[Federal Register: June 6, 2003 (Volume 68, Number 109)]
[Rules and Regulations]
[Page 34121-34190]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn03-17]
[[Page 34121]]
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Part III
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; Prospective Payment System for Long-Term Care
Hospitals: Annual Payment Rate Updates and Policy Changes; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1472-F]
RIN 0938-AL92
Medicare Program; Prospective Payment System for Long-Term Care
Hospitals: Annual Payment Rate Updates and Policy Changes
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule establishes the annual update of the payment
rates for the Medicare prospective payment system (PPS) for inpatient
hospital services provided by long-term care hospitals (LTCHs). It also
changes the annual period for which the rates are effective. The rates
will be effective from July 1 to June 30 instead of from October 1
through September 30, establishing a ``long-term care hospital rate
year'' (LTCH PPS rate year). We also change the publication schedule
for these updates to allow for an effective date of July 1. The payment
amounts and factors used to determine the updated Federal rates that
are described in this final rule have been determined based on this
revised LTCH PPS rate year. The annual update of the long-term care
diagnosis-related groups (LTC-DRG) classifications and relative weights
remains linked to the annual adjustments of the acute care hospital
inpatient diagnosis-related group system, and will continue to be
effective each October 1.
The outlier threshold for July 1, 2003, through June 30, 2004, is
also derived from the LTCH PPS rate year calculations.
In addition, we are making an adjustment to the short-stay outlier
policy for certain LTCHs and a policy change eliminating bed-number
restrictions for pre-1997 LTCHs that have established satellite
facilities and elect to be paid 100 percent of the Federal rate or when
the LTCH is fully phased-in to 100 percent of the Federal prospective
rate after the transition period.
EFFECTIVE DATE: The provisions of this final rule are effective June
30, 2003.
FOR FURTHER INFORMATION CONTACT:
Tzvi Hefter, (410) 786-4487 (General information);
Judy Richter, (410) 786-2590 (General information, transition payments,
payment adjustments, and onsite discharges and readmissions,
interrupted stays and short-stay outliers);
Michele Hudson, (410) 786-5490 (Calculation of the payment rates,
relative weights and case-mix index, market basket update, and payment
adjustments);
Ann Fagan, (410) 786-5662 (Patient classification system);
Miechal Lefkowitz, (410) 786-5316 (High-cost outliers and budget
neutrality);
Linda McKenna, (410) 786-4537 (Payment adjustments, interrupted stay,
and transition period);
Kathryn McCann, (410) 786-7623 (Medigap);
Robert Nakielny, (410) 786-4466 (Medicaid).
SUPPLEMENTARY INFORMATION:
Availability of Copies and Electronic Access
Copies: To order copies of the Federal Register containing this
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designated as Federal Depository Libraries and at many other public and
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Register.
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
preamble, we are providing the following table of contents.
Table of Contents
I. Background
A. Legislative and Regulatory Authority
B. Criteria for Classification as a LTCH
C. Transition Period for Implementation of the LTCH PPS
D. Limitation on Charges to Beneficiaries
E. System Implementation for the LTCH PPS
II. Publication of Proposed Rulemaking
III. Summary of the Major Contents of This Final Rule
A. Change in the Annual Update
B. Update Changes
IV. Changes in the Annual Update of the LTCH PPS
V. Changes in Long-Term Care Diagnosis-Related Group (LTC-DRG)
Classifications and Relative Weights
A. Background
B. Patient Classifications into DRGs
C. Organization of DRGs
D. Update of LTC-DRGs
E. ICD-9-CM Coding System
1. Uniform Hospital Discharge Data Set (UHDDS) Definitions
2. Maintenance of the ICD-9--CM Coding System
3. Coding Rules and Use of ICD-9-CM Codes in LTCHs
F. Changes to the Method for Updating the LTC-DRG Relative
Weights
VI. Policy Change Relating to Payments to LTCHs That Are Satellite
Facilities
VII. Changes to the LTCH PPS Rates for the 2004 LTCH PPS rate year
A. Overview of the Development of the Payment Rates
B. Update to the Standard Federal Rate for the 2004 LTCH PPS
rate year
1. Standard Federal Rate Update
a. Description of the Market Basket for the 2004 LTCH PPS rate
year
b. LTCH Market Basket Increase for the 2004 LTCH PPS rate year
2. Standard Federal Rate for the 2004 LTCH PPS rate year
C. Calculation of LTCH Prospective Payments for the 2004 LTCH
PPS rate year
1. Adjustment for Area Wage Levels
2. Adjustment for Cost-Of-Living in Alaska and Hawaii
3. Adjustment for High-Cost Outliers
4. Adjustment for Special Cases a. General
b. Short-Stay Outlier Cases
c. Interrupted Stay
d. Onsite Discharges and Readmittances
e. Treatment of Swing Beds Under the Interrupted Stay and Onsite
Discharge and Readmittance Policies
5. Other Payment Adjustments
6. Budget Neutrality Offset to Account for the Transition
Methodology
VIII. Computing the Adjusted Federal Prospective Payments
IX. Transition Period
X. Payments to New LTCHs
XI. Method of Payment
XII. Monitoring
XIII. Collection of Information Requirements
XIV. Regulatory Impact Analysis
A. Introduction
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Impact on Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Anticipated Effects
1. Budgetary Impact
2. Impact on Providers
3. Calculation of Prospective Payments
4. Results
5. Effect on the Medicare Program
6. Effect on Medicare Beneficiaries
C. Executive Order 12866
Regulations Text
Addendum-Tables
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Acronyms
Because of the many terms to which we refer by acronym in this
proposed rule, we are listing the acronyms used and their
corresponding terms in alphabetical order below:
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Public
Law 106-113
BIPA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Public Law 106-554
CMS Centers for Medicare & Medicaid Services
DRGs Diagnosis-related groups
FY Federal fiscal year
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act, Public
Law 104-191
IPPS Acute Care Hospital Inpatient Prospective Payment System
IRF Inpatient rehabilitation facility
LTC--DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare provider analysis and review file
OSCAR Online Survey Certification and Reporting (System)
PPS Prospective Payment System
QIO Quality Improvement Organization (formerly Peer Review
organization (PRO))
SNF Skilled nursing facility
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
I. Background
A. Legislative and Regulatory Authority
The Medicare, Medicaid, and SCHIP (State Children's Health
Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA) (Pub.
L. 106-113) and the Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (BIPA) (Pub. L.106-554) provide for payment
for both the operating and capital-related costs of hospital inpatient
stays in long-term care hospitals (LTCHs) under Medicare part A based
on prospectively set rates. The Medicare prospective payment system for
LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of
the Social Security Act (the Act), effective for cost reporting periods
beginning on or after October 1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act defines a LTCH as ``a
hospital which has an average inpatient length of stay (as determined
by the Secretary) of greater than 25 days.'' Section
1886(d)(1)(B)(iv)(II) of the Act also provides an alternative
definition of LTCHs: Specifically, a hospital that first received
payment under section 1886(d) of the Act in 1986 and has an average
inpatient length of stay (as determined by the Secretary) of greater
than 20 days and has 80 percent or more of its annual Medicare
inpatient discharges with a principal diagnosis that reflects a finding
of neoplastic disease in the 12-month cost reporting period ending in
FY 1997.
Section 123 of Public Law 106-113 requires the prospective payment
system for LTCHs to be a per discharge system with a diagnosis-related
group (DRG) based patient classification system that reflects the
differences in patient resources and costs in LTCHs while maintaining
budget neutrality.
Section 307(b)(1) of Public Law 106-554, among other things,
mandates that the Secretary shall examine and may provide for
adjustments to payments under the LTCH PPS, including adjustments to
DRG weights, area wage adjustments, geographic reclassification,
outliers, updates, and a disproportionate share adjustment.
In a Federal Register document issued on August 30, 2002 (67 FR
55954), we implemented the LTCH PPS authorized under Public Law 106-113
and Public Law 106-554. This system uses information from LTCH patient
records to classify patients into distinct long-term care diagnosis-
related groups (LTC-DRGs) based on clinical characteristics and
expected resource needs. Payments are calculated for each LTC-DRG and
provisions are made for appropriate payment adjustments. Payment rates
under the LTCH PPS are updated annually and published in the Federal
Register.
The LTCH PPS replaced the reasonable cost-based payment system
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA),
Public Law 97-248, for payments for inpatient services provided by a
LTCH with a cost reporting period beginning on or after October 1,
2002. (The regulations implementing the TEFRA (reasonable cost-based)
payment provisions are located at 42 CFR part 413.) With the
implementation of the prospective payment system for inpatient acute
care hospitals authorized by the Social Security Amendments of 1983
(Public Law 98-21), which added section 1886(d) to the Act, certain
hospitals, including LTCHs, were excluded from the PPS for acute care
hospitals and were paid their reasonable costs for inpatient services
subject to a per discharge limitation or target amount under the TEFRA
system. For each cost reporting period, a hospital-specific ceiling on
payments was determined by multiplying the hospital's updated target
amount by the number of total current year Medicare discharges. The
August 30, 2002, final rule further details payment policy under the
TEFRA system (67 FR 55954).
In the August 30, 2002, final rule, we presented an in-depth
discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments, and the
budget neutrality requirements mandated by section 123 of Public Law
106-113. The same final rule, that established regulations for the LTCH
PPS under 42 CFR part 412, subpart O, also contained provisions related
to covered inpatient services, limitation on charges to beneficiaries,
medical review requirements, furnishing of inpatient hospital services
directly or under arrangement, and reporting and recordkeeping
requirements.
We refer readers to the August 30, 2002, final rule (67 FR
55954)for a comprehensive discussion of the research and data that
supported the establishment of the LTCH PPS.
B. Criteria for Classification as a LTCH
LTCHs must have a provider agreement with Medicare and (1) must
have an average Medicare inpatient length of stay of greater than 25
days, or (2), for a hospital that was first excluded from the PPS in
1986, must have an average inpatient length of stay for all patients,
including both Medicare and non-Medicare inpatients, of greater than 20
days and demonstrate that at least 80 percent of its annual Medicare
inpatient discharges in the 12-month cost reporting period ending in FY
1997 have a principle diagnosis that reflects a finding of neoplastic
disease. Subject to the provisions of Sec. 412.23(e)(3), for the first
type of LTCHs as noted above, the average Medicare inpatient length of
stay is determined based on all covered and noncovered days of stay of
Medicare patients as calculated by dividing the total number of covered
and noncovered days of stay of Medicare inpatients (less leave or pass
days) by the number of total Medicare discharges for the hospital's
most recent complete cost reporting period. Fiscal intermediaries
verify that LTCHs meet the average length of stay requirements. We note
that the inpatient days of a patient who is admitted to a LTCH without
any remaining Medicare days of coverage, regardless of the fact that
the patient is a Medicare beneficiary, will not be included in the
above calculation. Because Medicare would not be paying for any of the
patient's treatment, data on the patient's stay would not be included
in our systems. In order for noncovered days of a LTCH
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hospitalization to be included, a patient must have at least one
remaining benefit day as described in Sec. 409.61.
The fiscal intermediary's determination of whether or not a
hospital qualifies as an LTCH is based on the hospital's discharge data
from its most recent cost reporting period and is effective at the
start of the hospital's next cost reporting period, as set forth under
Sec. 412.22(d). If a hospital does not meet the length of stay
requirement, the hospital may provide the intermediary with data
indicating a change in the hospital's average length of stay by the
same method for the immediately preceding 6-month period (Sec.
412.23(e)(3)(ii)). (For procedural efficiency and in order to comply
with the timing requirement of Sec. 412.22(d), we have a longstanding
policy of allowing hospitals to submit data for a period greater than
5-months for this purpose.) Requirements for hospitals seeking
classification as LTCHs that have undergone a change in ownership, as
described in Sec. 489.18, are set forth in Sec. 412.23(e)(3)(iii).
LTCHs that exist as hospitals-within-hospitals or satellite
facilities must also meet the criteria set forth in Sec. 412.22(e) or
Sec. 412.22(h), respectively, to be excluded from the IPPS and paid
under the LTCH PPS.
The following hospitals are paid under special payment provisions,
as described in Sec. 412.22(c) and, therefore, are not subject to the
LTCH PPS rules:
[sbull] Veterans Administration hospitals.
[sbull] Hospitals that are reimbursed under State cost control
systems approved under 42 CFR Part 403.
[sbull] Hospitals that are reimbursed in accordance with
demonstration projects authorized under section 402(a) of Public Law
90-248 (42 U.S.C. 1395b-1) or section 222(a) of Public Law 92-603 (42
U.S.C. 1395b-1 (note)) (statewide all-payer systems, subject to the
rate-of-increase test at section 1814(b) of the Act).
[sbull] Nonparticipating hospitals furnishing emergency services to
Medicare beneficiaries.
C. Transition Period for Implementation of the LTCH PPS
In the August 30, 2002, final rule, we provided for a 5-year
transition period from cost-based reimbursement to fully Federal
prospective payment for LTCHs (67 FR 56038). During the 5-year period,
two payment percentages are to be used to determine a LTCH's total
payment under the PPS. The blend percentages are as follows:
------------------------------------------------------------------------
Prospective Cost-based
Cost reporting periods beginning on or payment reimbursement
after Federal rate rate
percentage percentage
------------------------------------------------------------------------
October 1, 2002......................... 20 80
October 1, 2003......................... 40 60
October 1, 2004......................... 60 40
October 1, 2005......................... 80 20
October 1, 2006......................... 100 0
------------------------------------------------------------------------
D. Limitation on Charges to Beneficiaries
In the August 30, 2002, final rule, we presented an in-depth
discussion of beneficiary liability under the LTCH prospective payment
system (67 FR 55974-55975). Under Sec. 412.507, as consistent with
other established hospital prospective payment systems, a LTCH may not
bill a Medicare beneficiary for more than the deductible and
coinsurance amounts as specified under Sec. Sec. 409.82, 409.83, and
409.87 and for items and services as specified under Sec. 489.30(a),
if the Medicare payment to the LTCH is the full LTC-DRG payment amount.
However, if the Medicare payment was for a short-stay outlier case
(Sec. 412.529) that was less than the full LTC-DRG payment amount, the
LTCH could also charge the beneficiary for services for which the costs
of those services or the days those services were provided were not a
basis for calculating the Medicare short-stay outlier payment (Sec.
412.507).
Since the origin of the Medicare system, the intent of our
regulations has been to set limits on beneficiary liability and to
clearly establish the circumstances under which the beneficiary would
be required to assume responsibility for payment; that is, upon
exhausting benefits described in 42 CFR part 409, subpart F. The
discussion in the August 30, 2002, final rule was not meant to
establish rates or payments for, or define, Medicare-eligible expenses.
While we regulate beneficiary liability for coinsurance and deductibles
for hospital stays that are covered by Medicare, payments from Medigap
insurers to providers for inpatient hospital coverage after Medicare
benefits are exhausted are not regulated by us. Furthermore,
regulations beginning at Sec. 403.200 and the 1991 National
Association of Insurance Commissioners (NAIC) Model Regulation for
Medicare Supplemental Insurance, which was incorporated by reference
into section 1882 of the Act, govern the relationship between Medigap
insurers and beneficiaries.
E. System Implementation for the LTCH PPS
When we established the regulations to implement the LTCH PPS on
August 30, 2002 (67 FR 55954), effective for cost reporting periods
that began on or after October 1, 2002, we did not have computer system
changes in place that were necessary to accommodate claims processing
and payment under the system. However, after January 1, 2003, we made
the necessary system changes. Accordingly, after January 1, 2003, the
fiscal intermediary has been required to reconcile the payment amounts
that had been made to LTCHs for all covered inpatient hospital services
furnished to Medicare beneficiaries from cost reporting periods that
began on or after October 1, 2002, through January 1, 2003, with the
amounts that were payable under the LTCH PPS methodology. Because the
LTCH PPS was effective at the start of the LTCH's first cost reporting
period that began on or after October 1, 2002, only those LTCHs with
cost reporting periods that started October 1, 2002, through January 1,
2003, will experience the payment reconciliation necessitated by this
3-month period prior to systems implementation. The claims submission
procedure of using ICD-9-CM codes has not changed following the systems
implementation of the LTCH PPS.
We also want to note that as of October 16, 2002, a LTCH that was
required to comply with the Administrative Simplification Standards
under the Health Insurance Portability and Accountability Act (HIPAA)
(Pub. L. 104-191) and that had not obtained an extension in compliance
with the Administrative Compliance Act (Pub. L. 107-105) is obligated
to comply with the standards for submitting claim forms to the
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LTCH's Medicare fiscal intermediary (45 CFR 162.1002 and 45 CFR
162.1102). Beginning October 16, 2003, LTCHs that obtained an extension
and that are required to comply with the HIPPA Administrative
Simplification Standards must start submitting electronic claims in
compliance with the HIPPA regulations cited above, among others.
II. Publication of Proposed Rulemaking
On March 7, 2003, we published a proposed rule in the Federal
Register (67 FR 11234) that set forth the proposed annual update of the
payment rates for the Medicare prospective payment system (PPS) for
inpatient hospital services provided by long-term care hospitals
(LTCHs). In that rule, we proposed to change the annual period during
which the updated payment rates for the LTCH PPS would be effective
from October 1 through September 30 to a LTCH PPS rate year from July 1
through June 30. We also proposed to change the publication schedule
for these updates to allow for an effective date of July 1. The
proposed payment amounts and factors used to determine the proposed
updated Federal rates that were described in the March 7, 2003,
proposed rule were determined based on the proposed revised update LTCH
PPS rate year. However, the annual update of the long-term care
diagnosis-related groups (LTC-DRG) classifications and relative weights
remain linked to the annual adjustments of the acute care hospital
inpatient diagnosis-related group system, effective each October 1. In
the March 7, 2003, proposed rule, we also proposed the outlier
threshold for July 1, 2003, through June 30, 2004, that was derived
from the proposed LTCH PPS rate year calculations. We also proposed a
change for outlier payments under the LTCH PPS. In addition, we
proposed a policy change eliminating bed-number restrictions for pre-
1997 LTCHs that have established satellite facilities and that elect to
be paid 100 percent of the Federal rate or when the LTCH is fully
phased-in to 100 percent of the Federal prospective rate after the
transition period.
We received a total of 32 timely items of correspondence containing
multiple comments on the proposed rule. The major issues addressed by
the commenters included: The establishment of the LTCH PPS rate year
and its relation to the update of the Federal rates; the LTC-DRGs and
the wage index; satellite policy and budget neutrality calculations;
high-cost and short-stay outliers; market basket and labor share;
disproportionate share (DSH) and Graduate Medical Education (GME)
policies.
Summaries of the public comments received and our responses to
those comments are described below under the appropriate subject
heading.
III. Summary of the Major Contents of This Final Rule
In this final rule, we set forth the annual update to the payment
rates for the Medicare LTCH PPS and make other policy changes. The
following is a summary of the major areas that we are addressing in
this final rule:
A. Change in the Annual Update
We are changing the annual update to the Federal payment rate under
the LTCH PPS from the Federal fiscal year (October 1 through September
30) to a ``LTCH PPS rate year'' of July l through June 30, beginning
July l, 2003, as discussed in section IV. of this preamble. (In this
final rule, we define the LTCH PPS rate year as the period from July 1
to June 30 for updates to the LTCH PPS.) As noted below, we will now
publish information on the annual update in the Federal Register on or
before May 1 prior to the start of each long-term care hospital
prospective payment system rate year that begins July 1, unless for
good cause it is published after May 1, but before June 1. We have
already noted that the annual update of the LTC-DRGs will be published
in the proposed and final rules for the IPPS. We also recognize that it
may be necessary to address issues affecting LTCHs at a time that does
not conform to the schedule above. In such a situation, we would use
another Federal Register document (that is, the acute care hospital
inpatient prospective payment system (IPPS) proposed rule or final
rule) as the vehicle to present that issue.
B. Update Changes
[sbull] In section IV. of this preamble, the annual update of the
LTC-DRG classifications and relative weights remain linked to the
annual adjustments of the acute care hospital inpatient DRG system,
which are based on the annual revisions to the International
Classification of Diseases, Ninth Revision, Clinical Modification (ICD-
9-CM) codes, effective each October 1.
[sbull] In section VI. of this preamble, we discuss a policy change
on how Medicare payment under the LTCH PPS will be made to certain
LTCHs that have satellite facilities.
[sbull] In sections VII. through XI. of this preamble, we discuss
our determination of the LTCH PPS rates that are applicable to the LTCH
PPS rate year of July 1, 2003, through June 30, 2004, including
revisions to the wage index, the excluded hospital with capital market
basket that will be applied to the current standard Federal rate to
determine the prospective payment rates, the applicable adjustments to
payments, the outlier threshold, the short-stay outlier policy for
certain LTCHs, the transition period, and the budget neutrality factor.
[sbull] In section XII. of this preamble, we discuss our continuing
monitoring efforts to evaluate the LTCH PPS.
[sbull] In section XIV. of this preamble, we set forth an analysis
of the impact of the changes in this final rule on Medicare
expenditures and on Medicare-participating LTCHs and Medicare
beneficiaries.
IV. Changes in the Annual Update of the LTCH PPS
In existing regulations at Sec. 412.535 that were issued in the
August 30, 2002, final rule, we specify a schedule for publishing
information on the LTCH PPS on or before August 1, which coincided with
the statutorily mandated publication schedule for the IPPS. In the
March 7, 2003, proposed rule, we proposed to revise Sec. 412.535 to
provide generally for a change in the annual rate update for the LTCH
PPS, starting on July 1.
Section 1886(e)(5)(A) of the Act requires that, for the IPPS, the
proposed rule be published in the Federal Register ``not later than the
April 1 before each fiscal year; and the final rule, not later than the
August 1 before such fiscal year.'' The statute imposes no such
publication schedule for the LTCH PPS. In the August 30, 2002, final
rule, we stated that we were considering changing the publication
schedule of the LTCH PPS annual rulemaking cycle in order to avoid
concurrent publication of annual rules for these two systems for
purposes of administrative feasibility and efficiency (67 FR 55977). In
considering a change in the publication schedule of the LTCH PPS final
rule, we contemplated a change in the effective date for updating the
Federal rates for the LTCH PPS. Therefore, in the March 7, 2003,
proposed rule, we proposed changing the effective date of the annual
update for the LTCH PPS from October 1 to July 1 of each year in order
to facilitate a timely publication of these two significant payment
updates (IPPS and LTCH PPS). Thus, the annual update of the LTCH PPS
Federal rates would no longer be linked to the start of the Federal
fiscal year, as is the update of the IPPS. We had proposed that this
change would necessitate publication of the final rule for the
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LTCH PPS by no later than June 1 of each year (proposed revised Sec.
412.535).
In the March 7, 2003, proposed rule, we also proposed to amend
Sec. 412.503 to include a definition of ``LTCH PPS rate year''. A
``LTCH PPS rate year'' would mean the 12-month period of July 1 through
June 30. In the proposed rule, we stated that we would use this period
for those calculations related to updating the Federal rate for
payments under the LTCH PPS. We also stated that the determination of
the proposed fixed-loss threshold for outlier payment calculations,
under Sec. 412.525(a), would also be calculated based on the LTCH PPS
rate year. (Section VII.C. of this final rule includes a more detailed
discussion of our outlier policy.)
Proposing a change for the annual Federal rate update period for
the LTCH PPS also necessitated a proposed recalculation of the excluded
hospital market basket with capital estimate for the proposed
forthcoming payment year, July 1, 2003, through June 30, 2004. In the
August 30, 2002, final rule, we established a Federal rate of $34,956
that was computed based on the excluded hospital with capital market
basket calculated for the 12-month Federal fiscal year of October 1,
2002, through September 30, 2003. As already noted, we proposed to
change the Federal rate update for the LTCH PPS from the Federal fiscal
year to a 12-month LTCH PPS rate year of July 1 through June 30, and
the proposed rates in the March 7, 2003, proposed rule were based on
this period. Because the Federal rate of $34,956 was originally
computed based on a 12-month year, but in actuality will only be used
for 9 months, if the proposed change in the LTCH PPS rate update year
was finalized, we proposed, in the March 7, 2003, proposed rule, to
make a budget neutral adjustment to the market basket update taking
this 3-month differential into account in setting the Federal rate for
July 1, 2003, through June 30, 2004. In addition, we proposed that the
change in the 2004 LTCH PPS rate year would be budget neutral. In
section VII.B.1 of this final rule, we describe this adjustment in
greater detail.
In the March 7, 2003, proposed rule, we proposed to update the LTCH
PPS wage index that adjusts for differences in area wages under Sec.
412.525(c) using the FY 1999 IPPS wage data because these are the best
available wage data (as discussed in section VII.C. of this preamble).
We also stated that we were proposing to recalculate the budget
neutrality offset to account for the effect of the transition period
and the policy allowing LTCHs to elect 100 percent Federal rate
payments rather than the transition blend.
We also proposed an updated fixed-loss amount for determining
outlier payments based on the updated proposed Federal rate (as
discussed in section VII. of this preamble).
In section IV.C. of the March 7, 2003, proposed rule, we stated
that we did not propose an update to the LTC-DRG classifications or
relative weights at this time. Currently, the LTC-DRG patient
classifications used by the LTCH PPS for FY 2003 are based directly on
the same version of DRGs used by the IPPS, that is, GROUPER 20.0.
Therefore, we did not propose any change to the timing of the annual
update of the LTC-DRG classifications and relative weights. They will
remain linked to the annual adjustments of the acute care hospital
inpatient DRG system, which are based on the annual revisions to the
ICD-9-CM codes, effective each October 1. Table 3 of the Addendum to
the August 30, 2002, final rule (67 FR 56076-56084), which were
reprinted as Table 3 of the Addendum to the March 7, 2003, proposed
rule, contains the LTC-DRG classifications and relative weights that we
proposed to continue to apply to discharges occurring during the period
of July 1, 2003, through September 30, 2003. As an aid in calculating
payment under the short-stay outlier policy, under Sec. 412.529, we
also are including, in column 3 of Table 3, the proposed five-sixths
average length of stay that will be applied to each LTC-DRG in
determining whether the LTCH stay is a short-stay outlier. The average
length of stay for each DRG based on the FY 2001 MedPAR data, which
were used for the FY 2003 LTCH PPS final rule, are still the best
available complete LTCH discharge data available at this time.
The revised LTC-DRG classifications and relative weights for
discharges occurring from October 1, 2003, through September 30, 2004,
for payments under the LTCH PPS during that period would continue to be
updated on a Federal fiscal year cycle as is the case for the acute
care hospital inpatient DRG system. The FY 2004 DRGs and relative
weights for the IPPS had not yet been proposed by the time the March 7,
2003, proposed rule was published and we were unable to propose updated
LTC-DRGs and relative weights (which would be based on the proposed
updated acute care hospital inpatient DRGs). Thus, we proposed that the
LTC-DRG classifications and relative weights would be presented for
public comment in the proposed rule for the IPPS and finalized in the
IPPS final rule, with an effective date of October 1, 2003.
The proposed change in the LTCH PPS rate year for the LTCH PPS from
October 1 through September 30 to July 1 through June 30 means that,
although the Federal rate calculations in the August 30, 2002, final
rule were based on a 12-month year, only 9 months will elapse before
the July 1, 2003, update. In the March 7, 2003, proposed rule, we
proposed to make a prospective adjustment to the market basket update
to take into account this 3-month differential in setting the rates for
July 1, 2003, through June 30, 2004.
Specifically, we explained that the proposed updates for the
proposed 2004 LTCH PPS rate year would be affected as follows:
[sbull] The proposed update to the standard Federal rate calculated
in accordance with Sec. 412.523(c)(3) would be adjusted to account for
updating the standard Federal rate on July 1, 2003, instead of October
1, 2003.
[sbull] The fixed-loss amount for determining high-cost outlier
payments under Sec. 412.525(a) would also be updated based on the
Federal rate effective for July 1, 2003, through June 30, 2004.
In section VI.B.1 of the March 7, 2003, proposed rule, we discussed
the proposed computational adjustments resulting from our proposed
establishment of a LTCH PPS rate year beginning July 1, 2003, through
June 30, 2004.
In the March 7, 2003, proposed rule, we stated that several
provisions of the LTCH PPS would not be affected by the change in the
annual rate update year for the LTCH PPS from October 1 to July 1
because these policies are not based on any of the Federal rate
calculations for the LTCH PPS. Specifically, the following provisions
would not be affected:
[sbull] The transition blends provided for under Sec. 412.533(a)
will not be affected because they are linked to the start of each
LTCH's cost reporting period, rather than to the start of the Federal
fiscal year. (LTCHs being paid under the transition blend methodology
will receive those blends for the entire 5-year transition period,
unless they elect payments based on 100 percent of the Federal rate.)
For instance, for cost reporting periods that began on or after October
1, 2002, and before October 1, 2003, the total payment for a LTCH is 80
percent of the amount that will be calculated under the reasonable
cost-based payment system for that specific LTCH and 20 percent of the
Federal prospective payment amount. For cost reporting periods
beginning on or after October 1, 2003, and before October 1, 2004, the
total payment for a LTCH is
[[Page 34127]]
60 percent of the amount that will be calculated under the reasonable
cost-based payment system for that specific LTCH and 40 percent of the
Federal prospective payment amount.
[sbull] The 5-year phase-in of the adjustment for differences in
area wage levels under Sec. 412.525(c) will not be affected because
they are linked to the start of each LTCH's cost reporting period,
rather than to the start of the Federal fiscal year. For cost reporting
periods that began on or after October 1, 2002, and before September
30, 2003, the applicable LTCH PPS wage index is one-fifth of the full
LTCH wage index value, and for cost reporting periods beginning on or
after October 1, 2003, and before September 30, 2004, the applicable
LTCH PPS wage index is two-fifths of the full LTCH wage index value.
[sbull] The LTC-DRGs and their relative weights and the GROUPER
will not be affected since they will continue to be updated effective
October 1 through September 30 each year based on the changes to the
DRGs published in the IPPS final rule.
We received eight comments regarding our proposal to change the
effective date of the annual update for the LTCH PPS from October 1 to
July 1 of each year.
Comment: Two commenters supported the establishment of the LTCH PPS
rate year, but suggested that publishing the final rule each year by
May 1, rather than by June 1 would allow LTCHs additional time for
adjustments to their payment systems.
Response: We thank the commenters for endorsing the establishment
of the revised LTCH PPS rate year. In changing the effective date of
the LTCH PPS rate year update and the resulting publication dates of
the proposed and final regulations for the system, we stated that this
shift in the schedule would promote ``administrative feasibility and
efficiency,'' by avoiding concurrent rulemaking and publishing with the
IPPS final rule. As we have already noted, section 1886(e)(5)(A) of the
Act requires that, for the IPPS, the proposed rule be published in the
Federal Register ``not later than the April 1 before each fiscal year;
and the final rule, not later than the August 1 before such fiscal
year,'' but no similar requirement is imposed on the LTCH PPS.
Publishing a final rule annually by May 1 in order to allow 60-days
between publication and effective date of the LTCH PPS rate update does
not invalidate our stated objectives. Therefore, we will revise the
regulations to require publication of the final LTCH rule by May 1 of
each year unless for ``good cause'' we are unable to publish by that
date, but before June 1. (We note that ``good cause'' used in this
context is not coextensive and is broader than the ``good cause''
standard used in the Administrative Procedures Act (A.P.A.) at 5 U.S.C.
section 553(d)(3).)
Comment: Several commenters took issue with the proposed change in
the effective date of the annual update for the LTCH PPS from October 1
to July 1 of each year while still retaining the October 1 effective
date for updating LTC-DRG classifications and weights. They believe
that this policy change will be burdensome to LTCHs, requiring two
separate updates during one cost reporting period as well as increased
systems costs. These commenters urged us to remain with the existing
update and publication schedule and some suggested deferring the change
until full implementation of the LTCH PPS in FY 2006. One commenter
raised the issue that this ``fragmentary'' implementation of individual
updates will increase potential payment calculation errors for LTCHs.
Another commenter urged us to pay LTCHs as a ``pass through'' for any
expenses that they incur in complying with the new regulations, should
they be made final.
One commenter stated that administrative feasibility and efficiency
at CMS did not justify burdening LTCHs in this manner. One of the
commenters asserted that the costs for updating LTCH billing systems to
accommodate this change in the LTCH PPS rate year will have a
considerable impact on LTCHs as Small Businesses and, therefore, should
have been reviewed under the A.P.A and the Regulatory Flexibility Act
(RFA).
Response: In response to these commenters, we first want to
establish the fact that we have no requirement that LTCHs maintain
payment systems or coding software in order to be paid under the LTCH
PPS. We understand that it is common for many hospitals, consultants,
and industry associations to do so, but we believe that some of the
commenters who oppose the proposed change in the LTCH PPS rate year for
the LTCH PPS to July 1 through June 30 while retaining October 1
through September 30 for the LTC-DRG update are oversimplifying what
presently exists from a systems standpoint. Currently, all providers
with cost reporting periods beginning in any month other than October
already are subject to two separate updates. In addition, rate changes
may occur during the fiscal year because of Congressional action for
services rendered ``on or after'' the date that the rate change was
effective. Additionally, ongoing audit and review procedures, provider-
generated appeals procedures, and either administrative or judicial
decisions also can produce hospital-level rate changes not associated
with the start of a Federal fiscal year.
As noted above, we do not require providers to process claims or to
determine LTC-DRG assignments, but should a LTCH or any other group
choose to duplicate the PRICER software that is required for fiscal
intermediaries, or the GROUPER software that we use, it is an
individual business determination.
We primarily want to remind the commenters that the determination
of Medicare payments based on submitted claims is solely a
responsibility of each fiscal intermediary. Since payments to LTCHs
will be based on claims processing done by fiscal intermediaries, we do
not understand one commenter's assertion that we should not implement
this policy because one of the payment consequences in establishing the
LTCH PPS rate year will be to cause potential calculation errors by
LTCHs.
Nowhere in our regulations are LTCHs required to maintain the
systems capability to calculate payments. Therefore, although
individual LTCHs and other groups may elect, for their own purposes, to
purchase software packages in order to duplicate work done by our
contractors, we do not agree that those costs should be paid as a pass-
through by us. Moreover, we continue to believe that since the start of
cost reporting periods for many LTCHs, as well as acute care hospitals,
have not generally coincided with the October starting date of the
Federal fiscal year, those hospitals that choose to have their own
payment software are very familiar with the virtually seamless routine
of inputting new numbers to their existing systems when a final rule is
published. We do not believe that this policy will be unduly burdensome
to such LTCHs. We also point out to the commenters that with
publication of the proposed rule on March 7, 2003, we have complied
with the A.P.A. As to the RFA, as stated in the proposed rule (68 FR
11259), this rule would not have a significant impact on small entities
(this includes small businesses).
In response to the two comments suggesting that we delay
implementation of this policy until full phase-in of the LTCH PPS in FY
2006, based on our evaluation of the above comments, we do not believe
that such a decision is warranted.
Comment: One commenter suggested that if we found it necessary to
[[Page 34128]]
reschedule the effective date and publication cycle of one of the post-
acute care prospective payment systems, we should do so for Home Health
Agency (HHA) or Skilled Nursing Facilities (SNF) which are not DRG-
based, and, therefore, not linked to the October 1 update.
Response: As we have noted elsewhere in this final rule, there is
no statutory authority requiring the update of the LTCH PPS to coincide
with the October 1 start of the Federal fiscal year. On the contrary,
annual updates linked to the October 1 start of the Federal fiscal year
are required for both the SNF PPS, under section 1888(e)(4)(H) of the
Act (implemented in Sec. 413.345), and the HHA PPS, under section
1895(b)(3)(B) (implemented in Sec. 484.225). Therefore, although we do
not have the authority to shift the annual update for the SNF PPS or
the HHA PPS, we believe that such a policy is appropriate under section
123 of Public Law 106-113 and section 307(b) of Public Law 106-554,
which conferred broad authority on the Secretary in designing and
implementing a PPS for LTCHs.
Comment: One commenter noted that ``the use of two GROUPERs will
not in and of itself create any hardship on LTCHs [which] will be able
to adapt to this process. Most hospitals today do not have fiscal years
that coincide with the federal (sic) fiscal year and must adapt to the
use of two GROUPERs during their cost reporting year.'' This commenter
did express concern, however, about the additional rate changes caused
by the cost report reconciliation if the proposed outlier policy was
finalized. The commenter suggested that we require fiscal
intermediaries to update cost to charge ratios either at July 1 or
October 1 in order to limit the number of changes during a 12-month
period of time.
Response: We agree with the commenter's assessment of most LTCHs'
(and acute care hospital's) ability to adapt to the use of two GROUPERs
during one cost reporting period. Regarding rate changes brought about
by changes in our outlier policy, as noted elsewhere in this final
rule, all discussions of the outlier policy are presented in the IPPS
high-cost outlier final rule.
In this final rule, we amend Sec. 412.535 to indicate that
information on the unadjusted Federal payment rates and a description
of the methodology and data used to calculate the payment rates under
the LTCH PPS will be published in the Federal Register on or before May
1 prior to the beginning of each LTCH PPS rate year beginning July 1,
unless for good cause we are unable to make the May 1 publication date,
but before June 1. We proposed that information on the DRG
classification system and associated weighting factors, with the DRGs
from which the LTC-DRGs are derived, would be published in the proposed
IPPS rule and, ultimately, the final rule for the IPPS (the final IPPS
rule is published on or before August 1 of each Federal fiscal year).
Section XIV. of this final rule contains an impact analysis that
reflects the impact of these changes.
V. Changes in Long-Term Care Diagnosis-Related Group (LTC-DRG)
Classifications and Relative Weights
A. Background
Section 123 of Public Law 106-113 specifically requires that the
PPS for LTCHs be a per discharge system with a DRG-based patient
classification system reflecting the differences in patient resources
and costs in LTCHs while maintaining budget neutrality. Section
307(b)(1) of Public Law 106-554 modified the requirements of section
123 of Public Law 106-113 by specifically requiring that the Secretary
examine ``the feasibility and the impact of basing payment under such a
system [the LTCH PPS] on the use of existing (or refined) hospital
diagnosis-related groups (DRGs) that have been modified to account for
different resource use of long-term care hospital patients as well as
the use of the most recently available hospital discharge data.''
In accordance with section 307(b)(1) of Public Law 106-554 and
Sec. 412.515 of our existing regulations, the LTCH PPS uses
information from LTCH patient records to classify patient cases into
distinct long-term care diagnosis-related groups (LTC-DRGs) based on
clinical characteristics and expected resource needs. The LTC-DRGs used
as the patient classification component of the LTCH PPS correspond to
the DRGs in the IPPS. We apply weights to the existing hospital
inpatient DRGs to account for the difference in resource use by
patients exhibiting the case complexity and multiple medical problems
characteristic of LTCHs.
In a departure from the IPPS, we use low volume LTC-DRGs (less than
25 LTCH cases) in determining the LTC-DRG weights, since LTCHs do not
typically treat the full range of diagnoses as do acute care hospitals.
In order to deal with the large number of low volume DRGs (all DRGs
with fewer than 25 cases), we group low volume DRGs into 5 quintiles
based on average charge per discharge. (A listing of the composition of
low volume quintiles appears in the August 30, 2002, final rule at 67
FR 55986.) We also take into account adjustments to payments for cases
in which the stay at the LTCH is five-sixths of the geometric average
length of stay and classify these cases as short-stay outlier cases. (A
detailed discussion of the application of the Lewin Group model that
was used to develop the LTC-DRGs appears in the August 30, 2002, final
rule at 67 FR 55978.)
B. Patient Classifications Into DRGs
Generally, under the LTCH PPS, Medicare payment is made at a
predetermined specific rate for each discharge; that payment varies by
the LTC-DRG to which a beneficiary's stay is assigned. Cases are
classified into LTC-DRGs for payment based on the following six data
elements:
(1) Principal diagnosis.
(2) Up to eight additional diagnoses.
(3) Up to six procedures performed.
(4) Age.
(5) Sex.
(6) Discharge status of the patient.
Upon the discharge of the patient from a LTCH, the LTCH must assign
appropriate diagnosis and procedure codes from the ICD-9-CM. As of
October 16, 2002, a LTCH that was required to comply with the HIPAA
Administrative Simplification Standards and that had not obtained an
extension in compliance with the Administrative Compliance Act (Pub. L.
107-105) is obligated to comply with the standards at 45 CFR 162.1002
and 45 CFR 162.1102. Completed claim forms are to be submitted to the
LTCH's Medicare fiscal intermediary.
Medicare fiscal intermediaries enter the clinical and demographic
information into their claims processing systems and subject this
information to a series of automated screening processes called the
Medicare Code Editor (MCE). These screens are designed to identify
cases that require further review before assignment into a DRG can be
made. During this process, the following type of cases are selected for
further development:
[sbull] Cases that are improperly coded. (For example, diagnoses
are shown that are inappropriate, given the sex of the patient. Code
68.6, Radical abdominal hysterectomy, would be an inappropriate code
for a male.)
[sbull] Cases including surgical procedures not covered under
Medicare. (For example, organ transplant in a nonapproved transplant
center.)
[sbull] Cases requiring more information. (For example, ICD-9-CM
codes are required to be entered at their highest level of specificity.
There are valid 3-digit, 4-digit, and 5-digit codes. That is,
[[Page 34129]]
code 136.3, Pneumocystosis, contains all appropriate digits, but if it
is reported with either fewer or more than 4 digits, the claim will be
rejected by the MCE as invalid.)
[sbull] Cases with principal diagnoses that do not usually justify
admission to the hospital. (For example, code 437.9, Unspecified
cerebrovascular disease. While this code is valid according to the ICD-
9-CM coding scheme, a more precise code should be used for the
principal diagnosis.)
After screening through the MCE, each claim will be classified into
the appropriate LTC-DRG by the Medicare LTCH GROUPER. The LTCH GROUPER
is specialized computer software based on the same GROUPER used by the
IPPS. The GROUPER software was developed as a means of classifying each
case into a DRG on the basis of diagnosis and procedure codes and other
demographic information (age, sex, and discharge status). Following the
LTC-DRG assignment, the Medicare fiscal intermediary will determine the
prospective payment by using the Medicare PRICER program, which
accounts for hospital-specific adjustments. As provided for under the
IPPS, we provide an opportunity for the LTCH to review the LTC-DRG
assignments made by the fiscal intermediary and to submit additional
information within a specified timeframe (Sec. 412.513(c)).
The GROUPER is used both to classify past cases in order to measure
relative hospital resource consumption to establish the DRG weights and
to classify current cases for purposes of determining payment. The
records for all Medicare hospital inpatient discharges are maintained
in the MedPAR file. The data in this file are used to evaluate possible
DRG classification changes and to recalibrate the DRG weights during
our annual update. DRG weights are based on data for the population of
LTCH discharges, reflecting the fact that LTCH patients represent a
different patient mix than patients in short-term acute care hospitals.
C. Organization of DRGs
The DRGs are organized into 25 Major Diagnostic Categories (MDCs),
most of which are based on a particular organ system of the body; the
remainder involve multiple organ systems (such as MDC 22, Burns).
Accordingly, the principal diagnosis determines MDC assignment. Within
most MDCs, cases are then divided into surgical DRGs and medical DRGs.
Surgical DRGs are assigned based on a surgical hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. The GROUPER does not recognize all ICD-9-CM
procedure codes as procedures that affect DRG assignment, that is,
procedures which are not surgical (for example, EKG), or minor surgical
procedures (for example, 86.11, Biopsy of skin and subcutaneous
tissue).
The medical DRGs are generally differentiated on the basis of
diagnosis. Both medical and surgical DRGs may be further differentiated
based on age, sex, discharge status, and presence or absence of
complications or comorbidities (CC). We note that CCs are defined by
certain secondary diagnoses not related to, or not inherently a part
of, the disease process identified by the principal diagnosis. (For
example, the GROUPER would not recognize a code from the 800.0x series,
Skull fracture, as a CC when combined with principal diagnosis 850.4,
Concussion with prolonged loss of consciousness, without return to
preexisting conscious level.) In addition, we note that the presence of
additional diagnoses does not automatically generate a CC, as not all
DRGs recognize a comorbid or complicating condition in their
definition. (For example, DRG 466, Aftercare without History of
Malignancy as Secondary Diagnosis, is based solely on the principal
diagnosis, without consideration of additional diagnoses for DRG
determination.)
In its June 2000 Report to Congress, MedPAC recommended that the
Secretary ``* * * improve the hospital inpatient prospective payment
system by adopting, as soon as practicable, diagnosis-related group
refinements that more fully capture differences in severity of illness
among patients.'' (Recommendation 3A, p. 63) We have determined it is
not practical at this time to develop a refinement to inpatient
hospital DRGs based on severity due to time and resource requirements.
