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Tuesday,

January 29, 2008

Part III

Department of
Health and Human
Services
Centers for Medicare & Medicaid Services

42 CFR Part 412


Medicare Program; Prospective Payment
System for Long-Term Care Hospitals RY
2009: Proposed Annual Payment Rate
Updates, Policy Changes, and
Clarifications; Proposed Rule
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5342 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

DEPARTMENT OF HEALTH AND 3. By express or overnight mail. You Linda McKenna, (410) 786–4537
HUMAN SERVICES may send written comments (one (Payment adjustments and interrupted
original and two copies) to the following stay).
Centers for Medicare & Medicaid address ONLY: Elizabeth Truong, (410) 786–6005
Services Centers for Medicare & Medicaid (Federal rate update, budget neutrality,
Services, Department of Health and other adjustments, and calculation of
42 CFR Part 412 Human Services, Attention: CMS–1393– the payment rates).
P, Mail Stop C4–26–05, 7500 Security Michael Treitel, (410) 786–4552 (High
[CMS–1393–P]
Boulevard, Baltimore, MD 21244–1850. cost outliers and cost-to-charge ratios).
RIN 0938–AO94 4. By hand or courier. If you prefer, Table of Contents
Medicare Program; Prospective you may deliver (by hand or courier) I. Background
Payment System for Long-Term Care your written comments (one original A. Legislative and Regulatory Authority
Hospitals RY 2009: Proposed Annual and two copies) before the close of the B. Criteria for Classification as a LTCH
comment period to one of the following 1. Classification as a LTCH
Payment Rate Updates, Policy 2. Hospitals Excluded From the LTCH PPS
Changes, and Clarifications addresses. If you intend to deliver your
comments to the Baltimore address, C. Transition Period for Implementation of
the LTCH PPS
AGENCY: Centers for Medicare & please call telephone number (410) 786– D. Limitation on Charges to Beneficiaries
Medicaid Services (CMS), HHS. 7195 in advance to schedule your E. Administrative Simplification
ACTION: Proposed rule. arrival with one of our staff members. Compliance Act (ASCA) and Health
Room 445–G, Hubert H. Humphrey Insurance Portability and Accountability
SUMMARY: This proposed rule would Building, 200 Independence Avenue, Act (HIPAA) Compliance
update the annual payment rates for the SW., Washington, DC 20201; or 7500 II. Summary of the Provisions of This
Medicare prospective payment system Proposed Rule
Security Boulevard, Baltimore, MD
(PPS) for inpatient hospital services III. Medicare Severity Long-Term Care
21244–1850. Diagnosis-Related Group (LTC–DRG)
provided by long-term care hospitals (Because access to the interior of the Classifications and Relative Weights
(LTCHs). In addition, we are proposing HHH Building is not readily available to A. Background
to consolidate the annual July 1 update persons without Federal Government B. Patient Classifications into MS–LTC–
for payment rates and the October 1 identification, commenters are DRGs
update for Medicare severity long-term encouraged to leave their comments in C. Organization of MS–LTC–DRGs
care diagnosis related group (MS–LTC– D. Method for Updating the MS–LTC–DRG
the CMS drop slots located in the main
DRG) weights to a single fiscal year (FY) Classifications and Relative Weights
lobby of the building. A stamp-in clock 1. Background
update. is available for persons wishing to retain
In this proposed rule, we are also 2. FY 2008 MS–LTC–DRG Relative Weights
a proof of filing by stamping in and IV. Proposed Changes to the LTCH PPS
clarifying various policy issues. retaining an extra copy of the comments Payment Rates and other Proposed
This proposed rule would also being filed.) Changes for the 2009 LTCH PPS Rate
describe our evaluation of the possible Year
Comments mailed to the addresses
one-time adjustment to the Federal A. Overview of the Development of the
indicated as appropriate for hand or
payment rate. Payment Rates
courier delivery may be delayed and B. Proposed Consolidation of the Annual
DATES: To be assured consideration, received after the comment period. Updates for Payment and MS–LTC–DRG
comments must be received at one of Submission of comments on Weights to One Annual Update
the addresses provided below, no later paperwork requirements. You may C. LTCH PPS Market Basket
than 5 p.m. on March 24, 2008. submit comments on this document’s 1. Overview of the RPL Market Basket
ADDRESSES: In commenting, please refer paperwork requirements by mailing 2. Market Basket Estimate for the 2009
to file code CMS–1393–P. Because of your comments to the addresses LTCH PPS Rate Year
staff and resource limitations, we cannot D. Discussion of a One-time Prospective
provided at the end of the ‘‘Collection Adjustment to the Standard Federal Rate
accept comments by facsimile (FAX) of Information Requirements’’ section in E. Proposed Standard Federal Rate for the
transmission. this document. 2009 LTCH PPS Rate Year
You may submit comments in one of For information on viewing public 1. Background
four ways (please choose only one of the comments, see the beginning of the 2. Proposed Standard Federal Rate for the
ways listed): SUPPLEMENTARY INFORMATION section. 2009 LTCH PPS Rate Year
1. Electronically. You may submit F. Calculation of Proposed LTCH
FOR FURTHER INFORMATION CONTACT: Prospective Payments for the 2009 LTCH
electronic comments on specific issues
in this regulation to http:// Tzvi Hefter, (410) 786–4487 (General PPS Rate Year
www.regulations.gov/. Follow the information). 1. Proposed Adjustment for Area Wage
Judy Richter, (410) 786–2590 (General Levels
instructions for ‘‘Comment or
information, payment adjustments for a. Background
Submission’’ and enter the filecode to b. Proposed Updates to the Geographic
find the document accepting comment. special cases, onsite discharges and
Classifications/Labor Market Area
2. By regular mail. You may mail readmissions, interrupted stays, co- Definitions
written comments (one original and two located providers, and short-stay (1) Background
copies) to the following address ONLY: outliers). (2) Proposed Update to the CBSA-based
Centers for Medicare & Medicaid Michele Hudson, (410) 786–5490 Labor Market Area Definitions
Services, Department of Health and (Calculation of the payment rates, MS– (3) New England Deemed Counties
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Human Services, Attention: CMS–1393– LTC–DRGs, relative weights and case- (4) Proposed Codification of the Definitions
mix index, market basket, wage index, of urban and rural under 42 CFR Part
P, P.O. Box 8013, Baltimore, MD 21244– 412, subpart O
8013. budget neutrality, and other payment c. Proposed Labor-Related Share
Please allow sufficient time for mailed adjustments). d. Proposed Wage Index Data
comments to be received before the Ann Fagan, (410) 786–5662 (Patient 2. Proposed Adjustment for Cost-of-Living
close of the comment period. classification system). in Alaska and Hawaii

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5343

3. Proposed Adjustment for High-Cost Program] Balanced Budget Refinement O.R. Operating room
Outliers (HCOs) Act of 1999 (Pub. L. 106–113) OSCAR Online Survey Certification and
a. Background BIPA Medicare, Medicaid, and SCHIP [State Reporting (System)
b. Cost-to-Charge Ratios (CCRs) Children’s Health Insurance Program] PIP Periodic interim payment
c. Establishment of the Fixed-Loss Amount Benefits Improvement and Protection PLI Professional liability insurance
d. Application of Outlier Policy to Short- Act of 2000 (Pub. L. 106–554) PMSA Primary metropolitan statistical area
Stay Outlier (SSO) Cases BLS Bureau of Labor Statistics PPI Producer Price Indexes
4. Other Proposed Payment Adjustments BN Budget neutrality PPS Prospective payment system
5. Technical Correction to the Budget CBSA Core-based statistical area PSF Provider specific file
Neutrality Requirement at CC Complications and comorbidities QIO Quality Improvement Organization
§ 412.523(d)(2) CCR Cost-to-charge ratio (formerly Peer Review organization
G. Proposed Conforming Changes C&M Coordination and maintenance (PRO))
V. Computing the Proposed Adjusted Federal CMI Case-mix index RIA Regulatory impact analysis
Prospective Payments for the 2009 LTCH CMS Centers for Medicare & Medicaid RPL Rehabilitation psychiatric long-term
PPS Rate Year Services care (hospital)
VI. Monitoring COLA Cost of living adjustment RTI Research Triangle Institute,
VII. Method of Payment COP Condition of participation International
VIII. RTIs Research CPI Consumer Price Index RY Rate year (begins July 1 and ends June
IX. Collection of Information Requirements CY Calendar year 30)
X. Regulatory Impact Analysis DSH Disproportionate share of low–income SIC Standard industrial code
A. Introduction patients SNF Skilled nursing facility
1. Executive Order 12866 DRGs Diagnosis–related groups SSO Short-stay outlier
2. Regulatory Flexibility Act (RFA) ECI Employment Cost Index TEFRA Tax Equity and Fiscal
3. Impact on Rural Hospitals FI Fiscal intermediary Responsibility Act of 1982 (Pub. L. 97–
4. Unfunded Mandates FY Fiscal year 248)
5. Federalism FFY Federal fiscal year TEP Technical expert panel
6. Alternatives Considered HCO High-cost outlier UHDDS Uniform hospital discharge data set
B. Anticipated Effects of Proposed Payment HCRIS Hospital cost report information
Rate Changes system I. Background
1. Budgetary Impact HHA Home health agency
2. Impact on Providers A. Legislative and Regulatory Authority
HHS (Department of) Health and Human
3. Calculation of Prospective Payments Section 123 of the Medicare,
Services
4. Results Medicaid, and SCHIP (State Children’s
HIPAA Health Insurance Portability and
a. Location
Accountability Act (Pub. L. 104–191) Health Insurance Program) Balanced
b. Participation Date
c. Ownership Control
HIPC Health Information Policy Council Budget Refinement Act of 1999 (BBRA)
d. Census Region HwHs Hospitals within hospitals (Pub. L. 106–113) as amended by
e. Bed size ICD–9–CM International Classification of section 307(b) of the Medicare,
5. Effects on the Medicare Program Diseases, Ninth Revision, Clinical Medicaid, and SCHIP Benefits
6. Effects on Medicare Beneficiaries Modification (codes)
IME Indirect medical education
Improvement and Protection Act of
C. Accounting Statement 2000 (BIPA) (Pub. L. 106–554) provides
Regulations Text I–O Input-Output
IPF Inpatient psychiatric facility for payment for both the operating and
Addendum
IPPS [Acute Care Hospital] Inpatient capital-related costs of hospital
Table 1: Proposed Long-Term Care
Prospective Payment System inpatient stays in long-term care
Hospital Wage Index for Urban Areas for
Discharges Occurring from July 1, 2008
IRF Inpatient rehabilitation facility hospitals (LTCHs) under Medicare Part
through September 30, 2009. LOS Length of stay A based on prospectively set rates. The
Table 2: Proposed Long-Term Care LTC-DRG Long-term care diagnosis-related Medicare prospective payment system
Hospital Wage Index for Rural Areas for group (PPS) for LTCHs applies to hospitals
Discharges Occurring from July 1, 2008 LTCH Long-term care hospital
MAC Medicare Administrative Contractor
described in section 1886(d)(1)(B)(iv) of
through September 30, 2009. the Social Security Act (the Act),
Table 3: FY 2008 MS–LTC–DRG Relative MCE Medicare code editor
MDC Major diagnostic categories effective for cost reporting periods
Weights, Geometric Average Length of Stay,
Short-Stay Outlier Threshold and IPPS- MedPAC Medicare Payment Advisory beginning on or after October 1, 2002.
Comparable Threshold (for Short-Stay Commission Section 1886(d)(1)(B)(iv)(I) of the Act
Outlier Cases). MedPAR Medicare provider analysis and defines a LTCH as ‘‘a hospital which has
review an average inpatient length of stay (as
Acronyms MMA Medicare Prescription Drug, determined by the Secretary) of greater
Because of the many terms to which we Improvement, and Modernization Act of than 25 days.’’ Section
refer by acronym in this proposed rule, we 2003 (Pub. L. 108–173) 1886(d)(1)(B)(iv)(II) of the Act also
are listing the acronyms used and their MMSEA Medicare, Medicaid, and SCHIP
corresponding terms in alphabetical order Extension Act of 2007 (Pub. L. 110–173)
provides an alternative definition of
below: MSA Metropolitan statistical area LTCHs: Specifically, a hospital that first
3M 3M Health Information System MS–DRG Medicare severity diagnosis- received payment under section 1886(d)
AHA American Hospital Association related group of the Act in 1986 and has an average
AHIMA American Health Information MS–LTC–DRG Medicare severity long-term inpatient length of stay (LOS) (as
Management Association care diagnosis-related group determined by the Secretary of Health
ALOS Average length of stay NAICS North American Industrial and Human Services (the Secretary)) of
ALTHA Acute Long Term Hospital Classification System greater than 20 days and has 80 percent
Association NALTH National Association of Long Term or more of its annual Medicare inpatient
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ASCA Administrative Simplification Hospitals


NCHS National Center for Health Statistics
discharges with a principal diagnosis
Compliance Act of 2002 (Pub. L. 107–
105) OACT [CMS’] Office of the Actuary that reflects a finding of neoplastic
BBA Balanced Budget Act of 1997 (Pub. L. OBRA 86 Omnibus Budget Reconciliation disease in the 12-month cost reporting
105–33) Act of 1986 (Pub. L. 99–509) period ending in fiscal year (FY) 1997.
BBRA Medicare, Medicaid, and SCHIP OMB Office of Management and Budget Section 123 of the BBRA requires the
[State Children’s Health Insurance OPM U.S. Office of Personnel Management PPS for LTCHs to be a ‘‘per discharge’’

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5344 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

system with a diagnosis-related group rule that established regulations for the adjusting the LTCH PPS payment so that
(DRG) based patient classification LTCH PPS under 42 CFR part 412, the LTCH PPS payment is equivalent to
system that reflects the differences in subpart O, also contained LTCH what would otherwise be payable under
patient resources and costs in LTCHs. provisions related to covered inpatient § 412.1(a).
Section 307(b)(1) of the BIPA, among services, limitation on charges to The Medicare, Medicaid and SCHIP
other things, mandates that the beneficiaries, medical review Extension Act of 2007 (MMSEA) (Pub.L.
Secretary shall examine, and may requirements, furnishing of inpatient 110–173) was enacted on December 29,
provide for, adjustments to payments hospital services directly or under 2007 and has various effects on the
under the LTCH PPS, including arrangement, and reporting and LTCH PPS. The new law’s provisions
adjustments to DRG weights, area wage recordkeeping requirements. We refer also have varying time frames of
adjustments, geographic reclassification, readers to the August 30, 2002 final rule applicability. First, we note that certain
outliers, updates, and a disproportionate for a comprehensive discussion of the provisions of the MMSEA provided that
share adjustment. research and data that supported the Secretary shall not apply, for cost
In the August 30, 2002 Federal establishment of the LTCH PPS (67 FR reporting periods beginning on or after
Register, we issued a final rule that 55954). the date of the enactment of the Act
implemented the LTCH PPS authorized In the June 6, 2003 Federal Register, (December 29, 2007) for a 3-year period:
under BBRA and BIPA (67 FR 55954). we published a final rule that set forth the extension of payment adjustments at
This system uses information from the FY 2004 annual update of the § 412.534 to ‘‘grandfathered LTCHs’’ (a
LTCH patient records to classify payment rates for the Medicare PPS for long term care hospital identified by the
patients into distinct MS-long-term care inpatient hospital services furnished by amendment made by section 4417(a) of
diagnosis-related groups (MS-LTC- LTCHs (68 FR 34122). It also changed Pub. L. 105–33); and the payment
DRGs) based on clinical characteristics the annual period for which the adjustment at § 412.536 to
and expected resource needs. Payments payment rates are effective. The annual ‘‘freestanding’’ LTCHs. In addition, the
are calculated for each MS-LTC-DRG updated rates are now effective from new law provides that the Secretary
and provisions are made for appropriate July 1 through June 30 instead of from shall not apply, for the 3-year period
payment adjustments. Payment rates October 1 through September 30. We beginning on the date of enactment of
under the LTCH PPS are updated refer to the July through June time the Act the revision to the SSO policy
annually and published in the Federal period as a ‘‘long-term care hospital rate at § 412.529(c)(3)(i) that was finalized in
Register. year’’ (LTCH PPS rate year). In addition, 72 FR 26904 and 26992 and the one-
The LTCH PPS replaced the we changed the publication schedule for time adjustment to the payment rates
reasonable cost-based payment system the annual update to allow for an provided for in § 412.523(d)(3). The
under the Tax Equity and Fiscal effective date of July 1. The payment statute also provides that the base rate
Responsibility Act of 1982 (TEFRA) amounts and factors used to determine for RY 2008 be the same as the base rate
(Pub. L. 97–248) for payments for the annual update of the LTCH PPS for RY 2007 (the revised base rate,
inpatient services provided by a LTCH Federal rate are based on a LTCH PPS however, does not apply to discharges
with a cost reporting period beginning rate year. While the LTCH payment rate occurring on or after July 1, 2007 and
on or after October 1, 2002. (The update is effective July 1, the annual before April 1, 2008); for a 3-year
regulations implementing the TEFRA update of the DRG classifications and moratorium (with specified exceptions)
reasonable cost-based payment relative weights for LTCHs are linked to on the establishment of new LTCHs,
provisions are located at 42 CFR part the annual adjustments of the acute care LTCH satellites, and on the increase in
413.) With the implementation of the hospital inpatient DRGs and are the number of LTCH beds. The new law
PPS for acute care hospitals authorized effective each October 1. also revises in the threshold percentages
by the Social Security Amendments of In the Prospective Payment System
1983 (Pub. L. 98–21), which added for certain co-located LTCHs and LTCH
for Long-Term Care Hospitals RY 2007:
section 1886(d) to the Act, certain satellites governed under § 412.534.
Annual Payment Rate Updates, Policy
hospitals, including LTCHs, were Finally, the Act provides for an
Changes, and Clarifications final rule
excluded from the PPS for acute care expanded review of medical necessity
(71 FR 27798) (hereinafter referred to as
hospitals and were paid their reasonable for admission and continued stay at
the RY 2007 LTCH PPS final rule), we
costs for inpatient services subject to a LTCHs. In this proposed rule we are
set forth the 2007 LTCH PPS rate year
per discharge limitation or target proposing to establish the applicable
annual update of the payment rates for
amount under the TEFRA system. For the Medicare PPS for inpatient hospital Federal rates for RY 2009 consistent
each cost reporting period, a hospital- services provided by LTCHs. We also with section 1886(m)(2) of the Act as
specific ceiling on payments was adopted the ‘‘Rehabilitation, amended by MMSEA. We are also
determined by multiplying the Psychiatric, Long-Term Care (RPL)’’ proposing to amend our regulations at
hospital’s updated target amount by the market basket under the LTCH PPS in § 412.523(d)(3) to change the
number of total current year Medicare place of the excluded hospital with methodology for the one-time budget
discharges. (Generally, in this document capital market basket. In addition, we neutrality adjustment and to comply
when we refer to discharges, the intent implemented a zero percent update to with section 114(c)(4) of Pub. L. 110–
is to describe Medicare discharges.) The the LTCH PPS Federal rate for RY 2007. 173. We intend to address all other
August 30, 2002 final rule further We also revised the existing payment policy revisions necessitated by the
details the payment policy under the adjustment for short stay outlier (SSO) statutory changes of the new law in the
TEFRA system (67 FR 55954). cases by reducing part of the existing future.
In the August 30, 2002 final rule, we payment formula and adding a fourth
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B. Criteria for Classification as a LTCH


also presented an in-depth discussion of component to that payment formula. We
the LTCH PPS, including the patient also sunsetted the surgical DRG 1. Classification as a LTCH
classification system, relative weights, exception to the payment policy Under the existing regulations at
payment rates, additional payments, established under the 3-day or less § 412.23(e)(1) and (e)(2)(i), which
and the BN requirements mandated by interruption of stay policy. Finally, we implement section 1886(d)(1)(B)(iv)(I) of
section 123 of the BBRA. The same final clarified the policy at § 412.534(c) for the Act, to qualify to be paid under the

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5345

LTCH PPS, a hospital must have a coverage, regardless of the fact that the Analysis and Review (MedPAR) files
provider agreement with Medicare and patient is a Medicare beneficiary, will that reflect each LTCH’s cost reporting
must have an average Medicare not be included in the above period (68 FR 45464). Requirements for
inpatient LOS of greater than 25 days. calculation. Because Medicare would hospitals seeking classification as
Alternatively, § 412.23(e)(2)(ii) states not be paying for any of the patient’s LTCHs that have undergone a change in
that for cost reporting periods beginning treatment, data on the patient’s stay ownership, as described in § 489.18, are
on or after August 5, 1997, a hospital would not be included in the Medicare set forth in § 412.23(e)(3)(iv).
that was first excluded from the PPS in claims processing systems. In order for
1986 and can demonstrate that at least both covered and noncovered days of a 2. Hospitals Excluded From the LTCH
80 percent of its annual Medicare LTCH hospitalization to be included, a PPS
inpatient discharges in the 12-month patient admitted to the LTCH must have The following hospitals are paid
cost reporting period ending in FY 1997 at least 1 remaining benefit day (68 FR under special payment provisions, as
have a principal diagnosis that reflects 34123). described in § 412.22(c), and therefore,
a finding of neoplastic disease must The FI’s determination of whether or are not subject to the LTCH PPS rules:
have an average inpatient LOS for all not a hospital qualifies as an LTCH is • Veterans Administration hospitals.
patients, including both Medicare and based on the hospital’s discharge data • Hospitals that are reimbursed under
non-Medicare inpatients, of greater than from the hospital’s most recent State cost control systems approved
20 days. complete cost reporting period as under 42 CFR part 403.
Section 412.23(e)(3) provides that, specified in § 412.23(e)(3) and is • Hospitals that are reimbursed in
subject to the provisions of paragraphs effective at the start of the hospital’s accordance with demonstration projects
(e)(3)(ii) through (e)(3)(iv) of this next cost reporting period as specified authorized under section 402(a) of the
section, the average Medicare inpatient in § 412.22(d). However, if the hospital Social Security Amendments of 1967
LOS, specified under § 412.23(e)(2)(i) is does not meet the ALOS requirement as (Pub. L. 90–248) (42 U.S.C. 1395b–1) or
calculated by dividing the total number specified in § 412.23(e)(2)(i) or (ii), the section 222(a) of the Social Security
of covered and noncovered days of stay hospital may provide the FI with data Amendments of 1972 (Pub. L. 92–603)
for Medicare inpatients (less leave or indicating a change in the ALOS by the (42 U.S.C. 1395b–1 (note)) (Statewide
pass days) by the number of total same method for the period of at least all-payer systems, subject to the rate-of-
Medicare discharges for the hospital’s 5 months of the immediately preceding increase test at section 1814(b) of the
most recent complete cost reporting 6-month period (69 FR 25676). Our Act).
period. Section 412.23 also provides interpretation of § 412.23(e)(3) was to • Nonparticipating hospitals
that subject to the provisions of allow hospitals to submit data using a furnishing emergency services to
paragraphs (e)(3)(ii) through (e)(3)(iv) of period of at least 5 months of the most Medicare beneficiaries.
this section, the average inpatient LOS recent data from the immediately C. Transition Period for Implementation
specified under § 412.23(e)(2)(ii) is preceding 6-month period. of the LTCH PPS
calculated by dividing the total number As we stated in the FY 2004 Hospital
of days for all patients, including both Inpatient Prospective Payment System In the August 30, 2002 final rule (67
Medicare and non-Medicare inpatients (IPPS) final rule, published in the FR 55954), we provided for a 5-year
(less leave or pass days) by the number August 1, 2003 Federal Register, prior transition period. During this 5-year
of total discharges for the hospital’s to the implementation of the LTCH PPS, transition period, a LTCH’s total
most recent complete cost reporting we did rely on data from the most payment under the PPS was based on an
period. recently submitted cost report for increasing percentage of the Federal rate
In the RY 2005 LTCH PPS final rule purposes of calculating the ALOS (68 with a corresponding decrease in the
(69 FR 25674), we specified the FR 45464). The calculation to determine percentage of the LTCH PPS payment
procedure for calculating a hospital’s whether an acute care hospital qualifies that is based on reasonable cost
inpatient average length of stay (ALOS) for LTCH status was based on total days concepts. However, effective for cost
for purposes of classification as a LTCH. and discharges for LTCH inpatients. reporting periods beginning on or after
That is, if a patient’s stay includes days However, with the implementation of October 1, 2006, total LTCH PPS
of care furnished during two or more the LTCH PPS, for the ALOS specified payments are based on 100 percent of
separate consecutive cost reporting under § 412.23(e)(2)(i), we revised the Federal rate.
periods, the total days of a patient’s stay § 412.23(e)(3)(i) to only count total days
D. Limitation on Charges to
would be reported in the cost reporting and discharges for Medicare inpatients
Beneficiaries
period during which the patient is (67 FR 55970 through 55974). In
discharged (69 FR 25705). Therefore, we addition, the ALOS specified under In the August 30, 2002 final rule, we
revised § 412.23(e)(3)(ii) to specify that, § 412.23(e)(2)(ii) is calculated by presented an in-depth discussion of
effective for cost reporting periods dividing the total number of days for all beneficiary liability under the LTCH
beginning on or after July 1, 2004, in patients, including both Medicare and PPS (67 FR 55974 through 55975). In the
calculating a hospital’s ALOS, if the non-Medicare inpatients (less leave or RY 2005 LTCH PPS final rule (69 FR
days of an inpatient stay involve days of pass days) by the number of total 25676), we clarified that the discussion
care furnished during two or more discharges for the hospital’s most recent of beneficiary liability in the August 30,
separate consecutive cost reporting complete cost reporting period. As we 2002 final rule was not meant to
periods, the total number of days of the discussed in the FY 2004 IPPS final establish rates or payments for, or define
stay are considered to have occurred in rule, we are unable to capture the Medicare-eligible expenses. Under
the cost reporting period during which necessary data from our existing cost § 412.507, if the Medicare payment to
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the inpatient was discharged. reporting forms (68 FR 45464). the LTCH is the full LTC–DRG payment
Fiscal intermediaries (FIs) verify that Therefore, we notified FIs and LTCHs amount, as consistent with other
LTCHs meet the ALOS requirements. that until the cost reporting forms are established hospital prospective
We note that the inpatient days of a revised, for purposes of calculating the payment systems, a LTCH may not bill
patient who is admitted to a LTCH ALOS, we will be relying upon census a Medicare beneficiary for more than the
without any remaining Medicare days of data extracted from Medicare Provider deductible and coinsurance amounts as

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5346 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

specified under § 409.82, § 409.83, and Classification of Diseases, Ninth III. Medicare Severity Long-Term Care
§ 409.87 and for items and services as Revision, Clinical Modification (ICD–9– Diagnosis-Related Group (MS–LTC–
specified under § 489.30(a). However, CM) codes effective each October 1. In DRG) Classifications and Relative
under the LTCH PPS, Medicare will this section, we also summarize the Weights
only pay for days for which the severity adjusted MS–LTC–DRGs and [If you choose to comment on issues in
beneficiary has coverage until the SSO the development of the relative weights this section, please include the caption
threshold is exceeded. Therefore, if the for FY 2008 as established in the FY ‘‘MS–LTC–DRG CLASSIFICATIONS
Medicare payment was for a SSO case 2008 IPPS final rule with comment AND RELATIVE WEIGHTS’’ at the
(§ 412.529) that was less than the full period. beginning of your comments.]
LTC–DRG payment amount because the
beneficiary had insufficient remaining In section IV.B. of this proposed rule, A. Background
Medicare days, the LTCH could also we are proposing to extend the rate year
Section 123 of the BBRA requires that
charge the beneficiary for services cycle for RY 2009 to a 15-month period,
the Secretary implement a PPS for
delivered on those uncovered days from July 1, 2008 through September 30,
LTCHs (that is, a per discharge system
(§ 412.507). 2009. We would continue to have an with a DRG-based patient classification
update to the MS–LTC–DRG system reflecting the differences in
E. Administrative Simplification
classifications and weights effective for patient resources and costs). Section
Compliance Act (ASCA) and Health
Insurance Portability and October 1, 2008. We are proposing to 307(b)(1) of the BIPA modified the
Accountability Act (HIPAA) Compliance have one consolidated annual update to requirements of section 123 of the BBRA
both the rates and the classifications by requiring that the Secretary examine
Claims submitted to Medicare must and weights beginning October 1, 2009.
comply with both the Administrative ‘‘the feasibility and the impact of basing
Simplification Compliance Act (ASCA) As discussed in section IV.E.2. of this payment under such a system (the
(Pub. L. 107–105), and Health Insurance proposed rule, we are proposing a 3.5 LTCH PPS) on the use of existing (or
Portability and Accountability Act of percent market basket update to the refined) hospital DRGs that have been
1996 (HIPAA) (Pub. L. 104–191). LTCH PPS Federal rate for the 2009 modified to account for different
Section 3 of the ASCA requires that the LTCH PPS rate year based on the most resource use of LTCH patients, as well
Medicare Program deny payment under recent market basket estimate for the as the use of the most recently available
Part A or Part B for any expenses proposed 15-month 2009 LTCH PPS rate hospital discharge data.’’
incurred for items or services ‘‘for year. Also in section IV. of this When the LTCH PPS was
which a claim is submitted other than implemented for cost reporting periods
proposed rule, we discuss the
in an electronic form specified by the beginning on or after October 1, 2002,
prospective payment rate for RY 2009.
Secretary.’’ Section 1862(h) of the Act we adopted the same DRG patient
In section IV. D. of this proposed rule, classification system (that is, the CMS
(as added by section 3(a) of the ASCA)
provides that the Secretary shall waive we discuss the possible one-time DRGs) that was utilized at that time
such denial in two specific types of adjustment to the Federal payment rate under the hospital inpatient prospective
cases and may also waive such denial under § 412.523(d)(3). Consistent with payment system (IPPS). As a component
‘‘in such unusual cases as the Secretary section 114(c)(4) of Public Law 110–173, of the LTCH PPS, we refer to the patient
finds appropriate’’ (68 FR 48805). we are not proposing any adjustment classification system as the ‘‘LTC–
Section 3 of the ASCA operates in the under § 412.523(d)(3). However, at this DRGs.’’ As discussed in greater detail
context of the HIPAA regulations, which time, we are proposing to make a change below, although the patient
include, among other provisions, the to the methodology and changes classification system used under both
transactions and code sets standards reflecting the requirements of section the LTCH PPS and the IPPS are the
requirements codified as 45 CFR parts 114(c)(4) of Public Law 110–173 to the same, the relative weights are different.
160 and 162, subparts A and I through regulatory text. The established relative weight
R (generally known as the Transactions methodology and data used under the
In section VI. of this proposed rule,
Rule). The Transactions Rule requires LTCH PPS result in LTC–DRG relative
we discuss the proposed updates to the
covered entities, including covered weights that reflect ‘‘the different
payment rates, including the proposed
health care providers, to conduct certain resource use of long-term care hospital
revisions to the wage index, the labor- patients consistent with the statute’’.
electronic healthcare transactions related share, the cost-of-living
according to the applicable transactions As part of our efforts to better
adjustment (COLA) factors, and the recognize severity of illness among
and code sets standards. outlier threshold, for the 2009 LTCH patients, in the FY 2008 IPPS final rule
II. Summary of the Provisions of This PPS rate year. with comment period (72 FR 47130), the
Proposed Rule In section IX. of this proposed rule, Medicare Severity diagnosis related
In this proposed rule, we propose to we discuss our on-going monitoring groups (MS–DRGs) and the Medicare
revise the LTCH PPS payment rate protocols under the LTCH PPS. Severity long-term care diagnosis
update cycle and make other policy In section X. of this proposed rule, we related groups (MS–LTC–DRGs) were
changes and clarifications. The present an update of Research Triangle adopted for the IPPS and the LTCH PPS,
following is a summary of the major respectively, effective October 1, 2007
Institute’s (RTI) analysis relating to the
areas that we are addressing in this (FY 2008). For a full description of the
development of LTCH patient- and
proposed rule. development and implementation of the
facility-level criteria.
In section III. of this proposed rule, MS–DRGs and MS–LTC–DRGs, see the
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we discuss the LTCH PPS patient In section XII. of this proposed rule, FY 2008 IPPS final rule with comment
classification and the relative weights we analyze the impact of the proposed period (72 FR 47141 through 47175 and
which are linked to the annual changes presented in this proposed rule 47277 through 47299). (We note that in
adjustments of the acute care hospital on Medicare expenditures, Medicare- that same final rule, we revised the
inpatient DRG system, and are based on participating LTCHs, and Medicare regulations at § 412.503 to specify that
the annual revisions to the International beneficiaries. for LTCH discharges occurring on or

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after October 1, 2007, when applying detailed discussion of the application of demographic information into their
the provisions of this subpart for policy the Lewin Group ‘‘quintile’’ model that claims processing systems and subject
descriptions and payment calculations, was used to develop the LTC–DRGs this information to a series of automated
all references to LTC–DRGs would be appears in the August 30, 2002 LTCH screening processes called the Medicare
considered a reference to MS–LTC– PPS final rule (67 FR 55978).) We also Code Editor (MCE). These screens are
DRGs. For the remainder of this section, account for adjustments to payments for designed to identify cases that require
we present the discussion in terms of short-stay outlier (SSO) cases (that is, further review before assignment into a
the current MS–LTC–DRG patient cases where the covered length of stay MS–LTC–DRG can be made. During this
classification unless specifically (LOS) at the LTCH is less than or equal process, the following types of cases are
referring to the previous LTC–DRG to five-sixths of the geometric ALOS for selected for further development:
patient classification system (that was in the MS–LTC–DRG), and we make • Cases that are improperly coded.
effect before October 1, 2007).) We adjustments to account for (For example, diagnoses are shown that
believe the MS–DRGs (and by extension, nonmonotonicity, when necessary (as are inappropriate, given the sex of the
the MS–LTC–DRGs) represent a described below in this section). patient. Code 68.69, Other and
substantial improvement over the unspecified radical abdominal
previous CMS DRGs in their ability to B. Patient Classifications Into MS–LTC– hysterectomy, would be an
differentiate cases based on severity of DRGs inappropriate code for a male.)
illness and resource consumption. Generally, under the LTCH PPS, a • Cases including surgical procedures
The MS–DRGs represent an increase Medicare payment is made at a not covered under Medicare. (For
in the number of DRGs by 207 (that is, predetermined specific rate for each example, organ transplant in a non-
from 538 to 745) (72 FR 47171). In discharge; that payment varies by the approved transplant center.)
addition to improving the DRG system’s MS–LTC–DRG to which a beneficiary’s • Cases requiring more information.
recognition of severity of illness, we stay is assigned. Cases are classified into (For example, ICD–9–CM codes are
believe the MS–DRGs are responsive to MS–LTC–DRGs for payment based on required to be entered at their highest
the public comments that were made on the following six data elements: level of specificity. There are valid 3-
the FY 2007 IPPS proposed rule with • Principal diagnosis. digit, 4-digit, and 5-digit codes. That is,
respect to how we should undertake • Up to eight additional diagnoses. code 262, Other severe protein-calorie
further DRG reform. The MS–DRGs use • Up to six procedures performed. malnutrition, contains all appropriate
the CMS DRGs as the starting point for • Age. digits, but if it is reported with either
revising the DRG system to better • Sex. fewer or more than 3 digits, the claim
recognize resource complexity and • Discharge status of the patient. will be rejected by the MCE as invalid.)
severity of illness. We have generally Upon the discharge of the patient After screening through the MCE,
retained all of the refinements and from a LTCH, the LTCH must assign each claim is classified into the
improvements that have been made to appropriate diagnosis and procedure appropriate MS–LTC–DRG by the
the base DRGs over the years that codes from the most current version of Medicare LTCH GROUPER software.
recognize the significant advancements the International Classification of The Medicare GROUPER software,
in medical technology and changes to Diseases, Ninth Revision, Clinical which is used under the LTCH PPS, is
medical practice. Modification (ICD–9–CM). HIPAA specialized computer software, and is
In accordance with section 123 of the Transactions and Code Sets Standards the same GROUPER software program
BBRA as amended by section 307(b)(1) regulations at 45 CFR parts 160 and 162 used under the IPPS. The GROUPER
of the BIPA and § 412.515, we use require that no later than October 16, software was developed as a means of
information derived from LTCH PPS 2003, all covered entities must comply classifying each case into a MS–LTC–
patient records to classify LTCH with the applicable requirements of DRG on the basis of diagnosis and
discharges into distinct MS–LTC–DRGs subparts A and I through R of part 162. procedure codes and other demographic
based on clinical characteristics and Among other requirements, those information (age, sex, and discharge
estimated resource needs. As stated provisions direct covered entities to use status). Following the MS–LTC–DRG
above, the MS–LTC–DRGs used as the the ASC X12N 837 Health Care Claim: assignment, the Medicare contractor (FI
patient classification component of the Institutional, Volumes 1 and 2, version or MAC) determines the prospective
LTCH PPS correspond to the hospital 4010, and the applicable standard payment amount by using the Medicare
inpatient MS–DRGs in the IPPS. We medical data code sets for the PRICER program, which accounts for
assign an appropriate weight to the MS– institutional health care claim or hospital-specific adjustments. Under the
LTC–DRGs to account for the difference equivalent encounter information LTCH PPS, we provide an opportunity
in resource use by patients exhibiting transaction (see 45 CFR 162.1002 and 45 for the LTCH to review the MS–LTC–
the case complexity and multiple CFR 162.1102). For additional DRG assignments made by the Medicare
medical problems characteristic of information on the ICD–9–CM Coding contractor and to submit additional
LTCHs. System, refer to the FY 2008 IPPS final information within a specified
In a departure from the IPPS, we use rule with comment period (72 FR 47241 timeframe as specified in § 412.513(c).
low volume MS–LTC–DRGs (less than through 47243 and 47277 through The GROUPER software is used both
25 LTCH cases) in determining the MS– 47281). We also refer readers to the to classify past cases to measure relative
LTC–DRG relative weights, since LTCHs detailed discussion on correct coding hospital resource consumption to
do not typically treat the full range of practices in the August 30, 2002 LTCH establish the DRG weights and to
diagnoses as do acute care hospitals. To PPS final rule (67 FR 55981 through classify current cases for purposes of
manage the large number of low volume 55983). Additional coding instructions determining payment. The records for
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MS–LTC–DRGs (all MS–LTC–DRGs and examples are published in the all Medicare hospital inpatient
with fewer than 25 LTCH cases), for Coding Clinic for ICD–9–CM. discharges are maintained in the
purposes of determining the relative Medicare contractors (that is, fiscal MedPAR file. The data in this file are
weights, we group low volume MS– intermediaries (FIs), now called used to evaluate possible MS–DRG
LTC–DRGs into 5 quintiles based on Medicare Administrative Contractors classification changes and to recalibrate
average charge per discharge. (A (MACs)) enter the clinical and the MS–DRG and MS–LTC–DRG relative

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weights during CMS’ annual update In developing Version 25.0 of the that represents the resources needed by
under both the IPPS (§ 412.60(e)) and GROUPER program (the FY 2008 MS– an average inpatient LTCH case in that
the LTCH PPS (§ 412.517), respectively. DRGs), the diagnoses comprising the CC MS–LTC–DRG. For example, cases in a
As discussed in greater detail in section list were completely redefined. The MS–LTC–DRG with a relative weight of
III.D. of this preamble, with the revised CC list is primarily comprised of 2 will, on average, cost twice as much
implementation of section 503(a) of the significant acute disease, acute as cases in a MS–LTC–DRG with a
Medicare Prescription Drug, exacerbations of significant chronic relative weight of 1. Under § 412.517,
Improvement, and Modernization Act of diseases, advanced or end stage chronic the MS–LTC–DRG classifications and
2003 (MMA) (Pub. L. 108–173), there is diseases, and chronic diseases weighting factors (that is, relative
the possibility that one feature of the associated with extensive debility. In weights) are adjusted annually to reflect
GROUPER software program may be general, most chronic diseases were not changes in factors affecting the relative
updated twice during a Federal FY included on the revised CC list. For a use of LTCH resources, including
(FFY) (October 1 and April 1) as patient with a chronic disease, a treatment patterns, technology and
required by the statute for the IPPS (69 significant acute manifestation of the number of discharges.
FR 48954 through 48957). Specifically, chronic disease was required to be In the June 6, 2003 LTCH PPS final
as we discussed in the FY 2008 IPPS present and coded for the patient to be rule (68 FR 34122 through 34125), we
final rule with comment period (72 FR assigned a CC. changed the LTCH PPS annual payment
47227 through 47278), diagnosis and In addition to the revision of the CC rate update cycle to be effective July 1
procedure codes for new medical list, each CC was also categorized as a through June 30 instead of October 1
technology have the potential to be major CC (MCC) or a CC based on through September 30. In addition,
created and added to existing MS–DRGs relative resource use. Approximately 12 because the patient classification system
(and MS–LTC–DRGs) in the middle of percent of all diagnoses codes were utilized under the LTCH PPS is the
the FFY on April 1. New codes would classified as a major CC (MCC), 24 same DRG system that is used under the
be added to their predecessor MS–DRGs percent as a CC, and 64 percent as a non IPPS, in that same final rule, we
and MS–LTC–DRGs; no new MS–DRGs CC. Diagnoses closely associated with explained that the annual update of the
would be created. Additionally, this mortality (ventricular fibrillation, LTC–DRG classifications and relative
policy change will have no effect on the cardiac arrest, shock, and respiratory weights will continue to remain linked
MS–LTC–DRG relative weights (during arrest) were assigned as an MCC if the to the annual reclassification and
the FY), which will continue to be patient lived but as a non CC if the recalibration of the CMS DRGs used
updated only once a year (October 1), patient died. under the IPPS (as is the case with the
nor will there be any impact on The MCC, CC, and non CC MS–DRGs effective for discharges
Medicare payments under the LTCH categorization was used to subdivide the occurring on or after October 1, 2007
PPS during the FY as result of this surgical and medical DRGs into up to (see § 412.503)). Therefore, we specified
policy. The use of the ICD–9–CM code three levels, with a case being assigned that we will continue to update the
set is also compliant with the current to the most resource intensive level (for LTC–DRG classifications and relative
requirements of the Transactions and example, a case with two secondary weights to be effective for discharges
Code Sets Standards regulations at 45 diagnoses that are categorized as an occurring on or after October 1 through
CFR parts 160 and 162, published in MCC and a CC is assigned to the MCC September 30 each year. We further
accordance with HIPAA. level). To create the MS–DRGs (and by stated at that time that we will publish
extension, the MS–LTC–DRGs) the annual proposed and final update of
C. Organization of the MS–LTC–DRGs the LTC–DRGs in same notice as the
individual DRGs were subdivided into
The MS–DRGs (used under the IPPS) proposed and final update for the IPPS
three, two, or one level, depending on
and the MS–LTC–DRGs (used under the (69 FR 34125). (We note that in section
the CC impact on resources used for
LTCH PPS) are based on the CMS DRG IV.B. of this preamble, we are proposing
those cases.
structure. As noted above in this to revise § 412.535 in order to
As noted above in this section, further
section, we refer to the DRGs under the consolidate the annual July 1 and
information on the development and
LTCH PPS as MS–LTC–DRGs although October 1 LTCH PPS update cycles, so
implementation of the MS–DRGs and
they are structurally identical to the that beginning with FY 2010, both the
MS–LTC–DRGs can be found in the FY
DRGs used under the IPPS. The MS– annual update to the standard Federal
2008 IPPS final rule with comment
DRGs are organized into 25 major rate (and other rate and policy changes)
period (72 FR 47138 through 47175 and
diagnostic categories (MDCs), most of and the annual update to the MS–LTC–
47277 through 47299).
which are based on a particular organ DRGs would be presented in a single
system of the body; the remainder D. Method for Updating the MS–LTC– Federal Register publication to be
involve multiple organ systems (such as DRG Classifications and Relative effective on October 1 each year.) Under
MDC 22, Burns). Within most MDCs, Weights existing § 412.535(b), the FY 2008
cases are then divided into surgical update of the LTCH PPS patient
DRGs and medical DRGs. Surgical DRGs 1. Background
classification system and relative
are assigned based on a surgical Under the LTCH PPS, relative weights weights was presented in the FY 2008
hierarchy that orders operating room for each MS–LTC–DRG are a primary IPPS final rule with comment (72 FR
(O.R.) procedures or groups of O.R. element used to account for the 47277 through 47299). For the reader’s
procedures by resource intensity. The variations in cost per discharge and benefit, we are providing a summary of
GROUPER software program does not resource utilization among the payment the discussion presented in that final
recognize all ICD–9–CM procedure groups (that is, the MS–LTC–DRGs). To rule with comment in section III.D.2. of
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codes as procedures affecting DRG ensure that Medicare patients classified this preamble.
assignment, that is, procedures which to each MS–LTC–DRG have access to an For FY 2008, the MS–LTC–DRG
are not surgical (for example, EKG), or appropriate level of services and to classifications and relative weights were
minor surgical procedures (for example, encourage efficiency, each year based on updated based on LTCH data from the
86.11, Biopsy of skin and subcutaneous the best available data, we calculate a FY 2006 MedPAR file, which contained
tissue). relative weight for each MS–LTC–DRG hospital bills data from the March 2007

