WAIS Document Retrieval[Federal Register: September 8, 1998 (Volume 63, Number 173)]
[Proposed Rules]               
[Page 47601-47650]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08se98-35]
 
[[pp. 47601-47650]] Medicare Program; Prospective Payment System for Hospital 
Outpatient Services

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BILLING CODE 4120-01-C

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XI. Delay in Implementation Date

    Like other public and private organizations that depend upon the 
smooth functioning of computer systems, the Medicare program faces the 
challenge making changes to assure that computers can recognize dates 
in the year 2000 and later. Computer programming, which has commonly 
employed only two digits to record the year in the date for 
transactions and other entries, will not be able to distinguish the 
year 2000 from the year 1900 without reprogramming. Such confusion in 
the context of Medicare enrollment and claims processing could create 
massive errors, as computers could mistakenly determine that 
beneficiaries are not eligible for benefits or that services were 
rendered before the effective date of benefit provisions.
    For Medicare, achieving year 2000 (Y2K) compliance involves 
renovating all computer and information systems. The year 2000 
especially affects HCFA because of our extensive reliance on multiple 
computer systems. More than 183 systems are used in administering the 
Medicare and Medicaid programs, and 98 of these are considered 
``mission critical'' for establishing beneficiary eligibility and 
making payments to providers, plans, and states. Medicare is the most 
automated health care payer in the country. The Medicare program 
processes nearly one billion claims each year, or about 17 million 
transactions each week. Fully 98 percent of inpatient hospital and 
other Medicare Part A claims are processed electronically, as are 85 
percent of physician and other Medicare Part B claims.
    The renovation process is complicated because each piece in the 
systems used by Medicare, its 60-plus claims processing contractors, 
interfaces with state Medicaid programs, and some 1.6 million providers 
must be thoroughly reviewed and renovated by those responsible for each 
particular system. Programs must be tested, both alone and for the 
complicated interfaces among them. To fix only the Medicare systems, 49 
million lines of code must be renovated. All Medicare-specific software 
must be renovated, and tested to assure that it continues to work with 
new versions of vendor-supplied software, including operating systems 
that drive the hardware. Some hardware must be upgraded, and our 
telecommunications equipment and software must be compliant. We must 
assure that all data exchanges with thousands of partners are 
compliant. Testing of year 2000 changes presents a far greater burden 
than testing of routine system changes because we must test multiple 
times on a range of different dates. For example, February 29, 2000 and 
March 1, 2000 must both be tested because CY 2000 is a leap year.
    Because this process is necessary to keep program payments going 
out to beneficiaries and providers, year 2000 work must take precedence 
over other projects that require systems changes, including some 
Balanced Budget Act provisions. The Y2K project must be completed 
before other projects simply because activity on these other projects 
would divert resources from the Y2K project and could even compromise 
the effort to assure Y2K compliance if implemented in tandem. Many 
other private and public organizations, including most major insurance 
companies, have reached the same conclusion and are halting other 
projects involving information technology changes to clear the decks 
for the year 2000.
    HCFA's independent year 2000 verification and validation 
contractor, Intermetrics, has advised the agency to delay all projects 
that could interfere with year 2000 work. Intermetrics specifically 
advised the agency to ``seek necessary relief from Congressional 
mandates, system transitions and version releases to allow near-term, 
focused attention to achieving Y2K compliant systems.'' This includes 
projects that are complex, or which would occur during a critical 
window between October 1999 and March 2000. Otherwise, they warned, 
``many of your most critical system renovations have risk of 
significant schedule slippage.''
    Implementation of outpatient PPS is one of the projects that must 
be delayed by the year 2000 system renovations, because it requires 
massive system changes. Major contractor systems will be affected: the 
Fiscal Intermediary Standard Systems (FISS), the Arkansas Part A 
Standard System (APASS), the Common Working File (CWF), the Outpatient 
Code Editor (OCE), and the various systems operated by Fiscal 
Intermediaries and their corporate entities. Several HCFA systems will 
also be affected, including the National Claims History (NCH), the 
Provider Statistical & Reimbursement System (PS&R), and the Electronic 
Data Interchange (EDI). The scope of the required changes is also 
substantial. Among the required changes are:
    <bullet> Expansion of the claim record of FISS, APASS, EDI, NCH and 
CWF to accept and retain specific information related to how a service 
is being paid or why it's denied.
    <bullet> Conversion of all claims history to correspond with 
expanded format.
    <bullet> Rewriting the program for FISS to process claims using 
line item dates of service.
    <bullet> Rewriting the program for CWF to accept non covered 
charges by claim and line item.
    <bullet> Developing, installing and testing an outpatient PRICER 
which determines payment amounts based on the HCFA Common Procedural 
Codes (HCPCS).
    <bullet> Revision of interfaces with the fiscal intermediaries, 
providers, Billing Agents, EDI, OCE, PS&R and NCH and create an 
interface for PRICER.
    <bullet> Developing, installing and testing a program to calculate 
the variable co-insurance per payment code grouping for each provider 
who elects to accept a reduced co-insurance.
    <bullet> Revision of all claims processing output and interfaces 
including: Medicare Summary Notices (MSN), Beneficiary Denial Letters 
(BDL), Explanation of Medicare Benefits (EOMB), Notice of Utilization 
(NOU), Remittance Advice (RA).
    The consequence of all these required changes to basic systems will 
be to change the entire way Fiscal Intermediaries process and pay 
hospital outpatient and community mental health center claims. There is 
also a major impact on the many systems that are required to receive 
this revised output. Changes of this magnitude require massive testing 
by all of the systems maintainers as well as each Fiscal Intermediary. 
Additionally, the impact on the Fiscal Intermediary systems has a 
domino effect. The intermediaries are doing business for Medicare under 
the auspices of their respective corporate entities. These corporate 
systems must be modified to accept, edit and relay the new information 
necessary to process outpatient PPS claims. They are also working 
toward becoming millennium compliant and competing for the same 
resources to scope, program, test and rework these changes, as well as 
the multitude of other BBA changes and Y2K. In the light of this, HCFA 
has no choice but to suspend implementing such massive change while the 
Intermediaries, their respective corporate entities, the standard 
systems maintainers as well as the provider community are working 
diligently to become Y2K compliant. It would be irresponsible to 
continue activity that would create a real danger that basic enrollment 
and claims processing activities will be disrupted, with far worse 
consequences for providers and beneficiaries than delay in 
implementation of outpatient PPS will cause.

[[Page 47606]]

    We analyzed whether existing systems could be used to mimic 
processing of bills under the outpatient PPS. In every case, there were 
insuperable obstacles. In no case, for example, could these other 
systems compute the coinsurance correctly: the other available systems 
compute coinsurance as 20 percent of charges or 20 percent of a fee 
schedule amount. We have therefore reluctantly concluded that there is 
no alternative to a delay in implementation. As previously noted, the 
outpatient PPS will be implemented as soon as possible after January 1, 
2000. A notice of the anticipated implementation date will be published 
in the Federal Register at least 90 days in advance.
    We expect that there will be no negative impact on hospitals 
generally from the delay in implementation. The effect on individual 
hospitals will, of course, vary depending on how their current cost-
based reimbursement compares to the total payments they would receive 
under the proposed system. Hospitals altogether should receive about 
the same level of Medicare program payments under the existing payment 
system, as they would have received in program payments under the 
outpatient PPS. When beneficiary coinsurance is taken into account, we 
expect that hospitals generally will receive about 3.8 percent more in 
total payments under the existing payment system, than they would have 
received in total payments under the outpatient PPS. We should note 
that payment rates will be established at the level they would have 
been if the PPS had been implemented on January 1, 1999.
    The major impact of the delay in implementation will be on 
beneficiaries who will continue to pay coinsurance based on 20 percent 
of the hospital's charges. In the aggregate, we estimate beneficiary 
coinsurance would have been 6.9 percent lower under the outpatient 
prospective payment system in 1999 than under the current system. Under 
the prospective payment system, coinsurance will be based on our 
estimate of the median coinsurance amount for each APC under the 
current system in 1999. In the aggregate, estimated median coinsurance 
amounts are 6.9 percent lower than estimated mean coinsurance amounts 
for each APC. The actual impact will depend on the extent to which 
hospitals raise their charges in 1999. For example, the impact on 
beneficiaries would be moderated if hospitals show restraint in 
increasing charges (which have been increasing more rapidly than cost). 
We will actively encourage hospitals to voluntarily restrain from 
increasing their current charges. The actual impact on a given 
beneficiary will also depend on the hospital's charge structure 
relative to national charge levels. A beneficiary receiving services 
from a hospital with relatively low charges could be advantaged by the 
delay whereas a hospital with relatively high charges would be 
disadvantaged by the delay. We note that the impact will not be carried 
over to the prospective payment system.

List of Subjects

42 CFR Part 409

    Health facilities, Medicare.

42 CFR Part 410

    Health facilities, Health professions, Kidney diseases, 
Laboratories, Medicare, Rural areas, X-rays.

42 CFR Part 411

    Kidney diseases, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Puerto Rico, 
Reporting and recordkeeping requirements.

42 CFR Part 419

    Health facilities, Hospitals, Medicare.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 498

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 1003

    Administrative practice and procedure, Archives and records, grant 
program--social programs, Maternal and Child Health, Medicaid, 
Medicare, Penalties.

    For the reasons set forth in the preamble, 42 CFR chapters IV and V 
would be amended as follows:

PART 409--HOSPITAL INSURANCE BENEFITS

    A. Part 409 is amended as set forth below:
    1. The authority citation for part 409 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395(hh)).

Subpart B--Inpatient Hospital Services and Inpatient Critical 
Access Hospital Services

    2. In Sec. 409.10, paragraph (b) is revised to read as follows:


Sec. 409.10  Included services.

* * * * *
    (b) Inpatient hospital services does not include the following 
types of services:
    (1) Post-hospital SNF care, as described in Sec. 409.20, furnished 
by a hospital or a critical access hospital that has a swing-bed 
approval.
    (2) Nursing facility services, described in Sec. 440.155 of this 
chapter, that may be furnished as a Medicaid service under title XIX of 
the Act in a swing-bed hospital that has an approval to furnish nursing 
facility services.
    (3) Physician services that meet the requirements of 
Sec. 415.102(a) of this chapter for payment on a fee schedule basis.
    (4) Physician assistant services, as defined in section 
1861(s)(2)(K)(i) of the Act.
    (5) Nurse practitioner and clinical nurse specialist services, as 
defined in section 1861(s)(2)(K)(ii) of the Act.
    (6) Certified nurse mid-wife services, as defined in section 
1861(gg) of the Act.
    (7) Qualified psychologist services, as defined in section 1861(ii) 
of the Act.
    (8) Services of an anesthetist, as defined in Sec. 410.69 of this 
chapter.

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

    B. Part 410 is amended as set forth below:
    1. The authority citation for part 410 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395(hh)), unless otherwise indicated.