However, this does not preclude us from development of a severity-
adjusted DRG refinement in the future. That is, a refinement to the
list of comorbidities and complications could be incorporated into the
existing DRG structure. It is also possible a more comprehensive
severity adjusted structure may be created if a new code set is
adopted. That is, if ICD-9-CM is replaced by ICD-10-CM (for diagnostic
coding) and ICD-10-PCS (for procedure coding) or by other code sets, a
severity concept may be built into the resulting DRG assignments. Of
course any change to the code set would be adopted through the process
established in the HIPAA Administrative Simplification provisions.
D. Update of LTC-DRGs
For FY 2003, the LTC-DRG patient classification system was based on
LTCH data from the FY 2001 MedPAR file, which contained hospital bills
received through March 31, 2001, for hospital discharges occurring in
FY 2001. The patient classification system consisted of 510 DRGs that
formed the basis of the FY 2003 LTCH PPS GROUPER. The 510 LTC-DRGs
included two ``error DRGs''. As in the IPPS, we included two error DRGs
in which cases that cannot be assigned to valid DRGs will be grouped.
These two error DRGs are DRG 469 (Principal Diagnosis Invalid as a
Discharge Diagnosis) and DRG 470 (Ungroupable). (See the August 1,
2001, Medicare Program final rule, Changes to the Hospital Inpatient
Prospective Payment Systems and Rates and Costs of Graduate Medical
Education; Fiscal Year 2002 Rates (66 FR 40062).) The other 508 LTC-
DRGs are the same DRGs used in the IPPS GROUPER for FY 2003 (Version
20.0).
In the health care industry, annual changes to the ICD-9-CM codes
are effective for discharges occurring on or after October 1 each year.
Thus, the manual and electronic versions of the GROUPER software, which
are based on the ICD-9-CM codes, are also revised annually and
effective for discharges occurring on or after October 1 each year. As
discussed earlier, the patient classification system for the LTCH PPS
(LTC-DRGs) is based on the IPPS patient classification system (CMS-
DRGs), which is updated annually and effective for discharges occurring
on or after October 1 through September 30 each year. The updated DRGs
and GROUPER software are based on the latest revision to the ICD-9-CM
codes, which are published annually in the IPPS proposed rule and final
rule. The new or revised ICD-9-CM codes are not used by the industry
for either the IPPS or the LTCH PPS until the beginning of the next
Federal fiscal year (effective for discharges occurring on or after
October 1 through September 30). (The use of the ICD-9-CM codes in this
manner is consistent with current usage and the HIPAA regulations.)
October 1 is also when the changes to the CMS-DRGs and the next version
of the GROUPER software becomes effective.
As indicated previously in the March 7, 2003, proposed rule, we
proposed to make the annual update to the LTCH PPS effective from July
1 through June 30 each year. As a result of this change, we proposed
that the LTCH PPS would
[[Page 34130]]
use two GROUPERS during the course of a 12-month period: One GROUPER
for 3 months (from July 1 through September 30); and an updated GROUPER
for 9 months (from October 1 through June 30). The need to use two
GROUPERs is based upon the October 1 effective date of the updated ICD-
9-CM coding system. As previously discussed, new ICD-9-CM codes may
result in changes to the structure of the DRGs. In order for the
industry to be on the same schedule (for both the IPPS and the LTCH
PPS) for the use of the most current ICD-9-CM codes, it was necessary
for us to propose to apply two GROUPER programs to the LTCH PPS.
Although we did not believe that this would have any adverse effect on
LTCHs, we were interested in receiving comments on this issue. LTCHs
would continue to code diagnosis and procedures using the most current
version of the ICD-9-CM coding system.
Currently, for Federal FY 2003, we are using Version 20.0 of the
GROUPER software for both the IPPS and the LTCH PPS. For discharges
beginning on October 1, 2003 (Federal FY 2004), in the March 7, 2003,
LTCH PPS proposed rule, we proposed to use Version 21.0 of the GROUPER
software for both the IPPS and the LTCH PPS. Thus, changes to the CMS-
DRGs (the DRGs on which the LTC-DRGs are based), and their relative
weights, as well as the LTC-DRGs and their relative weights that will
be effective for October 1, 2003, through September 30, 2004, are
presented in the IPPS FY 2004 proposed rule that was published on May
19, 2003, in the Federal Register (68 FR 27154). Accordingly, we will
notify LTCHs of any revised LTC-DRG relative weights based on the final
DRGs and Version 21.0 GROUPER for the IPPS that would be effective
October 1, 2003.
Comment: Two commenters suggested that we synchronize the LTCH rate
year (that is, July 1 through June 30) with the update of the LTC DRGs
which occurs on October 1 by delaying the October 1 update until the
following July 1. As an alternative, one commenter suggested that the
LTCHs could continue to use the LTC-DRG weights determined the previous
October 1 until the start of the next LTCH rate year (July 1, 2004),
and conduct a readjustment for the LTCH PPS on July 1 of the following
year.
Response: With regard to the commenters' suggestion to continue to
use the current ICD-9-CM and DRG Grouper Version 20 until June 30,
2004, delaying the update until the following year, we believe that
this suggestion is not feasible. This would require coders to use two
different ICD-9-CM versions, one for IPPS use (Version 21 will be
implemented October 1, 2003) and another for LTCH PPS. Moreover, the
HIPPA (45 CFR part 162) requires that the ICD-9-CM be the standard
medical code set and each code set is valid within the dates specified
by the organization (Department of Health and Human Services)
responsible for maintaining that code set. The use of other than the
current code set (most recent update to the ICD-9-CM will be effective
October 1, 2003) would be in direct violation of the current HIPPA
requirements.
In this final rule, while we are adopting the proposed use of two
GROUPER software programs over the course of the LTCH rate year, one
GROUPER for 3 months (from July 1 through September 30); and an updated
GROUPER for 9 months (from October 1 through June 30), the existing
GROUPER and the updated GROUPER will be in effect for 12 months. These
two GROUPER programs will be the same programs in use for the IPPS.
E. ICD-9-CM Coding System
1. Uniform Hospital Discharge Data Set (UHDDS) Definitions
Because the assignment of a case to a particular LTC-DRG will help
determine the amount that will be paid for the case, it is important
that the coding is accurate. Classifications and terminology used in
the LTCH PPS are consistent with the ICD-9-CM and the UHDDS, as
recommended to the Secretary by the National Committee on Vital and
Health Statistics (``Uniform Hospital Discharge Data: Minimum Data Set,
National Center for Health Statistics, April 1980'') and as revised in
1984 by the Health Information Policy Council (HIPC) of the U.S.
Department of Health and Human Services.
We wish to point out that the ICD-9-CM coding terminology and the
definitions of principal and other diagnoses of the UHDDS are
consistent with the requirements of the HIPPA Administrative
Simplification Act of 1996 (45 CFR part 162). Furthermore, the UHDDS
has been used as a standard for the development of policies and
programs related to hospital discharge statistics by both governmental
and nongovernmental sectors for over 30 years. In addition, the
following definitions (as described in the 1984 Revision of the UHDDS,
approved by the Secretary of Health and Human Services for use starting
January 1986) are requirements of the ICD-9-CM coding system, and have
been used as a standard for the development of the CMS-DRGs:
[sbull] Diagnoses include all diagnoses that affect the current
hospital stay.
[sbull] Principal diagnosis is defined as the condition established
after study to be chiefly responsible for occasioning the admission of
the patient to the hospital for care.
[sbull] Other diagnoses (also called secondary diagnoses or
additional diagnoses) are defined as all conditions that coexist at the
time of admission, that develop subsequently, or that affect the
treatment received or the length of stay or both. Diagnoses that relate
to an earlier episode of care that have no bearing on the current
hospital stay are excluded.
[sbull] All procedures performed will be reported. This includes
those that are surgical in nature, carry a procedural risk, carry an
anesthetic risk, or require specialized training.
We provide LTCHs with a 60-day window after the date of the notice
of the initial LTC-DRG assignment to request review of that assignment.
Additional information may be provided by the LTCH to the fiscal
intermediary as part of that review.
2. Maintenance of the ICD-9-CM Coding System
The ICD-9-CM Coordination and Maintenance (C&M) Committee is a
Federal interdepartmental committee, co-chaired by the National Center
for Health Statistics (NCHS) and CMS, that is charged with maintaining
and updating the ICD-9-CM system. The C&M Committee is jointly
responsible for approving coding changes, and developing errata,
addenda, and other modifications to the ICD-9-CM to reflect newly
developed procedures and technologies and newly identified diseases.
The C&M Committee is also responsible for promoting the use of Federal
and non-Federal educational programs and other communication techniques
with a view toward standardizing coding applications and upgrading the
quality of the classification system.
The NCHS has lead responsibility for the ICD-9-CM diagnosis codes
included in the Tabular List and Alphabetic Index for Diseases, while
CMS has lead responsibility for the ICD-9-CM procedure codes included
in the Tabular List and Alphabetic Index for Procedures.
The C&M Committee encourages participation by health-related
organizations in the above process and holds public meetings for
discussion of educational issues and proposed coding changes twice a
year at the CMS Central Office located in Baltimore, Maryland. The
agenda and dates of the meetings
[[Page 34131]]
can be accessed on the CMS Web site at: http://www.cms.gov/paymentsystems/icd9
.
All changes to the ICD-9-CM coding system affecting DRG assignment
are addressed annually in the IPPS proposed and final rules. Because
the DRG-based patient classification system for the LTCH PPS is based
on the IPPS DRGs, these changes will also affect the LTCH PPS LTC-DRG
patient classification system.
As discussed above, the ICD-9-CM coding changes that have been
adopted by the C&M Committee become effective at the beginning of each
Federal fiscal year, October 1. Regardless of the change to the annual
update of the LTCH PPS year to July 1, coders will use the most current
updated ICD-9-CM coding book from October 1 through September 30 of
each year. This means that coders and LTCHs that use the updated ICD-9-
CM coding system will be on the same schedule (effective October 1) as
the rest of the health care industry. The newest version of ICD-9-CM is
not available for use until October 1, which would be 4 months after
the date that we will publish the LTCH annual payment rate update final
rule. The new codes on which the LTC-DRGs are based will go into effect
and be available for use for discharges occurring on or after October 1
through September 30 of each year. This annual schedule of the revision
to the ICD-9-CM coding system and the change of the ICD-9-CM coding
books or electronic coding programs has been in effect since the
adoption of Revision 9 of the ICD in 1979.
Of particular note to LTCHs will be the invalid diagnosis codes
(Table 6C) and the invalid procedure codes (Table 6D) located in the
annual proposed and final rules for the IPPS. Claims with invalid codes
will not be processed by the Medicare claims processing system.
3. Coding Rules and Use of ICD-9-CM Codes in LTCHs
We emphasize the need for proper coding by LTCHs. Inappropriate
coding of cases can adversely affect the uniformity of cases in each
LTC-DRG and produce inappropriate weighting factors at recalibration.
We continue to urge LTCHs to focus on improved coding practices.
Because of concerns raised by LTCHs concerning correct coding, we have
asked the American Hospital Association (AHA) to provide additional
clarification or instruction on proper coding in the LTCH setting. The
AHA will provide this instruction via their established process of
addressing questions through their publication ``Coding Clinic for ICD-
9-CM''. Written questions or requests for clarification may be
addressed to the Central Office on ICD-9-CM, American Hospital
Association, One North Franklin, Chicago, IL 60606. A form for the
question(s) is available to be downloaded and mailed on AHA's Web site
at: www.ahacentraloffice.org. In addition, current coding guidelines
are available at the National Center for Health Statistics (NCHS) Web
site: www.cdc.gov/nchs.icd9.htm.
In conjunction with the cooperating parties (AHA, AHIMA, and NCHS),
we have reviewed actual medical records and are concerned about the
quality of the documentation under the LTCH PPS, as was the case at the
beginning of the IPPS. We fully believe that, with experience, the
quality of the documentation and coding will improve, just as it did
for the IPPS. As noted above, the cooperating parties have plans to
assist their members with improvement in documentation and coding
issues for the LTCHs through specific questions and coding guidelines.
The importance of good documentation is emphasized in the revised ICD-
9-CM Official Guidelines for Coding and Reporting (October 1, 2002):
``A joint effort between the attending physician and coder is essential
to achieve complete and accurate documentation, code assignment, and
reporting of diagnoses and procedures. The importance of consistent,
complete documentation in the medical record cannot be overemphasized.
Without such documentation, the application of all coding guidelines is
a difficult, if not impossible, task. (Coding Clinic for ICD-9-CM,
Fourth Quarter 2002, page 115).
To improve medical record documentation, LTCHs should be aware that
if the patient is being admitted for continuation of treatment of an
acute or chronic condition, guidelines at section I.B.10 of the Coding
Clinic for ICD-9-CM, Fourth Quarter 2002 (page 129) are applicable
concerning selection of principal diagnosis. To clarify coding advice
issued in the August 30, 2002 final rule (67 FR 55979-55981), we would
like to point out that, at Guideline I.B.12, Late Effects, a late
effect is considered to be the residual effect (condition produced)
after the acute phase of an illness or injury has terminated (Coding
Clinic for ICD-9-CM, Fourth Quarter 2002, page 129). We have received a
question regarding whether a LTCH should report the ICD-9-CM code(s)
for an unresolved acute condition instead of the code(s) for late
effect of rehabilitation. Depending on the documentation in the medical
record, either code could be appropriate in a LTCH. Since
implementation of the LTCH PPS, our Medicare fiscal intermediaries have
been conducting training and providing assistance to LTCHs in correct
coding. We have also issued manuals containing procedures as well as
coding instructions to LTCHs and fiscal intermediaries. We will
continue to conduct such training and provide guidance on an as-needed
basis. We also refer readers to the detailed discussion on correct
coding practices in the August 30, 2002, final rule (67 FR 55979-
55981).
Comment: Two commenters expressed their support for our adherence
to the official ICD-9-CM coding guidelines.
Response: We appreciate the commenters support and anticipate
working closely with both the AHA and the AHIMA to increase awareness
of proper documentation and correct coding in the LTCH setting.
F. Changes to the Method for Updating the LTC-DRG Relative Weights
As discussed in the March 7, 2003, proposed rule, under the LTCH
PPS, each LTCH will receive a payment that represents an appropriate
amount for the efficient delivery of care to Medicare patients. The
system must be able to account adequately for each LTCH's case-mix in
order to ensure both fair distribution of Medicare payments and access
to adequate care for those Medicare patients whose care is more costly.
Therefore, in accordance with Sec. 412.523(c), we adjust the standard
Federal PPS rate by the LTC-DRG relative weights in determining payment
to LTCHs for each case.
Under this payment system, relative weights for each LTC-DRG are a
primary element used to account for the variations in cost per
discharge and resource utilization among the payment groups (Sec.
412.515). To ensure that Medicare patients who are classified to each
LTC-DRG have access to an appropriate level of services and to
encourage efficiency, we calculate a relative weight for each LTC-DRG
that represents the resources needed by an average inpatient LTCH case
in that LTC-DRG. For example, cases in a LTC-DRG with a relative weight
of 2 will, on average, cost twice as much as cases in a LTC-DRG with a
weight of 1.
As we discussed in the August 30, 2002, final rule (67 FR 55984-
55995), the LTC-DRG relative weights effective under the LTCH PPS for
Federal FY 2003 were calculated using the March 2002 update of FY 2001
MedPAR data and Version 20.0 of the CMS GROUPER software. We use total
days and total
[[Page 34132]]
charges in the calculation of the LTC-DRG relative weights.
By nature, LTCHs often specialize in certain areas, such as
ventilator-dependent patients and rehabilitation and wound care. Some
case types (DRGs) may be treated, to a large extent, in hospitals that
have, from a perspective of charges, relatively high (or low) charges.
Such distribution of cases with relatively high (or low) charges in
specific LTC-DRGs has the potential to inappropriately distort the
measure of average charges. To account for the fact that cases may not
be randomly distributed across LTCHs, we use a hospital-specific
relative value method to calculate relative weights. We believe this
method removes this hospital-specific source of bias in measuring
average charges. Specifically, we reduce the impact of the variation in
charges across providers on any particular LTC-DRG relative weight by
converting each LTCH's charge for a case to a relative value based on
that LTCH's average charge. (See the August 30, 2002, final rule (67 FR
55985) for further information of the hospital-specific relative value
methodology.)
In order to account for LTC-DRGs with low volume (that is, with
fewer than 25 LTCH cases), we grouped those low volume LTC-DRGs into
one of five categories (quintiles) based on average charges, for the
purposes of determining relative weights. For FY 2003 based on the FY
2001 MedPAR data, we identified 161 LTC-DRGs that contained between 1
and 24 cases. This list of low volume LTC-DRGs was then divided into
one of the five low volume quintiles, each containing a minimum of 32
LTC-DRGs (161/5 = 32 with 1 LTC-DRG as a remainder). Each of the low
volume LTC-DRGs grouped to a specific quintile received the same
relative weight and average length of stay using the formula applied to
the regular LTC-DRGs (25 or more cases), as described below. (See the
August 30, 2002, final rule (67 FR 55985-55988) for further explanation
of the development and composition of each of the five low volume
quintiles for FY 2003.)
After grouping the cases in the appropriate LTC-DRG, we calculate
the relative weights by first removing statistical outliers and cases
with a length of stay of 7 days or less. Next, we adjust the number of
cases in each LTC-DRG for the effect of short-stay outlier cases under
Sec. 412.529. The short-stay adjusted discharges and corresponding
charges were used to calculate ``relative adjusted weights'' in each
LTC-DRG using the hospital-specific relative value method described
above. (See the August 30, 2002, final rule (67 FR 55989-55995) for
further details on the steps for calculating the LTC-DRG relative
weights.)
We also adjust the LTC-DRG relative weights to account for
nonmonotonically increasing relative weights. That is, we make an
adjustment if cases classified to the LTC-DRG ``with comorbidities
(CCs)'' of a ``with CC''/``without CC'' pair had a lower average charge
than the corresponding LTC-DRG ``without CCs'' by assigning the same
weight to both LTC-DRGs in the ``with CC''/``without CC'' pair. (See
August 30, 2002, 67 FR 55990-55991). In addition, of the 510 LTC-DRGs
in the LTCH PPS for FY 2003, based on the FY 2001 MedPAR data, we
identified 159 LTC-DRGs for which there were no LTCH cases in the
database. That is, no patients who would have been classified to those
DRGs were treated in LTCHs during FY 2001 and, therefore, no charge
data were reported for those DRGs. Thus, in the process of determining
the relative weights of LTC-DRGs, we were unable to determine weights
for these 159 LTC-DRGs using the method described above. However, since
patients with a number of the diagnoses under these LTC-DRGs may be
treated at LTCHs beginning in FY 2003, we assigned relative weights to
each of the 159 ``no volume'' LTC-DRGs based on clinical similarity and
relative costliness to one of the remaining 351 (510-159 = 351) LTC-
DRGs for which we were able to determine relative weights, based on the
FY 2001 claims data. (A list of the no volume LTC-DRGs and further
explanation of their relative weight assignment can be found in the
August 30, 2002, final rule (67 FR 55991-55994).)
Furthermore, we establish LTC-DRG relative weights of 0.0000 for
heart, kidney, liver, lung, pancreas, and simultaneous pancreas/kidney
transplants (LTC-DRGs 103, 302, 480, 495, 512 and 513, respectively)
because Medicare will only cover these procedures if they are performed
at a hospital that has been certified for the specific procedures by
Medicare and presently no LTCH has been so certified. If in the future,
however, a LTCH applies for certification as a Medicare-approved
transplant center, we believe that the application and approval
procedure would allow sufficient time for us to propose appropriate
weights for the LTC-DRGs effected. At the present time, though, we only
include these six transplant LTC-DRGs in the GROUPER program for
administrative purposes because since the LTCH PPS uses the same
GROUPER program for LTCHs as is used under the IPPS, removing these
DRGs would be administratively burdensome.
As we stated in the March 7, 2003, proposed rule, we proposed that
we would continue to use the same LTC-DRGs and relative weights until
October 1, 2003. Accordingly, Table 3 in the Addendum to the March 7,
2003, proposed rule lists the LTC-DRGs and their respective relative
weights and arithmetic mean length of stay that we proposed would
continue to be used for the period of July 1, 2003, through September
30, 2003. (This table is the same as Table 3 of the Addendum to the
August 30, 2002, final rule (67 FR 56076-56084), except that it
includes the proposed five-sixth of the average length of stay for
short-stay outliers under Sec. 412.529.) As we noted in section IV.D.
of the March 7, 2003, proposed rule, we proposed that the final DRGs
and GROUPER for FY 2004 that will be used for the IPPS and the LTCH
PPS, effective October 1, 2003, would be presented in the IPPS FY 2004
final rule published no later than August 1, 2003, in the Federal
Register.
Accordingly, we will notify LTCHs of the revised LTC-DRG relative
weights for use in determining payments for discharges occurring
between October 1, 2003, and September 30, 2004, based on the final
DRGs and Version 21.0 GROUPER published in the IPPS rule on or before
August 1, 2003.
VI. Policy Change Related to Payments to LTCHs That Are Satellite
Facilities
Provisions of the Proposed Rule
In proposing the LTCH PPS (March 7, 2002, 67 FR 13416), we stated
that we were considering proposing the elimination of the bed limit in
Sec. 412.22(h)(2)(i) for pre-1997 excluded hospitals once the
prospective payment system was fully phased-in and all payments were
based on 100 percent of the Federal prospective payment rates. This
statement generated a number of comments and in the August 30, 2002,
final rule (67 FR 56012), we stated our agreement with commenters who
urged us to adopt a policy eliminating the bed-number restrictions for
pre-1997 LTCHs with satellite facilities, as soon as a LTCH is paid
based on 100 percent of the Federal prospective rate. However, we also
noted that we would address a change in the policy concerning bed
limits in the next update of the LTCH PPS. Therefore, in the March 7,
2003, proposed rule (68 FR 11243-11244), we proposed to eliminate the
application of the bed-number restrictions set forth in Sec.
412.22(h)(2)(i) for LTCHs established prior to 1997 with satellite
facilities, effective at the start of the first cost
[[Page 34133]]
reporting year that a LTCH is paid under the 100 percent fully Federal
prospective payment system. This will be either when a LTCH elects to
be paid based on 100 percent of the Federal prospective rate or when
the LTCH is fully transitioned to 100 percent of the Federal
prospective rate, whichever comes first.
Section 1886(b)(3) of the Act, as amended by section 4414 of Public
Law 105-33, required existing LTCHs to be subject to caps on their
target amounts for cost reporting periods beginning on or after October
1, 1997, through September 30, 2002. For purposes of calculating these
caps, the statute required the Secretary to ``estimate the 75th
percentile of the target amounts for such hospitals within [each] class
for cost reporting periods ending during fiscal year 1996.'' Section
1886(b)(3)(H) of the Act, as amended by section 121 of Public Law 106-
113, directed the Secretary to provide for an appropriate wage
adjustment to the caps on the target amounts for psychiatric and
rehabilitation hospitals and units and LTCHs effective for cost
reporting periods beginning on or after October 1, 1999 through
September 30, 2002. In addition, payment limits were established for
new excluded hospitals or units (excluding children's hospitals)
effective October 1, 1997. For new excluded hospitals (that is, post-
1997 LTCHs), section 1886(b)(7) of the Act, as added by section 4416 of
Public Law 105-33, specified that the payment amount for the facility's
first two 12-month cost reporting periods, for which the hospital has a
settled cost report, must not exceed 110 percent of the national median
of target amounts of similarly classified hospitals 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
hospital receives payment, as adjusted by section 1886(b)(7)(C) of the
Act. The result of sections 4414 and 4416 of Public Law 105-33 was a
distinction between the LTCHs established prior to, and those
established after 1997, with lower payment caps for the post-1997
LTCHs.
In the July 30, 1999, IPPS final rule (64 FR 41532-41533), we
promulgated regulations at Sec. 412.22(h)(2)(i) to discourage pre-1997
excluded hospitals, which had the higher caps on target amounts as
discussed above (under Sec. 413.40(c)(4)(iii)), from creating
satellites rather than establishing new hospitals, in order to avoid
the payment impact of the lower caps that apply to new hospitals (under
Sec. 413.40(f)(2)(ii)). In the July 30, 1999, IPPS final rule (64 FR
41490), we required that where a pre-1997 excluded hospital, such as a
LTCH, established a satellite facility and, in doing so, its total
beds, in both the parent hospital (or unit) and the satellite facility,
exceeded the number of State-licensed and Medicare-certified beds in
the parent hospital on the last day of its last cost reporting period
beginning before October 1, 1997, the excluded hospital would be paid
under the inpatient DRG system, instead of receiving payment as an
excluded hospital under the reasonable cost-based payment system.
Although the excluded hospital could ``transfer'' beds from the parent
facility to the satellite, it could not increase its total bed capacity
(at the parent and satellite(s)) beyond the level the hospital had in
the most recent cost reporting period beginning before October 1, 1997,
and still be paid as a hospital excluded from the IPPS. However, no
such limitation was imposed on a LTCH established after October 1,
1997. Since this type of hospital would have already been subject to
the lower payment limit of 110 percent of the national median of target
amounts for similarly classified hospitals under Sec.
413.40(f)(2)(ii), it would not benefit by establishing a satellite
facility instead of a separate free-standing hospital, as would a pre-
1997 LTCH.
The rationale for applying the bed-limit provision only on pre-1997
hospitals was the potential for gaming by those hospitals, by creating
a satellite facility with a higher TEFRA target cap where, in reality,
the satellite facility should have been a separately certified excluded
facility, which would have been subject to the lower cap on payments to
new (post-1997) facilities paid under the TEFRA system. Once the LTCH
is paid based on 100 percent of the Federal prospective rate, however,
the LTCH will no longer be subject to TEFRA caps and LTCH prospective
payments will be the same regardless of when the LTCH was established.
Therefore, consistent with the March 7, 2003, proposed rule, we are
eliminating the bed-limit provision once a LTCH is paid based on 100
percent of the LTCH Federal PPS rate. Finally, under this policy, the
bed limitation on ``existing'' LTCHs will, however, continue to apply
to those LTCHs while they are paid based on the transition blend, and,
therefore, continue to receive a percentage of their payments based on
the reasonable cost-based payment rules, until these hospitals are paid
based on 100 percent of the Federal prospective payment rate.
Comment: Several commenters expressed their strong support for our
proposal to eliminate the bed number limitation for pre-1997 LTCHs with
satellite facilities for those LTCHs receiving 100 percent of the
Federal rate. One commenter recommended that the bed number limitation
should also be eliminated for the IRFs since they are now receiving
payment at 100 percent of the Federal rate.
Response: We appreciate the strong endorsement in response to this
proposed change. Regarding the commenter who recommended eliminating
the bed size limitation for IRFs, we would suggest that the commenter
look to the IRF proposed rule that was published on May 16, 2003 (68 FR
26785).
Accordingly, in this final rule, we are adopting the proposal to
eliminate the bed size limitation for pre-1997 LTCHs with satellite
facilities once the LTCH is paid at 100 percent of the Federal rate. We
note that in the preamble to the March 7, 2003, proposed rule, we
stated the two circumstances under which a LTCH would be paid based on
100 percent of the Federal rate, which are for the start of the first
cost reporting period that a LTCH elects fully Federal payment, as set
forth in Sec. 412.533(c) or when the LTCH PPS is fully phased-in after
the transition period. We inadvertently omitted the second circumstance
in the proposed regulation text at Sec. 412.22(h)(6), therefore, we
are revising that section to reflect this policy.
VII. Changes to the LTCH PPS Rates for the 2004 LTCH PPS Rate Year
A. Overview of the Development of the Payment Rates
The LTCH PPS was effective for a LTCH's first cost reporting period
beginning on or after October 1, 2002. Effective with that cost
reporting period, LTCHs are paid, during a 5-year transition period, on
the basis of an increasing proportion of the LTCH PPS Federal rate and
a decreasing proportion of a hospital's payment under reasonable cost-
based payment system, unless the hospital makes a one-time election to
receive payment based on 100 percent of the Federal rate (see Sec.
412.533). New LTCHs (as defined at Sec. 412.23(e)(4)) are paid based
on 100 percent of the Federal rate, with no phase-in transition
payments.
The basic methodology for determining LTCH PPS Federal prospective
payment rates is set forth in the regulations at Sec. Sec. 412.515
through 412.532. Below we discuss the proposed factors used to update
the LTCH PPS standard Federal rate for the proposed 2004 LTCH PPS rate
year published in
[[Page 34134]]
the March 7, 2003, proposed rule. We also discuss the factors used to
establish the final update to the LTCH PPS standard Federal rate for
the 2004 LTCH PPS rate year in this final rule, which will be effective
for LTCHs paid under the LTCH PPS for discharges occurring on or after
July 1, 2003, through June 30, 2004. In the final rule published on
August 30, 2002 (67 FR 56029-56031), for cost reporting periods
beginning on or after October 1, 2002 (FY 2003), we computed the LTCH
PPS standard Federal payment rate by updating the best available (FY
1998 or FY 1999) Medicare inpatient operating and capital costs per
case data, using the excluded hospital market basket.
Section 123(a)(1) of Public Law 106-113 requires that the PPS
developed for LTCHs be budget neutral. Therefore, in calculating the
standard Federal rate for FY 2003 under Sec. 412.523(d)(2), we set
total estimated PPS payments equal to estimated payments that would
have been made under the reasonable cost-based payment methodology had
the PPS for LTCHs not been implemented. Section 307(a) of Public Law
106-554 specified that the increases to the hospital-specific target
amounts and cap on the target amounts for LTCHs for FY 2002 provided
for by section 307(a)(1) of Public Law 106-554 shall not be taken into
account in the development and implementation of the LTCH PPS. In
addition, the statute as amended by section 122 of Public Law 106-113
provides for enhanced bonus payments for LTCHs for two years, FY 2001
and FY 2002. Furthermore, as specified at Sec. 412.523(d)(1), the
standard Federal rate is reduced by an adjustment factor to account for
the estimated proportion of outlier payments under the LTCH PPS to
total LTCH PPS payments (8 percent). For further details on the
development of the FY 2003 standard Federal rate, see the August 30,
2002, final rule (67 FR 56027-56037). Under the existing regulations at
Sec. 412.523(c)(3)(ii) for fiscal years after FY 2003, we update the
standard Federal rate annually to adjust for the most recent estimate
of the projected increases in prices for LTCH inpatient hospital
services.
B. Update to the Standard Federal Rate for the 2004 LTCH PPS Rate Year
In the August 30, 2002, final rule (67 FR 56033), we established a
LTCH PPS standard Federal rate of $34,956.15 for FY 2003. As discussed
in the March 7, 2003, proposed rule (68 FR 11248), based on the most
recent estimate of the excluded hospital with capital market basket,
adjusted to account for the change in the rate year update cycle for
the LTCH PPS rates, we proposed that the LTCH PPS standard Federal
rate, effective from July 1, 2003, through June 30, 2004, would be
$35,726.64. Based on updated data, including the most recent estimate
of the excluded hospital with capital market basket adjusted to account
for the change in the rate year update cycle for the LTCH PPS rates,
and the policies described in this final rule, the LTCH PPS standard
Federal rate, effective from July 1, 2003, through June 30, 2004, is
$35,726.18 (as discussed below).
In the discussion that follows, we explain how we developed the
update to the final standard Federal rate for the 2004 LTCH PPS rate
year in this final rule. The final standard Federal rate for the 2004
LTCH PPS rate year is calculated based on the final update factor of
1.0220. Thus, we estimate that the final standard Federal rate for the
2004 LTCH PPS rate year will increase 2.2 percent compared to the FY
2003 standard Federal rate.
1. Standard Federal Rate Update
In the August 30, 2002, final rule, we established at Sec. 412.523
that, for years after FY 2003, the annual update to the LTCH PPS
standard Federal rate will be equal to the percentage change in the
excluded hospital with capital market basket (described in further
detail below). As we discussed in the August 30, 2002, final rule (67
FR 56087), in the future we may propose to develop a framework to
update payments to LTCHs that would account for other appropriate
factors that affect the efficient delivery of services and care
provided to Medicare patients. As we stated in the March 7, 2003,
proposed rule (68 FR 11244), because the LTCH PPS has only recently
been implemented (for cost reporting periods beginning on or after
October 1, 2002), we have not yet collected sufficient data to allow
for the analysis and development of an update framework under the LTCH
PPS. Therefore, in that same proposed rule, we did not propose an
update framework for the 2004 LTCH PPS rate year. However, we noted
that a conceptual basis for the proposal of developing an update
framework in the future can be found in Appendix B of the August 30,
2002, final rule (67 FR 56086-56090).
a. Description of the Market Basket for LTCHs for the 2004 LTCH PPS
Rate Year
A market basket has historically been used in the Medicare program
to account for price increases of the services furnished by providers.
The market basket used for the LTCH PPS includes both operating and
capital-related costs of LTCHs because the LTCH PPS uses a single
payment rate for both operating and capital-related costs. The
development of the LTCH PPS standard Federal rate is discussed in
further detail in the August 30, 2002 final rule (67 FR 56027-56037).
Under the reasonable cost-based payment system, the excluded
hospital market basket was used to update the hospital-specific limits
on payment for operating costs of LTCHs. The excluded hospital market
basket is based on operating costs from FY 1992 cost report data and
includes data from Medicare-participating long-term care,
rehabilitation, psychiatric, cancer, and children's hospitals. Since
LTCHs' costs are included in the excluded hospital market basket, this
market basket index, in part, also reflects the costs of LTCHs.
However, in order to capture the total costs (operating and capital-
related) of LTCHs, we added a capital component to the excluded
hospital market basket for use under the LTCH PPS. We refer to this
index as the excluded hospital with capital market basket.
As we discussed in both the August 30, 2002, final rule (67 FR
56016 and 56086-56086) and the March 7, 2003, proposed rule (68 FR
11245-11247), beginning with the implementation of the LTCH PPS in FY
2003, the excluded hospital with capital market basket based on FY 1992
Medicare cost report data has been used for updating payments to LTCHs.
The FY 1992-based market basket reflected the distribution of costs in
FY 1992 for Medicare-participating freestanding rehabilitation, long-
term care, psychiatric, cancer, and children's hospitals. This
information was derived from the FY 1992 Medicare cost reports. A full
discussion of the methodology and data sources used to construct the FY
1992-based excluded hospital with capital market basket is included in
Appendix A of the August 30, 2001, final rule (67 FR 56085-56086). In
the March 7, 2003, proposed rule, we proposed to revise and rebase the
excluded hospital with capital market basket, using more recent data,
that is, using FY 1997 base year data beginning with the proposed 2004
LTCH PPS rate year.
As we stated in the March 7, 2003, proposed rule (68 FR 11245-
11247), we believe it was appropriate to propose to revise and rebase
the LTCH PPS market basket based on the most recent complete data
available (FY 1997) because these data would more accurately reflect
LTCHs' current costs. Furthermore, we noted that this proposed revising
and rebasing of the LTCH PPS market basket from an FY
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1992 base year to a FY 1997 base year would be consistent with the
rebasing of both the hospital inpatient market basket used under the
IPPS and the excluded hospital market basket used to update the target
amounts under the reasonable cost-based payment system for FY 2003, as
discussed in the August 1, 2002, IPPS final rule (67 FR 50032-50047).
We received no comments on the proposed revising and rebasing of the
LTCH PPS market basket. Therefore, in this final rule, we are adopting
the FY 1997-based excluded hospital with capital market basket as the
LTCH PPS market basket beginning with the 2004 LTCH PPS rate year.
Below we are providing a discussion of the development of the FY 1997-
based excluded hospital with capital market basket, as we presented in
the March 7, 2003, proposed rule (68 FR 11245-11247).
The operating portion of the FY 1997-based excluded hospital with
capital market basket that we are using under the LTCH PPS beginning
with the 2004 LTCH PPS rate year is derived from the FY 1997-based
excluded hospital market basket used under the reasonable cost-based
payment system. The methodology we used to develop the operating
portion of the market basket under the LTCH PPS is the same methodology
used to revise and rebase the excluded hospital market basket used
under the reasonable cost-based payment system, which is described in
greater detail in the August 1, 2002, IPPS final rule (67 FR 50042-
50044). In brief, the operating cost category weights in the FY 1997-
based excluded market basket add up to 100.0. These weights were
determined based on FY 1997 Medicare cost report data, the 1997
Business Expenditure Survey, and the 1997 Annual Input-Output data from
the Bureau of the Census. In determining the FY 1997-based market
basket, as we discussed in the March 7, 2003, proposed rule (68 FR
11245-11247), we also revised the market basket by making the same two
methodological revisions that we established when we revised and
rebased the hospital inpatient market basket and the excluded hospital
market basket in the August 1, 2002, IPPS final rule--(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.
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. Based on data from FY 1997 Medicare cost reports for
excluded hospitals, the capital cost weight is 8.968 percent. Because
capital costs account for 8.968 percent of total costs for excluded
hospitals in FY 1997, operating costs must, therefore, account for
91.032 percent (100 percent minus 8.968 percent). Each operating cost
category weight in the FY 1997-based excluded hospital market basket
from the August 1, 2002, IPPS final rule (67 FR 50442-50444) was
multiplied by 0.91032 to determine its weight in the FY 1997-based
excluded hospital with capital market basket.
As we discussed in the March 7, 2003, proposed rule (68 FR 11245-
11247), the aggregate capital component of the FY 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 those Medicare cost
reports. We needed to determine two sets of weights for the capital
portion of the proposed revised and rebased market basket. The first
set of weights identifies the proportion of capital expenditures
attributable to each capital cost category; 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 67 FR 50046-50047, August 1, 2002, 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 used
under the LTCH PPS beginning with the 2004 LTCH PPS rate year are
presented below in Table I. The vintage weights for the FY 1997-based
excluded hospital with capital market basket are presented below in
Table II.
Table I.-- Excluded Hospital With Capital Input Price Index (FY 1992-Based and FY 1997-Based) Structure and
Weights
----------------------------------------------------------------------------------------------------------------
Weights (%) Weights (%)
Cost category Price/wage variable Base-Year FY Base-Year FY
19921,2 19971,2
----------------------------------------------------------------------------------------------------------------
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 to Capture Total Costs.
Professional fees.......................... ECI--Compensation: Professional & 1.908 4.423
Technical.
Utilities.................................. ................................... 1.524 1.180
Electricity............................ PPI--Commercial Electric Power..... 0.916 0.726
Fuel Oil, Coal, etc.................... PPI--Commercial Natural Gas........ 0.365 0.248
Water and Sewerage..................... CPI-U--Water & Sewerage Maintenance 0.243 0.206
Professional Liability..................... CMS--Professional Liability 0.983 0.733
Insurance Premiums Index.
All Other Products and..................... ................................... 28.571 27.117
All Other Products..................... ................................... 22.027 17.914
Pharmaceuticals.................... PPI--Ethical (Prescription) Drugs.. 2.791 6.318
Food: Direct Purchase.............. PPI--Processed Foods and Feeds..... 2.155 1.122
Food: Contract..................... CPI-U--Food Away from Home......... 0.998 1.043
Chemicals.......................... PPI--Industrial Chemicals.......... 3.413 2.133
Blood and Blood.................... PPI--Blood and Blood Derivatives, .............. 0.748
Human Use.
Medical Instruments................ PPI--Medical Instruments & 2.868 1.795
Equipment.
Photographic Supplies.............. PPI--Photographic Supplies......... 0.364 0.167
Rubber and Plastics................ PPI--Rubber & Plastic Products..... 4.423 1.366
Paper Products..................... PPI--Converted Paper and Paperboard 1.984 1.110
Products.
Apparel............................ PPI--Apparel....................... 0.809 0.478
Machinery and...................... PPI--Machinery & Equipment......... 0.193 0.852
[[Page 34136]]
Miscellaneous...................... PPI--Finished Goods Less Food and 2.029 0.783
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 for Private 4.945 4.453
Service Occupations.
All Other: Non-Labor............... CPI-U--All Items................... 0.757 3.700
Capital-Related Costs...................... ................................... 9.080 8.968
Depreciation........................... ................................... 5.611 5.586
Building & Fixed................... Boeckh-Institutional Construct. 3.570 3.503
Index--Vintage Weighted (23).
Movable Equipment.................. PPI--Machinery & Equipment--Vintage 2.041 2.083
Weighted (11 Years).
Interest Costs......................... ................................... 3.212 2.682
Government/Nonprofit............... Yield on Domestic Municipal Bonds 2.730 2.280
(Bond Buyer 20 Bonds)--Vintage
Weighted (23 years).
For-profit......................... Yield on Moody's Aaa Bonds--Vintage 0.482 0.402
Weighted (23 Years).
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
IPPS final rule (67 FR 50042-50044) add to 100.0. 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. Capital costs account for 8.968 percent of the market basket; operating costs account for
91.032 percent. Each weight in the FY 1997-based excluded hospital market basket from the August 1, 2002 IPPS
final rule (67 FR 50042-50044) was multiplied by 0.91032 to determine its weight in the FY 1997-based excluded
hospital with capital market basket.
\2\ Weights may not sum to 100.0 due to rounding.
Table II.--Excluded Hospital With Capital Input Price Index (FY 1997) Vintage Weights
----------------------------------------------------------------------------------------------------------------
Building and fixed Interest: capital-
Year (from farthest to most recent)* equipment (23-year Movable equipment related (23-year
weights)* (11-year weights)* 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
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
-----------------------
Total..................................... 1.0000 1.0000 1.0000
----------------------------------------------------------------------------------------------------------------
* Weights may not sum to 1.000 due to rounding.
Table III. compares the FY 1992-based excluded hospital with
capital market basket to the FY 1997-based excluded hospital with
capital market basket. As shown in the table and as we discussed in the
March 7, 2003, proposed rule (68 FR 11247), the revised and rebased
market basket grows slightly faster over the FY 1999-2001 period than
the FY 1992-based market basket. The major reason for this was the
switching of the wage and benefit proxy to the ECI for hospital workers
from the previous occupational blend. This revision had a similar
impact on the IPPS and excluded market baskets, as described in the
August 1, 2002, IPPS final rule (67 FR 50043-50047).
[[Page 34137]]
Table III.--Percent Changes in the FY 1992-Based and FY 1997-Based
Excluded Hospital With Capital Market Baskets, FYs 1999-2004
------------------------------------------------------------------------
Percentage change
-------------------------------
FY 1992-based Rebased FY
Fiscal year (FY) excluded 1997-based
hospital excluded
market basket market basket
------------------------------------------------------------------------
1999.................................... 2.3 2.7
2000.................................... 3.4 3.1
2001.................................... 3.9 4.0
2002.................................... 2.7 3.6
Average historical...................... 3.1 3.4
-----------------
2003.................................... 3.1 3.7
2004.................................... 2.9 3.3
Average forecast........................ 3.0 3.5
------------------------------------------------------------------------
In the August 30, 2002, LTCH PPS final rule (67 FR 56016 and 56085-
56086), we discussed why we believe the excluded hospital with capital
market basket provides a reasonable measure of the price changes facing
LTCHs. However, as we discussed in the March 7, 2003, proposed rule (68
FR 11247), we have been researching the feasibility of developing a
market basket specific to LTCH services. This research has 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 LTCHs. Based on this
research, we did not propose to develop a market basket specific to
LTCH services.
As we stated in the March 7, 2003, proposed rule (68 FR 11247), our
analysis of the Medicare cost reports indicates that the distribution
of costs among major cost report categories (wages, pharmaceuticals,
capital) for LTCHs is not substantially different from the 1997-based
excluded hospital with capital market basket. Data on other major cost
categories (benefits, blood, contract labor) that we would like to
analyze were excluded by many LTCHs in their Medicare cost reports. An
analysis based on only the data available to us for these cost
categories presented a potential problem since no other major cost
category weight would be based on LTCH data.
Furthermore, as we discussed in the March 7, 2003, proposed rule
(68 FR 11247), we conducted a sensitivity analysis of annual percent
changes in the market basket when the weights for wages,
pharmaceuticals, and capital in LTCHs were substituted into the
excluded hospital with capital market basket. Other cost categories
were recalibrated using ratios available from the IPPS market basket.
On average between FY 1995 and FY 2002, the excluded hospital with
capital market basket shows increases at nearly the same average annual
rate (2.9 percent) as the market basket with LTCH weights for wages,
pharmaceuticals, and capital (2.8 percent). This difference is less
than the 0.25 percentage point criterion that determines whether a
forecast error adjustment is warranted under the IPPS update framework.
We believe that an excluded hospital with capital market basket
adequately reflects the price changes facing LTCHs. In the March 7,
2003, proposed rule, we stated that we would continue to solicit
comments about issues particular to LTCHs that should be considered in
relation to the FY 1997-based excluded hospital with capital market
basket and to encourage suggestions for additional data sources that
may be available.