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update. The MS–LTC–DRG patient software, which are based on the ICD– groups as described in § 412.515. To
classification system for FY 2008 9–CM codes, were also revised annually ensure that Medicare patients who are
consists of 745 DRGs that formed the and effective for discharges occurring on classified to each MS–LTC–DRG have
basis of the Version 25.0 GROUPER or after October 1 each year. The patient access to services and to encourage
program utilized under the LTCH PPS. classification system used under the efficiency, we calculate a relative weight
The 745 MS–LTC–DRGs included two LTCH PPS (MS–LTC–DRGs) is the same for each MS–LTC–DRG that represents
‘‘error DRGs.’’ As in the IPPS, we DRG patient classification system used the resources needed by an average
included two error DRGs in which cases under the IPPS, which historically had inpatient LTCH case in that MS–LTC–
that cannot be assigned to valid DRGs been updated annually and was DRG. For example, cases in a MS–LTC–
will be grouped. These two error DRGs effective for discharges occurring on or DRG with a relative weight of 2 will, on
are MS–LTC–DRG 998 (Principal after October 1 through September 30 average, cost twice as much as cases in
Diagnosis Invalid as a Discharge each year. We have also explained that a MS–LTC–DRG with a weight of 1.
Diagnosis) and MS–LTC–DRG 999 since we do not publish a mid–year As we discussed in the FY 2008 IPPS
(Ungroupable). The other 743 MS–LTC– IPPS rule, we will assign any new final rule with comment period (72 FR
DRGs are the same DRGs used in the diagnosis or procedure codes 47282), the MS–LTC–DRG relative
IPPS GROUPER program for FY 2008 implemented on April 1 to the same weights effective under the LTCH PPS
(Version 25.0). DRG in which its predecessor code was for Federal FY 2008 were calculated
In the past, the annual update to the assigned, so that there will be no impact using the March 2007 update of FY 2006
CMS DRGs was based on the annual on the DRG assignments until the MedPAR data and Version 25.0 of the
revisions to the ICD–9–CM codes and following October 1. Any coding GROUPER software.
was effective each October 1. The ICD– updates will be available through the LTCHs often specialize in certain
9–CM coding update process was Web sites provided in section II.G.10. of areas, such as ventilator-dependent
revised as discussed in greater detail in the preamble of the FY 2008 IPPS final patients and rehabilitation or wound
the FY 2005 IPPS final rule (69 FR rule with comment period (72 FR 47241 care. Some case types (DRGs) may be
48953 through 48957). Specifically, through 47243) and through the Coding treated, to a large extent, in hospitals
section 503(a) of the MMA includes a Clinic for ICD–9–CM. Publishers and that have (from a perspective of charges)
requirement for updating diagnosis and software vendors currently obtain code relatively high (or low) charges.
procedure codes twice a year instead of changes through these sources to update Distribution of cases with relatively
the former process of annual updates on their code books and software system. If high (or low) charges in specific MS–
October 1 of each year. This new codes are implemented on April 1, LTC–DRGs has the potential to
requirement is included as part of the revised code books and software inappropriately distort the measure of
amendments to the Act relating to systems, including the GROUPER average charges. To account for the fact
recognition of new medical technology software program, will be necessary that cases may not be randomly
under the IPPS. (For additional because we must use current ICD–9–CM distributed across LTCHs, we use a
information on this provision, including codes. Therefore, for purposes of the hospital-specific relative value (HSRV)
its implementation and its impact on LTCH PPS, because each ICD–9–CM method to calculate relative weights. We
the LTCH PPS, refer to the FY 2005 IPPS code must be included in the GROUPER believe this method removes this
final rule (69 FR 48953 through 48957) algorithm to classify each case into a hospital-specific source of bias in
and the RY 2006 LTCH PPS final rule MS–LTC–DRG, the GROUPER software measuring average charges. Specifically,
(70 FR 24172 through 24177).) As noted program used under the LTCH PPS we reduce the impact of the variation in
above in this section, with the would need to be revised to charges across providers on any
implementation of section 503(a) of the accommodate any new codes. particular MS–LTC–DRG relative weight
MMA, there is the possibility that one At the September 2007 ICD–9–CM by converting each LTCH’s charge for a
feature of the GROUPER software C&M Committee meeting, there were no case to a relative value based on that
program may be updated twice during a compelling requests for an April 1, 2008 LTCH’s average charge. (See the FY
FFY (October 1 and April 1) as required implementation of new ICD–9–CM 2008 IPPS final rule with comment
by the statute for the IPPS. Specifically, codes, and therefore, we expect that the period for further information on the
diagnosis and procedure codes for new next update to the ICD–9–CM coding application of the HSRV methodology
medical technology may be created and system will not occur until October 1, under the LTCH PPS (72 FR 47282).)
added to existing DRGs in the middle of 2008 (FY 2009). Therefore, we expect To account for MS–LTC–DRGs with
the FFY on April 1. No new MS–LTC– that the ICD–9–CM coding set low volume (that is, with fewer than 25
DRGs will be created or deleted. implemented on October 1, 2007, will LTCH cases), we grouped those ‘‘low
Consistent with our current practice, continue through September 30, 2008 volume’’ MS–LTC–DRGs into 1 of 5
any changes to the MS–DRGs or relative (FY 2008). The next update to the MS– categories (quintiles) based on average
weights will be made at the beginning LTC–DRGs and relative weights for FY charges for the purposes of determining
of the next FFY (October 1). Therefore, 2009 will be presented in the FY 2009 relative weights. Each of the low volume
there will not be any impact on MS– IPPS proposed and final rules. MS–LTC–DRGs grouped to a specific
LTC–DRG payments under the LTCH quintile received the same relative
2. FY 2008 MS–LTC–DRG Relative weight and ALOS using the formula
PPS until the following October 1
Weights applied to the regular MS–LTC–DRGs
(although the new ICD–9–CM diagnosis
and procedure codes would be In accordance with § 412.523(c), we (25 or more cases). (See the FY 2008
recognized April 1). adjust the LTCH PPS standard Federal IPPS final rule with comment period for
As we explained in the FY 2008 IPPS rate by the MS–LTC–DRG relative further explanation of the development
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final rule with comment period (72 FR weights in determining payment to and composition of each of the 5 low
47277), annual changes to the ICD–9– LTCHs for each case. Relative weights volume quintiles for FY 2008 (72 FR
CM codes historically were effective for for each MS–LTC–DRG are a primary 47283 through 47288).)
discharges occurring on or after October element used to account for the After grouping the cases in the
1 each year. Thus, the manual and variations in cost per discharge and appropriate MS–LTC–DRG, generally,
electronic versions of the GROUPER resource utilization among the payment we calculated the relative weights by

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first removing statistical outliers and LTC–DRGs in a budget neutral manner same IPPS final rule with comment
cases with a LOS of 7 days or less. Next, because we believed that past period (78 FR 48143 through 48157)
we adjusted the number of cases fluctuations in the relative weights were will continue to be effective until
remaining in each MS–LTC–DRG for the primarily due to changes in LTCH October 1, 2008, (just as they would
effect of SSO cases under § 412.529. The coding practices rather than changes in have been even if there had been any
short-stay adjusted discharges and patient severity. In light of the most new ICD–9–CM code requests for an
corresponding charges were used to recently available LTCH claims data at April 1, 2008 update). We note that
calculate ‘‘relative adjusted weights’’ in that time, which indicated that LTCH Table 11 was corrected in the FY 2008
each MS–LTC–DRG using the HSRV claims data no longer appeared to IPPS correction notice that appeared in
method. In determining the FY 2008 significantly reflect changes in LTCH the October 10, 2007 Federal Register
MS–LTC–DRG relative weights, we also coding practices in response to the (72 FR 57733) and is hereinafter referred
made adjustments, as necessary, to implementation of the LTCH PPS, we to as the second FY 2008 IPPS
adjust for nonmonotonicity for the believed that, beginning with FY 2008, correction notice. Accordingly, Table 3
severity levels within a specific base it is appropriate to update the MS–LTC– in the Addendum of this proposed rule
MS–LTC–DRG. (Refer to the FY 2008 DRGs in a budget neutral manner (that lists the MS–LTC–RGs and their
IPPS final rule with comment period for is, so that estimated aggregate LTCH respective relative weights, geometric
further information on the treatment of PPS payments will neither increase nor ALOS, ‘‘Short-Stay Outlier Threshold’’
severity levels and adjustments for decrease). Accordingly, in that same and ‘‘IPPS Comparable Threshold’’ that
nonmonotically increasing relative final rule with comment period, we we will continue to use for the period
weights for FY 2008 (72 FR 47282 established under § 412.517(b) that the of July 1, 2008 through September 30,
through 47283 and 47293 through annual update to the MS–LTC–DRG 2009. (As noted above, this table is the
47295).) Furthermore, we determined classifications and relative weights be same as Table 11 of the Addendum to
FY 2008 MS–LTC–DRG relative weights done in a budget neutral manner. (As the FY 2008 IPPS final rule with
for the 185 MS–LTC–DRGs for which noted above in section III.A. of this comment period, including the
there were no LTCH cases in the preamble, we revised the regulations at technical correction made in the second
database (that is, LTCH claims from the § 412.503 to specify that ‘‘MS–LTC– FY 2008 IPPS correction notice (72 FR
FY 2006 LTCH MedPAR files). (A list of DRG’’ is used in place of ‘‘LTC–DRG’’ 57733), which has been reprinted in
the FY 2008 ‘‘no-volume’’ MS–LTC– for discharges occurring on or after Table 3 of the Addendum of this
DRGs and further explanation of their October 1, 2007.) Consistent with that proposed rule for the reader’s
FY 2008 relative weight assignment can provision, we updated the MS–LTC– convenience.) We expect the next
be found in the FY 2008 IPPS final rule DRG classifications and relative weights update to the ICD–9–CM coding system
with comment period (72 FR 47289 for FY 2008 based on the most recent to be presented in the FY 2009 IPPS
through 47293).) available data and included a budget proposed rule (since we expect that
In adopting the MS–LTC–DRGs neutrality adjustment. For further there will be no April 1, 2008 updates
beginning in FY 2008, we established a details on the methodology and to the ICD–9–CM coding system). In
2-year transition. Specifically, for FY calculation of the FY 2008 MS–LTC– addition, the proposed MS–DRGs and
2008, the first year of the transition, 50 DRG budget neutrality factor, refer to GROUPER for FY 2009 that would be
percent of the relative weight for a MS– the FY 2008 IPPS final rule with used for the IPPS and the LTCH PPS,
LTC–DRG is based on the average LTC– comment period (72 FR 47295 through effective October 1, 2008, and the
DRG relative weight under Version 24.0 47296). proposed update to the MS–LTC–DRG
of the LTC–DRG GROUPER. The Table 11 of the Addendum to the FY relative weights for FY 2009 will be
remaining 50 percent of the relative 2008 IPPS final rule with comment presented in the IPPS FY 2009 proposed
weight is based on the MS–LTC–DRG period lists the MS–LTC–DRGs and rule that will be published in the
relative weight under Version 25.0 of their respective transition blended Federal Register.
the MS–LTC–DRG GROUPER. (See the budget neutral relative weights,
FY 2008 IPPS final rule with comment geometric mean LOS, ‘‘short-stay outlier IV. Proposed Changes to the LTCH PPS
period (72 FR 47295) for additional threshold’’ (that is, five-sixths of the Payment Rates and Other Proposed
details on the methodology used to geometric mean LOS), and the ‘‘IPPS Changes for the 2009 LTCH PPS Rate
determine the transition blended MS– Comparable Threshold’’ (that is, the Year
LTC–DRG relative weights for FY 2008.) IPPS geometric average length of stay [If you choose to comment on issues
In the RY 2008 LTCH PPS final rule plus one standard deviation) for each in this section, please include the
(72 FR 26882), under the broad MS–LTC–DRG for FY 2008 (see (72 FR caption ‘‘PROPOSED CHANGES TO
authority conferred upon the Secretary 48143 through 48157), and the technical LTCH PPS PAYMENT RATES FOR THE
under section 123 of Public Law 106– correction made in the October 10, 2007 2009 LTCH PPS RATE YEAR’’ at the
113 as amended by section 307(b) of correction notice (72 FR 57733), which beginning of your comments.]
Public Law 106–554 to develop the has been reprinted in Table 3 of the
LTCH PPS, we established that A. Overview of the Development of the
Addendum of this proposed rule for
beginning with the update for FY 2008, Payment Rates
convenience).
the annual update to the MS–LTC–DRG As we noted previously in this The LTCH PPS was effective
classifications and relative weights will section, there were no new ICD–9–CM beginning with a LTCH’s first cost
be done in a budget neutral manner code requests for an April 1, 2008 reporting period beginning on or after
such that estimated aggregate LTCH PPS update. Therefore, we expect that October 1, 2002. Effective with that cost
payments would be unaffected, that is, Version 25.0 of the MS–DRG GROUPER reporting period, LTCHs are paid,
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would be neither greater than nor less software established in the FY 2008 during a 5-year transition period, a total
than the estimated aggregate LTCH PPS IPPS final rule with comment period LTCH prospective payment that is
payments that would have been made will continue to be effective until comprised of an increasing proportion
without the MS–LTC–DRG classification October 1, 2008. Moreover, the MS– of the LTCH PPS Federal rate and a
and relative weight changes. LTC–DRGs and relative weights for FY decreasing proportion based on
Historically, we had not updated the 2008 established in Table 11 of that reasonable cost-based principles, unless

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the hospital makes a one-time election 24179 through 24180), RY 2007 LTCH the IPPS and LTCH PPS proposed and
to receive payment based on 100 PPS final rule (71 FR 27819 through final rules. Thus, currently the annual
percent of the Federal rate, as specified 27827), and RY 2008 LTCH PPS final update of the LTCH PPS Federal rates
in § 412.533. New LTCHs (as defined at rule (72 FR 26870 through 27029). do not coincide with the start of the
§ 412.23(e)(4)) are paid based on 100 FFY, but rather, are effective prior to the
B. Proposed Consolidation of the
percent of the Federal rate, with no FFY.
Annual Updates for Payment and MS– In this proposed rule, we are
phase-in transition payments.
The basic methodology for LTC–DRG Relative Weights to One proposing a change to the current
determining LTCH PPS Federal Annual Update schedule for the annual updates of the
prospective payment rates is set forth at In the August 30, 2002 final rule for LTCH PPS Federal payment rates. We
§ 412.515 through § 412.536. In this the implementation of the LTCH PPS, propose to consolidate the rulemaking
section, we discuss the proposed factors we established a publication schedule at cycle for the annual update of the LTCH
that would be used to update the LTCH § 412.535 for publishing information PPS Federal payment rates and
PPS standard Federal rate for the 2009 pertaining to the LTCH PPS. That description of the methodology and data
LTCH PPS rate year that would be schedule set a publication date of on or used to calculate these payment rates,
effective for LTCH discharges occurring before August 1 prior to the beginning with the annual updating of the MS–
on or after July 1, 2008 through of each FFY, which coincided with the LTC–DRG classifications and associated
September 30, 2009. When we statutorily mandated publication weighting factors for LTCHs so that the
implemented the LTCH PPS in the schedule for the IPPS (67 FR 55954). In updates to the rates and the weights
August 30, 2002 LTCH PPS final rule the June 6, 2003 LTCH PPS final rule, would both be effective on October 1
(67 FR 56029 through 56031), we we amended § 412.535 to provide that each FFY. Under this proposal, the
computed the LTCH PPS standard ‘‘(a) Information on the unadjusted annual updates to the LTCH PPS
Federal payment rate for FY 2003 by Federal payment rates and a description Federal rates would no longer be
updating the best latest available (FY of the methodology and data used to published with a July 1 effective date.
1998 or FY 1999) Medicare inpatient calculate the payment rates are In proposing this change to the LTCH
operating and capital cost data, using published on or before May 1 prior to PPS rulemaking schedule, we took into
the excluded hospital market basket. the start of each long-term care hospital account comments on prior rules as well
Section 123(a)(1) of the BBRA prospective payment system rate year as recent input from the LTCH industry.
requires that the PPS developed for which begins July 1, unless for good After further considering those
LTCHs be budget neutral for the initial cause it is published after May 1, but comments and concerns, we agree that
year of implementation. Therefore, in before June 1. (b) Information on the having the effective date of the annual
calculating the standard Federal rate LTC–DRG classification and associated update of the LTCH PPS Federal
under § 412.523(d)(2), we set total weighting factors is published on or payment rates on July 1 of each year
estimated LTCH PPS payments equal to before August 1 prior to the beginning while retaining the October 1 effective
estimated payments that would have of each Federal fiscal year.’’ At the time, date for updating LTC–DRG
been made under the reasonable cost- we explained that the LTC–DRG patient classifications and weights has proved
based payment methodology had the classifications used by the LTCH PPS both burdensome and time-consuming
LTCH PPS not been implemented. for FY 2003 are based directly on the for all parties involved. Although a
Section 307(a)(2) of the BIPA specified same version of DRGs used by the IPPS, consolidated update may also be
that the increases to the target amounts that is, Grouper 20 (68 FR 34126). (We resource intensive, it would eliminate
and the cap on the target amounts for note, as discussed above in section III of some duplicative resource use. For
LTCHs for FY 2002 provided for by this proposed rule, effective for LTCH example, some of our resources used for
section 307(a)(1) of the BIPA shall not PPS discharges occurring on or after the payment simulations that are used
be considered in the development and October 1, 2007, all references to LTC– to estimate LTCH PPS payments for
implementation of the LTCH PPS. DRGs and DRGs in the existing purposes of the respective impact
Section 307(a)(2) of the BIPA also regulations are understood to represent analyses are duplicated for the annual
specified that enhanced bonus MS–LTC–DRGs. (See § 412.503.)) LTCH PPS rate update and the annual
payments for LTCHs provided for by Therefore, we did not make any changes MS-LTC-DRG update. Moreover, we
section 122 of Public Law 106–113 were to the timing for the annual update for understand the concern that there are
not to be taken into account in the LTC–DRG classifications and relative increased costs involved in updating the
development and implementation of the weights. The annual update to the DRG billing systems of LTCHs to
LTCH PPS. classifications and relative weights accommodate two separate updates, one
Furthermore, as specified at continues to be published on a FFY for the Federal rate and one for the DRG
§ 412.523(d)(1), the standard Federal cycle, as is the update of the acute care weights, in the same cost reporting
rate is reduced by an adjustment factor hospital IPPS DRG system. Our intent in period.
to account for the estimated proportion making the change in the payment rate We also considered the possibility
of outlier payments under the LTCH update schedule for the LTCH PPS was that two separate updates could increase
PPS to total estimated LTCH PPS to avoid concurrent publications of the the potential for calculating payment
payments (8 percent). For further details annual updates for these two significant errors under the LTCH PPS.
on the development of the FY 2003 payment systems for purposes of In order to revise the payment rate
standard Federal rate, see the August 30, administrative feasibility and efficiency. update to an October 1 through
2002 LTCH PPS final rule (67 FR 56027 With this in mind, we changed the September 30 period, we propose to first
through 56037), and for subsequent effective date for the annual update of extend the 2009 rate period to
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updates to the LTCH PPS Federal rate, the LTCH PPS payment rate from September 30, 2009 such that RY 2009
refer to the following final rules: RY October 1 to July 1 of each year would be 15 months. This proposed 15-
2004 LTCH PPS final rule (68 FR 34134 beginning with July 1, 2003. We month rate period would extend from
through 34140), RY 2005 LTCH PPS believed this change would help use our July 1, 2008 through September 30,
final rule (69 FR 25682 through 25684), limited resources effectively and 2009. We believe that the additional 3
RY 2006 LTCH PPS final rule (70 FR facilitate a timely publication of both months to RY 2009 (July, August and

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September), would provide for a smooth the LTCH PPS market basket. The since it is the best available data that
transition to a consolidated annual excluded hospital with capital market reflects the cost structures of LTCHs.
update for both the LTCH PPS payment basket was also used to update the For further details on the
rates and the LTCH PPS MS–LTC–DRG limits on LTCHs’ operating costs for development of the RPL market basket,
classifications and weighting factors. inflation under the TEFRA reasonable including the methodology for
(We believe that proposing to revise the cost-based payment system. We determining the operating and capital
payment rate update to an October 1 explained that we believe the use of the portions of the RPL market basket, see
through September 30 period by excluded hospital with capital market the RY 2007 LTCH PPS final rule (71 FR
proposing to shorten RY 2009 such that basket to update LTCHs’ costs for 27810 through 27817).
it would only be 3 months (that is, July inflation was appropriate because the 2. Proposed Market Basket Estimate for
1, 2008 through September 30, 2008), excluded hospital market basket (with a the 2009 LTCH PPS Rate Year
would exacerbate the current capital component) measures price
burdensome and time-consuming increases of the services furnished by As discussed in greater detail above in
biannual update process by resulting in excluded hospitals, including LTCHs. this section, for the 2009 LTCH PPS rate
two payment rate changes within a very For further details on the development year, we are proposing to consolidate
short (3 month) period of time.) Under of the excluded hospital with capital the current LTCH PPS rate year
this proposal, after the 2009 rate period, market basket, see the RY 2004 LTCH (payment rates and other policy
the rate period for the LTCH PPS PPS final rule (68 FR 34134 through changes) update and fiscal year MS–
payment rate and other policy changes 34137). LTC–DRG update into one annual
would be October 1 through September In the RY 2007 LTCH PPS final rule update cycle. Presently, the next
30. (The annual update to the MS–LTC– (71 FR 27810), we noted that based on payment rate update cycle would be
our research, we did not develop a effective July 1, 2008 through June 30,
DRG classifications and relative weights
market basket specific to LTCH services. 2009. In proposing to consolidate the
would continue to be effective on
We are still unable to create a separate annual payment rate and MS–LTC–DRG
October 1.) The October through
market basket specifically for LTCHs updates to be effective October 1 each
September rate period would first begin
due to the small number of facilities and year, we would extend the next rate year
with October 1, 2009. The next update
the limited amount of data that is update by 3 months (through September
to the LTCH PPS Federal rates after RY
reported (for instance, only 30, 2009), which would make the RY
2009 would be for RY 2010. (We note
approximately 15 percent of LTCHs 2009 rate effective for a 15-month
that if we finalize this proposal to move
reported contract labor cost data for period. Accordingly, for the proposed
the annual LTCH PPS rate update cycle
2002). In that same final rule, under the 2009 LTCH PPS rate year, we are
to October 1 effective October 1, 2009, proposing to use a 15-month (that is,
the LTCH PPS rate year would coincide broad authority conferred upon the
Secretary by section 123 of the BBRA as July 1, 2008 through September 30,
with Federal FY beginning in 2010.) We 2009) estimate of the RPL market basket
are proposing to make a change to the amended by section 307(b) of the BIPA,
we adopted the ‘‘Rehabilitation, based on the best available data.
regulations at § 412.503 to redefine the Consistent with our historical
LTCH PPS’ rate year to mean October 1 Psychiatric and Long-Term Care (RPL)
market basket’’ as the appropriate practice, we estimate the RPL market
through September 30. We are also basket update based on Global Insight,
proposing to revise § 412.535 to reflect market basket of goods and services
under the LTCH PPS for discharges Inc.’s forecast using the most recent
the proposed change to the annual available data. Global Insight, Inc. is a
occurring on or after July 1, 2006.
payment rate update cycle described nationally recognized economic and
Specifically, beginning with the 2007
above. The discussion of the proposed financial forecasting firm that contracts
LTCH PPS rate year, for the LTCH PPS,
15-month market basket update for the with CMS to forecast the components of
we adopted the use of the RPL market
proposed 2009 rate year can be found CMS’ market baskets. To determine a
basket based on FY 2002 cost report
below in sections IV.D.2. and 3. of this 15-month market basket update for RY
data. We choose to use the FY 2002
proposed rule. 2009, we calculate the 5-quarter moving
Medicare cost report data because it was
C. LTCH PPS Market Basket the most recent, relatively complete cost average index level for July 1, 2008
data for inpatient rehabilitation facilities through September 30, 2009 and the 4-
1. Overview of the RPL Market Basket quarter moving average index level for
(IRFs), inpatient psychiatric facilities
Historically, the Medicare program (IPF), and LTCHs available at the time July 1, 2007 through June 30, 2008. The
has used a market basket to account for of rebasing. percent change in these two values
price increases in the services furnished The RPL market basket is determined represents the proposed 15-month
by providers. The market basket used based on the operating and capital costs market basket update.
for the LTCH PPS includes both of IRFs, IPFs and LTCHs. All IRFs are Based on Global Insight’s 4th quarter
operating and capital-related costs of now paid under the IRF PPS Federal 2007 forecast with history through the
LTCHs because the LTCH PPS uses a payment rate, all LTCHs are now paid 3rd quarter of 2007, the projected 15-
single payment rate for both operating 100 percent of the Federal rate under month market basket estimate for the
and capital-related costs. The the LTCH PPS, and most IPFs are proposed 15-month 2009 LTCH PPS rate
development of the initial LTCH PPS transitioning to payment based on 100 year is 3.5 percent. Therefore, consistent
standard Federal rate for FY 2003, using percent of the Federal per diem with our historical practice of
the excluded hospital with capital payment amount under the IPF PPS estimating market basket increases
market basket, is discussed in further (payments to IPFs will be based based on the best available data, we are
detail in the August 30, 2002 LTCH PPS exclusively on 100 percent of the proposing a market basket update of 3.5
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final rule (67 FR 56027 through 56033). Federal rate for cost reporting periods percent for the proposed 15-month 2009
In the August 30, 2002 final rule (67 beginning on or after January 1, 2008). rate year based on the proposed
FR 56016 through 56017 and 56030), As we explained in that same final rule, consolidation of the annual updates for
which implemented the LTCH PPS, we we believe a market basket based on the payment rates and MS–LTC–DRGs.
established the use of the excluded data of IRFs, IPFs and LTCHs is Furthermore, because the proposed RY
hospital with capital market basket as appropriate to use under the LTCH PPS 2009 update is based on the most recent

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market basket estimate for the 15-month cap on the target amounts for LTCHs TABLE 4
period (currently 3.5 percent), we are provided for by section 307(a)(1) of the
also proposing that if more recent data BIPA (as set forth in section Estimated pay-
are subsequently available (for example, 1886(b)(3)(J) of the Act) and the LTCH PPS rate year ments
($ in billions)
a more recent estimate of the market enhanced bonus payments for LTCHs
basket), we would use such data, if provided for by section 122 of the BBRA 2009 ...................................... 4.67
appropriate, to determine the RY 2009 (as set forth in section 1886(b)(2)(E) of 2010 ...................................... 4.82
update in the final rule. (The proposed the Act) are not to be taken into account 2011 ...................................... 5.06
update to the standard Federal rate for in the development and implementation 2012 ...................................... 5.36
RY 2009 is discussed below in section of the LTCH PPS. 2013 ...................................... 5.73
IV.E. of this preamble.) As the LTCH PPS has progressed, we
We note that the most recent estimate In accordance with the methodology
have been monitoring payment data in established in the August 30, 2002
of the RPL market basket for July 1, 2008
order to evaluate whether there is a LTCH PPS final rule (67 FR 56027
through June 30, 2009, based on Global
significant difference between the through 56037), these estimates are
Insight’s 4th quarter 2007 forecast with
payments estimated on the basis of the based on the most recent available data.
history through the 3rd quarter of 2007,
data available at the time of the August These estimates are also based on our
is 3.1 percent. We determine this 12-
30, 2002 LTCH PPS final rule (67 FR estimate of LTCH PPS rate year
month market basket update by
56027 through 56037) and payment payments to LTCHs using CMS’ Office
calculating the 4-quarter moving average
index level for July 1, 2008 through June estimates based on more complete data of the Actuary’s (OACT) most recent
30, 2009 and the 4-quarter moving that have become available since that estimate of the RPL market basket of 3.1
average index level for July 1, 2007 time. We indicated from the inception percent for the 2009 LTCH PPS rate
through June 30, 2008. The percent of the LTCH PPS that it was possible for year, 2.8 percent for the 2010 LTCH PPS
change in these two values represents the aggregate amount of actual payments rate year, 3.0 percent for the 2011 LTCH
the proposed 12-month market basket in FY 2003 to be significantly higher or PPS and 2012 rate years, and 3.1 percent
update. Consistent with our historical lower than the estimates on which the for the 2013 LTCH PPS rate year. (We
practice of using market basket budget neutrality calculations were note that OACT develops its spending
estimates based on the most recent based to the extent that later, more projections based on existing policy.
available data, if we were not proposing complete data differ significantly from Therefore, changes that have not yet
to consolidate the two annual LTCH the data that were available at the time been implemented, including those
PPS payment system updates by of the original calculations. proposed in this proposed rule, and
proposing to extend the 2009 LTCH PPS Section 123(a)(1) of the BBRA, as changes as a result of the recent
rate year by 3 months, we would have amended by section 307(b) of BIPA, Medicare, Medicaid, and SCHIP
proposed a market basket update for a provides broad authority to the Extension Act of 2007, are not reflected
12 month RY 2009 of 3.1 percent, based Secretary in developing the LTCH PPS, in the spending projections shown in
on the most recent estimate of the 12- including the authority for establishing this section.) We also considered
month RPL market basket for July 1, appropriate adjustments. Under this OACT’s most recent projections of
2008 through June 30, 2009. broad authority to make appropriate changes in Medicare beneficiary
adjustments, we provided in enrollment that estimate increases in
D. One-time Prospective Adjustment to Medicare fee-for-service beneficiary
the Standard Federal Rate § 412.523(d)(3) of the regulations, for the
possibility of making a one-time enrollment of 0.6 percent in the 2009
As we discussed in the August 30, prospective adjustment to the LTCH LTCH PPS rate year, 0.7 percent in the
2002 LTCH PPS final rule (67 FR PPS rates by July 1, 2008, so that the 2010 LTCH PPS rate year, 1.2 percent in
56027), consistent with the statutory effect of any significant difference the 2011 LTCH PPS rate year, 2.0
requirement for budget neutrality in between actual payments and estimated percent in the 2012 LTCH PPS rate year,
section 123(a)(1) of the BBRA, we payments for the first year of the LTCH and 2.5 percent in the 2013 LTCH PPS
estimated aggregate payments under the PPS would not be perpetuated in the rate year. It is important to note that,
LTCH PPS for FY 2003 to be equal to the LTCH PPS rates for future years. while we provide these estimates of
estimated aggregate payments that future payments under the LTCH PPS in
would be made if the LTCH PPS were In the RY 2008 LTCH PPS final rule order to provide a projected estimate of
not implemented. Our methodology for (72 FR 26902), based on the best payments to LTCHs, these estimates will
estimating payments for purposes of the available data at that time, we estimated be neither the basis for determining
budget neutrality calculations used the that total Medicare program payments whether the one-time budget neutrality
best available data at the time and for LTCH services over the next 5 LTCH adjustment available under
necessarily reflected several PPS rate years would be $4.65 billion § 412.523(d)(3) should be proposed, nor
assumptions (for example, costs, for the 2008 LTCH PPS rate year; $4.85 are these estimates the basis for any of
inflation factors and intensity of billion for the 2009 LTCH PPS rate year; the proposed policy changes presented
services provided). In conducting our $5.04 billion for the 2010 LTCH PPS in this proposed rule. It is important to
budget neutrality calculations, we took rate year; $5.25 billion for the 2011 note that any proposal regarding the
into account the statutory requirement LTCH PPS rate year; and $5.50 billion one-time budget neutrality adjustment
that certain statutory provisions that for the 2012 LTCH PPS rate year. would be based solely on the data
affect the level of payments to LTCHs in In this proposed rule, consistent with related to FY 2003 that would be
years prior to the implementation of the the methodology established in the available at the time of the proposal,
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LTCH PPS shall not be taken into August 30, 2002 final rule (67 FR rather than on projections of payments
account in the development and 56036), and based on the most recent under LTCH PPS for future years.
implementation of the LTCH PPS. available data, we estimate that total In the August 30, 2002 LTCH PPS
Specifically, section 307(a)(2) of the Medicare program payments for LTCH final rule implementing the LTCH PPS
BIPA requires that the increases to the services for the next 5 LTCH PPS rate (67 FR 55954), we set forth the
target amounts and the increases to the years would be as shown in Table 4. implementing regulations, based upon

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the broad authority granted to the future years. However, we stated that we Prior to the enactment of the
Secretary, under section 123 of the would continue to collect and interpret Medicare, Medicaid, and SCHIP
BBRA (as amended by section 307(b) of new data as it became available in order Extension Act of 2007, we had
the BIPA). Section 123(a)(1) of the to determine whether we should developed a methodology for evaluating
BBRA required that the system propose such an adjustment in the whether to propose a one-time budget
‘‘maintain budget neutrality.’’ The future. Therefore, we revised neutrality adjustment under
statute requires the LTCH PPS to be § 412.523(d)(3) by changing the original § 412.523(d)(3) of the regulations. In
budget neutral in FY 2003, so that October 1, 2006 deadline (established in order to inform the public of our
estimated aggregate payments under the the August 30, 2002 final rule that thinking, and to stimulate comments for
LTCH PPS for FY 2003 should be equal implemented the LTCH PPS) to July 1, our consideration during the 3-year
to the estimated aggregate payments that 2008, to postpone the possible one-time delay in implementing any one-time
would be made if the LTCH PPS were adjustment due to the time lag in the budget neutrality adjustment under the
not implemented for FY 2003. The availability of Medicare data upon law referenced above, we have decided
methodology for determining the LTCH which a proposed adjustment would be to discuss our analysis and its results in
PPS standard Federal rate for FY 2003 based. We noted that there is a lag time this proposed rule. Evaluating the
that would ‘‘maintain budget neutrality’’ between the submission of claims data appropriateness of the possible one-time
is described in considerable detail in the and cost report data, and the availability prospective adjustment under
August 30, 2002 final rule (67 FR 56027 of that data in the MedPAR files and § 412.523(d)(3) requires a thorough
through 56037). As we discussed HCRIS, respectively. As also explained review of the relevant LTCH data (as
previously in this section, our in that same final rule, we believed that described below). When we established
methodology for estimating payments postponing the deadline of the possible the FY 2003 standard Federal rate in a
for the purposes of budget neutrality one-time prospective adjustment to the budget neutral manner, we used the
calculations used the best available LTCH PPS rates provided for in most recent LTCH cost data available at
data, and necessarily reflected § 412.523(d)(3) to July 1, 2008, would that time (that is, FY 1999 data), and
assumptions in estimating aggregate allow our decisions regarding a possible trended that data forward to estimate
payments that would be made if the adjustment to be based on more what Medicare would have paid to
LTCH PPS was not implemented. In the complete and up-to-date data. It should LTCHs in FY 2003 under the TEFRA
August 30, 2002 final rule, we also be noted that, in the years following the payment system if the PPS were not
stated our intentions to monitor LTCH initial implementation of the LTCH PPS, implemented for FY 2003 (67 FR
PPS payment data to evaluate whether we have already adopted some revised 56033). We have conducted a thorough
later data varied significantly from the policies and adjustments to LTCH PPS review of the relevant data. We now
data available at the time of the original payment levels. However, none of these have cost data from FY 2002,
budget neutrality calculations (for revised policies and payment representing the final year LTCHs were
example, data related to inflation adjustments have addressed the paid under the TEFRA payment system.
factors, intensity of services provided, intended purpose of the adjustment The cost report data for FY 2002 is
or behavioral response to the allowed under § 412.523(d)(3) of the comprised of a high proportion of
implementation of the LTCH PPS). To regulations, to ensure that any settled and audited cost reports
the extent the later data significantly significant difference between the submitted by LTCHs. We also have
differ from the data employed in the original estimates and calculations payment data on the first year of the
original calculations, the aggregate based on more recent data are not LTCH PPS (that is, FY 2003). On the
amount of payments during FY 2003 perpetuated in the LTCH PPS rates for basis of our review of these data
based on later data may be higher or future years. For example, the sources, we developed a potential
lower than the estimates upon which adjustments that we have made to methodology for determining whether
the budget neutrality calculations were account for coding changes in excess of the one-time adjustment available under
based. In that same final rule, the real severity increases in RY 2007 and § 412.523(d)(3) of the regulations should
Secretary exercised his broad authority RY 2008 were made to account for be proposed. On the basis of this
in establishing the LTCH PPS and changes in coding behavior in the years methodology, we have also determined
provided for the possibility of a one- following the implementation of the a potential method for computing an
time prospective adjustment to the LTCH PPS, and not to address any issue adjustment, if appropriate. Employing
LTCH PPS rates by October 1, 2006, in regarding the budget neutrality that methodology, our analysis has
§ 412.523(d)(3). This deadline was calculations that were used to establish indicated that a permanent adjustment
revised to July 1, 2008, in the RY 2007 the base rate for the LTCH PPS. factor of 0.9625 to the LTCH PPS
LTCH PPS final rule. As we discussed Section 114(c)(4) of MMSEA provides standard Federal rate could be
in the RY 2007 LTCH PPS final rule (71 that the ‘‘Secretary shall not, for the 3- warranted. Consistent with the
FR 27842 through 27844), because the year period beginning on the date of the requirements of section 114(c)(4) of the
LTCH PPS was only recently enactment of this Act, make the one- recently enacted Medicare, Medicaid,
implemented, sufficient new data had time prospective adjustment to long- and SCHIP Extension Act of 2007, we
not yet been generated that would term care hospital prospective payment are not proposing any adjustment for the
enable us to conduct a comprehensive rates provided for in section upcoming rate year. However, we
reevaluation of our budget neutrality 412.523(d)(3) of title 42, Code of Federal welcome public comment on our
calculations. Therefore, in that same Regulations, or any similar provision.’’ analysis, which we are presenting in
final rule, we did not implement the That provision delays the effective date this proposed rule. We will consider
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one-time adjustment provided under of any one-time budget neutrality these comments if and when we decide
§ 412.523(d)(3) so that the effect of any adjustment until no earlier than to propose an actual adjustment. We
significant difference between actual December 29, 2010. Therefore, we are note that in the final rule, we will
payments and estimated payments for proposing to revise § 412.523(d)(3) of respond to any comments on our
the first year of the LTCH PPS would the regulations to conform with this proposed changes to § 412.523(d)(3) of
not be perpetuated in the PPS rates for requirement. the regulations that would—(1) specify

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the methodology for the one-time expressed concern that employing FY In this way, we would ensure that we
budget neutrality adjustment; and (2) 2003 costs directly would provide a are comparing the estimated FY 2003
implement the requirements of section poor basis upon which to estimate TEFRA payments, which are based on
114(c)(4) of Public Law 110–173, in the payments that ‘‘would have been made updated costs incurred for FY 2002
final rule. if the LTCH PPS were not discharges to the estimated PPS
In order to determine whether a one- implemented’’ for precisely the reasons payments that would have been made
time budget neutrality adjustment could we have just discussed. We believe that for those same FY 2002 discharges
be warranted, it is necessary to estimate basing the estimate of FY 2003 TEFRA under the new LTCH PPS payment
both aggregate payments under the payments on FY 2002 costs trended methodology.
LTCH PPS for FY 2003 and the forward should satisfy these concerns. Therefore, in the absence of the
estimated aggregate payments that In determining whether a one-time Medicare, Medicaid, and SCHIP
would have been made under the budget neutrality adjustment could be Extension Act of 2007, we would have
TEFRA system in FY 2003 if the LTCH warranted, the estimate of the payments proposed to employ the general
PPS were not implemented. While we that would have been made in FY 2003 methodology we have just described to
know actual TEFRA payments to LTCHs under the TEFRA methodology should determine: (1) Whether the one-time
for FY 2002, the last year of payment be compared to estimated payments adjustment available under
under that methodology, it is necessary under the new LTCH PPS in FY 2003. § 412.523(d)(3) of the regulations should
to estimate what TEFRA payments The most direct way to determine be proposed for RY 2009, and (2) if such
would have been in FY 2003 if the new payments under the new LTCH PPS, of adjustment should be proposed, the
LTCH PPS had not been implemented. course, is simply to aggregate the actual actual proposed adjustment factor. In
In developing our methodology for payments calculated under the LTCH this proposed rule, we would revise the
evaluating a one-time adjustment, we PPS methodology for the discharges that current language of § 412.523(d)(3) of
considered whether we should employ occurred during the first year of the the regulations to conform more
actual FY 2003 costs to calculate LTCH PPS (FY 2003). However, that specifically with this preferred
estimated TEFRA payments for FY 2003 approach raises an issue of consistency methodology. At the time of the final
or employ costs for FY 2002 trended in the use of data. The discharges for LTCH PPS rule in 2002, we described
forward to FY 2003 as the basis for the which we paid under the LTCH PPS the nature of the one-time adjustment in
calculation. Basing the estimate on during FY 2003 are obviously not the very general terms. Specifically, that
actual FY 2003 costs would avoid the same as the discharges for which costs section currently provides the
need to employ any factor to update were incurred during the last year of following:
costs from FY 2002 to FY 2003. payment under the TEFRA The Secretary reviews payments under this
However, since FY 2003 was the first methodology, FY 2002. For the reasons prospective payment system and may make
year of payment under the LTCH PPS, we have just discussed, we believe that a one-time prospective adjustment to the
the best way to estimate the TEFRA long-term care hospital prospective payment
the cost experience of LTCHs in that system rates on or before July 1, 2008 so that
year would reflect their response to the payments that would have been made to the effect of any significant difference
incentives provided by the new LTCHs during FY 2003 is to use inflated between actual payments and estimated
payment system, instead of reflecting FY 2002 costs as a proxy for FY 2003 payments for the first year of the long term
behavior under the reasonable cost costs. Comparing actual FY 2003 LTCH care hospital prospective payment system is
payment system. Indeed, PPS payments to FY 2003 TEFRA not perpetuated in the prospective payment
implementation of an LTCH PPS should payments estimated on the basis of FY rates for future years.
directly affect the behavior of LTCHs, 2002 discharges would amount to a Our policy objective in providing for
and therefore, the level of costs in comparison between payments related this one-time budget neutrality
LTCHs. One of the incentives of a PPS to two different sets of discharges, adjustment has always been to ensure
is to improve efficiency in the delivery potentially skewing the results. that computations based on the earlier,
of care, which generally results in Therefore consistency suggests that, necessarily limited (but at that time best
decreased cost per discharge. For this rather than comparing TEFRA payments available) data available at the inception
reason, employing FY 2003 costs based on FY 2002 costs updated to FY of the LTCH PPS would not be built
directly could be a poor basis for 2003, to aggregate LTCH PPS payments permanently into the rates if data
estimating payments that ‘‘would have for discharges that actually occurred in available at a later date could provide
been made if the LTCH PPS were not FY 2003, it would be preferable to more accurate results. Prior to the
implemented.’’ On balance, we believe compare estimated TEFRA payments thorough analysis we conducted in
that trending forward for 1 year the based on updated FY 2002 costs to the preparation for this rate year, we had
costs incurred under the last year of the estimated payments that would have believed that the only appropriate
TEFRA payment system poses a smaller been made under LTCH PPS method for meeting this policy objective
prospect for distortion than using costs methodology in FY 2003 for those same involved employing actual payment
incurred during the subsequent year, FY 2002 discharges. In other words, we data from the first year of payment
when the incentives faced by LTCHs to believe that the best approach would be under the LTCH. As we have just
reduce costs could have had a to compare— discussed, we believe after a thorough
significant effect. Therefore, we could • Estimated aggregate FY 2003 evaluation of the currently available
base our calculation of the estimated TEFRA payments calculated on the data in the light of this policy objective,
aggregate payments that would have basis of FY 2002 costs updated to FY that the most appropriate methodology
been made if the LTCH PPS were not 2003; to for evaluating an adjustment to the
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implemented (that is, estimated FY 2003 • Estimated aggregate payments that original budget neutrality adjustment
TEFRA payments) on FY 2002 costs, would have been made in FY 2003 does not involve comparing the
trended forward to FY 2003 using the under the LTCH PPS methodology, by payments estimated in the original
excluded hospital market basket. It may applying the FY 2003 LTCH payment calculations against the ‘‘actual
be worth noting in this context that rules to the discharges that occurred in payments * * * for the first year,’’
some representatives of LTCHs have FY 2002. strictly speaking. Rather, as just

