that were made before the end of the applicable 3-month claims run out period.

(B) The numerator of the proration factor would be the portion of the total from the denominator that CMS determines is attributable to the population identified in Step 2 with dates of service during the period used to calculate expenditures for the applicable performance year or benchmark year.

Under this proposed approach, if an aggregate amount of improper payment is associated with claims activity that spans multiple calendar years, we would account for this in the proration factor by expanding the time period used to compute payments for the denominator to include the relevant years. For example, if the aggregate amount of improper payments was associated with claims activity in 2021 and 2022, we would include in the denominator payments on claims or line items with dates of service in 2021 (made before the end of March 2022) and on claims or line items with dates of service in 2022 (made before the end of March 2023). If we were adjusting PY 2022 expenditures for an ACO's assigned population, the numerator of the proration factor would be the portion of the denominator that is attributable to the ACO's assigned population during CY 2022.

++ Step 3(ii): Sum the amounts calculated under Step 3(i) attributable to the population identified in Step 2 across providers or suppliers that had identified improper payments.

++ Step 3(iii): Take the lesser of the following two values:

--The sum from Step 3(ii); or

--Total Medicare Parts A and B claim or line item payment amounts to all providers or suppliers that had improper payments for the population identified in Step 2 on claims of specified claim types with dates of service within the performance year or benchmark year made before the end of the applicable 3-month claims run out period.

The purpose of taking the lesser of two values in this step is to ensure that the improper payment amount that we attribute to a given population cannot be greater than the total amount of payments for the providers or suppliers at issue that was included in the original expenditure calculation for that population.

++ Step 3(iv): Express the lesser-of-amount from Step 3(iii) as a per capita value by dividing by the total beneficiary person years in the population identified in Step 2 for the applicable performance year or the benchmark year.

• Step 4—Subtract per capita improper payment amount from original expenditures: From the expenditure calculation identified in Step 1 for the population identified in Step 2, subtract the per capita amount calculated in Step 3(iv) for each of the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual eligible Medicare and Medicaid beneficiaries (as proposed in § 425.674(c)(4)).
• Step 5—Determine adjusted regional expenditures: If applicable, we would do the following to adjust regional expenditures for improper payments (as proposed in § 425.674(c)(5)):

++ Step 5(i): Adjust county-level FFS expenditures determined in Step 4, for each county in the ACO's regional service area, for severity and case mix of assignable beneficiaries in the county using prospective HCC risk scores. This calculation would be for each of the following populations of beneficiaries based on Medicare enrollment type: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual eligible Medicare and Medicaid beneficiaries. We note that under this approach CMS would not adjust the risk scores used to calculate risk adjusted county-level FFS expenditures.

++ Step 5(ii): Weight the risk-adjusted county-level FFS expenditures determined in Step 5(i) according to the ACO's proportion of assigned beneficiaries in the county, determined in accordance with § 425.601(d)(1), § 425.603(f)(1), or § 425.654(b)(1), as applicable, for each of the populations of beneficiaries by Medicare enrollment type.

++ Step 5(iii): Aggregate the values determined in Step 5(ii) for each of the populations of beneficiaries (by Medicare enrollment type) across all counties within the ACO's regional service area.

To illustrate how the proposed calculation methodology would be applied, we can consider the following hypothetical example in which CMS confirmed that two suppliers, NPI 1 and NPI 2, received improper payments from Medicare during calendar year 2022. Specifically, CMS identified $8 million in demanded overpayment determinations for NPI 1 which resulted in CMS adjusting payment amounts after the 3-month claims run out period for PY 2022 on claims or line items with dates of service during the performance year, and CMS identified an aggregate extrapolated overpayment demand amount of $30 million for NPI 2. Assume that in this example, CMS determines that reopening the ACO's PY 2022 initial determination is warranted, and CMS recalculates that ACO's financial performance using the proposed methodology to account for improper payments. To recalculate the ACO's financial performance for PY 2022, we would identify three separate expenditure calculations that need to be recalculated to determine the impact on an ACO's earned performance payment or owed shared losses: (1) PY 2022 expenditures for the ACO's assigned beneficiaries; (2) PY 2022 expenditures for assignable beneficiaries in the ACO's regional service area; and (3) PY 2022 expenditures for national assignable beneficiaries. For this example, in Table 41 we outline the steps and calculations for recalculating expenditures for beneficiaries assigned to the ACO for PY 2022. In Table 42 we outline how PY 2022 expenditures for assignable beneficiaries in the ACO's regional service area and PY 2022 expenditures for national assignable beneficiaries, recalculated to account for improper payments, would be incorporated into the blended national-regional benchmark update factor. In Table 43 we outline how an ACO's financial performance may be recalculated after accounting for improper payments in PY 2022 expenditures for the ACO's assigned beneficiaries, and using the recalculated blended national-regional benchmark update factor.

In Step 1, we identify expenditures for the ACO's assigned beneficiaries in PY 2022 as the calculation to be recalculated. In Step 2, we identify the ACO's assigned beneficiaries in PY 2022 as the population relevant for this expenditure calculation. In Step 3, we determine the per capita amount of improper payments that is attributable to the ACO's assigned beneficiaries. For NPI 1, we identify that $200,000 of the NPI's total aggregate improper payments were on claims for the ACO's assigned beneficiaries (row [D]). Because improper payments for NPI 2 were identified at the NPI level and thus are not tied to individual claims, we need to apply a proration factor to calculate the share of the total aggregate improper payments, $30 million (row [E]), that is attributable to the ACO's assigned beneficiaries. We calculate this proration factor as the total Medicare Parts A and B claim or line item payment amounts made to NPI 2 for the ACO's assigned beneficiaries for PY 2022 ($4.8 million, row [F]), divided by the total Medicare Parts A and B claim or line item payment amounts made to NPI 2 for all Medicare FFS beneficiaries ($80 million, row [G]); this results in a proration factor of 0.06 (row [H]), which when applied to NPI 2's total aggregate improper payments results in $1.8 million in aggregate improper payments attributable to the ACO's assigned beneficiaries (row [I]). Summing across NPI 1 and NPI 2, we calculate $2 million in total aggregate improper payments attributable to the ACO's assigned beneficiaries for PY 2022 (row [J]). We then compare this sum (row [J]) with total Medicare Parts A and B claim or line item payment amounts to the two suppliers for the ACO's assigned beneficiaries for PY 2022 (row [K]) and take the lesser of the two values (row [L]). We then express this lesser-of value in per capita terms by dividing by the ACO's total assigned beneficiary person years for PY 2022, 20,000, arriving at a $100 per capita improper payment amount attributable to the ACO's assigned beneficiaries (row [M]). Finally, in Step 4, we subtract the $100 per capita improper payment amount from the original PY 2022 per capita expenditure amount for the ACO's assigned beneficiaries used to make the initial payment determination, conducting this adjustment by enrollment type (row [N]).

We note that subtracting the same per capita improper payment amount ($100 in this example) from the expenditure calculation for each enrollment type population implicitly assumes that improper payments attributable to the overall population are distributed in proportion to the four enrollment types (ESRD, disabled, aged/dual eligible, aged/non-dual eligible). For example, if the aged/non-dual eligible population represents 82 percent of an ACO's overall assigned population for the performance year, we are assuming that 82 percent of improper payments attributable to the ACO's entire assigned population are associated with aged/non-dual eligible beneficiaries. We believe that this is a reasonable assumption as we expect that, in most cases, improper payments are unlikely to be associated with a particular enrollment type as defined by the Shared Savings Program and used in program financial calculations. This also allows for a standard approach across the potential variety of reopening scenarios, lending greater transparency and simplicity to the proposed methodology.

We would follow the same overall methodology to account for the impact of improper payments in recalculating PY 2022 expenditures for assignable beneficiaries in the ACO's regional service area and for national assignable beneficiaries. These amounts are calculated for the following populations of beneficiaries, by Medicare enrollment type: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual eligible Medicare and Medicaid beneficiaries. We would then use these adjusted expenditure calculations as new inputs along with other original calculations that were not adjusted for the impact of improper payments (such as the ACO's historical benchmark for PY 2022) to recalculate the ACO's financial performance for PY 2022, following the standard financial methodology described in § 425.605 (for ACOs participating in the BASIC track) or § 425.610 (for ACOs participating in the ENHANCED track), as applicable.

In Table 42, we expand upon the hypothetical example described in Table 41 and summarize how we would calculate national and regional update factors following the methodology specified in § 425.652(b)(2) but using the adjusted regional and national expenditures for the performance year for each enrollment type in place of the original values. Because benchmark update factors are calculated by enrollment type under the standard financial methodology, they would also be recalculated by enrollment type when using the adjusted national and regional expenditures. However, for brevity, we describe only the recalculation of the update factors for the aged/non-dual eligible population in Table 42.

In this continued hypothetical example, we used the proposed methodology to account for the impact of improper payments in recalculating national and regional per capita expenditures in the performance year, resulting in adjusted expenditures of $11,609 (row [A]) and $11,210 (row [C]), respectively. Dividing these PY values by the original BY3 national and regional per capita expenditures ($10,977, row [A], and $10,900, row [C], respectively), we recalculate the national update factor (1.058, row [B]) and regional update factor (1.028, row [D]). In this example, there is a $1 difference between the original and recalculated national per capita expenditure amount. The resulting value for the recalculated national update factor, shown rounded to the third decimal place, remains the same as the original value, but there would be a difference in the values if additional precision was shown. We then blend these adjusted update factors using the original national and regional weights (0.250, row [E], and 0.750, row [F], respectively). As shown in row [G], accounting for improper payments in PY 2022 causes the blended benchmark update factor to decrease from 1.042 to 1.036.

Table 43 summarizes how recalculated blended update factor to account for improper payments, based on adjusted national and regional expenditures for PY 2022, would be used with other original calculations and adjusted PY expenditures for ACO assigned beneficiaries to recalculate the ACO's financial performance for PY 2022. Applying the blended update factor (row [B]) to the original historical benchmark values by enrollment type (row [A]), we recalculate the updated benchmark values by enrollment type (row [C]) that account for improper payments occurring in PY 2022. The adjusted updated benchmark values (row [C]) and adjusted PY expenditures for ACO assigned beneficiaries by enrollment type (row [D]), also described in Table 41, are multiplied by original PY assigned beneficiary proportions by enrollment type (row [E]), and summed across enrollment types to recalculate the per capita updated benchmark (row [F]) and per capita ACO PY assigned beneficiary expenditures (row [G]). We then express these per capita quantities as the total updated benchmark amount (row [I]) and the total ACO PY assigned beneficiary expenditures amount (row [J]) by multiplying the per capita dollar amount by the ACO's total assigned beneficiary person years for PY 2022 (row [H]). The recalculated total updated benchmark (row [I]) can then be used to recalculate the minimum savings rate/minimum loss rate dollar threshold (row [L]). We subtract the recalculated total ACO PY assigned beneficiary expenditures (row [J]) from the recalculated total updated benchmark (row [I]) to determine if the ACO has gross savings or gross losses. Under this example, the recalculation indicates the ACO has total gross savings (row [K]). Finally, because the recalculated total gross savings (row [K]) is greater than the recalculated minimum savings rate dollar threshold, we recalculate the ACO's shared savings (row [N]) by multiplying the total gross savings (row [K]) by the original sharing rate (row [M]).

The result of these calculations is an adjusted shared savings amount of $17,355,000 (before accounting for sequestration), compared to an original amount of $16,950,000. Thus, while adjustments for improper payments reduced the ACO's PY assigned beneficiary expenditures by $2 million, the impact on the ACO's recalculated shared savings is only $405,000 due to the impact of improper payments on the expenditures for assignable beneficiaries that factor into the ACO's recalculated updated benchmark for PY 2022.

Under the proposed financial methodology, accounting for the impact of improper payments on expenditures could increase or decrease an ACO's amount of shared savings or shared losses. As demonstrated in the hypothetical example, the direction of changes to an ACO's shared savings or shared losses would depend on the differential impact of improper payments on the ACO's assigned beneficiary expenditures compared to the impact on expenditures for assignable beneficiaries used to determine the national and regional updates to the ACO's benchmark. In this example, the reduction in ACO PY assigned beneficiary expenditures due to the adjustment for improper payments was larger than the reduction to the updated benchmark stemming from adjustments to PY national and regional expenditures, ultimately causing the ACO to see an increase in both gross savings and shared savings. Other ACOs for which the reduction in ACO PY assigned beneficiary expenditures is greater than the reduction to the updated benchmark, may switch from earning no shared savings to earning shared savings or may see a reduction in shared losses owed. However, if accounting for improper payments results in relatively larger reductions to the expenditures for assignable beneficiaries in the ACO's regional service area or in the national assignable population, and relatively smaller reductions to the ACO's PY assigned beneficiary expenditures, the ACO might observe a reduction in shared savings or increase in shared losses, or potentially cause the ACO to switch from earning shared savings to not earning any shared savings or to owing shared losses.

As we propose in section III.G.7.c.(2).(d) of this proposed rule, if the reopened PY becomes a BY for a subsequent agreement period, CMS would adjust the historical benchmark to be used for any PY in that subsequent agreement period that has not yet been reconciled. Accounting for improper payments as it affects the ACO's benchmark could then result in changes to the ACO's shared savings or shared losses for a future performance year that differ in direction compared to the change in shared savings or shared losses observed with the initial reopening that affected PY expenditures. That is, following the example from Table 43, accounting for improper payments occurring in calendar year 2022 might result in the ACO earning greater shared savings (or smaller shared losses) for PY 2022 (because the reduction in ACO PY assigned beneficiary expenditures outweighs the reduction in national and regional expenditures used to update the benchmark), but may result in smaller shared savings (or greater shared losses) for future performance years for which CY 2022 becomes a benchmark year (because the adjustment for improper payments in BY 2022 causes a reduction in the overall benchmark with no corresponding reduction to ACO PY expenditures).

As we described in section III.G.7.c.(2).(b) of this proposed rule, administrative action and judicial action leading to the identification of improper payments may be subject to appeal, and ultimately the amount of the improper payments may be redetermined or otherwise amended. We acknowledge the potential inaccuracy in using amounts of improper payments that may be reversed, in whole or in part, in recalculating an ACO's financial performance. However, waiting for each possible appeal to be raised and resolved with respect to improper payments could delay our ability to reach a determination of whether to reopen an ACO's payment determination, identify the amounts of improper payments to be used in the recalculation, or both. We considered whether to account for the possibility that the improper payment amounts would be appealed, and the amount redetermined, as part the proposed methodology, but are not proposing a related approach at this time. For instance, we considered whether to apply an adjustment factor as part of the methodology, that would reduce the amount of improper payments by a percentage, to account for the rate at which the amounts could change, and to base this rate on statistics gathered on the outcomes of Medicare Parts A and B administrative appeals processes. Given that the proposed approach, if finalized, would be the initial use of improper payment amounts in Shared Savings Program calculation, we note our intent to monitor for the impact of appeals on the amounts of improper payments that may be used in reopenings under the Shared Savings Program. We may revisit our approach in future notice and comment rulemaking, after we gain additional experience with using improper payment amounts in Shared Savings Program calculations.

We propose to use our authority under section 1899(d)(1)(B)(ii) of the Act to calculate benchmark year expenditures using the proposed methodology to account for the impact of improper payments. This provision authorizes the Secretary to adjust the benchmark for beneficiary characteristics and “such other factors as the Secretary determines appropriate”. When reopening an initial determination for a performance year pursuant to § 425.315, we consider it appropriate to account for the impact of improper payments on expenditures used to establish the ACO's historical benchmark, consistent with our proposal.

We propose to use our authority under section 1899(i)(3) of the Act to use the proposed methodology to account for the impact of improper payments in calculating performance year expenditures and calculating the historical benchmark update factors. CMS may only adopt an alternative payment methodology pursuant to section 1899(i)(3) of the Act if we determine that the alternative payment methodology will improve the quality and efficiency of items and services furnished to Medicare beneficiaries, without resulting in additional program expenditures.

The proposed adjustments would remove improper payments from the performance year expenditures and factors used to calculate updated historical benchmarks, among other financial calculations, that resulted in inaccuracies in an ACO's payment determination, including the amount of shared savings CMS paid an ACO or the amount of shared losses owed to CMS by an ACO participating under a two-sided model. These policies improve the accuracy of financial calculations by which ACOs are held accountable for the cost and quality of care for their assigned beneficiary populations.

Addressing the impact of improper payments on ACO payment determinations could serve as a mechanism to bolster program integrity. ACO accountability for the total cost of care can deter fraud, waste, and abuse that is otherwise under the control of ACO participants. Additionally, ACOs have unique insight into Medicare Part A, B, and D claims data for their assigned beneficiary populations from monthly claim and claim line level data ACOs receive from CMS for care coordination and quality improvement. This vantage point makes ACOs uniquely situated to observe trends in expenditures and utilization patterns, including by providers and suppliers that are not participating in the ACO. Further establishing policies to specify the approach to excluding improper payments from Shared Savings Program calculations could encourage ACOs to report to CMS and the Department of Health and Human Services Office of Inspector General (HHS-OIG) potential fraud and abuse within the Medicare program. Addressing improper payments in the Medicare program would protect the accuracy, fairness, and integrity of Shared Savings Program financial calculations, and lead to greater beneficiary protections, and protection of the Trust Funds.

Accounting for the impact of improper payments in financial calculations promotes continued integrity and fairness of Shared Savings Program payment determinations and may in turn bolster ACO participation in the Shared Savings Program. Policies that improve the accuracy of the payment calculations could provide greater certainty to organizations considering entering or continuing their participation in the Shared Savings Program and thereby lead to more robust and sustained participation by ACOs in the Shared Savings Program. This, in turn, means that these organizations would continue working towards meeting the Shared Savings Program's goals of lowering growth in Medicare FFS expenditures and improving the quality of care furnished to Medicare beneficiaries.

As described in the Regulatory Impact Analysis (section VII. of this proposed rule), we believe accounting for the impact of improper payments on performance year expenditures and factors used to calculate updated historical benchmarks would not result in an increase in spending beyond the expenditures that would otherwise occur under the statutory payment methodology in section 1899(d) of the Act. As we also discuss elsewhere in this section of this proposed rule, across an ACO's reconciliations where improper payments impact performance year or BY expenditures, the overall net impact of using the proposed methodology on the ACO's aggregate shared savings or shared losses across those reconciliations could be positive or negative and would depend on the circumstances of a given reopening scenario.

We will continue to reexamine this projection in the future to ensure that the requirement under section 1899(i)(3)(B) of the Act that an alternative payment model not result in additional program expenditures continues to be satisfied. In the event that we later determine that the payment model established under section 1899(i)(3) of the Act no longer meets this requirement, we would undertake additional notice and comment rulemaking to make adjustments to the payment model to assure continued compliance with the statutory requirements.

(d) Adjusting Historical Benchmarks To Account for the Impact of Improper Payments

CMS adjusts an ACO's historical benchmark annually, during the term of the ACO's agreement period, to account for certain changes, as specified in the Shared Savings Program regulations. The related adjustment is specified under § 425.601(a)(9), for the benchmarking methodology applicable to agreement periods beginning on or after July 1, 2019, and before January 1, 2024, and under § 425.652(a)(9), for the benchmarking methodology applicable to agreement periods beginning on January 1, 2024, and in subsequent years. As finalized with the CY 2024 PFS final rule (88 FR 79195 through 79200), § 425.652(a)(9) introductory text was amended to specify, among other changes, that for each performance year during the term of the agreement period, the ACO's benchmark is adjusted for changes in values used in benchmark calculations as a result of issuance of a revised initial determination under § 425.315 (among other factors). Similar language is not currently included in § 425.601(a)(9) introductory text.

We propose to use our authority under section 1899(d)(1)(B)(ii) of the Act to adjust the benchmark to account for the impact of improper payments, in the event CMS recalculates a payment determination and issues a revised initial determination for a performance year in a prior agreement period that corresponds to a benchmark year of the ACO's current agreement period. We propose to adjust an ACO's historical benchmark for use in reaching an initial determination of financial performance for a performance year, in cases where an ACO has a benchmark year that corresponds to a performance year for which we issued a revised initial determination. In such a case, we would apply the same methodology to recalculate the ACO's BY expenditures as used in recalculating the expenditures for the corresponding performance year, as part of a reopening. Under this proposed approach, we would be able to improve the accuracy of the benchmark year calculations used in reaching an initial determination for a performance year, by addressing the impact of previously identified improper payments on the expenditure calculations. Such an adjustment to the benchmark expenditures would appropriately calculate the ACO's historical benchmark that might otherwise be under- or over-stated due to improper payments.

Expanding upon the example illustrated in Table 43, if we have issued a revised initial determination for PY 2022 in December 2025, for an ACO that renewed to continue its participation under a new agreement period beginning on January 1, 2025, our proposed policy would enable us to use the same methodology for calculating BY 2022 expenditures for PY 2025, in reaching the initial determination for PY 2025.

We propose to amend §§ 425.601(a)(9) and 425.652(a)(9) to specify this proposed adjustment to the historical benchmark. We propose to revise § 425.601(a)(9) introductory text to further specify that for the second and each subsequent performance year during the term of the agreement period, the ACO's benchmark would be adjusted for changes in values used in benchmark calculations as a result of issuance of a revised initial determination under § 425.315. We also propose to add a new paragraph (a)(9)(iii) to § 425.601 and to add a new paragraph (a)(9)(viii) to § 425.652, each specifying that we would recalculate benchmark year expenditures to account for the impact of improper payments, for the benchmark year corresponding to a performance year for which CMS issued a revised initial determination under § 425.315. In recalculating expenditures for the benchmark year, CMS would apply the same calculation methodology applied in recalculating expenditures for the corresponding performance year, in accordance with the proposed new section of the regulation at § 425.674.

(e) ACO Reopening Requests

The following discussion of requesting and conducting a reopening pertains to reopening a payment determination for good cause or for fraud or similar fault, unless specified otherwise.

We propose to establish a process at § 425.315(b) by which an ACO may request a reopening of an initial determination, or a final agency determination under subpart I, of shared savings or shared losses. Although an ACO's submission of a reopening request is optional, we propose to require that the ACO's request be in a form and manner specified by CMS. Further, we propose that the timing of the ACO's reopening request must be consistent with the timeframes specified in § 425.315(a)(1)(i) and (ii), respectively, either (i) at any time in the case of fraud or similar fault, or (ii) not later than 4 years after the date of the notification to the ACO of the initial determination of savings or losses for the relevant performance year for good cause. We anticipate providing additional information on the reopening request process for ACOs through guidance, including the form and manner in which CMS must receive a reopening request.

CMS will need to receive sufficient, detailed information from ACOs to evaluate an ACO's reopening request. For instance, in the case of a reopening request in connection with improper payments, or fraud or similar fault potentially impacting the ACO's financial calculations, receiving detailed information about the issue, including the following information, would aid in our analysis of the ACO's request:

• ACO identifier(s) (also referred to as “ACO ID”) and Legal Business Name(s).
• Identity of the provider or supplier for which there may be improper payment(s), or that may be suspected of fraud or similar fault, including name, NPI or Provider Transaction Access Number (PTAN), TIN, or other identifier.
• Time period during which potentially impacted claims were submitted or improper conduct occurred.
• Short description of the improper payment, alleged fraud or similar fault, and how it was identified, including information such as any specific claim type codes and HCPCS or CPT codes.
• Evidence of financial impact on the ACO's shared savings or shared losses calculation, such as any analysis supporting the calculation of financial impact to the ACO and a list of beneficiaries assigned to the ACO for whom claims were submitted by the provider or supplier suspected of fraud or similar fault, or for which expenditures may be impacted by improper payments.

As we describe elsewhere in this section of this proposed rule, a recalculation of shared savings and shared losses to account for improper payments could result in a variety of outcomes. An ACO should weigh these potential outcomes when considering whether to submit a reopening request.

We acknowledge that the proposed process for requesting a reopening, whether for good cause or for fraud or similar fault, would represent a new process. Therefore, we seek comments and suggestions on the form and manner in which CMS should receive these requests. We also seek comment on approaches to ensuring that ACOs submit reopening requests with sufficient information to allow CMS to identify and evaluate the impact on Shared Savings Program financial performance.

The following steps illustrate how we may conduct review of an ACO's request to reopen a payment determination to account for the impact of improper payments:

• Upon receiving an ACO's reopening request, CMS would evaluate this request, and ask the requesting ACO to provide supplemental information if needed.
• We would work with CPI and law enforcement agencies to identify, validate and quantify improper payments potentially impacting expenditures used in program calculations. We note that identification of improper payments may be contingent on the conclusion of an investigation that is underway.
• We may conduct initial analysis to consider the basis for reopening the ACO's payment determination under § 425.315(a), and the significance of the improper payments to an ACO's financial calculations under the Shared Savings Program (as described in section III.G.7.c.(2).(b) of this proposed rule):

++ If we find that the potential improper payment does not meet CMS' standards for reopening the payment determination, we anticipate notifying the ACO of our decision.

++ If we reach a determination to reopen the ACO's payment determination for a performance year:

—We would recalculate expenditures to account for improper payments using the methodology proposed in section III.G.7.c.(2).(c) of this proposed rule, recalculate the ACO's shared savings and shared losses, issue a revised initial determination, and engage in payment activities and recoupment activities, as needed.

—During the recalculation period CMS would also identify whether the relevant performance year is also serving as a benchmark year for the ACO's current agreement period and prepare to adjust the ACO's benchmark year expenditures to account for the revised initial determination (once issued), as discussed in section III.G.7.c.(2).(d) of this proposed rule.

In the event that improper payments identified in analyzing an ACO's reopening request have the potential to impact the payment determinations of one or more other ACOs, we anticipate only determining whether to reopen the payment determination for an ACO that submitted the reopening request. More generally, we may initiate analysis of the impact of improper payments on Shared Savings Program financial calculations, and potentially reopen the payment determination for one or more ACOs absent an ACO's request for reopening. For instance, in learning of improper payments that may potentially impact Shared Savings Program calculations for multiple ACOs, including through the reopening request process, we may seek to reopen payment determinations where improper payments are anticipated to result in significant adjustments to ACOs' initial determinations upon recalculation. We also anticipate initiating analysis of the impact of improper payments on an ACO's payment determination upon learning of improper payments originating inside the ACO that may potentially impact Shared Savings Program calculations, and may reopen the ACO's payment determination, as needed, to address program integrity concerns.

We anticipate that our review and analysis of reopening requests could occur over a protracted period of time during which we may be able to provide little additional information to the ACO until we have reached our decision. We would aim to conduct a reopening such that the timing of any issuance of a revised initial determination aligns with the timeframe for when CMS typically completes annual performance year financial reconciliation and payment and recoupment. However, because investigations into improper payments, including considering whether there is reliable evidence of fraud or similar fault, may involve varying degrees of complexity and scale, and because the application of our proposed methodology for calculating expenditures relies on information that may result from such investigations, among other sources of information, CMS may not always be able to conduct a reopening within a specific timeframe after an ACO submits a reopening request. As reflected in the discussions within this section of this proposed rule, the process for analyzing an ACO's reopening request, reaching a decision on whether to reopen the initial determination, recalculating the ACO's payment determination, and issuing a revised initial determination, may occur over a period of months or potentially years, and may have impacts on future agreement periods. In cases where CMS and law enforcement officials may have investigations underway, CMS must refrain from providing details to ACOs, and other individuals or entities, of pending actions to protect the integrity of those investigations. Therefore, we may be limited in the information we can communicate to an ACO about our consideration of the ACO's reopening request.

We seek comment on the aforementioned considerations for how we could conduct review of an ACO's request to reopen a payment determination to account for the impact of improper payments. More generally, as we gain additional experience with ACOs' submission of reopening requests, including the volume of the requests, and nature of the requests, we may revisit the reopening request process, as needed, in future notice and comment rulemaking.

(f) Preventing and Reporting Medicare Fraud

ACOs can help prevent fraud and abuse within the Medicare program or in other Federal health care programs. Program integrity requirements for the Shared Savings Program include the requirement under § 425.300 that the ACO must have a compliance plan. Among other required elements, an ACO's compliance plan must include a method for employees or contractors of the ACO, ACO participants, ACO providers/suppliers, and other individuals or entities performing functions or services related to ACO activities to anonymously report suspected problems related to the ACO to the compliance officer (§ 425.300(a)(3)). ACOs' compliance plans must also include a requirement for the ACO to report probable violations of law to an appropriate law enforcement agency (§ 425.300(a)(5)). (Refer to the November 2011 final rule, 76 FR 67951 and 67952.)

ACOs are encouraged to report potential fraud or abuse by submitting a complaint to the CMS Center for Program Integrity (CPI), Fraud Investigations Group (FIG), Division of Provider Investigations (DPI) at dpi.intake@cms.hhs.gov. ACOs can also report potential fraud or abuse by submitting a complaint to the HHS-OIG website, https://oig.hhs.gov/fraud/report-fraud/ , HHS-OIG hotline at 1-800-HHS-TIPS (1-800-447-8477), TTY at 1-800-377-4950, by fax at 1-800-223-8164, or by mailing to: Office of Inspector General ATTN: OIG HOTLINE OPERATIONS P.O. Box 23489 Washington, DC 20026. ACOs suspecting healthcare fraud, waste, or abuse are encouraged to visit the CMS Center for Program Integrity's web page on Reporting Fraud, at https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity/reporting-fraud for more information. More generally, anyone suspecting healthcare fraud, waste or abuse is encouraged to report it to CMS or HHS-OIG.

In the absence of a reopening request submitted by an ACO in the form and manner specified by CMS, as discussed in section III.G.7.c.(2).(e) of this proposed rule, the reporting of potential fraud or abuse to CPI or HHS-OIG does not itself constitute a reopening request under the Shared Savings Program.

We seek comment on the proposals, and considerations, described in this section of this proposed rule, including: considerations for reopening a payment determination to account for improper payments; the proposed changes to the regulations to specify (1) CMS' discretion to reopen payment determinations, (2) a calculation methodology to account for the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations upon reopening a payment determination pursuant to § 425.315, (3) an adjustment to the historical benchmark to account for the impact of improper payments, and (4) a process for ACOs to request reopening of a payment determination. We also welcome comments on considerations in connection with ACOs' potential role in preventing and reporting Medicare fraud.

d. Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Shared Savings Program Financial Calculations in Calendar Year 2024 or Subsequent Calendar Years

(1) Background

(a) Statutory Background on Shared Savings Program Financial Calculations

Section 1899 of the Social Security Act (the Act) (42 U.S.C. 1395jjj), as added by section 3022 of the Patient Protection and Affordable Care Act (Pub. L. 111-148, enacted March 23, 2010), establishes the general requirements for payments to participating ACOs in the Shared Savings Program. Specifically, section 1899(d)(1)(A) of the Act provides that providers of services and suppliers participating in an ACO will continue to receive payment under the original Medicare fee-for-service program under Medicare Parts A and B in the same manner as they would otherwise be made. However, section 1899(d)(1)(A) of the Act also provides for an ACO to receive payment for shared savings provided that the ACO meets both the quality performance standards established by the Secretary and demonstrates that it has achieved savings against a benchmark of expected average per capita Medicare FFS expenditures. Additionally, section 1899(i) of the Act authorizes the Secretary to use other payment models in place of the one-sided model described in section 1899(d) of the Act. This provision authorizes the Secretary to select a partial capitation model or any other payment model that the Secretary determines will improve the quality and efficiency of items and services furnished to Medicare beneficiaries without additional program expenditures. We have used our authority under section 1899(i)(3) of the Act to establish the Shared Savings Program's two-sided payment model (see for example, 80 FR 32771 and 32772, and 83 FR 67834 through 67841) and to mitigate shared losses owed by ACOs affected by extreme and uncontrollable circumstances during PY 2017 and subsequent performance years (82 FR 60916 and 60917, 83 FR 59974 through 59977), among other uses of this authority described elsewhere in this proposed rule.

Section 1899(d)(1)(B)(i) of the Act specifies that, in each year of the agreement period, an ACO is eligible to receive payment for shared savings only if the estimated average per capita Medicare expenditures under the ACO for Medicare FFS beneficiaries for Parts A and B services, adjusted for beneficiary characteristics, is at least the percent specified by the Secretary below the applicable benchmark under section 1899(d)(1)(B)(ii) of the Act. Section 1899(d)(1)(B)(ii) of the Act addresses how ACO benchmarks are to be established and updated under the Shared Savings Program. This provision specifies that the Secretary shall estimate a benchmark for each agreement period for each ACO using the most recent available 3 years of per beneficiary expenditures for Parts A and B services for Medicare FFS beneficiaries assigned to the ACO. This benchmark shall be adjusted for beneficiary characteristics and such other factors as the Secretary determines appropriate and updated by the projected absolute amount of growth in national per capita expenditures for Parts A and B services under the original Medicare FFS program, as estimated by the Secretary.

In past rulemaking, we have used our authority under sections 1899(d)(1)(B)(ii) and 1899(i)(3) of the Act to establish adjustments to the benchmark and program expenditure calculations, respectively, to exclude certain Medicare Parts A and B payments. In the November 2011 final rule (76 FR 67920 through 67922), we adopted an alternate payment methodology that excluded Indirect Medical Education (IME) and Disproportionate Share Hospital (DSH) payments from ACO benchmark and performance year expenditures due to concerns that the inclusion of these amounts would incentivize ACOs to avoid referring patients to the types of providers that receive these payments. In the CY 2023 PFS final rule (87 FR 69954 through 69956), we excluded new supplemental payments to Indian Health Service/Tribal hospitals and hospitals located in Puerto Rico consistent with our longstanding policy to exclude IME, DSH and uncompensated care payments from ACOs' assigned and assignable beneficiary expenditure calculations. In the May 8, 2020 COVID-19 IFC (85 FR 27577 through 27582), we established a methodology to adjust Shared Savings Program financial calculations to account for the COVID-19 Public Health Emergency. Specifically, we established a methodology that would exclude all Medicare Parts A and B FFS payment amounts for a beneficiary's episode of care for treatment of COVID-19 to prevent distortion to, among other calculations, an ACO's benchmark and program expenditure calculations.

(b) Background on Significant, Anomalous, and Highly Suspect Billing Activity

Recently, ACOs and other interested parties have raised concerns about an increase in billing to Medicare for selected intermittent urinary catheter supplies on Durable Medical Equipment, Prosthetics, Orthotics & Supplies (DMEPOS) claims in CY 2023, alleging that the increase in payments represents fraudulent activity (the “alleged conduct”). The observed DMEPOS billing volume for intermittent urinary catheters in CY 2023 represents significant, anomalous, and highly suspect (SAHS) billing activity.

Generally, a level of billing for a given HCPCS or CPT code is considered SAHS billing activity when a given HCPCS or CPT code exhibits a level of billing that represents a significant claims increase either in the volume or dollars (for example, dollar volume significantly above prior year, or claims volume beyond expectations) with national or regional impact (for example, not only impacting one or few ACOs) and represents a deviation from historical utilization trends that is unexpected and is not clearly attributable to reasonably explained changes in policy or the supply or demand for covered items or services. The billing level is significant and represents billing activity that would cause significantly inaccurate and inequitable payments and repayment obligations in the Shared Savings Program if not addressed.