As we noted above, we received no comments on the proposed revising
and rebasing of the LTCH PPS market basket. Accordingly, in this final
rule, we are adopting the FY 1997-based excluded hospital with capital
market basket as the LTCH PPS market basket for application beginning
with the 2004 LTCH PPS rate year.
b. LTCH Market Basket Increase for the 2004 LTCH Rate Year
As we discussed in the March 7, 2003, proposed rule (68 FR 11247),
for LTCHs paid under the LTCH PPS, we proposed that the 2004 rate year
update would apply to discharges occurring from July 1, 2003, through
June 30, 2004. Because we are changing the timeframe of the LTCH PPS
standard Federal rate annual update, as we discuss in section IV. of
this preamble, we needed to calculate an update factor that will
reflect this change in the update cycle. Presently, the current rate
cycle is October 1, 2002, through September 30, 2003. This means that
the FY 2003 standard Federal rate ($34,956.15; see the August 30, 2002,
final rule (67 FR 56033)) was determined based on the market basket
increase through September 30, 2003. As we explained in the March 7,
2003, proposed rule (68 FR 11247), since we proposed to change the rate
update cycle and, therefore, update the standard Federal rate 3 months
early (that is, July 1, 2003, instead of October 1, 2003), we needed to
propose an adjustment to the projected full (12-month) market basket
increase to eliminate the projected increase for the 3-month
overlapping period (July 1, 2003, through September 30, 2003).
Thus, we need to account for the fact that the FY 2003 standard
Federal rate of $34,956.15 already includes an update for the 3-month
period from July 1, 2003, through September 30, 2003. In the absence of
this proposed change, as we discussed in the March 7, 2003, proposed
rule (68 FR 11247-11248), the update for FY 2004 would have been
calculated using the estimated increase between FY 2003 and FY 2004.
For the proposed update for the proposed 2004 LTCH PPS rate year, we
calculated the estimated increase between FY 2003 and the proposed 2004
LTCH PPS rate year. As we discussed in that same proposed rule, based
on the fourth quarter 2002 forecast of the proposed revised and rebased
FY 1997-based excluded hospital with capital market basket, we
determined that the projected market basket increase for the 3-month
period of July 1, 2003, through September 30, 2003, would be 0.8
percentage points. The projected market basket increase for this 3-
month period (0.8 percent) was already included in the FY 2003 standard
Federal rate and, therefore, needed to be deducted from the projected
market basket increase for the 12-month period of July 1, 2003, through
June 30, 2004 (3.3 percent), in order to account for the proposed
change in the update cycle. Therefore,
[[Page 34138]]
in the March 7, 2003, proposed rule (68 FR 11248), based on Global
Insights' (formerly DRI-WEFA) fourth quarter 2002 forecast of the
proposed revised and rebased FY 1997-based excluded hospital with
capital market basket we proposed an update of 2.5 percent for the 2004
LTCH PPS rate year.
We received no comments on our proposed methodology for calculating
the market basket increase for the 2004 LTCH PPS rate year. Therefore,
consistent with our historical practice of estimating market basket
increases, based on Global Insights' (formerly DRI-WEFA) first quarter
2003 forecast of the revised and rebased FY 1997-based excluded
hospital with capital market basket, in this final rule using the
methodology described above, we determined an update of 2.5 percent (as
shown in Table IV. below) for the 2004 LTCH PPS rate year.
Table IV.--Calculation of Market Basket Increase for the 2004 LTCH
Prospective Payment System Rate Year
------------------------------------------------------------------------
Percent
------------------------------------------------------------------------
Full 12-month market basket with capital increase............ 3.3
Adjustment for the change in the update cycle *.............. -0.8
2004 rate year market basket increase **..................... 2.5
------------------------------------------------------------------------
* Projected market basket increase for the 3-month period of July 1,
2003, through September 30, 2003, already included in the FY 2003
standard Federal rate.
** Projected market basket increase for the 12-month period of July 1,
2003, through June 30, 2004, from FY 2003.
In addition, as we discussed in the March 7, 2003, proposed rule
(68 FR 11248), based on the best available data for 194 LTCHs, we
estimated that LTCH prospective payment system payments would be
approximately $1.960 billion for the proposed 2004 LTCH PPS rate year.
Furthermore, as we discussed in the August 30, 2002, final rule (67 FR
56027), we proposed that the proposed change to the annual update of
the FY 2003 factors and rates from a rate year beginning October 1,
2003, to a rate year beginning July 1, 2003, would maintain budget
neutrality. In that same final rule, we explained that, as required by
statute, total estimated LTCH PPS payments in FY 2003 will equal
estimated payments that would have been made under the reasonable cost-
based principles if the LTCH PPS were not implemented. Therefore, in
order to maintain budget neutrality for the proposed change in the rate
update cycle, in the March 7, 2003, proposed rule (68 FR 11248), under
proposed Sec. 412.523(c)(3)(ii), we proposed to adjust the standard
Federal rate by a factor of 0.997 (($1.960 billion-$5.66 million)/
$1.960 billion) or -0.003 to account for the resulting additional cost
of $5.66 million to the FY 2003 Federal budget that we estimated based
on the most recent data for the 3-month period from July 1, 2003,
through September 30, 2003. Also, in that same proposed rule, we
proposed to revise this adjustment factor in this final rule based on
the best available data.
In this final rule, based on the best available data for 194 LTCHs,
we estimated that LTCH prospective payment system payments would be
approximately $1.960 billion for the 2004 LTCH PPS rate year. As we
proposed in the March 7, 2003, proposed rule (68 FR 11248), the
proposed change to the annual update of the FY 2003 factors and rates
from a rate year beginning October 1, 2003, to a rate year beginning
July 1, 2003, would be budget neutral because, as we noted above, total
estimated LTCH PPS payments in FY 2003 must equal estimated payments
that would have been made under the reasonable cost-based principles,
if the LTCH PPS were not implemented. Therefore, in order to maintain
budget neutrality for the change in the rate update cycle, in this
final rule based on updated data and the final policies discussed in
this final rule, under Sec. 412.523(c)(3)(ii), we have adjusted the
2004 LTCH PPS rate year standard Federal rate by a factor of 0.997
(($1.960 billion-$5.68 million)/$1.960 billion) or -0.003 to account
for the resulting additional cost of $5.68 million to the FY 2003
Federal budget that we estimated based on the most recent data for the
3-month period from July 1, 2003, through September 30, 2003, for 194
LTCHs.
In the March 7, 2003, proposed rule (68 FR 11248), we proposed to
update the current standard Federal rate ($34,956.15) established in
the August 30, 2002, final rule (67 FR 56033) by 2.2 percent (2.5
percent minus 0.3 percent) for discharges paid under the LTCH PPS that
occur on or after July 1, 2003, through June 30, 2004. The proposed
update represented the most recent estimate of the increase in the
excluded hospital with capital market basket for the proposed 2004 LTCH
PPS rate year, adjusted by the above described factor to transition to
the proposed change in the rate update cycle to July 1, and is based on
the best available data for 194 LTCHs.
Comment: One commenter stated that the proposed 2.2 percent
increase in the LTCH PPS standard Federal rate from $34.956.15 to
$35,726.64 does not reflect the inflation of input hospital costs.
Response: As noted above, the proposed update of 2.2 percent was
based on the most recent estimate of the increase in the proposed
excluded hospital with capital market basket for the proposed 2004 LTCH
PPS rate year, adjusted as explained above to transition to the
proposed change in the rate update cycle to July 1. The proposed update
and adjustment were based on the best available data for 194 LTCHs
contained in our database. The most recent estimate of the increase in
the excluded hospital with capital market basket for the 2004 LTCH PPS
rate year was determined in a manner that is consistent with our
historical practice of estimating market basket increases for other
Medicare prospective payment systems (inpatient acute care hospitals,
IRFs, SNFs, and HHAs), that is, using Global Insights' (formerly DRI-
WEFA) most recent forecast of the applicable PPS market basket.
Furthermore, we believe it is appropriate to adjust the most recent
estimate of the 12-month increase in the LTCH PPS market basket for
July 1, 2003, through June 30, 2004, because as we explained above, the
FY 2003 standard Federal rate ($34,956.15) already includes inflation
for the 3-month period from July 1, 2003, through September 30, 2003.
Thus, the projected market basket increase for this 3-month period
needs to be deducted from the projected market basket increase for the
12-month period of July 1, 2003, through June 30, 2004.
In addition, as we explained above, it is necessary that the market
basket increase be further adjusted so that the proposed change in
updating the FY 2003 rate 3 months early (July 1, 2003, instead of
October 1, 2003) be budget neutral, as mandated by section 123 of
Public Law 106-113 (that is, total estimated LTCH PPS payments in FY
2003 will equal estimated payments that would have been made under the
reasonable cost-based principles if the LTCH PPS were not implemented).
Therefore, we believe that the proposed methodology for determining the
proposed 2.2 percent update for the 2004 LTCH PPS rate year is
appropriate.
Comment: A few commenters stated that the proposed 2004 LTCH PPS
rate year standardized amount of $35,726.64 is based on the
identification of costs related to short-stay outlier cases which have
been derived from cost-to-charge ratios that do not account for the
proposed change to the short-stay outlier policy under proposed Sec.
412.529. Specifically, in the March 7, 2003,
[[Page 34139]]
proposed rule (68 FR 11253), we proposed that fiscal intermediaries
would use either the most recently settled cost report or most recent
tentative settled cost report, whichever is later, in determining a
LTCH's cost-to-charge ratio used in determining short-stay outlier
payments. We also proposed, in that same proposed rule, that the
applicable statewide average cost-to-charge ratio would only be applied
when a LTCH's cost-to-charge ratio exceeds the ceiling (but not when a
LTCH's cost-to-charge ratio falls below the floor). The commenters
express concern that the proposed change to the short-stay outlier
policy is not reflected in the proposed 2004 LTCH PPS rate year
standard Federal rate and, therefore, CMS fails to maintain budget
neutrality.
In addition, one of the commenters noted that the cost-to-charge
ratio data posted on the web for the 2004 rate year proposed rule
(published on March 7, 2003, in the Federal Register) differed for many
LTCHs from the cost-to-charge ratio data posted on the web for the FY
2003 final rule (published August 30, 2002, in the Federal Register).
The commenter believes that the observed change in the LTCHs' cost-to-
charge ratios is due to the proposed change to allow fiscal
intermediaries to use either the most recently settled cost report or
most recent tentative settled cost report, whichever is later, in
computing a LTCH's cost-to-charge ratio used to determine both short-
stay outlier and high-cost outlier payments.
Response: The commenters have raised concerns that we have not
taken into account the proposed changes to the policies for determining
short-stay and high-cost outlier payments in calculating the proposed
update to the standard Federal rate for the proposed 2004 LTCH PPS rate
year. As we discuss in greater detail below in section VII.B.3. of this
preamble, at this time, the finalized changes to the proposed high-cost
outlier and short-stay outlier policies presented in the March 7, 2003,
proposed rule (68 FR 11250-11253) are not yet effective. Accordingly,
in establishing the final update factor for the 2004 LTCH PPS rate year
in this final rule, we used the high-cost outlier and short-stay
outlier policies established in the August 30, 2002, final rule (67 FR
55995-56000 and 56022-56027).
Nevertheless, based on the comments, there appears to be a
misconception among the commenters regarding the methodology for
updating the LTCH PPS standard Federal rate. While we are not
finalizing the proposed changes to the outlier policies in this final
rule, we believe that it is important to clarify the methodology used
in the March 7, 2003, proposed rule to determine the proposed update
factor for the proposed 2004 LTCH PPS rate year.
In the August 30, 2002, final rule, we established at Sec.
412.523(c)(3)(ii) that for fiscal years after FY 2003, we update the
standard Federal rate annually to adjust for the most recent estimate
of the projected increases in prices for LTCH inpatient hospital
services. That is, for years after FY 2003, the annual update to the
LTCH PPS standard Federal rate will be equal to the percentage change
in the excluded hospital with capital market basket.
In determining the proposed update for the proposed 2004 LTCH PPS
rate year, we adjusted the projected proposed LTCH market basket
increase in order to maintain budget neutrality (in addition to an
adjustment to account for the transition to the proposed change in the
LTCH PPS rate year) by accounting for the estimated increase in
payments during the remainder of FY 2003 (July 1, 2003, through
September 30, 2003) that would result from updating the factors and
rates 3 months early (July 1, 2003, instead of October 1, 2003). This
budget neutrality adjustment to the proposed rate update included the
effect of the proposed increase in the LTCH PPS standard Federal rate,
the effect of proposed change in the wage index values, and the effect
of the proposed change in the short-stay outlier policy and high-cost
outlier policy (specifically the elimination of assigning the statewide
average cost-to-charge ratio when a LTCH's cost-to-charge ratio falls
below the floor).
As we discussed in the March 7, 2003, proposed rule (68 FR 11251),
in calculating short-stay outlier and high-cost outlier payments we
currently use cost-to-charge ratios based on the latest available cost
report data from HCRIS and corresponding MedPAR claims data from FYs
1998, 1999, and 2000. In some cases the latest available cost report
data from HCRIS is from settled cost reports; however, in other
instances, the latest available cost report data from HCRIS is from
``as submitted'' cost reports. Since the universe of LTCHs is
relatively small and the substantial increase in the number of LTCHs is
fairly recent, due to the lag time in the cost report settlement and
the availability of cost report data in HCRIS, we used cost-to-charge
ratios based on as submitted cost report data if settled cost report
data were not available. Since, as we noted above, the data used to
compute LTCH cost-to-charge ratios was generated prior to the
implementation of the LTCH PPS (when the use of charges was not as
germane), we believe that the difference between a LTCH's cost-to-
charge ratio computed from the latest settled cost report and a LTCH's
cost-to-charge ratio computed from the latest tentative settled cost
report is immaterial for most LTCHs, and, therefore, would not have a
significant impact on payment estimates.
The commenter is mistaken as to the reason behind the change in the
cost-to-charge ratio data posted on the web from the FY 2003 final rule
(published August 30, 2002, in the Federal Register) to the 2004 LTCH
PPS rate year proposed rule (published on March 7, 2003, in the Federal
Register). As discussed above, this change in LTCHs' cost-to-charge
ratios is not a result of applying the proposed change to allow fiscal
intermediaries to use either the most recently settled cost report or
most recent tentative settled cost report, whichever is later, in
determining a LTCH's cost-to-charge ratio. We note instead that the
change in the LTCH cost-to-charge ratios observed by the commenter is a
result of using more updated data between the development of the August
30, 2002, final rule and the March 7, 2003, proposed rule. For example,
LTCHs that previously only had FY 1998 data available for the FY 2003
final rule may now have FY 1999 or FY 2000 data available. Similarly,
LTCHs that previously only had as submitted cost report data available
for the FY 2003 final rule may now have settled cost report data
available. Therefore, we do not believe that a change in our
methodology for updating the standard Federal rate for the 2004 LTCH
PPS rate year is warranted.
In this final rule, we updated the current standard Federal rate
($34,956.15) established in the August 30, 2002, final rule (67 FR
56033) by 2.2 percent (2.5 percent minus 0.3 percent) for discharges
paid under the LTCH PPS that occur on or after July 1, 2003, through
June 30, 2004. This update represents the most recent estimate of the
increase in the excluded hospital with capital market basket for the
2004 LTCH PPS rate year, adjusted to account for the change in the rate
update cycle to July 1, and is based on the best available data for 194
LTCHs.
2. Standard Federal Rate for the 2004 LTCH PPS Rate Year
In the August 30, 2002, LTCH PPS final rule (67 FR 56033), we
established a standard Federal rate of $34,956.15 based on the best
available data and policies established in that final rule. In the
March 7, 2003, proposed rule (68 FR 11248), for the proposed 2004 LTCH
[[Page 34140]]
PPS rate year, we proposed a standard Federal rate of $35,726.64. Since
the proposed standard Federal rate has already been adjusted for
differences in case-mix, wages, cost-of-living, and high-cost outlier
payments, we did not propose any additional adjustments in the proposed
standard Federal rate for these factors.
In this final rule, we are establishing a standard Federal rate of
$35,726.18 for the 2004 LTCH PPS rate year. Since the 2004 LTCH PPS
rate year standard Federal rate has already been adjusted for
differences in case-mix, wages, cost-of-living, and high-cost outlier
payments, we did not make any additional adjustments in the standard
Federal rate for these factors.
C. Calculation of LTCH Prospective Payments for the 2004 LTCH PPS Rate
Year
The basic methodology for determining prospective payment rates for
LTCH inpatient operating and capital-related costs is set forth in
Sec. 412.515 through Sec. 412.532. In accordance with Sec. 412.515,
we assign appropriate weighting factors to each LTC-DRG to reflect the
estimated relative cost of hospital resources used for discharges
within that group as compared to discharges classified within other
groups. The amount of the prospective payment is based on the standard
Federal rate, established under Sec. 412.523, and adjusted for the
LTC-DRG relative weights, differences in area wage levels, cost-of-
living in Alaska and Hawaii, high-cost outliers, and other special
payment provisions (short-stay outliers under Sec. 412.529 and
interrupted stays under Sec. 412.531). In accordance with Sec.
412.533, during the 5-year transition period, payment is based on the
applicable transition blend percentage of the adjusted Federal rate and
the reasonable cost-based payment rate unless the LTCH makes a one-time
election to receive payment based on 100 percent of the Federal rate. A
LTCH defined as ``new'' under Sec. 412.23(e)(4) is paid based on 100
percent of the Federal rate with no blended transition payments (Sec.
412.533(d)). As discussed in the August 30, 2002, final rule and in
accordance with Sec. 412.533(a), the applicable transition blends are
as follows:
------------------------------------------------------------------------
Reasonable
Cost reporting periods beginning on or Federal rate cost-based
after percentage payment rate
percentage
------------------------------------------------------------------------
October 1, 2002......................... 20 80
October 1, 2003......................... 40 60
October 1, 2004......................... 60 40
October 1, 2005......................... 80 20
October 1, 2006......................... 100 0
------------------------------------------------------------------------
Accordingly, for cost reporting periods that begin during FY 2003
(that is, on or after October 1, 2002, and before September 30, 2003),
blended payments under the transition methodology are based on 80
percent of the LTCH's reasonable cost-based payment rate and 20 percent
of the adjusted Federal rate. For cost reporting periods that begin
during FY 2004 (that is, on or after October 1, 2003, and before
September 30, 2004), blended payments under the transition methodology
will be based on 60 percent of the LTCH's reasonable cost-based
principles rate and 40 percent of the adjusted Federal rate.
1. Adjustment for Area Wage Levels
Under the authority of section 307(b) of Public Law 106-554, we
established an adjustment to account for differences in LTCH area wage
levels under Sec. 412.525(c) using the labor-related share estimated
by the excluded hospital market basket with capital and wage indices
that were computed using wage data from inpatient acute care hospitals
without regard to reclassification under section 1886(d)(8) or section
1886(d)(10) of the Act. Furthermore, as we discussed in the August 30,
2002, final rule (67 FR 56015-56019), we established a 5-year
transition to the full wage adjustment. For cost reporting periods
beginning on or after October 1, 2002, and before September 30, 2003
(FY 2003), the applicable LTCH wage index value is one-fifth of the
full FY 2002 acute care hospital inpatient wage index data, without
taking into account geographic reclassification under section
1886(d)(8) and section 1886(d)(10) of the Act.
In that same final rule (67 FR 56018), we stated that we would
continue to reevaluate LTCH data as they become available and would
propose to adjust the phase-in if subsequent data support a change. As
we stated in the March 7, 2003, proposed rule (68 FR 11249), because
the LTCH PPS was only recently implemented, sufficient new data have
not been generated that would enable us to conduct a comprehensive
reevaluation of the appropriateness of adjusting the phase-in. However,
we reviewed the most recent data available and did not find any
evidence to support a change in the 5-year phase-in of the wage index.
Therefore, in the March 7, 2003, proposed rule, we did not propose to
adjust the phase-in of the wage index adjustment at this time.
Comment: One commenter requested that we reconsider accelerating
the phase-in of the wage index adjustment.
Response: As we stated above, because the LTCH PPS was only
recently implemented, sufficient new data have not been generated that
would enable us to conduct a comprehensive reevaluation of the
appropriateness of adjusting the phase-in. For this final rule, we
reviewed the most recent data available again and still did not find
any evidence to support a change in the 5-year phase-in of the wage
index. Therefore, in this final rule, we are not revising the phase-in
of the wage index adjustment.
In addition, as we discussed in the March 7, 2003, proposed rule
(68 FR 11249), the 5-year phase-in of the wage index would not be
affected by the proposed establishment of a LTCH PPS rate year of July
1 to June 30. Instead, the 5-year phase-in of the wage index
established in the August 30, 2002 final rule (67 FR 56018) will
continue to follow the Federal fiscal year. That is, for cost reporting
periods beginning on or after October 1, 2003, and before September 30,
2004 (FY 2004; the second year of the phase-in), the applicable LTCH
wage index will be two-fifths of the applicable LTCH PPS index values
discussed below. However, as we stated in that same proposed rule, we
will reevaluate LTCH data as they become available and propose to
adjust the phase-in if subsequent data support a change.
As we noted above, we have not found any evidence to support a
change in the 5-year phase-in of the wage index adjustment at this
time. Therefore, we are not adopting the commenter's
[[Page 34141]]
recommendation and we are not revising the phase-in to the wage index
adjustment in this final rule.
Section 412.525(c) provides that the adjustment to account for
differences in area wage levels is made by multiplying the labor-
related portion of the Federal rate by the appropriate wage index value
for the area in which the LTCH is physically located. In the August 30,
2002, final rule (67 FR 56018), based on the best available data at
that time, we stated that the wage index adjustment is based on the FY
2002 inpatient acute care hospital wage index data without taking into
account geographic reclassification under section 1886(d)(8) and
section 1886(d)(10) of the Act. In the March 7, 2003, proposed rule,
for the 2004 LTCH PPS rate year, we proposed that the wage index
adjustment provided for under Sec. 412.525(c) be based on the most
recent available acute care hospital inpatient wage data, that is, the
same data used to compute the FY 2003 acute care hospital inpatient
wage index without taking into account geographic reclassification
under section 1886(d)(8) and section 1886(d)(10) of the Act. As we
noted above, we proposed that the 5-year phase-in of the wage index
adjustment would not be affected by the proposed change in the LTCH PPS
rate update cycle and will continue to be based on the Federal fiscal
year. However, we proposed to update the data used to compute the
annual wage index values on the 2004 LTCH PPS rate year cycle (July
through June).
Comment: A few commenters stated that our proposal to update the
data used to compute wage index values according to the LTCH PPS rate
year (July 1st) would cause LTCHs whose cost reporting periods do not
align with the LTCH rate year to have to make two wage index changes
per year during the 5-year phase-in of the wage index adjustment. In
addition to increasing provider burden, the commenters stated that two
wage index changes per year would also introduce the potential for
payment calculation errors. Thus, the commenters recommend that we
align the phase-in of the wage index adjustment and the update of the
data used to compute the wage index values to coincide with the LTCH
PPS rate year.
Response: Adopting the recommendation of the commenters to align
the phase-in of the wage index adjustment with the LTCH PPS rate year
(July 1st) would advance the 5-year phase-in of the wage index
adjustment. For instance, if the phase-in of the wage index adjustment
were to change for all LTCHs on July 1st (rather than, as required
under current language, for cost-reporting periods beginning on or
after October 1st each year during the 5-year phase-in period), LTCH's
with an April 1st cost reporting period would receive payments based on
\1/5\th of the wage index value for only 3 months (April 1, 2003,
through June 30, 2003) before changing to \2/5\th of the wage index on
July 1, 2003. As we discussed in the August 30, 2002, final rule (67 FR
56018), based on the latest available LTCH data, we did not find any
statistical evidence that showed a significant relationship between
LTCHs' costs and their geographic location, therefore, we believed that
it was appropriate to transition to a full wage index adjustment over a
5-year period.
As we discussed in the March 7, 2003, proposed rule and as we noted
above, because the LTCH PPS was only recently implemented, sufficient
new data have not been generated that would enable us to conduct a
comprehensive reevaluation of the appropriateness of adjusting the
phase-in. However, for this final rule we again reviewed the most
recent data available and we still did not find any evidence to support
a change in the 5-year phase-in of the wage index. Therefore, as stated
above, we are not revising the phase-in of the wage index adjustment.
Moreover, we believe it is inappropriate to accelerate the phase-in
of the wage index adjustment by adopting the commenters' recommendation
to align the phase-in of the wage index adjustment with the LTCH PPS
rate year. As we noted above, in accordance with Sec. 412.525(c), the
labor-related portion of the Federal rate is adjusted by the applicable
wage index value. Because the proposed labor-related share (72.612
percent) is lower then the existing labor-related share (72.885
percent) established in the August 30, 2002, final rule, LTCHs with a
wage index of less than 1.0 would be disadvantaged by the acceleration
of the phase-in of the wage index adjustment that would result if we
were to align the phase-in of the wage index adjustment with the LTCH
PPS rate year.
In addition, we do not believe that the application of two wage
index changes per year during the 5-year phase-in of the wage index
adjustment, for those LTCHs whose cost reporting periods do not align
with the LTCH rate year, would result in an additional burden or in
payment errors to LTCHs. We do not believe LTCHs would be additionally
burdened because they are not required to provide any additional
information due to the change in the wage index adjustment during their
cost reporting period. Also, we do not believe payment errors will
occur because both the wage index data and the phase-in of the wage
index adjustment are automatically performed in the PRICER software
used by fiscal intermediaries to price each LTCH claim based on the
date of service.
Therefore, we are not adopting the commenters' suggestion to align
the phase-in of the wage index adjustment and the update of the data
used to compute the wage index values to coincide with the LTCH PPS
rate year. The phase-in of the wage index adjustment will continue to
remain linked to each LTCH's cost reporting period beginning on or
after October 1st each year during the 5-year phase-in period and the
update of the data used to compute the wage index values will
correspond with the LTCH PPS rate year (that is, effective beginning on
July 1st each year).
For example, for a LTCH with a cost reporting period from January
1, 2003, through December 31, 2003, the LTCH will be paid using one-
fifth of the wage index value for its entire cost reporting period. For
the first 6 months of that period (January 1, 2003, through June 30,
2003), the one-fifth wage index value will be based on the same data
used to compute the FY 2002 acute care hospital inpatient wage index
without taking into account geographic reclassifications under sections
1886(d)(8) and (d)(10) of the Act as established in the August 30,
2002, final rule (67 FR 56018) and shown in Tables 1 and 2 of the
Addendum to that same final rule (67 FR 56057-56075). Under the policy
we are establishing in this final rule to update the data used to
compute the LTCH PPS wage index values for July 1, 2003, through June
30, 2004, for the next 6 months (July 1, 2003, through December 31,
2003) that LTCH will still be paid using one-fifth of the wage index
value, but the wage index value will now be computed using the same
data used to compute the FY 2003 acute care hospital inpatient wage
index without taking into account geographic reclassifications under
sections 1886(d)(8) and (d)(10) of the Act (as shown in Tables 1 and 2
of the Addendum to this final rule). In this example, for that LTCH's
subsequent cost reporting period from January 1, 2004, through December
31, 2004, that LTCH will be paid using the two-fifth wage index value.
For the first 6 months of that period (January 1, 2004, through June
30, 2004), the two-fifths wage index value will be based on the same
data used to compute the FY 2003 acute care hospital inpatient wage
index without taking into account geographic reclassifications under
sections
[[Page 34142]]
1886(d)(8) and (d)(10) of the Act, as shown in Tables 1 and 2 of the
Addendum to this final rule.
In the August 30, 2002, final rule (67 FR 56018), for FY 2003 we
used the same data used to compute the FY 2002 acute care hospital
inpatient wage index without taking into account geographic
reclassifications under sections 1886(d)(8) and (d)(10) of the Act. The
same data is also used in the IRF PPS and the SNF PPS. As we discussed
in the August 30, 2002, final rule (67 FR 56019), since hospitals that
are excluded from the IPPS are not required to provide wage-related
information on the Medicare cost report and we would need to establish
instructions for the collection of such LTCH data in order to establish
a geographic reclassification adjustment under the LTCH PPS, the wage
adjustment established under the LTCH PPS is based on a LTCH's actual
location without regard to the urban or rural designation of any
related or affiliated provider. In this final rule, we are establishing
that for the 2004 LTCH PPS rate year, the same data used to compute the
FY 2003 acute care hospital inpatient wage index without taking into
account geographic reclassifications under sections 1886(d)(8) and
(d)(10) of the Act will be used to determine the applicable wage index
values under the LTCH PPS, because it is the most recent available
complete data. This is the same wage data that were used to compute the
FY 2003 wage indices currently used under the IPPS. The final LTCH wage
index values for July 1, 2003, through June 30, 2004, are shown in
Table 1 (for urban areas) and Table 2 (for rural areas) in the Addendum
to this final rule.
As noted above, for cost reporting periods beginning on or after
October 1, 2002, and before September 30, 2003 (FY 2003), the labor
portion of the standard Federal rate is adjusted by one-fifth of the
applicable wage index value (that is, for LTCH PPS discharges on or
after July 1, 2003, through June 30, 2004, one-fifth of the full FY
2003 acute care hospital inpatient wage index data, without taking into
account geographic reclassifications under sections 1886(d)(8) and
(d)(10) of the Act). For cost reporting periods beginning on or after
October 1, 2003, and before October 1, 2004 (FY 2004), the LTCH wage
index is two-fifths of the applicable wage index value. Therefore, for
LTCHs with cost reporting periods beginning on or after October 1,
2003, through September 30, 2004, for discharges occurring on or after
July 1, 2003, through June 30, 2004, the labor portion of the standard
Federal rate is adjusted by two-fifths of the full FY 2003 acute care
hospital inpatient wage index data, without taking into account
geographic reclassification under sections 1886(d)(8) and (d)(10) of
the Act.
In conjunction with our proposal to revise and rebase the excluded
hospital with capital market basket from an FY 1992 to an FY 1997 base
year (as discussed above in section VII.B.1.a. of this preamble), in
the March 7, 2003, proposed rule (68 FR 11249-11250), we also proposed
to use a labor-related share that is determined based on the FY 1997-
based excluded hospital with capital market basket. In the August 30,
2002, final rule (67 FR 56016), we established a labor-related share of
72.885 percent based on the relative importance of the labor-related
share of operating and capital costs of the excluded hospital with
capital market basket with an FY 1992 base-year. In the March 7, 2003,
proposed rule, we proposed a labor-related share of 72.612 percent
based on the relative importance of the labor-related share of
operating costs (wages and salaries, employee benefits, professional
fees, postal services, and all other labor-intensive services) and
capital costs in the proposed FY 1997 rebased excluded hospital with
capital market basket. (For further details on the development of the
proposed labor share of 72.612 percent, refer to the March 7, 2003,
proposed rule (68 FR 11249-11250).)
Comment: Two commenters noted that the proposed revising and
rebasing of the LTCH PPS market basket coincided with the revisions
made to the IPPS market basket for FY 2003 where FY 1992 data was
replaced with FY 1997 data and other proxies used to measure changes in
costs were replaced (see the August 1, 2002, IPPS final rule; 67 FR
50041-50042). While we received no comments on the effect of the
proposed revising and rebasing of the LTCH PPS market basket on the
LTCH PPS update factor, the commenters noted that the proposed change
under the LTCH PPS, resulted in a decrease to the labor share from
72.885 percent to 72.612 percent, while under the IPPS, the use of this
new data resulted in an increase in the labor share. However, under the
IPPS, CMS decided not to use the updated data pending further analysis.
Thus, the commenters believe that a change in the labor share under the
LTCH PPS should be delayed, pending the results of the analysis being
performed under the IPPS.
Response: The methodology used to determine the labor-related share
presented in the March 7, 2003, proposed rule is consistent with our
historical methodology of determining the labor-related share in the
past for the IPPS market basket and the excluded hospital market
basket, which is the summation of cost categories from the market
basket deemed to vary with the local labor market. The concerns
expressed by the commenters regarding the proposed revising of the LTCH
PPS labor-related share are the same concerns expressed by commenters
in the August 1, 2002, IPPS final rule (67 FR 50041-50042) when we
proposed to revise the IPPS market basket and the excluded hospital
market basket. In response to those comments in that same IPPS final
rule, we stated that we are in the process of conducting further
analysis to determine the most appropriate methodology for determining
the labor-related share.
In the May 19, 2003, IPPS proposed rule (68 FR 27226), we explain
that we have not yet completed our research into the appropriateness of
this measure. In that same IPPS proposed rule, we discuss two ways that
we are currently reviewing for establishing the labor-related share--
(1) updating the regression analysis that was done when the IPPS was
originally developed and (2) reevaluating the methodology we currently
use for determining the labor-related share using the hospital market
basket. While each of these alternatives have strengths and weaknesses,
it is not clear at this point that any one alternative is superior to
the current methodology. Thus, we want to continue researching these
alternatives, in part, because changing from the current labor share
methodology would impact the labor-related shares for other Medicare
prospective payment systems, since they use a similar methodology.
Therefore, we agree with the commenter that it would be
inappropriate to change the LTCH PPS labor share until the results of
this research and analysis are complete. Accordingly, we are adopting
the commenters' recommendation and the labor share for the 2004 LTCH
PPS rate year will remain 72.885 percent.
2. Adjustment for Cost-of-Living in Alaska and Hawaii
Under Sec. 412.525(b), we make a cost-of-living adjustment (COLA)
for LTCHs located in Alaska and Hawaii to account for the higher costs
incurred in those States. In the March 7, 2003, proposed rule (68 FR
11250), for the proposed 2004 LTCH PPS rate year, we proposed to make a
COLA to payments for LTCHs located in Alaska and Hawaii by multiplying
the standard Federal payment rate by the appropriate factor listed in
Table V. below. These factors are obtained from the U.S. Office of
[[Page 34143]]
Personnel Management (OPM). In addition, in that same proposed rule we
stated that if OPM releases revised COLA factors before May 1, 2003, we
proposed to use them for the development of payments and publish them
in this final rule.
The OPM has not released revised COLA factors for Alaska and Hawaii
since the publication of the March 7, 2003, proposed rule. We received
no comments on the proposed COLA factors for Alaska and Hawaii for the
2004 LTCH PPS rate year. Therefore, under Sec. 412.525(b), we are
finalizing the COLA factors for Alaska and Hawaii shown below in Table
V. for the 2004 LTCH PPS rate year.
Table V.--Cost-of-Living Adjustment Factors for Alaska and Hawaii
Hospitals for the 2004 LTCH PPS Rate Year
------------------------------------------------------------------------
------------------------------------------------------------------------
Alaska:
All areas.................................................. 1.25
Hawaii:
Honolulu County............................................ 1.25
Hawaii County.............................................. 1.165
Kauai County............................................... 1.2325
Maui County................................................ 1.2375
Kalawao County............................................. 1.2375
------------------------------------------------------------------------
3. Adjustment for High-Cost Outliers
Under Sec. 412.525(a), we 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 LTCH PPS in
determining resource costs at the patient and hospital 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. We set
the outlier threshold before the beginning of the applicable rate year
so that total outlier payments are projected to equal 8 percent of
total payments under the LTCH PPS.
Under Sec. 412.525(a), we make outlier payments for any discharges
if the estimated cost of a case exceeds the adjusted LTCH PPS payment
for the LTC-DRG plus a fixed-loss amount. The fixed-loss amount is the
amount used to limit the loss that a hospital will incur under an
outlier policy. This results in Medicare and the LTCH sharing financial
risk in the treatment of extraordinarily costly cases. The LTCH's loss
is limited to the fixed-loss amount and the percentage of costs above
the marginal cost factor. We calculate the estimated cost of a case by
multiplying the overall hospital cost-to-charge ratio by the Medicare
allowable covered charge. In accordance with Sec. 412.525(a), we pay
outlier cases 80 percent of the difference between the estimated cost
of the patient case and the outlier threshold (the sum of the adjusted
Federal prospective payment for the LTC-DRG and the fixed-loss amount).
We determine a fixed-loss amount, that is, the maximum loss that a
LTCH can incur under the LTCH PPS for a case with unusually high costs
before the LTCH will receive any additional payments. We calculate the
fixed-loss amount by simulating aggregate payments with and without an
outlier policy. The fixed loss amount would result in estimated total
outlier payments being projected to be equal to 8 percent of projected
total LTCH PPS payments.
Outlier payments under the LTCH PPS are determined consistent with
the IPPS outlier policy. Currently, under the IPPS, a floor and a
ceiling are applied to an acute care hospital's cost-to-charge ratio
and if the acute care hospital's cost-to-charge ratio is either below
the floor or above the ceiling, the applicable statewide average cost-
to-charge ratio is assigned to the acute care hospital. Similarly, if a
LTCH's cost-to-charge ratio is below the floor or above the ceiling,
currently the applicable statewide average cost-to-charge ratio is
assigned to the LTCH. In addition, for LTCHs for which we are unable to
compute a cost-to-charge ratio, we also assign the applicable statewide
average. Currently, MedPAR claims data and cost-to-charge ratios based
on the latest available cost report data from HCRIS and corresponding
MedPAR claims data are used to establish a fixed-loss threshold amount
under the LTCH PPS.
For FY 2003, based on FY 2001 MedPAR claims data and cost-to-charge
ratios based on the latest available data from HCRIS and corresponding
MedPAR claims data from FYs 1998 and 1999, we established a fixed-loss
amount of $24,450. In the March 7, 2003, proposed rule (68 FR 11251),
for the proposed 2004 LTCH PPS rate year, we proposed to continue to
use the March 2002 update of the FY 2001 MedPAR claims data to
determine a fixed-loss threshold that would result in outlier payments
projected to be equal to 8 percent of total payments, based on the
policies described in that proposed rule, because these data are the
best data available. We would calculate cost-to-charge ratios for
determining the proposed fixed-loss amount based on the latest
available cost report data in HCRIS and corresponding MedPAR claims
data from FYs 1998, 1999, and 2000.
In the March 7, 2003, proposed rule (68 FR 11251), consistent with
the proposed outlier policy changes for acute care hospitals under the
IPPS discussed in the March 5, 2003, IPPS high-cost outlier proposed
rule (68 FR 10424), we proposed to no longer assign the applicable
statewide average cost-to-charge ratio when a LTCH's cost-to-charge
ratio falls below the floor. We proposed this policy change because, as
is the case for acute care hospitals, we believe LTCHs 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), currently when a LTCH's actual cost-to-charge
ratio falls below the floor, the LTCH's cost-to-charge ratio would be
raised to the applicable statewide average. This application of the
statewide average would result in inappropriately higher outlier
payments. Accordingly, we proposed to apply the LTCH's actual cost-to-
charge ratio to determine the cost of the case, even where the LTCH's
actual cost-to-charge ratio falls below the floor.
Also, in the March 7, 2003, proposed rule (68 FR 11251), consistent
with the proposed policy change for acute care hospitals under the
IPPS, we proposed under Sec. 412.525(a)(4), by cross-referencing
proposed Sec. 412.84(i), to continue to apply the applicable statewide
average cost-to-charge ratio when a LTCH's cost-to-charge ratio exceeds
the ceiling by adopting the proposed policy at proposed Sec.
412.84(i)(1)(ii). As we stated in that same proposed rule, cost-to-
charge ratios above this range 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 clearly errors
and should not be relied upon. In addition, we also proposed to make a
similar change to the short-stay outlier policy at Sec. 412.529. Since
cost-to-charge ratios are also used in determining short-stay outlier
payments, the rationale for that proposed change mirrors that for high-
cost outliers.
Therefore, in the March 7, 2003, proposed rule (68 FR 11251),
consistent with the proposed changes to the IPPS outlier policy, in
determining the proposed fixed-loss amount for the proposed 2004 LTCH
PPS rate year, we proposed to use only the current combined operating
and capital cost-to-charge ratio ceiling under the IPPS of 1.421 (as
explained in the IPPS final rule (67 FR 50125, August 1, 2002)). We
believe that using the current combined
[[Page 34144]]
IPPS operating and capital cost-to-charge ratio ceiling for LTCHs is
appropriate since, as we explained in the August 30, 2002, final rule
(67 FR 55960), LTCHs are certified as acute care hospitals that meet
the criteria set forth in section 1861(e) of the Act to participate as
a hospital in the Medicare program, and in general, hospitals are paid
as a LTCH only because their Medicare average length of stay is greater
than 25 days in accordance with Sec. 412.23(e). In the March 7, 2003,
proposed rule (68 FR 11251), we also explained that prior to qualifying
as a LTCH under Sec. 412.23(e)(2)(i), the hospitals generally are paid
as acute care hospitals under the IPPS during the period in which they
demonstrate that they have an average length of stay of greater than 25
days. Accordingly, if a LTCH's cost-to-charge ratio is above this
ceiling, we proposed to assign the applicable IPPS statewide average
cost-to-charge ratio. We also proposed to assign the applicable
statewide average for LTCHs for which we are unable to compute a cost-
to-charge ratio, such as for new LTCHs. Therefore, based on the
proposed methodology and data described above, in the March 7, 2003,
proposed rule (68 FR 11251), for the proposed 2004 LTCH PPS rate year,
we proposed a fixed-loss amount of $19,978. Thus, we proposed to pay an
outlier case 80 percent of the difference between the estimated cost of
the case and the outlier threshold (the sum of the adjusted Federal
LTCH payment for the LTC-DRG and the proposed fixed-loss amount of
$19,978).
We received numerous comments on the proposed changes to the LTCH
PPS high-cost outlier policy under proposed Sec. 412.525(a) (and
short-stay outlier policy under Sec. 412.529(c)). Because many
features of the proposed LTCH PPS high-cost outlier policy are based
upon the proposed policy changes to the IPPS high-cost outlier policy,
we believe it is appropriate to finalize the proposed changes to the
LTCH PPS high-cost outlier policy together with the final policy
decisions on the IPPS high-cost outlier policy. Because the existing
LTCH PPS outlier policy and proposed outlier policy changes are modeled
after the IPPS outlier policy, we include the summary of public
comments submitted on behalf of LTCHs, which in many cases mirror the
comments we received on the proposed changes to the IPPS outlier
policy, and the responses to those comments in the IPPS high-cost
outlier final rule. Please refer to that final rule for a full
discussion of the comments and responses, as well as any other final
policy decisions concerning LTCH PPS high-cost outlier policy under
Sec. 412.525(a) (and the short-stay outlier policy under Sec.
412.529(c)).
Therefore, in this final rule in calculating the final fixed-loss
amount for the 2004 LTCH PPS rate year since the finalized changes to
the high-cost outlier policy (and short-stay outlier policy) are not
yet effective, we applied the existing outlier policy; that is, we
assigned the statewide average to LTCHs whose cost-to-charge ratios
fell below the floor or exceeded the ceiling. Accordingly, we used the
current IPPS combined operating and capital cost-to-charge ratio floor
of 0.206 and cost-to-charge ratio ceiling of 1.421 (as explained in the
IPPS final rule (67 FR 50125, August 1, 2002)). We believe that using
the current combined IPPS operating and capital cost-to-charge ratio
floor and ceiling for LTCHs is appropriate for the same reasons we
stated above regarding the use of the current combined operating and
capital cost-to-charge ratio ceiling under the IPPS.
In this final rule, for the 2004 LTCH PPS rate year, we continue to
use the March 2002 update of the FY 2001 MedPAR claims data to
establish a fixed-loss threshold that would result in outlier payments
projected to be equal to 8 percent of total payments, based on the
policies described in this final rule, because these data are the best
LTCH data available. We also computed cost-to-charge ratios for
establishing the fixed-loss amount for the 2004 LTCH PPS rate year
based on the latest available cost report data in HCRIS and
corresponding MedPAR claims data from FYs 1998, 1999, and 2000. As we
explained above, the applicable IPPS statewide average cost-to-charge
ratios were applied when a LTCH's cost-to-charge ratio exceeded the
ceiling (1.421) or fell below the floor (0.206). Also, we assigned the
applicable statewide average to LTCHs for which we were unable to
compute a cost-to-charge ratio. (Currently, the applicable IPPS
statewide averages can be found in Tables 8A and 8B of the August 1,
2002, IPPS final rule (67 FR 50263).)
Accordingly, based on updated data and the final rates and policies
established in this final rule (including the existing cost-to-charge
ratio policy described above), we are establishing a fixed-loss amount
of $19,590 for the FY 2004 LTCH PPS rate year. Thus, we will pay an
outlier case 80 percent of the difference between the estimated cost of
the case and the outlier threshold (the sum of the adjusted Federal
LTCH payment for the LTC-DRG and the fixed-loss amount of $19,590).
As we discussed in the March 7, 2003, proposed rule (68 FR 11251-
11252), the IPPS standard Federal rate and relative weights are updated
simultaneously, effective October 1 of each year, when the new GROUPER
with the final DRGs and the new relative weights are implemented for
that fiscal year. The LTCH PPS utilizes the same DRGs and Medicare
GROUPER program as the IPPS. The GROUPER in effect on July 1, 2003,
will be version 20.0. Although we proposed to update the LTCH PPS
standard Federal rate on July 1, 2003, version 21.0 of the GROUPER will
not be available at the time this final rule is published. Therefore,
as we explained in the March 7, 2003, proposed rule (68 FR 11242), we
are not proposing an update to the LTC-DRG weights for the period of
July 1, 2003, through September 30, 2003, and the LTCH PPS will
continue to use version 20.0 of the GROUPER and the LTC-DRG relative
weights published in Table 3 of the Addendum to the August 30, 2002,
final rule (reprinted in Table 3 of the Addendum to the March 7, 2003,
proposed rule) for the period from July 1, 2003, through September 30,
2003.