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discussed, considerations of consistency 47425). We do not believe that we Medicare discharges. The provider’s
and other factors suggest that the most should treat differences greater than or TEFRA target amount was then updated
appropriate comparison would employ equal to 0.25 percent as not by a rate-of-increase percentage
an estimate of FY 2003 LTCH PPS ‘‘significant,’’ since the effect of any (§ 413.40(c)(3) of the regulations, as
payments based on the same set of difference will be magnified as the rates established by the Congress, to
discharges (from FY 2002) which are the are updated each year. determine the TEFRA target amount for
basis for the best estimate of what As discussed previously, absent the the subsequent cost reporting period
would have been paid in FY 2003 under requirement of section 114(c)(4) of the (§ 413.40(c)(4)(i), (ii)). For any particular
the TEFRA system. As a result of this Medicare, Medicaid and SCHIP cost reporting period, the Medicare
methodological determination, under Extension Act of 2007, we would have payment for inpatient operating costs
the broad authority of section 123 of the proposed to use FY 2002 LTCH costs as would be the lesser of the hospital’s
BBRA, as amended by section 307(b) of a basis for estimating FY 2003 LTCH reasonable costs, or the updated target
BIPA, to make appropriate adjustments TEFRA payments in evaluating whether amount multiplied by the number of
to the LTCH PPS, we are proposing to to propose a one-time prospective Medicare discharges during the cost
revise § 412.523(d)(3) to reflect the adjustment under § 412.523(d)(3). We reporting period, that is, the TEFRA
preferred methodology more clearly. As also would have proposed to update the ceiling (§ 413.40(a)(3)).
we have discussed previously, we are FY 2002 costs for inflation to FY 2003 The methodology described above,
also proposing to revise that section of by our Office of the Actuary’s current broadly speaking, is the general
the regulations to correspond with the estimate of the actual increase in the approach that we would use to arrive at
requirements of section 114(c)(4) of the excluded hospital market basket from an estimate of what Medicare payments
Medicare, Medicaid, and SCHIP FY 2002 to FY 2003 of 4.2 percent. This for hospital inpatient operating costs
Extension Act of 2007. Specifically, we updated amount would serve as the would have been in FY 2003 under the
are now proposing to revise proxy for actual FY 2003 TEFRA costs TEFRA payment system: each LTCH’s
§ 412.523(d)(3) of the regulations to read in the proposed budget neutrality FY 2003 target amount would be
as follows: computation for purposes of calculated by updating its estimated FY
The Secretary reviews payments under this § 412.523(d)(3). We estimated FY 2003 2002 target amount per discharge by the
prospective payment system and may make LTCH TEFRA payments using a full market basket percentage increase.
a one-time prospective adjustment to the methodology that is similar in concept The sum of all LTCH payments for
long-term care hospital prospective payment to the methodology we used to estimate operating costs (TEFRA target amount
system rates no earlier than December 29, FY 2003 LTCH total payments under the multiplied by Medicare discharges),
2010, so that the effect of any significant bonus or relief payments, continuous
difference between the data used in the TEFRA system when we determined the
initial standard Federal rate in the improvement bonus payments, and
original computations and more recent data payments for capital-related costs
to determine budget neutrality is not August 30, 2002 final rule (67 FR 56030
perpetuated in the prospective payment rates through 56033). We also made yields, in general, the estimate of what
for future years. modifications to the methodology we total Medicare payments to LTCHs
initially used to estimate FY 2003 LTCH would be in FY 2003 under the TEFRA
Our proposed revision to § 412.523(d)(3) payment system if the LTCH PPS had
of the regulations would continue to TEFRA payments because we are using
data from a later period, as discussed in not been implemented.
provide that the Secretary may make a However, because sections 4413
one-time adjustment to the LTCH PPS greater detail below. In general, we
through 4419 of the BBA of 1997,
rates in order to ensure that any estimated total payments under the
section 122 of the BBRA of 1999, and
‘‘significant’’ difference is not TEFRA payment system using the section 307(a)(1) of the BIPA made
perpetuated in the LTCH PPS rates for following steps: numerous changes to the TEFRA
future years. The regulation does not • Estimate each LTCH’s payment per payment system, we had to make
specifically define what constitutes a discharge for inpatient operating costs variations in the method described
significant difference for this purpose. under the TEFRA system for FY 2003; above to arrive at the estimate of FY
In the absence of section 114(c)(4) of the • Estimate each LTCH’s payment per 2003 payments for the inpatient
Medicare, Medicaid, and SCHIP discharge for capital-related costs for FY operating costs of each LTCH under the
Extension Act of 2007, we would have 2003; and TEFRA system, depending on the
proposed to consider as ‘‘significant’’ • Sum each LTCH’s estimated participation date of the hospital.
any difference greater than or equal to operating and capital payment per case Specifically, we must make the requisite
a 0.25 percentage point difference to determine its estimated total FY 2003 computations differently for two classes
between the original budget neutrality TEFRA payment system payment per of hospitals, ‘‘existing’’ hospitals and
calculations and budget neutrality discharge. ‘‘new’’ hospitals. (A detailed
calculations based on the more recent We discuss each of these steps in greater explanation of the provisions affecting
data now available. This threshold detail below. LTCHs, established by each of the
avoids making an adjustment to account The first step in the process of amendments, is found in the August 30,
for very minor deviations between estimating total FY 2003 payments 2002 final rule that implemented the
earlier and later estimates of budget under the TEFRA payment system is to LTCH PPS (67 FR 55959).) We discuss
neutrality. It is also consistent with estimate each LTCH’s payment per below these specific BBA, BBRA, and
thresholds that we have employed for discharge for inpatient operating costs BIPA changes, and their impact on the
similar purposes in prospective under the TEFRA. Until FY 1998, the calculations of estimated FY 2003
payment systems. For example, under payment methodology for inpatient TEFRA payments for ‘‘existing’’ and
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the capital IPPS, we make a forecast operating costs under the TEFRA ‘‘new’’ hospitals. As discussed in greater
error correction in the framework used payment system was a relatively detail below, we would employ two
to update the capital Federal rate if a straightforward process. First, we approaches to estimate Medicare
previous forecast of input prices varies calculated a target amount by dividing payments under the TEFRA system to
by at least a 0.25 percentage point from the Medicare total inpatient operating LTCHs in FY 2003, depending on how
actual input price changes (72 FR costs in a base year by the number of these changes in calculating TEFRA

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payments, as established by the hospital’s inpatient operating costs and hospitals prior to October 1, 1997. The
amendments, applied to each LTCH. the ceiling, or 2 percent of the ceiling. payment amount for a new provider for
The first set of changes that we had In addition, relief payments were made the first 12-month cost reporting period
to take into account were included in to providers whose net inpatient is the lower of its Medicare inpatient
the BBA. The BBA made significant operating costs were greater than 110 operating cost per discharge or a limit
changes to the TEFRA payment percent of the ceiling (or the adjusted based on 110 percent of the national
methodology starting with cost ceiling, if applicable). These relief median of target amounts for the same
reporting periods beginning on or after payments were the lower of 50 percent class of hospital for cost reporting
October 1, 1997. While the changes of the costs in excess of 110 percent of periods ending in FY 1996, updated by
were applicable to three types of PPS- the ceiling or (or the adjusted ceiling, if the market basket percentage increases
excluded providers (rehabilitation applicable) or 10 percent of the ceiling to the applicable period, and wage-
hospitals and units, psychiatric (or adjusted ceiling, if applicable) adjusted. The payment limit in the
hospitals and units, and LTCHs), the (§ 413.40(d)(3)(ii) of the regulations). second 12-month cost reporting period
following discussion will address the The third change was an additional is the same 110 percent limit as for the
provisions of the amendments as they incentive established by section 4415 of first year (§ 413.40(f)(2)(ii) of the
relate to LTCHs. the BBA, the continuous improvement regulations). A new provider’s target
The first change to consider under bonus payment (CIB) for providers amount would be established in its third
BBA is section 4414 that established meeting certain conditions and that kept cost reporting period by updating the
caps on the TEFRA target amounts for their costs below the target amount. amount paid in its second cost reporting
cost reporting periods beginning on or Eligibility for the CIB required that a period by the market basket percentage
after October 1, 1997, for LTCHs that provider had three full cost reporting increase for hospitals and hospital units
were paid as IPPS excluded providers periods as an IPPS-excluded provider excluded from the IPPS, applicable to
prior to that date. The cap was prior to the applicable fiscal year (62 FR the specific year, as published annually
determined by taking the 75th 46019). To qualify for a CIB, a provider’s in the Federal Register, which then
percentile of target amounts for cost operating costs per discharge in the becomes the target amount for its third
reporting periods ending in FY 1996 for current cost reporting period had to be cost reporting period. The target amount
each class of provider (rehabilitation lower than the least any of the for the fourth and subsequent cost
hospitals and units, psychiatric following: its target amount; its reporting periods is determined by
hospitals and units, and LTCHs), expected costs, that is, the lower of its updating the target amount from the
updating that amount by the market target amount or inpatient operating previous cost reporting period by the
basket percentage increases to FY 1998, costs per discharge from the previous applicable market basket percentage
and applying it to the cost reporting cost reporting period, updated; or, its increase.
period beginning on or after October 1, trended costs, that is, the inpatient Finally, two provisions under BIPA
1997 (62 FR 46018). The cap calculated operating costs per discharge from its were directed specifically at LTCHs.
for FY 1998 was updated by the third full cost reporting period, updated Section 307(a)(1) of BIPA provided a 2
applicable market basket percentages to by the market basket percentage percent increase to the wage-adjusted
determine the cap amounts for cost increase to the applicable fiscal year (62 75th percentile cap for existing LTCHs
reporting periods beginning during FY FR 46019, § 413.40(d)(5)(ii)(B) of the for cost reporting periods beginning in
1999 through 2002. Providers subject to regulations). For providers with their FY 2001, and a 25 percent increase to
the 75th percentile cap were paid the third or subsequent full cost reporting the target amount for LTCHs, subject to
lesser of their inpatient operating costs period ending in FY 1996, trended costs the increased 75th percentile cap.
or the TEFRA target amount, which was are the lower of their inpatient operating However, it is important to note that in
limited by the 75th percentile cap costs per discharge or target amount accordance with section 307(a)(2) of
amount (67 FR 55959). In addition, updated forward to the current year BIPA, the 2 percent increase to the 75th
section 4411 of the BBA established a (§ 413.40(d)(5)(ii)(A) of the regulations). percentile cap and the 25 percent
formula for calculating the update factor The CIB payment equals the lesser of 50 increase to the target amount were not
for FY 1999 through FY 2002 that was percent of the amount by which the to be taken into account in the
dependent on the relationship of a operating costs were less than expected development and implementation of the
provider’s inpatient operating costs to costs, or, 1 percent of the ceiling LTCH PPS.
its ceiling amount based on data from (§ 413.40(d)(4) of the regulations). In order to determine what a LTCH’s
the most recently available cost report. Section 122 of the BBRA increased this estimated payments would be under
Section 121 of the BBRA provided that percentage for LTCH’s for FY 2001 to TEFRA in FY 2003, we utilized cost
the 75th percentile cap amount should 1.5 percent of the ceiling, and beginning report data for LTCHs from the Hospital
be wage adjusted starting with cost in FY 2002, to 2 percent of the ceiling Cost Reporting Information System
reporting periods beginning on or after (§ 413.40(d)(4)(ii) and (iii) of the (HCRIS) for FYs 1999 through 2002. In
October 1, 1999 and before October 1, regulations). The increase in the CIB addition, to determine whether a LTCH
2002. percentage is not to be accounted for in is ‘‘new,’’ the certification date for each
The second change that we had to the development and implementation of LTCH was obtained from the On-line
take into account was section 4415 of the LTCH PPS in accordance with Survey & Certification Automated
the BBA. This provision revised the section 307(a)(2) of BIPA. Reporting (OSCAR) file. Based on the
percentage factors used to determine the The fourth change that we had to take certification date, a LTCH would either
amount of bonus and relief payments for into account was section 4416 of the be a ‘‘new’’ LTCH, meaning a LTCH that
LTCHs meeting specific criteria. If a BBA which significantly revised the was not paid as an excluded hospital
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provider’s net inpatient operating costs payment methodology for ‘‘new’’ IPPS- prior to October 1, 1997, or, an
did not exceed the hospital’s ceiling, a excluded providers. This provision ‘‘existing’’ LTCH, meaning a LTCH that
bonus payment was made to the LTCH applies to three classes of providers— was paid as an excluded hospital prior
(§ 413.40(d)(2) of the regulations). The psychiatric hospitals and units, to October 1, 1997. This could include
bonus payment was the lower of 15 rehabilitation hospitals and units, and a LTCH that was certified as an LTCH
percent of the difference between the LTCHs—that were not paid as excluded on or after October 1, 1997, but was

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previously paid as another type of IPPS- an increase of 4.2 percent in the The second approach that we used to
excluded provider prior to October 1, excluded hospital market basket for FY estimate FY 2003 hospital operating
1997. Our approach to estimating 2003, which we used to update LTCHs’ payments under the TEFRA system
Medicare payments in FY 2003 under FY 2002 costs to FY 2003, as described applied to ‘‘new’’ LTCHs. A ‘‘new’’
the TEFRA payment system varied below.) In a small number of cases LTCH is one that was first paid as an
somewhat, depending on whether an where FY 2002 operating cost data were IPPS excluded hospital on or after
LTCH was ‘‘existing’’ or ‘‘new’’ (as not available, we used operating cost October 1, 1997. For a ‘‘new’’ LTCH,
discussed in greater detail below). data from the most recent year available payment in the hospital’s first 12-month
Based on all these statutory changes and trended it forward to FY 2003. In cost reporting period is the lower of its
mentioned above, the first step would addition, we estimated FY 2003 bonus Medicare net inpatient operating costs
be to estimate FY 2003 inpatient or relief payments without the inclusion per discharge or the wage-adjusted 110
operating payments under the TEFRA of the 2 percent and 25 percent percent median amount determined for
system for ‘‘existing’’ LTCHs. ‘‘Existing’’ increases to the cap amount and target that particular year (§ 413.40(f)(2)(ii) of
LTCHs are those receiving payment as amount, respectively, and without the the regulations). For the hospital’s
IPPS-excluded providers in cost 1.5 percent and 2.0 percent increases to second 12-month cost reporting period,
reporting periods prior to FY 1998. the CIB payments, consistent with payment is the lower of their costs, or
These LTCHs were subject to the 75th section 307(a)(2) of BIPA as discussed the same 110 percent median amount
percentile cap on their target amounts. above. that was used in the first cost reporting
In addition, since comparisons are period, that is, it is not updated. The
While section 307(a)(1) of BIPA
made between the target amount and hospital’s ‘‘target amount’’ is established
provided for a 2 percent increase to the
Medicare inpatient operating costs to in the third cost reporting period by
75th percentile cap amount for LTCH’s
determine bonus or relief payments, we updating the per discharge amount that
for cost reporting periods beginning in
estimated FY 2003 operating costs for was paid in the prior cost reporting
FY 2001 and a 25 percent increase to the
each LTCH by updating its FY 2002 period by the estimated market basket
target amount for cost reporting periods
operating costs by the actual percentage percentage increase for hospitals and
beginning in FY 2001 (subject to the
increase in operating costs for PPS- hospital units excluded from the IPPS,
limiting or cap amount determined
excluded hospitals from FY 2002 to FY applicable to the specific year, as
under section 1886(b)(3)(H) of the Act),
2003 (4.2 percent, as determined by published annually in the Federal
section 307(a)(2) of BIPA precluded OACT). The 3.5 percent market basket
accounting for these increases in Register. Therefore, if the LTCH was
increase used to update the TEFRA paid its costs in the previous cost
developing the LTCH PPS. In addition, target amounts from FY 2002 to FY 2003
section 122 of the BBRA increased the reporting period because costs were
was the forecast increase used at that lower than the 110 percent median
CIB payment percentage to 1.5 percent time based on the most recent
for FY 2001 and 2.0 percent for FY 2002 amount, the hospital’s cost per
information from OACT, at that time. discharge for the second cost reporting
(§ 413.40(d)(4)(ii) and (iii) of the However, because we now have more
regulations). But these increases, also, period is updated and becomes the
recent data available for estimating the target amount for the hospital’s third
are not to be accounted for in the market basket increase for IPPS-
development and implementation of the cost reporting period. Target amounts
excluded hospitals from FY 2002 to FY for subsequent cost reporting periods
LTCH PPS in accordance with section 2003, we are using that more recent data
307(a)(2) of BIPA. Therefore, to ensure are determined by updating the
which OACT currently estimates that
that these increases would be excluded previous year’s target amount by the
the IPPS-excluded hospital market
from the computations, as required by applicable market basket percentage
basket increase from FY 2002 to FY
the statute, we estimated an existing increase.
2003 is 4.2 percent. As discussed
LTCH’s FY 2003 target amount by earlier, we estimated the FY 2003 New LTCHs with their first 12-month
starting with the hospital’s target operating costs using FY 2002 costs cost reporting period beginning in FY
amount from the FY 2000 cost report, rather than use the costs reported on the 1998, would have had a target amount
the year prior to when these increases FY 2003 cost report. calculated under section
were effective. Target amounts and The 75th percentile cap for LTCHs for 1886(b)(7)(A)(ii) of the Act, in FY 2000.
payments for FY 2003 were simulated FY 2002, without the 2 percent and 25 Therefore, as with the ‘‘existing’’
using the FY 2000 target amount in the percent increases to the cap and target LTCH’s, in estimating the FY 2003 target
hospital’s cost report and updating the amount, respectively, was $30,783 for amount, we used the target amount from
target amount for each subsequent cost the wage-index adjusted labor-related the FY 2000 cost report for those LTCHs
reporting period by the applicable rate- share, and $12,238 for the nonlabor- and update that target amount by the
of-increase percentage as described in related share. If a LTCH’s costs and applicable estimated market basket
§ 413.40(c)(3)(vii) through FY 2002. The hospital-specific target amount were percentage increases as published
target amount from FY 2002 is updated above the 75th percentile cap, annually in the Federal Register for the
by the forecasted market basket Medicare’s payment under the TEFRA IPPS final rule, without the 25 percent
percentage increase of 3.5 percent to system would be the wage-index increase, to FY 2003. For LTCH’s with
arrive at the FY 2003 target amount adjusted cap amount. If under our their first 12-month cost reporting
(§ 413.40(c)(3)(viii)). (Note, the payment model a LTCH’s estimated FY period beginning in FY 1999, we used
forecasted increase in the excluded 2002 TEFRA payment would have been the lower of their costs or target amount
hospital market basket for FY 2003 of limited by the wage-adjusted 75th from their FY 2000 cost report, and
3.5 percent was the applicable rate-of- percentile cap in FY 2002, that amount updated that amount by the applicable
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increase percentage used to update would be updated by the forecasted estimated market basket percentage
TEFRA target amounts in accordance market basket percentage increase (of increase to establish the target amount
with § 413.40(c)(3)(viii) in the FY 2003 3.5 percent) to FY 2003 to determine the in FY 2001, without the 25 percent
IPPS final rule (August 1, 2002, 67 FR LTCH’s FY 2003 target amount that was increase. From this point, we would
50289)). Based on more recent data, our used to estimate its TEFRA payment continue to update that target amount
Office of the Actuary currently estimates amount for FY 2003. by the estimated market basket

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percentage increases to FY 2003. It is directly from the FY 2002 cost report summary of how we addressed the
necessary to compute an estimated and updated it for inflation using the FY multiple bill problem in the FY 2002
target amount for LTCHs that are ‘‘new’’ 2003 capital excluded hospital market LTCH MedPAR data below. As we
in FY 1999 in order to eliminate the basket estimate of 0.7 percent, explained in the FY 2004 IPPS final rule
potential inclusion of the increase to the consistent with the methodology used (68 FR 45376), we addressed this
target amounts provided for by section in the August 30, 2002 final rule (67 FR problem by identifying all LTCH cases
307(a)(1) of BIPA (consistent with the 56032) in which we established the in the FY 2002 MedPAR file for which
statute). initial standard Federal rate. Thus, we multiple bills were submitted. For each
The 25 percent increase (under determined capital-related costs per of these cases, beginning with the first
section 307(a) of the BIPA) to the target case using capital cost data from bill and moving forward consecutively
amount was not an issue for LTCH’s Worksheets D, Parts I and II, and total through subsequent bills for that stay,
with their first 12-month cost reporting Medicare discharges for the cost we recorded the first unique diagnosis
period beginning in FYs 2000, 2001, and reporting period from worksheet S–3. codes up to 10 and the first unique
2002 because they would not have a (We note that since payments for procedure codes up to 10. We then used
‘‘target amount’’ based on sections capital-related costs are on a reasonable- these codes to appropriately group each
1886(b)(7)(A)(ii) of the Act, in FY 2001. cost basis, capital payments were the LTCH case to a LTC–DRG for FY 2004.
Rather, for these LTCHs, we would have same for ‘‘existing’’ and ‘‘new’’ LTCHs.) We estimated FY 2003 LTCH PPS
proposed to determine the estimated Once we have estimated total TEFRA payments using the same general
payment amount for their first 12-month payments as the sum of each LTCH’s methodology that we used to estimate
cost reporting period by looking at their
estimated operating and capital FY 2003 payments under the LTCH PPS
certification date from the OSCAR file,
payment per case, it is necessary to (without a budget neutrality adjustment)
the applicable 110 percent median
estimate FY 2003 payments under the when we determined the initial
amount (adjusted by their wage-index)
LTCH PPS. As we discussed above, in standard Federal rate in the August 30,
and their costs from the applicable cost
evaluating the one-time prospective 2002 final rule (67 FR 56032).
report, and then proceed in accordance
adjustment at § 412.523(d)(3), we Specifically, we estimated FY 2003
with the policy in § 413.40(f)(2)(ii) of
believe that the best approach is to use LTCH PPS payments for each LTCH by
the regulations, to arrive at estimated FY
FY 2002 LTCH claims data as a proxy simulating payments on a case-by-case
2003 TEFRA payments.
In addition to the TEFRA payments for estimating FY 2003 LTCH PPS basis by applying the final FY 2003
for operating costs, and any bonus or payments. We note (as explained below) payment policies established in the
relief payments made, we also added that we used the same FY 2002 LTCH August 30, 2002 final rule that
$10 million as an estimate of the CIB MedPAR data that was used to develop implemented the LTCH PPS (67 FR
payments that would have been made in the FY 2004 LTC–DRG relative weights 55954) based on the LTCH case-specific
FY 2003 under the TEFRA payment in the FY 2004 IPPS final rule (68 FR discharge information from the FY 2002
system. We estimated this payment by 45376). As we discussed in that final MedPAR files (as explained above), and
using actual CIB payments from the cost rule, there is a data problem with the FY we also used LTCH provider-specific
reports for FYs 1999 and 2000 as they 2002 claims data for LTCHs where data from the FY 2003 provider specific
would not include the statutory multiple bills for the stay were file (PSF), as these were the data used
increases to the target amount as submitted. Specifically, given the long by FIs to make LTCH payments during
discussed above, and recalculated CIB stays at LTCHs, some providers had the first year of the LTCH PPS (FY
payments for FYs 2001 and 2002 based submitted multiple bills for payment 2003). We used the FY 2003 LTC–DRG
on cost report data. Based on these under the reasonable cost-based Grouper (Version 22.0) software
historical CIB payments, we estimated reimbursement system for the same stay. program, relative weights, and average
that CIB payments in FY 2003 would In certain LTCHs, hospital personnel length of stay (see 67 FR 55979 through
have been approximately $10 million. apparently reported a different principal 55995); we made adjustments for
Just as the TEFRA payments and bonus diagnosis on each bill since, under the differences in area wage levels
and relief payments had to be reasonable cost-based (TEFRA) established for FY 2003 as set forth at
recalculated in particular years to reimbursement system, payment was § 412.525(c) using the appropriate
eliminate percentage increases that were not dependent upon principal phase-in wage index values and cost-of-
not to be included in our budget diagnosis, as it is under a DRG-based living for Alaska and Hawaii as set forth
neutrality calculations, it was necessary PPS system. As a result of this billing at § 412.525(b) established for FY 2003
to recalculate the CIB payments in FYs practice, we discovered that only data (see 67 FR 56015 through 56020 and
2001 and 2002 to eliminate the from the final bills were being extracted 56022, respectively); we made
percentage increases to these payments for the MedPAR file. Therefore, it was adjustments for short-stay outlier cases
as provided for under section 122 of possible that the original MedPAR file based on the method for determining
BBRA, but not to be accounted for in the was not receiving the correct principal payment applicable for discharges
development of the LTCH in accordance diagnosis. In that same IPPS final rule, occurring during FY 2003 in accordance
with section 307(a)(2) of BIPA. we discussed how we addressed this with § 412.529(c)(1) (see 67 FR 55975
As we discussed above, the second problem in the LTCH FY 2002 MedPAR and 55995–56002); and we included
step in estimating total payments under data when we used that data to additional payments for high cost
the TEFRA payment system is to determine the FY 2004 LTC–DRG outlier cases as initially implemented in
estimate each LTCH’s payment per relative weights. As stated above, for the accordance with former § 412.525(a) for
discharge for capital-related costs. evaluation of the one-time budget determining payments for discharges
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Under the TEFRA system, in accordance neutrality adjustment at § 412.523(d)(3) occurring in FY 2003 and the FY 2003
with section 1886(g) of the Act, in this proposed rule, we used the same fixed-loss amount of $24,450 (see 67 FR
Medicare allowable capital costs are ‘‘corrected’’ FY 2002 LTCH MedPAR 56023). (We note that correctly billed
paid on a reasonable cost basis. data that was used to develop the FY interrupted stay cases under § 412.531
Therefore, we took each LTCH’s 2004 LTC–DRG relative weights. For the are single LTCH cases in the MedPAR
payment for capital-related costs reader’s benefit, we are providing a files, and therefore, we estimated a

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single LTCH PPS payment for those payments are approximately 2.5 percent 2003 TEFRA payments in order to
cases.) For purposes of this calculation, higher than estimated payments to the ‘‘maintain budget neutrality.’’ To
we simulated case-by-case payments for same LTCHs in FY 2003 if the LTCH determine the necessary adjustment
each LTCH as if it were paid based on PPS had not been implemented (that is, factor that would need to be applied to
100 percent of the standard Federal rate estimated total FY 2003 TEFRA the standard Federal rate in order to
in FY 2003 rather than the transition payments). This analysis was based on ‘‘maintain budget neutrality,’’ we
blend methodology set forth at approximately 91,300 LTCH cases for simulated FY 2003 LTCH PPS payments
§ 412.533. To determine total estimated 250 LTCHs. As discussed above, we using the same payment simulation
PPS payments for all LTCHs, we would have proposed that any model discussed above (that we used to
summed the individual estimated LTCH difference greater than or equal to 0.25 estimate FY 2003 LTCH PPS payments
PPS payments for each LTCH. percentage points ‘‘significant’’ for without a budget neutrality factor).
The next step we did to evaluate a purposes of determining whether the Using iterative payment simulations
potential one-time adjustment under one-time budget neutrality adjustment using the data from the 250 LTCHs in
§ 412.523(d)(3) was to determine a case- provided under § 412.523(d)(3) may be our database, we determined that a
weighted average estimated TEFRA warranted. Although we project that factor of 0.9625 (that is, approximately
payment, consistent with the estimated FY 2003 LTCH PPS payments 3.75 percent (rather than 2.5 percent))
methodology used when we determined are approximately 2.5 percent higher would need to be applied to the
the initial standard Federal rate in the than estimated FY 2003 TEFRA standard Federal rate in order to make
August 30, 2002 final rule (68 FR payments, reducing the standard estimated total FY 2003 LTCH PPS
56032). This step is necessary in order Federal rate by 2.5 percent would not payments equal to estimated total FY
to determine if there is any difference 2003 TEFRA payments.
‘‘maintain budget neutrality’’ for FY
between estimated total TEFRA In the absence of section 114(c)(4)of
2003 (that is, estimated FY 2003 LTCH
payments and estimated LTCH PPS the Medicare, Medicaid, and SCHIP
PPS payments would not be equal to
payments in FY 2003. Each LTCH’s Extension Act of 2007, we would have
estimated FY 2003 TEFRA payments)
estimated total FY 2003 TEFRA proposed to employ this methodology in
because a considerable number of LTCH
payment per discharge was determined determining whether it would have
discharges are projected to have
by summing its estimated FY 2003 been appropriate to propose a one-time
received a LTCH PPS payment in FY
operating and capital payments under budget neutrality adjustment. As the
2003 based on the estimated cost of the
the TEFRA payment system based on discussion above indicates, that analysis
FY 2002 cost report data (as described case (rather than a payment based on
the standard Federal rate) under the suggests that an adjustment of 3.75
above), and dividing that amount by the percent to the standard Federal rate
number of discharges from the FY 2002 payment adjustment for short-stay
outlier (SSO) cases at § 412.529. would have been warranted. We expect
cost report data. Next, we determined to address the issue again when it is
each LTCH’s average estimated TEFRA Specifically, our payment data indicate
that nearly 20 percent of estimated FY closer to the time section 114(c)(4) of
payment weighted for its number of the MMSEA permits us to implement a
discharges in the FY 2002 MedPAR file 2003 LTCH PPS payments are SSO
payments that were paid based on one-time adjustment under
(for the purpose of estimating FY 2003 § 412.523(d)(3). In the meantime, we
LTCH PPS payments, as discussed estimated cost and not based on the
LTCH PPS standard Federal rate. These welcome comments on the methodology
above) by multiplying its average that we have described. We would take
estimated total TEFRA payment per SSO cases that receive a payment based
on the estimated cost of the case are these comments into account in
discharge by its number of discharges in proposing to implement a one-time
the FY 2002 MedPAR file. We then generally unaffected by any changes to
the Federal rate because the estimated budget neutrality adjustment on or after
estimated total case-weighted TEFRA December 29, 2010. As noted above, we
payments by summing each LTCH’s cost of the case is determined by
multiplying the Medicare allowable will respond to any comments on our
(MedPAR) case-weighted estimated FY proposed changes to the methodology
2003 TEFRA payments. This estimated charges by the LTCH’s cost-to-charge
ratio (see § 412.529(d)(2)). In other for the one-time budget neutrality
FY 2003 total TEFRA payment is adjustment and proposed change to
compared to the estimated FY 2003 total words, if we were to reduce the Federal
rate by 2.5 percent, estimated total FY implement the requirements of section
LTCH PPS payment in order to
2003 LTCH PPS payments would still be 114(c)(4) of Public Law 110–173.
determine whether a one-time budget
neutrality adjustment would be greater than estimated total FY 2003 E. Proposed Standard Federal Rate for
appropriate. (As discussed in greater TEFRA payments, and therefore would the 2008 LTCH PPS Rate Year
detail above, we are determining both not be budget neutral. This is because
the estimated LTCH PPS payments for 1. Background
estimated total FY 2003 TEFRA
payments and estimated total FY 2003 those SSO cases that in FY 2003 were At § 412.523(c)(3)(ii), for LTCH PPS
LTCH PPS payments based on FY 2002 estimated to have been paid 120 percent rate years beginning RY 2004 through
cost report and claims data, of the estimated cost of the case RY 2006, we updated the standard
respectively.) Adjusting our estimate of generally are not affected (that is, in this Federal rate by a rate increase factor to
FY 2003 TEFRA payments for the case, not lowered) by any budget adjust for the most recent estimate of the
number of discharges that we are using neutrality factor that would be applied increases in prices of an appropriate
to estimate FY 2003 LTCH PPS to the standard Federal rate since those market basket of goods and services for
payments ensures that the comparison payments are not derived from the LTCHs. We established the policy of
of estimated aggregate FY 2003 TEFRA Federal rate (as explained above). annually updating the standard Federal
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payments to estimated aggregate FY Therefore, it would be necessary to rate because at that time we believed
2003 LTCH PPS payments is based on propose to offset the standard Federal that was the most appropriate method
the same number of LTCH discharges. rate by a factor that is larger than 2.5 for updating the LTCH PPS standard
Using the methodology and data percent in order to ensure that estimated Federal rate annually for years after FY
described above, we have calculated total FY 2003 LTCH PPS payments 2003. When we moved the date of the
that estimated FY 2003 LTCH PPS would be equal to estimated total FY annual update of the LTCH PPS from

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October 1 to July 1 in the RY 2004 LTCH rate,’’ which is an undefined term in actually finalized in the RY 2008 final
PPS final rule (68 FR 34138), we revised § 1886(m) of the ACT and in 42 CFR rule and which would continue to be
§ 412.523(c)(3)accordingly. At that time, Part 412, subpart O. We are interpreting the standard Federal rate for RY 2008
we believed that was the most that term to mean the standard Federal even if section 114(e)(1) of MMSEA had
appropriate method for updating the rate because we believe the Congress not been enacted. Since as we noted
LTCH PPS standard Federal rate meant to eliminate the 0.71 percent above, Congress does not legislate a
annually for years after RY 2004. update from the RY 2008 standard nullity, we therefore believe that the
In the RY 2007 LTCH PPS final rule Federal rate. term ‘‘base rate’’ used in section
(71 FR 27818), we explained that rather If the term ‘‘base rate’’ used in the 114(e)(1) of MMSEA refers to the
than solely using the most recent statute refers to the standard Federal standard Federal rate and not the
estimate of the LTCH PPS market basket rate, then the standard Federal rate for ‘‘unadjusted rate.’’ In subsequent
as the basis of the update factor for the RY 2008 would be the same as the sections of this preamble, we shall be
Federal rate for RY 2007, we believed it standard Federal rate for RY 2007 and using the term standard Federal rate
was appropriate to adjust the Federal the 0.71 percent update finalized in the instead of ‘‘base rate’’ when referencing
rate to account for the changes in coding RY 2008 final rule would be reversed. the provision in section 114(e)(1) of
practices (rather than patient severity) We do not believe that the term ‘‘base MMSEA in order to avoid further
as indicated by our ongoing monitoring rate’’ could refer to the ‘‘unadjusted confusion. As noted above, the standard
activities. We established at rate’’ (that is, to determine the standard Federal rate for RY 2007 was $38,086.04
§ 412.523(c)(3)(iii) that the update to the Federal rate for any given rate year, the (71 FR 27818).
standard Federal rate for the 2007 LTCH
previous year’s standard Federal rate, 2. Proposed Standard Federal Rate for
PPS rate year was zero percent, based on
referred herein as the ‘‘unadjusted rate’’, the 2009 LTCH PPS Rate Year
the most recent estimate of the LTCH
is updated by the current year’s update In the RY 2008 LTCH PPS final rule
PPS market basket at the time which
factor.) If the interpretation of ‘‘base (72 FR 26890), we established a
was offset by an adjustment to account
rate’’ is the ‘‘unadjusted rate,’’ it would standard Federal rate of $38,356.45 for
for changes in case-mix in prior periods
render meaningless the provision at the the 2008 LTCH PPS rate year that was
due to changes in coding practices
section 114(e)(1) of the MMSEA and based on the best available data and
rather than increased patient severity in
Congress does not legislate a nullity. policies established in that final rule. As
FY 2004. Therefore, effective from July
The provision would be meaningless discussed above, the Medicare,
1, 2006 through June 30, 2007, the
standard rate was $38,086.04 (71 FR under such an interpretation because Medicaid, and SCHIP Extension Act of
27818). For the following year, we also even though the unadjusted rate for RY 2007, enacted on December 29, 2007,
considered changes in coding practices 2008 would be the same as the revises the standard Federal rate for RY
(rather than patient severity) in unadjusted rate for RY 2007, this 2008 while specifying that this rate
establishing the update to the Federal unadjusted rate must still be updated by ‘‘shall not apply to discharges occurring
rate for the 2008 LTCH PPS rate year. In 0.71 percent, and doing so would result on or after July 1, 2007, and before April
the RY 2008 final rule (72 FR 26887 in the same standard Federal rate for RY 1, 2008’’ (that is, the first 9 months of
through 27890), we adjusted the Federal 2008 as was adopted in the RY 2008 RY 2008). Specifically, section 114(e)(1)
rate based on the most recent estimate final rule. (The unadjusted rate must be of MMSEA provides that under the new
of market basket (3.2 percent) and an updated by 0.71 percent in order to 1886(m)(2) to the Act the standard
adjustment to account for changes in determine the standard Federal rate Federal rate for RY 2008 shall be the
coding practices (2.49 percent) in FY because it is the standard Federal rate same as the standard Federal rate for RY
2005. Accordingly, we established at that is the basis for Federal prospective 2007 (which shall not apply to
§ 412.523(c)(3)(iv) that the update to the LTCH PPS payments.) Consequently, discharges occurring before April 1,
standard Federal rate for RY 2008 was LTCH PPS payments would be 2008). Thus, the standard Federal rate
0.71 percent. Consequently, in the RY unaffected by section 114(e)(1) of the for RY 2008 will be $38,086.04 (the
2008 final rule, we established the Medicare, Medicaid, and SCHIP same as standard Federal rate for 2007).
LTCH PPS standard Federal rate, Extension Act of 2007. We explain In this proposed rule, consistent with
effective from July 1, 2007 through June below why RY 2008 LTCH PPS our historical practice, we are proposing
30, 2008, of $38,356.45 (see 72 FR payments would be unaffected by to update the standard Federal rate from
26890). section 114(e)(1) of Public Law 110–173 the previous year ($38,086.04) to
As stated in section I.A. of this if ‘‘base rate’’ means ‘‘unadjusted rate.’’ determine the proposed standard
preamble, section 114(e)(1) of the Specifically, if ‘‘base rate’’ means the Federal rate for RY 2009. Under the
Medicare, Medicaid, and SCHIP ‘‘unadjusted rate,’’ the RY 2007 ‘‘base broad authority conferred upon the
Extension Act of 2007, enacted on rate’’ (that is, $38,086.04) would be the Secretary by section 123 of the BBRA as
December 29, 2007 revises the base rate same as the standard Federal rate for RY amended by section 307(b) of the BIPA,
for RY 2008. Specifically, section 2007 (also $38,086.04) since we we are proposing an annual update to
114(e)(1) of Public Law 110–173 adds a established a zero percent update for RY the standard Federal rate for the
new subsection to the Act at 1886(m)(2), 2007. Consequently, if ‘‘base rate’’ is proposed 15-month 2009 rate year based
which provides that the base rate for RY interpreted to mean ‘‘unadjusted rate,’’ on the most recent LTCH PPS market
2008 ‘‘shall be the same as the base rate the ‘‘unadjusted rate’’ for RY 2008 basket estimate of 3.5 percent, as
for discharges for the hospital occurring ($38,086.04) would be the same as the discussed above in section IV.C. of the
during the rate year ending in 2007.’’ In RY 2007 ‘‘unadjusted rate’’ ($38,086.04). preamble of this proposed rule, and an
addition, section 114(e)(2) of Public Law The RY 2008 ‘‘unadjusted rate’’ of adjustment of 0.9 percent to account for
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110–173 indicates that section $38,086.04 would subsequently be the increase in case-mix in a prior
1886(m)(2) of the Act ‘‘shall not apply updated by the 0.71 percent update period (FY 2006) that resulted from
to discharges occurring on or after July factor finalized in the RY 2008 final changes in coding practices rather than
1, 2007, and before April 1, 2008’’ (that rule, resulting in a standard Federal rate an increase in patient severity.
is, the first 9 months of RY 2008). We for RY 2008 of $38,356.45, which is the As we discussed in greater detail in
note that the statute uses the term ‘‘base same standard Federal rate that was the RY 2007 and RY 2008 LTCH PPS

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final rules (71 FR 27819 through 27827 LTCH claims data (FY 2006 MedPAR the standard Federal rate for the RY
and 72 FR 26887 through 26890, files) and estimated the observed CMI 2009 final rule, and thus, the Federal
respectively), while we continue to change for FY 2006 to be 1.9 percent rate update noted in the proposed
believe that an update to the LTCH PPS (based on the most recent available regulation text at § 412.523(c)(3)(v)
Federal rate year should be based on the LTCH case-mix data from FY 2005 could change.
most recent estimate of the LTCH PPS compared to FY 2006). We continue to
F. Calculation of Proposed LTCH
market basket, we believe it is believe, as discussed and for the same
Prospective Payments for the 2009
appropriate that the rate be offset by an reasons stated in the RY 2008 final rule
LTCH PPS Rate Year
adjustment to account for any changes (72 FR 26888 through 26890), that it is
in coding practices that do not reflect appropriate to utilize the estimate of 1. Proposed Adjustment for Area Wage
increased patient severity. Such an real CMI increase of 1.0 percent, based Levels
adjustment protects the integrity of the on the well-established RAND study a. Background
Medicare Trust Funds by ensuring that referred to in the RY 2008 final rule, as
the LTCH PPS payment rates better the proxy for the portion of the observed Under the authority of section 123 of
reflect the true costs of treating LTCH 1.9 percent CMI increase from FY 2005 the BBRA as amended by section 307(b)
patients (71 FR 27819 through 27827). to FY 2006 that represents real CMI of the BIPA, we established an
changes for use in determining the adjustment to the LTCH PPS Federal
We continue to believe that a rate to account for differences in LTCH
proposed update to the LTCH PPS proposed RY 2009 Federal rate update.
(A more detailed discussion on the use area wage levels at § 412.525(c). The
Federal rate year should be based on the labor-related share of the LTCH PPS
most recent estimate of the LTCH PPS of the RAND study estimate for real CMI
change can be found in the RY 2008 Federal rate, currently estimated by the
market basket, offset if appropriate by FY 2002-based RPL market basket (as
an adjustment to account for changes in final rule appearing in the Federal
Register on May 11, 2007. (72 FR 26887 discussed in greater detail in section
coding practices that do not reflect IV.C.1. of this preamble), is adjusted to
increased patient severity. Furthermore, through 26890)). Accordingly, we
believe that 0.9 percent (1.9 ¥ 1.0 = 0.9) account for geographic differences in
in the FY 2008 IPPS final rule, we did area wage levels by applying the
of the observed 1.9 percent CMI increase
not finalize the proposed case-mix applicable LTCH PPS wage index. The
from FY 2005 to FY 2006 reflects CMS
budget neutrality factor for the adoption applicable LTCH PPS wage index is
increase that is due to changes in coding
of the severity adjusted MS–LTC–DRG computed using wage data from
practices (rather than patient severity).
patient classification system to the FY At this time, the most recent estimate inpatient acute care hospitals without
2008 MS–LTC–DRG relative weights. of the LTCH PPS market basket is 3.5 regard to reclassification under sections
We stated in that rule that since we have percent as discussed above in section 1886(d)(8) or 1886(d)(10) of the Act.
an established mechanism to adjust IV.C.2. of this proposed rule. We are As we discussed in the August 30,
prospectively LTCH payments to proposing to update the standard 2002 LTCH PPS final rule (67 FR
account for the effect of changes in Federal Rate for RY 2009 based on the 56015), when the LTCH PPS was
coding from a previous year and full LTCH PPS market basket estimate of implemented, we established a 5-year
documentation which is based on actual 3.5 percent and a proposed adjustment transition to the full wage adjustment.
LTCH data, and because at the time of to account for the increase in case-mix The wage index adjustment was
the final rule we were unable to in the prior period (FY 2006) that completely phased-in beginning with
determine an appropriate adjustment resulted from changes in coding cost reporting periods beginning in FY
factor applicable to LTCHs, we believed practices of 0.9 percent. Therefore, the 2007. Therefore, for cost reporting
it was appropriate to continue using the proposed update factor to the standard periods beginning on or after October 1,
established process rather than making Federal rate for RY 2009 is 2.6 percent 2006, the applicable LTCH wage index
a prospective adjustment based on an (3.5 ¥ 0.9 = 2.6). That is, under the values are the full (five-fifths) LTCH
estimate of projected LTCH specific broad authority conferred upon the PPS wage index values calculated based
case-mix change due to improved Secretary under the BBRA and the on acute-care hospital inpatient wage
coding and documentation. We also BIPA, we are proposing to specify under index data without taking into account
stated that consistent with past LTCH § 412.523(c)(3)(v), that, for discharges geographic reclassification under
payment policy, we could propose to occurring on or after July 1, 2008 and on sections 1886(d)(8) and (d)(10) of the
make future adjustments to account for or before September 30, 2009, the Act. For additional information on the
improvements in coding and standard Federal rate from the previous phase-in of the wage index adjustment
documentation that do not reflect real year would be updated by 2.6 percent. under the LTCH PPS, refer to the August
changes in case mix during these years In determining the proposed standard 30, 2002 LTCH PPS final rule (67 FR
that we are implementing MS–LTC– Federal rate for RY 2009, we are 56017 through 56019) and the RY 2008
DRGs. We also stated in that final rule applying the proposed 2.6 percent LTCH PPS final rule (72 FR 26891).
that we continue to believe more update to the RY 2008 Federal rate of b. Proposed Updates to the Geographic
accurate and complete documentation $38,086.04), which is the same standard Classifications/Labor Market Area
and coding will occur, and that we will Federal rate for discharges occurring Definitions
continue to monitor LTCHs’ response to during the rate year ending in 2007,
the MS–LTC–DRG transition and would consistent with section 114(e)(1) of the (1) Background
propose an adjustment factor to LTCHs Medicare, Medicaid, and SCHIP As discussed in the August 30, 2002
to account prospectively for coding and Extension Act of 2007. Consequently, LTCH PPS final rule, which
documentation changes if CMS is able the proposed standard Federal rate for implemented the LTCH PPS (67 FR
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to estimate an appropriate adjustment RY 2009 would be $39,076.28. 56015 through 56019), in establishing
factor applicable to LTCHs. In We also propose that if more recent an adjustment for area wage levels
determining the proposed update to the data becomes available (such as a more under § 412.525(c), the labor-related
standard Federal rate for the 2009 LTCH recent estimate of the LTCH PPS market portion of a LTCH’s Federal prospective
PPS rate year, we performed a CMI basket), we would use that data, if payment is adjusted by using an
analysis using the most recent available appropriate, to determine the update to appropriate wage index based on the

