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Animal and Plant Health Inspection Service, USDA.
Affirmation of interim rule as final rule.
We are adopting as a final rule, without change, an interim rule that amended our regulations regarding genetically engineered organisms to require that introductions of plants genetically engineered to encode compounds for industrial use be conducted only under permit. Prior to the interim rule, such introductions could be accomplished under notification, an expedited permitting procedure. The interim rule was necessary to strengthen our regulations for introductions of this small subgroup of genetically engineered plants until such time as the issues related to these plants are fully considered in conjunction with subsequent regulatory revision.
The interim rule became effective on August 6, 2003.
Dr. John Turner, Director, Policy Division, BRS, APHIS, 4700 River Road Unit 146, Riverdale, MD 20737-1238; (301) 734-8365.
The regulations in 7 CFR part 340, “Introduction of Organisms and Products Altered or Produced Through Genetic Engineering Which are Plant Pests or Which There is Reason to Believe are Plant Pests” (referred to below as the regulations), govern the introduction (importation, interstate movement, or release into the environment) of any organism or product altered or produced through genetic engineering that is a plant pest or that there is reason to believe is a plant pest, or any product which contains such an organism that is unclassified and/or whose classification is unknown. The regulations refer to such organisms as “regulated articles.”
With certain limited exceptions, the introduction of any regulated article is prohibited unless that introduction is authorized by a permit or, for specific classes of regulated articles, the Administrator of the Animal and Plant Health Inspection Service (APHIS) has been notified of the introduction in accordance with § 340.3 of the regulations, which provides for the use, under certain circumstances, of an expedited permitting procedure called notification.
The notification option was added to the regulations in 1993 (58 FR 17044-53043, Docket No. 92-156-02) in order to expedite introductions for certain types of low risk plants with which APHIS had considerable regulatory experience. Under the notification procedure, the regulated article to be introduced must be a plant, and the types of genetic modifications to the plant must meet the eligibility criteria described in § 340.3(b). Development of those criteria was based upon the types of genetic modifications that APHIS had reviewed and evaluated many times over the preceding years of issuing permits.
At the time the regulations were amended to provide for the use of notification, the types of genetically engineered plants that had industrial uses were typically those in which nutritional components, such as oil content, were being engineered. Since APHIS had significant regulatory experience with the types of traits then being introduced into these plants, industrial plants were eligible for the notification option. In contrast, the notification regulations in § 340.3(b)(4)(iii) prohibited the use of notification for introductions of plants genetically engineered to encode compounds for pharmaceutical use, thus continuing to require a permit for such introductions, because of our lack of regulatory experience and scientific familiarity with these types of introduced traits.
In 2003, we noted that a number of more recent introductions of plants engineered to produce compounds intended for industrial use had been for traits different than what we were seeing in 1993. Those more recent introductions were for non-food, non-feed traits with which APHIS has little regulatory experience or scientific familiarity. Based on the expansion of the technology and the new non-food, non-feed uses of industrial plants being developed, we believed it to be prudent and necessary to remove the notification option for all industrials pending the completion of our ongoing review of part 340.
Therefore, in an interim rule effective and published in the
Comments on the interim rule were required to be received on or before October 6, 2003. We received 12 comments by that date. The comments were from companies and organizations involved in biotechnology, an organic certification service, a university biologist, a private citizen, an association of crop production and protection companies, and associations representing food producers, processors, and manufacturers. One of the commenters voiced opposition to genetically modified plants generally, but offered no specific comments relating to the interim rule. The remaining commenters expressed their support for the interim rule, although several made specific suggestions or
Several commenters raised issues related to the potential for plants engineered to produce industrial compounds to contaminate or adulterate food crops. Some commenters urged APHIS to require that the introduction of such crops be conducted under conditions of 100 percent containment (
APHIS wishes to reiterate that the purpose of the interim rule was to ensure that introductions of plants engineered to produce industrial compounds will be conducted under permit rather than under notification. Although there are administrative differences between these procedures, the goal of each is to ensure that plants are confined during movement and field testing and do not persist in the environment, and both are designed to achieve high levels of safety. In addition, use of any regulated article originating from a field test as food or feed would be subject to the regulatory authority of the Food and Drug Administration (FDA). Failure to meet any of the requirements associated with APHIS permits and notifications can lead to substantial fines, as provided in the Plant Protection Act.
One commenter agreed with the three criteria set out in the interim rule to describe plants engineered to produce industrial compounds, but suggested that food or feed plants genetically engineered to produce dietary supplements that are acceptable only in dietary supplements should also be considered industrial plants and thus ineligible for introduction using the notification option.
Plants, whether genetically engineered or not, yield a variety of compounds that are used to produce dietary supplements. If a food or feed plant naturally produces a compound used in dietary supplements, and that plant has been genetically engineered to produce more of that compound, then that plant would not be considered an industrial plant (and thus would be eligible for introduction using notification) because the first of the three criteria is that “the plants are engineered to produce compounds that are new to the plant.” However, if the compound is new to the plant, has not been commonly used in food or feed, and is being expressed for non-food, non-feed industrial uses, then the plant would be considered an industrial plant under our criteria and thus eligible for introduction only under permit.
Again with respect to the three criteria, one commenter suggested that APHIS may wish to clarify those criteria regarding the circumstances under which a permit will and will not be required for field testing and to provide examples of both to assist the public and those developing industrial proteins in better understanding those circumstances.
APHIS may, when needed, provide additional written guidance illustrating the criteria that define whether a field test qualifies for the notification procedure or if it must be conducted under permit. The agency has provided such written guidance since the implementation of the regulations in part 340 in 1987, offering additional examples that would not necessarily be appropriate for inclusion in the regulations themselves and updating or clarifying that guidance as necessary. When the notification option was added to the regulations in 1993, APHIS published a user's guide to notifications. Copies of our user's guides are available in print form and may be viewed on the Agency Web site at
One commenter stated that, while it may be currently necessary to require that introductions of industrial plants be conducted only under permit, over time APHIS should gain sufficient familiarity with certain industrial compounds to allow plants producing such compounds to be grown under notification procedures. The commenter urged APHIS to adopt this approach as it considers amending its regulations in 7 CFR part 340.
APHIS continually evaluates its regulations in the light of increased experience and familiarity with scientific, technical, and administrative considerations. In this or any other situation, the accumulation of experience or the availability of additional information may lead us to initiate rulemaking to update the regulations.
Another commenter, also with an eye toward future amendments to the regulations, suggested that APHIS provide for enhanced oversight for industrial plants in the areas of confinement controls, site security, and compliance verification and the use of third-party auditors, standard-setting organizations, and standard operating procedures as a quality control mechanism.
APHIS agrees that it is appropriate to take the considerations identified by the commenter into account as we continue to review our existing regulations in part 340 and develop potential amendments to those regulations.
The preamble of the interim rule stated that our amendment to the regulations in part 340 to remove the notification options for plants genetically engineered to encode compounds for industrial use would be in effect until December 31, 2004. At the time we made that statement, and as we explained in the interim rule, it was our intent to remove the notification option for all industrials pending the completion of our ongoing review of part 340. That review, which is not yet complete, is being conducted as part of our consideration of possible amendments to the regulations to, among other things, include genetically engineered organisms that may pose a noxious weed risk and genetically engineered biological control agents.
On January 23, 2004, we published a notice in the
We believe that it is essential that we consider the findings of the EIS as part of our review of the existing regulations in part 340, but the EIS is not yet at a stage at which we may do so. Therefore, consistent with our stated intent to remove the notification option for all industrials pending the completion of our review of part 340, we are announcing that the current requirement that introductions of plants genetically engineered to encode compounds for industrial use be conducted only under permit will continue in effect beyond December 31, 2004, until the completion of our review of the regulations in part 340. We expect that our review will include the publication in the
Therefore, for the reasons given in the interim rule and in this document, we are adopting the interim rule as a final rule without change.
This action also affirms the information contained in the interim rule concerning Executive Order 12866 and the Regulatory Flexibility Act, Executive Orders 12372 and 12988, and the Paperwork Reduction Act.
Further, this action has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget.
Administrative practice and procedure, Biotechnology, Genetic engineering, Imports, Packaging and containers, Plant diseases and pests, Transportation.
National Indian Gaming Commission.
Final rule.
In response to the inherent risks of gaming enterprises and the resulting need for effective internal controls in Tribal gaming operations, the National Indian Gaming Commission (Commission or NIGC) first developed Minimum Internal Control Standards (MICS) for Indian gaming in 1999, and then later revised them in 2002. The Commission recognized from the outset that periodic technical adjustments and revisions would be necessary in order to keep the MICS effective in protecting Tribal gaming assets and the interests of Tribal stakeholders and the gaming public. To that end, the following final rule revisions contain certain corrections and revisions to the Commission's existing MICS, which are necessary to correct erroneous citations or references in the MICS and to clarify, improve, and update other existing MICS provisions. The purpose of these final MICS revisions is to address apparent shortcomings in the MICS and various changes in Tribal gaming technology and methods. Public comment to these final MICS revisions was received by the Commission for a period of 48 days after the date of their publication in the
After consideration of all received comments, the Commission has made whatever changes to the proposed revisions that it deemed appropriate and is now promulgating and publishing the final revisions to the Commission's MICS Rule, 25 CFR part 542.
Effective Date: May 4, 2005.
Compliance Date: On or before July 5, 2005, the Tribal gaming regulatory authority shall: (1) In accordance with the Tribal gaming ordinance, establish and implement Tribal internal control standards that shall provide a level of control that equals or exceeds the revised standards set forth herein; and (2) establish a deadline no later than September 1, 2005, by which a gaming operation must come into compliance with the Tribal internal control standards. However, the Tribal gaming regulatory authority may extend the deadline by an additional 60 days if written notice is provided to the Commission no later than September 1, 2005. Such notification must cite the specific revisions to which the extension pertains.
Vice-Chairman Nelson Westrin, (202) 632-7003 (not a toll-free number).
On January 5, 1999, the Commission first published its Minimum Internal Control Standards (MICS) as a Final Rule. As gaming Tribes and the Commission gained practical experience applying the MICS, it became apparent that some of the standards required clarification or modification to operate as the Commission had intended and to accommodate changes and advances that had occurred over the years in Tribal gaming technology and methods. Consequently, the Commission, working with an Advisory Committee composed of Commission and Tribal representatives, published the new final revised MICS rule on June 27, 2002. As the result of the practical experience of the Commission and Tribes working with the newly revised MICS, it has once again become apparent that additional corrections, clarifications, and modifications are needed to ensure that the MICS continue to operate as the Commission intended. To identify which of the current MICS need correction, clarification or modification, the Commission initially solicited input and guidance from NIGC employees, who have extensive gaming regulatory expertise and experience and work closely with Tribal gaming regulators in monitoring the implementation, operation, and effect of the MICS in Tribal gaming operations. The resulting input from NIGC staff convinced the Commission that the MICS require continuing review and prompt revision on an ongoing basis to keep them effective and up-to-date. To address this need, the Commission decided to establish a Standing MICS Advisory Committee to assist it in both identifying and developing necessary MICS revisions and revisions on an ongoing basis. In recognition of its government-to-government relationship with Tribes and related commitment to meaningful Tribal consultation, the Commission requested gaming Tribes, in January 2004, for nominations of Tribal representatives to serve on its Standing MICS Advisory Committee. From the 27 Tribal nominations that it received, the Commission selected 9 Tribal representatives in March 2004 to serve on the Committee. The Commission's Tribal Committee member selections were based on several factors, including the regulatory experience and background of the individuals nominated, the size(s) of their affiliated Tribal gaming operation(s), the types of games played at their affiliated Tribal gaming operation(s), and the areas of the country in which their affiliated Tribal gaming operation(s) are located. The selection process was very difficult, because numerous highly qualified Tribal representatives were nominated to serve on this important Committee.
As expected, the benefit of including Tribal representatives on the Committee, who work daily with the MICS, has proved to be invaluable.
Tribal representatives selected to serve on the Commission's Standing MICS Advisory Committee are: Tracy Burris, Gaming Commissioner, Chickasaw Nation Gaming Commission, Chickasaw Nation of Okalahoma; Jack Crawford, Chairman, Umatilla Gaming Commission, Confederated Tribes of the Umatilla Indian Reservation; Patrick Darden, Executive Director, Chitimacha Gaming Commission, Chitimacha Indian Tribe of Louisiana; Mark N. Fox, Compliance Director, Four Bears Casino, Three Affiliated Tribes of the Fort Berthold Reservation; Sherrilyn Kie, Senior Internal Auditor, Pueblo of Laguna Gaming Authority, Pueblo of Laguna; Patrick Lambert, Executive Director, Eastern Band of Cherokee Gaming Commission, Eastern Band of Cherokee Indians; John Meskill, Director, Mohegan Tribal Gaming Commission, Mohegan Indian Tribe; Jerome Schultze, Executive Director, Morongo Gaming Agency, Morongo Band of Mission Indians; and Lorna Skenandore, Assistant Gaming Manager, Support Services, Oneida Bingo and Casino, formerly Gaming Compliance Manager, Oneida Gaming Commission, Oneida Tribe of Indians of Wisconsin. The Advisory Committee also includes the following Commission representatives: Philip N. Hogen, Chairman; Nelson Westrin, Vice-Chairman; Cloyce V. Choney, Associate Commissioner; Joe H. Smith, Acting Director of Audits; Ken Billingsley, Region III Director; Nicole Peveler, Field Auditor; Ron Ray, Field Investigator; and Sandra Ashton, Staff Attorney, Office of General Counsel.
In the past, the MICS were comprehensively revised on a large wholesale basis. Such large-scale revisions proved to be difficult for Tribes to implement in a timely manner and unnecessarily disruptive to Tribal gaming operations. The purpose of the Commission's Standing Committee is to conduct a continuing review of the operation and effectiveness of the existing MICS, in order to promptly identify and develop needed revisions of the MICS, on a manageable incremental basis, as they become necessary to revise and keep the MICS practical and effective. By making more manageable incremental changes to the MICS on an ongoing basis, the Commission hopes to be more prompt in developing needed revisions, while, at the same time, avoiding larger-scale MICS revisions which take longer to implement and can be unnecessarily disruptive to Tribal gaming operations. In accordance with this approach, the Commission has developed the following final MICS rule revisions, with the assistance of its Standing MICS Advisory Committee. In doing so, the Commission is carrying out its statutory mandate under the Indian Gaming Regulatory Act, 25 U.S.C. 2706(b)(10), to promulgate necessary and appropriate regulations to implement the provisions of the Act. In particular, the following final MICS rule revisions are intended to address Congress' purpose and concern stated in Section 2702(2) of the Act, that the Act “provide a statutory basis for the regulation of gaming by an Indian tribe adequate to shield it from organized crime and other corrupting influences, to ensure the Indian tribe is the primary beneficiary of the gaming operation, and to ensure the gaming is conducted fairly and honestly by both the operator and the players.”
The Commission, with the Committee's assistance, identified three specific objectives for the following final MICS rule revisions: (1) To ensure that the MICS are reasonably comparable to the internal control standards of established gaming jurisdictions; (2) to ensure that the interests of the Tribal stakeholders are adequately safeguarded; and (3) to ensure that the interests of the gaming public are adequately protected.
The Standing Advisory Committee initially met on April 8, 2004, and then again on October 21, 2004, and January 25, 2005, to discuss the revisions set forth in the following final MICS rule revisions. The input received from the Committee Members has been invaluable to the Commission in its development of the following final MICS rule revisions.
In furtherance of the Commission's established Government-to-Government Tribal Consultation Policy, the Commission also provided a preliminary working draft of all of the final MICS rule revisions contained herein to gaming Tribes on June 22, 2004, for a 30-day informal review and comment period, before formulation of a proposed rule, which was published in the
For reasons stated above in this preamble, the National Indian Gaming Commission has revised the following specific sections of its MICS rule, 25 CFR part 542. The following discussion includes the Commission's responses to general comments concerning the MICS and is followed by a discussion regarding each of the specifically final rule revisions, along with previously submitted comments to the proposed revisions and the Commission's responses to those comments. As noted above, prior commenters include Commission and Tribal Advisory Committee members, gaming Tribes, and others.
Many of the comments to the published proposed MICS revisions pertained to the Commission's authority to promulgate rules governing the conduct of Class III gaming. Positions were expressed asserting that Congress intended the NIGC's Class III gaming regulatory authority to be limited exclusively to the approval of tribal gaming ordinances and management contracts. Similar comments were received concerning the first proposed MICS back in 1999. The Commission, at that time, determined in its publication of the original MICS in 1999 that it possessed the statutory authority to promulgate Class III MICS. As stated in the preamble to those MICS: “The Commission believes that it does have the authority to promulgate this final rule. * * * [T]he Commission's promulgation of MICS is consistent with its responsibilities as the Federal regulator of Indian gaming.” 64 FR 509 (Jan. 5, 1999). The current Commission reaffirms that determination. The Indian Gaming Regulatory Act, which established the regulatory structure for all classes of Indian gaming, expressly provides that the Commission “shall promulgate such regulations as it deems appropriate to implement the provisions of (the Act).” 25 U.S.C. 2707(b)(10).
Pursuant to this clearly stated statutory duty and authority under the
The Commission believes that the importance of internal control systems in the casino operating environment cannot be overemphasized. While this is true of any industry, it is particularly true and relevant to the revenue generation processes of a gaming enterprise, which, because of the physical and technical aspects of the games and their operation and the randomness of game outcomes, makes exacting internal controls mandatory.
The internal control systems are the primary management procedures used to protect the operational integrity of gambling games, account for and protect gaming assets and revenues, and assure the reliability of the financial statements for Class II and III gaming operations. Consequently, internal control systems are a vitally important part of properly regulated gaming. Effective internal control systems are dependent upon the support of the gaming enterprise's governing board, management, and other personnel who are responsible for providing reasonable assurance regarding the achievement of the enterprise's objectives, which typically include operational integrity, effectiveness and efficiency, reliable financial statement reporting, and compliance with applicable laws and regulations. The Commission believes that strict regulations, such as the MICS, are not only appropriate but necessary for it to fulfill its responsibilities under the IGRA to establish a necessary baseline, or minimum, Federal standards for all Tribal gaming operations on Indian lands. 25 U.S.C. 2702(3). Although the Commission recognizes that many Tribes had sophisticated internal control standards in place prior to the Commission's original promulgation of its MICS, many did not. Accordingly, the Commission continues to believe strongly that promulgation and revision of these standards is necessary and appropriate to implement effectively the provisions of the Indian Gaming Regulatory Act throughout Indian country and, therefore, is within the Commission's clearly expressed statutory power and duty under Section 2706(b)(10) of the Act.
Comments were also received suggesting that the NIGC should re-issue the MICS as a bulletin or guideline for Tribes to use voluntarily, at their discretion, in developing and implementing their own Tribal gaming ordinances and internal control standards. The Commission disagrees. The MICS are common in established gaming jurisdictions and, to be effective in establishing a minimum baseline for the internal operating procedures of Tribal gaming enterprises, the rule must be concise, explicit, and uniform for all Tribal gaming operations to which they apply. Furthermore, to nurture and promote public confidence in the integrity and regulation of Indian gaming and ensure its adequate regulation to protect Tribal gaming assets and the interests of Tribal stakeholders and the public, the Commission's MICS regulations must be reasonably uniform in their implementation and application and regularly monitored and enforced by Tribal regulators and the NIGC to ensure Tribal compliance.
The Commission has added or revised definitions of the following four terms in section 542.2. A discussion of each new or revised definition follows in alphabetical order. The text of the new or revised definition is set forth following the conclusion of this preamble in which of all of the final rule revisions to the Commission's MICS rule, 25 CFR part 542, are discussed.
This is a new definition. Several Tribal and Commission Committee members recommended that a definition of the term “drop period” be added to the current existing MICS definitions. In conjunction with other final rule revisions to the MICS which include this term, the NIGC has determined that to ensure that such revisions are clear and unambiguous, insertion of the definition of the term “drop period” into the MICS Definitions section 542.2 is worthwhile. This definition was included in the proposed rule publishing for review and comment prior to formulation of the final new definition, and no comments were received objecting to the definition.
The Commission has revised the existing MICS definition of this term to more accurately define the scope of the referenced term, as it is used in the MICS. Commission and Committee members recommended that the existing definition for “gaming machine” be revised to cover central server based linked gaming machines or player stations that are being increasingly utilized in Indian gaming. Comments were subsequently received supporting the proposed rule revision, which was published in the
The Commission agrees with the suggestion that the term “cash equivalents” should be used in the definition. We believe the term is more representative of the various items that could be wagered, in addition to cash and coin.
Comment was received recommending that a definition be added to the MICS for the term “cash equivalents.” The Commission agrees with this suggestion and will develop such a definition in subsequent proposed revisions after further input from the Advisory Committee and gaming Tribes regarding its text.
The Commission has revised the existing MICS definition of this term to more accurately define the applicability of the referenced term. Committee members recommended that the definition of “promotional progressive pots and/or pools” be revised to also apply to poker games. The revision was included in the proposed rule revision, which was published in the
This is a new definition. The referenced term is used in the current MICS but is not defined. Since it has been the frequent subject of inquiry regarding its meaning, the NIGC has determined that a definition of the term is warranted. Comments to the proposed rule published in the
The Commission identified and is correcting several referencing and citation errors in the current MICS. The relevant sections include the following: §§ 542.7(g)(1)(i), 542.8(h)(1)(i), 542.12(i)(4), 542.12(k)(1)(v), 542.12(k)(1)(ix), 542.12(k)(1)(xvii), and 542.13(l)(4).
Each of the referencing and citation corrections was set forth in the proposed rule published in the
It is common practice in the gaming industry that gaming machine manufacturers provide gaming operators with a Pay Analysis Report (PAR) or PAR sheet for each gaming machine that they supply to the operator. The PAR sheet provides information regarding certain design specifications for the gaming machine, including the statistical theoretical percentage(s) that the gaming machine is designed to win or hold for the operator (house), based on an adequate level of wagering activity after payment of game winnings to players. A theoretical hold worksheet also accompanies the PAR sheet and provides additional theoretical hold information for the gaming machine, frequently including probability calculations of the machine's theoretical hold percentages for different specified levels of coin-in wagering activity. The converse to a gaming machine's theoretical hold percentage is its theoretical payback percentage, which is the percentage of total money wagered that the machine is designed to pay back to players as game winnings based on adequate levels of wagering activity. A gaming machine's theoretical payback percentage can be calculated by deducting its specified theoretical hold percentage(s) from one.
Periodic statistical tracking of actual gaming machine performance, by comparing each machine's actual hold and payback percentages in relation to its theoretical hold and/or payback percentages, has become a necessary standard of management practice to ensure the integrity of gaming machine operations and safeguard related machine revenues and assets. To effectively monitor gaming machine operations for performance irregularities, whether due to machine defect, malfunction, embezzlement, cheating, or other improper tampering, gaming operators are required to periodically prepare a gaming machine analysis report that compares each machine's actual hold percentages to its specified theoretical hold percentage(s), based on the levels of coin-in wagering activity for each reporting period. Any material deviations between the actual and theoretical hold percentages must be thoroughly investigated by gaming machine department management and other management personnel independent of the gaming operation's gaming machine department. The ultimate objective of the gaming machine analysis report and investigative process is to ensure that any material uncharacteristic deviation between actual and theoretical hold is not due to machine defect, malfunction, embezzlement, cheating, or other improper tampering; but instead, a reasonably expected mathematical deviation based on the randomness of the machine's game outcome selection mechanism and the number of game plays and outcomes analyzed.
The standards set forth in section 542.13(h) of the MICS are intended to provide a minimum benchmark for effective use of gaming machine performance analysis by Tribal gaming enterprises to safeguard the integrity of their gaming machine operations and related Tribal gaming assets. In establishing these standards, the Commission has attempted to keep them as practical and effective as possible for the diverse nature and scale of the Tribal gaming machine operations to which they apply. For that reason, the Commission has made several revisions to section 542.13(h).
The Commission's deletion of subsection 542.13(h)(2) will eliminate the current requirement that Tribal operators utilize a weighted average calculation to adjust and determine the appropriate theoretical hold percentages for periodic analysis of complex gaming machines (excluding multi-game multi-denominational gaming machines), which have manufacturer's PAR or theoretical hold worksheets that specify multiple theoretical hold or payback percentages, with a spread of more than 4% between their minimum and maximum specified theoretical hold/payback percentages. Although the manufacturer's PAR sheets and theoretical hold worksheets for most gaming machines specify a single theoretical hold percentage, which can be reliably used for analysis of the machine's actual performance, there are other more complex gaming machines (excluding multi-gaming and multi-denominational gaming machines) that have multiple specified theoretical hold percentages. Identifying the most reliable theoretical hold percentage to use for analysis of the performance of these more complex gaming machines can be difficult and challenging, because the most appropriate theoretical hold percentage is so dependent upon the different amounts of permitted coin-in betting wagers (
Based on past MICS compliance audits and consultation with other gaming jurisdictions, the Commission has determined that the currently required weighted average calculation may not be necessarily to produce an acceptable adjusted theoretical hold percentage for analyzing the performance of complex gaming machines (other than multi-gaming and multi-denominational gaming machines) which have multiple specified theoretical hold percentages. Practical experience also demonstrates that this is also true regardless of whether the spread between the minimum and maximum specified theoretical hold percentages for such
The Commission has revised subsection 542.13(h)(4) by renumbering it as the new subsection 542.13(h)(2); extending the required use of weighted average calculations to determine the adjusted theoretical hold percentage for both multi-game and multi-denominational gaming machines; and deleting the 4% or greater spread criteria regarding the minimum and maximum specified theoretical payback percentage for such machines. While concluding that weighted average calculations need not be required for determining the most appropriate adjusted theoretical hold percentage for other complex gaming machines with multiple specified theoretical hold percentages, the Commission has determined that such calculations are essential for reliable analysis of the performance of multi-game and multi-denominational gaming machines, regardless of whether the spread between their minimum and maximum specified theoretical hold percentages is more or less than 4%. Therefore, the Commission is adding multi-denominational gaming machines to the weighted average calculation requirement in current subsection 542.13(h)(4), and is deleting the current requirement that the spread between the minimum and maximum specified multiple theoretical hold percentages must exceed 4% before any weighted average calculations are required to determine the appropriate adjusted theoretical hold percentage for either multi-game or multi-denominational gaming machines. In contrast to other complex gaming machines with multiple specified theoretical hold percentages, multi-game and multi-denominational gaming machines do not possess common characteristics that result in reasonably predictable player decisions regarding the individual programmed games of the multi-game gaming machine they elect to play or the denomination of their wager. Instead, player wagering decisions can vary widely and player game/denomination selections are also highly unpredictable and often subject to the effects of intervening management decisions, such as the activation/cancellation of game options, device location, gaming floor mix, and paytable alternatives. Thus, to effectively identify a reliable adjusted theoretical hold percentage for analysis of multi-game and multi-denominational gaming machine performance requires a weighted average calculation of player coins-in-wagering for each wager/game/denomination paytable player option. Furthermore, it is the Commission's considered judgment that such calculations are required and necessary regardless of whether the spread between the minimum and maximum specified multiple theoretical hold percentage for the multi-game and/or multi-denominational gaming machine exceeds 4%.
Based on past experience and interaction with Tribal gaming regulatory authorities, the Commission has determined that the current six months play threshold in subsection 542.13(h)(19) for determining when a gaming machine is required to be included in the gaming machine analysis report is not practical or appropriate. Consequently, to define more accurately when the comparison and investigation of large variances between actual and theoretical hold is required, the Commission has revised subsection 542.13(h)(19) by renumbering it as subsection 542.13(h)(18) and replacing the six months play threshold with a play threshold of at least 100,000 wagering transactions.
In recognition of the varying processes that exist in the gaming industry relative to the time period between currency drops for gaming machines, the Commission has determined that the current standard in subsection 542.13(m)(6) requiring weekly comparison of the bill-in meter readings to the total bill acceptor drop is impractical and too inflexible. Accordingly, the Commission is deleting the currently required weekly comparison and replace it with an every “drop period” requirement. In conjunction with these final rule revisions, the term “drop period” is being defined in section 542.2 as the period of time between sequential drops.
Furthermore, in consideration of the above revision, the Commission is revising subsection 542.13(m)(7) by deleting the current $200.00 threshold for required follow-up investigation of an unresolved variance between actual currency drop and bill-in meter reading and replacing it with a threshold amount that is “both more than $25.00 and at least 3 percent (3%) of the actual currency drop.”
Comments were received supporting the deletion of both standards, indicating that the process will potentially become simpler. Comment was received supporting the deletion of the standards and the willingness of the Commission to accept alternative methods of identifying the appropriate theoretical payback/hold percentage for the machines in question, which will often involve simply selecting the most conservative theoretical hold percentage within the range of acceptable parameters established by the game manufacturer. Such a procedure is founded upon the premise that patrons will generally opt for max coin bet.
Comment was received objecting to the striking of the weighted average calculation for complex gaming machines with a spread between theoretical payback percentages greater than 4%. It was noted that on-line computerized accounting systems for gaming machines capture the required data and facilitate the identification of an optimal theoretical payback/hold percentage for game analysis. Consequently, the commenter contended there is no compelling need to strike the standard. Comment was received questioning whether the standard requires the data to be collected by hard meter or whether soft meters are acceptable.
The Commission concurs with the commenter that the selection of the most conservative hold percentage will generally produce a benchmark for analysis of complex gaming machines, other than multi-game and multi-denominational machines, that will enable the gaming machine analysis report to be accurate and effective. However, should such a procedure not be reflective of the method of play of the gaming operation's patrons, the weighted average calculation would become the desired alternative. By striking the standard, the Commission is deferring to the Tribal Gaming Regulatory Authority (TGRA) to ensure Tribal gaming management employs procedures appropriate to identify reliable theoretical payback/hold percentages for analyzing the performance of their complex gaming devices with multiple specified theoretical hold percentages (excluding multi-gaming and multi-denominational gaming machines). The Commission acknowledges that, in accordance with industry standard, gaming machines and current technology on-line accounting systems greatly aid the process of collecting data. However, such on-line systems are not at this time required by the MICS for all gaming machines. Therefore, we do not agree that the striking of the standard lacks compelling justification.
The Commission refers the commenter to the MICS definitions regarding the question of whether hard or soft meters may be used to collect necessary game data and determine reliable theoretical payback/hold percentages for game performance analysis. In accordance with section 542.2, the term “meter” is defined as either hard or soft. Consequently, to satisfy the standard, either method of collection is permissible.
Comments were received acknowledging the need to extend the scope of the standard to include multi-denominational gaming machines in addition to multi-game devices. Comment was received supporting the striking of the 4% theoretical payback percentage spread criteria with regard to multi-game and multi-denomination gaming machines. The devices in question generally represent only a small portion of the typical gaming floor. Comment was received suggesting that, instead of quarterly meter reads, the meters should be read annually. Comment was also received questioning the need to make annual adjustments to the theoretical hold percentage for multi-game and multi-denomination devices, since the recalculation of the theoretical hold percentage results in only a nominal change. In addition, comment was also received regarding the task of calculating theoretical payback and hold percentages for multi-game machines that are also multi-denomination. The commenter questioned whether the necessary data could be extracted from such devices and, even if it could be obtained, the multi-tiered calculations would be exceedingly cumbersome.
Finally, comment was received questioning whether the potential annual adjustment to theoretical hold required the gaming machine to be considered a new device for purposes of the gaming machine analysis report. The Commission does not concur with the commenter recommendation that collecting the meter data on an annual basis is acceptable. With regard to the collection of wagering data from multi-game and multi-denominational gaming machines, the more data collected, the greater the confidence in the analysis of patron betting habits and, consequently, the more reliable the identification of a valid theoretical hold percentage. Due to the changes in machine mix and location that frequently occur on the gaming floor, the Commission believes the subject data should be collected on a quarterly basis. The Commission does not agree with the comment that the annual review and adjustment of the previously determined theoretical hold percentage is of no value. We agree with the premise that, if the gaming floor remained unaltered from one year to the next, the betting habits of the patrons are likely to remain constant. However, changes to the gaming floor are typically frequent, as management attempts to generate the greatest return on the square footage allocated to the gaming machine department. Such modifications may involve additions and removals of devices, movement of machines on the gaming floor, activation/deactivation of various game options (such as bonusing), changing the mix of games offered, or increasing or restricting the different denominations accepted. Each of these management decisions can affect the theoretical hold of the multi-game and multi-denominational gaming machines in question. We can certainly understand management electing not to make an adjustment to the theoretical hold when the amount of the adjustment will have no significant impact on the reliability of the gaming machine analysis reports. However, due to the volatility of the gaming floor and the potential effect such volatility can have on patron betting habits, we believe the annual testing of previously determined theoretical hold percentages to be a necessary management practice.
The Commission appreciates the concern raised by a commenter regarding the process of determining a reliable theoretical hold percentage for multi-game devices that also accept multi-denomination wagers. The Commission acknowledges that the standard is intended to address either multi-game or multi-denomination but is awkward in its application with regard to devices that possess both characteristics. The standard would imply that a multi-tiered level of weighted average calculations would be required and that, for each
In summation, it is important not to lose sight of the ultimate objective of the standards relevant to the statistical tracking of gaming performance, which is to employ a process that is effective in identifying deviations of actual performance from the manufacturer's specifications that warrant investigation. Such deviations may simply result from normal play, or be caused by gaming machine defect, malfunction, heating, embezzlement, or other improper tampering. Relevant to this overall process is the fact that many frauds have occurred in Tribal gaming over the past few years involving false or fraudulent gaming machine payouts that could have been detected sooner, if the gaming operation had had an effective process for measuring the appropriateness of actual gaming machine performance.
In response to the question raised by a commenter whether the annual adjustment to theoretical hold percentage requires a gaming machine to be given a new machine (asset) number for purposes of the gaming machine analysis report, the Commission refers the commenter to section 542.13(h)(16). That section explicitly exempts annual theoretical hold adjustments made in accordance with section 542.13(h)(2) from the general requirement that the adjusted machine be treated as a new machine. Consequently, creation of a new machine number is not required when such adjustments occur.
Comments were received supporting the Commission's recommended change from a specified six (6) month play threshold in section 542.13(h)(18) to a threshold of 100,000 wagering transactions to determine when a gaming machine should be included in the analysis of actual hold performance to theoretical hold.
Comment was also received suggesting that the PAR sheets provide information more relevant to when a particular device has experienced sufficient play to be included in the gaming machine analysis process. Comment was also received suggesting that the recommended range of acceptable deviations from theoretical of ±3 percentage points should be struck from the MICS. The commenter noted that it should be left up to the discretion of the TGRA as the primary gaming regulator to make the determination. Additional comment was also received recommending that it should also be left to the TGRA to determine when sufficient play exists to require the machine to be included in the gaming analysis report, since the performance of some devices should be examined prior to 100,000 wagering transactions, while others may require more play before any investigation of deviations between actual and theoretical performance is worthwhile.
Finally, comment was received suggesting that a computerized application utilizing a volatility indexing mathematical program should be an acceptable alternative to the process required by the MICS. Such programs employ a mathematical formula that estimates the minimum and maximum ranges of acceptable theoretical payback/hold percentages for a given machine based on the following: (1) The theoretical payback/hold over the expected life of the machine; (2) the number of winning combinations; (3) the payback/hold for the winning combinations; and (4) the number of games played. In essence, the program considers the game characteristics and determines a tolerable range of accepted performance, which narrows as performance predictability increases. Typically, predictability increases commensurate with increasing levels of wagering activity.
The Commission concurs with the commenter's recommendation that the standard would be better served by replacing the specified time period with a minimum number of wagering transactions. The final revision to section 542.13(h)(18) has, accordingly, been modified to reflect that recommendation. The Commission also appreciates the suggestion made by the commenter that determining when sufficient data exists to perform the analysis of actual game performance should include consideration of the data contained within the PAR sheet. It is important to recognize that the 100,000 wagering transaction standard establishes a minimum threshold for devices to be included in the required gaming machine analysis report; however, it is also well understood that the investigation of unacceptable deviations between actual and theoretical game performance is a complex process. To comment on how the Commission determined the 100,000 wager transaction threshold, a random number generator (RNG) with a 10 million cycle will produce a range between minimum and maximum confidence factors of approximately 3 percentage points, which we believe justifies an investigation of an unacceptable deviation, which industry practice would identify to be ±3 percentage points between actual hold and theoretical hold. However, the analyst should also consider the relevant PAR sheet in determining the extent to which follow-up analysis and investigation is warranted. For example, a multi-game device, particularly if it also accepts multi-denomination, may in fact need more than 100,000 wagering transactions before it is worthwhile to review past performance,
The Commission does not agree with the commenter's suggestion that the recommended acceptable deviation range of ±3 percentage points be struck from the MICS. We believe the recommended range represents industry practice and is a reasonable threshold to ensure that the gaming machine analysis process will be effective. The Commission also disagrees with the commenter's recommendation that it should be left to the discretion of the TGRA to decide when a device must be
Finally, the Commission appreciates the suggestion by a commenter that a volatility indexing mathematical program may produce results as reliable as, or even more reliable, than the weighted average calculation required for multi-game and multi-denominational gaming machines in the MICS. In response, it is noteworthy that at section 542.3(c), the TGRA is required to adopt regulations that provide a level of control that equals or exceeds the MICS. Although the rule does not condone the TGRA accepting management procedures that are in conflict with the MICS, it does not preclude acceptance of procedures or controls that are different and at least as stringent as those contained within the MICS. Furthermore, at section 542.13(b), computerized applications that provide at least the same level of control as the MICS are deemed to be acceptable under the current MICS. Based on the data provided by the commenter, it is the belief of the Commission that the noted mathematical formula would be an acceptable alternative procedure. However, it is incumbent upon management to adequately document the process and its effectiveness in providing the required level of control and reliability in analyzing game performance.
Comments were received concurring with the final revision. Comment was also received noting that the standard is stricter, but also acknowledging that the impact on management's gaming machine accounting/audit function should be nominal. Finally, comment was received supporting the final revision and noting that it should make the follow-up process less cumbersome.
Comment was received suggesting language in the initially proposed revision to clarify the applicability of $25 or 3 percent. Comment was received objecting to the revision because it would allow variances to go uninvestigated that should be subjected to review. Basically, the commenter contends that the rule is too liberal and results in the control being ineffective. Comment was received recommending the threshold be 5 percent and $25. The Commission accepts the commenter recommendation regarding more explicit language and has modified the final revision accordingly. The Commission understands the commenter concern for the rule becoming less stringent and possibly ineffective. However, the existing rule requires that a variance of $200 per machine per week must be investigated. Assuming the Tribal gaming operation performs a daily drop, the average variance threshold per day would be $28.57. Because the drop must exceed $833.33 before the 3 percent criteria becomes effective, for all practical purposes, the vast majority of variances will be subject to the $25 threshold. Consequently, we do not believe the revision will have a material impact on the effectiveness of the control. However, by changing the time frame from a week to a drop period, we believe the standard becomes more consistent with the workflows of the revenue audit process.
The Commission does not concur with the recommendation that the threshold be increased to 5 percent or $25. With regard to drop amounts, the final rule results in the $25 threshold being applicable to drops of $25 to $833.33. The commenter recommendation would cause the $25 threshold to be applicable to drops of $25 to $500, which would, in effect, result in a lessening of the control. We do not believe there is a compelling basis for making the recommended change.
Since initial adoption, this standard has often been a troublesome requirement for management and Tribal gaming regulatory authorities to implement and enforce. The NIGC is not unsympathetic to the challenges created by the regulation when a vendor is uncooperative. Although the proposed rule provided for the deletion of section 542.16(a)(1)(i), which requires Tribal management to ensure that vendors agree to adhere to Tribal internal control standards, the Commission has determined that deletion of this standard is not appropriate at this time. It is the common goal of the NIGC and Tribal management and regulators to ensure that vendors adhere to Tribal internal control standards.
Comment was received supporting deletion of the standard, but noting that management should continue to be held accountable by the TGRA to ensure that agreements/contracts are not entered into that would cause the gaming operation to be noncompliant with any Tribal, State, or Federal laws or regulations. Furthermore, the TGRA should not hesitate to enact and enforce such regulations of their own specific to vendor contract requirements. Comment was also received supporting deletion of the standard because it creates an undue hardship on management in the negotiation of vendor agreements. Additional comment was received supporting the deletion of the standard because violations by vendors are often difficult and troublesome to enforce, which causes the regulation to be fairly meaningless. Other comment was received objecting to deletion of the standard because it provides an added level of protection for Tribes from unscrupulous vendors in their gaming enterprises. Additional comment was received from a TGRA noting that, notwithstanding deletion of the standard from the MICS, the Tribe intends to keep the control in their regulations, which is a Tribe's right as primary regulator under IGRA.
After careful consideration of the comments received and relevant public policy issues, the Commission has decided to retain the standard at this time.
To more clearly describe the current variance process, the NIGC is revising section 542.18 of the MICS. Specifically, the revisions are intended to more clearly describe the authority and duties of the Chairman, his/her designee, the full Commission, as well as the appeal rights of the Tribal petitioner. The final revisions are also intended to ensure that an adequate factual investigation and record is developed for administrative and judicial review of the merits of the Chairman's decision on each variance request.
Comment was received supporting the final revisions. Comment was also received supporting the revisions, except for that part that prohibits the implementation of a TGRA approved variance until after concurrence has been received from the Commission. Comment was received questioning whether the petitioner Tribe has the authority to extend stipulated time frames in the variance process.
Additional comment was received questioning whether the thirty (30) day period associated with a review by NIGC staff of a resubmission was sufficient. Further comment was received questioning the potential result of a petitioner objecting to an extension of a stipulated time period requested by NIGC staff. Specifically, the concern is that refusal of such a request might result in summary denial of the variance request. Comment was also received questioning the need for extensions of the time frames provided. A commenter represented that the stipulated time periods should be sufficient. Finally, comment was received suggesting that the Commission should consider variance requests only after they have been approved by the TGRA.
The Commission understands the commenter's objection to deferring implementation of a TGRA approved variance until receipt of Commission concurrence; however, to preserve the integrity of the MICS, the regulatory body responsible for its enactment must have the latitude to prohibit the implementation of procedures deemed to be unacceptable and contrary to the NIGC's MICS regulations. The Commission also recognizes that the variance concurrence process is one initiated by the petitioner. Therefore, the Commission would not be unreasonable in considering requests for additional time from the petitioner. It is noteworthy to such a position that the implementation of the proposed alternative procedure is precluded until after the Commission has concurred.
The Commission acknowledges the concern expressed by a commenter regarding the time afforded NIGC staff to review a resubmission. Therefore, language has been added to enable staff to extend the period, subject to concurrence by the petitioner. The Commission understands the concern expressed by a commenter regarding a possible decision not to concur, if acceptance of an extension to a stipulated time period was not agreed. Certainly, the petitioner should be well aware that the investigation of pertinent facts and data associated with a variance request may take hours or many months, depending upon its complexity. Although requests for additional time should be reasonable and based on cause, the petitioner should also be well aware that the undue refusal to grant additional time may result in a determination different than that which would have otherwise been rendered, if the petitioners had agreed to the Chairman's request for more adequate time to investigate and decide their variance request. Notwithstanding the question pertaining to extension of time frames, the petitioner's right to appeal would continue to exist.
The Commission disagrees with the commenter's contention that time period extensions are not warranted. Although some variance requests can be readily addressed, particularly if the staff charged with performing the research has past experience with similar requests, most will involve extensive analysis. Seldom is a petition simply responded to. Instead, a filing will generally initiate a back and forth exchange with the petitioner as staff seeks additional information or clarifications regarding the requested variance. Alternative procedures involving new technology often involve travel by staff to consult with manufacturers and other regulators or operators. Inherent to the analysis of a variance request is the identification of risk and evaluation of compensating controls. The time periods contained within the regulation will generally be appropriate for the more simple concurrence requests; however, complex requests will typically require one or more extensions of the allotted time frame. The Commission concurs with the commenter's suggestion regarding consideration of variance requests only after they have been approved by the TGRA. In accordance with the final rule, a variance request received by the Commission lacking evidence of the TGRA approval would not be considered. Since such a submission would lack authority.
Sections (t) and (u) are new MICS sections. Existing sections (t) and (u) are unchanged and are now designated as sections (v) and (w). In recognition of an increasing number of gaming operations utilizing or considering the utilization of computerized key control systems, the NIGC has determined that regulations addressing such systems are warranted for Tier A, B, and C Tribal gaming operations.
Comment was received supporting the final revisions noting that electronic key control systems are becoming more prevalent. Comment was also received supporting the determination by the Commission to adopt standards specifically covering the use of computerized key control systems in Tier A, B, and C gaming operations and not rely solely on the general MICS regulation covering computerized applications. Comment was also received supporting the new regulation and noting that the controls also provide for an audit function.
Comment was received supporting the new regulation, but noting that the TGRA should also consider more stringent standards. Comment was received recommending that the auditing procedures, particularly the quarterly inventory of keys, be performed by accounting/auditing personnel independent of the key control process. Additional comment was received questioning the need for the regulations since most of the controls are already in the MICS. Comment was received recommending that the regulation more clearly differentiate the function of key custodian from system administrator.
Comment was also received questioning the need for three persons to be involved in accessing the manual override key to open the box to perform repairs. It was noted that the persons accessing the box would not have access
The Commission disagrees with the commenter questioning the need for the new regulations. Computerized key control systems have been the subject of several Tribal variance requests over the past few years. Therefore, the Commission believes it appropriate to establish minimum standards specific to such systems. The Commission concurs with the commenter recommendation that the auditing procedures be performed by accounting/auditing personnel independent of the key control process. The final regulation for all three tiers has been changed accordingly. The Commission also concurs with the commenter's recommendation that the key custodian functions be more clearly defined and noted as being separate from those of the system administrator. Accordingly, the final revisions have been modified in all three new sections to more clearly define separation of the two functions.
The Commission also concurs with the commenter's suggestion that only two people be required to access the manual override key to make repairs to the key control box. Such access would not include access to the coin drop and count keys. The final revisions have been modified to reflect the suggestion of the commenter in all three new MICS sections.
The Commission certifies that the Final rule revisions to the Minimum Internal Control Standards contained within this regulation will not have a significant economic impact on small entities, 5 U.S.C. 605(b). The factual basis for this certification is as follows:
Of the 330 Indian gaming operations across the country, approximately 93 of the operations have gross revenues of less than $5 million. Of these, approximately 39 operations have gross revenues of under $1 million. Since the final revisions will not apply to gaming operations with gross revenues under $1 million, only 39 small operations may be affected. While this is a substantial number, the Commission believes that the final revisions will not have a significant economic impact on these operations for several reasons.
Even before implementation of the original MICS, Tribes had internal controls because they are essential to gaming operations in order to protect assets. The costs involved in implementing these controls are part of the regular business costs incurred by such an operation. The Commission believes that many Indian gaming operation internal control standards that are more stringent than those contained in these regulations. Further, these final rule revisions are technical and minor in nature.
Under the final revisions, small gaming operations grossing under $1 million are exempted from MICS compliance. Tier A facilities (those with gross revenues between $1 and $5 million) are subject to the yearly requirement that independent certified public accountant testing occur. The purpose of this testing is to measure the gaming operation's compliance with the tribe's internal control standards. The cost of compliance with this requirement for small gaming operation is estimated at between $3,000 and $5,000. The cost of this report is minimal and does not create a significant economic effect on gaming operations. What little impact exists is further offset because other regulations require yearly independent financial audits that can be conducted at the same time. For these reasons, the Commission has concluded that the final rule revisions will not have a significant economic impact on those small entities subject to the rule.
These following final rule revisions do not constitute a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. The revisions will not have an annual effect on the economy of $100 million or more. The revisions also will not cause a major increase in costs or prices for consumers, individual industries, federal, state or local government agencies or geographic regions and does not have a significant adverse effect on competition, employment, investment, productivity, innovation, or the ability of U.S. based enterprises to compete with foreign-based enterprises.
The Commission is an independent regulatory agency and, as such, is not subject to the Unfunded Mandates Reform Act. Even so, the Commission has determined that the final rule revisions do not impose an unfunded mandate on State, local, or Tribal governments, or on the private sector, of more than $100 million per year. Thus, this is not a “significant regulatory action” under the Unfunded Mandates Reform Act, 2 U.S.C. 1501
The Commission has, however, determined that the final rule revisions may have a unique effect on Tribal governments, as they apply exclusively to Tribal governments, whenever they undertake the ownership, operation, regulation, or licensing of gaming facilities on Indian lands, as defined by the Indian Gaming Regulatory Act. Thus, in accordance with Section 203 of the Unfunded Mandates Reform Act, the Commission undertook several actions to provide Tribal governments with adequate notice, opportunity for “meaningful” consultation, input, and shared information, advice, and education regarding compliance. These actions included the formation of a Tribal Advisory Committee and the request for input from Tribal leaders.
Section 204(b) of the Unfunded Mandates Reform Act exempts from the Federal Advisory Committee Act (5 U.S.C. App.) meetings with Tribal elected officials (or their designees) for the purpose of exchanging views, information, and advice concerning the implementation of intergovernmental responsibilities or administration. In selecting Committee members, consideration was placed on the applicant's experience in this area, as well as the size of the Tribe the nominee represented, geographic location of the gaming operation, and the size and type of gaming conducted. The Commission attempted to assemble a Committee that incorporates diversity and is representative of Tribal gaming interests. The Commission met with the Advisory Committee to discuss the public comments that were received as a result of the publication of the proposed MICS rule revisions, and considered all Tribal and public comments and Committee recommendations before formulating the final rule revisions. The Commission also plans to continue its policy of providing necessary technical assistance, information, and support to enable Tribes to implement and comply with the MICS as revised. The Commission also provided the proposed revisions to Tribal leaders for comment prior to publication of this final rule and considered these comments in formulating the rule.
In accordance with Executive Order 12630, the Commission has determined that the following final MICS rule revisions do not have significant takings implications. A takings implication assessment is not required.
In accordance with Executive Order 12988, the Office of General Counsel has determined that the following final
The following final MICS rule revisions require information collection under the Paperwork Reduction Act 44 U.S.C. 3501
The Commission has determined that the following final MICS rule revisions do not constitute a major Federal action significantly affecting the quality of the human environment and that no detailed statement is required pursuant to the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Accounting, Auditing, Gambling, Indian-lands, Indian-tribal government, Reporting and recordkeeping requirements.
25 U.S.C. 2701
(g) * * *
(1) * * *
(i) If the electronic equipment contains a bill acceptor, then § 542.21(e) and (f), § 542.31(e) and (f), or § 542.41(e) and (f) (as applicable) shall apply.
(h) * * *
(1) * * *
(i) If the electronic equipment contains a bill acceptor, then § 542.21(e) and (f), § 542.31(e) and (f), or § 542.41(e) and (f) (as applicable) shall apply.
(i) * * *
(4) The management in paragraph (i)(3) of this section shall investigate any unusual fluctuations in hold percentage with pit supervisory personnel.
(k) * * *
(1) * * *
(v) The marker form shall be prepared in at least triplicate form (triplicate form being defined as three parts performing the functions delineated in the standard in paragraph (k)(1)(vi) of this section), with a preprinted or concurrently printed marker number, and utilized in numerical sequence. (This requirement shall not preclude the distribution of batches of markers to various pits.)
(ix) The forms required in paragraphs (k)(1)(v), (vi), and (viii) of this section shall be safeguarded, and adequate procedures shall be employed to control the distribution, use, and access to these forms.
(xvii) When partial payments are made in the pit, the payment slip of the marker that was originally issued shall be properly cross-referenced to the new marker number, completed with all information required by paragraph (k)(1)(xv) of this section, and inserted into the drop box.
(h) Standards for evaluating theoretical and actual hold percentages.
(1) Accurate and current theoretical hold worksheets shall be maintained for each gaming machine.
(2) For multi-game/multi-denominational machines, an employee or department independent of the gaming machine department shall:
(i) Weekly, record the total coin-in meter;
(ii) Quarterly, record the coin-in meters for each paytable contained in the machine; and
(iii) On an annual basis, adjust the theoretical hold percentage in the gaming machine statistical report to a weighted average based upon the ratio of coin-in for each game paytable.
(3) For those gaming operations that are unable to perform the weighted average calculation as required by paragraph (h)(2) of this section, the following procedures shall apply:
(i) On at least an annual basis, calculate the actual hold percentage for each gaming machine;
(ii) On at least an annual basis, adjust the theoretical hold percentage in the gaming machine statistical report for each gaming machine to the previously calculated actual hold percentage; and
(iii) The adjusted theoretical hold percentage shall be within the spread between the minimum and maximum theoretical payback percentages.
(4) The adjusted theoretical hold percentage for multi-game/multi-
(5) The theoretical hold percentages used in the gaming machine analysis reports should be within the performance standards set by the manufacturer.
(6) Records shall be maintained for each machine indicating the dates and type of changes made and the recalculation of theoretical hold as a result of the changes.
(7) Records shall be maintained for each machine that indicate the date the machine was placed into service, the date the machine was removed from operation, the date the machine was placed back into operation, and any changes in machine numbers and designations.
(8) All of the gaming machines shall contain functioning meters that shall record coin-in or credit-in, or on-line gaming machine monitoring system that captures similar data.
(9) All gaming machines with bill acceptors shall contain functioning billing meters that record the dollar amounts or number of bills accepted by denomination.
(10) Gaming machine in-meter readings shall be recorded at least weekly (monthly for Tier A and Tier B gaming operations) immediately prior to or subsequent to a gaming machine drop. On-line gaming machine monitoring systems can satisfy this requirement. However, the time between readings may extend beyond one week in order for a reading to coincide with the end of an accounting period only if such extension is for no longer than six (6) days.
(11) The employee who records the in-meter reading shall either be independent of the hard count team or shall be assigned on a rotating basis, unless the in-meter readings are randomly verified quarterly for all gaming machines and bill acceptors by a person other than the regular in-meter reader.
(12) Upon receipt of the meter reading summary, the accounting department shall review all meter readings for reasonableness using pre-established parameters.
(13) Prior to final preparation of statistical reports, meter readings that do not appear reasonable shall be reviewed with gaming machine department employees or other appropriate designees, and exceptions documented, so that meters can be repaired or clerical errors in the recording of meter readings can be corrected.
(14) A report shall be produced at least monthly showing month-to-date, year-to-date (previous twelve (12) months data preferred), and if practicable, life-to-date actual hold percentage computations for individual machines and a comparison to each machine's theoretical hold percentage previously discussed.
(15) Each change to a gaming machine's theoretical hold percentage, including progressive percentage contributions, shall result in that machine being treated as a new machine in the statistical reports (
(16) If promotional payouts or awards are included on the gaming machine statistical reports, it shall be in a manner that prevents distorting the actual hold percentages of the affected machines.
(17) The statistical reports shall be reviewed by both gaming machine department management and management employees independent of the gaming machine department on at least a monthly basis.
(18) For those machines that have experienced at least 100,000 wagering transactions, large variances (three percent (3%) recommended) between theoretical hold and actual hold shall be investigated and resolved by a department independent of the gaming machine department with the findings documented and provided to the Tribal gaming regulatory authority upon request in a timely manner.
(19) Maintenance of the on-line gaming machine monitoring system data files shall be performed by a department independent of the gaming machine department. Alternatively, maintenance may be performed by gaming machine supervisory employees if sufficient documentation is generated and it is randomly verified on a monthly basis by employees independent of the gaming machine department.
(20) Updates to the on-line gaming machine monitoring system to reflect additions, deletions, or movements of gaming machines shall be made at least weekly prior to in-meter readings and the weigh process.
(l) * * *
(4) Reports, where applicable, adequately documenting the procedures required in paragraph (l)(3) of this section shall be generated and retained.
(m) * * *
(6) For each drop period, accounting/auditing employees shall compare the bill-in meter reading to the total bill acceptor drop amount for the period. Discrepancies shall be resolved before the generation/distribution of gaming machine statistical reports.
(7) Follow-up shall be performed for any one machine having an unresolved variance between actual currency drop and bill-in meter reading in excess of an amount that is both more than $25 and at least three percent (3%) of the actual currency drop. The follow-up performed and results of the investigation shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request.
(a)
(2) For each enumerated standard for which the Tribal gaming regulatory authority approves a variance, it shall submit to the Chairman of the NIGC, within thirty (30) days, a detailed report, which shall include the following:
(i) A detailed description of the variance;
(ii) An explanation of how the variance achieves a level of control sufficient to accomplish the purpose of the standard it is to replace; and
(iii) Evidence that the Tribal gaming regulatory authority has approved the variance.
(3) In the event that the Tribal gaming regulatory authority or the Tribe chooses to submit a variance request directly to the Chairman, it may do so without the approval requirement set forth in paragraph (a)(2)(iii) of this section and such request shall be deemed as having been approved by the Tribal gaming regulatory authority.
(b)
(2) Any objection raised by the Chairman shall be in the form of a written explanation based upon the following criteria:
(i) There is no valid explanation of why the gaming operation should have received a variance approval from the Tribal gaming regulatory authority on the enumerated standard; or
(ii) The variance as approved by the Tribal gaming regulatory authority does not provide a level of control sufficient to accomplish the purpose of the standard it is to replace.
(3) If the Chairman fails to object in writing within sixty (60) days after the date of receipt of a complete submission, the variance shall be considered concurred with by the Chairman.
(4) The 60-day deadline may be extended, provided such extension is mutually agreed upon by the Tribal gaming regulatory authority and the Chairman.
(c)
(2) A Tribal gaming regulatory authority may cure the objections raised by the Chairman by:
(i) Rescinding its initial approval of the variance; or
(ii) Rescinding its initial approval, revising the variance, approving it, and re-submitting it to the Chairman.
(3) Upon any re-submission of a variance approval, the Chairman shall have thirty (30) days to concur with or object to the re-submitted variance.
(4) If the Chairman fails to object in writing within thirty (30) days after the date of receipt of the re-submitted variance, the re-submitted variance shall be considered concurred with by the Chairman.
(5) The thirty (30) day deadline may be extended, provided such extension is mutually agreed upon by the Tribal gaming regulatory authority and the Chairman.
(d)
(i) Within thirty (30) days of receiving an objection to a re-submission, the Tribal gaming regulatory authority shall file its notice of appeal.
(ii) Failure to file an appeal within the time provided by this section shall result in a waiver of the opportunity for an appeal.
(iii) An appeal under this section shall specify the reasons why the Tribal gaming regulatory authority believes the Chairman's objections should be reviewed, and shall include supporting documentation, if any.
(iv) The Tribal gaming regulatory authority shall be provided with any comments offered by the Chairman to the Commission on the substance of the appeal by the Tribal gaming regulatory authority and shall be offered the opportunity to respond to any such comments.
(v) Within thirty (30) days after receipt of the appeal, the Commission shall render a decision based upon the criteria contained within paragraph (b)(2) of this section unless the Tribal gaming regulatory authority elects to wave the thirty (30) day requirement and to provide the Commission additional time, not to exceed an additional thirty (30) days, to render a decision.
(vi) In the absence of a decision within the time provided, the Tribal gaming regulatory authority's resubmission shall be considered concurred with by the Commission and become effective.
(2) The Tribal gaming regulatory authority may appeal the Chairman's objection to the approval of a variance to the full Commission without resubmitting the variance by filling a notice of appeal with the full Commission within thirty (30) days of the Chairman's objection and complying with the procedures described in paragraph (d)(1) of this section.
(e)
(t)
(2) For computerized key security systems, the following additional gaming machine key control procedures apply:
(i) Management personnel independent of the gaming machine department assign and control user access to keys in the computerized key security system (
(ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the gaming machine drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(iii) The custody of the keys issued pursuant to paragraph (t)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return.
(iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the gaming machine drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(3) For computerized key security systems controlling access to gaming machine drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures:
(i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system (
(ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual gaming machine drop and count key removals or key returns occurred.
(iii) At least quarterly, review a sample of users that are assigned access to the gaming machine drop and count keys to determine that their access to the assigned keys is adequate relative to their job position.
(iv) All noted improper transactions or unusual occurrences are investigated with the results documented.
(4) Quarterly, an inventory of all count room, drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigation being documented.
(u)
(2) For computerized key security systems, the following additional table game key control procedures apply:
(i) Management personnel independent of the table game department assign and control user access to keys in the computerized key security system (
(ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the table game drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(iii) The custody of the keys issued pursuant to paragraph (u)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return.
(iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the table games drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(3) For computerized key security systems controlling access to table games drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures:
(i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system (
(ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual table games drop and count key removals or key returns occurred.
(iii) At least quarterly, review a sample of users that are assigned access to the table games drop and count keys to determine that their access to the assigned keys is adequate relative to their job position.
(iv) All noted improper transactions or unusual occurrences are investigated with the results documented.
(4) Quarterly, an inventory of all count room, table game drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigations being documented.
(v)
(w)
(2) A person independent of the cage, vault, gaming machine, and count team functions shall be required to be present whenever the calibration module is accessed. Such access shall be documented and maintained.
(3) If a weigh scale interface is used, it shall be adequately restricted so as to prevent unauthorized access (passwords, keys, etc.).
(4) If the weigh scale has a zero adjustment mechanism, it shall be physically limited to minor adjustments (
(5) The weigh scale and weigh scale interface (if applicable) shall be tested by a person or persons independent of the cage, vault, and gaming machine departments and count team at least quarterly. At least annually, this test shall be performed by internal audit in accordance with the internal audit standards. The result of these tests shall be documented and signed by the person or persons performing the test.
(6) Prior to the gaming machine count, at least two employees shall verify the accuracy of the weigh scale with varying weights or with varying amounts of previously counted coin for each denomination to ensure the scale is properly calibrated (varying weights/coin from drop to drop is acceptable).
(7) If a mechanical coin counter is used (instead of a weigh scale), the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply, with procedures that are equivalent to those described in paragraphs (u)(4), (u)(5), and (u)(6) of this section.
(8) If a coin meter count machine is used, the count team member shall record the machine number denomination and number of coins in ink on a source document, unless the meter machine automatically records such information.
(i) A count team member shall test the coin meter count machine prior to the actual count to ascertain if the metering device is functioning properly with a predetermined number of coins for each denomination.
(ii) [Reserved]
(t)
(2) For computerized key security systems, the following additional gaming machine key control procedures apply:
(i) Management personnel independent of the gaming machine department assign and control user access to keys in the computerized key security system (
(ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the gaming machine drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(iii) The custody of the keys issued pursuant to paragraph (t)(2)(ii) of this section, requires the presence of two persons from separate departments from the time of their issuance until the time of their return.
(iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the gaming machine drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(3) For computerized key security systems controlling access to gaming machine drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures:
(i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system (
(ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual gaming machine drop and count key removals or key returns occurred.
(iii) At least quarterly, review a sample of users that are assigned access to the gaming machine drop and count keys to determine that their access to the assigned keys is adequate relative to their job position.
(iv) All noted improper transactions or unusual occurrences are investigated with the results documented.
(4) Quarterly, an inventory of all count room, drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigation being documented.
(u)
(2) For computerized key security systems, the following additional table game key control procedures apply:
(i) Management personnel independent of the table game department assign and control user access to keys in the computerized key security system (
(ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the table game drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(iii) The custody of the keys issued pursuant to paragraph (u)(2)(ii) of this section, requires the presence of two persons from separate departments from the time of their issuance until the time of their return.
(iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the table games drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(3) For computerized key security systems controlling access to table games drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures:
(i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system (
(ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual table games drop and count key removals or key returns occurred.
(iii) At least quarterly, review a sample of users that are assigned access to the table games drop and count keys to determine that their access to the assigned keys is adequate relative to their job position.
(iv) All noted improper transactions or unusual occurrences are investigated with the results documented.
(4) Quarterly, an inventory of all count room, table game drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys
(v)
(w)
(2) A person independent of the cage, vault, gaming machine, and count team functions shall be required to be present whenever the calibration module is accessed. Such access shall be documented and maintained.
(3) If a weigh scale interface is used, it shall be adequately restricted so as to prevent unauthorized access (passwords, keys, etc.).
(4) If the weigh scale has a zero adjustment mechanism, it shall be physically limited to minor adjustments (
(5) The weigh scale and weigh scale interface (if applicable) shall be tested by a person or persons independent of the cage, vault, and gaming machine departments and count team at least quarterly. At least annually, this test shall be performed by internal audit in accordance with the internal audit standards. The result of these tests shall be documented and signed by the person or persons performing the test.
(6) Prior to the gaming machine count, at least two employees shall verify the accuracy of the weigh scale with varying weights or with varying amounts of previously counted coin for each denomination to ensure the scale is properly calibrated (varying weights/coin from drop to drop is acceptable).
(7) If a mechanical coin counter is used (instead of a weigh scale), the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply, with procedures that are equivalent to those described in paragraphs (u)(4), (u)(5), and (u)(6) of this section.
(8) If a coin meter count machine is used, the count team member shall record the machine number denomination and number of coins in ink on a source document, unless the meter machine automatically records such information.
(i) A count team member shall test the coin meter count machine prior to the actual count to ascertain if the metering device is functioning properly with a predetermined number of coins for each denomination.
(ii) [Reserved]
(t)
(2) For computerized key security systems, the following additional gaming machine key control procedures apply:
(i) Management personnel independent of the gaming machine department assign and control user access to keys in the computerized key security system (
(ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the gaming machine drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(iii) The custody of the keys issued pursuant to paragraph (t)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return.
(iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the gaming machine drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(3) For computerized key security systems controlling access to gaming machine drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures:
(i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system (
(ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual gaming machine drop and count key removals or key returns occurred.
(iii) At least quarterly, review a sample of users that are assigned access to the gaming machine drop and count keys to determine that their access to the assigned keys is adequate relative to their job position.
(iv) All noted improper transactions or unusual occurrences are investigated with the results documented.
(4) Quarterly, an inventory of all count room, drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigation being documented.
(u)
(2) For computerized key security systems, the following additional table game key control procedures apply:
(i) Management personnel independent of the table game department assign and control user
(ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the table game drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(iii) The custody of the keys issued pursuant to paragraph (u)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return.
(iv) Routine physical maintenance that requires accessing the emergency manual key(s) override key) and does not involve the accessing of the table games drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s).
(3) For computerized key security systems controlling access to table games drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures:
(i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system (
(ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual table games drop and count key removals or key returns occurred.
(iii) At least quarterly, review a sample of users that are assigned access to the table games drop and count keys to determine that their access to the assigned keys is adequate relative to their job position.
(iv) All noted improper transactions or unusual occurrences are investigated with the results documented.
(4) Quarterly, an inventory of all count room, table game drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigations being documented.
(v)
(w)
(2) A person independent of the cage, vault, gaming machine, and count team functions shall be required to be present whenever the calibration module is accessed. Such access shall be documented and maintained.
(3) If a weigh scale interface is used, it shall be adequately restricted so as to prevent unauthorized access (passwords, keys, etc.).
(4) If the weigh scale has a zero adjustment mechanism, it shall be physically limited to minor adjustments (
(5) The weigh scale and weigh scale interface (if applicable) shall be tested by a person or persons independent of the cage, vault, and gaming machine departments and count team at least quarterly. At least annually, this test shall be performed by internal audit in accordance with the internal audit standards. The result of these tests shall be documented and signed by the person or persons performing the test.
(6) Prior to the gaming machine count, at least two employees shall verify the accuracy of the weigh scale with varying weights or with varying amounts of previously counted coin for each denomination to ensure the scale is properly calibrated (varying weights/coin from drop to drop is acceptable).
(7) If a mechanical coin counter is used (instead of a weigh scale), the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply, with procedures that are equivalent to those described in paragraphs (u)(4), (u)(5), and (u)(6) of this section.
(8) If a coin meter count machine is used, the count team member shall record the machine number denomination and number of coins in ink on a source document, unless the meter machine automatically records such information.
(i) A count team member shall test the coin meter count machine prior to the actual count to ascertain if the metering device is functioning properly with a predetermined number of coins for each denomination.
(ii) [Reserved]
Department of Veterans Affairs.
Final rule.
This document amends the Department of Veterans Affairs (VA) adjudication regulations regarding the presumption of soundness of a veteran by adding a requirement that, in order to rebut the presumption of soundness of a veteran on entrance into active service, VA must prove not only that the condition existed prior to entrance into active service, but also that it was not aggravated by the veteran's active service. This amendment reflects a change in VA's interpretation of the statute governing the presumption of sound condition, and is based on a recent opinion of VA's General Counsel as well as a recent decision of the United States Court of Appeals for the Federal Circuit. The intended effect of this amendment is to require that VA, not the claimant, prove that the disability preexisted entrance into military service and that the disability was not aggravated by such service before the presumption of soundness on entrance onto active duty is overcome.
David Barrans, Attorney, Office of General Counsel (022), Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, telephone (202) 273-6315.
VA is amending its adjudication regulations at 38 CFR 3.304(b) to reflect a change in the interpretation of the statute governing the presumption of sound condition.
Section 1111 of title 38, United States Code, provides that veterans are presumed to have been in sound condition when they were examined, accepted, and enrolled for service, except as to conditions that were noted at the time, or “where clear and unmistakable evidence demonstrates that the injury or disease existed before acceptance and enrollment and was not aggravated by such service.” Section 1153 of title 38, United States Code, states that “[a] preexisting disease will be considered to have been aggravated by active military, naval, or air service, where there is an increase in disability during such service, unless there is a specific finding that the increase in disability is due to the natural progress of the disease.”
VA's regulation implementing the presumption of sound condition, 38 CFR 3.304(b), historically has stated that the presumption may be rebutted by clear and unmistakable evidence that a condition existed prior to service. Although this appears to ignore the last seven words of 38 U.S.C. 1111 (“and was not aggravated by such service”), VA historically has interpreted those seven words to relate to the presumption of aggravation under 38 U.S.C. 1153. Accordingly, VA's regulation implementing the presumption of aggravation under 38 U.S.C. 1153 also implements the last seven words of section 1111, as VA previously construed those words. That regulation, 38 CFR 3.306(b), states that, when a preexisting disability increased in severity during service, the presumption of aggravation may be rebutted only by clear and unmistakable evidence that the increase was due to the natural progress of the disease. The regulation further states that aggravation will not be conceded when a preexisting disability underwent no increase in severity during service.
Under VA's current regulations, if a condition was not noted at entry but is shown by clear and unmistakable evidence to have existed prior to entry, the burden then shifts to the claimant to show that the condition increased in severity during service. Only if the claimant satisfies this burden will VA incur the burden of refuting aggravation by clear and unmistakable evidence.
VA is revising its interpretation of section 1111 to provide that, if a condition is not noted at entry into service, the presumption of sound condition can be rebutted only if clear and unmistakable evidence shows both that the condition existed prior to service and that the condition was not aggravated by service. Under this interpretation, the burden does not shift to the claimant to establish that a preexisting condition increased in severity during service. Rather, VA alone bears the burden of proving both that the condition existed prior to service and that it was not aggravated by service. If the evidence fails to support either of those findings, the presumption of sound condition is not rebutted.
Our revised interpretation of section 1111 is based on the extensive analysis of the history of that statute stated in a precedent opinion of VA's General Counsel, VAOPGCPREC 3-2003, and the Federal Circuit's opinion in
VA has previously refrained from adopting a strictly literal interpretation of section 1111, because such a literal reading compels results that have been described as “illogical” by the General Counsel, “self-contradictory” by the Federal Circuit, and possibly “absurd” by the United States Court of Appeals for Veterans Claims.