Subpart A--General Provisions

    2. In Sec. 410.2, the following definitions are added in 
alphabetical order to read as follows:


Sec. 410.2  Definitions.

    As used in this part--
* * * * *
    Encounter means a direct personal contact between a patient and a 
physician, or other person who is authorized by State licensure law 
and, if applicable, by hospital or CAH staff bylaws, to order or 
furnish hospital services for diagnosis or treatment of the patient.
* * * * *

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    Outpatient means a person who has not been admitted as an inpatient 
but who is registered on the hospital or CAH records as an outpatient 
and receives services (rather than supplies alone) directly from the 
hospital or CAH.
* * * * *

Subpart B--Medical and Other Health Services

    3. In Sec. 410.27, the section heading is revised, the introductory 
text to paragraph (a) is revised, the introductory text to paragraph 
(a)(1) is republished, and new paragraphs (a)(1)(iii), (e), and (f) are 
added to read as follows:


Sec. 410.27  Outpatient hospital services and supplies incident to a 
physician service: Conditions.

    (a) Medicare Part B pays for hospital services and supplies 
furnished incident to a physician service to outpatients, including 
drugs and biologicals that cannot be self-administered, if--
    (1) They are furnished--
* * * * *
    (iii) In the hospital or at a location (other than an RHC or an 
FQHC) that HCFA designates as qualifying as a department of a provider 
under Sec. 413.65 of this chapter; and
* * * * *
    (e) Services furnished by an entity other than the hospital are 
subject to the limitations specified in Sec. 410.39(a).
    (f) Services furnished at a location (other than an RHC or an FQHC) 
that HCFA designates as having provider-based status under Sec. 413.65 
of this chapter must be under the direct supervision of a physician as 
defined in Sec. 410.32(b)(3)(ii).
    4. In Sec. 410.28, paragraph (a)(4) is removed, paragraph (c) is 
redesignated as paragraph (d), and new paragraphs (c) and (e) are added 
to read as follows:


Sec. 410.28  Hospital or CAH diagnostic services furnished to 
outpatients: Conditions.

* * * * *
    (c) Diagnostic services furnished by an entity other than the 
hospital or CAH are subject to the limitations specified in 
Sec. 410.39(a).
* * * * *
    (e) Medicare Part B makes payment under section 1833(t) of the Act 
for diagnostic tests performed at a facility (other than an RHC or an 
FQHC) that HCFA designates as having provider-based status only when 
the diagnostic tests are furnished under the appropriate level of 
physician supervision specified by HCFA in accordance with the 
definitions in Sec. 410.32(b)(3)(i), (b)(3)(ii), and (b)(3)(iii).
    5. A new Sec. 410.39 is added to read as follows:


Sec. 410.39  Limitations on coverage of certain services furnished to 
hospital outpatients.

    (a) Except as provided in paragraph (c) of this section, Medicare 
Part B does not pay for any item or service that is furnished to a 
hospital outpatient (as defined in Sec. 410.2) during an encounter (as 
defined in Sec. 410.2) by an entity other than the hospital unless the 
hospital has an arrangement (as defined in Sec. 409.3 of this chapter) 
with that entity to furnish that particular service to its patients.
    (b) As used in paragraph (a) of this section, the term ``hospital'' 
includes a CAH.
    (c) The limitations stated in paragraphs (a) and (b) of this 
section do not apply to the following services:
    (1) Physician services that meet the requirements of 
Sec. 415.102(a) of this chapter for payment on a fee schedule basis.
    (2) Physician assistant services, as defined in section 
1861(s)(2)(K)(i) of the Act.
    (3) Nurse practitioner and clinical nurse specialist services, as 
defined in section 1861(s)(2)(K)(ii) of the Act.
    (4) Certified nurse mid-wife services, as defined in section 
1861(gg) of the Act.
    (5) Qualified psychologist services, as defined in section 1861(ii) 
of the Act.
    (6) Services of an anesthetist, as defined in Sec. 410.69.

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE 
PAYMENT

    C. Part 411 is amended as set forth below:
    1. The authority citation for part 411 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395(hh)).

Subpart A--General Exclusions and Exclusion of Particular Services

    2. In Sec. 411.15, the introductory text is republished; the 
section heading to paragraph (m) is revised; paragraph (m)(1) is 
revised; the introductory text to paragraph (m)(2) is republished; 
paragraphs (m)(2)(iii), (m)(2)(iv), and (m)(2)(v) are redesignated as 
paragraphs (m)(2)(iv), (m)(2)(v), and (m)(2)(vi), respectively; and new 
paragraphs (m)(2)(iii) and (m)(3) are added to read as follows:


Sec. 411.15  Particular services excluded from coverage.

    The following services are excluded from coverage.
* * * * *
    (m) Services to hospital patients--(1) Basic rule. Except as 
provided in paragraph (m)(2) of this section, any service furnished to 
an inpatient of a hospital or to a hospital outpatient (as defined in 
Sec. 410.2 of this chapter) during an encounter (as defined in 
Sec. 410.2 of this chapter) by an entity other than the hospital, 
unless the hospital has an arrangement (as defined in Sec. 409.3 of 
this chapter) with that entity to furnish that particular service to 
the hospital's patients. (As used in this paragraph (m)(1), the term 
``hospital'' includes a CAH.)
    (2) Exceptions. The following services are not excluded from 
coverage:
* * * * *
    (iii) Nurse practitioner and clinical nurse specialist services, as 
defined in section 1861(s)(2)(K)(ii) of the Act.
* * * * *
    (3) Scope of exclusion. Services subject to exclusion under the 
provisions of this paragraph (m) include, but are not limited to, 
clinical laboratory services; pacemakers and other prostheses and 
prosthetic devices (other than dental) that replace all or part of an 
internal body organ (for example, intraocular lenses); artificial 
limbs, knees, and hips; equipment and supplies covered under the 
prosthetic device benefits; and services incident to a physician 
service.
* * * * *

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

    D. Part 412 is amended as set forth below:
    1. The authority citation for part 412 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395(hh)).

Subpart C--Conditions for Payment Under the Prospective Payment 
Systems for Inpatient Operating Costs and Inpatient Capital-Related 
Costs

    2. In Sec. 412.50, paragraphs (a) and (b) are revised to read as 
follows:


Sec. 412.50  Furnishing of inpatient hospital services directly or 
under arrangements.

    (a) The applicable payments made under the prospective payment 
systems, as described in subparts H and M of this part, are payment in 
full for all inpatient hospital services, as defined in Sec. 409.10

[[Page 47608]]

of this chapter. Inpatient hospital services do not include the 
following types of services:
    (1) Physician services that meet the requirements of 
Sec. 415.102(a) of this chapter for payment on a fee schedule basis.
    (2) Physician assistant services, as defined in section 
1861(s)(2)(K)(i) of the Act.
    (3) Nurse practitioner and clinical nurse specialist services, as 
defined in section 1861(s)(2)(K)(ii) of the Act.
    (4) Certified nurse mid-wife services, as defined in section 
1861(gg) of the Act.
    (5) Qualified psychologist services, as defined in section 1861(ii) 
of the Act.
    (6) Services of an anesthetist, as defined in Sec. 410.69 of this 
chapter.
    (b) HCFA does not pay any provider or supplier other than the 
hospital for services furnished to a beneficiary who is an inpatient, 
except for the services described in paragraphs (a)(1) through (a)(6) 
of this section.
* * * * *

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED 
PAYMENT RATES FOR SKILLED NURSING FACILITIES

    E. Part 413 is amended as set forth below:
    1. The authority citation for part 413 continues to read as 
follows:

    Authority: Secs. 1102, 1861(v)(1)(A), and 1871 of the Social 
Security Act (42 U.S.C. 1302, 1395x(v)(1)(A), and 1395hh).

Subpart A--Introduction and General Rules


Sec. 413.1  [Amended]

    2. In Sec. 413.1, paragraph (a)(2)(viii) is removed.

Subpart B--Accounting Records and Reports

    3. In Sec. 413.24, the heading to paragraph (d) is published, and a 
new paragraph (d)(6) is added to read as follows:


Sec. 413.24  Adequate cost data and cost finding.

* * * * *
    (d) Cost finding methods. * * *
    (6) Management contracts. (i) If the main provider purchases 
services for a department of the provider or a provider-based entity 
through a management contract or otherwise directly assigns costs to 
the department or entity, the like costs of the main provider must be 
carved out to ensure that they are not allocated to the department of 
the provider or provider-based entity. However, if the like costs of 
the main provider cannot be separately identified, the costs of the 
services purchased through a management contract must be included in 
the main provider's administrative and general costs and allocated 
among the provider's overall statistics.
    (ii) Costs of free-standing entities may not be shown in the 
provider's trial balance for purposes of stepping down overhead costs 
to such entities. The provider must develop detailed work papers 
showing the exact cost of the services (including overhead) provided to 
or by the free-standing entity and show those carved out costs as non-
reimbursable cost centers in the provider's trial balance.
* * * * *

Subpart E--Payments to Providers

    4. A new Sec. 413.65 is added to read as follows:


Sec. 413.65  Requirements for a determination that a facility or an 
organization is a department of a provider or a provider-based entity.

    (a) Definitions. In this subpart E, unless the context indicates 
otherwise--
    Department of a provider means a facility or organization or a 
physician office that is either created by, or acquired by, a main 
provider for the purpose of furnishing health care services under the 
name, ownership, and financial and administrative control of the main 
provider, in accordance with the provisions of this section. A 
department of a provider may not be licensed to provide health care 
services in its own right, and Medicare conditions of participation do 
not apply to a department as an independent entity. For purposes of 
this part, the term ``department of a provider'' does not include an 
RHC or an FQHC.
    Free-standing facility means an entity that furnishes health care 
services to Medicare beneficiaries and that is not integrated with any 
other entity as a main provider, a department of a provider, or a 
provider-based entity.
    Main provider means a provider that either creates, or acquires 
ownership of, another entity to deliver additional health care services 
under its name, ownership, and financial and administrative control.
    Provider-based entity means a provider of health care services, or 
an RHC or an FQHC as defined in Sec. 405.2401(b) of this chapter, that 
is either created by, or acquired by, a main provider for the purpose 
of furnishing health care services under the name, ownership, and 
administrative and financial control of the main provider, in 
accordance with the provisions of this section.
    Provider-based status means the relationship between a main 
provider and a provider-based entity or a department of a provider, 
that complies with the provisions of this section.
    (b) Responsibility for obtaining provider-based determinations. (1) 
A facility or organization is not entitled to be treated as provider-
based simply because it or the main provider believe it is provider-
based.
    (2) A provider or a facility or organization must contact HCFA and 
the facility or organization must be determined by HCFA to be provider-
based before the main provider begins billing for services of the 
facility or organization as if they were furnished by a department of 
the provider or provider-based entity, or before it includes costs of 
those services on its cost report.
    (3) A facility that is not located on the campus of a hospital and 
is used as a site of physician services of the kind ordinarily 
furnished in physician offices will be presumed to be a free-standing 
facility, unless it is determined by HCFA to have provider-based 
status.
    (c) Reporting. (1) A main provider that acquires a facility or 
organization for which it wishes to claim provider-based status, 
including any physician offices that a hospital wishes to operate as a 
hospital outpatient department or clinic, must report its acquisition 
of the facility or organization to HCFA and must furnish all 
information needed for a determination as to whether the facility or 
organization meets the requirements in paragraph (d) of this section 
for provider-based status.
    (2) A main provider that has had one or more facilities or 
organizations considered provider-based also must report to HCFA any 
material change in the relationship between it and any provider-based 
facility or organization, such as a change in ownership of the facility 
or organization or entry into a new or different management contract 
that could affect the provider-based status of the facility or 
organization.
    (d) Requirements. An entity must meet the following requirements to 
be determined by HCFA to be a provider-based entity or a department of 
a provider:
    (1) Licensure. The department of the provider and the main provider 
are operated under the same license, except in areas where the State 
requires a separate license for the department of

