CMS-460.Supporting Statement

Supporting Statement for Medicare Participation Agreement for Physicians and Suppliers

CMS-460

OMB#: 0938-0373

A. Background

The CMS-460 is the agreement a physician, supplier or their authorized official signs to participate in Medicare Part B. By signing the agreement to participate in Medicare, the physician, supplier or their authorized official agrees to accept the Medicare-determined payment for Medicare covered services as payment in full and to charge the Medicare Part B beneficiary no more than the applicable deductible or coinsurance for the covered services. For purposes of this explanation, the term a supplier means any person or entity that may bill Medicare for Part B services (e.g. DME supplier, nurse practitioner, supplier of diagnostic tests) except a Medicare provider of services (e.g. hospital), which must participate to be paid by Medicare for covered care.

Since 1984, physicians and suppliers have had the opportunity each year to enroll or disenroll from the Medicare participating physician and supplier program. The Deficit Reduction Act of 1984 (Public Law 98-369) created this program. Congress enacted a number of provisions to limit reimbursement for the services of physicians and suppliers and to encourage their participation in the program. Under the participation program, a physician or supplier enters into an agreement to accept assignment in all cases involving Medicare beneficiaries during the next calendar year. To accept assignment means to request direct payment from the Medicare program and to agree to accept the Medicare approved charge as payment in full for the covered services. The approved charge is composed of the Medicare Part B payment and the applicable deductible and coinsurance. A physician or supplier who accepts assignment may not collect from the beneficiary more than the applicable coinsurance and deductible. A non-participant may still accept assignment on Medicare claims on a case-by-case basis.

To implement the program, each year Medicare sends a CD-ROM to all physicians, which includes information on the participation program, i.e., the Dear Doctor Announcement, Supplemental information regarding the Medicare Program, as well as the CMS-460. The CMS-460 Form is on the CD-ROM and the CMS Website as an interactive form, Providers may electronically complete all information except the signature. Providers must submit an original signature on the CMS-460 Form. In the case of suppliers (including non-physician practitioners), letters are sent explaining how participation in the program will affect their Medicare payment. Blank participation agreements (CMS-460) are sent to nonparticipating providers and suppliers. This information is sent to each physician and supplier late each year after the next years payment amounts are published or during the year when a newly licensed physician or supplier acquires a Medicare provider identification number or establishes a business new to the carrier’s area. Nonparticipating physicians and suppliers may sign participation agreements at the end of the year for a 12 month period starting in January of the following year. Newly licensed entities or entities that are establishing a new business may sign one when they acquire a Medicare provider identification number for billing purposes. The participation agreement is automatically renewed each year unless the physician or supplier revokes it for the forthcoming year.

Incentives for physicians and suppliers to participate include:

- Inclusion in a directory of physicians and suppliers who participate in Medicare. The directories are provided to libraries, senior citizen programs, Social Security Offices and other locations for use by beneficiaries and beneficiaries are advised that they are available for sale.

- Provision of emblems that can be displayed in participating physician and suppliers offices or businesses.

- More rapid payment of claims.

There are additional benefits associated with payment for services paid under the Medicare fee schedule. Payments made under the Medicare fee schedule for physician services to participating physicians and suppliers are based on 100 percent of the Medicare fee schedule amount, while the Medicare fee schedule payment for physician services by nonparticipating physicians and suppliers is based on 95 percent of the fee schedule amount. Physicians and suppliers who do not participate in Medicare are subject to limits on their actual charges for unassigned claims for physician services. These limits, known as limiting charges, cannot exceed 115 percent of the non-participant fee schedule, which is set at 95 percent of the full fee schedule amount.

In addition, if a physician or supplier does not accept assignment on a claim for Medicare payment, the physician or supplier must collect payment from the beneficiary. If the physician or supplier accepts assignment on the claim, Medicare pays its share of the payment directly to the physician or supplier, resulting in faster and more certain payment.

We are seeking re-approval of the information which is collected on the CMS-460 form. The following identifies and justifies each question:

1. Name of Participant, Person or Organization

This is identifying information to be printed in the directory.

