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Presidential Documents
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Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws.
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Animal and Plant Health Inspection Service, USDA.
Interim rule and request for comments.
We are amending the Asian longhorned beetle regulations by adding portions of New York City, NY, and Hudson County, NJ, to the list of quarantined areas and restricting the interstate movement of regulated articles from these areas. We are also updating the list of regulated articles in order to reflect new information concerning host plants. These actions are necessary to prevent the artificial spread of the Asian longhorned beetle to noninfested areas of the United States.
This interim rule was effective May 13, 2003. We will consider all comments that we receive on or before July 18, 2003.
You may submit comments by postal mail/commercial delivery or by e-mail. If you use postal mail/commercial delivery, please send four copies of your comment (an original and three copies) to: Docket No. 03-018-1, Regulatory Analysis and Development, PPD, APHIS, Station 3C71, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. 03-018-1. If you use e-mail, address your comment to
You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 690-2817 before coming.
APHIS documents published in the
Mr. Michael B. Stefan, Director of Emergency Programs, Pest Detection and Management Programs, PPQ, APHIS, 4700 River Road Unit 134, Riverdale, MD 20737-1236; (301) 734-4387.
The Asian longhorned beetle (ALB) (
The ALB regulations in 7 CFR 301.51-1 through 301.51-9 (referred to below as the regulations) restrict the interstate movement of regulated articles from quarantined areas to prevent the artificial spread of ALB to noninfested areas of the United States. Portions of the State of Illinois and portions of New York City and Nassau and Suffolk Counties in the State of New York are already designated as quarantined areas.
Recent surveys conducted by inspectors of State, county, and city agencies and by inspectors of the Animal and Plant Health Inspection Service (APHIS) have revealed infestations of ALB in Hudson County, NJ. Additionally, surveys conducted in New York City, NY, have revealed that infestations of ALB have occurred outside the existing quarantined area. Officials of the U.S. Department of Agriculture and officials of State, county, and city agencies in New Jersey and New York are conducting intensive survey and eradication programs in the infested areas. Both New Jersey and New York have quarantined the infested areas and are restricting the intrastate movement of regulated articles from the quarantined areas to prevent the further spread of ALB within those States. However, Federal regulations are necessary to restrict the interstate movement of regulated articles from the quarantined areas to prevent the spread of ALB to other States and other countries.
The regulations in § 301.51-3(a) provide that the Administrator of APHIS will list as a quarantined area each State, or each portion of a State, where ALB has been found by an inspector, where the Administrator has reason to believe that ALB is present, or where the Administrator considers regulation necessary because of its inseparability for quarantine enforcement purposes from localities where ALB has been found.
Less than an entire State will be quarantined only if (1) the Administrator determines that the State has adopted and is enforcing restrictions on the intrastate movement of regulated
In accordance with these criteria and the recent ALB findings described above, we are amending the list of quarantined areas in § 301.51-3(c) to include a portion of Hudson County, NJ, and additional areas in New York City, NY. These quarantined areas are described in the rule portion of this document.
Section 301.51-2 of the regulations designates certain items as regulated articles. Regulated articles may not be moved interstate from quarantined areas except in accordance with the conditions specified in §§ 301.51-4 through 301.51-9 of the regulations. Regulated articles listed in § 301.51-2(a) have included green lumber and other material living, dead, cut, or fallen, inclusive of nursery stock, logs, stumps, roots, branches, and debris of half an inch or more in diameter of the following genera:
Based on additional survey experience and research, we are amending the list of regulated articles by removing
This rulemaking is necessary on an emergency basis to prevent the artificial spread of ALB to noninfested areas of the United States. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the
We will consider comments we receive during the comment period for this interim rule (
This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866.
This interim rule amends the ALB regulations by expanding the quarantined area in New York City, NY, and adding portions of Hudson County, NJ, to the list of quarantined areas. As a result of this action, the interstate movement of regulated articles from those areas is restricted.
The following analysis addresses the economic effects of the interim rule on small entities. The businesses potentially affected by this interim rule are nurseries, arborists, tree removal services, firewood dealers, garden centers, landscapers, recyclers of waste material, and lumber and building material outlets. The quarantined areas expanded or established by this interim rule encompass approximately 10 square miles (6 square miles in New York and 4 square miles in New Jersey). Within those areas, there is one potentially affected entity (a nursery). While the size of the entity is unknown, it is reasonable to assume that it would be classified as a small entity, based on the Small Business Administration's size standards.
Businesses could be affected by the regulations in two ways. First, if a business wishes to move regulated articles interstate from a quarantined area, that business must either: (1) Enter into a compliance agreement with APHIS for the inspection and certification of regulated articles to be moved interstate from the quarantined area; or (2) present its regulated articles for inspection by an inspector and obtain a certificate or a limited permit, issued by the inspector, for the interstate movement of regulated articles. The inspections may be inconvenient, but they should not be costly in most cases, even for businesses operating under a compliance agreement who would perform the inspections themselves. For those businesses that elect not to enter into a compliance agreement, APHIS would provide the services of the inspector without cost. There is also no cost for the compliance agreement, certificate, or limited permit for the interstate movement of regulated articles.
Second, there is a possibility that, upon inspection, a regulated article could be determined by the inspector to be potentially infested with ALB, and, as a result, the inspector would not be able to issue a certificate. In this case, the entity's ability to move regulated articles interstate would be restricted. However, the affected entity could conceivably obtain a limited permit under the conditions of § 301.51-5(b). Whether or not the affected entity would be denied certificates as a result of inspections of regulated articles is unknown. However, because it is located in a densely populated urban area, the nursery is more likely to be receiving regulated articles from outside the quarantined area than it is to be shipping regulated articles interstate to non-quarantined areas. It is unlikely, therefore, that the nursery would be moving regulated articles that would require inspection in the first place.
Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.
This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings
An environmental assessment and finding of no significant impact have been prepared for this interim rule. The assessment provides a basis for the conclusion that the integrated eradication program will not have a significant impact on the quality of the human environment. Based on the finding of no significant impact, the Administrator of the Animal and Plant Health Inspection Service has determined that an environmental impact statement need not be prepared.
The environmental assessment and finding of no significant impact were prepared in accordance with: (1) The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321
Copies of the environmental assessment and finding of no significant impact are available for public inspection in our reading room (information on the location and hours of the reading room is provided under the heading
This rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Agricultural commodities, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements, Transportation.
7 U.S.C. 7711, 7712, 7714, 7731, 7735, 7751, 7752, 7753, 7754, and 7760; 7 CFR 2.22, 2.80, and 371.3.
Section 301.75-15 also issued under Sec. 204, Title II, Pub L. 106-113, 113 Stat. 1501A-293; sections 301.75-15 and 301.75-16 also issued under Sec. 203, Title II, Pub. L. 106-224, 114 Stat. 400 (7 U.S.C. 1421 note).
(a) Firewood (all hardwood species), and green lumber and other material living, dead, cut, or fallen, inclusive of nursery stock, logs, stumps, roots, branches, and debris of half an inch or more in diameter of the following genera:
(c) * * *
That area in the city of Hoboken that is bounded as follows: Beginning at the shoreline of the Hudson River east of the intersection of Hudson Street and 11th Street; then west on 11th Street to the railroad tracks; then south along the railroad tracks to the Hoboken/Jersey City border; then east along the Hoboken/Jersey City border to the shoreline of the Hudson River; then north along the shoreline of the Hudson river to the point of beginning.
Animal and Plant Health Inspection Service, USDA.
Interim rule and request for comments.
We are amending the exotic Newcastle disease regulations by removing Mohave and Yuma Counties, AZ, Nye County, NV, and portions of La Paz County, AZ, and Clark County, NV, from the list of quarantined areas. This action removes restrictions on the movement of birds, poultry, and certain other articles from those areas.
This interim rule was effective May 14, 2003. We will consider all comments that we receive on or before July 18, 2003.
You may submit comments by postal mail/commercial delivery or by e-mail. If you use postal mail/commercial delivery, please send four copies of your comment (an original and three copies) to: Docket No. 02-117-6, Regulatory Analysis and Development, PPD, APHIS, Station 3C71, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. 02-117-6. If you use e-mail, address your comment to
You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue, SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 690-2817 before coming.
APHIS documents published in the
Dr. Lisa Ferguson, Senior Staff Veterinarian, Emergency Programs Staff, VS, APHIS, 4700 River Road Unit 41, Riverdale, MD 20737-1231; (301) 734-8073.
Exotic Newcastle disease (END) is a contagious and fatal viral disease affecting the respiratory, nervous, and digestive systems of birds and poultry. END is so virulent that many birds and poultry die without showing any clinical signs. A death rate of almost 100 percent can occur in unvaccinated poultry flocks. END can infect and cause death even in vaccinated poultry.
The regulations in “Subpart A-Exotic Newcastle Disease (END)” (9 CFR 82.1 through 82.15, referred to below as the regulations) were established to prevent the spread of END in the United States in the event of an outbreak. In § 82.3, paragraph (a) provides that any area where birds or poultry infected with END are located will be designated as a quarantined area, and that a quarantined area is any geographical area, which may be a premises or all or part of a State, deemed by epidemiological evaluation to be sufficient to contain all birds or poultry known to be infected with or exposed to END. Currently, portions of Arizona, California, Nevada, New Mexico, and Texas are designated as quarantined areas in § 82.3(c) of the regulations. As a result, the interstate movement from the quarantined areas of birds, poultry, products, and materials that could spread END is prohibited or restricted. Further, because the Secretary has declared an extraordinary emergency because of END in those States, the regulations in § 82.16 provide that the intrastate movement from those quarantined areas of birds, poultry, products, and materials that could spread END is prohibited or restricted.
In this interim rule, we are reducing the size of the quarantined areas in Nevada and Arizona based on the results of extensive surveillance and investigations conducted in those States. These activities are described below.
On January 16, 2003, END was confirmed in backyard poultry on a premises in Las Vegas, NV. Therefore, in an interim rule effective January 17, 2003, and published in the
Following the detection of END in Nevada, surveys were conducted in the immediate area around the infected premises. A total of 10 infected premises and 128 “dangerous contact” premises (
On February 4, 2003, END was confirmed in backyard poultry on a single premises in the Colorado River Indian Nation in Arizona. Therefore, in an interim rule effective February 10, 2003, and published in the
Following the detection of END in Arizona, surveys were conducted in the immediate area around the infected premises, both in Arizona and across the border in California. No additional cases were identified in any of these areas. Across Arizona, targeted high-risk areas were surveyed. Populated areas along major highways, reports from animal control units, and leads derived
A total of 1,451 investigations were conducted throughout the State of Arizona. In addition, 21 investigations were conducted in California in the area adjacent to the infected area. In the quarantined counties in Arizona, which contain no commercial premises, the following surveillance was completed with no evidence of disease spread:
• In Yuma County, 60 investigations were conducted, with 39 premises sampled;
• In Mohave County, 38 investigations were conducted with 10 premises sampled; and
• In La Paz County, 56 investigations were conducted with 52 premises sampled (these include the infected premises and 3 “dangerous contact” premises located within 1 kilometer of the infected premises).
As noted previously, the regulations in § 82.3(a) provide that any area where birds or poultry infected with END are located will be designated as a quarantined area, and that a quarantined area is any geographical area, which may be a premises or all or part of a State, deemed by epidemiological evaluation to be sufficient to contain all birds or poultry known to be infected with or exposed to END.
Animal and Plant Health Inspection Service epidemiologists have evaluated the results of the investigations conducted in Nevada and Arizona and have determined that we may now reduce the size of the quarantined areas in those States. This determination is based on, among other things, the demonstrated absence of birds or poultry infected with or exposed to END in specific areas. The regulations in § 82.14 provide requirements that must be met before an area may be removed from quarantine, but those requirements relate to measures taken with respect to END-infected or -exposed birds and poultry, their eggs and manure, and articles and premises with which such birds or their manure or litter have come in contact. As there were no END-infected or -exposed birds or poultry in the areas that we are removing from quarantine, there are no requirements under § 82.14 that need to be met before those areas can be removed from quarantine.
Therefore, in this interim rule, we are amending § 82.3(c) by removing Mohave and Yuma Counties, AZ, Nye County, NV, and portions of La Paz County, AZ, and Clark County, NV, from the list of quarantined areas because the continued quarantine of these areas is no longer necessary to contain all birds and poultry infected with or exposed to END. Those portions of La Paz County, AZ, and Clark County, NV, that will remain as quarantined areas, which are described in the amendments to § 82.3(c) at the end of this document, have been deemed by epidemiological evaluation to be sufficient to contain all birds or poultry known to be infected with or exposed to END.
Immediate action is warranted to relieve restrictions that are no longer necessary. We have determined that Mohave and Yuma Counties, AZ, Nye County, NV, and portions of La Paz County, AZ, and Clark County, NV, may now be removed from the list of areas quarantined because of END. Therefore, immediate action is warranted to relieve the prohibitions or restrictions that have applied to the movement of birds, poultry, products, and other materials from those areas. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this action effective less than 30 days after publication in the
We will consider comments that we receive during the comment period for this interim rule (
This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866.
This rule amends the regulations by removing Mohave and Yuma Counties, AZ, Nye County, NV, and portions of La Paz County, AZ, and Clark County, NV, from the list of quarantined areas. This action needs to be made effective immediately in order to remove restrictions on the movement of birds, poultry, and certain other articles from those areas that are no longer necessary.
This situation makes timely compliance with section 604 of the Regulatory Flexibility Act (5 U.S.C. 601
This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are in conflict with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.
This interim rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Animal diseases, Poultry and poultry products, Quarantine, Reporting and recordkeeping requirements, Transportation.
7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4.
(c) * * *
Animal and Plant Health Inspection Service, USDA.
Interim rule and request for comments.
We are amending the exotic Newcastle disease regulations by quarantining a portion of Kern County, CA, and prohibiting or restricting the movement of birds, poultry, products, and materials that could spread exotic Newcastle disease from the quarantined area. This action is necessary on an emergency basis to prevent the spread of exotic Newcastle disease from the quarantined area.
This interim rule was effective May 13, 2003. We will consider all comments that we receive on or before July 18, 2003.
You may submit comments by postal mail/commercial delivery or by e-mail. If you use postal mail/commercial delivery, please send four copies of your comment (an original and three copies) to: Docket No. 02-117-7, Regulatory Analysis and Development, PPD, APHIS, Station 3C71, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. 02-117-7. If you use e-mail, address your comment to
You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue, SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 690-2817 before coming.
APHIS documents published in the
Dr. Aida Boghossian, Senior Staff Veterinarian, Emergency Programs Staff, VS, APHIS, 4700 River Road Unit 41, Riverdale, MD 20737-1231; (301) 734-8073.
Exotic Newcastle disease (END) is a contagious and fatal viral disease affecting the respiratory, nervous, and digestive systems of birds and poultry. END is so virulent that many birds and poultry die without showing any clinical signs. A death rate of almost 100 percent can occur in unvaccinated poultry flocks. END can infect and cause death even in vaccinated poultry.
The regulations in “Subpart A—Exotic Newcastle Disease (END)” (9 CFR 82.1 through 82.15, referred to below as the regulations) were established to prevent the spread of END in the United States in the event of an outbreak. In § 82.3, paragraph (a) provides that any area where birds or poultry infected with END are located will be designated as a quarantined area, and that a quarantined area is any geographical area, which may be a premises or all or part of a State, deemed by epidemiological evaluation to be sufficient to contain all birds or poultry known to be infected with or exposed to END. Less than an entire State will be designated as a quarantined area only if the State enforces restrictions on intrastate movements from the quarantined area that are at least as stringent as the regulations. The regulations prohibit or restrict the movement of birds, poultry, products, and materials that could spread END from quarantined areas. Areas quarantined because of END are listed in § 82.3, paragraph (c).
On October 1, 2002, END was confirmed in the State of California. The disease was confirmed in backyard poultry, which are raised on private premises for hobby, exhibition, and personal consumption, and in commercial poultry.
In an interim rule effective on November 21, 2002, and published in the
In a second interim rule effective on January 7, 2003, and published in the
On January 16, 2003, END was confirmed in backyard poultry on a premises in Las Vegas, NV. Therefore, in a third interim rule effective January 17, 2003, and published in the
On February 4, 2003, END was confirmed in backyard poultry on a premises in the Colorado River Indian Nation in Arizona. Therefore, in a fourth interim rule effective February 10, 2003, and published in the
On April 9, 2003, END was confirmed in backyard poultry on a premises in El Paso County, TX. Therefore, in a fifth interim rule effective April 10, 2003, and published in the
On May 5, 2003, END was confirmed in backyard poultry on a premises in Kern County, CA. Therefore, in this interim rule, we are amending § 82.3(c) by designating a portion of Kern County, CA, as a quarantined area and prohibiting or restricting the movement of birds, poultry, products, and materials that could spread END from the quarantined area. As provided for by the regulations in § 82.3(a), this quarantined area encompasses the area where poultry infected with END were located and a surrounding geographical area deemed by epidemiological evaluation to be sufficient to contain all birds or poultry known to be infected with or exposed to END.
This rulemaking is necessary on an emergency basis to prevent the spread of END. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the
We will consider comments that we receive during the comment period for this interim rule (see
This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866.
This rule amends the regulations by quarantining a portion of Kern County, CA, and prohibiting or restricting the movement of birds, poultry, products, and materials that could spread END from the quarantined area. This action is necessary on an emergency basis to prevent the spread of END from the quarantined area.
This emergency situation makes timely compliance with section 604 of the Regulatory Flexibility Act (5 U.S.C. 601
This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are in conflict with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.
This rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Animal diseases, Poultry and poultry products, Quarantine, Reporting and recordkeeping requirements, Transportation.
7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4.
(c) * * *
Animal and Plant Health Inspection Service, USDA.
Direct final rule.
We are amending the regulations regarding the exportation of livestock by designating Portland International Airport in Portland, OR, as a port of embarkation and B Bar C Ranch, in Gervais, OR, and Pony World Farm in Portland, OR, as export inspection facilities for that port. This rule will add a port of embarkation and export inspection facilities through which livestock may be processed for export.
This rule will be effective on July 18, 2003, unless we receive written adverse comments or written notice of intent to submit adverse comments by June 18, 2003.
You may submit comments or notice of intent to submit adverse comments by postal mail/commercial delivery or by e-mail. If you use postal mail/commercial delivery, please send four copies (an original and three copies) to: Docket No. 02-127-1, Regulatory Analysis and Development, PPD, APHIS, Station 3C71, 4700 River Road, Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. 02-127-1. If you use e-mail, address your comment to
You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue, SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 690-2817 before coming.
APHIS documents published in the
Dr. Roger Perkins, Senior Staff Veterinarian, Technical Trade Services, National Center for Import and Export, VS, APHIS, 4700 River Road, Unit 39, Riverdale, MD 20737-1231; (301) 734-8364.
The regulations in 9 CFR part 91, “Inspection and Handling of Livestock for Exportation” (referred to below as the regulations), prescribe conditions for exporting animals from the United States. The regulations state, among other things, that all animals, except animals exported by land to Canada or Mexico, must be exported through designated ports of embarkation, unless the exporter can show that the animals would suffer undue hardship if they were required to be moved to a designated port of embarkation.
Paragraph (a) of § 91.14 contains a list of designated ports of embarkation and export inspection facilities. To receive designation as a port of embarkation, a port must have an export inspection facility available for the inspection, holding, feeding, and watering of animals prior to exportation. The facility must meet the standards in § 91.14(c) concerning physical construction and size, inspection implements, cleaning and disinfection, feed and water, access by inspectors, animal handling arrangements, testing and treatment of animals, location, disposal of animal wastes, lighting, office and restroom facilities, and walkways.
B Bar C Ranch and Pony World Farm operate facilities near Portland International Airport, Portland, OR, that have served as export inspection facilities for equines on a case-by-case basis since September 2001 and March 2000, respectively. The companies have requested that we approve each facility as a permanent export inspection facility, which would enable them to contract for shipments of equines without first having to ask for permission from the Animal and Plant Health Inspection Service (APHIS). Both B Bar C Ranch and Pony World Farm have constructed facilities specifically for the inspection, holding, feeding, and watering of horses intended for export. Both facilities have passed a number of APHIS inspections and meet all of the requirements for use as an export facility. There are five APHIS veterinary medical officers assigned to offices located within 1 to 2 hours' drive who will be available to support the facilities. The number of equines moving through each facility is such that each facility could function effectively and efficiently on a permanent basis. Therefore, we are amending the regulations by adding Portland International Airport to the list of ports of embarkation in § 91.14(a) and by adding B Bar C Ranch and Pony World Farm as export inspection facilities for equines for that port.
We are publishing this rule without a prior proposal because we view this action as noncontroversial and anticipate no adverse public comment. This rule will be effective, as published in this document, on July 18, 2003, unless we receive written adverse comments or written notice of intent to submit adverse comments on or before June 18, 2003.
Adverse comments are comments that suggest the rule should not be adopted or that suggest the rule should be changed.
If we receive written adverse comments or written notice of intent to submit adverse comments, we will publish a document in the
As discussed previously, if we receive no written adverse comments or written notice of intent to submit adverse comments within 30 days of publication of this direct final rule, this direct final rule will become effective 60 days following its publication. We will publish a document in the
This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866.
In the year 2002, receipts from trade in live animals (cattle, horses, sheep, swine and goats) totaled approximately
In 2000-2001, there were approximately 21,000 livestock operations in Oregon
In 2000-2001, the total earnings in Oregon from exports of live animals and meat were more than $8.9 million.
Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.
This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule;
(2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.
This rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Animal diseases, Animal welfare, Exports, Livestock, Reporting and recordkeeping requirements, Transportation.
Accordingly, 9 CFR part 91 is amended as follows:
7 U.S.C. 8301-8317; 19 U.S.C. 1644a(c); 21 U.S.C. 136, 136a, and 618; 46 U.S.C. 3901 and 3902; 7 CFR 2.22, 2.80, and 371.4.
(a) * * *
(14)
(i) Portland International Airport.
(A) B Bar C Ranch, 6460 Highway 219, Gervais, OR 97026, (503) 981-1600.
(B) Pony World Farm, 13630 NW., Springville Lane, Portland, OR 97229, (503) 330-8300.
(ii) [
Federal Aviation Administration (FAA) DOT.
Final special conditions; request for comments.
These special conditions are issued for the Raytheon Aircraft Company Model HS 125 Series 700A and 700B airplanes modified by Raytheon Aircraft Services, Inc. These modified airplanes will have novel and unusual design features when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for the protection of these systems from the effects of high-intensity radiated fields (HIRF). These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that provided by the existing airworthiness standards.
The effective date of these special conditions is April 18, 2002. Comments must be received on or before July 3, 2003.
Comments on these special conditions may be mailed in duplicate to: Federal Aviation Administration, Transport Airplane Directorate, Attn: Rules Docket (ANM-113), Docket No. NM253, 1601 Lind Avenue SW., Renton, Washington, 98055-4056; or delivered in duplicate to the Transport Airplane Directorate at the above address. All comments must be marked: Docket No. NM253.
Connie Beane, FAA, Standardization Branch, ANM-113, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW.,
The FAA has determined that notice and opportunity for prior public comment is impracticable because these procedures would significantly delay certification of the airplane and thus delivery of the affected aircraft. In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon issuance; however, the FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments.
We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning these special conditions. The docket is available for public inspection before and after the comment closing date. If you wish to review the docket in person, go to the address in the
We will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change these special conditions based on the comments received.
If you want the FAA to acknowledge receipt of your comments on these special conditions, include with your comments a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it back to you.
On December 31, 2002, Raytheon Aircraft Services Inc., applied to the FAA, Fort Worth Special Certification Office, for a supplemental type certificate (STC) to modify certain Raytheon Aircraft Company Model HS 125 Series 700A and 700B airplanes. These airplanes are two flightcrew, two-engine airplanes, each with a maximum takeoff weight of up to 25,500 lbs. The proposed modification incorporates the installation of an Electronic Flight Instrument System (EFIS). The equipment originally installed in these airplanes presented the required information in the form of analog displays. The information presented is flight critical. The EFIS as a digital system is vulnerable to HIRF external to the airplane. The avionics/electronics and electrical systems installed in this airplane have the potential to be vulnerable to HIRF external to the airplane.
Under the provisions of 14 CFR 21.101, Amendment 21-69, effective September 16, 1991, Raytheon Aircraft Services, Inc. must show that the modified Raytheon Aircraft Company Model HS 125 Series 700A and 700B airplanes, as changed, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A3EU, or the applicable regulations in effect on the date of application for the change. Subsequent changes have been made to 14 CFR 21.101 as part of Amendment 21-77, but those changes do not become effective until June 10, 2003. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.”
The regulations incorporated by reference in Type Certificate No. A3EU include Part 10 of the Civil Air Regulations (CAR). This certification is equivalent to CAR 4b dated December 1953, as amended by Amendment 4b-1 through Amendment 4b-11, exclusive of CAR 4b 350(e), and includes Special Regulation SR 422B. In addition, the certification basis includes certain later amendments to 14 CFR part 25 that are not relevant to these special conditions.
If the Administrator finds that the applicable airworthiness regulations (
In addition to the applicable airworthiness regulations and special conditions, the Model HS 125 Series 700A and 700B airplanes must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36.
Special conditions, as defined in 14 CFR 11.19, are issued in accordance with § 11.38 and become part of the type certification basis in accordance with § 21.101(b)(2), Amendment 21-69, effective September 16, 1991.
Special conditions are initially applicable to the model for which they are issued. Should Raytheon Aircraft Services Inc. apply at a later date for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under the provisions of § 21.101(a)(1), Amendment 21-69, effective September 16, 1991.
The modified Raytheon Aircraft Company Model HS 125 Series 700A and 700B airplanes will incorporate brand new avionics/electronics and electrical systems that will perform critical functions. These systems may be vulnerable to HIRF external to the airplane.
There is no specific regulation that addresses protection requirements for electrical and electronic systems from HIRF. Increased power levels from ground-based radio transmitters and the growing use of sensitive avionics/electronics and electrical systems to command and control airplanes have made it necessary to provide adequate protection.
To ensure that a level of safety is achieved equivalent to that intended by the regulations incorporated by reference, special conditions are needed for the Raytheon Aircraft Company Model HS 125 Series 700A and 700B airplanes. These special conditions require that new avionics/electronics and electrical systems that perform critical functions be designed and installed to preclude component damage and interruption of function due to both the direct and indirect effects of HIRF.
With the trend toward increased power levels from ground-based transmitters, and the advent of space and satellite communications coupled with electronic command and control of the airplane, the immunity of critical digital avionics/electronics and electrical systems to HIRF must be established.
It is not possible to precisely define the HIRF to which the airplane will be exposed in service. There is also uncertainty concerning the effectiveness of airframe shielding for HIRF. Furthermore, coupling of electromagnetic energy to cockpit-installed equipment through the cockpit
1. A minimum threat of 100 volts rms (root-mean-square) per meter electric field strength from 10 KHz to 18 GHz.
a. The threat must be applied to the system elements and their associated wiring harnesses without the benefit of airframe shielding.
b. Demonstration of this level of protection is established through system tests and analysis.
2. A threat external to the airframe of the field strengths identified in the following table for the frequency ranges indicated. Both peak and average field strength components from the table are to be demonstrated.
The threat levels identified above are the result of an FAA review of existing studies on the subject of HIRF, in light of the ongoing work of the Electromagnetic Effects Harmonization Working Group of the Aviation Rulemaking Advisory Committee.
As discussed above, these special conditions are applicable to Raytheon Aircraft Company Model HS 125 Series 700A and 700B airplanes. Should Raytheon Aircraft Services Inc. apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well as under the provisions of 14 CFR 21.101(a)(1), Amendment 21-60, effective September 16, 1991.
This action affects only certain novel and unusual design features on the Raytheon Aircraft Company Model HS 125 Series 700A and 700B airplanes. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.
The substance of the special conditions has been subjected to the notice and comment procedure in several prior instances and has been derived without substantive change from those previously issued. Because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.
Aircraft, Aviation safety, Reporting and record keeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the supplemental type certification basis for the modified Raytheon Aircraft Company Model HS 125 Series 700A and 700B airplanes:
1.
2. For the purpose of these special conditions, the following definition applies:
Federal Aviation Administration (FAA), DOT.
Direct final rule; request for comments; correction.
This action corrects a direct final rule; request for comments that was published in the
This direct final rule is effective on 0901 UTC, September 4, 2003. Comments for inclusion in the Rules Docket must be received on or before June 10, 2003.
Brenda Mumper, Air Traffic Division, Airspace Branch, ACE-520A, DOT Regional Headquarters Building, Federal Aviation Administration, 901 Locust, Kansas City, MO 64106; telephone: (816) 329-2524.
Federal Register Document 03-11030, published on Monday, May 5, 2003, (68 FR 23577), modified Class D and Class E airspace areas at Kansas City Downtown Airport, MO. The paragraph of Federal Aviation Administration Order 7400.9K pertaining to Class E airspace was misidentified.
Federal Aviation Administration (FAA), DOT.
Direct final rule; request for comments.
An Area Navigation (RNAV) Global Positioning System (GPS) Runway (RWY) 14 ORIGINAL Standard Instrument Approach Procedure (SIAP) has been developed to serve Miller Field, Valentine, NE. This action expands Class E airspace extending upward from 700 feet above ground level (AGL) at Valentine, NE to contain aircraft executing the approach. The Miller Field airport reference point has been redefined and is incorporated into the legal description of Valentine, NE Class E airspace.
This direct final rule is effective on 0901 UTC, September 4, 2003. Comments for inclusion in the Rules Docket must be received on or before June 25, 2003.
Send comments on this regulation to the Docket Management System, U.S. Department of Transportation, Room Plaza 401, 400 Seventh Street, SW., Washington, DC 20590-0001. You must identify the docket number FAA-2003-15075/Airspace Docket No. 03-ACE-43, at the beginning of your comments. You may also submit comments on the Internet at
Brenda Mumper, Air Traffic Division, Airspace Branch, ACE-520A, DOT Regional Headquarters Building, Federal Aviation Administration, 901 Locust, Kansas City, MO 64106; telephone (816) 329-2524.
The amendment to 14 CFR part 71 modifies the Class E airspace area at Valentine, NE. An RNAV (GPS) RWY 14 ORIGINAL SIAP has been developed to serve Miller Field, Valentine, NE. The SIAP requires additional controlled airspace to contain aircraft executing the approach procedure. This action expands Class E airspace extending upward from 700 fee AGL at Valentine, NE. The National Aeronautical Charting Office redefined the Valentine, Miller Field, NE airport reference point effective April 9, 2003. Class E controlled airspace at Valentine, NE is defined, in part, by the Miller Field airport reference point. This action corrects discrepancies between the previous and revised airport reference points by modifying the Valentine, NE Class E airspace area. It incorporates the revised Miller Field airport reference point in the Class E airspace legal description and brings the airspace area into compliance with FAA Order 7400.2E, Procedures for Handling Airspace Matters. The area will be depicted on appropriate aeronautical charts. Class E airspace areas extending upward from 700 fee or more above the surface of the earth are published in paragraph 6005 of FAA Order 7400.9K, dated August 30, 2002, and effective September 16, 2002, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.
The FAA anticipates that this regulation will not result in adverse or negative comment and, therefore, is issuing it as a direct final rule. Previous actions of this nature have not been controversial and have not resulted in adverse comments or objections. Unless a written adverse or negative comment, or a written notice of intent to submit an adverse or negative comment is received within the comment period, the regulation will become effective on the date specified above. After the close of the comment period, the FAA will publish a document in the
Interested parties are invited to participate in this rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2003-15075/Airspace Docket No. 03-ACE-43.” The postcard will be date/time stamped and returned to the commenter.
The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.
The FAA has determined that this regulation is noncontroversial and unlikely to result in adverse or negative comments. For the reasons discussed in the preamble, I certify that this regulation (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) if promulgated, will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Airspace, Incorporation by reference, Navigation (air).
49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.5-mile radius of Miller Field; and within 2.6 miles each side of the 149° bearing from the Valentine NDB extending from the 6.5-mile radius to 7.9 miles southeast of the airport; and within 1.8 miles each side of the 325° bearing from the airport extending from the 6.5-mile radius to 9.2 miles northwest of the airport.
Food and Drug Administration, HHS.
Final rule.
The Food and Drug Administration (FDA) is amending the animal drug regulations to reflect approval of a new animal drug application (NADA) filed by Technology Transfer, Inc. The NADA provides for use of zinc gluconate solution for chemical sterilization of dogs by intratesticular injection.
This rule is effective May 19, 2003.
Melanie R. Berson, Center for Veterinary Medicine (HFV-110), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-7543, e-mail:
Technology Transfer, Inc., 33 East Broadway, suite 190, Columbia, MO 65203, filed NADA 141-217 that provides for use of NEUTERSOL (zinc gluconate neutralized by arginine) Injectable Solution for chemical sterilization of 3- to 10-month-old male dogs by intratesticular injection. The NADA is approved as of March 17, 2003, and the regulations are amended in 21 CFR part 522 by adding new § 522.2690 to reflect the approval. The basis of approval is discussed in the freedom of information summary.
In addition, Technology Transfer, Inc., has not been previously listed in the animal drug regulations as a sponsor of an approved application. At this time, 21 CFR 510.600(c) is being amended to add entries for the firm.
In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.
Under section 512(c)(2)(F)(i) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 360b(c)(2)(F)(i)), this approval qualifies for 5 years of marketing exclusivity beginning March 17, 2003.
The agency has determined under 21 CFR 25.33(d)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.
Administrative practice and procedure, Animal drugs, Labeling, Reporting and recordkeeping requirements.
Animal drugs.
21 U.S.C. 321, 331, 351, 352, 353, 360b, 371, 379e.
(c) * * *
(1) * * *
(2) * * *
21 U.S.C. 360b.
(a)
(b)
(c)
(2)
(3)
Financial Crimes Enforcement Network (“FinCEN”), Treasury.
Extension of conditional exception.
FinCEN is giving notice that it is extending, until December 1, 2003, a conditional exception to a Bank Secrecy Act requirement that is due to expire on May 31, 2003. The exception permits financial institutions to substitute coded information for the true name and address of a customer in a funds transmittal order. The purpose of the extension is to permit FinCEN to perform a study of the alternatives to continuing the conditional exception.
Effective June 1, 2003.
David Vogt, Executive Associate Director, Office of Regulatory Programs, FinCEN, (202) 354-6400, or Judith R. Starr, Chief Counsel, FinCEN, (703) 905-3590.
In 1998, FinCEN granted a conditional exception (“the CIF Exception”) to the strict operation of 31 CFR 103.33(g) (the “Travel Rule”).
(1) Whether there are technological barriers to full compliance with the Travel Rule;
(2) Whether financial institutions will require additional time to comply;
(3) Whether the exception has had an adverse effect on law enforcement investigations; and
(4) Whether there is a potential for abuse of the exception.
FinCEN promulgated the Travel Rule in 1995. The Travel Rule requires financial institutions to include certain information in transmittal orders relating to transmittals of funds of $3,000 or more, which must “travel” with the order throughout the funds transmittal sequence. Among these requirements is that each transmittor's financial institution and intermediary financial institution include in a transmittal order the transmittor's true name and street address.
The conditional exception provides that a financial institution may satisfy the requirements of 31 CFR 103.33(g) that a customer's true name and address be included in a transmittal order, only upon satisfaction of the following conditions:
(1) The CIFs are not specifically altered for the particular transmittal of funds in question;
(2) The CIFs are generally programmed and used by the institution for customer communications, not simply for transmittal of funds transactions, and as so programmed generate other than true name and street address information;
(3) The institution itself knows and can associate the CIF information used in the funds transmittal order with the true name and street address of the transmittor of the order;
(4) The transmittal order includes a question mark symbol immediately following any designation of the transmittor other than by a true name on the order;
(5) Any currency transaction report or suspicious activity report by the institution with respect to the funds transmittal contains the true name and address information for the transmittor and plainly associates the report with the particular funds transmittal in question.
The conditional exception further provides that it has no application to any funds transmittals for whose processing an institution does not automatically rely on preprogrammed and prespecified CIF name and address information. FinCEN's release promulgating the CIF Exception further warned financial institutions that any customer request for a nominee name in a CIF should be carefully evaluated as a potentially suspicious transaction.
The comment period closed on April 21, 2003. FinCEN received 16 comments from banks, trade groups, financial consultants, the Federal Reserve's Wholesale Products Branch, and the Department of Justice, reflecting a diversity of views. Eight commenters
FinCEN believes that the WPO is correct that further study is needed, albeit a study more precisely targeted at the benefits and burdens associated with the available alternatives. The technological issues involved in complying with the Travel Rule appear to vary among financial institutions, and it is not clear what the global costs would be of removing the exception entirely. Having gaps in the funds transfer process where the inability to recognize the identity of a funds transmittor could harm law enforcement investigations should be avoided where possible, as should imposing unnecessary costs at a time when financial institutions are working diligently to comply with numerous Patriot Act requirements. FinCEN therefore intends to perform a study to determine the best way to reconcile the competing interests by obtaining data on the costs and benefits of each available alternative (for example, it may be feasible to require true name information but not true address information). For the expected duration of the study (approximately 180 days), the CIF Exception will be temporarily extended.
By virtue of the authority contained in 31 CFR 103.55(a) and (b), which has been delegated to the Director of FinCEN, the effective period of the CIF Exception, as such Exception is set forth (as part of FinCEN Issuance 98-1, 63 FR 3640 (January 6, 1998)) under the heading “Grant of Exceptions” (63 FR 3641) is extended so that the CIF Exception will expire on December 1, 2003 (if not revoked or modified with respect to such expiration date prior to that time), for transmittals of funds initiated after that date.
Federal Communications Commission.
Final rule.
This document revises rules to allow for electronic filing of forms by Multichannel Video Programming Distributors (“MVPDs”) via the Cable Operations And Licensing System (“COALS”). When COALS, currently being completed, is fully implemented MVPDs will be able to file over the Internet cable community registrations, aeronautical frequency notifications, operational change information, cable television system reports, annual signal leakage reports, and Cable Television Relay Service (CARS) applications. Electronic filing of each type of data will become mandatory 6 months after the Commission has determined that the form for collecting it has been reliably automated. This action includes providing forms for information previously submitted by letter and simplifying the CARS license application.
These rules contain information collection requirements that have not been approved by OMB. The Federal Communications Commission will publish a document in the
Wayne T. McKee, 202-418-2355, or Michael Lance, 202-418-7014. For additional information concerning the information collection(s) contained in this document, contact Judith B. Herman at 202-418-0214, or via the Internet at
This is a summary of the Commission's Report and Order (R&O) in CS Docket No. 00-78; FCC 03-55, adopted March 13, 2003, and released March 19, 2003. The complete text of this R&O is available for inspection and copying during normal business hours in the FCC Reference Information Center, Courtyard Level, 445 12th Street, SW., Washington, DC, and also may be purchased from the Commission's copy contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail at
The Notice of Proposed Rule Making (NPRM) in this proceeding may be found at 65 FR 48211, August 7, 2000.
This Report and Order revises our rules governing the filing of the majority of forms filed by the public for the Multichannel Video and Cable Television Service (“MVCTS”) and applications in the Cable Television Relay Service (“CARS”). In addition to the CARS microwave applications, these forms include cable television operator registrations, change of operational information, cable television system reports, aeronautical frequency usage filings, and annual signal leakage reports. These rule changes facilitate our implementation of the Cable Operations and Licensing System (“COALS”) and will allow for a new electronic filing system. This action will reduce the effort for Multichannel Video Programming Distributors (“MVPDs”) to file applications, reports, and other documents. It will also enhance the availability to the industry and the public of cable system and multichannel video programming systems information. This action is also another step for the Commission in complying with Government Paperwork Elimination Act.
Use of COALS will become mandatory in phases as the Commission verifies its reliability for filing each form. Thus, electronic filing of each form will be made mandatory six months after the Commission announces that the software for filing that form is available. The Commission will publish by Public Notice the date on which mandatory filing will begin. In cases where filers can show that electronic filing will work a hardship on them, the Commission will consider waivers of the mandatory filing requirement.
This Report and Order also makes modifications to procedural rules for filings by MVPDs. It redefines major and minor modifications of CARS stations and license applications. It also requires that geographic coordinates be given using the 1983 North American Datum (NAD83).
This Report and Order contains new or modified information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Pub. L. 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new or modified information collection(s) contained in this proceeding.
This Report and Order contains a modified information collection. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public to comment on the information collection(s) contained in this Report and Order as required by the Paperwork Reduction Act of 1995, Pub. L. 104-13.
As required by the Regulatory Flexibility Act of 1980, as amended (“RFA”), an Initial Regulatory Flexibility Analysis (“IRFA”) was incorporated in the Notice of Proposed Rulemaking (“NPRM”) in CS Docket No. 00-78, FCC 00-165. The Commission sought written public comment on the proposals in the Notice, including comment on the IRFA. This present Final Regulatory Flexibility Analysis (“FRFA”) conforms to the RFA.
We revise our rules governing the filing of forms and applications for the Multichannel Video and Cable Television Services. These include applications in the Cable Television Relay Service (CARS microwave applications), cable television operator registrations, and aeronautical frequency usage filings. These rule changes are designed to facilitate our implementation of electronic filing via the new Cable Operations And Licensing System (“COALS”). We undertake implementation of the COALS electronic filing system so that cable services applicants and associated parties may file documents with greater speed and efficiency. Because it is available over the Internet and is fully searchable, the system will also make license and cable operational information more accessible to the Commission's staff, the MVPD industry, and the general public. Furthermore, it is expected that the cost of filing applications or obtaining information will be reduced.
No one commented in direct response to the IRFA. We received only one comment in the proceeding—from the National Cable Telecommunications Association (“NCTA”). That comment did address the issue of the burden on small entities that would result if we decide to make electronic filing
The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of, small entities that will be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (“SBA”).
A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 1992, there were approximately 275,801 small organizations. “Small government jurisdiction” generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than 50,000.” As of 1992, there were approximately 85,006 governmental entities in the United States. This number includes 38,978 counties, cities, and towns: of these, 37,566, or 96%, have populations of fewer than 50,000. The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, we estimate that 81,600 (96%) are small entities. Below, we further describe and estimate the number of small entity licensees and regulatees that may be affected by these rules. It is possible that various types of small organizations are cable operators or other types of Multichannel Video Programming Distributor.
The rules we adopt will apply to all Multichannel Video Programming Distributors. This includes cable systems, the Multipoint Distribution Service (“MDS”), the Multichannel, Multipoint Distribution Service (“MMDS”), and Private Cable Operators (“PCOs”).
The Commission has developed, with SBA's approval, its own definition of a small cable system operator for the purposes of rate regulation. Under the Commission's rules, a “small cable company” is one serving fewer than 400,000 subscribers nationwide. Based on our most recent information, we estimate that there were 1439 cable operators that qualified as small cable companies at the end of 1995. Since then, some of those companies may have grown to serve over 400,000 subscribers, and others may have been involved in transactions that caused them to be combined with other cable operators. The Commission's rules define a “small system,” for the purposes of rate regulation, as a cable system with 15,000 or fewer subscribers. The Commission does not request nor does the Commission collect information concerning cable systems serving 15,000 or fewer subscribers and thus is unable to estimate, at this time, the number of small cable systems nationwide.
The Communications Act also contains a definition of a small cable system operator, which is “a cable operator that, directly of through an affiliate, serves in the aggregate fewer than 1% of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” The Commission has determined that there are 61,700,000 subscribers in the United States. Therefore, a cable operator serving fewer than 617,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all of its affiliates, do not exceed $250 million in the aggregate. Based on available data, we find that the number of cable operators serving 617,000 subscribers or less totals approximately 1450. Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250,000,000, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under definition in the Communications Act. It should be further noted that recent industry estimates project that there will be a total of 64,000,000 subscribers and we have based our fee revenue estimates on that figure.
The Commission completed its MMDS auction in March 1996 for authorization in 493 basic trading areas (“BTAs”). Of the 67 winning bidders, 61 qualified as small entities under the Commission definition. Five winners indicated that they were minority-owned and four winners indicated that they were women-owned businesses. In 1998, the Commission released the
This Report and Order creates no additional reporting, record keeping, or other requirements. Rather, makes reporting easier and more efficient by permitting filing by electronic means via the Internet. It also simplifies reporting by standardizing forms and deleting duplicate and unnecessary data collections.
The RFA requires an agency to describe any significant alternatives that it has considered in developing its approach, which may include the following four alternatives (among others): “(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.”
The impact of this action on small entities will not only be identical to the impact on large entities, it will be entirely beneficial. It gives them the option of eliminating the cost and expense of filing paper copies of required documents. We did not adopt a requirement for mandatory electronic filing specifically because of concerns for the burden that mandatory filing might impose upon small entities.
The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center,
Organization and functions (Government agencies), Reporting and recordkeeping requirements.
Reporting and recordkeeping requirements.
Cable television, Reporting and recordkeeping requirements.
Cable television, Communications equipment, Radio, Reporting and recordkeeping requirements.
Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 225, unless otherwise noted.
(b) * * *
(3) Alternatively, applications and other filings may be sent electronically via the Universal Licensing System (ULS) or the Cable Operations and Licensing System (COALS) as appropriate for use of those systems.
47 U.S.C. 151, 154(i), 154(j), 155, 225, 303(r), 309 and 325(e).
(d) Fees for applications and other filings pertaining to the Multichannel Video and Cable Television Service (MVCTS) and the Cable Television Relay Service (CARS) that are submitted electronically via the Cable Operations and Licensing System (COALS) may be paid electronically or sent to the Commission's lock box bank manually. When paying manually, applicants must include the FCC Form 159 generated by COALS (pre-filled with the transaction confirmation number) and completed with the necessary additional payment information to allow the Commission to verify that payment was made. Manual payments must be received no later than ten (10) days after receipt of the application or filing in COALS or the application or filing will be dismissed.
To provide electronic filing of applications, notifications, registration statements, reports, and related documents in the Multichannel Video and Cable Television Services and the Cable Television Relay Services.
This subpart applies to filings required by §§ 76.403, 76.1610, 76.1801, 76.1803, & 76.1804, and 78.11 through 78.36 of this chapter.
For purposes of this subpart, the following definitions apply:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Applications, notifications, correspondence, electronic filings and other material, and copies of authorizations, comprising technical, legal, and administrative data relating to each system in the Multichannel Video and Cable Television Services (MVCTS) and the Cable Television Relay Service (CARS) are maintained by the Commission in COALS and the Public Reference Room. These files constitute the official records for these stations and supersede any other records, database or lists from the Commission or other sources.
(a)
(1)
(2)
(3)
(4)
(5)
(6)
(b)
(1) There will be two ways for parties to electronically file applications with the Commission: batch and interactive.
(i)
(ii)
(2) Attachments to applications must be uploaded along with the electronically filed application whenever possible.
(3) Any associated documents submitted with an application must be uploaded as attachments to the application whenever possible. The attachment should be uploaded via COALS in Adobe Acrobat Portable Document Format (PDF) whenever possible.
(c)
(2) Manual filings must be submitted to the Commission at the appropriate address with the appropriate filing fee. The addresses for filing and the fee amounts for particular applications are listed in subpart G of this part, and in the appropriate fee filing guide for each service available from the Commission's Forms Distribution Center by calling 1-800-418-FORM (3676). The form may be downloaded from the Commission's Web site:
(3) Manual filings requiring fees as set forth at subpart G, of this part must be filed in accordance with § 0.401(b) of this chapter.
(4) Manual filings that do not require fees must be addressed and sent to the Media Bureau, Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554.
(5) FCC forms may be reproduced and the copies used in accordance with the provisions of § 0.409 of this chapter.
(d)
(a)
(b)
(c)
(d)
(e)
(f)
Regardless of filing method, all submissions with an insufficient fee, grossly deficient or inaccurate information, or those without a valid signature will be dismissed immediately. For any submission that is found subsequently to have minimally deficient or inaccurate information, we will notify the filer of the defect. We will allow 15 days from the date of this notification for correction or amendment of the submission if the amendment is minor. If the applicant files a timely corrected application, it will ordinarily be processed as a minor amendment in accordance with the Commission's rules. Thus it will have no effect on the initial filing date of the application or the applicant's filing priority. If, however, the amendment made by the applicant is not a simple correction, but constitutes a major amendment to the application, it will be governed by the rules and procedures applicable to major amendments, that is, it will be treated as a new application with a new filing date and new fees must be paid by the applicant. Finally, if the applicant fails to submit an amended application within the period specified in the notification, the application will be subject to dismissal for failure to prosecute.
47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a, 307, 308, 309, 312, 315, 317, 325, 503, 521, 522, 531, 532, 533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558, 560, 561, 571, 572, 573.
* * * These forms shall be completed and filed with (returned to) the Commission within 60 days after the Commission notifies the operator that the form is due. * * * ,
Sections 76.605(a)(12), 76.610, 76.611, 76.612, 76.614, 76.1803, 76.1804, 76.616, and 76.617 shall apply to all non-cable MVPDs. Exception: Non-cable MVPDs serving less than 1000 subscribers and less than 1000 units do not have to comply with § 76.1804(g).
The Operator shall inform the Commission on FCC Form 324 whenever there is a change of cable television system operator; change of legal name, change of the operator's mailing address or FCC Registration Number (FRN); or change in the operational status of a cable television system. Notification must be done within 30 days from the date the change occurs and must include the following information, as appropriate:
(a) The legal name of the operator and whether the operator is an individual, private association, partnership, corporation, or government entity. See § 76.5(cc). If the operator is a partnership, the legal name of the partner responsible for communications with the Commission shall be supplied;
(c) The physical address, including zip code, and e-mail address, if applicable, to which all communications are to be directed;
(d) The nature of the operational status change (
(g) The FCC Registration Number (FRN).
(a) A system community unit shall be authorized to commence operation only after filing with the Commission the following information on FCC Form 322.
(1) The legal name of the operator, entity identification or social security number, and whether the operator is an individual, private association, partnership, or corporation. If the operator is a partnership, the legal name of the partner responsible for communications with the Commission shall be supplied;
(2) The assumed name (if any) used for doing business in the community;
(3) The mailing address, including zip code; e-mail address, if applicable; and telephone number to which communications are to be directed;
(4) The month and year the system began service to subscribers;
(5) The name of the community or area served and the county in which it is located;
(6) The television broadcast signals to be carried which previously have not been certified or registered; and
(7) The FCC Registration Number (FRN).
(b) Registration statements, FCC Form 322, shall be signed by the operator; by one of the partners, if the operator is a partnership; by an officer, if the operator is a corporation; by a member who is an officer, if the operator is an unincorporated association; or by any duly authorized employee of the operator.
(c) Registration statements, FCC Form 322, may be signed by the operator's attorney in case of the operator's physical disability or of his absence from the United States. The attorney shall in that event separately set forth the reasons why the registration statement was not signed by the operator. In addition, if any matter is stated on the basis of the attorney's belief only (rather than the attorney's knowledge), the attorney shall separately set forth the reasons for believing that such statements are true.
MVPDs subject to § 76.611 must submit the results of ground based measurements derived in accordance with § 76.611(a)(1) or airspace measurements derived in accordance with § 76.611(a)(2), including a description of the method by which compliance with basic signal leakage criteria is achieved and the method of calibrating the measurement equipment. This information shall be provided to the Commission each calendar year via FCC Form 320.
An MVPD shall notify the Commission before transmitting any carrier or other signal component with an average power level across a 25 kHz bandwidth in any 160 microsecond time period equal to or greater than 10
(a) Legal name and local address of the MVPD;
(b) The names and FCC identifiers (
(c) The names and telephone numbers of local system officials who are responsible for compliance with §§ 76.610 through 76.616 and § 76.1803;
(d) Carrier frequency, tolerance, and type of modulation of all carriers in the aeronautical bands at any location in the cable distribution system and the maximum of those average powers measured over a 2.5 kHz bandwidth as described in the introductory paragraph to this rule section;
(e) The geographical coordinates (in NAD83) of a point near the center of the system, together with the distance (in kilometers) from the designated point to the most remote point of the plant, existing or planned, that defines a circle enclosing the entire plant;
(f) Certification that the monitoring procedure used is in compliance with § 76.614 or description of the routine monitoring procedure to be used; and
(g) For MVPDs subject to § 76.611, the cumulative signal leakage index derived under § 76.611(a)(1) or the results of airspace measurements derived under § 76.611(a)(2), including a description of the method by which compliance with the basic signal leakage criteria is achieved and the method of calibrating the measurement equipment.
(h) Aeronautical Frequency Notifications, FCC Form 321, shall be personally signed either electronically or manually by the operator; by one of the partners, if the operator is a partnership; by an officer, if the operator is a corporation; by a member who is an
(i) Aeronautical Frequency Notifications, FCC Form 321, may be signed by the operator's attorney in case of the operator's physical disability or of his absence from the United States. The attorney shall in that event separately set forth the reasons why the FCC Form 321 was not signed by the operator. In addition, if any matter is stated on the basis of the attorney's belief only (rather than the attorney's knowledge), the attorney shall separately set forth the reasons for believing that such statements are true.
(j) The FCC Registration Number (FRN).
Secs. 2, 3, 4, 301, 303, 307, 308, 309, 48 Stat., as amended 1064, 1065, 1066, 1081, 1082, 1083, 1084, 1085; 47 U.S.C. 152, 153, 154, 301, 303, 307, 308, 309.
Any application may be amended as a matter of right prior to the adoption date of any final action taken by the Commission with respect to the application. If a petition to deny has been filed, the amendment shall be served on the petitioner.
(a) Applications which are tendered for filing are dated upon receipt and then forwarded to the Media Bureau where an examination is made to ascertain whether the applications are complete. * * *
(d) If an assignment or transfer of control involves a substantial change of interest, and requires prior FCC approval, the CARS licensee is required to file FCC Form 327 with the Commission.
(e) Licensees are required to notify the Commission of consummation of an approved transfer or assignment. The assignee or transferee is responsible for providing this notification, including the date the transaction was consummated. The transaction must be consummated and notification provided to the Commission within 60 days of public notice of approval, and notification of consummation must occur no later than 30 days after actual consummation, unless a request for an extension of time to consummate is filed.
(a) Amendments to applications and modifications to stations are classified as major or minor. A major modification requires a formal application. A major amendment to an application is treated as a new application.
(b) Major modifications to a station or amendments to an application include, but are not limited to:
(1) Any increase in bandwidth;
(2) Any change in the transmitting antenna system of a station, other than a CARS pickup station, including the direction of the main radiation lobe, directive pattern, antenna gain or transmission line, antenna height or location;
(3) Any change in the type of modulation;
(4) Any change in the location of a station transmitter, other than a CARS pickup station transmitter, except a move within the same building or upon the tower or mast or a change in the area of operation of a CARS pickup station;
(5) Any change in frequency assignment, including polarization;
(6) Any increase in authorized operating power;
(7) Any substantial change in ownership or control;
(8) Any addition or change in frequency, excluding removing a frequency;
(9) Any modification or amendment requiring an environmental assessment (as governed by §§ 1.1301 through 1319 of this chapter, including changes affecting historic preservation under § 1.1307(a)(4) of this chapter and 16 U.S.C. 470 (National Historic Preservation Act));
(10) Any request requiring frequency coordination; or
(11) Any modification or amendment requiring notification to the Federal Aviation Administration as defined in 47 CFR 17, subpart B.
(c) Minor changes may be made at the discretion of the licensee, provided proper notice is given to the Commission within 30 days of implementing the change and provided further, that the changes are appropriately reflected in the next application for renewal of the license for the station.
(d) For applications and modifications, the following changes are considered minor:
(1) Any name change not involving change in ownership or control of the license;
(2) Any change to administrative information,
(3) Any change in ownership that does not affect the identity or controlling interest of the licensee;
(4) Lowering power;
(5) Removing one or more channels; or
(6) Deleting a path.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule; request for comments; correction.
NMFS announces a correction to the 2003 management measures for the West Coast salmon fisheries, which were published on May 6, 2003. An error in the northern boundary for the Commercial Season from “Pigeon Point, CA to the U.S.-Mexico Border” is corrected to the northern boundary of Point Arena, CA.
Effective from 0001 hours Pacific Daylight Time, May 1, 2003, until the effective date of the 2004 management measures, as published in the
William L. Robinson at 206-526-6140, or Svein Fougner at 562-980-4040.
The 2003 management measures for ocean salmon fisheries at 68 FR 23913, May 6, 2003 [FR Doc. 03-11084 Filed 5-1-03; 10:53 am] announced the northern boundary for the commercial season from “Pigeon Point, CA to the U.S.-Mexico Border” incorrectly. The northern boundary of the area should be Point Arena, CA, as
Accordingly, the final rule, on May 6, 2003, at 68 FR 23913 is corrected as follows:
On page 23917, column 3, the heading of the third paragraph (starting with the first full paragraph), is corrected from, “Pigeon Point, CA to U.S.-Mexico Border” to read “Point Arena, CA to U.S.-Mexico Border.”
16 U.S.C.
Federal Aviation Administration (FAA), DOT.
Proposed rule; correction.
This document makes a correction to the notice of proposed rulemaking (NPRM) published in the
Beverly Sharkey, (703) 668-3720; e-mail:
In FR Doc. 03-10946 published on May 5, 2003, on page 23808, in the second column, correct the
Beverly Sharkey, Suspected Unapproved Parts Program Office (AVR-20), Federal Aviation Administration, 13873 Park Center Rd., Suite 165, Herndon, VA 20171; telephone (703) 668-3720, facsimile (703) 481-3002, e-mail
Federal Aviation Administration, DOT.
Notice of proposed rulemaking (NPRM).
This document proposes adopting a new airworthiness directive (AD) for MD Helicopters Inc. Model 600N helicopters. The AD would require reducing the life limit of the main rotor drive shaft (drive shaft) and changing the life limit shown on the component history card or equivalent record. This proposal is prompted by the review of final fatigue test data, which indicates that the life limit of the drive shaft should be reduced by 2000 hours time-in-service (TIS). The actions specified by the proposed AD are intended to prevent failure of the drive shaft, loss of drive to the main rotor system, and subsequent loss of control of the helicopter.
Comments must be received on or before July 18, 2003.
Submit comments in triplicate to the Federal Aviation Administration (FAA), Office of the Regional Counsel, Southwest Region, Attention: Rules Docket No. 2003-SW-04-AD, 2601 Meacham Blvd., Room 663, Fort Worth, Texas 76137. You may also send comments electronically to the Rules Docket at the following address:
Guy Dalla Riva, Aviation Safety Engineer, FAA, Los Angeles Aircraft Certification Office, Propulsion Branch, 3960 Paramount Blvd., Lakewood, California 90712, telephone (562) 627-5248, fax (562) 627-5210.
Interested persons are invited to participate in the making of the proposed rule by submitting such written data, views, or arguments as they may desire. Communications should identify the Rules Docket number and be submitted in triplicate to the address specified above. All communications received on or before the closing date for comments will be considered before taking action on the proposed rule. The proposals contained in this document may be changed in light of the comments received.
Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the proposed rule. All comments submitted will be available, both before and after the closing date for comments, in the Rules Docket for examination by interested persons. A report summarizing each FAA-public contact concerned with the substance of this proposal will be filed in the Rules Docket.
Commenters wishing the FAA to acknowledge receipt of their mailed comments submitted in response to this proposal must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. 2003-SW-04-AD.” The postcard will be date stamped and returned to the commenter.
This document proposes adopting a new AD for MD Helicopters Inc. Model 600N helicopters. The AD would require reducing the life limit of the drive shaft from 16,000 hours TIS to 14,000 hours TIS and revising the component history card or an equivalent record to reflect the reduced life limit. This proposal is prompted by the review of final fatigue test data, which indicates that the life limit of the drive shaft should be reduced to prevent parts from remaining in service beyond their fatigue life. This condition, if not corrected, could result in failure of the drive shaft, loss of drive to the main
The FAA has reviewed MD Helicopters Inc. Service Bulletin SB600N-033, dated December 13, 2001 (ASB), which specifies reducing the life limit of the drive shaft at the next scheduled maintenance or within 1 year, whichever occurs first.
This unsafe condition created by this reduced fatigue life limit to a critical component is likely to exist or develop on other helicopters of the same type design. Therefore, the proposed AD would require within 100 hours TIS reducing the life limit for the drive shaft from 16,000 hours TIS to 14,000 hours TIS and reflecting the reduced life limit on the component history card or an equivalent record.
The FAA estimates that this proposed AD would affect 46 helicopters of U.S. registry, that it would take approximately .5 work hour per helicopter to update the records, and that the average labor rate is $60 per work hour. Based on these figures, the total cost impact of the proposed AD on U.S. operators is estimated to be $1,380.
The regulations proposed herein would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this proposal would not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this proposed regulation (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) if promulgated, will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A copy of the draft regulatory evaluation prepared for this action is contained in the Rules Docket. A copy of it may be obtained by contacting the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Safety.
Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows:
1. The authority citation for part 39 continues to read as follows:
49 U.S.C. 106(g), 40113, 44701.
2. Section 39.13 is amended by adding a new airworthiness directive to read as follows:
To prevent failure of the drive shaft, loss of drive to the main rotor hub, and subsequent loss of control of the helicopter, accomplish the following:
(a) Revise the component history card or equivalent record for drive shaft, P/N 600N5510-1, by changing the life limit from 16,000 to 14,000 hours TIS. Before further flight, replace any drive shaft that has 14,000 or more hours TIS with an airworthy drive shaft.
(b) This AD revises the Limitations section of the maintenance manual by reducing the life limit of the drive shaft, P/N 600N5510-1, to 14,000 hours TIS.
(c) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, Los Angeles Aircraft Certification Office (LAACO), FAA. Operators shall submit their requests through an FAA Principal Maintenance Inspector, who may concur or comment and then send it to the Manager, LAACO.
(d) Special flight permits may be issued in accordance with 14 CFR 21.197 and 21.199 to operate the helicopter to a location where the requirements of this AD can be accomplished.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking; correction.
This action corrects a notice of proposed rulemaking that was published in the
Comments for inclusion in the Rules Docket must be received on or before June 10, 2003.
Brenda Mumper, Air Traffic Division, Airspace Branch, ACE-520A, DOT Regional Headquarters Building, Federal Aviation Administration, 901 Locust, Kansas City, MO 64106; telephone: (816) 329-2524.
Accordingly, pursuant to the authority delegated to me, the Brookfield, MO Class E airspace, as published in the
On page 23623, Column 3, second paragraph from the bottom, change “North Central Missouri Regional Airport, MO” to read “Brookfield, North Central Missouri Regional Airport, MO.”
Food and Drug Administration, HHS.
Proposed rule; extension of comment period.
The Food and Drug Administration (FDA) is extending to August 11, 2003, the comment period for a proposed rule published in the
Submit written or electronic comments on the proposed rule by August 11, 2003.
Submit written comments to the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to
Karen Strauss, Center for Food Safety and Applied Nutrition (HFS-821), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 02740-3835, 301-436-2375.
In the
In the March 13, 2003, proposed rule, FDA announced that the time period for public comment would be 90 days from the date of the publication in the
FDA believes that an extension of the comment period is appropriate, given the variety of issues raised by the proposed rule. However, because the agency wants to move forward on finalizing the rule as quickly as possible, FDA is extending the comment period only for an additional 60 days, until August 11, 2003. This extension will provide the public with a total of 150 days to submit comments. FDA does not intend to grant any additional time for extensions of the comment period.
Interested persons may submit to the Dockets Management Branch (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of three draft guidances for industry on “Developing Medical Imaging Drug and Biological Products.” These draft guidances are intended to assist developers of medical imaging drug and biological products (medical imaging agents) in planning and coordinating their clinical investigations and preparing and submitting investigational new drug applications (INDs), new drug applications (NDAs), biologics license applications (BLAs), abbreviated new drug applications (ANDAs), and supplements to NDAs or BLAs. The draft guidances provide information on how FDA will interpret and apply certain provisions in the agency's regulations on in vivo radiopharmaceuticals used for diagnosis and monitoring of diseases and conditions.
Submit written or electronic comments on the draft guidances by June 18, 2003. General comments on agency guidance documents are welcome at any time.
Submit written requests for single copies of the draft guidances to the Division of Drug Information (HFD-240), Center for Drug Evaluation and Research, Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, or the Office of Communications, Training, and Manufacturers Assistance (HFM-40), Center for Biologics Evaluation and Research, 1401 Rockville Pike, Rockville, MD 20852-1448. Send one self-addressed adhesive label to assist either office in processing your request. Submit written comments on the draft guidances to the Dockets Management Branch (HFA-305), Food and Drug
Kyong Kang, Center for Drug Evaluation and Research (HFD-160), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-827-7510, or George Q. Mills, Center for Biologics Evaluation and Research (HFM-573), Food and Drug Administration, 1401 Rockville Pike, Rockville, MD 20852-1448, 301-827-5097.
In the
FDA received numerous written comments on the medical imaging draft guidance. In addition, the agency held public meetings on January 25 and March 26, 1999, to discuss various issues concerning the medical imaging draft guidance. In the
After considering the comments that FDA received on the revised draft guidance, the agency has decided to issue the guidance again as a draft for comment. The agency has divided the draft guidance into three parts to make it more user-friendly. These three draft guidances are intended to assist developers of medical imaging agents in planning and coordinating their clinical investigations and preparing and submitting INDs, NDAs, BLAs, ANDAs, and supplements to NDAs or BLAs.
Part 1 of “Medical Imaging Drug and Biological Products,” entitled “Conducting Safety Assessments,” discusses how to conduct safety assessments of medical imaging agents. Part 2, entitled “Clinical Indications,” discusses how clinical development programs for medical imaging agents can be tailored to reflect the use of these agents for diagnosis and monitoring of diseases and conditions. Part 3, entitled “Design, Analysis, and Interpretation of Clinical Studies,” discusses how to design a clinical development program for a medical imaging agent, including selecting subjects, and how to acquire, analyze, and interpret medical imaging data. Collectively, once finalized these draft guidances will provide information on how FDA will interpret and apply certain provisions in the final rule, published in the
These draft guidances are being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidances represent the agency's current thinking on different aspects of the development of medical imaging agents. They do not create or confer any rights for or on any person and do not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statutes and regulations.
Interested persons may submit to the Dockets Management Branch (see
Persons with access to the Internet may obtain the documents at
These guidances contain information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The guidances would not impose any additional reporting burden because information on the safety and effectiveness of medical imaging agents in applications for marketing approval and INDs is already required by existing regulations. In fact, clarification by the guidances of FDA's standards for evaluation of medical imaging agents is expected to reduce the overall burden of information collection. FDA received no comments on the analysis of information collection burdens stated in the notice of availability of the original draft guidance published in the
Agricultural Marketing Service, USDA.
Reopening and extension of the comment period.
Notice is hereby given that the comment period on the proposed new United States Standard for Grades of Frozen Onions is reopened and extended.
Comments may be submitted on or before June 12, 2003.
Written comments may be submitted to: Chere L. Shorter, Processed Products Branch, Fruit and Vegetable Programs, Agricultural Marketing Service, U.S. Department of Agriculture, STOP 0247, 1400 Independence Avenue, SW., Washington, D.C. 20250-0247; fax (202) 690-1087; or e-mail
Chere L. Shorter at (202) 720-5021 or e-mail at
A notice was published in the
A major trade association, American Frozen Food Institute (AFFI) representing frozen food processors, requested that additional time be provided for interested persons to comment on the proposed standard. AFFI believes that extending the comment period will enable enough time to assemble all the comments from their members and to reach a consensus among the many processors in their membership. After reviewing the request, the Department is reopening and extending the common period in order to allow sufficient time for all interested persons to file comments. This notice provides for an additional 30 day comment period for interested parties to comment on the standards.
Animal and Plant Health Inspection Service, USDA.
Notice of meeting.
Pursuant to the Federal Advisory Committee Act (5 U.S.C. App. II), we are giving notice of a meeting of the Secretary's Advisory Committee on Foreign Animal and Poultry Diseases.
Sessions will be held from 1 p.m. to 5 p.m. on June 3, 2003, and from 8 a.m. to 5 p.m. on June 4 and 5, 2003.
The meeting will be held in the Conference Center at the USDA Center at Riverside, 4700 River Road, Riverdale, MD.
Dr. Joseph Annelli, Chief Staff Veterinarian, Emergency Programs Staff, VS, APHIS, 4700 River Road Unit 41, Riverdale, MD 20737-1231; (301) 734-8073.
The Secretary's Advisory Committee on Foreign Animal and Poultry Diseases (the Committee) advises the Secretary of Agriculture on actions necessary to prevent the introduction of foreign diseases of livestock and poultry into the United States. In addition, the Committee advises the Secretary on contingency planning and on maintaining a state of preparedness to deal with these diseases, if introduced.
The meeting will focus on the U.S. animal health emergency management system and the foreign animal disease situation worldwide and its relevance to the United States. The meeting will be open to the public. However, due to the time constraints, the public will not be allowed to participate in the Committee's discussions.
You may obtain an agenda for the meeting by contacting Dr. Joseph Annelli at the address listed under
You may file written statements on meeting topics with the Committee before or after the meeting by sending them to Dr. Joseph Annelli at the address listed under
Please note that a fee of $2.25 is required to enter the parking lot at the USDA Center. The machine accepts $1 bills and quarters.
Upon entering the building, visitors should inform security personnel that they are attending the Advisory Committee Meeting on Foreign Animal and Poultry Diseases. Identification is required. Visitor badges must be worn at all times while inside the building.
Farm Service Agency, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the Farm Service Agency's (FSA) intention to request a reinstatement and revision of a previously approved collection. This information is used to support FSA in conducting business and accepting signatures on certain documents from individuals acting on behalf of others.
Comments on this notice must be received on or before July 18, 2003 to be assured of consideration.
Virgil Ireland, Agricultural Program Specialist, Emergency Preparedness and Program Branch, Production, Emergencies, and Compliance Division, FSA, at (202) 720-5103.
The FSA-211 also provides FSA, CCC, and RMA a source to verify an individual's authority to sign and act for another in the event of errors or fraud that require legal remedies. The information collected on the FSA-211 is limited to the grantor's name, signature and identification number, the grantee's name and address, and the applicable FSA, CCC, and RMA programs.
Proposed topics for comment include: (a) Whether the collection of information is necessary for the proper performance of the functions of the USDA service center; (b) the agency's estimate of burden; (c) methods to enhance the usefulness of the information collected; or (d) ways to minimize the burden of the collection of the information on those who respond. Comments must be sent to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503, and to Virgil Ireland, Agricultural Program Specialist, USDA-FSA-PECD, STOP 0517, 1400 Independence Avenue, SW., Washington, DC 20250; telephone (202) 720-5103; or fax (202) 690-3632. Copies of the information collection may be obtained from Mr. Ireland at the above address.
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Forest Service, USDA.
Notice of meeting.
The California Coast Provincial Advisory Committee (PAC) will meet on June 11 and 12, 2003, in Arcata, California. The purpose of the meeting is to discus issues relating to implementing the Northwest Forest Plan (NWFP).
The meeting will be held from 1 p.m. to 5 p.m. on June 11, 2003, and from 8:30 a.m. to noon on June 12, 2003.
The meeting will be held at the Mad River Rapids Conference Room (Quality Inn), 3501 Janes Road, Arcata, CA.
Phebe Brown, Committee Coordinator, USDA, Mendocino National Forest, 825 N. Humboldt Avenue, Willows, CA 95988, (530) 934-1137; E-mail
Agenda items to be covered include: (1) Regional Ecosystem Office (REO) update; (2) Presentation on current Forest Service issues; (3) Update on planning for a Province fire ecology/fuels treatment workshop; (4) Presentation on Survey and Manage Draft Supplemental Environmental Impact Statement and Aquatic Conservation Subcommittee comment recommendations; (5) Work on the Ground Subcommittee discussion of proposed timber harvest issue; (6) Forest Service Region 5 review of NWFP; (7) NWFP Implementation Monitoring; and (8) Public comment. The meeting is open to the public. Public input opportunity will be provided and individuals will have the opportunity to address the Committee at that time.
Forest Service, USDA.
Notice of meeting.
The Tehama County Resource Advisory Committee (RAC) will meet in Red Bluff, California. Agenda items to be covered include: (1) Introductions, (2) Approval of Minutes, (3) Public Comment, (4) Chairman Report, (5) Project Proposals/Possible Action, (6) Update on Approved Projects, (7) General Discussion, (8) Update on Financial Possibilities.
The meeting will be held on June 12, 2003 from 9 a.m. and end at approximately 12 p.m.
The meeting will be held at the Lincoln Street School, Conference Room A, 1135 Lincoln Street, Red Bluff, CA. Individuals wishing to speak or propose agenda items must send their names and proposals to Jim Giachino, DFO, 825 N. Humboldt Ave., Willows, CA 95988.
Bobbin Gaddini, Committee Coordinator, USDA, Mendocino
The meeting is open to the public. Committee discussion is limited to Forest Service staff and Committee members. However, persons who wish to bring matters to the attention of the Committee may file written statements with the Committee staff before or after the meeting. Public input sessions will be provided and individuals who made written requests by June 8, 2003 will have the opportunity to address the committee at those sessions.
National Agricultural Statistics Service, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13) and Office of Management and Budget regulations at 5 CFR part 1320 (60 FR 44978, August 29, 1995), this notice announces the intention of the National Agricultural Statistics Service (NASS) to seek approval to revise and extend a currently approved information collection, the Agricultural Surveys Program.
Comments on this notice must be received by July 23, 2003, to be assured of consideration.
Comments may be mailed to Ginny McBride, NASS OMB Clearance Officer, U.S. Department of Agriculture, Room 5336 South Building, 1400 Independence Avenue SW., Washington, DC 20250 or sent electronically to
Carol House, Acting Associate Administrator, National Agricultural Statistics Service, U.S. Department of Agriculture, (202) 720-4333.
Uses of the statistical information are extensive and varied. Producers, farm organizations, agribusinesses, State and national farm policy makers, and government agencies are important users of these statistics. Agricultural statistics are used to plan and administer other, related Federal and State programs in such areas as consumer protection, conservation, foreign trade, education, and recreation.
The cattle survey portion of the programs will be changed for January 2004 only to add two questions regarding non-ambulatory cattle. Aggregated totals will be provided to the U. S. Department of Agriculture's Animal and Plant Health Inspection Service for the National Animal Health Monitoring System, which will assess the number of farm operations experiencing down animals. That information will be used in the design of a major study to be conducted in 2005.
The Agricultural Surveys Program had approval from OMB for a 3-year period. NASS intends to request that the program be approved for another 3 years. These data will be collected under the authority of 7 U.S.C. 2204(a). Individually identifiable data collected under this authority are governed by Section 1770 of the Food Security Act of 1985, 7 U.S.C. 2276, which requires USDA to afford strict confidentiality to non-aggregated data provided by respondents.
Copies of this information collection and related instructions can be obtained without charge from Ginny McBride, NASS OMB Clearance Officer, at (202) 720-5778.
All responses to this notice will become a matter of public record and be summarized in the request for OMB approval.
National Agricultural Statistics Service, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13) and Office of Management and Budget regulations at 5 CFR part 1320 (60 FR 44978, August 29, 1995), this notice announces the intention of the National Agricultural Statistics Service (NASS) to request extension of a currently approved information collection, the List Sampling Frame.
Comments on this notice must be received by July 23, 2003, to be assured of consideration.
Comments may be mailed to Ginny McBride, NASS OMB Clearance Officer, U.S. Department of Agriculture,
Carol House, Associate Administrator, National Agricultural Statistics Service, U.S. Department of Agriculture, (202) 720-4333.
The List Sampling Frame is used to maintain as complete a list as possible of farm operations. The goal is to produce for each state a relatively complete, current, and unduplicated list of names to sample for agricultural operation surveys. Information from these surveys is used by government agencies and educational institutions in planning, farm policy analysis, and program administration.
These data will be collected under the authority of 7 U.S.C. 2204(a). Individually identifiable data collected under this authority are governed by Section 1770 of the Food Security Act of 1985, 7 U.S.C. 2276, which requires USDA to afford strict confidentiality to non-aggregated data provided by respondents.
Copies of this information collection and related instructions can be obtained without charge from Ginny McBride, NASS OMB Clearance Officer, at (202) 720-5778.
All responses to this notice will become a matter of public record and be summarized in the request for OMB approval.
Rural Business-Cooperative Service, USDA.
Notice of extension of application deadline and clarification of previous notice.
The Rural Business-Cooperative Service (RBS) extends the deadline of June 6, 2003, for submitting applications for grant funds to purchase renewable energy systems and make energy efficiency improvements for agricultural producers and rural small businesses under Title IX, Section 9006, pursuant to enactment of the Farm Security and Rural Investment Act of 2002 announced in a notice of funds availability (NOFA) published April 8, 2003 (67 FR 17009). This action is also taken to provide additional information that clarifies the financial requirements for agricultural producers and requirements for utility interconnection agreements and power purchase arrangements. This extension will allow eligible applicants additional time to submit applications.
Accordingly, the deadline for submitting applications under the notice published April 8, 2003, (67 FR 17009) is extended to June 27, 2003. Applications postmarked after June 27, 2003, will be returned to the applicant with no action. Postage due applications will not be accepted.
USDA Rural Development State Offices published in the notice on April 8, 2003 (67 FR 17009).
RBS published a Notice of Funds Availability (NOFA) on April 8, 2003 (67 FR 17009) with an application deadline of June 6, 2003. Due to the application requirements outlined in the NOFA and the clarifications of two areas of the NOFA that are being provided as part of this notice, RBS is extending the application period until June 26, 2003.
The NOFA requires that agricultural producers submit a current balance sheet and income statement in a format that is generally required by commercial agricultural lenders. In addition, agricultural producers are required to provide financial statements for the past 3 years, including income statements and balance sheets, in the format that is generally required by commercial agricultural lenders. For agricultural producers, the requirement of the use of a format that is generally required by commercial agricultural lenders is satisfied by the use of “income tax returns, bank statements, balance sheet/income statements, or financial statements.” If the applicant chooses to submit last year's income tax return in lieu of a current income statement, a balance sheet and/or bank statement will be required. This requirement is necessary in order to determine the demonstrated financial need for the grant. Agricultural producers may submit only income tax returns to satisfy the requirement to provide financial statements for the past 3 years. For assistance in finding technical and feasibility resources useful in preparing an application under the NOFA, please access the Rural Development Web site,
RBS recognizes that the interconnection agreement and power purchase arrangements may take several months to arrange and execute. While the Agency always recognized this reality, language used in the NOFA to describe the requirement could have been more clear. Applicants are advised that a letter of intent between the utility and the applicant to enter into an interconnection agreement satisfies the requirement in the NOFA. Applicants are also advised that a letter of intent between the power purchaser and the applicant to enter into a power purchase arrangement satisfies the requirement in the NOFA. RBS recognizes that the utility and the power purchaser may be different entities.
Proposed collection; comment request.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)).
Written comments must be submitted on or before July 18, 2003.
Direct all written comments to Diana Hynek, DOC Paperwork Clearance Officer, (202) 482-0266, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW., Washington, DC 20230.
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Ms. Marna Dove, BIS ICB Liaison, (202) 482-5211, Department of Commerce, Room 6622, 14th & Constitution Avenue, NW., Washington, DC, 20230.
Activities include: (1) A reporting requirement that allows exporters to request an exception to the import certificate (or its equivalent) procedure. (2) Reporting requirement associated with requests for exceptions to the delivery verification procedure. (3) A certification by overseas importers to the U.S. government that he/she will import specific commodities from the U.S. and will not reexport such commodities except in accordance with U.S. export regulations.
Written submission, requests for information, copies of documents or requirements to send notifications submitted to BIS.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they will also become a matter of public record.
The Regulations and Procedures Technical Advisory Committee will meet on June 3, 2003, 9 a.m., Room 3884, in the Herbert C. Hoover Building, 14th Street between Constitution and Pennsylvania Avenues, NW., Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration on implementation of the Export Administration Regulations (EAR) and provides for continuing review to update the EAR as needed.
1. Opening remarks by the Chairman.
2. Presentation of papers or comments by the public.
3. Update on pending regulations.
4. Update on Bureau of Industry and Security initiatives.
The meeting will be open to the public and a limited number of seats will be available. Reservations are not accepted. To the extent time permits, members of the public may present oral statements to the Committee. Written statements may be submitted at any time before or after the meeting. However, to facilitate distribution of public presentation materials to Committee members, the Committee suggests that presenters forward the public presentation materials, two weeks prior to the meeting date, to the following address: Ms. Lee Ann Carpenter, OSIES/EA/BIS MS: 3876, U.S. Department of Commerce, 14th St. & Constitution Ave., NW., Washington, DC 20230.
For more information contact Lee Ann Carpenter on (202) 482-2583.
Import Administration, International Trade Administration, U.S. Department of Commerce.
The Department of Commerce is extending the time limit of the final results of the new shipper review of the antidumping duty order on freshwater crawfish tail meat from the People's Republic of China until no later than July 13, 2003. The period of review is September 1, 2001, through February 28, 2002. This extension is made pursuant to section 751(a)(2)(B)(iv) of the Tariff Act of 1930, as amended.
May 19, 2003.
Douglas Kirby or Thomas Gilgunn, AD/CVD Enforcement, Import Administration, International Trade Administration, U.S. Department of
Section 751(a)(2)(B)(iv) of the Act requires the Department to issue the final results of a new shipper review within 90 days after the date on which the preliminary results were issued. However, if the Department determines the issues are extraordinarily complicated, section 751(a)(2)(B)(iv) of the Act allows the Department to extend the deadline for the final results to up to 150 days after the date on which the preliminary results were issued.
On March 29, 2002, the Department received a timely request from Weishan Zhenyu Foodstuff Co., Ltd. (Weishan Zhenyu), in accordance with section 751(a)(2)(B) of the Act and section 351.214(c) of the regulations, for a new shipper review of the antidumping duty order on freshwater crawfish tail meat from the People's Republic of China (“PRC”), which has a September anniversary date, and a March semiannual anniversary date. On April 23, 2002, the Department initiated this new shipper review covering the period September 1, 2001, through February 28, 2002.
Pursuant to section 751(a)(2)(B)(iv) of the Act, the Department may extend the deadline for completion of the final results of a new shipper review if it determines that the case is extraordinarily complicated. The Department has determined that this case is extraordinarily complicated because of the issues that must be addressed, and the final results of this new shipper review cannot be completed within the statutory time limit of 90 days. As stated above, the Department received the questionnaire response from the importer after the preliminary results of this new shipper review were signed. Based on our review of the importer questionnaire response, we find that we need additional information to analyze the
This notice is published pursuant to sections 751(a)(2)(B) and 777(i)(1) of the Act.
Import Administration, International Trade Administration, Department of Commerce.
In accordance with 19 CFR 351.216 (2002), Troon Investments Limited (Troon) requested that the Department of Commerce (the Department) conduct a changed circumstances review of the antidumping duty order on industrial nitrocellulose (INC) from the United Kingdom. In response to this request, the Department is initiating a changed circumstances review of the above-referenced order.
May 19, 2003.
Howard Smith or Michele Mire, Office of AD/CVD Enforcement, Office 4, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-5193 or (202) 482-4711, respectively.
On March 28, 2003, Troon requested that the Department conduct an expedited changed circumstances review of the antidumping duty order on INC from the United Kingdom pursuant to section 751(b)(1) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.221(c)(3)(ii). Troon claims to be the successor-in-interest to Imperial Chemical Industries PLC (ICI) based on its December 31, 2002, purchase of the nitrocellulose business division of Nobel's Explosives Company, Ltd. (NEC), a subsidiary of ICI. The signatories of the agreement for the sale of this division are Troon's parent company, Inabata & Co., Ltd. (Inabata) of Japan, and NEC's parent company, ICI.
On April 11, 2003, Green Tree Chemical Technologies, Inc. (Green Tree), the sole U.S. producer of INC and the petitioner to this proceeding, notified the Department that it opposes Troon's request to be considered the successor-in-interest to ICI. In particular, Green Tree argues that differences between the management, cost of capital, distribution channels, and corporate interests and strategy of ICI/NEC and Inabata/Troon preclude Troon from being considered the successor-in-interest to ICI.
Imports covered by this review are shipments of INC from the United Kingdom. INC is a dry, white amorphous synthetic chemical with a nitrogen content between 10.8 and 12.2 percent, and is produced from the
INC is currently classified under Harmonized Tariff Schedule of the United States (HTS) item number 3912.20.0000. While the HTS classification number is provided for convenience and Customs purposes, the written description remains dispositive as to the scope of the product coverage.
Pursuant to section 751(b)(1) of the Act, the Department will conduct a changed circumstances review upon receipt of information concerning, or a request from an interested party for a review of, an antidumping duty order which shows changed circumstances sufficient to warrant a review of the order. The information submitted by Inabata/Troon regarding a change in ownership of the nitrocellulose business division of NEC shows changed circumstances sufficient to warrant a review.
In antidumping duty changed circumstances reviews involving a successor-in-interest determination, the Department typically examines several factors including, but not limited to, changes in: (1) management; (2) production facilities; (3) supplier relationships; and (4) customer base.
Concerning Inabata/Troon's request that the Department conduct an expedited antidumping duty changed circumstances review, the Department has determined that it would be inappropriate to expedite this action by combining the preliminary results of review with this notice of initiation, as permitted under 19 CFR 351.221(c)(3)(ii). Because of the parties' differing views and the Department's need for additional information, which we will address in a questionnaire to be issued in the near future to Inabata/Troon, the Department finds that expedited action is impracticable. Therefore, the Department is not issuing the preliminary results of its antidumping duty changed circumstances review at this time.
The Department will publish in the
During the course of this antidumping duty changed circumstances review, we will not change the cash deposit requirements for the merchandise subject to review, unless a change is determined to be warranted pursuant to the final results of this review.
This notice of initiation is in accordance with sections 751(b)(1) of the Act and 19 CFR 351.221(b)(1) of the Department's regulations.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The Gulf of Mexico Fishery Management Council will convene a public meeting.
The meeting will be held on June 5-6, 2003.
These meetings will be held at the New Orleans Airport Plaza Hotel and Conference Center, 2150 Veterans Boulevard, Kenner, LA; telephone: 504-467-3111.
Wayne E. Swingle, Executive Director, Gulf of Mexico Fishery Management Council; telephone: (813) 228-2815.
Although non-emergency issues not contained in the agenda may come before the Council for discussion, in accordance with the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA), those issues may not be the subject of formal Council action during this meeting. Council action will be restricted to those issues specifically
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Anne Alford at the Council (see
Office of Ocean and Coastal Resource Management (OCRM), National Ocean Service (NOS), National Oceanic and Atmospheric Administration, Department of Commerce.
Notice of public meeting in Rockport, Texas on the site selection process for the nomination of a candidate site for the National Estuarine Research Reserve System.
Wednesday, June 11, 2003 at 2 p.m.
Saltwater Pavilion, 810 Seabreeze Drive, Rockport Beach Park, Rockport, Texas 78383.
In accordance with section 315 of the Coastal Zone Management Act of 1972, as amended, the State of Texas and the National Oceanic and Atmospheric Administration (NOAA) intend to conduct a public meeting on June 11, 2003 in Rockport, Texas as part of NOAA's site selection process for the nomination of a candidate site for the National Estuarine Research Reserve System (Reserve System).
The mission of the Reserve System is to promote stewardship of the nation's estuaries through science and education using a system of protected areas. NOAA has developed a classification scheme and typology of national estuarine areas that places the coastlines of the United States into biogeographic regions and subregions. Reserves are selected to represent these biogeographic regions and subregions and the wide range of coastal and estuarine habitats found in the United States.
Site selection criteria for a new reserve are based on environmental representativeness; value for research, monitoring, education, interpretation, and stewardship; acquisition and accessibility considerations; and coastal management considerations. The site ultimately designated will be used by researchers, educators, and the general public to study estuarine ecology and resource management issues that can aid in coastal policymaking and management decisions.
During the past year, the State of Texas in consultation with NOAA has undertaken a process to identify a site that adequately represents the major estuarine characteristics of a coastal ecosystem in the western Gulf of Mexico. An estuary located in Texas would be the first site to represent the Western Gulf Subregion of the Louisianian Biogeographic Region (Galveston to Mexico).
After consideration of several possible sites along the Texas coast, the Texas National Estuarine Research Reserve Site Selection Committee and Site Evaluation Subcommittee have selected Mission/Aransas Estuary located on the central Texas coast as a candidate site for nomination as a potential reserve. The public meeting is being held to provide details and solicit comments on this proposed site.
At the public meeting, the University of Texas at Austin Marine Science Institute will provide an overview of the Reserve System Program, the Texas site selection process, a physical description of the proposed site, and an open question and answer period.
Following the public meeting, a site nomination document will be finalized based on existing research documents and literature, and comments received from NOAA, the Texas Site Selection Committee and Site Evaluation Subcommittee, and the general public. The final site selection document will then be sent to the Governor of Texas for approval. If approved, the Governor will forward the site selection package and a nomination letter to NOAA for final clearance. A draft and final Environmental Impact Statement and Management Plan must be prepared prior to final site designation.
The public meeting will be held on Wednesday, June 11, 2003 at 2 p.m. at the Saltwater Pavilion, 810 Seabreeze Drive within the Rockport Beach Park, Rockport, Texas 78383. Interested parties who wish to comment on the site selection are invited to attend.
Paul Montagna, University of Texas at Austin Marine Science Institute at (361) 749-6779 or
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce
Notice of public meetings.
The New England Fishery Management Council (Council) is scheduling a public meeting of its Enforcement Oversight Committee and Advisory Panel and a Joint Meeting of its Herring Oversight and Advisory Panel in June, 2003 to consider actions affecting New England fisheries in the exclusive economic zone (EEZ). Recommendations from these groups will be brought to the full Council for formal consideration and action, if appropriate.
The meetings will be held on June 2 and June 3, 2003. See
The meetings will be held in Portsmouth, NH and Portland, ME. See
Paul J. Howard, Executive Director, New England Fishery Management Council; (978) 465-0492.
Location: Urban Forestry Center, 45 Elwyn Road, Portsmouth, NH 03801; telephone: (603) 431-6774.
The committee will review habitat enforcement analyses for groundfish, scallops, and monkfish. The committee will also discuss the enforcement aspects of allowing fishing vessels to land fish, harvested on the same trip, at multiple ports. Finally, the committee will discuss any other business that comes before it.
Location: Holiday Inn by the Bay, 88 Spring Street, Portland, ME 04101; telephone: (207) 775-2311.
The panels will review the May 29, 2003 Plan Development Team (PDT) Report. They will develop goals and objectives for Amendment 2 to the Herring Fishery Management Plan. They will also begin development of alternatives for Amendment 2 and provide guidance to the Herring PDT.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Paul J. Howard (see
Department of Defense, Office of the Deputy Under Secretary of Defense (Installations and Environment).
Notice.
In compliance with section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Office of the Assistant Deputy Under Secretary of Defense (Environmental) announces the proposed extension of a public information collection and seeks public comment on the provisions thereof. Comments are invited on (a) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed information collection; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology.
Consideration will be given to all comments received by July 18, 2003.
Written comments and recommendations on the proposed information collection should be sent to the Office of the Deputy Under Secretary of Defense (Installations & Environment), Attention: Ms. Patricia Ferrebee, 3400 Defense Pentagon, Washington, 20301-3400.
To request further information on this proposed information collection or to obtain a copy of the proposed and associated collection instruments, please write to the above address, or call Ms. Patricia Ferrebee, Office of the Deputy Under Secretary of Defense (Installations & Environment), (703) 695-6107.
Respondents are community members of restoration advisory boards or technical review committees requesting technical assistance to interpret scientific and engineering issues regarding the nature of environmental hazards at an installation. This assistance will assist communities in participating in the cleanup process. The information, directed by 10 U.S.C. 2705, will be used to determine the eligibility of the proposed project, begin the procurement process to obtain the requested products or services, and determine the satisfaction of community members of restoration advisory boards and technical review communities receiving the products and services.
Department of Defense, Defense Security Cooperation Agency.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104-164 dated 21 July 1996.
Ms. J. Hurd, DSCA/COMPT/RM, (703) 604-6575.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittal 03-12 with attached transmittal, policy justification, and Sensitivity of Technology.
Department of Defense, Defense Security Cooperation Agency.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104-164 dated 21 July 1996.
Ms. J. Hurd, DSCA/COMPT/RM, & (703) 604-6575.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittal 03-16 with attached transmittal, policy justification, and Sensitivity of Technology.
Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, Defense Threat Reduction Agency, DoD.
Notice of intent.
Pursuant to section 102(2)(c) of the National Environmental Act (NEPA), 42 U.S.C. 4321-4370, as implemented by the Council of Environmental Quality Regulations (40 CFR parts 1500-1508), the Defense Threat Reduction Agency (DTRA) announces intent to prepare a Draft Programmatic Environmental Impact Statement (PEIS) in support of activities at White Sands Missile Range (WSMR), New Mexico. As a major cooperating agency, WSMR will participate in the preparation of the PEIS. Future development of DTRA's testing facilities and program, and its scope require an PEIS to adequately address potential environmental impacts.
Written comments may be forwarded to the Defense Threat Reduction Agency, ATTN: DTRA/TDTS, 1680 Texas St., SE., Kirtland AFB, NM 87117-5669. Emails may be forwarded to
LTC Thomas Van Alstyne, EN, Environmental Engineer, DTRA at (505) 846-6612 or email
White Sands Missile Range covers approximately 8,288 km
Alternatives may consist of alternative locations or modifications of specific activities. These alternatives will be developed during preparation of the Draft PEIS as a result of environmental analyses of the activities and public input.
Significant issues that will be addressed in the Draft PEIS include:
1. The continued operation and maintenance of various test structures used as targets for weapon system evaluations.
2. Construction of new test structures, enlargement of existing test beads, and possible development of new test beds.
3. Testing, operations and maintenance activities at tunnel targets in the Capitol Canyon area (HTDT).
4. The use of chemical and biological simulants in collateral damage tests.
5. Planned improvements to the DTRA Administrative Park within the PHETS boundaries. Public scoping meeting will be held in the vicinity of WSMR, New Mexico, to facilitate input to the PEIS. The schedule and location for these meetings will be announced in the news media and the
For those that cannot attend the public scoping meetings, written comments via mail or email are encouraged. Comments should clearly identify and describe the specific issue(s) or topics that the PEIS should address.
To be considered in the Draft PEIS, comments and suggestions should be received no later than 30 days following the public scoping meeting.
Department of Defense, Defense Intelligence Agency.
Notice.
Pursuant to the provisions of Subsection (d) of section 10 of Public Law 92-463, as amended by section 5 of Public Law 94-409, notice is hereby given that a closed meeting of the DIA Advisory Board has been scheduled as follows:
May 21-22, 2003 (8:30 a.m. to 5 p.m.).
The Defense Intellignece Agency, 200 MacDill Blvd., Washington, DC 20340.
Mr. Lawrence R. Carnegie, Program Manager/Executive Secretary, DIA Advisory Board, Washington, DC, 20340-1328 (703) 697-7898.
The entire meeting is devoted to the discussion of classified information as defined in section 552b(c)(1), title 5 of the U.S. Code, and therefore will be closed to the public. The Board will receive briefings and discuss several current critical intelligence issued in order to advise the Director, DIA.
National Defense University.
Notice of meeting.
Pursuant to Public Law 92-463, notice is hereby given of a forthcoming meeting of the National Security Education Board. The purpose of the meeting is to review and make recommendations to the Secretary concerning requirements established by the David L. Boren National Security Education Act, Title VIII of Public Law 102-183, as amended.
May 20, 2003.
The Crystal City Marriott Hotel, 1999 Jefferson Davis Highway, Arlington, Virginia 22202.
Edmond J. Collier, Deputy Director, National Security Education Program, 1101 Wilson Boulevard, Suite 1210, Rosslyn, Virginia 22209-2248; (703) 696-1991. Electronic mail address:
The Board meeting is open to the public.
Department of Defense.
Notice of advisory committee meeting date changes.
On Wednesday, March 26, 2003 (68 FR 14598), the Department of Defense announced closed meetings of the Defense Science Board (DSB) Task Force on Enduring Freedom Lessons Learned. The meetings originally planned for May 14-27, 2003, have been rescheduled for May 14-16, 2003. The meetings will take place at the U.S. Strategic Command, Colorado Springs, CO, and the Pentagon, Washington, DC.
Department of Defense.
Notice of advisory committee meeting.
The Defense Science Board Task Force on Enduring Freedom Lessons Learned will meet in closed session June 15-28, 2003, at the US Central Command Area of Responsibility (Theater). This Task Force will review current activities of Operation Enduring Freedom to determine both near and longer-term technical and operational considerations that could be used to improve this operation and future campaigns initiated in the War Against Terrorism.
The mission of the Defense Science Board is to advise the Secretary of Defense and the Under Secretary of Defense for Acquisition, Technology & Logistics on scientific and technical matters as they affect the perceived needs of the Department of Defense. At these meetings, the Defense Science Board Task Force will review and evaluate operational policy and procedures, command and control, intelligence, combat support activities, weapon system performance, and science and technology requirements.
In accordance with section 10(d) of the Federal Advisory Committee Act, Pub. L. 92-463, as amended (5 U.S.C. App. II), it has been determined that these Defense Science Board Task Force meetings concern matters listed in 5 U.S.C. 552b(c)(1), and that, accordingly, the meetings will be closed to the public.
National Security Agency/Central Security Service, DoD.
Notice.
This notice identifies the office in the National Security Agency/Central Security Service to which mandatory declassification review requests shall be addressed in accordance with 32 CFR 2001.54(a).
Requests shall be addressed to: National Security Agency/Central Security Service, 9800 Savage Road, Ft. Meade, Maryland 20755-6884, ATTN: DC324 (CPC), Suite 6884.
Ms. Linda Huffman at 301-688-7785.
Notice of intent to fund down the grant slate for the Partnerships in Character Education Program.
The Secretary intends to use the grant slate developed for the Partnerships in Character Education Grant program in Fiscal Year (FY) 2002 to make new grant awards in FY 2003. The Secretary takes this action because a significant number of high-quality applications remain on the last year's grant slate and limited funding is available for new grant awards in FY 2003.
We received a significant number of applications for grants under the Partnerships in Character Education Grant Program in FY 2002, and made 39 new grants. Because such a large number of high-quality applications were received, many applications that were awarded very high scores by peer reviewers did not receive funding last year.
Limited funding is available for new awards under this program in FY 2003. In order to conserve funding that would have been required for a peer review of new applications submitted under the program, we intend to select grantees in FY 2003 from the existing slate of applicants. This slate was developed during the FY 2002 competition using the selection criteria, competitive preference priority, and application requirements included in the May 21, 2002 notice. No changes to selection criteria, competitive preference priority, or application requirements will be required by this action.
Office of Safe and Drug-Free Schools, U.S. Department of Education, 400 Maryland Avenue, SW., Washington, DC 20202-6123. Telephone: (202) 260-3954.
Individuals who use a telecommunication device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at (800) 877-8339.
You may view this document, as well as all other Department of Education documents published in the
To use PDF, you must have Adobe Acrobat Reader, which is available free at this site. If you have questions about use PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, area at (202) 512-1530.
The official version of this document is the document published in the
20 U.S.C. 7247.
In accordance with 34 CFR 614.8, an application for a grant under this program must be received by the deadline date.
The Department is not bound by any estimates in this notice.
• A “page” is 8.5″ x 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
• Double space (no more than three lines per vertical inch) all text, including titles, headings, footnotes, quotations, references, and captions, as well as all text in charts, tables, figures, and graphs.
• Use a font that is either 12-point or larger or no smaller than 10 point.
The page limit does not apply to the title page, the table of contents, the assurances and justifications; or the one-page abstract, the budget narrative and budget forms, the resumes, the bibliography, or the letters of support and commitment, and the required appendices.
We will reject your application if—
• You apply these standards and exceed the page limit; or
• You apply other standards and exceed the equivalent of the page limit.
In evaluating an application for a new grant under this competition, the Secretary uses the selection criteria in EDGAR, sections 75.209 and 75.210. The application booklet includes the specific selection criteria used for this competition.
Under 34 CFR 75.105(c)(1) we do not give an application that meets the invitational priority a competitive or absolute preference over other applications.
You may also contact ED Pubs at its Web site:
Or you may contact ED Pubs at its e-mail address:
If you request an application from ED Pubs, be sure to identify this competition as follows: CFDA number 84.342A.
Brenda Shade, Preparing Tomorrow's Teachers to Use Technology Program, U.S. Department of Education, 1990 K Street, NW., Suite 7090, Washington, DC 20006-8526. Telephone: (202) 502-7773 or via Internet:
If you use a telecommunications device for the deaf (TDD), you may call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an alternative format (
Individuals with disabilities may obtain a copy of the application package in an alternative format by contacting that person. However, the Department is not able to reproduce in an alternative format the standard forms included in the application package.
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20 U.S.C. 1041-1044.
President's Board of Advisors on Historically Black Colleges and Universities, Education.
Notice of meeting.
This notice sets forth the schedule and proposed agenda of an upcoming meeting of the President's board of Advisors on Historically Black Colleges and Universities (Board). The notice also describes the functions of the Board. Notice of this meeting is required by section 10(a)(2) of the Federal Advisory Committee Act and is intended to notify the pubic of their opportunity to attend.
Wednesday, May 28, 2003.
8 a.m.-4 p.m.
The Board will meet in Washington, DC the Wyndham Hotel on 1400 M Street.
Ambassador Leonard H.O. Spearman, Executive Director, or Beverly Ward, Special Assistant, White House Initiative on Historically Black Colleges and Universities, 400 Maryland Ave., SW., Washington, DC 20202; telephone: (202) 502-9700.
The President's Board of Advisors on Historically Black Colleges and Universities is established under Executive Order 13256 dated February 12, 2002. The Board is established (a) to report to the President annually on the results of the participation of historically black colleges and universities (HBCUs) is Federal programs, including recommendations on how to increase the private sector role, including the role of private foundations, in strengthening these institutions, with particular emphasis on enhancing institutional planning and development, strengthening fiscal
The purpose of the meeting is to address administrative issues, such as annual ethics training.
Individuals who will need accommodations for a disability in order to attend the meeting (
An opportunity for public comment is available on May 28, 2003 between 3 p.m. and 4 p.m. Those members of the public interested in submitting written comments may do so at the address indicated above by Friday, May 25, 2003.
Records are kept of all Board proceedings and are available for public inspection at the office of the White House Initiative on Historically Black Colleges and Universities from the hours of 9 a.m. to 5 p.m.
Energy Information Administration (EIA), Department of Energy (DOE).
Notice of intent to release information about uranium mines and properties in the United States to other Federal government agencies for official uses.
The Energy Information Administration (EIA) is notifying the public of its intent to release, upon request from Federal government agencies for official uses, information about uranium mines and properties in the United States. The information is considered confidential. Information that may be released includes: (1) The U.S. Uranium Mines and Properties Database containing information about former uranium mines and properties that were active in the period 1940-1983; and (2) Uranium Mining and Processing Survey Information collected during the period 1971-2001. Currently, EIA has requests from the Environmental Protection Agency (EPA) and the Department of Interior's Bureau of Land Management (BLM) for uranium mines and properties information. The EPA request is for information from both the Uranium Mines and Properties Database and from Uranium Mining and Processing Survey Information about decommissioned, abandoned, closed or inactive uranium mines, transfer stations, tailings, and leases located in Northeastern Arizona, Northwestern New Mexico, and Southeastern Utah on Navajo Nation tribal lands, Navajo fee lands, and Navajo allotted lands. The BLM request is for information in the Uranium Mines and Properties Database. Laws, including the Comprehensive Environmental Response, Compensation, and Liability Act, require that the Department provide the requested information to the EPA and BLM.
EIA plans to release uranium mines and properties information to other Federal agencies for their official uses on or after June 20, 2003. Comments must be filed by June 13, 2003. If you anticipate difficulty in submitting comments within that period, contact the person listed below as soon as possible.
Comments should be directed to Luther Smith. To ensure receipt of the comments by the due date, submission is recommended by FAX (202-287-1934) or e-mail at (
Requests for additional information should be directed to Mr. Smith at the address listed above.
The Federal Energy Administration Act of 1974 (Pub. L. 93-275, 15 U.S.C. 761
In carrying out its mission, the EIA collects, compiles, and analyzes information on energy resources, production, demand, technology, and related economic and statistical information. The information is used to assess and report on the energy situation of the United States.
The EIA provides the public and Federal agencies with opportunity to comment on the energy-information projects conducted by EIA. EIA also, as appropriate, requests comments on important issues relevant to dissemination of its energy information. Comments received assist EIA in responding to requests for the energy information it has compiled from various sources.
The Uranium Mines and Properties Database information is based on the Federal government's Uranium Concentrate Procurement Program (1947-1970) and the related Uranium Ore Reserve Program (1947-1983). Throughout these programs, the Atomic Energy Commission (AEC) and successive Federal agencies obtained private-industry information that was needed to assure the success of the concentrate procurement and ore reserve programs. The AEC, Energy Research and Development Administration (ERDA), and DOE staff engineers and geologists also regularly monitored private-industry activities to assure the capability to prepare timely internal reports on uranium exploration, mining, reserves, concentrate production, and important industry activities. It is EIA's view that information requested in conjunction with these programs was provided to the Federal government with the understanding that it would be treated
Management of the Uranium Concentrate Procurement Program, formerly under the Manhattan Engineer District of the Army Corps of Engineers, was transferred by early 1947 to the AEC as a key responsibility. The AEC's critical mission included the acquisition of uranium concentrates to meet defense needs and the development of a domestic uranium ore reserves base adequate to meet the future demand as then foreseen. The AEC began in 1947 a major program for uranium exploration and development of a domestic uranium mining industry. The program was designed to utilize the full-scale participation of mining-industry firms, small miners, and private prospectors, and its success required that exploration activities were maintained at a high level. Through financial incentives issued by the AEC, private industry was encouraged to explore for uranium deposits. The AEC also conducted exploration projects for uranium in selected areas and made the results from those projects available to the private sector. These actions succeeded in stimulating a rapid rate of private industry participation by providing supporting services and information to the private sector. During the Uranium Concentrate Procurement Program, the AEC and successive agencies issued announcements that redirected the program or established new incentives as required to achieve the long term goals of the concentrate procurement effort. These announcements, in varying degree, altered the Federal government's informational requirements for the on-going uranium procurement and ore reserve programs.
The Uranium Ore Reserve Program was complementary to the Uranium Concentrate Procurement Program. The Uranium Ore Reserve Program dealt initially with the quantity and quality of uranium reserves on mining properties tributary to uranium mills, from which the AEC had contracted to buy uranium concentrates. The mills were to be amortized by the Government, generally in a short time period. AEC's responsibility was to assure that sufficient uranium ore to feed the mills existed on the tributary properties so the Government reasonably could expect to receive the amounts of uranium concentrate specified in the milling contracts and to assure that identified reserves were adequate for amortization of the milling projects proposed by industry firms.
The Uranium Ore Reserve Program's prime objective was collection of current and accurate information at that time on the supply of uranium ores in the Western United States. Assessment of the ore reserves for uranium deposits on individual properties required independent calculation of reserves by Federal government agency mining engineers. For this purpose, drill-hole and other engineering data for a large number of properties were made available to the government agencies by the mining companies.
In addition to quantitative data regarding ore reserves, data were also obtained about the deposits' physical locations, ownership, geological and geochemical characteristics, mining problems, and mining costs. Data were also routinely obtained about industry activities, including acquisition of land for uranium exploration, exploration and development activities, mine production of uranium ore, milling of ore, the costs associated with these activities, and the processing of uranium ore and production of concentrate. Data and costs for other activities were also obtained. The data for each uranium mine and property were compiled into an individual file (record). The files for all U.S. mines and properties (1940-1983) make up the database. The files may also contain official letters and documents, notes, and other specific information prepared by the government agency staff.
The government's uranium ore reserve effort, which began early in the Uranium Concentrate Procurement Program, was continued after 1970 when the procurement program was ended. Estimates of domestic uranium ore reserves and potential (undiscovered) resources made by the ERDA and DOE under the Uranium Ore Reserve Program were published annually by those agencies into early 1983.
Across all records in the mines and properties database, the quantity and quality of data, subject-matter, type of information, its relative completeness, and similarity of the information are variable. Some records contain a large amount of detailed, company and property-specific information, whereas other records contain more limited information. For the Uranium Mines and Properties Database, the list of identification codes for mine/property names contains about 8,700 ID-code/name combinations that were assigned for recording and tracking the mines and properties data. That number is believed to represent an approximate upper limit for the total number of records (files) created for uranium mine and property data during the Federal government programs.
The Uranium Mines and Properties Database contains historical, confidential information about the domestic uranium industry (1940-1983) that relates to, but is not limited to, the ownership of uranium mines and properties, ore reserves, mine development, mining operations, and ore and uranium concentrate production. The historical information is potentially helpful to other Federal agencies in reclamation projects at former uranium mine sites, processing sites, and related sites. Such uses may include, but are not limited to, documenting the history and nature of former site use and activities, determining the outlines of former mine (open pit and underground) areas and workings, and to potentially relocate sites of surface exploration boreholes.
The information obtained by the EIA in its Uranium Mining and Processing Surveys is submitted by domestic uranium mining and milling firms. The information is analyzed and disseminated by the EIA as non-company-specific information in a variety of printed and electronic-media products that are used by analysts and policymakers in the government and the private sector. (EIA's uranium information is available on its web site at http://www.eia.doe.gov/cneaf/nuclear/page/newuran.html.) The uranium industry information obtained in EIA's uranium surveys is not integrated with the U.S. Uranium Mines and Properties Database (1947-1983).
In addition to information obtained on its Uranium Mining and Processing Surveys, the EIA uses information contained in the Uranium Mines and Properties Database to annually prepare estimates of the domestic uranium ore reserve situation. The estimates of U.S. ore reserves made by the EIA are published annually in the “Uranium Industry Annual” report series (1985-2001); submitted to the Congress, the U.S. Department of Energy, and other Federal agencies as required; and periodically submitted to the Nuclear Energy Agency of the Organization for Economic Cooperation and Development and to the International Atomic Energy Agency.
The EIA is notifying the public of its intent to release, upon request from Federal government agencies for official use, information about uranium mines and properties in United States. The information is considered confidential. Information that may be released includes: (1) The U.S. Uranium Mines and Properties Database containing information about uranium mines and
Release of the information to other Federal agencies is consistent with the Federal Energy Administration Act of 1974 (Pub. L. 93-275, 15 U.S.C. 761
For the Uranium Mines and Properties Database, the particular types of information that would be released to other Federal agencies upon request may include, but are not limited to, the following: name for the mine operator/owner; beginning date and ending date for mining operations; total production from the mine; mining methods; nature and extent of the surface plant; number of employees who worked at the mine and period; mills to which the mined ore was shipped; historical photographs of the mine during the time it was in operation; maps that show mine workings in plan view, the pit walls and bottoms for open pit mines, and the location and extent of any underground mine workings; and drill-site locations for surface boreholes.
For the Uranium Mining and Processing Survey Information, the particular types of information that would be released to other Federal agencies upon request may include, but are not limited to, exploration, development, reserves, production, milling, processing, and employment information collected in the years 1971-1981 by the DOE and predecessor agencies and in the period 1982-2001 by the EIA from domestic uranium industry companies on the “Annual Uranium Exploration Survey,” (Form EIA-717 and predecessor forms for 1971-1984), and Schedule A (Uranium Raw Materials Activities) of the “Uranium Industry Annual Survey,” (Form EIA-858 for 1984-2001.)
The release of uranium mines and properties information to other Federal agencies for their official uses will not expand uranium industry data that will be provided in EIA's information products. The EIA will continue to maintain the confidentiality of information collected on its survey forms and will continue to use its disclosure rules, which are designed to protect confidential data, and withhold sensitive data from publication in individually-identifiable form. EIA will also require that any Federal agencies receiving confidential information from EIA will treat the information appropriately.
Federal Energy Administration Act of 1974 (Pub. L. 93-275, 15 U.S.C. 761
Take notice that on May 7, 2003, Black Marlin Pipeline Company (Black Marlin) tendered for filing as part of its FERC Gas Tariff, Original Volume No. 1, the following revised tariff sheets to be effective July 1, 2003:
Black Marlin states that this filing is made in part for administrative purposes and in part as a housekeeping matter to clarify, update and clean up several items in Black Marlin's tariff.
Black Marlin further states that copies of the filing have been mailed to each of its customers, interested State Commissions and other interested persons.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with Sections 385.214 or 385.211 of the Commission's Rules and Regulations. All such motions or protests must be filed in accordance with Section 154.210 of the Commission's Regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that on May 8, 2003, Clear Creek Storage Company, L.L.C. (Clear Creek) tendered for filing, as part of its FERC Gas Tariff, Original Volume No. 1, the following tariff sheets, with an effective date of July 1, 2003:
Clear Creek states that the filing is in compliance with the Commission's Order No. 587-R in Docket No. RM96-1-024.
Clear Creek explains that Order No. 587-R amended, 18 CFR 284.12, standards for interstate pipeline business operations and communications, to adopt (1) Version 1.6 of the consensus industry standards promulgated by the Wholesale Gas Quadrant (WGQ) of the North American Energy Standards Board (NAESB) and (2) WGQ standards governing partial day recalls. Clear Creek states that through this filing it will revise its tariff to reflect the changed standards so as to be consistent with Order No. 587-R.
Clear Creek states further that a copy of this filing has been served upon its customers and the Public Service Commission of Wyoming.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with Sections 385.214 or 385.211 of the Commission's Rules and Regulations. All such motions or protests must be filed in accordance with Section 154.210 of the Commission's Regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that on May 7, 2003, Enbridge Pipelines (KPC), hereinafter Enbridge KPC, tendered for filing as part its FERC Gas Tariff, First Revised Volume No. 1, the revised tariff sheets listed on the filing, proposed to be effective November 1, 2002.
Enbridge KPC states that the purpose of this filing is to establish negotiated rate authority for Enbridge KPC and to file negotiated rates applicable to services for Kansas Gas Service, a division of Oneok, Inc.
Enbridge KPC states that copies of this tariff filing are being served on all jurisdictional customers and applicable state regulatory agencies.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with Sections 385.214 or 385.211 of the Commission's Rules and Regulations. All such motions or protests must be filed in accordance with Section 154.210 of the Commission's Regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that on May 8, 2003, Questar Pipeline Company (Questar) tendered for filing as part of its FERC Gas Tariff, Original Volume No. 3, the following tariff sheets, to be effective March 1, 2003:
Questar states that it filed an application under 7(b) of the Natural Gas Act in Docket No. CP03-59-000, on March 5, 2003, to abandon service under a certificated agreement between Questar and Mid-Power Resource Corporation (Mid-Power).
Questar further states that on March 1, 2003, Mid-Power signed a letter indicating its agreement to the abandonment of this service, and, on April 24, 2003, the Commission issued an order granting approval of the abandonment, effective March 1, 2003. Therefore, Questar filed to revise tariff sheets reflecting the cancellation of Rate Schedule X-34.
Questar states that a copy of this filing has been served upon Questar's customers, the Public Service Commission of Utah and the Public Service Commission of Wyoming.
Any person desiring to protest said filing should file a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with Section 385.211 of the Commission's Rules and Regulations. All such protests must be filed in accordance with Section 154.210 of the Commission's Regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will
Take notice that on May 6, 2003, Transcontinental Gas Pipe Line Corporation (Transco) tendered for filing a copy of the executed service agreement amendment that contains a negotiated daily facilities reservation rate surcharge (facilities surcharge) under Transco's Rate Schedule FT for the costs of the expansion of the U.S. Steel Meter Station, a delivery point to PECO Energy Company (PECO). The effective date of this facilities surcharge is May 7, 2003, which is the anticipated in-service date of the U.S. Steel Meter Station expansion.