[[Page 47609]]

the provider. If a State health facilities' cost review commission or 
other agency that has authority to regulate the rates charged by 
hospitals or other providers in a State finds that a particular 
facility or organization is not part of a provider, HCFA will determine 
that the facility or organization does not have provider-based status.
    (2) Operation under the ownership and control of the main provider. 
The facility or organization seeking provider-based status is operated 
under the ownership and control of the main provider, as evidenced by 
the following:
    (i) The facility or organization is 100 percent owned by the 
provider.
    (ii) The main provider and the facility or organization seeking 
status as a department of the provider have the same governing body.
    (iii) The facility or organization is operated under the same 
organizational documents as the main provider. For example, the 
facility or organization seeking provider-based status must be subject 
to common bylaws and operating decisions of the governing body of the 
provider where it is based.
    (iv) The main provider has final responsibility for administrative 
decisions, final approval for contracts with outside parties, final 
approval for personnel actions, final responsibility for personnel 
policies (such as fringe benefits/code of conduct), and final approval 
for medical staff appointments in the facility or organization.
    (3) Administration and supervision. The reporting relationship 
between the facility or organization seeking provider-based status and 
the main provider must have the same frequency, intensity, and level of 
accountability that exists in the relationship between the main 
provider and one of its departments, as evidenced by compliance with 
all of the following requirements:
    (i) The facility or organization is under the direct supervision of 
the provider where it is located.
    (ii) The facility or organization is operated under the same 
monitoring and oversight by the provider as any other department of the 
provider, and is operated just as any other department of the provider 
with regard to supervision and accountability. The facility or 
organization director or individual responsible for daily operations at 
the entity--
    (A) Maintains a day-to-day reporting relationship with a manager at 
the main provider; and
    (B) Is accountable to the governing body of the main provider, in 
the same manner as any department head of the provider.
    (iii) The following administrative functions of the facility or 
organization are integrated with those of the provider where the 
facility or organization is based: billing services, records, human 
resources, payroll, employee benefit package, salary structure, and 
purchasing services. Either the same employees or group of employees 
handle these administrative functions for the facility or organization 
and the main provider, or the administrative functions for both the 
facility or organization and the entity are--
    (A) Contracted out under the same contract agreement; or
    (B) Handled under different contract agreements, with the contract 
of the facility or organization being managed by the main provider's 
billing department.
    (4) Clinical services. The clinical services of the facility or 
organization seeking provider-based status and the main provider are 
integrated as evidenced by the following:
    (i) Professional staff of the facility or organization have 
clinical privileges at the main provider.
    (ii) The main provider maintains the same monitoring and oversight 
of the facility or organization as it does for any other department of 
the provider.
    (iii) The medical director of the facility or organization seeking 
provider-based status maintains a day-to-day reporting relationship 
with the Chief Medical Officer or other similar official of the main 
provider, and is under the same type of supervision and accountability 
as any other director, medical or otherwise, of the main provider.
    (iv) Medical staff committees or other professional committees at 
the main provider are responsible for medical activities in the 
facility or organization including quality assurance, utilization 
review, and the coordination and integration of services, to the extent 
practicable, between the facility or organization seeking provider-
based status and the main provider.
    (v) Medical records for patients treated in the facility or 
organization are integrated into a unified retrieval system (or cross 
reference) of the main provider.
    (vi) Inpatient and outpatient services of the facility or 
organization and the main provider are integrated, and patients treated 
at the facility or organization who require further care have full 
access to all services of the main provider and are referred where 
appropriate to the corresponding inpatient or outpatient department or 
service of the main provider.
    (5) Financial integration. The financial operations of the facility 
or organization are fully integrated within the financial system of the 
main provider, as evidenced by shared income and expenses between the 
main provider and the facility or organization. The costs of the 
facility or organization are reported in a cost center of the provider, 
and the financial status of the facility or organization is 
incorporated and readily identified in the main provider's trial 
balance.
    (6) Public awareness. The facility or organization seeking status 
as a department of a provider is held out to the public and other 
payers as part of the main provider. When patients enter the provider-
based facility or organization, they are aware that they are entering 
the main provider and are billed accordingly.
    (7) Location in immediate vicinity. The facility or organization 
and the main provider are located on the same campus, except where the 
following requirements are met:
    (i) The facility or organization demonstrates a high level of 
integration with the main provider by showing that it meets all of the 
other provider-based criteria, and demonstrates that it serves the same 
patient population as the main provider, either by submitting records 
such as common patient lists and/or demographic data showing that a 
high percentage of patients of both the main provider and the applicant 
entity come from the same geographic area, or by submitting data 
substantiating that the patients served by the entity also receive 
services from the main provider (for example, the patients of an RHC 
receive inpatient hospital services from the main provider).
    (ii) A facility or organization is not considered to be in the 
``immediate vicinity'' of the main provider if the facility or 
organization and the main provider are located in different States.
    (e) Provider-based status not applicable to joint ventures. A 
facility or organization cannot be considered provider-based if the 
entity is owned by two or more providers engaged in a joint venture. 
For example, where a hospital has jointly purchased or jointly created 
free-standing facilities under joint venture arrangements, neither 
party to the joint venture arrangement can claim the free-standing 
facility as a provider-based entity.
    (f) Management contracts. Facilities and organizations operated 
under management contracts are considered provider-based if all of the 
following criteria are met:
    (1) The staff of the facility or organization are employed by the

[[Page 47610]]

provider or by another organization other than the management company.
    (2) The administrative functions of the facility or organization 
are integrated with those of the main provider, as determined under 
criteria in paragraph (b)(3)(iii) of this section.
    (3) The main provider has significant day-to-day control over the 
operations of the facility or organization as determined under criteria 
in paragraph (b)(3)(ii) of this section.
    (4) The management contract is held by the main provider itself, 
not by a parent organization that has control over both the main 
provider and the facility or organization.
    (g) Obligations of hospital outpatient departments and hospital-
based entities. (1) Hospital outpatient departments located either on 
or off the main premises of the hospital must comply with the anti-
dumping rules in Secs. 489.20(l), (m), (q), and (r) and 489.24 of this 
chapter. If any individual comes to any hospital-based entity 
(including an RHC) located on the main hospital campus, and a request 
is made on the individual's behalf for examination or treatment of a 
medical condition, as described in Sec. 489.24, the hospital must 
comply with the anti-dumping rules in Sec. 489.24.
    (2) Physician services furnished in hospital outpatient departments 
or hospital-based entities (other than RHCs) must be billed with the 
correct site-of-service indicator, so that applicable site-of-service 
reductions to physician and practitioner payment amounts can be 
applied.
    (3) Hospital outpatient departments must comply with all the terms 
of the hospital's provider agreement.
    (4) Physicians who work in hospital outpatient departments or 
hospital-based entities are obligated to comply with the non-
discrimination provisions in Sec. 489.10(b) of this chapter.
    (5) Hospital outpatient departments (other than RHCs) must hold 
themselves out to other payers as outpatient departments of that 
hospital, and must treat all patients, for billing purposes, as 
hospital outpatients. The department must not treat some patients as 
hospital outpatients and others as physician office patients.
    (6) In the case of a patient admitted to the hospital as an 
inpatient after receiving treatment in the hospital outpatient 
department or hospital-based entity, payments for services in the 
hospital outpatient department or hospital-based entity are subject to 
the payment window provisions applicable to PPS hospitals and to 
hospitals and units excluded from PPS set forth at Sec. 412.2(c)(5) of 
this chapter and at Sec. 413.40(c)(2), respectively.
    (7) When a Medicare beneficiary is treated in a hospital outpatient 
department or hospital-based entity (other than an RHC), the hospital 
has a duty to notify the beneficiary, prior to the delivery of 
services, of the beneficiary's potential financial liability (that is, 
a coinsurance liability for an outpatient visit to the hospital as well 
as for the physician service).
    (8) Hospital outpatient departments must meet applicable hospital 
health and safety rules for Medicare-participating hospitals in part 
482 of this chapter.
    (9) A facility or organization may not qualify for provider-based 
status if all services furnished at the facility are furnished under 
arrangement.
    (h) Inappropriate treatment of a facility or organization as 
provider-based. If HCFA learns of a provider treating a facility or 
organization as provider-based without notifying HCFA to obtain a 
determination of provider-based status, HCFA reconsiders all payments 
to that provider for all cost reporting periods subject to re-opening 
in accordance with Secs. 405.1885 and 405.1889 of this chapter. HCFA 
then investigates and determines whether the requirements in paragraph 
(d) of this section were met. If the facility or organization did not 
qualify for a provider-based determination, HCFA recovers the 
difference between the amount of payments that actually were made and 
the amount of payments that should have been made in the absence of a 
determination of provider-based status, except that recovery will not 
be made for any period prior to [insert the effective date of final 
rule] if during all of that period the management of the entity made a 
good faith effort to operate it as a provider-based facility or 
organization, as described in paragraph (i)(2) of this section.
    (i) Inappropriate billing. (1) If HCFA determines that a provider 
has been inappropriately billing Medicare for services furnished in a 
physician office or other facility or organization as if they had been 
furnished in a hospital outpatient department or other department of a 
provider or in a provider-based entity, HCFA stops all payments to the 
provider for outpatient services until the provider can demonstrate 
which payments are proper. If overpayments have been made, HCFA 
recovers the difference between the amount of payments that actually 
were made and the amount of the payments that should have been made in 
the absence of the determination of provider-based status. However, 
past payments attributable to treatment as a department of a provider 
or a provider-based entity for any period prior to [insert effective 
date of final rule] are not recovered if during all of that period the 
management of a facility or an organization made a good faith effort to 
operate it as a department of a provider or a provider-based entity, as 
described in paragraph (i)(2) of this section, prior to [insert 
effective date of final rule].
    (2) HCFA determines that the management of a facility has made a 
good faith effort to operate it as a provider-based entity if--
    (i) The requirements regarding licensure and public awareness in 
paragraphs (d)(1) and (d)(6) of this section are met;
    (ii) All facility services were billed as if they had been 
furnished by a department of a provider or a provider-based entity of 
the main provider; and
    (iii) All professional services of physicians and other 
practitioners were billed with the correct site-of-service indicator, 
as described in paragraph (g)(7) of this section.
    (j) Correction of errors. HCFA may review a past determination of 
provider-based status if it believes that the determination may be 
inappropriate, based on the provisions of this section. If HCFA 
determines that a previous determination was in error, and the entity 
should not be considered provider-based, HCFA notifies the main 
provider. Treatment of the facility or organization as provider-based 
ceases with the first day of the next cost report period following 
notification of the redetermination.