The calculation of the fixed-loss amount is dependent in part on
the LTC-DRG relative weights because the fixed-loss amount is set so
that estimated total outlier payments are estimated to be equal to 8
percent of total LTCH PPS payments. We proposed to calculate a fixed-
loss amount that would result in total estimated outlier payments being
equal to 8 percent of total LTCH PPS payments for the proposed 2004
LTCH PPS rate year, using the LTC-DRG relative weights based on the
version 20.0 GROUPER. We proposed to use the version 20.0 GROUPER in
determining the fixed-loss amount for the period of July 1, 2003,
through June 30, 2004, as it contains the best available data at the
time the fixed-loss amount is determined.
As we discuss below, we did not propose to change the fixed-loss
amount to account for changes in the version 21.0 GROUPER, because we
believe implementing two fixed-loss amounts during the proposed LTCH
PPS rate year may be administratively burdensome. Implementing a single
fixed-loss amount which would be in effect for a full 12 months (July
through June) would be consistent with other components of the LTCH
PPS, such as the standard Federal rate and the wage index, both of
which would be in effect for a full 12-month period (July through
June). Similarly, the relative weights and the GROUPER program are in
effect for 12 months (October through September). However, because the
[[Page 34145]]
update to the ICD-9-CM codes is effective at the beginning of the
Federal fiscal year, as described in section IV.E.2. of the March 7,
2003, proposed rule (68 FR 11241), we explained in that same proposed
rule (68 FR 11252) that we would continue to update the LTCH PPS
GROUPER and the relative weights on October 1.
In addition, in the March 7, 2003, proposed rule (68 FR 11252), we
also stated that we do not anticipate that the fixed-loss amount
calculated using the relative weights based on the version 20.0 GROUPER
would be significantly different from a fixed-loss amount calculated
using the relative weights based on the version 21.0 GROUPER. We
believe this based on the fact that the LTCH PPS outlier policy, one
component of which is a fixed-loss amount, is modeled after the IPPS
outlier policy. The annual reclassification and recalibration of DRGs
under the IPPS generally does not result in a significant impact on the
IPPS fixed-loss amount (although this impact would vary from year to
year depending on the actual DRG changes). Therefore, we proposed to
calculate a single fixed-loss amount for each LTCH PPS rate year based
on the version of the GROUPER that is in effect as of July 1 of that
year.
Since the proposed effective date of the updated LTCH PPS standard
Federal rate would be July 1, while the updated GROUPER would not be
effective until October 1, we stated in the March 7, 2003, proposed
rule (68 FR 12252) that we did consider an alternative proposal that
would establish two separate fixed-loss amounts during the proposed
LTCH PPS rate year--one for July through September based on the current
GROUPER and another for October through June based on the updated
GROUPER. As we explained in that same proposed rule, we decided not to
propose this alternative because, as we discussed above, calculating
and implementing two fixed-loss amounts in one proposed LTCH PPS rate
year is administratively burdensome.
We received no comments on our proposal to calculate a single
fixed-loss amount for each LTCH PPS rate year based on the version of
the GROUPER that is in effect as of July 1 of that year. Therefore, for
the 2004 LTCH PPS rate year, we are establishing a single fixed-loss
amount based on the version 20.0 of the GROUPER, which is in effect at
the start of the 2004 LTCH PPS rate year (July 1, 2003). As we stated
above, the fixed-loss amount for the 2004 LTCH PPS rate year is
$19,590. As we stated in the August 30, 2002, final rule (67 FR 56026),
under some rare circumstances, a LTCH discharge could qualify as a
short-stay outlier case (as defined under Sec. 412.529 and discussed
in section VII.B.4.b. of this preamble) and also as a high-cost outlier
case. In such a scenario, a patient could be hospitalized for less than
five-sixths of the geometric average length of stay for the specific
LTC-DRG, and yet incur extraordinarily high treatment costs. If the
costs exceeded the outlier threshold (that is, the short-stay outlier
payment plus the fixed-loss amount), the discharge would be eligible
for payment as a high-cost outlier. Thus, for a short-stay outlier in
the 2004 LTCH PPS rate year, the high-cost outlier payment will be 80
percent of the difference between the estimated cost of the case plus
the outlier threshold (the sum of the final fixed-loss amount of
$19,590 and the amount paid under the short-stay outlier policy).
Under existing regulations at Sec. 412.525(a), we specify that no
retroactive adjustment will be made to the outlier payments upon cost
report settlement to account for differences between the estimated
cost-to-charge ratios and the actual cost-to-charge ratios for outlier
cases. This policy is consistent with the existing outlier payment
policy for acute care hospitals under the IPPS. However, we note that
in the March 5, 2003, IPPS high-cost outlier proposed rule (68 FR
10424), we proposed to revise the methodology for determining cost-to-
charge ratios for acute care hospitals under the IPPS because, as we
discussed in that notice, we became aware that payment vulnerabilities
exist in the current IPPS outlier policy.
Because the LTCH PPS high-cost outlier and short-stay policies are
modeled after the outlier policy in the IPPS, we believe they are
susceptible to the same payment vulnerabilities and, therefore, merit
revision. As proposed for acute care hospitals under the IPPS at
proposed Sec. 412.84(m) in the March 5, 2003, IPPS high-cost outlier
proposed rule (68 FR 10429), we proposed in the March 7, 2003, proposed
rule (68 FR 11252) under Sec. 412.525(a)(4)(ii), by cross-referencing
proposed Sec. 412.84(m), that for LTCHs any reconciliation of outlier
payments would be made upon cost report settlement to account for
differences between the estimated cost-to-charge ratio for the period
during which the discharge occurs. As is the case with the proposed
changes to the outlier policy for acute care hospitals under the IPPS,
we are still assessing the procedural changes that would be necessary
to implement this change. In addition, in that same proposed rule (68
FR 11252), we proposed to make a similar change to the short-stay
outlier policy at proposed Sec. 412.529(c)(4)(ii).
We also stated in the March 7, 2003, proposed rule (68 FR 11252),
that because we currently use cost-to-charge ratios based on the latest
settled cost report, any dramatic increases in charges during the
payment year are not reflected in the cost-to-charge ratios when making
outlier payments. Consistent with the proposed policy change for acute
care hospitals under the IPPS at proposed Sec. 412.84(i) discussed in
the March 5, 2003, IPPS high-cost outlier proposed rule (68 FR 10424-
10426), because a LTCH has the ability to increase its outlier payments
through a dramatic increase in charges and because of the lag time in
the data used to calculate cost-to-charge ratios, in the March 7, 2003,
proposed rule (68 FR 11252), we proposed that fiscal intermediaries
would use more recent data when determining a LTCH's cost-to-charge
ratio. Therefore, by cross-referencing proposed Sec. 412.84(i) under
proposed Sec. 412.525(a)(4)(ii) in the March 7, 2003, proposed rule
(68 FR 11252), we proposed that fiscal intermediaries would use either
the most recent settled cost report or the most recent tentative
settled cost report, whichever is later. In addition, in that same
proposed rule, we proposed to make a similar change to the short-stay
outlier policy at proposed Sec. 412.529(c)(4)(ii).
As we noted above, we received numerous comments on the proposed
reconciliation of outlier payments at cost report settlement and the
proposed policy to allow fiscal intermediaries to use either the most
recent settled cost report or the most recent tentative settled cost
report, whichever is later, in computing LTCH's cost-to-charge ratios
for determining high-cost outlier payments under proposed Sec.
412.525(a) (and short-stay outlier payments under proposed Sec.
412.529(c)). As we also noted previously, because many features of the
proposed LTCH PPS high-cost outlier policy are based upon the proposed
policy changes to the IPPS high-cost outlier policy, we believe it is
appropriate to finalize the proposed changes to the LTCH PPS high-cost
outlier together with the final policy decisions on the IPPS outlier
policy. Because, however, the LTCH PPS outlier policy and proposed
outlier policy changes are modeled after the IPPS outlier policy, we
include the summary of public comments submitted on behalf of LTCHs,
which in many cases mirror the comments we received on the proposed
IPPS outlier policy, and the responses to those comments in the IPPS
high-cost outlier final rule. Please
[[Page 34146]]
refer to that final rule for a full discussion of the comments and
responses, as well as any other final policy decisions concerning LTCH
PPS high-cost outlier policy under Sec. 412.525(a) (and the short-stay
outlier policy under Sec. 412.529(c)).
In conclusion, the summary of public comments on the proposed
changes presented in the March 7, 2003, proposed rule regarding the
high-cost outlier policy under proposed Sec. 412.525(a) (and the
short-stay outlier policy under proposed Sec. 412.529(c)), and the
responses to those comments are presented in the IPPS high-cost outlier
final rule. Therefore, in this final rule, based on the data and
existing methodology described above, we are establishing a fixed-loss
amount of $19,590 for the FY 2004 LTCH PPS rate year. Accordingly, we
will pay an outlier case 80 percent of the difference between the
estimated cost of the case and the outlier threshold (the sum of the
adjusted Federal LTCH payment for the LTC-DRG and the fixed-loss amount
of $19,590).
4. Adjustments for Special Cases
a. General
As discussed in the August 30, 2002, final rule (67 FR 55995),
under section 123 of Public Law 106-113, the Secretary generally has
broad authority in developing the PPS for LTCHs, including whether (and
how) to provide for adjustments to reflect variations in the necessary
costs of treatment among LTCHs.
Generally, LTCHs, as described in section 1886(d)(1)(B)(iv) of the
Act, are distinguished from other inpatient hospital settings by
maintaining an average length of stay of greater than 25 days. However,
LTCHs may have cases that have stays of considerably less than the
average length of stay and that receive significantly less than the
full course of treatment for a specific LTC-DRG. As we explained in the
August 30, 2002, final rule (67 FR 55995), such cases would be paid
inappropriately if the hospital were to receive the full LTC-DRG
payment. While we did not propose any changes to the payment policy for
special cases at this time, below we discuss the payment methodology
for these special cases as implemented in the August 30, 2002, final
rule (67 FR 55955-56010).
b. Short-Stay Outlier Cases
A short-stay outlier case may occur when a beneficiary receives
less than the full course of treatment at the LTCH before being
discharged. These patients may be discharged to another site of care or
they may be discharged and not readmitted because they no longer
require treatment. Furthermore, patients may expire early in their LTCH
stay.
As noted above, generally LTCHs are defined by statute as having an
average length of stay of greater than 25 days. We believe that a
payment adjustment for short-stay outlier cases results in more
appropriate payments, because these cases most likely would not receive
a full course of treatment in such a short period of time and a full
LTC-DRG payment may not always be appropriate. Payment-to-cost ratios
simulated for LTCHs, for the cases described above, show that if LTCHs
receive a full LTC-DRG payment for those cases, they would be
significantly ``overpaid'' for the resources they have actually
expended.
Under Sec. 412.529, we adjust the per discharge payment to the
least of 120 percent of the cost of the case, 120 percent of the LTC-
DRG specific per diem amount multiplied by the length of stay of that
discharge, or the full LTC-DRG payment, for all cases with a length of
stay up to and including five-sixths of the geometric average length of
stay of the LTC-DRG.
As we discussed in the March 7, 2003, proposed rule (68 FR 12252),
in the March 5, 2003, IPPS high-cost outlier proposed rule (68 FR
10424), we proposed to revise the methodology for determining cost-to-
charge ratios for acute care hospitals under the IPPS because, as we
discussed in that March 7, 2003, proposed rule, we became aware that
payment vulnerabilities exist in the current IPPS outlier policy. As we
also explained in that March 7, 2003, proposed rule, because the LTCH
PPS high-cost outlier and short-stay outlier policies are modeled after
the outlier policy in the IPPS, we believe they are susceptible to the
same payment vulnerabilities and, therefore, merit revision. As
proposed for acute care hospitals under the IPPS at proposed Sec.
412.84(i) and (m) in the March 5, 2003, IPPS high-cost outlier proposed
rule (68 FR 10429), and as we proposed above for high-cost outlier
payments at Sec. 412.525(a)(4)(ii), we proposed under Sec. 412.529(c)
that short-stay outlier payments would be subject to the proposed
provisions in the regulations at proposed Sec. 412.84(i) and (m).
Therefore, consistent with the proposed changes to the high-cost
outlier policy discussed in the March 7, 2003, proposed rule (68 FR
11251), we proposed, by cross-referencing proposed Sec. 412.84(i),
that fiscal intermediaries would use either the most recent settled
cost report or the most recent tentative settled cost report, whichever
is later, in determining a LTCH's cost-to-charge ratio.
In the March 7, 2003, proposed rule (68 FR 11253), we also
proposed, by cross-referencing proposed Sec. 412.84(i), that the
applicable statewide average cost-to-charge ratio would only be applied
when a LTCH's cost-to-charge ratio exceeds the ceiling. Thus, the
applicable statewide average cost-to-charge ratio would not be applied
if a LTCH's cost-to-charge ratio falls below the floor. Finally, in
that same proposed rule, by cross-referencing proposed Sec. 412.84(m),
we proposed that any reconciliation of payments for short-stay outliers
would be made upon cost report settlement to account for differences
between the estimated cost-to-charge ratio and the actual cost-to-
charge ratio for the period during which the discharge occurs. We also
noted that, as is the case with the proposed changes to the outlier
policy for acute care hospitals under the IPPS, we are still assessing
the procedural changes that would be necessary to implement this
change.
As we discussed above in section VII.B.3 of this preamble, we
received numerous comments on the proposed changes to the short-stay
outlier policy under proposed Sec. 412.529(c) (and the high-cost
outlier policy under proposed Sec. 412.525(a)). Because many features
of the proposed LTCH PPS outlier policies are based upon the proposed
policy changes to the IPPS high-cost outlier policy, we believe it is
appropriate to finalize the proposed changes to the LTCH PPS short-stay
outlier policy (and high-cost outlier policy) together with the final
policy decisions on the IPPS high-cost outlier policy. Because the LTCH
PPS outlier policy and proposed outlier policy changes are modeled
after the IPPS outlier policy, we include the summary of public
comments submitted on behalf of LTCHs, which in many cases mirror the
comments we received on the proposed IPPS outlier policy, and the
responses to those comments in the IPPS high-cost outlier final rule.
Please refer to that final rule for a full discussion of the comments
and responses, as well as any other final policy decisions concerning
LTCH PPS (the short-stay outlier policy under Sec. 412.529(c) and the
high cost outlier policy under Sec. 412.525(a)). Therefore, in this
final rule, we are not making the changes to the short-stay outlier
policy at Sec. 412.529 based on the changes proposed in the March 7,
2003, proposed rule (68 FR 11252).
As noted above, we will be responding to all comments on the
proposed outlier policies for the LTCH PPS and presenting any changes
in
[[Page 34147]]
existing policy in the IPPS high-cost outlier final rule. We believe
that it is appropriate, however, to respond to three commenters that
submitted comments regarding the impact of our short-stay outlier
policy on certain hospitals which qualify as LTCHs under section
1886(d)(1)(B)(iv)(II) of the Act (``subclause (II)'' LTCHs) as added by
section 4417(b) of Public Law 105-33, and implemented in Sec.
412.23(e)(2)(ii).
Comment: Three commenters, two hospital associations and the other,
a hospital that qualifies as a LTCH under section 1886(d)(1)(B)(iv)(II)
of the Act, expressed great concern that since becoming subject to the
LTCH PPS, the LTCH is experiencing considerable financial losses which
it anticipates will continue to increase during the 5-year transition
period. The commenters assert that these mounting losses will
substantially threaten the LTCH's ability to continue to offer services
in accordance with its unique mission of primarily treating cancer
patients. The commenters identify our payment policy for short-stay
outliers as creating the most damaging shortfall, given this
``subclause (II)'' LTCH's case mix. In order to ameliorate this
situation, all three commenters suggest that we exempt ``subclause
(II)'' LTCHs, from the short-stay outlier policy and establish a
hospital-specific standard Federal rate to reflect this change, which
would also result in a lower average payment amount for all of those
LTCHs' cases and a higher high-cost outlier threshold. We were urged,
by one of the commenters to make these suggested policy modifications
retroactive to the start of the hospital's first cost reporting period
under the LTCH PPS and also to suspend the timing requirements of Sec.
412.533(c), which would allow this LTCH to elect fully prospective
payments as of that date. A suggestion from one of the hospital
associations also advanced the possibility that the necessity for any
adjustment to the short-stay outlier policy would end with the
completion of the 5-year transition because with implementation of the
full wage index adjustment and no budget neutrality adjustment (to
account for the costs incurred by the Medicare program during the
transition), Medicare payments for the ``subclause (II)'' LTCH would be
more in line with the costs of delivering care.
Response: By enacting section 4417(b) of Public Law 105-33, and
adding the provision at section 1886(d)(1)(B)(iv)(II) of the Act, the
Congress provided an exception to the general definition of LTCH as set
forth in section 1886(d)(1)(B)(iv)(I) of the Act (``subclause (I)''
LTCHs), intending, we believe, to recognize the existence and
importance of a distinct category of LTCHs that might not otherwise
warrant exclusion from the IPPS under subclause (I), but which,
nonetheless, fulfills a unique and vital role in serving a particular
subset of Medicare patients. Under this provision, which we implemented
at Sec. 412.23(e)(2)(ii), to qualify as a LTCH, a hospital must have
first been excluded as a LTCH in 1986, have an average inpatient length
of stay of greater than 20 days, and demonstrate that 80 percent of its
annual Medicare inpatient discharges in the 12-month reporting period
ending in Federal fiscal year 1997 have a principal diagnosis that
reflects a finding of neoplastic disease (62 FR 46016 and 46026, August
29, 1997). Moreover, we believe the Congress assumed ``subclause (II)''
LTCHs would continue to serve this population after FY 1997.
Acknowledging the distinction between hospitals qualifying as LTCHs
under section 1886(d)(1)(B)(iv)(I) of the Act, and those qualifying
under section 1886(d)(1)(B)(iv)(II) of the Act when we developed the
LTCH PPS, we revised the greater than 25 day average length of stay
criteria to include only Medicare patients for these ``subclause (I)''
LTCHs. However, for LTCHs described in section 1886(d)(1)(B)(iv)(II) of
the Act, no change was made to the methodology for calculating the
LTCH's average length of stay, since ``we have no reason to believe
that the change in methodology for determining the average inpatient
length of stay would better identify the hospitals that the Congress
intended to exclude under subclause (II)'' (67 FR 55974, August 30,
2002). Consistent with existing policies that differentiate ``subclause
(II)'' LTCHs from other LTCHs, we agree with the commenters that it is
appropriate for us to consider whether or not a policy that applies to
LTCHs designated under subclause I, can reasonably and equitably be
applied to ``subclause (II)'' LTCHs without some measure of adjustment.
We also believe that the specificity of section 4417(b) of Public Law
105-33, which states that 80 percent or more of the annual Medicare
inpatient discharges, in such a ``subclause (II)'' LTCH, in the 12-
month reporting period ending in Federal fiscal year 1997 would have
had a principal diagnosis that reflects a finding of neoplastic
disease, indicates to us that the Congress determined that hospitals
fitting this description fulfilled a unique and vital service for
certain Medicare beneficiaries. Furthermore, we believe the Congress
assumed that not only would a ``subclause (II)'' LTCH have at least 80
percent of its Medicare inpatient discharges with a diagnosis of
neoplastic disease in FY 1997, but this type of LTCH would continue to
serve this patient case-mix in years subsequent to FY 1997.
The theoretical foundations of a DRG-based PPS are that while the
costs of one case may exceed its payment, the opposite is also likely
to happen, and that where some types of cases are always very expensive
for a hospital to treat, others are, in general, not costly. It is
assumed that hospitals under a DRG-based system, therefore, can
typically exercise some influence over their case-mix and their
services in order to achieve fiscal stability. This is not generally
the case for ``subclause (II)'' LTCHs because they continue to
primarily treat patients with neoplastic diseases (97.4 percent of
patients at a ``subclause (II)'' LTCH had primary diagnosis of
neoplastic disease, according to data from FY 2001 MedPAR files.).
According to our claims data for January 1, 2001, through December 31,
2001, at a ``subclause (II)'' LTCH, more than 93 percent of its
Medicare patients expired, over half of the patients at this hospital
would qualify as short-stay outliers (97 percent of those short-stay
outliers expired), and 30 percent of its patient days were for high-
cost outlier patients with an average length of stay of 109 days.
We have analyzed our data as well as information supplied by the
commenters in order to better understand the financial impact on a
``subclause (II)'' LTCH of the payment policies established for LTCHs
that will be in place during the 5-year transition to the full LTCH
PPS. In identifying this category of LTCHs, Congress required that ``in
the 12-month cost reporting period ending in fiscal year 1997'' the
Medicare patient population would be comprised of at least 80 percent
with ``* * * a principal diagnosis that reflects a finding of
neoplastic disease.'' As noted above, our data indicates that the
treatment of neoplastic diseases continues to be the mission of a
``subclause (II)'' LTCH. Accordingly we believe that the patient census
at a ``subclause (II)'' LTCH will, by its very nature, be comprised of
unusually high percentages of both short-stay cases as well as high-
cost outliers. Data projections further reveal that the significant
losses that are being incurred will gradually decline throughout the 5-
year transition, as the percentage of payments based on the Federal
rate increase and the effect of the wage index adjustment is fully
transitioned. Our analyses lead us to believe that until the
[[Page 34148]]
full wage index is phased-in in 2006 and the transition period budget
neutrality adjustments cease, the survival of such a ``subclause (II)''
LTCH is in serious jeopardy.
By establishing ``subclause (II)'' LTCHs, the Congress provided an
exception to the general definition of LTCH under subclause (I), and,
therein, we believe, endorsed the unique mission of a particular type
of hospital. We do not believe that the Congress intended for policies
that equitably apply to LTCHs described under subclause (I) to
potentially undermine the viability of a LTCH described under subclause
(II).
In the August 30, 2003, final rule (67 FR 55954), we stated that we
believed that in establishing the short-stay outlier policy under the
LTCH PPS, we were recognizing that LTCHs, as a provider category under
Medicare, should not be admitting patients whose stay were considerably
less than the average length of stay at a LTCH and who could otherwise
receive care at an acute care hospital subject to the IPPS. Data from
the FY 1999 MedPAR files revealed that 52 percent of cases being
treated at LTCHs were for stays of less than two-thirds of the average
length of stay for the LTC-DRG and 20 percent had a length of stay of
even less than 8 days (67 FR 55970, August 30, 2002). We noted,
however, that short-stay outliers could also result from a legitimate
admission to a LTCH when a change in the patient's condition dictated
that another treatment or care setting would be more clinically
appropriate or if the patient expired early in the LTCH stay. In these
situations, the patient would still not have received the full course
of treatment at the LTCH and paying a full LTC-DRG would result in
significant overpayment. Therefore, we created the short-stay outlier
category as a feature of the LTCH PPS, so that Medicare would be
rendering fair, but not excessive payment for patients who could have
received treatment at an acute care hospital as well as for patients
who, for valid clinical reasons, did not stay long enough at a LTCH to
receive the course of treatment for which the full LTC-DRG payments
were calibrated. We further believed that implementing the short-stay
policy could encourage LTCHs to adopt admission policies that, for the
most part, would work to limit the number of short-stay patients since
there would be no inappropriate financial incentive for admitting such
cases.
As we evaluate the short-stay outlier policy with regard to
``subclause (II)'' LTCHs, we believe that a LTCH in this category may
not be able to readily address the length of stay of patients and the
costs it incurs for those patients as would LTCHs described under
subclause (I) because a ``subclause (II)'' LTCH continues to primarily
serve patients with neoplastic diseases. In fact, as previously noted,
FY 2001 MedPAR data demonstrate that 97.4 percent of the patients at a
``subclause (II)'' LTCH have a primary diagnosis of neoplastic disease.
Accordingly, we believe that it is necessary to adjust the short-stay
policy for ``subclause (II)'' LTCHs during the 5-year transition
period, so that a LTCH of this type can continue to serve its
community, as we believe was assumed by the Congress when it
established this category of LTCHs.
All three commenters suggested that we abrogate the entire short-
stay outlier policy for ``subclause (II)'' LTCHs, which would result in
a revised hospital-specific standard Federal rate and high-cost outlier
threshold. We do not believe that such a radical departure from the
general LTCH PPS policies is either necessary or appropriate to address
the problems that we have noted.
In the August 30, 2002, final rule (67 FR 55995-56000), we describe
the simulations that resulted in our short-stay outlier policy of the
lesser of 120 percent of the cost, 120 percent of the per diem amount
of the LTC-DRG, or the full LTC-DRG. Since these simulations were
established by analyzing costs and payments of a LTCH with a greater
than 25 day average length of stay, we are instead providing an
adjustment to the short-stay outlier payment policy for a ``subclause
(II)'' LTCH, which is held to a greater than 20 day average length of
stay criterion and not to the greater than 25 day average length of
stay criterion which applies to ``subclause (I)'' LTCHs. Furthermore,
this adjustment to the short-stay payment policy will be in place
during ``subclause (II)'' LTCHs'' 5-year transition to full LTCH PPS in
the form of percentages, corresponding to the 120 percent for
``subclause (I)'' LTCHs, and it will be ``phased out'' gradually as the
percentage of payments under the LTCH PPS are increased, the full wage
index adjustment is phased-in, and the budget neutrality adjustment is
decreased. The adjustment, described below, was derived based on
payment simulations using the same methodology on ``subclause (II)''
LTCH data that we used in arriving at the 120 percent for ``subclause
(I)'' LTCHs. (67 FR 55995-56000, August 30, 2002)
We are establishing this formula with the expectation that an
adjustment to the short-stay payments during the transition will result
in reducing the difference between payments and costs for a ``subclause
(II)'' LTCH for the period of July 1, 2003, through the end of the
transition period, when the LTCH PPS will be fully phased-in.
Therefore, for example, a ``subclause (II)'' LTCH, which became subject
to the LTCH PPS for their first cost reporting period which began on
January 1, 2003 (and did not elect payment based on 100% of the Federal
rate), 80 percent of Medicare payments would still be based on what
would have been paid under the TEFRA system and only 20 percent would
be based on the Federal rate (and subject to payments under the short-
stay outlier policy established in the August 30, 2002, final rule).
Effective for discharges from a ``subclause (II)'' LTCH occurring on or
after July 1, 2003, and based on the payment simulations described
above, we have revised the short-stay outlier percentage to 195 percent
during the first year of the hospital's 5-year transition. For the
second cost reporting period, the short-stay outlier percentage will be
193 percent; for the third cost reporting period, the percentage will
be 165 percent; for the fourth cost reporting period, the percentage
will be 136 percent; and for the final cost reporting period of the 5-
year transition, the short-stay outlier percentage for ``subclause
(II)'' LTCHs, will be 120 percent, that is, the same as it is for all
other LTCHs under the LTCH PPS. We have set forth this policy by
redesignating the existing paragraph (c)(4) as (c)(5) and adding a new
paragraph (c)(4) to Sec. 412.529.
We also expect that during this 5-year period, ``subclause (II)''
LTCHs will make every attempt to adopt the type of efficiency enhancing
policies that generally result from the implementation of prospective
payment systems in other health care settings.
We consider the above adjustment to be a reasonable, equitable and
sufficient response to the particular situation of a ``subclause (II)''
LTCH under the LTCH PPS and, therefore, we will not address at any
length the other two suggestions regarding retroactive adjustments to
the start of a LTCH's first cost reporting period under the LTCH PPS
and the disregarding of timing requirements established in Sec.
412.533(c) for election not to be paid under the transition period
methodology. In this final rule, therefore, we are making a temporary
adjustment to payments under the short-stay outlier policy for LTCHs
designated under section 1886(d)(1)(B)(iv)(II) of the Act and Sec.
412.23(e)(2)(ii) that will end upon full implementation of the LTCH
PPS, at the beginning of their fifth cost reporting period in the 5-
year transition period.
[[Page 34149]]
c. Interrupted Stay
In Sec. 412.531(a), we define an ``interruption of a stay'' as a
stay at a LTCH during which a Medicare inpatient is admitted upon
discharge from the LTCH to an acute care hospital, an IRF, or a SNF for
treatment or services that are not available in the LTCH and returns to
the same LTCH within applicable fixed day periods. For a discharge to
an acute care hospital, the applicable fixed-day period is 9 days. For
a discharge to an IRF, the applicable fixed-day period is 27 days. For
a discharge to a SNF, the applicable fixed-day period is 45 days. The
counting of the days begins on the day of discharge from the LTCH and
ends on the 9th, 27th, or 45th day for an acute care hospital, an IRF,
or a SNF, respectively. (We refer readers to section VII.C.4.e. of this
preamble for a discussion of application of this interrupted stay
policy to Medicare-participating providers with approved swing beds.)
If the patient's length of stay away from the LTCH does not exceed
the fixed-day thresholds, the return to the LTCH is considered part of
the first admission and only a single LTCH PPS payment will be made.
(From the standpoint of implementing this policy, in the event that a
Medicare inpatient is discharged from a LTCH and is readmitted and the
stay qualifies as an interrupted stay, the provider should cancel the
claim generated by the original stay in the LTCH and submit one claim
for the entire stay. For further details, see Program Memorandum
Transmittal A-02-093, September 2002.) On the other hand, if the
patient stay exceeds the total fixed-day threshold outside of the LTCH
at another facility before being readmitted, two separate LTC-DRG
payments will be made, one based on the principal diagnosis for the
first admittance and the other based on the principal diagnosis for the
second admittance. Moreover, if the principal diagnoses are the same
for both admissions, the hospital could receive two similar payments.
(See section VII.C.4.e. of this final rule for application of the
interrupted stay policy to transfers to swing bed hospitals.)
d. Onsite Discharges and Readmittances
Under Sec. 412.532, generally, if a LTCH readmits more than 5
percent of its Medicare patients who are discharged to an onsite SNF,
IRF, or psychiatric facility, or to an onsite acute care hospital, only
one LTC-DRG payment will be made to the LTCH for discharges and
readmittances during the LTCH's cost reporting period. Therefore,
payment for the entire stay will be paid either as one full LTC-DRG
payment or a short-stay outlier, depending on the duration of the
entire LTCH stay.
In applying the 5-percent threshold, we apply one threshold for
discharges and readmittances with a co-located acute care hospital.
There is also a separate 5-percent threshold for all discharges and
readmittances with co-located SNFs, IRFs, and psychiatric facilities.
In the case of a LTCH that is co-located with an acute care hospital,
an IRF, or a SNF, the interrupted stay policy at Sec. 412.531 applies
until the 5-percent threshold is reached. However, once the applicable
threshold is reached, all such discharges and readmittances to the
applicable site(s) for that cost reporting period are paid as one
discharge. This means that even if a discharged LTCH Medicare patient
was readmitted to the LTCH following a stay in an acute care hospital
of greater than 9 days, if the facilities share a common location and
the 5-percent threshold were exceeded, the subsequent discharge from
the LTCH will not represent a separate hospitalization for payment
purposes. Only one LTC-DRG payment will be made for all such discharges
during a cost reporting period to the acute care hospital, regardless
of the length of stay at the acute care hospital, that are followed by
readmittances to the onsite LTCH.
Similarly, if the LTCH has exceeded its 5-percent threshold for all
discharges to an onsite IRF, SNF, or psychiatric hospital or unit, with
readmittances to the LTCH, the subsequent LTCH discharge for patients
from any of those sites for the entire cost reporting period will not
be treated as a separate discharge for Medicare payment purposes. (As
under the interrupted stay policy, payment to an acute care hospital
under the IPPS, to an IRF under the IRF PPS, and to a SNF under the SNF
PPS, will not be affected. Payments to the psychiatric facility also
will not be affected.)
e. Treatment of Swing Beds Under the Interrupted Stay and Onsite
Discharge and Readmittance Policies
A swing-bed hospital is defined at Sec. 413.114(b) as a hospital
or critical access hospital (CAH) participating in Medicare that has an
approval from CMS to provide post-hospital SNF care as defined in Sec.
409.20 and meets the requirements specified in Sec. 482.66 or Sec.
485.645. Swing beds are otherwise licensed hospital beds that may,
under certain circumstances, be used temporarily as SNF beds. Under
Sec. 413.114(a)(2), post-hospital SNF care furnished in general
routine inpatient beds in rural hospitals (other than CAHs) is paid in
accordance with the provisions of the SNF PPS for services furnished
for cost reporting periods beginning on or after July 1, 2002. Since it
is possible for a Medicare beneficiary to be discharged from a LTCH for
post-hospital SNF care that is being provided by another hospital-level
Medicare provider with swing beds, such a discharge would be considered
the same as if it were to an individual SNF. We interpret the extension
of the SNF PPS to swing beds to require that all payment policy
determinations regarding patient movement between LTCHs and SNFs,
including the onsite policy described above, also apply to swing beds.
In the March 7, 2003, proposed rule (68 FR 11254), we stated that
we want to emphasize that our inclusion of swing beds in payment policy
determinations for all patient movement between LTCHs and SNFs (see
section VII.C.4.c. of this preamble) would mean that a readmission to a
LTCH from post-hospital SNF care being provided in a swing bed that is
located either in the LTCH itself or in another onsite Medicare
provider would have the same policy consequences as would a readmission
to the LTCH from an onsite SNF. We received no comments on this
clarification.
5. Other Payment Adjustments
As indicated earlier, we had broad authority under section 123 of
Public Law 106-113, including whether (and how) to provide for
adjustments to reflect variations in the necessary costs of treatment
among LTCHs. Thus, in the August 30, 2002, final rule (67 FR 56014-
56027), we discussed our extensive data analysis and rationale for not
implementing an adjustment for geographic reclassification, rural
location, treating a disproportionate share of low-income patients
(DSH), or indirect medical education (IME) costs. In that same final
rule, we stated that we would collect data and reevaluate the
appropriateness of these adjustments in the future once more LTCH data
become available after the LTCH PPS is implemented. As we stated in the
March 7, 2003, proposed rule (68 FR 11254), because the LTCH PPS was
only recently implemented, sufficient new data have not yet been
generated that would enable us to conduct a comprehensive reevaluation
of these payment adjustments. Therefore, in that same proposed rule, we
did not propose an adjustment for geographic reclassification, rural
location, DSH, or IME at this time. Additionally, we stated
[[Page 34150]]
that we would continue to collect and interpret new data as they become
available in the future to determine if these data support proposing
any additional payment adjustments.
Comment: Two commenters objected to our proposal not to include an
adjustment to account for a hospital's treatment of a disproportionate
share of low-income patients (a DSH adjustment) or an adjustment to
account for indirect teaching costs (an IME adjustment). One commenter
stated that given that LTCHs are a heterogeneous group of facilities
with widely varying costs and patient populations, it is particularly
important to provide adjustments to compensate for the differences
where possible. The other commenter stated that the LTCH regression
analysis was among a diverse set of facilities, thus weakening CMS'
conclusions not to include adjustments for DSH and IME. Accordingly,
both commenters urged for the inclusion of a DSH adjustment and an IME
adjustment in the LTCH PPS.
Response: As we discussed in the August 30, 2002, final rule (67 FR
56020-56022), we examined the appropriateness of an adjustment for
LTCHs serving a disproportionate share of low-income patients. In that
same final rule, we explained that in examining the most recent LTCH
data available to us, we determined that a DSH adjustment consistent
with the DSH adjustment under the IPPS for acute care hospitals (set
forth at section 1886(d)(5)(F) of the Act) would reduce the ability of
the LTCH PPS to predict cost per case while lowering the base payment
rate. We also evaluated alternative methods to provide some type of DSH
adjustment. Specifically, using regression analysis that took into
account both the Medicaid patients receiving SSI and the percentage of
Medicaid patients not entitled to Medicare, we found no significant
empirical relationship between these variables and LTCHs' costs.
Therefore, we did not establish a DSH adjustment under the LTCH PPS.
Also, in the August 30, 2002, final rule (67 FR 56022), we
explained that based on a double log regression, we found that the
indirect teaching cost variable was negative and not significant. In
addition, we looked at different specifications for the teaching
variable, including resident-to-bed ratio and resident-to-average daily
census, to measure teaching intensity. In all of our payment
regressions it was determined that the teaching variable was not
significant; that is, no empirical evidence exists to show that LTCHs'
cost per case would vary with teaching costs.
In the March 7, 2003, proposed rule (68 FR 11254), we explained
that because the LTCH PPS was only recently implemented, sufficient new
data have not yet been generated that would enable us to conduct a
comprehensive reevaluation of these payment adjustments. Therefore,
since we still do not have empirical evidence to support a DSH
adjustment or an IME adjustment, we continue to believe that it would
be inappropriate to establish such adjustments at this time.
Accordingly, in this final rule, we are not adopting the commenters'
suggestion to include a DSH adjustment and an IME adjustment in the
LTCH PPS. As we stated in the March 7, 2003, proposed rule (68 FR
11254), we will continue to collect and interpret new data as they
become available in the future to determine if these data support
proposing any additional payment adjustments.
6. Budget Neutrality Offset To Account for the Transition Methodology
In the August 30, 2002, final rule (67 FR 56038) under Sec.
412.533, we implemented a 5-year transition period from reasonable
cost-based payment to prospective payment, during which a LTCH will be
paid an increasing percentage of the LTCH PPS rate and a decreasing
percentage of its payments under the reasonable cost-based principles
for each discharge. Furthermore, we allow a LTCH to elect to be paid
based on 100 percent of the standard Federal rate in lieu of the blend
methodology.
As we discussed in further detail in the August 30, 2002, final
rule (67 FR 56032-56037), the standard Federal rate was determined as
if all LTCHs will be paid based on 100 percent of the standard Federal
rate. As stated earlier, we provide for a 5-year transition period
methodology that allows LTCHs to receive payments based partially on
reasonable cost-based principles. In order to maintain budget
neutrality as required by section 123(a)(1) of the Public Law 106-113
and Sec. 412.523(d)(2) during the 5-year transition period, we reduce
all LTCH Medicare payments (whether a LTCH elects payment based on 100
percent of the Federal rate or whether a LTCH is being paid under the
transition blend methodology). Specifically, we reduce all LTCH
Medicare payments during the 5-year transition by a factor that is
equal to 1 minus the ratio of the estimated TEFRA reasonable cost-based
payments that would have been made if the LTCH PPS had not been
implemented, to the projected total Medicare program PPS payments (that
is, payments made under the transition methodology and the option to
elect payment based on 100 percent of the Federal rate).
For FY 2003, based on a comparison of the estimated FY 2003
payments to each LTCH based on 100 percent of the standard Federal rate
and the transition blend methodology, we projected that approximately
49 percent of LTCHs would elect to be paid based on 100 percent of the
standard Federal rate rather than receive payment based on the
transition blend methodology. This projection was based on our estimate
that those 49 percent of LTCHs would receive higher payments based on
100 percent of the standard Federal rate compared to the payments they
would receive under the transition blend methodology. Similarly, we
projected that the remaining 51 percent of LTCHs would choose to be
paid based on the transition blend methodology (80 percent of
reasonable cost-based payments and 20 percent of payments based on the
Federal rate) in FY 2003, because those payments would be higher than
if they were paid based on 100 percent of the standard Federal rate.
In the August 30, 2002, final rule (67 FR 56034), we projected that
the full effect of the 5-year transition period and the election option
would result in a cost to the Medicare program of $240 million as
follows: For FY 2003, $50 million; for FY 2004, $80 million; for FY
2005, $60 million; for FY 2006, $40 million; for FY 2007, $10 million.
Thus, in order to maintain budget neutrality, we applied a 6.6 percent
reduction (0.934) to all LTCHs' payments in FY 2003 to account for the
estimated cost of $50 million for FY 2003. Furthermore, in order to
maintain budget neutrality, we indicated that, in the future, we would
propose a budget neutrality offset for each of the remaining years of
the transition period to account for the estimated payments for the
respective fiscal year. Based on the data available at that time, in
the August 30, 2002, final rule (67 FR 56037) we estimated the
following budget neutrality offsets to LTCH payments during the
remainder of the transition period: 5.0 percent (0.950) in FY 2004; 3.4
percent (0.966) in FY 2005; and 1.7 percent (0.983) in FY 2006. We also
stated that no budget neutrality offset is necessary in the 5th year of
the transition period (FY 2007) because under the transition
methodology at Sec. 412.533, all LTCHs will be paid based on 100
percent of the standard Federal rate and zero percent of the reasonable
cost-based principles.
As stated in the March 7, 2003, proposed rule (68 FR 11254-11256),
for the proposed 2004 LTCH PPS rate year,
[[Page 34151]]
based on the best available data and the policies presented in that
proposed rule, we projected that approximately 49 percent of LTCHs
would be paid based on 100 percent of the proposed standard Federal
rate rather than receive payment under the transition blend
methodology. Using the same methodology in the August 30, 2002, final
rule (67 FR 56034) described above, this projection, which uses updated
data and inflation factors, is based on our estimate that these LTCHs
would receive higher payments based on 100 percent of the proposed
standard Federal rate compared to the payments they would receive under
the transition blend methodology. Similarly, we project that the
remaining 51 percent of LTCHs would choose to be paid based on the
transition blend methodology (80 percent of reasonable cost-based
payments and 20 percent of Federal rate payments for cost reporting
periods that begin during FY 2003; and 60 percent of reasonable cost-
based payments and 40 percent of Federal rate payments for cost
reporting periods that begin during FY 2004 (in accordance with Sec.
412.533(a))) because they would receive higher payments than if they
were paid based on 100 percent of the proposed standard Federal rate.
In the March 7, 2003, proposed rule (68 FR 11255), based on the
best available data and the proposed policy revisions described in that
proposed rule, we projected that the full effect of the remaining 4
years of the transition period (including the election option) would
result in a cost to the Medicare program of $300 million as follows:
$120 million in the 2004 LTCH PPS rate year; $90 million in the 2005
LTCH PPS rate year; $60 million in the 2006 LTCH PPS rate year; and $30
million in the 2007 LTCH PPS rate year. Therefore, we proposed a 5.7
percent reduction (0.943) to all LTCHs' payments for discharges
occurring on or after July 1, 2003, and through June 30, 2004, to
account for the estimated cost of the $120 million for the proposed
2004 LTCH PPS rate year.
As we stated above, in order to maintain budget neutrality, we
indicated that we would propose a budget neutrality offset for each of
the remaining years of the transition period to account for the
estimated costs for the respective fiscal year. In the March 7, 2003,
proposed rule (68 FR 11255), based on the best available data at that
time, we proposed the following budget neutrality offsets to LTCH
payments during the transition period: 4.4 percent (0.956) in proposed
2005 LTCH PPS rate year; 2.9 percent (0.971) in proposed 2006 LTCH PPS
rate year; and 1.2 percent (0.988) in proposed 2007 LTCH PPS rate year.
Comment: One commenter recommended that the budget neutrality
offsets to LTCH payments during the transition period be updated
periodically and adjusted to reflect any change in the percentage of
LTCHs electing to receive payments during the transition period based
on 100 percent of the Federal rate as provided for under Sec.
412.533(c).
Response: As we stated in the March 7, 2003, proposed rule, the
proposed budget neutrality offsets to LTCH payments during the
transition period are determined using the best available data.
Moreover, as we stated above, we proposed to revise the estimated
budget neutrality offsets to LTCH payments during the transition period
for future years annually along with the update to the Federal rate
based on updated data. Therefore, in determining the budget neutrality
offsets to LTCH payments during the transition period in future rate
years, we will use the latest data available, including data on actual
elections made by LTCHs to receive payments during the transition
period based on 100 percent of the Federal rate as provided for under
Sec. 412.533(c). To update the budget neutrality offsets to LTCH
payments during the transition period more often than in conjunction
with the annual rate update would be an administrative burden to LTCHs
and us.
Comment: A few commenters requested clarification on how we derived
the estimate that 49 percent of LTCHs would elect payment based on 100
percent of the Federal rate in the proposed 2004 LTCH PPS rate year.
Additionally, the commenters requested an explanation of how the
estimate that 49 percent of LTCHs would elect payment based on 100
percent of the Federal rate in the 2004 LTCH PPS rate year can be
determined from the proposed rule data posted on the CMS Web site. Some
commenters also requested that the data files posted on the CMS Web
site be consistent in the future, that is, provide the same information
and title headings. One commenter, requested that the data files posted
on the CMS Web site contain an indicator of which LTCHs have elected to
receive payments based on 100 percent of the standard Federal rate as
provided for under Sec. 412.533(c).