2. Address/Addresses

All addresses under which the physician/supplier does business within the carriers jurisdiction are needed for the directory.

3. Medicare physician/supplier identification number

This is necessary to ensure that proper payment is made since the physician or suppliers Medicare number is carried in the bill processing system.

4. Signature and title of participant or authorized representative of participating organization

This is necessary to signify that the physician or supplier agrees to the terms of the agreement and to identify the authorized representative, if there is one.

5. Date

This is the date that the agreement is signed. This is necessary to establish the validity of the agreement and its proper effective date. This is important because physicians and suppliers have a long time period in which to submit claims and the agreement relates to services provided on or after the effective date of the agreement. It is particularly important when the agreement is being signed by a newly licensed physician or supplier or a physician or supplier who is new to the carrier’s service area.

6. Office phone Number

This is to be printed in the directory so that beneficiaries can contact participating physicians and suppliers to arrange to receive services.

B. Justification

1. Need and Legal Basis

Section 1842(h) of the Social Security Act permits physicians and suppliers to voluntarily participate in Medicare Part B by agreeing to take assignment on all claims for services to Medicare beneficiaries. The law also requires that the Secretary provide specific benefits to the physicians, suppliers and other persons who choose to participate. The CMS-460 is the agreement by which the physician or supplier elects to participate in Medicare.

2. Information Users

The information is used by the following:

- Medicare contractors; to provide the benefits the law provides for participating entities and to enable contractors to enforce the Medicare limiting charge for

physicians, suppliers and other persons who do not participate

- Medicare beneficiaries: to assist them in locating physicians who will accept Medicare assignment on claims for services and therefore save them money.

- By CMS to gauge the effectiveness of our contractors efforts to increase participation in Medicare.

3. Improved Information Technology

The CMS-460 Form is an interactive form on the CMS’ Web site and on the CD-ROM that is mailed to providers. However, at this time CMS does not yet have the ability to collect the information electronically and CMS does not have the ability to receive electronic signatures.

4. Duplication Similar Information

There is no duplication of similar information.

5. Small Business

Many of the affected entities are small businesses (e.g. physician practices) but the burden is very small compared to the financial benefits to the physician, supplier or other person who chooses to participate. The agreement is very simple and contains the minimum amount of information to permit us to comply with the law.

6. Less Frequent Collection

We would be in violation of the law. Moreover, if we were to permit nonparticipating physicians and suppliers to choose to participate less frequently than once a year or upon starting a new business in the area, physicians, suppliers and other persons would have to wait longer to participate. The benefits of participation to beneficiaries and to the physicians and suppliers would be lost for that period of time.

7. Special Circumstances

There are no special circumstances.

8. Federal Register Notice/Outside Consultation

The 60-day notice was published in the Federal Register on March 9, 2007, attached. This agreement is defined in law and no consultation with outside groups is needed.

9. Payment/Gift To Respondent

The benefits of participation are specified in law. We do not consider them to be payment or a gift for responding.

10. Confidentiality

The decision to participate in Medicare is not confidential. To the contrary, the statute requires that the names of participating physicians, suppliers and other persons be published in the Medicare participating physician directory and made available to beneficiaries on request via a toll free phone number. This is viewed as a desirable benefit by physicians and suppliers.

11. Sensitive Questions

There are no sensitive questions.

12. Burden Estimate (Hours & Wages)

We estimate that the completion of the participation agreement will take the physician, supplier or other person approximately 15 minutes. In 2007, approximately 6,000 entities submitted new participation agreements for a total burden to the public of 1,500 hours.

Calculation = 15 x 6,000 / 60 = 1,500

We estimate the cost to a physician, supplier or other person who chooses to participate to be $59.50 for the 15 minutes it will take to complete and sign the form, have someone make a copy, file the copy and for the envelope and postage needed to mail it. This estimate is based upon the national Medicare payment rate for 2007 for a 15 minute physician (face to face) visit (CPT code 99213 at 1.57 non-facility total relative value units times conversion factor of $37.8975) The participation decision is likely to be made or approved, completed and signed by the practitioner (in the case of a solo practice), by the Chief Executive Officer or by the Chief Financial Officer of a group practice or supplier because of its significant impact on the payments that will be made by Medicare.

