[Federal Register: August 1, 2003 (Volume 68, Number 148)]
[Rules and Regulations]
[Page 45673-45728]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01au03-16]
[[Page 45673]]
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Part IV
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 412
Medicare Program; Changes to the Inpatient Rehabilitation Facility
Prospective Payment System and Fiscal Year 2004 Rates; Final Rule
[[Page 45674]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1474-F]
RIN 0938-AL95
Medicare Program; Changes to the Inpatient Rehabilitation
Facility Prospective Payment System and Fiscal Year 2004 Rates
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: In this final rule, we are establishing the prospective
payment rates for inpatient hospital services furnished under Medicare
by inpatient rehabilitation facilities (IRFs) for Federal fiscal year
(FY) 2004, as required under section 1886(j)(3)(C) of the Social
Security Act (the Act). As required by law and regulations, we are
specifying the classification and weighting factors for the IRF case-
mix groups and providing a description of the methodology and data used
in computing the prospective payment rates for FY 2004. These rates are
applicable to discharges occurring on or after October 1, 2003 and
before October 1, 2004.
In addition, we are revising and clarifying policies governing the
payment for inpatient hospital services furnished by IRFs under the IRF
PPS.
DATES: Effective: October 1, 2003. The updated IRF prospective payment
rates are applicable for discharges on or after October 1, 2003 and on
or before September 30, 2004 (FY 2004).
FOR FURTHER INFORMATION CONTACT: Robert Kuhl, (410) 786-4597 (General
information) Pete Diaz (410) 786-1235 (Patient assessment instrument
and other patient assessment issues); Nora Hoban, (410) 786-0675
(Payment system, calculation of IRF payment rates, update factors,
relative weights/case-mix index, and payment adjustments).
SUPPLEMENTARY INFORMATION:
Availability of Copies and Electronic Access
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final rule document, send your request to: New Orders, Superintendent
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This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. The web site address is: http://www.access.gpo.gov/nara/index.html
.
To assist readers in referencing sections contained in this final
rule document, we are providing the following table of contents.
Table of Contents
I. Background
A. Overview of the Inpatient Rehabilitation Facility Prospective
Payment System (IRF PPS)
B. Requirements for Updating the Prospective Payment Rates Under
the IRF PPS
C. Operational Overview of the IRF PPS
D. Issuance of Proposed Rule on the FY 2004 Updates
II. Requirements and Conditions for Payment Under the IRF PPS
A. Background
B. Provisions of the May 16, 2003 Proposed Rule
C. Classification Criteria for IRFs Subject to the IRF PPS
1. Relationship to IPPS
2. IRF Hospital Services Furnished to HMOs and CMP Enrollees
3. Bed-Number Criteria for Freestanding Satellite IRFs
4. Technical Changes
III. Research to Support Case-Mix Refinements to the IRF PPS
A. Research on IRFs
B. RAND Research Background
C. Continuing Research
D. Staff Time Measurement Data
E. Monitoring
F. Need to Develop Quality Indicators for IRFs
IV. The IRF PPS Patient Assessment Process
A. Background
B. Patient Rights
C. When the IRF-PAI Must Be Completed
D. Recording IRF-Data Based on a Patient's Performance
E. Transmission of IRF-PAI Data
F. Revision of the Definition of Discharge
G. Waiver of the Penalty for Late Transmittal of the IRF-PAI
Data
H. General Information Regarding the IRF-PAI Assessment Process
V. Patient Classification System for the IRF PPS
VI. Fiscal Year 2004 Federal Prospective Payment
Rates
A. Expiration of the IRF PPS Transition Period
B. Description of the Proposed IRF Standardized Payment Amount
C. Adjustments to Determine the FY 2004 Standard Payment
Conversion Factor
1. IRF Market Basket Index
2. The Excluded Hospital and the Capital Market Basket
3. Research and Analysis
4. Updated Labor-Related Share
5. Budget Neutral Wage Adjustment Update Methodology
D. Update of Payment Rates Under the IRF PPS for FY 2004
E. Examples of Computing the Total Adjusted IRF Prospective
Payments
F. Computing Total Payments Under the IRF PPS for the Transition
Period
G. IRF-Specific Wage Data
H. Adjustment for High-Cost Outliers under the IRF PPS
1. Current Outlier Payment Provision under the IRF PPS
2. Changes to the IRF Outlier Payment Methodology
3. Adjustment to IRF Outlier Payments
4. Change to the Methodology for Calculating the Federal
Prospective Payment Outlier Payment
I. Miscellaneous Comment
VII. Provisions of the Final Rule
VIII. Collection of Information Requirements
IX. Regulatory Impact Analysis
Regulations Text
Addendum
Table 1--Relative Weights for Case-Mix Groups (CMGs)
Table 2--Fiscal Year 2004 Federal Prospective Payments for Case-Mix
Groups (CMGs)
Table 3A--Urban Wage Index
Table 3B--Rural Wage Index
Appendix--Inpatient Rehabilitation Facility Patient Privacy Forms
Acronyms
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Public
Law 106-113
CMGs Case-mix groups
CMI Case-mix index
CMP Competitive medical plan
CMS Centers for Medicare & Medicaid Services
FY Federal fiscal year
HIPAA Health Insurance Portability and Accountability Act of 1996,
Pub. L. 104-191
HMO Health maintenance organization
IPPS Acute care hospital inpatient prospective payment system
IRF Inpatient rehabilitation facility
IRF PAI Inpatient rehabilitation patient assessment instrument
IRF PPS Inpatient rehabilitation facility prospective payment system
JCAH Joint Commission on Accreditation of Hospitals
JCAHO Joint Commission on Accreditation of Hospital Organizations
LTCH Long-term care hospital
MedPAR Medicare Provider Analysis and Review File
[[Page 45675]]
PPS Prospective payment system
RIC Rehabilitation impairment category
SNF Skilled nursing facility
I. Background
A. Overview of the Inpatient Rehabilitation Facility Prospective
Payment System (IRF PPS)
Section 1886(j) of the Social Security Act (the Act) provides for
the implementation of a prospective payment system under Medicare for
inpatient hospital services furnished by a rehabilitation hospital or a
rehabilitation unit of a hospital (referred to as an inpatient
rehabilitation facility (IRF)). Sections 1886(d)(1)(B) and
1886(d)(1)(B)(ii) of the Act give the Secretary of Health and Human
Services (the Secretary) discretion in defining a rehabilitation
hospital and rehabilitation unit of a hospital. The regulations at 42
CFR 412.23(b), 412.25, and 412.29, specify the criteria for a hospital
to be classified as a rehabilitation hospital or rehabilitation unit.
Hospitals and units meeting such criteria are eligible to be paid on a
prospective payment basis as an IRF under the IRF PPS.
Payments made under the IRF PPS cover inpatient operating and
capital costs of furnishing covered rehabilitation services (that is,
routine, ancillary, and capital costs), but not costs of approved
educational activities, bad debts, and other services or items outside
the scope of the IRF PPS. Covered rehabilitation services include
services for which benefits are provided under Medicare Part A
(Hospital Insurance).
Payments under the IRF PPS are made on a per discharge basis. A
patient classification system is used to classify patients in IRFs into
case-mix groups (CMGs). The IRF PPS uses Federal prospective payment
rates across distinct CMGs. A majority of the CMGs are constructed
using rehabilitation impairment categories (RICs), functional status
(both motor and cognitive), and age (in some cases, cognitive status
and age may not be a factor in defining a CMG). Special CMGs are
constructed to account for very short stays, and for patients who
expire in the IRF.
For each CMG, we develop relative weighting factors to account for
a patient's clinical characteristics and expected resource needs. Thus,
the weighting factors account for the relative difference in resource
use across all CMGs. Within each CMG, the weighting factors are
``tiered'' based on the estimated effect that the existence of certain
comorbidities have on resource use.
The Federal prospective payment rates are established using a
standard payment amount (also referred to as the budget neutral
conversion factor). For each of the tiers within a CMG, the relative
weighting factors are applied to the budget neutral conversion factor
to compute the unadjusted Federal prospective payment rates.
Adjustments that account for geographic variations in wages (wage
index), for the percentage of low-income patients, and for facilities
located in a rural area are applied to the unadjusted Federal
prospective payment rates. In addition, adjustments are made for early
transfers of patients, interrupted stays, and high-cost outliers (cases
with unusually high costs).
(We note that, for cost reporting periods that began on or after
January 1, 2002 and before October 1, 2002, IRFs either transitioned
into the prospective payment system and received a ``blended payment,''
or elected to be paid 100 percent of the Federal IRF PPS rate. For cost
reporting periods beginning on or after October 1, 2002 (FY 2003), the
transition methodology has expired and payments for all IRFs are now
based on 100 percent of the adjusted Federal prospective payment under
the IRF PPS.)
Implementing regulations for the IRF PPS are located in 42 CFR part
412, subpart P. Regulations governing the requirements for
classification of hospitals as IRFs are located in 42 CFR 412.22,
412.23, 412.25 and 412.29.
A complete discussion of the development of the IRF PPS is included
in the August 7, 2001 final rule (66 FR 41316). We also have
established a CMS Web site that contains useful information regarding
the IRF PPS. The Web site URL is http://www.cms.hhs.gov/providers/irfpps/default.asp
and may be accessed to download or view
publications, software, and other information pertinent to the IRF PPS.
B. Requirements for Updating the Prospective Payment Rates Under the
IRF PPS
Section 412.628 of the regulations requires us to publish
information pertaining to the IRF prospective payment rates in the
Federal Register, on or before August 1 of the preceding fiscal year.
We are required to include in the Federal Register document the
classifications of the IRF case-mix groups (CMGs), the weighting
factors that are applied to the CMG in determining the payment rate,
and a description of the methodology and data used to compute the
prospective payment rates for the applicable fiscal year.
The initial FY 2002 IRF prospective payment rates were established
on August 7, 2001 in a final rule entitled ``Medicare Program;
Prospective Payment System for Inpatient Rehabilitation Facilities
(CMS-1069-F)'' in the Federal Register (66 FR 41316) and were effective
for cost reporting periods beginning on or after January 1, 2002. On
August 1, 2002, we published a notice in the Federal Register (67 FR
49928) that updated the IRF Federal prospective payment rates from FY
2002 to FY 2003 using the methodology specified in Sec. 412.624 of the
regulations. On July 1, 2002, we also published in the Federal Register
(67 FR 44073) a correcting amendment to the August 1, 2001 final rule.
Therefore, any reference in this final rule to the August 7, 2001 final
rule includes the provisions effective in the correcting amendment.
As discussed in section II of this preamble, on May 16, 2003, we
issued a proposed rule in the Federal Register (68 FR 26786) to update
the IRF Federal prospective payment rates from FY 2003 to FY 2004, to
be effective for discharges occurring on or after October 1, 2003 and
before October 1, 2004. For the proposed FY 2004 updates, we used the
same classifications and weighting factors that were used for the IRF
CMGs set forth in the August 7, 2001 final rule to update the IRF
Federal prospective payment rates from FY 2002 to FY 2003.
C. Operational Overview of the IRF PPS
In accordance with existing regulations at Sec. 412.606, upon the
admission and discharge of a Medicare Part A fee-for-service patient,
the IRF is required to complete the appropriate sections of a patient
assessment instrument. CMS has established the Inpatient Rehabilitation
Facility--Patient Assessment Instrument (IRF-PAI) for this purpose. All
required data must be electronically encoded into the IRF's PAI
software product. Generally, the software product includes patient
grouping programming called the GROUPER software. The GROUPER software
uses specific PAI data elements to classify (or group) a patient into a
distinct CMG and account for the existence of any relevant
comorbidities. The GROUPER software produces a 5-digit CMG number. The
first digit is an alpha-character that indicates the comorbidity tier.
The last 4 digits represent the distinct CMG number. (Free downloads of
the Inpatient Rehabilitation Validation and Entry (IRVEN) software
product, including the GROUPER software, are available at the CMS Web
site at http://
[[Page 45676]]
www.cms.hhs.gov/providers/irfpps/default.asp).
When a patient is discharged, the IRF completes the Medicare claim
(UB-92 or its equivalent) using the 5-digit CMG number and sends it to
the appropriate Medicare fiscal intermediary. (Claims submitted to
Medicare must comply with the electronic claim requirements found at
http://www.cms.hhs.gov/providers/edi/default.asp. All submitted claims
must also be in compliance with the Health Insurance Portability and
Accountability Act (HIPAA) program claim memoranda issued by us and
also published at that website, and as listed in the addenda to the
Medicare Intermediary Manual, Part 3, section 3600. Instructions for
the limited number of claims submitted to Medicare on paper are located
in Part 3 section 3604 of the Medicare Intermediary Manual.) The
Medicare fiscal intermediary processes the claim through its software
system. This software system includes pricing programming called the
PRICER software. The PRICER software uses the CMG number, along with
other specific claim data elements and provider-specific data, to
adjust the IRF's prospective payment for interrupted stays, transfers,
short stays, and deaths. The PRICER software also applies the
applicable adjustments to account for the IRF's wage index, percentage
of low-income patients, rural location, and outlier payments.
D. Issuance of Proposed Rule on the FY 2004 Updates
On May 16, 2003, we issued in the Federal Register (68 FR 26788) a
proposed rule in which we proposed to update the Federal prospective
payments rates under the IRF PPS and to make revisions and clarifying
changes to the policies governing the implementation of the IRF PPS. A
summary of our proposal follows:
We proposed to use FY 1999 acute care hospital wage data to compute
the IRF wage indices for FY 2004. (For FY 2003, we used FY 1997 acute
care hospital wage data to compute the IRF wage indices.) We believe
that the FY 1999 acute care hospital data are the best available
because they are currently the most recent complete final data.
However, any adjustments or updates made under section 1886(j)(6) of
the Act must be made in a budget neutral manner. Therefore, we proposed
to apply the methodology to update the wage indices for FY 2004, using
1999 acute care hospital data in a budget neutral manner.
We also proposed to update the underlying data used to compute the
IRF market basket index. As explained in Appendix D of the August 7,
2001 final rule, we used 1992 cost report data as the underlying data
to develop the excluded hospital with capital market basket that formed
the basis of the FY 2002 and FY 2003 IRF market basket index. We
proposed to use 1997 cost report data, which are the most recent data
available to form the basis of the FY 2004 IRF market basket index.
We further proposed to modify or clarify certain criteria for a
hospital or a hospital unit to be classified as an IRF. As stated in
the August 7, 2001 final rule, we did not change the survey and
certification procedures applicable to entitled seeking classification
as an IRF. Currently, to be paid under the IRF PPS, a hospital or unit
of a hospital must first be deemed excluded from the diagnosis-related
group (DRG)-based acute care hospital PPS (IPPS) under the general
requirements in subpart B of part 412 of the regulations. Second, the
excluded hospital or unit must meet the conditions for payment under
the IRF PPS at Sec. 412.604 of the regulations.
Lastly, we proposed to modify or clarify existing provisions of the
IRF PPS relating to the patient assessment process and the transmission
of patient data to CMS. However, we note that we did not propose any
refinements or changes to the FY 2002 case-mix classification system
(the CMGs and the corresponding relative weights) and the case-level
and facility-level adjustments, due to the lack of available data to
make such changes.
We received more than 6,900 timely items of correspondence
containing multiple comments on the May 16, 2003 proposed rule. Major
issues addressed by commenters included the following: enforcement of
the 75 percent rule (as discussed below); definition of a discharge;
waiver of the penalty for late transmission of the IRF-PAI; and changes
to the outlier policies. Summaries of the public comments received and
our responses to those comments are set forth below under the
appropriate subject headings.
Many commenters did not agree with our stated intention to enforce
the existing regulations at Sec. 412.23(b) whereby at least 75 percent
of an IRF's patient population must receive intensive rehabilitation
services for treatment of one or more of ten conditions specified in
regulations for the facility to be classified as an IRF (also known as
the 75 percent rule). In addition, on May 19, 2003, we hosted an IRF
Town Hall meeting in Baltimore, MD where patients, providers, and other
interested parties presented their views on the May 16, 2003 proposed
rule. We received numerous suggestions concerning changes to the 75
percent rule. Based on the level of public interest generated by this
issue, we have decided to revisit our policies concerning the 75
percent rule. In the very near future, we will be issuing a proposed
rule in the Federal Register that will contain a full discussion of our
proposed changes to the existing 75 percent rule.
II. Requirements and Conditions for Payment Under the IRF PPS
A. Background
Existing regulations at Sec. 412.604 describe the conditions that
must be met for an IRF to be paid under the IRF PPS. Section 412.604(a)
states the general requirements for payment to be made under the IRF
PPS and the effects on Medicare payment if the conditions described the
section are not met. Section 412.604(b) states the existing regulatory
provisions that must be met for a hospital or unit of a hospital to be
excluded from the IPPS and to be classified as an IRF. Section
412.604(c) requires an IRF to complete a patient assessment instrument
for each Medicare Part A fee-for-service patient admitted. Section
412.604(d) describes the limitations on IRFs for charging beneficiaries
who receive Medicare covered services. Section 412.604(e) describes the
requirements associated with furnishing inpatient hospital services
directly or under arrangement. Section 412.604(f) states the reporting
and recordkeeping requirements that IRFs must meet.
B. Provisions of the May 16, 2003 Proposed Rule
In the May 16,2003 proposed rule, we described several proposed
changes to the conditions or underlying requirements of Sec. 412.604.
Below we discuss the proposed change to the general conditions and
requirements. The specific changes relating to classification criteria
are addressed under section II.C. of this preamble.
As stated earlier, under Sec. 412.604(a), we specify the general
conditions for payment to be made under the IRF PPS and the effects on
Medicare payment if the conditions are not met. We proposed to make a
change in paragraph (a)(2) relating to the entity that takes the action
if the IRF fails to comply with the conditions of the section; that is
to withhold (in full or in part) or reduce Medicare payment to the IRF
until the facility provides adequate assurances of compliance, or to
classify the IRF as an inpatient hospital that is subject to the
conditions of 42 CFR part 412, subpart
[[Page 45677]]
C and is paid under the prospective payment systems specified in Sec.
412.1(a)(1). We proposed to specify that either CMS or the Medicare
fiscal intermediary may take such action, as appropriate.
Comment: We did not receive any comments concerning this proposed
change.
Response: We are therefore adopting the proposed change to Sec.
412.604(a)(2) to indicate that CMS or the Medicare fiscal intermediary
may take actions if the IRF does not meet the conditions specified in
the section.
C. Classification Criteria for IRFs Subject to the IRF PPS
Section 412.604(b) states that, subject to the special payment
provisions of Sec. 412.22(c), an IRF must meet the general criteria
set forth in Sec. 412.22 and the criteria to be classified as a
rehabilitation hospital or rehabilitation unit set forth in Sec.
412.23(b), Sec. 412.25, and Sec. 412.29 for exclusion from the IPPS
specified in Sec. 412.1(a)(1). These general criteria are located
under 42 CFR part 412, subpart B of the regulations. In the August 7,
2001 final rule implementing the IRF PPS, we did not make any changes
to the exclusion criteria and requirements to be classified as an IRF
under subpart B of part 412. Since the implementation of the IRF PPS, a
number of questions have been raised on the application of some of
these requirements and the necessity of other criteria.
Below, we discuss each requirement as it relates to the
classification of an IRF, the proposed changes, if any, included in the
May 16, 2003 proposed rule, the public comments received, and the
provisions of this final rule.
1. Relationship to IPPS
Section 1886 to the Act established a PPS for acute care inpatient
hospital services for cost reporting periods beginning on or after
October 1, 1983. Under section 1886(d)(1)(B) of the Act, several types
of hospitals and units of hospitals are excluded from the IPPS.
Sections 1886(d)(1)(B) and 1886(d)(1)(B)(ii) of the Act specify that
rehabilitation hospitals and units (as defined by the Secretary) are
excluded from the IPPS. The Secretary has defined rehabilitation
hospitals and units in regulations at 42 CFR part 412 subpart B.
Extensive discussion and public comments on developing the criteria
under which a hospital or unit of a hospital can be excluded from the
IPPS as an IRF began with the September 1, 1983 publication of the
interim final rule with comment period in the Federal Register (48 FR
39752). (That interim final rule discussed the provisions necessary to
implement section 1886 of the Act.) On January 3, 1984, we published in
the Federal Register a final rule (49 FR 234) that responded to public
comments on the provisions of the September 1, 1983 interim final rule
and established the initial set of criteria that must be met by a
hospital or unit of a hospital seeking exclusion from the IPPS as an
IRF. Since the publication of these earlier rules, the criteria to be
an IRF have been revised and codified at 42 CFR part 412, subpart B of
the existing Medicare regulations.
2. IRF Hospital Services Furnished to HMOs or CMP Enrollees
Section 412.20(b) of the existing regulations state that covered
inpatient hospital services furnished to Medicare beneficiaries by a
rehabilitation hospital or rehabilitation unit that meet the conditions
of Sec. 412.604 are paid under the IRF PPS described in subpart P of
42 CFR part 412.
In the May 16, 2003 proposed rule, we proposed to redesignate
existing Sec. 412.20(b) as Sec. 412.20(b)(1) and add Sec.
412.20(b)(2) to ensure that inpatient hospital services will not be
paid under the IRF PPS if the services are paid by a health maintenance
organization (HMO) or competitive medical plan (CMP) that elects not to
have CMS make payments to an IRF for services, which are inpatient
hospital services, furnished to the HMO's or CMP's Medicare enrollees
under 42 CFR Part 417. This provision is similar to the provision at
Sec. 412.20(d)(3) that prohibits payments under the IPPS for similar
HMO or CMP services.
Comment: We did not receive any comments concerning this proposed
change.
Response: Therefore, we are adopting the proposed redesignation of
existing Sec. 412.20(b) as Sec. 412.20(b)(1) and add Sec.
412.20(b)(2) to ensure that inpatient hospital services will not be
paid under the IRF PPS if the services are paid by a HMO or CMP that
elects not to have CMS make payments to an IRF for services, which are
inpatient hospital services, furnished to the HMO's or CMP's Medicare
enrollees under 42 CFR part 417.
3. Bed-Number Criteria for Freestanding Satellite IRFs
Section 412.22(h) describes the requirements to be a satellite
facility of a hospital that is excluded from the IPPS. The following
describes our proposed changes in the May 16, 2003 proposed rule to
eliminate the provision that limits the bed size of a satellite IRF.
In the July 30, 1999 Federal Register (64 FR 41540), we revised
Sec. 412.22(h) to require that in order to be excluded from the acute
care hospital inpatient PPS, a satellite of a hospital: (1) Effective
for cost reporting periods beginning on or after October 1, 2002, is
not under the control of the governing body or chief executive officer
of the hospital in which it is located, and furnishes inpatient care
through the use of medical personnel who are not under the control of
the medical staff or chief medical officer of the hospital in which it
is located; (2) must maintain admission and discharge records that are
separately identified from those of the hospital in which it is located
and are readily available; (3) cannot commingle beds with beds of the
hospital in which it is located; (4) must be serviced by the same FI as
the hospital of which it is a part; (5) must be treated as a separate
cost center of the hospital of which it is a part; (6) for cost
reporting and apportionment purposes, must use an accounting system
that properly allocates costs and maintains adequate data to support
the basis of allocation; and (7) must report costs in the cost report
of the hospital of which it is a part, covering the same fiscal period
and using the same method of apportionment as the hospital of which it
is a part. In addition, the satellite facility must independently
comply with the qualifying criteria for exclusion from the IPPS.
Lastly, the total number of State-licensed and Medicare-certified beds
(including those of the satellite facility) for a hospital (other than
a children's hospital) that was excluded from the IPPS for the most
recent cost reporting period beginning before October 1, 1997, may not
exceed the hospital's number of beds on the last day of that cost
reporting period.