Response: As we discussed above, the proposed estimate that 49
percent of LTCHs would elect payment based on 100 percent of the
standard Federal rate in the proposed 2004 LTCH PPS rate year was based
on our estimate that those 49 percent of LTCHs (96 out of 194) would
receive higher payments based on 100 percent of the proposed standard
Federal rate compared to the payments they would receive under the
transition blend methodology. As we also noted above, this projection
was based on the best available data and the policies presented in that
proposed rule. Accordingly, in the March 7, 2003, proposed rule, when
we simulated payments for each LTCH under the LTCH PPS for the proposed
2004 LTCH PPS rate year based on 100 percent of the proposed standard
Federal rate, we incorporated the proposed policy changes, including
the proposed standard Federal rate of $35,726.64, the proposed fixed
loss amount of $19,978, the proposed labor-share of 72.612 percent, the
proposed update of the wage index data, and the proposed elimination of
the assignment of the applicable statewide average cost-to-charge ratio
when a LTCH's cost-to-charge ratio fell below the floor. In estimating
the payments that LTCHs would receive under the transition blend
methodology, we projected the payments that each LTCH would receive
during the proposed 2004 LTCH PPS rate year, if the LTCH PPS were not
implemented. That is, we estimated payments based on reasonable cost-
based principles in accordance with the methodology set forth in Sec.
1886(b) of the Act.
Based on the LTCH's cost reporting period, we applied the
applicable transition blend percentages for each LTCH during the
proposed 2004 LTCH PPS rate year. For example, as we noted in the March
7, 2003, proposed rule (68 FR 11261), based on the transition blend
percentages set forth in Sec. 412.533(a), some providers may
experience a change in the transition blend percentage during the
proposed 2004 LTCH PPS rate year, such that a LTCH with an October 1,
2002, cost reporting period would have 3 months (July 1, 2003, through
September 30, 2003) under the 80/20 transition blend (that is, 80
percent of payments based on reasonable cost-based principles and 20
percent based on the Federal rate) and 9 months (October 1, 2003,
through June 30, 2004) of payment under the 60/40 transition blend (60
percent of payments based on reasonable cost-based principles and 40
based on the Federal rate).
If a LTCH's estimated LTCH PPS payments for the proposed 2004 LTCH
PPS rate year were greater than its estimated payments under the
transition period methodology for the proposed 2004 LTCH PPS rate year,
then we assumed that the LTCH would elect payment based on 100 percent
of the standard Federal rate for the proposed
[[Page 34152]]
2004 LTCH PPS rate year. Conversely, if a LTCH's estimated payments
under the transition period methodology for the proposed 2004 LTCH PPS
rate year were greater than its estimated LTCH PPS payments for the
proposed 2004 LTCH PPS rate year, then we assumed that the LTCH would
receive payment based on the transition blend methodology set forth in
Sec. 412.533(a) for the proposed 2004 LTCH PPS rate year. However,
regardless of the comparison of a LTCH's estimated LTCH PPS payments
and estimated payments under the transition period methodology for the
proposed 2004 LTCH PPS rate year, we also took into account whether we
had previously projected that a LTCH would elect payment based on 100
percent of the standard Federal rate in the August 30, 2002, final
rule. Specifically, because LTCHs subject to the LTCH PPS with cost
reporting periods that began prior to start of the proposed 2004 LTCH
PPS rate year (July 1, 2003) would have already notified their fiscal
intermediary of their election to receive payment based on 100 percent
of the Federal rate in accordance with Sec. 412.533(c)(2), and once a
LTCH makes this election it cannot revert to the transition blend
(Sec. 412.533(a)), in our proposed rule projection, we took into
account our previous projection from the August 30, 2003, final rule.
Based on the clarification of how we derived the estimate that 49
percent of LTCHs would elect payment based on 100 percent of the
Federal rate in the 2004 LTCH PPS rate year provided above, the March
7, 2003, proposed rule data posted on our website could be combined
with the August 30, 2002, final rule data also posted on our website to
derive the estimate that that 49 percent of LTCHs would elect payment
based on 100 percent of the Federal rate in the proposed 2004 LTCH PPS
rate year. Specifically, the variables ``Total TEFRA Payments for
Impact'' and ``Total PPS Payments'' in the August 30, 2002, final rule
data file posted on our website and the variables ``Estimated Total
TEFRA Payment'' and ``Estimated Total PPS Payments (DRG + High-Cost
Outlier)'' in the March 7, 2003, proposed rule data file posted on our
website can be used to derive the estimate that 49 percent of LTCHs
would elect payment based on 100 percent of the Federal rate in the
2004 LTCH PPS rate year.
In the future, we will make every attempt possible to provide the
same information and title headings in the data file posted on our Web
site. However, changes may be necessary in the future to reflect
current policy and to more accurately reflect the data used. For
example, the August 30, 2002, final rule data files posted on our
website contained the variable ``Total TEFRA Payment for Budget
Neutrality.'' As described in the corresponding file layout also posted
on our Web site, in accordance with section 307 of Public Law 106-554,
this variable used to determine the budget neutral standard Federal
rate does not contain the increases to LTCHs' payments provided for
under section 122 of Public Law 106-113 and section 307 of Public Law
106-554. However, that variable is no longer necessary since we are not
required to determine the LTCH PPS Federal rate based on payments made
under the reasonable cost-based methodology once the LTCH PPS is
implemented (that is, for years beyond FY 2003). Since this variable
was not required to determine the proposed rate and factors discussed
in the March 7, 2003, proposed rule, there is no corresponding variable
in the data files posted on our Web site. Additionally, as data on
which LTCHs have elected to receive payments based on 100 percent of
the standard Federal rate as provided for under Sec. 412.533(c) become
available in the future, we will incorporate that data in the LTCH PPS
data files posted on the CMS' Web site.
Comment: One commenter requested clarification on why the proposed
budget neutrality offsets for the transition period were increased for
``fiscal years'' 2004 through 2007, despite the fact the assumptions
appear the same. The commenter recommends that the budget neutrality
offsets for the transition period remain unchanged from those published
in the August 30, 2002, final rule.
Response: Although the budget neutrality offsets presented in the
August 30, 2002, final rule were applicable on a fiscal year basis,
this is no longer true for the proposed budget neutrality offsets
included in the March 7, 2003, proposed rule. The proposed budget
neutrality offsets for the transition period were estimated to apply
for the proposed LTCH PPS rate years 2004 through 2007, not ``fiscal
years'' 2004 through 2007 as the commenter stated. The change in the
period of time for which the proposed budget neutrality offsets for the
transition period would be applicable is the primary reason why we
determined the proposed budget neutrality offset for the transition
period to be 5.7 percent for the proposed 2004 LTCH PPS rate year,
beginning July 1, 2003, as compared to the previous estimate of 5.0
percent for FY 2004, beginning October 1, 2003 (presented in the August
30, 2002, final rule). Therefore, the change in the budget neutrality
offsets for the transition period is primarily due to moving from the
Federal FY (October 1st) rate cycle to the LTCH PPS rate year (July
1st) rate cycle. As we stated in the August 30, 2002, final rule,
future budget neutrality offsets for the transition period in the
proposed rule will be based on the best available data. Accordingly, in
determining the proposed budget neutrality offsets for the transition
period, we also took into account updated data.
Therefore, we believe that the proposed budget neutrality offset
for the transition period for the proposed 2004 LTCH PPS rate year is
appropriate based on the data available at that time, and we are not
adopting the commenter's recommendation that the budget neutrality
offsets for the transition period remain unchanged from those published
in the August 30, 2002, final rule. Instead, in this final rule, we are
revising the budget neutrality offsets for the transition period for
the 2004 LTCH PPS rate year based on the same methodology established
in the August 30, 2002, final rule, while using the best available
data, and applying the offset to the 2004 LTCH PPS rate year.
In this final rule, for the 2004 LTCH PPS rate year, based on the
best available data and the policies established in this final rule, we
project that approximately 49 percent of LTCHs will be paid based on
100 percent of the proposed standard Federal rate rather than receive
payment under the transition blend methodology. Using the same
methodology described in the August 30, 2002, final rule (67 FR 56034),
this projection, which uses updated data and inflation factors, is
based on our estimate that either--(1) a LTCH has already elected
payment based on 100 percent of the Federal rate prior to July 1, 2003,
or (2) a LTCH will receive higher payments based on 100 percent of the
2004 LTCH PPS rate year standard Federal rate compared to the payments
it would receive under the transition blend methodology. Similarly, we
project that the remaining 51 percent of LTCHs will choose to be paid
based on the transition blend methodology (80 percent of reasonable
cost-based payments and 20 percent of the Federal rate for cost
reporting periods beginning during FY 2003 and 60 percent of reasonable
cost-based payments and 40 percent of the Federal rate for cost
reporting periods beginning during FY 2004 in accordance with Sec.
412.533(a)) because they will receive higher payments than if they were
paid based on 100 percent of the 2004 LTCH PPS rate year standard
Federal rate. We note that, as discussed in the March 7,
[[Page 34153]]
2003, proposed rule (68 FR 11256-11257), we did not propose to change
the 5-year transition period set forth in Sec. 412.533(a) in
conjunction with the proposed change in the proposed 2004 LTCH PPS rate
year update. Therefore, the applicable transition blend percentage will
apply for a LTCH's entire cost reporting period beginning on or after
October 1 (unless the LTCH elects payment based on 100 percent of the
Federal rate).
In this final rule, based on the best available data and the final
policy revisions described above, we projected that the full effect of
the remaining 4 years of the transition period (including the election
option) will result in a cost to the Medicare program of $310 million
as follows:
------------------------------------------------------------------------
Estimated cost
LTCH PPS rate year (in millions)
------------------------------------------------------------------------
2004................................................... $120
2005................................................... 100
2006................................................... 60
2007................................................... 30
------------------------------------------------------------------------
Therefore, using the methodology established in the August 30,
2002, final rule (67 FR 56034) based on updated data and the final
policies and rates established in this final rule, we are establishing
a 6.0 percent reduction (0.940) to all LTCHs' payments for discharges
subject to the LTCH PPS occurring on or after July 1, 2003, and through
June 30, 2004, to account for the estimated cost of the election of the
$120 million for the proposed 2004 LTCH PPS rate year. This offset has
increased slightly over the estimate in the proposed rule (5.7 percent)
primarily due to slightly higher projections of reasonable cost-based
payment based on the latest available data. In addition, as we stated
in the March 7, 2003, proposed rule (68 FR 12255), we emphasize that
the budget neutrality offset to account for the transition methodology
is calculated based on and effective for payments made for discharges
occurring during the 2004 LTCH PPS rate year of July 1, 2003, through
June 30, 2004, not the Federal FY 2004 of October 1, 2003, through
September 30, 2004.
As we discussed in the August 30, 2002, final rule (67 FR 56036),
consistent with the statutory requirement for budget neutrality in
section 123(a)(1) of Public Law 106-113, we intended for estimated
aggregate payments under the LTCH PPS to equal the estimated aggregate
payments that would be made if the LTCH PPS was not implemented. Our
methodology for estimating payments for purposes of the budget
neutrality calculations use the best available data at that time and
necessarily reflect assumptions. As the LTCH PPS progresses, we are
monitoring payment data and will evaluate the ultimate accuracy of the
assumptions used in the budget neutrality calculations (for example,
inflation factors, intensity of services provided, or behavioral
response to the implementation of the LTCH PPS) described in the August
30, 2002, final rule (67 FR 56027-56037). To the extent these
assumptions significantly differ from actual experience, the aggregate
amount of actual payments may turn out to be significantly higher or
lower than the estimates on which the budget neutrality calculations
were based.
Section 123 of Public Law 106-113 and section 307 of Public Law
106-554 provides broad authority to the Secretary in developing the
LTCH PPS, including the authority for appropriate adjustments. Under
this broad authority, as implemented in the regulations at Sec.
412.523(d)(3), we have provided for the possibility of making a one-
time prospective adjustment to the LTCH PPS rates by October 1, 2006,
so that the effect of any significant difference between actual
payments and estimated payments for the first year of the LTCH PPS
would not be perpetuated in the LTCH PPS rates for future years.
In the August 30, 2002, final rule (67 FR 56037), we estimated that
total Medicare program payments for LTCH services over 5 years would be
$1.59 billion for FY 2003; $1.69 billion for FY 2004; $1.79 billion for
FY 2005; $1.90 billion for FY 2006; and $2.00 billion for FY 2007. In
the March 7, 2003, proposed rule (68 FR 12255), based on the best
available data, we estimated that total Medicare program payments for
LTCH services for the proposed LTCH PPS rate years of 2004 through 2008
would be:
------------------------------------------------------------------------
Estimated
LTCH PPS rate year payments ($ in
billion)
------------------------------------------------------------------------
2004................................................... $2.17
2005................................................... 2.29
2006................................................... 2.42
2007................................................... 2.56
2008................................................... 2.71
------------------------------------------------------------------------
At this time, based on the most recent and best available data,
these estimates of Medicare program payments for LTCH services for the
LTCH PPS rate years of 2004 through 2008 remain unchanged from those
estimates presented in the proposed rule. Therefore, in this final
rule, we continue to estimate that Medicare program payments for LTCH
services for the LTCH PPS rate years of 2004 through 2008 will be
approximately $12.2 billion as shown above.
In accordance with the methodology established in the August 30,
2002, final rule (67 FR 56037), these estimates are based on the
projection that 49 percent of LTCHs will elect to be paid based on 100
percent of the 2004 LTCH PPS rate year standard Federal rate rather
than the transition blend, and an update of our estimate of 2004 LTCH
PPS rate year payments to LTCHs using our Office of the Actuary's most
recent estimate (based on updated data) of the excluded hospital with
capital market basket of 2.5 percent for the 2004 LTCH PPS rate year
(adjusted to account for the proposed change in the rate update cycle
discussed in section VII.B.1.b. of this preamble), 3.2 percent for the
2005 LTCH PPS rate year, 3.1 percent for the 2006 and 2007 LTCH PPS
rate years, and 3.0 percent for the 2008 LTCH PPS rate year. We also
took into account our Office of the Actuary's projection that there
would be an increase in Medicare beneficiary enrollment of 1.3 percent
in the 2004 LTCH PPS rate year, 1.6 percent in the 2005 LTCH PPS rate
year, 1.9 percent in the 2006 LTCH PPS rate year, 2.0 percent in the
2007 LTCH PPS rate year, and 2.1 percent in the 2008 LTCH PPS rate
year.
Because the LTCH PPS was only recently implemented, sufficient new
data have not been generated that would enable us to conduct a
comprehensive reevaluation of our budget neutrality calculations.
Therefore, in the March 7, 2003, proposed rule (68 FR 11256), we did
not propose an adjustment for budget neutrality under Sec.
412.523(d)(3) at this time. However, we stated that we will continue to
collect and interpret new data as the data become available in the
future to determine if such an adjustment should be proposed.
Comment: A few commenters expressed concern that the retroactive
one-time budget neutrality adjustment at Sec. 412.523(d)(3) would
wrongly penalize LTCHs for a CMS calculation error, thereby, weakening
the intent and value of the PPS design. The commenters believe that the
proposed rule lacks detail about the methodology CMS will use to
implement this adjustment and requests that CMS publish the data and
methodology used to assess compliance with the budget neutrality
mandate under section 123 of Public Law 106-113 established in
regulations at Sec. 412.523(d)(3). In addition, one commenter states
that if the Congress intended CMS to ``reduce'' future payments based
on a one-time budget neutrality adjustment, the Congress would have
specified this
[[Page 34154]]
intent more clearly in the statutory or report language.
Response: As we discussed in greater detail in the August 30, 2002,
final rule, section 123(a)(1) of Public Law 106-113 requires the
Secretary to develop a DRG-based PPS for LTCHs and ``shall maintain
budget neutrality.'' As we stated in that same final rule (67 FR
56036), in implementing the LTCH PPS in FY 2003 we intended for
estimated aggregate payments under the LTCH PPS to equal the estimated
aggregate payments that would have been made if the LTCH PPS had not
been implemented. Moreover, section 123 of Public Law 106-113 and
section 307 of Public Law 106-554 provide broad authority to the
Secretary in developing the LTCH PPS, including the authority for
appropriate adjustments. Under this broad authority, as implemented in
the regulations at Sec. 412.523(d)(3), we have provided for the
possibility of making a one-time prospective adjustment to the LTCH PPS
rates by October 1, 2006, so that the effect of any significant
difference between actual payments and estimated payments of the LTCH
PPS would not be perpetuated in the LTCH PPS rates for future years.
This adjustment would not be ``retroactive'' as stated by the
commenters; therefore, we do not believe that the one-time budget
neutrality adjustment at Sec. 412.523(d)(3) would wrongly penalize
LTCHs for any calculation errors. Instead, as noted above, this
adjustment is necessary so that any errors in the original budget
neutrality calculations would not be perpetuated in the LTCH PPS rates
for future years.
Furthermore, as we stated in the August 30, 2002, final rule (67 FR
56036-56037), if a one-time budget neutrality adjustment were proposed
in the future under Sec. 412.523(d)(3), the standard Federal rate may
either increase or decrease depending on the difference between actual
payments and estimated payments under the LTCH PPS.
As we also stated in the August 30, 2002, final rule (67 FR 56036-
56037), when estimating payments for the purposes of the budget
neutrality calculations in implementing the LTCH PPS for FY 2003, we
used the best available data and any assumptions. As we explained in
that same final rule, the actual data and the assumptions include
inflation factors, intensity of services provided, and behavioral
responses to the implementation of the LTCH PPS. To the extent that
these data or assumptions significantly differ from actual experience,
actual payments under the LTCH PPS may be higher or lower than the
estimates on which the budget neutrality calculations were based, and a
one-time prospective budget neutrality adjustment may be necessary to
prevent perpetuating any errors in the budget neutrality calculations
in future years. If in the future (but prior to October 1, 2006) after
monitoring LTCH PPS payment data we believe that the assumptions used
to determine the budget neutrality calculations differ significantly
from actual experience, we would first propose an appropriate
adjustment and publish the details of our findings in a future Federal
Register document. At that time, we would also discuss the data and
methodology used to determine the proposed one-time budget neutrality
offset provided for under Sec. 412.523(d)(3).
As we stated in the March 7, 2003, proposed rule, because the LTCH
PPS was only recently implemented, sufficient new data have not been
generated that would enable us to conduct a comprehensive reevaluation
of our budget neutrality calculations. Therefore, in the March 7, 2003,
proposed rule (68 FR 11256), we did not propose a one-time prospective
adjustment for budget neutrality under Sec. 412.523(d)(3) at that
time. However, we will continue to collect and interpret new data as
the data becomes available in the future to determine if such an
adjustment should be proposed. Therefore, at this time we are not
making a one-time prospective adjustment for budget neutrality as
provided for under Sec. 412.523(d)(3).
VIII. Computing the Adjusted Federal Prospective Payments
In accordance with Sec. 412.525 and as discussed in section VII.
of this final rule, the standard Federal rate is adjusted to account
for differences in area wages by multiplying the labor-related share of
the standard Federal rate by the appropriate LTCH PPS wage index. The
standard Federal rate is also adjusted to account for the higher costs
of hospitals in Alaska and Hawaii by multiplying the nonlabor-related
share of the standard Federal rate by the appropriate adjustment factor
shown in Table V in section VII.C.2. of this preamble. In the March 7,
2003, proposed rule (68 FR 11248), we proposed a standard Federal rate
of $35,726.64 for the proposed 2004 LTCH PPS rate year. In this final
rule, based on the best available data and the finalized policies
present in this final rule, we are establishing a standard Federal rate
of $35,892.41 for the 2004 LTCH PPS rate year. We illustrate the
methodology used to adjust the Federal prospective payments in the
following example:
During the 2004 LTCH PPS rate year, a Medicare patient is in a LTCH
located in Chicago, Illinois (MSA 1600) with a two-fifths wage index
value of 1.0418 (see Table 1 in the Addendum to this final rule). The
Medicare patient is classified into LTC-DRG 4 (Spinal Procedures),
which has a relative weight of 1.2493 (see Table 3 of the Addendum to
this final rule). To calculate the LTCH's total adjusted Federal
prospective payment for this Medicare patient, we compute the wage-
adjusted Federal prospective payment amount by multiplying the
unadjusted standard Federal rate ($35,892.41) by the labor-related
share (72.885 percent) and the wage index (1.0418). This wage-adjusted
amount is then added to the nonlabor-related portion of the unadjusted
standard Federal rate (27.115 percent) to determine the adjusted
Federal rate, which is then multiplied by the LTC-DRG relative weight
(1.2493) to calculate the total adjusted Federal prospective payment
for the 2004 LTCH PPS rate year ($45,992.49). In addition, as discussed
in section VII.C.6. of this preamble, for the 2004 LTCH PPS rate year,
we are reducing the LTCH PPS payment by 6.0 percent for the budget
neutrality offset to account for the costs of the transition
methodology. The following illustrates the components of the
calculations in this example:
------------------------------------------------------------------------
------------------------------------------------------------------------
Unadjusted Standard Federal Prospective Payment Rate... ... $35,726.18
Labor-Related Share.................................... ... 0.72885
Labor-Related Portion of the Federal Rate.............. = $26,039.03
\2/5\th Wage Index (MSA 1600).......................... ... 1.0418
Wage-Adjusted Labor Share.............................. = $27,127.46
Nonlabor-Related Portion of the Federal Rate (adjusted + $9,687.15
for COLA if applicable)...............................
Adjusted Federal Rate.................................. = $36,814.61
LTC-DRG 4 Relative Weight.............................. x 1.2493
Total Adjusted Federal Prospective Payment (Before the = $45,992.49
Budget Neutrality Offset).............................
Budget Neutrality Offset............................... x 0.940
Total Federal Prospective Payment (With the Budget = $43,232.94
Neutrality Offset)....................................
------------------------------------------------------------------------
IX. Transition Period
To provide a stable fiscal base for LTCHs, under Sec. 412.533, we
implemented a 5-year transition period from reasonable cost-based
reimbursement under the TEFRA system to a prospective payment based
[[Page 34155]]
on industry-wide average operating and capital-related costs. Under the
average pricing system, payment is not based on the experience of an
individual hospital. As discussed in the August 30, 2002, final rule
(67 FR 56038), we believe that a 5-year phase-in will provide LTCHs
time to adjust their operations and capital financing to the new LTCH
PPS, which is based on prospectively determined Federal payment rates.
Furthermore, we believe that the 5-year phase-in of the LTCH PPS allows
LTCH personnel to develop proficiency with the LTC-DRG coding system,
resulting in improvement in the quality of the data used for generating
our annual determination of relative weights and payment rates.
In accordance with Sec. 412.533, the transition period for all
hospitals subject to the LTCH PPS begins with the hospital's first cost
reporting period beginning on or after October 1, 2002, and extends
through the hospital's last cost reporting period beginning before
October 1, 2007. During the 5-year transition period, a LTCH's total
payment under the LTCH PPS is based on two payment percentages--one
based on reasonable cost-based (TEFRA) payments and the other based on
the standard Federal prospective payment rate. The percentage of
payment based on the LTCH PPS Federal rate increases by 20 percentage
points each year, while the reasonable cost-based payment rate
percentage decreases by 20 percentage points each year, for the next 4
fiscal years. For cost reporting periods beginning on or after October
1, 2006, Medicare payment to LTCHs will be determined entirely under
the Federal PPS methodology. The blend percentages as set forth in
Sec. 412.533(a) are as follows:
------------------------------------------------------------------------
Reasonable
Federal cost
Cost reporting periods beginning on or after rate principles
percentage rate
percentage
------------------------------------------------------------------------
October 1, 2002............................... 20 80
October 1, 2003............................... 40 60
October 1, 2004............................... 60 40
October 1, 2005............................... 80 20
October 1, 2006............................... 100 0
------------------------------------------------------------------------
For a cost reporting period that began on or after October 1, 2002,
and before October 1, 2003 (FY 2003), the total payment for a LTCH is
80 percent of the amount calculated under reasonable cost principles
for that specific LTCH and 20 percent of the Federal prospective
payment amount. For cost reporting periods beginning on or after
October 1, 2003, and before October 1, 2004 (Federal FY 2004), the
total payment for a LTCH will be 60 percent of the amount calculated
under reasonable cost principles for that specific LTCH and 40 percent
of the Federal prospective payment amount. As we noted in the March 7,
2003, proposed rule (68 FR 11257), the change in the effective date of
the annual LTCH PPS rate update discussed in section IV. of this
preamble has no effect on the LTCH PPS transition period as set forth
in Sec. 412.533(a). That is, LTCHs paid under the transition blend
under Sec. 412.533(a), will receive those blend percentages for the
entire 5-year transition period (unless they elect payments based on
100 percent of the Federal rate). Furthermore, LTCHs paid under the
transition blend will receive the appropriate blend percentages of the
Federal and reasonable cost-based rate for their entire cost reporting
period as prescribed in Sec. 412.533(a)(1) through (a)(5). For
example, a LTCH with a cost reporting period beginning on July 1, 2003
(which is the LTCH's first cost reporting period since the
implementation of the LTCH PPS), will receive payments based on 80
percent of the reasonable cost-based rate and 20 percent of the Federal
rate for its discharges occurring on or after July 1, 2003, through
June 30, 2004 (if the LTCH does not elect payment based on 100 percent
of the Federal rate).
The reasonable cost-based rate percentage is a LTCH specific amount
that is based on the amount that the LTCH would have been paid (under
TEFRA) if the PPS were not implemented. As we discussed in the August
30, 2002, final rule (67 FR 56040), Medicare fiscal intermediaries will
continue to compute the LTCH reasonable cost-based payment amount
according to Sec. 412.22(b) of the regulations and sections 1886(d)
and (g) of the Act. We note that several reasonable cost-based payment
provisions that were previously in effect are no longer effective,
starting with cost reporting periods beginning in FY 2003. For
instance, the caps on the target amounts for ``existing'' LTCHs
provided for under section 4414 of the BBA (see Sec.
413.40(c)(4)(iii)) for FYs 1998 through 2002 are no longer applicable
for cost reporting periods beginning in FY 2003. Thus, a LTCH's target
amount for FYs 2003 and beyond will be determined by updating its prior
year's target amount (which for FY 2003 was subject to the FY 2002
cap). In addition, the 15-percent reduction to payments to LTCHs for
capital-related costs provided for under section 4412 of Public Law
105-33 (Sec. 413.40(j)) is only applicable for portions of cost
reporting periods occurring in FYs 1998 through FY 2002. This reduction
is no longer applicable for cost reporting periods beginning in FY
2003. Therefore, the TEFRA portion of a LTCH's payment for capital-
related costs during the LTCH PPS transition period is based on 100
percent of its Medicare allowable capital costs.
As we discussed in the August 30, 2002, final rule (67 FR 56038),
in implementing the PPS for LTCHs, one of our goals is to transition
hospitals to full prospective payments as soon as appropriate.
Therefore, under Sec. 412.533(c), we allow a LTCH, which is subject to
a blended rate, to elect payment based on 100 percent of the Federal
rate at the start of any of its cost reporting periods during the 5-
year transition period rather than incrementally shifting from
reasonable cost-based payments to prospective payments. Once a LTCH
elects to be paid based on 100 percent of the Federal rate, it will not
be able to revert to the transition blend. For cost reporting periods
beginning on or after December 1, 2002, and for the remainder of the 5-
year transition period, a LTCH must notify its fiscal intermediary in
writing of its election on or before the 30th day prior to the start of
the LTCH's next cost reporting period. For example, a LTCH with a cost
report period that begins on May 1, 2004, must notify its fiscal
intermediary in writing of an election before April 1, 2004.
Under Sec. 412.533(c)(2)(i), the notification by the LTCH to make
the election must be made in writing to the Medicare fiscal
intermediary. Under Sec. 412.533(c)(2)(ii) and (iii), the intermediary
must receive the request on or before the specified date (that is, on
or before the 30th day before the applicable cost reporting period
begins for cost reporting periods beginning on or after December 1,
2002, through September 30, 2006), regardless of any postmarks or
anticipated delivery dates.
Notifications received, postmarked, or delivered by other means
after the specified date will not be accepted. If the specified date
falls on a day that the postal service or other delivery sources are
not open for business, the LTCH will be responsible for allowing
sufficient time for the delivery of the request before the deadline. If
a LTCH's notification is not received timely, payment will be based on
the transition period blend percentages.
X. Payments to New LTCHs
Under Sec. 412.23(e)(4), for purposes of Medicare payment under
the LTCH PPS, we define a new LTCH as a provider of inpatient hospital
services that otherwise meets the qualifying criteria for LTCHs, set
forth in Sec. 412.23(e)(1)
[[Page 34156]]
and (e)(2) and, under present or previous ownership (or both), and its
first cost reporting period as a LTCH begins on or after October 1,
2002. We also specify in Sec. 412.500 that the LTCH PPS is applicable
to hospitals with a cost reporting period beginning on or after October
1, 2002.
As we discussed in the August 30, 2002, final rule (67 FR 56040),
this definition of new LTCHs should not be confused with those LTCHs
first paid under the TEFRA payment system for discharges occurring on
or after October 1, 1997, described in section 1886(b)(7)(A) of the
Act, added by section 4416 of Public Law 105-33. As stated in Sec.
413.40(f)(2)(ii), for cost reporting periods beginning on or after
October 1, 1997, the payment amount for a ``new'' (post-FY 1998) LTCH
is the lower of the hospital's net inpatient operating cost per case or
110 percent of the national median target amount payment limit for
hospitals in the same class for cost reporting periods ending during FY
1996, updated to the applicable cost reporting period (see 62 FR 46019,
August 29, 1997). Under the LTCH PPS, those ``new'' LTCHs that meet the
definition of ``new'' under Sec. 413.40(f)(2)(ii) and that have their
first cost reporting period as a LTCH beginning prior to October 1,
2002, will be paid under the transition methodology described in Sec.
412.533.
As noted above and in accordance with Sec. 412.533(d), new LTCHs
will not participate in the 5-year transition from reasonable cost-
based reimbursement to prospective payment. The transition period is
intended to provide existing LTCHs time to adjust to payment under the
new system. Since these new LTCHs with cost reporting periods beginning
on or after October 1, 2002, would not have received payment under
reasonable cost-based reimbursement for the delivery of LTCH services
prior to the effective date of the LTCH PPS, we do not believe that
those new LTCHs require a transition period in order to make
adjustments to their operations and capital financing, as will LTCHs
that have been paid under reasonable cost-based.
For example, a ``new'' LTCH (post-FY 1998) that first began
receiving payment as a LTCH on October 1, 2001, will be subject to the
110 percent of the median target amount payment limit for LTCHs (in
accordance with Sec. 413.40(f)(2)(ii)) for both its FY 2002 (October
1, 2001, through September 30, 2002) and FY 2003 (October 1, 2002,
through September 30, 2003) cost reporting periods. Assuming the
hospital has not elected to be paid 100 percent of the Federal rate for
its cost reporting period beginning on October 1, 2002 (the first cost
reporting period when the LTCH will be subject to the PPS), the
hospital will be paid under the transition methodology whereby the
LTCH's reasonable cost-based portion of its payment for operating costs
(80 percent) is limited by the 110 percent of the median target amount
payment limit for LTCHs under Sec. 413.40(f)(2)(ii). For its cost
reporting period beginning on October 1, 2003 (which is the hospital's
third cost reporting period), under the transition methodology, that
LTCH's reasonable cost-based portion of its payment for operating costs
(60 percent) will be limited to its target amount as determined under
Sec. 413.40(c)(4)(v). Furthermore, if a hospital is designated as a
LTCH on September 1, 2002, it will not be considered a new LTCH under
Sec. 412.23(e)(4), even if it had not discharged any patients or
received any payments as of the implementation date of the LTCH PPS on
October 1, 2002, because its first cost reporting period did not begin
on or after October 1, 2002. Thus, it will be paid according to Sec.
413.40(f)(2)(ii) from September 1, 2002, through August 30, 2003. This
LTCH will not be subject to payments under the LTCH PPS until the start
of its next cost reporting period on September 1, 2003. At the
beginning of its second cost reporting period as a LTCH (that is,
September 1, 2003), this LTCH will be subject to the transition period
methodology in Sec. 412.533(a)(1), because this provision applies to
cost reporting periods beginning on or after October 1, 2002, and
before October 1, 2003. Under the blended payments of the transition
period in Sec. 412.533(a)(1), 80 percent of payments for operating
costs would be paid under the reasonable cost principles, as described
in Sec. 413.40(f)(2)(ii). (This hospital could also elect to be paid
100 percent of the Federal rate for its cost reporting period beginning
September 1, 2003.)
XI. Method of Payment
Under Sec. 412.513, a Medicare LTCH patient is classified into a
LTC-DRG based on the principal diagnosis, up to eight additional
(secondary) diagnoses, and up to six procedures performed during the
stay, as well as age, sex, and discharge status of the patient. The
LTC-DRG is used to determine the Federal prospective payment that the
LTCH will receive for the Medicare-covered part A services the LTCH
furnished during the Medicare patient's stay. Under Sec. 412.541(a),
the payment is based on the submission of the discharge bill. The
discharge bill also provides data to allow for reclassifying the stay
from payment at the full LTC-DRG rate to payment for a case as a short-
stay outlier (under Sec. 412.529) or as an interrupted stay (under
Sec. 412.531), or to determine if the case will qualify for a high-
cost outlier payment (under Sec. 412.525(a)).
Accordingly, the ICD-9-CM codes and other information used to
determine if an adjustment to the full LTC-DRG payment is necessary
(for example, length of stay or interrupted stay status) are recorded
by the LTCH on the Medicare patient's discharge bill and submitted to
the Medicare fiscal intermediary for processing. The payment represents
payment in full, under Sec. 412.521(b), for inpatient operating and
capital-related costs, but not for the costs of an approved medical
education program, bad debts, blood clotting factors, anesthesia
services by hospital-employed nonphysician anesthetists or obtained
under arrangement, or the costs of photocopying and mailing medical
records requested by a QIO, which are costs paid outside the LTCH PPS.
As under the previous reasonable cost-based payment system, under
Sec. 412.541(b) a LTCH may elect to be paid using the periodic interim
payment (PIP) method described in Sec. 413.64(h) and may be eligible
to receive accelerated payments as described in Sec. 413.64(g).
For those LTCHs that are paid during the 5-year transition based on
the blended transition methodology in Sec. 412.533(a) for cost
reporting periods beginning on or after October 1, 2002, and before
October 1, 2006, the PIP amount is based on the transition blend. For
those LTCHs that are paid based on 100 percent of the standard Federal
rate, the PIP amount is based on the estimated prospective payment for
the year rather than on the estimated reasonable cost-based
reimbursement. We exclude high-cost outlier payments that are paid upon
submission of a discharge bill from the PIP amounts. In addition, part
A costs that are not paid for under the LTCH PPS, including Medicare
costs of an approved medical education program, bad debts, blood
clotting factors, anesthesia services by hospital-employed nonphysician
anesthetists or obtained under arrangement, and the costs of
photocopying and mailing medical records requested by a QIO, are
subject to the interim payment provisions (Sec. 412.541(c)).
Under Sec. 412.541(d), LTCHs with unusually long lengths of stay
and that are not receiving payment under the PIP method may bill on an
interim basis (60 days after an admission and at intervals of at least
60 days after the date of the
[[Page 34157]]
first interim bill) and should include any high-cost outlier payment
determined as of the last day for which the services have been billed.
XII. Monitoring
In the August 30, 2002, final rule (67 FR 56014), we discussed our
intent to develop a monitoring system that will assist us in evaluating
the LTCH PPS. Specifically, we discussed the monitoring of the various
policies that we believe would provide equitable payment for stays that
reflect less than the full course of treatment and reduce the
incentives for inappropriate admissions, transfers, or premature
discharges of patients that are present in a discharge-based
prospective payment system. We also stated our intent to collect and
interpret data on changes in average lengths of stay under the LTCH PPS
for specific LTC-DRGs and the impact of these changes on the Medicare
program. We stated that if our data indicate that changes might be
warranted, we may revisit these issues and consider proposing revisions
to these policies in the future. To this end, we have designed systems
features utilizing MedPAR data that will enable CMS and the fiscal
intermediary to track beneficiary movement to and from a LTCH and to
and from another Medicare provider. The Medicare Payment Advisory
Commission (MedPac) has endorsed this monitoring activity and is
pursuing an independent research initiative that will evaluate all
aspects of LTCHs, including the accuracy of data reporting, provision
of equivalent services by other providers, growth in the number of
LTCHs, and clinical outcomes.
Also, in the August 30, 2002, final rule (67 FR 56014), we
explained that, given that the only unique requirement that
distinguishes a LTCH from other inpatient acute care hospitals is an
average length of stay of greater than 25 days, we continue to be
concerned about the extent to which LTCH services and patients differ
from those services and patients treated in other Medicare covered
settings (for example, SNFs and IRFs) and how the LTCH PPS will affect
the access, quality, and costs across the health care continuum. Thus,
we will monitor trends in the supply and utilization of LTCHs and
Medicare's costs in LTCHs relative to other Medicare providers. For
example, we may conduct medical record reviews of Medicare patients to
monitor changes in service use (for example, ventilator use) over a
LTCH episode of care and to assess patterns in the average length of
stay at the facility level. We will consider future changes to LTCH
coverage and payment policy based upon the results of such analyses.
XIII. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995.
XIV. Regulatory Impact Analysis
A. Introduction
We have examined the impact 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 Act), the
Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4), and
Executive Order 13132.
1. Executive Order 12866
Executive Order 12866 (as amended by Executive Order 13258, which
merely assigns responsibility of duties) 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 any one
year). We have determined that this final rule will not be a major rule
within the meaning of Executive Order 12866 because the redistributive
effects do not constitute a shift of $100 million in any one year. As
we discuss in further detail below, and in section VII.B.1.b. of this
preamble, the change to the LTCH PPS rate update cycle will be budget
neutral. Therefore, we estimate that there will be no budgetary impact
for the Medicare program as a result of the change to the LTCH PPS rate
update cycle. Based on the best available data for 194 LTCHs, we
estimate that the 2.2 percent increase in the standard Federal rate for
the 2004 LTCH PPS rate year will result in an increase in payments of
$32.4 million and there are no significant redistributive effects among
any groups of hospitals. (Section VII.C.6. of this preamble includes an
estimate of Medicare program payments for LTCH services.)
2. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $26
million or less in any 1 year. For purposes of the RFA, all hospitals
are considered small entities according to the Small Business
Administration's latest size standards with total revenues of $26
million or less in any 1 year (for further information, see 65 FR
69432, November 17, 2000). Medicare fiscal intermediaries are not
considered to be small entities. Individuals and States are not
included in the definition of a small entity. We certify that this
final rule will not have a significant impact on a substantial number
of small entities, in accordance with RFA.
3. Impact on Rural Hospitals
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a rule may have a significant impact on the
operations of a substantial number of small rural hospitals. For a
final rule, this analysis must conform to the provisions of section 604
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 and has fewer than 100 beds. As discussed
in detail below, the rates and policies set forth in this final rule
will not have a substantial impact on the seven rural hospitals for
which data were available that have fewer than 100 beds and that are
located in rural areas.
4. Unfunded Mandates
Section 202 of the UMRA requires that agencies assess anticipated
costs and benefits before issuing any rule that may result in
expenditure in any one year by State, local, or tribal governments, in
the aggregate, or by the private sector, of $110 million or more. This
final rule will not mandate any requirements for State, local, or
tribal governments, nor would it result in expenditures by the private
sector of $110 million or more in any one year.
5. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications.
[[Page 34158]]
We have examined this final rule under the criteria set forth in
Executive Order 13132 and have determined that, based on the 9 State
and local LTCHs in our database, this final rule will not have any
significant impact on the rights, roles, and responsibilities of State,
local, or tribal governments or preempt State law.
B. Anticipated Effects
We discuss the impact of this final rule below in terms of its
fiscal impact on the Medicare budget and on LTCHs.
1. Budgetary Impact
Section 123(a)(1) of Medicare, Medicaid and State Child Health
Insurance Program (SCHIP) Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) requires us to set the payment rates contained in
this final rule such that total payments under the LTCH PPS are
projected to equal the amount that would have been paid if this PPS had
not been implemented. However, as discussed in greater detail in the
August 30, 2002, final rule (67 FR 56033-56036), the FY 2003 standard
Federal rate ($34,956.15) was calculated as though all LTCHs will be
paid based on 100 percent of the standard Federal rate in FY 2003. As
discussed in section VII.C.6 of this final rule, we are applying a
budget neutrality offset to payments to account for the monetary effect
of the 5-year transition period and the policy to permit LTCHs to elect
to be paid based on 100 percent of the standard Federal rate rather
than a blend of Federal prospective payments and reasonable cost-based
payments during the transition. The amount of the offset is equal to 1
minus the ratio of the estimated reasonable cost-based payments that
would have been made if the LTCH PPS had not been implemented, to the
projected total Medicare program payments that will be made under the
transition methodology and the option to elect payment based on 100
percent of the Federal prospective payment rate.
Our Office of the Actuary computed an update factor to update LTCH
PPS payments from the current rate period (Federal FY 2003) to the new
2004 LTCH PPS rate year (July 1, 2003, through June 30, 2004). The 2004
LTCH PPS rate year overlaps the current rate period by 3 months (July
1, 2003, through September 30, 2003). The market basket increase for
Federal FY 2003 is currently estimated at 3.7 percent and the most
recent estimate of the LTCH PPS market basket increase for the 2004
LTCH PPS rate year is estimated at 2.5 percent (as discussed in section
VII.B.1.b of this preamble). Therefore, over the period from FY 2002
through the 2004 LTCH PPS rate year (June 30, 2004), the cumulative
increase would be 6.0 percent (1.037 * 1.025 = 1.063). This cumulative
increase matches (within rounding) the cumulative increase calculated
by using the index level in the new effective period and the index
level in FY 2002, such that having two separate updates result in the
same cumulative update as if we had used a single update for the entire
21-month period (October 1, 2002, through June 30, 2004). Thus, the
change to the 2004 LTCH PPS rate update cycle will not result in a
higher or lower update than would have been the case (except due to
rounding) if no change had been made to the LTCH PPS update cycle. In
addition, as discussed in section VII.B.1.b. of the preamble of this
final rule, we apply a budget neutrality adjustment of 0.997 in
determining the standard Federal rate to account for the estimated
$5.68 million budgetary impact for the Medicare program in FY 2003 as a
result of the change to the 2004 LTCH PPS rate year cycle.
2. Impact on Providers
The basic methodology for determining a LTCH PPS payment is set
forth in the regulations at Sec. 412.515 through Sec. 412.525. In
addition to the basic LTC-DRG payment (standard Federal rate x LTC-DRG
relative weight), we make adjustments for differences in area wage
levels, cost-of-living adjustment for Alaska and Hawaii, and short-stay
outliers. In addition, LTCHs may also receive high-cost outlier
payments for those cases that qualify under the threshold established
each rate year. Section 412.533 provides for a 5-year transition to
fully prospective payments from payment based on reasonable cost-based
principles. During the 5-year transition period, payments to LTCHs are
based on an increasing percentage of the LTCH PPS Federal rate and a
decreasing percentage of payment based on reasonable cost-based
principles. Section 412.533(c) provides for a one-time opportunity for
LTCHs to elect payments based on 100 percent of the LTCH PPS Federal
rate.
In order to understand the impact of the changes to the LTCH PPS
discussed in this final rule on different categories of LTCHs for the
2004 LTCH PPS rate year, it is necessary to estimate payments per
discharge under the current (Federal FY 2003) LTCH PPS rates and
factors (see the August 30, 2002, final rule) and payments per
discharge that will be made under the LTCH PPS rates and factors for
the 2004 LTCH PPS rate year (July 1, 2003, through June 30, 2004). We
also evaluated the percent change in payments per discharge of
estimated FY 2003 prospective payments to estimated 2004 LTCH PPS rate
year payments for each category of LTCHs.
Hospital groups were based on characteristics provided in OSCAR
data and FYs 1998 through 2000 cost report data from HCRIS. Hospitals
with incomplete characteristics were grouped into the ``unknown''
category. Hospital groups include:
--Location: Large Urban/Other Urban/Rural
--Participation Date
--Ownership Control
--Census Region
--Bed Size
To estimate the impacts among the various categories of providers
during the transition period, it is imperative that reasonable cost-
based principle payments and prospective payments contain similar
inputs. More specifically, in the impact analysis showing the impact
reflecting the applicable transition blend percentages of prospective
payments and reasonable cost-based principle payments and the option to
elect payment based on 100 percent of the Federal rate (Table VII
below), we estimated payments only for those providers for whom we are
able to calculate payments based on reasonable cost-based principles.
For example, if we did not have FYs 1996 through 1999 cost data for a
LTCH, we were unable to determine an update to the LTCH's target amount
to estimate payment under the current reasonable cost-based principles.
Using LTCH cases from the FY 2001 MedPAR file and cost data from
FYs 1996 through 2000 in HCRIS to estimate payments under the current
reasonable cost-based principles, we have both case-mix and cost data
for 194 LTCHs. Thus, for the impact analyses reflecting the applicable
transition blend percentages of prospective payments and reasonable
cost-based principle payments and the option to elect payment based on
100 percent of the Federal rate (see Table VI below), we used data from
194 LTCHs. While currently there are approximately 280 LTCHs, the most
recent growth is predominantly in for-profit LTCHs that provide
respiratory and ventilator-dependent patient care. We believe that the
discharges from the MedPAR data for the 194 LTCHs in our database
provide sufficient representation in the LTC-DRGs containing discharges
for patients that received respiratory and ventilator-dependent care.