Transco states that Transco and PECO are parties to a service agreement, dated June 1, 2001, under Transco's Rate Schedule FT for firm transportation service under Transco's Leidy East Expansion Project. Transco further states that it has agreed to construct an expansion of the U.S. Steel Meter Station, a delivery point to PECO located on Transco's main line in Bucks County, Pennsylvania. Transco asserts that pursuant to Section 20.7 of the General Terms and Conditions of Transco's FERC Gas Tariff, Transco and PECO have executed an amendment to the service agreement to revise Exhibit C thereto to include a facilities surcharge for the expansion of the U.S. Steel Meter Station in addition to the negotiated daily reservation rate for PECO's firm transportation service under Transco's Leidy East Expansion Project. Transco states that the effective date of this facilities surcharge is May 7, 2003, which is the anticipated in-service date of the U.S. Steel Meter Station expansion.
Transco states that copies of the filing are being mailed to its affected customers and interested state commissions.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with Sections 385.214 or 385.211 of the Commission's Rules and Regulations. All such motions or protests must be filed in accordance with Section 154.210 of the Commission's Regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
The following filings have been made with the Commission. The filings are listed in ascending order within each docket classification.
Take notice that on May 2, 2003, Granite II Holding, LLC (Granite), Quixx Corporation (Quixx), Quixx Resources, Inc. (Quixx Resources), Energy Investors Funds Group, and EIF Mustang Holdings I, LLC (Mustang Holdings) (all collectively, Applicants) filed with the Federal Energy Regulatory Commission (the Commission) an application for authorization pursuant to Section 203 of the Federal Power Act and part 33 of the Commission's regulations (the Application). The Applicants state that the application seeks authorization for Granite, Quixx, and Quixx Resources to sell their ownership interests in Denver City Energy Associates, L.P. (DCE) to Mustang Holdings for cash. The Applicants state the DCE holds an undivided 50 percent interest in an approximately 489-MW generating facility near Denver City, Texas. The Applicants assert that jurisdictional assets included in the transaction are rate schedules, a long-term power purchase agreement, books and records, and certain facilities associated with the generation assets that are necessary to effectuate wholesale sales of electricity.
Applicants seek expedited review of the Application and request confidential treatment of certain documents submitted therewith.
Take notice that on May 6, 2003, Mountain View Power Company, L.L.C. (Applicant), filed with the Federal Energy Regulatory Commission an application for determination of exempt wholesale generator status pursuant to part 365 of the Commission's regulations.
Applicant states that it proposes to own or operate, or both own and operate, a natural gas-fired, combined cycle electric generation station, together with ancillary facilities, with an aggregate capacity of approximately 1,052, to be located in San Bernardino County, California. Applicant further states that all output from the generating facilities will be sold exclusively at wholesale.
Take notice that on May 6, 2003, Jersey Central Power & Light Company (Jersey Central) tendered for filing an amendment to its March 25, 2003 filing, as amended March 27, 2003, in Docket Nos. ER03-650-000 and ER03-650-001. Jersey Central states that the amendment redesignates a proposed interconnection agreement as PJM Interconnection, L.L.C., FERC Electric Tariff, Fifth Revised Volume No. 1, Original Service Agreement No. C890. In addition, Jersey Central states that in addition, the amendment deletes material that is no longer pertinent to the agreement.
Jersey Central states that a copy of this filing has been served upon parties to the agreement and each of the parties designated on the official service list for this proceeding.
Take notice that on May 7, 2003, LMP Capital, LLC (LMP Capital) filed an amendment to its application for market-based rates. LMP Capital states that the amendment supplies additional information requested in an April 29, 2003 deficiency letter by the Federal Energy Regulatory Commission including disclosure of direct ownership in LMP Capital and CAM Energy Products, LP and a request for a revision to the LMP Capital market-based rate tariff.
Take notice that on May 6, 2003, Marina Energy, LLC (Marina) tendered for filing with the Federal Energy Regulatory Commission (Commission) an amendment to its application for market-based rates as a power marketer. Marina states that the amendment to the initial filing insures that the Rate Schedule complies with the pagination and designation requirements of FERC Order No. 614 (2000).
Take notice that on May 6, 2003, Southern Company Services, Inc. (SCS), acting on behalf of Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Savannah Electric and Power Company (collectively Southern Companies), filed an Interim Agreement for Network Integration Transmission Service and Complementary Services between the Southeastern Power Administration (SEPA), and SCS, as agent for Southern Companies. SCS states that under the Interim Agreement, SEPA is allocating additional resources to certain of its customers and Southern Companies are providing additional transmission and complementary services to those customers. SCS states that the Interim Agreement is designated Rate Schedule FERC No. 400.
Take notice that on May 6, 2003, Virginia Electric and Power Company, doing business as Dominion Virginia Power (Dominion Virginia Power) tendered for filing an executed Generator Interconnection and Operating Agreement (Interconnection Agreement) between Dominion Virginia Power and Industrial Power Generating Corporation (Ingenco). Dominion Virginia Power states that the Interconnection Agreement sets forth the terms and conditions governing the interconnection between Ingenco's Shoosmith generating facility, located in Chester, Virginia, and Dominion Virginia Power's transmission system. Dominion Virginia Power requests an effective date of July 5, 2003.
Dominion Virginia Power states that copies of the filing were served upon Ingenco and the Virginia State Corporation Commission.
Take notice that on May 5, 2003, The Dayton Power and Light Company (DP&L) submitted for filing a Network Service Agreement and a Network Operating Agreement for Network Integration Transmission Service between DP&L and Buckeye Power, Inc. (Buckeye). DP&L states that these Agreements will provide for Network Integration Transmission Service under DP&L's Open Access Transmission Tariff. In addition DP&L states that the Attachment to the Network Service Agreement establishes monthly direct assignment charges for wholesale distribution service and metering provided to Buckeye over facilities owned by DP&L. DP&L also submitted for filing a Notice of Cancellation of DP&L's FERC Electric Rate Schedule No. 33, Rate Schedules FPC Nos. 3 through 29, Supplement No. 1 to Rate Schedule No. 70 and Supplement No. 1 to Rate Schedule FPC No. 2, consisting of a Power Delivery Agreement among Buckeye, the Cincinnati Gas & Electric Company, Columbus Southern Power Company, Monongahela Power Company, Ohio Power Company, Toledo Edison Company, and DP&L.
DP&L requests an effective date of June 30, 2003 for the cancellation and an effective date of July 1, 2003 for the Agreements and Attachment for Network Integration Transmission Service.
DP&L further states that it served copies of these filings on Buckeye, the Cincinnati Gas and Electric Company, Columbus Southern Power Company, Monongahela Power Company, Ohio Power Company, the Toledo Edison Company, and the Public Utilities Commission of Ohio.
Take notice that on May 6, 2003, One Nation Energy Solutions, LLC (ONES) petitioned the Federal Energy Regulatory Commission (Commission) for acceptance of ONES Rate Schedule FERC No. 1; the granting of certain blanket approvals, including the authority to sell electricity at market-based rates; and the waiver of certain Commission regulations.
ONES states that it intends to engage in wholesale electric power and energy purchases and sales as a marketer; that it is not in the business of generating or transmitting electric power; and is not affiliated with any other company, nor do its officers/members serve as officers, significant stockholders, or members of any other company.
Take notice that on May 6, 2003, PacifiCorp tendered for filing with the Federal Energy Regulatory Commission (Commission) a Notice of Cancellation of PacifiCorp's Rate Schedule No. 544 with San Diego Gas & Electric Company (San Diego) effective December 31, 2001.
PacifiCorp states that it has served copies of this filing to San Diego and the Public Utility Commission of Oregon.
Take notice that on May 6, 2003, Ameren Services Company (ASC)
Take notice that on May 6, 2003, Commonwealth Edison Company (ComEd) tendered for filing with the Federal Energy Regulatory Commission (Commission) a Notice of Cancellation of FERC Rate Schedule No. 16, Amendment No. 7 to an Interconnection Agreement between ComEd and Wisconsin Power and Light Company (Wisconsin Power) dated February 21, 1992. ComEd requests a cancellation effective date of May 31, 2003.
Take notice that on May 6, 2003, Maxim Energy Partners, LLC (Maxim Energy Partners) tendered for filing with the Federal Energy Regulatory Commission (Commission) a petition for acceptance of Maxim Energy Partners' Rate Schedule FERC No. 1; the granting of certain blanket approvals, including the authority to sell electricity at market-based rates; and the waiver of certain Commission regulations.
Maxim Energy Partners states that it intends to engage in wholesale electric power and energy purchases and sales as a marketer; that it is not in the business of generating or transmitting electric power; and that it is a Kansas limited liability company and is not affiliated with any other organization.
Take notice that on May 6, 2003, the California Power Exchange Corporation (CalPX) tendered for filing with the Federal Energy Regulatory Commission (Commission) its proposed Amendment No. 23 to the CalPX FERC Electric Service Tariff No. 2. CalPX states that it files this Tariff Amendment No. 23 to align CalPX's Tariff procedures with those proposed by the California Independent System Operator (ISO) in its April 15, 2003 filing of Amendment No. 51 to the ISO Tariff, which concerns preparatory market adjustments and reruns. CalPX states that by its Tariff Amendment No. 23, CalPX also requests that the time period for filing disputes on the ISO Settlement Statements for the preparatory adjustments/reruns be extended to 15 business days, which period shall begin on the date that CalPX provides the statements to its Participants.
CalPX states that it has served copies of the filing on its participants, on the ISO, and on the California Public Utilities Commission. CalPX requests that the amendment be made effective concurrently with the effective date of the ISO's Amendment No. 51.
Take notice that on May 8, 2003, Global Common Greenport, LLC (GCG) petitioned the Commission for acceptance of GCG's Rate Schedule FERC No. 1; the granting of certain blanket approvals, including the authority to sell electricity at market-based rates; and the waiver of certain Commission regulations.
GCG, states that it is an exempt wholesale generator, and will sell the entire output of its 54 MW generating facility located in Greenport, New York under long-term contract to the Long Island Power Authority (LIPA). GCG also states that it is is a limited liability company formed under the laws of New York principal place of business is New York, New York. GCG asserts that in transactions where GCG sells electric power it proposes to make such sales on rates, terms, and conditions to be mutually agreed to with the purchasing party.
Any person desiring to intervene or to protest this filing should file with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a motion to intervene. All such motions or protests should be filed on or before the comment date, and, to the extent applicable, must be served on the applicant and on any other person designated on the official service list. This filing is available for review at the Commission or may be viewed on the Commission's Web site at
In accordance with the National Environmental Policy Act of 1969 and the Federal Energy Regulatory Commission's (Commission) regulations, 18 CFR part 380 (Order No. 486, 52 FR 47897), the Office of Energy Projects has reviewed the application for amendment to licenses for the Lewis River Hydroelectric Projects (Merwin P-935, Yale P-2071, Swift No. 1 P-2111, and Swift No. 2 P-2213), located on the North Fork Lewis River in Cowlitz, Clark, and Skamania counties, Washington and has prepared a Final Environmental Assessment (FEA) for the projects. No Federal lands are involved.
The FEA contains the staff's analysis of the potential environmental impacts of the projects and concludes that approving the amendments to the licenses, with appropriate environmental protective measures, would not constitute a major federal action that would significantly affect the quality of the human environment.
A copy of the FEA is available for public inspection in the Public Reference Room of the Commission's offices at 888 First Street, NE., Washington, DC 20426. The FEA may also be viewed on the Internet at
Register online at
For further information, contact Allison Arnold at (202) 502-6346 or
May 12, 2003
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On July 6, 2000, PacifiCorp filed an application to amend its licenses for the North Fork Lewis River Hydroelectric Projects (Lewis River Projects) (Merwin P-935, Yale P-2071, and Swift No. 1 P-2111) and supplemented that filing on August 17, 2000. On August 17, 2000, Cowlitz PUD No. 1 (PUD) filed an application to amend its license for the Swift No. 2 Project (P-2213) also located on the Lewis River. The Swift No. 2 Project is operated by PacifiCorp. PacifiCorp and PUD request approval from the Federal Energy Regulatory Commission (Commission) to include within its licenses measures for protecting, enhancing, or mitigating impacts to endangered and threatened and proposed and candidate fish species under the Endangered Species Act of 1973, as amended (ESA). These measures are intended to provide PacifiCorp and PUD with ESA compliance for the Merwin, Yale, and Swift No. 1 and Swift No. 2 hydroelectric projects until collaborative relicensing is completed. By amending its licenses, PacifiCorp and PUD hope to incidental take of listed and proposed species occurring as a result of current facility operations.
In this Environmental Assessment (EA), Commission staff review the proposed amendments to the Merwin, Yale, Swift No. 1 and Swift No. 2 licenses to determine if the measures for protecting, enhancing, and mitigating impacts to fish species listed under the ESA will likely reduce incidental take of those species resulting from the operation of the four projects.
The recommended alternative is approving the amendment of PacifiCorp's and PUD's licenses to adopt and implement the proposed conservation strategy. Incorporating the terms of the conservation strategy into PacifiCorp's and PUD's licenses will significantly reduce incidental take of listed species resulting from operation of the Lewis River Projects. Such conservation measures likewise represent important near-term conservation opportunities that may be lost if not secured while the parties collaboratively devise long-term conservation strategies.
PacifiCorp and PUD (Licensees) have initiated a collaborative ALP for four hydroelectric projects on the North Fork Lewis River in Cowlitz, Clark, and Skamania counties in southwest Washington. PacifiCorp owns and operates the Merwin, Yale, and Swift No. 1 projects. PacifiCorp operates Swift No. 2 under a 1957 contract with Cowlitz PUD. Under that contract, PacifiCorp has sole charge and responsibility for generation and delivery of the power and energy from Swift No. 2.
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“Section 3. Manner of Operation of Swift Plant No. 2
(a) Pacific will operate and maintain Swift Plant No. 2 in an efficient manner, consistent with established electric utility practices for the operation and maintenance of hydroelectric projects of similar type and size and in accordance with any applicable provisions of the Federal Power Commission License for Swift Plant No. 2, as the same may be amended from time to time.
(b) Pacific shall perform the work hereunder as an independent contractor and shall not be subject to the control or supervision of the District except as to the results of the work.”
Cowlitz PUD, as licensee, has the right to notice of PacifiCorp's actions and such notice has been given. Cowlitz PUD also may wish to be involved in PacifiCorp's discussions with the Commission staff, USFWS and NMFS (and has been to date). However, as contract operator, PacifiCorp has full discretion to take necessary steps to obtain ESA compliance for its operation of Swift No. 2.
The current license for the Yale Project expired on May 1, 2001, five years prior to the expiration of the licenses for Swift Nos. 1 and 2 projects (May 1, 2006) and about eight years before the original expiration date of the current license for the Merwin Project (December 11, 2009). On April 1, 1999, the Commission approved PacifiCorp
Section 7(a)(2) of the ESA requires that federal agencies ensure that their actions do not jeopardize federally-listed species. The Commission has recognized PacifiCorp as a non-federal designee under Section 7 in a letter dated October 20, 1999. PacifiCorp has developed a multi-species Biological Assessment (BA) (Attachment A) that includes a number of measures to protect, enhance and mitigate project impacts to proposed and listed species under the ESA for the Commission's review and adoption. In the BA, PacifiCorp requests the Commission to amend its licenses, which constitutes a federal action triggering a Section 7 consultation. Specifically, PacifiCorp's application for amendment of its licenses to provide ESA compliance for its ownership of three of the facilities (Merwin, Yale and Swift No. 1) and operation of all four projects (Merwin, Yale and Swift Nos. 1 and 2).
The Proposed Action is Commission approval of the Application for Amendment of PacifiCorp's (Merwin, Yale, and Swift No. 1) and PUD's (Swift No. 2) Licenses.
The following section describes proposed measures to reduce the effects of the Lewis River Projects on certain fish species that are listed, proposed for listing, or candidates for listing under the ESA. PacifiCorp proposes to implement pertinent measures upon issuance of license article amendments by the Commission after consultation with the National Marine Fisheries Service (NMFS) and (USFWS) under section 7(a)(2) of the ESA, and subsequent issuance of a Biological Opinion (BO)(Attachment C), and its associated incidental take statement, as it pertains to the proposed operation of the Lewis River Projects. Table 5.1-1 summarizes PacifiCorp's proposed measures. The BO, filed June 28, 2002 by NMFS and USFWS, is consistent with and supports the proposed amendments to the license.
The Lewis River anadromous salmonids, with the exception of the fall chinook, are currently of hatchery origin from other basins and have been supplemented or introduced since the early 1930's. In addition, current management is aimed at maintaining hatchery stocks in the North Fork Lewis River for the purposes of sport harvest (essentially a terminal fishery) (WDFW and Western Washington Treaty Tribes 1997).
Given this background, PacifiCorp proposes to assist with acquisition of lands to protect and enhance fall chinook habitat downstream of Merwin dam. Chum will benefit from this action as well. The primary purpose is to provide juvenile wild fall chinook rearing to protect the remaining indigenous stock. Coho and steelhead are also known to utilize extensive rearing areas downstream of Merwin dam. PacifiCorp proposes to modify its existing ramping rates and also review the existing license flows downstream of Merwin dam to determine if the current flow regime is suitable for all anadromous species and life stages. In addition, PacifiCorp currently funds WDFW to evaluate hatchery affects on listed salmon and steelhead under a Section 10 permit held by the state and proposes to continue that funding.
Related to the unplanned outage and interruption of flow that occurred on June 6, 1999, PacifiCorp has been working with WDFW to identify measures that would provide for the potential adult salmon and steelhead production that was lost. Elements of the discussion include possible gravel enhancements downstream of Merwin, rehabilitation of a chum spawning site that was inundated by a landslide, habitat improvements on Cedar, Johnson, and Colvin creeks, or purchase of riparian habitat on Cedar Creek. WDFW and PacifiCorp are currently evaluating which of these options to pursue but any one of these will result in benefits to the listed species.
Anadromous salmonids utilize several areas downstream of Merwin dam for spawning and rearing. The majority of the spawning occurs upstream of the Lewis River Salmon Hatchery. Juvenile rearing occurs in many areas between the uppermost spawning sites and the lower river adjacent to the city of Woodland. The primary rearing site downstream of Merwin dam is Eagle Island, which is approximately seven miles downstream of Merwin dam and is considered to be prime fall chinook juvenile rearing habitat.
Eagle Island is a 259-acre parcel with an associated 20-acre mainland piece. Over 75 percent of the present day wild fall chinook rearing habitat is associated with the island. The island also provides critical habitat for adult and juvenile steelhead, coho, chum and cutthroat (WDFW 1998). Until this year, a developer owned the island with plans for residential development. The WDFW has made many attempts to purchase the island for protection of the habitat. In June 1999, Clark County obtained monies to match State funding for purchase of the island. PacifiCorp, through agreement with Clark County, has paid the county's portion of the funding to purchase the island and deed the property to the State. The funding obtained by Clark County will be used to protect and restore salmon and steelhead rearing areas through their Conservation Futures program to improve the habitat on the island for wildlife and set up a fund for continued preservation of Eagle Island.
PacifiCorp proposes to modify the current Merwin down-ramping rates to meet a new standard of 0.5 feet per three-hour period (with the intent to meet 2 inch/hour as best as possible). This down-ramping rate protects juveniles and fry using shallow stream margin habitat. Up-ramping will be increased from 1 ft/hr to 1.5 ft/hr. The up-ramping limitations focus on safety for those using the river below the project. A Standard Operating Procedure (SOP) will be developed that describes how ramping requirements will be accomplished. The SOP will be subject to NMFS and USFWS approval.
PacifiCorp currently funds WDFW to evaluate effects of hatchery outplanting from Merwin and North Fork Lewis River hatcheries on Columbia and Snake river listed species. With the addition of listed species within the basin, PacifiCorp proposes to expand efforts to evaluate hatchery effects on in-basin species.
The USFWS commented on the Yale application for a new license and suggested that PacifiCorp begin engineering studies concerning fish passage facilities at the projects. However, since the ALP will address basin-wide fish passage issues, PacifiCorp believes it is premature to propose specific passage measures at this time. PacifiCorp proposes to continue net and haul activities in cooperation with WDFW as directed by USFWS (letter from N. Gloman—USFWS, dated Nov. 12, 1998) and to expand efforts to the Swift No. 2 tailrace if needed. PacifiCorp initiated a pilot net and haul program at Swift No. 2 tailrace in 1999. According to the bull trout monitoring report (Lesko 2000 page 4), two bull trout were captured at the Swift 2 tailrace on October 2, 1999. However, PacifiCorp will continue its involvement in monitoring the presence of bull trout at the Swift No. 2 tailrace if USFWS and WDFW determine it to be necessary.
PacifiCorp proposes to evaluate a strobe light system to prevent bull trout entrainment at the Yale and Swift No. 1 spill and turbine intakes (
Habitat does not appear to be a limiting factor for cutthroat trout in the upper basin. In contrast, the primary limiting factor for Yale and Swift bull trout production is the availability of adequate spawning and rearing habitat. The fact that only 1
For spawning and rearing habitat protection, action could be taken to protect the existing habitat around Cougar Creek. Therefore, PacifiCorp has purchased land from Weyerhaeuser Corporation in the Cougar Creek riparian corridor to protect the bull trout spawning and rearing habitat and proposes a conservation easement that will be approximately a 500-foot buffer on Cougar Creek and a 200-foot buffer on Panamaker Creek. No other known spawning habitat for bull trout residing in Yale reservoir is known. Therefore, the protection of this habitat is very desirable. PacifiCorp shall maintain the property consistent with the conservation easement and BO and incidental take statement. Such maintenance may include, but is not limited to, planting of vegetation, removal of non-native or invasive plant species, other vegetation management and installation of boundary markers or fences. PacifiCorp will coordinate with USFWS and NMFS on maintenance and management of lands subject to the conservation easement. Management of the lands outside the easement will include road and culvert maintenance in the short term and may eventually be included in the Lewis River wildlife management plan at the completion of ALP settlement discussions. PacifiCorp and PUD recognize and intend that the conservation easement along Cougar and Panamaker creek riparian corridors are measures under the ESA for the benefit of the species in the entire range of all four projects.
PacifiCorp has implemented modifications to the Yale turbine intakes to resolve total dissolved gases (TDG) levels in the Yale tailrace. Temperature fluctuation in the Yale tailrace is currently being addressed
Information is lacking on bull trout in the Swift Creek arm and the location and status of known sub-adult rearing habitat in Swift reservoir. Therefore, PacifiCorp has entered into a contract with Weyerhaeuser Corporation to purchase lands on the east side of the Swift Creek arm (Devil's Backbone) for protection of shoreline rearing habitat and with the intent of placing a conservation easement along that adjacent riparian zone for the protection of that habitat in perpetuity. Such an easement will be created to protect and conserve the habitat for bull trout, cutthroat trout and other aquatic species and will provide a high level of certainty that long-term benefits will accrue to these species. PacifiCorp shall maintain the property consistent with the conservation easement and BO (Attachment C), and its associated incidental take statement. Such maintenance may include, but is not limited to, planting of vegetation, removal of nonnative or invasive plant species, other vegetation management and installation of boundary markers or fences. PacifiCorp will coordinate with USFWS and NMFS on maintenance and management of lands subject to the conservation easement.
This proposed conservation easement will result in increased protections for the adjacent riparian zone beyond that currently required by the Washington Forest Practice Act and associated regulations. For example, NMFS believes these regulations do not provide properly functioning riparian and instream habitats. Specifically, NMFS believes the base regulations do not adequately address LWD recruitment, tree retention to maintain stream bank integrity and channel networks within floodplains, and chronic and episodic inputs of coarse and fine sediment that maintain habitats that are properly functioning for all salmonid life stages. Therefore, the proposed placement of a conservation easement on these areas will benefit salmonids by enhancing and protecting the productivity of aquatic habitat in this area, providing such benefits in perpetuity.
PacifiCorp has been funding and participating in a WDFW/USFWS cooperative Swift bull trout population monitoring project since 1988. Currently, WDFW is utilizing a visual mark-recapture protocol to estimate reservoir population size. PacifiCorp proposes to continue providing partial funding and in-kind services to maintain the Swift population monitoring database.
Commission staff considered the Proposed Action and No Action alternatives until collaborative project relicensing is completed. Commission staff believe the Proposed Action is preferable because the proposed conservation measures will likely provide beneficial effects for listed, proposed and candidate fish species in the North Fork Lewis River project area. Securing essential habitat for listed species is important because these lands could be sold and developed in the future.
No alternatives to PacifiCorp's proposed measures were identified. Commission staff considered the Proposed Action and No Action until a new project license is issued by the Commission. No other alternatives were identified that met the purpose of providing near term ESA compliance. As discussed earlier, the Commission approved the use of the ALP for the Lewis River projects. A Collaborative Team consisting of PacifiCorp, PUD, federal, state, county and city agencies, the Yakama Nation, the Cowlitz Indian Tribe and non-governmental organizations and private citizens are working together to complete the relicensing process. Through this process, PacifiCorp proposed to negotiate a comprehensive settlement agreement covering natural and social resource management measures for the new license terms of its projects, including long term conservation strategies for ESA compliance. Thus, the measures in the PacifiCorp's BA (Appendix A) represent important near-term conservation opportunities that can provide immediate benefits to aquatic species in the Lewis River Basin while recognizing that the Collaborative Team would devise a long-term conservation strategies in the ALP settlement for ESA compliance.
Commission staff believe the Proposed Action is preferable because the proposed conservation measures will likely provide immediate benefits for listed, proposed and candidate fish species in the North Fork Lewis River project area. Securing essential habitat for listed species is important because these lands could be sold and developed in the future, subsequently becoming lost opportunities.
The No Action alternative would require denying the inclusion of ESA compliance measures within the Lewis River Projects' licenses. A denial would maintain the status quo and result in a lost opportunity to purchase and protect essential habitat for the species in the near term prior to settlement or new licenses.
The Commission publicly noticed the licensee's application on July 6, 2000. Table 6.1-1 lists those who filed motions to intervene.
Commission staff included a draft environmental assessment (DEA) in the
1995—PacifiCorp began working with the USFWS regarding the Yale Hydroelectric Project.
1998—PacifiCorp and Cowlitz PUD continued to work with the USFWS and began working with NMFS when the scope of analysis was expanded to include the remaining three hydroelectric projects on the North Fork Lewis River Watershed.
July 1999—PacifiCorp and Cowlitz PUD met with the USFWS, NMFS, and Commission staff to discuss habitat protection measures designed to protect and conserve salmon, steelhead and bull trout with the objective of obtaining authorization of incidental take under Section 7 of the ESA for the operations of the Lewis River Projects.
July 2000—On July 6th, PacifiCorp filed a draft single-party BA and application to amend the licenses for Merwin, Yale and Swift No. 1 Hydroelectric Projects.
August 2000—On August 16th, PacifiCorp and Cowlitz PUD jointly draft a BA for all four hydroelectric projects. PacifiCorp filed an amended application for amendment of PacifiCorp licenses and included a revised Exhibit E, a revised BA, and a revised EA. Cowlitz PUD filed an application to amend its license for the Swift No. 2 Hydroelectric Project.
October 2000—On October 4th, the Commission requested formal Section 7 consultation by letter to the NMFS and USFWS. The NMFS initiated consultation.
December 2000—On December 15th, the Commission sent additional information in a letter to the USFWS, per USFWS request. Commission staff noted that no other additional information was available. The USFWS initiated formal consultation on 27 December.
June 2002—On June 28th, NMFS and USFWS file their BO and its associated Incidental take statement. Formal consultation concluded.
Commission staff reviewed all comments received on the DEA (Attachment B). Below is a summary of and responses to the comments received.
The NMFS, USFS, and American Rivers submitted comments on the DEA. The NMFS and American Rivers also filed motions to intervene. All comments received are generally supportive of the proposed amendments in this Order. The USFS made numerous comments that extended beyond the scope of the proposed amendments.
The NMFS and American Rivers expressed concern that the DEA did not address, comprehensively, the impacts of ongoing operation of the Lewis River Projects on listed species but limited the scope to the specific measures contained in the amendment. The BA, which was included in the FEA, did address the impacts of ongoing operation on listed species to the extent it was known. However, as indicated earlier, the projects are undergoing the preparation of relicense applications. This effort will ultimately result in a comprehensive examination of project effects on listed species.
In addition, both NMFS and American Rivers expressed concern regarding the lack of details as to how the lands that are to be protected will be managed. As stated in the FEA and required in this order management activities will be consistent with the terms and conditions of the BO for each target species.
Finally, these entities expressed concern that, in the event that unforeseen circumstances cause the relicensing effort to become a protracted affair, the actions approved herein should have some time limits. Specifically their concern is that the protection measures may not afford the necessary protection for ongoing operation beyond the expiration of the existing licenses. Their does exist the possibility, albeit remote, that information will become available that indicates additional measures are required to address, as yet, unidentified effects to listed species associated with the ongoing operation of the subject projects. The ALP collaborative is in the process of undertaking studies or reviewing study results pursuant to the relicensing effort and it is possible that such efforts could reveal unidentified impacts. If this were to happen, then it is expected that Commission staff, in concert with the Licensee, NMFS, and USFWS, would undertake an effort to discuss the situation as appropriate.
The North Fork Lewis River Basin (Lewis River Basin) lies on the flanks of the southern Cascade Mountains of Washington State. The river flows in a general southwesterly direction from its source on the slopes of Mount Adams to the Columbia River 19 miles downstream of Vancouver, Washington. The river is 93 miles long and has a total fall of 7,900 feet, the greater part of which is in the upper reaches. At its mouth and up to the Lewis River Hatchery, the river stage is influenced by tides and subsequent backflow from the Columbia River. The area of the drainage basin is 1,050 square miles; its mean elevation is 2,550 ft.-mean sea level (msl). Slopes in the upper portions of the basin are generally steep, resulting from the incision of numerous streams and rivers into the geologically young landscape. Most of the tributaries have natural barrier falls or are too precipitous for spawning (Chambers 1957; Kray 1957). Areas to the south of the Merwin Project and downstream along the river are less steep, represented by rolling hills and flat woodland bottomlands.
The basin has a complex geologic history, having undergone Tertiary volcanism, several glaciations, and interglacial erosion and deposition. Bedrock surrounding the project
Soils in the basin are predominantly well drained and medium-textured, and were derived from volcanic ash or were formed in sediments derived from mixed volcanic rocks and ash. Slopes, which are variable from gentle to steep, range from flat to more than 70 percent. Soil erosion hazard is dependent on slope and vegetation cover; the erosion hazard increases with increasing slope and extent of bare soil.
The climate in the North Fork Lewis River basin is influenced by the Pacific Ocean to the west and the Cascade Range to the east. The Pacific Ocean provides a moderating influence on temperatures in the basin. Storms from the Pacific encounter the Cascade Range, forcing the air masses to rise, cool, and drop large volumes of precipitation. Levels of precipitation increase with elevation in this area. Average annual precipitation varies from 45 inches near Woodland, to over 140 inches on Mount Adams. The majority of the precipitation occurs during the rainy fall and winter months, with snow falling at higher elevations of the basin. Summers (July through mid-October) are generally drier.
The majority of the North Fork Lewis River basin is forested; a condition typical of the Southern Washington Cascades Province. However, an area of approximately 30 square miles within the upper basin was denuded by the May 18, 1980 eruption of Mount St. Helens. Most of the basin is within the western hemlock vegetation zone (Franklin and Dyrness 1988).
Basin lands provide winter range for deer and elk; mink and beaver are common in wetlands. Large numbers of amphibians have been observed in the basin, primarily in wetland and riparian/riverine habitats. Over 100 species of birds have also been observed, including waterfowl, raptors, and numerous species of passerines.
A large portion of the North Fork Lewis River basin is managed as commercial forest, and as such is undeveloped except for logging roads. In recent years, these lands have experienced increased recreation use and demand for residential development. Other land uses include farming in the lower elevation areas, hydropower, parks, and the Mount St. Helens National Volcanic Monument (Monument). Population densities are low. The small communities of Cougar, Chelatchie, and Amboy lie in the upper basin, along with scattered private homes and recreational properties. The largest town near the project is Woodland.
The following description covers all four hydroelectric projects in the North Fork Lewis River basin. The projects begin approximately 10 miles east of the small town of Woodland, Washington. The upstream sequence of the projects from the confluence of the Lewis and Columbia rivers is as follows: Merwin, Yale, Swift No. 2, and Swift No.1. The Merwin, Yale, and Swift No.1 projects represent a linked reservoir/powerhouse system covering over 30 miles of the Lewis River. The Swift No. 2 project does not include a dam and reservoir. It utilizes water directly from the tailrace of Swift No.1, which flows into a 3.2 mile-long canal that discharges through the Swift No. 2 powerhouse into Yale Reservoir.
The three-reservoir system is operated in a coordinated fashion to achieve optimum benefits for power production, flood control, and to provide for natural resources in the basin such as fish, wildlife and recreation. The four projects utilize the water resources within the North Fork Lewis River basin from elevation 50 ft msl (Merwin Project tailwater) to 1,000 ft msl (Swift No. 1 normal pool). The total usable storage in the reservoirs is 814,000 acre-ft. The total installed capacity for the four projects is 580 MW.
The Merwin Hydroelectric Project is a 136 MW plant owned and operated by PacifiCorp. The project is the furthermost downstream project of the four projects on the North Fork Lewis River, and is located approximately 35 miles northeast of Portland. Construction of the Merwin Project began in 1929 and was completed with a single unit in 1931. Two additional units were added to the project in 1949 and 1958.
Merwin Dam is located on the North Fork Lewis River 21 miles upstream from the confluence with the Columbia River. Merwin Dam is a concrete arch structure with a total crest length of 1,300 feet and a maximum height above its lowest foundation of 314 feet. The dam consists of an arch section 752 feet in crest length, a 75-foot-long gravity thrust block, a 206-foot-long spillway section, a non-overflow gravity section 242 feet long, followed by a concrete core wall section 20 feet high and extending 25 feet into the bank. The spillway is equipped with four taintor gates 39 feet wide and 30 feet high, and one taintor gate 10 feet wide and 30 feet high. The taintor gates have been extended to an elevation of 240 ft above msl by the addition of 5-foot flashboards.
The reservoir formed by Merwin Dam is about 14.5 miles long with a surface area of approximately 4,000 acres at elevation 239.6 feet above msl (full pool). At full pool, the reservoir has a gross storage capacity of approximately 422,800 acre-ft. Of this amount, 182,600 acre-ft are available between elevation 190 and 239.6 ft msl, and an additional 81,100 acre-ft are available if the reservoir is lowered to its allowable minimum level of 165 ft msl.
The Yale Hydroelectric Project is a 134 MW plant owned and operated by PacifiCorp. The project lies directly upstream of the Merwin Project on the North Fork Lewis River, approximately 40 miles northeast of Portland. Construction of the Yale Project began in 1951 and was complete by 1953. The project consists of a main embankment dam, saddle dam, reservoir, penstocks, powerhouse, and transmission line. The project is operated in coordination with the other three hydroelectric facilities on the North Fork Lewis River.
Yale Dam is located on the North Fork Lewis River approximately 30 miles upstream from the confluence with the Columbia River. Yale Dam is a rolled earthen fill embankment type dam with a crest length of 1,305 feet and a height of 323 feet above its lowest foundation point. Its crest elevation is 503-ft msl. The saddle dam is located
The reservoir formed by Yale Dam is approximately 10.5 miles long with a surface area of approximately 3,800 acres at elevation 490-ft msl (full pool). At full pool, the reservoir has a gross storage capacity of approximately 401,000 acre-ft. At the minimum pool elevation of 430-ft msl, the reservoir has a capacity of approximately 190,000 acre-ft.
The Swift No. 1 Hydroelectric Project is a 240 MW plant owned and operated by PacifiCorp. The project is the furthermost upstream hydroelectric facility on the North Fork Lewis River, lying directly upstream of the Swift No 2 Hydroelectric Project, or approximately 45 miles northeast of Portland. Construction of the Swift No. 1 Project began in 1956 and was completed in 1958. The project consists of a main embankment dam, saddle dam, reservoir, penstocks, powerhouse, and transmission line. It is operated in coordination with the other three hydroelectric facilities on the North Fork Lewis River.
Swift Dam is located on the North Fork Lewis River approximately 40 miles upstream from the confluence with the Columbia River and 10.5 miles upstream of Yale Dam. Swift Dam is a an earthen fill embankment type dam with a crest length of 2,100 feet and a height of 512 feet above its lowest foundation point. At the time of its construction, Swift dam was the tallest earthen fill dam in the world. Its overflow spillway, located in the left abutment, has a capacity of 120,000 cfs by utilizing two 50 foot by 51 foot taintor gates with the reservoir at elevation 1,000 ft msl. The elevation at the top of the taintor gates is 1,001.6-ft msl.
The reservoir formed by Swift Dam is approximately 11.5 miles long with a surface area of approximately 4,680 acres at elevation 1,000-ft msl (full pool). At maximum pool, the reservoir has a gross storage capacity of approximately 755,000 acre-ft. At the minimum pool elevation of 878-ft msl, the reservoir has a capacity of approximately 447,000 acre-ft.
The Swift No. 2 Hydroelectric Project is a 70 MW plant owned by Cowlitz PUD and, under contract, is operated and maintained by PacifiCorp. The project lies between the Swift No. 1 and Yale hydroelectric projects. The Swift No. 2 Powerhouse is located 3.2 miles downstream of the Swift No. 1 Powerhouse. Construction of the Swift No. 2 Project began in 1956 and was completed in 1958. The project consists of a power canal, penstocks, powerhouse, and transmission line. It is operated in coordination with the other three hydroelectric facilities on the North Fork Lewis River.
Basin lands provide winter range for deer and elk; mink and beaver are common in wetlands. Large numbers of amphibians have been observed in the basin, primarily in wetland and riparian/riverine habitats. Over 100 species of birds have also been observed, including waterfowl, raptors, and numerous species of passerines. More information regarding terrestrial resources may be found in the supporting BA (Attachment A) and BO (Attachment C).
Terrestrial resources associated with the four Lewis River Projects include wildlife comprised of plant communities, unique land forms, and a compliment of mammals, birds, amphibians, and reptiles.
Vegetation cover in the Lewis River basin is predominantly managed second-growth Douglas-fir forests and mixed conifer-hardwood forests typical of the Cascade region of Washington (Franklin and Dyrness 1988). Forest resource inventories conducted on PacifiCorp-owned lands for the Yale and Merwin projects identified 7,340 acres of upland forest and provided information on associated species, volume, site class, and overstory crown closure (Hildreth 1995). The upland forests consist of conifer, mixed conifer/hardwood forest, and hardwood forest. A unique lodgepole pine community occurs in the old lava flow in the Mount St. Helens area. Non-forest cover types include meadows, wetlands, transmission line right-of-way (ROW) and other project facilities, shrub-dominated communities, and a small portion of the lava flow area. Detailed maps of vegetation cover types were produced for relicensing the Yale Project; these are included in the license application and Terrestrial Resource FTR (PacifiCorp 1999). Wetlands in the project area occur in the vicinity of the Yale Project, Frazier Creek, the upper end of Lake Merwin and Yale Dam and along the transmission line ROW (PacifiCorp 1996b). Wetlands have been identified around Swift Dam (EDAW 2000).
Other sensitive habitats include caves, oak woodlands, old-growth forest stands, riparian areas, snag-rich forest stands, cliff/talus, meadows, and deer/elk winter range are present in the project vicinity (WDFW 1998). Functional riparian habitat in the project vicinity is present only at the upper end of Swift Reservoir, along the Swift bypass reach, and Lake Merwin. Other riparian habitat is primarily associated with the Lewis River downstream of Merwin Dam and with tributary streams, including Drift, Siouxon, Speelyai, Cougar, Canyon, Cresap, Rock, and Buncomb Hollow creeks.
A number of threatened, endangered, and sensitive (TES) plant species potentially occur in the vicinity of the projects. Only one TES plant, the green-fruited sedge, was identified in surveys conducted for the Yale Project (PacifiCorp 1999).
Wildlife species in the Lewis River basin are representative of southwest Washington and include a number of TES and state priority species (WDFW 1991) including nesting osprey and wintering and nesting bald eagles along the Lewis River and project reservoirs and northern spotted owls on Washington Department of Natural Resources (DNR) lands within 0.5 mile of the Lewis River Projects. No spotted owl nests have been documented in the old-growth conifer habitat on PacifiCorp lands.
Improving watershed conditions by purchasing conservation easements will provide direct and substantial benefits for wildlife and terrestrial species. Riparian areas are very productive biological areas for such species, providing important areas of food production, as well as cover areas for resting, watering, and feeding wildlife (Knutson and Naef 1997). Conservation easements also provide undisturbed areas where sensitive plant species may colonize and proliferate. Improving aquatic habitat conditions as proposed will also provide indirect benefits for various bird species including bald eagles, osprey, and other birds of prey that rely on aquatic species for food sources. Further, the Proposed Action will require compliance with the BO (Attachment C), and its associated incidental take statement, issued by NMFS and USFWS designed to protect and enhance TES and their associated habitats resulting in improvements in terrestrial resources relative to the No Action alternative.
More information regarding aquatic resources may be found in the supporting BA (Attachment A) and BO (Attachment C).
The Lewis River supports a variety of aquatic organisms. Merwin Dam, located approximately 21 miles upriver from the mouth of the Lewis River, is a barrier to upstream migration. The river
Numerous fish species are known to occur in Lake Merwin, Yale Lake, and Swift Reservoir (
A list of analysis species was developed during planning sessions conducted for the Lewis River Watershed Studies scoping process. Contributors to this list include but are not limited to: WDFW, NMFS, USFWS, and USFS). Analysis species to be included in aquatic studies are listed in Table 7.3-1 (note this list also includes taxonomic groups or guilds).
The following sections present information on the status of several key aquatic species in the Lewis River basin.
In the Lewis River, spring Chinook have been supplemented with Cowlitz and Carson hatchery stocks since 1956 (pers. comm., R. Nicolay, WDFW, 1999). The bright fall Chinook run is considered a wild run although the run has experienced intermittent supplementation from 1930 through 1986 (pers. comm., R. Nicolay, WDFW, 1999). This stock is one of only two self-sustaining, wild fall Chinook salmon populations in the Columbia River basin. The Lewis River bright fall Chinook salmon is a designated index stock used for monitoring purposes under the Pacific Salmon Treaty. The Tule fall Chinook run has also been supplemented with Kalama stock since 1930.
Very little is known about the life history of chum in the Lewis River. Smoker
The Lewis River supports populations of winter and summer steelhead. The number of adults returning to the river and run-timing for each of these species are determined by trapping adult migrants in the fish ladder at the Lewis River hatchery and the fish trap at Merwin Dam. In addition, WDFW conducts spawning surveys on the East Fork Lewis River and Cedar Creek. The primary steelhead spawning and rearing areas in the Lewis River are located downstream of Merwin Dam in the mainstem, Cedar and Johnson creeks, and the East Fork Lewis River. WDFW continues spawning surveys on Cedar Creek and has installed a trap at the Grist Mill fish ladder to monitor upstream migration and to segregate hatchery and wild stocks. There are no existing data on the average annual size of the natural outmigration.
Currently, bull trout are listed as threatened under the ESA and are present in all three reservoirs. Self-sustaining bull trout populations exist in Yale and Swift reservoirs. Bull trout found in Lake Merwin are thought to be introduced from upstream, either through spill or turbine operations. There is no known spawning habitat available to bull trout in the reservoir.
The Columbia River population of bull trout is comprised of 141 subpopulations. The Lewis River basin contains two of the 20 subpopulations in watersheds of nine major tributaries of the lower Columbia River (63fr111, June 10, 1998). The number of bull trout inhabiting the Lewis River basin is believed to be low. Spawning and
Bull trout populations in the Lewis River basin are found in Merwin, Yale, and Swift reservoirs. Spawning populations are found only in Yale and Swift reservoirs. The bull trout populations in the Lewis River basin are considered as having a “moderate” risk of extinction (WDFW 1998).
Both early and late run coho salmon are endemic to the Lewis River (WDFW and USFWS 1951). Supplementation of the runs has occurred since the days of the Johnson Creek facility dating back to 1909. Historically, native stocks were used for supplementation; however, in 1965 early coho were supplemented with eggs taken from Big Creek, Oregon (pers. comm., Robin Nicolay, WDFW, Lewis River Hatchery Complex Manager). Late-run coho were supplemented in 1981 with Cowlitz River stock. Today, the Lewis River hatchery continues to produce 3.3 million coho for PacifiCorp's obligation under the Merwin license. PacifiCorp funds about 70 percent of the hatchery operations and maintenance (O&M) for that facility.
Contrary to increasing trends in the Toutle River, WDFW states that its population numbers for sea-run cutthroat trout are still critically low in the Lewis River (approximately 100 total adults in run). For example, 1998 sea-run cutthroat creel returns on the Lewis River numbered only 20 (Hillson and Tipping 1999). Based on this information, WDFW has elected to discontinue cutthroat trout production at Merwin Hatchery.
Section 7(a) of the ESA requires federal agencies to ensure that their actions are not likely to jeopardize the continued existence of federally listed threatened and endangered species, or result in the destruction or adverse modification of designated critical habitat. NMFS has identified that the following factors have significantly contributed to the decline of steelhead and other salmonids (NMFS 1996): (1) The present or threatened destruction, modification, or curtailment of its habitat or range; (2) over-utilization for commercial, recreational, scientific, or education purposes; (3) disease or predation; (4) inadequacy of existing regulatory mechanisms; or (5) other natural or human-made factors affecting its continued existence.
Adoption of the No Action alternative will likely continue to contribute to the decline of these species per the factors listed above given that no ESA measures will be in place to protect listed or candidate species. Under the Proposed Action, measures will be adopted to benefit listed and proposed species occurring in the project area. These measures, including acquisition of conservation easements, modification of project ramping rates, and implementation of technological measures to reduce entrainment, will help conserve listed and proposed species during the period of project relicensing.
Maintenance and improvement of water quality, temperature, and ecological productivity in the project area.
The Proposed Action will adopt measures to modify turbine intakes to resolve TDG levels in the Yale tailrace, evaluate temperature fluctuation in the Yale tailrace, and study of temperatures and total dissolved gases (TDG) in the Swift No. 1 and Swift No. 2 tailraces. Improvement of water quality conditions will improve conditions for listed fish species that exist in the Yale and Swift tailraces.
Protection of listed species and their progeny from stranding as a result of rapid flow fluctuations
The Proposed Action will adopt measures to implement Merwin redundancy equipment to prevent potential dewatering of riverbed, fish trap and hatcheries in efforts to protect listed species including steelhead, chinook, chum, coho, and cutthroat. Collaboration with WDFW will continue to provide habitat enhancement measures in the Lewis River and tributaries to benefit salmon populations.
Entrainment through spill or turbine intakes represents a potential threat to the Yale and Swift bull trout populations. The Proposed Action will address entrainment issues, however, measures are not likely to be in place until after additional studies are complete and settlement for Lewis River relicensing is achieved. Measures adopted by the Proposed Action will include a study using the Flash Technology strobe light system to determine the effectiveness of strobe lighting as a deterrent for entrainment. This study would take place during the relicensing process. If strobe lighting proves effective for bull trout and other resident species, bull trout and cutthroat trout entrainment should be curtailed resulting in substantial population level benefits in terms of reduced turbine and spill mortality.
Land has been acquired to protect and enhance fall chinook habitat downstream of Merwin Dam. Eagle Island is a 259-acre parcel with an associated 20-acre mainland piece. Over 75% of the present day wild fall chinook rearing habitat is associated with the island. The island also provides important habitat for adult and juvenile steelhead, coho, chum and cutthroat (WDFW 1998). The primary purpose of the acquisition is to provide juvenile wild fall chinook rearing to protect the remaining indigenous stock. Further, the Proposed Action will result in the modification of existing ramping rates and a review of the existing license flows downstream of Merwin Dam to determine if the current flow regime is suitable for all anadromous species' life stages.
With the exception of possible rearing habitat in Ole and Rain creeks, there are limited opportunities for expanding or improving habitat for the Yale bull trout population. However, the Proposed Action will adopt measures regarding the acquisition of lands to protect bull trout and cutthroat trout spawning and rearing habitat in the Cougar/Panamaker Creek, Swift Creek, and Devil's Backbone areas. Conservation easements will be established with the express purpose of conserving and protecting in perpetuity bull trout and cutthroat trout spawning and rearing habitat. These proposed conservation easements will result in increased protections for the adjacent riparian zones beyond that currently required by the Washington Forest Practices Act and associated regulations.
Failing to adopt measures identified in the Proposed Action would result, at best, in maintaining the status quo. The No Action alternative could result in current potential adverse project effects on anadromous fish resulting from a lack of fish passage, inadequate instream flows and ramping rates, and spill. Further, opportunities to purchase and protect important aquatic and riparian habitats would be lost resulting in increased impacts to listed species. Therefore, the Proposed Action will likely result in improvements in aquatic resources relative to the No Action alternative.
The Lewis River Projects provide many recreation opportunities, one component of the large number of recreation facilities and opportunities in the Lewis River basin. Recreation development intensity and visitation at the three reservoirs range from more developed active recreation activities at Merwin and Yale, located closest to the Interstate 5 (I-5) corridor and Portland/Vancouver population base, to more primitive recreation activities at Swift, located farthest from the I-5 corridor.
Popular recreation activities at these projects include camping (RV and tent), picnicking, boat and bank fishing, hunting, hiking, power boating (including personal watercraft), sailing, wind surfing, swimming, water skiing, horseback riding, cycling (road and mountain), relaxing, and sightseeing.
Yale Lake recreation facility occupancy and use were examined during previous relicensing studies. The occupancy level at the three campgrounds is at 95 percent on weekends during the peak recreation period (July and August). From Memorial Day to Labor Day weekend, the weekly occupancy level ranges from 47-73 percent (PacifiCorp 1999). Day use site occupancy averages only 8-14 percent season long; however, overflow conditions do occur approximately five times annually, particularly on hot days.
Swift Reservoir has two developed recreation facilities at the east end of the reservoir, Swift Campground and Eagle Cliff Park. Swift Campground has 93 campsites, a 2-lane boat ramp with parking spaces, and a day use beach swim area. Eagle Cliff Park is located at the far eastern tip of the reservoir and has ten picnic sites, a restroom, and a parking area.
While the Swift No. 2 Project has no developed recreation facilities, the Swift No. 2 power canal does receive consistent use by bank anglers. In addition, an annual fishing derby for disabled recreationists is held at the Swift No. 2 power canal, which is stocked with fish for the event.
All PacifiCorp recreation sites are open to the public during the primary recreation season, while Merwin Park and Speelyai Bay Park at Lake Merwin and Yale Park at Yale Lake are open year-round. Cresap Bay Campground at Lake Merwin is generally open from Memorial Day weekend to late September. Saddle Dam, Cougar Park, and Cougar Camp on Yale Lake are open from Memorial Day weekend to Labor Day weekend. Beaver Bay on Yale Lake is open from late April until mid-late September to accommodate spring fishing and fall hunting seasons. The use season at Swift Campground is also extended to accommodate fall hunter use and fishing, generally from late April until mid-November. Elk and deer hunting seasons for all types of hunts extend from September 1 through December 15 for management units in the immediate area. Peak hunting occurs during times when modern firearms are allowed; for elk this is November 6 through 14, and for deer this is October 16 through 31 (WDFW 1999b). Recreation use at Swift Reservoir is limited by low pool levels, fishing season closure, and road access during winter months.
The projects also provide non-shoreline dispersed recreation opportunities, such as trail use by hikers, equestrians, and mountain bikers. Most of this use occurs along a trail running from Saddle Dam along the southwest shoreline of Yale Lake to the Speelyai Canal and along the International Paper (IP) Road at Yale Lake. Other smaller trails also exist.
Numerous examples of dispersed shoreline recreation use exist around the three reservoirs and along the Swift bypass reach above Yale Lake. Boat-in dispersed use occurs on all three reservoirs. Shoreline impacts have occurred because of this activity. As a result, PacifiCorp is increasing Marine Patrol activities and no longer permits overnight parking at its day use facility parking areas except at Swift. There is no fee for dispersed shoreline use; however, there is a fee charged for day use parking and for each watercraft trailered or hauled into PacifiCorp recreation sites, except for car-top watercraft.
Other dispersed recreation uses adjacent to the reservoirs include a number of sites relating to river recreation in the Lewis River corridor. Canyon Creek, which joins Lake Merwin just below Yale Dam, receives whitewater boating use primarily in the form of kayaking. This advanced-level run has been the site of a “kayak rodeo” in recent years. Many paddlers running the creek either take out well above Lake Merwin or descend to the reservoir and paddle to the nearest takeouts at the SR 503 bridge or Cresap Bay Park. Upstream of Swift Reservoir, the upper Lewis River is used for dispersed recreation, hiking, mountain biking, and non-motorized boating.
Over the last 15 to 20 years, recreation resource managers in the Lewis River corridor have witnessed increased use levels at Merwin, Yale, and Swift reservoirs based on day use vehicle counts, campground occupancy levels, signs of environmental degradation along the shoreline caused by boat-in dispersed camping and day use activities, and other indicators. While these higher use levels are usually contingent upon weather conditions, increased use is generally attributable to: (1) Increased population growth in the Portland/Vancouver metropolitan area and proximity to Interstate 5 and Lewis River Road; (2) increased publicity about Merwin, Yale, and Swift reservoirs; (3) creation of and increased popularity of the Monument, including increasing use of the southern scenic loop road (Forest Road 90, SR 503, and Lewis River Road) coupled with few overnight camping facilities within the Monument and GPNF; (4) increasing urban development in the Lewis River valley including new custom home development; and (5) increasing demand for lower cost recreation activities available at Merwin, Yale, and Swift reservoirs, and within western Washington State.
Recreation opportunities should be enhanced by measures that improve watershed conditions in the project area. Areas of the Lewis River are recognized as providing excellent sportfishing opportunities, as well as opportunities for boating, swimming, and wildlife observation. Improving watershed conditions and aquatic productivity should translate into enhanced recreational fishing opportunities, which should in turn provide greater recreational opportunities in an area near several large urban centers. However, greater recreational fishing opportunities also heighten the potential for anglers to catch and possibly harvest bull trout from reservoirs and streams. There is some evidence to suggest that bull trout are targeted and occasionally harvested by anglers even though fishing for bull trout is prohibited. Opening day creel surveys conducted by the WDFW on Swift reservoir and power canal have indicated that some bull trout are harvested in the Swift power canal (WDFW 2000). Large spoons and plugs are also sometimes found in the mouths of bull trout during annual bull trout surveys in the Swift reservoir (WDFW. 1999).
The natural setting of the study area is mountain rural with sweeping vistas
The Clark, Cowlitz, and Skamania county planning departments have primary jurisdiction over lands in the project vicinity. The USFS and the Washington State Department of Natural Resources (DNR) manage extensive holdings around Yale and Swift reservoirs. Their management practices affect the reservoir's viewsheds.
• Visual character of project features, including hydroelectric generation, transmission, and recreation facilities;
• Visibility of project features from locations of high public use such as Lewis River Road, and recreation areas;
• Visual effect of reservoir water level fluctuations, particularly during periods of high recreation use;
• Visual effect of instream flows in sections of the Lewis River controlled by the project;
• Consistency of the project with existing and proposed federal, state, and local plans and policies regarding the visual resource; and
• Opportunities to enhance the scenic landscape characteristics of the Lewis River Valley viewshed.
As described above, improving watershed conditions will provide direct and substantial benefits for aquatic species and terrestrial species associated with protected riparian communities. These improvements in the natural setting should result in improved aesthetic qualities in and around project features, and should result in a more natural setting in such areas. At this point, no construction or project alterations are proposed at this time that could result in construction-related impacts to aesthetic qualities. Therefore, the Proposed Action should result in enhanced aesthetic qualities relative to the No Action alternative.
Existing land uses in the project vicinity include timber production, agriculture, hydroelectric generation, recreation, small commercial businesses, and residential housing. Land ownership in the project vicinity is a combination of large and small holdings by public and private entities including the USFS, DNR, Weyerhaeuser, Longview Fibre, Clark County, Cowlitz County, PacifiCorp, and private residents.
The projects are located east (10-40 miles) of the community of Woodland; in recent years, there has been a considerable increase in residential development in the Woodland area and in areas adjacent to the projects along Lewis River Road.
Land use regulations in the project vicinity are under federal, state, and local jurisdiction. Agencies with land management responsibilities in the project vicinity include the USFS, U.S. Army Corps of Engineers, DNR, WDFW, WDOE, Cowlitz County Planning Department, Clark County Planning Department, Skamania County Planning Department, and the City of Woodland.
Proposed watershed improvement measures are consistent with existing land use regulations. Conservation efforts with regard to the acquisition of Eagle Island reduces potential for land use conflicts as Eagle Island will be unavailable for development due to the conservation easement. Likewise, conservation easements for riparian habitat will provide long-term benefits for existing landowners, particularly with regard to aesthetic values as land within an easement is not likely to be developed. The Proposed Action provides opportunities to enhance the land use practices and benefit efforts to protect listed species.
The Lewis River Projects occupy lands located in three counties: Clark, Cowlitz, and Skamania. Information presented in this EA is based on information from the Economic Development Network Web site titled County Profiles for Washington. (
For the past decade, Clark County has had one of the most dynamic economies in the state of Washington. Clark County's demographics and economy have been shaped by its status as a suburb, by its diverse industrial base, by a steady flow of high tech investment, and by the differing tax structures between Washington and Oregon.
Clark County is a suburban county within the Portland-Vancouver metropolitan area. It shares many of the characteristics of not-yet-fully-mature suburban counties, such as rapid population growth and an imbalance in commuting patterns. Close to one-third of the county's work force commutes across the Columbia River to Portland every day. The county's role as a bedroom community means that many of the jobs there cater to consumers, in the form of retail trade, social and health services, and personal services. Conversely, most of the (high wage) corporate services such as finance, advertising, law, engineering,
Historically, Clark County has been a blue-collar community, with a diverse manufacturing base. The timber industry has always been present in the county but has not played a dominant role since the turn of the century. Besides paper and lumber, the county has been the site of food processing, textiles, apparel, aluminum, and machinery. The Port of Vancouver has also played a key role, both as a transportation hub and an industrial landlord. Employment in some of these “traditional” manufacturing industries has declined somewhat in the past few years due to employment reductions and closures, and future closures should not be ruled out. In general, however, new investment has far outpaced shutdowns, and manufacturing employment has grown substantially.
Over the past 20 years, there has been a tremendous surge in high technology investment in the county. It began in the late 1970s when Tektronix sited a branch plant. Tek's employment peaked at about 2,000 before the company spun off some operations and then closed down its Vancouver operation in 1990. Other large branch plants were established during the 1980s, many of them Japanese. High tech employers were lured by low land and energy costs, plenty of available water, a skilled and growing work force, excellent K-12 and community college education and training installations, proximity to the Portland International Airport (Vancouver and Camas are closer than Hillsboro), a Pacific Rim locale, and access to recreational opportunities.
The future should bring continued maturation of the county economy and increased integration with Portland. Among the more prominent developments, Washington State University moved into a new campus just north of Vancouver in June. Reclamation of the Columbia River waterfront for recreational use is well under way. The city of Vancouver recently bought the former Lucky Brewery and surrounding blocks downtown; the old brewery will be razed, with mixed-use development in the offing. Finally, high tech investment and expansion continue to make the headline. A case in point is the large facility planned by Taiwan Semiconductor (doing business as WaferTech) in Camas, which is expected to add 800 manufacturing jobs to the county's employment base.
Along with Portland, Clark County faces a major challenge in determining how to handle growth. At this point growth is occurring faster than local governments can plan and build infrastructure. The bridges crossing the Columbia are nearing capacity, and Clark County voters recently soundly rejected funding a light rail connection with Portland.
Cowlitz County historically has had large resource-based economies that relied on timber. Although the big shakeout of the industry that occurred in the early-to-mid 1980s had a significant effect, timber still remains the biggest industry. Its employment fell dramatically but has since stabilized at new levels, and there has been some diversification of industry within manufacturing, as well as significant growth in the trade and services sectors.
Because the economy has stabilized in recent years, the population is again increasing. During much of the 1980s, out-migration exceeded in-migration, and the overall population in the county declined. Since about 1990, that situation has reversed and the population is growing again. In 1999, the population of Cowlitz was estimated at 94,100.
The labor force has been growing much like the population, and unemployment is at its lowest level in years. In 1997, the rate was 7.1 percent in Cowlitz, the lowest since 1990. Even so, there are proportionally more unemployed people in the area than there are statewide, where the rate is down to 4.8 percent.
There has been good growth in non-farm employment following the 1990-91 national recession. Since 1992, Cowlitz County has added over 3,000 jobs. Looking at the area as a whole, most of the growth has come in trade, services, and government. This growth in non-manufacturing activities and the earlier, quite sharp declines in the timber industry have not sufficed to dislodge manufacturing from its position as the largest industry sector in the county. Cowlitz County has over one-fourth of its employment in manufacturing. Statewide, the share is 15 percent.
Cowlitz County has withstood the turbulence of the restructuring and decline in employment and wages of the timber industry in the 1980s. The area is regaining population—in-migration is up—and timber remains a large, solid foundation of the economy. Relatively low unemployment and gains in the number of non-farm jobs make the labor market picture quite a bit more attractive than it has been for quite some time. Wages have been stagnant, in real terms, but are no longer declining. At the moment, the area is doing well. Projections to 2001 indicate that Cowlitz County will have moderate growth overall with strong growth in non-timber related manufacturing, construction, services, and the finance, insurance, and real estate sector.
Geography and politics have greatly influenced the Skamania County economy. Ninety percent of the county is forest land, and 80 percent of the county is part of the GPNF. For decades, the county economy rested on timber, directly through logging and milling and indirectly through USFS employment. Timber-related employment began to decline in the 1980s, dropping from 820 in 1979 to 620 in 1988. At that time, harvest restrictions were placed on federal lands, limiting local timber supply and raising log prices. Timber harvest from federal lands dropped from an average of 250 million board feet to less than five million in 1996. Scarce timber and competition from chipboard substitutes led to the closure of Stevenson Co-Ply, the largest mill remaining in the county, in early 1992. The job loss was accompanied by loss of savings because the mill was a co-op. By 1993, only 180 timber jobs remained in Skamania County, and federal employment has fallen from a peak of 420 to only 240 in 1996.
While most of Skamania County is in forested, mountainous terrain, the bottom strip of the county borders the Columbia River Gorge. The gorge has influenced the county economy in two major ways. In the 1978-1982 period, construction of a second powerhouse at Bonneville Dam boosted county construction employment, chiefly through construction workers commuting into the county. This had the unfortunate side effect of skewing county labor force estimates in the 1983-1989 period; through use of a faulty commuting ratio, the labor force size was under-estimated and the unemployment rate overestimated.
Second, in 1986, about 15 percent of the county was made part of the Columbia River Gorge National Scenic Area (CRGNSA). Creation of the CRGNSA, while placing some restrictions on development in the gorge area, has helped augment the county's growing tourism industry. Federal subsidies helped build the Skamania Lodge, a conference center/destination resort, now the largest private sector
The transition from timber to tourism has had a number of effects. Population growth began picking up in 1990, as did labor force growth. Because of fewer job opportunities, almost half of the county labor force commutes to work outside the county. Unemployment rose sharply in 1992 with the mill closure, reaching 18 percent before declining to the current 10-11 percent.
Only a few years ago, one-third of the jobs in the county were in manufacturing; by 1996, the number had fallen below 15 percent. With the advent of the Skamania Lodge, trade and service employment rose from 19 percent to a 36 percent share, while the public sector accounted for 43 percent.
Coming years should bring further expansion of tourist-related business as well as modest growth in population and employment. Commuting to jobs outside the county by a significant share of the labor force should be the norm.
The Proposed Action enhances the natural setting of the area and encourages tourist-related use and development that are consistent with current and anticipated socioeconomic development. This should more than offset any effects of habitat protection and conservation easements on timber-related employment or revenues associated with the No Action alternative.
Cultural resource management in the Lewis River basin is under the auspices of the Washington State Office of Archaeology and Historic Preservation (OAHP), the GPNF, and the Advisory Council on Historic Preservation (ACHP). Indian Tribes that have an interest in the project include the Cowlitz Indian Tribe (CIT) and the Yakama Nation (YN). Under Section 106 of the National Historic Preservation Act (NHPA) and regulations promulgated by the Federal Power Act (FPA), the Commission is required to inventory archaeological, historical, and traditional cultural resources; evaluate their eligibility for listing in the National Register of Historic Places (National Register); determine project impacts on them; and consider measures to avoid or mitigate adverse effects. This work is conducted in consultation with the cultural resource oversight agencies, responsible federal land management agencies, and Indian tribes.
Two archaeological sites, one historic-period cemetery, and 6 isolated scatters of flaked stone artifacts have been recorded for the Merwin Project area. The National Register eligibility of the two archaeological sites and the cemetery has not been formally considered. The Federal Power Commission granted the license for the Merwin Project in late 1929, and the project began commercial operation on January 1, 1932. The current Merwin license, issued in 1983, does not identify any specific cultural resource enhancement measures. Article 38 of the Merwin license states:
Prior to commencement of any construction or development of any project works or other facilities at the project, the licensee shall consult and cooperate with the State Historic Preservation Officer to determine the need for * * * any archaeological or historic resource surveys and any mitigation measures that may be necessary.
In mid-September 1990, a GPNF archaeologist reported to PacifiCorp the occurrence of unauthorized excavation of archaeological deposits along the exposed shoreline of Lake Merwin. Subsequently, PacifiCorp contracted the Oregon State Museum of Anthropology (OSMA) to survey high probability areas, evaluate the known deposits, and assess the damage to cultural resources at Lake Merwin (O'Neill 1991). A brief reconnaissance was conducted by OSMA staff, resulting in the discovery of 6 isolated scatters of flakes and tools along with excavations in 2 locations. Excavations in one of the sites at Merwin revealed some flaked stone artifacts but not enough to make a detailed analysis. This site was found to have some significance but was not evaluated for National Register eligibility. The location of the historic-period cemetery near Woodland Park was recorded, but according to O'Neill (1991), all of the burials were removed prior to inundation. Protection of the sites through ongoing monitoring was recommended.
• 15 new prehistoric sites were recorded, all of which were lithic scatters without ground stone.
• 5 historic-period sites were recorded, including a washed-out bridge, a campsite with a cleared tent platform, a dense scatter of historic-period refuse, and an abandoned railroad grade.
• 54 isolates were identified, the majority of which were groupings of flaked cobble tools, occasionally associated with a few flakes or other prehistoric artifacts.
An evaluation of the Merwin powerhouse conducted by Historical Research Associates, Inc (HRA). Based on a survey of the powerhouse and associated facilities and archival research, HRA recommended that the powerhouse be considered eligible for inclusion on the National Register (pers. comm., G. Thompson, HRA, Seattle, WA, May 1, 1999).
Additional archaeological sites may exist in the Merwin Project area, and historical buildings and structures need to be inventoried and evaluated for National Register eligibility.
Construction of the Yale Project began soon after the license was issued in April 1951, and the project began operation in 1953. A survey for archaeological resources in the area to be inundated by Yale Lake was conducted in 1952 and 1953 by the University of Washington (Bryan 1953, 1955). This study resulted in the recording and testing of 6 sites. Three other recent cultural resource investigations have been conducted at Yale Lake including: a 1993-94 GPNF-sponsored archaeological survey conducted by Oregon State University at a site along the margin of Yale Lake; PacifiCorp-sponsored archaeological testing in 1995 at a heavily vandalized site on company lands near Yale Dam; and a comprehensive cultural resources inventory and National Register evaluation of historic, prehistoric, and traditional cultural resources conducted in 1996-97 as part of the Yale license application process (PacifiCorp 1999).
The results of this analysis found 8 prehistoric archaeological sites, 5 historic sites, and 9 prehistoric isolated finds. Of these, 5 of the prehistoric sites were determined to be eligible for listing in the National Register (letter from Greg Griffith, OAHP to Russ Howison, PacifiCorp April 3, 1998). The OAHP and affected Indian tribes have expressed ongoing concern over the illegal collecting of artifacts and
The Yale hydroelectric facilities were evaluated for National Register eligibility and were found to be not eligible for listing. However, the Yale Project may be eligible for listing in the National Register as a contributing element to a mufti-property nomination for the entire Lewis River hydroelectric system.
A Cultural Resource Management Plan (CRMP) for resources potentially affected by the Yale Project is included as a proposed enhancement measure in the Yale license application submitted to the Commission in April 1999. A subsequent agreement was developed in consultation with Commission staff, the Advisory Council on Historic Preservation (ACHP), and the Lewis River Cultural Resource Work Group on January 20, 2000. Terms of this agreement include delaying development of the formal CRMP until the conclusion of relicensing studies for all four projects. Protection measures, as described in the Yale application, will be implemented. These include management guidelines for National Register-eligible sites (5 known currently) within the 2,500-acre Yale Area of Potential Effects (APE), which will include: Monitoring of known sites, options for site avoidance, site protection measures, or mitigation through data recovery. The final CRMP also will include a protocol for the discovery of previously unknown sites and a training program for project personnel.
The Swift No. 1 and Swift No. 2 projects operate under separate licenses issued in 1956, with project completion in December 1958. The current licenses for the Swift projects do not contain any specific cultural resource enhancement measures, nor are there any sites officially determined eligible for the National Register. A May 1957 archaeological survey of the areas to be inundated by the Swift No. 1 dam and Swift No. 2 power canal did not find any cultural resources present (undated letter from Clayton Denman to Dr. Douglas Osborne, Washington State Museum). However, the study was conducted under the standards of the day, and it remains a possibility that undiscovered cultural resources may be present. A 1998 archaeological survey of the Swift Reservoir drawdown area recorded two archaeological sites and nine isolated finds; one of the sites was considered not to be National Register eligible, and testing is needed to determine the eligibility of the other site (Goetz 1998). Additional surveys performed in October 1999 revealed a single prehistoric isolate. In addition, the project buildings and structures need to be inventoried and evaluated for National Register eligibility because they will meet the 50-year age criterion when the existing license expires.
None of the proposed measures contained in the Proposed Action involve ground disturbing activities with potential to affect cultural resources. The Proposed Action should result in reduced adverse impacts to cultural resources with a conservation easement for riparian habitat on Cougar Creek and the habitat protection on Eagle Island versus the No Action alternative.
Measures contained in the Proposed Action were arrived at through extensive pre-filing discussions with the USFWS and NMFS. Both agencies support the proposed measures and have issued a BO (Attachment C), and its associated incidental take statement, which is consistent with and supports the proposed amendments to the license. Comments and recommendations have likewise been incorporated from both agencies in this document and the associated BA (Attachment A).
On February 11, 1994, President Clinton issued Executive Order 12898 (“E.O. 12898”), Federal Actions to Address Environmental Justice in Minority and Low-Income Populations. E.O. 12898 requires federal executive agencies to identify and address, as appropriate, disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority and low-income populations which may be affected by agency actions. Environmental justice issues encompass a broad range of issues already covered by the NEPA, including impacts on the natural or physical environment and interrelated social, and economic effects. Environmental justice analysis focused NEPA review on whether the environmental effects of a proposed federal action has disproportionately high and adverse effects on minority and low-income populations, including Indian tribes. Although independent agencies such as the Commission are not subject to E.O. 12898, President Clinton requested independent agencies to comply with the provisions of E.O. Order 12898. In the exercise of the Commission's discretion, and recognizing the E.O. Order 12898 is not by its terms applicable to the Commission, but that potential environmental justice issues are already within the scope of NEPA issues that the Commission must evaluate in connection with proposals for Commission action, this EA analyzes the effects of the Proposed Action with respect to potential environmental justice issues.
The Proposed Action is expected to have a positive effect on fish populations in the project vicinity, compared to existing conditions. Therefore, the Proposed Action is reasonably expected to have a beneficial effect on any population which relies on fishery resources for food or other purposes. Commission staff have not identified any disproportionate, adverse effect of the Proposed Action on any minority or low-income population or Indian tribe. Commission staff conclude therefore that the Proposed Action does not have adverse environmental justice effects.
Section 305(b) of the Magnuson-Stevens Act and associated implementing regulations provide that Federal agencies must consult with NMFS concerning all actions that may adversely affect designated essential fish habitat (EFH). NMFS EFH guidance documents provide that EFH consultations should be combined with ESA consultations to accommodate the substantive requirements of both Acts. As discussed in the above referenced biological assessment, the Proposed Action will result in habitat improvements, and will not result in any adverse effects to EFH. Therefore, EFH consultation is not required at this time.
The recommended alternative is approving the amendment of PacifiCorp's and PUD's licenses to adopt and implement the proposed conservation measures pursuant to the terms and conditions of the BO, as appropriate. Incorporating the conservation measures into PacifiCorp's and PUD's licenses will reduce incidental take of listed species resulting from operation of the Lewis River Projects. Such conservation measures likewise represent important near-term conservation opportunities that may be lost if not secured while the
On the basis of our independent analysis, the proposed amendments for the Lewis River Projects, with the recommended mitigation measures, would not constitute a major federal action significantly affecting the quality of the human environment.
The staff of the Federal Energy Regulatory Commission (FERC or Commission) will prepare an environmental impact statement (EIS) that will discuss the environmental impacts of the Freeport LNG Project involving construction and operation of facilities by Freeport LNG Development, L.P. (Freeport) in Texas.
This notice is being sent to residences within 0.5 mile of Freeport's proposed LNG facilities and to landowners along the proposed pipeline route. If you are a landowner receiving this notice, you may be contacted by a pipeline company representative about the acquisition of an easement to construct, operate, and maintain the proposed facilities. The pipeline company would seek to negotiate a mutually acceptable agreement. However, if the project is approved by the Commission, that approval conveys with it the right of eminent domain. Therefore, if easement negotiations fail to produce an agreement, the pipeline company could initiate condemnation proceedings in accordance with state law.
A fact sheet prepared by the FERC entitled “An Interstate Natural Gas Facility On My Land? What Do I Need To Know?” was attached to the project notice Freeport provided to landowners. This fact sheet addresses a number of typically asked questions, including the use of eminent domain and how to participate in the Commission's proceedings. It is available for viewing on the FERC Internet Web site (www.ferc.gov).
Freeport proposes to build a new LNG import, storage, and vaporization terminal on Quintana Island, southeast of Freeport, Texas; and a natural gas pipeline to transfer up to 1.5 billion cubic feet per day of imported natural gas to the Texas market. This would help satisfy the demand for natural gas in the state of Texas. Freeport seeks authority to construct and operate the following new facilities at its proposed site:
• LNG ship docking and unloading facilities with a protected single berth equipped with mooring and breasting dolphins, three liquid unloading arms, and one vapor return arm;
• Reconfiguration of a storm protection levee and a permanent access road;
• Two 26-inch-diameter (32-inch outside diameter) LNG transfer lines and one 16-inch-diameter vapor return line;
• Service lines (instrument air, nitrogen, potable water, and firewater);
• Two double-walled LNG storage tanks each with a usable volume of 1,006,000 barrels (3.5 billion cubic feet of gas equivalent);
• Six 3,240 gallon-per-minute (gpm) in-tank pumps;
• Seven 2,315 gpm high pressure LNG booster pumps;
• Three boil-off gas compressors and a condensing system;
• Six high-pressure LNG vaporizers using a primary closed circuit water/
• Two natural gas superheaters and two fuel gas heaters;
• Fire response system, flare, construction dock, utilities, buildings, and service facilities; and
• 9.38 miles of 36-inch-diameter natural gas pipeline extending from the LNG import terminal to a proposed Stratton Ridge Meter Station. The general location of the project facilities is shown in appendix 1.
Freeport is requesting approval such that the terminal and pipeline are completed and placed into service in time to meet natural gas demand during the 2006-2007 winter heating season. Construction of the facilities would take about 3 years.
Construction of the proposed LNG facility would require about 45.7 acres of land for the marine terminal, 140.4 acres for the storage and vaporization area, and 18.6 acres for the LNG transfer line. Construction of the proposed pipeline would disturb about 61.5 acres of land including the construction right-of-way, temporary extra workspaces, and the meter station. The construction right-of-way width for the pipeline would vary from 35 feet in wetland areas to 200 feet at horizontal directional drill sites.
Freeport would maintain a 30-to 50-foot-wide permanent right-of-way for operation of the pipeline. Total land requirements would be approximately 25.6 acres for new permanent right-of-way, 3.8 acres for the new meter station, and 146.4 acres for the LNG facilities.
The National Environmental Policy Act (NEPA) requires the Commission to take into account the environmental impacts that could result from an action whenever it considers the issuance of a Certificate of Public Convenience and Necessity. NEPA also requires us
The EIS will discuss impacts that could occur as a result of the construction and operation of the proposed project under these general headings:
We will also evaluate possible alternatives to the proposed project or portions of the project, and make recommendations on how to lessen or avoid impacts on the various resource areas.
Our independent analysis of the issues will be in the EIS. Depending on the comments received during the scoping process, the EIS may be published and mailed to Federal, state, and local agencies, public interest groups, interested individuals, affected landowners, newspapers, libraries, and the Commission's official service list for this proceeding. A comment period will be allotted for review if the EIS is published. We will consider all comments on the EIS before we make our recommendations to the Commission.
To ensure your comments are considered, please carefully follow the instructions in the public participation section beginning on page 6.
We have already identified several issues that we think deserve attention based on a preliminary review of the proposed facilities and the environmental information provided by Freeport. This preliminary list of issues may be changed based on your comments and our analysis.
You can make a difference by providing us with your specific comments or concerns about the project. By becoming a commentor, your concerns will be addressed in the EIS and considered by the Commission. You should focus on the potential environmental effects of the proposal, alternatives to the proposal (including alternative locations/routes), and measures to avoid or lessen environmental impact. The more specific your comments, the more useful they will be. Please carefully follow these instructions to ensure that your comments are received in time and properly recorded:
• Send an original and two copies of your letter to: Magalie R. Salas, Secretary, Federal Energy Regulatory Commission, 888 First St., NE., Room 1A, Washington, DC 20426
• Label one copy of the comments for the attention of Gas Branch 2.
• Reference Docket No. CP03-75-000.
• Mail your comments so that they will be received in Washington, DC on or before June 16, 2003 .
Please note that we are continuing to experience delays in mail deliveries from the U.S. Postal Service. As a result, we will include all comments that we receive within a reasonable time frame in our environmental analysis of this project. However, the Commission strongly encourages electronic filing of any comments or interventions or protests to this proceeding.
If you do not want to send comments at this time but still want to remain on our mailing list, please return the Information Request (appendix 4). If you do not return this form or send in written comments, you will be taken off the mailing list.
In addition to or in lieu of sending written comments, we invite you to attend the public scoping meeting we will conduct in the area. The location and time for this meeting is listed below:
The public scoping meeting is designed to provide state and local agencies, interested groups, affected landowners, and the general public with more detailed information and another opportunity to offer your comments on the proposed project. Interested groups and individuals are encouraged to attend the meeting and to present comments on the environmental issues they believe should be addressed in the EIS. A transcript of the meeting will be made so that your comments will be accurately recorded.
On the day after the meeting, we will also be conducting a limited site visit to the LNG terminal site and pipeline route. Anyone interested in participating in the site visit should meet at the Quintana Town Hall on Quintana Island, near the proposed LNG terminal site at 8:30 a.m. on June 4, 2003. The meeting place is near the intersection of Lamar and 8th Streets on Quintana Island. Participants must provide their own transportation. For additional information, please contact the Commission's Office of External Affairs at (202) 502-8004.
In addition to involvement in the EIS scoping process, you may want to become an official party to the proceeding known as an “intervenor”. Intervenors play a more formal role in the process. Among other things, intervenors have the right to receive copies of case-related Commission documents and filings by other intervenors. Likewise, each intervenor must provide 14 copies of its filings to the Secretary of the Commission and must send a copy of its filings to all other parties on the Commission's service list for this proceeding. If you want to become an intervenor you must file a motion to intervene according to Rule 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.214) (
Affected landowners and parties with environmental concerns may be granted intervenor status upon showing good cause by stating that they have a clear and direct interest in this proceeding which would not be adequately represented by any other parties. You do not need intervenor status to have your environmental comments considered.
This notice is being sent to individuals, organizations, and government entities interested in and/or potentially affected by the proposed project. It is also being sent to all identified potential right-of-way grantors. By this notice we are also asking governmental agencies, especially those in appendix 3, to express their interest in becoming cooperating agencies for the preparation of the EIS.
Additional information about the project is available from the Commission's Office of External Affairs, at 1-866-208-FERC or on the FERC Internet Web site (
In addition, the Commission now offers a free service called eSubscription which allows you too keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to
The Federal Energy Regulatory Commission hereby gives notice that members of its staff will attend a Midwest Independent Transmission System Operator, Inc. (MISO) conference on its Open Access Transmission and Energy Markets Tariff. The staff's attendance is part of the Commission's ongoing outreach efforts. The conference is sponsored by MISO, and will be held on May 19 and 20, 2003, at 10 a.m. at MISO's headquarters, 701 City Center Drive, Carmel, IN 46032. This meeting is open to the public. The meeting may discuss matters at issue in Docket No. RM01-12-000, Remedying Undue Discrimination Through Open Access Transmission Service and Standard Electricity Market Design; in Docket No. EL02-65-000,
For more information, contact Patrick Clarey, Office of Markets, Tariffs and Rates, Federal Energy Regulatory Commission at (317) 249-5937 or
1. The Commission is establishing a fact-finding proceeding facilitated by an administrative law judge (ALJ), concerning transmission congestion on the portion of the power grid on the Delmarva Peninsula operated by PJM Interconnection, L.L.C. (PJM). This exercise will benefit customers because it will help us evaluate the extent and costs of transmission congestion on the Delmarva Peninsula, help identify potential solutions to the problem, and also assist us in identifying lessons we can learn from this experience that may apply to other situations.
2. The Commission has encouraged the development of methods to effectively and efficiently manage congestion on transmission systems. PJM uses a system of locational marginal pricing (LMP) and financial transmission rights (FTRs) to manage congestion on the PJM system. Some areas of PJM, in particular the Delmarva Peninsula, have experienced significant congestion over the last several years.
3. Accordingly, we direct the ALJ to conduct a fact-finding inquiry concerning congestion on the Delmarva Peninsula. In particular the ALJ should identify: (1) The historical and expected extent of the congestion and its cost, rate and reliability effects for wholesale and retail customers on the Delmarva Peninsula and elsewhere in PJM; (2) the causes of the congestion; (3) how FTRs have been and can be used to protect customers on the Delmarva Peninsula from congestion costs; (4) whether transmission upgrades currently planned for the Delmarva Peninsula will effectively moderate this congestion; (5) the costs, benefits and timing of transmission expansion to relieve congestion and who will benefit from such transmission expansion; (6) whether demand-side, distributed generation or other generation solutions can complement new transmission to solve these problems over the near or long term; and (7) other opportunities for solutions to better manage congestion costs, and the obstacles and timeliness of possible solutions. The above list is not exclusive; the ALJ and participants to the proceeding may raise other issues that are directly related to the problem of congestion on the Delmarva Peninsula and possible solutions, in addition to those identified above.
4. Our goal is for the ALJ to convene a group of interested parties from the affected area, drawing not only from the Delmarva Peninsula but also from across the PJM area as appropriate. We invite the Public Service Commissions of Delaware and Maryland and the Virginia State Corporation Commission to send expert staff members to participate, and even to send an ALJ to work with the Commission's ALJ if they wish. Any State Commission that is interested in having its ALJ participate in the case study should contact the Commission ALJ to make the appropriate arrangements. We expect the full participation of all wholesale transmission customers on the Delmarva Peninsula, as well as the PJM RTO. Interested entities should file notice of their intent to participate within ten days from the date of this order.
5. We direct the Chief Administrative Law Judge or his designee to appoint a presiding judge to convene a conference no later than fifteen days from the date of this order. We direct the presiding judge to provide a report on the foregoing within sixty days from the
(A) The Secretary is hereby directed to publish this order in the
(B) Entities seeking to participate in this proceeding should file notices of their intent to participate within ten days of the date of this order. However, since this proceeding will not be a formal case, we direct the ALJ to welcome late participants to the proceeding rather than holding strictly to the formal rules of participation and intervention.
(C) Pursuant to the authority contained in and subject to the jurisdiction conferred upon the Federal Energy Regulatory Commission by Section 402(a) of the Department of Energy Organization Act and by the Federal Power Act, and pursuant to the Commission's Rules of Practice and Procedure and the regulations under the Federal Power Act (18 CFR, Chapter I), and the appropriate guidelines for Alternate Dispute Resolutions, the ALJ shall conduct whatever proceedings and hearings may be appropriate to determine the facts and solutions concerning congestion on the Delmarva Peninsula, as discussed in the body of this order.
(D) A presiding administrative law judge, to be designated by the chief administrative law judge, shall convene a conference in the proceeding to be held within fifteen days of the date of this order, in a hearing room of the Federal Energy Regulatory Commission, 888 First Street, NW., Washington, DC 20426. The presiding judge is authorized to establish procedural dates and to rule on all motions (except motions to dismiss) as provided for in the Commission's Rules of Practice and Procedure.
(E) The presiding judge shall file a report within sixty days after the date of this order, as discussed in the body of this order.
(F) Any State Commission that is interested in having its ALJ participate in the case study should contact the Commission ALJ to make the appropriate arrangements.
(G) The Commission's Office of Administrative Litigation shall provide technical support to the ALJ and the parties in this proceeding.
By the Commission.
Western Area Power Administration, DOE.
Notice of Intent to Prepare an Environmental Impact Statement.
The Western Area Power Administration (Western) intends to prepare an environmental impact statement (EIS) regarding the proposal by Dome Valley Energy Partners, LLC (Dome Valley) to construct and operate the Wellton-Mohawk Generating Facility (Facility) east of Yuma, Arizona. The EIS will also address the construction of a new natural gas pipeline and high-voltage transmission line upgrades and additions needed to support the Facility, a no-action alternative, and any action alternatives defined as a result of the EIS scoping process.
Because implementing this proposal would incorporate a major new generation resource into Western's system, Western has determined that an EIS is required. Western will hold a 30-day scoping period to ensure that interested members of the public and Federal, State, local, and tribal agencies have an opportunity to provide input on the scope and alternatives that will be addressed in the EIS. Western also will hold public open-house scoping meetings in the project area during the scoping period.
The public scoping meetings will be held on June 3, 2003, in Wellton, and June 4, 2003, in Yuma. Each meeting will be held between 6 p.m. and 9 p.m. Written comments on the scope of the EIS for the proposed Project should be received no later than 11:59 p.m. (Arizona Time) on June 30, 2003, which will be the end of the EIS scoping period. Comments on the project will be accepted throughout the National Environmental Policy Act (NEPA) process.
The Wellton scoping meeting will be held at the Wellton Elementary School, 29126 San Jose Avenue in Wellton. The Yuma scoping meeting will be held at the Yuma Civic and Convention Center, 1440 West Desert Hills Drive in Yuma. Each facility is handicapped accessible. Comments should be addressed to Mr. John Holt, Environment Manager, Desert Southwest Customer Service Region, Western Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005, fax (602) 352-2630, e-mail holt@wapa.gov.
Mr. Mark Wieringa, NEPA Document Manager, Western Area Power Administration, P.O. Box 281213, Lakewood, CO 80228-8213, telephone (720) 962-7448, fax (720) 962-7263, e-mail
The Facility would be located adjacent to Western's existing Ligurta Substation, approximately 25 miles east of Yuma, Arizona, and nine miles west of Wellton, Arizona, just north of Interstate Highway 8. Dome Valley proposes to construct and operate a natural gas-fired combined-cycle electricity generating facility, an associated solar collection field, and ancillary facilities in unincorporated Yuma County, Arizona. The proposed Facility would be developed in two phases. The full output of the first phase would be nominally rated at 260 megawatts (MW) with about 310-MW peaking capacity. With the second phase, the Facility would be nominally rated at 520 MW with peaking capacity of about 620 MW via duct burners. Each phase would consist of one combustion turbine, one heat recovery steam generator, a steam turbine, condenser, transformer, cooling towers, tanks, sedimentation/evaporation ponds, auxiliary boilers, an emergency generator, an emergency fire pump, and associated buildings. Water for the Facility's use, including cooling, would be provided by the Wellton-Mohawk Irrigation and Drainage District (Wellton-Mohawk) via the Wellton-Mohawk Canal. Associated with the Facility would be a solar component that would convert solar energy to thermal energy for inlet air-cooling. Natural gas for the Facility would be delivered via a new natural gas pipeline that would interconnect to a proposed or existing natural gas transmission line
The first phase of the Facility would interconnect at Western's Ligurta Substation. In response to Dome Valley's proposal, Western conducted a transmission system impact study and determined that upgrades and additions to the existing transmission system were needed to accommodate the Facility. Western's proposed actions would include upgrading the existing Ligurta Substation, upgrading Western's existing 12.7-mile Ligurta to Gila transmission line, adding 75 megavolt-ampere transformer capacity between the 161-kilovolt (kV) side and the 69-kV side in Western's Gila Substation near Yuma, constructing a new 18-mile transmission line between the Ligurta Substation and Arizona Public Service's North Gila Substation north of Yuma, and interconnecting this line at the North Gila Substation. The new Ligurta to North Gila transmission line would parallel the existing Wellton-Mohawk Canal for most of its length. In addition, Western would require that primary and secondary communication systems be installed to ensure reliable operation of the transmission system. Because the facility would be a major new source of generation and electricity generated by the Facility would be integrated into Western's transmission system, Western has determined that an EIS is required in accordance with DOE's NEPA Implementing Procedures, 10 CFR part 1021, Subpart D, Appendix D, class of action D6. The EIS will address the proposed action, a no-action alternative, and any action alternatives defined as a result of the EIS scoping process. Western will be the lead Federal Agency, as defined at 40 CFR 1501.5.
Portions of the transmission line upgrades and additions and a proposed natural gas pipeline for the Facility would cross lands managed by the U.S. Department of the Interior, Bureau of Land Management, Yuma Field Office (BLM). Since BLM would require rights-of-way grants for portions of the transmission line additions and new natural gas pipeline, BLM will participate as a cooperating agency in the preparation of the EIS.
The proposed Facility would be located on land currently owned by the U.S. Department of the Interior, Bureau of Reclamation (BOR). Title to this property would be transferred by BOR to Wellton-Mohawk. The EIS will address the proposed property transfer, and the BOR will participate in the EIS review of the project as a cooperating agency.
Western, in consultation with the cooperating agencies, will carefully examine public health and safety, environmental impacts, and engineering aspects of the proposed Facility, the proposed transmission system upgrades and facilities, and the proposed natural gas pipeline. Even though only portions of the proposed Facility and its components would be addressed by Western, the BLM, or the BOR decisions, the EIS will address all components of the proposed Facility.
The EIS will be prepared in accordance with the requirements of the Council on Environmental Quality's NEPA Implementing Regulations (40 CFR parts 1500-1508) and DOE's NEPA Implementing Procedures (10 CFR part 1021). Western will invite tribal, local, and State agencies with special expertise or jurisdiction over the Project to be cooperating agencies on the EIS. Full public participation, including information prepared in both English and Spanish, and disclosure are planned for the entire EIS process. It is anticipated that the EIS process will take about 1 year and will include public information and scoping meetings; consultation and involvement with appropriate Federal, State, local, and tribal government agencies; public review and hearings on the published draft EIS; a published final EIS; a review period; and publication of a record of decision (ROD). Publication of the ROD is anticipated in 2004.
The scoping meetings will be structured as open houses, and provide interested parties an opportunity to view Facility and EIS process exhibits, and provide comments to Western and cooperating agency representatives. The meetings will be held June 3 and 4, 2003, between 6 p.m. and 9 p.m. at the Wellton Elementary School Gymnasium and the Yuma Civic and Convention Center, respectively. The meeting locations are handicapped accessible, and an interpreter for the hearing-impaired will be available to provide information for the hearing impaired. The scoping period expires on June 30, 2003.
Environmental Protection Agency (EPA).
Notice.
In compliance with the Paperwork Reduction Act (44 U.S.C. 3501
Comments must be submitted on or before July 18, 2003.
Comments may be submitted by mail, through hand delivery/courier, or electronically. Follow the detailed instructions as provided in the
The mailing address, referencing Docket ID No. RCRA-2003-0010, is: OSWER Docket (5305T) EPA Docket Center, U.S. Environmental Protection Agency Headquarters, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. Hand deliveries of comments should be made to the EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC. Comments may also be submitted electronically through the Internet to:
Commenters should not submit any confidential business information (CBI) electronically. An original and two copies of CBI must be submitted under separate cover to: RCRA CBI Document Control Officer, Office of Solid Waste (5303W), U.S. EPA, 1200 Pennsylvania Avenue, NW., Washington, DC 20460.
Hand deliveries must be brought to the OSWER Docket in the EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC. The Docket is open from 8:30 a.m. to 4:30 p.m. Monday through Friday, excluding Federal holidays.
David Eberly by phone at (703) 308-8645, by mail at the Office of Solid Waste (5303W), U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460, or by e-mail at
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You may use EPA Dockets at
Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI, and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in A.1 above.
For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket.
Public comments submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Public comments that are mailed or delivered to the Docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.
You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments in formulating a final decision.
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Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e-mail. Send or deliver information identified as CBI only to: RCRA CBI Document Control Officer, Office of Solid Waste (5303W), U.S. EPA, 1200 Pennsylvania Avenue, NW., Washington DC 20460, Attention Docket ID No. RCRA-2003-0010. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is CBI). Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.
In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified in the
Pursuant to section 3506(c)(2)(A) of the PRA, EPA specifically solicits comments and information to enable it to:
1. Evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility.
2. Evaluate the accuracy of the Agency's estimates of the burdens of the proposed collections of information. In particular, for this ICR, EPA is soliciting information on the estimates for performing waste analyses as required in 40 CFR 264.13(a)(1) and 40 CFR 265.13(a)(1).
3. Enhance the quality, utility, and clarity of the information to be collected.
4. Minimize the burden of the collections of information on those who are to respond, including through the use of appropriate automated or electronic collection technologies or other forms of information technology,
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.
Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.
Environmental Protection Agency (EPA).
Notice.
In compliance with the Paperwork Reduction Act (44 U.S.C. 3501
Comments must be submitted on or before July 18, 2003.
Comments may be submitted electronically, by mail, or through hand delivery/courier service. Follow the detailed instructions as provided under
The contact individuals for each ICR are listed under
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(1) NESHAP for Secondary Lead Smelting (40 CFR part 63, subpart X), Docket ID Number OECA-2003-0036.
(2) NESHAP for Halogenated Solvent Cleaning (40 CFR part 63, subpart T), Docket ID Number OECA-2003-0024.
(3) NSPS for Storage Vessels for Petroleum Liquids for Which Construction, Reconstruction or Modification Commenced After June 11, 1973, and prior to May 19, 1978 (40 CFR part 60, subpart K), Docket ID Number OECA-2003-0019.
(4) NSPS for New Commercial and Industrial Solid Waste Incineration Units (40 CFR part 60, subpart CCCC), Docket ID Number OECA-2003-0025.
(5) NSPS for Ammonium Sulfate Manufacture (40 CFR part 60, subpart PP), Docket ID Number OECA-2003-0026.
(6) NESHAP for Phosphoric Acid Manufacturing Plants and Phosphate Fertilizers Production Plants (40 CFR part 63, subparts AA and BB), Docket ID Number OECA-2003-0027.
(7) Emission Guidelines for Commercial and Industrial Solid Waste Incineration Units (40 CFR part 60, subpart DDDD), Docket ID Number OECA-2003-0028.
(8) NESHAP for Magnetic Tape Manufacturing Operations (40 CFR part 63, subpart EE), Docket ID Number OECA-2003-0022.
(9) NESHAP for Flexible Polyurethane Foam Production (40 CFR part 63, subpart III), Docket ID Number OECA-2003-0037.
(10) NESHAP for Mineral Wool Production (40 CFR part 63, Subpart DDD), Docket ID Number OECA-2003-0029.
(11) NSPS for Nitric Acid Plants (40 CFR part 60, subpart G), Docket ID Number OECA-2003-0030.
(12) NESHAP for Off-Site Waste and Recovery Operations (40 CFR part 63, subpart DD), Docket ID Number OECA-2003-0031.
(13) NSPS for New Residential Wood Heaters (40 CFR part 60, subpart AAA), Docket ID Number OECA-2003-0021.
(14) NESHAP for Wood Furniture Manufacturing Operations (40 CFR part 63, subpart JJ), Docket ID Number OECA-2003-0032.
(15) NESHAP for Ethylene Oxide Emissions from Sterilization Facilities (40 CFR part 63, subpart O), Docket ID Number OECA-2003-0033.
(16) NSPS for Chromium Emissions From Hard and Decorative Chromium Electroplating and Chromium Anodizing Tanks (40 CFR part 63, subpart N), Docket ID Number OECA-2003-0034.
(17) NSPS for Secondary Brass and Bronze Production (40 CFR part 60, subpart M); Primary Copper Smelters (40 CFR part 60, subpart P); Primary Zinc Smelters (40 CFR part 60, subpart Q); Primary Lead Smelters (40 CFR part 60, subpart R); Primary Aluminum Reduction Plants (40 CFR part 60, subpart S); and Ferroalloy Production Facilities (40 CFR part 60, subpart Z), Docket ID Number OECA-2003-0038.
(18) NESHAP for Gasoline Distribution Facilities (40 CFR part 63, subpart R), Docket ID Number OECA-2003-0020.
(19) NESHAP for Pharmaceutical Production (40 CFR part 63, subpart GGG), Docket ID Number OECA-2003-0035.
(20) NSPS for Magnetic Tape Facilities (40 CFR part 60, subpart SSS), Docket ID Number OECA-2003-0023.
The official public docket for each ICR consists of the documents specifically referenced in the ICR, any public comments received, and other information related to each ICR. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket for each ICR is the collection of materials that is available for public viewing at the Enforcement and Compliance Docket and Information Center in the EPA Docket Center (EPA/DC), EPA West, Room B102, 1301 Constitution Avenue, NW., Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Reading Room is (202) 566-1744, and the telephone number for the Enforcement and Compliance Docket and Information Center Docket is (202) 566-1514.
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Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI, and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in section I.A.1. EPA intends to work toward providing electronic access to all of the publicly available docket materials through EPA's electronic public docket.
For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket.
Public comments submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Public comments that are mailed or delivered to the Docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.
For additional information about EPA's electronic public docket, visit EPA Dockets online or
You may submit comments electronically, by mail, or through hand delivery/courier service. To ensure proper receipt by EPA, identify the
1. Electronically. If you submit an electronic comment as prescribed below, EPA recommends that you include your name, mailing address, and an e-mail address or other contact information in the body of your comment. Also include this contact information on the outside of any disk or CD ROM you submit, and in any cover letter accompanying the disk or CD ROM. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. EPA's policy is that EPA will not edit your comment, and any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket, and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.
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Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e-mail. Send or deliver information identified as CBI only to the contact individuals listed in section II.C.; Attention: Docket ID Number (provide number). You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI. If you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI, and then identify within the disk or CD ROM the specific information that is CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.
In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified under the section titled
You may find the following suggestions helpful for preparing your comments:
(1) Explain your views as clearly as possible.
(2) Describe any assumptions that you used.
(3) Provide any technical information and/or data you used that support your views.
(4) If you estimate potential burden or costs, explain how you arrived at your estimate.
(5) Provide specific examples to illustrate your concerns.
(6) Offer alternatives.
(7) Make sure to submit your comments by the comment period deadline identified.
(8) To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and
Pursuant to section 3506(c)(2)(A) of the PRA, EPA specifically solicits comments and information to enable it to:
(1) Evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility.
(2) Evaluate the accuracy of the Agency's estimates of the burdens of the proposed collections of information.
(3) Enhance the quality, utility, and clarity of the information to be collected.
(4) Minimize the burden of the collections of information on those who are to respond, including through the use of appropriate automated or electronic collection technologies or other forms of information technology,
Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and
An Agency may not conduct or sponsor, and a person is not required to respond to, a collection information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations are displayed in 40 CFR part 9.
These information collection requirements are mandatory. Furthermore, the records required by New Source Performance Standards (NSPS) must be retained by the owner or operator for at least two years and records required by the National Emission Standards for Hazardous Air Pollutants (NESHAP) must be retained by the owner or operator for at least five years. In general, the required information consists of emissions data and other information deemed not to be private.
In the absence of such information collection requirements, enforcement personnel would be unable to determine whether the standards are being met on a continuous basis, as required by the Clean Air Act.
The EPA computed the burden for each of the recordkeeping and reporting requirements applicable to the industry for the currently approved Information Collection Requests (ICRs) listed in this notice. Where applicable, the EPA identified specific tasks and made assumptions, while being consistent with the concept of the Paperwork Reduction Act.
In compliance with the Paperwork Reduction Act (44 U.S.C. 3501
(1) NESHAP for Secondary Lead Smelting (40 CFR part 63, subpart X); Docket ID Number OECA-2003-0036; EPA ICR Number 1686.05; OMB Control Number 2060-0296; expiration date October 31, 2003.
(2) NESHAP for Halogenated Solvent Cleaning (40 CFR part 63, subpart T); Docket ID Number OECA-2003-0024; EPA ICR Number 1652.05; OMB Control Number 2060-0273; expiration date October 31, 2003.
(3) NSPS for Storage Vessels for Petroleum Liquids for Which Construction, Reconstruction or Modification Commenced After June 11, 1973, and prior to May 19, 1978 (40 CFR part 60, subpart K); Docket ID Number OECA-2003-0019; EPA ICR Number 1797.03; OMB Control Number 2060-0442; expiration date January 31, 2004.
(4) NSPS for Commercial and Industrial Solid Waste Incineration Units (40 CFR part 60, subpart CCCC); Docket ID Number OECA-2003-0025; EPA ICR Number 1926.03; OMB Control Number 2060-0450; expiration date January 31, 2004.
(5) NSPS for Ammonium Sulfate Manufacture (40 CFR part 60, subpart PP); Docket ID Number OECA-2003-0026; EPA ICR Number 1066.04; OMB Control Number 2060-0032; expiration date January 31, 2004.
(6) NESHAP for Phosphoric Acid Manufacturing Plants and Phosphate Fertilizers Production Plants (40 CFR part 63, subparts AA and BB); Docket ID Number OECA-2003-0027; EPA ICR Number 1790.03; OMB Control Number 2060-0361; expiration date January 31, 2004.
(7) Emission Guidelines for Commercial and Industrial Solid Waste Incineration Units (40 CFR part 60, subpart DDDD); Docket ID Number OECA-2003-0028; EPA ICR Number 1927.03; OMB Control Number 2060-0451; expiration date January 31, 2004.
(8) NESHAP for Magnetic Tape Manufacturing Operations (40 CFR part 63, subpart EE); Docket ID Number OECA-2003-0022; EPA ICR Number 1678.05; OMB Control Number 2060-0326; expiration date January 31, 2004.
(9) NESHAP for Flexible Polyurethane Foam Production (40 CFR part 63, subpart III); Docket ID Number OECA-2003-0037; EPA ICR Number 1783.03; OMB Control Number 2060-0357; expiration date January 31, 2004.
(10) NESHAP for Mineral Wool Production (40 CFR part 63, subpart DDD); Docket ID Number OECA-2003-0029; EPA ICR Number 1799.03; OMB Control Number 2060-0362; expiration date January 31, 2004.
(11) NSPS for Nitric Acid Plants (40 CFR part 60, subpart G); Docket ID Number OECA-2003-0030; EPA ICR Number 1056.08; OMB Control Number 2060-0019; expiration date January 31, 2004.
(12) NESHAP for Off-Site Waste and Recovery Operations (40 CFR part 63, subpart DD); Docket ID Number OECA-2003-0031; EPA ICR Number 1717.04; OMB Control Number 2060-0313; expiration date January 31, 2004.
(13) NSPS for New Residential Wood Heaters (40 CFR part 60, subpart AAA); Docket ID Number OECA-2003-0021; EPA ICR Number 1706.07; OMB Control Number 2060-0161; expiration date February 29, 2004.
(14) NESHAP for Wood Furniture Manufacturing Operations (40 CFR part 63, subpart JJ); Docket ID Number OECA-2003-0032; EPA ICR Number 1716.04; OMB Control Number 2060-0324; expiration date February 29, 2004.
(15) NESHAP for Ethylene Oxide Emissions from Sterilization Facilities (40 CFR part 63, subpart O); Docket ID Number OECA-2003-0033; EPA ICR Number 1666.06; OMB Control Number 2060-0283; expiration date February 29, 2004.
(16) NESHAP for Chromium Emissions From Hard and Decorative Chromium Electroplating and Chromium Anodizing Tanks (40 CFR part 63, subpart N); Docket ID Number OECA-2003-0034; EPA ICR Number 1611.05; OMB Control Number 2060-0327; expiration date February 29, 2004.
(17) NSPS for Secondary Brass and Bronze Production Plants (40 CFR part 60, subpart M); Primary Copper Smelters (40 CFR part 60, subpart P); Primary Zinc Smelters (40 CFR part 60, subpart Q); Primary Lead Smelters (40 CFR part 60, subpart R); Primary Aluminum Reduction Plants (40 CFR part 60, subpart S); and Ferroalloy Production Facilities (40 CFR part 60, subpart Z); Docket ID Number OECA-2003-0038; EPA ICR Number 1604.07; OMB Control Number 2060-0110; expiration date February 29, 2004.
(18) NESHAP for Gasoline Distribution Facilities (40 CFR part 63, subpart R); Docket ID Number OECA-2003-0020; EPA ICR Number 1659.05; OMB Control Number 2060-0325; expiration date February 29, 2004.
(19) NESHAP for Pharmaceutical Production (40 CFR part 63, subpart GGG); Docket ID Number OECA-2003-0035; EPA ICR Number 1781.03; OMB Control Number 2060-0358; expiration date February 29, 2004.
(20) NSPS for Magnetic Tape Coating Facilities (40 CFR part 60, subpart SSS); Docket ID Number OECA-2003-0023; EPA ICR Number 1135.08; OMB Control Number 2060-0171; expiration date February 29, 2004.
(1) NESHAP for Secondary Lead Smelting (40 CFR part 63, subpart X); contact María Malavé of the Office of Compliance at (202) 564-7027 or via E-mail at
(2) NESHAP for Halogenated Solvent Cleaning (40 CFR part 63, subpart T); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(3) NSPS for Storage Vessels for Petroleum Liquids for Which Construction, Reconstruction or Modification Commenced After June 11, 1973, and prior to May 19, 1978 (40 CFR part 60, subpart K); Rafael Sanchez of the Office of Compliance at (202) 564-7028 or via E-mail at
(4) NSPS for Commercial and Industrial Solid Waste Incineration Units (40 CFR part 60, subpart CCCC); Learia Williams of the Office of Compliance at (202)564-4113 or via E-mail at
(5) NSPS for Ammonium Sulfate Manufacture (40 CFR part 60, subpart PP); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(6) NESHAP for Phosphoric Acid Manufacturing Plants and Phosphate Fertilizers Production Plants (40 CFR part 63, subparts AA and BB); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(7) Emission Guidelines for Commercial and Industrial Solid Waste Incineration Units (40 CFR part 60, subpart DDDD); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(8) NESHAP for Magnetic Tape Manufacturing Operations (40 CFR part 63, subpart EE); Leonard Lazarus of the Office of Compliance at (202) 564-6369 or via E-mail at
(9) NESHAP for Flexible Polyurethane Foam Production (40 CFR part 63, subpart III); contact María Malavé of the Office of Compliance at (202) 564-7027 or via E-mail at
(10) NESHAP for Mineral Wool Production (40 CFR part 63, subpart DDD); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(11) NSPS for Nitric Acid Plants (40 CFR part 60, subpart G); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(12) NESHAP for Off-Site Waste and Recovery Operations (40 CFR part 63, subpart DD); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(13) NSPS for New Residential Wood Heaters (40 CFR part 60, subpart AAA); John DuPree of the Office of Compliance at (202) 564-5950 or via E-mail at
(14) NESHAP for Wood Furniture Manufacturing Operations (40 CFR part 63, subpart JJ); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(15) NESHAP for Ethylene Oxide Emissions from Sterilization Facilities (40 CFR part 63, subpart O); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(16) NESHAP for Chromium Emissions From Hard and Decorative Chromium Electroplating and Chromium Anodizing Tanks (40 CFR part 63, subpart N); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(17) NSPS for Secondary Brass and Bronze Production Plants (40 CFR part 60, subpart M); Primary Copper Smelters(40 CFR part 60, subpart P); Primary Zinc Smelters (40 CFR part 60, subpart Q); Primary Lead Smelters (40 CFR part 60, subpart R); Primary Aluminum Reduction Plants (40 CFR part 60, subpart S); and Ferroalloy Production Facilities (40 CFR part 60, subpart Z); contact María Malavé of the Office of Compliance at (202) 564-7027 or via E-mail at
(18) NESHAP for Gasoline Distribution Facilities (40 CFR part 63, subpart R); Rafael Sanchez of the Office of Compliance at (202) 564-7028 or via E-mail at
(19) NESHAP for Pharmaceutical Production (40 CFR part 63, subpart GGG); Learia Williams of the Office of Compliance at (202) 564-4113 or via E-mail at
(20) NSPS for Magnetic Tape Coating Facilities (40 CFR part 60, subpart SSS); Leonard Lazarus of the Office of Compliance at (202) 564-6369 or via E-mail at
(1) NESHAP for Secondary Lead Smelting (40 CFR part 63, subpart X); EPA ICR Number 1686.05; OMB Control Number 2060-0296; expiration date October 31, 2003.
(2) NESHAP for Halogenated Solvent Cleaning (40 CFR part 63, subpart T); EPA ICR Number 1652.05; OMB Control Number 2060-0273; expiration date October 31, 2003.
The monitoring, recordkeeping, and reporting requirements outlined in the standards are similar to those required for other NESHAP regulations. Plants must demonstrate compliance with the emission standards by monitoring their control devices and performing annual emissions testing. This information notifies EPA when a source becomes subject to the regulations, informs the EPA if a source is in compliance when it begins operation, and informs EPA if the source remained in compliance during any period of operation.
These standards rely on the proper design and operation of halogenated solvent cleaners such as working-mode covers, freeboard ratio of 1.0, and reduced room draft to reduce solvent emissions from halogenated solvent cleaners. Certain records and reports are necessary to enable the EPA to identify sources subject to the standards and to ensure that the standards are being achieved. Sources subject to these standards must provide EPA with an initial notification of existing or new solvent cleaning machines, initial statements of compliance, an annual control device monitoring report for batch vapor and in-line cleaning machines, an annual solvent emission report for batch vapor and in-line cleaning machines complying with the alternative standard, and exceedance of monitoring parameters or emissions. These records that the facilities maintain indicate to EPA whether they are operating and maintaining the halogenated solvent cleaners properly to control emissions. In order to ensure compliance with the standards, adequate reporting and recordkeeping is necessary. All sources subject to these standards are required to submit quarterly, semiannual, and annual reports.
The total annualized reporting and recordkeeping cost burden is approximately $4,091,000 of which the capital startup costs are $3,079,000 and the operation and maintenance costs are $1,012,000.
(3) NSPS for Storage Vessels for Petroleum Liquids for Which Construction, Reconstruction or Modification Commenced After June 11, 1973, and prior to May 19, 1978 (40 CFR part 60, subpart K); EPA ICR Number 1797.03; OMB Control Number 2060-0442; expiration date January 31, 2004.
(4) NSPS for Commercial and Industrial Solid Waste Incineration Units (40 CFR part 60, subpart CCCC); EPA ICR Number 1926.03; OMB Control Number 2060-0450; expiration date January 31, 2004.
The standards require initial performance tests for 10 pollutants, annual performance testing for particulate matter (PM), hydrogen chloride (HCl), opacity continuous operating parameter monitoring, annual
To minimize the burden of the annual performance testing, the standards only require that the owner or operator test for PM, HCl, and opacity. Annual performance testing is not required for dioxins/furans, cadmium, carbon monoxide, lead, mercury, nitrogen oxides, and sulfur dioxide. This significantly reduces the testing costs while still providing the EPA with sufficient data to adequately assess compliance. In addition, the standards allow the owner or operator to skip two annual tests for a pollutant if all performance tests over the previous three years show compliance with the emission limit. Reports must be submitted semiannually and annually.
The annual capital/startup costs per year were approximately $14,000 and there were no annualized operation and maintenance costs.
(5) NSPS for Ammonium Sulfate Manufacture (40 CFR part 60, subpart PP); EPA ICR Number 1066.04; OMB Control Number 2060-0032; expiration date January 31, 2004.
The recordkeeping requirements for ammonium sulfate plants consist of the occurrence and duration of all startups and malfunctions, the initial performance tests results, amount of ammonium sulfate feed material, and the pressure drop across the emission control system. Records of startups, shutdowns and malfunctions shall be noted as they occur. Records of the performance test should include information necessary to determine the conditions of the performance test, and performance test measurements (including pressure drop across the emission control system) and results. The continuous emission monitors (CEMS) shall record pressure drop across the scrubbers continuously and automatically. The reporting requirements for this industry include initial notifications, and initial performance tests.
(6) NESHAP for Phosphoric Acid Manufacturing Plants and Phosphate Fertilizers Production Plants (40 CFR part 63, subparts AA and BB); EPA ICR Number 1790.03; OMB Control Number 2060-0361; expiration date January 31, 2004.
All affected facilities must submit one-time notifications (where applicable) and a one-time report on performance test results. Plants must develop and implement a startup, shutdown, and malfunction plan and submit semiannual reports of any event where the plan was not followed.
Semiannual reports for periods of operation during which the monitoring parameter boundaries established during the initial compliance test are exceeded (or reports certifying that no exceedances have occurred) also are required. General requirements applicable to all NESHAP require records of applicability determinations; test results; exceedances; periods of startups; shutdowns; or malfunctions; monitoring records; and all other information needed to determine compliance with the applicable standards. Records and reports must be retained for a total of 5 years (2 years at the site; the remaining 3 years of records may be retained off-site).
Subparts AA and BB require respondents to install monitoring devices to measure the pressure drop and liquid flow rate for wet scrubbers. These operating parameters are permitted to vary within ranges determined concurrently with performance tests. Exceedances of the operating ranges are considered violations of the emission limits. The requirements include an option which allows sources to retest and demonstrate that the operating parameter exceedances are not exceedances of the emissions limit.
The standards require sources to determine and record the amount of phosphatic feed material processed or stored on a daily basis. This requirement allows verification of plant operating rate which is one of the factors considered in establishing the operating ranges of control devices. This requirement poses no additional burden upon the industry. This is so because proper plant operation and industry practice include daily recording of phosphate-bearing feed processed. Because the daily recordkeeping requirement places no additional burden upon sources, no cost estimate has been made for this requirement. Respondents also maintain records of specific information needed to determine that the standards are being achieved and maintained.
Since many of the facilities potentially affected by the standards are currently subject to a similar new source performance standard (NSPS), these standards include an exemption from the NSPS for those sources. That exemption eliminates duplication of information collection requirements.
The annual reporting and recordkeeping cost burden was $66,000 of which the capital/startup costs were $53,000 and the operation and maintenance costs were $13,000.
(7) Emission Guidelines for Commercial and Industrial Solid Waste Incineration Units (40 CFR part 60,
The emission guidelines require a one-time waste management plan, initial performance tests for 10 pollutants, annual performance testing for particulate matter, hydrogen chloride and opacity, continuous operating parameter monitoring, annual operator training, and annual reporting. Only the control plan and the waste management plan are submitted in the first 3 years after promulgation of the emission guidelines. The one-time control plan will allow the Designated Administrator to determine whether the respondent has an adequate strategy for achieving compliance with the emission guidelines by the final compliance date. The one-time waste management plan will allow the Designated Administrator to determine whether the respondent has an adequate plan for reducing and separating waste. The final compliance report notifies the Designated Administrator that the owner or operator has achieved compliance with the emission guidelines. Annual reporting allows the submitting of required information and data parameters so that any potential problems can be identified in a timely fashion.
(8) NESHAP for Magnetic Tape Manufacturing Operations (40 CFR part 63, subpart EE); Docket ID Number OECA-2003-0022; EPA ICR Number 1678.05; OMB Control Number 2060-0326; expiration date January 31, 2004.