In Sec. 412.22(h)(1), we define a satellite as ``a part of a
hospital that provides inpatient services in a building also used by
another hospital, or in one or more entire buildings located on the
same campus as buildings used by another hospital.'' Satellite
arrangements exist when an existing hospital that is excluded from the
IPPS and that is either a freestanding hospital or a hospital-within-a-
hospital under Sec. 412.22(e) shares space in a building or on a
campus occupied by another hospital in order to establish an additional
location for the excluded hospital. The July 30, 1999 IPPS final rule
(64 FR 41532-41534) includes a detailed discussion of our policies
regarding Medicare payments for satellite facilities of hospitals
excluded from the IPPS.
[[Page 45678]]
In accordance with section 1886(b) of the Act, as amended by
sections 4414 and 4416 of Pub. L. 105-33, we established two different
target limits on payments to excluded hospitals, depending upon when
the IRF was established. The target amount limit for an IRF with a cost
reporting period beginning before October 1, 1997 was set at the 75th
percentile of the target amounts of IRFs, as specified in Sec.
413.40(c)(4)(iii), updated to the applicable cost reporting period. For
IRFs with a cost reporting period beginning on or after October 1,
1997, under section 4416 of Pub. L. 105-33, the payment amount for the
hospital's first two 12-month cost reporting periods, as specified at
Sec. 413.40(f)(2)(ii)(A) and (B), could not exceed 110 percent of the
national median of target amounts of IRFs for cost reporting periods
ending during FY 1996, updated by the hospital market basket increase
percentage to the first cost reporting period in which the IRF receives
payment.
Because we were concerned that a number of pre-1997 excluded
hospitals (including IRFs), governed by Sec. 413.40(c)(4)(iii), would
seek to create satellite arrangements in order to avoid the effect of
the lower payment caps that would apply to new hospitals under Sec.
413.40(f)(2)(ii), we established rules regarding the exclusion of and
payments to satellites of existing facilities. If the number of beds in
the hospital or unit (including both the base hospital or unit and the
satellite location) exceeds the number of State-licensed and Medicare-
certified beds in the hospital or unit on the last day of the
hospital's or unit's last cost reporting period beginning before
October 1, 1997, the facility would be paid under the IPPS. Therefore,
while an excluded hospital or unit could ``transfer'' bed capacity from
a base facility to a satellite, if it increased total bed capacity
beyond the level it had in the most recent cost reporting period before
October 1, 1997 (see 64 FR 41532-41533, July 30, 1999), the hospital
will not be paid as a hospital excluded from the IPPS. However, no
similar limitation was imposed with respect to the number of total beds
in excluded hospitals and units and satellite facilities of those
excluded hospitals and units established after October 1, 1997, since
those excluded hospitals and units were subject to the lower payment
limits of section 4416 of Pub. L. 105-33, and would, therefore, not
benefit from the higher payment cap on target amounts under Sec.
413.40(c)(4) by creating a satellite facility.
On March 22, 2002, we published a proposed rule in the Federal
Register (67 FR 13416) that set forth the proposed Medicare PPS for
long-term care hospitals (LTCHs). Discussion of the comments received
on that LTCH proposed rule and our responses were published in a final
rule on August 30, 2002 Federal Register (67 FR 55954). Specific
comments received were discussed on page 56013 of the LTCH final rule
that urged us to eliminate the bed-number criteria in Sec.
412.22(h)(2)(i) for pre-1997 IRFs since the applicable PPS is fully
phased in. The rationale for the bed-number criteria provision at Sec.
412.22(h)(2)(i) was the potential for circumventing the PPS by creating
a satellite location that could have their payment based on a higher
TEFRA target amount cap. However, once an IRF's payment under the IRF
PPS does not include a TEFRA-based payment (referred to as the
facility-specific payment under the transition period described in
Sec. 412.626) and is based on 100 percent of the Federal prospective
payment rate, we believe that the need for the bed-number criteria does
not exist because IRF prospective payments will be the same regardless
of when the IRF was established. Because all IRFs now will be paid 100
percent of the Federal prospective payment rates, in the May 16, 2003
proposed rule, we proposed to eliminate the bed-number criteria by
revising Sec. 412.22(h) relating to freestanding satellite IRFs. We
also proposed to eliminate the bed-number criteria for IRF satellite
units of a hospital by revising Sec. 412.25(e) to conform to the
proposed change in Sec. 412.22(h).
Comment: We received a number of comments in support of the
proposed elimination of the bed-number criteria. However, one commenter
was concerned with the increase in paperwork burden.
Response: We are adopting the proposed elimination of the bed-
number criteria by revising Sec. 412.22(h) for freestanding IRFs and
Sec. 412.25(e) for IRF units. The commenter was not specific on how
this change would increase paperwork burden. We believe that this
change makes the policy of creating a satellite IRF less restrictive
and less burdensome to verify that the bed-number criteria were met.
Accordingly, we do not believe that this change increases paperwork
burden and, thus, we did not include an estimate of time associated
with eliminating the bed-number criteria in the Collection of
Information section of the May 16, 2003 proposed rule.
4. Technical Changes
a. Excluded Rehabilitation Units: Additional Requirements:
Under Sec. 412.29(a), an IRF unit must have met either the
requirements for new units or converted units under Sec. 412.30.
Section 412.29(a)(2) contains an incorrect reference to the
requirements for converted units as ``Sec. 412.30(b).'' The correct
reference to the requirements for converted units is Sec. 412.30(c).
Accordingly, we proposed to make a technical correction by changing the
reference in Sec. 412.29(a)(2) to state ``Converted units under Sec.
412.30(c).''
Comment: We did not receive any comments concerning this proposed
technical correction.
Response: We are adopting the proposed technical correction to
Sec. 412.29(a)(2) to state ``Converted units under Sec. 412.30(c).''
b. Exclusion of New Rehabilitation Units and Expansion of Units
Already Excluded:
Under Sec. 412.30(b)(2), a hospital that seeks exclusion of a new
IRF unit may provide written certification that the inpatient
population the hospital intends the unit to serve meets the
requirements of Sec. 412.23(b)(2). Section 412.30(b)(3) contains an
incorrect reference to the required written certification described in
``paragraph (a)(2)'' of this section. The correct reference to the
written certification is described in paragraph (2) of Sec. 412.30(b).
Accordingly, we proposed to make a technical correction by changing the
current reference to Sec. 412.30(a)(2) in Sec. 412.30(b)(3) to state
``The written certification described in paragraph (b)(2) * * * .'' In
the proposed rule, we incorrectly stated that the reference to Sec.
412.23(a)(2) was in Sec. 412.23(b)(3). It should have read that the
reference to Sec. 412.30(a)(2) was in Sec. 412.30(b)(3).
Comment: We did not receive any comments concerning this proposed
technical correction.
Response: We are adopting the proposed technical correction to
Sec. 412.30(b)(3) to state ``The written certification described in
paragraph (b)(2) * * * .''
Section 412.30(d)(1) defines new bed capacity for the purposes of
expanding an existing excluded IRF unit. Section Sec. 412.30(d)(2)(i)
contains an incorrect reference to the definition of new bed capacity
under ``paragraph (c)(1)'' of this section. The correct reference to
the definition of new bed capacity is paragraph (d)(1). Accordingly, we
proposed a technical correction to change the current reference to
[[Page 45679]]
paragraph (c)(1) under paragraph (d)(2)(i) to state ``under paragraph
(d)(1) of this section.''
Comment: We did not receive any comments concerning this proposed
technical correction.
Response: We are adopting the proposed technical correction to
change the current reference to paragraph (c)(1) under paragraph
(d)(2)(i) to state ``under paragraph (d)(1) of this section.''
III. Research To Support Case-Mix Refinements to the IRF PPS
A. Research on IRFs
As described in the August 7, 2001 final rule, we contracted with
the RAND Corporation (RAND) to analyze IRF data to support our efforts
in developing the CMG patient classification system and the IRF PPS. As
discussed below, we are continuing our contract with RAND to support us
in developing refinements to the classification and PPS, and in
developing a system to monitor the effects of the IRF PPS. In addition,
under a separate contract, we are developing and defining measures to
monitor the quality of care and services provided to Medicare
beneficiaries receiving care in an IRF.
B. RAND Research Background
In 1995, the RAND Corporation (RAND) began extensive CMS-sponsored
research to assist us in developing a per discharge-based inpatient
rehabilitation PPS model using the patient classification system known
as Functional Independence Measures-Functional Related Groups (FIM-
FRGs) using 1994 data. Initial results of RAND's earliest research were
revealed in September 1997 and are contained in two reports available
through the National Technical Information Service (NTIS). The reports
are entitled ``Classification System for Inpatient Rehabilitation
Patients--A Review and Proposed Revisions to the Functional
Independence Measure-Function Related Groups,'' NTIS order number PB98-
105992INZ; and ``Prospective Payment System for Inpatient
Rehabilitation,'' NTIS order number PB98-106024INZ.
In summarizing these reports, RAND found in the research based on
1994 data that, with limitations, the FIM-FRGs were effective
predictors of resource use based on the proxy measurement: length of
stay. FRGs based upon FIM motor score, cognitive scores, and age
remained stable over time. Researchers at RAND developed, examined, and
evaluated a model payment system based upon FIM-FRG classifications
that explains approximately 50 percent of patient costs and
approximately 60 percent to 65 percent of the costs at the facility
level. Based on this earlier analysis, RAND concluded that an IRF PPS
using this model is feasible.
In July 1999, we contracted with RAND to update the earlier study.
The update used their earlier research and included an analysis of FIM
data, the FRGs, and the model rehabilitation PPS using more recent data
from a greater number of IRFs. The purpose of updating the earlier
research was to develop the underlying data necessary to support the
Medicare IRF PPS based on case-mix groups for the original IRF PPS
proposed rule. RAND expanded the scope of their earlier research to
include the examination of several payment elements, such as
comorbidities, facility-level adjustments, and implementation issues,
including evaluation and monitoring. This research was used in our
development of the IRF PPS. RAND issued a report on its research which
can be found on our Web site at http://cms.hhs.gov/providers/irfpps/research.asp
.
C. Continuing Research
RAND's data efforts over the past year were concentrated on
archiving data from the first phase of the project, constructing the
analytic files for monitoring special studies, and preparing for post-
IRF PPS data that will be used for monitoring and for refinement.
RAND's monitoring effort seeks to measure changes in IRF care, post-IRF
care, and postacute care following implementation of the IRF PPS. The
refinement effort necessitates that the methods used to create the
initial set of CMGs weights and facility adjustments be applied to more
recent IRF data.
Section 125(b) of the Medicare, Medicaid, and SCHIP [State
Children's Health Insurance Program] Balanced Budget Refinement Act
(BBRA), Pub. L. 106-113, provides that the Secretary shall conduct a
study of the impact on utilization and beneficiary access to services
of the implementation of the IRF prospective payment system. A report
on the study must be submitted to the Congress not later than 3 years
after the date the IRF prospective payment system is first implemented.
Accordingly, to continue RAND's research, data from other health care
settings are needed to assess the impact on utilization and beneficiary
access to services because the IRF PPS can have an impact among other
settings that deliver rehabilitative services. If we only analyzed data
from IRFs, our assessment of utilization and access would not be
complete. In addition to the data obtained from the IRF Medicare
claims, functional measures from the IRF PAI, and cost reports, other
data are required to show the utilization and access of rehabilitative
services delivered in other settings, such as SNFs, LTCHs, home health
agencies, and outpatient rehabilitation facilities. Analysis of these
data may show changes in utilization of inpatient rehabilitation
services and if the types or severity of patients treated in IRFs
differs significantly from the data used to create the CMGs, case-mix
refinements may be needed.
In the next phase of their research, RAND will be developing and
testing possible improvements to the payment system using existing
data. This analysis will focus on potential improvements to the methods
used to establish the CMGs, facility adjustments (such as, teaching,
rural, and low-income adjustments), and comorbidities.
In constructing the CMGs for the IRF PPS, one of our primary goals
was to develop a payment methodology that would match payment to
resource use as closely as possible. It is important to continue to
examine the IRF PPS to ensure that the system remains a good predictor
of resource use over time. Further, more complete data will be
available in which we can assess the reliability and validity of the
IRF PPS. We also expect improvements with certain data elements. For
example, prior to implementation of the IRF PPS, IRFs were not required
to code comorbidities. As a result of implementing the IRF PPS, we
expect that IRFs will improve coding comorbidities because collection
of this information may affect their payment amount. These improved
data will allow us to determine the effects various conditions have on
the cost of a case.
RAND will use post-IRF PPS data when they become available, as well
as existing data to support their research. RAND research includes:
analyses of methodological improvements in the creation of CMGs,
methodological improvements to the statistical approaches used to
derive payment adjustments and characterizing IRFs into groups based on
their case-mix. Currently, RAND does not have enough post-IRF PPS data
to analyze potential modifications to the classification and payment
systems. Further, we will need a sufficient amount of these data to be
able to determine if future refinements are needed. Because IRFs began
to be paid under the IRF PPS based on their cost report start date that
occurred on or after January 1, 2002, sufficient data will not be
available for those facilities
[[Page 45680]]
whose cost report start date occurs later in the calendar year.
Therefore, in this final rule, we are not changing the CMG
classification system or the facility-level and case-level adjustments,
other than the wage adjustment. The adopted changes for the wage
adjustment are discussed in detail in section VI. of this final rule.
D. Staff Time Measurement Data
As described in the August 7, 2001 final rule, we contracted with
Aspen Systems Corporation (ASPEN) to collect actual resource use or
staff time measurement (STM) data in a sample of IRFs. Data were
collected using the MDS-PAC patient assessment instrument. FIM data
were collected at the same time. We believe that these data, which
measure actual nursing and therapy time spent on patient care, may be
used to enhance our ability to refine the CMGs.
RAND received ASPEN's analytical database in early spring 2002.
After a brief period of working with the data, RAND discovered that
their study required details that were not in this summary database.
Specifically, about half of the cases within the analytic database had
data for only the first part of the patient's stay. RAND needed to have
explicit data that tracked how staff time usage changed throughout a
patient's stay and the analytic database contained only the averages of
the observed portions of the patient's stay. RAND also needed data on
patients during the second part of their stay.
In late July 2002, RAND received the backup data, but did not
assess it until late August 2002. Further technical questions about the
data still exist and must be answered before the modeling of the data
can occur.
E. Monitoring
A greater part of the ongoing work to be performed by RAND is an
analysis to develop a potential system of indicators to monitor the
impact and performance of the IRF PPS. As part of their analysis, RAND
will case-mix adjust these measures and distinguish between those that
will track the direct impact of PPS on IRFs and IRF patients, and those
that will track changes in the pool of potential IRF patients. We
anticipate that RAND will develop a set of possible indicators needed
to monitor the IRF PPS, develop potential access to care models and
measures, and define a possible measure of outcomes.
F. Need To Develop Quality Indicators for IRFs
The IRF PAI is the data collection instrument for IRFs. It contains
a blend of FIM items and quality and medical needs questions. The
quality and medical needs questions (which are currently collected on a
voluntary basis) may need to be modified to encapsulate those data
necessary for calculation of a quality indicator in the future. One of
the primary tasks of the RAND contract is to identify quality
indicators pertinent to the inpatient rehabilitation setting and
determine what information is necessary to calculate those quality
indicators. These tasks include reviewing literature and other sources
for existing rehabilitation quality indicators. It also involves
identifying organizations involved in measuring or monitoring quality
of care in the inpatient rehabilitation setting. RAND will convene a
technical expert panel to identify a series of quality indicators that
can be measured using the IRF-PAI. In addition, quality indicators and
data elements must be developed for calculation as well as the
independent testing of the developed indicators.
We note that the National Library of Medicine, which is part of the
National Institutes of Health within the Department of Health and Human
Services, has entered into an agreement with the College of American
Pathologists to license the Systematized Nomenclature of Medicine--
Clinical Terms (SNOMED CT). SNOMED CT provides a common language that
enables a consistent way of capturing, sharing, and aggregating health
care data across specialties and sites of care. If in the future, CMS
makes changes to the IRF PAI, we will consider whether SNOMED CT
includes IRF PAI data terminology and we will consider including SNOMED
CT terms. For further information, please visit SNOMED's Web site at
http://www.snomed.org or the National Library of Medicine Web site at
http://www.nlm.hih.gov.
IV. The IRF PPS Patient Assessment Process
A. Background
In the August 7, 2001 IRF PPS final rule (66 FR 41316), we
described how an IRF would use the IRF Patient Assessment Instrument
(PAI) to assess an IRF patient. Training on the IRF-PAI assessment
process was conducted in Baltimore, Maryland, Chicago, Illinois, San
Francisco, California, and Atlanta, Georgia during the fall of 2001. We
also created videotapes of the training that we made available to IRFs
free of charge. IFRs were instructed to go to the CMS IRF PPS website
to request copies of the videotapes and to access electronic copies of
the IRF-PAI manual, which contained detailed instructions regarding the
completion of the IRF-PAI.
B. Patient Rights
Section 412.608 of the existing regulations specifies that prior to
performing the IRF-PAI assessment, and in order to receive payment from
Medicare, the IRF must inform the patient of the rights contained in
this section. These rights are as follows:
(1) The right to be informed of the purpose of the patient
assessment data collection;
(2) The right to have the patient assessment information collected
kept confidential and secure;
(3) The right to be informed that the patient assessment
information will not be disclosed to others, except for legitimate
purposes allowed by the Federal Privacy Act and Federal and State
regulations;
(4) The right to refuse to answer patient assessment questions; and
(5) The right to see, review, and request changes on the patient
assessment instrument.
In addition to the rights specified in Sec. 412.608, a patient has
privacy rights under the Privacy Act of 1974 (5 U.S.C 552a(e)(3)), and
45 CFR 5b.4(a)(3). We have elaborated on these privacy rights in this
Preamble statement in order to avoid any confusion. The Privacy Act and
45 CFR 5b.4(a)(3) require that an individual be informed of the
following: the authority by which individually identifiable information
is being collected by a Federal agency and maintained in a system of
records; whether providing the information is voluntary or mandatory;
the principal purpose for collecting the information; the routine uses
for release of the information; and the effect refusal to provide
requested information may have on the individual. The Federal agency
should be identified, as well as the location of the system of records.
In order to ensure compliance with the Privacy Act of 1974 and 45 CFR
5b.4(a)(3), in the May 16, 2003 proposed rule, we proposed to revise
Sec. 412.608 to specify that, prior to performing the IRF-PAI
assessment, an IRF clinician must give each Medicare inpatient specific
privacy information forms.
We published these proposed privacy forms in Appendix B of the May
16, 2003 proposed rule (and are including them under the Appendix of
this final rule). The first proposed form, entitled ``Privacy Act
Statement--Health Care Records,'' is a detailed description of the
patient's privacy rights under the Privacy Act of 1974. The second
proposed form, entitled ``Data
[[Page 45681]]
Collection Information Summary for Patients in Inpatient Rehabilitation
Facilities'' is the simplified plain language summary of the Privacy
Act Statement--Health Care Records. We proposed to require that both of
these forms be given to a patient before beginning the IRF-PAI
assessment. These actions on the part of an IRF would fulfill the
requirement that the patient be informed of the five rights specified
in Sec. 412.608. In addition, in this final rule, we have made
technical changes to the proposed Sec. 412.608. We have deleted
proposed Sec. 412.608(c) because it was redundant of proposed Sec.
412.608(a)(2), and have redesignated proposed Sec. 412.608(d) as Sec.
412.608(c) and proposed Sec. 412.608(e) as Sec. 412.608(d). We note
that when an IRF clinician gives a patient the forms entitled ``Data
Collection Information Summary for Patients in Inpatient Rehabilitation
Facilities'' and the ``Privacy Act Statement-Health Care Records''
prior to performing an assessment, these forms do not satisfy the
privacy provisions contained in the HIPAA Privacy Rule (65 FR 82462 as
modified by 67 FR 53182). For example, these forms do not meet the
privacy notice requirements of the HIPAA Privacy Rule (see 45 CFR
164.520).
Health plans and health care providers must meet the notice
requirements of the HIPAA Privacy Rule by giving a Notice of Privacy
Practices to their patients. The Notice of Privacy Practices describes
a health plan or health care provider's uses and disclosures of
protected health information and the individual rights that patients
have with respect to their protected health information.
Comment: One commenter suggested adding the text, ``simplified
plain language,'' to the subtitle of the form entitled ``Data
Collection Information Summary for Patients in Inpatient Rehabilitation
Facilities.''
Response: We agree with the commenter and have revised the title of
the ``Data Collection Information Summary for Patients in Inpatient
Rehabilitation Facilities'' to include the phrase ``Simplified Plain
Language'' as a subtitle.
Comment: One commenter requested that the two patient rights forms
be posted on the IRF PPS website and that they also be made available
in Spanish.
Response: We agree with the commenter and will post the two privacy
forms on the IRF PPS website and make them available in Spanish.
Comment: We received one comment concerning patients' rights. The
commenter supported the proposed change, however, several members of
the commenter's organization have raised concerns about an additional
paperwork burden.
Response: We disagree with the commenter and estimate that it will
take no more than one minute to document the fact that the IRF has
given a patient a copy of his or her rights, even assuming that the
rights statement is the only handout. We anticipate that the rights
statement will be one of several handouts that a patient would receive
and that as a matter of prudent business and medical procedures,
facilities have a mechanism in place to document that patients have
been given all the necessary paperwork.
C. When the IRF-PAI Must Be Completed
Under existing Sec. 412.606(b), an IRF must use the IRF-PAI to
assess Medicare Part A fee-for-service inpatients. Section
412.610(c)(1)(i)(A) specifies that the admission assessment covers the
first 3 calendar days of the inpatient's current IRF Medicare Part A
fee-for-service hospitalization. Section 412.610(c)(1)(i)(B) specifies
that the admission assessment reference date is the third day of the 3-
day admission assessment time period. Section 412.610(c)(1)(i)(C)
specifies that the IRF-PAI for the admission assessment must be
completed on the calendar day that follows the admission assessment
reference day.
We are concerned that IRFs are interpreting Sec.
412.610(c)(1)(i)(C) to mean that they may not start to record data on
the IRF-PAI before the calendar day that follows the admission
assessment reference day. This interpretation is not our intent. The
``completion requirement'' of the IRF-PAI indicates the date that the
IRF's staff must have completed its recording on the IRF-PAI of the
assessment data that the IRF's clinical staff obtained during an
assessment of the inpatient that was performed during the admission
assessment time period. In other words, the date when the IRF-PAI must
be completed is the deadline date when the process of recording data on
the IRF-PAI must be finished. The IRF's staff is permitted to enter
assessment data on the IRF-PAI prior to the deadline date.
D. Recording IRF-Data Based on a Patient's Performance
How data are recorded on the IRF-PAI is specified in the IRF-PAI
item-by-item guide, entitled the ``IRF-PAI Training Manual Revised 01/
16/02.'' The instructions contained in the IRF-PAI item-by-item guide
are, when possible, very similar to the rules for coding the patient
assessment instrument that we used as the model for the IRF-PAI. The
model for the IRF-PAI was the patient assessment instrument published
by Uniform Data System for Medical Rehabilitation (UDSmr).
The UDSmr rules for coding their assessment instrument specify that
an item's score should reflect an inpatient's lowest level of
functioning. Consequently, in order to be consistent with how an
inpatient's functional performance was scored on the UDSmr patient
assessment instrument, the IRF-PAI item-by-item guide, likewise,
specifies that a patient's assessment must indicate the patient's
lowest level of functioning.
During the admission assessment, an IRF clinician records different
types of data on the IRF-PAI. We believe that the sources of the data
recorded in the categories of the IRF-PAI entitled ``Identification
Information,'' ``Admission Information,'' and ``Payer Information''
allows an IRF to quickly obtain and record these data. For these
categories of data, the source of the data may be the patient, the
patient's medical record, other patient documents, the patient's
family, or a person that has personal knowledge of the patient.