However,
[[Page 34159]]
using cases from the FY 2001 MedPAR file, we had case-mix data for 250
LTCHs. Cost data to determine current payments under reasonable cost-
based principle payments are not needed to simulate payments based on
100 percent of the Federal rate. Therefore, for the impact analyses
reflecting fully phased-in prospective payments (see Table VII below),
we used data from 250 LTCHs.
These impacts reflect the estimated ``losses'' or ``gains'' among
the various classifications of providers for the 12-month period from
October 1, 2002, through September 30, 2003 (Federal FY 2003), compared
to the 12-month period from July 1, 2003, through June 30, 2004 (2004
LTCH PPS rate year). Prospective payments for the 2004 LTCH rate year
were based on the standard Federal rate of $35,726.18 and the
hospital's estimated case-mix based on FY 2001 claims data. Prospective
payments for Federal FY 2003 were based on the standard Federal rate of
$34,956.15 and the same FY 2001 claims data.
3. Calculation of Prospective Payments
To estimate payments under the LTCH PPS, we simulated payments on a
case-by-case basis by applying the payment policy for short-stay
outliers (as described in section VII.C.4.b of this final rule) and the
adjustments for area wage differences (as described in section VII.C.1
of this final rule) and for the cost-of-living for Alaska and Hawaii
(as described in section VII.C.2 of this final rule). Additional
payments would also be made for high-cost outlier cases (as described
in section VII.C.3 of this final rule). As noted in section VII.C.5 of
this final rule, we are not making adjustments for rural location,
geographic reclassification, indirect medical education costs, or a
disproportionate share of low-income patients.
We adjusted for area wage differences for estimated FY 2003
payments by using the applicable LTCH PPS wage index (one-fifth of the
full FY 2002 acute care hospital inpatient wage index data, without
taking into account geographic reclassification under sections
1886(d)(8) and 1886(d)(10) of the Act (see August 30, 2002, 67 FR
56057-56075). For the estimated 2004 LTCH PPS rate year payments, we
used a weighted average of a LTCH's applicable wage index during the
period from July 1, 2003, through June 30, 2004, since some providers
may experience a change in the wage index phase-in percentage during
the period from July 1, 2003, through June 30, 2004. For cost reporting
periods beginning on or after October 1, 2002, and before September 30,
2003, the labor portion of the Federal rate is adjusted by one-fifth of
the applicable LTCH PPS wage index. For cost reporting periods
beginning on or after October 1, 2003, and before September 30, 2004,
the labor portion of the Federal rate is adjusted by two-fifths of the
applicable LTCH PPS wage index. The applicable LTCH PPS wage index
values are computed using the same data to compute the acute care
hospital inpatient wage index data, without taking into account
geographic reclassification under sections 1886(d)(8) and 1886(d)(10)
of the Act (as discussed in section VII.C.1. of this final rule).
Therefore, a provider with a cost reporting period beginning October 1,
2003, will have 3 months of payments under the one-fifth wage index
value and 9 months of payment under the two-fifths wage index value.
For this provider, we computed a blended wage index of 25 percent (3
months/12 months) of the one-fifth wage index value and 75 percent (9
months/12 months) of the two-fifths wage index value.
We also calculated payments using the applicable transition blend
percentages. For FY 2003, the applicable transition blend percentage is
80 percent of payment based on reasonable cost-based principles and 20
percent of payment under the LTCH PPS. For the 2004 LTCH PPS rate year
based on the transition blend percentages set forth in Sec.
412.533(a), some providers may experience a change in the transition
blend percentage during the period from July 1, 2003, through June 30,
2004. For example during the 12-month period from July 1, 2003, through
June 30, 2004, a provider with a cost reporting period beginning on
October 1, 2002 (which is paid under the 80/20 transition blend (80
percent of payments based on reasonable cost-based principles and 20
percent of payments under the LTCH PPS), beginning October 1, 2002)
will have 3 months (July 1, 2003, through September 30, 2003) under the
80/20 blend and 9 months (October 1, 2003, through June 30, 2004) of
payment under the 60/40-transition blend (60 percent of payments based
on reasonable cost-based principles and 40 percent of payments under
the LTCH PPS). (The 60 percent/40 percent blend would continue until
the provider's cost report period beginning on October 1, 2004.) In
estimating blended transition payments, we estimated payments based on
reasonable cost-based principles in accordance with the methodology in
section 1886(b) of the Act. We compared the estimated blended
transition payment to the LTCH's estimated payment if it would elect
payment based on 100 percent of the Federal rate. If we estimated that
a LTCH would be paid more based on 100 percent of the Federal rate, we
assumed that it would elect to bypass the transition methodology and to
receive immediate prospective payments.
Then we applied the 6.6 percent reduction to payment to account for
the effect of the 5-year transition methodology and election of payment
based on 100 percent of the Federal rate on Medicare program payments
established in the August 30, 2002, final rule (67 FR 56034) to each
LTCH's estimated payments under the LTCH PPS for FY 2003. Similarly, we
applied the 6.0 percent reduction to payment to account for the effect
of the 5-year transition methodology and election of payment based on
100 percent of the Federal rate on Medicare program payments (see
section VII.C.6 of this final rule) to each LTCH's estimated payments
under the LTCH PPS for the 2004 LTCH PPS rate year. The impact based on
our projection of whether a LTCH will be paid based on the transition
blend methodology or will elect payment based on 100 percent of the
Federal rate is shown below in Table VI.
In Table VII below, we also show the impact if the LTCH PPS were
fully implemented; that is, as if there were an immediate transition to
fully Federal prospective payments under the LTCH PPS for Federal FY
2003 and the 2004 LTCH PPS rate year. Accordingly, the 6.0 percent
reduction to account for the 5-year transition methodology on LTCHs'
Medicare program payments for the 2004 LTCH PPS rate year and the 6.6
percent reduction to account for the 5-year transition methodology on
LTCHs' Medicare program payments established for FY 2003 were not
applied to LTCHs' estimated payments under the PPS.
Tables VI and VII below illustrate the aggregate impact of the
payment system among various classifications of LTCHs.
[sbull] The first column, LTCH Classification, identifies the type
of LTCH.
[sbull] The second column lists the number of LTCHs of each
classification type.
[sbull] The third column identifies the number of long-term care
cases.
[sbull] The fourth column shows the estimated payment per discharge
for FY 2003.
[sbull] The fifth column shows the estimated payment per discharge
for the 2004 LTCH PPS rate year.
[[Page 34160]]
[sbull] The sixth column shows the percent change of FY 2003
compared to the 2004 LTCH PPS rate year.
Table VI.--Projected Impact Reflecting Applicable Transition Blend Percentages of Prospective Payments and
Reasonable Cost-Based (TEFRA) Payments and Option To Elect Payment Based on 100 Percent of the Federal Rate \1\
[FY 2003 payments compared to 2004 LTCH prospective payment system rate year]
----------------------------------------------------------------------------------------------------------------
Average 2004
LTCH
Average prospective
LTCH classification Number of Number of federal FY payment system Percent
LTCHs LTCH cases 2003 payment rate year change
per case \2\ payment per
case \3\
----------------------------------------------------------------------------------------------------------------
All Providers............................ 194 71,861 26,751 27,202 1.7
By Location:
Rural................................ 7 2,153 20,381 20,807 2.1
Urban................................ 187 69,708 26,947 27,400 1.7
Large................................ 113 47,743 27,232 27,695 1.7
Other................................ 74 21,965 26,329 26,757 1.6
By Participation Date:
After October 1993................... 129 42,973 27,983 28,452 1.7
Before October 1983.................. 16 7,846 20,204 20,262 0.3
October 1983-September 1993.......... 48 20,810 26,531 27,063 2.0
Unknown.............................. 1 232 39,515 42,895 8.6
By Ownership Control:
Voluntary............................ 48 17,741 24,561 25,032 1.9
Proprietary.......................... 136 51,655 27,562 27,980 1.5
Government........................... 10 2,465 25,513 26,531 4.0
By Census Region:
New England.......................... 14 9,499 20,371 20,286 -0.4
Middle Atlantic...................... 9 3,282 28,390 28,069 -1.1
South Atlantic....................... 20 6,573 30,805 31,580 2.5
East North Central................... 33 9,061 28,862 29,454 2.1
East South Central................... 10 2,863 26,516 26,163 -1.3
West North Central................... 11 2,906 26,278 26,940 2.5
West South Central................... 71 30,262 25,842 26,464 2.4
Mountain............................. 15 2,495 28,049 28,611 2.0
Pacific.............................. 11 4,920 34,011 34,566 1.6
By Bed Size:
Beds: 0-24........................... 17 2,456 28,815 29,591 2.7
Beds: 25-49.......................... 88 21,734 28,129 28,507 1.3
Beds: 50-74.......................... 24 8,214 28,780 28,592 -0.7
Beds: 75-124......................... 34 16,310 26,821 27,673 3.2
Beds: 125-199........................ 21 13,838 24,430 24,558 0.5
Beds: 200+........................... 9 9,228 24,671 25,559 3.6
Unknown.............................. 1 81 7,668 7,937 3.5
----------------------------------------------------------------------------------------------------------------
\1\ These calculations take into account that some providers may experience a change in the blend percentage
changes during the July 1, 2003, through June 30, 2004, rate year. For example, during the 12-month period of
July 1, 2003, through June 30, 2004, a provider with a cost reporting period beginning October 1 would have 3
months (July 1, 2003, through September 30, 2003) of payments under the 80/20 blend and 9 months (October 1,
2003, through June 30, 2004) of payment under the 60/40 blend.
\2\ Average payment per case for the 12-month period of October 1, 2002, through September 30, 2003.
\3\ Average payment per case for the 12-month period of July 1, 2003, through June 30, 2004.
Table VII.--Projected Impact Reflecting the Fully Phased-In Prospective Payments
[FY 2003 payments compared to 2004 LTCH prospective payment system rate year payments]
----------------------------------------------------------------------------------------------------------------
Average 2004
LTCH
Average prospective
LTCH classification Number of Number of Federal FY payment system Percent
LTCHs LTCH cases 2003 payment rate year change
per case \1\ payment per
case \2\
----------------------------------------------------------------------------------------------------------------
All Providers............................ 250 82,625 26,357 26,951 2.2
By Location:
Rural................................ 16 4,674 20,851 21,013 0.8
Urban................................ 234 77,951 26,687 27,307 2.3
Large................................ 135 52,256 27,027 27,651 2.3
Other................................ 99 25,695 25,996 26,607 2.3
By Participation Date:
After October 1993................... 182 53,246 27,178 27,740 2.1
[[Page 34161]]
Before October 1983.................. 17 7,897 20,826 20,881 0.3
October 1983--September 1993......... 49 21,257 26,230 27,138 3.5
Unknown.............................. 2 743 25,318 26,537 4.8
By Ownership Control:
Voluntary............................ 55 19,853 24,314 24,833 2.1
Proprietary.......................... 148 54,269 27,490 28,052 2.0
Government........................... 47 8,503 23,893 24,864 4.1
By Census Region:
New England.......................... 16 9,609 21,094 21,009 -0.4
Middle Atlantic...................... 15 4,162 28,982 28,607 -1.3
South Atlantic....................... 23 7,051 30,441 31,289 2.8
East North Central................... 48 12,145 28,356 29,074 2.5
East South Central................... 14 3,722 28,561 28,496 -0.2
West North Central................... 16 3,769 26,347 27,245 3.4
West South Central................... 87 33,971 24,560 25,384 3.4
Mountain............................. 19 2,993 26,529 27,567 3.9
Pacific.............................. 12 5,203 33,836 34,323 1.4
By Bed Size:
Beds: 0-24........................... 21 3,073 27,130 28,221 4.0
Beds: 25-49.......................... 98 24,386 27,954 28,222 1.0
Beds: 50-74.......................... 27 9,310 27,556 27,610 0.2
Beds: 75-124......................... 35 16,432 26,222 27,475 4.8
Beds: 125-199........................ 21 13,838 24,945 25,148 0.8
Beds: 200+........................... 11 9,518 25,041 26,054 4.0
Unknown.............................. 37 6,068 23,354 24,284 4.0
----------------------------------------------------------------------------------------------------------------
\1\ Average payment per case for the 12-month period of October 1, 2002, through September 30, 2003.
\2\ Average payment per case for the 12-month period of July 1, 2003, through June 30, 2004.
4. Results
We have prepared the following summary of the impact (as shown in
Table VI) of the LTCH PPS set forth in this proposed rule.
a. Location. The majority of LTCHs are in urban areas.
Approximately 3 percent of the LTCHs are identified as being located in
a rural area, and approximately 3 percent of all LTCH cases are treated
in these rural hospitals. Impact analysis in Table VI shows that the
percent change in estimated payments per discharge for FY 2003 compared
to the 2004 LTCH PPS rate year for rural LTCHs will be 2.1 percent, and
will be 1.7 percent for urban LTCHs. Large urban LTCHs are projected to
experience a 1.7 percent increase in payments per discharge percent
from FY 2003 compared to the 2004 LTCH PPS rate year, while other urban
LTCHs projected to experience a 1.6 percent increase in payments per
discharge percent from FY 2003 compared to the 2004 LTCH PPS rate year.
(See Table VI.)
b. Participation Date. LTCHs are grouped by participation date into
three categories: (1) Before October 1983; (2) between October 1983 and
September 1993; and (3) after October 1993. We did not have sufficient
OSCAR data on 1 LTCH, which we labeled as an ``Unknown'' category. The
majority, approximately 60 percent, of the LTCH cases are in hospitals
that began participating after October 1993 and are projected to
experience a 1.7 percent increase in payments per discharge from FY
2003 compared to the 2004 LTCH PPS rate year. Approximately 11 percent
of the cases are in LTCHs that began participating in Medicare before
October 1983 and are projected to experience a 0.3 percent increase in
payments per discharge percent from FY 2003 compared to the 2004 LTCH
PPS rate year. LTCHs that began participating between October 1983 and
September 1993 are projected to experience a 2.0 percent increase in
payments per discharge from FY 2003 compared to the 2004 LTCH PPS rate
year. (See Table VI.)
c. Ownership Control. LTCHs are grouped into three categories based
on ownership control type--(1) Voluntary; (2) proprietary; and (3)
government.
Approximately 5 percent of LTCHs are government run and we expect
that they will ``gain'' the most from the changes based on our
projection that they will experience a 4.0 percent increase in payments
per discharge from FY 2003 compared to the 2004 LTCH PPS rate year.
Voluntary and proprietary LTCHs are projected to experience a 1.9
percent and 1.5 percent increase in payments per discharge percent from
FY 2003 compared to the 2004 LTCH PPS rate year, respectively. (See
Table VI.)
d. Census Region. LTCHs located in most regions are expected to
experience an increase in payments per discharge percent from FY 2003
compared to the 2004 LTCH PPS rate year. Specifically, of the nine
census regions, we expect that LTCHs in the South Atlantic and West
North Central regions will experience the largest percent increase in
payments per discharge percent from FY 2003 compared to the 2004 LTCH
PPS rate year (2.5 percent). We expect LTCHs in the Pacific region will
experience the smallest percent increase in payments per discharge
percent from FY 2003 compared to the 2004 LTCH PPS rate year (1.6
percent). (See Table VI.)
e. Bed Size. LTCHs were grouped into six categories based on bed
size--0-24 beds, 25-49 beds, 50-74 beds, 75-124 beds, 125-199 beds, and
200+ beds. We did not have sufficient OSCAR data on
[[Page 34162]]
1 LTCH, which we labeled as an ``Unknown'' category.
The percent increase in payments per discharge percent from FY 2003
compared to the 2004 LTCH PPS rate year are projected to increase for
all bed size categories. Most LTCHs were in bed size categories where
the percent increase in payments per discharge from FY 2003 compared to
the 2004 LTCH PPS rate year is estimated to be greater than 1.0
percent. Other than the LTCH whose bed size is unknown, LTCHs with 200
or more beds have the highest estimated percent change in payments per
discharge percent from FY 2003 compared to the 2004 LTCH PPS rate year
(3.6 percent), while LTCHs with 125-199 beds have the lowest projected
increase in the percent change in payments per discharge percent from
FY 2003 compared to the 2004 LTCH PPS rate year (0.5 percent). (See
Table VI.)
5. Effect on the Medicare Program
Based on actuarial projections resulting from our experience with
other prospective payment systems, we estimate that Medicare spending
(total Medicare program payments) for LTCH services over the next 5
years will be as follows:
------------------------------------------------------------------------
Estimated
LTCH PPS rate year payments ($ in
billions)
------------------------------------------------------------------------
2004................................................... $2.17
2005................................................... 2.29
2006................................................... 2.42
2007................................................... 2.56
2008................................................... 2.71
------------------------------------------------------------------------
These estimates are based on the current estimate of increase in
the excluded hospital market with capital basket of 2.5 percent for
2004 LTCH PPS rate year (adjusted to account for the change in the rate
update cycle discussed in section VII.B.1.b of the preamble of this
final rule), 3.2 percent for the 2005 LTCH PPS rate year, 3.1 percent
for the 2006 and 2007 LTCH PPS rate years, and 3.0 percent for the 2008
LTCH PPS rate year. We currently estimate that there will be an
increase in Medicare beneficiary enrollment of 1.3 percent in 2004 LTCH
PPS rate year, 1.6 percent in 2005 LTCH PPS rate year, 1.9 percent in
2006 LTCH PPS rate year, 2.0 percent in 2007 LTCH PPS rate year, 2.1
percent in 2008 LTCH PPS rate year, and an estimated increase in the
total number of LTCHs.
Consistent with the statutory requirement for budget neutrality, we
intend for estimated aggregate payments under the LTCH PPS in FY 2003
to equal the estimated aggregate payments that will be made if the LTCH
PPS were not implemented. Our methodology for estimating payments for
purposes of the budget neutrality calculations uses the best available
data and necessarily reflects assumptions. As we collect data from
LTCHs, we will monitor payments and evaluate the ultimate accuracy of
the assumptions used to calculate the budget neutrality calculations
(that is, inflation factors, intensity of services provided, or
behavioral response to the implementation of the LTCH PPS). To the
extent the assumptions significantly differ from actual experience, the
aggregate amount of actual payments may turn out to be significantly
higher or lower than the estimates on which the budget neutrality
calculations are based.
Section 123 of BBRA and section 307 of BIPA provide the Secretary
with extremely broad authority in developing the LTCH PPS, including
the authority for appropriate adjustments. In accordance with this
broad authority, we may discuss in a future proposed rule a possible
one-time prospective adjustment to the LTCH PPS rates to maintain
budget neutrality so that the effect of the difference between actual
payments and estimated payments for the first year of LTCH PPS is not
perpetuated in the PPS rates for future years. Because the LTCH PPS was
only implemented for cost reporting periods beginning on or after
October 1, 2002, we do not yet have sufficient data to determine
whether such an adjustment is warranted.
6. Effect on Medicare Beneficiaries
Under the LTCH PPS, hospitals will receive payment based on the
average resources consumed by patients for each diagnosis. We do not
expect any changes in the quality of care or access to services for
Medicare beneficiaries under the LTCH PPS, but we expect that paying
prospectively for LTCH services will enhance the efficiency of the
Medicare program.
C. Executive Order 12866
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
0
In accordance with the discussion in this 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).
0
2. Section 412.22 is amended by revising paragraph (h)(2) introductory
text and adding a new paragraph (h)(6) to read as follows:
Sec. 412.22 Excluded hospitals and hospital units: General rules.
* * * * *
(h) Satellite facilities. * * *
(2) Except as provided in paragraphs (h)(3) and (h)(6) 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 prospective payment
systems for any period:
* * * * *
(6) The provisions of paragraph (h)(2)(i) of this section do not
apply to any long-term care hospital that is subject to the long-term
care hospital prospective payment system under Subpart O of this part,
effective for cost reporting periods occurring on or after October 1,
2002, and that elects to be paid based on 100 percent of the Federal
prospective payment rate as specified in Sec. 412.533(c), beginning
with the first cost reporting period following that election, or when
the LTCH is fully transitioned to 100 percent of the Federal
prospective rate, or to a new long-term care hospital, as defined in
Sec. 412.23(e)(4).
0
3. Section 412.503 is amended by adding a definition of ``long-term
care hospital prospective payment system rate year'' in alphabetical
order to read as follows:
Sec. 412.503 Definitions.
* * * * *
Long-term care hospital prospective payment system rate year means
the 12-month period of July 1 through June 30.
* * * * *
0
4. Section 412.523 is amended by revising paragraphs (c)(3) and (d)(3)
to read as follows:
Sec. 412.523 Methodology for calculating the Federal prospective
payment rates.
* * * * *
(c) * * *
(3) Computation of the standard Federal rate. The standard Federal
rate is computed as follows:
(i) For FY 2003. Based on the updated costs per discharge and
estimated
[[Page 34163]]
payments for FY 2003 determined in paragraph (c)(2) of this section,
CMS computes a standard Federal rate for FY 2003 that reflects, as
appropriate, the adjustments described in paragraph (d) of this
section. The FY 2003 standard Federal rate is effective for discharges
occurring in cost reporting periods beginning on or after October 1,
2002 through June 30, 2003.
(ii) For long-term care hospital prospective payment system rate
years beginning July 1, 2003 and after. The standard Federal rate for
long-term care hospital prospective payment system rate years beginning
July 1, 2003 and after will be the standard Federal rate for the
previous long-term care hospital prospective payment system rate year,
updated by the increase factor described in paragraph (a)(2) of this
section, and adjusted, as appropriate, as described in paragraph (d) of
this section. For the rate year from July 1, 2003 through June 30,
2004, the updated and adjusted standard Federal rate will be offset by
a budget neutrality factor to account for updating the FY 2003 standard
Federal rate on July 1 rather than October 1.
* * * * *
(d) * * *
(3) One-time prospective adjustment. The Secretary will review
payments under this prospective payment system and may make a one-time
prospective adjustment to the long-term care hospital prospective
payment system rates by October 1, 2006, so that the effect of any
significant difference between actual payments and estimated payments
for the first year of the long-term care hospital prospective payment
system is not perpetuated in the prospective payment rates for future
years.
* * * * *
0
5. Section 412.525 is amended by revising paragraph (a) to read as
follows:
Sec. 412.525 Adjustments to the Federal prospective payment.
(a) Adjustments for high-cost outliers.
(1) CMS provides for an additional payment to a long-term care
hospital if its estimated costs for a patient exceed the adjusted LTC-
DRG payment plus a fixed-loss amount. For each long-term care hospital
rate year, CMS determines a fixed-loss amount that is the maximum loss
that a hospital can incur under the prospective payment system for a
case with unusually high costs.
(2) The fixed-loss amount is determined for the long-term care
hospital rate year using the LTC-DRG relative weights that are in
effect on July 1 of the rate year.
(3) The additional payment equals 80 percent of the difference
between the estimated cost of the patient care (determined by
multiplying the hospital-specific cost-to-charge ratios by the Medicare
allowable covered charge) and the sum of the adjusted Federal
prospective payment for the LTC-DRG prospective payment system payment
and the fixed-loss amount.
(4) No retroactive adjustments will be made to outlier payments
upon cost report settlement to account for differences between the
estimated cost-to-charge ratio and the actual cost-to-charge ratio of
the case.
* * * * *
0
6. Section 412.529 is amended by:
0
A. Revising paragraph (c)(1) introductory text.
0
B. Redesignating paragraph (c)(4) as paragraph (c)(5) and removing the
term ``LTCH's'' and adding the term ``long-term care hospital's'' in
its place.
0
C. Adding a new paragraph (c)(4).
Sec. 412.529 Special payment provision for short-stay outliers.
* * * * *
(c) Method for determining the payment amount.
(1) Subject to the provisions of paragraph (c)(4) of this section,
the adjusted payment amount for a short-stay outlier is the least of
the following amounts:
* * * * *
(4) Effective for discharges occurring on or after July 1, 2003,
for long-term care hospitals described under Sec. 412.23(e)(2)(ii),
the adjusted payment amount for a short-stay outlier is determined
under the formula set forth in paragraph (c)(1) of this section with
the following substitution of the percentages specified for the LTG-DRG
specific per diem amount and the cost of the case under paragraphs
(c)(1)(i) and (c)(1)(ii) of this section:
(i) For the 1st year of the transition period, as specified at
Sec. 412.533(a)(1), the percentage is 195 percent.
(ii) For the 2nd year of the transition period, as specified at
Sec. 412.533(a)(2), the percentage is 193 percent;
(iii) For the 3rd year of the transition period, as specified at
Sec. 412.533(a)(3), the percentage is 165 percent;
(iv) For the 4th year of the transition period, as specified at
Sec. 412.533(a)(4), the percentage is 136 percent;
(v) For the 5th year of the transition period and after, as
specified at Sec. 412.533(a)(5), the percentage is 120 percent.
* * * * *
0
7. Section 412.535 is revised to read as follows:
Sec. 412.535 Publication of the Federal prospective payment rates.
CMS publishes information pertaining to the long-term care hospital
prospective payment system effective for each annual update in the
Federal Register.
(a) Information on the unadjusted Federal payment rates and a
description of the methodology and data used to calculate the payment
rates are published on or before May 1 prior to the start of each long-
term care hospital prospective payment system rate year which begins
July 1, unless for good cause it is published after May 1, but before
June 1.
(b) Information on the LTC-DRG classification and associated
weighting factors is published on or before August 1 prior to the
beginning of each Federal fiscal year.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance)
Dated: May 28, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: May 28, 2003.
Tommy G. Thompson,
Secretary.
Addendum
This addendum contains the tables referred to throughout the
preamble to this final rule. The tables presented below are as follows:
Table 1.--Long-Term Care Hospital Wage Index for Urban Areas for
Discharges Occurring from July 1, 2003, through June 30, 2004.
Table 2.--Long-Term Care Hospital Wage Index for Rural Areas for
Discharges Occurring from July 1, 2003, through June 30, 2004.
Table 3.--LTC-DRG Relative Weights, Geometric Mean Length of Stay,
and Short-Stay Five-Sixths Average Length of Stay for the Period of
July 1, 2003, through September 30, 2003.
[[Page 34164]]
Table 1.--Long-Term Care Hospital Wage Index for Urban Areas for
Discharges Occurring From July 1, 2003 Through June 30, 2004
------------------------------------------------------------------------
Urban Area \1/5\th \2/5\th
MSA (Constituent Full Wage Wage Index Wage Index
Counties) Index \1\ \2\ \3\
------------------------------------------------------------------------
0040............ Abilene, TX....... 0.7792 0.9558 0.9117
Taylor, TX
0060............ Aguadilla, PR..... 0.4587 0.8917 0.7835
Aguada, PR
Aguadilla, PR
Moca, PR
0080............ Akron, OH......... 0.9600 0.9920 0.9840
Portage, OH
Summit, OH
0120............ Albany, GA........ 1.0594 1.0119 1.0238
Dougherty, GA
Lee, GA
0160............ Albany-Schenectady- 0.8384 0.9677 0.9354
Troy, NY.
Albany, NY
Montgomery, NY
Rensselaer, NY
Saratoga, NY
Schenectady, NY
Schoharie, NY
0200............ Albuquerque, NM... 0.9315 0.9863 0.9726
Bernalillo, NM
Sandoval, NM
Valencia, NM
0220............ Alexandria, LA.... 0.7859 0.9572 0.9144
Rapides, LA
0240............ Allentown- 0.9735 0.9947 0.9894
Bethlehem-Easton,
PA.
Carbon, PA
Lehigh, PA
Northampton, PA
0280............ Altoona, PA....... 0.9225 0.9845 0.9690
Blair, PA
0320............ Amarillo, TX...... 0.9034 0.9807 0.9614
Potter, TX
Randall, TX
0380............ Anchorage, AK..... 1.2358 1.0472 1.0943
Anchorage, AK
0440............ Ann Arbor, MI..... 1.1103 1.0221 1.0441
Lenawee, MI
Livingston, MI
Washtenaw, MI
0450............ Anniston, AL...... 0.8044 0.9609 0.9218
Calhoun, AL
0460............ Appleton-Oshkosh- 0.8997 0.9799 0.9599
Neenah, WI.
Calumet, WI
Outagamie, WI
Winnebago, WI
0470............ Arecibo, PR....... 0.4337 0.8867 0.7735
Arecibo, PR
Camuy, PR
Hatillo, PR
0480............ Asheville, NC..... 0.9876 0.9975 0.9950
Buncombe, NC
Madison, NC
0500............ Athens, GA........ 1.0211 1.0042 1.0084
Clarke, GA
Madison, GA
Oconee, GA
0520............ Atlanta, GA....... 0.9991 0.9998 0.9996
Barrow, GA
Bartow, GA
Carroll, GA
Cherokee, GA
Clayton, GA
Cobb, GA
Coweta, GA
DeKalb, GA
Douglas, GA
Fayette, GA
Forsyth, GA
Fulton, GA
[[Page 34165]]
Gwinnett, GA
Henry, GA
Newton, GA
Paulding, GA
Pickens, GA
Rockdale, GA
Spalding, GA
Walton, GA
0560............ Atlantic-Cape May, 1.1017 1.0203 1.0407
NJ.
Atlantic, NJ
Cape May, NJ
0580............ Auburn-Opelika, AL 0.8325 0.9665 0.9330
Lee, AL
0600............ Augusta-Aiken, GA- 1.0264 1.0053 1.0106
SC.
Columbia, GA
McDuffie, GA
Richmond, GA
Aiken, SC
Edgefield, SC
0640............ Austin-San Marcos, 0.9637 0.9927 0.9855
TX.
Bastrop, TX
Caldwell, TX
Hays, TX
Travis, TX
Williamson, TX
0680............ Bakersfield, CA... 0.9877 0.9975 0.9951
Kern, CA
0720............ Baltimore, MD..... 0.9929 0.9986 0.9972
Anne Arundel, MD
Baltimore, MD
Baltimore City,
MD
Carroll, MD
Harford, MD
Howard, MD
Queen Anne's, MD
0733............ Bangor, ME........ 0.9664 0.9933 0.9866
Penobscot, ME
0743............ Barnstable- 1.3202 1.0640 1.1281
Yarmouth, MA.
Barnstable, MA
0760............ Baton Rouge, LA... 0.8294 0.9659 0.9318
Ascension, LA
East Baton Rouge,
LA
Livingston, LA
West Baton Rouge,
LA
0840............ Beaumont-Port 0.8324 0.9665 0.9330
Arthur, TX.
Hardin, TX
Jefferson, TX
Orange, TX
0860............ Bellingham, WA.... 1.2282 1.0456 1.0913
Whatcom, WA
0870............ Benton Harbor, MI. 0.8965 0.9793 0.9586
Berrien, MI
0875............ Bergen-Passaic, NJ 1.2150 1.0430 1.0860
Bergen, NJ
Passaic, NJ
0880............ Billings, MT...... 0.9022 0.9804 0.9609
Yellowstone, MT
0920............ Biloxi-Gulfport- 0.8757 0.9751 0.9503
Pascagoula, MS.
Hancock, MS
Harrison, MS
Jackson, MS
0960............ Binghamton, NY.... 0.8341 0.9668 0.9336
Broome, NY
Tioga, NY
1000............ Birmingham, AL.... 0.9222 0.9844 0.9689
Blount, AL
Jefferson, AL
St. Clair, AL
Shelby, AL
1010............ Bismarck, ND...... 0.7972 0.9594 0.9189
[[Page 34166]]
Burleigh, ND
Morton, ND
1020............ Bloomington, IN... 0.8907 0.9781 0.9563
Monroe, IN
1040............ Bloomington- 0.9109 0.9822 0.9644
Normal, IL.
McLean, IL
1080............ Boise City, ID.... 0.9310 0.9862 0.9724
Ada, ID
Canyon, ID
1123............ Boston-Worcester- 1.1229 1.0246 1.0492
Lawrence-Lowell-
Brockton, MA-NH
(NH Hospitals).
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, 0.9689 0.9938 0.9876
CO.
Boulder, CO
1145............ Brazoria, TX...... 0.8535 0.9707 0.9414
Brazoria, TX
1150............ Bremerton, WA..... 1.0944 1.0189 1.0378
Kitsap, WA
1240............ Brownsville- 0.8880 0.9776 0.9552
Harlingen-San
Benito, TX.
Cameron, TX
1260............ Bryan-College 0.8821 0.9764 0.9528
Station, TX.
Brazos, TX
1280............ Buffalo-Niagara 0.9365 0.9873 0.9746
Falls, NY.
Erie, NY
Niagara, NY
1303............ Burlington, VT.... 1.0052 1.0010 1.0021
Chittenden, VT
Franklin, VT
Grand Isle, VT
1310............ Caguas, PR........ 0.4371 0.8874 0.7748
Caguas, PR
Cayey, PR
Cidra, PR
Gurabo, PR
San Lorenzo, PR
1320............ Canton-Massillon, 0.8932 0.9786 0.9573
OH.
Carroll, OH
Stark, OH
1350............ Casper, WY........ 0.9690 0.9938 0.9876
Natrona, WY
1360............ Cedar Rapids, IA.. 0.9056 0.9811 0.9622
Linn, IA
1400............ Champaign-Urbana, 1.0635 1.0127 1.0254
IL.
Champaign, IL
1440............ Charleston-North 0.9235 0.9847 0.9694
Charleston, SC.
Berkeley, SC
Charleston, SC
Dorchester, SC
1480............ Charleston, WV.... 0.8898 0.9780 0.9559
Kanawha, WV
Putnam, WV
1520............ Charlotte-Gastonia- 0.9875 0.9975 0.9950
Rock Hill, NC-SC.
Cabarrus, NC
Gaston, NC
Lincoln, NC
Mecklenburg, NC
Rowan, NC
Stanly, NC
Union, NC
York, SC
1540............ Charlottesville, 1.0438 1.0088 1.0175
VA.
[[Page 34167]]
Albemarle, VA
Charlottesville
City, VA
Fluvanna, VA
Greene, VA
1560............ Chattanooga, TN-GA 0.8976 0.9795 0.9590
Catoosa, GA
Dade, GA
Walker, GA
Hamilton, TN
Marion, TN
1580............ Cheyenne, WY...... 0.8628 0.9726 0.9451
Laramie, WY
1600............ Chicago, IL....... 1.1044 1.0209 1.0418
Cook, IL
DeKalb, IL
DuPage, IL
Grundy, IL
Kane, IL
Kendall, IL
Lake, IL
McHenry, IL
Will, IL
1620............ Chico-Paradise, CA 0.9745 0.9949 0.9898
Butte, CA
1640............ Cincinnati, OH-KY- 0.9381 0.9876 0.9752
IN.
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- 0.8406 0.9681 0.9362
Hopkinsville, TN-
KY.
Christian, KY
Montgomery, TN
1680............ Cleveland-Lorain- 0.9670 0.9934 0.9868
Elyria, OH.
Ashtabula, OH
Cuyahoga, OH
Geauga, OH
Lake, OH
Lorain, OH
Medina, OH
1720............ Colorado Springs, 0.9916 0.9983 0.9966
CO.
El Paso, CO
1740............ Columbia, MO...... 0.8496 0.9699 0.9398
Boone, MO
1760............ Columbia, SC...... 0.9307 0.9861 0.9723
Lexington, SC
Richland, SC
1800............ Columbus, GA- 0.8374 0.9675 0.9350
ALRussell, AL.
Chattahoochee, GA
Harris, GA
Muscogee, GA
1840............ Columbus, OH...... 0.9751 0.9950 0.9900
Delaware, OH
Fairfield, OH
Franklin, OH
Licking, OH
Madison, OH
Pickaway, OH
1880............ Corpus Christi, TX 0.8729 0.9746 0.9492
Nueces, TX
San Patricio, TX
1890............ Corvallis, OR..... 1.1453 1.0291 1.0581
Benton, OR
[[Page 34168]]
1900............ Cumberland, MD-WV 0.7847 0.9569 0.9139
(WV Hospital).
Allegany, MD
Mineral, WV
1920............ Dallas, TX........ 0.9998 1.0000 0.9999
Collin, TX
Dallas, TX
Denton, TX
Ellis, TX
Henderson, TX
Hunt, TX
Kaufman, TX
Rockwall, TX
1950............ Danville, VA...... 0.8859 0.9772 0.9544
Danville City, VA
Pittsylvania, VA
1960............ Davenport-Moline- 0.8835 0.9767 0.9534
Rock Island, IA-
IL.
Scott, IA
Henry, IL
Rock Island, IL
2000............ Dayton- 0.9282 0.9856 0.9713
Springfield, OH.
Clark, OH
Greene, OH
Miami, OH
Montgomery, OH
2020............ Daytona Beach, FL. 0.9071 0.9814 0.9628
Flagler, FL
Volusia, FL
2030............ Decatur, AL....... 0.8973 0.9795 0.9589
Lawrence, AL
Morgan, AL
2040............ Decatur, IL....... 0.8055 0.9611 0.9222
Macon, IL
2080............ Denver, CO........ 1.0601 1.0120 1.0240
Adams, CO
Arapahoe, CO
Denver, CO
Douglas, CO
Jefferson, CO
2120............ Des Moines, IA.... 0.8791 0.9758 0.9516
Dallas, IA
Polk, IA
Warren, IA
2160............ Detroit, MI....... 1.0448 1.0090 1.0179
Lapeer, MI
Macomb, MI
Monroe, MI
Oakland, MI
St. Clair, MI
Wayne, MI
2180............ Dothan, AL........ 0.8137 0.9627 0.9255
Dale, AL
Houston, AL
2190............ Dover, DE......... 0.9356 0.9871 0.9742
Kent, DE
2200............ Dubuque, IA....... 0.8795 0.9759 0.9518
Dubuque, IA
2240............ Duluth-Superior, 1.0368 1.0074 1.0147
MN-WI.
St. Louis, MN
Douglas, WI
2281............ Dutchess County, 1.0684 1.0137 1.0274
NY.
Dutchess, NY
2290............ Eau Claire, WI.... 0.8952 0.9790 0.9581
Chippewa, WI
Eau Claire, WI
2320............ El Paso, TX....... 0.9265 0.9853 0.9706
El Paso, TX
2330............ Elkhart-Goshen, IN 0.9722 0.9944 0.9889
Elkhart, IN
2335............ Elmira, NY........ 0.8416 0.9683 0.9366
Chemung, NY
[[Page 34169]]
2340............ Enid, OK.......... 0.8376 0.9675 0.9350
Garfield, OK
2360............ Erie, PA.......... 0.8925 0.9785 0.9570
Erie, PA
2400............ Eugene- 1.0944 1.0189 1.0378
Springfield, OR.
Lane, OR
2440............ Evansville- 0.8177 0.9635 0.9271
Henderson, IN-KY
(IN Hospitals).
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY
2520............ Fargo-Moorhead, ND- 0.9684 0.9937 0.9874
MN.
Clay, MN
Cass, ND
2560............ Fayetteville, NC.. 0.8889 0.9778 0.9556
Cumberland, NC
2580............ Fayetteville- 0.8100 0.9620 0.9240
Springdale-
Rogers, AR.
Benton, AR
Washington, AR
2620............ Flagstaff, AZ-UT.. 1.0682 1.0136 1.0273
Coconino, AZ
Kane, UT
2640............ Flint, MI......... 1.1135 1.0227 1.0454
Genesee, MI
2650............ Florence, AL...... 0.7792 0.9558 0.9117
Colbert, AL
Lauderdale, AL
2655............ Florence, SC...... 0.8780 0.9756 0.9512
Florence, SC
2670............ Fort Collins- 1.0066 1.0013 1.0026
Loveland, CO.
Larimer, CO
2680............ Ft. Lauderdale, FL 1.0297 1.0059 1.0119
Broward, FL
2700............ Fort Myers-Cape 0.9680 0.9936 0.9872
Coral, FL.
Lee, FL
2710............ Fort Pierce-Port 0.9823 0.9965 0.9929
St. Lucie, FL.
Martin, FL
St. Lucie, FL
2720............ Fort Smith, AR-OK. 0.7895 0.9579 0.9158
Crawford, AR
Sebastian, AR
Sequoyah, OK
2750............ Fort Walton Beach, 0.9693 0.9939 0.9877
FL.
Okaloosa, FL
2760............ Fort Wayne, IN.... 0.9457 0.9891 0.9783
Adams, IN
Allen, IN
De Kalb, IN
Huntington, IN
Wells, IN
Whitley, IN
2800............ Forth Worth- 0.9446 0.9889 0.9778
Arlington, TX.
Hood, TX
Johnson, TX
Parker, TX
Tarrant, TX
2840............ Fresno, CA........ 1.0169 1.0034 1.0068
Fresno, CA
Madera, CA
2880............ Gadsden, AL....... 0.8505 0.9701 0.9402
Etowah, AL
2900............ Gainesville, FL... 0.9871 0.9974 0.9948
Alachua, FL
2920............ Galveston-Texas 0.9465 0.9893 0.9786
City, TX.
Galveston, TX
2960............ Gary, IN.......... 0.9584 0.9917 0.9834
Lake, IN
Porter, IN
2975............ Glens Falls, NY... 0.8281 0.9656 0.9312
Warren, NY
[[Page 34170]]
Washington, NY
2980............ Goldsboro, NC..... 0.8892 0.9778 0.9557
Wayne, NC
2985............ Grand Forks, ND-MN 0.8897 0.9779 0.9559
Polk, MN
Grand Forks, ND
2995............ Grand Junction, CO 0.9456 0.9891 0.9782
Mesa, CO
3000............ Grand Rapids- 0.9525 0.9905 0.9810
Muskegon-Holland,
MI.
Allegan, MI
Kent, MI
Muskegon, MI
Ottawa, MI
3040............ Great Falls, MT... 0.8950 0.9790 0.9580
Cascade, MT
3060............ Greeley, CO....... 0.9237 0.9847 0.9695
Weld, CO
3080............ Green Bay, WI..... 0.9502 0.9900 0.9801
Brown, WI
3120............ Greensboro-Winston- 0.9282 0.9856 0.9713
Salem-High Point,
NC.
Alamance, NC
Davidson, NC
Davie, NC
Forsyth,
NCGuilford, NC
Randolph, NC
Stokes, NC
Yadkin, NC
3150............ Greenville, NC.... 0.9100 0.9820 0.9640
Pitt, NC
3160............ Greenville- 0.9122 0.9824 0.9649
Spartanburg-
Anderson, SC.
Anderson, SC
Cherokee, SC
Greenville, SC
Pickens, SC
Spartanburg, SC
3180............ Hagerstown, MD.... 0.9268 0.9854 0.9707
Washington, MD
3200............ Hamilton- 0.9418 0.9884 0.9767
Middletown, OH.
Butler, OH
3240............ Harrisburg-Lebanon- 0.9223 0.9845 0.9689
Carlisle, PA.
Cumberland, PA
Dauphin, PA
Lebanon, PA
Perry, PA
3283............ Hartford, CT...... 1.1549 1.0310 1.0620
Hartford, CT
Litchfield, CT
Middlesex, CT
Tolland, CT
3285............ Hattiesburg, MS... 0.7659 0.9532 0.9064
Forrest, MS
Lamar, MS
3290............ Hickory-Morganton- 0.9028 0.9806 0.9611
Lenoir, NC.
Alexander, NC
Burke, NC
Caldwell, NC
Catawba, NC
3320............ Honolulu, HI...... 1.1457 1.0291 1.0583
Honolulu, HI
3350............ Houma, LA......... 0.8317 0.9663 0.9327
Lafourche, LA
Terrebonne, LA
3360............ Houston, TX....... 0.9892 0.9978 0.9957
Chambers, TX
Fort Bend, TX
Harris, TX
Liberty, TX
Montgomery, TX
Waller, TX
3400............ Huntington- 0.9636 0.9927 0.9854
Ashland, WV-KY-OH.
[[Page 34171]]
Boyd, KY
Carter, KY
Greenup, KY
Lawrence, OH
Cabell, WV
Wayne, WV
3440............ Huntsville, AL.... 0.8903 0.9781 0.9561
Limestone, AL
Madison, AL
3480............ Indianapolis, IN.. 0.9717 0.9943 0.9887
Boone, IN
Hamilton, IN
Hancock, IN
Hendricks, IN
Johnson, IN
Madison, IN
Marion, IN
Morgan, IN
Shelby, IN
3500............ Iowa City, IA..... 0.9587 0.9917 0.9835
Johnson, IA
3520............ Jackson, MI....... 0.9532 0.9906 0.9813
Jackson, MI
3560............ Jackson, MS....... 0.8607 0.9721 0.9443
Hinds, MS
Madison, MS
Rankin, MS
3580............ Jackson, TN....... 0.9275 0.9855 0.9710
Madison, TN
Chester, TN
3600............ Jacksonville, FL.. 0.9381 0.9876 0.9752
Clay, FL
Duval, FL
Nassau, FL
St. Johns, FL
3605............ Jacksonville, NC.. 0.8239 0.9648 0.9296
Onslow, NC
3610............ Jamestown, NY..... 0.7976 0.9595 0.9190
Chautauqua, NY
3620............ Janesville-Beloit, 0.9849 0.9970 0.9940
WI.