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labor market area in which the LTCH is • Goleta, California qualifies as a new (3) Clarification of New England
located. In the RY 2006 LTCH PPS final principal city of the Santa Barbara-Santa Deemed Counties
rule (70 FR 24184 through 24185), in Maria-Goleta, California CBSA (CBSA We are also taking this opportunity to
regulations at § 412.525(c), we revised code 42060). address the change in the treatment of
the labor market area definitions used • Franklin, Tennessee qualifies as a ‘‘New England deemed counties’’ (that
under the LTCH PPS effective for new principal city of the Nashville- is, those counties in New England listed
discharges occurring on or after July 1, Davidson-Murfreesboro-Franklin, in § 412.64(b)(1)(ii)(B) that were deemed
2005 based on the Office of Management Tennessee CBSA (CBSA code 34980). to be parts of urban areas under section
and Budget’s (OMB’s) Core Based 601(g) of the Social Security
Statistical Area (CBSA) designations • Fort Pierce, Florida no longer
qualifies as a principal city of the Port Amendments of 1983) that was made in
based on 2000 Census data. We made the FY 2008 IPPS final rule with
this revision because we believe that St. Lucie-Fort Pierce, Florida CBSA; the
comment period. These counties
those new CBSA-based labor market new designation is Port St. Lucie,
include the following: Litchfield
area definitions will ensure that the Florida CBSA (CBSA code 38940).
County, Connecticut; York County,
LTCH PPS wage index adjustment most • Essex County, Massachusetts Maine; Sagadahoc County, Maine;
appropriately accounts for and reflects Metropolitan Division was renamed as Merrimack County, New Hampshire;
the relative hospital wage levels in the the Peabody, Massachusetts and Newport County, Rhode Island. Of
geographic area of the hospital as Metropolitan Division, which changed these five ‘‘New England deemed
compared to the national average the CBSA code from 21604 to 37764. counties,’’ three (York County,
hospital wage level. As set forth in Sagadahoc County, and Newport
We note that these six revised CBSA
existing § 412.525(c)(2), a LTCH’s wage County) are also included in
designations made in OMB Bulletin No.
index is determined based on the metropolitan statistical areas defined by
location of the LTCH in an urban or 07–01 do not change the composition
(constituent counties) of the affected OMB and are considered urban under
rural area as defined in both the current IPPS and LTCH PPS
§ 412.64(b)(1)(ii)(A) through (C). An CBSAs; they only revise the CBSA titles
(and the CBSA code for the CBSA that labor market area definitions in
urban area under the LTCH PPS is § 412.64(b)(1)(ii)(A) (they would also be
currently defined at § 412.64(b)(1)(ii)(A) consists of Essex County, MA).
urban under the proposed conforming
and (B). Under § 412.64(b)(1)(ii)(C), a In this proposed rule, under the broad
changes to § 412.503). The remaining
rural area is defined as any area outside authority conferred upon the Secretary
two, Litchfield County and Merrimack
of an urban area. by section 123 of the BBRA, as amended
County, are geographically located in
We note that these are the same by section 307(b) of BIPA to determine areas that are considered rural under the
CBSA-based designations implemented appropriate adjustments under the current IPPS (and LTCH PPS) labor
for acute care hospitals under the IPPS LTCH PPS, we are proposing to apply market area definitions (however, they
at § 412.64(b) effective October 1, 2004 these changes to the current CBSA- have been previously deemed urban
(69 FR 49026 through 49034). For based labor market area definitions and under the IPPS in certain circumstances
further discussion of the labor market geographic classifications used under as discussed below).
area (geographic classification) the LTCH PPS effective for discharges In the FY 2008 IPPS final rule with
definitions currently used under the occurring on or after July 1, 2008. We comment period (72 FR 47337 through
LTCH PPS, see the RY 2006 LTCH PPS believe these revisions to the LTCH PPS 47338), § 412.64(b)(1)(ii)(B) was revised
final rule (70 FR 24182 through 24191). CBSA-based labor market area such that the two ‘‘New England
(2) Proposed Update to the CBSA-based definitions, which are based on the most deemed counties’’ that are still
Labor Market Area Definitions recent available data, would ensure that considered rural by OMB (Litchfield
the LTCH PPS wage index adjustment county, CT and Merrimack county, NH)
On December 18, 2006, OMB most appropriately accounts for and
announced the inclusion of two new are no longer considered urban effective
reflects the relative hospital wage levels for discharges occurring on or after
CBSAs and the revision of designations in the geographic area of the hospital as
for six areas (OMB Bulletin No. 07–01). October 1, 2007, and therefore, are
compared to the national average considered rural in accordance with
This OMB bulletin is available on the hospital wage level. (We note that we
OMB Web site at http:// § 412.64(b)(1)(ii)(C). However, for
are currently not aware of any LTCHs purposes of payment under the IPPS,
www.whitehouse.gov/omb/bulletins/ located in the two new proposed CBSAs
fy2007/b07–01.pdf. The two new CBSAs acute-care hospitals located within
(that is, proposed CBSA 29420 and those areas are treated as being
outlined in this bulletin are as follows: proposed CBSA 37380), and as
• Lake Havasu-Kingman, Arizona reclassified to their deemed urban area
discussed above, the six proposed effective for discharges occurring on or
(CBSA code 29420). This CBSA comes
revisions to the CBSA designations after October 1, 2007 (see 72 FR 47337
from Mohave County, Arizona.
• Palm Coast, Florida (CBSA code would only revise the CBSA titles (and through 47338). (We note that the LTCH
37380). This CBSA comes from Flager the CBSA code for the CBSA that PPS does not provide for such
County, Florida. consists of Essex County, MA).) geographic reclassification (67 FR 56019
The six revised CBSA designations Accordingly, the proposed RY 2009 through 56020)). Also in the FY 2008
outlined in this bulletin are as follows: LTCH PPS wage index values presented IPPS final rule with comment period (72
• Mauldin, South Carolina and in Tables 1 and 2 in the Addendum of FR 47338), we explained that we have
Easley, South Carolina qualify as new this proposed rule were calculated limited this policy change for the ‘‘New
principal cities of the Greenville- based on the proposed revisions to the England deemed counties’’ only to IPPS
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Mauldin-Easley, South Carolina CBSA CBSA-based labor market area hospitals, and any change to non-IPPS
(CBSA code 24860). definitions described above. We also provider wage indices would be
• Conway, Arkansas qualifies as a note that these revisions to the CBSA- addressed in the respective payment
new principal city of the Little Rock- based designations were adopted under system rules. Accordingly, as stated
North Little Rock-Conway, Arkansas the IPPS effective beginning October 1, above, we are taking this opportunity to
CBSA (CBSA code 30780). 2007 (72 FR 47308 through 47309). clarify the treatment of ‘‘New England

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5364 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

deemed counties’’ under the LTCH PPS (Manchester-Nashua, NH), respectively. explained above in section IV.F.1.b.3.,
in this proposed rule. We note that currently we are not aware the definition of ‘‘urban area’’ at
As discussed above, under existing of any LTCHs located in either § 412.64(b)(1)(ii)(B) is no longer
§ 412.525(c)(2), a LTCH’s wage index is Litchfield county, CT or Merrimack applicable under the LTCH PPS
determined based on the location of the county, NH. We also note that this effective for discharges occurring on or
LTCH in an urban or rural area as policy is consistent with our policy of after July 1, 2008, and therefore, the
defined in § 412.64(b)(1)(ii)(A) through not taking into account IPPS geographic only remaining definition of ‘‘urban
(C). Under existing § 412.525(c)(2), an reclassifications in determining area’’ will be that of a Metropolitan
urban area under the LTCH PPS is payments under the LTCH PPS. In Statistical Area (MSA) as defined by the
currently defined at § 412.64(b)(1)(ii)(A) addition, as discussed above, in this Executive Office of Management and
and (B), and a rural area is defined as section, effective for discharges on or Budget. (See 72 FR 47337 through
any area outside of an urban area in after July 1, 2008, § 412.64(b)(1)(ii)(B) is 47338). Thus, we omit the language of
§ 412.64(b)(1)(ii)(C). no longer applicable under the LTCH § 412.64(b)(1)(ii)(B) from the proposed
Historical changes to the labor market PPS. definition of ‘‘urban area’’ that would be
area/geographic classifications and applicable to discharges occurring on or
annual updates to the wage index values (4) Proposed Codification of the
after July 1, 2008 in proposed 412.503.
under the LTCH PPS have been made Definitions of Urban and Rural Under
We, however, included the language
effective July 1 each year. When we 42 CFR Part 412 Subpart O
from § 412.64(b)(1)(ii)(A) in the
established the most recent LTCH PPS Under the current regulations at proposed definition of ‘‘urban area’’ that
payment rate update, effective for LTCH § 412.525(c), the labor-related portion of would be applicable to discharges
discharges occurring on or after July 1, the LTCH PPS Federal rate is adjusted occurring on or after July 1, 2008 in
2007 through June 30, 2008, we to account for geographical differences proposed 412.503. For the reason just
considered the ‘‘New England deemed in the area wage levels using an described, we note that the proposed
counties’’ (including Litchfield county, appropriate wage index to reflect the definitions of ‘‘urban’’ and ‘‘rural’’ that
CT and Merrimack county, NH) as urban relative level of hospital wages and would be effective for discharges
for RY 2008 (in accordance with the wage-related costs in the geographic occurring on or after July 1, 2008 (in
definitions of urban and rural stated in area (that is, urban or rural area) of the subparagraph (3) in the both the
the RY 2008 LTCH PPS final rule (72 FR hospital compared to the national proposed definition of ‘‘rural area’’ and
26891) and as evidenced by the average level of hospital wages and the proposed definition of ‘‘urban area’’)
inclusion of Litchfield county as one of wage-related costs annually. Currently, vary slightly from the wording in the
the constituent counties of urban CBSA the application of the wage index under current regulations at
25540 (Hartford-West Hartford-East existing § 412.525(c)(2) is made on the § 412.64(b)(1)(ii)(A) through (C);
Hartford, CT), and the inclusion of basis of the location of the facility in an however, substantively the definitions
Merrimack county as one of the urban or rural area as defined in are the same. We believe that the slight
constituent counties of urban CBSA § 412.64(b)(1)(ii)(A) through (C) (in 42 difference in the wording of 412.503
31700 (Manchester-Nashua, NH)). (See CFR Part 412 subpart D). more precisely conveys the treatment of
72 FR 27004 and 27008, respectively). In light of regulatory construct New England deemed counties under
As noted above, existing discussed above where § 412.525(c) the LTCH PPS, as discussed above. As
§ 412.525(c)(2) indicates that the terms indicated that the terms ‘‘rural area’’ a conforming change, we are also
‘‘rural’’ and ‘‘urban’’ as areas are defined and ‘‘urban area’’ as defined according proposing to replace the cross-
according to the definitions of those to the definitions of those terms’’ under references to § 412.62(f)(1)(iii) and
terms in § 412.64(b)(1)(ii)(A) through the IPPS in 42 CFR Part 412 subpart D, § 412.64(b)(1)(ii)(A) through (C) in
(C). As Litchfield county, CT and we believe it may be administratively § 412.525(c) with references to the
Merrimack county, NH would be simpler to have the LTCH PPS urban proposed definitions of ‘‘urban area’’
considered rural areas in accordance and rural labor market area definitions and ‘‘rural area’’ at § 412.503.
with our regulations at (§ 412.525(c)(2), self-contained in (§ 412.503) 42 CFR Accordingly, we are proposing to revise
these two counties will be ‘‘rural’’ under Part 412 subpart O rather than cross- § 412.525(c) to specify that the
the LTCH PPS effective with the next referring to the definitions of urban and application of the LTCH PPS wage
update of the LTCH PPS payment rates, rural in the IPPS regulations in 42 CFR index would be made on the basis of the
which will be July 1, 2008 (under the Part 412, Subpart D. This approach is location of the LTCH in an urban or
LTCH PPS effective for discharges on or similar to the change we made in rural area as defined in proposed
after July 1, 2008, Litchfield County, CT § 412.525(a) for high cost outliers and § 412.503. As discussed in section
and Merrimack County, NH are not § 412.529 for short-stay outliers in the VI.G.3. of this proposed rule, we are also
urban under § 412.64(b)(1)(ii)(A–B) and FY 2007 IPPS final rule when we proposing to make conforming changes
therefore are rural under embedded within Subpart O the to the regulations governing short-stay
§ 412.64(b)(1)(ii)(c)). (We note that regulatory provisions concerning the outlier payments (at § 412.529) and the
Litchfield and Merrimack counties will determination of cost-to-charge ratios special payment provisions for co-
also be rural under our proposed (CCRs) and the reconciliation of outlier located LTCHs (at § 412.534) and free-
§ 412.503, discussed in greater detail payments (71 FR 48115 through 48122). standing LTCHs (at § 412.536), which
below, that would incorporate the Under the broad authority of § 123 of refer to the definition of urban and rural
existing definitions of ‘‘urban’’ and the BBRA as amended by § 307(b) of under the LTCH PPS.
‘‘rural’’ areas.) Therefore, Litchfield BIPA we are proposing to codify in
county, CT and Merrimack county, NH § 412.503 the definitions for ‘‘urban c. Proposed Labor-Related Share
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will be considered ‘‘rural’’ effective for area’’ and ‘‘rural area.’’ The proposed In the August 30, 2002 LTCH PPS
LTCH PPS discharges occurring on or definitions for ‘‘urban area’’ and ‘‘rural final rule (67 FR 56016), we established
after July 1, 2008, and will no longer be area’’ in § 412.503 would incorporate a labor-related share of 72.885 percent
considered as being part of urban CBSA the provisions of § 412.62(f)(1)(ii) and based on the relative importance of the
25540 (Hartford-West Hartford-East (f)(1)(iii) as well as § 412.64(b)(1)(ii)(A) labor-related share of operating costs
Hartford, CT) and urban CBSA 31700 through (C). Furthermore, since, as (wages and salaries, employee benefits,

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professional fees, postal services, and all identifying the national average determining the labor-related share for
other labor-intensive services) and proportion of operating costs and capital the 2009 LTCH PPS rate year in the final
capital costs of the excluded hospital costs that are related to, influenced by, rule.
with capital market basket based on FY or varies with the local labor market, we Based on the most recent available
1992 data. We did not revise the labor- are proposing to revise the LTCH PPS data, we are proposing that the sum of
related share in RYs 2004 through 2006 labor-related share from 75.788 percent the relative importance for the 2009
while we conducted further analysis to to 75.920 percent based on the relative LTCH PPS rate year for operating costs
determine the most appropriate importance of the labor-related share of (wages and salaries, employee benefits,
methodology and data for determining operating costs (wages and salaries, professional fees, and labor-intensive
the labor-related share under the LTCH employee benefits, professional fees, services) would be 71.965, as shown in
PPS (70 FR 24182). After our research and all other labor-intensive services) Table 1. The portion of capital that is
into the labor-related share methodology and capital costs of the FY 2002-based influenced by the local labor market is
was complete, we revised the labor- RPL market basket from the fourth still estimated to be 46 percent, which
related share under the LTCH PPS in the quarter of 2007, as shown in Table 1. is the same percentage used when we
RY 2007 final rule (71 FR 27829). The proposed labor-related share is the established the current labor-related
Specifically, beginning in RY 2007, we sum of the relative importance of wages share in the RY 2008 LTCH PPS final
established a labor-related share based and salaries, fringe benefits, rule. Since, based on the most recent
on the relative importance of the labor- professional fees, labor-intensive available data, the relative importance
related share of operating costs (wages services, and a portion of the capital for capital would be 8.597 percent of the
and salaries, employee benefits, share from an appropriate market FY 2002-based RPL market basket for
professional fees, postal services, and all basket. the 2009 LTCH PPS rate year, we are
other labor-intensive services) and proposing to multiply the estimated
In this proposed rule, for RY 2009, we
capital costs of the RPL market basket portion of capital influenced by the
based on FY 2002 data, as it is the best are proposing to use the FY 2002-based
RPL market basket costs based on data local labor market (46 percent) by the
available data that reflect the cost relative importance for capital (8.597
structure of LTCHs. from the fourth quarter of 2007 to
determine the labor-related share for the percent) to determine the proposed
Consistent with our historical
LTCH PPS effective for discharges labor-related share of capital for the
practice, the labor-related share
occurring on or after July 1, 2008 and 2009 LTCH PPS rate year. The result
currently used under the LTCH PPS is
before September 30, 2009, as this is the would be 3.955 percent (0.46 x 8.597
determined by identifying the national
most recent available data. The percent), which we would add to the
average proportion of operating costs
proposed labor-related share for RY proposed 71.965 percent for the
and capital costs that are related to,
influenced by, or vary with the local 2009 LTCH PPS would continue to be operating cost amount to determine the
labor market. Accordingly, in the RY the sum of the relative importance of proposed total labor-related share for
2008 LTCH PPS final rule (72 FR each labor-related cost category, and the 2009 LTCH PPS rate year. Thus,
26892), we updated the LTCH PPS would reflect the different rates of price based on the latest available data, we are
labor-related share to 75.788 percent change for these cost categories between proposing to use a labor-related share of
based on the relative importance of the the base year (FY 2002) and the (15- 75.920 percent (71.965 percent + 3.955
labor-related share of operating costs month) 2009 LTCH PPS rate year. (As percent) under the LTCH PPS for the
(wages and salaries, employee benefits, discussed in greater detail above in 2009 LTCH PPS rate year. As noted
professional fees, and all other labor- section IV.B. of this proposed rule, we above in this section, this proposed
intensive services) and capital costs of are proposing to move the LTCH PPS labor-related share is determined using
the RPL market basket based on FY 2002 annual payment rate year beginning July the same methodology as employed in
data from the first quarter of 2007. 1st to a rate year beginning October 1st calculating the current LTCH labor-
As discussed in section IV.C.2. of this and have a 15-month rate year for 2009 related share (72 FR 26892) and the
preamble, we now have data from the (that is, July 1, 2008 through September labor-related shares used under the IRF
4th quarter of 2007 (with history 30, 2009). Accordingly, we are PPS and IPF PPS, which also use the
through the 3rd quarter of 2007) proposing to use the 15-month RY 2009 RPL market basket.
available for determining the labor- RPL market basket, discussed above, to Table 1 shows the 2008 LTCH PPS
related share of the FY 2002-based RPL determine the proposed labor-related rate year relative importance labor-
market basket. Based on this more share for RY 2009 in this proposed rule. related share of the FY 2002-based RPL
recent data, in this proposed rule, under Consistent with our historical practice market basket (established in the RY
the broad authority conferred upon the of using the best data available, if more 2008 LTCH PPS final rule) and the
Secretary by section 123 of the BBRA as recent data are available to determine proposed 2009 LTCH PPS rate year
amended by section 307(b) of the BIPA, the labor-related share of the RPL relative importance labor-related share
consistent with our historical practice of market basket (used under the LTCH of the FY 2002-based RPL market
determining the labor-related share by PPS), we propose to use it for basket.

TABLE 1.—RY 2008 LABOR-RELATED SHARE RELATIVE IMPORTANCE AND PROPOSED RY 2009 LABOR-RELATED SHARE
RELATIVE IMPORTANCE OF THE FY 2002-BASED RPL MARKET BASKET
RY 2008 Proposed RY
Cost category relative 2009 relative
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importance* importance

Wages and Salaries ................................................................................................................................................ 52.588 52.830


Employee Benefits ................................................................................................................................................... 14.127 14.079
Professional fees ..................................................................................................................................................... 2.907 2.907
All other labor intensive services ............................................................................................................................. 2.145 2.149

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TABLE 1.—RY 2008 LABOR-RELATED SHARE RELATIVE IMPORTANCE AND PROPOSED RY 2009 LABOR-RELATED SHARE
RELATIVE IMPORTANCE OF THE FY 2002-BASED RPL MARKET BASKET—Continued
RY 2008 Proposed RY
Cost category relative 2009 relative
importance* importance

Subtotal ............................................................................................................................................................. 71.767 71.965


Labor share of capital costs .................................................................................................................................... 4.021 3.955

Total Labor-related share ................................................................................................................................. 75.788 75.920


* As established in the RY 2008 LTCH PPS final rule (72 FR 26892).
** Other labor intensive services includes landscaping services, services to buildings, detective and protective services, repair services, laundry
services, advertising, auto parking and repairs, physical fitness facilities, and other government enterprises.

d. Proposed Wage Index Data by section 307(b) of BIPA to determine wage index values for the following
Historically, under the LTCH PPS, we appropriate adjustments under the CBSAs are affected by this policy:
have established LTCH PPS wage index LTCH PPS, we are proposing that, for Boston-Quincy, MA (CBSA 14484),
values calculated from acute care IPPS the RY 2009, the same data (collected Providence-New Bedford-Falls River,
hospital wage data without taking into from cost reports submitted by hospitals RI-MA (CBSA 39300), Chicago-
account geographic reclassification for cost reporting periods beginning Naperville-Joliet, IL (CBSA 16974) and
under sections 1886(d)(8) and (d)(10) of during FY 2004) used to compute the Lake County-Kenosha County, IL-WI
the Act. As we discussed in the August FY 2008 acute care hospital inpatient (CBSA 29404) (refer to Table 1 in the
30, 2002 LTCH PPS final rule (67 FR wage index data without taking into Addendum of this proposed rule).
56019), since hospitals that are account geographic reclassification Furthermore, the proposed RY 2009
excluded from the IPPS are not required under sections 1886(d)(8) and (d)(10) of LTCH PPS wage index values presented
to provide wage-related information on the Act would be used to determine the in this proposed rule were computed
the Medicare cost report. Therefore, we applicable wage index values under the consistent with the urban and rural
would need to establish instructions for LTCH PPS because these data (FY 2004) geographic classifications (labor market
the collection of this LTCH data as well are the most recent complete data. (For areas) discussed above in section
as develop some type of application and information on the data used to IV.F.1.b. of this proposed rule and
determination process before a compute the FY 2008 IPPS wage index consistent with pre-reclassified IPPS
geographic reclassification adjustment refer to the FY 2008 IPPS final rule with wage index policy (that is, our historical
under the LTCH PPS could be comment period (72 FR 47308 through policy of not taking into account IPPS
implemented. Thus, the wage 47309, 47315)). We are proposing to geographic reclassifications in
adjustment established under the LTCH continue to use IPPS wage data as a determining payments under the LTCH
PPS is based on a LTCH’s actual proxy to determine the proposed LTCH PPS). Specifically, we note that the
location without regard to the urban or wage index values for RY 2009 because wage data of the IPPS hospitals located
rural designation of any related or both LTCHs and acute-care hospitals are in Litchfield county, CT, and Merrimack
affiliated provider. Acute care hospital required to meet the same certification county, NH, were included in the
inpatient wage index data are also used criteria set forth in section 1861(e) of the calculation of the proposed RY 2009
to establish the wage index adjustment Act to participate as a hospital in the LTCH PPS statewide rural wage index
used in other Medicare PPSs, such as Medicare program and they both values for Connecticut and New
the IRF PPS, IPF PPS, HHA PPS, and compete in the same labor markets, and Hampshire, respectively (rather than
SNF PPS. therefore, experience similar wage- urban CBSA 25540 (Hartford-West
In the RY 2008 LTCH PPS final rule related costs. We note that the IPPS Hartford-East Hartford, CT) and urban
(72 FR 26893), we established LTCH wage data used to determine the CBSA 31700 (Manchester-Nashua, NH),
PPS wage index values for the RY 2008 proposed RY 2009 LTCH wage index respectively). In addition, the proposed
calculated from the same data (collected values reflects our policy that was RY 2009 wage index reflects our
from cost reports submitted by hospitals adopted under the IPPS beginning in FY proposals (discussed in greater detail
for cost reporting periods beginning 2008 that apportions the wage data for below) to establish wage index values in
during FY 2003) used to compute the multicampus hospitals’ located in urban and rural areas in which there are
FY 2007 acute care hospital inpatient different labor market areas (CBSAs) to no IPPS wage data from which to
wage index data without taking into each CBSA where the campuses are compute a wage index value under our
account geographic reclassification located (see the FY 2008 IPPS final rule methodology described above. As noted
under sections 1886(d)(8) and (d)(10) of with comment period (72 FR 47317 above, the IPPS wage data we are
the Act because that was the best through 47320)). For the proposed RY proposing to use are the same FY 2004
available data at that time. The LTCH 2009 LTCH PPS wage index, which is acute care hospital inpatient wage data
PPS wage index values applicable for computed from IPPS wage data that were used to compute the FY 2008
discharges occurring on or after July 1, submitted by hospitals for cost reporting wage index currently used under the
2007 through June 30, 2008 are shown periods beginning in FY 2004 (just like IPPS.
in Table 1 (for urban areas) and Table the FY 2008 IPPS wage index), we In this proposed rule, under the broad
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2 (for rural areas) in the Addendum to allocated salaries and hours to the authority conferred upon the Secretary
the RY 2008 LTCH PPS final rule (72 FR campuses of two multicampus hospitals by section 123 of the BBRA as amended
26996 through 27019). with campuses that are located in by section 307(b) of BIPA to determine
In this proposed rule, under the broad different labor areas, one in appropriate adjustments under the
authority conferred upon the Secretary Massachusetts and another in Illinois. LTCH PPS, we are also proposing to
by section 123 of the BBRA as amended Thus, the proposed RY 2009 LTCH PPS establish a policy for determining LTCH

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PPS wage index values for labor market reclassified IPPS wage data, it is easy to contiguous to the rural counties of the
areas in which there is no IPPS hospital evaluate, and it uses the most State would be a reasonable proxy for
wage data from which to compute a geographically similar relative wage- determining the wage index for rural
wage index value under our related costs data available. (Our areas in a State with no wage data
methodology described above. rationale for using pre-reclassified IPPS because it is based on pre-reclassified
Currently, there are no LTCHs located in wage data is discussed above in the IPPS wage data, it is easy to evaluate,
labor areas where there is no IPPS beginning of this section.) Based on the and it uses the most geographically
hospital wage data (or IPPS hospitals). FY 2004 IPPS wage data that we are similar relative wage-related costs data
However, we believe it is appropriate to proposing to use to determine the available. (Our rationale for using pre-
establish a methodology for determining proposed RY 2009 LTCH PPS wage reclassified IPPS wage data is discussed
LTCH PPS wage index values for these index (discussed above), there is no above in the beginning of this section.)
areas in the event that in the future a IPPS wage data for the urban area of Based on the FY 2004 IPPS data that
LTCH should open in one of those areas. Hinesville-Fort Stewart, GA (CBSA we are proposing to use to determine
Thus, any LTCH that would open in 25980). Consistent with our proposal for the proposed RY 2009 LTCH PPS wage
area in which there is no IPPS wage data determining a LTCH PPS wage index index (discussed above), rural
for which to compute a wage index value for urban areas with no IPPS wage Massachusetts (CBSA code 11) does not
based on our established methodology data, in this proposed rule, we have any IPPS wage data. Consistent
would have a wage index value assigned calculated the proposed wage index with our proposal for determining a
to them for determining their LTCH PPS value for RY 2009 for CBSA 25980 as LTCH PPS wage index value for rural
payments. Under this proposal, each the average of the wage index values for areas with no IPPS hospital wage data,
year we would determine a wage index all of the other urban areas within the in this proposed rule, we determined
value for any area in which there is no State of Georgia (that is, CBSAs 10500, the proposed wage index value for RY
IPPS wage data based on the proposed 12020, 12060, 12260, 15260, 16860, 2009 rural Massachusetts by computing
methodologies described below. As 17980, 19140, 23580, 31420, 40660, the unweighted average of the wage
IPPS hospitals may open or close at any 42340, 46660 and 47580) (refer to Table indices from all of the CBSAs that are
time, the number of areas without any 1 of the Addendum of this proposed contiguous to the rural counties in that
IPPS wage data may change from year rule). (As noted above, there are State. Specifically, in the case of
to year, and even when an IPPS hospital currently no LTCHs located in CBSA Massachusetts, the entire rural area
does open in area where there are 25980). We believe that this policy consists of Dukes and Nantucket
currently no IPPS hospitals, because could be readily applied to other urban counties. We determined that the
there is a lag-time between the time a CBSAs (besides CBSA 25980) that lack borders of Dukes and Nantucket
hospital opens or becomes an IPPS IPPS wage data (possibly due to acute- counties are ‘‘contiguous’’ with
provider and when the hospital’s cost care hospitals converting to a different Barnstable County, MA, and Bristol
report wage data are available to include provider type that does not submit the County, MA. Therefore, the proposed
in calculating the area wage index (see appropriate wage data). However, if the RY 2009 LTCH PPS wage index value
72 FR 47323), we believe it is proposed policy is adopted, we may re- for rural Massachusetts would be
appropriate to establish a methodology examine the application of this computed as the unweighted average of
for determining LTCH PPS wage index proposed policy should a similar the proposed RY 2009 wage indexes for
Barnstable county and Bristol county
values for these areas, if necessary. Our situation arise in the future.
(refer to Tables 1 and 2 of the
proposed policies for determining LTCH The other situation for which we are Addendum of this proposed rule). (As
PPS wage index values for areas with no proposing to establish a policy for noted above, there are currently no
IPPS hospital wage data are consistent determining a LTCH PPS wage index LTCHs located in rural Massachusetts.)
with the policies that have been value is for rural areas with no IPPS We believe that this proposed policy
established under other Medicare post- wage data. As discussed above, as IPPS could be readily applied to other rural
acute care PPSs, such as SNF and HHA, wage data is dynamic, it is possible that areas (besides Massachusetts) that lack
as well as the IPPS. rural areas without IPPS wage data will IPPS wage data (possibly due to acute-
The first situation for which we are vary in the future. Consistent with the care hospitals converting to a different
proposing to establish a policy for policy established under other PPSs, provider type that does not submit the
determining a LTCH PPS wage index such as the HHA (71 FR 65905 through appropriate wage data). However, if the
value is for urban CBSAs with no IPPS 65906) and the IPPS (72 FR 47323 proposed policy is adopted, we may re-
wage data. As discussed above, as IPPS through 47324), we are proposing to use examine the application of this
wage data is dynamic, it is possible that the unweighted average of the wage proposed policy should a similar
urban areas without IPPS wage data will indices from all of the CBSAs that are situation arise in the future.
vary in the future. Consistent with the contiguous to the rural counties of the The proposed RY 2009 LTCH wage
policy established under other PPSs, State to serve as a reasonable proxy in index values that would be applicable
such as the HHA (70 FR 40795 and 71 determining the LTCH PPS wage index for LTCH discharges occurring on or
FR 65892 through 65893), we are for a rural area without specific IPPS after July 1, 2008 through September 30,
proposing to use an average of all of the hospital wage index data. For this 2009, are presented in Table 1 (for urban
urban areas within the State to serve as purpose, we would define ‘‘contiguous’’ areas) and Table 2 (for rural areas) in the
a reasonable proxy for determining the as sharing a border. We are not able to Addendum of this proposed rule. As
LTCH PPS wage index for an urban area apply a similar averaging in rural areas discussed in greater detail above in
without specific IPPS hospital wage with no wage data as we proposed section IV.B. of this preamble, we are
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index data. We believe that an average above for urban areas with no wage data proposing to move the LTCH PPS
of all of the urban areas within the State because there is no rural hospital data annual payment rate update cycle from
would be a reasonable proxy for available for averaging on a state-wide July 1 to October 1 and to have a 15-
determining the LTCH PPS wage index basis. We believe that using an month rate year for 2009 (that is, July 1,
for an urban area in the State with no unweighted average of the wage indices 2008 through September 30, 2009).
wage data because it is based on pre- from all of the CBSAs that are Therefore, we note that if our proposal

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to move the LTCH PPS annual payment TABLE 2.—PROPOSED COST-OF-LIVING policy for a case with unusually high
rate update cycle is finalized, the next ADJUSTMENT FACTORS FOR ALASKA costs. This results in Medicare and the
proposed update to the LTCH wage AND HAWAII HOSPITALS FOR THE LTCH sharing financial risk in the
index values would be effective for 2009 LTCH PPS RATE YEAR treatment of extraordinarily costly cases.
discharges occurring on or after October Under the LTCH PPS HCO policy, the
1, 2009 (FY 2010). In addition, as noted Alaska:
LTCH’s loss is limited to the fixed-loss
above, the wage index adjustment under City of Anchorage and 80-kilo- amount and a fixed percentage
the LTCH PPS was completely phased meter (50-mile) radius by road .. 1.24 (currently 80 percent) of costs above the
in beginning with cost reporting periods City of Fairbanks and 80-kilometer outlier threshold (LTCH DRG payment
(50-mile) radius by road ............ 1.24 plus the fixed loss amount). The fixed
beginning in FY 2007 (that is, for cost City of Juneau and 80-kilometer percentage of costs is called the
reporting periods beginning on or after (50-mile) radius by road ............ 1.24 marginal cost factor. We calculate the
October 1, 2006). Therefore, for LTCH All other areas of Alaska .............. 1.25 estimated cost of a case by multiplying
PPS discharges occurring during RY Hawaii:
the Medicare allowable covered charge
2009, the labor related portion of the City and County of Honolulu ......... 1.25
County of Hawaii ........................... 1.17 by the overall hospital cost-to-charge
standard Federal rate will be adjusted ratio (CCR).
County of Kauai ............................ 1.25
by the applicable full (five fifths) County of Maui and County of Under the LTCH PPS, we determine a
proposed RY 2009 LTCH PPS wage Kalawao ..................................... 1.25 fixed-loss amount, that is, the maximum
index value. (As noted above, the loss that a LTCH can incur under the
proposed RY 2009 LTCH PPS wage 3. Proposed Adjustment for High-Cost LTCH PPS for a case with unusually
index values are shown in Tables 1 and Outliers (HCOs) high costs before the LTCH will receive
2 of the Addendum to this proposed any additional payments. We calculate
a. Background the fixed-loss amount by estimating
rule).
Under the broad authority conferred aggregate payments with and without an
2. Proposed Adjustment for Cost-of- upon the Secretary by section 123 of the outlier policy. The fixed-loss amount
Living in Alaska and Hawaii BBRA as amended by section 307(b) of will result in estimated total outlier
BIPA, in the regulations at § 412.525(a), payments being projected to be equal to
In the August 30, 2002 final rule (67 we established an adjustment for 8 percent of projected total LTCH PPS
FR 56022), we established, under additional payments for outlier cases payments. Currently, MedPAR claims
§ 412.525(b), a COLA for LTCHs located that have extraordinarily high costs data and CCRs based on data from the
in Alaska and Hawaii to account for the relative to the costs of most discharges. most recent provider specific file (PSF)
higher costs incurred in those States. In Providing additional payments for (or to the applicable Statewide average
the RY 2008 LTCH PPS final rule (72 FR outliers strongly improves the accuracy CCR if a LTCH’s CCR data are faulty or
26894), for RY 2008, we established a of the LTCH PPS in determining unavailable) are used to establish a
COLA to payments for LTCHs located in resource costs at the patient and fixed-loss threshold amount under the
Alaska and Hawaii by multiplying the hospital level. These additional LTCH PPS.
standard Federal payment rate by the payments reduce the financial losses
that would otherwise be incurred when b. Cost-to-Charge Ratios (CCRs)
appropriate factor listed in Table 3 of
that same final rule. treating patients who require more The following is a discussion of cost-
costly care and, therefore, reduce the to-charge ratios (CCRs) used in
Similarly, in this proposed rule, determining payments for high cost and
incentives to underserve these patients.
under the broad authority conferred We set the outlier threshold before the short-stay outlier cases under the LTCH
upon the Secretary by section 123 of the beginning of the applicable rate year so PPS, at § 412.525(a) and § 412.529,
BBRA as amended by section 307(b) of that total estimated outlier payments are respectively. Although this section is
BIPA to determine appropriate projected to equal 8 percent of total specific to high cost outlier cases,
adjustments under the LTCH PPS, for estimated payments under the LTCH because CCRs and the policies and
RY 2009 we are proposing a COLA to PPS. Outlier payments under the LTCH methodologies pertaining to them are
payments to LTCHs located in Alaska PPS are determined consistent with the used in determining payments for both
and Hawaii by multiplying the proposed instructions issued for the IPPS outlier high cost and short-stay outlier cases,
standard Federal payment rate by the policy. (as explained below), we are discussing
proposed factors listed below in Table 2 Under § 412.525(a) (in conjunction the determination of CCRs under the
because these are currently the most with the revised definition of ‘‘LTC– LTCH PPS for both of these type of cases
recent available data. These proposed DRG’’ at § 412.503), we make outlier simultaneously. In section IV.G. of this
factors are obtained from the U.S. Office payments for any discharges if the proposed rule, which discusses short-
of Personnel Management (OPM) and estimated cost of a case exceeds the stay outlier (SSO) cases, we refer the
are currently also used under the IPPS adjusted LTCH PPS payment for the reader to this section of the preamble for
(72 FR 47422). In addition, we propose MS–LTC–DRG plus a fixed-loss amount. a complete discussion on the
that if OPM releases revised COLA Specifically, in accordance with determination of CCRs.
§ 412.525(a)(3) (in conjunction with the In determining both high-cost outlier
factors before March 1, 2008, we would
revised definition of ‘‘LTC–DRG’’ at payments (at § 412.525(a)) and short-
use them for the development of LTCH
§ 412.503), we pay outlier cases 80 stay outlier payments (at § 412.529), we
PPS payments for RY 2009 and publish percent of the difference between the calculate the estimated cost of the case
those revised COLA factors in the final estimated cost of the patient case and by multiplying the LTCH’s overall CCR
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rule. the outlier threshold (the sum of the by the Medicare allowable charges for
adjusted Federal prospective payment the case. In general, we use the LTCH’s
for the MS–LTC–DRG and the fixed-loss overall CCR, which is computed based
amount). The fixed-loss amount is the on either the most recently settled cost
amount used to limit the loss that a report or the most recent tentatively
hospital will incur under the outlier settled cost report, whichever is from

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the latest cost reporting period, in final rule with comment period (72 FR payments for high cost outlier and SSO
accordance with § 412.525(a)(4)(iv)(B) 47403 through 47404).) cases, respectively, are subject to
and § 412.529(c)(4)(iv)(B) for high cost Our general methodology established reconciliation. Specifically, any
outliers and SSOs, respectively. (We for determining the statewide average reconciliation of outlier payments is
note that in some instances we use an CCRs used under the LTCH PPS is based on the CCR calculated based on
alternative CCR, such as the statewide similar to our established methodology a ratio of costs to charges computed
average CCR in accordance with the for determining the LTCH total CCR from the relevant cost report and charge
regulations at § 412.525(a)(4)(iv)(C) and ceiling (described above) since it is data determined at the time the cost
§ 412.529(c)(4)(iv)(C), or a CCR that is based on ‘‘total’’ IPPS CCR data. Under report coinciding with the discharge is
specified by CMS or that is requested by the LTCH PPS HCO policy at settled. For additional information, refer
the hospital under the provisions of the § 412.525(a)(4)(iv)(C) and the short-stay to the RY 2008 LTCH PPS final rule (72
regulations at § 412.525(a)(4)(iv)(A) and outlier policy at § 412.529(c)(4)(iv)(C), FR 26899 through 26900).
§ 412.529(c)(4)(iv)(A).) Under the LTCH the FI may use a statewide average CCR,
which is established annually by CMS, c. Establishment of the Proposed Fixed-
PPS, a single prospective payment per Loss Amount
discharge is made for both inpatient if it is unable to determine an accurate
operating and capital-related costs. CCR for a LTCH in one of the following When we implemented the LTCH
Therefore, we compute a single circumstances: (1) New LTCHs that have PPS, as discussed in the August 30,
‘‘overall’’ or ‘‘total’’ LTCH-specific CCR not yet submitted their first Medicare 2002 LTCH PPS final rule (67 FR 56022
based on the sum of LTCH operating cost report (for this purpose, consistent through 56026), under the broad
and capital costs (as described in with current policy, a new LTCH would authority of section 123 of the BBRA as
Chapter 3, section 150.24, of the be defined as an entity that has not amended by section 307(b) of BIPA, we
Medicare Claims Processing Manual accepted assignment of an existing established a fixed-loss amount so that
(CMS Pub. 100–4)) as compared to total hospital’s provider agreement in total estimated outlier payments are
charges. Specifically, a LTCH’s CCR is accordance with § 489.18); (2) LTCHs projected to equal 8 percent of total
calculated by dividing a LTCH’s total whose CCR is in excess of the LTCH estimated payments under the LTCH
Medicare costs (that is, the sum of its CCR ceiling (as discussed above); and PPS. To determine the fixed-loss
operating and capital inpatient routine (3) other LTCHs for whom data with amount, we estimate outlier payments
and ancillary costs) by its total Medicare which to calculate a CCR are not and total LTCH PPS payments for each
available (for example, missing or faulty case using claims data from the
charges (that is, the sum of its operating
data). (Other sources of data that the FI MedPAR files. Specifically, to
and capital inpatient routine and
may consider in determining a LTCH’s determine the outlier payment for each
ancillary charges).
CCR include data from a different cost case, we estimate the cost of the case by
Generally, a LTCH is assigned the multiplying the Medicare covered
reporting period for the LTCH, data
applicable statewide average CCR if, charges from the claim by the LTCH’s
from the cost reporting period preceding
among other things, a LTCH’s CCR is hospital specific CCR. Under
the period in which the hospital began
found to be in excess of the applicable § 412.525(a)(3) (in conjunction with the
to be paid as a LTCH (that is, the period
maximum CCR threshold (that is, the revised definition of ‘‘LTC–DRG’’ at
of at least 6 months that it was paid as
LTCH CCR ceiling). This is because § 412.503), if the estimated cost of the
a short-term acute care hospital), or data
CCRs above this threshold are most from other comparable LTCHs, such as case exceeds the outlier threshold (the
likely due to faulty data reporting or LTCHs in the same chain or in the same sum of the adjusted Federal prospective
entry, and, therefore, these CCRs should region.) payment for the MS–LTC–DRG and the
not be used to identify and make In the FY 2008 IPPS final rule with fixed-loss amount), we pay an outlier
payments for outlier cases. Such data comment period, in accordance with payment equal to 80 percent of the
are clearly errors and should not be § 412.525(a)(4)(iv)(C) for high-cost difference between the estimated cost of
relied upon. Thus, under our outliers and § 412.529(c)(4)(iv)(C) for the case and the outlier threshold (the
established policy, generally, if a short-stay outliers, using our established sum of the adjusted Federal prospective
LTCH’s calculated CCR is above the methodology for determining the LTCH payment for the MS–LTC–DRG and the
applicable ceiling, the applicable LTCH statewide average CCRs, based on the fixed-loss amount).
PPS statewide average CCR is assigned most recent complete IPPS total CCR In the RY 2008 LTCH PPS final rule
to the LTCH instead of the CCR data from the March 2007 update of the (72 FR 26898), in calculating the fixed-
computed from its most recent (settled PSF, the LTCH PPS statewide average loss amount that would result in
or tentatively settled) cost report data. total CCRs for urban and rural hospitals estimated outlier payments projected to
In the FY 2008 IPPS final rule with effective for discharges occurring on or be equal to 8 percent of total estimated
comment period, in accordance with after October 1, 2007, and before payments for the 2008 LTCH PPS rate
§ 412.525(a)(4)(iv)(C)(2) for high-cost October 1, 2008, are presented in Table year, we used claims data from the
outliers and § 412.529(c)(4)(iv)(C)(2) for 8C of the Addendum to that final rule December 2006 update of the FY 2006
short-stay outliers, using our established with comment period (72 FR 48127). MedPAR files and CCRs from the
methodology for determining the LTCH (For further detail on our methodology December 2006 update of the PSF, as
total CCR ceiling, based on IPPS total for annually determining the LTCH that was the best available data at that
CCR data from the March 2007 update urban and rural statewide average CCRs, time. We believe that CCRs from the
to the Provider-Specific File (PSF), we we refer readers to the FY 2007 IPPS PSF are the best available CCR data for
established a total CCR ceiling of 1.284 final rule (71 FR 48119 through 48121) determining estimated LTCH PPS
under the LTCH PPS effective October and FY 2008 IPPS final rule with payments for a given LTCH PPS rate
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1, 2007 through September 30, 2008. comment period (72 FR 47403 through year because they are the most recently
(For further detail on our methodology 47404).) available CCRs actually used to make
for annually determining the LTCH total We note, under the LTCH PPS high LTCH PPS payments.
CCR ceiling, we refer readers to the FY cost outlier policy at As we also discussed in the RY 2008
2007 IPPS final rule (71 FR 48119 § 412.525(a)(4)(iv)(D) and the LTCH PPS LTCH PPS rate year final rule (72 FR
through 48121) and the FY 2008 IPPS SSO policy at § 412.529(c)(4)(iv)(D), the 26898), we calculated a single fixed-loss