In order to complete the data for the IRF-PAI categories entitled
``Function Modifiers'' and ``FIMTM Instrument,'' the
clinician observes the patient's functional performance over the
admission assessment time period, and makes clinical judgments
regarding the patient's performance. Consequently, due to how the data
for the Function Modifiers and FIMTM categories are
obtained, we believe it is the time span that it takes to assess the
patient's functional performance that will usually determine how long
it takes to complete the admission assessment.
Page III-3 of the IRF-PAI manual states that when determining the
level of a patient's functional performance, the clinician is to
``record the lowest (most dependent) score.'' We believe that the
patient's functional performance improves in the time span between the
patient's admission and discharge from the IRF. We also believe that on
the patient's admission day and for the following next few days, a
patient's functional performance is poor in comparison to functional
performance on subsequent days of the patient's current IRF
hospitalization. Therefore, during the part of the admission assessment
that is the first or second day of the patient's current IRF
hospitalization, we believe that a patient's functional performance
will usually be scored as indicating the most
[[Page 45682]]
dependence or the lowest level of functioning.
As stated previously, the IRF's clinical staff is permitted to
record assessment data on the IRF-PAI at any time during the admission
assessment process. Also, as stated previously, we believe it is the
scoring of a patient's functional performance that will determine how
long it takes to complete the admission assessment. The combination of:
(1) Being able to record assessment data at any time during the
admission assessment, (2) the requirement that the lowest level of
functional performance be recorded, and (3) the lowest level of
functional performance that will usually occur on the first or second
day of the admission assessment, makes it possible to finish obtaining
and recording all the assessment data before the day that follows the
admission assessment reference date. However, in accordance with Sec.
412.610(c)(1)(i)(C), an IRF has until the day following the admission
assessment reference day to complete the IRF-PAI.
In order to clarify that Sec. 412.610(c)(1)(i)(C) does not
prohibit the IRF from recording any or all of the data on the IRF-PAI
before the day that follows the admission assessment reference day, in
the May 16, 2003 proposed rule we proposed to revise Sec.
412.610(c)(1)(i)(C) to indicate that the IRF-PAI must be completed by
the calendar day that follows the admission assessment reference day.
Comment: A commenter expressed agreement with the proposed change.
Response: We are adopting the proposed change as final without
modification.
E. Transmission of IRF-PAI Data
As specified in Sec. 412.606(b), ``Patient assessment
instrument,'' an IRF must use the IRF-PAI to assess Medicare Part A
fee-for-service inpatients. There are nine categories of IRF-PAI
assessment data. The nine categories are entitled ``identification
information, admission information, payer information, medical
information, medical needs, function modifiers, the FIMTM
instrument, discharge information, and quality indicators''. The data
from some of these categories are used to classify a patient into a
CMG.
It is the CMG classification code, not the IRF-PAI raw data itself,
that is part of the claim data the IRF submits to its fiscal
intermediary when the IRF submits data in order to be paid for the
services it furnished to the inpatient. We believe that an IRF's
clinical staff will initially use the paper version of the IRF-PAI to
record its assessment data. In accordance with Sec. 412.610(d), the
IRF would use the data that it recorded on the paper version of the
IRF-PAI to enter the IRF-PAI data into an electronic version of the
document. The electronic version of the IRF-PAI uses the patient
assessment data to classify a patient into a CMG. Under the IRF PPS, it
is the CMG payment code, along with other information that the IRF
submits to the fiscal intermediary that will determine the payment the
IRF receives for the services the IRF furnished to a Medicare Part A
fee-for-service beneficiary.
Section 412.614 specifies that an IRF must transmit to us the IRF-
PAI assessment data for each Medicare Part A fee-for-service inpatient.
It is the electronic version of the IRF-PAI that enables an IRF to
transmit the IRF-PAI data to us. We require that IRFs transmit IRF-PAI
data so that we have the IRF-PAI data that are associated with the CMG
payment code that the IRF submitted to its fiscal intermediary.
In most cases, an IRF will submit claims data, including the
patient's CMG, to the fiscal intermediary in order to be paid for the
services it furnished to a Medicare Part A fee-for-service inpatient.
However, there are situations when the IRF would submit claims data to
its fiscal intermediary, but the submission of the claims data is not
for the purpose of being paid for any of the services the IRF furnished
to a Medicare Part A fee-for-service inpatient.
In these situations, Medicare operational procedures that were in
effect before implementation of the IRF PPS require an IRF to send
claims data to the FI. The purpose of the IRF sending claims data to
the FI in these situations is to enable Medicare to monitor a
beneficiary's period of entitlement. For instance, an IRF must still
send the fiscal intermediary claims data even if the inpatient's non-
Medicare primary payer paid for all of the IRF services that the IRF
furnished to the Medicare Part A fee-for-service inpatient. Another
instance when the IRF must still send the FI claims data is when an
inpatient's non-Medicare primary payer does not pay for any of the
services, and these services also do not qualify for payment under the
IRF PPS.
We want to relieve the IRF of the burden of transmitting IRF-PAI
data to us when the IRF is not requesting that Medicare pay for any of
the services the IRF furnished to a Medicare Part A fee-for-service
inpatient. Accordingly, in the May 16, 2003 proposed rule, we proposed
to revise Sec. 412.614 to specify that paragraph (a) is a general
rule.
We also proposed to further revise Sec. 412.614 by adding a new
Sec. 412.614(a)(3) to specify that the IRF is not required to, but
may, transmit the IRF-PAI data for a Medicare Part A fee-for-service
inpatient when Medicare will not be paying the IRF for any of the
services the IRF furnished to that inpatient.
Comment: We received one public comment supporting the proposed
change.
Response: We are adopting the proposed change as final without
modification.
F. Revision of the Definition of Discharge
Existing Sec. 412.602 specifies that a discharge has occurred when
the patient has been formally released from the hospital, or has died
in the hospital, or when the patient stops receiving Medicare-covered
Part A inpatient rehabilitation services. Our intention in specifying
this definition of when a discharge has occurred under the IRF PPS was
to try to ensure that Medicare paid an IRF only for furnishing an IRF
level of services to the Medicare Part A fee-for-service inpatient.
However, in contrast to when a patient is formally released from the
IRF or dies, the time when a patient stops receiving Medicare-covered
Part A IRF services may be subject to different interpretations,
resulting in different determinations of when a discharge has occurred.
Various determinations of when a discharge has occurred can lead to
inconsistencies in determining the discharge date. In these situations,
IRFs furnishing the same services for the same period of time may be
paid differently, because the discharge date determines a patient's
length-of-stay. The patient's length-of-stay is one of the factors that
determines the amount of the CMG payment. For example, under Sec.
412.624(f), a patient's length-of-stay as determined by the inpatient's
discharge date may affect the amount of the IRF's CMG payment when a
patient is transferred from an IRF to another site of care.
In addition, there may be cases when an IRF believes an inpatient
no longer has a medical need for Medicare-covered Part A inpatient
rehabilitation services, but the IRF believes that the inpatient has a
medical need for an SNF level of services. However, due to
circumstances beyond the IRF's control, the IRF is unable to formally
release the patient, because the IRF cannot place the patient in an SNF
setting. In that situation, according to section 1861(v)(1)(G)(i) of
the Act and
[[Page 45683]]
Sec. 424.13(b), a physician may certify or recertify that the patient
needs to continue to be hospitalized in the IRF. The effect of the
physician's certification or recertification is that under Medicare the
patient is not considered discharged until the patient is formally
released from the IRF.
In consideration of what can occur when discharge is defined as
being when the inpatient stops receiving Medicare-covered Part A
inpatient rehabilitation services, in the May 16, 2003 proposed rule,
we proposed to revise the definition of ``discharge'' under Sec.
412.602 by removing the phrase ``(2) The patient stops receiving
Medicare-covered Part A inpatient rehabilitation services, unless the
patient qualifies for continued hospitalization under Sec. 424.13(b)
of this chapter; or''. Under the proposed revised definition, discharge
would mean a Medicare patient in an inpatient rehabilitation facility
is considered discharged when (1) the patient is formally released from
the inpatient rehabilitation facility; or (2) the patient dies in the
inpatient rehabilitation facility.
Comment: We received a comment requesting that CMS not revise the
definition of discharge as specified in Sec. 412.503 that applies to
patients in an LTCH similar to how we are revising the definition of a
discharge from an IRF.
Response: The commenter's concern did not relate to our proposed
change to the definition of discharge in the IRF context and we are
adopting the proposed change without modification.
G. Waiver of the Penalty for Late Transmittal of the IRF-PAI Data
Section 412.614(c), ``transmission dates,'' states that the
admission and discharge assessment data must be transmitted together.
The discharge assessment is completed after the admission assessment
has been completed. Therefore, the date when the IRF-PAI data must be
transmitted is determined by when the IRF-PAI discharge assessment is
completed.
Section 412.610(d) specifies that after the discharge assessment
has been completed, the data must be entered into the electronic
version of the IRF-PAI, a process which Sec. 412.602 defines as
encoding the data. Section 412.610(d) specifies that the IRF has 7
calendar days to encode the discharge assessment. Section 412.614(d)(2)
specifies that, in order for the IRF-PAI data not to be considered as
having been transmitted late, the IRF-PAI data must be transmitted to
us no later than 10 calendar days from the date specified in Sec.
412.614(c).
The date specified in Sec. 412.614(c) is the 7th calendar day of
the applicable encoding time period specified in Sec. 412.610(d). The
7th calendar day of the applicable encoding date specified in Sec.
412.610(d) is the end of the discharge assessment encoding time period
because none of the data can be transmitted until the discharge
assessment has been encoded. The following example, which is very
similar to the Chart 3 on page 41332 of the August 7, 2001 final rule
(66 FR 41316), is intended to clarify when CMS will determine that the
IRF-PAI data were transmitted late.
Chart 1-2.--Example of Applying the Patient Assessment Instrument Discharge Assessment and Transmission Dates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Date when IRF-
Assessment IRF-PAI IRF-PAI IRF-PAI data PAI data
Assessment type Discharge date reference date completed by encoded by transmitted by transmission
is late
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discharge Assessment.................................... 10/16/03 10/16/03 10/20/03 10/26/03 11/01/03 11/12/03*
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Or any day after 11/12/03.
If IRF-PAI data are transmitted later than 10 calendar days from
the transmission date specified in Sec. 412.614(c), Sec.
412.614(d)(2) specifies that we will assess a penalty by deducting 25
percent from the CMG payment that is associated with the IRF-PAI data
that were transmitted late. However, we believe that an IRF may
encounter an extraordinary situation, which is beyond its control, and
that extraordinary situation could render the IRF unable to comply with
Sec. 412.614(c). The IRF must fully describe in the appropriate
inpatient's clinical record, or by use of another documentation method
as selected by the IRF, the extraordinary situation which the IRF
encountered that resulted in the IRF being unable to comply with Sec.
412.614(c). Although an IRF may believe that the facility has
encountered an extraordinary situation, the IRF's belief does not mean
that CMS is obligated to also automatically determine that the
situation was of an extraordinary nature.
CMS has the discretion to determine whether the situation described
by the IRF is extraordinary. An extraordinary situation may be, but
does not have to be, due to the occurrence of an unusual event.
Examples of unusual events include, but are not limited to, fire,
flood, earthquake, or other similar incidents that inflict extensive
damage to an IRF.
Another example of an extraordinary situation is the inability of
an IRF to transmit any IRF-PAI data for an extended time period,
because during that entire time period there was a problem with the
data transmission system that was beyond the control of the IRF. An
example of a data transmission system problem that is beyond the
control of the IRF is the inability of an IRF to transmit its IRF-PAI
data because the computer used by CMS to receive and process the data
is malfunctioning.
A further example of a data transmission system problem that is
beyond the control of the IRF is the existence of a flaw in the
software that was distributed by CMS to IRFs, or a flaw in the software
specifications made available by CMS to vendors that prevent the IRF
from transmitting its IRF-PAI data. In addition, an extraordinary
situation may include a situation in which a facility has correctly
followed CMS policies and procedures in order to be classified as an
IRF and obtain an IRF provider number, but has experienced a delay in
attaining an IRF provider number.
In light of these possibilities, in the May 16, 2003 proposed rule,
we proposed to add a new Sec. 412.614(e) to specify that CMS may waive
the penalty specified in Sec. 412.614(d) when, due to an extraordinary
situation that is beyond the control of an inpatient rehabilitation
facility, the inpatient rehabilitation facility is unable to transmit
the patient assessment data in accordance with Sec. 412.614(c).
We also proposed that ``only CMS can determine if a situation
encountered by an IRF is extraordinary and qualifies as a situation for
waiver of the penalty specified in Sec. 412.614(d)(2) of this
[[Page 45684]]
section. An extraordinary situation may be due to, but is not limited
to, fires, floods, earthquakes, or similar unusual events that inflict
extensive damage to an inpatient rehabilitation facility. An
extraordinary situation may be one that produces a data transmission
problem that is beyond the control of the inpatient rehabilitation
facility, as well as other situations determined by CMS to be beyond
the control of the inpatient rehabilitation facility.''
Lastly, we proposed that ``an extraordinary situation must be fully
documented by the inpatient rehabilitation facility.''
Comment: The comments we received supported the proposed revision.
Response: We are adopting the proposed change as final without
modification.
H. General Information Regarding the IRF-PAI Assessment Process
We have received many questions regarding the IRF-PAI assessment
process policies. We have posted the answers to most of these questions
on the IRF PPS Web site.
1. The IRF PPS Web Site Address
The current Internet address for the IRF PPS Web site is http://www.cms.hhs.gov/providers/irfpps/.
Due to changes in CMS' Internet
policies during 2002, the current website address is different from the
one we published in the August 7, 2001 final rule.
2. Exceptions to the IRF-PAI Admission and Discharge Assessment Time
Period General Rules
Section 412.610(c)(1)(i) states the general rule that the time span
covered during the admission assessment is calendar days 1 through 3 of
the patient's current Medicare Part A fee-for-service IRF
hospitalization. Section 412.610(c)(2)(i) states the general rule that
the discharge assessment time period is a span of time that covers 3
calendar days, which includes the inpatient's discharge date, which is
the same date as the discharge assessment reference date, and the 2
calendar days before the discharge date. We want to remind IRFs that,
as specified in Sec. 412.610(c)(1)(ii) and Sec. 412.610(c)(2)(iii),
we may use the IRF-PAI item-by-item guide and other instructions to
identify items that have a different admission or discharge assessment
time period. We may specify different admission and discharge
assessment time periods in order to capture patient information for
payment and quality of care monitoring objectives appropriately.
Miscellaneous Comments: We received several comments regarding IRF
PPS implementation operational issues. For example, some commenters
requested that we post on the IRF PPS website the questions asked of
the IRF PAI Help Desk and the associated answers. Some commenters
requested that we revise the instructions in the IRF-PAI manual
regarding the coding of the patient during the discharge assessment.
Some commenters requested that CMS publish a list of all the ICD-9-CM
codes associated with every impairment group. Some commenters requested
that we synchronize the discharge codes used in IRF-PAI with the
patient status codes used in the claim data. Some commenters requested
that we synchronize the methodology used to determine the IRF-PAI
etiologic diagnosis code with the methodology used to determine the
principal or admitting diagnosis on the claim.
Response: These comments are related to functions that are
administrative and operational and are not specifically related to our
proposed changes to the IRF PPS. We will take these comments into
consideration as we continue to refine implementation of the IRF PPS.
V. Patient Classification System for the IRF PPS
As previously stated, in this final rule we are adopting the same
case-mix classification system that was set forth in the August 7, 2001
final rule. It is our intention to pursue the development of possible
refinements to the case-mix classification system that will continue to
improve the ability of the PPS to accurately pay IRFs. We have awarded
a contract to the RAND Corporation (RAND) to conduct additional
research that will, in the initial stages, provide us with the data
necessary to address the feasibility of developing and proposing
refinements. When the study has been completed, we plan to review
various approaches so that we can propose an appropriate methodology to
develop and apply refinements. Any specific refinement proposal
resulting from this research will be published in the Federal Register.
Table 1.--Relative Weights for Case-Mix Groups (CMGs) in the
Addendum to this final rule presents the CMGs, the comorbidity tiers,
and the corresponding Federal relative weights. We also present the
average length of stay for each CMG. As we discussed in the August 7,
2001 final rule (66 FR 41353), the average length of stay for each CMG,
along with the discharge destination, is used to determine when an IRF
discharge meets the definition of a transfer, which results in a per
diem case level adjustment (66 FR 41354). Because these data elements
are not changing as a result of this final rule, Table 1 in this final
rule is identical to Table 1 that was published in the August 7, 2001
final rule (66 FR 41394 through 41396). The relative weights reflect
the inclusion of cases with an interruption of stay (patient returns on
day of discharge or either of the next 2 days). The methodology we used
to construct the data elements in Table 1 is described in detail in the
August 7, 2001 final rule (66 FR 41350 through 41353).
VI. Fiscal Year 2004 Federal Prospective Payment Rates
A. Expiration of the IRF PPS Transition Period
Section 1886(j)(1) of the Act and Sec. 412.626 of the regulations
provides that the transition period for IRFs expires for cost reporting
periods beginning on or after October 1, 2002 (FY 2003 and beyond).
Accordingly, the payment for discharges during FY 2004 will be based
entirely on the adjusted FY 2004 IRF Federal PPS rates in this final
rule.
B. Description of the IRF Standardized Payment Amount
In the August 7, 2001 final rule, we established a standard payment
amount referred to as the budget neutral conversion factor under Sec.
412.624(c). In accordance with the methodology described in Sec.
412.624(c)(3)(i), the budget neutral conversion factor for FY 2002, as
published in the August 7,2001 final rule, was $11,838.00. Under Sec.
412.624(c)(3)(i), this amount reflects, as appropriate, any adjustments
for outlier payments, budget neutrality, and coding and classification
changes as described in Sec. 412.624(d).
The budget neutral conversion factor is a standardized payment
amount and the amount reflects the budget neutrality adjustment for FY
2002, as described in Sec. 412.624(d)(2). The statute requires a
budget neutrality adjustment only for FYs 2001 and 2002. Accordingly,
we believe it is more consistent with the statute to refer to the
standardized payment as the standardized payment conversion factor,
rather than refer to it as a budget neutral conversion factor.
As we proposed in the May 16, 2003 proposed rule, after careful
consideration, in this final rule we are changing all references to the
budget neutral conversion factor in Sec. Sec. 412.624(c) and
412.624(d) to the
[[Page 45685]]
``standard payment conversion factor.'' We believe that the standard
payment conversion factor better describes the standardized payment
amount especially in those fiscal years where a budget neutrality
adjustment is not made.
Under Sec. 412.624(c)(3)(i), the standard payment conversion
factor for FY 2002 of $11,838.00 reflected the budget neutrality
adjustment described in Sec. 412.624(d)(2). Under the then existing
Sec. 412.624(c)(3)(ii), we updated the FY 2002 standard payment
conversion factor ($11,838.00) to FY 2003 by applying an increase
factor (the IRF market basket index) of 3.0 percent, as described in
the update notice published in the August 1, 2002 Federal Register (67
FR 49931). This yielded the FY 2003 standard payment conversion factor
of $12,193.00 that was published in the August 1, 2002 update notice
(67 FR 49931). The FY 2003 standard payment conversion factor is the
basis of the updated FY 2004 standard payment conversion factor that
also reflects the adjustments described below.
C. Adjustments To Determine the FY 2004 Standard Payment Conversion
Factor
1. IRF Market Basket Index
Section 1886(j)(3)(C) of the Act requires the Secretary to
establish an increase factor that reflects changes over time in the
prices of an appropriate mix of goods and services included in IRF
services paid for under the IRF PPS, which is referred to as the IRF
market basket index. Accordingly, in updating the FY 2004 payment rates
set forth in this final rule, we will apply an appropriate increase
factor, that is equal to the IRF market basket, to the FY 2003 IRF
standardized payment amount.
Beginning with the implementation of the IRF PPS in FY 2002 and
with the FY 2003 IRF PPS update, the 1992-based excluded hospital with
capital market basket has been used to determine the IRF market basket
factor for updating payments to rehabilitation facilities. The 1992-
based market basket reflected the distribution of costs in 1992 for
Medicare-participating freestanding rehabilitation, long-term care,
psychiatric, cancer, and children's hospitals. This information was
derived from the 1992 Medicare cost reports. A full discussion of the
methodology and data sources used to construct the 1992-based excluded
hospital with capital market basket is available in Appendix D of the
IRF PPS final rule published in the August 7, 2001 Federal Register (66
FR 41427).
2. The Excluded Hospital and the Capital Market Basket
In this final rule, we are revising and rebasing the excluded
hospital with capital market basket to a 1997 base year. We believe
that using 1997 data, rather than 1992 data, to construct the IRF
market basket allows us to more appropriately estimate increases in the
costs of IRF goods and services from year to year. We believe the use
of more recent data will ensure that our estimates more closely
approximate the current costs of goods and services provided in IRFs.
The operating portion of the 1997-based excluded hospital with
capital market basket is derived from the 1997-based excluded hospital
market basket. The methodology used to develop the excluded hospital
market basket operating portion was described in the August 1, 2002
Federal Register (67 FR 50042-50044). In brief, the operating cost
category weights in the 1997-based excluded market basket added to
100.0. These weights were determined from the Medicare cost reports,
the 1997 Business Expenditure Survey from the Bureau of the Census, and
the 1997 Annual Input-Output data from the Bureau of Economic Analysis.
In using the 1997 data, we made two methodological revisions to the
1997-based excluded hospital market basket: (1) Changing the wage and
benefit price proxies to use the Employment Cost Index (ECI) wage and
benefit data for hospital workers, and (2) adding a cost category for
blood and blood products.
Previously we used a combination of several occupational ECIs in
the 1992-based index such as the professional and technical workers,
service workers, etc. We believe the ECI for hospital workers better
represents the movement of hospital wages, salaries, and benefits and
it is more reflective of current labor market conditions. For the 1992-
based market baskets we were unable to find an adequate data source for
the blood cost category.
For the 1997-based excluded hospital market basket, we were able to
obtain these data from Medicare cost reports. As discussed in the IPPS
August 1, 2002 final rule (67 FR 50035), BIPA required that we
adequately reflect the price of blood and blood products in the
hospital market basket when it was rebased and revised, which was done
for the FY 2003 IPPS payment rates. We believe this revision is also
appropriate for the excluded hospital with capital market basket
because it results in a more precise measure of the cost category for
blood and blood products.
When we add the weight for capital costs to the excluded hospital
market basket, the sum of the operating and capital weights must still
equal 100.0. Because capital costs account for 8.968 percent of total
costs for excluded hospitals in 1997, it holds that operating costs
must account for 91.032 percent. Each operating cost category weight
from the August 1, 2002 Federal Register (67 FR 50442-50444) was
rebased to the 1997-based excluded hospital with capital market basket
by multiplying by 0.91032 to determine its weight in the 1997-based
excluded hospital with capital market basket.
The aggregate capital component of the 1997-based excluded hospital
market basket (8.968 percent) was determined from the same set of
Medicare cost reports used to derive the operating component. The
detailed capital cost categories of depreciation, interest, and other
capital expenses were also determined using the Medicare cost reports.
As explained below, two sets of weights for the capital portion of the
revised and rebased market basket needed to be determined. The first
set of weights identifies the proportion of capital expenditures
attributable to each capital cost category, while the second set
represents relative vintage weights for depreciation and interest. The
vintage weights identify the proportion of capital expenditures that is
attributable to each year over the useful life of capital assets within
a cost category (see IPPS final rule published in the August 1, 2002
Federal Register (67 FR 50046-50047) for a discussion of how vintage
weights are determined).