Despite these concerns, VA's General Counsel and the Federal Circuit have concluded that the legislative history of section 1111 strongly suggests that Congress intended what the language of the statute literally requires. The General Counsel also concluded that, although the statute's requirements seemed counterintuitive, they were not so bizarre that Congress could not have intended them.
The rebuttal standard in what is now section 1111 originated in the Act of July 13, 1943, ch. 233, § 9(b), 57 Stat. 554, 556 (Pub. L. 78-144), as an amendment to Veterans' Regulation No. 1(a), part I, para. I(b) (Exec. Ord. No. 6,156) (June 6, 1933). Prior to the amendment, paragraph I(b) stated that the presumption of soundness could be rebutted “where evidence or medical judgment is such as to warrant a finding that the injury or disease existed prior to acceptance and enrollment.” In 1943, a bill was introduced in the House to make the presumption of soundness irrebuttable (
A Senate Committee Report concerning the 1943 statute stated that “[t]he language added by the committee, ‘and was not aggravated by such active military or naval service’ is to make
The provisions of this section shall not apply * * * to persons as to whom clear and unmistakable evidence discloses that the disease, injury, or disability had inception before or after the period of active military or naval service, unless such disease, injury, or disability is shown to have been aggravated during service * * * and as to all such cases enumerated in this proviso, all reasonable doubts shall be resolved in favor of the veteran, the burden of proof being on the Government.
Based on the foregoing authorities, VA is revising its regulations at 38 CFR 3.304(b) to provide that, in order to rebut the presumption of sound condition, VA must establish by clear and convincing evidence both that the disability existed prior to service and that it was not aggravated by service. To accomplish this, VA is amending § 3.304(b) by adding, at the end of the first sentence, “and was not aggravated by such service.”
The effect of this new interpretation is to establish different standards to govern for disabilities that were noted at entry into service and those that were not. If a disability was not noted at entry into service, VA will apply the presumption of sound condition under 38 U.S.C. 1111. If VA fails to establish either that the disability existed prior to service or that it was not aggravated by service, the presumption of sound condition will govern and the disability will be considered to have been incurred in service if all other requirements for service connection are established. In such cases, the presumption of aggravation in 38 U.S.C. 1153 will not apply because VA will presume that the veteran entered service in sound condition. On the other hand, if a condition was noted at entry into service, VA will consider the claim with respect to the presumption of aggravation in section 1153.
This final rule is an interpretative rule explaining how VA construes 38 U.S.C. 1111, and it merely reflects the holding in the Federal Circuit's decision in
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before developing any rule that may result in an expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any given year. This rule would have no such effect on State, local, or tribal governments, or the private sector.
The Secretary hereby certifies that this regulatory amendment will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. Only VA beneficiaries could be directly affected. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.
This document contains no provisions constituting a collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).
The Catalog of Federal Domestic Assistance program numbers are 64.102, 64.109 and 64.110.
Administrative practice and procedure, Claims, Health care, Individuals with disabilities, Pensions, Veterans.
38 U.S.C. 501(a), unless otherwise noted.
Environmental Protection Agency (EPA).
Final rule.
The EPA is approving as a revision to Michigan's Clean Air Act State Implementation Plan (SIP) prepared by Michigan that will limit the emissions of oxides of nitrogen (NO
This rule is effective June 3, 2005.
EPA has established a docket for this action under Regional Material in EDocket (RME) ID No. R05-OAR-2004-MI-0002. All documents in the docket are listed in the index. Although listed in the index, some information is not publicly available, i.e., consolidated business information (CBI) or other information where disclosure is restricted by statute. Publicly available docket materials are available in hard copy at the following address: United States Environmental Protection Agency, Region 5, Air and Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois 60604. The Docket Facility is open during normal business hours, Monday through Friday, excluding legal holidays. We recommend that you telephone Douglas Aburano at (312) 353-6960, before visiting the Region 5 office.
Douglas Aburano, Environmental Engineer, Criteria Pollutant Section, Air Programs Branch, United States Environmental Protection Agency, Region 5, Mailcode AR-18J, 77 West Jackson Boulevard, Chicago, Illinois 60604. Telephone: (312) 353-6960. E-mail address:
This supplemental information section is organized as follows:
This action applies to large stationary sources of NO
EPA is approving the NO
Specifically, we are approving Michigan's revision of the ozone SIP that responds to EPA's Phase I NO
By this action, we are also vacating our April 16, 2004 (69 FR 20548) conditional approval of Michigan's earlier NO
The SIP revision submitted by the MDEQ on August 5, 2004, consists of Michigan Rules 802 through 817. MDEQ has requested that we approve all of these rules in the SIP to satisfy the requirements of EPA's Phase I NO
We concluded in our April 16, 2004, direct final conditional approval at 69 FR 20548 that the April 3, 2003, SIP revision was approvable except for a number of minor deficiencies. Therefore, EPA conditionally approved the submittal. On May 27, 2004, MDEQ submitted for approval as a SIP revision a package that addressed all of the issues raised in EPA's April 16, 2004, conditional approval. On December 23, 2004, we published a direct final action approving the corrections submitted by MDEQ on May 27, 2004. Because EPA received adverse comments during the public comment period, we were required to withdraw the December 23, 2004, direct final rulemaking and address those comments in today's rulemaking.
We received four adverse comments on our December 23, 2004, approval of Michigan's August 5, 2004, SIP revision. Although the comments do not specifically address the actual action taken in the SIP revision, they are “adverse” to the SIP action in that the commenters generally disagree with the action we took on December 23, 2004. Because all of the comments expressed the same general concerns in a similar language, we have summarized them below as one comment.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget.
For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001).
This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).
This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
This action also does not have Federalism implications because it does not have substantial direct effects 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act.
This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTA), 15 U.S.C. 272, requires federal agencies to use technical standards that are developed or adopted by voluntary consensus to carry our policy objectives, so long as such standards are not inconsistent with applicable law or otherwise impracticable. In reviewing program submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Act. Absent a prior existing requirement for the state to use voluntary consensus standards, EPA has no authority to disapprove a program submission for failure to use such standards, and it would thus be inconsistent with applicable law for EPA to use voluntary consensus standards in place of a program submission that otherwise satisfies the provisions of the Act. Therefore, the requirements of section 12(d) of the NTTA do not apply.
As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct.
EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order, and has determined that the rule's requirements do not constitute a taking.
This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, EPA promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 5, 2005. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Ozone, Nitrogen dioxide, Reporting and recordkeeping requirements.
42 U.S.C. 7401 et seq.
(c) * * *
(121) On April 3, 2003, the Michigan Department of Environmental Quality (MDEQ) submitted regulations restricting emissions of oxides of nitrogen (NO
(i)
(A) R336.1802 Applicability under oxides of nitrogen budget trading program, effective May 20, 2004.
(B) R336.1803 Definitions for oxides of nitrogen budget trading program, effective December 4, 2002.
(C) R336.1804 Retired unit exemption from oxides of nitrogen budget trading program, effective May 20, 2004.
(D) R336.1805 Standard requirements of oxides of nitrogen budget trading program, effective December 4, 2002.
(E) R336.1806 Computation of time under oxides of nitrogen budget trading program, effective December 4, 2002.
(F) R336.1807 Authorized account representative under oxides of nitrogen budget trading program, effective December 4, 2002.
(G) R336.1808 Permit requirements under oxides of nitrogen budget trading program, effective December 4, 2002.
(H) R336.1809 Compliance certification under oxides of nitrogen budget trading program, effective December 4, 2002.
(I) R336.1810 Allowance allocations under oxides of nitrogen budget trading program, effective December 4, 2002.
(J) R336.1811 New source set-aside under oxides of nitrogen budget trading program, effective May 20, 2004.
(K) R336.1812 Allowance tracking system and transfers under oxides of nitrogen budget trading program, effective December 4, 2002.
(L) R336.1813 Monitoring and reporting requirements under oxides of nitrogen budget trading, effective December 4, 2002.
(M) R336.1814 Individual opt-ins under oxides of nitrogen budget trading program, effective December 4, 2002.
(N) R336.1815 Allowance banking under oxides of nitrogen budget trading program, effective December 4, 2002.
(O) R336.1816 Compliance supplement pool under oxides of nitrogen budget trading program, effective December 4, 2002.
(P) R336.1817 Emission limitations and restrictions for Portland cement kilns, effective December 4, 2002.
3. Section 52.1218 is removed.
Federal Communications Commission.
Final rule.
This document modifies the Commission's rules to reflect ongoing technical developments in cognitive radio technologies. In light of the Commission's experience with these rules, the Commission is modifying and clarifying the equipment rules to further facilitate the development and deployment of software defined and cognitive radios. These actions are taken to facilitate opportunities for flexible, efficient, and reliable spectrum use by radio equipment employing cognitive radio technologies and enable a full realization of their potential benefits.
Effective August 2, 2005.
Hugh Van Tuyl, Office of Engineering and Technology, (202) 418-7506, e-mail:
This is a summary of the Commission's Report and Order, ET Docket No. 03-108, FCC 05-57, adopted March 10, 2005 and released March 11, 2005. The full text of this document is available on the Commission's Internet site at
1. An accelerating trend in radio technologies has been the use of software in radios to define their transmission characteristics. The incorporation of cognitive radio technologies to allow the more efficient use of spectrum is also becoming increasingly common. As demonstrated in this and earlier proceedings, this Commission has a continuing commitment to recognize these important new technologies and make any necessary changes to its rules and processes to facilitate their development in the public interest.
2. Over the past several years, manufacturers have increased the computer processing capabilities of radio system technologies. As a result, radio systems are increasingly incorporating software into their operating design. Incorporating software programming capabilities into radios can make basic functions easier to implement and more flexible. As the capabilities have advanced, radio systems have been gaining increased abilities to be “cognitive”—to adapt their behavior based on external factors. This “ability to adapt” is opening up a vast potential for more flexible and intensive use of spectrum.
3. On December 17, 2003, we adopted a
4. The development of cognitive radio technology has been and will continue to be evolutionary in nature. As the technology evolves, our intent is to delete, change, or adopt rules in phases so as to ensure that our rules facilitate the market-based development and deployment of these technologies. In this
5. To facilitate the market-based development and introduction of new technologies into the market, we addressed certain issues in the
6. The
7. The efforts being undertaken by industry, often working with governmental agencies, standards bodies, and others to research, develop, and implement various software-defined radio and cognitive radio capabilities have been striking. These accomplishments were made possible through various advanced radio technologies such as those of the Department of Defense Joint Tactical Radio System (JTRS) in development of a common software architecture and the first actual software defined radios. Industry, working in conjunction with the military, is also taking a lead in developing and implementing new technologies and is serving as the impetus for further technical developments that should spur the commercial deployment of SDRs and cognitive radios. In addition, efforts are underway within industry forums and standards organizations to adopt internationally accepted standards for software defined radios and cognitive radios. These efforts and the resultant technical developments undoubtedly will lead to even greater flexibility in the future, with some touting the ultimate adoption of radios incorporating a cognition cycle as the foundation for a fully flexible cognitive radio.
8. The advent of cognitive radios and associated technologies has the potential to initiate a new era in radio frequency spectrum utilization. With radios that are able to recognize spectrum availability and able to negotiate protocols for rapid reconfiguration, these radios will employ software defined radio technologies to change their operational characteristics and open new opportunities for spectrum use. As highlighted in our NPRM, applications such as dynamic spectrum sharing, interruptible spectrum sharing, and rapidly reconfigurable secondary markets in spectrum use will be attainable with cognitive radios.
9. In this section, we are making certain changes to our current rules and clarifying them in other respects. First we are modifying the definition of software defined radio to include radios that employ software that determines not just the operating parameters, but also the circumstances under which the radio transmits pursuant to those parameters. We clarify that equipment that is designed or expected to be modified by a party other than the manufacturer must be certified as software defined radios and comply with security requirements to prevent unauthorized modifications to the radio frequency operating parameters. We also clarify the security requirements that such equipment must meet.
10. In addition to these changes, we make several other changes to the authorization requirements for software defined radios. We find that the specific rule that requires manufacturers to supply a copy of their radio software (source code) to the Commission upon request is unnecessary because such software is generally not useful for certification review and may have become an unnecessary barrier to entry. In addition, the Commission already has authority to request to request and examine any component (whether software or hardware) of a radio system when needed for certification under Commission rules. We therefore delete this requirement as discussed below. Further, we clearly define the information about the radio software that must be submitted with applications for software defined radios. Additionally, we allow certification of certain part 15 unlicensed transmitters that have the technical capability of operating outside part 15 frequency bands, provided the equipment incorporates features to limit operation to authorized frequencies when used in the United States.
11. To reflect new kinds of conditions sometimes being included in our certification rules, we are broadening the definition of software defined radio to include devices where a software change could change not only the operating parameters of frequency range, modulation type or maximum output power, but also the circumstances under which a transmitter operates in accordance with Commission rules. For example, to make available otherwise unusable spectrum, we have required that certain radio transmitters include a DFS algorithm that further conditions use of spectrum beyond frequency range, modulation type, and maximum output. We are also changing the rules to require certain equipment to comply with the rules for software defined radios, including the requirement to incorporate security features to prevent unauthorized modifications to the software that controls the RF operating parameters. Specifically, we are requiring equipment in which the software that controls the radio frequency operating parameters is designed or expected to be modified by a party other than the manufacturer to comply with the rules for software defined radios. Because this change is limited to radios that contain RF affecting software that is third party modifiable, we believe that this change will affect only a small subset of equipment available in the marketplace today. We are making no change to the authorization requirements for the vast majority of devices such as cellular/PCS telephones, Wi-Fi equipment and two-way radios where the software that
12. We have modified our definition of software defined radio because, under recent rules, certain software changes that do not directly affect the technical operating parameters affect whether the device can be certified under our rules. The direct effects are addressed in the current definition of a software defined radio: frequency range, modulation type or maximum output power (either radiated or conducted). Our rules, however, now sometimes require additional radio functions such as DFS to prevent interference to other users. Even though these functions are being implemented and controlled by software in a radio, they do not currently fall within the definition of a software defined radio.
13. We are changing the definition of software defined radio to address software changes that directly or indirectly affect the compliance of a device with the Commission's rules. The modified definition will read as follows.
14. We are also changing the applicability of our rules to address software defined radios with relevant software that is designed or expected to be modified by a party other than the manufacturer. If a radio is not certified as a software defined radio, a manufacturer is not required to demonstrate in the equipment certification process that it incorporates features designed to prevent unauthorized changes to the software that would permit violation of Commission rules the equipment's certification, thus increasing the risk of interference to authorized radio services. We find that such a showing is in the public interest when a radio's RF-affecting software is designed or expected to be modified by a third party other than the manufacturer. In addition to minimizing the potential for unauthorized modifications to software defined radios, these changes will benefit manufacturers by allowing them to take advantage of the streamlined Class III permissive change procedure when they develop revised software that affects the RF operating parameters of the radio.
15. We find that the rules we are adopting that require the certification of certain radios as software defined radios will not be unduly burdensome on manufacturers or restrain the development of technology. Only a relatively small number of radios will be affected by this requirement because most RF affecting radio software is not designed or expected to be modified by a party other than the manufacturer, and we are not changing the rules for radios that are not designed or expected to be modified by a party other than the manufacturer. Thus, there will be no change to the authorization requirement for the vast majority of devices including cellular/PCS telephones, land mobile transceivers and Wi-Fi equipment, provided the software that directly or indirectly controls the RF emissions of these devices is not designed or expected to be modified by a party other than the manufacturer. Also, manufacturers of radios that are software modifiable typically already take steps to prevent unauthorized modifications to the software in a radio, so we expect that only rarely will manufacturers have to make significant design changes to comply with the security requirements. In addition, as discussed below, we are adopting changes to simplify the information that must be submitted with an application for a software defined radio. Finally, we find that the requirements we are adopting are consistent with the Commission's authority under section 302 of the Communications Act to make reasonable regulations, consistent with the public interest, which govern the interference potential of radio frequency devices.
16. We find that the standard we are adopting adequately protects against interference to other users. We disagree with the commenters who argue that only radios that can be remotely modified in large numbers should be required to be certified as software defined radios. We first find this definitional standard to be too difficult to apply. We also note that a radio that lacks security features to prevent unauthorized changes to the RF operating parameters could be easily modifiable to operate in unauthorized bands, and therefore has a high potential to interfere with authorized users in many different bands, including public safety bands. We therefore find that the requirement to certify certain radios as software defined radios should apply to all radios which are software modifiable by the user, not just those which could be remotely modified in large numbers.
17.
18. We are clarifying the requirements in the rules that are intended to prevent unauthorized changes to the operating parameters of software defined radios. The Commission's equipment approval rules currently require that manufacturers take steps to ensure that only software that has been approved with a software defined radio can be loaded into such a radio. The current rule states that the software must not allow the user to operate the transmitter with frequencies, output power, modulation types or other parameters outside of those that were approved. Manufacturers may use authentication codes or any other means to meet these requirements, and must describe the methods in their application for equipment authorization.
19. We find that the current approach that manufacturers take steps to prevent unauthorized changes to the software in a radio, but does not require the use of specific security measures, is the most appropriate method to ensure the security of software defined radios. This approach allows manufacturers to respond to improvements in security technology more quickly and with the best solutions for a particular product
20. Our security requirements for software defined radios give manufacturers flexibility to determine the appropriate security measures for a device. However, manufacturers also have the responsibility to choose security measures that can not be easily defeated by unintended parties. In the event that a software defined radio is found to be easily modifiable by end users, we would expect the responsible party as defined by our rules to immediately cease marketing the equipment and to take steps to ensure that future production of the equipment complies with the rules. Any potential forfeiture for non-compliance with the software defined radio security requirements would be considered on a case-by-case basis, taking into account all relevant factors, in the same manner as forfeitures are considered for non-compliant hardware-based equipment. In determining whether to issue any forfeiture penalties for a non-compliant device, the Commission takes into account the nature, circumstances, extent and gravity of the violations and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as may be relevant and appropriate. The Commission has specific guidelines for assessing forfeitures, but may issue higher or lower forfeitures than provided in the guidelines, issue no forfeiture at all, or apply alternative or additional sanctions as permitted by statute.
21. We decline to establish specific limitations on the responsible party's liability for a device that incorporates specific type(s) of security measures in the event that it is later determined that unauthorized modifications can be easily made to the radio frequency operating parameters of the device. The responsible party's liability for a non-compliant device is most appropriately determined on a case-by-case basis. Further, we agree with Intel that such an approach could be counterproductive because manufacturers would tend to design equipment to incorporate specific security features and may have little incentive to design equipment with robust security features, especially where more secure features add cost to a device. However, the Commission may consider compliance with industry security standards as a factor in determining the responsible party's liability.
22. We are simplifying the structure of the rules for software defined radios by moving the security requirements for software defined radios from § 2.932(e) into § 2.944. Section 2.944 currently contains a requirement for parties to submit a copy of radio software to the Commission upon request. We are changing that requirement as well as the applicability of the security requirements for software defined radios. We are placing the requirements for software defined radios into a single rule section, § 2.944, for easier reference. We are also modifying § 2.1033, which lists the information to be included in an application for certification, to make clear that an application for certification of a software defined radio must include the information specified in the revised § 2.944.
23. As part of the revisions to § 2.944, we are providing specific examples of the types of security measures that the Commission may consider to be acceptable for preventing unauthorized modifications to equipment. These examples are intended only to provide guidance to industry, and the use of one or more of these methods in a particular device should not be construed to limit a manufacturer's liability or responsibility to take appropriate corrective action in the event that parties other than the manufacturer are able to make unauthorized modifications to a device. This section will state that manufacturers may use any reasonable means to prevent impermissible modifications to the radio software including, but not limited to, the following and must describe the method(s) used for a particular device in the application for certification:
• The use of a private network that allows only authenticated users to download software.
• Coding in hardware that is decoded by software to verify that new software can be legally loaded into a device.
• Electronic signatures in software.
24. In the
25. We are removing the requirement that an applicant for authorization of a software defined radio or the grantee or other party responsible for the compliance of a software defined radio submit a copy of the software that controls the radio frequency operating parameters upon request. We find that a copy of software source code is generally not be a useful aid in determining whether unauthorized changes have been made to the operating parameters of a device because software changes that have no effect on these parameters are frequently made by manufacturers. We also are concerned that this specific rule may be overly burdensome because we have observed that some equipment that could be authorized under the rules for software defined radios is not being authorized under these rules. The fact that the software in a device being marketed may differ somewhat from software previously supplied to the Commission would not necessarily indicate that any unauthorized changes have been made to a device's RF affecting operating parameters. In the event that questions arise about the compliance of a particular device, the
26. We are adopting a requirement to submit a high level software operational description or flow diagram. The requirement we are adopting is analogous to the requirements in the rules that were developed for hardware based equipment that require applicants for equipment certification to supply a block diagram, schematic diagram and a brief description of the circuit functions of a device, along with a statement describing how the device operates. In this regard, the software operational description or flow diagram must describe or show how the RF functions in the radio, including the modulation type, operating frequency and power level are controlled or modified by software, and must describe the security or authentication methods that are incorporated to prevent unauthorized software changes. The description can include text, logic or flow diagrams, state descriptions or other material that provides the Commission's staff with a reasonable understanding of the operation of a device being certified and whether the device complies with the rules. The Commission's staff will work with applicants for certification to ensure that these requirements are clear and will issue appropriate additional guidance as necessary.
27. We agree with comments that information on how software within a software defined radio operates would be company proprietary information and that making this information publicly available would result in competitive harm to a manufacturer. Further, we find that information on the security methods that manufacturers employ to prevent unauthorized modifications to the RF operating parameters of a device would be considered company proprietary information. Additionally, making information on security measures publicly available could assist unauthorized parties in determining ways to defeat them. We also conclude that, if we were to make information on software defined radio operation and security measures generally available to the public, entities seeking equipment certification may not provide sufficient information for the Commission to determine whether the device at issue would operate in compliance with our rules. Accordingly, we will modify § 0.457(d) of the rules to state that the descriptions of the security features and software operation for a software defined radio are presumptively protected from public disclosure and will not routinely be made available for public inspection. This presumptive protection will apply only to the descriptions of the security features and software operation for a software defined radio and not to any other exhibits in the application for certification which will normally be made available for public inspection after grant of the application. An applicant for certification of a software defined radio must file a specific request and pay the appropriate filing fee to have other exhibits in the application held confidential, assuming the exhibits are eligible for confidential treatment. To avoid possible delays in processing applications, applicants should ensure that exhibits for which confidential treatment is automatically afforded or for which it is requested are clearly identified and that these exhibits do not contain information that is not eligible for such treatment.
28. We decline to allow TCBs to certify software defined radios at this time. The changes that we are adopting to automatically afford confidential treatment to the description of software and security features in software defined radio applications address the confidentiality concerns of parties who requested that TCBs be allowed to certify software defined radios to protect this information from public disclosure. Additionally, as the Commission has previously stated, because software defined radio is a new technology, TCBs will not be permitted to certify software defined radios until the Commission has more experience with them and can properly advise TCBs on how to apply the applicable rules. The Commission's Laboratory maintains a list of types of devices, including software defined radios, that TCBs are excluded from certifying. The Laboratory will remove software defined radios from this exclusion list when it determines that TCBs are capable of certifying them.
29. We are changing part 15 of the rules to allow certification of unlicensed transmitters that are capable of operation outside of permissible part 15 frequency bands, provided the transmitters incorporate an automatic frequency selection mechanism to ensure that they operate only on frequencies where unlicensed operation is permitted when operated in the United States.
30. We will allow certification of part 15 devices that operate outside permissible frequency bands using a master/client model. The terms “master” and “client” were defined in the U-NII proceeding for U-NII devices. We will define these terms for other types of part 15 devices consistent with the U-NII definitions. That is, a master device will be defined as a device operating in a mode in which it has the capability to transmit without receiving an enabling signal. In this mode it is able to select a channel and initiate a network by sending enabling signals to other devices. A network always has at least one device operating in master mode. A client device will be defined as a device operating in a mode in which the transmissions of the device are under control of the master. A device in client mode is not able to initiate a network. We, of course, require master devices marketed within the United States to operate only in permissible part 15 frequency bands, which will ensure that they enable operation of client devices only within permissible part 15 frequency bands. Manufacturers that wish to market master devices that are hardware-capable of operating outside of permissible part 15 frequency bands for use in other countries, but use software to limit their operation to permissible part 15 frequency bands, must incorporate security features into them to limit the operating frequency range for devices marketed in the United States and must certify the devices as software defined radios. Different software can then be installed in master devices that are used outside of the United States to change the operating frequency range for use in other countries. Client devices that can also act as master devices must meet the certification requirements of a master device, and thus must be certified as software defined radios if the manufacturer wishes to incorporate additional frequency bands for use in other countries.
31. We will allow the certification of client devices such as wireless LAN cards used in desktop or notebook computers if they have the capability of operating outside permissible part 15 frequency bands. Client devices may transmit only under the control of a master device. Because master devices are limited to operation on permissible
32. The changes we have adopted will benefit manufacturers by allowing production of devices that can be used in multiple countries, thus reducing equipment costs. At the same time, the requirement to limit the frequency range of master devices sold in the United States will minimize the likelihood that devices will operate outside permissible frequency bands and cause interference to authorized services.
33. In this section, we are describing the technical methods that a cognitive radio could use to enable interruptible secondary use of licensed spectrum by other parties. The concepts in this section would apply to lessors who want a high level assurance of reclaiming leased spectrum when they need it. We find that there are technologies available now or under development that could safely allow for interruptible spectrum leasing. We find that cognitive radio technologies, or even trunked radio technologies, would allow implementation of the following general principles that interested parties state would be essential to enable interruptible leased use of spectrum:
1. The licensee must have positive control as to when the lessee can access the spectrum.
2. The licensee must have positive control to terminate the use of the spectrum by the lessee so it can revert back to the licensee's use.
3. Reversion must occur immediately upon action by the licensee unless that licensee has made specific provisions for a slower reversion time.
4. The equipment used by the licensee and the lessee must perform access and reversion functions with an extremely high degree of reliability.
5. The equipment used by the licensee and the lessee must incorporate security features to prevent inadvertent misuse of, and to thwart malicious misuse of, the licensee's spectrum.
34. There are at least three different technical approaches that currently exist or are under development that a licensee could employ that would comply with the intent of these principles and enable interruptible spectrum leasing. One approach would be for a licensee to allow leasing using an existing trunked system. A trunked system uses a central controller to select the operating frequencies of radios in the system. When a radio is ready to begin transmitting, it sends a request for an operating frequency to a central controller over a control channel. The controller dynamically assigns an operating frequency to that radio and the other radios with which it communicates. Such a centralized system could be used to assign channels to radios operating under the terms of a lease, or de-assign channels when a licensee needs to use the spectrum. This could be done through a wireless control channel as is currently done to assign channels to radios in the system. Alternatively, information about leased channel availability could be provided by the trunked system controller to the lessee's equipment through a wired link.
35. The beacon approach proposed in the
36. A third method that could enable leased use of spectrum is by an exchange of “tokens” sent to the lessee's devices. Token approaches rely on the encrypted exchange of unique information to verify a user's identity when opening and maintaining a secure communications exchange. Tokens would provide a means of ensuring that lessees transmit only on available frequencies when they receive an electronic token authorizing them to do so. These tokens could also enforce terms of a lease such as the specific period of time that transmission on a frequency is allowed, thus providing a licensee with a high level of confidence that lessees will vacate the spectrum when required under the terms of the lease. Such token technology is already in use in other resource allocation problems, such as the enforcement of software license terms and avoiding data transmission conflicts between computers on local area networks.
37. At this point, we see no need to adopt any particular technical model for interruptible spectrum leasing. Ultimately, a licensee must itself be satisfied that the technical mechanism being implemented under a lease does in fact provide it with the ability in real time to reclaim use of its spectrum when necessary.
38. As required by the Regulatory Flexibility Act (RFA),
39. Advances in technology are creating the potential for radio systems to use radio spectrum more intensively and more efficiently than in the past. Software-defined and cognitive, or “smart,” radios are allowing and will increasingly allow more intensive access to, and use of, spectrum than possible with traditional, hardware-based radio systems. In this
40. In the
(1) Eliminates the requirement for applicants and grantees of certification of software defined radios to supply a copy of the software that controls the RF
(2) Requires applicants for certification of software defined radios to supply a high level operational description of the software that controls the radio frequency operating parameters;
(3) Requires that radios in which the software that controls the RF operating parameters is designed or expected to be modified by a party other than the manufacturer to incorporate a means to prevent unauthorized software changes, and requires such radios to be certified as software defined radios;
(4) Allows certification of unlicensed transmitters that have the capability of operating outside permissible part 15 frequency bands, provided the transmitters incorporate a software control to limit operation to permissible part 15 frequency bands when used in the United States.
41. None.
42. The RFA directs agencies to provide a description of, and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted.
43. The SBA has established a small business size standard for radio and television broadcasting and wireless communications equipment manufacturing. Under this standard, firms are considered small if they have 750 or fewer employees.
44. Unlicensed transmitters are required to be certified before they can be imported into or marketed within the United States. The certification process requires the manufacturer or other party responsible for compliance to have the equipment tested and electronically file an application form, measurement report and other information on the equipment with the Commission or a designated Telecommunication Certification Body (TCB). Software defined radios at present may be approved only by the Commission and not by TCBs, although the Commission has stated that it will eventually allow TCBs to approve them. The Report and Order does not change this requirement.
45. Applicants for certification of a software defined radio will be required to supply a high level operational description of the software that controls the radio frequency operating parameters.
46. Manufacturers of radios in which the software that controls the radio frequency operating parameters is designed or expected to be modified by a party other than the manufacturer must incorporate a means to prevent unauthorized software changes that must be described in the application for certification. Such software changeable radios must be declared as software defined radios in the application for certification. Most radios at the present are not software modifiable, and manufacturers of those that are generally already take steps to prevent unauthorized modifications, so we expect that only rarely would manufacturers have to redesign equipment to comply with this requirement.
47. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed 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 or reporting requirements under the rule for 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 small entities.
48. The Commission sought comment in the
49. The Commission simplified the filing requirements for software defined radios to benefit all entities, including
The Commission will send a copy of the Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act,
50. Parts 0, 2, and 15 of the Commission's Rules are amended as specified in rule changes, effective August 2, 2005. This action is taken pursuant to the authority contained in sections 4(i), 301, 302, 303(e), 303(f) and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. sections 154(i), 301, 302, 303(e), 303(f) and 303(r).
51. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of the
Communications equipment, Radio. Report and recordkeeping requirements.
Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155.
(d) * * *
(1) * * *
(ii) Applications for equipment authorizations (type acceptance, type approval, certification, or advance approval of subscription television systems), and materials relating to such applications, are not routinely available for public inspection prior to the effective date of the authorization. The effective date of the authorization will, upon request, be deferred to a date no earlier than that specified by the applicant. Following the effective date of the authorization, the application and related materials (including technical specifications and test measurements) will be made available for inspection upon request (See § 0.460). Portions of applications for equipment certification of scanning receivers and related materials will not be made available for inspection. This information includes that necessary to prevent modification of scanning receivers to receive Cellular Service frequencies, such as schematic diagrams, technical narratives describing equipment operation, and relevant design details. Portions of applications for equipment certification of software defined radios that describe the operation of the device's software and security features will not be made available for inspection.
47 U.S.C. 154, 302a, 303 and 336, unless otherwise noted.
(c) * * *
(a) Manufacturers must take steps to ensure that only software that has been approved with a software defined radio can be loaded into the radio. The software must not allow the user to operate the transmitter with operating frequencies, output power, modulation types or other radio frequency parameters outside those that were approved. Manufacturers may use means including, but not limited to the use of a private network that allows only authenticated users to download software, electronic signatures in software or coding in hardware that is decoded by software to verify that new software can be legally loaded into a device to meet these requirements and must describe the methods in their application for equipment authorization.
(b) Any radio in which the software is designed or expected to be modified by a party other than the manufacturer and would affect the operating parameters of frequency range, modulation type or maximum output power (either radiated or conducted), or the circumstances under which the transmitter operates in accordance with Commission rules, must comply with the requirements in paragraph (a) of this section and must be certified as a software defined radio.
(c) Applications for certification of software defined radios must include a high level operational description or flow diagram of the software that controls the radio frequency operating parameters.
(b) * * *
(12) An application for certification of a software defined radio must include the information required by § 2.944.
(c) * * *
(18) An application for certification of a software defined radio must include the information required by § 2.944.
(b) * * *
(3) A Class III permissive change includes modifications to the software of a software defined radio transmitter that change the frequency range, modulation type or maximum output power (either radiated or conducted) outside the parameters previously approved, or that change the circumstances under which the transmitter operates in accordance with Commission rules. When a Class III permissive change is made, the grantee shall supply the Commission with a description of the changes and test results showing that the equipment complies with the applicable rules with the new software loaded, including compliance with the applicable RF exposure requirements. The modified software shall not be loaded into the equipment, and the equipment shall not be marketed with the modified software under the existing grant of certification, prior to acknowledgement by the Commission that the change is acceptable. Class III changes are permitted only for equipment in which no Class II changes have been made from the originally approved device.
Any software change that degrades spurious and out-of-band emissions previously reported to the Commission at the time of initial certification would be considered a change in frequency or modulation and would require a Class III permissive change or new equipment authorization application.
47 U.S.C. 154, 302, 303, 304, 307, 336, and 544.
Client devices that operate in a master/client network may be certified if they have the capability of operating outside permissible part 15 frequency bands, provided they operate on only permissible part 15 frequencies under the control of the master device with which they communicate. Master devices marketed within the United States must be limited to operation on permissible part 15 frequencies. Client devices that can also act as master devices must meet the requirements of a master device. For the purposes of this section, a master device is defined as a device operating in a mode in which it has the capability to transmit without receiving an enabling signal. In this mode it is able to select a channel and initiate a network by sending enabling signals to other devices. A network always has at least one device operating in master mode. A client device is defined as a device operating in a mode in which the transmissions of the device are under control of the master. A device in client mode is not able to initiate a network.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Inseason adjustments to management measures; announcement of incidental halibut retention allowance; corrections; request for comments.
NMFS announces changes to management measures in the commercial and recreational Pacific Coast groundfish fisheries. NMFS also announces regulations for the retention of Pacific halibut landed incidentally in the limited entry longline primary sablefish fishery north of Pt. Chehalis, WA (46°53.30′ N. lat.). This document also contains notification of a voluntary closed area (also called an “area to be avoided”) off Washington for salmon trollers. These actions, which are authorized by the Pacific Coast Groundfish Fishery Management Plan (FMP), will allow fisheries to access more abundant groundfish stocks while protecting overfished and depleted stocks. This action also corrects the trawl gear regulatory language for chafing gear and selective flatfish trawl gear.
Effective 0001 hours (local time) May 1, 2005, except that the amendments to 50 CFR 660.381 (b)(5)(i) are effective June 3, 2005. Comments on this rule will be accepted through June 3, 2005.
You may submit comments, identified by 042205C, by any of the following methods:
• E-mail: GroundfishInseason2.nwr@noaa.gov. Include I.D. number in the subject line of the message.
• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• Fax: 206-526-6736, Attn: Carrie Nordeen.
• Mail: D. Robert Lohn, Administrator, Northwest Region, NMFS, Attn: Carrie Nordeen, 7600 Sand Point Way NE, Seattle, WA 98115-0070.
Jamie Goen or Carrie Nordeen (Northwest Region, NMFS), phone: 206-526-6140; fax: 206-526-6736; and e-mail:
This
Background information and documents are available at the NMFS Northwest Region website at:
The Pacific Coast Groundfish FMP and its implementing regulations at title 50 in the Code of Federal Regulations (CFR), part 660, subpart G, regulate fishing for over 80 species of groundfish off the coasts of Washington, Oregon, and California. Groundfish specifications and management measures are developed by the Pacific Fishery Management Council (Pacific Council), and are implemented by
The Northern Pacific Halibut Act of 1982 (16 U.S.C. 773-773k) (Halibut Act) and its implementing regulations at 50 CFR part 300, subpart E, regulate fishing for Pacific Halibut in U.S. Convention waters. The Halibut Act also authorizes the Pacific Council to develop regulations governing the Pacific halibut catch in waters off of Washington, Oregon, and California that are in addition to, but not in conflict with, regulations of the International Pacific Halibut Commission (IPHC). Accordingly, the Pacific Council has developed, and NMFS has approved, a catch sharing plan (CSP) to allocate the total allowable catch (TAC) of Pacific halibut between treaty Indian and non-Indian harvesters, and among non-Indian commercial and sport fisheries in IPHC statistical Area 2A (off Washington, Oregon, and California). The CSP, as implemented at 50 CFR part 300, provides for retention of halibut landed incidentally in the limited entry, longline primary sablefish fishery north of Pt. Chehalis, WA (46°53.30′ N. lat.) in years when the Area 2A TAC is above 900,000 lb (408.2 mt). Because the Area 2A TAC is above 900,000 lb (408.2 mt) in 2005, NMFS is establishing an allowance for incidental halibut retention in the primary sablefish fishery in 2005.
The following changes to current groundfish management measures were recommended by the Pacific Council, in consultation with Pacific Coast Treaty Indian Tribes and the States of Washington, Oregon, and California, at its April 3-8, 2005, meeting in Tacoma, WA. The changes recommended by the Pacific Council include: (1) changes to the limited entry trawl trip limits, (2) changes to the trawl RCA for limited entry trawl fisheries and open access non-groundfish trawl fisheries, (3) a clarification to the trawl gear language in 50 CFR 660.381 regarding chafing gear and selective flatfish trawl gear, (4) an incidental catch allowance for halibut in the limited entry primary sablefish fishery north of Pt. Chehalis, WA, (5) a voluntary area closure off Washington for salmon trollers and (6) changes to California′s recreational groundfish fishery seasons and Rockfish Conservation Areas (RCAs). Pacific Coast groundfish landings will be monitored throughout the year, and further adjustments to trip limits or management measures will be made as necessary to allow achievement of, or to avoid exceeding, optimum yields (OYs).
The trawl RCAs and limited entry trawl trip limits for Dover sole, “other flatfish,” petrale sole, English sole, arrowtooth flounder, minor slope rockfish, darkblotched rockfish and splitnose rockfish are adjusted based on updated trawl model projections and current fish ticket landings data from the Pacific Fisheries Information Network database (PacFIN).
The trawl model used to project trawl catch of target groundfish species and bycatch of overfished species was updated by the NMFS Northwest Fisheries Science Center for the April Pacific Council meeting. The trawl model was updated to include new fishticket, logbook and observer data, as well as other minor changes such as separating English sole from “other flatfish” in the trawl model.
Previously, the trawl model had used a weighted average of fishticket data from 2000 through 2003 to document the amount of target species landings for each limited entry trawl vessel participating in the fishery. For the updated model, fishticket data from 2004 replaced the data from 2000. The updated model continues to use a weighted average for 2001 through 2004 data, with greater weight given to more recent year′s data.
Similarly, the trawl model had previously used a weighted average of trawl logbook data from 2000 through 2003 to develop a baseline of each vessel's target catch among depth zones. Where possible, 2004 logbook data replaced data from 2000. However, logbook data are often incomplete early in the year. For the updated trawl model, a large portion of Oregon's 2004 logbook data and California's logbook data from the last six months of 2004 are still not available. Therefore, for periods where data are not complete for 2004, a weighted average from 2001 through 2003 was used in the updated model. As logbook data for 2004 becomes available from Oregon and California, the trawl model will be updated during 2005. Due to the inability to include the 2004 Oregon logbook data, concerns over the effect of higher fuel prices on fleet depth distribution, and possible impacts on canary rockfish, an overfished groundfish species, inseason adjustments were modeled assuming a higher likelihood that vessels will fish shoreward of the trawl rockfish conservation area (RCA) than was modeled in 2004.
New observer data from September 2003 through August 2004 was also used to update the trawl model. NMFS West Coast Groundfish Observer Program (WCGOP) reports are available online:
In addition to updating the trawl model, fishticket landings data from PacFIN for the first cumulative limit period (January through February) in 2005 were reviewed and compared to trawl model projections for 2005. Landings for petrale sole, trawl sablefish, longspine, arrowtooth, and Dover sole were higher than what had been projected for that period in the trawl model, while landings of slope rockfish, including darkblotched rockfish and splitnose rockfish, were substantially below initial model projections. The higher landings of petrale and Dover sole are of particular concern, because access to flatfish stocks are substantially more liberal than in recent years, and these species were initially modeled to achieve their respective OYs. Therefore, flatfish trip limits were reduced in order to slow the catch of flatfish species.
Current slope rockfish landings are tracking slower than projected for 2005; however, the Pacific Council was reluctant to increase trip limits for these species based on its concern over the results from management actions in 2004. In May 2004, the Pacific Council had recommended trawl management measures that affected the catch rate of darkblotched rockfish. Specifically, the trawl slope rockfish cumulative limit was increased (from 4,000 lbs (1.8 mt) to 8,000 lbs (3.6 mt) per 2 months north of 40°10′N. lat.) and the seaward trawl RCA boundary was moved from 200 fm (366 m) to 150 fm (274 m) (north of 40°′N. lat.). Targeting on slope rockfish increased after the May 2004 inseason action, and industry members reported that there was a size-related market discard factor for small darkblotched rockfish that was independent of trip limit size. The combination of these factors contributed to an increased darkblotched encounter rate, and potentially the discard rate.
In September 2004, the Pacific Council made a recommendation to drastically slow the catch of darkblotched rockfish based on PacFIN fishticket landings data and, for non-whiting trawl, on a preliminary
Also in response to the higher darkblotched rockfish mortalities, the Pacific Council recommended and NMFS implemented more restrictive limited entry trawl management measures for the beginning of 2005 as a precautionary measure until new observer data were available. Specifically, in the area north of 40°10′ N. lat, the RCA boundary scheduled for Period 1 (January through February) was moved from a boundary line approximating the 150-fm (274-m) depth contour to one approximating the 200-fm (366-m) depth contour, modified to allow fishing in petrale areas, and the slope rockfish trip limits were reduced to 4,000 lbs (1.8 mt) per 2 months (i.e., the same trip limit that was in place in Period 1 of 2004). These RCA boundaries and trip limits were also adopted for the area between 40E10′ N. lat and 38E N. lat. due to uncertainty in darkblotched encounter rates for that area. At that time, the Pacific Council anticipated that these RCA boundaries and/or trip limits would then be adjusted inseason in April 2005 as more discard information became available from the 2004 Observer Program.
At its April 2005 meeting, the Pacific Council recommended liberalizing the seaward trawl RCA boundary for 2005 from a boundary line approximating the 200-fm (366-m) depth contour back to one approximating the 150-fm (274-m) depth in this area, and increasing the minor slope rockfish and splitnose limits from 4,000 lbs (1.8) mt) per 2 months to 8,000 lbs (3.6 mt) per 2 months for the following reasons: (1) the darkblotched rockfish encounter rate for the area south of 40°10′N. lat. is much lower than the encounter rate for the area north of 40°10′ N. lat. and, therefore, is expected to result in a minimal increased amount of darkblotched catch, and; (2) the area between 40°10′ N. lat. and 38° N. lat. was overly constrained through action taken in September 2004, as a temporary precautionary measure, until NMFS Observer Program data were available.
In general, using the encounter rates based on information from the NMFS Observer Program, as used in the trawl model, produced an anticipated total catch estimate of darkblotched rockfish for all fisheries combined of 172.3 mt (as compared to a 2005 OY of 269 mt). Therefore, while the Pacific Council recommended moving the RCA boundary and increasing the slope rockfish trip limits between 40°10′ N. lat. and 38° N. lat., they recommended a precautionary approach to the magnitude of adjustment (i.e., only increasing limits to 8,000 lbs (3.6 mt) per 2 months, rather than increasing them to a higher limit) at this time. Therefore, the Pacific Council recommended and NMFS is implementing the following inseason adjustments:
(1) Decrease Dover sole trip limits with large and small footrope trawl gear from 69,000 lbs (31.3 mt) per 2 months to 22,000 lbs (10.0 mt) per 2 months in Period 6 (November through December) north of 40°10′ N. lat. ;
(2) Decrease Dover sole trip limits with selective flatfish trawl gear from 50,000 lbs (22.7 mt) per 2 months to 35,000 lbs (15.9 mt) per 2 months (15.9 mt) in Periods 3 through 5 (May through October) and from 20,000 lbs (9.1 mt) per 2 months (9.1 mt) to 8,000 lbs (3.6 mt) per 2 months on Period 6 north of 40°10′ N. lat.;
(3) Decrease petrale sole sub-trip limit in the other flatfish and English sole trip limit with large and small footrope trawl gear from 42,000 lbs (19.1 mt) per 2 months (19.1 mt) to 40,000 lbs (18.1 mt) per 2 months (18.1 mt) in Periods 3 through 5 north of 40°10′ N. lat.;
(4) In Period 6 decrease the other flatfish and english sole trip limit from 110,000 lbs (49.9 mt) per 2 months (49.9 mt) to 80,000 lbs (36.3 mt) per 2 months north of 40°10′ N. lat., make petrale sole a sublimit and decrease it from “not limited” to 60,000 lbs (27.2 mt) per 2 months (27.2 mt);
(5) Decrease the other flatfish, English and petrale sole trip limits with selective flatfish trawl gear from 100,000 lbs per (45.4 mt) per 2 months to 90,000 lbs (40.8 mt) per 2 months in Periods 3 through 5 north of 40°10′ N. lat.;
(6) In period 6 decrease the other flatfish, English and petrale sole trip limits with selective flatfish trawl gear from 100,000 lbs (45.4 mt) per 2 months (45.4 mt) to 75,000 lbs (34.0 mt) per 2 months (34.0 mt) and the petrale sole sublimit from 25,000 lbs (11.3 mt) per 2 months (11.3 mt) to 15,000 lbs (6.8 mt) per 2 months (6.8 mt) north of 40°10′ N. lat.;
(7) Decrease arrowtooth flounder trip limits with large and small footrope trawl gear from “not limited” to 80,000 lbs per (36.3 mt) per 2 months in Period 6 north of 40°10′ N. lat.;
(8) Decrease Dover sole trip limits from 50,000 lbs (22.7 mt) per 2 months to 40,000 lbs (18.1 mt) per 2 months in Periods 3 through 5 and from 50,000 lbs (22.7 mt) per 2 months to 35,000 lbs (15.9 mt) per 2 months in Period 6 south of 40°10′ N. lat.;
(9) In Period 6 make petrale sole a sub-trip limit of other flatfish and English sole and decrease it from “not limited” to 100,000 lbs (45.4 mt) 2 months south of 40°10′ N. lat.;
(10) Decrease arrowtooth flounder trip limits in Period 6 from “not limited” to 20,000 lbs (9.1 mt) 2 months south of 40°10′ N. lat.;
(11) Increase minor slope rockfish and darkblotched and splitnose rockfish trip limits from 4,000 lbs (1.8 mt) per 2 months to 8,000 lbs (3.6 mt) per 2 months in Periods 3 through 6 between 40°10′ N. lat. and 38° N. lat.;
(12) Move the seaward boundary of the trawl RCA for limited entry trawl and open access non-groundfish trawl from a boundary line approximating the 200-fm (366-m) depth contour to a boundary line approximating the 150-fm (274-m) depth contour in Periods 3 through 6 between 40°10′ N. lat. and 38° N. lat. [Note: North of 40°10′ N. lat., multiple bottom trawl gear trip limits are adjusted to match trip limits for the most restrictive gear type for that species in the trip limits table, Table 3 (North).]
The Pacific halibut CSP and implementing regulations at 50 CFR 300.63(b)(3) provide for retention of halibut landed incidentally in the limited entry, longline primary sablefish fishery north of Pt. Chehalis, WA (46°53.30′ N. lat.) in years when the Area 2A TAC is above 900,000 lb (408.2 mt). The 2005 Area 2A TAC is 1,330,000 lb (603 mt).
According to IPHC and Federal regulations, Pacific halibut may not be taken by gear other than hook-and-line gear. Only vessels registered for use with sablefish-endorsed limited entry permits may participate in the primary fixed gear sablefish fishery specified for halibut retention in the CSP. Vessels must also carry IPHC commercial
Similar to 2004, halibut caught incidentally in the primary sablefish fishery may be retained by appropriately licensed longline vessels. In 2005, the amount of incidental halibut retained in the primary sablefish fishery is capped at 70,000 lb (31.8 mt), to ensure that the fishery is maintained as an incidental and not as a directed fishery. The objective for setting annual landing restrictions is to reach the halibut quota for this fishery at about the same time as the primary sablefish season ends, October 31, and to ensure an equitable sharing of the halibut landings among the fishers. To achieve this objective, incidental halibut retention in the sablefish fishery over the past few years has been structured as a ratio of halibut landings permitted in relation to sablefish landings.
Therefore, the Pacific Council recommended, and NMFS is implementing the following: Beginning May 1, 2005, and continuing until the halibut quota (70,000 lbs or 31.8 mt) is taken, longliners eligible to participate in the primary sablefish fishery north of Pt. Chehalis, WA (46°53.30′ N. lat.) (see 50 CFR 660.372(a)) with appropriate IPHC licenses may retain incidental halibut landings up to 100 lbs (45 kg) (dressed weight) of halibut for every 1,000 lbs (454 kg) (dressed weight) of sablefish landed and up to two additional halibut in excess of the 100 lb (45 kg) per 1,000 lb (454 kg) ratio per landing. Halibut may not be on board a vessel that has any gear other than longline gear on board (e.g., pot or trawl gear).
Since 2003, NMFS has implemented a “C-shaped” Yelloweye Rockfish Conservation Area (YRCA) off the Washington coast to protect yelloweye rockfish, an overfished species (see 50 CFR 660.390(a)). For 2005, the “C-shaped” YRCA is a mandatory closed area for recreational groundfish and recreational Pacific halibut fishing. In addition, the “C-shaped” YRCA has been designated as an area to be avoided (a voluntary closure) by commercial fixed gear groundfish fishermen at §§ 660.382(c)(1) and 660.383(c)(1). Much of the YRCA is already closed to commercial groundfish fixed gear fishermen by the non-trawl RCA, which extends from the Washington shoreline to specific latitude and longitude coordinates that approximate the 100-fm (183-m) depth contour.
To further protect yelloweye rockfish, the Pacific Council has recommended that the “C-shaped” YRCA in the North Coast subarea (Washington Marine Area 3) also be designated as an area to be avoided (a voluntary closure) by salmon trollers to protect yelloweye rockfish.
At the March 2005 Pacific Council meeting, the California Department of Fish and Game (CDFG) provided an Informational Report that summarized the California Recreational Fisheries Survey (CRFS) program implementation and validation process, and provided recreational groundfish catch and effort estimates by mode for 2004. CRFS results showed that California recreational harvest guidelines or allocations for overfished species were not exceeded in 2004. Initially, California′s 2005 recreational fishery was structured with a more restrictive season than the 2004 fishery, based on the Marine Recreational Fisheries Statistics Survey (MRFSS) data through 2003. Based on the CRFS catch results from 2004, in conjunction with the improved ability for real-time inseason catch monitoring through CRFS, the Pacific Council conveyed its willingness to consider CRFS estimates to support inseason adjustments to California's recreational fishery in 2005.
CDFG reviewed the uncertainties and risks associated with using the CRFS data including: (1) identification of technical errors in CRFS during its first year of operation; (2) the tracking of uncalibrated 2004 CRFS data against harvest targets set for unassessed and assessed stocks; and (3) impacts on fishing opportunities of other fisheries and sectors. As with any new program involving sampling and expansions, there is the risk that technical errors may be identified during implementation. The RecFIN Statistical Sub-committee (RecFIN SSC) met recently and evaluated the data inputs from the first year of the CRFS sampling program including errors that could potentially affect the catch estimates generated for 2004. The RecFIN SSC′s findings primarily focused on sampling errors in the Angler License Database (ALD) survey. Specifically, the RecFIN SSC noted that licensed anglers were kept in the sample population for only one sample period (month) following entry into the angler license database, instead of being retained for the remainder of the calendar year. Sampling errors such as this one can cause statistical problems and biases in the estimate. However, further discussion highlighted the fact that ALD effort estimates are only used to estimate catch for modes of fishing that cannot be observed directly in the field. This includes beach/bank anglers, private access boats, and night-time fishing components of the private/rental, man-made, and beach/bank modes. Considering that only about 10 percent of the overall catch and effort for all sportfishing in California comes from these anglers, of which the majority are beach and bank anglers, and that anglers fishing from beach and banks do not catch significant numbers of groundfish, the Pacific Council concluded that the impact of this error on the estimates for groundfish species of concern should be minimal.
CDFG also summarized their plans for tracking inseason take, instituting closures, and providing regulation and educational information to the public. CDFG staff will review recreational catch estimates on a monthly basis for inseason tracking and provide these estimates to the Pacific Council's Groundfish Management Team. In addition, as 2005 monthly catch estimates become available, CDFG will replace the projected catches with the estimates for that month and will use these along with the remaining projected impacts to evaluate whether harvest targets will be met as scheduled. If catches are projected to exceed specific harvest targets specified in Federal regulations, then the Director of CDFG can take action to restrict the fishery to slow the harvest or close the fishery when warranted. This state action becomes effective 10 days after the state has issued public notice on the action. To keep anglers informed and assist with rapid distribution of concerns or requests to slow fishing, CDFG has established a communication network with charter/party boat fishing vessel operators and approximately 20 recreational angling associations and clubs (this network successfully stopped the targeting of widow rockfish in Southern California waters during 2004).
At the Pacific Council's April 2005 meeting and using the 2004 recreational groundfish fishing regulations as a starting point, CDFG recommended modifying the Federal fishing season in 2005 to liberalize the fishing seasons and RCAs based on new information. Primary considerations in adjusting the season were minimizing the canary and
Therefore, the Pacific Council recommended and NMFS is implementing changes to California's recreational groundfish fishery as follows:
(1) From the California/Oregon border to 40°10′ N. lat., extend the season for all species from July through October to May through December, except that lingcod is closed in December and “other flatfish” remains status quo;
(2) From the California/Oregon border to 40°10′ N. lat., restrict the recreational RCA from open shoreward of a boundary line approximating the 40-fm (73-m) depth contour to open shoreward of a boundary line approximating the 30 fm (55 m) depth contour (except the “other flatfish” remains exempt from the RCA);
(3) Between 40°10′ N. lat. to 36° N. lat., extend the season for all species (except lingcod and “other flatfish” remain status quo) from July through November to July through December;
(4) Between 36° N. lat. to 34°27′ N. lat., liberalize the recreational RCA from open between boundary lines approximating the 20-fm (37-m) and 40-fm (73-m) depth contours to open shoreward of a boundary line approximating the 40 fm (73 m) depth contour for all species (except “other flatfish” remains status quo); (5) South of 34°27′ N. lat., extend the season for nearshore rockfish, California sheephead, cabezon, greenlings, ocean whitefish and shelf rockfish from March through September to March through December;
(6) South of 34°27′ N. lat., extend the season for lingcod from April through September to April through November;
(7) South of 34°27′ N. lat., the season for California scorpionfish and the season and RCA exemption for “other flatfish” remains status quo;
(8) South of 34°27′ N. lat., liberalize the recreational RCA from open between boundary lines approximating the 30-fm (55-m) and 60 fm (110 m) depth contours from April through June, shoreward of a boundary line approximating the 40-fm (73-m) depth contour from July through August and November, and shoreward of the 20-fm (37-m) depth contour in December to open shoreward of a boundary line approximating the 60-fm (110-m) depth contour from April through August and November through December (the recreational RCA for March remains status quo, open between boundary lines approximating the 30-fm (55-m) through 60-fm (110- m) depth contours); (9) South of 34°27′ N. lat., restrict the recreational RCA from open shoreward of a boundary line approximating the 40 fm (73 m) depth contour from September through October to open shoreward of a boundary line approximating the 30 fm (55 m) depth contour from September through October. The Pacific Council also recommended that NMFS use its authority to take action similar to that taken by CDFG between Council meetings, if needed to restrict the fisheries.
The following corrections and clarifications are being made to the 2005-2006 management measures.
Limited entry trawl chafing gear language in Federal regulations at 50 CFR 660.381(b)(3) is clarified to include the chafing gear requirements for small footrope trawl gear (currently found in § 660.381(b)(5) and referenced in the chafing gear requirements at § 660.381(b)(3)) with all other chafing gear requirements.
Chafing gear requirements at § 660.381(b)(3) currently read as follows:
Chafing gear may encircle no more than 50 percent of the net′s circumference, except as provided in paragraph (b)(5) of this section. No section of chafing gear may be longer than 50 meshes of the net to which it is attached. Except at the corners, the terminal end of each section of chafing gear must not be connected to the net. (The terminal end is the end farthest from the mouth of the net.) Chafing gear must be attached outside any riblines and restraining straps. There is no limit on the number of sections of chafing gear on a net.
In addition, chafing gear requirements for small footrope trawl gear are mentioned in § 660.381(b)(5) as follows:
Chafing gear may be used only on the last 50 meshes of a small footrope trawl, measured from the terminal (closed) end of the codend.
To clarify the chafing gear language and keep all chafing gear requirements in one location in the regulations, the Pacific Council recommended and NMFS will modify the regulations to read as follows:
Chafing gear may encircle no more than 50 percent of the net′s circumference. No section of chafing gear may be longer than 50 meshes of the net to which it is attached. Chafing gear may be used only on the last 50 meshes of a small footrope trawl, measured from the terminal (closed) end of the codend. Except at the corners, the terminal end of each section of chafing gear on all trawl gear must not be connected to the net. (The terminal end is the end farthest from the mouth of the net.) Chafing gear must be attached outside any riblines and restraining straps. There is no limit on the number of sections of chafing gear on a net.
Limited entry selective flatfish trawl gear language in Federal regulations at 50 CFR 660.381(b)(5)(i) is modified to preserve the original intent of the gear requirement. Buoy placement on selective flatfish trawl gear can alter the size and shape of the trawl mouth. Selective flatfish trawl gear regulations are intended to require that the net's mouth be a flattened oval shape, much wider than it is tall. Changing the shape of the selective flatfish trawl mouth might result in an increased take of rockfish, thus changing the encounter rates of rockfish in targeted flatfish trips with this gear. Trip limits for species taken with selective flatfish gear were previously set for 2005 based on assumptions of incidental rockfish catch with this gear. The Pacific Council′s Groundfish Advisory Subpanel alerted the Groundfish Management Team and Enforcement Consultants that some flatfish participants were modifying the shape of the selective flatfish trawl net mouth through strategic placement of buoys on the net′s upper edge. Increasing the take of rockfish by modifying the gear with buoy placement from its original configuration is not accounted for by the trawl model used to set 2005 trip limits and may, therefore, result in achieving rockfish OYs more quickly than anticipated. The purpose of this modification to selective flatfish trawl gear requirements is to specify allowable buoy placement and the number of riblines to preserve the original intent of the gear requirement.
Selective flatfish trawl gear requirements at § 660.381(b)(5)(i) currently read as follows:
The selective flatfish trawl net must be a two-seamed net and its breastline may not be longer than 3 ft (0.92 m) in length. There may be no floats along the center third of the selective flatfish trawl net's headrope and the headrope must be at least 30 percent longer in length than the footrope. Selective flatfish trawl gear may not have a footrope that is longer than 105 ft (32.26 m) in length. An explanatory diagram of a selective flatfish trawl net is provided as Figure 1 of part 660, subpart G.
The Pacific Council recommended and NMFS will modify the selective flatfish trawl gear requirement to read as follows:
The selective flatfish trawl net must be a two-seamed net with no more than two riblines, excluding the codend. The breastline may not be longer than 3 ft (0.92 m) in length. There may be no floats along the center third of the headrope or attached to the top panel except on the riblines. The footrope must be less than 105 ft (32.26 m) in length. The headrope must be not less than 30 percent longer than the footrope. An explanatory diagram of a selective flatfish trawl net is provided as Figure 1 of part 660, subpart G.
These actions are authorized by the Pacific Coast groundfish FMP, the Halibut Act, and their implementing regulations and are based on the most recent data available. The aggregate data upon which these actions are based are available for public inspection at the Office of the Administrator, Northwest Region, NMFS, (see
Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on the management measures and the selective flatfish trawl gear requirements, as notice and comment would be impracticable and contrary to the public interest. The data upon which these recommendations were based was provided to the Pacific Council and the Pacific Council made its recommendations at its April 3-8, 2005, meeting in Tacoma, WA. There was not sufficient time after that meeting to draft this document and undergo proposed and final rulemaking before these actions need to be in effect at the start of the next cumulative limit period, May 1, 2005, as explained below. For the actions in this notice, prior notice and opportunity for comment would be impracticable and contrary to the public interest because affording the time necessary for prior notice and opportunity for public comment would impede the Agency's function of managing fisheries using the best available science to approach without exceeding the OYs for federally managed species.
The adjustments to management measures in this document include changes to the commercial and recreational groundfish fisheries, including corrections and clarifications. Changes to the trawl RCA and the limited entry trawl trip limits must be implemented in a timely manner by May 1, 2005, so that harvest of groundfish, including overfished species, stays within the harvest levels projected for 2005 based on modeling and the most current catch projections available. Changes to the limited entry fixed gear primary sablefish fishery to allow the retention of Pacific halibut must be implemented by May 1, 2005, in order to provide an opportunity for participants in this fishery to catch the available quota projected to be taken based on the ratio of halibut to sablefish landings set. Changes to California's recreational fishery management measures for seasons and recreational RCAs must be implemented as soon as possible and no later than May 1, 2005, the next recreational fishery management month, in order to conform Federal and state recreational regulations, to protect overfished groundfish species, to keep the harvest of other groundfish species within the harvest levels projected for 2005, and to allow an opportunity for anglers to harvest the available harvest guidelines. Delaying any of these changes would result in management measures that fail to use the best available science and, in some cases, could lead to early closures of the fishery if harvest of groundfish exceeds levels projected for 2005. This would be contrary to the public interest because it would impair achievement of one of the Pacific Coast Groundfish FMP objectives of providing for year-round harvest opportunities or extending fishing opportunities as long as practicable during the fishing year. Delaying these changes would also be contrary to the public's interest in protecting overfished species and other groundfish species from overfishing.
NMFS has also provided clarifications to Federal regulations that clarify the limited entry trawl gear requirement for chafing gear. Affording an opportunity for prior notice and comment on this clarification is unnecessary because it is not a substantive change to the regulations and is contrary to the public interest because it clarifies regulations that might otherwise be confusing to the public.
For these reasons, good cause also exists to waive the 30 day delay in effectiveness requirement under 5 U.S.C. 553 (d)(3) for all actions taken in this notice except the clarification to the selective flatfish trawl gear language. The clarification to selective flatfish trawl gear language may require some fishermen to move buoys and/or riblines on their trawl nets to conform with the originally intended selective flatfish trawl gear configuration. In order to provide fishermen adequate time to reconfigure their trawl gear, the modified language for the selective flatfish trawl gear will take effect 30 days after publication in the
These actions are taken under the authority of 50 CFR 300.63(b)(3)and 660.370(c) and are exempt from review under Executive Order 12866.
Administrative practice and procedure, American Samoa, Fisheries, Fishing, Guam, Hawaiian Natives, Indians, Northern Mariana Islands, Reporting and recordkeeping requirements.
16 U.S.C. 1801
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(i) Selective flatfish trawl gear is a type of small footrope trawl gear. The selective flatfish trawl net must be a two-seamed net with no more than two riblines, excluding the codend. The breastline may not be longer than 3 ft (0.92 m) in length. There may be no floats along the center third of the headrope or attached to the top panel except on the riblines. The footrope must be less than 105 ft (32.26 m) in length. The headrope must be not less than 30 percent longer than the footrope. An explanatory diagram of a selective flatfish trawl net is provided as Figure 1 of part 660, subpart G.
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National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule; annual management measures for the ocean salmon fishery; request for comments.
NMFS establishes fishery management measures for the 2005 ocean salmon fisheries off Washington, Oregon, and California and the 2006 salmon seasons opening earlier than May 1, 2006. Specific fishery management measures vary by fishery and by area. The measures establish fishing areas, seasons, quotas, legal gear, recreational fishing days and catch limits, possession and landing restrictions, and minimum lengths for salmon taken in the U.S. exclusive economic zone (EEZ)(3-200 nm) off Washington, Oregon, and California. The management measures are intended to prevent overfishing and to apportion the ocean harvest equitably among treaty Indian, non-treaty commercial, and recreational fisheries. The measures are also intended to allow a portion of the salmon runs to escape the ocean fisheries in order to provide for spawning escapement and to provide for inside fisheries (fisheries occurring in state internal waters).
Effective from 0001 hours Pacific Daylight Time, May 1, 2005, until the effective date of the 2006 management measures, as published in the
Comments on the management measures and the related environmental assessment (EA) may be sent to D. Robert Lohn, Regional Administrator, Northwest Region, NMFS, 7600 Sand Point Way N.E., Seattle, WA 98115-0070, fax: 206-526-6376; or to Rod McInnis, Regional Administrator, Southwest Region, NMFS, 501 West Ocean Boulevard, Suite 4200, Long Beach, CA 90802-4213, fax: 562-980-4018. Comments can also be submitted via e-mail at the
Copies of the supplemental FONSI and its supporting EA and other documents cited in this document are available from Dr. Donald O. McIsaac, Executive Director, Pacific Fishery Management Council, 7700 NE Ambassador Place, Suite 200, Portland, OR 97220-1384, and are posted on its website (
Send comments regarding the reporting burden estimate or any other aspect of the collection-of-information requirements in these management measures, including suggestions for reducing the burden, to one of the NMFS addresses listed above and to David Rostker, Office of Management and Budget (OMB), by email at
Stephen P. Freese at 206-526-6140, or Mark Helvey at 562-980-4040.
The ocean salmon fisheries in the EEZ off Washington, Oregon, and California are managed under a “framework” fishery management plan entitled the Pacific Coast Salmon Fishery Management Plan (Salmon FMP). Regulations at 50 CFR part 660, subpart H, provide the mechanism for making preseason and inseason adjustments to the management measures, within limits set by the Salmon FMP, by notification in the
These management measures for the 2005 and pre-May 2006 ocean salmon fisheries were recommended by the Pacific Fishery Management Council (Council) at its April 4 to 8, 2005, meeting.
The Council announced its annual preseason management process for the 2005 ocean salmon fisheries in the
In accordance with the Salmon FMP, the Council′s Salmon Technical Team (STT) and staff economist prepared a series of reports for the Council, its advisors, and the public. The first of the reports was prepared in February when the scientific information first necessary for crafting management measures for the 2005 and pre-May 2006 ocean salmon fishery became available. The first report, “Review of 2004 Ocean Salmon Fisheries” (REVIEW), summarizes biological and socio-economic data for the 2004 ocean salmon fisheries and assesses how well the Council′s 2004 management objectives were met. The second report, “Preseason Report I Stock Abundance Analysis for 2005 Ocean Salmon Fisheries” (PRE I), provides the 2005 salmon stock abundance projections and analyzes the impacts on the stocks and Council management goals if the 2004 regulations and regulatory procedures were applied to the projected 2005 stock abundances. The completion of PRE I is the initial step in evaluating the full suite of preseason options.
The Council met in Sacramento, CA from March 7 to 11, 2005, to develop 2005 management options for proposal to the public. The Council proposed four options of commercial and recreational fisheries management for analysis and public comment (typically there are three). These options consisted of various combinations of management measures designed to protect weak stocks of coho and Chinook salmon and to provide for ocean harvests of more abundant stocks. After the March Council meeting, the Council′s STT and staff economist prepared a third report, “Preseason Report II Analysis of Proposed Regulatory Options for 2005 Ocean Salmon Fisheries,” which analyzes the effects of the proposed 2005 management options. This report was made available to the Council, its advisors, and the public.
Public hearings, sponsored by the Council, to receive testimony on the proposed options were held on: March 28, 2005, in Westport, WA and Coos Bay, OR; and March 29, 2005, in Fort Bragg, CA. The States of Washington, Oregon, and California sponsored meetings in various forums that also collected public testimony, which was then presented to the Council by each state′s Council representative. The Council also received public testimony at both the March and April meetings and received written comments at the Council office.
The Council met from April 4 to 8, 2005, in Tacoma, WA to adopt its final 2005 recommendations. Following the April Council meeting, the Council′s STT and staff economist prepared a fourth report, “Preseason Report III Analysis of Council-Adopted Management Measures for 2005 Ocean Salmon Fisheries,” which analyzes the environmental and socio-economic effects of the Council′s final recommendations. This report was also made available to the Council, its advisors, and the public. After the Council took final action on the annual ocean salmon specifications in April, it published the recommended management measures in its newsletter and also posted them on the Council website (
Since 1989, NMFS has listed under the Endangered Species Act (ESA) 26 evolutionarily significant units (ESUs) of salmonids on the West Coast. As the listings have occurred, NMFS has conducted formal ESA section 7 consultations, issued biological opinions, and made determinations under section 4(d) of the ESA that consider the impacts to listed salmonid species resulting from proposed implementation of the Salmon FMP, or in some cases, from proposed implementation of the annual management measures. Associated with the biological opinions are incidental take statements which specify the level of take that is expected. Some of the biological opinions have concluded that implementation of the Salmon FMP is not likely to jeopardize the continued existence of certain listed ESUs and have provided incidental take statements. Other biological opinions have found that implementation of the Salmon FMP is likely to jeopardize certain listed ESUs and have identified reasonable and prudent alternatives (consultation standards) that would avoid the likelihood of jeopardizing the continued existence of the ESU under consideration, and provided an incidental take statement for the reasonable and prudent alternative. In a March 4, 2005, letter to the Council, NMFS provided the Council with ESA consultation standards and guidance for the management of stocks listed under the ESA in preparation for the 2005 management season in order to ensure that the Council recommendations comply with the ESA.
Estimates of the 2004 spawning escapements for key stocks managed under the Salmon FMP and preseason estimates of 2005 ocean abundance are provided in the Council′s REVIEW and PRE I documents. The primary resource and management concerns are for salmon stocks listed under the ESA.
Snake River wild fall Chinook are listed under the ESA as a threatened species. Direct information on the stock′s ocean distribution and on fishery impacts is not available. Fishery impacts on Snake River fall Chinook are evaluated using the Lyons Ferry Hatchery stock as an indicator. The Lyons Ferry stock is widely distributed and harvested by ocean fisheries from southern California to Alaska. NMFS′ ESA consultation standard requires that Council fisheries be managed to ensure that the Adult Equivalent (AEQ) exploitation rate on age-3 and age-4 adults for the combined Southeast Alaska, Canadian, and Council fisheries is not greater than 70.0 percent of that observed during the 1988-1993 base period. The Council′s 2005 recommended fisheries, combined with expected impacts in Southeast Alaska and Canada fisheries, have an estimated age 3/4 AEQ exploitation rate that is 69.8 percent of that observed during the 1988-1993 base period. Meeting the Snake River fall Chinook age 3/4 AEQ exploitation rate was a major constraint on fisheries north of Cape Falcon.