Subpart F--Specific Categories of Costs

    5. In Sec. 413.118, the heading to paragraph (d) is republished, 
and a new paragraph (d)(5) is added to read as follows:


Sec. 413.118  Payment for facility services related to covered ASC 
surgical procedures performed in hospitals on an outpatient basis.

* * * * *
    (d) Blended payment amount. * * *
    (5) For portions of cost reporting periods beginning on or after 
October 1, 1997, for purposes of calculating the blended payment amount 
under paragraph (d)(4) of this section, the ASC payment amount is the 
sum of the standard overhead amounts reduced by deductibles and 
coinsurance as defined in section 1866(a)(2)(ii) of the Act.
* * * * *
    6. In Sec. 413.122, the heading to paragraph (b) is republished, a 
new

[[Page 47611]]

paragraph (b)(5) is added, the heading to paragraph (c) is republished, 
and a new paragraph (c)(4) is added to read as follows:


413.122  Payment for hospital outpatient radiology services and other 
diagnostic procedures.

* * * * *
    (b) Payment for hospital outpatient radiology services. * * *
    (5) For hospital outpatient radiology services furnished on or 
after October 1, 1997, the blended payment amount is equal to the sum 
of--
    (i) 42 percent of the hospital-specific amount; and
    (ii) 58 percent of the fee schedule amount calculated as 62 percent 
of the sum of the fee schedule amounts payable for the same services 
when furnished by participating physicians in their offices in the same 
locality, less deductible and coinsurance as defined in section 
1866(a)(2)(A)(ii) of the Act.
    (c) Payment for other diagnostic procedures. * * *
    (4) For other diagnostic services furnished on or after October 1, 
1997, the blended payment amount is equal to the sum of--
    (i) 50 percent of the hospital-specific amount; and
    (ii) 50 percent of the fee schedule amount calculated as 42 percent 
of the sum of the fee schedule amounts payable for the same services 
when furnished by participating physicians in their offices in the same 
locality, less deductible and coinsurance as defined in section 
1866(a)(2)(A)(ii) of the Act.
    7. In Sec. 413.124, paragraph (a) is revised to read as follows:


Sec. 413.124  Reduction to hospital outpatient operating costs.

    (a) Except for sole community hospitals, as defined in Sec. 412.92 
of this chapter, and critical access hospitals, the reasonable costs of 
outpatient hospital services (other than capital-related costs of such 
services) are reduced by 5.8 percent for services furnished during 
portions of cost reporting periods occurring on or after October 1, 
1990 and before January 1, 2000.
* * * * *

Subpart G--Capital-Related Costs

    8. In Sec. 413.130, the heading to paragraph (j) and the 
introductory text to paragraph (j)(1) are republished, and paragraph 
(j)(1)(ii) is revised to read as follows:


Sec. 413.130  Introduction to capital-related costs.

* * * * *
    (j) Reduction to capital-related costs. (1) Except for sole 
community hospitals and critical access hospitals, the amount of 
capital-related costs of all hospital outpatient services is reduced 
by--
* * * * *
    (ii) 10 percent for portions of cost reporting periods occurring on 
or after October 1, 1991 through December 31, 1999 and before January 
1, 2000.
* * * * *
    F. A new part 419, consisting of Secs. 419.1, 419.2, 419.20, 
419.21, 419.22, 419.30, 419.31, 419.32, 419.40, 419.41, 419.42, 419.43, 
419.44, 419.50, 419.51, and 419.60, is added to read as follows:

PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT 
DEPARTMENT SERVICES

Subpart A--General Provisions

Sec.
419.1  Scope of part.
419.2  Basis of payment.

Subpart B--Services Subject to and Excluded From the Hospital 
Outpatient Prospective Payment System

419.20  Hospitals subject to the hospital outpatient prospective 
payment system.
419.21  Hospital outpatient services subject to the outpatient 
prospective payment system.
419.22  Hospital outpatient services excluded from payment under the 
hospital outpatient prospective payment system.

Subpart C--Basic Methodology for Determining Prospective Payment Rates 
for Hospital Outpatient Services

419.30  Base expenditure target for calendar year 1999.
419.31  Ambulatory Payment Classification (APC) system and payment 
weights.
419.32  Calculation of prospective payment rates for hospital 
outpatient services.

Subpart D--Payments to Hospitals

419.40  Payment concepts.
419.41  Calculation of national beneficiary copayment amounts and 
national Medicare program payment amounts.
419.42  Hospital election to reduce copayment.
419.43  Adjustments to national program payment and beneficiary 
copayment amounts.
419.44  Payment reductions for surgical procedures.

Subpart E--Updates

419.50  Revisions to groups, weights, and other adjustments.
419.51  Volume control measures for services furnished in CY 2000.

Subpart F--Limitations on Review

419.60  Limitations on administrative and judicial review.

    Authority: Secs. 1102, 1833(t), and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1395l(t), and 1395(hh)).

PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT 
DEPARTMENT SERVICES

Subpart A--General Provisions


Sec. 419.1  Scope of part.

    (a) Purpose. This part implements section 1833(t) of the Act by 
establishing a prospective payment system for services furnished by 
hospital outpatient departments to Medicare beneficiaries who are 
registered on hospital records as outpatients, effective for services 
furnished on or after the implementation date.
    (b) Summary of content. This subpart describes the basis of payment 
for outpatient hospital services under the prospective payment system. 
Subpart B sets forth the categories of hospitals and services that are 
subject to the outpatient hospital prospective payment system and those 
categories of hospitals and services that are excluded from the 
outpatient hospital prospective payment system. Subpart C sets forth 
requirements and the basic methodology by which prospective payment 
rates for hospital outpatient services are determined. Subpart D 
describes Medicare payment amounts, beneficiary copayment amounts, and 
methods of payment to hospitals under the hospital outpatient 
prospective payment system. Subpart E describes how the hospital 
outpatient prospective payment system may be revised to take into 
account changes in medical practice and technology, the addition or 
deletion of services, new cost data, and other relevant information and 
factors.


Sec. 419.2  Basis of payment.

    (a) Unit of payment. Under the hospital outpatient prospective 
payment system, hospitals are paid a predetermined amount for 
designated services, which are identified by codes established under 
the Health Care Financing Administration Common Procedure Coding System 
(HCPCS), furnished to Medicare beneficiaries. The prospective payment 
rate for each service or procedure for which payment is allowed under 
the hospital outpatient prospective payment system is determined 
according to the methodology described in subpart C of this part. The 
manner in which the Medicare payment amount and the beneficiary 
copayment amount for each service or procedure are determined is 
described in subpart D of this part.
    (b) Costs included in determination of hospital outpatient 
department payment rates. The prospective payment system establishes a 
national payment rate,

[[Page 47612]]

standardized for geographic wage differences, for operating and 
capital-related costs that are directly related and integral to 
performing a procedure or furnishing a service on an outpatient basis, 
including, but not limited to--
    (1) Use of an operating suite, procedure room, or treatment room;
    (2) Use of recovery room;
    (3) Use of an observation bed;
    (4) Anesthesia, drugs, biologicals, other pharmaceuticals, and 
blood; medical and surgical supplies and equipment; surgical dressings; 
splints, casts, and other devices used for reduction of fractures and 
dislocations;
    (5) Supplies and equipment for administering and monitoring 
anesthesia or sedation;
    (6) Intra-ocular lenses (IOLs);
    (7) Incidental services such as venipuncture;
    (8) Capital-related costs.
    (c) Costs excluded from determination of hospital outpatient 
prospective payment rates. The following costs are excluded from the 
hospital outpatient prospective payment rates:
    (1) Medical education costs for approved nursing and allied health 
education programs.
    (2) Costs for services listed in Sec. 419.22.

Subpart B--Services Subject to and Excluded From the Hospital 
Outpatient Prospective Payment System


Sec. 419.20  Hospitals subject to the hospital outpatient prospective 
payment system.

    (a) Applicability. The hospital outpatient prospective payment 
system is applicable to any hospital participating in the Medicare 
program, except those specified in paragraph (b) of this section, for 
services furnished on or after the implementation date.
    (b) Hospitals excluded from the outpatient prospective payment 
system. (1) Those services furnished by Maryland hospitals that are 
paid under a cost containment waiver in accordance with section 
1814(b)(3) of the Act are excluded from the hospital outpatient 
prospective payment system.
    (2) Critical access hospitals (CAHs) are excluded from the hospital 
outpatient prospective payment system.


Sec. 419.21  Hospital outpatient services subject to the outpatient 
prospective payment system.

     Beginning on the implementation date, except for services 
described in Sec. 419.22, payment is made under the hospital outpatient 
prospective payment system for--
    (a) Medicare Part B services furnished to hospital outpatients 
designated by HCFA under this part that are not otherwise excluded 
under Sec. 419.22;
    (b) Services that are covered under Medicare Part B when furnished 
to hospital inpatients who are either not entitled to benefits under 
Part A or who have exhausted their Part A benefits, but are entitled to 
benefits under Part B of the program;
    (c) Partial hospitalization services furnished by community mental 
health centers (CMHCs);
    (d) The following medical and other health services furnished by a 
comprehensive outpatient rehabilitation facility (CORF) when they fall 
outside the definition of CORF services at section 1861(cc)(1) of the 
Act; or by a home health agency (HHA) to patients who are not under an 
HHA plan or treatment; or, by a hospice program furnishing services to 
patients outside the hospice benefit:
    (1) Antigens.
    (2) Splints and casts.
    (3) Pneumococcal vaccine, influenza vaccine, hepatitis B vaccine.


Sec. 419.22  Hospital outpatient services excluded from payment under 
the hospital outpatient prospective payment system.