Owners or operators of magnetic tape manufacturing operations must make the following one-time-only reports: Notification of the date of construction or reconstruction; notification of the anticipated and actual dates of startup; notification of any physical or operational change to an existing facility which may increase the regulated pollutant emission rate; notification of the date of the initial performance test; and the results of the initial performance test. Owners or operators also are required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility.
Each owner or operator of an affected magnetic tape coating operation shall install, calibrate, maintain, and operate a monitoring device that continuously measures control device efficiency. Recordkeeping requirements include records of the freeboard ratio, compliance monitoring system (CMS) maintenance and calibration, performance tests, material balance calculation, and hazardous air pollutant (HAP) usage.
(9) NESHAP for Flexible Polyurethane Foam Production (40 CFR part 63, subpart III); EPA ICR Number 1783.03; OMB Control Number 2060-0357; expiration date January 31, 2004.
There were no capital/startup costs and no operation and maintenance costs associated with CEM in the previous ICR. This estimate was based on the assumption that all foam production sources will elect the source-wide emission limitation, which requires no startup, capital, or operation and maintenance costs paid outside of the company.
(10) NESHAP for Mineral Wool Production (40 CFR part 63, subpart DDD); EPA ICR Number 1799.03; OMB Control Number 2060-0362; expiration date January 31, 2004.
The monitoring, recordkeeping, and reporting requirements outlined in the standards are similar to those required for other NESHAP standards. Plants must demonstrate compliance with the standards by monitoring their control devices and performing annual emissions testing. Respondents must
Records and reports must be retained for a total of 5 years (2 years at the site, and the remaining 3 years may be retained off-site). All sources subject to these standards are required to submit initial and semiannual reports.
The annual reporting and recordkeeping cost burden in the previous ICR was approximately $100,000 of which the capital/startup costs were $96,000 and the operation and maintenance costs were $4,000.
(11) NSPS for Nitric Acid Plants (40 CFR part 60, subpart G); EPA ICR Number 1056.08; OMB Control Number 2060-0019; expiration date January 31, 2004.
The recordkeeping requirements for nitric acid plants consist of the occurrence and duration of all startups, shutdowns, or malfunctions of an affected facility, or any period during which the monitoring system is inoperative. These notifications, reports, records and semiannual reports, in general, apply to all NSPS subject sources.
The annual reporting and recordkeeping cost burden was approximately $3,568,000 of which the capital/startup costs were $68,000 and the operation and maintenance costs were $3,500,000.
(12) NESHAP for Off-Site Waste and Recovery Operations (40 CFR part 63, subpart DD); EPA ICR Number 1717.04; OMB Control Number 2060-0313; expiration date January 31, 2004.
(13) NSPS for New Residential Wood Heaters (40 CFR part 60, subpart AAA); EPA ICR Number 1176.07; OMB Control Number 2060-0161; expiration date February 29, 2004.
Manufacturers submit a notification to the EPA stating the dates of certification testing, perform the certification testing at an accredited laboratory, supply detailed component drawings including manufacturing tolerances to the EPA, reapply for certification every five years, seal/store each tested model and maintain all necessary certification test records.
(14) NESHAP for Wood Furniture Manufacturing Operations (40 CFR part 63, subpart JJ); EPA ICR Number 1716.04; OMB Control Number 2060-0324; expiration date February 29, 2004.
Respondents must make one-time-only notifications which include: Notification of any physical or operational change to an existing facility which may increase the regulated pollutant emission rate; notification of the initial performance test, including information necessary to determine the conditions of the performance test, performance test measurements and results; and notification of demonstration of the continuous monitoring system.
Respondents are also required to submit both initial and regular semiannual compliance reports and to perform recordkeeping activities. Any respondent subject to the provisions of this part shall maintain and retain reports for at least five years.
The annual reporting and recordkeeping cost burden in the previous ICR was approximately $41,000. The total annualized capital/startup costs were zero and the annualized operation and maintenance costs were approximately $41,000.
(15) NESHAP for Ethylene Oxide Emissions from Sterilization Facilities (40 CFR part 63, subpart O); EPA ICR Number 1666.06; OMB Control Number 2060-0283; expiration date February 29, 2004.
The annual reporting and recordkeeping cost burden in the previous ICR was approximately $228,000 of which the capital/startup costs were $195,000 and the operation and maintenance costs were $33,000.
(16) NESHAP for Chromium Emissions From Hard and Decorative Chromium Electroplating and Chromium Anodizing Tanks (40 CFR part 63, subpart N); EPA ICR Number 1611.05; OMB Control Number 2060-0327; expiration date February 29, 2004.
The monitoring, recordkeeping, and reporting requirements outlined in the standards are similar to those required for other NESHAP regulations. These standards require initial notifications, performance tests, and periodic reports. Respondents are also required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility, or any period during which the monitoring system is inoperative. Respondents that are not required to conduct an initial performance test (
Respondents are required to maintain several records for a minimum of 5 years.
The annual reporting and recordkeeping cost burden in the previous ICR was $75,300,000 for operation and maintenance of the required continuous emission monitoring equipment.
(17) NSPS for Secondary Brass and Bronze Production Plants (40 CFR part 60, subpart M); Primary Copper Smelters(40 CFR part 60, subpart P); Primary Zinc Smelters (40 CFR part 60, subpart Q); Primary Lead Smelters (40 CFR part 60, subpart R); Primary Aluminum Reduction Plants (40 CFR part 60, subpart S); and Ferroalloy Production Facilities (40 CFR part 60, subpart Z); EPA ICR Number 1604.07; OMB Control Number 2060-0110; expiration date February 29, 2004.
There were no capital/startup costs associated with continuous emission monitors (CEMs) in the previous ICR. The operation and maintenance costs associated with CEMs for the previous ICR are $231,900.
(18) NESHAP for Gasoline Distribution Facilities (40 CFR part 63, subpart R); EPA ICR Number 1659.05; OMB Control Number 2060-0325; expiration date February 29, 2004.
The monitoring, recordkeeping, and reporting requirements outlined in the standards are similar to those required for other NESHAP regulations. Respondents must submit one-time notifications of applicability and reports on initial performance test results. Respondents must develop and implement a startup, shutdown, and malfunction plan and submit semiannual reports describing any occurrence when the plan was not followed. Respondents must also develop and implement an operation, maintenance, and monitoring plan covering each affected facility and each emission control device. In addition to the general requirements, this NESHAP requires respondents to submit one-time reports of start of construction, anticipated and actual startup dates, and physical or operational changes to existing facilities. Reports of initial performance tests at bulk terminal loading racks are also required and are necessary to show that the installed control devices are meeting the emission limitations required by the NESHAP. Annual reports of storage vessel inspections at all affected facilities are required. Respondents must also submit semiannual startup, shutdown, and malfunction reports, semiannual excess emissions and continuous monitoring system performance reports, and semiannual reports of equipment leaks not repaired within five days or loadings of gasoline cargo tanks for which vapor tightness documentation is not on file. Quarterly excess emissions reports are required for control device monitoring parameter exceedances, equipment leaks for which timely repair is not made, and reloadings of nonvapor tightness certified cargo tanks. All affected bulk terminals must maintain records of the cargo tank vapor tightness test data on the facility premises.
In the previous ICR, the total annual reporting and recordkeeping cost burden was approximately $851,000 which covered the operation and maintenance costs associated with the continuous monitoring requirements.
(19) NESHAP for Pharmaceutical Production (40 CFR part 63, subpart GGG); EPA ICR Number 1781.03; OMB Control Number 2060-0358; expiration date February 29, 2004.
The monitoring, recordkeeping, and reporting requirements outlined in the standards are similar to those required for other NESHAP regulations. These standards require initial notifications, performance tests, and periodic reports. Respondents are also required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility, or any period during which the monitoring system is inoperative. Respondents subject to these standards will provide a one-time report of initial performance tests and semiannual reports of noncompliance.
Respondents subject to the provisions of this part shall maintain a file of these measurements, and retain the file for at least five years following the date of such measurements, maintenance reports, and records.
The annual reporting and recordkeeping cost burden in the previous ICR was $8,000 of which the capital/startup costs were $4,000 and the operation and maintenance costs were $4,000.
(20) NSPS for Magnetic Tape Coating Facilities (40 CFR part 60, subpart SSS); Docket ID Number OECA-2003-0023; EPA ICR Number 1135.08; OMB Control Number 2060-0171; expiration date February 29, 2004.
Owners or operators of the affected facilities described must make the following one-time-only reports: Notification of the date of construction or reconstruction; notification of the anticipated and actual dates of startup; notification of any physical or operational change to an existing facility which may increase the regulated pollutant emission rate; notification of the date of the initial performance test; and the results of the initial performance test. Owners or operators also are required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility.
Monitoring requirements specific to the magnetic tape coating facilities consist mainly of VOC measurements, including monthly records of VOC content of all coatings applied, total amount and percent VOC recovered, and the total amount of coating applied. In addition, facilities utilizing less solvent annually than the applicable cutoff shall make semiannual estimates of projected annual amount of solvent use and maintain records of actual solvent use.
Each owner or operator of affected magnetic tape coating facilities shall install, calibrate, maintain, and operate a monitoring device that continuously indicates and records the concentration level of organic compounds in the outlet gas stream. Certain facilities will also be required to continuously measure and record either the combustion temperature of the incinerator (for those facilities controlled by a thermal incinerator) or the condenser exhaust temperature.
Environmental Protection Agency.
Notice.
In compliance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before June 18, 2003.
Follow the detailed instructions in
Vinh Nguyen, DWPD, OGWDW, OW, Mail Code 4606M, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: 202-564-4631; fax number: 202-564-3757; e-mail address:
EPA has submitted the following ICR to OMB for review and approval according to the procedures prescribed in 5 CFR 1320.12. On December 30, 2002 (67
EPA has established a public docket for this ICR under Docket ID No. OW-2002-0059, which is available for public viewing at the Water Docket in the EPA Docket Center (EPA/DC), EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Reading Room is (202) 566-1744, and the telephone number for the Water Docket is (202) 566-2426. An electronic version of the public docket is available through EPA Dockets (EDOCKET) at
Any comments related to this ICR should be submitted to OMB and EPA within 30 days of this notice, and according to the following detailed instructions: (1) Mail your comments to OMB at: Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Attention: Desk Officer for EPA, 725 17th Street, NW., Washington, DC 20503, and (2) Submit your comments to EPA online using EDOCKET (our preferred method), by e-mail to
EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing in EDOCKET as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose public disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EDOCKET. The entire printed comment, including the copyrighted material, will be available in the public docket. Although identified as an item in the official docket, information claimed as CBI, or whose disclosure is otherwise restricted by statute, is not included in the official public docket, and will not be available for public viewing in
The information collection activities will occur primarily at the program level through the Capitalization Grant Application and Agreement/State Intended Use Plan, Biennial Report, Annual Audit, and Assistance Application Review. Information from these sources may be used for input into the DWSRF National Information Management System.
In order to receive a grant, the State must prepare a Capitalization Grant Application that includes an Intended Use Plan (IUP) outlining in detail how it will use funds in the program. The Capitalization Grant Agreement is the principal instrument by which the State commits to manage its revolving fund program in conformity with the requirements of the SDWA.
The State must agree to complete and submit a Biennial Report on the uses of the capitalization grant. The Biennial Report indicates how the State has met its goals and objectives of the previous two fiscal years as stated in the grant agreement, and more specifically in the IUP. The report provides information on loan recipients, loan amounts, loan terms, project categories of eligible costs, and similar data on other forms of assistance.
A State must comply with the provisions of the Single Audit Act Amendments of 1996. Best management practices suggest and EPA recommends that a State conduct an annual independent audit of its DWSRF program (including set-asides), which contains an opinion on the financial condition of the DWSRF program, a report on its internal controls, and a report on compliance with applicable laws and the SDWA.
Because States provide assistance to local applicants, States assist local applicants in preparing DWSRF loan applications and verify that proposed projects will comply with applicable Federal and State requirements.
EPA will use the Capitalization Grant Application/State Intended Use Plan, Biennial Report, Annual Audit, and DWSRF National Information Management System to help conduct its oversight responsibilities as mandated by the SDWA.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR chapter 15, and are identified on the form and/or instrument, if applicable.
Environmental Protection Agency (EPA).
Notice
EPA is announcing the meeting of the Forum on State and Tribal Toxics Action (FOSTTA) to collaborate on environmental protection and pollution prevention issues. The Tribal Affairs Project and representatives and invited guests of the Pollution Prevention Project, components of FOSTTA, will be meeting on June 4-5, 2003. The meeting is being held to provide the members of the two projects an opportunity to interact fully and to have in depth discussions on the state-of-the-art pollution prevention approaches used to develop and operate the Mohegan Sun Facility and on other pollution prevention issues. This notice announces the location and times for the meeting and sets forth some tentative agenda topics. EPA invites all interested parties to attend the public meeting.
The two projects will meet jointly June 4-5, 2003, from 8:30 a.m. to 5 p.m. Requests to participate in the spring FOSTTA meeting, identified by docket ID number OPPT-2003-0022, must be received by EPA on or before May 29, 2003.
The meeting will be held at the Mohegan Sun, 1 Mohegan Sun Boulevard, Uncasville, CT. Requests to participate in the meeting may be submitted to Christine Eppstein, listed under
Christine Eppstein, Environmental Council of the States, 444 North Capitol Street, NW., Suite 445, Washington, DC 20001; telephone number: (202) 624-3661; fax number: (202) 624-3666; e-mail address: ceppstein@sso.org.
You may be potentially affected by this action if you are interested in FOSTTA and hearing more about the perspectives of the states and tribes on EPA programs and information exchange regarding important issues related to human health and environmental exposure to toxics. Potentially affected entities may include, but are not limited to:
• States and federally recognized tribes.
• State, federal, local environmental, and public health organizations.
The listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the technical persons listed under
1.
2.
An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA's Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit II.1. Once in the system, select “search,” then key in the appropriate docket ID number.
You may submit a request to participate in this meeting to Christine Eppstein, the technical person listed under
The Toxic Substances Control Act, 15 U.S.C. 2609 section 10(g), authorizes EPA and other federal agencies to establish and coordinate a system for exchange among federal, state, and local authorities of research and development results respecting toxic chemical substances and mixtures, including a system to facilitate and promote the development of standard data format and analysis and consistent testing procedures. Through FOSTTA, the Chemical Information and Management Project (CIMP) focuses on EPA's chemical program and works to develop a more coordinated effort involving federal, state, and tribal agencies. The Pollution Prevention Project (P2) promotes the prevention ethic across society, helping companies incorporate P2 approaches and techniques and integrating P2 into mainstream environmental activities at both the federal level and among the states. The Tribal Affairs Project (TAP) concentrates on chemical and prevention issues that are most relevant to the tribes, including lead control and abatement, Tribal traditional/subsistence lifeways, hazard communications, and outreach. FOSTTA's vision is to reinvigorate the projects, focus on major policy-level issues, recruit more senior state and tribal leaders, increase outreach to all 50 states, some 560 federally recognized tribes, and vigorously seek ways to engage the states and tribes in ongoing substantive discussions on complex and often times controversial environmental issues that states and tribes resolve at their respective levels of government. In January 2002, the Environmental Council of the States (ECOS), in cooperation with the National Tribal Environmental Council (NTEC), was awarded the new FOSTTA cooperative agreement. ECOS, NTEC, and EPA's Office of Pollution Prevention and Toxics (OPPT) are co-sponsoring the meetings. As part of a cooperative agreement, ECOS facilitates on going efforts of the state and tribal leaders and OPPT to increase understanding and improve collaboration on toxics and pollution prevention issues and to continue a dialogue on how federal environmental programs can best be implemented among the states, tribes, and EPA.
In the interest of time and efficiency, the meetings are structured to provide maximum opportunity for state, tribal, and EPA participants to discuss items on the predetermined agenda. At the discretion of the chair, an effort will be made to accommodate participation by observers attending the proceedings. The FOSTTA representatives and EPA will collaborate on environmental protection and prevention issues. The tentative agenda items identified by the states and the tribes follow:
• Overview of the Mohegan Sun Facility and the P2 approaches used in its development and operation.
• Technology transfer discussion.
• P2Rx Pollution Prevention information currently available.
• Discussion of tribal needs and P2Rx resources or potential products.
• OPPTS tribal strategy.
Environmental protection, Pollution prevention.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States. Additional information on all bank holding companies may be obtained from the National Information Center website at www.ffiec.gov/nic/.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than June 12, 2003.
Board of Governors of the Federal Reserve System, May 13, 2003.
In accordance with § 271.25 of its rules regarding availability of information (12 CFR part 271), there is set forth below the domestic policy directive issued by the Federal Open Market Committee at its meeting held on March 18, 2003.
The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee in the immediate future seeks conditions in reserve markets consistent with maintaining the federal funds rate at an average of around 1
By order of the Federal Open Market Committee, May 13, 2003.
With this notice, the Agency for Healthcare Research and Quality informs the public of the change of date and time for two meetings. The original notice of these meetings was published in the
Below are the changes for the two meetings highlighted in bold.
Agenda items for these meetings are subject to change as priorities dictate.
This program is authorized under sections 301, 311 and 317(C) of the Public Health Service Act, (42 U.S.C. 241, 243 and 247b-4 as amended). The Catalog of Federal Domestic Assistance number is 93.283.
The Centers for Disease Control and Prevention (CDC) announces the availability of fiscal year (FY) 2003 funds for a cooperative agreement program for Building Capacity for Population-Based Surveillance of Autism Spectrum Disorders (ASDs) and other Developmental Disabilities (DDs).
CDC is committed to achieving the health promotion and disease prevention objectives of “Healthy People 2010.” This announcement is related to the focus area of Maternal, Infant and Child Health.
The purpose of this program is to enhance the capacity to design and implement population-based, multiple-source surveillance for ASDs and other DDs to include children who are eight years of age.
This program will support funding for applicants to develop a new surveillance system for ASDs and other DDs, beginning with the ASDs and Mental Retardation (MR) in eight year-old children, in collaboration with a network of CDC-funded ASD/DD surveillance projects known as the Autism and Developmental Disabilities Monitoring (ADDM) Network.
Measurable outcomes of the program will be in alignment with the following performance goals for the National Center for Birth Defects and Developmental Disabilities (NCBDDD): To improve the data on the prevalence of birth defects and developmental disabilities and find causes and risk factors of birth defects and developmental disabilities in order to develop prevention strategies.
For additional information applicable to this announcement,
Applications may be submitted by Health departments of States, or their bona fide agents, including the Commonwealth of Puerto Rico, the Virgin Islands, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, the Federated States of Micronesia, the Republic of the Marshall Islands, the Republic of Palau, and federally recognized Indian tribal governments.
Competition is limited to State Health Departments, or their bona fide agents, because they maintain public health responsibility for these health conditions, and their record systems and expertise are essential to continued program operation. If the applicant is not the State Health Agency, the applicant must provide a letter from the appropriate State Health Agency designating the applicant as a bona fide agent to conduct ASD and DD surveillance. If an applicant is acting as an agent for their Health Department, the Health Department will be expected to assign a liaison with no less than ten percent time dedicated to participate in major activities of the program. Applicants are expected to provide some in-kind support for these activities.
Only one application per state will be accepted. If multiple states, territories or regions are represented, a lead applicant must be specified. Information indicating the lead applicant and the letter granting authority from the Health Department for this application should be placed directly behind the cover letter of the application. Applicants that fail to submit the evidence requested above will be considered non-responsive and returned without review.
Applicants from States that currently have ASD and other DD surveillance programs funded by CDC are ineligible. These States include: Arizona, Arkansas, California, Colorado, Georgia, Florida, Maryland, Delaware, New Jersey, North Carolina, Pennsylvania, South Carolina, Utah, and West Virginia.
To be eligible, applicants must document a study population of at least 30,000 live births per year within a State, a contiguous area (geographically linked) of a State, or a contiguous area comprised of a combination of States. Applicants who are unable to document the minimum study population size based on live birth data from their State Health Department or proxy data from the United States Census Bureau (based on 2000 census data or other appropriate data source) will be determined ineligible.
Title 2 of the United States Code, section 1611 states that an organization described in section 501c(4) of the Internal Revenue Code that engages in lobbying activities is not eligible to receive Federal funds constituting an award, grant, or loan.
Approximately $800,000 may be available in FY 2003 to fund approximately four awards. It is expected that the average award will be $200,000, ranging from $150,000 to $250,000. The award is expected to begin on September 1, 2003, and will be made for a 12-month budget period within a project period of up to three years. Funding estimates may change.
Continuation awards within an approved project period will be dependent upon demonstration of reasonable progress towards establishing ongoing, population-based surveillance for ASDs and other DDs as evidenced by required reports and the availability of funds.
Funds awarded should be used solely for the implementation of the approved project for ASD and DD surveillance.
Although matching funds are not a requirement under this announcement, applicants are encouraged to seek additional funds to support project activities. Applicants should document the source and amount of financial support, including in-kind contributions. Such letters of financial commitment as well as additional correspondence citing specific areas of project collaborations should be included in the application Appendix.
During the selection process CDC will make every effort to ensure a balanced geographic distribution with currently funded grantees.
In conducting activities to achieve the purpose of this program, the recipient will be responsible for the activities listed in 1. Recipient Activities, and CDC will be responsible for the activities listed in 2. CDC Activities. Please see Attachment I for additional guidance information.
1. Recipient Activities:
a. Develop a collaborative, population-based epidemiologic surveillance system for ASDs including Autistic Disorder, Pervasive Developmental Disorder—Not Otherwise Specified (PDD-NOS) and Asperger's Disorder and other developmental disabilities (
b. Develop collaborative relationships with appropriate professionals and organizations and existing funded surveillance partners to establish a multiple-source methodology for case ascertainment that is compatible with current collaborative CDC methodology.
c. Determine data linkages that may be needed to supplement the ASD/DD surveillance system.
d. Develop a plan to identify and access potential sources for ASD/DD surveillance.
e. Identify a surveillance project team capable of conducting ASD and DD surveillance. If acting as a bona fide agent of a health department, a department employee with no less than 10 percent of his/her time dedicated to participate in major activities of the program must be assigned to the project.
f. Develop a plan for quality assurance procedures for abstraction and case review and to ensure that study protocols are followed.
g. Develop an evaluation plan for estimating the validity and completeness of the surveillance system.
h. Develop a plan to increase community and public health awareness of ASDs/DDs to facilitate early and accurate identification of children and to improve the consistent identification
i. Outline a plan to disseminate findings of the surveillance activities for the professional community and the public to increase public health awareness.
j. Collaborate with funded CDC ASD surveillance partners and participate in surveillance development workshop(s) and meetings with CDC staff and ADDM Network members concerning population-based surveillance of ASDs/DDs.
2. CDC Activities:
a. Assist recipient in the development and implementation of surveillance activities including the development of a standardized surveillance case definition.
b. Provide current scientific information on surveillance methods, including the identification of potential sources for surveillance.
c. Assist recipient in the development of quality assurance procedures.
d. Provide assistance in the development of an evaluation plan for the completeness of the surveillance system.
a. Facilitate communication/coordination among the ADDM and other CDC-funded surveillance programs, to improve efficiency of activities and quality of surveillance data.
f. Provide technical consultation regarding data analyses.
A LOI is requested for this program. The LOI will be used to determine level of interest in the announcement and should include the following information: The program announcement title and number; name of applicant; project director's name and contact information.
The Program Announcement title and number must appear in the application. The applicant should use the information in the Purpose, Program Requirements, Evaluation Criteria, and Other Program Requirements sections of this announcement, as well as the additional information in Attachment I to develop the application content. The application will be evaluated on the criteria listed, so it is important to follow them in laying out the program plan.
The applicant should provide a detailed description of first-year goals, objectives, and activities and provide general goals, objectives, and activities for year two. Plans to sustain the program in the event of limited CDC future funding should also be addressed. The application must contain the following:
1.
2.
3.
4.
5.
a. Understanding of the Public Health Impact of the ASDs and other DDs.
b. Understanding of the need for population-based, multiple source prevalence data on the ASDs and DDs and the particular needs in the applicant's area.
c. Plans for collaboration with CDC and other partners and sources in the development of the surveillance system.
d. Description of the surveillance system planned including disabilities covered, age of children, study area, case definitions, multiple source case ascertainment methods, data collection instruments, data linkages and analyses, and reporting of results.
e. A plan to identify and access potential sources with written assurances from major sources. The plan should address issues pertaining to Federal privacy laws, and applicable state laws dealing with confidentiality issues, as well as any other assurances considered necessary to ensure the privacy and confidentiality of individuals. Sources should include a range of facilities that provide evaluation and treatment services for children with developmental disabilities, particularly ASDs and MR. Sources should include: Schools (public and private, including evaluations to determine eligibility for special education services), Clinical (including diagnostic and developmental assessment information), and other programs (for example, state DD programs).
f. Plan to address quality assurance procedures for abstraction and case review to ensure that study protocols are followed.
g. An evaluation plan for estimating the validity and completeness of the surveillance system.
h. A plan for data storage and maintaining confidentiality.
i. A plan for data analysis.
j. A plan to increase community and public health awareness of ASDs/DDs to facilitate early and accurate identification of children and to develop linkages between identification and assessment and intervention resources.
k. A plan for training local community service providers to improve the consistent identification of children with an ASD/DD in order to improve case ascertainment.
l. Intent to collaborate with the ADDM Network and participate in surveillance development workshop(s) and weekly conference call meetings with CDC staff and ADDM Network members concerning population-based surveillance of ASDs/DDs.
6.
7.
8.
9.
10.
On or before June 18, 2003, submit the LOI to the Project Officer, at the address designated for programmatic technical assistance identified in the “Where to Obtain Additional Information” section of this announcement.
Submit the signed original and two copies of PHS 5161-1 (OMB Number 0937-0189). Forms are available at the following Internet address:
The application must be received by 4 p.m. Eastern Time on July 18, 2003. Submit the application to: Technical Information Management—PA #03065, CDC Procurement and Grants Office, 2920 Brandywine Rd., Atlanta, GA 30341-4146.
Applications may not be submitted electronically.
A postcard will be mailed by PGO-TIM, notifying you that CDC has received your application.
Letters of intent and applications will be considered as meeting the deadline if they are received before 4 p.m. Eastern Time on the deadline date. Any applicant who sends their application by the United States Postal Service or commercial delivery services must ensure that the carrier will be able to guarantee delivery of the application by the closing date and time. If an application is received after closing due to (1) carrier error when the carrier accepted the package with a guarantee for delivery by the closing date and time, or (2) significant weather delays or natural disasters, CDC will upon receipt of proper documentation, consider the application as having been received by the deadline.
Any application that does not meet the above criteria will not be eligible for competition and will be discarded. Applicants will be notified of their failure to meet the submission requirements.
Applicants are required to provide measures of effectiveness that will demonstrate the accomplishment of the various identified objectives of the cooperative agreement. Measures of effectiveness must relate to the performance goals as stated in the “B. Purpose” section of this announcement. Measures must be objective and quantitative and must measure the intended outcome. The measures of effectiveness must be submitted with the application and shall be an element of evaluation.
An independent review group appointed by CDC will evaluate each application against the following criteria:
a. The extent to which the applicant describes the specific planning objectives, strategies for achieving these objectives, and describes an approach to surveillance of ASDs and other DDs.
b. Extent to which applicant describes the methods they will use to:
(1) Identify all relevant sources for surveillance case ascertainment for ASD and other DDs within the study area.
(2) Obtain permission to access records from relevant sources.
(3) Address relevant records access issues as related to federal privacy laws, and applicable state laws dealing with confidentiality issues, as well as any other assurances considered necessary to ensure the privacy and confidentiality of individuals.
(4) Collaborate with ADDM Network to develop standard case definitions for ASD and other DDs and implement a strategy to conduct multiple-source case ascertainment.
(5) Train community service providers to improve case ascertainment.
(6) Develop and implement quality assurance procedures and an evaluation plan for the surveillance system.
(7) Develop and implement a plan to use surveillance data to improve public awareness of ASD and other developmental disabilities and/or access to care of affected children.
(8) Develop an analytic and dissemination plan, and prepare manuscripts.
c. The extent to which the applicant demonstrates its collaboration with health and education services that would be appropriate sources of cases for the surveillance system (by letters of support which address the level of support, activities, and involvement).
a. Extent to which applicant has a clear, concise understanding of the requirements and purpose of the cooperative agreement.
b. Extent to which applicant understands the issues, challenges, and barriers associated with developing and implementing population-based surveillance for the range of ASDs and other DDs, particularly MR, and
c. Extent to which applicant describes the need for funds to develop/enhance ASD and other DD surveillance in their State or territory.
a. Extent to which applicant clearly describes the short-term and long-term goals and measurable objectives of the project.
b. A statement as to whether the design of the activities is adequate to enable the applicant to implement an ongoing population-based surveillance system for ASDs/DDs.
c. Extent to which applicant's goals and objectives are realistic and are consistent with the stated goals and purpose of this announcement.
d. The degree to which applicant has met the CDC policy requirements regarding the inclusion of women, ethnic and racial groups in the proposed research. This includes:
(1) The proposed plan for the inclusion of both sexes and racial and ethnic minority populations for appropriate representation.
(2) The proposed justification when representation is limited or absent.
(3) A statement as to why and in what ways the design of the surveillance system is adequate to establish the rates and descriptive data to evaluate differences when warranted.
(4) A statement as to whether the plans for recruitment and outreach for study participants include the process of establishing partnerships with community(ies) and recognition of mutual benefits.
a. Extent to which the applicant demonstrates that the proposed Project Director or Principal Investigator is knowledgeable regarding ASDs, DDs, and surveillance issues, as evidenced by publications, presentations, or other materials that document prior work.
b. Extent to which key personnel have qualifications, skills and experience in epidemiologic methods, public health surveillance, data management and analysis to develop and implement surveillance in ASD and other DDs, as evidenced by publications, presentations, or other materials that document prior work.
c. Extent to which applicant has the ability and experience to manage and coordinate surveillance related activities for this project.
d. Extent to which applicant involves adequate personnel with expertise the abstraction of records. In addition, adequate personnel with clinical expertise to review records to determine case status are also needed.
e. Extent to which there is appropriate dedicated staff and staff time to develop and implement the project.
f. Extent to which applicant provides an appropriate time line, which includes activities, percent of time staff will work on this project, and responsibilities/duties for assigned personnel.
g. Extent to which applicant demonstrates an organizational structure (include an organizational chart) and facilities/space/equipment that are adequate to carry out the activities of the program. The level of in-kind support and commitment to sustaining an ongoing surveillance system will also be considered.
a. Extent to which applicant identifies an appropriate team with expertise in both epidemiology and disabilities and disorders of childhood, particularly the ASDs.
b. Extent to which applicant demonstrates the ability to collaborate with multiple sources such as school systems, diagnostic centers, health/mental health service providers and other intervention service providers for the purpose of case ascertainment (include written assurances).
c. Extent to which applicant demonstrates their willingness to collaborate with the ADDM Network and other CDC-funded ASD/DD surveillance programs to develop and implement joint project efforts.
d. Extent to which collaborative efforts with other relevant programs are documented (such as education sources, Part C, state developmental disabilities programs, specialty clinics, etc.).
a. Extent to which applicant describes an evaluation plan that will monitor reliability, progress, timeliness, and completeness of the objectives and activities of the project.
b. Extent to which applicant describes a study to evaluate the completeness of ascertainment of children throughout this on-going surveillance program.
The extent to which the budget is reasonable, clearly justified, and consistent with the intended use of funds. Applicants should include in their first year budget two trips to CDC (Atlanta), for up to four persons at two days per trip.
Does the applicant adequately address the requirements of 45 CFR part 46 for the protection of human subjects? Not scored; however, an application can be disapproved if the research risks are sufficiently serious and protection against such risks is so inadequate as to make the entire application unacceptable.
Provide CDC with original plus two copies of:
1. Interim progress reports, which are due annually on April 22nd and annual progress reports, which are due annually no more than 30 days after the end of the budget period (September 29th). The interim progress report will serve as your non-competing continuation application. Progress reports must include the following elements:
a. Current Budget Period Activities Objectives.
b. Current Budget Period Financial Progress.
c. New Budget Period Program Proposed Activity Objectives.
d. Detailed Line-Item Budget and Justification (for interim progress reports only).
e. Additional Requested Information.
2. Financial Status Report (FSR), no more than 90 days after the end of the budget period; and
3. Final financial Status Report (FSR) and performance reports, no more than 90 days after the end of the project period.
Send all reports to the Grants Management Specialist and a copy to the Project Officer identified in the “Where to Obtain Additional Information” section of this announcement.
The following additional requirements are applicable to this program. For a complete description of each,
This and other CDC announcements, the necessary applications, and associated forms can be found on the CDC Web site, Internet address:
Application Deadline: July 3, 2003.
This program is authorized under sections 317, and 301 of the Public Health Service Act (42 U.S.C. 247b and 241). The Catalog of Federal Domestic Assistance number is 93.136.
The Centers for Disease Control and Prevention (CDC) announces the availability of fiscal year (FY) 2003 funds for a cooperative agreement study to tailor, implement, and evaluate community-based interventions with demonstrated effectiveness to reduce motor vehicle-related injuries.
This study addresses the “Healthy People 2010” focus area of Injury and Violence Prevention.
“Healthy People 2010: Health Objectives for the Nation” has set an objective of reducing motor vehicle-related fatalities to no more than 9.2 per 100,000 persons from a baseline of 15.6 per 100,000 persons in 1998. To meet this objective, the nation must improve the safety of motor vehicle travel, community-by-community, state-by-state. Deterrence of alcohol-impaired driving and increasing the proper use of occupant restraints are among the most important measures to further reduce motor vehicle-related injuries and deaths.
The purpose of the study is to tailor, implement, and evaluate community-based interventions with demonstrated effectiveness for preventing motor vehicle-related injuries within the following areas: (1) Reduce alcohol-impaired driving among high risk groups; (2) increase safety belt use among low-use groups; and (3) increase the use of child safety seats, with an emphasis on booster seats.
In addition, the study should gather information on the process of tailoring and implementing evidence-based community interventions such as defining how the interventions were tailored, barriers to implementation, and how the various evaluation activities were undertaken.
This study will require the formation of coalitions of public health departments, transportation and traffic safety agencies, Governors' highway safety representatives, law enforcement, and academic evaluation experts. These coalitions will work with community leaders, groups, and organizations (
Measurable outcomes of the study will be in alignment with the following research priorities in transportation safety from the National Center for Injury Prevention and Control (NCIPC) Research Agenda: (1) Evaluate strategies to implement and disseminate known, effective interventions to reduce alcohol-impaired driving and test the effectiveness of new, innovative strategies; (2) develop and evaluate interventions that address the proper and consistent use of measures to protect child occupants in motor vehicles; (3) develop methodologies for and evaluate the effectiveness of various means to translate transportation safety research findings into public policy. The study is expected to widely disseminate the outcomes through traditional mechanisms, such as professional and peer-reviewed journal publications.
Applications may be submitted by state or local health departments or their bona fide agents, including the District of Columbia, Commonwealth of Puerto Rico, Virgin Islands, Commonwealth of the Northern Marianna Islands, American Samoa, Guam, Federated States of Micronesia, Republic of the Marshall Islands, and Republic of Palau.
Other required eligibility criteria include the following:
1. The applicant should provide evidence that there is an unmet need in their community for these interventions. The intent of the study is not to support existing activities. This can be done by describing the target groups for the selected interventions and documenting the size of the problem in these groups.
2. The applicant should provide evidence of effective and well-defined collaborative relationships within the performing organization and among the coalition members that will ensure implementation of the proposed activities. At a minimum, the coalition must include the recipient state or local health department, a state or local highway safety department representative, the state Governor's highway safety representative or designee, local law enforcement, and a university-based evaluation expert. Documentation, such as letters of collaboration, describing the specific commitments and responsibilities that will be undertaken by the coalition members and community organizations must be included.
3. The applicant and its collaborative team should provide evidence of prior experience in tailoring, implementing, and evaluating community-based interventions. This experience must be documented by including publications such as those from peer-reviewed journal articles or technical reports in the appendix of the application.
4. The recipient should provide evidence of access to target populations and experience with accessing community leaders and community-level groups.
Title 2 of the United States Code section 1611 states that an organization described in section 501(c)(4) of the Internal Revenue Code that engages in lobbying activities is not eligible to receive Federal funds constituting an award, grant or loan.
Approximately $450,000 is available in FY 2003 to fund approximately 2 awards. It is expected that the average award will be $225,000, ranging from $200,000 to $250,000. It is expected that the awards will begin on or about September 15, 2003, and will be made for a 12-month budget period within a project period of up to four years. Funding estimates may change.
Continuation awards within an approved project period will be made on the basis of satisfactory progress as evidenced by required reports and the availability of funds.
Applicants will be expected to implement and evaluate at least two community-based interventions with demonstrated effectiveness during the four-year project period. Preference will be given to applicants who propose implementing at least one community-based intervention from the following list of interventions that have strong evidence of effectiveness according to the “The Guide to Community Preventive Services”. (
a. Sobriety checkpoints to reduce alcohol-impaired driving. Key components of the intervention: officer training in appropriate practices; implement or increase the frequency of sobriety checkpoints (or roving patrols if checkpoints are not feasible); develop a strategy for publicizing checkpoints through earned media (
b. Enhanced enforcement campaigns to increase safety belt and child safety seat use. Key components of the intervention: Implement or increase the frequency of citations for violations of the law, safety belt and/or child safety seat checkpoints (or roving patrols if checkpoints are not feasible); develop a strategy for publicizing the enhanced enforcement efforts through earned media (
c. Efforts to increase possession and use of child safety seats and booster seats. Key components of the intervention: Distribution of child safety seats and/or booster seats among low use groups; education on appropriate use.
Key components of the chosen interventions must be included in implementation.
Applicants may choose to implement one or more interventions with demonstrated effectiveness to reduce motor vehicle-related injuries that are not on the above list. Applicants who select interventions that are not included in the list above, but have been systematically reviewed in the peer-reviewed literature, must cite the review and summarize its findings in the application.
In conducting activities to achieve the purpose of this program, the recipient will be responsible for the activities listed in 1. Recipient Activities, and CDC will be responsible for the activities listed in 2. CDC Activities.
a. Establish the coalition that will help tailor, implement, and evaluate the selected interventions. At a minimum, the coalition must include the recipient state or local health department, a state or local highway safety department representative, the state Governor's highway safety representative or designee, local law enforcement, and an evaluation expert or academic researcher who has published in the peer-review literature.
b. Collect or obtain and analyze baseline measures that will guide the planning process and serve as the pre-intervention measures of effectiveness (
c. If the recipient proposes to implement enhanced enforcement campaigns to increase safety belt use or to strengthen child safety seat laws or booster seat laws, the recipient must first determine baseline use rates for safety belts, child safety seats, and booster seats using, at a minimum, a comparison of observed use rates determined from observational surveys in the intervention and control communities before and after implementation of the intervention activities.
d. If the recipient proposes to implement sobriety checkpoints to reduce alcohol-impaired driving, the recipient must first determine rates of alcohol-impaired driving using appropriate survey methods before and after implementation of the intervention. Direct assessment of driver blood alcohol content levels in roadside surveys is the preferred method. However, an acceptable method for baseline measurement would be the number of pre- and post-intervention nighttime single vehicle crashes.
e. Develop a detailed plan for the tailoring of the intervention for their community, for implementation, and for evaluation of the selected evidence-based interventions to reduce motor vehicle-related injuries. Obtain approval for the plan from each coalition member and the CDC.
f. Implement and evaluate the selected interventions. Sufficient resources should be allocated for a rigorous evaluation.
g. Attend and participate in technical assistance, planning, and project briefing meetings coordinated by the CDC. (Travel to CDC for one meeting per year.)
h. Submit required reports on time.
Activities should be specifically tailored to stimulate community ownership and investment in sustaining the intervention, if effective, beyond the funding period. Collaboration with ongoing activities such as “Safe Communities” and existing coalitions such as “SAFE KIDS” is encouraged.
The first year of the study will include several activities: Establishing the coalition; evaluating the perceptions of stakeholders regarding barriers to implementation and perceived benefits of the intervention; collecting and analyzing baseline information (
At the end of Year I, noncompetitive continuation funding will be available for Year II, contingent upon successful progress in Year I and a detailed budget for implementing and evaluating the selected interventions. Years two through four will be dedicated to implementing, sustaining, and evaluating the selected interventions. The evaluation should include systematic and detailed process data regarding any unanticipated barriers that were encountered in implementing the interventions.
a. Provide technical assistance and guidance in the tailoring, implementation, and evaluation of the selected interventions.
b. Review plans for the tailoring, implementation, and evaluation of the selected interventions.
c. Assist in ensuring human subjects assurances are in place as needed.
d. Assist in analysis and dissemination of results including the preparation of manuscripts.
e. Facilitate technical assistance and planning meetings and briefings to CDC.
A LOI is required for this program. The narrative should be no more than two single-spaced pages, printed on one side, with one-inch margins, and unreduced 12-point font. The letter should identify the announcement number, the name of the principal investigator, and briefly describe the scope and intent of the proposed study. The letter of intent does not influence review or funding decisions, but the number of letters received will enable CDC to plan the review more effectively and efficiently.
The Program Announcement title and number must appear in the application. Use the information in the Program Requirements and Evaluation Criteria sections to develop the application content. Your application will be evaluated on the criteria listed, so it is important to follow them in laying out your program plan. The narrative portion of the application must not exceed 25 pages.
Applications should follow the PHS-5161 application and should include the following information:
1. The project's focus justifying the intervention needs and describing the scientific basis for the program, the
2. Specific, measurable, and time-framed objectives.
3. A detailed plan describing the methods that will achieve the objectives, including their sequence.
4. A description of the roles and responsibilities of the principal investigator.
5. A description of all project staff regardless of their funding source. It should include their title, qualifications, experience, percentage of time each will devote to the project, as well as that portion of their salary to be paid by the cooperative agreement.
6. A description of those activities related to, but not supported by the cooperative agreement.
6. A description of those activities related to, but not supported by the cooperative agreement.
7. A description of the involvement of other entities that will relate to the proposed project, if applicable. It should include letters of organizational commitments of support and a clear statement of their roles.
8. A detailed budget for the cooperative agreement.
9. An explanation of how the research findings will contribute to the national effort to reduce the morbidity, mortality and disability caused by injuries.
The LOI must be received by 4 p.m. eastern time on or before June 9, 2003. Submit the LOI to: Stephen Lester, Grants Management Specialist, Procurement and Grants Office, Centers for Disease Control and Prevention, 2920 Brandywine Road, Atlanta, GA 30341-4146. Telephone: 770-488-1998.
Submit the signed original and two copies of PHS-5161 application. Forms are available at the following Internet address:
If you do not have access to the Internet, or if you have difficulty accessing the forms on-line, you may contact the CDC Procurement and Grants Office Technical Information Management Section (PGO-TIM) at: 770-488-2700.
The application must be received by 4 p.m. eastern time July 3, 2003. Submit the application to: Technical Information Management—PA#03077, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341-4146.
Applications may not be submitted electronically.
A postcard will be mailed by PGO-TIM, notifying you that CDC has received your application.
Applications shall be considered as meeting the deadline if they are received before 4 p.m. eastern time on the deadline date. Any applicant who sends their application by the United States Postal Service or commercial delivery services must ensure that the carrier will be able to guarantee delivery of the application by the closing date and time. If an application is received after closing due to (1) carrier error, when the carrier accepted the package with a guarantee for delivery by the closing date and time, or (2) significant weather delays or natural disasters, CDC will upon receipt of proper documentation, consider the application as having been received by the deadline.
Any application that does not meet the above criteria will not be eligible for competition, and will be discarded. The applicant will be notified of their failure to meet the submission requirements.
Applicants are required to provide measures of effectiveness that will demonstrate the accomplishment of the various identified objectives of the cooperative agreement. Measures of effectiveness must relate to the performance goals stated in the purpose section of this announcement. Measures must be objective and quantitative and must measure the intended outcome. These measures of effectiveness must be submitted with the application and will be an element of evaluation.
Eligible applications will be evaluated individually against the following criteria by an independent peer review special emphasis panel (SEP) appointed by CDC that will review the scientific merit of the applications. This will be the primary review of applications. These SEP reviewers will review all applications for scientific merit using current National Institutes of Health (NIH) criteria (a scoring system of 100-500 points) to evaluate the methods and scientific quality of the application. All categories are of equal importance, however, the application does not need to be strong in all categories to be judged likely to have a major scientific impact.
Factors to be considered will include:
Applicant has described how this study will advance scientific knowledge of how to tailor, implement, and evaluate community-based interventions for preventing motor vehicle-related injuries.
The extent to which the applicant's work plan and timetable includes:
a. The identification of representatives to be named as members of the coalition, including a description of the areas of expertise covered by each; the specific roles and responsibilities of each in implementing this cooperative agreement; methods for making decisions; etc.
b. Memorandum of agreement and understanding or letters of support from these collaborating organizations as an appendix, and the extent to which these letters indicate that the applicant and the other collaborating organizations have established a “working partnership” which specifies the active roles each will have in the study.
c. Plans for collecting or obtaining and analyzing baseline (pre-intervention) and follow-up data for the measures of effectiveness.
d. A description of the process used in selecting the interventions to be implemented.
e. A description of the process to be used in preparing the detailed plan for tailoring, implementing and evaluating the selected interventions.
f. Initial plans to rigorously evaluate the interventions including appropriate measures of effectiveness that will demonstrate the accomplishment of the identified objectives of the cooperative agreement. Measures should be objective and quantifiable and measure the intended outcome.
g. Plans to train and support staff regarding the responsibilities of this cooperative agreement, and the availability of staff and facilities to carry out this cooperative agreement.
h. Acknowledgement of potential problem areas and plans to consider alternative tactics.
The extent to which the applicant has documented that the principal investigator is appropriately trained and well-suited to carry out the study.
The extent to which the applicant and proposed collaborators have documented:
a. Their history and current capacity to provide a leadership function in convening and facilitating the work of the coalition.
b. Their history and current capacity to provide a leadership function in the tailoring, implementation, and evaluation of the selected community-based interventions to reduce motor vehicle-related injuries.
c. Their history and current capacity to present findings at national conferences and prepare peer-reviewed manuscripts.
d. A willingness to attend and participate in technical assistance and planning meetings and related travel to Atlanta coordinated by the CDC for all cooperative agreement recipients.
e. Their organizational capacity to realize the objectives of the cooperative agreement.
f. Their management operation, structure and/or organization. An organizational chart of the applicant's organization should be included as an appendix. Additionally, the applicant should include within their management plan the specific role and mechanisms to be established to ensure effective coordination, communication and shared decision making among the involved agencies/organizations.
g. A staffing plan for the project, noting existing staff as well as additional staffing needs. The responsibilities of individual staff members including the level of effort and allocation of time for each project activity by staff position should be included. The specific staff positions within the other involved state level agencies, both in-kind and funded, should be described.
h. Resumes, biosketches, and/or position descriptions (
i. A continuation plan in the event that key staff leave the project, how new staff will be smoothly integrated into the project, and assurances that resources will be available when needed for this project.
j. Previous experience of project staff to submit required reports on time.
What provisions have been made for the protection of human subjects and the safety of the research environments? How does the applicant plan to handle issues of confidentiality and compliance with mandated reporting requirements, (
a. The proposed plan for the inclusion of both sexes and racial and ethnic minority populations for appropriate representation.
b. The proposed justification when representation is limited or absent.
c. A statement as to whether the design of the study is adequate to measure differences when warranted.
d. A statement as to whether the plans for recruitment and outreach for study participants include the process of establishing partnerships with communities and recognition of mutual benefits. Is there evidence of effective working relationships between the applicant and community organizations? Does the applicant describe experience in developing community partnerships and the community's current and anticipated capacity to carry out the proposed activities?
Are the samples rigorously defined to permit complete independent replication at another site? Have the referral sources been described, including the definitions and criteria? What plans have been made to include women and minorities and their subgroups as appropriate for the scientific goals of the research? How will the applicant deal with recruitment and retention of subjects?
a. Plans to present findings to local, state, regional, and national audiences.
b. Plans to prepare peer-reviewed manuscripts based on the study.
Are the measures set forth in the application in accordance with CDC's performance plans? How adequately has the applicant addressed these measures?
The SEP will also examine the appropriateness of the proposed study budget and duration in relation to the proposed research and the availability of data required for the study.
The secondary review will be conducted by the Science and Program Review Subcommittee (SPRS) of the Advisory Committee for Injury Prevention and Control (ACIPC). ACIPC Federal agency experts will be invited to attend the secondary review and will receive modified briefing books (
The subcommittee's responsibility is to develop funding recommendations for the NCIPC Director based on the results of the primary review, the relevance and balance of proposed research relative to the NCIPC programs and priorities, and to assure that unwarranted duplication of federally funded research does not occur. The secondary review committee has the latitude to recommend to the NCIPC Director, to reach over better ranked proposals in order to assure maximal impact and balance of proposed research. The factors to be considered will include:
1. The results of the primary review including the application's priority score as the primary factor in the selection process.
2. The relevance and balance of proposed research relative to the NCIPC programs and priorities.
3. The significance of the proposed activities in relation to the priorities and objectives stated in Healthy People 2010, the Institute of Medicine report, Reducing the Burden of Injury, and the NCIPC Injury Research Agenda.
4. Budgetary considerations including the extent to which the budget is
Provide CDC with original plus two copies of:
1. Interim progress report, no less than 90 days before the end of the budget period. The progress report will serve as your non-competing continuation application, and must contain the following elements:
a. Current Budget Period Activities Objectives.
b. Current Budget Period Financial Progress.
c. New Budget Period Program Proposed Activity Objectives.
d. Detailed Line-Item Budget and Justification.
e. Additional Requested Information.
2. Financial status report, no more than 90 days after the end of the budget period.
3. Final financial and performance reports, no more than 90 days after the end of the project period.
Send all reports to the Grants Management Specialist identified in the “Where to Obtain Additional Information” section of this announcement.
The following additional requirements are applicable to this program. For a complete description of each, see Attachment II of the program announcement, as posted on the CDC Web site.
This and other CDC announcements, the necessary applications, and associated forms can be found on the CDC Web site, Internet address:
Click on “Funding” then “Grants and Cooperative Agreements”.
For general questions about this announcement, contact: Technical Information Management, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341-4146. Telephone: 770-488-2700.
For business management and budget assistance, contact: Stephen Lester, Grants Management Specialist, CDC Procurement and Grants Office, Centers for Disease Control and Prevention, 2920 Brandywine Road, Atlanta, GA 30341-4146. Telephone: 770-488-1998. E-mail address:
For program technical assistance, contact: Tim Groza, MPA, Project Officer, National Center for Injury Prevention and Control, Centers for Disease Control and Prevention, 4770 Buford Highway NE, MS K-63, Atlanta, GA 30341-3724. Telephone: 770-4676. E-mail address:
Application Deadline: July 3, 2003.
This program is authorized under the Public Health Service Act, sections 301(a) (42 U.S.C. 241(a)), 311(42 U.S.C. 243), and 317(k)(2) (42 U.S.C. 247b(k)(2)), as amended. The Catalog of Federal Domestic Assistance number is 93.283.
The Centers for Disease Control and Prevention (CDC) announces the availability of fiscal year (FY) 2003 funds for a cooperative agreement program for surveillance and eradication in the global Guinea worm eradication effort. This program addresses the “Healthy People 2010” focus areas of Immunization and Infectious Diseases.
The purpose of the program is to provide assistance for the eradication of
Measurable outcomes of the program will be in alignment with the following performance goal for the National Center for Infectious Diseases: Protect Americans from infectious diseases.
Applications may be submitted by public and private nonprofit organizations and by governments and their agencies; that is:
Title 2 of the United States Code section 1611 states that an organization described in section 501(c)(4) of the Internal Revenue Code that engages in lobbying activities is not eligible to receive Federal funds constituting an award, grant or loan.
Approximately $95,000 is available in FY 2003 to fund one award. It is expected that the award will begin on or about September 15, 2003, and will be made for a 12-month budget period within a project period of up to five years. The funding estimate will not change so any application exceeding $95,000 will not be considered.
A continuation award within an approved project period will be made on the basis of satisfactory progress as evidenced by required reports and the availability of funds.
No matching funds are required for this program.
Preference will be extended to applicants demonstrating leadership among the recognized partners of the global Guinea worm eradication campaign, with a record of success
In conducting activities to achieve the purpose of this program, the recipient will be responsible for the activities listed in 1. Recipient Activities, and CDC will be responsible for the activities listed in 2. CDC Activities.
a. Develop and implement surveillance plans to identify, contain and report cases of
b. Develop and implement interventions in targeted and priority areas.
c. Provide sufficient and adequately trained personnel.
d. Develop an evaluation plan to assess development and implementation of interventions and surveillance activities.
a. Collaborate with the recipient on the design, development and implementation of epidemiologic studies regarding Guinea worm interventions.
b. Collaborate with the recipient on site selection in the highest priority areas of Nigeria, Ghana, and Togo, in the secondary priority areas of the tri-border region of Mali, Niger, and Burkina Faso, and in the tertiary priority areas of the remaining West African countries (
c. Collaborate with the recipient on assessing the use of intervention supplies and materials to specific country Guinea worm eradication programs.
d. Provide medical consultation, programmatic review, and epidemiologic assistance when and where possible in project areas during Guinea worm drives.
e. Provide technical expertise in the form of one-on-one or group consultations by phone, in person, or via formal or informal meetings.
f. Assist in the development of a research protocol for Institutional Review Board (IRB) review by all cooperating institutions participating in the research project. The CDC IRB will review and approve the protocol initially and on at least an annual basis until the research project is completed.
An LOI is optional for this program. The Program Announcement title and number must appear in the LOI. The narrative should be no more than one page, single-spaced, printed on one side, with one-inch margins, and unreduced 12-point font. Your letter of intent will be used to enable CDC to determine the level of interest in the announcement and should include the following information, a brief description of the proposed study, the business address of the organization, and the name and phone number of the Principal Investigator.
The Program Announcement title and number must appear in the application. Use the information in the Program Requirements, Other Requirements, and Evaluation Criteria sections to develop the application content. Your application will be evaluated on the criteria listed, so it is important to follow them in laying out your program plan. The narrative should be no more than 25 pages, double-spaced, printed on one side, with one-inch margins, and unreduced 12-point font.
The narrative should consist of Experience and Background, Implementation Plan, Capacity, Methods, Evaluation, Objectives, Measures of Effectiveness, Budget, and Human Subjects. The Implementation Plan should address activities to be conducted over the entire five year project period.
On or before June 3, 2003, submit the LOI to the Grants Management Specialist identified in the “Where to Obtain Additional Information” section of this announcement.
Submit the signed original and two copies of PHS 398 (OMB Number 0925-0001)(Adhere to the instructions on the Errata Instruction Sheet for PHS 398). Forms are available at the following Internet address:
If you do not have access to the Internet, or if you have difficulty accessing the forms on-line, you may contact the CDC Procurement and Grants Office Technical Information Management Section (PGO-TIM) at: 770-488-2700. Application forms can be mailed to you.
The application must be received by 4 p.m. eastern time July 3, 2003. Submit the application to: Technical Information Management-PA03109, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341-4146. Applications may not be submitted electronically.
A postcard will be mailed by PGO-TIM, notifying you that CDC has received your application.
Letters of intent and applications shall be considered as meeting the deadline if they are received before 4 p.m. eastern time on the deadline date. Any applicant who sends their application by the United States Postal Service or commercial delivery services must ensure that the carrier will be able to guarantee delivery of the application by the closing date and time. If an application is received after closing due to (1) carrier error, when the carrier accepted the package with a guarantee for delivery by the closing date and time, or (2) significant weather delays or natural disasters, CDC will upon receipt of proper documentation, consider the application as having been received by the deadline.
Any application that does not meet the above criteria will not be eligible for competition, and will be discarded. The applicant will be notified of their failure to meet the submission requirements.
Applicants are required to provide measures of effectiveness that will demonstrate the accomplishment of the various identified objectives of the cooperative agreement. Measures of effectiveness must relate to the performance goals stated in the purpose section of this announcement. Measures must be objective and quantitative and must measure the intended outcome. These measures of effectiveness must be submitted with the application and will be an element of evaluation.
An independent review group appointed by CDC will evaluate each application against the following criteria:
The extent to which the applicant documents previous participation and leadership in the ongoing Guinea worm eradication effort, including provision of political support through ministries and heads of state that reflect regional coordination of resources and efforts, the applicant's grasp of the elements and magnitude of effort necessary to strategize the eradication of Guinea worm, ability to respond to unanticipated needs, and overall commitment.
a. The extent to which the applicant demonstrates knowledge of the effort needed to eradicate Guinea worm, time frames, performance standards, and management of financial and materiel resources. A demonstration of overall high quality in an implementation plan, including: (1) Compatibility with the global Guinea worm eradication effort; (2) acceptability of the plan by key partners in the Guinea worm effort; and (3) a description that indicates the applicant's understanding of relevant issues, obstacles and goals. (15 points)
b. If research involving human subjects is proposed, the degree to which the applicant has met the CDC Policy requirements regarding the inclusion of women, ethnic, and racial groups in the proposed research. This includes: (1) The proposed plan for the inclusion of both sexes and racial and ethnic minority populations for appropriate representation; (2) the proposed justification when representation is limited or absent; (3) a statement as to whether the design of proposed studies is adequate to measure differences when warranted; and (4) a statement as to whether the plans for recruitment and outreach for study participants include the process of establishing partnerships with community/ies and recognition of mutual benefits. (5 points)
The extent to which the applicant demonstrates sufficient, existing capacity to carry out the proposed plan, including staffing proposals (with curriculum vitae, titles and roles).
The extent to which applicant describes clear, practiced and accepted methods to implement elements of a Guinea worm eradication program.
The feasibility of the evaluation methods or procedures to monitor proposed activities, and the evaluation criteria to measure program accomplishments.
The extent to which (1) the stated goals are specific, measurable, realistic, and time-phased; (2) the objectives are related to the purpose(s) stated in the Program Announcement; and (3) measures are objective and quantitative.
The extent to which the applicant provides Measures of Effectiveness that will demonstrate the accomplishment of the various identified objectives of the award; that such measures are objective/quantitative and adequately measure the intended outcome.
The extent to which the budget provides detail and justification, and that they are consistent with the stated objectives and adequate to support proposed activities.
The extent to which the application adequately addresses the requirements of title 45 CFR part 46 for the protection of human subjects. (Not scored; however, an application can be disapproved if the research risks are sufficiently serious and protection against risks is so inadequate as to make the entire application unacceptable.)
Provide CDC with original plus two copies of:
1. Interim progress report, no less than 90 days before the end of the budget period. The progress report will serve as your non-competing continuation application, and must contain the following elements:
a. Current Budget Period Activity Objectives.
b. Current Budget Period Financial Progress.
c. New Budget Period Program Proposed Activity Objectives.
d. Detailed Line-Item Budget and Justification.
e. Additional Requested Information.
2. Financial status report, no more than 90 days after the end of the budget period.
3. Final financial and performance reports, no more than 90 days after the end of the project period.
Send all reports to the Grants Management Specialist identified in the “Where to Obtain Additional Information” section of this announcement.
The following additional requirements are applicable to this program. For a complete description of each, see Attachment I of the program announcement, as posted on the CDC website.
This and other CDC announcements, the necessary applications, and associated forms can be found on the CDC Web site, Internet address:
For general questions about this announcement, contact: Technical Information Management, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341-4146. Telephone: 770-488-2700.
For business management and budget assistance, contact: Yolanda Sledge, Grants Management Specialist, Procurement and Grants Office, Centers for Disease Control and Prevention, 2920 Brandywine Road, Atlanta, GA 30341-4146. Telephone: 770-488-2787. E-mail Address:
For program technical assistance, contact: Linda A. Webb, Public Health Advisor (MS/F22), Centers for Disease Control and Prevention, 4770 Bufford Highway, NE., Atlanta, GA 30341-4146. Telephone: 770/488-7784. E-mail address:
This program is authorized under section 317(k)(2) of the Public Health Service Act, (42 U.S.C. 247b(k)(2)), as amended. The Catalog of Federal Domestic Assistance number is 93.283.
The Centers for Disease Control and Prevention (CDC) announces the availability of fiscal year (FY) 2003 funds for a cooperative agreement program for the National Organizations' Support for Oral Health Programs. This program addresses the “Healthy People 2010” focus area of Oral Health.
The purpose of the program is to provide support for coordination of effort to identify state oral health program needs; facilitate development of systems and procedures that ensure the inclusion of essential and scientifically sound oral health program components; and enhance the effectiveness of state and local health department programs to prevent and control oral diseases in accordance with “Oral Health in America: A Report of the Surgeon General” and the National Oral Health “Call to Action” and accomplish the oral health-related objectives of Healthy People 2010.
Measures to address performance consistent with this program announcement should be included with the application.
Applications may be submitted by national, public and private nonprofit organizations that have developed and implemented nationwide programs and activities designed to promote state and local health department capacity to carry out essential public health functions as they relate to oral disease prevention and control. National organizations that serve as an umbrella organization for their constituents (state and local oral health programs) provide a unique opportunity to address barriers to prevention and control, enhance population based programs, and improve the nation's oral health. The program effort will be national in scope with outcomes useful to all state health agencies.
Title 2 of the United States Code section 1611 states that an organization described in section 501(c)(4) of the Internal Revenue Code that engages in lobbying activities is not eligible to receive Federal funds constituting an award, grant or loan.
Continuation awards within an approved project period will be made on the basis of satisfactory progress as evidenced by required reports and the availability of funds.
In conducting activities to achieve the purpose of this program, the recipient will be responsible for the activities listed in 1. Recipient Activities, and CDC will be responsible for the activities listed in 2. CDC Activities.
a. Develop and implement a plan to design and disseminate new and/or update existing surveillance tools for use by state programs to assess oral health status and needs on the state and community levels.
b. Provide technical assistance, upon request from state oral health programs, to strengthen capacity to conduct oral health surveillance. Technical assistance may be provided through one-on-one consultation, workshops, conferences, or other forums.
c. Develop and implement a plan to revise and disseminate nationally accepted guidelines for state and territorial oral health programs to incorporate lessons learned and new or alternative practices identified as promising.
d. Develop, write, implement, and evaluate a process for assessments of state oral health programs. The process shall address, but is not limited to:
(1) Procedures for submission and processing of state requests for assessments; (2) criteria for and selection of assessment team leader and additional team members; (3) state, team leader, and team member responsibilities; (4) state and assessment team preparations; (5) guidelines for logistical arrangements; (6) the assessment process; (7) report preparation and delivery; (8) post-assessment follow-up. Recipient should also include evaluation activities to measure outcomes of state assessments and determine effectiveness of state program assessment as a strategy that impacts enhancement of oral health program capacity to perform core public health functions pertaining to oral disease prevention and control.
e. Develop, implement, and evaluate a written plan for initiating and maintaining liaison and collaborative associations with other key organizations. At a minimum, the plan should address (1) determination of relevance; (2) development of clear and specific objectives to be achieved through each association; (3) activities to be undertaken; (4) responsibilities, including reporting, of recipient organization representative(s) conducting liaison or collaborative activities; and (5) evaluation.
f. Co-sponsor, with CDC and other agencies and national organizations, an
g. Identify, describe, and disseminate promising public health approaches to improving oral health with demonstrated and/or potential success based on criteria that may include effectiveness, efficiency, collaboration, and sustainability. Descriptions and dissemination of identified practices should be designed to support the ability of users to select promising practices and make modifications as needed for application within the context of their own programs, resources, and sociopolitical environments. Recipient will meet annually with CDC to discuss progress and coordination.
h. Enhance dissemination of information among state oral health programs and between state programs and their public/private partner by developing, maintaining, and evaluating information technology (IT) resources. Disseminated information may include, but not be limited to, summaries of features and characteristics of state oral health programs, results of state and community data analysis, effective practices, new initiatives, calendar of events, and questions and answer exchange. Data stored and presented on the web site will be aggregate data from state oral health programs. No sensitive or person-level data will be stored or displayed. It is expected that the recipient will need to provide IT skills in areas such as (1) data base administration (designs, builds and maintains relational databases) with experience in Web-enabled databases; (2) development of static Web pages such as hyper text mark up language (html), dynamic Web pages such as active server pages (asp), and text-based search engines at a minimum; other types of pages or programming languages depending on the goals of the five-year plan; and improvement of usability and accessibility, such as section 508 of the Rehabilitation Act (29 U.S.C. 794d) compliance, of Web sites; and (3) local area network (LAN) and internet server maintenance, including securing or hardening the Web site against attacks.
a. Provide assistance to develop and evaluate an internet-based oral health information system, including technical assistance in epidemiology and surveillance, Web development (including assessment of usability and accessibility), and editorial support.
b. Collaborate with recipient to assess state oral health programs using nationally accepted guidelines.
c. Provide assistance to plan an annual public health conference that includes, but is not limited to, representation at conference development meetings and identification and provision of CDC speakers.
d. Collaborate with recipient to develop and evaluate a process for identifying and disseminating population based oral health practices with demonstrated and/or promising success.
e. Meet annually with recipient to address progress and coordination of activities to identify, describe, and disseminate oral health practices that have demonstrated and/or promised success.
f. Determine information technology needs and disseminate information gathered through the recipient activities under this cooperative agreement.
Letter of Intent (LOI): A LOI is requested from each applicant applying for this program announcement. The narrative should be no more than one single-spaced page, printed on one side, with one-inch margins, and unreduced 12-point font. Your LOI will not be evaluated, but will be used to assist CDC in planning for the objective review for this program, and should include the announcement number, a statement of the intent to apply, and the amount of funds to be requested.
Applications: The Program Announcement title and number must appear in the application. Use the information in the Program Requirements, Other Requirements, and Evaluation Criteria sections to develop the application content. Your application will be evaluated on the criteria listed, so it is important to follow them in laying out your program plan. The narrative should be no more than 35 pages, double-spaced, printed on one side, with one-inch margins, and unreduced 12-point font.
The narrative should consist of:
Provide a clear and concise summary of the need for a national oral health program, proposed goals, major objectives and activities required for achievement of program goals and amount of Federal funding requested for budget year one of this cooperative agreement. Include proof of non-profit status.
Describe the documented need for the proposed activities, current activities that provide relevant experience and expertise to perform the proposed activities, and collaborative relationships with other agencies and organizations that will be involved in the proposed activities.
Describe realistic five-year goals and measurable, time-phased objectives for each proposed project; the major activities to achieve each objective; plans for collaboration with partners, including the CDC; and the evaluation process that will be used to determine effectiveness and initiate modifications as needed.
Provide specific, measurable, and time-phased year one objectives for each proposed project, the specific activities proposed to achieve the year one objectives, and a projected timetable for completion that displays dates for the accomplishment of tasks and identifies responsible parties. For each year one objective, specify how achievement will be measured and documented.
Describe how the program will be effectively managed. Include the following:
a. Management structure including the lines of authority and plans for fiscal control.
b.The staff positions responsible for implementation of the program.
c. Qualifications and experience of the designated staff.
Provide a detailed budget request and line item justification that is consistent with the purpose of the program and the proposed objectives and activities.
Letter of Intent (LOI): The letter of intent must be received by 4 p.m. eastern time June 9, 2003. Submit the LOI to the Grants Management Specialist listed in the “Where to Find Additional Information” section of this announcement.
Application Forms: Submit the signed original and two copies of PHS 5161-1
The application must be received by 4 p.m. eastern time July 3, 2003. Submit the application to: Technical Information Management—PA03062, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341-4146.
Applications may not be submitted electronically.
CDC Acknowledgement of Application Receipt: A postcard will be mailed by PGO-TIM, notifying you that CDC has received your application.
Deadline: Applications shall be considered as meeting the deadline if they are received before 4 p.m. eastern time on the deadline date. Any applicant who sends their application by the United States Postal Service or commercial delivery services must ensure that the carrier will be able to guarantee delivery of the application by the closing date and time. If an application is received after closing due to (1) carrier error, when the carrier accepted the package with a guarantee for delivery by the closing date and time, or (2) significant weather delays or natural disasters, CDC will upon receipt of proper documentation, consider the application as having been received by the deadline.
Any application that does not meet the above criteria will not be eligible for competition, and will be discarded. The applicant will be notified of their failure to meet the submission requirements.
An independent review group appointed by CDC will evaluate each application against the following criteria (the criteria are listed in descending order by weight of score):
The extent to which the applicant clearly identifies realistic five-year goals, measurable, time-phased objectives for each proposed project, and the major activities to achieve the objectives; provides a realistic plan for collaboration with partners including CDC in the projects; and describes an evaluation process that is likely to provide meaningful information about the achievement of objectives.
The extent to which the year one objectives are specific, measurable and time-phased; tasks and activities are logical; the projected timetable is reasonable and realistic; and measures of progress and achievement are described.
The extent to which the applicant demonstrates experience and expertise to perform the proposed activities and provides evidence of collaborative relationships with other agencies and organizations relevant to the achievement of proposed goals and objectives.
The extent to which the applicant demonstrates management structure and staff positions with clear lines of authority and plans for fiscal control, and that designated staff have appropriate qualification and experience.
The extent to which the applicant provides a detailed budget and justification consistent with the proposed program objectives and activities.
Provide CDC with original plus two copies of:
1. An interim progress report is due no later than March 30, 2004. Subsequent interim reports will be due on the 30th of March each budget year through March 30, 2009. The interim progress report will serve as your non-competing continuation application, and must contain the following elements:
a. A succinct description of the program accomplishments/narrative and progress made in meeting each Current Budget Period Program Objective during the first six months of the budget period (June 30th through December 31st).
b. The reason(s) for not meeting established program objectives and strategies to be implemented to achieve unmet objectives.
c. Current Budget Period Financial Progress.
d. A description of New Budget Period Proposed Activities and Objectives.
e. Detailed Line-Item Budget and Justification.
f. For all proposed contracts, provide the name of contractor, method of selection, period of performance, scope of work, and itemized budget and budget justification. If the information is not available, please indicate To Be Determined until the information becomes available, it should be submitted to CDC Procurement and Grants Management Office contact identified in this program announcement.
2. Annual progress and financial status reports, no more than 90 days after the end of the budget period and consist of the same information outlined for the interim progress report in (a) through (c).
3. Final financial and performance reports, no more than 90 days after the end of the project period.
Applicants are required to provide measures of performance that will demonstrate the accomplishment of the various identified objectives of the cooperative agreement. Measures of performance must relate to the Recipient Activities (
1. Design and dissemination of new, and/or update of existing surveillance tools for state programs: Documentation should include the need for new and/or updated surveillance tools, description of the development or revision process, identification of those participating in the development and review of the tool(s), and dissemination methods and measurable outputs that demonstrate that the intended audience has been reached.
2. Provision of technical assistance to enhance oral health surveillance capacity in states: Documentation should include an annual summary of requests for technical assistance and responses to such requests; provision of technical assistance for at least five states or all states requesting assistance if fewer than five requests are received during a project year; for each request receiving assistance, document the nature of assistance provided, including method of delivery, amount of time expended, scope of assistance and immediate one-year results (products, skills, etc).
3. Revision and dissemination of national guidelines for state and territorial oral health programs: Documentation should include
4. Develop, implement and evaluate a written process for state oral health program assessment: Documentation should include adherence to the proposed timeline for process development; inclusion of all components described in the Program Requirements for this announcement; identification of those participating in the development and review of the process; at least 90 percent adherence to the process; rationale for and descriptions of deviations from process; and evaluation of outcomes attributable to site assessments.
5. Develop, implement, and evaluate a written plan for liaison and collaborative associations with other organizations: Documentation should include adherence to the proposed timeline for protocol development; inclusion of all components described in the Program Requirements for this announcement; identification of participants in the plan development and review process; at least 90 percent adherence to the plan; rationale for and descriptions of deviations from plan; and measurable outputs of liaison and collaborative associations.
6. Co-sponsor an annual public health conference: Documentation should include the scope of participation beyond the responsibilities described in the Program Requirements; promotional efforts; number of attendees; the number and percentage of conference sessions that include presentation of state or local population based oral health programs and practices; and demonstration of use of evaluation results in planning and implementation of subsequent conferences.
7. Identify, describe, and disseminate field-tested population based oral health practices with demonstrated and/or promising success: Documentation should include adherence to the proposed timeline for development and dissemination; evidence of a standardized form for submitting practice information; identification and role of participants in development and review process; annual meeting with CDC to discuss progress and coordination; methods of dissemination and measurable outputs that demonstrate that the intended audience has been reached.
8. Develop, maintain and evaluate IT resources: Documentation should include the extent of adherence to the proposed timeline; evidence of compliance with Section 508; evidence of procurement of IT services from a contractor with experience as required to fulfill the goals of the application.
Send all reports to the Grants Management Specialist identified in the “Where to Obtain Additional Information” section of this announcement.
The following additional requirements are applicable to this program. For a complete description of each,
Executive Order 12372 does not apply to this program.
This and other CDC announcements, the necessary applications, and associated forms can be found on the CDC Web site, Internet address:
For general questions about this announcement, contact: Technical Information Management, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341-4146. Telephone: 770-488-2700.
For business management and budget assistance, contact: Nealean Austin, Grants Management Specialist, Procurement and Grants Office, Centers for Disease Control and Prevention, 2920 Brandywine Road, Atlanta, GA 30341-4146. Telephone: 770-488-2754. E-mail address:
For program technical assistance, contact: Claudia Vousden, MPH, Division of Oral Health, National Center for Chronic Disease Prevention and Health Promotion, Centers for Disease Control and Prevention, 4770 Buford Highway, MS F-10, Atlanta, GA 30341. Telephone: (770) 488-5509. E-mail address:
This program is authorized under sections 391 and 301(a) of the Public Health Service Act, (42 U.S.C. 280b and 241(a)). The Catalog of Federal Domestic Assistance number is 93.136.
The Centers for Disease Control and Prevention (CDC) announces the availability of fiscal year (FY) 2003 funds for a cooperative agreement for a randomized control study that will extend the current knowledge about what is the most effective approach to improve smoke alarm maintenance and function to reduce fire-related injuries. This study addresses the “Healthy People 2010” focus area, Injury and Violence Prevention.
The purpose of this funding is to determine the most effective approach to encourage behaviors that will improve smoke alarm maintenance and function over time. The applicant will develop a research model and implement a rigorous study to be conducted in a community setting that will:
1. Employ a variety of scientifically based strategies that are grounded in behavioral theory to improve household smoke alarm maintenance and function.
2. Evaluate the relative effectiveness of the proposed strategies over a minimum 18 months follow-up period when compared to control households. This study is intended to stimulate collaborative research by creating a community-based infrastructure in which State Health Departments will partner with university researchers and fire prevention organizations to develop, implement, and evaluate strategies to improve smoke alarm maintenance and long-term function.
Measurable outcomes of this research study will be in alignment with the following performance goal for the National Center for Injury Prevention and Control (NCIPC), described as a priority in the NCIPC Research Agenda: To conduct a targeted program of research to reduce injury-related death and disability.
Applications may be submitted by: Public nonprofit organizations, private nonprofit organizations, universities, colleges, technical schools, research institutions, hospitals, managed care organizations, community-based organizations, faith-based organizations, federally recognized Indian tribal governments, Indian tribes, Indian tribal organizations, State and local governments or their
Other required eligibility criteria include the following:
(1) The applicant must provide evidence of effective and well-defined collaborative relationships needed to ensure the implementation of the proposed activities. (2) The collaboration must include at least a State Health Department (to provide leadership regarding local public health priorities), academic or research institution (to provide scientific and methodological expertise), and a fire prevention agency (to provide guidance in community implementation activities). (3) The applicant must include letters of support that describe the specific commitments and responsibilities that will be undertaken by the collaborating organizations.
Title 2 of the United States Code section 1611 states that an organization described in section 501(c)(4) of the Internal Revenue Code that engages in lobbying activities is not eligible to receive Federal funds constituting an award, grant or loan.
Approximately $500,000 is available in FY 2003 to fund one award. It is expected that the award will begin on or about September 1, 2003, and will be made for a 12-month budget period within a project period of up to four years. The funding estimate may change.
Continuation awards within an approved project period will be made on the basis of satisfactory progress as evidenced by required reports and the availability of funds.
Matching funds are not required for this program.
The objective of this study is to develop and implement an effective behavioral approach that will improve household smoke alarm maintenance and long-term function. Research shows that functioning smoke alarms are more likely to be present in a home if a fire safety program provides and installs them instead of simply providing vouchers or discounts to individuals to obtain alarms. CDC programs currently being conducted in 16 states include home installation of smoke alarms plus general fire safety education in households at high risk for fire, fire-related injury, and death. Programs of this type seem reasonable but have not been evaluated scientifically to assess their impact on smoke alarm maintenance and function. Such studies would target vulnerable populations (
In conducting activities to achieve the purpose of this study, the recipient will be responsible for the activities listed in 1. Recipient Activities, and CDC will be responsible for the activities listed in 2. CDC Activities.
a. Develop mutually beneficial collaborations among at least a State Health Department, academic or research institution, and a fire prevention agency. Identify agencies and organizations with the capacity to implement behavioral theory-based interventions.
b. Develop and implement a plan to obtain community input and develop partnerships to work together to reduce fire-related injuries by increasing smoke alarm maintenance and function among vulnerable populations in the community.
c. Develop a research model and implement a randomized study with at least two intervention groups plus a comparison group. All groups will receive home visits. One intervention will include smoke alarm installation and behavioral strategies (
d. Develop an evaluation plan that includes both process and outcome measures. Assess effectiveness by comparing smoke alarm function among all three groups of households after a follow-up period of at least 18 months. Additional interim follow-up intervals could also be incorporated into the evaluation design.
e. Develop data collection instruments and methods, and a coordinated system for data management and data quality assurance.
f. Travel to Atlanta annually to present a briefing to NCIPC staff describing progress to date.
a. Provide up-to-date scientific information and technical assistance to awardee to assist in their final study design, intervention strategies and implementation.
b. Assist in developing a research protocol for annual Institutional Review Board (IRB) review by all cooperating institutions participating in the research study. The CDC IRB will review and approve the protocol initially and on at least an annual basis until the research study is completed.
c. Assist in ensuring human subjects assurances are in place.
d. Assist in data analysis, preparation of manuscripts and dissemination of study results.
e. Monitor and evaluate the scientific and operational accomplishments of the project. This will be accomplished through periodic site visits, telephone calls, electronic communication, technical reports and interim data analyses.
A LOI is strongly encouraged for this program. The LOI will be used to determine level of interest in the announcement. The LOI should include the following information: Program Announcement Number 03100; name and address of institution; name and telephone number of contact person;
The Program Announcement title and number must appear in the application. Use the information in the Program Requirements, Other Requirements, and Evaluation Criteria sections to develop the application content. Your application will be evaluated on the criteria listed so it is important to address each, preferably in order, with sufficient detail. Applicants may submit only one proposal.
The narrative should be no more than 25 (eight and a half by eleven) double-spaced pages, printed on one side, with one inch margins on four sides, unreduced 12-point Times New Roman font, and a page number at the bottom of each page. Applications with more than 25 pages will be returned and not reviewed. Please provide only attachments or appendices that are directly relevant to this request for funding. Include sample forms and data collection instruments. The budget, budget justification and attachments/appendices, including letters of support, are not included in the count for the 25-page limit. All pages, including appendices, must be numbered sequentially.
Applications should follow the PHS-398 (Rev. 5/2001) application and Errata sheet.
To document eligibility, the narrative should contain the following sections in the order presented:
1. Abstract (one page recommended):
Provide a brief abstract of the project. The abstract must reflect the study's focus and the length of the project period (maximum of four years) for which assistance is being requested (
2. Background (three to five pages recommended):
Describe the applicant's background and knowledge of the field as it relates to this study. Document their capacity to accomplish the proposed study as demonstrated by relevant past or current injury prevention studies and smoke alarm program activities. Justify the proposed study using existing scientific knowledge. Describe relevant behavioral theories and how these will be applied to improve smoke alarm maintenance and function.
3. Goals and Objectives (three to five pages recommended):
Describe the specific questions this research is intended to address, the hypotheses to be tested, the specific study goals, and measurable objectives for each goal. Include a plan that addresses activities to be conducted over the entire four-year project period as well as a detailed time-line for the first year of the study.
4. Study Design and Methods (10-15 pages recommended):
a. Describe the study design and the procedures that will be used to accomplish the specific aims of the study. Describe and justify where and how the study will be implemented in order to achieve the stated goals and test the proposed hypotheses.
b. Describe the target population. Provide evidence that the applicant has the ability to access this population.
c. Describe how intervention and control households will be selected; the process by which households will be randomized; and how households will be accessed, recruited and retained.
d. Describe one proposed intervention that will use behavioral strategies to improve smoke alarm maintenance and function over time (which will include training in testing behaviors, skill building, monitoring, educational boosters, reinforcement, modeling and/or practice behaviors, and self-efficacy) and one intervention that will use a theory-based educational program incorporating behavioral guidance to improve general fire safety behaviors.
e. Describe the proposed non-fire related, other public health educational program incorporating behavioral guidance that will be provided to the comparison households.
f. Describe the process measures that will be used to document the implementation of the intervention.
g. Describe the plans for data collection and data management including security of data, assurance of participant confidentially, data entry, editing, and quality assurance procedures.
g. For all study groups, describe the measurable outcomes that will be used to evaluate the proposed interventions. Describe the time frame for collecting these data.
h. Describe a statistical analysis plan appropriate for the study design, which will be used to evaluate the impact of the proposed behavioral and educational interventions.
i. Describe the nature and extent of collaboration with CDC and/or others during various phases of the project.
5. Personnel and Collaborations (three to five pages):
Describe the personnel and collaborative activities needed to accomplish the proposed study. Study personnel should represent, at a minimum, a State Health Department to provide leadership regarding local public health priorities and vulnerable populations, an academic or research institution to provide scientific and methodological expertise, and a fire prevention agency or similar community-based organization to provide guidance in community implementation activities. Provide evidence that the study personnel have the expertise and capacity to accomplish the proposed activities and to provide the appropriate scientific oversight necessary to fulfill the study goals and objectives. This will include design of a rigorous scientific study; development, implementation, evaluation of the proposed intervention strategies; data collection and management; experience in delivering educational and behavioral interventions; and preparation of scientific papers. Evidence of the experience and capacity for all key staff members should include an attachment containing CVs and position descriptions.
6. Community Capacity (three to five pages):
Provide evidence of effective working relationships between the applicant and community organizations. The applicant should describe their experience in developing community partnerships and the community's current and anticipated capacity to carry out the proposed activities. An advisory committee representing diverse organizations including (but not limited to) fire prevention organizations, professional organizations, and community service organizations is recommended. For such a committee, describe the qualifications and appropriateness of the proposed members.
7. Human Subject Involvement:
Describe procedures that will provide for the protection of human subjects. Address how these procedures adequately address the requirements of 45 CFR 46 for the protection of human subjects.
8. Inclusion of Women and Racial and Ethnic Populations:
Describe (1) the proposed plan for the inclusion of both sexes and racial and ethnic minority populations for appropriate representation; (2) the proposed justification when representation is limited or absent; (3) a statement as to whether the design of the study is adequate to measure differences when warranted.
On or before June 3, 2003, submit the LOI to appropriate recipient. The LOI should be on the applicant's letterhead and sent to the Grants Management Specialist identified in the “Where to Obtain Additional Information” section of this announcement.
Submit the signed original and two copies of PHS 398 (OMB Number 0925-0001). Adhere to the instructions on the Errata Instruction Sheet (as posted on the CDC website for PHS 398) to the CDC Procurement and Grants Office. Forms are available at the following Internet address:
If you do not have access to the Internet, or if you have difficulty accessing the forms on-line, you may contact the CDC Procurement and Grants Office Technical Information Management Section (PGO-TIM) at: 770-488-2700. Application forms can be mailed to you.
The application must be received by 4 p.m. eastern time July 3, 2003. Submit the application to: Technical Information Management—PA 03100, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341-4146.
Applications may not be submitted electronically.
A postcard will be mailed by PGO-TIM, notifying you that CDC has received your application.
Letters of intent and applications shall be considered as meeting the deadline if they are received before 4 eastern time on the deadline date. Any applicant who sends their application by the United States Postal Service or commercial delivery services must ensure that the carrier will be able to guarantee delivery of the application by the closing date and time. If an application is received after closing due to (1) carrier error, when the carrier accepted the package with a guarantee for delivery by the closing date and time, or (2) significant weather delays, natural or manmade disasters, CDC will upon receipt of proper documentation, consider the application as having been received by the deadline.
Any application that does not meet the above requirements will not be eligible for competition, and will be discarded. The applicant will be notified of their failure to meet the submission requirements.
Applications which are complete and responsive may be subjected to a preliminary evaluation (streamline review) by a peer review committee, the Special Emphasis Panel (SEP), to determine if the application is of sufficient and scientific merit to warrant further review by the SEP. CDC will withdraw from further consideration applications judged to be noncompetitive and promptly notify the principal investigator/program director and the official signing for the applicant organization. A dual review process will evaluate applications that are complete and responsive.
All awards will be determined by the Director of the NCIPC based on priority scores assigned to applications by the primary review committee SEP, recommendations by the secondary review committee of the Science and Program Review Subcommittee of the Advisory Committee for Injury Prevention and Control (ACIPC), consultation with NCIPC senior staff, and the availability of funds.
1. The primary review will be a peer review conducted by the SEP. A committee of reviewers with appropriate expertise will review all applications for scientific merit using current National Institutes of Health (NIH) criteria (a scoring system of 100-500 points) to evaluate the methods and scientific quality of the application. All categories are of equal importance, however, the application does not need to be strong in all categories to be judged likely to have a major scientific impact.
Factors to be considered will include:
a.
b.
Does the project include plans to measure progress toward achieving the stated objectives? Is there an appropriate work plan included? Does the applicant provide a detailed time-line for the first year of the study as well as a projected time-line for the subsequent four years?
Has the applicant clearly described how intervention and comparison households will be selected; the process by which households will be randomized; and how households will be accessed, recruited and retained? Does the applicant describe a proposed intervention strategy that will use behavioral strategies to improve smoke alarm maintenance and function over time?
Is there a statement as to whether the plans for recruitment and outreach for study participants include the process of establishing partnerships with community or communities and recognition of mutual benefits. Is there evidence of effective working relationships between the applicant and community organizations? Does the applicant describe experience in developing community partnerships and the community's current and anticipated capacity to carry out the proposed activities?
Are there adequate plans for data collection and data management including security of data, assurance of participant confidentially, data entry, editing, and quality assurance procedures? Is there a statistical analysis plan appropriate for the study design?
c.
d.
e.
Is there evidence of institutional support? Does the applicant describe the personnel and study collaborators needed to accomplish the proposed activities? Does the applicant provide evidence that the study personnel have the expertise and capacity to accomplish the proposed activities and to provide appropriate scientific oversight necessary to fulfill study goals and objectives?
Is there an appropriate degree of commitment and cooperation of other interested parties as evidenced by letters detailing the nature and extent of the involvement? Is there evidence of the experience and capacity for all key staff members including CVs and position descriptions?
f.
g.
Does the application adequately address the requirements of 45 CFR part 46 for the protection of human subjects? Not scored; however, an application can be disapproved if the research risks are sufficiently serious and protection against risks is so inadequate as to make the entire application unacceptable.
Does the application adequately address the CDC Policy requirements regarding the inclusion of women, ethnic, and racial groups in the proposed research? This includes:
(1) The proposed plan for the inclusion of both sexes and racial and ethnic minority populations for appropriate representation.
(2) The proposed justification when representation is limited or absent.
(3) A statement as to whether the design of the study is adequate to measure differences when warranted.
(4) A statement as to whether the plans for recruitment and outreach for study participants include the process of establishing partnerships with community(ies) and recognition of mutual benefits.
h.
i.
j.
2. The secondary review will be conducted by the Science and Program Review Subcommittee (SPRS) of the Advisory Committee for Injury Prevention and Control (ACIPC). ACIPC Federal agency experts will be invited to attend the secondary review and will receive modified briefing books (
The Subcommittee's responsibility is to develop funding recommendations for the NCIPC Director based on the results of the primary review, the relevance and balance of proposed research relative to the NCIPC programs and priorities, and to assure that unwarranted duplication of federally funded research does not occur. The secondary review Subcommittee has the latitude to recommend to the NCIPC Director, to reach over better-ranked proposals in order to assure maximal impact and balance of proposed research. The factors to be considered will include:
a. The results of the primary review including the application's priority score as the primary factor in the selection process.
b. The relevance and balance of proposed research relative to the NCIPC programs and priorities.
c. The significance of the proposed activities in relation to the priorities and objectives stated in “Healthy People 2010”, the Institute of Medicine report, “Reducing the Burden of Injury”, and the NCIPC Injury “Research Agenda.”
d. Budgetary considerations including the extent to which the budget is reasonable, clearly justified, and consistent with the intended use of funds.
Provide CDC with original plus two copies of:
1. Interim progress reports, no less than 90 days before the end of the budget period. The progress report will serve as your non-competing continuation application, and must contain the following elements:
a. Current Budget Period Activities Objectives.
b. Current Budget Period Financial Progress.
c. New Budget Period Program Proposed Activity Objectives.
d. Detailed Line-Item Budget and Justification.
e. Additional Requested Information.
2. Financial status reports, no more than 90 days after the end of the budget period.
3. Final financial and performance reports, no more than 90 days after the end of the project period.
Send all reports to the Grants Management Specialist identified in the “Where to Obtain Additional Information” section of this announcement.
The following additional requirements are applicable to this program. For a complete description of each, see Attachment I of the program announcement, as posted on the CDC Web site.
Executive Order 12372 does not apply to this program.
This and other CDC announcements, the necessary applications, and associated forms can be found on the CDC Web site, Internet address:
For general questions about this announcement, contact: Technical Information Management, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341-4146. Telephone: 770-488-2700.
For business management and budget assistance, contact: Wanda Allison, Grants Management Specialist, Procurement and Grants Office, Centers for Disease Control and Prevention, 2920 Brandywine Road, Atlanta, GA 30341-4146, Telephone: 770-488-2645, E-mail address:
For business management and budget assistance in the territories, contact: Angelia Hill, Grants Management Specialist, Procurement and Grants Office, Centers for Disease Control and Prevention, 2920 Brandywine Road, Atlanta, GA 30341-4146, Telephone: 770-488-2785, E-mail address:
For program technical assistance, contact: Judy Stevens, Ph.D., Technical Adviser, National Center for Injury Prevention and Control, Centers for Disease Control and Prevention, 4770 Buford Highway NE, MS K-63, Atlanta, GA 30341-3724, Telephone: 770-488-4649, E-mail address:
Administration on Children, Youth and Families, ACF, DHHS.
Notice of meeting; Advisory Committee on Head Start Research and Evaluation.
The 1998 Head Start Reauthorization (42 U.S.C. 9844(g); section 649(g)(1) of the Head Start Act, as amended) called on the Secretary of Health and Human Services to form an independent panel of experts (
June 16, 2003, 9 a.m.-5 p.m. June 17, 2003, 9 a.m.-4 p.m.
This meeting is open to the public and is barrier free. Meeting records will also be open to the public and will be kept at the Switzer Building located at 330 C Street, SW., Washington, DC 20447. The Head Start Bureau also intends to make material related to this meeting available on the Head Start Web site (
Michael L. Lopez, Ph.D. at 202-205-8212 for substantive information. ACF Office of Public Affairs at 202-401-9215 for press inquiries. Xtria at 703-821-3090 (ext. 265) for logistical information.
Food and Drug Administration, HHS.
Notice.
This notice announces a forthcoming meeting of a public advisory committee of the Food and Drug Administration (FDA). At least one portion of the meeting will be closed to the public.
Persons attending FDA's advisory committee meetings are advised that the agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with physical disabilities or special needs. If you
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of the draft guidance for industry (#79) entitled “Dispute Resolution Procedures for Science-Based Decisions on Products Regulated by the Center for Veterinary Medicine (CVM).” This draft guidance document describes dispute resolution procedures by which sponsors, applicants, or manufacturers of FDA regulated products for animals may request review of science-based decisions. This draft guidance does not address procedures for handling issues associated with FDA's new initiative to enhance pharmaceutical good manufacturing practices (GMP's).
Submit written or electronic comments on this draft guidance by August 4, 2003 to ensure their adequate consideration in preparation of the final document. General comments on agency guidance documents are welcome at any time.
Written comments on the information collection requirements must be received by July 18, 2003.
Submit written requests for single copies of the draft guidance document to the Communications Staff (HFV-12), Center for Veterinary Medicine, Food and Drug Administration, 7519 Standish Place, Rockville, MD 20855. Send one self-addressed adhesive label to assist that office in processing your requests.
Submit written comments on the draft guidance document to the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to
Submit written comments on the collection of information requirements to the Dockets Management Branch (address above). Comments should be identified with the docket number found in brackets in the heading of this document.
Marcia Larkins, Center for Veterinary Medicine (HFV-7), Food and Drug Administration, 7519 Standish Place, Rockville, MD 20855, 301-827-4535, e-mail: mlarkins@cvm.fda.gov.
FDA regulations, § 10.75 (21 CFR 10.75), provide a mechanism for any interested person to obtain internal review of any agency decision by raising the matter through the established agency channels of supervision or review for that matter.
On November 21, 1997, the President signed into law the Food and Drug Administration Modernization Act of 1997 (FDAMA) (Public Law 105-115). Section 404 of FDAMA creates new section 562 of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 360bbb-1). Section 562 of the act provides that, if a procedure under which an applicant, sponsor, or manufacturer (applicant) could request a review of a scientific controversy related to human drugs, animal drugs, human biologics, or devices did not already exist, either as a provision in the act or a regulation issued under the act, FDA must, by regulation, establish a procedure under which such an applicant may request a review of the controversy, including review by an appropriate scientific advisory panel or advisory committee.
In the
CVM Appeals Procedure Guide 1240.3130 (Guide 1240.3130) of the CVM Program Policy and Procedures Manual (P & P Manual) describes CVM's current appeals procedure. Because this guidance predates FDAMA, CVM is revising its procedures. Draft Guidance #79, when finalized, will supercede Guide 1240.3130, and, at that time, CVM will eliminate the guide from the P & P Manual.
This draft guidance document describes CVM's procedures for handling requests for internal review of scientific controversies relating to agency decisions affecting animal drugs or other products regulated by CVM. Incorporated in this document is the dispute resolution procedure set forth in section 404 of FDAMA. While CVM seeks comments on all aspects of this draft guidance, CVM is particularly interested in the definition of a scientific controversy, standards for granting and denying a request for the review of a scientific controversy by an advisory committee, and the time frames for conducting the review.
This Level 1 draft guidance is being issued consistent with FDA's Good Guidance Practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the agency's current thinking on dispute resolution and the procedures regarding requests for review of scientific controversies relating to decisions affecting animal drugs or other products regulated by CVM. The document does not create or confer any rights for or on any person and will not operate to bind FDA or the public. Alternative methods may be used as long as they satisfy the requirements of the applicable statutes and regulations. If an applicant wants to discuss an alternative approach, they should contact the FDA staff responsible for implementing the guidance. If the applicant cannot identify the appropriate FDA staff, call 301-827-4535.
Under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and includes agency requests or
With respect to the following collection of information, FDA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
The guidance recommends a procedure whereby applicants first seek review through the supervisory chain of command. If the issue is not resolved at the supervisor's level, the interested person may request in writing that the matter be reviewed at the next higher supervisory level. This process may continue through the agency's entire supervisory chain of command through CVM and to the Commissioner of Food and Drugs (Commissioner). At each level of review (Division, Office Director, Deputy Center Director, and Center Director levels) CVM recommends that the applicant identify the information in the administrative file upon which the request is based. If the appeal contains new information not previously contained in the administrative file, the matter will, in accordance with 21 CFR 10.75(d), be returned to the appropriate lower level in CVM for reevaluation based on the new information. After the applicant has appealed the decision through the supervisory chain of command, they may request review through an ad hoc appeals committee or review by the Veterinary Medicine Advisory Committee (VMAC) in writing to the CVM Ombudsman. If the applicant seeks review by the Ad Hoc Committee, the Chair should provide them the opportunity to submit written arguments to the Committee. The applicant may submit a letter appealing the Ad Hoc Committee's decision to the CVM director and then to the Commissioner. CVM recommends that persons filing a request for review by VMAC provide the CVM Ombudsman with a concise summary of the scientific issue in dispute, including a summary of the particular FDA action or decision to which the requesting party objects, the results of all efforts that have been made to resolve the dispute to date, and a clear articulated summary of the arguments and relevant data and information.
The information collected will form the basis for resolving the dispute between the requester and FDA. The likely respondents to this collection are applicants for approval of animal drugs or other products regulated by CVM who have a scientific dispute with FDA and who request a review of the matter.
Based on FDA's experience with dispute resolution, the agency expects that most persons seeking formal dispute resolution will have gathered the materials during any previous efforts to resolve the dispute with the agency. CVM considered the number and substance of similar appeals made to FDA in recent years under Guide 1240.3130 to arrive at the numbers reflected in table 1. Guidance #79, when finalized, will supercede Guide 1240.3130, and at that time, CVM will eliminate the guide from the P & P Manual.
FDA estimates the burden for this collection of information as follows:
The use of VMAC for resolving scientific disputes represents a new process for CVM. Although the procedures for requesting dispute resolution by a scientific advisory committee as set forth in the draft guidance document are new, CVM estimates that the number of respondents who would submit requests would not increase. The number of hours per response (30) encompasses a wide range depending on the dispute involved. This estimate was based on discussions with industry and is an average of hours per response.
This draft guidance document is being distributed for comment purposes only and is not intended for implementation at this time. Interested persons may submit to the Dockets Management Branch (address above) written or electronic comments regarding this draft guidance document. Submit written or electronic comments by August 4, 2003 to ensure adequate consideration in preparation of the final document. Written comments concerning the information collection requirements must be received by the Dockets Management Branch by July 18, 2003. Two copies of any comments are to be submitted, except that individuals may submit one copy. Comments are to be identified with the docket number found in brackets in the heading of this document. A copy of the draft guidance and received comments are available for public examination in the Dockets
Electronic comments may be submitted on the Internet at
Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.
Notice.
The proposed information collection requirement described below will be submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.
Comments Due Date: July 18, 2003.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Wayne Eddins, Reports Management Officer, Department of Housing and Urban Development, 451 7th Street, SW., L'Enfant Plaza Building, Room 8003, Washington, DC 20410 or
Ivy Jackson, Acting Director, Office of Interstate Land Sales and Real Estate Settlement Procedures Act, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, telephone (202) 708-0502 (this is not a toll free number) for copies of the proposed forms and other available information.
The Department is submitting the proposed information collection to OMB for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35, as amended).
This Notice is soliciting comments from members of the public and affected agencies concerning the proposed collection of information to: (1) Evaluate whether the proposed collection is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond; including the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
This Notice also lists the following information:
The Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35, as amended.
Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.
Notice.
The proposed information collection requirement described below will be submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Wayne Eddins, Reports Management Officer, Department of Housing and Urban Development, 451 7th Street, SW., L'Enfant Plaza Building, Room 8003, Washington, DC 20410, or
Willie Spearmon, Director, Office of Housing Assistance and Grant Administration, U.S. Department of Housing and Urban Development, 451 Seventh Street, SW., Room 6152, Washington, DC 20410; (202) 708-3000 (this is not a toll free number) for copies of the proposed forms and other available information.
The Department is submitting the proposed information collection to OMB for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35, as amended).
The Notice is soliciting comments from members of the public and affected agencies concerning the proposed collection of information to: (1) Evaluate whether the proposed collection is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond; including the use of appropriate automated collection techniques or other form of information technology, e.g., permitting electronic submission of responses.
This Notice also lists the following information:
The Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35, as amended.
Office of the Assistant Secretary for Community Planning and Development, HUD.
Notice of funding awards.
In accordance with section 102 (a)(4)(C) of the Department of Housing and Urban Development Reform Act of 1989, this announcement notifies the public of funding decisions made by the Department in a competition for funding under the Super Notice of Funding Availability (SuperNOFA) for the Community Development Technical Assistance Programs. This announcement contains the names of the awardees and the amounts of the awards made available by HUD.
Jean Whaley, Department of Housing and Urban Development, 451 7th Street, SW., Washington, DC 20410; telephone (202) 708-3176 extension 2774 (this is not a toll-free number). Hearing- and speech-impaired persons may access this number via TTY by calling the Federal Relay Service toll-free at 1-800-877-8339. For general information on this and other HUD programs, call Community Connections at 1-800-998-9999 or visit the HUD Web site at
The Fiscal Year 2002 Community Development Technical Assistance program is designed to increase the effectiveness of HUD's HOME Investment Partnerships Program (HOME), McKinney-Vento Homeless Assistance programs (Homeless), and Housing Opportunities for Persons with AIDS (HOPWA) through the selection of technical assistance (TA) providers for these three programs. The purposes of technical assistance under these three programs are as follows:
The assistance made available in this announcement is authorized by the following:
The HOME Technical Assistance Program is authorized by the HOME Investment Partnerships Act (42 U.S.C. 12781-12783); 24 CFR part 92.
For the McKinney-Vento Act Homeless Assistance Programs Technical Assistance, the Supportive Housing Program is authorized under 42 U.S.C. 11381
The HOPWA program is authorized under the AIDS Housing Opportunities Act (42 U.S.C. 12901) and the HOPWA regulations are found at 24 CFR part 574. The HOPWA Technical Assistance program is authorized under Pub. L. 107-73, Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 2002.
The competition was announced in the SuperNOFA published March 26, 2002 (67 FR 13893). Applications were rated and selected for funding on the basis of selection criteria contained in that Notice.
For the Fiscal Year 2002 competition, a total of $9,830,481 was awarded to 41 technical assistance providers nationwide. In accordance with section 102(a)(4)(C) of the Department of Housing and Urban Development Reform Act of 1989 (103 Stat. 1987, 42 U.S.C. 3545), the Department is publishing the grantees and amounts of the awards in Appendix A to this document.
This notice is published in accordance with section 9 (a) (2) of the Federal Advisory Committee Act (Pub. L. 92-463), 5 U.S.C. App. (1988). Following consultation with the General Services Administration, notice is hereby given that the Secretary of the Interior is renewing the Advisory Committee on Water Information (ACWI). OMB Memorandum M-92-01 dated December 10, 1991, designated the U.S. Geological Survey (USGS) as the lead agency for the Water Information Coordination Program (WICP) and also designated all other Federal organizations using water resources information to assist the USGS in ensuring the implementation of an effective WICP.
The purpose of the Committee is to represent the interests of water-information users and professionals in advising the Federal Government on Federal water-information programs and their effectiveness in meeting the Nation's water-information needs. Member organizations help to foster communications between the Federal and non-Federal sectors on sharing water information.
Membership represents a wide range of water resources interests and functions. Representation of the ACWI includes all levels of government, Tribes, public interest groups, academia, private industry, nonprofit and professional organizations. Member organizations designate their representatives and alternates. Membership is limited to a maximum of 35 organizations.
The Committee will function solely as an advisory body and in compliance with the provisions of the Federal Advisory Committee Act. The Charter will be filed under the Act, 15 days from the date of publication of this notice.
Further information regarding the ACWI may be obtained from the Associate Director for Water, USGS, Department of the Interior, 12201 Sunrise Valley Drive, Reston, Virginia 20192. Certification of renewal is published below.
I hereby certify that the renewal of the Advisory Committee on Water Information is necessary and in the public interest in connection with the performance of duties by the Department of the Interior mandated pursuant to the OMB Memorandum M-92-01.
Fish and Wildlife Service, Interior.
Notice of issuance of permit.
On October 24, 2000, the U.S. Fish and Wildlife Service (Service), issued an incidental take permit associated with a habitat conservation plan to Plum Creek Timber Company (Permit Number TE-034609-0) for the incidental take of threatened and endangered species pursuant to section 10(a)(1)(B) of the Endangered Species Act of 1973, as amended (Act). Stimson Lumber Company is in the process of purchasing approximately 11,487 hectares (28,385 acres) of Plum Creek land in Montana covered by the above Incidental Take Permit for the Plum Creek Native Fish Habitat Conservation Plan (NFHCP). Stimson Lumber Company expressed the desire to continue implementing pertinent provisions of the NFHCP on these lands and to continue to be covered by an Incidental Take Permit. Partial transfer of an Incidental Take Permit is expressly authorized at 50 CFR 13.25
On March 17, 2003, along with the Service and Plum Creek, Stimson Lumber Company entered into an Assignment and Assumption Agreement (partial assignment only, in connection with the sale of the above-mentioned lands) to facilitate the transfer of all relevant obligations of the NFHCP, Implementing Agreement and the permit from Plum Creek to Stimson pursuant to 50 CFR 13.25. On March 21, 2003, Stimson Lumber Company submitted to the Service an application for an Incidental Take Permit, along with the Assignment and Assumption Agreement and a Letter of Agreement to fulfill the requirements of processing the partial transfer of the NFHCP to Stimson Lumber Company and to initiate discussions with the Service concerning an amendment of the NFHCP to include the grizzly bears and implement interim grizzly bear best management practices.
Notice is hereby given that on April 24, 2003, as authorized by the provisions of the Act, the Service issued an Incidental Take Permit (TE-070004) to Stimson Lumber Company subject to certain conditions set forth therein. The permit was granted only after the Service determined that it was applied for in good faith, that granting the permit would not be to the disadvantage of the threatened species, and that it will be consistent with the purposes and policies set forth in the Act, as amended.
Additional information on this partial transfer and permit issuance may be requested by contacting the Regional Habitat Conservation Planning Coordinator, 134 Union Boulevard, Suite 645, Lakewood, Colorado 80228, telephone (303) 236-7400, extension 280.
Bureau of Indian Affairs, Interior.
Notice.
This notice publishes the Tribal Council Ordinance No. 02-04 regulating the Sale and Consumption of Alcoholic Beverages for the Rumsey Indian Rancheria of Wintun Indians of California. The Ordinance regulates and controls the possession, sale and consumption at a gaming facility located on the Rancheria known as the Cache Creek Indian Bingo & Casino and related hotel (hereinafter, “Facility”). The sale of alcohol within the Facility, for on-Facility consumption only, is hereby authorized. No alcoholic beverages may be sold at any location pursuant to this Ordinance other than within the Facility. The Rumsey Indian Rancheria Tribal Council enacted Tribal Council Resolution No. 09-24-02-02, on September 24, 2002, to authorize the enactment of the Ordinance. Ordinance No. 02-04, was adopted on September 24, 2002, but does not become effective until published in the
This Ordinance is effective on May 19, 2003.
Iris Drew, Southwest Regional Office, Branch of Tribal Government, PO Box 26567, Albuquerque, New Mexico 87125-6567; Telephone (505) 346-7592 or Ralph Gonzales, Office of Tribal Services, 1951 Constitution Ave., NW., MS-320-SIB, Washington, DC 20240; Telephone (202) 513-7629.
Pursuant to the Act of August 15, 1953, Public Law 83-277, 67 Stat. 586, 18 U.S.C. 1161, as interpreted by the Supreme Court in
This notice is published in accordance with the authority delegated by the Secretary of the Interior to the Assistant Secretary—Indian Affairs by 209 Departmental Manual 8.1.
I certify that Tribal Council Ordinance No. 02-04, Sale and Consumption of Alcoholic Beverages at the gaming facility, located on tribal trust lands, known as the Cache Creek Indian Bingo & Casino and related hotel, was duly adopted by the Rumsey Indian Rancheria of Wintun Indians of California on September 24, 2002. The Ordinance was further authorized for enactment by Tribal Council Resolution No. 09-23-02-02, on September 24, 2002.
The Tribal Council, governing body of the Rumsey Indian Rancheria of Wintun Indians of California (hereinafter “Tribe”), hereby enacts this Ordinance to govern the sale and consumption of alcoholic beverages at its Indian gaming facility and related hotel on Rancheria lands.
1. Title 18, United States Code, Section 1161, provides Indian tribes with authority to enact ordinances governing the consumption and sale of alcoholic beverages on their Reservations, provided such ordinance is certified by the Secretary of the Interior, published in the
2. Pursuant to the Tribe's Constitution at Article 4 and Article 8 Section 1(i) and (j), the Tribal Council is the governing body of the Tribe with the power to enact ordinances to promote the general welfare of the Tribe and to plan and manage economic affairs of the Tribe.
3. The Tribe is and shall be the owner and operator of a gaming facility located on the Rancheria known as the Cache Creek Indian Bingo & Casino and related hotel (hereinafter “Facility”), at which Class III Gaming is conducted pursuant to the Tribe's Gaming Ordinance and a Compact executed with the State of California on September 10, 1999, ratified by the California Legislature, approved by the Secretary of the Interior on May 5, 2000, and published in the
4. The Facility, located on trust land, is an integral and indispensable part of the Tribe's economy, providing income to the Tribe and training and employment to its members.
5. The Facility includes restaurant and lounge areas in which food and beverages are served to patrons who may also desire to consume alcoholic beverages.
6. The Tribal Council has determined that it is now in its best interest to offer alcoholic beverages for sale and consumption at the Facility.
7. It is the purpose of this Ordinance to set out the terms and conditions under which the sale of said alcoholic beverages may take place.
1. The sale of alcohol within the Facility, for on-Facility consumption only, is hereby authorized.
2. No alcoholic beverages may be sold at any location pursuant to this Ordinance other than within the Facility.
3. The sale of said alcoholic beverages authorized by this Ordinance shall be in conformity with all applicable laws of the State of California, and the sale of said beverages shall be subject to state sales tax, federal excise tax and any fees required by the Federal Bureau of Alcohol, Tobacco & Firearms. This includes but is not limited to the following examples:
a. No person under the age of 21 years shall consume, acquire or have in his or her possession at the Facility any alcoholic beverage.
b. No person shall sell alcohol to any person under the age of 21 at the Facility.
c. No person shall sell alcohol to a person apparently under the influence of liquor at the Facility.
4. Where there may be a question of a person's right to purchase liquor by reason of his or her age, such person shall be required to present any one of the following types of identification which shows his or her correct age and bears his or her signature and photograph: (1) Driver's license or identification card issued by any state Department of Motor Vehicles; (2) United States Active Duty Military card; (3) passport.
5. All liquor sales within the Facility shall be on a cash only basis and no credit shall be extended to any person, organization or entity, except that this provision does not prevent the use of major credit cards.
This Ordinance shall be conspicuously posted within the Facility at all times it is open to the public.
1. This Ordinance may be enforced by the Rumsey Tribal Gaming Agency by implementation of monetary fines not to exceed $500 and/or withdrawal of authorization to sell alcohol at the Facility. Prior to any enforcement action, the Rumsey Tribal Gaming Agency shall provide the alleged offender of this ordinance with at least three (3) days notice of an opportunity to be heard during a specially-called meeting. The decision of the Rumsey Tribal Gaming Agency shall be final.
2. This Ordinance also may be enforced by the Yolo County Sheriff's Office at the request of the Rumsey Tribal Gaming Agency.
If any provision or application of this ordinance is determined by review to be invalid, such adjudication shall not be held to render ineffectual the remaining portions of this title or to render such provisions inapplicable to other persons or circumstances.
This ordinance may only be amended by a majority vote of the Tribal Council.
Nothing in this ordinance in any way limits, alters, restricts or waives the Tribe's sovereign immunity from unconsented suit or action.
This Ordinance shall become effective following its certification by the Secretary of the Interior and its publication in the
The foregoing ordinance was adopted by a vote of
Bureau of Indian Affairs, Interior.
Notice.
This notice publishes the San Pasqual Band of Mission Indians Tribal Liquor Control Ordinance. The Ordinance regulates and controls the possession, sale and consumption of liquor at a facility known as the Valley View Casino. The land is located on trust land and this ordinance allows for the sale and consumption of alcoholic beverages within the Casino, for on-premises consumption only. The sale of said alcoholic beverages is in conformity with all applicable laws of the State of California and applicable federal laws. The Ordinance was adopted by Tribal Ordinance No. SP113002-03 and Tribal Resolution No. SCA-SP-04-03, on November 30, 2002 and does not become effective until published in the
This Code is effective on May 19, 2003.
Iris Drew, Southwest Regional Office, Branch of Tribal Government, P.O. Box 26567, Albuquerque, New Mexico 87125-6567; Telephone (505) 346-7592 or Ralph Gonzales, Office of Tribal Services, 1951 Constitution Ave., NW, MS-320-SIB, Washington, DC 20240; Telephone (202) 513-7629.
Pursuant to the Act of August 15, 1953, Public Law 83-277, 67 Stat. 586, 18 U.S.C. 1161, as interpreted by the Supreme Court in
This notice is published in accordance with the authority delegated by the Secretary of the Interior to the Assistant Secretary—Indian Affairs by 209 Departmental Manual 8.1.
I certify that Resolution No. SCA-SP-04-03 authorizing the submittal of Tribal Ordinance No. SP113002-03, was duly adopted by the San Pasqual Band of Mission Indians on November 30, 2002.
The San Pasqual Band of Mission Indians Tribal Liquor Control Ordinance reads as follows:
The General Council of the San Pasqual Band of Mission Indians (hereinafter General Council), governing body of the San Pasqual Band (hereinafter Tribe), hereby enacts this Ordinance to govern the sale and consumption of alcoholic beverages within casino facilities on Reservation lands.
1. Title 18, United States Code, Section 1161, provides Indian tribes with authority to enact ordinances governing the consumption and sale of alcoholic beverages on their Reservations, provided such ordinance is certified by the Secretary of the Interior, published in the
2. Pursuant to Article IV, Section 1 of the Constitution and By-Laws of the San Pasqual Band, the General Council is the governing body of the Tribe, with the power to enact ordinances to promote the general welfare and economic advancement of the Tribe and its members.
3. The Tribe is the owner and operator of a gaming facility located on the Reservation known as the Valley View Casino (hereinafter Casino), at which Class II and Class III Gaming is conducted pursuant to the Tribe's Gaming Ordinance and a Compact executed with the State of California on September 10, 1999, ratified by the California Legislature, approved by the Secretary of the Interior on May 5, 2000, and published in the
4. The Casino, located on trust land, is an integral and indispensable part of the Tribe's economy, and is intended to provide income to the Tribe and training and employment to its members.
5. The General Council has determined that it is now in the best interest of the Tribe to offer alcoholic beverages for sale and consumption in the Casino.
6. It is the purpose of this Ordinance to set out the terms and conditions under which the sale and consumption of said alcoholic beverages may take place.
1. The sale and consumption of alcoholic beverages within the Casino, for on-premises consumption only, is hereby authorized.
2. For the purpose of this Ordinance, the term Casino shall mean the Valley View Casino, as currently existing or as expanded in the future, or any other casino facility owned by the Tribe and located on the San Pasqual Indian Reservation.
3. The sale of said alcoholic beverages authorized by this Ordinance shall be in conformity with all applicable laws of the State of California and applicable federal laws, and the sale of said beverages shall be subject to federal excise tax and any fees required by the Federal Bureau of Alcohol, Tobacco & Firearms. This includes but is not limited to the following:
a. No person under the age of 21 years shall consume, acquire or have in his or her possession any alcoholic beverage.
b. No person shall sell any alcoholic beverages to any person under the age of 21.
c. No person shall sell alcoholic beverages to a person apparently under the influence of alcohol.
4. Where there may be a question of a person's right to purchase liquor by reason of his or her age, such person shall be required to present anyone of the following types of identification which shows his or her correct age and bears his or her signature and photograph: (1) Driver's license or identification card issued by any state Department of Motor Vehicles; (2) United States Active Duty Military card; or (3) passport.
5. All liquor sales within the Casino shall be on a cash only basis and no credit shall be extended to any person, organization or entity, except that this provision does not prevent the use of major credit or debit cards.
This Ordinance shall be conspicuously posted within the Casino at all times it is open to the public.
The San Pasqual Gaming Commission may enforce this Ordinance by implementation of monetary fines not to exceed $500 per violation. Prior to any enforcement action, the Gaming Commission shall provide the alleged offender of this Ordinance with at least three (3) days notice of an opportunity to be heard during a specially called meeting. The decision of the Gaming Commission shall be final.
If any provision or application of this Ordinance is determined by review to be invalid, such adjudication shall not be held to render ineffectual the remaining portions of this title or to render such provisions inapplicable to other persons or circumstances.