This is the sixth year that NMFS provided guidance to the Council related to the Puget Sound Chinook ESU. NMFS′s guidance for Puget Sound Chinook stocks is expressed in terms of total or southern U.S. fishery exploitation rate ceilings, or terminal escapement objectives. Under the current management structure, Council fisheries are included as part of the suite of fisheries that comprise the fishing regime negotiated each year by the co-managers under
In March 2005 NMFS completed its evaluation of the Resource Management Plan (RMP) provided by the Washington Department of Fish and Wildlife and the Puget Sound Treaty tribes for the 2004-2009 fishing years. On March 4, 2005, the NMFS approved the 2004-2009 RMP for applicability of limit 6 for the 2005-2009 fishing seasons. Previously NMFS had consulted on the 2004 fishing season regarding its effects on listed Puget Sound Chinook. NMFS concluded that the RMP poses no jeopardy to the Puget Sound Chinook ESU under conditions specified in Limit 6 of the ESA 4(d) Rule. NMFS issued an associated biological opinion on April 29, 2004, that also included the effects of the Council area fisheries under the Salmon FMP on Puget Sound Chinook salmon. The state and tribes manage their Council-area and inside Puget Sound fisheries as a package in coordination with the Council and NMFS to ensure that all impacts are accounted for and that overall conservation constraints are met. NMFS has determined that the management measures for the ocean salmon fisheries are consistent with the state and Tribal RMP, and that the RMP is consistent with the 4(d) rule.
Sacramento River winter Chinook are listed as endangered under the ESA. The Council′s recommended management measures meet NMFS′s requirements for the stock established through the ESA section 7 consultation process.
Although management concerns for ESA listed stocks were a primary consideration in preseason planning, the conservation objectives of other stocks also constrained fishing in certain areas. The forecast September 1, 2004 (preseason) ocean abundance of Klamath River fall Chinook salmon is 185,700 age-3 fish, 48,900 age-4 fish, and 5,200 age-5 fish. The forecast abundance requires certain reductions in 2005 commercial fishing opportunity south of Cape Falcon, OR, relative to the 2004 seasons, in order to achieve the conservation objective of 35,000 natural Klamath River fall Chinook adult spawners.
The Canadian Department of Fisheries and Oceans forecast that the abundance of Interior Fraser River (Thompson River) coho in Canada for 2005 to be in the low status category. As a result, U.S. fisheries under the Southern Coho Management Plan, adopted by the Pacific Salmon Commission in February 2002, were constrained to an exploitation rate no greater than 10.0 percent. The development of coho
The Council-recommended ocean harvest levels and management measures for 2005 fisheries are designed to apportion the burden of protecting the weak stocks identified and discussed in PRE I equitably among ocean fisheries and to allow maximum harvest of natural and hatchery runs surplus to inside fishery and spawning needs. NMFS finds the Council′s recommendations responsive to the goals of the Salmon FMP, the requirements of the resource, and the socio-economic factors affecting resource users. The recommendations are consistent with the requirements of the Magnuson-Stevens Fishery Conservation and Management Act and U.S. obligations to Indian tribes with Federally recognized fishing rights, and U.S. international obligations regarding Pacific salmon. Accordingly, NMFS has adopted them.
North of Cape Falcon the 2005 management measures have a slightly lower Chinook quota and substantially lower coho quota relative to the 2004 season. The total allowable catch for 2005 is 86,500 Chinook and 145,000 marked hatchery coho; these fisheries are restricted to protect depressed Lower Columbia River wild coho, Washington coastal coho, Puget Sound coho, Oregon Coastal Natural (OCN) coho, Interior Fraser River coho, Puget Sound Chinook, and Snake River fall Chinook. Washington coastal and Puget Sound Chinook generally migrate to the far north and are not greatly affected by ocean harvests from Cape Falcon, OR, to the U.S.-Canada border. Nevertheless, ocean fisheries in combination with fisheries inside Puget Sound were restricted in order to meet ESA related conservation objectives for Puget Sound Chinook. North of Cape Alava, WA, the Council recommends a provision prohibiting retention of chum salmon during August and September to protect ESA listed Hood Canal summer chum. The Council has recommended such a prohibition for the last four years.
South of Cape Falcon, OR, the retention of coho is prohibited, except for a recreational selective fishery off Oregon with a 40,000-fish quota of marked hatchery coho. This is the second year the selective fishery includes the southern coastal area of Oregon. The Council′s recommendations are below the 15-percent exploitation rate permitted under Amendment 13 to protect OCN coho stocks, with an expected 11.1-percent OCN coho exploitation rate. The expected ocean exploitation rate for Rogue/Klamath coho is 5.5 percent, and is also below its exploitation rate limit of 13.0 percent. Chinook fisheries off Oregon and California are constrained to meet the conservation objective of Klamath River fall Chinook and the ESA consultation standards for Sacramento River winter Chinook.
The treaty-Indian commercial troll fishery quota is 48,000 Chinook in ocean management areas and Washington State Statistical Area 4B combined. This quota is slightly lower than the 49,000-Chinook quota in 2004. The fisheries include a Chinook-directed fishery in May and June (under a quota of 25,000 Chinook) and an all-salmon season beginning in July with a 23,000 Chinook sub-quota. The coho quota for the treaty-Indian troll fishery in ocean management areas, including Washington State Statistical Area 4B for the July-September period is 50,000 coho, a decrease from the 75,000-coho quota in 2004.
The timing of the March and April Council meetings makes it impracticable for the Council to recommend fishing seasons that begin before May 1 of the same year. Therefore, the 2006 fishing seasons opening earlier than May 1 are also established in this action. The Council recommended, and NMFS concurs, that the recreational seasons off California from Horse Mountain to the U.S.-Mexico Border and off Oregon from Cape Falcon to Humbug Mountain, and the commercial troll seasons off California from Horse Mountain to Point Arena and off Oregon from Cape Falcon to the Oregon-California Border and will open in 2006 as indicated in the Season Description section. At the March 2005 meeting, the Council may consider inseason recommendations to adjust the commercial season prior to May 1 in the area off California between Horse Mountain and Point Arena.
The following sections set out the management regime for the salmon fishery. Open seasons and days are described in Sections 1, 2, and 3 of the 2005 management measures. Inseason closures in the commercial and recreational fisheries are announced on the NMFS hotline and through the U.S. Coast Guard Notice to Mariners as described in Section 6. Other inseason adjustments to management measures are also announced on the hotline and through the Notice to Mariners. Inseason actions will also be published the
The following are the management measures recommended by the Council and approved and implemented here for 2005 and, as specified, for 2006.
Note: This section contains restrictions in parts A, B, and C that must be followed for lawful participation in the fishery. Each fishing area identified in part A specifies the fishing area by geographic boundaries from north to south, the open seasons for the area, the salmon species allowed to be caught during the seasons, and any other special restrictions effective in the area. Part B specifies minimum size limits. Part C specifies special requirements, definitions, restrictions and exceptions.
May 1 through the earlier of June 30 or a 29,000-Chinook quota. Open May 1-3 with a 75 Chinook per vessel landing and possession limit for the three-day open period; open May 6-9 with a 100-Chinook per vessel landing and possession limit for the 4-day open period; beginning May 13, open Friday through Monday with a 125-Chinook possession and landing limit for each of the subsequent 4-day open periods. If insufficient quota remains to prosecute openings prior to the June 24-27 open period, the remaining quota will be provided for a June 26-30 open period with a per vessel landing and possession limit to be determined inseason. All salmon except coho (C.7). Cape Flattery and Columbia Control Zones closed (C.5). See gear restrictions and definitions (C.2, C.3). Vessels must land their fish within 24 hours of any closure of this fishery. Under state law, vessels must report their catch on a state fish receiving ticket. Vessels fishing north of Leadbetter Point must land their fish within the area north of Leadbetter Point. Vessels fishing south of Leadbetter Point must land their fish within the area south of Leadbetter Point, except that Oregon permitted vessels may also land their fish in Garibaldi, OR. Oregon State regulations require all fishers landing salmon into Oregon from any fishery between Leadbetter Point, Washington, and Cape
July 7 through the earlier of September 15 or a 14,250 preseason Chinook guideline (C.8) or a 23,200-marked coho quota. Open Thursday through Monday prior to August 3, and Wednesday through Sunday thereafter. Landing and possession limit of 75 Chinook per vessel for the July 7-11 and July 14-18 open periods, and 100-Chinook landing and possession limit for subsequent five-day open periods. Landing and possession limit of 75 coho per 5-day open period beginning August 10 in the area between Cape Falcon and Leadbetter Point. All salmon except no chum retention north of Cape Alava, WA, in August and September (C.7). All retained coho must have a healed adipose fin clip, except an inseason conference call may occur to consider allowing retention of all legal sized coho beginning no earlier than September 1 (C.8.d). Gear restricted to plugs 6 inches (15.2 cm) or longer (C.2, C.3), except no special gear restrictions beginning August 10 in the area between Cape Falcon and Leadbetter Point. Cape Flattery and Columbia Control Zones closed (C.5). Vessels must land their fish within 24 hours of any closure of this fishery. Under state law, vessels must report their catch on a state fish receiving ticket. Vessels fishing north of Leadbetter Point must land their fish within the area north of Leadbetter Point. Vessels fishing south of Leadbetter Point must land their fish within the area south of Leadbetter Point, except that Oregon permitted vessels may also land their fish in Garibaldi, OR. Oregon State regulations require all fishers landing salmon into Oregon from any fishery between Leadbetter Point and Cape Falcon must notify ODFW within 1 hour of delivery or prior to transport away from the port of landing by calling 541-867-0300 Ext. 271. Notification shall include vessel name and number, number of salmon by species, port of landing and location of delivery, and estimated time of delivery. Inseason actions may modify harvest guidelines in later fisheries to achieve or prevent exceeding the overall allowable troll harvest impacts (C.8).
March 15-25; April 1-15; May 1-3, 8-10, 15-17, 22-24, 29-30; June 1-30; September 1-23; October 1-31 (C.9). All salmon except coho (C.7). Chinook 27 inch (68.6 cm) total length minimum size limit through April 15, and 28 inches (71.1 cm) total length thereafter (B). All vessels fishing in the area must land their fish in the State of Oregon. See gear restrictions and definitions (C.2, C.3) and Oregon State regulations for a description of special regulations at the mouth of Tillamook Bay.
In 2006, the season will open March 15 for all salmon except coho, with a 27 inch (68.6 cm) total length Chinook minimum size limit.
March 15-25; April 1-15; May 1-30; September 1-23; October 1-31 (C.9). All salmon except coho (C.7). Chinook 27 inch (68.6 cm) total length minimum size limit through April 15, and 28 inches (71.1 cm) total length thereafter (B). All vessels fishing in the area must land their fish in the State of Oregon.
In 2006, the season will open March 15 for all salmon except coho, with a 27 inch (68.6 cm) Chinook minimum size limit.
March 15-25; April 1-15. September 3 through the earlier of September 30, or a 3,000 Chinook quota (C.9). All salmon except coho. Chinook 27 inch (68.6 cm) total length minimum size limit through April 15, and 28 inches (71.1 cm) total length September 1 through 30. Possession and landing limit of 45 fish per day per vessel in September. See gear restrictions and definitions (C.2, C.3). Vessels must land their fish in Gold Beach, Port Orford, or Brookings, OR, and within 24 hours of closure. State regulations require fishers intending to transport and deliver their catch to other locations after first landing in one of these ports notify ODFW prior to transport away from the port of landing by calling 541-867-0300 Ext. 271, with vessel name and number, number of salmon by species, location of delivery, and estimated time of delivery.
In 2006, the season will open March 15 for all salmon except coho, with a 27-inch (68.6-cm) Chinook minimum size limit.
September 3 through the earlier of September 30 or a 6,000 Chinook quota. All salmon except coho. Chinook minimum size limit of 28 inches (71.1 cm) total length. Possession and landing limit of 30 fish per day per vessel. All fish caught in this area must be landed within the area. See compliance requirements (C.1) and gear restrictions and definitions (C.2, C.3). Klamath Control Zone closed (C.5.). See California State regulations for additional closures adjacent to the Smith and Klamath rivers. When the fishery is closed between the Oregon-California border and Humbug Mountain and open to the south, vessels with fish on board caught in the open area off California may seek temporary mooring in Brookings, OR, prior to landing in California only if such vessels first notify the Chetco River Coast Guard Station via VHF channel 22A between the hours of 0500 and 2200 and provide the vessel name, number of fish on board, and estimated time of arrival.
September 1-30. All salmon except coho. Chinook minimum size limit 27 inches (68.6 cm) total length. See gear restrictions and definitions (C.2, C.3).
In 2006, the season will open March 15 for all salmon except coho, with a 27 inch (68.6 cm) total length Chinook minimum size limit. This opening could be modified following Council review at its March 2006 meeting.
July 4 through August 29; September 1-30. All salmon except coho. Chinook minimum size limit 27 inches (68.6 cm) total length in September; 28 inches (71.1 cm) in July and August. See gear restrictions and definitions (C.2, C.3).
October 3-14. Open Monday through Friday. All salmon except coho. Chinook minimum size limit 26 inches (66.0 cm) total length. See gear restrictions and definitions (C.2, C.3).
May 1-31; July 4 through August 29; September 1-30. All salmon except coho. Chinook minimum size limit 27 inches (68.6 cm) total length in May and September; 28 inches (71.1 cm) total length in July and August. See gear restrictions and definitions (C.2, C.3).
May 1 through September 30. All salmon except coho. Chinook minimum size limit 27 inches (68.6 cm) total length in May, June, and September; 28 inches total length in July and August. See gear restrictions and definitions (C.2, C.3).
C.1.
C.2. Gear Restrictions:
a. Single point, single shank, barbless hooks are required in all fisheries.
b.
c.
C.3.
a.
b.
c.
d.
C.4.
C.5.
a.
b. Columbia Control Zone: An area at the Columbia River mouth, bounded on the west by a line running northeast/southwest between the red lighted Buoy #4 (46°13′35″ N. lat., 124°06′50″ W. long.) and the green lighted Buoy #7 (46°15′09′ N. lat., 124°06′16” W. long.); on the east, by the Buoy #10 line which bears north/south at 357° true from the south jetty at 46°14′00′ N. lat., 124°03′07″ W. long. to its intersection with the north jetty; on the north, by a line running northeast/southwest between the green lighted Buoy #7 to the tip of the north jetty (46°15′48″ N. lat., 124°05′20″ W. long.) and then along the north jetty to the point of intersection with the Buoy #10 line; and, on the south, by a line running northeast/southwest between the red lighted Buoy #4 and tip of the south jetty (46°14′03″ N. lat., 124°04′05′ W. long.), and then along the south jetty to the point of intersection with the Buoy #10 line.
c.
C.6.
C.7.
Beginning May 1, license holders may land no more than 1 Pacific halibut per each 3 Chinook, except 1 Pacific halibut may be landed without meeting the ratio requirement, and no more than 35 halibut may be landed per trip. Pacific halibut retained must be no less than 32 inches (81.3 cm) in total length (with head on).
A “C-shaped” yelloweye rockfish conservation area is an area to be avoided for salmon trolling. NMFS and the Council request salmon trollers voluntarily avoid this area in order to protect yelloweye rockfish. The area is defined in the Council Halibut Catch Sharing Plan in the North Coast subarea (Washington marine area 3), with the following coordinates in the order listed:
48°18′ N. lat.; 125°18′ W. long;
48°18′ N. lat.; 124°59′ W. long;
48°11′ N. lat.; 124°59′ W. long;
48°11′ N. lat.; 125°11′ W. long;
48°04′ N. lat.; 125°11′ W. long;
48°04′ N. lat.; 124°59′ W. long;
48°00′ N. lat.; 124°59′ W. long;
48°00′ N. lat.; 125°18′ W. long;
and connecting back to 48°18′ N. lat.; 125°18′ W. long.
C.8.
a. Chinook remaining from the May through June non-Indian commercial troll harvest guideline north of Cape Falcon, OR, may be transferred to the July through September harvest guideline on a fishery impact equivalent basis.
b. NMFS may transfer fish between the recreational and commercial fisheries north of Cape Falcon, OR, if there is agreement among the areas′ representatives on the Salmon Advisory Subpanel.
c. At the March 2006 meeting, the Council will consider inseason recommendations for special regulations for any experimental fisheries (proposals must meet Council protocol and be received in November 2005).
d. If retention of unmarked coho is permitted in the area from the U.S.-Canada border to Cape Falcon, OR, by inseason action, the allowable coho quota will be adjusted to ensure preseason projected mortality of critical stocks is not exceeded.
C.9. Consistent with Council management objectives, the State of Oregon may establish additional late-season, Chinook-only fisheries in state waters. Check state regulations for details.
C.10. For the purposes of California Department of Fish and Game Code, Section 8232.5, the definition of the Klamath Management Zone for the ocean salmon season shall be that area from Humbug Mountain, OR, to Horse Mountain, CA.
Note: This section contains restrictions in parts A, B, and C that must be followed for lawful participation in the fishery. Each fishing area identified in part A specifies the fishing area by geographic boundaries from north to south, the open seasons for the area, the salmon species allowed to be caught during the seasons, and any other special restrictions effective in the area. Part B specifies minimum size limits. Part C specifies special requirements, definitions, restrictions and exceptions.
July 1 through the earlier of September 18 or a 12,667 marked coho subarea quota with a subarea guideline of 4,300 Chinook. Tuesday through Saturday, except there may be a conference call no later than July 27 to consider opening seven days per week. All salmon, except no chum retention August 1 through September 18, two fish per day, no more than one of which may be a Chinook (Chinook 24-inch (61.0 cm) total length minimum size limit)(B). All retained coho must have a healed adipose fin clip. See gear restrictions and definitions (C.2, C.3). Beginning August 1, Chinook non-retention east of the Bonilla-Tatoosh line (C.4.d) during Council managed ocean fishery. Inseason management may be used to sustain season length and keep harvest within the overall Chinook recreational TAC for north of Cape Falcon (C.5).
July 1 through the earlier of September 18 or a 3,067 marked coho subarea quota with a subarea guideline of 1,900 Chinook. Tuesday through Saturday, except there may be a conference call no later than July 27 to consider opening seven days per week.
September 24 through October 9 or a 100-marked coho quota or a 100 Chinook quota: In the area north of 47° 50′00 N. Lat. and south of 48° 00′00″ N. lat. (C.5). Seven days per week.
All salmon, two fish per day, no more than one of which may be a Chinook (Chinook 24-inch (61.0 cm) total length minimum size limit)(B). All retained coho must have a healed adipose fin, except inseason action may occur to consider allowing retention of all legal sized coho beginning September 24 (C.5.d). See gear restrictions and definitions (C.2, C.3). Inseason management may be used to sustain season length and keep harvest within the overall Chinook recreational TAC for north of Cape Falcon (C.5).
June 26 through the earlier of September 18 or a 45,066 marked coho subarea quota with a subarea guideline of 28,750 Chinook. Sunday through Thursday, except there may be a conference call no later than July 27 to consider opening seven days per week. All salmon, two fish per day, no more than one of which may be a Chinook (Chinook 24-inch (61.0 cm) total length minimum size limit)(B). All retained coho must have a healed adipose fin clip. See gear restrictions and definitions (C.2, C.3). Beginning August 1, Grays Harbor Control Zone closed (C.4.b). Inseason management may be used to sustain season length and keep harvest within the overall Chinook recreational TAC for north of Cape Falcon (C.5).
July 3 through the earlier of September 30 or a 60,900-marked coho subarea quota with a subarea guideline of 8,200 Chinook. Sunday through Thursday, except there may be a conference call no later than July 27 to consider opening seven days per week. All salmon, two fish per day, no more than one of which may be a Chinook (Chinook 24-inch (61.0 cm) total length minimum size limit)(B). All retained coho must have a healed adipose fin clip. See gear restrictions and definitions (C.2, C.3). Columbia Control Zone closed (C.4.a). Closed between Cape Falcon and Tillamook Head beginning August 1. Inseason management may be used to sustain season length and keep harvest within the overall Chinook recreational TAC for north of Cape Falcon (C.5).
Except as provided below during the selective fishery, the season will be March 15 through October 31 (C.6). All
Open seven days per week, all salmon, two fish per day (C.1). All retained coho must have a healed adipose fin clip. Fishing in the Stonewall Bank Groundfish Conservation Area restricted to trolling only on days the all depth recreational halibut fishery is open (see 70 FR 20304, April 19, 2005, and call the halibut fishing hotline 1-800-662-9825 for additional dates)(C.3, C.4.e). Open days may be adjusted inseason to utilize the available quota (C.5). All salmon except coho seasons reopen the earlier of August 1 or attainment of the coho quota.
In 2006, the season will open March 15 for all salmon except coho, two fish per day (C.1), Chinook minimum size limit of 20 inches (50.8 cm) total length (B), and the same gear restrictions as in 2005 (C.2, C.3).
Except as provided above during the selective fishery, the season will be May 21 through July 4; and August 14 through September 11 (C.6). All salmon except coho, except as noted above in the coho selective fishery. Chinook minimum size limit 24 inches (61.0 cm) total length (B). Seven days per week, two fish per day (C.1). See gear restrictions and definitions (C.2, C.3). Klamath Control Zone closed in August (C.4.c). See California State regulations for additional closures adjacent to the Smith, Klamath, and Eel rivers.
February 12 through July 10; July 16-17; July 23 through November 13. All salmon except coho. Two fish per day (C.1). Chinook minimum size limit 20 inches (50.8 cm) total length (B). See gear restrictions and definitions (C.2, C.3).
In 2006, season opens February 18 (nearest Saturday to February 15) for all salmon except coho, two fish per day (C.1), Chinook minimum size limit of 20 inches (50.8 cm) total length (B), and the same gear restrictions as in 2005 (C.2, C.3).
April 2 through November 13. All salmon except coho. Two fish per day (C.1). Chinook minimum size limit 20 inches (50.8 cm) total length (B). See gear restrictions and definitions (C.2, C.3).
In 2006, the season will open April 1 for all salmon except coho, two fish per day (C.1), Chinook minimum size limit of 20 inches (50.8 cm) total length (B), and the same gear restrictions as in 2005 (C.2, C.3).
April 2 through September 25. All salmon except coho. Two fish per day (C.1). Chinook minimum size limit 20 inches (50.8 cm) total length (B). See gear restrictions and definitions (C.2, C.3).
In 2006, the season will open April 1 for all salmon except coho, two fish per day (C.1), Chinook minimum size limit of 20 inches (50.8 cm) total length (B), and the same gear restrictions as in 2005 (C.2, C.3).
C.1.
C.2.
a.
b.
c.
C.3.
a.
b.
c.
C.4.
a.
b.
c.
d.
e.
44°37.46′ N. lat.; 124°24.92′ W. long.;
44°37.46′ N. lat.; 124°23.63′ W. long.;
44°28.71′ N. lat.; 124°21.80′ W. long.;
44°28.71′ N. lat.; 124°24.10′ W. long.;
44°31.42′ N. lat.; 124°25.47′ W. long.;
and connecting back to 44°37.46′ N. lat.; 124°24.92 W. long.
C.5.
C.6.
Note: This section contains restrictions in parts A, B, and C which must be followed for lawful participation in the fishery.
May 1 through the earlier of June 30 or a 25,000 Chinook quota. All salmon except coho. If the Chinook quota for the May-June fishery is not fully utilized, the excess fish cannot be transferred into the later all-salmon season. If the Chinook quota is exceeded, the excess will be deducted from the later all-salmon season. See size limit (B) and other restrictions (C).
July 1 through the earlier of September 15, or 23,000 preseason Chinook quota, or a 50,000 coho quota. All salmon. If the treaty Indian troll catch taken from Areas 4-4B is projected inseason to exceed 47,286 coho, the total treaty Indian troll quota will be adjusted to ensure that the exploitation rate impact of the treaty Indian troll fishery on Interior Fraser coho does not exceed the level anticipated under the assumptions employed for impact assessment. See size limit (B) and other restrictions (C).
C.1
C.2
a. Single point, single shank, barbless hooks are required in all fisheries.
b. No more than 8 fixed lines per boat.
c. No more than four hand held lines per person in the Makah area fishery (Washington State Statistical Area 4B and that portion of the FMA north of 48 02′15” N. lat. (Norwegian Memorial) and east of 125 44′00” W. long.)
C.3
a. The overall treaty Indian troll ocean quotas are 48,000 Chinook and 50,000 coho.
b. The quotas include troll catches by the S′Klallam and Makah tribes in Washington State Statistical Area 4B from May 1 through September 15.
c. The Makah encounter rate study will occur between May 1 and September 15. Salmon taken in the study by treaty Indian vessels will be counted towards the overall treaty Indian troll quota.
d. The Quileute Tribe will continue a ceremonial and subsistence fishery during the time frame of September 15 through October 15 in the same manner as in 2004. Fish taken during this fishery are to be counted against treaty troll quotas established for the 2005 season (estimated harvest during the October ceremonial and subsistence fishery: 100 Chinook; 200 coho).
C.4
a. The area within a 6-nautical mile (11.1-km) radius of the mouths of the Queets River, WA (47°31′42” N. lat.) and the Hoh River, WA (47°45′12” N. lat.) will be closed to commercial fishing.
b. A closure within 2-nautical miles (3.7 km) of the mouth of the Quinault River, WA (47°21′00” N. lat.) may be enacted by the Quinault Nation and/or the State of Washington and will not adversely affect the Secretary of Commerce′s management regime.
Under the authority of the Northern Pacific Halibut Act, NMFS promulgated regulations governing the Pacific halibut fishery which appear at 50 CFR part 300, subpart E. On February 25, 2005, NMFS published a final rule (70 FR 9242) to implement the International Pacific Halibut Commission′s (IPHC) recommendations, and to announce fishery regulations for U.S. waters off Alaska and fishery regulations for treaty commercial and ceremonial and subsistence fisheries and some regulations for non-treaty commercial fisheries for U.S. waters off the West Coast. In addition, a final rule to announce approval of and implement the Area 2A Pacific halibut Catch Sharing Plan and the Area 2A management measures for 2005, effective April 14, 2005, was published in the
The following measures have been approved by the IPHC, and implemented by NMFS. The operator of a vessel who has been issued an incidental halibut harvest license by the IPHC may retain Pacific halibut caught incidentally in Area 2A, during authorized periods, while trolling for salmon. Incidental harvest is authorized only during the May and June troll seasons. It is also authorized after June 30 if halibut quota remains and if halibut retention is announced on the NMFS hotline (phone 800-662-9825). License holders may land no more than 1 halibut per each 3 Chinook, except 1 halibut may be landed without meeting the ratio requirement, and no more than 35 halibut may be landed per trip. Halibut retained must meet the minimum size limit of 32 inches (81.3 cm) total length (with head on). The ODFW and WDFW will monitor landings and, if they are projected to exceed the 39,918-lb. (18.1-mt) salmon troll allocation or the Area 2A non-Indian commercial total allowable catch of halibut, NMFS will take inseason action to close the incidental halibut fishery. License applications for incidental harvest must be obtained from the IPHC. Applicants must apply prior to April 1 of each year.
NMFS and the Council request that salmon trollers voluntarily avoid a “C-shaped” yelloweye rockfish conservation area in order to protect yelloweye rockfish. The area is defined in the Pacific Council Halibut Catch Sharing Plan in the North Coast subarea (WA marine area 3)(See Section 1.C.7. for the coordinates).
Wherever the words “nautical miles off shore” are used in this document, the distance is measured from the baseline from which the territorial sea is measured.
Geographical landmarks referenced in this document are at the following locations:
Cape Flattery, WA............48°23′00″ N. lat.
Cape Alava, WA...............48°10′00″ N. lat.
Queets River, WA.............47°31′42″ N. lat.
Leadbetter Point, WA.........46°38′10″ N. lat.
Cape Falcon, OR..............45°46′00″ N. lat.
Florence South Jetty, OR.....44°00′54″ N. lat.
Humbug Mountain, OR..........42°40′30″ N. lat.
Oregon-California Border.....42°00′00″ N. lat.
Humboldt South Jetty, CA.....40°45′53″ N. lat.
Horse Mountain, CA...........40°05′00″ N. lat.
Point Arena, CA..............38°57′30″ N. lat.
Point Reyes, CA..............37°59′44″ N. lat.
Point San Pedro, CA..........37°35′40″ N. lat.
Pigeon Point, CA.............37°11′00″ N. lat.
Point Sur, CA................36°18′00″ N. lat.
Point Conception, CA.........34°27′00″ N. lat.
Actual notice of inseason management actions will be provided by a telephone hotline administered by the Northwest Region, NMFS, 206-526-6667 or 800-662-9825, and by U.S. Coast Guard Notice to Mariners broadcasts. These broadcasts are
This notification of annual management measures is exempt from review under Executive Order 12866.
The provisions of 50 CFR 660.411 state that if, for good cause, an action must be filed without affording a prior opportunity for public comment, the measures will become effective; however, public comments on the action will be received for a period of 15 days after the date of publication in the
The Assistant Administrator for Fisheries, NOAA (AA) finds good cause under 5 U.S.C. 553(b)(B), to waive the requirement for prior notice and opportunity for public comment, as such procedures are impracticable.
The annual salmon management cycle begins May 1 and continues through April 30 of the following year. May 1 was chosen because the pre-May harvests constitute a relatively small portion of the annual catch. The time-frame of the preseason process for determining the annual modifications to ocean salmon fishery management measures depends on when the pertinent biological data are available. Salmon stocks are managed to meet annual spawning escapement goals or specific exploitation rates. Achieving either of these objectives requires designing management measures that are appropriate for the ocean abundance predicted for that year. These pre-season abundance forecasts, which are derived from the previous year's observed spawning escapement, vary substantially from year to year, and are not available until January and February because spawning escapement continues through the fall.
The preseason planning and public review process associated with developing Council recommendations is initiated in February as soon as the forecast information becomes available. The public planning process requires coordination of management actions of four states, numerous Indian tribes, and the Federal Government, all of which have management authority over the stocks. This complex process includes the affected user groups, as well as the general public. The process is compressed into a 2-month period which culminates at the April Council meeting at which the Council adopts a recommendation that is forwarded to NMFS for review, approval and implementation of fishing regulations effective on May 1.
Providing opportunity for prior notice and public comments on the Council's recommended measures through a proposed and final rulemaking process would require 30 to 60 days in addition to the 2-month period required for development of the regulations. Delaying implementation of annual fishing regulations, which are based on the current stock abundance projections, for an additional 60 days would require that fishing regulations for May and June be set in the previous year without knowledge of current stock status. Although this is currently done for fisheries opening prior to May, relatively little harvest occurs during that period (e.g., in 2004 less than 10 percent of commercial and recreational harvest occurred prior to May 1). Allowing the much more substantial harvest levels normally associated with the May and June seasons to be regulated in a similar way would impair NMFS′ ability to protect weak and ESA listed stocks and provide harvest opportunity where appropriate.
Overall, the annual population dynamics of the various salmon stocks require managers to vary the season structure of the various West Coast area fisheries to both protect weaker stocks and give fishers access to stronger salmon stocks, particularly hatchery produced fish. Failure to implement these measures immediately could compromise the status of certain stocks, or result in foregone opportunity to harvest stocks whose abundance has increased relative to the previous year thereby undermining the purpose of this agency action. For example, the 2005 forecast ocean abundance for Klamath River fall Chinook requires a reduction in the commercial season length from Humbug Mountain, OR, to the Oregon-California Border from being open from May-June in 2004 to being closed in 2005. With out these, and similar restrictions in other areas in 2005, the projected Klamath River fall Chinook escapement floor would not be met. Based upon the above-described need to have these measures effective on May 1 and the fact that there is limited time available to implement these new measures after the final Council meeting in April and before the commencement of the ocean salmon fishing year on May 1, NMFS has concluded it is impracticable to provide an opportunity for prior notice and public comment under 5 U.S.C. 553(b)(B).
The AA also finds that good cause exists under 5 U.S.C. 553(d)(3), to waive the 30-day delay in effectiveness of this final rule. As previously discussed, data are not available until February and management measures not finalized until early April. These measures are essential to conserve threatened and endangered ocean salmon stocks, and to provide for harvest of more abundant stocks. If these measures are not in place on May 1, the previous year′s management measures will continue to apply. Failure to implement these measures immediately could compromise the status of certain stocks, such as the Klamath River fall Chinook, and negatively impact international, state, and tribal salmon fisheries, thereby undermining the purposes of this agency action.
To enhance notification of the fishing industry of these new measures, NMFS is announcing the new measures over the telephone hotline used for inseason management actions and is also posting the regulations on both of its West Coast regional websites (
This action contains collection-of-information requirements subject to the Paperwork Reduction Act (PRA), and which have been approved by OMB under control number 0648-0433. The public reporting burden for providing notifications if landing area restrictions cannot be met, or to obtain temporary mooring in Brookings, OR, is estimated to average 15 minutes per response. This estimate includes the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate, or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS and OMB (see
Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject
Since 1989, NMFS has listed 26 ESUs of salmonids on the West Coast. As the listings have occurred, NMFS has conducted formal ESA section 7 consultations and issued biological opinions, and made determinations under section 4(d) of the ESA (Table 1), that consider the impacts to listed salmonid species resulting from proposed implementation of the Salmon FMP, or in some cases, from proposed implementation of the annual management measures.
Associated with the biological opinions are incidental take statements that specify the level of take that is expected. Some of the biological opinions have concluded that implementation of the Salmon FMP is not likely to jeopardize the continued existence of certain listed ESUs and provide incidental take statements. Other biological opinions have found that implementation of the Salmon FMP is likely to jeopardize certain listed ESUs and have identified reasonable and prudent alternatives (consultation standards) that would avoid the likelihood of jeopardizing the continued existence of the ESU under consideration, and provided an incidental take statement for the reasonable and prudent alternative.
In a March 4, 2005, letter to the Council, NMFS provided the Council with ESA consultation standards and guidance for the management of stocks listed under the ESA. These management measures are consistent with the biological opinions that find no jeopardy, with the reasonable and prudent alternatives in the jeopardy biological opinions, and with the terms of the state and Tribal RMPs.
16 U.S.C. 773-773k; 1801
Social Security Administration (SSA).
Proposed rules; reopening of comment period.
On February 11, 2005, SSA, with the concurrence of the Office of Government Ethics (OGE), published a notice of proposed rulemaking (NPRM) in the
To be sure that your comments are considered, we must receive them by June 3, 2005.
You may give us your comments by: using our Internet facility (
The electronic file of this document is available on the date of publication in the
Asim A. Akbari, Office of the General Counsel, Office of General Law, telephone (410) 966-6581, fax (410) 597-0071, or TTY 1-410-966-5609. For information on eligibility or filing for benefits, call our national toll-free numbers, 1-800-772-1213 or TTY 1-800-325-0778, or visit our Internet Web site, Social Security Online, at
On February 11, 2005 (70 FR 7192-7196), we published “Supplemental Standards of Ethical Conduct for Employees of the Social Security Administration” as an NPRM, with a 30-day public comment period. This NPRM would set forth prohibitions and prior approval requirements for certain outside employment and other outside activities for all SSA employees, except special Government employees, and would set forth additional prior approval requirements for SSA Administrative Law Judges. SSA has received a request to extend the comment period. This factor, and the importance of the proposed rule, makes it appropriate to reopen the comment period for another 30 days, through June 3, 2005. If you have already provided comments on the NPRM, your comments will be considered and you do not need to resubmit them.
Agricultural Marketing Service, USDA.
Proposed rule.
This proposed rule would terminate language in Table 3, “Maximum Defect and Minimum Size Levels,” of the marketing order regulating pistachios produced in the State of California. This language was erroneously included in Table 3 at the time of promulgation of the order. Correction of the table was unanimously recommended by the Administrative Committee for Pistachios, the committee responsible for local administration of the order.
Comments received by May 19, 2005 will be considered prior to issuance of a final rule.
Interested persons are invited to submit written comments concerning the proposal to: Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC, 20250-0237; Fax: (202) 720-8938, E-mail:
Melissa Schmaedick, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 1035, Moab, Utah, 84532; Telephone: (435) 259-7988, Fax: (435) 259-4945; or Rose Aguayo, California Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, Suite 102 B, Fresno,
Small businesses may request information on complying with this regulation by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-8938, or E-mail:
This rule is proposed pursuant to the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”
The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.
This proposal has been reviewed under Executive Order 12988, Civil Justice Reform. This proposal is not intended to have retroactive effect. This proposed rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this proposed rule.
The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after date of the entry of the ruling.
This action would terminate language in Table 3, “Maximum Defect and Minimum Size Levels,” of the marketing order regulating pistachios produced in the State of California (69 FR 17844, April 5, 2004). The termination would apply to language in two portions of the table: (1) In the “Internal (Kernel) Defects” section, the words “external or” would be removed from the heading “Total external or internal defects allowed” because this section of the table only covers internal defects allowed, and (2) the sub-heading “Minimum permissible defects (percent by weight)” would be removed so that all information in the table would be captured under the table heading “Maximum permissible defects (percent by weight).” This language was erroneously included in Table 3 at the time of promulgation of the order. Termination of this language would remove these errors and would allow Table 3 to read as originally intended by the group establishing the order.
Suspension of this language was unanimously recommended by the Administrative Committee for Pistachios (ACP), the group responsible for local administration of the order, at a December 15, 2004, committee meeting. However, because this is a permanent correction, USDA is proposing to remove and terminate the language.
The federal marketing order regulating the handling of pistachios produced in the State of California was promulgated in 2004. Provisions to establish the ACP became effective on April 6, 2004 (69 FR 17844, April 5, 2004). The regulatory provisions of the order will become effective on August 1, 2005 (70 FR 661, January 5, 2005; 70 FR 4191, January 28, 2005).
Section 983.39, Minimum quality levels, of the order establishes maximum defect and minimum size tolerances for pistachios produced and handled in California. Table 3 of the order, which is included in § 983.39, describes the maximum thresholds for defects, as well as the maximum tolerance for minimum-sized pistachios, of the provisions in table format. Table 3 also serves as a reference tool for handlers regulated by the order to easily interpret the written quality and size provisions of the order under § 983.39.
ACP preparations for implementing the regulatory provisions of the order have brought to light that two sub-headings in Table 3, “Maximum Defect and Minimum Size Levels,” were erroneously included at the time of promulgation. In the “Internal (Kernel) Defects” section, the words “external or” would be removed from the heading “Total external or internal defects allowed” because this section of the table only applies to internal defects, not external defects. Additionally, the sub-heading “Minimum permissible defects (percent by weight)” would be removed from the table so that all information in the table would be captured under the table heading “Maximum Permissible Defects (percent by weight).” Termination of this language would remove these errors and would allow Table 3 to read as originally intended by the group responsible for promulgating the order.
This language should be removed prior to the effective date of the regulatory provisions of the order (August 1, 2005).
Pursuant to the requirements set for in the Regulatory Flexibility Act (RFA) the administrator of the Agricultural Marketing Service (AMS) has considered the economic impact of this proposal on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.
There are approximately 20 handlers of California pistachios subject to regulation the marketing order and approximately 741 producers in the production area. Small agricultural service firms are defined as those whose annual receipts are less than $6,000,000 and small agricultural producers have been defined by the Small Business Administration as those having annual receipts less than $750,000 (13 CFR 121.201). Eight out of the 20 handlers subject to regulation have annual pistachio receipts of at least $6,000,000. In addition, 722 producers have annual receipts less than $750,000. Thus, the majority of pistachio producers and handlers regulated under the marketing order may be classified as small entities.
This action would terminate language in Table 3, “Maximum Defect and Minimum Size Levels” in § 983.39 of the order. The termination would apply to language in two portions of the table: (1) In the “Internal (Kernel) Defects” section, the words “external or” would be removed from the heading “Total external or internal defects allowed” because this section of the table only pertains to internal defects, and (2) the sub-heading “Minimum permissible defects (percent by weight)” would be removed so that all information in the table would be captured under the table heading “Maximum permissible defects (percent by weight).” Neither the thresholds contained in the table nor the regulatory provisions outlined in § 983.39 of the order would be impacted by this termination. The termination would serve to facilitate more accurate interpretation of the information presented in Table 3. Thus, no significant impact on large or small
One alternative to this action would be to not remove and terminate the identified language in Table 3. However, at a December 15, 2004 meeting of the ACP, it was determined that if this language were not removed from the table, handlers regulated under the order may not correctly interpret the thresholds outlined in Table 3. Thus, the ACP unanimously recommended that the table be corrected. Committee meetings are open to the public. No comments or recommendations against the recommendation were received.
A comment period of 15 days after publication of this proposal in the
In compliance with Office of Management and Budget (OMB) regulations (5 CFR part 1320) which implement the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Committee's meeting was publicized and all Committee members and alternate Committee members, representing both large and small entities, were invited to attend the meeting and participate in Committee deliberations. The Committee itself is composed of 11 members, of which 8 members are growers, 2 are handlers, and one represents the public.
A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at the following Web site:
In summary, the termination would apply to language in two portions of the table. In the “Internal (Kernel) Defects” section, the words “external or” would be removed and terminated, and the sub-heading “Minimum permissible defects (percent by weight)” would be removed and terminated so that all information in the table would be captured under the table heading “Maximum permissible defects (percent by weight).”
Pistachios, Marketing agreements and orders, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, 7 CFR part 983 is proposed to be amended as follows:
1. The authority citation for 7 CFR part 983 continues to read as follows:
7 U.S.C. 601-674.
2. In § 983.39, Table 3 is revised to read as follows:
Federal Election Commission.
Notice of proposed rulemaking.
The Federal Election Commission seeks comments on proposed changes to its rules defining “Federal election activity” under the Federal Election Campaign Act of 1971, as amended (“FECA”). The proposed changes would retain the existing definition of “voter registration activity” and modify the existing definitions of “get-out-the-vote activity” and “voter identification” consistent with the ruling of the U.S. District Court for the District of Columbia in
Comments must be received on or before June 3, 2005. If the Commission receives sufficient requests to testify, it may hold a hearing on these proposed rules. Anyone wishing to testify at the hearing must file written comments by the due date and must include a request to testify in the written comments.
All comments must be in writing, addressed to Ms. Mai T. Dinh, Assistant General Counsel, and submitted in either electronic, facsimile or hard copy form. Commenters are strongly encouraged to submit comments electronically to ensure timely receipt and consideration. Electronic comments must be sent to either
Ms. Mai T. Dinh, Assistant General Counsel, Mr. J. Duane Pugh Jr., Senior Attorney, or Ms. Margaret G. Perl, Attorney, 999 E Street, NW., Washington, DC 20463, (202) 694-1650 or (800) 424-9530.
The Bipartisan Campaign Reform Act of 2002 (“BCRA”), Public Law No. 107-155, 116 Stat. 81 (2002), amended FECA by adding a new term, “Federal election activity” (“FEA”), that describes certain activities that State, district, and local party committees must pay for with either Federal funds
BCRA does not define “voter registration activity” other than to specify that it is only FEA when it is conducted 120 days or fewer before a regularly scheduled Federal election.
In
The court also held that the question of whether the regulation satisfies step two of the
The district court also determined that the promulgation of this regulation did not satisfy the APA's notice requirement because the notice of proposed rulemaking did not indicate that the Commission would seek to limit the term “voter registration activity” to those activities that assist the registration of voters.
The Commission is concerned that a definition of “voter registration activity” that includes merely “encouraging” people to register to vote may sweep too broadly. The current regulations seek to balance the need to cover the core voter registration activity targeted by the statute with the public policy interest of encouraging the civic act of voting. Also, the Commission's experience indicates that exhortations to register and vote are so frequent in political party communications (and often spontaneous) that attaching any campaign finance significance to every “don't forget to vote” uttered by speakers at political party events or written in a political party flyer may be unduly burdensome to the political party committees and could overwhelm the administrative and enforcement capacity of the Commission. As the Commission noted when it promulgated the regulation, “[a] more expansive definition would run the risk that thousands of political committees and grassroots organizations that merely encouraged voting as a civic duty, who have never been subject to Federal regulation for such conduct, would be swept into the extensive reporting and filing requirements mandated under Federal law.”
Although the Commission is not proposing any changes to current 11 CFR 100.24(a)(2), it seeks comment on whether it should address the concerns raised by the district court by amending the regulation, expanding the explanation and justification for the final rules, or providing guidance through a case-by-case application of the rules in advisory opinions and the enforcement process. Substantively, the Commission seeks comment on the following questions. Should the Commission define “assist” to include encouragement coupled with a direction as to how one might register? Does the “assist” limitation or the “individualized means” requirement exclude any activities that should be included in the definition of “voter registration activity?” Are there other specific activities that the Commission should include or exclude from the definition of “voter registration activity?”
In BCRA, Congress also included GOTV within the definition of FEA without further defining the term.
The district court found that the term “get-out-the-vote activity” in section 431(20)(A)(ii) was not defined by Congress and can be read in different ways, and concluded that excluding mere encouragement of people to vote in section 100.24(a)(3) reflected a permissible reading under
To conform to the district court's opinion, proposed section 100.24(a)(3) would remove the exception for communications by associations or similar groups of candidates for State or local office, or of State or local officeholders, that refer only to State or local candidates. This exception was included in the 2002 rules because the Commission was concerned that the underlying provision would require Federal registration and reporting for a broad swath of State and local election activity, “sweep[ing] within Federal regulation candidates for city council, or the local school board, who join together to identify potential voters for their own candidacies. * * *”
Further, what impact would there be from removing the exception for groups of non-Federal candidates? Would such groups of non-Federal candidates have to pay for the full amount of FEA with Federal funds?
The district court also held that the promulgated regulation defining GOTV
“Voter identification” is another term used in the BCRA definition of FEA that is not defined by the statute.
The district court in
To comport with this ruling, proposed section 100.24(a)(4) would include acquisition of voter lists in the definition of “voter identification.” Thus, the acquisition of voter lists would be considered FEA if it occurs after the earliest filing deadline for the ballot in an even-numbered year and after the date is set for a special election in which a candidate for Federal office appears on the ballot.
Alternatively, the Commission also seeks comment on an alternative application of the rule that would use the date the voter list was used to determine whether the acquisition of a voter list falls with the FEA timeframes and would therefore be a Federal election activity. Under this alternative, a voter list that was purchased before the FEA period would nonetheless be subject, at least in part, to Federal and Levin funds requirements whenever it was used within the FEA period. Triggering the FEA provisions based on the use of a voter list would discourage any attempts to avoid those requirements by purchasing a list early for intended use during the FEA period. However, this approach could raise allocation and valuation issues if the voter list is purchased outside the FEA window and used by the political party committee both inside and outside the window.
The Commission is concerned about how this proposed rule may affect a State party committee's ability to acquire a voter list in preparation for a general election in an odd-numbered year in which a special election to fill a Federal office is called contemporaneously with its acquisition of a voter list. The purpose of the definition of “in connection with an election in which a candidate for Federal office appears on the ballot” in 11 CFR 100.24(a)(1) is to ensure that the regulation would not affect activities that are purely non-Federal in nature.
Proposed section 100.24(a)(4) also would remove the exception for associations or groups of candidates for State or local office, and associations of State and local officeholders, that engage in voter identification activity that refers only to State or local candidates. Is there another approach that would address the Commission's concerns while still comporting with Congressional intent, as determined by the
Voter identification, GOTV, and generic campaign activity constitute FEA when those activities are conducted “in connection with an election in which a candidate for Federal office appears on the ballot.” 2 U.S.C. 431(20)(A)(ii). In defining this phrase, a Commission regulation establishes the timeframe in which these activities are FEA, and are collectively “type 2 FEA.” 11 CFR 100.24(a)(1)(i) and (ii). The Commission is considering whether to make some limited exceptions and one change to the operation of the type 2 FEA time periods in current 11 CFR 100.24(a)(1)(i) and (ii).
Proposed revisions to section 100.24(a)(1)(ii) would change the operation of type 2 FEA time periods that are related to special elections for Federal office. Currently, this provision is limited so that it only applies in odd numbered years, and the proposed revisions would eliminate this limitation. While many special elections that occur in even numbered years will fall in time periods already covered by paragraph (a)(1)(i), the removal of the limitation could extend the type 2 FEA time period when a State schedules a special election for Federal office before the type 2 FEA time period under paragraph (a)(1)(i) has begun. The Commission seeks comment on this proposed change.
The Commission is concerned that treating State party committees' voter drives that are related to a State or local election as FEA because of an upcoming special election for Federal office would unduly federalize an election that was initially scheduled to decide State and local races. To address this issue, the Commission is considering adopting an exception to section 100.24(a)(1)(ii) so that the type 2 FEA time periods would not include the period before any special election for Federal office that is scheduled to be held on the same date as a previously scheduled State or local election. This exception does not appear in the proposed rules that follow. Is such an exception consistent with FECA, as amended by BCRA? Would an exception that is limited to voter drives that refer only to State or local candidates be too narrowly tailored to address this concern? Alternatively, should any voter drives that refer to candidates for Federal office be excluded from the exception so that the FEA rules would still apply to such voter drives?
Proposed new section 100.24(a)(1)(iii) would create an exception to type 2 FEA time periods for certain municipal elections. The municipal elections that would be subject to the exception are those that take place on a date other than Federal election dates, but still during the type 2 FEA timeframes specified in 11 CFR 100.24(a)(1)(i). The rationale for such an exception might be that municipalities have chosen an election date apart from State or Federal elections in an effort to disentangle State and Federal contests from local elections to leave the local elections nonpartisan. If that local election date is nonetheless within the type 2 FEA timeframes specified in 11 CFR 100.24(a)(1), then all of the FEA requirements of Federal law would apply, chief among them the requirement that State, district or local committees of political parties use only Federal or a combination of Federal and Levin funds to pay for type 2 FEA. 2 U.S.C. 441i(b).
The Commission seeks comment on this proposed exception, which is reflected in the proposed regulatory language that follows. Is the exception adequate to address the concerns? Is it consistent with FECA, as amended by BCRA? Do any practical considerations tend either to support or to oppose such an exception?
Alternatively, the regulation could be revised to address the same concerns more narrowly. One example of a more limited exception would be to exclude GOTV that takes place within 72 hours before an election that does not include an election for Federal office. The 72-hour standard is borrowed from the Commission's first example of the non-exhaustive list of examples of GOTV in 11 CFR 100.24(a)(3)(i). The Commission seeks comment on whether GOTV that takes place only shortly before a local election where no Federal candidates are on the ballot may merit an exception from the type 2 FEA time periods, while an exception for other forms of FEA may not be appropriate. Would any other limitations on the exception be more suitable? Please note that the proposed regulation text that follows does not reflect the more narrow alternative exceptions to the type 2 FEA time periods.
The Commission also seeks comment on whether similar exceptions would be appropriate for voter registration activity, or type 1 FEA. BCRA establishes that voter registration activity is Federal election activity “during the period that begins on the date that is 120 days before the date a regularly scheduled Federal election is held and ends on the date of the election.” 2 U.S.C. 431(20)(A)(i). Would any exceptions to this timeframe to address any of the situations described above be permissible under BCRA? If so, should any such exceptions be adopted?
The Commission certifies that the attached proposed rule, if promulgated, would not have a significant economic impact on a substantial number of small entities. The basis for this certification is that the organizations affected by this proposed rule are State, district, and local party committees, which are not “small entities” under 5 U.S.C. 601. These not-for-profit committees do not meet the definition of “small organization” which requires that the enterprise be independently owned and operated and not dominant in its field. 5 U.S.C. 601(4). State political party committees are not independently owned and operated because they are not financed and controlled by a small identifiable group of individuals, and they are affiliated with the larger national political party organizations. In addition, the State political party committees representing the Democratic and Republican parties have a major controlling influence within the political arena of their State and are thus dominant in their field. District and local party committees are generally considered affiliated with the State committees and need not be considered separately. To the extent that any State party committees representing minor political parties might be considered “small organizations,” the number affected by this proposed rule is not substantial.
Elections.
For reasons set out in the preamble, subchapter A of chapter 1 of title 11 of the Code of Federal Regulations would be amended as follows:
1. The authority citation for 11 CFR part 100 would continue to read as follows:
2 U.S.C. 431, 434, and 438(a)(8).
2. In § 100.24, paragraphs (1)(i), (ii), (iii), (2), (3), and (4)(a) would be revised to read as follows:
(a) * * *
(1) * * *
(i) Except as provided in paragraph (a)(1)(iii) of this section, the period of time beginning on the date of the earliest filing deadline for access to the primary election ballot for Federal candidates as determined by State law, or in those States that do not conduct primaries, on January 1 of each even-numbered year and ending on the date of the general election, up to and including the date of any general runoff.
(ii) The period beginning on the date on which the date of a special election in which a candidate for Federal office appears on the ballot is set and ending on the date of the special election.
(iii) In municipalities that elect local officials in elections that do not coincide with primary or general elections for Federal office but occur during the period described in paragraph (a)(1)(i) of this section, the following periods of time are excluded from the periods described in paragraphs (a)(1)(i) and (a)(1)(ii) of this section:
(A) For municipalities that hold local elections before primary elections for Federal office, from the beginning of the period described in paragraph (a)(1)(i) up to and including the date of the municipal election; and
(B) For municipalities that hold primary elections for Federal office before local elections, from the day after the primary election for Federal office up to and including the date of the municipal election.
(2)
(3)
(i) Providing to individual voters, within 72 hours of an election, information such as the date of the election, the times when polling places are open, and the location of particular polling places; and
(ii) Offering to transport or actually transporting voters to the polls.
(4)
Federal Election Commission.
Notice of proposed rulemaking.
The Federal Election Commission is seeking comment on proposed changes to regulations regarding payments by State, district or local party committees for salaries and wages of employees who spend 25 percent or less of their compensated time in a month on Federal election activity and activity in connection with Federal elections. Currently, these committees may use funds whose only restriction is that they comply with State law. The proposed changes would require these expenses to be paid using at least some Federal funds, consistent with the ruling of the United States District Court for the District of Columbia in
Comments must be received on or before June 3, 2005. If the Commission receives sufficient requests to testify, it may hold a hearing on the proposed rules. Anyone wishing to testify at the hearing must file written comments by the due date and must include a request to testify in the written comments.
All comments must be in writing, addressed to Ms. Mai T. Dinh, and submitted in either electronic, facsimile, or hard copy form. Commenters are strongly encouraged to submit comments electronically to ensure timely receipt and consideration. Electronic comments must be sent to either
Ms. Mai T. Dinh, Assistant General Counsel, or Mr. Anthony T. Buckley, Attorney, 999 E Street, NW., Washington, DC 20463, (202) 694-1650 or (800) 424-9530.
The Bipartisan Campaign Reform Act of 2002 (“BCRA”), Pub. L. 107-155, 116 Stat. 81 (March 27, 2002), contained extensive and detailed amendments to the Federal Election Campaign Act of 1971, as amended (the “Act”), 2 U.S.C. 431
In
Implicit in the district court's decision is that State party committees are required under BCRA and FECA to use at least some Federal funds to pay for the salaries and wages of those employees who spend some of their compensated time, but not more than 25 percent per month, on Federal-related activity. Thus, the Commission is issuing this Notice of Proposed Rulemaking (“NPRM”) to determine the appropriate mix of Federal and non-Federal funds that State party committees must use to pay the salaries and wages for these employees.
One approach would be to adopt an allocation method that would establish a fixed minimum percentage that a State party committee would be required to allocate to its Federal account. A fixed minimum percentage provides committees with a bright-line rule that is easy to understand and administer. The proposed rule below reflects this approach. Section 106.7(c)(1) would be amended to set forth two methods by which State party committees could pay the salaries and wages for employees who spend 25 percent or less of their compensated time in a month on Federal-related activity. Paragraph (c)(1)(i) would state that State party committees could pay for such salaries and wages with funds from their Federal account. Paragraph (c)(1)(ii) would state that such salaries and wages could also be allocated between the committee's Federal and non-Federal accounts under section 106.7(d)(1)(i). Section 106.7(d)(1)(i) would be amended to require State party committees to allocate at least 25 percent of the salaries and wages for employees who spend 25 percent or less of their compensated time on Federal-related activities to their Federal account.
The Commission has two reasons for proposing 25 percent as the fixed minimum percentage. Because these employees would not spend more than 25 percent of their compensated time on Federal-related activities, a minimum allocation percentage that is 25 percent would ensure that State party committees would use Federal funds to pay for the compensated time spent on Federal-related activity. In addition, prior to BCRA, salaries and wages of State party committees' employees were considered administrative expenses that were allocated based on ballot composition.
Nevertheless, in the alternative, the Commission seeks comment on returning to treating salaries and wages for these employees as administrative expenses subject to the allocation ratios in 11 CFR 106.7(d)(2). The Commission is also seeking suggestions for other fixed minimum percentages and the basis for the suggested fixed minimum percentages.
Another alternative method, which is not reflected in the proposed rule, would be to establish an allocation percentage that is directly proportional to the amount of compensated time these employees spend on Federal-related activities in a given month. Under this approach, the percentage of Federal funds that a State party committee must use to pay for these salaries and wages would be no less than the percentage of compensated time these employees spend on Federal-related activities in relation to all compensated time in a given month. The remaining salaries and wages could be paid for with non-Federal funds, provided that the funds comply with State law. The log that each State, District or local party committee maintains pursuant to section 106.7(d)(1) would allow committees to determine the percentage of an employee's time that must be compensated using Federal funds.
The proposed rules also include conforming changes to current 11 CFR 300.33(c)(2). That paragraph would be amended to state that salaries and wages for employees who spend 25 percent or less of their compensated time per month on Federal-related activities may be allocated in accordance with 11 CFR 106.7(c) and (d)(1)(i).
The Commission also seeks comment on whether the methods for allocating salaries and wages should be applied to fringe benefits of employees. In Advisory Opinion 2003-11, a State party committee sought guidance on paying the costs of fringe benefits (medical, dental, and prescription drug insurance coverage; coverage for short-term disability (wage loss) and long-term disability insurance benefits; coverage for life insurance benefit; and employer matching contributions to the 401(k) retirement plan) for employees who spent 25 percent or less of their compensated time per month on Federal-related activity. The committee had allocated such costs based on the allocation method used for administrative expenses, which required a mixture of Federal and non-Federal funds, rather than based on the allocation method used for salaries and wages, which would have allowed for the use of all non-Federal funds. The Commission concluded amounts spent on fringe benefits fall into the category of compensated time, and thus concluded that the State party committee could use all non-Federal funds to pay for the fringe benefits.
The Commission now seeks comment on whether the rules should be amended to permit, but not require, State, district and local party committees to use the same allocation rules for fringe benefits as are used for salaries and wages, instead of allocating fringe benefits as administrative costs.
In Advisory Opinion 2004-12, the Commission determined that a State party committee may pay for Federal election activity with Federal funds raised at events where the costs of such events had been paid for with a combination of Federal and non-Federal funds through the use of the “funds received” method under 11 CFR 106.7(d)(4).
The Commission seeks comment on all the issues identified in this NPRM as well as the proposed rule.
The Commission certifies that the attached proposed rule, if promulgated, would not have a significant economic impact on a substantial number of small entities. The basis for this certification is that the organizations affected by this proposed rule are State, district, and local party committees, which are not “small entities” under 5 U.S.C. 601. These not-for-profit committees do not meet the definition of “small organization” which requires that the enterprise be independently owned and operated and not dominant in its field. 5 U.S.C. 601(4). State political party committees are not independently owned and operated because they are not financed and controlled by a small identifiable group of individuals, and they are affiliated with the larger national political party organizations. In addition, the State political party committees representing the Democratic and Republican parties have a major controlling influence within the political arena of their State and are thus dominant in their field. District and local party committees are generally considered affiliated with the State committees and need not be considered separately. To the extent that any State party committees representing minor political parties might be considered “small organizations,” the number affected by this proposed rule is not substantial.
Campaign funds, Political committees and parties, Reporting and recordkeeping requirements.
Campaign funds, Nonprofit organizations, Political committees and parties, Political candidates, Reporting and recordkeeping requirements.
For reasons set out in the preamble, subchapters A and C of chapter 1 of title 11 of the Code of Federal Regulations would be amended to read as follows:
1. The authority citation for part 106 would continue to read as follows:
2 U.S.C. 438(a)(8), 441a(b), 441a(g).
2. Paragraphs (c)(1) and (d)(1) introductory text and (d)(1)(i) of § 106.7 would be revised to read as follows:
(c)
(1)
(i) Pay for such salaries and wages with funds from their Federal account; or
(ii) Allocate such salaries and wages between their Federal and non-Federal accounts in accordance with paragraph (d)(1)(i) of this section.
(d)
(1)
(i) For salaries and wages for employees who spend 25% or less of their compensated time in a given month on Federal election activities or on activities in connection with a Federal election, the committee shall allocate at least 25% of such salaries and wages to a Federal account. Any portion of salaries and wages not allocated to a Federal account must be paid from funds that comply with State law.
1. The authority citation for part 300 would continue to read as follows:
2 U.S.C. 434(e), 438(a)(8), 441a(a), 441i, 453.
2. Paragraph (c)(2) of § 300.33 would be revised to read as follows:
(c) * * *
(2)
Environmental Protection Agency (EPA).
Proposed rule.
The EPA is proposing to approve revisions to the State Implementation Plan (SIP) submitted by the Governor of New Mexico on December 16, 2004. The proposed revisions will incorporate the Early Action Compact (EAC) Clean Air Action Plan into the New Mexico SIP. The EAC is a voluntary program between the New Mexico Department of Environment (NMED), the Cities of Aztec, Bloomfield, and Farmington, San Juan County, and EPA. EPA is proposing approval of the photochemical modeling in support of the attainment demonstration of the 8-hour ozone standard within the San Juan County EAC area. EPA is proposing these actions as a strengthening of the SIP in accordance with the requirements of sections 110 and 116 of the Federal Clean Air Act (the Act). The revisions will contribute to improvement in air quality and continued attainment of the 8-hour National Ambient Air Quality Standard (NAAQS) for ozone.
Comments must be received on or before June 3, 2005.
Submit your comments, identified by Regional Material in EDocket (RME) ID No. R06-OAR-2005-NM-0002, by one of the following methods:
The State submittal is also available for public inspection at the State Air Agency listed below during official business hours by appointment:
New Mexico Environment Department, Air Quality Bureau, 2048 Galisteo, Santa Fe, New Mexico 87505.
Mr. Alan Shar, Air Planning Section (6PD-L), EPA Region 6, 1445 Ross Avenue,
Throughout this document “we,” “us,” and “our” refer to EPA.
Today we are proposing to approve a revision to the New Mexico SIP under sections 110 and 116 of the Act, as a strengthening of the SIP. This revision will incorporate the San Juan County EAC Clean Air Action Plan into the New Mexico SIP. The EAC is a voluntary agreement between the NMED, the Cities of Aztec, Bloomfield, and Farmington, San Juan County, and EPA. The geographic area included in this EAC consists of San Juan County, with the exception of the Navajo Nation and the Ute Mountain Reservation. See section II of this document for more information on the EAC. The intent of this agreement, known as the San Juan County EAC, is to reduce ozone pollution and thereby maintain the 8-hour ozone standard. The San Juan County EAC sets forth a schedule to develop technical information about ozone pollution, and adopt and implement a Clean Air Action Plan, consisting of emissions control measures to ensure San Juan County achieves compliance with the 8-hour ozone standard by December 31, 2007. The revision also includes an attainment demonstration and associated local voluntary measures.
The Early Action Compact was developed to allow communities an opportunity to reduce emissions of ground level ozone pollution sooner than the Act requires. The EAC program was designed for areas that approach or monitor exceedences of the 8-hour ozone standard, but are in attainment for the 1-hour ozone standard. The compact is a voluntary agreement between local communities, States and tribal air quality officials, and EPA which allows States and local entities to make decisions that will accelerate meeting the new 8-hour ozone standard using locally tailored pollution controls instead of Federally mandated control measures. Early planning and early implementation of control measures that improve air quality will likely accelerate protection of public health. The EPA believes the EAC program provides an incentive for early planning, early implementation, and early reductions of air emissions in the affected areas, thus leading to an expeditious attainment and maintenance of the 8-hour ozone standard.
Communities with EACs will have plans in place to reduce air pollution at least two years earlier than required by the Act. In December 2002, a number of States submitted compact agreements pledging to reduce emissions earlier than required for compliance with the 8-hour ozone standard. These States and local communities had to meet specific criteria, and agreed to meet certain milestones for development and implementation of the compact. States with communities participating in the EAC program had to submit implementation plans for meeting the 8-hour ozone standard by December 31, 2004, rather than June 15, 2007, the deadline for all other areas not meeting the 8-hour standard. The EAC program required communities to develop and implement air pollution control strategies, account for emissions growth, and demonstrate their attainment and maintenance of the 8-hour ozone standard. For more information on the EAC program see section V of our December 16, 2003 (68 FR 70108) publication entitled “Deferral of Effective Date of Nonattainment Designations for 8-hour Ozone National Ambient Air Quality Standards for Early Action Compact Areas.”
On April 15, 2004, EPA designated all areas for the 8-hour ozone standard. The EPA deferred the effective date of nonattainment designations for those EAC areas that were violating the 8-hour standard but continue to meet the compact milestones. We announced the details of this deferral on April 15, 2004 as part of the Clean Air Rules of 2004. See our April 30, 2004 (69 FR 23858) publication entitled “Air Quality Designations and Classifications for the 8-Hour Ozone National Ambient Air Quality Standards; Early Action Compact Areas with Deferred Effective Dates.”
The SIP is a set of air pollution regulations, control strategies and technical analyses developed by the state, to ensure that the state meets the NAAQS. These ambient standards are established under section 109 of the Act and they currently address six criteria pollutants: Carbon monoxide, nitrogen dioxide, ozone, lead, particulate matter, and sulfur dioxide. The SIP is required by Section 110 of the Act. These SIPs can be extensive, containing state regulations or other enforceable documents and supporting information such as emission inventories, monitoring networks, and modeling demonstrations.
In support of this proposal, the NMED conducted an ozone photochemical modeling study developed for the Four Corners/San Juan air basin. This study meets EPA's modeling requirements and guidelines, including such items as the base year inventory development, the growth rate projections, and the performance of the model. See our Technical Support Document (TSD) for more information about this modeling study. The modeling submitted in support of this proposal demonstrates that San Juan EAC area would be in attainment with the 8-hour ozone NAAQS in 2007 and 2012. The modeling results for the Four Corners/San Juan air basin show or predict a maximum ozone design value of 74.78 parts per billion (ppb) for the 2007. This predicted maximum design value is well below the 8-hour ozone limit of 85 ppb. In fact, the San Juan EAC area would attain the 8-hour ozone NAAQS absent requiring additional local control measures or emissions reductions. See section VI of this document for a list of adopted measures as a part of this EAC. Therefore, we are proposing to approve NMED's EAC 8-hour ozone attainment demonstration plan for the Four Corners/San Juan air basin.
We are proposing to approve this EAC SIP submittal because implementing the requirements in the San Juan EAC Clean Air Action Plan will help ensure San Juan County's continued compliance with the 8-hour ozone standard through December 31, 2007. We have reviewed the submittal and determined that it is consistent with the requirements of the Act, EPA's policy, and EAC's protocol. Our TSD contains more information concerning this rulemaking action.
The ozone concentrations in San Juan County have not exceeded the federal 1-hour ozone standard during the past several years. While the ozone concentrations in this EAC area have
For compliance and milestone determination purposes the San Juan EAC area has already started implementing the above measures, prior to the December 31, 2005 EAC deadline, on an on-going basis.
On April 15, 2004, EPA designated the San Juan County area as attainment for the 8-hour ozone standard. The measures outlined in this submittal provide sufficient information to conclude that the San Juan County EAC area will complete each compact milestone requirement, including attainment of the 8-hour ozone standard by 2007. However, one of the principles of the EAC protocol is to provide safeguards to return areas to traditional SIP requirements should an area fail to comply with the terms of the compact. If, as outlined in our guidance and in 40 CFR 81.300, a compact milestone is missed and the San Juan County EAC area is still in attainment of the 8-hour ozone standard, we would take action to propose and promulgate a finding of failure to meet the milestone, but the ozone attainment designation and the approved SIP elements would remain in effect. If the EAC area subsequently violates the 8-hour ozone standard and the area has missed a compact milestone, we would also consider factors in section 107(d)(3)( A) of the Act in deciding whether to redesignate the EAC area to nonattainment for the 8-hour ozone NAAQS.
The EPA is proposing to approve the aforementioned changes to New Mexico's SIP because the revisions are consistent with the Act and EPA regulatory requirements. See sections IV and VI of this document for more information.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason and because this action will not have a significant, adverse effect on the supply, distribution, or use of energy, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This proposed action merely proposes to approve state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This proposed rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). Although Executive Order 13175 does not apply to this rule, tribal officials, through their participation in the Four Corners Ozone Task Force, have been active in the development of this rule. This action also does not have Federalism implications because it does not have substantial direct effects 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.
In reviewing SIP submissions under the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note), EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 do not apply. This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Environmental protection, Air pollution control, Ozone, Nitrogen oxide, Reporting and recordkeeping requirements.
42 U.S.C. 7401
Office of Governmentwide Policy, General Services Administration (GSA).
Proposed rule.
The General Services Administration is amending the Federal Management Regulation (FMR) by adding the requirement that transportation managers who obligate the Government for rate tender procurements must be properly authorized in writing. This written authorization will certify that the transportation manager is competent and trained in transportation management and has the authority to commit Government funds for the procurement of transportation or transportation services. The FMR and any corresponding documents may be accessed at GSA's website at
Submit comments identified by FMR case 2005-102-1 by any of the following methods:
• Federal eRulemaking Portal:
• Agency Web Site:
• E-mail:
• Fax: 202-501-4067.
• Mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405.
The Regulatory Secretariat, Room 4035, GS Building, Washington, DC, 20405, at (202) 208-7312 for information pertaining to status or publication schedules. For clarification of content, contact Ms. Elizabeth Allison, Office of Governmentwide Policy, Transportation Management Policy Division, at (202) 219-1729, or e-mail at
31 U.S.C. 3325 and 31 U.S.C. 3527 address the issues of liability and relief of Certifying and Disbursing Officers. The regulation proposes to clarify the issue of accountability, liability, and relief by adding an additional requirement that will mandate that any person or persons who obligates Government funds have proper written authority from the Agency Head or his/her designee.
It is the responsibility of Government associates, contractors, and/or agents of the Government to uphold their duty of spending public money in a responsible fiduciary manner. Therefore, it is the intent of this proposed regulation to cover not only certifying or disbursing officers as covered in 31 U.S.C. 3322 and 3528, but all persons holding the responsibility of procuring or paying for transportation or transportation services with Government funds to be held accountable for their transactions. Person(s) with proper authority must display this authority in plain view.
Federal associates have a duty to uphold the public trust, prevent the occurrence of conflicts of interest, and to endeavor at all times to use their position for the public benefit. It is expected that any Government employee arranging for transportation will follow standards of professionalism in the relationship between the Government shipper and the transportation service provider (TSP). As transportation managers, employees are entrusted to spend money allocated to their agency effectively and efficiently. Employees must spend those funds wisely by continually seeking for required transportation services at the lowest cost and the best value to the Government.
For transportation services acquired under the authorities of the Federal Acquisition Regulation (FAR) (48 CFR Chapter 1), contracting officers shall be appointed in writing on a Standard Form 1402, Certificate of Appointment, which shall state any limitations on the scope of authority to be exercised, other than limitations contained in applicable law or regulations. Appointing officials shall maintain files containing copies of all appointments that have not been terminated.
Agency heads are encouraged to delegate micro-purchase authority to individuals who are employees of an executive agency or members of the Armed Forces of the United States who will be using the supplies or services being purchased. Individuals delegated this authority shall be appointed in writing in accordance with agency procedures.
The FAR further states that procurement officers are to utilize the talent and experience of a qualified transportation officer for any transportation procurements. At a minimum, transportation managers, conducting a FAR procurement, will have Contracting Officer Representative (COR) training. There are a number of classes being offered in the commercial sector. GSA prescribes the Federal Acquisition Institute's Contracting Officer Representative (COR) Mentor Program that is on-line, for its CORs.