Rock, WI
3640............ Jersey City, NJ... 1.1190 1.0238 1.0476
Hudson, NJ
3660............ Johnson City- 0.8268 0.9654 0.9307
Kingsport-
Bristol, TN-VA.
Carter, TN
Hawkins, TN
Sullivan, TN
Unicoi, TN
Washington, TN
Bristol City, VA
Scott, VA
Washington, VA
3680............ Johnstown, PA..... 0.8329 0.9666 0.9332
Cambria, PA
Somerset, PA
3700............ Jonesboro, AR..... 0.7749 0.9550 0.9100
Craighead, AR
3710............ Joplin, MO........ 0.8613 0.9723 0.9445
Jasper, MO
Newton, MO
3720............ Kalamazoo- 1.0595 1.0119 1.0238
Battlecreek, MI.
Calhoun, MI
Kalamazoo, MI
Van Buren, MI
3740............ Kankakee, IL...... 1.0790 1.0158 1.0316
Kankakee, IL
3760............ Kansas City, KS-MO 0.9736 0.9947 0.9894
Johnson, KS
Leavenworth, KS
Miami, KS
[[Page 34172]]
Wyandotte, KS
Cass, MO
Clay, MO
Clinton, MO
Jackson, MO
Lafayette, MO
Platte, MO
Ray, MO
3800............ Kenosha, WI....... 0.9686 0.9937 0.9874
Kenosha, WI
3810............ Killeen-Temple, TX 1.0399 1.0080 1.0160
Bell, TX
Coryell, TX
3840............ Knoxville, TN..... 0.8970 0.9794 0.9588
Anderson, TN
Blount, TN
Knox, TN
Loudon, TN
Sevier, TN
Union, TN
3850............ Kokomo, IN........ 0.8971 0.9794 0.9588
Howard, IN
Tipton, IN
3870............ La Crosse, WI-MN.. 0.9400 0.9880 0.9760
Houston, MN
La Crosse, WI
3880............ Lafayette, LA..... 0.8452 0.9690 0.9381
Acadia, LA
Lafayette, LA
St. Landry, LA
St. Martin, LA
3920............ Lafayette, IN..... 0.9278 0.9856 0.9711
Clinton, IN
Tippecanoe, IN
3960............ Lake Charles, LA.. 0.7965 0.9593 0.9186
Calcasieu, LA
3980............ Lakeland-Winter 0.9357 0.9871 0.9743
Haven, FL.
Polk, FL
4000............ Lancaster, PA..... 0.9078 0.9816 0.9631
Lancaster, PA
4040............ Lansing-East 0.9726 0.9945 0.9890
Lansing, MI.
Clinton, MI
Eaton, MI
Ingham, MI
4080............ Laredo, TX........ 0.8472 0.9694 0.9389
Webb, TX
4100............ Las Cruces, NM.... 0.8745 0.9749 0.9498
Dona Ana, NM
4120............ Las Vegas, NV-AZ.. 1.1521 1.0304 1.0608
Mohave, AZ
Clark, NV
Nye, NV
4150............ Lawrence, KS...... 0.8323 0.9665 0.9329
Douglas, KS
4200............ Lawton, OK........ 0.8315 0.9663 0.9326
Comanche, OK
4243............ Lewiston-Auburn, 0.9179 0.9836 0.9672
ME.
Androscoggin, ME
4280............ Lexington, KY..... 0.8581 0.9716 0.9432
Bourbon, KY
Clark, KY
Fayette, KY
Jessamine, KY
Madison, KY
Scott, KY
Woodford, KY
4320............ Lima, OH.......... 0.9483 0.9897 0.9793
Allen, OH
Auglaize, OH
4360............ Lincoln, NE....... 0.9892 0.9978 0.9957
[[Page 34173]]
Lancaster, NE
4400............ Little Rock-North 0.9097 0.9819 0.9639
Little Rock, AR.
Faulkner, AR
Lonoke, AR
Pulaski, AR
Saline, AR
4420............ Longview-Marshall, 0.8629 0.9726 0.9452
TX.
Gregg, TX
Harrison, TX
Upshur, TX
4480............ Los Angeles-Long 1.2001 1.0400 1.0800
Beach, CA.
Los Angeles, CA
4520............ Louisville, KY-IN. 0.9276 0.9855 0.9710
Clark, IN
Floyd, IN
Harrison, IN
Scott, IN
Bullitt, KY
Jefferson, KY
Oldham, KY
4600............ Lubbock, TX....... 0.9646 0.9929 0.9858
Lubbock, TX
4640............ Lynchburg, VA..... 0.9219 0.9844 0.9688
Amherst, VA
Bedford, VA
Bedford City, VA
Campbell, VA
Lynchburg City,
VA
4680............ Macon, GA......... 0.9204 0.9841 0.9682
Bibb, GA
Houston, GA
Jones, GA
Peach, GA
Twiggs, GA
4720............ Madison, WI....... 1.0467 1.0093 1.0187
Dane, WI
4800............ Mansfield, OH..... 0.8900 0.9780 0.9560
Crawford, OH
Richland, OH
4840............ Mayaguez, PR...... 0.4914 0.8983 0.7966
Anasco, PR
Cabo Rojo, PR
Hormigueros, PR
Mayaguez, PR
Sabana Grande, PR
San German, PR
4880............ McAllen-Edinburg- 0.8428 0.9686 0.9371
Mission, TX.
Hidalgo, TX
4890............ Medford-Ashland, 1.0498 1.0100 1.0199
OR.
Jackson, OR
4900............ Melbourne- 1.0253 1.0051 1.0101
Titusville-Palm
Bay, FL.
Brevard, Fl
4920............ Memphis, TN-AR-MS. 0.8920 0.9784 0.9568
Crittenden, AR
DeSoto, MS
Fayette, TN
Shelby, TN
Tipton, TN
4940............ Merced, CA........ 0.9742 0.9948 0.9897
Merced, CA
5000............ Miami, FL......... 0.9802 0.9960 0.9921
Dade, FL
5015............ Middlesex-Somerset- 1.1213 1.0243 1.0485
Hunterdon, NJ.
Hunterdon, NJ
Middlesex, NJ
Somerset, NJ
5080............ Milwaukee- 0.9893 0.9979 0.9957
Waukesha, WI.
Milwaukee, WI
Ozaukee, WI
Washington, WI
[[Page 34174]]
Waukesha, WI
5120............ Minneapolis-St. 1.0903 1.0181 1.0361
Paul, MN-WI.
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 0.9831 0.9663
Missoula, MT
5160............ Mobile, AL........ 0.8108 0.9622 0.9243
Baldwin, AL
Mobile, AL
5170............ Modesto, CA....... 1.0498 1.0100 1.0199
Stanislaus, CA
5190............ Monmouth-Ocean, NJ 1.0674 1.0135 1.0270
Monmouth, NJ
Ocean, NJ
5200............ Monroe, LA........ 0.8137 0.9627 0.9255
Ouachita, LA
5240............ Montgomery, AL.... 0.7734 0.9547 0.9094
Autauga, AL
Elmore, AL
Montgomery, AL
5280............ Muncie, IN........ 0.9284 0.9857 0.9714
Delaware, IN
5330............ Myrtle Beach, SC.. 0.8976 0.9795 0.9590
Horry, SC
5345............ Naples, FL........ 0.9754 0.9951 0.9902
Collier, FL
5360............ Nashville, TN..... 0.9578 0.9916 0.9831
Cheatham, TN
Davidson, TN
Dickson, TN
Robertson, TN
Rutherford TN
Sumner, TN
Williamson, TN
Wilson, TN
5380............ Nassau-Suffolk, NY 1.3357 1.0671 1.1343
Nassau, NY
Suffolk, NY
5483............ New Haven- 1.2408 1.0482 1.0963
Bridgeport-
Stamford-
Waterbury-.
Danbury, CT
Fairfield, CT
New Haven, CT
5523............ New London- 1.1767 1.0353 1.0707
Norwich, CT.
New London, CT
5560............ New Orleans, LA... 0.9046 0.9809 0.9618
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 1.0883 1.1766
Bronx, NY
Kings, NY
New York, NY
Putnam, NY
Queens, NY
[[Page 34175]]
Richmond, NY
Rockland, NY
Westchester, NY
5640............ Newark, NJ........ 1.1381 1.0276 1.0552
Essex, NJ
Morris, NJ
Sussex, NJ
Union, NJ
Warren, NJ
5660............ Newburgh, NY-PA... 1.1387 1.0277 1.0555
Orange, NY
Pike, PA
5720............ Norfolk-Virginia 0.8574 0.9715 0.9430
Beach-Newport
News, VA-NC.
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 1.1014 1.2029
Alameda, CA
Contra Costa, CA
5790............ Ocala, FL......... 0.9402 0.9880 0.9761
Marion, FL
5800............ Odessa-Midland, TX 0.9397 0.9879 0.9759
Ector, TX
Midland, TX
5880............ Oklahoma City, OK. 0.8900 0.9780 0.9560
Canadian, OK
Cleveland, OK
Logan, OK
McClain, OK
Oklahoma, OK
Pottawatomie, OK
5910............ Olympia, WA....... 1.0960 1.0192 1.0384
Thurston, WA
5920............ Omaha, NE-IA...... 0.9978 0.9996 0.9991
Pottawattamie, IA
Cass, NE
Douglas, NE
Sarpy, NE
Washington, NE
5945............ Orange County, CA. 1.1474 1.0295 1.0590
Orange, CA
5960............ Orlando, FL....... 0.9640 0.9928 0.9856
Lake, FL
Orange, FL
Osceola, FL
Seminole, FL
5990............ Owensboro, KY..... 0.8344 0.9669 0.9338
Daviess, KY
6015............ Panama City, FL... 0.8865 0.9773 0.9546
Bay, FL
6020............ Parkersburg- 0.8127 0.9625 0.9251
Marietta, WV-OH.
Washington, OH
Wood, WV
6080............ Pensacola, FL..... 0.8610 0.9722 0.9444
Escambia, FL
Santa Rosa, FL
6120............ Peoria-Pekin, IL.. 0.8739 0.9748 0.9496
Peoria, IL
[[Page 34176]]
Tazewell, IL
Woodford, IL
6160............ Philadelphia, PA- 1.0713 1.0143 1.0285
NJ.
Burlington, NJ
Camden, NJ
Gloucester, NJ
Salem, NJ
Bucks, PA
Chester, PA
Delaware, PA
Montgomery, PA
Philadelphia, PA
6200............ Phoenix-Mesa, AZ.. 0.9820 0.9964 0.9928
Maricopa, AZ
Pinal, AZ
6240............ Pine Bluff, AR.... 0.7962 0.9592 0.9185
Jefferson, AR
6280............ Pittsburgh, PA.... 0.9365 0.9873 0.9746
Allegheny, PA
Beaver, PA
Butler, PA
Fayette, PA
Washington, PA
Westmoreland, PA
6323............ Pittsfield, MA.... 1.0235 1.0047 1.0094
Berkshire, MA
6340............ Pocatello, ID..... 0.9372 0.9874 0.9749
Bannock, ID
6360............ Ponce, PR......... 0.5169 0.9034 0.8068
Guayanilla, PR
Juana Diaz, PR
Penuelas, PR
Ponce, PR
Villalba, PR
Yauco, PR
6403............ Portland, ME...... 0.9794 0.9959 0.9918
Cumberland, ME
Sagadahoc, ME
York, ME
6440............ Portland- 1.0667 1.0133 1.0267
Vancouver, OR-WA.
Clackamas, OR
Columbia, OR
Multnomah, OR
Washington, OR
Yamhill, OR
Clark, WA
6483............ Providence-Warwick- 1.0854 1.0171 1.0342
Pawtucket, RI.
Bristol, RI
Kent, RI
Newport, RI
Providence, RI
Washington, RI
6520............ Provo-Orem, UT.... 0.9984 0.9997 0.9994
Utah, UT
6560............ Pueblo, CO........ 0.8820 0.9764 0.9528
Pueblo, CO
6580............ Punta Gorda, FL... 0.9218 0.9844 0.9687
Charlotte, FL
6600............ Racine, WI........ 0.9334 0.9867 0.9734
Racine, WI
6640............ Raleigh-Durham- 0.9990 0.9998 0.9996
Chapel Hill, NC.
Chatham, NC
Durham, NC
Franklin, NC
Johnston, NC
Orange, NC
Wake, NC
6660............ Rapid City, SD.... 0.8846 0.9769 0.9538
Pennington, SD
6680............ Reading, PA....... 0.9295 0.9859 0.9718
[[Page 34177]]
Berks, PA
6690............ Redding, CA....... 1.1135 1.0227 1.0454
Shasta, CA
6720............ Reno, NV.......... 1.0648 1.0130 1.0259
Washoe, NV
6740............ Richland-Kennewick- 1.1491 1.0298 1.0596
Pasco, WA.
Benton, WA
Franklin, WA
6760............ Richmond- 0.9477 0.9895 0.9791
Petersburg, VA.
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 1.1365 1.0273 1.0546
Bernardino, CA.
Riverside, CA
San Bernardino,
CA
6800............ Roanoke, VA....... 0.8614 0.9723 0.9446
Botetourt, VA
Roanoke, VA
Roanoke City, VA
Salem City, VA
6820............ Rochester, MN..... 1.2139 1.0428 1.0856
Olmsted, MN
6840............ Rochester, NY..... 0.9194 0.9839 0.9678
Genesee, NY
Livingston, NY
Monroe, NY
Ontario, NY
Orleans, NY
Wayne, NY
6880............ Rockford, IL...... 0.9625 0.9925 0.9850
Boone, IL
Ogle, IL
Winnebago, IL
6895............ Rocky Mount, NC... 0.9228 0.9846 0.9691
Edgecombe, NC
Nash, NC
6920............ Sacramento, CA.... 1.1500 1.0300 1.0600
El Dorado, CA
Placer, CA
Sacramento, CA
6960............ Saginaw-Bay City- 0.9650 0.9930 0.9860
Midland, MI.
Bay, MI
Midland, MI
Saginaw, MI
6980............ St. Cloud, MN..... 0.9700 0.9940 0.9880
Benton, MN
Stearns, MN
7000............ St. Joseph, MO.... 0.9544 0.9909 0.9818
Andrew, MO
Buchanan, MO
7040............ St. Louis, MO-IL.. 0.8855 0.9771 0.9542
Clinton, IL
Jersey, IL
Madison, IL
Monroe, IL
St. Clair, IL
Franklin, MO
Jefferson, MO
Lincoln, MO
St. Charles, MO
[[Page 34178]]
St. Louis, MO
St. Louis City,
MO
Warren, MO
7080............ Salem, OR......... 1.0500 1.0100 1.0200
Marion, OR
Polk, OR
7120............ Salinas, CA....... 1.4623 1.0925 1.1849
Monterey, CA
7160............ Salt Lake City- 0.9945 0.9989 0.9978
Ogden, UT.
Davis, UT
Salt Lake, UT
Weber, UT
7200............ San Angelo, TX.... 0.8374 0.9675 0.9350
Tom Green, TX
7240............ San Antonio, TX... 0.8753 0.9751 0.9501
Bexar, TX
Comal, TX
Guadalupe, TX
Wilson, TX
7320............ San Diego, CA..... 1.1131 1.0226 1.0452
San Diego, CA
7360............ San Francisco, CA. 1.4142 1.0828 1.1657
Marin, CA
San Francisco, CA
San Mateo, CA
7400............ San Jose, CA...... 1.4145 1.0829 1.1658
Santa Clara, CA
7440............ San Juan-Bayamon, 0.4741 0.8948 0.7896
PR.
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- 1.1271 1.0254 1.0508
Atascadero-Paso
Robles, CA.
San Luis Obispo,
CA
7480............ Santa Barbara- 1.0481 1.0096 1.0192
Santa Maria-
Lompoc, CA.
Santa Barbara, CA
7485............ Santa Cruz- 1.3646 1.0729 1.1458
Watsonville, CA.
Santa Cruz, CA
7490............ Santa Fe, NM...... 1.0712 1.0142 1.0285
Los Alamos, NM
Santa Fe, NM
7500............ Santa Rosa, CA.... 1.3046 1.0609 1.1218
Sonoma, CA
7510............ Sarasota- 0.9425 0.9885 0.9770
Bradenton, FL.
[[Page 34179]]
Manatee, FL
Sarasota, FL
7520............ Savannah, GA...... 0.9376 0.9875 0.9750
Bryan, GA
Chatham, GA
Effingham, GA
7560............ Scranton--Wilkes- 0.8599 0.9720 0.9440
Barre--Hazleton,
PA.
Columbia, PA
Lackawanna, PA
Luzerne, PA
Wyoming, PA
7600............ Seattle-Bellevue- 1.1474 1.0295 1.0590
Everett, WA.
Island, WA
King, WA
Snohomish, WA
7610............ Sharon, PA........ 0.7869 0.9574 0.9148
Mercer, PA
7620............ Sheboygan, WI..... 0.8697 0.9739 0.9479
Sheboygan, WI
7640............ Sherman-Denison, 0.9255 0.9851 0.9702
TX.
Grayson, TX
7680............ Shreveport-Bossier 0.8987 0.9797 0.9595
City, LA.
Bossier, LA
Caddo, LA
Webster, LA
7720............ Sioux City, IA-NE. 0.9046 0.9809 0.9618
Woodbury, IA
Dakota, NE
7760............ Sioux Falls, SD... 0.9257 0.9851 0.9703
Lincoln, SD
Minnehaha, SD
7800............ South Bend, IN.... 0.9802 0.9960 0.9921
St. Joseph, IN
7840............ Spokane, WA....... 1.0852 1.0170 1.0341
Spokane, WA
7880............ Springfield, IL... 0.8659 0.9732 0.9464
Menard, IL
Sangamon, IL
7920............ Springfield, MO... 0.8424 0.9685 0.9370
Christian, MO
Greene, MO
Webster, MO
8003............ Springfield, MA... 1.0927 1.0185 1.0371
Hampden, MA
Hampshire, MA
8050............ State College, PA. 0.8941 0.9788 0.9576
Centre, PA
8080............ Steubenville- 0.8804 0.9761 0.9522
Weirton, OH-WV
(WV Hospitals).
Jefferson, OH
Brooke, WV
Hancock, WV
8120............ Stockton-Lodi, CA. 1.0506 1.0101 1.0202
San Joaquin, CA
8140............ Sumter, SC........ 0.8273 0.9655 0.9309
Sumter, SC
8160............ Syracuse, NY...... 0.9714 0.9943 0.9886
Cayuga, NY
Madison, NY
Onondaga, NY
Oswego, NY
8200............ Tacoma, WA........ 1.0940 1.0188 1.0376
Pierce, WA
8240............ Tallahassee, FL... 0.8504 0.9701 0.9402
Gadsden, FL
Leon, FL
8280............ Tampa-St. 0.9065 0.9813 0.9626
Petersburg-
Clearwater, FL.
Hernando, FL
Hillsborough, FL
Pasco, FL
Pinellas, FL
[[Page 34180]]
8320............ Terre Haute, IN... 0.8599 0.9720 0.9440
Clay, IN
Vermillion, IN
Vigo, IN
8360............ Texarkana,AR- 0.8088 0.9618 0.9235
Texarkana, TX.
Miller, AR
Bowie, TX
8400............ Toledo, OH........ 0.9810 0.9962 0.9924
Fulton, OH
Lucas, OH
Wood, OH
8440............ Topeka, KS........ 0.9199 0.9840 0.9680
Shawnee, KS
8480............ Trenton, NJ....... 1.0432 1.0086 1.0173
Mercer, NJ
8520............ Tucson, AZ........ 0.8911 0.9782 0.9564
Pima, AZ
8560............ Tulsa, OK......... 0.8332 0.9666 0.9333
Creek, OK
Osage, OK
Rogers, OK
Tulsa, OK
Wagoner, OK
8600............ Tuscaloosa, AL.... 0.8130 0.9626 0.9252
Tuscaloosa, AL
8640............ Tyler, TX......... 0.9521 0.9904 0.9808
Smith, TX
8680............ Utica-Rome, NY.... 0.8465 0.9693 0.9386
Herkimer, NY
Oneida, NY
8720............ Vallejo-Fairfield- 1.3354 1.0671 1.1342
Napa, CA.
Napa, CA
Solano, CA
8735............ Ventura, CA....... 1.1096 1.0219 1.0438
Ventura, CA
8750............ Victoria, TX...... 0.8756 0.9751 0.9502
Victoria, TX
8760............ Vineland-Millville- 1.0031 1.0006 1.0012
Bridgeton, NJ.
Cumberland, NJ
8780............ Visalia-Tulare- 0.9418 0.9884 0.9767
Porterville, CA.
Tulare, CA
Tulare, CA
8800............ Waco, TX.......... 0.8073 0.9615 0.9229
McLennan, TX
8840............ Washington, DC-MD- 1.0851 1.0170 1.0340
VA-WV.
District of
Columbia, DC
Calvert, MD
Charles, MD
Frederick, MD
Montgomery, MD
Prince Georges,
MD
Alexandria City,
VA
Arlington, VA
Clarke, VA
Culpeper, 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
Berkeley, WV
Jefferson, WV
[[Page 34181]]
8920............ Waterloo-Cedar 0.8069 0.9614 0.9228
Falls, IA.
Black Hawk, IA
8940............ Wausau, WI........ 0.9782 0.9956 0.9913
Marathon, WI
8960............ West Palm Beach- 0.9939 0.9988 0.9976
Boca Raton, FL.
Palm Beach, FL
9000............ Wheeling, WV-OH... 0.7670 0.9534 0.9068
Belmont, OH
Marshall, WV
Ohio, WV
9040............ Wichita, KS....... 0.9520 0.9904 0.9808
Butler, KS
Harvey, KS
Sedgwick, KS
9080............ Wichita Falls, TX. 0.8498 0.9700 0.9399
Archer, TX
Wichita, TX
9140............ Williamsport, PA.. 0.8544 0.9709 0.9418
Lycoming, PA
9160............ Wilmington-Newark, 1.1173 1.0235 1.0469
DE-MD.
New Castle, DE
Cecil, MD
9200............ Wilmington, NC.... 0.9640 0.9928 0.9856
New Hanover, NC
Brunswick, NC
9260............ Yakima, WA........ 1.0569 1.0114 1.0228
Yakima, WA
9270............ Yolo, CA.......... 0.9434 0.9887 0.9774
Yolo, CA
9280............ York, PA.......... 0.9026 0.9805 0.9610
York, PA
9320............ Youngstown-Warren, 0.9358 0.9872 0.9743
OH.
Columbiana, OH
Mahoning, OH
Trumbull, OH
9340............ Yuba City, CA..... 1.0276 1.0055 1.0110
Sutter, CA
Yuba, CA
9360............ Yuma, AZ.......... 0.8589 0.9718 0.9436
Yuma, AZ
------------------------------------------------------------------------
\1\ Prereclassification wage index from Federal FY 2003 based on fiscal
year 1999 audited acute care hospital inpatient wage data that
excludes wages for services provided by teaching physicians, interns
and residents, and nonphysician anesthetists under Part B of the
Medicare program.
\2\ One-fifth of the full wage index value, applicable for LTCH's cost
reporting period beginning on or after October 1, 2002 through
September 30, 2003 (Federal FY 2203). For example, for a LTCH's cost
reporting period begins during Federal in FY 2003 and located in
Chicago, Illinois (MSA 1600), the 1/5th of the wage index value is
computed as (1.1044 + 4)/5 = 1.0209. For further details on the 5-year
phase-in of the wage index, see section VI.C.1. of this final rule.
\3\ Two-fifths of the full wage index value, applicable for LTCH's cost
reporting period beginning on or after October 1, 2003 through
September 30, 2003 (Federal FY 2004). For example, for a LTCH's cost
reporting period begins during Federal in FY 2004 and located in
Chicago, Illinois (MSA 1600), the 2/5th of the wage index value is
computed as ((2*1.1044) + 3))/5 = 1.0418. For further details on the 5-
year phase-in of the wage index, see section VI.C.1. of this final
rule.
Table 2.--Long-Term Care Hospital Wage Index for Rural Areas for
Discharges Occurring From July 1, 2003 through June 30, 2004
------------------------------------------------------------------------
\1/5\th \2/5\th
Nonurban Area Full Wage Wage Index Wage Index
Index \1\ \2\ \3\
------------------------------------------------------------------------
Alabama............................. 7660 9532 9064
Alaska.............................. 2293 0459 0917
Arizona............................. 8493 9699 9397
Arkansas............................ 7666 9533 9066
California.......................... 9899 9980 9960
Colorado............................ 9015 9803 9606
Connecticut......................... 2394 0479 0958
Delaware............................ 9128 9826 9651
Florida............................. 8827 9765 9531
Georgia............................. 8230 9646 9292
Hawaii.............................. 0255 0051 0102
Idaho............................... 8747 9749 9499
Illinois............................ 8204 9641 9282
[[Page 34182]]
Indiana............................. 8755 9751 9502
Iowa................................ 8315 9663 9326
Kansas.............................. 7900 9580 9160
Kentucky............................ 8079 9616 9232
Louisiana........................... 7580 9516 9032
Maine............................... 8874 9775 9550
Maryland............................ 8946 9789 9578
Massachusetts....................... 1288 0258 0515
Michigan............................ 9009 9802 9604
Minnesota........................... 9151 9830 9660
Mississippi......................... 7680 9536 9072
Missouri............................ 7881 9576 9152
Montana............................. 8481 9696 9392
Nebraska............................ 8204 9641 9282
Nevada.............................. 9577 9915 9831
New Hampshire....................... 9839 9968 9936
New Jersey \4\...................... .......... .......... ..........
New Mexico.......................... 8872 9774 9549
New York............................ 8542 9708 9417
North Carolina...................... 8669 9734 9468
North Dakota........................ 7788 9558 9115
Ohio................................ 8613 9723 9445
Oklahoma............................ 7590 9518 9036
Oregon.............................. 0259 0052 0104
Pennsylvania........................ 8462 9692 9385
Puerto Rico......................... 4356 8871 7742
Rhode Island \4\.................... .......... .......... ..........
South Carolina...................... 8607 9721 9443
South Dakota........................ 7815 9563 9126
Tennessee........................... 7877 9575 9151
Texas............................... 7821 9564 9128
Utah................................ 9312 9862 9725
Vermont............................. 9345 9869 9738
Virginia............................ 8504 9701 9402
Washington.......................... 0179 0036 0072
West Virginia....................... 7975 9595 9190
Wisconsin........................... 9162 9832 9665
Wyoming............................. 9007 9801 9603
------------------------------------------------------------------------
\1\ Pre-reclassification wage index from Federal FY 2003 based on fiscal
year 1999 audited acute care hospital inpatient wage data that exclude
wages for services provided by teaching physicians, residents, and
nonphysician anesthetists under Part B of the Medicare program.
\2\ One-fifth of the full wage index value, applicable for LTCH's cost
reporting period beginning on or after October 1, 2002 through
September 30, 2003 (Federal FY 2203). For example, for a LTCH's cost
reporting period begins during Federal in FY 2003 and located in rural
Illinois, the 1/5th of the wage index value is computed as (0.8204 +
4)/5 = 0.9641. For further details on the 5-year phase-in of the wage
index, see section VI.C.1. of this final rule.
\3\ Two-fifths of the full wage index value, applicable for LTCH's cost
reporting period beginning on or after October 1, 2003 through
September 30, 2003 (Federal FY 2004). For example, for a LTCH's cost
reporting period begins during Federal in FY 2004 and located in rural
Illinois, the 2/5th of the wage index value is computed as ((2*0.8204)
+ 3))/5 = 0.9282. For further details on the 5-year phase-in of the
wage index, see section VI.C.1. of this final rule.
\4\ All counties within the State are classified as urban.
Table 3.--LTC-DRG Relative Weights, Geometric Mean Length of Stay, and
Short-Stays of Five-Sixths Average Length of Stay for the Period of July
1, 2003 Through September 30, 2003
------------------------------------------------------------------------
Short-
Geo-metric Stays of
Relative Mean \5/6\th
LTC-DRG Description Weight Length of Average
Stay Length of
Stay
------------------------------------------------------------------------
1........... CRANIOTOMY AGE 17 W CC \5\.
2........... CRANIOTOMY AGE 17 W/O CC \5\.
3........... CRANIOTOMY AGE 0-17 *. 1.8783 46.3 38.5
4........... SPINAL PROCEDURES \4\. 1.2493 31.3 26.0
5........... EXTRACRANIAL VASCULAR 1.2493 31.3 26.0
PROCEDURES \4\.
6........... CARPAL TUNNEL RELEASE 0.4055 16.8 14.0
*.
7........... PERIPH & CRANIAL NERVE 1.7829 43.8 36.5
& OTHER NERV SYST
PROC W CC.
8........... PERIPH & CRANIAL NERVE 1.2493 31.3 26.0
& OTHER NERV SYST
PROC W/O CC \4\.
9........... SPINAL DISORDERS & 1.4118 34.6 28.8
INJURIES.
10.......... NERVOUS SYSTEM 0.8537 24.5 20.4
NEOPLASMS W CC \7\.
11.......... NERVOUS SYSTEM 0.8537 24.5 20.4
NEOPLASMS W/O CC \7\.
[[Page 34183]]
12.......... DEGENERATIVE NERVOUS 0.7773 27.1 22.5
SYSTEM DISORDERS.
13.......... MULTIPLE SCLEROSIS & 0.7207 25.6 21.3
CEREBELLAR ATAXIA.
14.......... INTERCRANIAL 0.8816 26.6 22.1
HEMORRHAGE & STROKE W
INFARCT.
15.......... NONSPECIFIC CVA & 0.9053 29.4 24.5
PRECEREBRAL
OCCULUSION W/O
INFARCT.
16.......... NONSPECIFIC 0.8864 27.0 22.5
CEREBROVASCULAR
DISORDERS W CC.
17.......... NONSPECIFIC 0.6655 21.9 18.2
CEREBROVASCULAR
DISORDERS W/O CC \2\.
18.......... CRANIAL & PERIPHERAL 0.7770 24.9 20.7
NERVE DISORDERS W CC.
19.......... CRANIAL & PERIPHERAL 0.5486 22.0 18.3
NERVE DISORDERS W/O
CC.
20.......... NERVOUS SYSTEM 1.2331 29.3 24.4
INFECTION EXCEPT
VIRAL MENINGITIS.
21.......... VIRAL MENINGITIS \1\.. 0.4055 16.8 14.0
22.......... HYPERTENSIVE 0.6655 21.9 18.2
ENCEPHALOPATHY \2\.
23.......... NONTRAUMATIC STUPOR & 0.9623 27.2 22.6
COMA.
24.......... SEIZURE & HEADACHE AGE 0.8831 24.8 20.6
17 W CC.
25.......... SEIZURE & HEADACHE AGE 0.4830 20.4 17.0
17 W/O CC.
26.......... SEIZURE & HEADACHE AGE 0.4055 16.8 14.0
0-17 *.
27.......... TRAUMATIC STUPOR & 1.1126 31.6 26.3
COMA, COMA 1 HR.
28.......... TRAUMATIC STUPOR & 1.1507 29.0 24.1
COMA, COMA <1 HR AGE
17 W CC.
29.......... TRAUMATIC STUPOR & 0.9268 27.2 22.6
COMA, COMA 1 HR AGE 17 W/O CC.
30.......... TRAUMATIC STUPOR & 0.8284 23.3 19.4
COMA, COMA <1 HR AGE
0-17 *.
31.......... CONCUSSION AGE 17 W CC \2\.
32.......... CONCUSSION AGE 17 W/O CC *.
33.......... CONCUSSION AGE 0-17 *. 0.4055 16.8 14.0
34.......... OTHER DISORDERS OF 0.8385 25.1 20.9
NERVOUS SYSTEM W CC.
35.......... OTHER DISORDERS OF 0.6561 25.3 21.0
NERVOUS SYSTEM W/O CC.
36.......... RETINAL PROCEDURES *.. 0.4055 16.8 14.0
37.......... ORBITAL PROCEDURES *.. 0.4055 16.8 14.0
38.......... PRIMARY IRIS 0.4055 16.8 14.0
PROCEDURES *.
39.......... LENS PROCEDURES WITH 0.4055 16.8 14.0
OR WITHOUT VITRECTOMY
*.
40.......... EXTRAOCULAR PROCEDURES 0.4055 16.8 14.0
EXCEPT ORBIT AGE 17 *.
41.......... EXTRAOCULAR PROCEDURES 0.4055 16.8 14.0
EXCEPT ORBIT AGE 0-17
*.
42.......... INTRAOCULAR PROCEDURES 0.4055 16.8 14.0
EXCEPT RETINA, IRIS &
LENS *.
43.......... HYPHEMA \3\........... 0.8284 23.3 19.4
44.......... ACUTE MAJOR EYE 0.6655 21.9 18.2
INFECTIONS \2\.
45.......... NEUROLOGICAL EYE 0.4055 16.8 14.0
DISORDERS \1\.
46.......... OTHER DISORDERS OF THE 0.6655 21.9 18.2
EYE AGE 17
W CC \2\.
47.......... OTHER DISORDERS OF THE 0.4055 16.8 14.0
EYE AGE 17
W/O CC \1\.
48.......... OTHER DISORDERS OF THE 0.4055 16.8 14.0
EYE AGE 0-17 *.
49.......... MAJOR HEAD & NECK 1.8783 46.3 38.5
PROCEDURES *.
50.......... SIALOADENECTOMY *..... 0.6655 21.9 18.2
51.......... SALIVARY GLAND 0.6655 21.9 18.2
PROCEDURES EXCEPT
SIALOADENECTOMY *.
52.......... CLEFT LIP & PALATE 0.6655 21.9 18.2
REPAIR *.
53.......... SINUS & MASTOID 0.6655 21.9 18.2
PROCEDURES AGE 17 *.
54.......... SINUS & MASTOID 0.6655 21.9 18.2
PROCEDURES AGE 0-17 *.
55.......... MISCELLANEOUS EAR, 0.6655 21.9 18.2
NOSE, MOUTH & THROAT
PROCEDURES \2\.
56.......... RHINOPLASTY *......... 0.6655 21.9 18.2
57.......... T&A PROC, EXCEPT 0.6655 21.9 18.2
TONSILLECTOMY &/OR
ADENOIDECTOMY ONLY,
AGE 17 *.
58.......... T&A PROC, EXCEPT 0.6655 21.9 18.2
TONSILLECTOMY &/OR
ADENOIDECTOMY ONLY,
AGE 0-17 *.
59.......... TONSILLECTOMY &/OR 0.6655 21.9 18.2
ADENOIDECTOMY ONLY,
AGE 17 *.
60.......... TONSILLECTOMY &/OR 0.6655 21.9 18.2
ADENOIDECTOMY ONLY,
AGE 0-17 *.
61.......... MYRINGOTOMY W TUBE 1.8783 46.3 38.5
INSERTION AGE 17 \5\.
62.......... MYRINGOTOMY W TUBE 0.6655 21.9 18.2
INSERTION AGE 0-17 *.
63.......... OTHER EAR, NOSE, MOUTH 1.8783 46.3 38.5
& THROAT O.R.
PROCEDURES \5\.
64.......... EAR, NOSE, MOUTH & 1.0447 25.5 21.2
THROAT MALIGNANCY.
65.......... DYSEQUILIBRIUM........ 0.5056 19.8 16.5
66.......... EPISTAXIS \1\......... 0.4055 16.8 14.0
67.......... EPIGLOTTITIS \1\...... 0.4055 16.8 14.0
68.......... OTITIS MEDIA & URI AGE 0.8284 23.3 19.4
>17 W CC \3\.
69.......... OTITIS MEDIA & URI AGE 0.8284 23.3 19.4
>17 W/O CC \3\.
70.......... OTITIS MEDIA & URI AGE 0.4055 16.8 14.0
0-17 *.
71.......... LARYNGOTRACHEITIS *... 0.4055 16.8 14.0
72.......... NASAL TRAUMA & 0.4055 16.8 14.0
DEFORMITY \1\.
73.......... OTHER EAR, NOSE, MOUTH 0.8097 23.7 19.7
& THROAT DIAGNOSES
AGE 17.
74.......... OTHER EAR, NOSE, MOUTH 0.4055 16.8 14.0
& THROAT DIAGNOSES
AGE 0-17 *.
75.......... MAJOR CHEST PROCEDURES 1.8783 46.3 38.5
\5\.
76.......... OTHER RESP SYSTEM O.R. 2.7674 50.6 42.1
PROCEDURES W CC.
77.......... OTHER RESP SYSTEM O.R. 1.8783 46.3 38.5
PROCEDURES W/O CC \5\.
78.......... PULMONARY EMBOLISM.... 0.6348 20.5 17.0
[[Page 34184]]
79.......... RESPIRATORY INFECTIONS 0.8916 22.2 18.5
& INFLAMMATIONS AGE
17 W CC.
80.......... RESPIRATORY INFECTIONS 0.7947 22.8 19.0
& INFLAMMATIONS AGE
17 W/O CC.
81.......... RESPIRATORY INFECTIONS 0.4055 16.8 14.0
& INFLAMMATIONS AGE 0-
17 *.
82.......... RESPIRATORY NEOPLASMS. 0.7976 20.9 17.4
83.......... MAJOR CHEST TRAUMA W 0.7384 24.8 20.6
CC.
84.......... MAJOR CHEST TRAUMA W/O 0.4055 16.8 14.0
CC \1\.
85.......... PLEURAL EFFUSION W CC. 0.8207 23.6 19.6
86.......... PLEURAL EFFUSION W/O 0.6194 21.1 17.5
CC.
87.......... PULMONARY EDEMA & 1.6597 32.3 26.9
RESPIRATORY FAILURE.
88.......... CHRONIC OBSTRUCTIVE 0.7532 20.9 17.4
PULMONARY DISEASE.
89.......... SIMPLE PNEUMONIA & 0.8533 23.6 19.6
PLEURISY AGE 17 W CC.
90.......... SIMPLE PNEUMONIA & 0.7921 23.0 19.1
PLEURISY AGE 17 W/O CC.
91.......... SIMPLE PNEUMONIA & 0.8284 23.3 19.4
PLEURISY AGE 0-17 *.
92.......... INTERSTITIAL LUNG 0.7251 19.1 15.9
DISEASE W CC.
93.......... INTERSTITIAL LUNG 0.5573 18.5 15.4
DISEASE W/O CC.
94.......... PNEUMOTHORAX W CC..... 0.7885 22.7 18.9
95.......... PNEUMOTHORAX W/O CC 0.4055 16.8 14.0
\1\.
96.......... BRONCHITIS & ASTHMA 0.8173 24.2 20.1
AGE 17 W
CC.
97.......... BRONCHITIS & ASTHMA 0.5940 17.9 14.9
AGE 17 W/O
CC.
98.......... BRONCHITIS & ASTHMA 0.4055 16.8 14.0
AGE 0-17 *.
99.......... RESPIRATORY SIGNS & 1.1164 27.3 22.7
SYMPTOMS W CC.
100......... RESPIRATORY SIGNS & 1.0015 25.4 21.1
SYMPTOMS W/O CC.
101......... OTHER RESPIRATORY 0.9763 23.4 19.5
SYSTEM DIAGNOSES W CC.
102......... OTHER RESPIRATORY 0.9313 24.5 20.4
SYSTEM DIAGNOSES W/O
CC.
103......... HEART TRANSPLANT \6\.. 0.0000 0.0 0.0
104......... CARDIAC VALVE & OTHER 1.8783 46.3 38.5
MAJOR CARDIOTHORACIC
PROC W CARDIAC CATH *.
105......... CARDIAC VALVE & OTHER 1.8783 46.3 38.5
MAJOR CARDIOTHORACIC
PROC W/O CARDIAC CATH
*.
106......... CORONARY BYPASS W PTCA 1.8783 46.3 38.5
*.
107......... CORONARY BYPASS W 1.8783 46.3 38.5
CARDIAC CATH *.
108......... OTHER CARDIOTHORACIC 0.6655 21.9 18.2
PROCEDURES \2\.
109......... CORONARY BYPASS W/O 1.8783 46.3 38.5
PTCA OR CARDIAC CATH
*.
110......... MAJOR CARDIOVASCULAR 1.8783 46.3 38.5
PROCEDURES W CC \5\.
111......... MAJOR CARDIOVASCULAR 1.8783 46.3 38.5
PROCEDURES W/O CC \5\.
113......... AMPUTATION FOR CIRC 1.4103 36.9 30.7
SYSTEM DISORDERS
EXCEPT UPPER LIMB &
TOE.
114......... UPPER LIMB & TOE 1.3377 40.2 33.5
AMPUTATION FOR CIRC
SYSTEM DISORDERS.
115......... PRM CARD PACEM IMPL W 1.8783 46.3 38.5
AMI,HRT FAIL OR
SHK,OR AICD LEAD OR
GNRTR P \5\.
116......... OTH PERM CARD PACEMAK 0.8284 23.3 19.4
IMPL OR PTCA W
CORONARY ARTERY STENT
IMPLNT \3\.
117......... CARDIAC PACEMAKER 0.4055 16.8 14.0
REVISION EXCEPT
DEVICE REPLACEMENT *.
118......... CARDIAC PACEMAKER 0.4055 16.8 14.0
DEVICE REPLACEMENT
\1\.
119......... VEIN LIGATION & 0.6655 21.9 18.2
STRIPPING *.
120......... OTHER CIRCULATORY 1.4091 36.4 30.3
SYSTEM O.R.
PROCEDURES.
121......... CIRCULATORY DISORDERS 0.7167 21.6 18.0
W AMI & MAJOR COMP,
DISCHARGED ALIVE.
122......... CIRCULATORY DISORDERS 0.5144 19.0 15.8
W AMI W/O MAJOR COMP,
DISCHARGED ALIVE.
123......... CIRCULATORY DISORDERS 0.9412 20.9 17.4
W AMI, EXPIRED.
124......... CIRCULATORY DISORDERS 0.8284 23.3 19.4
EXCEPT AMI, W CARD
CATH & COMPLEX DIAG
\3\.
125......... CIRCULATORY DISORDERS 1.8783 46.3 38.5
EXCEPT AMI, W CARD
CATH W/O COMPLEX DIAG
\5\.
126......... ACUTE & SUBACUTE 0.7689 24.8 20.6
ENDOCARDITIS.
127......... HEART FAILURE & SHOCK. 0.7616 22.4 18.6
128......... DEEP VEIN 0.6042 20.8 17.3
THROMBOPHLEBITIS.
129......... CARDIAC ARREST, 1.0534 20.9 17.4
UNEXPLAINED.
130......... PERIPHERAL VASCULAR 0.7914 24.8 20.6
DISORDERS W CC.
131......... PERIPHERAL VASCULAR 0.7081 23.7 19.7
DISORDERS W/O CC.
132......... ATHEROSCLEROSIS W CC.. 0.8183 21.8 18.1
133......... ATHEROSCLEROSIS W/O CC 0.5484 18.5 15.4
134......... HYPERTENSION.......... 0.6985 24.0 20.0
135......... CARDIAC CONGENITAL & 0.7331 20.3 16.9
VALVULAR DISORDERS
AGE 17 W
CC.
136......... CARDIAC CONGENITAL & 0.7075 21.0 17.5
VALVULAR DISORDERS
AGE 17 W/O
CC.
137......... CARDIAC CONGENITAL & 0.6655 21.9 18.2
VALVULAR DISORDERS
AGE 0-17 *.
138......... CARDIAC ARRHYTHMIA & 0.7187 23.4 19.5
CONDUCTION DISORDERS
W CC.
139......... CARDIAC ARRHYTHMIA & 0.6482 20.4 17.0
CONDUCTION DISORDERS
W/O CC.
140......... ANGINA PECTORIS....... 0.7690 20.1 16.7
141......... SYNCOPE & COLLAPSE W 0.6252 23.2 19.3
CC.
142......... SYNCOPE & COLLAPSE W/O 0.5452 21.5 17.9
CC.
143......... CHEST PAIN............ 0.7316 22.7 18.9
144......... OTHER CIRCULATORY 0.7870 21.9 18.2
SYSTEM DIAGNOSES W CC.
145......... OTHER CIRCULATORY 0.7637 25.0 20.8
SYSTEM DIAGNOSES W/O
CC.
146......... RECTAL RESECTION W CC 1.2493 31.3 26.0
\4\.
[[Page 34185]]
147......... RECTAL RESECTION W/O 1.2493 31.3 26.0
CC *.
148......... MAJOR SMALL & LARGE 2.8488 47.6 39.6
BOWEL PROCEDURES W CC.