This Ordinance may only be amended by a majority vote of the General Council.
Nothing in this Ordinance in any way limits, alters, restricts or waives the Tribe's sovereign immunity from unconsented suit or action.
This Ordinance shall become effective following its adoption by the General Council, certification by the Secretary of the Interior and publication in the
Bureau of Indian Affairs, Interior.
Notice.
This notice publishes the Tribal Council No. 09-16-02-01 regulating the Sale and Consumption of Alcoholic Beverages for the United Auburn Indian Community. The Ordinance regulates and controls the possession, sale and consumption of liquor within the boundaries of the United Auburn Indian Community at a gaming facility located on tribal trust lands in Placer County, California. No alcoholic beverages may be sold at any location pursuant to this Ordinance other than within the facility. The Ordinance is in conformity with the laws of the State of California, where applicable and necessary. Although the Ordinance was adopted on September 16, 2002, it does not become effective until published in the
This Ordinance is effective on May 19, 2003.
Iris Drew, Southwest Regional Office, Branch of Tribal Government, PO Box 26567, Albuquerque, New Mexico 87125-6567; Telephone (505) 346-7592 or Ralph Gonzales, Office of Tribal Services, 1951 Constitution Ave., NW., MS-320-SIB, Washington, DC 20240; Telephone (202) 513-7629.
Pursuant to the Act of August 15, 1953, Public Law 83-277, 67 Stat. 586, 18 U.S.C. 1161, as interpreted by the Supreme Court in
This notice is published in accordance with the authority delegated by the Secretary of the Interior to the Assistant Secretary—Indian Affairs by 209 Departmental Manual 8.1. I certify that Tribal Council Ordinance No. 09-16-02-01, Sale and Consumption of Alcoholic Beverages at the gaming facility, located on tribal trust lands in Placer County, California, was duly adopted by the United Auburn Indian Community on September 16, 2002.
The United Auburn Indian Community Ordinance for the Sale and Consumption of Alcoholic Beverages, Tribal Council Ordinance No. 09-16-02-01, reads as follows:
The Tribal Council, governing body of the United Auburn Indian Community (hereinafter “Tribe”), hereby enacts this Ordinance to govern the sale and consumption of alcoholic beverages at
1. Title 18, United States Code, Section 1161, provides Indian tribes with authority to enact ordinances governing the consumption and sale of alcoholic beverages on their Reservations, provided such ordinance is certified by the Secretary of the Interior, published in the
2. Pursuant to Article IV Section 1 and Article VIII Section 1 subsections (i) and (j) of the Tribe's Constitution, the Tribal Council is the governing body of the Tribe with the power to enact ordinances to promote the economic well-being of the Tribe and the general welfare of its members.
3. The Tribe plans to own and operate a gaming facility located on tribal trust lands in Placer County, California, APN-021-280-088 (hereinafter “Facility”), at which Class III Gaming will be conducted pursuant to the Tribe's Gaming Ordinance and a Compact executed with the State of California on September 10, 1999, ratified by the California Legislature, approved by the Secretary of the Interior on May 5, 2000, and published in the
4. The Facility, located on this trust land, will be an integral and indispensable part of the Tribe's economy, providing income to the Tribe and training and employment to its members.
5. The Facility will include restaurant and lounge areas in which food and beverages will be served to patrons who may also desire to consume alcoholic beverages.
6. The Tribal Council has determined that it is in the Tribe's best interest to offer alcoholic beverages for sale and consumption at the Facility.
7. It is the purpose of this Ordinance to set out the terms and conditions under which the sale of said alcoholic beverages may take place.
1. The sale of alcohol within the Facility, for on-Facility consumption only, is hereby authorized.
2. No alcoholic beverages may be sold at any location pursuant to this Ordinance other than within the Facility.
3. The sale of said alcoholic beverages authorized by this Ordinance shall be in conformity with all applicable laws of the State of California, and the sale of said beverages shall be subject to state sales tax, federal excise tax and any fees required by the Federal Bureau of Alcohol, Tobacco & Firearms. This includes but is not limited to the following examples:
a. No person under the age of 21 years shall consume, acquire or have in his or her possession at the Facility any alcoholic beverage.
b. No person shall sell alcohol to any person under the age of 21 at the Facility.
c. No person shall sell alcohol to a person apparently under the influence of liquor at the Facility.
4. Where there may be a question of a person's right to purchase liquor by reason of his or her age, such person shall be required to present any one of the following types of identification which shows his or her correct age and bears his or her signature and photograph: (1) Driver's license or identification card issued by any state Department of Motor Vehicles; (2) United States Active Duty Military card; (3) passport.
5. All liquor sales within the Facility shall be on a cash only basis and no credit shall be extended to any person, organization or entity, except that this provision does not prevent the use of major credit cards.
This Ordinance shall be conspicuously posted within the Facility at all times it is open to the public.
1. This Ordinance may be enforced by the Tribal Gaming Commission by implementation of monetary fines not to exceed $500 and/or withdrawal of authorization to sell alcohol at the Facility. Prior to any enforcement action, Tribal Gaming Commission shall provide the alleged offender of this ordinance with at least three (3) days notice of an opportunity to be heard during a specially-called meeting. The decision of the Tribal Gaming Commission shall be final.
2. This Ordinance also may be enforced by the Placer County Sheriff's Office at the request of the Tribal Gaming Commission.
If any provision or application of this ordinance is determined by review to be invalid, such adjudication shall not be held to render ineffectual the remaining portions of this title or to render such provisions inapplicable to other persons or circumstances.
This ordinance may only be amended by a majority vote of the Tribal Council.
Nothing in this ordinance in any way limits, alters, restricts or waives the Tribe's sovereign immunity from unconsented suit or action.
This Ordinance shall become effective following its certification by the Secretary of the Interior and its publication in the
The foregoing ordinance was adopted by a vote of
Bureau of Land Management, Interior.
Notice.
The Bureau of Land Management proposes to withdraw 6,168.61 acres of public lands from surface entry and mining for a period of 20 years to protect cultural, historic, and recreational resources in and around the Grimes Point Archaeological Area, the Sand Mountain Recreation Area, and the Cold Springs Historical Area in Churchill County. This notice proposes closure of the land from surface entry and mining for up to 2 years while various studies and analyses are made to make a final decision on the withdrawal application.
Comments should be received on or before August 18, 2003.
Comments should be sent to the Nevada State Director, BLM, 1340 Financial Blvd., P.O. Box 12000, Reno, Nevada 89520-0006.
Dennis J. Samuelson, BLM Nevada State Office, 775-861-6532.
On January 29, 2003, a petition was approved allowing the Bureau of Land Management to file an application to
The areas describe aggregate 6,168.61 acres in Churchill County.
The purpose of the withdrawal is to protect cultural, historic, and recreational resources in and around the Grimes Point Archaeological Area, the Sand Mountain Recreation Area, and the Cold Springs Historical Area. The Grimes Point Archaeological Area is recognized as one of the most significant archaeological sites in the Great Basin and is on the National Register of Historic Places. The Sand Mountain Recreation Area contains Sand Mountain, which is over 500 feet tall and is the largest single sand dune in the Great Basin. The Cold Springs Historical Area contains the ruins of an Overland Stage station and a station constructed to support the first transcontinental telegraph.
For a period of 90 days from the date of publication of this notice, all persons who wish to submit comments, suggestions, or objections in connection with the proposed withdrawal may present their views in writing to the Nevada State Director of the Bureau of Land Management at the address above.
Notice is hereby given that there will be an open house/public meeting in connection with the proposed withdrawal from 6 p.m. to 8 p.m., on June 17, 2003, at the Fallon Convention Center, 100 Campus Way, Fallon, Nevada 89406.
Comments, including names and street addresses of commenters, will be available for public review at the Carson City Field Office, 5665 Morgan Mill Road, Carson City, Nevada during regular business hours, 7:30 a.m. to 4:30 p.m., Monday through Friday, except holidays. Individual respondents may request confidentiality. If you wish to hold your name or address from public review or from disclosure under the Freedom of Information Act, you must state this prominently at the beginning of your comments. Such requests will be honored to the extent allowed by law. All submissions from organizations or businesses will be made available for public inspection in their entirety.
The application will be processed in accordance with the regulations set forth in 43 CFR part 2300.
For a period of 2 years from the date of publication of this notice in the
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined not to review the presiding administrative law judge's (“ALJ's”) initial determination (“ID”) terminating the above-captioned investigation on the basis of a consent order.
Clara Kuehn, Esq., Office of the General Counsel, U.S. International Trade Commission, 500 E Street, SW., Washington, DC 20436, telephone (202) 205-3012. Copies of the ALJ's ID and all other nonconfidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW., Washington, DC 20436, telephone 202-205-2000. General information concerning the Commission may also be obtained by accessing its Internet server (
The Commission instituted this investigation on October 4, 2002, based on a complaint filed on behalf of Kason Industries, Inc. of Shenandoah, Georgia (“Kason”). 67 FR 62,264 (2002). The complaint, as supplemented, alleged violations of section 337 in the importation into the United States, sale for importation, and sale within the United States after importation of certain panel fasteners, products containing same, and components thereof by reason of infringement of claim 1 of U.S. Patent No. 6,299,224, and claims 1-4 of U.S. Patent No. 6,409,235. Id. The Commission named as respondents Cheng Tai Company of Kwun Tong Kowloon, Hong Kong (“Cheng Tai”); Ningbo Foreign Trading Company, Ltd. of Ningbo, China (“Ningbo”); and Component Hardware Group of Lakewood, New Jersey (“CHG”). Id.
On March 24, 2003, respondent CHG filed an unopposed motion to terminate the investigation as to CHG on the basis of a proposed consent order. On April 2, 2003, the Commission investigative attorney (“IA”) filed a response supporting CHG's motion. In a paper filed April 7, 2003, respondent CHG noted that in light of the agreement by Cheng Tai and Ningbo to be bound by the proposed consent order, CHG was submitting a proposed joint consent order that applied to CHG, Cheng Tai, and Ningbo. On April 7, 2003, Cheng Tai also filed a consent order stipulation and a copy of the proposed joint consent order. On April 8, 2003, Ningbo filed a consent order stipulation and a copy of the proposed joint consent order. On April 14, 2003, the IA filed a supplemental response supporting termination of the investigation as to respondents CHG, Cheng Tai, and Ningbo on the basis of the proposed joint consent order. On April 18, 2003, Kason responded that it did not oppose
On April 21, 2003, the ALJ issued an ID (Order No. 7) terminating the investigation on the basis of the proposed joint consent order. No petitions for review of the ID were filed.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in section 210.42 of the Commission's Rules of Practice and Procedure (19 CFR 210.42).
By order of the Commission.
International Trade Commission.
May 20, 2003, at 11 a.m.
Room 101, 500 E Street, SW., Washington, DC 20436. Telephone: (202) 205-2000.
Open to the public.
1. Agenda for future meetings: none.
2. Minutes.
3. Ratification list.
4. Inv. No. 731-TA-1010 (Final) (Lawn and Garden Steel Fence Posts from China)—briefing and vote. (The Commission is currently scheduled to transmit its determination and Commissioners' opinions to the Secretary of Commerce on or before June 2, 2003.)
5. Outstanding action jackets: none.
In accordance with Commission policy, subject matter listed above, not disposed of at the scheduled meeting, may be carried over to the agenda of the following meeting.
By order of the Commission.
The Department of Labor has submitted the following (see below) information collection request (ICR), utilizing emergency review procedures, to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35). OMB approval has been requested by May 19, 2003. A copy of this ICR, with applicable supporting documentation, may be obtained by calling the Department of Labor. To obtain documentation, contact Darrin King on 202-693-4129 (this is not a toll-free number) or e-mail:
Comments and questions about the ICR listed below should be forwarded to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for the Occupational Safety and Health Administration, Office of Management and Budget, Room 10235, Washington, DC 20503.
The Office of Management and Budget is particularly interested in comment which:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumption use;
• Enhance the quality, utility, and clarify of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Office of Disability Employment Policy, Labor.
Reopening and extension of period for submission of nominations.
This document re-opens and extends the period for submission of nominations for the Secretary of Labor's New Freedom Initiative Award. This action is taken to permit increased participation by interested stakeholders.
Nomination packages must be submitted to the Office of Disability Employment Policy by June 6, 2003. Any application received after 4:45 p.m. EDST on June 6, 2003 will not be considered unless it was received before the award is made and:
1. It was sent by registered or certified mail no later than the 3rd calendar day before June 6, 2003;
2. It is determined by the Government that the late receipt was due solely to mishandling by the Government after receipt at the U.S. Department of Labor at the address indicated; or
3. It was sent by U.S. Postal Service Express Mail Next Day Service—Post Office to Addressee, not later than 5 p.m. at the place of mailing two (2) working days, excluding weekends and Federal holidays, prior to June 6, 2003.
The only acceptable evidence to establish the date of mailing of a late application sent by registered or certified mail is the U.S. Postal Service postmark on the envelope or wrapper and on the original receipt from the U.S. Postal Service. If the postmark is not legible, an application received after the above closing time and date will be processed as if mailed late. “Postmark” means a printed, stamped, or otherwise placed impression (not a postage meter machine impression) that is readily identifiable without further action as having been applied and affixed by an employee of the U.S. Postal Service on the date of mailing. Therefore, applicants should request that the postal clerk place a legible hand cancellation bull's-eye” postmark on both the receipt and the envelope or wrapper.
The only acceptable evidence to establish the time of receipt at the U.S. Department of Labor is the date/time stamp of the Office of Disability Employment Policy on the application wrapper or other documentary evidence or receipt maintained by that office.
Applications sent by other delivery services, such as Federal Express, UPS, etc., will also be accepted; however, the applicant bears the responsibility of timely submission.
Nomination packages must be submitted to the Office of Disability Employment Policy, 200 Constitution Avenue, NW., Room S-1303 Washington DC 20210; Telephone (202) 693-7880; TTY (202) 693-7881.
Dina Dorich of the Office of Disability Employment Policy, telephone (202) 693-7859; TTY (202) 693-4920 (these are not toll-free numbers), prior to the closing deadline.
In the
Because of the continuing interest in this solicitation, the agency believes that is desirable to re-open and extend the period for submission of nominations. Therefore, the period for submission of nominations is extended until June 6, 2003.
In accordance with section 223 of the Trade Act of 1974, as amended, the Department of Labor herein presents summaries of determinations regarding eligibility to apply for trade adjustment assistance for workers (TA-W) issued during the period of May 2003.
In order for an affirmative determination to be made and a certification of eligibility to apply for worker adjustment assistance to be issued, each of the group eligibility requirements of section 222 of the Act must be met.
(1) That a significant number or proportion of the workers in the workers' firm, or an appropriate subdivision thereof, have become totally or partially separated, or are threatened to become totally or partially separated; and
(2) That sales or production, or both, of the firm or sub-division have decreased absolutely, and
(3) That increases of imports of articles like or directly competitive with articles produced by the firm or appropriate subdivision have contributed importantly to the separations, or threat thereof, and to the absolute decline in sales or production of such firm or subdivision.
In each of the following cases the investigation revealed that criterion (3) has not been met. A survey of customers indicated that increased imports did not contribute importantly to worker separations at the firm.
In the following case, the investigation revealed that the criteria for eligibility have not been met for the reasons specified.
The investigation revealed that criterion (a)(2)(A)(I.C.) (Increased imports) and (a) (2)(B) (II.B) (No shift in production to a foreign country) have not been met.
The workers firm does not produce an article as required for certification under Section 222 of the Trade Act of 1974.
The investigation revealed that criterion (a)(2)(A) (I.A) (no employment declines) have not been met.
The investigation revealed that criterion (a)(2)(A) (I.B.) (Sales or production, or both, did not decline) and (II.B) (has shifted production to a
The investigation revealed that criteria (a)(2) (A) (I.C) (Increased imports) and (a)(2)(B) (II.C) (Has shifted production to a county not under the free trade agreement with U.S.) have not been met.
The following certification has been issued. The requirement of (a)(2)(A) (increased imports) of Section 222 and (II.B) (has shifted production to a country not under the free trade agreement with the U.S.) have not been met.
The following certifications have been issued; the date following the company name and location of each determination references the impact date for all workers of such determination.
The following certifications have been issued. The requirements of (a)(2)(A) (increased imports) of Section 222 have been met.
The following certifications have been issued. The requirements of (a)(2)(B) (shift in production) of Section 222 have been met.
The following certification has been issued. The requirement of upstream supplier to a trade certified primary firm has been met.
Also, pursuant to Title V of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182) concerning transitional adjustment assistance hereinafter called (NAFTA-TAA) and in accordance with section 250(a), Subchaper D, Chapter 2, Title II, of the Trade Act as amended, the Department of Labor presents summaries of determinations regarding eligibility to apply for NAFTA-TAA issued during the month of May 2003.
In order for an affirmative determination to be made and a certification of eligibility to apply for NAFTA-TAA the following group eligibility requirements of section 250 of the Trade Act must be met:
(1) That a significant number or proportion of the workers in the workers' firm, or an appropriate subdivision thereof, (including workers in any agricultural firm or appropriate subdivision thereof) have become totally or partially separated from employment and either—
(2) That sales or production, or both, of such firm or subdivision have decreased absolutely,
(3) That imports from Mexico or Canada of articles like or directly competitive with articles produced by such firm or subdivision have increased, and that the increases imports contributed importantly to such workers' separations or threat of separation and to the decline in sales or production of such firm or subdivision; or
(4) That there has been a shift in production by such workers' firm or subdivision to Mexico or Canada of articles like or directly competitive with articles which are produced by the firm or subdivision.
In each of the following cases the investigation revealed that criteria (3) and (4) were not met. Imports from Canada or Mexico did not contribute importantly to workers' separations. There was no shift in production from the subject firm to Canada or Mexico during the relevant period.
The investigation revealed that the criteria for eligibility have not been met for the reasons specified.
The investigation revealed that the workers of the subject firm did not produce an article within the meaning of section 250(a) of the Trade Act, as amended.
I hereby certify that the aforementioned determinations were issued during the month of May 2003. Copies of these determinations are available for inspection in Room C-5311, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210 during normal business hours or will be mailed to persons who write to the above address.
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on March 12, 2003, applicable to workers of Americal Corporation, Goldsboro, North Carolina. The notice was published in the
At the request of the company, the Department reviewed the certification for workers of the subject firm. The workers were engaged in the production of hosiery.
New findings show that worker separations occurred at the Henderson, North Carolina facility of the subject firm. Workers at Henderson, North Carolina produce leg wear (hosiery—full length, knee-length and thigh-lengths and socks) as well as occupy administrative offices for the subject firm.
Accordingly, the Department is amending the certification to cover workers at Americal Corporation, Henderson, North Carolina.
The intent of the Department's certification is to include all workers of Americal Corporation who were adversely affected by increased imports.
The amended notice applicable to TA-W-50,895 is hereby issued as follows:
All workers of Americal Corporation, Goldsboro, North Carolina (TA-W-50,895) and Americal Corporation, Henderson, North Carolina (TA-W-50,895A), who became totally or partially separated from employment on or after February 12, 2002, through March 12, 2005, are eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974.
By letter dated March 25, 2003, the company requested administrative reconsideration regarding the Department's Negative Determination Regarding Eligibility to Apply for Worker Adjustment Assistance, applicable to the workers of the subject firm.
The initial investigation resulted in a negative determination issued on February 11, 2003, was based on the finding that the workers did not produce a product under the meaning of section 222 of the Act. The denial notice was published in the
To support the request for reconsideration, the company supplied additional information to supplement that which was gathered during the initial investigation. The company indicated that the plant workers were also engaged in value-added production that was necessary to complete the product (slippers).
An analysis of the functions supplied by the company on reconsideration show that the workers were engaged not only engaged in packaging and warehousing, but the actual finishing of the product (slippers).
An examination of information provided by the company during the initial investigation shows that the company shifted all plant production and related functions to Mexico during the relevant period.
After careful review of the additional facts obtained on reconsideration, I conclude that there were layoffs and a shift in production from the workers firm or subdivision to Mexico of articles like or directly competitive with those produced at Barry of Goldsboro, Goldsboro, North Carolina. In accordance with the provisions of the Act, I make the following certification:
All workers of Barry of Goldsboro, Goldsboro, North Carolina, who became totally or partially separated from employment on or after January 20, 2002 through two years from the date of this certification, are eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974.
By application received on March 14, 2003, a company official requested administrative reconsideration of the Department's negative determination regarding eligibility for workers and former workers of the subject firm to apply for Trade Adjustment Assistance (TAA). The denial notice applicable to workers of Ericsson, Inc., Base Station and Systems Development Division, Research Triangle Park, North Carolina was signed on February 21, 2003, and published in the
Pursuant to 29 CFR 90.18(c) reconsideration may be granted under the following circumstances:
(1) If it appears on the basis of facts not previously considered that the determination complained of was erroneous;
(2) if it appears that the determination complained of was based on a mistake in the determination of facts not previously considered; or
(3) if in the opinion of the Certifying Officer, a mis-interpretation of facts or of the law justified reconsideration of the decision.
The TAA petition was filed on behalf of workers at Ericsson, Inc., Base Station and Systems Development Division, Research Triangle Park, North Carolina engaged in activities related to the design and testing of software and hardware for radio base stations. The petition was denied because the petitioning workers did not produce an article within the meaning of section 222(3) of the Act.
The company official alleges that the initial negative determination was based on a “misunderstanding of activities at the subject firm.” She continues that workers at Ericsson, Inc., Base Station and Systems Development Division, Research Triangle Park, North Carolina were “engaged in the design and development of base station transceivers”. The official also states that what was delivered to the internal customer involved “precise drawings and assembly instructions which enabled the product to be manufactured, shipped and to fulfill orders for customers.” The official concludes that layoffs at the subject firm are attributed to design and development functions being transferred abroad.
In fact, there was no misunderstanding of the nature of the functions performed at the subject facility. Design and development services do not constitute production within the meaning of section 222 of the Trade Act. As a result of this, the transfer of job functions is irrelevant.
Only in very limited instances are service workers certified for TAA, namely the worker separations must be caused by a reduced demand for their services from a parent or controlling firm or subdivision whose workers produce an article and who are currently under certification for TAA.
In conclusion, the workers at the subject firm did not produce an article within the meaning of section 222(3) of the Trade Act 1974.
After review of the application and investigative findings, I conclude that there has been no error or misinterpretation of the law or of the facts which would justify reconsideration of the Department of Labor's prior decision. Accordingly, the application is denied.
By application dated October 11, 2002, the United Electrical, Radio & Machine Workers of America, Local 506, requested administrative reconsideration regarding the Department's Negative Determination Regarding Eligibility to Apply for Worker Adjustment Assistance, applicable to the workers of the subject firm.
The initial investigation resulted in a negative determination issued on September 10, 2002, based on the finding that imports of diesel electric locomotive components including U-tubes and gear cases, diesel electric locomotives and off-highway drive systems did not contribute importantly to worker separations at the Erie plant. The denial notice was published in the
To support the request for reconsideration, the union supplied additional information to supplement that which was gathered during the initial investigation. The union supplied a list of products (brush holder assemblies, 761,752 traction motors, alternators, traction motor field coils) that were allegedly shifted to foreign sources and potentially imported back to the United States.
The company was contacted in regard to all imported products that were like or directly competitive with those produced at the subject facility, as well as those shifted from the subject facility, in 2000 through 2002. In addition, a copy of the union's reconsideration request was forwarded to the company for their response. The company's response revealed that the only products shifted and subsequently imported during the relevant period which impacted subject firm layoffs were u-tubes and gear cases. Workers producing u-tubes and gear cases are separately identifiable from other functions conducted at the subject facility. Therefore, workers at the subject facility producing u-tubes and gear cases meet the eligibility requirements of the Trade Act of 1974.
Further, the company reported shifting “Design III” functions (drafting) to a foreign country during the relevant period. These workers were engaged in a service, and did not supply a significant amount of support to workers producing u-tubes and gear cases, and thus do not meet the eligibility requirements of the Trade Act. Only in very limited instances are service workers certified for TAA, namely the worker separations must be caused by a reduced demand for their services from a parent or controlling firm or subdivision whose workers produce an article and who are currently under certification for TAA.
The company indicated that the products listed by the union were shifted to foreign sources and imported back to the United States. However, the shift of these products did not affect the petitioning worker groups, thus it has no bearing on this investigation.
The company also supplied a list of foreign competitors that produce locomotives, traction motors, alternators, OHV wheels, blowers and drill motors, apparently implying that potential imports from these competitors contributed importantly to purchasing trends of subject firm customers in the relevant period.
The “contributed importantly” test is generally demonstrated through a survey of the subject firm's customers. The Department conducted a survey of the subject firm's major declining customers regarding their purchases of diesel electric locomotives and off-highway drive systems in 2000, 2001, and January through April of 2002 during the initial investigation. Results of this survey revealed no imports. Further, the Department shared the union's list of competitors and their products with the company. The company indicated that these competitors and associated products did not impact the petitioning worker groups, as no layoffs ensued from competitive product lines at the subject facility. As a result, the above-mentioned data provided by the union is irrelevant to the investigation.
After careful review of the additional facts obtained on reconsideration, I conclude that increased imports of u-tubes and gear cases like or directly competitive with those produced at General Electric Transportation Systems, a subsidiary of General Electric Company, Erie, Pennsylvania, contributed importantly to the declines in sales or production and to the total or partial separation of workers at the subject firm. In accordance with the provisions of the Act, I make the following certification:
“All workers of General Electric Transportation Systems, a subsidiary of
“I further determine that all other workers at General Electric Transportation Systems, a subsidiary of General Electric Company, Erie, Pennsylvania excluding workers engaged in the production of u-tubes and gear cases are denied eligibility to apply for adjustment assistance under section 223 of the Trade Act of 1974.”
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on January 29, 2003, applicable to workers of Gilster Mary Lee Corporation, Wilson, Arkansas. The notice was published in the
At the request of the petitioners, the Department reviewed the certification for workers of the subject firm. Information provided by the company shows that leased workers of AID Temporary Services were employed at Gilster Mary Lee Corporation to produce tea at the Wilson, Arkansas location of the subject firm.
Based on these findings, the Department is amending this certification to include leased workers of AID Temporary Services, Osceola, Arkansas employed at Gilster Mary Lee Corporation, Wilson, Arkansas.
The intent of the Department's certification is to include all workers of Gilster Mary Lee Corporation who were adversely affected by increased imports.
The amended notice applicable to TA-W-50,548 is hereby issued as follows:
All workers of Gilster Mary Lee Corporation, Wilson, Arkansas, who were engaged in activities related to the packaging of tea, including leased workers of AID Temporary Services, Osceola, Arkansas, who were engaged in activities related to the packaging of tea at Gilster Mary Lee Corporation, Wilson, Arkansas, who became totally or partially separated from employment on or after January 10, 2002, through January 29, 2005, are eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974.
On May 5, 2003, the Department, on its own motion, reopened its investigation for the former workers of the subject firm.
The initial investigation resulted in a negative determination issued on April 25, 2003, based on the finding that the workers' firm did not shift production of tool and die components to a foreign country, nor did the company or its customers import tool and die components from 2001 through February 2003. The denial notice will soon be published in the
A late response to the customer survey conducted by the Department revealed that this customer of the subject firm increased import purchases of tool and die components while reducing purchases from Jamestown Precision Tooling Inc.
After careful consideration of the new facts obtained on reopening, it is concluded that increased imports of articles like or directly competitive with tool and die components produced by Jamestown Precision Tooling, Inc., Jamestown Division, Jamestown, New York, contributed importantly to the decline in sales and to the total or partial separation of workers of the subject firm.
In accordance with the provisions of the Trade Act of 1974, I make the following revised determination:
All workers of Jamestown Precision Tooling, Inc., Jamestown Division, Jamestown, New York, who became totally or partially separated from employment on or after February 5, 2002 through two years from the date of certification, are eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974.
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on February 19, 2002, applicable to workers of Republic Technologies International located in Lorain, Ohio. The notice was published in the
At the request of the State agency, the Department reviewed the certification for workers of the subject firm. The workers produce hot rolled steel bars. The State reports that the plant was purchased by Republic Engineered Products and the worker group continued to produce hot rolled steel bars. Furthermore, worker separations have occurred under the new employer, and the workers wages are reported under the Unemployment Insurance tax account for the new owner.
It is the Department's intent to provide coverage to all workers of the firm adversely impacted by increases in imports of steel bars. Consequently, the Department is amending the certification to reflect the change in ownership and include workers of Republic Engineered Products, Lorain, Ohio.
The amended notice applicable to TA-W-40,521D is hereby issued as follows:
All workers of Republic Technologies International, currently known as Republic Engineered Products, Lorain, Ohio, who became totally or partially separated from employment on or after November 19, 2000 through February 19, 2004, are eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974.
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on January 31, 2003, applicable to workers of Swank, Inc., Norwalk, Connecticut. The notice was published in the
At the request of a company official, the Department reviewed the certification for workers of the subject firm. The workers are engaged in the production of men's belts and suspenders. The company reports that the subject firm was formerly known as Crestline. Furthermore, the plant is actually located in South Norwalk, not Norwalk as was indicated in the certification.
The Department is amending the certification to make the necessary corrections.
The amended notice applicable to TA-W-50, 661 is hereby issued as follows:
All workers of Swank, Inc., formerly known as Crestline, South Norwalk, Connecticut, who became totally or partially separated from employment on or after January 17, 2002 through January 31, 2005, are eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974.
By application of August 27, 2002, the International Association of Machinists and Aerospace Workers, Local Lodge 1377, requested administrative reconsideration regarding the Department's Negative Determination Regarding Eligibility to Apply for Worker Adjustment Assistance, applicable to the workers of the subject firm.
The initial investigation resulted in a negative determination issued on July 19, 2002, based on the finding that imports of internal combustion gaseous fueled engines and parts did not contribute importantly to worker separations at the Lewisburg plant. The denial notice was published in the
To support the request for reconsideration, the union supplied additional information to supplement that which was gathered during the initial investigation. Upon further review and contact with the company, it was revealed that, in contrast to the initial finding that the subject facility exclusively serviced the export market, it became apparent that there was a substantial domestic customer base.
Further, the company provided import data not previously disclosed regarding imports. An examination of this data revealed that the company increased its reliance on imports of internal combustion gaseous fueled engines and parts, contributing to layoffs at the subject facility.
After careful review of the additional facts obtained on reconsideration, I conclude that increased imports of articles like or directly competitive with those produced at Waukesha Engine Division, Waukesha, Wisconsin, contributed importantly to the declines in sales or production and to the total or partial separation of workers at the subject firm. In accordance with the provisions of the Act, I make the following certification:
All workers of Waukesha Engine Division, Waukesha, Wisconsin, who became totally or partially separated from employment on or after May 15, 2001 through two years from the date of this certification, are eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974.
10 a.m., Thursday, May 22, 2003.
Board Room, 7th Floor, Room 7047, 1775 Duke Street, Alexandria, VA 22314-3428.
Open.
1. Issuance of the Final Version of Corporate Federal Credit Union Bylaws.
2. Final Rule: Section 709.13 of NCUA's Rules and Regulations, Treatment of Swap Agreements in Liquidation or Conservatorship.
3. Final Rule: Part 703 of NCUA's Rules and Regulations, Investment and Deposit Activities.
4. Final Rule: Interpretive Ruling and Policy Statement (IRPS) 03-2 Amending IRPS 87-2, Definition of Small Credit Union.
Becky Baker, Secretary of the Board, Telephone 703-518-6304.
In accordance with the Federal Advisory Committee Act (Pub. L. 92-463, as amended), the National Science Foundation announces the following meeting:
In accordance with the Federal Advisory Committee Act (Pub.L. 92-463, as amended), the National Science Foundation announces the following meetings:
National Science Foundation, National Science Board and its Subdivisions.
May 21, 2003: 8:30 a.m.-4 p.m.—Open Session
The National Science Foundation, 4201 Wilson Boulevard, Arlington, VA 22230,
NSF Information Center (703) 292-5111.
Part of this meeting will be closed to the public. Part of this meeting will be open to the public.
Thursday, May 22, 2003, 9:30 a.m. (open portion), 10 a.m. (closed portion).
Offices of the Corporation, Twelfth Floor Europe Room, 1100 New York Avenue, NW., Washington, DC.
Meeting open to the public from 9:30 a.m. to 10 a.m. Closed portion will commence at 10 a.m. (approx.).
1. Welcome & introductory remarks.
2. Administrative issues.
(Closed to the public 10 a.m.)
1. Reports.
Due to unforeseen circumstances this notice is published less than 15 days prior to the meeting. (41 CFR 102-3.150(b)).
Information on the meeting may be obtained from Marysue K. Shore at (202) 336-8630.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 206(4)-3, which is entitled “Cash Payments for Client Solicitations,” provides restrictions on cash payments for client solicitations. The rule requires that an adviser pay all solicitors' fees pursuant to a written agreement. When an adviser will provide only impersonal advisory services to the prospective client, the rule imposes no disclosure requirements. When the solicitor is affiliated with the adviser and the adviser will provide individualized services, the solicitor must, at the time of the solicitation, indicate to prospective clients that he is affiliated with the adviser. When the solicitor is not affiliated with the adviser and the adviser will provide individualized services, the solicitor must, at the time of the solicitation, provide the prospective client with a copy of the adviser's brochure and a disclosure document containing information specified in rule 206(4)-3. The information rule 206(4)-3 requires is necessary to inform advisory clients about the nature of the solicitor's financial interest in the recommendation so they may consider the solicitor's potential bias, and to protect investors against solicitation activities being carried out in a manner inconsistent with the adviser's fiduciary duty to clients. Rule 206(4)-3 is applicable to all Commission registered investment advisers. The Commission believes that approximately 1,560 of these advisers have cash referral fee arrangements. The rule requires approximately 7.04 burden hours per year per adviser and results in a total of approximately 10,982 total burden hours (7.04 × 1,560) for all advisers.
Rule 206(4)-4, which is entitled “Financial and Disciplinary Information that Investment Advisers Must Disclose to Clients,” requires advisers to disclose certain financial and disciplinary information to clients. The disclosure requirements in rule 206(4)-4 are designed so that clients will have information about an adviser's financial condition and disciplinary events that may be material to an evaluation of the adviser's integrity or ability to meet contractual commitments to clients. We estimate that approximately 1,349 advisers are subject to this rule. The rule requires approximately 7.5 burden hours per year per adviser and amounts to approximately 10,118 total burden hours (7.5 × 1,349) for all advisers.
Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication.
Please direct your written comments to Kenneth A. Fogash, Acting Associate Executive Director/CIO, Office of Information Technology, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94-409, that the Securities and Exchange Commission will hold the following meetings during the week of May 19, 2003:
Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the Closed Meetings. Certain staff members who have an interest in the matters may also be present.
Commissioner Glassman, as duty officer, determined that no earlier notice thereof was possible.
The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c) (5), (7), (8), (9)(B) and (10) and 17 CFR 200.402(a) (5), (7), (8), (9)(ii) and (10), permit consideration of the scheduled matters at the Closed Meetings.
The subject matter of the Closed Meeting scheduled for Tuesday, May 20, 2003 will be:
The subject matter of the Closed Meeting scheduled for Wednesday, May 21, 2003 will be:
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted, or postponed, please contact:
The Office of the Secretary at (202) 942-7070.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Amex proposes to adopt Exchange Rule 61 to require members, member organizations, limited trading permit holders, approved persons or persons associated with any of the foregoing who bring legal proceedings against the Exchange to reimburse the Exchange for all costs associated with defending such proceedings only when such persons do not prevail and the Exchange's costs exceed fifty thousand dollars ($50,000.00). Below is the text of the proposed rule change. New text is in
In its filing with the Commission, Amex included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Amex has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
Legal proceedings can significantly divert staff resources away from the Exchange's regulatory and business purposes. In addition, these proceedings often require the Exchange to secure outside counsel—a costly undertaking. The Exchange believes that seeking to ensure that only merit-based legal proceedings are pursued against the Exchange by members, member organizations, limited trading permit holders, approved persons or persons associated with any of the foregoing will help protect against Exchange resources being unnecessarily diverted from the Exchange's regulatory and business objectives, thus strengthening the overall organization. To this end, the Exchange is proposing to adopt a rule similar to one already in effect at the Chicago Board Options Exchange
The proposed rule change is consistent with section 6(b)
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were solicited or received in response to the proposed rule change.
The Amex has stated that because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days (or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest), it has become effective pursuant to section 19(b)(3)(A) of the Act
Pursuant to Rule 19b-4(f)(6)(iii) under the Act,
The Commission believes that waiving the five-day pre-filing provision and the 30-day operative delay is consistent with the protection of investors and the public interest.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Amex. All submissions should refer to File No. Amex-2003-35 and should be submitted by June 9, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
On February 28, 2003, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Three Amex fees would apply to Linkage trades other than satisfaction orders: a per transaction per contract side fee of $.26; a $.05 options floor brokerage fee; and a $.05 options comparison fee. Each of these Linkage-related fees would be implemented as a one-year pilot, expiring on January 31, 2004.
The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange
The Commission finds good cause, consistent with Section 19(b)(2) of the Act,
Interested persons are invited to submit written data, views and arguments concerning Amendment No. 4, including whether it is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Amex. All submissions should refer to File No. SR-Amex-2003-14 and should be submitted by June 9, 2003.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
On June 9, 2000, the National Association of Securities Dealers, Inc. (“NASD”) and through its subsidiary, NASD Regulation, Inc. (“NASD Regulation”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
On November 6, 2002, NASD Regulation filed Amendment No. 3 to the proposed rule change.
The NASD submitted the proposed rule change to modernize and clarify the rules governing member communications with the public. Among other things, the proposed rule change would exclude all communications to institutional investors from member pre-use approval and NASD filing requirements and from many of the content standards. Form letters and group e-mail to existing retail customers and fewer than 25 prospective retail customers also would be eligible for these exclusions, provided that a member developed appropriate policies and procedures to supervise and review such communications. In addition, the proposed rule change would exclude independently prepared reprints, and excerpts there from, from the filing and many of the content standards, and would exclude certain press releases from the filing requirements. The proposed rule change generally would simplify the content standards applicable to member communications.
The proposed rule change would create new NASD Rule 2211, which would apply to institutional sales material and correspondence. The proposed rule change also would provide cross-references between NASD Rule 2210 and NASD Rule 2211 in appropriate places. Existing NASD Rule 2211, concerning telemarketing, would be renumbered as NASD Rule 2212.
Existing NASD Rule 2210(d)(1)(C) provides that NASD members who engage in public appearances or speaking activities must follow the content standards of NASD Rules 2210(d) and (f). Consequently, public appearances already are subject to strict content requirements. The proposed rule change would clarify the application of NASD Rule 2210 to public appearances by defining “public appearance” as a type of communication with the public. Public appearances would include participation in a seminar, forum (including an interactive electronic forum), radio or television interview, or other public appearance or public speaking activity.
The proposed rule change would eliminate the pre-use approval and filing requirements applicable to communications that are distributed or made available only to institutional investors contained in NASD Rule 2210. Institutional sales material would be subject to new supervision and review requirements that are modeled on those in NASD Rule 3010, which apply to correspondence. Moreover, institutional sales material would continue to be subject to the record-keeping requirements and some, but not all, of the content standards in NASD Rule 2210.
Under the proposed rule change, no member could treat a communication as having been distributed to an institutional investor if the member had reason to believe that the communication or any excerpt thereof would be forwarded or made available to any person other than an institutional investor. For example, if a member had reason to believe that such a communication would be forwarded or made available to 401(k) plan participants or other beneficiaries of institutional accounts, it would be treated as retail sales material. NASD Regulation believes that plan participants and other beneficiaries of institutional accounts should receive the same protections under the advertising rules as other retail investors. Similarly, an advertisement in a publication designed for broker/dealers or other institutional investors may not be treated as institutional sales material if the member has reason to believe that the publication will be made available to any person other than an institutional investor.
The proposed rule change amended the definition of “institutional investor,” first, to include governmental entities and their subdivisions. Second, the definition was amended to include employee benefit plans that meet the requirements of section 403(b) or section 457 of the Internal Revenue Code and have at least 100 participants.
The definition of “institutional investor” would include persons described in NASD Rule 3110(c)(4), which defines “institutional account” to include any entity with total assets of at least $50 million.
NASD Rule 2210 currently treats any letter or e-mail sent to more than one person as “sales literature” subject to the content standards applicable to all other sales literature, and to the member pre-use approval and NASD filing requirements. The proposed rule change would define “correspondence” to include form letters and group e-mail sent to existing retail customers and to fewer than 25 prospective retail customers within any 30 calendar-day period (“Group Correspondence”), as well as written and electronic communications prepared for delivery to a single retail customer. The proposed rule change would subject Group Correspondence to the strict supervisory procedures in NASD Rule 3010(d), which governs the approval and review of correspondence, and to those content standards that apply to correspondence.
The Notice provides that members must:
• Specify in writing the firm's policies and procedures for reviewing different types of correspondence;
• Identify what types of correspondence will be pre-or post-reviewed by a registered principal; and
• Periodically re-evaluate the effectiveness of the firm's procedures for reviewing public correspondence and consider any necessary revisions.
Of course, members could not “sanitize” sales literature by enclosing it with Group Correspondence. For example, an item that a member has distributed as sales literature would remain sales literature for purposes of Rule 2210 when the member encloses it in Group Correspondence.
In order to ensure that its review of Group Correspondence meets these standards, a member would be expected to review its procedures to ensure that they adequately address potential concerns with the distribution of Group Correspondence. The NASD encourages members to consider whether to adopt stricter procedures that require registered principal pre-use approval of Group Correspondence that presents a higher risk to investors, based on factors such as its content, purposes or targeted audience.
“Existing retail customer” would be defined as any person, other than an institutional investor, for whom the member or a clearing broker or dealer on behalf of the member carries an account, or who has an account with any registered investment company for which a member serves as principal underwriter. The new language would make clear that a person who has opened an account with an investment company or with a transfer agent for such an investment company could qualify as an existing retail customer. NASD also has amended the language to make it more consistent with existing NASD Rule 2211(d).
NASD Rule 2210 currently defines “sales literature” to include “reprints or excerpts of any * * * published article.” Article reprints may have to be filed with the Department, depending upon their content, such as whether they pertain to registered investment companies. The proposed rule change would define a new type of communication with the public, an “independently prepared reprint,” and exclude independently prepared reprints from the filing and most of the content standards. An independently prepared reprint would consist of any article reprint that meets certain standards that are designed to ensure that the reprint was issued by an independent publisher and was not materially altered by the member. The proposed rule change would provide that a member may alter the contents of an independently prepared reprint in a manner necessary to make it consistent with applicable regulatory standards or to correct factual errors.
An article reprint would qualify as an “independently prepared reprint” under Rule 2210(a)(6)(A) only if, among other things, its publisher is not an affiliate of the member using the reprint or any underwriter or issuer of the security mentioned in the reprint or excerpt that the member is promoting. For purposes of this provision, “affiliate” has the same meaning as that term is defined in NASD Rule 2720(b)(1)(A) and (B). The term “affiliate” as used in NASD Rule 2210(a)(6)(B) (regarding investment company research reports) also has this meaning.
Some, but not all, content standards would apply to independently prepared reprints. For example, NASD Rule 2210(d)(1) would impose various content standards on all communications with the public, including independently prepared reprints. However, paragraph (d)(1)(D) (concerning predictions and projections of performance) would not apply to a statement in an independently prepared reprint that represents the author's opinion about the prospects for a member's business, products or services.
The proposed rule change also would include certain investment company research reports within the definition of independently prepared reprints. NASD Rule 2210 was amended to exclude these research reports from the filing requirements.
Independently prepared reprints would continue to be subject to the pre-use approval and record-keeping requirements of NASD Rule 2210. Moreover, article reprints and research reports that do not meet the definition of “independently prepared reprint” would continue to constitute sales literature that would have to meet all of the requirements applicable to sales literature.
NASD Rule 2210 defines “sales literature” to include “any written or electronic communication distributed or made generally available to customers or the public,” which the Department has interpreted to include press releases. The proposed rule change would codify this interpretation by amending the definition of “sales literature” to include press releases concerning a member's product or service. The proposed rule change would exclude from the filing requirements press releases that are made available only to members of the media.
The proposed rule change would require members that have filed a draft version or “story board” of a television or video advertisement pursuant to a filing requirement also to file the final filmed version within ten business days of first use or broadcast. This rule change would codify an existing Department policy regarding television and video sales material. NASD Rule 2210 would impose a filing fee only when the draft version or story board is filed. No additional fee would be assessed when the final filmed version is filed.
The proposed rule change would make three additional modifications to the pre-use approval and record-keeping requirements. First, it would clarify that the pre-use approval requirement could be met with respect to a research report concerning any debt or equity security, including non-corporate securities, by signature or initial of a supervisory analyst under New York Stock Exchange Rule 344. Second, the proposed rule change would clarify that members must maintain a file with the name of the registered principal who approved any advertisement or sales literature. Members would not be required to maintain a file with the name of the person who prepared those items, however.
The proposed rule change would retain the existing provision concerning the obligation of a member that has not filed an advertisement with the Department, to pre-file its advertisements for a one-year period.
The proposed rule change also would clarify that advertisements and sales literature for continuously offered closed-end funds must be filed with the Department. This clarification codifies a long-standing position of the Department.
The proposed rule change would clarify that members need not file advertisements and sales literature that previously have been filed and that are to be used without material change. This provision would codify existing practice, which excludes from the filing requirement material that has been filed previously, but in which performance data is updated or there are other changes that are not material for purpose of the filing requirement.
The proposed rule change would specifically list institutional sales material as one type of communication that need not be filed. The proposed rule change also would list correspondence, independently prepared reprints, and certain press releases as other types of communications that need not be filed. In addition, the proposed rule change would state that when these items concern investment companies, then they will be deemed filed with the NASD for purposes of section 24(b) of the Investment Companies Act of 1940 and Rule 24b-3 thereunder. This provision would eliminate the need to file this material with the SEC.
The proposed rule change also would exclude from the filing requirement announcements as a matter of record that a member has participated in a private placement.
Members are not required to file shareholder reports that only consist of statistical reporting information such as financial statements and portfolio holdings. However, members must file the management's discussion of fund performance (“MDFP”) portion of a report (as well as any supplemental sales material attached to or distributed with the report) with the Department.
The proposed rule change would substantially shorten and simplify the standards applicable to communications with the public that are contained in NASD Rule 2210(d). The proposed rule change would relocate certain standards from NASD Rule 2210(d) to a new Interpretive Material 2210-1, Guidelines to Ensure that Communications Are Not Misleading.
Proposed IM-2210-1 would not contain certain of the specific standards currently in NASD Rule 2210. The proposed rule change would eliminate the specific standards regarding non-existent or self-conferred degrees or designations, offers of free service, claims for research facilities, hedge clauses, recruiting advertising, and periodic investment plans. To the extent that these provisions prohibit statements that are misleading, unbalanced, or inaccurate regarding particular types of communications, the rule already prohibits the use of such statements. Moreover, certain required disclosures, such as those currently applicable to statements concerning periodic investment plans, may not be necessary depending upon the context in which they are made.
The proposed rule change also would clarify which guidelines concerning references to tax free or tax exempt income apply to all communications with the public, and which guidelines apply only to advertisements or sales literature.
NASD Rule 2210 cautions members concerning the placement of footnotes, and in the filing review process the Department has insisted that members adopt an appropriate use of footnotes. The proposed rule change would provide that information may be placed in a legend or footnote only in the event that such placement would not inhibit an investor's understanding of the communication. Thus, for example, footnotes in especially small type in an advertisement might be deemed to inhibit an investor's understanding of the advertisement. Similarly, an advertisement that presents bold claims that are supposedly “balanced” only with footnote disclosure might not comply with this content standard.
In proposed NASD Rule 2210(d)(1)(D), NASD Regulation would insert language similar to the existing language. Under the proposed rule change, a member could present a hypothetical illustration of mathematical principles, provided that the illustration does not predict or project the performance of an investment or investment strategy and is not used in such a manner. The proposed rule change thus would permit the use of mutual fund cost calculators and other hypothetical illustrations that are permitted by existing NASD Rule 2210.
The proposed rule change would apply testimonial standards to advertisements or sales literature concerning the investment advice or
The proposed rule change would clarify certain aspects of the existing standards governing recommendations in order to provide investors with adequate disclosure about the financial interests that research analysts, other associated persons, or their firms may have in securities that they recommend.
The proposed rule change would simplify the provisions concerning disclosure of member names. In addition, the proposed rule change would make clear that the requirement to disclose the member's name applies to advertisements, sales literature, and correspondence, which for purposes of this provision would include business cards and letterhead.
The proposed rule change would modify the ranking guidelines in several respects. First, the proposed rule change would make clear that no advertisement, item of sales literature or correspondence may present a ranking other than rankings: (1) Created and published by a Ranking Entity, which the ranking guidelines define to include certain independent entities; or (2) created by an investment company or an investment company affiliate but based on the performance measurements of a Ranking Entity.
Third, the proposed rule change would permit the use of investment company family rankings even in sales material that advertises only one investment company in the family. The proposed rule change would permit the presentation of investment company family rankings, provided that when a particular investment company is being advertised, the individual rankings for that investment company also must be presented. The definition of “investment company family” is substantially similar to the definition of “group of investment companies” in section 12(d)(1)(G) of the Investment Company Act of 1940. Use of an investment company family ranking would have to comply with the other applicable requirements of NASD Rule 2210. The proposed rule change would retain existing language concerning the required ranking periods.
The proposed rule change also would eliminate the requirement that certain disclosures appear in “close proximity” to any headline or other prominent statement that refers to a ranking. The NASD has represented that the subjective nature of this requirement has complicated the Department's administration of the ranking guidelines without providing meaningful additional protection to investors. The proposed rule change would eliminate certain disclosure requirements applicable to investment company rankings that are based on subcategories of funds or categories created by an investment company or its affiliate.
The proposed rule change would simplify and shorten the requirements in IM-2210-4 concerning the use of the NASD's name. The proposed rule change also would delete current NASD Rule 2210(d)(2)(J) concerning references to regulatory organizations.
The proposed rule change would rewrite existing IM-2210-1 (the CMO Guidelines), which governs communications about collateralized mortgage obligations (“CMOs”) and renumber it as IM-2210-7. The current CMO Guidelines may give the impression that different standards apply to educational material, advertisements and “communications.” The proposed rule change would simplify, shorten and reorganize the CMO Guidelines to provide a more straightforward and uniform list of disclosure requirements.
The content standards of NASD Rule 2210, in their current form and as they would be amended, prohibit a member from making these statements in any communication with the public. The proposed rule change would make clear that paragraphs (b)(1) and (c) apply only to advertisements, sales literature and correspondence. Also, the proposed rule change would clarify that paragraph (b)(2) does not apply to the sale of a CMO to an institutional investor.
The Commission received ten comment letters in response to the proposed rule change as modified by Amendment Nos. 1 and 2 addressing a broad range of issues.
AIM, FMC, BMA, Fidelity, ICI, T. Rowe and Wilmer-Lee all commented that NASD should broaden the scope of its proposed definition of “institutional investor.” These commenters recommended that NASD lower the asset dollar threshold of the “catch-all” category of institutional investors under NASD Rule 3110(c)(4)(C) from $50 million to either $10 million or $5 million. Commenters cited the definition of “accredited investor” in SEC Regulation D under the Securities Act of 1933 in support of a $5 million threshold. Two commenters also cited NASD IM-2310-3 in support of lowering the threshold to $10 million, which indicates that an investor that has at least $10 million invested in securities may be considered an institutional investor for purposes of NASD's suitability rule.
In responding to these comments, the NASD noted that it received similar comments when it first published its Advertising Modernization proposal for comment in September 1999.
AIM, Fidelity, and the ICI commented that the definition should include employee benefit plans that meet the requirements of sections 403(b) or 457 of the Internal Revenue Code, in addition to “qualified plans,” as defined in section 3(a)(12)(C) of the Exchange Act,
BMA and Wilmer-Lee objected to the limitation that a member may not treat sales material as institutional sales material if the member has “reason to believe” that the material will be forwarded to retail investors. BMA argued that as long as institutional sales material includes a disclosure that it is limited to institutional investors, that should be sufficient. Wilmer-Lee argued that the standard should be changed to whether a member “knowingly permits” the forwarding of institutional sales material to retail investors. Wilmer-Lee also argued that as long as material includes appropriate disclosure, members should be able to rely on the institutional sales material exceptions. The NASD disagreed with these comments because the proposed changes would not ensure that institutional sales material is kept out of the hands of retail investors, and declined to make the changes recommended.
BMA and Wilmer-Lee also requested that NASD include a “reasonable belief” safe harbor for members relying on the institutional sales material exceptions. In other words, members could treat sales material as institutional sales material as long as they reasonably believed the material is only being distributed to institutional investors. The NASD also disagreed with this comment. The NASD stated that while it recognizes that members may occasionally distribute institutional sales material to retail investors by accident, it expects members to make every effort ensure that institutional sales material does not go to retail investors.
Wilmer-Lee also commented that the definition of “institutional investor” should not include NASD members and their associated persons since broker/dealer-only communications are not covered by NASD Rule 2210. Fidelity had a similar comment. The NASD disagreed with this contention noting that while NASD Rule 2210 excepts internal-use only materials from its filing requirements,
The proposed rule change would define “correspondence” to include any written letter or electronic mail message distributed by the member to one or more existing retail customers. As correspondence, these communications would not be subject to NASD Rule 2210's filing and principal approval requirements. The ICI requested that the NASD “clarify” that the definition of “existing retail customer” includes existing customers of affiliates of NASD members and participants of employee retirement plans. The NASD disagreed with these comments explaining that often there is no nexus between a customer of an affiliate (such as a bank or credit card company) and a member broker/dealer that merits exempting communications with these customers from the filing and principal approval requirements. This exemption is intended to cover routine administrative communications with current brokerage customers.
Further, the NASD noted that retirement plan participants often change regularly as individuals take new jobs with or leave the employment of the employer plan sponsor. Thus, these new employees are new to the products and services of a broker/dealer that services the plan. The NASD believes that these participants should receive the same level of investor protection as any other prospective retail customer.
Sullivan, T. Rowe and Wilmer-Lee had a number of comments on the definitions of “advertisement,” “sales literature” and “correspondence.” Sullivan recommended that the NASD clarify that the term “advertisement” does not include sales literature and that “public appearances” are excluded from the definitions of “advertisement” and “sales literature.” The NASD responded to this comment by stating that while it believes that these concepts should be self-evident, it will provide this clarification in the Notice to Members announcing Commission approval of the proposal to the extent necessary.
Sullivan and Wilmer-Lee also recommended that the NASD clarify that password-protected Web sites of members are sales literature rather than advertisements. Sullivan also commented that the current definition of “advertisement” does not reflect the latest technologies, such as CDs or DVDs, and recommended that the NASD broaden the definition to include these media. The NASD responded that it recognized that the definitions of “advertisement” and “sales literature” do not list all technologies through which sales material may be delivered, and it does not believe that it is useful to attempt to do so through rule language, especially given how quickly these technologies change. The NASD explained that it has already announced its position with regard to password-protected Web sites,
Sullivan also recommended that the NASD exclude various communications from the definitions of “advertisement” and “sales literature” based upon the content of the communication, such as material not related to the member's products or services, customer-generated material, and governmental material. In response to this comment, the NASD explained that it defined these terms based on the communication medium rather than content. The NASD believes that any attempt to define these terms based on content would raise numerous interpretive issues as to the purpose of a communication, which is secondary to whether a communication is fair and balanced. Accordingly, the NASD stated that it believed that it would not be appropriate or productive to attempt to draft such content-based definitions.
T. Rowe commented that the definition of “advertisement” should be revised from “material published, or
Proposed NASD Rule 2211(a)(1) would define “correspondence” as any written letter or electronic mail message distributed to one or more existing retail customers and fewer than 25 prospective retail customers within any 30-day period. Wilmer-Lee requested that “correspondence” be defined as “communications with prospective retail customers for marketing purposes.” The NASD declined to adopt this definition for several reasons. First, the NASD noted that correspondence also includes communications with
Sullivan inquired whether the fact that a member sent a mail message to 25 or more prospective retail customers during the course of a 30-day period causes the first 24 messages to become sales literature retroactively. The NASD acknowledged that this situation may arise; however, it stated that it would expect members to know in advance whether they intend to send a mail message to more than 25 prospective retail customers within 30 days, and if this possibility is likely, the member would be expected to obtain principal approval of the message before it is distributed, and file it as required. The NASD stated that it intends to deal with these situations on a case-by-case basis.
The proposed rule change would exempt “independently prepared reprints” from NASD Rule 2210's filing requirements. The proposed rule change defines “independently prepared reprint” in part as a reprint or excerpt of any article, provided that “the publisher is not an affiliate of the member using the reprint or any underwriter or issuer of a security mentioned in the reprint.” ICI and T. Rowe argued that this requirement is too broad, since a publisher could be affiliated with a security mentioned in an article without compromising its independence. They suggest only that the publisher should not be affiliated with the member. ICI also requested clarification that the requirements apply to any article
The NASD acknowledged the concern regarding affiliates, but believes that the deletion proposed by the commenters is too narrow. The NASD noted, for example, an article published by an affiliate of a third-party mutual fund being sold by the member would qualify as “independent” under the proposed test. Therefore, the NASD revised the rule language to indicate that the publisher may not be affiliated with either the member or any underwriter or issuer of a security mentioned in the reprint that the member is promoting. The NASD clarified that the requirements apply to article excerpts as well as full articles. As for the request to allow removal of information from articles about non-offered investment companies, the NASD stated that it believes that these issues are best addressed on a case-by-case basis.
Wilmer-Lee requested clarification that article reprints that would otherwise constitute correspondence (such as reprints sent to existing retail customers) or institutional sales literature do not require principal approval or filing, even if they do not meet the definition of an “independently prepared reprint.” The NASD explained that an article reprint that is sent to existing retail customers may not qualify as correspondence, since this category includes only written letters and group emails sent to existing retail customers. Nevertheless, to the extent clarification is needed, the NASD indicated that it would do so through interpretations in the future.
Wilmer-Lee also requested that the definition not be limited to articles about investment companies, and that the term “reprint” include any type of document. The NASD disagreed with this comment for two reasons. First, the NASD stated that the definition is not limited to articles about investment companies. Second, the NASD explained that it is intentionally limited to independent press articles, noting that if the term were expanded to include “any document,” the exception would encompass all sales material regardless of source and lose all meaning.
AIM, Fidelity and ICI all urged NASD to permit electronic filing of sales material as soon as possible. In response, the NASD explained that recently it began implementing an electronic filing system. Currently, members may receive email notifications when the Advertising Regulation Department (“Department”) has reviewed filed material, and may view the NASD comments on the filed material online. The NASD explained that it is working on expanding this system to permit electronic filing of sales material in the future. In this regard, it plans to fully implement the electronic filing program in 2003.
ICI and T. Rowe commented that NASD should eliminate the current requirement in NASD Rule 2210(c)(3)(A) to file a copy of any ranking or comparison used in advertisements or sales literature. In response to this comment, the NASD noted that it received this comment in response to Notice to Members 99-79, and continues to believe that this back-up filing requirement is necessary to properly review sales material that includes rankings. The NASD stated that the Department has found through experience that sales material that includes rankings often does not meet the NASD ranking guidelines contained in IM-2210-3, which necessitates review of the backup ranking materials. The NASD explained that the filing requirement expedites the Department's review of this backup material.
Under the proposed rule change, the NASD may require a member to submit pre-filings if it determines that the member has departed from the standards contained in NASD Rule 2210. The NASD also eliminated the restriction of one-year during which it could require a member to submit pre-filings upon such a finding. ICI objected to the deletion of language in current NASD Rule 2210(c)(4)(A) that requires the Department to find that there is a reasonable likelihood that a member will depart again from NASD Rule 2210's standards before the Department may require a member to pre-file all or a portion of the member's sales material. ICI also objected to deletion of language in current NASD Rule 2210(c)(4)(B) that limits the imposition of a pre-use filing requirement to one year. While the NASD stated that it recognizes these concerns, it explained that the pre-use filing requirement is an important tool to ensure compliance with its advertising standards. The NASD stated that it would use this requirement judiciously.
ICI and Wilmer-Lee also commented that NASD should exempt investment company shareholder reports from NASD Rule 2210's filing requirements, and ICI commented that generic investment company advertisements also should be exempt. The NASD stated that it addressed these comments previously in response to Notice to Members 99-79. As the NASD explained at that time, the management's discussion in shareholder reports sometimes contains misleading sales material that triggers comments from the NASD staff. In addition, the NASD stated, members sometimes miscategorize investment company advertisements as “generic” ads. When this error occurs, the sales material will omit the disclosures required by these rules. For these reasons, the NASD continues to believe that shareholder reports and investment company generic advertisements should be filed with NASD.
NASD Rule 2210 requires new members to file advertisements (including Web sites) at least 10 days
Current NASD Rule 2210(d)(2)(N) prohibits member communications from predicting or projecting investment results, but allows the presentation of hypothetical illustrations of mathematical principles such as dollar-cost averaging, tax-free compounding, or the mechanics of variable insurance products. The proposed rule change retains this provision, but the NASD has moved it to proposed NASD Rule 2210(d)(1)(D). ICI expressed concern that the new proposed provision provides that a hypothetical illustration may not “predict or project the performance of an investment or investment strategy.” Similarly, Wilmer-Becker requested that the NASD interpret current Rule 2210(d)(2)(N) to allow members to use certain portfolio analysis tools.
The NASD filed a proposed rule with the Commission on February 3, 2003 that would allow members to provide customers with access to certain investment analysis tools that otherwise would be prohibited by Rule 2210(d)(2)(N).
ICI commented that its members have complained about receiving inconsistent comments on filed materials based upon the subjective views of the Department analyst reviewing the material. The NASD responded to this comment by stating that the Department continues to work toward providing uniform guidance through the filing and comment process. It explained that NASD procedures include frequent meetings among managers and analyst teams to ensure that everyone is interpreting the advertising rules consistently, particularly with respect to new products and advertising campaigns. The NASD represented that as a result of this effort, it receives relatively few complaints concerning inconsistent interpretations, and when it does receive such a complaint, it reviews it to determine whether an inconsistent interpretation has occurred and what if any action should be taken.
Sullivan advocated relaxing the requirement for a principal to pre-approve advertisements and sales literature that are posted on a member's Web site. Sullivan has argued because this material changes frequently, the pre-approval requirement should be waived in certain circumstances, or members should be allowed to delegate this function to affiliates or others. The NASD disagreed with this comment stating that the principal approval requirement is vital to ensuring that advertising is fair and balanced.
Sullivan also requested that the NASD permit special record retention procedures for Web sites and other new technologies. The NASD addressed certain of these issues in an interpretive letter to T. Rowe Price.
Proposed NASD Rule 2210(d)(2)(C)(i) would require member sales material to “prominently” disclose the member's name. T. Rowe commented that this requirement should be changed to require members to “clearly” disclose their names. T. Rowe argued that most members that distribute mutual funds feature the fund's name rather than the name of the member so that there is little room for confusion as to whom to contact for more information. The NASD acknowledged this concern, but noted that member advertisements that do not prominently indicate the member's name sometimes suggest that securities products are offered by a non-member entity rather than the member, which can be misleading and confusing to investors. The NASD stated that its staff often cites the current prominence requirement in Rule 2210(f)(2)(A) to comment upon these deficiencies. For this reason, it is retaining the prominence requirement.
Wilmer-Lee commented that the proposed rule change should provide NASD with broader authority to grant exemptions from the filing requirements. The NASD disagreed, and accordingly declined to amend the proposed rule change to expand this authority.
Wilmer-Lee also opposed a requirement in both current NASD Rule 2210(d)(2)(M) and proposed NASD Rule 2210(d)(2)(B) that any comparison in advertisements or sales literature between investments or services must disclose all material differences between them, including investment objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, and tax features. Wilmer-Lee argued that having to disclose these differences is burdensome on members and that the standard is vague. The NASD disagreed explaining that the standard is quite specific as to the types of differences it is looking for. In addition, any burden on members is justified. Without this standard, the NASD stated, members would be permitted to include misleading comparisons of products or services in sales material that do not disclose material differences.
Wilmer-Lee also objected to proposed NASD Rule 2210(e), which provides that violations of any rule of the SEC, SIPC or MSRB applicable to member communications is deemed a violation of NASD Rule 2210. Wilmer-Lee argued that this provision has no incremental benefit and is “anathema to efficient regulation.” Again, the NASD disagreed with this comment. The NASD explained that its examinations and enforcement actions regularly apply non-NASD rules to member communications, and that proposed NASD Rule 2210(e) will assist regulatory efforts in ensuring compliance with all applicable advertising rules.
Sullivan also had several comments on NASD Rule 2220, which governs member communications about options, however, because the NASD is not proposing at this time to revise Rule 2220, these comments are beyond the scope of this rule proposal.
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.
The primary purpose of this proposed rule change is to modernize and clarify the rules governing member communications with the public. To this end, the NASD has proposed to reorganize NASD Rule 2210 and create new NASD Rule 2211. As discussed in detail below, the proposal also makes changes to several definitions, which affect the filing and pre-use requirements.
The Commission believes that categorizing “Public Appearances” as a type of communication with the public and thus subjecting these appearances to the same content standards as other forms of communications with the public is appropriate. The Commission believes that the proposed rule change will simplify the standards which members must comply with when making public appearances, and will likely enhance compliance with the rules. Further, the Commission believes that codifying the NASD staff's position that Internet chat rooms constitute public appearances rather than advertisements or sales literature for purposes of NASD Rule 2210 by defining “Public Appearance” to include interactive electronic forums will also help to ensure compliance with the Rule.
The Commission believes that the proposed treatment of “Institutional Sales Material,” as amended in response to concerns expressed by commenters and Commission staff, adequately balances the needs of members to contact sophisticated institutional investors without being subjected to pre-use approval and filing requirements, while still providing protection to ensure that inappropriate materials do not reach retail customers without first being reviewed for content by the NASD. For example, the proposed definition of “institutional investor” includes any “employee benefit plan that meets the requirements of section 403(b) or section 457 of the Internal Revenue Code and has at least 100 participants, but does not include any participant of such a plan.” This provision allows members to use sales material with the sponsors, administrators or consultants of such plans without having to file the material with the NASD while also preventing such material from reaching individual plan participants who are clearly not institutional investors.
The Commission agrees with the NASD's proposal to treat form letters and group electronic mail sent to existing retail customers and to fewer than 25 prospective customers as a separate category of communication (”Group Correspondence”), and to subject these communications to procedures governing the approval and review of correspondence, and applicable content standards. The Commission notes that the NASD has stated that it expects that each member will review its procedures to ensure that they adequately address potential concerns with the distribution of Group Correspondence and consider whether to adopt stricter procedures that require registered principal pre-use approval and filing with NASD of Group Correspondence that presents a higher risk to investors. The Commission similarly encourages members to be proactive in this regard.
The Commission believes that the NASD's proposal to create a new category of article reprint, “independently prepared reprint” is appropriate. An independently prepared reprint would consist of any article reprint that meets certain standards that are designed to ensure that the reprint was issued by an independent publisher and was not materially altered by a member.
The Commission believes that it is appropriate to exempt press releases that are made available only to members of the media from the filing requirements of NASD Rule 2210. The Commission recognizes that often these releases are time-sensitive and that the filing requirements may represent an unnecessary regulatory burden. However, the Commission notes that although these releases do not need to be filed, they are still subject to applicable content, pre-use approval and record-keeping requirements.
The Commission believes that it is appropriate for the NASD to codify in the proposed rules an existing policy that requires members to file the final filmed version of any television or video advertisement within ten business days of its first use or broadcast.
The Commission believes that the NASD's proposed changes to the Filing and Record-keeping Requirements are appropriate. The proposed rules clarify members' responsibilities for retaining documents as well as simplify members' obligations for filing documents with the NASD for approval. Further, the proposed rules appropriately codify current NASD practices regarding the types of materials that must be filed with the NASD. The Commission believes that the proposed change will assist members in complying with filing and record-keeping requirements.
The NASD proposed to shorten and simplify the standards applicable to communications with the public that are contained in NASD Rule 2210(d). The rules clarify that members will be required to examine their communications with the public to ensure that statements are not misleading, unbalanced or inaccurate. The Commission supports the proposed changes to the rule, as they will make clear to members that they have the primary responsibility for ensuring that their communications with the public are not inappropriate.
The Commission believes that the NASD's proposal to limit information that can be placed in a footnote or legend is appropriate and will aid in the protection of investors from misleading information contained in sales material. Specifically, the NASD proposed rule change provides that information may be placed in a legend or footnote only in the event that such placement would not inhibit an investor's understanding of the communication. The Commission
The proposed NASD rules would permit a member to present a hypothetical illustration of mathematical principles, but would not permit the illustration to predict or project the performance of an investment or investment strategy. The Commission believes that this rule strikes an appropriate balance in that members may still use, for example, mutual fund cost calculators and other hypothetical illustrations, but they may not make predictions based on those calculations, which could be misleading to investors.
The NASD proposed rules regarding establishing standards for testimonials would apply only to advertisements or sales literature concerning the investment advice or investment performance of a member or its products. The Commission believes that the application of these standards is appropriately tailored to ensure that the standards imposed on testimonials on investment performance do not inadvertently encompass testimonials regarding matters other than investment performance, such as the member's general services.
The Commission believes that the NASD's proposal to simplify the provisions concerning disclosure of member names is appropriate. The proposed rule requires that all advertisements and sales literature must prominently disclose the name of the member sponsoring the advertisement or sales literature, as well as reflect any relationship between the member and any non-member who is also named. The Commission believes that requiring that such information be provided will help assure that members do not mislead investors about their relationships with non-members involved with an advertisement or sales literature.
The Commission believes that the changes proposed to the NASD's rules regarding ranking guidelines are appropriate. The proposed guidelines are designed to ensure that investors do not receive misleading or inaccurate information in advertisements or sales literature about potential investments, but are also narrowly tailored so that members are not subject to unduly restrictive requirements in this regard.
The Commission believes that the NASD's proposed changes to the rule governing Communications about Collateralized Mortgage Obligations (“CMOs”) will aid retail investors in making informed decisions about these investments products by ensuring that they are provided with appropriate information and disclosure in all advertisements and sales literature regarding these products. Further, the Commission believes that the NASD appropriately simplified the rule, which will likely enhance compliance with provisions thereof.
The Commission notes that the NASD will publish a Notice to Members announcing the Commission's approval of the proposed rule change within 60 calendar days of the Commission's order, and that the proposed rule changes will take effect on Monday, November 3, 2003.
The Commission finds good cause for accelerating approval of Amendments Nos. 3 and 4 to the proposed rule change prior to the thirtieth day after publication of notice of the filings thereof in the Federal Register. The Commission is accelerating approval of Amendment Nos. 3 and 4 because these amendments are consistent with section 15A(b)(6) of the Act,
First, in Amendment No. 3, the NASD amended the proposed definition of “institutional investor” to include employee benefit plans that meet the requirements of sections 403(b) or 457 of the Internal Revenue Code and also to change the term “beneficiary” to “participant” with respect to qualified plans as defined in section 3(a)(12)(C) of the Act. In Amendment No. 4, the NASD clarified that for purposes of the definition of “institutional investor,” employee benefit plans and qualified plans do not include any participant of such a plan. The NASD explained that the purpose of including certain large employee benefit plans within the definition of “institutional investor” was so that members could use sales material with the sponsors, administrators or consultants of those plans without having to file the material with the NASD or have a registered principal approve the material. The NASD stated that it did not intend to include sales material that is distributed to the participants of those plans in the definition of institutional sales material. The Commission concurs with this analysis, and believes that the proposed changes to the definition of institutional investor are appropriate.
Second, in Amendment No. 3, the NASD revised the definition of “advertisement.” In the original proposal, the NASD described an advertisement as “material published, or designed for use in any electronic or other public media * * *” In response to a commenter that pointed out that sales material could be “designed for use” but never actually used, the NASD amended the definition to describe advertisements as “material published, or used in any electronic or other public media * * *” The Commission believes that this change appropriately narrows the scope of the definition.
Third, with respect to the proposal to exempt “independently prepared reprints” from filing requirements, the NASD made two changes to the proposed rule change in Amendment No. 3. The NASD amended NASD Rule 2210 to indicate that to qualify for the exemption, a publisher may not be affiliated with either the member or any underwriter or issuer of a security mentioned in a reprint that the member is promoting in an effort to narrow the exclusion from the exemption. Further, the NASD clarified that the requirements apply to article excerpts as well as full articles. The Commission believes that these changes will appropriately exempt members from filing requirements in situations where there is no regulatory need for review of an advertisement or sales literature.
Fourth, the NASD made changes NASD 2210 and IM-2210-7 to incorporate new requirements relating to securities futures. Specifically, the Commission notes that on October 15, 2002, it approved rule changes that, among other things, amended Rule 2210 and created a new Interpretive Material 2210-7 to regulate communications with the public regarding security futures.
Fifth, in Amendment No. 3, the NASD made changes to NASD Rule 2210's disclosure requirements for recommendations. These changes were made to conform the rule to the requirements contained in NASD Rule 2711,
The new disclosure requirements imposed by NASD Rule 2711 differ from those contained in current NASD Rule 2210, therefore, for consistency, the NASD amended NASD Rule 2210 to be more similar to the new requirements imposed by NASD Rule 2711 and to incorporate references to security futures. The Commission believes that coordinating the disclosure requirements contained in NASD Rules 2210 and 2711 is appropriate and will aid members in complying the rules.
Interested persons are invited to submit written data, views, and arguments concerning Amendment Nos. 3 and 4, including whether the Amendments are consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room.
Copies of such filing will also be available for inspection and copying at the principal office of the NASD. All submissions should refer to File No. SR-NASD-00-12 and should be submitted by June 9, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
On March 12, 2003, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, the Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
As noted above, this filing seeks the permanent approval of the 90-day pilot program that allows OE Firms
As noted above, the Commission received three comment letters regarding the proposal, as amended.
Another commenter, however, described the proposed rule change as a significant market structure change, and suggested that Nasdaq's proposal be subject to additional review.
Nasdaq disagreed with the STA's characterization that the proposal was a significant market structure change that warranted additional consideration by the Commission.
After careful review of the proposed rule change, the comment letters, and Nasdaq's response to comments, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.
The Commission believes that it is appropriate to permanently approve the pilot. As noted by two of the commenters and Nasdaq, the implementation of the pilot has provided OE Firms with greater access to the system thereby increasing the liquidity of SuperMontage and potentially reducing fragmentation. Further, the Commission is not aware of any problems concerning the pilot since its inception on February 10, 2003.
Also, as previously discussed in the pilot approval order, the Commission believes that the proposal is consistent with the goals of Section 11A(a)(1)(C), particularly Congress' finding that it is
The Commission notes that STA suggested that the pilot be extended for an additional 90 days to provide the Commission as well as other market participants greater opportunity to study the potential impact of the pilot. However, Nasdaq represented that there has been no apparent negative market impact on public investors during the pilot, and in fact, the pilot has proven to be a catalyst for additional liquidity in SuperMontage. Further, the Commission notes that the pilot has been in place since February 10, 2003, that 35 OE Firms are currently participating in the pilot, and that the Commission is not aware of any problems with the pilot. Accordingly, the Commission does not believe that an extension of the pilot program is warranted in lieu of granting permanent approval.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 (“Act”),
On April 22, 2003, NFA requested that the CFTC make a determination that review of the proposed rule change is not necessary. The CFTC made such a determination on May 2, 2003.
Currently, the Interpretive Notice to NFA Compliance Rules 2-7 and 2-24 and Registration Rule 401: Proficiency Requirements for Security Futures Products provides that new registrants can satisfy their proficiency requirements for security futures through training if they are registered no later than six months after the first retail, exchange-traded contract begins trading. The proposed rule change eliminates the six-month distinction and extends the training option to all new registrants who take the Series 3 examination and apply for registration before the revised examination becomes available. The proposed rule change also makes similar changes regarding the proficiency requirements for designated security futures principals.
Section 15A(k) of the Exchange Act
NFA has prepared statements concerning the purpose of, and basis for, the proposed rule change, burdens on competition, and comments received from members, participants, and others. The text of these statements may be examined at the places specified in Item IV below. These statements are set forth in Sections A, B, and C below.
While the Interpretive Notice to NFA Compliance Rules 2-7 and 2-24 and Registration Rule 401: Proficiency Requirements for Security Futures Products applies to all current registrants, it presently states that new registrants can qualify by training only if they are registered within six months after the first retail, exchange-traded security futures contract begins trading. At the time the interpretive notice was adopted, NFA staff assumed that six months, or until May 8, 2003, would provide adequate time to update both the futures and the securities examinations. NASD, however, has recently informed NFA that its examinations will not be available until January 2004.
Although NFA is prepared to meet the May 8 deadline, a regulatory disparity may occur if NFA incorporates security futures questions into its proficiency examinations before the securities industry does. For that reason, NFA proposes to postpone the use of the revised exams until NASD's examinations are ready.
The current version of the interpretive notice incorporates the May 8 deadline through its references to a date six months after security futures begin trading. The revised interpretive notice extends the training option to all new registrants who take the Series 3 and apply for registration before the revised examination becomes available. The revised interpretive notice was similarly changed for designated security futures principals.
The rule change is authorized by, and consistent with, Section 15A(k) of the Act.
The rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act and the Commodity Exchange Act.
NFA did not publish the rule changes to the membership for comment. NFA did not receive comment letters concerning the rule changes.
Pursuant to Section 19(b)(7)(B) of the Act,
Within 60 days of the date of effectiveness of the proposed rule change, the Commission, after consultation with the CFTC, may summarily abrogate the proposed rule change and require that the proposed rule change be refiled in accordance with the provisions of Section 19(b)(1) of the Act.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change conflicts with the Act. Persons making written submissions should file nine copies of the submission with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Comments also may be submitted electronically to the following e-mail address:
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
On June 27, 2002, the Pacific Exchange, Inc. (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission” or “SEC”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange has designed a new trading platform for options, PCX Plus. This new hybrid model combines the features of traditional floor-based markets and new electronic trading systems, while preserving a single marketplace with a single book. It allows PCX members to trade as Market Makers from locations away from the trading floor. For those options designated for trading on PCX Plus, the proposal replaces the PCX's current priority rules with new ones and expands upon the Exchange's current trading rules by permitting the entry of
Under the PCX's proposal, orders would be allocated to Market Makers on a “size pro rata” basis. This formula would reward larger-sized bids and offers with greater participation in trades. In addition, the proposal would grant significant trade participation rights to market participants who are first to improve the PCX quote. Under this proposed rule change, a member who improves the quote and stands alone at that price for three seconds would receive First Improved Quote (“FIQ”) status. Those with FIQ status would be guaranteed, at least, the greater of: (1) 40% of the next order(s) to buy or sell the same series (for a minimum of 20 contracts), or (2) the total size that it would receive pursuant to a size pro rata allocation. Market Makers must establish the best bid or offer (“BBO”) or quote at the BBO to participate in automated trades.
The proposed new PCX Plus structure would involve four types of Market Makers on the Exchange.
Under the proposal, LMMs would be eligible to receive up to 40% in guaranteed participation on trades occurring at their disseminated markets. Members would also be entitled to receive up to 40% trade participation if they maintain FIQ status. Although members may receive more than 40% participation by virtue of a pro rata allocation, no member would be eligible to receive more than 40% participation as a guarantee by rule. LLMs would be entitled only to the greater of their 40% guaranteed participation or their size pro rata allocation, subject to the size of the LMM's disseminated size.
The proposal would allow available trading interest on the Exchange to be aggregated by price and size. Currently, only orders for the accounts of public customers are eligible to be represented in the PCX order book. Under the proposal, orders for all account types—including public customer, Firm, Market Maker and Non-Member Market Maker—may be represented in the Consolidated Book, along with Quotes with Size of PCX Market Makers (which would be entered for handling as if they were orders). Public customer orders displayed at the best price would continue to receive first priority on the Exchange.
Market and marketable limit orders routed electronically to PCX Plus would receive immediate executions against bids and offers in the Consolidated Book, unless a specified condition applies, in which case the order (or a portion of it) would be routed to a Floor Broker Hand Held Terminal for execution. The proposal also establishes new procedures for Market Makers' trading interest that interact electronically with orders in the Consolidated Book. In such situations, a Market Maker who initiates a transaction would be limited to 40% of the available customer contracts at the execution price or the Market Maker's size pro rata share, whichever amount is greater. The Market Maker would then be eligible to trade the remaining option contracts at the execution price once other Crowd Participants
While the proposal is intended to further automate options trading on the Exchange, the Exchange represents that the proposed new system would continue to facilitate open outcry trading as currently practiced today, particularly for large transactions and executions of complex orders and contingency orders. When an order is entered by phone or re-routed to a Hand Held Terminal for execution, a Floor Broker would represent it at the appropriate trading post and would be afforded priority first to public customer interest in the Consolidated Book, then to bids or offers in the trading crowd, and finally to any Firm or Market Maker interest in the Consolidated Book.
The Exchange proposes to phase in the use of PCX Plus in particular issues, while simultaneously phasing out the current Auto-Ex “wheel” functionality. During the phase-in period, the Exchange represents that it would have two sets of trading rules in operation, each applying to a different set of option issues traded on the Exchange. PCX represents that PCX Plus will be implemented gradually on an issue-by-issue basis beginning on December 15, 2003, and will become completely
For a more detailed description of the specific proposed amendments to PCX's rules, see the Section II.A.1.b. (“Summary of Proposed Changes to PCX's Rules”) in the Notice of the Proposal.
In Amendments No. 2 and 3, the PCX proposed changes to the proposed PCX Plus rules to address specific questions and concerns raised by the Comment Letters and by Commission staff.
The Exchange proposes to modify PCX Rule 6.64(d) to clarify how the automated opening rotation would work in PCX Plus and to add PCX Rule 6.64, Commentary .02 to codify the procedure for determining a single price opening for option issues designated for trading on PCX Plus. The proposed automated opening rotations used by PCX Plus would differ from those currently used on the Trading Floor in the following respects: (1) There would be no “manual” openings as provided in current PCX Rule 6.64(b); (2) all account types (including orders for the accounts of broker-dealers and Market Maker Quotes with Size) would be eligible to participate in the opening; (3) the concept of an “imbalance threshold” (as described in current Rule PCX 6.64(c)(2)(D)) would no longer apply; and (4) there would be an electronic Requests for Quotes (“RFQ”) process when the opening price cannot be determined within certain parameters. The manner in which the opening rotation would operate is described below.
Opening rotations for options designated for trading on PCX Plus would be conducted at the commencement of each trading day using the process described in proposed PCX Rule 6.64(d). In Amendment No. 2, PCX proposes to modify the proposal to specify that the PCX Plus system would accept market and limit orders and Quotes with Size for inclusion in the opening rotation process (“Rotation Process”) up until the Rotation Process is initiated in that option series. PCX further clarifies in Amendment No. 2 that market orders would have priority over limit orders during the Rotation Process and any open orders residing in the Consolidated Book from the previous trading session would be included in the Rotation Process. As set forth in the Notice of Proposal, contingency orders (except for “opening only” orders) will not participate in the Rotation Process.
First, PCX Plus would verify that a Quote with Size has been received from the LMM before a series is eligible for the Rotation Process. Second, PCX Plus would determine a single price at which a particular option series would be opened, as provided in proposed Commentary .02 and as described below. Third, orders in the PCX Plus system would maintain priority over Market Maker bids and offers that are not being represented in the Consolidated Book as Quotes with Size. Orders in the PCX Plus system would be matched up with one another, based on the priority rules as set forth in proposed Rule 6.76(a); provided, however, that (1) Market Maker Quotes with Size would have priority over orders for Firms, Market Makers, and Non-Member Market Makers during the Rotation Process and (2) orders for the accounts of Firms, Market Makers, and Non-Member Market Makers would be executed based on price/time priority during the Rotation Process. Finally, following the opening, any unexecuted contracts would be represented as bids and offers on the Exchange.
In Amendments No. 2 and 3, PCX proposes to add Commentary .02 to PCX Rule 6.64 to establish the process by which PCX Plus would automatically determine a single price at which a particular option series would be opened. The opening price is that price at which the maximum number of contracts may be executed within the established market. The opening price would always be on or between the bid and offer established by the Rotation Process. If there were two or more prices at which the maximum number of contracts are executable within the established market, then the opening price would be the midpoint of the available prices. If, however, the midpoint of the available prices is not consistent with the minimum price variation (“MPV”),
To illustrate how the PCX proposes to establish the opening price, assume that the established market is 6.00-6.50 and that the maximum number of options contracts that could be matched is 250 contracts at prices on or between 6.10 and 6.40. Since the resulting midpoint price of 6.25 represents a price increment other than an eligible MPV permitted under the Exchange's rules, the PCX Plus system will select the eligible MPV that is closest to the 6.25 midpoint which, in this case, is either 6.20 or 6.30. Since the midpoint at the MPV is equidistant (
In the event that the opening price cannot be determined within the range of 75% of the lowest Quote with Size bid and 125% of the highest Quote with Size offer, the PCX proposes that the PCX Plus system would initiate an RFQ
In Amendment No. 2, the Exchange proposes to add a new proposed subsection (h)
The PCX believes that the proposed new subsection (h) to PCX Rule 6.35 is consistent with current membership rules as each RMM that performs market-making activities on behalf of the Member Firm would have to be assigned a membership in order to trade on PCX Plus. In addition, each RMM would have to be registered and properly qualified pursuant to current PCX Rule 6.33.
Under proposed PCX Rule 6.37(h)(5), as published in the Notice of the Proposal, RMMs would be required to trade at least 75% of their average daily trading volume per quarter in issues included in their primary appointments. RMMs would be permitted to trade up to 25% of their quarterly contract volume in option issues that are not included within their primary appointments. In Amendment No. 2, the Exchange proposes to amend its proposal to include a provision that would restrict RMMs from entering two-sided quotations in option issues that are not included within their primary appointments. However, RMMs would be permitted to enter single-sided quotes
The Exchange proposes to amend proposed PCX Rule 6.76(a)(2)(C) concerning the methodology used to allocate trades to LMMs. As discussed in the Notice of the Proposal, LMMs in options trading in PCX Plus would be guaranteed an allocation up to 40% of the incoming trading interest on trades occurring at their disseminated markets. The LMM's 40% participation would apply to the quantity remaining after all public customer orders and quotes with FIQ status, if any, have first been executed.
In response to the Phlx Letter, which argued that the proposed trade allocation methodology would provide LMMs with a disproportionate share of the incoming order flow, PCX proposes in Amendment No. 2 to eliminate proposed PCX Rule 6.76(a)(2)(C)(iv) and proposes to amend proposed PCX Rule 6.76(a)(2)(C)(iii) so that LMMs would receive an allocation representing the greater of their 40% guaranteed participation or their size pro rata allocation, but no greater than the size of the LMM's disseminated size.
In a separate rule filing, the Exchange proposes to adopt new rules that would allow it to either adjust or nullify a transaction in circumstances where a member or its customer has made an error and the price of the execution is “obviously” not correct.
In response to the request of Commission staff, PCX proposes to amend proposed PCX Rule 6.90(b) to clarify the application of trading rules in option issues traded on PCX Plus during the phase-in period. During the phase-in period, PCX would have two sets of trading rules in operation, each applying to a different set of option issues traded on the Exchange. Accordingly, PCX estimates that the rules applicable to PCX Plus would be implemented gradually on an issue-by-issue basis beginning on December 15, 2003, and would become completely operative and applicable to all options issues by June 30, 2004. At that time, the rules relating to PCX Plus would supercede existing rules that are inapplicable to the new trading environment.
In Amendment No. 2, PCX represents that PCX Rule 2.6(e) (Prevention of the Misuse of Material, Non-Public Information) would apply to members trading on PCX Plus. PCX believes that PCX Rule 2.6(e) would require a PCX Market Maker to maintain information barriers (that are reasonably designed to prevent the misuse of material, non-public information by such member) with any affiliates that may act as a specialist or market maker in any security underlying the options for which the PCX member acts as a Market Maker.
As discussed in the Notice of the Proposal, proposed PCX Rule 6.76 provides that the maximum size of an inbound order (the “Maximum Order Size”) that may be eligible for execution on PCX Plus will be established by the LMM in the issue, subject to the approval of two Floor Officials, whose approval must be further ratified by the Options Floor Trading Committee. In Amendment No. 2, the Exchange proposes to modify this provision to require approval of the LMM's initial determination of the Maximum Order Size by the Options Floor Trading Committee. In addition, the Exchange proposed to add the following text: “Any request by the LMM for changes to the Maximum Order Size must be accompanied by a verified statement indicating the business reason for the change and the estimated duration of such change. Such requests must be approved by two Floor Officials, whose approval must be further ratified by the Options Floor Trading Committee.” Furthermore, in Amendment No. 2, PCX proposes to add language to proposed PCX Rule 6.76 to prohibit a LMM from requesting changes to the Maximum Order Size in order to manipulate the operation of PCX Plus or for any anti-competitive purposes.
The Exchange believes that the proposed amendment to proposed PCX Rule 6.76 addresses the competitive concerns raised by the Commission staff and is consistent with the terms and spirit of the Commission's Order.
The Commission staff requested the Exchange to clarify the application of the definition of “Eligible Market Maker,” as that term is used in the Linkage Plan
The quoting obligations of SMMs and FMMs are set forth in proposed PCX Rule 6.37(g)(3) and (4), respectively. In Amendment No. 2, the Exchange proposes to modify these proposed rules to clarify that when the aforementioned Market Makers are present in the trading crowd, they would be required to provide quotations on PCX Plus through an electronic interface with the Exchange, but would be permitted to also provide quotations by public outcry. In addition, whenever a Floor Broker represents an order in the trading crowd and calls for a market in a particular options series, each SMM and FMM present at the trading post would be obligated to vocalize a two-sided, legal-width market (pursuant to PCX Rule 6.37(b)(1)).
The Exchange believes that this proposed amendment to proposed PCX Rule 6.37 will ensure that SMMs and FMMs meet their affirmative obligations and be entitled to receive special margin treatment by assisting the LMM in maintaining a fair and orderly market.
In the Notice of the Proposal, proposed PCX Rule 6.90(g) included provisions regarding the suspension of the PCX Plus system in the event of any disruption or malfunction in the use or operation of system, as well as any other unusual market conditions not involving a system malfunction. In Amendment No. 2, the Exchange proposes to amend proposed PCX Rule 6.90(g) as follows:
First, the Exchange proposes to eliminate that portion of the text in proposed Rule 6.90(g)(1) that refers to the declaration of a “fast market” by two Floor Officials. The Exchange believes that the deleted phrase “declare a fast market” is inapplicable given its market structure and trading system. The PCX Plus system enables Market Makers to set parameters establishing the amount of their quotation size that would be available for execution against inbound interest, with the system automatically executing such orders according to these parameters. Consequently, when a system disruption or malfunction occurs but the Exchange is able to process and disseminate quotes accurately, any orders received by the Exchange would be routed to Floor Broker Hand Held Terminals for representation in the trading crowd. In such circumstances, Market Maker bids and offers would continue to be firm pursuant to PCX Rule 6.86 and SEC Rule 11Ac1-1 under the Act. Regular trading procedures would be resumed by the Exchange when two Floor Officials determine that the disruption or malfunction is corrected.
Second, the Exchange proposes to add language to proposed PCX Rule 6.90(g)(1) to clarify that those orders
Finally, the Exchange proposes to eliminate proposed PCX Rule 6.90(g)(2), which relates to other unusual market conditions not involving a system malfunction, because it is superfluous. The Exchange believes that under any circumstance where a fair and orderly market cannot be maintained, the trading halt guidelines set forth in current PCX Rule 6.65 will be followed. Trading may be resumed whenever two Floor Officials determine that a fair and orderly market may be maintained. The Exchange also proposes to make a conforming change to PCX Rule 6.28(c)(6) by eliminating that portion of the text that refers to the suspension of the PCX Plus system during fast markets and unusual market conditions, as this provision is no longer applicable.
ASAP Memberships are governed by current PCX Rule 1.14, which allows certain qualified broker-dealers (“ASAP Members”) electronic access to the Exchange's automated options trading system, Pacific Options Exchange Trading System (“POETS”), as well as any other systems approved by the PCX's Board of Governors. In Amendment No. 2, PCX represents that an ASAP Membership cannot be utilized: (1) To effect trades via PCX Plus, or (2) by a member to act as a RMM.
Finally, in Amendment No. 2, the PCX proposes the following technical and miscellaneous changes:
1.
2.
3.
Interested persons are invited to submit written data, views, and arguments concerning Amendments No. 2 and 3 to the proposed rule change, including whether Amendments No. 2 and 3 are consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the PCX. All submissions should refer to File No. SR-PCX-2002-36 and should be submitted by June 9, 2003.
After careful review, the Commission finds that the proposed rule change, as amended, is consistent with the Act and the rules and regulations promulgated thereunder applicable to a national securities exchange and, in particular, with the requirements of section 6(b) of the Act.
The PCX Plus proposal contemplates four types of Maker Makers: LMMs, RMMs, FMMs, and SMMs. LMMs are required to provide continuous two-sided quotes that meet certain spread parameters throughout the trading day in each of their appointed issues. LMMs must enter their quotations through an automated quotation system, but may also provide quotations by public outcry.
RMMs enter quotations from off-floor locations through an electronic interface with the Exchange.
FMMs would be physically located in the trading crowd, and like RMMs,
Finally, when present in the trading crowd, SMMs would be required to provide the size of their quotations at the LMM's bid or offer through an electronic interface device. Also, like FMMs, SMMs would be obligated to vocalize a two-sided, legal-width market whenever a floor broker enters the trading crowd.
In addition, all Market Makers must trade at least 75% of their average daily trading volume per quarter in issues included in their primary appointment.
Market Makers receive certain benefits for carrying out their duties. For example, a lender may extend credit to a broker-dealer without regard to the restrictions in Regulation T of the Board of Governors of the Federal Reserve system if the credit is to be used to finance the broker-dealer's activities as a specialist or market maker on a national securities exchange.
Under the proposal, the best priced bids and offers have priority over worse priced bids and offers. The Commission believes that the capability that PCX Plus provides to market makers to independently submit their quotes and then reward market makers with better quotes through this priority rule should substantially enhance incentives to quote competitively by providing market participants that improve the quote with an allocation of the resulting trade.
In addition, bids and offers for public customers would get first priority over other bids or offers at the same price. If there is more than one highest bid or lowest offer for a public customer, the bids/offers would be ranked based on time priority. Non-customer orders and Quotes with Size would be allocated (after any LMM or FIQ guarantees, discussed below) on a size pro rata basis.
PCX Rule 6.82 currently provides LMMs with a 40% participation right in transactions occurring at their disseminated bids and/or offers in their allocated issues. PCX Plus rules would also guarantee to the LMM 40% of the portion of an order traded at the LMM's quote that remains after the execution of all public customer orders and quotes with FIQ status. The LMM, however, would be entitled to its size pro rata allocation, if it were greater than the allocation it would receive under the LMM guarantee. In no event would the LMM be allocated contracts greater than its disseminated size.
The Commission recognizes that a large guaranteed participation right will erode the incentive of other market makers to make competitive markets. Thus, the Commission must weigh whether a proposed participation right adequately balances the aim of rewarding the specialist or lead market maker with the aim of leaving a sizeable enough portion of the incoming order for the other market makers quoting at the same price.
A non-customer order or Quote with Size that improves the best bid or offer on the Exchange will have FIQ status with respect to other bids or offers at the same price, unless it is matched or further improved within three seconds. An order or Quote with Size with FIQ status is entitled to trade against the greater of: (1) 40% of the next inbound electronic order or orders (after public customer orders have been executed), and (2) the total size that the order or Quote with Size with FIQ status would be entitled to receive pursuant to a size pro rata allocation. An order or Quote with Size with FIQ status would not be awarded a greater number of contracts than the size of the bid or offer with FIQ status. LLMs would be entitled only to the greater of their 40% guaranteed participation or the number of contracts the LMM would be entitled to receive for having FIQ status.
The Phlx commented that because the “LMM need only match the price improving quote (as opposed to further improving it), LMMs likely would automate the matching process to ensure that no Market Maker that improves the quote would ever be able to maintain FIQ status.”
Under PCX Rule 6.92(a), an “Eligible Market Maker” for purposes of the Linkage Plan is defined as “a market maker that: (i) Is assigned to, and is providing two-sided quotations in, the Eligible Option Class; (ii) is logged on to participate in Auto-Ex in such Eligible Option Class;
PCX Plus provides for automated executions and manual executions, as well as split-price executions and electronic book executions. The PCX represents that once PCX Plus is completely phased in, it will replace the PCX's current Auto-Ex “wheel” in its entirety.
Under PCX's current rules, an incoming eligible market or marketable limit order is automatically executed against an order in the PCX order book if there is an order representing the best price on the Exchange. Otherwise, the inbound order, or a portion of it, is executed by Market Makers in the trading crowd who are logged onto PCX's Auto-Ex “wheel.”
Under PCX Plus, inbound marketable orders would be immediately executed against bids and offers in the Consolidated Book unless: (1) The size of the inbound order exceeds the PCX's established Maximum Order Size;
If the inbound marketable order does not meet the two conditions above, the way it would be executed under the proposed rules would differ depending on whether a single firm or Non-Member Market Maker order at the best price on the Consolidated Book was entered less than one minute, or one minute or more, before the inbound order.
The Commission notes that inbound electronic orders entered through PCX Plus will receive split-price execution at multiple price levels if there is insufficient trading interest at the best price in the Consolidated Book and the remainder of the order can be filled at one or more other price levels in the Consolidated Book. The Commission notes that, consistent with the Linkage Plan, under the PCX's proposed rules for PCX Plus, the order cannot be executed at a price that trades through another market, and so the balance of the order, if any, will either be placed on the Consolidated Book, or, if it locks or crosses the NBBO, routed to a Floor Broker Hand Held Terminal for manual execution.
Under the PCX Plus system, Market Makers can receive electronic book executions when they enter a Quote with Size that initiates a trade with the Consolidated Book. The initiating Quote with Size will immediately execute against the Consolidated Book if the percentage of the transaction including public customer interest comprises no more than 40% of the transaction. If the public customer interest is more than 40% of the transaction, the initiating Quotes with Size will receive the greater of the 40% of the public customer interest in the Consolidated Book at that price, or the total size that the initiating Quote with Size would receive on a size pro rata allocation. The Crowd Participants will then have an opportunity to obtain the balance of the Consolidated Book on a size pro rata basis. The Commission notes that split-price executions will not occur with electronic book executions.
The Commission believes that the various types of PCX Plus executions, including automated and manual executions, as well as split-price and electronic book executions, should allow Market Makers and floor brokers to provide more efficient and immediate executions for inbound orders and Quotes with Size, subject to priority and allocation principles.
Under the proposed rules, public customer orders would always receive first priority. Therefore, the Commission believes that the PCX Plus system should comply with section 11(a) of the Act.
The PCX proposes to incorporate an NBBO Step-Up feature for PCX Plus that is similar to its current PCX Rule 6.87(i), which allows PCX members logged on to Auto-Ex to step up to the NBBO in executing incoming orders. Under PCX Plus, an LMM in an issue would have the discretion, subject to the approval of two Floor Officials, to use the NBBO Step-Up feature to step up and execute orders at the NBBO price when the NBBO is better than the PCX's disseminated price. The LMM also would have the discretion to use the NBBO Step-Up feature to disseminate Quotes with Size at the NBBO, which would then be disseminated via Options Price Reporting Authority.
The Commission notes that the LMM in an issue may not use the NBBO Step-Up feature to match quotations of other PCX participants who are quoting at the NBBO.
The PCX Plus proposal incorporates a new crossing mechanism that would permit the cross and execution of two orders with instructions to match the identified buy-side with the identified sell-side at a specified cross price.
The PCX proposal establishes certain prohibitions regarding cross orders to prevent internalization and to promote competition. Under the proposal, it would be a violation of PCX rules for a PCX Broker to be a party to any arrangement designed to circumvent proposed PCX Rule 6.76(c) by providing an opportunity for a public customer or a broker-dealer to execute against agency orders handled by the PCX Broker immediately upon their entry into PCX Plus. PCX Brokers also would not be permitted to execute as principal any orders they represent as agent unless: (1) Agency orders are first exposed on the Exchange for at least 30 seconds; (2) the PCX Broker utilizes the crossing mechanism pursuant to proposed PCX Rule 6.76(c)(2); or (3) the PCX Broker executes the orders pursuant to PCX Rule 6.47 (“Crossing” Orders and Stock/Option Orders). The Commission believes that these rules should promote intramarket price competition by providing market makers with a reasonable opportunity to compete for a significant percentage of the incoming order and, therefore, should protect investors and the public interest.
The PCX has indicated that PCX Rule 2.6(e), which governs the use of material, non-public information, would apply to members trading on PCX Plus. The PCX has represented that this rule would require a PCX Market Maker to maintain information barriers—that are reasonably designed to prevent the misuse of material, non-public information by such member—with any affiliates that may act as specialist or market maker in any security underlying the options for which the PCX member acts as a Market Maker. The Commission believes that the requirement that there be an information barrier between the PCX Market Maker and its affiliates with respect to transactions in the option and the underlying security serve to reduce the opportunity for unfair trading advantages or misuse of material, non-public information.
The PCX proposal includes certain prohibited practices for PCX members entering orders through PCX Plus.
PCX members would be prohibited from dividing up orders considered to be part of a single investment decision into small lots in order to stay within the Maximum Order Size established pursuant to PCX Rule 6.76. Multiple orders to trade the same option issue that are on the same side of the market, whether long or short, and multiple orders to trade the same options series entered within any 15-second period for the account of the same beneficial owner will be presumed to be based on a single investment decision. The Commission finds that the 15-second requirement as applicable to multiple orders for the same beneficial owner is consistent with the provisions of the Act and the rules and regulations thereunder. The Commission believes that fifteen seconds is a sufficient time period to allow Market Makers to change their quotations following an execution, while at the same time not unduly long as to place a burden on investors seeking to execute transactions on the Exchange. The Commission believes that this prohibition should prevent the splitting of orders on behalf of the same beneficial owner to meet PCX Plus eligibility, while providing a safe-harbor rule for multiple orders entered after the 15-second time period. The Exchange has represented and the Commission notes that the prohibition against splitting orders applies only to PCX members and member organizations that have direct electronic access to PCX Plus, and does not apply in any way to customers.
The PCX Plus proposal includes rules regarding the suspension of PCX Plus.
The Exchange represents that its obvious error and trade nullification/price adjustment rules applicable to PCX Plus will be based upon the rules that the Commission ultimately approves in File No. SR-PCX-2002-01, and not the existing Price Adjustment rules. Further, PCX represents that it will not implement PCX Plus until File No. SR-PCX-2002-01 has been approved by the Commission. Thus, the implementation of PCX Plus is contingent upon the Commission's approval of SR-PCX-2002-01.
The Commission finds good cause for approving Amendments No. 2 and 3 to the proposed rule change prior to the thirtieth day after the amendments are published for comment in the
For the foregoing reasons, the Commission finds that the proposed rule change, as amended, is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange, and, in particular, with section 6(b)(5) of the Act.
It is therefore ordered, pursuant to section 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
As a result of the President's major disaster declaration on May 12, 2003, I find that Bibb, Blount, Calhoun, Cullman, DeKalb, Etowah, Jackson, Jefferson, Madison, Marshall, Morgan, Shelby, St. Clair, Talladega, Tuscaloosa and Walker Counties in the State of Alabama constitute a disaster area due to damages caused by severe storms, tornadoes, and flooding occurring on May 5, 2003 and continuing. Applications for loans for physical damage as a result of this disaster may be filed until the close of business on July 11, 2003 and for economic injury until the close of business on February 12, 2004 at the address listed below or other locally announced locations: U.S. Small Business Administration, Disaster Area 2 Office, One Baltimore Place, Suite 300, Atlanta, GA 30308.
In addition, applications for economic injury loans from small businesses located in the following contiguous counties may be filed until the specified date at the above location: Cherokee, Chilton, Clay, Cleburne, Coosa, Fayette, Greene, Hale, Lawrence, Limestone, Marion, Perry, Pickens and Winston in the State of Alabama; Chattooga, Dade and Walker counties in the State of Georgia; and Franklin, Lincoln and Marion counties in the State of Tennessee.
The interest rates are:
The number assigned to this disaster for physical damage is 350012. For economic injury the number is 9V2900 for Alabama; 9V3000 for Georgia; and 9V3100 for Tennessee.
In accordance with a notice received from the Department of Homeland Security—Federal Emergency Management Agency, effective May 9, 2003, the above numbered declaration is hereby amended to include Bollinger, Cape Girardeau, Franklin, Jefferson, Perry, Saint Francois, Sainte Genevieve, Saint Louis, Scott, Stoddard and Washington Counties in the State of Missouri as disaster areas due to damages caused by severe storms, tornadoes and flooding occurring on May 4, 2003 and continuing.
In addition, applications for economic injury loans from small businesses located in the contiguous counties of Butler, Crawford, Dunklin, Gasconade, Independent City of St. Louis, Iron, Madison, Mississippi, New Madrid, St. Charles, Warren and Wayne in the State of Missouri; and Alexander, Jackson, Madison, Monroe, Randolph, St. Clair and Union Counties in the State of Illinois may be filed until the specified date at the previously designated location. All other counties contiguous to the above named primary county have been previously declared.
The economic injury number assigned to Illinois is 9V2800.
All other information remains the same,
As a result of the President's major disaster declaration on May 12, 2003, I find that Cayuga, Monroe, Oneida, Onondaga, Ontario, Oswego, Seneca and Wayne Counties in the State of New York constitute a disaster area due to damages caused by an ice storm occurring on April 3 through April 5, 2003. Applications for loans for physical damage as a result of this disaster may be filed until the close of business on July 11, 2003 and for economic injury until the close of business on February 12, 2004 at the address listed below or other locally announced locations: U.S. Small Business Administration, Disaster Area 1 Office, 360 Rainbow Blvd., South 3rd Fl., Niagara Falls, NY 14303-1192.
In addition, applications for economic injury loans from small businesses located in the following contiguous counties may be filed until the specified date at the above location: Cortland, Genesee, Herkimer, Jefferson, Lewis, Livingston, Madison, Orleans, Otsego, Schuyler, Steuben, Tompkins and Yates in the State of New York.
The interest rates are:
The number assigned to this disaster for physical damage is 350111 and for economic injury the number is 9V3200.
Tennessee Valley Authority (Meeting No. 1545).
9 a.m. (CDT), May 21, 2003, Athens State University, Sandridge Student Center Ballroom, 300 North Beaty Street, Athens, Alabama.
Open.
Approval of minutes of meeting held on March 19, 2003.
C1. Three spot coal contracts—two with Appalachian Fuels LLC and one with ALPHA Natural Resources—to supply low-sulfur coal for 18 months to Bull Run and Kingston Fossil Plants.
C2. Contract with Shaw Environmental & Infrastructure, Inc., to provide services for containment and recovery of oil and hazardous material spills.
C3. Supplement to blanket contract 4296 with Valley Mechanical Alliance for heating, ventilation, and air-conditioning equipment and services.
C4. Contract with Allied Welding and Safety Supply Company, LLC, for welding supplies and equipment.
C5. Contract with Westinghouse Electric Company, LLC, for outage services and parts at Sequoyah Nuclear Plant Units 1 and 2 and Watts Bar Nuclear Plant Unit 1.
C6. Supplement to contract with Schweitzer Engineering Laboratories for distance relays.
C7. Contract with Morpac Industries and Alstom for 500kV vertical reach switches.
E1. Modification of certain deed restrictions affecting approximately 0.07 acre of former TVA land on Chickamauga Reservoir in Hamilton County, Tennessee, Tract No. XCR-39, S.4X.
E2. Abandonment of a portion of the retired Centerville-McEwen 44kV transmission line right-of-way easement affecting approximately 0.43 acre of land in Humphreys County, Tennessee, Tract No. CMC-62.
E3. Nineteen-year commercial recreation lease to Hollis B. DeWitt affecting approximately 23 acres of land on Fort Loudoun Reservoir in Loudon County, Tennessee (formerly operated as Yarberry Recreation Area), Tract No. XFL-134L.
E4. Grant of a permanent easement to the State of Tennessee for a highway improvement project affecting approximately 0.75 acre of land on Watts Bar Reservoir in Roane County, Tennessee, Tract No. XTWBR-145H.
E5. Transfer of approximately 8.25 acres of Beech River Project property in Henderson County, Tennessee, Tract No. XTBRPIC-2RE, to the Beech River Watershed Development Authority.
E6. Sale of a permanent easement to Dr. James E. Lee for a road and utilities access affecting approximately 0.53 acre of land on Kentucky Reservoir in Decatur County, Tennessee, Tract No. XGIR-940H.
F1. Approval to file condemnation cases to acquire transmission line easements and rights of way affecting Tract Nos. RSCP-149, Rock Springs-Center Point Transmission Line, Whitfield County, Georgia; TRYC-25, TRYC-36, TRYC-50, TRYC-54, TRYC-63, TRYC-65, TRYC-66. TRYC-71, TRYC-74, TRYC-89, TRYC-99, Youngcane-Toccoa Transmission Line, Fannin County, Georgia; tree-removal rights affecting Tract Nos. TRYC-43-CR and TRYC-49B-CR, Youngcane-Toccoa Transmission Line, Fannin County, Georgia; transmission line switching structure and access road affecting Tract Nos. 2PMNS-1 and -1AR, Hickory Valley-Selmer Tap to North Selmer Transmission Line, McNairy County, Tennessee; and communication circuit easement and right-of-way affecting Tract No. ASFOS-1, Alcoa, Tennessee, Switching Station, Blount County, Tennessee.
1. Approval of a revision to the cooperative agreement with Memphis, Light, Gas and Water to support a lo-income energy conservation demonstration in the MLGW service area.
2. Approval of the filing of a condemnation case to acquire the right to erect a transmission line switching structure on an existing right-of-way affecting Tract No. CHAN-34.AS.1 for the Cullman-Hanceville Transmission Line in Cullman County, Alabama.
3. Amendment to the Provisions of the TVA Savings and Deferral Retirement Plan (401(k) Plan) to provide for a lump-sum distribution to a participant, no longer employed by TVA, of a small 401(k) Plan account balance (less than $5,000).
4. Delegation of authority to the Chief Financial Officer, or a designee, to enter into agreements with financial institutions for the sale of accounts receivable that result from electric system projects for TVA's customers.
5. Approval of INVESCO Institutional (N.A.), Inc. as a new investment manager for the TVA Retirement System and approval of the investment management agreement between the Retirement System and the new investment manager.
Please call TVA Media Relations at (865) 632-6000, Knoxville, Tennessee. Information is also available at TVA's Washington Office (202) 898-2999. People who plan to attend the meeting and have special needs should call (865) 632-6000. Anyone who wishes to comment on any of the agenda in writing may send their comments to: TVA Board of Directors, Board Agenda Comments, 400 West Summit Hill Drive, Knoxville, Tennessee 37902.
Federal Aviation Administration (FAA), DOT.
Notice of RTCA Special Committee 194 meeting.
The FAA is issuing this notice to advise the public of a meeting of RTCA Special Committee 194: Air Traffic and Management (ATM) Data Link Implementation.
The meeting will be held June 10, 2003, starting from 9-5 p.m.
The meeting will be held at RTCA, Inc., 1828 L Street, NW., Suite 805, Washington, DC 20036.
RTCA Secretariat, 1828 L Street, NW, Washington, DC 20036; telephone (202) 833-9339; fax (202) 833-9434; Web site
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C. appendix 2), notice is hereby given for a Special Committee 194 meeting. The agenda will include:
• June 10:
• Opening Plenary Session (Welcome and Introductory Remarks, Review Agenda, Review/Approve Minutes of Previous Meeting, Working Group Reports)
• Status of Controller-Pilot Data Link Communication (CPDLC) Program
• Working Group (WG) Reports and Discussion
• WG-1, Plans and Principles document final status
• WG-3, Issues and status of proposed Human Factors document and Build II
• WG-4, Issues and status of draft DO-Connect
• SC- 194 Terms of Reference Discussion
• Other Business
• Closing Plenary Session (Review Agenda, Working Group Reports, Other Business, Date and Place of Next Meeting)
• Attendance is open to the interested public but limited to space availability. With the approval of the chairmen, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), DOT.
Notice of RTCA Special Committee 172 meeting.
The FAA is issuing this notice to advise the public of a meeting of RTCA Special Committee 172: Future Air-Ground Communications in the VHF Aeronautical Data Band (118-137 MHz).
The meeting will be held June 10-11, 2003 from 9 a.m. to 5 p.m.
The meeting will be held at RTCA, Inc., 1828 L Street, NW., Suite 805, Washington, DC 20036.
RTCA Secretariat, 1828 L Street, SW., Washington, DC 20036; telephone (202) 833-9339; fax (202) 833-9434; Web site
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., appendix 2), notice is hereby given for a Special Committee 172 meeting. The agenda will include:
• June 10:
• Opening Plenary Session (Welcome and Introductory Remarks, Review of Agenda, Review Summary of Previous Meeting)
• Convene Working Group-3 (WG), prepare for FRAC Change 1 to DO-271A, VHF Digital Link Mode 3 Minimum Operational Performance Standard (MOPS).
• June 11:
• Convene WG-2 to entertain white papers and actions regarding the development of Version B of the DO-224A, Signal-in-Space Minimum Aviation System Performance Standards (MASPS) for advance VHF Digital Data Communications Including Compatibility with Digital Voice.
• Reconvene WG-3 (if necessary)
• Reconvene Plenary
• Review relevant activities
• International Civil Aviation Organization Aeronautical Mobile Communications Panel work
• NEXCOM activities
• EUROCAE WG-47 status and issues
• Others as appropriate
• Closing Plenary Session (Other Business, Date and Place of Next Meeting, Adjourn)
Attendance is open to the interested public but limited to space availability. With the approval of the chairmen, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), DOT.
Notice of intent to rule on application.
This correction revises information from the previously published notice.
In notice document 03-10577 appearing on page 23173, in the issue of Wednesday, April 30, 2003, under Notice of Intent to Rule on Application, in the third column, in the 29th line, the Date of Letter of Completeness, should read, April 22, 2003.
In addition, on page 23174, in the first column, in the 3rd line, the Current Date, should read, April 22, 2003.
Matthew J. Thys, Assistant Manager, Orlando Airports District office, 5950 Hazeltine National Drive, Suite 400, Orlando, FL 32822, (407) 812-6331, extension 21.
Federal Highway Administration (FHWA), Alaska
Notice of intent.
ADOT&PF, on behalf of FHWA, will be preparing a supplemental draft environmental impact statement (SDEIS) and section 4(f) Evaluation, in accordance with Title 23 CFR part 771, for the Sterling Highway MP 45 to MP 60 project and invites public comment. The supplement updates a draft EIS approved and circulated for public review in 1994.
The Sterling Highway is the only highway connecting the western Kenai Peninsula with the remainder of the nation's highway system. The highway parallels the Kenai River and passes through State and federal public lands and the community of Cooper Landing.
The proposed project provides a highway meeting current design standards. Alternatives under consideration include: (1) The No-Build Alternative, (2) constructing a new location facility north of the existing Sterling Highway, (3) constructing a new location facility south of the existing Sterling Highway, (4) constructing an improved facility along the same corridor as the existing facility.
Mr. Tim Haugh, Environmental and Right-of-Way Programs Manager, Alaska Division FHWA, P.O. Box 21648, Juneau, Alaska 99802-1648, Telephone (907) 586-7430; Ms. Miriam Tanaka, P.E., Project Manager, Preliminary Design and Environmental, ADOT&PF, P.O. Box 196900, Anchorage, Alaska 99519-6900, Telephone (907) 269-0546. ADOT&PF has established a Web site for the project:
ADOT&PF and FHWA published a Draft EIS for the Sterling Highway MP 37 to 60 Project in 1994. The following year, FHWA agreed to advance a portion of the proposed improvements under a separate environmental document. The current supplement reexamines the MP 45 to 60 portion of the improvement studied in the Draft EIS.