It is, therefore, reasonable to expect that transportation managers, acquiring transportation services utilizing a rate tender, will be qualified, trained in transportation management, and have experience with a rate tender. Transportation managers generally are not formally delegated the authority to perform their functions, nor are they required to meet any specialized training experience or education requirements. This proposed rule describes procedures with respect to delegations of authority, and outlines training and experience requirements. Transportation managers, acquiring transportation for one-time-only shipments utilizing procurements other than the FAR or a rate tender, should have the authority to commit Government funds. The delegated authority will be in writing.
This proposed rule adds the requirement and clarifies the authority and training that transportation managers must have to obligate Government expenditures for the procurement of transportation or transportation services utilizing a rate tender procurement.
This proposed rule adds the requirement and clarifies the issue of
GSA has determined that this proposed rule is not a significant rule for the purposes of Executive Order 12866 of September 30, 1993.
This proposed rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601,
The Paperwork Reduction Act does not apply because the proposed rule does not impose recordkeeping or information collection requirements, or the collection of information from offerors, contractors, or members of the public which require the approval of the Office of Management and Budget (OMB) under 44 U.S.C. 3501
This proposed rule is exempt from Congressional review prescribed under 5 U.S.C. 801 since it relates solely to agency management and personnel.
Accounting, Claims, Government property management, Reporting and recordkeeping requirements, Surplus Government property, Transportation.
For the reasons set forth in the preamble, GSA proposes to amend 41 CFR parts 102-117 and 102-118 as set forth below:
1. The authority citation for 41 CFR part 102-117 continues to read as follows:
31 U.S.C. 3726, 40 U.S.C. 121(c), and 49 U.S.C. 10721, 13712, and 15504.
2. Amend Part 102-117 by adding Subpart M to read as follows:
(a) The head of the agency or someone delegated that authority must grant the employee the authority, in writing, to obligate Government funds using rate tenders to procure transportation or transportation services for that U.S. Government agency or agency component.
(b) Transportation managers, acquiring transportation for one-time-only shipments utilizing procurements other than the Federal Acquisition Regulation (48 CFR Chapter 1) or a rate tender, must have the authority to commit Government funds. The delegated authority must be in writing.
(c) This authority must be posted where anyone may see that the employee is an experienced and trained transportation manager with the authority to commit Government funds.
(a) A transportation manager is an authorized Federal employee who has been delegated to oversee the physical movement of commodities, household goods, and other freight from one location to another by a transportation service provider (TSP).
(b) Employees may be assigned the position of a transportation officer or technician under the Office of Personnel Management classification system. For specific duties associated with a particular classification for traffic managers, or traffic management specialists, see the Office of Personnel Management web site,
(c) Before you are assigned transportation management duties as an ancillary duty, you must demonstrate, at a minimum, knowledge and experience in planning and directing an overall traffic management program of an organization as well as—
(1) Negotiating with TSPs;
(2) Representing the organization's position in disputes, such as disagreements over rates and charges;
(3) Developing, evaluating and advising on traffic management policies and programs;
(4) Understanding a particular transportation program such as freight, personal property, or passenger;
(5) Understanding the transportation requirements and systems for specific geographical areas;
(6) Understanding programs that require transportation, such as contract administration, supply, storage, distribution, or inventory management;
(7) Understanding contract methodology for the procurement of specific transportation services;
(8) Analyzing transportation costs to develop alternatives in procurement, storage, distribution, or mobilization; and
(9) Understanding transportation policies and procedures, as well as knowledge of rate tenders and other regulations.
(a) The minimum experience for transportation as an ancillary duty would be a formal 40-hour training course specializing in transportation management.
(b) Transportation managers with full-time responsibilities as transportation managers should have documented minimum experience requirements for transportation as an ancillary duty with a minimum of an 80-hour training course and 2-year on-the-job training. College or university class or degrees are highly desirable and may be substituted for on-the-job training.
(c) Informal training may be acquired through on-the-job training.
(d) Classroom training is available from commercial sources such as transportation associations, institutes, and colleges and universities. Much of the training is available through computer on-line classes, but other courses are taught at specific locations throughout the United States.
(e) There are also Government training forums and schools, but these may be agency specific. The Department
(f) Additional training is required if the employee moves or otherwise is involved with hazardous material, hazardous waste, or other specialized transportation requirements. This training must be current and well documented.
(a) Training documentation includes a certificate of completion from a class that is accredited with the International Association for Continuing Education and Training (IACET), at a minimum, or a degree from an accredited university or college, indicating the hours of training, experience level attained, and course description.
(b) A supervisor must acknowledge in writing that the employee has attained a level of experience and the number of years of experience that is credited to the logistics or transportation management field.
3. The authority citation for 41 CFR part 102-118 continues to read as follows:
31 U.S.C. 3726, 40 U.S.C. 121(c), and 49 U.S.C. 10721, 13712, and 15504.
4. Redesignate § 102-118.350 as § 102-118.351.
5. Add new § 102-118.350 to read as follows:
(a) In accordance with 31 U.S.C. 3322 and 3528, certifying and disbursing officers are accountable for expenditures of public funds. However, any Government employee who has the responsibility to procure transportation must also have proper authority to obligate funds. This authority must be in writing from the head of your agency or his or her designee.
(b) For further information and training requirements, see part 102-117, subpart M, of this subchapter.
Proposed rule; extension of comment period.
In this document, the Wireless Telecommunications Bureau (WTB) of the Federal Communications Commission (Commission) extends the periods for both the comment and reply comment deadlines established in the Notice of Proposed Rulemaking (
The agency must receive comments on or before May 18, 2005; and reply comments on or before June 2, 2005.
You may submit comments, identified by WT Docket No. 05-62, by any of the following methods:
•
•
•
•
•
Michael Connelly, Wireless Telecommunications Bureau at 202-418-0620, or via the Internet at
This is a summary of the Federal Communications Commission's Order (
2. On April 14, 2005, the WTB released an
3. On April 4, 2005, the United Telecom Council, the National Association of Manufacturers and MRFAC, the Association of American Railroads, the American Petroleum Institute, the National Rural Electric Cooperative Association, and the Enterprise Wireless Alliance jointly filed a request for an extension of time to submit comments. They contend that the current comment period does not provide commenters with a sufficient length of time to provide thorough and meaningful responses. They also state that they are conducting discussions with other interested parties in an effort to reach consensus that would allow a consistent filing position in this matter for most of the 900 MHz user communities, and believe that this effort will not be complete before the comment filing deadline. On April 12, 2005, Nextel Communications, Inc. filed an opposition to the comment period extension request, arguing that any delay would adversely impact the Commission's 800 MHz rebanding effort, 69 FR 67823, November 22, 2004, and would delay Nextel's opportunity to obtain, through the auction process, any unused 900 MHz B/ILT spectrum.
4. Pursuant to sections 4(i) and 4(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and 154(j), and §§ 0.131, 0.331, and 1.46 of the Commission's rules, 47 CFR 0.131, 0.331, and 1.46, the deadline for filing comments in response to the
National Highway Traffic Safety Administration (NHTSA), DOT.
Notice of regulatory review; request for comments.
The National Highway Traffic Safety Administration (NHTSA) seeks comments on the economic impact of its regulations on small entities. As required by Section 610 of the Regulatory Flexibility Act, we are attempting to identify rules that may have a significant economic impact on a substantial number of small entities. We also request comments on ways to make these regulations easier to read and understand. The focus of this notice is rules that specifically relate to passenger cars, multipurpose passenger vehicles, trucks, buses, trailers, incomplete vehicles, motorcycles, and motor vehicle equipment.
Comments must be received on or before July 5, 2005.
You should mention the docket number of this document in your comments and submit your comments in writing to: Docket Management System, U.S. Department of Transportation, Room PL-401, 400 Seventh Street, SW., Washington, DC 20590. You may call Docket Management at: (202) 366-9324. You may visit the Docket from 10 a.m. to 5 p.m. Monday through Friday.
Nita Kavalauskas, Office of Regulatory Analysis, Office of Planning, Evaluation and Budget, National Highway Traffic Safety Administration, U.S. Department of Transportation, 400 Seventh Street, SW., Washington, DC 20590. Telephone: (202) 366-2584. Facsimile (fax): (202) 366-2559.
Section 610 of the Regulatory Flexibility Act of 1980 (Pub. L. 96-354), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), requires agencies to conduct periodic reviews of final rules that have a significant economic impact on a substantial number of small business entities. The purpose of the reviews is to determine whether such rules should be continued without change, or should be amended or rescinded, consistent with the objectives of applicable statutes, to minimize any significant economic impact of the rules on a substantial number of such small entities.
The Department of Transportation (DOT) published its Semiannual Regulatory Agenda on November 22, 1999, listing in Appendix D (64 FR 64684) those regulations that each operating administration will review under section 610 during the next 12 months. Appendix D also contains DOT's 10-year review plan for all of its existing regulations.
The National Highway Traffic Safety Administration (NHTSA, “we”) has divided its rules into 10 groups by subject area. Each group will be reviewed once every 10 years, undergoing a two-stage process—an Analysis Year and a Review Year. For purposes of these reviews, a year will coincide with the fall-to-fall publication schedule of the Semiannual Regulatory Agenda. Thus, Year 1 (1998) began in the fall of 1998 and ended in the fall of 1999; Year 2 (1999) began in the fall of 1999 and ended in the fall of 2000; and so on.
During the Analysis Year, we will request public comment on and analyze each of the rules in a given year's group to determine whether any rule has a significant impact on a substantial number of small entities and, thus, requires review in accordance with section 610 of the Regulatory Flexibility Act. In each fall's Regulatory Agenda, we will publish the results of the analyses we completed during the previous year. For rules that have subparts, or other discrete sections of rules that do have a significant impact on a substantial number of small entities, we will announce that we will be conducting a formal section 610 review during the following 12 months.
The section 610 review will determine whether a specific rule should be revised or revoked to lessen its impact on small entities. We will consider: (1) The continued need for the rule; (2) the nature of complaints or comments received from the public; (3) the complexity of the rule; (4) the extent to which the rule overlaps, duplicates, or conflicts with other federal rules or with state or local government rules; and (5) the length of time since the rule has been evaluated or the degree to which technology, economic conditions,
During Year 7 (2004), the Analysis Year, we will conduct a preliminary assessment of the following sections of 49 CFR part 571:
We are seeking comments on whether any requirements in Parts 571.214, 571.216, 571.218, and 571.219 have a significant economic impact on a substantial number of small entities. “Small entities” include small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations under 50,000. Business entities are generally defined as small businesses by Standard Industrial Classification (SIC) code, for the purposes of receiving Small Business Administration (SBA) assistance. Size standards established by SBA in 13 CFR 121.201 are expressed either in number of employees or annual receipts in millions of dollars, unless otherwise specified. The number of employees or annual receipts indicates the maximum allowed for a concern and its affiliates to be considered small. If your business or organization is a small entity and if any of the requirements in Parts 571.214, 571.216, 571.218, and 571.219 have a significant economic impact on your business or organization, please submit a comment to explain how and to what degree these rules affect you, the extent of the economic impact on your business or organization, and why you believe the economic impact is significant.
If the agency determines that there is a significant economic impact on a substantial number of small entities, it will ask for comment in a subsequent notice during the Review Year on how these impacts could be reduced without reducing safety.
Executive Order 12866 and the President's memorandum of June 1, 1998, require each agency to write all rules in plain language. Application of the principles of plain language includes consideration of the following questions:
• Have we organized the material to suit the public's needs?
• Are the requirements in the rule clearly stated?
• Does the rule contain technical language or jargon that is not clear?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the rule easier to understand?
• Would more (but shorter) sections be better?
• Could we improve clarity by adding tables, lists, or diagrams?
• What else could we do to make the rule easier to understand?
If you have any responses to these questions, please include them in your comments on this document.
In conjunction with our section 610 reviews, we will be performing plain language reviews over a ten-year period on a schedule consistent with the section 610 review schedule. We will review part 571 to determine if these regulations can be reorganized and/or rewritten to make them easier to read, understand, and use. We encourage interested persons to submit draft regulatory language that clearly and simply communicates regulatory requirements, and other recommendations, such as for putting information in tables that may make the regulations easier to use.
Your comments must be written and in English. To ensure that your comments are correctly filed in the Docket, please include the docket number of this document in your comments.
Your comments must not be more than 15 pages long. (49 CFR 553.21.) We established this limit to encourage you to write your primary comments in a concise fashion. However, you may attach necessary additional documents to your comments. There is no limit on the length of the attachments.
Please submit two copies of your comments, including the attachments, to Docket Management at the address given above under
Comments may also be submitted to the docket electronically by logging onto the Docket Management System Web site at
If you wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail.
If you wish to submit any information under a claim of confidentiality, you should submit three copies of your
We will consider all comments that Docket Management receives before the close of business on the comment closing date indicated above under DATES. To the extent possible, we will also consider comments that Docket Management receives after that date.
You may read the comments received by Docket Management at the address given above under
You may also see the comments on the Internet. To read the comments on the Internet, take the following steps:
(1) Go to the Docket Management System (DMS) Web page of the Department of Transportation (
(2) On that page, click on “search.”
(3) On the next page (
(4) On the next page, which contains docket summary information for the docket you selected, click on the desired comments. You may download the comments. However, since the comments are imaged documents, instead of word processing documents, the “pdf” versions of the documents are word searchable.
Please note that even after the comment closing date, we will continue to file relevant information in the Docket as it becomes available. Further, some people may submit late comments. Accordingly, we recommend that you periodically check the Docket for new material.
Fish and Wildlife Service, Interior.
Revised proposed rule; reopening of public comment period, notice of availability of draft economic analysis and draft environmental assessment, updated legal descriptions for critical habitat units.
We, the U.S. Fish and Wildlife Service (Service), announce the availability of the draft economic analysis and draft environmental assessment for the proposal to designate critical habitat for the Roswell springsnail (
Comments must be submitted directly to the Service (see
If you wish to comment, you may submit your comments and materials by any one of several methods:
1. You may submit written comments and information to the Susan MacMullin, Field Supervisor, New Mexico Ecological Services Field Office, 2105 Osuna Road NE, Albuquerque, New Mexico 87113.
2. You may hand-deliver written comments and information to our New Mexico Ecological Services Field Office, at the above address, or fax your comments to 505-346-2542.
3. You may send your comments by electronic mail (e-mail) to “
You may obtain copies of the draft economic analysis and draft environmental assessment by mail by contacting the person listed under
Susan MacMullin, Field Supervisor, New Mexico Ecological Services Field Office (telephone 505-761-2525, facsimile 505-346-2542).
We intend any final action resulting from this proposal to be as accurate and as effective as possible. Therefore, we solicit comments or suggestions from the public, other concerned governmental agencies, the scientific community, industry, or any other interested party concerning this proposed rule. We particularly seek comments concerning:
(1) The reasons why any habitat should or should not be determined to be critical habitat as provided by section 4 of the Act, including whether the benefits of designation will outweigh any threats to the species resulting from designation;
(2) Specific information on the amount and distribution of the four invertebrates' habitat, and which habitat is essential to the conservation of the species and why;
(3) Land use designations and current or planned activities in the subject area and their possible impacts on the species or proposed critical habitat;
(4) Whether our approach to listing or critical habitat designation could be improved or modified in any way to provide for greater public participation
(5) Any foreseeable economic, environmental, or other impacts resulting from the proposed designation of critical habitat or coextensively from the proposed listing, in particular, any impacts on small entities or families;
(6) Whether the economic analysis identifies all State and local costs. If not, what other costs are overlooked;
(7) Whether the economic analysis makes appropriate assumptions regarding current practices and likely regulatory changes imposed as a result of the listing of the species or the designation of critical habitat;
(8) Whether the economic analysis correctly assesses the effect on regional costs associated with land use controls that derive from the designation;
(9) Whether the designation will result in disproportionate economic impacts to specific areas that should be evaluated for possible exclusion from the final designation; and
(10) Whether the economic analysis appropriately identifies all costs that could result from the designation or coextensively from the listing.
Comments submitted during this comment period will be fully considered in the critical habitat determination, which will be made on or before August 1, 2005. To meet this date, all comments or proposed revisions to the draft economic analysis, draft environmental assessment, and proposed rule need to be submitted to us during the open comment period (see
Please submit electronic comments in ASCII file format and avoid the use of special characters or any form of encryption. Please also include “Attn: RIN 1018-AI15” in your e-mail subject header and your name and return address in the body of your message. If you do not receive a confirmation from the system that we have received your e-mail message, contact us directly by calling our New Mexico Ecological Services Field Office at (505) 346-2525.
Our practice is to make comments, including names and home addresses of respondents, available for public review during regular business hours. Individual respondents may request that we withhold their home address, which we will honor to the extent allowable by law. If you wish us to withhold your name or address, you must state this request prominently at the beginning of your comments. However, we will not consider anonymous comments. To the extent consistent with applicable law, we will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.
On November 22, 1985, we received a petition from Mr. Harold F. Olson, Director of the New Mexico Department of Game and Fish, to add 11 species of New Mexican mollusks to the Federal list of endangered and threatened wildlife. Roswell springsnail (
These species occur at sinkholes, springs, and associated spring runs and wetland habitats. They are found at Bitter Lake National Wildlife Refuge in Chaves County, New Mexico, one site in Pecos County, Texas, and one site in Reeves County, Texas.
In the proposed rule, we determined that these three snails and one amphipod have an exceedingly limited distribution and are imperiled by local and regional groundwater depletion, surface and groundwater contamination, oil and gas extraction activities within the supporting aquifer and watershed, and direct loss of their habitat (
If the proposed listing and critical habitat designation is finalized, section 7(a)(2) of the Act would require that Federal agencies ensure that actions they fund, authorize, or carry out are not likely to jeopardize the continued existence of the species or result in the destruction or adverse modification of critical habitat.
Section 4 of the Act requires that we consider economic and other relevant impacts prior to making a final decision on what areas to designate as critical habitat. We may revise the proposal, or its supporting documents, to incorporate or address new information received during the comment period. In particular, we may exclude an area from critical habitat if we determine that the benefits of excluding the area outweigh the benefits of including the area as critical habitat, provided such exclusion will not result in the extinction of the species. Bitter Lake National Wildlife Refuge (NWR) completed a Final Comprehensive Conservation Plan in September of 1998 that provides for protection and management of the four invertebrate species and sensitive natural habitats. We believe that there is minimal benefit from designating critical habitat for the four invertebrates within Bitter Lake NWR lands because these lands are already managed for the conservation of wildlife. We did not propose to exclude Bitter Lake NWR from the proposed critical habitat designation, but we anticipate excluding it from the final designation after further analysis and public comment.
The draft economic analysis estimates that the total post-designation costs could amount to between $6.4 million to $12.8 million over 20 years (or $3.4 to $6.8 million in present value terms and $170,000 to $339,000 annually from 2005 to 2025). Approximately 82 percent of these costs are associated with impacts to oil and gas activities on Bureau of Land Management lands within the Bitter Lake Habitat Protection Zone. Federal, State, and The Nature Conservancy management activities are expected to generate 14 percent of total forecast costs.
Below we provide corrected legal descriptions for the four invertebrates' proposed critical habitat designation. The legal descriptions published on February 12, 2002 (67 FR 6459), as part of the proposed critical habitat designation, used a less accurate method of description and contained errors. In this revised proposed rule, we are proposing updated legal descriptions for critical habitat units using GIS coordinates, which is our current (and a more precise) method of identifying critical habitat units. The general unit locations of proposed critical habitat on the maps in the February 12, 2002, proposal remain correct, and we are not republishing them in this document. The proposed updated legal descriptions using GIS coordinates may be found in the rule portion of this document.
Since the publication of the February 12, 2002, proposed rule, the common and scientific names of one of the snails proposed for listing as endangered with critical habitat have changed. The proposed rule specified this snail as Koster's tryonia (
This revised proposed rule affirms the information contained in the February 12, 2002, proposed rule (67 FR 6459) concerning Executive Order 12866 and the Regulatory Flexibility Act; Executive Orders 13211, 12630, 13132, 12988, and 13175; the Unfunded Mandates Reform Act; the Paperwork Reduction Act; the National Environmental Policy Act; and the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951).
Endangered and threatened species, Exports, Imports, Reporting and recordkeeping requirements, Transportation.
Accordingly, we propose to amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below:
1. The authority citation for part 17 continues to read as follows:
16 U.S.C. 1361-1407; 16 U.S.C. 1531-1544; 16 U.S.C. 4201-4245; Pub. L. 99-625, 100 Stat. 3500, unless otherwise noted.
2. Amend § 17.11(h) as follows:
a. Add Pecos assiminea snail, Koster's springsnail, and Roswell springsnail in alphabetical order under “SNAILS'; and
b. Add Noel's amphipod in alphabetical order under “CRUSTACEANS”, to the List of Endangered and Threatened Wildlife to read as follows:
(h) * * *
3. Amend § 17.95 as follows:
a. In paragraph (f), add critical habitat for Pecos assiminea, Koster's springsnail, and Roswell springsnail; and
b. In paragraph (h), add critical habitat for Noel's amphipod, in the same alphabetical order as these species occur in § 17.11(h).
(f)
Pecos assiminea (
1. A portion of the critical habitat for the Pecos assiminea is located in paragraph (f) of this section within the text for the Koster's springsnail. These species occur together, and critical habitat and the primary constituent elements are identical for these snails. In addition, critical habitat is depicted for the Pecos assiminea in:
(i) Pecos County, TX, including the Diamond Y Springs complex, located at longitude −102.923461 and latitude 30.999271, and approximately 6.8 km (4.2 mi) of the spring outflow ending at about 0.8 km (0.5 mi) downstream of the State Highway 18 bridge crossing (approximately longitude −102.885137 and latitude 31.041405). Also included is approximately 0.8 km (0.5 mi) of Leon Creek upstream of the confluence with Diamond Y Draw. All surrounding riparian vegetation and mesic soil environments within the spring, outflow, and portion of Leon Creek are also proposed for designation as these areas are considered habitat for the Pecos assiminea. Legal description (geographic projection, North American Datum 83): Longitude (decimal degrees), Latitude (decimal degrees):
(ii) Reeves County, TX, at the East Sandia Spring complex. East Sandia Spring is located at longitude −103.728918, latitude 30.991012. The designation includes the springhead itself, surrounding seeps, and all submergent vegetation and moist soil habitat found at the margins of these areas. These areas are considered habitat for the Pecos assiminea. Legal description (geographic projection, North American Datum 83): Longitude (decimal degrees), Latitude (decimal degrees):
(iii) [Reserved for maps.]
(2) The primary constituent elements of critical habitat for Pecos assiminea are found in paragraph (f) of this section within the text for Koster's springsnail. In addition, Pecos assiminea requires moist soil at stream or spring run margins with hydrophytic vegetation such as salt grass or sedges.
1. Critical habitat is depicted for the Koster's springsnail in Chaves County, NM, and includes areas within the Bitter Lake National Wildlife Refuge (Sago Springs; Bitter Creek; the adjacent gypsum sinkholes; portions of impoundments 3, 5, 6, 7, and 15; and Hunter Marsh). The designation includes all springs, seeps, sinkholes, and outflows surrounding Bitter Creek, Refuge impoundments, and the Sago Springs complex. Legal description (geographic projection, North American Datum 83):
(i) Northern section, Longitude (decimal degrees), Latitude (decimal degrees):
(ii) Southern section, Longitude (decimal degrees), Latitude (decimal degrees):
(2) [Reserved for map.]
(3) Within these areas, the primary constituent elements include permanent, flowing, unpolluted fresh to moderately saline water; slow to moderate velocities of water over substrates (a surface on which a plant or animal grows or is attached) ranging from deep organic silts to limestone cobble and gypsum substrates; presence of algae, submergent vegetation, and detritus in the substrata; water temperatures in the approximate range of 10-20 degrees Centigrade (50-68 degrees Fahrenheit) with natural diurnal and seasonal variation slightly above and below that range.
The critical habitat map and description for the Roswell springsnail is located in paragraph (f) of this section within the text for the Koster's springsnail. These species occur together, and critical habitat and the primary constituent elements are identical for these snails.
(h)
The critical habitat map and description, including the primary constituent elements, for the Noel's amphipod is located in paragraph (f) of this section, within the text for the Koster's springsnail. These species occur together, and critical habitat and the primary constituent elements are identical for this snail and the Noel's amphipod.
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments regarding (a) Whether the 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 burden including the validity of the methodology and assumptions used; (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 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 should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB),
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
Agricultural Marketing Service, USDA.
Notice.
The Agricultural Marketing Service (AMS) is announcing that lamb producers, feeders, seedstock producers, and first handlers of lamb and lamb products voting in a national referendum from January 31, 2005, through February 28, 2005, have approved the continuation of the Lamb Promotion, Research, and Information Order (Order).
Kenneth R. Payne, Chief; Marketing Programs Branch, Livestock and Seed Program; Agricultural Marketing Service (AMS), USDA, Room 2638-S; STOP 0251; 1400 Independence Avenue, SW.; Washington, DC 20250-0251, telephone number 202/720-1115, fax number 202/720-1125, or by e-mail at:
Pursuant to the Commodity Promotion, Research, and Information Act of 1996 (Act) (7 U.S.C. 7411-7425), the Department of Agriculture conducted a referendum from January 31, 2005, through February 28, 2005, among eligible lamb producers, feeders, seedstock producers, and first handlers of lamb and lamb products to determine if the Order would continue to be effective. A final rule was published in the December 27, 2004,
Of the 3,490 valid ballots cast, 2,807 (80 percent) favored and 683 (20
Therefore, based on the referendum results, the Secretary of Agriculture has determined that the required majority of eligible voters who voted in the nationwide referendum from January 31, 2005, through February 29, 2005, voted to continue the Order. As a result, the Lamb Checkoff Program will continue to be funded by a mandatory assessment on producers, seedstock producers (breeders), feeders, and exporters at the rate of one-half cent ($.005) per pound when live ovine animals are sold. The first handler, primarily packers, will pay an additional $.30 cents per head on ovine animals purchased for slaughter. Importers are not assessed.
In accordance with Paperwork Reduction Act (44 U.S.C. Chapter 35), the information collection requirements have been approved under OMB number 0581-0227.
7 U.S.C. 7411-7425.
The Department of Commerce has submitted to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 3501).
EDA must collect data and report on the results of the following principal programs. The Public Works program promotes long-range economic development in distressed areas by providing investments for vital public infrastructure and development facilities. The Economic Adjustment program offers flexible investments, including revolving loan funds, for communities facing sudden or severe economic distress. EDA's Planning program supports local planning and long-term partnerships with State, regional organizations, Economic Development Districts and Indian Tribes that assist distressed communities with strategic planning and investment activities. The University Center program is a partnership that draws on the expertise of colleges and universities to strengthen distressed communities as they strive to become economically self-sufficient. The Trade Adjustment Assistance program, authorized under the Trade Act of 1974 (19 U.S.C. 2341
The Government Performance and Results Act of 1993 (GPRA) requires Federal agencies to develop performance measures and report to Congress and their stakeholders the results of the agency's performance. To comply with GPRA, EDA must collect specific data from grant recipients to report its performance in meeting stated goals and objectives. The congressionally mandated reports include (i) the Annual Performance Plan, (ii) Annual Program Performance Report, (iii) annual Accountability Report, and (iv) annual Budgets. EDA performance measures are designed to evaluate overall program performance and not the performance of individual grantees. The information collected at project completion and various stages thereafter will be used to enhance the management and performance of EDA programs.
Written comments and recommendations for the proposed collection should be sent within thirty (30) days of publication of this notice to David Rostker, OMB Desk Officer, facsimile (202) 395-7285, or via e-mail at
DOC has submitted to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. chapter 35).
Improved coverage is one of the four major goals for Census 2010. In preparation for the 2010 Census, the Census Bureau plans to conduct the 2005 CFU operation in conjunction with the 2005 NCT.
For the 2005 CFU operation, we plan to select a sample of respondents for a telephone followup interview. This coverage operation is intended to evaluate new procedures that have been developed to improve coverage and reduce duplication.
The purpose of the 2005 CFU operation is to determine whether respondents in the 2005 NCT included all the appropriate persons on their form and excluded persons who should have been counted elsewhere. The 2005 CFU operation will attempt to assess the accuracy in which respondents report within household coverage using different rostering approaches and coverage questions. The U.S. Census Bureau will conduct the 2005 CFU from November 1, 2005 through March 6, 2006.
The U.S. Census Bureau telephone center staff will interview households selected for 2005 CFU using computer-assisted telephone interviewing (CATI). The 2005 CFU CATI instrument will include the ability to conduct interviews in Spanish.
Copies of the above information collection proposal can be obtained by calling or writing Diana Hynek, Departmental Paperwork Clearance Officer, (202) 482-0266, Department of Commerce, room 6625, 14th and Constitution Avenue, NW., Washington, DC 20230 (or via the Internet at
Written comments and recommendations for the proposed
The Department of Commerce has submitted to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the emergency provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35).
Copies of the above information collection proposal can be obtained by calling or writing Diana Hynek, Departmental Paperwork Clearance Officer, (202) 482-0266, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW., Washington, DC 20230 (or via the Internet at
Written comments and recommendations for the proposed information collection should be sent before May 9, 2005 to David Rostker, OMB Desk Officer, FAX number (202) 395-7285, or
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 5, 2005.
Direct all written comments to Diana Hynek, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Edison Gore, Acting Division Chief, Decennial Management Division, U.S. Census Bureau, Building 2, Room 2102, Washington, DC 20233-9200, (301) 763-3998.
In order to design and implement an optimal short-form-only 2010 Census, the Census Bureau has adopted a robust incremental and iterative research, development, and testing program. This program includes several special purpose tests (
The 2003 National Census Test was the first major test that we conducted in preparation for the 2010 Census. This was a two-part mail-out/mail-back test designed to evaluate alternative self-response options (paper, Internet, and telephone) and alternative presentations of the race and Hispanic origin questions. For more information, see
In 2004, we implemented a site test (the 2004 Census Test) that was used chiefly to examine the feasibility of collecting personal information using a Hand Held computer (HHC). It also studied new methods to improve coverage, including procedures for reducing duplication, and tested respondent reaction to revised race and Hispanic origin questions, examples, and instructions, including the removal of the Some other race option. For more information, see
The 2005 National Census Test, which is scheduled to begin in late summer of 2005 (Census Day is September 15, 2005), is a mail-out/mail-back test designed to evaluate alternative treatments including:
Procedures intended to improve the completeness and accuracy of reporting for short form items, especially the wording of the race and Hispanic origin questions;
1. The presentation of residence rules and other questionnaire items designed to make sure that everyone is counted only once and in the right place;
2. The effects of a bilingual Spanish/English questionnaire on response rates;
3. The feasibility of various replacement questionnaire mailing options and methods; and
4. The effects of questionnaire design improvements on data quality.
This test will be our last chance to test content on this scale in preparation for the 2010 Census. Although results from this test will not be available in time for use in planning the 2006 Census Test, they will be used to make content decisions for the 2010 Census (no later than January 2007). For more information, see
Building upon the results of the 2004 Census Test, the 2006 Census Test will help the U.S. Census Bureau achieve one of its Strategic Goals—developing a census that is cost-effective, improves
• Improving enumeration on American Indian Reservations;
• Improving coverage, including procedures to address overall coverage of population and housing and procedures to address duplication;
• Increased use of automation for data collection, including using Hand Held Computers (HHCs) for updating addresses and geographic features. The HHCs also will have expanded functionality and usability that will improve their utility during data collection followup operations;
• Addressing the needs of respondents who speak a language other than English by mailing Bilingual Questionnaires and Language Assistance Guides; and
• Improving self-response by delivering targeted replacement questionnaires and using motivational language on mailing pieces.
The Census Bureau will conduct three other operations as part of the 2006 Census Test—the 2006 Census Test Group Quarters Validation/Advance Visit operation, the 2006 Coverage Followup operation, and the 2006 Coverage Measurement operation. Brief descriptions of these operations are include below for reference purposes. These operations will be submitted to OMB separately.
The 2006 Census Test Group Quarters Validation/Advance Visit operation is designed to verify and update the Census 2000 GQ inventory in the test sites and verify information about the group quarters such as to verify the group quarter's name, address, and geocode information. This operation also will collect additional information (
The Coverage Followup operation is designed to improve coverage by collecting additional information from households which might have coverage problems. This includes households where persons may have been counted more than once (
The 2006 Coverage Followup will be conducted in two phases, telephone and personal visit. During the telephone phase, we will attempt to contact the households noted above from our call centers and complete a Coverage Followup web-based questionnaire. For cases not resolved during the telephone phase, field enumerators will visit the households and administer a paper Coverage Followup questionnaire.
The Coverage Measurement program is intended to measure the coverage of the census. In the 2006 Census Test, two field components of the Coverage Measurement Program will be conducted—the Person Interview and the Person Followup. The Person Interview instrument will collect data from a sample of households which we will compare to the data collected by the census questionnaire. In certain cases of inconsistencies, the Person Followup will be conducted to clarify the situation. The data from the Coverage Measurement Program are intended to measure erroneous enumerations and persons that were missed when they should have been counted. In the 2006 Census Test, changes to these operations are being tested so they will not be used to formally assess the coverage of the 2006 Census Test enumeration.
We will conduct the 2006 Census Test in two sites, one urban and one rural. The urban site, Travis County 2006 Census Test site, will consist of the central portion of Travis County, Texas. The rural site, the Cheyenne River Reservation American Indian Reservation and Tribal Trust Lands, is located in South Dakota. These sites were selected because they contain demographic characteristics associated with specific test objectives that will support key research questions and evaluation requirements. Plans for this test are subject to Congressional appropriation of requested funds.
Both sites combined contain about 200,000 housing units and a variety of group quarters. The temporary field office that we will establish in each site will manage staffing, training, and the data collection.
Prior to the actual enumeration, enumerators will conduct Address Canvassing in both sites using HHCs. They will attempt to contact every structure that is or could be a place where people live or stay (including Other Living Quarters which may be Group Quarters or housing units) in order to update the maps and address lists that we will use for conducting the enumeration.
This test will be the first time that we have attempted to automate the Address Canvassing operation by using HHCs. An automated process which will capture address and geographic feature updates in real time will be faster than updating the lists and geographic features manually and will reduce the costs and clerical errors that result from keying and digitizing. We also will use the results of Address Canvassing to continue the process of integrating the address list for Group Quarters with the address list for housing units in order to reduce duplication and geographic errors and improve data quality for Group Quarters. The 2006 Census Test also will include our first attempt to collect GPS coordinates for structures during the Address Canvassing operation.
We will use different enumeration procedures for each site. We will enumerate the rural site using the Update/Enumerate method—a method of data collection designed for communities like the Cheyenne River Reservation with special enumeration needs and where many housing units may not have house-number-and-street-name mailing addresses.
During Update/Enumerate, enumerators will update the addresses and maps as they visit each address in their assignment areas, and then enumerate the residents during the same visit. This operation is scheduled to occur between March 13, 2006 and May 12, 2006.
Respondents in the urban site (Travis County 2006 Census Test site) will receive their questionnaires by mail. The enumeration strategy that we will use for this site will be similar to the one that we used in mail-out/mail-back areas in the 2004 Census Test. The multi-part mailing strategy will consist of an advance letter, an initial mailing package, a blanket reminder post card, and a replacement questionnaire package.
In order to test the effect of deadline messages, some respondents will receive mailings that include
The advance letter will be delivered between March 8, 2006 and March 10, 2006. This letter will inform respondents that they will soon receive a census form. About a week later, each address in the Travis County 2006 Census Test site will receive an initial mailing package that includes the questionnaire. The questionnaires for some areas will be in English, while housing units in other areas will receive a bilingual (English/Spanish) form. We will use this design to test the impact of a bilingual questionnaire on response rates and data quality. In addition, the questionnaire mailing package for certain census tracts also will contain a language assistance guide designed to aid respondents whose primary language is other than English. We are including these guides in the initial questionnaire mailing for some tracts so that we can study the effect of the guides on response rates. Approximately one week after the initial questionnaires have been delivered, the USPS will deliver a blanket reminder post card to each address. This postcard will serve as a thank-you for respondents who have mailed back the questionnaire and will be a reminder for those who have not. About 10 days after the reminder postcard is delivered, each address from which we have not received a questionnaire will receive a targeted replacement questionnaire package.
Two to three weeks after Census Day (April 1, 2006), we will begin to identify the universe of addresses in the Travis County 2006 Census Test site from which we have not yet received a census response. Enumerators equipped with HHCs will visit each of these addresses between April 24, 2006 and July 15, 2006, in order to complete a census questionnaire. Enumerators will determine the Census Day status of the unit and complete a questionnaire on their HHCs based on that status. Enumerators also will complete a census questionnaire for any address that they find in their assignment areas which is not shown on their assignment lists.
The assignment lists, as well as the questionnaires and maps, will be in electronic, rather than paper form. These enumeration materials will be stored and updated as necessary on their HHCs. Each enumerator's assignment list will be updated daily to remove addresses from which a census response is received by mail after the universe identification. Updating the enumerators' assignment lists daily could reduce respondent burden as well as the cost of Nonresponse Followup by eliminating unnecessary visits to housing units that have already been enumerated.
Nonresponse Followup will incorporate several quality checks. Among these is the Vacant-Delete Check—an independent followup of all addresses classified as vacant or nonexistent for the first time during Nonresponse Followup. These addresses will be reassigned to an enumerator other than the enumerator who made the original classification. The Vacant-Delete Check enumerators will verify the Census Day status of the assigned addresses and complete a short form questionnaire that reflects the Census Day status. This operation also will be conducted using HHCs equipped with the same functionality that we use to conduct Nonresponse Followup. Other quality check procedures conducted during this operation include an independent re-interview of a portion of an enumerator's' completed cases.
Although most individuals live in conventional housing units, others live in group living situations, (
During the Group Quarters Enumeration operation, enumerators will visit group quarters in order to verify address information about the group quarters, develop a control list of all residents, and distribute questionnaires for completion. Within a few days, the same enumerator will return to the GQ to collect the completed questionnaires. In order to obtain a complete count for everyone who uses the facility, the enumerator will ask the GQ contact to supply information for any individual on the control list who did not complete a questionnaire.
The Service-Based Enumeration is designed to enumerate people experiencing homelessness who may be missed in the traditional enumeration of housing units and group quarters. As in Census 2000, people will be enumerated at places where they receive services such as meals, or a bed for the night. Service-Based Enumeration facilities for the 2006 Census Test will include only shelters (emergency and transitional shelters, hotels and motels providing shelter for people experiencing homelessness) and soup kitchens in order to test new procedures for enumerating this population. Enumerators will visit these facilities a maximum of two times during the enumeration period and enumerate the clients who are using the service at the time of the enumerator's visit.
Respondents in both sites will be able to call our existing call centers' toll-free telephone numbers to obtain information about the questionnaire and the 2006 Census Test. This service will be available in English, Spanish, and Telephone Device for the Deaf.
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 also will become a matter of public record.
The Transportation and Related Equipment Technical Advisory Committee will meet on May 18, 2005, 9:30 a.m., in the Herbert C. Hoover Building, Room 6087B, 14th Street between Pennsylvania & Constitution Avenues, NW., Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration with respect to technical questions that affect the level of export controls applicable to transportation and related equipment or technology.
1. Opening remarks and introductions. Christiansen/Borman.
2. Identification of Duties and Election of TRANSTAC Chair.
3. Update on country-specific policies.
4. Update on policies and procedures.
5. Review of Wassenaar Arrangement and Technical Working Group issues.
6. Review of Missile Technology Control Regime Issues.
7. Update on Export Administration Regulations CCL Issues.
8. Update on status of US Munitions List Review.
9. Presentation of papers, proposals, and comments by the public.
10. Review of new and open action items.
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 you forward your public presentation materials to Yvette Springer at
For more information, call Ms. Springer on (202) 482-4814.
Import Administration, International Trade Administration, Department of Commerce.
On June 1, 2004, the Department of Commerce (“the Department”) initiated a sunset review of the countervailing duty (“CVD”) order on stainless steel sheet and strip in coils (“SSSS”) from Italy pursuant to section 751(c) of the Tariff Act of 1930, as amended (“the Act”).
May 4, 2005.
Hilary Sadler, Esq., Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-4340.
On June 1, 2004, the Department initiated a sunset review of the CVD order on SSSS from Italy pursuant to section 751(c) of the Act. See Initiation of Five-Year (Sunset) Reviews, 69 FR 30874 (June 1, 2004). On December 29, 2004, the Department published the preliminary results of the full sunset review of the CVD on SSSS from Italy. See Notice of Preliminary Results of Full Sunset Review: Stainless Steel Sheet and Strip in Coils from Italy (“preliminary sunset review results”), 69 FR 78091 (December 29, 2004) and the accompanying Issues and Decision Memorandum for the Full Sunset Review of the Countervailing Duty Order on Stainless Steel Sheet and Strip in Coils from Italy: Preliminary Results (“preliminary results decision memorandum”) dated December 29, 2004.
(1) Law 675/77;
(2) Law 451/94 Early Retirement Benefits; and
(3) European Social Fund.
On February 8, 2005, the Department received a joint case brief from the Government of Italy (GOI) and the European Commission (EC).
The product covered by this order is certain stainless steel sheet and strip in
The merchandise subject to these orders is classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) at the following subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70, 7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. Although the HTSUS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise covered by these orders is dispositive.
Excluded from the scope of these orders are the following: (1) Sheet and strip that is not annealed or otherwise heat treated and pickled or otherwise descaled; (2) sheet and strip that is cut to length; (3) plate (
In response to comments by interested parties the Department has determined that certain specialty stainless steel products are also excluded from the scope of these orders. These excluded products are described below:
Flapper valve steel is defined as stainless steel strip in coils containing, by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent manganese. This steel also contains, by weight, phosphorus of 0.025 percent or less, silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent or less. The product is manufactured by means of vacuum arc remelting, with inclusion controls for sulphide of no more than 0.04 percent and for oxide of no more than 0.05 percent. Flapper valve steel has a tensile strength of between 210 and 300 ksi, yield strength of between 170 and 270 ksi, plus or minus 8 ksi, and a hardness (Hv) of between 460 and 590. Flapper valve steel is most commonly used to produce specialty flapper valves in compressors.
Also excluded is a product referred to as suspension foil, a specialty steel product used in the manufacture of suspension assemblies for computer disk drives. Suspension foil is described as 302/304 grade or 202 grade stainless steel of a thickness between 14 and 127 microns, with a thickness tolerance of plus-or-minus 2.01 micros, and surface glossiness of 200 to 700 percent Gs. Suspension foil must be supplied in coil widths of not more than 407 mm and with a mass of 225 kg or less. Roll marks may only be visible on one side, with no scratches of measurable depth. The material must exhibit residual stresses of 2 mm maximum deflection and flatness of 1.6 mm over 685 mm length.
Certain stainless steel foil for automotive catalytic converters is also excluded from the scope of these orders. The stainless strip in coils is a specialty foil with a thickness of between 20 and 110 microns used to produce a metallic substrate with a honeycomb structure for use in automotive catalytic converters. The steel contains, by weight, carbon of no more than 0.030 percent, silicon of no more than 1.0 percent, manganese of no more than 1.0 percent, chromium of between 19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of no more than 0.045 percent, sulfur of no more than 0.03 percent, lanthanum of less than 0.002 or greater than 0.05 percent, and total rare earth elements of more than 0.06 percent, with the balance iron.
Permanent magnet iron-chromium-cobalt alloy stainless strip is also excluded from the scope of these orders. This ductile stainless steel strip contains, by weight, 26 to 30 percent chromium and 7 to 10 percent cobalt, with the remainder of iron, in widths 228.6 mm or less, and a thickness between 0.127 and 1.270 mm. It exhibits magnetic remanence between 9,000 and 12,000 gauss, and a coercivity of between 50 and 300 oersteds. This product is most commonly used in electronic sensors and is currently available under proprietary trade names such as “Arnokrome III.”
Certain electrical resistance alloy steel is also excluded from the scope of these orders. This product is defined as a non-magnetic stainless steel manufactured to American Society of Testing and Materials (ASTM) specification B344 and containing, by weight, 36 percent nickel, 18 percent chromium, and 46 percent iron, and is most notable for its resistance to high-temperature corrosion. It has a melting point of 1390 degrees Celsius and displays a creep rupture limit of 4 kilograms per square millimeter at 1000 degrees Celsius. This steel is most commonly used in the production of heating ribbons for circuit breakers and industrial furnaces, and in rheostats for railway locomotives. This product is currently available under proprietary trade names, such as “Gilphy 36.”
Certain martensitic precipitation-hardenable stainless steel is also excluded from the scope of these orders. This high-strength, ductile stainless steel product is designated under the Unified Numbering System (UNS) as S45500-grade steel, and contains, by weight, 11 to 13 percent chromium and 7 to 10 percent nickel. Carbon, manganese, silicon and molybdenum each comprise, by weight, 0.05 percent or less, with phosphorus and sulfur each comprising, by weight, 0.03 percent or less. This steel has copper, niobium, and titanium added to achieve aging and will exhibit yield strengths as high as 1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after aging, with elongation percentages of 3 percent of less in 50 mm. It is generally provided in thicknesses between 0.635 and 0.787 mm, and in widths of 25.4
Finally, three specialty stainless steels typically used in certain industrial blades and surgical and medical instruments are also excluded from the scope of these orders. These include stainless steal strip in coils used in the production of textile cutting tools (
All issues raised in this review are addressed in the Issues and Decision Memorandum (“Decision Memorandum”) from Ronald K. Lorentzen, Acting director, Office of Policy, Import Administration, to Joseph A. Spetrini, Acting Assistant Secretary for Import Administration, dated April 27, 2005, which is hereby adopted by this notice. The issues discussed in the accompanying Decision Memorandum include the likelihood of continuation or recurrence of countervailable subsidies and the net countervailable subsidy likely to prevail were the order revoked. Parties can find a complete discussion of all issues raised in this review and the corresponding recommendations in this public memorandum which is on file in the Central Records Unit, room B-099, of the main Commerce building. In addition, a complete version of the Decision Memorandum can be accessed directly on the Web at
We determine that revocation of the countervailing duty order on SSSS from Italy would be likely to lead to continuation or recurrence of countervailable subsidies at the rate listed below:
This notice also serves as the only reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305 of the Department's regulations. Timely notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is violation which is subject to sanction.
We are issuing and publishing the results and notice in accordance with sections 751(c), 752, and 777(i)(1) of the Act.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of approval of hook sector operations plan and allocation of Georges Bank cod total allowable catch.
NMFS announces approval of an Operations Plan and Sector Contract titled “Amendment 1 to Georges Bank (GB) Cod Hook Sector Operations Plan and Agreement” (Sector Agreement), and the associated allocation of GB cod, consistent with regulations implementing Amendment 13 to the Northeast (NE) Multispecies Fishery Management Plan (FMP). The intent is to allow regulated harvest of groundfish by the GB cod Hook Sector (Sector), consistent with the objectives of the FMP.
Copies of the Sector Operations Plan and the environmental assessment (EA) are available upon request from the NE Regional Office at the following mailing address: George H. Darcy, Assistant Regional Administrator for Sustainable Fisheries, NMFS, Northeast Regional Office, 1 Blackburn Drive, Gloucester, MA 01930. These documents may also be requested by calling (978) 281-9315.
Thomas Warren, Fishery Policy Analyst, phone (978) 281-9347, fax (978) 281-9135, e-mail
The final rule implementing Amendment 13 (69 FR 22906, April 27, 2004) specified a process for the formation of sectors within the NE multispecies fishery and the allocation of total allowable catch (TAC) for a specific groundfish species (or Days-at-Sea (DAS)), implemented restrictions that apply to all sectors, authorized the Sector, established the GB Cod Hook Sector Area (Sector Area), and specified a formula for the allocation of GB cod TAC to the Sector. The Sector was authorized for fishing year (FY) 2004 and, based upon the hook gear landings history of its 58
NMFS provided interested parties an opportunity to comment on the Sector Agreement proposed for the 2005 fishing year through notification published in the
After consideration of the proposed Sector Agreement, which contains the Sector Contract and Operations Plan, NMFS has concluded that the Sector Agreement is consistent with the goals of the FMP and other applicable law and is in compliance with the regulations governing the development and operation of a sector as specified under 50 CFR 648.87.
There are 49 members of the approved Sector. The calculation of GB cod TAC for the Sector was based upon historic GB landings under the following two regulatory scenarios: (1) The current regulations, as implemented by Amendment 13, that restrict GB cod landings to only hook gear; and (2) based upon the proposed Framework Adjustment 40-B (currently under review by the NMFS) that, if approved, would not restrict GB cod landings to certain gear types. The allocation percentages were calculated by dividing the sum of GB cod landings by Sector members for the FYs 1996 through 2001 by the sum of the accumulated landings of GB cod harvested by all NE multispecies vessels for same time period (113,278,842 lb or 51,383 mt) for each of the two regulatory scenarios described above. The resulting numbers are 10.79 percent and 11.12 percent for the two methods, respectively. Based upon the 49 Sector members, the Sector TAC of GB cod for FY 2005 is 441 mt, and would be 455 mt, upon approval of FW 40-B.
Letters of Authorization will be issued to members of the Sector exempting them, conditional upon their compliance with the Sector Agreement, from the requirements of the Gulf of Maine trip limit exemption program, limits on the number of hooks, and the GB Seasonal Closure Area, as specified in §§ 648.86(b), 648.80(a)(4)(v), and 648.81(g), respectively.
This action is required by 50 CFR part 648 and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
National Oceanic and Atmospheric Administration (NOAA), Department of Commerce.
Notice, public workshop and opportunity for public discussion.
The National Oceanic and Atmospheric Administration publishes this notice to announce the U.S. Climate Change Science Program (CCSP) Workshop: Climate Science in Support of Decisionmaking, addressing the capability of science to inform decisionmaking. This workshop will include discussion of decisionmaker needs for scientific information on climate variability and change, as well as expected outcomes of CCSP's research and assessment activities that are necessary for resource management, adaptive planning, and policy formulation.
The workshop will be held Monday, November 14, 2005, from 8:30 a.m. to 5:30 p.m., Tuesday, November 15, 2005, from 8:30 a.m. to 5:30 p.m., and Wednesday, November 16, 2005, from 8:30 a.m. to noon.
The workshop will be held at the Marriott Crystal Gateway, 1700 Jefferson Davis Highway in Arlington, VA.
Sandy MacCracken, Telephone: 202-223 6262, Fax: 202 223 3065, Email:
The Climate Change Science Program, sponsored by 13 participating departments and agencies of the U.S. Government, coordinates and integrates scientific research on changes in climate and related systems. The CCSP Strategic Plan emphasizes the application of knowledge from CCSP to develop, improve, and disseminate products for use in decisionmaking related to climate variability and change. Many CCSP programs and activities address these needs-for example, the use of observations and seasonal-to-interannual climate forecasts in the management of natural resources, or application of scientific knowledge in integrated assessments of global change.
The CCSP Strategic Plan calls for the development of 21 Synthesis and Assessment products that provide current evaluations of climate science issues, complementing other international assessments such as that prepared by the Intergovernmental Panel on Climate Change (IPCC). To maximize the effectiveness of all CCSP products, it is vital that these products account for the science information needs of their users. The workshop will be an opportunity for scientists and user communities to discuss future application and development of climate science, recognizing the multiple ways in which climate information will be utilized to address societal and scientific challenges.
Status:
The workshop will include both plenary and breakout sessions. The plenary sessions will include presentations by leading figures from the international scientific community and the government, NGO, and private sectors. The breakout sessions will foster interactions among those involved in producing CCSP decision support resources, and representatives of the scientific, resource management, policy development, and other stakeholder communities.Abstracts for contributed presentations at the workshop that focus on development of scientific resources for decisionmaking are encouraged. Instructions on how to submit abstracts will be posted by June 1, 2005 at:
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 Groundfish Oversight Committee in May, 2005. Recommendations from the committee will be brought to the full Council for formal consideration and action, if appropriate.
The 2-day meeting will held on May 23, 2005, at 9:30 a.m. and May 24, 2005, at 8:30 a.m.
The meeting will be held at the Holiday Inn, 31 Hampshire Street, Mansfield, MA 02048; telephone: (508) 339-2200.
Paul J. Howard, Executive Director, New England Fishery Management Council (978) 465-0492. Requests for special accommodations should be addressed to the New England Fishery Management Council, 50 Water Street, Newburyport, MA 01950; telephone: (978) 465-0492.
The Groundfish Oversight Committee will hold a 2-day meeting to identify measures for the biennial adjustment to the Northeast Multispecies Fishery Management Plan. The schedule for this meeting is shown below. Members of the public are cautioned that the Committee may deviate from this schedule, if necessary, in order to complete its work. While the Committee will make every effort to adhere to the agenda, topics may be discussed at different times, or on different days, than planned.
Tentatively identified as Framework Adjustment 42, the biennial adjustment will consider a number of groundfish management issues, including any changes to measures necessary to achieve Amendment 13 mortality objectives, revisions to existing Special Access Programs (SAPs), a review of the days-at-sea (DAS) leasing program, a review of the Category B (regular) DAS Pilot Projects, and other issues. The Council will review Committee recommendations at an initial framework meeting that will be held at the June 21-23, 2005 Council meeting. Final decisions by the Council will take place at the November 15-17, 2005 Council meeting. If approved, management measures are scheduled to be implemented on May 1, 2006.
Other business may be discussed by the Committee if time is available.
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.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Paul J. Howard (see
Proposed collection; comment request.
The United States Patent and Trademark Office (USPTO), as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on the submission of a extension of a currently approved collection, 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 5, 2005.
You may submit comments by any of the following methods:
• E-mail:
• Fax: 571-273-0221; marked to the attention of Susan Brown.
• Mail: Susan K. Brown, Records Officer, Office of the Chief Information Officer, Office of Data Architecture and Services, Data Administration Division, U.S. Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450.
Requests for additional information should be directed to the attention of Theresa Hall, Supervisor, Patent Branch, Office of Human Resources, U.S. Patent and Trademark Office (USPTO), Alexandria, VA 22314; by telephone at 571-272-6144; or by e-mail to
The Job Application Rating System (JARS) is a system by which the USPTO can rapidly review applications for employment of entry-level patent examiners. The Office of Human Resources (OHR), armed with a recommendation from a Supervisory Patent Examiner (SPE) can, in turn, rapidly make an offer of employment and support hiring actions with necessary administrative action. Over the past three fiscal years, JARS has enabled the Patent Corps to hire more than 1,600 entry-level patent examiners.
Since the inception of JARS, upgrades have increased the flexibility of the system and the speed and ease with which the Office of Human Resources can support hiring recommendations.
In the current employment environment, information technology professionals and engineering graduates are in great demand. The USPTO is in direct competition with private industry for the same caliber of candidates with the requisite knowledge and skills to perform patent examination work. Consequently, it is imperative that every available technology be employed if the USPTO is to remain competitive, meet the hiring goal, and fulfill the agency's congressional commitment to reduce the pendency rate for the examination of patent applications. The information supplied to the USPTO by an applicant seeking a patent examiner position with the USPTO assists the Human Resources Specialists and hiring managers in determining whether an applicant possesses the basic qualification requirements for the patent examiner position.
JARS provides the USPTO a user-friendly on-line employment application process for applicants and enables the USPTO to process hiring actions in an efficient and timely manner. The on-line application provides an electronic real-time candidate inventory that allows the USPTO to review applications from potential applicants almost instantaneously. Given the immediate hiring need of the Patent Examining Corps, time consumed in the mail distribution system or paper review of applications delays the decision-making process by several weeks. The JARS system results in increased speed and accuracy in the employment process, in addition to streamlining labor and reducing costs.
The use of the JARS on-line application fully complies with 5 U.S.C. 2301, which requires adequate public notice to assure open competition by guaranteeing that necessary employment information will be accessible and available to the public on inquiry. The JARS on-line application is fully compliant with Section 508 (29 U.S.C. 794(d)), which requires agencies to provide disabled employees and members of the public access to information that is comparable to the access available to others.
Since the JARS on-line application is used as an alternative form of employment application, the collection and use of the information requires OMB approval as outlined in Section 5.1 of the Delegated Examining Operations Handbook. The Handbook provides guidance to agencies under a delegated examining authority by the Office of Personnel Management (OPM), under the provisions of Title 5, U.S. Code, Chapter 11, Section 1104.
The application information is collected electronically from the applicant. The application form may be completed on-line and then transmitted to the USPTO electronically, via the Internet. For those applicants who do not have access to a personal computer, applications are available in the Personnel Office at the USPTO, or the applicant can go to the local library to complete an application.
Not every applicant can supply all of the required information electronically. For example, in order to apply for a patent examiner position, the applicant must possess a minimum of a bachelor degree. A resume and an official college or university transcript must be submitted separately with this application and mailed to the USPTO. The college or university transcript must be an official/original copy and include the university stamp or seal. When responding to the veteran's preference claim field, additional information may be required. The applicant may be required to submit Form DD214 or SF-15, which must be completed separately and either mailed, faxed or delivered to the USPTO. The OF-306 (Declaration of Federal Employment) and the SF-85 (Security Background Information) must be printed, signed and dated, and provided to the USPTO via mail prior to reporting for duty. These additional required documents may be submitted to the USPTO by first-class mail through the United States Postal Service. The USPTO estimates that the average first-class postage is 60 cents. Therefore, the USPTO estimates that it will receive 7,000 responses to the JARS on-line application per year, for a total cost of
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 or included in the request for OMB approval of this information collection; they will also become a matter of public record.
The Committee for the Implementation of Textile Agreements (the Committee)
Solicitation of public comments concerning a request for safeguard action on imports from China of men's and boys' cotton and man-made fiber shirts, not knit (Category 340/640).
On April 6, 2005, the Committee received a request from the American Manufacturing Trade Action Coalition, the National Council of Textile Organizations, the National Textile Association, and UNITE HERE requesting that the Committee limit imports from China of men's and boys' cotton and man-made fiber shirts, not knit (Category 340/640). They request that a textile and apparel safeguard action, as provided for in the Report of the Working Party on the Accession of China to the World Trade Organization (the Accession Agreement), be taken on imports of such shirts. The Committee hereby solicits public comments on this request, in particular with regard to whether imports from China of such shirts are, due to market disruption, threatening to impede the orderly development of trade in this product. Comments must be submitted by June 3, 2005 to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, United States Department of Commerce, 14th and Constitution Avenue, NW., Washington, DC 20230.
Jay Dowling, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4058.
Section 204 of the Agriculture Act of 1956, as amended; Executive Order 11651, as amended.
The Report of the Working Party on the Accession of China to the World Trade Organization (Accession Agreement) provides that, if a WTO Member, such as the United States, believes that imports of Chinese origin textile and apparel products are, “due to market disruption, threatening to impede the orderly development of trade in these products”, it may request consultations with China with a view to easing or avoiding the disruption. Pursuant to this provision, if the United States requests consultations with China, it must, at the time of the request, provide China with a detailed factual statement showing (1) the existence or threat of market disruption; and (2) the role of products of Chinese origin in that disruption. Beginning on the date that it receives such a request, China must restrict its shipments to the United States to a level no greater than 7.5 percent (6 percent for wool product categories) above the amount entered during the first 12 months of the most recent 14 months preceding the month in which the request was made.
On April 6, 2005, the Committee received a request that an Accession Agreement textile and apparel safeguard action be taken on imports from China of men's and boys' cotton and man-made fiber shirts, not knit (Category 340/640). The Committee has determined that this request provides the information necessary for the Committee to consider the request in light of the considerations set forth in the Procedures. In this case, the Committee notes that imports from China of men's and boys' cotton and man-made fiber shirts, not knit (Category 340/640) have increased from 500,713 dozen in the first quarter of 2004 to 1,925,762 dozen in the first quarter of 2005 (includes preliminary data for 2005). The text of the request is reproduced in full below.
The Committee is soliciting public comments on this request, in particular with regard to whether imports from China of such shirts are, due to market disruption, threatening to impede the orderly development of trade in this product.
Comments may be submitted by any interested person. Comments must be received no later than June 3, 2005. Interested persons are invited to submit ten copies of such comments to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, U.S. Department of Commerce, 14th and Constitution Avenue N.W., Washington, DC 20230.
If a comment alleges that there is no market disruption or that the subject imports are not the cause of market disruption, the Committee will closely review any supporting information and documentation, such as information about domestic production or prices of like or directly competitive products. Particular consideration will be given to comments representing the views of actual producers in the United States of a like or directly competitive product.
The Committee will protect any business confidential information that is marked “business confidential” from disclosure to the full extent permitted by law. To the extent that business confidential information is provided, two copies of a non-confidential version must also be provided in which business confidential information is summarized or, if necessary, deleted. Comments received, with the exception of information marked “business confidential”, will be available for inspection between Monday - Friday, 8:30 a.m and 5:30 p.m in the Trade Reference and Assistance Center Help Desk, Suite 800M, USA Trade Information Center, Ronald Reagan Building, 1300 Pennsylvania Avenue, NW, Washington, DC, (202) 482-3433.
The Committee expects to make a determination within 60 calendar days of the close of the comment period as to whether the United States will request consultations with China. If, however, the Committee is unable to make a determination within 60 calendar days, it will cause to be published a notice in the
The Committee for the Implementation of Textile Agreements (the Committee)
Solicitation of public comments concerning a request for safeguard action on imports from China of cotton and man-made fiber sweaters (Category 345/645/646).
On April 6, 2005, the Committee received a request from the American Manufacturing Trade Action Coalition, the National Council of Textile Organizations, the National Textile Association, and UNITE HERE requesting that the Committee limit imports from China of cotton and man-made fiber sweaters (Category 345/645/646). They request that a textile and apparel safeguard action, as provided for in the Report of the Working Party on the Accession of China to the World Trade Organization (the Accession Agreement), be taken on imports of such sweaters. The Committee hereby solicits public comments on this request, in particular with regard to whether imports from China of such sweaters are, due to market disruption, threatening to impede the orderly development of trade in this product. Comments must be submitted by June 3, 2005 to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, United States Department of Commerce, 14th and Constitution Avenue, N.W., Washington, D.C. 20230.
Jay Dowling, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4058.
Section 204 of the Agriculture Act of 1956, as amended; Executive Order 11651, as amended.
The Report of the Working Party on the Accession of China to the World Trade Organization (Accession Agreement) provides that, if a WTO Member, such as the United States, believes that imports of Chinese origin textile and apparel products are, “due to market disruption, threatening to impede the orderly development of trade in these products”, it may request consultations with China with a view to easing or avoiding the disruption. Pursuant to this provision, if the United States requests consultations with China, it must, at the time of the request, provide China with a detailed factual statement showing (1) the existence or threat of market disruption; and (2) the role of products of Chinese origin in that disruption. Beginning on the date that it receives such a request, China must restrict its shipments to the United States to a level no greater than 7.5 percent (6 percent for wool product categories) above the amount entered during the first 12 months of the most recent 14 months preceding the month in which the request was made.
On April 6, 2005, the Committee received a request that an Accession Agreement textile and apparel safeguard action be taken on imports from China of cotton and man-made fiber sweaters (Category 345/645/646). The Committee has determined that this request provides the information necessary for the Committee to consider the request in light of the considerations set forth in the Procedures. In this case, the Committee notes that imports from China of cotton and man-made fiber sweaters (Category 345/645/646) have increased from 134,828 dozen in the first quarter of 2004 to 383,314 dozen in the first quarter of 2005 (includes preliminary data for 2005). The text of the request is reproduced in full below.
The Committee is soliciting public comments on this request, in particular with regard to whether imports from China of such sweaters are, due to market disruption, threatening to impede the orderly development of trade in this product.
Comments may be submitted by any interested person. Comments must be received no later than June 3, 2005. Interested persons are invited to submit ten copies of such comments to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, U.S. Department of Commerce, 14th and Constitution Avenue N.W., Washington, DC 20230.
If a comment alleges that there is no market disruption or that the subject imports are not the cause of market disruption, the Committee will closely review any supporting information and documentation, such as information about domestic production or prices of like or directly competitive products. Particular consideration will be given to comments representing the views of actual producers in the United States of a like or directly competitive product.
The Committee will protect any business confidential information that is marked “business confidential” from disclosure to the full extent permitted by law. To the extent that business confidential information is provided, two copies of a non-confidential version must also be provided in which business confidential information is summarized or, if necessary, deleted. Comments received, with the exception of information marked “business confidential”, will be available for inspection between Monday - Friday, 8:30 a.m and 5:30 p.m in the Trade Reference and Assistance Center Help Desk, Suite 800M, USA Trade Information Center, Ronald Reagan Building, 1300 Pennsylvania Avenue, NW, Washington, DC, (202) 482-3433.
The Committee expects to make a determination within 60 calendar days of the close of the comment period as to whether the United States will request consultations with China. If, however, the Committee is unable to make a determination within 60 calendar days, it will cause to be published a notice in the
The Committee for the Implementation of Textile Agreements (the Committee)
Solicitation of public comments concerning a request for safeguard action on imports from China of cotton and man-made fiber brassieres (Category 349/649).
On April 6, 2005, the Committee received a request from the American Manufacturing Trade Action Coalition, the National Council of Textile Organizations, the National Textile Association, and UNITE HERE requesting that the Committee limit imports from China of cotton and man-made fiber brassieres (Category 349/649). They request that a textile and apparel safeguard action, as provided for in the Report of the Working Party on the Accession of China to the World Trade Organization (the Accession Agreement), be taken on imports of such brassieres. The Committee hereby solicits public comments on this request, in particular with regard to whether imports from China of such brassieres are, due to market disruption, threatening to impede the orderly development of trade in this product. Comments must be submitted by June 3, 2005 to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, United States Department of Commerce, 14th and Constitution Avenue, N.W., Washington, D.C. 20230.
Jay Dowling, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4058.
Section 204 of the Agriculture Act of 1956, as amended; Executive Order 11651, as amended.
The Report of the Working Party on the Accession of China to the World Trade Organization (Accession Agreement) provides that, if a WTO Member, such as the United States, believes that imports of Chinese origin textile and apparel products are, “due to market disruption, threatening to impede the orderly development of trade in these products”, it may request consultations with China with a view to easing or avoiding the disruption. Pursuant to this provision, if the United States requests consultations with China, it must, at the time of the request, provide China with a detailed factual statement showing (1) the existence or threat of market disruption; and (2) the role of products of Chinese origin in that disruption. Beginning on the date that it receives such a request, China must restrict its shipments to the United States to a level no greater than 7.5 percent (6 percent for wool product categories) above the amount entered during the first 12 months of the most recent 14 months preceding the month in which the request was made.
On April 6, 2005, the Committee received a request that an Accession Agreement textile and apparel safeguard action be taken on imports from China of cotton and man-made fiber brassieres (Category 349/649). The Committee has determined that this request provides the information necessary for the Committee to consider the request in light of the considerations set forth in the Procedures. In this case, the Committee notes that imports from China of cotton and man-made fiber brassieres (Category 349/649) have increased from 4,079,865 dozen in the first quarter of 2004 to 5,581,965 dozen in the first quarter of 2005 (includes preliminary data for 2005). The text of the request is reproduced in full below.
The Committee is soliciting public comments on this request, in particular with regard to whether imports from China of such brassieres are, due to market disruption, threatening to impede the orderly development of trade in this product.
Comments may be submitted by any interested person. Comments must be received no later than June 3, 2005. Interested persons are invited to submit ten copies of such comments to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, U.S. Department of Commerce, 14th and Constitution Avenue N.W., Washington, DC 20230.
If a comment alleges that there is no market disruption or that the subject imports are not the cause of market disruption, the Committee will closely review any supporting information and documentation, such as information about domestic production or prices of like or directly competitive products. Particular consideration will be given to comments representing the views of actual producers in the United States of a like or directly competitive product.
The Committee will protect any business confidential information that is marked “business confidential” from disclosure to the full extent permitted by law. To the extent that business confidential information is provided, two copies of a non-confidential version must also be provided in which business confidential information is summarized or, if necessary, deleted. Comments received, with the exception of information marked “business confidential”, will be available for inspection between Monday - Friday, 8:30 a.m and 5:30 p.m in the Trade Reference and Assistance Center Help Desk, Suite 800M, USA Trade Information Center, Ronald Reagan Building, 1300 Pennsylvania Avenue, NW, Washington, DC, (202) 482-3433.
The Committee expects to make a determination within 60 calendar days of the close of the comment period as to whether the United States will request consultations with China. If, however, the Committee is unable to make a determination within 60 calendar days, it will cause to be published a notice in the
The Committee for the Implementation of Textile Agreements (the Committee)
Solicitation of public comments concerning a request for safeguard action on imports from China of cotton and man-made fiber dressing gowns and robes (Category 350/650).
On April 6, 2005, the Committee received a request from the American Manufacturing Trade Action Coalition, the National Council of Textile Organizations, the National Textile Association, and UNITE HERE requesting that the Committee limit imports from China of cotton and man-made fiber dressing gowns and robes (Category 350/650). They request that a textile and apparel safeguard action, as provided for in the Report of the Working Party on the Accession of China to the World Trade Organization (the Accession Agreement), be taken on imports of such dressing gowns and robes. The Committee hereby solicits public comments on this request, in particular with regard to whether imports from China of such dressing gowns and robes are, due to market disruption, threatening to impede the orderly development of trade in this product. Comments must be submitted by June 3, 2005 to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, United States Department of Commerce,
Jay Dowling, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4058.
Section 204 of the Agriculture Act of 1956, as amended; Executive Order 11651, as amended.
The Report of the Working Party on the Accession of China to the World Trade Organization (Accession Agreement) provides that, if a WTO Member, such as the United States, believes that imports of Chinese origin textile and apparel products are, “due to market disruption, threatening to impede the orderly development of trade in these products”, it may request consultations with China with a view to easing or avoiding the disruption. Pursuant to this provision, if the United States requests consultations with China, it must, at the time of the request, provide China with a detailed factual statement showing (1) the existence or threat of market disruption; and (2) the role of products of Chinese origin in that disruption. Beginning on the date that it receives such a request, China must restrict its shipments to the United States to a level no greater than 7.5 percent (6 percent for wool product categories) above the amount entered during the first 12 months of the most recent 14 months preceding the month in which the request was made.
On April 6, 2005, the Committee received a request that an Accession Agreement textile and apparel safeguard action be taken on imports from China of cotton and man-made fiber dressing gowns and robes (Category 350/650). The Committee has determined that this request provides the information necessary for the Committee to consider the request in light of the considerations set forth in the Procedures. In this case, the Committee notes that imports from China of cotton and man-made fiber dressing gowns and robes (Category 350/650) have increased from 884,075 dozen in the first quarter of 2004 to 1,226,435 dozen in the first quarter of 2005 (includes preliminary data for 2005). The text of the request is reproduced in full below.
The Committee is soliciting public comments on this request, in particular with regard to whether imports from China of such dressing gowns and robes are, due to market disruption, threatening to impede the orderly development of trade in this product.
Comments may be submitted by any interested person. Comments must be received no later than June 3, 2005. Interested persons are invited to submit ten copies of such comments to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, U.S. Department of Commerce, 14th and Constitution Avenue N.W., Washington, DC 20230.
If a comment alleges that there is no market disruption or that the subject imports are not the cause of market disruption, the Committee will closely review any supporting information and documentation, such as information about domestic production or prices of like or directly competitive products. Particular consideration will be given to comments representing the views of actual producers in the United States of a like or directly competitive product.