    The following services are not paid for under the hospital 
outpatient prospective payment system:
    (a) Physician services.
    (b) Nurse practitioner services.
    (c) Physician assistant services.
    (d) Certified nurse-midwife services.
    (e) Services of qualified psychologists.
    (f) Services of an anesthetist as defined in Sec. 410.69 of this 
chapter.
    (g) Clinical social worker services as defined in section 
1861(hh)(2) of the Act.
    (h) Rehabilitation services described in section 1833(a)(8) of the 
Act.
    (i) Ambulance services.
    (j) Prosthetics and prosthetic supplies, prosthetic devices, 
prosthetic implants (except IOLs), and orthotic devices.
    (k) Durable medical equipment supplied by the hospital for the 
patient to take home.
    (l) Clinical diagnostic laboratory services.
    (m) Dialysis services furnished to ESRD patients.
    (n) Services and procedures that are not safely furnished in an 
outpatient setting or that require inpatient care.
    (o) Services specific to other sites such as nursing homes.
    (p) Services furnished to persons who are inpatients of a SNF and 
furnished pursuant to the resident assessment or comprehensive care 
plan but that are covered under the SNF prospective payment system, 
furnished ``under arrangement,'' and billable only by the SNF.
    (q) Services that are not covered by Medicare by statute.
    (r) Services that are not reasonable or necessary for the diagnosis 
or treatment of an illness or disease.

Subpart C--Basic Methodology for Determining Prospective Payment 
Rates for Hospital Outpatient Services


Sec. 419.30  Base expenditure target for calendar year 1999.

    (a) HCFA estimates the aggregate amount that would be payable for 
hospital outpatient services in calendar year 1999 by summing--
    (1) The total amounts that would be payable from the Trust Fund for 
covered hospital outpatient services without regard to the outpatient 
prospective payment system described in this part; and
    (2) The total amounts of copayments estimated to be paid by 
beneficiaries, under the prospective payment system described in this 
part, to hospitals for covered hospital outpatient services.
    (b) The aggregate amount under paragraph (a) of this section is 
determined as though the deductible required under section 1833(b) of 
the Act did not apply.


Sec. 419.31  Ambulatory Payment Classification (APC) system and payment 
weights.

    (a) APC groups. (1) HCFA classifies hospital outpatient services 
and procedures that are comparable clinically and similar in terms of 
resource use into APC groups.
    (2) The payment rate determined for an APC group in accordance with 
Sec. 419.32 and the copayment amount and program payment amount 
determined for an APC group in accordance with subpart D of this part 
apply to every individual service or procedure within the APC group.
    (b) APC weighting factors. (1) Using hospital claims data from 
calendar year 1996 and data from the most recent available hospital 
cost reports, HCFA determines the median costs for the services and 
procedures within each APC group.
    (2) HCFA assigns to each APC group an appropriate weighting factor 
to reflect the relative median costs for the services within the APC 
group compared to the median costs for the services in all APC groups.
    (c) Standardizing amounts. (1) HCFA determines the portion of costs 
determined in paragraph (b)(1) of this section that is labor-related. 
This is known as the ``labor-related portion'' of hospital outpatient 
costs.
    (2) HCFA standardizes the median costs determined in paragraph 
(b)(1) of

[[Page 47613]]

this section by adjusting for variations in hospital labor costs across 
geographic areas.


Sec. 419.32  Calculation of prospective payment rates for hospital 
outpatient services.

    (a) Conversion factor for 1999. HCFA calculates a conversion factor 
in such a manner as to ensure that payment for hospital outpatient 
services furnished in 1999 would have equalled the base expenditure 
target calculated in Sec. 419.30, taking APC group weights and 
estimated service volume into account.
    (b) Conversion factor for calendar years 2000, 2001, and 2002. (1) 
Subject to paragraph (c)(2) of this section, the conversion factor for 
each of the calendar years 2000, 2001, and 2002 is equal to the 
conversion factor calculated under paragraph (a) of this section for 
the previous year adjusted by the hospital inpatient market basket 
percentage increase applicable under section 1886(b)(3)(B)(iii) of the 
Act for fiscal years 2000, 2001, and 2002, respectively, reduced by one 
percentage point.
    (2) Beginning in calendar year 2000, HCFA may substitute for the 
hospital inpatient market basket percentage in paragraph (c)(1) of this 
section a market basket percentage increase that is determined and 
applied to hospital outpatient services in the same manner that the 
hospital inpatient market basket percentage increase is determined and 
applied to inpatient hospital services.
    (c) Payment rates. The payment rate for services and procedures for 
which payment is made under the hospital outpatient prospective payment 
system is the product of the conversion factor calculated under 
paragraph (a) or paragraph (b) of this section and the relative weight 
determined under Sec. 419.31(b).

Subpart D--Payments to Hospitals


Sec. 419.40  Payment concepts.

    In addition to the payment rate described in Sec. 419.32, for each 
APC group there is a predetermined beneficiary copayment amount as 
described in Sec. 419.41(a). The Medicare payment for each APC is 
calculated by applying the program payment percentage as described in 
Sec. 419.41(b).
    (b) For purposes of this section--
    Copayment percentage is calculated as the difference between the 
program payment percentage and 100 percent. The copayment percentage in 
any year is thus defined for each APC group as the greater of the 
following: the ratio of the APC group unadjusted copayment amount to 
the annual APC group payment rate, or 20 percent.
    Program payment percentage is calculated as the lower of the 
following: the ratio of the APC group payment rate minus the APC group 
unadjusted copayment amount, to the APC group payment rate, or 80 
percent.
    Unadjusted copayment amount is calculated as 20 percent of the 
wage-adjusted national median of charges for services within an APC 
group furnished during 1996, updated to 1999 using an actuarial 
projection of charge increases for hospital outpatient department 
services during the period 1996 to 1999.


Sec. 419.41  Calculation of national beneficiary copayment amounts and 
national Medicare program payment amounts.

    (a) Calculation of the national beneficiary copayment amount. To 
calculate the unadjusted copayment amount for each APC group, HCFA--
    (1) Standardizes 1996 hospital charges for the services within each 
APC group to offset variations in hospital labor costs across 
geographic areas;
    (2) Identifies the median of the wage-neutralized 1996 charges for 
each APC group; and,
    (3) Determines the value equal to 20 percent of the wage-
neutralized 1996 median charge for each APC group and multiplies that 
value by an actuarial projection of increases in charges for hospital 
outpatient department services during the period 1996 to 1999. The 
result is the unadjusted beneficiary copayment amount for the APC 
group.
    (b) Calculation of the program payment amount for each APC group. 
(1) HCFA calculates annually the program payment percentage for every 
APC group on the basis of each group's unadjusted copayment amount and 
its payment rate after the payment rate is adjusted in accordance with 
Sec. 419.32.
    (2) The Medicare program payment amounts are calculated annually by 
multiplying the updated APC group payment rates by the program payment 
percentage.
    (c) To determine payment amounts due for a service paid for under 
the hospital outpatient prospective payment system, HCFA makes the 
following calculations:
    (1) Makes the wage index adjustment and any other adjustments that 
are appropriate in accordance with Sec. 419.43.
    (2) Subtracts the amount of the applicable Part B deductible 
provided under Sec. 410.160 of this chapter.
    (3) Multiplies the remainder by the program payment percentage for 
the group to determine the program payment amount.
    (4) Subtracts the program payment amount from the amount determined 
in paragraph (c)(2) of this section to determine the copayment amount.


Sec. 419.42  Hospital election to reduce copayment.

    (a) A hospital may elect to reduce copayments for any or all APC 
groups on a calendar year basis. A hospital may not elect to reduce 
copayment for some, but not all, services within the same group.
    (b) A hospital must notify its fiscal intermediary of its election 
to reduce copayments no later than 90 days prior to the start of the 
calendar year.
    (c) The hospital's election must be properly documented. It must 
specifically identify the APCs to which it applies and the copayment 
level (within the limits identified below) that the hospital has 
selected for each group.
    (d) The election of reduced copayment must remain in effect 
unchanged during the year for which the election was made.
    (e) The hospital may advertise and otherwise disseminate 
information concerning the reduced level(s) of copayment that it has 
elected.
    (f) In electing reduced copayment, a hospital may elect a level 
that is less than that year's national copayment amount for the group, 
but not less than 20 percent of the APC payment rate as determined in 
Sec. 419.32.


Sec. 419.43  Adjustments to national program payment and beneficiary 
copayment amounts.

    (a) General rule. HCFA determines national prospective payment 
rates for hospital outpatient department services and determines a wage 
adjustment factor to adjust the portion of the APC payment and national 
beneficiary copayment amount attributable to labor-related costs for 
relative differences in labor and labor-related costs across geographic 
regions in a budget neutral manner.
    (b) Labor-related portion of payment and copayment rates for 
hospital outpatient services. HCFA determines the portion of hospital 
outpatient costs attributable to labor and labor-related costs (known 
as the ``labor-related portion'' of hospital outpatient costs) in 
accordance with Sec. 419.31(c)(1).
    (c) Wage index factor. HCFA uses the hospital inpatient prospective 
payment system wage index established in accordance with section 
1886(d)(3)(E) of the Act and part 412 of this chapter to make the 
adjustment referred to in paragraph (a) of this section.
    (d) Other adjustments. Any other adjustments to payment amounts 
made by HCFA to ensure equitable payments are made in a budget neutral 
manner.

[[Page 47614]]

Sec. 419.44  Payment reductions for surgical procedures.

    (a) Multiple surgical procedures. When more than one surgical 
procedure for which payment is made under the hospital outpatient 
prospective payment system is performed during a single surgical 
encounter, the Medicare program payment amount and the beneficiary 
copayment amount are based on--
    (1) The full amounts for the procedure with the highest APC payment 
rate; and
    (2) One half of the full program and beneficiary payment amounts 
for all other covered procedures.
    (b) Terminated procedures. When a surgical procedure is terminated 
prior to completion due to extenuating circumstances or circumstances 
that threaten the well-being of the patient, the Medicare program 
payment amount and the beneficiary copayment amount are based on--
    (1) The full amounts if the procedure is discontinued after the 
induction of anesthesia or after the procedure is started; and
    (2) One-half of the full program and beneficiary payment amounts if 
the procedure is discontinued after the patient is prepared for surgery 
and taken to the room where the procedure is to be performed, but 
before anesthesia is induced.

Subpart E--Updates


Sec. 419.50  Revisions to groups, weights, and other adjustments.

    (a) HCFA periodically reviews and updates groups, relative payment 
weights, and the wage and other adjustments to take into account 
changes in medical practice, changes in technology, the addition of new 
services, new cost data, and other relevant information and factors.
    (1) Changes in the APC system. HCFA may make a change in the group 
composition of the APC system or recalibrate any APC weight, as needed, 
but not more frequently than once a year. HCFA makes these changes 
based on evidence that a reassignment would improve the consistency of 
the group(s) either clinically or with respect to resource consumption.
    (2) New services. HCFA assigns a new service to the APC group that 
is most similar clinically and with respect to resource consumption.
    (3) Budget neutrality. HCFA adjusts the conversion factor so that 
any adjustments determined under paragraphs (a)(1) through (a)(3) of 
this section do not increase or decrease the amount of expenditures 
that would have been made under this section if the adjustments had not 
been made.
    (b) Annual update to conversion factor. HCFA updates the conversion 
factor annually as specified in Sec. 419.32.