The cost categories, price proxies, and base-year FY 1992 and FY
1997 weights for the excluded hospital with capital market basket are
presented in Chart 3 ``Excluded Hospital With Capital Input Price Index
(FY 1992 and FY 1997) Structure and Weights.'' Chart 4 ``Excluded
Hospital with Capital Input Price Index (FY 1997) Vintage Weights''
presents the vintage weights for the 1997-based excluded hospital with
capital market basket.
[[Page 45686]]
Chart 3.--Excluded Hospital With Capital Input Price Index (FY 1992 and FY 1997) Structure and Weights \1,\ \2\
----------------------------------------------------------------------------------------------------------------
Weights (%) Weights (%)
Cost category Price wage variable base-year 1992 base-year 1997
----------------------------------------------------------------------------------------------------------------
Total................................ ................................... 100.000 100.000
Compensation............................... ................................... 57.935 57.579
Wages and Salaries..................... ECI--Wages and Salaries, Civilian 47.417 47.335
Hospital Workers.
Employee Benefits...................... ECI--Benefits, Civilian Hospital 10.519 10.244
Workers.
Professional fees: Non-Medical............. ECI--Compensation: Prof. & 1.908 4.423
Technical.
Utilities.................................. ................................... 1.524 1.180
Electricity............................ WPI--Commercial Electric Power..... 0.916 0.726
Fuel Oil, Coal, etc.................... WPI--Commercial Natural Gas........ 0.365 0.248
Water and Sewerage..................... CPI-U--Water & Sewage.............. 0.243 0.206
Professional Liability Insurance........... HCFA--Professional Liability 0.983 0.733
Premiums.
All Other Products and Services............ ................................... 28.571 27.117
All Other Products..................... ................................... 22.027 17.914
Pharmaceuticals............................ WPI--Prescription Drugs............ 2.791 6.318
Food: Direct Purchase.................. WPI--Processed Foods............... 2.155 1.122
Food: Contract Service................. CPI-U--Food Away from Home......... 0.998 1.043
Chemicals.................................. WPI--Industrial Chemicals.......... 3.413 2.133
Blood and Blood Products................... WPI--Blood and Derivatives......... .............. 0.748
Medical Instruments........................ WPI--Med. Inst. & Equipment........ 2.868 1.795
Photographic Supplies...................... WPI--Photo Supplies................ 0.364 0.167
Rubber and Plastics........................ WPI--Rubber & Plastic Products..... 4.423 1.366
Paper Products............................. WPI--Convert. Paper and Paperboard. 1.984 1.110
Apparel.................................... WPI--Apparel....................... 0.809 0.478
Machinery and Equipment.................... WPI--Machinery & Equipment......... 0.193 0.852
Miscellaneous Products..................... WPI--Finished Goods excluding Food 2.029 0.783
and Energy.
All Other Services......................... ................................... 6.544 9.203
Telephone.................................. CPI-U--Telephone Services.......... 0.574 0.348
Postage.................................... CPI-U--Postage..................... 0.268 0.702
All Other: Labor........................... ECI--Compensation: Service Workers. 4.945 4.453
All Other: Non-Labor Intensive............. CPI-U--All Items (Urban)........... 0.757 3.700
Capital-Related Costs...................... ................................... 9.080 8.968
Depreciation............................... ................................... 5.611 5.586
Fixed Assets............................... Boeckh-Institutional Construction: 3.570 3.503
23 Year Useful Life.
Movable Equipment.......................... WPI--Machinery & Equipment: 11 Year 2.041 2.083
Useful Life.
Interest Costs............................. ................................... 3.212 2.682
Non-profit................................. Avg. Yield Municipal Bonds: 23 Year 2.730 2.280
Useful Life.
For-profit................................. Avg. Yield AAA Bonds: 23 Year 0.482 0.402
Useful Life.
Other Capital-Related Costs................ CPI-U--Residential Rent............ 0.257 0.699
----------------------------------------------------------------------------------------------------------------
\1\ The operating cost category weights in the excluded hospital market basket described in the August 1, 2002
Federal Register (67 FR 50442 through 50444) add to 100.0.
\2\ Due to rounding, weights sum to 1.000.
When we add an additional set of cost category weights (total
capital weight = 8.968 percent) to this original group, the sum of the
weights in the new index must still add to 100.0. Because capital costs
account for 8.968 percent of the market basket, then operating costs
account for 91.032 percent. Each weight in the 1997-based excluded
hospital market basket from the IPPS final rule published in the August
1, 2002 Federal Register (67 FR 50442-50444) was multiplied by 0.91032
to determine its weight in the 1997-based excluded hospital with
capital market basket.
Chart 4.--Excluded Hospital With Capital Input Price Index (FY 1997) Vintage Weights
----------------------------------------------------------------------------------------------------------------
Interest:
Fixed assets Movable assets capital-
Year from farthest to most to most recent (23-year (11-year related (23-
weights) weights) year weights)
----------------------------------------------------------------------------------------------------------------
1............................................................... 0.018 0.063 0.007
2............................................................... 0.021 0.068 0.009
3............................................................... 0.023 0.074 0.011
4............................................................... 0.025 0.080 0.012
5............................................................... 0.026 0.085 0.014
6............................................................... 0.028 0.091 0.016
7............................................................... 0.030 0.096 0.019
8............................................................... 0.032 0.101 0.022
9............................................................... 0.035 0.108 0.026
10.............................................................. 0.039 0.114 0.030
11.............................................................. 0.042 0.119 0.035
12.............................................................. 0.044 .............. 0.039
13.............................................................. 0.047 .............. 0.045
[[Page 45687]]
14.............................................................. 0.049 .............. 0.049
15.............................................................. 0.051 .............. 0.053
16.............................................................. 0.053 .............. 0.059
17.............................................................. 0.057 .............. 0.065
18.............................................................. 0.060 .............. 0.072
19.............................................................. 0.062 .............. 0.077
20.............................................................. 0.063 .............. 0.081
21.............................................................. 0.065 .............. 0.085
22.............................................................. 0.064 .............. 0.087
23.............................................................. 0.065 .............. 0.090
=================
----------------------------------------------------------------------------------------------------------------
*Due to rounding, weights sum to 1.000.
Comment: One commenter asked about the derivation of the
professional liability cost weight. The commenter believed the
reduction in the professional liability weight (shown in Chart 3) from
the 1992-based excluded with capital market basket (.983) to the 1997-
based excluded with capital market basket (.733) was inconsistent with
the trends in professional liability insurance.
Response: Recent trends show professional liability insurance
growing faster than our market basket but in the post 1997 period. This
growth is reflected in the movement of the professional liability
insurance price proxy.
The professional liability cost weight used in the 1997-based
excluded with capital market basket was derived from a survey conducted
by ANASYS under contract to CMS (Contract Number 500-98-005). This
survey attempted to estimate hospital malpractice insurance costs over
time at the national level for years 1996 and 1997 using a statistical
sample. The statistical sample was drawn from a population universe of
non-Federal short-term, acute care prospective payment system
hospitals. CMS applied the results--more specifically the relationship
between professional liability and other hospital costs--to the
excluded hospital with capital market basket. (More results about this
survey are published in the May 9, 2002 IPPS Hospital Proposed Rule (90
FR 31440)).
We believe the reduction in the professional liability insurance
weight from 1992 to 1997 does reflect the actual conditions facing
hospitals at that time. The relevant professional liability insurance
price proxy shows a decline in prices from 1990 to 1998 while the
overall market basket shows an increase. In the most recent five years,
the professional liability insurance price proxy has been accelerating,
resulting in an increasing relative importance of its weight in the
market basket. This is consistent with recent trends.
Chart 5 ``Percent Changes in the 1992-based and 1997-based Excluded
Hospital with Capital Market Baskets, FY 1999-2004'' compares the 1992-
based excluded hospital with capital market basket to the 1997-based
excluded hospital with capital market basket. As is shown, the rebased
and revised market basket grows slightly faster over the 1999-2001
period than the 1992-based market basket. The major reason for this was
the switching of the previous wage and benefit proxies to the ECI for
hospital workers from the previous occupational blend. We believe that
the ECI is the best most appropriate price proxy for measuring changes
in wage data facing IRFs. This wage series reflects actual wage data
reported by civilian hospitals to the Bureau of Labor Statistics that
is more reflective of current trends in hospitals than is the blended
wage previously used. The ECIs are fixed-weight indexes and strictly
measure the change in wage rates and employee benefits per hour. They
are appropriately not affected by shifts in skill mix. This differs
from the proxy used in the FY 1992-based index in which a blended
occupational wage index was used. The blended occupational wage proxy
used in the FY 1992-based index and the ECI for wages and salaries for
hospitals both reflect a fixed distribution of occupations within a
hospital. The major difference between the two proxies is in the
treatment of professional and technical wages (legal, accounting,
management, and consulting services from outside the facility). In the
blended occupational wage proxy, the professional and technical
category was blended evenly between the ECI for wages and salaries for
hospitals and the ECI for wages and salaries for professional and
technical occupations in the overall economy. The ECI for hospitals
reflects, instead of hospital-specific occupations as reflected in the
ECI for hospitals. This revision had a similar impact on the hospital
PPS and excluded market baskets, as described in the IPPS final rule
published in the August 1, 2001 Federal Register. The FY 2004 increase
in the 1997-based excluded hospital with capital market basket is 3.2
percent.
Chart 5.--Percent Changes in the 1992-Based and 1997-Based Excluded
Hospital With Capital Market Baskets, FY 1999-2004
------------------------------------------------------------------------
Percent Percent
change, FY change, FY
Fiscal year 1992-based 1997-based
market basket market basket
------------------------------------------------------------------------
Actual Historical % Increase (FY 1999-2002)
------------------------------------------------------------------------
1999.................................... 2.3 2.7
[[Page 45688]]
2000.................................... 3.4 3.1
2001.................................... 3.9 4.0
2002.................................... 2.7 3.6
Average historical...................... 3.1 3.4
-----------------------------------------
Forecasts (FY 2003-2004)
------------------------------------------------------------------------
2003.................................... 3.4 3.8
2004.................................... 2.9 3.2
Average forecast........................ 3.2 3.5
------------------------------------------------------------------------
Section 1886(j)(3)(c) requires that the increase in the IRF PPS
payment rate be based on an ``appropriate percentage increase in a
market basket of goods and services comprising services for which
payment is made under this subsection, which may be the market basket
percentage increase described in subsection (b)(3)(B)(iii).'' To date,
we have used a market basket based on the cost structure of all
excluded hospitals to satisfy this requirement, and have discussed in
prior IRF rules why we feel this market basket provides a reasonable
measure of the price changes facing exempt hospitals.
3. Research and Analysis
In its March 2002 Report, the Medicare Payment Advisory Commission
(MedPAC) recommended the development of a market basket specific to IRF
services. As we mentioned in the August 7, 2001 final rule, we
researched the feasibility of developing such a market basket. This
research included analyzing data sources for cost category weights,
specifically the Medicare cost reports, and investigating other data
sources on cost, expenditure, and price information specific to IRFs.
As described in greater detail below, based on this research, we are
not developing a market basket specific to IRF services at this time.
Our analysis of the Medicare cost reports indicates that the
distribution of costs among major cost report categories (wages,
pharmaceuticals, capital) for IRFs is not substantially different from
the 1997-based excluded hospital with capital market basket we have
used. In addition, the only data available to us were for these cost
categories (wages, pharmaceuticals, and capital) presenting a potential
problem since no other major cost category would be based on IRF data.
We conducted a sensitivity analysis of annual percent changes in
the market basket when the IRF weights for wages, pharmaceuticals, and
capital were substituted into the excluded hospital with capital market
basket. Other cost categories were recalibrated using ratios available
from the inpatient PPS hospital market basket. On average, between the
years 1995 through 2002, the excluded hospital with capital market
basket increased at essentially the same average annual rate (2.9
percent) as the market basket with IRF weights for wages,
pharmaceuticals, and capital (2.8 percent). In addition, in almost any
individual year the difference was 0.1 percentage point or less, which
is less than the 0.25 percentage point criterion that is used under the
IPPS update framework to determine whether a forecast error adjustment
is warranted.
The 0.25 percentage point criterion that determines whether a
forecast error adjustment is warranted has been used in the IPPS update
framework since the implementation of the IPPS. It serves as a
guideline for the level of forecast accuracy, since any forecast is
likely to contain enough imprecision that differences of one tenth or
two-tenths of a percentage point are not thought to be significant.
Thus, in this case if the forecast error is not at least greater than
two-tenths of a percentage point, it is thought to be similar enough to
the actual data as not to warrant an adjustment.
Based on the analysis described above, we continue to believe that
the excluded hospital with capital market basket is doing an adequate
job of reflecting the price changes facing IRFs. As additional cost
data are being collected under the IRF PPS we hope that we will
eventually be able to develop a market basket derived specifically from
IRF data.
As shown in Chart 5, for the payment rates set forth in this final
rule, the FY 2004 IRF market basket increase factor using 1997 data is
3.2 percent. Thus, we apply the 3.2 percent increase, in addition to
the budget neutral wage adjustment factor described below, to the FY
2003 standard payment conversion factor ($12,193.00) to determine the
2004 standard payment conversion factor.
4. Updated Labor-Related Share
In implementing the FY 2002 and FY 2003 IRF PPS, we used the 1992
market basket data to determine the labor-related share (72.395
percent). As stated above, we are updating the 1992 market basket data
to 1997. Doing so allows us to use the 1997-based excluded hospital
market basket with capital costs to determine the FY 2004 labor-related
share.
We calculated the FY 2004 labor-related share as the sum of the
weights for those cost categories contained in the 1997-based excluded
hospital with capital market basket that are influenced by local labor
markets. These cost categories include wages and salaries, employee
benefits, professional fees, labor-intensive services and a 46 percent
share of capital-related expenses. The labor-related share for FY 2004
is the sum of the FY 2004 relative importance of each labor-related
cost category, and reflects the different rates of price change for
these cost categories between the base year (FY 1997) and FY 2004. The
sum of the relative importance for FY 2004 for operating costs (wages
and salaries, employee benefits, professional fees, and labor-intensive
services) is 69.028 percent, as shown in Chart 6 ``FY 2004 Labor-
Related Share Relative Importance.'' The portion of capital that is
influenced by local labor markets is estimated to be 46 percent.
Because the relative importance of capital is 7.604 percent of the
1997-based excluded hospital with capital market basket in FY 2004, we
take 46 percent of 7.604 percent to
[[Page 45689]]
determine the labor-related share of capital for FY 2004. The result is
3.498 percent, which we then add to the 69.028 percent calculated for
operating costs to determine the total labor-related relative
importance for FY 2004. The resulting labor-related share that we are
using for IRFs in FY 2004 is 72.526 percent.
Chart 6.--FY 2004 Labor-Related Share Relative Importance
------------------------------------------------------------------------
Relative Relative
importance importance
Cost category 1992-based 1997-based
market basket market basket
FY 2004 FY 2004
------------------------------------------------------------------------
Wages and salaries...................... 50.180 48.906
Employee benefits....................... 11.980 11.081
Professional fees....................... 2.041 4.500
Postage................................. 0.257 ..............
All other labor intensive services...... 5.214 4.541
-----------------
Subtotal............................ 69.672 69.028
=================
Labor-related share of capital.......... 3.370 3.498
-----------------
Total........................... 73.042 72.526
------------------------------------------------------------------------
Chart 6 above shows that rebasing the excluded hospital with
capital market basket lowers the increase in labor share that we used
in FY 2004 relative to what it would have been had we not rebased the
excluded hospital with capital market basket. As we previously stated,
we are using a labor-related share of 72.526 percent for the FY 2004
IRF PPS payment rates set forth in this final rule.
5. Budget Neutral Wage Adjustment Update Methodology
As stated above, for FY 2004, we are updating the FY 2003 IRF wage
indices by using FY 1999 acute care hospital wage data and updating the
labor-related share by using the 1997 market basket data. Because any
adjustment or updates to the IRF wage index made under section
1886(j)(6) of the Act must be made in a budget neutral manner as
required by statute, we are amending the regulation at Sec.
412.624(e)(1), as proposed, to reflect this requirement. We also
determined a budget neutral wage adjustment factor based on an
adjustment or update to the wage data to apply to the standard payment
conversion factor.
In addition, as we proposed in the May 16, 2003 proposed rule, we
use the following steps to ensure that the FY 2004 IRF standard payment
conversion factor reflects the update to the wage indices and to the
labor-related share in a budget neutral manner:
Step 1. We determine the total amount of the FY 2003 IRF PPS rates
using the FY 2003 standardized payment amount and the labor-related
share and the wage indices from FY 2003 (as published in the August 1,
2002 notice).
Step 2. We then calculate the total amount of IRF PPS payments
using the FY 2003 standardized payment amount and the updated FY 2004
labor-related share and wage indices described above.
Step 3. We divide the amount calculated in step 1 by the amount
calculated in step 2, which equals the FY 2004 budget neutral wage
adjustment factor of 0.9954.
Step 4. We then apply the FY 2004 budget neutral wage adjustment
factor from step 3 to the FY 2003 IRF PPS standard payment conversion
factor after the application of the market basket update, described
above, to determine the FY 2004 standardized payment amount.
Comment: A commenter noted that the update factor used to develop
the FY 2003 IRF PPS payment rates should have been higher than 3
percent.
Response: In order to update the IRF PPS payment rates, section
1886(j)(3)(C) of the Act requires the Secretary to establish an
increase factor that reflects changes over time in the prices of an
appropriate mix of goods and services included in the covered IRF
services, which is referred to as a market basket index.
Accordingly, in the November 2, 2000 proposed rule we described our
proposed methodology for constructing an appropriate IRF market basket,
the 1992-based excluded hospital with capital market basket. We invited
comments on the proposed construction of this market basket and
eventually adopted the proposed methodology in the August 7, 2001 final
rule. At the time we proposed this methodology, we used the best data
that were available. Further, in finalizing this method we also used
the best data available at the time we developed the August 7, 2001
final rule.
In updating the FY 2003 IRF PPS payment rates, we issued a notice
in the Federal Register using the methodology finalized in the August
7, 2001 final rule. Therefore, we used an appropriate update factor for
the FY 2003 IRF PPS payment rates based on the best data available at
the time the August 1, 2002 update notice was developed.
D. Update of Payment Rates Under the IRF PPS for FY 2004
Once we calculate the IRF market basket increase factor and
determine the budget neutral wage adjustment factor, this calculation
enables us to determine the updated Federal prospective payments for FY
2004. In this final rule, we apply the IRF market basket increase
factor of 3.2 percent to the standard payment conversion factor for FY
2003 ($12,193) that equals $12,583. Then, we apply the budget neutral
wage adjustment of 0.9954 to $12,583, which resulted in a final updated
standard payment conversion factor for FY 2004 of $12,525.
Consistent with the proposed rule, this final rule provides that
the FY 2004 standard payment conversion factor is applied to each CMG
weight shown in Table 1 to compute the unadjusted IRF prospective
payment rates for FY 2004 shown in Table 2.
Table 2.--FY 2004 Federal Prospective Payments for Case-Mix Groups
(CMGs) for FY 2004 displays the CMGs, the comorbidity tiers, and the
corresponding unadjusted IRF prospective payment rates for FY 2004.
E. Examples of Computing the Total Adjusted IRF Prospective Payments
In general, under Sec. 412.624(e), we adjust the Federal
prospective payment amount associated with a CMG, shown
[[Page 45690]]
in Table 2, to account for an IRF's geographic wage variation, low-
income patients and, if applicable, location in a rural area.
The adjustment for an IRF's geographic wage variation includes the
FY 2004 labor-related share adjustment of 72.526 percent and the FY
2004 IRF urban or rural wage indices in Tables 3A and 3B of the
Addendum of this final rule, respectively.
The adjustment for low-income patients is based on the formula used
to account for the cost of furnishing care to low-income patients as
discussed in the August 7, 2001 IRF PPS final rule (67 FR 41360). The
formula to calculate the low-income patient or LIP adjustment is as
follows:
[GRAPHIC] [TIFF OMITTED] TR01AU03.000
The adjustment for IRFs located in rural areas is an increase to
the Federal prospective payment amount of 19.14 percent. This
percentage increase is the same as the one described in the August 7,
2002 IRF PPS final rule (67 FR 41359).
To illustrate the methodology that we use to adjust the Federal
prospective payments, we provide an example in Chart 7 below.
One beneficiary is in Facility A, an IRF located in rural Maryland,
and another beneficiary is in Facility B, an IRF located in the New
York City metropolitan statistical area (MSA). Facility A's
disproportionate share hospital (DSH) adjustment is 5 percent, with a
low-income patient adjustment of (1.0239) and a wage index of (0.8946),
and the rural area adjustment (19.14 percent) applies. Facility B's DSH
is 15 percent, with a LIP adjustment of (1.0700) and a wage index of
(1.4414).
Both Medicare beneficiaries are classified to CMG 0112 (without
comorbidities). To calculate each IRF's total adjusted Federal
prospective payment, we compute the wage-adjusted Federal prospective
payment and multiply the result by the appropriate low-income patient
adjustment and the rural adjustment (if applicable). Chart 7
illustrates the components of the adjusted payment calculation.
Chart 7.--Example of Computing an IRF's Federal Prospective Payment
------------------------------------------------------------------------
Facility A Facility B
------------------------------------------------------------------------
Federal Prospective Payment......... $25,068.79 $25,068.79
Labor Share......................... x0.72526 x0.72526
Labor Portion of Federal Payment.... 18,181.39 18,181.39
Wage Index (shown in Tables 3A or x0.8946 x1.4414
3B)................................
Wage-Adjusted Amount................ =$16,265.07 =$26,206.65
Nonlabor Amount..................... +$6,887.40 +$6,887.40
Wage-Adjusted Federal Payment....... =$23,152.47 =$33,094.05
Rural Adjustment.................... x1.1914 x1.0000
Subtotal........................ =$27,583.85 =$33,094.05
LIP Adjustment...................... x1.0239 x1.0700
Total FY 2004 Adjusted =$28,243.11 =$35,410.64
Federal Prospective Payment
------------------------------------------------------------------------
Thus, the adjusted payment for facility A will be $28,243.11, and
the adjusted payment for facility B will be $35,410.64.
F. Computing Total Payments Under the IRF PPS for the Transition Period
Under section 1886(j)(1) of the Act and Sec. 412.626 of the
regulations, payment for all IRFs with cost reporting periods beginning
on or after October 1, 2002, will consist of 100 percent of the FY 2004
adjusted Federal prospective payment (plus any applicable outlier
payments under Sec. 412.624(e)(4)) and there will not be any blended
payments. Accordingly, the FY 2004 IRF PPS rates set forth in this
final rule will apply to all discharges on or after October 1, 2003 and
before October 1, 2004.
G. IRF-Specific Wage Data
On page 41358 of the August 7, 2001 IRF PPS final rule, we
responded to comments regarding the development of a separate wage
index for IRFs. Our response indicated that we were unable to develop a
separate wage index for rehabilitation facilities. Specifically, we
responded to these comments as follows:
``At this time, we are unable to develop a separate wage index for
rehabilitation facilities. There is a lack of specific IRF wage and
staffing data necessary to develop a separate IRF wage index
accurately. Further, in order to accumulate the data needed for such an
effort, we would need to make modifications to the cost report. In the
future, we will continue to research a wage index specific to IRF
facilities. Because we do not have an IRF specific wage index that we
can compare to the hospital wage index, we are unable to determine at
this time the degree to which the acute care hospital data fully
represent IRF wages. However, we believe that a wage index based on
acute care hospital wage data is the best and most appropriate wage
index to use in adjusting payments to IRFs, since both acute care
hospitals and IRFs compete in the same labor markets.''