Current Shared Savings Program regulations, codified at 42 CFR part 425, do not provide a basis for CMS to adjust program expenditure or revenue calculations to remove the impact of SAHS billing activity such as that arising from the alleged conduct in advance of issuing an initial determination. As discussed in section III.G.7.c of this proposed rule, CMS may reopen an initial determination or a final agency determination and issue a revised initial determination at any time in the case of fraud or similar fault, and not later than 4 years after the date of the notification to the ACO of the initial determination of savings or losses for the relevant performance year for good cause (§ 425.315). This does not allow for CMS to address SAHS billing activity, which must be addressed prior to conducting financial reconciliation, which is an initial determination, to prevent significant inequity and inaccurate payment determinations.

We are concerned that such SAHS billing activity, should it occur in CY 2024 or later, would inflate Medicare Parts A and B payment amounts and affect Shared Savings Program calculations, including:

• Performance year reconciliation calculations, including expenditures for each ACO's assigned beneficiaries for the calendar year that has SAHS billing activity, the national-regional blended update factor used to update the benchmark for ACOs beginning an agreement period before January 1, 2024 (refer to § 425.601(b)), the three-way blended update factor used to update the benchmark for ACOs beginning an agreement period on January 1, 2024 and in subsequent years (refer to § 425.652(b)), and factors based on ACO participant revenue to determine the loss recoupment limits for ACOs participating under two-sided models of the BASIC track (Levels C, D, E) (refer to § 425.605(d)).
• Historical benchmark calculations for establishing the benchmark for ACOs beginning new agreement periods on January 1, 2025, or in subsequent years with a benchmark year that has SAHS billing activity (refer to § 425.652(a)).
• Factors used in the application cycle for ACOs applying to enter a new agreement period beginning two years after the SAHS billing activity occurred, and the change request cycle for ACOs continuing their participation in the program, including data used to determine an ACO's eligibility for Advance Investment Payments under § 425.630(b) or for the CMS Innovation Center's new ACO Primary Care Flex Model (ACO PC Flex Model) based on ACO revenue status (high revenue or low revenue), and to determine repayment mechanism amounts for ACOs entering, or continuing in, two-sided models (refer to § 425.204(f)).

The accuracy of the Shared Savings Program's determination of an ACO's financial performance (through a process referred to as financial reconciliation) in terms of the ACO's eligibility for and amount of a shared savings payment or liability for shared losses, depends on the accuracy of claims data. Absent CMS action, SAHS billing activity would affect performance year financial reconciliation program-wide rather than being limited to ACOs that have assigned beneficiaries directly impacted by the issue. For instance:

• An ACO with assigned beneficiaries impacted by the SAHS billing activity will see an increase in performance year expenditures, reducing the ACO's shared savings or increasing the amount of shared losses owed by the ACO. The impact on the ACO's performance may be partially mitigated if the SAHS billing activity also increases the ACO's regional service area expenditures and the national expenditures used to calculate the two-way national-regional blended benchmark update factor.
• An ACO with assigned beneficiary expenditures and regional service area expenditures with little or no impact from the SAHS billing activity will receive a relatively higher benchmark update under the national-regional blended update factors used in performance year reconciliation, and therefore, may appear to perform better as a result of the national impact of the SAHS billing activity, resulting in higher earned performance payments or lower or no losses for the ACO.

Unaddressed, SAHS billing activity in a given calendar year can distort the historical benchmarks for an ACO in an agreement period that have the calendar year as a benchmark year and the accuracy of any future financial reconciliation performed against those benchmarks. Similarly, inaccurate revenue and expenditure calculations based on data from a calendar year affected by SAHS billing activity may affect an ACO's revenue status and the amount of funds an ACO in a two-sided model must secure as a repayment mechanism, one of the program's important safeguards for protecting the Medicare Trust Funds. Absent CMS action, SAHS billing activity likely would significantly impact shared savings and losses calculations for the performance year affected by SAHS billing activity, and for future performance years that have benchmark years affected by SAHS billing activity. Under these circumstances, some ACOs would likely experience adverse impacts (for example, lower or no shared savings or higher shared losses) while other ACOs would experience windfall gains (for example, higher shared savings or lower or no shared losses).

Failing to address SAHS billing activity would jeopardize the integrity of the Shared Savings Program. There are 480 ACOs in the Shared Savings Program with over 608,000 health care providers who care for 10.8 million assigned FFS beneficiaries. In PY 2022, the most recent year for which data is available, savings achieved by ACOs relative to benchmarks amounted to $4.3 billion, of which ACOs received shared savings payments totaling $2.5 billion, and Medicare retained $1.8 billion in savings. ACOs are held accountable for 100 percent of total Medicare Parts A and B expenditures for their assigned beneficiary populations (with limited exceptions). This incentivizes ACOs to generate savings for the Medicare program as they have the opportunity to share in those savings if certain requirements are met. It also discourages the ACO from generating unnecessary expenditures for Medicare as they may be required to repay those amounts to CMS. Accountable care arrangements such as this cannot function if the ACO may be held responsible for all SAHS billing activity that is outside of their control. Holding an ACO accountable for substantial losses due to SAHS billing activity is not only inequitable but will dramatically increase the level of risk associated with participation, making the Shared Savings Program unattractive.

In a separate proposed rule entitled “Medicare Program: Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Medicare Shared Savings Program Financial Calculations in Calendar Year 2023” (89 FR 55168, July 3, 2024) (referred to herein as the SAHS billing activity proposed rule), we have proposed an approach to address the SAHS billing activity identified for CY 2023 to protect the accuracy, fairness, and integrity of Shared Savings Program financial calculations. Specifically, we have proposed to exclude payment amounts for two HCPCS codes (A4352 ( Intermittent urinary catheter; Coude (curved) tip, with or without coating (Teflon, silicone, silicone elastomeric, or hydrophilic, etc.), each) and A4353 ( Intermittent urinary catheter, with insertion supplies)) on DMEPOS claims submitted by any supplier from expenditure and revenue calculations used for: assessing performance year (PY) 2023 financial performance of Shared Savings Program ACOs, establishing benchmarks for ACOs starting agreement periods in 2024, 2025, and 2026, and calculating factors used to determine revenue status and repayment mechanism amounts in the application and change request cycle for ACOs applying to enter a new agreement period beginning on January 1, 2025, or continue their participation in the program in PY 2025, respectively. There will be a 30-day public comment period on the SAHS billing activity proposed rule so as to minimize the negative impact on ACOs of a delay in the issuance of PY 2023 initial financial determinations and disbursement of performance payments, as well as to other program milestones, necessitated by the calculation of amounts under the financial methodology proposed in the SAHS billing activity proposed rule.

(2) Proposed Revisions

It is important to establish a policy that would allow CMS to proactively make similar adjustments for future calendar years, should new SAHS billing activity be identified. In general, we anticipate that billing activity that meets the high bar to be considered significant, anomalous, and highly suspect billing activity will be a rare occurrence. This is evidenced by the program's history. The SAHS billing activity surrounding selected catheter codes in 2023 is the first occasion we have had in the program's 12-year history to consider this issue. We propose that we would notify ACOs and ACO applicants of our determinations to remove any codes and the aggregate per capita dollar amount of the codes removed as part of the annual financial reconciliation process. While we anticipate future occurrences of the scope and magnitude observed for urinary catheters in CY 2023 to be rare, having a permanent policy in place would:

• Allow CMS to move quickly to make adjustments to financial calculations without having to engage in additional rulemaking, ensuring timely issuance of initial determinations of savings and losses and disbursement of earned performance payments;
• Provide ACOs with greater certainty that they will not be held accountable for SAHS billing activity that is out of their control, promote integrity and fairness and ensure accuracy of program calculations;
• Limit requests to reopen initial determinations, thus reducing burden for ACOs and CMS.

In this proposed rule we are therefore proposing an approach by which we would adjust Shared Savings Program calculations to mitigate the impacts of SAHS billing activity occurring in CY 2024 or subsequent calendar years.

(a) Identifying Significant, Anomalous, and Highly Suspect Billing Activity

We propose that CMS would have the sole discretion to identify cases of SAHS billing activity for a particular calendar year that would warrant the adjustment of Shared Savings Program financial calculations. We anticipate routinely examining billing trends identified by CMS and other relevant information that had been raised through complaints by ACOs or other interested parties to the HHS-OIG or to the CMS CPI. We would seek to identify and monitor any codes that would potentially trigger the adjustment policy by meeting the high bar for removal under the criteria used to determine SAHS billing activity. Shortly after the start of a calendar year CMS would make a final determination as to which codes, if any, warrant adjustments for the previous calendar year. For example, in early CY 2026 CMS would make a final determination of whether any codes met the high bar for removal under the criteria used to determine SAHS billing activity in CY 2025, allowing time for the adjustments to be incorporated in forthcoming calculations.

CMS must retain sole discretion to identify cases of SAHS billing activity because we cannot anticipate what SAHS billing activity we may encounter in the future that may warrant adjustments to the program's financial calculations. We are also concerned about balancing adjustments for billing activity that rises to the level of SAHS versus removing payment amounts associated with billing activity due to inefficiencies that are within the ACO's control. Depending on the frequency of the use of this authority and the occurrence of SAHS billing activity, and thus the experience we develop in this area, we would consider proposing to codify criteria to identify SAHS billing activity in the future through additional rulemaking. Nonetheless, we believe that CMS should retain sole discretion to determine whether SAHS billing activity occurred on a case-by-case basis at this time.

We anticipate considering multiple criteria in determining whether SAHS billing activity warrants removal of the corresponding billing codes from Shared Savings Program financial calculations. These criteria include:

• The observed increase in claims for a HCPCS or CPT code year-to-year meets the definition of significant, anomalous, and highly suspect billing activity, as defined elsewhere in this section of this proposed rule;
• The observed billing activity has national or regional impact or significance, such as:

++ Involves a Medicare provider or supplier, a beneficiary population and/or states with claims activity that that significantly impacts national or regional expenditure values or trends;

++ Warrants adjustment (all or partial) to national Medicare expenditure trend calculations used in payment (for example, United States Per Capita Cost) and/or Federal budget forecast calculations;

++ Warrants removal from national and regional growth rates used to update ACO historical benchmarks;

• If no action is taken there would be an imbalance between ACO performance year and historical benchmark year expenditures;
• Use of payment amounts associated with the SAHS billing activity could result in payment inaccuracies that produce significantly inaccurate and inequitable payment determinations in the Shared Savings Program (including the amount of shared savings or shared losses), due to factors beyond the control of ACOs; and
• The claims in question may be disproportionately represented by Medicare providers or suppliers whose Medicare enrollment status has been revoked.

We anticipate utilizing this authority only in rare and extreme cases where a number of the criteria are satisfied. We anticipate we would consider the extent to which the billing activity meets each criterion when developing a holistic assessment of the billing activity's impact on the Shared Savings Program.

The extent of the geographic impact of the SAHS billing activity in question is relevant given that the proposed policy would entail adjustments program-wide. One consideration for determining whether the billing activity has national or regional significance would be if the pattern warrants an adjustment to or special assumption for calculating official Medicare expenditure trends (such as the United States Per Capita Cost (USPCC) or Federal budget forecasts) due to the activity's significant, anomalous, and highly suspect nature. For example, the 2024 Medicare Trustees Report noted a significant increase in suspected fraudulent spending on certain intermittent catheters in 2023. The DME projections in the report include the assumption that this suspected fraud will be addressed during 2024. Billing activity in the Medicare FFS program at a scale warranting a special assumption for calculating the USPCC or Federal budget forecasts has per se national or regional significance, and thus would likely rise to the high bar of warranting adjustment to Shared Savings Program expenditure and revenue calculations.

We would seek to assess whether the billing activity creates an imbalance between ACO performance year and historical benchmark year expenditures. This assessment could involve considering whether the increase in billing activity was at such scale that it causes the difference between performance year and benchmark year expenditures for an ACO's assigned beneficiary population for the claim type affected by the billing activity (for example, DMEPOS) to be substantially larger than differences for other claim types.

We would also consider whether the billing activity, and any inaccurate or inequitable payment determinations that could result from using the related payment amounts, was outside of Shared Savings Program ACOs' ability to reasonably control. Most commonly, this would entail examining whether the Medicare providers or suppliers billing the codes in question are ACO providers or suppliers. Generally, we would be more likely to apply the proposed policy if the SAHS billing activity were outside of the ACO's control as the program may otherwise lack a means to control the growth of such amounts.

Finally, we would consider whether billing activity were disproportionately represented by Medicare providers or suppliers whose Medicare enrollment status has been revoked. Such a circumstance would provide further evidence that the billing activity surrounding these codes was highly suspect. We seek comment on the processes and criteria described.

(b) Adjustments to Shared Savings Program Calculations

In the event that CMS identifies one or more HCPCS or CPT codes with SAHS billing activity in CY 2024 or a subsequent calendar year that warrant adjustment, we propose to exclude all Medicare Parts A and B payment amounts associated with the identified codes on specified claim types submitted by any provider or supplier from expenditure and revenue calculations for the relevant calendar year for which the SAHS billing activity is identified. For example, if CMS identifies one or more codes with SAHS billing activity in CY 2025 that warrant adjustment, we would exclude payments for those codes for both calculations where CY 2025 is the performance year and in calculations where CY 2025 is a benchmark year for ACOs in agreement periods beginning in 2026, 2027, and 2028.

We propose that we would also adjust the 3 most recent years prior to the start of the ACO's agreement period used in establishing the historical benchmark that is used to reconcile the ACO for a performance year corresponding to the calendar year for which the SAHS billing activity was identified. In the example where CMS identified SAHS billing activity for 2025, we would adjust benchmark expenditures (ACO, national, and regional) for 2019, 2020, and 2021, for an ACO that began an agreement period in 2022 (for which PY 2025 is the fourth performance year in its agreement period) and would adjust benchmark expenditures (ACO, national, and regional) for 2022, 2023, and 2024 for an ACO that began its agreement period in 2025 (for which PY 2025 is the first performance year in its agreement period). Note that in computing benchmark expenditures for 2023 for this second ACO, because 2023 is a benchmark year, CMS would also exclude payments for the catheter claims with SAHS billing activity in 2023, as proposed in the SAHS billing activity proposed rule, if finalized.

Our proposal to adjust an ACO's historical benchmark to exclude Medicare Parts A and B FFS payment amounts associated with the HCPCS or CPT codes displaying SAHS billing activity during a performance year would achieve greater consistency between the benchmark period and the performance year, given that we are excluding all payments on specified claim types for the selected codes from performance year calculations, including payments that would have been made in the absence of any SAHS billing activity. This helps to ensure a balance between the benchmark and the performance year such that an ACO is not unfairly benefitting from a benchmark that includes certain expenditures that are excluded from the performance year. Under our proposal, we would identify any codes warranting adjustment at the start of the next calendar year and our operational schedule would accommodate the additional calculations required. Therefore, we anticipate we would be able to compute adjusted historical benchmarks for the affected reconciliation with minimal, if any, delays to the typical timeline for issuing initial determinations.

We propose that we would provide the historical benchmark that has been adjusted to exclude payment amounts for HCPSC or CPT codes associated with SAHS billing activity occurring in the performance year being reconciled to ACOs as part of their financial reconciliation settlement package for the performance year, as opposed to providing a separate new historical benchmark report in advance of settlement. This approach is consistent with what we have done for rare past occasions where we computed revised benchmarks immediately prior to reconciliation to correct for late-breaking data issues. Consistent with existing operational practice, in calculating these adjusted benchmarks, we would recompute ACO expenditures using beneficiary assignment data that was generated during the performance year being reconciled for all ACOs. For example, if computing adjusted historical benchmarks for PY 2025 to exclude claim payments for codes with SAHS billing activity during the performance year, we would use beneficiary assignment data generated during CY 2025. Although the benchmark year assignment data generated during the performance year being reconciled would be based on the same ACO participant list, assignment methodology selection under § 425.226(a)(1), and assignment methodology under subpart E of Part 425 of the regulations as used in calculating the ACO's most recent prior benchmark, other factors, such as more recent Medicare beneficiary eligibility data along with the ACOs included in the claims-based assignment competition, could differ and impact an ACO's assigned population. We considered whether to provide ACOs with their adjusted benchmark at the time we announce our determination of SAHS billing activity for a given calendar year (anticipated to occur near the start of the next calendar year), however we concluded this would delay other important program milestones, such as the issuance of preliminary and adjusted historical benchmarks for the new performance year.

When the calendar year with SAHS billing activity becomes a benchmark year, we are proposing adjustments to calculations for the calendar year itself, and not for other years in the benchmark period, or the performance years that will be reconciled against those benchmarks. Thus, in the example where we identified codes with SAHS billing activity in CY 2025, in establishing or resetting the benchmark for an ACO entering an agreement period in 2026, we would exclude payments for the relevant codes identified for CY 2025 from BY 2025 calculations and, if our proposed policy in the SAHS billing activity proposed rule is finalized, would remove payments for the specified catheter codes from BY 2023 calculations. We would not exclude the catheter codes identified as having SAHS billing activity in BY 2023 or the codes identified for CY 2025 from either BY 2024 calculations or calculations for PY 2026 or any subsequent performance years in the same agreement period.

Specifically, we are proposing to adjust the following Shared Savings Program calculations, as applicable, to exclude all Medicare Parts A and B payment amounts associated with a HCPCS or CPT code on claims for the specified claim types displaying SAHS billing activity:

• Calculation of Medicare Parts A and B FFS expenditures for an ACO's assigned beneficiaries for all purposes including the following: Establishing, adjusting, updating, and resetting the ACO's historical benchmark and determining performance year expenditures.
• Calculation of FFS expenditures for assignable beneficiaries as used in determining county-level FFS expenditures and national Medicare FFS expenditures, including the following calculations:

++ Determining average county FFS expenditures based on expenditures for the assignable population of beneficiaries in each county in the ACO's regional service area according to §§ 425.601(c) and 425.654(a) for purposes of calculating the ACO's regional FFS expenditures.

++ Determining the 99th percentile of national Medicare FFS expenditures for assignable beneficiaries for purposes of the following:

-- Truncating assigned beneficiary expenditures used in calculating benchmark expenditures under §§ 425.601(a)(4) and 425.652(a)(4), and performance year expenditures under §§ 425.605(a)(3) and 425.610(a)(4).

-- Truncating expenditures for assignable beneficiaries in each county for purposes of determining county FFS expenditures according to §§ 425.601(c)(3) and 425.654(a)(3).

-- Truncating expenditures for assignable beneficiaries for purposes of determining truncated national per capita FFS expenditures for purposes of calculating the Accountable Care Prospective Trend (ACPT) according to § 425.660(b)(3).

++ Determining truncated national per capita expenditures FFS per capita expenditures for assignable beneficiaries for purposes of calculating the ACPT according to § 425.660(b)(3).

++ Determining national per capita expenditures for Parts A and B services under the original Medicare FFS program for assignable beneficiaries for purposes of capping the regional adjustment to the ACO's historical benchmark according to §§ 425.601(a)(8)(ii)(C) and 425.656(c)(3), capping the prior savings adjustment according to § 425.658(c)(1)(ii), capping the prepaid shared savings multiplier according to § 425.640(f)(2)(v), and calculating the proposed HEBA scaler according to § 425.662(b)(2).

++ Determining national growth rates that are used as part of the blended growth rates used to trend forward BY1 and BY2 expenditures to BY3 according to §§ 425.601(a)(5)(ii) and 425.652(a)(5)(ii) and as part of the blended growth rates used to update the benchmark according to §§ 425.601(b)(2) and 425.652(b)(2)(i).

• Calculation of Medicare Parts A and B FFS revenue of ACO participants for purposes of calculating the ACO's loss recoupment limit under the BASIC track as specified in § 425.605(d).
• Calculation of total Medicare Parts A and B FFS revenue of ACO participants and total Medicare Parts A and B FFS expenditures for the ACO's assigned beneficiaries for purposes of identifying whether an ACO is a high revenue ACO or low revenue ACO, as defined under § 425.20, determining an ACO's eligibility to receive advance investment payments according to § 425.630, and determining whether an a ACO qualifies for a shared savings payment under § 425.605(h).
• Calculation or recalculation of the amount of the ACO's repayment mechanism arrangement according to § 425.204(f)(4).

This approach would recognize that SAHS billing activity has the potential to impact an ACO's savings and loss determination for both the performance year when the SAHS billing activity occurred and future performance years for which the affected year is a benchmark year. Making adjustments when the affected period represents a performance year or benchmark year is consistent with our approach for the exclusion of payment amounts for episodes of care for treatment of COVID-19 that we established in the May 8, 2020 COVID-19 IFC (85 FR 27577 through 27581).

The listed calculations reflect the same set of calculations that CMS adjusts for a beneficiary's episode of care for treatment of COVID-19, specified at § 425.611(c), as amended by the CY 2021 PFS final rule (85 FR 85044), the CY 2023 PFS final rule (87 FR 70241), and the CY 2024 PFS final rule (88 FR 79548), with a few exceptions. First, § 425.611(c) includes certain provisions that are not relevant for the proposed policy. Second, the proposed policy includes calculations related to truncated national per capita expenditures used in determining the ACPT as described in § 425.660(b)(3) that are not included in § 425.611(c), as well as references to other new or proposed calculations that do not rely on expenditures from a period of time overlapping the Public Health Emergency for COVID-19 for the United States which was in effect from January 27, 2020, through May 11, 2023 (capping the proposed prepaid shared savings multiplier (§ 425.640(f)(2)(v)), calculating the proposed HEBA scaler (§ 425.662(b)(2)), and determining whether an ACO that does not meet its minimum savings requirement qualifies for a shared savings payment (§ 425.605(h)). We propose to adjust calculations used for the ACPT to mitigate the impact of any SAHS billing activity identified for CY 2024 or subsequent calendar years. Specifically, in projecting growth rates at the start of an agreement period according to § 425.660, we would make an adjustment to the growth rates to mitigate the impact that any known SAHS billing activity have on spending growth projections.

We believe it is unlikely that fixed growth rates projected at the start of agreement periods beginning in earlier years may also need mitigation from a code displaying SAHS billing activity. For example, if CMS identifies a HCPCS or CPT code displaying SAHS billing activity in CY 2025, the projected growth rate from 2023 to 2025—which will be used to update the historical benchmark for PY 2025 financial reconciliation for ACOs that began an agreement period on January 1, 2024—would likely have assumed typical billing patterns for the code in CY 2025. Additionally, the projected growth rate from BY 2024 to PY 2025—which will be used to update the historical benchmark for PY 2025 financial reconciliation for ACOs that began an agreement period on January 1, 2025—would likely also have assumed typical billing patterns for the code in CY 2025 given the projections were finalized early in CY 2025.

However, if we determine a bias exists due to differences between adjustments to the projected growth rates for the ACPT and other Shared Savings Program calculations, we could rely on our current policy under § 425.652(b)(4)(ii) to reduce the weight of the ACPT in the three-way blend. We propose that we would use our discretion to reduce the weight of the ACPT rather than recalculate the growth rates that had been projected at the start of agreement periods starting in earlier years, as we believe it is important to maintain the policy that the projected growth rates remain fixed for the ACO's agreement period. In the CY 2023 PFS final rule (refer to 87 FR 69886 through 69898) we finalized our proposal to establish the ACPT at the outset of an agreement period, based on one or more annualized growth rates. We explained that we will not adjust the ACPT due to external factors such as geographic price changes, efficiency discounts, or other retrospective updates occurring during the performance years throughout the agreement period. In response to commenters concern that CMS might adjust the ACPT downward during the agreement period, we stated that we will not adjust the ACPT projections over the course of the agreement period (87 FR 69897). However, we acknowledged that a variety of circumstances could cause actual expenditure trends to significantly deviate from projections. If unforeseen circumstances occur during an ACO's agreement period we retained flexibility to reduce the impact of the prospectively determined ACPT portion of the three-way blend when necessary to mitigate unforeseen circumstances. We explained that we anticipate determining, on an ad hoc basis, whether an unforeseen circumstance warrants adjustment of the weight placed on the ACPT component of the three-way blend by considering whether it has a material impact across the entire Shared Savings Program. If we determine that expenditure growth has differed significantly from projections made at the start of the agreement period due to unforeseen circumstances, such as an economic recession, pandemic, or other factors, a reduction in the weight placed on the ACPT may be considered.

To summarize, we propose that when projecting growth rates used for the ACPT at the beginning of an agreement period, we would make an adjustment to mitigate the impact of any known SAHS billing activity on spending growth projections. Additionally, in accordance with § 425.660(a), CMS would not adjust the ACPT projections over the course of the agreement period to account for SAHS billing activity later identified. Rather, CMS may use its discretion to reduce the weight of the ACPT in the three-way blend in accordance with § 425.652(b)(4)(ii) if CMS determines that the SAHS billing activity represents an unforeseen circumstance that warrants a reduction to the weight.

The direction and magnitude of the impact of the proposed adjustments may vary by ACO. However, by making these adjustments, we would be helping to ensure that no ACOs are held accountable, and financially penalized for SAHS billing activity that was outside their direct control while also protecting the Trust Funds from other ACOs potentially receiving windfall gains.

For this proposal, we rely on our authority under section 1899(d)(1)(B)(ii) of the Act. Section 1899(d)(1)(B)(ii) of the Act authorizes the Secretary to adjust the benchmark for beneficiary characteristics and such other factors as the Secretary determines appropriate. Here, we are proposing to adjust the benchmark in order to remove payments for HCPCS or CPT codes identified as exhibiting SAHS billing activity in CY 2024 or subsequent calendar years from the determination of benchmark expenditures when the calendar year serves as a benchmark year or from the determination of benchmark expenditures that will be used to reconcile the calendar year when it serves as a performance year.

We propose to use our authority under section 1899(i)(3) of the Act to remove payment amounts for HCPCS or CPT codes identified as exhibiting SAHS billing activity in CY 2024 or subsequent calendar years from the following calculations: (1) performance year expenditures; (2) updates to the historical benchmark; and (3) ACO participants' Medicare FFS revenue used for multiple purposes across the Shared Savings Program, including determinations of loss sharing limits in the two-sided models of the BASIC track, determinations of eligibility for advance investment payments, and expanded criteria for certain low revenue ACOs participating in the BASIC track to qualify for shared savings in the event the ACO does not meet the minimum savings rate. Section 1899(i)(3) of the Act requires that we determine that the alternative payment methodology adopted under that provision would improve the quality and efficiency of items and services furnished to Medicare beneficiaries, without resulting in additional program expenditures. The adjustments we are proposing herein, which would remove payment amounts for codes with identified SAHS billing activity from the specified Shared Savings Program calculations as proposed in § 425.672(c) and (e), would capture and remove from program calculations expenditures that are outside of an ACO's control, but that could significantly affect the ACO's performance under the program. In particular, failing to remove these payments would likely create highly variable savings and loss results for individual ACOs that happen to have over-representation or under-representation of SAHS billing activity for the selected codes among their assigned beneficiary populations.

As described in the Regulatory Impact Analysis (section VII. of this proposed rule), excluding payment amounts for the selected codes from the specified calculations are not expected to result in an increase in spending beyond the expenditures that would otherwise occur under the statutory payment methodology in section 1899(d) of the Act. Further, these adjustments to our calculations to remove payment amounts for these codes would promote continued integrity and fairness and improve the accuracy of Shared Savings Program financial calculations. As a result, we expect these policies would support ACOs continued participation in the Shared Savings Program and the program's goals of lowering growth in Medicare FFS expenditures and improving the quality of care furnished to Medicare beneficiaries.

Based on these considerations, and as specified in the Regulatory Impact Analysis (section VII. of this proposed rule), we have determined that adjusting certain Shared Savings Program calculations to remove payment amounts for selected codes, in the event we determine SAHS billing activity occurs in CY 2024 or subsequent calendar years, from the calculation of performance year expenditures, updates to the historical benchmark, and ACO participants' Medicare FFS revenue used for multiple purposes across the Shared Savings Program, meets the requirements for use of our authority under section 1899(i)(3) of the Act when incorporated into the existing other payment model we have established pursuant to that section.

The changes that we are proposing in this section of this proposed rule would apply to address the impact of SAHS billing activity identified in CY 2024 or subsequent calendar years, and thus would apply to ACOs currently participating in PY 2024. Therefore, if finalized, these changes to policies applicable for PY 2024 would constitute retroactive rulemaking. Section 1871(e)(1)(A)(ii) of the Act permits a substantive change in regulations, manual instructions, interpretive rules, statements of policy, or guidelines of general applicability under Title XVIII of the Act to be applied retroactively to items and services furnished before the effective date of the change if the failure to apply the change retroactively would be contrary to the public interest.

Failing to apply the proposed changes retroactively to PY 2024 would be contrary to the public interest because it would unfairly punish Shared Savings Program ACOs by forcing them to unexpectedly assume a substantial magnitude of financial risk for costs outside of their control and not previously contemplated in the Shared Savings Program, undermining both the sustainability of the Shared Savings Program and the public's faith in CMS as a fair partner, in the event we determine SAHS billing activity impacts CY 2024. We did not fully contemplate the potential for SAHS billing activity outside of an ACO's control when the Shared Savings Program was established. For this reason, the Shared Savings Program financial methodology and the procedures we have utilized in the past did not provide a means to adequately account for instances of SAHS billing activity outside of an ACO's control, and thereby the related financial risk is assumed entirely by ACOs. We view this outcome as particularly inequitable to ACOs because they have no direct means of controlling such costs. Unlike Medicare Advantage organizations, ACOs are not responsible for processing claims for their assigned beneficiaries and otherwise have no means of causing the denial of such claims. CMS thus cannot reasonably have expected ACOs to have intended to assume responsibility for all instances of SAHS billing activity outside of an ACO's control when they joined the Shared Savings Program. For these reasons, it would be contrary to the public interest for CMS to fail to apply a policy mitigating this issue retroactively.

We did not foresee the acute need to address SAHS billing activity impacting CY 2023, and the need for the related policy proposal for addressing SAHS billing activity in CY 2024 or subsequent calendar years, with sufficient time in advance of the start of PY 2024 to undertake notice and comment rulemaking earlier, and to avoid retroactive rulemaking. More specifically, we were only able to determine that the increase in billing on HCPCS codes A4352 and A4353 in CY 2023 represented SAHS billing activity after the calendar year ended. To identify that the billing activity in CY 2023 was significant, anomalous, and highly suspect, CMS reviewed actual billing levels after the calendar year closed and services furnished in CY 2023 had occurred and the billing level could then be compared to billing levels observed in prior calendar years.

We seek comment on our proposal to apply the policy retroactively to PY 2024, including whether failing to apply the policy retroactively would be contrary to the public interest and how it would affect ACOs and their ability to participate in the Shared Savings Program.

We are proposing a new § 425.672 to describe adjustments CMS could make to Shared Savings Program calculations to mitigate the impact of SAHS billing activity for CY 2024 or subsequent calendar years. We propose that § 425.672(b) specify that CMS, at its sole discretion, may determine that the billing of specified HCPCS or CPT codes represents SAHS billing activity in calendar year 2024 or subsequent calendar years that warrants adjustment to calculations made under this part. We propose under § 425.672(c) to specify the Shared Savings Program calculations for which CMS would exclude all Medicare Parts A and B FFS payment amounts for the specified claim types associated with a HCPCS or CPT code identified in § 425.672(b) when an adjustment to the calculation is appropriate in light of the SAHS billing activity. The calculations specified in § 425.672(c) include all potentially relevant financial calculation provisions, including those covering the financial benchmarking methodologies (including the proposed HEBA scaler at § 425.662(b)(2)) and those covering calculation of shared savings and losses. We propose in § 425.672(d) that for calendar year 2024 or subsequent calendar years, CMS would adjust Shared Savings Program calculations for SAHS billing activity identified under § 425.672(b) for the calendar year when it is either a performance year or a benchmark year, as well as the 3 most recent years prior to the start of the ACO's agreement period used in establishing the historical benchmark, when such a benchmark is used to reconcile the ACO for a performance year adjusted for SAHS billing activity. We propose to specify under § 425.672(e) that we would also make adjustments for any calendar year corresponding to BY3 in projecting per capita growth in Medicare Parts A and B FFS expenditures according to § 425.660(b)(1) for purposes of calculating the ACPT for agreement periods beginning on January 1, 2024, and in subsequent years. Additionally, we are proposing conforming revisions to §§ 425.601(a)(9) and 425.652(a)(9), as well as proposing new paragraphs at §§ 425.601(a)(9)(iv) and 425.652(a)(9)(ix) to include adjustments for SAHS billing activity as one of the reasons that CMS would adjust an ACO's benchmark during the term of its agreement period. While we expect that the identification of SAHS billing activity that triggers these proposed policies will be rare, we believe that, if finalized, these policies will allow us to proactively ensure the accuracy of program calculations and provide greater certainty for ACOs and the Trust Funds.

We seek comment on these proposals.

e. Seeking Comment on Establishing Higher Risk and Potential Reward Under the ENHANCED Track

(1) Background

As described in the CY 2024 PFS final rule (88 FR 79223), CMS has considered a higher risk Shared Savings Program track under which the shared savings/loss rate would be somewhere between 80 percent and 100 percent (that is, a rate higher than that currently offered under the ENHANCED track) and that builds on the experience of the Next Generation ACO (NGACO) and ACO REACH Models. A higher risk track would offer ACOs increased incentives to generate savings, which would help improve care delivery by promoting innovations in the delivery of high-quality care that is more patient-centered. In other words, by increasing sharing rates for ACOs, ACOs will be better incentivized to develop innovations in the delivery of high-quality care and, therefore, improve the care they offer to their beneficiaries. A revised ENHANCED track could be implemented in accordance with section 1899(i)(3) of the Act, provided the Secretary determines that such other payment model enhances the quality and efficiency of items and services furnished under the Medicare program and does not result in program expenditures greater than those that would result under the statutory payment model.

In the CY 2024 PFS final rule (88 FR 79223), we summarized public comments received in response to our Request for Information (RFI) regarding a potential track within the Shared Savings Program with higher risk than the current ENHANCED track. For a full summary of the comments submitted in response to our comment solicitation, we refer readers to the relevant discussion in the CY 2024 PFS final rule (88 FR 79225 through 79227). Commenters were broadly supportive of such an approach and referenced existing policies under the ACO REACH Model, and the NGACO Model. Some commenters suggested features of such a track that would serve to encourage more participation in the Shared Savings Program and help ACOs deliver more person-centered care to beneficiaries in Traditional Medicare. These features included prospective payments, full sharing rates (a sharing rate of 100 percent, similar to the Global Risk Sharing Option in the ACO REACH Model) as well as a benchmark discount rate (a reduction of the benchmark by a predetermined percentage) to protect the Medicare Trust Funds.

A higher risk sharing arrangement could incentivize participating ACOs to improve performance in the program as they would receive a greater share of any gross savings. That improved performance may, in turn, result in reduced healthcare costs for Medicare and more effective, efficient care for beneficiaries. In addition, higher risk sharing could incentivize ACOs to develop new care delivery strategies in order to improve their financial performance, such as a focus on specialty care integration and reduced care fragmentation. Offering a higher risk sharing track may also help CMS reach our goal of having all beneficiaries in the traditional Medicare program in a care relationship with a health care provider who is accountable for the costs and quality of their care by 2030 by encouraging currently participating ACOs to continue participation in the Shared Savings Program, as well as encourage ACOs not participating in the Shared Savings Program to join as a result of increased potential reward.