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amount for the 2008 LTCH PPS rate year proposed fixed-loss amount for the 2009 in section XII. of this proposed rule, we
based on the version 24.0 of the LTCH PPS rate year as they are are projecting that the proposed changes
GROUPER, which was the version in currently the most recent complete would result in a 1.7 percent increase in
effect as of the beginning of the LTCH available data. Consistent with our estimated payments per discharge in RY
PPS rate year (that is, July 1, 2007 for historical practice of using the best data 2009 as compared to RY 2008, on
the 2008 LTCH PPS rate year). In available, if more recent CCR data are average, for all LTCHs. Because of the
addition, we applied the outlier policy available, we propose to use it for estimated increase in aggregate LTCH
under § 412.525(a) in determining the determining the fixed-loss amount for PPS payments proposed for the 2009
fixed-loss amount for the 2008 LTCH the 2009 LTCH PPS rate year in the final LTCH PPS rate year (as discussed above
PPS rate year; that is, we assigned the rule. Furthermore, in determining the in this section), we believe that an
applicable Statewide average CCR only proposed fixed-loss amount for the 2009 increase in the proposed fixed-loss
to LTCHs whose CCRs exceeded the LTCH PPS rate year, we used the amount is appropriate and necessary to
ceiling (and not when they fell below current FY 2008 applicable LTCH maintain the requirement that estimated
the floor). Accordingly, we used the FY ‘‘total’’ CCR ceiling of 1.284 and LTCH outlier payments would be projected to
2007 LTCH PPS total CCR ceiling of Statewide average ‘‘total’’ CCRs be equal to 8 percent of estimated total
1.321 (72 FR 26898). As noted in that established in the FY 2008 IPPS final LTCH PPS payments, as required under
same final rule, in determining the rule (72 FR 47404 and 48126 through § 412.525(a). As we discussed in the RY
fixed-loss amount for the 2008 LTCH 48127) such that the current applicable 2008 final rule (72 FR 26897),
PPS rate year using the CCRs from the Statewide average CCR would be maintaining the fixed-loss amount at the
PSF, there were no LTCHs with missing assigned if, among other things, a current level would result in HCO
CCRs or with CCRs in excess of the LTCH’s CCR exceeded the current payments above the current regulatory
current ceiling and, therefore, there was ceiling (1.284). We note that in requirement that estimated outlier
no need for us to independently assign determining the proposed fixed-loss payments would be projected to equal 8
the applicable Statewide average CCR to amount for the 2009 LTCH PPS rate year percent of estimated total LTCH PPS
any LTCHs in determining the fixed-loss using the CCRs from the PSF, there was payments. Based on the regression
amount for the 2008 LTCH PPS rate year no need for us to independently assign analysis that was performed when we
(as this may have already been done by the applicable Statewide average CCR to implemented the LTCH PPS (August 30,
the FI in the PSF in accordance with the any LTCHs (as this may have already 2002 final rule (67 FR 56022 through
established policy). been done by the FI in the PSF in 56027)), we established the outlier target
Accordingly, in 2008 LTCH PPS rate accordance with our established policy). at 8 percent of estimated total LTCH
year final rule (72 FR 26898), as (Currently, the applicable FY 2008 PPS payments to allow us to achieve a
amended by the RY 2008 correction LTCH Statewide average CCRs can be balance between the ‘‘conflicting
notice (72 FR 36613), we established a found in Table 8C of the FY 2008 IPPS considerations of the need to protect
fixed-loss amount of $20,738 for the final rule (72 FR 48126 through 48127).) hospitals with costly cases, while
2008 LTCH PPS rate year. Thus, we pay maintaining incentives to improve
an outlier case 80 percent of the Accordingly, based on the data and
policies described in this proposed rule, overall efficiency’’ (67 FR 56024). That
difference between the estimated cost of regression analysis also showed that
the case and the outlier threshold (the we are proposing a fixed-loss amount of
$21,199 for the 2009 LTCH PPS rate additional increments of outlier
sum of the adjusted Federal LTCH PPS payments over 8 percent (that is, raising
payment for the MS–LTC–DRG and the year. Thus, we would pay an outlier
case 80 percent of the difference the outlier target to a larger percentage
fixed-loss amount of $20,738).
between the estimated cost of the case than 8 percent) would reduce financial
In this proposed rule, for the 2009
LTCH PPS rate year, we used the March and the proposed outlier threshold (the risk, but by successively smaller
2006 update of the FY 2006 MedPAR sum of the adjusted proposed Federal amounts. Outlier payments are budget
claims data to determine a proposed LTCH payment for the MS–LTC–DRG neutral, and therefore, outlier payments
fixed-loss amount that would result in and the proposed fixed-loss amount of are funded by prospectively reducing
estimated outlier payments projected to $21,199). We note that the proposed the non-outlier PPS payment rates by
be equal to 8 percent of total estimated fixed-loss amount for the 2009 LTCH projected total outlier payments. The
payments, based on the policies PPS rate year is somewhat higher than higher the outlier target, the greater the
described in this proposed rule, because the current fixed-loss amount of (prospective) reduction to the base
these data are the most recent complete $20,738. In addition to being based on payment would need to be applied to
LTCH data available. Consistent with the most recent available LTCH data to the Federal rate to maintain BN.
our historical practice of using the best estimate the cost of each LTCH case, As we discussed in the RY 2008
data available, if more recent LTCH this proposed change in the fixed-loss LTCH PPS final rule (72 FR 26898
claims data become available, we amount is primarily due to the projected through 26899), as an alternative to
propose to use it for determining the increase in estimated aggregate LTCH proposing to lower the fixed-loss
fixed-loss amount for the 2009 LTCH PPS payments that is expected to result amount for RY 2009, we examined
PPS rate year in the final rule. from the proposed 2.6 percent update to adjusting the marginal cost factor (that
Furthermore, as noted previously, we the Federal rate (discussed in greater is, the percentage that Medicare will pay
determined the proposed fixed-loss detail in section IV.E. of this preamble), of the estimated cost of a case that
amount based on the version of the in conjunction with the proposed exceeds the sum of the adjusted Federal
GROUPER that would be in effect as of changes to the area wage adjustment prospective payment for the MS–LTC–
the beginning of the 2009 LTCH PPS (discussed in greater detail in section DRG and the fixed-loss amount for
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rate year (July 1, 2008), that is, Version IV.F.1. of this preamble) and the LTCH PPS outlier cases as specified in
25.0 of the GROUPER (as established in changes to the MS–LTC–DRG relative § 412.525(a)(3) in conjunction with the
the FY 2008 IPPS final rule (72 FR weights for FY 2008 (as discussed in the revised definition of ‘‘LTC–DRG’’ at
47278)). FY 2008 IPPS final rule (72 FR 47277 § 412.503), which is currently equal to
We also used CCRs from the July 2007 through 47299)). As discussed in greater 80 percent, as a means of ensuring that
update of the PSF for determining the detail in the impact analysis presented estimated outlier payments would be

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projected to equal 8 percent of estimated percent marginal cost factor should be PPS. Thus, under the broad authority of
total LTCH PPS payments. When we adjusted in response to our solicitation section 123(a)(1) of the BBRA and
initially established the 80 percent on this issue. section 307(b)(1) of BIPA, we are
marginal cost factor in the August 30, In response to these comments, we proposing a fixed-loss amount of
2002 final rule (67 FR 56022 through agreed with the commenters that, based $21,199 based on the best available
56027), we explained that our analysis on the regression analysis done for the LTCH data and the policies presented in
of payment-to-cost ratios for HCO cases implementation of the LTCH PPS this proposed rule because we believe a
showed that a marginal cost factor of 80 (August 30, 2002; 68 FR 56022 through proposed increase in the fixed-loss
percent appropriately addresses outlier 56026), a marginal cost factor of 80 amount is appropriate and necessary to
cases that are significantly more percent and a outlier target of 8 percent maintain estimated outlier payments are
expensive than nonoutlier cases, while best identifies LTCH patients that are projected to be equal to 8 percent of
simultaneously maintaining the truly unusually costly cases, and that estimated total LTCH PPS payments, as
integrity of the LTCH PPS. such a policy appropriately addresses required under § 412.525(a).
In proposing increases to the fixed- LTCH HCO cases that are significantly
more expensive than non-outlier cases, d. Application of Outlier Policy to
loss amount for RY 2007 and RY 2008 Short-Stay Outlier (SSO) Cases
(71 FR 27834 and 72 FR 4799 through which is consistent with our intent of
4800 respectively), we also solicited the LTCH HCO policy as stated when As we discussed in the August 30,
comments on whether we should revisit we implemented the LTCH PPS in the 2002 final rule (67 FR 56026), under
August 30, 2002 final rule (67 FR some rare circumstances, a LTCH
the regression analysis discussed above
56025). Therefore, as supported by discharge could qualify as a SSO case
in this section that was used to establish
many commenters, in both the RY 2007 (as defined under § 412.529 and
the existing 8 percent outlier target and
final rule (71 FR 27835) and the RY discussed in section IV.G. of this
80 percent marginal cost factor, using
2008 final rule (72 FR 26898), we did preamble) and also as a HCO case. In
the most recent available data to
not revisit the regression analysis that this scenario, a patient could be
evaluate whether the current outlier
was used to establish the existing 80 hospitalized for less than five-sixths of
target of 8 percent or the 80 percent
percent marginal cost factor and existing the geometric ALOS for the specific
marginal cost factor should be adjusted,
outlier target of 8 percent, and therefore, MS–LTC–DRG, and yet incur
and therefore, could have resulted in
did not make any changes to the extraordinarily high treatment costs. If
less of an increase in the fixed-loss marginal cost factor or outlier target in
amount for RY 2007 and RY 2008, the costs exceeded the high cost outlier
either of those final rules.
respectively. In response to this threshold (that is, the SSO payment plus
Although proposing to increase the
solicitation in the RY 2007 proposed the fixed-loss amount), the discharge is
fixed-loss amount from $20,738 to
rule (as summarized in the RY 2007 $21,199 (based on the policies presented eligible for payment as a HCO. Thus, for
LTCH PPS final rule (71 FR 27834 in this proposed rule) would increase a SSO case in the 2009 LTCH PPS rate
through 27835)), several commenters the amount of the ‘‘loss’’ that a LTCH year, the HCO payment would be 80
opposed any option that would allow us must incur under the LTCH PPS for a percent of the difference between the
to revisit the regression analysis that case with unusually high costs before estimated cost of the case and the
was used to establish the existing 80 the LTCH would receive any additional proposed outlier threshold (the sum of
percent marginal cost factor and existing Medicare payments, as we discussed the proposed fixed-loss amount of
outlier target of 8 percent. The above and as we explained in greater $21,199 and the amount paid under the
commenters stated their belief that the detail in the RY 2006 LTCH PPS final SSO policy as specified in § 412.529).
LTCH PPS is still in its early stages and rule (70 FR 24195 through 24196), we 4. Other Payment Adjustments
further changes to the 80 percent continue to believe that the existing 8
marginal cost factor or 8 percent outlier percent outlier target and 80 percent Section 123(a)(1) of the BBRA, as
target would result in instability to the marginal cost factor continue to amended by section 307(b) of BIPA,
system. The commenters cautioned adequately maintain the LTCHs’ share granted the Secretary broad authority to
against making any premature changes of the financial risk in treating the most determine appropriate adjustments
to the factors affecting HCO payments to costly patients and ensure the efficient under the LTCH PPS, including whether
LTCHs, particularly the marginal cost delivery of services. Accordingly, we are (and how) to provide for adjustments to
factor and outlier target established by not proposing to adjust the existing 8 reflect variations in the necessary costs
regulation when the LTCH PPS was percent outlier target or 80 percent of treatment among LTCHs. In
implemented. Also, the commenters marginal cost factor under the LTCH developing the LTCH PPS payment
agreed that keeping the marginal cost PPS HCO policy at this time. However, methodology, we conducted extensive
factor at 80 percent and the outlier pool we continue to be interested in any regression analyses of the relationship
at 8 percent better identifies LTCH comments that would support revisiting between LTCH costs (including both
patients that are truly unusually costly the analysis that was used to establish operating and capital-related costs per
cases, and that this policy appropriately the existing 8 percent outlier target and case) and several factors that may affect
addresses outlier cases that are the existing 80 percent marginal cost costs such as the percent of Medicaid
significantly more expensive than non- factor, using the most recent available patients treated, the percent of
outlier cases. Similarly, as summarized data to evaluate whether any changes to Supplemental Security Income (SSI)
in the RY 2008 final rule (72 FR 26897), the current HCO policy should be made, patients treated, the hospital’s
we received no comments in support of and therefore, may result in a smaller geographic location, and training
revisiting the regression analysis increase (or even a decrease) in the residents in approved medical
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discussed above that was used to fixed-loss amount for RY 2009. education programs (67 FR 56014). The
establish the existing 8 percent outlier For the reasons described above, we appropriateness of potential payment
target and 80 percent marginal cost believe the proposed fixed-loss amount adjustments were evaluated based upon
factor, using the most recent available of $21,199 would appropriately identify whether including each adjustment
data to evaluate whether the current unusually costly LTCH cases while increased the accuracy of payments to
outlier target of 8 percent or the 80 maintaining the integrity of the LTCH LTCHs.

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In the August 30, 2002 LTCH PPS analysis by 3M (referenced above), 56052), we established a budget
final rule, we detailed the extensive data indicates that proposing payment neutrality requirement at § 412.523(d)(2)
analysis performed by our contractor, adjustments for geographic for calculating the standard Federal rate
3M Health Information Systems (3M) reclassification, rural location, DSH, or for FY 2003 such that estimated
and our resulting decisions to indirect medical education (IME) costs aggregate LTCH PPS payments were
implement a COLA for LTCHs in Alaska would not improve the accuracy of estimated to be equal to estimated
and Hawaii (§ 412.525(b)) and an payments to LTCHs. (3M’s ‘‘Report on payments that would have been made to
adjustment to account for geographical LTCH Payment Methodology Review LTCHs under the reasonable cost-based
differences in area wage levels and Results’’ is posted on our Web site payment methodology had the PPS for
(§ 412.525(c)). In addition, we discussed at: http://www.cms.hhs.gov/ LTCHs not been implemented, and, to
the extensive data analyses that led to LongTermCareHospitalPPS/ implement section 307(a)(2) of the
the decision not to implement 08_download.asp#TopOfPage. Public Law 106–554, we excluded the
adjustments for geographic We believe that these analyses effects of sections 1886(b)(2) and (b)(3)
reclassification, rural location, the confirm our initial determinations as we of the Act.
treatment of a disproportionate share of developed the LTCH PPS regarding the We are proposing a technical
low-income patients (DSH), or indirect applicability of PPS payment correction to existing § 412.523(d)(2)
medical education (IME) costs. We also adjustments. Therefore, we are not that would more precisely describe the
noted that we would continue to collect proposing to adopt any additional provisions of sections 1886(b)(2) and
data and revisit these determinations as payment adjustments such as (b)(3) of the Act that were not taken into
additional data became available. (For geographic reclassification, rural account when determining the standard
more detailed information, see 67 FR location, DSH, or IME, as features of the Federal rate under § 412.523(d). The
56014 through 56027.) LTCH PPS. Proposed policies for the RY current regulatory language at
When we implemented the LTCH PPS 2009 wage index adjustment and the § 412.523(d)(2) cites the general sections
for FY 2003, we provided for a 5-year COLA are discussed in sections IV.D.1 of the Act which contain the specific
transition period (§ 412.533), to allow and 2. of this proposed rule, provisions set forth in § 307(a)(2) of
LTCHs time to adjust to the new respectively. Furthermore, now that the Public Law 106–554 that the Secretary
payment system (67 FR 56038). For cost 5-year transition to the LTCH PPS is is required to not take into account in
reporting periods beginning on or after completed, we have collected data that developing the PPS. We believe that it
October 1, 2006, the final year of the 5- reflects LTCH behavior in response to is clearer and more precise to cite the
year transition, LTCHs are paid based the implementation of the LTCH PPS. specific subparagraphs the Secretary did
on 100 percent of the Federal rate. We believe that our above described not take into account rather than to cite
We continued to collect and interpret analyses of LTCH PPS data do not the general sections of the Act of which
new data as they became available to support the adoption of any additional such subparagraphs are a part. In order
determine if these data support payment adjustments. We further to mitigate any confusion that may be
proposing any additional payment believe that since 3M’s recent analyses caused by existing regulations, we are
adjustments. In both the RY 2007 and confirm policy determinations that have proposing to make a technical
the RY 2008 LTCH PPS final rules, we been in place since the implementation correction at § 412.523(d)(2).
stated that we believed that it was of the LTCH PPS for FY 2003, that Specifically, we are proposing to revise
appropriate to wait for the conclusion of annual data analyses related to potential § 412.523(d)(2) to state that the effects of
the 5-year transition to 100 percent of payment adjustments for geographic section 1886(b)(2)(E) of the Act
the Federal rate under the LTCH PPS to reclassification, rural location, DSH or (enhanced bonus payments for LTCHs,
maximize the availability of data that IME will not be necessary barring as described above) and section
reflected LTCH behavior in response to significant transformations in the nature 1886(b)(3)(J) of the Act (increases to the
the implementation of the LTCH PPS. of the LTCH universe or substantial hospital-specific target amounts and the
The availability of this data would allow changes in Medicare payment outcomes cap on the target amounts for LTCHs, as
us to conduct a comprehensive that warrant additional evaluation. described above) were excluded in the
reevaluation of payment adjustments development of the FY 2003 LTCH PPS
under the LTCH PPS. (See the RY 2007 5. Technical Correction to the Budget
standard Federal rate. This technical
and RY 2008 LTCH PPS final rules (71 Neutrality Requirement at
correction would make the regulatory
FR 27839) and (72 FR 26900), § 412.523(d)(2)
language consistent with section
respectively.) Section 123(a)(1) of the Public Law 307(a)(2) of Public Law 106–113 and
Therefore, similar to the data analyses 106–113 requires that the PPS consistent with the methodology we
conducted at the inception of the LTCH developed for LTCHs be budget neutral used to determine the LTCH PPS
PPS for FY 2003, 3M evaluated LTCH for the initial year of implementation. standard Federal rate under § 412.523,
data from the most recent cost report Furthermore, under section 307(a)(2) of and it is not a change in policy.
files in our HCRIS database (updated the Public Law 106–554, the increases (Accordingly, no adjustments to the
through June 30, 2007) for providers’ to the target amounts and the cap on the LTCH PPS standard Federal rate
cost reports beginning during fiscal target amounts for LTCHs provided for computed under § 412.523(d) have been
years 2004 through 2006. We believe by section 307(a)(1) of Public Law 106– proposed in conjunction with this
that in the 5 years since the start of the 554 (as set forth in section 1886(b)(3)(J) proposed technical correction to
LTCH PPS, there has been sufficient of the Act), and the enhanced bonus § 412.523(d)(2).)
new data generated to allow for a payments for LTCHs provided for by
comprehensive reevaluation of the section 122 of Public Law 106–113 (as G. Proposed Conforming Changes
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appropriateness of payment adjustments set forth in section 1886(b)(2)(E) of the Various regulations throughout 42
such as geographic reclassification, rural Act) were not to be taken into account CFR Part 412 Subpart O indicate that
location, DSH, and IME under the LTCH in the development and implementation the terms ‘‘urban area’’ and ‘‘rural area’’
PPS at this time. of the LTCH PPS. Therefore, when we are defined according to the definitions
Our most recent data analysis which implemented the LTCH PPS, in the of ‘‘urban area’’ and ‘‘rural area’’ found
is based on the comprehensive data August 30, 2002 final rule (67 FR in 42 CFR Part 412 Subpart D (the IPPS

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regulations). Specifically, §§ 412.525(c), Extension Act of 2007, enacted on proposing that the standard Federal rate
412.529(d)(4)(ii)(B) and (d)(4)(iii)(B), December 29, 2007 require a 3-year for the 2009 LTCH PPS rate year would
412.534(d)(1), (f)(2)(ii), and (f)(3)(ii), and suspension of the payment adjustments be $39,076.28 as discussed in section
412.536(c)(1), (e)(2)(ii), and (e)(3)(ii) of at § 412.534 to ‘‘grandfathered LTCHs’’ IV.C.3. of this preamble. We illustrate
Subpart O refer to the definitions of and application of § 412.536 to the methodology that would be used to
‘‘urban area’’ and ‘‘rural area’’ in either ‘‘freestanding’’ LTCHs for cost reporting adjust the proposed Federal prospective
§ 412.62(f)(1)(ii) and (f)(1)(iii) or periods beginning on or after the date of payments for the 2009 LTCH PPS rate
§ 412.64(b)(1)(ii)(A)–(C) in 42 CFR Part enactment of the legislation. In addition, year in the following examples:
412 Subpart D. As stated elsewhere in revisions to the short stay outlier policy, Example: During the 2009 LTCH PPS rate
the preamble, we believe that it is as well as other changes to the year, a Medicare patient is in a LTCH located
administratively simpler to define the regulations necessitated by MMSEA will in Chicago, Illinois (CBSA 16974). The
terms ‘‘urban area’’ and ‘‘rural area’’ in be addressed in a future notice.) proposed full LTCH PPS wage index value
§ 412.503 rather than cross-referencing for CBSA 16974 is 1.0715 (see Table 1 in
the definitions of ‘‘urban area’’ and VI. Computing the Proposed Adjusted
Addendum A to this proposed rule). The
‘‘rural area’’ in § 412.62(f)(1)(ii) and Federal Prospective Payments for the Medicare patient is classified into MS–LTC–
§ 412.62(f)(1)(iii) and 2008 LTCH PPS Rate Year DRG 28 (Spinal Procedures with MCC),
§ 412.64(b)(1)(ii)(A)–(C). Consequently, In accordance with § 412.525 and as which has a current relative weight of 1.1417
in section IV.F.1.b(4). of this regulation, discussed in section IV.C. of this (see Table 3 of Addendum A to this proposed
we propose to add definitions for proposed rule, the standard Federal rate rule).
‘‘urban area’’ and ‘‘rural area’’ in is adjusted to account for differences in To calculate the LTCH’s proposed total
area wages by multiplying the labor- adjusted Federal prospective payment for
§ 412.503 which would incorporate the
this Medicare patient, we compute the
provisions of § 412.62(f)(1)(ii) and related share of the standard Federal proposed wage-adjusted Federal prospective
(f)(1)(iii) as well as § 412.64(b)(1)(ii)(A) rate by the appropriate LTCH PPS wage payment amount by multiplying the
through (C). Because we are proposing index (as shown in Tables 1 and 2 of proposed unadjusted standard Federal rate
to define ‘‘urban area’’ and ‘‘rural area’’ Addendum A to this proposed rule). ($39,076.28) by the proposed labor-related
in § 412.503, the citations to the The standard Federal rate is also share (75.920 percent) and the proposed
definitions of ‘‘urban area’’ and ‘‘rural adjusted to account for the higher costs wage index value (1.0715). This proposed
area’’ in § 412.62(f)(1)(ii) and § 412.62 of hospitals in Alaska and Hawaii by wage-adjusted amount is then added to the
(f)(1)(iii) and § 412.64(b)(1)(ii)(A)–(C) multiplying the nonlabor-related share nonlabor-related portion of the proposed
which are found in §§ 412.525(c), of the standard Federal rate by the unadjusted standard Federal rate (24.080
412.529(d)(4)(ii)(B) and (d)(4)(iii)(B), appropriate cost-of-living factor (shown percent; adjusted for cost of living, if
412.534(d)(1), (f)(2)(ii), and (f)(3)(ii), and in Table 3 in section IV.D.2 of this applicable) to determine the proposed
412.536(c)(1), (e)(2)(ii), and (e)(3)(ii) adjusted Federal rate, which is then
preamble). In the RY 2008 LTCH PPS
multiplied by the MS–LTC–DRG relative
would need to be replaced with final rule (72 FR 4776), we established weight (1.1417) to calculate the proposed
references to § 412.503. We are a standard Federal rate of $38,356.45 for total adjusted Federal prospective payment
proposing to replace the above- the 2008 LTCH PPS rate year. In this for the 2009 LTCH PPS rate year
described references with § 412.503. proposed rule, based on the best ($47,035.13). Table 6 illustrates the
(We note that provisions of the available data and the proposed policies components of the calculations in this
Medicare, Medicaid, and SCHIP described in this proposed rule, we are example.

TABLE 6
Unadjusted Proposed Standard Federal Prospective Payment Rate .................................. $39,076.28
Proposed Labor-Related Share ............................................................................................ × 0.75920
Proposed Labor-Related Portion of the Federal Rate .......................................................... = $29,666.71
Proposed Wage Index (CBSA 16974) .................................................................................. × 1.0715
Proposed Wage-Adjusted Labor Share of Federal Rate ...................................................... = $31,787.88
Proposed Nonlabor-Related Portion of the Federal Rate ($39,076.28 x 0.24080) .............. + $ 9,409.57
Proposed Adjusted Federal Rate Amount ............................................................................ = $41,197.45
MS–LTC–DRG 9 Relative Weight ......................................................................................... × 1.1417
Proposed Total Adjusted Federal Prospective Payment ...................................................... = $47,035.13

VII. Monitoring have identified behaviors by certain In the RY 2007 and 2008 final rules
LTCHs that lead to inappropriate (71 FR 27798 and 72 FR 28670), we
In the August 30, 2002 final rule (67 Medicare payments. revised the SSO payment adjustment
FR 56014), we described an on-going In the RY 2005 LTCH PPS final rule formula as a consequence of data
monitoring component to the new LTCH (69 FR 25692) we revised the analyses which indicated that Medicare
PPS. Specifically, we discussed on- interruption of stay policy. We also was overpaying for certain SSO cases.
going analysis of the various policies established a payment adjustment for Although at this time, we are not
that we believe would provide equitable LTCH HwHs and satellites in the FY proposing any new payment
payment for stays that reflect less than 2005 IPPS final rule (69 FR 49191 adjustments that have resulted from our
the full course of treatment and reduce through 49214). In the RY 2008 final monitoring activity, we continue to
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the incentives for inappropriate rule, at § 412.536, based on additional pursue our on-going monitoring
admissions, transfers, or premature data monitoring and analysis, we program that involves the CMS Office of
discharges of patients that are present in expanded this payment adjustment to Research and Development (ORDI),
a discharge-based PPS. As a result of our apply to LTCHs and LTCH satellites that existing QIO monitoring, and studies
data analysis, we have revisited a were not co-located with their referring described in the RY 2006 LTCH PPS
number of our original policies and hospitals. final rule (70 FR 24211).

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As we discussed in the RY 2004 patient’s discharge bill and submitted to providers. This work reviewed prior
LTCH PPS final rule (68 FR 34157), the the Medicare FI for processing. The analyses of these issues and included
Medicare Payment Advisory payment represents payment in full, discussions with MedPAC, other
Commission (MedPAC) endorsed our under § 412.521(b), for inpatient researchers, CMS, the QIOs, and the
monitoring activity. Furthermore, the operating and capital-related costs, but hospital associations.
Commission pursued an independent not for the costs of an approved medical In Phase II, RTI collected additional
research initiative that led to a section education program, bad debts, blood information on tools currently used by
in MedPAC’s June 2004 Report to clotting factors, anesthesia services by the QIOs and the industry to assess
Congress entitled ‘‘Defining long-term hospital-employed nonphysician patient appropriateness for admission;
care hospitals’’. This study included anesthetists or the costs of photocopying analyzed claims to understand
recommendations that we develop and mailing medical records requested differences between short term acute
facility and patient criteria for LTCH by a Quality Improvement Organization care hospital patients with outlier stays
admission and treatment and that we (QIO), which are costs paid outside the who were subsequently treated in
require a review by QIOs to evaluate LTCH PPS. LTCHs compared to those who were not
whether LTCH admissions meet criteria As under the previous reasonable and differences between patients who
for medical necessity once the cost-based payment system, under continued treatment as outliers in acute
recommended facility and patient § 412.541(b), a LTCH may elect to be care hospitals with patients who had
criteria are established (70 FR 24210). In paid using the periodic interim payment been admitted to LTCH with the same
response to the recommendation in (PIP) method described in § 413.64(h), DRGs; and visited different types of
MedPAC’s June 2004 Report, we based on the estimated prospective hospitals to observe first-hand how
awarded a contract to Research Triangle payment for the year, and may be LTCH patients differ from those in other
Institute, International (RTI), on eligible to receive accelerated payments settings and how this pattern varies in
September 27, 2004, to conduct a as described in § 413.64(g). We exclude different parts of the country. RTI
thorough examination of the feasibility HCO payments that are paid upon worked with different associations,
of implementing MedPAC’s submission of a discharge bill from the including the National Association of
recommendations. PIP amounts. In addition, Part A costs Long Term Hospitals (NALTH), the
Both Part 1 and Part 2 of the RTI that are not paid for under the LTCH Acute Long Term Hospital Association
Report are available on our Web site at PPS, including Medicare costs of an (ALTHA), the American Hospital
http://www.cms.hhs.gov/ approved medical education program, Association (AHA), and the American
LongTermCareHospitalPPS/ bad debts, blood clotting factors, Medical Rehabilitation Providers
02a_RTIReports.asp#TopOfPage. We anesthesia services by hospital- Association (AMRPA), as well as several
also included the Executive Summary of employed nonphysician anesthetists of the larger LTCH chains. The final
RTI’s final report in Addendum B of the and the costs of photocopying and report for those phases submitted by RTI
RY 2008 proposed rule (72 FR 4884 mailing medical records requested by a summarizes these efforts and makes
through 4886). (A comprehensive QIO, are subject to the interim payment recommendations to CMS regarding
discussion of RTI’s continuing work is provisions as specified in § 412.541(c). LTCHs.
included at section XI of this proposed Under § 412.541(d), LTCHs with (We have posted the reports on both
rule.) unusually long lengths of stay that are Phase I and Phase II of RTI’s research on
not receiving payment under the PIP our Web site at http://www.cms.hhs.gov/
VIII. Method of Payment method may bill on an interim basis (60 LongTermCareHospitalPPS/
Under § 412.513, a Medicare LTCH days after an admission and at intervals 02a_RTIReports.asp#TopOfPage.)
patient is classified into a MS–LTC– of at least 60 days after the date of the In summary, RTI’s research has
DRG based on the principal diagnosis, first interim bill) and this should resulted in an extensive and careful
up to eight additional (secondary) include any HCO payment determined analysis of the Medicare populations
diagnoses, and up to six procedures as of the last day for which the services served by LTCHs, a comparison of these
performed during the stay, as well as have been billed. populations with those treated in other
age, sex, and discharge status of the acute settings, including IPPS, IRFs, and
patient. The MS–LTC–DRG is used to IX. RTI’s Research Inpatient Psychiatric populations, as
determine the Federal prospective With the recommendations of well as those treated in less intensive
payment that the LTCH will receive for MedPAC’s June 2004 Report to Congress settings such as SNFs. This work
the Medicare-covered Part A services as a point of departure, we awarded a included analysis of Medicare data to
the LTCH furnished during the contract to Research Triangle Institute, compare patient characteristics and
Medicare patient’s stay. Under International (RTI) at the start of FY provider costs for certain types of
§ 412.541(a), the payment is based on 2005 for a comprehensive evaluation of patients; regulatory requirements
the submission of the discharge bill. The the feasibility of developing patient and governing program conditions of
discharge bill also provides data to facility level characteristics for LTCHs participation for these different types of
allow for reclassifying the stay from that could distinguish LTCH patients facilities; interviews with private sector
payment at the full MS–LTC–DRG rate from those treated in other hospitals. developers of level of care
to payment for a case as a SSO (under RTI completed this project in two determinations; and site visits and
§ 412.529) or as an interrupted stay phases. In Phase I, RTI prepared a interviews with physicians treating
(under § 412.531), or to determine if the background report summarizing existing these typical and frequently overlapping
case will qualify for a HCO payment information regarding LTCHs’ current populations.
(under § 412.525(a)). role in the Medicare system: their The results suggested that while there
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Accordingly, the ICD–9–CM codes history as Medicare participating are some patients who require very long
and other information used to determine providers; the types of patients they term acute care hospitalization there are
if an adjustment to the full MS–LTC– treat; the criteria QIOs currently use to also many patients whose LOS at the
DRG payment is necessary (for example, review appropriateness of care in these LTCH may trigger a short stay outlier
LOS or interrupted stay status) are settings; and the types of regulations payment, suggesting that not all LTCH
recorded by the LTCH on the Medicare they face as Medicare participating admissions had a LOS consistent with

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the need for prolonged acute care severity of illness of their patient common in long-term ventilator-
hospitalization in an LTCH. While populations, much of the difference dependent patients. (p. 125))
existing patient criteria such as between the LTCH and acute hospital RTI presented two analyses of
Interqual are useful for distinguishing patient populations was driven by Medicare claims data based on episodes
between the need for hospital-level geography and access to LTCH facilities. of care constructed for beneficiaries
treatment and a less intensive level, In the many areas of the country with vent-related DRGs during their
such as SNF care, RTI’s analysis has without access to LTCH services, acute initial (acute) admission. The first
determined that, in fact, the private hospitals treat the medically complex analysis compared outcomes for
sector criteria failed to distinguish patients and receive an acute hospital patients living in areas with LTCHs, to
between patients at LTCHs and patients IPPS payment, or outlier payment in outcomes for clinically similar patients
at acute care hospitals. The criteria cases where the costs of care are very living in geographically comparable
proposed by the National Association high, rather than the much higher LTCH areas that had no LTCHs. The second
for Long Term Hospitals (NALTH) also payment. As a result of the discussion, examined episodes of care only for
had this shortcoming. While they claims by the LTCH industry that beneficiaries in specific states with
identified the acute care patient, they medically complex patients treated in several LTCHs, and compared outcomes
failed to identify differences between LTCHs were significantly different from for clinically similar cases that
LTCH admissions’ clinical medically complex patients treated in remained in the acute care setting with
characteristics and those treated in a acute settings were not confirmed, those that were referred to an LTCH.
general acute care hospital, in either a though panel members did agree that Both analyses used a ‘‘propensity score
step down unit, or in some cases, a more work may need to be done to approach’’ which groups patients
general medical/surgery unit. measure outcomes for medically according to the clinical and
On January 30, 2007, RTI convened a complex patients treated in each of demographic characteristics that predict
Technical Expert Panel (TEP) comprised these settings. There was also consensus LTCH referral.
of physicians, nurses, and hospital among the panelists that quality of care The first analysis found that there was
administrators representing, LTCHs, was related to treating a sufficient very little difference in average episode
acute care hospitals, IRFs, and SNFs, all volume of these difficult cases, length, Medicare cost, mortality or
of which represent the range of regardless of provider setting. length of time before being discharged
inpatient settings for treating medically On November 6, 2007, RTI convened home, between areas that have LTCHs
complex patients. The goal of this a second TEP based upon the earlier and those that do not. The second
meeting was to identify a set of clinical meeting and participant responses. As analysis found that results differed
indicators that distinguish between the with the first TEP, panel members between cases with the highest
medically complex populations at included LTCH physicians and probability of using LTCHs (those
LTCHs and acute care hospitals , administrators, acute care physicians in medically complex vent cases with
including ICU, step-down, and general areas without LTCHs (for example, New tracheotomies, longer prior ICU stays),
acute care. The panelists examined York and northern New England), and ventilator cases with lower
severity measures and treatment needs physicians from SNFs in areas without probability of using LTCHs. In the small
for medically complex patients to define LTCHs, and several IRF physicians. group with a high likelihood, mortality
the point at which ICU or acute care There was an intentional focus at the was lower and the 60-day likelihood of
patients become appropriate for care at second TEP on Medicare patients with being discharged home was higher for
LTCHs. They focused on patient criteria respiratory conditions requiring those referred to LTCHs than for those
currently used by some providers and mechanical ventilation (vent patients). staying in acute settings, while
QIOs. Presentations described existing RTI presented data showing the Medicare payments were the same or
systems for identifying medical mechanical ventilator patients were less. Among the less complex cases,
complexity and severity of illness for a relatively homogenous in their however, RTI found that LTCH referral
particular patient. In exchanges between likelihood of using LTCHs whereas the was associated with much higher costs
the presenters and panel members , medically complex (respiratory) patients and same or worse performance in other
however, acute care hospital physicians were much more diverse in their outcome measures. These findings are
stated that acute care hospitals treated distributions making it more difficult to very similar to those noted by MedPAC
severely ill patients with medically develop measurable medical parameters in the Commission’s June 2004 Report
complex conditions for their entire and widely accepted treatment to the Congress. (p. 126–127).
episode of care and that these measures protocols for this group. However, it RTI also asked TEP members to
were not useful for determining whether was acknowledged that ventilator evaluate 6 case vignettes and assess
the patient should be treated in an acute patients (referred to as ‘‘vent patients’’ which patients were appropriate for
care hospital or a LTCH. After in the following discussion) comprise admission to their type of facility. The
discussion, the TEP participants less than 15 percent of all LTCH case vignettes consisted of detailed
reached a consensus that LTCHs patients. RTI believed that the category medical histories of two ventilator-
provide a service that is comparable to of ‘‘medically complex’’ cases was too dependent patients admitted for
general acute step-down units and is not amorphous and the focus on vent weaning, two wound care patients, and
unique to LTCHs. patients would allow for more two ‘‘medically complex’’ patients.
Discussions with LTCH physicians meaningful comparisons between the The TEP indicated that there were
and acute care hospital physicians provider types. Nationwide, vent significant differences between the level
practicing in areas that lack LTCHs patients are treated in acute care of patient morbidity that the acute care
confirmed the results of RTI’s data hospitals and in LTCHs while some hospitals and LTCHs would admit and
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analyses in demonstrating the IRFs and SNFs accept and treat this treat as compared to the IRFs and also
widespread overlap in the patient group of patients. (We would also note the SNFs, but that LTCH patients and
populations treated in LTCHs and those that, as MedPAC found in its June, 2004 patients treated in IPPS acute care
treated in acute care hospitals. Though Report to Congress, the highest hospital step-down units were virtually
representatives from the LTCHs clearly predictor of LTCH use is whether a indistinguishable. In further discussion
described the medical complexity and patient has had a tracheotomy which is of individual case vignettes, LTCH and

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acute care hospital physicians were in known to provide specialized treatment that any criteria can be developed
accord regarding appropriate for particular types of patients. It was which identifies patients who belong in
therapeutic dispositions for the also noted, however, that commonly, a LTCH exclusively.
stabilized, post-ICU ‘‘critical care’’ hospital resources drive patient RTI will continue to work on these
patients and they agreed that such placement regarding the treatment of issues in preparing its final report. The
patients could be appropriately treated very sick and expensive patients when results thus far have shown empirically,
in either acute care hospital step-down there is an LTCH placement option. that LTCHs treat medically stable but
units or in LTCHs. Therefore, although Following the above exchanges, it was critically ill patients that are clinically
there was consensus regarding the widely acknowledged by panelists that indistinguishable from those treated in
medical profile of such patients, it was measures distinguishing appropriate step-down units of acute care hospitals.
also noted by one acute care physician LTCH patients from patients being The work has also confirmed earlier
that this indicated that ‘‘there is no such treated in step-down units of acute care research showing that for cases other
thing as an LTCH-only patient.’’ On the hospitals were not going to be than the vent patients discussed above
other hand, acute care hospital developed by the TEP. There were in this section, that in the absence of
physicians noted that typically, in their serious questions raised as to whether compelling data on patient outcomes,
facilities, their step-down units may developing such a product was even that treatment at an LTCH is less cost-
take a slightly less stable ‘‘critical care’’ feasible. The group concurred on the effective for the same DRGs than is
patient than would be treated in a recommendations, listed below, for a treatment at acute care hospitals for the
LTCH, that is, patients that may have treatment model for the type of ‘‘critical same DRGs.
some unresolved medical issues still care’’ patients who had been the focus These TEPs have been important for
being diagnosed especially if there was of TEP: furthering the discussion regarding the
a need to free-up an ICU bed. This was • CMS should pay similar rates for feasibility of developing unique criteria
possible because such a patient would similar patients regardless of setting if for LTCH patients. Over the past few
continue treatment by the same certain objective parameters associated years, the clinicians have agreed that
physicians and have access to the full with patient care were present, among LTCHs specialize in treating critically ill
range of acute care hospital services but which were: patients with multiple comorbidities
also could return to the ICU without ++ A critical mass of patients with and other longer term, acute level needs.
significant difficulty, if necessary. the targeted conditions to ensure This consensus contributes to
The panelists also discussed a sufficient experience in those areas for identifying an appropriate LTCH patient
realistic definition of patient stability the health professionals in that setting; by acuity of illness as well as LOS. Over
for ‘‘critical care’’ patients in different ++ Patient-level criteria to identify the next few months, RTI will continue
settings and whether this was typically appropriate cases for this level of care, working with the clinical community to
based upon ‘‘vital signs,’’ dependence applicable regardless of setting; make recommendations regarding
on ‘‘pressors,’’ (intravenous drugs ++ Quality of care should be based on payment and treatment of critically ill
administered to raise blood pressure) or structure and process standards; patients, particularly in LTCHs. Further
whether patient stability was based on ++ Interdisciplinary teams with work will expand on the Centers of
a physician’s subjective determination physician leads, appropriate nurse Excellence concept to examine the
(for example, ‘‘I know it when I see it’’). staffing levels; and inclusion of treating structure and process needed for such a
There was additional clinically-oriented therapists (for example, physical, designation. Additional analysis will
discussion of measures of medical respiratory, occupational); examine the relative costs and payments
stability. (It was also noted that while • Both LTCHs and these IPPS step- for these patients under different
some of the ‘‘medically complex’’ down units meeting these standards payment systems.
patients currently being treated in could be recognized as ‘‘Centers of
LTCHs would fall into the ‘‘critical Excellence’’ for patients defined as X. Collection of Information
care’’ category, this is not the case for critically ill. Requirements
all of their patients.) TEP members decided not to include This document does not impose
Panelists also addressed the intensity ‘‘patient outcomes’’ on the list of information collection and
of nursing care required by a ‘‘critical recommendations because of concerns recordkeeping requirements.
care’’ patient and the central role of the that a facility’s recognition and/or Consequently, it need not be reviewed
nurse to patient ratio in identifying the payment based on patient outcomes by the Office of Management and
level of care offered in a hospital. Both could lead to ‘‘cherry-picking’’ of less Budget under the authority of the
LTCHs and IPPS step-down units sick patients which could lead to access Paperwork Reduction Act of 1995 (44
typically have a RN to patient ratio of problems for otherwise appropriate U.S.C. 35).
1-to-4 or 1-to-5. LTCH physicians patients.
emphasized the value of the LTCH In summary, there was a consensus at XI. Regulatory Impact Analysis
‘‘team approach’’ to patient care to the the end of RTI’s second TEP that LTCHs [If you choose to comment on issues in
agreement of the TEP’s acute care treat patients who are also treated by this section, please include the caption
hospital physicians who noted that this acute care hospitals. The ‘‘critical care’’ ‘‘IMPACT’’ at the beginning of your
approach is also the model that is in post-ICU patient who LTCHs describe as comments.]
place in their facilities. One physician their targeted patient are treated
noted that he had little doubt that a throughout most of the country in acute A. Introduction
‘‘critical care’’ patient hospitalized at care hospital step-down units. The We have examined the impacts of this
any of the acute care hospitals or LTCHs interdisciplinary team treatment model proposed rule as required by Executive
rwilkins on PROD1PC63 with PROPOSALS2

represented at the TEP would receive an is the standard both in many LTCHs and Order 12866 (September 1993,
equivalent and high level of treatment. in many acute care hospitals with step- Regulatory Planning and Review), the
Members of the panel also indicated down units. While by definition, the Regulatory Flexibility Act (RFA)
that discharges from acute care hospitals patients appropriate for treatment in a (September 19, 1980, Pub. L. 96–354),
to LTCHs (in areas where this is an LTCH require hospital-level care (as section 1102(b) of the Act, the
option) often occur because the LTCH is opposed to SNF level), it is not clear Unfunded Mandates Reform Act of 1995