At the current time, we still do not have any IRF-specific wage
data to determine the feasibility of developing an IRF-specific wage
index or of developing an adjustment to refine the acute care hospital
wage data to reflect inpatient rehabilitation services. We continue to
look into alternative ways to collect, analyze, develop, and audit IRF-
specific wage data that would reflect the
[[Page 45691]]
wages and wage-related costs attributable to rehabilitation facilities.
We believe that the best source to collect IRF-specific wage data
is the Medicare cost report--the same source for the acute care
hospital wage data. These data must be accurate and reliable; thus,
collecting these data would increase the recordkeeping and reporting
burden on IRFs. Initially, this burden would be imposed to collect data
just to determine the feasibility of developing an IRF-specific wage
index or development of an adjustment to the current IRF wage index.
In addition, as stated earlier in this section of this final rule,
any adjustment or update to the wage index must be made in a budget
neutral manner in accordance with section 1886(j)(6) of the Act. Thus,
the PPS rates for any one IRF could be affected in a positive or
negative direction, due to the application of the updates to the labor-
related share and wage indices in a budget neutral manner. Accordingly,
given the current trend of reducing the Medicare cost reporting burden
of collecting data and given that any change to the wage index be
budget neutral, in the May 16, 2003 proposed rule, we did not propose
to require facilities to record additional information at this time,
however we solicited comments on possible ways to adjust or refine the
current IRF wage index, given those restraints.
Comment: One commenter offered to meet with us to discuss the
feasibility and effort involved with developing an IRF-based wage
index.
Response: We appreciate the commenter's willingness to meet and we
will contact them to arrange a meeting in the future.
In this final rule, we are not imposing the burden of collecting
these data and we will continue to explore options to adjust or refine
the current IRF wage index, given the restraints previously discussed.
Since IRFs and hospitals compete in the same labor markets, we will
continue to use the acute care hospital wage data to develop the IRF
wage index as described earlier in this section of this final rule.
Comment: One commenter requested that we reconsider the decision in
the August 7, 2001 final rule to use pre-reclassification wage data to
determine a facilities wage adjustment and suggested the use of the
post-reclassification wage index. The commenter asserted that using the
pre-reclassification wage index disadvantages IRFs because they must
compete in the same labor market as their affiliated acute care
hospital for the same pool of highly trained personnel.
Response: In the November 2, 2000 proposed rule, we proposed to use
the pre-reclassification wage index. In the August 7, 2001 final rule,
we addressed comments that we received regarding the use of the post-
reclassification wage index. In the August 7, 2001 final rule we stated
that we believe the actual location of an IRF as opposed to the
location of affiliated providers is most appropriate for determining
the wage adjustment because the data support the premise that the
prevailing wages in the area in which the facility is located influence
the cost of a case. We also stated that IRFs provide services that are
considered part of the post-acute continuum of care and in order to be
consistent with the area wage adjustments made to other post-acute care
providers (that is, under the existing SNF and HHA prospective payment
systems), we are using the inpatient acute care hospital wage data
without regard to any approved geographic reclassifications under
section 1886(d)(8) or 1886(d)(10) of the Act. Therefore, for all of the
reasons stated above, we will continue to use the pre-reclassification
wage index to adjust an IRF's PPS payments and base this payment
adjustment on the facility's actual location.
We would also like to point out that on June 6, 2003, the Office of
Management and Budget (OMB) issued ``OMB Bulletin No.03-04,''
announcing revised definitions of Metropolitan Statistical Areas, and
new definitions of Micropolitan Statistical Areas and Combined
Statistical Areas. A copy of the Bulletin may be obtained at the
following Internet address: http://www.whitehouse.gov/omb/bulletins/b03-04.html.
These new definitions will not be applied to the FY 2004
IRF wage index. However, we will be studying the new definitions and
their impact and, if warranted, may adopt them at a later point in time
using the appropriate administrative processes. To the extent these
definitions are used, the concerns expressed by many for the use of a
geographical reclassification system may be mitigated.
H. Adjustment for High-Cost Outliers Under the IRF PPS
In the May 16, 2003 proposed rule, we proposed changes to the
methodology for determining IRF payments for high-cost outliers. The
intent of the proposed changes was to ensure that outlier payments are
paid only for truly high-cost cases. Further, we indicated that these
proposed changes would allow us to create policies that are consistent
among the various Medicare prospective payment systems when
appropriate.
We have become aware that under the IPPS, some hospitals have taken
advantage of two features in the IPPS outlier policy to maximize their
outlier payments. The first is the time lag between the current charges
on a submitted bill and the cost-to-charge ratio taken from the most
recent settled cost report. Second, statewide average cost-to-charge
ratios are used in those instances in which an acute care hospital's
operating or capital cost-to-charge ratios fall outside reasonable
parameters. We set forth these parameters and the statewide cost-to-
charge ratios in the annual notices of prospective payment rates that
are published by August 1 of each year in accordance with Sec.
412.8(b). Currently, these parameters represent 3.0 standard deviations
(plus or minus) from the geometric mean of cost-to-charge ratios for
all hospitals. In some cases, hospitals may increase their charges so
far above costs that their cost-to-charge ratios fall below 3 standard
deviations from the geometric mean of the cost-to-charge ratio and a
higher statewide average cost-to-charge ratio is applied to determine
if the acute care hospital should receive an outlier payment. This
disparity results in their cost-to-charge ratios being set too high,
which in turn results in an overestimation of their current costs per
case.
We believe the Congress intended that outlier payments under both
the IPPS and the IRF PPS would be made only in situations where the
cost of care is extraordinarily high in relation to the average cost of
treating comparable conditions or illnesses. Under the IPPS outlier
methodology, if hospitals' charges are not sufficiently comparable in
magnitude to their costs, the legislative purpose underlying the
outlier regulations is thwarted. Thus, on March 4, 2003, we published
in the Federal Register a proposed rule ``Proposed Changes in
Methodology for Determining Payment for Extraordinarily High-Cost Cases
(Cost Outliers) Under the Acute Care Hospital Inpatient Prospective
Payment System'' (68 FR 10420-10429) with an extensive discussion
proposing new regulations to ensure outlier payments are paid for truly
high-cost cases under the IPPS. This policy was finalized in a final
regulation on June 9, 2003 (68 FR 34494), effective August 8, 2003.
We believe the use of these parameters is appropriate in
determining cost-to-charge ratios to ensure these values are reasonable
and outlier payments can be made in the most equitable manner possible.
[[Page 45692]]
Further, we believe the methodology of computing IRF outlier payments
is susceptible to the same payment enhancement practices identified
under the IPPS and, therefore, merit similar revisions. Accordingly, as
discussed below, in this final rule we are making revisions as proposed
in the May 16, 2003 proposed rule, to the IRF outlier payment
methodology to be effective for discharges on or after October 1, 2003.
1. Current Outlier Payment Provision Under the IRF PPS
Section 1886(j)(4) of the Act provides the Secretary with the
authority to make payments in addition to the basic IRF prospective
payments for cases incurring extraordinarily high costs. In the August
7, 2001 IRF PPS final rule, we codified at Sec. 412.624(e)(4) of the
regulations the provision to make an adjustment for additional payments
for outlier cases that have extraordinarily high costs relative to the
costs of most discharges. Providing additional payments for outliers
strongly improves the accuracy of the IRF PPS in determining resource
costs at the patient and facility level. These additional payments
reduce the financial losses that would otherwise be caused by treating
patients who require more costly care and, therefore, reduce the
incentives to underserve these patients.
Under Sec. 412.624(e)(4), we make outlier payments for any
discharges if the estimated cost of a case exceeds the adjusted IRF PPS
payment for the CMG plus the adjusted threshold amount ($11,211 which
is then adjusted for each IRF by the facilities wage adjustment, its
low-income patient adjustment, and its rural adjustment, if
applicable). We calculate the estimated cost of a case by multiplying
the IRF's overall cost-to-charge ratio by the Medicare allowable
covered charge. In accordance with Sec. 412.624(e)(4), we pay outlier
cases 80 percent of the difference between the estimated cost of the
case and the outlier threshold (the sum of the adjusted IRF PPS payment
for the CMG and the adjusted threshold amount).
On November 1, 2001, we published a Program Memorandum (Transmittal
A-01-131) with detailed intermediary instructions for calculating the
cost-to-charge ratios for the purposes of determining outlier payments
under the IRF PPS. We stated the following:
``Intermediaries will use the latest available settled cost report
and associated data in determining a facility's overall Medicare cost-
to-charge ratio specific to freestanding IRFs and for IRFs that are
distinct part units of acute care hospitals. Intermediaries will
calculate updated ratios each time a subsequent cost report settlement
is made. Further, retrospective adjustments to the data used in
determining outlier payments will not be made. If the overall Medicare
cost-to-charge ratio appears to be substantially out-of-line with
similar facilities, the intermediary should ensure that the underlying
costs and charges are properly reported. We are evaluating the use of
upper and lower cost-to-charge ratio thresholds (similar with the
outlier policy for acute care hospitals) in the future to ensure that
the distribution of outlier payments remains equitable.''
In the May 16, 2003 proposed rule, we proposed to continue to use
the $11,211 threshold amount.
Comment: A commenter asserted that CMS should consider dropping the
outlier threshold similar to the IPPS.
Response: As we stated in the May 16, 2003 proposed rule, the
threshold amount was used in the FY 2003 IRF PPS payment rates and we
believe that the threshold amount of $11,211 that was used remains
appropriate because the data that was used to calculate this amount was
not comprised of data that were inappropriately influenced by the
incentives the current IRF PPS may create.
Specifically we used the IRF cost and charge data from the previous
cost-based reimbursement system to establish the outlier threshold.
These data were not inappropriately influenced by incentives to inflate
charges that are created with the existence of an outlier policy. There
is no need to inflate charges under cost-based reimbursement because a
provider is paid their costs subject to certain applicable limits. This
is unlike the outlier situation in IPPS, which used post-PPS data to
update its annual threshold amount. The IPPS data reflected the
practices that we believe erroneously created inappropriate outlier
payments. Namely, that hospitals take advantage of the time lag between
current charges on a submitted bill and the cost-to-charge ratio taken
from the most recent settled cost report. Specifically, using
historical cost-to-charge ratios may not reflect actual charges in the
cost reporting period when the discharge occurred. This can result in
an over-estimation of costs that in turn may result in inappropriate
outlier payments. In addition to the time lag vulnerability, some
hospitals increase their charges so far above costs that their cost-to-
charge ratios fall below a floor resulting in an over-estimation of a
hospital's cost per case. Again, this over-estimation of costs can
possibly result in inappropriate outlier payments. As discussed in the
November 3, 2000 proposed rule, the outlier threshold amount of $11,211
was calculated by simulating aggregate payments with and without an
outlier policy, and applying an iterative process to determine a
threshold that would result in outlier payments being projected to
equal 3 percent of total payments under the simulation. Once we have
adequate post-IRF PPS data, we will be able to examine whether the
threshold amount needs to be updated. Specifically, we will assess the
extent to which total estimated outlier payment approximates 3 percent
of total payments and whether the threshold amount needs to be updated.
As we previously stated, the data used to develop the IRF PPS outlier
threshold amount were not inappropriately influenced by these
incentives, therefore, we are adopting as final the continued use of
the $11,211 threshold amount.
We will also continue to make outlier payments for any discharges
if the estimated cost of a case exceeds the adjusted IRF PPS payment
for the CMG plus the adjusted threshold amount ($11,211 which is then
adjusted for each IRF by the facility's wage adjustment, its low-income
patient adjustment, and its rural adjustment, if applicable). We will
calculate the estimated cost of a case by multiplying an IRF's overall
cost-to-charge ratio by the Medicare allowable covered charge. However,
we are applying a ceiling to an IRF's cost-to-charge ratios, which is
discussed below. In accordance with Sec. 412.624(e)(4), we will
continue to pay outlier cases at 80 percent of the difference between
the estimated cost of the case and the outlier threshold (the sum of
the adjusted IRF PPS payment for the CMG and the adjusted threshold
amount). In addition, under the existing methodology described in the
preamble to the August 7, 2001 IRF PPS final rule (66 FR 41363), we
will continue to assign the applicable national average for new IRFs.
2. Changes to the IRF Outlier Payment Methodology
Statistical accuracy of cost-to-charge ratios. We believe that
there is a need to ensure that the cost-to-charge ratio used to compute
an IRF's estimated costs should be subject to a statistical measure of
accuracy. Removing aberrant data from the calculation of outlier
payments will allow us to enhance the extent to which outlier payments
are equitably distributed and continue to reduce incentives for IRFs to
underserve patients who require more costly care. Further, we stated in
the May 16, 2003 IRF proposed rule that using a statistical
[[Page 45693]]
measure of accuracy to address aberrant cost-to-charge ratios would
also allow us to be consistent with the proposed outlier policy changes
for the acute care hospital IPPS discussed in the March 4, 2003 Cost
Outlier proposed rule, (68 FR 10420). In the May 16, 2003 proposed
rule, we proposed the following:
(1) To apply a ceiling to IRF's cost-to-charge ratio if a
facility's cost-to-charge ratio is above a ceiling. We would calculate
two national ceilings, one for IRFs located in rural areas and one for
facilities located in urban areas. We proposed to compute this ceiling
by first calculating the national average and the standard deviation of
the cost-to-charge ratio for both urban and rural IRFs. (Because of the
small number of IRF's compared to the number of acute care hospitals,
we believe that statewide averages for IRFs, as proposed and adopted as
final under the IPPS, would not be statistically valid. Thus, we
proposed to use national average cost-to-charge ratios in place of
statewide averages.)
However, we believe that using only a national average may not
adequately address the differences among the various types of IRFs,
like the use of statewide averages would under the IPPS. Therefore, we
believe using two national ceilings, one for IRFs in urban areas and
one for IRFs in rural areas would be more appropriate than just using
one national ceiling for IRFs. In the August 7, 2001 final rule, we
discussed our policy to adjust IRF PPS payments to IRFs located in
rural areas, in large part, because IRFs in rural areas have
significantly higher costs than other facilities. Similarly, we believe
using an average cost-to-charge ratio specifically targeted for rural
facilities will allow us to more accurately estimate costs that are
used to determine outlier payments for IRFs in rural areas. Therefore,
we are adopting as final the use of two national ceilings, one for IRFs
in urban areas and one for IRFs in rural areas.
To determine the rural and urban ceiling, we proposed to multiply
each of the standard deviations by 3 and add the result to the
appropriate national cost-to-charge ratio average (rural and urban). We
believe this method results in statistically valid ceilings. If an
IRF's cost-to-charge ratio is above the applicable ceiling it would be
considered to be statistically inaccurate and we would assign the
national (either rural or urban) average cost-to-charge ratio to the
IRF. Cost-to-charge ratios above this ceiling are probably due to
faulty data reporting or entry, and, therefore, should not be used to
identify and make payments for outlier cases because such data are most
likely erroneous and therefore should not be relied upon. We proposed
to update the ceiling and averages using this methodology every year
and indicated that we would publish these amounts in future program
memoranda.
Comment: We received no comments on this proposal.
Response: We are adopting this proposed policy as final.
(2) Not assign the applicable national average cost-to-charge ratio
when an IRF's cost-to-charge ratio falls below a floor. We proposed
this policy because, as is the case for acute care hospitals, we
believe IRFs could arbitrarily increase their charges in order to
maximize outlier payments. Even though this arbitrary increase in
charges should result in a lower cost-to-charge ratio in the future
(due to the lag time in cost report settlement), if we use a floor, the
IRF's cost-to-charge ratio would be raised to the applicable national
average. This application of the national average could result in
inappropriately higher outlier payments. Accordingly, we proposed to
apply the IRF's actual cost-to-charge ratio to determine the cost of
the case rather than creating and applying a floor. Applying an IRF's
actual cost-to-charge ratio to charges in the future to determine the
cost of a case will result in more appropriate outlier payments because
it does not overstate the actual cost-to-charge ratio.
Comment: Some commenters disagreed with the proposal to assign a
national ceiling and not a national floor when an IRF's own ratio falls
below the floor. A commenter asserted that this did not seem equitable.
Response: We disagree with the commenters and believe the
elimination of a floor while maintaining a ceiling is fair and
appropriate. The proposed policy not to use a floor under the IRF PPS
is appropriate because use of a floor results in cost-to-charge ratios
being set too high relative to an IRF's own cost-to-charge ratio, which
in turn results in an over-estimation of an IRF's current costs per
case. We also note that not using a floor is consistent with the IPPS
finalized outlier policies as discussed in the June 9, 2003 final rule.
This policy was established in response to a specific problem
associated with hospitals under the IPPS, with some hospitals
intentionally taking advantage of our policy to assign cost-to-charge
ratios when a hospital's own ratio fell below the floor. We are
finalizing our decision not to use a floor in our outlier policy as it
would aid in appropriately identifying those cases that warrant outlier
payments. In addition, the proposed policy to maintain a ceiling under
IRF PPS is fair because we believe that if an IRF has a cost-to-charge
ratio above 3 standard deviations from the mean, then the cost-to-
charge ratio is probably due to faulty data reporting or entry and
should not be used to identify and pay for outliers.
3. Adjustment of IRF Outlier Payments
Under the existing methodology for computing IRF outlier payments
as described in the preamble of the August 7, 2001 IRF PPS final rule
(66 FR 41363) and in the November 1, 2001 Program Memorandum discussed
above, we specify that the cost-to-charge ratio used to compute
estimated costs are obtained from the most recent settled Medicare cost
report. Further, we provided for no retroactive adjustment to the
outlier payments to account for differences between the cost-to-charge
ratio from the latest settled cost report and the actual cost-to-charge
ratio for the cost reporting period in which the outlier payment is
made. This policy is consistent with the existing outlier payment
policy for acute care hospitals under the IPPS. However, as discussed
in the IPPS March 4, 2003 Cost Outlier proposed rule (68 FR 10423), we
proposed to revise the methodology for determining cost-to-charge
ratios for acute care hospitals under the IPPS because we became aware
that payment vulnerabilities exist in the current IPPS outlier policy.
Because we believe the IRF outlier payment methodology is likewise
susceptible to the same payment vulnerabilities, we proposed the
following:
(1) As proposed for acute care hospitals under the IPPS at proposed
Sec. 412.84(i) in the March 4, 2003 proposed rule (68 FR 10420), we
proposed under Sec. 412.624(e)(4), by cross-referencing proposed Sec.
412.84(i), that fiscal intermediaries would use more recent data when
determining an IRF's cost-to-charge ratio. Specifically, under Sec.
412.84(i), we proposed that fiscal intermediaries would use either the
most recent settled IRF cost report or the most recent tentative
settled IRF cost report (whichever is later) to obtain the applicable
IRF cost-to-charge ratio. In addition, as proposed under Sec.
412.84(i), any reconciliation of outlier payments would be based on a
ratio of costs to charges computed from the relevant cost report and
charge data determined at the time the cost report coinciding with the
discharge is settled.
(2) As proposed for acute care hospitals under the IPPS at proposed
Sec. 412.84(m) in the March 4, 2003 proposed rule (68 FR 10420), we
proposed under Sec. 412.624(e)(4), by
[[Page 45694]]
cross-referencing proposed Sec. 412.84(m), that IRF outlier payments
may be adjusted to account for the time value of money which is the
value of money during the time period it was inappropriately held by
the IRF as an ``overpayment.'' We also proposed to adjust outlier
payments for the time value of money for cases that are ``underpaid''
to the IRF. In these cases, the adjustment would result in additional
payments to the IRF. We proposed that any adjustment would be based
upon a widely available index to be established in advance by the
Secretary, and would be applied from the midpoint of the cost reporting
period to the date of reconciliation.
Comment: A few commenters disagreed with the proposed policy to
adjust outlier payments to account for the time value of money.
Response: Outlier payments are extremely susceptible to
manipulation because hospitals set their own level of charges and are
able to change their charges without notification to, or review by,
their fiscal intermediary. Such changes by a hospital directly affect
its level of outlier payments. Therefore, even though money may be
recouped if the outlier payments are reconciled, the hospital would
essentially be able to unilaterally increase its charges and acquire an
interest-free loan in the meantime. For that reason, we believe it is
appropriate and we are finalizing our policy to apply an adjustment for
the time value of ``overpayments'' or ``underpayments'' identified at
the cost report reconciliation.
Comment: Some commenters believe that the adjustment for the time
value of money should be set at a point other than the midpoint of the
cost reporting period
Response: We believe using the midpoint of the cost reporting year
is an appropriate point to base an adjustment, as proposed, and results
in an average ``overpayment'' or ``underpayment'' that would be fair to
use as part of the adjustment calculation. Specifically, using the
midpoint of the cost reporting period as the point to base an
adjustment for all discharges that occur during a given cost reporting
period is appropriate given that the midpoint is the median of the time
period for all discharges. As we stated in the proposed rule, we
proposed that IRF outlier payments may be adjusted to account for the
time value of money which is the value of money during the time period
it was inappropriately held by the IRF as an ``overpayment.'' We also
stated that we may adjust outlier payments for the time value of money
for cases that are ``underpaid'' to the IRF. In these ``underpayment''
cases, the adjustment will result in additional payments to the IRF.
Because this adjustment will be applicable to IRFs that were
``overpaid,'' as well as those IRFs that were ``underpaid,'' we believe
applying adjustments from the midpoint of the cost reporting period to
the date of reconciliation is reasonable. Further, this policy is
consistent with the final outlier policy stated in the June 9, 2003
IPPS outlier final rule.
We proposed to add a provision to our regulations to provide that
outlier payments would become subject to reconciliation when hospitals'
cost reports are settled. Under this policy, outlier payments would be
processed throughout the year using facility cost-to-charge ratios
based on the best information available at that time. We proposed that
when the cost report is settled, any reconciliation of outlier payments
by fiscal intermediaries would be based on facility cost-to-charge
ratios calculated on a ratio of costs to charges computed from the cost
report and charge data determined at the time the cost report
coinciding with the discharge is settled.
This process would require some degree of recalculating outlier
payments for individual claims. It is not possible to distinguish, on
an aggregate basis, how much a hospital's outlier payments would change
due to a change in its cost-to-charge ratios. This is because, in the
event of a decline in a cost-to-charge ratio, some cases may no longer
qualify for any outlier payments while other cases may qualify for
lower outlier payments. Therefore, the only way to determine accurately
the net effect of a decrease in cost-to-charge ratios on a hospital's
total outlier payments is to assess the impact on a claim-by-claim
basis. Because under our proposal, outlier payments would be based on
the relationship between the hospital's costs and charges at the time a
discharge occurred, the proposed methodology would ensure that when the
final outlier payments were made, they would reflect an accurate
assessment of the actual costs the hospital incurred. Therefore, we are
adopting this proposal as final.
4. Change to the Methodology for Calculating the Federal Prospective
Payment Outlier Payment
Under Sec. 412.624(e)(4), we provide for an additional payment to
a facility if its estimated costs for a patient exceeds a fixed dollar
amount (adjusted for area wage levels and factors to account for
treating low-income patients and for rural locations) as specified by
CMS. The additional payment equals 80 percent of the difference between
the estimated cost of the patient and the sum of the adjusted Federal
prospective payment computed under this section and the adjusted fixed
dollar amount. Effective for discharges on or after October 1, 2003,
additional payments made under this section will be subject to the
adjustments at Sec. 412.84(i) except that national averages will be
used instead of statewide averages. Also effective for discharges on or
after October 1, 2003, additional payments made under this section will
also be subject to adjustments at Sec. 412.84(m).
Comment: A commenter was concerned about the discretion given to
the fiscal intermediaries that would allow them to reconcile a
provider's outlier payments if they believe the outlier payments are
significantly inaccurate.