149......... MAJOR SMALL & LARGE 0.6655 21.9 18.2
BOWEL PROCEDURES W/O
CC \2\.
150......... PERITONEAL 0.4055 16.8 14.0
ADHESIOLYSIS W CC \1\.
151......... PERITONEAL 0.4055 16.8 14.0
ADHESIOLYSIS W/O CC *.
152......... MINOR SMALL & LARGE 1.2493 31.3 26.0
BOWEL PROCEDURES W CC
\4\.
153......... MINOR SMALL & LARGE 0.8284 23.3 19.4
BOWEL PROCEDURES W/O
CC *.
154......... STOMACH, ESOPHAGEAL & 1.2493 31.3 26.0
DUODENAL PROCEDURES
AGE 17 W
CC \4\.
155......... STOMACH, ESOPHAGEAL & 0.8284 23.3 19.4
DUODENAL PROCEDURES
AGE 17 W/O
CC *.
156......... STOMACH, ESOPHAGEAL & 0.8284 23.3 19.4
DUODENAL PROCEDURES
AGE 0-17 *.
157......... ANAL & STOMAL 0.4055 16.8 14.0
PROCEDURES W CC \1\.
158......... ANAL & STOMAL 0.4055 16.8 14.0
PROCEDURES W/O CC *.
159......... HERNIA PROCEDURES 1.2493 31.3 26.0
EXCEPT INGUINAL &
FEMORAL AGE 17 W CC \4\.
160......... HERNIA PROCEDURES 0.6655 21.9 18.2
EXCEPT INGUINAL &
FEMORAL AGE 17 W/O CC *.
161......... INGUINAL & FEMORAL 0.6655 21.9 18.2
HERNIA PROCEDURES AGE
17 W CC *.
162......... INGUINAL & FEMORAL 0.6655 21.9 18.2
HERNIA PROCEDURES AGE
17 W/O CC
*.
163......... HERNIA PROCEDURES AGE 0.6655 21.9 18.2
0-17 *.
164......... APPENDECTOMY W 0.8284 23.3 19.4
COMPLICATED PRINCIPAL
DIAG W CC *.
165......... APPENDECTOMY W 0.8284 23.3 19.4
COMPLICATED PRINCIPAL
DIAG W/O CC *.
166......... APPENDECTOMY W/O 0.6655 21.9 18.2
COMPLICATED PRINCIPAL
DIAG W CC *.
167......... APPENDECTOMY W/O 0.6655 21.9 18.2
COMPLICATED PRINCIPAL
DIAG W/O CC *.
168......... MOUTH PROCEDURES W CC 0.8284 23.3 19.4
\3\.
169......... MOUTH PROCEDURES W/O 0.6655 21.9 18.2
CC *.
170......... OTHER DIGESTIVE SYSTEM 1.5543 35.0 29.1
O.R. PROCEDURES W CC.
171......... OTHER DIGESTIVE SYSTEM 0.8284 23.3 19.4
O.R. PROCEDURES W/O
CC \3\.
172......... DIGESTIVE MALIGNANCY W 0.8553 24.2 20.1
CC.
173......... DIGESTIVE MALIGNANCY W/ 0.5513 18.9 15.7
O CC.
174......... G.I. HEMORRHAGE W CC.. 0.8741 23.6 19.6
175......... G.I. HEMORRHAGE W/O CC 0.8359 25.6 21.3
176......... COMPLICATED PEPTIC 0.7661 24.4 20.3
ULCER.
177......... UNCOMPLICATED PEPTIC 0.8284 23.3 19.4
ULCER W CC \3\.
178......... UNCOMPLICATED PEPTIC 0.6655 21.9 18.2
ULCER W/O CC \2\.
179......... INFLAMMATORY BOWEL 1.0975 23.4 19.5
DISEASE.
180......... G.I. OBSTRUCTION W CC. 0.8457 22.8 19.0
181......... G.I. OBSTRUCTION W/O 0.5638 19.5 16.2
CC.
182......... ESOPHAGITIS, GASTROENT 0.8829 25.9 21.5
& MISC DIGEST
DISORDERS AGE 17 W CC.
183......... ESOPHAGITIS, GASTROENT 0.6913 21.5 17.9
& MISC DIGEST
DISORDERS AGE 17 W/O CC.
184......... ESOPHAGITIS, GASTROENT 0.6655 21.9 18.2
& MISC DIGEST
DISORDERS AGE 0-17 *.
185......... DENTAL & ORAL DIS 0.8284 23.3 19.4
EXCEPT EXTRACTIONS &
RESTORATIONS, AGE 17 \3\.
186......... DENTAL & ORAL DIS 0.8284 23.3 19.4
EXCEPT EXTRACTIONS &
RESTORATIONS, AGE 0-
17 *.
187......... DENTAL EXTRACTIONS & 0.8284 23.3 19.4
RESTORATIONS *.
188......... OTHER DIGESTIVE SYSTEM 1.0490 24.2 20.1
DIAGNOSES AGE 17 W CC.
189......... OTHER DIGESTIVE SYSTEM 0.5852 17.4 14.5
DIAGNOSES AGE 17 W/O CC.
190......... OTHER DIGESTIVE SYSTEM 0.6655 21.9 18.2
DIAGNOSES AGE 0-17 *.
191......... PANCREAS, LIVER & 1.8783 46.3 38.5
SHUNT PROCEDURES W CC
\5\.
192......... PANCREAS, LIVER & 1.2493 31.3 26.0
SHUNT PROCEDURES W/O
CC *.
193......... BILIARY TRACT PROC 1.2493 31.3 26.0
EXCEPT ONLY CHOLECYST
W OR W/O C.D.E. W CC
\4\.
194......... BILIARY TRACT PROC 0.8284 23.3 19.4
EXCEPT ONLY CHOLECYST
W OR W/O C.D.E. W/O
CC *.
195......... CHOLECYSTECTOMY W 0.8284 23.3 19.4
C.D.E. W CC *.
196......... CHOLECYSTECTOMY W 0.8284 23.3 19.4
C.D.E. W/O CC *.
197......... CHOLECYSTECTOMY EXCEPT 1.8783 46.3 38.5
BY LAPAROSCOPE W/O
C.D.E. W CC \5\.
198......... CHOLECYSTECTOMY EXCEPT 1.8783 46.3 38.5
BY LAPAROSCOPE W/O
C.D.E. W/O CC \5\.
199......... HEPATOBILIARY 0.8284 23.3 19.4
DIAGNOSTIC PROCEDURE
FOR MALIGNANCY \3\.
200......... HEPATOBILIARY 1.2493 31.3 26.0
DIAGNOSTIC PROCEDURE
FOR NON-MALIGNANCY
\4\.
201......... OTHER HEPATOBILIARY OR 1.8783 46.3 38.5
PANCREAS O.R.
PROCEDURES \5\.
202......... CIRRHOSIS & ALCOHOLIC 0.5736 18.4 15.3
HEPATITIS.
203......... MALIGNANCY OF 0.5897 18.2 15.1
HEPATOBILIARY SYSTEM
OR PANCREAS.
204......... DISORDERS OF PANCREAS 0.9444 22.1 18.4
EXCEPT MALIGNANCY.
205......... DISORDERS OF LIVER 0.6825 21.5 17.9
EXCEPT MALIG,CIRR,ALC
HEPA W CC.
206......... DISORDERS OF LIVER 0.6655 21.9 18.2
EXCEPT MALIG,CIRR,ALC
HEPA W/O CC \2\.
207......... DISORDERS OF THE 0.6979 21.5 17.9
BILIARY TRACT W CC.
208......... DISORDERS OF THE 0.4055 16.8 14.0
BILIARY TRACT W/O CC
\1\.
209......... MAJOR JOINT & LIMB 1.8783 46.3 38.5
REATTACHMENT
PROCEDURES OF LOWER
EXTREMITY \5\.
210......... HIP & FEMUR PROCEDURES 1.2493 31.3 26.0
EXCEPT MAJOR JOINT
AGE 17 W
CC \4\.
211......... HIP & FEMUR PROCEDURES 0.8284 23.3 19.4
EXCEPT MAJOR JOINT
AGE 17 W/O
CC *.
212......... HIP & FEMUR PROCEDURES 0.8284 23.3 19.4
EXCEPT MAJOR JOINT
AGE 0-17 *.
213......... AMPUTATION FOR 1.2591 33.0 27.5
MUSCULOSKELETAL
SYSTEM & CONN TISSUE
DISORDERS.
[[Page 34186]]
216......... BIOPSIES OF 1.2493 31.3 26.0
MUSCULOSKELETAL
SYSTEM & CONNECTIVE
TISSUE \4\.
217......... WND DEBRID & SKN GRFT 1.3602 38.8 32.3
EXCEPT HAND,FOR
MUSCSKELET & CONN
TISS DIS.
218......... LOWER EXTREM & HUMER 0.8284 23.3 19.4
PROC EXCEPT
HIP,FOOT,FEMUR AGE
17 W CC
\3\.
219......... LOWER EXTREM & HUMER 0.8284 23.3 19.4
PROC EXCEPT
HIP,FOOT,FEMUR AGE
17 W/O CC
*.
220......... LOWER EXTREM & HUMER 0.8284 23.3 19.4
PROC EXCEPT
HIP,FOOT,FEMUR AGE 0-
17 *.
223......... MAJOR SHOULDER/ELBOW 1.2493 31.3 26.0
PROC, OR OTHER UPPER
EXTREMITY PROC W CC
\4\.
224......... SHOULDER,ELBOW OR 0.4055 16.8 14.0
FOREARM PROC,EXC
MAJOR JOINT PROC, W/O
CC \1\.
225......... FOOT PROCEDURES \4\... 1.2493 31.3 26.0
226......... SOFT TISSUE PROCEDURES 1.2493 31.3 26.0
W CC \4\.
227......... SOFT TISSUE PROCEDURES 0.8284 23.3 19.4
W/O CC \3\.
228......... MAJOR THUMB OR JOINT 0.6655 21.9 18.2
PROC,OR OTH HAND OR
WRIST PROC W CC *.
229......... HAND OR WRIST PROC, 0.6655 21.9 18.2
EXCEPT MAJOR JOINT
PROC, W/O CC \2\.
230......... LOCAL EXCISION & 0.4055 16.8 14.0
REMOVAL OF INT FIX
DEVICES OF HIP &
FEMUR \1\.
231......... LOCAL EXCISION & 1.8783 46.3 38.5
REMOVAL OF INT FIX
DEVICES EXCEPT HIP &
FEMUR \5\.
232......... ARTHROSCOPY *......... 0.4055 16.8 14.0
233......... OTHER MUSCULOSKELET 1.2493 31.3 26.0
SYS & CONN TISS O.R.
PROC W CC \4\.
234......... OTHER MUSCULOSKELET 0.4055 16.8 14.0
SYS & CONN TISS O.R.
PROC W/O CC \1\.
235......... FRACTURES OF FEMUR.... 0.7540 28.5 23.7
236......... FRACTURES OF HIP & 0.7381 27.2 22.6
PELVIS.
237......... SPRAINS, STRAINS, & 0.6655 21.9 18.2
DISLOCATIONS OF HIP,
PELVIS & THIGH \2\.
238......... OSTEOMYELITIS......... 0.8275 27.5 22.9
239......... PATHOLOGICAL FRACTURES 0.6689 21.9 18.2
& MUSCULOSKELETAL &
CONN TISS MALIGNANCY.
240......... CONNECTIVE TISSUE 0.9260 26.0 21.6
DISORDERS W CC.
241......... CONNECTIVE TISSUE 0.5805 22.7 18.9
DISORDERS W/O CC.
242......... SEPTIC ARTHRITIS...... 0.7725 26.3 21.9
243......... MEDICAL BACK PROBLEMS. 0.6596 23.4 19.5
244......... BONE DISEASES & 0.5756 20.6 17.1
SPECIFIC
ARTHROPATHIES W CC.
245......... BONE DISEASES & 0.4426 17.5 14.5
SPECIFIC
ARTHROPATHIES W/O CC.
246......... NON-SPECIFIC 0.6053 21.4 17.8
ARTHROPATHIES.
247......... SIGNS & SYMPTOMS OF 0.5590 20.4 17.0
MUSCULOSKELETAL
SYSTEM & CONN TISSUE.
248......... TENDONITIS, MYOSITIS & 0.7288 23.9 19.9
BURSITIS.
249......... AFTERCARE, 0.8005 27.1 22.5
MUSCULOSKELETAL
SYSTEM & CONNECTIVE
TISSUE.
250......... FX, SPRN, STRN & DISL 0.8373 31.8 26.5
OF FOREARM, HAND,
FOOT AGE 17 W CC.
251......... FX, SPRN, STRN & DISL 0.6904 26.0 21.6
OF FOREARM, HAND,
FOOT AGE 17 W/O CC.
252......... FX, SPRN, STRN & DISL 0.4055 16.8 14.0
OF FOREARM, HAND,
FOOT AGE 0-17 *.
253......... FX, SPRN, STRN & DISL 0.8054 28.0 23.3
OF UPARM,LOWLEG EX
FOOT AGE 17 W CC.
254......... FX, SPRN, STRN & DISL 0.6999 26.4 22.0
OF UPARM,LOWLEG EX
FOOT AGE 17 W/O CC.
255......... FX, SPRN, STRN & DISL 0.4055 16.8 14.0
OF UPARM,LOWLEG EX
FOOT AGE 0-17 *.
256......... OTHER MUSCULOSKELETAL 0.8002 25.1 20.9
SYSTEM & CONNECTIVE
TISSUE DIAGNOSES.
257......... TOTAL MASTECTOMY FOR 0.6655 21.9 18.2
MALIGNANCY W CC \2\.
258......... TOTAL MASTECTOMY FOR 0.6655 21.9 18.2
MALIGNANCY W/O CC *.
259......... SUBTOTAL MASTECTOMY 0.6655 21.9 18.2
FOR MALIGNANCY W CC *.
260......... SUBTOTAL MASTECTOMY 0.6655 21.9 18.2
FOR MALIGNANCY W/O CC
*.
261......... BREAST PROC FOR NON- 0.4055 16.8 14.0
MALIGNANCY EXCEPT
BIOPSY & LOCAL
EXCISION *.
262......... BREAST BIOPSY & LOCAL 0.4055 16.8 14.0
EXCISION FOR NON-
MALIGNANCY \1\.
263......... SKIN GRAFT &/OR DEBRID 1.5388 45.0 37.5
FOR SKN ULCER OR
CELLULITIS W CC.
264......... SKIN GRAFT &/OR DEBRID 1.1645 38.8 32.3
FOR SKN ULCER OR
CELLULITIS W/O CC.
265......... SKIN GRAFT &/OR DEBRID 1.6569 45.6 38.0
EXCEPT FOR SKIN ULCER
OR CELLULITIS W CC.
266......... SKIN GRAFT &/OR DEBRID 0.8284 23.3 19.4
EXCEPT FOR SKIN ULCER
OR CELLULITIS W/O CC
\3\.
267......... PERIANAL & PILONIDAL 0.4055 16.8 14.0
PROCEDURES *.
268......... SKIN, SUBCUTANEOUS 1.2493 31.3 26.0
TISSUE & BREAST
PLASTIC PROCEDURES
\4\.
269......... OTHER SKIN, SUBCUT 1.3915 41.7 34.7
TISS & BREAST PROC W
CC.
270......... OTHER SKIN, SUBCUT 1.3879 41.6 34.6
TISS & BREAST PROC W/
O CC.
271......... SKIN ULCERS........... 0.9714 31.1 25.9
272......... MAJOR SKIN DISORDERS W 0.6846 21.0 17.5
CC.
273......... MAJOR SKIN DISORDERS W/ 0.6655 21.9 18.2
O CC \2\.
274......... MALIGNANT BREAST 0.7872 22.0 18.3
DISORDERS W CC \7\.
275......... MALIGNANT BREAST 0.7872 22.0 18.3
DISORDERS W/O CC \7\.
276......... NON-MALIGANT BREAST 0.6655 21.9 18.2
DISORDERS \2\.
277......... CELLULITIS AGE 17 W CC.
278......... CELLULITIS AGE 17 W/O CC.
279......... CELLULITIS AGE 0-17 *. 0.6655 21.9 18.2
280......... TRAUMA TO THE SKIN, 1.0097 30.9 25.7
SUBCUT TISS & BREAST
AGE 17 W
CC.
281......... TRAUMA TO THE SKIN, 0.7363 27.4 22.8
SUBCUT TISS & BREAST
AGE 17 W/O
CC.
282......... TRAUMA TO THE SKIN, 0.6655 21.9 18.2
SUBCUT TISS & BREAST
AGE 0-17 *.
283......... MINOR SKIN DISORDERS W 0.8574 24.8 20.6
CC.
284......... MINOR SKIN DISORDERS W/ 0.4055 16.8 14.0
O CC \1\.
[[Page 34187]]
285......... AMPUTAT OF LOWER LIMB 1.3692 31.7 26.4
FOR
ENDOCRINE,NUTRIT,&
METABOL DISORDERS.
286......... ADRENAL & PITUITARY 1.2493 31.3 26.0
PROCEDURES *.
287......... SKIN GRAFTS & WOUND 1.3195 39.6 33.0
DEBRID FOR ENDOC,
NUTRIT & METAB
DISORDERS.
288......... O.R. PROCEDURES FOR 1.8783 46.3 38.5
OBESITY \5\.
289......... PARATHYROID PROCEDURES 0.4055 16.8 14.0
*.
290......... THYROID PROCEDURES \1\ 0.4055 16.8 14.0
291......... THYROGLOSSAL 0.4055 16.8 14.0
PROCEDURES *.
292......... OTHER ENDOCRINE, 1.2493 31.3 26.0
NUTRIT & METAB O.R.
PROC W CC \4\.
293......... OTHER ENDOCRINE, 0.6655 21.9 18.2
NUTRIT & METAB O.R.
PROC W/O CC *.
294......... DIABETES AGE 35.
295......... DIABETES AGE 0-35 \3\. 0.8284 23.3 19.4
296......... NUTRITIONAL & MISC 0.7710 24.3 20.2
METABOLIC DISORDERS
AGE 17 W
CC.
297......... NUTRITIONAL & MISC 0.6321 21.1 17.5
METABOLIC DISORDERS
AGE 17 W/O
CC.
298......... NUTRITIONAL & MISC 0.6655 21.9 18.2
METABOLIC DISORDERS
AGE 0-17 *.
299......... INBORN ERRORS OF 0.8284 23.3 19.4
METABOLISM \3\.
300......... ENDOCRINE DISORDERS W 0.8670 23.3 19.4
CC.
301......... ENDOCRINE DISORDERS W/ 0.4055 16.8 14.0
O CC \1\.
302......... KIDNEY TRANSPLANT \6\. 0.0000 0.0 0.0
303......... KIDNEY,URETER & MAJOR 1.8783 46.3 38.5
BLADDER PROCEDURES
FOR NEOPLASM \5\.
304......... KIDNEY,URETER & MAJOR 1.2493 31.3 26.0
BLADDER PROC FOR NON-
NEOPL W CC \4\.
305......... KIDNEY,URETER & MAJOR 0.6655 21.9 18.2
BLADDER PROC FOR NON-
NEOPL W/O CC \2\.
306......... PROSTATECTOMY W CC \3\ 0.8284 23.3 19.4
307......... PROSTATECTOMY W/O CC 0.4055 16.8 14.0
\1\.
308......... MINOR BLADDER 0.8284 23.3 19.414.0
PROCEDURES W CC \3\.
309......... MINOR BLADDER 0.4055 16.8 26.0
PROCEDURES W/O CC *.
310......... TRANSURETHRAL 1.2493 31.3 14.0
PROCEDURES W CC \4\.
311......... TRANSURETHRAL 0.4055 16.8 38.5
PROCEDURES W/O CC \1\.
312......... URETHRAL PROCEDURES, 1.8783 46.3 14.0
AGE 17 W
CC \5\.
313......... URETHRAL PROCEDURES, 0.4055 16.8 14.0
AGE 17 W/O
CC *.
314......... URETHRAL PROCEDURES, 0.4055 16.8 14.0
AGE 0-17 *.
315......... OTHER KIDNEY & URINARY 1.5800 39.5 32.9
TRACT O.R. PROCEDURES.
316......... RENAL FAILURE......... 0.9308 24.1 20.0
317......... ADMIT FOR RENAL 1.2493 31.3 26.0
DIALYSIS \4\.
318......... KIDNEY & URINARY TRACT 0.8075 21.5 17.9
NEOPLASMS W CC.
319......... KIDNEY & URINARY TRACT 0.6655 21.9 18.2
NEOPLASMS W/O CC \2\.
320......... KIDNEY & URINARY TRACT 0.7424 23.9 19.9
INFECTIONS AGE 17 W CC.
321......... KIDNEY & URINARY TRACT 0.6123 20.4 17.0
INFECTIONS AGE 17 W/O CC.
322......... KIDNEY & URINARY TRACT 0.6655 21.9 18.2
INFECTIONS AGE 0-17 *.
323......... URINARY STONES W CC, &/ 0.6655 21.9 18.2
OR ESW LITHOTRIPSY
\2\.
324......... URINARY STONES W/O CC 0.6655 21.9 18.2
\2\.
325......... KIDNEY & URINARY TRACT 0.8123 26.7 22.2
SIGNS & SYMPTOMS AGE
17 W CC.
326......... KIDNEY & URINARY TRACT 0.6655 21.9 18.2
SIGNS & SYMPTOMS AGE
17 W/O CC
\2\.
327......... KIDNEY & URINARY TRACT 0.4055 16.8 14.0
SIGNS & SYMPTOMS AGE
0-17 *.
328......... URETHRAL STRICTURE AGE 0.6655 21.9 18.2
17 W CC *.
329......... URETHRAL STRICTURE AGE 0.4055 16.8 14.0
17 W/O CC
\1\.
330......... URETHRAL STRICTURE AGE 0.4055 16.8 14.0
0-17 *.
331......... OTHER KIDNEY & URINARY 0.9267 24.6 20.5
TRACT DIAGNOSES AGE
17 W CC.
332......... OTHER KIDNEY & URINARY 0.6393 20.9 17.4
TRACT DIAGNOSES AGE
17 W/O CC.
333......... OTHER KIDNEY & URINARY 0.4055 16.8 14.0
TRACT DIAGNOSES AGE 0-
17 *.
334......... MAJOR MALE PELVIC 1.2493 31.3 26.0
PROCEDURES W CC *.
335......... MAJOR MALE PELVIC 0.8284 23.3 19.4
PROCEDURES W/O CC *.
336......... TRANSURETHRAL 0.8284 23.3 19.4
PROSTATECTOMY W CC
\3\.
337......... TRANSURETHRAL 0.6655 21.9 18.2
PROSTATECTOMY W/O CC
*.
338......... TESTES PROCEDURES, FOR 0.6655 21.9 18.2
MALIGNANCY *.
339......... TESTES PROCEDURES, NON- 0.4055 16.8 14.0
MALIGNANCY AGE 17 \1\.
340......... TESTES PROCEDURES, NON- 0.4055 16.8 14.0
MALIGNANCY AGE 0-17 *.
341......... PENIS PROCEDURES \2\.. 0.6655 21.9 18.2
342......... CIRCUMCISION AGE 17 \4\.
343......... CIRCUMCISION AGE 0-17. 0.4055 16.8 14.0
344......... OTHER MALE 1.2493 31.3 26.0
REPRODUCTIVE SYSTEM
O.R. PROCEDURES FOR
MALIGNANCY \4\.
345......... OTHER MALE 0.8284 23.3 19.4
REPRODUCTIVE SYSTEM
O.R. PROC EXCEPT FOR
MALIGNANCY \3\.
346......... MALIGNANCY, MALE 0.7070 21.6 18.0
REPRODUCTIVE SYSTEM,
W CC.
347......... MALIGNANCY, MALE 0.6655 21.9 18.2
REPRODUCTIVE SYSTEM,
W/O CC \2\.
348......... BENIGN PROSTATIC 0.4055 16.8 14.0
HYPERTROPHY W CC \1\.
349......... BENIGN PROSTATIC 0.4055 16.8 14.0
HYPERTROPHY W/O CC *.
350......... INFLAMMATION OF THE 0.6058 19.9 16.5
MALE REPRODUCTIVE
SYSTEM.
351......... STERILIZATION, MALE *. 0.4055 16.8 14.0
[[Page 34188]]
352......... OTHER MALE 0.8284 23.3 19.4
REPRODUCTIVE SYSTEM
DIAGNOSES \3\.
353......... PELVIC EVISCERATION, 1.8783 46.3 38.5
RADICAL HYSTERECTOMY
& RADICAL VULVECTOMY
*.
354......... UTERINE,ADNEXA PROC 1.2493 31.3 26.0
FOR NON-OVARIAN/
ADNEXAL MALIG W CC *.
355......... UTERINE,ADNEXA PROC 1.2493 31.3 26.0
FOR NON-OVARIAN/
ADNEXAL MALIG W/O CC
*.
356......... FEMALE REPRODUCTIVE 1.2493 31.3 26.0
SYSTEM RECONSTRUCTIVE
PROCEDURES *.
357......... UTERINE & ADNEXA PROC 1.2493 31.3 26.0
FOR OVARIAN OR
ADNEXAL MALIGNANCY *.
358......... UTERINE & ADNEXA PROC 1.8783 46.3 38.5
FOR NON-MALIGNANCY W
CC \5\.
359......... UTERINE & ADNEXA PROC 0.4055 16.8 14.0
FOR NON-MALIGNANCY W/
O CC \1\.
360......... VAGINA, CERVIX & VULVA 0.4055 16.8 14.0
PROCEDURES \1\.
361......... LAPAROSCOPY & 0.6655 21.9 18.2
INCISIONAL TUBAL
INTERRUPTION *.
362......... ENDOSCOPIC TUBAL 0.6655 21.9 18.2
INTERRUPTION *.
363......... D&C, CONIZATION & 0.8284 23.3 19.4
RADIO-IMPLANT, FOR
MALIGNANCY *.
364......... D&C, CONIZATION EXCEPT 0.6655 21.9 18.2
FOR MALIGNANCY *.
365......... OTHER FEMALE 1.8783 46.3 38.5
REPRODUCTIVE SYSTEM
O.R. PROCEDURES \5\.
366......... MALIGNANCY, FEMALE 0.9654 23.9 19.9
REPRODUCTIVE SYSTEM W
CC.
367......... MALIGNANCY, FEMALE 0.8284 23.3 19.4
REPRODUCTIVE SYSTEM W/
O CC \3\.
368......... INFECTIONS, FEMALE 1.2493 31.3 26.0
REPRODUCTIVE SYSTEM
\4\.
369......... MENSTRUAL & OTHER 0.6655 21.9 18.2
FEMALE REPRODUCTIVE
SYSTEM DISORDERS \2\.
370......... CESAREAN SECTION W CC 0.8284 23.3 19.4
*.
371......... CESAREAN SECTION W/O 0.6655 21.9 18.2
CC *.
372......... VAGINAL DELIVERY W 0.6655 21.9 18.2
COMPLICATING
DIAGNOSES *.
373......... VAGINAL DELIVERY W/O 0.4055 16.8 14.0
COMPLICATING
DIAGNOSES *.
374......... VAGINAL DELIVERY W 0.4055 16.8 14.0
STERILIZATION &/OR
D&C *.
375......... VAGINAL DELIVERY W 0.4055 16.8 14.0
O.R. PROC EXCEPT
STERIL &/OR D&C *.
376......... POSTPARTUM & POST 0.4055 16.8 14.0
ABORTION DIAGNOSES W/
O O.R. PROCEDURE *.
377......... POSTPARTUM & POST 0.4055 16.8 14.0
ABORTION DIAGNOSES W
O.R. PROCEDURE *.
378......... ECTOPIC PREGNANCY *... 0.6655 21.9 18.2
379......... THREATENED ABORTION *. 0.4055 16.8 14.0
380......... ABORTION W/O D&C *.... 0.4055 16.8 14.0
381......... ABORTION W D&C, 0.4055 16.8 14.0
ASPIRATION CURETTAGE
OR HYSTEROTOMY *.
382......... FALSE LABOR *......... 0.4055 16.8 14.0
383......... OTHER ANTEPARTUM 0.4055 16.8 14.0
DIAGNOSES W MEDICAL
COMPLICATIONS *.
384......... OTHER ANTEPARTUM 0.4055 16.8 14.0
DIAGNOSES W/O MEDICAL
COMPLICATIONS *.
385......... NEONATES, DIED OR 0.4055 16.8 14.0
TRANSFERRED TO
ANOTHER ACUTE CARE
FACILITY *.
386......... EXTREME IMMATURITY *.. 0.6655 21.9 18.2
387......... PREMATURITY W MAJOR 0.6655 21.9 18.2
PROBLEMS *.
388......... PREMATURITY W/O MAJOR 0.4055 16.8 14.0
PROBLEMS *.
389......... FULL TERM NEONATE W 1.2493 31.3 26.0
MAJOR PROBLEMS \4\.
390......... NEONATE W OTHER 0.6655 21.9 18.2
SIGNIFICANT PROBLEMS
*.
391......... NORMAL NEWBORN *...... 0.4055 16.8 14.0
392......... SPLENECTOMY AGE 17 *.
393......... SPLENECTOMY AGE 0-17 * 0.6655 21.9 18.2
394......... OTHER O.R. PROCEDURES 1.8783 46.3 38.5
OF THE BLOOD AND
BLOOD FORMING ORGANS
\5\.
395......... RED BLOOD CELL 0.8584 25.1 20.9
DISORDERS AGE 17.
396......... RED BLOOD CELL 0.4055 16.8 14.0
DISORDERS AGE 0-17 *.
397......... COAGULATION DISORDERS. 0.7567 19.4 16.1
398......... RETICULOENDOTHELIAL & 0.9008 23.4 19.5
IMMUNITY DISORDERS W
CC.
399......... RETICULOENDOTHELIAL & 0.4055 16.8 14.0
IMMUNITY DISORDERS W/
O CC)\1\.
400......... LYMPHOMA & LEUKEMIA W 0.8284 23.3 19.4
MAJOR O.R. PROCEDURE
\3\.
401......... LYMPHOMA & NON-ACUTE 1.2493 31.3 26.0
LEUKEMIA W OTHER O.R.
PROC W CC \4\.
402......... LYMPHOMA & NON-ACUTE 0.8284 23.3 19.4
LEUKEMIA W OTHER O.R.
PROC W/O CC *.
403......... LYMPHOMA & NON-ACUTE 0.9651 23.9 19.9
LEUKEMIA W CC.
404......... LYMPHOMA & NON-ACUTE 0.8980 19.1 15.9
LEUKEMIA W/O CC.
405......... ACUTE LEUKEMIA W/O 0.6655 21.9 18.2
MAJOR O.R. PROCEDURE
AGE 0-17 *.
406......... MYELOPROLIF DISORD OR 1.8783 46.3 38.5
POORLY DIFF NEOPL W
MAJ O.R.PROC W CC \5\.
407......... MYELOPROLIF DISORD OR 0.8284 23.3 19.4
POORLY DIFF NEOPL W
MAJ O.R.PROC W/O CC *.
408......... MYELOPROLIF DISORD OR 1.2493 31.3 26.0
POORLY DIFF NEOPL W
OTHER O.R.PROC \4\.
409......... RADIOTHERAPY.......... 0.5220 19.5 16.2
410......... CHEMOTHERAPY W/O ACUTE 0.4055 16.8 14.0
LEUKEMIA AS SECONDARY
DIAGNOSIS \1\.
411......... HISTORY OF MALIGNANCY 0.4055 16.8 14.0
W/O ENDOSCOPY *.
412......... HISTORY OF MALIGNANCY 0.4055 16.8 14.0
W ENDOSCOPY *.
413......... OTHER MYELOPROLIF DIS 0.9061 23.7 19.7
OR POORLY DIFF NEOPL
DIAG W CC \7\.
414......... OTHER MYELOPROLIF DIS 0.9061 23.7 19.7
OR POORLY DIFF NEOPL
DIAG W/O CC \7\.
415......... O.R. PROCEDURE FOR 1.4933 38.7 32.2
INFECTIOUS &
PARASITIC DISEASES.
416......... SEPTICEMIA AGE 17.
417......... SEPTICEMIA AGE 0-17 *. 0.8284 23.3 19.4
418......... POSTOPERATIVE & POST- 0.8771 25.8 21.5
TRAUMATIC INFECTIONS.
[[Page 34189]]
419......... FEVER OF UNKNOWN 0.5948 20.5 17.0
ORIGIN AGE 17 W CC.
420......... FEVER OF UNKNOWN 0.4055 16.8 14.0
ORIGIN AGE 17 W/O CC \1\.
421......... VIRAL ILLNESS AGE 17 \4\.
422......... VIRAL ILLNESS & FEVER 0.4055 16.8 14.0
OF UNKNOWN ORIGIN AGE
0-17 *.
423......... OTHER INFECTIOUS & 0.8701 24.7 20.5
PARASITIC DISEASES
DIAGNOSES.
424......... O.R. PROCEDURE W 1.8783 46.3 38.5
PRINCIPAL DIAGNOSES
OF MENTAL ILLNESS \5\.
425......... ACUTE ADJUSTMENT 0.6177 26.0 21.6
REACTION &
PSYCHOLOGICAL
DYSFUNCTION.
426......... DEPRESSIVE NEUROSES... 0.5739 26.9 22.4
427......... NEUROSES EXCEPT 0.6655 21.9 18.2
DEPRESSIVE \2\.
428......... DISORDERS OF 1.2493 31.3 26.0
PERSONALITY & IMPULSE
CONTROL \4\.
429......... ORGANIC DISTURBANCES & 0.5466 25.0 20.8
MENTAL RETARDATION.
430......... PSYCHOSES............. 0.4479 22.9 19.0
431......... CHILDHOOD MENTAL 0.4345 22.7 18.9
DISORDERS.
432......... OTHER MENTAL DISORDER 0.6655 21.9 18.2
DIAGNOSES \2\.
433......... ALCOHOL/DRUG ABUSE OR 0.2489 13.1 10.9
DEPENDENCE, LEFT AMA.
439......... SKIN GRAFTS FOR 1.3200 42.5 35.4
INJURIES.
440......... WOUND DEBRIDEMENTS FOR 1.3567 40.1 33.4
INJURIES.
441......... HAND PROCEDURES FOR 0.6655 21.9 18.2
INJURIES *.
442......... OTHER O.R. PROCEDURES 1.6442 39.7 33.0
FOR INJURIES W CC.
443......... OTHER O.R. PROCEDURES 0.6655 21.9 18.2
FOR INJURIES W/O CC
\2\.
444......... TRAUMATIC INJURY AGE 0.9614 30.7 25.5
17 W CC.
445......... TRAUMATIC INJURY AGE 0.8448 27.3 22.7
17 W/O CC.
446......... TRAUMATIC INJURY AGE 0- 0.8284 23.3 19.4
17 *.
447......... ALLERGIC REACTIONS AGE 0.6655 21.9 18.2
17 \2\.
448......... ALLERGIC REACTIONS AGE 0.4055 16.8 14.0
0-17 *.
449......... POISONING & TOXIC 0.8284 23.3 19.4
EFFECTS OF DRUGS AGE
17 W CC
\3\.
450......... POISONING & TOXIC 0.6655 21.9 18.2
EFFECTS OF DRUGS AGE
17 W/O CC
\2\.
451......... POISONING & TOXIC 0.4055 16.8 14.0
EFFECTS OF DRUGS AGE
0-17 *.
452......... COMPLICATIONS OF 0.9596 25.5 21.2
TREATMENT W CC.
453......... COMPLICATIONS OF 0.6666 23.1 19.2
TREATMENT W/O CC.
454......... OTHER INJURY, 0.8284 23.3 19.4
POISONING & TOXIC
EFFECT DIAG W CC \3\.
455......... OTHER INJURY, 0.4055 16.8 14.0
POISONING & TOXIC
EFFECT DIAG W/O CC
\1\.
461......... O.R. PROC W DIAGNOSES 1.3383 38.0 31.6
OF OTHER CONTACT W
HEALTH SERVICES.
462......... REHABILITATION........ 0.6469 23.5 19.5
463......... SIGNS & SYMPTOMS W CC. 0.7618 26.8 22.3
464......... SIGNS & SYMPTOMS W/O 0.6234 24.3 20.2
CC.
465......... AFTERCARE W HISTORY OF 0.8284 23.3 19.4
MALIGNANCY AS
SECONDARY DIAGNOSIS
\3\.
466......... AFTERCARE W/O HISTORY 0.8119 23.9 19.9
OF MALIGNANCY AS
SECONDARY DIAGNOSIS.
467......... OTHER FACTORS 0.6655 21.9 18.2
INFLUENCING HEALTH
STATUS \2\.
468......... EXTENSIVE O.R. 2.2177 45.5 37.9
PROCEDURE UNRELATED
TO PRINCIPAL
DIAGNOSIS.
469......... PRINCIPAL DIAGNOSIS 0.0000 0.0 0.0
INVALID AS DISCHARGE
DIAGNOSIS \6\.
470......... UNGROUPABLE \6\....... 0.0000 0.0 0.0
471......... BILATERAL OR MULTIPLE 1.8783 46.3 38.5
MAJOR JOINT PROCS OF
LOWER EXTREMITY *.
473......... ACUTE LEUKEMIA W/O 0.8047 17.1 14.2
MAJOR O.R. PROCEDURE
AGE 17.
475......... RESPIRATORY SYSTEM 2.0906 35.5 29.5
DIAGNOSIS WITH
VENTILATOR SUPPORT.
476......... PROSTATIC O.R. 1.8783 46.3 38.5
PROCEDURE UNRELATED
TO PRINCIPAL
DIAGNOSIS \5\.
477......... NON-EXTENSIVE O.R. 1.6791 39.7 33.0
PROCEDURE UNRELATED
TO PRINCIPAL
DIAGNOSIS.
478......... OTHER VASCULAR 1.6244 37.8 31.5
PROCEDURES W CC.
479......... OTHER VASCULAR 0.6655 21.9 18.2
PROCEDURES W/O CC \2\.
480......... LIVER TRANSPLANT \6\.. 0.0000 0.0 0.0
481......... BONE MARROW TRANSPLANT 1.8783 46.3 38.5
*.
482......... TRACHEOSTOMY FOR 0.6655 21.9 18.2
FACE,MOUTH & NECK
DIAGNOSES *.
483......... TRACH W MECH VENT 96+ 3.2319 4.6 45.5
HRS OR PDX EXCEPT
FACE,MOUTH & NECK
DIAG.
484......... CRANIOTOMY FOR 1.8783 46.3 38.5
MULTIPLE SIGNIFICANT
TRAUMA *.
485......... LIMB REATTACHMENT, HIP 1.8783 46.3 38.5
AND FEMUR PROC FOR
MULTIPLE SIGNIFICANT
TR *.
486......... OTHER O.R. PROCEDURES 0.8284 23.3 19.4
FOR MULTIPLE
SIGNIFICANT TRAUMA
\3\.
487......... OTHER MULTIPLE 1.0885 29.5 24.5
SIGNIFICANT TRAUMA.
488......... HIV W EXTENSIVE O.R. 1.8783 46.3 38.5
PROCEDURE \5\.
489......... HIV W MAJOR RELATED 0.8846 22.9 19.0
CONDITION.
490......... HIV W OR W/O OTHER 0.6952 20.4 17.0
RELATED CONDITION.
491......... MAJOR JOINT & LIMB 1.8783 46.3 38.5
REATTACHMENT
PROCEDURES OF UPPER
EXTREMITY *.
492......... CHEMOTHERAPY W ACUTE 0.8284 23.3 19.4
LEUKEMIA AS SECONDARY
DIAGNOSIS \3\.
493......... LAPAROSCOPIC 0.8284 23.3 19.4
CHOLECYSTECTOMY W/O
C.D.E. W CC \3\.
494......... LAPAROSCOPIC 0.4055 16.8 14.0
CHOLECYSTECTOMY W/O
C.D.E. W/O CC \1\.
495......... LUNG TRANSPLANT \6\... 0.0000 0.0 0.0
496......... COMBINED ANTERIOR/ 1.2493 31.3 26.0
POSTERIOR SPINAL
FUSION *.
497......... SPINAL FUSION W CC \5\ 1.8783 46.3 38.5
[[Page 34190]]
498......... SPINAL FUSION W/O CC 0.8284 23.3 19.4
\3\.
499......... BACK & NECK PROCEDURES 1.8783 46.3 38.5
EXCEPT SPINAL FUSION
W CC \5\.
500......... BACK & NECK PROCEDURES 0.8284 23.3 19.4
EXCEPT SPINAL FUSION
W/O CC *.
501......... KNEE PROCEDURES W PDX 1.8783 46.3 38.5
OF INFECTION W CC \5\.
502......... KNEE PROCEDURES W PDX 0.8284 23.3 19.4
OF INFECTION W/O CC *.
503......... KNEE PROCEDURES W/O 1.8783 46.3 38.5
PDX OF INFECTION \5\.
504......... EXTENSIVE 3RD DEGREE 1.8783 46.3 38.5
BURNS W SKIN GRAFT *.
505......... EXTENSIVE 3RD DEGREE 1.2493 31.3 26.0
BURNS W/O SKIN GRAFT
\4\.
506......... FULL THICKNESS BURN W 1.8783 46.3 38.5
SKIN GRAFT OR INHAL
INJ W CC OR SIG
TRAUMA \5\.
507......... FULL THICKNESS BURN W 0.8284 23.3 19.4
SKIN GRFT OR INHAL
INJ W/O CC OR SIG
TRAUMA *.
508......... FULL THICKNESS BURN W/ 0.8284 23.3 19.4
O SKIN GRFT OR INHAL
INJ W CC OR SIG
TRAUMA \3\.
509......... FULL THICKNESS BURN W/ 0.8284 23.3 19.4
O SKIN GRFT OR INH
INJ W/O CC OR SIG
TRAUMA \3\.
510......... NON-EXTENSIVE BURNS W 1.0734 32.2 26.8
CC OR SIGNIFICANT
TRAUMA.
511......... NON-EXTENSIVE BURNS W/ 0.8284 23.3 19.4
O CC OR SIGNIFICANT
TRAUMA \3\.
512......... SIMULTANEOUS PANCREAS/ 0.0000 0.0 0.0
KIDNEY TRANSPLANT \6\.
513......... PANCREAS TRANSPLANT 0.0000 0.0 0.0
\6\.
514......... CARDIAC DEFIBRILATOR 0.8284 23.3 19.4
IMPLANT W CARDIAC
CATH *.
515......... CARDIAC DEFIBRILATOR 1.2493 31.3 26.0
IMPLANT W/O CARDIAC
CATH \4\.
516......... PERCUTANEOUS 0.8284 23.3 19.4
CARDIVASCULAR
PROCEDURE W AMI *.
517......... PERCUTANEOUS 1.8783 46.3 38.5
CARDIVASCULAR PROC W
NON-DRUG ELUTING
STENT W/O AMI \5\.
518......... PERCUTANEOUS 1.2493 31.3 26.0
CARDIVASCULAR PROC W/
O CORONARY ARTERY
STENT OR AMI \4\.
519......... CERVICAL SPINAL FUSION 0.8284 23.3 19.4
W CC \3\.
520......... CERVICAL SPINAL FUSION 0.6655 21.9 18.2
W/O CC \2\.
521......... ALCOHOL/DRUG ABUSE OR 0.3755 18.6 15.5
DEPENDENCE W CC.
522......... ALCOHOL/DRUG ABUSE OR 0.4055 16.8 14.0
DEPENDENCE W
REHABILITATION
THERAPY W/O CC \1\.
523......... ALCOHOL/DRUG ABUSE OR 0.3860 21.2 17.6
DEPENDENCE W/O
REHABILITATION
THERAPY W/O CC.
524......... TRANSIENT ISCHEMIA.... 0.6250 23.1 19.2
525......... HEART ASSIST SYSTEM 1.8783 46.3 38.5
IMPLANT *.
526......... PERCUTANEOUS 0.8284 23.3 19.4
CARVIOVASCULAR PROC W
DRUG-ELUTING STENT W
AMI *.
527......... PERCUTANEOUS 0.8284 23.3 19.4
CARVIOVASCULAR PROC W
DRUG-ELUTING STENT W/
O AMI *.
------------------------------------------------------------------------
* Relative weights for these LTC-DRGs were determined by assigning
these cases to the appropriate low volume quintile because they had no
LTCH cases in the FY 2001 MedPAR.
\1\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 1.
\2\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 2.
\3\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 3.
\4\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 4.
\5\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 5.
\6\ Relative weights for these LTC-DRGs were assigned a value of 0.0.
\7\ Relative weights for these LTC-DRGs were determined after adjusting
to account for nonmonotonically (see step 5 above).
[FR Doc. 03-14078 Filed 5-30-03; 3:28 pm]
BILLING CODE 4120-01-P