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5377

(UMRA) (Pub. L. 104–4), and Executive the 394 LTCHs in our database. Based is mostly attributable to the effect of the
Order 13132. on the 394 LTCHs in our database, we estimated increase in payments for HCO
estimate RY 2008 LTCH PPS payments and SSO cases in RY 2009 as compared
1. Executive Order 12866
to be approximately $4.32 billion and to RY 2008. That is, in calculating the
Executive Order 12866 (as amended RY 2009 LTCH PPS payments to be estimated increase in payments from RY
by Executive Order 13258) directs approximately $4.44 billion. Because 2008 to RY 2009 for HCO and SSO
agencies to assess all costs and benefits the combined distributional effects and cases, we increased estimated costs by
of available regulatory alternatives and, estimated changes to the Medicare the applicable proposed market basket
if regulation is necessary, to select program payments would be greater (approximately 3.5 percent). We note,
regulatory approaches that maximize than $100 million, this proposed rule SSO cases comprise approximately 16
net benefits (including potential would be considered a major economic percent of estimated total LTCH PPS
economic, environmental, public health rule, as defined in this section. We note payments and HCO cases comprise
and safety effects, distributive impacts, the approximately $124 million for the approximately 8 percent of estimated
and equity). A regulatory impact projected increase in estimated total LTCH PPS payments. The vast
analysis (RIA) must be prepared for aggregate LTCH PPS payments resulting majority of the payments for SSO cases
major rules with economically from the provisions presented in this (over 80 percent) are based on the
significant effects ($100 million or more proposed rule does not reflect changes estimated cost of the case.
in any one year). In the impact analysis, in LTCH admissions or case-mix While the effects of the estimated
we are using the proposed rates, factors intensity in estimated LTCH PPS increase in SSO and HCO payments and
and policies presented in this proposed payments, which would also affect the proposed change to the standard
rule, including updated proposed wage overall payment changes. (We note that Federal rate which are projected to
index values, and the best available due to rounding, the approximation of increase estimated payments per
claims and CCR data to estimate the $124 million is closer to the projected discharge from RY 2008 to RY 2009, the
change in proposed payments for the increase in estimated aggregate LTCH proposed changes to the area wage
2009 LTCH PPS rate year. As stated in PPS payments than the difference adjustment from RY 2008 to RY 2009
section I.A. of this preamble section between the approximately $4.44 billion are expected to result in a small
114(e)(1) of the MMSEA at the new and approximately $4.32 billion in decrease of 0.1 percent in estimated
section 1886(m)(2) to the Act revises the estimated RY 2008 and RY 2009 LTCH aggregate LTCH PPS payments from the
standard Federal rate for RY 2008 by PPS payments, respectively.) 2008 LTCH PPS rate year to the 2009
providing that the base rate for RY 2008 LTCH PPS rate year (see column 7 of
shall be the same as the base rate for RY We note that the average combined Table 9). As discussed in section IV.F.1.
2007 (in other words, the standard effect of the proposed standard Federal of this proposed rule, we are proposing
Federal rate for RY 2008 is the same as rate and area wage adjustment changes to update the wage index values for RY
the standard Federal rate for 2007). on estimated aggregate payments cannot 2009 based on the most recent available
Also, section 114(e)(2) of the MMSEA be computed by simply adding up the data. In addition, we are proposing to
provides that the revised rate does not estimated averages in columns 6 and 7 increase the labor-related share from
apply to discharges occurring on or after of Table 9 because each of those two 75.788 percent to 75.920 percent under
July 1, 2007, and before April 1, 2008. columns are intended to show the the LTCH PPS for RY 2009 based on the
As noted in section IV.E. of this isolated impact of the respective most recent available data on the
preamble, the standard Federal rate for proposed change (that is, the proposed relative importance of the labor-related
RY 2007 was $38,086.04. Furthermore, change to the standard Federal rate or share of operating and capital costs of
we note that section 114(c)(3) of the proposed change to the area wage the market basket applicable to the
MMSEA requires a 3-year suspension of adjustment) on estimated payments for LTCH PPS (also discussed in section
our implementation of the revisions to RY 2009 as compared to RY 2008, and IV.F.1. of this proposed rule).
the SSO policy at § 412.529(c)(3)(i) that the interactive effects resulting from
was finalized in the RY 2008 final rule. both the proposed change to the 2. Regulatory Flexibility Act (RFA)
Both of these revisions to RY 2008 standard Federal rate and proposed The RFA requires agencies to analyze
LTCH PPS payments (that is, sections change to the area wage adjustment are options for regulatory relief of small
114(c)(3) and (e)(1) through (2) of not accounted for in the modeling of entities. For purposes of the RFA, small
MMSEA) affect the modeling of estimated payments to produce the entities include small businesses,
payments in this impact analysis, which percent change in each of these nonprofit organizations, and small
we will discuss in greater detail in columns. However, the interactive governmental jurisdictions. Most
section XVI.B.3. of this proposed rule. effects of all proposed changes are taken hospitals and most other providers and
Based on the best available data for 394 into account in the modeling of suppliers are small entities, either by
LTCHs, we estimate that the proposed estimated payments for RY 2009 as nonprofit status or by having revenues
update to the standard Federal rate for compared to RY 2008 in Column 8 of of $6.5 million to $31.5 million in any
RY 2009 (discussed in section IV.C. of Table 9. Notwithstanding this limitation 1 year. For further information, see the
the preamble of this proposed rule) and in comparing the various columns in Small Business Administration’s
the proposed changes to the area wage Table 9, the difference between the regulation at 70 FR 72577, December 6,
adjustment (discussed in section IV.F.1. projected increase in payments per 2005. Individuals and States are not
of the preamble of this proposed rule), discharge from RY 2008 to RY 2009 for included in the definition of a small
for the 2009 LTCH PPS rate year, in all changes of 2.9 percent (column 8) entity. Because we lack data on
addition to an estimated increase in and the sum of the projected increase individual hospital receipts, we cannot
rwilkins on PROD1PC63 with PROPOSALS2

short-stay and high cost outlier due to proposed change to the standard determine the number of small
payments (as discussed in greater detail Federal rate (2.2 percent in column 6) proprietary LTCHs. Therefore, we
below) would result in an increase in and the proposed change due to the area assume that all LTCHs are considered
estimated payments from the 2008 wage adjustment (¥0.1 percent in small entities for the purpose of the
LTCH PPS rate year of approximately column 7) of 2.1 percent (that is, 2.2 analysis that follows. Medicare FIs are
$124 million (or about 2.9 percent) for percent + (¥0.1 percent) = 2.1 percent) not considered to be small entities. The

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5378 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

Secretary certifies that this proposed 3. Impact on Rural Hospitals local, or tribal governments, nor would
rule would not have a significant For purposes of section 1102(b) of the it result in expenditures by the private
economic impact on a substantial Act, we define a small rural hospital as sector of $120 million or more in any 1
number of small entities. a hospital that is located outside of a year.
Currently, our database of 394 LTCHs Metropolitan Statistical Area and has 5. Federalism
includes the data for 88 non-profit fewer than 100 beds. As shown in Table
(voluntary ownership control) LTCHs 9, we are projecting a 2.6 percent Executive Order 13132 establishes
and 265 proprietary LTCHs. Of the increase in estimated payments per certain requirements that an agency
remaining 41 LTCHs, 25 LTCHs are discharge from the 2008 LTCH PPS rate must meet when it publishes a proposed
Government-owned and operated and year as compared to the 2009 LTCH PPS rule (and subsequent final rule) that
the ownership type of the other 16 rate year for rural LTCHs as a result of imposes substantial direct requirement
LTCHs is unknown (as shown in Table the proposed changes presented in this costs on State and local governments,
9). The impact of the proposed payment proposed rule (that is, the proposed preempts State law, or otherwise has
rate and policy changes for the 2009 update to the standard Federal rate Federalism implications.
LTCH PPS rate year (including the discussed in section IV.E. of the We have examined this proposed rule
proposed update to the standard Federal preamble of this proposed rule and the under the criteria set forth in Executive
rate and the proposed changes to the proposed changes to the area wage Order 13132 and have determined that
area wage adjustment) is discussed in adjustment as discussed in section this proposed rule would not have any
section XVI.B.4.c. of this proposed rule. IV.F.1. of the preamble of this proposed significant impact on the rights, roles,
rule) based on the data of the 25 rural and responsibilities of State, local, or
As we discuss in detail throughout tribal governments or preempt State
LTCHs in our database of 394 LTCHs for
the preamble of this proposed rule, law, based on the 25 State and local
which complete data were available.
based on the most recent available LTCHs (that is, Government ownership
As shown in Table 9, the estimated
LTCH data, we believe that the type) in our database of 394 LTCHs for
increase in estimated LTCH PPS
provisions of this proposed rule would which data were available.
payments from the 2008 LTCH PPS rate
result in an increase in estimated
year as compared to the 2009 LTCH PPS 6. Alternatives Considered
aggregate LTCH PPS payments and that
rate year for rural LTCHs is primarily
the resulting LTCH PPS payment due to the proposed update to the In the preamble of this proposed rule,
amounts result in appropriate Medicare standard Federal rate (as discussed in we are setting forth the proposed annual
payments. greater detail in section IV.E. of the update to the payment rates for the
The impact analysis of the proposed preamble of this proposed rule) and the LTCH PPS for RY 2009. In this
payment rate and policy changes in proposed change in the area wage preamble, we specify the statutory
Table 9 shows that estimated payments adjustment (as discussed in greater authority for the provisions that are
per discharge are expected to increase detail in section V.F.1. of the preamble presented, identify those proposed
approximately 2.9 percent, on average, of this proposed rule) in conjunction policies when discretion has been
for all LTCHs from the 2008 LTCH PPS with the estimated increased payments exercised, and present rationale for our
rate year as compared to the 2009 LTCH for SSO and HCO cases (as discussed decisions as well as alternatives that
PPS rate year. We are proposing a 2.6 below in section XVI.B.3. of this were considered, and solicit comments
percent increase to the standard Federal proposed rule). We believe that the on suggested alternatives from
rate for RY 2009 (as discussed in section changes to the area wage adjustment commenters (where relevant).
IV.E. of this proposed rule). The presented in this proposed rule (that is, B. Anticipated Effects of Proposed
projected 2.9 percent increase in the proposed use of updated wage data Payment Rate Changes
estimated payments per discharge from and the proposed change in the labor-
the 2008 LTCH PPS rate year to the 2009 related share) would result in accurate We discuss the impact of the
LTCH PPS rate year is attributable to the and appropriate LTCH PPS payments in proposed changes to the payment rates,
proposed change to the rate, the area RY 2009 since they are based on the factors, and other payment rate policies
wage adjustment (discussed in section most recent available data. Such presented in the preamble of this
IV.F.1. of this proposed rule) and updated data appropriately reflect proposed rule in terms of their
estimated increases in short-stay outlier national differences in area wage levels estimated fiscal impact on the Medicare
(SSO) and high cost outlier (HCO) and identifies the portion of the budget and on LTCHs.
payments (as discussed in greater detail proposed standard Federal rate that 1. Budgetary Impact
below). That is, as Table 9 shows, the should be adjusted to account for such
proposed change to the standard Federal differences in area wages, thereby Section 123(a)(1) of the BBRA
rate is projected to result in an resulting in accurate and appropriate requires that the PPS developed for
estimated average increase of 2.2 LTCH PPS payments. LTCHs ‘‘maintain budget neutrality.’’
percent in estimated payments per We believe that the statute’s mandate for
discharge from RY 2008 to RY 2009, on 4. Unfunded Mandates budget neutrality (BN) applies only to
average, for all LTCHs, while the Section 202 of the Unfunded the first year of the implementation of
proposed changes to the area wage Mandates Reform Act of 1995 (UMRA) the LTCH PPS (that is, FY 2003).
adjustment are projected to result in an also requires that agencies assess Therefore, in calculating the FY 2003
estimated decrease of 0.1 percent, on anticipated costs and benefits before standard Federal rate under
average, for all LTCHs (columns 6 and issuing any rule whose mandates § 412.523(d)(2), we set total estimated
rwilkins on PROD1PC63 with PROPOSALS2

7 of Table 9, respectively). A thorough require spending in any one year of payments for FY 2003 under the LTCH
discussion of the regulatory impact $100 million in 1995 dollars, updated PPS so that estimated aggregate
analysis for the proposed changes annually for inflation. That threshold payments under the LTCH PPS are
presented in this proposed rule can be level is currently approximately $120 estimated to equal the amount that
found below in section XVI.B.3. of this million. This proposed rule would not would have been paid if the LTCH PPS
proposed rule. mandate any requirements for State, had not been implemented.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5379

2. Impact on Providers patient care. We believe that the SCHIP Extension Act of 2007. Therefore,
The basic methodology for discharges from the FY 2006 MedPAR for purposes of the impact analysis in
determining a per discharge LTCH PPS data for the 394 LTCHs in our database, this proposed rule, we modeled the
payment is set forth in § 412.515 which includes 265 proprietary LTCHs, projected changes in estimated
through § 412.536. In addition to the provide sufficient representation in the payments from RY 2008 to RY 2009
basic MS–LTC–DRG payment (standard MS–LTC–DRGs containing discharges based on computing estimated RY 2008
Federal rate multiplied by the MS–LTC– for patients who received LTCH care for LTCH PPS payments using a standard
DRG relative weight), we make the most commonly treated LTCH Federal rate of $38,086.04 and the
patients’ diagnoses. corresponding change to the SSO
adjustments for differences in area wage
policy, which excludes the revisions to
levels, COLA for Alaska and Hawaii, 3. Calculation of Prospective Payments
the SSO policy at § 412.529(c)(3)(i), as if
and SSOs. Furthermore, LTCHs may For purposes of this impact analysis, those policies were applicable to all
also receive HCO payments for those to estimate per discharge payments discharges occurring during RY 2008.
cases that qualify based on the threshold under the LTCH PPS, we simulated (Additional information on section 114
established each rate year. payments on a case-by-case basis using of the Medicare, Medicaid and SCHIP
To understand the impact of the LTCH claims for the FY 2006 MedPAR Extension Act of 2007 can be found at
proposed changes to the LTCH PPS files. In modeling estimated LTCH PPS section I.A. of this proposed rule.)
payments discussed in section IV. of payments for both RY 2008 and RY 2009 Furthermore, in modeling estimated
this proposed rule on different in this impact analysis, we applied the LTCH PPS payments for both RY 2008
categories of LTCHs for the 2009 LTCH RY 2008 standard Federal rate (that is, and RY 2009 in this impact analysis, we
PPS rate year, it is necessary to estimate $38,086.04) provided for by sections applied the RY 2008 and proposed RY
payments per discharge for the 2008 114(e)(1) and (2) of Public Law 110–173, 2009 adjustments for area wage
LTCH PPS rate year using the rates, and the SSO policy provided for by differences (as described in section
factors and policies established in the section 114(c)(3) of the MMSEA7 (that IV.F.1. of the preamble of this proposed
RY 2008 LTCH PPS final rule (72 FR is, excluding the revisions to the SSO rule), and the COLA for Alaska and
26870 through 27029), the RY 2008 policy at § 412.529(c)(3)(i) of the Hawaii (as described in section IV.F.2.
LTCH PPS correction notice (72 FR regulations). Although we realize that of the preamble of this proposed rule).
36613 through 36616) and the the effective date for the change in the Specifically, we adjusted for area wage
applicable sections of MMSEA (as SSO policy during RY 2008 in the differences for estimated 2008 LTCH
described in greater detail below in MMSEA is December 29, 2007, and the PPS rate year payments using the
section XVI.B.3. of this proposed rule). revised standard Federal rate for RY current LTCH PPS labor-related share of
It is also necessary to estimate the 2008 is not applicable for discharges 75.788 percent (72 FR 26892), the wage
proposed payments per discharge that occurring on or after July 1, 2007 and index values established in the Tables 1
would be made under the proposed before April 1, 2008, for purposes of this and 2 of the Addendum of the RY 2008
LTCH PPS rates, factors and policies for impact analysis, in estimating RY 2008 final rule (72 FR 26996 through 27019)
the 2009 LTCH PPS rate year (as LTCH PPS payments we applied both and the COLA factors established in
discussed in the preamble of this the revised SSO policy and revised Table 3 of the preamble of the RY 2008
proposed rule). We also evaluated the standard Federal rate for all of RY 2008. final rule (72 FR 26894). Similarly, we
change in estimated 2008 LTCH PPS Similarly, in modeling LTCH PPS adjusted for area wage differences for
rate year payments to estimated payments to project the average change estimated 2009 LTCH PPS rate year
proposed 2009 LTCH PPS rate year in estimated payments per discharge payments using the proposed LTCH PPS
payments (on a per discharge basis) for from RY 2008 to RY 2009 due to the labor-related share of 75.920 percent
each category of LTCHs. proposed change in the standard (see section IV.D.1.c. of this proposed
Hospital groups were based on Federal rate (column 6 of Table 9), rule), the proposed wage index values
characteristics provided in the OSCAR rather than using the RY 2008 standard presented in the Tables 1 and 2 of the
data, FY 2003 through FY 2005 cost Federal rate finalized in the RY 2008 Addendum of this proposed rule and
report data in HCRIS, and PSF data. final rule, we compared the RY 2008 the proposed COLA factors established
Hospitals with incomplete ‘‘base rate’’ (which we interpret to mean in Table 3 of the preamble of this
characteristics were grouped into the the standard Federal rate) mandated by proposed rule.
‘‘unknown’’ category. Hospital groups section 114(e)(1) of the Medicare, As discussed above, we also
include the following: Medicaid and SCHIP Extension Act of accounted for the payment policy for
• Location: Large Urban/Other Urban/ 2007 (that is, $38,086.04), to the SSOs. We also estimated additional
Rural. proposed RY 2009 standard Federal rate payments that would be made for HCOs
• Participation date. of $39,076.28 (that is, $38,086.04 (as described in section IV.F.3. of this
• Ownership control. updated by 2.6 percent, as discussed in proposed rule). As noted in section
• Census region. section IV.E. of this proposed rule) in IV.F.4. of this proposed rule, we are not
• Bed size. order to appropriately estimate the proposing to make adjustments for rural
To estimate the impacts of the effect of updating the rate by 2.6 location, geographic reclassification,
proposed payment rates and policy percent. We took this approach for the indirect medical education costs, or a
changes among the various categories of impact analysis in this proposed rule DSH payment for the treatment of low-
existing providers, we used LTCH cases since for the last 3 months of the 2008 income patients because our most recent
from the FY 2006 MedPAR file to LTCH PPS rate year (that is, April 2008 data analysis that reflects LTCH
estimate payments for RY 2008 and to through June 2008), which is the 3- behavior subsequent to the
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estimate proposed payments for RY month period immediately preceding implementation of the LTCH PPS
2009 for 394 LTCHs. While currently the start of the 2009 LTCH PPS rate indicates that proposing payment
there are just under 400 LTCHs, the year, LTCHs will be paid in accordance adjustments for geographic
most recent growth is predominantly in with the RY 2008 standard Federal rate reclassification, rural location, DSH, or
for-profit LTCHs that provide and SSO policy established by section indirect medical education costs would
respiratory and ventilator-dependent 114 of the Medicare, Medicaid, and not improve the accuracy of payments

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5380 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

made under the LTCH PPS to LTCHs. • The third column identifies the • The seventh column shows the
(See Section IV.F.4 ). number of LTCH cases. percentage change in estimated
These impacts reflect the estimated • The fourth column shows the payments per discharge from the 2008
‘‘losses’’ or ‘‘gains’’ among the various estimated payment per discharge for the LTCH PPS rate year to the 2009 LTCH
classifications of LTCHs for the 2008 2008 LTCH PPS rate year (as described PPS rate year for proposed changes to
LTCH PPS rate year compared to the above). the area wage adjustment at § 412.525(c)
2009 LTCH PPS rate year based on the • The fifth column shows the (as discussed in section IV.D.1. of the
proposed payment rates and policy estimated proposed payment per
preamble of this proposed rule).
changes presented in this proposed rule. discharge for the 2009 LTCH PPS rate
Table 9 illustrates the estimated year (as described above). • The eighth column shows the
aggregate impact of the LTCH PPS • The sixth column shows the percentage change in estimated
among various classifications of LTCHs. percentage change in estimated payments per discharge from the 2008
• The first column, LTCH payments per discharge from the 2008 LTCH PPS rate year (column 4) to the
Classification, identifies the type of LTCH PPS rate year to the 2009 LTCH 2009 LTCH PPS rate year (column 5) for
LTCH. PPS rate year for proposed changes to all proposed changes.
• The second column lists the the standard Federal rate (as discussed
number of LTCHs of each classification in section IV.E. of the preamble of this
type. proposed rule).

TABLE 9.—PROJECTED IMPACT OF PROPOSED PAYMENT RATE AND PAYMENT RATE POLICY CHANGES TO LTCH PPS
PAYMENTS FOR RY 2009
(Estimated 2008 LTCH PPS Rate Year Payments Compared to Estimated Proposed 2009 LTCH PPS Rate Year Payments *)

Percent
Percent change in
change in estimated
Percent
estimated change in
Average es- payments
Average es- timated pro-
payments per dis-
estimated
timated RY per dis- payments
Number of posed RY charge from
Number of 2008 LTCH charge from per dis-
LTCH Classification LTCH PPS 2009 LTCH RY 2008 to
LTCHs PPS pay- RY 2008 to charge from
cases PPS pay- RY 2009 for
ment per ment per
RY 2009 for proposed
RY 2008 to
case 1 case 2
proposed changes to
RY 2009 for
changes to the area
all
the Federal changes 5
wage ad-
rate 3 justment 4

ALL PROVIDERS .................................... 394 134,160 $32,166 $33,092 2.2 ¥0.1 2.9
BY LOCATION:
RURAL .............................................. 25 6,076 26,951 27,643 2.4 ¥0.5 2.6
URBAN ............................................. 369 128,084 32,414 33,351 2.2 ¥0.1 2.9
LARGE ....................................... 193 78,292 33,732 34,736 2.2 ¥0.1 3.0
OTHER ...................................... 176 49,792 30,341 31,172 2.3 ¥0.3 2.7
BY PARTICIPATION DATE:
BEFORE OCT. 1983 ........................ 28 9,779 27,864 28,849 2.2 0.4 3.5
OCT. 1983—SEPT. 1993 ................. 46 21,101 33,189 34,175 2.2 ¥0.1 3.0
OCT. 1993—SEPT. 2002 ................. 204 74,145 32,207 33,082 2.3 ¥0.3 2.7
AFTER OCTOBER 2002 .................. 112 28,598 32,793 33,783 2.3 0.0 3.0
UNKNOWN ....................................... 4 537 31,300 32,442 2.3 0.7 3.6
BY OWNERSHIP TYPE:
VOLUNTARY .................................... 88 27,948 31,061 32,017 2.2 0.0 3.1
PROPRIETARY ................................ 265 100,047 32,415 33,314 2.2 ¥0.2 2.8
GOVERNMENT ................................ 25 3,692 33,984 35,155 2.1 0.1 3.4
UNKNOWN ....................................... 16 2,473 31,864 33,177 2.3 1.1 4.1
BY CENSUS REGION:
NEW ENGLAND ............................... 20 9,776 27,177 28,213 2.2 0.7 3.8
MIDDLE ATLANTIC .......................... 36 10,756 31,851 32,629 2.2 ¥0.6 2.4
SOUTH ATLANTIC ........................... 50 13,544 35,730 36,822 2.2 0.0 3.1
EAST NORTH CENTRAL ................. 70 19,552 35,316 36,289 2.2 ¥0.2 2.8
EAST SOUTH CENTRAL ................. 30 8,667 32,736 33,565 2.2 ¥0.5 2.5
WEST NORTH CENTRAL ................ 18 5,350 34,325 35,378 2.2 0.0 3.1
WEST SOUTH CENTRAL ................ 130 51,441 28,779 29,538 2.3 ¥0.3 2.6
MOUNTAIN ....................................... 22 5,804 35,089 36,143 2.2 0.0 3.0
PACIFIC ............................................ 18 9,270 41,129 42,633 2.1 0.6 3.7
BY BED SIZE:
BEDS: 0–24 ...................................... 33 4,797 30,110 30,888 2.4 ¥0.5 2.6
BEDS: 25–49 .................................... 195 45,212 32,404 33,305 2.2 ¥0.2 2.8
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BEDS: 50–74 .................................... 72 26,064 32,145 33,040 2.2 ¥0.2 2.8


BEDS: 75–124 .................................. 52 23,503 33,212 34,246 2.2 0.1 3.1
BEDS: 125–199 ................................ 21 17,567 32,088 33,013 2.2 ¥0.2 2.9
BEDS: 200 + ..................................... 21 17,017 30,781 31,717 2.2 0.0 3.0
1 Estimated 2009 LTCH PPS rate year payments based on the proposed payment rates and policy changes presented in the preamble of this
proposed rule.

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2 Estimated 2008 LTCH PPS rate year payments based on the rates, factors and policies established in the RY 2008 LTCH PPS final rule (72
FR 26870 through 27029), the RY 2008 LTCH PPS correction notice (72 FR 36613 through 36616) and the applicable sections of the Medicare,
Medicaid, and SCHIP Extension Act of 2007. As described in section XVI.B.3. of this proposed rule, although we are aware that there are dif-
ferent effective dates for the various provisions of MMSEA that affect RY 2008 LTCH PPS payments, for the purpose of this impact analysis, we
modeled estimated RY 2008 payments as if those provisions were applicable to discharges for the entire 2008 LTCH PPS rate year. Specifically,
in estimating RY 2008 LTCH PPS payments, we applied the RY 2008 Federal rate provided for by sections 114(e)(1) of the MMSEA (that is,
$38,086.04), and the SSO policy provided for by section 114(c)(3) of the MMSA (that is, excluding the revisions to the SSO policy at
§ 412.529(c)(3)(i)).
3 Percent change in estimated payments per discharge from the 2008 LTCH PPS rate year to the 2009 LTCH PPS rate year for the proposed
changes to the Federal rate, as discussed in section IV.E. of the preamble of this proposed rule. (Note, because about 34 percent of all LTCH
cases are projected to receive a payment adjustment under the SSO policy that is based either on the estimated cost of the case or the ‘‘blend
option’’ (which is based in part on the ‘‘IPPS comparable amount’’) rather than the proposed Federal rate in RY 2009, the percent change in esti-
mated payments per discharge due to the proposed changes to the Federal rate for most of the categories of LTCHs, 2.2 percent, is somewhat
less than the proposed update to the Federal rate of 2.6 percent.)
4 Percent change in estimated payments per discharge from the 2008 LTCH PPS rate year to the 2009 LTCH PPS rate year for proposed
changes to the area wage adjustment at § 412.525(c) (as discussed in section V.F.1. of the preamble of this proposed rule).
5 Percent change in estimated payments per discharge from the 2008 LTCH PPS rate year (as described in section XVI.B.3. of this proposed
rule) to the 2009 LTCH PPS rate year for all of the proposed changes presented in the preamble of this proposed rule. Note, this column, which
shows the percent change in estimated payments per discharge for all proposed changes, may not equal the sum of the percent changes in esti-
mated payments per discharge for proposed changes to the Federal rate (column 6) and the proposed changes to the area wage adjustment
(column 7) due to the effect of estimated changes in both payments to SSO cases that are paid based on estimated costs and aggregate HCO
payments (as discussed this proposed rule), as well as other interactive effects that cannot be isolated.

4. Results changes to the standard Federal rate for the average percent increase in
most categories of LTCHs shown in estimated payments per discharge for
Based on the most recent available Table 9 is projected to be 2.2 percent, the 2008 LTCH PPS rate year compared
data (as described previously for 394 which is somewhat less than the 2.6 to the 2009 LTCH PPS rate year for all
LTCHs), we have prepared the following percent proposed update to the standard hospitals is 2.9 percent for all proposed
summary of the impact (as shown in Federal rate. In addition to the proposed changes. For rural LTCHs, the percent
Table 9) of the proposed LTCH PPS 2.6 percent increase to the standard change for all proposed changes is
payment rate and policy changes Federal rate for RY 2009, the projected estimated to be 2.6 percent, while for
presented in this proposed rule. The percent increase in estimated payments urban LTCHs, we estimate this increase
impact analysis in Table 9 shows that per discharge from the 2008 LTCH PPS to be 2.9 percent. Large urban LTCHs
estimated payments per discharge are rate year to the 2009 LTCH PPS rate year are projected to experience a 3.0 percent
expected to increase approximately 2.9 of 2.9 percent shown in Table 9 (see increase in estimated payments per
percent, on average, for all LTCHs from column 8) reflects the effect of increased discharge from the 2008 LTCH PPS rate
the 2008 LTCH PPS rate year as HCO and SSO payments as we year compared to the 2009 LTCH PPS
compared to the 2009 LTCH PPS rate discussed previously. That is, in rate year, while other urban LTCHs are
year as a result of the proposed payment calculating the estimated increase in projected to experience a 2.7 percent
rate and policy changes presented in payments for HCO and SSO from RY increase in estimated payments per
this proposed rule. We note that 2008 to RY 2009, we increased costs by discharge from the 2008 LTCH PPS rate
although we are proposing a 2.6 percent applying the proposed market basket year compared to the 2009 LTCH PPS
increase to the standard Federal rate for (approximately 3.5 percent). As noted rate year, as shown in Table 9. Rural
RY 2009, based on the latest proposed above, SSOs comprise approximately 16 LTCHs are projected to experience a
market basket estimate (3.5 percent) and percent of total LTCH PPS payments somewhat lower than average increase
offset by the proposed coding and and high cost outliers comprise in estimated payments per discharge for
documentation adjustment (0.9 percent), approximately 8 percent of estimated all proposed changes primarily due to
for most categories of LTCHs, the impact total LTCH PPS payments. Furthermore, the proposed changes to the area wage
analysis shown in Table 9 (column 7) as discussed previously in this adjustment. That is, 68 percent of the
only shows a 2.2 percent increase in regulatory impact analysis, the average LTCHs in these areas are expected to
estimated payments per discharge from increase in estimated payments per experience a decrease in their wage
RY 2008 to RY 2009 as a result of the discharge from the 2008 LTCH PPS rate index value from RY 2008 to RY 2009.
proposed change to the standard Federal year to the 2009 LTCH PPS rate year, on In addition, because all LTCHs in rural
rate. The reason that this column shows average, for all LTCHs of approximately areas have a wage index value that is
an estimated 2.2 percent increase rather 2.9 (as shown in Table 9) was less than 1.0, the proposed increase to
than an estimated 2.6 percent increase determined by comparing estimated RY the labor-related share (from 75.788
(based on the proposed 2.6 percent 2009 LTCH PPS payments (using the percent to 75.920 percent) would also
update to the standard Federal rate) is proposed rates and policies discussed in contribute to the estimated lower than
because about 34 percent of all LTCH the preamble of this rule) to estimated average increase in estimated payments
cases are projected to receive an SSO RY 2008 LTCH PPS payments (as from RY 2008 to RY 2009 shown in
payment that would be based either on described above in section XVI.B.3. of column 8 of Table 9.
the estimated cost of the case or the this regulatory impact analysis).
‘‘blend option’’ (which is based in part b. Participation Date
on the ‘‘IPPS comparable amount’’) a. Location LTCHs are grouped by participation
rather than a LTCH PPS payment based Based on the most recent available date into four categories: (1) Before
on the proposed standard Federal rate. data, the majority of LTCHs are in urban October 1983; (2) between October 1983
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Therefore, because over 30 percent of all areas. Approximately 6 percent of the and September 1993; (3) between
LTCH PPS cases would receive a LTCHs are identified as being located in October 1993 and September 2002; and
payment that is not based fully on the a rural area, and approximately 5 (4) after October 2002. Based on the
proposed standard Federal rate, the percent of all LTCH cases are treated in most recent available data, the majority
percent change in estimated payments these rural hospitals. The impact (approximately 52 percent) of the LTCH
per discharge due to the proposed analysis presented in Table 9 shows that cases are in hospitals that began

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5382 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

participating between October 1993 and c. Ownership Control and 3.7 percent, respectively; see Table
September 2002, and are projected to Other than LTCHs whose ownership 9). LTCHs located in both the New
experience a slightly lower than average control type is unknown, LTCHs are England and Pacific regions are
increase of 2.7 percent in estimated grouped into three categories based on expected to experience a larger than
payments per discharge from the 2008 ownership control type: Voluntary; average increase in estimated payments
LTCH PPS rate year compared to the proprietary; and government. Based on due to the proposed changes in the area
2009 LTCH PPS rate year, as shown in the most recent available data, wage adjustment (0.7 percent for the
Table 9, mostly because approximately approximately 6 percent of LTCHs are New England region, and 0.6 percent for
66 percent of hospitals in this category identified as government-owned and the Pacific region, as shown in Table 9).
are projected to experience a decrease in operated (see Table 9). We expect that This is because approximately 85
their wage index value from RY 2008 to for these government-owned and percent of LTCHs located in the New
RY 2009. In addition, because the operated LTCHs, estimated 2009 LTCH England region and all of the LTCHs in
majority of hospitals (80 percent) in this PPS rate year payments per discharge the Pacific region are projected to
category have a wage index of less than would increase 3.4 percent in experience an increase in their wage
1.0, the proposed increase to the labor- comparison to the 2008 LTCH PPS rate index values for proposed RY 2009 as
related share (from 75.788 percent to year, as shown in Table 9. We are compared to RY 2008.
75.920 percent) would also contribute to projecting that government-run LTCHs
the slightly lower than average increase We project that in comparison to the
would experience a somewhat higher 2008 LTCH PPS rate year, the proposed
in payments from RY 2008 to RY 2009 than average increase in estimated
shown in column 8 of Table 9. 2009 LTCH PPS rate year estimated
payments in RY 2009 as compared to
payments per discharge for LTCHs in
LTCHs that began participating in RY 2008 primarily due to the effect of
the East North Central region would
Medicare between October 1983 and the proposed changes to the area wage
increase by approximately 2.8 percent
September 1993, and those LTCHs that adjustment. Specifically, LTCHs in this
category are projected to experience a (nearly average). For LTCHs located in
began participating in Medicare after the South Atlantic and West North
October 2002 are projected to higher than average increase in their
estimated payments from RY 2008 to RY Central regions, we estimate that the
experience close to the average percent
2009 due to the proposed changes to the slightly higher than average projected
increase (3.0 percent) in estimated
area wage adjustment primarily because increase (3.1 percent for each region) in
payments per discharge from the 2008
the majority (60 percent) of hospitals in estimated payments per discharge for
LTCH PPS rate year compared to the
this category would experience an the 2009 LTCH PPS rate year compared
2009 LTCH PPS rate year, as shown in
increase in their wage index value from to the 2008 LTCH PPS rate year is
Table 9. Approximately 12 percent of
LTCHs began participating in Medicare RY 2008 to RY 2009. largely a result of the proposed changes
between October 1983 and September We project that estimated 2009 LTCH to the area wage adjustment. That is, we
1993 while approximately 28 percent of PPS rate year payments per discharge estimate that approximately 58 percent
LTCHs began participating in Medicare for voluntary LTCHs, which account for of hospitals in the South Atlantic region
after October 2002 (that is, the approximately 22 percent of LTCHs, and approximately 55 percent of
beginning of the LTCH PPS, which was would increase near the average (3.1 hospitals in the West North Central
implemented for cost reporting periods percent) in comparison to estimated region would experience an increase in
beginning on or after October 1, 2002). 2008 LTCH PPS rate year payments (see their wage index values from RY 2008
Table 9). to RY 2009. For LTCHs located in the
LTCHs that began participating before The majority (approximately 67 Middle Atlantic, East South Central and
October 1983 are projected to percent) of LTCHs are identified as West South Central regions, we estimate
experience a 3.5 percent increase in proprietary. We project that 2009 LTCH that the somewhat lower than average
estimated payments per discharge from PPS rate year estimated payments per projected increase (2.4 percent, 2.5
the 2008 LTCH PPS rate year compared discharge for these proprietary LTCHs percent, and 2.6 percent, respectively)
to the 2009 LTCH PPS rate year (see would increase 2.8 percent (nearly in estimated payments per discharge for
Table 9). We are projecting that LTCHs average) in comparison to the 2008
that began participating in Medicare the 2009 LTCH PPS rate year compared
LTCH PPS rate year (see Table 9). to the 2008 LTCH PPS rate year is
before October 1983 would experience a
larger than average increase in estimated d. Census Region largely a result of the proposed changes
payments for RY 2009 as compared to to the area wage adjustment.
Estimated payments per discharge for
RY 2008 primarily due to the proposed Specifically, nearly all LTCHs in the
the 2009 LTCH PPS rate year are
changes to the area wage adjustment. projected to increase for LTCHs located Middle Atlantic region (approximately
This is because approximately 68 in all regions in comparison to the 2008 89 percent) and the majority of the
percent of the LTCHs that began LTCH PPS rate year. The percent hospitals in the East South Central
participating in Medicare before October increase in estimated payments per region (approximately 67 percent) and
1983 are located in areas where the discharge from the 2008 LTCH PPS rate West South Central region
proposed RY 2009 wage index value year to the 2009 LTCH PPS rate year for (approximately 75 percent) would
would be greater than the RY 2008 wage all regions is largely attributable to the experience a decrease in their wage
index value. In addition, because a proposed increase in the standard index value from RY 2008 to RY 2009.
significant number (75 percent) of Federal rate. Furthermore, because a significant
hospitals in this category have a wage Of the 9 census regions, we project number of hospitals in these categories
rwilkins on PROD1PC63 with PROPOSALS2

index of greater than 1.0, the proposed that the increase in proposed 2009 have a wage index of less than 1.0, the
increase to the labor-related share (from LTCH PPS rate year estimated payments proposed increase to the labor-related
75.788 percent to 75.920 percent) would per discharge in comparison to the 2008 share (from 75.788 percent to 75.920
also contribute to the larger than average LTCH PPS rate year would have the percent) would also contribute to the
increase in estimated payments from RY largest impact on LTCHs in the New lower than average estimated increase in
2008 to RY 2009. England and Pacific regions (3.8 percent payments from RY 2008 to RY 2009.

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e. Bed Size 75.788 percent to 75.920 percent) would adjustment until no earlier than
LTCHs were grouped into seven also contribute to the smaller than December 29, 2010. However, prior to
categories based on bed size: 0–24 beds; average increase in estimated payments the enactment of the MMSEA of 2007,
25–49 beds; 50–74 beds; 75–124 beds; from RY 2008 to RY 2009 shown in we had developed a methodology for
125–199 beds; greater than 200 beds; Table 9. evaluating the appropriateness of
and unknown bed size. proposing a one-time budget neutrality
5. Effect on the Medicare Program
We are projecting an increase in adjustment under existing
estimated 2009 LTCH PPS rate year Based on actuarial projections, an § 412.523(d)(3). In order to inform the
payments per discharge in comparison estimate of Medicare spending (total public of our thinking, and to stimulate
to the 2008 LTCH PPS rate year for all estimated Medicare program payments) comments for our consideration during
bed size categories. Most LTCHs are in for LTCH services over the next 5 years the three-year delay in implementing
bed size categories where estimated based on current LTCH PPS policy (as any adjustment under the recent
2009 LTCH PPS rate year payments per established in previous LTCH PPS final legislation, we have presented our
discharge are projected to increase at or rules) is shown in Table 4 in section analysis and its results in section IV.D.
near the average increase of 2.9 percent IV.D. of the preamble of this proposed of the preamble of this proposed rule.
for all LTCHs, in comparison to the rule. As noted previously, we project
6. Effect on Medicare Beneficiaries
2008 LTCH PPS rate year (that is, all that the provisions of this proposed rule
LTCH bed size categories except the would result in an increase in estimated Under the LTCH PPS, hospitals
category of LTCHs with 0–24 beds). aggregate LTCH PPS payments in RY receive payment based on the average
Specifically, estimated payments per 2009 of approximately 124 million (or resources consumed by patients for each
discharge for the 2009 LTCH PPS rate about 2.9 percent) for the 394 LTCHs in diagnosis. We do not expect any
year are projected to increase for LTCHs our database. changes in the quality of care or access
with 25–49 and 50–74 beds at 2.8 Consistent with the statutory to services for Medicare beneficiaries
percent, for LTCHs with 75–124 beds at requirement for BN, as we discussed in under the LTCH PPS, but we expect that
3.1 percent, for LTCHs with 125–199 the August 30, 2002 final rule that paying prospectively for LTCH services
beds at 2.9 percent, and for LTCHs with implemented the LTCH PPS, in would enhance the efficiency of the
more than 200 beds, at 3.0 percent. developing the LTCH PPS, we intended Medicare program.
Estimated payments per discharge for estimated aggregate payments under the
D. Accounting Statement
the 2009 LTCH PPS rate year for LTCHs LTCH PPS in FY 2003 be projected to
with 0–24 beds are projected to have a equal the estimated aggregate payments As discussed in section XVI.A.1., the
somewhat lower than average increase that would have been made if the LTCH impact analysis of this proposed rule
in comparison to all hospitals (2.6 PPS were not implemented. Our results in an increase in estimated
percent; see Table 9). This lower than methodology for estimating payments aggregate payments of approximately
average increase in estimated payments for purposes of the BN calculations for $124 million (or about 2.9 percent) for
per discharge for LTCHs with 0–24 beds determining the FY 2003 standard the 394 LTCHs in our database.
is largely due to the proposed changes Federal rate used the best available data Therefore, as required by OMB Circular
to the area wage adjustment. and necessarily reflects assumptions. As A–4 (available at http://
Specifically, LTCHs in this category are discussed in section IV.D. of this www.whitehouse.gov/omb/circulars/
expected to experience a larger than proposed rule, section 114(c)(4) of the a004/a-4.pdf), in Table 10, we have
average decrease in their payments from Medicare, Medicaid and SCHIP prepared an accounting statement
RY 2008 to RY 2009 due to the proposed Extension Act of 2007 provides that the showing the classification of the
changes to the area wage adjustment ‘‘Secretary shall not, for the 3-year expenditures associated with the
primarily because approximately 73 period beginning on the date of the provisions of this proposed rule. Table
percent of the hospitals in this category enactment of this Act, make the one- 10 provides our best estimate of the
are projected to experience a decrease in time prospective adjustment to long- proposed increase in Medicare
their wage index value from RY 2008 to term care hospital prospective payment payments under the LTCH PPS as a
RY 2009. In addition, because the rates provided for in section result of the provisions presented in this
majority (approximately 91 percent) of 412.523(d)(3) of title 42, Code of Federal proposed rule based on the data for the
hospitals in this category have a wage Regulations, or any similar provision.’’ 394 LTCHs in our database. All
index of less than 1.0, the proposed That provision delays the effective date expenditures are classified as transfers
increase to the labor-related share (from of any one-time budget neutrality to Medicare providers (that is, LTCHs).