Response: Although CMS understands the commenter's concerns about
discretion given to the fiscal intermediaries, we believe that it is
important for CMS to have the flexibility to respond appropriately in
the future if unforeseen evidence of manipulation of other prospective
payments similar to that of IPPS comes to light. Therefore, we will
provide guidance to the fiscal intermediaries with respect to their
scope of discretion, as well as, provide them with instructions to
implement all revisions to the outlier policy contained in this final
rule.
I. Miscellaneous Comment
Comment: We received a comment expressing a concern that some
providers believe that recreational therapy services are not covered by
Medicare and that the costs of providing recreational therapy services
are not included in the IRF PPS rates.
Response: This comment is not specifically related to our proposed
changes to the IRF PPS. We responded to similar comments in the IPPS
January 3, 1984 final rule (49 FR 242) by stating that ``Neither the
implementation of the prospective payment system nor the criteria for
excluding certain hospitals and units from it will prohibit the
provision of recreational therapy services to hospital inpatients. In
particular, the absence of these services from the list of
rehabilitative services in rehabilitation hospitals and units does not
indicate that Medicare will no longer pay for them in those hospitals
and units that provide them. On the contrary, these services will
continue to be covered to the same extent they always have been under
the existing Medicare policies.'' Since the publication of the January
3, 1984 final
[[Page 45695]]
rule, we have not made any changes to our policies that would preclude
recreational therapy services from those covered by Medicare. In
particular the introduction of the IRF PPS does not change this fact.
Accordingly, since recreational therapy services were provided in the
IRF base period, the costs of providing these covered services are
included in standardized payment amount upon which the IRF PPS rates
are based.
VII. Provisions of the Final Rule
The provisions of this final rule reflect the provisions of the May
16, 2003 proposed rule, except as noted elsewhere in this preamble.
Following is a summary of the major changes that we have made in this
final rule, either in consideration of public comments received or to
more effectively implement the FY 2004 IRF PPS.
[sbull] In the proposed rule we proposed a market basket increase
factor of 3.3 percent for FY 2004 IRF 1997 data. In this final rule,
the payment rates set forth for the FY 2004 IRF market basket increase
factor is 3.2 percent using 1997 data.
[sbull] As indicated in the May 16, 2003 proposed rule, in this
final rule we are using updated FY 2004 IRF market basket index data
from 1992 through 1997 and an updated FY 2004 IRF labor-related share
and wage indices to update the IRF PPS rates to FY 2004. Because any
adjustment or updates to the IRF wage index made under section
1886(j)(6) of the Act must be made in a budget neutral manner as
required by statute, we amend our regulation at Sec. 412.624(e)(1).
[sbull] As indicated in the May 16, 2003 proposed rule, we finalize
changes to the methodology for determining IRF payments for high-cost
outliers to conform our policies to other Medicare prospective payment
systems as appropriate. In this final rule we revise the IRF outlier
payment methodology effective for discharges on or after October 1,
2003 and adopt as final the continued use of the $11,211 threshold
amount. However, a ceiling will be applied to an IRF's cost-to-charge
ratios in accordance with Sec. 412.624(e)(4). We will continue to pay
outlier cases at 80 percent of the difference between the estimated
cost of the case and the outlier threshold and assign the applicable
national average for new IRFs.
[sbull] Under Sec. 412.624(e)(4), we provide for an additional
payment to a facility if its estimated costs for a patient exceeds a
fixed dollar amount (adjusted for area wage levels and factors to
account for treating low-income patients and for rural locations) as
specified by us. Effective for discharges on or after October 1, 2003,
additional payments made under this section will be subject to the
adjustments at Sec. 412.84(i) except that national averages will be
used instead of statewide averages. Also effective for discharges on or
after October 1, 2003, additional payments made under this section will
also be subject to adjustments at Sec. 412.84(m).
VIII. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), agencies are
required to provide a 30-day notice in the Federal Register and solicit
public comment when a collection of information requirement is
submitted to the Office of Management and Budget (OMB) for review and
approval. To fairly evaluate whether an information collection should
be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we
solicit comments on the following issues:
[sbull] Whether the information collection is necessary and useful
to carry out the proper functions of the agency;
[sbull] The accuracy of the agency's estimate of the information
collection burden;
[sbull] The quality, utility, and clarity of the information to be
collected; and
[sbull] Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are therefore soliciting public comment on each of these issues
for the proposed information collection requirements discussed below.
Section 412.608 Patients' Rights Regarding the Collection of Patient
Assessment Data
Under this section, before performing an assessment using the
inpatient rehabilitation facility patient assessment instrument, a
clinician of the inpatient rehabilitation facility must give a Medicare
inpatient the form entitled ``Privacy Act Statement--Health Care
Records'' and the simplified plain language description of the Privacy
Act Statement--Health Care Records, which is a form entitled ``Data
Collection Information Summary for Patients in Inpatient Rehabilitation
Facilities;'' the inpatient rehabilitation facility must document in
the Medicare inpatient's clinical record that the Medicare inpatient
has been given the documents specified in this section.
The burden associated with this section is the time it will take to
document that the patient has been given the requisite forms. We
estimate that it will take no more than a minute per patient. There
will be an estimated 390,000 admissions per year, for a total of 6,500
hours per year.
Section 412.614 Transmission of Patient Assessment Data
1. The inpatient rehabilitation facility must encode and transmit
data for each Medicare Part A fee-for-service inpatient.
These information collection requirements associated with the IRF
PPS are currently approved by OMB through July 31, 2005 under OMB
number 0938-0842.
2. Under paragraph (e), Exemption to being assessed a penalty for
transmitting the IRF-PAI data late, CMS may waive the penalty specified
in paragraph (d) of this section. To assist CMS in determining if a
waiver is appropriate the inpatient rehabilitation facility must fully
document the circumstances surrounding the occurrence.
Given that it is estimated that fewer than 10 instances will occur
on an annual basis to necessitate a waiver, this requirement is not
subject to the PRA as stipulated under 5 CFR 1320.3(c).
We have submitted a copy of this final rule to OMB for its review
of the information collection requirements in Sec. 412.608 and Sec.
412.614. These requirements are not effective until they have been
approved by OMB.
If you have any comments on any of these information collection and
record keeping requirements, please mail the original and 3 copies to
CMS within 30 days of this publication date directly to the following:
Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Office of Regulations Development
and Issuances, Reports Clearance Officer, 7500 Security Boulevard,
Baltimore, MD 21244-1850. Attn: Julie Brown, CMS-1474-P; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Brenda Aguilar, CMS Desk Officer.
Comments submitted to OMB may also be emailed to the following address:
E-mail: baguilar@omb.eop.gov; or faxed to OMB at (202) 395-6974.
IX. Regulatory Impact Analysis
A. Introduction
The August 7, 2001 IRF PPS final rule (66 FR 41316) established the
IRF PPS for the payment of inpatient hospital services furnished by a
rehabilitation
[[Page 45696]]
hospital or rehabilitation unit of a hospital with cost reporting
periods beginning on or after January 1, 2002. We incorporated a number
of elements into the IRF PPS, such as case-level adjustments, a wage
adjustment, an adjustment for the percentage of low-income patients, a
rural adjustment, and outlier payments. The August 1, 2002 IRF PPS
notice (67 FR 49928) set forth updates of the IRF PPS rates contained
in the August 7, 2001 IRF PPS final rule. The purpose of the August 1,
2002 IRF PPS notice was only to provide an update to the IRF payment
rates for discharges during FY 2003. This final rule provides updated
IRF PPS rates for discharges that occur during FY 2004 as well as makes
policy changes in the IRF PPS system.
In constructing these impacts, we do not attempt to predict
behavioral responses, and we do not make adjustments for future changes
in such variables as discharges or case-mix. We note that certain
events may combine to limit the scope or accuracy of our impact
analysis, because such an analysis is future-oriented and, thus,
susceptible to forecasting errors due to other changes in the
forecasted impact time period. Some examples of such possible events
are newly legislated general Medicare program funding changes by the
Congress, or changes specifically related to IRFs. In addition, changes
to the Medicare program may continue to be made as a result of new
statutory provisions. Although these changes may not be specific to the
IRF PPS, the nature of the Medicare program is such that the changes
may interact, and the complexity of the interaction of these changes
could make it difficult to predict accurately the full scope of the
impact upon IRFs.
We have examined the impacts of this final rule as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA), (September 16, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
B. Executive Order 12866
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more).
In this final rule, we are using an updated FY 2004 IRF market
basket index and an updated FY 2004 IRF labor-related share and wage
indices to update the IRF PPS rates to FY 2004, as described in section
VII. of this final rule. By updating the IRF PPS rates to FY 2004, we
estimate that the overall cost to the Medicare program for IRF services
in FY 2004 will increase by $187.3 million over FY 2003 levels. The
updates to the IRF labor-related share and wage indices are made in a
budget neutral manner. Thus, updating the IRF labor-related share and
the wage indices to FY 2004 have no overall effect on estimated costs
to the Medicare program. Therefore, this estimated cost to the Medicare
program is due to the application of the updated IRF market basket of
3.2 percent. Because the combined distributional effects and the cost
to the Medicare program are greater than $100 million, this final rule
is considered a major rule as defined above.
C. Regulatory Flexibility Act (RFA) and Impact on Small Hospitals
The RFA requires agencies to analyze the economic impact of our
regulations on small entities. If we determine that the regulation will
impose a significant burden on a substantial number of small entities,
we must examine options for reducing the burden. For purposes of the
RFA, small entities include small businesses, nonprofit organizations,
and governmental agencies. Most hospitals are considered small
entities, either by nonprofit status or by having receipts of $6
million to $29 million in any 1 year. (For details, see the Small
Business Administration's regulation at 65 FR 69432 that set forth size
standards for health care industries.) Because we lack data on
individual hospital receipts, we cannot determine the number of small
proprietary IRFs. Therefore, we assume that all IRFs are considered
small entities for the purpose of the analysis that follows. Medicare
fiscal intermediaries and carriers are not considered to be small
entities. Individuals and States are not included in the definition of
a small entity.
The provisions of this final rule represent a 3.2 percent increase
to the Federal PPS rates. We do not expect an incremental increase of
3.2 percent to the Medicare Federal rates to have a significant effect
on the overall revenues of IRFs. Most IRFs are units of hospitals that
provide many different types of services (for example, acute care,
outpatient services) and the rehabilitation component of their business
is relatively minor in comparison. In addition, IRFs provide services
to (and generate revenues from) patients other than Medicare
beneficiaries. Accordingly, we certify that this final rule will not
have a significant impact on small entities.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis for any final rule that will have a significant impact
on the operations of a substantial number of small rural hospitals.
This analysis must conform to the provisions of section 603 of the RFA.
For purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area (MSA) and has fewer than 100 beds.
This final rule will not have a significant impact on the
operations of small rural hospitals. As indicated above, the provisions
of this final rule represent a 3.2 percent increase to the Federal PPS
rates. In addition, we do not expect an incremental increase of 3.2
percent to the Federal rates to have a significant effect on overall
revenues or operations since most rural hospitals provide many
different types of services (for example, acute care, outpatient
services) and the rehabilitation component of their business is
relatively minor in comparison. Accordingly, we certify that this final
rule will not have a significant impact on the operations of small
rural hospitals.
D. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in an expenditure in any 1 year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of at least $110 million. This final rule will not have
a substantial effect on the governments mentioned nor will it affect
private sector costs.
E. Executive Order 13132
We examined this final rule in accordance with Executive Order
13132 and determined that it will not have a substantial impact on the
rights, roles, or responsibilities of State, local, or tribal
governments.
F. Overall Impact
For the reasons stated above, we have not prepared an analysis
under the RFA and section 1102(b) of the Act because we have determined
that this final rule will not have a significant impact on small
entities or the operations of small rural hospitals.
[[Page 45697]]
G. Anticipated Effects of the Final Rule
We discuss below the impacts of this final rule on the Federal
budget and on IRFs.
1. Budgetary Impact
Section 1886(j)(3)(C) of the Act requires annual updates to the IRF
PPS payment rates. Section 1886(j)(6) of the Act requires the Secretary
to adjust or update the labor-related share and the wage indices or the
labor-related share and the wage indices applicable to IRFs not later
than October 1, 2001 and at least every 36 months thereafter. We
project that updating the IRF PPS for discharges occurring on or after
October 1, 2003 and before October 1, 2004, will cost the Medicare
program $187.3 million. The updates to the IRF labor-related share and
wage indices are made in a budget neutral manner. Thus, updating the
IRF labor-related share and the wage indices to FY 2004 will have no
overall effect on estimated costs to the Medicare program. Therefore,
this estimated cost to the Medicare program is due to the application
of the updated IRF market basket of 3.2 percent.
2. Impact on Providers
For the impact analyses shown in the August 7, 2001 IRF PPS final
rule, we simulated payments for 1,024 facilities. To construct the
impact analyses set forth in this final rule, we use the latest
available data. For the most part, we used 1998 and 1999 Medicare
claims and FIM data for the same facilities that were used in
constructing the impact analyses provided in the August 7, 2001 IRF PPS
final rule (66 FR 41364 through 41365, and 41372) which was effective
for cost reporting periods beginning on or after January 1, 2002. We do
not have enough post-IRF PPS data to develop the distributional impact
on providers. Further, we will need a sufficient amount of these data
to be able to rely on them as the basis for the impact analysis.
Because IRFs began to be paid under the IRF PPS based on their cost
report start date that occurred on or after January 1, 2002, sufficient
Medicare claims data will not be available for those facilities whose
cost report start date occurs later in the calendar year. The estimated
distributional impacts among the various classifications of IRFs for
discharges occurring on or after October 1, 2003 and before October 1,
2004 is reflected in Chart 8.--Projected Impact of FY 2004 Update--of
this final rule. These impacts reflect the updated IRF wage adjustment
and the application of the 3.2 percent IRF market basket increase.
3. Calculation of the Estimated FY 2003 IRF Prospective Payments
To estimate payments under the IRF PPS for FY 2003, we multiplied
each facility's case-mix index by the facility's number of Medicare
discharges, the FY 2003 standardized payment amount, the applicable FY
2003 labor-related share and wage indices, a low-income patient
adjustment, and a rural adjustment (if applicable). The adjustments
include the following:
The wage adjustment, calculated as follows:
(.27605 + (.72395 x FY 2003 Wage Index)).
The disproportionate share adjustment, calculated as follows:
(1 + Disproportionate Share Percentage) raised to the power of .4838).
The rural adjustment, if applicable, calculated by multiplying
payments by 1.1914.
4. Calculation of the Proposed Estimated FY 2004 IRF Prospective
Payments
To calculate FY 2004 payments, we use the payment rates described
in this final rule that reflect the 3.2 percent market basket increase
factor using the FY 2004 labor-related share and wage indices, a low-
income patient adjustment, and a rural adjustment (if applicable). The
adjustments include the following:
The wage adjustment, calculated as follows:
(.27474 + (.72526 x FY 2004 Wage Index)).
The disproportionate share adjustment, calculated as follows:
(1 + Disproportionate Share Percentage) raised to the power of .4838).
The rural adjustment, if applicable, calculated by multiplying
payments by 1.1914.
Chart 8.--Projected Impact of FY 2004 Update illustrates the
aggregate impact of the estimated FY 2004 updated payments among the
various classifications of facilities compared to the estimated IRF PPS
payment rates applicable for FY 2003. The first column, Facility
Classification, identifies the type of facility. The second column
identifies the number of facilities for each classification type, and
the third column lists the number of cases. The fourth column indicates
the impact of the budget neutral wage adjustment. The last column
reflects the combined changes including the update to the FY 2003
payment rates by 3.2 percent and the budget neutral wage adjustment
(including the FY 2004 labor-related share and the FY 2004 wage
indices).
Chart 8.--Projected Impact of FY 2004 Update
----------------------------------------------------------------------------------------------------------------
Budget neutral
Number of Number of wage Total change
Facility classification facilities cases adjustment (in percent)
(in percent)
----------------------------------------------------------------------------------------------------------------
Total
----------------------------------------------------------------------------------------------------------------
1,024 347,809 0.0 3.2
Urban unit...................................... 725 206,926 -0.5 2.7
Rural unit...................................... 131 26,507 0.2 3.4
Urban hospital.................................. 156 109,691 0.9 4.2
Rural hospital.................................. 12 4,685 -1.3 1.8
Total urban..................................... 881 316,617 0.0 3.2
Total rural..................................... 143 31,192 0.0 3.1
-------------------------------------------------
Urban by Region
----------------------------------------------------------------------------------------------------------------
New England..................................... 32 15,039 0.1 3.3
Middle Atlantic................................. 133 64,042 -1.5 1.6
South Atlantic.................................. 112 52,980 0.5 3.7
East North Central.............................. 171 55,071 -0.5 2.6
East South Central.............................. 41 23,434 0.9 4.1
[[Page 45698]]
West North Central.............................. 70 18,087 0.6 3.8
West South Central.............................. 154 52,346 1.5 4.7
Mountain........................................ 56 14,655 1.1 4.3
Pacific......................................... 112 20,963 -0.7 2.5
-------------------------------------------------
Rural by Region
----------------------------------------------------------------------------------------------------------------
New England..................................... 4 829 -0.2 3.0
Middle Atlantic................................. 10 2,424 -1.3 1.8
South Atlantic.................................. 20 6,192 -0.8 2.4
East North Central.............................. 29 5,152 -0.5 2.7
East South Central.............................. 10 3,590 0.2 3.4
West North Central.............................. 22 3,820 1.7 4.9
West South Central.............................. 32 7,317 0.6 3.8
Mountain........................................ 9 1,042 -0.3 2.9
Pacific......................................... 7 826 -1.2 2.0
----------------------------------------------------------------------------------------------------------------
As Chart 8 illustrates, all IRFs are expected to benefit from the
3.2 percent market basket increase that will be applied to FY 2003 IRF
PPS payment rates to develop the FY 2004 rates. However, there may be
distributional impacts among various IRFs due to the application of the
updates to the labor-related share and wage indices in a budget neutral
manner.
To summarize, this final rule provides that all facilities will
receive a 3.2 percent increase in their unadjusted IRF PPS payments.
The estimated positive impact among all IRFs reflected in Chart 8 are
due to the effect of the update to the IRF market basket index.
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget (OMB).
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV, part 412 as set forth
below:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
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 1395hh).
Subpart B--Hospital Services Subject to and Excluded From the
Prospective Payment Systems for Inpatient Operating Costs and
Inpatient Capital-Related Costs
0
2. In Sec. 412.20, the following changes are made:
0
A. Redesignate paragraph (b) as paragraph (b)(1).
0
B. Add paragraph (b)(2) to read as follows:
Sec. 412.20 Hospital services subject to the prospective payment
systems.
* * * * *
(b) * * *
(2) CMS will not pay for services under Subpart P of this part if
the services are paid for by a health maintenance organization (HMO) or
competitive medical plan (CMP) that elects not to have CMS make
payments to an inpatient rehabilitation facility for services, which
are inpatient hospital services, furnished to the HMO's or CMP's
Medicare enrollees, as provided under part 417 of this chapter.
* * * * *
0
3. In Sec. 412.22, the following changes are made:
0
A. Revise paragraph (h)(2) introductory text.
0
B. Remove and reserve paragraph (h)(6).
0
C. Add paragraph (h)(7).
The revisions and addition read as follows:
Sec. 412.22 Excluded hospitals and hospital units: General rules.
* * * * *
(h) * * *
(2) Except as provided in paragraphs (h)(3), (h)(6), and (h)(7) of
this section, effective for cost reporting periods beginning on or
after October 1, 1999, a hospital that has a satellite facility must
meet the following criteria in order to be excluded from the acute care
hospital inpatient prospective payment systems for any period:
* * * * *
(6) [Reserved]
(7) The provisions of paragraph (h)(2)(i) of this section do not
apply to any inpatient rehabilitation facility that is subject to the
inpatient rehabilitation facility prospective payment system under
subpart P of this part, effective for cost reporting periods beginning
on or after October 1, 2003.
0
4. In Sec. 412.25, the following changes are made:
0
A. Revise paragraph (e)(2) introductory text.
0
B. Add paragraph (e)(5).
The revision and addition read as follows:
Sec. 412.25 Excluded hospital units: Common requirements.
* * * * *
(e) * * *
(2) Except as provided in paragraphs (e)(3) and (e)(5) of this
section, effective for cost reporting periods beginning on or after
October 1, 1999, a hospital that has a satellite facility must meet the
following criteria in order to be excluded from the acute care hospital
inpatient prospective payment systems for any period:
* * * * *
(5) The provisions of paragraph (e)(2)(i) of this section do not
apply to any inpatient rehabilitation facility that is subject to the
inpatient rehabilitation facility prospective payment system under
subpart P of this part, effective for
[[Page 45699]]
cost reporting periods beginning on or after October 1, 2003.
* * * * *
0
5. In Sec. 412.29, revise paragraph (a)(2) to read as follows:
Sec. 412.29 Excluded rehabilitation units: Additional requirements.
(a) * * *
(2) Converted units under Sec. 412.30(c).
* * * * *
0
6. In Sec. 412.30, the following changes are made:
0
A. Revise paragraph (b)(3).
0
B. Revise paragraph (d)(2)(i).
Sec. 412.30 Exclusion of new rehabilitation units and expansion of
units already excluded.
(b) * * *
(3) The written certification described in paragraph (b)(2) of this
section is effective for the first full cost reporting period during
which the unit is used to provide hospital inpatient care.
* * * * *
(d) * * *
(2) Conversion of existing bed capacity.
(i) Bed capacity is considered to be existing bed capacity if it
does not meet the definition of new bed capacity under paragraph (d)(1)
of this section.
* * * * *
Subpart P--Prospective Payment for Inpatient Rehabilitation
Hospitals and Rehabilitation Units
0
7. In Sec. 412.602, republish the introductory text and revise the
definition of ``Discharge'' to read as follows:
Sec. 412.602 Definitions.
As used in this subpart--
* * * * *
Discharge. A Medicare patient in an inpatient rehabilitation
facility is considered discharged when--
(1) The patient is formally released from the inpatient
rehabilitation facility; or
(2) The patient dies in the inpatient rehabilitation facility.
* * * * *
0
8. In Sec. 412.604(a)(2), revise the introductory text to read as
follows:
Sec. 412.604 General requirements.
(a) * * *
(2) If an inpatient rehabilitation facility fails to comply fully
with these conditions with respect to inpatient hospital services
furnished to one or more Medicare Part A fee-for-service beneficiaries,
CMS or its Medicare fiscal intermediary may, as appropriate--
* * * * *
0
9. Section 412.608 is revised to read as follows:
Sec. 412.608 Patients' rights regarding the collection of patient
assessment data.
(a) Before performing an assessment using the inpatient
rehabilitation facility patient assessment instrument, a clinician of
the inpatient rehabilitation facility must give a Medicare inpatient--
(1) The form entitled ``Privacy Act Statement--Health Care
Records''; and
(2) The simplified plain language description of the Privacy Act
Statement--Health Care Records which is a form entitled ``Data
Collection Information Summary for Patients in Inpatient Rehabilitation
Facilities.''
(b) The inpatient rehabilitation facility must document in the
Medicare inpatient's clinical record that the Medicare inpatient has
been given the documents specified in paragraph (a) of this section.
(c) By giving the Medicare inpatient the forms specified in
paragraph (a) of this section the inpatient rehabilitation facility
will inform the Medicare patient of--
(1) Their privacy rights under the Privacy Act of 1974 and 45 CFR
5b.4(a)(3); and
(2) The following rights:
(i) The right to be informed of the purpose of the collection of
the patient assessment data;
(ii) The right to have the patient assessment information collected
be kept confidential and secure;
(iii) The right to be informed that the patient assessment
information will not be disclosed to others, except for legitimate
purposes allowed by the Federal Privacy Act and Federal and State
regulations;
(iv) The right to refuse to answer patient assessment questions;
and
(v) The right to see, review, and request changes on his or her
patient assessment.