A recent CBO report proposed that higher sharing rates might incentivize providers to decrease spending as they would stand to gain a larger portion of the savings generated. While in the short term this might diminish CMS savings, the report postulates that this would increase participation in the Shared Savings Program and provide a means for CMS to manage long-term healthcare spending growth. The report also highlights the necessity of striking a delicate balance: devising financial incentives enticing enough for ACOs to participate actively in the Shared Savings Program, while ensuring that such participation leads to savings for the Medicare program.

We seek comment on a participation option that would allow for higher risk and reward than currently available under the ENHANCED track. A participation option of this type would replace the existing ENHANCED track in order to avoid the self-selection issues that would occur if a higher risk track were to be included alongside the ENHANCED track. If both participation options were made available to ACOs, we have concerns that only the highest-performing ACOs would self-select into the higher of the two risk tracks. While we included an RFI on the topic in CY 2024 PFS rulemaking, we are concerned that ACOs did not have enough detailed information to appropriately weigh the tradeoffs associated with a higher risk/reward option than the current ENHANCED track, and that the additional information we have generated since then will allow ACOs and other interested parties to provide more forthright and helpful feedback. CMS is interested in public comments on the design of a higher risk option within the Shared Savings Program that could be enacted under our authority granted by section 1899(i)(3) of the Act and that would encourage ACOs to participate actively in the Shared Savings Program while ensuring that such participation leads to savings for the Medicare program.

(a) Current ENHANCED Track

Currently, under the Shared Savings Program, ACOs may enter participation agreements under the ENHANCED track. The ENHANCED track is a two-sided model that represents the highest level of risk and potential reward currently offered under the Shared Savings Program. The rules governing the participation options available to ACOs and the progression from lower to higher risk for ACOs entering the program are described in § 425.600 of the regulations. To qualify for a shared savings payment, an ACO must meet a minimum savings rate (MSR) requirement, meet the quality performance standard or alternative quality performance standard established under § 425.512, and otherwise maintain its eligibility to participate in the Shared Savings Program under 42 CFR part 425, subpart B (§§ 425.100 through 425.118). For ACOs meeting the applicable quality performance standard established under § 425.512(a)(2) or (a)(5)(i) (for PY 2024 and subsequent performance years), the final shared savings rate is equal to the maximum sharing rate of 75 percent, or savings at a rate of 75 percent multiplied by the ACO's health equity adjusted quality performance score if the ACO meets the alternative quality performance standard at § 425.512(a)(5)(ii). CMS computes an ACO's shared savings payment by applying the final sharing rate to the ACO's savings on a first dollar basis (meaning the final sharing rate is applied to the ACO's full total savings amount), with the payment subject to a cap that is equal to 20 percent of the updated benchmark (§ 425.610(e)(2)).

ACOs that operate under a two-sided model and have losses that meet or exceed a minimum loss rate (MLR) must share losses with the Medicare program (§ 425.100(c)). Once this MLR is met or exceeded, the ACO will share in losses at a rate determined according to the ACO's track/level of participation, up to a loss recoupment limit (also referred to as the loss sharing limit) (§ 425.605(d); § 425.610(f), (g)). In determining shared losses, ACOs participating in the ENHANCED track are subject to losses at a rate determined using a sliding scale based on ACO's health equity adjusted quality performance score, if the applicable quality performance standard established in § 425.512(a)(2) or (a)(5)(i) or the alternative quality performance standard at § 425.512(a)(5)(ii) is met; with minimum shared loss rate of 40 percent and maximum of 75 percent. If the ACO fails to meet the applicable quality performance standard established in § 425.512 or the alternative quality performance standard, the ACO is subject to 1st dollar losses at a rate of 75 percent (§ 425.610(f)(4)(ii)). Shared losses are subject to a cap that is equal to 15 percent of updated benchmark (§ 425.610(g)).

CMS adjusts historical benchmark expenditures by Medicare enrollment type by a percentage of the difference between the average per capita expenditure amount for the ACO's regional service area and the ACO's historical benchmark amount (referred to herein as the “regional adjustment”) (§ 425.652(a)(8)). The weights used in the regional adjustment calculation are determined in accordance with§ 425.656(e) and are dependent on whether the ACO has lower or higher spending compared to the ACO's regional service area and the agreement period for which the ACO is subject to the regional adjustment. The first time that an ACO's benchmark is adjusted based on the ACO's regional service area expenditures, CMS calculates the regional adjustment using either 35 percent of the difference between the average per capita amount of expenditures for the ACO's regional service area and the average per capita amount of the ACO's initial or rebased historical benchmark, if the ACO is determined to have lower spending than the ACO's regional service area (§ 425.656(e)(1)(i)); or 15 percent of the difference between the average per capita amount of expenditures for the ACO's regional service area and the average per capita amount of the ACO's initial or rebased historical benchmark, if the ACO is determined to have higher spending than the ACO's regional service area (§ 425.656(e)(1)(ii)). The second time that an ACO's benchmark is adjusted based on the ACO's regional service area expenditures, CMS calculates the regional adjustment using either the 50 percent of the difference between the average per capita amount of expenditures for the ACO's regional service area and the average per capita amount of the ACO's rebased historical benchmark if the ACO is determined to have lower spending than the ACO's regional service area (§ 425.656(e)(2)(i)); or 25 percent of the difference between the average per capita amount of expenditures for the ACO's regional service area and the average per capita amount of the ACO's rebased historical benchmark if the ACO is determined to have higher spending than the ACO's regional service area (§ 425.656(e)(2)(ii)). The third time that an ACO's benchmark is adjusted based on the ACO's regional service area expenditures, CMS calculates the regional adjustment using the 50 percent of the difference between the average per capita amount of expenditures for the ACO's regional service area and the average per capita amount of the ACO's rebased historical benchmark if the ACO is determined to have lower spending than the ACO's regional service area (§ 425.656(e)(3)(i)); or the 35 percent of the difference between the average per capita amount of expenditures for the ACO's regional service area and the average per capita amount of the ACO's rebased historical benchmark if the ACO is determined to have higher spending than the ACO's regional service area (§ 425.656(e)(3)(ii)). The fourth or subsequent time that an ACO's benchmark is adjusted based on the ACO's regional service area expenditures, CMS calculates the regional adjustment to the historical benchmark using 50 percent of the difference between the average per capita expenditures for the ACO's regional service area and the average per capita amount of the ACO's rebased historical benchmark (§ 425.656(e)(4)). Among the ACOs participating in PY 2024, 78 percent of BASIC track ACOs (176 of 227) received a positive regional adjustment, whereas 95 percent (155 of 163) of ACOs in the ENHANCED track received a positive regional adjustment. A positive regional adjustment indicates that their expenditures were less than that of their regional service area. For ACOs receiving a positive regional adjustment, the average regional adjustment amount was 2.21 percent ($237) of historical benchmark expenditures.

As of January 1, 2024, 43 percent (207 of 480) Shared Savings Program ACOs are participating under the ENHANCED track. Under Shared Savings Program policies, all ACOs participating in a two-sided model can select a symmetrical MSR and MLR which applies for the duration of its agreement period (§ 425.605(b)(2); § 425.610(b)(1)). Among ACOs participating in the ENHANCED track for PY 2024, 61 percent (126 of 207) have selected an MSR/MLR of 0.5 percent or greater while 39 percent (81 of 207) have selected an MSR/MLR of 0.0 percent. Among ACOs that participated in the ENHANCED track for PY 2022, 38 percent (55 of 146) generated gross savings between zero and 5 percent of their updated benchmark expenditures, and 12 percent (17 of 146) generated gross savings of 10 percent or more of their benchmark expenditures.

(b) Other CMS Innovation Center Models

In the NGACO Model, NGACOs were offered the choice between two risk arrangements, partial risk or full risk. Under both arrangements, the NGACO was responsible for 100 percent of performance year expenditures for services rendered to the NGACO's aligned beneficiaries. Under the partial risk arrangement, the NGACO could receive or owe up to 80 percent of savings/losses, whereas under the full risk arrangement, the NGACO could receive or owe up to 100 percent of savings/losses. To mitigate the ACO's risk of large shared losses, as well as to protect the Medicare Trust Funds against paying out excessive shared savings, NGACOs were required to choose a cap on gross savings/losses. The cap, expressed as a percentage of the benchmark, ranged from 5 percent to 15 percent. The risk arrangement chosen by the NGACO (80 or 100 percent) was applied to gross savings or losses after the application of the cap. In PYs 1-3, a discount was applied to the NGACO's benchmark that was set at a standard 3 percent, with various adjustments, that allowed the final discount to vary from 0.5 percent to 4.5 percent. In PYs 4-6, a discount of 0.5 percent was applied to the benchmark under the partial risk arrangement, and a discount of 1.25 was applied to the benchmark under the full risk arrangement. The purpose of the discount was to increase the likelihood that any savings achieved by the NGACOs participating in the model would also result in savings for the Medicare Program. The NGACO Model evaluation found that while NGACOs reduced gross Medicare Parts A and B expenditures relative to a comparison group of similar fee-for-service Medicare beneficiaries in their markets, they did not generate savings to the Medicare Trust Funds. ACOs that elected a risk cap greater than 5 percent and participated in model population-based payment mechanisms achieved greater declines in spending, suggesting that the combination of risk and payment flows is impactful. Spending reductions grew larger almost every year, reflecting a combination of NGACOs' improvements in infrastructure and clinical processes, exit by poorer-performing NGACOs, and the COVID-19 pandemic. While the NGACO Model reduced spending in Medicare Parts A and B, CMS paid back these reductions in the form of shared savings payments to ACOs. These results highlight the need to balance the tradeoff between incentivizing participation in higher levels of risk and reward, in alternative payment models such as the Shared Savings Program and ACO models tested by the Innovation Center, and reducing the risk of loss to the Medicare Trust Funds.

Under the ACO REACH Model, REACH ACOs are offered the choice of participating under the Global or the Professional Risk Sharing Options. As in the NGACO Model, under both risk sharing options, the REACH ACO is responsible for 100 percent of performance year expenditures for services rendered to aligned beneficiaries. Because ACOs electing the Global Risk Sharing Option retain up to 100 percent of the savings/losses on all savings up to 25 percent of their benchmark, with reduced sharing rates for savings exceeding 25 percent of their benchmark, a discount is applied to the benchmark to ensure savings are also generated for CMS. For ACOs in the Global Risk Sharing Option, the benchmark is reduced by a fixed percentage based on the performance year. The discount rate for PYs 2021 and 2022 was 2 percent, for PYs 2023 and 2024 is 3 percent, and for PYs 2025 and 2026 will be above 3.5 percent. The benchmark for ACOs participating in the Professional Risk Sharing Option does not include this discount, and these ACOs are only eligible to retain 50 percent of savings or owe 50 percent of any losses.

Preliminary evaluation results of the first 2 performance years of the Global and Professional Direct Contracting Model, before its transition to the ACO REACH Model, suggest that participating ACOs had mixed results in gross spending but consistent, significant increases in net spending relative to a comparison group of similar FFS Medicare beneficiaries in their markets, which included beneficiaries assigned to ACOs participating in the Shared Savings Program. Standard ACOs, comprised of organizations that generally have experience serving Medicare FFS beneficiaries, increased gross spending. Standard ACOs also reduced acute care spending and utilization but comparison providers had larger reductions in acute care spending and utilization. Increased spending among Standard ACOs was concentrated among the integrated delivery system/hospital system ACOs in the model. High Needs ACOs that serve Medicare FFS beneficiaries with complex needs, including dually eligible beneficiaries, decreased gross spending. High Needs ACOs comprised of organizations that have not traditionally provided services to Medicare FFS beneficiaries favorably reduced acute and post-acute care utilization and spending. New Entrant ACOs had declines in gross spending but these declines were similar to those of providers within their same markets. Standard and New Entrant ACOs showed statistically significant improvement on at least one quality measure. These interim evaluation results are mixed, and additional analyses and years of experience with the Model will inform which features of ACO REACH could drive continued growth and innovation in the Shared Savings Program and the focus of future Innovation Center ACO models.

(2) Considerations for Incorporating Higher Risk and Potential Reward Under the ENHANCED Track

As we explained in the CY 2024 PFS final rule (88 FR 79223 through 79225), when considering a higher risk track, CMS would need to balance the incentives for ACOs to transition to higher levels of risk and potential reward and increase ACO participation in the Shared Savings Program and in two-sided risk tracks, all while ensuring sufficient financial safeguards to protect against inappropriately large shared losses for ACOs coordinating and improving quality of care for high-cost beneficiaries. Considerations must also be directed towards safeguarding the Medicare Trust Funds and ensuring that CMS satisfies any statutory requirements under section 1899(i)(3) of the Act.

A revised ENHANCED track could be implemented in accordance with section 1899(i)(3) of the Act, provided the Secretary determines that such other payment model enhances the quality and efficiency of items and services furnished under the Medicare program and does not result in program expenditures greater than those that would result under the statutory payment model. Increasing the sharing rate in the ENHANCED track may need to be accompanied by other modifications to prevent spending from increasing and possibly jeopardizing compliance with section 1899(i)(3) of the Act. One factor to consider is selective participation with regard to which ACOs would choose to participate in a higher risk track, if offered. For example, Shared Savings Program ACOs that have a history of high levels of earned shared savings or have received a favorable high regional adjustment to their benchmark may be more likely than other ACOs to switch to the higher risk track upon renewing or early renewing their participation in the program so they can receive additional benefit from the higher levels of potential reward offered in a higher risk track. This could result in increased spending on the part of CMS which may jeopardize compliance with section 1899(i)(3) of the Act. If a higher risk track were to be offered in the Shared Savings Program in the future, CMS would consider replacing the existing ENHANCED track in order to prevent further selective participation and maintain the balance between increased participation and compliance with applicable statutory requirements.

We are seeking comment on the following potential features of a revised ENHANCED track:

(a) Benchmark Discount Rate

Both the NGACO Model and the Global Risk Sharing Option of the ACO REACH Model feature a discount rate that is applied to benchmarks. The discount rate serves to protect the Medicare Trust Funds by reducing benchmarks and thereby improves the likelihood of achieving savings for the Medicare program for risk tracks that can feature up to 100 percent shared savings rates, such as the Global Risk Sharing Option in the ACO REACH Model. A discount would be applied to an ACO's updated historical benchmark before gross savings/losses are calculated, which increases the likelihood of savings for CMS and the Medicare program. If an ACO were to participate in a potential higher risk track and potentially share in 100 percent of gross savings, this discount would serve as the primary means for CMS to capture savings from ACOs participating in this option, as in the absence of a discount any and all gross savings would go to ACOs in the form of a shared savings payment. For example, consider an ACO with an updated benchmark of $10,000 and mean per-capita performance year expenditures of $9,500. Applying a discount rate of 1 percent to the benchmark would reduce the ACO's benchmark to $9,900. Gross savings would then be calculated based on the discounted benchmark, and the ACO's shared saving rate would be applied to the savings, provided these savings met or exceeded the ACO's selected MSR.

A discount to the benchmark could also include a guardrail policy similar to the guardrail implemented in the three-way blended update factor that was finalized in the CY 2023 PFS final rule (87 FR 69881). Under such an approach, if an ACO were to be liable for shared losses after discounting the benchmark, then gross savings or losses would be recalculated using a benchmark without the discount. However, if the ACO were to generate gross savings in excess of their MSR under the benchmark without the discount, they would still not be considered eligible to share in savings. This approach would help ensure that CMS shares in any savings generated by ACOs participating in a potential revised ENHANCED track while also not increasing downside risk for ACOs that may be liable for shared losses.

We seek comment on what rate would be appropriate for a discount to the benchmark that would protect the Medicare Trust Funds while providing an adequate incentive for ACOs to participate in a potential revised ENHANCED track. We also seek comment on whether the model features described in following subsections might replace a discount to the benchmark while balancing financial incentives for ACOs and risk to CMS. Additionally, we also seek comments from interested parties, including ACOs, on the discount to the benchmark and what level of discount would be acceptable to ACOs participating in the Shared Savings Program, as well as what would be considered too high of a discount.

(b) Tapered Sharing Arrangements

Currently in the ENHANCED track, ACOs can receive a shared savings payment of up to 20 percent of their updated benchmark (once the MSR is met or exceeded) (§ 425.610(e)(2)) or be liable for losses not to exceed 15 percent of their updated benchmark (once the MLR is met or exceeded) (§ 425.610(g)). Alternatively, CMS could set up marginal savings bands or risk corridors under which shared savings or losses rates would vary with the amount of gross savings or losses. As gross savings/losses increase, the ACO will retain a progressively smaller portion of the total savings or will be responsible for a progressively smaller portion of the total losses. For example, consider hypothetical marginal savings bands shown in Table 44. Under this arrangement, an ACO would share in all savings up to 10 percent of their updated benchmark at a rate of 100 percent. For savings between 10 to 15 percent, the ACO would share in 60 percent of savings and CMS would retain the remaining 40 percent. For savings between 15 to 20 percent, the ACO would share in 40 percent of savings and CMS would retain the remaining 60 percent. In case of losses, ACOs would be responsible for 50-100 percent of the losses, depending on the ACO's quality performance score.

We seek comment on whether the hypothetical marginal shared savings bands shown in Table 44 represent an appropriate tapering schedule that would provide sufficient incentive for an ACO to participate in a potential revised ENHANCED track, as well as whether the tapering schedule should begin with lower shared savings rates and feature increasing rates as an ACO generates greater amounts of savings. We also seek comment on whether a potential tapering schedule should be symmetrical with respect to shared loss rates. Finally, we seek comment on whether marginal shared savings bands provide the right incentives to ACOs relative to the fixed savings rate in the current ENHANCED track.

(c) MSR/MLR

We are considering the option for all ACOs under a revised ENHANCED track to be subject to a symmetric MSR/MLR of 0 percent. This would increase many ACOs' exposure to both positive savings and negative risk. While this approach would guarantee that any ACO generating savings would share in those savings (provided they meet the quality performance standard established under § 425.512 and otherwise maintain their eligibility to participate in the Shared Savings Program), ACOs with performance year expenditures greater than their historical benchmark would be liable for those losses due to the 0 percent MLR. We are seeking comment on whether a potential revised ENHANCED track should retain the existing symmetric MSR/MLR selection options that currently exist for ACOs in a two-sided risk model under § 425.610(b)(1).

(d) Cap On Regional Adjustment Weight

We are seeking comment on adjusting the weights used to calculate the regional adjustment amounts under § 425.656(e) for ACOs in the revised ENHANCED track. This may take the form of applying a cap of 35 percent to all the weights used to calculate regional adjustment amounts. This would impact any ACOs in a second or subsequent agreement period subject to a regional adjustment if their historical benchmark spending is lower than their regional service area. If the cap were to apply to an ACO with lower spending than their regional service area, then this would result in a decreased regional adjustment to that ACO's historical benchmark. Overall, this feature would reduce the cost to CMS associated with high regional adjustments by reducing an ACO's historical benchmark in the event that an ACO in a second or subsequent agreement period receives a large positive regional adjustment, which may decrease the need for higher benchmark discount rates or lower tapered shared savings rates that are less favorable to ACOs and limit incentives for ACOs to transition from the BASIC track to the revised ENHANCED track. This feature may also increase the relative impact of the prior savings adjustment and the health equity benchmark adjustment proposed in section III.G.7.b. of this proposed rule. We seek comment on whether further reductions to or the removal of the regional adjustment to the historical benchmark would be appropriate as part of a potential revised ENHANCED track. We also seek comment on whether maintaining the regional adjustment in its current state would warrant further changes to the revised ENHANCED track features described above, including, but not limited to, a discount to the benchmark or lower tapered shared savings rates.

(e) Payment Mechanisms

We are seeking comments on alternative payment mechanisms the Innovation Center has tested and their ability to help transform care delivery and improve health outcomes for ACOs participating in the Shared Savings Program. These payment mechanisms test whether alternative payment flows (that is, those other than fee for service reimbursement) facilitate better investment in infrastructure and care coordination and encourage innovative downstream payment arrangements that can improve health outcomes for Medicare beneficiaries. The alternative payment mechanisms on which we seek comments are described below:

• Infrastructure Payments: Under these arrangements, CMS makes a payment to the ACO, in addition to FFS reimbursement to the providers and suppliers participating in the ACO, that is unrelated to claims. Infrastructure payments have been distributed either as a lump sum or per beneficiary per month payments. Infrastructure payments are recouped during the payment reconciliation process.
• Population-Based Payment, All-Inclusive Population-Based Payment, or Advance Payment Option: In this arrangement, CMS provides a percentage of FFS reimbursement to the ACO in the form of a monthly payment to support ongoing ACO activities and provide the ACO flexibility in the types of arrangements it enters into with provider/suppliers. The ACO and providers with whom it has a written business arrangement determine percentage reductions to the base FFS payments to the providers interested in this payment arrangement. Providers participating in this option have their FFS payments reduced by the agreed upon percentage, which range from 1-100 percent. CMS pays the projected total annual amount taken out of the base FFS rates to the ACO in monthly payments. At the end of each performance year, the amount of payment paid to ACOs participating in this type of payment option is reconciled against the reductions actually made to claims payments to providers participating in these arrangements, linking the amount of these payments directly to utilization and FFS payment.
• Capitation: The ACO REACH Model tests two capitation payment options—Primary Care Capitation and Total Care Capitation.

The Primary Care Capitation Payment is the payment for primary care services provided to aligned REACH beneficiaries by all Participant Providers and those Preferred Providers who have selected Primary Care Capitation Payment. In Primary Care Capitation, a per beneficiary, per month capitated payment is provided to an ACO for its aligned beneficiaries for the primary care services provided by the ACO's Participant Providers and its Preferred Providers who have opted to participate in Primary Care Capitation Payment. The Primary Care Capitation payment amount is generally equal to seven percent of the estimated total cost of care for the ACO's aligned population (that is, the risk adjusted, trended, and regionally blended benchmark).

The Primary Care Capitation payment includes two components, Base Primary Care Capitation and Enhanced Primary Care Capitation. The Base Primary Care Capitation amount is intended to cover primary care services furnished to aligned beneficiaries by Participant Providers and those Preferred Providers who have agreed to participate in Primary Care Capitation Payment that are thus subject to fee reductions under Primary Care Capitation Payment. The Enhanced Primary Care Capitation amount, which will be recouped by CMS in full during final financial settlement, is intended to enable ACOs to make upfront investments in infrastructure, technology, tools, and resources to support increased access to primary care, provision of care, and care coordination. The Primary Care Capitation Payment is expected to encourage greater flexibility in payment and innovative primary care service delivery as a means of improving the quality and cost effectiveness of care overall.

In Total Care Capitation, a per-beneficiary, per month capitated payment is provided to an ACO for all Medicare Part A and Part B services provided to aligned beneficiaries by the ACO's Participant Providers and its Preferred Providers who have opted to participate in Total Care Capitation payment. The Total Care Capitation payment amount reflects the estimated total cost of care for the ACO's aligned population (that is, the risk adjusted, trended, and regionally blended benchmark) and is only available to ACOs participating in the Global risk option. Participant Providers and those Preferred Providers that have elected to participate in the ACO's selected capitation payment mechanism continue to submit claims to CMS for services provided to aligned beneficiaries. The CMS FFS claims processing system reduces claims payment amounts according to the payment reduction arrangements with their providers. More details on ACO REACH Model's capitation payment mechanisms are available here: https://www.cms.gov/files/document/aco-reach-py24-financial-ops-capitation-and-payment-mechanisms.pdf.

Additionally, we are interested in feedback on the following questions related to implementation of a revised ENHANCED track with higher risk and potential reward, as well as comments that could inform changes to the Shared Savings Program and future Innovation Center ACO models:

1. What would the option of a revised ENHANCED track allow an ACO to do that they are unable to do currently?

2. How would higher downside risk impact an ACO's care delivery strategies, including advanced primary care, behavioral health, specialty integration, and integration with community-based organizations to improve health outcomes or advance health equity?

3. How does higher downside risk impact an ACO's downstream provider arrangements to further advance incentives to reduce delivery of low value services and the total cost of care, and to increase savings performance?

4. What types of organizations, including but not limited to ACOs and providers, are interested in a higher risk and reward option in the Shared Savings Program?

5. What additional flexibilities or features (for example, benefit enhancements, advance payments, capitation payments, etc.) would ACOs in a revised ENHANCED track with higher risk and potential reward want CMS to offer to help them be successful in improving the quality of care and reducing costs?

6. How should a revised ENHANCED track with higher risk and potential reward also require additional accountability for quality? Should ACOs in this revised track be required to report all payer/all patient quality measures?

7. Should a revised ENHANCED track with higher risk and potential reward require ACOs with earned shared savings to share savings with beneficiaries or spend a flat dollar amount or a certain percentage on beneficiaries in the form of items or services not covered by original Medicare (for example, meals, dental, vision, hearing, or Part B cost-sharing reductions)?

8. How should CMS consider the discount, sharing rate, and risk corridors or marginal savings bands in the design of a higher risk option that can realize savings for Medicare? Are there special considerations that CMS should bear in mind when thinking through such features for different types of ACOs (for example, low revenue, high revenue, health system-based, safety net, etc.)?

9. How might we improve beneficiary assignment and are there different considerations for different types of ACOs (for example, low revenue, high revenue, health system-based, safety net, etc.)?

10. What other features should CMS consider in designing financial benchmarks that balance prospectivity and accuracy, and that can lead to savings for both ACOs and Medicare? How might administratively set benchmarks achieve these goals and what considerations should we bear in mind if we test administrative benchmarking?

11. We are interested in ways to increase participation by healthcare providers and suppliers in the Shared Savings Program and future Innovation Center ACO models, including how an ACO model requiring provider participation or stronger participation incentives might be designed.

f. Proposed Technical Change for Consistency in Financial Calculations

(1) Background

For the benchmarking methodology applicable to agreement periods beginning on January 1, 2024, and in subsequent years, we cap ACO prospective hierarchical condition category (HCC) risk score growth between BY3 and the performance year (as finalized in the CY 2023 PFS final rule, refer to 87 FR 69932 through 69946), as well as prospective HCC risk score growth in an ACO's regional service area between BY3 and the performance year (as finalized in the CY 2024 PFS final rule, refer to 88 FR 79174 through 79185). The policy to cap ACO prospective HCC risk score growth between BY3 and the performance year relied on our authority granted by section 1899(d)(1)(B)(ii) of the Act to adjust the benchmark for beneficiary characteristics and such other factors as the Secretary determines appropriate (see 87 FR 69934). The policy to cap prospective HCC risk score growth in an ACO's regional service area between BY3 and the performance year by applying an adjustment factor in calculating the regional component of the three-way blended benchmark update factor required use of our statutory authority under section 1899(i)(3) of the Act (see 88 FR 79182 and 79183).

The current regulations describe how we cap ACO prospective HCC risk score growth at §§ 425.605(a)(1) and 425.610(a)(2). As specified, positive adjustments in prospective HCC risk scores are subject to a cap equal to the ACO's aggregate growth in demographic risk scores between BY3 and the performance year (positive or negative) plus 3 percentage points. The cap applies to prospective HCC risk score growth for any Medicare enrollment type only if the ACO's aggregate growth in prospective HCC risk scores between BY3 and the performance year across all of the Medicare enrollment type exceeds this cap. Growth in an ACO's risk scores by enrollment type is expressed as the ratio of the ACO's performance year risk score for that enrollment type to the ACO's BY3 risk score for that enrollment type. The aggregate growth in demographic and prospective HCC risk scores risk scores is calculated by taking a weighted average of the risk ratio for demographic risk scores or prospective HCC risk scores, as applicable, for each Medicare enrollment type using specified weights.

The current regulations further describe how we cap prospective HCC risk score growth in the ACO's regional service area at § 425.655. As specified, CMS determines aggregate growth in regional prospective HCC and demographic risk scores by calculating growth in prospective HCC and demographic risk scores between BY3 and the performance year for each Medicare enrollment type, where growth in an ACO's regional risk score by enrollment type is expressed as the ratio of the performance year regional risk score for a Medicare enrollment type to the BY3 regional risk score for that enrollment type. We then calculate aggregate risk score growth by taking a weighted average of the regional prospective HCC or demographic risk ratios, as applicable, across the four Medicare enrollment types, using specified weights. We next determine the cap on regional risk score growth (refer to § 425.655(e)), and then determine if the ACO's regional risk score growth is subject to a cap and apply a regional risk score growth cap adjustment factor for each Medicare enrollment type, as applicable (refer to § 425.655(f)).

When describing how we will cap prospective HCC risk score growth in the ACO's regional service area in the CY 2024 PFS final rule, we included a footnote (see 88 FR 79178) that indicated that the weights to be used to compute aggregate risk score growth for this calculation are the same as the weights to be used when calculating weighted average ACO prospective HCC and demographic risk ratios under the risk adjustment methodology for capping ACO risk score growth adopted in the CY 2023 PFS final rule and codified in §§ 425.605(a)(1)(ii)(C) and 425.610(a)(2)(ii)(C). That is, it was our intention to use the same weights in both the regional risk score growth cap calculation and the ACO risk score growth cap calculation. However, in codifying the methodology for the regional risk score growth cap in the new section of the regulations, § 425.655, we inadvertently introduced a discrepancy.

In §§ 425.605(a)(1)(ii)(C) and 425.610(a)(2)(ii)(C), where we codified how we will calculate aggregate risk score growth used in determining the cap to apply to ACO prospective HCC risk score growth, we describe the weight applied to the growth in demographic or prospective HCC risk scores for each Medicare enrollment type as equal to the product of the historical benchmark expenditures for that enrollment type and the performance year person years for that enrollment type. In § 425.655(d)(2), where we codified how we will calculate aggregate risk score growth used in determining the cap to apply to regional prospective HCC risks score growth, we describe the weight applied to the growth in demographic or prospective HCC risk scores for each Medicare enrollment type as equal to product of the ACO's regionally adjusted historical benchmark expenditures (emphasis added) for that enrollment type and the ACO's performance year assigned beneficiary person years for that enrollment type.

The regulations at §§ 425.605(a)(1)(ii)(C) and 425.610(a)(2)(ii)(C) provide that we will use the ACO's historical benchmark expenditures in calculating the weights used to cap ACO risk score growth. By contrast, the regulations at § 425.655(d)(2) provide that we will use an ACO's regionally adjusted historical expenditures in calculating the weights used in the calculation of regional risk score growth cap. As written, the regulations text at § 425.655(d)(2) is inconsistent with the language used in in §§ 425.605(a)(1)(ii)(C) and 425.610(a)(2)(ii)(C) despite the fact that we indicated in the CY 2024 PFS final rule that we would use the same weights in both calculations. Additionally, it is unclear how we would apply the calculation described at § 425.655(d)(2) in practice. As we describe in section III.G.7.b. of this proposed rule, for agreement periods beginning on January 1, 2024, and in subsequent years, in computing an ACO's historical benchmark, CMS determines the per capita Parts A and B fee-for-service expenditures for beneficiaries that would have been assigned to the ACO in any of the 3 most recent years prior to the start of the agreement period using the ACO participant TINs identified before the start of the agreement period as required under § 425.118(a) and the beneficiary assignment methodology selected by the ACO for the first performance year of the agreement period as required under § 425.400(a)(4)(ii). An ACO's historical benchmark may then be subject to a regional adjustment (refer to § 425.656), a prior savings adjustment (refer to § 425.658), or no adjustment (refer to § 425.652(a)(8) and (c)). This methodology, based on policies finalized in the CY 2023 and CY 2024 PFS final rules, under which an ACO may receive a prior savings adjustment, a regional adjustment, and or no adjustment at all, differs from the methodology that was in effect for ACOs in an agreement period beginning on or after July 1, 2019, but before January 1, 2024, under which all ACO historical benchmarks incorporated a regional adjustment (see § 425.601). Furthermore, in section III.G.7.b. of this proposed rule we are proposing to add a third type of adjustment that could be applied to an ACO's historical benchmark, the health equity benchmark adjustment. If the health equity benchmark adjustment is finalized as proposed, an ACO may receive a regional adjustment, a prior savings adjustment, a health equity benchmark adjustment, or no adjustment to its historical benchmark.

(2) Proposed Revisions

As we described in a footnote in the CY 2024 PFS final rule (see 88 FR 79178), it was our intention at the time to use the same weights to calculate the cap for prospective HCC risk score growth in an ACO's regional service area as the weights used to calculate the cap on prospective HCC risk score growth for the ACO. We continue to believe that the same weights should apply to both calculations. However, the regulation text language is not currently aligned among the relevant provisions or with the preamble discussion and may also create confusion with respect to how CMS will compute the weights used in setting the caps on ACO and regional prospective HCC risk score growth, given that some ACOs will receive a regional adjustment to their benchmarks, some will receive a prior savings or, if finalized, a health equity benchmark adjustment, and some will receive no adjustment at all.

To address these issues, we are proposing technical changes to the regulation text at §§ 425.605(a)(1)(ii)(C), 425.610(a)(2)(ii)(C), and 425.655(d)(2) to align the language describing the calculation of the weights that will be used to compute aggregate risk score growth across the three provisions and to clarify that the weight applied to the growth in ACO and regional risk scores for each Medicare enrollment type, respectively, would be equal to the product of the ACO's historical benchmark expenditures, adjusted in accordance with § 425.652(a)(8), for that enrollment type and the ACO's performance year assigned beneficiary person years for that enrollment type. That is, we would use the ACO's historical benchmark expenditures that would have already been adjusted to reflect a prior savings adjustment, a regional adjustment, a health equity benchmark adjustment, if finalized, or no adjustment. Aligning the description of the weight calculation across the three provisions would address the discrepancy that exists between the current regulation text and the preamble discussion in the CY 2024 PFS final rule. Additionally, providing additional detail in the description of the weight calculation, namely by indicating that we will use an ACO's historical benchmark expenditures adjusted in accordance with § 425.652(a)(8), clarifies how we will operationalize the calculation which we believe is important, especially given the proposed health equity benchmark adjustment, which, if finalized, would add greater complexity to this historical benchmark calculation.

The technical changes that we are proposing in this section of this proposed rule relate to benchmark calculations for ACOs in agreement periods beginning on or after January 1, 2024. Although we will not implement the proposed methodologies for the first time until summer 2025 when we reconcile PY 2024, these policies, if finalized, would constitute retroactive rulemaking because they are the standards under which we will score ACOs that are currently participating in agreement periods that began on January 1, 2024, for PY 2024. Section 1871(e)(1)(A)(ii) of the Act permits a substantive change in regulations, manual instructions, interpretive rules, statements of policy, or guidelines of general applicability under Title XVIII of the Act to be applied retroactively to items and services furnished before the effective date of the change if the failure to apply the change retroactively would be contrary to the public interest. Here, we are proposing a technical change that would align the regulation text with our stated intention as described in previous rulemaking. The current regulation text, in combination with related discussion in the CY 2024 PFS final rule, fails to provide sufficient clarity with regard to how CMS will calculate the weights used to calculate aggregate ACO or regional risk score growth. While the discussion in the CY 2024 PFS final rule indicates that the same weights should be use in both calculations, the related regulation text does not make this clear and, furthermore, could raise questions for how CMS will perform calculations given that not all ACO historical benchmarks will include a regional adjustment. Failure to apply the proposed changes to our regulations at §§ 425.605(a)(1)(ii)(C), 425.610(a)(2)(ii)(C), and 425.655(d)(2) retroactively would be contrary to the public interest because it creates unintended ambiguity in the standard CMS will use when calculating risk score growth. Such ambiguity may make it difficult for ACOs and other interested parties to understand how CMS will perform these calculations or be interpreted to suggest that CMS would calculate risk score growth in a different manner, which was not the agency's intention.