The Committee will protect any business confidential information that is marked “business confidential” from disclosure to the full extent permitted by law. To the extent that business confidential information is provided, two copies of a non-confidential version must also be provided in which business confidential information is summarized or, if necessary, deleted. Comments received, with the exception of information marked “business confidential”, will be available for inspection between Monday - Friday, 8:30 a.m and 5:30 p.m in the Trade Reference and Assistance Center Help Desk, Suite 800M, USA Trade Information Center, Ronald Reagan Building, 1300 Pennsylvania Avenue, NW, Washington, DC, (202) 482-3433.
The Committee expects to make a determination within 60 calendar days of the close of the comment period as to whether the United States will request consultations with China. If, however, the Committee is unable to make a determination within 60 calendar days, it will cause to be published a notice in the
The Committee for the Implementation of Textile Agreements (the Committee)
Solicitation of public comments concerning a request for safeguard action on imports from China of other synthetic filament fabric (Category 620).
On April 6, 2005, the Committee received a request from the American Manufacturing Trade Action Coalition, the National Council of Textile Organizations, the National Textile Association, and UNITE HERE requesting that the Committee limit imports from China of other synthetic filament fabric (Category 620). They request that a textile and apparel safeguard action, as provided for in the Report of the Working Party on the Accession of China to the World Trade Organization (the Accession Agreement), be taken on imports of other synthetic filament fabric. The Committee hereby solicits public comments on this request, in particular with regard to whether imports from China of other synthetic filament fabric are, due to market disruption, threatening to impede the orderly development of trade in this product. Comments must be submitted by June 3, 2005 to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, United States Department of Commerce, 14th and Constitution Avenue, N.W., Washington, D.C. 20230.
Jay Dowling, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4058.
Section 204 of the Agriculture Act of 1956, as amended; Executive Order 11651, as amended.
The Report of the Working Party on the Accession of China to the World Trade Organization (Accession Agreement) provides that, if a WTO Member, such as the United States, believes that imports of Chinese origin textile and apparel products are, “due to market disruption, threatening to impede the orderly development of trade in these products”, it may request consultations with China with a view to easing or avoiding the disruption. Pursuant to this provision, if the United States requests consultations with China, it must, at the time of the request, provide China with a detailed factual statement showing (1) the existence or threat of market disruption; and (2) the role of products of Chinese origin in that disruption. Beginning on the date that it receives such a request, China must restrict its shipments to the United States to a level no greater than 7.5 percent (6 percent for wool product categories) above the amount entered during the first 12 months of the most recent 14 months preceding the month in which the request was made.
On April 6, 2005, the Committee received a request that an Accession Agreement textile and apparel safeguard action be taken on imports from China of other synthetic filament fabric (Category 620). The Committee has determined that this request provides the information necessary for the Committee to consider the request in light of the considerations set forth in the Procedures. In this case, the Committee notes that imports from China of other synthetic filament fabric (Category 620) have increased from 1,534,747 square meters in the first quarter of 2004 to 12,132,793 square meters in the first quarter of 2005 (includes preliminary data for 2005). The text of the request is reproduced in full below.
The Committee is soliciting public comments on this request, in particular with regard to whether imports from China of other synthetic filament fabric are, due to market disruption, threatening to impede the orderly development of trade in this product.
Comments may be submitted by any interested person. Comments must be received no later than June 3, 2005. Interested persons are invited to submit ten copies of such comments to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, U.S. Department of Commerce, 14th and Constitution Avenue N.W., Washington, DC 20230.
If a comment alleges that there is no market disruption or that the subject imports are not the cause of market disruption, the Committee will closely review any supporting information and documentation, such as information about domestic production or prices of like or directly competitive products. Particular consideration will be given to comments representing the views of actual producers in the United States of a like or directly competitive product.
The Committee will protect any business confidential information that is marked “business confidential” from disclosure to the full extent permitted by law. To the extent that business confidential information is provided, two copies of a non-confidential version must also be provided in which business confidential information is summarized or, if necessary, deleted. Comments received, with the exception of information marked “business confidential”, will be available for inspection between Monday - Friday, 8:30 a.m and 5:30 p.m in the Trade Reference and Assistance Center Help Desk, Suite 800M, USA Trade Information Center, Ronald Reagan Building, 1300 Pennsylvania Avenue, NW, Washington, DC, (202) 482-3433.
The Committee expects to make a determination within 60 calendar days of the close of the comment period as to whether the United States will request consultations with China. If, however, the Committee is unable to make a determination within 60 calendar days, it will cause to be published a notice in the
The Committee for the Implementation of Textile Agreements (the Committee)
Solicitation of public comments concerning a request for safeguard action on imports from China of man-made fiber knit shirts and blouses (Category 638/639).
On April 6, 2005, the Committee received a request from the American Manufacturing Trade Action Coalition, the National Council of Textile Organizations, the National Textile Association, and UNITE HERE requesting that the Committee limit imports from China of man-made fiber knit shirts and blouses (Category 638/639). They request that a textile and apparel safeguard action, as provided for in the Report of the Working Party on the Accession of China to the World Trade Organization (the Accession Agreement), be taken on imports of such man-made fiber knit shirts and blouses. The Committee hereby solicits public comments on this request, in particular with regard to whether imports from China of such man-made fiber knit shirts and blouses are, due to market disruption, threatening to impede the orderly development of trade in this product. Comments must be submitted by June 3, 2005 to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, United States Department of Commerce, 14th and Constitution Avenue, N.W., Washington, D.C. 20230.
Jay Dowling, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4058.
Section 204 of the Agriculture Act of 1956, as amended; Executive Order 11651, as amended.
The Report of the Working Party on the Accession of China to the World Trade Organization (Accession Agreement) provides that, if a WTO Member, such as the United States, believes that imports of Chinese origin textile and apparel products are, “due to market disruption, threatening to impede the orderly development of trade in these products”, it may request consultations with China with a view to easing or avoiding the disruption. Pursuant to this provision, if the United States requests consultations with China, it must, at the time of the request, provide China with a detailed factual statement showing (1) the existence or threat of market disruption; and (2) the role of products of Chinese origin in that disruption. Beginning on the date that it receives such a request, China must restrict its shipments to the United States to a level no greater than 7.5 percent (6 percent for wool product categories) above the amount entered during the first 12 months of the most recent 14 months preceding the month in which the request was made.
On April 6, 2005, the Committee received a request that an Accession Agreement textile and apparel safeguard action be taken on imports from China of man-made fiber knit shirts and blouses (Category 638/639). The Committee has determined that this request provides the information necessary for the Committee to consider the request in light of the considerations set forth in the Procedures. In this case, the Committee notes that imports from China of man-made fiber knit shirts and blouses (Category 638/639) have increased from 642,708 dozen in the first quarter of 2004 to 2,808,951 dozen in the first quarter of 2005 (includes preliminary data for 2005). The text of the request is reproduced in full below.
The Committee is soliciting public comments on this request, in particular with regard to whether imports from China of such man-made fiber knit shirts and blouses are, due to market disruption, threatening to impede the orderly development of trade in this product.
Comments may be submitted by any interested person. Comments must be received no later than June 3, 2005. Interested persons are invited to submit ten copies of such comments to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, U.S. Department of Commerce, 14th and Constitution Avenue N.W., Washington, DC 20230.
If a comment alleges that there is no market disruption or that the subject imports are not the cause of market disruption, the Committee will closely review any supporting information and documentation, such as information about domestic production or prices of like or directly competitive products. Particular consideration will be given to comments representing the views of actual producers in the United States of a like or directly competitive product.
The Committee will protect any business confidential information that is marked “business confidential” from disclosure to the full extent permitted by law. To the extent that business confidential information is provided, two copies of a non-confidential version must also be provided in which business confidential information is summarized or, if necessary, deleted. Comments received, with the exception of information marked “business confidential”, will be available for inspection between Monday - Friday, 8:30 a.m and 5:30 p.m in the Trade Reference and Assistance Center Help Desk, Suite 800M, USA Trade Information Center, Ronald Reagan Building, 1300 Pennsylvania Avenue, NW, Washington, DC, (202) 482-3433.
The Committee expects to make a determination within 60 calendar days of the close of the comment period as to whether the United States will request consultations with China. If, however, the Committee is unable to make a determination within 60 calendar days, it will cause to be published a notice in the
The Committee for the Implementation of Textile Agreements (the Committee)
Solicitation of public comments concerning a request for safeguard action on imports from China of man-made fiber trousers (Category 647/648).
On April 6, 2005, the Committee received a request from the American Manufacturing Trade Action Coalition, the National Council of Textile Organizations, the National Textile Association, and UNITE HERE requesting that the Committee limit imports from China of man-made fiber trousers (Category 647/648). They request that a textile and apparel safeguard action, as provided for in the Report of the Working Party on the Accession of China to the World Trade Organization (the Accession Agreement), be taken on imports of such man-made fiber trousers. The Committee hereby solicits public comments on this request, in particular with regard to whether imports from China of such man-made fiber trousers are, due to market disruption, threatening to impede the orderly development of trade in this product. Comments must be submitted by June 3, 2005 to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, United States Department of Commerce, 14th and Constitution Avenue, N.W., Washington, D.C. 20230.
Jay Dowling, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4058.
Section 204 of the Agriculture Act of 1956, as amended; Executive Order 11651, as amended.
The Report of the Working Party on the Accession of China to the World Trade Organization (Accession Agreement) provides that, if a WTO Member, such as the United States, believes that imports of Chinese origin textile and apparel products are, “due to market disruption, threatening to impede the orderly development of trade in these products”, it may request consultations with China with a view to easing or avoiding the disruption. Pursuant to this provision, if the United States requests consultations with China, it must, at the time of the request, provide China with a detailed factual statement showing (1) the existence or threat of market disruption; and (2) the role of products of Chinese origin in that disruption. Beginning on the date that it receives such a request, China must restrict its shipments to the United States to a level no greater than 7.5 percent (6 percent for wool product categories) above the amount entered during the first 12 months of the most recent 14 months preceding the month in which the request was made.
On April 6, 2005, the Committee received a request that an Accession Agreement textile and apparel safeguard action be taken on imports from China of man-made fiber trousers (Category 647/648). The Committee has determined that this request provides the information necessary for the Committee to consider the request in light of the considerations set forth in the Procedures. In this case, the Committee notes that imports from China of man-made fiber trousers (Category 647/648) have increased from 615,356 dozen in the first quarter of 2004 to 2,300,622 dozen in the first quarter of 2005 (includes preliminary data for 2005). The text of the request is reproduced in full below.
The Committee is soliciting public comments on this request, in particular with regard to whether imports from China of such man-made fiber trousers are, due to market disruption, threatening to impede the orderly development of trade in this product.
Comments may be submitted by any interested person. Comments must be received no later than June 3, 2005. Interested persons are invited to submit ten copies of such comments to the Chairman, Committee for the Implementation of Textile Agreements, Room 3001A, U.S. Department of Commerce, 14th and Constitution Avenue N.W., Washington, DC 20230.
If a comment alleges that there is no market disruption or that the subject imports are not the cause of market disruption, the Committee will closely review any supporting information and documentation, such as information about domestic production or prices of like or directly competitive products. Particular consideration will be given to comments representing the views of actual producers in the United States of a like or directly competitive product.
The Committee will protect any business confidential information that is marked “business confidential” from disclosure to the full extent permitted by law. To the extent that business confidential information is provided, two copies of a non-confidential version must also be provided in which business confidential information is summarized or, if necessary, deleted. Comments received, with the exception of information marked “business confidential”, will be available for inspection between Monday - Friday, 8:30 a.m and 5:30 p.m in the Trade Reference and Assistance Center Help Desk, Suite 800M, USA Trade Information Center, Ronald Reagan Building, 1300 Pennsylvania Avenue, NW, Washington, DC, (202) 482-3433.
The Committee expects to make a determination within 60 calendar days of the close of the comment period as to whether the United States will request consultations with China. If, however, the Committee is unable to make a determination within 60 calendar days, it will cause to be published a notice in the
Notice of meeting.
This notice sets forth the schedules and summary for the forthcoming meetings of the BRAC. The purposes of these meetings are to receive testimony from the Secretary of Defense, the Chairman of the Joint Chiefs of Staff (JCS), or their representatives; the Department of the Air Force; the Department of the Navy; the Department of the Army; and the Department of Defense's Joint Cross Service Groups on the recommendations and methodology regarding the closure and realignment of military installations. The Commission Chairman, Anthony J. Principi, will chair the hearings.
Senate Russell Building, Room 418, U.S. Senate, Washington, DC.
Contact Mr. Charles Battaglia, Executive Director, BRAC Commission, 2521 South Clark St., Suite 600, Arlington VA 22202, telephone 703-699-2952
Pursuant to the Federal Advisory Committee Act (FACA), Public Law 96-463, notice is hereby given that the Independent Review Panel To Study the Relationships between Military Department General Counsels and Judge Advocates General will hold an open meeting at the Hilton Crystal City, 2399 Jefferson Davis Highway, Arlington, Virginia 22202, on May 18-19, 2005, from 8:30 a.m. to 11:30 p.m. and 1 p.m. to 4 p.m.
May 18-19, 2005: 8:30 a.m.-11:30 a.m. and 1 p.m.-4 p.m.
Any member of the public wishing further information concerning this meeting or wishing to submit written comments may contact: Mr. James R. Schwenk, Designated Federal Official, Department of Defense Office of the General Counsel, 1600 Defense Pentagon, Arlington, Virginia 20301-1600. Telephone: (703) 697-9343. Fax: (703) 693-7616.
Interested persons may submit a written statement for consideration by the Panel at any time prior to June 10, 2005.
The Assistant Secretary for Vocational and Adult Education proposes to change certain requirements governing the Community Technology Centers (CTC) program that were established in 2004 and used for the Fiscal Year (FY) 2004 CTC competition. Specifically, the Assistant Secretary proposes to remove the following two requirements: (1) Novice and non-novice applicants in CTC competitions must be ranked and funded separately, and (2) at least 75 percent of the funds must be set aside for non-novice applicants and up to 25 percent of the funds must be set aside for novice applicants. The Assistant Secretary intends to make awards in FY 2005 from the list of unfunded applicants from the FY 2004 CTC competition.
We must receive your comments on or before June 3, 2005.
Address all comments about these proposed changes to the requirements to Inas El-Sabban, U.S. Department of Education, 400 Maryland Avenue, SW., room 11055, Potomac Center Plaza, Washington, DC 20202-7100. If you prefer to send your comments through the Internet, use the following address:
You must include the phrase “CTC Comments” in the subject line of your electronic message.
Inas El-Sabban. Telephone: (202) 245-7736.
If you use a telecommunications device for the deaf (TDD), you may call the Federal Relay Service (FRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an alternative format (
We invite you to submit comments regarding these proposed changes to the requirements that we established for the FY 2004 CTC competition. These changes will apply only to the awards we will make in FY 2005 based on the list of unfunded applications from the FY 2004 competition.
We invite you to assist us in complying with the specific
During and after the comment period, you may inspect all public comments about this regulatory action at 550 12th Street, SW., room 11089, Washington, DC, between the hours of 8:30 a.m. and 4 p.m., Eastern Time, Monday through Friday of each week except Federal holidays.
On request, we will supply an appropriate aid, such as a reader or print magnifier, to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for this regulatory action. If you want to schedule an appointment for this type of aid, please contact the person listed under
In 2004, the Department held a CTC competition with FY 2004 funds, in which it used the requirements, priorities, and selection criteria that it had established through a notice of final requirements, priorities, and selection criteria for novice and non-novice applicants for the CTC program, published in the
Because of the separate ranking of novice and non-novice applicants and the set-aside requirements, a number of high-quality applications received through the FY 2004 CTC competition were not funded. Accordingly, the Department proposes to make awards for FY 2005 based on the list of unfunded applicants from the FY 2004 CTC competition without regard to the set-aside provisions, thereby continuing to support and create local technology programs that are among the strongest in the nation.
We will announce the final changes to these requirements in a notice in the
We propose to change two of the requirements of the CTC competition held in 2004 so that the Department is no longer required to: (1) Rank and fund novice and non-novice applicants separately, and (2) set aside at least 75 percent of the funds for non-novice applicants and up to 25 percent of the funds for novice applicants that met the absolute priorities.
For FY 2005, we are proposing to make awards from the list of unfunded applicants from the FY 2004 competition in the highest-ranking order, using the same priorities and selection criteria and irrespective of the novice or non-novice status of applicants.
The Department received nearly 500 applications in response to the FY 2004 Notice Inviting Applications for the CTC program. With the $9.5 million available, the Department awarded 25 grants. A number of high-quality applications remained unfunded. The Assistant Secretary has determined the best way to expend the $4.9 million appropriated for FY 2005 is to make awards from the list of unfunded applicants from the FY 2004 CTC competition, without taking into account the novice or non-novice status of the applicants. By making awards from the list of unfunded applicants from the FY 2004 competition in this manner, the Department will ensure that the highest-quality applications are funded.
This notice of proposed changes to requirements has been reviewed in accordance with Executive Order 12866. Under the terms of the order, we have assessed the potential costs and benefits of this regulatory action.
The potential costs associated with the notice of proposed changes to requirements are those resulting from statutory requirements and those we have determined as necessary for administering this program effectively and efficiently.
In assessing the potential costs and benefits—both quantitative and qualitative—of this notice of proposed changes to requirements, we have determined that the benefits of the proposed change to the requirements governing the FY 2004 CTC competition justify the costs.
We have also determined that this regulatory action does not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.
This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive Order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.
This document provides early notification of our specific plans and actions for this program.
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 using 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
National Advisory Council on Indian Education (NACIE), U.S. Department of Education
Notice of meeting.
This notice sets forth the schedule and proposed agenda of an
Bernard Garcia, Group Leader, Office of Indian Education, U.S. Department of Education, 400 Maryland Avenue, SW., Washington, DC 20202. Telephone: 202-260-1454. Fax: 202-260-7779.
The Council advises the Secretary of Education on the funding and administration (including the development of regulations, and administrative policies and practices) of any program over which the Secretary has jurisdiction and includes Indian children or adults as participants or programs that may benefit Indian children or adults, including any program established under Title VII, Part A of the Elementary and Secondary Education Act. The Council submits to the Congress, not later than June 30 of each year, a report on the activities of the Council that includes recommendations the Council considers appropriate for the improvement of Federal education programs that include Indian children or adults as participants or that may benefit Indian children or adults, and recommendations concerning the funding of any such program.
The gerneral public is welcome to attend the May 23, 2005 meeting to be held from 9 a.m. to 4 p.m., in Chicago, IL. Individuals who need accommodations for a disability in order to participate (
Records are kept of all Council proceedings and are available for public inspection at the Office of Indian Education, United States Department of Education, Room 5C141, 400 Maryland Avenue, SW., Washington, DC 20202.
Federal Energy Regulatory Commission, DOE.
Notice of proposed information collection and request for comments.
In compliance with the requirements of section 3506(c)(2)(a) of the Paperwork Reduction Act of 1995 (Pub. L. 104-13), the Federal Energy Regulatory Commission (Commission) is soliciting public comment on the specific aspects of the information collection described below.
Comments on the collection of information are due by June 27, 2005.
Copies of sample filings of the proposed collection of information can be obtained from the Commission's Web site (
Documents filed electronically via the Internet must be prepared in WordPerfect, MS Word, Portable Document Format, or ASCII format. To file the document, access the Commission's Web site at
All comments may be viewed, printed or downloaded remotely via the Internet through FERC's homepage using the eLibrary link. For user assistance, contact
Michael Miller may be reached by telephone at (202) 502-8415, by fax at (202) 273-0873, and by e-mail at
The information collected under the requirements of FERC-545 “Gas Pipeline Rates: Rate Change (Non-formal)” (OMB No. 1902-0154) is used by the Commission to implement the statutory provisions of sections 4, 5, 8, 10 and 16 of the Natural Gas Act (NGA) (15 U.S.C. 717c-717o, PL 75-688, 52 Stat. 822 and 830) and Title III of the Natural Gas Policy Act (15 U.S.C. 3301-3432, Pl. 95-621). A natural gas company must obtain Commission authorization for all rates and charges made, demanded or received in connection with the transportation of natural gas in interstate commerce. The Commission is authorized to investigate the rates charged by natural gas pipeline companies subject to its jurisdiction. If, after the investigation, the Commission is of the opinion that the rates are “unjust or unreasonable or unjustly discriminatory or unduly preferential,” it is authorized to determine and prescribe just and reasonable rates. The NGA also provides the Commission with a means for considering the reasonableness of rates through settlement conferences or hearings.
The data filed in rate change applications for all rates and charges made, demanded, or received in connection with the transportation of natural gas are used by the Commission to establish a basis for determining just and reasonable rates that should be charged, and the rate of return which can be earned by the regulated natural gas company. However rate regulation, combined with the obligations of major natural gas companies to serve all customers fairly and equitably, also prevents rate discrimination. Major natural gas companies and others engaged in the transportation of natural gas must file this information for ratemaking purposes and certain NGPA
Estimated cost burden to respondents is $5,9142,219. (113,318 hours/2080 hours per year times $108,558 per year average per employee). The cost per respondent is $38,909.
The reporting burden includes the total time, effort, or financial resources expended to generate, maintain, retain, disclose, or provide the information including: (1) Reviewing instructions; (2) developing, acquiring, installing, and utilizing technology and systems for the purposes of collecting, validating, verifying, processing, maintaining, disclosing and providing information; (3) adjusting the existing ways to comply with any previously applicable instructions and requirements; (4) training personnel to respond to a collection of information; (5) searching data sources; (6) completing and reviewing the collection of information; and (7) transmitting, or otherwise disclosing the information.
The estimate of cost for respondents is based upon salaries for professional and clerical support, as well as direct and indirect overhead costs. Direct costs include all costs directly attributable to providing this information, such as administrative costs and the cost for information technology. Indirect or overhead costs are costs incurred by an organization in support of its mission. These costs apply to activities which benefit the whole organization rather than any one particular function or activity.
Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility; (2) the accuracy of the agency'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 those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Federal Energy Regulatory Commission, DOE.
Notice.
In compliance with the requirements of section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507, the Federal Energy Regulatory Commission (Commission) has submitted the information collection described below to the Office of Management and Budget (OMB) for review of this information collection requirement. Any interested person may file comments directly with OMB and should address a copy of those comments to the Commission as explained below. The Commission received no comments in response to an earlier
Comments on the collection of information are due by May 28, 2005.
Address comments on the collection of information to the Office of Management and Budget, Office of Information and Regulatory Affairs, Attention: Federal Energy Regulatory Commission Desk Officer. Comments to OMB should be filed electronically, c/o
Documents filed electronically via the Internet must be prepared in, MS Word, Portable Document Format, Word Perfect or ASCII format. To file the document, access the Commission's Web site at
All comments are available for review at the Commission or may be viewed on the Commission's Web site at http://www.ferc.gov, using the “eLibrary” link. Enter the docket number excluding the last three digits in the docket number field to access the document. For assistance, contact FERC Online Support at
Michael Miller may be reached by telephone at (202) 502-8415, by fax at (202) 273-0873, and by e-mail at
The information collection submitted for OMB review contains the following:
1.
2.
3.
The Commission is now requesting that OMB approve with a three-year extension of the expiration date, with no changes to the existing collection. The information filed with the Commission is mandatory.
4.
The Commission has defined CEII to include information about existing or proposed critical infrastructure that (i) relates to the production, generation, transportation, transmission, or distribution of energy; (ii) could be useful to a person planning an attack on critical infrastructure, (iii) is exempt from mandatory disclosure under the Freedom of Information Act, and (iv) does not simply give the location of the critical infrastructure. Critical infrastructure means existing and proposed systems and assets, whether physical or virtual, the incapacity or destruction of which would negatively affect security, economic security, public health or safety, or any combination of those matters. A person seeking access to CEII may file a request for that information by providing information about their identity and reason for the need for the information. Through this process, the Commission is able to review the requester's need for the information against the sensitivity of the information. The Commission implements these requirements in 18 CFR 388.113 of its regulations.
5.
6.
7.
15 U.S.C. 717,
Take notice that on April 22, 2005, the California Independent System Operator Corporation (CAISO) tendered for filing an amendment to the CAISO Tariff, Amendment No. 69, for expedited consideration and acceptance by the Commission. CAISO states that the purpose of Amendment No. 69 is to make certain modifications in order to fully implement the intertie pricing methodology proposed in Amendment No. 66 and approved by the Commission.
The CAISO states that this filing has been served upon the Public Utilities Commission, the California Energy Commission, the California Electricity Oversight Board, all parties with effective Scheduling Coordinator Agreements under the CAISO Tariff, and all parties of record in Docket No. ER05-718-000.
Any person desiring to intervene or to protest this filing must file 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 notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant. On or before the comment date, it is not necessary to serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on April 22, 2005, El Paso Natural Gas Company (El Paso) tendered for filing as part of its FERC Gas Tariff, Second Revised Volume No. 1-A, Substitute Fifth Revised Sheet No. 2, with an effective date of April 15, 2005.
El Paso states that the filing is being made in compliance with the Commission's order issued April 7, 2005 at Docket No. RP05-227-000.
El Paso states that it is submitting Substitute Fifth Revised Sheet No. 2 to remove a reference to a precedent
Any person desiring to protest this filing must file in accordance with Rule 211 of the Commission's Rules of Practice and Procedure (18 CFR 385.211). Protests to this filing 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. Such protests must be filed in accordance with the provisions of Section 154.210 of the Commission's regulations (18 CFR 154.210). Anyone filing a protest must serve a copy of that document on all the parties to the proceeding.
The Commission encourages electronic submission of protests in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on April 22, 2005, Garden Banks Gas Pipeline, LLC (GBGP) tendered for filing as part of its FERC Gas Tariff, Original Volume No. 1, the following tariff sheets to become effective May 22, 2005:
GBGP states that the above-referenced tariff sheets are being filed in accordance with section 154.204 of the Commission's regulations in order to make minor conforming changes to its Tariff to reflect revisions to its contact information, including address, telephone, and facsimile numbers.
Any person desiring to intervene or to protest this filing must file 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 notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed in accordance with the provisions of section 154.210 of the Commission's regulations (18 CFR 154.210). Anyone filing an intervention or protest must serve a copy of that document on the Applicant. Anyone filing an intervention or protest on or before the intervention or protest date need not serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on April 22, 2005, Guardian Pipeline, L.L.C. (Guardian) tendered for filing to become part of Guardian's FERC Gas Tariff, Original Volume No. 1, the following tariff sheets to become effective June 1, 2005:
Guardian states that it is filing revised tariff sheets for the purpose of: (1) Revising Rate Schedule PAL and its associated form of service agreement, (2) relocating the scheduling priority of PAL service from the General Terms and Conditions to Rate Schedule PAL; and (3) making minor housekeeping changes.
Any person desiring to intervene or to protest this filing must file 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 notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed in accordance with the provisions of Section 154.210 of the Commission's regulations (18 CFR 154.210). Anyone filing an intervention
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on April 22, 2005, Mississippi Canyon Gas Pipeline, LLC (MCGP) tendered for filing as part of its FERC Gas Tariff, First Revised Volume No. 1, the following tariff sheets to become effective May 22, 2005:
MCGP states that the above-referenced tariff sheets are being filed in accordance with section 154.204 of the Commission's regulations in order to make minor conforming changes to its Tariff to reflect revisions to the contact information, including address, telephone, and facsimile numbers.
Any person desiring to intervene or to protest this filing must file 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 notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed in accordance with the provisions of Section 154.210 of the Commission's regulations (18 CFR 154.210). Anyone filing an intervention or protest must serve a copy of that document on the Applicant. Anyone filing an intervention or protest on or before the intervention or protest date need not serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on April 22, 2005, Transcontinental Gas Pipe Line Corporation (Transco) tendered for filing as part of its FERC Gas Tariffs, Third Revised Volume No. 1, and Original Volume No. 2, certain revised sheets which are enumerated in Appendix A attached to the filing, to become effective June 1, 2005.
Transco states that the instant filing is being submitted to remove the Great Plains Surcharge rates and certain tariff provisions (including references thereto) from Transco's Third Revised Volume No. 1 and Original Volume No. 2 FERC Gas Tariffs.
Transco states that it is serving copies of the instant filing to its affected customers, interested State Commissions and other interested parties.
Any person desiring to intervene or to protest this filing must file 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 notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed in accordance with the provisions of Section 154.210 of the Commission's regulations (18 CFR 154.210). Anyone filing an intervention or protest must serve a copy of that document on the Applicant. Anyone filing an intervention or protest on or before the intervention or protest date need not serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
On Tuesday, May 17, 2005, at 8:30 a.m. (CST), staff from the Commission's Office of Energy Projects will convene a cryogenic design and technical conference regarding the proposed Sempra Port Arthur LNG import terminal. The cryogenic conference will be held at the Holiday Inn Port Arthur-Park Central located at 2929 Jimmy Johnson Blvd., Port Arthur, TX. For hotel details call (409) 724-5000.
In view of the critical energy infrastructure information and security issues to be explored, the cryogenic conference will not be open to the public. Attendance at this conference will be limited to existing parties to the proceeding (anyone who has specifically requested to intervene as a party) and to representatives of interested Federal, State, and local agencies. Any person planning to attend this May 17th cryogenic conference
The following notice of meeting is published pursuant to section 3(a) of the Government in the Sunshine Act (Pub. L. 94-409), 5 U.S.C. 552b:
Federal Energy Regulatory Commission.
May 4, 2005. (Within a relatively short time after the Commission's open meeting on May 4, 2005.)
Room 3M 4A/B, 888 First Street, NE., Washington, DC 20426.
Closed.
Non-Public Investigations and Inquiries, Enforcement Related Matters, and Security of Regulated Facilities.
Magalie R. Salas, Secretary, telephone (202) 502-8400.
Chairman Wood and Commissioners Brownell, Kelliher, and Kelly voted to hold a closed meeting on May 4, 2005. The certification of the General Counsel explaining the action closing the meeting is available for public inspection in the Commission's Public reference Room at 888 First Street, NW., Washington, DC 20426.
The Chairman and the Commissioners, their assistants, the Commission's Secretary and her assistant, the General Counsel and members of her staff, and a stenographer are expected to attend the meeting. Other staff members from the Commission's program offices who will advise the Commissioners in the matters discussed will also be present.
The following notice of meeting is published pursuant to section 3(a) of the government in the Sunshine Act (Pub. L. 94-409), 5 U.S.C 552b:
Federal Energy Regulatory Commission.
May 4, 2005, 10 a.m.
Room 2C, 888 First Street, NE., Washington, DC 20426.
Open.
Agenda.
Items listed on the agenda may be deleted without further notice.
Magalie R. Salas, Secretary, telephone (202) 502-8400. For a recorded listing items stricken from or added to the meeting, call (202) 502-8627.
This is a list of matters to be considered by the Commission. It does not include a listing of all papers relevant to the items on the agenda; however, all public documents may be examined in the Public Reference Room.
The Capitol Connection offers the opportunity for remote listening and viewing of the meeting. It is available for a fee, live over the Internet, via C-Band Satellite. Persons interested in receiving the broadcast, or who need information on making arrangements should contact David Reininger or Julia Morelli at the Capitol Connection (703-993-3100) as soon as possible or visit the Capitol Connection Web site at
Immediately following the conclusion of the Commission Meeting, a press briefing will be held in Hearing Room 2. Members of the public may view this briefing in the Commission Meeting overflow room. This statement is intended to notify the public that the press briefings that follow Commission meetings may now be viewed remotely at Commission headquarters, but will not be telecast through the Capitol Connection service.
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 5, 2005.
Follow the detailed instructions in
Jim Sullivan, Climate Protection Partnerships Division, Office of Atmospheric Programs, 6202J, Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460; telephone number: (202) 343-9241; fax number: (202) 565-2134; e-mail address
The EPA has established a public docket for this ICR under Docket ID No. OAR-2004-0501, which is available for public viewing at the Air and Radiation Docket and Information Center 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 Air and Radiation Docket and Information Center is (202) 566-1742. An electronic version of the public docket is available through EPA Dockets (EDOCKET) at
Any comments related to this ICR should be submitted to EPA within 60 days of this notice, and according to the following detailed instructions: 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 on paper, will be made available for public viewing in EDOCKET as EPA receives them and without change, unless the comment contains copyrighted material, confidential business information (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 EDOCKET. For further information about the electronic docket, see EPA's
The EPA has developed this ICR to obtain authorization to collect information from organizations participating in the Green Power Partnership and CHP Partnership to ensure that they are meeting their voluntary renewable energy and CHP goals and to assure the credibility of these partnership programs. Organizations that join these programs voluntarily agree to the following respective actions: (1) Designating a Green Power or CHP Partnership liaison; (2) for the Green Power Partnership, reporting to EPA, on an annual basis, their progress toward their green power commitment via a 1-page Green Power Partner Yearly Report; (3) for the CHP Partnership, reporting to EPA information on their existing CHP projects and project development activity via the CHP Partner Projects Data Form. The EPA uses the data obtained from its Partners to assess the success of these programs in achieving their national energy and greenhouse gas reduction goals.
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.
The EPA would like to solicit comments to:
(i) 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;
(ii) evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(iii) enhance the quality, utility, and clarity of the information to be collected; and
(iv) 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,
Partners from both programs may also submit voluntary updates of simple information, such as contact information or company profiles, via the Web site. These updates would take from 15 minutes to 0.5 hours per response. A subset of Partners may participate in brief (
The estimated number of annual respondents averaged over three (3) years is 1,164, which includes an average of 1,033 respondents for the Green Power Partnership and 131 for the CHP Partnership.
There are no capital or start-up costs associated with this information collection. The average annual operation and maintenance cost resulting from this (3) three year collection of information is $3 per respondent. The average annual labor cost is $254 per respondent. The resulting total annual cost averaged over the three year period is $298,886. 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.
Notice.
In compliance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before June 3, 2005.
Submit your comments, referencing docket ID number OAR-2005-0115 to (1) EPA online using EDOCKET (our preferred method), by e-mail to
Annie Nikbakht, Ozone Policy and Strategies Group, Mail Drop C539-02, Environmental Protection Agency, 109 T.W. Alexander Drive, RTP, North Carolina 27711; telephone number: (919) 541-5246; fax number: (919) 541-0824; 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 February 1, 2005 (70 FR 5178), EPA sought comments on this ICR pursuant to 5 CFR 1320.8(d). EPA received no comments.
EPA has established a public docket for this ICR under Docket ID No.OAR-2005-0115, which is available for public viewing at the Air and Radiation 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 Air and Radiation Docket is (202) 566-1742. An electronic version of the public docket is available through EPA Dockets (EDOCKET) at
Any comments related to this ICR should be submitted to EPA and OMB within 30 days of this notice. 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, confidential business information (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
The Federal government uses information collected to ensure that general Federal actions conform to applicable provisions of the SIP and that the Federal action does not impede the goal of attaining and maintaining the NAAQS throughout the country. The State and local air agencies use the results from conformity determinations to determine applicability of the general conformity requirements, to demonstrate that their actions satisfy both the emissions and air quality criteria stipulated in the regulation, and to demonstrate that their actions conform to applicable provisions of the SIP.
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 in 40 CFR are listed in 40 CFR part 9 and are identified on the form and/or instrument, if applicable.
Environmental Protection Agency (EPA).
Notice of final action.
This document announces that the EPA Administrator has responded to two citizen petitions asking EPA to object to operating permits issued by the Illinois Environmental Protection Agency (IEPA) to two facilities. Specifically, the Administrator has partially granted and partially denied each of the petitions submitted by the Chicago Legal Clinic to object to the operating permits issued to the Midwest Generation Fisk and Crawford stations.
Pursuant to section 505(b)(2) of the Clean Air Act (Act), Petitioner may seek judicial review of those portions of the petitions which EPA denied in the United States Court of Appeals for the appropriate circuit. Any petition for review shall be filed within 60 days from the date this notice appears in the
You may review copies of the final orders, the petitions, and other supporting information at the EPA Region 5 Office, 77 West Jackson Boulevard, Chicago, Illinois 60604. If you wish to examine these documents, you should make an appointment at least 24 hours before visiting day. Additionally, the final orders for the Midwest Generation Fisk and Crawford stations are available electronically at:
Pamela Blakley, Chief, Air Permitting Section, Air Programs Branch, Air and Radiation Division, EPA, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, telephone (312) 886-4447.
The Act affords EPA a 45-day period to review, and object to as appropriate, operating permits proposed by State permitting authorities. Section 505(b)(2) of the Act authorizes any person to petition the EPA Administrator within 60 days after the expiration of this review period to object to State operating permits if EPA has not done so. Petitions must be based only on objections to the permit that were raised with reasonable specificity during the public comment period provided by the State, unless the petitioner demonstrates that it was impracticable to raise these issues during the comment period or the grounds for the issues arose after this period.
On January 22, 2004, the EPA received from the Chicago Legal Clinic petitions requesting that EPA object to the issuance of the title V operating permits to the Midwest Generation Fisk and Crawford stations. The petitions raise issues regarding the permit application, the permit issuance process, and the permits themselves. Chicago Legal Clinic asserts that the permits: (1) Lack compliance schedules designed to bring the Midwest Generation Fisk and Crawford stations into compliance with Clean Air Act requirements; (2) contain language that fails to include conditions that meet the legal requirements for monitoring; (3) contain language that violates the requirements related to credible evidence; (4) contain language regarding
On March 25, 2005, the Administrator issued orders partially granting and partially denying the petitions. The orders explain the reasons behind EPA's conclusion that the IEPA must reopen the permits to: (1) Address Petitioner's significant comments; (2) include periodic monitoring in compliance with 40 CFR § 70.6(a)(3)(i)(B); (3) remove the note stating that compliance with the carbon monoxide limit is inherent; (4) explain in the statement of basis how it determined in advance that the permittee had met the requirements of the Illinois State Implementation Plan (SIP) or to specify in the permit that continued operation during malfunction or breakdown will be authorized on a case-by-case basis if the source meets the SIP criteria; (5) remove language which is not required by the underlying applicable requirement or explain in the permit or statement of basis how this language implements the meaning and intent of the underlying applicable requirement; (6) remove “established startup procedures,” include the startup procedures in the permit, or include minimum elements of the startup procedures that would “affirmatively demonstrate that all reasonable efforts have been made to minimize startup emissions, duration of individual startups and frequency of startups;” (7) require the owner or operator of the sources to report to the agency “immediately” or explain how the phrase “as soon as possible” meets the requirements of the SIP; (8) remove “reasonably” and “reasonable” from relevant permit terms or define or provide criteria to determine “reasonably” and “reasonable” that meet the requirements of the SIP; (9) remove the term “reasonable” from the relevant permit conditions in accordance with the language in Part 70, Section 504 of the Clean Air Act or Section 39.5 of the Environmental Protection Act; (10) remove the ability to waive the testing requirements or explain how such a waiver would meet the requirements of part 70; (11) define “extraordinary circumstances” in a manner consistent with the requirements of the SIP or remove the language from the permit; and (12) remove “summary of compliance” from the permit or clarify the term such that the reader understands what a “summary of compliance” must contain and how the summary relates to the control measures. The orders also explain the reasons for denying Chicago Legal Clinic's remaining claims.
Environmental Protection Agency (EPA).
Notice of final action.
This notice announces that on September 30, 2004, the Environmental Appeals Board (EAB or Board) of the United States EPA denied a petition for review of a Federal Prevention of Significant Deterioration (PSD) permit issued to Indeck-Niles L.L.C. (Indeck) by the Michigan Department of Environmental Quality (MDEQ).
The effective date for the EAB's decision is September 30, 2004. Pursuant to Section 307(b)(1) of the Clean Air Act, 42 U.S.C. 7607(b)(1), judicial review of this permit decision, to the extent it is available, may be sought by filing a petition for review in the United States Court of Appeals for the Sixth Circuit within 60 days of May 4, 2005.
The documents relevant to the above action are available for public inspection during normal business hours at the following address: Environmental Protection Agency, Region 5, 77 West Jackson Boulevard (AR-18J), Chicago, Illinois 60604. To arrange viewing of these documents, call Laura L. David at (312) 886-0661.
Laura L. David, Environmental Protection Agency, Region 5, 77 W. Jackson Boulevard (AR-18J), Chicago, Illinois 60604. Anyone who wishes to review the EAB decision can obtain it at
In the Board's September 30, 2004 Order Denying Review, the Board made the following findings. On November 2, 2000, Indeck-Niles, L.L.C. applied to MDEQ for permission to construct a new 656-MW simple-cycle natural gas-fired electrical generating facility, to be transformed into a 1,076-MW combined-cycle facility approximately twelve to eighteen months after startup of the simple-cycle facility. Indeck proposed to site the new facility (Indeck-Niles Energy Center) in the southwestern corner of the State of Michigan, in Cass County, northeast of the City of Niles, Michigan, and not far from South Bend, Indiana. That portion of the State was designated as attainment or unclassifiable for carbon monoxide (CO), nitrogen dioxide (NO
In the first phase of the project, Indeck proposed to install four natural gas-fired combustion turbines for operation in simple-cycle mode. In the second phase, Indeck proposed to convert the four simple-cycle turbines into combined-cycle units through the addition of heat recovery steam generators and natural gas-fired duct burners to increase steam output. The conversion would take place within twelve to eighteen months after operation of the simple-cycle turbines commences. The steam produced would be piped to two steam condensing turbines to produce additional power. In this configuration, the proposed facility has the potential to emit NO
In December 2001, MDEQ approved Indeck's analyses and issued a permit to the company for the proposed facility (New Source Review Permit to Install No. 364-00). However, a number of individuals timely petitioned the Board for review of that permit, which prevented the permit from going into effect at that time. On March 11, 2002, the Board issued an order denying the individuals' petition for review and the permit therefore became final on that date. Notably, however, Indeck failed to commence construction of its new facility within eighteen months of issuance of the final PSD permit. Under the State of Michigan's air pollution control regulations (which are based on the Federal PSD rules), such a lack of action within the prescribed time frame renders the permit void (Mich. Admin. Code r. 336.1201(4)).
A year and a half later, in June 2003, Indeck requested that MDEQ reissue the PSD permit for the proposed Indeck-
MDEQ subsequently reviewed and approved Indeck's BACT analyses. Accordingly, MDEQ issued a draft PSD permit to Indeck in January 2004, containing proposed terms and conditions to regulate the proposed power plant. MDEQ also published a notice inviting public comment on the draft permit and establishing a 30 day comment period. On February 25, 2004, MDEQ held a public hearing on the draft permit at the Niles High School Auditorium in Niles, Michigan. The Department received approximately sixty written and twelve oral comments on the draft permit from interested parties, including comments from Mr. Douglas Meeusen (“Petitioner”). After reviewing the public comments on the draft permit, MDEQ issued a final permit (Permit to Install No. 364-00A) on April 21, 2004, for Indeck's construction of the Niles Energy Center, along with a document responding to the comments on the draft permit.
On May 20, 2004, Petitioner filed PSD Appeal No. 04-01 with the Board. In his appeal, Petitioner raised concerns about the startup and shutdown frequency of the proposed facility's combustion turbines. Under Indeck's PSD permit, each turbine is allowed to operate in startup/shutdown mode a maximum of 500 hours per twelve-month rolling time period, as determined at the end of each calendar month, or a total of 2,000 hours for the four turbines annually. The Petitioner challenged special condition 5.8 of the permit which provides that Indeck mustprepare a plan (“emission minimization plan”) to minimize air pollutant emissions during startup and shutdown periods, as well as malfunction periods, and obtain MDEQ's approval of this plan prior to initiating operation of the combustion turbines and duct burners. The Petitioner pointed out that, in his comments on the draft version of the permit, he had asked MDEQ to provide for public scrutiny of the emissions minimization plan and to follow all the directives given to MDEQ by the EAB in a previous decision regarding Tallmadge Energy Center, Order Denying Review in Part and Remanding in Part (PSD Appeal No. 02-12, EAB May 21, 2003), regarding a similar emissions minimization plan. The Petitioner argued that MDEQ ignored the Tallmadge requirements and, as a consequence, the plan called for in Indeck's PSD permit lacks the requisite degree of specificity to allow for meaningful comment by Petitioner and other members of the public.
At the request of the Board, MDEQ submitted a response to the merits of the petition for review on June 25, 2004. In response, MDEQ distinguished the factual circumstances of this case from those in Tallmadge Energy Center. First, MDEQ noted that the Tallmadge permit explicitly exempted that facility from complying with all BACT emission limits during startup, shutdown, and malfunction periods and instead made the facility's operations contingent on the permittee's submittal of a plan describing how it would minimize emissions during those periods. Indeck's permit, MDEQ noted, does not contain such explicit exemption from all BACT limits. To the contrary, MDEQ observed that Indeck's permit incorporates annual BACT emission limitations (expressed in terms of tons per year) that must be met at all times, including during startup, shutdown, and malfunction periods, and it also contains restrictions on the amount of time the turbines can be in startup/shutdown mode and sets forth a minimum load requirement of ninety percent that defines when startup is completed. Second, MDEQ responded to any latent concerns that might exist about the Indeck permit's exclusions of the facility from short-term (
On September 30, 2004, for the foregoing reasons, the Board denied the petition for review of PSD Permit No. 364-00A.
Environmental Protection Agency (EPA).
Notice of meeting.
Pursuant to the Federal Advisory Committee Act, Pub. L. 92-463, the Environmental Protection Agency, Office of Research and Development (ORD), announces a meeting (via conference call) of the Board of Scientific Counselors (BOSC) Computational Toxicology Subcommittee.
The conference call will be held Friday, May 20, 2005, from 10 a.m. to 11 a.m. eastern standard time (e.s.t.), and may adjourn early if all business is completed. Written comments, and requests for the draft agenda or for making oral presentations at the meeting will be accepted up to 1 business day before the meeting date.
Any member of the public interested in receiving a draft BOSC agenda or making an oral presentation during the conference call may contact Ms. Lorelei Kowalski, Designated Federal Officer, whose contact information is listed under the
Written comments may be submitted electronically, by mail, or through hand delivery/courier. Follow the detailed instructions as provided in Unit I.B. of this section. Written comments will be accepted up to 1 business day prior to the conference call date.
Ms. Lorelei Kowalski, Designated Federal Officer, via telephone/voice mail at (202) 564-3408, via e-mail at
This notice announces a meeting (via conference call) of the BOSC Computational Toxicology Subcommittee. The purpose of the meeting is to finalize a draft letter report on EPA's Computational Toxicology Research Center. Proposed agenda items for the conference call include, but are not limited to: Presentations of the Subcommittee's draft responses to the charge questions and approval of the final draft letter report prior to its submission to the BOSC Executive Committee. The conference call is open to the public.
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An electronic version of the public docket is available through EDOCKET. You may use EDOCKET at
For those wishing to make public comments, it is important to note that EPA's policy is that comments, whether submitted electronically or on 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, confidential business information (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 mailed or delivered to the docket will be transferred to EPA's electronic public docket. Written public comments mailed or delivered to the Docket will be scanned and placed in EPA's electronic public docket.
You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket identification number (ORD-2005-0013) in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period.
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Environmental Protection Agency (EPA).
Notice.
In accordance with section 6(f)(1) of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), as amended, EPA is issuing a notice of receipt of requests by registrants to amend or voluntarily cancel their registrations to terminate certain uses of products containing the pesticide dimethoate [
Comments, identified by docket ID number OPP-2005-0084, must be received on or before June 3, 2005.
Comments may be submitted electronically, by mail, or through hand delivery/courier. Follow the detailed instructions as provided in Unit I. of the
Stephanie Plummer, Special Review and Reregistration Division (7508C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number: (703) 305-0076; fax number: (703) 308-7042; e-mail address:
This action is directed to the public in general, and may be of interest to a wide range of stakeholders, including environmental, human health, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under
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An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. 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
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 ID 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. If you wish to submit CBI or information that is otherwise protected by statute, please follow the instructions in Unit I.D. Do not use EPA Dockets or e-mail to submit CBI or information protected by statute.
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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. 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 listed under
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 ID number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and
This notice announces receipt by EPA of requests from all of the affected dimethoate end-use registrants to cancel dimethoate product registrations or amend their registrations so as to terminate all use of dimethoate on apples, broccoli raab, cabbage, collards, fennel, grapes, head lettuce, lespedeza, spinach, tomatillo, and trefoil. Dimethoate is a systemic organophosphate insecticide. Dimethoate will remain registered for use on a variety of other vegetables, fruit, field crops, trees, and ornamental plants. In letters submitted between November 2004 and March 2005, dimethoate end-use registrants requested that EPA cancel end-use product registrations or amend end-use product registrations to terminate use on apples, broccoli raab, cabbage, collards, fennel, grapes, head lettuce, lespedeza, spinach, tomatillo, and trefoil. The registrants requested 1 year from the date of cancellations of these registrations/uses for the distribution of their existing stocks of products with the current labels. The registrants also requested that the 180-day comment period be waived in favor of a 30-day comment period, allowing for a quicker cancellation of these uses. Only one of the currently active dimethoate products would be canceled, and the majority of dimethoate uses are not affected by this request.
This notice announces receipt by EPA of requests from registrants to cancel dimethoate products or amend their registrations to terminate certain uses of dimethoate product registrations. The affected products and the registrants making the requests are identified in Tables 1 and 2 of this unit.
Under section 6(f)(1)(A) of FIFRA, registrants may request at any time that their pesticide registrations be canceled or amended to terminate one or more pesticide uses. Section 6(f)(1)(B) of FIFRA requires that before acting on a request for voluntary cancellation, EPA must provide a 30-day public comment period on the request for voluntary cancellation or use termination. In addition, section 6(f)(1)(C) of FIFRA requires that EPA provide a 180-day comment period on a request for voluntary cancellation or termination of any minor agricultural use before granting the request, unless:
1. The registrants request a waiver of the comment period, or
2. The Administrator determines that continued use of the pesticide would pose an unreasonable adverse effect on the environment.
The dimethoate registrants have requested that EPA waive the 180-day comment period; therefore, EPA will provide a 30-day comment period on the proposed requests.
Unless a request is withdrawn by the registrant within 30 days of publication of this notice, or if the Agency determines that there are substantive comments that warrant further review of this request, an order will be issued canceling or amending the affected registrations.
Table 3 of this unit includes the names and addresses of record for the registrants of the products listed in Table 1 and Table 2 of this unit.
Section 6(f)(1) of FIFRA provides that a registrant of a pesticide product may at any time request that any of its pesticide registrations be canceled or amended to terminate one or more uses. FIFRA further provides that, before acting on the request, EPA must publish a notice of receipt of any such request in the
Registrants who choose to withdraw a request for cancellation must submit such withdrawal in writing to the person listed under
Upon the close of the comment period for this Notice, EPA expects to issue an order granting the requests for voluntary cancellation and amendments for the products identified in Tables 1 and 2, and to include in the order provisions regarding the status of existing stocks of the pesticides. Existing stocks are defined in EPA's existing stocks policy (56 FR 29362, June 26, 1991) as those stocks of registered pesticide products which are currently in the United States and which were packaged, labeled, and released for shipment prior to the effective date of the cancellation or amendment of their registration. Any distribution, sale, or use of existing stocks, except as provided in the amendment or cancellation order, would be considered a violation of section 12(a)(2)(K) and/or 12(a)(1)(A) of FIFRA.
In any order issued in response to these requests for cancellation or amendment to terminate certain uses, EPA proposes to include the following provisions for the treatment of any existing stocks of the products identified or referenced in Table 1 or 2:
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The registrant of any product listed in Table 1 or 2 may distribute or sell existing stocks of the product bearing labels for use on apples, broccoli, raab, cabbage, collards, fennel, grapes, head lettuce, lespedeza, spinach, tomatillo, or trefoil for 1 year after the effective date of the cancellation or amendment order. The distribution or sale of existing stocks by the registrant of any product listed in Table 1 or 2 will not be lawful under FIFRA 1 year after the effective date of the cancellation or amendment order, except for the purposes of shipping such stocks for export consistent with section 17 of FIFRA or for proper disposal.
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Any person other than the registrant may distribute, sell, and use existing stocks of any product listed in Table 1 or 2 that is labeled for use on apples, broccoli raab, cabbage, collards, fennel, grapes, head lettuce, lespedeza, spinach, tomatillo, and trefoil after the effective date of the cancellation or amendment order and until such existing stocks are exhausted.
Environmental protection, Pesticides and Pests.
Environmental Protection Agency (EPA).
Notice.
This notice announces the initial filing of a pesticide petition proposing the establishment of regulations for residues of a certain pesticide chemical in or on various food commodities.
Comments, identified by docket identification (ID) number OPP-2005-0111, must be received on or before June 3, 2005.
Comments may be submitted electronically, by mail, or through hand delivery/courier. Follow the detailed instructions as provided in Unit I. of the
Denise Greenway, Biopesticides and Pollution Prevention Division (7511C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number: (703) 308-8263; e-mail address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:
• Crop production (NAICS 111)
• Animal production (NAICS 112)
• Food manufacturing (NAICS 311)
• Pesticide manufacturing (NAICS 32532)
This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under
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An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA
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 Unit I.B.1. EPA intends to work towards 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.
You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket ID 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. If you wish to submit CBI or information that is otherwise protected by statute, please follow the instructions in Unit I.D. Do not use EPA Dockets or e-mail to submit CBI or information protected by statute.
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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. 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
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 copies of 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 the estimate that you provide.
5. Provide specific examples to illustrate your concerns.
6. Make sure to submit your comments by the deadline in this notice.
7. To ensure proper receipt by EPA, be sure to identify the docket ID number assigned to this action in the subject line on the first page of your response. You may also provide the name, date, and
EPA has received a pesticide petition as follows proposing the establishment and/or amendment of regulations for residues of a certain pesticide chemical in or on various food commodities under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a. EPA has determined that this petition contains data or information regarding the elements set forth in FFDCA section 408(d)(2); however, EPA has not fully evaluated the sufficiency of the submitted data at this time or whether the data support granting of the petition. Additional data may be needed before EPA rules on the petition.
Environmental protection, Agricultural commodities, Feed additives, Food additives, Pesticides and pests, Reporting and recordkeeping requirements.
The petitioner summary of the pesticide petition is printed below as required by FFDCA section 408(d)(3). The summary of the petition was prepared by the petitioner and represents the view of the petitioner. The petition summary announces the availability of a description of the analytical methods available to EPA for the detection and measurement of the pesticide chemical residues or an explanation of why no such method is needed.
EPA has received a pesticide petition 6F4632 from Valent BioSciences Corp.,870 Technology Way, Libertyville, Il. 60048, proposing pursuant to section 408(d) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a(d), to amend 40 CFR part 180 to establish an exemption from the requirement of a tolerance for the biochemical pesticide Aminoethoxyvinylglycine hydrochloride (Aviglycine HCI or AVG) in or on walnut and cucumber.
Pursuant to section 408(d)(2)(A)(i) of the FFDCA, as amended, Valent BioSciences Corp. has submitted the following summary of information, data, and arguments in support of their pesticide petition. This summary was prepared by Valent BioSciences Corp. and EPA has not fully evaluated the merits of the pesticide petition. The summary may have been edited by EPA if the terminology used was unclear, the summary contained extraneous material, or the summary unintentionally made the reader conclude that the findings reflected EPA's position and not the position of the petitioner.
Aviglycine HCl (AVG) is a plant growth regulator used in preventing pistillate flower abortion (PFA) in walnuts, thereby increasing yield. AVG is the active ingredient (ai) in ReTain Plant Growth Regulator (EPA Reg. 73049-45) and ReTain Plant Growth Regulator for California (EPA Reg. No. 73049-58). The proposed use is for a single application to orchards when 5 to 10% of each of the trees is in bloom in order to increase the fruit set in walnut cultivars that suffer a high incidence of PFA. The proposed use rate for walnuts is 50 - 100 grams a.i./acre (0.73 - 1.46 lbs of ReTain® per acre targeting 125 parts per million (ppm) AVG in the spray solution) in a spray volume of 100 gallons per acre for small trees, 200 gallons per acre for large trees.
Aviglycine HCl is a plant growth regulator effective in inducing staminate (male) flowers on gynoecious (all female) breeding lines of curcubits used in seed production. AVG is the ai in ReTain Plant Growth Regulator (EPA Reg. 73049-45) and ReTain Plant Growth Regulator for California (EPA Reg. No. 73049-58). The proposed use is for one to four applications of ReTain to cucumber plants at early first leaf stage through to the tenth leaf stage. The proposed use rate for cucumbers is 19 to 48 grams a.i./acre (0.28 - 0.7 lbs of ReTain® per acre targeting 250 to 500 ppm AVG in the spray solution) in a spray volume of 10 to 25 gallons per acre to ensure good coverage.
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The proposed use of aviglycine HCl on cucumbers is for seed production only. The proposed use is for an early season application to immature plants. There is minimal translocation of aviglycine HCl within plants. Residues of AVG will degrade over time on and in treated plant tissue. Therefore it is unlikely residual AVG will be present in the fruit or seed at the time the seed is harvested. There are also two generations between the seed production use of ReTain and generation of a commercial edible plant product from that seed. Curcubit seed is mechanically harvested with specialized equipment that destroys the fruit to obtain the seed. As a result, the potential for measurable residues of aviglycine HCl on the harvested edible portion of commercially grown cucumbers following application of ReTain as a means of inducing male flowers in seed production 2-generations before commercial harvest is negligible. Analytical methods for the detection of aviglycine HCl have been submitted to EPA in support of petitions for tolerances on pome and stone fruit. An analytical method for detection of aviglycine HCl residues in or on walnuts or cucumbers is not required. There is negligible potential for measurable residues of aviglycine HCl on walnuts or cucumbers as a result of the proposed use of ReTain and an exemption from the requirements of a tolerance for both walnuts and cucumbers is being sought.
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The proposed use of aviglycine HCl is one to four early season applications of ReTain to breeding lines of cucumbers for seed production. ReTain is not proposed for use on cucumbers destined for commercial harvest and it is highly unlikely that application to cucumbers grown for seed production could or would result in measurable residues in the cucumbers grown commercially from progeny of that seed. Therefore, it should not be necessary to establish a tolerance for this use. Residue studies, methods supporting the analysis and methods of analysis for purpose of enforcement would similarly not be required.
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AVG was evaluated in a rat 2-generation reproduction study submitted by Abbott Laboratories. Based on reductions in body weight, changes in organ weights and an increased incidence of microscopic findings, the parental NOAEL was established at 0.8 mg a.i./kg/day. The NOAEL for reproductive toxicity was established at 4.0 mg a.i./kg/day and the neonatal toxicity NOAEL was established at 2.5 mg a.i./kg/day.
4.
A 21 day repeat dose dermal toxicity study in rats was carried out at 0, 100, 500, and 1,000 mg/kg/day. The no observed effect level (NOEL) is 1,000 mg/kg/day; a lowest observed effect level (LOEL) was not determined.
5.
1.
The resulting exposures were compared to a chronic reference dose (RfD) of 0.007 mg a.i./kg/day and an acute NOEL of 1.77 mg/kg bwt/day. The RfD is based on the NOAEL of 0.7 mg a.i./kg/day from the rat chronic toxicity study (52 week) and the rat carcinogenicity feeding study (104-week) with a 100-fold uncertainty factor to account for intra-species and inter-species variations. The acute NOEL is based on the rat oral developmental toxicity study.
Chronic dietary exposure estimates for the overall U.S. population and 24 population subgroups, including infants and children, are well below the chronic RfD. Estimated daily exposures from tolerance level residues and a 100% CT assumption for all crops were 15.9% of the RfD or less for all populations examined. Acute dietary exposure was estimated for the overall U.S. population and the population subgroups: (i) all infants, (ii) nursing infants, (iii) non-nursing infants, (iv) children 1 to 2 years of age, (viii) adults 20 to 49 years of age, (ix) females 13 to 49 years of age and (x) adults 50 years and older. Estimated daily exposures from tolerance level residues (at the 95
The proposed agricultural uses of aviglycine HCl will not alter the results of the chronic and acute dietary exposure analyses conducted for pome fruit and stone fruit applications, which clearly demonstrated a reasonable certainty that no harm will result from the agricultural uses of AVG.
ii.
2.
The exposure from the commercial use is expected to be dermal in nature. A 21-day repeat dose dermal toxicity study resulted in no significant treatment related effects at 1,000 milligrams/kilogram/day (mg/kg/day), the highest dose tested (HDT).
Consideration of a common mechanism of toxicity is not necessary at this time because there is no indication that toxic effects of AVG would be cumulative with those of any other chemical compounds. AVG has a novel mode of action compared to other currently registered active ingredients. Therefore, Valent BioSciences Corp. believes it is appropriate to consider only the potential risks of aviglycine HCl in an aggregate risk assessment.
1.
Therefore, taking into account the proposed uses, it can be concluded with reasonable certainty that residues of AVG in food and drinking water will not result in unacceptable levels of human health risk.
2.
Using the chronic exposure assumptions and the proposed RfD described above, the dietary exposure to AVG for non-nursing infants, the most highly exposed population subgroup, was calculated to be 0.001110 mg/kg bwt/day or 15.9% of the reference dose. Daily exposure for the overall U.S. population was estimated to be 0.000153 mg/kg bwt/day. The proposed
Lifespan, and multigenerational studies on mammals, and acute and subchronic studies on aquatic organisms and wildlife did not reveal any definite immune or endocrine effects. An immunotoxicity study in rats at 0, 1.25, 5 and 15 mg/kg/day with a NOAEL of 5 mg/kg/day based on decreased primary antibody (igM) response to sheep red blood cells; decreased absolute and relative thymus weights; decreased body weight, food consumption and food efficiency at the high dose level. The LOEL is 15 mg/kg/day.
Any endocrine related effects would have been detected in this definitive array of required tests. The probability of any such effect due to agricultural uses of AVG is considered negligible.
Tolerances have been established for the residues of AVG in or on the following food commodities:
There are no Codex maximum residue limits for use of aviglycine HCl on apples or pears, or on any other crop.
Environmental Protection Agency (EPA).
Notice.
This notice announces EPA's approval of an application for test marketing exemption (TME) under section 5(h)(1) of the Toxic Substances Control Act (TSCA) and 40 CFR 720.38. EPA has designated this application as TME-05-3. The test marketing conditions are described in the TME application and in this notice.
Approval of this TME is effective April 27, 2005.
This action is directed in particular to the chemical manufacturer and/or importer who submitted the TME to EPA. This action may, however, be of interest to the public in general. Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the technical person 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 Dockets at
Section 5(h)(1) of TSCA and 40 CFR 720.38 authorizes EPA to exempt persons from premanufacture notification (PMN) requirements and permit them to manufacture or import new chemical substances for test marketing purposes, if the Agency finds that the manufacture, processing, distribution in commerce, use, and disposal of the substances for test marketing purposes will not present an unreasonable risk of injury to health or the environment. EPA may impose restrictions on test marketing activities and may modify or revoke a test marketing exemption upon receipt of new information which casts significant doubt on its finding that the test marketing activity will not present an unreasonable risk of injury.
EPA approves the above-referenced TME. EPA has determined that test
The test market time period, production volume, number of customers, and use must not exceed specifications in the application and this notice. All other conditions and restrictions described in the application and in this notice must also be met.
The following additional restrictions apply to this TME. A bill of lading accompanying each shipment must state that the use of the substance is restricted to that approved in the TME. In addition, the applicant shall maintain the following records until 5 years after the date they are created, and shall make them available for inspection or copying in accordance with section 11 of TSCA:
1. Records of the quantity of the TME substance produced and the date of manufacture.
2. Records of dates of the shipments to each customer and the quantities supplied in each shipment.
3. Copies of the bill of lading that accompanies each shipment of the TME substance.
EPA identified no significant health or environmental concerns for the test market substance. Therefore, the test market activities will not present an unreasonable risk of injury to human health or the environment.
Yes. The Agency reserves the right to rescind approval or modify the conditions and restrictions of an exemption should any new information that comes to its attention cast significant doubt on its finding that the test marketing activities will not present an unreasonable risk of injury to human health or the environment.
Environmental protection, Test marketing exemptions.
The Federal Communications Commission (FCC) has received Office of Management and Budget (OMB) approval for the following public information collections pursuant to the Paperwork Reduction Act of 1995, Public Law 104-13. 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 control number.
Paul J. Laurenzano, Federal Communications Commission, 445 12th Street, SW., Washington DC 20554, (202) 418-1359 or via the Internet at
The Federal Communications Commission, as part of its continuing effort to reduce paperwork burden invites the general public and other Federal agencies to take this opportunity to comment on the following information collection(s), as required by the Paperwork Reduction Act of 1995, Public Law 104-13. An agency may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act (PRA) that does not display a valid control number. Comments are requested concerning (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimate; (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 the respondents, including the use of automated collection techniques or other forms of information technology.
Written Paperwork Reduction Act (PRA) comments should be submitted on or before June 3, 2005. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all comments regarding this Paperwork Reduction Act submission to Judith B. Herman, Federal Communications Commission, Room 1-C804, 445 12th Street, SW., DC 20554 or via the Internet to
For additional information or copies of the information collection(s), contact Judith B. Herman at 202-418-0214 or via the Internet at
The Federal Communications Commission, as part of its continuing effort to reduce paperwork burden invites the general public and other Federal agencies to take this opportunity to comment on the following information collection(s), as required by the Paperwork Reduction Act (PRA) of 1995, Public Law 104-13. An agency may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act that does not display a valid control number. Comments are requested concerning (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimate; (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 the respondents, including the use of automated collection techniques or other forms of information technology.
Written Paperwork Reduction Act (PRA) comments should be submitted on or before July 5, 2005. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all Paperwork Reduction Act (PRA) comments to Les Smith, Federal Communications Commission, Room 1-A804, 445 12th Street, SW., Washington, DC 20554 or via the Internet to
For additional information or copies of the information collection(s), contact Les Smith at (202) 418-0217 or via the Internet at
Applicants that require an FCC license to operate a new or modified experimental radio station must file FCC Form 442, as required by 47 CFR 5.55 (a), (b), and (c) and 5.59 of FCC Rules. The FCC's information technician and engineers use the data supplied by applicants in FCC Form 442 to determine: (1) If the applicant is eligible for an experimental license; the purpose of the experiment; compliance with the requirements of part 5 of the FCC Rules; and (2) if the proposed operation will cause interference to existing operations. Thus, the FCC cannot grant an experimental license without the information contained on this form.
The Federal Communications Commission, as part of its continuing effort to reduce paperwork burden invites the general public and other Federal agencies to take this opportunity to comment on the following information collection, as required by the Paperwork Reduction Act of 1995, Pub. L. 104-13. An agency may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act (PRA) that does not display a valid control number. Comments are requested concerning (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimate; (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 the respondents, including the use of automated collection techniques or other forms of information technology.
Written comments should be submitted on or before June 3, 2005. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all comments to Cathy Williams, Federal Communications Commission, Room 1-C823, 445 12th Street, SW., Washington, DC 20554 or via the Internet to
For additional information or copy of the information collection(s) contact Cathy Williams at (202) 418-2918 or via the Internet at
In a Public Notice (DA-04-2117) dated July 14, 2004, the Commission informed Multichannel Video Programming Distributors (MVPDs) about the requirement that all Form 320 filings must be submitted electronically as of February 1, 2005.
Federal Communications Commission.
Notice.
This document is a summary of the International Bureau's decision to approve the application of Allied Communications International, Inc. to provide international voice and data service between the United States and Cuba. The International Bureau determined that the present and future public convenience and necessity require a grant of the application.
Effective March 17, 2005.
Peggy Reitzel, International Bureau, (202) 418-1460.
This is a summary of the International Bureau's Order, DA 05-699, adopted on March 16, 2005, and released on March 17, 2005. The full text of this document is available for inspection and copying during normal business hours in the Consumer and Government Affairs Bureau's Reference Information Center, (Room CY-A257) of the Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554. The document is also available for download over the Internet at
On March 16, 2005, the Commission approved the application of Allied Communications International, Inc. (“ACI”) to provide international voice and data service between the United States and Cuba. ACI filed an application seeking authority pursuant to section 214 to provide the service via indirect transit through Mexico.
The Commission has authorized ACI to provide service between the United States and Cuba in accordance with the provisions of the Cuban Democracy Act of 1992. This will allow ACI to route its voice and data traffic via a Qwest point of presence in Florida to site facilities of Comsat International. Comsat International will then route the traffic via network facilities made available by several submarine cable systems. In addition, the Commission granted ACI's request for permission to modify its routing arrangement between the United States and Mexico as new business and technical developments may warrant. ACI will be required to notify the Commission of any such routing changes. Under the guidelines
Federal Communications Commission.
Notice.
In this document, the Commission announces a change in the date of the meeting of its Consumer Advisory Committee meeting (Committee).
Federal Communications Commission, 445 12th Street, NW., Room TW-C305, Washington, DC 20554.
The Consumer Advisory Committee meeting has been rescheduled for Friday June 10, 2005, 9 a.m. to 4 p.m.
Scott Marshall, Consumer & Governmental Affairs Bureau, (202) 418-2809 (voice), (202) 418-0179 (TTY), or e-mail
This is a summary of the Commission's document DA 05-1058, dated and released April 14, 2005.
The Committee is organized under, and operates in accordance with the provisions of the Federal Advisory Committee Act, 5 U.S.C., App. 2 (1988). Minutes of meetings are available for public inspection and are posted on the Commission's Web site at
Members of the public may address the Committee or may send written comments to: Scott Marshall, Designated Federal Officer of the Committee.
To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to
The Commission hereby gives notice of the filing of the following agreements under the Shipping Act of 1984. Interested parties may obtain copies of agreements by contacting the Commission's Office of Agreements at (202) 523-5793 or via e-mail at
By Order of the Federal Maritime Commission.
Notice is hereby given that the following Ocean Transportation Intermediary licenses have been reissued by the Federal Maritime Commission pursuant to section 19 of the Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998 (46 U.S.C. app. 1718) and the regulations of the Commission pertaining to the licensing of Ocean Transportation Intermediaries, 46 CFR part 515.
The Federal Maritime Commission hereby gives notice that the following Ocean Transportation Intermediary licenses have been revoked pursuant to section 19 of the Shipping Act of 1984 (46 U.S.C. app. 1718) and the regulations of the Commission pertaining to the licensing of Ocean Transportation Intermediaries, effective on the corresponding date shown below:
Notice is hereby given that the following applicants have filed with the Federal Maritime Commission an application for license as a Non-Vessel—Operating Common Carrier and Ocean Freight Forwarder—Ocean Transportation Intermediary pursuant to section 19 of the Shipping Act of 1984 as amended (46 U.S.C. app. 1718 and 46 CFR part 515).
Persons knowing of any reason why the following applicants should not receive a license are requested to contact the Office of Transportation Intermediaries, Federal Maritime Commission, Washington, DC 20573.
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
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 May 27, 2005.
Board of Governors of the Federal Reserve System, April 28, 2005.
Pursuant to the Federal Advisory Committee Act, the Department of Health and Human Services announces the following advisory committee meeting.
Should you require reasonable accommodation, please contact the CDC Office of Equal Employment Opportunity on (301) 458-4EEO (4336) as soon as possible.
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces the following meeting:
The Director, Management Analysis and Services Office, has been delegated the authority to sign
• Street-based services;
• Home-based services for families with youth at risk of separation from the family;
• Drug abuse education and prevention services; and
• At the request of runaway and homeless youth, testing for sexually transmitted diseases.
Each BCP is required to provide to runaway and homeless youth; temporary shelter for up to fifteen (15) days including room and board; individual, group and family counseling (as appropriate); and aftercare and referrals, as appropriate. Some programs also provide some or all of their services through host homes (usually private homes under contract to the centers) with counseling and referrals being provided. Basic Center programs shelter youth through 18 years of age.