Public lands in the project area include the Mystery Creek Wilderness Unit of the Kenai National Wildlife Refuge, Chugach National Forest (including campgrounds, recreation areas, and trails), the Resurrection Pass National Recreation Trail, and the State of Alaska Kenai River Special Management Area. The project area also includes the Sqilantnu Archaeological District and the Cooper Landing Historic District.
The existing highway is narrow without shoulders or clear zones and has many curves and driveways. The proposed improved highway includes wider shoulders, passing and turning lanes, clear zones or barricades, new bridge construction, improved drainage systems, and slope stabilization. Title XI of the Alaska National Interest Lands Conservation Act (ANILCA), which addresses transportation corridors that cross certain conservation lands contains additional procedural review requirements and specific timeframes should a preferred alternative be chosen that impacts an ANILCA Title XI resource. The Resurrection Pass National Recreation Trail and Mystery Creek Wilderness Unit warrant ANILCA Title XI procedures in addition to FHWA regulations governing implementation of the National Environmental Policy Act (NEPA), 23 CFR part 771.
The U.S. Department of the Interior, Fish and Wildlife Service Regional Administrator, and the USDA Forest Service, Chugach Forest Supervisor, have agreed to combine the environmental requirements imposed by ANILCA with the requirements of 23 CFR part 771 by designating the FHWA as the lead agency for compliance with NEPA.
The U.S. Fish and Wildlife Service, the USDA Forest Service, and the U.S. Army Corps of Engineers are cooperating agencies in the development of the SDEIS.
ADOT&PF is undertaking an on-going, large-scale public involvement program including public events in Cooper Landing, the Soldotna area, and Anchorage. Public notices will continue to be published in local newspapers and on the project Web site (
Surface Transportation Board, DOT.
Notice of exemption.
Under 49 U.S.C. 10502, the Board conditionally exempts from the prior approval requirements of 49 U.S.C. 10901 the construction and operation by Southwest Gulf Railroad Company (SGR) of an approximately 7-mile line of railroad in Medina County, TX. The planned line will extend from Vulcan Construction Materials, LP's
The exemption will not become effective until the environmental review process is completed. Once that process is completed, the Board will issue a further decision addressing the environmental matters and establishing an exemption effective date at that time, if appropriate. Petitions to reopen must be filed by June 9, 2003.
An original and 10 copies of all pleadings, referring to STB Finance Docket No. 34284, must be filed with the Surface Transportation Board, 1925 K Street, NW., Washington, DC 20423-0001. In addition, one copy of all pleadings must be served on petitioner's representative: David H. Coburn, Steptoe & Johnson LLP, 1330 Connecticut Avenue, NW., Washington, DC 20036.
Beryl Gordon (202) 565-1600. [Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at 1-800-877-8339.]
Additional information is contained in the Board's decision. Copies of the decision may be purchased from Da
Board decisions and notices are available on our Web site at
By the Board, Chairman Nober and Commissioner Morgan.
CSX Transportation, Inc. (CSXT), has filed a notice of exemption under 49 CFR Part 1152 Subpart F—
CSXT has certified that: (1) No local traffic has moved over the line for at least 2 years; (2) there is no overhead traffic on the line; (3) no formal complaint filed by a user of rail service on the line (or by a State or local government entity acting on behalf of such user) regarding cessation of service over the line either is pending with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the 2-year period; and (4) the requirements at 49 CFR 1105.7 (environmental reports), 49 CFR 1105.8 (historic reports), 49 CFR 1105.11 (transmittal letter), 49 CFR 1105.12 (newspaper publication), and 49 CFR 1105.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the abandonment shall be protected under
A copy of any petition filed with the Board should be sent to the applicant's representative: Natalie S. Rosenberg, Counsel, CSX Transportation, Inc., 500 Water Street, J150, Jacksonville, FL 32202.
If the verified notice contains false or misleading information, the exemption is void
CSXT has filed an environmental report which addresses the abandonment's effects, if any, on the environment and historic resources. SEA will issue an environmental assessment (EA) by May 23, 2003. Interested persons may obtain a copy of the EA by writing to SEA (Room 500, Surface Transportation Board, Washington, DC 20423-0001) or by calling SEA, at (202) 565-1552. [Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at 1-800-877-8339.] Comments on environmental and historic preservation matters must be filed within 15 days after the EA becomes available to the public.
Environmental, historic preservation, public use, or trail use/rail banking conditions will be imposed, where appropriate, in a subsequent decision.
Pursuant to the provisions of 49 CFR 1152.29(e)(2), CSXT shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the line. If consummation has not been effected by CSXT's filing of a notice of consummation by May 19, 2004, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire.
Board decisions and notices are available on our Web site at
By the Board, David M. Konschnik, Director, Office of Proceedings.
Union Pacific Railroad Company (UP) and Texas Northeastern Division, Mid-Michigan Railroad, Inc. (TNER), have filed a notice of exemption under 49 CFR Part 1152 Subpart F—
UP and TNER have certified that: (1) No local traffic has moved over the line for at least 2 years; (2) any overhead traffic on the line can be rerouted over other lines; (3) no formal complaint filed by a user of rail service on the line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the line either is pending with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the 2-year period; and (4) the requirements at 49 CFR 1105.7 (environmental reports), 49 CFR 1105.8 (historic reports), 49 CFR 1105.11 (transmittal letter), 49 CFR 1105.12 (newspaper publication), and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to these exemptions, any employee adversely affected by the abandonment or discontinuance shall be protected under
A copy of any petition filed with the Board should be sent to applicants' representatives: Mack H. Shumate, Jr., Senior General Attorney, 101 North Wacker Drive, Room 1920, Chicago, IL 60606; and Louis E. Gitomer, Of Counsel, Ball Janik LLP, 1455 F St., NW., Suite 225, Washington, DC 20005.
If the verified notice contains false or misleading information, the exemptions are void
Applicants have filed an environmental report which addresses the effects, if any, of the abandonment and discontinuance on the environment and historic resources. SEA will issue an environmental assessment (EA) by May 23, 2003. Interested persons may obtain a copy of the EA by writing to SEA (Room 500, Surface Transportation Board, Washington, DC 20423-0001) or by calling SEA, at (202) 565-1552. [Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at 1-800-877-8339.] Comments on environmental and historic preservation matters must be filed within 15 days after the EA becomes available to the public.
Environmental, historic preservation, public use, or trail use/rail banking conditions will be imposed, where appropriate, in a subsequent decision.
Pursuant to the provisions of 49 CFR 1152.29(e)(2), UP shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the line. If consummation has not been effected by UP's filing of a notice of consummation by May 19, 2004, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire.
Board decisions and notices are available on our Website at
By the Board, David M. Konschnik, Director, Office of Proceedings.
Bureau of Transportation Statistics (BTS), DOT.
Notice.
In compliance with the Paperwork Reduction Act of 1995, Public Law 104-13, the Bureau of Transportation Statistics invites the general public, industry and other governmental parties to comment on the continuing need for and usefulness of BTS collecting a sample of airline passenger itineraries with the dollar value of the passenger ticket. Certificated air carriers that operated scheduled passenger service with at least one aircraft having a seating capacity of over 60 seats report these data. Comments are requested concerning whether (a) the collection is still needed by the Department of Transportation; (b) BTS accurately estimated the reporting burden; (c) there are other ways to enhance the quality, utility and clarity of the information collected; and (d) there are ways to minimize reporting burden, including the use of automated collection techniques or other forms of information technology.
Written comments should be submitted by July 18, 2003.
Comments should be directed to: Office of Airline Information, K-14, Room 4125, Bureau of Transportation Statistics, 400 Seventh Street, SW., Washington, DC 20590-0001, FAX NO. 366-3383 or e-mail
Bernie Stankus Office of Airline Information, K-14, Room 4125, Bureau of Transportation Statistics, 400 Seventh Street, SW., Washington, DC 20590-0001, (202) 366-4387
The Confidential Information Protection and Statistical Efficiency Act of 2002 (44 U.S.C. 3501
Financial Crimes Enforcement Network (“FinCEN”), Treasury.
Notice and request for comments.
As part of its continuing effort to reduce paperwork and respondent burden, FinCEN invites comment on a proposed revision to the Currency
Written comments are welcome and must be received on or before July 18, 2003.
Written comments should be submitted to: Office of Chief Counsel, Financial Crimes Enforcement Network, Department of the Treasury, P.O. Box 39, Vienna, Virginia 22183, Attention: PRA Comments—CTR Form. Comments also may be submitted by electronic mail to the following Internet address:
Russell Stephenson, Senior Compliance Administration Specialist, Office of Compliance and Regulatory Enforcement, FinCEN, at (202) 354-6015; and Judith R. Starr, Chief Counsel and Christine L. Schuetz, Attorney-Advisor, Office of Chief Counsel, FinCEN, at (703) 905-3590.
Section 5313(a) authorizes the Secretary to issue regulations that require a report when “a domestic financial institution is involved in a transaction for the payment, receipt, or transfer of United States coins or currency (or other monetary instruments the Secretary of the Treasury prescribes), in an amount, denomination, or amount and denomination, or under circumstances the Secretary prescribes.” Regulations implementing section 5313(a) are found at 31 CFR 103.22. In general, the regulations require the reporting of transactions in currency in excess of $10,000 a day. Financial institutions as defined in 31 U.S.C. 5312(a)(2) and 31 CFR 103.11 are subject to the currency transaction reporting requirement. The Currency Transaction Report, FinCEN 104 (Formally Form 4789), is the form financial institutions use to comply with the currency transaction reporting requirements.
Several editorial changes are also being made in this revision. As part of an effort to standardize BSA forms, FinCEN is renumbering the form, consistent with its new numbering system, as FinCEN Form 104. In other editorial changes, the Commodity Futures Trading Commission (“CFTC”) has been added to the list of Federal Regulators for Part III,
Estimated number of respondents = 19,000.
Estimated Total Annual Responses = 12,400,000.
Estimated Total Annual Burden Hours: 4,960,000
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Records required to be retained under the Bank Secrecy Act must be retained for five years.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected: (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance and purchase of services to provide information.
Financial Management Services, Fiscal Service, Department of the Treasury.
Notice.
This is Supplement No. 13 to the Treasury Department Circular 570; 2002 Revision, published July 1, 2002, at 67 FR 44294.
Surety Bond Branch at (202) 874-1033.
A Certificate of Authority as an acceptable surety on Federal bonds is hereby issued to the following Company under 31 U.S.C. 9304 to 9308. Federal bond-approving officers should annotate their reference copies of the Treasury Circular 570, 2002 Revision, on page 44310 to reflect this addition:
Company Name: First Sealord Surety, Inc.
Business Address: 33 Rock Hill Road Bala Cynwyd, PA 19004.
Phone: (610) 664-2259.
Underwriting Limitation b/: $1,000,000.
Surety Licenses c/: AL, AR, CT, DE, DC, FL, GA, IL, IN, IA, KY, MD, MI, MS, NJ, NY, NC, OH, PA, SC, TN, TX, VA, WV, WI. Incorporated in: Pennsylvania.
Certificates of Authority expire on June 30 each year, unless revoked prior to that date. The Certificates are subject to subsequent annual renewal as long as the companies remain qualified (31 CFR part 223). A list of qualified companies is published annually as of July 1 in Treasury Department Circular 570, with details as to underwriting limitations, areas in which licensed to transact surety business and other information.
The Circular may be viewed and downloaded through the internet at
Questions concerning this Notice may be directed to the U.S. Department of the Treasury, Financial Management Service, Financial Accounting and Service Division, Surety Bond Branch, 3700 East-West Highway, Room 6F07, Hyattsville, MD 20782.
Financial Management Service, Fiscal Service, Department of the Treasury.
Notice.
This is Supplement No. 12 to the Treasury Department Circular 570; 2002 Revision, published July 1, 2002 at 67 FR 44294.
Surety Bond Branch at (202) 874-1033.
Notice is hereby given that the Certificate of Authority issued by the Treasury to the above named Company, under the United States Code, Title 31, Sections 9304-9308, to qualify as an acceptable surety on Federal bonds is terminated effective today.
The Company was last listed as an acceptable surety on Federal bonds at 67 FR 44319, July 1, 2002.
With respect to any bonds, including continuous bonds, currently in force with above listed Company, bond-approving officers should secure new bonds with acceptable sureties in those instances where a significant amount of liability remains outstanding. In addition, in no event, should bonds that are continuous in nature by renewed.
The Circular may be viewed and downloaded through the Internet at
Questions concerning this notice may be directed to the U.S. Department of the Treasury, Financial Management Service, Financial Accounting and Services Division, Surety Bond Branch, 3700 East-West Highway, Room 6F07, Hyattsville, MD 20782.
Office of Foreign Assets Control, Treasury.
Notice.
The Treasury Department's Office of Foreign Assets Control (“OFAC”) is publishing the names of seven additional persons whose property and interests in property have been blocked pursuant to the Sudanese Sanctions Regulations, 31 CFR part 538.305(d). OFAC also is publishing updated identifying information for two previously-designated Sudanese persons.
Effective October 17, 2002.
Office of Foreign Assets Control, Department of the Treasury, Washington, DC 20220, tel.: (202) 622-2420.
This document and additional information concerning OFAC are available from OFAC's Web site
Executive Order 13067 (the “Order”) imposes economic sanctions on the Government of Sudan. The Sudanese Sanctions Regulations, 31 CFR part 538.305(d), provide for designations by the Director of the Office of Foreign Assets Control (“OFAC”) of particular persons subject to the Order. On October 17, 2002, the Director of OFAC designated seven additional persons whose property and interests in property are blocked pursuant to the Order. The names of these additional persons are set forth in the list below. These persons will be added to appendix A to 31 CFR chapter V through a separate
The designations of these additional persons listed below were effective on October 17, 2002. All property and interests in property of any designated person, including but not limited to all accounts, that are or come within the United States or that are or come within the possession or control of United States persons, including their overseas branches, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in, and all transactions or dealings by U.S. persons or within the United States in property or interests in property of any designated person are prohibited, unless authorized by OFAC or exempted by statute.
With respect to two persons previously designated, OFAC is publishing updated identifying information.
The list of seven additional designations follows:
Updated identifying information for two previously-designated persons follows:
In notice document 03-10217 beginning on page 20413 in the issue of Friday, April 25, 2003, make the following corrections:
1. On page 20413, in the second column, at the bottom of the page, in the footnotes, footnote “
2. On the same page, in the same column, at the bottom of the page, in the footnotes, footnote “
Centers for Medicare and Medicaid Services (CMS), HHS.
Proposed rule.
We are proposing to revise the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital costs to implement changes arising from our continuing experience with these systems. In addition, in the Addendum to this proposed rule, we are describing proposed changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. These changes would be applicable to discharges occurring on or after October 1, 2003. We also are setting forth proposed rate-of-increase limits as well as proposed policy changes for hospitals and hospital units excluded from the IPPS.
Among other changes that we are proposing are changes to the policies governing postacute care transfers, payments to hospitals for the direct and indirect costs of graduate medical education, determination of hospital beds and patient days for payment adjustment purposes, and payments to critical access hospitals (CAHs).
Comments will be considered if received at the appropriate address, as provided below, no later than 5 p.m. on July 18, 2003.
Mail written comments (an original and three copies) to the following address only: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1470-P, P.O. Box 8010, Baltimore, MD 21244-1850.
If you prefer, you may deliver, by hand or courier, your written comments (an original and three copies) to one of the following addresses:
Comments mailed to those addresses specified as appropriate for courier delivery may be delayed and could be considered late.
Because of staffing and resource limitations, we cannot accept comments by facsimile (FAX) transmission. In commenting, please refer to file code CMS-1470-P.
For information on viewing public comments see the beginning of the
For comments that relate to information collection requirements, mail a copy of comments to the following addresses:
Comments received timely will be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, in Room C5-12-08 of the Centers for Medicare & Medicaid Services, 7500 Security Blvd., Baltimore, MD, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. Please call (410) 786-7197 to schedule an appointment to view public comments.
This
Section 1886(d) of the Social Security Act (the Act) sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of hospital inpatient stays under a prospective payment system (PPS). Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. Discharges are classified according to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The labor-related share is adjusted by the wage index applicable to the area where the hospital is located; and if the hospital is located in Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-living adjustment factor. This base payment rate is multiplied by the DRG relative weight.
If the hospital treats a high percentage of low-income patients, it receives a percentage add-on payment applied to the DRG-adjusted base payment rate. This add-on payment, known as the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payments to hospitals that qualify under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patients. For qualifying hospitals, the amount of this adjustment may vary based on the outcome of the statutory calculations.
If the hospital is an approved teaching hospital, it receives a percentage add-on payment for each case paid under the IPPS (known as the indirect medical education (IME) adjustment). This percentage varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new technologies that have been approved for special add-on payments. To qualify, a new technology must demonstrate that it is a substantial clinical improvement over technologies otherwise available, and that, absent an add-on payment, it would be inadequately paid under the regular DRG payment.
The costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any outlier payment due is added to the DRG-adjusted base payment rate, plus any DSH, IME, and new technology add-on adjustments.
Although payments to most hospitals under the IPPS are made on the basis of the standardized amounts, some categories of hospitals are paid the higher of a hospital-specific rate based on their costs in a base year (the higher of FY 1982, FY 1987, or FY 1996) or the IPPS rate based on the standardized amount. For example, sole community hospitals (SCHs) are the sole source of care in their areas, and Medicare-dependent, small rural hospitals (MDHs) are a major source of care for Medicare beneficiaries in their areas. Both of these categories of hospitals are afforded this special payment protection in order to maintain access to services for beneficiaries (although MDHs receive only 50 percent of the difference between the IPPS rate and their hospital-specific rates if the hospital-specific rate is higher than the IPPS rate).
Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services “in accordance with a prospective payment
The existing regulations governing payments to hospitals under the IPPS are located in 42 CFR part 412, subparts A through M.
Under section 1886(d)(1)(B) of the Act, as amended, certain specialty hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Psychiatric hospitals and units, rehabilitation hospitals and units; long-term care hospitals (LTCHs); children's hospitals; and cancer hospitals. Various sections of the Balanced Budget Act of 1997 (Pub. L. 105-33), the Medicare, Medicaid and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554) provide for the implementation of PPSs for rehabilitation hospitals and units (referred to as inpatient rehabilitation facilities (IRFs)), psychiatric hospitals and units, and LTCHs, as discussed below. Children's hospitals and cancer hospitals continue to be paid under reasonable cost-based reimbursement.
The existing regulations governing payments to excluded hospitals and hospital units are located in 42 CFR parts 412 and 413.
a. Inpatient Rehabilitation Facilities. Under section 1886(j) of the Act, as amended, rehabilitation hospitals and units (IRFs) have been transitioned from payment based on a blend of reasonable cost reimbursement subject to a hospital-specific annual limit under section 1886(b) of the Act and prospective payments for cost reporting periods beginning January 1, 2002 through September 30, 2002, to payment on a full prospective payment system basis effective for cost reporting periods beginning on or after October 1, 2002 (66 FR 41316, August 7, 2001 and 67 FR 49982, August 1, 2002). The existing regulations governing payments under the IRF PPS are located in 42 CFR part 412, subpart P.
b. LTCHs. Under the authority of sections 123(a) and (c) of Pub. L. 106-113 and section 307(b)(1) of Pub. L. 106-554, LTCHs are being transitioned from being paid for inpatient hospital services based on a blend of reasonable cost-based reimbursement under section 1886(b) of the Act to fully Federal prospective rates during a 5-year period, beginning with cost reporting periods that start on or after October 1, 2002. For cost reporting periods beginning on or after October 1, 2006, LTCHs will be paid under the fully Federal prospective payment rate (the August 30, 2002 LTCH PPS final rule (67 FR 55954)). LTCHs may elect to be paid based on full PPS payments instead of a blended payment in any year during the 5-year transition period. The existing regulations governing payment under the LTCH PPS are located in 42 CFR part 412, subpart O.
c. Psychiatric Hospitals and Units. Sections 124(a) and (c) of Pub. L. 106-113 provide for the development of a per diem PPS for payment for inpatient hospital services furnished in psychiatric hospitals and units under the Medicare program, effective for cost reporting periods beginning on or after October 1, 2002. This system must include an adequate patient classification system that reflects the differences in patient resource use and costs among these hospitals and maintain budget neutrality. We are in the process of developing a proposed rule, to be followed by a final rule, to implement the PPS for psychiatric hospitals and units.
Under sections 1814, 1820, and 1834(g) of the Act, payments are made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services on a reasonable cost basis. Reasonable cost is determined under the provisions of section 1861(v)(1)(A) of the Act and existing regulations under 42 CFR parts 413 and 415.
Under section 1886(a)(4) of the Act, costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act; the amount of payment for direct GME costs for a cost reporting period is based on the hospital's number of residents in that period and the hospital's costs per resident in a base year. The existing regulations governing payments to the various types of hospitals are located in 42 CFR part 413.
In this proposed rule, we are setting forth proposed changes to the Medicare IPPS for operating costs and for capital-related costs in FY 2004. We also are proposing changes relating to payments for GME costs, payments to CAHs, and payments to providers classified as psychiatric hospitals and units that continue to be excluded from the IPPS and paid on a reasonable cost basis. The proposed changes would be effective for discharges occurring on or after October 1, 2003.
The following is a summary of the major changes that we are proposing to make:
As required by section 1886(d)(4)(C) of the Act, we adjust the DRG classifications and relative weights annually. Based on analyses of Medicare claims data, we are proposing to establish a number of new DRGs and make changes to the designation of diagnosis and procedure codes under other existing DRGs. Our proposed changes for FY 2004 are set forth in section II. of this preamble.
Among the proposed changes discussed are:
• Expanding the number of DRGs that are split on the basis of the presence or absence of complications or comorbidities (CCs). The DRGs we are proposing to split are: DRG 4 (Spinal Procedures), DRG 5 (Extracranial Vascular Procedures), DRG 231 (Local Excision and Removal of Internal Fixation Devices Except Hip and Femur) and DRG 400 (Lymphoma and Leukemia With Major O.R. Procedure).
• Creating two new DRGs to differentiate current DRG 514 (Cardiac Defibrillator Implant With Cardiac Catheterization) on the basis of whether the patient does or does not experience any of the following symptoms: acute myocardial infarction, heart failure, or shock.
• Changing the DRG assignments of certain congenital anomalies that currently result in patients being assigned to newborn DRGs even when the patient is actually an adult. We also are adding to the list of major problems in newborns that affect DRG assignment.
• Modifying DRG 492 (Chemotherapy With Acute Leukemia as Secondary Diagnosis) to include in this DRG cases receiving high-dose Interleukin-2 (IL-2)
We also are presenting our analysis of applicants for add-on payments for high-cost new medical technologies.
In section III. of this preamble, we discuss proposed revisions to the wage index and the annual update of the wage data. Specific issues addressed in this section include the following:
• The proposed FY 2004 wage index update, using wage data from cost reporting periods that began during FY 2000.
• Proposed exclusion of the wage data for rural health centers (RHCs) and Federally qualified health centers (FQHCs) from the calculation of the FY 2004 wage index.
• Proposed exclusion of paid hours associated with military and jury duty leave from the wage index calculation, and request for comments on possible exclusion of paid lunch or meal break hours.
• Proposed revisions to the wage index based on hospital redesignations and reclassifications.
• Proposed amendments to the timetable for reviewing and verifying the wage data that will be in effect for the FY 2005 wage index.
In section IV. of this preamble, we discuss several provisions of the regulations in 42 CFR parts 412 and 413 and set forth certain proposed changes concerning the following:
• Proposed expansion of the current postacute transfer policy to 19 additional DRGs.
• Proposed clarification of our policies that would be applied to counting hospital beds and patient days, in particular with regard to the treatment of swing-beds and observation beds, for purposes of the IME and DSH adjustments.
• Proposed changes in our policy relating to nursing and allied health education payments to wholly owned subsidiary educational institutions of hospitals.
• Proposed clarification of policy relating to application of redistribution of costs and community support funds in determining a hospital's resident training costs.
• Proposed change in the amount of rural training time required for an urban hospital to qualify for an increase in the rural track FTE limitation.
• Proposed inclusion of FTE residents training in rural tracks in a hospital's rolling average calculation.
4. PPS for Capital-Related Costs
In section V., of this preamble, we discuss the payment requirements for capital-related costs. We are not proposing any changes to the policies on payments to hospitals for capital-related costs.
5. Proposed Changes for Hospitals and Hospital Units Excluded from the IPPS
In section VI., of this preamble, we discuss the following proposals concerning excluded hospitals and hospital units and CAHs:
• Revisions relating to the operation of excluded “grandfathered” hospitals-within-hospitals in effect on September 30, 1999.
• Clarification of the classification criteria for LTCHs.
• Clarification of the policy on payments for laboratory services provided by a CAH to patients outside a CAH.
In the Addendum to this proposed rule, we set forth proposed changes to the amounts and factors for determining the FY 2004 prospective payment rates for operating costs and capital-related costs. We also establish the proposed threshold amounts for outlier cases. In addition, we address update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2004 for hospitals and hospital units excluded from the PPS.
In Appendix A, we set forth an analysis of the impact that the proposed changes described in this proposed rule would have on affected hospitals.
As required by sections 1886(e)(4) and (e)(5) of the Act, Appendix B provides our recommendation of the appropriate percentage change for FY 2004 for the following:
• Large urban area and other area average standardized amounts (and hospital-specific rates applicable to SCHs and MDHs) for hospital inpatient services paid under the IPPS for operating costs.
• Target rate-of-increase limits to the allowable operating costs of hospital inpatient services furnished by hospitals and hospital units excluded from the IPPS.
Under section 1805(b) of the Act, the Medicare Payment Advisory Commission (MedPAC) is required to submit a report to Congress, no later than March 1 of each year, that reviews and makes recommendations on Medicare payment policies. This annual report makes recommendations concerning hospital inpatient payment policies. In section VII., of this preamble, we discuss the MedPAC recommendations and any actions we are proposing to take with regard to them (when an action is recommended). For further information relating specifically to the MedPAC March 1 report or to obtain a copy of the report, contact MedPAC at (202) 653-7220 or visit MedPAC's Web site at:
Section 1886(d) of the Act specifies that the Secretary shall establish a classification system (referred to as DRGs) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG. Therefore, under the IPPS, we pay for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary's stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital's payment rate per case by the weight of the DRG to which the case is assigned. Each DRG weight represents the average resources required to care for cases in that particular DRG relative to the average resources used to treat cases in all DRGS.
Congress recognized that it would be necessary to recalculate the DRG relative weights periodically to account for changes in resource consumption. Accordingly, section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually. These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. The proposed changes to the DRG classification system and the proposed recalibration of the DRG weights for discharges occurring on or after October 1, 2003 are discussed below.
Cases are classified into DRGs for payment under the IPPS based on the principal diagnosis, up to eight additional diagnoses, and up to six procedures performed during the stay. In a small number of DRGs, classification is also based on the age, sex, and discharge status of the patient. The diagnosis and procedure information is reported by the hospital using codes from the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM).
For FY 2003, cases are assigned to one of 510 DRGs in 25 major diagnostic categories (MDCs). Most MDCs are based on a particular organ system of the body. For example, MDC 6 is Diseases and Disorders of the Digestive System. This approach is used because the clinical care is generally organized in accordance with the organ system affected. However, some MDCs are not constructed on this basis because they involve multiple organ systems (for example, MDC 22 (Burns)). The table below lists the 25 MDCs.
In general, cases are assigned to an MDC based on the patient's principal diagnosis before assignment to a DRG. However, for FY 2003, there are eight DRGs to which cases are directly assigned on the basis of ICD-9-CM procedure codes. These are the DRGs for heart, liver, bone marrow, lung transplants, simultaneous pancreas/kidney, and pancreas transplants (DRGs 103, 480, 481, 495, 512, and 513, respectively) and the two DRGs for tracheostomies (DRGs 482 and 483). Cases are assigned to these DRGs before classification to an MDC.
Within most MDCs, cases are then divided into surgical DRGs and medical DRGs. Surgical DRGs are based on a hierarchy that orders operating room (O.R.) procedures or groups of O.R. procedures by resource intensity. Medical DRGs generally are differentiated on the basis of diagnosis and age (less than or greater than 17 years of age). Some surgical and medical DRGs are further differentiated based on the presence or absence of a complication or a comorbidity (CC).
Generally, nonsurgical procedures and minor surgical procedures not usually performed in an operating room are not treated as O.R. procedures. However, there are a few non-O.R. procedures that do affect DRG assignment for certain principal diagnoses, such as extracorporeal shock wave lithotripsy for patients with a principal diagnosis of urinary stones.
Patients' diagnosis, procedure, discharge status, and demographic information is fed into the Medicare claims processing systems and subjected to a series of automated screens called the Medicare Code Editor (MCE). These screens are designed to identify cases that require further review before classification into a DRG.
After screening through the MCE and any further development of the claims, cases are classified into the appropriate DRG by the Medicare GROUPER software program. The GROUPER program was developed as a means of classifying each case into a DRG on the basis of the diagnosis and procedure codes and, for a limited number of DRGs, demographic information (that is, sex, age, and discharge status).
After cases are screened through the MCE and assigned to a DRG by the GROUPER, a payment is calculated by the PRICER software. The PRICER calculates the payments for each case covered by the IPPS based on the DRG relative weight and factors associated with each hospital, such as IME and DSH adjustments.
The records for all Medicare hospital inpatient discharges are maintained in the Medicare Provider Analysis and Review (MedPAR) file. The data in this file are used to evaluate possible DRG classification changes and to recalibrate the DRG weights. However, in the July 30, 1999 IPPS final rule (64 FR 41500), we discussed a process for considering non-MedPAR data in the recalibration process. In order for the use of particular data to be feasible, we must have sufficient time to evaluate and test the data. The time necessary to do so depends upon the nature and quality of the data submitted. Generally, however, a significant sample of the data should be submitted by mid-October for consideration in conjunction with the next year's proposed rule, so that we can test the data and make a preliminary assessment as to the feasibility of using the data. Subsequently, a complete database should be submitted by early December for consideration in conjunction with the next year's proposed rule.
Many of the changes to the DRG classifications are the result of specific issues brought to our attention by interested parties. We encourage individuals with concerns about the DRG classifications to bring those concerns to our attention in a timely manner so they can be carefully considered for possible inclusion in the next proposed rule and so any proposed changes may be subjected to public review and comment. Therefore, similar to the timetable for interested parties to submit non-MedPAR data for consideration in the DRG recalibration process, concerns about DRG classification issues should be brought to our attention no later than early December in order to be considered and possibly included in the next annual proposed rule updating the IPPS.
The changes we are proposing to the DRG classification system for FY 2004 GROUPER version 21.0 and to the methodology to recalibrate the DRG weights are set forth below. Unless otherwise noted, our DRG analysis is based on data from the December 2002 update of the FY 2002 MedPAR file, which contains hospital bills received
In an effort to improve the clinical and cost cohesiveness of the DRG classification system, we have evaluated whether additional DRGs should be split based on the presence or absence of a CC. There are currently 116 paired CC split DRGs. We last performed a systematic evaluation and considered changes to the DRGs to recognize the within-DRG cost differences based on the presence or absence of CCs in 1994 (May 27, 1994 IPPS proposed rule, 59 FR 27715). In 1994, we described a refined DRG system based on a list of secondary diagnoses that have a major effect on the resources used by hospitals in treating patients across DRGs. We analyzed how the presence of the secondary diagnosis affected resource use compared to other secondary diagnoses, and classified these secondary diagnoses as non-CC, CC, or major CC. After finalizing the classification of secondary diagnoses, we evaluated which collapsed DRGs should be split on the basis of the presence 8 of a major CC, other CC, or both.
Section 301(e) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 Public Law 106-554 authorized the Secretary to make such a prospective adjustment to the average standardized amounts for discharges occurring on or after October 1, 2001, to ensure the total payment impacts of changes to the DRGs do not result in any more or less total spending than would otherwise occur without the changes (budget neutrality).
Pending a decision whether to replace ICD-9-CM with another classification system, we are not proposing to proceed with implementing a refined DRG system at this time. The refined DRG system discussed in the 1994
In the meantime, we have undertaken an effort to identify groups of DRGs where a CC-split appears most justified. Our analysis identified existing DRGs that meet the following criteria: a reduction in variance in charges within the DRG of at least 4 percent; fewer than 75 percent of all patients in the current DRG would be assigned to the with-CC DRG; and the overall payment impact (higher payments for cases in the with-CC DRG offset by lower payments for cases in the without-CC DRG) is at least $40 million.
The following four DRGs meet these criteria: DRG 4 (Spinal Procedures) and DRG 5 (Extracranial Vascular Procedures) in MDC 1 (Diseases and Disorders of the Nervous System); DRG 231 (Local Excision and Removal of Internal Fixation Devices Except Hip and Femur) in MDC 8 (Diseases and Disorders of the Musculoskeletal and Connective Tissue); and DRG 400 (Lymphoma and Leukemia with Major O.R. Procedure) in MDC 17 (Myeloproliferative Diseases and Disorders and Poorly Differentiated Neoplasms).
The following data indicate that the presence or absence of a CC was found to have a significant impact on patient charges and average length of stays in these four DRGs.
Therefore, we are proposing to establish the following new DRGs: proposed DRG 531 (Spinal Procedures With CC) and proposed DRG 532 (Spinal Procedures Without CC) in MDC 1; proposed DRG 533 (Extracranial Vascular Procedures With CC) and proposed DRG 534 (Extracranial Vascular Procedures Without CC) in
a. Revisions of DRGs 1 and 2. In the FY 2003 IPPS final rule, we split DRGs 1 and 2 (Craniotomy Age >17 With and Without CC, respectively) based on the presence or absence of a CC (67 FR 49986). We have received several proposals related to devices or procedures that are used in a small subset of cases from these DRGs. These proposals argue that the current payment for these devices or procedures under DRGs 1 and 2 is inadequate.
Therefore, we undertook an analysis of the charges of various procedures and diagnoses within DRGs 1 and 2 to assess whether further changes to these DRGs may be warranted. Currently, the average charges for cases assigned to DRGs 1 and 2 are approximately $55,000 and $30,000, respectively. We are proposing to create two separate new DRGs for: Cases with an intracranial vascular procedure and a principal diagnosis of an intracranial hemorrhage; and craniotomy cases with a ventricular shunt procedure (absent another procedure). The former set of cases are much more expensive than those presently in DRGs 1 and 2; the latter set of cases are much less expensive.
Our analysis indicated that patients with an intracranial vascular procedure and a principal diagnosis of an intracranial hemorrhage were significantly more costly than other cases in DRGs 1 and 2. These patients have an acute condition with a high severity of illness and risk of mortality. There were 917 cases in DRGs 1 and 2 with an intracranial vascular procedure and a principal diagnosis of hemorrhage with average charges of approximately $113,884, which are much higher than the average charges of DRGs 1 and 2 noted above.
We also found 890 cases that had an intracranial vascular procedure without a principal diagnosis of hemorrhage (for example, nonruptured aneurysms). These cases are generally less acutely ill than those involving ruptured aneurysms, and have a lower risk of mortality. Among these 890 cases, the average charges were approximately $52,756, which are much more similar to the average charges for all cases in DRGs 1 and 2.
Based on this analysis, we are proposing to create new DRG 528 (Intracranial Vascular Procedure With a Principal Diagnosis of Hemorrhage) for patients with an intracranial vascular procedure and an intracranial hemorrhage. We are proposing that cases involving intracranial vascular procedures without a principal diagnosis of hemorrhage would remain in DRGs 1 and 2.
Proposed new DRG 528 would have the following principal diagnoses:
We also found that craniotomy patients who had a ventricular shunt procedure (absent another procedure) were significantly less costly than other craniotomy patients in DRGs 1 and 2. Ventricular shunts are normally performed for draining intracranial fluid. A ventricular shunt is a less extensive procedure than the other intracranial procedures in DRGs 1 and 2. As a result, if a ventricular shunt is the only intracranial procedure performed, these cases will typically be less costly.
There were 4,373 cases in which only ventricular shunt procedures were performed. These cases had average charges of approximately $27,188. However, the presence or absence of a CC had a significant impact on patient charges and lengths of stay. There were 2,533 cases with CC, with average charges of approximately $33,907 and an average length of stay of 8.2 days. In contrast, there were 1,840 cases without CC, with average charges of approximately $17,939 and an average length of stay of 3.7 days.
Therefore, we are proposing to create two new DRGs, splitting on CC, for patients with only a vascular shunt procedure: proposed new DRG 529 (Ventricular Shunt Procedures With CC) and proposed new DRG 530 (Ventricular Shunt Procedures Without CC).
Proposed new DRG 529 would consist of any principal diagnosis in MDC 5, with the presence of a CC and one of the following operating room procedures:
• 02.31, Ventricular shunt to structure in head and neck
• 02.32, Ventricular shunt to circulatory system
• 02.33, Ventricular shunt to thoracic cavity
• 02.34, Ventricular shunt to abdominal cavity and organs
• 02.35, Ventricular shunt to urinary system
• 02.39, Other operations to establish drainage of ventricle
• 02.42, Replacement of ventricular shunt
• 02.43, Removal of ventricular shunt
Proposed new DRG 530 would consist of any principal diagnosis in MDC 5 with one of the operating room procedures listed above for the proposed new DRG 529, but without the presence of a CC.
b. DRG 23 (Nontraumatic Stupor and Coma). In DRG 23 (Nontraumatic Stupor and Coma), there are currently six principal diagnoses identified by the following ICD-9-CM diagnosis codes: 348.4, Compression of the brain; 348.5, Cerebral edema; 780.01, Coma; 780.02, Transient alteration of awareness; 780.03, Persistent vegetative state; and 780.09, Other alteration of consciousness. Code 780.02 is often used to describe the diagnosis of psychiatric patients rather than the diagnosis of patients with severe
Although there are neurological patients who present with the complaint of “transient alteration of awareness,” the cause of this alteration of consciousness is commonly identified, and the principal diagnosis for the hospital admission is the etiology of the alteration of consciousness rather than the symptom itself. For the few remaining neurological patients for whom the cause is not identified and for whom code 780.02 is assigned as the principal diagnosis, we still believe that the care of these patients is different than the care of patients with coma or cerebral edema.
Because we believe the patients with a principal diagnosis of “transient alteration of consciousness” are more clinically related to the patients in DRG 429 (Organic Disturbances and Mental Retardation) in MDC 19 (Mental Diseases and Disorders), we are proposing that patients who are assigned a principal diagnosis of code 780.02 will be assigned to DRG 429 instead of DRG 23. DRG 429 also contains similar diagnoses, such as code 293.81, Organic delusional syndrome and code 293.82, Organic hallucinosis syndrome. We note that the charges for the patient cases in DRGs 23 and 429 are very similar ($11,559 and $11,713, respectively), so the proposed movement of code 780.02 from DRG 23 to DRG 429 would have minimal payment impact. Moving this diagnosis code would also consolidate diagnoses treated frequently in psychiatric hospitals in those DRGs that are likely to be a part of the upcoming proposed Medicare psychiatric facility PPS.
Code 37.64 (Removal of heart assist system) in DRGs 478 and 479 describes the operative, as opposed to bedside, removal of a heart assist system. Based on comments we received suggesting that code 37.64 was inappropriately assigned to DRGs 478 and 479, we reviewed the MedPAR data for both DRGs 478 and 479 and DRG 110 (Major Cardiovascular Procedures With CC) and DRG 111 (Major Cardiovascular Procedures Without CC) to assess the appropriate assignment of code 37.64.
We found that there were only 17 cases of code 37.64 in DRGs 478 and 479, with an average length of stay of 14.1 days and average charges of $105,153. There were a total of 90,591 cases in DRGs 478 and 479 that did not contain code 37.64. These cases had an average length of stay of 6.6 days and average charges of $31,879. In DRGs 110 and 111, we found an average length of stay of 8.1 days, with average charges of $54,653.
We are proposing to remove code 37.64 from DRGs 478 and 479 and reassign it to DRGs 110 and 111. The surgical removal of a heart assist system is a major cardiovascular procedure and, therefore, more appropriately assigned to DRGs 110 and 111. Accordingly, we believe this DRG assignment for this procedure is more clinically and financially appropriate.
We received a recommendation that we modify DRG 514 (Cardiac Defibrillator Implant With Cardiac Catheterization) and DRG 515 (Cardiac Defibrillator Implant Without Cardiac Catheterization) so that these DRGs are split based on the presence or absence of acute myocardial infarction, heart failure, or shock. We note that the increased cost of treating cardiac patients with acute myocardial infarction, heart failure, or shock is recognized in the payment logic for pacemaker implants (DRG 115 (Permanent Cardiac Pacemaker Implant With Acute Myocardial Infarction, Heart Failure or Shock, or AICD Lead or Generator) and DRG 116 (Other Permanent Cardiac Pacemaker Implant)).
We examined FY 2002 MedPAR data regarding the number of cases and the average charges for DRGs 514 and 515. The results of our examination are summarized in the following table.
A cardiac catheterization is generally performed to establish the nature of the patient's cardiac problem and determine if implantation of a cardiac defibrillator is appropriate. Generally, the cardiac catheterization can be done on an outpatient basis. Patients who are admitted with acute myocardial infarction, heart failure, or shock and have a cardiac catheterization are generally acute patients who require emergency implantation of the defibrillator. Thus, there are very high costs associated with these patients.
We found that the average charges for patients with cardiac catheterizations who also had acute myocardial infarction, heart failure, or shock were $120,852, compared to the average charges for all DRG 514 cases of $97,133. Therefore, we are proposing to split DRG 514 and create a new DRG for patients receiving a cardiac defibrillator implant with cardiac catheterization and with acute myocardial infarction, heart failure, or shock.
Patients without cardiac catheterization generally have had the need for the defibrillator established on an outpatient basis prior to admission. We found 935 cases with acute myocardial infarction, heart failure, or shock, with average charges of $84,140. The average charges for all cases in DRG 515 were $76,537. Because of the relatively small number of patients and the less-than-10-percent charge difference for patients in DRG 515 who have acute myocardial infarction, heart failure, or shock, we are not proposing to create a separate DRG for patients with a cardiac defibrillator implant without cardiac catheterization with acute myocardial infarction, heart failure, or shock.
Specifically, we are proposing to create two new DRGs that would replace the current DRG 514. The two new DRGs would have the same procedures currently listed for DRG 514, but would be split based on the presence or absence of acute myocardial infarction, heart failure, or shock. The proposed new DRGs would be DRG 535 (Cardiac
• 398.91, Rheumatic heart failure
• 402.01, Malignant hypertensive heart disease with heart failure
• 402.11, Benign hypertensive heart disease with heart failure
• 402.91, Hypertensive heart disease not otherwise specified with heart failure
• 404.01, Malignant hypertensive heart and renal disease with heart failure
• 404.03, Malignant hypertensive heart and renal disease with heart failure and renal failure
• 404.11, Benign hypertensive heart and renal disease with heart failure
• 404.13, Benign hypertensive heart and renal disease with heart failure and renal failure
• 404.91, Hypertensive heart and renal disease not otherwise specified with heart failure
• 404.93, Hypertensive heart and renal disease not otherwise specified with heart failure and renal failure
• 410.01, AMI anterolateral, initial
• 410.11, AMI anterior wall, initial
• 410.21, AMI inferolateral, initial
• 410.31, AMI inferopost, initial
• 410.41, AMI inferior wall, initial
• 410.51, AMI lateral not elsewhere classified, initial
• 410.61, True posterior infarction, initial
• 410.71, Subendocardial infarction, initial
• 410.81, AMI not elsewhere classified, initial
• 410.91, AMI not otherwise specified, initial
• 428.0, Congestive heart failure, not otherwise specified
• 428.1, Left heart failure
• 428.20, Systolic heart failure, not otherwise specified
• 428.21, Acute systolic heart failure
• 428.22, Chronic systolic heart failure
• 428.23, Acute on chronic systolic heart failure
• 428.30, Diastolic heart failure, not otherwise specified
• 428.31, Acute diastolic heart failure
• 428.32, Chronic diastolic heart failure
• 428.33, Acute on chronic diastolic heart failure
• 428.40, Combined systolic and diastolic heart failure not otherwise specified
• 428.41, Acquired combined systolic and diastolic heart failure
• 428.42, Chronic combined systolic and diastolic heart failure
• 428.43, Acute on chronic combined systolic and diastolic heart failure
• 428.9, Heart failure, not otherwise specified
• 785.50, Shock, not otherwise specified
• 785.51, Cardiogenic shock
We received a comment from a provider who pointed out that we did not include the following combination of codes under the list of procedure combinations that would lead to an assignment of DRG 514 or DRG 515:
• 39.75, Implantation of automatic cardioverter/defibrillator lead(s) only
• 00.54, Implantation or replacement of cardiac resynchronization defibrillator, pulse generator device only [CRT-D]
The commenter pointed out that cases are assigned to DRGS 514 and 515 when a total cardiodefibrillator or CRT-D system is implanted. In addition, cases are assigned to DRGs 514 and 515 when implantation of a variety of combinations of defibrillator leads and device combinations are reported. The commenter indicated that total defibrillator and CRT-D system may be replaced with completely new systems or all new devices and leads, and added that it is also possible to replace a generator, a lead, or a combination of generators and up to three leads.
When the CRT-D generator (code 00.54) and one of the cardioverter/defibrillator leads are replaced, the case currently is assigned to DRG 115 (Permanent Cardiac Pacemaker Implant with AMI, Heart Failure, or Shock or AICD Lead or Generator Procedure). The commenter recommended that we include the combination of codes 39.75 and 00.54 as a combination that would result in assignment to DRG 514 or DRG 515, as do other combinations of generators and leads. Our medical advisors agree with this recommendation. As discussed previously, we are proposing to delete DRG 514 and replace it with proposed new DRGs 535 and 536. Therefore, we are proposing to add codes 39.75 and 00.54 to the list of procedure combinations that would result in assignment to DRG 515 or new proposed DRGs 535 and 536.
We received a comment that two codes for cervical fusion of the spine are not included within DRG 519 (Cervical Spinal Fusion With CC) and DRG 520 (Cervical Spinal Fusion Without CC). The two cervical fusion codes are:
• 81.01, Atlas-axis spinal fusion
• 81.31, Refusion of atlas-axis
The atlas-axis includes the first two vertebrae of the cervical spine (C1 and C2). These two cervical fusion codes are currently assigned to DRG 497 (Spinal Fusion Except Cervical With CC) and DRG 498 (Spinal Fusion Except Cervical Without CC). Because codes 81.01 and 81.31 involve the cervical spine, we are proposing to remove these codes from DRGs 497 and 498 and reassign them to DRGs 519 and 520.
a. Nonneonate Diagnoses. As indicated earlier, ICD-9-CM diagnosis codes are assigned to MDCs based on 25 groupings corresponding to a single organ system or etiology and, in general, are associated with a particular medical specialty. MDC 15 is comprised of diagnoses that relate to newborns and other neonates with conditions originating in the perinatal period. Some of the codes included in MDC 15 consist of conditions that originate in the neonatal period but can persist throughout life. These conditions are referred to as congenital anomalies. When an older (not neonate) population is treated for a congenital anomaly, DRG assignment problems can arise. For instance, if a patient is over 65 years old and is admitted with a congenital anomaly, it is not appropriate to assign the patient to a newborn DRG. This situation occurs when a congenital anomaly code is classified within MDC 15.
We have received a recommendation to move the following congenital anomaly codes from MDC 15 and reassign them to other appropriate MDCs based on the body system being treated:
• 758.9, Chromosome anomaly, not otherwise specified
• 759.4, Conjoined twins
• 759.7, Multiple congenital anomalies, not elsewhere classified
• 759.81, Prader-Willi syndrome
• 759.83, Fragile X syndrome
• 759.89, Specified congenital anomalies, not elsewhere classified
• 759.9, Congenital anomaly, not otherwise specified
• 779.7, Periventricular leukomalacia
• 795.2, Abnormal chromosomal analysis
Each of the congenital anomaly diagnosis codes recommended for reassignment represents a condition that is frequently addressed beyond the neonatal period. In addition, the assignment of these congenital anomaly codes as principal diagnosis currently results in assignment to MDC 15.
We have evaluated the recommendation and agree that each of the identified codes represents a condition that is frequently addressed beyond the neonate period and should therefore be removed from the list of principal diagnoses that result in assignment to MDC 15. Therefore, we are proposing to change the MDC and DRG assignments of the congenital anomaly codes as specified in the following table. The table shows the principal diagnosis code for the congenital anomaly and the proposed MDC and DRG to which the code would be assigned.
b. Heart Failure Codes for Newborns and Neonates. Under MDC 15, cases of newborns and neonates with major problems may be assigned to DRG 387 (Prematurity With Major Problems) or DRG 389 (Full-Term Neonate With Major Problems). Existing DRG 387 has three components: (1) Principal or secondary diagnosis of prematurity; (2) principal or secondary diagnosis of major problem (these are the diagnoses that define MDC 15); or (3) secondary diagnosis of major problem (these are diagnoses that do not define MDC 15, so they will only be secondary diagnosis codes for patients assigned to MDC 15). To be assigned to DRG 389, the neonate must have one of the principal or secondary diagnoses listed under the DRG.
We have received correspondence suggesting that the following diagnosis codes for heart failure, which are currently in MDC 5, be added to the list of major problems for neonates under MDC 15.
These heart failure-related diagnosis codes were new codes as of October 1, 2002. They were an expansion of the previous 4-digit codes for heart failure and provided additional detail about the specific type of heart failure. The other codes for heart failure that existed prior to October 1, 2002, are classified as major problems within MDC 15 and are currently assigned to DRGs 387 and DRG 389.
We agree that diagnosis codes 428.20 through 428.43 listed in the chart above should be included as principal diagnosis of major problem codes within MDC 15 and, therefore, are proposing to add them to DRG 387 and 389.
High-dose Interleukin-2 (IL-2) Chemotherapy is a hospital inpatient-based regimen requiring administration by experienced oncology professionals. It is used for the treatment of patients with advanced renal cell cancer and advanced melanoma. Unlike traditional cytotoxic chemotherapies that attack cancer cells themselves, Interleukin-2 is designed to enhance the body's defenses by mimicking the way natural IL-2 activates the immune system and stimulates the growth and activity of cancer-killing cells. The IL-2 product on the market was approved for use by the Food and Drug Administration (FDA) in 1992.
High-dose IL-2 therapy is performed only in very specialized treatment settings, such as an intensive care unit or a bone marrow transplant unit. This therapy requires oversight by oncology health care professionals experienced in the administration and management of patients undergoing this intensive treatment because of the severity of the side effects. Unlike most cancer
High-dose IL-2 therapy is significantly different from conventional chemotherapy in terms of the resources required to administer it. Conventional chemotherapy may be given to patients either on an outpatient basis or through a series of short (that is, 1 to 3 day) inpatient stays.
High-dose IL-2 therapy is given during two separate hospital admissions. For the first cycle, the IL-2 is administered every 8 hours over 5 days. Patients are then discharged to rest at home for several days and then are admitted for the second cycle of therapy, in which the same regimen and dosing is repeated. The two cycles complete the first course of high-dose IL-2 therapy. This regimen may be repeated at 8 to 12 weeks if the patient is responding. The maximum number of courses for any one patient is predicted to be five courses.
Not all patients with end-stage renal cell carcinoma or end-stage melanoma are appropriate candidates for high-dose IL-2 chemotherapy. It is estimated that there are between 15,000 and 20,000 patients in the United States who have one of these two types of cancer. However, only 20 percent of those patients will be appropriate candidates for the rigors of the treatment regimen. It is further estimated that, annually, approximately 1,300 of these patients will be Medicare beneficiaries. However, allegedly due to the level of payment for the DRGs to which these cases are currently assigned, we have been informed by industry sources that only between 100 and 200 Medicare patients receive the treatment each year. According to these industry sources, several treatment centers have had to discontinue their high-dose IL-2 therapy programs for end-stage renal cell carcinoma or end-stage melanoma because of the low Medicare payment.
According to industry sources, the wholesale cost of IL-2 is approximately $700 per vial. Dosages range between 15 and 20 vials per treatment, or between $10,500 and $14,000 per patient, per cycle, for the cost of the IL-2 drug alone. There is no ICD-9-CM procedure code that currently identifies patients receiving this therapy. Therefore, it is not possible to identify directly these cases in the MedPAR data. Currently, this therapy is coded using the more general ICD-9-CM code 99.28 (Injection or infusion of biologic response modifier). When we addressed this issue previously in the August 1, 2000 IPPS final rule (65 FR 47067) by examining cases for which procedure code 99.28 was present, our analysis was inconclusive due to the wide range of cases identified (1,179 cases across in 136 DRGs). However, recent data collected by the industry on 30 Medicare beneficiaries who received high-dose IL-2 therapy during FY 2002 show average charges for these cases of approximately $54,000.
Depending on the principal diagnosis reported, patients receiving high-dose IL-2 therapy may be assigned to one of the following five DRGs: DRG 272 (Major Skin Disorder With CC) and DRG 273 (Major Skin Disorder Without CC) in MDC 9; DRG 318 (Kidney and Urinary Tract Neoplasms With CC) and DRG 319 (Kidney and Urinary Tract Neoplasms Without CC) in MDC 11; and DRG 410 (Chemotherapy Without Leukemia as Secondary Diagnosis) in MDC 17. The following table illustrates the average charges for patients in these DRGs.
Because of the need to identify the subset of patients receiving this type of treatment, the ICD-9-CM Coordination and Maintenance Committee determined, based on its consideration at the December 6, 2002 public meeting, that a new code for high-dose IL-2 therapy was warranted. Therefore, a new code has been created in the 00 Chapter of ICD-9-CM (Procedures and Interventions, Not Elsewhere Classified), in category 00.1 (Pharmaceuticals) at 00.15 (High-dose infusion Interleukin-2 (IL-2)), effective October 1, 2003.
We believe patients receiving high-dose IL-2 therapy are clinically similar to other cases currently assigned to DRG 492 (Chemotherapy With Acute Leukemia as Secondary Diagnosis) in MDC 17. The average charge for patients currently assigned to DRG 492 is $55,581. Currently, DRG 492 requires one of the following two principal diagnoses:
• V58.1, Encounter for chemotherapy
• V67.2, Followup examination following chemotherapy
• 204.00, Acute lymphoid leukemia without mention of remission
• 204.01, Acute lymphoid leukemia with remission
• 205.01, Acute myeloid leukemia with remission
• 206.00, Acute monocytic leukemia without mention of remission
• 206.01, Acute monocytic leukemia with remission
• 207.00, Acute erythremia and erythroleukemia without mention of remission
• 207.01, Acute erythremia and erythroleukemia with remission
• 208.00, Acute leukemia of unspecified cell type without mention of remission
• 208.01, Acute leukemia of unspecified cell type without mention of remission
We are proposing to modify DRG 492 by adding new procedure code 00.15 to the logic. Assignment to this DRG would require the same two V-code principal diagnosis codes as listed above (V58.1 and V67.2), but would require either one of the leukemia codes listed as a secondary diagnosis, or would require the procedure code 00.15. In addition, we are proposing to change the title of DRG 492 to “Chemotherapy With Acute Leukemia or With Use of High Dose Chemotherapy Agent”.
We will monitor cases with procedure code 00.15 as these data become available, and consider potential further refinements to DRG 492 as necessary.
a. Implantable Devices. We received a comment regarding three ICD-9-CM diagnosis codes that are currently assigned to MDC 23: V53.01 (Fitting and adjustment of cerebral ventricular (communicating) shunt); V53.02 (Neuropacemaker (brain) (peripheral nerve) (spinal cord)); and V53.09 (Fitting and adjustment of other devices related to nervous system and special senses). The commenter suggested that we move these three codes from MDC 23 to MDC 1 (Diseases and Disorders of the Nervous System) because these codes are used as the principal diagnosis for admissions involving removal, replacement, and reprogramming of devices such as cerebral ventricular shunts, neurostimulators, intrathecal infusion pumps and thalamic stimulators.
Currently, if these diagnosis codes are reported alone without an O.R. procedure, the case would be assigned to DRG 467 (Other Factors Influencing Health Status). However, if an O.R. procedure is reported with the principal
In our analysis of the MedPAR data, we found 30 cases assigned to DRG 467 and 179 cases assigned to DRG 461 with one of these codes as principal diagnosis. We found that the procedures reported with one of these diagnosis codes were procedures in MDC 1. The most frequent procedure was 86.06 (Insertion of totally implantable infusion pump).
Because the procedures that are routinely used with these codes are in MDC 1, it would be appropriate to assign these diagnosis codes to MDC 1. As the commenter also stated, this assignment would be consistent with how fitting and adjustments of devices are handled within other MDCs, such as in MDC 5 (Disease and Disorders of the Circulatory System) and MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract). Diagnosis codes V53.31 (Cardiac pacemaker), V53.32 (Automatic implantable cardiac defibrillator), and V53.39 (Other cardiac device) are used for fitting and adjustment of cardiac devices and are assigned to MDC 5. Diagnosis code V53.6 (Urinary devices) is used for fitting and adjustment of urinary devices and is assigned to MDC 11.
Therefore, we are proposing to move V53.01, V53.02, and V53.09 from MDC 23 to MDC 1 when an O.R. procedure is performed. If no O.R. procedure is performed, these diagnosis codes would be assigned to DRG 34 (Other Disorders of Nervous System With CC) or DRG 35 (Other Disorders of Nervous System Without CC). If an O.R. procedure is performed on a patient assigned with one of these codes as the principal diagnosis, the case would be assigned to the DRG in MDC 1 to which the O.R. procedure is assigned.
b. Malignancy Codes. We received correspondence that indicated that when we recognized code V10.48 (History of malignancy, epididymis) as a new code for FY 2002, we did not include the code as a history of malignancy code in DRG 465 (Aftercare with History of Malignancy as Secondary Diagnosis). All other history of malignancy codes were included in DRG 465.
We agree that code V10.48 should have been included in the list of history of malignancy codes within DRG 465 and, therefore, are proposing to add it to the list of secondary diagnoses in DRG 465.
As explained under section II.B.1. of this preamble, the MCE is a software program that detects and reports errors in the coding of Medicare claims data.
We received a request to examine the MCE edit “Adult Diagnosis—Age Greater than 14” because currently the edit rejects claims for patients under age 15 who are being treated for gall bladder disease. We reviewed this issue with our pediatric consultants and determined that, although incidence is rare, gallbladder disease does occur in patients under age 15. Therefore, we are proposing to modify the MCE by removing the following codes from the edit “Adult Diagnosis—Age Greater Than 14”:
• 574.00, Calculus of gallbladder with acute cholecystitis without mention of obstruction
• 574.01, Calculus of gallbladder with acute cholecystitis with obstruction
• 574.10, Calculus of gallbladder with other cholecystitis without mention of obstruction
• 574.11, Calculus of gallbladder with other cholecystitis with obstruction
• 574.20, Calculus of gallbladder without mention of cholecystitis without mention of obstruction
• 574.21, Calculus of gallbladder without mention of cholecystitis with obstruction
• 574.30, Calculus of bile duct with acute cholecystitis without mention of obstruction
• 574.31, Calculus of bile duct with acute cholecystitis with obstruction
• 574.40, Calculus of bile duct with other cholecystitis without mention of obstruction
• 574.41, Calculus of bile duct with other cholecystitis with obstruction
• 574.50, Calculus of bile duct without mention of cholecystitis without mention of obstruction
• 574.51, Calculus of bile duct without mention of cholecystitis with obstruction
• 574.60, Calculus of gallbladder and bile duct with acute cholecystitis without mention of obstruction
• 574.61, Calculus of gallbladder and bile duct with acute cholecystitis with obstruction)
• 574.70, Calculus of gallbladder and bile duct with other cholecystitis without mention of obstruction
• 574.71, Calculus of gallbladder and bile duct with other cholecystitis with obstruction
• 574.80, Calculus of gallbladder and bile duct with acute and chronic cholecystitis without mention of obstruction
• 574.81, Calculus of gallbladder and bile duct with acute and chronic cholecystitis with obstruction
• 574.90, Calculus of gallbladder and bile duct without cholecystitis without mention of obstruction
• 574.90, Calculus of gallbladder and bile duct without cholecystitis with obstruction
• 575.0, Acute cholecystitis
• 575.10, Cholecystitis, not otherwise specified
• 575.11, Chronic cholecystitis
• 575.12, Acute and chronic cholecystitis
• 575.2, Obstruction of gallbladder
• 575.3, Hydrops of gallbladder
• 576.0, Postcholecystectomy syndrome
• 577.1, Chronic pancreatitis
Some inpatient stays entail multiple surgical procedures, each one of which, occurring by itself, could result in assignment of the case to a different DRG within the MDC to which the principal diagnosis is assigned. Therefore, it is necessary to have a decision rule within the GROUPER by which these cases are assigned to a single DRG. The surgical hierarchy, an ordering of surgical classes from most resource-intensive to least resource-intensive, performs that function. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the DRG associated with the most resource-intensive surgical class.
Because the relative resource intensity of surgical classes can shift as a function of DRG reclassification and recalibrations, we reviewed the surgical hierarchy of each MDC, as we have for previous reclassifications and recalibrations, to determine if the ordering of classes coincides with the intensity of resource utilization.
A surgical class can be composed of one or more DRGs. For example, in MDC 11, the surgical class “kidney transplant” consists of a single DRG (DRG 302) and the class “kidney, ureter and major bladder procedures” consists of three DRGs (DRGs 303, 304, and 305). Consequently, in many cases, the surgical hierarchy has an impact on more than one DRG. The methodology for determining the most resource-intensive surgical class involves weighting the average resources for each DRG by frequency to determine the weighted average resources for each surgical class. For example, assume surgical class A includes DRGs 1 and 2 and surgical class B includes DRGs 3, 4, and 5. Assume also that the average charge of DRG 1 is higher than that of
This methodology may occasionally result in assignment of a case involving multiple procedures to the lower-weighted DRG (in the highest, most resource-intensive surgical class) of the available alternatives. However, given that the logic underlying the surgical hierarchy provides that the GROUPER search for the procedure in the most resource-intensive surgical class, this result is unavoidable.
We note that, notwithstanding the foregoing discussion, there are a few instances when a surgical class with a lower average charge is ordered above a surgical class with a higher average charge. For example, the “other O.R. procedures” surgical class is uniformly ordered last in the surgical hierarchy of each MDC in which it occurs, regardless of the fact that the average charge for the DRG or DRGs in that surgical class may be higher than that for other surgical classes in the MDC. The “other O.R. procedures” class is a group of procedures that are only infrequently related to the diagnoses in the MDC but are still occasionally performed on patients in the MDC with these diagnoses. Therefore, assignment to these surgical classes should only occur if no other surgical class more closely related to the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average charges for two surgical classes is very small. We have found that small differences generally do not warrant reordering of the hierarchy because, as a result of reassigning cases on the basis of the hierarchy change, the average charges are likely to shift such that the higher-ordered surgical class has a lower average charge than the class ordered below it.
Based on the preliminary recalibration of the DRGs, we are proposing modifications of the surgical hierarchy as set forth below.
At this time, we are proposing to revise the surgical hierarchy for the pre-MDC DRGs, MDC 1 (Diseases and Disorders of the Nervous System), MDC 5 (Diseases and Disorders of the Circulatory System), MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue), and MDC 17 (Myeloproliferative Disease and Disorders, Poorly Differentiated Neoplasms for Lymphoma and Leukemia) as follows:
• In the pre-MDC DRGs, we are proposing to reorder DRG 513 (Pancreas Transplant) above DRG 512 (Simultaneous Pancreas/Kidney Transplant).
• In MDC 1, we are proposing to reorder DRG 3 (Craniotomy Age 0-17) above DRG 528 (Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage); DRG 528 above DRGs 1 and 2 (Craniotomy Age >17 With and Without CC, respectively); DRGs 1 and 2 above DRGs 529 and 530 (Ventricular Shunt Procedures With and Without CC, respectively); DRGs 529 and 530 above DRGs 531 and 532 (Spinal Procedures With and Without CC, respectively); DRGs 531 and 532 above DRGs 533 and 534 (Extracranial Procedures With and Without CC, respectively); and DRGs 533 and 534 above DRG 6 (Carpal Tunnel Release).
• In MDC 5, we are proposing to reorder DRG 535 (Cardiac Defibrillator Implant With Cardiac Catheterization With AMI, Heart Failure, or Shock) above DRG 536 (Cardiac Defibrillator Implant With Cardiac Catheterization Without AMI, Heart Failure, or Shock), and DRG 536 above DRG 515 (Cardiac Defibrillator Implant Without Cardiac Catheterization).
• In MDC 8, we are proposing to reorder DRGs 537 and 538 (Local Excision and Removal of Internal Fixation Devices Except Hip and Femur With and Without CC, respectively) above DRG 230 (Local Excision and Removal of Internal Fixation Devices of Hip and Femur).
• In MDC 17, we are proposing to reorder DRGs 539 and 540 (Lymphoma and Leukemia With Major O.R. Procedure With and Without CC, respectively) above DRGs 401 and 402 (Lymphoma and Non-Acute Leukemia With Other O.R. Procedures With and Without CC, respectively).
In the September 1, 1987 final notice (52 FR 33143) concerning changes to the DRG classification system, we modified the GROUPER logic so that certain diagnoses included on the standard list of CCs would not be considered valid CCs in combination with a particular principal diagnosis. Thus, we created the CC Exclusions List. We made these changes for the following reasons: (1) To preclude coding of CCs for closely related conditions; (2) to preclude duplicative coding or inconsistent coding from being treated as CCs; and (3) to ensure that cases are appropriately classified between the complicated and uncomplicated DRGs in a pair. We developed this standard list of diagnoses, using physician panels, to include those diagnoses that, when present as a secondary condition, would be considered a substantial complication or comorbidity. In previous years, we have made changes to the standard list of CCs, either by adding new CCs or deleting CCs already on the list. At this time, we are not proposing to delete any of the diagnosis codes on the CC list.
In the May 19, 1987 proposed notice (52 FR 18877) concerning changes to the DRG classification system, we explained that the excluded secondary diagnoses were established using the following five principles:
• Chronic and acute manifestations of the same condition should not be considered CCs for one another (as subsequently corrected in the September 1, 1987 final notice (52 FR 33154)).
• Specific and nonspecific (that is, not otherwise specified (NOS)) diagnosis codes for the same condition should not be considered CCs for one another.
• Codes for the same condition that cannot coexist, such as partial/total, unilateral/bilateral, obstructed/unobstructed, and benign/malignant, should not be considered CCs for one another.
• Codes for the same condition in anatomically proximal sites should not be considered CCs for one another.
• Closely related conditions should not be considered CCs for one another.
The creation of the CC Exclusions List was a major project involving hundreds of codes. The FY 1988 revisions were intended only as a first step toward refinement of the CC list in that the criteria used for eliminating certain diagnoses from consideration as CCs were intended to identify only the most obvious diagnoses that should not be considered CCs of another diagnosis. For that reason, and in light of comments and questions on the CC list, we have continued to review the remaining CCs to identify additional exclusions and to remove diagnoses from the master list that have been shown not to meet the definition of a CC. (See the September 30, 1988 final rule (53 FR 38485) for the revision made for the discharges occurring in FY 1989; the September 1, 1989 final rule (54 FR
We are proposing a limited revision of the CC Exclusions List to take into account the proposed changes that will be made in the ICD-9-CM diagnosis coding system effective October 1, 2003. (See section II.B.13. of this preamble for a discussion of ICD-9-CM changes.) These proposed changes are being made in accordance with the principles established when we created the CC Exclusions List in 1987.
Tables 6G and 6H in the Addendum to this proposed rule contain the revisions to the CC Exclusions List that would be effective for discharges occurring on or after October 1, 2003. Each table shows the principal diagnoses with changes to the excluded CCs. Each of these principal diagnoses is shown with an asterisk, and the additions or deletions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis.
CCs that are added to the list are in Table 6G—Additions to the CC Exclusions List. Beginning with discharges on or after October 1, 2003, the indented diagnoses would not be recognized by the GROUPER as valid CCs for the asterisked principal diagnosis.
CCs that are deleted from the list are in Table 6H—Deletions from the CC Exclusions List. Beginning with discharges on or after October 1, 2003, the indented diagnoses would be recognized by the GROUPER as valid CCs for the asterisked principal diagnosis.
Copies of the original CC Exclusions List applicable to FY 1988 can be obtained from the National Technical Information Service (NTIS) of the Department of Commerce. It is available in hard copy for $133.00 plus shipping and handling. A request for the FY 1988 CC Exclusions List (which should include the identification accession number (PB) 88-133970) should be made to the following address: National Technical Information Service, United States Department of Commerce, 5285 Port Royal Road, Springfield, VA 2216l; or by calling (800) 553-6847.
Users should be aware of the fact that all revisions to the CC Exclusions List (FYs 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2002, and 2003) and those in Tables 6G and 6H of the final rule for FY 2004 must be incorporated into the list purchased from NTIS in order to obtain the CC Exclusions List applicable for discharges occurring on or after October 1, 2003. (Note: There was no CC Exclusions List in FY 2001 because we did not make changes to the ICD-9-CM codes for FY 2001.)
Alternatively, the complete documentation of the GROUPER logic, including the current CC Exclusions List, is available from 3M/Health Information Systems (HIS), which, under contract with CMS, is responsible for updating and maintaining the GROUPER program. The current DRG Definitions Manual, Version 20.0, is available for $225.00, which includes $15.00 for shipping and handling. Version 21.0 of this manual, which includes the final FY 2003 DRG changes, is available for $225.00. These manuals may be obtained by writing 3M/HIS at the following address: 100 Barnes Road, Wallingford, CT 06492; or by calling (203) 949-0303. Please specify the revision or revisions requested.
Each year, we review cases assigned to DRG 468 (Extensive O.R. Procedure Unrelated to Principal Diagnosis), DRG 476 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis), and DRG 477 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis) to determine whether it would be appropriate to change the procedures assigned among these DRGs.
DRGs 468, 476, and 477 are reserved for those cases in which none of the O.R. procedures performed are related to the principal diagnosis. These DRGs are intended to capture atypical cases, that is, those cases not occurring with sufficient frequency to represent a distinct, recognizable clinical group. DRG 476 is assigned to those discharges in which one or more of the following prostatic procedures are performed and are unrelated to the principal diagnosis:
• 60.0, Incision of prostate
• 60.12, Open biopsy of prostate
• 60.15, Biopsy of periprostatic tissue
• 60.18, Other diagnostic procedures on prostate and periprostatic tissue
• 60.21, Transurethral prostatectomy
• 60.29, Other transurethral prostatectomy
• 60.61, Local excision of lesion of prostate
• 60.69, Prostatectomy, not elsewhere classified
• 60.81, Incision of periprostatic tissue
• 60.82, Excision of periprostatic tissue
• 60.93, Repair of prostate
• 60.94, Control of (postoperative) hemorrhage of prostate
• 60.95, Transurethral balloon dilation of the prostatic urethra
• 60.99, Other operations on prostate
All remaining O.R. procedures are assigned to DRGs 468 and 477, with DRG 477 assigned to those discharges in which the only procedures performed are nonextensive procedures that are unrelated to the principal diagnosis. The original list of the ICD-9-CM procedure codes for the procedures we consider nonextensive procedures, if performed with an unrelated principal diagnosis, was published in Table 6C in section IV. of the Addendum to the September 30, 1988 final rule (53 FR 38591). As part of the final rules published on September 4, 1990 (55 FR 36135), August 30, 1991 (56 FR 43212), September 1, 1992 (57 FR 23625), September 1, 1993 (58 FR 46279), September 1, 1994 (59 FR 45336), September 1, 1995 (60 FR 45783), August 30, 1996 (61 FR 46173), and August 29, 1997 (62 FR 45981), we moved several other procedures from DRG 468 to 477, and some procedures from DRG 477 to 468. No procedures were moved in FY 1999, as noted in the July 31, 1998 final rule (63 FR 40962); in FY 2000, as noted in the July 30, 1999 final rule (64 FR 41496); in FY 2001, as noted in the August 1, 2000 final rule (65 FR 47064); or in FY 2002, as noted in the August 1, 2001 final rule (66 FR 39852).
In the August 1, 2002 final rule (67 FR 49999), we did not move any procedures from DRG 477. However, we did move procedures codes from DRG 468 and placed them in more clinically coherent DRGs.
a. Moving Procedure Codes from DRG 468 or DRG 477 to MDCs. We annually conduct a review of procedures
We identify those procedures occurring in conjunction with certain principal diagnoses with sufficient frequency to justify adding them to one of the surgical DRGs for the MDC in which the diagnosis falls. Based on this year's review, we did not identify any necessary changes in procedures under DRG 477. Therefore, we are not proposing to move any procedures from DRG 477 to one of the surgical DRGs.
However, we have identified a necessary proposed change under DRG 468 relating to code 50.29 (Other destruction of lesion of liver). We were contacted by a hospital about the fact that code 50.29 is not currently included in MDC 6 (Diseases and Disorders of the Digestive System). The hospital pointed out that it is not uncommon for patients to have procedures performed on the liver when they are admitted for a condition that is classified in MDC 6. For example, DRGs 170 and 171 (Other Digestive System O.R. Procedures With and Without CC, respectively) in MDC 6 currently include liver procedures such as biopsy of the liver. The hospital disagreed with the assignment of code 50.29 to DRG 468 when performed on a patient with a principal diagnosis in MDC 6. We believe that the commenter is correct and are proposing to assign code 50.29 to DRGs 170 and 171 in MDC 6.
b. Reassignment of Procedures among DRGs 468, 476, and 477. We also annually review the list of ICD-9-CM procedures that, when in combination with their principal diagnosis code, result in assignment to DRGs 468, 476, and 477, to ascertain if any of those procedures should be reassigned from one of these DRGs to another of these DRGs based on average charges and length of stay. We look at the data for trends such as shifts in treatment practice or reporting practice that would make the resulting DRG assignment illogical. If we find these shifts, we would propose moving cases to keep the DRGs clinically similar or to provide payment for the cases in a similar manner. Generally, we move only those procedures for which we have an adequate number of discharges to analyze the data. Based on our review this year, we are not proposing to move any procedures from DRG 468 to DRGs 476 or 477, from DRG 476 to DRGs 468 or 477, or from DRG 477 to DRGs 468 or 476.
c. Adding Diagnosis or Procedure Codes to MDCs. Based on our review this year, we are not proposing to add any diagnosis codes to MDCs.
However, we have identified several procedures that we propose to move from DRG 468 and add to DRGs 476 and 477 because the procedures are nonextensive:
• 38.21, Biopsy of blood vessel
• 77.42, Biopsy of scapula, clavicle and thorax [ribs and sternum]
• 77.43, Biopsy of radius and ulna
• 77.44, Biopsy of carpals and metacarpals
• 77.45, Biopsy of femur
• 77.46, Biopsy of patella
• 77.47, Biopsy of tibia and fibula
• 77.48, Biopsy of tarsals and metatarsals
• 77.49, Biopsy of other bones
• 92.27, Implantation or insertion of radioactive elements
As described in section II.B.1. of this preamble, the ICD-9-CM is a coding system that is used for the reporting of diagnoses and procedures performed on a patient. In September 1985, the ICD-9-CM Coordination and Maintenance Committee was formed. This is a Federal interdepartmental committee, co-chaired by the National Center for Health Statistics (NCHS) and CMS, charged with maintaining and updating the ICD-9-CM system. The Committee is jointly responsible for approving coding changes, and developing errata, addenda, and other modifications to the ICD-9-CM to reflect newly developed procedures and technologies and newly identified diseases. The Committee is also responsible for promoting the use of Federal and non-Federal educational programs and other communication techniques with a view toward standardizing coding applications and upgrading the quality of the classification system.
The ICD-9-CM Manual contains the list of valid diagnosis and procedure codes. (The ICD-9-CM Manual is available from the Government Printing Office on CD-ROM for $23.00 by calling (202) 512-1800.) The NCHS has lead responsibility for the ICD-9-CM diagnosis codes included in the
The Committee encourages participation in the above process by health-related organizations. In this regard, the Committee holds public meetings for discussion of educational issues and proposed coding changes. These meetings provide an opportunity for representatives of recognized organizations in the coding field, such as the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), and various physician specialty groups as well as physicians, medical record administrators, health information management professionals, and other members of the public, to contribute ideas on coding matters. After considering the opinions expressed at the public meetings and in writing, the Committee formulates recommendations, which then must be approved by the agencies.
The Committee presented proposals for coding changes for implementation in FY 2004 at a public meeting held on December 6, 2002, and finalized the coding changes after consideration of comments received at the meetings and in writing by January 10, 2003. Those coding changes are announced later in this section of the preamble. Copies of the Committee procedure minutes of the 2002 meetings can be obtained from the CMS home page at:
The first of the 2003 public meetings was held on April 3, 2003. In the September 7, 2001 final rule implementing the IPPS new technology add-on payments (66 FR 46906), we indicated we would attempt to include all proposals discussed and approved at the April meeting as part of the code revisions effective the following October. Because this proposed rule is being published after the April meeting, we are able to include all new codes that were approved subsequent to that meeting in Table 6F of the Addendum to this proposed rule, including the DRG assignments.
For a report of procedure topics discussed at the April 2003 meeting, see the Summary Report at:
We encourage commenters to address suggestions on coding issues involving diagnosis codes to: Donna Pickett, Co-Chairperson; ICD-9-CM Coordination and Maintenance Committee; NCHS; Room 2404, 3311 Toledo Road, Hyattsville, MD 20782. Comments may be sent by E-mail to:
Questions and comments concerning the procedure codes should be addressed to: Patricia E. Brooks, Co-Chairperson; ICD-9-CM Coordination and Maintenance Committee; CMS, Center for Medicare Mangement, Hospital and Ambulatory Policy Group, Division of Acute Care; C4-08-06; 7500 Security Boulevard; Baltimore, MD 21244-1850. Comments may be sent by E-mail to:
The ICD-9-CM code changes that have been approved will become effective October 1, 2003. The new ICD-9-CM codes are listed, along with their DRG classifications, in Tables 6A and 6B (New Diagnosis Codes and New Procedure Codes, respectively) in the Addendum to this proposed rule. As we stated above, the code numbers and their titles were presented for public comment at the ICD-9-CM Coordination and Maintenance Committee meetings. Both oral and written comments were considered before the codes were approved. In this proposed rule, we are only soliciting comments on the proposed DRG classification of these new codes.
For codes that have been replaced by new or expanded codes, the corresponding new or expanded diagnosis codes are included in Table 6A. New procedure codes are shown in Table 6B. Diagnosis codes that have been replaced by expanded codes or other codes or have been deleted are in Table 6C (Invalid Diagnosis Codes). These invalid diagnosis codes will not be recognized by the GROUPER beginning with discharges occurring on or after October 1, 2003. Table 6D contains invalid procedure codes. Revisions to diagnosis code titles are in Table 6E (Revised Diagnosis Code Titles), which also includes the DRG assignments for these revised codes. Table 6F includes a revised procedure code title for FY 2003.
The Department of Health and Human Services has been actively working on the development of new coding systems to replace the ICD-9-CM. For example, the ICD-10-CM (for diagnoses) and the ICD-10-PCS (for procedures) were developed to replace ICD-9-CM. These efforts have become increasingly important because of the many problems with the ICD-9-CM, which was implemented 24 years ago.
Implementing ICD-10-PCS as a national standard was discussed at the December 6, 2002, ICD-9-CM Coordination and Maintenance Committee meeting. A complete report of the meeting, including examples of letters supporting and opposing ICD-10-PCS, can be found at the CMS web site:
In addition to the specific topics discussed in section II.B.1. through 13. of this proposed rule, we considered a number of other DRG-related issues. Below is a summary of the issues that were addressed.
a. Cochlear Implants. Cochlear implants were first covered by Medicare in 1986 and were assigned to DRG 49 (Major Head and Neck Procedures) in MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth, and Throat). This is the highest weighted surgical DRG in MDC 3. However, commenters have contended that this DRG is clinically and economically inappropriate and have requested a specific DRG for cochlear implants. The commenters contend that, like heart assist systems (we created a new DRG last year, DRG 525 (Heart Assist System Implant) in MDC 5), cochlear implants are low incidence procedures with disproportionately high costs compared to other procedures within DRG 49.
As we stated in the FY 2003 final rule in our discussion regarding the creation of DRG 525 (67 FR 49989), we found 185 heart assist system cases in DRG 104 (Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization) and 90 cases in DRG 105 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization). The average charges for these cases were approximately $36,000 and $85,000, higher than the average charges for cases in DRGS 104 and 105, respectively, but they represented only a small fraction of all cases in these DRGs (1.3 percent and 0.5 percent, respectively). Therefore, despite the drastically higher average charges for heart assist systems, the relative volume was insufficient to affect the DRG weight to any great degree.
In our analysis of the FY 2002 MedPAR file, we found 134 cochlear implant cases out of 1,637 cases assigned to DRG 49, which represent more than 8 percent of the total cases in DRG 49. Compared to the situation with the heart assist system implant cases in DRGs 104 and 105, cochlear implants do have a greater effect on the relative weight for DRG 49. Also, while average charges for cochlear implant cases are significantly more than other cases in DRG 49 (average charges for cochlear implant cases were $51,549 compared to $25,052 for noncochlear implant cases), this difference is much less than the $36,000 and $85,000 differences for heart assist systems cited above.
Although we are concerned about the disparity between the average costs and payments for cochlear implant patients, we also have concerns about establishing a separate DRG for these cases. Doing so could create an incentive for some of these procedures to be shifted from outpatient settings, where most are currently performed. Even among current cochlear implant cases, our analysis found the average length of stay for Medicare patients receiving this procedure in the inpatient setting was just over 1 day, indicating minimal inpatient care is necessary for these cases. It is unclear whether a shift toward more inpatient stays would be appropriate.
We also are concerned whether the volume of cochlear implant cases across all hospitals performing this procedure warrants establishing a new DRG. The DRG relative weights reflect an average cost per case, with the costs of some procedures above the DRG mean costs and some below the mean. It is expected that hospitals will offset losses for certain procedures with payment gains for other procedures, while responding to incentives to maintain efficient operations. An excessive proliferation of new DRGs for specific technologies would fundamentally alter this averaging concept.
Accordingly, for the reasons cited above, we are not proposing to change the DRG assignment of cochlear implants at this time. However, we encourage public comments as to whether a new DRG for cochlear implants (or some other solution) is warranted.
b. Burn Patients on Mechanical Ventilation. Concerns have been raised by hospitals treating burn patients that the current DRG payment for burn patients on mechanical ventilation is not adequate. The DRG assignment for these cases depends on whether the hospital performed the tracheostomy, or the tracheostomy was performed prior to transfer to the hospital. If the hospital does not actually perform the tracheostomy, the case is assigned to
In the August 1, 2002 final rule, we modified DRGs 482 and 483 to recognize code 96.72 (Continuous mechanical ventilation for 96 consecutive hours or more) for the first time in the DRG assignment (67 FR 49996). We noted that many patients assigned to DRG 483 did not have code 96.72 recorded. We believed this was due, in part, to the limited number of procedure codes (six) that can be submitted on the current billing form, and the fact that code 96.72 did not affect the DRG assignment (prior to FY 2003). We stated that we would give future consideration to further modifying DRGs 482 and 483 based on the presence of code 96.72. We anticipate that cases of patients receiving 96 or more hours of continuous mechanical ventilation are more expensive than other tracheostomy patients. Once code 96.72 is reported more frequently, we will be better able to assess the need for future revisions to DRGs 482 and 483.
To assess the payment for burn patients on mechanical ventilation when the hospital did not perform the tracheostomy, we analyzed data on cases reporting both code 96.72 and diagnosis code V44.0 (Tracheostomy status). We had hoped that these cases would show patients on long-term ventilation who were admitted to the hospital with a tracheostomy in place. Our data did not include any cases reported in any of the burn DRGs with codes 96.72 and V44.0. We then analyzed data on the frequency of cases reporting code 96.72 along with diagnosis code V46.1 (Respirator dependence). We found only 5 of these cases in the burn DRGs. With so few cases reporting code 96.72, it is difficult for us to determine the effect of long-term ventilation on reimbursement for burn cases.
All hospitals, including those that treat burn patients, are encouraged to increase the reporting of code 96.72 for patients who are on continuous mechanical ventilation for 96 or more hours. With better data, we would be able to determine how best to make any future DRG modification for all patients on long-term mechanical ventilation.
c. Multiple Level Spinal Fusion. We received a comment recommending the establishment of new DRGs that would differentiate between the number of levels of vertebrae involved in a spinal fusion procedure. The commenter noted that the ICD-9-CM Coordination and Maintenance Committee discussed adding a new series of codes to identify multiple levels of spinal fusions at its December 6, 2002 meeting.
The following codes were approved by the Committee, effective for October 1, 2003, and are listed in Table 6B in the Addendum to this proposed rule:
• 81.62, Fusion or refusion of 2-3 vertebrae
• 81.63, Fusion or refusion of 4-8 vertebrae
• 81.64, Fusion or refusion of 9 or more vertebrae
The commenter conducted an analysis to support redefining the spinal fusion DRGs using these new ICD-9-CM codes. Using the CMS FY 2001 Standard Analytical File data for physicians and hospitals as the basis for its analysis, the commenter linked a 5-percent sample of hospital spinal fusion cases with the corresponding physician claims. Because there were no ICD-9-CM codes to identify multiple level fusions in 2001, multiple level fusions were identified using Current Procedural Terminology (CPT) codes on the physician claims.
The analysis found that increasing the levels fused from 1 to 2 levels to 3 or more levels increased the mean standardized charges by 38 percent for lumbar/thoracic fusions, and by 47 percent for cervical fusions. The commenter then recommended redefining the spinal fusion DRGs to differentiate between 1 to 2 level spinal fusions and multilevel spinal fusions.
The following current spinal fusion DRGs separate cases based on whether or not a CC is present: DRG 497 (Spinal Fusion Except Cervical With CC) and DRG 498 (Spinal Fusion Except Cervical Without CC); and DRG 519 (Cervical Spinal Fusion With CC) and DRG 520 (Cervical Spinal Fusion Without CC). The difference in charges associated with the current CC-split is only slightly greater than the difference attributable to the number of levels fused as found by the commenter's analysis. Therefore, at this time, we are not proposing to redefine these DRGs to differentiate on the basis of the number of levels fused.
We note that adopting the commenter's recommendation would necessitate adjusting the DRG relative weights using non-MedPAR data, because Medicare claims data with the new ICD-9-CM codes will not be available until the FY 2003 MedPAR file. Although we considered this possibility, we believe the more prudent course, given that the current DRG structure actually appears to differentiate appropriately among these cases, is to wait until sufficient data with the new multilevel spinal fusion codes are available before making a final determination on whether multilevel spinal fusions should be incorporated into the DRG structure.
d. Heart Assist System Implant. During the comment period for the FY 2003 IPPS proposed rule on which the FY 2003 IPPS final rule was based, we received a suggestion that we develop a new heart transplant DRG entitled “Heart Transplant with Left Ventricular Assist Device (LVAD).” The commenter stated that, because a great number of LVAD cases remain inpatients until heart transplant occurs, there is a disparity in costs between heart transplant patients who receive LVADs during the stay and those who do not. Cases in which heart transplantation occurs during the hospitalization are assigned to DRG 103 (Heart Transplant). Therefore, the costs of LVAD cases are included in the DRG relative weight for DRG 103. However, we noted that we would continue to monitor these types of cases.
When we reviewed the FY 2002 MedPAR data, we identified only 21 cases in DRG 103 that listed a procedure code that would indicate the use of an LVAD. We do not believe this is a sufficient number of cases to support creation of an additional DRG. Therefore, we are not proposing a change to the structure of either DRG 103 or DRG 525 at this time.
e.
In the absence of MedPAR data reflecting the use of drug-eluting stents, it was necessary to undertake several calculations to establish the FY 2003 DRG relative weights for these two new DRGs. First, based on prices where drug-eluting stents are currently being used and the average price of currently available stents, we calculated a price differential of approximately $1,200. Assuming average hospital charge markups for this technology (based on weighted average cost-to-charge ratios), the anticipated charge differential
In order to determine accurately the DRG relative weights for these two new DRGs relative to all other DRGs, we also must estimate the volume of cases likely to occur. We used the manufacturer's estimate that as many as 43 percent of current stent patients will receive drug-eluting stents during FY 2003 to calculate the FY 2003 DRG relative weights, although we prorated this percentage since the new DRGs did not become active until April 1, 2003. Even though the DRG will become active on April 1, 2003, we expect that hospitals did not use this technology before FDA approval. (We intend to identify and review any cases with the code 36.07 that occurred prior to FDA approval.) Therefore, no payments are expected to have been made under these DRGs for cases occurring before FDA approval.
In determining the FY 2004 proposed DRG relative weights for DRGs 526 and 527, we assumed that 43 percent of coronary stent cases (those with code 36.06 (Insertion of nondrug-eluting coronary artery stent)) from DRGs 516 and 517 would be reassigned to new DRGs 526 and 527 (with code 36.07), and the charges of these cases would be increased $3,996 per case, to approximate the higher charges associated with the drug-eluting stents in DRGs 526 and 527. The relative weights for DRGs 516 and 517 are calculated based on the charges of the cases estimated to remain in these two DRGs.
We are proposing to maintain DRGs 526 and 527 for FY 2004, and to adopt the same methodology to establish the relative weights as we used for FY 2003. The FDA issued a decision on April 24, 2003 approving drug-eluting stents. For the final rule, we will use the best available data at that time to establish the FY 2004 relative weights for DRGs 526 and 527.
f.
We have received a request that we review these DRG assignments. According to the requester, the artificial anal sphincter procedures are expensive and the payment does not adequately cover a hospital's costs in the most likely occurring DRGs 157 and 158. The requester submitted data showing cases involving artificial anal sphincters with average charges of $44,000, and suggested that we assign codes 49.75 and 49.76 in MDC 6 to DRG 170 (Other Digestive System O.R. Procedures With CC) and DRG 171) (Other Digestive System O.R. Procedures Without CC) because DRG 170 and DRG 171 are higher weighted than DRGs 157 and 158.
At this time, we are not proposing to assign these cases to DRGs 170 and 171. Although we recognize the data submitted by the commenter appear to show this procedure is associated with above average costs in the DRGs to which these cases are assigned, we believe the current assignment is the most clinically appropriate at this time. As noted above, the procedure codes to identify the implantation, revision, or removal of these devices were effective beginning on October 1, 2002. Therefore, we propose to monitor the costs of these cases using actual Medicare cases with these codes included from the FY 2003 MedPAR that will be used for the FY 2004 DRG relative weights.
We are proposing to use the same basic methodology for the FY 2004 recalibration as we did for FY 2003 (August 1, 2002 IPPS final rule (67 FR 50008). That is, we are proposing to recalibrate the DRG weights based on charge data for Medicare discharges using the most current charge information available (the FY 2002 MedPAR file).
The MedPAR file is based on fully coded diagnostic and procedure data for all Medicare inpatient hospital bills. FY 2002 MedPAR data include discharges occurring between October 1, 2001 and September 30, 2002, based on bills received by CMS through December 31, 2002, from all hospitals subject to the IPPS and short-term acute care hospitals in Maryland (which is under a waiver from the IPPS under section 1814(b)(3) of the Act). The FY 2002 MedPAR file includes data for approximately 11,404,829 Medicare discharges. Discharges for Medicare beneficiaries enrolled in a Medicare+Choice managed care plan are excluded from this analysis. The data include hospitals that subsequently became CAHs, although no data are included for hospitals after the point they are certified as CAHs.
The proposed methodology used to calculate the DRG relative weights from the FY 2002 MedPAR file is as follows:
• To the extent possible, all the claims were regrouped using the DRG classification revisions discussed in section II.B. of this preamble.
• Charges were standardized to remove the effects of differences in area wage levels, indirect medical education and disproportionate share payments, and, for hospitals in Alaska and Hawaii, the applicable cost-of-living adjustment.
• The average standardized charge per DRG was calculated by summing the standardized charges for all cases in the DRG and dividing that amount by the number of cases classified in the DRG. A transfer case is counted as a fraction of a case based on the ratio of its transfer payment under the per diem payment methodology to the full DRG payment for nontransfer cases. That is, transfer cases paid under the transfer methodology equal to half of what the case would receive as a nontransfer would be counted as 0.5 of a total case.
• Statistical outliers were eliminated by removing all cases that are beyond 3.0 standard deviations from the mean of the log distribution of both the charges per case and the charges per day for each DRG.
• The average charge for each DRG was then recomputed (excluding the statistical outliers) and divided by the national average standardized charge per case to determine the relative weight.
• The transplant cases that were used to establish the relative weight for heart and heart-lung, liver, and lung transplants (DRGs 103, 480, and 495) were limited to those Medicare-approved transplant centers that have cases in the FY 2000 MedPAR file. (Medicare coverage for heart, heart-lung, liver, and lung transplants is limited to
• Organ acquisition costs for kidney, heart, heart-lung, liver, lung, pancreas, and intestinal (or multivisceral organs) transplants continue to be paid on a reasonable cost basis. Because these acquisition costs are paid separately from the prospective payment rate, it is necessary to subtract the acquisition charges from the total charges on each transplant bill that showed acquisition charges before computing the average charge for the DRG and before eliminating statistical outliers.
When we recalibrated the DRG weights for previous years, we set a threshold of 10 cases as the minimum number of cases required to compute a reasonable weight. We used that same case threshold in recalibrating the proposed DRG weights for FY 2004. Using the FY 2002 MedPAR data set, there are 42 DRGs that contain fewer than 10 cases. We computed the weights for these low-volume DRGs by adjusting the proposed FY 2003 weights of these DRGs by the percentage change in the average weight of the cases in the other DRGs.
The proposed new weights are normalized by an adjustment factor (1.45510) so that the average case weight after recalibration is equal to the average case weight before recalibration. This adjustment is intended to ensure that recalibration by itself neither increases nor decreases total payments under the IPPS.
As noted below in section IV.A.2., we are proposing to expand the transfer policy applicable to postacute care transfers from 10 DRGs currently to an additional 19 DRGs, beginning in FY 2004. Because we count a transfer case as a fraction of a case as described above in the recalibration process, any expansion of the postacute care transfer policy to 19 additional DRGs would affect the proposed relative weights for those DRGs. Therefore, we calculated the proposed FY 2004 normalization factor comparing the case-mix using the proposed FY 2004 DRG relative weights in which we treated postacute care transfer cases in the 19 DRGs proposed to be added to the postacute transfer policy for FY 2004 as a fraction of a case with the case-mix using the FY 2003 DRG relative weights without treating cases in these 19 additional DRGs as transfer cases.
Section 1886(d)(4)(C)(iii) of the Act requires that, beginning with FY 1991, reclassification and recalibration changes be made in a manner that assures that the aggregate payments are neither greater than nor less than the aggregate payments that would have been made without the changes. Although normalization is intended to achieve this effect, equating the average case weight after recalibration to the average case weight before recalibration does not necessarily achieve budget neutrality with respect to aggregate payments to hospitals because payments to hospitals are affected by factors other than average case weight. Therefore, as we have done in past years and as discussed in section II.A.4.a. of the Addendum to this proposed rule, we are proposing to make a budget neutrality adjustment to ensure that the requirement of section 1886(d)(4)(C)(iii) of the Act is met.
In the March 7, 2003 LTCH PPS proposed rule (68 FR 11234), we proposed to change the LTCH PPS annual payment rate update cycle to be effective July 1 through June 30 instead of October 1 through September 30. In addition, since the patient classification system utilized under the LTCH PPS is based directly on the DRGs used under the IPPS for acute care hospitals, in that same proposed rule, we proposed that the annual update of the long-term care diagnosis-related group (LTC-DRG) classifications and relative weights would continue to remain linked to the annual reclassification and recalibration of the CMS-DRGs under the IPPS.
The annual update to the IPPS DRGs is based on the annual revisions to the ICD-9-CM codes and is effective each October 1. In the health care industry, annual changes to the ICD-9-CM codes are effective for discharges occurring on or after October 1 each year. The use of the ICD-9-CM coding system is also compliant with the requirements of the Health Insurance Portability and Accountability Act (HIPAA), Pub. L. 104-191, under 45 CFR Parts 160 and 162. Therefore, the manual and electronic versions of the GROUPER software, which are based on the ICD-9-CM codes, are also revised annually and effective for discharges occurring on or after October 1 each year. Because the LTC-DRGs are based on the patient classification system used under the IPPS (CMS-DRGs), which is updated annually and effective for discharges occurring on or after October 1 through September 30 each year, in the March 7, 2003 LTCH PPS proposed rule (68 FR 11234), we proposed to continue to update the LTC-DRG classifications and relative weights to be effective for discharges occurring on or after October 1 through September 30 each year.
As we explained in the March 7, 2003 LTCH PPS proposed rule (68 FR 11234), the FY 2004 DRGs and relative weights used under the IPPS had not yet been proposed, and we were unable to propose updated LTC-DRGs and relative weights at that time. Therefore, since the LTC-DRG classifications and relative weights would continue to be based on the annual updates to the IPPS DRGs, we proposed that proposed revisions to the LTC-DRG classifications and relative weights would be presented for public comment in the IPPS proposed rule and finalized in the IPPS final rule, to be effective October 1, 2003 through September 30, 2004.
For FY 2003, version 20.0 of the DRG GROUPER is being utilized under both the IPPS and the LTCH PPS. The LTC-DRG classifications and relative weights are shown in Table 3 of the Addendum to the August 30, 2002 for FY 2003 final rule (67 FR 56076-56084) and in Table 3 of the Addendum to the March 7, 2003 LTCH PPS proposed rule (68 FR 11285 through 11292). Below we discuss the proposed LTC-DRGs and relative weights for FY 2004 based on the proposed changes to the hospital IPPS DRGs (GROUPER version 21.0) discussed in section II. of this preamble.
a. Background. Section 123 of Pub. L. 106-113 specifically requires that the PPS for LTCHs be a per discharge system with a DRG-based patient classification system reflecting the differences in patient resources and costs in LTCHs while maintaining budget neutrality. Section 307(b)(1) of Pub. Law 106-554 modified the requirements of section 123 of Pub. L. 106-113 by specifically requiring that the Secretary examine “the feasibility and the impact of basing payment under such a system [the LTCH PPS] on the use of existing (or refined) hospital diagnosis-related groups (DRGs) that have been modified to account for different resource use of long-term care hospital patients as well as the use of the most recently available hospital discharge data.”
In accordance with section 307(b)(1) of Pub. L. 106-554 and § 412.515 of our existing regulations, the LTCH PPS uses information from LTCH patient records to classify patient cases into distinct LTC-DRGs based on clinical characteristics and expected resource needs. The LTC-DRGs used as the patient classification component of the LTCH PPS correspond to the DRGs
Under the LTCH PPS, we determine relative weights for each of the IPPS DRGs to account for the difference in resource use by patients exhibiting the case complexity and multiple medical problems characteristic of LTCHs. In a departure from the IPPS, as we discussed in the August 30, 2002 final rule (67 FR 55985), we use low volume LTC-DRGs (less than 25 LTCH cases) in determining the LTC-DRG weights, since LTCHs do not typically treat the full range of diagnoses as do acute care hospitals. In order to deal with the large number of low volume LTC-DRGs (DRGs with fewer than 25 cases), we group those low volume LTC-DRGs into 5 quintiles based on average charge per discharge. (A listing of the composition of low volume quintiles for the FY 2003 LTC-DRGs (based on FY 2001 MedPAR data) appears in the August 30, 2002 final rule at 67 FR 55986-55988). We also adjusted for cases in which the stay at the LTCH is five-sixths of the geometric average length of stay; that is, short-stay outlier cases (§ 412.529). (A detailed discussion of the application of the Lewin Group model that was used to develop the LTC-DRGs appears in the August 30, 2002 final rule at 67 FR 55978).
b. Patient Classifications into DRGs. Generally, under the LTCH PPS, Medicare payment is made at a predetermined specific rate for each discharge; that is, payment varies by the LTC-DRG to which a beneficiary's stay is assigned. Similar to case classification for acute care hospitals under the IPPS (
As discussed above in section II.B. of this preamble, the DRGs are organized into 25 Major Diagnostic Categories (MDCs), most of which are based on a particular organ system of the body; the remainder involve multiple organ systems (such as MDC 22, Burns). Accordingly, the principal diagnosis determines MDC assignment. Within most MDCs, cases are then divided into surgical DRGs and medical DRGs. Some surgical and medical DRGs are further differentiated based on the presence or absence of CCs. (
Because the assignment of a case to a particular LTC-DRG will help determine the amount that will be paid for the case, it is important that the coding is accurate. As is the case under the IPPS, classifications and terminology used in the LTCH PPS are consistent with the ICD-9-CM and the Uniform Hospital Discharge Data Set (UHDDS), as recommended to the Secretary by the National Committee on Vital and Health Statistics (“Uniform Hospital Discharge Data: Minimum Data Set, National Center for Health Statistics, April 1980”) and as revised in 1984 by the Health Information Policy Council (HIPC) of the U.S. Department of Health and Human Services. We wish to point out again that the ICD-9-CM coding terminology and the definitions of principal and other diagnoses of the UHDDS are consistent with the requirements of the Administrative Simplification Act of 1996 of the HIPAA (45 CFR Parts 160 and 162).
As we stated in the August 30, 2002 LTCH PPS final rule (67 FR 55981), the emphasis on the need for proper coding cannot be overstated. Inappropriate coding of cases can adversely affect the uniformity of cases in each LTC-DRG and produce inappropriate weighting factors at recalibration and result in inappropriate payments under the LTCH PPS. LTCHs are to follow the same coding guidelines used by the acute care hospitals to ensure accuracy and consistency in coding practices. There will be only one LTC-DRG assigned per long-term care hospitalization; it will be assigned at the discharge. Therefore, it is mandatory that the coders continue to report the same principal diagnosis on all claims and include all diagnostic codes that coexist at the time of admission, that are subsequently developed, or that affect the treatment received. Similarly, all procedures performed during that stay are to be reported on each claim. (For further information on the use of ICD-9-CM codes under the LTCH PPS, see the August 30, 2002 LTCH PPS final rule (67 FR 55979-55983).)
Upon the discharge of the patient from a LTCH, the LTCH must assign appropriate diagnosis and procedure codes from the ICD-9-CM. As of October 16, 2002, a LTCH that was required to comply with the HIPAA Administrative Simplification Standards and that had not obtained an extension in compliance with the Administrative Compliance Act (Pub. L. 107-105) is obligated to comply with the standards at 45 CFR 162.1002 and 45 CFR 162.1102. Completed claim forms are to be submitted to the LTCH's Medicare fiscal intermediary.
Medicare fiscal intermediaries enter the clinical and demographic information into their claims processing systems and subject this information to a series of automated screening processes called the Medicare Code Editor (MCE). These screens are designed to identify cases that require further review before assignment into a DRG can be made. (For more information on types of cases selected for further development, see the August 30, 2002 LTCH PPS final rule (67 FR 55979).)
After screening through the MCE, each LTCH claim will be classified into the appropriate LTC-DRG by the Medicare LTCH GROUPER. The LTCH GROUPER is specialized computer software based on the same GROUPER used under the IPPS. After the LTC-DRG is assigned, the Medicare fiscal intermediary determines the prospective payment by using the Medicare PRICER program, which accounts for LTCH hospital-specific adjustments. As provided for under the IPPS, we provide an opportunity for the LTCH to review the LTC-DRG assignments made by the fiscal intermediary and to submit additional information within a specified timeframe (§ 412.513(c)).
The GROUPER is used both to classify past cases in order to measure relative hospital resource consumption to establish the DRG weights and to classify current cases for purposes of determining payment. The records for all Medicare hospital inpatient discharges are maintained in the MedPAR file. The data in this file are used to evaluate possible DRG classification changes and to recalibrate the DRG weights during our annual update (as discussed in section II. of this preamble). The LTC-DRG weights are based on data for the population of LTCH discharges, reflecting the fact that LTCH patients represent a different patient mix than patients in short-term acute care hospitals.
a. General Overview of Development of the LTC-DRG Relative Weights. As we stated in the August 30, 2002 LTCH PPS final rule (67 FR 55984), one of the primary goals for the implementation of the LTCH IPPS is to pay each LTCH an appropriate amount for the efficient delivery of care to Medicare patients.
Under the LTCH PPS, relative weights for each LTC-DRG are a primary element used to account for the variations in cost per discharge and resource utilization among the payment groups (§ 412.515). To ensure that Medicare patients classified to each LTC-DRG have access to an appropriate level of services and to encourage efficiency, we calculate a relative weight for each LTC-DRG that represents the resources needed by an average inpatient LTCH case in that LTC-DRG. For example, cases in a LTC-DRG with a relative weight of 2 will, on average, cost twice as much as cases in a LTC-DRG with a weight of 1.
b. Data. To calculate the proposed LTC-DRG relative weights for FY 2004 in this proposed rule, we obtained total Medicare allowable charges from FY 2002 Medicare hospital bill data from the December 2002 update of the MedPAR file, and we used the proposed Version 21.0 of the CMS GROUPER used under the acute care hospital inpatient IPPS as discussed above in section II.B. of this preamble. Consistent with the methodology under the hospital IPPS, we are proposing to recalculate the FY 2004 LTC-DRG relative weights based on the best available data for the final rule.
As we discussed in further detail in the August 30, 2002 LTCH PPS final rule (67 FR 55984), based on comments regarding the data used in the development of the LTCH prospective payment system, we have excluded the data from LTCHs that are all-inclusive rate providers and LTCHs that are reimbursed in accordance with demonstration projects authorized under section 402(a) of Public Law 90-248 (42 U.S.C. 1395b-1) or section 222(a) of Public Law 92-603 (42 U.S.C. 1395b-1). Therefore, in the development of the proposed FY 2004 LTC-DRG relative weights we have excluded the data of the 22 all-inclusive rate providers and the 3 LTCHs that are paid in accordance with demonstration projects.
In addition, as we discussed in the August 30, 2002 LTCH PPS final rule (67 FR 55989), a data problem regarding the proposed FY 2003 LTC-DRG relative weight values that were determined using MedPAR (claims) data for FYs 2000 and 2001 was brought to our attention. Following notification of this problem, we researched the commenter's claims and determined that, given the long stays at LTCHs, some providers had submitted multiple bills for payment under the TEFRA reimbursement system for the same stay. Based upon our research, we became aware of the following situation: In certain LTCHs, hospital personnel apparently reported a different principal diagnosis on each bill since, under the TEFRA system, payment was not dependent upon principal diagnosis as it is under a DRG-based system. These claims from the MedPAR file were run through the LTCH GROUPER and used in determining the proposed FY 2003 relative weights for each LTC-DRG.
Since this issue was brought to our attention and we discovered that only data from the final bills were being extracted for the MedPAR file, it was possible that the original MedPAR file was not receiving the correct principal diagnosis. Therefore, in the August 30, 2002 final rule (67 FR 55989), we addressed the problem by identifying all LTCH cases in the FY 2001 MedPAR file for which multiple bills were submitted. For each of these cases, beginning with the first bill and moving forward consecutively through subsequent bills for that stay, we recorded the first unique diagnosis codes up to 10 and the first unique procedure codes up to 10. We then used these codes to appropriately group each LTCH case to a LTC-DRG for FY 2003.
As we noted above, we are proposing to use LTCH claims data from the FY 2002 MedPAR file for the determination of the proposed FY 2004 LTC-DRG relative weights. Since at the time (FY 2002) LTCHs were still reimbursed under the TEFRA reasonable cost-based system, some LTCHs also had submitted multiple bills for Medicare payment for the same stay. Thus, in certain LTCHs, hospital personnel were apparently still reporting a different principal diagnosis on each bill since, under the TEFRA system in FY 2002, payment was not dependent upon principal diagnosis as it is under a DRG-based system. Therefore, we are proposing to follow the same methodology outlined above to determine the appropriate diagnosis and procedure codes for those multiple bill LTCH cases in the FY 2002 MedPAR files, and we are proposing to use these codes to group each LTCH case to a proposed LTC-DRG for FY 2004. Since the LTCH PPS was implemented for cost reporting periods beginning on or after October 1, 2002 (FY 2003), we believe that this problem will be self-correcting as LTCHs submit more completely coded data in the future.
c. Hospital-Specific Relative Value Methodology. As we discussed in the August 30, 2002 LTCH PPS final rule (67 FR 55985), by nature LTCHs often specialize in certain areas, such as ventilator-dependent patients and rehabilitation and wound care. Some case types (DRGs) may be treated, to a large extent, in hospitals that have, from a perspective of charges, relatively high (or low) charges. Such nonarbitrary distribution of cases with relatively high (or low) charges in specific LTC-DRGs has the potential to inappropriately distort the measure of average charges. To account for the fact that cases may not be randomly distributed across LTCHs, as explained in that same final rule (67 FR 55985), we use a hospital-specific relative value method to calculate the proposed LTC-DRG relative weights instead of the methodology used to determine the proposed DRG relative weights under the hospital IPPS described above in section II.C. of this preamble. We believe this method will remove this hospital-specific source of bias in measuring LTCH average charges. Specifically, we reduce the impact of the variation in charges across providers on any particular LTC-DRG relative weight by converting each LTCH's charge for a case to a relative value based on that LTCH's average charge.
Under the hospital-specific relative value method, as we explained in the August 30, 2002 LTCH PPS final rule (67 FR 55985), we standardize charges for each LTCH by converting its charges for each case to hospital-specific relative charge values and then adjusting those values for the LTCH's case-mix. The adjustment for case-mix is needed to rescale the hospital-specific relative charge values (which, by definition, averages 1.0 for each LTCH). The average relative weight for a LTCH is its case-mix, so it is reasonable to scale each LTCH's average relative charge value by its case-mix. In this way, each LTCH's relative charge value is adjusted by its case-mix to an average that reflects the complexity of the cases it treats relative to the complexity of the cases treated by all other LTCHs (the average case-mix of all LTCHs).
In accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55985), we standardize charges for each case by first dividing the adjusted charge for the case (adjusted for short-stay outliers under § 412.529 as described in section II.D.4. (step 3) of this preamble) by the average adjusted charge for all cases at the LTCH in which the case was treated.
Multiplying by the LTCH's case-mix index accounts for the fact that the same relative charges are given greater weight in a LTCH with higher average costs than they would at a LTCH with low average costs which is needed to adjust each LTCH's relative charge value to reflect its case-mix relative to the average case-mix for all LTCHs. Because we standardize charges in this manner, we count charges for a Medicare patient at a LTCH with high average charges as less resource intensive than they would be at a LTCH with low average charges. For example, a $10,000 charge for a case in a LTCH with an average adjusted charge of $17,500 reflects a higher level of relative resource use than a $10,000 charge for a case in a LTCH with the same case-mix, but an average adjusted charge of $35,000. We believe that the adjusted charge of an individual case more accurately reflects actual resource use for an individual LTCH because the variation in charges due to systematic differences in the markup of charges among LTCHs is taken into account.
d. Low Volume LTC-DRGs. In order to account for LTC-DRGs with low volume (that is, with fewer than 25 LTCH cases), in accordance with the methodology we established in the August 30, 2002 LTCH PPS final rule (67 FR 55985), we group those low volume LTC-DRGs into one of five categories (quintiles) based on average charges, for the purposes of determining relative weights. For this proposed rule, using LTCH cases from the December 2002 update of the FY 2002 MedPAR file, we identified 163 proposed LTC-DRGs that contained between 1 and 24 cases. This list of proposed LTC-DRGs was then divided into one of the five proposed low volume quintiles, each containing a minimum of 32 proposed LTC-DRGs (163/5 = 32 with 3 proposed LTC-DRGs as the remainder). For FY 2004, we are proposing to make an assignment to a specific low volume quintile by sorting the 163 low volume proposed LTC-DRGs in ascending order by average charge. Since the number of proposed LTC-DRGs with less than 25 LTCH cases is not evenly divisible by five, the average charge of the low volume proposed LTC-DRG was used to determine which proposed low volume quintile received the additional proposed LTC-DRG. After sorting the 163 low volume proposed LTC-DRGs in ascending order, we are proposing that the first fifth (32) of low volume proposed LTC-DRGs with the lowest average charge would be grouped into Quintile 1. Since the average charge of the 33rd proposed LTC-DRG in the sorted list is closer to the previous proposed LTC-DRG's average charge (assigned to proposed Quintile 1) than to the average charge of the 34th proposed LTC-DRG on the sorted list (to be assigned to proposed Quintile 2), we are proposing to place it into proposed Quintile 1. The highest average charge cases would then be grouped into proposed Quintile 5. This process would be repeated through the remaining low volume proposed LTC-DRGs so that 3 proposed low volume quintiles would contain 33 proposed LTC-DRGs and 2 proposed low volume quintiles would contain 32 proposed LTC-DRGs.
In order to determine the proposed relative weights for the proposed LTC-DRGs with low volume for FY 2004, in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55985), we would use the five proposed low volume quintiles described above. The proposed composition of each of the five low volume quintiles shown below in Table 1 would be used in determining the proposed LTC-DRG relative weights for FY 2004. We would determine a proposed relative weight and (geometric) average length of stay for each of the five proposed low volume quintiles using the formula that we are proposing to apply to the regular proposed LTC-DRGs (25 or more cases), as described below in section II.D.4. of this preamble. We are proposing to assign the same proposed relative weight and average length of stay to each of the proposed LTC-DRGs that make up that proposed low volume quintile. We note that as this system is dynamic, it is possible that the number and specific type of LTC-DRGs with a low volume of LTCH cases will vary in the future. We use the best available claims data in the MedPAR file to identify low volume LTC-DRGs and to calculate the relative weights based on our methodology.
As we noted previously, the proposed FY 2004 LTC-DRG relative weights are determined in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55989-55991). In summary, LTCH cases must be grouped in the appropriate proposed LTC-DRG, while taking into account the low volume proposed LTC-DRGs as described above, before the proposed FY 2004 LTC-DRG relative weights can be determined. After grouping the cases in the appropriate proposed LTC-DRG, we are proposing to calculate the proposed relative weights for FY 2004 in this proposed rule by first removing statistical outliers and cases with a length of stay of 7 days or less. Next, we are proposing to adjust the number of cases in each proposed LTC-DRG for the effect of short-stay outlier cases under § 412.529. The short-stay adjusted discharges and corresponding charges would be used to calculate “relative adjusted weights” in each proposed LTC-DRG using the hospital-specific relative value method described above.
Below we discuss in detail the steps for calculating the proposed FY 2004 LTC-DRG relative weights, in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55989-55991).
We do not believe that it would be appropriate to compromise the integrity of the payment determination for those LTCH cases that actually benefit from and receive a full course of treatment at a LTCH, in order to include data from these very short-stays. Thus, in determining the proposed FY 2004 LTC-DRG relative weights, we remove LTCH cases with a length of stay of 7 days or less.
We make this adjustment by counting a short-stay outlier as a fraction of a discharge based on the ratio of the length of stay of the case to the average length of stay for the proposed LTC-DRG for nonshort-stay outlier cases. This has the effect of proportionately reducing the impact of the lower charges for the short-stay outlier cases in calculating the average charge for the proposed LTC-DRG. This process produces the same result as if the actual charges per discharge of a short-stay outlier case were adjusted to what they would have been had the patient's length of stay been equal to the average length of stay of the proposed LTC-DRG.
As we explained in the August 30, 2002 LTCH PPS final rule (67 FR 55990), counting short-stay outlier cases as full discharges with no adjustment in determining the proposed LTC-DRG relative weights would lower the proposed LTC-DRG relative weight for affected proposed LTC-DRGs because the relatively lower charges of the short-
For each proposed LTC-DRG, the proposed FY 2004 LTC-DRG relative weight is calculated by dividing the average of the adjusted hospital-specific relative charge values (from above) for the proposed LTC-DRG by the overall average hospital-specific relative charge value across all cases for all LTCHs. Using these recalculated proposed LTC-DRG relative weights, each LTCH's average proposed relative weight for all of its cases (case-mix) is calculated by dividing the sum of all the LTCH's proposed LTC-DRG relative weights by its total number of cases. The LTCHs' hospital-specific relative charge values above are multiplied by these hospital specific case-mix indexes. These hospital-specific case-mix adjusted relative charge values are then used to calculate a new set of proposed LTC-DRG relative weights across all LTCHs. In this proposed rule, this iterative process is continued until there is convergence between the weights produced at adjacent steps, for example, when the maximum difference is less than 0.0001.