We seek comment on these proposals.

8. Beneficiary Notification Requirements

a. Proposal To Modify the Requirements for When ACOs Must Provide the Beneficiary Information Follow-Up Communication

Under § 425.312(a), ACOs are required to notify beneficiaries about the ACO's participation in the Shared Savings Program, the beneficiary's ability to decline claims data sharing, and the beneficiary's ability to select a provider for the purposes of voluntary alignment. In the CY 2023 PFS final rule (87 FR 69961), CMS added the beneficiary information follow up communication requirement under § 425.312(a)(2)(v), which requires an additional follow up with a beneficiary who has received the beneficiary notification. In the CY 2023 PFS final rule (87 FR 69960 through 69963), CMS noted that the follow up communication promotes transparency and empowers beneficiaries to make an informed decision in choosing a primary care physician and how they share their health data. The beneficiary information follow-up communication affords the opportunity for additional direct engagement between the beneficiary and the ACO, or ACO participant, and provides a chance for a meaningful dialog between the patient and provider about the coordination of their care, the benefits of receiving care from an ACO provider/supplier (as defined in § 425.20), the organizational operations of the ACO, and how data is used to improve care and report quality outcomes.

Currently, under § 425.312(a)(2)(v)(A), “The follow-up communication must occur no later than the earlier of the beneficiary's next primary care service visit or 180 days from the date the standardized written notice was provided.” Regulations at § 425.312(a)(2)(v)(B) require ACOs to document the beneficiary information follow-up communication in a system of record supported by the ACO and to make the information available to CMS upon request.

Since CMS implemented the beneficiary information follow-up communication requirement, we have received feedback from ACOs that requiring the follow-up communication no later than the earlier of the beneficiary's next primary care service visit or 180 days from the date the standardized written notice was provided is difficult for ACOs to operationalize as they do not always know when the beneficiary's next primary care service will be and in some cases it can be very soon after the beneficiary receives the original beneficiary notification.

In order to address this issue and the burden it creates, CMS is proposing to remove the requirement that ACOs must provide this follow up at the beneficiary's next primary care visit. Specifically, we propose to modify § 425.312(a)(2)(v)(A) to read “The follow-up communication must occur no later than 180 days from the date the standardized written notice was provided.” This would provide ACOs with more flexibility to implement their strategy for following up with beneficiaries after they receive the beneficiary notice, while still providing the opportunity for a meaningful dialog between a beneficiary and their provider. We seek comment on this proposal. If finalized, this proposal would be effective beginning January 1, 2025.

b. Limit the Distribution of the Beneficiary Notification to Beneficiaries Likely To Be Assigned for ACOs Under Preliminary Prospective Assignment With Retrospective Reconciliation

ACOs that select preliminary prospective assignment with retrospective reconciliation are assigned beneficiaries in a preliminary manner and before the start of the performance year. Beneficiary assignment for these ACOs is then updated quarterly based on the most recent 12 or 24 months of data, as applicable. This assignment methodology is codified at § 425.400(a)(2). We are proposing to limit the distribution of the beneficiary notification under § 425.312(a)(2)(iii) to beneficiaries who are more likely be assigned to ACOs that select preliminary prospective assignment with retrospective reconciliation, when compared to the population of beneficiaries who must receive the beneficiary notification under current § 425.312(a)(2)(iii). Please note that this is not a proposal to modify the Shared Savings Program's assignment methodology.

Currently, ACOs that select preliminary prospective assignment with retrospective reconciliation are required to send a beneficiary notice to “each fee-for-service beneficiary” under § 425.312(a)(2)(iii). Under § 425.312(a)(2)(iii), the standardized written notice must be furnished to “all fee-for-service beneficiaries prior to or at the first primary care service visit during the first performance year in which the beneficiary receives a primary care service from an ACO participant.” This can result in ACOs sending notices each year to beneficiaries who may not ultimately be assigned to the ACO, as there are “fee-for-service beneficiar[ies]” to whom ACOs must send notices under § 425.312(a)(2)(iii) and who are not eligible to be assigned to those ACOs for a variety of reasons. This policy was intended to ensure that all beneficiaries who receive a primary care visit from a ACO provider/supplier receive the beneficiary notice. However, we have heard feedback from ACOs that this creates confusion for the beneficiary and unnecessary administrative work for the ACO.

To reduce burden on ACOs and confusion for beneficiaries, we are proposing to update the beneficiary notice requirement for ACOs that select preliminary prospective assignment with retrospective reconciliation to focus on beneficiaries that are likely to be assigned to the ACO. These beneficiaries are those who received at least one primary care service during the assignment window or applicable expanded window for assignment (as defined in § 425.20) from a physician who is an ACO professional in the ACO and who is a primary care physician as defined under § 425.20 or who has one of the primary specialty designations included in § 425.402(c), a FQHC or RHC that is part of the ACO, or an ACO professional in the ACO whom the beneficiary designated as responsible for coordinating their overall care under § 425.402(c).

This proposal would reduce the burden of sending the beneficiary notice to all “fee for service beneficiar[ies],” including those who ultimately would not be eligible to be assigned to ACOs that select preliminary prospective assignment with retrospective reconciliation. Specifically, we propose to modify § 425.312(a)(2)(iii) to state in the case of an ACO that has selected preliminary prospective assignment with retrospective reconciliation, the beneficiary notice must be provided by the ACO or ACO participant to each beneficiary who received at least one primary care service during the assignment window or applicable expanded window for assignment (as defined in § 425.20) from a physician who is an ACO professional in the ACO and who is a primary care physician as defined under § 425.20 or who has one of the primary specialty designations included in § 425.402(c), a FQHC or RHC that is part of the ACO, or an ACO professional in the ACO whom the beneficiary designated as responsible for coordinating their overall care under § 425.402(e). Each such beneficiary must receive a standardized written notice at least once during an agreement period in the form and manner specified by CMS. The standardized written notice must be furnished to all of these beneficiaries prior to or at the first primary care service visit during the first performance year in which the beneficiary receives a primary care service from an ACO participant.

For ACOs that select prospective assignment, beneficiaries are prospectively assigned to the ACO at the beginning of each benchmark or performance year based on the beneficiary's use of primary care services in the most recent 12 or 24 months, as applicable, for which data are available, using the assignment methodology described in §§ 425.402 and 425.404. See § 425.400(a)(3)(i). Beneficiaries that are prospectively assigned to an ACO under § 425.400(a)(3)(i) remain assigned to the ACO at the end of the benchmark or performance year unless they meet any of the exclusion criteria under § 425.401(b). See § 425.400(a)(3)(ii). We note that ACOs that select prospective assignment are subject to § 425.312(a)(2)(iv). Under this regulation, ACOs that select prospective assignment are required to furnish the beneficiary notice to all prospectively assigned beneficiaries once during an agreement period. We seek comment on this proposal. If finalized, this proposed change would be effective beginning on January 1, 2025.

H. Medicare Part B Payment for Preventive Services (§§ 410.10, 410.57, 410.64, 410.152)

1. Part B Preventive Vaccines and Their Administration

a. Statutory Background

Under section 1861(s)(10) of the Act, Medicare Part B covers both the vaccine and vaccine administration for the specified preventive vaccines—pneumococcal, influenza, hepatitis B and COVID-19 vaccines. Section 1861(s)(10)(B) of the Act specifies that the hepatitis B vaccine and its administration is only covered for those who are at high or intermediate risk of contracting hepatitis B, as defined at § 410.63. Under sections 1833(a)(1)(B) and (b)(1) of the Act, respectively, there is no applicable beneficiary coinsurance, and the annual Part B deductible does not apply for these vaccines or the services to administer them. Per section 1842(o)(1)(A)(iv) of the Act, payment for these vaccines is based on 95 percent of the Average Wholesale Price (AWP) for the vaccine product, except when furnished in the settings for which payment is based on reasonable cost, such as a hospital outpatient department (HOPD), rural health clinic (RHC), or federally qualified health center (FQHC). Some other preventive vaccines, such as the zoster vaccine for the prevention of shingles, are not specified for Medicare Part B coverage under section 1861(s)(10) of the Act and are instead covered under Medicare Part D.

b. Pneumococcal, Influenza and Hepatitis B Vaccine Administration

In the CY 2022 PFS final rule (86 FR 65185), we finalized a uniform payment rate of $30 for the administration of a pneumococcal, influenza or hepatitis B vaccine covered under the Medicare Part B preventive vaccine benefit. We explained that since payment policies for the administration of the preventive vaccines described under section 1861(s)(10) of the Act are independent of the PFS, these payment rates will be updated as necessary, independent of the valuation of any specific codes under the PFS. (Please see COVID-19 vaccine administration payment information in the next section.) The CY 2022 PFS final rule (86 FR 65180 through 65182) provides a detailed discussion on the history of the valuation of the three Level II Healthcare Common Procedure Coding System (HCPCS) codes, G0008, G0009, and G0010, which describe the services to administer an influenza, pneumococcal, and hepatitis B vaccine, respectively.

In the CY 2023 PFS final rule (87 FR 69984), we finalized a policy to annually update the payment amount for the administration of Part B preventive vaccines based upon the percentage increase in the Medicare Economic Index (MEI). Additionally, we finalized the use of the PFS Geographical Adjustment Factor (GAF) to adjust the payment amount to reflect cost differences for the geographic locality based upon the fee schedule area where the preventive vaccine is administered. These adjustments and updates apply to HCPCS codes G0008, G0009, G0010.

These adjustments and updates also apply to Current Procedural Terminology (CPT) code 90480 (Immunization administration by intramuscular injection of severe acute respiratory syndrome coronavirus 2 (SARSCoV-2) (coronavirus disease [COVID-19]) vaccine, single dose) that describe the service to administer COVID-19 vaccines and HCPCS code M0201 (Administration of pneumococcal, influenza, hepatitis b, and/or covid-19 vaccine inside a patient's home; reported only once per individual home per date of service when such vaccine administration(s) are performed at the patient's home), discussed below in section III.H.1.c and III.H.1.d, respectively, of this proposed rule.

The current payment rates for G0008, G0009, and G0010, as finalized in the CY 2024 PFS final rule, can be found on the CMS Vaccine Pricing website under the “Seasonal Flu Vaccines” tab, and then under the heading “Locality-Adjusted Payment Rates.” The payment rates for these services, with the annual update applied for CY 2025, will be made available at the time of publication of the CY 2025 PFS final rule. The current forecast of the increase in the MEI for CY 2025 is 3.6 percent based on the 2017-based MEI. We note that the CY 2025 MEI increase factor for the final rule will be based on historical data through the 2nd quarter of 2024. Tables 45 and 46 in section III.H.1.f. of this proposed rule provide the CY 2025 projected payment rates for G0008, G0009, and G0010.

c. COVID-19 Vaccine Administration

In the CY 2022 PFS final rule (86 FR 65181 and 65182), we provided a detailed history regarding the determinations of initial payment rates for the administration of COVID-19 vaccines, and an explanation of how the payment policy evolved to a rate of $40 per dose. For CY 2022, we maintained the payment policy for the administration of COVID-19 vaccines and stated that while we believe it is appropriate to establish a single, consistent payment rate for the administration of all four Part B preventive vaccines in the long term, we will pay a higher, $40 payment rate for administration of COVID-19 vaccines in the short term, while pandemic conditions persisted (86 FR 65185).

In the CY 2023 PFS final rule (87 FR 69988 through 69993), we stated that due to timing distinctions between a PHE declared under section 319 of the Public Health Service (PHS) Act and an Emergency Use Authorization (EUA) declaration under section 564 of the Federal Food, Drug, and Cosmetic Act (FD&C Act), we reconsidered the policies finalized in the CY 2022 PFS final rule in light of our goal to promote broad and timely access to COVID-19 vaccines. We explained that our goal would be better served if our policies with respect to payment for administration of these products, as addressed in the November 6, 2020 COVID-19 IFC (85 FR 71142) and CY 2022 PFS final rule (85 FR 18250), continue until the EUA declaration for drugs and biological products with respect to COVID-19 is terminated. Therefore, we finalized that we would maintain the current payment rate of $40 per dose for the administration of COVID-19 vaccines through the end of the calendar year in which the March 27, 2020 EUA declaration under section 564 of the FD&C Act (EUA declaration) for drugs and biological products ends. Effective January 1 of the year following the year in which the EUA declaration ends, the COVID-19 vaccine administration payment would be set at a rate to align with the payment rate for the administration of other Part B preventive vaccines, that is, approximately $30 per dose. As mentioned above, we also finalized that, beginning January 1, 2023, we would annually update the payment amount for the administration of all Part B preventive vaccines based upon the percentage increase in the MEI, and that we would use the PFS GAF to adjust the payment amount to reflect cost differences for the geographic locality based upon the fee schedule area where the vaccine is administered.

On September 11, 2023, the Food and Drug Administration (FDA) announced its recommendation to shift to a monovalent severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) (coronavirus disease 2019 [COVID-19]) vaccine that targets the predominant XBB lineage virus strain for the 2023-2024 vaccine administration season. In anticipation of this recommendation, in August 2023, the CPT Editorial Panel approved five new monovalent COVID-19 vaccine product codes for Pfizer and Moderna vaccines. In addition, they approved a new vaccine administration code (90480) for reporting the administration of any COVID-19 vaccine for any patient (pediatric or adult), replacing all previously approved specific vaccine administration codes. All previously approved COVID-19 vaccine product and vaccine administration codes were deleted from the CPT code set effective November 1, 2023, except for product code 91304, which represents the Novavax COVID-19 vaccine product and remains active.

The current payment rate for CPT code 90480 is available on the CMS COVID-19 Vaccine Pricing website, under “COVID-19 Vaccines & Monoclonal Antibodies”. The payment rate for this service, with the annual update applied for CY 2025, will be made available at the time of publication of the CY 2025 PFS final rule. As noted above, the current forecast of the increase in the MEI for CY 2025 is 3.6 percent based on the 2017-based MEI, however, the CY 2025 MEI increase factor for the final rule will be based on historical data through the 2nd quarter of 2024.

Due to the uncertainty surrounding the future of the EUA declaration for drugs and biological products for COVID-19, Tables 45 and 46, at the end of section III.H.1.f. of this proposed rule, reflect the potential alternative payment amounts for Part B preventive vaccine administration for CY 2025. Table 45 displays the CY 2025 Part B payment rates for preventive vaccine administration if the EUA declaration continues into CY 2025, and Table 46 displays the CY 2025 Part B payment rates for preventive vaccine administration if the EUA declaration ends on or before December 31, 2024.

d. In-Home Additional Payment for Administration of Preventive Vaccines

In the CY 2022 PFS final rule (86 FR 65187 and 65190), we provide a detailed discussion on the payment policy for COVID-19 vaccine administration in the home. In summary, providers and suppliers that administer a COVID-19 vaccine in the home, under certain circumstances, could bill Medicare for one of the existing COVID-19 vaccine administration CPT codes along with HCPCS code M0201 ( COVID-19 vaccine administration inside a patient's home; reported only once per individual home per date of service when only COVID-19 vaccine administration is performed at the patient's home). For CY 2022, we continued to make an additional payment when a COVID-19 vaccine was administered in a beneficiary's home under certain circumstances and stated that we would make this payment until the end of the year in which the PHE expires.

In the CY 2023 PFS final rule (87 FR 69984 through 69986), we discussed that we had received many comments and requests from interested parties that the in-home add-on payment be applied more broadly to all preventive vaccines. Commenters also expressed concerns that discontinuation of the in-home additional payment would negatively impact access to the COVID-19 vaccine for underserved homebound beneficiaries. Therefore, we continued the policy of making an additional payment when a COVID-19 vaccine is administered in a beneficiary's home, under the certain circumstances for the duration of CY 2023. We explained that we were continuing the policy of additional payment for at-home COVID-19 vaccinations for another year in order to provide us time to track utilization and trends associated with its use, in order to inform the Part B preventive vaccine policy on payments for in-home vaccine administration for CY 2024. In addition, for CY 2023 we updated the payment amount by the CY 2023 MEI percentage increase and adjusted for geographic cost differences as we do the payment for the preventive vaccine administration service, that is, based upon the fee schedule area where the COVID-19 vaccine is administered, by using the PFS GAF (87 FR 69986).

In the CY 2024 PFS final rule (88 FR 79235 through 79237), we discussed the policy for the in-home additional payment for COVID-19 vaccine administration under the Part B preventive vaccine benefit for CY 2024 and subsequent years. We maintained the payment policy for COVID-19 vaccine administration and extended the additional payment to the administration of the other three preventive vaccines included in the Part B preventive vaccine benefit—the pneumococcal, influenza, and hepatitis B vaccines. As described at § 410.152(h)(3), effective January 1, 2024, the payment amount for the in-home administration of all four vaccines is identical, that is, Medicare Part B pays the same additional payment amount to providers and suppliers that administer a pneumococcal, influenza, hepatitis B, or COVID-19 vaccine in the home. This additional payment amount is annually updated using the percentage increase in the MEI and is adjusted to reflect geographic cost variations with the PFS GAF.

We stated that the in-home additional payment is limited to one payment per home visit, even if multiple vaccines are administered during the same home visit. We noted that every vaccine dose that is furnished during a home visit still receives its own unique vaccine administration payment. The additional payment for in-home Part B vaccine administration is only made if certain circumstances are met, as outlined at § 410.152(h)(3)(iii). Providers and suppliers that administer one of the Part B preventive vaccines in the home, under those circumstances, can bill Medicare for one of the existing Part B vaccine administration CPT codes along with HCPCS code M0201 (Administration of pneumococcal, influenza, hepatitis b, and/or covid-19 vaccine inside a patient's home; reported only once per individual home per date of service when such vaccine administration(s) are performed at the patient's home) (88 FR 79235 through 79237).

The current payment rate for M0201 can be found on the CMS Vaccine Pricing website under “COVID-19 Vaccines & Monoclonal Antibodies”. The M0201 payment rate with the annual update applied for CY 2025 will be made available at the time of publication of the CY 2025 PFS final rule. The current forecast of the increase in the MEI for CY 2025 is 3.6 percent based on the 2017-based MEI. We note that the CY 2025 MEI increase factor for the final rule will be based on historical data through the 2nd quarter of 2024. Tables 45 and 46 in section III.H.1.f. of this proposed rule provide the CY 2025 projected payment rate for M0201.

e. COVID-19 Monoclonal Antibodies and Their Administration

In CY 2023 PFS final rule (87 FR 69987 through 69993), we discussed that all COVID-19 monoclonal antibody products and their administration are covered and paid for under the Part B preventive vaccine benefit through the end of year in which the Secretary terminates the EUA declaration for drugs and biological products with respect to COVID-19. In addition, we explained that, under the authority provided by section 3713 of the CARES Act, we have established specific coding and payment rates for the COVID-19 vaccine, as well COVID-19 monoclonal antibodies and their administration, through technical direction to Medicare Administrative Contractors (MACs) and information posted publicly on the CMS website (87 FR 69987).

In the CY 2023 PFS final rule, we also established a policy to continue coverage and payment for monoclonal antibodies that are used for pre-exposure prophylaxis (PrEP) of COVID- 19 under the Part B preventive vaccine benefit if they meet applicable coverage requirements (87 FR 69992). We explained that we will continue to pay for these products and their administration even after the EUA declaration for drugs and biological products is terminated, so long as after the EUA declaration is terminated, such products have market authorization. Additionally, we established that payments for the administration of monoclonal antibodies that are used for PrEP of COVID-19 would be adjusted for geographic cost variations using the PFS GAF. In the CY 2024 PFS rule (88 FR 79239 through 79240), we codified these policies in regulations at §§ 410.10(l) and 410.57(c).

In CY 2024 PFS final rule (88 FR 79239 through 79240), we noted that we did not finalize any payment regulations regarding monoclonal antibodies for PrEP of COVID-19, since at the time of the publication of the CY 2024 PFS final rule, there were no COVID-19 monoclonal antibodies approved or authorized for use against the dominant strains of COVID-19 in the United States. We stated that if a new monoclonal antibody for PrEP of COVID-19 became authorized for use, we would use the authority provided by section 3713 of the CARES Act, as discussed in the CY 2023 PFS final rule (87 FR 69987), to establish specific coding and payment rates for the administration of that product through technical direction to MACs and information posted publicly on the CMS website. We explained that we would subsequently propose coding and payment rates for the administration of that product via rulemaking.

We also noted that, for the purposes of the in-home additional payment discussed above in section III.H.1.d. of this proposed rule, that additional payment is not applicable to the administration of monoclonal antibodies for PrEP of COVID-19. For monoclonal antibodies for PrEP of COVID-19, we set the coding and payment rates for the administration of COVID-19 monoclonal antibodies in the home (when applicable) to be higher than those in other health care settings, and therefore such amounts already account for the higher costs of administering the product in the home.

On March 22, 2024, the FDA issued an EUA for Pemgarda (pemivibart) injection, for intravenous use. Pemgarda is a monoclonal antibody product indicated for use for pre-exposure prophylaxis to help prevent COVID-19 in adults and children 12 years of age and older who weigh at least 88 pounds (40 kg) who:

• Are not currently infected with SARS-CoV-2 and who have not been known to be exposed to someone who is infected with SARS-CoV-2 and
• Have moderate-to-severe immune compromise because of a medical condition or because they receive medicines or treatments that suppress the immune system and they are unlikely to have an adequate response to COVID-19 vaccination.

Therefore, under the authority provided by section 3713 of the CARES Act, we established specific coding and payment rates for the administration of Pemgarda through technical direction to MACs and information posted publicly on the CMS website. Since Pemgarda is used for pre-exposure prophylaxis of COVID-19, which CMS is covering under the Part B preventive vaccine benefit even after the EUA declaration for drugs and biological products is terminated (so long as such products still have market authorization), we plan to propose long-term coding and payment rates for the administration of this product in future rulemaking. The current payment rates for Pemgarda and its administration can be found on the CMS Vaccine Pricing website under “COVID-19 Vaccines & Monoclonal Antibodies”. These payment rates are also listed below in Tables 45 and 46.

More information on our coding and payment policies for COVID-19 monoclonal antibodies is available at https://www.cms.gov/monoclonal .

f. Summary of Payment Amounts for CY 2025

Due to the uncertainty surrounding the future of the EUA declaration for drugs and biological products for COVID-19, we are including Tables 45 and 46, which summarize Medicare Part B the potential alternative preventive vaccine administration payment amounts at the time of the publication of this proposed rule. If the EUA declaration continues to be in effect on January 1, 2025, we propose that the payment rates in Table 45 will apply. If the EUA declaration is terminated before January 1, 2025, we propose that the payment rates in Table 45 will apply.

For CY 2025, the proposed growth rate of the 2017-based MEI is estimated to be 3.6 percent, based on the IHS Global, Inc. (IGI) first quarter 2024 forecast with historical data through fourth quarter 2023. Therefore, Table 45 represents our CY 2024 payment rates for the listed items, multiplied by 1.036. We propose that if more recent data are subsequently available (for example, a more recent estimate of the MEI percentage increase), we would use such data, if appropriate, to determine the CY 2025 MEI percentage increase in the CY 2025 PFS final rule; we would apply that updated MEI percentage increase to the rates found in the Tables 45 and 46 where applicable.

2. Revised Payment Policies for Hepatitis B Vaccine Administration

In section III.M of this proposed rule, CMS proposes to improve access and utilization of hepatitis B vaccines by expanding the list of individuals who are at high or intermediate risk of contracting hepatitis B at § 410.63. Specifically, CMS proposes to expand coverage of hepatitis B vaccinations by revising § 410.63(a)(2), Intermediate Risk Groups, by adding a new paragraph (a)(2)(iv) to include individuals who have not previously received a completed hepatitis B vaccination series and individuals whose previous vaccination history is unknown. CMS believes that this proposed coverage change will help protect Medicare beneficiaries from acquiring hepatitis B infection, contribute to eliminating viral hepatitis as a public health threat in the United States, and is in the best interest of the Medicare program and its beneficiaries. Below, we discuss how the proposal to expand coverage may impact Part B payment policy for hepatitis B vaccines and administration.

a. Background

Section 2323 of the Deficit Reduction Act of 1984 (Pub. L. 98-369) amended section 1861(s)(10) of the Act by adding subparagraph (B) to provide Medicare Part B coverage for the hepatitis B vaccine and its administration for those individuals who are at high or intermediate risk of contracting hepatitis B. The statute required the Secretary to determine, by regulations, criteria for identifying individuals who are at high or intermediate risk of contracting hepatitis B. In addition, section 2323 of the Deficit Reduction Act of 1984 added section 1833(k) of the Act, which states that the Secretary may provide, instead of the amount of payment otherwise provided under Part B for the hepatitis B vaccine and its administration, for payment of such an amount or amounts as reasonably reflects the general cost of efficiently providing such services.

In the June 4, 1990 Federal Register , CMS issued a final rule to implement section 2323 of the Deficit Reduction Act of 1984 and the coverage provisions were codified in regulation at § 410.63(a) (55 FR 22785). In the preamble to 1990 rule, we stated that, “[f]or Medicare payment purposes, the hepatitis B vaccine may be administered—upon the order of a doctor of medicine or osteopathy—by qualified staff of home health agencies, skilled nursing facilities, ESRD facilities, hospital outpatient departments, HMO's, persons recognized under the `incident to physician's services' provision of the law (section 1861(s)(2)(A) of the Act), as well as doctors of medicine and osteopathy.” This policy is included in the Medicare Claims Processing Manual, Chapter 18, section 10.1.3.

In the CY 2013 PFS final rule (77 FR 69363), CMS amended the regulations at § 410.63(a) to include those diagnosed with diabetes mellitus in the list of groups at high risk of contracting hepatitis B. In the November 6, 2020 COVID-19 IFC (85 FR 71145), in preamble discussions surrounding the implementation of coverage and payment for the COVID-19 vaccine, we mentioned the unique coverage and payment requirements related the hepatitis B vaccine under Part B. We noted that, unlike pneumococcal, influenza and COVID-19 vaccines, hepatitis B vaccines require an assessment of a patient's risk of contracting hepatitis B. Because, hepatitis B vaccinations claims needed a physician's order, they could not be roster billed by mass immunizers. More information on the current physician's order policy for the administration of hepatitis B vaccines in Part B can be found in the Medicare Benefit Policy Manual, Chapter 15, Section 50.4.4.2.

b. Revisions to Payment Policies for Hepatitis B Vaccinations

As discussed above, section III.M of this proposed rule revises § 410.63(a) to provide coverage under Part B for hepatitis B vaccines and their administration for an expanded range of Medicare enrollees. We explain that Medicare coverage of hepatitis B vaccination is outdated in light of recent information about the risks of contracting hepatitis B, and that current research indicates that individuals who remain unvaccinated against hepatitis B are at intermediate risk of contracting hepatitis B virus. Under the new proposal, an assessment of an individual's vaccination status could now be made without the clinical expertise of a physician. Thus, if the rule is finalized, we would remove our policy in the manual that the administration of a Part B hepatitis B vaccine be preceded by a doctor's order. If the new definition at § 410.63(a) is finalized as proposed, then a doctor's order would no longer be necessary for the administration of a hepatitis B vaccine under Part B.

If the physician's order requirement is eliminated, then we would also change our procedures to allow mass immunizers to use the roster billing process to submit Medicare Part B claims for hepatitis B vaccines and their administration.

Currently, instructions regarding hepatitis B vaccine administration under part B are contained in CMS manual guidance. If changes to § 410.63(a) are finalized, then we would make corresponding changes to guidance in the Medicare Benefit Policy Manual and Medicare Claims Processing Manual. More information on roster billing is available on the CMS web page at https://www.cms.gov/roster-billing .

We note that the current payment rates for HCPCS code G0010, “ Administration of hepatitis b vaccine,” as finalized in the CY 2024 PFS final rule, can be found on the CMS Vaccine Pricing website under “Seasonal Flu Vaccines”. The payment rates for G0010, with the annual update applied for CY 2025, will be made available at the time of publication of the CY 2025 PFS final rule. Tables 45 and 46 in section III.H.1.f. of this proposed rule provide the CY 2025 projected payment rates for G0010. More information on other policies related to the administration of G0010 can be found in the section preceding this one (section III.H.1. of this proposed rule), and proposed revisions to payment policies for the administration of G0010 in RHCs and FQHCs can be found in the section immediately below (section III.H.2.c. of this proposed rule).

c. Revisions to Payment Policies for Hepatitis B Vaccinations in Rural Health Clinics (RHC) and Federally Qualified Health Centers (FQHC)

When section 2323 of the Deficit Reduction Act of 1984 added section 1861(s)(10)(B) to the Act to add Medicare Part B coverage for the hepatitis B vaccine and its administration, it limited that coverage to certain settings. In RHCs and FQHCs, the law specified at section 1833(a)(3)(A) of the Act that the vaccines mentioned at section 1861(s)(10)(A) of the Act—namely, pneumococcal and influenza (and later, COVID-19) vaccines—are not included in the all-inclusive payment rate for an RHC or FQHC visit, but are reimbursed as a separate payment. Pneumococcal, influenza and COVID-19 vaccines and their administration are paid at 100 percent of reasonable cost when administered in an RHC or FQHC, in accordance with section 1833(a)(1)(B) of the Act. By contrast, hepatitis B vaccines and the cost of administration are included in the capitated payment for an RHC or FQHC visit. RHCs and FQHC visits are generally paid at 80 percent of reasonable costs, and thus, they are subject to coinsurance for Medicare Part B enrollees. The Deficit Reduction Act of 1984 also added section 1833(k) to the Act, which states that, for hepatitis B vaccines and their administration as described at section 1861(s)(10)(B), the Secretary may provide, instead of the amount of payment otherwise dictated in statute, for payment that “reasonably reflects the general cost of efficiently providing such services.”

In CY 2011 PFS final rule (75 FR 73418), we addressed the issue of coinsurance for hepatitis B vaccines and their administration in FQHCs. The CY 2011 PFS final rule, which implemented the expansion of preventive services in Medicare as mandated by the ACA, stated that effective January 1, 2011, Part B coinsurance on hepatitis B vaccinations was waived, as the vaccine and its administration were deemed “preventive services” per section 1861(ddd)(3)(A) of the Act as cross-referenced to section 1861(ww)(2) of the Act. (More information on preventive services is provided immediately below at section III.H.3. of this proposed rule). The CY 2011 PFS final rule codified this FQHC policy in regulation at § 405.2449. In the CY 2014 FQHC PPS final rule (79 FR 25474), at § 405.2410(b), we codified regulations regarding coinsurance in RHCs and FQHCs which exempt from coinsurance “preventive services for which Medicare pays 100 percent under § 410.152(l) of this chapter”, which explicitly includes the hepatitis B vaccine. In the CY 2016 PFS final rule (80 FR 71088), we clarified that these waivers of cost-sharing (both coinsurance and deductible) for preventive services applied to RHCs as well, and we subsequently clarified in subregulatory guidance that these waivers apply to the administration of hepatitis B vaccines in RHC and FQHCs. We note that FQHC services are always exempt from the Part B deductible, per section 1833(b)(4) of the Act.

Even though hepatitis B vaccines and their administration are deemed preventive services for which coinsurance (and deductible in RHCs) is waived, hepatitis B vaccines are still currently paid differently than other Part B vaccines in RHCs and FQHCs. Due to the statutory differences explained above, pneumococcal, influenza and COVID-19 vaccines and their administration are paid at 100 of reasonable cost in RHCs and FQHCs—that is, they are paid separately from the FQHC PPS or the RHC All-Inclusive Rate (AIR) methodology—while hepatitis B vaccines and their administration are paid as part of the FQHCs PPS or the RHC AIR, which means that they are paid through changes to the facilities' capitated rate.

In light of the proposal to expand coverage for hepatitis B vaccination in section III.M. of this proposed rule, we propose to use the aforementioned authority at section 1833(k) of the Act to align payment for hepatitis B vaccinations in RHCs and FQHCs with the payment for pneumococcal, influenza and COVID-19 vaccinations in those settings. That is, we propose to pay for hepatitis B vaccines and their administration in RHCs and FQHCs at 100 percent of reasonable cost, separate from the FQHCs PPS and the RHC AIR methodology, for all populations identified for coverage at § 410.63(a). As is the case for pneumococcal, influenza and COVID-19 vaccine administration, under this proposal, a hepatitis B vaccine administration would not be considered an RHC or FQHC visit. If this policy is finalized, then effective January 1, 2025, RHCs and FQHCs would bill for Part B hepatitis B vaccines in the same manner as they currently bill for pneumococcal, influenza and COVID-19 vaccines, that is, on their cost report. We note that we proposed above, in section III.B.5 of this proposed rule, to allow for billing and payment of all Part B preventive vaccines and their administration at the time of service in RHCs and FQHCs, with annual reconciliation on the facilities' cost reports. That policy, if finalized as proposed, would be effective for dates of service on or after July 1, 2025. Both proposals together support our goal of streamlining payment for all Part B vaccines across Part B settings of care. We believe that streamlining Part B vaccine and vaccine administration payments among care settings aligns with the stated goals of section 1833(k) of the Act, since those payment policy changes will allow for increased efficiency in Part B claims processing on both the part of the RHCs and FQHCs and on the part of CMS. We also believe that the increased efficiency will promote vaccine access, and thus health equity in general, in RHCs and FQHCs that already serve vulnerable populations.

To implement this proposal regarding payment for hepatitis B vaccines and their administration in RHCs and FQHCs, we also propose to amend the regulations at § 405.2466(b)(1)(iv), to add hepatitis B vaccines to the list of vaccines covered in RHCs and FQHCs at 100 percent of reasonable cost. Upon the publication of the CY 2025 PFS final rule, if revisions to § 405.2466(b)(1)(iv) are finalized as proposed, we would make corresponding changes to guidance in the Medicare Benefit Policy Manual, Chapter 13 and Medicare Claims Processing Manual, Chapter 9. If finalized, we also plan to facilitate the necessary operational systems updates needed to implement these changes.

d. Regulations Concerning Hepatitis B Vaccines and their Administration

Listed below are several Medicare Part B regulations that mention the hepatitis B vaccine and refer to § 410.63(a) for a definition of hepatitis B vaccine coverage. Since we are proposing to revise § 410.63(a) in section III.M. of this proposed rule, we do not believe additional regulation text changes are needed to conform to the coverage proposal, as the update to the definition at § 410.63(a) will apply to the use of the definition in these regulations:

• Section 410.10(p).
• Section 410.57(d).
• Section 411.15(e)(3) and (k)(5).
• Section 414.707(a)(2)(iii).
• Section 414.904(e)(1).

In addition, we note that there are no conforming regulation text changes needed to the payment regulations at § 410.152, paragraphs (h) and (l)(1), to conform to the coverage proposal.