Grants for Runaway and Homeless Youth programs are authorized by the Runaway and Homeless Youth Act (Title III of the Juvenile Justice and Delinquency Prevention Act of 1974), as amended by the Runaway, Homeless, and Missing Children Protection Act of 2003, Public Law 108-96. Text of the 2003 amended legislation may be found at
In the early 1970s, there were an alarming number of youth leaving home without parental permission, crossing State lines and, while away from home, were exposed to exploitation and other dangers of street life. In response to the widespread concern about the problem of runaway and homeless youth, Congress created a system of financial support for States through a competitive grant program as authorized by the Runaway and Homeless Youth (RHY) Act of 1974. The implementation and administration of the program was placed in the Family and Youth Services Bureau (FYSB) within the Department of Health and Human Services (HHS).
The Basic Center Program (BCP) was one of the grant programs authorized under Part A of the RHY Act of 1974 to address the runaway and homeless youth problems. The overall purpose of BCP is to provide a system of care for young runaways outside the traditional child welfare, mental health, law enforcement, or juvenile justices systems. Each program must provide a safe and appropriate shelter and individual, family, and group counseling as appropriate. Optional services that programs may provide are:
• Street-based services;
• Home-based services for families with youth at risk of separation from the family;
• Drug abuse education and prevention services; and
• At the request of runaway and homeless youth, testing for sexually transmitted diseases
While each Basic Center is slightly different, each Basic Center Program is required to provide outreach to runaway and homeless youth; temporary shelter for up to fifteen (15) days, including room and board; individual, group and family counseling (as appropriate); and aftercare and referrals, as appropriate. Some programs also provide some or all of their shelter services through host homes (usually private homes under contract to the centers) with counseling and referrals being provided. BCPs shelter youth through 18 years of age.
In fiscal year 2004, a total of $44.4 million was available for the program, which allowed FYSB to fund 345 Basic Centers.
The Family and Youth Services Bureau has worked to promote a positive youth development (PYD) framework for all of its funded grant programs (including the Basic Center Programs) and activities. Therefore, applicants are encouraged, to the extent possible, to develop their project descriptions with the PYD framework in mind as discussed below.
The positive youth development approach is predicated on the understanding that all young people need support, guidance and opportunities during adolescence, a time of rapid growth and change. With this support, they can develop self-assurance and create a healthy, successful life. Key elements of positive youth development are:
• Healthy messages to adolescents about their bodies, their behaviors and their interactions;
• Safe and structured places for teens to study, recreate and socialize;
• Strengthened relationships with adult role models, such as parents, mentors, coaches or community leaders;
• Skill development in literacy, competence, work readiness and social skills; and
• Opportunities to serve others and build self-esteem.
If these factors are being addressed, young people can become not just “problem free” but “fully-prepared” and engaged constructively in their communities and society.
These key elements result in the following outcomes:
• Increased opportunities and avenues for the positive use of time;
• Increased opportunities for positive self-expression; and
• Increased opportunities for youth participation and civic engagement.
It is FYSB's hope and expectation that awareness of this PYD approach and its importance for serving youth will increase. The FYSB publications,
Definitions may be found at Section 387 of the RHY Act, as amended.
County governments; City or township governments; Special district governments; State controlled institutions of higher education; Native American tribal governments (Federally recognized); Native American tribal organizations (other than Federally recognized tribal governments); Non-profits having a 501(c)(3) status with the IRS, other than institutions of higher education; Non-profits that do not have a 501(c)(3) status with the IRS, other than institutions of higher education; Others (See Additional Information on Eligibility below.)
Public and non-profit private entities and coordinated networks of such entities are eligible applicants under this announcement.
Faith-based and community organizations are eligible applicants under this announcement.
Current BCP grantees with project periods ending on or before September 29, 2005, and all other eligible applicants not currently receiving BCP funds may apply for a new competitive Basic Center grant under this announcement.
Current BCP grantees (including sub-grantees) with one or two years remaining in their project period may not apply for a new Basic Center grant for the community they currently serve. These grantees will receive instructions from their respective Administration for Children and Families (ACF) Runaway and Homeless Youth (RHY) Regional Office contacts on the procedures for applying for noncompetitive continuation grants. Current grantees that have questions regarding their eligibility to apply for new funds should consult with the appropriate Regional Office Youth Contact to determine if they are eligible to apply for a new grant award.
The funds available for new awards and continuations in each State and insular area are listed below in the Basic Center Program Table of Allocations by State. In this Table, the amounts shown in the “New Awards” column are the amounts available for competition under this announcement. The dollar amount available for awards in each State depends on the amount of the State's total allotment (based on the State's relative population of individuals who are less than 18 years of age) minus the amount required for non-competing continuations. Therefore, where the amount required for non-competing continuations in any State equals or exceeds the State's total allotment, it is possible that no new awards will be made in the State. However, agencies in States where zero ($ -0-) funding is reflected on the BCP Table of Allocation are highly encouraged to apply for grant funding in the event that additional funding becomes available.
All applicants under this competitive grant area will compete with other eligible applicants in the State in which they propose to deliver services.
Agencies in States where zero ($ -0-) funding is reflected on the BCP Table of Allocations are highly encouraged to apply for grant funding in case additional funds become available.
Yes.
Grantees are required to meet a non-Federal share of the project costs, in accordance with Pub. L. 108-96, section
All applicants must have a Dun & Bradstreet number. On June 27, 2003, the Office of Management and Budget published in the
Please ensure that your organization has a DUNS number. You may acquire a DUNS number at no cost by calling the dedicated toll-free DUNS number request line on 1-866-705-5711 or you may request a number on-line at
Non-profit organizations applying for funding are required to submit proof of their non-profit status. Proof of non-profit status is any one of the following:
• A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code.
• A copy of a currently valid IRS tax exemption certificate.
• A statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earning accrue to any private shareholders or individuals.
• A certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status.
• Any of the items in the subparagraphs immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
Applications that exceed the ceiling amount will be considered non-responsive and will not be considered for funding under this announcement.
Any application that fails to satisfy the deadline requirements referenced in Section IV.3 will be considered non-responsive and will not be considered for funding under this announcement.
ACYF Operations Center, c/o The Dixon Group, Attn: Basic Center Program Funding, 118 Q Street, NE., Washington, DC 20002-2132. Phone: 866-796-1591. E-mail:
Each application package must include an original and two copies. Do not staple the application or any section of the application.
The length of the entire application package must not exceed 80 pages. This includes the required Federal forms/certifications (SF-424, SF-424A, SF-424B and SF-LLL), table of contents, project summary, project description, budget/budget justification, supplemental documentation, proof of non-profit status, summaries of sub-grants and contracts, and letters of support or agreement.
The project description must be typed and double-spaced on a single-side of 8
• Item 6: Insure the accuracy of Employer Identification Number (EIN). This number is provided to an organization by the Internal Revenue Service (IRS).
• Item 10: Clearly state the Catalog of Federal Domestic Assistance (CFDA) number (93.623) and title of the program (Basic Center Program).
• Item 13: Proposed Project Start Date is 09/30/2005; End Date is 09/29/2008.
• Item 14: Include the Congressional District where the applicant is located in 14a and other district(s) affected by the project in 14b. An applicant may insure the accuracy of its district(s) via the following website address:
• Item 15: The Estimated Funding should reflect only the budgeted amount for a 12-month budget period. Assume that if the application is awarded a grant in this cycle that future funding based on non-competitive continuation grants will remain at this level based on the availability of funds.
You may submit your application to us in either electronic or paper format.
To submit an application electronically, please use the
Please note the following if you plan to submit your application electronically via Grants.gov
• Electronic submission is voluntary, but strongly recommended.
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation. We strongly recommend that you do not wait until the application deadline date to begin the application process through Grants.gov.
• We recommend you visit Grants.gov at least 30 days prior to filing your application to fully understand the process and requirements. We encourage applicants who submit electronically to submit well before the closing date and time so that if difficulties are encountered an applicant can still send in a hard copy overnight. If you encounter difficulties, please contact the Grants.gov Help Desk at 1-800-518-4276 to report the problem and obtain assistance with the system.
• To use Grants.gov, you, as the applicant, must have a DUNS Number and register in the Central Contractor Registry (CCR). You should allow a minimum of five days to complete the CCR registration.
• You will not receive additional point value because you submit a grant application in electronic format, nor will we penalize you if you submit an application in paper format.
• You may submit all documents electronically, including all information typically included on the SF-424 and all necessary assurances and certifications.
• Your application must comply with any page limitation requirements described in this program announcement.
• After you electronically submit your application, you will receive an automatic acknowledgement from Grants.gov that contains a Grants.gov tracking number. The Administration for Children and Families will retrieve your application from Grants.gov.
• We may request that you provide original signatures on forms at a later date.
• You may access the electronic application for this program on
• You must search for the downloadable application package by the CFDA number.
Applicants that are submitting their application in paper format should submit an original and two copies of the complete application. The original and each of the two copies must include all required forms, certifications, assurances, and appendices, be signed by an authorized representative, have original signatures, and be submitted unbound.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
The project description should include all the information requirements described in the specific evaluation criteria outlined in the program announcement under Section V Application Review Information. In addition to the project description, the applicant needs to complete all the standard forms required for making applications for awards under this announcement.
Applicants seeking financial assistance under this announcement must file the Standard Form (SF) 424, Application for Federal Assistance; SF-424A, Budget Information—Non-Construction Programs; SF-424B, Assurances—Non-Construction Programs. The forms may be reproduced for use in submitting applications. Applicants must sign and return the standard forms with their application.
Applicants must furnish prior to award an executed copy of the Standard Form LLL, Certification Regarding Lobbying, when applying for an award in excess of $100,000. Applicants who have used non-Federal funds for lobbying activities in connection with receiving assistance under this announcement shall complete a disclosure form, if applicable, with their applications (approved by the Office of Management and Budget under control number 0348-0046). Applicants must sign and return the certification with their application.
Applicants must also understand they will be held accountable for the
Applicants seeking to provide drug abuse education and prevention services must also understand that they will be held accountable for conducting outreach activities for runaway and homeless youth. (See 42 U.S.C. 5712(e)(2)) By signing and submitting the application, applicants are providing this certification and need not mail back a separate certification with the application.
Applicants must make the appropriate certification of their compliance with all Federal statutes relating to nondiscrimination. By signing and submitting the applications, applicants are providing the certification and need not mail back the certification form. Complete the standard forms and the associated certifications and assurances based on the instructions on the forms. The forms and certifications may be found at:
Please see Section V.1. Criteria, for instructions on preparing the full project description.
Due Date for Applications: June 20, 2005.
The closing time and date for receipt of applications is referenced above. Applications received after 4:30 p.m. eastern time on the closing date will be classified as late.
Applications hand carried by applicants, applicant couriers, other representatives of the applicant, or by overnight/express mail couriers shall be considered as meeting an announced deadline if they are received on or before the deadline date, between the hours of 8 a.m. and 4:30 p.m., eastern time, at the address referenced in Section IV.6., between Monday and Friday (excluding Federal holidays).
ACF cannot accommodate transmission of applications by facsimile. Therefore, applications transmitted to ACF by fax will not be accepted regardless of date or time of submission and time of receipt.
Receipt acknowledgement for application packages will be provided to applicants who submit their package via mail, courier services, or by hand delivery. Applicants will receive an electronic acknowledgement for applications that are submitted via
Any application received after 4:30 p.m. eastern time on the deadline date will not be considered for competition.
Applicants using express/overnight mail services should allow two working days prior to the deadline date for receipt of applications. Applicants are cautioned that express/overnight mail services do not always deliver as agreed.
You may use the checklist below as a guide when preparing your application package.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
This program is covered under Executive Order 12372, “Intergovernmental Review of Federal Programs,” and 45 CFR Part 100, “Intergovernmental Review of Department of Health and Human Services Programs and Activities.” Under the Order, States may design their own processes for reviewing and commenting on proposed Federal assistance under covered programs.
As of October 1, 2004, the following jurisdictions have elected to participate in the Executive Order process: Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Carolina, Texas, Utah, West Virginia, Wisconsin, American Samoa, Guam, North Mariana Islands, Puerto Rico, and Virgin Islands. As these jurisdictions have elected to participate in the Executive Order process, they have established SPOCs. Applicants from participating jurisdictions should contact their SPOC, as soon as possible, to alert them of prospective applications and receive instructions. Applicants must submit all required materials, if any, to the SPOC and indicate the date of this submittal (or the date of contact if no submittal is required) on the Standard Form 424, item 16a.
Under 45 CFR 100.8(a)(2), a SPOC has 60 days from the application deadline to comment on proposed new or competing continuation awards. SPOCs are encouraged to eliminate the submission of routine endorsements as official recommendations. Additionally, SPOCs are requested to clearly differentiate between mere advisory comments and those official State process recommendations which may trigger the “accommodate or explain” rule.
When comments are submitted directly to ACF, they should be addressed to the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Grants Management, Division of Discretionary Grants, 370 L'Enfant Promenade SW., 4th floor, Washington, DC 20447.
Although the remaining jurisdictions have chosen not to participate in the process, entities that meet the eligibility requirements of the program are still eligible to apply for a grant even if a State, Territory, Commonwealth, etc. does not have a SPOC. Therefore, applicants from these jurisdictions, or for projects administered by federally-recognized Indian Tribes, need take no action in regard to E.O. 12372.
The official list, including addresses, of the jurisdictions that have elected to participate in E.O. 12372 can be found on the following URL:
Grant awards will not allow reimbursement of pre-award costs.
Construction of a facility is not an allowable activity or expenditure under this program. However, it is permissible to use grant funds to renovate existing structures as described in program regulations at 45 CFR 1351.15.
No grant funds may be used for any program of distributing sterile needles or syringes for the hypodermic injection of any illegal drug. (42 U.S.C. 5752) [See Section VI.3. Special Terms and Conditions of Awards.]
A minimum of $100,000 will be allotted to each State, the District of Columbia and Puerto Rico. A minimum of $45,000 will be awarded to each of the four insular areas: Guam, American Samoa, the Commonwealth of the Northern Marianas and the Virgin Islands.
Public reporting burden for this collection of information is estimated to average 20 hours per response, including the time for reviewing instructions, gathering and maintaining the data needed and reviewing the collection information.
The project description is approved under OMB control number 0970-0139 which expires 4/30/2007.
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 project description provides a major means by which an application is evaluated and ranked to compete with other applications for available assistance. The project description should be concise and complete and should address the activity for which Federal funds are being requested. Supporting documents should be included where they can present information clearly and succinctly. In preparing your project description, information responsive to each of the requested evaluation criteria must be provided. Awarding offices use this and other information in making their funding recommendations. It is important, therefore, that this information be included in the application in a manner that is clear and complete.
ACF is particularly interested in specific project descriptions that focus on outcomes and convey strategies for achieving intended performance. Project
Applicants required to submit a full project description shall prepare the project description statement in accordance with the following instructions while being aware of the specified evaluation criteria. The text options give a broad overview of what your project description should include while the evaluation criteria identify the measures that will be used to evaluate applications.
Provide a summary of the project description (a page or less) with reference to the funding request.
Clearly identify the physical, economic, social, financial, institutional, and/or other problem(s) requiring a solution. The need for assistance must be demonstrated and the principal and subordinate objectives of the project must be clearly stated; supporting documentation, such as letters of support and testimonials from concerned interests other than the applicant, may be included. Any relevant data based on planning studies should be included or referred to in the endnotes/footnotes. Incorporate demographic data and participant/beneficiary information, as needed. In developing the project description, the applicant may volunteer or be requested to provide information on the total range of projects currently being conducted and supported (or to be initiated), some of which may be outside the scope of the program announcement.
Identify the results and benefits to be derived. For example, the project description may cite measurable outcomes, including but not limited to, the number of youth returning home for reunification with family or returning to a safe and appropriate alternative living arrangement.
Outline a plan of action that describes the scope and detail of how the proposed work will be accomplished. Account for all functions or activities identified in the application. Cite factors that might accelerate or decelerate the work and state your reason for taking the proposed approach rather than others. Describe any unusual features of the project such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvement.
Provide quantitative monthly or quarterly projections of the accomplishments to be achieved for each function or activity in such terms as the number of people to be served and the number of activities accomplished.
When accomplishments cannot be quantified by activity or function, list them in chronological order to show the schedule of accomplishments and their target dates.
If any data is to be collected, maintained, and/or disseminated, clearance may be required from the U.S. Office of Management and Budget (OMB). This clearance pertains to any “collection of information that is conducted or sponsored by ACF.”
List organizations, cooperating entities, consultants, or other key individuals who will work on the project along with a short description of the nature of their effort or contribution.
Describe the precise location of the project and boundaries of the area to be served by the proposed project. Maps or other graphic aids may be attached.
Provide a biographical sketch and job description for each key person appointed. Job descriptions for each vacant key position should be included as well. As new key staff is appointed, biographical sketches will also be required.
Provide information on the applicant organization(s) and cooperating partners, such as organizational charts, financial statements, audit reports or statements from CPAs/Licensed Public Accountants, Employer Identification Numbers, names of bond carriers, contact persons and telephone numbers, child care licenses and other documentation of professional accreditation, information on compliance with Federal/State/local government standards, documentation of experience in the program area, and other pertinent information. If the applicant is a non-profit organization, submit proof of non-profit status in its application.
The non-profit agency can accomplish this by providing: (a) A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code; (b) a copy of a currently valid IRS tax exemption certificate, (c) a statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earnings accrue to any private shareholders or individuals; (d) a certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status, (e) any of the items immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
Provide a budget with line item detail and detailed calculations for each budget object class identified on the Budget Information form. Detailed calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail sufficient for the calculation to be duplicated. Also include a breakout by the funding sources identified in Block 15 of the SF-424.
Provide a narrative budget justification that describes how the categorical costs are derived. Discuss the necessity, reasonableness, and allocability of the proposed costs.
Use the following guidelines for preparing the budget and budget justification. Both Federal and non-Federal resources shall be detailed and justified in the budget and narrative justification. “Federal resources” refers only to the ACF grant for which you are applying. “Non-Federal resources” are all other Federal and non-Federal resources. It is suggested that budget amounts and computations be presented in a columnar format: first column, object class categories; second column, Federal budget; next column(s), non-Federal budget(s), and last column, total budget. The budget justification should be a narrative.
Recipients might be required to make available to ACF pre-award review and procurement documents, such as request for proposals or invitations for bids, independent cost estimates, etc.
Whenever the applicant intends to delegate part of the project to another agency, the applicant must provide a detailed budget and budget narrative for each delegate agency, by agency title, along with the required supporting information referred to in these instructions.
Enter the total of all other costs. Such costs, where applicable and appropriate, may include but are not limited to insurance, food, medical and dental costs (noncontractual), professional services costs, space and equipment rentals, printing and publication, computer use, training costs, such as tuition and stipends, staff development costs, and administrative costs.
In considering how applicants will carry out the responsibilities addressed under this announcement, competing applications for financial assistance will be reviewed and evaluated against the following criteria:
1. The extent to which the application describes how the Basic Center will operate programmatically and
2. The extent to which the application describes the delivery of counseling services to youth that encourages, to the extent possible, the involvement of parents or legal guardians in the counseling.
3. The extent to which the application describes the delivery of aftercare services to youth and ensures that services will be provided to all youth, including those who are returned to a home or domicile that is beyond the State in which the runaway and homeless youth center is located.
4. The extent to which the application states the expected or estimated ratio of staff to youth in a BCP center and explains how this ratio will be sufficient to ensure adequate supervision and treatment of youth accessing services.
5. The extent to which the application describes plans for conducting an outreach program that, where applicable, will attract members of ethnic, cultural, and racial minorities and/or persons with limited ability to speak English. As such, the application should describe the strategies and activities for encouraging awareness of and sensitivity to the diverse needs of runaway and homeless youth who are persons of low English proficiency, or represent particular ethnic and racial backgrounds.
6. If the application proposes to serve a specific RHY population (
7. The extent to which the application describes plans for ensuring coordination with schools to which runaway and homeless youth will return and for assisting the youth to stay current with the curricula of these schools. Specific information on how the applicant will work with the McKinney-Vento School District Liaison (as designated by the State Coordinator) to assure that runaway and homeless youth are provided information about the educational services available to such youth under 42 U.S.C. 11431 through 11435. A list of McKinney-Vento State Coordinators can be found at
8. The extent to which the application describes procedures for dealing with youth who have run away from foster care placements and from correctional institutions and must show that procedures are in accordance with Federal, State and local laws.
9. The extent to which the application describes procedures for maintaining confidentiality of records on the youth and families served. Procedures must insure that no information on the youth and families is disclosed without the consent of the individual youth, parent or legal guardian.
10. If the applicant proposes to provide optional home-based services, then the application will be evaluated on the extent to which it provides a description of:
• The nature of counseling and information provided to youth and the families (including unrelated individuals in the family households) of such youth, including services relating to basic life skills, interpersonal skill building, educational advancement, job attainment skills, mental and physical health care, parenting skills, financial planning, and referral to sources of other needed services;
• How the center will provide directly, or through an arrangement made by the center, 7-day, 24-hour service to respond to family crises (including immediate access to temporary shelter for runaway and homeless youth and youth at risk of separation from the family);
• The objectives and measures of success to be achieved in partnership with the families of runaway and homeless youth and youth at risk of separation from the family, as a result of receiving home-based services;
• Initial and ongoing training for staff who provide home-based services;
• How caseloads will remain sufficiently low to allow for intensive involvement (
11. If the applicant proposes to provide optional drug abuse education and prevention services, then the application will be evaluated on the extent to which it provides a description of:
• The types of such services that the applicant proposes to provide;
• The objectives of such services;
• The types of information and training to be provided to individuals providing such services to runaway and homeless youth; and,
• How outreach activities for runaway and homeless youth will be conducted.
12. If the applicant proposes to provide optional street-based services, then the application will be evaluated on the extent to which it provides a description of:
• Staff supervision, including on-street supervision by appropriately trained staff;
• Backup personnel for on-street staff;
• Initial and ongoing training for staff who provide such services; and
• How outreach activities for runaway and homeless youth and street youth will be conducted.
1. The extent to which the application describes specific measurable outcomes and how they will be achieved.
2. The extent to which the application describes the anticipated changes in attitudes, values, and behavior of the youth served and improvements in individual and family functioning that will result from services provided.
1. The extent to which the application describes the goals and objectives of the proposed Basic Center project and how implementation will fulfill the purpose and provide the scope services stated in Part A of the RHY legislation as described in the “Background, Purpose and Scope of Services” in Section I.
2. The extent to which the application describes the need for assistance by describing the general conditions of youth and families in the area to be served and the estimated number and characteristics of runaway and homeless youth and their families in the vicinity. The extent to which the discussion includes matters of family functioning and the health, education, employment, and social conditions of the youth in the service area, including at-risk conditions or behaviors such as drug use, school failure, and delinquency.
3. The extent to which the application describes the existing support systems for youth at risk of separation from the family and homeless youth in the area, with specific references to law enforcement, health and mental health care, social services, schools and child
4. The extent to which the application describes the area to be served, states the precise location(s) of program services, and demonstrates that the services will be located in an area which is frequented by and/or easily accessible by runaway and homeless youth.
5. The extent to which the application specifies the annual number of qualifying runaway and homeless youth (RHY) and their families expected to be directly served (
1. The extent to which the application describes key staff (including key staff, consultants, and volunteers) skills, knowledge, and experience as it relates to working with RHY generally and BCP specifically.
2. The extent to which the application provides for key staff, biographical sketches or resumes, and position descriptions that are consistent with those described in the narrative budget justification. Resumes must indicate what positions staff will fill; and position descriptions must specifically describe each job as it relates to the proposed project.
3. The extent to which the application describes the cultural competencies of staff and how that competency relates to the youth being served.
4. The extent to which the application describes a plan for training project staff as well as staff of cooperating organizations and individuals. Training should include at a minimum: organizational policies and procedures, job responsibilities, and subject matter knowledge of issues pertaining to runaway and homeless youth and at-risk youth, such as positive youth development.
1. The extent to which the application provides a detailed line item budget and narrative budget justification for requested Federal and non-Federal funds to implement the full scope of services and related activities for the first year (12-months) of the project. The Budget Categories described, must be the same as the categories listed on the SF-424A, Section B: Personnel, fringe benefits, travel, equipment, supplies, contractual, other, total direct charges, indirect charges, and total budget. The non-Federal share, as appropriate, must be reflected among the same categories in a separate column.
2. The extent to which the application describes how each category of costs are derived,
3. The extent to which the applicant has appropriately allocated funds toward the purchase of necessary computer equipment in order to comply with the special requirements of statistical record keeping through RHYMIS (Runaway and Homeless Youth Management information System). (See Section VI.2. Administrative and National Policy Requirements.)
4. The extent to which the application describes fiscal controls (including accounting procedures and audit requirements) to ensure prudent use, proper disbursement, and accurate accounting of Federal funds received as well as accounting for non-Federal resources.
1. The extent to which the application describes the organization's past experience in working with runaway, homeless, and street youth populations. Experience does not have to pertain only to past FYSB funded program experience. Note: Past experience means that a major activity of the agency has been the provision of temporary shelter, counseling, and referral services to runaway or otherwise homeless youth and their families, either directly or through linkages established with other community agencies.
2. The extent to which the application describes the role of other organizations or multiple sites of the agency that will be involved in direct services (through monetary or non-monetary arrangements) to runaway and homeless youth through this grant. The application should list all of these sites and include addresses, phone numbers and staff contact names if different from the address and contact on the SF-424. Letters of agreement and an Organizational Chart are required.
3. If the agency is a current recipient of funds from the Administration for Children and Families for services to runaway and homeless youth for programs other than those applied for in this application, the application will be evaluated on the extent to which it shows how the services supported by these funds are, or will be, integrated with the existing services.
4. The extent to which the application provides a plan for project continuance beyond grant support, including a plan for securing resources and continuing project activities after Federal assistance has ceased. A listing of the applicant's other funding sources must be included. The extent to which the application either describes how the activities implemented under this project will be continued by the agency once Federal funding for the project has ended
5. The extent to which the application includes letters of support from community, public, and commercial leaders and organizations that support the proposed project for funding.
No grant award will be made under this announcement on the basis of an incomplete application.
Applications will be reviewed and scored competitively. This review will be conducted in Washington, DC, by a panel of experts in the field, generally persons from outside the Federal Government. The review panels will use the evaluation criteria listed in Section V.1. of this announcement to review and score the applications. In addition, the panels will assign a score (maximum score 100) to each application. The panels will identify the application's strengths and weaknesses based on the application's responsiveness to the evaluation criteria. The results (scores) of this review will be a primary factor in making funding decisions. Each application in the funding range will be subject to an administrative review by the ACF Central and Regional Offices after the panel review process. ACF may consider a variety of factors in addition to the review criteria identified above, including geographic location, relative
As required by the RHY Act, in making grant award decisions, priority for funding shall be given to private entities with past experience in providing services to runaway, homeless and street youth. Past experience means that a major activity of the agency has been the provision of temporary shelter, counseling, and referral services to runaway or otherwise homeless youth and their families, either directly or through linkages established with other community agencies.
Since ACF will be using non-Federal reviewers in the process, applicants have the option of omitting from the application copies (not the original) specific salary rates or amounts for individuals specified in the application budget and Social Security Numbers, if otherwise required for individuals. The copies may include summary salary information.
Applications that are approved but unfunded may be held over for funding in the next funding cycle, pending the availability of funds, for a period not to exceed one year.
Awards will be made by September 30, 2005. Unsuccessful applicants will be notified in writing after the final awards have been made.
The successful applicants will be notified through the issuance of a Financial Assistance Award document which sets forth the amount of funds granted, the terms and conditions of the grant, the effective date of the grant, the budget period for which initial support will be given, the non-Federal share to be provided, (if applicable), and the total project period for which support is contemplated. The Financial Assistance Award will be signed by the Grants Officer and transmitted via postal mail.
Organizations whose applications will not be funded will be notified in writing.
Grantees are subject to the requirements in 45 CFR Part 74 (non-governmental) and 45 CFR Part 92 (governmental).
Direct Federal grants, subaward funds, or contracts under this ACF Program shall not be used to support inherently religious activities such as religious instruction, worship, or proselytization. Therefore, organizations must take steps to separate, in time or location, their inherently religious activities from the services funded under this Program. Regulations pertaining to the prohibition of Federal funds for inherently religious activities can be found on the HHS Web site at
Applicants are advised that no grant funds may be used for any program of distributing sterile needles or syringes for the hypodermic injection of any illegal drug. Prospective grantees are advised that entities which receive Basic Center Program (BCP) grant funds and which operate a program of distributing sterile needles or syringes for hypodermic injections of illegal drugs must account for all funds used for such programs separately from any expenditure of BCP grant funds. (42 U.S.C. 5752.) See Section IV.5. Funding Restrictions.
The Family and Youth Services Bureau will fund computer software for RHY program data collection through RHYMIS. An applicant lacking the computer equipment (hardware) for RHYMIS data collection must include an estimated cost for such equipment in their proposed budget. If the applicant already has such equipment, this fact must be noted. (See Section V.1. Evaluation Criteria/Budget and Budget Justification.) (
In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13) the data collection under RHYMIS is approved under OMB control number 0970-0123, which expires September 30, 2007.
Program Progress Reports: Semi-Annual.
Financial Reports: Semi-Annual.
Grantees will be required to submit program progress and financial reports (SF 269) throughout the project period. Program progress and financial reports are due 30 days after the reporting period. In addition, final programmatic and financial reports are due 90 days after the close of the project period.
Dorothy W. Pittard, Family and Youth Services Bureau, c/o ACYF Operations Center, 118 Q Street, NE, Washington, DC 20002-2132. Phone: 866-796-1591. E-mail: fysb@dixongroup.com.
Peter Thompson, ACYF Grants Officer, Family and Youth Services Bureau, c/o ACYF Operations Center, 118 Q Street, NE, Washington, DC 20002-2132. Phone: 866-796-1591. E-mail: fysb@dixongroup.com.
Please reference Section IV.3 for details about acknowledgement of received applications.
It is anticipated that three grants (one each to a tribe, a tribal organization, and a migrant program) will be funded under this announcement for $143,000 per grantee for FY 2005. This amount reflects the maximum Federal share of this project not exceeding one-third (
The primary purpose of this funding announcement is to provide financial support to selected tribes, tribal organizations, and migrant programs for child abuse prevention programs and activities that are consistent with the goals outlined by Title II of CAPTA. The goal of the programs and activities supported by these funds is to prevent the occurrence or recurrence of abuse or neglect within the tribal and migrant populations. The funds must support more effective and comprehensive child abuse prevention activities and family support services, including an emphasis on strengthening marriages and reaching out to include fathers, that will enhance the lives and ensure the safety and well-being of migrant and Native American children and their families. Some examples of the programs funded may include, but are not limited to, voluntary home visiting, respite care, parenting education, mutual support, family resource centers, marriage education, and other family support services. The funds must also be used to support an evaluation of the programs and services funded by the grant. Finally, programs funded should develop stronger linkages with the Community-based Child Abuse Prevention Program (CBCAP) State Lead Agency funded under Title II of CAPTA.
It is anticipated that three grants (one each to a tribe, a tribal organization, and a migrant program) will be funded under this announcement for $143,000 per grantee for FY 2005. This amount reflects the maximum Federal share of this project not exceeding one-third (
The primary purpose of this funding announcement is to provide financial support to selected tribes, tribal organizations, and migrant programs for child abuse prevention programs and activities that are consistent with the goals outlined by Title II of CAPTA. The goal of the programs and activities supported by these funds is to prevent the occurrence or recurrence of abuse or neglect within the tribal and migrant populations. The funds must support more effective and comprehensive child abuse prevention activities and family support services, including an emphasis on strengthening marriages and reaching out to include fathers, that will enhance the lives and ensure the safety and well-being of migrant and Native American children and their families. Some examples of programs that may be funded include, but are not limited to, voluntary home visiting, respite care, parenting education, mutual support, family resource centers, marriage education, and other family support services. The funds must also be used to support an evaluation of the programs and services funded by the grant. Finally, programs funded should develop stronger linkages with the Community-based Child Abuse Prevention Program (CBCAP) State Lead Agency funded under Title II of CAPTA.
It is anticipated that three grants (one each to a tribe, a tribal organization, and a migrant program) will be funded under this announcement for $143,000 per grantee for FY 2005. This amount reflects the maximum Federal share of this project not exceeding one-third (
The Administration on Children, Youth and Families (ACYF) administers national programs for children and youth; works with States and local communities to develop services which support and strengthen family life; seeks joint ventures with the private sector to enhance the lives of children and their families; and provides information and other assistance to parents. The concerns of ACYF extend to all children from pre-natal through adolescence. Many of the programs administered by the agency focus on children from low-income families; abused and neglected children; children and youth in need of foster care, independent living, adoption or other child welfare services; preschool children; children with disabilities; runaway and homeless youth; and children from Native American and migrant families.
Within ACYF, the Children's Bureau plans, manages, coordinates, and supports child abuse and neglect prevention and child welfare services programs. The Children's Bureau programs are designed to promote the safety, permanency, and well-being of all children, including those in foster care, available for adoption, recently adopted, abused, neglected, dependent, disabled, or homeless and to prevent neglect and abuse of children. The programs also encourage strengthening the family unit to help prevent the
The Children's Bureau is the agency within the Federal Government that has primary responsibility for assisting State child welfare systems to promote continuous improvement in the delivery of child welfare services. State child welfare systems are designed to protect children who have suffered maltreatment, who are at risk for maltreatment, or who are under the care and placement responsibility of the State because their families are unable to care for them. These systems also focus on securing permanent living arrangements through foster care and adoption for children who are unable to return home.
The Children's Bureau fulfills this mission by providing leadership and conducting activities designed to assist and enhance national, State, and community efforts to prevent, assess, identify, and treat child abuse and neglect. These activities include undertaking data collection and analysis; research and demonstration programs regarding and making grants to States for: developing comprehensive child-centered and family-focused child protective services systems; providing training and technical assistance to develop the necessary resources to implement successful comprehensive child and family protection strategies; gathering, processing, and housing high quality data sets through a National Data Archive on Child Abuse and Neglect; and gathering, storing, and disseminating child maltreatment information through a National Clearinghouse on Child Abuse and Neglect Information and a National Adoption Information Clearinghouse.
Federal programs administered by the Bureau include the Foster Care and Adoption Assistance Programs, the Child Welfare Services State Grants Program, Child Welfare Services Training Program, the Chafee Foster Care Independence Program, the Adoption Opportunities Program, the Abandoned Infants Assistance Program, the Promoting Safe and Stable Families Program, the Court Improvement Program, and several State and discretionary grant programs authorized by the Child Abuse Prevention and Treatment Act (CAPTA). For more information about Children's Bureau programs, visit
Title I of CAPTA authorizes research and demonstration grants, data collection and information dissemination activities and two State grant programs: the Basic State Grant and the Children's Justice Act Grant. The Basic State Grant provides States with funds and basic Federal guidelines to strengthen and maintain their child protective services (CPS) systems. The Children's Justice Act provides funds to assist States in developing, establishing and operating programs which are designed to improve the handling of child abuse and neglect cases to reduce trauma to the child victim; the handling of cases of suspected child abuse or neglect related fatalities; and the investigation and prosecution of cases on child abuse or neglect.
Title II of CAPTA authorizes the Community-Based Grants for the Prevention of Child Abuse and Neglect. This program assists States to develop and implement, or expand and enhance, a comprehensive statewide system of community-based family resource and support services to prevent child maltreatment.
In 2003, the Congress passed legislation reauthorizing CAPTA's programs for an additional five years. Among the provisions in the legislation was a section reauthorizing, amending and re-naming the program previously known as the Community-Based Family Resource and Support (CBFRS) Grants program. The program is now known as the Community-Based Grants for the Prevention of Child Abuse and Neglect or, for the sake of brevity, the Community-Based Child Abuse Prevention (CBCAP) program. This formula grant program specifically supports community-based efforts to develop, operate, expand, enhance, and, where appropriate, to network, initiatives aimed at the prevention of child abuse and neglect, to support networks of coordinated resources and activities to better strengthen and support families to reduce the likelihood of child abuse and neglect, and to foster an understanding, appreciation, and knowledge of diverse populations in order to be effective in preventing and treating child abuse and neglect. One percent of the funding for this program is earmarked to support child abuse prevention programs and activities specifically targeting the tribal and migrant populations. Tribal and migrant programs funded in previous years have included parenting education and support, voluntary home visiting programs, outreach and case management services for the specified target population.
All States, the District of Columbia, and the territories receive funding under the formula grant program. In every State, the Governor designates a Lead Agency to receive these funds. The Lead Agencies provide grants to local agencies to fund child abuse prevention and family support services and activities. Some States may choose to fund tribal and migrant programs from their formula grant. Many States fund core services such as parent education, parent mutual support, home visiting programs, early childhood programs, respite and crisis care, family resource centers, and other family support services. In addition, the Lead Agencies provide leadership and support for the child abuse prevention network in the State and offered training and technical assistance to their funded programs. It is expected that the tribal and migrant programs funded by this announcement will be actively engaged in the Statewide CBCAP network. Moreover, the tribal and migrant programs are encouraged to provide their input and expertise with the Lead Agencies regarding the needs and issues facing their target populations.
For more information on the CBCAP Program and Lead Agencies, visit the website for the FRIENDS National Resource Center for CBCAP Programs at:
In the first budget period, the maximum Federal share of each project is not to exceed $143,000. The projects awarded will be for a project period of 36 months. The initial grant award will be for a 12-month budget period. The award of continuation beyond each 12-month budget period will be subject to the availability of funds, satisfactory progress on the part of the grantee, and a determination that continued funding would be in the best interest of the government.
Native American tribal governments (Federally recognized).
Native American tribal organizations (other than Federally recognized tribal governments).
Nonprofits having a 501(c)(3) status with the IRS, other than institutions of higher education.
Nonprofits that do not have a 501(c)(3) status with the IRS, other than institutions of higher education.
Indian tribes, tribal organizations, and migrant programs with the capacity to establish, maintain and evaluate community-based programs for the prevention of child abuse and neglect may apply.
Applicants should specify if they are applying as a “Tribe” or “Tribal Organization” or “Migrant Program.”
Organizations should foster strong linkages with the State Lead Agency for the Community-Based Child Abuse Prevention Programs funded by Title II of CAPTA.
Collaborative and interdisciplinary efforts are acceptable, but applications should identify a primary applicant responsible for administering the grant.
Faith-based and community organizations that meet all other eligibility requirements are eligible to apply.
No.
All applicants must have a Dun & Bradstreet number. On June 27, 2003 the Office of Management and Budget published in the
Please ensure that your organization has a DUNS number. You may acquire a DUNS number at no cost by calling the dedicated toll-free DUNS number request line on 1-866-705-5711 or you may request a number on-line at
Non-profit organizations applying for funding are required to submit proof of their non-profit status.
Proof of non-profit status is any one of the following:
• A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code.
• A copy of a currently valid IRS tax exemption certificate.
• A statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earning accrue to any private shareholders or individuals.
• A certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status.
• Any of the items in the subparagraphs immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
Applications that exceed the ceiling amount will be considered non-responsive and will not be eligible for funding under this announcement.
Any application received after 4:30 p.m. eastern time on the deadline date will not be considered for competition.
ACYF Operations Center, c/o The Dixon Group, Inc., ATTN: Children's Bureau, 118 Q St., NE., Washington, DC 20002-2132.
Each application must contain the following items in the order listed:
In Item 5 of Form 424, put DUNS number in “Organizational DUNS:” box.
In Item 5 of Form 424, include name, phone number, and, if available, email and fax numbers of the contact person.
In Item 8 of Form 424, check ‘New.'
In Item 10 of Form 424, clearly identify the Catalog of Federal Domestic Assistance (CFDA) program title and number for the program for which funds are being requested as stated in this funding opportunity announcement.
In Item 11 of Form 424, identify the single funding opportunity the application addresses.
In Item 14 of Form 424, identify Congressional districts of both the applicant and project.
Follow the instructions provided here and those in Section V. Application Review Information. Note that Federal funds provided to States and services or other resources purchased with Federal funds may not be used to match project grants.
Applicants must disclose lobbying activities on the Standard Form LLL when applying for an award in excess of $100,000. Applicants who have used
Applicants must make the appropriate certification regarding environmental tobacco smoke. By signing and submitting the application, the applicant is providing the certification and need not mail back the certification with the applications.
If applicable, applicants must include a completed SPOC certification (Single Point of Contact) with the date of the SPOC contact entered in line 16, page 1 of the Form 424.
By signing the “Signature of Authorized Representative” on the SF 424, the applicant is providing a certification and need not mail assurances for completing the following grant and cooperative agreement requirements:
(1) The applicant will have the project fully functioning within 90 days of the notification of the grant award.
(2) The applicant will participate if the Children's Bureau chooses to do a national evaluation or a technical assistance contract that relates to this priority area.
(3) All performance indicator data, program and financial reports will be submitted in a timely manner, in recommended format (to be provided), and the final report will also be submitted on disk or electronically using a standard word-processing program.
(4) Within 90 days of project end date, the applicant will submit a copy of the final report and any program products to the National Clearinghouse on Child Abuse and Neglect Information, 330 C Street, SW, Washington, DC 20447. This is in addition to the standard requirement that the final program and evaluation report must also be submitted to the Grants Management Specialist and the Federal Project Officer.
(5) Allocate sufficient funds in the budget to:
(a) Provide for the project director and the evaluator to attend an annual 3-day grantees' meeting in Washington, DC.
(b) Provide for the project director and the evaluator to attend an early kick-off meeting in Washington, DC, in the first year only, within 90 days of the notification of the grant award.
(c) Provide for 10-15 percent of the proposed budget to project evaluation.
In implementing their projects, grantees are expected to comply with all applicable administrative regulations regarding extent or types of costs. Applicable HHS regulations can be found in 45 CFR Part 74 or 92.
Care should be taken to produce an abstract/summary that accurately and concisely reflects the proposed project. It should describe the objectives of the project, the approach to be used and the results or benefits expected.
The application limit is 60 pages total including all forms and attachments. Pages over this page limit will be removed from the application and will not be reviewed.
To be considered for funding, each application must be submitted with the Standard Federal Forms (provided at the end of this announcement or through the electronic links provided) and following the guidance provided. The application must be signed by an individual authorized to act for the applicant agency and to assume responsibility for the obligations imposed by the terms and conditions of the grant award.
To be considered for funding, each applicant must submit one signed original and two additional copies of the application, including all forms and attachments, to the Application Receipt Point specified in the section titled Deadline at the beginning of the announcement. The original copy of the application must have original signatures.
The application must be typed, double spaced, printed on only one side, with at least
All copies of an application must be submitted in a single package, and a separate package must be submitted for each funding opportunity. The package must be clearly labeled for the specific funding opportunity it is addressing.
Because each application will be duplicated, do not use or include separate covers, binders, clips, tabs, plastic inserts, maps, brochures, or any other items that cannot be processed easily on a photocopy machine with an automatic feed. Do not bind, clip, staple, or fasten in any way
The Children's Bureau's Web site (
Project Evaluation Plan. Project evaluations are very important. If you do not have the in-house capacity to conduct an objective, comprehensive evaluation of the project, then the Children's Bureau advises that you propose contracting with a third-party evaluator specializing in social science or evaluation, or a university or college, to conduct the evaluation. A skilled evaluator can assist you in designing a data collection strategy that is appropriate for the evaluation of your proposed project. Additional assistance may be found in a document titled “Program Manager's Guide to Evaluation.” A copy of this document can be accessed at
You may submit your application to us in either electronic or paper format.
To submit an application electronically, please use the
Please note the following if you plan to submit your application electronically via Grants.gov.
• Electronic submission is voluntary, but strongly encouraged.
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation. We strongly recommend that you do not wait until the application deadline date to begin the application process through Grants.gov.
• To use Grants.gov, you, as the applicant, must have a DUNS Number and register in the Central Contractor Registry (CCR). You should allow a minimum of five days to complete the CCR registration.
• You will not receive additional point value because you submit a grant application in electronic format, nor will we penalize you if you submit an application in paper format.
• You may submit all documents electronically, including all information typically included on the SF 424 and all necessary assurances and certifications.
• Your application must comply with any page limitation requirements described in this program announcement.
• After you electronically submit your application, you will receive an automatic acknowledgement from Grants.gov that contains a Grants.gov tracking number. The Administration for Children and Families will retrieve your application from Grants.gov.
• We may request that you provide original signatures on forms at a later date.
• You may access the electronic application for this program on
• You must search for the downloadable application package by the CFDA number.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
Applicants seeking financial assistance under this announcement must file the Standard Form (SF) 424, Application for Federal Assistance; SF-424A, Budget Information—Non-Construction Programs; SF-424B, Assurances—Non-Construction Programs. The forms may be reproduced for use in submitting applications. Applicants must sign and return the standard forms with their application.
Applicants must furnish prior to award an executed copy of the Standard Form LLL, Certification Regarding Lobbying, when applying for an award in excess of $100,000. Applicants who have used non-Federal funds for lobbying activities in connection with receiving assistance under this announcement shall complete a disclosure form, if applicable, with their applications (approved by the Office of Management and Budget under control number 0348-0046). Applicants must sign and return the certification with their application.
Applicants must also understand they will be held accountable for the smoking prohibition included within Pub. L. 103-227, Title XII Environmental Tobacco Smoke (also known as the PRO-KIDS Act of 1994). A copy of the
Applicants must make the appropriate certification of their compliance with all Federal statutes relating to nondiscrimination. By signing and submitting the applications, applicants are providing the certification and need not mail back the certification form.
Applicants have the option of omitting from the application copies (not the original) specific salary rates or amounts for individuals specified in the application budget and Social Security Numbers, if otherwise required for individuals. The copies may include summary salary information.
Please see Section V.1. Criteria, for instructions on preparing the full project description.
Applications hand-carried by applicants, applicant couriers, other representatives of the applicant, or by overnight/express mail couriers shall be considered as meeting an announced deadline if they are received on or before the deadline date, between the hours of 8:00 a.m. and 4:30 p.m., eastern time, at the address referenced in Section IV.6., between Monday and Friday (excluding Federal holidays).
ACF cannot accommodate transmission of applications by facsimile. Therefore, applications transmitted to ACF by fax will not be accepted regardless of date or time of submission and time of receipt.
Receipt acknowledgement for application packages will not be provided to applicants who submit their package via mail, courier services, or by hand delivery. However, applicants will receive an electronic acknowledgement for applications that are submitted via Grants.gov.
Any application received after 4:30 p.m. eastern time on the deadline date will not be considered for competition.
Applicants using express/overnight mail services should allow two working days prior to the deadline date for receipt of applications. Applicants are cautioned that express/overnight mail services do not always deliver as agreed.
This program is covered under Executive Order 12372, “Intergovernmental Review of Federal Programs,” and 45 CFR Part 100, “Intergovernmental Review of Department of Health and Human Services Programs and Activities.” Under the Order, States may design their own processes for reviewing and commenting on proposed Federal assistance under covered programs.
As of October 1, 2004, the following jurisdictions have elected to participate in the Executive Order process: Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Carolina, Texas, Utah, West Virginia, Wisconsin, American Samoa, Guam, North Mariana Islands, Puerto Rico, and Virgin Islands. As these jurisdictions have elected to participate in the Executive Order process, they have established SPOCs. Applicants from participating jurisdictions should contact their SPOC, as soon as possible, to alert them of prospective applications and receive instructions. Applicants must submit all required materials, if any, to the SPOC and indicate the date of this submittal (or the date of contact if no submittal is required) on the Standard Form 424, item 16a. Under 45 CFR 100.8(a)(2).
A SPOC has 60 days from the application deadline to comment on proposed new or competing continuation awards. SPOCs are
When comments are submitted directly to ACF, they should be addressed to the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Grants Management, Division of Discretionary Grants, 370 L'Enfant Promenade SW., 4th floor, Washington, DC 20447.
When comments are submitted directly to ACF, they should be addressed to: Department of Health and Human Services, Administration for Children and Families, Division of Discretionary Grants, 370 L'Enfant Promenade, SW., Washington, DC 20447.
Although the remaining jurisdictions have chosen not to participate in the process, entities that meet the eligibility requirements of the program are still eligible to apply for a grant even if a State, Territory, Commonwealth, etc. does not have a SPOC. Therefore, applicants from these jurisdictions, or for projects administered by federally-recognized Indian Tribes, need take no action in regard to E.O. 12372.
The official list, including addresses, of the jurisdictions elected to participate in E.O. 12372 can be found on the following URL:
Grant awards will not allow reimbursement of pre-award costs.
Construction is not an allowable activity or expenditure under this solicitation.
ACYF Operations Center, c/o The Dixon Group, Inc., ATTN: Children's Bureau, 118 Q St., NE., Washington, DC 20002-2132.
Public reporting burden for this collection of information is estimated to average 40 hours per response, including the time for reviewing instructions, gathering and maintaining the data needed and reviewing the collection information.
The project description is approved under OMB control number 0970-0139 which expires 4/30/2007.
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 following are instructions and guidelines on how to prepare the “project summary/abstract” and “full project description” sections of the application. Under the evaluation criteria section, note that each criterion is preceded by the generic evaluation requirement under the ACF Uniform Project Description (UPD).
ACF is particularly interested in specific project descriptions that focus on outcomes and convey strategies for achieving intended performance. Project descriptions are evaluated on the basis of substance and measurable outcomes, not length. Extensive exhibits are not required. Cross-referencing should be used rather than repetition. Supporting information concerning activities that will not be directly funded by the grant or information that does not directly pertain to an integral part of the grant funded activity should be placed in an appendix. Pages should be numbered and a table of contents should be included for easy reference.
Applicants required to submit a full project description shall prepare the project description statement in accordance with the following instructions while being aware of the specified evaluation criteria. The text options give a broad overview of what your project description should include while the evaluation criteria identifies the measures that will be used to evaluate applications.
Provide a summary of the project description (a page or less) with reference to the funding request.
Clearly identify the physical, economic, social, financial, institutional, and/or other problem(s) requiring a solution. The need for assistance must be demonstrated and the principal and subordinate objectives of the project must be clearly stated; supporting documentation, such as letters of support and testimonials from concerned interests other than the applicant, may be included. Any relevant data based on planning studies should be included or referred to in the endnotes/footnotes. Incorporate demographic data and participant/beneficiary information, as needed. In developing the project description, the applicant may volunteer or be requested to provide information on the total range of projects currently being conducted and supported (or to be initiated), some of which may be outside the scope of the program announcement.
Outline a plan of action that describes the scope and detail of how the proposed work will be accomplished. Account for all functions or activities identified in the application. Cite factors that might accelerate or decelerate the work and state your reason for taking the proposed approach rather than others. Describe any unusual features of the project such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvement.
Provide quantitative monthly or quarterly projections of the accomplishments to be achieved for each function or activity in such terms as the number of people to be served and the number of activities accomplished.
When accomplishments cannot be quantified by activity or function, list them in chronological order to show the schedule of accomplishments and their target dates.
If any data is to be collected, maintained, and/or disseminated, clearance may be required from the U.S. Office of Management and Budget
List organizations, cooperating entities, consultants, or other key individuals who will work on the project along with a short description of the nature of their effort or contribution.
Provide information on the applicant organization(s) and cooperating partners, such as organizational charts, financial statements, audit reports or statements from CPAs/Licensed Public Accountants, Employer Identification Numbers, names of bond carriers, contact persons and telephone numbers, child care licenses and other documentation of professional accreditation, information on compliance with Federal/State/local government standards, documentation of experience in the program area, and other pertinent information. If the applicant is a non-profit organization, submit proof of non-profit status in its application.
The non-profit agency can accomplish this by providing: (a) A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code; (b) a copy of a currently valid IRS tax exemption certificate; (c) a statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earnings accrue to any private shareholders or individuals; (d) a certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status; (e) any of the items immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
Provide a budget with line item detail and detailed calculations for each budget object class identified on the Budget Information form. Detailed calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail sufficient for the calculation to be duplicated. Also include a breakout by the funding sources identified in Block 15 of the SF-424.
Provide a narrative budget justification that describes how the categorical costs are derived. Discuss the necessity, reasonableness, and allocability of the proposed costs.
Use the following guidelines for preparing the budget and budget justification. Both Federal and non-Federal resources shall be detailed and justified in the budget and narrative justification. “Federal resources” refers only to the ACF grant for which you are applying. “Non-Federal resources” are all other Federal and non-Federal resources. It is suggested that budget amounts and computations be presented in a columnar format: first column, object class categories; second column, Federal budget; next column(s), non-Federal budget(s), and last column, total budget. The budget justification should be a narrative.
Recipients might be required to make available to ACF pre-award review and procurement documents, such as request for proposals or invitations for bids, independent cost estimates, etc.
Whenever the applicant intends to delegate part of the project to another agency,
Enter the total of all other costs. Such costs, where applicable and appropriate, may include but are not limited to insurance, food, medical and dental costs (noncontractual), professional services costs, space and equipment rentals, printing and publication, computer use, training costs, such as tuition and stipends, staff development costs, and administrative costs.
In considering how applicants will carry out the responsibilities addressed under this announcement, competing applications for financial assistance will be reviewed and evaluated against the following criteria:
In reviewing the approach, the following factors will be considered: (50 points)
(1) The extent to which there is a sound timeline for effectively implementing the proposed project, including major milestones and target dates. The extent to which the proposed project would complete the development and implementation of a child abuse prevention program in a timely manner and conduct a thorough evaluation of its effectiveness within the three-year project time frame.
(2) The extent to which the proposed project would improve the safety and well-being of tribal, Native American or migrant families being served by the program. The extent to which specific measurable outcomes will occur as a result of the proposed child abuse prevention program. The extent to which there will be a strong relationship between the proposed child abuse prevention or family support program and improved outcomes for tribal, Native American or migrant children and families.
(3) The extent to which there will be an effective administrative and organizational interface between the applicant and CBCAP State Lead Agencies. The extent to which there are appropriate letters of commitment from any partner organizations, if applicable.
(4) The extent to which the application demonstrates a thorough understanding of the challenges of improving the approaches to providing family support and child abuse prevention services to the target population. The extent to which the application demonstrates a thorough understanding of the challenges that the proposed project will have in planning and implementing the proposed project with these underserved groups. The extent to which the applicant provides a sound plan explaining how the project would successfully overcome these challenges.
(5) The extent to which the proposed project will effectively provide culturally competent services to the tribal, Native American or migrant population.
(6) The extent to which the design of the proposed project reflects up-to-date knowledge from child welfare prevention research and literature. The extent to which the proposed project is innovative and involves service delivery strategies that build on, or are an alternative to, existing strategies.
(7) The extent to which the project's evaluation plan would measure achievement of project objectives, customer satisfaction, acquisition of competencies, effectiveness of program services and project strategies, the efficiency of the implementation process, and the impact of the project. The extent to which the methods of evaluation would provide performance feedback, support periodic assessment of program progress and provide a sound basis for program adjustments. The extent to which the proposed evaluation plan would be likely to yield useful findings or results about effective strategies, and contribute to and promote evaluation research and evidence-based practices that could be used to guide replication or testing in other settings. The extent to which applicants that do not have the in-house capacity to conduct an objective, comprehensive evaluation of the project present a sound plan for contracting with a third-party evaluator specializing in social science or evaluation, or a university or college to conduct the evaluation.
(8) The extent to which there is a sound plan for documenting project activities and results, including the development of a data collection infrastructure that is sufficient to support a methodologically sound and rigorous evaluation. The extent to which appropriate data sources are identified and relevant data would be collected. The extent to which there is a sound plan for collecting and analyzing these data, securing informed consent and implementing an Institutional Review Board (IRB) review, and Tribal review, if applicable.
(9) The extent to which there is a sound plan for developing useful products during the proposed project and a reasonable schedule for developing these products. The extent to which the intended audience (
(10) The extent to which there is a sound plan for continuing this project beyond the period of Federal funding.
In reviewing the organizational profiles, the following factors will be considered: (20 points)
(1) The extent to which the application evidences sufficient experience and expertise in child abuse prevention or family support, especially in the area of service delivery involving tribal, Native American, or migrant populations; in collaboration with child and family agencies serving the target population; in culturally competent service delivery; and in administration, development, implementation, management, and evaluation of similar projects. The extent to which each participating organization (including partners and/or subcontractors) possesses the organizational capability to fulfill their assigned roles and functions effectively (if the application involves partnering and/or subcontracting with other agencies/organizations) in serving tribal, Native American or migrant populations.
(2) The extent to which the proposed project director and key project staff possess sufficient relevant knowledge, experience and capabilities to implement and manage a project of this size, scope and complexity effectively (
(3) The extent to which there is a sound management plan for achieving the objectives of the proposed project on time and within budget, including clearly defined responsibilities, for accomplishing project tasks and ensuring quality. The extent to which the plan clearly describes the effective management and coordination of activities carried out by any partners, subcontractors and consultants (if appropriate). The extent to which there would be a mutually beneficial relationship between the proposed project and other work planned, anticipated or underway with Federal assistance by the applicant.
In reviewing the objectives and need for assistance, the following factors will be considered: (20 points)
(1) The extent to which the application demonstrates an understanding of the requirements of Title II of the Child Abuse Prevention and Treatment Act, and the extent to which the proposed project will contribute to meeting those requirements. The extent to which the application demonstrates a clear understanding of issues related to the prevention of child abuse and neglect for the tribal, Native American or migrant population.
(2) The extent to which the application demonstrates a thorough understanding of the need for family support and child abuse prevention services for the tribal, Native American or migrant population.
(3) The extent to which the application presents a clear vision for the proposed child abuse prevention project to be developed and implemented. The extent to which the applicant makes a clear statement of the goals (end products of an effective project) and objectives (measurable steps for reaching these goals) of the proposed project. The extent to which these goals and objectives closely relate to the family support needs of tribes, Native Americans, or the migrant population in the target community.
(4) The extent to which the application presents a thorough review of the relevant literature that reflects a clear understanding of the research on best practices and promising approaches as it relates to the proposed project. The extent to which the review of the literature sets a sound context and rationale for the project. The extent to which it provides evidence that the proposed project is innovative and, if successfully implemented and evaluated, likely to contribute to the knowledge base on the prevention of child abuse and neglect and the promotion of family support for tribes, Native Americans, or the migrant population.
(5) The extent to which the lessons learned through the proposed project would benefit policy, practice and theory development in addressing the family support needs of tribes, Native Americans, or the migrant population in the target community.
In reviewing the budget and budget justification, the following factors will be considered: (10 points)
(1) The extent to which the costs of the proposed project are reasonable and appropriate, in view of the activities to be conducted and expected results and benefits.
(2) The extent to which the applicant's fiscal controls and accounting procedures would ensure prudent use, proper and timely disbursement and accurate accounting of funds received under this program announcement.
No grant award will be made under this announcement on the basis of an incomplete application.
When the Operations Center receives your application it will be screened to confirm that your application was received by the deadline. Federal staff will verify that you are an eligible applicant and that the application contains all the essential elements. Applications received after the deadline will be withdrawn from further consideration.
A panel of at least three reviewers (primarily experts from outside the Federal government) will use the evaluation criteria described in this announcement to evaluate each application. The reviewers will determine the strengths and weaknesses of each application, provide comments about the strengths and weaknesses and give each application a numerical score.
All applications will be reviewed and evaluated using four major criteria: (1) Objectives and need for assistance, (2) approach, (3) organizational profiles, and (4) budget and budget justification. Each criterion has been assigned a point value. The point values (summing up to 100) indicate the maximum numerical weight each criterion may be given in the review and evaluation process.
Reviewers also are evaluating the project products and materials that you propose. They will be interested in your plans for sustaining your project without Federal funds if the evaluation findings are supportive. Reviewers will be looking to see that the total budget you propose and the way you have apportioned that budget are appropriate and reasonable for the project you have described. Remember that the reviewers only have the information that you give them, so it needs to be clear, complete, and concise.
The results of the competitive review are a primary factor in making funding decisions. In addition, Federal staff conducts administrative reviews of the applications and, in light of the results of the competitive review, will recommend applications for funding to the ACYF Commissioner. ACYF reserves the option of discussing applications with other funding sources when this is in the best interest of the Federal government. ACYF may also solicit and consider comments from ACF Regional Office staff in making funding decisions. ACYF may take into consideration the involvement
With the results of the peer review and the information from Federal staff, the Commissioner of ACYF makes the final funding decisions. The Commissioner may give special consideration to applications proposing services of special interest to the Government and to achieve geographic distributions of grant awards. Applications of special interest may include, but are not limited to, applications focusing on unserved or inadequately served clients or service areas and programs addressing diverse ethnic populations.
Applicants should note that grants to be awarded under this program announcement are subject to the availability of funds.
In cases where more applications are approved for funding than ACF can fund with the money available, the Grants Officer shall fund applications in their order of approval until funds run out. In this case, ACF has the option of carrying over the approved applications up to a year for funding consideration in a later competition of the same program. These applications need not be reviewed and scored again if the program's evaluation criteria have not changed. However, they must then be placed in rank order along with other applications in later competition.
Applications will be reviewed during the Summer 2005. Grant awards will have a start date no later than September 30, 2005.
The successful applicants will be notified through the issuance of a Financial Assistance Award document which sets forth the amount of funds granted, the terms and conditions of the grant, the effective date of the grant, the budget period for which initial support will be given, the non-Federal share to be provided (if applicable), and the total project period for which support is contemplated. The Financial Assistance Award will be signed by the Grants Officer and transmitted via postal mail.
Organizations whose applications will not be funded will be notified in writing.
Grantees are subject to the requirements in 45 CFR Part 74 (non-governmental) or 45 CFR Part 92 (governmental).
Programmatic Reports and Financial Reports are required semi-annually. All required reports will be submitted in a timely manner, in recommended formats (to be provided), and the final report will also be submitted on disk or electronically using a standard word-processing program.
Melissa Brodowski, Children's Bureau, 330 C Street, SW., Washington, DC 20447. Phone: 202-205-2629. E-mail:
Peter Thompson, Grants Officer, Administration for Children and Families, Children's Bureau, 330 C Street, SW., Room 2070, Washington, DC 20447. Phone: 202-401-4608. E-mail:
Direct federal grants, sub-award funds, or contracts under this program shall not be used to support inherently religious activities such as religious instruction, worship, or proselytization. Therefore, organizations must take steps to separate, in time or location, their inherently religious activities from the services funded under this program. Regulations pertaining to the prohibition of Federal funds for inherently religious activities can be found on the HHS Web site at
Additional information about this program and its purpose can be located on the following Web sites:
For general information regarding this announcement please contact: ACYF Operations Center, c/o The Dixon Group, Inc., ATTN: Children's Bureau, 118 Q St., NE., Washington, DC 20002-2132. Telephone: 866-796-1591.
Applicants will not be sent acknowledgements of received applications.
The Administration on Children, Youth and Families seeks to support coordinated outreach efforts to underserved and diverse communities, of which each effort is staffed and/or supported by expert and multi-disciplined teams that are culturally responsive and competent in regard to the issue of domestic violence in their particular communities.
On a nationwide basis the expertise assembled within the Special Outreach projects will offer assistance on resource accumulation and information, capacity building within community organizations, policy analysis and review, training, and technical assistance for public and private organizations providing service in the domestic violence community. This assistance will be available to the entire domestic violence community as well as the specific communities to be served by these demonstration projects.
Domestic Violence/Runaway and Homeless Youth Collaborations on the Prevention of Adolescent Dating Violence: The collaboration of the Runaway Youth and Domestic Violence communities will foster the development and implementation of effective strategies and program requirements for the use of domestic violence prevention services concurrently with services provided through Basic Center, Transitional Living and Street Outreach Projects. These collaborations will help to eliminate adolescent dating violence.
These collaborative efforts will focus on the youth who are identified within the domestic violence and runaway and homeless youth communities as individuals that may be responsive to a collaborative set of interventions that are useful as effective prevention and intervention strategies.
A substantial proportion of the domestic violence that occurs in the general population involves underserved populations, including populations that are underserved because of ethnic, racial, cultural, language diversity or geographic isolation. The purpose of this effort and priority area is to increase the numbers and the capacity of the advocates and allies to do the work that is needed in these communities to prevent domestic violence.
The Family Violence Prevention and Services Act (the Act) was originally enacted in sections 301-313 of Title III of the “Child Abuse Amendments of 1984” (Pub. L. 98-457, 10/9/84). The Act was reauthorized and otherwise amended by the “Child Abuse Prevention, Adoptions, and Family Services Act of 1988” (Pub. L. 100-294, 4/25/88); the “Child Abuse, Domestic Violence, Adoption, and Family Services Act of 1992” (Pub. L. 102-295, 5/2/92); the “Safe Homes for Women of 1994,” Subtitle B of the “Violent Crime Control and Law Enforcement Act of 1994” (Pub. L. 103-322, 9/13/94); and the “Child Abuse and Prevention Treatment Act of 1996” (Pub. L. 104-235, 10/3/96); and the “Victims of Trafficking and Violence Protection Act of 2000” (Pub. L. 106-386, 10/28/00). The Act was most recently amended by the “Keeping Children and Families Safe Act of 2003” (Pub. L. 108-36).
In order to further the commitment to bring diverse voices and approaches to the discussions on the elimination of domestic violence, the Administration on Children, Youth and Families announces grant funds to support projects that convene researchers, activists, survivors of domestic violence, and practitioners who have been advocates of a more culturally appropriate and familial orientation to the elimination of domestic violence.
On a nationwide basis the expertise assembled within the Special Outreach projects will offer assistance on resource accumulation and information, capacity building within community organizations, policy analysis and review, training, and technical assistance for public and private organizations providing service in the domestic violence community. This assistance will be available to the entire domestic violence community as well as the specific communities to be served by these demonstration projects.
Areas of emphasis to be developed in the applicants' proposals are the:
• Description of the immediacy of needs to be addressed as an outreach demonstration and the description of information on the specific assistance your organization currently provides; and a general description of the activities and assistance to be provided as a demonstration;
• Technical assistance, training and consultation to be provided to improve the cultural relevancy of service delivery, resource utilization, and state-of-the-art techniques related to program implementation, service delivery and evaluation;
• Development of a network of young adult, culturally competent professionals in domestic violence and the coordination of their input, experiences and professional expertise to assist persons, programs, or agencies requesting information or assistance;
• Presentation of the technical approach and specific strategies for assistance to the field that is national in scope, culturally specific in emphasis, and includes the use of expert panels and/or working groups;
• Description of efforts that will be initiated with other national advocacy and domestic violence organizations, other national technical assistance resource centers and clearinghouses, and articulate how the continued coordination with them will enhance the demonstration efforts;
• Provision of a detailed plan that proposes the implementation of special projects related to policy issues, training, curricula development, service delivery models or other aspects of services, related to the prevention of domestic violence;
• Provision of a work plan and evaluation schedule, and a plan for a report on the effectiveness of the project one year after the effective date of the grant award;
• Description of the outreach staff and supportive expertise including a steering committee, organizational or institutional affiliations, capability, and experience in the area of domestic violence;
• Description of the organizational and administrative structure, the management plan, and the cost structure within which the project will operate; and
• A description of the administrative, operational and organizational relationships that are current, and those that will be established with other centers and technical assistance entities for an effective national network.
The ACYF will outline a plan of action with the grantee for implementation under the cooperative agreement. The ACYF anticipates collaboration that facilitates outreach activities with local and non-profit community organizations. Assistance by ACYF will also be characterized by assuring that information on community based resources and activities are available to the grantee. The ACYF, in support of the Special Outreach Demonstration grantees, will sponsor a peer-to-peer information exchange workshop to facilitate and identify technical assistance issues and related information requirements of the grantee.
The respective responsibilities of the ACYF and the successful applicant will be identified and incorporated in to the agreement during the pre-award negotiations. It is anticipated that the cooperative agreement will not change the project requirements for the grantee in this announcement. The plan under the cooperative agreement will prescribe the general and specific responsibilities of the grantee as well as the grantor as well as foreseeable joint responsibilities. A schedule of tasks will be developed and agreed upon in addition to any special conditions relating to the implementation of the project.
State-controlled institutions of higher education; Non-profits having a 501(c)(3) status with the IRS, other than institutions of higher education;Private institutions of higher education; Others (see Additional Information on Eligibility below.)
Public or private non-profit educational institutions that have domestic violence institutes, centers or programs related to culturally specific issues in domestic violence; private non-profit organizations and/or collaborations that focus primarily on issues of domestic violence in racial and ethnic underserved communities. All applicants must have documented experience in the areas of domestic violence prevention and services, and experience and relevance to the specific underserved populations to whom assistance, outreach and information would be provided. Each applicant must have an advisory board/steering committee and staffing that is reflective of the targeted underserved community.
None.
Awards, on a competitive basis, will be for a one-year budget period, although project periods may be for 3 years. Applications for continuation grants funded under these awards beyond the one-year period will be considered in subsequent years on a non-competitive basis, subject to the availability of funds, satisfactory progress of the grantee, and a determination that continued funding would be in the best interest of the government. Total funds available for the first 12 months of the project are subject to the availability of funds.
All applicants must have a Dun & Bradstreet number. On June 27, 2003 the Office of Management and Budget published in the
Please ensure that your organization has a DUNS number. You may acquire a DUNS number at no cost by calling the dedicated toll-free DUNS number request line on 1-866-705-5711 or you may request a number on-line at
Non-profit organizations applying for funding are required to submit proof of their non-profit status. Proof of non-profit status is any one of the following:
• A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code.
• A copy of a currently valid IRS tax exemption certificate.
• A statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earnings accrue to any private shareholders or individuals.
• A certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status.
• Any of the items in the subparagraphs immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
When applying electronically we strongly suggest you attach your proof of non-profit status with your electronic application.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at
Applications that exceed the ceiling amount will be considered non-responsive and will not be eligible for funding under this announcement.
Any application that fails to satisfy the deadline requirements referenced in Section IV.3 will be considered non-responsive and will not be considered for funding under this announcement.
ACYF Operations Center, c/o The Dixon Group, Inc., Attention FV-FYSB, 118 Q Street, NE., Washington, DC 20002-2132.
You may submit your application to us in either electronic or paper format. To submit an application electronically, please use the
Please note the following if you plan to submit your application electronically via Grants.gov
• Electronic submission is voluntary, but strongly encouraged.
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation. We strongly recommend that you do not wait until the application deadline date to begin the application process through Grants.gov.
• We recommend you visit Grants.gov at least 30 days prior to filing your application to fully understand the process and requirements. We encourage applicants who submit electronically to submit well before the closing date and time so that if difficulties are encountered an applicant can still send in a hard copy overnight. If you encounter difficulties, please contact the Grants.gov Help Desk at 1-800-518-4276 to report the problem and obtain assistance with the system.
• To use Grants.gov, you, as the applicant, must have a DUNS Number and register in the Central Contractor Registry (CCR). You should allow a minimum of five days to complete the CCR registration.
• You will not receive additional point value because you submit a grant application in electronic format, nor will we penalize you if you submit an application in paper format.
• You may submit all documents electronically, including all information typically included on the SF 424 and all necessary assurances and certifications.
• Your application must comply with any page limitation requirements described in this program announcement.
• After you electronically submit your application, you will receive an automatic acknowledgement from Grants.gov that contains a Grants.gov tracking number. The Administration for Children and Families will retrieve your application from Grants.gov.
• We may request that you provide original signatures on forms at a later date.
• You may access the electronic application for this program on
• You must search for the downloadable application package by the CFDA number.