TABLE 10.—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2008 LTCH PPS RATE
YEAR TO THE 2009 LTCH PPS RATE YEAR
[In millions]

Category Transfers

Annualized Monetized Transfers .............................................................. Positive transfer—Estimated increase in expenditures: $124 million.
From Whom To Whom? ........................................................................... Federal Government To LTCH Medicare Providers.
rwilkins on PROD1PC63 with PROPOSALS2

In accordance with the provisions of List of Subjects in 42 CFR Part 412 For the reasons set forth in the
Executive Order 12866, this proposed preamble, the Centers for Medicare &
rule was reviewed by the Office of Administrative practice and Medicaid Services would amend 42 CFR
Management and Budget. procedure, Health facilities, Medicare, chapter IV as set forth below:
Puerto Rico, Reporting and
recordkeeping requirements.

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5384 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

PART 412—PROSPECTIVE PAYMENT A. Adding new paragraph (c)(3)(v). § 412.529 Special payment provision for
SYSTEMS FOR INPATIENT HOSPITAL B. Revising paragraph (d)(2) by short-stay outliers.
SERVICES removing the phrase ‘‘sections * * * * *
1886(b)(2) and (b)(3) of the Act’’ and (d) * * *
1. The authority citation for part 412 adding ‘‘section 1886(b)(2)(E) and (4) * * *
continues to read as follows: (b)(3)(J) of the Act’’ in its place. (ii) * * *
Authority: Secs. 1102 and 1871 of the C. Revising paragraph (d)(3). (B) Is adjusted for different area wage
Social Security Act (42 U.S.C. 1302 and levels based on the geographic
The addition and revisions read as
1395hh) and section 124 of Pub. L. 106–113 classifications set forth at § 412.503 and
follows:
(113 Stat. 1501A–332). the applicable hospital inpatient
§ 412.523 Methodology for calculating the prospective payment system labor-
Subpart O—Prospective Payment Federal prospective payment rates. related share, using the applicable
System for Long Term Care Hospitals * * * * * hospital inpatient prospective payment
2. Section 412.503 is amended by— (c) * * * system wage index value for
A. Revising the definition of ‘‘Long- (3) * * * nonreclassified hospitals. For LTCHs
term care hospital prospective payment (v) For long-term care hospital located in Alaska and Hawaii, this
system rate year’’. prospective payment system rate year amount is also adjusted by the
B. Adding new definitions of ‘‘rural’’ beginning July 1, 2008 and ending applicable hospital inpatient
and ‘‘urban’’ in alphabetical order. September 30, 2009. The standard prospective payment system cost of
The revision and additions read as Federal rate for long-term care hospital living adjustment factors.
follows: prospective payment system rate year * * * * *
beginning July 1, 2008 and ending (iii) * * *
§ 412.503 Definitions. (B) Is adjusted for the applicable
September 30, 2009 is the standard
* * * * * Federal rate for the previous long-term geographic adjustment factors,
Long-term care hospital prospective care hospital prospective payment including local cost variation based on
payment system rate year means— system rate year updated by 2.6 percent. the geographic classifications set forth at
(1) From July 1, 2003 and ending on § 412.503 and the applicable full
The standard Federal rate is adjusted, as
or before June 30, 2008, the 12-month hospital inpatient prospective payment
appropriate, as described in paragraph
period of July 1 through June 30. system wage index value for
(d) of this section.
(2) From July 1, 2008 and ending on nonreclassified hospitals, and
September 30, 2009, the 15-month * * * * *
applicable large urban location cost of
period of July 1, 2008 through (d)(3) The Secretary reviews payments
living adjustment factors for LTCHs in
September 30, 2009. under this prospective payment system
Alaska and Hawaii, if applicable.
(3) Beginning on or after October 1, and may make a one-time prospective
adjustment to the long-term care * * * * *
2009, the 12-month period of October 1 6. Section 412.534 is amended by
through September 30. hospital prospective payment system
rates no earlier than December 29, 2010, revising paragraphs (d)(1), (f)(2)(ii), and
* * * * * (f)(3)(ii) to read as follows:
Rural area means—(1) For cost so that the effect of any significant
reporting periods beginning on or after difference between the data used in the § 412.534 Special payment provisions for
October 1, 2002, with respect to original computations and more recent long-term care hospitals within hospitals
discharges occurring during the period data to determine budget neutrality is and satellites of long-term care hospitals.
covered by such cost reports but before not perpetuated in the prospective * * * * *
July 1, 2005, an area defined in payment rates for future years. (d) * * *
§ 412.62(f)(1)(iii); * * * * * (1) Subject to paragraphs (g) and (h)
(2) For discharges occurring on or 4. Section 412.525 is amended by of this section, in the case of a long-term
after July 1, 2005, and before July 1, revising paragraph (c) to read as follows: care hospital or satellite facility that is
2008, an area as defined in located in a rural area as defined in
§ 412.525 Adjustments to the Federal § 412.503 and is co-located with another
§ 412.64(b)(1)(ii)(C); and
prospective payment. hospital for any cost reporting period
(3) For discharges occurring on or
after July 1, 2008, any area outside an * * * * * beginning on or after October 1, 2004 in
urban area. (c) Adjustments for area levels. The which the long-term care hospital or
Urban area means—(1) For cost labor portion of a long-term care satellite facility has a discharged
reporting periods beginning on or after hospital’s Federal prospective payment Medicare inpatient population of whom
October 1, 2002, with respect to is adjusted to account for geographical more than 50 percent were admitted to
discharges occurring during the period differences in the area wage levels using the long-term care hospital or satellite
covered by such cost reports but before an appropriate wage index (established facility from the co-located hospital,
July 1, 2005, an area defined in by CMS), which reflects the relative payments for the patients who are
§ 412.62(f)(1)(ii); level of hospital wages and wage-related admitted from the co-located hospital
(2) For discharges occurring on or costs in the geographic area (that is, and who cause the long-term care
after July 1, 2005, and before July 1, urban or rural area as determined in hospital or satellite facility to exceed the
2008, an urban area means an area as accordance with the definitions set forth 50 percent threshold for discharged
defined in § 412.64(b)(1)(ii)(A) and (B); in § 412.503) of the hospital compared patients who were admitted from the co-
and to the national average level of hospital located hospital are the lesser of the
rwilkins on PROD1PC63 with PROPOSALS2

(3) For discharges occurring on or wages and wage-related costs. The amount otherwise payable under this
after July 1, 2008, a Metropolitan appropriate wage index (established by subpart or the amount payable under
Statistical Area, as defined by the CMS) is updated annually. this subpart that is equivalent, as set
Executive Office of Management and 5. Section 412.529 is amended by forth in paragraph (f) of this section, to
Budget. revising paragraphs (d)(4)(ii)(B) and the amount that were otherwise payable
3. Section 412.523 is amended by— (d)(4)(iii)(B) to read as follows: under subpart A, § 412.1(a). Payments

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5385

for the remainder of the long-term care Federal payment rates and a description (ii) Is adjusted for different area wage
hospital’s or satellite facility’s patients of the methodology and data used to levels based on the geographic
are made under the rules in this subpart calculate the payment rates are classifications defined at § 412.503 and
at § 412.500 through § 412.541 with no published on or before May 1 prior to the applicable hospital inpatient
adjustment under this section. the start of the long-term care hospital prospective payment system labor-
* * * * * prospective payment system rate year related share, using the applicable
(f) * * * which begins July 1, unless for good hospital inpatient prospective payment
(2) * * * cause it is published after May 1, but system wage index value for non-
(ii) Is adjusted for different area wage before June 1. reclassified hospitals. For long-term care
levels based on the geographic (c) For the period beginning on or hospitals located in Alaska and Hawaii,
classifications set forth at § 412.503 and after October 1, 2009, information on this amount is also adjusted by the
the applicable hospital inpatient the unadjusted Federal payment rates applicable hospital inpatient
prospective payment system labor- and a description of the methodology prospective payment system cost of
related share, using the applicable and data used to calculate the payment living adjustment factors;
hospital inpatient prospective payment rates are published on or before August * * * * *
system wage index value for non- 1 prior to the start of the Federal fiscal (3) * * *
reclassified hospitals. For LTCHs year which begins October 1, unless for (ii) Is adjusted by the applicable
located in Alaska and Hawaii, this good cause it is published after August geographic adjustment factors,
amount is also adjusted by the 1, but before September 1. including local cost variation based on
applicable hospital inpatient * * * * * the applicable geographic classifications
prospective payment system cost of 7. Section 412.536 is amended by set forth at § 412.503 and the applicable
living adjustment factors; revising paragraphs (c)(1), (e)(2)(ii), and full hospital inpatient prospective
* * * * * (e)(3)(ii) to read as follows. payment system wage index value for
(3) * * * nonreclassified hospitals, applicable
§ 412.536 Special payment provisions for large urban location and cost of living
(ii) Is adjusted by the applicable long-term care hospitals and satellites of
geographic adjustment factors, adjustment factors for long-term care
long-term care hospitals that discharged
including local cost variation based on Medicare patients admitted from a hospital hospitals for Alaska and Hawaii, if
the applicable geographic classifications not located in the same building or on the applicable;
set forth at § 412.503 and the applicable same campus as the long term care * * * * *
full hospital inpatient prospective hospital or satellite of the long-term care (Catalog of Federal Domestic Assistance
payment system wage index value for hospital. Program No. 93.773, Medicare—Hospital
* * * * * Insurance; and Program No. 93.774,
nonreclassified hospitals, applicable
(c) Special treatment of rural Medicare— Supplementary Medical
large urban location and cost of living Insurance Program)
adjustment factors for LTCHs for Alaska hospitals. (1) Subject to paragraph (f) of
and Hawaii, if applicable; this section, in the case of a long-term Dated: December 13, 2007.
* * * * * care hospital or long-term care hospital Kerry Weems,
7. Section 412.535 is amended by— satellite facility that is located in a rural Acting Administrator, Centers for Medicare
A. Revising the introductory text. area as defined in § 412.503 that has a & Medicaid Services.
B. Revising paragraph (a). discharged Medicare inpatient Approved: January 16, 2008.
C. Redesignating paragraph (b) as population of whom more than 50 Michael O. Leavitt,
paragraph (d). percent were admitted to the long-term Secretary.
D. Adding new paragraphs (b) and (c). care hospital or long term care hospital The following addenda will not
The revisions and additions read as satellite facility from a hospital not co- appear in the Code of Federal
follows: located with the long-term care hospital Regulations.
or with the satellite of a long-term care
§ 412.535 Publication of the Federal hospital, payment for the Medicare Addendum
prospective payment rates. discharges who are admitted from that Addendum A contains the tables
Except as specified in paragraph (b) of hospital and who cause the long-term referred to throughout the preamble to
this section, CMS publishes information care hospital or satellite facility to this proposed rule. The tables presented
pertaining to the long-term care hospital exceed the 50 percent threshold for below are as follows:
prospective payment system effective Medicare discharges is determined at Table 1.—Proposed Long-Term Care
for each annual update in the Federal the lesser of the amount otherwise Hospital Wage Index for Urban Areas
Register. payable under this subpart or the for Discharges Occurring from July 1,
(a) For the period beginning on or amount payable under this subpart that 2008 through September 30, 2009
after July 1, 2003, and ending on June is equivalent, as set forth in paragraph Table 2.—Proposed Long-Term Care
30, 2008, information on the unadjusted (e) of this section, to the amount that is Hospital Wage Index for Rural Areas
Federal payment rates and a description otherwise payable under subpart A, for Discharges Occurring from July 1,
of the methodology and data used to § 412.1(a). Payments for the remainder 2008 through September 30, 2009
calculate the payment rates are of the long-term care hospital’s or long- Table 3.—FY 2008 MS–LTC–DRG
published on or before May 1 prior to term care hospital satellite facility’s Relative Weights, Geometric Average
the start of each long term care hospital Medicare discharges admitted from that Length of Stay, Short-Stay Outlier
prospective payment system rate year referring hospital are made under the Threshold and IPPS-Comparable
rwilkins on PROD1PC63 with PROPOSALS2

which begins July 1, unless for good rules in this subpart at § 412.500 Threshold (for Short-Stay Outlier
cause it is published after May 1, but through § 412.541 with no adjustment Cases) (effective for discharges
before June 1. under this section. occurring on or after July 1, 2008
(b) For the period beginning on July * * * * * through September 30, 2009). (Note:
1, 2008 and ending on September 30, (e) * * * This table is the same information
2009, information of the unadjusted (2) * * * provided in Table 11 of the FY 2008

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5386 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

IPPS final rule (72 FR 48143 through 48157), which has been reprinted here
for convenience.)

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009
Proposed
CBSA code Urban area (constituent counties) wage index

10180 ........ Abilene, TX ....................................................................................................................................................................... 0.7957


Callahan County, TX.
Jones County, TX.
Taylor County, TX.
10380 ........ Aguadilla-Isabela-San Sebastián, PR .............................................................................................................................. 0.3448
Aguada Municipio, PR.
Aguadilla Municipio, PR.
Añasco Municipio, PR.
Isabela Municipio, PR.
Lares Municipio, PR.
Moca Municipio, PR.
Rincón Municipio, PR.
San Sebastián Municipio, PR.
10420 ........ Akron, OH ......................................................................................................................................................................... 0.8794
Portage County, OH.
Summit County, OH.
10500 ........ Albany, GA ....................................................................................................................................................................... 0.8514
Baker County, GA.
Dougherty County, GA.
Lee County, GA.
Terrell County, GA.
Worth County, GA.
10580 ........ Albany-Schenectady-Troy, NY ......................................................................................................................................... 0.8588
Albany County, NY.
Rensselaer County, NY.
Saratoga County, NY.
Schenectady County, NY.
Schoharie County, NY.
10740 ........ Albuquerque, NM ............................................................................................................................................................. 0.9554
Bernalillo County, NM.
Sandoval County, NM.
Torrance County, NM.
Valencia County, NM.
10780 ........ Alexandria, LA .................................................................................................................................................................. 0.7979
Grant Parish, LA.
Rapides Parish, LA.
10900 ........ Allentown-Bethlehem-Easton, PA–NJ .............................................................................................................................. 0.9865
Warren County, NJ.
Carbon County, PA.
Lehigh County, PA.
Northampton County, PA.
11020 ........ Altoona, PA ...................................................................................................................................................................... 0.8618
Blair County, PA.
11100 ........ Amarillo, TX ...................................................................................................................................................................... 0.9116
Armstrong County, TX.
Carson County, TX.
Potter County, TX.
Randall County, TX.
11180 ........ Ames, IA ........................................................................................................................................................................... 1.0046
Story County, IA.
11260 ........ Anchorage, AK ................................................................................................................................................................. 1.1913
Anchorage Municipality, AK.
Matanuska-Susitna Borough, AK.
11300 ........ Anderson, IN .................................................................................................................................................................... 0.8827
Madison County, IN.
11340 ........ Anderson, SC ................................................................................................................................................................... 0.9086
Anderson County, SC.
11460 ........ Ann Arbor, MI ................................................................................................................................................................... 1.0539
Washtenaw County, MI.
11500 ........ Anniston-Oxford, AL ......................................................................................................................................................... 0.7926
rwilkins on PROD1PC63 with PROPOSALS2

Calhoun County, AL.


11540 ........ Appleton, WI ..................................................................................................................................................................... 0.9598
Calumet County, WI.
Outagamie County, WI.
11700 ........ Asheville, NC .................................................................................................................................................................... 0.9185
Buncombe County, NC.
Haywood County, NC.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5387

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Henderson County, NC.


Madison County, NC.
12020 ........ Athens-Clarke County, GA ............................................................................................................................................... 1.0517
Clarke County, GA.
Madison County, GA.
Oconee County, GA.
Oglethorpe County, GA.
12060 ........ Atlanta-Sandy Springs-Marietta, GA ................................................................................................................................ 0.9828
Barrow County, GA.
Bartow County, GA.
Butts County, GA.
Carroll County, GA.
Cherokee County, GA.
Clayton County, GA.
Cobb County, GA.
Coweta County, GA.
Dawson County, GA.
DeKalb County, GA.
Douglas County, GA.
Fayette County, GA.
Forsyth County, GA.
Fulton County, GA.
Gwinnett County, GA.
Haralson County, GA.
Heard County, GA.
Henry County, GA.
Jasper County, GA.
Lamar County, GA.
Meriwether County, GA.
Newton County, GA.
Paulding County, GA.
Pickens County, GA.
Pike County, GA.
Rockdale County, GA.
Spalding County, GA.
Walton County, GA.
12100 ........ Atlantic City, NJ ................................................................................................................................................................ 1.2198
Atlantic County, NJ.
12220 ........ Auburn-Opelika, AL .......................................................................................................................................................... 0.8090
Lee County, AL.
12260 ........ Augusta-Richmond County, GA–SC ................................................................................................................................ 0.9645
Burke County, GA.
Columbia County, GA.
McDuffie County, GA.
Richmond County, GA.
Aiken County, SC.
Edgefield County, SC.
12420 ........ Austin-Round Rock, TX .................................................................................................................................................... 0.9544
Bastrop County, TX.
Caldwell County, TX.
Hays County, TX.
Travis County, TX.
Williamson County, TX.
12540 ........ Bakersfield, CA ................................................................................................................................................................. 1.1051
Kern County, CA.
12580 ........ Baltimore-Towson, MD ..................................................................................................................................................... 1.0134
Anne Arundel County, MD.
Baltimore County, MD.
Carroll County, MD.
Harford County, MD.
Howard County, MD.
Queen Anne’s County, MD.
Baltimore City, MD.
rwilkins on PROD1PC63 with PROPOSALS2

12620 ........ Bangor, ME ...................................................................................................................................................................... 0.9978


Penobscot County, ME.
12700 ........ Barnstable Town, MA ....................................................................................................................................................... 1.2603
Barnstable County, MA.
12940 ........ Baton Rouge, LA .............................................................................................................................................................. 0.8034
Ascension Parish, LA.
East Baton Rouge Parish, LA.

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5388 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

East Feliciana Parish, LA.


Iberville Parish, LA.
Livingston Parish, LA.
Pointe Coupee Parish, LA.
St. Helena Parish, LA.
West Baton Rouge Parish, LA.
West Feliciana Parish, LA.
12980 ........ Battle Creek, MI ............................................................................................................................................................... 1.0179
Calhoun County, MI.
13020 ........ Bay City, MI ...................................................................................................................................................................... 0.8897
Bay County, MI.
13140 ........ Beaumont-Port Arthur, TX ................................................................................................................................................ 0.8531
Hardin County, TX.
Jefferson County, TX.
Orange County, TX.
13380 ........ Bellingham, WA ................................................................................................................................................................ 1.1474
Whatcom County, WA.
13460 ........ Bend, OR .......................................................................................................................................................................... 1.0942
Deschutes County, OR.
13644 ........ Bethesda-Gaithersburg-Frederick, MD ............................................................................................................................ 1.0511
Frederick County, MD.
Montgomery County, MD.
13740 ........ Billings, MT ....................................................................................................................................................................... 0.8666
Carbon County, MT.
Yellowstone County, MT.
13780 ........ Binghamton, NY ............................................................................................................................................................... 0.8949
Broome County, NY.
Tioga County, NY.
13820 ........ Birmingham-Hoover, AL ................................................................................................................................................... 0.8898
Bibb County, AL.
Blount County, AL.
Chilton County, AL.
Jefferson County, AL.
St. Clair County, AL.
Shelby County, AL.
Walker County, AL.
13900 ........ Bismarck, ND ................................................................................................................................................................... 0.7225
Burleigh County, ND.
Morton County, ND.
13980 ........ Blacksburg-Christiansburg-Radford, VA .......................................................................................................................... 0.8192
Giles County, VA.
Montgomery County, VA.
Pulaski County, VA.
Radford City, VA.
14020 ........ Bloomington, IN ................................................................................................................................................................ 0.8915
Greene County, IN.
Monroe County, IN.
Owen County, IN.
14060 ........ Bloomington-Normal, IL .................................................................................................................................................... 0.9325
McLean County, IL.
14260 ........ Boise City-Nampa, ID ....................................................................................................................................................... 0.9465
Ada County, ID.
Boise County, ID.
Canyon County, ID.
Gem County, ID.
Owyhee County, ID.
14484 ........ Boston-Quincy, MA .......................................................................................................................................................... 1.1792
Norfolk County, MA.
Plymouth County, MA.
Suffolk County, MA.
14500 ........ Boulder, CO ...................................................................................................................................................................... 1.0426
Boulder County, CO.
14540 ........ Bowling Green, KY ........................................................................................................................................................... 0.8159
rwilkins on PROD1PC63 with PROPOSALS2

Edmonson County, KY.


Warren County, KY.
14740 ........ Bremerton-Silverdale, WA ................................................................................................................................................ 1.0904
Kitsap County, WA.
14860 ........ Bridgeport-Stamford-Norwalk, CT .................................................................................................................................... 1.2735
Fairfield County, CT.
15180 ........ Brownsville-Harlingen, TX ................................................................................................................................................ 0.8914

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5389

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Cameron County, TX.


15260 ........ Brunswick, GA .................................................................................................................................................................. 0.9475
Brantley County, GA.
Glynn County, GA.
McIntosh County, GA.
15380 ........ Buffalo-Niagara Falls, NY ................................................................................................................................................. 0.9568
Erie County, NY.
Niagara County, NY.
15500 ........ Burlington, NC .................................................................................................................................................................. 0.8747
Alamance County, NC.
15540 ........ Burlington-South Burlington, VT ....................................................................................................................................... 0.9660
Chittenden County, VT.
Franklin County, VT.
Grand Isle County, VT.
15764 ........ Cambridge-Newton-Framingham, MA .............................................................................................................................. 1.1215
Middlesex County, MA.
15804 ........ Camden, NJ ..................................................................................................................................................................... 1.0411
Burlington County, NJ.
Camden County, NJ.
Gloucester County, NJ.
15940 ........ Canton-Massillon, OH ...................................................................................................................................................... 0.8935
Carroll County, OH.
Stark County, OH.
15980 ........ Cape Coral-Fort Myers, FL .............................................................................................................................................. 0.9396
Lee County, FL.
16180 ........ Carson City, NV ............................................................................................................................................................... 1.0003
Carson City, NV.
16220 ........ Casper, WY ...................................................................................................................................................................... 0.9385
Natrona County, WY.
16300 ........ Cedar Rapids, IA .............................................................................................................................................................. 0.8852
Benton County, IA.
Jones County, IA.
Linn County, IA.
16580 ........ Champaign-Urbana, IL ..................................................................................................................................................... 0.9392
Champaign County, IL.
Ford County, IL.
Piatt County, IL.
16620 ........ Charleston, WV ................................................................................................................................................................ 0.8289
Boone County, WV.
Clay County, WV.
Kanawha County, WV.
Lincoln County, WV.
Putnam County, WV.
16700 ........ Charleston-North Charleston, SC .................................................................................................................................... 0.9124
Berkeley County, SC.
Charleston County, SC.
Dorchester County, SC.
16740 ........ Charlotte-Gastonia-Concord, NC–SC .............................................................................................................................. 0.9520
Anson County, NC.
Cabarrus County, NC.
Gaston County, NC.
Mecklenburg County, NC.
Union County, NC.
York County, SC.
16820 ........ Charlottesville, VA ............................................................................................................................................................ 0.9277
Albemarle County, VA.
Fluvanna County, VA.
Greene County, VA.
Nelson County, VA.
Charlottesville City, VA.
16860 ........ Chattanooga, TN–GA ....................................................................................................................................................... 0.8994
Catoosa County, GA.
Dade County, GA.
rwilkins on PROD1PC63 with PROPOSALS2

Walker County, GA.


Hamilton County, TN.
Marion County, TN.
Sequatchie County, TN.
16940 ........ Cheyenne, WY ................................................................................................................................................................. 0.9308
Laramie County, WY.
16974 ........ Chicago-Naperville-Joliet, IL ............................................................................................................................................ 1.0715

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5390 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Cook County, IL.


DeKalb County, IL.
DuPage County, IL.
Grundy County, IL.
Kane County, IL.
Kendall County, IL.
McHenry County, IL.
Will County, IL.
17020 ........ Chico, CA ......................................................................................................................................................................... 1.1290
Butte County, CA.
17140 ........ Cincinnati-Middletown, OH–KY–IN .................................................................................................................................. 0.9784
Dearborn County, IN.
Franklin County, IN.
Ohio County, IN.
Boone County, KY.
Bracken County, KY.
Campbell County, KY.
Gallatin County, KY.
Grant County, KY.
Kenton County, KY.
Pendleton County, KY.
Brown County, OH.
Butler County, OH.
Clermont County, OH.
Hamilton County, OH.
Warren County, OH.
17300 ........ Clarksville, TN–KY ........................................................................................................................................................... 0.8251
Christian County, KY.
Trigg County, KY.
Montgomery County, TN.
Stewart County, TN.
17420 ........ Cleveland, TN ................................................................................................................................................................... 0.8052
Bradley County, TN.
Polk County, TN.
17460 ........ Cleveland-Elyria-Mentor, OH ........................................................................................................................................... 0.9339
Cuyahoga County, OH.
Geauga County, OH.
Lake County, OH.
Lorain County, OH.
Medina County, OH.
17660 ........ Coeur d’Alene, ID ............................................................................................................................................................. 0.9532
Kootenai County, ID.
17780 ........ College Station-Bryan, TX ................................................................................................................................................ 0.9358
Brazos County, TX.
Burleson County, TX.
Robertson County, TX.
17820 ........ Colorado Springs, CO ...................................................................................................................................................... 0.9719
El Paso County, CO.
Teller County, CO.
17860 ........ Columbia, MO .................................................................................................................................................................. 0.8658
Boone County, MO.
Howard County, MO.
17900 ........ Columbia, SC ................................................................................................................................................................... 0.8800
Calhoun County, SC.
Fairfield County, SC.
Kershaw County, SC.
Lexington County, SC.
Richland County, SC.
Saluda County, SC.
17980 ........ Columbus, GA–AL ............................................................................................................................................................ 0.8729
Russell County, AL.
Chattahoochee County, GA.
Harris County, GA.
rwilkins on PROD1PC63 with PROPOSALS2

Marion County, GA.


Muscogee County, GA.
18020 ........ Columbus, IN .................................................................................................................................................................... 0.9537
Bartholomew County, IN.
18140 ........ Columbus, OH .................................................................................................................................................................. 1.0085
Delaware County, OH.
Fairfield County, OH.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5391

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Franklin County, OH.


Licking County, OH.
Madison County, OH.
Morrow County, OH.
Pickaway County, OH.
Union County, OH.
18580 ........ Corpus Christi, TX ............................................................................................................................................................ 0.8588
Aransas County, TX.
Nueces County, TX.
San Patricio County, TX.
18700 ........ Corvallis, OR .................................................................................................................................................................... 1.0959
Benton County, OR.
19060 ........ Cumberland, MD–WV ...................................................................................................................................................... 0.8294
Allegany County, MD.
Mineral County, WV.
19124 ........ Dallas-Plano-Irving, TX .................................................................................................................................................... 0.9915
Collin County, TX.
Dallas County, TX.
Delta County, TX.
Denton County, TX.
Ellis County, TX.
Hunt County, TX.
Kaufman County, TX.
Rockwall County, TX.
19140 ........ Dalton, GA ........................................................................................................................................................................ 0.8760
Murray County, GA.
Whitfield County, GA.
19180 ........ Danville, IL ........................................................................................................................................................................ 0.8957
Vermilion County, IL.
19260 ........ Danville, VA ...................................................................................................................................................................... 0.8240
Pittsylvania County, VA.
Danville City, VA.
19340 ........ Davenport-Moline-Rock Island, IA–IL .............................................................................................................................. 0.8830
Henry County, IL.
Mercer County, IL.
Rock Island County, IL.
Scott County, IA.
19380 ........ Dayton, OH ....................................................................................................................................................................... 0.9190
Greene County, OH.
Miami County, OH.
Montgomery County, OH.
Preble County, OH.
19460 ........ Decatur, AL ...................................................................................................................................................................... 0.7885
Lawrence County, AL.
Morgan County, AL.
19500 ........ Decatur, IL ........................................................................................................................................................................ 0.8074
Macon County, IL.
19660 ........ Deltona-Daytona Beach-Ormond Beach, FL ................................................................................................................... 0.9031
Volusia County, FL.
19740 ........ Denver-Aurora, CO .......................................................................................................................................................... 1.0718
Adams County, CO.
Arapahoe County, CO.
Broomfield County, CO.
Clear Creek County, CO.
Denver County, CO.
Douglas County, CO.
Elbert County, CO.
Gilpin County, CO.
Jefferson County, CO.
Park County, CO.
19780 ........ Des Moines-West Des Moines, IA ................................................................................................................................... 0.9226
Dallas County, IA.
Guthrie County, IA.
rwilkins on PROD1PC63 with PROPOSALS2

Madison County, IA.


Polk County, IA.
Warren County, IA.
19804 ........ Detroit-Livonia-Dearborn, MI ............................................................................................................................................ 0.9999
Wayne County, MI.
20020 ........ Dothan, AL ....................................................................................................................................................................... 0.7270
Geneva County, AL.

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5392 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Henry County, AL.


Houston County, AL.
20100 ........ Dover, DE ......................................................................................................................................................................... 1.0099
Kent County, DE.
20220 ........ Dubuque, IA ..................................................................................................................................................................... 0.9058
Dubuque County, IA.
20260 ........ Duluth, MN–WI ................................................................................................................................................................. 0.9975
Carlton County, MN.
St. Louis County, MN.
Douglas County, WI.
20500 ........ Durham, NC ..................................................................................................................................................................... 0.9816
Chatham County, NC.
Durham County, NC.
Orange County, NC.
Person County, NC.
20740 ........ Eau Claire, WI .................................................................................................................................................................. 0.9475
Chippewa County, WI.
Eau Claire County, WI.
20764 ........ Edison, NJ ........................................................................................................................................................................ 1.1181
Middlesex County, NJ.
Monmouth County, NJ.
Ocean County, NJ.
Somerset County, NJ.
20940 ........ El Centro, CA ................................................................................................................................................................... 0.8914
Imperial County, CA.
21060 ........ Elizabethtown, KY ............................................................................................................................................................ 0.8711
Hardin County, KY.
Larue County, KY.
21140 ........ Elkhart-Goshen, IN ........................................................................................................................................................... 0.9611
Elkhart County, IN.
21300 ........ Elmira, NY ........................................................................................................................................................................ 0.8264
Chemung County, NY.
21340 ........ El Paso, TX ...................................................................................................................................................................... 0.8989
El Paso County, TX.
21500 ........ Erie, PA ............................................................................................................................................................................ 0.8495
Erie County, PA.
21660 ........ Eugene-Springfield, OR ................................................................................................................................................... 1.0932
Lane County, OR.
21780 ........ Evansville, IN–KY ............................................................................................................................................................. 0.8662
Gibson County, IN.
Posey County, IN.
Vanderburgh County, IN.
Warrick County, IN.
Henderson County, KY.
Webster County, KY.
21820 ........ Fairbanks, AK ................................................................................................................................................................... 1.1050
Fairbanks North Star Borough, AK.
21940 ........ Fajardo, PR ...................................................................................................................................................................... 0.4375
Ceiba Municipio, PR.
Fajardo Municipio, PR.
Luquillo Municipio, PR.
22020 ........ Fargo, ND–MN ................................................................................................................................................................. 0.8042
Cass County, ND.
Clay County, MN.
22140 ........ Farmington, NM ................................................................................................................................................................ 0.9587
San Juan County, NM.
22180 ........ Fayetteville, NC ................................................................................................................................................................ 0.9368
Cumberland County, NC.
Hoke County, NC.
22220 ........ Fayetteville-Springdale-Rogers, AR–MO ......................................................................................................................... 0.8742
Benton County, AR.
Madison County, AR.
Washington County, AR.
rwilkins on PROD1PC63 with PROPOSALS2

McDonald County, MO.


22380 ........ Flagstaff, AZ ..................................................................................................................................................................... 1.1687
Coconino County, AZ.
22420 ........ Flint, MI ............................................................................................................................................................................. 1.1220
Genesee County, MI.
22500 ........ Florence, SC .................................................................................................................................................................... 0.8249
Darlington County, SC.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5393

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Florence County, SC.


22520 ........ Florence-Muscle Shoals, AL ............................................................................................................................................ 0.7680
Colbert County, AL.
Lauderdale County, AL.
22540 ........ Fond du Lac, WI ............................................................................................................................................................... 0.9667
Fond du Lac County, WI.
22660 ........ Fort Collins-Loveland, CO ................................................................................................................................................ 0.9897
Larimer County, CO.
22744 ........ Fort Lauderdale-Pompano Beach-Deerfield Beach, FL ................................................................................................... 1.0229
Broward County, FL.
22900 ........ Fort Smith, AR–OK .......................................................................................................................................................... 0.7933
Crawford County, AR.
Franklin County, AR.
Sebastian County, AR.
Le Flore County, OK.
Sequoyah County, OK.
23020 ........ Fort Walton Beach-Crestview-Destin, FL ......................................................................................................................... 0.8743
Okaloosa County, FL.
23060 ........ Fort Wayne, IN ................................................................................................................................................................. 0.9284
Allen County, IN.
Wells County, IN.
Whitley County, IN.
23104 ........ Fort Worth-Arlington, TX .................................................................................................................................................. 0.9693
Johnson County, TX.
Parker County, TX.
Tarrant County, TX.
Wise County, TX.
23420 ........ Fresno, CA ....................................................................................................................................................................... 1.0993
Fresno County, CA.
23460 ........ Gadsden, AL .................................................................................................................................................................... 0.8159
Etowah County, AL.
23540 ........ Gainesville, FL .................................................................................................................................................................. 0.9196
Alachua County, FL.
Gilchrist County, FL.
23580 ........ Gainesville, GA ................................................................................................................................................................. 0.9216
Hall County, GA.
23844 ........ Gary, IN ............................................................................................................................................................................ 0.9224
Jasper County, IN.
Lake County, IN.
Newton County, IN.
Porter County, IN.
24020 ........ Glens Falls, NY ................................................................................................................................................................ 0.8256
Warren County, NY.
Washington County, NY.
24140 ........ Goldsboro, NC .................................................................................................................................................................. 0.9288
Wayne County, NC.
24220 ........ Grand Forks, ND–MN ...................................................................................................................................................... 0.7881
Polk County, MN.
Grand Forks County, ND.
24300 ........ Grand Junction, CO ......................................................................................................................................................... 0.9864
Mesa County, CO.
24340 ........ Grand Rapids-Wyoming, MI ............................................................................................................................................. 0.9315
Barry County, MI.
Ionia County, MI.
Kent County, MI.
Newaygo County, MI.
24500 ........ Great Falls, MT ................................................................................................................................................................ 0.8675
Cascade County, MT.
24540 ........ Greeley, CO ..................................................................................................................................................................... 0.9658
Weld County, CO.
24580 ........ Green Bay, WI .................................................................................................................................................................. 0.9727
Brown County, WI.
Kewaunee County, WI.
rwilkins on PROD1PC63 with PROPOSALS2

Oconto County, WI.


24660 ........ Greensboro-High Point, NC ............................................................................................................................................. 0.9010
Guilford County, NC.
Randolph County, NC.
Rockingham County, NC.
24780 ........ Greenville, NC .................................................................................................................................................................. 0.9402
Greene County, NC.

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5394 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Pitt County, NC.


24860 ........ Greenville-Mauldin-Easley, SC ........................................................................................................................................ 0.9860
Greenville County, SC.
Laurens County, SC.
Pickens County, SC.
25020 ........ Guayama, PR ................................................................................................................................................................... 0.3064
Arroyo Municipio, PR.
Guayama Municipio, PR.
Patillas Municipio, PR.
25060 ........ Gulfport-Biloxi, MS ........................................................................................................................................................... 0.8773
Hancock County, MS.
Harrison County, MS.
Stone County, MS.
25180 ........ Hagerstown-Martinsburg, MD–WV ................................................................................................................................... 0.9013
Washington County, MD.
Berkeley County, WV.
Morgan County, WV.
25260 ........ Hanford-Corcoran, CA ...................................................................................................................................................... 1.0499
Kings County, CA.
25420 ........ Harrisburg-Carlisle, PA ..................................................................................................................................................... 0.9280
Cumberland County, PA.
Dauphin County, PA.
Perry County, PA.
25500 ........ Harrisonburg, VA .............................................................................................................................................................. 0.8867
Rockingham County, VA.
Harrisonburg City, VA.
25540 ........ Hartford-West Hartford-East Hartford, CT ....................................................................................................................... 1.0959
Hartford County, CT.
Middlesex County, CT.
Tolland County, CT.
25620 ........ Hattiesburg, MS ................................................................................................................................................................ 0.7366
Forrest County, MS.
Lamar County, MS.
Perry County, MS.
25860 ........ Hickory-Lenoir-Morganton, NC ......................................................................................................................................... 0.9028
Alexander County, NC.
Burke County, NC.
Caldwell County, NC.
Catawba County, NC.
25980 ........ Hinesville-Fort Stewart, GA .............................................................................................................................................. 0.9187
Liberty County, GA.
Long County, GA.
26100 ........ Holland-Grand Haven, MI ................................................................................................................................................ 0.9006
Ottawa County, MI.
26180 ........ Honolulu, HI ...................................................................................................................................................................... 1.1556
Honolulu County, HI.
26300 ........ Hot Springs, AR ............................................................................................................................................................... 0.9109
Garland County, AR.
26380 ........ Houma-Bayou Cane-Thibodaux, LA ................................................................................................................................ 0.7892
Lafourche Parish, LA.
Terrebonne Parish, LA.
26420 ........ Houston-Sugar Land-Baytown, TX .................................................................................................................................. 0.9939
Austin County, TX.
Brazoria County, TX.
Chambers County, TX.
Fort Bend County, TX.
Galveston County, TX.
Harris County, TX.
Liberty County, TX.
Montgomery County, TX.
San Jacinto County, TX.
Waller County, TX.
26580 ........ Huntington-Ashland, WV–KY–OH .................................................................................................................................... 0.9041
rwilkins on PROD1PC63 with PROPOSALS2

Boyd County, KY.


Greenup County, KY.
Lawrence County, OH.
Cabell County, WV.
Wayne County, WV.
26620 ........ Huntsville, AL ................................................................................................................................................................... 0.9146
Limestone County, AL.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5395

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Madison County, AL.


26820 ........ Idaho Falls, ID .................................................................................................................................................................. 0.9264
Bonneville County, ID.
Jefferson County, ID.
26900 ........ Indianapolis-Carmel, IN .................................................................................................................................................... 0.9844
Boone County, IN.
Brown County, IN.
Hamilton County, IN.
Hancock County, IN.
Hendricks County, IN.
Johnson County, IN.
Marion County, IN.
Morgan County, IN.
Putnam County, IN.
Shelby County, IN.
26980 ........ Iowa City, IA ..................................................................................................................................................................... 0.9568
Johnson County, IA.
Washington County, IA.
27060 ........ Ithaca, NY ......................................................................................................................................................................... 0.9630
Tompkins County, NY.
27100 ........ Jackson, MI ...................................................................................................................................................................... 0.9329
Jackson County, MI.
27140 ........ Jackson, MS ..................................................................................................................................................................... 0.8011
Copiah County, MS.
Hinds County, MS.
Madison County, MS.
Rankin County, MS.
Simpson County, MS.
27180 ........ Jackson, TN ..................................................................................................................................................................... 0.8676
Chester County, TN.
Madison County, TN.
27260 ........ Jacksonville, FL ................................................................................................................................................................ 0.9021
Baker County, FL.
Clay County, FL.
Duval County, FL.
Nassau County, FL.
St. Johns County, FL.
27340 ........ Jacksonville, NC ............................................................................................................................................................... 0.8079
Onslow County, NC.
27500 ........ Janesville, WI ................................................................................................................................................................... 0.9702
Rock County, WI.
27620 ........ Jefferson City, MO ........................................................................................................................................................... 0.8478
Callaway County, MO.
Cole County, MO.
Moniteau County, MO.
Osage County, MO.
27740 ........ Johnson City, TN .............................................................................................................................................................. 0.7677
Carter County, TN.
Unicoi County, TN.
Washington County, TN.
27780 ........ Johnstown, PA ................................................................................................................................................................. 0.7543
Cambria County, PA.
27860 ........ Jonesboro, AR .................................................................................................................................................................. 0.7790
Craighead County, AR.
Poinsett County, AR.
27900 ........ Joplin, MO ........................................................................................................................................................................ 0.8951
Jasper County, MO.
Newton County, MO.
28020 ........ Kalamazoo-Portage, MI .................................................................................................................................................... 1.0433
Kalamazoo County, MI.
Van Buren County, MI.
28100 ........ Kankakee-Bradley, IL ....................................................................................................................................................... 1.0238
Kankakee County, IL.
rwilkins on PROD1PC63 with PROPOSALS2

28140 ........ Kansas City, MO–KS ....................................................................................................................................................... 0.9504


Franklin County, KS.
Johnson County, KS.
Leavenworth County, KS.
Linn County, KS.
Miami County, KS.
Wyandotte County, KS.

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5396 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Bates County, MO.


Caldwell County, MO.
Cass County, MO.
Clay County, MO.
Clinton County, MO.
Jackson County, MO.
Lafayette County, MO.
Platte County, MO.
Ray County, MO.
28420 ........ Kennewick-Richland-Pasco, WA ...................................................................................................................................... 1.0075
Benton County, WA.
Franklin County, WA.
28660 ........ Killeen-Temple-Fort Hood, TX ......................................................................................................................................... 0.8249
Bell County, TX.
Coryell County, TX.
Lampasas County, TX.
28700 ........ Kingsport-Bristol-Bristol, TN–VA ...................................................................................................................................... 0.7658
Hawkins County, TN.
Sullivan County, TN.
Bristol City, VA.
Scott County, VA.
Washington County, VA.
28740 ........ Kingston, NY .................................................................................................................................................................... 0.9556
Ulster County, NY.
28940 ........ Knoxville, TN .................................................................................................................................................................... 0.8036
Anderson County, TN.
Blount County, TN.
Knox County, TN.
Loudon County, TN.
Union County, TN.
29020 ........ Kokomo, IN ....................................................................................................................................................................... 0.9591
Howard County, IN.
Tipton County, IN.
29100 ........ La Crosse, WI–MN ........................................................................................................................................................... 0.9685
Houston County, MN.
La Crosse County, WI.
29140 ........ Lafayette, IN ..................................................................................................................................................................... 0.8869
Benton County, IN.
Carroll County, IN.
Tippecanoe County, IN.
29180 ........ Lafayette, LA .................................................................................................................................................................... 0.8247
Lafayette Parish, LA.
St. Martin Parish, LA.
29340 ........ Lake Charles, LA .............................................................................................................................................................. 0.7777
Calcasieu Parish, LA.
Cameron Parish, LA.
29404 ........ Lake County-Kenosha County, IL–WI .............................................................................................................................. 1.0603
Lake County, IL.
Kenosha County, WI.
29420 ........ Lake Havasu City-Kingman, AZ ....................................................................................................................................... 0.9333
Mohave County, AZ.
29460 ........ Lakeland, FL ..................................................................................................................................................................... 0.8661
Polk County, FL.
29540 ........ Lancaster, PA ................................................................................................................................................................... 0.9252
Lancaster County, PA.
29620 ........ Lansing-East Lansing, MI ................................................................................................................................................. 1.0119
Clinton County, MI.
Eaton County, MI.
Ingham County, MI.
29700 ........ Laredo, TX ........................................................................................................................................................................ 0.8093
Webb County, TX.
29740 ........ Las Cruces, NM ............................................................................................................................................................... 0.8676
Dona Ana County, NM.
rwilkins on PROD1PC63 with PROPOSALS2

29820 ........ Las Vegas-Paradise, NV .................................................................................................................................................. 1.1799


Clark County, NV.
29940 ........ Lawrence, KS ................................................................................................................................................................... 0.8227
Douglas County, KS.
30020 ........ Lawton, OK ....................................................................................................................................................................... 0.8025
Comanche County, OK.
30140 ........ Lebanon, PA ..................................................................................................................................................................... 0.8192

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5397

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Lebanon County, PA.