3. Payment for Drugs Covered as Additional Preventive Services (§ 410.152)

a. Statutory Background

Section 101 of the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 (Pub. L. 110-275) added section 1861(ddd)(1) and (2) of the Act to effectuate “improvements to coverage of preventive services” in the Medicare program. Under section 1861(ddd)(1) of the Act, Medicare Part B covers “additional preventive services” that identify medical conditions or risk factors and that the Secretary determines are reasonable and necessary for: (A) the prevention or early detection of an illness or disability; (B) that are recommended with a grade of A or B by the United States Preventive Services Task Force; and (C) that are appropriate for individuals entitled to benefits under Part A or enrolled under Part B. Section 1861(ddd)(2) of the Act states that, in making determinations under section 1861(ddd)(1) of the Act, the Secretary should use the process for making National Coverage Determinations (NCD) in the Medicare program.

Section 101 of MIPPA also added section 1833(a)(1)(W) of the Act, which provides requirements for payment of additional preventive services. Section 1833(a)(1)(W)(i) establishes requirements for payment of additional preventive services that are clinical diagnostic laboratory tests, and section 1833(a)(1)(W)(ii) establishes requirements for payment of all other services. Section 1833(a)(1)(W)(ii) (as amended by section 4104 of the Affordable Care Act (Pub. L. 111-148) requires that the amount paid for the provision of all other additional preventive services is 100 percent of the lesser of the actual charge for the service, or the amount determined under a fee schedule established by the Secretary for purposes of this subparagraph.

We note that “additional preventive services” are a subset of “preventive services” under Medicare Part B, per section 1861(ddd)(3) and 1861(ww)(2)(O) of the Act, respectively. Section 1833(b)(1) of the Act states that the annual Part B deductible does not apply to preventive services, and section 1833(a)(1)(Y) of the Act waives coinsurance for preventive services that are recommended with a grade of A or B by the USPSTF for any indication or population. Based on all the above statutory authorities, there is no cost-sharing under Part B for additional preventive services for Medicare enrollees, that is, there is no applicable beneficiary coinsurance or deductible for these services.

The term “preventive services” is defined at § 410.2, and coverage for “additional preventive services” is delineated at § 410.64. At § 410.152(l), we list the Part B preventive services that are paid at 100 percent of the Medicare payment amount, that is, for which zero coinsurance is charged. There, at § 410.152(l)(11), we include “additional preventive services identified for coverage through the national coverage determination (NCD) process”. At § 410.160(b), we list the Part B services that are not subject to the Part B annual deductible and do not count toward meeting that deductible, and “additional preventive services identified for coverage through the national coverage determination (NCD) process” is included there at § 410.160(b)(13).

The payment authority under section 1833(a)(1)(W)(ii) of the Act has not been utilized to date because CMS has not yet covered any additional preventive service that would require use of that payment authority. While CMS currently covers certain screenings and therapies as additional preventive services under the section 1861(ddd) of the Act, those screenings and therapies are currently paid under the existing PFS fee schedule for physician services. Furthermore, the Medicare Diabetes Prevention Program, described at section III.E of this proposed rule, uses the section 1833(a)(1)(W)(ii) authority to waive the coinsurance and deductible as described above, but its payment policy is based on separate authorities under the model.

Specifically, we note that CMS has not yet covered or paid for any drugs or biologicals (hereinafter, referred to as drugs) under the benefit category of additional preventive services. This was highlighted when CMS released a Proposed NCD for Pre-Exposure Prophylaxis (PrEP) for Human Immunodeficiency Virus (HIV) Infection Prevention on July 12, 2023. This proposed NCD announced CMS' intention to cover and pay for those drugs under section 1861(ddd) of the Act's additional preventive services authority, and a decision on the NCD is forthcoming. We note that CMS covers and pays for Part B vaccines, which are also considered preventive services under sections 1861(ddd)(3) and 1861(ww)(2)(A) of the Act, but they have unique payment rates specified in statute at section 1842(o)(1)(A)(iv) of the Act (for more information, see above at section III.H.1.a. of this proposed rule).

b. Proposed Fee Schedule for Drugs Covered as Additional Preventive Services (DCAPS)

As discussed above, the authority at section 1833(a)(1)(W)(ii) of the Act provides for payment for additional preventive services, including drugs. This authority differs from the authority used to pay drugs that are separately paid as drugs and biologicals under other Part B payment authorities. Specifically, payment for most drugs separately payable under Part B is authorized at section 1833(a)(1)(S) of the Act and outlined at section 1842(o)(1)(C) of the Act, and those payments are generally made according to the Average Sales Price (ASP) methodology that is described at section 1847A of the Act. In addition, because drugs covered as additional preventive services (hereinafter, DCAPS; we will use the term “DCAPS drugs” for the ease of the reader) are not described in section 1842(o)(1)(C) of the Act, provisions under section 1847A of the Act would not apply, including requirements for manufacturers to report ASP to CMS on a quarterly basis (see sections 1847A(f) and 1927(b)(3)(A)(iii) of the Act). When manufacturers are not required to report the manufacturer's ASP for a drug, they may do so voluntarily, but the availability of voluntarily reported ASP data cannot be guaranteed, and the data may not reflect all available NDCs for the drug. However, we emphasize that DCAPS drugs that are also covered under Part B for non-preventive indications (that is, are also used for diagnosis or treatment) would be subject to ASP reporting requirements.

Above, we mentioned that section 1833(a)(1)(W)(ii) of the Act requires that the amount paid for the provision of additional preventive services is 100 percent of the lesser of the actual charge for the service, or the amount determined under a fee schedule established by the Secretary for purposes of this subparagraph. For purposes of this policy, we refer to the amount determined under the fee schedule as the payment limit, which we discuss in detail below.

We are proposing a fee schedule for DCAPS drugs that uses existing Part B drug pricing mechanisms, because we believe that it is preferable to set all drug payment limits under Part B, including those for DCAPS, as consistently as possible. Accordingly, we propose that the payment limit for a DCAPS drug be determined using the methodology described in section 1847A of the Act (also referred to as ASP methodology), or, if ASP data is not available for a particular drug, to use an alternative pricing mechanism, as described below. We propose to update the fee schedule quarterly, on the same schedule as the ASP pricing file, which is updated each calendar quarter.

(1) Payment Limit Based on Section 1847A of the Act

To determine the payment limit for the applicable billing and payment code for a DCAPS drug under the fee schedule, we propose to apply ASP methodology described in section 1847A of the Act when ASP data is available for the drug. We believe the use of ASP data would be preferable for determining the payment limit for DCAPS drug billing and payment codes for two reasons. First, this approach would determine the payment limit for these drugs in the same way as the payment limit is usually determined for other drugs that are separately payable under Part B, when possible. This would include the application of payment limit calculations for multiple source drugs, single source drugs and biologicals, and biosimilar biological products, as is done for products under section 1847A of the Act, for each applicable billing and payment code. Second, because section 1847A(c)(3) of the Act requires that calculation of the manufacturer's ASP for an NDC must include volume discounts, prompt pay discounts, cash discounts, free goods that are contingent on any purchase requirement, chargebacks, and rebates (other than rebates under the Medicaid drug rebate program, discounts under the 340B Program, and rebates under the Part B and Part D Medicare inflation rebate program), this would set a payment limit that would likely better reflect acquisition cost of the drug than list prices in available compendia (such as Wholesale Acquisition Cost (WAC)).

We propose that CMS would determine the payment limit for DCAPS drugs as the amount that would result from application of ASP methodology in section 1847A of the Act only if ASP data for the drug is available for a given quarter (that is, positive manufacturer's ASP data is reported by the drug manufacturer, as explained in section III.A.2 of this proposed rule). We propose that if ASP data is available for a DCAPS drug, the payment limit would be the amount described in section 1847A(b) of the Act, which is usually 106 percent of ASP.

(2) Payment Limit Based on National Average Drug Acquisition Cost (NADAC) Pricing

If ASP data for a DCAPS drug (as described in the previous section) is not available (as defined in the prior paragraph), we propose to determine the payment limit for the applicable billing and payment code using the most recently published amount for the drug in Medicaid's National Average Drug Acquisition Cost (NADAC) survey (OMB control number 0938-1041). When using NADAC data, we propose to determine the payment limit per billing unit, which would be an average of NADAC prices for all NDCs for the drug. If a drug is available in generic and brand formulations, we propose all NDCs will be averaged together to determine the payment limit.

Since the timing of ASP reporting and publishing has a two-quarter lag (for example, payment limits calculated using data reported from the first quarter of sales become effective two quarters later), we propose that “most recently published” for purposes of this policy means the most recently updated NADAC survey available 30 days after the close of the quarter for which ASP data would have been reported if it were available. For example, in the calculation of the payment limit for dates of service in the third calendar quarter, if NADAC is used to determine the payment limit, CMS would use the most recent NADAC survey update available on the 30th day after the close of the first calendar quarter to determine the payment limit for the third quarter.

The NADAC survey provides a national drug pricing benchmark for certain drugs that is adequately comprehensive to serve as the first alternative pricing source in the case that ASP data is not available. CMS conducts surveys of retail community pharmacy prices to develop the NADAC pricing benchmark in the annual NADAC pricing file. The pricing benchmark is reflective of the prices paid by retail community pharmacies to acquire prescription and over-the-counter covered outpatient drugs. NADAC data is publicly available and it can be accessed at https://data.medicaid.gov/nadac .

In the CY 2020 PFS final rule (84 FR 62655), we similarly finalized the use of NADAC pricing as a pricing alternative for oral drugs under the Part B Opioid Treatment Program (OTP) benefit when ASP data is not available. There, we stated that “[s]urvey data on invoice prices provide the closest pricing metric to ASP that we are aware of.” Because the previous statement continues to be true, it is an appropriate alternative in the pricing framework for DCAPS drugs when ASP data is not available.

(3) Payment Limit Based on the Federal Supply Schedule (FSS)

Since NADAC pricing is only available for drugs typically dispensed through retail community pharmacies, there could be circumstances in which ASP and NADAC data are not available for DCAPS drugs. Therefore, if both ASP and NADAC pricing data are not available for a DCAPS drug, we propose to use the most recently published and listed prices for pharmaceutical products in the Federal Supply Schedule (FSS) to calculate the payment limit for the applicable billing and payment code. In the same manner as discussed in the previous section, we propose that “most recently published” for purposes of this policy means the most recently updated FSS survey available 30 days after the close of the quarter for which ASP data would have been reported if it were available. For example, in the calculation of the payment limit for dates of service in the third calendar quarter, if FSS is used to determine the payment limit, CMS would use the most recent FSS update available on the 30th day after the close of the first calendar quarter to determine the payment limit for the third quarter. When using the FSS, we would calculate the average price per billing unit (as described in the billing and payment code for the drug) for all NDCs listed for a drug.

Drug pricing information from the Veterans Affairs' (VA's) FSS pharmaceutical pricing database is publicly available at the NDC level and published at https://www.va.gov/opal/nac/fss/pharmPrices.asp . We propose to use FSS data when ASP and NADAC data are not available because FSS data is one of the few existing options for drug pricing that includes a wide variety of drug formulations, including both self-administered drugs typically dispensed through retail community pharmacies and drugs administered incident to a physician's service. We believe that using FSS data to calculate the payment limit for DCAPS drugs is preferable to instructing MACs to determine DCAPS drug payment limits according to invoice (as discussed below), because invoice-based pricing requires MACs to manually process claims and is therefore burdensome to the MACs.

(4) Invoice Pricing

Finally, if ASP, NADAC, and FSS pricing are not available for a particular drug covered as an additional preventive service, then MACs will determine the payment for that drug according to invoice. Since one of the three above pricing mechanisms should be available in nearly all cases, we expect that invoice pricing would be necessary only in rare situations. Specifically, we believe that invoice pricing would likely only be necessary for new drugs before pricing data is available.

To summarize, we propose to establish a fee schedule using the following pricing mechanisms to determine the payment limit for DCAPS drugs under Part B, which would be updated quarterly:

(1) If ASP data is available for the DCAPS drug, the payment limit would be determined based on the methodology under section 1847A(b) of the Act (usually 106 percent of ASP);

(2) If ASP data is not available, the payment limit would be calculated using NADAC prices for the drug;

(3) If ASP data and NADAC prices are not available, the payment limit would be calculated using the FSS prices for the drug; and

(4) If ASP data, NADAC prices, and FSS prices are not available, payment limit would be the invoice price determined by the MAC.

We are proposing to amend § 410.152 by adding paragraph (o) to establish the fee schedule and the pricing methodologies used to determine the payment limit for DCAPS drugs under Part B. In addition, to highlight that coinsurance does not apply to DCAPS drugs, we propose to publish the payment limits for DCAPS drugs along with other separately payable Part B drugs on the ASP pricing file.

We invite public comment on the proposed fee schedule for drugs paid as additional preventive services.

c. Payment for Supplying and Administration of Drugs Under the Additional Preventive Services Benefit

As explained above, DCAPS drugs are subject to payment under section 1833(a)(1)(W)(ii) of the Act. Because the fee schedule authorized under such section has not yet been established, and since DCAPS drugs are not covered by Part B under the same authority as other separately payable Part B drugs that would provide for administration or supplying fees, there is no existing policy regarding payment for the administration of DCAPS drugs or the supplying of DCAPS drugs by suppliers and providers. In a similar manner to the DCAPS drug pricing mechanisms described above, we propose administration and supplying fees for DCAPS drugs that mirror existing policies under the PFS and Part B drug payment. We anticipate that an NCD that adds drugs to the additional preventive services benefit would include coverage for the supplying or administration of the drug, as appropriate, and those fees would therefore be considered payment for additional preventive services as well. Therefore, we are proposing payment limits for the supply and administration of DCAPS drugs to be included on the DCAPS fee schedule. As stated above, section 1833(a)(1)(W)(ii) of the Act requires that the amount paid for the provision of additional preventive services is 100 percent of the lesser of the actual charge for the service, or the amount determined under a fee schedule established by the Secretary for purposes of this subparagraph. That is, the amount paid for the administration or supplying of the DCAPS drug will be the lesser of either the actual charge for the service or the payment limit.

For drugs that are supplied by a pharmacy, we propose that the fee schedule include a payment limit for a supplying fee that is similar to the supplying fee for other Part B-covered drugs dispensed from a pharmacy, to allow for consistency among similar payments in Part B. These other groups of drugs covered under Part B include immunosuppressives, oral anti-cancer, and oral anti-emetic drugs, and supplying fees for these drugs are described at 42 CFR part 414, subpart L (§§ 414.1000 and 414.1001). Generally, Medicare pays $24 for the first prescription of one of these drugs supplied by a pharmacy in a 30-day period, and pays $16 for each subsequent prescription, after the first one, supplied in that 30-day period. We propose similar payment limits for supplying fees for DCAPS drugs. Specifically, we propose that CMS will establish payment limit of $24 to a pharmacy for the first DCAPS prescription that the pharmacy supplies to a beneficiary in a 30-day period, and a payment limit of $16 to a pharmacy for all subsequent DCAPS prescriptions that the pharmacy supplies to a beneficiary in that 30-day period. We are proposing that the same fees would apply regardless of the number of days' supply that is dispensed.

As discussed in section III.A.4.c of this proposed rule, we intend to further study the supplying fees for certain drugs paid under Part B (for example, immunosuppressive drugs) and are not proposing to make any changes to the supplying fee amounts at this time (meaning the current 30-day supplying fees would apply to any amount of days' supply). The dispensing and supplying fees under Part B (§ 414.1001) have been shown to be higher than dispensing fees paid in the commercial market. So, until additional study is done regarding input costs for dispensing drugs billed to Medicare Part B and subsequent notice-and-comment rulemaking can be done, if appropriate, in response to such information, we aim to continue the current fee schedule for such Part B drugs regardless of the days' supply dispensed. Therefore, we propose to use the same approach for payment limits that are paid to pharmacies that supply DCAPS prescriptions.

For drugs that are administered by a physician or a non-physician practitioner, we propose that the fee schedule include a payment limit for such administration that aligns with the administration fee for other drugs provided as incident to physician services, as paid according to the PFS. To operationalize this, we propose that CMS determine the payment limit for administration of a DCAPS drug provided incident to a physician service via a crosswalk to an existing, corresponding drug administration code under the PFS. Exact details on coding and corresponding crosswalks would be included on the published fee schedule once DCAPS drugs are finalized for coverage via the NCD process. The fee schedule would be published quarterly on the CMS website and implemented in the Medicare claims processing systems.

No cost sharing would apply for the administration or supplying of DCAPS drugs, because we are proposing that such administration or supplying would be considered an additional preventive service, and as explained above, there is no cost-sharing for any additional preventive services under section 1833(a)(1)(W) of the Act. We propose to codify these policies at the newly added § 410.152(o).

We note that with regard to the July 12, 2023 Proposed NCD for Pre-Exposure Prophylaxis (PrEP) for Human Immunodeficiency Virus (HIV) Infection Prevention, in section II.E.4.b. of this proposed rule, in item 37, we propose national rates for HCPCS code G0012 ( Injection of pre-exposure prophylaxis (PrEP) drug for HIV prevention, under skin or into muscle) that are crosswalked from CPT code 96372 ( Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); subcutaneous or intramuscular). Please see that section for more information.

d. Payment for Drugs Covered as Additional Preventive Services in RHCs and FQHCs

Above, we mentioned that section 4104 of the ACA amended payment for additional preventive services, to increase payment to the lesser of 100 percent of charges, or the amount determined under a fee schedule established by the Secretary, per Section 1833(a)(1)(W)(ii). This change waived coinsurance for additional preventive services. Section 4104 of the ACA also removed several other barriers to access to preventive services in Medicare. Specifically, section 4104 of the ACA amended section 1833 of the Act to waive the deductible for preventive services at section 1833(b)(1) of the Act, and to waive coinsurance for preventive services that are recommended with a grade of A or B by the USPSTF for any indication or population by adding section 1833(a)(1)(Y) of the Act. We also mentioned above that “additional preventive services” are a subset of “preventive services” under Medicare Part B, per section 1861(ddd)(3) and 1861(ww)(2)(O) of the Act, respectively.

In the CY 2011 PFS final rule, we interpreted the above waivers of cost-sharing for preventive services to apply to FQHCs (75 FR 73417); we note that FQHC services were already exempt from the Part B deductible, per section 1833(b)(4) of the Act. The CY 2011 PFS final rule codified this FQHC policy in regulation at § 405.2449 (75 FR 73613), and in sub-regulatory guidance, we clarified that these waivers of cost-sharing for preventive services applied to RHCs as well. In the CY 2014 FQHC PPS final rule (79 FR 25474), at § 405.2410(b), we codified regulations regarding coinsurance in RHCs and FQHCs, “[E]xcept for preventive services for which Medicare pays 100 percent under § 410.152(l) of this chapter.” In the CY 2016 PFS final rule (80 FR 71088), we clarified explicitly that these waivers of cost-sharing (that is, both coinsurance and deductible) for preventive services applied to RHCs.

In the previous sections of III.H.3. of this proposed rule, we discussed drugs covered as additional preventive services (henceforth “DCAPS drugs,” for the ease of the reader). In this section, we are clarifying that drugs covered as additional preventive services, and any accompanying administration and supplying fees, are not subject to cost-sharing in RHCs and FQHCs. Since DCAPS drugs and the services to administer and supply them are all considered additional preventive services, as explained in the previous section, they are paid at 100 percent of the Medicare payment amount in RHCs and FQHCs per §§ 405.2410 and 410.152(l) and they are paid on a claim-by-claim basis.

In addition, we are proposing that DCAPS drugs, when administered and supplied in an RHC or FQHC, as well as any administration and supply fee for those drugs, would be paid according to the fee schedule payment limits described above at section III.H.3.b. of this proposed rule. Since regulations at § 405.2460 allow the payment limitations set out in Part 410 to apply to payment for services provided by RHCs and FQHCs, we believe it is consistent with our current RHC and FQHC payment policies to apply the proposed DCAPS fee schedule payment limits, as discussed above, to those same DCAPS drugs when furnished in an RHC or FQHC. Those payment limits are described earlier in section III.H.3.b., and if finalized as proposed, they would be codified at § 410.152(o)(1). We propose to codify this RHC/FQHC DCAPS policy in regulation as well, at a new § 405.2464(h).

We welcome comments on these proposals.

I. Medicare Prescription Drug Inflation Rebate Program

1. Background

a. Overview of the Medicare Prescription Drug Inflation Rebate Program

The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169, enacted August 16, 2022) established new requirements under which drug manufacturers must pay inflation rebates if they raise their prices for certain Part B and Part D drugs faster than the rate of inflation. Drug manufacturers are required to pay rebates to Medicare if prices for certain Part B drugs increase faster than the rate of inflation for a calendar quarter beginning with the first quarter of 2023; drug manufacturers are required to pay rebates to Medicare if prices for certain Part D drugs increase faster than the rate of inflation over a 12-month period, starting with the 12-month period that began October 1, 2022.

Section 11101 of the IRA amended section 1847A of the Act by adding a new subsection (i), which establishes a requirement for drug manufacturers to pay rebates into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund for Part B rebatable drugs if the specified amount exceeds the inflation-adjusted payment amount, which is calculated as set forth in section 1847A(i)(3)(C) of the Act. The IRA also provides for an adjustment to the beneficiary coinsurance amount in cases where the price of a Part B rebatable drug increases faster than the rate of inflation such that the beneficiary coinsurance is calculated based on the lower inflation-adjusted payment amount instead of the applicable payment amount. Section 1847A(i)(2) of the Act defines a “Part B rebatable drug,” in part, as a single source drug or biological product (as defined in section 1847A(c)(6)(D) of the Act), including a biosimilar biological product (as defined in section 1847A(c)(6)(H) of the Act), but excluding a qualifying biosimilar biological product (as defined in section 1847A(b)(8)(B)(iii) of the Act) for which payment is made under Part B.

Section 11102 of the IRA added section 1860D-14B of the Act, which requires drug manufacturers to pay rebates into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund for each 12-month applicable period, starting with the applicable period beginning on October 1, 2022, for Part D rebatable drugs if the annual manufacturer price (AnMP) of such drug exceeds the inflation-adjusted payment amount. Section 1860D-14B(g)(1)(A) of the Act defines a “Part D rebatable drug,” in part, as a drug or biological described at section 1860D-14B(g)(1)(C) of the Act that is a “covered Part D drug” as that term is defined in section 1860D-2(e) of the Act. The definition of a Part D rebatable drug includes drugs approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic (FD&C) Act (that is, brand name drugs), generic drugs approved under section 505(j) of the FD&C Act that meet certain statutory criteria (that is, sole source generic drugs), and biologicals licensed under section 351 of the Public Health Service Act (PHS), including biosimilars.

Under the IRA, certain statutory requirements vary for implementation of the Medicare Part B Drug Inflation Rebate Program and the Medicare Part D Drug Inflation Rebate Program. For example, section 1847A(i) of the Act requires CMS to calculate Part B drug inflation rebates for a calendar quarter, whereas section 1860D-14B of the Act requires CMS to calculate Part D drug inflation rebates for each 12-month applicable period. With respect to invoicing manufacturers for the rebate amount owed, under section 1847A(i)(1) of the Act, CMS must report rebate amounts to each manufacturer of a Part B rebatable drug no later than 6 months after the end of each calendar quarter, except that for calendar quarters beginning in 2023 and 2024, CMS has until September 30, 2025, to invoice manufacturer for rebates. In contrast, under section 1860D-14B(a) of the Act, CMS must report rebate amounts to each manufacturer of a Part D rebatable drug no later than 9 months after the end of each applicable period, except that for the first two applicable periods (that is, October 1, 2022, to September 30, 2023, and October 1, 2023, to September 30, 2024), CMS has until December 31, 2025, to invoice manufacturers for Part D inflation rebates. Additionally, there are statutory differences in the inputs used to calculate the rebate amounts for Part B and Part D. As a result, CMS is proposing to use different methodologies to calculate inflation rebates for Part B rebatable drugs and Part D rebatable drugs. However, CMS has attempted to align policies across the Medicare Part B Drug Inflation Rebate Program and Medicare Part D Drug Inflation Rebate Program to the extent possible.

b. Summary of Proposed Policies for the Medicare Prescription Drug Inflation Rebate Program

CMS is proposing to codify policies established in the revised guidance for the Medicare Part B Drug Inflation Rebate Program and the Medicare Part D Drug Inflation Rebate Program (collectively referred to as the “Medicare Prescription Drug Inflation Rebate Program”) in regulatory text. Specifically, CMS is proposing to codify with limited modification policies set forth in guidance for the Medicare Prescription Drug Inflation Rebate Program by adding new parts 427 and 428 to title 42, chapter IV of the Code of Federal Regulations for Part B and Part D, respectively, and welcomes comments on these proposals.

In addition, CMS is proposing new policies for the Medicare Part B Drug Inflation Rebate Program as follows:

• Proposed § 427.201(b) provides that CMS would compare the payment amount in the quarterly pricing files published by CMS to the inflation-adjusted payment amount for a given quarter when determining whether the criteria for a coinsurance adjustment are met.
• Proposed § 427.302(c)(3) provides that for a Part B rebatable drug first approved or licensed by the FDA on or before December 1, 2020 but with a first marketed date after December 1, 2020, the payment amount benchmark quarter for such drug is the third full calendar quarter after the drug's first marketed date. Proposed § 427.302(c)(4) further provides that for a Part B rebatable drug that was billed under a NOC code during the calendar quarter beginning July 1, 2021, or the third full calendar quarter after such drug's first marketed date, whichever is later, the payment amount benchmark quarter is the third full calendar quarter after the drug is assigned a billing and payment code other than a NOC code.
• Proposed § 427.303(b)(1)(i) provides that CMS would remove 340B units for professional claims with dates of service during 2024 (in addition to 2023) submitted by Medicare suppliers that are listed by the Health Resources and Services Administration (HRSA) 340B Office of Pharmacy Affairs Information System as participating in the 340B Program, by using National Provider Identifiers and/or Medicare Provider numbers to identify these suppliers and the claims submitted with such identifiers.
• Proposed § 427.303(b)(5) provides that CMS would remove units of refundable single-dose container or single-use package drugs subject to discarded drug refunds, from the calculation of rebate amounts, generally in the reconciliation process.
• Proposed § 427.501 describes CMS' method and process for reconciliation of a rebate amount for a Part B rebatable drug, including the circumstances that may trigger such a reconciliation.
• Proposed § 427.600 establishes a civil money penalty process in accordance with section 1847A(i)(7) of the Act to address when a manufacturer of a Part B rebatable drug fails to pay the rebate amount in full by the payment deadline for such drug for such applicable calendar quarter.
• Proposed § 427.10 provides that, were any provision of part 427 to be held invalid or unenforceable by its terms, or as applied to any person or circumstance, such provisions would be severable from part 427 and the invalidity or unenforceability would not affect the remainder thereof or any other part of this subchapter or the application of such provision to other persons not similarly situated or to other, dissimilar circumstances.

CMS also is proposing new policies for the Medicare Part D Drug Inflation Rebate Program as follows:

• Proposed § 428.202(c)(3) provides that if a Part D rebatable drug first approved or licensed by the FDA on or before October 1, 2021, does not have AMP data reported under section 1927(b)(3) of the Act for any quarters during the period beginning on January 1, 2021 and ending on September 30, 2021, CMS would identify the payment amount benchmark period as the first calendar year, which would be no earlier than calendar year 2021, in which such drug has at least 1 quarter of AMP reported. Proposed § 428.202(c)(4) further provides that for a Part D rebatable drug first approved or licensed after October 1, 2021 (that is, a subsequently approved drug), for which there are no quarters during the first calendar year beginning after the drug's first marketed date for which AMP has been reported under section 1927(b)(3), the payment amount benchmark period would be the first calendar year in which such drug has at least 1 quarter of AMP reported. CMS is also soliciting comments on alternative policies to address certain instances in which AMP are not reported for certain NDC-9s of a Part D rebatable drug.
• Proposed § 428.203(b)(2) provides that, for claims with dates of service on or after January 1, 2026, and with respect to an applicable period, CMS would exclude from the total number of units used to calculate the total rebate amount for a Part D rebatable drug those units of the Part D rebatable drug for which a manufacturer provided a discount under the 340B Program. To determine the total number of such units for which a manufacturer provided a discount under the 340B Program, CMS would use data reflecting the total number of units of a Part D rebatable drug for which a discount was provided under the 340B Program and that were dispensed during the applicable period. CMS may apply adjustment(s) to these data as needed. CMS is also soliciting comments on alternative policies for collecting and using 340B data to calculate rebate amounts for Part D rebatable drugs.
• Proposed § 428.401 describes CMS' method and process for reconciliation of a rebate amount for a Part D rebatable drug, including the circumstances that may trigger such a reconciliation.
• Proposed § 428.500 establishes a civil money penalty process in accordance with section 1860D-14B(e) of the Act to address when a manufacturer of a Part D rebatable drug fails to pay the rebate amount in full by the payment deadline for such drug for such applicable period.
• Proposed § 428.10 provides that, were any provision of part 428 to be held invalid or unenforceable by its terms, or as applied to any person or circumstance, such provisions would be severable from this part and the invalidity or unenforceability would not affect the remainder thereof or any other part of this subchapter or the application of such provision to other persons not similarly situated or to other, dissimilar circumstances.

Unless otherwise specified, CMS proposes that the provisions herein would apply, with respect to Part B rebatable drugs, for all calendar quarters beginning with January 1, 2023, and with respect to Part D rebatable drugs, for all applicable periods beginning with October 1, 2022. The IRA directs the Secretary to calculate rebate amounts for Part B rebatable drugs beginning on January 1, 2023, and Part D rebatable drugs beginning on October 1, 2022, using pricing data from past periods of time, including benchmark data from periods prior to the statute's enactment. In some cases, the time periods during which prices are subject to rebates began as early as several weeks after the IRA was enacted. In recognition of this timing, section 1860D-14B(h) of the Act specifically requires CMS to use program instruction to implement the Medicare Part D Drug Inflation Rebate Program for 2022, 2023, and 2024. Similarly, the existing provision at section 1847A(c)(5)(C) of the Act, provides authority for CMS to implement the Medicare Part B Drug Inflation Rebate Program using program instruction or other guidance. In addition, sections 1847A(i)(1)(C) and 1860D-14B(a)(3) of the Act, as added by the IRA, permit the Secretary to delay the issuance of Rebate Reports for certain initial calendar quarters and applicable periods until 2025.

Section 1871(e)(1)(A) of the Act provides that a substantive change in regulations, manual instructions, interpretative rules, statements of policy, or guidelines of general applicability under Title XVIII of the Act may not apply retroactively unless the Secretary has determined that such retroactive application is necessary to comply with statutory requirements or that failure to apply such policies retroactively would be contrary to the public interest. To the extent any proposed provisions in this section III.I of this proposed rule are considered to apply retroactively, CMS has determined that such retroactive application would be both necessary to establish policies to implement the statutory requirements that CMS perform various calculations that involve pricing activities from prior periods and also consistent with the statutory provisions expressly allowing the agency to delay the issuance of rebate reports for initial applicable periods until 2025. In addition, such retroactive application would be in the public interest because it would ensure that the proposed regulations address the same time periods and manufacturer pricing conduct Congress sought to address in the IRA and would promote consistency and continuity in program implementation.

c. Timeline of Key Dates for the Medicare Prescription Drug Inflation Rebate Program

As sections 1847A(i)(2)(C) and 1860D-14B(a)(3) of the Act allow for delayed reporting and invoicing of rebates amounts for applicable calendar quarters in 2023 and 2024 for Part B rebatable drugs and the first two applicable periods for Part D rebatable drugs, Figures 1 and 2 provide example timelines for how rebates will be calculated for applicable calendar quarters and one applicable period in calendar year 2025. The figures also depict how the rebate period and components of the rebate calculation may shift based on the marketing and approval dates for a rebatable drug or biological product.

Table 47 describes a summary timeline for inflation rebate amount reports and deadlines for applicable calendar quarters in calendar year 2025 and thereafter for Part B rebates and for the Part D rebate applicable period beginning on October 1, 2024, and applicable periods thereafter.

2. Medicare Part B Drug Rebates for Single Source Drugs and Biological Products With Prices That Increase Faster Than the Rate of Inflation

a. Definitions (§ 427.20)

In this proposed rule, CMS proposes to codify the definitions of terms consistent with the meanings given in section 1847A(i) of the Act or established in the revised Medicare Part B Drug Inflation Rebate Guidance, as applicable, as well as new definitions based on policies detailed in this proposed rule.

At proposed § 427.20, CMS is proposing that the following terms in section 1847A of the Act are defined:

• “Benchmark period CPI-U”.
• “Biosimilar biological product”.
• “Inflation-adjusted payment amount”.
• “Part B rebatable drug”.
• “Payment amount benchmark quarter”.
• “Payment amount in the payment amount benchmark quarter”.
• “Rebate period CPI-U”.
• “Single source drug or biological product”.
• “Specified amount”.
• “Subsequently approved drug”.
• “Unit”.

Further, in § 427.20 of this proposed rule, CMS proposes to codify definitions established in the revised Medicare Part B Drug Inflation Rebate Guidance and new definitions based on policies detailed in this proposed rule for the following terms:

• “Allowed charges”.
• “Applicable calendar quarter”.
• “Applicable threshold”.
• “Average sales price (ASP)”.
• “Billing and payment code”.
• “Billing unit”.
• “CPI-U”.

• “FDA application”.
• “Final action claim”.
• “First marketed date”.
• “Grouped billing and payment code”.
• “Manufacturer”.
• “National Drug Code” (NDC).
• “Not Otherwise Classified (NOC) code”.

b. Determination of Part B Rebatable Drugs (§§ 427.100 Through 427.101)

i. Definitions

In proposed § 427.100, CMS proposes to define the following terms applicable to proposed subpart B (§§ 427.100 through 427.101):

• “EUA Declaration”.
• “Individual who uses such a drug or biological”.

ii. Identification of Part B Rebatable Drugs

Section 1847A(i)(2) of the Act defines a “Part B rebatable drug,” in part, as a single source drug or biological product (as defined in section 1847A(c)(6)(D)), including a biosimilar biological product (as defined in section 1847A(c)(6)(H)), but excluding a qualifying biosimilar biological product (as defined in section 1847A(b)(8)(B)(iii)), for which payment is made under Part B. The definitions for a biosimilar biological product and a qualifying biosimilar biological product are codified in § 414.902.

In § 427.101, CMS proposes to codify the policies established in section 30.1 of the revised Medicare Part B Drug Inflation Rebate Guidance to identify Part B rebatable drugs by (1) identifying the applicable billing and payment code for each single source drug or biological product, including biosimilar biological products, for which payment is made under Part B and (2) excluding any billing and payment code corresponding to a drug or biological product in excluded product categories or that have average total allowed charges below an applicable threshold, to be codified in proposed § 427.101(b) and (c), respectively.

iii. Excluded Product Categories

Section 1847A(i)(2)(A) of the Act excludes qualifying biosimilar biological products (as defined in section 1847A(b)(8)(B)(iii) of the Act) from the definition of a Part B rebatable drug. As such, in § 427.101(b)(1) CMS proposes to codify the policy established in section 30.2 of the revised Medicare Part B Drug Inflation Rebate Guidance to exclude such products from the definition of a Part B rebatable drug and not subject them to Part B inflation rebates.