An original and two copies of the complete application are required. The original and each of the two copies must include all required forms, certifications, assurances, and appendices, be signed by an authorized representative, have original signatures, and be submitted unbound.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at
Receipt acknowledgement for application packages will not be provided to applicants who submit their package via mail, courier services, or by hand delivery. However, applicants will receive an electronic acknowledgement for applications that are submitted via
Applicants seeking financial assistance under this announcement must file the Standard Form (SF) 424, Application for Federal Assistance; SF 424A, Budget Information—Non-Construction Programs; SF 424B, Assurances—Non-Construction Programs. The forms may be reproduced for use in submitting applications. Applicants must sign and return the standard forms with their application.
Applicants must furnish prior to award an executed copy of the Standard Form LLL, Certification Regarding Lobbying, when applying for an award in excess of $100,000. Applicants who have used non-Federal funds for lobbying activities in connection with receiving assistance under this announcement shall complete a disclosure form, if applicable, with their applications (approved by the Office of Management and Budget under control number 0348-0046). Applicants must sign and return the certification with their application.
Applicants must also understand they will be held accountable for the smoking prohibition included within Public Law 103-227, Title XII Environmental Tobacco Smoke (also known as the PRO-KIDS Act of 1994). A copy of the
Applicants must make the appropriate certification of their compliance with all Federal statutes relating to nondiscrimination. By signing and submitting the applications, applicants are providing the certification and need not mail back the certification form. Complete the standard forms and the associated certifications and assurances based on the instructions on the forms. The forms and certifications may be found at
Those organizations required to provide proof of non-profit status, please refer to Section III.3.
Please see Section V.1, for instructions on preparing the full project description.
Applications hand carried by applicants, applicant couriers, other representatives of the applicant, or by overnight/express mail couriers shall be considered as meeting an announced deadline if they are received on or before the deadline date, between the hours of 8 a.m. and 4:30 p.m., eastern time, at the address referenced in Section IV.6., between Monday and Friday (excluding Federal holidays).
ACF cannot accommodate transmission of applications by facsimile. Therefore, applications transmitted to ACF by fax will not be accepted regardless of date or time of submission and time of receipt.
Applicants will not be sent acknowledgement of applications received in hard-copy through the mail.
Any application received after 4:30 p.m. eastern time on the deadline date will not be considered for competition.
Applicants using express/overnight mail services should allow two working days prior to the deadline date for receipt of applications. Applicants are cautioned that express/overnight mail services do not always deliver as agreed.
Checklist: You may use the checklist below as a guide when preparing your application package.
Additional Forms: Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at
This program is covered under Executive Order 12372, “Intergovernmental Review of Federal Programs,” and 45 CFR Part 100, “Intergovernmental Review of Department of Health and Human Services Programs and Activities.” Under the Order, States may design their own processes for reviewing and commenting on proposed Federal assistance under covered programs.
As of October 1, 2004, the following jurisdictions have elected to participate in the Executive Order process: Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Carolina, Texas, Utah, West Virginia, Wisconsin, American Samoa, Guam, North Mariana Islands, Puerto Rico, and Virgin Islands. As these jurisdictions have elected to participate in the Executive Order process, they have established SPOCs. Applicants from participating jurisdictions should contact their SPOC, as soon as possible, to alert them of prospective applications and receive instructions. Applicants must submit all required materials, if any, to the SPOC and indicate the date of this submittal (or the date of contact if no submittal is required) on the Standard Form 424, item 16a. Under 45 CFR 100.8(a)(2).
A SPOC has 60 days from the application deadline to comment on proposed new or competing continuation awards. SPOCs are encouraged to eliminate the submission of routine endorsements as official recommendations. Additionally, SPOCs are requested to clearly differentiate between mere advisory comments and those official State process recommendations that may trigger the “accommodate or explain” rule.
When comments are submitted directly to ACF, they should be addressed to the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Grants Management, Division of Discretionary Grants, 370 L'Enfant Promenade SW., 4th floor, Washington, DC 20447.
Although the remaining jurisdictions have chosen not to participate in the process, entities that meet the eligibility requirements of the program are still eligible to apply for a grant even if a State, Territory, Commonwealth, etc. does not have a SPOC. Therefore, applicants from these jurisdictions, or for projects administered by federally recognized Indian Tribes, need take no action in regard to E.O. 12372.
The official list, including addresses, of the jurisdictions that have elected to participate in E.O. 12372 can be found on the following URL:
ACYF will not fund any project where the role of the applicant is to serve as a conduit for funds to organizations other than the applicant. The applicant
Electronic Submission:
Public reporting burden for this collection of information is estimated to average 40 hours per response, including the time for reviewing instructions, gathering and maintaining the data needed and reviewing the collection information.
The project description is approved under OMB control number 0970-0139, which expires 4/30/2007.
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 following are instructions and guidelines on how to prepare the “project summary/abstract” and “full project description” sections of the application. Under the evaluation criteria section, note that each criterion is preceded by the generic evaluation requirement under the ACF Uniform Project Description (UPD).
The project description provides a major means by which an application is evaluated and ranked to compete with other applications for available assistance. The project description should be concise and complete and should address the activity for which Federal funds are being requested. Supporting documents should be included where they can present information clearly and succinctly. In preparing your project description, information responsive to each of the requested evaluation criteria must be provided. Awarding offices use this and other information in making their funding recommendations. It is important, therefore, that this information be included in the application in a manner that is clear and complete.
Provide a summary of the project description (a page or less) with reference to the funding request.
Clearly identify the physical, economic, social, financial, institutional, and/or other problem(s) requiring a solution. The need for assistance must be demonstrated and the principal and subordinate objectives of the project must be clearly stated; supporting documentation, such as letters of support and testimonials from concerned interests other than the applicant, may be included. Any relevant data based on planning studies should be included or referred to in the endnotes/footnotes. Incorporate demographic data and participant/beneficiary information, as needed. In developing the project description, the applicant may volunteer or be requested to provide information on the total range of projects currently being conducted and supported (or to be initiated), some of which may be outside the scope of the program announcement.
Identify the results and benefits to be derived. Identify the methodology, quantitative or qualitative, which will be used to determine the outcomes of the project.
Outline a plan of action that describes the scope and detail of how the proposed work will be accomplished. Account for all functions or activities identified in the application. Cite factors that might accelerate or decelerate the work and state your reason for taking the proposed approach rather than others. Describe any unusual features of the project such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvement.
Provide quantitative monthly or quarterly projections of the accomplishments to be achieved for each function or activity in such terms as the number of people to be served and the number of activities accomplished.
Provide information on the applicant organization(s) and cooperating partners, such as organizational charts, financial statements, audit reports or statements from CPAs/Licensed Public Accountants, Employer Identification Numbers, names of bond carriers, contact persons and telephone numbers, child care licenses and other documentation of professional accreditation, information on compliance with Federal/State/local government standards, documentation of experience in the program area, and other pertinent information. If the applicant is a non-profit organization, submit proof of non-profit status in its application.
The non-profit agency can accomplish this by providing: (a) A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code; (b) a copy of a currently valid IRS tax exemption certificate; (c) a statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earnings accrue to any private shareholders or individuals; (d) a certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status; (e) any of the items immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
Provide a budget with line item detail and detailed calculations for each budget object class identified on the Budget Information form. Detailed calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail
Provide a narrative budget justification that describes how the categorical costs are derived. Discuss the necessity, reasonableness, and allocability of the proposed costs.
In considering how applicants will carry out the responsibilities addressed under this announcement, competing applications for financial assistance will be reviewed and evaluated against the following criteria:
The extent to which the application outlines a sound and workable plan of action pertaining to the scope of the project, and details how the proposed work will be accomplished; relates each task to the objectives and identifies the key staff member who will be the lead person; provides a chart indicating the timetable for completing each task, the lead person, and the time committed; cites factors that might accelerate or decelerate the work, giving acceptable reasons for taking this approach as opposed to others; describes and supports any unusual features of the project, such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvement; and provides for projections of the accomplishments to be achieved. The extent to which the application describes the evaluation methodology that will be used to determine if the needs identified and discussed are being met and if the results and benefits identified are being achieved.
The extent to which the application identifies the results and benefits to be derived, the extent to which they are consistent with the objectives of the applications, the extent to which the application indicates the anticipated contributions to policy, practice, and theory, and the extent to which the proposed project costs are reasonable in view of the expected results. Identify, in specific terms, the results and benefits, for target groups and human service providers, to be derived from implementing the proposed project.
The extent to which the need for the project and the problems it will address have national and local significance; the applicability of the project to coordination efforts by national, Tribal, State and local governmental and non-profit agencies, and its ultimate impact on domestic violence prevention services and intervention efforts, policies and practice; the relevance of other documentation as it relates to the applicant's knowledge of the need for the project; and the identification of the specific topic or area to be served by the project. Maps and other graphic aids may be attached.
The extent to which, when applicable, the application describes the evaluation methodology that will be used to determine if the needs identified and discussed are being met and if the results and benefits identified are being achieved.
Relate the proposed budget to the level of effort required to obtain the project's objectives and provide a cost/benefit analysis. Demonstrate that the project's costs are reasonable in view of the anticipated results. Applications will be evaluated on the extent to which they include a budget that is concise and provides a detailed justification of the amount of Federal funds that are requested.
The extent to which the participating organizations and entities have discussed, through letters and other documentation, the proposed collaboration and cooperation. Assess the extent to which the financial and physical resources provided by the participating entities will be adequate and to what extent will the coordinating organizations participate in the day to day operations of the project.
No grant award will be made under this announcement on the basis of an incomplete application.
In cases where more applications are approved for funding than ACF can fund with the money available, the Grants Officer shall fund applications in their order of approval until funds run out. In this case, ACF has the option of carrying over the approved applications up to a year for funding consideration in a later competition of the same program. These applications need not be reviewed and scored again if the program's evaluation criteria have not changed. However, they must then be placed in rank order along with other applications in later competition.
Since ACF will be using non-Federal reviewers in the process, applicants have the option of omitting from the application copies (not the original) specific salary rates or amounts for individuals specified in the application budget and Social Security Numbers, if otherwise required for individuals. The copies may include summary salary information.
The successful applicants will be notified through the issuance of a Financial Assistance Award document, which sets forth the amount of funds granted, the terms and conditions of the grant, the effective date of the grant, the budget period for which initial support will be given, and the total project period for which support is contemplated. The Financial Assistance Award will be signed by the Grants Officer and transmitted via postal mail. Organizations whose applications will not be funded will be notified in writing.
Grantees are subject to the requirements in 45 CFR Part 74 (non-governmental) or 45 CFR Part 92 (governmental).
All grantees are required to submit semi-annual program reports; grantees are also required to submit semi-annual expenditure reports using the required financial standard form (SF 269) which can be found at the following URL:
Final reports are due 90 days after the end of the grant period.
Programmatic Reports: Semi-Annually.
Financial Reports: Semi-Annually.
Programmatic Reports: Semi-annually and a final report is due 90 days after the grant period.
Financial Reports: Semi-annually and a final report is due 90 days after the grant period.
All grantees are required to submit semi-annual financial status reports using the required financial standard form (SF 269). A format for the program report will be sent to all grantees after the awards are made.
Program Office Contact: William D. Riley, Director, Family Violence Division, Room 2117, Switzer Building, 330 C Street, SW., Washington, DC 20447. Phone: 202-401-5229. E-mail:
Grants Management Office Contact: Peter Thompson, Grants Officer, Administration on Children, Youth, and Families, Room 2070, Switzer Building, 330 C Street, SW., Washington, DC 20447. Phone: 202-401-4608. E-mail:
Additional Information on this program and its purpose can be located on the following web site:
Applicants will not be sent acknowledgements of received applications.
This announcement would offer the applicant organization, through a letter of agreement, the opportunity to design, develop, and collaborate in a service intersection area that has languished from the lack of concentrated attention. The approaches to the needs of this intersection are many and varied, for example: collaborative efforts that may accommodate informational needs; the development of training materials and curricula to be used in a learning environment; the collection of mutually useful data that may lead to more intensive service approaches; and the development of protocols for effective strategies of prevention/intervention that may lead to an improved pattern of service delivery.
Adolescent dating violence exhibits similar characteristics as adult violence in terms of its being a continuing and escalating form of abuse. As such, these behaviors range from verbal abuse to physical and sexual assaults. The cycle of abuse is also displayed in these early relationships as the violence may escalate over time. Moreover, a high percentage of disconnected youth come from homes where domestic violence occurs while 40 to 60 percent of men in court ordered treatment for domestic violence have witnessed it as a child. It also is recognized, however, that perpetrators of adolescent dating violence can be either male or female. As teenagers lack the experience of intimate relationships, the abuse they may be experiencing may be interpreted as jealousy of their partner's commitment to them. There is a need to raise the awareness of adolescent dating violence and send the message that it is not wrong or “uncool” to talk about or report the violence in a relationship. To encourage healthy relationships we need to promote programs to reduce adolescent violence through community awareness activities, education and prevention programs, and information and supportive opportunities.
Applicants must submit a signed interagency agreement between the organization representing the interest of Runaway and Homeless Youth (RHY) programs and the organization or coalition representing the domestic violence advocacy interests.
The agreement that is submitted will specifically indicate the roles and responsibilities that each agency and participating organizations will have in the planning and implementation of the proposed project. Moreover, the agreement will indicate the collaborative commitment to cultural sensitivity in the proposed project.
Applicants may propose to do one or more of the following, or may propose other related project activities that maintain the focus of the priority area:
• Plan and implement cross-training activities between domestic violence service providers and advocates, youth workers, supervisors, and other social service providers on the relationships of adolescent dating violence and disconnected youth;
• Develop and implement model intervention responses of youth workers to identified adolescent dating violence;
• Support the development and adoption of model collaborative protocols for domestic violence service providers and youth workers; and
• The compilation of service data correlating adolescent dating violence with youth who are serviced through Basic Center, Transitional Living Programs, and Street Outreach projects.
Non-profits having a 501(c)(3) status with the IRS, other than institutions of higher education.
Non-profit organizations not having 501(c)3 status.
Others (See Additional Information on Eligibility below).
Eligibility includes local public agencies and non-profit community-based organizations; faith-based and community-bsed organizations who are recipients, or have been recipients, of grant awards for Basic Center, Transitional Living and Street Outreach Family and Youth Services Bureau-funded projects; and non-profit domestic violence advocacy organizations and domestic violence State Coalitions who are or have been recipients of Family Violence Prevention and Services grant awards.
No.
Awards, on a competitive basis, will be for a one-year budget period, although project periods may be for 3 years. Applications for continuation grants funded under these awards beyond the one-year period will be considered in subsequent years on a non-competitive basis, subject to the availability of funds, satisfactory progress of the grantee, and a determination that continued funding would be in the best interest of the government. Total funds available for the first 12 months of the project are subject to the availability of funds.
All applicants must have a Dun & Bradstreet number. On June 27, 2003 the
Non-profit organizations applying for funding are required to submit proof of their non-profit status. Proof of non-profit status is any one of the following:
• A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code.
• A copy of a currently valid IRS tax exemption certificate.
• A statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earning accrue to any private shareholders or individuals.
• A certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status.
• Any of the items in the subparagraphs immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
When applying electronically we strongly suggest you attach your proof of non-profit status with your electronic application.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at
Applications that exceed the ceiling amount will be considered non-responsive and will not be eligible for funding under this announcement.
Any application that fails to satisfy the deadline requirements referenced in Section IV.3 will be considered non-responsive and will not be considered for funding under this announcement.
ACYF Operations Center, c/o Dixon Group, FV-FYSB Funding; 118 Q Street, NE., Washington, DC 20002-2132.
You may submit your application to us in either electronic or paper format.
To submit an application electronically, please use the
Please note the following if you plan to submit your application electronically via Grants.gov
• Electronic submission is voluntary, but strongly encouraged.
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation. We strongly recommend that you do not wait until the application deadline date to begin the application process through Grants.gov.
• We recommend you visit Grants.gov at least 30 days prior to filing your application to fully understand the process and requirements. We encourage applicants who submit electronically to submit well before the closing date and time so that if difficulties are encountered an applicant can still send in a hard copy overnight. If you encounter difficulties, please contact the Grants.gov Help Desk at 1-800-518-4276 to report the problem and obtain assistance with the system.
• To use Grants.gov, you, as the applicant, must have a DUNS Number and register in the Central Contractor Registry (CCR). You should allow a minimum of five days to complete the CCR registration.
• You will not receive additional point value because you submit a grant application in electronic format, nor will we penalize you if you submit an application in paper format.
• You may submit all documents electronically, including all information typically included on the SF 424 and all necessary assurances and certifications.
• Your application must comply with any page limitation requirements described in this program announcement.
• After you electronically submit your application, you will receive an automatic acknowledgement from Grants.gov that contains a Grants.gov tracking number. The Administration for Children and Families will retrieve your application from Grants.gov.
• We may request that you provide original signatures on forms at a later date.
• You may access the electronic application for this program on
• You must search for the downloadable application package by the CFDA number.
An original and two copies of the complete application are required. The original and each of the two copies must include all required forms, certifications, assurances, and appendices, be signed by an authorized representative, have original signatures, and be submitted unbound.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at
Receipt acknowledgement for application packages will not be provided to applicants who submit their package via mail, courier services, or by hand delivery. However, applicants will receive an electronic acknowledgement for applications that are submitted via
The project description should include all the information requirements described in the specific evaluation criteria outlined in the program announcement under Section V Application Review Information. In addition to the project description, the applicant needs to complete all the standard forms required for making applications for awards under this announcement.
Applicants seeking financial assistance under this announcement
Applicants must furnish prior to award an executed copy of the Standard Form LLL, Certification Regarding Lobbying, when applying for an award in excess of $100,000. Applicants who have used non-Federal funds for lobbying activities in connection with receiving assistance under this announcement shall complete a disclosure form, if applicable, with their applications (approved by the Office of Management and Budget under control number 0348-0046). Applicants must sign and return the certification with their application.
Applicants must also understand they will be held accountable for the smoking prohibition included within Public Law 103-227, Title XII Environmental Tobacco Smoke (also known as the PRO-KIDS Act of 1994). A copy of the
Applicants must make the appropriate certification of their compliance with all Federal statutes relating to nondiscrimination. By signing and submitting the applications, applicants are providing the certification and need not mail back the certification form. Complete the standard forms and the associated certifications and assurances based on the instructions on the forms. The forms and certifications may be found at:
Those organizations required to provide proof of non-profit status, please refer to Section III.3.
Please see Section V.1, for instructions on preparing the full project description.
Receipt acknowledgement for application packages will not be provided to applicants who submit their package via mail, courier services, or by hand delivery. However, applicants will receive an electronic acknowledgement for applications that are submitted via
The closing time and date for receipt of applications is referenced above. Applications received after 4:30 p.m. eastern time on the closing date will be classified as late.
Applications hand carried by applicants, applicant couriers, other representatives of the applicant, or by overnight/express mail couriers shall be considered as meeting an announced deadline if they are received on or before the deadline date, between the hours of 8 a.m. and 4:30 p.m., eastern time, at the address referenced in Section IV.6., between Monday and Friday (excluding Federal holidays).
ACF cannot accommodate transmission of applications by facsimile. Therefore, applications transmitted to ACF by fax will not be accepted regardless of date or time of submission and time of receipt.
Applicants will not be sent acknowledgement of applications received in hard-copy through the mail. Applicants that submit applications via Grants.gov will receive electronic acknowledgement.
Any application received after 4:30 p.m. eastern time on the deadline date will not be considered for competition.
Applicants using express/overnight mail services should allow two working days prior to the deadline date for receipt of applications. Applicants are cautioned that express/overnight mail services do not always deliver as agreed.
You may use the checklist below as a guide when preparing your application package.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at
This program is covered under Executive Order 12372, “Intergovernmental Review of Federal Programs,” and 45 CFR Part 100, “Intergovernmental Review of Department of Health and Human Services Programs and Activities.” Under the Order, States may design their own processes for reviewing and commenting on proposed Federal assistance under covered programs.
As of October 1, 2004, the following jurisdictions have elected to participate in the Executive Order process: Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Carolina, Texas, Utah, West Virginia, Wisconsin, American Samoa, Guam, North Mariana Islands, Puerto Rico, and Virgin Islands. As these jurisdictions have elected to participate in the Executive Order process, they have established SPOCs. Applicants from participating jurisdictions should contact their SPOC, as soon as possible, to alert them of prospective applications and receive instructions. Applicants must submit all required materials, if any, to the SPOC and indicate the date of this submittal (or the date of contact if no submittal is required) on the Standard Form 424, item 16a. Under 45 CFR 100.8(a)(2).
A SPOC has 60 days from the application deadline to comment on proposed new or competing continuation awards. SPOCs are encouraged to eliminate the submission of routine endorsements as official recommendations. Additionally, SPOCs are requested to clearly differentiate between mere advisory comments and those official State process recommendations that may trigger the “accommodate or explain” rule.
When comments are submitted directly to ACF, they should be addressed to the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Grants Management, Division of Discretionary Grants, 370 L'Enfant Promenade SW., 4th floor, Washington, DC 20447.
Although the remaining jurisdictions have chosen not to participate in the process, entities that meet the eligibility requirements of the program are still eligible to apply for a grant even if a State, Territory, Commonwealth, etc. does not have a SPOC. Therefore, applicants from these jurisdictions, or for projects administered by federally recognized Indian Tribes, need take no action in regard to E.O. 12372.
The official list, including addresses, of the jurisdictions that have elected to participate in E.O. 12372 can be found on the following URL:
None.
Public reporting burden for this collection of information is estimated to average 40 hours per response, including the time for reviewing instructions, gathering and maintaining the data needed and reviewing the collection information.
The project description is approved under OMB control number 0970-0139, which expires 4/30/2007.
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 following are instructions and guidelines on how to prepare the “project summary/abstract” and “full project description” sections of the application. Under the evaluation criteria section, note that each criterion is preceded by the generic evaluation requirement under the ACF Uniform Project Description (UPD).
The project description provides a major means by which an application is evaluated and ranked to compete with other applications for available assistance. The project description should be concise and complete and should address the activity for which Federal funds are being requested. Supporting documents should be included where they can present information clearly and succinctly. In preparing your project description, information responsive to each of the requested evaluation criteria must be provided. Awarding offices use this and other information in making their funding recommendations. It is important, therefore, that this information be included in the application in a manner that is clear and complete.
Provide a summary of the project description (a page or less) with reference to the funding request.
Clearly identify the physical, economic, social, financial, institutional, and/or other problem(s) requiring a solution in a quantifiable manner. The need for assistance must be demonstrated and the principal and subordinate objectives of the project must be clearly stated; supporting documentation, such as letters of support and testimonials from concerned interests other than the applicant, may be included. Any relevant data based on planning studies should be included or referred to in the endnotes/footnotes. Incorporate demographic data and participant/
Identify the results and benefits to be derived. Identify the methodology, quantitative or qualitative, which will be used to determine the outcome of the project.
Outline a plan of action that describes the scope and detail of how the proposed work will be accomplished. Account for all functions or activities identified in the application. Cite factors that might accelerate or decelerate the work and state your reason for taking the proposed approach rather than others. Describe any unusual features of the project such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvement. Provide quantitative monthly or quarterly projections of the accomplishments to be achieved for each function or activity in such terms as the number of people to be served and the number of activities accomplished.
Provide information on the applicant organization(s) and cooperating partners, such as organizational charts, financial statements, audit reports or statements from CPAs/Licensed Public Accountants, Employer Identification Numbers, names of bond carriers, contact persons and telephone numbers, child care licenses and other documentation of professional accreditation, information on compliance with Federal/State/local government standards, documentation of experience in the program area, and other pertinent information. If the applicant is a non-profit organization, submit proof of non-profit status in its application.
The non-profit agency can accomplish this by providing: (a) A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code; (b) a copy of a currently valid IRS tax exemption certificate, (c) a statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earnings accrue to any private shareholders or individuals; (d) a certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status, (e) any of the items immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
Provide a budget with line item detail and detailed calculations for each budget object class identified on the Budget Information form. Detailed calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail sufficient for the calculation to be duplicated. Also include a breakout by the funding sources identified in Block 15 of the SF 424.
Provide a narrative budget justification that describes how the categorical costs are derived. Discuss the necessity, reasonableness, and allocability of the proposed costs.
In considering how applicants will carry out the responsibilities addressed under this announcement, competing applications for financial assistance will be reviewed and evaluated against the following criteria:
The extent to which the application outlines a sound and workable plan of action pertaining to the scope of the project, and details how the proposed work will be accomplished; relates each task to the objectives and identifies the key staff member who will be the lead person; provides a chart indicating the timetable for completing each task, the lead person, and the time committed; cites factors that might accelerate or decelerate the work, giving acceptable reasons for taking this approach as opposed to others; describes and supports any unusual features of the project, such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvement; and provides for projections of the accomplishments to be achieved. The extent to which the application describes the evaluation methodology that will be used to determine if the needs identified and discussed are being met and if the results and benefits identified are being achieved.
The extent to which the application identifies the results and benefits to be derived, the extent to which they are consistent with the objectives of the applications, the extent to which the application indicates the anticipated contributions to policy, practice, and theory, and the extent to which the proposed project costs are reasonable in view of the expected results. Identify, in specific terms, the results and benefits, for target groups and human service providers, to be derived from implementing the proposed project.
The extent to which the need for the project and the problems it will address have national and local significance; the applicability of the project to coordination efforts by national, Tribal, State and local governmental and non-profit agencies, and its ultimate impact on domestic violence prevention services and intervention efforts, policies and practice; the relevance of other documentation as it relates to the applicant's knowledge of the need for the project; and the identification of the specific topic or area to be served by the project. Maps and other graphic aids may be attached. The extent to which the application describes the evaluation methodology that will be used to determine if the needs identified and discussed are being met and if the results and benefits identified are being achieved.
Relate the proposed budget to the level of effort required to obtain the project's objectives and provide a cost/benefit analysis. Demonstrate that the project's costs are reasonable in view of the anticipated results. Applications will be evaluated on the extent to which they include a budget that is concise and provide a detailed justification of the amount of Federal funds that are requested.
The extent to which the participating organizations and entities have discussed, through letters and other documentation, the proposed collaboration and cooperation. Assess the extent to which the financial and physical resources provided by the participating entities will be adequate and to what extent will the coordinating organizations participate in the day to day operations of the project.
No grant award will be made under this announcement on the basis of an incomplete application.
In cases where more applications are approved for funding than ACF can fund with the money available, the Grants Officer shall fund applications in their order of approval until funds run out. In this case, ACF has the option of carrying over the approved applications up to a year for funding consideration in a later competition of the same program. These applications need not be reviewed and scored again if the program's evaluation criteria have not changed. However, they must then be placed in rank order along with other applications in later competition.
Since ACF will be using non-Federal reviewers in the process, applicants have the option of omitting from the application copies (not the original) specific salary rates or amounts for individuals specified in the application budget and Social Security Numbers, if otherwise required for individuals. The copies may include summary salary information.
The successful applicants will be notified through the issuance of a Financial Assistance Award document which sets forth the amount of funds granted, the terms and conditions of the grant, the effective date of the grant, the budget period for which initial support will be given, and the total project period for which support is contemplated. The Financial Assistance Award will be signed by the Grants Officer and transmitted via postal mail.
Organizations whose applications will not be funded will be notified in writing.
Grantees are subject to the requirements in 45 CFR Part 74 (non-governmental) or 45 CFR Part 92 (governmental).
All grantees are required to submit semi-annual program reports; grantees are also required to submit semi-annual expenditure reports using the required financial standard form (SF 269) which can be found at the following URL:
Final reports are due 90 days after the end of the grant period.
William D. Riley, Director, Family Violence Division, Room 2117, Switzer Building, 330 C Street, SW., Washington, DC 20447.
Peter Thompson, Grants Officer, Administration on Children, Youth and Families, Room 2070, Switzer Building, 330 C Street, SW., Washington, DC 20447.
Please see Section IV.3 for details about acknowledgement of received applications.
The Minority Training Grant Stipends to Historically Black, Hispanic Serving, and Tribal Colleges and Universities will assist in generating skill-building and training opportunities in domestic violence prevention and services. The skill-building and training opportunities will be provided through field placements of the participating students. The field placements will occur in local domestic violence programs that may provide residential and non-residential services. These projects will be particularly responsive to issues of cultural content and designed to increase the extent to which minority groups participate in the domestic violence service community.
A substantial proportion of the of the domestic violence that occurs in the general population involves underserved populations, including populations that are underserved because of ethnic, racial, cultural, language diversity or geographic isolation. The purpose of this effort and priority area is to increase the numbers and the capacity of the advocates and allies to do the work that is needed in these communities to prevent domestic violence.
There are three Executive orders that support the provision of training grants to the educational institutions targeted in this priority area:
• Executive Order 13021 of October 19, 1969, Tribal Colleges and Universities;
• Executive Order 12900 of December 5, 1994, Educational Excellence for Hispanic Americans; and
• Executive Order 12876 of November 1, 1993, Historically Black Colleges and Universities.
Executive Order 13021 reaffirms the special relationship of the Federal Government to the American Indians and identifies several purposes that support access to opportunities and resources, and that support educational opportunities of economically disadvantaged students; Executive Order 12900 requires the provision of quality education and increased opportunities for Hispanic Americans; and Executive Order 12876 requires strengthening the capacity of Historical Black Colleges and Universities to provide quality education and increased opportunities to participate in and benefit from Federal programs.
This priority area is intended to provide support for graduate and undergraduate students who show promise and demonstrate serious interest and commitment to domestic violence in underserved populations. Historically Black, Hispanic, and American Indian colleges and universities will be given consideration in order to generate skill building and training opportunities particularly
A field placement should provide stipends for individuals pursuing degrees in social work with a special interest in domestic violence. The stipend should provide one-year undergraduate or graduate support for skill-building and training for students interested in treatment and services to underserved racial and ethnic minority populations. Stipends should not exceed a 12-month period. All field placements will be at a minimum of 400 hours for a one-year period.
Placements must provide a structured learning environment enabling students to compare field experiences, integrate knowledge from the classroom, and expand knowledge beyond the scope of the practicum setting. (Baccalaureate and Master's Program Evaluative Standards, Interpretive Guidelines, Curriculum Policy Statement, and the Accreditation Standards and Self-Study Guides).
Proposals must include content about the differential assessment and intervention skills that will enable the practitioners to serve diverse populations. Placements should focus on the following general and specific areas: Information on domestic violence services in the community; interventions with shelters; batterers' groups and other treatment services; medical services to families experiencing domestic violence; legal advocacy; TANF relationships; crisis intervention services; community service centers; faith community interaction; and the families of prisoners.
Faculty must indicate the use of professional supervision, coordinate and monitor the practicum placements.
Proposals must define the social work setting and practice, field instructor assignments and activities, and student learning expectations and responsibilities. Clear practice and evaluation goals for the field practicum must be articulated including an orientation plan for the student to the practicum policy and agency's policy.
State controlled institutions of higher education; Private institutions of higher education; Others (See Additional Information on Eligibility below.)
Participating students are qualified undergraduate or graduate social work students. All of the applicant's students must be enrolled in the institution, be full-time students, and maintain satisfactory academic records. Awards will be made only to eligible institutions on behalf of their qualified student candidates.
No
All applicants must have a Dun & Bradstreet number. On June 27, 2003 the Office of Management and Budget published in the
Please ensure that your organization has a DUNS number. You may acquire a DUNS number at no cost by calling the dedicated toll-free DUNS number request line on 1-866-705-5711 or you may request a number on-line at
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
Applications that exceed the ceiling amount will be considered non-responsive and will not be eligible for funding under this announcement.
Any application that fails to satisfy the deadline requirements referenced in Section IV.3 will be considered non-responsive and will not be considered for funding under this announcement.
ACYF Operations Center, c/o Dixon Group, FV-FYSB Funding, 118 Q Street, NE., Washington, DC 20002-2132.
You may submit your application to us in either electronic or paper format.
To submit an application electronically, please use the
Please note the following if you plan to submit your application electronically via Grants.gov
• Electronic submission is voluntary, but strongly encouraged.
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation. We strongly recommend that you do not wait until the application deadline date to begin the application process through Grants.gov.
• We recommend you visit Grants.gov at least 30 days prior to filing your application to fully understand the process and requirements. We encourage applicants who submit electronically to submit well before the closing date and time so that if difficulties are encountered an applicant can still send in a hard copy overnight. If you encounter difficulties, please contact the Grants.gov Help Desk at 1-800-518-4276 to report the problem and obtain assistance with the system.
• To use Grants.gov, you, as the applicant, must have a DUNS Number and register in the Central Contractor Registry (CCR). You should allow a minimum of five days to complete the CCR registration.
• You will not receive additional point value because you submit a grant application in electronic format, nor will we penalize you if you submit an application in paper format.
• You may submit all documents electronically, including all information typically included on the SF 424 and all necessary assurances and certifications.
• Your application must comply with any page limitation requirements described in this program announcement.
• After you electronically submit your application, you will receive an automatic acknowledgement from Grants.gov that contains a Grants.gov tracking number. The Administration for Children and Families will retrieve your application from Grants.gov.
• We may request that you provide original signatures on forms at a later date.
• You may access the electronic application for this program on
• You must search for the downloadable application package by the CFDA number.
An original and two copies of the complete application are required. The original and each of the two copies must include all required forms, certifications, assurances, and appendices, be signed by an authorized representative, have original signatures, and be submitted unbound.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
Receipt acknowledgement for application packages will not be provided to applicants who submit their package via mail, courier services, or by hand delivery. However, applicants will receive an electronic acknowledgement for applications that are submitted via
The project description should include all the information requirements described in the specific evaluation criteria outlined in the program announcement under Section V Application Review Information. In addition to the project description, the applicant needs to complete all the standard forms required for making applications for awards under this announcement.
Applicants seeking financial assistance under this announcement must file the Standard Form (SF) 424, Application for Federal Assistance; SF-424A, Budget Information—Non-Construction Programs; SF-424B, Assurances—Non-Construction Programs. The forms may be reproduced for use in submitting applications. Applicants must sign and return the standard forms with their application.
Applicants must furnish prior to award an executed copy of the Standard Form LLL, Certification Regarding Lobbying, when applying for an award in excess of $100,000. Applicants who have used non-Federal funds for lobbying activities in connection with receiving assistance under this announcement shall complete a disclosure form, if applicable, with their applications (approved by the Office of Management and Budget under control number 0348-0046). Applicants must sign and return the certification with their application.
Applicants must also understand they will be held accountable for the smoking prohibition included within Public Law 103-227, Title XII Environmental Tobacco Smoke (also known as the PRO-KIDS Act of 1994). A copy of the
Applicants must make the appropriate certification of their compliance with all Federal statutes relating to nondiscrimination. By signing and submitting the applications, applicants are providing the certification and need not mail back the certification form. Complete the standard forms and the associated certifications and assurances based on the instructions on the forms. The forms and certifications may be found at:
Those organizations required to provide proof of non-profit status, please refer to Section III.3.
Please see Section V.1, for instructions on preparing the full project description.
The closing time and date for receipt of applications is referenced above. Applications received after 4:30 p.m. eastern time on the closing date will be classified as late.
Applications hand carried by applicants, applicant couriers, other representatives of the applicant, or by overnight/express mail couriers shall be considered as meeting an announced deadline if they are received on or before the deadline date, between the hours of 8:00 a.m. and 4:30 p.m., eastern time, at the address referenced in Section IV.6., between Monday and Friday (excluding Federal holidays).
ACF cannot accommodate transmission of applications by facsimile. Therefore, applications transmitted to ACF by fax will not be accepted regardless of date or time of submission and time of receipt.
Applicants will not be sent acknowledgement of applications received in hard-copy through the mail. Applicants that submit applications via Grants.gov will receive electronic acknowledgement.
Any application received after 4:30 p.m. eastern time on the deadline date will not be considered for competition.
Applicants using express/overnight mail services should allow two working days prior to the deadline date for receipt of applications. Applicants are cautioned that express/overnight mail services do not always deliver as agreed.
You may use the checklist below as a guide when preparing your application package.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
This program is covered under Executive Order 12372, “Intergovernmental Review of Federal Programs,” and 45 CFR Part 100, “Intergovernmental Review of Department of Health and Human Services Programs and Activities.” Under the Order, States may design their own processes for reviewing and commenting on proposed Federal assistance under covered programs.
As of October 1, 2004, the following jurisdictions have elected to participate in the Executive Order process: Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Carolina, Texas, Utah, West Virginia, Wisconsin, American Samoa, Guam, North Mariana Islands, Puerto Rico, and Virgin Islands. As these jurisdictions have elected to participate in the Executive Order process, they have established SPOCs. Applicants from participating jurisdictions should contact their SPOC, as soon as possible, to alert them of prospective applications and receive instructions. Applicants must submit all required materials, if any, to the SPOC and indicate the date of this submittal (or the date of contact if no submittal is required) on the Standard Form 424, item 16a. Under 45 CFR 100.8(a)(2).
A SPOC has 60 days from the application deadline to comment on proposed new or competing continuation awards. SPOCs are encouraged to eliminate the submission of routine endorsements as official recommendations. Additionally, SPOCs are requested to clearly differentiate between mere advisory comments and those official State process recommendations which may trigger the “accommodate or explain” rule.
When comments are submitted directly to ACF, they should be addressed to the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Grants Management, Division of Discretionary Grants, 370 L'Enfant Promenade SW., 4th floor, Washington, DC 20447.
Although the remaining jurisdictions have chosen not to participate in the process, entities that meet the eligibility requirements of the program are still eligible to apply for a grant even if a State, Territory, Commonwealth, etc. does not have a SPOC. Therefore, applicants from these jurisdictions, or for projects administered by federally-recognized Indian Tribes, need take no action in regard to E.O. 12372.
The official list, including addresses, of the jurisdictions that have elected to participate in E.O. 12372 can be found on the following URL:
ACYF will not fund any project where the role of the application is to serve as a conduit for funds to organizations other than the applicant. The applicant must have a substantive role in the implementation of the project for which the funding is requested. This prohibition does not bar the making of subgrants or subcontracting for specific services or activities needed to conduct the project.
Public reporting burden for this collection of information is estimated to average 40 hours per response, including the time for reviewing instructions, gathering and maintaining the data needed and reviewing the collection information.
The project description is approved under OMB control number 0970-0139 which expires 4/30/2007.
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 following are instructions and guidelines on how to prepare the “project summary/abstract” and “full project description” sections of the application. Under the evaluation criteria section, note that each criterion is preceded by the generic evaluation requirement under the ACF Uniform Project Description (UPD).
The project description provides a major means by which an application is evaluated and ranked to compete with other applications for available assistance. The project description should be concise and complete and should address the activity for which Federal funds are being requested. Supporting documents should be included where they can present information clearly and succinctly. In preparing your project description, information responsive to each of the requested evaluation criteria must be provided. Awarding offices use this and other information in making their funding recommendations. It is important, therefore, that this information be included in the application in a manner that is clear and complete.
Provide a summary of the project description (a page or less) with reference to the funding request.
Clearly identify the physical, economic, social, financial, institutional, and/or other problem(s) requiring a solution in a quantifiable manner. The need for assistance must be demonstrated and the principal and subordinate objectives of the project must be clearly stated; supporting documentation, such as letters of support and testimonials from concerned interests other than the applicant, may be included. Any relevant data based on planning studies should be included or referred to in the endnotes/footnotes. Incorporate demographic data and participant/beneficiary information, as needed. In developing the project description, the applicant may volunteer or be requested to provide information on the total range of projects currently being conducted and supported (or to be initiated), some of which may be outside the scope of the program announcement.
Identify the results and benefits to be derived. Identify the methodology, quantitative or qualitative, which will be used to determine the outcomes of the project.
Outline a plan of action that describes the scope and detail of how the proposed work will be accomplished. Account for all functions or activities identified in the application. Cite factors that might accelerate or decelerate the work and state your reason for taking the proposed approach rather than others. Describe any unusual features of the project such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvement.
Provide quantitative monthly or quarterly projections of the accomplishments to be achieved for each function or activity in such terms as the number of people to be served and the number of activities accomplished.
Provide information on the applicant organization(s) and cooperating partners, such as organizational charts, financial statements, audit reports or statements from CPAs/Licensed Public Accountants, Employer Identification Numbers, names of bond carriers, contact persons and telephone numbers, child care licenses and other documentation of professional accreditation, information on compliance with Federal/State/local government standards, documentation of experience in the program area, and other pertinent information. If the applicant is a non-profit organization, submit proof of non-profit status in its application.
The non-profit agency can accomplish this by providing: (a) A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code; (b) a copy of a currently valid IRS tax exemption certificate, (c) a statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earnings accrue to any private shareholders or individuals; (d) a certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status, (e) any of the items immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
Provide a budget with line item detail and detailed calculations for each budget object class identified on the Budget Information form. Detailed calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail sufficient for the calculation to be duplicated. Also include a breakout by the funding sources identified in Block 15 of the SF-424.
Provide a narrative budget justification that describes how the categorical costs are derived. Discuss the necessity, reasonableness, and allocability of the proposed costs.
The following evaluation criteria appear in weighted descending order. The corresponding score values indicate the relative importance that ACF places on each evaluation criterion; however, applicants need not develop their applications precisely according to the order presented. Application components may be organized such that a reviewer will be able to follow a seamless and logical flow of information (
In considering how applicants will carry out the responsibilities addressed under this announcement, competing applications for financial assistance will be reviewed and evaluated against the following criteria:
The extent to which the application outlines a sound and workable plan of action pertaining to the scope of the project, and details how the proposed work will be accomplished; relates each
The extent to which the application identifies the results and benefits to be derived, the extent to which they are consistent with the objectives of the applications, the extent to which the application indicates the anticipated contributions to policy, practice, and theory, and the extent to which the proposed project costs are reasonable in view of the expected results. Identify, in specific terms, the results and benefits, for target groups and human service providers, to be derived from implementing the proposed project.
The extent to which the need for the project and the problems it will address have national and local significance; the applicability of the project to coordination efforts by national, Tribal, State and local governmental and non-profit agencies, and its ultimate impact on domestic violence prevention services and intervention efforts, policies and practice; the relevance of other documentation as it relates to the applicant's knowledge of the need for the project; and the identification of the specific topic or area to be served by the project. Maps and other graphic aids may be attached. The extent to which, when applicable, the application describes the evaluation methodology that will be used to determine if the needs identified and discussed are being met and if the results and benefits identified are being achieved.
Relate the proposed budget to the level of effort required to obtain the project's objectives and provide a cost/benefit analysis. Demonstrate that the project's costs are reasonable in view of the anticipated results. Applications will be evaluated on the extent to which they include a budget that is concise and provides a detailed justification of the amount of Federal funds that are requested.
Describe the staffing/faculty pattern for the proposed project, clearly linking responsibilities to project task and specifying the roles and contributions of key associated staff. Describe the qualifications of the project team including their experiences working on similar projects in an institutional setting and providing assistance and guidance to participating students. Also describe the relevant educational background and the demonstrated ability to produce results in the project that have potential for replication and are usable. One or two pertinent paragraphs on each key member of the project team are preferred to resumes.
No grant award will be made under this announcement on the basis of an incomplete application.
In cases where more applications are approved for funding than ACF can fund with the money available, the Grants Officer shall fund applications in their order of approval until funds run out. In this case, ACF has the option of carrying over the approved applications up to a year for funding consideration in a later competition of the same program. These applications need not be reviewed and scored again if the program's evaluation criteria have not changed. However, they must then be placed in rank order along with other applications in later competition.
Since ACF will be using non-Federal reviewers in the process, applicants have the option of omitting from the application copies (not the original) specific salary rates or amounts for individuals specified in the application budget and Social Security Numbers, if otherwise required for individuals. The copies may include summary salary information.
The successful applicants will be notified through the issuance of a Financial Assistance Award document which sets forth the amount of funds granted, the terms and conditions of the grant, the effective date of the grant, the budget period for which initial support will be given, and the total project period for which support is contemplated. The Financial Assistance Award will be signed by the Grants Officer and transmitted via postal mail.
Organizations whose applications will not be funded will be notified in writing.
Grantees are subject to the requirements in 45 CFR Part 74 (non-governmental) or 45 CFR Part 92 (governmental).
All grantees are required to submit semi-annual program reports; grantees are also required to submit semi-annual expenditure reports using the required financial standard form (SF-269) which can be found at the following URL:
Final reports are due 90 days after the end of the grant period.
Programmatic Reports: Semi-Annually; Financial Reports: Semi-Annually; Programmatic Reports: Semi-annually and a final report is due 90 days after the grant period.
Financial Reports: Semi-annually and a final report is due 90 days after the grant period.
All grantees are required to submit semi-annual financial status reports using the required financial standard form (SF-269). A format for the program report will be sent to all grantees after the awards are made.
William D. Riley, Director, Family Violence Division, Room 2117, Switzer Building, 330 C Street, SW., Washington, DC 20447.
Peter Thompson, Grants Officer, Administration on Children, Youth and Families, Room 2070, Switzer Building, 330 C Street, SW., Washington, DC 20447.
Additional information on this program and its purpose can be located on the following web site:
Applicants will not be sent acknowledgements of received applications.
A public or private non-profit agency interested in receiving funding under this announcement must have the organizational capacity to work with refugees who have low incomes, limited English-language proficiency, and neither assets nor American business experience. Many newly arrived refugees do not qualify for commercial loans or for admission into mainstream microenterprise development programs for these reasons. Organizations that cannot support in-house lending and essential loan-servicing responsibilities may experience difficulties in implementing a microenterprise project.
Refugees bring positive attributes to microenterprise development projects, including a diverse and rich array of business ideas, skills, experiences, and ambitions. These characteristics have been largely responsible for the success of the ORR program. During the last 14 years, refugees have started or expanded more than 1,800 micro-businesses (with a business survival rate of over 88 percent). ORR grantees have provided over $4 million in financing to these entrepreneurs and clients have used these loans to leverage an additional $4,500,000 in loans from other sources. The loan repayment rate is close to 100 percent. Additionally, 2,666 new jobs have been created. Over 10,500 refugees have gained new entrepreneurial skills and knowledge; and the additional business income is helping refugee families to achieve economic self-sufficiency. By commonly accepted measures of performance (business survival rates, loan default rates, etc.), the ORR-funded programs have excelled and frequently led the field in achievement.
Building on the experience of the last 14 years, ORR seeks in this announcement to continue support to this field, particularly on behalf of those refugees who, because of language and cultural barriers, are unlikely to gain access to commercial loans or business training through other programs. To be successful in this competition, refugee-serving organizations must demonstrate their organization's capacity to provide the technical expertise necessary to help refugees start, expand, or strengthen businesses, and to provide access to credit. Economic development agencies must show how they will modify their existing programs to serve refugees effectively.
The Office of Refugee Resettlement (ORR) invites eligible entities to submit competitive grant applications for microenterprise development projects for refugees.
To achieve this purpose, applicants for microenterprise development projects may request funds for business technical assistance, short-term training, credit in the form of microloans, a revolving microloan fund or loan loss reserve fund, and post-loan technical assistance. Funds may also be requested to cover administrative costs associated
Projects should be designed in a manner that is culturally and linguistically appropriate for the refugee population, including interest in diverse microbusinesses and English-language proficiency. Project designs should also take into account such economic factors as employment rates, welfare status, and length of time in the U.S. Applicants should also be familiar with the capital needs and capital market gaps for refugee entrepreneurs and should demonstrate how refugees will gain access to business credit.
Successful applicants should demonstrate an understanding of the economic opportunities in the community for refugees and should have established working partnerships with the communities' refugee resettlement services network, with existing microenterprise development organizations (where they are present), and with financial institutions.
Training and other services should be individualized and flexible. While not all clients need extensive training or comprehensive technical assistance, proposals should address how the grant award will be allocated based on client need. Applications should indicate how technical assistance will be provided to address the complexity of the business plan, the level of risk entailed by the business, and the experiential background of the client.
If structured training is offered, it is generally recommended that the training be relatively short-term. The goal of training should be the completion of the business plan. Training should also stress marketing and cash-flow projections.
Microloans consist of small amounts of credit that are less than $15,000 and are extended to low-income entrepreneurs for start-ups of microenterprises or for the expansion or stabilization of existing microenterprises. ORR funds may be used for microloans to individual refugee entrepreneurs in sums not to exceed $15,000 (of ORR monies). These funds may be disbursed through individual loans or a revolving loan fund. Grantees with loan funds will be responsible for establishing written lending policies and procedures and for collecting and servicing loan repayments.
ORR supports the use of commercial lending institutions for refugee borrowers to leverage the limited amount of ORR funds available for this purpose and to provide borrowers with the opportunity to establish creditworthy histories with traditional lenders. Applicants may elect to establish cooperative relationships with one or more of the community's financial institutions to obtain access to commercial loan funds. Alternatively, grantees may establish a loan-loss reserve fund with a financial institution, but should ensure that the agreement with the financial institution is beneficial to the grantee and the refugee clients; this should be monitored particularly in reference to the amount of additional funds leveraged using ORR monies and the way in which loans will be approved. In this case, ORR funds may be used for microloans to individual refugee entrepreneurs in sums not to exceed $15,000 of ORR monies in the reserve, but the total loan may be larger if necessary.
ORR does not encourage the use of below-market rates of interest for the loan funds. Conversely, grantees may not charge refugees interest rates that exceed four percentage points above the New York prime lending rate at the time of loan approval. Unless the terms and interest rate are identical, ORR loan funds cannot be combined with other sources.
Microloans will have a maximum maturity of three years. The applicant must demonstrate how they will ensure that loans are closed out by the end of the project period. If the term of the loan will exceed the time of the grant, grantees may also propose how they will continue to administer the loan repayment and any necessary technical assistance after the end of the project period. Loans may be used for working capital, inventory, supplies, furniture, fixtures, machinery, tools, equipment, building renovation, and/or leasehold improvements.
Microloan funds may not be used for the following types of businesses:
• As venture capital for established businesses that are attempting major expansion;
• For enterprises engaged in gambling or speculation;
• For any illegal activity or production or for the service or distribution of illegal products;
• For purposes not related to microenterprise development;
Additionally, ORR strongly urges that if a refugee client proposes opening an import/export business or a franchise business, the businesses be thoroughly investigated and documented to ensure legality and fairness to the refugee.
Any fees or charges imposed on refugee clients by the grantee or its subcontractors or affiliates (
Successful grantees will be expected to coordinate their policies and procedures for developing and administering refugee microenterprise development projects with the existing refugee microenterprise services network. To ensure an exchange of technical and training information among programs, all grantees are encouraged to attend two ORR training meetings during each year of their participation in this program area. Grant funds may be used to offset the cost of attendance.
State governments;
County governments; City or township governments; State-controlled institutions of higher education; Non-profits having a 501(c)(3) status with the IRS, other than institutions of higher education; Non-profits that do not have a 501(c)(3) status with the IRS, other than institutions of higher Education; and Private institutions of higher education.
Only public and private non-profit organizations are eligible to apply. Faith-based organizations are eligible to apply.
To be successful in this competition, refugee-serving organizations must demonstrate their organization's capacity to provide the technical expertise necessary to help refugees start, expand, or strengthen businesses, and to provide access to credit. Economic development agencies must show how they will modify their existing programs to serve refugees effectively.
None.
All applicants must have a Dun & Bradstreet number. On June 27, 2003 the Office of Management and Budget published in the
Please ensure that your organization has a DUNS number. You may acquire a DUNS number at no cost by calling the dedicated toll-free DUNS number request line on 1-866-705-5711 or you may request a number online at
Non-profit organizations applying for funding are required to submit proof of their non-profit status. Proof of non-profit status is any one of the following:
• A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS code.
• A copy of a currently valid IRS tax-exemption certificate.
• A statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earnings accrue to any private shareholders or individuals.
• A certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status.
• Any of the items in the subparagraphs immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
When applying electronically we strongly suggest that you attach your proof of non-profit status with your electronic application.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
Applications that exceed the ceiling amount will be considered non-responsive and will not be considered for funding under this announcement.
Any application that fails to satisfy the deadline requirements referenced in Section IV.3 will be considered nonresponsive and will not be considered for funding under this announcement.
Sylvia Johnson, Grants Management Officer, Office of Grants Management, Administration for Children and Families, 370 L'Enfant Promenade SW., 4th Floor West, Washington, DC 20447. Phone: 202-401-5513. E-mail:
Applicants that are submitting their application in paper format should submit an original and two copies of the complete application. An original and two copies of the complete application are required. The original and each of the two copies must include all required forms, certifications, assurances, and appendices, be signed by an authorized representative, have original signatures, and be submitted unbound.
ACF is particularly interested in specific factual information and statements of measurable goals in quantitative terms. Project descriptions are evaluated on the basis of substance, not length. Extensive exhibits are not required. Cross-referencing should be used rather than repetition. Supporting information concerning activities that will not be directly funded by the grant or information that does not directly pertain to an integral part of the grant-funded activity should be placed in an appendix. A table of contents and an executive summary should be included. The application narrative should be in a 12-pitch font with a 25 page narrative limit (up to an additional 20 pages of attachments are allowable, not including letters of support, table of contents, executive summary, or standard forms and certifications). Reviewers may disregard narrative over the page limit. Each page should be numbered sequentially, including any attachments or appendices. Please do not staple or in any way bind the application other than with a rubber band or a clip. Please do not include books or videotapes as they are not easily reproduced and are, therefore, inaccessible to reviewers.
You may submit your application to us in either electronic or paper format. To submit an application electronically, please use the
Please note the following if you plan to submit your application electronically via Grants.gov:
• Electronic submission is voluntary, but strongly encouraged.
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation. We strongly recommend that you do not wait until the application deadline date to begin the application process through Grants.gov.
• We recommend that you visit Grants.gov at least 30 days prior to filing your application to fully understand the process and requirements. We encourage applicants who submit electronically to submit well before the closing date and time so that if difficulties are encountered an applicant can still send in a hard copy overnight. If you encounter difficulties, please contact the Grants.gov Help Desk at 1-800-518-4276 to report the problem and obtain assistance with the system.
• To use Grants.gov, you, as the applicant, must have a DUNS Number and register in the Central Contractor Registry (CCR). You should allow a minimum of five days to complete the CCR registration.
• You will not receive additional point value because you submit a grant application in electronic format, nor will we penalize you if you submit an application in paper format.
• You may submit all documents electronically, including all information typically included on the SF 424 and all necessary assurances and certifications.
• Your application must comply with any page-limitation requirements described in this program announcement.
• After you electronically submit your application, you will receive an automatic acknowledgement from Grants.gov that contains a Grants.gov tracking number. The Administration for Children and Families will retrieve your application from Grants.gov.
• We may request that you provide original signatures on forms at a later date.
• You may access the electronic application for this program on
• You must search for the downloadable application package by the CFDA number.
Private, non-profit organizations are encouraged to submit with their applications the survey located under “Grant Related Documents and Forms,” “Survey for Private, Non-Profit Grant Applicants,” titled, “Survey on Ensuring Equal Opportunity for Applicants,” at:
Applicants seeking financial assistance under this announcement must file the Standard Form (SF) 424, Application for Federal Assistance; SF 424A, Budget Information—Non-Construction Programs; SF 424B, Assurances—Non-Construction Programs. The forms may be reproduced for use in submitting applications. Applicants must sign and return the standard forms with their application.
Applicants must furnish prior to award an executed copy of the Standard Form LLL, Certification Regarding Lobbying, when applying for an award in excess of $100,000. Applicants who have used non-Federal funds for lobbying activities in connection with receiving assistance under this announcement shall complete a disclosure form, if applicable, with their applications (approved by the Office of Management and Budget under control number 0348-0046). Applicants must sign and return the certification with their application.
Applicants must also understand they will be held accountable for the smoking prohibition included within Pub. L. 103-227, Title XII Environmental Tobacco Smoke (also known as the PRO-KIDS Act of 1994). A copy of the
Applicants must make the appropriate certification of their compliance with all Federal statutes relating to non-discrimination. By signing and submitting the applications, applicants are providing the certification and need not mail back the certification form. Complete the standard forms and the associated certifications and assurances based on the instructions on the forms. The forms and certifications may be found at:
For those organizations required to provide proof of non-profit status, please refer to Section III.3.
Please see Section V.1, for instructions on preparing the full project description.
The closing date for submission of applications is referenced above. Mailed applications postmarked after the closing date will be classified as late.
Applicants must ensure that a legibly dated U.S. Postal Service postmark or a legibly dated, machine-produced postmark of a commercial mail service is affixed to the envelope/package containing the application(s). To be acceptable as proof of timely mailing, a postmark from a commercial mail service must include the logo/emblem of the commercial mail service company and must reflect the date the package was received by the commercial mail service company from the applicant. Private metered postmarks shall not be acceptable as proof of timely mailing. (Applicants are cautioned that express/overnight mail services do not always deliver as agreed.)
Applications hand-carried by applicants, applicant couriers, or by other representatives of the applicant shall be considered as meeting an announced deadline if they are received on or before the deadline date, between the hours of 8 a.m. and 4:30 p.m., eastern time at the address referenced in Section IV.6., between Monday and Friday (excluding Federal holidays).
ACF cannot accommodate transmission of applications by fax. Therefore, applications transmitted to ACF by fax will not be accepted regardless of date or time of submission and time of receipt.
Receipt acknowledgement for application packages will not be provided to applicants who submit their package via mail, courier services, or by hand delivery. However, applicants will receive an electronic acknowledgement
You may use the checklist below as a guide when preparing your application package.
This program is covered under Executive Order 12372, “Intergovernmental Review of Federal Programs,” and 45 CFR Part 100, “Intergovernmental Review of Department of Health and Human Services Programs and Activities.” Under the Order, States may design their own processes for reviewing and commenting on proposed Federal assistance under covered programs.
As of October 1, 2004, the following jurisdictions have elected to participate in the Executive Order process: Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Carolina, Texas, Utah, West Virginia, Wisconsin, American Samoa, Guam, North Mariana Islands, Puerto Rico, and Virgin Islands. As these jurisdictions have elected to participate in the Executive Order process, they have established SPOCs. Applicants from participating jurisdictions should contact their SPOC, as soon as possible, to alert them of prospective applications and receive instructions. Applicants must submit all required materials, if any, to the SPOC and indicate the date of this submittal (or the date of contact if no submittal is required) on the Standard Form 424, item 16a. Under 45 CFR 100.8(a)(2).
A SPOC has 60 days from the application deadline to comment on proposed new or competing continuation awards. SPOCs are encouraged to eliminate the submission of routine endorsements as official recommendations. Additionally, SPOCs are requested to clearly differentiate between mere advisory comments and those official State process recommendations which may trigger the “accommodate or explain” rule.
When comments are submitted directly to ACF, they should be addressed to the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Grants Management, Division of Discretionary Grants, 370 L'Enfant Promenade SW., 4th floor, Washington, DC 20447.
When comments are submitted directly to ACF, they should be addressed to: Department of Health and Human Services, Administration for Children and Families, Division of Discretionary Grants, 370 L'Enfant Promenade, SW., Washington, DC 20447.
Although the remaining jurisdictions have chosen not to participate in the process, entities that meet the eligibility requirements of the program are still eligible to apply for a grant even if a State, Territory, Commonwealth, etc. does not have a SPOC. Therefore, applicants from these jurisdictions, or for projects administered by federally-recognized Indian Tribes, need take no action in regard to E.O. 12372.
The official list, including addresses, of the jurisdictions that have elected to participate in E.O. 12372 can be found on the following URL:
A list of Single Points of Contact for each State and Territory is included with the application materials for this announcement.
Grant awards will not allow reimbursement of pre-award costs.
Public reporting burden for this collection of information is estimated to average 25 hours per response, including the time for reviewing instructions, gathering and maintaining the data needed and reviewing the collection information.
The project description is approved under OMB control number 0970-0139 which expires 4/30/2007.
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 following are instructions and guidelines on how to prepare the “project summary/abstract” and “full project description” sections of the application. Under the evaluation criteria section, note that each criterion is preceded by the generic evaluation requirement under the ACF Uniform Project Description (UPD).
The project description provides a major means by which an application is evaluated and ranked to compete with other applications for available assistance. The project description should be concise and complete and should address the activity for which Federal funds are being requested. Supporting documents should be included where they can present information clearly and succinctly. In preparing your project description, information responsive to each of the requested evaluation criteria must be provided. Awarding offices use this and other information in making their funding recommendations. It is important, therefore, that this information be included in the application in a manner that is clear and complete.
ACF is particularly interested in specific project descriptions that focus on outcomes and convey strategies for achieving intended performance. Project descriptions are evaluated on the basis of substance and measurable outcomes, not length. Extensive exhibits are not required. Cross-referencing should be used rather than repetition. Supporting information concerning activities that will not be directly funded by the grant or information that does not directly pertain to an integral part of the grant funded activity should be placed in an appendix. Pages should be numbered and a table of contents should be included for easy reference.
Applicants required to submit a full project description shall prepare the project description statement in accordance with the following instructions while being aware of the specified evaluation criteria. The text options give a broad overview of what your project description should include while the evaluation criteria identifies the measures that will be used to evaluate applications.
Provide a summary of the project description (a page or less) with reference to the funding request.
Clearly identify the physical, economic, social, financial, institutional, and/or other problem(s) requiring a solution. The need for assistance must be demonstrated and the principal and subordinate objectives of the project must be clearly stated; supporting documentation, such as letters of support and testimonials from concerned interests other than the applicant, may be included. Any relevant data based on planning studies should be included or referred to in the endnotes/footnotes. Incorporate demographic data and participant/beneficiary information, as needed. In developing the project description, the applicant may volunteer or be requested to provide information on the total range of projects currently being conducted and supported (or to be initiated), some of which may be outside the scope of the program announcement.
Identify the results and benefits to be derived. ORR is particularly interested in the number and type of businesses established, expanded, or stabilized; the employment generated by the businesses; the number and size of loans provided to refugees; the amount of additional funds leveraged by the ORR funds for microenterprise loans, and the impact of the businesses assisted on the refugees' movement toward self-sufficiency.
Outline a plan of action that describes the scope and detail of how the proposed work will be accomplished. Account for all functions or activities identified in the application. Cite factors that might accelerate or decelerate the work and state your reason for taking the proposed approach rather than others. Describe any unusual features of the project such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvement.
Provide quantitative monthly or quarterly projections of the accomplishments to be achieved for each function or activity in such terms as the number of people to be served and the number of activities accomplished.
Provide a narrative addressing how the conduct of the project and the results of the project will be evaluated. In addressing the evaluation of results, state how you will determine the extent to which the project has achieved its stated objectives and the extent to which the accomplishment of objectives can be attributed to the project. Discuss the criteria to be used to evaluate results, and explain the methodology that will be used to determine if the needs identified and discussed are being met and if the project results and benefits are being achieved. With respect to the conduct of the project, define the procedures to be employed to determine whether the project is being conducted in a manner consistent with the work plan presented and discuss the impact of the project's various activities on the project's effectiveness.
Describe the precise location of the project and boundaries of the area to be served by the proposed project. Maps or other graphic aids may be attached.
Following are requests for additional information that need to be included in the application:
Provide a biographical sketch and job description for each key person appointed. Job descriptions for each vacant key position should be included as well. As new key staff is appointed, biographical sketches will also be required.
Provide information on the applicant organization(s) and cooperating partners, such as organizational charts, financial statements, audit reports or statements from CPAs/Licensed Public Accountants, Employer Identification Numbers, names of bond carriers, contact persons and telephone numbers, child care licenses and other documentation of professional accreditation, information on compliance with Federal/State/local government standards, documentation of experience in the program area, and other pertinent information. If the applicant is a non-profit organization, submit proof of non-profit status in its application.
The non-profit agency can accomplish this by providing: (a) A reference to the applicant organization's listing in the Internal Revenue Service's (IRS) most recent list of tax-exempt organizations described in the IRS Code; (b) a copy of a currently valid IRS tax exemption certificate, (c) a statement from a State taxing body, State attorney general, or other appropriate State official certifying that the applicant organization has a non-profit status and that none of the net earnings accrue to any private shareholders or individuals; (d) a certified copy of the organization's certificate of incorporation or similar document that clearly establishes non-profit status, (e) any of the items immediately above for a State or national parent organization and a statement signed by the parent organization that the applicant organization is a local non-profit affiliate.
Provide written and signed agreements between grantees and subgrantees or subcontractors or other cooperating entities. These agreements must detail scope of work to be performed, work schedules, remuneration, and other terms and conditions that structure or define the relationship.
Provide statements from community, public and commercial leaders that support the project proposed for funding. All submissions should be included in the application OR by application deadline.
Provide a budget with line item detail and detailed calculations for each budget object class identified on the Budget Information form. Detailed calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail sufficient for the calculation to be duplicated. Also include a breakout by the funding sources identified in Block 15 of the SF-424.
Provide a narrative budget justification that describes how the categorical costs are derived. Discuss the necessity, reasonableness, and allocability of the proposed costs.
Use the following guidelines for preparing the budget and budget justification. Both Federal and non-Federal resources shall be detailed and justified in the budget and narrative justification. “Federal resources” refers only to the ACF grant for which you are applying. “Non-Federal resources” are all other Federal and non-Federal resources. It is suggested that budget amounts and computations be presented in a columnar format: First column, object class categories; second column, Federal budget; next column(s), non-Federal budget(s), and last column, total budget. The budget justification should be a narrative.
Recipients might be required to make available to ACF pre-award review and procurement documents, such as request for proposals or invitations for bids, independent cost estimates, etc.
Whenever the applicant intends to delegate part of the project to another agency, the applicant must provide a detailed budget and budget narrative for each delegate agency, by agency title, along with the required supporting information referred to in these instructions.
Enter the total of all other costs. Such costs, where applicable and appropriate, may include but are not limited to insurance, food, medical and dental costs (noncontractual), professional services costs, space and equipment rentals, printing and publication, computer use, training costs, such as tuition and stipends, staff development costs, and administrative costs.
The following evaluation criteria appear in weighted descending order. The corresponding score values indicate the relative importance that ACF places on each evaluation criterion; however, applicants need not develop their applications precisely according to the order presented. Application components may be organized such that a reviewer will be able to follow a seamless and logical flow of information (
In considering how applicants will carry out the responsibilities addressed under this announcement, competing applications for financial assistance will be reviewed and evaluated against the following criteria:
Adequacy and appropriateness of the program approach or design, including project goals and structure (policies, procedures, activities); training and technical assistance; loan funds, lending criteria, and fees, if included in the design; whether the business targets are start-ups, expansions, strengthenings, or all of the above, and how the applicant will aid each type of client; partner agencies; and credit provision.
Extent to which the expected outcomes and unit costs of the project are appropriate, consistent with reported nationwide performance in microenterprise projects, and reasonable in relation to the proposed activities. Results may include the impact of business income and business assets on clients' welfare status, if applicable, and on economic self-sufficiency as well as projected outcomes for business income, employment, and survivability.
Demonstrated organizational and management capacity including bilingual/bicultural competent services and experience serving refugees and other economically disadvantaged populations; description of experience in organizational management, including previous experience in managing grants of similar size; description of experience in providing microenterprise development services and in the management of loan funds, including a projected monthly cash flow chart for the loan fund for the four-year period beginning September 30, 2005; description of results achieved under any previous grant awarded by ORR for microenterprise; and experience in collaboration with the specific refugee community(ies) and coalition building among refugee and non-refugee service providers.
Quality of the description of the prospective refugee communities' profile with respect to welfare utilization, English language proficiency, length of time in the U.S., interest in microbusiness, and the description of local capital needs and capital market gaps for refugee microentrepreneurs, including their ability to access mainstream financial services. This should include data regarding refugee hardships, the climate for business startups in relation to the overall cost of living, and a market analysis of the general business community.
Appropriateness and reasonableness of the proposed budget, including the relative distribution of funds for administrative costs, training, technical assistance, and loan capital. The application should include project timelines and a narrative justification supporting each budget line item.
No grant award will be made under this announcement on the basis of an incomplete application.
The ORR Director and program staff use review panel scores when considering competing applications. Review panel scores will weigh heavily in funding decisions, but will not be the only factors considered. Applications generally will be considered in order of the average scores assigned by the review panel. Because other important factors are taken into consideration, highly ranked applications are not guaranteed funding. These other considerations include the timely and proper completion by the applicant of projects funded with ORR funds granted in the last five (5) years; comments of reviewers and government officials; ORR staff evaluation and input; amount and duration of the grant requested and the proposed project's consistency and harmony with ORR goals and policy; administrative costs associated with any sub-grantees; geographic distribution of applications; previous program performance of applicants; compliance with grant terms under previous HHS grants; audit reports; investigative reports; and applicant's progress in resolving any final audit disallowance or program review finding on previous ORR or other Federal agency grants.
Applications that are approved but unfunded may be held over for funding in the next funding cycle, pending the availability of funds, for a period not to exceed one year.
Successful applicants will be notified through the issuance of a Financial Assistance Award document, which sets forth the amount of funds granted, the terms and conditions of the grant, the effective date of the grant, the budget period for which initial support will be given, the non-Federal share to be provided (if applicable), and the total project period for which support is contemplated. The Financial Assistance Award will be signed by the Grants Officer and transmitted via postal mail.
Organizations whose applications will not be funded will be notified in writing.
Grantees are subject to the requirements in 45 CFR Part 74 (non-governmental) or 45 CFR Part 92 (governmental).
Direct Federal grants, subaward funds, or contracts under this ACF program shall not be used to support inherently religious activities such as religious instruction, worship, or proselytization. Therefore, organizations must take steps to separate, in time or location, their inherently religious activities from the services funded under this Program. Regulations pertaining to the prohibition of Federal funds for inherently religious activities can be found on the HHS Web site at
Program Progress Reports: Semi-annually.
Financial Reports: Semi-annually.
Grantees will be required to submit program progress and financial reports (SF 269) throughout the project period. Program progress and financial reports are due 30 days after the reporting period. In addition, final programmatic and financial reports are due 90 days after the close of the project period.
Lisa Campbell, Project Officer, Office of Refugee Resettlement, Administration for Children and Families, 370 L'Enfant Promenade SW., 8th Floor West, Washington, DC 20447. Phone: 202-205-4597. E-mail:
Sylvia Johnson, Grants Management Officer, Office of Grants Management, Administration for Children and Families, 370 L'Enfant Promenade SW., 4th Floor West, Washington, DC 20447. Phone: 202-401-5513. E-mail:
ORR typically sponsors two training workshops per year, which grantees are required to attend; therefore applicants should budget accordingly.
Please reference Section IV.3 for details about acknowledgement of received applications.
Office of Healthy Homes and Lead Hazard Control, HUD.
Notice.
The revised 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 proposals.
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: Gail Ward, Reports Liaison Officer, Department of Housing and Urban Development, 451 7th Street, SW., Room P-3206, Washington, DC 20410.
Dr. Warren Friedman at (202) 755-1785, ext. 159 (this is not a toll-free number).
Hearing- or speech-impaired persons may access the number above via TTY by calling the toll-free Federal Information Relay Service at 1-800-877-8339.
The Department is submitting the revised 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 revised collection of information 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 revised collection of information; (3) enhance the quality, utility, and clarity of the
This notice also lists the following information:
This data collection is intended to obtain information specific to each of the grant programs of the Office of Healthy Homes and Lead Hazard Control. This refines the approach used previously, under OMB Control Number 2538-0008, which covered both lead hazard control and healthy homes grant programs, used the Lead Hazard Control Grantee Quarterly Program Report for all grant programs. Under the new data collection, the reporting for each grant program will be tailored to reflect the data most relevant to its individual operating procedures and enable respondents in each program to focus their attention on information specific to their program. The other significant difference from the previous data collection is an increase in the number of respondents from 210 to 300 to reflect the gradual increase in the number of grantees participating in HUD's healthy homes and lead hazard control grant programs (255 as of March 31, 2005). With the number of hours per response remaining at 8 hours, and the responses required quarterly, the total annual hours is adjusted from 6,720, to 9,600. Based on experience under the previous collection, the Department expects that at least 99% of responses under this collection will be electronic.