Sec. 419.51  Volume control measures for services furnished in CY 2000.

    HCFA uses the target amount specified under section 1833(t)(3)(A) 
of the Act as an expenditure target for services furnished in CY 1999. 
HCFA updates the target amount to CY 2000 based on the adjustment to 
the conversion factor in Sec. 419.32(b), estimated changes in the 
volume and intensity of hospital outpatient services, and estimated 
changes in beneficiary enrollment. HCFA compares the CY 2000 target to 
an estimate of CY 2000 actual payments to hospitals. If unnecessary 
volume increases cause payments to exceed the target, HCFA determines 
the percentage by which the target is exceeded, and adjusts the CY 2002 
update to the conversion factor by the same percentage.

Subpart F--Limitations on Review


Sec. 419.60  Limitations on administrative and judicial review.

    There can be no administrative or judicial review under sections 
1869 and 1878 of the Act, or otherwise of--
    (a) The development of the APC system, including--
    (1) Establishment of the groups and relative payment weights;
    (2) Wage adjustment factors;
    (3) Other adjustments; and
    (4) Methods for controlling unnecessary increases in volume.
    (b) The calculation of base amounts described in section 1833(t)(3) 
of the Act;
    (c) Periodic adjustments described in section 1833(t)(6) of the 
Act; and
    (d) The establishment of a separate conversion factor for hospitals 
described in section 1886(d)(1)(B)(v) of the Act.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

    G. Part 489 is amended as set forth below:
    1. The authority citation to part 489 continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Subpart B--Essentials of Provider Agreements

    2. In Sec. 489.20, the introductory text to the section is 
republished; the introductory text to paragraph (d) is revised; 
paragraphs (d)(3), (d)(4), and (d)(5) are redesignated as paragraphs 
(d)(4), (d)(5), and (d)(6), respectively; and a new paragraph (d)(3) is 
added to read as follows:


Sec. 489.20  Basic commitments.

    The provider agrees to the following:
* * * * *
    (d) In the case of a hospital or a CAH that furnishes services to 
Medicare beneficiaries, either to furnish directly or to make 
arrangements (as defined in Sec. 409.3 of this chapter) for all 
Medicare-covered services to inpatients and outpatients of a hospital 
or a CAH except the following:
* * * * *
    (3) Nurse practitioner and clinical nurse specialist services, as 
defined in section 1861(s)(2)(K)(ii) of the Act.
* * * * *
    3. In Sec. 489.24(b), the definition for ``Comes to the emergency 
department'' is revised to read as follows:


Sec. 489.24  Special responsibilities of Medicare hospitals in 
emergency cases.

* * * * *
    (b) * * *
    Comes to the emergency department means, with respect to an 
individual requesting examination or treatment, that the individual is 
on the hospital property. For purposes of this section, ``property'' 
means the entire main hospital campus, including the parking lot, 
sidewalk, and driveway, as well as any facility or organization that is 
located off the main hospital campus but has been determined under 
Sec. 416.35 of this chapter to be a department of the hospital. 
Property also includes ambulances owned and operated by the hospital, 
even if the ambulance is not on hospital grounds. An individual in a 
nonhospital-owned ambulance on hospital property is considered to have 
come to the hospital's emergency department. An individual in a 
nonhospital-owned ambulance off hospital property is not considered to 
have come to the hospital's emergency department, even if a member of 
the ambulance staff contacts the hospital by telephone or telemetry 
communications and informs the hospital that they want to transport the 
individual to the hospital for examination and treatment. In such 
situations, the hospital may deny access if it is in ``diversionary 
status,'' that is, it does not have the staff or facilities to accept 
any additional emergency patients. If, however, the ambulance staff 
disregards the hospital's instructions and transports the individual on 
to hospital property, the individual is considered to have come to the 
emergency department.
* * * * *

[[Page 47615]]

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT 
AFFECT THE PARTICIPATION OF ICFs/MR AND CERTAIN NFs IN THE MEDICAID 
PROGRAM

    H. Part 498 is amended as set forth below:
    1. The authority citation for part 498 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395(hh).

    2. In Sec. 498.2, the introductory text is republished, and the 
definition of ``Provider'' is revised to read as follows:


Sec. 498.2  Definitions.

As used in this part --

* * * * *
    Provider means a hospital, critical access hospital (CAH), skilled 
nursing facility (SNF), comprehensive outpatient rehabilitation 
facility (CORF), home health agency (HHA), or hospice, that has in 
effect an agreement to participate in Medicare, that has in effect an 
agreement to participate in Medicaid, or a clinic, rehabilitation 
agency, or public health agency that has a similar agreement but only 
to furnish outpatient physical therapy or outpatient speech pathology 
services, and prospective provider means any of the listed entities 
that seeks to participate in Medicare as a provider or to have any 
facility or organization determined to be a department of the provider 
or provider-based entity under Sec. 412.65 of this chapter.
* * * * *
    3. In Sec. 498.3, the introductory text to paragraph (b) is 
republished; paragraphs (b)(2) through (b)(14) are redesignated as 
paragraphs (b)(3) through (b)(15), respectively; and a new paragraph 
(b)(2) is added to read as follows:


Sec. 498.3  Scope and applicability.

* * * * *
    (b) Initial determinations by HCFA. HCFA makes initial 
determinations with respect to the following matters:
* * * * *
    (2) Whether a prospective department of a provider or provider-
based entity qualifies as a department of a provider or provider-based 
entity under Sec. 413.65 of this chapter.
* * * * *

PART 1003--CIVIL MONEY PENALTIES, ASSESSMENTS AND EXCLUSIONS

    I. Part 1003 is amended as set forth below:
    1. The authority citation for part 1003 is revised to read as 
follows:

    Authority: 42 U.S.C. 1302, 1320-7, 1320a-7a, 1320b-10, 1395u(j), 
1395u(k), 1395cc(g), 1395dd(d)(1), 1395mm, 1395nn(g), 1395ss(d), 
1396b(m), 11131(c) and 11137(b)(2).

    2. Section 1003.100 is amended by revising paragraph (a) to read as 
follows:


Sec. 1003.100  Basis and purpose.

    (a) Basis. This part implements sections 1102, 1128(c), 1128A, 
1140, 1842(j), 1842(k), 1866(g), 1876(i)(6), 1877(g), 1882(d) and 
1903(m)(5) of the Social Security Act, and sections 421(c) and 
427(b)(2) of Pub. L. 99-660 (42 U.S.C. 1302, 1320a-7, 1320a-7a, 1320b-
10, 1395u(j), 1395u(k), 1395cc(g), 1395mm(i)(6), 1395nn(g), 1395ss(d), 
1396d(m)(5), 11131(c) and 11137(b)(2)).
* * * * *
    3. Section 1003.102 is amended by republishing the introductory 
text to paragraph (b), by reserving paragraphs (b)(11) through (b)(13), 
and by adding a new paragraph (b)(14) to read as follows:


Sec. 1003.102  Basis for civil money penalties and assessments.

* * * * *
    (b) The OIG may impose a penalty, and where authorized, an 
assessment against any person (including an insurance company in the 
case of paragraphs (b)(5) and (b)(6) of this section) whom it 
determines in accordance with this part--
* * * * *
    (11) [Reserved]
    (12) [Reserved]
    (13) [Reserved]
    (14) Has knowingly and willfully presented, or caused to be 
presented, a bill or request for payment for an item or service 
furnished to a hospital patient for which payment may be made under the 
Medicare or another Federal health care program, if that bill or 
request is inconsistent with an arrangement under section 1866(a)(1)(H) 
of the Act, or violates the requirements for such an arrangement.
* * * * *
    4. Section 1003.103 is amended by revising paragraph (a) to read as 
follows:


Sec. 1003.103  Amount of penalty.

    (a) Except as provided in paragraphs (b) through (f) of this 
section, the OIG may impose a penalty of not more than $10,000 for each 
item or service that is subject to a determination under Sec. 1003.102.
* * * * *
    5. Section 1003.105 is amended by revising paragraph (a)(1)(i) to 
read as follows:


Sec. 1003.105  Exclusion from participation in Medicare and State 
health care programs.

    (a)(1) * * *
    (i) Any person who is subject to a penalty or assessment under 
Sec. 1003.102(a), (b)(1) through (b)(4), or (b)(14).
* * * * *
(Catalog of Federal Domestic Assistance 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: June 29, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: June 29, 1998.
June G. Brown,
Inspector General, Department of Health and Human Services.

    Approved: August 15, 1998.
Donna E. Shalala,
Secretary.

    Note: The following addenda will not appear in the Code of 
Federal Regulations.
          

  

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<hbond><hbond>

  

[[Page 47615]]



  Addendum A.--List of Proposed Hospital Outpatient Ambulatory Payment Classes With Status Indicators, Relative
                                 Weights, Payment Rates, and Coinsurance Amounts
----------------------------------------------------------------------------------------------------------------
                                                                                          National     Minimum
 APC \1\       Group title                             Status      Relative   Payment    unadjusted   unadjusted
   \2\                                               indicator      weight      rate    coinsurance  coinsurance
----------------------------------------------------------------------------------------------------------------
020......  Partial             ..................  S                   4.11    $208.01       $46.78       $41.60
            Hospitalization
            per diem.
031......  Dental procedures.  ..................  S                   1.34     $67.90       $13.58       $13.58
061......  Level I             ..................  X                   1.04     $52.70       $36.61       $10.54
            Chemotherapeutic
            agents.
062......  Level II            ..................  X                   1.69     $85.63       $36.61       $17.13
            Chemotherapeutic
            agents.