Section 1847A(i)(2) of the Act defines a Part B rebatable drug as a “single source drug or biological as defined in section 1847A(c)(6)(D) of the Act” which requires that a single source drug not be a multiple source drug. CMS has interpreted section 1847A(c)(6)(C)(ii) of the Act to mean that single source drugs or biological products are treated as multiple source drugs if they were within the same billing and payment code as of October 1, 2003. Accordingly, in § 427.101(b)(2), we are proposing to codify the existing policy established in section 30.1 of the revised Medicare Part B Drug Inflation Rebate Guidance to exclude drugs and biological products described in section 1847A(c)(6)(C)(ii) of the Act from the definition of a Part B rebatable drug and not subject them to Part B inflation rebates.

For drugs and biological products that are billed using a HCPCS code that represents a NOC code, CMS has a process to determine the allowed payment amount for such billing and payment codes; however, current Medicare claims data do not allow CMS to determine the average total allowed charges for such drug or biological product for a year per individual that uses such a drug or biological product or to identify units billed. CMS must perform these steps to determine if a drug or biological product is a Part B rebatable drug. Therefore, in § 427.101(b)(3), we are proposing to codify the policy in section 30.1 of the revised Medicare Part B Drug Inflation Rebate Guidance to exclude drugs and biological products that are billed using a billing and payment code that represents a NOC code drug or biological product or claims for such drugs and biological products when no other billing and payment code is applicable. CMS notes that few Part B drugs and biological products are billed with such codes and the quarterly process for updating billing and payment codes, including establishing new billing and payment codes, provides an existing mechanism for CMS to minimize the number of Part B rebatable drugs that are billed with such codes. As discussed in §§ 90.2 and 90.3 in Chapter 17 of the Medicare Claims Processing Manual, CMS believes NOC codes are generally used to bill Medicare for new-to-market, FDA-approved drug products until a specific billing and payment code is assigned; and so, CMS expects that the impact of this exclusion will be limited.

Consistent with section 303(h) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, radiopharmaceutical drugs and biologicals are not paid under section 1847A of the Act. Manufacturers of radiopharmaceuticals are therefore not required to report ASP under section 1927(b)(3) of the Act and are not otherwise required to report ASP data to CMS for separately payable radiopharmaceuticals. In addition, different payment methodologies across the outpatient setting result in data variations that could inappropriately trigger an inflation rebate amount due to methodological differences in reimbursement. Therefore, although some radiopharmaceuticals may appear on quarterly pricing files, in § 427.101(b)(4) CMS proposes to codify the revised Medicare Part B Drug Inflation Rebate Guidance policy (as described in section 30.1) that excludes separately payable radiopharmaceuticals for the purposes of identifying Part B rebatable drugs. Additionally, CMS proposes to codify the existing policy not to subject these units to the inflation-adjusted beneficiary coinsurance at § 427.201(c) and described further in the following section of this preamble.

CMS aims to create a consistent coding and payment approach for the suite of products currently referred to as skin substitutes as stated in section 30.1 of revised Medicare Part B Drug Inflation Rebate Guidance. In the CY 2024 PFS proposed rule, CMS solicited comments on potential changes to payment for skin substitutes. In the CY 2024 PFS final rule, CMS acknowledged the comments received in response to this solicitation and stated that CMS would take these comments into consideration for future rulemaking. In § 427.101(b)(5) CMS proposes to codify existing policy to exclude cellular- and tissue-based products that would aid wound healing, currently referred to as skin substitutes, for the purposes of identifying Part B rebatable drugs. In addition, CMS proposes not to subject these products to the beneficiary coinsurance adjustment at § 427.201(c).

Section 1847A(i)(2)(A) of the Act excludes from the definition of a Part B rebatable drug a drug or biological if, as determined by the Secretary, the average total allowed charges for such drug or biological product under Part B for a year per individual who uses such a drug or biological product are less than $100. Section 1847A(i)(2)(B) of the Act provides that the $100 amount for 2023 will be increased for 2024 and subsequent years by the percentage change in the CPI-U for the 12-month period ending with June of the previous year, rounded to the nearest multiple of $10. Therefore, in § 427.101(b)(6) CMS proposes to codify the policy established in revised Medicare Part B Drug Inflation Rebate Guidance to exclude from the definition of a Part B rebatable drug those drugs and biologicals for which the Part B average total allowed charges for a year per individual who uses such drug or biological is below the applicable threshold.

Section 1847A(i)(2)(A)(ii) of the Act excludes vaccines described in subparagraph (A) or (B) of section 1861(s)(10) of the Act from the definition of a Part B rebatable drug. Such vaccines include the pneumococcal vaccine, the influenza vaccine, the COVID-19 vaccine; and the hepatitis B vaccine when furnished to an individual who is at high or intermediate risk of contracting hepatitis B (as determined by the Secretary under regulations). As such, in § 427.101(b)(7), CMS proposes to codify the existing policy established in section 30.3 of the revised Medicare Part B Drug Inflation Rebate Guidance to exclude vaccines described in subparagraph (A) or (B) of section 1861(s)(10) of the Act from the definition of a Part B rebatable drug and not subject them to Part B inflation rebates. In addition, with respect to monoclonal antibodies used for treatment or post-exposure prophylaxis of COVID-19, which are covered and paid for under section 1861(s)(10) of the Act, CMS proposes to exclude these products from the definition of Part B rebatable drugs for applicable quarters through the end of the calendar year in which the EUA declaration under section 564 of the FD&C Act for drugs and biological products is terminated. With respect to monoclonal antibodies that are used for pre-exposure prophylaxis of COVID-19 that are covered and paid for under section 1861(s)(10) of the Act, CMS proposes to exclude these products from the definition of Part B rebatable drug for applicable calendar quarters even after the year in which the EUA Declaration ends, as long as these products have an FDA-approved application or license after the EUA Declaration is terminated.

Finally, Part B drugs approved under an Abbreviated New Drug Application (ANDA) submitted under 505(j) of the FD&C Act do not meet the definition of “single source drug or biological product,” as defined under section 1847A(c)(6)(D) of the Act, and thus, are not Part B rebatable drugs. We propose to codify this exclusion at § 427.101(b)(8).

iv. Drugs and Biological Products With Average Total Allowed Charges Below the Applicable Threshold

Pursuant to section 1847A(i)(2) of the Act, drugs and biological products, for which the average total allowed charges for such drug or biological under Part B for a year per individual who uses such drug or biological are below the applicable threshold, as determined by the Secretary, are excluded from the definition of Part B rebatable drugs. As explained in section 30.2 of the revised Medicare Part B Drug Inflation Rebate Guidance, CMS uses the term “applicable threshold” to mean $100 for all four calendar quarters in 2023. For all four calendar quarters in 2024, the applicable threshold will be $100 as increased in accordance with section 1847A(i)(2)(B) of the Act. For calendar quarters in 2025 and beyond, the applicable threshold will be equal to the unrounded applicable threshold calculated for the prior calendar year, increased by the percentage increase in the CPI-U for the 12-month period ending with June of the previous year.

In § 427.101(c), CMS is proposing to codify policies from the revised Medicare Part B Drug Inflation Rebate Guidance to exclude these drugs from the definition of a Part B rebatable drug. To do so, in accordance with the statute, for each applicable calendar quarter, CMS proposes to identify drugs and biological products with Part B average total allowed charges for a year per individual that uses such a drug or biological product below the applicable threshold.

In § 427.101(c)(1), CMS is proposing that to identify the average total allowed charges for a year per individual, for each Part B rebatable drug, CMS would:

• For single source drugs and biological products assigned to only one billing and payment code, sum the allowed charges from final action claims greater than $0 and divide the summed amount by the number of individuals who use such a drug or biological.
• For single source drugs and biological products assigned to more than one billing and payment code, sum the allowed charges from final action claims greater than $0 for all billing and payment codes and divide the summed amount by the number of individuals who use such a drug or biological.

CMS may move a drug or biological product from a grouped billing and payment code to a unique billing and payment code in instances where the drug is either approved through the pathway established under section 505(b)(2) of the FD&C Act (hereinafter “section 505(b)(2) drug products”) that CMS initially assigned to the same billing and payment code as its reference drug for a period of time, or the drug was previously a multiple source drug but is now a single source drug that was moved to its own billing and payment code. There may be instances where a single source drug or biological product was previously crosswalked to a grouped billing and payment code (other than a NOC code) during the full year. In such instances, CMS proposes to calculate the average total allowed charges per individual per year for the drug using allowed charges and the number of individuals who used the drug or biological product based on claims for the previously grouped billing and payment code during the year. Such instances would apply to section 505(b)(2) drug products, drugs that were previously multiple source drugs where all other drugs under the same billing and payment code were discontinued (applicable only if the sole remaining product was not approved under an ANDA), and to any other situations where a drug was previously in a grouped billing and payment code (other than a NOC code).

Finally, there may be instances where a single source drug or biological product was initially billed under a grouped billing and payment code (other than a NOC code) and was later billed under a unique billing and payment code for some of the year. In such instances, CMS proposes to calculate the average total allowed charges per individual for a year by: summing the total allowed charges billed under the unique billing and payment code for the drug with dates of service on or after the Medicare effective date for this unique billing and payment code and identifying the individuals on those claims; summing the total allowed charges on claims billed under the previously grouped billing and payment code and identifying the individuals with claims prior to the unique billing and payment code's effective date; and then summing the total allowed charges under both billing and payment codes across the full year and dividing by the total number of individuals (de-duplicated for those individuals identified under both the previously grouped billing and payment code and the unique billing and payment code). If the average total allowed charges for a year per individual who uses such drug or biological product are less than the applicable threshold, CMS proposes to exclude the billing and payment code for that calendar quarter. CMS welcomes comment on the proposed implementation of the exclusion for drugs and biologicals with average total allowed charges below the applicable threshold.

CMS proposes in § 427.101(c)(2) to calculate the applicable threshold as follows:

• For applicable calendar quarters in 2023, the applicable threshold is equal to $100.
• For applicable calendar quarters in 2024, the applicable threshold is equal to $100 increased by the percentage increase in the CPI-U for the 12-month period ending with June of 2023.
• For applicable calendar quarters in each subsequent calendar year, the applicable threshold is equal to the unrounded applicable threshold calculated for the prior calendar year increased by the percentage increase in the CPI-U for the 12-month period ending with June of the previous year.
• If the resulting amount from these calculations is not a multiple of $10, CMS will round that amount to the nearest multiple of $10.

Accordingly, the formula to determine the applicable threshold for calendar quarters in 2024 is $100 multiplied by (CPI-U for June 2023 divided by CPI-U for June 2022) (apply rounding to the nearest multiple of $10). To illustrate, the 2024 threshold is: 100 × (305.109/296.311) = 102.969178 (which rounds down to $100 after applying CMS rounding) so the threshold for calendar quarters in 2024 = $100.

For the purposes of this calculation, CMS proposes that “a year” means the 4 consecutive calendar quarters beginning 6 calendar quarters before the applicable calendar quarter. CMS also proposes using final action claims from the Medicare fee-for-service claims repository to identify claims where separate payment was allowed for the applicable HCPCS code for dates of service within a year. Drugs and biological products that do not meet the applicable threshold are not considered Part B rebatable drugs. For example, for the calendar quarter beginning July 1, 2025, CMS would use available final action Medicare Part B claims with dates of service beginning January 1, 2024, and ending December 31, 2024, because January 1, 2024, is the beginning of the calendar quarter that is 6 quarters before the applicable calendar quarter beginning on July 1, 2025.

In § 427.101(c)(3), CMS proposes to codify the policies and methodological steps as described in section 30.2 of the revised Medicare Part B Drug Inflation Rebate Guidance for excluding drugs and biological products with average total allowed charges below the applicable threshold at the billing and payment code level. For each applicable calendar quarter, CMS would identify the applicable billing and payment codes for drugs and biological products with average total allowed charges for a year per individual less than the applicable threshold and exclude such drugs and biological products from the definition of Part B rebatable drug in accordance with proposed § 427.101(b)(6). When a single source drug or biological product with average total allowed charges below the applicable threshold is assigned to a unique billing and payment code, CMS would exclude the assigned billing and payment code for the applicable calendar quarter. There also may be instances where a single source drug or biological product is assigned to more than one billing and payment code during a year and the average total allowed charges for a year per individual that uses such drug or biological product are less than the applicable threshold. In such instances, CMS proposes to exclude all assigned billing and payment codes for such single source drug or biological product for that applicable calendar quarter.

c. Inflation-Adjusted Beneficiary Coinsurance Adjustment and Adjusted Medicare Payment for Part B Rebatable Drugs With Price Increases Faster Than Inflation (§§ 427.200 Through 427.201)

Section 1847A(i)(5) of the Act requires that for Part B rebatable drugs, as defined in section 1847A(i)(2)(A) of the Act, furnished on or after April 1, 2023, in quarters in which the payment amount described in section 1847A(i)(3)(A)(ii)(I) of the Act (or, in the case of selected drugs described under section 1192(c) of the Act, the payment amount described in section 1847A(b)(1)(B) of the Act), exceeds the inflation-adjusted payment amount determined in accordance with section 1847A(i)(3)(C) of the Act, the coinsurance will be 20 percent of the inflation-adjusted payment amount for such quarter (hereafter, the inflation-adjusted coinsurance amount). This inflation-adjusted coinsurance amount is applied as a percent, as determined by the Secretary, to the payment amount that would otherwise apply for such calendar quarter in accordance with section 1847A(b)(1)(B) or (C) of the Act, as applicable, including in the case of a selected drug. In the CY 2024 Hospital Outpatient Prospective Payment System (OPPS) final rule and the CY 2024 PFS final rule, CMS codified this inflation-adjusted coinsurance amount at §§ 419.41(e), 410.152(m), and 489.30(b)(6), respectively.

Beginning with the April 2023 quarterly pricing files, the applicable beneficiary coinsurance percentage is shown for each HCPCS code in the pricing files that are posted on the CMS website. For example, the ASP Pricing files are posted at https://www.cms.gov/medicare/payment/part-b-drugs/asp-pricing-files . The applicable beneficiary coinsurance percentage for certain drugs and biologicals used predominantly in the hospital outpatient setting are listed in the Hospital Outpatient Prospective Payment System (OPPS) Addenda A and B, which can be found at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates . The applicable beneficiary coinsurance percentage for certain drugs and biologicals used predominantly in the ambulatory surgical center setting are listed in the ASC Addendum, which can be found at https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-payment-rates-addenda . The percentage is expressed as two digits with three decimal places, for example, 18.760. If an adjusted beneficiary coinsurance does not apply, the percentage would show as 20.000.

Section 11101(b) of the IRA amended section 1833(a)(1) of the Act by adding a new subparagraph (EE), which requires that if the payment amount under section 1847A(i)(3)(A)(ii)(I) of the Act or, in the case of a selected drug, the payment amount described in section 1847A(b)(1)(B) of the Act, for that drug exceeds the inflation-adjusted payment amount for a Part B rebatable drug, the Part B payment amount would, subject to the Part B deductible and sequestration, equal the difference between the payment limit and the inflation-adjusted coinsurance amount. Consistent with the clarification in section 40 of the revised Medicare Part B Drug Inflation Rebate Guidance and with the application of sequestration in the context of Medicare payment and beneficiary coinsurance in general, we note that the calculation to determine the applicable beneficiary coinsurance amount would not be adjusted for sequestration. CMS codified the Medicare payment for Part B rebatable drugs in the CY 2024 PFS final rule by adding new paragraph (m) to § 410.152.

In this proposed rule, CMS proposes to adopt new provisions at §§ 427.200 and 427.201 to codify the policies regarding the computation of the inflation-adjusted beneficiary coinsurance, defined in § 427.200, for Part B rebatable drugs as required by section 1847A(i)(5) of the Act. This proposed new provision includes references to the existing provisions at §§ 410.152(m), 419.41(e), and 489.30(b)(6). CMS further proposes at § 427.201(c) that any category of products that is excluded from the identification of Part B rebatable drugs at § 427.101(b) is not subject to the inflation-adjusted beneficiary coinsurance. Examples of these excluded products include separately payable radiopharmaceuticals, skin substitute products, and qualifying biosimilar biological products.

Additionally, CMS proposes at § 427.201(b) that CMS will use the published payment amount in quarterly pricing files to determine if a Part B rebatable drug should have an adjusted beneficiary coinsurance equal to 20 percent of the inflation-adjusted payment amount as described in section 1847A(i)(3)(C) for a calendar quarter. This proposed approach deviates from the rebate calculation approach proposed in § 427.302, which relies on the specified amount defined at § 427.20 even when the specified amount and the published payment amount in quarterly pricing files differ. The approach proposed at § 427.201(b) would be used only to determine whether there should be a coinsurance adjustment and would not impact the applicability or calculation of inflation rebates. CMS believes this approach is consistent with the statutory language and appropriately reflects the differences in the statutory text of section 1847A(i)(5) of the Act, which sets forth the payment amount that is used to determine whether coinsurance should be adjusted, and section 1847A(i)(3)(A) of the Act, which sets forth the “specified amount” used to determine rebate amounts.

CMS' intent with this proposed policy is to hold beneficiaries harmless in situations where the payment amount is calculated differently from the specified amount. Though the payment amount is generally based on the same provisions as the specified amount, there may be situations where the payment amount is updated or adjusted under other provisions of 1847A of the Act, such as when ASP data are not available under section 1847A(c)(5)(B). For example, if the specified amount is very low due to negative ASP data and the payment amount is updated using other available data resulting in a payment amount that exceeds the inflation-adjusted payment amount, beneficiaries would not receive the benefit of adjusted coinsurance. There may also be situations where the payment amount is lower than the inflation-adjusted payment amount, but the specified amount is higher than the inflation-adjusted payment amount. In such a situation, if the “specified amount” was used as the comparator to determine whether coinsurance should be adjusted, beneficiaries would pay a coinsurance higher than 20 percent, because 20 percent of the inflation-adjusted payment amount would be higher than 20 percent of the payment amount. As such, we propose to codify at § 427.201(b) that we will compare the published payment amount in the quarterly pricing files published by CMS to determine whether a coinsurance adjustment applies. This policy would provide an adjusted beneficiary coinsurance amount only when the payment amount for a Part B rebatable drug exceeds the inflation-adjusted payment amount in a given quarter.

CMS believes this approach is valid and gives effect to the differing statutory language in sections 1847A(i)(3)(A), 1847A(i)(5), and 1833(a)(1)(EE) of the Act, which sets forth the coinsurance adjustment for Part B rebatable drugs. Unlike the “specified amount” in section 1847A(i)(3)(A), sections 1847A(i)(5) and 1833(a)(1)(EE) both refer to a “payment amount.” Fundamentally, a payment amount cannot be a negative number; if the specified amount and payment amount were the same amount, it would result in situations where the payment amount at section 1833(a)(1)(EE) was a negative number. Rather, we believe that the term “payment amount” in both sections 1847A(i)(5) and 1833(a)(1)(EE) is most naturally read to include the amount, as updated and adjusted for the purposes of providing payment to providers, that CMS publishes as the payment amount in quarterly pricing files; and that section 1833(a)(1)(EE) operates to adjust the percentage of such payment amount. Furthermore, section 1847A(i)(5)(B) of the Act provides the Secretary with discretion to apply the adjusted coinsurance percentage to the payment amount that would otherwise apply under section 1847A(b)(1)(B) or (C) of the Act. Lastly, sections 1847A(i)(8)(D) and (E) of the Act preclude administrative and judicial review of the computation of the adjusted coinsurance and amounts paid to the provider under section 1833(a)(1)(EE).

In summary, we are proposing CMS will use the payment amount in quarterly pricing files to determine if a Part B rebatable drug should have an adjusted beneficiary coinsurance, the calculation to determine the adjusted Medicare payment (if applicable) will not be adjusted for sequestration, and drugs excluded from the identification of Part B rebatable drugs will not be subject to the inflation-adjusted beneficiary coinsurance. CMS invites comment on these proposals.

d. Determination of the Rebate Amount for Part B Rebatable Drugs (§§ 427.300 Through 427.304)

i. Definitions

In proposed § 427.300, CMS proposes to define the following terms applicable to subpart D (§§ 427.300 through 427.304):

• “340B Program”.
• “Refundable single-use dose container or single-use package drug”.

ii. Calculation of the Total Part B Rebate Amount To Be Paid by Manufacturers

Section 1847A(i)(3) of the Act specifies the calculation of the rebate amount for a Part B rebatable drug assigned to a billing and payment code for an applicable calendar quarter for which a manufacturer must pay a rebate. CMS proposes to codify the rebate calculation, as established in revised Medicare Part B Drug Inflation Rebate Guidance, as the estimated amount is equal to the product of the total number of billing units determined in accordance with section 1847A(i)(3)(B) of the Act (proposed at § 427.303) and the amount (if any) by which the specified amount (proposed at § 427.302(b)) exceeds the inflation-adjusted payment amount determined in accordance with section 1847A(i)(3)(C) of the Act (proposed at § 427.302(g)) for the drug or biological product for an applicable calendar quarter. The Part B drug inflation rebate amount calculated in accordance with this subpart is subject to adjustment based on any reductions in accordance with subpart E of this part or any reconciliations in accordance with subpart F of the part.

Because Part B rebatable drugs are single source drugs or biologicals, they typically will have one manufacturer. However, a Part B rebatable drug could have more than one manufacturer. For example, a Part B rebatable drug could be produced by one or more manufacturer(s) that is a repackager or relabeler. Multiple manufacturers of a rebatable drug also could occur in the case of one or more authorized generic products that are marketed under the same FDA-approval as the original FDA applicant. In such instances, all the NDCs for the drug typically are assigned to the same billing and payment code(s), and each manufacturer is responsible for reporting ASP data to CMS. When calculating the rebate owed by manufacturers for a rebatable drug that has more than one manufacturer, CMS proposes to codify the policy from section 50.13 of the revised Medicare Part B Drug Inflation Rebate Guidance to multiply the total rebate amount calculated for the billing and payment code by the following quotient:

(Sum of the individual manufacturer's billing units sold during the applicable calendar quarter for all NDCs of the manufacturer assigned to the billing and payment code, as reported in the ASP data submissions) divided by (Sum of all manufacturers' total billing units sold during the applicable calendar quarter for all NDCs of the Part B rebatable drug assigned to the billing and payment code, as reported in the ASP data submissions)

CMS welcomes comment on this calculation approach.

Based on further review, CMS has observed that there are several instances where there are multiple manufacturers in a billing and payment code and the ASP data, including the number of units sold, for all or some manufacturers' NDCs within a billing and payment code may be negative, zero, or missing. To enable CMS to calculate the respective rebate amounts attributable to each manufacturer when the ASP units are negative, zero, or missing, CMS is soliciting comments on the new proposed policies outlined below and any other alternative options.

(1) Scenarios in Which All NDCs Within a Billing and Payment Code Have Negative, Zero, or Missing ASP Units

If there are NDCs of multiple manufacturers in a billing and payment code, to determine the respective rebate amount when the manufacturer-reported ASP units for all NDCs are either negative, zero, or missing but there is a positive rebate amount calculated for the Part B rebatable drug, CMS proposes to: (1) apportion a $0 rebate amount when the reported units for all NDCs are missing for NDCs not marketed or sold during the applicable calendar quarter, negative, and/or zero; and (2) equally apportion a positive rebate amount to each NDC with missing units when the NDCs were marketed or sold during the applicable calendar quarter. If the NDCs within a billing and payment code have a mix of negative units, zero units, missing units for NDCs marketed or sold during the applicable calendar quarter, or missing units for NDCs not marketed or sold during the applicable calendar quarter, CMS will apportion a $0 rebate amount to the NDCs with missing units that are not marketed or sold during the applicable calendar quarter, NDCs with negative units, and NDCs with zero units, and will equally apportion the positive rebate amount across all NDCs with missing units that are marketed or sold during the applicable quarter. CMS understands that this approach would treat missing units for NDCs not marketed or sold during the applicable calendar quarter, negative units, and zero units as representing zero sales, and we welcome comments on the extent to which this approach could potentially exclude from rebate liability a manufacturer of a drug that did have sales in that quarter (for example, if negative units represent price concessions). In addition, CMS welcomes comments on the extent to which, in a scenario with a billing and payment code with multiple manufacturers, a single manufacturer with missing ASP units could assume full rebate liability for the entire billing and payment code if the manufacturer's NDCs have missing units and are marketed or sold during the applicable calendar quarter.

CMS also considered several alternative policies for attributing rebate amounts to each respective manufacturer in this scenario, including: (1) using the reported ASP units from the calendar quarter prior to the applicable calendar quarter; (2) using an average of units sold based on sales data for several calendar quarters prior to the applicable calendar quarter (for example, an average of the previous four calendar quarters); and (3) validation of ASP data based on review of AMP data in combination with one of the aforementioned alternative proposed policies to determine inflation rebate amounts. However, CMS has observed that ASP units are often negative, zero, or missing for several quarters in a four-quarter lookback, so including additional quarters may not necessarily yield additional data that could be used to apportion inflation rebate amounts (and could complicate the calculation of an average by introducing a mix of zero, negative, missing, and positive units within a single NDC). In addition, the AMP validation of ASP sales could add another layer of complexity and potential bias as AMP data represent only sales to retail community pharmacies, and ASP data represent all sales of a drug. CMS welcomes comments on these alternatives.

(2) Scenarios in Which Some (But Not All) NDCs Have Negative, Zero, or Missing ASP Units

When some manufacturers' NDCs within a billing and payment code report negative, zero, or missing ASP units, CMS proposes to: (1) treat any NDCs with missing units that are not marketed or sold during the applicable calendar quarter, negative units, or zero units as not having any sales for the applicable calendar quarter and apportion a $0 rebate amount to them; (2) treat NDCs with missing units that are marketed or sold during the applicable calendar quarter as though they had the same units as that of the NDC with the lowest positive units; and (3) apportion rebate amounts across NDCs with missing units that are marketed or sold during the applicable calendar quarter and NDCs with positive units based on the share of ASP units sold in accordance with the policy outlined in section 50.13 of the revised Medicare Part B Drug Inflation Rebate Guidance. CMS welcomes comments on the extent to which, in a scenario where NDCs of multiple manufacturers are assigned to the same billing and payment code, a single manufacturer that accounts for all positive ASP units could potentially be responsible for the full rebate amount for the entire billing and payment code.

CMS also considered proposing other alternative policies for attributing rebate amounts to each respective manufacturer in this scenario, including: (1) review of historical ASP data to identify the most recent calendar quarter with positive ASP units for any of the NDCs with negative, zero, or missing units in the applicable calendar quarter and allocation of financial responsibility across NDCs with positive ASP units in that quarter (excluding NDCs without positive units in that quarter); (2) using an average of units sold based on sales data for several calendar quarters prior to the applicable quarter (for example, an average of the previous four calendar quarters); (3) apportionment of rebates based on units at the NDC-9 level rather than the NDC-11 level; and (4) apportionment of rebates to only those manufacturers within a HCPCS code that reported positive ASP units for the applicable calendar quarter.

CMS elected to not propose use of a historical lookback approach (under options 1 and 2) since ASP units are often negative, zero, or missing for the most recent calendar quarter and/or over several quarters in a four-quarter lookback period, and so including additional quarters may not necessarily yield additional data that could be used to apportion inflation rebate amounts (and could complicate the calculation of an average by introducing a mix of zero, negative, missing, and positive units within a single NDC). CMS also understands that a historical lookback approach could create outliers that could affect the resulting allocation. When evaluating option 3, CMS observed that ASP units are often negative, zero, or missing for several calendar quarters when aggregating units sold at the NDC-9 level. Consequently, this approach may not necessarily yield additional data that could be used to apportion inflation rebate amounts and doing so would differ from our general policy on using NDC-11s as set forth in the revised guidance. Finally, CMS decided not to propose apportioning the full rebate amount to only those manufacturers that reported positive ASP units within a billing and payment code under option 4, as we questioned whether that policy could inadvertently disfavor manufacturers that reported units while benefiting manufacturers that did not report ASP data. We continue to evaluate these alternative policy approaches for apportioning rebate liability and may adopt changes to this proposed policy in the final rule.

CMS reminds manufacturers of their reporting obligations under sections 1847A(f)(2) and 1927(b) of the Act and that failure to provide timely information may result in penalties as detailed in sections 1847A(d)(4)(B) and (C) and 1927(b)(3)(C)(i) of the Act.

CMS welcomes comments on these proposed approaches as well as alternative policy options on how CMS could apportion rebate amounts among multiple manufacturers' NDCs that reported negative, zero, and/or missing units for NDCs.

iii. Calculation of the Per Unit Part B Drug Rebate Amount

(1) Identification of the Specified Amount for the Applicable Calendar Quarter

In the calculation of the rebate amount for a Part B rebatable drug, CMS is statutorily required to compare the inflation-adjusted payment amount to the specified amount, which is the amount set forth in section 1847A(i)(3)(A)(ii)(I) of the Act. Statute also requires CMS to impose an inflation rebate if the specified amount exceeds the inflation-adjusted payment amount. CMS proposes to codify at § 427.302(a) the policy established in revised Medicare Part B Drug Inflation Rebate Guidance to calculate the Part B per unit rebate amount for the applicable calendar quarter by determining the amount by which the specified amount exceeds the inflation-adjusted payment amount, after accounting for exclusions under § 427.303(b). CMS proposes to codify the current operational steps for calculating Part B inflation rebates as described in section 50 of the revised Medicare Part B Drug Inflation Rebate Guidance.

In § 427.302(b), CMS proposes to codify the policy established in section 50.2 of the revised Medicare Part B Drug Inflation Rebate Guidance on how to calculate the specified amount for the applicable calendar quarter. The “specified amount” refers to the amount specified in section 1847A(i)(3)(A)(ii)(I)(aa) or (bb) of the Act, as applicable. In general, section 1847A(i)(3)(A)(ii)(I)(aa) and (bb) of the Act cross-reference provisions governing quarterly payment limits for single source drugs and biological products that are typically, but not always, reflected in the quarterly pricing files. Specifically, the specified amount for single source drugs and biological products is 106 percent of the amount determined under section 1847A(b)(4) of the Act—that is, the lesser of ASP or WAC—for the applicable calendar quarter. For biosimilar biological products, the specified amount is the payment amount under section 1847A(b)(1)(C) of the Act, which is based on 100 percent of the ASP for the biosimilar biological product plus 6 percent of the lesser of ASP or WAC for the reference biological product.

In § 427.302(b)(1), CMS proposes that the first applicable calendar quarter for a Part B rebatable drug will be the earliest applicable calendar quarter that follows the payment amount benchmark quarter identified in § 427.302(c)(1) through (6).

Additionally, for the purposes of determining the rebate amount for a Part B rebatable drug, based on further consideration of data availability in specific circumstances, CMS proposes to clarify the policy established in section 50 of the revised Medicare Part B Drug Inflation Rebate Guidance and use the most updated price information reported by manufacturers, determined in accordance with section 1847A(i)(3)(A)(ii)(I)(aa) or (bb) of the Act as applicable, as the specified amount for the applicable calendar quarter for each HCPCS code identified in accordance with § 427.101. That is, CMS would use the most updated price information reported by manufacturers to compare whether 106 percent of WAC or 106 percent of ASP is less, and would use the lower value for the specified amount. In circumstances in which all NDCs in the HCPCS code have neither manufacturer-reported ASP nor WAC price data available for the applicable calendar quarter, CMS proposes to use WAC price data from other public sources, if available, to calculate 106 percent of WAC, which will serve as the specified amount. CMS proposes to adopt this approach regardless of whether there is a price substitution for Medicare's payment during the quarter or whether other policies cause the published payment limit to differ from the specified amount. In circumstances in which negative or zero manufacturer ASP data is reported for all NDCs for a given quarter, that negative or zero ASP amount would be used to compare 106 percent of WAC to 106 percent of ASP to determine the lower value for use as the specified amount. CMS believes these proposals on treatment of missing pricing data and treatment of pricing differences between reported prices and the published payment limit for a billing and payment code will further clarify the application of the specified amount in the calendar quarter are consistent with the requirements set forth in section 1847A(i)(3)(A)(ii)(I) of the Act. CMS solicits comments on this policy.

(2) Identification of the Payment Amount Benchmark Quarter

In § 427.302(c), CMS proposes to codify policies from section 50.3 of the revised Medicare Part B Drug Inflation Rebate Guidance to identify the applicable payment amount benchmark quarter. Specifically, for drugs first approved or licensed by the FDA on or before December 1, 2020, and with a first marketed date on or before December 1, 2020, the payment amount benchmark quarter would be the calendar quarter beginning July 1, 2021. For subsequently approved drugs—that is, drugs approved or licensed by the FDA after December 1, 2020—the payment amount benchmark quarter would be the third full calendar quarter after a drug's first marketed date. Additionally, there may be cases where a drug was first approved or licensed on or before December 1, 2020, but with a first marketed date after December 1, 2020, and the drug lacks ASP or WAC data to calculate the payment amount for the applicable calendar quarter beginning July 1, 2021. Under the policy applicable to drugs approved or licensed and with a first marketed date before December 1, 2020, such drugs would not have data to calculate the payment amount in the payment amount benchmark quarter. In these cases, CMS proposes to treat such drugs in the same manner as it would treat subsequently approved drugs and identify the payment amount benchmark quarter as the third full calendar quarter after a drug's first marketed date. CMS solicits comments on this policy proposal and specifically on our proposal to treat drugs approved or licensed on or before December 1, 2020, but with a first marketed date after December 1, 2020 as subsequently approved drugs.

For Part B rebatable drugs that were billed under a NOC code during the payment amount benchmark quarter, CMS stated in the revised Medicare Part B Drug Inflation Rebate Guidance that it would use the third full quarter after a drug was assigned a unique HCPCS code as the payment amount benchmark quarter. In this rulemaking, CMS proposes to determine the payment amount benchmark quarter as follows: For a Part B rebatable drug that was billed under a NOC code during the calendar quarter beginning July 1, 2021, or the third full calendar quarter after such drug's first marketed date, whichever is later, CMS proposes that the payment amount benchmark quarter be the third full calendar quarter after the Part B rebatable drug is assigned a billing and payment code other than a NOC code. CMS solicits comments on these proposals.

CMS continues to consider whether there is a need to identify additional or modified methodologies to appropriately determine the payment amount benchmark quarter for products with insufficient pricing data in the payment amount benchmark quarter or that otherwise do not fall squarely into the categories otherwise described in § 427.302(c) and in a manner that enables the calculation of rebate amounts consistent with section 1847A(i)(3) of the Act.

CMS has determined that ASP data are the most appropriate for identifying (1) the day on which the drug was first marketed and (2) which calendar quarter is the third full calendar quarter thereafter as the payment amount benchmark quarter for drugs first approved or licensed by the FDA after December 1, 2020, or licensed on or before December 1, 2020, but with a first marketed date after December 1, 2020. CMS also has determined that it is most appropriate and administratively feasible to identify the first marketed date as the date of first sale of any NDC-11 within a billing and payment code among all products and package sizes under the same FDA application.