For a case to be assigned to a proposed LTC-DRG with CCs, as we explained in the August 30, 2002 LTCH PPS final rule (67 FR 55990), more coded information is called for (that is, at least one relevant secondary diagnosis), than for a case to be assigned to a proposed LTC-DRG “without CCs” (which is based on only one principal diagnosis and no relevant secondary diagnoses). Currently, the LTCH claims data include both accurately coded cases without complications and cases that have complications (and cost more) but were not coded completely. Both types of cases are grouped to a proposed LTC-DRG “without CCs” since only one principal diagnosis was coded. Since LTCHs were previously paid under cost-based reimbursement, which is not based on patient diagnoses, LTCHs' coding for these cases may not have been as detailed as possible.
Thus, in developing the FY 2003 LTC-DRG relative weights for the LTCH PPS based on FY 2001 claims data, as we explained in the August 30, 2002 LTCH PPS final rule (67 FR 55990), we found on occasion that the data suggested that cases classified to the LTC-DRG “with CCs” of a “with CC”/“without CC” pair had a lower average charge than the corresponding LTC-DRG “without CCs.” Similarly, based on FY 2002 claims data, we also found on occasion that the data suggested that cases classified to the proposed LTC-DRG “with CCs” of a “with CC”/“without CC” pair would have a lower average charge than the corresponding proposed LTC-DRG “without CCs” for FY 2004.
We believe this anomaly may be due to coding that may not have fully reflected all comorbidities that were present. Specifically, LTCHs may have failed to code relevant secondary diagnoses, which resulted in cases that actually had CCs being classified into a “without CC” LTC-DRG. It would not be appropriate to pay a lower amount for the “with CC” LTC-DRG. Therefore, in this proposed rule, in accordance with the methodology established in that same final rule (67 FR 55990-55991), we grouped both the cases “with CCs” and “without CCs” together for the purpose of calculating the proposed FY 2004 LTC-DRG relative weights. We continue to employ this methodology to account for nonmonotonically increasing relative weights until we have adequate data to calculate appropriate separate weights for these anomalous LTC-DRG pairs. We expect that, as was the case when we first implemented the IPPS, this problem will be self-correcting, as LTCHs submit more completely coded data in the future.
As we discussed in the August 30, 2002 LTCH PPS final rule (67 FR 55990), there are three types of “with CC” and “without CC” pairs that were nonmonotonic, that is, where the “without CC” proposed LTC-DRG would have a higher average charge than the “with CC” proposed LTC-DRG. For this proposed rule, using the LTCH cases in the December 2002 update of the FY 2002 MedPAR file, we identified two of the types of nonmonotonic LTC-DRG pairs.
The first category of nonmonotonically increasing relative weights for proposed FY 2004 LTC-DRG pairs “with and without CCs” contains no pairs of proposed LTC-DRGs in which both the proposed LTC-DRG “with CCs” and the proposed LTC-DRG “without CCs” had 25 or more LTCH cases and, therefore, would not fall into one of the 5 proposed low volume quintiles. For that type of nonmonotonic LTC-DRG pair, in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55990-55991), we would combine the LTCH cases and compute a new proposed relative weight based on the case-weighted average of the combined LTCH cases of the proposed LTC-DRGs. The case-weighted average charge is determined by dividing the total charges for all LTCH cases by the total number of LTCH cases for the combined proposed LTC-DRG. This new proposed relative weight would then be assigned to both of the proposed LTC-DRGs in the pair. However, as there are no pairs that fall into this category, in this proposed rule, we are proposing that, for FY 2004, there would be zero proposed LTC-DRGs in this category.
The second category of nonmonotonically increasing relative weights for proposed LTC-DRG pairs with and without CCs consists of 5 pairs of proposed LTC-DRGs that has fewer than 25 cases, and each proposed LTC-DRG would be grouped to different proposed low volume quintiles in which the “without CC” proposed LTC-DRG would be in a higher-weighted proposed low volume quintile than the “with CC” proposed LTC-DRG. For those pairs, in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55990-55991), we combine the LTCH cases and determine the case-weighted average charge for all LTCH cases. The case-weighted average charge is determined by dividing the total charges for all LTCH cases by the total number of LTCH cases for the combined proposed LTC-DRG. Based on the case-weighted average LTCH charge, we determine which proposed low volume quintile the “combined proposed LTC-DRG” would be grouped. Both proposed LTC-DRGs in the pair are then grouped into the same proposed low volume quintile, and thus would have the same proposed relative weight. For the FY 2004, in this proposed rule, we are proposing that the following proposed LTC-DRGs would be in this category: Proposed LTC-DRGs 31 and 32 (proposed low volume quintile 3); proposed LTC-DRGs 193 and 194 (proposed low volume quintile 2); proposed LTC-DRGs 493 and 494 (proposed low volume quintile 4); proposed LTC-DRGs 497 and 498 (proposed low volume quintile 3); and proposed LTC-DRGs 506 and 507 (proposed low volume quintile 2).
The third category of nonmonotonically increasing relative weights for proposed LTC-DRG pairs with and without CCs consists of 5 pairs of proposed LTC-DRGs where one of the proposed LTC-DRGs has fewer than 25 LTCH cases and is grouped to a proposed low volume quintile and the other proposed LTC-DRG has 25 or more LTCH cases and has its own proposed LTC-DRG relative weight, and the proposed LTC-DRG “without CCs” has the higher proposed relative weight. In accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55990 and 55991), we remove the proposed low volume LTC-DRG from the proposed low volume quintile and combine it with the other proposed LTC-DRG for the computation of a new proposed relative weight for each of these proposed LTC-DRGs. This new proposed relative weight is assigned to both proposed LTC-DRGs, so they each have the same proposed relative weight. For FY 2004, in this proposed rule, we are proposing the following proposed LTC-DRGs would be in this category: Proposed LTC-DRGs 94 and 95; proposed LTC-DRGs 170 and 171; proposed LTC-DRGs 265 and 266; proposed LTC-DRGs 346 and 347; and proposed LTC-DRGs 478 and 479.
As there are currently no LTCH cases in these “no volume” proposed LTC-DRGs, in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55991), we determine proposed relative weights for the 164 proposed LTC-DRGs with no LTCH cases in the FY 2002 MedPAR file used in this proposed rule by grouping them to the appropriate proposed low volume quintile. This methodology is consistent with our methodology used in determining proposed relative weights to account for the proposed low volume LTC-DRGs described above.
As we described in the August 30, 2002 LTCH PPS final rule (67 FR 55991), our methodology for determining proposed relative weights for the “no volume” proposed LTC-DRGs is as follows: First, we crosswalk the no volume proposed LTC-DRGs by matching them to other similar proposed LTC-DRGs for which there were LTCH cases in the FY 2002 MedPAR file based on clinical similarity and intensity of use of resources as determined by care provided during the period of time surrounding surgery, surgical approach (if applicable), length of time of surgical procedure, post-operative care, and length of stay. We assign the proposed relative weight for the applicable proposed low volume quintile to the no volume proposed LTC-DRG if the proposed LTC-DRG to which it is crosswalked is grouped to one of the proposed low volume quintiles. If the proposed LTC-DRG to which the no volume proposed LTC-DRG is crosswalked is not one of the proposed LTC-DRGs to be grouped to one of the proposed low volume quintiles, we compare the proposed relative weight of the proposed LTC-DRG to which the no volume proposed LTC-DRG is crosswalked to the proposed relative weights of each of the five proposed quintiles and we assign the no volume proposed LTC-DRG the proposed relative weight of the proposed low volume quintile with the closest weight. For this proposed rule, a list of the no volume proposed FY 2004 LTC-DRGs and the proposed FY 2004 LTC-DRG to which it is crosswalked in order to determine the appropriate proposed low volume quintile for the assignment of a proposed relative weight for FY 2004 is shown below in Table 2.
To illustrate this methodology, which was established in the August 30, 2002 LTCH PPS final rule (67 FR 55991), for determining the proposed relative weights for the 164 proposed LTC-DRGs with no LTCH cases, we are providing the following examples, which refer to the no volume proposed LTC-DRGs crosswalk information for FY 2004 provided above in Table 2:
There were no cases in the FY 2002 MedPAR file used for this proposed rule for proposed LTC-DRG 163 (Hernia Procedures Age 0-17). Since the procedure is similar in resource use and the length and complexity of the procedures and the length of stay are similar, we determined that proposed LTC-DRG 178 (Uncomplicated Peptic Ulcer Without CC), which is assigned to proposed low volume quintile 1 for the purpose of determining the proposed FY 2004 relative weights, would display similar clinical and resource use. Therefore, we are proposing to assign the same proposed relative weight of LTC-DRG 178 of 0.5711 (proposed Quintile 1) for FY 2004 (Table 11 in the Addendum to this proposed rule) to proposed LTC-DRG 163.
There were no LTCH cases in the FY 2002 MedPAR file used in this proposed rule for proposed LTC-DRG 91 (Simple Pneumonia and Pleurisy Age 0-17). Since the severity of illness in patients with bronchitis and asthma is similar in patients regardless of age, we determined that proposed LTC-DRG 90 (Simple Pneumonia and Pleurisy Age >17 Without CC) would display similar clinical and resource use characteristics and have a similar length of stay to proposed LTC-DRG 91. There were over 25 cases in proposed LTC-DRG 90. Therefore, it would not be assigned to a proposed low volume quintile for the purpose of determining the proposed LTC-DRG relative weights. However, under our established methodology, proposed LTC-DRG 91, with no LTCH cases, would need to be grouped to a proposed low volume quintile. We identified that the proposed low volume quintile with the closest weight to proposed LTC-DRG 90 (0.7429; see Table 11 in the Addendum to this proposed rule) would be proposed low volume quintile 2 (0.7347; see Table 11 in the Addendum to this proposed rule). Therefore, we are proposing to assign proposed LTC-DRG 91 a proposed relative weight of 0.7347 for FY 2004.
Furthermore, in accordance with the methodology established in the August 30, 2002 final rule (67 FR 55991), we are proposing LTC-DRG relative weights of 0.0000 for heart, kidney, liver, lung, pancreas, and simultaneous pancreas/kidney transplants (proposed LTC-DRGs 103, 302, 480, 495, 512, and 513, respectively) for FY 2004 because Medicare will only cover these procedures if they are performed at a hospital that has been certified for the specific procedures by Medicare and presently no LTCH has been so certified.
Based on our research, as we discussed in that same final rule (67 FR 55995), we found that most LTCHs only perform minor surgeries, such as minor small and large bowel procedures, to the extent any surgeries are performed at all. Given the extensive criteria that must be met to become certified as a transplant center for Medicare, we believe it is unlikely that any LTCHs would become certified as a transplant center. In fact, in the nearly 20 years since the implementation of the IPPS, there has never been a LTCH that even expressed an interest in becoming a transplant center.
However, if in the future a LTCH applies for certification as a Medicare-approved transplant center, we believe that the application and approval procedure would allow sufficient time for us to propose appropriate weights for the LTC-DRGs affected. At the present time, we would only include these six transplant proposed LTC-DRGs in the GROUPER program for administrative purposes. Since we use the same GROUPER program for LTCHs as is used under the acute care hospital IPPS, removing these LTC-DRGs would be administratively burdensome.
Again, we note that as this system is dynamic, it is entirely possible that the number of proposed LTC-DRGs with a zero volume of LTCH cases based on the system will vary in the future. We used the best most recent available claims data in the MedPAR file to identify zero volume proposed LTC-DRGs and to determine the relative weights in this final rule.
Table 11 in the Addendum to this proposed rule lists the proposed LTC-DRGs and their respective proposed relative weights, geometric mean length of stay, and five-sixths of the geometric mean length of stay (to assist in the determination of short-stay outlier payments under § 412.529) for FY 2004.
Sections 1886(d)(5)(K) and (L) of the Act establish a process of identifying and ensuring adequate payment for new medical services and technologies under the IPPS. Section 1886(d)(5)(K)(ii)(I) of
Section 412.87(b)(1) of our existing regulations provides that a new technology will be an appropriate candidate for an additional payment when it represents an advance in medical technology that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries (see the September 7, 2001 final rule (66 FR 46902)). Section 412.87(b)(3) provides that, to receive special payment treatment, new technologies meeting this clinical definition must be demonstrated to be inadequately paid otherwise under the DRG system. To assess whether technologies would be inadequately paid under the DRGs, we established this threshold at one standard deviation beyond the geometric mean standardized charge for all cases in the DRGs to which the new technology is assigned (or the case-weighted average of all relevant DRGs, if the new technology occurs in many different DRGs). Table 10 in the Addendum to this proposed rule lists the proposed qualifying criteria by DRG, based on the discharge data that we are using to calculate the proposed FY 2004 DRG weights. The thresholds that will be published in the final rule for FY 2004 will be used to evaluate applicants for new technology add-on payments during FY 2005.
In addition to the clinical and cost criteria, we established that, in order to qualify for the new technology add-on payments, a specific technology must be “new” under the requirements of § 412.87(b)(2) of our regulations. The statutory provision contemplated the special payment treatment for new technologies until such time as data are available to reflect the cost of the technology in the DRG weights through recalibration (no less than 2 years and no more than 3 years). There is a lag of 2 to 3 years from the point a new technology is first introduced on the market and when data reflecting the use of the technology are used to calculate the DRG weights. For example, data from discharges occurring during FY 2002 are used to calculate the proposed FY 2004 DRG weights in this proposed rule.
Technology may be considered “new” for purposes of this provision within 2 or 3 years after the point at which data begin to become available reflecting the costs of the technology. After we have recalibrated the DRGs to reflect the costs of an otherwise new technology, the special add-on payment for new technology will cease (§ 412.87(b)(2)). For example, an approved new technology that received FDA approval in October 2002 would be eligible to receive add-on payments as a new technology at least until FY 2005 (discharges occurring before October 1, 2004), when data reflecting the costs of the technology would be used to recalibrate the DRG weights. Because the FY 2005 DRG weights will be calculated using FY 2003 MedPAR data, the costs of such a new technology would likely be reflected in the FY 2005 DRG weights.
Similar to the timetable for applying for new technology add-on payments during FY 2004, we are proposing that applicants for FY 2005 must submit a formal request, including a full description of the clinical applications of the technology and the results of any clinical evaluations demonstrating that the new technology represents a substantial clinical improvement, along with a significant sample of data to demonstrate the technology meets the high-cost threshold, no later than early October 2003. We are proposing that a complete database must be submitted no later than mid-December 2003. Complete application information is available at our Web site at:
The new technology add-on payment policy provides additional payments for cases with high costs involving eligible new technologies while preserving some of the incentives under the average-based payment system. The payment mechanism is based on the cost to hospitals for the new technology. Under § 412.88, Medicare pays a marginal cost factor of 50 percent for the costs of the new technology in excess of the full DRG payment. If the actual costs of a new technology case exceed the DRG payment by more than the estimated costs of the new technology, Medicare payment is limited to the DRG payment plus 50 percent of the estimated costs of the new technology.
The report language accompanying section 533 of Public Law 106-554 indicated Congressional intent that the Secretary implement the new mechanism on a budget neutral basis (H.R. Conf. Rep. No. 106-1033, 106th Cong., 2nd Sess. at 897 (2000)). Section 1886(d)(4)(C)(iii) of the Act requires that the adjustments to annual DRG classifications and relative weights must be made in a manner that ensures that aggregate payments to hospitals are not affected. Therefore, we account for projected payments under the new technology provision during the upcoming fiscal year at the same time we estimate the payment effect of changes to the DRG classifications and recalibration. The impact of additional payments under this provision would then be included in the budget neutrality factor, which is applied to the standardized amounts and the hospital-specific amounts.
Because any additional payments directed toward new technology under this provision must be offset to ensure budget neutrality, it is important to consider carefully the extent of this provision and ensure that only technologies representing substantial advances are recognized for additional payments. In that regard, we indicated that we would discuss in the annual proposed and final rules those technologies that were considered under this provision; our determination as to whether a particular technology meets our criteria to be considered new; whether it is determined further that cases involving the new technology would be inadequately paid under the existing DRG payment; and any assumptions that went into the budget neutrality calculations related to additional payments for that new technology, including the expected number, distribution, and costs of these cases.
To balance appropriately the Congress' intent to increase Medicare's payments for eligible new technologies with concern that the total size of those payments not result in significantly reduced payments for other cases, we set a target limit for estimated add-on payments for new technology under the provisions of sections 1886(d)(5)(K) and (L) of the Act at 1.0 percent of estimated total operating prospective payments.
If the target limit is exceeded, we would reduce the level of payments for approved technologies across the board, to ensure estimated payments do not exceed the limit. Using this approach, all cases involving approved new technologies that would otherwise receive additional payments would still receive special payments, albeit at a
In the August 1, 2002 IPPS final rule, we stated that cases involving the administration of Xigris® (a biotechnology product that is a recombinant version of naturally occurring Activated Protein C (APC)) as identified by the presence of code 00.11 (Infusion of drotrecogin alfa (activated)) are eligible for additional payments of up to $3,400 (50 percent of the average cost of the drug)” (67 FR 50013). (The August 1, 2002 final rule contains a detailed discussion of this technology.) Although Xigris® was approved by the FDA in November 2001, it did not qualify for add-on payments until discharges on or after October 1, 2002. Consequently, FY 2002 discharges (between October 1, 2001 and September 30, 2002) may not reflect full utilization of the technology due to the absence of the add-on payment.
Therefore, for FY 2004, we are proposing to continue to make add-on payments for cases involving the administration of Xigris® as identified by the presence of code 00.11. Based on preliminary analysis of the incidence of Xigris® in the first quarter FY 2003 MedPAR file, we are proposing to revise downward our estimate of total add-on payments for Xigris®. For FY 2003, we estimated that total add-on payments would be approximately $74.8 million (22,000 Medicare patients who would be eligible for a $3,400 add-on payment). For FY 2004, we are estimating the total add-on payments would be approximately $50 million (based on 14,000 Medicare patients who would be eligible for a $3,400 add-on payment). We are proposing that this additional payment would be included in the DRG reclassification and recalibration budget neutrality factor, which is applied to the standardized amounts and the hospital-specific amounts. However, we will reevaluate our assumptions regarding this estimate based on preliminary claims data from the FY 2003 MedPAR file before the publication of the FY 2004 IPPS final rule.
We received two applications for new technologies to be designated eligible for inpatient add-on payments for new technology for FY 2004. A discussion of these applications and our determinations on these applications appears below.
a. Bone Morphogenetic Proteins (BMPs) for Spinal Fusions. An application was submitted by Medtronic Sofamor Danek for the InFUSE
The product is applied through use of an absorbable collagen sponge and an interbody fusion device, which is then implanted at the fusion site. The patient undergoes a spinal fusion, and the product is placed at the fusion site to promote bone growth. This procedure is done in place of the more traditional use of autogenous iliac crest bone graft. For a more detailed discussion about InFUSE
On July 2, 2002, the FDA approved InFUSE
In its application for add-on payments for FY 2004, Medtronic used data from CMS' FY 2001 Standard Analytical File for physicians and hospitals. The analysis linked a 5-percent sample of hospital spinal fusions cases with the corresponding physician claims. Because there were no ICD-9-M codes to identify multilevel fusions in 2001, multilevel fusions were identified using CPT codes on the physician claims. Average charges were taken from actual cases used in clinical trials.
After grouping these cases into one, two, and three or more levels fused in DRGs 497 and 498 (Spinal Fusion Except Cervical With and Without CC, respectively), the applicant then calculated average charges assuming the use of the InFUSE
However, we note the thresholds to qualify for the new technology add-on payments for FY 2003 published in Table 10 of the August 1, 2002 IPPS final rule for DRGs 497 and 498 were $58,040 and $41,923, respectively. These thresholds were computed based on all cases assigned to these DRGs, and do not differentiate between the number of spinal levels fused. Because we are not proposing to redefine these DRGs to differentiate cases on the basis of the number of levels of the spine fused in the manner suggested by the applicant's analysis, the thresholds published in last year's final rule are applicable for a new technology to qualify for add-on payments in these DRGs for FY 2004. Therefore, because the averages calculated by the applicant for single-level fusions do not exceed the published thresholds, we are proposing not to approve this technology on the basis of this analysis.
The applicant also submitted data from actual cases involving the InFUSE
We note that, effective for discharges occurring on or after October 1, 2002, ICD-9-CM codes 84.51 (Insertion of interbody spinal fusion device) and 84.52 (Insertion of recombinant bone morphogenetic protein) are effective to identify cases involving this technology. Therefore, in an effort to resolve the difficulties in obtaining sufficient data upon which to determine whether this technology exceeds the applicable threshold, we intend to review available MedPAR data for the first several months of FY 2003 to identify these cases and calculate their average standardized charges to compare with the thresholds. We anticipate some of these cases will involve multilevel spinal fusions, and it will be necessary to identify those cases in order to remove them from the calculation of the average charges.
If the technology meets the cost threshold based on the MedPAR data, we will evaluate whether it qualifies as a substantial clinical improvement. According to the applicant:
“InFUSE
• Obviates iliac crest bone graft donor site morbidity.
• Reduces operative time, blood loss and hospitalization.
• Results in greater fusion success.
• We found that the Oswestry Low Back Pain Disability score and SF-36 Physical Component and Pain Index score were consistently 10 percent better in the InFUSE
• Enables earlier return to work.”
Among the issues we will consider are: Does avoiding the complications associated with the iliac crest bone harvesting procedure constitute a substantial clinical improvement; and, with the increased rate of osteoarthritis and osteoporosis in the Medicare population, is there evidence that the technology represents a substantial clinical improvement in spinal fusions among this population? We are particularly interested in data on the results of aged Medicare patients who have been treated with BMP, and any basic biology bench data on the results of using BMP in osteoporotic bones.
b. GLIADEL® Wafer. Glioblastoma Multiforme (GBM) is the most common and most aggressive of the primary brain tumors. Standard care for patients diagnosed with GBM is surgical resection and radiation. According to the manufacturer (Guilford Pharmaceuticals), the GLIADEL® Wafer is indicated for use as an adjunct to surgery to prolong survival in patients with recurrent GBM. Implanted directly into the cavity that is created when a brain tumor is surgically removed, GLIADEL® delivers chemotherapy directly to the site where tumors are most likely to recur.
The FDA approved GLIADEL® Wafer on September 23, 1996, for use as an adjunct to surgery to prolong survival in patients with recurrent GBM for whom surgical resection is indicated. In announcing its approval, the FDA indicated that GLIADEL® was approved:
“ * * * based on the results of a multi-center placebo controlled study in 222 patients who had recurrent malignant glioma after initial treatment with surgery and radiation therapy. Following surgery to remove the tumor, half of the patients were treated with GLIADEL® implants and half with placebo. In patients with glioblastoma multiforme, the 6-month survival rate increased from 36 percent with placebo to 56 percent with GLIADEL®. Median survival increased from 20 weeks with placebo to 28 weeks with GLIADEL®. In patients with pathologic diagnoses other than glioblastoma multiforme, GLIADEL® had no effect on survival.”
Guilford Pharmaceuticals has requested that GLIADEL® still be considered new because, until a new ICD-9-CM code (00.10 Implementation of Chemotherapeutic Agent) was established on October 1, 2002, it was not possible to identify specifically these cases in the MedPAR data. However, as noted previously, technology will no longer be considered new after the costs of the technology are reflected in the DRG weights. Because the costs of GLIADEL® are currently reflected in the DRG weights (despite the absence of a specific code), GLIADEL® does not meet our criterion that a medical service or technology be “new”. That is, FY 2002 MedPAR data used to calculate the proposed DRG weights for FY 2004 include cases where GLIADEL® was administered (and the corresponding charges of these cases, include charges associated with GLIADEL®). On February 26, 2003, the FDA approved GLIADEL® for use in newly diagnosed patients with high-grade malignant glioma as an adjunct to surgery and radiation. However, our understanding is that many newly diagnosed patients were already receiving this therapy. To the extent this is true, the charges associated with this use of GLIADEL® are also reflected in the DRG relative weights.
According to Guilford's application, the current average wholesale price of GLIADEL® is $10,985. Guilford submitted charge data for 23 Medicare patients at 7 hospitals from FY 2000. The charges were then standardized and adjusted for inflation using the hospital market basket inflation factor (from 2000 to 2003) in order to determine an inflated average standardized charge of $33,002. Guilford points out that this charge narrowly misses the DRG 2 threshold published in Table 10 of the August 1, 2002 IPPS final rule of $34,673. However, we note that, according to the manufacturer, as many as 60 percent of current GLIADEL® cases may be assigned to DRG 1 based on the presence of CCs. Based on this assumption, the qualifying threshold for GLIADEL® would be $54,312 (60 percent of the DRG 1 threshold of $67,404, and 40 percent of the DRG 2 threshold of $34,673).
As mentioned above in section II.B.3.a. of this proposed rule, we examined the definitions of DRGs 1 and 2 to determine whether they could be improved, and we are proposing to create a new DRG for patients with an intracranial vascular procedure and an intracranial hemorrhage and two new DRGs for patients with only a vascular shunt procedure (splitting on the presence or absence of a CC). We also compared the data submitted in the application on the charges for GLIADEL® cases with the charges of other procedures in DRGs 1 and 2. We found that, although the $33,002 average standardized charge reported is just below the qualifying threshold in DRG 2, it is actually well below the mean average standardized charge for DRG 1 ($42,092). As noted previously, as many as 60 percent of current GLIADEL® cases may be assigned to DRG 1 based on the presence of CCs. Therefore, we do not believe that any change to the DRG assignment of cases receiving GLIADEL® is warranted at this time. However, we will continue to monitor our data to determine whether a change is warranted in the future.
The current cost threshold for a new technology to qualify for add-on
In its comments on this approach, MedPAC supported the one standard deviation threshold. However, others, particularly representatives of the manufacturers of new technology, have argued this threshold is too high, and that virtually no new technology would qualify for the special payment provision.
We are concerned that establishing higher payments for a great number of new technologies may be inflationary because the add-on payments reduce the efficiency incentives hospitals face when new technologies must otherwise be financed out of current payments for similar cases. Traditionally, new technologies were required to compete with existing treatment methods on clinical and cost criteria. Add-on payments are intended to give new technologies a competitive boost relative to existing treatment methods with the goal of encouraging faster and more widespread adoption of new technologies.
Much of the current variation around the mean within any particular DRG is due to the range of procedures contained within each DRG. Generally, some of these procedures will be more expensive than the mean and some will be less expensive. The threshold should be set high enough to ensure that it identifies truly high-cost technologies. If the threshold were set too low (for example, at $2,500, as some have suggested), additional technologies may qualify merely by association with a procedure only slightly more costly than the mean for the DRG.
For example, consider a DRG with five different procedures and mean charges of $15,000. The mean charges for each procedure are distributed around $15,000, as illustrated in the following table. A qualifying threshold of $2,500 would result in any new technology that is only used for the fifth procedure automatically qualifying for new technology add-on payments (unless the new technology had the unlikely effect of lowering the mean cost for cases with this procedure by at least $2,500). This is because the average charge of $20,000 for cases in this procedure already exceeds the mean charges for the DRG plus $2,500.
At the same time, we recognize that the very limited number of applications that have been submitted the past 2 years (five for FY 2003; two for FY 2004) may indicate that only a very small number of the new technologies that come onto the market every year are costly enough even to apply for new technology add-on payments. Therefore, for FY 2005 and subsequent Fiscal Years, we are proposing to reduce the threshold to 75 percent of one standard deviation beyond the geometric mean standardized charge for all cases in the DRG to which the new medical service or technology is assigned (proposed § 412.87(b)(3)).
Based on our analysis of the thresholds for FY 2004, this proposed change would reduce the average threshold across all DRGs to qualify for the add-on payments from approximately $9,900 above the mean standardized charges for each DRG to approximately $7,400. This reduction would maintain the averaging principles of the IPPS while easing the requirement somewhat to allow more technologies to qualify. Furthermore, the situation illustrated above, where a technology qualifies on the basis of its association with a high cost procedure, is much less likely to occur as a result of this reduction than if the threshold were reduced dramatically.
Subpart H of part 412 describes payments to hospitals under IPPS. We have become aware of references to the calculation of IPPS payments in this subpart that inadvertently omit references to new technology add-on payments. For example, § 412.112(c) describes the basis for per case payments. This section refers to outlier payments under subpart F, but was not revised to reflect the implementation of the new technology add-on payments. Therefore, we are proposing to amend § 412.112(c) to add a new paragraph (d) to include a reference to additional payments for new medical services or technologies under subpart F.
Section 412.116(e) currently states that payments for outlier cases are not made on an interim basis. That is, for hospitals receiving payments under a biweekly, lump-sum payment methodology, outlier payments are not included in the calculation of the lump-sum payment amounts. Rather, outlier payments are calculated on a case-by-case basis. Similarly, due to the unique nature of the new technology add-on payments, we are proposing that they would also be calculated on a case-by-case basis rather than included in the calculation of interim payment amounts. Therefore, we are proposing to revise § 412.116(e) to include this policy.
Section 1886(d)(3)(E) of the Act requires that, as part of the methodology for determining prospective payments to hospitals, the Secretary must adjust the standardized amounts “for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level.” In accordance with the broad discretion conferred under the Act, we currently define hospital labor market areas based on the definitions of Metropolitan Statistical Areas (MSAs), Primary MSAs (PMSAs), and New England County Metropolitan Areas (NECMAs) issued by the Office of Management and Budget (OMB). OMB also designates Consolidated MSAs (CMSAs). A CMSA is a metropolitan area with a population of one million or more, comprising two or more PMSAs (identified by their separate economic and social character). For purposes of the hospital wage index, we use the PMSAs rather than CMSAs since they allow a more precise breakdown of labor costs. If a metropolitan area is not designated as part of a PMSA, we use the applicable MSA. Rural areas are areas outside a designated MSA, PMSA, or NECMA. For purposes of the wage index, we combine all of the rural counties in a State to calculate a rural wage index for that State.
We note that, effective April 1, 1990, the term Metropolitan Area (MA) replaced the term MSA (which had been used since June 30, 1983) to describe the set of metropolitan areas consisting of MSAs, PMSAs, and CMSAs. The terminology was changed by OMB in the March 30, 1990
Under section 1886(d)(8)(B) of the Act, hospitals in certain rural counties adjacent to one or more MSAs are considered to be located in one of the adjacent MSAs if certain standards are met. Under section 1886(d)(10) of the Act, the Medicare Geographic Classification Review Board (MGCRB) considers applications by hospitals for geographic reclassification from a rural area to a MSA, one rural area to another rural area, or from one MSA to another MSA, for purposes of payment under the IPPS.
In a December 27, 2000 notice published in the
Beginning October 1, 1993, section 1886(d)(3)(E) of the Act requires that we update the wage index annually. Furthermore, this section provides that the Secretary base the update on a survey of wages and wage-related costs of short-term, acute care hospitals. The survey should measure, to the extent feasible, the earnings and paid hours of employment by occupational category, and must exclude the wages and wage-related costs incurred in furnishing skilled nursing services. As discussed below in section III.F. of this preamble, we also take into account the geographic reclassification of hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when calculating the wage index.
Section 1886(d)(3)(E) of the Act also provides for the collection of data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index. The initial collection of these data must be completed by September 30, 2003, for application beginning October 1, 2004 (the FY 2005 wage index). In the April 4, 2003
The proposed FY 2004 wage index values (effective for hospital discharges occurring on or after October 1, 2003 and before October 1, 2004) in section V. of the Addendum to this proposed rule are based on the data collected from the Medicare cost reports submitted by hospitals for cost reporting periods beginning in FY 2000 (the FY 2003 wage index was based on FY 1999 wage data).
The proposed FY 2004 wage index includes the following categories of data associated with costs paid under the IPPS (as well as outpatient costs), which were also included in the FY 2003 wage index:
• Salaries and hours from short-term, acute care hospitals.
• Home office costs and hours.
• Certain contract labor costs and hours.
• Wage-related costs.
Consistent with the wage index methodology for FY 2003, the proposed wage index for FY 2004 also excludes the direct and overhead salaries and hours for services not subject to IPPS payment, such as SNF services, home health services, costs related to GME (teaching physicians and residents) and certified registered nurse anesthetists (CRNAs), and other subprovider components that are not paid under the IPPS.
In the FY 2001 IPPS final rule, we discussed removing from the wage index the salaries, hours, and wage-related costs of hospital-based rural health clinics (RHCs) and Federally qualified health centers (FQHCs) because Medicare pays for these costs outside of the IPPS (65 FR 47074). We noted that because RHC and FQHC costs were not separately reported on Worksheet S-3 of the Medicare cost report, we could not exclude these costs from the prior wage indexes. We further noted that we would evaluate the exclusion of RHC and FQHC wage data in developing the FY 2004 wage index. We now have revised Worksheet S-3 so that it allows for the separate reporting of RHC and FQHC wage costs and hours beginning with FY 2000. Therefore, as we now have the ability to exclude these costs from the wage index, beginning with the FY 2004 wage index, we are proposing to exclude the wage costs and hours data for RHCs and FQHCs from the hospital wage index calculation. An analysis of the effects of this change is included in the Appendix A of this proposed rule.
It has been the longstanding policy of CMS to calculate the wage index using paid hours rather than hours worked (58 FR 46299). This policy reflects our belief that paid hours more appropriately reflect a hospital's total wage costs, which include amounts paid for actual time worked and for covered leave periods (for example, annual, sick, and holiday leave). Therefore, the inclusion of paid lunch hours in the wage index is consistent with our inclusion of other paid nonworking hours.
Several hospitals have requested that we exclude paid lunch or meal break hours from the wage index calculation. At these hospitals, the typical workday is 7
The hospitals argue that their practice of paying employees for meal breaks is not substantially different, in practice, from other hospitals whose employees do not receive paid lunch hours but who are on call during their lunch periods. These hospitals further argue that this policy causes them, in some cases due to union contracts beyond the hospital's control, to be the only hospitals with this category of nonproductive hours included in the wage index.
We are soliciting comments on our policy that paid lunch hours should be excluded from the wage index. Specifically, we would like a broader understanding of the issue of whether some hospitals may, in fact, be truly disadvantaged by this policy through no fault of their own. Any change in our policy would not be implemented until, at the earliest, the FY 2005 wage index.
Some hospitals and associations have also recommended that we exclude the paid hours associated with military and jury duty leave from the wage index calculation. They state that, unlike other paid leave categories for which workers are usually paid at their full hourly rates (for example, annual, sick, and holiday), hospitals typically pay employees on military or jury duty only a fraction of their normal pay. The amount that the hospital pays is intended to only supplement the earnings that the employee receives from the government, so that, while performing military or civic duties, the employee can continue to be paid the same salary level as if he or she were still working at the hospital.
The hospitals and associations believe that including the lower pay rates associated with employees' military and jury duty leave unfairly decreases a hospital's average hourly wage and, therefore, its wage index value. Therefore, we are proposing to exclude from the wage index the paid hours associated with military and jury duty leave, beginning with the FY 2005 wage index. The associated salaries would continue to be reported on Worksheet S-3, Part II, Line 1 of the Medicare cost report.
The data for the proposed FY 2004 wage index were obtained from Worksheet S-3, Parts II and III of the FY 2000 Medicare cost reports. The data file used to construct the proposed wage index includes FY 2000 data submitted to us as of February 18, 2003. As in past years, we performed an intensive review of the wage data, mostly through the use of edits designed to identify aberrant data.
We asked our fiscal intermediaries to revise or verify data elements that resulted in specific edit failures. Some unresolved data elements are included in the calculation of the proposed FY 2004 wage index, pending their resolution before calculation of the final FY 2004 wage index. We instructed the intermediaries to complete their verification of questionable data elements and to transmit any changes to the wage data no later than April 4, 2003. We believe all unresolved data elements will be resolved by the date the final rule is issued. The revised data will be reflected in the final rule.
Also, as part of our editing process, we removed data for 110 hospitals that failed edits. We identified 72 hospitals with incomplete or inaccurate data resulting in zero or negative, or otherwise aberrant, average hourly wages. Therefore, wage data from these hospitals were removed from the calculation. We have notified the fiscal intermediaries of these hospitals and will continue to work with the fiscal intermediaries to correct these data whenever possible. As a result, the proposed FY 2004 wage index is calculated based on FY 2000 wage data for 4,593 hospitals.
In constructing the proposed FY 2004 wage index, we include the wage data for facilities that were IPPS hospitals in FY 2000, even for those facilities that have terminated their participation in the program as hospitals or have since been designated as a critical access hospital (CAH), as long as those data do not fail any of our edits for reasonableness. We believe that including the wage data for these hospitals is, in general, appropriate to reflect the economic conditions in the various labor market areas during the relevant past period.
However, we received correspondence suggesting that the wage data for hospitals that have subsequently been redesignated as CAHs should be removed from the wage index calculation because CAHs are unique compared to other short-term, acute care hospitals. CAHs are limited to only 15 acute care beds. An additional 10 beds may be designated as swing-beds, but only 15 beds can be used at one time to serve acute care patients. CAHs tend to be located in isolated, rural areas. We solicit comment on whether we should exclude wage data from such hospitals from the wage index calculation. However, we have included the data for CAHs in the proposed FY 2004 wage index if the CAH was paid under the IPPS during FY 2000.
The method used to compute the proposed FY 2004 wage index follows:
Step 1—As noted above, we based the proposed FY 2004 wage index on wage data reported on the FY 2000 Medicare cost reports. We gathered data from each of the non-Federal, short-term, acute care hospitals for which data were reported on the Worksheet S-3, Parts II and III of the Medicare cost report for the hospital's cost reporting period beginning on or after October 1, 1999 and before October 1, 2000. In addition, we included data from some hospitals that had cost reporting periods beginning before October 1999 and reported a cost reporting period covering all of FY 2000. These data were included because no other data from these hospitals would be available for the cost reporting period described above, and because particular labor market areas might be affected due to the omission of these hospitals. However, we generally describe these wage data as FY 2000 data. We note that, if a hospital had more than one cost reporting period beginning during FY 2000 (for example, a hospital had two short cost reporting periods beginning on or after October 1, 1999 and before October 1, 2000), we included wage data from only one of the cost reporting periods, the longer, in the wage index calculation. If there was more than one cost reporting period and the periods were equal in length, we included the wage data from the later period in the wage index calculation. We have removed the wage data of CAHs, after the effective date of the CAH designation, from the calculation of the proposed wage index.
Step 2—Salaries—Beginning with the FY 2003 wage index, the method used to compute a hospital's average hourly wage excludes all GME and CRNA costs.
In calculating a hospital's average salaries plus wage-related costs, we subtracted from Line 1 (total salaries) the GME and CRNA costs reported on lines 2, 4.01, and 6, the Part B salaries reported on Lines 3, 5 and 5.01, home office salaries reported on Line 7, and excluded salaries reported on Lines 8 and 8.01 (that is, direct salaries attributable to SNF services, home health services, and other subprovider components not subject to the IPPS). We also subtracted from Line 1 the salaries for which no hours were reported on Line 4. To determine total salaries plus wage-related costs, we added to the net hospital salaries the costs of contract labor for direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services (Lines 9, 9.01, 9.02, and 10), home office salaries and wage-related costs reported by the hospital on Lines 11 and 12, and nonexcluded area wage-related costs (Lines 13, 14, and 18).
We note that contract labor and home office salaries for which no corresponding hours are reported were not included. In addition, wage-related costs for nonteaching physician Part A employees (Line 18) are excluded if no corresponding salaries are reported for those employees on Line 4.
Step 3—Hours—With the exception of wage-related costs, for which there are no associated hours, we computed total hours using the same methods as described for salaries in Step 2.
Step 4—For each hospital reporting both total overhead salaries and total overhead hours greater than zero, we then allocated overhead costs to areas of the hospital excluded from the wage
Step 5—For each hospital, we adjusted the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimated the percentage change in the employment cost index (ECI) for compensation for each 30-day increment from October 14, 1999 through April 15, 2001 for private industry hospital workers from the Bureau of Labor Statistics'
For example, the midpoint of a cost reporting period beginning January 1, 2000 and ending December 31, 2000 is June 30, 2000. An adjustment factor of 1.03786 would be applied to the wages of a hospital with such a cost reporting period. In addition, for the data for any cost reporting period that began in FY 2000 and covered a period of less than 360 days or more than 370 days, we annualized the data to reflect a 1-year cost report. Annualization is accomplished by dividing the data by the number of days in the cost report and then multiplying the results by 365.
Step 6—Each hospital was assigned to its appropriate urban or rural labor market area before any reclassifications under section 1886(d)(8)(B) or section 1886(d)(10) of the Act. Within each urban or rural labor market area, we added the total adjusted salaries plus wage-related costs obtained in Step 5 for all hospitals in that area to determine the total adjusted salaries plus wage-related costs for the labor market area.
Step 7—We divided the total adjusted salaries plus wage-related costs obtained under both methods in Step 6 by the sum of the corresponding total hours (from Step 4) for all hospitals in each labor market area to determine an average hourly wage for the area.
Step 8—We added the total adjusted salaries plus wage-related costs obtained in Step 5 for all hospitals in the nation and then divided the sum by the national sum of total hours from Step 4 to arrive at a national average hourly wage. Using the data as described above, the national average hourly wage is $24.5439.
Step 9—For each urban or rural labor market area, we calculated the hospital wage index value by dividing the area average hourly wage obtained in Step 7 by the national average hourly wage computed in Step 8.
Step 10—Following the process set forth above, we developed a separate Puerto Rico-specific wage index for purposes of adjusting the Puerto Rico standardized amounts. (The national Puerto Rico standardized amount is adjusted by a wage index calculated for all Puerto Rico labor market areas based on the national average hourly wage as described above.) We added the total adjusted salaries plus wage-related costs (as calculated in Step 5) for all hospitals in Puerto Rico and divided the sum by the total hours for Puerto Rico (as calculated in Step 4) to arrive at an overall average hourly wage of $11.5431 for Puerto Rico. For each labor market area in Puerto Rico, we calculated the Puerto Rico-specific wage index value by dividing the area average hourly wage (as calculated in Step 7) by the overall Puerto Rico average hourly wage.
Step 11—Section 4410 of Pub. L. 105-33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State. Furthermore, this wage index floor is to be implemented in such a manner as to ensure that aggregate prospective payment system payments are not greater or less than those that would have been made in the year if this section did not apply. For FY 2004, this change affects 141 hospitals in 44 MSAs. The MSAs affected by this provision are identified by a footnote in Table 4A in the Addendum of this proposed rule.
Under section 1886(d)(10) of the Act, the Medicare Geographic Classification Review Board (MGCRB) considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. Hospitals can elect to reclassify for the wage index or the standardized amount, or both, and as individual hospitals or as rural groups. Generally, hospitals must be proximate to the labor market area to which they are seeking reclassification and must demonstrate characteristics similar to hospitals located in that area. Hospitals must apply for reclassification to the MGCRB, which issues its decisions by the end of February for reclassification to become effective for the following fiscal year (beginning October 1). The regulations applicable to reclassifications by the MGCRB are in §§ 412.230 through 412.280.
Section 1886(d)(10)(D)(v) of the Act provides that, beginning with FY 2001, a MGCRB decision on a hospital reclassification for purposes of the wage index is effective for 3 fiscal years, unless the hospital elects to terminate the reclassification. Section 1886(d)(10)(D)(vi) of the Act provides that the MGCRB must use the 3 most recent years' average hourly wage data in evaluating a hospital's reclassification application for FY 2003 and any succeeding fiscal year.
Section 304(b) of Pub. L. 106-554 provides that the Secretary must establish a mechanism under which a statewide entity may apply to have all of the geographic areas in the State treated as a single geographic area for purposes of computing and applying a single wage index, for reclassifications beginning in FY 2003. The implementing regulations for this provision are at § 412.235.
Section 1886(d)(8)(B) of the Act permits a hospital located in a rural county adjacent to one or more urban areas to be designated as being located in the MSA to which the greatest number of workers in the county commute (1) If the rural county would otherwise be considered part of an urban area under the standards published in the
Revised MSA standards were published in the December 27, 2000
However, if the updated list of hospitals meeting the new standards based on the 2000 census data is available in time, we will incorporate it in the final rule to be published by August 1, 2003. To the extent hospitals otherwise reclassified by the MGCRB for FY 2004 are adversely affected by their inclusion on or exclusion from the new list, we will address this in the final rule. Among the options we may consider in the final rule to address situations where hospitals may be adversely affected are: Assigning adversely affected hospitals the highest applicable wage index; or extending the opportunity for adversely affected hospitals to withdraw from a reclassification by the MGCRB for FY 2004.
The methodology for determining the wage index values for redesignated hospitals is applied jointly to the hospitals located in those rural counties that were deemed urban under section 1886(d)(8)(B) of the Act and those hospitals that were reclassified as a result of the MGCRB decisions under section 1886(d)(10) of the Act. Section 1886(d)(8)(C) of the Act provides that the application of the wage index to redesignated hospitals is dependent on the hypothetical impact that the wage data from these hospitals would have on the wage index value for the area to which they have been redesignated. Therefore, as provided in section 1886(d)(8)(C) of the Act,
Also, section 1886(d)(8)(C)(iv)(II) of the Act provides that an urban area's wage index may not decrease as a result of redesignated hospitals if the urban area is located in a State that is composed of a single urban area.
• If including the wage data for the redesignated hospitals would reduce the wage index value for the area to which the hospitals are redesignated by 1 percentage point or less, the area wage index value determined exclusive of the wage data for the redesignated hospitals applies to the redesignated hospitals.
• If including the wage data for the redesignated hospitals reduces the wage index value for the area to which the hospitals are redesignated by more than 1 percentage point, the area wage index determined inclusive of the wage data for the redesignated hospitals (the combined wage index value) applies to the redesignated hospitals.
• Rural areas whose wage index values would be reduced by excluding the wage data for hospitals that have been redesignated to another area continue to have their wage index values calculated as if no redesignation had occurred (otherwise, redesignated rural hospitals are excluded from the calculation of the rural wage index).
• The wage index value for a redesignated rural hospital cannot be reduced below the wage index value for the rural areas of the State in which the hospital is located.
If including the wage data for the redesignated hospitals increases the wage index value for the urban area to which the hospitals are redesignated, both the area and the redesignated hospitals receive the combined wage index value. Otherwise, the hospitals located in the urban area receive a wage index excluding the wage data of hospitals redesignated into the area.
The wage data for a reclassified urban hospital is included in both the wage index calculation of the area to which
The proposed wage index values for FY 2004 are shown in Tables 4A, 4B, 4C, and 4F in the Addendum to this proposed rule. Hospitals that are redesignated should use the wage index values shown in Table 4C. Areas in Table 4C may have more than one wage index value because the wage index value for a redesignated urban or rural hospital cannot be reduced below the wage index value for the rural areas of the State in which the hospital is located, and those areas have hospitals from more than one State reclassified into them.
Tables 3A and 3B in the Addendum of this proposed rule list the 3-year average hourly wage for each labor market area before the redesignation of hospitals, based on FYs 1998, 1999, and 2000 cost reporting periods. Table 3A lists these data for urban areas and Table 3B lists these data for rural areas. In addition, Table 2 in the Addendum to this proposed rule includes the adjusted average hourly wage for each hospital from the FY 1998 and FY 1999 cost reporting periods, as well as the FY 2000 period used to calculate the proposed FY 2004 wage index. The 3-year averages are calculated by dividing the sum of the dollars (adjusted to a common reporting period using the method described previously) across all 3 years, by the sum of the hours. If a hospital is missing data for any of the previous years, its average hourly wage for the 3-year period is calculated based on the data available during that period.
At the time this proposed wage index was constructed, the MGCRB had completed its review of FY 2004 reclassification requests. We have included in this proposed rule Table 9, which shows hospitals that have been reclassified under either section 1886(d)(8) or section 1886(d)(10)(D) of the Act. This table includes hospitals reclassified for FY 2004 by the MGCRB (73 for wage index, 66 for the standardized amount, and 33 for both the wage index and the standardized amount), as well as hospitals that were reclassified for the wage index in either FY 2002 (476) or FY 2003 (56) and are, therefore, in either the second or third year of their 3-year reclassification. This table also includes hospitals located in urban areas that have been designated rural in accordance with section 1886(d)(8)(E) of the Act (14). In addition, it includes rural hospitals redesignated to an urban area under section 1886(d)(8)(B) of the Act for purposes of the standardized amount and the wage index (42).
Under § 412.273, hospitals that have been reclassified by the MGCRB are permitted to withdraw their applications within 45 days of the publication of this proposed rule in the
Any changes to the wage index that result from withdrawals of requests for reclassification, wage index corrections, appeals, and the Administrator's review process will be incorporated into the wage index values published in the final rule following this proposed rule. Therefore, the final wage indexes will likely be different from those published in this proposed rule, and, in some cases, they may be quite different. Although, as described above, the statute provides that a reclassified rural hospital may not have a lower wage index after reclassification than before, there is no similar protection for urban hospitals. Therefore, hospitals should carefully evaluate the impacts of their reclassifications prior to the deadline for withdrawing from an approved reclassification.
Applications and other information about MGCRB reclassifications may be obtained via the CMS internet Web site at
As noted previously, OMB plans to announce new definitions of CBSAs by the middle of this year, and the earliest these new CBSA definitions would be used for the wage index is FY 2005. Applications for reclassification by the MGCRB for FY 2005 will be due by September 2, 2003. However, by that time, we will not have completed our analysis of the new CBSAs. Therefore, hospitals submitting applications for reclassification by the MGCRB for FY 2005 should base those applications on the current MSAs. We will assess the implications of the new CBSAs on hospitals' reclassification requests in the FY 2005 proposed rule.
The preliminary wage data file was made available on January 10, 2003 (and subsequently on February 4, 2003), through the Internet on CMS's Web site at
If a hospital wished to request a change to its data as shown in that wage data file, the hospital was to submit corrections along with complete, detailed supporting documentation to its intermediary by February 17, 2003 (this deadline was initially announced as February 10, 2003, but was changed due to the need to repost some of the data). Hospitals were notified of this deadline and of all other possible deadlines and requirements, including the requirement to review and verify their data as posted on the preliminary wage data file on the Internet, through the December 31, 2002 memorandum referenced above.
After reviewing requested changes submitted by hospitals, fiscal intermediaries transmitted any revised cost reports to CMS and forwarded a copy of the revised Worksheet S-3, Parts II and III to the hospitals by April 4, 2003. In addition, fiscal intermediaries were to notify hospitals of the changes or the reasons that changes were not accepted. These deadlines are necessary to allow sufficient time to review and process the data so that the final wage index
If a hospital disagreed with the fiscal intermediary's resolution of a policy issue (for example, whether a general category of cost is allowable in the wage data), the hospital could have contacted CMS in an effort to resolve the issue. We note that the April 4, 2003 deadline also applied to these requests. Requests were required to be sent to CMS at the address below (with a copy to the hospital's fiscal intermediary). The request must have fully documented all attempts by the hospital to resolve the dispute through the process described above, including copies of relevant correspondence between the hospital and the fiscal intermediary. During review, we do not consider issues such as the adequacy of a hospital's supporting documentation, as we believe that fiscal intermediaries are generally in the best position to make evaluations regarding the appropriateness of these types of issues (which should have been resolved earlier in the process).
Hospitals should also examine Table 2 in the Addendum to this proposed rule to verify their data. Table 2 contains each hospital's adjusted average hourly wage used to construct the wage index values for the past 3 years, including the FY 2000 data used to construct the proposed FY 2004 wage index. We note that the hospital average hourly wages shown in Table 2 only reflect changes made to a hospital's data and transmitted to CMS prior to February 18, 2003.
We will release a final wage data file in May 2003 to hospital associations and the public on the Internet at
CMS and the fiscal intermediaries must receive these requests no later than June 6, 2003. Requests mailed to CMS should be sent to: Centers for Medicare & Medicaid Services, Center for Medicare Management, Attention: Wage Index Team, Division of Acute Care, C4-07-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
Each request also must be sent to the hospital's fiscal intermediary. The intermediary will review requests upon receipt and contact CMS immediately to discuss its findings.
At this point in the process, that is, after the release of the May 2003 wage index file, changes to the hospital wage data will only be made in those very limited situations involving an error by the intermediary or CMS that the hospital could not have known about before its review of the final wage data file. Specifically, neither the intermediary nor CMS will approve the following types of requests:
• Requests for wage data corrections that were submitted too late to be included in the data transmitted to CMS by fiscal intermediaries on or before April 4, 2003.
• Requests for correction of errors that were not, but could have been, identified during the hospital's review of the January 2003 wage data file.
• Requests to revisit factual determinations or policy interpretations made by the intermediary or CMS during the wage data correction process.
Verified corrections to the wage index received timely (that is, by June 6, 2003) will be incorporated into the final wage index in the final rule to be published by August 1, 2003, and to be effective October 1, 2003.
We have created the process described above to resolve all substantive wage data correction disputes before we finalize the wage data for the FY 2004 payment rates. Accordingly, hospitals that did not meet the procedural deadlines set forth above will not be afforded a later opportunity to submit wage data corrections or to dispute the intermediary's decision with respect to requested changes. Specifically, our policy is that hospitals that do not meet the procedural deadlines set forth above will not be permitted to challenge later, before the Provider Reimbursement Review Board, the failure of CMS to make a requested data revision (
Again, we believe the wage data correction process described above provides hospitals with sufficient opportunity to bring errors in their wage data to the fiscal intermediaries' attention. Moreover, because hospitals will have access to the final wage data by early May 2003, they will have the opportunity to detect any data entry or tabulation errors made by the fiscal intermediary or CMS before the development and publication of the FY 2004 wage index by August 1, 2003, and the implementation of the FY 2004 wage index on October 1, 2003. If hospitals avail themselves of this opportunity, the wage index implemented on October 1 should be accurate. Nevertheless, in the event that errors are identified after that date, we retain the right to make midyear changes to the wage index under very limited circumstances.
Specifically, in accordance with § 412.63(x)(2) of our existing regulations, we make midyear corrections to the wage index for an area only if a hospital can show that the intermediary or CMS made an error in tabulating its data. This provision is not available to a hospital seeking to revise another hospital's data that may be affecting the requesting hospital's wage index. As described earlier, the requesting hospital must show that it could not have known about the error, or that it did not have the opportunity to correct the error, before the publication of the FY 2004 wage index. As indicated earlier, since a hospital will have the opportunity to verify its data, and the fiscal intermediary will notify the hospital of any changes, we do not expect that midyear corrections will be necessary. However, if the correction of a data error changes the wage index value for an area, the revised wage index value will be effective prospectively from the date the correction is approved.
Although the wage data correction process described in section III.G. of this preamble has proven successful in the past for ensuring that the wage data used each year to calculate the wage indexes are generally reliable and accurate, we continue to be concerned about the growing volume of wage data revisions initiated by hospitals after the release of the first public use file in February. This issue has been discussed previously in the FY 1998 IPPS proposed rule (62 FR 29918) and in the FY 2002 IPPS proposed rule (66 FR 22682). In each discussion, we describe the increasing number of revisions to wage data between the proposed rule and the final rule.
Currently, the fiscal intermediaries are required to conduct initial desk reviews on or before November 15 in advance of the preparation of the preliminary wage data public use file in early January (see Program
This high volume of revisions results in an additional workload for the fiscal intermediaries. In particular, much of a fiscal intermediary's efforts prior to submitting the data to prepare the preliminary public use file may be in vain if the hospital subsequently revises all of its data prior to the early February deadline (which is the hospital's right at that point). Therefore, we are proposing to modify the process to release the preliminary wage data file prior to requiring the fiscal intermediaries to conduct their initial desk reviews on the data. This unaudited data would be available on the Internet by early October rather than early January. Hospitals would review this file to ensure it contains their correct data as submitted on their cost reports and request any changes by early November. At that time, the fiscal intermediaries would review the revision requests and conduct desk reviews of the data including all approved changes.
Under this proposed revised timetable, the fiscal intermediaries would notify the hospitals in early February of any changes to the wage data as a result of the desk reviews and the resolution of the hospitals' early November change requests. The fiscal intermediaries would also submit the revisions to CMS in early February. Hospitals would then have until early March to submit requests to the fiscal intermediaries for reconsideration of adjustments made by the fiscal intermediaries as a result of the desk review. Other than requesting reconsideration of desk review adjustments, hospitals would not be able to submit new requests for additional changes that were not submitted by early November. By early April, the fiscal intermediaries would notify all hospitals of their decisions regarding the hospitals' requests to reconsider desk review adjustments and submit all of the revised wage data to CMS. From this point (early April) until the publication of the final rule, the process would be identical to the current timetable. Similar to the current timetable, hospitals would also have the opportunity in early April to request CMS consideration of policy disputes.
We believe that the proposed revision of the schedule would improve the quality of the wage index by initiating hospitals' review of their data sooner and allowing the fiscal intermediaries to focus their reviews on the final data submitted by hospitals to be included in the wage index. In addition, we would receive the revised data in time to incorporate them into the wage indexes published in the proposed rule, resulting in fewer changes from the proposed rule to the final rule. This will improve the ability of hospitals to assess whether they should request a withdrawal from a MGCRB reclassification. Because the decision of whether to withdraw a wage index reclassification must be made prior to publication of the final rule, this proposed schedule should decrease the likelihood that the final wage index will be dramatically different from the proposed wage index.
The following table illustrates the proposed timetable that would be applicable for the development of the FY 2005 wage index:
Existing regulations at § 412.4(a) define discharges under the IPPS as situations in which a patient is formally released from an acute care hospital or dies in the hospital. Section 412.4(b) defines transfers from one acute care hospital to another, and § 412.4(c) defines transfers to certain postacute care providers. Our policy provides that, in transfer situations, full payment is made to the final discharging hospital and each transferring hospital is paid a per diem rate for each day of the stay, not to exceed the full DRG payment that would have been made if the patient had been discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by dividing the full DRG payment by the geometric mean length of stay for the DRG. Based on an analysis that showed that the first day of hospitalization is the most expensive (60 FR 45804), our policy provides for payment that is double the per diem amount for the first day (§ 412.4(f)(1)). Transfer cases are also eligible for outlier payments. The outlier threshold for transfer cases is equal to the fixed-loss outlier threshold for nontransfer cases, divided by the geometric mean length of stay for the DRG, multiplied by the length of stay for the case, plus one day.
Medicare adopted its IPPS transfer policy because, if we were to pay the full DRG payment regardless of whether a patient is transferred or discharged, there would be a strong incentive for hospitals to transfer patients to another IPPS hospital early in their stay in order to minimize costs while still receiving the full DRG payment. The transfer policy adjusts the payments to approximate the reduced costs of transfer cases.
Currently, when a patient chooses to depart from a hospital against the medical opinion of treating physicians, the case is treated as a left against medical advice (LAMA) discharge and coded as discharge status “07-Left Against Medical Advice (LAMA)” on the inpatient billing claim form. Because, by definition, LAMA discharges are assumed not to involve the active participation of the hospital administration, our policy has been to treat LAMA cases as discharges. This policy applies even if the patient is admitted to another hospital on the date of the LAMA discharge. Consequently, we currently make a full DRG payment for any discharge coded as a LAMA case.
However, we are concerned that some hospitals may be incorrectly coding transfers as LAMA cases. The Office of Inspector General (OIG) issued a report in March 2002 (A-06-99-00045), asserting that of the approximately 60,000 LAMA discharges annually, 1,500 patients were subsequently admitted to another IPPS hospital the same day. The OIG performed a detailed review of the medical records at selected hospitals and found evidence that the hospitals actively participated in transferring the patients to a different IPPS hospital, yet the hospital coded the claim as a LAMA. OIG cited several examples of these cases:
“In the first example, the transferring hospital did not have an inpatient room available for the patient, who had been in the emergency room for 24 hours. The medical record showed that the treating physician contacted another PPS hospital to determine whether the hospital could accept the patient. Specifically, the medical record stated: ‘Upon request of the patient, [hospital name] was contacted since there is a good possibility of transferring patient to [name of hospital]. At present, he has been in emergency room for 24 hours waiting for a bed.’ ”
In this example, despite the overt participation of the physician in securing the admission to the other IPPS hospital and the fact that the transferring hospital did not have an inpatient room available for the patient, the claim was submitted as a LAMA discharge, rather than as a transfer to another IPPS hospital.
“In the second example, the patient was brought to the first hospital by ambulance. Subsequently, the patient's family indicated that they wanted a neurologist at another hospital to render the treatment needed by the patient. The attending physician contacted the neurologist in order to determine if the neurologist would accept, admit, and treat the patient. The medical record contained ample evidence of knowledge and participation of the transferring hospital, and the discharge should have been reported as a PPS transfer. Specifically, the medical record stated: ‘Patient's family wanted to sign the patient out against medical advice and take her to [name of hospital]. The physician spoke with the neurologist at [name of hospital], who agreed to accept the patient. The patient's family signed the patient discharged against medical advice. All the risks of self-discharge were explained.’ ”
In this case, although the medical record indicated the patient wanted to leave against medical advice, there is also evidence that the patient's attending physician at the hospital participated in the transfer to another IPPS hospital. While we do not wish to discourage such participation and cooperation in cases where a transfer occurs, this situation would seem almost indistinguishable from other transfer situations. For instance, we have long recognized situations where patients are transferred from a rural hospital to an urban hospital for a surgical procedure, then back to the rural hospital to complete the recuperative care, as appropriate transfer situations as long as the transfers are medically appropriate. In such a case, the rural hospital would receive a payment under the transfer policy for the first portion of the stay, the urban hospital would also receive payment under the transfer policy for the care it provided, and the rural hospital would receive a full DRG payment as the discharging hospital for the recuperative care it provided upon the patient's return from the urban hospital. In such situations, each portion of the stay may be assigned a different DRG.
Therefore, we are proposing to expand our definition of a transfer under § 412.4(b) to include all patients who are admitted to another IPPS hospital on the same day that the patient is discharged from an IPPS hospital, unless the first (transferring) hospital can demonstrate that the patient's treatment was completed at the time of discharge from that hospital. In other words, unless the same-day readmission is to treat a condition that is unrelated to the condition treated during the original admission (for example, the beneficiary is in a car accident later that day), any situation where the beneficiary is admitted to another IPPS hospital on the same date that he or she is discharged from an IPPS hospital would be considered a transfer, even if the patient left against medical advice from the first hospital.
Although we considered proposing a policy that would be based on whether the hospital actively participated in the transfer, and exempting from the transfer definition cases where the hospital had absolutely no knowledge that the patient intended to go to another hospital, we are not proposing such a policy for two reasons. First, it would be difficult to administer equitably a policy that required a determination as to whether the hospital or the physician had knowledge of the patient's intentions. Such a policy would require fiscal intermediaries to make a difficult judgment call in many cases. Second, if we were to base the determination of whether a case is a transfer on the level of involvement of the hospital and the physician caring for the patient, we would be creating a financial disincentive to hospitals for ensuring an efficient and cooperative transfer once a decision has been made by the patient or the patient's family to leave the hospital.
We recognize that, in some cases, a hospital cannot know the patient will go to another hospital. However, we note the claims processing system can identify cases coded as discharges where the date of discharge matches the admission date at another hospital. In these cases, the fiscal intermediary will notify the hospital of the need to submit an adjustment claim. However, if the hospital can present documentation showing that the patient's care associated with the admission to the hospital was completed before discharge, consistent with our current policy, the transfer policy will not be applied.
Section 412.4(b)(2) defines a discharge from one inpatient area of the hospital to another area of the hospital as a transfer. Although this situation may be viewed as an intrahospital transfer, it does not implicate the transfer policy under the IPPS. Therefore, to avoid confusion and to be
Under section 1886(d)(5)(J) of the Act, a “qualified discharge” from one of 10 DRGs selected by the Secretary, to a postacute care provider is treated as a transfer case beginning with discharges on or after October 1, 1998. This section requires the Secretary to define and pay as transfers all cases assigned to one of 10 DRGs selected by the Secretary, if the individuals are discharged to one of the following postacute care settings:
• A hospital or hospital unit that is not a subsection 1886(d) hospital. (Section 1886(d)(1)(B) of the Act identifies the hospitals and hospital units that are excluded from the term “subsection (d) hospital” as psychiatric hospitals and units, rehabilitation hospitals and units, children's hospitals, long-term care hospitals, and cancer hospitals.)
• A SNF (as defined at section 1819(a) of the Act).
• Home health services provided by a home health agency, if the services relate to the condition or diagnosis for which the individual received inpatient hospital services, and if the home health services are provided within an appropriate period (as determined by the Secretary).
In the July 31, 1998 IPPS final rule (63 FR 40975 through 40976), we specified the appropriate time period during which we would consider a discharge to postacute home health services to constitute a transfer as within 3 days after the date of discharge. Also, in the July 31, 1998 final rule, we did not include in the definition of postacute care transfer cases patients transferred to a swing-bed for skilled nursing care (63 FR 40977).
Section 1886(d)(5)(J) of the Act directed the Secretary to select 10 DRGs based upon a high volume of discharges to postacute care and a disproportionate use of postacute care services. As discussed in the July 31, 1998 final rule, these 10 DRGs were selected in 1998 based on the MedPAR data from FY 1996. Using that information, we identified and selected the first 20 DRGs that had the largest proportion of discharges to postacute care (and at least 14,000 such transfer cases). In order to select 10 DRGs from the 20 DRGs on our list, we considered the volume and percentage of discharges to postacute care that occurred before the mean length of stay and whether the discharges occurring early in the stay were more likely to receive postacute care. We identified the following DRGs to be subject to the special 10 DRG transfer rule:
• DRG 14 (Intracranial Hemorrhage and Stroke with Infarction (formerly “Specific Cerebrovascular Disorders Except Transient Ischemic Attack”));
• DRG 113 (Amputation for Circulatory System Disorders Except Upper Limb and Toe);
• DRG 209 (Major Joint Limb Reattachment Procedures of Lower Extremity);
• DRG 210 (Hip and Femur Procedures Except Major Joint Procedures Age >17 With CC);
• DRG 211 (Hip and Femur Procedures Except Major Joint Procedures Age >17 Without CC);
• DRG 236 (Fractures of Hip and Pelvis);
• DRG 263 (Skin Graft and/or Debridement for Skin Ulcer or Cellulitis With CC);
• DRG 264 (Skin Graft and/or Debridement for Skin Ulcer or Cellulitis Without CC);
• DRG 429 (Organic Disturbances and Mental Retardation); and
• DRG 483 (Tracheostomy With Mechanical Ventiliation 96+ Hours or Principal Diagnosis Except Face, Mouth, and Neck Diagnoses (formerly “Tracheostomy Except for Face, Mouth, and Neck Diagnoses”)).
Similar to the policy for transfers between two acute care hospitals, the transferring hospital in a postacute care transfer for 7 of the 10 DRGs receives twice the per diem rate the first day and the per diem rate for each following day of the stay before the transfer, up to the full DRG payment. However, 3 of the 10 DRGs exhibit a disproportionate share of costs very early in the hospital stay in postacute care transfer situations. For these 3 DRGs, hospitals receive 50 percent of the full DRG payment plus the single per diem (rather than double the per diem) for the first day of the stay and 50 percent of the per diem for the remaining days of the stay, up to the full DRG payment. This is consistent with section 1886(d)(5)(J)(i) of the Act, which recognizes that in some cases “a substantial portion of the costs of care are incurred in the early days of the inpatient stay.”
Section 1886(d)(5)(J)(iv) of the Act authorizes the Secretary to expand the postacute transfer policy beyond 10 DRGs. In the May 9, 2002 IPPS proposed rule, we discussed the possibility of expanding this policy to either all DRGs or a subset of additional DRGs (we identified 13 additional DRGs in that proposed rule) (67 FR 31455). However, as discussed further in the August 1, 2002 final rule (65 FR 50048), we did not expand the postacute transfer provision to additional DRGs for FY 2003. The commenters on the options in the May 9, 2002 proposed rule raised many issues regarding the impact of expanding this policy that we needed to consider further before proceeding. In particular, due to the limited time between the close of the comment period and the required publication date of August 1, we were unable to completely analyze and respond to all of the points that were raised. We indicated that we would continue to conduct research to assess whether further expansion of this policy may be warranted and, if so, how to design any such refinements.
Many commenters on the May 9, 2002 proposed rule argued that, in a system based on averages, expansion of the postacute care transfer policy negatively influences, and in fact penalizes, hospitals for efficient care. They claimed that this policy indiscriminately penalizes hospitals for efficient treatment and for ensuring that patients receive the right care at the right time in the right place. They believed that the postacute care transfer provision creates an inappropriate incentive for hospitals to keep patients longer.
Commenters also expressed concern that the expansion of the transfer provision violates the fundamental principle of the IPPS. The DRG system is based on payments that will, on average, be adequate. These commenters argued that expansion of the postacute care transfer policy would give the IPPS a per-diem focus and would mean that hospitals would be paid less for shorter than average lengths of stay, although they would not be paid more for the cases that are longer than average (except for outlier cases).
We agree that the transfer policy should not hamper the provision of effective patient care, and any future expansion must consider both the need to reduce payments to reflect cost-shifting due to reductions in length of stay attributable to early transfers to postacute care and the need to ensure that payments, on average, remain adequate to ensure effective patient care. Therefore, we have assessed the extent to which the current postacute transfer policy balances these objectives.
The table below displays the results of our analysis. We first examined whether the 10 DRGs included in the policy continue to exhibit a relatively high percentage of cases transferred to postacute care settings, particularly
This similarity in treatment patterns is further evidenced by the fact that, for 6 of the 10 DRGs, the geometric mean length of stay has continued to decline in the 5 years since the policy was implemented. Accordingly, hospitals have continued to transfer many patients in these DRGs before the mean length of stay, despite the transfer policy. As we stated in the July 31, 1998 final rule, the transfer provision adjusts payments to hospitals to reflect the reduced lengths of stay arising from the shift of patient care from the acute care setting to the postacute setting (63 FR 40977). This policy does not require a change in physician clinical decisionmaking nor in the manner in which physicians and hospitals practice medicine: it simply addresses the appropriate level of payments once those decisions have been made.
With respect to whether this policy alters the fundamental averaging principles of the IPPS, we believe the current policy, which targets specific DRGs where evidence shows hospitals have aggressively moved care to postacute care settings, does not alter the averaging principles of the system. In fact, it could be said to enhance those principles because a transfer case is counted as only a fraction of a case toward DRG recalibration based on the ratio of its transfer payment to the full DRG payment for nontransfer cases. This methodology ensures the DRG weight calculation is consistent with the payment policy for transfer cases. The last column of the table below indicates that all but three of these DRGs have experienced increases in DRG weights since the policy was implemented. By reducing the contribution of transfer cases to the calculation of the DRG average charge, the relative weights (the result of dividing the DRG average charge by the national average charge per case) are higher than they would otherwise be. This is because transfers, particularly short-stay transfers, have lower total charges, on average.
After determining the current 10 DRG postacute care transfer policy appears to be appropriately balancing the objectives to reduce payments to reflect cost-shifting due to reductions in length of stay attributable to early postacute care transfers and to ensure that payments, on average, remain adequate to ensure effective patient care, we once again undertook the analysis to identify additional DRGs to which the policy may be expanded. However, it should be noted that, at this time, we have decided not to expand the policy to all DRGs. Although we still believe expanding the postacute care transfer policy to all DRGs might be the most equitable approach because a policy that is limited to certain DRGs may result in disparate payment treatment across hospitals, at this time, we believe an incremental expansion is appropriate. That is, we believe further analysis is necessary to assess whether it would be appropriate to apply a reduced payment for postacute care transfers across all DRGs. In particular, it is important to attempt to distinguish between DRGs where the care is increasingly being shifted to postacute care sites versus DRGs where some patients have always been discharged to postacute care early in the stay. For the latter DRGs, it may not be appropriate to reduce payment for these DRGs if the base payment already reflects a similar postacute care utilization rate (for example, in these cases there would be no cost shifting).
As described below, we have identified an additional 19 DRGs, based on declining mean lengths of stay and high percentages of postacute transfers, for which an expansion of the current policy appears warranted.
MedPAC has also conducted analysis on the current postacute care transfer policy. Most recently, in its March 2003 Report to Congress, MedPAC recommended adding 13 additional DRGs to the 10 DRGs covered under the current policy (page 46). The 13 DRGs were the same DRGs included in one of our proposals to expand the postacute care transfer policy in last year's IPPS proposed rule. MedPAC did not recommend expanding the policy to include all DRGs at this time, noting
MedPAC's report cites several reasons for expanding the postacute care transfer policy beyond the current 10 DRGs. First, it notes the continuing shifts in services from the acute care setting to the postacute care setting. Second, the report points to different postacute care utilization for different hospitals, particularly based on geographic location. Third, the report states: “the expanded transfer policy provides a better set of incentives to protect beneficiaries from potential premature discharge to postacute care.” Fourth, MedPAC notes that the policy improves payment equity across hospitals by: Reducing payments to hospitals that transfer patients to postacute care while making full payments to hospitals that provide all of the acute inpatient services in an acute care setting; and maintaining more accurate DRG weights that reflect the true resource utilization required to provide the full course of acute inpatient care, as distinguished from the partial services provided to patients who are transferred to postacute care.
Since the publication of last year's rule, we have conducted an extensive analysis to identify the best method by which to expand the postacute care transfer policy. Similar to the analysis used to identify the current 10 DRGs, we are proposing to identify DRGs with high postacute care transfer rates and at least 14,000 transfer cases. However, rather than ranking DRGs on the basis of the percentage of all postacute care transfers, we are proposing to rank DRGs on the basis of the percentage of postacute care transfers occurring before the DRG geometric mean length of stay. This is because only transfers that occur before the geometric mean length of stay, minus one day due to the policy that hospitals receive double the per diem for the first day, are impacted by the transfer policy. In order to focus on those DRGs where this policy would have the most impact, we are proposing to include only DRGs where at least 10 percent of all cases that were transferred to postacute care before the geometric mean length of stay. The next proposed criterion is to identify DRGs with at least a 7-percent decline in length of stay over the past 5 years (from FY 1998 to FY 2003). This criterion would focus on those DRGs for which hospitals have been most aggressively discharging patients sooner into postacute care settings. Finally, we are proposing to include only DRGs with a geometric mean length of stay of at least 3 days because the full payment is reached on the second day for a DRG with a 3-day length of stay.
Using these criteria, we have identified 19 additional DRGs to include in the postacute care transfer policy. However, some of the 13 DRGs proposed last year (and included in MedPAC's proposed expansion) are not included in this proposed rule. For example, DRGs 79 and 80 (Respiratory Infections and Inflammations Age >17 With and Without CC, respectively) were included in last year's proposed expansion but are not included in this proposed rule for FY 2004. DRGs 79 and 80 are excluded from this proposed rule because they did not exhibit a decline in length of stay of at least 7 percent over the past 5 years.
We note that 7 of these 19 DRGs are paired DRGs (that is, they contain a CC and no-CC split). Because these DRGs are paired DRGs (that is, the only difference in the cases assigned to DRG 130, for example, as opposed to DRG 131 is that the patient has a complicating or comorbid condition), we are proposing to include both DRGs under this expanded policy. If we were to include only DRG 130 in the transfer policy, there would be an incentive for hospitals not to include any code that would identify a complicating or comorbid condition, so that a transfer case would be assigned to DRG 131 instead of DRG 130.
Using the selection criteria described above, we identified the following 19 DRGs that we are proposing to include under the postacute care transfer policy (in addition to the 10 DRGs already subject to the policy).
We are proposing to revise § 412.4(d) to incorporate these additional 19 DRGs as qualifying DRGs for transfer payments and to make a conforming change to § 412.4(c).
We also examined whether any of these DRGs would qualify for the alternative payment methodology of 50 percent of the full DRG payment plus the per diem for the first day of the stay, and 50 percent of the per diem for the remaining days of the stay, up to the full DRG payment specified in existing regulations under § 412.4(f). To identify the DRGs that might qualify, the average charges for all cases with a length of stay of 1 day were compared to the average charges of all cases in a particular DRG. To qualify for the alternative methodology, the average charges of 1-day discharge cases must be at least 50 percent of the average charges for all cases in the DRG.
Based on this analysis, we determined that 5 out of the 19 DRGs would qualify for this payment method (DRGs 25, 122, 131, 297, and 321). However, the fact that the average charges of 1-day stays equal at least 50 percent of the average charges for all cases in these DRGs is due to the very short lengths of stay for these DRGs. Therefore, we do not believe that it is necessary to include them in the alternative payment methodology. For example, for a DRG with a 3-day geometric mean length of stay, full DRG payment will be met on the second day of the stay, regardless of which payment methodology is used. Therefore, we are proposing that none of the 19 additional DRGs that we are proposing to add to the postacute care transfer policy would be paid under the alternative payment methodology.
We also have analyzed the 10 DRGs that are currently subject to the postacute care transfer policy. Of the three DRGs that are receiving payments under the special payment (transfers after 1 day incur charges equal to at least 50 percent of the average charges for all cases). Unlike the five DRGs that would otherwise meet this criterion, the geometric mean lengths of stay of both DRG 209 and 211 are over 4 days. In addition, DRG 210 is currently paid under the special payment methodology, but our current analysis indicates average charges for one day stays are less than 50 percent of the average charges for all cases in the DRG. Nonetheless, DRG 210 is a paired with DRG 211, which meets the criteria. Therefore, we are proposing DRG 210 will continue to be paid under the special payment methodology. Similar to our rationale for including both paired DRGs when one qualifies for inclusion in the postacute care transfer policy, we are including both DRGs in this pair under the special payment methodology. Accordingly, we are proposing that only DRGs 209, 210, and 211 that are currently paid under the alternative transfer payment methodology would continue to be paid under this methodology.
Finally, we note that the OIG has prepared several reports that examined hospitals' compliance with proper coding of patients' discharge status as transferred under our guidelines, and has found substantial noncompliance leading to excessive payments.
Under the authority of section 1886(d)(5)(C)(i) of the Act, the regulations at § 412.96 set forth the criteria that a hospital must meet in order to qualify under the IPPS as a rural referral center. For discharges occurring before October 1, 1994, rural referral centers received the benefit of payment based on the other urban amount rather than the rural standardized amount. Although the other urban and rural standardized amounts are the same for discharges beginning with that date, rural referral centers continue to receive special treatment under both the DSH payment adjustment and the criteria for geographic reclassification.
Rural referral centers with a disproportionate share percentage of at least 30 percent are not subject to the 5.25 percent cap on DSH payments that is applicable to other rural hospitals (with the exception of rural hospitals with 500 or more beds). Rural referral centers are not subject to the proximity criteria when applying for geographic reclassification, and they do not have to meet the requirement that a hospital's average hourly wage must exceed 106 percent of the average hourly wage of the labor market area where the hospital is located.
As discussed in
One of the criteria under which a hospital may qualify as a rural referral center is to have 275 or more beds available for use (§ 412.96(b)(1)(ii)). A rural hospital that does not meet the bed size requirement can qualify as a rural referral center if the hospital meets two mandatory prerequisites (a minimum case-mix index and a minimum number of discharges) and at least one of three optional criteria (relating to specialty composition of medical staff, source of inpatients, or referral volume) (§ 412.96(c)(1) through (c)(5)). (See also the September 30, 1988
• The hospital's case-mix index is at least equal to the lower of the median case-mix index for urban hospitals in its census region, excluding hospitals with approved teaching programs, or the median case-mix index for all urban hospitals nationally; and
• The hospital's number of discharges is at least 5,000 per year, or, if fewer, the median number of discharges for urban hospitals in the census region in which the hospital is located. (The number of discharges criterion for an osteopathic hospital is at least 3,000 discharges per year, as specified in section 1886(d)(5)(C)(i) of the Act.)
Section 412.96(c)(1) provides that CMS will establish updated national and regional case-mix index values in each year's annual notice of prospective payment rates for purposes of determining rural referral center status. The methodology we use to determine the proposed national and regional case-mix index values is set forth in regulations at § 412.96(c)(1)(ii). The proposed national mean case-mix index value for FY 2004 includes all urban hospitals nationwide, and the proposed regional values for FY 2004 are the
We are proposing that, in addition to meeting other criteria, if they are to qualify for initial rural referral center status for cost reporting periods beginning on or after October 1, 2003, rural hospitals with fewer than 275 beds must have a case-mix index value for FY 2002 that is at least—
• 1.3374; or
• The median case-mix index value (not transfer-adjusted) for urban hospitals (excluding hospitals with approved teaching programs as identified in § 412.105) calculated by CMS for the census region in which the hospital is located.
The proposed median case-mix index values by region are set forth in the following table:
The preceding numbers will be revised in the final rule to the extent required to reflect the updated FY 2002 MedPAR file, which will contain data from additional bills received through March 31, 2002.
Hospitals seeking to qualify as rural referral centers or those wishing to know how their case-mix index value compares to the criteria should obtain hospital-specific case-mix index values (not transfer-adjusted) from their fiscal intermediaries. Data are available on the Provider Statistical and Reimbursement (PS&R) System. In keeping with our policy on discharges, these case-mix index values are computed based on all Medicare patient discharges subject to DRG-based payment.
Section 412.96(c)(2)(i) provides that CMS will set forth the national and regional numbers of discharges in each year's annual notice of prospective payment rates for purposes of determining rural referral center status. As specified in section 1886(d)(5)(C)(ii) of the Act, the national standard is set at 5,000 discharges. We are proposing to update the regional standards based on discharges for urban hospitals' cost reporting periods that began during FY 2002 (that is, October 1, 2001 through September 30, 2002).
Therefore, we are proposing that, in addition to meeting other criteria, a hospital, if it is to qualify for initial rural referral center status for cost reporting periods beginning on or after October 1, 2003, must have as the number of discharges for its cost reporting period that began during FY 2002 a figure that is at least—
• 5,000 (3,000 for an osteopathic hospital); or
• The median number of discharges for urban hospitals in the census region in which the hospital is located, as indicated in the following table:
These numbers will be revised in the final rule based on the latest available cost report data.
Section 1886(d)(5)(B) of the Act provides that subsection (d) hospitals that have residents in approved graduate medical education (GME) programs receive an additional payment for each discharge of Medicare beneficiaries to reflect the higher indirect patient care costs of teaching hospitals relative to nonteaching hospitals. The existing regulations regarding the calculation of this additional payment, known as the indirect medical education (IME) adjustment, are located at § 412.105. The additional payment is based on the IME adjustment factor, calculated using
Section 1886(d)(5)(F) of the Act specifies two methods for a hospital to qualify for the Medicare DSH adjustment. The primary method, which is the subject of a provision in this proposed rule, is for a hospital to qualify based on a complex statutory formula under which payment adjustments are based on the level of the DSH patient percentage. The first computation includes the number of patient days that are furnished to patients who were entitled to both Medicare Part A and Supplemental Security Income (SSI) benefits. This number is divided by the total number of patient days that are associated with patients entitled to benefits under Medicare Part A. The second computation includes hospital patient days that are furnished to patients who, for those days, were eligible for Medicaid but were not entitled to benefits under Medicare Part A. This number is divided by the number of total hospital inpatient days in the same period.
Hospitals whose DSH patient percentage exceeds 15 percent are eligible for a DSH payment adjustment (prior to April 1, 2001, the qualifying DSH patient percentage varied, in part, by the number of beds (66 FR 39882)). The DSH payment adjustment may vary based on the DSH patient percentage and the type of hospital: the statute provides for different adjustments for urban hospitals with 100 or more beds and rural hospitals with 500 or more beds, hospitals that qualify as rural referral centers or SCHs, and other hospitals.
We are combining our discussion of proposed changes to the policies for counting beds and patient days, in relation to the calculations at §§ 412.105(b) and 412.106(a)(1)(ii) because the underlying concepts are similar, and we believe they should generally be interpreted in a consistent manner for both purposes. Specifically, we are proposing to clarify that beds and patient days that are counted for these purposes should be limited to beds or patient days in hospital units or wards that would be directly included in determining the allowable costs of inpatient hospital care payable under the IPPS on the Medicare cost reports. As a preliminary matter, beds and patient days associated with these beds that are located in units or wards that are excluded from the IPPS (for example, psychiatric or rehabilitation units), and thus from the determination of allowable costs of inpatient hospital care under the IPPS on the Medicare cost report, are not to be counted for purposes of §§ 412.105(b) and 412.106(a)(1)(ii). The remainder of this discussion pertains to beds and patient days associated with these beds that are located in units or wards that are not excluded from the IPPS and for which costs are included in determining the allowable costs of inpatient hospital care under the IPPS on the Medicare cost report. For example, neonatal intensive care unit beds are included in the determination of available beds because the costs and patient days associated with these beds are directly included in the determination of the allowable costs of inpatient hospital care under the IPPS. In contrast, beds and patient days associated with these beds that are located in excluded distinct-part psychiatric or rehabilitation units would not be counted for purposes of §§ 412.105(b) and 412.106(a)(1)(ii) under any circumstances, because the costs associated with those units or wards are excluded from the determination of the costs of allowable inpatient care under IPPS.
This policy has been upheld in the past by various courts. (See, for example,
Our policies on counting beds are applied consistently for both IME and DSH although the incentives for hospitals can be different for IME and DSH. For purposes of IME, teaching hospitals have an incentive to minimize their number of available beds in order to increase the resident-to-bed ratio and maximize the IME adjustment. On the other hand, for DSH purposes, urban hospitals with under 100 beds and rural hospitals with under 500 beds may have an incentive to increase their bed count in order to qualify for the higher DSH payments for urban hospitals with over 100 beds (or rural hospitals with over 500 beds).
However, some courts have applied our current rules in a manner that is inconsistent with our current policy and that would result in inconsistent treatment of beds, patient days, and costs. For example, in
These courts considered subregulatory guidance (program instructions) in formulating their decisions. Although this proposed rule would clarify the underlying principles for our bed and patient days counting policies and would amend the relevant regulations to be consistent with these clarifications, we recognize the need to revise some of our program instructions to make them fully consistent with these clarifications and will act to do so as soon as possible.
While some of the topics discussed below pertain only to counting available beds (unoccupied beds) and some only to counting patient days (section 1115 waiver days, dual-eligible days, and Medicare+Choice days), several important topics are applicable to both bed-counting and day-counting policies (nonacute care beds and days, observation beds and days, and swing-beds and days). Therefore, for ease of discussion, we have combined all topics pertaining to counting available beds and patient days together in the following discussion.
The current policy for counting hospital beds for IME and DSH is specified at § 412.105(b). That count is based on total available bed days during
Further instructions for counting beds are detailed in section 2405.3, Part I, of the Medicare Provider Reimbursement Manual (PRM). That section states that a bed must be permanently maintained for lodging inpatients and it must be available for use and housed in patient rooms or wards. Thus, beds in a completely or partially closed wing of the facility are considered available only if the hospital can put the beds into use when they are needed.
Currently, if a bed can be staffed for inpatient care either by nurses on staff or from a nurse registry within 24 to 48 hours, the unoccupied bed is determined available.
Section 2405.3 of the PRM states that beds in unoccupied rooms or wards are to be excluded from the bed count if the associated costs are excluded from depreciable plant assets because the area is not available for patient use. However, issues continue to arise with regard to how to treat entire units or even entire floors that are unoccupied over a period of time. For example, in one recent Provider Reimbursement Review Board (PRRB) decision, the hospital acknowledged that an entire floor was temporarily unoccupied for approximately 2 years. Rooms on the floor were used for office space, storage and outpatient services. The PRRB ruled that current rules allowed these beds to be counted. Specifically, the PRRB found the beds could reasonably be made ready for inpatient use within 24 to 48 hours, the rooms were counted on the hospital's cost report as depreciable plant assets available for patient care, and the hospital could adequately provide patient care in the beds using staff nurses or nurses from a nurse registry. Upon review, the Administrator also ultimately upheld this decision based on existing policies and instructions.
We do not believe that an accurate bed count should include beds that are essentially hypothetical in nature; for example, when the beds are on a floor that is not used for inpatient care throughout the entire cost reporting period (and, indeed, may have been used for other purposes). Followed to the extreme, a hospital could count every bed in its facility, even if it had no intention of ever using a bed for inpatient care, as long as it would be theoretically possible to place an inpatient in the bed. We do not believe such a result would accurately reflect a hospital's inpatient bed capacity. Even though some teaching hospitals have an incentive to minimize the bed count for payment purposes, some DSH hospitals have an incentive to maximize the bed count for the same reason. Our current policy is intended to reflect a hospital's bed count as accurately as possible, achieving a balance between capturing short-term shifts in occupancy and long-term changes in capacity. Therefore, we believe further clarification and refinement of our policies relating to counting available beds is necessary.
In the FY 2003 IPPS proposed rule published on May 9, 2002 (67 FR 31462), we proposed that, if a hospital's reported bed count results in an occupancy rate (average daily census of patients divided by the number of beds) below 35 percent, the applicable bed count, for purposes of establishing the number of available beds for that hospital would exclude beds that would result in an average annual occupancy rate below 35 percent. However, at the time the FY 2003 IPPS final rule was published on August 1, 2002 (67 FR 50060), we decided not to proceed with the proposed changes as final and to reconsider the issue as part of a future comprehensive analysis of our bed and patient day counting policies.
In this proposed rule, rather than establish a minimum standard occupancy rate, we are proposing to determine whether beds in a unit are available based upon whether the unit was used to provide patient care of a level generally payable under the IPPS (“IPPS level of care”)
For example, our policy as to how to count beds during minor renovations of units, wards, or individual rooms has been that unless the space costs are treated as nonallowable, the beds would be counted. Under the policy we are proposing, beds in an otherwise unoccupied unit that are occupied (for purposes of providing IPPS-level care) at any time during the 3 preceding months would be counted as available for the current month. This would apply even if the rooms were undergoing renovation during a portion of that 3-month period.
We believe a unit or ward can be defined as a group of rooms staffed by nurses assigned to a single nursing station. In most cases, the patients treated within a single unit or ward will receive a similar level of care (that is, acute, intensive, rehabilitation, psychiatric, or skilled nursing). However, we encourage comments on the most useful definition of a unit or ward.
We believe this proposed policy would provide a clear standard for both hospitals and fiscal intermediaries to use to determine whether otherwise unoccupied beds should be counted. We note that if the required time period for excluding the unoccupied beds were to be set too low, hospitals could potentially manipulate their available bed count by not admitting any patients to a unit during low occupancy periods, thereby distorting the measure of hospital size. We believe 3 months, one quarter of a hospital's fiscal year, represents a reasonable standard for determining that a unit is not being used to provide patient care and may be excluded from the hospital's available bed count.
It is also necessary to consider our policy with respect to individual beds within rooms located in an otherwise occupied unit when those beds are used for alternative purposes. For example, section 2405.3 of the PRM states that beds used for the following are excluded from the definition (of a bed): Postanesthesia or postoperative recovery rooms, outpatient areas, emergency rooms, ancillary departments nurses' and other staff residences, and other such areas as are regularly maintained and utilized for only a portion of the stay of patients or for purposes other than inpatient lodging. In some situations, beds used for these excluded
Beds being used to provide specific categories of nonacute services, such as outpatient services in an observation bed or skilled nursing services in a swing-bed, are excluded from the count. As discussed later, this flows from our policy that the bed days are treated consistently with the assignment of the costs on the Medicare cost report of the services provided in the bed.
In the case of individual rooms in an otherwise occupied unit that are altered to be used for other uses besides inpatient care, we are proposing the bed(s) should be counted if a patient could be admitted to the room within 24 hours (proposed § 412.105(b)(3)). This would apply even if the bed(s) were not currently located in the room, as long as a bed could be physically placed in the room and made available within 24 hours. We are proposing that it would no longer be necessary for the hospital to determine whether a bed could be staffed within 24 to 48 hours. For example, in the case of a room that has been altered for use as a staff lounge, if the room could be made available to house a patient merely by replacing the lounge furniture with a patient bed, the bed should be counted as available.
Under this proposal, other than when an inpatient room is used to provide observation services, labor/delivery room services, or skilled nursing services in a swing-bed (all discussed later in this proposed rule), the alternative purpose of the room is only relevant if it impacts whether the room could be made available for patient occupancy within 24 hours. If the hospital was fully occupied (no other room was available), and the room still was not put into service when needed, that would provide evidence that the room could not be made available and beds in the room should be excluded from the bed count.
Therefore, we are proposing to amend § 412.105(b) to indicate that the bed days in a unit that is unoccupied by patients receiving IPPS-level care for the 3 preceding months are to be excluded from the available bed day count for the current month. We are further proposing the beds in a unit that was occupied for IPPS-level care during the 3 preceding months should be counted unless they could not be made available for patient occupancy within 24 hours, or they are used to provide outpatient observation services or swing-bed skilled nursing care.
As noted above, these policies are consistent with the reporting of the days, costs, and beds that are used to calculate the costs of hospital inpatient care in individual cost centers on the Medicare cost report. Furthermore, since the IME and DSH adjustments are part of the IPPS, we read the statute to apply only to inpatient beds and days.
Under the existing provisions of § 412.105(b), the regulations specifically exclude beds or bassinets in the healthy newborn nursery, custodial care beds, or beds in excluded distinct part hospital units as types of beds excluded from the count of available beds.
Existing regulations at § 412.106(a)(1)(ii) state that the number of patient days used in the DSH percentage calculation includes only those days attributable to areas of the hospital that are subject to the IPPS and excludes all others. This regulation was added after being proposed in the March 22, 1988
As noted previously, a recent decision in the Ninth Circuit Court of Appeals (
In light of the Ninth Circuit decision that our rules were not sufficiently clear to permit exclusion of bed days based on the area where the care is provided, we are proposing to revise our regulations to be more specific. Therefore, in this proposed rule, we are proposing to clarify that beds and patient days are excluded from the calculations at § 412.105(b) and § 412.106(a)(1)(ii) if the nature of the care provided in the unit or ward is inconsistent with what is typically furnished to acute care patients, regardless of whether these units or wards are separately certified or are located in the same general area of the hospital as a unit or ward used to provide an acute level of care. Although the intensity of care may vary within a particular unit, such that some patients may be acute patients while others are nonacute, we understand that a patient-by-patient review of whether the care received would be paid under the IPPS would be unduly burdensome. Therefore, we believe it is more practical to permit the application of this principle based upon the location at which the services were furnished.
In particular, we are proposing to revise our regulations to clarify that the beds and patient days attributable to a nonacute care unit or ward should not be included in the calculations at § 412.105(b) and § 412.106(a)(1)(ii), even if the unit is not separately certified by Medicare as a distinct-part unit and even if the unit or ward is within the same general location of the hospital as areas that are subject to the IPPS.
Exceptions to this policy are outpatient observation and swing-bed days, which are excluded from the count of available bed days even if the care is provided in an acute care unit. Our policies pertaining to these beds are discussed further below. Another exception is healthy newborn nursery days. The costs, days, and beds of a healthy newborn nursery are excluded from inpatient calculations for Medicare purposes. Meanwhile, for the purpose of computing the Medicaid patient share computation of the DSH patient percentages, these days are included both as Medicaid patient days and as total patient days. Nursery costs are not directly included in calculating Medicare hospital inpatient care costs because Medicare does not generally cover services for infants. However, Medicaid does offer extensive coverage to infants, and nursery costs would be directly included in calculating Medicaid hospital inpatient care costs. Therefore, these costs, days, and beds are excluded for Medicare purposes, but included for determining the Medicaid DSH percentage. (This policy was previously communicated through a memorandum to CMS Regional Offices on February 27, 1997.)
Generally, as discussed previously, if the nature of the care provided in the unit or ward is consistent with what is typically furnished to acute care patients, and, therefore, would be characteristic of services paid under the IPPS, the patient days, beds, and costs of that unit or ward would be classified as inpatient acute care (except for observation bed days and swing bed days, as discussed later in this
This proposed policy is not intended to focus on the level or type of care provided to individual patients in a unit, but rather on the level and type of care provided in the unit as a whole. For example, the bed days for a patient participating in an experimental procedure that is not covered under the IPPS should be counted as long as the patient is treated in a unit of the hospital that generally provides acute inpatient care normally payable under the IPPS. The expectation is that a patient located in an acute care unit or ward of the hospital is receiving a level of care that is consistent with what would be payable under the IPPS.
There are instances where services that are provided in units excluded from the IPPS (such as rehabilitation and psychiatric distinct-part units) are consistent with the level of care that would qualify for payment under the IPPS. However, §§ 412.105(b) and 412.106(a)(1)(ii) specifically exclude the beds and patient days associated with these excluded units. That exclusion is because the costs of care provided in these units are paid outside the IPPS, even though some of the care provided is of a type that would be payable under the IPPS if the care was provided in an IPPS unit.
We are proposing to revise § 412.105(b) to clarify that beds in units or wards established or used to provide a level of care that is not consistent with what would be payable under the IPPS cannot be counted (proposed paragraph (b)(1)). We also are proposing to revise the DSH regulations at § 412.106(a)(1)(ii) to clarify that the number of patient days includes only those attributable to patients that receive care in units or wards that furnish a level of care that would generally be payable under the IPPS (proposed paragraph (a)(1)(ii)(C)).
We note these proposed revisions are clarifications of our regulations to reflect our longstanding interpretation of the statutory intent, especially relating to the calculation of the Medicare DSH patient percentage.
Observation services are those services furnished by a hospital on the hospital's premises that include use of a bed and periodic monitoring by a hospital's nursing or other staff in order to evaluate an outpatient's condition or to determine the need for a possible admission to the hospital as an inpatient. When a hospital places a patient under observation but has not formally admitted him or her as an inpatient, the patient initially is treated as an outpatient. Consequently, the observation bed days are not recognized under the IPPS as part of the inpatient operating costs of the hospital.
Observation services may be provided in a distinct observation bed area, but they may also be provided in a routine inpatient care area. In either case, our policy is the bed days attributable to beds used for observation services are excluded from the counts of available bed days and patient days at §§ 412.105(b) and 412.106(a)(1)(ii). This policy was clarified in a memorandum that was sent to all CMS Regional Offices (for distribution to fiscal intermediaries) dated February 27, 1997, which stated that if a hospital provides observation services in beds that are generally used to provide hospital inpatient services, the equivalent days that those beds are used for observation services should be excluded from the count of available bed day count (even if the patient is ultimately admitted as an acute inpatient).
A swing-bed is a bed otherwise available for use to provide acute inpatient care that is also occasionally used to provide SNF care. The criteria to qualify as a swing-bed hospital are located under § 482.66, and for a swing-bed CAH under § 485.645. Under § 413.114(a)(1), payment for posthospital SNF care furnished in swing-beds is in accordance with the provisions of the prospective payment system for SNF care (effective for services furnished in cost reporting periods beginning on and after July 1, 2002). Similar to observation beds and patient days, swing-beds and patient days are excluded from the counts of available bed days and patient days at §§ 412.105(b) and 412.106(a)(1)(ii) when the swing-bed is used to furnish SNF care.
Observation beds and swing-beds are both special, frequently temporary, alternative uses of acute inpatient care beds. That is, only the days an acute inpatient care unit bed is used to provide outpatient observation services are to be deducted from the available bed count under § 412.105(b). Otherwise, the bed is considered available for acute care services (as long as it otherwise meets the criteria to be considered available). This same policy applies for swing-beds. The policies to exclude observation bed days and swing-bed days stem from the fact that these bed days are not payable under the IPPS (unless the patient is ultimately admitted, in the case of observation bed days).
Some hospitals have contested our policy excluding swing-beds and patient days and observation beds and patient days under existing §§ 412.105(b) and 412.106(a)(1)(ii). For example, in
The list of the types of beds excluded from the count under existing § 412.105(b) was never intended to be an exhaustive list of all of the types of beds to be excluded from the bed count under this provision. In fact, over the years, specific bed types have been added to the list as clarifications of the types of beds to be excluded, not as new exclusions (see the September 1, 1994
Courts also have recently found that observation and swing-bed days are included under the ‘plain meaning’ of § 412.106(a)(1)(ii), which reads: “The number of patient days includes only those days attributable to areas of the hospital that are subject to the prospective payment system and excludes all others.” However, the preamble language when this provision was promulgated clarified its meaning (53 FR 38480):
• “Although previously the Medicare regulations did not specifically define the inpatient days for use in the computation of a hospital's disproportionate share patient percentage, we believe that, based on a
Our policy excluding outpatient observation and swing-bed days is consistent with this regulatory interpretation of days to be counted under § 412.106(a)(1)(ii). That is, the services provided in these beds are not payable under the IPPS (unless the patient is admitted, in the case of observation bed days).
As outlined previously, our consistent and longstanding policy, which has been reviewed and upheld previously by several courts, including the United States District Court for the District of Columbia, is based on the principle of counting beds in the same manner as the patient days and costs are treated. Our policy to exclude observation and swing-bed days under the regulations at § 412.105(b) and § 412.106(a)(1)(ii) stems from this policy.
However, we are proposing to amend our policy with respect to observation bed days of patients who ultimately are admitted. As noted previously, our current policy is that these bed days are excluded from the available bed day and the patient day counts. This policy was communicated in a memorandum to all CMS Regional Offices on February 27, 1997. Specifically, we are proposing that, if a patient is admitted as an acute inpatient subsequent to receiving outpatient observation services, because the charges of the observation ancillary services the patient receives are currently treated as inpatient charges on the cost report, in order to be consistent with our policy to treat the costs and patient days consistently, we will begin to include the patient bed days associated with the observation services in the inpatient bed day count.
In order to avoid any potential future misunderstandings about our policies regarding the exclusion of observation and swing-bed days under the regulations at § 412.105(b) and § 412.106(a)(1)(ii), we are proposing to revise our regulations to specify our policy that observation and swing-bed bed days are to be excluded from the counts of both available beds and patient days, unless a patient treated in an observation bed is ultimately admitted, in which case the beds and days would be included in those counts.
Prior to December 1991, Medicare's policy on counting days for maternity patients required an inpatient day to be counted for an admitted maternity patient in the labor/delivery room at the census taking hour. This is consistent with Medicare policy for counting days for admitted patients in any other ancillary department at the census-taking hour. However, based on decisions adverse to the government regarding this policy in a number of Federal courts of appeal, including the United States Court of Appeals for the District of Columbia Circuit, the policy regarding the counting of inpatient days for maternity patients was revised.
Therefore, our current policy regarding the treatment of labor and delivery bed days was initially described in Section 2205.2 of the PRM. Section 2205.2. of the PRM states that a maternity inpatient in the labor/delivery room at midnight is not included in the census of inpatient routine care if the patient has not occupied an inpatient routine bed at some time since admission. For example, if a Medicaid patient is in the labor room at the census and has not yet occupied a routine bed, the bed day is not counted as a routine bed day of care in Medicaid or total days and, therefore, is not included in the counts under existing §§ 412.105(b) and 412.106(a)(1)(ii). If the patient is in the labor room at the census but had first occupied a routine bed, a routine bed day is counted, in Medicaid and total days, for DSH purposes and for apportioning the cost of routine care on the cost report (consistent with our longstanding policy to treat days, costs, and beds similarly).
Increasingly, hospitals are redesigning their maternity areas from separate labor and delivery rooms apart from the postpartum rooms, to single labor, delivery room, and postpartum (LDRP) rooms. In order to appropriately track the days and costs of LDRP rooms, it is necessary to apportion them between the labor and delivery ancillary cost center and the routine adults and pediatrics cost center. This is done by determining the proportion of the patient's stay in the LDRP room that the patient was receiving ancillary services (labor and delivery) as opposed to routine adult and pediatric services (recovery and postpartum).
An example of this would be if 25 percent of the patient's time in the LDRP room was for labor/delivery services and 75 percent for routine care, over the course of a 4-day stay in the LDRP room. In that case, 75 percent of the time the patient spent in the LDRP room is applied to the total bed days and costs (resulting in 3 routine adults and pediatrics bed days for this patient, 75 percent of 4 total days). The resulting days (or portion of days) are included in total days and in Medicaid days for all purposes. For purposes of determining hospital bed count, the time when the beds are unoccupied should be counted as available bed days using an average percentage (for example, 75 percent adults and pediatrics and 25 percent ancillary) based on all patients. In other words, 75 percent of the days the bed is unoccupied would be counted in the available bed count.
We realize that it may be burdensome for a hospital to determine for each patient in this type of room the amount of time spent in labor/delivery and the amount of time spent receiving routine care. Alternatively, the hospital could calculate an average percentage of time patients receive ancillary services, as opposed to routine inpatient care during a typical month, to apply the rest of the year.
Some States extend medical benefits to a given population that could not have been made eligible for Medicaid under a State plan amendment under section 1902(r)(2) or section 1931(b) of the Act, under a demonstration under a section 1115(a)(2) demonstration project (also referred to as a section 1115 waiver). These populations are specific, finite populations identifiable in the award letters and special terms and conditions for the demonstrations.
On January 20, 2000, we issued an interim final rule with comment period (65 FR 3136), followed by a final rule issued on August 1, 2000 (65 FR 47086 through 47087), to allow hospitals to include the patient days of all populations that receive benefits under a section 1115 demonstration project in calculating the Medicare DSH adjustment. Previously, hospitals were to include only those days for populations under the section 1115 demonstration project who were, or could have been made, eligible under a State plan. Patient days of those expansion waiver groups who could not be made eligible for medical assistance under the State plan were not to be included for determining Medicaid patient days in calculating the Medicare DSH patient percentage. Under the January 20, 2000 interim final rule with comment period (65 FR 3137), hospitals could include in the numerator of the Medicaid fraction those patient days for individuals who receive benefits under
In the January 20, 2000 interim final rule with comment period, we explained that including the section 1115 expansion populations “in the Medicare DSH calculation is fully consistent with the Congressional goals of the Medicare DSH adjustment to recognize the higher costs to hospitals of treating low-income individuals covered under Medicaid.”
Since that revision, we have become aware that there are certain section 1115 demonstration projects that serve expansion populations with benefit packages so limited that the benefits are not similar to the medical assistance available under a Medicaid State plan. These section 1115 demonstration projects extend coverage only for specific services and do not include inpatient care in the hospital. Because of the limited nature of the coverage offered, the population involved may have a significantly higher income than traditional Medicaid beneficiaries.
In allowing hospitals to include patient days related to section 1115 expansion waiver populations, our intention was to include patient days of section 1115 expansion waiver populations who receive benefits under the demonstration project that are similar to those available to traditional Medicaid beneficiaries, including inpatient benefits. Because of the differences between expansion populations in these limited benefit demonstrations and traditional Medicaid beneficiaries, we are proposing that the Medicare DSH calculation should exclude from treatment as Medicaid patient days those patient days attributable to limited benefit section 1115 expansion waiver populations (proposed § 412.106(b)(4)(i)).
For example, a State may extend a family planning benefit to an individual for 2 years after she has received the 60-day postpartum benefit under Medicaid, or a State may choose to provide a family planning benefit to all individuals below a certain income level, regardless of having previously received the Medicaid postpartum benefit. This is a limited, temporary benefit that is generally administered in a clinic setting (see section 1905(a)(4)(C) of the Act). Also, a number of States are developing demonstrations that are limited to providing beneficiaries an outpatient prescription drug benefit. Generally, these limited benefits under a demonstration project do not include inpatient benefits. If a hospital were to include the days attributable to patients receiving benefits under such a limited benefit, the hospital would be able to receive higher DSH payments, perhaps substantially, for patients who may otherwise be insured for inpatient care. For example, these limited demonstrations provide benefits that may be needed to supplement private insurance coverage for individuals who do not have incomes low enough to qualify for Medicaid under the State plan. We do not believe such patients should be counted in the DSH patient percentage as eligible for title XIX.
As we have noted previously, at the time the Congress enacted the Medicare DSH adjustment provision, there were no approved section 1115 demonstration projects involving expansion populations and the statute does not address the treatment of these days. Although we did not initially include patient days for individuals who receive extended benefits only under a section 1115 demonstration project, we nevertheless expanded our policy in the January 20, 2000 revision to these rules to include such patient days. We now believe that this reading is warranted only to the extent that those individuals receive inpatient benefits under the section 1115 demonstration project.
Therefore, we are proposing to revise § 412.106(b)(4)(i) to clarify that patients must be eligible for medical assistance inpatient hospital benefits under an approved State Medicaid plan (or similar benefits, including inpatient hospital benefits, under a section 1115 demonstration project) in order for their hospital inpatient days to be counted as Medicaid days in the calculation of a hospital's DSH patient percentage. Under this proposed clarification, hospital inpatient days attributed to patients who do not receive coverage for inpatient hospital benefits either under the approved State plan or through a section 1115 demonstration would not be counted in the calculation of Medicaid days for purposes of determining a hospital's DSH patient percentage.
Under this reading, in the examples given above, the days associated with a hospital inpatient who receives coverage of prescription drugs or family planning services on an outpatient basis, but no inpatient hospital coverage, through either a Medicaid State plan or a section 1115 demonstration, would not be counted as Medicaid days for purposes of determining the DSH patient percentage.
This proposed revision would address an unintended potential consequence of our interpretation that hospitals may include in the DSH calculation patient days associated with section 1115 demonstration populations (65 FR 3136). As discussed above, that interpretation was based on our finding that individuals receiving a comprehensive benefit package under a section 1115 demonstration project could appropriately be included in the numerator of the Medicaid fraction even though the statute does not require such an inclusion, but did not address individuals who were receiving limited benefit packages under a section 1115 demonstration project.
As described above, the DSH patient percentage is equal to the sum of the percentage of Medicare inpatient days attributable to patients entitled to both Medicare Part A and SSI benefits, and the percentage of total inpatient days attributable to patients eligible for Medicaid but not entitled to Medicare Part A benefits. If a patient is a Medicare beneficiary who is also eligible for Medicaid, the patient is considered dual-eligible and the patient days are included in the Medicare fraction of the DSH patient percentage but not the Medicaid fraction. This is consistent with the language of section 1886(d)(5)(F)(vi)(II) of the Act, which specifies that patients entitled to benefits under Part A are excluded from the Medicaid fraction.
This policy currently applies even after the patient's Medicare coverage is exhausted. In other words, if a dual-eligible patient is admitted without any Medicare Part A coverage remaining, or the patient exhausts Medicare Part A coverage while an inpatient, his or her patient days are counted in the Medicare fraction before and after Medicare coverage is exhausted. This is consistent with our inclusion of Medicaid patient days even after the patient's Medicaid coverage is exhausted.
We are proposing to change our policy, to begin to count in the Medicaid fraction of the DSH patient percentage the patient days of dual-eligible Medicare beneficiaries whose Medicare coverage has expired. We note the statute referenced above stipulates that patient days attributable to patients entitled to benefits under Medicare Part A are to be excluded from the Medicaid fraction, while the statute specifies the Medicaid fraction is to include patients who are eligible for Medicaid.
As noted above, our current policy regarding dual-eligible patient days is that they are counted in the Medicare fraction and excluded from the
Therefore, in order to facilitate consistent handling of these days across all hospitals, we are proposing that the days of patients who have exhausted their Medicare Part A coverage will no longer be included in the Medicare fraction. Instead, we are proposing these days should be included in the Medicaid fraction of the DSH calculation. (We note that not all SSI recipients are Medicaid eligible. Therefore, it will not be automatic that the patient days of SSI recipients will be counted in the Medicaid fraction when their Part a coverage expires.)
Under this proposed change, before a hospital could count patient days attributable to dual-eligible beneficiaries in the Medicaid fraction, the hospital must submit documentation to the fiscal intermediary that justifies including the days in the Medicaid fraction after the Medicare Part A benefits have been exhausted. That is, if the State provides data on all the days associated with all dual-eligible patients treated at a hospital, regardless of whether the beneficiary had Medicare Part A coverage, the hospital is responsible for providing documentation showing which days should be included in the Medicaid fraction because Medicare Part A coverage was exhausted.
Under § 422.1, an M+C plan “means health benefits coverage offered under a policy or contract by an M+C organization that includes a specific set of health benefits offered at a uniform premium and uniform level of cost-sharing to all Medicare beneficiaries residing in the service area of the M+C plan.” Generally, each M+C plan must provide coverage of all services that are covered by Medicare Part A and Part B (or just Part B if the M+C plan enrollee is only entitled to Part B).
We have received questions whether patients enrolled in an M+C Plan should be counted in the Medicare fraction or the Medicaid fraction of the DSH patient percentage calculation. The question stems from whether M+C plan enrollees are entitled to benefits under Medicare Part A since M+C plans are administered through Medicare Part C.
We note that, under § 422.50, an individual is eligible to elect an M+C plan if he or she is entitled to Medicare Part A and enrolled in Part B. However, once a beneficiary has elected to join an M+C plan, that beneficiary's benefits are no longer administered under Part A.
Therefore, we are proposing to clarify that once a beneficiary elects Medicare Part C, those patient days attributable to the beneficiary should not be included in the Medicare fraction of the DSH patient percentage. These patient days should be included in the count of total patient days in the Medicaid fraction (the denominator), and the patient's days for the M+C beneficiary who is also eligible for Medicaid would be included in the numerator of the Medicaid fraction.
With the creation of the MGCRB, beginning in FY 1991, under section 1886(d)(10) of the Act, hospitals could request reclassification from one geographic location to another for the purpose of using the other area's standardized amount for inpatient operating costs or the wage index value, or both (September 6, 1990 interim final rule with comment period (55 FR 36754), June 4, 1991 final rule with comment period (56 FR 25458), and June 4, 1992 proposed rule (57 FR 23631)). Implementing regulations in subpart L of part 412 (§§ 412.230
Effective with reclassifications for FY 2003, section 1886(d)(10)(D)(vi)(II) of the Act provides that the MGCRB must use the average of the 3 years of hourly wage data from the most recently published data for the hospital when evaluating a hospital's request for reclassification. The regulations at § 412.230(e)(2)(ii) stipulate that the wage data are taken from the CMS hospital wage survey used to construct the wage index in effect for prospective payment purposes. To evaluate applications for wage index reclassifications for FY 2004, the MGCRB used the 3-year average hourly wages published in Table 2 of the August 1, 2002 IPPS final rule (67 FR 50135). These average hourly wages are taken from data used to calculate the wage indexes for FY 2001, FY 2002, and FY 2003, based on cost reporting periods beginning during FY 1997, FY 1998, and FY 1999, respectively.
Last year, we received a comment suggesting that we allow for the correction of inaccurate data from prior years as part of a hospital's bid for geographic reclassification (67 FR 50027). The commenter suggested that not to allow corrections to the data results in inequities in the calculation in the average hourly wage for purposes of reclassification. In the August 1, 2002 IPPS final rule, we responded:
“Hospitals have ample opportunity to verify the accuracy of the wage data used to calculate their wage index and to request revisions, but must do so within the prescribed timelines. We consistently instruct hospitals that they are responsible for reviewing their data and availing themselves to the opportunity to correct their wage data within the prescribed timeframes. Once the data are finalized and the wage indexes published in the final rule, they may not be revised, except through the mid-year correction process set forth in the regulations at § 412.63(x)(2). Accordingly, it has been our consistent policy that if a hospital does not request corrections within the prescribed timeframes for the development of the wage index, the hospital may not later seek to revise its data in an attempt to qualify for MGCRB reclassification.
“Allowing hospitals the opportunity to revise their data beyond the timelines required to finalize the data used to calculate the wage index each year would lessen the importance of complying with those deadlines. The likely result would be that the data used to compute the wage index would not be as carefully scrutinized because
Since responding to this comment in the FY 2003 IPPS final rule, we have become aware of a situation in which a hospital does not meet the criteria to reclassify because its wage data were erroneous in prior years, and these data are now being used to evaluate its reclassification application. In addition, in this situation, the hospital's wage index was subject to the rural floor because the hospital was located in an urban area with an actual wage index below the statewide rural wage index for the State, and it was for a time period preceding the requirement for using 3 years of data. Therefore, the hospital contends, it had no incentive to ensure its wage data were completely accurate. (However, we would point out that hospitals are required to certify that their cost reports submitted to CMS are complete and accurate. Furthermore, inaccurate or incomplete reporting may have other payment implications beyond the wage index.)
While we continue to have all of the concerns we expressed in last year's final rule, we now more fully understand this particular hospital's situation. Although we do have administrative authority to establish a policy allowing corrections for this particular set of circumstances, we are concerned about establishing a precedent that could reduce the importance of ensuring that the final wage data published in the annual IPPS final rule are complete and accurate. As we indicated in our response last year, we are concerned this could lead to less accuracy and stability in the wage indexes from year to year.