(d) The patient rights specified in this section are in addition to
the patient rights specified in Sec. 82.13 of this chapter.
0
10. In Sec. 412.610, revise paragraph (c)(1)(i)(C) to read as follows:
Sec. 412.610 Assessment schedule.
* * * * *
(c) * * *
(1) * * *
(i) * * *
(C) Must be completed by the calendar day that follows the
admission assessment reference day.
* * * * *
0
11. In Sec. 412.614, the following changes are made:
0
A. Revise the introductory text to paragraph (a).
0
B. Add a new paragraph (a)(3).
0
C. Add a new paragraph (e).
The revision and additions read as follows:
Sec. 412.614 Transmission of patient assessment data.
(a) Data format. General rule. The inpatient rehabilitation
facility must encode and transmit data for each Medicare Part A fee-
for-service inpatient--
* * * * *
(3) Exception to the general rule. When the inpatient
rehabilitation facility does not submit claim data to Medicare in order
to be paid for any of the services it furnished to a Medicare Part A
fee-for-service inpatient, the inpatient rehabilitation facility is not
required to, but may, transmit to Medicare the inpatient rehabilitation
facility patient assessment data associated with the services furnished
to that same Medicare Part A fee-for-service inpatient.
* * * * *
(e) Exemption to being assessed a penalty for transmitting the IRF-
PAI data late. CMS may waive the penalty specified in paragraph (d) of
this section when, due to an extraordinary situation that is beyond the
control of an inpatient rehabilitation facility, the inpatient
rehabilitation facility is unable to transmit the patient assessment
data in accordance with paragraph (c) of this section. Only CMS can
determine if a situation encountered by an inpatient rehabilitation
facility is extraordinary and qualifies as a situation for waiver of
the penalty specified in paragraph (d)(2) of this section. An
extraordinary situation may be due to, but is not limited to, fires,
floods, earthquakes, or similar unusual events that inflict extensive
damage to an inpatient rehabilitation facility. An extraordinary
situation may be one that produces a data transmission problem that is
beyond the control of the inpatient rehabilitation facility, as well as
other situations determined by CMS to be beyond the control of the
inpatient rehabilitation facility. An extraordinary situation must be
fully documented by the inpatient rehabilitation facility.
0
12. In Sec. 412.624, the following changes are made:
0
A. Revise paragraph (c).
0
B. Revise paragraph (d).
0
C. Revise paragraph (e)(1).
0
D. Revise paragraph (e)(4).
The revisions read as follows:
[[Page 45700]]
Sec. 412.624 Methodology for calculating the Federal prospective
payment rates.
* * * * *
(c) Determining the Federal prospective payment rates. (1) General.
The Federal prospective payment rates will be established using a
standard payment amount referred to as the standard payment conversion
factor. The standard payment conversion factor is a standardized
payment amount based on average costs from a base year that reflects
the combined aggregate effects of the weighting factors, various
facility and case level adjustments, and other adjustments.
(2) Update the cost per discharge. CMS applies the increase factor
described in paragraph (a)(3) of this section to the facility's cost
per discharge determined under paragraph (b) of this section to compute
the cost per discharge for fiscal year 2002. Based on the updated cost
per discharge, CMS estimates the payments that would have been made to
the facility for fiscal year 2002 under part 413 of this chapter
without regard to the prospective payment system implemented under this
subpart.
(3) Computation of the standard payment conversion factor. The
standard payment conversion factor is computed as follows:
(i) For fiscal year 2002. Based on the updated costs per discharge
and estimated payments for fiscal year 2002 determined in paragraph
(c)(2) of this section, CMS computes a standard payment conversion
factor for fiscal year 2002, as specified by CMS, that reflects, as
appropriate, the adjustments described in paragraph (d) of this
section.
(ii) For fiscal years after 2002. The standard payment conversion
factor for fiscal years after 2002 will be the standardized payments
for the previous fiscal year updated by the increase factor described
in paragraph (a)(3) of this section, including adjustments described in
paragraph (d) of this section as appropriate.
(4) Determining the Federal prospective payment rate for each case-
mix group. The Federal prospective payment rates for each case-mix
group is the product of the weighting factors described in Sec.
412.620(b) and the standard payment conversion factor described in
paragraph (c)(3) of this section.
(d) Adjustments to the standard payment conversion factor. The
standard payment conversion factor described in paragraph (c)(3) of
this section will be adjusted for the following:
(1) Outlier payments. CMS determines a reduction factor equal to
the estimated proportion of additional outlier payments described in
paragraph (e)(4) of this section.
(2) Budget neutrality. CMS adjusts the Federal prospective payment
rates for fiscal year 2002 so that aggregate payments under the
prospective payment system, excluding any additional payments
associated with elections not to be paid under the transition period
methodology under Sec. 412.626(b), are estimated to equal the amount
that would have been made to inpatient rehabilitation facilities under
part 413 of this chapter without regard to the prospective payment
system implemented under this subpart.
(3) Coding and classification changes. CMS adjusts the standard
payment conversion factor for a given year if CMS determines that
revisions in case-mix classifications or weighting factors for a
previous fiscal year (or estimates that those revisions for a future
fiscal year) did result in (or would otherwise result in) a change in
aggregate payments that are a result of changes in the coding or
classification of patients that do not reflect real changes in case-
mix.
(e) Calculation of the adjusted Federal prospective payment.
(1) Adjustment for area wage levels. The labor portion of a
facility's Federal prospective payment is adjusted to account for
geographical differences in the area wage levels using an appropriate
wage index. The application of the wage index is made on the basis of
the location of the facility in an urban or rural area as defined in
Sec. 412.602. Adjustments or updates to the wage data used to adjust a
facility's Federal prospective payment rate under paragraph (e)(1) of
this section will be made in a budget neutral manner. CMS determines a
budget neutral wage adjustment factor, based on any adjustment or
update to the wage data, to apply to the standard payment conversion
factor.
* * * * *
(4) Adjustment for high-cost outliers. CMS provides for an
additional payment to an inpatient rehabilitation facility if its
estimated costs for a patient exceeds a fixed dollar amount (adjusted
for area wage levels and factors to account for treating low-income
patients and for rural locations) as specified by CMS. The additional
payment equals 80 percent of the difference between the estimated cost
of the patient and the sum of the adjusted Federal prospective payment
computed under this section and the adjusted fixed dollar amount.
Effective for discharges occurring on or after October 1, 2003,
additional payments made under this section will be subject to the
adjustments at Sec. 412.84(i), except that national averages will be
used instead of statewide averages. Effective for discharges occurring
on or after October 1, 2003, additional payments made under this
section will also be subject to adjustments at Sec. 412.84(m).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: July 16, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Approved: July 22, 2003.
Tommy G. Thompson,
Secretary.
BILLING CODE 4120-01-P
[[Page 45701]]
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[[Page 45705]]
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[[Page 45706]]
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[[Page 45710]]
[GRAPHIC] [TIFF OMITTED] TR01AU03.010
BILLING CODE 4120-01-C
[[Page 45711]]
Table 3A.--Urban Wage Index
------------------------------------------------------------------------
Urban area (constituent counties or Wage
MSA county equivalents) index
------------------------------------------------------------------------
0040.............. Abilene, TX............................... 0.7792
Taylor, TX
0060.............. Aguadilla, PR............................. 0.4587
Aguada, PR
Aguadilla, PR
Moca, PR
0080.............. Akron, OH................................. 0.9600
Portage, OH
Summit, OH
0120.............. Albany, GA................................ 1.0594
Dougherty, GA
Lee, GA
0160.............. Albany-Schenectady-Troy, NY............... 0.8384
Albany, NY
Montgomery, NY
Rensselaer, NY
Saratoga, NY
Schenectady, NY
Schoharie, NY
0200.............. Albuquerque, NM........................... 0.9315
Bernalillo, NM
Sandoval, NM
Valencia, NM
0220.............. Alexandria, LA............................ 0.7859
Rapides, LA
0240.............. Allentown-Bethlehem-Easton, PA............ 0.9735
Carbon, PA
Lehigh, PA
Northampton, PA
0280.............. Altoona, PA............................... 0.9225
Blair, PA
0320.............. Amarillo, TX.............................. 0.9034
Potter, TX
Randall, TX
0380.............. Anchorage, AK............................. 1.2358
Anchorage, AK
0440.............. Ann Arbor, MI............................. 1.1103
Lenawee, MI
Livingston, MI
Washtenaw, MI
0450.............. Anniston, AL.............................. 0.8044
Calhoun, AL
0460.............. Appleton-Oshkosh-Neenah, WI............... 0.8997
Calumet, WI
Outagamie, WI
Winnebago, WI
0470.............. Arecibo, PR............................... 0.4337
Arecibo, PR
Camuy, PR
Hatillo, PR
0480.............. Asheville, NC............................. 0.9876
Buncombe, NC
Madison, NC
0500.............. Athens, GA................................ 1.0211
Clarke, GA
Madison, GA
Oconee, GA
0520.............. Atlanta, GA............................... 0.9991
Barrow, GA
Bartow, GA
Carroll, GA
Cherokee, GA
Clayton, GA
Cobb, GA
Coweta, GA
De Kalb, GA
Douglas, GA
Fayette, GA
Forsyth, GA
Fulton, GA
[[Page 45712]]
Gwinnett, GA
Henry, GA
Newton, GA
Paulding, GA
Pickens, GA
Rockdale, GA
Spalding, GA
Walton, GA
0560.............. Atlantic City-Cape May, NJ................ 1.1017
Atlantic City, NJ
Cape May, NJ
0580.............. Auburn-Opelika, AL........................ 0.8325
Lee, AL
0600.............. Augusta-Aiken, GA-SC...................... 1.0264
Columbia, GA
McDuffie, GA
Richmond, GA
Aiken, SC
Edgefield, SC
0640.............. Austin-San Marcos, TX..................... 0.9637
Bastrop, TX
Caldwell, TX
Hays, TX
Travis, TX
Williamson, TX
0680.............. Bakersfield, CA........................... 0.9899
Kern, CA
0720.............. Baltimore, MD............................. 0.9929
Anne Arundel, MD
Baltimore, MD
Baltimore City, MD
Carroll, MD
Harford, MD
Howard, MD
Queen Annes, MD
0733.............. Bangor, ME................................ 0.9664
Penobscot, ME
0743.............. Barnstable-Yarmouth, MA................... 1.3202
Barnstable, MA
0760.............. Baton Rouge, LA........................... 0.8294
Ascension, LA
East Baton Rouge
Livingston, LA
West Baton Rouge, LA
0840.............. Beaumont-Port Arthur, TX.................. 0.8324
Hardin, TX
Jefferson, TX
Orange, TX
0860.............. Bellingham, WA............................ 1.2282
Whatcom, WA
0870.............. Benton Harbor, MI......................... 0.9042
Berrien, MI
0875.............. Bergen Passaic, NJ........................ 1.2150
Bergen, NJ
Passaic, NJ
0880.............. Billings, MT.............................. 0.9022
Yellowstone, MT
0920.............. Biloxi-Gulfport-Pascagoula, MS............ 0.8757
Hancock, MS
Harrison, MS
Jackson, MS
0960.............. Binghamton, NY............................ 0.8341
Broome, NY
Tioga, NY
1000.............. Birmingham, AL............................ 0.9222
Blount, AL
Jefferson, AL
St. Clair, AL
Shelby, AL
1010.............. Bismarck, ND.............................. 0.7972
[[Page 45713]]
Burleigh, ND
Morton, ND
1020.............. Bloomington, IN........................... 0.8907
Monroe, IN
1040.............. Bloomington-Normal, IL.................... 0.9109
McLean, IL
1080.............. Boise City, ID............................ 0.9310
Ada, ID
Canyon, ID
1123.............. Boston-Worcester-Lawrence-Lowell-Brockton, 1.1235
MA-NH.
Bristol, MA
Essex, MA
Middlesex, MA
Norfolk, MA
Plymouth, MA
Suffolk, MA
Worcester, MA
Hillsborough, NH
Merrimack, NH
Rockingham, NH
Strafford, NH
1125.............. Boulder-Longmont, CO...................... 0.9689
Boulder, CO
1145.............. Brazoria, TX.............................. 0.8535
Brazoria, TX
1150.............. Bremerton, WA............................. 1.0944
Kitsap, WA
1240.............. Brownsville-Harlingen-San Benito, TX...... 0.8880
Cameron, TX
1260.............. Bryan-College Station, TX................. 0.8821
Brazos, TX
1280.............. Buffalo-Niagara Falls, NY................. 0.9365
Erie, NY
Niagara, NY
1303.............. Burlington, VT............................ 1.0052
Chittenden, VT
Franklin, VT
Grand Isle, VT
1310.............. Caguas, PR................................ 0.4371
Caguas, PR
Cayey, PR
Cidra, PR
Gurabo, PR
San Lorenzo, PR
1320.............. Canton-Massillon, OH...................... 0.8932
Carroll, OH
Stark, OH
1350.............. Casper, WY................................ 0.9690
Natrona, WY
1360.............. Cedar Rapids, IA.......................... 0.9056
Linn, IA
1400.............. Champaign-Urbana, IL...................... 1.0635
Champaign, IL
1440.............. Charleston-North Charleston, SC........... 0.9235
Berkeley, SC
Charleston, SC
Dorchester, SC
1480.............. Charleston, WV............................ 0.8898
Kanawha, WV
Putnam, WV
1520.............. Charlotte-Gastonia-RockHill, NC-SC........ 0.9850
Cabarrus, NC
Gaston, NC
Lincoln, NC
Mecklenburg, NC
Rowan, NC
Stanly, NC
Union, NC
York, SC
1540.............. Charlottesville, VA....................... 1.0438
[[Page 45714]]
Albemarle, VA
Charlottesville City, VA
Fluvanna, VA
Greene, VA
1560.............. Chattanooga, TN-GA........................ 0.8976
Catoosa, GA
Dade, GA
Walker, GA
Hamilton, TN
Marion, TN
1580.............. Cheyenne, WY.............................. 0.8628
Laramie, WY
1600.............. Chicago, IL............................... 1.1044
Cook, IL
DeKalb, IL
DuPage, IL
Grundy, IL
Kane, IL
Kendall, IL
Lake, IL
McHenry, IL
Will, IL
1620.............. Chico-Paradise, CA........................ 0.9745
Butte, CA
1640.............. Cincinnati, OH-KY-IN...................... 0.9381
Dearborn, IN
Ohio, IN
Boone, KY
Campbell, KY
Gallatin, KY
Grant, KY
Kenton, KY
Pendleton, KY
Brown, OH
Clermont, OH
Hamilton, OH
Warren, OH
1660.............. Clarksville-Hopkinsville, TN-KY........... 0.8406
Christian, KY
Montgomery, TN
1680.............. Cleveland-Lorain-Elyria, OH............... 0.9670
Ashtabula, OH
Geauga, OH
Cuyahoga, OH
Lake, OH
Lorain, OH
Medina, OH
1720.............. Colorado Springs, CO...................... 0.9916
El Paso, CO
1740.............. Columbia MO............................... 0.8496
Boone, MO
1760.............. Columbia, SC.............................. 0.9307
Lexington, SC
Richland, SC
1800.............. Columbus, GA-AL........................... 0.8374
Russell, AL
Chattanoochee, GA
Harris, GA
Muscogee, GA
1840.............. Columbus, OH.............................. 0.9751
Delaware, OH
Fairfield, OH
Franklin, OH
Licking, OH
Madison, OH
Pickaway, OH
1880.............. Corpus Christi, TX........................ 0.8729
Nueces, TX
San Patricio, TX
1890.............. Corvallis, OR............................. 1.1453
[[Page 45715]]
Benton, OR
1900.............. Cumberland, MD-WV......................... 0.7847
Allegany, MD
Mineral, WV
1920.............. Dallas, TX................................ 0.9998
Collin, TX
Dallas, TX
Denton, TX
Ellis, TX
Henderson, TX
Hunt, TX
Kaufman, TX
Rockwall, TX
1950.............. Danville, VA.............................. 0.8859
Danville City, VA
Pittsylvania, VA
1960.............. Davenport-Moline-Rock Island, IA-IL....... 0.8835
Scott, IA
Henry, IL
Rock Island, IL
2000.............. Dayton-Springfield, OH.................... 0.9282
Clark, OH
Greene, OH
Miami, OH
Montgomery, OH
2020.............. Daytona Beach, FL......................... 0.9062
Flagler, FL
Volusia, FL
2030.............. Decatur, AL............................... 0.8973
Lawrence, AL
Morgan, AL
2040.............. Decatur, IL............................... 0.8055
Macon, IL
2080.............. Denver, CO................................ 1.0601
Adams, CO
Arapahoe, CO
Broomfield, CO
Denver, CO
Douglas, CO
Jefferson, CO
2120.............. Des Moines, IA............................ 0.8791
Dallas, IA
Polk, IA
Warren, IA
2160.............. Detroit, MI............................... 1.0448
Lapeer, MI
Macomb, MI
Monroe, MI
Oakland, MI
St. Clair, MI
Wayne, MI
2180.............. Dothan, AL................................ 0.8137
Dale, AL
Houston, AL
2190.............. Dover, DE................................. 0.9356
Kent, DE
2200.............. Dubuque, IA............................... 0.8795
Dubuque, IA
2240.............. Duluth-Superior, MN-WI.................... 1.0368
St. Louis, MN
Douglas, WI
2281.............. Dutchess County, NY....................... 1.0684
Dutchess, NY
2290.............. Eau Claire, WI............................ 0.8952
Chippewa, WI
Eau Claire, WI
2320.............. El Paso, TX............................... 0.9265
El Paso, TX
2330.............. Elkhart-Goshen, IN........................ 0.9722
Elkhart, IN
[[Page 45716]]
2335.............. Elmira, NY................................ 0.8416
Chemung, NY
2340.............. Enid, OK.................................. 0.8376
Garfield, OK
2360.............. Erie, PA.................................. 0.8925
Erie, PA
2400.............. Eugene-Springfield, OR.................... 1.0944
Lane, OR
2440.............. Evansville-Henderson, IN-KY............... 0.8177
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY
2520.............. Fargo-Moorhead, ND-MN..................... 0.9684
Clay, MN
Cass, ND
2560.............. Fayetteville, NC.......................... 0.8889
Cumberland, NC
2580.............. Fayetteville-Springdale-Rogers, AR........ 0.8100
Benton, AR
Washington, AR
2620.............. Flagstaff, AZ-UT.......................... 1.0682
Coconino, AZ
Kane, UT
2640.............. Flint, MI................................. 1.1135
Genesee, MI
2650.............. Florence, AL.............................. 0.7792
Colbert, AL
Lauderdale, AL
2655.............. Florence, SC.............................. 0.8780
Florence, SC
2670.............. Fort Collins-Loveland, CO................. 1.0066
Larimer, CO
2680.............. Ft. Lauderdale, FL........................ 1.0297
Broward, FL
2700.............. Fort Myers-Cape Coral, FL................. 0.9680
Lee, FL
2710.............. Fort Pierce Port-St. Lucie, FL............ 0.9823
Martin, FL
St.Lucie, FL
2720.............. Fort Smith, AR-OK......................... 0.7895
Crawford, AR
Sebastian, AR
Sequoyah, OK
2750.............. Fort Walton Beach, FL..................... 0.9693
Okaloosa, FL
2760.............. Fort Wayne, IN............................ 0.9457
Adams, IN
Allen, IN
DeKalb, IN
Huntington, IN
Wells, IN
Whitley, IN
2800.............. Forth Worth-Arlington, TX................. 0.9446
Hood, TX
Johnson, TX
Parker, TX
Tarrant, TX
2840.............. Fresno, CA................................ 1.0216
Fresno, CA
Madera, CA
2880.............. Gadsden, AL............................... 0.8505
Etowah, AL
2900.............. Gainesville, FL........................... 0.9871
Alachua, FL
2920.............. Galveston-Texas City, TX.................. 0.9465
Galveston, TX
2960.............. Gary, IN.................................. 0.9584
Lake, IN
Porter, IN
[[Page 45717]]
2975.............. Glens Falls, NY........................... 0.8281
Warren, NY
Washington, NY
2980.............. Goldsboro, NC............................. 0.8892
Wayne, NC
2985.............. Grand Forks, ND-MN........................ 0.8897
Polk, MN
Grand Forks, ND
2995.............. Grand Junction, CO........................ 0.9456
Mesa, CO
3000.............. Grand Rapids-Muskegon-Holland, MI......... 0.9525
Allegan, MI
Kent, MI
Muskegon, MI
Ottawa, MI
3040.............. Great Falls, MT........................... 0.8950
Cascade, MT
3060.............. Greeley, CO............................... 0.9237
Weld, CO
3080.............. Green Bay, WI............................. 0.9502
Brown, WI
3120.............. Greensboro-Winston Salem-High Point, NC... 0.9282
Alamance, NC
Davidson, NC
Davie, NC
Forsyth, NC
Guilford, NC
Randolph, NC
Stokes, NC
Yadkin, NC
3150.............. Greenville, NC............................ 0.9100
Pitt, NC
3160.............. Greenville-Spartanburg-Anderson, SC....... 0.9122
Anderson, SC
Cherokee, SC
Greenville, SC
Pickens, SC
Spartanburg, SC
3180.............. Hagerstown, MD............................ 0.9268
Washington, MD
3200.............. Hamilton-Middletown, OH................... 0.9418
Butler, OH
3240.............. Harrisburg-Lebanon-Carlisle, PA........... 0.9223
Cumberland, PA
Dauphin, PA
Lebanon, PA
Perry, PA
3283.............. Hartford, CT.............................. 1.1549
Hartford, CT
Litchfield, CT
Middlesex, CT
Tolland, CT
3285.............. Hattiesburg, MS........................... 0.7659
Forrest, MS
Lamar, MS
3290.............. Hickory-Morganton-Lenoir, NC.............. 0.9028
Alexander, NC
Burke, NC
Caldwell, NC
Catawba, NC
3320.............. Honolulu, HI.............................. 1.1457
Honolulu, HI
3350.............. Houma, LA................................. 0.8385
Lafourche, LA
Terrebonne, LA
3360.............. Houston, TX............................... 0.9892
Chambers, TX
Fort Bend, TX
Harris, TX
Liberty, TX
[[Page 45718]]
Montgomery, TX
Waller, TX
3400.............. Huntington-Ashland, WV-KY-OH.............. 0.9636
Boyd, KY
Carter, KY
Greenup, KY
Lawrence, OH
Cabell, WV
Wayne, WV
3440.............. Huntsville, AL............................ 0.8903
Limestone, AL
Madison, AL
3480.............. Indianapolis, IN.......................... 0.9717
Boone, IN
Hamilton, IN
Hancock, IN
Hendricks, IN
Johnson, IN
Madison, IN
Marion, IN
Morgan, IN
Shelby, IN
3500.............. Iowa City, IA............................. 0.9587
Johnson, IA
3520.............. Jackson, MI............................... 0.9532
Jackson, MI
3560.............. Jackson, MS............................... 0.8607
Hinds, MS
Madison, MS
Rankin, MS
3580.............. Jackson, TN............................... 0.9275
Chester, TN
Madison, TN
3600.............. Jacksonville, FL.......................... 0.9381
Clay, FL
Duval, FL
Nassau, FL
St. Johns, FL
3605.............. Jacksonville, NC.......................... 0.8239
Onslow, NC
3610.............. Jamestown, NY............................. 0.7976
Chautaqua, NY
3620.............. Janesville-Beloit, WI..................... 0.9849
Rock, WI
3640.............. Jersey City, NJ........................... 1.1190
Hudson, NJ
3660.............. Johnson City-Kingsport-Bristol, TN-VA..... 0.8268
Carter, TN
Hawkins, TN
Sullivan, TN
Unicoi, TN
Washington, TN
Bristol City, VA
Scott, VA
Washington, VA
3680.............. Johnstown, PA............................. 0.8329
Cambria, PA
Somerset, PA
3700.............. Jonesboro, AR............................. 0.7749
Craighead, AR
3710.............. Joplin, MO................................ 0.8613
Jasper, MO
Newton, MO
3720.............. Kalamazoo-Battlecreek, MI................. 1.0595
Calhoun, MI
Kalamazoo, MI
Van Buren, MI
3740.............. Kankakee, IL.............................. 1.0790
Kankakee, IL
3760.............. Kansas City, KS-MO........................ 0.9736
[[Page 45719]]
Johnson, KS
Leavenworth, KS
Miami, KS
Wyandotte, KS
Cass, MO
Clay, MO
Clinton, MO
Jackson, MO
Lafayette, MO
Platte, MO
Ray, MO
3800.............. Kenosha, WI............................... 0.9686
Kenosha, WI
3810.............. Killeen-Temple, TX........................ 1.0399
Bell, TX
Coryell, TX
3840.............. Knoxville, TN............................. 0.8970
Anderson, TN
Blount, TN
Knox, TN
Loudon, TN
Sevier, TN
Union, TN
3850.............. Kokomo, IN................................ 0.8971
Howard, IN
Tipton, IN
3870.............. La Crosse, WI-MN.......................... 0.9400
Houston, MN
La Crosse, WI
3880.............. Lafayette, LA............................. 0.8475
Acadia, LA
Lafayette, LA
St. Landry, LA
St. Martin, LA
3920.............. Lafayette, IN............................. 0.9278
Clinton, IN
Tippecanoe, IN
3960.............. Lake Charles, LA.......................... 0.7965
Calcasieu, LA
3980.............. Lakeland-Winter Haven, FL................. 0.9357
Polk, FL
4000.............. Lancaster, PA............................. 0.9078
Lancaster, PA
4040.............. Lansing-East Lansing, MI.................. 0.9726
Clinton, MI
Eaton, MI
Ingham, MI
4080.............. Laredo, TX................................ 0.8472
Webb, TX
4100.............. Las Cruces, NM............................ 0.8745
Dona Ana, NM
4120.............. Las Vegas, NV-AZ.......................... 1.1521
Mohave, AZ
Clark, NV
Nye, NV
4150.............. Lawrence, KS.............................. 0.7923
Douglas, KS
4200.............. Lawton, OK................................ 0.8315
Comanche, OK
4243.............. Lewiston-Auburn, ME....................... 0.9179
Androscoggin, ME
4280.............. Lexington, KY............................. 0.8581
Bourbon, KY
Clark, KY
Fayette, KY
Jessamine, KY
Madison, KY
Scott, KY
Woodford, KY
4320.............. Lima, OH.................................. 0.9483
[[Page 45720]]
Allen, OH
Auglaize, OH
4360.............. Lincoln, NE............................... 0.9892
Lancaster, NE
4400.............. Little Rock-North Little, AR.............. 0.9097
Faulkner, AR
Lonoke, AR
Pulaski, AR
Saline, AR
4420.............. Longview-Marshall, TX..................... 0.8629
Gregg, TX
Harrison, TX
Upshur, TX
4480.............. Los Angeles-Long Beach, CA................ 1.2001
Los Angeles, CA
4520.............. Louisville, KY-IN......................... 0.9276
Clark, IN
Floyd, IN
Harrison, IN
Scott, IN
Bullitt, KY
Jefferson, KY
Oldham, KY
4600.............. Lubbock, TX............................... 0.9646
Lubbock, TX
4640.............. Lynchburg, VA............................. 0.9219
Amherst, VA
Bedford City, VA
Bedford, VA
Campbell, VA
Lynchburg City, VA
4680.............. Macon, GA................................. 0.9204
Bibb, GA
Houston, GA
Jones, GA
Peach, GA
Twiggs, GA
4720.............. Madison, WI............................... 1.0467
Dane, WI
4800.............. Mansfield, OH............................. 0.8900
Crawford, OH
Richland, OH
4840.............. Mayaguez, PR.............................. 0.4914
Anasco, PR
Cabo Rojo, PR
Hormigueros, PR
Mayaguez, PR
Sabana Grande, PR
San German, PR
4880.............. McAllen-Edinburg-Mission, TX.............. 0.8428
Hidalgo, TX
4890.............. Medford-Ashland, OR....................... 1.0498
Jackson, OR
4900.............. Melbourne-Titusville-Palm Bay, FL......... 1.0253
Brevard, FL
4920.............. Memphis, TN-AR-MS......................... 0.8920
Crittenden, AR
De Soto, MS
Fayette, TN
Shelby, TN
Tipton, TN
4940.............. Merced, CA................................ 0.9837
Merced, CA
5000.............. Miami, FL................................. 0.9802
Dade, FL
5015.............. Middlesex-Somerset-Hunterdon, NJ.......... 1.1213
Hunterdon, NJ
Middlesex, NJ
Somerset, NJ
5080.............. Milwaukee-Waukesha, WI.................... 0.9893
[[Page 45721]]
Milwaukee, WI
Ozaukee, WI
Washington, WI
Waukesha, WI
5120.............. Minneapolis-St. Paul, MN-WI............... 1.0903
Anoka, MN
Carver, MN
Chisago, MN
Dakota, MN
Hennepin, MN
Isanti, MN
Ramsey, MN
Scott, MN
Sherburne, MN
Washington, MN
Wright, MN
Pierce, WI
St. Croix, WI
5140.............. Missoula, MT.............................. 0.9157
Missoula, MT
5160.............. Mobile, AL................................ 0.8108
Baldwin, AL
Mobile, AL
5170.............. Modesto, CA............................... 1.0498
Stanislaus, CA
5190.............. Monmouth-Ocean, NJ........................ 1.0674
Monmouth, NJ
Ocean, NJ
5200.............. Monroe, LA................................ 0.8137
Ouachita, LA
5240.............. Montgomery, AL............................ 0.7734
Autauga, AL
Elmore, AL
Montgomery, AL
5280.............. Muncie, IN................................ 0.9284
Delaware, IN
5330.............. Myrtle Beach, SC.......................... 0.8976
Horry, SC
5345.............. Naples, FL................................ 0.9754
Collier, FL
5360.............. Nashville, TN............................. 0.9578
Cheatham, TN
Davidson, TN
Dickson, TN
Robertson, TN
Rutherford, TN
Sumner, TN
Williamson, TN
Wilson, TN
5380.............. Nassau-Suffolk, NY........................ 1.3357
Nassau, NY
Suffolk, NY
5483.............. New Haven-Bridgeport-Stamford-Waterbury- 1.2408
Danbury, CT.