Additionally, CMS believes ASP data are accurate and reliable because manufacturers attest to the accuracy of their submitted data and have the ability to update these data quarterly. Therefore, in § 427.302(c), CMS proposes to codify existing policy from the revised Medicare Part B Drug Inflation Rebate Guidance on the identification of the payment amount benchmark quarter for each Part B rebatable drug. CMS would use the earliest first marketed date of any NDC ever marketed under any FDA application under which any NDCs that have ever been assigned to the billing and payment code for that Part B rebatable drug as of the applicable calendar quarter have ever been marketed. The earliest first marketed date would apply to all NDCs within a billing and payment code and to all products and package sizes marketed under the same FDA approved application. If the original NDC on which the first marketed date is based is terminated, the first marketed date for the associated billing and payment code would remain the same. By defining the first marketed date for the Part B rebatable drug at the level of the product's FDA approval, CMS would retain the same first marketed date for the billing and payment code even if the NDCs and/or billing and payment codes used to bill for the Part B rebatable drug change over time. In addition, when the date of first sale is missing from ASP data, CMS proposes to identify the first marketed date from alternative public sources, such as the National Institutes of Health's DailyMed.

Table 48 in this section provides an example, for illustration purposes only, of the application of first marketed date based on the earliest date of first sale of any NDC ever marketed under any NDA or BLA under which any NDCs that have ever been assigned to the billing and payment code as of the applicable calendar quarter have ever been marketed. In the example, NDC1 (marketed under NDA 000000) is first sold on January 15, 2022, and NDC2 (also marketed under NDA 000000) is first sold on October 15, 2023. Both NDCs are marketed under an NDA associated with HCPCS code X0000. The first marketed date for HCPCS code X0000 would be January 15, 2022, because that date is the earliest date of first sale for any NDC that has ever been associated with an NDA or BLA within that HCPCS code as of the calendar quarter. If NDC2 were subsequently assigned to a new HCPCS code Y0000, the first marketed date for HCPCS Y0000 would similarly be January 15, 2022. In cases when NDCs that are marketed under different NDA/BLAs are assigned to the same HCPCS code, using the example in the table in this section, NDC3 (marketed under NDA 111111) was first sold on November 1, 2024, and first billed under HCPCS Y0000, and the first marketed date for HCPCS Y0000 would remain January 15, 2022, as noted, given that HCPCS Y0000 includes NDC2, associated with NDA 000000. NDC3 was later assigned to a new HCPCS code Z0000. Following CMS' approach, the first marketed date for HCPCS code Z0000 is November 1, 2024, because that is the earliest date of first sale for any NDC ever marketed under NDA 111111, which is the only NDA ever associated with Z0000 as of the calendar quarter.

(3) Identification of Payment Amount in the Payment Amount Benchmark Quarter

Section 1847A(i)(3)(C) of the Act specifies use of the “payment amount for the billing and payment code for such drug in the payment amount benchmark quarter” (“payment amount in the payment amount benchmark quarter”) in the determination of the inflation-adjusted payment amount. While the specified amount and the payment amount in the payment amount benchmark quarter are similar, the statutory requirements for determining these two amounts differ. The specified amount for a Part B rebatable drug, as set forth in section 1847A(i)(3)(A)(ii)(I) of the Act, is based on item (aa) (for example, lesser of ASP+6 percent or WAC+6 percent) or (bb) (that is, 100 percent of the ASP for the biosimilar biological product plus 6 percent of the lesser of ASP or WAC for the reference biological product). The payment amount in the payment amount benchmark quarter under section 1847A(i)(3)(C)(i) is based on various provisions within section 1847A of the Act (for example, the lesser of 106 percent ASP or WAC, WAC+3 percent, and price substitutions). To identify the payment amount in the payment amount benchmark quarter for the Part B rebatable drug by billing and payment code, in § 427.302(d), CMS proposes to codify the policies established in section 50.4 of the revised Medicare Part B Drug Inflation Rebate Guidance. CMS would use the published payment limit (as available) for the billing and payment code for the applicable payment amount benchmark quarter determined in accordance with section 1847A of the Act. If a published payment limit is not available for the applicable payment amount benchmark quarters, CMS would use the lower of 106 percent of manufacturer-reported ASP or 106 percent of manufacturer-reported WAC. If neither a published payment limit nor manufacturer-reported ASP or WAC data are available, CMS would use WAC data from other public sources to calculate 106 percent of WAC, which, solely for the purposes of identifying the payment amount in the payment amount benchmark quarter, CMS would consider to be the payment amount for the payment amount benchmark quarter. Table 49 and Figure 3 illustrate the specified amount and payment amount in the payment amount benchmark quarter.

CMS notes that there may be situations when a Part B rebatable drug was previously billed under a grouped billing and payment code during the benchmark quarter and later billed under a unique billing and payment code, such as certain section 505(b)(2) drug products and single source drugs that were previously multiple source drugs. For example, a multiple source drug approved under an NDA may become a single source drug if all other therapeutically equivalent drugs are no longer marketed and the now-single source NDA is later shifted into a separately payable code. To identify the payment amount in the payment amount benchmark quarter for such drugs, CMS proposes to codify policy established in section 50.4 of the Medicare Part B Drug Inflation Rebate Guidance and identify the grouped billing and payment code payment limit used by CMS for the payment amount in the payment amount benchmark quarter and use that payment limit for the benchmark quarter.

Finally, consistent with the policy established in section 50.4 of the revised Medicare Part B Drug Inflation Rebate Guidance, CMS would not apply a sequestration reduction to the payment amount in the payment amount benchmark quarter as part of the methodology to calculate a Part B inflation rebate amount.

(4) Identification of the Benchmark Period CPI-U

For each Part B rebatable drug by HCPCS code, the statute requires CMS to identify the applicable benchmark period CPI-U. In accordance with section 1847A(i)(3)(E) of the Act, the benchmark period CPI-U for drugs first approved or licensed by the FDA on or before December 1, 2020, and with a first marketed date on or before December 1, 2020, is the CPI-U for January 2021, which is 261.582. CMS proposes to codify in § 427.302(e) policies established in section 50.5 of the revised Medicare Part B Drug Inflation Rebate Guidance. Specifically, the benchmark period CPI-U for drugs first approved or licensed on or before December 1, 2020, with a first marketed date after December 1, 2020, would be the CPI-U for the first month of the third full calendar quarter after a drug's first marketed date. Additionally, CMS proposes to codify policies in revised guidance that the benchmark period CPI-U for subsequently approved drugs would be the first month of the first full calendar quarter after a drug's first marketed date in accordance with section 1847A(i)(4)(A) of the Act. Furthermore, CMS proposes to determine the benchmark period CPI-U for certain drugs previously billed under NOC codes as follows: For a Part B rebatable drug that was billed under a NOC code during the calendar quarter beginning July 1, 2021, or the third full calendar quarter after such drug's first marketed date, whichever is later, CMS proposes that the benchmark period CPI-U would be first month of the third full calendar quarter after the drug is assigned a billing and payment code other than a NOC code. CMS solicits comments on these proposals.

(5) Identification of the Rebate Period CPI-U

As specified in section 1847A(i)(3)(F) of the Act, in § 427.302(f), CMS proposes to codify the policy described in section 50.6 of the revised Medicare Part B Drug Inflation Rebate Guidance, that the rebate period CPI-U means the greater of the benchmark period CPI-U index level and the CPI-U index level for the first month of the calendar quarter that is 2 calendar quarters prior to the applicable calendar quarter in which the Part B rebatable drug is furnished. CMS will retrieve the CPI-U index level information from bls.gov.

(6) Determination of the Inflation-Adjusted Payment Amount

Section 1847A(i)(3)(C) of the Act specifies the determination of the inflation-adjusted payment amount. In § 427.302(g), CMS proposes to codify the policy established in section 50.7 of revised Medicare Part B Drug Inflation Rebate Guidance for determining the inflation-adjusted payment amount in accordance with this section of the Act. For each applicable calendar quarter and for each Part B rebatable drug by billing and payment code, CMS proposes to use the payment amount in the payment amount benchmark quarter (per § 427.302(d)), benchmark period CPI-U (per § 427.302(e)), and rebate period CPI-U (per § 427.302(f)) to identify the inflation-adjusted payment amount. Specifically, CMS would calculate the inflation-adjusted payment amount by dividing the rebate period CPI-U by the benchmark period CPI-U and then multiplying the quotient by the payment amount in the payment amount benchmark quarter.

iv. Determination of Total Number of Billing Units

For calendar quarters starting on or after January 1, 2023, CMS proposes in § 427.303 to codify policies established in section 50.8 of the revised Medicare Part B Drug Inflation Rebate Guidance to determine the number of billing units for each Part B rebatable drug by HCPCS code. Section 1847A(i)(3)(B) describes the total number of billing units of Part B rebatable drugs that should be included in the rebate calculation. These billing units include the number of billing units for the HCPCS code of the Part B rebatable drug furnished during the relevant calendar quarter minus billing units of drugs with respect to which the manufacturer provides a discount under the 340B Program, billing units with respect to which the manufacturer could have paid a Medicaid rebate, and billing units that are packaged into the payment amount for an item or service and are not separately payable. CMS further proposes codifying policy set forth in revised Medicare Part B Drug Inflation Rebate Guidance in § 427.303 to exclude billing units when a drug is no longer a Part B rebatable drug.

After identifying Part B rebatable drugs by HCPCS code (in accordance with policy proposed in §§ 427.10, 427.20, and 427.100 through 427.101) using final action claims in the CMS Medicare fee-for-service claims repository, CMS proposes to codify existing policy in the revised Medicare Part B Drug Inflation Rebate Guidance in § 427.303 to determine the total number of billing units for each HCPCS code as follows. CMS identifies claim lines for such HCPCS code for dates of service in the calendar quarter, excludes billing units in claim specified in section 1847A(i)(3)(B)(ii) of the Act, as applicable, and sums the number of billing units in the remaining claim lines for which Medicare payment was allowed and greater than zero. Including billing units where Medicare payment was allowed would ensure that billing units for which Medicare and some beneficiaries have financial liability would be counted in the total number of billing units.

CMS proposes to codify the policy in the revised Medicare Part B Drug Inflation Rebate Guidance in § 427.303 and will perform this process at least 3 months after the end of a calendar quarter to allow time for claims to be submitted, processed, and finalized. Subpart F of this proposed rule describes the proposed rebate process, including reports of rebate amounts, suggestion of error, and restatements. CMS welcomes comment on the following policies and comments on any additional units that should be excluded from the rebate amount calculation.

(1) Units of Drugs Acquired Through the 340B Program

Section 1847A(i)(3)(B)(ii)(I) of the Act specifically excludes billing units of drugs for which the manufacturer provides a discount under the 340B Program from the billing units of drugs for which a manufacturer may otherwise have a Part B inflation rebate liability. CMS proposes codifying the policy described in section 50.8.1 of the revised Medicare Part B Drug Inflation Rebate Guidance in § 427.303 to remove separately payable billing units in claim lines that are billed with the “JG” or “TB” modifiers from identified final action claim lines.

On December 20, 2022, CMS issued program guidance that requires all 340B covered entities to include the “JG” or “TB” modifier, as applicable, on separately payable claim lines for drugs acquired through the 340B Program with dates of service beginning no later than January 1, 2024. CMS proposes to codify this requirement in § 427.303(b)(1)(ii). Furthermore, on November 22, 2023, in the CY 2024 OPPS final rule (88 FR 81791 through 81792), CMS finalized a policy to utilize a single 340B modifier (“TB”), requiring hospitals that currently report the “JG” modifier to use the “TB” modifier beginning January 1, 2025. As described in the final rule, in CY 2024, these hospitals can choose to continue to use the “JG” modifier or choose to transition to the use of “TB” modifier during that year. On December 14, 2023, CMS updated the December 20, 2022 guidance titled “Part B Inflation Rebate Guidance: Use of the 340B Modifiers” to align with the updated single modifier requirement.

CMS proposes in § 427.303(b)(1)(i) to exclude separately payable billing units in claim lines for professional claims with dates of service during 2023 from suppliers that are covered entities listed by the HRSA 340B Office of Pharmacy Affairs Information System as participating in the 340B Program. CMS will use National Provider Identifier numbers and/or Medicare Provider Numbers to identify these suppliers and the claims submitted with such identifiers. CMS proposes to continue this approach for professional claims with dates of service during 2024. Consistent with the CMS updated 340B modifier guidance, CMS proposes in § 427.303(b)(1)(ii) excluding separately payable billing units in claim lines for institutional providers with the “JG” and “TB” modifiers from identified final action claims with dates of service through December 31, 2024. CMS proposes to codify policies established in section 50.8.1 of the revised Medicare Part B Drug Inflation Rebate Guidance in § 427.303(b)(1)(iii) by excluding separately payable billing units in claim lines with the “TB” modifier from identified final action claims with dates of service on or after January 1, 2025. CMS is proposing to use these modifiers to identify and exclude billing units for which a discount was acquired under the 340B Program because the “TB” modifier is an existing mechanism used to identify drugs acquired through the 340B Program and familiar to most 340B covered entities paid under the OPPS.

(2) Units With a Rebate Under Section 1927 of the Social Security Act

To receive payment under Medicaid for covered outpatient drugs, manufacturers must participate in the Medicaid Drug Rebate Program (that is, have a drug rebate agreement in effect with the Secretary of HHS) and are required to report certain pricing and drug product information and pay Medicaid drug rebates for covered outpatient drugs furnished and paid for under the Medicaid State plan. States invoice manufacturers no later than 60 days after the end of each calendar quarter on the number of units of each dosage form and strength of each covered outpatient drug furnished and paid for under the State plan. This invoice includes units of covered outpatient drugs that are furnished to dually eligible beneficiaries when the claim for the drug is paid for by Medicare Part B and the beneficiary's cost sharing is covered by Medicaid. To determine unit counts for rebate calculations, at this time, in § 427.303(b)(2), CMS proposes codifying our policy described in revised Medicare Part B Drug Inflation Rebate Guidance in section 50.8.2 to exclude billing units from claims with dates of service during a month within a calendar quarter when the Medicare beneficiary has Medicaid coverage that may provide cost-sharing assistance. These are Qualified Medicare Beneficiary (QMB) Plus, Specified Low-Income Medicare Beneficiary (SLMB) Plus, QMB-only beneficiaries, and other full dually eligible beneficiaries. CMS further proposes codifying the policy in revised guidance that billing units for Part B rebatable drugs furnished to Medicare beneficiaries with Medicaid coverage that does not include cost-sharing assistance (that is, SLMB Only, Qualified Disabled and Working Individuals (QDWI), and Qualifying Individuals (QI) beneficiaries) be included in rebate calculations. CMS would identify the months for which a beneficiary has Medicaid coverage with cost-sharing assistance using available information (for example the State MMA File of dually eligible beneficiaries) at the time the rebate amount is being calculated for a calendar quarter. CMS proposes codifying this policy as manufacturers pay rebates through the Medicaid Drug Rebate Program on units of covered outpatient drugs that are furnished to dually eligible beneficiaries when the claim for the drug is paid for by Medicare Part B and the beneficiary's cost sharing is covered by Medicaid.

CMS also considered excluding all units furnished to dually eligible individuals but is not proposing this alternative as it would result in the over exclusion of units.

(3) Units That Are Packaged Into the Payment Amount for an Item or Service and Are Not Separately Payable

As described earlier in this section, CMS proposes codifying our policy in section 50.8.3 of revised Medicare Part B Drug Inflation Rebate Guidance and only include claim lines with a Medicare allowed amount greater than zero. Because CMS proposes in § 427.303(b)(3) identifying billing units for separately payable claim lines for Part B rebatable drugs only, no further action would be necessary to exclude billing units that are packaged into the payment amount for an item or service and are not separately payable, such as drugs for which payment is packaged under the OPPS, or the Ambulatory Surgical Center (ASC) payment system, or those furnished in the Federally qualified health centers (FQHC) or rural health clinics (RHC) setting. CMS notes that claim lines for drugs for which payment is bundled under the End-Stage Renal Disease (ESRD) prospective payment system would not have a Medicare allowed amount that is greater than zero and such units would therefore be excluded.

In accordance with policies established in the CY 2024 OPPS/ASC final rule and codified in regulatory text at 88 FR 81540, CMS would except biosimilar biological products from the OPPS threshold packaging policy when their reference biological products are separately paid. This means that CMS would pay separately for these biosimilar biological products even if their per-day cost is below the threshold packaging policy. Because units of these biosimilar biological products are not packaged into the payment amount for an item or service and are separately payable, they would be included in the Part B inflation rebate calculation if they are not qualifying biosimilar biological products.

(4) Units When a Drug Is No Longer a Part B Rebatable Drug

As described in section 1847A(i)(2) of the Act, multiple source drugs are not Part B rebatable drugs. A single source drug that is a Part B rebatable drug could become a multiple source drug at the start of or during a calendar quarter. In such cases, in § 427.303(b)(4), CMS proposes codifying policy in section 50.8.4 of the revised Medicare Part B Drug Inflation Rebate Guidance to identify the first marketed date, as described in § 427.20, of a drug product that is rated as therapeutically equivalent to such a drug under FDA's most recent publication of Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the FDA Orange Book ) and determine whether the drug is no longer a Part B rebatable drug. In § 427.303(b)(4), CMS proposes to exclude billing units of such drug furnished on and after the first day of the calendar month in which the therapeutically equivalent drug was first sold or marketed during the applicable calendar quarter. CMS further proposes codifying policy that it may consult with the FDA for technical assistance in instances where there is ambiguity as to whether a new product is therapeutically equivalent. Units furnished on or after the calendar month of the first marketed date would be excluded from the units identified in accordance with § 427.303(b)(4)(iii).

(5) Operational Considerations Related to the Inclusion of Units Furnished to Beneficiaries Who Are Enrolled in Medicare Advantage (MA) Plans

Section 1847A(i) of the Act requires the manufacturer of a Part B rebatable drug to pay a rebate that, generally, is calculated based on the total number of billing units of that drug that were furnished in a calendar quarter, multiplied by the excess specified amount for the drug over a statutorily defined inflation-adjusted payment amount. The inclusion in this calculation of billing units of drugs that are furnished to Medicare beneficiaries who are enrolled in MA plans poses significant operational complexities. At this time, CMS is not proposing to establish a policy on treatment of MA units in the calculation of Part B inflation rebates due to operational considerations, but may establish policy on this issue in future rulemaking. CMS solicits comments on this approach.

(6) Units Subject to Discarded Drug Refunds

In § 427.303(b)(5), CMS proposes a policy addressing the interaction between Part B inflation rebates and billing units of discarded drugs. Under the Infrastructure Investment and Jobs Act of 2021, section 90004, manufacturers are required to provide a refund to CMS for certain discarded amounts from separately payable single-dose container or single-use package drugs beginning January 1, 2023. To implement the discarded drugs refund provision of the Infrastructure Investment and Jobs Act of 2021, in the CY 2023 PFS final rule (87 FR 69711 through 69719), CMS finalized the requirement that providers and suppliers use the “JW” claim modifier for all separately payable drugs with discarded amounts of drugs from a single-dose container or from a single-use package Part B claims that bill for drugs and biological products to report discarded amounts. CMS also finalized a requirement for providers and suppliers to use the “JZ” modifier on claims that bill for drugs from single-dose containers that are separately payable under Medicare Part B when there are no discarded amounts to attest that no amount of drug was discarded and eligible for payment. As of October 1, 2023, claims for drugs from single-dose containers that do not use the modifiers as appropriate may be returned until claims are properly resubmitted.

Although section 1847A(i)(3)(B)(ii) of the Act does not require that billing units of discarded drugs be excluded from Part B inflation rebates, CMS is proposing to exclude billing units of discarded drugs that are subject to discarded drug refunds from Part B inflation rebates. CMS believes not applying Part B inflation rebates to billing units of discarded drugs for which a refund is owed would balance fairness for manufacturers that owe refunds for billing units of discarded drugs with the need to fulfill the requirements of section 11101 of the IRA.

As new policy not established in section 50.8.6 of the revised Medicare Part B Drug Inflation Rebate Guidance, CMS proposes to exclude billing units of a refundable single-dose container or single-use package drug as defined in § 414.902 (hereinafter referred to as “refundable drug”) subject to discarded drug refunds, from the calculation of rebate amounts during the reconciliation process except for calendar quarters in calendar year 2023. In the CY 2024 PFS final rule (codified in § 414.940), CMS finalized policy to send annual refund reports for discarded drug refunds for the 4 quarters of a calendar year at or around the time it sends Part B Inflation Rebate Reports for the first quarter of the following calendar year. Therefore, CMS invoices manufacturers for discarded drug refunds on an annual basis but CMS is required to invoice manufacturers for Part B inflation rebates on a quarterly basis.

Under the timeline for processing discarded drug refunds, data to determine which billing units of discarded drugs are subject to discarded drug refunds will generally not be available until after CMS issues the Rebate Report to the manufacturer. Due to these data limitations, CMS proposes to include all discarded billing units, including units of a refundable drug subject to the discarded drug refund (as defined in § 414.940), in the calculation of billing units for the Preliminary Rebate Report and the Rebate Report. CMS proposes to use data available during the reconciliation process to exclude billing units of discarded drugs that are subject to discarded drug refunds from the calculation of the rebate amount.

For calendar quarters in calendar year 2023, CMS proposes to exclude billing units of a refundable drug subject to discarded drug refunds from the calculation of the rebate amount before CMS issues the Rebate Report to the manufacturer. As permitted by section 1847A(i)(1)(C) of the Act, CMS is delaying reporting of rebate information required by section 1847A(i)(1)(A) for calendar quarters in calendar years 2023 and 2024 until no later than September 30, 2025. Under this timeline for calendar quarters in calendar year 2023, CMS will have data available regarding which billing units are subject to discarded drug refunds when CMS sends the Preliminary Rebate Report and Rebate Report in 2025 for calendar quarters in calendar year 2023 and can exclude these billing units from the calculation of the rebate amount in these reports.

CMS solicits comments on the proposed approach to excluding billing units of a refundable drug subject to discarded drug refunds, from the calculation of Part B inflation rebate amounts during the reconciliation process, except for calendar quarters in calendar year 2023.

v. Adjustments for Changes to Billing and Payment Codes

Changes to billing and payment codes, including new code assignments and dose description changes, may occur.

When a new billing and payment code is assigned for a Part B rebatable drug and the code dose description, which determines that amount of drug in each billing unit, remains the same, CMS proposes to codify in § 427.304(b) the existing policy set forth in revised Medicare Part B Drug Inflation Rebate Guidance to use the benchmark quarter's payment amount, the payment amount benchmark quarter, and the benchmark quarter CPI-U of the prior billing and payment code to calculate the per unit Part B rebate amount. For example, a single source drug or biological product may be assigned a new billing and payment code if it was initially assigned to a billing and payment code with other products and then later assigned a unique billing and payment code. In this situation, a multiple source drug in an NDA may become a single source drug if all its other therapeutically equivalent drugs are discontinued and the now-single source NDA is later shifted into a separately payable code.

When a Part B rebatable drug's code dose description changes, CMS proposes to codify in § 427.304(a) policies established in section 50.9 of the revised Medicare Part B Drug Inflation Rebate Guidance and apply a conversion factor within the rebate calculation, when applicable. For example, a billing and payment code dose description that determines the amount of drug in each billing unit could be changed from 10mg to 5mg. If a billing and payment code dose description changes from 10mg to 5mg, the payment amount in the payment amount benchmark quarter for such drug was $200 based on 10mg, and the rebate period payment amount is based on 5mg, then CMS would apply a conversion factor of 0.5 to the payment amount in the payment amount benchmark quarter (yielding $100). In this example, the conversion factor would be based on the ratio of the current billing unit description to the prior billing unit description (5mg/10mg = 0.5). In addition, to ensure consistency in how CMS is calculating a rebate when a billing and payment code's dose description changes, CMS proposes to apply a conversion factor before applying the percentage by which the rebate period CPI-U for the calendar quarter exceeds the benchmark period CPI-U to determine the inflation-adjusted payment amount.

In situations where a new billing and payment code is assigned for a Part B rebatable drug and the code dose description changes, CMS would apply a conversion factor, as appropriate, and use the benchmark quarter's payment amount, the payment amount benchmark quarter, and the benchmark quarter CPI-U of the prior billing and payment code to calculate the per unit Part B rebate amount—consistent with the policy in revised guidance that CMS is proposing to codify in § 427.304(a) and (b).

To apply the provisions in section 1847A(i) of the Act appropriately, CMS also proposes in § 427.304(c) to codify existing policy to maintain a crosswalk between such changes or codes.

CMS solicits comment on these proposals.

e. Reducing the Rebate Amount for Part B Rebatable Drugs in Shortage and When There Is a Severe Supply Chain Disruption (§§ 427.400 Through 427.402)

Section 1847A(i)(3)(G) of the Act requires the Secretary to reduce or waive the rebate amount owed by a manufacturer for a Part B rebatable drug with respect to a calendar quarter in two cases: (1) when a Part B rebatable drug is described as currently in shortage on a shortage list in effect under section 506E of the FD&C Act at any point during the applicable period; and (2) when CMS determines there is a severe supply chain disruption during the applicable quarter for a Part B rebatable biosimilar biological product, such as a disruption caused by a natural disaster or other unique or unexpected event. The statute does not describe how CMS should reduce or waive inflation rebates in each of these cases.

To implement the statutory requirement under section 1847A(i)(3)(G), CMS proposes to codify in subpart E of part 427 existing policies described in sections 50.10, 50.11, and 50.12 of the revised Medicare Part B Drug Inflation Rebate Guidance to reduce the total rebate amount owed by a manufacturer in each of these cases, as summarized in Table 50 and discussed later in this section.

As proposed, the rebate amount owed would not be fully waived in either of the cases previously described. CMS believes the proposed rebate reduction policies balance providing appropriate financial relief for manufacturers in certain circumstances, including when there is a severe supply disruption resulting from exogenous circumstances outside of a manufacturer's control, while not incentivizing manufacturers to delay taking appropriate steps to resolve a drug shortage or severe supply chain disruption to avoid an obligation to pay rebates. CMS will continue to evaluate these policies and may update them in future years. CMS underscores that most shortages involve multiple source generic drugs, which are not Part B rebatable drugs and thus are not subject to Part B drug inflation rebates. CMS solicits comments on the proposed approach.

i. Definitions

CMS proposes in § 427.400 to define the following terms applicable to proposed subpart E (§§ 427.400 through 427.402)—

• “Drug shortage” or “shortage”.
• “Plasma-derived product”.

Proposed § 427.400 also would codify definitions established in the revised Medicare Part B Drug Inflation Rebate Guidance for the following terms:

• “Currently in shortage”.
• “Natural disaster”.
• “Other unique or unexpected event”.
• “Severe supply chain disruption”.

ii. Reducing the Rebate Amount for Part B Rebatable Drugs Currently in Shortage

In proposed § 427.401, CMS proposes to codify the policy established in section 50.11 of the revised Medicare Part B Drug Inflation Rebate Guidance whereby CMS would reduce the total rebate amount for a Part B rebatable drug that is currently in shortage based on the length of time the drug is in shortage during a calendar quarter and decrease the amount of the reduction over time. CMS intends to use the shortage lists maintained by the FDA Center for Biologics Evaluation and Research (CBER) and Center for Drug Evaluation and Research (CDER) to determine whether a Part B rebatable drug is currently in shortage during a calendar quarter. CMS will not consider an NDC-10 in the status of “to be discontinued,” “discontinued,” or “resolved” to be “currently in shortage.” At this time, CMS intends to provide the same reduction in the rebate amount for Part B rebatable drugs currently in shortage regardless of the cause of the shortage.

CMS will not provide a full waiver of the rebate amount for drugs currently in shortage on an FDA shortage list, as providing a full waiver of the rebate amount could further incentivize manufacturers to delay taking appropriate steps that may resolve a shortage more expeditiously simply to maintain having the drug listed on FDA's drug shortage list to avoid an obligation to pay rebates for an extended period. Further, in a report analyzing the root causes of drug shortages between 2013 and 2017, FDA found that more than 60 percent of drug shortages were the result of manufacturing or product quality issues, and providing a full waiver of the rebate amount in situations that may be within a manufacturer's control could be perceived as rewarding manufacturers for poor quality management.

CMS would be responsible for monitoring the status of a Part B rebatable drug on an FDA shortage list, and manufacturers would not need to submit any information to CMS to be eligible for a reduction of the rebate amount for a Part B rebatable drug that is currently in shortage.

To calculate the reduced total rebate amount for a Part B rebatable drug, in § 427.401(b), CMS proposes the following formula:

Reduced Total Rebate Amount = total rebate amount multiplied by (1 minus applicable percent reduction) multiplied by (percentage of time drug was currently in shortage during the calendar quarter) added to the total rebate amount multiplied by (1 minus percentage of time drug was currently in shortage during the calendar quarter)

For the purpose of this formula, for a Part B rebatable drug that is a plasma-derived product, in § 427.401(b)(2)(i), CMS proposes an applicable percent reduction of 75 percent for the first 4 consecutive calendar quarters such Part B rebatable drug is currently in shortage, 50 percent for the second 4 consecutive calendar quarters, and 25 percent for each subsequent calendar quarter. For a Part B rebatable drug (including a biosimilar biological product) that is not a plasma-derived product, in § 427.401(b)(2)(ii), CMS proposes an applicable percent reduction of 25 percent for the first 4 consecutive calendar quarters such Part B rebatable drug is currently in shortage, 10 percent for the second 4 consecutive calendar quarters, and 2 percent for each subsequent calendar quarter.

Because drugs and biologicals on the FDA shortage lists are maintained at the NDC-10 level, and Part B drug inflation rebates are calculated at the HCPCS level, CMS proposes in § 427.401(c) that if any NDC-10 assigned to the HCPCS code(s) is currently in shortage, CMS would apply the rebate reduction to all of the NDCs under the relevant HCPCS code(s). CMS will closely monitor market data for the Part B rebatable drugs for which the rebate is reduced to ensure the integrity of the application of the rebate reduction policy.

CMS intends to provide a reduction in the rebate amount for as long as a Part B rebatable drug is currently in shortage. CMS believes the rebate reduction should be proportional to the time the drug is currently in shortage and decrease over time to balance providing financial relief to manufacturers experiencing a drug shortage while not incentivizing manufacturers to delay taking appropriate steps to resolve a shortage simply to maintain having the drug listed on an FDA shortage list to avoid an obligation to pay rebates for an extended period.

To determine the percentage of time a Part B rebatable drug was currently in shortage during the calendar quarter, as proposed in § 427.401(b)(3), CMS would count the number of days such drug is currently in shortage in a calendar quarter and divide by the total number of days in that calendar quarter.

In § 427.401(b)(2), CMS proposes codifying the policy set forth in section 50.11 of the revised Medicare Part B Drug Inflation Rebate Guidance to apply a greater applicable percent reduction for plasma-derived products than non-plasma derived products because the former rely on a variable supply of donated blood plasma that can impact downstream production and therefore hamper the ability to promptly resolve a shortage.

When the status of a Part B rebatable drug changes from currently in shortage to resolved during a calendar quarter and then changes to currently in shortage during one or more of the subsequent three calendar quarters, CMS would apply the shortage reduction as if there was a continuous shortage beginning with the quarter in which the drug has re-entered a shortage and move to the percent reduction applicable for the second four consecutive quarters. (In this scenario, once this drug enters its fifth quarter of shortage from the first quarter in which it was listed as currently in shortage, the applicable percent reduction would be 50 percent for the fifth through eighth calendar quarters for a Part B rebatable drug that is a plasma-derived product and 10 percent for a Part B rebatable drug that is not a plasma-derived product.) When the status of a Part B rebatable drug changes from currently in shortage to resolved and either remains in the status of resolved or is removed from the list for at least 4 full consecutive calendar quarters and then subsequently reemerges on a shortage list, CMS would treat the subsequent shortage as a new shortage and would apply the applicable percent reduction for the first 4 consecutive calendar quarters.

iii. Reducing the Rebate Amount for Part B Rebatable Biosimilar Biological Products When There Is a Severe Supply Chain Disruption

In § 427.402 of this proposed rule, CMS proposes to codify the policy established in section 50.12 of the revised Medicare Part B Drug Inflation Rebate Guidance for rebate reductions when CMS determines there is a severe supply chain disruption during a calendar quarter. As proposed in § 427.402(b)(1), CMS would provide a time-limited standard reduction of 75 percent in the total rebate amount for a Part B rebatable biosimilar biological product when CMS determines there is a severe supply chain disruption during the calendar quarter, such as that caused by a natural disaster or other unique or unexpected event. To receive a rebate reduction in accordance with proposed § 427.402(b)(1), the manufacturer would have to submit to CMS a rebate reduction request that meets the eligibility requirements in proposed § 427.402(c). A rebate reduction request should specify each NDC-11 and HCPCS code to which the request applies and if CMS grants a manufacturer's request for an NDC-11, CMS proposes in § 427.402(b)(3) that the rebate reduction would apply to all the NDC-11s under the relevant HCPCS code. CMS has proposed additional submission requirements for rebate reduction requests in the information collection request under OMB control number: 0938-NEW (CMS-10858).

As proposed in § 427.402(c)(4), CMS would grant a reduction in the rebate amount owed if a manufacturer of an eligible drug submits to CMS a request in writing demonstrating supply chain disruption has occurred during the calendar quarter, (2) the severe supply chain disruption directly affects the manufacturer itself, a supplier of an ingredient or packaging, a contract manufacturer, or a method of shipping or distribution that the manufacturer uses in a significant capacity to make or distribute the Part B rebatable biosimilar biological product, and (3) the severe supply chain disruption was caused by a natural disaster or other unique or unexpected event. As proposed in § 427.402(c)(2), for a natural disaster or other unique or unexpected event occurring on or after August 2, 2024, that the manufacturer believes caused a severe supply chain disruption, the manufacturer must submit the rebate reduction request within 60 calendar days from the first day that the natural disaster or other unique or unexpected event occurred or began in order for CMS to consider a rebate reduction.

CMS believes that severe supply chain disruptions generally take time to resolve and for purposes of this proposed rule, CMS proposes in § 427.402(a) to codify the policy established in section 50.12 of the revised Medicare Part B Drug Inflation Rebate Guidance whereby a determination that a severe supply chain disruption has occurred would be deemed to disrupt the supply chain for the quarter in which the event occurred and the three subsequent calendar quarters. If the manufacturer makes a timely request that includes all the supporting documentation and CMS determines, based on its review of the reduction request and supporting documentation, that a reduction should be granted, CMS would reduce the total rebate amount owed by a manufacturer by 75 percent for the calendar quarter in which the event that caused the severe supply chain disruption occurred or began, or the following calendar quarter if the request is submitted less than 60 calendar days before the end of a calendar quarter, and the three calendar quarters thereafter.

CMS proposes in § 427.402(c)(5) that if the manufacturer believes a severe supply chain disruption continues into a fifth consecutive calendar quarter after the start of the natural disaster or other unique or unexpected event, the manufacturer may request a reduction of the rebate amount for the fifth through eighth calendar quarters by submitting a rebate reduction extension request to CMS along with any new supporting documentation. CMS has proposed additional submission requirements for rebate reduction extension requests in the information collection request under OMB control number: 0938-NEW (CMS-10858). As proposed in § 427.402(c)(5)(ii), a rebate reduction extension request and any new supporting documentation must be submitted at least 60 calendar days before the start of the fifth calendar quarter in order for CMS to consider a rebate reduction extension.