However, we are soliciting comments on whether it may be appropriate to establish a policy whereby, for the limited purpose of qualifying for reclassification based on data from years preceding the establishment of the 3-year requirement (that is, cost reporting years beginning before FY 2000), a hospital in an urban area that was subject to the rural floor for the period during which the wage data the hospital wishes to revise were used to calculate the wage index, a hospital may request that its wage data be revised.
Medicare has historically paid providers for the share of the costs that providers incur in connection with approved educational activities. The activities may be divided into the following three general categories to which different payment policies apply:
• Approved graduate medical education (GME) programs in medicine, osteopathy, dentistry, and podiatry. Medicare makes direct and indirect medical education payments to hospitals for residents training in these programs. Existing policy on direct GME payment is found at 42 CFR 413.86, and for indirect GME payment at 42 CFR 412.105.
• Approved nursing and allied health education programs operated by the provider. The costs of these programs are excluded from the definition of inpatient hospital operating costs and are not included in the calculation of payment rates for hospitals paid under the IPPS or in the calculation of payments to hospitals and hospital units excluded from the IPPS that are subject to the rate-of-increase ceiling. These costs are separately identified and “passed through” (that is, paid separately on a reasonable cost basis). Existing regulations on nursing and allied health education program costs are located at 42 CFR 413.85.
• All other costs that can be categorized as educational programs and activities are considered to be part of normal operating costs and are included in the per discharge amount for hospitals subject to the IPPS, or are included as reasonable costs that are subject to the rate-of-increase limits for hospitals and hospital units excluded from the IPPS.
In this section, we are proposing to clarify our policy governing payments to hospitals for provider-operated nursing and allied health education programs. Under the regulations at § 413.85 (“Cost of approved nursing and allied health educational activities”), Medicare makes reasonable cost payment to hospitals for provider-operated nursing and allied health education programs. A program is considered to be provider-operated if the hospital meets the criteria specified in § 413.85(f), which means the hospital directly incurs the training costs, controls the curriculum and the administration of the program, employs the teaching staff, and provides and controls both clinical training and classroom instruction (where applicable) of a nursing or allied health education program.
In the January 12, 2001
Section 6205(b)(2) of Public Law 101-239 directed the Secretary to publish regulations clarifying the rules governing allowable costs of approved educational activities. The Secretary was directed to publish regulations to specify the conditions under which those costs are eligible for pass-through, including the requirement that there be a relationship between the approved nursing or allied health education program and the hospital. Section 4004(b)(1) of Public Law 101-508 provides an exception to the requirement that programs be provider-operated to receive pass-through payments. The section provides that, effective for cost reporting periods beginning on or after October 1, 1990, if certain conditions are met, the costs incurred by a hospital (or by an educational institution related to the hospital by common ownership or control) for clinical training (as defined by the Secretary) conducted on the premises of the hospital under an approved nursing or allied health education program that is
Since publication of the January 12, 2001 final rule on nursing and allied health education, we have encountered questions concerning the substantive difference between provider-operated continuing education programs for nursing and allied health education (which would
Accordingly, upon publication of the final rule, we revised § 413.85(h)(3) to include continuing education programs in the same category as “educational seminars and workshops that increase the quality of medical care or operating efficiency of the provider.” Costs associated with continuing education programs, as stated above, are recognized as normal operating costs and are paid in accordance with applicable principles.
We received an inquiry requesting further clarification on what is meant by continuing education. It is our belief that provider-operated programs that do not lead to any specific certification in a specialty would be classified as continuing education. By certification, we do not mean certification in a specific skill, such as when an individual is certified to use a specific piece of machinery or perform a specific procedure. Rather, we believe certification would mean the ability to perform in the specialty as a whole.
Although, in the past, we believe we have allowed hospitals to be paid for operating a pharmacy “residency” program, it has come to our attention that those programs do not meet the criteria for approval as a certified program. Once individuals have finished their undergraduate degree in pharmacy, there are
We understand that
Because of the apparent confusion concerning continuing education programs in the nursing and allied health reasonable cost context, we are proposing to revise § 413.85(h)(3) to state that educational seminars, workshops, and continuing education programs in which the employees participate that enhance the quality of medical care or operating efficiency of the provider and, effective October 1, 2003, do not lead to certification required to practice or begin employment in a nursing or allied health specialty, would be treated as educational activities that are part of normal operating costs. We also are proposing to add a conforming definition of “certification” for purposes of nursing and allied health education under § 413.85(c) to mean “the ability to practice or begin employment in a specialty as a whole.”
Another matter that has come to CMS’ attention since publication of the January 12, 2001 final rule (66 FR 3363) on nursing and allied health education concerns the preamble language of the rule, which states:
“Concerning those hospitals that have established their own educational institution to meet accrediting standards, we believe that, in some cases, these providers can be eligible to receive payment for the classroom and clinical training of students in approved programs. If the provider demonstrates that the educational institution it has established is wholly within the provider's control and ownership and that the provider continues to incur the costs of both the classroom and clinical training portions of the program, the costs would continue to be paid on a reasonable cost basis. An independent college would not meet these criteria.
“An example of a program that could be considered provider-operated would be one in which the hospital is the sole corporate member of the college, elects the board of trustees, has board members in common, employs the faculty and pays the salaries, controls the administration of the program and the curriculum, and provides the site for the clinical and classroom training on the premises of the hospital. We believe that, in these situations, the community has not undertaken to finance the training of health professionals; the provider has merely restructured its provider-operated program to meet certain State or accrediting requirements. In most cases, providers have aligned themselves with already established educational institutions. We note that a program operated by an educational institution that is related to the provider through common ownership or control would not be considered to meet the criteria for provider operated.” (66 FR 3363)
We have received a question from a hospital that pertains to the cited preamble language in the narrow circumstance where the hospital previously received Medicare reasonable cost payment for direct operation of nursing or allied health education programs and then established its own wholly owned subsidiary college to operate the programs, in order to meet accreditation standards. The hospital has continued to receive Medicare payments after the hospital moved operation of the programs to the wholly owned subsidiary college. The hospital believes that, based on the cited preamble language regarding wholly owned subsidiary colleges and the lack of prior specific guidance on this particular organizational structure (as well as its continued receipt of pass-through payments) and because the hospital continues to pay all of the costs of the nursing and allied health education programs, the hospital is still the direct operator of the programs and should continue to receive pass-through treatment. However, we believe that once the hospital moved the direct operation of its nursing and allied health education programs to the college, the programs no longer met our provider-operated criteria at § 413.85(f). At the very least, it appears that the hospital did not hire the faculty for the program(s) and did not have direct control of the curriculum of the program(s) after operation was transferred to the wholly owned subsidiary college. As we stated in the
However, we understand that some hospitals, including this hospital, may have interpreted the preamble language that stated, “if the provider demonstrates that the educational institution it has established is wholly within the provider's control and ownership and that the provider continues to incur the costs of both the classroom and clinical training portions of the program, the costs would continue to be paid on a reasonable cost basis” (Ibid.), to mean that hospitals that establish wholly owned subsidiary colleges or educational institutions would continue to receive Medicare reasonable cost payment if the hospitals incur the costs of the classroom instruction and clinical training. We are proposing to clarify that transferring operation of previously provider-operated programs to educational institutions, even if the institutions are wholly owned by the hospital, does
While we are proposing to clarify that merely operating programs through a wholly owned subsidiary college does not constitute direct operation of nursing or allied health education programs unless the hospital itself meets the requirements of the regulations at § 413.85(f), we believe it would be unfair to recoup Medicare payments that have already been made to hospitals that meet this very narrow fact pattern. Therefore, we are proposing that Medicare would not recoup reasonable cost payment from hospitals that have received pass-through payments for portions of cost reporting periods occurring on or before October 1, 2003 (the effective date of finalizing this proposed rule) for the nursing or allied health education program(s) where the program(s) had originally been operated by the hospital, and then operation of the program(s) had been transferred by the hospital to a wholly owned subsidiary educational institution in order to meet accreditation standards prior to October 1, 2003, and where the hospital had continuously incurred the costs of both the classroom and clinical training portions of the programs at the educational institution.
In addition, we are proposing that, for portions of cost reporting periods occurring on or after October 1, 2003, such a hospital would continue to receive reasonable cost payments for the clinical training costs incurred by the hospital for the program(s) described above that were previously provider operated. However, we are further proposing that, with respect to classroom costs, only those classroom costs incurred by the hospital for the courses that were paid by Medicare on a reasonable cost basis and included in the hospital's provider-operated program(s) could continue to be reimbursed on a reasonable cost basis. That is, Medicare would pay on a reasonable cost basis for the classroom costs associated with the courses provided as part of the nursing and allied health education programs (for example, the courses relating to the theory and practice of the particular nursing and allied health discipline(s)) that were offered by the hospital when the hospital was the direct operator of the program(s).
We believe this proposed policy is appropriate since continued pass-through payment will allow these hospitals to maintain equal footing with other hospitals that receive pass-through payments and have maintained their provider-operated programs. In addition, it would not be equitable to discontinue longstanding Medicare pass-through payment to these hospitals (in fact, reasonable cost payment to at least one of these hospitals for nonprovider-operated programs preceded the publication of the January 12, 2001 final rule on nursing and allied health education payments by many years) that restructured operation of their nursing and allied health education program(s) as wholly owned subsidiaries in order to meet accreditation standards while relying on their understanding of CMS' prior expressions of provider-operated requirements and the recent preamble language. If these providers were now forced to restructure in order to meet the requirements of § 413.85(f), they would not be able to maintain their accreditation.
We note that Congress has specifically expressed its intent that providers that have restructured their programs to be operated by a wholly owned subsidiary educational institution in order to meet accreditation standards should continue to receive Medicare reasonable cost payment. In the conference report accompanying the Consolidated Appropriations Resolution for FY 2003, Congress stated:
“The conferees are particularly concerned about nursing and allied health educational programs that cannot meet the regulations set forth at 42 CFR 413.85(f) solely as a result of regional educational accrediting criteria. Given the shortage of nursing and allied health professionals, the conferees support the payment of costs on a reasonable cost basis for a hospital that has historically been the operator of nursing and allied health education programs(s) that qualified for Medicare payments under 42 CFR 413.85, but, solely in order to meet educational standards, subsequently relinquishes some control over the program(s) to an educational institution, which meets regional accrediting standards; is wholly owned by the provider; and is supported by the hospital, that is, the hospital is incurring the costs of both the classroom and clinical training of the program.” (H.R. Rep. No. 108-10, 108th Cong., 1st Sess., 1115 (2003).)
However, the proposed policy does not allow these hospitals to be paid for additional classroom costs for courses that were not paid on a reasonable cost basis to the hospitals in conjunction with their provider-operated programs (for example, additional classes needed to meet degree requirements). We believe that to allow pass-through payment for those additional costs would provide these hospitals with an unfair advantage over other hospitals with provider-operated programs.
We note that any hospital that chooses to restructure its programs to be operated by a wholly owned subsidiary educational institution on or after the effective date of this proposal when finalized (October 1, 2003) would not be eligible for pass-through payments under this proposed provision unless the hospital continues to meet the requirements of § 413.85(f). We believe it is appropriate to limit the proposed payments to hospitals that restructured before this proposed rule is made final because our policy with respect to programs by a wholly owned subsidiary of a hospital will have been clarified in that final rule.
We are proposing to revise § 413.85 by adding new paragraphs (d)(1)(iii) and (g)(3) to reflect this proposed payment policy.
Under section 1886(h) of the Act, Medicare pays hospitals for the direct costs of graduate medical education
Section 1886(h) of the Act, as added by section 9202 of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L. 99-272) and implemented in regulations at § 413.86(e), establishes a methodology for determining payments to hospitals for the costs of approved GME programs. Section 1886(h)(2) of the Act, as added by COBRA, sets forth a payment methodology for the determination of a hospital-specific, base-period per resident amount (PRA) that is calculated by dividing a hospital's allowable costs of GME for a base period by its number of residents in the base period. The base period is, for most hospitals, the hospital's cost reporting period beginning in FY 1984 (that is, the period of October 1, 1983 through September 30, 1984). The PRA is multiplied by the weighted number of full-time equivalent (FTE) residents working in all areas of the hospital complex (or nonhospital sites, when applicable), and the hospital's Medicare share of total inpatient days to determine Medicare's direct GME payments.
Existing regulations at § 413.86(e)(4) specify the methodology for calculating each hospital's weighted average PRA and the steps for determining whether a hospital's PRA will be revised.
a. General Background on Methodology for Determining FTE Resident Count. As we explain earlier in this preamble, Medicare makes both direct and indirect GME payments to hospitals for the training of residents. Direct GME payments are reimbursed in accordance with section 1886(h) of the Act, based generally on hospital-specific PRAs, the number of FTE residents a hospital trains, and the hospital's Medicare patient share. The indirect costs of GME are reimbursed in accordance with section 1886(d)(5)(B) of the Act, based generally on the ratio of the hospital's FTE residents to the number of hospital beds. It is well-established that the calculation of both direct GME and IME payments is affected by the number of FTE residents that a hospital is allowed to count; generally, the greater the number of FTE residents a hospital counts, the greater the amount of Medicare direct GME and IME payments the hospital will receive. In an attempt to end the implicit incentive for hospitals to increase the number of FTE residents, Congress instituted a cap on the number of allopathic and osteopathic residents a hospital is allowed to count for direct GME and IME purposes under the provisions of section 1886(h)(4)(F) (direct GME) and section 1886(d)(5)(B)(v) (IME) of the Act. Dental and podiatric residents were not included in this statutorily mandated cap.
With respect to reimbursement of direct GME costs, since July 1, 1987, hospitals have been allowed to count the time residents spend training in sites that are not part of the hospital (referred to as “nonprovider” or “nonhospital sites”) under certain conditions. Section 1886(h)(4)(E) of the Act requires that the Secretary's rules concerning computation of FTE residents for purposes of separate reimbursement of direct GME costs “provide that only time spent in activities relating to patient care shall be counted and that all the time so spent by a resident under an approved medical residency training program shall be counted towards the determination of full-time equivalency, without regard to the setting in which the activities are performed, if the hospital incurs all, or substantially all, of the costs for the training program in that setting.” (Section 1886(h)(4)(E) of the Act, as added by section of 9314 of the Omnibus Budget Reconciliation Act of 1986, Pub. L. 99-509.)
Regulations on time spent by residents training in nonhospital sites for purposes of direct GME payment were first implemented in the September 29, 1989 final rule (54 FR 40286). We stated in that rule (under § 413.86(f)(3)) that a hospital may count the time residents spend in nonprovider settings for purposes of direct GME payment if the residents spend their time in patient care activities and there is a written agreement between the hospital and the nonprovider entity stating that the hospital will incur all or substantially all of the costs of the program. The regulations at that time defined “all or substantially all” of the costs to include the residents’ compensation for the time spent at the nonprovider setting.
Prior to October 1, 1997, for IME payment purposes, hospitals could only count the time residents spend training in areas subject to the IPPS and outpatient areas of the hospital. Section 4621(b)(2) of the Balanced Budget Act of 1997 (Pub. L. 105-33) revised section 1886(d)(5)(B) of the Act to allow providers to count time residents spend training in nonprovider sites for IME purposes, effective for discharges occurring on or after October 1, 1997. Specifically, section 1886(d)(5)(B)(iv) of the Act was amended to provide that “all the time spent by an intern or resident in patient care activities under an approved medical residency program at an entity in a non-hospital setting shall be counted towards the determination of full-time equivalency if the hospital incurs all, or substantially all, of the costs for the training program in that setting.”
In the regulations at §§ 412.105(f)(1)(ii)(C) and 413.86(f)(4) (as issued in the July 31, 1998
b. Inappropriate Counting of FTE Residents. As we stated above, dental residents, along with podiatric residents, are excepted from the statutory cap on the count of FTE residents for both direct GME and IME payment purposes. We have become aware of a practice pertaining to the counting of FTE residents at a nonhospital site, particularly dental residents, that we see as inappropriate under Medicare policy. Most often, the situation involves dental schools that, for a number of years, have been training dental residents in programs at the dental schools of universities affiliated with teaching hospitals, and the schools have been directly incurring the costs of the dental residents training at the dental schools (for example, the teaching faculty costs, the resident salary costs, the office space costs, and
As a result of the provisions that Congress added to allow hospitals to count FTE residents and receive IME payment, as well as direct GME payment, if the hospital incurs “all or substantially all” the costs of training residents in nonhospital settings, a significant number of dental schools are shifting the resident training costs of the dental programs from the schools to the hospital, and thus to the Medicare program, when the hospitals count the FTE dental residents training in these dental schools (that is, “nonhospital sites”) under the regulations at § 413.86(f)(4). Furthermore, in the case of training dentists at dental school clinics, as a result of this cost-shifting and because dental residents are excepted from the cap, hospitals are receiving significant amounts of Medicare direct GME and IME payments when they have incurred relatively small costs of the residents training in a dental school.
The following actual situations are illustrative of the inappropriate application of Medicare direct GME and IME policy that we have found:
• An academic medical center hospital associated with a university has been training allopathic residents for at least 20 years. Prior to 1999, the university s affiliated dental school had always incurred the costs of dental residency programs at the dental school. Beginning with the hospital's cost report for its fiscal year ending in 1999, for the first time ever, the hospital has requested direct GME and IME payment for an additional 67 FTE residents because the hospital claims it has begun to incur “all or substantially all” of the costs of the dental residents training in the university's affiliated dental school, in accordance with the regulations at § 413.86(f)(4).
• A university dental school in one State has been incurring the costs of dental residency programs at its dental school for several years. Beginning in FY 1999, a teaching hospital in a neighboring State decided to begin incurring “all or substantially all” of the costs of the dental residents training in the dental clinics in the program (which is located in a different State from the hospital) in order to receive Medicare direct GME and IME payment for an additional 60 FTE residents.
• In another situation, a teaching hospital on the East Coast of the United States has requested direct GME and IME payment for an additional 60 FTE dental residents, some of whom are training in dental programs at nonhospital sites located in Hawaii, New Mexico, and the Netherlands, because it has begun to incur “all or substantially all” of the costs of dental residents training in those remote “nonhospital sites”. Prior to 1999, the costs for these dental programs were funded by nonhospital sources.
We note that such inappropriate cost-shifting practices are by no means limited to the dental school context. Indeed, we understand that there are some hospitals with resident counts below their direct GME and IME FTE resident caps that have recently (as of October 1, 1997, when it became possible to receive significant IME payments under the amendment made by Pub. L. 105-33) started to incur “all or substantially all” of the costs of residents who had been training at sites outside of the hospital without any financial assistance from the hospital, in order for the hospital to count those FTE residents and receive Medicare direct GME and IME payments for the additional residents. The actual costs of the programs that are being shifted from nonhospital entities to hospitals are relatively small, compared to the direct GME and IME payments that hospitals receive as a result of incurring “all or substantially all” of the training costs.
• In another example, an academic medical center hospital in one State asked Medicare to allow it to count an additional 10 FTEs for both direct GME and IME payment, beginning with its fiscal year ending 1999 cost report, because the hospital claims it is incurring all or substantially all of the costs of training osteopathic family practice residents in a walk-in clinic. The osteopathic family practice residency program had previously been sponsored by this clinic for several years and the residents do not participate in any training at the hospital.
c. Congressional Intent. Congress has delegated broad authority to the Secretary to implement a policy on the count of FTE residents for purposes of calculating direct GME and IME payments. For IME payment, section 1886(d)(5)(B) of the Act simply states that “the Secretary shall provide for an additional payment amount” which includes “the ratio of the hospital's full-time equivalent interns and residents to beds.” The methodology to compute the count of FTE residents for IME is not established in the statute. Similarly, for direct GME, section 1886(h)(4)(A) of the Act states that “the Secretary shall establish rules consistent with this paragraph for the computation of the number of full-time equivalent residents in an approved medical residency training program.”
Although not in the context of the general rules for counting FTE residents, Congress similarly acknowledged its intent to defer to the Secretary with respect to the rules for implementing “limits” or caps on the number of FTE residents hospitals may count for purposes of direct GME and IME payment. The conference agreement that accompanied Pub. L. 105-33, which established a cap on the number of allopathic and osteopathic residents a hospital may count, states—
“[T]he Conferees recognize that such limits raise complex issues, and provide for specific authority for the Secretary to promulgate regulations to address the implementation of this provision. The Conferees believe that rulemaking by the Secretary would allow careful but timely consideration of this matter, and that the record of the Secretary's rulemaking would be valuable when Congress revisits this provision.” (H.R. Conf. Rep. No. 105-217, 105th Cong., 1st Sess., 821 (1997).
The absence of statutory specificity on determining FTE counts in these situations and the declared Congressional delegations of authority to the Secretary on the subject are clear indications that Congress has given the Secretary broad discretion to promulgate reasonable regulations in order to implement the policy on the counting of residents for direct GME and IME payments.
When Congress enacted the nonhospital site provisions for both direct GME and IME, Congress intended to address application of the FTE count policy to situations where the training site had been the hospital. The intent was to create incentives for hospitals to move resident training from the hospital to nonhospital settings. We believe that Congress did
This Congressional intent is evident in the legislative history of both the direct GME and the IME provisions on nonhospital settings. First, legislative history associated with passage of the direct GME provision (as part of Pub. L. 99-509) indicates that Congress intended to broaden the scope of settings in which a hospital could train its residents and still receive separate direct GME cost reimbursement, and to
Thus, from the start of the policy allowing payment for training in nonprovider sites, we believe Congress intended to create a monetary incentive for hospitals to rotate residents from the hospital to the nonhospital settings. We believe Congress did not intend for hospitals to be paid for residents who had previously been training at nonhospital sites without hospital funding.
Further, in the Conference committee report accompanying the provision of Pub. L. 105-33 on IME payment for training in nonhospital settings, Congress stated that “[t]he conference agreement includes new permission for
We note that, prior to enactment of Pub. L. 105-33, if a hospital rotated a resident to train at a nonhospital site, the hospital could not count the time the resident spent at the nonhospital site for purposes of Medicare IME payments. As a result, the lack of IME payments acted as a disincentive and discouraged hospitals from rotating residents out of the hospital. Therefore, Congress authorized hospitals to count residents in nonhospital sites for IME purposes as a specific incentive to encourage hospitals to rotate their residents to nonhospital sites (and not to encourage hospitals to incur the costs of a program at a nonhospital site that had already been funded by other sources). This legislative intent becomes more apparent when the nature of the Medicare IME payment is considered. The Medicare IME payment is inherently a payment that reflects the increased operating costs of treating inpatients as a result of the hospital having a residency program. For example, as explained in the September 29, 1989 final rule (54 FR 40286), the indirect costs of medical education might include added costs resulting from an increased number of tests ordered by residents as compared to the number of tests normally ordered by more experienced physicians.
The IME payment is an adjustment that is made for each Medicare discharge from the areas subject to the IPPS in a teaching hospital. The authorization by Congress for IME payments relating to nonhospital services while residents are training at nonhospital sites would be absurd if not viewed as an incentive to transfer existing residency training from the hospital to the nonhospital setting. We do not believe Congress intended to permit such IME payments to be allowable to the hospital that is incurring “all or substantially all the costs” of residents training in nonhospital sites except in the situation where the hospital rotated residents from the hospital to the nonhospital settings. The illustrative situations described above in which nonhospital sites, such as dental schools, are shifting the costs of existing programs to the hospitals are not consistent with the intent of Congress to encourage hospitals to rotate residents from the hospital setting to nonhospital sites.
Thus, we believe Congress intended both cited provisions of the Act on counting residents in nonhospital sites for purposes of direct GME and IME payments to be limited to situations in which hospitals rotate residents from the hospital to the nonhospital settings, and
d. Medicare Principles on Redistribution of Costs and Community Support. It is longstanding Medicare policy that if the community has undertaken to bear the costs of medical education, these costs are not to be assumed by the Medicare program. In addition, medical education costs that have been incurred by an educational institution may not be redistributed to the Medicare program. Indeed, these concepts, community support and redistribution of costs, have been a part of Medicare GME payment policy since the inception of the Medicare program. Both the House and Senate Committee reports accompanying Pub. L. 89-97 (the authorizing Medicare statute) indicate that Congress intended Medicare to share in the costs of medical education
“Many hospitals engage in substantial education activities, including the training of medical students, internship and residency programs, the training of nurses and the training of various paramedical personnel. Educational activities enhance the quality of care in an institution and it is intended,
The principle behind the congressional committee report language for Pub. L. 89-97 that Medicare would share in the costs of educational activities until communities bore them in some other way has guided Medicare policy on educational activities from the inception of the Medicare program. The principles of community support and redistribution of costs associated with payment for GME have been continually reiterated in various regulations, manual provisions, and implementing instructions to fiscal intermediaries. As recently as the final rule published in the
“We note that the proposed revisions in the proposed rule inadvertently did not include community support as the basis for an offset from the allowed cost of a GME or nursing and allied health program. In this final rule, we restate our longstanding policy that Medicare will share in the costs of educational activities of providers where communities have not assumed responsibility for financing these programs. Medicare's policy is to offset from otherwise allowable education costs, community funding for these activities.” (66 FR 3368)
We note the instructions that CMS (then HCFA) gave to its Regional Offices in the 1990 audit instructions for purposes of calculating the direct GME base period PRA specifically addressed redistribution of costs and community support in the GME context:
“Where costs for services related to medical education activities have historically been borne by the university, it is assumed the community has undertaken to support these activities, and subsequent allocation of these costs to a hospital constitutes a redistribution of costs from an educational institution to a patient care institution. In such a situation, these costs are not allowable under the Medicare program. (
Furthermore, the regulation at § 413.85(c) that was originally issued in the
“
The Secretary of Health and Human Services interpreted this provision to deny reimbursement of educational costs that were borne in prior years by a hospital's affiliated medical school. The U.S. Supreme Court affirmed the Secretary's interpretation of the redistribution of costs regulation in
“The regulation provides,
The Supreme Court's opinion in
e. Application of Redistribution of Costs and Community Support Principles. As we have described above, we have discovered an inappropriate application of Medicare direct GME and IME payment policies relating to the counting of FTE residents in nonhospital settings. As stated previously, we believe that: (1) Congress has given the Secretary broad discretion to implement policy on FTE resident counts; (2) Congress intended that the nonhospital site policy for both direct GME and IME would encourage hospitals to move resident training from the hospital to nonhospital settings, not to enable nonhospital sites to shift the costs of already established residency programs in the nonhospital site to the hospital; and (3) since the inception of the Medicare program, CMS’ policy has been consistent with the intent of Congress that Medicare would only share in the costs of medical education until the community assumes the costs. The Supreme Court has specifically found that CMS’ implementation of the redistribution of costs and community support principles is “reasonable.” (
Accordingly, we are proposing that residents training at nonhospital sites may be counted in a hospital's FTE resident count only where the principles of redistribution of costs and community support are not violated. We are proposing this policy at this time to address the inappropriate practice of nonhospital sites shifting costs to hospitals solely to allow the hospitals to count residents training in the nonhospital sites. However, we believe the concepts of redistribution of costs and community support are equally relevant to the counting of FTEs residents by a hospital in general.
We note again that the Medicare program has a long tradition of applying redistribution of costs and community support principles to medical education payments. As we have stated above, both the House and Senate Committee reports accompanying Pub. L. 89-97 (the 1965 authorizing Medicare statute) indicate that Congress intended Medicare to share in the costs of medical education only where the community has not stepped in to incur them.
We believe it is appropriate to employ the principles of redistribution of costs and community support to specifically address the inappropriate scenarios described above whereby hospitals attempt to inflate their FTE resident counts by assuming payment of training costs for residents in nonhospital sites that were previously funded by a nonhospital entity. Therefore, we are proposing to specify the application of the redistribution of costs and community support principles by adopting the definitions (with some modification to reflect the methodology for counting FTE residents applicable to GME) of “community support” and “redistribution of costs” at § 413.85(c), which relate to nursing and health education program costs, for use at § 413.86(b), which relates to GME. In addition, we are proposing a general rule at proposed § 413.86(i) on the application of community support and redistribution of costs principles to the counting of FTE residents for GME. We are proposing to (1) make the provisions under § 413.86(f) relating to determining the number of FTE residents subject to the provisions of the proposed § 413.86(i); (2) add a proposed § 413.86(f)(4) in order to clarify that the principles of redistribution of costs and community support are applicable to the counting of FTE residents, including when the residents are training in nonhospital settings; and (3) making the provisions of the proposed § 413.86(i) specifically applicable to determining the number of FTE residents under § 413.86(g)(4) through (6) and (g)(12).
The general rule at proposed § 413.86(i) contains two provisions. Proposed § 413.86(i)(1) states the principles of community support and redistribution of costs: In relation to community support, we are proposing that if the community has undertaken to bear the costs of medical education through community support, the training costs of residents that are paid through community support are not considered GME costs to the hospital for purposes of Medicare payment. In relation to redistribution of costs, we are proposing that the costs of training residents that constitute a redistribution of costs from an educational institution to the hospital are not considered GME costs to the hospital for purposes of Medicare payment.
In applying the redistribution of costs and community support principles, we are proposing under § 413.86(i)(2) to state that a hospital must continuously incur direct GME costs of residents training in a particular program at a training site since the date the residents first began training in that site in order for the hospital to count the FTE residents in accordance with the
We note that our reasons for specifically referencing the applicability of the principles of community support and redistribution of costs at § 413.86(f)(4), the paragraph concerning counting residents training in nonhospital settings for direct GME purposes, are twofold. First, although we are already making the proposed § 413.86(i) applicable to § 413.86(f), which would make the principles applicable to each paragraph under § 413.86(f), in consideration of the inappropriate applications we have identified of the GME FTE-counting policy with respect to counting residents in nonhospital sites, we believe it is appropriate to also specifically address the applicability of the redistribution of costs and community support principles to § 413.86(f)(4). In addition, we note that the proposed reference at § 413.86(f)(4) has implications for IME payment as well, as explained below.
Under existing § 412.105(f)(1)(ii)(C), the rule for the counting of FTE residents training in nonhospital settings for IME payment, there is a specific reference indicating that the criteria set forth in § 413.86(f)(4) must be met in order for a hospital to count the FTE residents training in nonhospital settings for purposes of IME payments. Thus, if under proposed § 413.86(f)(4)(iv) (the paragraph making redistribution of costs and community support principles applicable) a hospital is not permitted to count the FTE residents training in a nonhospital site because of redistribution of costs or community support, the hospital would not be permitted to count the FTE residents for purposes of IME payment as well, because the IME regulation at § 412.105(f)(1)(ii)(C) requires the criteria under § 413.86(f)(4) to be met.
As we have stated above, payment for IME is based on the concept that, as a direct result of the hospital's resident training program, the costs the hospital incurs for patient care are increased. When Congress included section 1886(d)(5)(B)(iv) of the Act as part of Public Law 105-33, the statute expanded the circumstances under which IME payments to a hospital could be made by allowing the hospital to count the number of residents training outside the hospital setting under certain conditions. Even though it is clear that those residents training outside the hospital cannot have any impact on patient care costs to the hospital, Congress nevertheless allowed the hospital to receive IME payments when the hospital counts FTE residents training in a nonhospital setting in accordance with section 1886(d)(5)(B)(iv) of the Act, where those residents would otherwise have trained in the hospital setting. As we have stated, Congress created an incentive (or removed a disincentive) with the provisions of Public Law 105-33 for hospitals to rotate residents to nonhospital settings by allowing hospitals to continue to receive IME payment as if the residents continued to train in the hospital setting. If there is a redistribution of costs or community support, we believe IME payment to the hospital would be contrary to Congressional intent to encourage the hospital to rotate residents from the hospital to the nonhospital site.
In addition, when Congress included section 1886(d)(5)(B)(iv) of the Act as part of Public Law 105-33, the statutory authority for IME payment was premised on the hospital incurring the direct GME costs of the residents: “all the time spent by an intern or resident in patient care activities under an approved medical residency program at an entity in a nonhospital setting shall be counted towards the determination of full-time equivalency
Although we are stating generally that the principles of community support and redistribution of cost have applied since the inception of Medicare to graduate medical education payment, as we have stated above, we have identified relatively recent inappropriate application of the nonhospital site policy for counting FTE residents. Therefore, we believe it is appropriate to propose to identify January 1, 1999, as the date our fiscal intermediaries should use to determine whether a hospital or another entity has been incurring the costs of training in a particular program at a training setting for purposes of determining whether there has been a redistribution of costs or community support. We are proposing that January 1, 1999 be used as the date the fiscal intermediaries should use for determinations, since it may be difficult for our fiscal intermediaries to obtain from hospitals contemporaneous documentation that the hospitals have appropriately been incurring the direct GME costs in earlier fiscal years. We believe the January 1, 1999 date should simplify confirmation by our fiscal intermediaries and hospitals of whether the hospital or another entity had been incurring the costs of the program in particular training settings and whether redistribution of costs or community support had occurred. We have chosen the January 1, 1999 date because of administrative convenience and feasibility, so that necessary data are both valid and available, and in recognition of the fact that our fiscal intermediaries must prioritize their limited audit resources. While we are not requiring our fiscal intermediaries to determine whether a hospital had been incurring the training costs of a program prior to the January 1, 1999 date, if the fiscal intermediaries determine that there is a redistribution of costs or community support exists with respect to certain residents prior to January 1, 1999, a disallowance of direct GME and IME payments with respect to those FTE residents would certainly be required.
Since calculation of a hospital's FTE resident count is dependent upon whether the hospital incurred the training costs, we are proposing to require each teaching hospital and its fiscal intermediary to determine which entity had been incurring the training costs at least since January 1, 1999. For example, if a nonhospital entity, such as a school of medicine or dentistry, had incurred the costs of training the residents anytime on or after January 1, 1999, and a hospital subsequently begins to incur direct GME costs of training those FTE residents, the hospital would not qualify to count those FTE residents for purposes of direct GME and IME payments.
We note that the proposal states that a hospital must have been
We note that if a hospital incurs the direct GME costs, whether training takes
Consistent with the policy on redistribution of costs and community support discussed above, if a hospital incurs the direct GME costs of
We note that, under existing policy, to count residents in a nonhospital setting, a hospital is required to incur for “all or substantially all of the costs of the
For example, training in a general dentistry program with 10 FTE residents has taken place at a school of dentistry for 20 years. The school of dentistry has been incurring the training costs of the general dentistry residents since the inception of the program. Beginning in 2003, the school of dentistry has decided to add an additional 5 FTE residents to the program, and Hospital A decides to incur “all or substantially all” the costs of those 5 additional FTE residents only. Applying the policy concerning redistribution of costs and community support in combination with the policy on incurring all or substantially all of the costs, the hospital could not count the additional 5 FTE residents in the dental school since it is not paying for all or substantially all of the costs of the program. Even if the hospital were to incur all or substantially all of the costs for the training program for all 15 FTE residents, the hospital could not count the 10 FTEs that were part of the existing general dentistry program because of the redistribution of costs and community support principles; it would be a redistribution of costs for the hospital to begin to incur direct GME costs of the 10 FTE residents when the dental school had previously been incurring those costs.
We note that such a result does not occur when a
We also note that the interaction of the two provisions discussed above—redistribution of costs and community support, and “all or substantially all”—does not occur when counting FTE residents training inside the hospital, since a hospital is not required to incur “all or substantially all” of the costs for the training program inside the hospital.
Furthermore, if one hospital had incurred the direct GME costs of training residents in a particular program in a nonhospital site from one point in time, for example, 1995 through 1999, and then another hospital consecutively incurs the costs from 2000 and thereafter, the second hospital may be eligible to receive direct GME and IME payments for training the FTE residents from the point in time where the second hospital incurred the direct GME costs, and the redistribution and community support exclusions would not apply. The second hospital may be eligible to receive Medicare direct GME and IME payments because the costs were incurred previously by a hospital, and not either the community or the university. Therefore, there was neither community support nor redistribution of costs.
The following are some examples to clarify how these proposed policies would be implemented:
Since 1995, 10 FTE residents in an internal medicine program have been training in the Community Clinic. In accordance with the current provisions of § 413.86(f), Hospital A has incurred all or substantially all of the costs of training the 10 FTE residents since 1995. Assuming the current provisions of the regulations at §§ 412.105(f)(1)(ii)(C) and 413.86(f)(3) and (f)(4) are met, Hospital A may continue to receive IME and direct GME payments for 10 FTE residents because Hospital A had incurred direct GME costs continuously (as evidenced by contemporaneous documentation since January 1, 1999), as specified in our proposed regulation.
Beginning July 1, 2004, in addition to continuing to incur all or substantially all of the costs of the first 10 FTE internal medicine residents training in the nonhospital site, Hospital A also incurs all or substantially all of the costs of training an additional 3 FTE internal medicine residents at that site. Accordingly, beginning July 1, 2004, Hospital A may count all 13 FTE residents training in the Community Clinic for purposes of direct GME and IME payments, assuming Hospital A does not exceed its FTE cap for IME and direct GME.
Since 1995, 2.25 dental FTE residents in a dental school program were training in a dental clinic at the dental school. While the 2.25 FTEs were training at the
Since 1995, 2.25 FTE residents in a family practice program were training in a physicians' group practice. While the 2.25 FTEs were training at the physicians' practice, a school of medicine paid for the costs of the family practice residency program. Prior to July 1, 2000, Hospital A signed a written agreement with the physicians' practice to send 1 additional family practice FTE resident to the physicians' practice and to incur all or substantially all of the costs of training the original 2.25 FTE residents
Residents in a surgery program have been rotating from a hospital to two nonhospital clinics, Clinic A and Clinic B, since 1996. The training of the surgery residents in Clinic A has been supported by a nonhospital institution since 1996, while the hospital has incurred all or substantially all of the costs of the surgery residents in Clinic B since 1996. The hospital cannot count the surgery FTE residents training in Clinic A, even if it begins to pay for all of the costs of the program at that site, since a nonhospital institution had supported the training in Clinic A since 1996 (in other words, the redistribution of costs and community support principles would prohibit the hospital from counting these FTE residents). However, if the hospital continues to incur all or substantially all of the costs of the surgery residents in Clinic B, the hospital may count the FTE residents training in Clinic B for purposes of direct GME and IME payments because there would be no cost-shifting to the hospital for these residents and the hospital would incur all or substantially all of the costs for the training program in that setting.
3. Rural Track FTE Limitation for Purposes of Direct GME and IME for Urban Hospitals that Establish Separately Accredited Approved Medical Programs in a Rural Area (§§ 412.105(f)(1)(x) and 413.86(g)(12)) a. Change in the Amount of Rural Training Time Required for an Urban Hospital to Qualify for an Increase in the Rural Track FTE Limitation. To encourage the training of physicians in rural areas, section 407(c) of Pub. L. 106-113 amended sections 1886(d)(5)(B) and 1886(h)(4)(H) of the Act to add a provision that, in the case of an urban hospital that establishes separately accredited approved medical residency training programs (or rural tracks) in a rural area or has an accredited training program with an integrated rural track, an adjustment shall be made to the urban hospital's cap on the number of residents. For direct GME, the amendment applies to payments to hospitals for cost reporting periods beginning on or after April 1, 2000; for IME, the amendment applies to discharges occurring on or after April l, 2000.
Section 407(c) of Pub. L. 106-113 did not define a “rural track” or an “integrated rural track,” nor are these terms defined elsewhere in the Act or in any applicable regulations.
Currently, there are a number of accredited 3-year primary care residency programs in which residents train for 1 year of the program at an urban hospital and are then rotated for training for the other 2 years of the 3-year program to a rural facility(ies). These separately accredited “rural track” programs are recognized by the Accreditation Council of Graduate Medical Education (ACGME) as “1-2” rural track programs. As far as CMS is able to determine, ACGME is the only accrediting body to “separately accredit” rural track residency programs, a requirement specified in Pub. L. 106-113.
We implemented the rural track program provisions of section 1886(d)(5)(B) and 1886(h)(4)(H) of the Act to address these “1-2” programs and to account for other programs that are not specifically “1-2” programs but that include rural training components. As stated above, since there is no existing definition of “rural track” or “integrated rural track,” we define at § 413.86(b) a “rural track” and an “integrated rural track” as an approved medical residency training program established by an urban hospital in which residents train for a portion of the program at the urban hospital and then rotate for a portion of the program to a rural hospital(s) or to a rural nonhospital site(s). We have previously noted that the terms “rural track” and “integrated rural track,” for purposes of this definition, are synonymous.
To implement these provisions, we revised § 413.86 to add paragraph (g)(11) (since redesignated as (g)(12)), and § 412.105 to add paragraph (f)(1)(x) to specify that, for direct GME, for cost reporting periods beginning on or after April 1, 2000, or, for IME, for discharges occurring on or after April 1, 2000, an urban hospital that establishes a new residency program, or has an existing residency program, with a rural track (or an integrated rural track) may, under certain circumstances, include in its FTE count residents in those rural tracks, in addition to the residents subject to the FTE cap at § 413.86(g)(4). (See the August 1, 2000 interim final rule with comment period (65 FR 47033) and the August 1, 2001 IPPS final rule (66 FR 39902)). These regulations specify that an urban hospital may count the residents in the rural track in excess of the hospital's FTE cap up to a “rural track FTE limitation” for that hospital. We defined this rural track FTE limitation at § 413.86(b) as the maximum number of residents (as specified in § 413.86(g)(12)) training in a rural track residency program that an urban hospital may include in its FTE count, in addition to the number of FTE residents already included in the hospital's FTE cap.
Generally, the rural track policy is divided into two categories: rural track programs in which residents are rotated to a rural area for at least two-thirds of the duration of the program; and rural track programs in which residents are rotated to a rural area for less than two-thirds of the duration of the program. Currently, family practice is the only specialty that has separately accredited rural track programs. As previously noted, to account for other specialties that have program lengths greater than
Accordingly, our policy for determining whether an urban hospital qualifies for an adjustment to the FTE cap for training residents in rural areas is dependent upon the proportion of time the residents spend training in the rural areas. If the time spent training in rural areas (either at a rural hospital or a rural nonhospital site) constitutes
When we first implemented this policy on rural tracks, it was consistent with our understanding of how the ACGME accredits rural track “1-2” programs, in which residents train for 1 year of the program at an urban hospital and are then rotated for training years 2 and 3 to a rural facility. We believed that the ACGME did not separately accredit an approved program as a rural track program unless it met this “1-2” condition; that is, the residents were spending one-third of program training in the urban area and two-thirds of the program training in the rural area. However, we have recently learned that there are a few rural track programs that are separately accredited by the ACGME as “1-2” rural track programs, but the residents in these programs are not training in rural areas for at least two-thirds of the duration of the program. We understand that in certain instances in which the case-mix of the rural facilities might not be sufficiently broad to provide the residents with an acceptable range of training opportunities, the ACGME allows the residents in program years 2 and 3 to return to the urban hospital for some training in both years. However, because the training in years 2 and 3 is predominantly occurring at the rural locations, the ACGME still separately accredits the urban and rural portions as a “1-2” program.
The existing regulations at §§ 412.105(f)(1)(x) and 413.86(g)(12) specify two main criteria for an urban hospital to count the time spent by residents training in a rural track while at the urban hospital in excess of the hospital's FTE limitation: (1) The program must be separately accredited by the ACGME;
We believe that an urban hospital that operates a program that is separately accredited by the ACGME as a “1-2” program, but in which residents train in rural areas for more than half but less than two-thirds of the duration of the program, should still be allowed to count those FTE residents for GME payment purposes. Therefore, to be consistent with the ACGME accreditation practices, we are proposing to revise our regulations. Proposed § 413.86(g)(12) would still address our policy that an urban hospital qualifies for an adjustment to the FTE cap for training in rural areas based upon the proportion of time the residents spend training in the rural areas. However, instead of using a “two-thirds” model to specify the amount of time residents are training in the rural areas, as the framework exists under current policy, the proposal would use, at §§ 413.86(g)(12)(i) through (iv), a “one-half of the time” model to specify the amount of time residents are training in rural areas. This proposal would address the limited cases where ACGME separately accredits programs as “1-2” rural tracks but residents in those programs train in the rural areas less than two-thirds of the time, although greater than one-half of the time. Specifically, we are proposing at § 413.86(g)(12) to state:
• If an urban hospital rotates residents to a separately accredited rural track program at a rural hospital(s) for two-thirds of the duration of the program for cost reporting periods beginning on or after April 1, 2000 and before October 1, 2003, or for more than one-half of the duration of the program for cost reporting periods beginning on or after October 1, 2003, the urban hospital may include those residents in its FTE count for the time the rural track residents spend at the urban hospital.
• If an urban hospital rotates residents to a separately accredited rural track program at a rural nonhospital site(s) for two-thirds of the duration of the program for cost reporting periods beginning on or after April 1, 2000, and before October 1, 2003, or for more than one-half of the duration of the program for cost reporting periods beginning on or after October 1, 2003, the urban hospital may include those residents in its FTE count, subject to the requirements under § 413.86(f)(4).
• If an urban hospital rotates residents in the rural track program to a rural hospital(s) for less than two-thirds of the duration of the program for cost reporting periods beginning on or after April 1, 2002, and before October 1, 2003, or for one-half or less than one-half of the duration of the program for cost reporting periods beginning on or after October 1, 2003, the rural hospital may not include those residents it its FTE count (if the rural track is not a new program under § 413.86(g)(6)(iii), or if the rural hospital's FTE count exceeds that hospital's FTE cap), nor may the urban hospital include those residents when calculating its rural track FTE limitation.
• If an urban hospital rotates residents in the rural track program to a rural nonhospital site(s) for a period of time that is less than two-thirds of the duration of the program for cost reporting periods beginning on or after April 1, 2002, and before October 1, 2003, or for one-half or less than one-half of the duration of the program for cost reporting periods beginning on or after October 1, 2003, the urban hospital may include those residents in its FTE count, subject to the requirements under § 413.86(f)(4).
We also are proposing to make a conforming change to § 412.105(f)(1)(x) to make these proposed provisions applicable to IME payments for discharges occurring on or after October 1, 2003.
We believe this proposal produces a more equitable result than the existing policy; the proposal encompasses what we believe to be all situations in which the ACGME separately accredits rural track programs and in which residents in the programs spend a majority of the time training in rural settings, fulfilling the intent of Congress for Medicare to
b. Inclusion of Rural Track FTE Residents in the Rolling Average Calculation. Section 1886(h)(4)(G) of the Act, as added by section 4623 of Public Law 105-33, provides that, for a hospital's first cost reporting period beginning on or after October 1, 1997, the hospital's FTE resident count for direct GME payment purposes equals the average of the actual FTE resident count for that cost reporting period and the preceding cost reporting period. Section 1886(h)(4)(G) of the Act requires that, for cost reporting periods beginning on or after October 1, 1998, a hospital's FTE resident count for direct GME payment purposes equals the average of the actual FTE resident count for the cost reporting period and the preceding two cost reporting periods (that is, a 3-year rolling average). This provision phases in over a 3-year period any reduction in direct GME payments to hospitals that results from a reduction in the number of FTE residents below the number allowed by the FTE cap. We first implemented this provision in the August 29, 1997 final rule with comment period (62 FR 46004) and revised § 413.86(g)(5) accordingly. Because hospitals may have two PRAs, one for residents in primary care and obstetrics and gynecology (the “primary care PRA”), and a lower PRA for nonprimary care residents, we revised our policy for computing the rolling average for direct GME payment purposes (
Section 407(c) of Public Law 106-113, which amended sections 1886(d)(5)(B) and 1886(h)(4)(H) of the Act to create the rural track provision, provided that, in the case of an urban hospital that establishes a separately accredited rural track, “* * * the Secretary shall
Since we implemented this rural track provision in the August 1, 2000 interim final rule with comment period (65 FR 47033), we have interpreted this provision to mean that, except for new rural track programs begun by urban teaching hospitals that are establishing an FTE cap for the first time under § 413.86(g)(6)(i), when an urban hospital establishes a new rural track program or expands an existing rural track program, FTE residents in the rural track that are counted by the urban hospital are included in the hospital's rolling average calculation immediately. Although we have not specified in the regulations that rural track FTE residents counted by an urban hospital are included in the hospital's rolling average FTE resident count, this has been our policy. The Medicare cost report, Form CMS-2552-96 (line 3.05 on Worksheet E, Part A, for IME payments, and on line 3.02 on Worksheet E-3, Part IV, for direct GME payments), reflects this policy. Accordingly, FTE residents in a rural track program are to be included in the urban hospital's rolling average count for IME and direct GME for cost reporting periods beginning on or after April 1, 2000.
We are proposing to revise the regulations at § 413.86(g)(5) to add a new paragraph (vii) to clarify that, subject to regulations at § 413.86(g)(12), except for new rural track programs begun by urban hospitals that are first establishing an FTE cap under § 413.86(g)(6)(i), when an urban hospital with an existing FTE cap establishes a new program with a rural track (or an integrated rural track), or expands an existing rural track (or an integrated rural track) program, the FTE residents in that program that are counted by the urban hospital are included in the urban hospital's rolling average FTE resident count immediately. We also are proposing to revise §§ 413.86(g)(12)(i)(A), (g)(12)(ii)(B), and (g)(12)(iv)(A) to indicate that for the first 3 years of the rural track's existence, the rural track FTE limitation for each urban hospital will be the actual number of FTE residents, subject to the rolling average, training in the rural track at the urban hospital.
Section 1886(h)(4)(H)(ii) of the Act permits, but does not require, the Secretary to prescribe rules that allow institutions that are members of the same affiliated group (as defined by the Secretary) to elect to apply the FTE resident limit on an aggregate basis. This provision allows the Secretary to give hospitals flexibility in structuring rotations within a combined cap when they share a resident's time. Consistent with the broad authority conferred by the statute, we established criteria for defining an “affiliated group” and an “affiliation agreement” in both the August 29, 1997 final rule (62 FR 45965) and the May 12, 1998 final rule (63 FR 26317). We further clarified our policy concerning affiliation agreements in the August 1, 2002 final rule (67 FR 50069).
We are aware that there has been some confusion at times among members of the provider community when using the term “affiliation agreement,” since the term is used in contexts other than for Medicare GME payment purposes. For example, an “affiliation agreement” is a term historically used in the academic community that generally relates to agreements made between hospitals and medical schools or among sponsors of medical residency education programs. To help prevent further confusion, we are proposing to change the term in the regulations to “Medicare GME affiliation agreement.” We believe this will help to distinguish these agreements used for purposes of GME payments from agreements used for other purposes in the provider community. We are proposing to revise the regulations at § 413.86(b) to state “Medicare GME affiliated group,” and “Medicare GME affiliation agreement,” and we are making similar revisions to § 413.86(g)(4)(iv), (g)(7)(i) through (v), and § 412.105(f)(1)(vi) for IME payment purposes.
Under the Medicare program, payment for services furnished by a physician is made under either the Hospital Insurance Program (Part A) or the Supplementary Medical Insurance Program (Part B), depending on the type of services furnished. In accordance with section 1848 of the Act, physicians' charges for medical or surgical services to individual Medicare patients generally are covered under Part B on a fee-for-service basis under the Medicare physician fee schedule. The compensation that physicians receive from or through a provider for services that benefit patients generally (for example, administrative services, committee work, teaching, and supervision) can be covered under Part A or Part B, depending on the provider's setting.
As required by section 1887(a)(2)(B) of the Act, allowable compensation for services furnished by physicians to providers that are paid by Medicare on a reasonable cost basis is subject to reasonable compensation equivalent (RCE) limits. Under these limits, payment is determined based on the lower of the actual cost of the services to the provider (that is, any form of compensation to the physician) or a reasonable compensation equivalent. For purposes of applying the RCE limits, physician compensation costs means monetary payments, fringe benefits, deferred compensation and any other items of value (excluding office space or billing and collection services) that a provider or other organization furnishes a physician in return for the physician's services.
The RCE limits do not apply to the costs of physician compensation that are attributable to furnishing inpatient hospital services paid for under the IPPS or GME costs. In addition, RCE limits do not apply to the costs CAHs incur in compensating physicians for services. Furthermore, compensation that a physician receives for activities that may not be paid for under either Part A or Part B are not considered in applying the RCE limits.
The limits apply equally to all physician services to providers that are payable on a reasonable cost basis under Medicare. If a physician receives any compensation from a provider for his or her physician services to the provider (that is, those services that benefit patients generally), payment to those affected providers for the costs of such compensation is subject to the RCE limits. The RCE limits are not applied to payment for services that are identifiable medical or surgical services to individual patients and paid for under the physician fee schedule, even if the physician agrees to accept compensation (for example, from a hospital) for those services. (However, payments to teaching hospitals that have elected to be paid for these services on a reasonable cost basis in accordance with section 1861(b)(7) of the Act are subject to the limits.)
Section 415.70(b) of the regulations specifies the methodology for determining annual RCE limits, considering average physician incomes by specialty and type of location, to the extent possible using the best available data. On October 31, 1997, the revised RCE limits update methodology was published in the
We intend to publish updated payment limits on the amount of allowable compensation for services furnished by physicians to providers in the FY 2004 IPPS final rule. These revised limits will be mere updates that will be calculated by applying the most recent economic index data. We are not proposing any change in the methodology. Therefore, in accordance with § 415.70(f), we are allowed to publish the revised RCE limits in a final rule without prior publication of a proposed rule for public comment. Furthermore, we believe that publication of the revised RCE limits in a proposed rule with opportunity for public comment is unnecessary, and we find good cause to waive the procedure.
In this proposed rule, we are not proposing any changes in the policies governing the determination of the payment rates for capital-related costs for short-term acute care hospitals under the IPPS. However, for the readers' benefit, in this section of this proposed rule, we are providing a summary of the statutory basis for the PPS for hospital capital-related costs, the methodology used to determine capital-related payments to hospitals, and a brief description of the payment policies under the PPS for capital-related costs for new hospitals, extraordinary circumstances, and exception (regular and special) payments. (Refer to the August 1, 2001 IPPS final rule (66 FR 39910) for a more detailed discussion of the statutory basis for the system, the development and evolution of the system, the methodology used to determine capital-related payments to hospitals both during and after the transition period, and the policy for providing regular and special exceptions payments.)
Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services “in accordance with a PPS established by the Secretary.” Under the statute, the Secretary has broad authority in establishing and implementing the PPS for capital related costs. We initially implemented the capital PPS in the August 30, 1991 IPPS final rule (56 FR 43358), in which we established a 10-year transition period to change the payment methodology for Medicare hospital inpatient capital-related costs from a reasonable cost-based methodology to a prospective methodology (based fully on the Federal rate).
Federal fiscal year (FY) 2001 was the last year of the 10-year transition period established to phase in the PPS for hospital inpatient capital-related costs. Beginning in FY 2002, capital PPS payments are based solely on the Federal rate for the vast majority of hospitals. The basic methodology for determining capital prospective payments based on the Federal rate is set forth in § 412.312. For the purpose of calculating payments for each discharge, the standard Federal rate is adjusted as follows:
Hospitals also may receive outlier payments for those cases that qualify under the thresholds established for each fiscal year that are specified in § 412.312(c) of existing regulations.
During the 10-year transition period, a new hospital (as defined at 412.300(b)) was exempt from the capital PPS for its first 2 years of operation and was paid 85 percent of its reasonable costs during that period. Originally, this provision was effective only through the transition period and, therefore, ended with cost reporting periods beginning in FY 2002. As we discussed in the August 1, 2002 final rule (67 FR 50101), this payment provision was implemented to provide special protection to new hospitals during the transition period in response to concerns that prospective payments under a DRG system may not be adequate initially to cover the capital costs of newly built hospitals. Therefore, we believe that the rationale for this policy applies to new hospitals after the transition period as well, and in that same final rule, we established regulations under § 412.304(c)(2) that provide the same special payment to new hospitals for cost reporting periods beginning on or after October 1, 2002. Therefore, a new hospital, defined under § 412.300(b), is paid 85 percent of its allowable Medicare inpatient hospital capital-related costs through its first 2 years of operation unless the new hospital elects to receive fully prospective payment based on 100 percent of the Federal rate. (For more detailed information regarding this policy, see the August 1, 2002 IPPS final rule (67 FR 50101).)
Regulations at § 412.348(f) provide that a hospital may request an additional payment if the hospital incurs unanticipated capital expenditures in excess of $5 million due to extraordinary circumstances beyond the hospital's control. This policy was established for hospitals during the 10-year transition period, but we established regulations at § 412.312(e) to specify that payment for extraordinary circumstances is also made for cost reporting periods after the transition period (that is, cost reporting periods beginning on or after October 1, 2001). (For more detailed information regarding this policy, refer to the August 1, 2002
During the transition period, under §§ 412.348(b) through (e), eligible hospitals could receive regular exception payments. These exception payments guaranteed a hospital a minimum payment of a percentage of its Medicare allowable capital-related costs depending on the class of hospital (§ 412.348(c)). However, after the end of the transition period, eligible hospitals can receive additional payments under the special exceptions provisions at § 412.348(g), which guarantees an eligible hospital a minimum payment of 70 percent of its Medicare allowable capital-related costs. Special exceptions payments may be made only for the 10 years after the cost reporting year in which the hospital completes its qualifying project, which can be no later than the hospital's cost reporting period beginning before October 1, 2001. Thus, an eligible hospital may receive special exceptions payments for up to 10 years beyond the end of the capital PPS transition period. Hospitals eligible for special exceptions payments were required to submit documentation to the intermediary indicating the completion date of their project. (For more detailed information regarding the special exceptions policy under § 412.348(g), refer to the August 1, 2001 IPPS final rule (66 FR 39911 through 39914) and the August 1, 2002 IPPS final rule (67 FR 50102).)
Section 1886(b)(3)(H) of the Act (as amended by section 4414 of Pub. L. 105-33) established caps on the target amounts for certain existing hospitals and hospital units excluded from the IPPS for cost reporting periods beginning on or after October 1, 1997 through September 30, 2002. For this period, the caps on the target amounts apply to the following three classes of excluded hospitals or units: psychiatric hospitals and units, rehabilitation hospitals and units, and LTCHs.
In accordance with section 1886(b)(3)(H)(i) of the Act and effective for cost reporting periods beginning on or after October 1, 2002, payments to these classes of existing excluded hospitals or hospital units are no longer subject to caps on the target amounts. In accordance with existing §§ 413.40(c)(4)(ii) and (d)(1)(i) and (ii), where applicable, these excluded hospitals and hospital units continue to be paid on a reasonable cost basis, and payments are based on their Medicare inpatient operating costs, not to exceed the ceiling. The ceiling would be computed using the hospital's or unit's target amount from the previous cost reporting period updated by the rate-of-increase specified in § 413.40(c)(3)(viii) of the regulations and then multiplying this figure by the number of Medicare discharges. Effective for cost reporting periods beginning on or after October 1, 2002, rehabilitation hospitals and units are paid 100 percent of the Federal rate. Effective for cost reporting periods beginning on or after October 1, 2002, LTCHs also are no longer paid on a reasonable cost basis but are paid under a DRG-based PPS. As part of this process for LTCHs, we established a 5-year transition period from reasonable cost-based reimbursement to a fully Federal PPS. However, a LTCH, subject to the blend methodology, may elect to be paid based on a 100 percent of the Federal prospective rate. (Sections VII.A.3. and 4. of this preamble contain for a more detailed discussion of the IRF PPS and the LTCH PPS.)
Section 1886(b)(7) of the Act establishes a payment limitation for new psychiatric hospitals and units, new rehabilitation hospitals and units, and new LTCHs. A discussion of how the payment limitation was calculated can be found in the August 29, 1997 final rule with comment period (62 FR 46019); the May 12, 1998 final rule (63 FR 26344); the July 31, 1998 final rule (63 FR 41000); and the July 30, 1999 final rule (64 FR 41529). Under the statute, a “new” hospital or unit is a hospital or unit that falls within one of the three classes of hospitals or units (psychiatric, rehabilitation or long-term care) that first receives payment as a hospital or unit excluded from the IPPS on or after October 1, 1997.
The amount of payment for a “new” psychiatric hospital or unit would be determined as follows:
• Under existing § 413.40(f)(2)(ii), for the first two 12-month cost reporting periods, the amount of payment is the lesser of: (1) The operating costs per case; or (2) 110 percent of the national median (as estimated by the Secretary) of the target amounts for the same class of hospital or unit for cost reporting periods ending during FY 1996, updated by the hospital market basket increase percentage to the fiscal year in which the hospital or unit first receives payments under section 1886 of the Act, as adjusted for differences in area wage levels.
• Under existing § 413.40(c)(4)(v), for cost reporting periods following the hospital's or unit's first two 12-month cost reporting periods, the target amount is equal to the amount determined under section 1886(b)(7)(A)(i) of the Act for the third period, updated by the applicable hospital market basket increase percentage.
The proposed amounts included in the following table reflect the updated 110 percent of the national median target amounts of new excluded psychiatric hospitals and units for cost reporting periods beginning during FY 2004. These figures are updated with the most recent data available to reflect the projected market basket increase percentage of 3.5 percent. This projected percentage change in the market basket reflects the average change in the price of goods and services purchased by hospitals to furnish inpatient hospital services (as projected by the Office of the Actuary of CMS based on its historical experience with the IPPS). For a new provider, the labor-related share of the target amount is multiplied by the appropriate geographic area wage index, without regard to IPPS reclassifications, and added to the nonlabor-related share in order to determine the per case limit on payment under the statutory payment methodology for new providers.
Effective for cost reporting periods beginning on or after October 1, 2002, this payment limitation is no longer applicable to new LTCHs because they are paid 100 percent of the Federal rate. Under the LTCH PPS, a new LTCH is defined as a provider of inpatient hospital services that meets the qualifying criteria for LTCHs specified under § 412.23(e)(1) and (e)(2) and whose first cost reporting period as a LTCH begins on or after October 1, 2002 (§ 412.23(e)(4)). (We note that this definition of new LTCHs should not be confused with those LTCHs first paid under the TEFRA payment system for discharges occurring on or after October 1, 1997, and before October 1, 2002.) New LTCHs are paid based on 100 percent of the fully Federal prospective rate (they may not participate in the 5-year transition from cost-based reimbursement to prospective payment). In contrast, those “new” LTCHs that meet the definition of “new” under § 413.40(f)(2)(ii) and that have their first cost reporting periods beginning on or after October 1, 1997, and before October 1, 2002, may be paid under the LTCH PPS transition methodology. Since those hospitals by definition would have been considered new before October 1, 2002, they would have been subject to the updated payment limitation on new hospitals that was published in the FY 2003 IPPS final rule (67 FR 50103). Under existing regulations at § 413.40(f)(2)(ii), the “new” hospital would be subject to the same cap in its second cost reporting period; this cap would not be updated for the new hospital's second cost reporting year. Thus, because the same cap is to be used for the new LTCH's first two cost reporting periods, it is no longer necessary to publish an updated cap for new LTCHs.
Effective for cost reporting periods beginning on or after October 1, 2002, this payment limitation is no longer applicable to new rehabilitation hospitals and units because they are paid 100 percent of the Federal prospective rate under the IRF PPS. Therefore, it is also no longer necessary to update the payment limitation for new rehabilitation hospitals or units.
Section 1886(j) of the Act, as added by section 4421(a) of Public Law 105-33, provided the phase-in of a case-mix adjusted PPS for inpatient hospital services furnished by a rehabilitation hospital or a rehabilitation hospital unit (referred to in the statute as rehabilitation facilities) for cost reporting periods beginning on or after October 1, 2000 and before October 1, 2002, with a fully implemented PPS for cost reporting periods beginning on or after October 1, 2002. Section 1886(j) of the Act was amended by section 125 of Public Law 106-113 to require the Secretary to use a discharge as the payment unit under the PPS for inpatient hospital services furnished by rehabilitation facilities and to establish classes of patient discharges by functional-related groups. Section 305 of Public Law 106-554 further amended section 1886(j) of the Act to allow rehabilitation facilities, subject to the blend methodology, to elect to be paid the full Federal prospective payment rather than the transitional period payments specified in the Act.
On August 7, 2001, we issued a final rule in the
In accordance with the requirements of section 123 of Public Law 106-113, as modified by section 307(b) of Public Law 106-554, we established a per discharge, DRG-based PPS for LTCHs as described in section 1886(d)(1)(B)(iv) of the Act for cost reporting periods beginning on or after October 1, 2002, in a final rule issued on August 30, 2002 (67 FR 55954). The LTCH PPS uses information from LTCH hospital patient records to classify patients into distinct LTC-DRGs based on clinical characteristics and expected resource needs. Separate payments are calculated for each LTC-DRG with additional adjustments applied.
As part of the implementation of the system, we established a 5-year transition period from reasonable cost-based reimbursement to the fully Federal prospective rate. A blend of the reasonable cost-based reimbursement percentage and the prospective payment Federal rate percentage would be used to determine a LTCH's total payment under the LTCH PPS during the transition period. Certain LTCHs may elect to be paid based on 100 percent of the Federal prospective rate. All LTCHs will be paid under the fully Federal prospective rate for cost reporting periods beginning on or after October 1, 2006.
Existing regulations at § 412.22(e) define a hospital-within-a-hospital as a hospital that occupies space in the same building as another hospital, or in one or more entire buildings located on the same campus as buildings used by another hospital. Moreover, existing § 412.22(f) provides for the grandfathering of hospitals-within-hospitals that were in existence on or before September 30, 1995.
Sections 412.22(h) and 412.25(e), relating to satellites of hospitals and hospital units, respectively, excluded from the IPPS, define a satellite facility as a part of a hospital or unit that provides inpatient services in a building also used by another hospital, or in one or more entire buildings located on the same campus as buildings used by another hospital. Sections 412.22(h)(3) and 412.25(e)(3) provide for the grandfathering of excluded hospitals and units that were structured as satellite facilities on September 30, 1999, to the extent they operate under
In providing for the grandfathering of satellite facilities of hospitals and hospital units, we believed it was appropriate to require that the satellite facilities operate under the same terms and conditions that were in effect on September 30, 1999. There are similarities between the definition of the two types of satellite facilities and the definition of hospitals-within-hospitals (that is, hospitals-within-hospitals and satellite facilities are both physically located in acute care hospitals that are paid for their inpatient services on a prospective payment basis). Also, satellite facilities of both excluded hospitals and hospital units and hospitals-within-hospitals provide inpatient hospital services that are paid at a higher rate than would apply if the facilities were treated by Medicare as part of an acute care hospital.
We are proposing to revise § 412.22(f) to specify that, effective with cost reporting periods beginning on or after October 1, 2003, a hospital operating as a hospital-within-a-hospital on or before September 30, 1995, is exempt from the criteria in § 412.22(e)(1) through (e)(5) only if the hospital-within-a-hospital continues to operate under the same terms and conditions in effect as of September 30, 1995. The intent of the “grandfathering” provision was to ensure that hospitals that had been in existence prior to the effective date of our hospital-within-hospital requirements should not be adversely affected by those requirements. To the extent hospitals were already operating as hospitals-within-hospitals without meeting those requirements, we believe it is appropriate to limit the “grandfathering” provision to those hospitals that continue to operate in the same manner as they had operated prior to the effective date of those rules. However, if a hospital changes the way it operates (for example, adds more beds) subsequent to the effective date of the new rules, it should no longer receive the benefit of the “grandfathering” provision.
Under § 412.22(e), we specify the criteria that a hospital-within-a-hospital is required to meet in order to be excluded from the IPPS. One of these criteria, under § 412.22(e)(5)(i), requires that a hospital-within-a-hospital is able to perform basic hospital functions (for example, medical record services and nursing services) that are presently included in the Medicare hospital conditions of participation under Part 482 of the Medicare regulations. These requirements were first included in Part 412 in response to hospitals organizing themselves as what is referred to as the hospital-within-a-hospital model. Thus, to avoid recognizing nominal hospitals, while allowing hospitals adequate flexibility and opportunity for legitimate networking and sharing of services, we included, by reference, certain hospital conditions of participation as additional criteria in part 412 for hospitals-within-hospitals that request exclusion from the IPPS. (Further discussion can be found in a final rule published in the
Under § 412.23(e)(2), to qualify to be excluded from the IPPS as a LTCH and to be paid under the LTCH PPS, a hospital must have an average Medicare length of stay of greater than 25 days (which includes all covered and noncovered days of stay for Medicare patients) as calculated under the criteria of § 412.23(e)(3). In calculating this average Medicare inpatient length of stay, data from the hospital's most recently filed cost report are used to make this determination. However, if the hospital has not yet filed a cost report or if there is an indication that the most recently filed cost report does not accurately reflect the hospital's current Medicare average length of stay, data from the most recent 6-month period are used.
Our interpretation of § 412.23(e)(3)(ii) and (e)(3)(iii) was to allow hospitals that submit data for purposes of exclusion from the IPPS to use a period of at least 5 months of the most recent data from the preceding 6-month period. This longstanding policy interpretation was necessary in order to comply with the time requirement in § 412.22(d) that specifies that, for purposes of the IPPS, status is determined at the beginning of each cost reporting period and is effective for the entire cost reporting period. Therefore, we are proposing to revise §§ 412.23(e)(3)(ii) and (iii) to reflect our longstanding interpretation of the regulations.
Section 1820 of the Act provides for the establishment of Medicare Rural Hospital Flexibility Programs, under which individual States may designate certain facilities as critical access hospitals (CAHs). Facilities that are so designated and meet the CAH conditions of participation in 42 CFR part 485, subpart F, will be certified as CAHs by CMS. Section 1834(g) of the Act states that the amount of payment for outpatient services furnished by a CAH will be the reasonable costs of the CAH in providing these services.
Regulations implementing section 1834(g) of the Act are set forth at § 413.70. These regulations state, in paragraph (b)(2)(iii), that payment to a CAH for outpatient clinical diagnostic laboratory tests will be made on a reasonable cost basis only if the individuals for whom the tests are performed are outpatients of the CAH, as defined in 42 CFR 410.2, at the time the specimens are collected. The regulations also state that clinical diagnostic laboratory tests for persons who are not patients of the CAH at the time the specimens are collected will be paid for in accordance with the provisions of sections 1833(a)(1)(D) and 1833(a)(2)(D) of the Act. These provisions, which also are the basis for payment for clinical diagnostic laboratory tests performed by independent laboratories and by hospitals on specimens drawn at other locations, set payment at the least of: (1) Charges determined under the fee schedule as set forth in section 1833(h)(1) or section 1834(d)(1) of the Act; (2) the limitation amount for that test determined under section 1833(h)(4)(B) of the Act; or (3) a negotiated rate established under section 1833(h)(6) of the Act. Payments determined under this methodology are typically referred to as “fee schedule payments,” and are so described here both for ease of reference and to differentiate them from payments determined on a reasonable cost basis.
The definition of an “outpatient” in 42 CFR 410.2 states that an outpatient means a person who has not been admitted as an inpatient but who is registered on hospital or CAH records as an outpatient and receives services (rather than supplies alone) directly from the hospital or CAH.
Recently, we have received numerous questions about how Medicare pays for laboratory services that a CAH may furnish to Medicare beneficiaries in various settings other than the CAH.
We have considered these suggestions and understand the position taken by those who believe that nominal compliance with the requirements for outpatient status should be enough to warrant reasonable cost payment for clinical diagnostic laboratory tests for individuals at locations outside the CAH. However, we do not agree that providing reasonable cost payment under these circumstances would be appropriate. On the contrary, we believe that extending reasonable cost payment for services furnished to individuals who are not at the CAH when the specimen is drawn would duplicate existing coverage, create confusion for beneficiaries and others by blurring the distinction between CAHs and other providers, such as SNFs and HHAs, and increase the costs of care to Medicare patients without enhancing either the quality or the availability of that care.
To clarify our policies in this area and avoid possible misunderstandings about the scope of the CAH benefit, we are proposing to revise § 413.70(b)(2)(iii) to state that payment to a CAH for outpatient clinical diagnostic laboratory tests will be made on a reasonable cost basis only if the individuals for whom the tests are performed are outpatients of the CAH, as defined in 42 CFR 410.2, “and are physically present in the CAH” at the time the specimens are collected. (We note that, in some cases, the CAH outpatients from whom specimens are collected at the CAH may include individuals referred to the CAH from RHCs or other facilities to receive the tests.) We are proposing to further revise this paragraph to state that clinical diagnostic laboratory tests for individuals who do not meet these criteria but meet other applicable requirements will be paid for only in accordance with the provisions of sections 1833(a)(1)(D) and 1833(a)(2)(D) of the Act, that is, payment will be made only on a fee schedule basis. By making the second proposed change, we wish to emphasize that this proposal does not mean that no payment would be made for clinical diagnostic laboratory tests performed by CAHs that do not meet the revised criteria. On the contrary, such tests would be paid, but on a fee schedule basis. We believe these clarifications are appropriate, as the CAH is not providing CAH services but is acting as an independent laboratory in providing these clinical diagnostic laboratory tests.
On July 30, 1999, we published in the
We are required by section 1886(e)(4)(B) of the Act to respond to MedPAC's IPPS recommendations in our annual proposed rule. We have reviewed MedPAC's March 1, 2003 “Report to the Congress: Medicare Payment Policy” and have given it careful consideration in conjunction with the proposals set forth in this document. For further information relating specifically to the MedPAC report or to obtain a copy of the report, contact MedPAC at (202) 653-7220, or visit MedPAC's Web site at:
MedPAC's Recommendation 2A-6 concerning the update factor for inpatient hospital operating costs and for hospitals and distinct-part hospital units excluded from the IPPS is discussed in Appendix C to this proposed rule. MedPAC's other recommendations relating to payments for Medicare inpatient hospital services focused mainly on the expansion of DRGs subject to the postacute care transfer policy, a reevaluation of the labor-related share of the market basket used in determining the hospital wage index, an increase in the DSH adjustment, and payments to rural hospitals. These recommendations and our responses are set forth below:
This recommendation, which MedPAC estimates would increase Medicare payments to hospitals by less than $50 million in FY 2004, and others requiring Congressional action, should be considered in the context of larger discussions within Congress and between Congress and the Administration regarding Medicare reform and payment refinements. Therefore, we are not responding specifically to MedPAC's recommendation regarding a low-volume adjustment to the IPPS payments at this time.
In the August 1, 2002 IPPS final rule, we elected to continue to use 71.066 percent as the labor-related share applicable to the standardized amounts (67 FR 50041). At that time, we indicated that we would conduct further analysis to determine the most appropriate methodology for the labor-related share.
We are not proposing to use the updated labor-related share at this time because we have not yet completed our research into the appropriateness of this measure. Specifically, we are currently reviewing the labor-related share in two ways. First, we are updating the regression analysis that was done when the IPPS was originally developed, with the expectation that it would help give an alternative indication of the labor-related share. Second, we are reevaluating the methodology we currently use for determining the labor-related share using the hospital market basket.
Our regression analysis attempts to explain the variation in operating cost per case for a given year using many different explanatory variables, such as case-mix, DSH status, and ownership type. We described this methodology and some of our initial results in the May 9, 2002
A second approach was to reevaluate our methodology for determining the labor-related share using the hospital market basket. We have researched various alternative data sources for further breaking down the cost categories in the market basket and have begun to evaluate alternative methodologies. While each of these alternatives has strengths and weaknesses, it is not clear at this point that any one alternative is superior to the current methodology. We want to continue researching these alternatives, in part, because changing from the current methodology would impact the labor-related shares for SNFs, HHAs, and all of the excluded hospital payment systems, since they use a similar methodology. Our research plan includes consulting with experts on these issues, including MedPAC, to evaluate the various alternative approaches to determining the labor-related share. We plan to invite public comments on any proposed change to the labor-related share.
In conclusion, we are proposing to continue using the 71.066 percent labor-related share that was calculated from the 1992-based market basket until we have completed our research.
In order to respond promptly to public requests for data related to the prospective payment system, we have established a process under which commenters can gain access to raw data on an expedited basis. Generally, the data are available in computer tape or cartridge format; however, some files are available on diskette as well as on the Internet at
This file contains the hospital hours and salaries for FY 2000 used to create the proposed FY 2004 prospective payment system wage index. The file will be available by the beginning of February for the NPRM and the beginning of May for the final rule.
These files support the following:
• NPRM published in the
• Final Rule published in the
This file contains a history of all wage indices since October 1, 1983.
This file contains a crosswalk of State and county codes used by the Social Security Administration (SSA) and the Federal Information Processing Standards (FIPS), county name, and a historical list of Metropolitan Statistical Area (MSA).
This file contains a list of hospitals that were reclassified for the purpose of assigning a new wage index. Two versions of these files are created each year. They support the following:
• NPRM published in the
• Final Rule published in the
The Minimum Data Set contains cost, statistical, financial, and other information from Medicare hospital cost reports. The data set includes only the most current cost report (as submitted, final settled, or reopened) submitted for a Medicare participating hospital by the Medicare fiscal intermediary to CMS. This data set is updated at the end of each calendar quarter and is available on the last day of the following month.
(
The Capital Data Set contains selected data for capital-related costs, interest expense and related information and complete balance sheet data from the Medicare hospital cost report. The data set includes only the most current cost report (as submitted, final settled or reopened) submitted for a Medicare certified hospital by the Medicare fiscal intermediary to CMS. This data set is updated at the end of each calendar quarter and is available on the last day of the following month.
(
The file contains cost, statistical, financial, and other data from the Medicare Hospital Cost Report. The data set includes only the most current cost report (as submitted, final settled, or reopened) submitted for a Medicare-certified hospital by the Medicare fiscal intermediary to CMS. The data set is updated at the end of each calendar quarter and is available on the last day of the following month.
This file is a component of the PRICER program used in the fiscal intermediary's system to compute DRG payments for individual bills. The file contains records for all prospective payment system eligible hospitals, including hospitals in waiver States, and data elements used in the prospective payment system recalibration processes and related activities. Beginning with December 1988, the individual records were enlarged to include pass-through per diems and other elements.
This file contains the Medicare case-mix index by provider number as published in each year's update of the Medicare hospital inpatient prospective payment system. The case-mix index is a measure of the costliness of cases treated by a hospital relative to the cost of the national average of all Medicare hospital cases, using DRG weights as a measure of relative costliness of cases. Two versions of this file are created each year. They support the following:
• NPRM published in the
• Final rule published in the
This file contains a listing of DRGs, DRG narrative description, relative weights, and geometric and arithmetic mean lengths of stay as published in the
• NPRM.
• Final rule.
This file contains data used to estimate payments under Medicare's hospital inpatient prospective payment systems for operating and capital-related costs. The data are taken from various sources, including the Provider-Specific File, Minimum Data Sets, and prior impact files. The data set is abstracted
This file contains data used to develop the DRG relative weights. It contains mean, maximum, minimum, standard deviation, and coefficient of variation statistics by DRG for length of stay and standardized charges. The BOR tables are “Before Outliers Removed” and the AOR is “After Outliers Removed.” (Outliers refers to statistical outliers, not payment outliers.)
Two versions of this file are created each year. They support the following:
• NPRM published in the
• Final rule published in the
This file contains information that standardizes the charges used to calculate relative weights to determine payments under the prospective payment system. Variables include wage index, cost-of-living adjustment (COLA), case-mix index, disproportionate share, and the Metropolitan Statistical Area (MSA). The file supports the following:
• NPRM published in the
• Final rule published in the
For further information concerning these data tapes, contact the CMS Public Use Files Hotline at (410) 786-3691.
Commenters interested in obtaining or discussing any other data used in constructing this rule should contact Stephen Phillips at (410) 786-4548.
This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995.
Administrative practice and procedure, Health facilities, Medicare, Puerto Rico, Reporting and recordkeeping requirements.
Health facilities, Kidney diseases, Medicare, Puerto Rico, Reporting and recordkeeping requirements.
For the reasons stated in the preamble of this proposed rule, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as follows:
1. The authority citation for part 412 continues to read as follows:
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
2. Section 412.4 is amended by—
A. Revising paragraphs (b), (c), and (d).
B. In paragraph (f)(1), revising the reference “paragraph (b)(1) or (c)” to read “paragraph (b) or (c)”.
The revisions read as follows:
(b)
(1) Paid under the prospective payment system described in subparts A through M of this part; or
(2) Excluded from being paid under the prospective payment system described in subparts A through M of this part because of participation in an approved statewide cost control program as described in subpart C of part 403 of this chapter.
(c)
(1) To a hospital or distinct part hospital unit excluded from the prospective payment system described in subparts A through M of this part under subpart B of this part.
(2) To a skilled nursing facility.
(3) To home under a written plan of care for the provision of home health services from a home health agency and those services begin within 3 days after the date of discharge.
(d)
(1) For discharges occurring on or after October 1, 1998, DRGs 14, 113, 209, 210, 211, 236, 263, 264, 429, and 483.
(2) For discharges occurring on or after October 1, 2003, the DRGs listed in paragraph (d)(1) of this section and DRGs 12, 24, 25, 89, 90, 121, 122, 130, 131, 239, 243, 277, 278, 296, 297, 320, 321, 462, and 468.
3. Section 412.22 is amended by:
A. Republishing the introductory text of paragraph (e)(5) and revising the first sentence of paragraph (e)(5)(i).
B. Revising paragraph (f).
The revisions read as follows:
(e) * * *
(5)
(i) The hospital performs the basic functions specified in §§ 482.21 through 482.27, 482.30, 482.42, 482.43, and 482.45 of this chapter through the use of employees or under contracts or other agreements with entities other than the hospital occupying space in the same building or on the same campus, or a third entity that controls both hospitals. * * *
(f)
4. Section 412.23 is amended by revising paragraphs (e)(3)(ii) and (e)(3)(iii) to read as follows:
(e)
(3)
(ii) If a change in the hospital's Medicare average length of stay is indicated, the calculation is made by the same method for the period of at least 5 months of the immediately preceding 6-month period.
(iii) If a hospital has undergone a change of ownership (as described in § 489.18 of this chapter) at the start of a cost reporting period or at any time within the period of at least 5 months of the preceding 6-month period, the hospital may be excluded from the prospective payment system as a long-term care hospital for a cost reporting period if, for the period of at least 5 months of the 6 months immediately preceding the start of the period (including time before the change of ownership), the hospital has the required Medicare average length of stay, continuously operated as a hospital, and continuously participated as a hospital in Medicare.
5. In § 412.25(e)(4), introductory text, the reference “paragraph (h)(3) of this section” is revised to read “paragraph (e)(3) of this section”.
6. Section 412.87 is amended by revising paragraph (b)(3) to read as follows:
(b)
(3) The DRG prospective payment rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate, based on application of a threshold amount to estimated charges incurred with respect to such discharges. To determine whether the payment would be adequate, CMS will determine whether the charges of the cases involving a new medical service or technology will exceed a threshold amount set at 75 percent of one standard deviation beyond the geometric mean standardized charge for all cases in the DRG to which the new medical service or technology is assigned (or the case-weighted average of all relevant DRGs if the new medical service or technology occurs in many different DRGs). Standardized charges reflect the actual charges of a case adjusted by the prospective payment system payment factors applicable to an individual hospital, such as the wage index, the indirect medical education adjustment factor, and the disproportionate share adjustment factor.
7. Section 412.105 is amended by—
A. In paragraph (a)(1), introductory text, revising the phrase “paragraph (f) of this section” to read “paragraphs (f) and (h) of this section”.
B. In paragraph (a)(1)(i), revising the phrase “affiliated groups” to read “Medicare GME affiliated groups”.
C. Revising paragraph (b).
D. Adding a sentence at the end of paragraph (f)(1)(v).
E. In paragraph (f)(1)(vi), revising the phrase “affiliated group” to read “Medicare GME affiliated group”.
F. Revising paragraph (f)(1)(x).
The revisions and additions read as follows:
(b)
(1) Beds in any other units or wards where the level of care provided would not be payable under the acute care hospital inpatient prospective payment system;
(2) Beds in units unoccupied for the previous 3 months;
(3) Beds that could not be made available for inpatient occupancy within 24 hours.
(4) Beds in excluded distinct part hospital units;
(5) Beds otherwise countable under this section used for outpatient observation services (unless the patient is subsequently admitted for acute inpatient care), skilled nursing swing-bed services, or ancillary labor/delivery services;
(6) Beds or bassinets in the healthy newborn nursery; and
(7) Custodial care beds;
(f)
(v) * * * Subject to the provisions of paragraph (f)(1)(x) of this section, effective for cost reporting periods beginning on or after April 1, 2000, FTE residents in a rural track program are included in the urban hospital's rolling average calculation described in this paragraph (f)(1)(v).
(x) An urban hospital that establishes a new residency program (as defined in § 413.86(g)(13) of this subchapter), or has an existing residency program, with a rural track (or an integrated rural track) may include in its FTE count residents in those rural tracks in accordance with the applicable provisions of § 413.86(g)(12) of this subchapter effective for discharges occurring on or after April 1, 2002 and before October 1, 2003, and the applicable provisions of § 413.86(g)(12) of this subchapter effective for discharges occurring on or after October 1, 2003.
7. Section 412.106 is amended by revising paragraphs (a)(1)(ii) and (b)(4)(i) to read as follows:
(a) General considerations. (1) * * *
(ii) For purposes of this section, the number of patient days in a hospital includes only those days attributable to units or wards of the hospital providing acute care services generally payable under the prospective payment system and excludes patient days associated with—
(A) Beds in excluded distinct part hospital units;
(B) Beds otherwise countable under this section used for outpatient observation services (unless the patient is subsequently admitted for acute inpatient care), skilled nursing swing-bed services, or ancillary labor/delivery services; and
(C) Beds in any other units or wards where the level of care provided would not be payable under the acute care hospital inpatient prospective payment system.
(b)
(4)
(i) For purposes of this computation, a patient is deemed eligible for Medicaid on a given day only if the patient is eligible for inpatient hospital services under an approved State Medicaid plan or under a waiver authorized under section 1115(a)(2) of the Act on that day, regardless of whether particular items or services were covered or paid under the State plan or the authorized waiver.
8. In § 412.112, the introductory text is republished and a new paragraph (d) is added to read as follows:
A hospital is paid the following amounts on a per case basis.
(d) Additional payments for new medical services and technologies determined under subpart F of this part.
9. Section 412.116 is amended by revising paragraph (e) to read as follows:
(e)
1. The authority citation for part 413 is revised to read as follows:
Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and (n), 1871, 1881, 1883, and 1886 of the Social Security Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395hh, 1395rr, 1395tt, and 1395ww).
2. Section 413.70 is amended by revising paragraph (b)(2)(iii), introductory text, to read as follows:
(b)
(2)
(iii) Payment for outpatient clinical diagnostic laboratory tests is not subject to the Medicare Part B deductible and coinsurance amounts. Payment to a CAH for clinical diagnostic laboratory tests will be made on a reasonable cost basis under this section only if the individuals are outpatients of the CAH, as defined in § 410.2 of this chapter, and are physically present in the CAH, at the time the specimens are collected. Clinical diagnostic laboratory tests performed for persons who are not physically present in the CAH when the specimens are collected will be made in accordance with the provisions of sections 1833(a)(1)(D) and 1833(a)(2)(D) of the Social Security Act.
3. Section 413.85 is amended by—
A. Adding under paragraph (c) a definition of “Certification” in alphabetical order.
B. Republishing the introductory text of paragraph (d)(1) and adding a new paragraph (d)(1)(iii).
C. Adding a new paragraph (g)(3).
D. Republishing the introductory text of paragraph (h) and revising paragraph (h)(3).
The addition and revision read as follows.
(c)
(d)
(iii) The costs of certain nonprovider-operated programs at wholly owned subsidiary educational institutions are reimbursable on a reasonable cost basis if the provisions of paragraph (g)(3) of this section are met.
(g)
(3)
(i) Effective for portions of cost reporting periods occurring on or after October 1, 2003, a provider that incurs costs for a nursing or allied health education program(s) where those program(s) had originally been provider-operated according to the criteria at paragraph (f) of this section, and then operation of the program(s) was transferred to a wholly owned subsidiary educational institution in order to meet accreditation standards prior to October 1, 2003, and where the provider has continuously incurred the costs of both the classroom and clinical training portions of the program(s) at the educational institution, may receive reasonable cost payment for such a program(s) according to the specifications under paragraphs (g)(3)(ii) and (g)(3)(iii) of this section.
(ii) Payment for the incurred costs of educational activities identified in paragraph (g)(3)(i) of this section will be made on a reasonable cost basis if a provider, as described in paragraph (g)(3)(i) of this section, received Medicare reasonable cost payment for those nursing and allied health education program(s) both prior and subsequent to the date the provider transferred operation of the program(s) to its wholly owned subsidiary educational institution (and ceased to be a provider-operated program(s) according to the criteria under paragraph (f) of this section).
(iii) The provider that meets the requirements in paragraphs (g)(3)(i) and (g)(3)(ii) of this section will be eligible to receive payment under this paragraph for: (A) the clinical training costs incurred for the program(s) as described in paragraph (g)(3)(i) of this section; and (B) classroom costs, but only those costs incurred by the provider for the courses that were included in the programs described in paragraph (g)(3)(i) of this section.
(h)
(3) Educational seminars, workshops, and continuing education programs in which the employees participate that enhance the quality of medical care or operating efficiency of the provider and, effective October 1, 2003, do not lead to certification required to practice or begin employment in a nursing or allied health specialty.
4. Section 413.86 is amended by—
A. Under paragraph (b)—
(1) Removing the definitions of “Affiliated group” and “Affiliation agreement”.
(2) Adding definitions of “Community support”, “Medicare GME affiliated agreement”, “Medicare GME affiliated group”, and “Redistribution of costs” in alphabetical order.
(3) Under the definition of “Rural track FTE limitation”, revising the phrase “paragraph (g)(11)” to read “paragraph (g)(12)”.
B. Revising the introductory text of paragraph (f).
C. Adding a new paragraph (f)(4)(iv).
D. In paragraph (g)(1)(i), revising the reference “paragraphs (g)(1)(ii) and (g)(1)(iii)” to read “paragraphs (g)(1)(ii) through (g)(1)(iv)”.
E. Revising the introductory text of paragraph (g)(4).
F. Revising paragraph (g)(4)(iv).
G. Revising the introductory text of paragraph (g)(5).
H. Adding a new paragraph (g)(5)(vii).
I. Revising paragraphs (g)(6)(i)(D) and (g)(6)(i)(E).
J. Revising paragraph (g)(7).
K. Revising the introductory text of paragraph(g)(12).
L. Revising paragraph (g)(12)(i).
M. Revising paragraph (g)(12)(ii), introductory text.
N. Revising paragraph (g)(12)(ii)(A).
O. Revising paragraph (g)(12)(ii)(B)(
P. Revising paragraph (g)(12)(iii).
Q. Revising paragraph (g)(12)(iv), introductory text.
R. Revising paragraph (g)(12)(iv)(A).
S. Revising paragraph (g)(12)(iv)(B)(
T. Redesignating paragraphs (i) and (j) as paragraphs (j) and (k), respectively, and adding a new paragraph (i).
The additions and revisions read as follows:
(b)
(1) Two or more hospitals that are located in the same urban or rural area (as those terms are defined in § 412.62(f) of this subchapter) or in a contiguous area and meet the rotation requirements in paragraph (g)(7)(ii) of this section.
(2) Two or more hospitals that are not located in the same or in a contiguous urban or rural area, but meet the rotation requirement in paragraph (g)(7)(ii) of this section, and are jointly listed—
(i) As the sponsor, primary clinical site or major participating institution for one or more programs as these terms are used in the most current publication of the
(ii) As the sponsor or is listed under “affiliations and outside rotations” for one or more programs in operation in
(3) Two or more hospitals that are under common ownership and, effective for all Medicare GME affiliation agreements beginning July 1, 2003, meet the rotation requirement in paragraph (g)(7)(ii) of this section.
(1) The term of the Medicare GME affiliation agreement (which, at a minimum is one year), beginning on July 1 of a year;
(2) Each participating hospital's direct and indirect GME FTE caps in effect prior to the Medicare GME affiliation;
(3) The total adjustment to each hospital's FTE caps in each year that the Medicare GME affiliation agreement is in effect, for both direct GME and IME, that reflects a positive adjustment to one hospital's direct and indirect FTE caps that is offset by a negative adjustment to the other hospital's (or hospitals') direct and indirect FTE caps of at least the same amount;
(4) The adjustment to each participating hospital's FTE counts resulting from the FTE resident's (or residents') participation in a shared rotational arrangement at each hospital participating in the Medicare GME affiliated group for each year the Medicare GME affiliation agreement is in effect. This adjustment to each participating hospital's FTE count is also reflected in the total adjustment to each hospital's FTE caps (in accordance with paragraph (3) of this definition); and
(5) The names of the participating hospitals and their Medicare provider members.
(f)
(4) * * *
(iv) The hospital is subject to the principles of community support and redistribution of costs as specified in the provisions of paragraph (i) of this section.
(g)
(4) Subject to the provisions of paragraph (i) of this section, for purposes of determining direct graduate medical education payment—
(iv) Hospitals that are part of the same Medicare GME affiliated group (as described under paragraph (b) of this section) may elect to apply the limit on an aggregate basis as described under paragraph (g)(7) of this section.
(5) Subject to the provisions of paragraph (i) of this section, for purposes of determining direct graduate medical education payment—
(vii) Subject to the provisions under paragraph (g)(12) of this section, effective for cost reporting periods beginning on or after April 1, 2000, FTE residents in a rural track program at an urban hospital are included in the urban hospital's rolling average calculation described in paragraph (g)(5) of this section.
(6) * * *
(i) * * *
(D) An urban hospital that qualifies for an adjustment to its FTE cap under paragraph (g)(6)(i) of this section is not permitted to be part of a Medicare GME affiliated group for purposes of establishing an aggregate FTE cap.
(E) A rural hospital that qualifies for an adjustment to its FTE cap under paragraph (g)(6)(i) of this section is permitted to be part of a Medicare GME affiliated group for purposes of establishing an aggregate FTE cap.
(7) A hospital may receive a temporary adjustment to its FTE cap, which is subject to the averaging rules under paragraph (g)(5)(iii) of this section, to reflect residents added or subtracted because the hospital is participating in a Medicare GME affiliated group (as defined under paragraph (b) of this section). Under this provision—
(i) Each hospital in the Medicare GME affiliated group must submit the Medicare GME affiliation agreement, as defined under paragraph (b) of this section, to the CMS fiscal intermediary servicing the hospital and send a copy to CMS's Central Office no later than July 1 of the residency program year during which the Medicare GME affiliation agreement will be in effect.
(ii) Each hospital in the Medicare GME affiliated group must have a shared rotational arrangement, as defined in paragraph (b) of this section, with at least one other hospital within the Medicare GME affiliated group, and all of the hospitals within the Medicare GME affiliated group must be connected by a series of such shared rotational arrangements.
(iii) During the shared rotational arrangements under an Medicare GME affiliation agreement, as defined in paragraph (b) of this section, more than one of the hospitals in the Medicare GME affiliated group must count the proportionate amount of the time spent by the resident(s) in its FTE resident counts. No resident may be counted in the aggregate as more than one FTE.
(iv) The net effect of the adjustments (positive or negative) on the Medicare GME affiliated hospitals' aggregate FTE cap for each Medicare GME affiliation agreement must not exceed zero.
(v) If the Medicare GME affiliation agreement terminates for any reason, the FTE cap of each hospital in the Medicare GME affiliated group will revert to the individual hospital's pre-affiliation FTE cap that is determined under the provisions of paragraph (g)(4) of this section.
(12) Subject to the provisions of (i) of this section, an urban hospital that establishes a new residency program, or has an existing residency program, with a rural track (or an integrated rural track) may include in its FTE count residents in those rural tracks, in addition to the residents subject to its FTE cap specified under paragraph (g)(4) of this section. An urban hospital with a rural track residency program may count residents in those rural tracks up to a rural track FTE limitation if the hospital complies with the conditions specified in paragraphs (g)(12)(i) through (g)(12)(vi) of this section.
(i) If an urban hospital rotates residents to a separately accredited rural track program at a rural hospital(s) for two-thirds of the duration of the program for cost reporting periods beginning on or after April 1, 2000 and before October 1, 2003, or for more than one-half of the duration of the program for cost reporting periods beginning on or after October 1, 2003, the urban hospital may include those residents in its FTE count for the time the rural track residents spend at the urban hospital. The urban hospital may include in its FTE count those residents in the rural track training at the urban hospital, not to exceed its rural track FTE limitation, determined as follows:
(A) For the first 3 years of the rural track's existence, the rural track FTE limitation for each urban hospital will be the actual number of FTE residents, subject to the rolling average at paragraph (g)(5)(vii) of this section, training in the rural track at the urban hospital.
(B) Beginning with the fourth year of the rural track's existence, the rural track FTE limitation is equal to the product of the highest number of residents, in any program year, who during the third year of the rural track's existence are training in the rural track at the urban hospital or the rural hospital(s) and are designated at the beginning of their training to be rotated to the rural hospital(s) for at least two-thirds of the duration of the program for cost reporting periods beginning on or after April l, 2000 and before October 1, 2002, or for more than one-half of the duration of the program effective for cost reporting periods beginning on or after October 1, 2003, and the number of years those residents are training at the urban hospital.
(ii) If an urban hospital rotates residents to a separately accredited rural track program at a rural nonhospital site(s) for two-thirds of the duration of the program for cost reporting periods beginning on or after April 1, 2000 and before October 1, 2003, or for more than one-half of the duration of the program for cost reporting periods beginning on or after October 1, 2003, the urban hospital may include those residents in its FTE count, subject to the requirements under paragraph (f)(4) of this section. The urban hospital may include in its FTE count those residents in the rural track, not to exceed its rural track FTE limitation, determined as follows:
(A) For the first 3 years of the rural track's existence, the rural track FTE limitation for each urban hospital will be the actual number of FTE residents, subject to the rolling average specified in paragraph (g)(5)(vii) of this section, training in the rural track at the urban hospital and the rural nonhospital site(s).
(B) * * *
(
(
(iii) If an urban hospital rotates residents in the rural track program to a rural hospital(s) for less than two-thirds of the duration of the program for cost reporting periods beginning on or after April 1, 2000 and before October 1, 2003, or for one-half or less than one-half of the duration of the program for cost reporting periods beginning on or after October 1, 2003, the rural hospital may not include those residents in its FTE count (if the rural track is not a new program under paragraph (g)(6)(iii) of this section, or if the rural hospital's FTE count exceeds that hospital's FTE cap), nor may the urban hospital include those residents when calculating its rural track FTE limitation.
(iv) If an urban hospital rotates residents in the rural track program to a rural nonhospital site(s) for period of time is less than two-thirds of the duration of the program for cost reporting periods beginning on or after April 1, 2000 and before October 1, 2003, or for one-half or less than one-half of the duration of the program for cost reporting periods beginning on or after October 1, 2003, the urban hospital may include those residents in its FTE count, subject to the requirements under paragraph (f)(4) of this section. The urban hospital may include in its FTE count those residents in the rural track, not to exceed its rural track limitation, determined as follows:
(A) For the first 3 years of the rural track's existence, the rural track FTE limitation for the urban hospital will be the actual number of FTE residents, subject to the rolling average specified in paragraph (g)(5)(vii) of this section, training in the rural track at the rural nonhospital site(s).
(B) * * *
(
(i)
(1) For purposes of determining direct graduate medical education payments, the following principles apply:
(i)
(ii)
(2)
In this Addendum, we are setting forth the proposed amounts and factors for determining prospective payment rates for Medicare hospital inpatient operating costs and Medicare hospital inpatient capital-related costs. We are also setting forth proposed rate-of-increase percentages for updating the target amounts for hospitals and hospital units excluded from the IPPS.
For discharges occurring on or after October 1, 2003, except for SCHs, MDHs, and hospitals located in Puerto Rico, each hospital's payment per discharge under the IPPS will be based on 100 percent of the Federal national rate, which will be based on the national adjusted standardized amount. This amount reflects the national average hospital costs per case from a base year, updated for inflation.
SCHs are paid based on whichever of the following rates yields the greatest aggregate payment: The Federal national rate; the updated hospital-specific rate based on FY 1982 costs per discharge; the updated hospital-specific rate based on FY 1987 costs per discharge; or the updated hospital-specific rate based on FY 1996 costs per discharge.
Under section 1886(d)(5)(G) of the Act, MDHs are paid based on the Federal national rate or, if higher, the Federal national rate plus 50 percent of the difference between the Federal national rate and the updated hospital-specific rate based on FY 1982 or FY 1987 costs per discharge, whichever is higher. MDHs do not have the option to use their FY 1996 hospital-specific rate.
For hospitals in Puerto Rico, the payment per discharge is based on the sum of 50 percent of a Puerto Rico rate reflecting base year average costs per case of Puerto Rico hospitals and 50 percent of a blended Federal national rate (a discharge-weighted average of the national large urban and other areas standardized amounts). (
As discussed below in section II. of this Addendum, we are proposing to make changes in the determination of the prospective payment rates for Medicare inpatient operating costs for FY 2004. The changes, to be applied prospectively effective with discharges occurring on or after October 1, 2003, affect the calculation of the Federal rates. In section III. of this Addendum, we discuss our proposed changes for determining the prospective payment rates for Medicare inpatient capital-related costs for FY 2004. Section IV. of this Addendum sets forth our proposed changes for determining the rate-of-increase limits for hospitals excluded from the IPPS for FY 2004. Section V. of this Addendum sets forth policies on payment for blood clotting factor administered to hemophilia patients. The tables to which we refer in the preamble to this proposed rule are presented in section VI. of this Addendum.
The basic methodology for determining prospective payment rates for hospital inpatient operating costs is set forth at § 412.63. The basic methodology for determining the prospective payment rates for hospital inpatient operating costs for hospitals located in Puerto Rico is set forth at §§ 412.210 and 412.212. Below, we discuss the factors used for determining the prospective payment rates.
In summary, the proposed standardized amounts set forth in Tables 1A and 1C of section VI. of this Addendum reflect—
• Updates of 3.5 percent for all areas (that is, the full market basket percentage increase of 3.5 percent);
• An adjustment to ensure the proposed DRG recalibration and wage index update and changes, as well as the add-on payments for new technology, are budget neutral, as provided for under sections 1886(d)(4)(C)(iii) and (d)(3)(E) of the Act, by applying new budget neutrality adjustment factors to the large urban and other standardized amounts;
• An adjustment to ensure the effects of geographic reclassification are budget neutral, as provided for in section 1886(d)(8)(D) of the Act, by removing the FY 2003 budget neutrality factor and applying a revised factor;
• An adjustment to apply the new outlier offset by removing the FY 2003 outlier offsets and applying a new offset.
The national standardized amounts are based on per discharge averages of adjusted hospital costs from a base period (section 1886(d)(2)(A) of the Act) or, for Puerto Rico, adjusted target amounts from a base period (section 1886(d)(9)(B)(i) of the Act), updated and otherwise adjusted in accordance with the provisions of section 1886(d) of the Act. The preamble to the September 1, 1983 interim final rule (48 FR 39763) contained a detailed explanation of how base-year cost data (from cost reporting periods ending during FY 1981) were established in the initial development of standardized amounts for the IPPS. The September 1, 1987 final rule (52 FR 33043, 33066) contains a detailed explanation of how the target amounts were determined and how they are used in computing the Puerto Rico rates.
Sections 1886(d)(2)(B) and (d)(2)(C) of the Act require us to update base-year per discharge costs for FY 1984 and then standardize the cost data in order to remove the effects of certain sources of cost variations among hospitals. These effects include case-mix, differences in area wage levels, cost-of-living adjustments for Alaska and Hawaii, indirect medical education costs, and costs to hospitals serving a disproportionate share of low-income patients.
Under sections 1886(d)(2)(H) and (d)(3)(E) of the Act, in making payments under the IPPS, the Secretary estimates from time to time the proportion of costs that are wages and wage-related costs. Based on the estimated labor-related share, the standardized amounts are divided into labor-related and nonlabor-related amounts. As discussed in section IV. of the preamble to the August 1, 2002 IPPS final rule, when we revised the market basket in FY 2003, we did not revise the labor share of the standardized amount (the proportion adjusted by the wage index). We consider 71.1 percent of costs to be labor-related for purposes of the IPPS. The average labor share in Puerto Rico is 71.3 percent.
Sections 1886(d)(2)(D) and (d)(3) of the Act require the Secretary to compute two average standardized amounts for discharges occurring in a fiscal year: one for hospitals located in large urban areas and one for hospitals located in other areas. In addition, under sections 1886(d)(9)(B)(iii) and (d)(9)(C)(i) of the Act, the average standardized amount per discharge must be determined for hospitals located in large urban and other areas in Puerto Rico. In accordance with section 1886(b)(3)(B)(i) of the Act, the large urban average standardized amount is 1.6 percent higher than the other area average standardized amount.
Section 402(b) of Pub. L. 108-7 required that, effective for discharges occurring on or after April 1, 2003, and before October 1, 2003, the Federal rate for all IPPS hospitals would be based on the large urban standardized amount. However, for discharges occurring on or after October 1, 2003, the Federal rate will again be calculated based on separate average standardized amounts for hospitals in large urban areas and for hospitals in other areas.
Section 1886(d)(2)(D) of the Act defines “urban area” as those areas within a Metropolitan Statistical Area (MSA). A “large urban area” is defined as an urban area with a population of more than 1 million. In addition, section 4009(i) of Pub. L. 100-203 provides that a New England County Metropolitan Area (NECMA) with a population of more than 970,000 is classified as a large urban area. As required by section 1886(d)(2)(D) of the Act, population size is determined by the Secretary based on the latest population data published by the Bureau of the Census. Urban areas that do not meet the definition of a “large urban area” are referred to as “other urban areas.” Areas that are not included in MSAs are considered “rural areas” under section 1886(d)(2)(D) of the Act. Payment for discharges from hospitals located in large urban areas will be based on the large urban standardized amount. Payment for discharges from hospitals located in other urban and rural areas will be based on the other standardized amount.
Based on the latest available population estimates published by the Bureau of the Census, 63 areas meet the criteria to be defined as large urban areas for FY 2004. These areas are identified in Table 4A of section VI. of this Addendum.
In accordance with section 1886(d)(3)(A)(iv) of the Act, we are proposing to update the large urban areas' and the other areas' average standardized amounts for FY 2004 by the full estimated market basket percentage increase for hospitals in all areas, as specified in section 1886(b)(3)(B)(i)(XIX) of the Act. The percentage change in the market basket reflects the average change in the price of goods and services purchased by hospitals to furnish inpatient care. The most recent forecast of the hospital market basket increase for FY 2004 is 3.5 percent. Thus, for FY 2004, the update to the average standardized amounts equals 3.5 percent for hospitals in all areas.
Although the update factors for FY 2004 are set by law, we are required by section 1886(e)(3) of the Act to report to the Congress our initial recommendation of update factors for FY 2004 for both IPPS hospitals and hospitals excluded from the IPPS. Our proposed recommendation on the update factors (which is required by sections 1886(e)(4)(A) and (e)(5)(A) of the Act) is set forth as Appendix B of this proposed rule.
As in the past, we are proposing to adjust the FY 2004 standardized amounts to remove the effects of the FY 2003 geographic reclassifications and outlier payments before applying the FY 2004 updates. We then apply the new offsets to the standardized amounts for outliers and geographic reclassifications for FY 2004.
We do not remove the prior years' budget neutrality adjustment because, in accordance with section 1886(d)(4)(C)(iii) of the Act, estimated aggregate payments after the changes in the DRG relative weights and wage index should equal estimated aggregate payments prior to the changes. If we removed the prior year adjustment, we would not satisfy this condition.
Budget neutrality is determined by comparing aggregate IPPS payments before and after making the changes that are required to be budget neutral (for example, reclassifying and recalibrating the DRGs, updating the wage data, and geographic reclassifications). We include outlier payments in the payment simulations because outliers may be affected by changes in these payment parameters. Because the proposed changes to the postacute care transfer policy discussed in section IV.A. of this preamble are not budget neutral, we included the effects of expanding this policy to additional DRGs prior to estimating the payment effects of the DRG and wage data changes.
a. Recalibration of DRG Weights and Updated Wage Index—Budget Neutrality Adjustment. Section 1886(d)(4)(C)(iii) of the Act specifies that, beginning in FY 1991, the annual DRG reclassification and recalibration of the relative weights must be made in a manner that ensures that aggregate payments to hospitals are not affected. As discussed in section II. of the preamble, we normalized the recalibrated DRG weights by an adjustment factor, so that the average case weight after recalibration is equal to the average case weight prior to recalibration. However, equating the average case weight after recalibration to the average case weight before recalibration does not necessarily achieve budget neutrality with respect to aggregate payments to hospitals because payments to hospitals are affected by factors other than average case weight. Therefore, as we have done in past years, we are proposing to make a budget neutrality adjustment to ensure that the requirement of section 1886(d)(4)(C)(iii) of the Act is met.
Section 1886(d)(3)(E) of the Act requires us to update the hospital wage index on an annual basis beginning October 1, 1993. This provision also requires us to make any updates or adjustments to the wage index in a manner that ensures that aggregate payments to hospitals are not affected by the change in the wage index.
Section 4410 of Pub. L. 105-33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is not located in a rural area may not be less than the area wage index applicable to hospitals located in rural areas in that State. This provision is required by section 4410(b) of Pub. L. 105-33 to be budget neutral. Therefore, we include the effects of this provision in our calculation of the wage update budget neutrality factor.
In addition, we are required to ensure that any add-on payments for new technology under section 1886(d)(5)(K) of the Act are budget neutral. As discussed in section II.E. of this proposed rule, we are proposing to approve one new technology for add-on payments in FY 2004. We estimate that the proposed total add-on payments for this new technology would be $50 million for FY 2004.
To comply with the requirement that DRG reclassification and recalibration of the relative weights be budget neutral, and the requirement that the updated wage index be budget neutral, we used FY 2002 discharge data to simulate payments and compared aggregate payments using the FY 2003 relative weights, wage index, and new technology add-on payments to aggregate payments using the proposed FY 2004 relative weights and wage index, plus the proposed additional add-on payments for new technology. The same methodology was used for the FY 2003 budget neutrality adjustment.
Based on this comparison, we computed a proposed budget neutrality adjustment factor equal to 1.003133. We also adjust the Puerto Rico-specific standardized amounts for the effect of DRG reclassification and recalibration. We computed a proposed budget neutrality adjustment factor for Puerto Rico-specific standardized amounts equal to 1.000627. These budget neutrality adjustment factors are applied to the standardized amounts without removing the effects of the FY 2003 budget neutrality adjustments.
In addition, we are proposing to apply these same adjustment factors to the hospital-specific rates that are effective for cost reporting periods beginning on or after October 1, 2003. (See the discussion in the September 4, 1990 final rule (55 FR 36073).)
b. Reclassified Hospitals—Budget Neutrality Adjustment. Section 1886(d)(8)(B) of the Act provides that, effective with discharges occurring on or after October 1, 1988, certain rural hospitals are deemed urban. In addition, section 1886(d)(10) of the Act provides for the reclassification of hospitals based on determinations by the MGCRB. Under section 1886(d)(10) of the Act, a hospital may be reclassified for purposes of the standardized amount or the wage index, or both.
Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amounts so as to ensure that aggregate payments under the IPPS after implementation of the provisions of sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are equal to the aggregate prospective payments that would have been made absent these provisions. To calculate this budget neutrality factor, we used FY 2002 discharge data to simulate payments, and compared total IPPS payments prior to any reclassifications to total IPPS payments after reclassifications. Based on these simulations, we are proposing to apply an adjustment factor of 0.991848 to ensure that the effects of reclassification are budget neutral.
The proposed adjustment factor is applied to the standardized amounts after removing the effects of the FY 2003 budget neutrality adjustment factor. We note that the proposed FY 2004 adjustment reflects proposed FY 2004 wage index and standardized amount
c. Outliers. Section 1886(d)(5)(A) of the Act provides for payments in addition to the basic prospective payments, for “outlier” cases, that is, cases involving extraordinarily high costs. To qualify for outlier payments, a case must have costs above a fixed-loss cost threshold amount (a dollar amount by which the costs of a case must exceed payments in order to qualify for outlier payment). To determine whether the costs of a case exceed the fixed-loss threshold, a hospital's cost-to-charge ratio is applied to the total covered charges for the case to convert the charges to costs. Payments for eligible cases are then made based on a marginal cost factor, which is a percentage of the costs above the threshold.
Under section 1886(d)(5)(A)(iv) of the Act, outlier payments for any year must be projected to be not less than 5 percent nor more than 6 percent of total operating DRG payments plus outlier payments. Section 1886(d)(3)(B) of the Act requires the Secretary to reduce the average standardized amounts by a factor to account for the estimated proportion of total DRG payments made to outlier cases. Similarly, section 1886(d)(9)(B)(iv) of the Act requires the Secretary to reduce the average standardized amounts applicable to hospitals in Puerto Rico to account for the estimated proportion of total DRG payments made to outlier cases.
i. FY 2004 outlier fixed-loss cost threshold. In the August 1, 2002 IPPS final rule (67 FR 50124), we established a threshold for FY 2003 that was equal to the prospective payment rate for the DRG, plus any IME and DSH payments and any additional payments for new technology, plus $33,560. The marginal cost factor (the percent of costs paid after costs for the case exceed the threshold) was 80 percent.
In the March 5, 2003
The first of the proposed changes was that fiscal intermediaries would use more up-to-date data when determining the cost-to-charge ratio for each hospital. Currently, fiscal intermediaries use the hospital's most recent settled cost report. We proposed to revise our regulations to specify that fiscal intermediaries would use either the most recent settled or the most recent tentative settled cost report, whichever is from the latest reporting period.
The second proposed change was to remove the current requirement in our regulations specifying that a fiscal intermediary will assign a hospital the statewide average cost-to-charge ratio when the hospital has a cost-to-charge ratio that falls below established thresholds (3 standard deviations below the national geometric mean cost-to-charge ratio). We proposed that hospitals would receive their actual cost-to-charge ratios no matter how low their ratios actually fall.
The third proposal was to add a provision to our regulations to provide that the outlier payments for some hospitals may become subject to reconciliation when the hospitals' cost reports are settled. In addition, outlier payments would be subject to an adjustment to account for the time value of any outlier overpayments or underpayments that are ultimately reconciled.
However, as of the time this FY 2004 proposed rule was prepared, these proposed changes to the outlier policy had not been finalized. Therefore, the proposed changes have not been factored into the calculation of the proposed FY 2004 fixed-loss threshold. If these changes are made final prior to (or as part of) the publication of the final FY 2004 fixed-loss threshold, they will be reflected in the analysis used to establish the final FY 2004 threshold.
To calculate the proposed FY 2004 outlier thresholds, we simulated payments by applying proposed FY 2004 rates and policies using cases from the FY 2002 MedPAR file. Therefore, in order to determine the appropriate proposed FY 2003 threshold, it was necessary to inflate the charges on the MedPAR claims by 2 years, from FY 2002 to FY 2004.
As discussed in the August 1, 2002 IPPS final rule (67 FR 50124), rather than use the rate-of-cost increase from hospitals' FY 1998 and FY 1999 cost reports to project the rate of increase from FY 2001 to FY 2003, as had been done in prior years, we used a 2-year average annual rate of change in charges per case to calculate the FY 2003 outlier threshold.
We are proposing to continue to use a 2-year average annual rate of change in charges per case to establish the proposed FY 2004 threshold. The 2-year average annual rate of change in charges per case from FY 2000 to FY 2001, and from FY 2001 to FY 2002, was 12.8083 percent annually, or 27.3 percent over 2 years.
Using the methodology above for setting the charge inflation factors for FY 2004, we are proposing to establish a fixed-loss cost outlier threshold equal to the prospective payment rate for the DRG, plus any IME and DSH payments, and any add-on payments for new technology, plus $50,645.
This single threshold would be applicable to qualify for both operating and capital outlier payments. We also are proposing to maintain the marginal cost factor for cost outliers at 80 percent.