[[Page 47616]]

063......  Level III           ..................  X                   2.89    $146.43      $110.97       $29.29
            Chemotherapeutic
            agents.
064......  Level IV            ..................  X                   4.17    $211.29      $140.12       $42.26
            Chemotherapeutic
            agents.
089......  Neuropsychological  ..................  X                   2.54    $128.70       $37.29       $25.74
            Testing.
090......  Monitoring          ..................  X                   0.85     $43.07       $12.43        $8.61
            psychiatric drugs.
091......  Brief Individual    ..................  S                   1.09     $55.23       $14.01       $11.05
            Psychotherapy.
092......  Extended            ..................  S                   1.57     $79.55       $21.92       $15.91
            Individual
            Psychotherapy.
093......  Family              ..................  S                   1.54     $78.03       $20.11       $15.61
            Psychotherapy.
094......  Group               ..................  S                   1.24     $62.83       $20.11       $12.57
            Psychotherapy.
121......  Level I needle      ..................  T                   0.67     $33.95       $20.91        $6.79
            biopsy/aspiration.
122......  Level II needle     ..................  T                   4.87    $246.76      $115.03       $49.35
            biopsy/aspiration.
131......  Level I incision &  ..................  T                   1.94     $98.30       $36.61       $19.66
            drainage.
132......  Level II incision   ..................  T                   6.04    $306.04      $134.13       $61.21
            & drainage.
137......  Nail procedures...  ..................  T                   0.46     $23.31        $4.66        $4.66
141......  Level I             ..................  T                   0.59     $29.90        $9.49        $5.98
            Destruction of
            lesion.
142......  Level II            ..................  T                   3.77    $191.02       $73.00       $38.20
            Destruction of
            lesion.
151......  Level I             ..................  T                   1.74     $88.16       $35.71       $17.63
            debridement/
            destruction.
152......  Level II            ..................  T                  10.43    $528.48      $261.71      $105.70
            debridement/
            destruction.
161......  Level I excision/   ..................  T                   3.50    $177.34       $75.48       $35.47
            biopsy.
162......  Level II excision/  ..................  T                   5.67    $287.30      $125.43       $57.46
            biopsy.
163......  Level III excision/ ..................  T                  10.69    $541.66      $264.65      $108.33
            biopsy.
181......  Level I skin        ..................  T                   2.19    $110.97       $43.84       $22.19
            repair.
182......  Level II skin       ..................  T                   4.00    $202.68       $84.98       $40.54
            repair.
183......  Level III skin      ..................  T                  11.17    $565.98      $286.46      $113.20
            repair.
184......  Level IV skin       ..................  T                  15.17    $768.66      $396.40      $153.73
            repair.
197......  Incision/excision   ..................  T                  12.13    $614.62      $310.75      $122.92
            breast.
198......  Breast              ..................  T                  19.17    $971.33      $530.20      $194.27
            reconstruction/
            mastectomy.
200......  Arthrocentesis &    ..................  T                   1.89     $95.77       $39.10       $19.15
            Ligament/Tendon
            Injection.
207......  Closed treatment    ..................  T                   1.70     $86.14       $31.64       $17.23
            fracture finger/
            toe/trunk.
209......  Closed treatment    ..................  T                   1.94     $98.30       $37.29       $19.66
            fracture/
            dislocation/
            except finger/toe/
            trunk.
210......  Bone/joint          ..................  T                  10.46    $530.00      $283.40      $106.00
            manipulation
            under anesthesia.
216......  Open/percutaneous   ..................  T                  20.13  $1,019.98      $520.82      $204.00
            treatment
            fracture or
            dislocation.
217......  Arthroplasty......  ..................  T                  20.48  $1,037.71      $526.81      $207.54
218......  Arthroplasty with   ..................  T                  27.49  $1,392.90      $715.52      $278.58
            prosthesis.
*226.....  Maxillofacial       ..................  T                   1.59     $80.56       $21.92       $16.11
            prostheses.
231......  Level I skull and   ..................  T                  12.02    $609.05      $299.90      $121.81
            facial bone
            procedures.
232......  Level II skull and  ..................  T                  23.93  $1,212.52      $639.35      $242.50
            facial bone
            procedures.
251......  Level I             ..................  T                  14.26    $722.55      $366.12      $144.51
            Musculoskeletal
            Procedures.
252......  Level II            ..................  T                  19.39    $982.48      $509.18      $196.50
            Musculoskeletal
            Procedures.
253......  Level III           ..................  T                  26.33  $1,334.13      $699.24      $266.83
            Musculoskeletal
            Procedures.
254......  Level IV            ..................  T                  34.37  $1,741.51      $937.11      $348.30
            Musculoskeletal
            Procedures.
261......  Level I Hand        ..................  T                  10.54    $534.06      $261.48      $106.81
            Musculoskeletal
            Procedures.
262......  Level II Hand       ..................  T                  18.35    $929.78      $480.82      $185.96
            Musculoskeletal
            Procedures.
271......  Level I Foot        ..................  T                  14.41    $730.15      $368.38      $146.03
            Musculoskeletal
            Procedures.
272......  Level II Foot       ..................  T                  16.56    $839.09      $409.74      $167.82
            Musculoskeletal
            Procedures.
276......  Bunion Procedures.  ..................  T                  19.19    $972.35      $500.14      $194.47
280......  Diagnostic          ..................  T                  22.20  $1,124.86      $581.72      $224.97
            Arthroscopy.
281......  Level I Surgical    ..................  T                  22.65  $1,147.66      $590.20      $229.53
            Arthroscopy.
282......  Level II Surgical   ..................  T                  23.94  $1,213.03      $614.04      $242.61
            Arthroscopy.
286......  Arthroscopically-   ..................  T                  26.76  $1,355.91      $802.41      $271.18
            Aided Procedures.
311......  Level I ENT         ..................  T                   1.43     $72.46       $20.57       $14.49
            Procedures.
312......  Level II ENT        ..................  T                   7.26    $367.86      $178.31       $73.57
            Procedures.
313......  Level III ENT       ..................  T                  15.81    $801.08      $411.09      $160.22
            Procedures.
314......  Level IV ENT        ..................  T                  25.65  $1,299.67      $693.37      $259.93
            Procedures.
*317.....  Implantation of     ..................  T              .........  .........  ...........  ...........
            Cochlear Device.
318......  Nasal               ..................  T                   2.07    $104.89       $38.65       $20.98
            Cauterization/
            Packing.
319......  Tonsil/Adenoid      ..................  T                  17.30    $876.58      $480.02      $175.32
            Procedures.
320......  Thoracentesis/      ..................  T                   3.17    $160.62       $79.33       $32.12
            Lavage Procedures.
331......  Level I Endoscopy   ..................  T                   0.69     $34.96       $14.01        $6.99
            Upper Airway.
332......  Level II Endoscopy  ..................  T                   9.74    $493.52      $244.98       $98.70
            Upper Airway.
333......  Level III           ..................  T                  17.24    $873.54      $464.20      $174.71
            Endoscopy Upper
            Airway.
336......  Endoscopy Lower     ..................  T                   7.44    $376.98      $197.98       $75.40
            Airway.
339......  Injection of        ..................  T                   1.02     $51.68       $19.66       $10.34
            Sclerosing
            Solution.
341......  Level I Needle and  ..................  T                   0.13      $6.59        $2.94        $1.32
            Catheter
            Placement.
342......  Level II Needle     ..................  T                   3.20    $162.14       $80.23       $32.43
            and Catheter
            Placement.
343......  Level III Needle    ..................  T                   9.52    $482.37      $224.87       $96.47
            and Catheter
            Placement.
346......  Placement           ..................  T                   4.83    $244.73      $120.23       $48.95
            Transvenous Caths/
            Cutdown.
347......  Injection           ..................  T                   2.93    $148.46       $62.15       $29.69
            Procedures for
            Interventional
            Radiology.
360......  Removal/Revision,   ..................  T                   6.09    $308.58      $140.12       $61.72
            Pacemaker/
            Vascular Device.
367......  Vascular Ligation.  ..................  T                  17.59    $891.28      $449.06      $178.26
368......   Vascular Repair/   ..................  T                  22.83  $1,156.78      $648.85      $231.36
            Fistula
            Construction.
369......  Blood and Blood     ..................  T                   4.33    $219.40       $97.18       $43.88
            Product Exchange.

[[Page 47617]]