If the manufacturer submits a complete and timely extension request, and CMS determines that the information submitted warrants an extension of the rebate reduction, the total rebate amount would be reduced by 75 percent for the fifth through eighth calendar quarters for that manufacturer's Part B rebatable biosimilar biological product, in accordance with proposed § 427.402(b)(2).

Consistent with the policy established in section 50.12 of the revised Medicare Part B Drug Inflation Rebate Guidance, a manufacturer may receive only one extension of the rebate reduction per Part B rebatable biosimilar biological product per CMS determination of a severe supply chain disruption, as proposed in § 427.402(c)(5). Said differently, the severe supply chain disruption rebate reduction would be limited to 8 consecutive calendar quarters total per Part B rebatable biosimilar biological product per CMS determination of a severe supply chain disruption.

As proposed in § 427.402(b)(4)(i), if the manufacturer believes there are multiple events causing severe supply chain disruptions during the same four calendar quarters for the same Part B rebatable biosimilar biological product and submits multiple rebate reduction requests for the same product, CMS will grant no more than one rebate reduction for that Part B rebatable biosimilar biological product for those 4 consecutive calendar quarters. For example, if the manufacturer of a Part B rebatable biosimilar biological product is granted a severe supply chain disruption rebate reduction request for its product due to a natural disaster that occurred in January 2025 and then experiences a second severe supply chain disruption caused by a second, distinct natural disaster in July 2025, CMS would not grant the second rebate reduction request. That is, the manufacturer would receive the 75 percent reduction for four calendar quarters for the severe supply chain disruption caused by the first natural disaster but would not receive a reduction for the second natural disaster. However, if the second natural disaster exacerbated the severe supply chain disruption caused by the first natural disaster, the manufacturer may reflect such circumstances in its request for an extension of the rebate reduction for the fifth through eighth calendar quarters.

As proposed in § 427.402(b)(4)(ii), if CMS grants a severe supply chain disruption rebate reduction request for a Part B rebatable biosimilar biological product, and the product appears as currently in shortage during one of the same four calendar quarter(s) as for which the severe supply chain disruption reduction was granted, CMS would apply the 75 percent reduction to the four calendar quarters for which the severe supply disruption request was granted and would not grant any additional reduction for the shortage status during those quarters. For any subsequent calendar quarters that the Part B rebatable biosimilar biological product appears as currently in shortage, CMS would reduce the rebate amount in accordance with the drug shortages reduction proposed in § 427.401, starting with the highest reduction (that is, 75 percent for a plasma-derived product and 25 percent for a Part B rebatable drug that is not a plasma-derived product). For example, if CMS grants a severe supply chain disruption rebate reduction request for a Part B rebatable biosimilar biological product that was submitted on February 15, 2024, and that product is currently in shortage from December 15, 2024 until May 15, 2025, CMS would apply a 75 percent reduction in the total rebate amount to all four calendar quarters in 2024, and then would apply the shortages reduction as proposed in § 427.401, beginning with a reduction of 25 percent for a Part B rebatable biosimilar biological product or 75 percent in the case of a plasma-derived product that is a Part B rebatable biosimilar biological product for the first two calendar quarters of 2025.

As proposed in § 427.402(b)(4)(iii), if a Part B rebatable biosimilar biological product that is currently in shortage experiences a severe supply chain disruption, the manufacturer may submit a request for a severe supply chain disruption rebate reduction. If CMS grants the rebate reduction request, the rebate amount would be reduced by 75 percent for the duration of 4 consecutive calendar quarters (that is, the calendar quarter in which the event that caused the severe supply chain disruption occurred and the three calendar quarters thereafter), and CMS would not grant any additional reduction under § 427.401 for the currently in shortage status during those 4 calendar quarters. If CMS receives the request and all supporting documentation describing the natural disaster or other unique or unexpected event causing the severe supply chain disruption less than 60 days before the end of a calendar quarter, CMS would apply the 75 percent rebate reduction to the next calendar quarter and to the three subsequent calendar quarters thereafter. For example, if a Part B rebatable biosimilar biological product that is currently in shortage in the calendar quarter beginning October 1, 2024, is granted a severe supply chain disruption rebate reduction request as a result of a natural disaster that occurs on October 20, 2024, CMS would apply a 75 percent reduction in the rebate amount for the duration of the calendar quarter in which the natural disaster occurred and the three subsequent calendar quarters thereafter (that is, October 1, 2024, to September 30, 2025). In this same example, if the natural disaster instead occurs on November 20, 2024, CMS would apply the shortages reduction proposed in § 427.401 for the calendar quarter beginning October 1, 2024, and ending on December 31, 2024, and then a 75 percent reduction under the severe supply chain disruptions policy to the next calendar quarter and the three subsequent calendar quarters thereafter (that is, January 1, 2025 to December 31, 2025).

In proposed § 427.402(c)(6), CMS proposes to review rebate reduction requests and rebate reduction extension requests within 60 calendar days of receipt of all documentation, if feasible, beginning with the calendar quarter that begins on October 1, 2024. CMS will begin accepting rebate reduction requests and rebate reduction extension requests upon completion of the Paperwork Reduction Act (PRA) process, including for severe supply chain disruptions caused by a natural disaster or other unique or unexpected event that occurred on or after January 1, 2023, prior to completion of the PRA process. If a manufacturer's rebate reduction request does not meet the criteria in proposed § 427.402(c)(4) or if the rebate reduction request is incomplete or untimely based on the requirements in proposed § 427.402(c), CMS would deny the request. CMS also proposes that if a manufacturer's rebate reduction extension request does not meet the criteria in proposed § 427.402(c)(5), is incomplete or untimely based on the requirements in proposed § 427.402(c)(5), or if a reduction under proposed § 427.402(b)(1) was not provided for such Part B rebatable biosimilar biological product, CMS would deny the rebate reduction extension request. As proposed in § 427.402(c)(6)(iii), CMS' decisions to deny a request would be final and not be subject to an appeals process.

As proposed at § 427.402(c)(7), CMS would keep confidential, to the extent allowable under law, any requests for a rebate reduction, including supporting documentation. CMS proposes that information provided as part of a severe supply chain disruption rebate reduction request that the submitter indicates is a trade secret or confidential commercial or financial information would be protected from disclosure if CMS determines the information meets the requirements set forth under Exemptions 3 and/or 4 of the Freedom of Information Act (FOIA). In addition to the protections under the FOIA for trade secrets and commercial or financial information obtained from a person that is privileged or confidential, the Trade Secrets Act at 18 U.S.C. 1905 requires executive branch employees to protect such information. CMS would protect confidential and proprietary information as required by applicable law.

f. Reports of Rebate Amounts, Reconciliation, Suggestion of Error, and Payments (§§ 427.500 Through 427.505)

Section 1847A(i)(1)(A) of the Act requires the Secretary to provide a report to each manufacturer of a Part B rebatable drug with the following information not later than 6 months after the end of an applicable calendar quarter: (1) the total number of billing units for each Part B rebatable drug; (2) the amount, if any, of the excess average sales price increase (the amount by which the specified amount exceeds the inflation-adjusted payment amount as calculated in proposed § 427.301(g)) for an applicable calendar quarter; and (3) the rebate amount for the Part B rebatable drug. In compliance with section 1847A(i)(1)(B) of the Act, manufacturers of a Part B rebatable drug must provide a rebate for each Part B rebatable drug no later than 30 calendar days after the receipt of the information provided by the Secretary in section 1847A(i)(1)(A) of the Act.

To fulfill this statutory requirement, CMS is proposing to provide a Preliminary Rebate Report followed by a Rebate Report, as described in proposed § 427.501(b) and (c), to all manufacturers of a Part B rebatable drug, even if the amount due is $0; all rebate amounts would be subject to reconciliation as proposed in § 427.501(d). As proposed in § 427.501(d)(4), CMS does not intend to send notice to manufacturers for drugs that are not considered rebatable pursuant to proposed § 427.20.

Additionally, to address the completeness and accuracy of the rebate amount, CMS proposes to conduct one regular reconciliation to determine whether the rebate amount should be adjusted due to updated claims and payment data used in the calculation of such rebate amount (specified in proposed § 427.501(b)(1)) to occur 12 months after the issuance of the Rebate Report. The reporting process for reconciliation will be the same process described for the original Rebate Report, with payment due for any outstanding rebate amount 30 days after receipt of a report with a reconciled rebate amount. In addition to regular reconciliation, CMS proposes a process to conduct reconciliation of the rebate amount as needed to correct agency error and when CMS determines that the information used by CMS to calculate a rebate amount was inaccurate due to manufacturer misreporting.

CMS believes conducting a reconciliation for the Part B Rebate Program is important in ensuring the accuracy of the rebate amount and for programmatic alignment with the Part D Rebate Program.

i. Definitions

In proposed § 427.500, CMS proposes the following term applicable to proposed subpart F (§§ 427.500 through 427.505):

• “Date of receipt”.

For example, if CMS issues a Rebate Report through the method and process described in § 427.504 on June 30, 2026, then July 1, 2026, will be the date of receipt and day one of the 30-calendar-day payment period.

ii. Reports of Rebate Amounts and Suggestion of Error

Consistent with the process specified in section 60 of the revised Medicare Part B Drug Inflation Rebate Guidance involving preliminary and final reports, CMS proposes to codify a multi-step process to provide a manufacturer as defined in § 427.20 with the rebate information specified in section 1847A(i)(1)(A) of the Act. CMS considered the following factors in determining a method and process for providing the rebate information: meeting statutorily provided deadlines in section 1847A(i) of the Act (for example, dates by which to provide the rebate amount to the manufacturer); the operational time to acquire the relevant information specified in the proposed part 427; the operational time to calculate the rebate amount specified in subpart D of the proposed part 427; clarity of the information provided as well as potential burden on manufacturers; and how to ensure accuracy of the rebate amount.

CMS proposes at proposed § 427.501 the use of an initial Preliminary Rebate Report and a subsequent Rebate Report, with an opportunity for manufacturers to identify certain mathematical errors (see proposed § 427.503 and discussed in further detail later in this section) and one regular reconciliation of the rebate amount to account for data revisions 12 months after the Rebate Report is provided. CMS proposes at proposed § 427.501(d)(1), to conduct a reconciliation 12 months after issuance of the subsequent Rebate Report specified in § 427.501(c) to include any restatements that have occurred in the drug pricing data and claims billing data reported to CMS and used in the rebate calculation specified in subpart D of the part.

CMS proposes in proposed § 427.501 that the multi-step reporting process for providing rebate information to a manufacturer would include: (1) an initial report, which CMS proposes to entitle the “Preliminary Rebate Report” in proposed § 427.501(b) and (2) a second report, which CMS proposes to entitle the “Rebate Report” in proposed § 427.501(c). The Rebate Report would serve as the invoice for the rebate amount due, if any, for each NDC that has been assigned to a billing and payment code for a product determined to be a Part B rebatable drug for the applicable calendar quarter, as specified in proposed § 427.101. Manufacturers of Part B rebatable drugs would receive a Rebate Report for their rebatable drugs even if the amount due is $0. CMS proposes at proposed § 427.501(d)(1) a regular reconciliation of the rebate amount to occur 12 months after issuance of the subsequent Rebate Report specified in proposed § 427.501(c).

As the first step in the reporting process, as proposed in proposed § 427.501(b) and consistent with section 60 of the revised Medicare Part B Drug Inflation Rebate Guidance, CMS would provide the manufacturer of a Part B rebatable drug with the preliminary rebate amount through a Preliminary Rebate Report that is provided to each manufacturer of a Part B rebatable drug at least 1 month prior to the issuance of the Rebate Report specified in proposed § 427.501(c) for an applicable calendar quarter (that is, at least 5 months after the end of the applicable calendar quarter). To facilitate manufacturer understanding of the Preliminary Rebate Report, CMS is proposing in proposed § 427.501(b)(1) that the Preliminary Rebate Report would include the following information: the NDC(s) and billing and payment code for the Part B rebatable drug as specified in proposed § 427.20, the total number of billing units as specified in proposed § 427.303; the payment amount in the payment amount benchmark quarter as specified in proposed § 427.302(d); the applicable calendar quarter specified amount as specified in proposed § 427.302(b); the applicable benchmark period and rebate period CPI-Us as specified in proposed § 427.302(e) and (f); the inflation-adjusted payment amount as specified in proposed § 427.302(g); the amount, if any, by which the specified amount as described in proposed § 427.302(b) exceeds the inflation-adjusted payment amount as described in proposed § 427.302(g) for the Part B rebatable drug for the applicable calendar quarter as determined under proposed § 427.302; any applied reduction as described in proposed §§ 427.401 and 427.402; and the rebate amount due as specified in proposed § 427.301(a).

When determining what information should be included on rebate reports, CMS considered the statutory requirements outlined in section 1847A(i)(1)(A) of the Act to determine which data elements are necessary to review the Preliminary Rebate Report for error (described later in this section) and to protect proprietary information. In response to comments on the initial Medicare Part B Drug Inflation Rebate Guidance, CMS has proposed to disclose data elements as suggested by interested parties that are not enumerated in the statute, such as the applicable benchmark period and rebate period CPI-Us. CMS acknowledges requests from interested parties to provide additional data elements such as claims-level data at the NDC-11 level, that are not included in this proposal. CMS considered these requests in development of this proposed rule but does not believe it necessary to provide further information to fulfill its statutory obligation and believes that the potential benefit to manufacturers of additional data are outweighed by the administrative burdens additional reporting would impose to the agency. The elements listed above provide sufficient information for a manufacturer review the Preliminary Rebate Report for mathematical error, while protecting proprietary information, and these elements are operationally feasible for CMS to provide. CMS believes the elements listed in proposed § 427.501(b)(1) satisfy these considerations.

By structuring the Rebate Report process to include a Preliminary Rebate Report before the Rebate Report, CMS is able to provide manufacturers with an opportunity to review the Preliminary Rebate Report before the rebate amount is invoiced via the Rebate Report. While CMS is not required to provide a preliminary report, CMS seeks to facilitate manufacturer understanding of the report and believes it would be beneficial for manufacturers to review the report for mathematical errors that can be corrected before invoicing via the Rebate Report. Further, a Preliminary Rebate Report would provide additional notice to manufacturers regarding whether they may owe a rebate amount.

In proposed § 427.503, CMS proposes a process in which a manufacturer may suggest to CMS that the manufacturer believes the Preliminary Rebate Report includes a mathematical error within 10 calendar days after the date of receipt of the Preliminary Rebate Report. For example, if the Preliminary Rebate Report is provided on May 31, 2026, then June 1, 2026, would be the date of receipt and, therefore, day one of the 10-calendar-day period to submit a Suggestion of Error. In this example, Suggestions of Error would be due by 11:59 p.m. PT on June 10, 2026. CMS reviewed comments on the 10-day Suggestion of Error period submitted in response to the initial Medicare Part B Drug Inflation Rebate Guidance, many of which suggested that manufacturers receive at least 30 days to review the Preliminary Rebate Report. CMS considered a 10-day, 15-day, and 30-day Suggestion of Error period and believes a 10-calendar-day period (see proposed § 427.503(c)) is sufficient after considering the volume of the data to be provided to manufacturers, the narrow scope of items that may be identified as a Suggestion of Error, and the operational time necessary for CMS to provide a Rebate Report within 6 months of the end of the applicable calendar quarter as required under section 1847A(i)(1)(A) of the Act. However, CMS proposes in proposed § 427.502(c)(1)(ii) to expand the Suggestion of Error period to 30 calendar days for the Preliminary Rebate Report for calendar year 2023 and calendar year 2024. This extended Suggestion of Error period will provide additional time and flexibility during the first invoicing cycle of the Part B Rebate Program.

Section 1847A(i)(8) of the Act precludes administrative or judicial review on the determination of units, whether a drug is a Part B rebatable drug, and the calculation of the rebate amount (see proposed § 427.503(a)(1)). Therefore, the Suggestion of Error process will be limited to mathematical steps involved in determining the rebate amount and the elements precluded from administrative or judicial review will not be considered in-scope for the Suggestion of Error process. Additionally, CMS is not providing an administrative dispute resolution process. CMS intends to consider all in-scope submissions under the Suggestion of Error process as specified in proposed § 427.503(a) (for example, suggestions regarding a mathematical error). CMS does not intend to review suggestions of error that are out-of-scope or submissions for a rebatable drug with an amount due of $0.

As the second step in the reporting process, CMS proposes in proposed § 427.501(c) to provide the rebate amount to the manufacturer through the Rebate Report no later than 6 months after the end of the applicable calendar quarter. As proposed in § 427.501(c)(1), the Rebate Report would include the same data elements as the Preliminary Rebate Report (specified in § 427.501(b)(1)) and include any recalculations based on CMS acceptance of a manufacturer's Suggestion of Error from proposed § 427.503, or any CMS-determined recalculations from proposed § 427.501(d)(2), if applicable. Manufacturers must pay the rebate amount within 30 calendar days from the date of receipt of the Rebate Report (see proposed § 427.505(a)). For example, if the Rebate Report is provided on June 30, 2026, then July 1, 2026, would be the date of receipt and therefore day one of the 30-calendar-day payment period; payment would be due no later than 11:59 p.m. PT on July 30, 2026.

In proposed §§ 427.504 and 427.505, CMS proposes that it will establish a standard method and process to issue Rebate Reports and accept manufacturer rebate payments. This method and process may include an online portal administered by a CMS contractor which would provide manufacturers with access to their Rebate Reports, submit Suggestions of Error, and pay a rebate amount due. CMS intends to provide technical instructions separate from this rulemaking to manufacturers of Part B rebatable drugs regarding how to access Rebate Reports and how to receive notifications alerting the manufacturer when information is available. CMS also intends to issue reminder notices to manufacturers regarding the due date of rebate payments. In proposed § 427.504(a), CMS notes that the manufacturer that may access Rebate Reports and make applicable rebate amount payments is the manufacturer responsible for paying a rebate and, as stated above, CMS proposes to identify the manufacturer that is responsible for paying a rebate using the same approach used for reporting ASP and Medicaid Drug Rebate Program data.

iii. Reconciliation of a Rebate Amount

As discussed in section 60 of the revised Medicare Part B Drug Inflation Rebate Guidance, CMS considered options for establishing a standardized method and process at regular intervals to determinate any appropriate adjustments to the rebate amount for a Part B rebatable drug for an applicable calendar quarter to account for revised information as well as options for recalculation based on CMS identifying an agency error or determining manufacturer data was misreported. While the provisions in 1847A(i) of the Act do not expressly provide for reconciliation in the Medicare Part B Drug Inflation Rebate Program, CMS has determined that a process for reconciling the rebate amount for updated information is necessary and appropriate to promote the accuracy of the rebate amount for each drug for each applicable calendar quarter. CMS is proposing policies for reconciliation, including with respect to enforcement of payment of any reconciled rebate amount, consistent with both the statutory framework for the Part B Inflation Rebate Program and the express authority in sections 1102 and 1871 of the Act to adopt regulations for the proper administration of the Medicare Prescription Drug Inflation Rebate Program.

As proposed at § 427.501(d), CMS believes that it is necessary and appropriate for CMS to recalculate the rebate amount for an applicable calendar quarter at a regular interval to include updated information about key data elements included in the calculation of the rebate amount. These data elements as set forth in proposed § 427.501(d)(1)(i) include: total units; the payment amount in the payment amount quarter; and any applied reductions as described in proposed §§ 427.401 and 427.402. Updating these calculation inputs at a regular reconciliation interval will result in a rebate amount that more fully reflects the majority of shifts in the underlying data following additional time for claims run-out, which refers to the maturation of claims in the claims processing system. Because the information accessed represents the claims' status in the claims processing system at that moment in time, additional claims run-out may yield different information, either because more claims with dates of service during the applicable calendar quarter were finalized and added to the claims processing system or because the status of the existing claims changed. CMS refers to “X months of run-out” as the period between the end of the applicable calendar quarter and the date when CMS accesses information about the claims; for example, “3 months of run-out” means that claims data are accessed for claims with service dates during an applicable calendar quarter 3 months after the end of such applicable calendar quarter. Conducting a reconciliation of the rebate amount with additional claims run-out will improve the accuracy of the rebate amount. Additionally, reconciliation of payment amounts is consistent with the approach to the calculation of payment amounts in other CMS programs (such as the Coverage Gap Discount Program) that provide for a reconciliation period.

CMS notes that the reconciliation of a rebate amount, whether the regular reconciliation proposed at § 427.501(d)(1) or a discretionary reconciliation proposed at § 427.501(d)(2) discussed further below, will not create a separately payable and distinct rebate amount. Rather, reconciliation updates the prior rebate amount owed to CMS, if any, by a manufacturer of a Part B rebatable drug so that the rebate amount ultimately reflects a more precise calculation of the rebate amount, as required by section 1847A(i) of the Act, to account for shifts in the underlying data following additional time for claims run-out after the Rebate Report is issued as well as subsequently identified data integrity issues. Moreover, because the reconciled rebate amount is an adjustment to the prior rebate amount, CMS proposes at § 427.501(d)(1)(i)(F) for the report of a reconciled rebate amount to also identify the difference between the rebate amount due as specified on the Rebate Report set forth in § 427.501(c) and the reconciled rebate amount. CMS would only collect the net rebate amount due, if any, upon reconciliation, so as to prevent any duplicate payments. CMS also proposes to refund any overpayment made by a manufacturer, as determined during reconciliation, as discussed in proposed § 427.505(c).

Additionally, as CMS suggested in section 60 of the revised Medicare Part B Drug Inflation Rebate Guidance, CMS considered multiple options for establishing a standardized method and process to occur at regular intervals to determine any appropriate adjustment to the rebate amount for a Part B rebatable drug for an applicable calendar quarter to account for revised information prior to adopting the proposal described here with for reconciliation of the Part B inflation rebate amount at 12 months. CMS considerations included the length of time needed to capture relevant changes to data inputs for recalculation, whether the timing should align with the reconciliation of Part D rebate amounts, and manufacturer burden. Specifically, CMS considered the average time span needed to ensure submission of the majority of revisions from claims run-out periods for Part B, and how such unit revisions compare to the Part D plan unit revisions specified in section 1860D-14B(b)(6) of the Act. CMS also considered the average time span needed to ensure the majority of Part B claims submitted would already be adjudicated and determined to be final action claims, CMS' policies related to the frequency of ASP restatements, the reporting timeline for refunds on discarded drug units, and reporting timelines for 340B claims and claims for beneficiaries dually eligible for Medicare and Medicaid. Without a reconciliation process, the Part B rebate amount would include units of discarded drugs on which manufacturers potentially owe a refund, thereby potentially requiring manufacturers to pay both a discarded drug refund and a rebate amount on certain units of a Part B rebatable drug due to the timing of revisions to discarded drug units discussed in further detail in section II.2.c.iv of this proposed rule.

CMS believes a longer period of claims run-out (at least 12 months of run-out time in the proposed approach) would ensure that CMS more fully accounts for capturing of revised units. CMS considered that penalties associated with failure to submit timely and accurate ASP data (specified in § 414.806(b)) encourage timely submission of ASP data with the submission timeline in accordance with § 414.804(a)(5) when considering the completeness of 12 months of claims run-out. While CMS considered a longer period until a revision is completed, such as the 36-month period provided by the Medicaid Drug Rebate Program (MDRP) for AMP restatements in § 447.510(d)(3), CMS believes that a 12-month reconciliation period is appropriate for the Part B rebate program because of requirements to submit timely and accurate ASP data (specified in § 414.806(b)), and it provides sufficient time to capture the majority of updates to the data specified in proposed § 427.301 while closing out (except for the proposed circumstances in proposed § 427.501(d)(2) regarding CMS' identification of mathematical errors or manufacturer misreporting) the calculation of the rebate amount for a Part B rebatable drug for an applicable calendar quarter within a reasonable time period after the Rebate Report is issued. While CMS proposes a 12- and 36-month reconciliation period in the Medicare Part D Drug Inflation Rebate Program, due largely to the 36-month restatement period provided for MDRP AMP restatements (specified in § 447.510(d)(3)), CMS does not believe a second or longer restatement process is needed for Part B rebatable drugs because, as described previously, the ASP and claims run-out periods correspond with sufficient claims run-out and ASP restatement timing for Part B (particularly when considering penalties associated with failure to submit timely and accurate ASP data (specified in § 414.806(b)).

Further, in considering whether consistency across CMS programs is critical, CMS believes that consideration for the completeness of data, as discussed above, should be prioritized over consistency across program timelines. That is, when examining timelines from other CMS programs that collect data contributing to calculation of the rebate amount, CMS prioritized that, to the extent feasible, completeness and accuracy of the data elements contributing to the calculation of the rebate amount rather than prioritizing consistency among the data collection and reconciliation timelines themselves. Finally, CMS believes that a restatement of each data element included in proposed § 427.501(d) to reconcile the rebate amount provided in the Rebate Report in proposed § 427.501(c) and drugs acquired through the 340B Program as proposed in § 427.303(b)(1)(i) is appropriate to capture an updated rebate amount and is in line with other CMS programs that provide for a reconciliation period, including ASP restatements (see § 414.806). While some data points may not change, CMS would review the data to determine if there are any updates in the data and use the updated data in the reconciliation to provide a reconciled rebate amount to the manufacturer.

Based on these considerations, similar to the multi-step process for the Rebate Report proposed in § 427.501(b) and (c), in summary, CMS proposes a multi-step process to provide each manufacturer of a Part B rebatable drug with a reconciled rebate amount on a regular basis. At the 12 month reconciliation, CMS proposes a reconciliation process will include: (1) a preliminary reconciliation of the rebate amount, which CMS would provide to manufacturers of Part B rebatable drugs as proposed in § 427.501(d)(1) and (2) a reconciled rebate amount, which CMS would provide to manufacturers of a Part B rebatable drug as proposed in § 427.501(d)(1)(ii). CMS also proposes to apply the Suggestion of Error process specified in proposed § 427.503 to the preliminary reconciliation.

In detail, first, as specified in proposed § 427.501(d)(1) and similar to the Preliminary Rebate Report process proposed in § 427.501(b), CMS proposes to provide the manufacturer with information about the preliminary reconciliation of the rebate amount at least 1 month prior to the issuance of the reconciled rebate amount (see proposed § 427.501(d)(1)) to each manufacturer of a Part B rebatable drug for an applicable calendar quarter. CMS proposes in § 427.501(d)(1) that the preliminary reconciliation would include, at a minimum, the same information outlined for the Rebate Report and the following updated information, if applicable: updated total number of rebatable units as specified in proposed § 427.303; the payment amount in the payment amount benchmark quarter, if any inputs are restated within the reconciliation run-out period, as specified in proposed § 427.302(d); applicable calendar quarter specified amount (defined in § 427.302(b)), if any inputs are restated within the reconciliation run-out period; the excess amount by which the specified amount exceeds the inflation-adjusted payment amount, if any inputs are restated within the reconciliation run-out period, as specified in § 427.302; the reconciled total rebate amount calculated in accordance with § 427.301; and the difference between the total rebate amount due as specified on the Rebate Report set forth in proposed § 427.501(d)(1)(i)).

In proposed § 427.503(a), similar to the Suggestion of Error process proposed for the Preliminary Rebate Report in proposed § 427.501(a), within 10 calendar days after date of receipt of the information about the preliminary reconciliation of the rebate amount, CMS proposes that a manufacturer may suggest to CMS that the manufacturer believes the preliminary reconciled rebate amount contains a mathematical error. CMS believes a 10-calendar-day period is sufficient due to the same considerations of data volume, the narrow set of reviewable items, and the operational time period necessary for CMS to complete the process to publish the reconciled rebate amount. The preclusions in section 1847A(i)(8) of the Act on administrative and judicial review apply to the reconciliation process.

Second, in detail, CMS proposes in § 427.501(d) to provide the reconciled rebate amount to the manufacturer 12 months after the Rebate Report was issued for an applicable calendar quarter. As proposed in § 427.501(d)(1)(i), the information in the report for the reconciled rebate amount would include the same data elements as provided in the information provided to the manufacturer of a Part B rebatable drug regarding the preliminary reconciliation of a rebate amount (specified in proposed § 427.501(d)(1)) and include any recalculations based on CMS acceptance of a manufacturer's Suggestion of Error from proposed § 427.503. A reconciliation of the rebate amount may result in an increase, decrease, or no change to the rebate amount, compared to the Rebate Report for an applicable calendar quarter (see proposed § 427.501(d)(3)).

Additionally, as CMS suggested in section 60 of the revised Medicare Part B Drug Inflation Rebate Guidance, CMS considered options for establishing circumstances where a recalculation of the rebate amount may be appropriate for an applicable calendar quarter after issuing the Rebate Report and/or a reconciled rebate amount based on CMS identifying an error or CMS determining that the information used by CMS to calculate a rebate amount was inaccurate due to false reporting or similar fault by the manufacturer (for example, manufacturer pricing or product data under section 1927(b)(3) of the Act). CMS also considered potential time limits for revisions and whether certain circumstances, such as instances of false reporting, should be exempt from such time limits.

Based on these considerations, CMS believes that, to capture an accurate rebate amount and consistent with reconciliations of pricing data otherwise submitted to CMS that provide for revisions when necessary due to errors, including mathematical errors, and manufacturer misreporting, certain circumstances may merit a recalculation of the rebate amount separate from the 12-month reconciliation proposed in § 427.501(d)(1). Specifically, CMS proposes in § 427.501(d)(2) that CMS may recalculate a rebate amount, when CMS identifies either: (1) an agency error such as a mathematical error or an error in the information specified in a Rebate Report as described in proposed § 427.501(c) or report of a reconciled rebate amount as described in proposed § 427.501(d)(1) including reporting system or coding errors, or (2) CMS determining that information used to calculate the rebate amount was inaccurate due to manufacturer misreporting. Examples of agency errors could include CMS incorrectly assigning a billing or payment code or incorrectly calculating the billing units per package, or the mechanism that provides a Rebate Report to the manufacturer or the Rebate Report incorrectly displays a rebate amount. Examples of manufacturer misreporting could include instances in which the manufacturer has made a correction to previously submitted data as well as instances in which the individual or entity reporting data or information to CMS on behalf of the manufacturer knows or should know is inaccurate or misleading (for example, inaccurate ASP data as specified in § 414.806). This does not include standard restatements to ASP or other data outside of the standard process of issuing the reconciled rebate amount. In addition to manufacturer-initiated corrections, CMS may become aware of manufacturer misreporting based on fact finding and conclusions of enforcement authorities, for example, the HHS Office of Inspector General, the CMS Center for Program Integrity, or the Department of Justice. In a situation where an error or manufacturer misreporting is identified prior to the 12-month reconciliation of the rebate amount proposed in § 427.501(d)(1), CMS may choose to include a correction based on the circumstances proposed in § 427.501(d)(2) concurrently with the 12-month reconciliation. When CMS reconciles data due to an instance of agency error or manufacturer misreporting, CMS proposes that the agency would limit the scope of the reconciliation to the specific information that is the basis for the reconciliation and not update or otherwise revise any other data elements in the Rebate Report (specified in proposed § 427.501(c)) or the report of the reconciled rebate amount (specified in proposed § 427.501(d)(1)) unless the correction directly impacts additional data fields. For example, CMS believes corrections to an ASP quarterly file may not change the specified amount for the applicable calendar quarter.

In addition, because reconciling a rebate amount imposes substantial administrative burden on CMS to reprocess the rebate amount, retest the reporting system, and reissue a rebate report, CMS proposes in § 427.501(d)(2) that it may exercise discretion not to initiate recalculate the rebate amount in these situations which are outside of the regular reconciliation process proposed in § 427.501(d)(1).

CMS proposes that for a recalculation due to agency error, the error must be identified within 3 years of the date of receipt of the reconciled rebate amount for the applicable calendar quarter (see proposed § 427.501(d)(2)(i)). Identification means that CMS has knowledge of the error; CMS does not need to have completed its revision of the impacted data or determined if the revision impacts the rebate amount within the 3-year period. CMS would timely complete these steps and determine, when the reconciliation does impact the rebate amount, whether the reconciliation must be included in a discretionary revision or within an upcoming reconciled rebate amount for an applicable calendar quarter. CMS believes that a 3-year period dating from the issuance of a reconciliation aligns broadly with the timeframe in which most manufacturers provide Part B ASP restatements.

CMS proposes in § 427.501(d)(2)(ii) that for a circumstance in which a manufacturer misreports data, CMS is not bound by the 3-year time limit for revision of the rebate amount. For example, if a determination is made that a manufacturer misreported ASP data, then CMS may recalculate the rebate amount owed for a Part B rebatable drug. CMS requests comments on the proposals related to manufacturer misreporting.

CMS proposes in § 427.505(a)(1) that upon receipt of the reconciled rebate amount manufacturers must pay the rebate within 30 calendar days from the date of receipt of the reconciled rebate amount. A 30-day payment deadline aligns with the payment period set forth in statute at section 1847A(i)(1)(B) of the Act. As specified in proposed § 427.504, CMS would use the same method and process for issuing Rebate Reports and submission of payments for reports with a reconciled rebate amount. CMS would provide notice to manufacturers when a report with a reconciled rebate amount, which will include the information proposed in § 427.501(d), is available for the manufacturer's Part B rebatable drugs. CMS proposes in § 427.505(c) that if a refund is owed to a manufacturer based on a reconciled rebate amount, CMS would initiate the process to issue such a refund within 60 days from the date of receipt of the reconciled rebate amount (proposed in § 427.501(d)). CMS will issue additional information on this method and process through additional program communications.

iv. Rebate Report for Applicable Calendar Quarters in CY 2023 and CY 2024

Section 1847A(i)(1)(C) of the Act provides the CMS with the option to delay sending the information required by section 1847A(i)(1)(A) for applicable calendar quarters in calendar years 2023 and 2024 until not later than September 30, 2025. In § 427.502, consistent with section 60.2 of the revised Medicare Part B Drug Inflation Rebate Guidance, CMS proposes consolidating the Preliminary Rebate Reports and Rebate Reports for CYs 2023 and 2024 into two reports: one report for the four applicable calendar quarters in CY 2023 and one report for the four applicable calendar quarters in CY 2024. This approach allows for 12 months of claims run-out for each applicable calendar quarter in CY 2023 and at least 3 months of claims run-out for each applicable calendar quarter in CY 2024. For these combined reports, CMS proposes in § 427.502 to provide an extended 30 calendar day Suggestion of Error period for the Preliminary Rebate Report.

CMS intends to send a reconciled rebate amount for the four applicable calendar quarters in CY 2024 9 months after the Rebate Report, to allow for 12 months of claims run-out for each applicable calendar quarter; CMS does not intend to conduct reconciliation for the four applicable calendar quarters in CY 2023 since the Rebate Report would already reflect 12 months of claims run-out (see proposed § 427.502(b)). This approach aligns claims and payment data run-out with the run-out used during a regular reconciliation cycle. The Suggestion of Error period for the report containing the reconciled rebate amount for applicable calendar quarters in CY 2024 would be 10 calendar days.

This approach also minimizes the number of reports issued to manufacturers as a result of the delay in reporting and simplifies payment procedures, thereby minimizing manufacturer burden. Starting with the first applicable calendar quarter of CY 2025, reporting would begin a standard cadence and follow the procedures otherwise proposed in subpart F of this part 427.