Again, any final rule subsequent to the March 5, 2003 proposed rule that implements changes to the outlier payment methodology is likely to affect how we will calculate the final FY 2004 outlier threshold. Therefore, the final FY 2004 threshold is likely to be different from this proposed threshold, as a result of any changes subsequent to the March 5, 2003 proposed rule. For example, if we were to implement the proposal to no longer apply the statewide average cost-to-charge ratio when hospitals' actual ratios fall below the established threshold (see below), this change would impact our calculation of the threshold.
ii. Other changes concerning outliers. As stated in the September 1, 1993 final rule (58 FR 46348), we establish outlier thresholds that are applicable to both hospital inpatient operating costs and hospital inpatient capital-related costs. When we modeled the combined operating and capital outlier payments, we found that using a common set of thresholds resulted in a higher percentage of outlier payments for capital-related costs than for operating costs. We project that the proposed thresholds for FY 2004 would result in outlier payments equal to 5.1 percent of operating DRG payments and 5.5 percent of capital payments based on the Federal rate.
In accordance with section 1886(d)(3)(B), we reduced the proposed FY 2004 standardized amounts by the same percentage to account for the projected proportion of payments paid to outliers. The proposed outlier adjustment factors to be applied to the standardized amounts for FY 2004 are as follows:
We apply the outlier adjustment factors after removing the effects of the FY 2003 outlier adjustment factors on the standardized amounts.
To determine whether a case qualifies for outlier payments, we apply hospital-specific cost-to-charge ratios to the total covered charges for the case. Operating and capital costs for the case are calculated separately by applying separate operating and capital cost-to-charge ratios. These costs are then combined and compared with the fixed-loss outlier threshold.
Once again, although a final rule subsequent to the March 5, 2003 proposed rule on outliers may be published before (or as part of) the FY 2004 IPPS final rule, we are proposing changes for FY 2004 without taking the proposals contained in the March 5, 2003 proposed rule into account at this time.
For those hospitals for which the fiscal intermediary computes operating cost-to-charge ratios lower than 0.194 or greater than 1.223, or capital cost-to-charge ratios lower than 0.012 or greater than 0.163, we are proposing statewide average ratios would be used to calculate costs to determine whether a hospital qualifies for outlier payments.
iii. FY 2002 and FY 2003 outlier payments. In the August 1, 2002 IPPS final rule (67 FR 50125), we stated that, based on available data, we estimated that actual FY 2002 outlier payments would be approximately 6.9 percent of actual total DRG payments. This estimate was computed based on simulations using the FY 2001 MedPAR file (discharge data for FY 2001 bills). That is, the estimate of actual outlier payments did not reflect actual FY 2002 bills but instead reflected the application of FY 2002 rates and policies to available FY 2001 bills.
Our current estimate, using available FY 2002 bills, is that actual outlier payments for FY 2002 were approximately 7.9 percent of actual total DRG payments. Thus, the data indicate that, for FY 2002, the percentage of actual outlier payments relative to actual total payments is higher than we projected before FY 2002 (and thus exceeds the percentage by which we reduced the standardized amounts for FY 2002). Nevertheless, consistent with the policy and statutory interpretation we have maintained since the inception of the IPPS, we do not plan to make retroactive adjustments to outlier payments to ensure that total outlier payments for FY 2002 are equal to 5.1 percent of total DRG payments.
We currently estimate that actual outlier payments for FY 2003 will be approximately 5.5 percent of actual total DRG payments, 0.4 percentage points higher than the 5.1 percent we projected in setting outlier policies for FY 2003. This estimate is based on simulations using the FY 2002 MedPAR file (discharge data for FY 2002 bills). We used these data to calculate an estimate of the actual outlier percentage for FY 2003 by applying FY 2003 rates and policies including an outlier threshold of $33,560 to available FY 2002 bills. If changes to the outlier payment methodology are made effective during FY 2003, these may affect the actual percentage of FY 2003 outlier payments.
The adjusted standardized amounts are divided into labor and nonlabor portions. Table 1A in section VI. of this Addendum contains the two national standardized amounts that we are proposing will be applicable to all hospitals, except hospitals in Puerto Rico. As described in section II.A.1. of this Addendum, we are not proposing to revise the labor share of the national standardized amount from 71.1 percent.
The following table illustrates the proposed changes from the FY 2003 national average standardized amounts. The first row in the table shows the updated (through FY 2003) average standardized amounts after restoring the FY 2003 offsets for outlier payments and geographic reclassification budget neutrality. The DRG reclassification and recalibration and wage index budget neutrality factor is cumulative. Therefore, the FY 2003 factor is not removed from the amounts in the table.
Under section 1886(d)(9)(A)(ii) of the Act, the Federal portion of the Puerto Rico payment rate is based on the discharge-weighted average of the national large urban standardized amount and the national other standardized amount (as set forth in Table 1A). The labor and nonlabor portions of the national average standardized amounts for Puerto Rico hospitals are set forth in Table 1C of section VI. of this Addendum. This table also includes the Puerto Rico standardized amounts. The labor share applied to the Puerto Rico standardized amount is 71.3 percent.
Tables 1A and 1C, as set forth in section VI. of this Addendum, contain the labor-related and nonlabor-related shares that we are proposing to use to calculate the prospective payment rates for hospitals located in the 50 States, the District of Columbia, and Puerto Rico. This section addresses two types of adjustments to the standardized amounts that are made in determining the proposed prospective payment rates as described in this Addendum.
Sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act require that we make an adjustment to the labor-related portion of the national and Puerto Rico prospective payment rates, respectively, to account for area differences in hospital wage levels. This adjustment is made by multiplying the labor-related portion of the adjusted standardized amounts by the appropriate wage index for the area in which the hospital is located. In section III. of this preamble, we discuss the data and methodology for the proposed FY 2004 wage index. The proposed FY 2004 wage index is set forth in Tables 4A, 4B, 4C, and 4F of section VI. of this Addendum.
Section 1886(d)(5)(H) of the Act authorizes an adjustment to take into account the unique circumstances of hospitals in Alaska and Hawaii. Higher labor-related costs for these two States are taken into account in the adjustment for area wages described above. For FY 2004, we are proposing to adjust the payments for hospitals in Alaska and Hawaii by multiplying the nonlabor portion of the standardized amounts by the appropriate adjustment factor contained in the table below. If the Office of Personnel Management releases revised cost-of-living adjustment factors before July 1, 2003, we will publish them in the final rule and use them in determining FY 2004 payments.
As discussed in section II. of the preamble, we have developed a classification system for all hospital discharges, assigning them into DRGs, and have developed relative weights for each DRG that reflect the resource utilization of cases in each DRG relative to Medicare cases in other DRGs. Table 5 of section VI. of this Addendum contains the relative weights that we are proposing to use for discharges occurring in FY 2004. These factors have been recalibrated as explained in section II. of the preamble.
The proposed operating prospective payment rate for all hospitals paid under the IPPS located outside of Puerto Rico, except SCHs and MDHs, equals the Federal rate based on the proposed amounts in Table 1A in section VI. of this Addendum.
The proposed prospective payment rate for SCHs equals the higher of the proposed applicable Federal rate from Table 1A or the hospital-specific rate as described below. The proposed prospective payment rate for MDHs equals the higher of the Federal rate, or the Federal rate plus 50 percent of the difference between the Federal rate and the hospital-specific rate as described below. The proposed prospective payment rate for Puerto Rico equals 50 percent of the Puerto Rico rate plus 50 percent of the proposed national rate from Table 1C in section VI. of this Addendum.
For discharges occurring on or after October 1, 2003 and before October 1, 2004, except for SCHs, MDHs, and hospitals in Puerto Rico, payment under the IPPS is based exclusively on the Federal rate.
The Federal rate is determined as follows:
Step 1—Select the appropriate average standardized amount considering the location of the hospital (large urban or other) (see Table 1A in section VI. of this Addendum).
Step 2—Multiply the labor-related portion of the standardized amount by the applicable wage index for the geographic area in which the hospital is located or the area to which the hospital is reclassified (see Tables 4A, 4B, and 4C of section VI. of this Addendum).
Step 3—For hospitals in Alaska and Hawaii, multiply the nonlabor-related portion of the standardized amount by the appropriate cost-of-living adjustment factor.
Step 4—Add the amount from Step 2 and the nonlabor-related portion of the standardized amount (adjusted, if appropriate, under Step 3).
Step 5—Multiply the final amount from Step 4 by the relative weight corresponding to the appropriate DRG (see Table 5 of section VI. of this Addendum).
The Federal rate as determined in Step 5 may then be further adjusted if the hospital qualifies for either the IME or DSH adjustment.
a. Calculation of Hospital-Specific Rate. Section 1886(b)(3)(C) of the Act provides that SCHs are paid based on whichever of the following rates yields the greatest aggregate payment: the Federal rate; the updated hospital-specific rate based on FY 1982 costs per discharge; the updated hospital-specific rate based on FY 1987 costs per discharge; or the updated hospital-specific rate based on FY 1996 costs per discharge.
Section 1886(d)(5)(G) of the Act provides that MDHs are paid based on whichever of the following rates yields the greatest aggregate payment: the Federal rate or the Federal rate plus 50 percent of the difference between the Federal rate and the greater of the updated hospital-specific rates based on either FY 1982 or FY 1987 costs per discharge. MDHs do not have the option to use their FY 1996 hospital-specific rate.
Hospital-specific rates have been determined for each of these hospitals based on either the FY 1982 costs per discharge, the FY 1987 costs per discharge or, for SCHs, the FY 1996 costs per discharge. For a more detailed discussion of the calculation of the hospital-specific rates, we refer the reader to the September 1, 1983 interim final rule (48 FR 39772); the April 20, 1990 final rule with comment (55 FR 15150); the September 4, 1990 final rule (55 FR 35994); and the August 1, 2000 final rule (65 FR 47082). In addition, for both SCHs and MDHs, the hospital-specific rate is adjusted by the proposed budget neutrality adjustment factor (that is, by 1.003133) as discussed in section II.A.4.a. of this Addendum. The resulting rate would be used in determining the payment rate an SCH or MDH would receive for its discharges beginning on or after October 1, 2003.
b. Updating the FY 1982, FY 1987, and FY 1996 Hospital-Specific Rates for FY 2004. We are proposing to increase the hospital-specific rates by 3.5 percent (the hospital market basket percentage) for SCHs and MDHs for FY 2004. Section 1886(b)(3)(C)(iv) of the Act provides that the update factor applicable to the hospital-specific rates for SCHs is equal to the update factor provided under section 1886(b)(3)(B)(iv) of the Act, which, for SCHs in FY 2004, is the market basket rate of increase. Section 1886(b)(3)(D) of the Act provides that the update factor applicable to the hospital-specific rates for MDHs also equals the update factor provided under section 1886(b)(3)(B)(iv) of the Act, which, for FY 2004, is the market basket rate.
a. Puerto Rico Rate. The Puerto Rico prospective payment rate is determined as follows:
Step 1—Select the appropriate adjusted average standardized amount considering the large urban or other designation of the hospital (see Table 1C of section VI. of the Addendum).
Step 2—Multiply the labor-related portion of the standardized amount by the appropriate Puerto Rico-specific wage index (see Table 4F of section VI. of the Addendum).
Step 3—Add the amount from Step 2 and the nonlabor-related portion of the standardized amount.
Step 4—Multiply the result in Step 3 by 50 percent.
Step 5—Multiply the amount from Step 4 by the appropriate DRG relative weight (see Table 5 of section VI. of the Addendum).
b. National Rate. The national prospective payment rate is determined as follows:
Step 1—Multiply the labor-related portion of the national average standardized amount (see Table 1C of section VI. of the Addendum) by the appropriate national wage index (see Tables 4A and 4B of section VI. of the Addendum).
Step 2—Add the amount from Step 1 and the nonlabor-related portion of the national average standardized amount.
Step 3—Multiply the result in Step 2 by 50 percent.
Step 4—Multiply the amount from Step 3 by the appropriate DRG relative weight (see Table 5 of section VI. of the Addendum).
The sum of the Puerto Rico rate and the national rate computed above equals the prospective payment for a given discharge for a hospital located in Puerto Rico. This rate may then be further adjusted if the hospital qualifies for either the IME or DSH adjustment.
The PPS for acute care hospital inpatient capital-related costs was implemented for cost reporting periods beginning on or after October 1, 1991. Effective with that cost reporting period and during a 10-year transition period extending through FY 2001, acute care hospital inpatient capital-related costs were paid on the basis of an increasing proportion of the capital PPS Federal rate and a decreasing proportion of a hospital's historical costs for capital.
The basic methodology for determining Federal capital prospective rates is set forth in regulations at §§ 412.308 through 412.352. Below we discuss the factors that we are proposing to use to determine the capital Federal rate for FY 2004, which would be effective for discharges occurring on or after October 1, 2003. The 10-year transition period ended with hospital cost reporting periods beginning on or after October 1, 2001 (FY 2002). Therefore, for cost reporting periods beginning in FY 2002, all hospitals (except “new” hospitals under
For FY 1992, we computed the standard Federal payment rate for capital-related costs under the IPPS by updating the FY 1989 Medicare inpatient capital cost per case by an actuarial estimate of the increase in Medicare inpatient capital costs per case. Each year after FY 1992, we update the standard Federal rate, as provided in § 412.308(c)(1), to account for capital input price increases and other factors. Section 412.308(c)(2) provides that the Federal rate is adjusted annually by a factor equal to the estimated proportion of outlier payments under the Federal rate to total capital payments under the Federal rate. In addition, § 412.308(c)(3) requires that the Federal rate be reduced by an adjustment factor equal to the estimated proportion of payments for (regular and special) exception under § 412.348. Section 412.308(c)(4)(ii) requires that the standard Federal rate be adjusted so that the annual DRG reclassification and the recalibration of DRG weights and changes in the geographic adjustment factor are budget neutral.
For FYs 1992 through 1995, § 412.352 required that the Federal rate also be adjusted by a budget neutrality factor so that aggregate payments for inpatient hospital capital costs were projected to equal 90 percent of the payments that would have been made for capital-related costs on a reasonable cost basis during the fiscal year. That provision expired in FY 1996. Section 412.308(b)(2) describes the 7.4 percent reduction to the rate that was made in FY 1994, and § 412.308(b)(3) describes the 0.28 percent reduction to the rate made in FY 1996 as a result of the revised policy of paying for transfers. In FY 1998, we implemented section 4402 of Public Law 105-33, which requires that, for discharges occurring on or after October 1, 1997, and before October 1, 2002, the unadjusted standard Federal rate is reduced by 17.78 percent. As we discussed in the August 1, 2002 IPPS final rule (67 FR 50102) and implemented in § 412.308(b)(6)), a small part of that reduction was restored effective October 1, 2002.
To determine the appropriate budget neutrality adjustment factor and the regular exceptions payment adjustment during the 10-year transition period, we developed a dynamic model of Medicare inpatient capital-related costs, that is, a model that projected changes in Medicare inpatient capital-related costs over time. With the expiration of the budget neutrality provision, the capital cost model was only used to estimate the regular exceptions payment adjustment and other factors during the transition period. As we explained in the August 1, 2001 IPPS final rule (66 FR 39911), beginning in FY 2003, an adjustment for regular exception payments is no longer necessary because regular exception payments were only made for cost reporting periods beginning on or after October 1, 1991, and before October 1, 2001 (see § 412.348(b)). Since payments are no longer being made under the regular exception policy in FY 2003 and after, we no longer use the capital cost model. The capital cost model and its application during the transition period are described in Appendix B of the August 1, 2001 IPPS final rule (66 FR 40099).
In accordance with section 1886(d)(9)(A) of the Act, under the IPPS for acute care hospital operating costs, hospitals located in Puerto Rico are paid for operating costs under a special payment formula. Prior to FY 1998, hospitals in Puerto Rico were paid a blended rate that consisted of 75 percent of the applicable standardized amount specific to Puerto Rico hospitals and 25 percent of the applicable national average standardized amount. However, effective October 1, 1997, as a result of section 4406 of Public Law 105-33, operating payments to hospitals in Puerto Rico are based on a blend of 50 percent of the applicable standardized amount specific to Puerto Rico hospitals and 50 percent of the applicable national average standardized amount. In conjunction with this change to the operating blend percentage, effective with discharges on or after October 1, 1997, we compute capital payments to hospitals in Puerto Rico based on a blend of 50 percent of the Puerto Rico rate and 50 percent of the Federal rate.
Section 412.374 provides for the use of this blended payment system for payments to Puerto Rico hospitals under the PPS for acute care hospital inpatient capital-related costs. Accordingly, for capital-related costs, we compute a separate payment rate specific to Puerto Rico hospitals using the same methodology used to compute the national Federal rate for capital.
In the final IPPS rule published in the
In the discussion that follows, we explain the factors that were used to determine the proposed FY 2004 capital Federal rate. In particular, we explain why the proposed FY 2004 Federal rate has increased 1.18 percent compared to the FY 2003 Federal rate (effective for discharges occurring on or after April 1, 2003 through September 30, 2003). We also estimate aggregate capital payments will increase by 2.5 percent during this same period. This increase is primarily due to the increase in the number of hospital admissions and the increase in case-mix. This increase in capital payments is slightly less than last year (5.81 percent), mostly due to the restoration of the 2.1 percent reduction to the capital Federal rate in FY 2003 (§ 412.308(b)(6)).
Total payments to hospitals under the IPPS are relatively unaffected by changes in the capital prospective payments. Since capital payments constitute about 10 percent of hospital payments, a 1-percent change in the capital Federal rate yields only about 0.1 percent change in actual payments to hospitals. Aggregate payments under the capital PPS are estimated to increase in FY 2004 compared to FY 2003.
a. Description of the Update Framework. Under § 412.308(c)(1), the standard Federal rate is updated on the basis of an analytical framework that takes into account changes in a capital input price index (CIPI) and several other policy adjustment factors. Specifically, we have adjusted the projected CIPI rate of increase as appropriate each year for case-mix index-related changes, for intensity, and for errors in previous CIPI forecasts. The proposed update factor for FY 2004 under that framework is 0.7 percent, based on data available at this time. This proposed update factor is based on a projected 0.7 percent increase in the CIPI, a 0.0 percent adjustment for intensity, a 0.0 percent adjustment for case-mix, a 0.0 percent adjustment for the FY 2002 DRG reclassification and recalibration, and a forecast error correction of 0.0 percent. We explain the basis for the FY 2004 CIPI projection in section III.C. of this Addendum. Below we describe the policy adjustments that have been applied.
The case-mix index is the measure of the average DRG weight for cases paid under the IPPS. Because the DRG weight determines the prospective payment for each case, any percentage increase in the case-mix index corresponds to an equal percentage increase in hospital payments.
The case-mix index can change for any of several reasons:
• The average resource use of Medicare patients changes (“real” case-mix change);
• Changes in hospital coding of patient records result in higher weight DRG assignments ( coding effects ); and
• The annual DRG reclassification and recalibration changes may not be budget neutral (“reclassification effect”).
We define real case-mix change as actual changes in the mix (and resource requirements) of Medicare patients as opposed to changes in coding behavior that result in assignment of cases to higher weighted DRGs but do not reflect higher resource requirements. In the update
For FY 2004, we are projecting a 1.0 percent total increase in the case-mix index. We estimate that real case-mix increase will equal 1.0 percent in FY 2004. Therefore, the net adjustment for case-mix change in FY 2004 is 0.0 percentage points.
We estimate that FY 2002 DRG reclassification and recalibration will result in a 0.0 percent change in the case-mix when compared with the case-mix index that would have resulted if we had not made the reclassification and recalibration changes to the DRGs. Therefore, we are making a 0.0 percent adjustment for DRG reclassification and recalibration in the update for FY 2004 to maintain budget neutrality.
The capital update framework contains an adjustment for forecast error. The input price index forecast is based on historical trends and relationships ascertainable at the time the update factor is established for the upcoming year. In any given year, there may be unanticipated price fluctuations that may result in differences between the actual increase in prices and the forecast used in calculating the update factors. In setting a prospective payment rate under the framework, we make an adjustment for forecast error only if our estimate of the change in the capital input price index for any year is off by 0.25 percentage points or more. There is a 2-year lag between the forecast and the measurement of the forecast error. A forecast error of 0.2 percentage points was calculated for the FY 2002 update. That is, current historical data indicate that the forecasted FY 2002 CIPI used in calculating the FY 2002 update factor (0.7 percent) overstated the actual realized price increases (0.5 percent) by 0.2 percentage points. This slight overprediction was mostly due to an underestimation of the interest rate cuts by the Federal Reserve Board in 2002, which impacted the interest component of the CIPI. However, since this estimation of the change in the CIPI is less than 0.25 percentage points, it is not reflected in the update recommended under this framework. Therefore, we are making a 0.0 percent adjustment for forecast error in the update for FY 2004.
Under the capital PPS system framework, we also make an adjustment for changes in intensity. We calculate this adjustment using the same methodology and data that are used in the framework for the operating PPS. The intensity factor for the operating update framework reflects how hospital services are utilized to produce the final product, that is, the discharge. This component accounts for changes in the use of quality-enhancing services, for changes in within-DRG severity, and for expected modification of practice patterns to remove noncost-effective services.
We calculate case-mix constant intensity as the change in total charges per admission, adjusted for price level changes (the CPI for hospital and related services) and changes in real case-mix. The use of total charges in the calculation of the intensity factor makes it a total intensity factor, that is, charges for capital services are already built into the calculation of the factor. Therefore, we have incorporated the intensity adjustment from the operating update framework into the capital update framework. Without reliable estimates of the proportions of the overall annual intensity increases that are due, respectively, to ineffective practice patterns and to the combination of quality-enhancing new technologies and within-DRG complexity, we assume, as in the operating update framework, that one-half of the annual increase is due to each of these factors. The capital update framework thus provides an add-on to the input price index rate of increase of one-half of the estimated annual increase in intensity, to allow for within-DRG severity increases and the adoption of quality-enhancing technology.
As we discussed in the May 9, 2002 proposed rule (67 FR 51514), we have developed a Medicare-specific intensity measure based on a 5-year average. Past studies of case-mix change by the RAND Corporation (“Has DRG Creep Crept Up? Decomposing the Case Mix Index Change Between 1987 and 1988” by G. M. Carter, J. P. Newhouse, and D. A. Relles, R-4098-HCFA/ProPAC (1991)) suggest that real case-mix change was not dependent on total change, but was usually a fairly steady 1.0 to 1.4 percent per year. We use 1.4 percent as the upper bound because the RAND study did not take into account that hospitals may have induced doctors to document medical records more completely in order to improve payment.
We calculate case-mix constant intensity as the change in total charges per admission, adjusted for price level changes (the CPI for hospital and related services), and changes in real case-mix. As we noted above, in accordance with § 412.308(c)(1)(ii), we began updating the standard Federal capital rate in FY 1996 using an update framework that takes into account, among other things, allowable changes in the intensity of hospital services. For FYs 1996 through 2001, we found that case-mix constant intensity was declining and we established a 0.0 percent adjustment for intensity in each of those years. For FYs 2001 and 2002, we found that case-mix constant intensity was increasing and we established a 0.3 percent adjustment and 1.0 percent adjustment for intensity, respectively.
Using the methodology described above, for FY 2004 we examined the change in total charges per admission, adjusted for price level changes (the CPI for hospital and related services), and changes in real case-mix for FYs 1998 though 2002. We found that, over this period and in particular the last 3 years of this period (FYs 2000 through 2002), the charge data appear to be skewed. More specifically, we found a dramatic increase in hospital charges for FYs 2000 through 2002 without a corresponding increase in hospital case-mix index. If hospitals were treating new or different types of cases, which would result in an appropriate increase in charges per discharge, then we would expect hospitals' case-mix to increase proportionally.
The timing of this increase in charge growth is consistent with the dramatic increase in charges that we discussed in the March 5, 2003 high-cost outlier proposed rule (68 FR 10420 through 14029). As we discussed in that proposed rule, because hospitals have the ability to increase their outlier payments through dramatic charge increases, we proposed several changes in our high-cost outlier policy at §§ 412.84(i) and (m) in order to prevent hospitals from taking advantage of our current outlier policy.
As discussed above, because our intensity calculation relies heavily upon charge data and we believe that this charge data may be inappropriately skewed, we are proposing a 0.0 percent adjustment for intensity in FY 2004. In past FYs (1996 through 2000) when we found intensity to be declining, we believed a zero (rather then negative) intensity adjustment was appropriate. Similarly, we believe that it is appropriate to propose a zero intensity adjustment for FY 2004 until we believe that any increase in charges can be tied to intensity rather then to attempts to maximize outlier payments.
Above we described the basis of the components used to develop the proposed 0.7 percent capital update factor for FY 2004 as shown in the table below.
b. Comparison of CMS and MedPAC Update Recommendation. In the past, MedPAC has included update recommendations for capital PPS in a Report to Congress. In its March 2003 Report to Congress, MedPAC did not make an update recommendation for capital PPS payments. However, in that same report, MedPAC made an update recommendation for hospital inpatient and outpatient services (page 4). MedPAC stated that hospital inpatient and outpatient services should be considered together because they are so closely interrelated. Their recommendation is based on an assessment of whether payments are adequate to cover the costs of efficient providers, an estimate of input price inflation (measured by the market basket index), and an adjustment for technological charges, which is offset by reasonable expectations in productivity gains.
Section 412.312(c) establishes a unified outlier methodology for inpatient operating and inpatient capital-related costs. A single set of thresholds is used to identify outlier cases for both inpatient operating and inpatient capital-related payments. Section 412.308(c)(2) provides that the standard Federal rate for inpatient capital-related costs be reduced by an adjustment factor equal to the estimated proportion of capital-related outlier payments to total inpatient capital-related PPS payments. The outlier thresholds are set so that operating outlier payments are projected to be 5.1 percent of total operating DRG payments.
In the August 1, 2002 IPPS final rule (67 FR 50129), we estimated that outlier payments for capital in FY 2003 would equal 5.31 percent of inpatient capital-related payments based on the FY 2003 Federal rate. Accordingly, we applied an outlier adjustment factor of 0.9469 to the FY 2003 Federal rate. Based on the thresholds as set forth in section II.A.4.c. of this Addendum, we estimate that outlier payments for capital would equal 5.45 percent of inpatient capital-related payments based on the Federal rate in FY 2004. Therefore, we are proposing an outlier adjustment factor of 0.9455 to the Federal rate. Thus, the projected percentage of capital outlier payments to total capital standard payments for FY 2004 is higher than the percentage for FY 2003.
The outlier reduction factors are not built permanently into the rates; that is, they are not applied cumulatively in determining the Federal rate. Therefore, the net proposed change in the outlier adjustment to the Federal rate for FY 2004 is 0.9985 (0.9455/0.9469). The outlier adjustment decreases the proposed FY 2004 Federal rate by 0.15 percent compared with the FY 2003 outlier adjustment.
Section 412.308(c)(4)(ii) requires that the Federal rate be adjusted so that aggregate payments for the fiscal year based on the Federal rate after any changes resulting from the annual DRG reclassification and recalibration and changes in the geographic adjustment factor (GAF) are projected to equal aggregate payments that would have been made on the basis of the Federal rate without such changes.
Since we implemented a separate geographic adjustment factor for Puerto Rico, we apply separate budget neutrality adjustments for the national geographic adjustment factor and the Puerto Rico geographic adjustment factor. We apply the same budget neutrality factor for DRG reclassifications and recalibration nationally and for Puerto Rico. Separate adjustments were unnecessary for FY 1998 and earlier since the geographic adjustment factor for Puerto Rico was implemented in FY 1998.
In the past, we used the actuarial capital cost model (described in Appendix B of the August 1, 2001 IPPS final rule (66 FR 40099)) to estimate the aggregate payments that would have been made on the basis of the Federal rate with and without changes in the DRG classifications and weights and in the GAF to compute the adjustment required to maintain budget neutrality for changes in DRG weights and in the GAF. During the transition period, the capital cost model was also used to estimate the regular exception payment adjustment factor. As we explain in section III.A.4. of this Addendum, beginning in FY 2003 an adjustment for regular exception payments is no longer necessary. Therefore, we are no longer using the capital cost model. Instead, we are using historical data based on hospitals' actual cost experiences to determine the exceptions payment adjustment factor for special exceptions payments.
To determine the proposed factors for FY 2004, we compared (separately for the national rate and the Puerto Rico rate) estimated aggregate Federal rate payments based on the FY 2003 DRG relative weights and the FY 2003 GAF to estimated aggregate Federal rate payments based on the proposed FY 2004 relative weights and the proposed FY 2004 GAF. In the August 1, 2002 IPPS final rule (67 FR 50129) for FY 2003, the budget neutrality adjustment factors were 0.9885 for the national rate and 0.9963 for the Puerto Rico rate. As a result of the revisions to the GAF effective for discharges occurring on or after April 1, 2003 through September 30, 2003, the budget neutrality adjustment factor is 0.9983 for the national rate for discharges occurring on or before April 1, 2003 through September 30, 2003. The budget neutrality adjustment factor for the Puerto Rico rate remained unchanged (0.9963). As we noted above, the rates effective for discharges occurring on or after April 1, 2003 through September 30, 2003 were used in determining the proposed FY 2004 rates. In making the comparison, we set the regular and special exceptions reduction factors to 1.00.
To achieve budget neutrality for the changes in the national GAF, based on calculations using updated data, we are proposing to apply an incremental budget neutrality adjustment of 1.0034 for FY 2004 to the previous cumulative FY 2003 adjustment (0.9883), yielding a proposed cumulative adjustment of 0.9929 through FY 2004. For the Puerto Rico GAF, we are proposing to apply an incremental budget neutrality adjustment of 1.0002 for FY 2004 to the previous cumulative FY 2003 adjustment (0.9963), yielding a proposed cumulative adjustment of 0.9964 through FY 2004. (This is the rounded result of a calculation performed on unrounded numbers.)
We then compared estimated aggregate Federal rate payments based on the FY 2003 DRG relative weights and the FY 2003 GAF to estimated aggregate Federal rate payments based on the proposed FY 2004 DRG relative weights and the proposed FY 2004 GAF. The proposed incremental adjustment for DRG classifications and changes in relative weights is 1.0004 both nationally and for Puerto Rico. The proposed cumulative adjustments for DRG classifications and changes in relative weights and for changes in the GAF through FY 2004 are 0.9920 nationally and 0.9968 for Puerto Rico (this is the rounded result of a calculation performed with unrounded numbers). The following table summarizes the adjustment factors for each fiscal year:
The methodology used to determine the proposed recalibration and geographic (DRG/GAF) budget neutrality adjustment factor for FY 2004 is similar to that used in establishing budget neutrality adjustments under the PPS for operating costs. One difference is that, under the operating PPS, the budget neutrality adjustments for the effect of geographic reclassifications are determined separately from the effects of other changes in the hospital wage index and the DRG relative weights. Under the capital PPS, there is a single DRG/GAF budget neutrality adjustment factor (the national rate and the Puerto Rico rate are determined separately) for changes in the GAF (including geographic reclassification) and the DRG relative weights. In addition, there is no adjustment for the effects that geographic reclassification has on the other payment parameters, such as the payments for serving low-income patients, indirect medical education payments, or the large urban add-on payments.
In the August 1, 2002 IPPS final rule (67 FR 50129), we calculated a GAF/DRG budget neutrality factor of 0.9957 for FY 2003. As we noted above, as a result of the revisions to the GAF effective for discharges occurring on or after April 1, 2003 through September 30, 2003, we calculated a GAF/DRG budget neutrality factor of 0.9956 for discharges occurring on or after April 1, 2003 through September 30, 2003. Furthermore, the rates effective for discharges occurring on or after April 1, 2003 through September 30, 2003 were used in determining the proposed FY 2004 rates. For FY 2004, we are proposing a GAF/DRG budget neutrality factor of 1.00038. The GAF/DRG budget neutrality factors are built permanently into the rates; that is, they are applied cumulatively in determining the Federal rate. This follows from the requirement that estimated aggregate payments each year be no more or less than they would have been in the absence of the annual DRG reclassification and recalibration and changes in the GAF. The proposed incremental change in the adjustment from FY 2003 to FY 2004 is 1.00038. The proposed cumulative change in the rate due to this adjustment is 0.9920 (the product of the incremental factors for FY 1993, FY 1994, FY 1995, FY 1996, FY 1997, FY 1998, FY 1999, FY 2000, FY 2001, FY 2002, FY 2003, and the proposed incremental factor for FY 2004: 0.9980 × 1.0053 0.9998 × 0.9994 × 0.9987 × 0.9989 × 1.0028 × 0.9985 × 0.9979 × 0.9934 × 0.9956 × 1.00038 = 0.9920).
This proposed factor accounts for DRG reclassifications and recalibration and for changes in the GAF. It also incorporates the effects on the GAF of FY 2004 geographic reclassification decisions made by the MGCRB compared to FY 2003 decisions. However, it does not account for changes in payments due to changes in the DSH and IME adjustment factors or in the large urban add-on.
Section 412.308(c)(3) requires that the standard capital Federal rate be reduced by an adjustment factor equal to the estimated proportion of additional payments for both regular exceptions and special exceptions under § 412.348 relative to total capital PPS payments. In estimating the proportion of regular exception payments to total capital PPS payments during the transition period, we used the actuarial capital cost model originally developed for determining budget neutrality (described in Appendix B of the August 1, 2001 IPPS final rule (66 FR 40099)) to determine the exceptions payment adjustment factor, which was applied to both the Federal and hospital-specific rates.
An adjustment for regular exception payments is no longer necessary in determining the FY 2004 capital Federal rate because, in accordance with § 412.348(b), regular exception payments were only made for cost reporting periods beginning on or after October 1, 1991 and before October 1, 2001. Accordingly, as we explained in the August 1, 2001 IPPS final rule (66 FR 39949), in FY 2003 and subsequent fiscal years, no payments will be made under the regular exceptions provision. However, in accordance with § 412.308(c), we still need to compute a budget neutrality adjustment for special exception payments under § 412.348(g). We describe our methodology for determining the special exceptions adjustment used in calculating the proposed FY 2004 capital Federal rate below.
Under the special exceptions provision specified at § 412.348(g)(1), eligible hospitals include SCHs, urban hospitals with at least 100 beds that have a disproportionate share percentage of at least 20.2 percent or qualify for DSH payments under § 412.106(c)(2), and hospitals with a combined Medicare and Medicaid inpatient utilization of at least 70 percent. An eligible hospital may receive special exceptions payments if it meets (1) a project need requirement as described at § 412.348(g)(2), which, in the case of certain urban hospitals, includes an excess capacity test as described at § 412.348(g)(4); (2) an age
As we explained in the August 1, 2001 IPPS final rule (66 FR 39912 through 39914), in order to determine the estimated proportion of special exceptions payments to total capital payments, we attempted to identify the universe of eligible hospitals that may potentially qualify for special exceptions payments. First, we identified hospitals that met the eligibility requirements at § 412.348(g)(1). Then we determined each hospital's average fixed asset age in the earliest available cost report starting in FY 1992 and subsequent fiscal years. For each of those hospitals, we calculated the average fixed asset age by dividing the accumulated depreciation by the current year's depreciation. In accordance with § 412.348(g)(3), a hospital must have an average age of buildings and fixed assets above the 75th percentile of all hospitals in the first year of the capital PPS. In the September 1, 1994 final rule (59 FR 45385), we stated that, based on the June 1994 update of the cost report files in HCRIS, the 75th percentile for buildings and fixed assets for FY 1992 was 16.4 years. However, we noted that we would make a final determination of that value on the basis of more complete cost report information at a later date. In the August 29, 1997 final rule (62 FR 46012), based on the December 1996 update of HCRIS and the removal of outliers, we finalized the 75th percentile for buildings and fixed assets for FY 1992 as 15.4 years. Thus, we eliminated any hospitals from the potential universe of hospitals that may qualify for special exception payments if its average age of fixed assets did not exceed 15.4 years.
For the hospitals remaining in the potential universe, we estimated project-size by using the fixed capital acquisitions shown on Worksheet A7 from the following HCRIS cost reports updated through December 2002.
Because the project phase-in may overlap 2 cost reporting years, we added together the fixed acquisitions from sequential pairs of cost reports to determine project size. Under § 412.348(g)(5), the hospital's project cost must be at least $200 million or 100 percent of its operating cost during the first 12-month cost reporting period beginning on or after October 1, 1991. We calculated the operating costs from the earliest available cost report starting in FY 1992 and later by subtracting inpatient capital costs from inpatient costs (for all payers). We did not subtract the direct medical education costs as those costs are not available on every update of the HCRIS minimum data set. If the hospital met the project size requirement, we assumed that it also met the project need requirements at § 412.348(g)(2) and the excess capacity test for urban hospitals at § 412.348(g)(4).
Because we estimate that so few hospitals will qualify for special exceptions, projecting costs, payments, and margins would result in high statistical variance. Consequently, we decided to model the effects of special exceptions using historical data based on hospitals' actual cost experiences. If we determined that a hospital may qualify for special exceptions, we modeled special exceptions payments from the project start date through the last available cost report (FY 2000). (Although some FY 2001 cost reports are available in HCRIS, only a few hospitals have submitted FY 2001 costs. Consequently, too few cost reports are available to reliably model FY 2001 special exceptions payments.) For purposes of modeling, we used the cost and payment data on the cost reports from HCRIS assuming that special exceptions would begin at the start of the qualifying project. In other words, when modeling costs and payment data, we ignored any regular exception payments that these hospitals may otherwise have received as if there had not been regular exception provision during the transition period. In projecting an eligible hospital's special exception payment, we applied the 70-percent minimum payment level, the cumulative comparison of current year capital PPS payments and costs, and the cumulative operating margin offset (excluding 75 percent of operating DSH payments).
Our modeling of special exception payments for FY 2004 produced the following results:
We note that hospitals still have one more cost reporting period (PPS XVIII) to complete their projects in order to be eligible for special exceptions payments, and, therefore, we estimate that about 30 hospitals could qualify for special exceptions payments. Thus, we project that special exception payments as a fraction of capital payments to all hospitals to be approximately 0.0005.
Because special exceptions are budget neutral, we are proposing to offset the Federal capital rate by 0.05 percent for special exceptions payments for FY 2004. Therefore, the proposed exceptions adjustment factor would equal 0.9995 (1 − 0.0005) to account for special exceptions payments in FY 2004. Furthermore, we are proposing to estimate the exceptions payment adjustment factor for special exceptions payments in FY 2004 in the final rule based on updated data.
In the August 1, 2002 IPPS final rule (67 FR 50131) for FY 2003, we estimated that total (special) exceptions payments would equal 0.30 percent of aggregate payments based on the Federal rate. Therefore, we applied an exceptions reduction factor of 0.9970 (1 − 0.0030) in determining the FY 2003 Federal rate. As we stated, we estimate that exceptions payments in FY 2004 would equal 0.05 percent of aggregate payments based on the proposed FY 2004 Federal rate. Therefore, we are proposing to apply an exceptions payment adjustment factor of 0.9995 (1 − 0.0005) to the proposed Federal rate for FY 2004. The proposed exceptions adjustment factor for FY 2004 is 0.25 percent higher than the factor for FY 2003 published in the August 1, 2002 IPPS final rule (67 FR 50131). This increase is primarily due to a refined analysis of more recent data.
The exceptions reduction factors are not built permanently into the rates; that is, the factors are not applied cumulatively in determining the Federal rate. Therefore, the proposed net change in the exceptions adjustment factor used in determining the proposed FY 2004 Federal rate is 0.9995/0.9970, or 1.0025.
In the August 1, 2002 IPPS final rule (67 FR 50131) we established a capital Federal rate of $407.01 for FY 2003. As we noted above, as a result of the revisions to the GAF effective for discharges occurring on or after April 1, 2003 through September 30, 2003, we have established a capital Federal rate of $406.93 for discharges occurring on or after April 1, 2003 through September 30, 2003. The rates effective for discharges occurring on or after April 1, 2003 through September 30, 2003, were used in determining the proposed FY 2004 rates. In this proposed rule, we are proposing a capital Federal rate of $411.72 for FY 2004. The proposed Federal rate for FY 2004 was calculated as follows:
• The proposed FY 2004 update factor is 1.0070; that is, the update is 0.70 percent.
• The proposed FY 2004 budget neutrality adjustment factor that is applied to the standard Federal payment rate for changes in the DRG relative weights and in the GAF is 1.0038.
• The proposed FY 2004 outlier adjustment factor is 0.9455.
• The proposed FY 2004 (special) exceptions payment adjustment factor is 0.9995.
Since the proposed Federal rate has already been adjusted for differences in case-mix, wages, cost-of-living, indirect medical education costs, and payments to hospitals serving a disproportionate share of low-income patients, we are proposing to make no additional adjustments in the standard Federal rate for these factors, other than the
We are providing a chart that shows how each of the proposed factors and adjustments for FY 2004 affected the computation of the proposed FY 2004 Federal rate in comparison to the FY 2003 Federal rate. The proposed FY 2004 update factor has the effect of increasing the Federal rate by 0.70 percent compared to the FY 2003 Federal rate, while the proposed GAF/DRG budget neutrality factor has the effect of increasing the Federal rate by 0.38 percent. The proposed FY 2004 outlier adjustment factor has the effect of decreasing the Federal rate by 0.15 percent compared to the FY 2003 Federal rate. The proposed FY 2004 exceptions payment adjustment factor has the effect of increasing the Federal rate by 0.25 percent compared to the exceptions payment adjustment factor for FY 2003. The combined effect of all the proposed changes is to increase the Federal rate by 1.18 percent compared to the FY 2003 Federal rate.
As explained at the beginning of section II.D. of this Addendum, hospitals in Puerto Rico are paid based on 50 percent of the Puerto Rico rate and 50 percent of the Federal rate. The Puerto Rico rate is derived from the costs of Puerto Rico hospitals only, while the Federal rate is derived from the costs of all acute care hospitals participating in the PPS (including Puerto Rico). To adjust hospitals' capital payments for geographic variations in capital costs, we apply a GAF to both portions of the blended rate. The GAF is calculated using the operating PPS wage index and varies, depending on the MSA or rural area in which the hospital is located. We use the Puerto Rico wage index to determine the GAF for the Puerto Rico part of the capital-blended rate and the national wage index to determine the GAF for the national part of the blended rate.
Because we implemented a separate GAF for Puerto Rico in FY 1998, we also apply separate budget neutrality adjustments for the national GAF and for the Puerto Rico GAF. However, we apply the same budget neutrality factor for DRG reclassifications and recalibration nationally and for Puerto Rico. As we stated in section III.A.4. of this Addendum, for Puerto Rico the proposed GAF budget neutrality factor is 1.0002, while the proposed DRG adjustment is 1.0004, for a proposed combined cumulative adjustment of 0.9968.
In computing the payment for a particular Puerto Rico hospital, the Puerto Rico portion of the rate (50 percent) is multiplied by the Puerto Rico-specific GAF for the MSA in which the hospital is located, and the national portion of the rate (50 percent) is multiplied by the national GAF for the MSA in which the hospital is located (which is computed from national data for all hospitals in the United States and Puerto Rico). In FY 1998, we implemented a 17.78 percent reduction to the Puerto Rico rate as a result of Public Law 105-33. In FY 2003, a small part of that reduction was restored.
For FY 2003, before application of the GAF, the special rate for Puerto Rico hospitals was $198.29. With the changes we are proposing to the factors used to determine the rate, the proposed FY 2004 special rate for Puerto Rico is $201.26.
With the end of the capital PPS transition period in FY 2001, all hospitals (except “new” hospitals under § 412.324(b) and under § 412.304(c)(2)) are paid based on 100 percent of the Federal rate in FY 2004. The applicable Federal rate was determined by making adjustments as follows:
• For outliers, by dividing the standard Federal rate by the outlier reduction factor for that fiscal year; and
• For the payment adjustments applicable to the hospital, by multiplying the hospital's GAF, disproportionate share adjustment factor, and IME adjustment factor, when appropriate.
For purposes of calculating payments for each discharge during FY 2004, the standard Federal rate is adjusted as follows: (Standard Federal Rate) × (DRG weight) × (GAF) × (Large Urban Add-on, if applicable) × (COLA adjustment for hospitals located in Alaska and Hawaii) × (1 + Disproportionate Share Adjustment Factor + IME Adjustment Factor, if applicable). The result is the adjusted Federal rate.
Hospitals also may receive outlier payments for those cases that qualify under the thresholds established for each fiscal year. Section 412.312(c) provides for a single set of thresholds to identify outlier cases for both inpatient operating and inpatient capital-related payments. The proposed outlier thresholds for FY 2004 are in section II.A.4.c. of this Addendum. For FY 2004, a case qualifies as a cost outlier if the cost for the case plus the IME and DSH payments is greater than the prospective payment rate for the DRG plus $50,645.
An eligible hospital may also qualify for a special exceptions payment under § 412.348(g) for up through the 10th year beyond the end of the capital transition period if it meets: (1) A project need requirement described at § 412.348(g)(2), which in the case of certain urban hospitals includes an excess capacity test as described at § 412.348(g)(4); and (2) a project size requirement as described at § 412.348(g)(5). Eligible hospitals include sole community hospitals, urban hospitals with at least 100 beds that have a DSH patient percentage of at least 20.2 percent or qualify for DSH payments under § 412.106(c)(2), and hospitals that have a combined Medicare and Medicaid inpatient utilization of at least 70 percent. Under § 412.348(g)(8), the amount of a special exceptions payment is determined by comparing the cumulative payments made to the hospital under the capital PPS to the cumulative minimum payment level. This amount is offset by: (1) Any amount by which a hospital's cumulative capital payments exceed its cumulative minimum payment levels applicable under the regular exceptions process for cost reporting periods beginning during which the hospital has been subject to the capital PPS; and (2) any amount by which a hospital's current year operating and capital payments (excluding 75 percent of operating DSH payments) exceed its operating and capital costs. Under § 412.348(g)(6), the minimum payment level is 70 percent for all eligible hospitals.
During the transition period, new hospitals (as defined under § 412.300) were exempt from the capital PPS for their first 2 years of operation and are paid 85 percent of their reasonable costs during that period. Effective with the third year of operation through the remainder of the transition period, under § 412.324(b) we paid the hospital under the appropriate transition methodology. If the hold-harmless methodology was applicable, the hold-harmless payment for assets in use during the base period would extend for 8 years, even if the hold-harmless payments extend beyond the normal transition period. As discussed in section VI.B. of the preamble of this proposed rule, under § 412.304(c)(2), for cost reporting periods beginning on or after October 1, 2002, we pay a new hospital 85 percent of their reasonable costs during the first 2 years of operation unless it elects
Like the operating input price index, the capital input price index (CIPI) is a fixed-weight price index that measures the price changes associated with costs during a given year. The CIPI differs from the operating input price index in one important aspect—the CIPI reflects the vintage nature of capital, which is the acquisition and use of capital over time. Capital expenses in any given year are determined by the stock of capital in that year (that is, capital that remains on hand from all current and prior capital acquisitions). An index measuring capital price changes needs to reflect this vintage nature of capital. Therefore, the CIPI was developed to capture the vintage nature of capital by using a weighted-average of past capital purchase prices up to and including the current year.
We periodically update the base year for the operating and capital input prices to reflect the changing composition of inputs for operating and capital expenses. The CIPI was last rebased to FY 1997 in the August 1, 2002 final rule (67 FR 50044).
We are forecasting the proposed CIPI to increase 0.7 percent for FY 2004. This reflects a projected 1.2 percent increase in vintage-weighted depreciation prices (building and fixed equipment, and movable equipment) and a 3.4 percent increase in other capital expense prices in FY 2004, partially offset by a 2.0 percent decline in vintage-weighted interest rates in FY 2004. The weighted average of these three factors produces the 0.7 percent increase for the CIPI as a whole.
As discussed in section VI. of the preamble of this proposed rule, in accordance with section 1886(b)(3)(H)(i) of the Act and effective for cost reporting periods beginning on or after October 1, 2002, payments to existing psychiatric hospitals and units, rehabilitation hospitals and units, and long-term care hospitals excluded from the IPPS are no longer subject to limits on a hospital-specific target amount (expressed in terms of the inpatient operating cost per discharge) that are set for each hospital, based on the hospital's own historical cost experience trended forward by the applicable rate-of-increase percentages (update factors).
Effective for cost reporting periods beginning on or after October 1, 2002, rehabilitation hospitals and units are no longer paid on a reasonable cost basis but are paid under the IRF PPS. Effective for cost reporting periods beginning on or after October 1, 2002, LTCHs also are no longer paid on a reasonable cost basis but are paid under a DRG-based PPS. As part of the payment process for LTCHs, we established a 5-year transition period from reasonable cost-based reimbursement to a fully Federal PPS. However, a LTCH, subject to the blend methodology, may elect to be paid based on a 100 percent of the Federal prospective rate.
In accordance with existing § 413.40(c)(4)(ii) and (d)(1)(i) and (ii), where applicable, excluded hospitals and units that continue to be paid on a reasonable cost basis will have payments based on their Medicare inpatient operating costs, not to exceed the ceiling (as defined in § 413.40(a)(3)).
Section 1886(b)(7) of the Act had established a payment limitation for new hospitals and units excluded from the IPPS. While both rehabilitation hospitals and units and LTCHs are now paid under a PPS, psychiatric hospitals and units continue to be subject to the payment limitation. A discussion of how the payment limitation was calculated can be found in the August 29, 1997 final rule with comment period (62 FR 46019); the May 12, 1998 final rule (63 FR 26344); the July 31, 1998 final rule (63 FR 41000); and the July 30, 1999 final rule (64 FR 41529).
The amount of payment for a “new” psychiatric hospital or unit would be determined as follows:
• Under existing § 413.40(f)(2)(ii), for cost reporting periods beginning on or after October 1, 1997, the amount of payment for a new hospital or unit that was not paid as an excluded hospital or unit before October 1, 1997, is the lower of: (1) The hospital's net inpatient operating costs per case; or (2) 110 percent of the national median of the target amounts for the same class of excluded hospitals and units, adjusted for differences in wage levels and updated to the first cost reporting period in which the hospital receives payment. The second cost reporting period is subject to the same target amount applied to the first cost reporting period.
• In the case of a hospital that received payments under § 413.40(f)(2)(ii) as a newly created hospital or unit, to determine the hospital's or unit's target amount for the hospital's or unit's third 12-month cost reporting period, the payment amount determined under § 413.40(f)(2)(ii)(A) for the preceding cost reporting period is updated to the third cost reporting period.
The proposed amounts included in the following table reflect the updated 110 percent of the national median target amounts of new excluded psychiatric hospitals and units for cost reporting periods beginning during FY 2004. These figures are updated with the most recent data available to reflect the projected market basket increase percentage of 3.5 percent. This projected percentage change in the market basket reflects the average change in the price of goods and services purchased by hospitals to furnish inpatient hospital services (as projected by CMS's Office of the Actuary based on its historical experience with the IPPS). For a new provider, the labor-related share of the target amount is multiplied by the appropriate geographic area wage index, without regard to IPPS reclassifications, and added to the nonlabor-related share in order to determine the per case limit on payment under the statutory payment methodology for new providers.
Effective for cost reporting periods beginning on or after October 1, 2002, this payment limitation is no longer applicable to new LTCHs since they will be paid 100 percent of the Federal rate. A new LTCH is a provider of inpatient hospital services that meets the qualifying criteria for LTCHs specified under § 412.23(e)(1) and (e)(2) and whose first cost reporting period as a LTCH begins on or after October 1, 2002 (§ 412.23(e)(4)). Under the LTCH PPS, new LTCHs are paid based on 100 percent of the fully Federal prospective rate (they may not participate in the 5-year transition from cost-based reimbursement to prospective payment). In contrast, those “new” LTCHs that meet the definition of “new” under § 413.40(f)(2)(ii) and that have their first cost reporting periods beginning on or after October 1, 1997, and before October 1, 2002, may be paid under the LTCH PPS transition methodology. Since those hospitals by definition would have been considered new before October 1, 2002, they would have been subject to the updated payment limitation on new hospitals that was published in the FY 2003 IPPS final rule (67 FR 50103). Under existing regulations at § 413.40(f)(2)(ii), the “new” hospital would be subject to the same cap in its second cost reporting period; this cap would not be updated for the new hospital's second cost reporting year. Thus, since the same cap is to be used for the “new” LTCH's first two cost reporting periods, it is no longer necessary to publish an updated cap.
In December 2002, the Department implemented a policy that established the Single Drug Pricer (SDP) to correct identified discrepancies, further the legislative goal of establishing a uniform payment allowance as a reflection of the average wholesale price (AWP), and otherwise apply the existing stature and regulation more accurately and efficiently (CMS Program Memorandum AB-02-174, December 3, 2002, which can be accessed at:
On a quarterly basis, CMS will furnish three SDP files to all fiscal intermediaries. Each fiscal intermediary must accept the SDP files and process claims for any drug identified on the files on the basis of the price shown on the applicable file. Previously, the fiscal intermediary performed annual update calculations based on the most recent AWP data available to the carrier. The fiscal intermediary should use the SDP to price the blood clotting factors.
This section contains the tables referred to throughout the preamble to this proposed rule and in this Addendum. For purposes of this proposed rule, and to avoid confusion, we have retained the designations of Tables 1 through 5 that were first used in the September 1, 1983 initial prospective payment final rule (48 FR 39844). Tables 1A, 1C, 1D, 2, 3A, 3B, 4A, 4B, 4C, 4F, 4G, 4H, 5, 6A, 6B, 6C, 6D, 6E, 6F, 6G, 6H, 7A, 7B, 8A, 8B, 9, 10, and 11 are presented below. The tables presented below are as follows:
We have examined the impacts of this proposed rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review) and the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year).
We have determined that this proposed rule is a major rule as defined in 5 U.S.C. 804(2). Based on the overall percentage change in payments per case estimated using our payment simulation model (a 2.5 percent increase), we estimate that the total impact of these proposed changes for FY 2004 payments compared to FY 2003 payments to be approximately a $2.1 billion increase. This amount does not reflect changes in hospital admissions or case-mix intensity, which would also affect overall payment changes.
The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $5 million to $25 million in any 1 year. For purposes of the RFA, all hospitals and other providers and suppliers are considered to be small entities. Individuals and States are not included in the definition of a small entity.
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis for any proposed rule that may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. With the exception of hospitals located in certain New England counties, for purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital with fewer than 100 beds that is located outside of a Metropolitan Statistical Area (MSA) or New England County Metropolitan Area (NECMA). Section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98-21) designated hospitals in certain New England counties as belonging to the adjacent NECMA. Thus, for purposes of the acute care hospital inpatient prospective payment systems, we classify these hospitals as urban hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) also requires that agencies assess anticipated costs and benefits before issuing any proposed rule (or a final rule that has been preceded by a proposed rule) that may result in an expenditure in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. This proposed rule would not mandate any requirements for State, local, or tribal governments.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. We have reviewed this proposed rule in light of Executive Order 13132 and have determined that it would not have any negative impact on the rights, roles, and responsibilities of State, local, or tribal governments.
In accordance with the provisions of Executive Order 12866, this proposed rule was reviewed by the Office of Management and Budget.
The following analysis, in conjunction with the remainder of this document, demonstrates that this proposed rule is consistent with the regulatory philosophy and principles identified in Executive Order 12866, the RFA, and section 1102(b) of the Act. The proposed rule would affect payments to a substantial number of small rural hospitals as well as other classes of hospitals, and the effects on some hospitals may be significant.
The primary objective of the IPPS is to create incentives for hospitals to operate efficiently and minimize unnecessary costs while at the same time ensuring that payments are sufficient to adequately compensate hospitals for their legitimate costs. In addition, we share national goals of preserving the Medicare Trust Fund.
We believe the changes in this proposed rule would further each of these goals while maintaining the financial viability of the hospital industry and ensuring access to high quality health care for Medicare beneficiaries. We expect that these proposed changes would ensure that the outcomes of this payment system are reasonable and equitable while avoiding or minimizing unintended adverse consequences.
The following quantitative analysis presents the projected effects of our proposed policy changes, as well as statutory changes effective for FY 2004, on various hospital groups. We estimate the effects of individual proposed policy changes by estimating payments per case while holding all other payment policies constant. We use the best data available, but we do not attempt to predict behavioral responses to our proposed policy changes, and we do not make adjustments for future changes in such variables as admissions, lengths of stay, or case-mix. As we have done in previous proposed rules, we are soliciting comments and information about the anticipated effects of these proposed changes on hospitals and our methodology for estimating them.
The prospective payment systems for hospital inpatient operating and capital-related costs encompass nearly all general short-term, acute care hospitals that participate in the Medicare program. There were 45 Indian Health Service hospitals in our database, which we excluded from the analysis due to the special characteristics of the prospective payment method for these hospitals. Among other short-term, acute care hospitals, only the 48 such hospitals in Maryland remain excluded from the IPPS under the waiver at section 1814(b)(3) of the Act.
There are approximately 729 critical access hospitals (CAHs). These small, limited service hospitals are paid on the basis of reasonable costs rather than under the IPPS. The remaining 20 percent are specialty hospitals that are excluded from the IPPS. These specialty hospitals include psychiatric hospitals and units, rehabilitation hospitals and units, long-term care hospitals, children's hospitals, and cancer hospitals. The impacts of our proposed policy changes on these hospitals are discussed below.
Thus, as of April 2003, we have included 4,087 hospitals in our analysis. This represents about 80 percent of all Medicare-participating hospitals. The majority of this impact analysis focuses on this set of hospitals.
As of April 2003, there were 1,085 specialty hospitals excluded from the IPPS that were paid instead on a reasonable cost basis subject to the rate-of-increase ceiling under § 413.40. Broken down by specialty, there were 484 psychiatric, 214 rehabilitation, 296 long-term care, 80 children's, and 11 cancer hospitals. In addition, there were 1,410 psychiatric units and 979 rehabilitation units in hospitals otherwise subject to the IPPS. Under § 413.40(a)(2)(i)(A), the rate-of-increase ceiling is not applicable to the 48 specialty hospitals and units in Maryland that are paid in accordance with the waiver at section 1814(b)(3) of the Act.
In the past, hospitals and units excluded from the IPPS have been paid based on their reasonable costs subject to limits as established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Hospitals that continue to be paid based on their reasonable costs are subject to TEFRA limits for FY 2004. For these hospitals, the proposed update is the percentage increase in the excluded hospital market basket (currently estimated at 3.5 percent).
Inpatient rehabilitation facilities (IRFs) are paid under a prospective payment system (IRF PPS) for cost reporting periods beginning on or after January 1, 2002. For cost reporting periods beginning during FY 2004, the IRF PPS is based on 100 percent of the adjusted Federal IRF prospective payment amount, updated annually. Therefore, these hospitals would not be impacted by this proposed rule.
Effective for cost reporting periods beginning on or after October 1, 2002, LTCHs are paid under a LTCH PPS, based on the adjusted Federal prospective payment amount, updated annually. LTCHs will receive a blended payment (Federal prospective payment and a reasonable cost-based payment) over a 5-year transition period. However, under the LTCH PPS, a LTCH may also elect to be paid at 100 percent of the Federal prospective rate at the beginning of any of its cost reporting periods during the 5-year transition period. For purposes of the update factor, the portion of the LTCH PPS transition blend payment based on reasonable costs for inpatient operating services would be determined by updating the LTCH's TEFRA limit by the estimate of the excluded hospital market basket (or 3.5 percent).
The impact on excluded hospitals and hospital units of the update in the rate-of-increase limit depends on the cumulative cost increases experienced by each excluded hospital or unit since its applicable base period. For excluded hospitals and units that have maintained their cost increases at a level below the rate-of-increase limits since their base period, the major effect would be on the level of incentive payments these hospitals and hospital units receive. Conversely, for excluded hospitals and hospital units with per-case cost increases above the cumulative update in their rate-of-increase limits, the major effect would be the amount of excess costs that would not be reimbursed.
We note that, under § 413.40(d)(3), an excluded hospital or unit whose costs exceed 110 percent of its rate-of-increase limit receives its rate-of-increase limit plus 50 percent of the difference between its reasonable costs and 110 percent of the limit, not to exceed 110 percent of its limit. In addition, under the various provisions set forth in § 413.40, certain excluded hospitals and hospital units can obtain payment adjustments for justifiable increases in operating costs that exceed the limit. At the same time, however, by generally limiting payment increases, we continue to provide an incentive for excluded hospitals and hospital units to restrain the growth in their spending for patient services.
In this proposed rule, we are announcing policy changes and payment rate updates for the IPPS for operating and capital-related costs. Based on the overall percentage change in payments per case estimated using our payment simulation model (a 2.5 percent increase), we estimate the total impact of these changes for FY 2004 payments compared to FY 2003 payments to be approximately a $2.1 billion increase. This amount does not reflect changes in hospital admissions or case-mix intensity, which would also affect overall payment changes.
We have prepared separate impact analyses of the proposed changes to each system. This section deals with changes to the operating prospective payment system. Our payment simulation model relies on available data to enable us to estimate the impacts on payments per case of certain changes we are proposing in this proposed rule. However, there are other changes we are proposing for which we do not have data available that would allow us to estimate the payment impacts using this model. For those proposals, we have attempted to predict the payment impacts of those proposed changes based upon our experience and other more limited data.
The data used in developing the quantitative analyses of changes in payments per case presented below are taken from the FY 2002 MedPAR file and the most current Provider-Specific File that is used for payment purposes. Although the analyses of the changes to the operating PPS do not incorporate cost data, data from the most recently available hospital cost report were used to categorize hospitals. Our analysis has several qualifications. First, we do not make adjustments for behavioral changes that hospitals may adopt in response to these proposed policy changes, and we do not adjust for future changes in such variables as admissions, lengths of stay, or case-mix. Second, due to the interdependent nature of the IPPS payment components, it is very difficult to precisely quantify the impact associated with each proposed change. Third, we draw upon various sources for the data used to categorize hospitals in the tables. In some cases, particularly the number of beds, there is a fair degree of variation in the data from different sources. We have attempted to construct these variables with the best available source overall. However, for individual hospitals, some miscategorizations are possible.
Using cases in the FY 2002 MedPAR file, we simulated payments under the operating IPPS given various combinations of payment parameters. Any short-term, acute care hospitals not paid under the IPPSs (Indian Health Service hospitals and hospitals in Maryland) were excluded from the simulations. The impact of payments under the capital IPPS, or the impact of payments for costs other than inpatient operating costs, are not analyzed in this section. Estimated payment impacts of proposed FY 2004 changes to the capital IPPS are discussed in section IX. of this Appendix.
The proposed changes discussed separately below are the following:
• The effects of expanding the postacute care transfer policy to 19 additional DRGs.
• The effects of the proposed annual reclassification of diagnoses and procedures and the recalibration of the DRG relative weights required by section 1886(d)(4)(C) of the Act.
• The effects of the proposed changes in hospitals' wage index values reflecting wage data from hospitals' cost reporting periods beginning during FY 2000, compared to the FY 1999 wage data, including the effects of removing wage data for Part B costs of RCHs and FQHCs.
• The effects of geographic reclassifications by the MGCRB that will be effective in FY 2004.
• The total change in payments based on proposed FY 2004 policies relative to payments based on FY 2003 policies.
To illustrate the impacts of the proposed FY 2004 changes, our analysis begins with a FY 2004 baseline simulation model using: the FY 2003 DRG GROUPER (version 20.0); the current postacute care transfer policy for 10 DRGs; the FY 2003 wage index; and no MGCRB reclassifications. Outlier payments are set at 5.1 percent of total operating DRG and outlier payments.
Each proposed and statutory policy change is then added incrementally to this baseline model, finally arriving at an FY 2004 model incorporating all of the proposed changes. This allows us to isolate the effects of each proposed change.
Our final comparison illustrates the percent change in payments per case from FY
A second significant factor that impacts changes in hospitals' payments per case from FY 2003 to FY 2004 is the change in MGCRB status from one year to the next. That is, hospitals reclassified in FY 2003 that are no longer reclassified in FY 2004 may have a negative payment impact going from FY 2003 to FY 2004; conversely, hospitals not reclassified in FY 2003 that are reclassified in FY 2004 may have a positive impact. In some cases, these impacts can be quite substantial, so if a relatively small number of hospitals in a particular category lose their reclassification status, the percentage change in payments for the category may be below the national mean. However, this effect is alleviated by section 1886(d)(10)(D)(v) of the Act, which provides that reclassifications for purposes of the wage index are for a 3-year period.
A third significant factor is that we currently estimate that actual outlier payments during FY 2003 will be 5.5 percent of total DRG payments. When the FY 2003 final rule was published, we projected FY 2003 outlier payments would be 5.1 percent of total DRG plus outlier payments; the average standardized amounts were offset correspondingly. The effects of the higher than expected outlier payments during FY 2003 (as discussed in the Addendum to this proposed rule) are reflected in the analyses below comparing our current estimates of FY 2003 payments per case to estimated FY 2004 payments per case.
Fourth, we are proposing to expand the postacute care transfer policy to 19 additional DRGs. This proposed expansion would result in Medicare savings of $160 million because we would no longer pay a full DRG payment for these cases. As a result, there would be a lower total increase in Medicare spending for FY 2004.
Fifth, section 402(b) of Pub. L. 108-7 provided that the large urban standardized amount of the Federal rate is applicable for all IPPS hospitals for discharges occurring on or after April 1, 2003, and before October 1, 2003. For discharges occurring on or after October 1, 2003, the Federal rate will again be based on separate average standardized amounts for hospitals in large urban areas and for hospitals in other areas. The effect is to reduce the percent increase in FY 2004 payments compared to those made in FY 2003.
Table I demonstrates the results of our analysis. The table categorizes hospitals by various geographic and special payment consideration groups to illustrate the varying impacts on different types of hospitals. The top row of the table shows the overall impact on the 4,087 hospitals included in the analysis. This number is 143 fewer hospitals than were included in the impact analysis in the FY 2003 final rule (67 FR 50279). There are 98 new CAHs that were excluded from last year's analysis.
The next four rows of Table I contain hospitals categorized according to their geographic location: all urban, which is further divided into large urban and other urban; and rural. There are 2,582 hospitals located in urban areas (MSAs or NECMAs) included in our analysis. Among these, there are 1,493 hospitals located in large urban areas (populations over 1 million), and 1,089 hospitals in other urban areas (populations of 1 million or fewer). In addition, there are 1,505 hospitals in rural areas. The next two groupings are by bed-size categories, shown separately for urban and rural hospitals. The final groupings by geographic location are by census divisions, also shown separately for urban and rural hospitals.
The second part of Table I shows hospital groups based on hospitals' FY 2004 payment classifications, including any reclassifications under section 1886(d)(10) of the Act. For example, the rows labeled urban, large urban, other urban, and rural show that the number of hospitals paid based on these categorizations after consideration of geographic reclassifications are 2,591, 1,572, 1,019, and 1,496, respectively.
The next three groupings examine the impacts of the proposed changes on hospitals grouped by whether or not they have GME residency programs (teaching hospitals that receive an IME adjustment) or receive DSH payments, or some combination of these two adjustments. There are 2,976 nonteaching hospitals in our analysis, 873 teaching hospitals with fewer than 100 residents, and 238 teaching hospitals with 100 or more residents.
In the DSH categories, hospitals are grouped according to their DSH payment status, and whether they are considered urban or rural after MGCRB reclassifications. Therefore, hospitals in the rural DSH categories represent hospitals that were not reclassified for purposes of the standardized amount or for purposes of the DSH adjustment. (However, they may have been reclassified for purposes of the wage index.)
The next category groups hospitals considered urban after geographic reclassification, in terms of whether they receive the IME adjustment, the DSH adjustment, both, or neither.
The next five rows examine the impacts of the proposed changes on rural hospitals by special payment groups (SCHs, rural referral centers (RRCs), and MDHs), as well as rural hospitals not receiving a special payment designation. The RRCs (149), SCHs (494), MDHs (254), and hospitals that are both SCH and RRC (78) shown here were not reclassified for purposes of the standardized amount.
The next two groupings are based on type of ownership and the hospital's Medicare utilization expressed as a percent of total patient days. These data are taken primarily from the FY 2000 Medicare cost report files, if available (otherwise FY 1999 data are used). Data needed to determine ownership status were unavailable for 120 hospitals. Similarly, the data needed to determine Medicare utilization were unavailable for 104 hospitals.
The next series of groupings concern the geographic reclassification status of hospitals. The first grouping displays all hospitals that were reclassified by the MGCRB for FY 2004. The next two groupings separate the hospitals in the first group by urban and rural status. The final row in Table I contains hospitals located in rural counties but deemed to be urban under section 1886(d)(8)(B) of the Act.
In column 2 of Table I, we present the effects of the postacute care transfer policy expansion, as discussed in section IV.A. of the preamble to this proposed rule. We compared aggregate payments using the FY 2003 DRG relative weights (GROUPER version 21.0) with the expanded postacute care transfer policy to aggregate payments using the proposed expanded postacute care transfer policy (with the additional 19 DRGs). The changes we are proposing to make would result in 0.2 percent lower payments to
To simulate the impact of this proposed policy, we calculated hospitals' transfer-adjusted discharges and case-mix index values, including the proposed additional 19 DRGs. The transfer-adjusted discharge fraction is calculated in one of two ways, depending on the transfer payment methodology. Under our current transfer payment methodology, for all but the three DRGs receiving special payment consideration (DRGs 209, 210, and 211), this adjustment is made by adding 1 to the length of stay and dividing that amount by the geometric mean length of stay for the DRG (with the resulting fraction not to exceed 1.0). For example, a transfer after 3 days from a DRG with a geometric mean length of stay of 6 days would have a transfer-adjusted discharge fraction of 0.667 ((3+1)/6).
For transfers from any one of the three DRGs receiving the alternative payment methodology, the transfer-adjusted discharge fraction is 0.5 (to reflect that these cases receive half the full DRG amount the first day), plus one half of the result of dividing 1 plus the length of stay prior to transfer by the geometric mean length of stay for the DRG. None of the proposed 19 additional DRGs would receive the alternative payment methodology. As with the above adjustment, the result is equal to the lesser of the transfer-adjusted discharge fraction or 1.
The transfer-adjusted case-mix index values are calculated by summing the transfer-adjusted DRG weights and dividing by the transfer-adjusted discharges. The transfer-adjusted DRG weights are calculated by multiplying the DRG weight by the lesser of 1 or the transfer-adjusted discharge fraction for the case, divided by the geometric mean length of stay for the DRG. In this way, simulated payments per case can be compared before and after the proposed change to the transfer policy.
This proposed expansion of the policy has a negative 0.2 percent payment impact overall among both urban and rural hospitals. There is very small variation among all of the hospital categories from this negative 0.2 percent impact. This outcome is different than the impacts exhibited when we implemented the postacute care transfer policy for the current 10 DRGs in the July 31, 1998
The less dramatic impact observed for this proposed expansion to additional DRGs is not surprising. The movement to transfer more and more patients for postacute care sooner appears to have abated in recent years. While it does appear that many patients continue to be transferred for postacute care early in the course of their acute care treatment, the rapid expansion of this trend that was apparent during the mid-90s appears to have subsided. To a large extent, this decline probably stems from the decreased payment incentives to transfer patients to postacute care settings as a result of the implementation of prospective payment systems for IRFs, SNFs, LTCHs, and HHAs.
In column 3 of Table I, we present the combined effects of the DRG reclassifications and recalibration, as discussed in section II. of the preamble to this proposed rule. Section 1886(d)(4)(C)(i) of the Act requires us annually to make appropriate classification changes and to recalibrate the DRG weights in order to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources.
We compared aggregate payments using the FY 2003 DRG relative weights (GROUPER version 20.0) to aggregate payments using the proposed FY 2004 DRG relative weights (GROUPER version 21.0). Both simulations reflected the proposed expansion of the postacute care transfer policy. We note that, consistent with section 1886(d)(4)(C)(iii) of the Act, we have applied a budget neutrality factor to ensure that the overall payment impact of the DRG changes (combined with the wage index changes) is budget neutral. This proposed budget neutrality factor of 1.003133 is applied to payments in Column 6. Because this is a combined DRG reclassification and recalibration and wage index budget neutrality factor, it is not applied to payments in this column.
The major DRG classification changes we are proposing are: Creating additional DRGs that are split based on the presence or absence of CCs; creating a new DRG for cases with ruptured brain aneurysms; and creating a new DRG for cases involving the implantation of a cardiac defibrillator where the patient experiences acute myocardial infarction, heart failure, or shock. In the aggregate, these proposed changes would result in 0.0 percent change in overall payments to hospitals.
The overall level of the DRG weights are determined by the normalization factor intended to ensure that recalibration by itself neither increases nor decreases total payments under the IPPS. Because we count transfer cases as a fraction of a case in the recalibration process, expanding the postacute care transfer policy to 19 additional DRGs would affect the proposed relative weights for those DRGs. Therefore, we calculated the proposed FY 2004 normalization factor comparing the case-mix using the proposed FY 2004 DRG relative weights in which we treated postacute care transfer cases in the 19 additional DRGs being proposed for FY 2004 as a fraction of a case with the case-mix using the FY 2003 DRG relative weights without treating cases in these 19 additional DRGs as transfer cases. As noted above, the proposed expansion of the postacute care transfer policy impacts the overall level of the DRG weights, contributing to the impacts seen in this column.
Rural hospitals with fewer than 50 beds would experience a 0.2 percent increase due to these changes, while rural hospitals with more than 150 beds will experience a 0.1 percent decrease. Also, RRCs and hospitals classified with both SCH and RRC would experience a 0.1 percent decrease. MDHs would experience a 0.2 percent increase. Hospitals in the urban Mountain census division would experience the largest change, with a 0.2 percent decrease. Again, these impacts are ultimately offset by the budget neutrality factor of 1.003133.
Section 1886(d)(3)(E) of the Act requires that, beginning October 1, 1993, we annually update the wage data used to calculate the wage index. In accordance with this requirement, the proposed wage index for FY 2004 is based on data submitted for hospital cost reporting periods beginning on or after October 1, 1999 and before October 1, 2000. As with column 3, the impact of the new data on hospital payments is isolated in column 4 by holding the other payment parameters constant in this simulation. That is, column 4 shows the percentage changes in payments when going from a model using the FY 2003 wage index (based on FY 1999 wage data to a model using the FY 2004 pre-reclassification wage index based on FY 2000 wage data).
The wage data collected on the FY 2000 cost reports are similar to the data used in the calculation of the FY 2003 wage index. Also, as described in section III.B of this preamble, the proposed FY 2004 wage index is calculated by removing the nonphysician Part B costs and hours of RHCs and FQHCs, shown in column 5.
Column 4 shows the impacts of updating the wage data using FY 2000 cost reports. Overall, the new wage data would lead to a 0.4 percent reduction, but this reduction is offset by the budget neutrality factor. Urban hospitals' wage indexes would decline by 0.5 percent, and rural hospitals' wage indexes would decline by 0.2 percent. Among regions, the largest impact of updating the wage data is seen in rural Puerto Rico (a 4.1 percent decrease). Rural hospitals in the Pacific and West South Central regions would experience the next largest impact, a 0.5 percent and 0.4 percent decrease, respectively. Rural New England and East North Central regions would experience an increase of 0.3 percent and 0.2 percent, respectively.
Among urban hospitals, New England and the Middle Atlantic regions would experience 1.0 percent decreases, respectively. These impacts result, respectively, from a 9.0 percent decrease in the proposed FY 2004 wage index for Springfield, Massachusetts, and a 6.1 percent decrease in the Pittsburgh, Pennsylvania wage index. The East South Central, West North Central, and Mountain regions would experience increases of 0.3 percent, 0.1 percent, and 0.5 percent, respectively.
The next column shows the impacts on the calculation of the proposed FY 2004 wage index of removing nonphysician Part B data for RHCs and FQHCs. Column 5 shows the impacts of removing nonphysician Part B costs for RHCs and FQHCs. The effects of this proposed change are relatively small with the
We note that the wage data used for the proposed wage index are based upon the data available as of March 2003 and, therefore, do not reflect revision requests received and processed by the fiscal intermediaries after that date. To the extent these requests are granted by hospitals' fiscal intermediaries, these revisions will be reflected in the final rule. In addition, we continue to verify the accuracy of the data for hospitals with extraordinary changes in their data from the prior year.
The following chart compares the shifts in wage index values for labor market areas for FY 2004 relative to FY 2003. This chart demonstrates the impact of the changes for the proposed FY 2004 wage index, including updating to FY 2000 wage data. The majority of labor market areas (331) would experience less than a 5-percent change. A total of 13 labor market areas would experience an increase of more than 5 percent and less than 10 percent. Two areas would experience an increase greater than 10 percent. A total of 24 areas would experience decreases of more than 5 percent and less than 10 percent. Finally, 3 areas would experience declines of 10 percent or more.
Among urban hospitals, 45 would experience an increase of between 5 and 10 percent and 8 more than 10 percent. A total of 64 rural hospitals would experience increases greater than 5 percent, but none would experience greater than 10-percent increases. On the negative side, 109 urban hospitals would experience decreases in their wage index values of at least 5 percent but less than 10 percent. Nine urban hospitals and one rural hospital would experience decreases in their wage index values greater than 10 percent. There are 25 rural hospitals that would experience decreases in their wage index values of greater than 5 percent but less than 10 percent. The following chart shows the projected impact for urban and rural hospitals.
The impact of the DRG reclassifications and recalibration on aggregate payments is required by section 1886(d)(4)(C)(iii) of the Act to be budget neutral. In addition, section 1886(d)(3)(E) of the Act specifies that any updates or adjustments to the wage index are to be budget neutral. As noted in the Addendum to this proposed rule, we compared simulated aggregate payments using the FY 2003 DRG relative weights and wage index to simulated aggregate payments using the proposed FY 2004 DRG relative weights and blended wage index. In addition, we are required to ensure that any add-on payments for new technology under section 1886(d)(5)(K) of the Act are budget neutral. As discussed in section II.E. of the preamble of this proposed rule, we are proposing to maintain the new technology status of Xigris
We computed a proposed wage and recalibration budget neutrality factor of 1.003133. The 0.0 percent impact for all hospitals demonstrates that these proposed changes, in combination with the proposed budget neutrality factor, are budget neutral. In Table I, the combined overall impacts of the effects of both the proposed DRG reclassifications and recalibration and the proposed updated wage index are shown in column 6. The proposed changes in this column are the sum of the proposed changes in columns 3, 4, and 5, combined with the budget neutrality factor and the wage index floor for urban areas required by section 4410 of Pub. L. 105-33 to be budget neutral. There also may be some variation of plus or minus 0.1 percentage point due to rounding.
Our impact analysis to this point has assumed hospitals are paid on the basis of their actual geographic location (with the exception of ongoing policies that provide that certain hospitals receive payments on bases other than where they are geographically located, such as hospitals in rural counties that are deemed urban under section 1886(d)(8)(B) of the Act). The changes in column 7 reflect the per case payment impact of moving from this baseline to a simulation incorporating the MGCRB decisions for FY 2004. These decisions affect hospitals' standardized amount and wage index area assignments.
By February 28 of each year, the MGCRB makes reclassification determinations that will be effective for the next fiscal year, which begins on October 1. The MGCRB may approve a hospital's reclassification request for the purpose of using another area's standardized amount, wage index value, or both. The proposed FY 2004 wage index values incorporate all of the MGCRB's reclassification decisions for FY 2004. The wage index values also reflect any decisions made by the CMS Administrator through the appeals and review process as of February 28, 2003. Additional changes that result from the Administrator's review of MGCRB decisions or a request by a hospital to withdraw its application will be reflected in the final rule for FY 2004.
The overall effect of geographic reclassification is required by section 1886(d)(8)(D) of the Act to be budget neutral. Therefore, we applied an adjustment of 1.003133 to ensure that the effects of reclassification are budget neutral. (See section II.A.4.b. of the Addendum to this proposed rule.)
As a group, rural hospitals benefit from geographic reclassification. Their payments would rise 2.6 percent in column 7. Payments to urban hospitals would decline 0.4 percent. Hospitals in other urban areas would experience an overall decrease in payments of 0.2 percent, while large urban hospitals would lose 0.4 percent. Among urban hospital groups (that is, bed size, census division, and special payment status), payments generally would decline.
A positive impact is evident among most of the rural hospital groups. The smallest increases among the rural census divisions are 0.4 and 1.5 percent for the Puerto Rico and Mountain regions, respectively. The largest increases are in the rural South Atlantic and West South Central regions. These regions would experience increases of 2.9 and 3.7 percent, respectively.
Among all the hospitals that were reclassified for FY 2004 (including hospitals that received wage index reclassifications in FY 2002 or FY 2003 that extend for 3 years), the MGCRB changes are estimated to provide a 4.3 percent increase in payments. Urban hospitals reclassified for FY 2004 are expected to receive an increase of 4.0 percent, while rural reclassified hospitals are expected to benefit from the MGCRB changes with a 4.6 percent increase in payments. Overall, among hospitals that were reclassified for purposes of the standardized amount only, a payment increase of 3.9 percent is expected, while those reclassified for purposes of the wage index only show a 4.3 percent increase in payments. Payments to urban and rural hospitals that did not reclassify are expected to decrease slightly due to the MGCRB changes, decreasing by 0.6 percent for urban hospitals and 0.5 percent for rural hospitals.
Column 8 compares our estimate of payments per case, incorporating all changes reflected in this proposed rule for FY 2004 (including statutory changes), to our estimate of payments per case in FY 2003. This column includes all of the proposed policy changes. Because the reclassifications shown in column 7 do not reflect FY 2003
Column 8 includes the effects of the 3.5 percent update to the standardized amounts and the hospital-specific rates for MDHs and SCHs. It also reflects the 0.4 percentage point difference between the projected outlier payments in FY 2003 (5.1 percent of total DRG payments) and the current estimate of the percentage of actual outlier payments in FY 2003 (5.5 percent), as described in the introduction to this Appendix and the Addendum to this proposed rule. As a result, payments are projected to be 0.4 percent higher in FY 2003 than originally estimated, resulting in a 0.4 percent smaller increase than would otherwise occur.
Section 213 of Public Law 106-554 provides that all SCHs may receive payment on the basis of their costs per case during their cost reporting period that began during 1996. For FY 2004, eligible SCHs receive 100 percent of their 1996 hospital-specific rate. The impact of this provision is modeled in column 8 as well.
The proposed expansion of the postacute care transfer policy also reduces payments by paying for discharges to postacute care in 19 additional DRGs as transfers. Because FY 2003 payments reflect full DRG payments for all cases in these 19 DRGs, there is a negative impact due to the proposed expansion of this policy compared to FY 2003. The net effect of this proposed policy, as displayed in column 2, is also seen in the lower overall percent change shown in column 8 comparing FY 2004 simulated payments per case to FY 2003 payments.
Another influence on the overall change reflected in this column is the requirement of section 402(b) of Public Law 108-7 that all hospitals receive the large urban standardized amount for all discharges occurring on or after April 1, 2003, and before October 1, 2003. For discharges occurring on or after October 1, 2003, the Federal rate will again be calculated based on separate average standardized amounts for hospitals in large urban areas and for hospitals in other areas. The effect is to reduce the percent increase reflected in the “all changes” column.
There might also be interactive effects among the various factors comprising the payment system that we are not able to isolate. For these reasons, the values in column 8 may not equal the sum of the changes described above.
The overall change in payments per case for hospitals in FY 2004 would increases by 2.5 percent. Hospitals in urban areas would experience a 2.5 percent increase in payments per case compared to FY 2003. Hospitals in rural areas, meanwhile, would experience a 3.1 percent payment increase. Hospitals in large urban areas would experience a 2.6 percent increase in payments.
Among urban census divisions, the largest payment increase was 3.5 percent in the Mountain region. Hospitals in the urban East South Central region and in Puerto Rico would experience an overall increase of 3.1 percent and 2.9 percent, respectively. The smallest increase would occur in the Middle Atlantic, with an increase of 1.7 percent. These below average increases are primarily due to the inflated outlier payments for some of these hospitals during FY 2003 compared to FY 2004. Among rural regions, the only hospital category that would experience overall payment decreases is Puerto Rico, where payments would decrease by 0.2 percent, largely due to the updated wage data. In the West North Central region, payments are projected to increase by 3.8 percent. West South Central and Pacific regions also would benefit, both with 3.5 percent increases.
Among special categories of rural hospitals, those hospitals receiving payment under the hospital-specific methodology (SCHs, MDHs, and SCH/RRCs) would experience payment increases of 3.9 percent, 3.3 percent, and 3.3 percent, respectively. This outcome is primarily related to the fact that, for hospitals receiving payments under the hospital-specific methodology, there are no outlier payments. Therefore, these hospitals would not experience negative payment impacts from the decline in outlier payments from FY 2003 to FY 2004 as would hospitals paid based on the national standardized amounts.
Hospitals that were reclassified for FY 2004 are estimated to receive a 3.0 percent increase in payments. Urban hospitals reclassified for FY 2004 are anticipated to receive an increase of 2.7 percent, while rural reclassified hospitals are expected to benefit from reclassification with a 3.2 percent increase in payments. Overall, among hospitals reclassified for purposes of the standardized amount, a payment increase of 5.8 percent is expected, while those hospitals reclassified for purposes of the wage index only would show an expected 2.4 percent increase in payments. Those hospitals located in rural counties but deemed to be urban under section 1886(d)(8)(B) of the Act are expected to receive an increase in payments of 1.8 percent.
Table II presents the projected impact of the proposed changes for FY 2004 for urban and rural hospitals and for the different categories of hospitals shown in Table I. It compares the estimated payments per case for FY 2003 with the average estimated per case payments for FY 2004, as calculated under our models. Thus, this table presents, in terms of the average dollar amounts paid per discharge, the combined effects of the changes presented in Table I. The percentage changes shown in the last column of Table II equal the percentage changes in average payments from column 8 of Table I.
In addition to those proposed changes discussed above that we are able to model using our IPPS payment simulation model, we are proposing various other changes in this proposed rule. Generally, we have limited or no specific data available with which to estimate the impacts of these proposed changes. Our estimates of the likely impacts associated with these other proposed changes are discussed below.
Under IPPS, both the IME and the DSH adjustments utilize statistics regarding the number of beds and patient days of a hospital to determine the level of the respective payment adjustment. For IME, hospitals receiving this adjustment want to minimize their numbers of beds in order to maximize their resident-to-bed ratio. For DSH, urban hospitals with 100 or more beds qualify for a higher payment adjustment, so some hospitals have an incentive to maximize their bed count to qualify for higher payments. Existing regulations specify that the number of beds is determined by counting the number of available bed days during the cost reporting period and dividing that number by the number of days in the cost reporting period.
Over the years, questions have arisen as to whether beds in rooms or entire units that are unoccupied for extended periods of time should continue to be counted on the basis that, if there would ever be a need, they could be put into use. In section IV.C. of the preamble of this proposed rule, we are proposing to base the determination of whether a bed is available upon whether the unit where the bed is located is staffed for patient care. If the bed is located in a unit that was staffed by nurses to provide patient care at any time during the 3 preceding months, all of the beds in the unit would be counted for purposes of determining available bed days during the current month. If no patient care were provided in that unit during the 3 preceding months, the beds in the unit would be excluded from the determination of available bed days during the current month.
This proposal is primarily intended to establish clear and consistent guidelines for hospitals and fiscal intermediaries to use when determining whether beds should be counted. We do not anticipate this proposal would have a significant impact on payments. In some cases, previously uncounted beds would now be counted, such as when a hospital is undertaking to remodel a unit and that unit is temporarily unavailable for patient occupancy. Under the proposed policy, if the remodeling is completed in less than 3 months and patients are again being treated in the unit, all of the beds in the unit would be counted as available for the entire year.
The proposed rule would clarify that days attributable to a nonacute care unit or ward, regardless of whether the unit or ward is separately certified by Medicare or is adjacent to a unit or ward used to provide an acute level of care, would not be included in the count of bed or patient days. In a recent decision by the Ninth Circuit Court of Appeals (
Because the
We are unable to estimate the effect of this proposed provision on specific hospitals because we are not aware of specific hospitals that are presently including those inpatient days in their calculation of Medicaid days for purposes of determining their Medicare DSH percentage. However, we expect the impact on any particular hospital would be minimal (with no impact on the level of beneficiary services), because the days attributable to patients receiving these limited benefit programs should be only a small portion of the overall Medicaid days at any particular hospital. No other provider types would be affected. However, because our policy is to count patient days and beds consistently, inclusion of the days of postacute care units in the DSH calculation would lead to an offsetting negative payment impact for teaching hospitals. The inclusion of additional beds decreases the resident-to-bed ratios used to calculate the IME adjustments. Therefore, the actual potential impact on hospitals of this policy clarification is likely to be significantly less than $184 million.
We are proposing to revise our regulations to clarify that swing-bed and observation bed days are to be excluded from the count of bed and patient days. Because this certification reflects our current policy, despite the fact
Similarly, in the case of labor, delivery, recovery, and postpartum rooms, we would clarify that it is necessary to apportion the days and costs of a patient stay between the labor/delivery ancillary cost centers and the routine adults and pediatrics cost center on the basis of the percentage of time during the entire stay associated with these various services. Because this is a clarification of existing policy, we do not anticipate this proposed change would have a significant payment impact. However, we do not have data available that would enable us to identify those hospitals that have not been applying this policy and, therefore, would be required to change their policy. Consequently, we are unable to quantify the impacts of this clarification.
Some States have demonstration projects that provide family planning or outpatient drug benefits that are limited benefits that do not include Medicaid coverage for inpatient services. In this proposed rule, we also would clarify that any hospital inpatient days attributed to a patient who is not eligible for Medicaid inpatient hospital benefits either under the approved State plan or through a section 1115 waiver must not be counted in the calculation of Medicaid days for purposes of determining a hospital's DSH percentage.
We estimated the potential impact of the proposed clarification to our policy of excluding days associated with inpatients who are eligible only for Medicaid outpatient benefits. We identified the percentage of individuals receiving only outpatient family planning benefits under Medicaid compared to all Medicaid-eligible beneficiaries (this is currently the only outpatient-only category for which we have numbers of eligible beneficiaries). These percentages were calculated on a statewide basis for each State with a family planning benefit. Based on these percentages, assuming family planning beneficiaries use inpatient services at the same rate as all other Medicaid beneficiaries, we estimated the amount of total Medicare DSH payments for each State that may be attributable to family planning beneficiaries' use of inpatient services.
For example, in Alabama, total Medicare DSH payments in 1999 (the latest year for which a complete database of cost reports from all hospitals is available) were $97.1 million. Because the percentage of family planning beneficiaries to total Medicaid eligible beneficiaries is 11.24 percent, we estimated 11.24 percent of $97.1 million in Medicare DSH payments, or $10.9 million, is the maximum amount of Medicare DSH that may currently be attributable to the inclusion of inpatient days for individuals who are only eligible for outpatient family planning Medicaid benefits. Based on this analysis, we have identified the potential impact upon hospitals to be as much as $290 million in reduced DSH payments from the Medicare program to those hospitals in FY 2004. Of this amount, $170 million is attributable to California. This amount is not an impact on State programs nor does it require States to spend any additional money. We also note that we are not aware of any specific hospitals that are including inpatient days attributable to individuals with no inpatient Medicaid benefits. Therefore, this estimate reflects the maximum potential impact, but the actual impact is very likely to be much less.
We are unable to estimate the effect of this clarification on specific hospitals because we are not aware of specific hospitals that are presently including those inpatient days in their calculation of Medicaid days for purposes of determining their Medicare DSH percentage. However, we expect the impact on any particular hospital would be minimal (with no impact on the level of beneficiary services), because the days attributable to patients receiving these limited benefit programs should be only a small portion of the overall Medicaid days at any particular hospital. No other provider types would be affected.
We are proposing to change our policy for counting days for patients who are Medicare beneficiaries and also eligible for Medicaid, to begin to count in the Medicaid fraction of the DSH patient percentage the patient days of these dual-eligible Medicare beneficiaries whose Medicare coverage has expired. Our current policy regarding dual-eligible patient days is they are counted in the Medicare fraction and excluded from the Medicaid fraction, even if the patient has no Medicare Part A coverage or coverage has been exhausted. However, we recognize it is often difficult for fiscal intermediaries to differentiate the days for dual-eligible patients whose Part A coverage has been exhausted. We believe the impact of this proposed change would be minimal, both because situations where dual-eligible patients exhaust their Medicare benefits occur infrequently, and because, due to the administrative difficulty separately identifying these days, in many cases they are already included in the hospital's Medicaid fraction. Accordingly, we do not have data available to allow us to quantify the impact of this proposed change precisely.
We have received questions whether patients enrolled in a Medicare+Choice (M+C) Plan should be counted in the Medicare fraction or the Medicaid fraction of the DSH patient percentage calculation. The questions stem from whether M+C plan enrollees are entitled to Medicare Part A because M+C plans are administered through Medicare Part C. We are proposing to clarify that once a beneficiary elects Medicare Part C, those patient days attributable to the beneficiary should not be included in the Medicare fraction of the DSH patient percentage. These patient days should be included in the count of total patient days in the Medicaid fraction (the denominator), and the patient's days for an M+C beneficiary who is also eligible for Medicaid would be included in the numerator of the Medicaid fraction.
We do not have data readily available to assess the impacts of this proposed change. In particular, it appears likely that there is some variation in how these days are currently being handled from one hospital and fiscal intermediary to the next. Nonetheless, we believe there should not be a major impact associated with this proposed change.
In section IV.E. of the preamble of this proposed rule, we are proposing to clarify further the distinction between continuing education, which is not eligible for pass-through payment, and approved educational programs, which are eligible for pass-through payment. An approved program that qualifies for pass-through payment is generally a program of long duration designed to develop trained practitioners in a nursing or allied health discipline, such as professional nursing, in which the individual learns “value-added” skills that enable him or her to work in a particular capacity upon completion of the program. Such a program is in contrast to a continuing education program in which a practitioner, such as a registered nurse, receives training in a specialized skill or a new technology. While such training is undoubtedly valuable in enabling the nurse to treat patients with special needs, the nurse, upon completion of the program, continues to function as a registered nurse, albeit one with an additional skill. We are proposing to clarify our policy concerning not allowing pass-through payment for continuing education because it has come to our attention that certain programs, which in our view constitute continuing education, such as pharmacy or clinical pastoral education, are inappropriately receiving pass-through payment.
To the extent that Medicare would no longer pay for such programs as pharmacy and clinical pastoral education, Medicare payments would be reduced. We believe that these two programs comprise a small fraction of the approximately $230 million that are paid for all nursing and allied health education programs under Medicare.
As discussed in section IV.E.3. of this proposed rule, we are proposing that Medicare would not recoup reasonable cost payment from hospitals that have received pass-through payment for portions of cost reporting periods occurring on or before October 1, 2003 (the effective date of finalizing this proposed rule) for costs of nursing or allied health education program(s) where the program(s) had originally been operated by the hospital, and then operation
In addition, we are also proposing that, for portions of cost reporting periods beginning on or after October 1, 2003, a hospital that meets the criteria described above may continue to receive reasonable cost payments for clinical training costs incurred by the hospital for the nursing and allied health education program(s) that were operated by the hospital prior to the date the hospital transferred operation of the program(s) to its wholly owned subsidiary educational institution (and ceased to be a provider-operated program). We are further proposing that, with respect to classroom costs, only those classroom costs incurred by the hospital for the courses that were paid by Medicare on a reasonable cost basis and included in the hospital's provider-operated program(s) could continue to be reimbursed on a reasonable cost basis. We estimate the costs to the Medicare program for this proposal would be $1 to $2 million per year.
As we explain in section IV.F.2. of the preamble of this proposed rule, under section 1886(h) of the Act, hospitals may count the time that residents spend training in nonhospital sites if they meet certain conditions, including incurring “all or substantially all” of the costs of training at the nonhospital site. Legislative history indicates that the purpose of this provision is to encourage hospitals to provide more training outside the traditional hospital environment.
It has come to our attention that hospitals have been incurring the costs of and receiving direct GME and IME payment for residency training that had previously been occurring in nonhospital settings, without the financial support of the hospitals. We believe that where no new or additional training is provided in these nonhospital settings, the receipt of Medicare payment in such cases is contrary to Congressional intent and is, therefore, inappropriate. In addition, it violates Medicare's anti-redistribution principle, which states that Medicare will not share in the costs of educational activities of a hospital that represent a redistribution of costs from the community to the hospital. Accordingly, we are proposing to revise our policy concerning counting residents to ensure that Medicare IME and direct GME payments are not made to hospitals for training that had already been in place in the absence of the hospital's financial support. We are proposing that effective October 1, 2003, in order for a hospital to receive IME and direct GME payment, the hospital must have been continuously incurring the direct GME costs of residents training in a particular program since the date the resident first began training in the program in order for the hospital to count the FTE residents.
By prohibiting payment for residency training that had been previously supported by nonhospital institutions, this proposal would reduce the amount of direct GME and IME payments received by hospitals. Although we cannot estimate the impact on programs nationally, we are aware that two hospitals in New York were receiving over $10 million annually for payments for dental residents training in nonhospital sites (including a site in Hawaii). Another hospital in Boston was receiving over $2 million annually for dental residents training at a dental school.
As explained in section IV.F.3 of the preamble of this proposed rule, under existing regulations, if an urban hospital rotates residents to a separately accredited rural track program in a rural area for two-thirds of the duration of the training program, the urban hospital may receive an increase in its FTE cap to reflect the time those residents train at the urban hospital. When we first implemented these regulations, we did so based on our understanding that the Accreditation Council for Graduate Medical Education (ACGME) requires that at least two-thirds of the duration of the program be spent in a rural area. However, it has come to our attention that, while the ACGME generally follows a one-third/two-thirds model for accreditation, the rural training requirement is actually somewhat less than two-thirds of the duration of the program. Therefore, we are proposing to revise the regulations to state that if an urban hospital rotates residents to a separately accredited rural track program in a rural area for more than 50 percent of the duration of the training program, the urban hospital may receive an increase in its FTE cap to reflect the time those residents train at the urban hospital. We estimate that this proposal would only slightly increase Medicare payments for IME and direct GME costs.
As explained in section IV.F.4 of the preamble of this proposed rule, when we first issued the regulations concerning residents training in a rural track program, we inadvertently did not specify in regulations that these residents would be included in the hospital's rolling average count of FTE residents used for computing GME payment. We are proposing to make this technical clarification to the regulations. We believe that this proposed provision would not have a budget impact because it is a clarification of existing policy.
Fiscal year 2001 was the last year of the 10-year transition period established to phase in the PPS for hospital capital-related costs. During the transition period, hospitals were paid under one of two payment methodologies: Fully prospective or hold harmless. Under the fully prospective methodology, hospitals were paid a blend of the Federal rate and their hospital-specific rate (see § 412.340). Under the hold-harmless methodology, unless a hospital elected payment based on 100 percent of the Federal rate, hospitals were paid 85 percent of reasonable costs for old capital costs (100 percent for SCHs) plus an amount for new capital costs based on a proportion of the Federal rate (see § 412.344). As we state in section V. of the preamble of this proposed rule, with the 10-year transition period ending with hospital cost reporting periods beginning on or after October 1, 2001 (FY 2002), beginning in FY 2004 capital prospective payment system payments for most hospitals are based solely on the Federal rate. Therefore, we no longer include information on obligated capital costs or projections of old capital costs and new capital costs, which were factors needed to calculate payments during the transition period, for our impact analysis.
In accordance with § 412.312, the basic methodology for determining a capital prospective payment system payment is:
In addition, hospitals may also receive outlier payments for those cases that qualify under the threshold established for each fiscal year.
The data used in developing the impact analysis presented below are taken from the December 2002 update of the FY 2002 MedPAR file and the December 2002 update of the Provider Specific File that is used for payment purposes. Although the analyses of the changes to the capital prospective payment system do not incorporate cost data, we used the December 2002 update of the most recently available hospital cost report data (FY 2000) to categorize hospitals. Our analysis has several qualifications. First, we do not make adjustments for behavioral changes that hospitals may adopt in response to policy changes. Second, due to the interdependent nature of the prospective payment system, it is very difficult to precisely quantify the impact associated with each proposed change. Third, we draw upon various sources for the data used to categorize hospitals in the tables. In some cases (for instance, the number of beds), there is a fair degree of variation in the data from different sources. We have attempted to construct these variables with the best available sources overall. However, for
Using cases from the December 2002 update of the FY 2002 MedPAR file, we simulated payments under the capital prospective payment system for FY 2003 and FY 2004 for a comparison of total payments per case. Any short-term, acute care hospitals not paid under the general hospital inpatient prospective payment systems (Indian Health Service Hospitals and hospitals in Maryland) are excluded from the simulations.
As we explain in section III.A.4. of the Addendum of this proposed rule, payments will no longer be made under the regular exceptions provision under §§ 412.348(b) through (e). Therefore, we are no longer using the actuarial capital cost model (described in Appendix B of August 1, 2001 final rule (66 FR 40099)). We modeled payments for each hospital by multiplying the Federal rate by the GAF and the hospital's case-mix. We then added estimated payments for indirect medical education, disproportionate share, large urban add-on, and outliers, if applicable. For purposes of this impact analysis, the model includes the following assumptions:
• We estimate that the Medicare case-mix index would increase by 1.01505 percent in FY 2003 and would increase by 1.02010 percent in FY 2004.
• We estimate that the Medicare discharges will be 14,288,000 in FY 2003 and 14,507,000 in FY 2004 for a 1.5 percent increase from FY 2003 to FY 2004.
• The Federal capital rate was updated beginning in FY 1996 by an analytical framework that considers changes in the prices associated with capital-related costs and adjustments to account for forecast error, changes in the case-mix index, allowable changes in intensity, and other factors. The proposed FY 2004 update is 0.7 percent (
• In addition to the proposed FY 2004 update factor, the proposed FY 2004 Federal rate was calculated based on a GAF/DRG budget neutrality factor of 1.0038, an outlier adjustment factor of 0.9455, and a (special) exceptions adjustment factor of 0.9995.
In the past, in this impact section we presented the redistributive effects that were expected to occur between “hold-harmless” hospitals and “fully prospective” hospitals and a cross-sectional summary of hospital groupings by the capital prospective payment system transition period payment methodology. We are no longer including this information since all hospitals (except new hospitals under § 412.324(b) and under § 412.304(c)(2)) are paid 100 percent of the Federal rate in FY 2004.
We used the actuarial model described above to estimate the potential impact of our proposed changes for FY 2004 on total capital payments per case, using a universe of 3,922 hospitals. As described above, the individual hospital payment parameters are taken from the best available data, including the December 2002 update of the FY 2002 MedPAR file, the December 2002 update to the Provider-Specific File, and the most recent cost report data from the December 2002 update of HCRIS. In Table III, we present a comparison of total payments per case for FY 2003 compared to FY 2004 based on the proposed FY 2004 payment policies. Column 2 shows estimates of payments per case under our model for FY 2003. Column 3 shows estimates of payments per case under our model for FY 2004. Column 4 shows the total percentage change in payments from FY 2003 to FY 2004. The change represented in Column 4 includes the 0.7 percent update to the Federal rate, a 1.02010 percent increase in case-mix, changes in the adjustments to the Federal rate (for example, the effect of the new hospital wage index on the geographic adjustment factor), and reclassifications by the MGCRB, as well as changes in special exception payments. The comparisons are provided by: (1) Geographic location; (2) region; and (3) payment classification.
The simulation results show that, on average, capital payments per case can be expected to increase 1.0 percent in FY 2004. Our comparison by geographic location shows an overall increase in payments to hospitals in all areas. This comparison also shows that urban and rural hospitals will experience different rates of increase in capital payments per case (0.9 percent and 1.5 percent, respectively). This difference is due to a projection that rural hospitals will experience a larger increase in the GAF due to reclassifications from rural to urban and a slightly larger increase in DSH and IME payments from FY 2003 to FY 2004 compared to urban hospitals.
All regions are estimated to receive an increase in total capital payments per case. Changes by region vary from a minimum increase of 0.4 percent (Middle Atlantic urban region) to a maximum increase of 2.1 percent (New England rural region). Hospitals located in Puerto Rico are expected to experience an increase in total capital payments per case of 1.3 percent.
By type of ownership, government hospitals are projected to have the largest rate of increase of total payment changes (1.2 percent). Similarly, payments to voluntary hospitals will increase 1.0 percent, while payments to proprietary hospitals will increase 0.9 percent.
Section 1886(d)(10) of the Act established the MGCRB. Hospitals may apply for reclassification for purposes of the standardized amount, wage index, or both. Although the Federal capital rate is not affected, a hospital's geographic classification for purposes of the operating standardized amount does affect a hospital's capital payments as a result of the large urban adjustment factor and the disproportionate share adjustment for urban hospitals with 100 or more beds. Reclassification for wage index purposes also affects the geographic adjustment factor, since that factor is constructed from the hospital wage index.
To present the effects of the hospitals being reclassified for FY 2004 compared to the effects of reclassification for FY 2003, we show the average payment percentage increase for hospitals reclassified in each fiscal year and in total. The reclassified groups are compared to all other nonreclassified hospitals. These categories are further identified by urban and rural designation.
Hospitals reclassified for FY 2004 as a whole are projected to experience a 1.7 percent increase in payments. Payments to nonreclassified hospitals would increase almost half as much (0.9 percent) as reclassified hospitals, overall. Hospitals reclassified during both FY 2003 and FY 2004 are projected to receive an increase in payments of 1.4 percent. Hospitals reclassified during FY 2004 only are projected to receive an increase in payments of 4.9 percent. This increase is primarily due to changes in the GAF (wage index).
Section 1886(e)(4)(A) of the Act requires that the Secretary, taking into consideration the recommendations of the Medicare Payment Advisory Commission (MedPAC), recommend update factors for inpatient hospital services for each fiscal year that take into account the amounts necessary for the efficient and effective delivery of medically appropriate and necessary care of high quality. Under section 1886(e)(5) of the Act, we are required to publish the proposed update factors recommended under section 1886(e)(4) of the Act in this proposed rule, and the final update factors recommended by the Secretary in the final rule. Accordingly, this Appendix provides the recommendations of appropriate update factors for the IPPS standardized amounts, the hospital-specific rates for SCHs and MDHs, and the rate-of-increase limits for hospitals and hospitals units excluded from the IPPS. We also discuss our update framework and respond to MedPAC's recommendations concerning the update factors.
Section 1886(b)(3)(B)(i)(XIX) of the Act sets the FY 2004 percentage increase in the operating cost standardized amounts equal to the rate of increase in the hospital market basket for IPPS hospitals in all areas. Based on the Office of the Actuary's first quarter 2003 forecast of the FY 2004 market basket increase, the proposed update to the standardized amounts is 3.5 percent (that is, the market basket rate of increase) for hospitals in both large urban and other areas.
Section 1886(b)(3)(B)(iv) of the Act sets the FY 2004 percentage increase in the hospital-specific rates applicable to SCHs and MDHs equal to the rate set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same update factor as all other hospitals subject to the IPPS, or the rate of increase in the market basket). Therefore, the proposed update to the hospital-specific rate applicable to SCHs and MDHs is also 3.5 percent.
Under section 1886(b)(3)(B)(ii) of the Act, the FY 2004 percentage increase in the rate-of-increase limits for hospitals and hospital units excluded from the IPPS (psychiatric hospitals and units, rehabilitation hospitals and units (now referred to as IRFs), LTCHs, cancer hospitals, and children's hospitals) is the market basket percentage increase. In the past, hospitals and hospital units excluded from the IPPS have been paid based on their reasonable costs subject to limits as established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). However, some of these categories of excluded hospitals and units have begun to be paid under prospective payment systems. Hospitals and units that receive any hospital-specific payments will have those payments subject to TEFRA limits for FY 2004. For these hospitals, the proposed update is the percentage increase in the excluded hospital market basket (currently estimated at 3.5 percent).
IRFs are paid under the IRF PPS for cost reporting periods beginning on or after January 1, 2002. For cost reporting periods beginning during FY 2004, the Federal prospective payment for IRFs is based on 100 percent of the adjusted Federal IRF prospective payment amount, updated annually.
Effective for cost reporting periods beginning during FY 2003, LTCHs are paid under the LTCH PPS under which they receive payment based on a 5-year transition period (see the August 30, 2002 final rule (67 FR 55954)). An LTCH may elect to be paid on 100 percent of the Federal prospective rate at the start of any of its cost reporting periods during the 5-year transition period. For purposes of the update factor, the portion of the LTCH PPS transition blend payment based on reasonable costs for inpatient operating services is determined by updating the LTCH's TEFRA limit by the current estimate of the excluded hospital market basket (or 3.5 percent).
Consistent with current law, we are proposing an update recommendation equal to the full market basket percentage increase for the IPPS operating cost standardized amounts for FY 2004. We also have analyzed changes in hospital productivity, scientific and technological advances, practice pattern changes, changes in case-mix, the effect of reclassification on recalibration, and forecast error correction. A discussion of this analysis is below.
Service level labor productivity is defined as the ratio of total service output to full-time equivalent employees (FTEs). While we recognize that productivity is a function of many variables (for example, labor, nonlabor material, and capital inputs), we use the portion of productivity attributed to direct labor since this update framework applies to operating payment. To recognize that we are apportioning the short-run output changes to the labor input and not considering the nonlabor inputs, we weight our productivity measure by the share of direct labor services in the market basket to determine the expected effect on cost per case.
Our recommendation for the service productivity component is based on historical trends in productivity and total output for both the hospital industry and the general economy, and projected levels of future hospital service output. MedPAC's predecessor, the Prospective Payment Assessment Commission (ProPAC), estimated cumulative service productivity growth to be 4.9 percent from 1985 through 1989 or 1.2 percent annually. At the same time, ProPAC estimated total output growth at 3.4 percent annually, implying a ratio of service productivity growth to output growth of 0.35.
Absent a productivity measure specific to Medicare patients, we examined productivity (output per hour) and output (gross domestic product) for the economy. Depending on the exact time period, annual changes in productivity range from 0.30 to 0.35 percent of the change in output (that is, a 1.0 percent increase in output would be correlated with a 0.30 percent to a 0.35 percent change in output per hour).
Under our framework, the recommended update is based in part on expected productivity—that is, projected service output during the year, multiplied by the historical ratio of service productivity to total service output, multiplied by the share of direct labor in total operating inputs, as calculated in the hospital market basket. This method estimates an expected productivity improvement in the same proportion to expected total service growth that has occurred in the past and assumes that, at a minimum, growth in FTEs changes
The expected change in total hospital service output is the product of projected growth in total admissions (adjusted for outpatient usage), projected real case-mix growth, expected quality-enhancing intensity growth, and net of expected decline in intensity due to reduction of cost-ineffective practice. Case-mix growth and intensity numbers for Medicare are used as proxies for those of the total hospital, since case-mix increases (used in the intensity measure as well) are unavailable for non-Medicare patients. Normally, the expected FY 2004 hospital output growth would be simply the sum of the expected change in intensity (1.0 percent), projected admissions change (1.6 percent), and projected real case-mix growth (1.0 percent—a definition of real case mix growth appears below), or 3.6 percent. However, as discussed below and in relation to the proposed capital update, we believe our intensity estimate is skewed by hospitals' charge data. Therefore, we are including only the projected changes in admissions and real case-mix in our calculation of productivity gains. This results in an estimate of 2.6 percent.
The share of direct labor services in the market basket (consisting of wages, salaries, and employee benefits) is 61.6 percent. Multiplying the expected change in total hospital service output (2.6 percent) by the ratio of historical service productivity change to total service growth of 0.30 to 0.35 and by the direct labor share percentage of 61.6 provides our productivity standard of -0.6 to -0.5 percent. Because productivity gains hold down the rate of increase in hospitals' costs, this factor is applied as a negative offset to the market basket increase.
The intensity factor for the operating update framework reflects how hospital services are utilized to produce the final product, that is, the discharge. This component accounts for changes in the use of quality-enhancing services, changes in within-DRG severity, and expected modification of practice patterns to remove non-cost-effective services. Under the capital IPPS framework, we also make an adjustment for changes in intensity. We calculate this adjustment using the same methodology and data that are used in the framework for the operating IPPS.
We calculate case-mix constant intensity as the change in total Medicare charges per admission, adjusted for price level changes (the Consumer Price Index (CPI) for hospital and related services) and changes in real case-mix. The use of total charges in the calculation of the intensity factor makes it a total intensity factor, that is, charges for capital services are already built into the calculation of the factor.
However, as discussed above in relation to the proposed capital update, because our intensity calculation relies heavily upon charge data and we believe that this charge data may be inappropriately inflated due to manipulation of charges to maximize outlier payments, we are proposing a 0.0 percent adjustment for intensity in FY 2004. In past fiscal years (1996 through 2000) when we found intensity to be declining, we believed a zero (rather then negative) intensity adjustment was appropriate. Similarly, we believe that it is appropriate to propose a zero intensity adjustment for FY 2004 until we determine that any increase in charges can be tied to intensity, rather than to attempts to maximize outlier payments.
Our analysis takes into account projected changes in real case-mix, less the changes attributable to improved coding practices. We define real case-mix change as actual changes in the mix (and resource requirements) of Medicare patients, as opposed to changes in coding behavior that result in assignment of cases to higher-weighted DRGs but do not reflect greater resource requirements. For our FY 2004 update recommendation, we are projecting a 1.0 percent increase in the case-mix index. We do not believe changes in coding behavior will impact the overall case-mix in FY 2004. As such, for FY 2004, we estimate that real case-mix is equal to projected change in case-mix. Thus, we are recommending a 0.0 percent adjustment for case-mix.
We estimate that DRG reclassification and recalibration for FY 2002 (GROUPER version 19.0) resulted in a 0 percent change in the case-mix index when compared with the case-mix index that would have resulted if we had not made the reclassification and recalibration changes to the GROUPER (version 18.0). Therefore, we are recommending a 0 percent adjustment for the effect of FY 2002 DRG reclassification and recalibration.
We make a forecast error correction if the actual market basket changes differ from the forecasted market basket by 0.25 percentage points or more. There is a 2-year lag between the forecast and the measurement of forecast error. The estimated market basket percentage increase used to update the FY 2002 payment rates was 3.3 percent. Our most recent data indicates the actual FY 2002 increase was 2.9 percent. The resulting forecast error in the FY 2002 market basket rate of increase is (-0.4) percentage points. This overestimate was due largely to a lower-than-expected increase in energy costs that impacted natural gas and chemical prices. This follows consecutive years where the market basket was under-forecast by 0.7 percentage points each year.
The following is a summary of the update range supported by our analyses:
In the past, MedPAC recommended specific adjustments to its update recommendation for each of the factors discussed under section III. of this Appendix. In its March 2003 Report to Congress, MedPAC assesses the adequacy of current payments and costs and the relationship between payments and an appropriate cost base. MedPAC stresses that the issue at hand is whether payments are too high or too low, and not how they became such.
In the first portion of MedPAC's analysis on the assessment of payment adequacy, the Commission reviews the relationship between costs and payments (typically represented as a margin). Based on the latest cost report data available, MedPAC estimated an inpatient Medicare operating margin for
MedPAC also projects margins through FY 2003, making certain assumptions about changes in payments and costs. On the payment side, MedPAC applied the annual payment updates (as specified by law for FYs 2001 through 2003) and then modeled the effects of other policy changes that have affected the level of payments. On the cost side, MedPAC estimated the increases in cost per unit of output over the same time period at the rate of inflation as measured by the applicable market basket index generated by CMS adjusted downward, anticipating improvements in productivity. While no specific Medicare inpatient margin is identified for a calendar year beyond 2000, MedPAC projected an overall Medicare margin for FY 2003 of 3.9 percent (page 41). The FY 2000 overall Medicare margin, as estimated by MedPAC, was 5.0 percent.
In addition to considering the relationship between estimated payments and costs, MedPAC also considered the following three factors to assess whether current payments are adequate (page 42):
• Changes in access to or quality of care;
• Changes in the volume of services or number of providers; and
• Change in providers' access to capital.
MedPAC's assessment of aggregate Medicare payments finds that payments were at least adequate as of FY 2003.
MedPAC's recommendation related to updating payments under the IPPS is that the Congress should increase the payment rates for the IPPS by the rate of increase in the hospital market basket, less 0.4 percent, for FY 2004. MedPAC focuses on the operating update exclusively because operating costs account for about 92 percent of total hospital costs and because the operating update is of most interest to Congress. Based on the current market basket estimate for FY 2003 of 3.5 percent, this update would increase Medicare inpatient payments to hospitals covered by IPPS by 3.1 percent.
Because the operating and capital prospective payment systems remain separate, CMS continues to use separate updates for operating and capital payments. The proposed update to the capital payment rate is discussed in section III. of the Addendum to this proposed rule.