396......  Lymph Node          ..................  T                  13.28    $672.89      $338.77      $134.58
            Excisions.
397......  Thyroid/            ..................  T                  18.36    $930.29      $496.86      $186.06
            Lymphadenectomy
            Procedures.
406......  Esophageal          ..................  T                   4.31    $218.39      $108.48       $43.68
            Dilation without
            Endoscopy.
407......  Esophagoscopy.....  ..................  T                   7.06    $357.73      $189.84       $71.55
417......  Diagnostic Upper    ..................  T                   6.44    $326.31      $181.70       $65.26
            GI Endoscopy.
418......  Therapeutic Upper   ..................  T                   7.59    $384.58      $214.25       $76.92
            GI Endoscopy.
419......  Small Intestine     ..................  T                   7.13    $361.27      $164.08       $72.25
            Endoscopy.
426......  Diagnostic Lower    ..................  T                   6.85    $347.09      $187.81       $69.42
            GI Endoscopy.
427......  Therapeutic Lower   ..................  T                   8.22    $416.50      $224.19       $83.30
            GI Endoscopy.
437......  Therapeutic         ..................  T                   2.91    $147.45       $76.61       $29.49
            Anoscopy.
446......  Diagnostic          ..................  T                   2.59    $131.23       $65.09       $26.25
            Sigmoidoscopy.
447......  Therapeutic         ..................  T                   6.87    $348.10      $184.76       $69.62
            Proctosigmoidosco
            py.
448......  Therapeutic         ..................  T                   5.37    $272.09      $141.25       $54.42
            Flexible
            Sigmoidoscopy.
449......  Complex GI          ..................  T                   7.80    $395.22      $215.38       $79.04
            Endoscopy.
451......  Level I Anal/       ..................  T                   2.56    $129.71       $54.24       $25.94
            Rectal Procedures.
452......  Level II Anal/      ..................  T                   4.82    $244.23      $109.61       $48.85
            Rectal Procedures.
453......  Level III Anal/     ..................  T                  16.87    $854.79      $445.22      $170.96
            Rectal Procedures.
456......  Endoscopic          ..................  T                   9.78    $495.55      $257.19       $99.11
            Retrograde
            Cholangio-
            Pancreatography
            (ERCP).
458......  Percutaneous        ..................  T                   7.23    $366.34      $181.59       $73.27
            Biliary
            Endoscopic
            Procedures.
459......  Peritoneal and      ..................  T                  18.06    $915.09      $496.52      $183.02
            Abdominal
            Procedures.
466......  Hernia/Hydrocele    ..................  T                  21.43  $1,085.85      $562.97      $217.17
            Procedures.
470......  Tube Procedures...  ..................  T                   2.22    $112.49       $54.92       $22.50
521......  Level I             ..................  T                   5.06    $256.39      $112.10       $51.28
            Cystourethroscopy
            and other
            Genitourinary
            Procedures.
522......  Level II            ..................  T                  10.46    $530.00      $262.39      $106.00
            Cystourethroscopy
            and other
            Genitourinary
            Procedures.
523......  Level III           ..................  T                  16.87    $854.79      $447.03      $170.96
            Cystourethroscopy
            and other
            Genitourinary
            Procedures.
524......  Level IV            ..................  T                  28.89  $1,463.84      $833.38      $292.77
            Cystourethroscopy
            and other
            Genitourinary
            Procedures.
527......  Lithotripsy.......  ..................  T                  51.56  $2,612.52    $1,372.95      $522.50
529......  Simple Urinary      ..................  T                   2.50    $126.67       $63.05       $25.33
            Studies and
            Procedures.
530......  Genitourinary       ..................  T                   2.52    $127.69       $54.69       $25.54
            Procedures.
531......  Level I Urethral    ..................  T                  18.94    $959.68      $527.26      $191.94
            Procedures.
532......  Level II Urethral   ..................  T                  25.50  $1,292.07      $602.18      $258.41
            Procedures.
536......  Circumcision......  ..................  T                  13.17    $667.32      $326.57      $133.46
537......  Penile Procedures.  ..................  T                  28.72  $1,455.23      $864.34      $291.05
538......  Insertion of        ..................  T                  45.59  $2,310.02    $1,540.64      $462.00
            Penile Prosthesis.
546......  Testes/Epididymis   ..................  T                  17.14    $868.47      $453.81      $173.69
            Procedures.
547......  Prostate Biopsy...  ..................  T                   4.39    $222.44      $125.20       $44.49
550......  Surgical            ..................  T                  16.89    $855.81      $447.93      $171.16
            Hysteroscopy.
551......  Level I             ..................  T                  24.78  $1,255.59      $711.67      $251.12
            Laparoscopy.
552......  Level II            ..................  T                  37.71  $1,910.75    $1,053.16      $382.15
            Laparoscopy.
561......  Level I Female      ..................  T                   1.52     $77.02       $24.63       $15.40
            Reproductive
            Procedures.
562......  Level II Female     ..................  T                  12.76    $646.54      $330.75      $129.31
            Reproductive
            Procedures.
563......  Level III Female    ..................  T                  16.90    $856.31      $464.88      $171.26
            Reproductive
            Procedures.
567......  D & C.............  ..................  T                  13.61    $689.61      $364.09      $137.92
568......  Infertility         ..................  T                   2.49    $126.17       $49.49       $25.23
            Procedures.
578......  Pregnancy and       ..................  T                   1.26     $63.84       $33.90       $12.77
            Neonatal Care
            Procedures.
580......  Vaginal Delivery..  ..................  T                   4.59    $232.57      $146.34       $46.51
586......  Therapeutic         ..................  T                  12.50    $633.37      $431.89      $126.67
            Abortion.
587......  Spontaneous         ..................  T                  13.25    $671.37      $347.02      $134.27
            Abortion.
600......  Spinal Tap........  ..................  T                   2.63    $133.26       $61.47       $26.65
601......  Level I Nervous     ..................  T                   3.11    $157.58       $74.13       $31.52
            System Injections.
602......  Level II Nervous    ..................  T                   3.33    $168.73       $87.69       $33.75
            System Injections.
616......  Implantation of     ..................  T                  14.43    $731.16      $366.57      $146.23
            Neurostimulator
            Electrodes.
617......  Revision/Removal    ..................  T                  11.56    $585.74      $287.59      $117.15
            Neurological
            Device.
618......  Implantation of     ..................  T                  25.56  $1,295.11      $780.49      $259.02
            Neurological
            Device.
631......  Level I Nerve       ..................  T                  12.98    $657.69      $333.80      $131.54
            Procedures.
632......  Level II Nerve      ..................  T                  18.13    $918.64      $461.04      $183.73
            Procedures.
648......  Laser Retinal       ..................  T                   3.94    $199.64       $95.15       $39.93
            Procedures.
649......  Laser Eye           ..................  T                   4.44    $224.97      $111.64       $44.99
            Procedures except
            Retinal.
651......  Level I Anterior    ..................  T                   7.24    $366.85      $174.70       $73.37
            Segment Eye
            Procedures.
652......  Level II Anterior   ..................  T                  16.48    $835.03      $433.69      $167.01
            Segment Eye
            Procedures.
667......  Cataract            ..................  T                  15.33    $776.40      $521.72      $155.28
            Procedures.
668......  Cataract            ..................  T                  19.28    $976.91      $530.87      $195.38
            Procedures with
            IOL Insert.
670......  Corneal Transplant  ..................  T                  29.23  $1,481.07      $847.50      $296.21
676......  Posterior Segment   ..................  T                   6.30    $319.22      $140.35       $63.84
            Eye Procedures.
677......  Strabismus/Muscle   ..................  T                  16.26    $823.89      $436.63      $164.78
            Procedures.
681......  Level I Eye         ..................  T                   1.67     $84.62       $30.51       $16.92
            Procedures.
682......  Level II Eye        ..................  T                   3.54    $179.37       $81.36       $35.87
            Procedures.
683......  Level III Eye       ..................  T                  10.19    $516.32      $257.87      $103.26
            Procedures.
684......  Level IV Eye        ..................  T                  13.48    $683.02      $348.94      $136.60
            Procedures.

[[Page 47618]]

690......  Vitrectomy........  ..................  T                  30.54  $1,547.45      $852.02      $309.49
700......  Plain Film........  ..................  X                   0.78     $39.52       $22.37        $7.90
706......  Miscellaneous       ..................  X                   1.96     $99.31       $57.63       $19.86
            Radiological
            Procedures.
710......  Computerized Axial  ..................  S                   5.06    $256.39      $176.28       $51.28
            Tomography.
716......  Fluoroscopy.......  ..................  X                   1.59     $80.56       $47.91       $16.11
720......  Magnetic Resonance  ..................  S                   6.34    $321.24      $206.11       $64.25
            Angiography.
726......  Magnetic Resonance  ..................  S                   7.96    $403.33      $258.09       $80.67
            Imaging.
728......  Myelography.......  ..................  S                   4.07    $206.22      $113.23       $41.24
730......  Arthography.......  ..................  S                   2.48    $125.66       $72.09       $25.13
736......  Digestive           ..................  S                   1.85     $93.74       $54.24       $18.75
            Radiology.
737......  Diagnostic          ..................  S                   2.81    $142.38       $86.56       $28.48
            Urography.
738......  Therapeutic         ..................  S                   4.48    $227.00      $133.23       $45.40
            Radiologic
            Procedures.
739......  Diagnostic          ..................  S                   5.83    $295.40      $168.71       $59.08
            Angiography and
            Venography.
746......  Mammography.......  ..................  S                   0.69     $34.96       $19.44        $6.99
747......  Diagnostic          ..................  S                   1.65     $83.60       $54.69       $16.72
            Ultrasound Except
            Vascular.
749......  Guidance under      ..................  X                   2.44    $123.63       $76.16       $24.73
            Ultrasound.
750......  Therapeutic         ..................  X                   0.91     $46.11       $25.54        $9.22
            Radiation
            Treatment
            Planning.
751......  Level I             ..................  X                   1.15     $58.27       $33.22       $11.65
            Therapeutic
            Radiation
            Treatment
            Preparation.
752......  Level II            ..................  X                   3.54    $179.37       $88.82       $35.87
            Therapeutic
            Radiation
            Treatment
            Preparation.
757......  Radiation Therapy.  ..................  S                   2.30    $116.54       $52.43       $23.31
758......  Hyperthermic        ..................  S                   3.41    $172.78       $76.84       $34.56
            Therapies.
759......  Brachytherapy and   ..................  S                   7.98    $404.34      $160.01       $80.87
            Complex
            Radioelement
            Applications.
760......  PET Scans.........  ..................  S                  17.26    $874.55      $419.46      $174.91
*761.....  Standard Non-       ..................  S                   2.04    $103.37       $61.47       $20.67
            Imaging Nuclear
            Medicine.
*762.....  Complex Non-        ..................  S                   1.78     $90.19       $51.53       $18.04
            Imaging Nuclear
            Medicine.
771......  Standard Planar     ..................  S                   3.78    $191.53      $116.84       $38.31
            Nuclear Medicine.
772......  Complex Planar      ..................  S                   4.22    $213.83      $127.92       $42.77
            Nuclear Medicine.
781......  Standard SPECT      ..................  S                   5.26    $266.52      $145.77       $53.30
            Nuclear Medicine.
782......  Complex SPECT       ..................  S                   9.28    $470.21      $275.04       $94.04
            Nuclear Medicine.
*791.....  Standard            ..................  S                  15.83    $802.10      $562.06      $160.42
            Therapeutic
            Nuclear Medicine.
*792.....  Complex             ..................  S                   4.80    $243.21      $144.19       $48.64
            Therapeutic
            Nuclear Medicine.
861......  Immunology Tests..  ..................  X                   0.13      $6.59        $3.62        $1.32
881......  Level I Pathology.  ..................  X                   0.20     $10.13        $6.78        $2.03
882......  Level II Pathology  ..................  X                   0.39     $19.76       $11.75        $3.95
883......  Level III           ..................  X                   0.65     $32.94       $20.34        $6.59
            Pathology.
900......  Critical Care.....  ..................  V                   7.44    $376.98      $144.87       $75.40
901......  Level I             ..................  X                   0.07      $3.55        $2.49        $0.71
            Immunization.
*902.....  Level II            ..................  X                   1.78     $90.19       $41.47       $18.04
            Immunization.
*903.....  Level III           ..................  X                   1.16     $58.78       $25.65       $11.76
            Immunization.
906......  Infusion Therapy    ..................  X                   1.46     $73.98       $42.49       $14.80
            except
            Chemotherapy.
907......  Intramuscular       ..................  X                   0.85     $43.07       $11.98        $8.61
            Injections.
+91111...  Low Level Clinic    Well care and       V                   1.06     $53.71       $12.66       $10.74
            Visits.             administrative.
91118....  Low Level Clinic    Skin and breast     V                   0.83     $42.06        $9.27        $8.41
            Visits.             diseases.
91124....  Low Level Clinic    Musculoskeletal     V                   0.87     $44.08        $9.49        $8.82
            Visits.             diseases.
91131....  Low Level Clinic    Ear, nose, mouth    V                   0.81     $41.04        $9.04        $8.21
            Visits.             and throat
                                diseases.
91133....  Low Level Clinic    Respiratory system  V                   0.80     $40.54        $8.59        $8.11
            Visits.             diseases.
91136....  Low Level Clinic    Cardiovascular      V                   0.85     $43.07        $8.61        $8.61
            Visits.             system diseases.
91141....  Low Level Clinic    Digestive system    V                   0.98     $49.66       $10.40        $9.93
            Visits.             diseases.
91153....  Low Level Clinic    Kidney, urinary     V                   0.91     $46.11        $9.27        $9.22
            Visits.             tract and male
                                genital diseases.
91156....  Low Level Clinic    Female genital      V                   0.93     $47.12        $9.42        $9.42
            Visits.             system diseases.
*91157...  Low Level Clinic    Pregnancy and       V                   1.33     $67.39       $14.46       $13.48
            Visits.             neonatal care.
91163....  Low Level Clinic    Nervous system      V                   0.98     $49.66       $10.17        $9.93
            Visits.             diseases.
*91168...  Low Level Clinic    Eye diseases......  V                   0.98     $49.66       $10.62        $9.93
            Visits.
*91172...  Low Level Clinic    Trauma a