Calculation = 37.8975 x 1.57 = 59.50

We estimate the total national cost to physicians, suppliers and other persons who sign participation agreements each year to be about $285,600. We calculated this amount by multiplying $59.50, per agreement time’s 6,000 agreements ($357,000) and reducing it by 20 percent (71,400). The 20 percent reduction is needed to recognize that Medicare payments include payment for the practice expense involved in running the practice or business (such as making the decision to participate). Therefore, Medicare pays part of the physicians or suppliers cost of signing the agreement in its payment for Medicare covered services. We know that Medicare payment to physicians represents approximately 20 percent of the payments made to physicians for all patients (Medicare and all others) they serve; in the absence of knowledge, we assume that this ratio applies equally to suppliers. Hence, we believe that Medicare program payments pay about 20 percent of the cost to physicians of making the participation decision.

Calculation = 59.50 x 6,000 =357,000 x 20% = 71,400 then 357,000 – 71,400 = 285,600

13. Capital Costs

There are no capital costs.

14. Cost to Federal Government

We estimate that the total cost to the Federal government attributable to these agreements for 2007 was $60,852. There are three components of cost to the Federal government: cost to Medicare contractors to print the agreement, the portion of the cost of completing the agreement that is a cost of business in which the Medicare program shares, and the cost to Medicare contractors for processing the signed agreements.

Calculation = 2,210 + 57,120 + 1,522 = 60,852

Administrative Cost for Printing the Agreement: We estimate a printing cost to Medicare contactors of $.13 per agreement. In 2007, the agreement was sent to physicians/suppliers via a CD during the open participation enrollment period. The CD also contained other material that is sent as part of the “Dear Doctor” mailing. Since the agreement is mailed as part of a CD, there is no increase for postage cost. The carriers are required to have 2 percent of the “Dear Doctor” hard copy packages on hand, which includes the agreement, to be mailed to any physician/supplier who requests a hardcopy. Based on these assumptions, we estimate that approximately 850,000 total physicians/suppliers received agreements. Carriers kept on hand 17,000 hardcopies; we estimate the cost of producing the hardcopy agreements to be $2,210.

Calculation = 17,000 x .13 = 2,210

Program cost: As discussed above, we estimate that Medicare’s program payment for services (which includes a practice expense component) picks up 20 percent of the cost to the physician, supplier or other person of completing the agreement. Based on this assumption, we estimate the Medicare program payment portion related to signing the participation agreement to be $57,120.

Calculation = 285,600 x .20 = 57,120

Administrative cost for processing the agreement upon receipt: We estimate that there are approximately 86 keystrokes per each of 6,000 forms or 516,000 total keystrokes. We estimate that a data input clerk can do approximately 5000 keystrokes per hour and is paid at the rate of a GS 4 step 5 or $14.75 per hour (2007 general schedule rate). Dividing the total keystrokes by the number a clerk can do per hour and multiplying by the estimated hourly salary results in an estimated total processing cost of $1,522.

Calculation = 86 x 6,000 = 516,000/5,000 = 103.20 x 14.75 = 1,522

15. Program Changes

There are no program changes or adjustments.

16. Publication and Tabulation Dates

The form that will be mailed to the contractors as part of the 2007 "dear doctor" letter in anticipation of the 2007 participation period includes the required OMB paperwork burden disclosure notice and is attached; this is the notice that will be sent to physicians and suppliers. A sample of the CMS-460 form exists in Publication 100-04, Chapter 1, Section 30.3.12.2 and includes the OMB paperwork disclosure notice.

17. Expiration Date

CMS would like to display the expiration date.

18. Certification Statement

There are no exceptions to the certification statement.

C. Collections of Information Employing Statistical Methods

No statistical methods were used in this collection.

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