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Statement of Need: The Omnibus Budget Reconciliation Act (OBRA) of 1989 changed the basis of the Medicare Physician payment system from reasonable charge to a fee schedule based on relative value units (RVUs). The fee schedule was first implemented in 1992. This document will announce the RVUs upon which Medicare payment for physician services will be based in 1996, including interim RVUs for procedure codes that are new or revised for 1996. The public was given a 60-day period to comment on the interim values. It will also explain the process by which the interim RVUs were reviewed and, in some cases, revised as a result of public comments. ^PAfter 3 full years of experience with the physician fee schedule, we have reevaluated several payment policies related to it. Proposed revisions to these policies were announced in a notice of proposed rulemaking on July 26, 1995. This final rule will respond to the public comments received on those proposals and announces the final policy decisions. Thus, it will discuss changes in payment for the services of teaching physicians, limiting payment for interpretation of electrocardiograms and x-rays taken in the emergency room, making budget neutrality adjustments on the conversion factor rather than the RVUs, and changes in the calculation of the multiple volume performance standard (MVPS). It will also announce final decisions regarding the extension of the site-of-service payment differential to ambulatory surgical centers, prohibition of separate payment for the transportation of diagnostic equipment to a patient, expansion of the definition of "diagnostic" mammography, and a variety of bundled services. ^PThis document also discusses the process for periodic review and adjustment of all RVUs. In this regard, we have and will continue to work with the physician community through the American Medical Association Specialty Society Relative Value Update Committee.

Alternatives: An alternative to this notice would be to continue to base payments on 1995 RVUs. This would continue inappropriate payments for certain services and would not allow a national basis for paying for new services. By not revising the payment policies described in this notice, we would continue inadequate or inequitable payments for certain physician services.

Anticipated Costs and Benefits: Section 1848(c)(2)(B) of the Social Security Act requires that adjustments to RVUs for a year may not cause the amount of expenditures to differ by more than $20 million from the amount of expenditures if the adjustments had not been made. In general, the payment policies and other revisions included in this notice will be implemented in a budget-neutral manner. Thus, total Medicare expenditures will not be increased or decreased as a result of most of these changes.

Risks: Not applicable.