Fairfield, CT
New Haven, CT
5523.............. New London-Norwich, CT.................... 1.1767
New London, CT
5560.............. New Orleans, LA........................... 0.9046
Jefferson, LA
Orleans, LA
Plaquemines, LA
St. Bernard, LA
St. Charles, LA
St. James, LA
St. John The Baptist, LA
St. Tammany, LA
5600.............. New York, NY.............................. 1.4414
Bronx, NY
Kings, NY
New York, NY
[[Page 45722]]
Putnam, NY
Queens, NY
Richmond, NY
Rockland, NY
Westchester, NY
5640.............. Newark, NJ................................ 1.1381
Essex, NJ
Morris, NJ
Sussex, NJ
Union, NJ
Warren, NJ
5660.............. Newburgh, NY-PA........................... 1.1387
Orange, NY
Pike, PA
5720.............. Norfolk-Virginia Beach-Newport News, VANC. 0.8574
Currituck, NC
Chesapeake City, VA
Gloucester, VA
Hampton City, VA
Isle of Wight, VA
James City, VA
Mathews, VA
Newport News City, VA
Norfolk City, VA
Poquoson City, VA
Portsmouth City, VA
Suffolk City, VA
Virginia Beach City, VA
Williamsburg City, VA
York, VA
5775.............. Oakland, CA............................... 1.5072
Alameda, CA
Contra Costa, CA
5790.............. Ocala, FL................................. 0.9402
Marion, FL
5800.............. Odessa-Midland, TX........................ 0.9397
Ector, TX
Midland, TX
5880.............. Oklahoma City, OK......................... 0.8900
Canadian, OK
Cleveland, OK
Logan, OK
McClain, OK
Oklahoma, OK
Pottawatomie, OK
5910.............. Olympia, WA............................... 1.0960
Thurston, WA
5920.............. Omaha, NE-IA.............................. 0.9978
Pottawattamie, IA
Cass, NE
Douglas, NE
Sarpy, NE
Washington, NE
5945.............. Orange County, CA......................... 1.1474
Orange, CA
5960.............. Orlando, FL............................... 0.9640
Lake, FL
Orange, FL
Osceola, FL
Seminole, FL
5990.............. Owensboro, KY............................. 0.8344
Daviess, KY
6015.............. Panama City, FL........................... 0.8865
Bay, FL
6020.............. Parkersburg-Marietta, WV-OH............... 0.8127
Washington, OH
Wood, WV
6080.............. Pensacola, FL............................. 0.8645
Escambia, FL
Santa Rosa, FL
[[Page 45723]]
6120.............. Peoria-Pekin, IL.......................... 0.8739
Peoria, IL
Tazewell, IL
Woodford, IL
6160.............. Philadelphia, PA-NJ....................... 1.0713
Burlington, NJ
Camden, NJ
Gloucester, NJ
Salem, NJ
Bucks, PA
Chester, PA
Delaware, PA
Montgomery, PA
Philadelphia, PA
6200.............. Phoenix-Mesa, AZ.......................... 0.9820
Maricopa, AZ
Pinal, AZ
6240.............. Pine Bluff, AR............................ 0.7962
Jefferson, AR
6280.............. Pittsburgh, PA............................ 0.9365
Allegheny, PA
Beaver, PA
Butler, PA
Fayette, PA
Washington, PA
Westmoreland, PA
6323.............. Pittsfield, MA............................ 1.0235
Berkshire, MA
6340.............. Pocatello, ID............................. 0.9372
Bannock, ID
6360.............. Ponce, PR................................. 0.5169
Guayanilla, PR
Juana Diaz, PR
Penuelas, PR
Ponce, PR
Villalba, PR
Yauco, PR
6403.............. Portland, ME.............................. 0.9794
Cumberland, ME
Sagadahoc, ME
York, ME
6440.............. Portland-Vancouver, OR-WA................. 1.0667
Clackamas, OR
Columbia, OR
Multnomah, OR
Washington, OR
Yamhill, OR
Clark, WA
6483.............. Providence-Warwick-Pawtucket, RI.......... 1.0854
Bristol, RI
Kent, RI
Newport, RI
Providence, RI
Washington, RI
6520.............. Provo-Orem, UT............................ 0.9984
Utah, UT
6560.............. Pueblo, CO................................ 0.8820
Pueblo, CO
6580.............. Punta Gorda, FL........................... 0.9218
Charlotte, FL
6600.............. Racine, WI................................ 0.9334
Racine, WI
6640.............. Raleigh-Durham-Chapel Hill, NC............ 0.9990
Chatham, NC
Durham, NC
Franklin, NC
Johnston, NC
Orange, NC
Wake, NC
6660.............. Rapid City, SD............................ 0.8846
[[Page 45724]]
Pennington, SD
6680.............. Reading, PA............................... 0.9295
Berks, PA
6690.............. Redding, CA............................... 1.1135
Shasta, CA
6720.............. Reno, NV.................................. 1.0648
Washoe, NV
6740.............. Richland-Kennewick-Pasco, WA.............. 1.1491
Benton, WA
Franklin, WA
6760.............. Richmond-Petersburg, VA................... 0.9477
Charles City County, VA
Chesterfield, VA
Colonial Heights City, VA
Dinwiddie, VA
Goochland, VA
Hanover, VA
Henrico, VA
Hopewell City, VA
New Kent, VA
Petersburg City, VA
Powhatan, VA
Prince George, VA
Richmond City, VA
6780.............. Riverside-San Bernardino, CA.............. 1.1365
Riverside, CA
San Bernardino, CA
6800.............. Roanoke, VA............................... 0.8614
Botetourt, VA
Roanoke, VA
Roanoke City, VA
Salem City, VA
6820.............. Rochester, MN............................. 1.2139
Olmsted, MN
6840.............. Rochester, NY............................. 0.9194
Genesee, NY
Livingston, NY
Monroe, NY
Ontario, NY
Orleans, NY
Wayne, NY
6880.............. Rockford, IL.............................. 0.9625
Boone, IL
Ogle, IL
Winnebago, IL
6895.............. Rocky Mount, NC........................... 0.9228
Edgecombe, NC
Nash, NC
6920.............. Sacramento, CA............................ 1.1500
El Dorado, CA
Placer, CA
Sacramento, CA
6960.............. Saginaw-Bay City-Midland, MI.............. 0.9650
Bay, MI
Midland, MI
Saginaw, MI
6980.............. St. Cloud, MN............................. 0.9700
Benton, MN
Stearns, MN
7000.............. St. Joseph, MO............................ 0.8021
Andrews, MO
Buchanan, MO
7040.............. St. Louis, MO-IL.......................... 0.8855
Clinton, IL
Jersey, IL
Madison, IL
Monroe, IL
St. Clair, IL
Franklin, MO
Jefferson, MO
[[Page 45725]]
Lincoln, MO
St. Charles, MO
St. Louis, MO
St. Louis City, MO
Warren, MO
Sullivan City, MO
7080.............. Salem, OR................................. 1.0367
Marion, OR
Polk, OR
7120.............. Salinas, CA............................... 1.4623
Monterey, CA
7160.............. Salt Lake City-Ogden, UT.................. 0.9945
Davis, UT
Salt Lake, UT
Weber, UT
7200.............. San Angelo, TX............................ 0.8374
Tom Green, TX
7240.............. San Antonio, TX........................... 0.8753
Bexar, TX
Comal, TX
Guadalupe, TX
Wilson, TX
7320.............. San Diego, CA............................. 1.1131
San Diego, CA /
7360.............. San Francisco, CA......................... 1.4142
Marin, CA
San Francisco, CA
San Mateo, CA
7400.............. San Jose, CA.............................. 1.4145
Santa Clara, CA
7440.............. San Juan-Bayamon, PR...................... 0.4741
Aguas Buenas, PR
Barceloneta, PR
Bayamon, PR
Canovanas, PR
Carolina, PR
Catano, PR
Ceiba, PR
Comerio, PR
Corozal, PR
Dorado, PR
Fajardo, PR
Florida, PR
Guaynabo, PR
Humacao, PR
Juncos, PR
Los Piedras, PR
Loiza, PR
Luguillo, PR
Manati, PR
Morovis, PR
Naguabo, PR
Naranjito, PR
Rio Grande, PR
San Juan, PR
Toa Alta, PR
Toa Baja, PR
Trujillo Alto, PR
Vega Alta, PR
Vega Baja, PR
Yabucoa, PR
7460.............. San Luis Obispo-Atascadero-Paso Robles, CA 1.1271
San Luis Obispo, CA
7480.............. Santa Barbara-Santa Maria-Lompoc, CA...... 1.0481
Santa Barbara, CA
7485.............. Santa Cruz-Watsonville, CA................ 1.3646
Santa Cruz, CA
7490.............. Santa Fe, NM.............................. 1.0712
Los Alamos, NM
Santa Fe, NM
[[Page 45726]]
7500.............. Santa Rosa, CA............................ 1.3046
Sonoma, CA
7510.............. Sarasota-Bradenton, FL.................... 0.9425
Manatee, FL
Sarasota, FL
7520.............. Savannah, GA.............................. 0.9376
Bryan, GA
Chatham, GA
Effingham, GA
7560.............. Scranton-Wilkes Barre-Hazleton, PA........ 0.8599
Columbia, PA
Lackawanna, PA
Luzerne, PA
Wyoming, PA
7600.............. Seattle-Bellevue-Everett, WA.............. 1.1474
Island, WA
King, WA
Snohomish, WA
7610.............. Sharon, PA................................ 0.7869
Mercer, PA
7620.............. Sheboygan, WI............................. 0.8697
Sheboygan, WI
7640.............. Sherman-Denison, TX....................... 0.9255
Grayson, TX
7680.............. Shreveport-Bossier City, LA............... 0.8987
Bossier, LA
Caddo, LA
Webster, LA
7720.............. Sioux City, IA-NE......................... 0.9046
Woodbury, IA
Dakota, NE
7760.............. Sioux Falls, SD........................... 0.9257
Lincoln, SD
Minnehaha, SD
7800.............. South Bend, IN............................ 0.9802
St. Joseph, IN
7840.............. Spokane, WA............................... 1.0852
Spokane, WA
7880.............. Springfield, IL........................... 0.8659
Menard, IL
Sangamon, IL
7920.............. Springfield, MO........................... 0.8424
Christian, MO
Greene, MO
Webster, MO
8003.............. Springfield, MA........................... 1.0927
Hampden, MA
Hampshire, MA
8050.............. State College, PA......................... 0.8941
Centre, PA
8080.............. Steubenville-Weirton, OH-WV............... 0.8804
Jefferson, OH
Brooke, WV
Hancock, WV
8120.............. Stockton-Lodi, CA......................... 1.0506
San Joaquin, CA
8140.............. Sumter, SC................................ 0.8273
Sumter, SC
8160.............. Syracuse, NY.............................. 0.9714
Cayuga, NY
Madison, NY
Onondaga, NY
Oswego, NY
8200.............. Tacoma, WA................................ 1.0940
Pierce, WA
8240.............. Tallahassee, FL........................... 0.8504
Gadsden, FL
Leon, FL
8280.............. Tampa-St. Petersburg-Clearwater, FL....... 0.9065
Hernando, FL
[[Page 45727]]
Hillsborough, FL
Pasco, FL
Pinellas, FL
8320.............. Terre Haute, IN........................... 0.8599
Clay, IN
Vermillion, IN
Vigo, IN
8360.............. Texarkana, AR-Texarkana, TX............... 0.8088
Miller, AR
Bowie, TX
8400.............. Toledo, OH................................ 0.9810
Fulton, OH
Lucas, OH
Wood, OH
8440.............. Topeka, KS................................ 0.9199
Shawnee, KS
8480.............. Trenton, NJ............................... 1.0432
Mercer, NJ
8520.............. Tucson, AZ................................ 0.8911
Pima, AZ
8560.............. Tulsa, OK................................. 0.8332
Creek, OK
Osage, OK
Rogers, OK
Tulsa, OK
Wagoner, OK
8600.............. Tuscaloosa, AL............................ 0.8130
Tuscaloosa, AL
8640.............. Tyler, TX................................. 0.9521
Smith, TX
8680.............. Utica-Rome, NY............................ 0.8465
Herkimer, NY
Oneida, NY
8720.............. Vallejo-Fairfield-Napa, CA................ 1.3354
Napa, CA
Solano, CA
8735.............. Ventura, CA............................... 1.1096
Ventura, CA
8750.............. Victoria, TX.............................. 0.8756
Victoria, TX
8760.............. Vineland-Millville-Bridgeton, NJ.......... 1.0031
Cumberland, NJ
8780.............. Visalia-Tulare-Porterville, CA............ 0.9429
Tulare, CA
8800.............. Waco, TX.................................. 0.8073
McLennan, TX
8840.............. Washington, DC-MD-VA-WV................... 1.0851
District of Columbia, DC
Calvert, MD
Charles, MD
Frederick, MD
Montgomery, MD
Prince Georges, MD
Alexandria City, VA
Arlington, VA
Clarke, VA
Culpepper, VA
Fairfax, VA
Fairfax City, VA
Falls Church City, VA
Fauquier, VA
Fredericksburg City, VA
King George, VA
Loudoun, VA
Manassas City, VA
Manassas Park City, VA
Prince William, VA
Spotsylvania, VA
Stafford, VA
Warren, VA
[[Page 45728]]
Berkeley, WV
Jefferson, WV
8920.............. Waterloo-Cedar Falls, IA.................. 0.8069
Black Hawk, IA
8940.............. Wausau, WI................................ 0.9782
Marathon, WI
8960.............. West Palm Beach-Boca Raton, FL............ 0.9939
Palm Beach, FL
9000.............. Wheeling, OH-WV........................... 0.7670
Belmont, OH
Marshall, WV
Ohio, WV
9040.............. Wichita, KS............................... 0.9520
Butler, KS
Harvey, KS
Sedgwick, KS
9080.............. Wichita Falls, TX......................... 0.8498
Archer, TX
Wichita, TX
9140.............. Williamsport, PA.......................... 0.8544
Lycoming, PA
9160.............. Wilmington-Newark, DE-MD.................. 1.1173
New Castle, DE
Cecil, MD
9200.............. Wilmington, NC............................ 0.9640
New Hanover, NC
Brunswick, NC
9260.............. Yakima, WA................................ 1.0569
Yakima, WA
9270.............. Yolo, CA.................................. 0.9434
Yolo, CA
9280.............. York, PA.................................. 0.9026
York, PA
9320.............. Youngstown-Warren, OH..................... 0.9358
Columbiana, OH
Mahoning, OH
Trumbull, OH
9340.............. Yuba City, CA............................. 1.0276
Sutter, CA
Yuba, CA
9360.............. Yuma, AZ.................................. 0.8589
Yuma, AZ
------------------------------------------------------------------------
Table 3B.--Rural Wage Index
------------------------------------------------------------------------
Wage
Nonurban area index
------------------------------------------------------------------------
Alabama....................................................... 0.7660
Alaska........................................................ 1.2293
Arizona....................................................... 0.8493
Arkansas...................................................... 0.7666
California.................................................... 0.9840
Colorado...................................................... 0.9015
Connecticut................................................... 1.2394
Delaware...................................................... 0.9128
Florida....................................................... 0.8814
Georgia....................................................... 0.8230
Guam.......................................................... 0.9611
Hawaii........................................................ 1.0255
Idaho......................................................... 0.8747
Illinois...................................................... 0.8204
Indiana....................................................... 0.8755
Iowa.......................................................... 0.8315
Kansas........................................................ 0.7923
Kentucky...................................................... 0.8079
Louisiana..................................................... 0.7567
Maine......................................................... 0.8874
Maryland...................................................... 0.8946
Massachusetts................................................. 1.1288
Michigan...................................................... 0.9000
Minnesota..................................................... 0.9151
Mississippi................................................... 0.7680
Missouri...................................................... 0.8021
Montana....................................................... 0.8481
Nebraska...................................................... 0.8204
Nevada........................................................ 0.9577
New Hampshire................................................. 0.9796
New Jersey \1\................................................ ........
New Mexico.................................................... 0.8872
New York...................................................... 0.8542
North Carolina................................................ 0.8666
North Dakota.................................................. 0.7788
Ohio.......................................................... 0.8613
Oklahoma...................................................... 0.7590
Oregon........................................................ 1.0303
Pennsylvania.................................................. 0.8462
Puerto Rico................................................... 0.4356
Rhode Island \1\.............................................. ........
South Carolina................................................ 0.8607
South Dakota.................................................. 0.7815
Tennessee..................................................... 0.7877
Texas......................................................... 0.7821
Utah.......................................................... 0.9312
Vermont....................................................... 0.9345
Virginia...................................................... 0.8504
Virgin Islands................................................ 0.7845
Washington.................................................... 1.0179
West Virginia................................................. 0.7975
Wisconsin..................................................... 0.9162
Wyoming....................................................... 0.9007
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\1\ All counties within the State are classified urban.
[FR Doc. 03-19540 Filed 7-31-03; 8:45 am]
BILLING CODE 4120-01-P