30300 ........ Lewiston, ID–WA .............................................................................................................................................................. 0.9454
Nez Perce County, ID.
Asotin County, WA.
30340 ........ Lewiston-Auburn, ME ....................................................................................................................................................... 0.9193
Androscoggin County, ME.
30460 ........ Lexington-Fayette, KY ...................................................................................................................................................... 0.9191
Bourbon County, KY.
Clark County, KY.
Fayette County, KY.
Jessamine County, KY.
Scott County, KY.
Woodford County, KY.
30620 ........ Lima, OH .......................................................................................................................................................................... 0.9424
Allen County, OH.
30700 ........ Lincoln, NE ....................................................................................................................................................................... 1.0051
Lancaster County, NE.
Seward County, NE.
30780 ........ Little Rock-North Little Rock-Conway, AR ....................................................................................................................... 0.8863
Faulkner County, AR.
Grant County, AR.
Lonoke County, AR.
Perry County, AR.
Pulaski County, AR.
Saline County, AR.
30860 ........ Logan, UT–ID ................................................................................................................................................................... 0.9183
Franklin County, ID.
Cache County, UT.
30980 ........ Longview, TX .................................................................................................................................................................... 0.8717
Gregg County, TX.
Rusk County, TX.
Upshur County, TX.
31020 ........ Longview, WA .................................................................................................................................................................. 1.0827
Cowlitz County, WA.
31084 ........ Los Angeles-Long Beach-Glendale, CA .......................................................................................................................... 1.1771
Los Angeles County, CA.
31140 ........ Louisville-Jefferson County, KY–IN .................................................................................................................................. 0.9065
Clark County, IN.
Floyd County, IN.
Harrison County, IN.
Washington County, IN.
Bullitt County, KY.
Henry County, KY.
Jefferson County, KY.
Meade County, KY.
Nelson County, KY.
Oldham County, KY.
Shelby County, KY.
Spencer County, KY.
Trimble County, KY.
31180 ........ Lubbock, TX ..................................................................................................................................................................... 0.8680
Crosby County, TX.
Lubbock County, TX.
31340 ........ Lynchburg, VA .................................................................................................................................................................. 0.8732
Amherst County, VA.
Appomattox County, VA.
Bedford County, VA.
Campbell County, VA.
Bedford City, VA.
Lynchburg City, VA.
31420 ........ Macon, GA ....................................................................................................................................................................... 0.9541
Bibb County, GA.
Crawford County, GA.
rwilkins on PROD1PC63 with PROPOSALS2

Jones County, GA.


Monroe County, GA.
Twiggs County, GA.
31460 ........ Madera, CA ...................................................................................................................................................................... 0.8069
Madera County, CA.
31540 ........ Madison, WI ..................................................................................................................................................................... 1.0935
Columbia County, WI.

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5398 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Dane County, WI.


Iowa County, WI.
31700 ........ Manchester-Nashua, NH .................................................................................................................................................. 1.0273
Hillsborough County, NH.
31900 ........ Mansfield, OH ................................................................................................................................................................... 0.9271
Richland County, OH.
32420 ........ Mayagüez, PR .................................................................................................................................................................. 0.3711
Hormigueros Municipio, PR.
Mayagüez Municipio, PR.
32580 ........ McAllen-Edinburg-Mission, TX ......................................................................................................................................... 0.9123
Hidalgo County, TX.
32780 ........ Medford, OR ..................................................................................................................................................................... 1.0318
Jackson County, OR.
32820 ........ Memphis, TN–MS–AR ...................................................................................................................................................... 0.9250
Crittenden County, AR.
DeSoto County, MS.
Marshall County, MS.
Tate County, MS.
Tunica County, MS.
Fayette County, TN.
Shelby County, TN.
Tipton County, TN.
32900 ........ Merced, CA ...................................................................................................................................................................... 1.2120
Merced County, CA.
33124 ........ Miami-Miami Beach-Kendall, FL ...................................................................................................................................... 1.0002
Miami-Dade County, FL.
33140 ........ Michigan City-La Porte, IN ............................................................................................................................................... 0.8914
LaPorte County, IN.
33260 ........ Midland, TX ...................................................................................................................................................................... 1.0017
Midland County, TX.
33340 ........ Milwaukee-Waukesha-West Allis, WI ............................................................................................................................... 1.0214
Milwaukee County, WI.
Ozaukee County, WI.
Washington County, WI.
Waukesha County, WI.
33460 ........ Minneapolis-St. Paul-Bloomington, MN–WI ..................................................................................................................... 1.1093
Anoka County, MN.
Carver County, MN.
Chisago County, MN.
Dakota County, MN.
Hennepin County, MN.
Isanti County, MN.
Ramsey County, MN.
Scott County, MN.
Sherburne County, MN.
Washington County, MN.
Wright County, MN.
Pierce County, WI.
St. Croix County, WI.
33540 ........ Missoula, MT .................................................................................................................................................................... 0.8953
Missoula County, MT.
33660 ........ Mobile, AL ........................................................................................................................................................................ 0.8033
Mobile County, AL.
33700 ........ Modesto, CA ..................................................................................................................................................................... 1.1962
Stanislaus County, CA.
33740 ........ Monroe, LA ....................................................................................................................................................................... 0.7832
Ouachita Parish, LA.
Union Parish, LA.
33780 ........ Monroe, MI ....................................................................................................................................................................... 0.9414
Monroe County, MI.
33860 ........ Montgomery, AL ............................................................................................................................................................... 0.8088
Autauga County, AL.
Elmore County, AL.
rwilkins on PROD1PC63 with PROPOSALS2

Lowndes County, AL.


Montgomery County, AL.
34060 ........ Morgantown, WV .............................................................................................................................................................. 0.8321
Monongalia County, WV.
Preston County, WV.
34100 ........ Morristown, TN ................................................................................................................................................................. 0.7388
Grainger County, TN.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5399

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Hamblen County, TN.


Jefferson County, TN.
34580 ........ Mount Vernon-Anacortes, WA ......................................................................................................................................... 1.0529
Skagit County, WA.
34620 ........ Muncie, IN ........................................................................................................................................................................ 0.8214
Delaware County, IN.
34740 ........ Muskegon-Norton Shores, MI .......................................................................................................................................... 0.9836
Muskegon County, MI.
34820 ........ Myrtle Beach-Conway-North Myrtle Beach, SC ............................................................................................................... 0.8634
Horry County, SC.
34900 ........ Napa, CA .......................................................................................................................................................................... 1.4476
Napa County, CA.
34940 ........ Naples-Marco Island, FL .................................................................................................................................................. 0.9487
Collier County, FL.
34980 ........ Nashville-Davidson-Murfreesboro-Franklin, TN ............................................................................................................... 0.9689
Cannon County, TN.
Cheatham County, TN.
Davidson County, TN.
Dickson County, TN.
Hickman County, TN.
Macon County, TN.
Robertson County, TN.
Rutherford County, TN.
Smith County, TN.
Sumner County, TN.
Trousdale County, TN.
Williamson County, TN.
Wilson County, TN.
35004 ........ Nassau-Suffolk, NY .......................................................................................................................................................... 1.2640
Nassau County, NY.
Suffolk County, NY.
35084 ........ Newark-Union, NJ–PA ..................................................................................................................................................... 1.1862
Essex County, NJ.
Hunterdon County, NJ.
Morris County, NJ.
Sussex County, NJ.
Union County, NJ.
Pike County, PA.
35300 ........ New Haven-Milford, CT .................................................................................................................................................... 1.1871
New Haven County, CT.
35380 ........ New Orleans-Metairie-Kenner, LA ................................................................................................................................... 0.8897
Jefferson Parish, LA.
Orleans Parish, LA.
Plaquemines Parish, LA.
St. Bernard Parish, LA.
St. Charles Parish, LA.
St. John the Baptist Parish, LA.
St. Tammany Parish, LA.
35644 ........ New York-White Plains-Wayne, NY–NJ .......................................................................................................................... 1.3115
Bergen County, NJ.
Hudson County, NJ.
Passaic County, NJ.
Bronx County, NY.
Kings County, NY.
New York County, NY.
Putnam County, NY.
Queens County, NY.
Richmond County, NY.
Rockland County, NY.
Westchester County, NY.
35660 ........ Niles-Benton Harbor, MI ................................................................................................................................................... 0.9141
Berrien County, MI.
35980 ........ Norwich-New London, CT ................................................................................................................................................ 1.1432
rwilkins on PROD1PC63 with PROPOSALS2

New London County, CT.


36084 ........ Oakland-Fremont-Hayward, CA ....................................................................................................................................... 1.5685
Alameda County, CA.
Contra Costa County, CA.
36100 ........ Ocala, FL .......................................................................................................................................................................... 0.8627
Marion County, FL.
36140 ........ Ocean City, NJ ................................................................................................................................................................. 1.0988

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5400 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Cape May County, NJ.


36220 ........ Odessa, TX ...................................................................................................................................................................... 1.0042
Ector County, TX.
36260 ........ Ogden-Clearfield, UT ....................................................................................................................................................... 0.9000
Davis County, UT.
Morgan County, UT.
Weber County, UT.
36420 ........ Oklahoma City, OK .......................................................................................................................................................... 0.8815
Canadian County, OK.
Cleveland County, OK.
Grady County, OK.
Lincoln County, OK.
Logan County, OK.
McClain County, OK.
Oklahoma County, OK.
36500 ........ Olympia, WA .................................................................................................................................................................... 1.1512
Thurston County, WA.
36540 ........ Omaha-Council Bluffs, NE–IA .......................................................................................................................................... 0.9561
Harrison County, IA.
Mills County, IA.
Pottawattamie County, IA.
Cass County, NE.
Douglas County, NE.
Sarpy County, NE.
Saunders County, NE.
Washington County, NE.
36740 ........ Orlando-Kissimmee, FL .................................................................................................................................................... 0.9226
Lake County, FL.
Orange County, FL.
Osceola County, FL.
Seminole County, FL.
36780 ........ Oshkosh-Neenah, WI ....................................................................................................................................................... 0.9551
Winnebago County, WI.
36980 ........ Owensboro, KY ................................................................................................................................................................ 0.8652
Daviess County, KY.
Hancock County, KY.
McLean County, KY.
37100 ........ Oxnard-Thousand Oaks-Ventura, CA .............................................................................................................................. 1.1852
Ventura County, CA.
37340 ........ Palm Bay-Melbourne-Titusville, FL .................................................................................................................................. 0.9325
Brevard County, FL.
37380 ........ Palm Coast, FL ................................................................................................................................................................ 0.8945
Flager County, FL.
37460 ........ Panama City-Lynn Haven, FL .......................................................................................................................................... 0.8313
Bay County, FL.
37620 ........ Parkersburg-Marietta-Vienna, WV–OH ............................................................................................................................ 0.8105
Washington County, OH.
Pleasants County, WV.
Wirt County, WV.
Wood County, WV.
37700 ........ Pascagoula, MS ............................................................................................................................................................... 0.8647
George County, MS.
Jackson County, MS.
37764 ........ Peabody, MA .................................................................................................................................................................... 1.0650
Essex County, MA.
37860 ........ Pensacola-Ferry Pass-Brent, FL ...................................................................................................................................... 0.8281
Escambia County, FL.
Santa Rosa County, FL.
37900 ........ Peoria, IL .......................................................................................................................................................................... 0.9299
Marshall County, IL.
Peoria County, IL.
Stark County, IL.
Tazewell County, IL.
rwilkins on PROD1PC63 with PROPOSALS2

Woodford County, IL.


37964 ........ Philadelphia, PA ............................................................................................................................................................... 1.0925
Bucks County, PA.
Chester County, PA.
Delaware County, PA.
Montgomery County, PA.
Philadelphia County, PA.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5401

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

38060 ........ Phoenix-Mesa-Scottsdale, AZ .......................................................................................................................................... 1.0264


Maricopa County, AZ.
Pinal County, AZ.
38220 ........ Pine Bluff, AR ................................................................................................................................................................... 0.7839
Cleveland County, AR.
Jefferson County, AR.
Lincoln County, AR.
38300 ........ Pittsburgh, PA .................................................................................................................................................................. 0.8525
Allegheny County, PA.
Armstrong County, PA.
Beaver County, PA.
Butler County, PA.
Fayette County, PA.
Washington County, PA.
Westmoreland County, PA.
38340 ........ Pittsfield, MA .................................................................................................................................................................... 1.0091
Berkshire County, MA.
38540 ........ Pocatello, ID ..................................................................................................................................................................... 0.9465
Bannock County, ID.
Power County, ID.
38660 ........ Ponce, PR ........................................................................................................................................................................ 0.4450
Juana Dı́az Municipio, PR.
Ponce Municipio, PR.
Villalba Municipio, PR.
38860 ........ Portland-South Portland-Biddeford, ME ........................................................................................................................... 1.0042
Cumberland County, ME.
Sagadahoc County, ME.
York County, ME.
38900 ........ Portland-Vancouver-Beaverton, OR–WA ......................................................................................................................... 1.1498
Clackamas County, OR.
Columbia County, OR.
Multnomah County, OR.
Washington County, OR.
Yamhill County, OR.
Clark County, WA.
Skamania County, WA.
38940 ........ Port St. Lucie, FL ............................................................................................................................................................. 1.0016
Martin County, FL.
St. Lucie County, FL.
39100 ........ Poughkeepsie-Newburgh-Middletown, NY ....................................................................................................................... 1.0982
Dutchess County, NY.
Orange County, NY.
39140 ........ Prescott, AZ ...................................................................................................................................................................... 1.0020
Yavapai County, AZ.
39300 ........ Providence-New Bedford-Fall River, RI–MA .................................................................................................................... 1.0574
Bristol County, MA.
Bristol County, RI.
Kent County, RI.
Newport County, RI.
Providence County, RI.
Washington County, RI.
39340 ........ Provo-Orem, UT ............................................................................................................................................................... 0.9557
Juab County, UT.
Utah County, UT.
39380 ........ Pueblo, CO ....................................................................................................................................................................... 0.8851
Pueblo County, CO.
39460 ........ Punta Gorda, FL ............................................................................................................................................................... 0.9254
Charlotte County, FL.
39540 ........ Racine, WI ........................................................................................................................................................................ 0.9498
Racine County, WI.
39580 ........ Raleigh-Cary, NC ............................................................................................................................................................. 0.9839
Franklin County, NC.
Johnston County, NC.
rwilkins on PROD1PC63 with PROPOSALS2

Wake County, NC.


39660 ........ Rapid City, SD .................................................................................................................................................................. 0.8811
Meade County, SD.
Pennington County, SD.
39740 ........ Reading, PA ..................................................................................................................................................................... 0.9356
Berks County, PA.
39820 ........ Redding, CA ..................................................................................................................................................................... 1.3541

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5402 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Shasta County, CA.


39900 ........ Reno-Sparks, NV ............................................................................................................................................................. 1.0715
Storey County, NV.
Washoe County, NV.
40060 ........ Richmond, VA .................................................................................................................................................................. 0.9425
Amelia County, VA.
Caroline County, VA.
Charles City County, VA.
Chesterfield County, VA.
Cumberland County, VA.
Dinwiddie County, VA.
Goochland County, VA.
Hanover County, VA.
Henrico County, VA.
King and Queen County, VA.
King William County, VA.
Louisa County, VA.
New Kent County, VA.
Powhatan County, VA.
Prince George County, VA.
Sussex County, VA.
Colonial Heights City, VA.
Hopewell City, VA.
Petersburg City, VA.
Richmond City, VA.
40140 ........ Riverside-San Bernardino-Ontario, CA ............................................................................................................................ 1.1100
Riverside County, CA.
San Bernardino County, CA.
40220 ........ Roanoke, VA .................................................................................................................................................................... 0.8691
Botetourt County, VA.
Craig County, VA.
Franklin County, VA.
Roanoke County, VA.
Roanoke City, VA.
Salem City, VA.
40340 ........ Rochester, MN ................................................................................................................................................................. 1.0755
Dodge County, MN.
Olmsted County, MN.
Wabasha County, MN.
40380 ........ Rochester, NY .................................................................................................................................................................. 0.8858
Livingston County, NY.
Monroe County, NY.
Ontario County, NY.
Orleans County, NY.
Wayne County, NY.
40420 ........ Rockford, IL ...................................................................................................................................................................... 0.9814
Boone County, IL.
Winnebago County, IL.
40484 ........ Rockingham County-Strafford County, NH ...................................................................................................................... 1.0111
Rockingham County, NH.
Strafford County, NH.
40580 ........ Rocky Mount, NC ............................................................................................................................................................. 0.9001
Edgecombe County, NC.
Nash County, NC.
40660 ........ Rome, GA ......................................................................................................................................................................... 0.9042
Floyd County, GA.
40900 ........ Sacramento–Arden-Arcade–Roseville, CA ...................................................................................................................... 1.3505
El Dorado County, CA.
Placer County, CA.
Sacramento County, CA.
Yolo County, CA.
40980 ........ Saginaw-Saginaw Township North, MI ............................................................................................................................ 0.8812
Saginaw County, MI.
rwilkins on PROD1PC63 with PROPOSALS2

41060 ........ St. Cloud, MN ................................................................................................................................................................... 1.0549


Benton County, MN.
Stearns County, MN.
41100 ........ St. George, UT ................................................................................................................................................................. 0.9358
Washington County, UT.
41140 ........ St. Joseph, MO–KS .......................................................................................................................................................... 0.8762
Doniphan County, KS.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5403

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Andrew County, MO.


Buchanan County, MO.
DeKalb County, MO.
41180 ........ St. Louis, MO–IL .............................................................................................................................................................. 0.9024
Bond County, IL.
Calhoun County, IL.
Clinton County, IL.
Jersey County, IL.
Macoupin County, IL.
Madison County, IL.
Monroe County, IL.
St. Clair County, IL.
Crawford County, MO.
Franklin County, MO.
Jefferson County, MO.
Lincoln County, MO.
St. Charles County, MO.
St. Louis County, MO.
Warren County, MO.
Washington County, MO.
St. Louis City, MO.
41420 ........ Salem, OR ........................................................................................................................................................................ 1.0572
Marion County, OR.
Polk County, OR.
41500 ........ Salinas, CA ....................................................................................................................................................................... 1.4775
Monterey County, CA.
41540 ........ Salisbury, MD ................................................................................................................................................................... 0.8994
Somerset County, MD.
Wicomico County, MD.
41620 ........ Salt Lake City, UT ............................................................................................................................................................ 0.9399
Salt Lake County, UT.
Summit County, UT.
Tooele County, UT.
41660 ........ San Angelo, TX ................................................................................................................................................................ 0.8579
Irion County, TX.
Tom Green County, TX.
41700 ........ San Antonio, TX ............................................................................................................................................................... 0.8834
Atascosa County, TX.
Bandera County, TX.
Bexar County, TX.
Comal County, TX.
Guadalupe County, TX.
Kendall County, TX.
Medina County, TX.
Wilson County, TX.
41740 ........ San Diego-Carlsbad-San Marcos, CA ............................................................................................................................. 1.1492
San Diego County, CA.
41780 ........ Sandusky, OH .................................................................................................................................................................. 0.8822
Erie County, OH.
41884 ........ San Francisco-San Mateo-Redwood City, CA ................................................................................................................. 1.5195
Marin County, CA.
San Francisco County, CA.
San Mateo County, CA.
41900 ........ San Germán-Cabo Rojo, PR ........................................................................................................................................... 0.4729
Cabo Rojo Municipio, PR.
Lajas Municipio, PR.
Sabana Grande Municipio, PR.
San Germán Municipio, PR.
41940 ........ San Jose-Sunnyvale-Santa Clara, CA ............................................................................................................................. 1.5735
San Benito County, CA.
Santa Clara County, CA.
41980 ........ San Juan-Caguas-Guaynabo, PR .................................................................................................................................... 0.4528
Aguas Buenas Municipio, PR.
rwilkins on PROD1PC63 with PROPOSALS2

Aibonito Municipio, PR.


Arecibo Municipio, PR.
Barceloneta Municipio, PR.
Barranquitas Municipio, PR.
Bayamón Municipio, PR.
Caguas Municipio, PR.
Camuy Municipio, PR.

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5404 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Canóvanas Municipio, PR.


Carolina Municipio, PR.
Cataño Municipio, PR.
Cayey Municipio, PR.
Ciales Municipio, PR.
Cidra Municipio, PR.
Comerı́o Municipio, PR.
Corozal Municipio, PR.
Dorado Municipio, PR.
Florida Municipio, PR.
Guaynabo Municipio, PR.
Gurabo Municipio, PR.
Hatillo Municipio, PR.
Humacao Municipio, PR.
Juncos Municipio, PR.
Las Piedras Municipio, PR.
Loı́za Municipio, PR.
Manatı́ Municipio, PR.
Maunabo Municipio, PR.
Morovis Municipio, PR.
Naguabo Municipio, PR.
Naranjito Municipio, PR.
Orocovis Municipio, PR.
Quebradillas Municipio, PR.
Rı́o Grande Municipio, PR.
San Juan Municipio, PR.
San Lorenzo Municipio, PR.
Toa Alta Municipio, PR.
Toa Baja Municipio, PR.
Trujillo Alto Municipio, PR.
Vega Alta Municipio, PR.
Vega Baja Municipio, PR.
Yabucoa Municipio, PR.
42020 ........ San Luis Obispo-Paso Robles, CA .................................................................................................................................. 1.2488
San Luis Obispo County, CA.
42044 ........ Santa Ana-Anaheim-Irvine, CA ........................................................................................................................................ 1.1766
Orange County, CA.
42060 ........ Santa Barbara-Santa Maria-Goleta, CA .......................................................................................................................... 1.1714
Santa Barbara County, CA.
42100 ........ Santa Cruz-Watsonville, CA ............................................................................................................................................. 1.6122
Santa Cruz County, CA.
42140 ........ Santa Fe, NM ................................................................................................................................................................... 1.0734
Santa Fe County, NM.
42220 ........ Santa Rosa-Petaluma, CA ............................................................................................................................................... 1.4696
Sonoma County, CA.
42260 ........ Sarasota-Bradenton-Venice, FL ....................................................................................................................................... 0.9933
Manatee County, FL.
Sarasota County, FL.
42340 ........ Savannah, GA .................................................................................................................................................................. 0.9131
Bryan County, GA.
Chatham County, GA.
Effingham County, GA.
42540 ........ Scranton–Wilkes-Barre, PA .............................................................................................................................................. 0.8457
Lackawanna County, PA.
Luzerne County, PA.
Wyoming County, PA.
42644 ........ Seattle-Bellevue-Everett, WA ........................................................................................................................................... 1.1572
King County, WA.
Snohomish County, WA.
42680 ........ Sebastian-Vero Beach, FL ............................................................................................................................................... 0.9412
Indian River County, FL.
43100 ........ Sheboygan, WI ................................................................................................................................................................. 0.8975
Sheboygan County, WI.
rwilkins on PROD1PC63 with PROPOSALS2

43300 ........ Sherman-Denison, TX ...................................................................................................................................................... 0.8320


Grayson County, TX.
43340 ........ Shreveport-Bossier City, LA ............................................................................................................................................. 0.8476
Bossier Parish, LA.
Caddo Parish, LA.
De Soto Parish, LA.
43580 ........ Sioux City, IA–NE–SD ...................................................................................................................................................... 0.9251

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5405

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Woodbury County, IA.


Dakota County, NE.
Dixon County, NE.
Union County, SD.
43620 ........ Sioux Falls, SD ................................................................................................................................................................. 0.9563
Lincoln County, SD.
McCook County, SD.
Minnehaha County, SD.
Turner County, SD.
43780 ........ South Bend-Mishawaka, IN–MI ........................................................................................................................................ 0.9617
St. Joseph County, IN.
Cass County, MI.
43900 ........ Spartanburg, SC ............................................................................................................................................................... 0.9422
Spartanburg County, SC.
44060 ........ Spokane, WA ................................................................................................................................................................... 1.0455
Spokane County, WA.
44100 ........ Springfield, IL ................................................................................................................................................................... 0.8944
Menard County, IL.
Sangamon County, IL.
44140 ........ Springfield, MA ................................................................................................................................................................. 1.0366
Franklin County, MA.
Hampden County, MA.
Hampshire County, MA.
44180 ........ Springfield, MO ................................................................................................................................................................. 0.8695
Christian County, MO.
Dallas County, MO.
Greene County, MO.
Polk County, MO.
Webster County, MO.
44220 ........ Springfield, OH ................................................................................................................................................................. 0.8694
Clark County, OH.
44300 ........ State College, PA ............................................................................................................................................................. 0.8768
Centre County, PA.
44700 ........ Stockton, CA .................................................................................................................................................................... 1.1855
San Joaquin County, CA.
44940 ........ Sumter, SC ....................................................................................................................................................................... 0.8599
Sumter County, SC.
45060 ........ Syracuse, NY ................................................................................................................................................................... 0.9910
Madison County, NY.
Onondaga County, NY.
Oswego County, NY.
45104 ........ Tacoma, WA ..................................................................................................................................................................... 1.1055
Pierce County, WA.
45220 ........ Tallahassee, FL ................................................................................................................................................................ 0.9025
Gadsden County, FL.
Jefferson County, FL.
Leon County, FL.
Wakulla County, FL.
45300 ........ Tampa-St. Petersburg-Clearwater, FL ............................................................................................................................. 0.9020
Hernando County, FL.
Hillsborough County, FL.
Pasco County, FL.
Pinellas County, FL.
45460 ........ Terre Haute, IN ................................................................................................................................................................ 0.8805
Clay County, IN.
Sullivan County, IN.
Vermillion County, IN.
Vigo County, IN.
45500 ........ Texarkana, TX-Texarkana, AR ........................................................................................................................................ 0.7770
Miller County, AR.
Bowie County, TX.
45780 ........ Toledo, OH ....................................................................................................................................................................... 0.9431
Fulton County, OH.
rwilkins on PROD1PC63 with PROPOSALS2

Lucas County, OH.


Ottawa County, OH.
Wood County, OH.
45820 ........ Topeka, KS ....................................................................................................................................................................... 0.8538
Jackson County, KS.
Jefferson County, KS.
Osage County, KS.

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5406 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Shawnee County, KS.


Wabaunsee County, KS.
45940 ........ Trenton-Ewing, NJ ............................................................................................................................................................ 1.0699
Mercer County, NJ.
46060 ........ Tucson, AZ ....................................................................................................................................................................... 0.9245
Pima County, AZ.
46140 ........ Tulsa, OK ......................................................................................................................................................................... 0.8340
Creek County, OK.
Okmulgee County, OK.
Osage County, OK.
Pawnee County, OK.
Rogers County, OK.
Tulsa County, OK.
Wagoner County, OK.
46220 ........ Tuscaloosa, AL ................................................................................................................................................................. 0.8303
Greene County, AL.
Hale County, AL.
Tuscaloosa County, AL.
46340 ........ Tyler, TX ........................................................................................................................................................................... 0.9114
Smith County, TX.
46540 ........ Utica-Rome, NY ............................................................................................................................................................... 0.8486
Herkimer County, NY.
Oneida County, NY.
46660 ........ Valdosta, GA .................................................................................................................................................................... 0.8098
Brooks County, GA.
Echols County, GA.
Lanier County, GA.
Lowndes County, GA.
46700 ........ Vallejo-Fairfield, CA .......................................................................................................................................................... 1.4666
Solano County, CA.
47020 ........ Victoria, TX ....................................................................................................................................................................... 0.8302
Calhoun County, TX.
Goliad County, TX.
Victoria County, TX.
47220 ........ Vineland-Millville-Bridgeton, NJ ........................................................................................................................................ 1.0133
Cumberland County, NJ.
47260 ........ Virginia Beach-Norfolk-Newport News, VA–NC ............................................................................................................... 0.8818
Currituck County, NC.
Gloucester County, VA.
Isle of Wight County, VA.
James City County, VA.
Mathews County, VA.
Surry County, VA.
York County, VA.
Chesapeake City, VA.
Hampton City, VA.
Newport News City, VA.
Norfolk City, VA.
Poquoson City, VA.
Portsmouth City, VA.
Suffolk City, VA.
Virginia Beach City, VA.
Williamsburg City, VA.
47300 ........ Visalia-Porterville, CA ....................................................................................................................................................... 1.0091
Tulare County, CA.
47380 ........ Waco, TX .......................................................................................................................................................................... 0.8518
McLennan County, TX.
47580 ........ Warner Robins, GA .......................................................................................................................................................... 0.9128
Houston County, GA.
47644 ........ Warren-Troy-Farmington Hills, MI .................................................................................................................................... 1.0001
Lapeer County, MI.
Livingston County, MI.
Macomb County, MI.
rwilkins on PROD1PC63 with PROPOSALS2

Oakland County, MI.


St. Clair County, MI.
47894 ........ Washington-Arlington-Alexandria, DC–VA–MD–WV ....................................................................................................... 1.0855
District of Columbia, DC.
Calvert County, MD.
Charles County, MD.
Prince George’s County, MD.

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Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5407

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Arlington County, VA.


Clarke County, VA.
Fairfax County, VA.
Fauquier County, VA.
Loudoun County, VA.
Prince William County, VA.
Spotsylvania County, VA.
Stafford County, VA.
Warren County, VA.
Alexandria City, VA.
Fairfax City, VA.
Falls Church City, VA.
Fredericksburg City, VA.
Manassas City, VA.
Manassas Park City, VA.
Jefferson County, WV.
47940 ........ Waterloo-Cedar Falls, IA .................................................................................................................................................. 0.8519
Black Hawk County, IA.
Bremer County, IA.
Grundy County, IA.
48140 ........ Wausau, WI ...................................................................................................................................................................... 0.9679
Marathon County, WI.
48260 ........ Weirton-Steubenville, WV–OH ......................................................................................................................................... 0.7924
Jefferson County, OH.
Brooke County, WV.
Hancock County, WV.
48300 ........ Wenatchee, WA ............................................................................................................................................................... 1.1469
Chelan County, WA.
Douglas County, WA.
48424 ........ West Palm Beach-Boca Raton-Boynton Beach, FL ........................................................................................................ 0.9728
Palm Beach County, FL.
48540 ........ Wheeling, WV–OH ........................................................................................................................................................... 0.6961
Belmont County, OH.
Marshall County, WV.
Ohio County, WV.
48620 ........ Wichita, KS ....................................................................................................................................................................... 0.9062
Butler County, KS.
Harvey County, KS.
Sedgwick County, KS.
Sumner County, KS.
48660 ........ Wichita Falls, TX .............................................................................................................................................................. 0.7920
Archer County, TX.
Clay County, TX.
Wichita County, TX.
48700 ........ Williamsport, PA ............................................................................................................................................................... 0.8043
Lycoming County, PA.
48864 ........ Wilmington, DE–MD–NJ ................................................................................................................................................... 1.0824
New Castle County, DE.
Cecil County, MD.
Salem County, NJ.
48900 ........ Wilmington, NC ................................................................................................................................................................ 0.9410
Brunswick County, NC.
New Hanover County, NC.
Pender County, NC.
49020 ........ Winchester, VA–WV ......................................................................................................................................................... 0.9913
Frederick County, VA.
Winchester City, VA.
Hampshire County, WV.
49180 ........ Winston-Salem, NC .......................................................................................................................................................... 0.9118
Davie County, NC.
Forsyth County, NC.
Stokes County, NC.
Yadkin County, NC.
rwilkins on PROD1PC63 with PROPOSALS2

49340 ........ Worcester, MA .................................................................................................................................................................. 1.1287


Worcester County, MA.
49420 ........ Yakima, WA ...................................................................................................................................................................... 1.0267
Yakima County, WA.
49500 ........ Yauco, PR ........................................................................................................................................................................ 0.3284
Guánica Municipio, PR.
Guayanilla Municipio, PR.

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5408 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules

TABLE 1.—PROPOSED LONG-TERM CARE HOSPITAL WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING
FROM JULY 1, 2008 THROUGH SEPTEMBER 30, 2009—Continued
Proposed
CBSA code Urban area (constituent counties) wage index

Peñuelas Municipio, PR.


Yauco Municipio, PR.
49620 ........ York-Hanover, PA ............................................................................................................................................................ 0.9359
York County, PA.
49660 ........ Youngstown-Warren-Boardman, OH–PA ......................................................................................................................... 0.9002
Mahoning County, OH.
Trumbull County, OH.
Mercer County, PA.
49700 ........ Yuba City, CA ................................................................................................................................................................... 1.0756
Sutter County, CA.
Yuba County, CA.
49740 ........ Yuma, AZ ......................................................................................................................................................................... 0.9488
Yuma County, AZ.

TABLE 2.—PROPOSED LONG-TERM TABLE 2.—PROPOSED LONG-TERM TABLE 2.—PROPOSED LONG-TERM


CARE HOSPITAL WAGE INDEX FOR CARE HOSPITAL WAGE INDEX FOR CARE HOSPITAL WAGE INDEX FOR
RURAL AREAS FOR DISCHARGES RURAL AREAS FOR DISCHARGES RURAL AREAS FOR DISCHARGES
OCCURRING FROM JULY 1, 2008 OCCURRING FROM JULY 1, 2008 OCCURRING FROM JULY 1, 2008
THROUGH SEPTEMBER 30, 2009 THROUGH SEPTEMBER 30, 2009— THROUGH SEPTEMBER 30, 2009—
Continued Continued
Proposed
CBSA Nonurban area wage Proposed Proposed
code CBSA CBSA
index Nonurban area wage Nonurban area wage
code code
index index
01 ....... Alabama ....................... 0.7533
02 ....... Alaska .......................... 1.2109 21 ....... Maryland ...................... 0.9034 38 ....... Oregon ......................... 0.9906
03 ....... Arizona ......................... 0.8479 22 ....... Massachusetts ............. 1.1589 39 ....... Pennsylvania ................ 0.8385
04 ....... Arkansas ...................... 0.7371 23 ....... Michigan ....................... 0.8953 41 ....... Rhode Island * .............. ................
05 ....... California ...................... 1.2023 24 ....... Minnesota .................... 0.9079 42 ....... South Carolina ............. 0.8656
06 ....... Colorado ...................... 0.9704
25 ....... Mississippi .................... 0.7700 43 ....... South Dakota ............... 0.8549
07 ....... Connecticut .................. 1.1119
08 ....... Delaware ...................... 0.9727 26 ....... Missouri ........................ 0.7930 44 ....... Tennessee ................... 0.7723
10 ....... Florida .......................... 0.8465 27 ....... Montana ....................... 0.8379 45 ....... Texas ........................... 0.7968
11 ....... Georgia ........................ 0.7659 28 ....... Nebraska ...................... 0.8849 46 ....... Utah ............................. 0.8116
12 ....... Hawaii .......................... 1.0612 29 ....... Nevada ......................... 0.9272 47 ....... Vermont ....................... 0.9919
13 ....... Idaho ............................ 0.7920 30 ....... New Hampshire ........... 1.0470 49 ....... Virginia ......................... 0.7896
14 ....... Illinois ........................... 0.8335 31 ....... New Jersey * ................ ................ 50 ....... Washington .................. 1.0259
15 ....... Indiana ......................... 0.8576 32 ....... New Mexico ................. 0.8940 51 ....... West Virginia ................ 0.7454
16 ....... Iowa ............................. 0.8566 33 ....... New York ..................... 0.8268 52 ....... Wisconsin ..................... 0.9667
17 ....... Kansas ......................... 0.7981 34 ....... North Carolina .............. 0.8603
53 ....... Wyoming ...................... 0.9287
18 ....... Kentucky ...................... 0.7793 35 ....... North Dakota ................ 0.7182
19 ....... Louisiana ...................... 0.7373 36 ....... Ohio ............................. 0.8714 * All counties within the State are classified
20 ....... Maine ........................... 0.8476 37 ....... Oklahoma ..................... 0.7492 as urban.

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY
OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD
Geometric Short stay IPPS com-
MS–LTC– Relative average
MS–DRG title outlier parable
DRG weight 1 length of threshold 2 threshold 3
stay

001 ........... Heart transplant or implant of heart assist system w MCC ...................... 0.0000 0.0 0.0 0.0
002 ........... Heart transplant or implant of heart assist system w/o MCC ................... 0.0000 0.0 0.0 0.0
003 ........... ECMO or trach w MV 96+ hrs or PDX exc face, mouth & neck w maj 4.2380 64.3 53.6 53.6
O.R.
004 ........... Trach w MV 96+ hrs or PDX exc face, mouth & neck w/o maj O.R ........ 3.0249 46.7 38.9 38.9
005 ........... Liver transplant w MCC or intestinal transplant ........................................ 0.0000 0.0 0.0 0.0
006 ........... Liver transplant w/o MCC .......................................................................... 0.0000 0.0 0.0 0.0
007 ........... Lung transplant .......................................................................................... 0.0000 0.0 0.0 0.0
008 ........... Simultaneous pancreas/kidney transplant ................................................. 0.0000 0.0 0.0 0.0
rwilkins on PROD1PC63 with PROPOSALS2

009 ........... Bone marrow transplant ............................................................................ 1.1417 29.0 24.2 24.2
010 ........... Pancreas transplant ................................................................................... 1.1417 29.0 24.2 0.0
011 ........... Tracheostomy for face, mouth & neck diagnoses w MCC ....................... 1.5545 35.2 29.3 25.2
012 ........... Tracheostomy for face, mouth & neck diagnoses w CC .......................... 1.5545 35.2 29.3 16.7
013 ........... Tracheostomy for face, mouth & neck diagnoses w/o CC/MCC .............. 1.5545 35.2 29.3 11.2
020 ........... Intracranial vascular procedures w PDX hemorrhage w MCC ................. 1.5545 35.2 29.3 29.3
021 ........... Intracranial vascular procedures w PDX hemorrhage w CC .................... 0.5472 20.3 16.9 16.9

VerDate Aug<31>2005 17:36 Jan 28, 2008 Jkt 214001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 E:\FR\FM\29JAP2.SGM 29JAP2
Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Proposed Rules 5409

TABLE 3.—FY 2008 MS–LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, SHORT-STAY
OUTLIER THRESHOLD AND IPPS-COMPARABLE THRESHOLD—Continued
Geometric Short stay IPPS com-
MS–LTC– Relative average
MS–DRG title outlier parable
DRG weight 1 length of threshold 2 threshold 3
stay

022 ........... Intracranial vascular procedures w PDX hemorrhage w/o CC/MCC ........ 0.5472 20.3 16.9 16.1
023 ........... Cranio w major dev impl/acute complex CNS PDX w MCC or chemo 1.5545 35.2 29.3 22.2
implant.
024 ........... Cranio w major dev impl/acute complex CNS PDX w/o MCC .................. 0.5472 20.3 16.9 15.8
025 ........... Craniotomy & endovascular intracranial procedures w MCC ................... 1.5545 35.2 29.3 22.1
026 ........... Craniotomy & endovascular intracranial procedures w CC ...................... 1.5545 35.2 29.3 13.2
027 ........... Craniotomy & endovascular intracranial procedures w/o CC/MCC .......... 1.5545 35.2 29.3 7.5
028 ........... Spinal procedures w MCC ......................................................................... 1.1417 29.0 24.2 24.2
029 ........... Spinal procedures w CC or spinal neurostimulators ................................. 1.1417 29.0 24.2 12.4
030 ........... Spinal procedures w/o CC/MCC ............................................................... 0.5472 20.3 16.9 5.9
031 ........... Ventricular shunt procedures w MCC ....................................................... 1.5545 35.2 29.3 22.9
032 ........... Ventricular shunt procedures w CC .......................................................... 0.5472 20.3 16.9 9.4
033 ........... Ventricular shunt procedures w/o CC/MCC .............................................. 0.5472 20.3 16.9 4.7
034 ........... Carotid artery stent procedure w MCC ..................................................... 1.5545 35.2 29.3 12.5
035 ........... Carotid artery stent procedure w CC ........................................................ 1.1417 29.0 24.2 4.4
036 ........... Carotid artery stent procedure w/o CC/MCC ............................................ 1.1417 29.0 24.2 2.2
037 ........... Extracranial procedures w MCC ................................................................ 1.5545 35.2 29.3 14.9
038 ........... Extracranial procedures w CC ................................................................... 1.1417 29.0 24.2 5.8
039 ........... Extracranial procedures w/o CC/MCC ...................................................... 1.1417 29.0 24.2 2.6
040 ........... Periph/cranial nerve & other nerv syst proc w MCC ................................. 1.2704 36.2 30.2 22.7
041 ........... Periph/cranial nerve & other nerv syst proc w CC or periph neurostim ... 1.0810 34.3 28.6 12.3
042 ........... Periph/cranial nerve & other nerv syst proc w/o CC/MCC ....................... 0.7305 22.9 19.1 5.7
052 ........... Spinal disorders & injuries w CC/MCC ..................................................... 1.0629 32.3 26.9 10.7
053 ........... Spinal disorders & injuries w/o CC/MCC .................................................. 1.0629 32.3 26.9 6.4
054 ........... Nervous system neoplasms w MCC ......................................................... 0.7205 23.6 19.7 11.7
055 ........... Nervous system neoplasms w/o MCC ...................................................... 0.6779 22.0 18.3 8.1
056 ........... Degenerative nervous system disorders w MCC ...................................... 0.7407 26.4 22.0 12.3
057 ........... Degenerative nervous system disorders w/o MCC ................................... 0.6309 24.4 20.3 7.6
058 ........... Multiple sclerosis & cerebellar ataxia w MCC ........................................... 0.7305 22.9 19.1 12.5
059 ........... Multiple sclerosis & cerebellar ataxia w CC .............................................. 0.5595 22.6 18.8 8.0
060 ........... Multiple sclerosis & cerebellar ataxia w/o CC/MCC .................................. 0.5472 20.3 16.9 6.2
061 ........... Acute ischemic stroke w use of thrombolytic agent w MCC ..................... 0.7897 24.2 20.2 16.0
062 ........... Acute ischemic stroke w use of thrombolytic agent w CC ........................ 0.6563 22.7 18.9 9.6
063 ........... Acute ischemic stroke w use of thrombolytic agent w/o CC/MCC ........... 0.5472 20.3 16.9 6.8
064 ........... Intracranial hemorrhage or cerebral infarction w MCC ............................. 0.7746 25.1 20.9 12.7
065 ........... Intracranial hemorrhage or cerebral infarction w CC ................................ 0.6691 23.3 19.4 8.2
066 ........... Intracranial hemorrhage or cerebral infarction w/o CC/MCC .................... 0.5472 20.3 16.9 5.8
067 ........... Nonspecific cva & precerebral occlusion w/o infarct w MCC ................... 0.5472 20.3 16.9 10.1
068 ........... Nonspecific cva & precerebral occlusion w/o infarct w/o MCC ................ 0.5472 20.3 16.9 5.6
069 ........... Transient ischemia ..................................................................................... 0.5472 20.3 16.9 4.7
070 ........... Nonspecific cerebrovascular disorders w MCC ........................................ 0.7897 24.2 20.2 12.7
071 ........... Nonspecific cerebrovascular disorders w CC ........................................... 0.6563 22.7 18.9 8.8
072 ........... Nonspecific cerebrovascular disorders w/o CC/MCC ............................... 0.5472 20.3 16.9 5.8
073 ........... Cranial & peripheral nerve disorders w MCC ........................................... 0.7849 25.6 21.3 10.2
074 ........... Cranial & peripheral nerve disorders w/o MCC ........................................ 0.6260 23.4 19.5 6.9
075 ........... Viral meningitis w CC/MCC ....................................................................... 0.7305 22.9 19.1 12.1
076 ........... Viral meningitis w/o CC/MCC .................................................................... 0.5472 20.3 16.9 6.5
077 ........... Hypertensive encephalopathy w MCC .............................