Section 3506 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, as amended.
Office of the Policy Development and Research, 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: Reports Liaison Officer, Office of Policy Development and Research, Department of Housing and Urban Development, 451 7th Street, SW., Room 8226, Washington, DC 20410.
Dr. Carlos Martín, Office of Policy Development and Research, Department of Housing and Urban Development, Washington, DC 20410; telephone (202) 708-4370, extension 5845 for copies of the proposed forms and other available documents. (This is not a toll-free number.)
The Department will submit 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 of information 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 though the use of appropriate automated collection techniques or other forms of information technology (
This notice also lists the following information:
Section 3506 of 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 8001, Washington, DC 20410 or
Vance Morris, Director, Office of Single Family Program Development, Department of Housing and Urban Development, 451 7th Street, SW., Washington, DC 20410, telephone (202) 708-2121 (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,
This notice also lists the following information:
The Paperwork Reduction Act of 995, 44 U.S.C. Chapter 35, as amended.
Office of the Chief Information Officer, HUD.
Notice.
The proposed information collection requirement described below has been 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.
Public Housing Agencies (PHAs) are required to submit to HUD information on the sale of public housing to residents. HA's identify the address of the unit sold, and the date sold. The underlying statute for this program has been replaced by another so HA's can no longer submit requests to sell units under program. Sale information is used by HUD to report to congress and to modify the HA's subsidy calculation.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB approval Number (2577-0201) and should be sent to: HUD Desk Officer, Office of Management and Budget, New Executive Office Building, Washington, DC 20503; fax: (202) 395-6974.
Wayne Eddins, Reports Management Officer, AYO, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410; e-mail
This notice informs the public that the Department of Housing and Urban Development has submitted to OMB a request for approval of the information collection described below. This notice is soliciting comments from members of the public and affecting agencies concerning the proposed collection of information to: (1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including
This notice also lists the following information:
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. 35, as amended.
Office of the Chief Information Officer, HUD.
Notice.
The proposed information collection requirement described below has been 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. Facsimile transmittal information is necessary for submission of third-party documentation as part of an application for funding competitions.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB approval Number (2535-0118) and should be sent to: HUD Desk Officer, Office of Management and Budget, New Executive Office Building, Washington, DC 20503; fax: (202) 395-6974.
Wayne Eddins, Reports Management Officer, AYO, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410; e-mail
This notice informs the public that the Department of Housing and Urban Development has submitted to OMB a request for approval of the information collection described below. This notice is soliciting comments from members of the public and affecting agencies concerning the proposed collection of information to: (1) 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; (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 through the use of appropriate automated collection techniques or other forms of information technology,
This notice also lists the following information:
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. 35, as amended.
Office of the Chief Information Officer, HUD.
Notice.
The proposed information collection requirement described below has been 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.
Agencies which receive HUD funding for projects that will involve relocation of owners or tenants displaced due to a project which involves rehabilitation demolition, or acquisition of property are subject to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA). Agencies are required to document their compliance with the requirements of the URA and applicable implementing program regulations.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB approval Number (2506-0121) and should be sent to: HUD Desk Officer, Office of Management and Budget, New Executive Office Building, Washington, DC 20503; fax: (202) 395-6974.
Wayne Eddins, Reports Management Officer, AYO, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410; e-mail
This notice informs the public that the Department of Housing and Urban Development has submitted to OMB a request for approval of the information collection described below. This notice is soliciting comments from members of the public and affecting agencies concerning the proposed collection of information to: (1) 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; (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 through the use of appropriate automated collection techniques or other forms of information technology,
This notice also lists the following information:
Notice is hereby given that on April 25, 2005, a proposed Partial Consent Decree in
The joint Commonwealth of Kentucky and United States action sought penalties and injunctive relief for unauthorized discharges of untreated sewage and to address problems of overflows from sewers that carry a combination of untreated sewage and storm water under the Clean Water Act and MSD's National Pollutant Discharge Elimination System permit issued by Kentucky. Under the Consent Decree, MSD will propose and implement specific corrective action plans to bring its combined sewer overflows into compliance with water quality standards and to eliminate unauthorized discharges from its sanitary sewers. The Consent Decree also requires MSD to pay a civil penalty to the Commonwealth of Kentucky of $1
Pursuant to 28 CFR 50.7, the United States Department of Justice will receive, for a period of thirty (30) days from the date of this publication, comments relating to the Consent Decree. Comments should be addressed to the U.S. Department of Justice, Assistant Attorney General, Environment and Natural Resources Division, P.O. Box 7611, Ben Franklin Station, Washington, DC 20044-7611, and should refer to
The Consent Decree may be examined during the public comment period on the following Department of Justice Web site:
60-day emergency notice of information collection under review: summit on implementing wireless communications assessment.
The Department of Justice, Office of Justice Programs, National Institute of Justice has submitted the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with emergency review procedures of the Paperwork Reduction Act of 1995. OMB approval has been requested by May 2, 2005. The proposed information collection is published to obtain comments from the public and affected agencies. If granted, the emergency approval is only valid for 180 days. Comments should be directed to OMB, Office of Information and Regulation Affairs, Attention: Department of Justice Desk Officer (202) 395-6466, Washington, DC 20503.
During the first 60 days of this same review period, a regular review of this information collection is also being undertaken. All comments and suggestions, or questions regarding additional information, to include obtaining a copy of the proposed information collection instrument with instructions, should be directed to: Rhonda Jones, Program Executive, National Institute of Justice, by telephone, at: 202-616-3233.
Request written comments and suggestions from the public and affected agencies concerning the proposed collection of information. Your comments should address one or more of the following four points:
(1) 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;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(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 through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Overview of this information:
(1)
(2)
(3)
(4)
(5)
(6)
The Department of Labor (DOL) has submitted the following public information collection requests (ICRs) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. chapter 35). A copy of each ICR, with applicable supporting documentation, may be obtained by contacting Darrin King on 202-693-4129 (this is not a toll-free number) or e-mail:
Comments should be sent to Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for the Employment Standards Administration (ESA), Office of Management and Budget, Room 10235, Washington, DC 20503, 202-395-7316 (this is not a toll-free number), within 30 days from the date of this publication in the
The OMB is particularly interested in comments 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 particular 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 assumptions used;
• Enhance the quality, utility, and clarity 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, e.g., permitting electronic submission of responses.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) (44 U.S.C. 3506(c)(2)(A)). This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. Currently, the Employment Standards Administration is soliciting comments concerning the proposed collection: Representative Payee Report (CM-623), Representative Payee Report, Short Form (CM-623S), and Physician's/Medical Officer's Statement (CM-787). A copy of the proposed information collection request can be obtained by contacting the office listed below in the addresses section of this Notice.
Written comments must be submitted to the office listed in the addresses section below on or before [insert date 60 days from the date of publication].
Ms. Hazel M. Bell, U.S. Department of Labor, 200 Constitution Ave., NW., Room S-3201, Washington, DC 20210, telephone (202) 693-0418, fax (202) 693-1451,
The Office of Workers' Compensation Programs administers the Federal Black Lung Workers' Compensation Program. Under the Federal Mine Safety and Health Act (30 U.S.C. 901) benefits due a DOL black lung beneficiary may be paid to a representative payee on behalf of the beneficiary when the beneficiary is unable to manage his/her benefits due to incapability, incompetence, or minority. The CM-623, Representative Payee Report is used to collect expenditure data regarding the disbursement of the beneficiary's benefits by the representative payee to assure that the beneficiary's needs are being met. The CM-623S, Representative Payee Report, Short Form is a shortened version of the CM-623 that is used when the representative payee is a family member. The CM-787, Physician's/Medical Officer's Statement is a form used by OWCP to gather information from the beneficiary's physician about the capability of the beneficiary to manage monthly benefits. It is used by OWCP to determine if it is in the beneficiary's best interest to have his/her benefits managed by another party. The regulatory authority for collecting this information is at 20 CFR 725.506, 510, 511, and 513. This information collection is currently approved for use through October 31, 2005.
The Department of Labor is particularly interested in comments 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 assumptions used;
• Enhance the quality, utility and clarity 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,
The Department of Labor seeks the extension of approval to collect this information in order to carry out its responsibility to determine if a beneficiary is capable and/or competent to manage his/her black lung benefits, and to ensure that the representative payee is using the benefits to meet the beneficiary's needs.
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they will also become a matter of public record.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) (44 U.S.C. 3506(c)(2)(A)). This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. Currently, the Employment Standards Administration is soliciting comments concerning the proposed collection: Employee Polygraph Protection Act. A copy of the proposed information collection request can be obtained by contacting the office listed below in the
Written comments must be submitted to the office listed in the
Ms. Hazel M. Bell, U.S. Department of Labor, 200 Constitution Ave., NW., Room S-3201, Washington, DC 20210, telephone (202) 693-0418, fax (202) 693-1451, e-mail
The Wage and Hour Division (WHD) of the Department of Labor (DOL) administers the Employee Polygraph Protection Act of 1988 (EPPA), 29 U.S.C. 2001
The Department of Labor is particularly interested in comments 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 assumptions used;
• Enhance the quality, utility and clarity 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,
The DOL seeks an approval for the extension of this information collection that requires the keeping of records by examiners and employers as necessary or appropriate for the administration of the Act and the provision of certain notices to polygraph examiners and examinees.
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they will also become a matter of public record.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) [44 U.S.C. 3506(c)(2)(A)]. This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed.
Submit comments on or before July 5, 2005.
Send comments to U.S. Department of Labor, Mine Safety and Health Administration, John Rowlett, Director, Management Services Division, 1100 Wilson Boulevard, Room 2134, Arlington, VA 22209-3939. Commenters are encouraged to send their comments on a computer disk, or via Internet e-mail to
Contact the employee listed in the
The Mine Safety and Health Administration (MSHA) is responsible for the inspection, testing, approval and certification, and quality control of mining equipment and components, materials, instruments, and explosives
Currently, the Mine Safety and Health Administration (MSHA) is soliciting comments concerning the proposed extension of the information collection requirement related to testing, evaluation, and approval of Mining Products. MSHA is particularly interested in comments that:
* Evaluate whether the proposed collection of information is necessary for the proper performance of MSHA's functions, including whether the information has practical utility;
* Evaluate the accuracy of MSHA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
* Suggest methods to enhance the quality, utility, and clarity of the information to be collected; and
* Address the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, (
A copy of the proposed information collection request can be obtained by contacting the employee listed in the
Title 30 CFR parts 6 through 36 require that an investigation leading to approval or certification will be undertaken by the A&CC only pursuant to a written application accompanied by prescribed drawings and specifications identifying the piece of equipment. This information is used by engineers and scientists to evaluate the design in conjunction with tests to assure conformance to standards prior to approval for use in mines.
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they will also become a matter of public record.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or containing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) (44 U.S.C. 3506(c)(2)(A)). This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed.
Submit comments on or before July 5, 2005.
Send comments to U.S. Department of Labor, Mine Safety and Health Administration, John Rowlett, Director, Management Services Division, 1100 Wilson Boulevard, Room 2134, Arlington, VA 22209-3939. Commenters are encouraged to send their comments on a computer disk, or via Internet e-mail to
Contact the employee listed in the
Section 101(a)(7) of the Mine Act requires, in part, that mandatory standards “prescribe the use of labels or other appropriate forms of warning as are necessary to insure that miners are apprised of all hazards to which they are exposed, relevant symptoms and appropriate emergency treatment, and proper conditions and precautions for safe use or exposure.” MSHA collected evidence from the National Institute for Occupational Safety and Health's (NIOSH) Occupational Health Survey of Mining and other sources indicating that there is chemical exposure occurring in every type of mine, although every miner may not be exposed. We are concerned that miners being exposed to chemicals may not know the hazards of those chemicals or the appropriate precautions to prevent injury or illness caused by exposure to a hazardous chemical.
Currently, the Mine Safety and Health Administration (MSHA) is soliciting comments concerning the proposed extension of the information collection requirement related to Hazard Communication (HazCom). MSHA is particularly interested in comments that:
• Evaluate whether the proposed collection of information is necessary for the proper performance of MSHA's functions, including whether the information has practical utility;
• Evaluate the accuracy of MSHA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Suggest methods to enhance the quality, utility, and clarity of the information to be collected; and
• Address the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology (
A copy of the proposed information collection request can be obtained by contacting the employee listed in the
The HazCom standard involves third-party information sharing. It requires mine operators and/or contractors to assess the hazards of chemicals they produce or use and provide information to their miners concerning the chemicals' hazards. The mine operators and/or contractors must develop a written hazard communication program that describes how they will inform miners of chemical hazards and safe handling procedures through miner training, labeling containers of hazardous chemicals, and providing miners access to material safety data sheets (MSDSs). The purpose of the information sharing is to provide miners with the right to know the hazards and identities of the chemicals they are exposed to while working, as well as the measures they can take to protect themselves from these hazards. Through HazCom mine operators and/or contractors also have the necessary information regarding the hazards of chemicals present at their mines, so that work methods are improved or instituted to minimize exposure to these chemicals. HazCom provides miners with access to this information, so that they can take action to protect themselves.
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they will also become a matter of public record.
Occupational Safety and Health Administration (OSHA), Labor.
Notice of opportunity for public comment.
In accordance with the Paperwork Reduction Act, OSHA is soliciting public comment on a survey addressing the usefulness and efficacy of automatic external defibrillators (AEDs) in occupational settings.
Comments must be submitted by the following dates:
You may submit comments, identified by OSHA Docket No. ICR-1218-0NEW(2005)-01, by any of the following methods:
Todd Owen, Directorate of Standards and Guidance, OSHA, Room N-3609, 200 Constitution Avenue, NW., Washington, DC 20210; telephone: (202) 693-2222.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent (
The Office of Management and Budget (OMB) has requested that OSHA conduct a comprehensive study of the usefulness and efficacy of AEDs in occupational settings. OSHA estimates that as many as 8,700 fatal heart attacks and other fatal cardiac events might occur at workplaces annually (Ex. 3-1). Studies have shown that timely access to defibrillation units significantly increases the survival probabilities of victims of such events (Ex. 3-2). Modern technology has permitted the development of AEDs that can be effectively used by first responders with a basic level of training. In addition, there also are AEDs on the market now that require minimal or no training to operate. Moreover, the cost of AEDs has dropped significantly and this trend is anticipated to continue as their use in public,home and workplace setting increases. Based on the costs of AED equipment, associated training, and program management requirements and the potential value of the lives saved, OSHA believes the use of such equipment in establishments is cost effective from a societal perspective.
Despite the social desirability of greater penetration of AED programs in occupational settings, little quantitative information is available about current prevalence of such programs in different industrial sectors. OSHA also lacks information about factors that influenced establishments to install AED equipment and about other factors that deterred establishments from implementing AED programs.
To gather more information about AED use in occupational settings, OSHA will conduct a statistical survey of selected establishments in OSHA-regulated industrial sectors to develop statistically accurate estimates of the current prevalence of AED programs in various industrial sectors. OHSA will also develop estimates of the percentages of establishments that have considered, but not implemented such programs. Additionally, OSHA will collect information on the characteristics of AED programs and establishments (
OSHA has conducted a thorough search and review of existing studies and other literature about AED use. Only limited information is available about AED use in occupational settings, although substantial literature exists addressing AED use in public settings. In addition, OSHA found little direct evidence about AED cost-effectiveness in the workplace. Collection of information sought by OSHA from establishments concerning the use of automatic external defibrillators in occupational settings will include:
1. Profile information, including industry, type of operation, number of employees, age distribution of employees, presence of safety or health professionals on staff, and experience with sudden cardiac events.
2. Characteristics of AED programs in place, including number of units, number of employees trained, type and frequency of training, and percentage of workforce protected by AEDs.
3. Factors influencing decisions whether to invest in AED equipment or implement an AED program, including experience with sudden cardiac events, role of marketing by AED manufacturers, costs of AED equipment, costs of training, cost of maintenance, and liability concerns.
4. Frequency of use of AED units and their effectiveness in cases of employee heart attacks or other sudden cardiac events.
5. In-depth interviews on issues identified with respect to Topics 2, 3, and 4 will be conducted during post-survey case study interviews.
OHSA plans to use this information, first, to identify the occupational settings in which AEDs are most cost-effective. Second, OSHA will use the survey results to identify barriers to expanding AED use and to help design effective outreach programs to encourage establishments to install AED equipment. Without this survey, OSHA will lack information about the current prevalence of AED programs in occupational settings. The Agency will also lack information on the characteristics of establishments with and without AED programs and about the factors that have influenced establishments' decisions whether to implement AED programs. Without this knowledge, OSHA will have difficulty determining the efficacy of different strategies that might be used to encourage the implementation of workplace AED programs such as developing outreach and promotion programs.
The proposed collection of information consists of a two-stage statistical survey of at least 1,000 estblishments in OSHA-regulated industries that have 100 or more employees. In the first stage, OSHA will survey establishments from the universe population to gather baseline profile information and to screen for establishments that either (1) have an AED program in place, or (2) have considered implementing an AED program but have not done so. In the second stage, screened respondents will be asked questions specific to which group their establishment belongs (
As an adjunct to the statistical survey, OSHA plans to conduct as many as 36 in-depth case study interviews with selected volunteers among respondents in both the groups that do and do not have AED programs. These open-ended interviews will permit OSHA to gather detailed qualitative information about key issues pertaining to the implementation, cost, and effectiveness of AED programs and factors deterring implementation of such programs.
OSHA is requesting OMB approval of the collection of information (paperwork) requirements contained in the Survey of Automatic External Defibrillators. The Agency will summarize the comments submitted in response to this notice and will include this summary in its request to OMB to
OSHA has a particular interest in comments on the following issues:
• Whether the proposed information collection requirements are necessary for the proper performance of the Agency's functions, including whether the information is useful;
• The accuracy of OSHA's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collection; and
• Ways to minimize the burden on employers who must comply; for example, by using automated or other technological information collection and transmission techniques.
You may submit comments and supporting materials in response to this notice by (1) hard copy, (2) FAX transmission (facsimile), or (3) electronically through the OSHA Web page. Because of security-related problems, a significant delay may occur in receiving comments by regular mail. Please contact the OSHA Docket Office at (202) 693-2350 (TTY (877) 889-5627)) for information about security procedures concerning the delivery of submissions by express delivery, hand delivery and courier service.
All comments, submissions, and background documents are available for inspection and copying at the OSHA Docket Office at the above address. Comments and submissions posted on OSHA's Web page are available at
Electronic copies of this
Jonathan L. Snare, Acting Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506
1. Pursuant to sections 5 and 6(a) (3) of the Fair Labor Standards Act (FLSA) of 1938, as amended (29 U.S.C. 205, 206(a) (3)), and Reorganization Plan No. 6 of 1950 (3 CFR 1949-53 Comp., p. 1004) and 29 CFR part 511, I hereby appoint special Industry Committee No. 26 for American Samoa.
2. Pursuant to sections 5, 6(a) (3) and 8 of the FLSA, as amended (29 U.S.C. 205, 206(a) (3), and 208), Reorganization Plan No. 6 of 1950 (3 CFR 1949-53 Comp., p. 1004), and 29 CFR part 511, I hereby:
(a) Convene the above-appointed industry committee;
(b) Refer to the industry committee the question of the minimum rate or rates for all industries in American Samoa to be paid under section 6(a)(3) of the FLSA, as amended; and,
(c) Give notice of the hearing to be held by the committee at the time and place indicated.
The industry committee shall investigate conditions in such industries and the committee, or any authorized subcommittee thereof, shall hear such witnesses and receive such evidence as may be necessary or appropriate to enable the committee to perform its duties and functions under the FLSA.
The committee shall meet in executive session to commence its investigation at 9 a.m. and begin its public hearing at 11 a.m. on June 20, 2005, in Pago Pago, American Samoa.
3. The rate or rates recommended by the committee shall not exceed the rate prescribed by section 6(a) or 6(b) of the FLSA, as amended by the Fair Labor Standards Act Amendments of 1996, of $5.15 an hour effective September 1, 1997.
The committee shall recommend to the Administrator of the Wage and Hour Division of the Department of Labor the highest minimum rate or rates of wages for such industries that it determines, having due regard to economic and competitive conditions, will not substantially curtail employment in such industries, and will not give any industry in American Samoa a competitive advantage over any industry in the United States outside of American Samoa.
4. Where the committee finds that a higher minimum wage may be determined for employees engaged in certain activities or in the manufacture of certain products in the industry than may be determined for other employees in the industry, the committee shall recommend such reasonable classifications within the industry as it determines to be necessary for the purpose of fixing for each classification the highest minimum wage rate that can be determined for it under the principles set forth herein and in 29 CFR 511.10, that will not substantially curtail employment in such classification and will not give a competitive advantage to any group in the industry. No classification shall be made, however, and no minimum wage rate shall be fixed solely on a regional basis or on the basis of age or sex. In determining whether there should be classifications within an industry, in making such classifications, and in determining the minimum wage rates for such classifications, the committee shall consider, among other relevant factors, the following:
(a) Competitive conditions as affected by transportation, living and production costs;
(b) Wages established for work of like or comparable character by collective labor agreements negotiated between employers and employees by representatives of their own choosing; and
(c) Wages paid for work of like or comparable character by employers who voluntarily maintain minimum wage standards in the industry.
5. Prior to the hearing, the Administrator of the Wage and Hour Division, U.S. Department of Labor, shall prepare an economic report
6. The provisions of Title 29, Code of Federal Regulations, part 511, will govern the procedure of this industry committee. Copies of this part of the regulations will be available at the Office of the Governor, Pago Pago, American Samoa, and at the National Office of the Wage and Hour Division. The proceedings will be conducted in English, but in the event that a witness should wish to testify in Samoan, an interpreter will be provided. As a prerequisite to participation as a party, interested persons shall file six copies of a pre-hearing statement at the aforementioned Office of the Governor of American Samoa and six copies at the National Office of the Wage and Hour Division, U.S. Department of Labor, Washington, DC 20210. Each pre-hearing statement shall contain the data specified in 29 CFR 511.8 of the regulations and shall be filed not later than May 20, 2005. If such statements are sent by airmail between American Samoa and the mainland, such filing shall be deemed timely if postmarked within the time provided.
10 a.m., Wednesday, May 4, 2005.
The Richard V. Backley Hearing Room, 9th Floor, 601 New Jersey Avenue, NW., Washington, DC.
Open.
The Commission will hear oral argument on an appeal of Maple Creek Mining, Inc. and Maple Creek employees Steve Brown, Alvy Walker, and Greg Miller from the decision of an administrative law judge in
Any person attending this meeting who requires special accessibility features and/or auxiliary aids, such as sign language interpreters, must inform the Commission in advance of those needs, subject to 29 CFR § 2706.150(a)(3) and § 2706.160(d).
Jean Ellen, (202) 434-9950/(202) 708-9300 for TDD Relay/1-800-877-8339 for toll free.
National Science Board, Subcommittee on Science and Engineering Indicators.
May 17, 2005, 10 a.m. (ET).
National Science Foundation, 4201 Wilson Boulevard, Arlington, VA 22230, Public Meeting Room 130.
This meeting will be open to the public.
1. Discussion of the topic for the Companion Piece to Science and Engineering Indicators 2006.
2. Discussion of the draft Science and Technology: Public Attitudes and Understanding chapter of Science and Engineering Indicators 2006.
For information contact: Dr. Michael P. Crosby, Executive Officer and NSB Office Director, (703) 292-7000.
The ACRS Subcommittee on Fire Protection will hold a meeting on May 17, 2005, Room T-2B3, 11545 Rockville Pike, Rockville, Maryland.
The entire meeting will be open to public attendance.
The agenda for the subject meeting shall be as follows:
The purpose of this meeting is to discuss the Draft Regulatory Guide, DG-1139, “Risk-Informed, Performance-Based Fire Protection for Existing Light-Water Nuclear Power Plants.” This regulatory guide provides guidance for use in complying with the requirements that the U.S. Nuclear Regulatory Commission (NRC) has promulgated for risk-informed, performance-based fire protection programs that meet the requirements of Title 10, Section 50.48(c), of the Code of Federal Regulations (10 CFR 50.48(c)) and the 2001 Edition of the National Fire Protection Association (NFPA) standard, NFPA 805, “Performance-Based Standard for Fire Protection for Light-Water Reactor Electric Generating Stations.” The Subcommittee will hear presentations by and hold discussions with the NRC staff, representatives of the Electric Power Research Institute (EPRI), and other interested persons regarding this matter. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the full Committee.
Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official, Dr. Hossein P. Nourbakhsh (Telephone: (301) 415-5622) five days prior to the meeting, if possible, so that appropriate
Further information regarding this meeting can be obtained by contacting the Designated Federal Official between 7:30 a.m. and 4:15 p.m. (ET). Persons planning to attend this meeting are urged to contact the above named individual at least two working days prior to the meeting to be advised of any potential changes to the agenda.
The ACRS Subcommittee on Early Site Permits will hold a meeting on May 16, 2005, Room T-2B3, 11545 Rockville Pike, Rockville, Maryland.
The entire meeting will be open to public attendance.
The agenda for the subject meeting shall be as follows: Monday, May 16, 2005—8:30 a.m. until 1 p.m.
The Subcommittee will discuss and review the application for an early site permit for the Grand Gulf site and the staff's draft safety evaluation report related to that application.
The Subcommittee will hear presentations by and hold discussions with representatives of the NRC staff, System Energy Resources, Inc. (the applicant), and other interested persons regarding this matter. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the full Committee.
Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official, Dr. Medhat M. El-Zeftawy (telephone (301) 415-6889) five days prior to the meeting, if possible, so that appropriate arrangements can be made. Electronic recordings will be permitted.
Further information regarding this meeting can be obtained by contacting the Designated Federal Official between 7:30 a.m. and 4:15 p.m. (ET). Persons planning to attend this meeting are urged to contact the above named individual at least two working days prior to the meeting to be advised of any potential changes to the agenda.
Nuclear Regulatory Commission.
Request for comment.
Notice is hereby given that the staff of the Nuclear Regulatory Commission (NRC) has prepared a model safety evaluation (SE) relating to changes in Combustion Engineering (CE) plant required action end state requirements in technical specifications (TS). The NRC staff has also prepared a model no-significant-hazards-consideration (NSHC) determination relating to this matter. The purpose of these models is to permit the NRC to efficiently process amendments that propose to adopt technical specifications changes, designated as TSTF-422, related to Topical Report CE NPSD-1186, Rev. 00, “Technical Justification for the Risk Informed Modification to Selected Required Action End States for CEOG PWRs,” which was approved by an NRC SE dated July 17, 2001. Licensees of CE nuclear power reactors to which the models apply could then request amendments, confirming the applicability of the SE and NSHC determination to their reactors. The NRC staff is requesting comment on the model SE and model NSHC determination prior to announcing their availability for referencing in license amendment applications.
The comment period expires June 3, 2005. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
Comments may be submitted either electronically or via U.S. mail. Submit written comments to Chief, Rules and Directives Branch, Division of Administrative Services, Office of Administration, Mail Stop: T-6 D59, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. Hand deliver comments to: 11545 Rockville Pike, Rockville, Maryland, between 7:45 a.m. and 4:15 p.m. on Federal workdays. Copies of comments received may be examined at the NRC's Public Document Room, 11555 Rockville Pike (Room O-1F21), Rockville, Maryland. Comments may be submitted by electronic mail to
Tom Boyce, Mail Stop: O-12H4, Division of Inspection Program Management, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone 301-415-0184.
Regulatory Issue Summary 2000-06, “Consolidated Line Item Improvement Process for Adopting Standard Technical Specifications Changes for Power Reactors,” was issued on March 20, 2000. The consolidated line item improvement process (CLIIP) is intended to improve the efficiency of NRC licensing processes, by processing proposed changes to the standard technical specifications (STS) in a manner that supports subsequent license amendment applications. The CLIIP includes an opportunity for the public to comment on proposed changes to the STS after a preliminary assessment by the NRC staff and finding that the change will likely be offered for adoption by licensees. This notice solicits comment on a proposed change to the STS that allows changes in CE plant required action end state requirements in technical specifications, if risk is assessed and managed. The CLIIP directs the NRC staff to evaluate any comments received for a proposed change to the STS and to either reconsider the change or announce the availability of the change for adoption by licensees. Licensees opting to apply for this TS change are responsible for reviewing the staff's evaluation, referencing the applicable technical justifications, and providing any necessary plant-specific information. Each amendment application made in response to the notice of availability will be processed and noticed in accordance with applicable NRC rules and procedures.
This notice involves the changes in CE plant required action end state requirements in TS, if risk is assessed and managed. The change was proposed in Topical Report CE NPSD-1186, Rev. 00, “Technical Justification for the Risk Informed Modification to Selected
This proposal to modify TS requirements by the adoption of TSTF-422 is applicable to all licensees of CE plants who have adopted or will adopt, in conjunction with the proposed change, TS requirements for a Bases control program consistent with the TS Bases Control Program described in Section 5.5 of the applicable vendor's STS, and commit to WCAP-16364-NP, Rev [0], “Implementation Guidance for Risk Informed Modification to Selected Required Action End States at Combustion Engineering NSSS Plants (TSTF-422).”
To efficiently process the incoming license amendment applications, the staff requests that each licensee applying for the changes proposed in TSTF-422 include Bases for the proposed TS consistent with the Bases proposed in TSTF-422. In addition, licensees that have not adopted requirements for a Bases control program by converting to the improved STS or by other means, are requested to include the requirements for a Bases control program consistent with the STS in their application for the proposed change. The need for a Bases control program stems from the need for adequate regulatory control of some key elements of the proposal that are contained in the proposed Bases in TSTF-422. The staff is requesting that the Bases be included with the proposed license amendments in this case because the changes to the TS and the changes to the associated Bases form an integral change to a plant's licensing bases. To ensure that the overall change, including the Bases, includes appropriate regulatory controls, the staff plans to condition the issuance of each license amendment on the licensee's incorporation of the changes into the Bases document and on requiring the licensee to control the changes in accordance with the Bases Control Program. The CLIIP does not prevent licensees from requesting an alternative approach or proposing the changes without the requested Bases and Bases control program. However, deviations from the approach recommended in this notice may require additional review by the NRC staff and may increase the time and resources needed for the review.
This notice requests comments from interested members of the public within 30 days of the date of publication in the
On January 23, 2003, the Nuclear Energy Institute (NEI) Risk Informed Technical Specifications Task Force (RITSTF) submitted a proposed change, TSTF-422, Revision 1, to the Combustion Engineering (CE) standard technical specifications (STS) (NUREG-1432) on behalf of the industry. TSTF-422, Revision 1, is a proposal to incorporate the Combustion Engineering Owners Group (CEOG) approved Topical Report CE NPSD-1186, Rev. 00, “Technical Justification for the Risk Informed Modification to Selected Required Action End States for CEOG PWRs” (Reference 1), into the CE STS (
The Code of Federal Regulations, 10 CFR 50.36(c)(2)(i), “Technical Specifications; Limiting Conditions for Operation,” states: “When a limiting condition for operation of a nuclear reactor is not met, the licensee shall shut down the reactor or follow any remedial action permitted by the technical specifications until the condition can be met.” TS provide a completion time (CT) for the plant to meet the limiting condition for operation (LCO). If the LCO or the remedial action cannot be met, then the reactor is required to be shutdown. When the individual plant technical specifications were written, the shutdown condition or end state specified was usually cold shutdown.
Topical Report CE NPSD-1186 provides the technical basis to change certain required end states when the TS CTs for remaining in power operation are exceeded. Most of the requested TS changes are to permit an end state of hot shutdown (Mode 4) rather than an end state of cold shutdown (Mode 5) contained in the current TS. The request was limited to: (1) Those end states where entry into the shutdown mode is for a short interval, (2) entry is initiated by inoperability of a single train of equipment or a restriction on a plant operational parameter, unless otherwise stated in the applicable TS, and (3) the primary purpose is to correct the initiating condition and return to power operation as soon as is practical.
The TS for CE plants define six operational modes. In general, they are:
• Mode 1—Power Operation.
• Mode 2—Reactor Startup.
• Mode 3—Hot Standby. Reactor coolant system (RCS) temperature above ~300°F (TS specific) and RCS pressure that can range up to power operation pressure. Shutdown cooling (SDC) systems can sometimes be operated in the lower range of Mode 3 temperature and pressure.
• Mode 4—Hot Shutdown. RCS temperature can range from the lower value of Mode 3 to the upper value of Mode 5. Pressure is generally (but not always) low enough for SDC system operation.
• Mode 5—Cold Shutdown. RCS temperature is below 200°F and RCS pressure is consistent with operation of the SDC system.
• Mode 6—Refueling. Operation is in Mode 6 if one or more reactor vessel head bolts have been de-tensioned. RCS
Criticality is not allowed in Modes 3 through 6, inclusive.
The CEOG request generally is to allow a Mode 4 end state rather than a Mode 5 end state for selected initiating conditions.
In 10 CFR 50.36, the Commission established its regulatory requirements related to the content of TS. Pursuant to 10 CFR 50.36(c)(1)-(5), TS are required to include items in the following five specific categories related to station operation: (1) Safety limits, limiting safety system settings, and limiting control settings; (2) limiting conditions for operation (LCOs); (3) surveillance requirements (SRs); (4) design features; and (5) administrative controls. The rule does not specify the particular requirements to be included in a plant's TS. As stated in 10 CFR 50.36(c)(2)(i), the “Limiting conditions for operation are the lowest functional capability or performance levels of equipment required for safe operation of the facility. When a limiting condition for operation of a nuclear reactor is not met, the licensee shall shut down the reactor or follow any remedial action permitted by the technical specifications * * * .”
The Reference 1 request states: “preventing plant challenges during shutdown conditions has been, and continues to be, an important aspect of ensuring safe operation of the plant. Past events demonstrate that risk of core damage associated with entry into, and operation in, shutdown cooling is not negligible and should be considered when a plant is required to shutdown. Therefore, the TS should encourage plant operation in the steam generator heat removal mode whenever practical, and
Controlling shutdown risk encompasses control of conditions that can cause potential initiating events and response to those initiating events that do occur. Initiating events are a function of equipment malfunctions and human error. Response to events is a function of plant sensitivity, ongoing activities, human error, defense-in-depth, and additional equipment malfunctions. In the end state changes under consideration here, a component or train has generally resulted in a failure to meet a TS and a controlled shutdown has begun because a TS CT requirement is not met.
Most of today's shutdown TS and the design basis analyses were developed under the perception that putting a plant in cold shutdown would result in the safest condition and the design basis analyses would bound credible shutdown accidents. In the late 1980s and early 1990s, the NRC and licensees recognized that this perception was incorrect and took corrective actions to improve shutdown operation. At the same time, standard TS were developed and many licensees improved their TS. Since a shutdown rule was expected, almost all TS changes involving power operation, including a revised end state requirement were postponed in anticipation of enactment of a shutdown rule (see, for example, Reference 2). However, in the mid 1990s, the Commission decided a shutdown rule was not necessary in light of industry improvements.
In practice, the realistic needs during shutdown operation are often addressed via voluntary actions and application of 10 CFR 50.65 (Reference 3), the maintenance rule. Section 50.65(a)(4) states: “Before performing maintenance activities * * * the licensee shall assess and manage the increase in risk that may result from the proposed maintenance activities. The scope of the assessment may be limited to structures, systems, and components that a risk-informed evaluation process has shown to be significant to public health and safety.” Regulatory Guide (RG) 1.182 (Reference 4) provides guidance on implementing the provisions of 10 CFR 50.65(a)(4) by endorsing the revised Section 11 (published separately) to NUMARC 93-01, Revision 2 (Reference 5). The revised section 11 of NUMARC 93-01, Revision 2 , was subsequently incorporated into Revision 3 of NUMARC 93-01. However, Revision 3 has not yet been formally endorsed by the NRC.
The changes proposed in TSTF-422 are consistent with the changes proposed and justified in Topical Report CE NPSD-1186, and approved by the associated SE of July 17, 2001 (Reference 6). The evaluation included in Reference 6, as appropriate and applicable to the changes of TSTF-422 (Reference 7), is reiterated here and differences from the SE (Reference 6) are justified. [
The objective of the risk assessment in Topical Report CE NPSD-1186 was to show that the risk changes due to changes in TS end states are either negative (i.e., a net decrease in risk) or neutral (i.e., no risk change).
Topical Report CE NPSD-1186 documents a risk-informed analysis of the proposed TS changes. Probabilistic risk analysis (PRA) results and insights are used, in combination with results of deterministic assessments, to identify and propose changes in end states for all CE plants. This is consistent with guidance provided in RG 1.174, “An Approach for Using Probabilistic Risk Assessment in Risk-Informed Decisions on Plant-Specific Changes to the Licensing Basis,” (Reference 9), and RG 1.177, “An Approach for Plant-Specific, Risk-Informed Decisionmaking: Technical Specifications,” (Reference 10). The three-tiered approach documented in RG 1.177 was followed. The first tier includes the assessment of the risk impact of the proposed change for comparison to acceptance guidelines consistent with the Commission's Safety Goal Policy Statement (RG 1.174). In addition, the first tier aims at ensuring that there are no time intervals associated with the implementation of the proposed TS end state changes during which there is an increase in the probability of core damage or large early release with respect to the current end states. The second tier addresses the need to preclude potentially high-risk configurations which could result if equipment is taken out of service during implementation of the proposed TS change. The third tier addresses the application of 10 CFR 50.65(a)(4) for identifying risk-significant configurations resulting from maintenance or other operational activities and taking appropriate compensatory measures to avoid such configurations. The scope of the topical report and the associated SE were limited to identifying changes in end state conditions that excluded continued power operation as an acceptable end state, regardless of the risk.
CEOG's risk assessment approach was found comprehensive and acceptable. In addition, the analyses show that the criteria of the three-tiered approach for allowing TS changes are met as explained below:
•
•
•
The changes proposed in TSTF-422 are consistent with the changes proposed in topical report CE NPSD-1186 and approved by the NRC SE of July 17, 2001. Only those changes proposed in TSTF-422 are addressed in this SE. The SE information and justifications are not duplicated in this document; see ML011980047 in ADAMS for the topical report SE (Reference 6). The SE and associated topical report address the entire fleet of CE plants, and the plants adopting TSTF-422 must confirm the applicability of the changes to their plant. Following are the proposed changes, including a synposis of the STS LCO, the change, and a brief conclusion of acceptability.
The RWST is a source of borated water for the ECCS.
The engineered safety feature actuation system (ESFAS) provides an automatic actuation of the ESFs which are required for accident mitigation. A set of two manual trip circuits is also provided, which uses the actuation logic and initiation logic circuits to perform the trip function.
1. One manual trip circuit, initiating logic circuit, or actuation logic circuit is inoperable for RAS, SIAS, CIAS, or CCAS, for more than 48 hours (Conditions A, B & D), or,
2. Two initiating logic circuits in the same trip leg for RAS, SIAS, CIAS, or CCAS are inoperable for more than 48 hours (Condition C).
In general, the CCAS is used to automatically actuate the containment heat removal systems (containment recirculation fan coolers) to prevent containment overpressurization during a range of accidents which release inventory to the containment, including large break LOCAs, small break LOCAs, or main steam line breaks or feedwater line breaks inside containment. This signal is typically actuated by high containment pressure. Based on the lower stored energy in the RCS and lesser core heat generation, short term containment pressure following a LOCA or main steam line break would be less than the current design containment strength. Ample instrumentation is available to the operator to diagnose the onset of the event and to take appropriate mitigating actions (actuation of the containment fan coolers and/or sprays) prior to a potential containment threat.
Following a LOCA, the RAS is used to automatically perform the switchover from the SI mode of heat removal to the sump recirculation mode of heat removal. RAS times in Mode 4 are expected to be longer than those associated with Mode 1 and available instrumentation is sufficient to alert the operator to the need for switchover.
Since the SIAS and CIAS signals perform numerous actions, manual trip and actuation for these signals should be retained in Mode 4. In particular, the operability of a single train of HPSI is required in Mode 4. Therefore, the associated actuation circuit and manual trip circuit for SIAS should be maintained available so that automatic lineup of HPSI can be established following a LOCA. Both isolation valves in the appropriate containment penetrations are required to be operable during Mode 4. However, the large number of actions required to isolate these penetrations, given an event, indicates that an extended unavailability of CIAS is not desired. We conclude from a comparison of plant conditions, event response, and risk characteristics, including the discussions of Sections 3 and 4 of Reference 6, that there is no net benefit from requiring a Mode 5 end state as opposed to a Mode 4 end state.
The containment purge isolation signal (CPIS) provides automatic or manual isolation of any open containment purge valves upon indication of high containment airborne radiation.
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDC system.
The CEOG recommended and provided implementation guidance stating that, when the CPIS is disabled, the operating staff should be alerted and operation of the containment mini-purge should be restricted. It further recommended consideration should be given to maintaining availability of CIAS during the CPIS Mode 4 repair. The staff endorses these recommendations. In addition, licensees must commit to the implementation guidance contained in Reference 8.
The control room isolation signal (CRIS) initiates actuation of the emergency radiation protection system and terminates the normal supply of outside air to the control room to minimize operator radiation exposure.
This system responds to radiation releases from fuel. Adequate in-plant radiation sensors (for example, containment high area radiation monitors (CHARMs)) are available to identify the need for control room (CR) isolation or shield building filtration (if appropriate). In Mode 4, the transient will unfold more slowly than at power. Therefore sufficient time exists for the operator to take manual action to realign the control room emergency air cleanup system (CREACUS). The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions, including this condition. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDC system.
The CEOG recommended and provided implementation guidance stating that it would be prudent to minimize unavailability of SIAS and alternate shutdown panel and/or remote shutdown capabilities during Mode 4 operation with CRIS unavailable. The staff agrees. In addition, licensees must commit to the implementation guidance contained in Reference 10.
The chemical volume control system (CVCS) isolation signal provides protection from radioactive contamination, as well as personnel and equipment protection in the event of a letdown line rupture outside containment.
1. One actuation logic channel is inoperable, or
2. One CVCS isolation instrument channel is inoperable for a time period in excess of the plant AOT/CT (48 hours).
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to
The shield building filtration actuation signal (SBFAS) is required to ensure filtration of the air space between the containment and shield building during a LOCA.
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions, including this condition. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDC system.
An RCS loop consists of a hot leg, SG, crossover pipe between the SG and an RCP, the RCP, and a cold leg. The operational meaning with respect to this TS is that water flows from the reactor vessel into a hot leg, either into a SG or a SDC system where it is cooled, and is returned to the reactor vessel via one or more cold legs. The flow rate must be sufficient to both cool the core and to ensure good boron mixing.
The requested change reflects the risk of Mode 5 operation with one SDC system train inoperable and two RCS loops not in operation. The change will allow heat removal to be achieved in Mode 4 using either SDC or, if available, the steam generators with RCS/core heat removal driven by natural convection flows. Reactivity concerns are addressed by requiring natural circulation prior to RCP restart. Furthermore, as already noted in the STS Bases, if unavailability of RCS loops is due to single SDC train unavailability, staying in a state with minimal reliance on SDC is preferred (Mode 4) due to the diversity in RCS heat removal modes during Mode 4 operation.
Containment air locks provide a controlled personnel passage between outside and inside the containment building with two doors/door-seals in series with a small compartment between the doors. When operable, only one door can be opened at a time, thus providing a continuous containment building pressure boundary. The two doors provide redundant closures.
1. One or more containment air locks with one containment air lock door inoperable or,
2. One or more containment air locks with containment air lock interlock mechanism inoperable, or
3. One or more containment air locks inoperable for other reasons, and
4. The required action not completed within the specified AOT/CT.
Operability of the containment air locks is defined to ensure that leakage rates (defined in TS 3.6.1) will not exceed permissible values. These TS are entered when containment leakage is within limits, but some portion of the containment isolation function is impaired. The issue of concern is the appropriate action/end state for extended repair of an inoperable air lock where air lock doors are not functional. Changes to the TS are only requested for conditions when containment leakage is not expected to exceed that allowed in TS 3.6.1. For example, this means that the containment air locks must still be functional under expected conditions during Mode 4 operation.
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions, including this condition. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because
For systems that communicate with the containment atmosphere, two redundant isolation valves are provided for each line that penetrates containment. For systems that do not communicate with the containment atmosphere, at least one isolation valve is provided for each line.
The vacuum lower limit on containment pressure is typically set by the plant design basis and ensures the ability of the containment to withstand an inadvertent actuation of the containment spray (CS) system. The lower limit is of particular concern to plants with steel shell containment designs—plants with steel containment control the impact of CS actuation via use of vacuum breakers. Therefore, for plants with steel shell containments, if the lower limit pressure specification is violated, the operators are to confirm operability of the vacuum breakers. For all plants, when entering this action statement for violation of low containment pressure limit for a period projected to exceed one day, one containment spray pump is to be secured. The licensee shall commit to an implementation guide in which these actions will be prescribed. Aspects of the assessment discussed in paragraph 3.2.8 above, are applicable and will not be repeated.
The containment building is typically provided with containment spray and containment cooling trains to control containment conditions following accidents that cause containment pressure or temperature upsets.
The design basis of the CS and cooling systems varies among the CEOG units. Most CEOG plants credit the CS and cooling systems for containment pressure and temperature control and one of the two systems for radioiodine removal. In these plants, typically, one train of CS is sufficient to effect radioiodine control and one train of CS and one train of fan coolers is sufficient to effect containment pressure and temperature control. The Palo Verde units are designed with only the CS system (containing full capacity redundant CS pumps) which it credits for both functions.
Design and operational limits (and consequently the TSs) are established based on Mode 1 analyses. Traditionally, these analyses and limits
Inability to complete the repair of a single train of cooling equipment in the allotted AOT/CT presently requires transition to Mode 5. This end state transition was based on the expectation of low Mode 5 risks when compared to alternate operating states. As discussed in Sections 3 and 4 of Reference 6, Mode 4 is a robust operating mode when compared to Mode 5. Furthermore, when considering potential Mode 4 containment challenge, the low stored energy and decay heat of the RCS (after 36 or 84 hours) support the proposed use of the containment cooling and radionuclide removal capability. Based on representative plant analyses performed in support of PRA containment success criteria, containment protection may be established via use of a single fan cooler. Qualitatively, a similar conclusion could be drawn for one train of CS. Consequently, in Mode 4, one train of containment coolers or one train of CS should provide adequate heat removal capability. Furthermore, for plants that credit CS for iodine removal, accidents initiated in Mode 4 should be adequately mitigated via one operable spray pump. Therefore, 84 hours requested to transition to Mode 4 with one CS train inoperable allows additional time to restore the inoperable CS train and is reasonable when considering the relatively low driving force for a release of radioactive material from the RCS. Further, the CEOG states that the requested 36 hours to transition to Mode 4 with both trains of containment cooling inoperable is reasonable, based on operating experience, to reach the required plant conditions from full power conditions in an orderly manner and without challenging plant systems. It also recognizes that at least one train of CS is available as a backup system.
The shield building is a concrete structure that surrounds the primary containment in some pressurized water reactors (PWRs). Between the primary containment and the shield building inner wall is an annular space that collects containment leakage that may occur following an accident. Following a LOCA, the shield building exhaust air cleanup system establishes a negative pressure in the annulus between the shield building and the steel containment vessel. Filters in the system then control the release of radioactive contaminants to the environment.
Shield building “leakage” at or near containment design basis levels is not explicitly modeled in the PRA. The PRA implicitly assumes that containment gross integrity must be available. In the Level 2 model, containment leakage is not considered to contribute to large early release even without a shield building. Were accidents to occur in Mode 4, resulting initial containment pressures would be less than the design basis analysis conditions and the shield building would be available to further limit releases. When Condition A of this TS can no longer be met, the plant must be shut down and transitioned to Mode 5.
Inoperability of the shield building during Mode 4 implies leakage rates in excess of permissible values. Containment conditions following a LOCA in Mode 4 may result in containment pressures somewhat higher than in Mode 5, but since containment leakage is controlled via TS 3.6.1, and no major leak paths should be unisolable, there should be no contribution to an increased LERF.
The requirements stated in the LCO define the performance of the shield building as a fission product barrier. In addition, this TS places restrictions on containment air locks and containment isolation valves. The integrated effect of these TS is intended to ensure that containment leakage is controlled to meet 10 CFR part 100 limits following a maximum hypothetical event initiated from full power.
Accidents initiated from Mode 4 are initially less challenging to the containment than those initiating from Mode 1. Furthermore, by having the plant in a shutdown condition in advance, fission product releases should be reduced. Thus, while leakage restrictions should be maintained in Mode 4, a condition in excess of that allowed in Mode 1, is anticipated to meet overall release requirements and therefore, Mode 4 should be allowed to effect repair of the leak and then return the plant to power operation.
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions, including this condition. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDCS.
The CCW system provides cooling to critical components in the RCS and also provides heat removal capability for various plant safety systems, both at power and on SDC.
In the event of a design basis accident, one train of CCW is required to provide the minimum heat removal capability
For conditions where CCW flow is lost to the RCP seals, reactor shutdown is required and the RCS loops operating TS is entered. Limited duration natural circulation operation is acceptable, but extended plant operation in the higher Mode 4 temperatures may degrade RCP seal elastomers. Mode 5 operation ensures adequately low RCS temperatures so that RCP seal challenges would be avoided. Therefore, use of the modified Mode 4 end state may not always be appropriate. Prior to entry into Mode 5 due to loss of CCW to RCP seals, the redundant CCW train should be confirmed to be operable and backup cooling water systems should be confirmed for emergency use. SG inventory should be retained to assure a diverse and redundant heat removal source if CCW should fail. The licensee shall commit to an implementation guide in which compensatory actions will be contained.
This TS covers systems that provide a heat sink for the removal of process heat and operating heat from the safety-related components during a transient or design basis accident. This discussion is based on the SONGS 2 and 3 designation of the SWC system.
At least one SWC train must be operable to remove decay heat loads following a design basis accident. SWC is also used to provide heat removal during normal operating and shutdown conditions. Two 100 percent trains of SWC are provided, which provides adequate SWC flow assuming the worst single failure.
SWC is required to support SDC when the plant is in Mode 4 on SDC or in Mode 5. Therefore, in conditions in which the other SWC train is inoperable, the one operable SWC train must continue to function. The staff notes much of the CCW discussion in paragraph 3.2.14 above, is also applicable here since long-term loss of SWC is, in effect, loss of CCW.
Operation in Mode 4 with the steam generators available provides a decay heat removal path that is not directly dependent on SWC, although there are some long-term concerns such as RCP seal cooling. Overall, the proposed Mode 4 TS end state generally results in plant conditions where reliance on the SWC system is least significant. The licensee shall commit to an implementation guide in which compensatory actions will be contained.
The ultimate heat sink (UHS) system provides a heat sink for the removal of process and operating heat from the safety-related components during a transient or design basis accident. In some plants the UHS system provides emergency makeup to the CCW system and may also provide backup supply to the AFW system. For many plants, loss of one UHS system train such as would occur with the loss of a cooling fan tower, as in this TS, will degrade the plant's capability to remove heat via the affected SDC heat exchanger.
When the plant is in Mode 5, UHS is required to support shutdown cooling and the one operable cooling tower (in conditions in which the other train is inoperable) must continue to function. Operation in Mode 4 with the steam generators available provides a decay heat removal path that is not dependent on UHS.
The proposed Mode 4 TS end state results in plant conditions where the direct reliance on the UHS system is the least significant. The rationale applicable to paragraph 3.2.15 above, applies to this section as well. Further, we note we addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions, including this condition.
The emergency chilled water (ECW) system provides a heat sink for the removal of process and operating heat from selected safety-related air-handling systems during a transient or accident.
In Modes 1, 2, 3, and 4, the ECW system is required to be operable when a LOCA or other accident would require ESF operation. Two trains have not been required in Mode 5 because potential heat loads are smaller and the probability of accidents requiring the ECW system has been perceived as low.
Because normal HVAC would be available in all non-loss of 1E bus situations, cooling to most plant equipment would remain available. Should an event occur during Mode 4, the post-accident heat loads would be reduced, potentially allowing more time for manual recovery actions, including alternate ventilation measures. Such measures could include opening doors/vents and/or provision for temporary alternate cooling equipment. Repair of the ECW in Mode 4 poses a low risk of core damage due to the diversity of plant RCS heat removal resources in Mode 4 and the added risks associated with the transition to Mode 5, as discussed in Sections 3 and 4 of Reference 6.
The CREACUS
Outage planning should ensure that the plant staff is aware of the system inoperability, that respiratory units and control room pressurization systems are available, that operational and leakage pathways are properly controlled, and that alternate shutdown panels and local shutdown stations are available. The licensee shall commit to an implementation guide in which compensatory actions will be contained.
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions, including this condition. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDC system.
The control room emergency air temperature control system (CREATCS) provides temperature control following control room isolation. Portions of the CREATCS may also operate during normal operation. The CREATCS consists of two independent, redundant trains that provide cooling and heating of recirculated control room air. Each train consists of heating coils, cooling coils, instrumentation, and controls. A single train of CREATCS will provide the required temperature control to maintain habitable control room temperatures following a design basis accident.
The ECCS pump room exhaust air cleanup system (ECCS PREACS) and the ESF pump room exhaust air cleanup system (ESF PREACS) filters air from the area of active ESF components during the recirculation phase of a LOCA. This protects the public from radiological exposure resulting from auxiliary building leaks in the ECCS system. The ECCS PREACS consists of two independent, redundant equipment trains. A single train will maintain room temperature within acceptable limits.
The PREACS is a post-accident mitigation system that is expected to have little or no impact on CDF. The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDCS.
The penetration room emergency air cleanup system filters air from the penetration area between the containment and the auxiliary building. It consists of two independent, redundant trains. Each train consists of a heater, demister or prefilter, HEPA filter, activated charcoal absorber, and a fan. The penetration room emergency air cleanup system's purpose is to protect the public from radiological exposure resulting from containment leakage through penetrations.
The penetration room emergency cleanup system is an accident mitigation system and it has little to no impact on the likelihood of core damage. The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions, including this condition. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDC system. For the licensee to have the condition which allows 24 hours to restore the penetration room boundary when two PREACS trains are inoperable, they would have already had to commit to compensatory and preplanned measures to protect control room operators from potential hazards such as radioactive contamination, toxic chemicals, smoke, temperature and relative humidity, and physical security. Consequently, we conclude that this is a reasonable assessment.
The unit Class 1E electrical power distribution system AC sources consist of the offsite power sources (preferred power sources, normal and alternate(s)), and the onsite standby power sources (Train A and Train B emergency diesel generators). In addition, many sites, including SONGS Units 2 and 3 and St. Lucie Units 1 and 2, provide a cross-tie capability between units. Palo Verde provides alternate AC power capability via an onsite combustion turbine-generator.
As required by General Design Criterion (GDC) 17 of 10 CFR part 50, appendix A, the design of the AC electrical power system provides independence and redundancy. The onsite Class 1E AC distribution system is divided into redundant load groups (trains) so that the loss of any one group does not prevent the minimum safety functions from being performed. Each train has connections to two preferred offsite power sources and a single diesel generator. Offsite power is supplied to the unit switchyard(s) from the transmission network by two transmission lines.
Certain loads required for accident mitigation are started in a predetermined sequence in order to prevent overloading the transformer supplying offsite power to the onsite Class 1E distribution system. Within 1 minute after the initiating signal is received, all automatic and permanently connected loads needed to recover the unit or maintain it in a safe condition are started via the load sequencer.
In the event of a loss of power, the ESF electrical loads are automatically connected to the emergency diesel generators (EDGs) in sufficient time to provide for safe reactor shutdown and to mitigate the consequences of a design basis accident (DBA) such as a LOCA.
1. Two qualified circuits between the offsite transmission network and the
2. Two EDGs each capable of supplying one train of the onsite Class 1E AC electrical power distribution system.
During Mode 4 with the steam generators available, plant risk is dominated by a LOOP initiating event. If a LOOP were to occur during degraded AC power system conditions, the number of redundant and diverse means available for removing heat from the RCS may vary, depending upon the cause of the degradation. If the LCO entry resulted from inoperability of both onsite AC sources (
Switchyard activities, other than those necessary to restore power, should be prohibited when AC power sources are degraded. Note that to properly utilize TDAFW pumps the SG pressure should be maintained above the minimum recommended pressure required to operate the TDAFW. The licensee shall commit to an implementation guide in which compensatory actions will be contained.
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDC system. In the case of a degraded AC power capability, the likelihood of losing SDC is increased, and the staff judged the plant should be placed in a condition that maximizes the likelihood of avoiding a further plant upset of loss of RCS cooling. This will generally be Mode 4 with SG cooling.
The DC electrical power system:
1. Provides normal and emergency DC electrical power for the AC emergency power system, emergency auxiliaries, and control and switching during all modes of operation,
2. Provides motive and control power to selected safety related equipment, and
3. Provides power to preferred AC vital buses (via inverters).
For CEOG Member PWRs (with the exception of San Onofre, Palo Verde, Calvert Cliffs, and Waterford), the Class 1E, 125-VDC electrical power system consists of two independent and redundant safety-related subsystems. The Class 1E, 125-VDC electrical power system at San Onofre, Palo Verde, and Calvert Cliffs consists of four independent and redundant Class 1E, safety subsystems. At Waterford, there are three Class 1E,125-VDC independent and redundant safety-related subsystems. Each subsystem consists of one battery, the associated battery charger(s) for each battery, and all the associated control equipment and interconnecting cables.
The 125-VDC loads vary among the CE-designed PWRs. At SONGS for example, Train A and Train B 125-VDC electrical power subsystems provide control power for the 4.16 KV switchgear and 480-V load center AC load groups A and B, diesel generator A and B control systems, and Train A and B control systems, respectively. Train A and Train B DC subsystems also provide DC power to the Train A and Train B inverters, as well as to Train A and Train B DC valve actuators, respectively. The inverters in turn supply power to the 120-VAC vital buses.
Train C and Train D 125-VDC electrical power subsystems provide power for nuclear steam supply system control power and DC power to Train C and Train D inverters, respectively. The Train C DC subsystem also provides DC power to the TDAFW pump inlet valve HV-4716 and the TDAFW pump electric governor.
During normal operation, the 125-VDC load is powered from the battery chargers with the batteries floating on the system. In case of loss of normal power to the battery charger (which is powered from the safety related 480-VAC source), the DC load is automatically powered from the station batteries.
If a DC electrical power subsystem is inoperable during Mode 4, plant risk is dominated by LOOP events. Such an event with concurrent failure of the unaffected EDG can progress to a station blackout. These events challenge the capability of the ESF systems to remove heat from the RCS. Entry into Mode 4 as the end state when an inoperable DC electrical power subsystem cannot be restored to operability within 2 hours provides the plant staff with several resources. For station blackout cases with one DC power source continuing to
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions, including those applicable here. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDC system. The licensee shall commit to an implementation guide in which compensatory actions will be contained.
In Modes 1, 2, 3, and 4, the inverters provide the preferred source of power for the 120-VAC vital buses which power the reactor protection system (RPS) and the ESFAS. The inverters are designed to ensure the availability of AC power for the systems instrumentation required to shut down the reactor and maintain it in a safe condition after an anticipated operational occurrence or a postulated design basis accident (DBA). The Class 1E, 125-VDC station batteries via the respective Class 1E, 125-VDC buses provide an uninterruptible source of power for the inverters.
The inoperability of a single inverter during Mode 4 operation will have little or no impact on plant risk. The inoperable inverter causes a loss of power to the associated bistable channel of the RPS. Since reactor trip will have been accomplished as part of the shutdown prior to reaching Mode 4, loss of one inverter will not impact reactor trip. An inoperable inverter also causes a loss of power to one of the four ESFAS trip paths. This single condition should not impact the ability of the ESFAS to perform its function.
The staff addressed Mode 4 versus Mode 5 operation in Sections 3 and 4 of Reference 6, and concluded there is essentially no benefit in moving to Mode 5 under many conditions. Further, there is a potential benefit to remaining in Mode 4 on SG heat removal because additional risk benefits are realized by averting the risks associated with the alignment of the SDC system.
The above requested changes are found acceptable by the staff. The staff approval applies only to operation as described and acceptably justified in the References 1 and 6.
In order to efficiently process incoming license amendment applications and ensure consistent implementation of the change by the various licensees, the NRC staff requested each licensee requesting the changes addressed by TSTF-422 using the CLIIP to address the following plant-specific regulatory commitment.
4.1 Each licensee should make a regulatory commitment to follow the implementation guidance of WCAP-16364-NP.
The licensee has made a regulatory commitment to follow the implementation guidance of WCAP-16364-NP.
The NRC staff finds that reasonable controls for the implementation and for subsequent evaluation of proposed changes pertaining to the above regulatory commitment(s) can be provided by the licensee's administrative processes, including its commitment management program. The NRC staff has agreed that NEI 99-04, Revision 0, “Guidelines for Managing NRC Commitment Changes,” provides reasonable guidance for the control of regulatory commitments made to the NRC staff (see Regulatory Issue Summary 2000-17, “Managing Regulatory Commitments Made by Power Reactor Licensees to the NRC Staff,” dated September 21, 2000). The NRC staff notes that this amendment establishes a voluntary reporting system for the operating data that is similar to the system established for the ROP PI program. Should the licensee choose to incorporate a regulatory commitment into the final safety analysis report or other document with established regulatory controls, the associated regulations would define the appropriate change-control and reporting requirements.
In accordance with the Commission's regulations, the [ ] State official was notified of the proposed issuance of the amendment. The State official had [(1) no comments or (2) the following comments—with subsequent disposition by the staff].
The amendments change a requirement with respect to the installation or use of a facility component located within the restricted area as defined in 10 CFR part 20 and change surveillance requirements. [For licensees adding a Bases Control Program: The amendment also changes record keeping, reporting, or administrative procedures or requirements.] The NRC staff has determined that the amendments involve no significant increase in the amounts and no significant change in the types of any effluents that may be released offsite, and that there is no significant increase in individual or cumulative occupational radiation exposure. The Commission has previously issued a proposed finding that the amendments involve no-significant-hazards-considerations, and there has been no public comment on the finding [FR ]. Accordingly, the amendments meet the eligibility criteria for categorical exclusion set forth in 10 CFR 51.22(c)(9) [and (c)(10)]. Pursuant to 10 CFR 51.22(b), no environmental impact statement or environmental assessment need be prepared in connection with the issuance of the amendments.
The Commission has concluded, on the basis of the considerations discussed above, that (1) there is reasonable assurance that the health and safety of the public will not be endangered by operation in the proposed manner, (2) such activities will be conducted in compliance with the Commission's regulations, and (3) the issuance of the amendments will not be inimical to the common defense and security or to the health and safety of the public.
1. Schneider, Raymond, “Technical Justification for the Risk-Informed Modification to Selected Required Action End States for CEOG Member PWRs,” Final Report, Task 1115, CE Nuclear Power LLC., CE NPSD-1186 Rev 00, January 2001.
2.
3. 10 CFR 50.65, Requirements for Monitoring the Effectiveness of Maintenance at Nuclear Power Plants,” effective November 28, 2000.
4. Regulatory Guide 1.182, “Assessing and Managing Risk Before Maintenance Activities at Nuclear Power Plants,” May 2000.
5. NUMARC 93-01, Industry Guideline for Monitoring the Effectiveness of Maintenance at Nuclear Power Plants, Nuclear Management and Resource Council, Revision 3, July 2000.
6. Richards, Stuart A., “Safety Evaluation of CE NPSD-1186, Rev. 00, 'Technical Justification for the Risk-Informed Modification to Selected Required Action End States for CEOG Member PWRs',” Letter to CEOG, July 17, 2001.
7. TSTF-422, “Change in Technical Specification States: CE-NSPD-1186,” Risk Informed Technical Specification Task Force.
8. WCAP-16362-NP, “Implementation Guidance for Risk Informed Modification to Selected Required Action End States at Combustion Engineering NSSS Plants (TSTF-422),” Revision 0, dated November, 2004.
9. Regulatory Guide 1.174, “An Approach for Using Probabilistic Risk Assessment in Risk-Informed Decision Making on Plant Specific Changes to the Licensing Basis,” USNRC, August 1998.
10. Regulatory Guide 1.177, “An Approach for Pant Specific Risk-Informed Decision Making: Technical Specifications,” USNRC, August 1998.
The proposed change allows a change to certain required end states when the TS Completion Times for remaining in power operation are exceeded. Most of the requested technical specification (TS) changes are to permit an end state of hot shutdown (Mode 4) rather than an end state of cold shutdown (Mode 5) contained in the current TS. The request was limited to: (1) Those end states where entry into the shutdown mode is for a short interval, (2) entry is initiated by inoperability of a single train of equipment or a restriction on a plant operational parameter, unless otherwise stated in the applicable technical specification, and (3) the primary purpose is to correct the initiating condition and return to power operation as soon as is practical. Risk insights from both the qualitative and quantitative risk assessments were used in specific TS assessments. Such assessments are documented in Section 5.5 of CE NPSD-1186, Rev 00, “Technical Justification for the Risk-Informed Modification to Selected Required Action End States for CEOG Member PWRs,” Final Report, Task 1115, CE Nuclear Power LLC., January 2001. They provide an integrated discussion of deterministic and probabilistic issues, focusing on specific technical specifications, which are used to support the proposed TS end state and associated restrictions. The staff finds that the risk insights support the conclusions of the specific TS assessments. Therefore, the probability of an accident previously evaluated is not significantly increased, if at all. The consequences of an accident after adopting proposed TSTF-422, are no different than the consequences of an accident prior to adopting TSTF-422. Therefore, the consequences of an accident previously evaluated are not significantly affected by this change. The addition of a requirement to assess and manage the risk introduced by this change will further minimize possible concerns. Therefore, this change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
The proposed change does not involve a physical alteration of the plant (no new or different type of equipment will be installed). Allowing a change to
The proposed change allows, for some systems, entry into hot shutdown rather than cold shutdown to repair equipment, if risk is assessed and managed. The CEOG's risk assessment approach is comprehensive and follows staff guidance as documented in RGs 1.174 and 1.177. In addition, the analyses show that the criteria of the three-tiered approach for allowing TS changes are met. The risk impact of the proposed TS changes was assessed following the three-tiered approach recommended in RG 1.177. A risk assessment was performed to justify the proposed TS changes. The net change to the margin of safety is insignificant. Therefore, this change does not involve a significant reduction in a margin of safety.
Based upon the reasoning presented above and the previous discussion of the amendment request, the requested change does not involve a significant hazards consideration.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Notice of availability.
Notice is hereby given that the staff of the Nuclear Regulatory Commission (NRC) has prepared a model application relating to the modification of requirements regarding the impact of inoperable snubbers not in technical specifications, on supported systems in technical specifications (TS). The purpose of this model is to permit the NRC to efficiently process amendments that propose to modify requirements by adding to the TS a limiting condition for operation (LCO) 3.0.8 that provides a delay time for entering a supported system TS when the inoperability is due solely to an inoperable snubber, if risk is assessed and managed, as generically approved by this notice. Licensees of nuclear power reactors to which the model applies could request amendments utilizing the model application.
The NRC staff issued a
Tom Boyce, Mail Stop: O-12H2, Division of Inspection Program Management, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone 301-415-0184.
Regulatory Issue Summary 2000-06, “Consolidated Line Item Improvement Process for Adopting Standard Technical Specifications Changes for Power Reactors,” was issued on March 20, 2000. The consolidated line item improvement process (CLIIP) is intended to improve the efficiency of NRC licensing processes. This is accomplished by processing proposed changes to the standard technical specifications (STS) in a manner that supports subsequent license amendment applications. The CLIIP includes an opportunity for the public to comment on proposed changes to the STS following a preliminary assessment by the NRC staff and finding that the change will likely be offered for adoption by licensees. The CLIIP directs the NRC staff to evaluate any comments received for a proposed change to the STS and to either reconsider the change or to proceed with announcing the availability of the change for proposed adoption by licensees. Those licensees opting to apply for the subject change to technical specifications are responsible for reviewing the staff's evaluation, referencing the applicable technical justifications, and providing any necessary plant-specific information. Each amendment application made in response to the notice of availability will be processed and noticed in accordance with applicable rules and NRC procedures.
This notice involves the modification of requirements regarding the addition to the TS of LCO 3.0.8 that provides a delay time for entering a supported system TS when the inoperability is due solely to an inoperable snubber, if risk is assessed and managed. This change was proposed for incorporation into the standard technical specifications by all Owners Groups participants in the Technical Specification Task Force (TSTF) and is designated TSTF-372 Revision 4, which was referenced in the
This proposed change to modify technical specification requirements for the impact of inoperable non-technical specification snubbers on supported systems in TS is applicable to all licensees who currently have or who will adopt, in conjunction with the proposed change, technical specification requirements for a Bases control program consistent with the
To efficiently process the incoming license amendment applications, the staff requests each licensee applying for the changes addressed by TSTF-372 Revision 4 using the CLIIP to include the Bases for the proposed technical specifications. In addition, for those licensees that have not adopted requirements for a Bases control program by converting to the improved STS or by other means, the staff requests that you include the requirements for a Bases control program consistent with the STS in your request for the proposed change. The need for a Bases control program stems from the need for adequate regulatory control of some key elements of the proposal that are contained in the proposed Bases for surveillance requirement (SR) 3.0.8. The staff is requesting that the Bases be included with the proposed license amendments because, in this case, the changes to the technical specifications and changes to the associated Bases form an integrated change to a plant's licensing bases. To ensure that the overall change, including the Bases, includes the appropriate regulatory controls, the staff plans to condition the issuance of each license amendment on incorporation of the changes to the Bases document and on ensuring the licensee's TS have a Bases Control Program for controlling changes to the Bases. The CLIIP does not prevent licensees from requesting an alternative approach or proposing the changes without the requested Bases and Bases control program. Variations from the approach recommended in this notice may, however, require additional justification, additional review by the NRC staff and may increase the time and resources needed for the review.
The staff issued a
In response to the notice soliciting comments from interested members of the public about modifying the TS requirements regarding the impact of inoperable non-technical specification snubbers on supported systems in TS, the staff received three sets of comments (from licensees and the TSTF Owners Groups, representing licensees). Specific comments on the model SE were offered, and are summarized and discussed below:
1.
The evaluation described is not an “operability assessment.” In order for LCO 3.0.8 to be needed, the system supported by the snubber to be removed from service would not be considered operable. The phrases “operability assessment” and “engineering assessment” should be replaced as described in the previous bullet.
2.
3.
4.
5.
A similar statement is made on page 68418 of the
6.
7.
Some clarification is requested to ensure that the snubbers of interest are clearly understood to be those required to support Technical Specifications functions.
8.
9.
For the Nuclear Regulatory Commission.
On April 23, 2004, the Nuclear Energy Institute (NEI) Risk Informed Technical Specifications Task Force (RITSTF) submitted a proposed change, TSTF-372, Revision 4, to the standard technical specifications (STS) (NUREGs 1430-1434) on behalf of the industry (TSTF-372, Revisions 1 through 3 were prior draft iterations). TSTF-372, Revision 4, is a proposal to add an STS Limiting Condition for Operation (LCO) 3.0.8, allowing a delay time for entering a supported system technical specification (TS), when the inoperability is due solely to an inoperable snubber, if risk is assessed and managed. The postulated seismic event requiring snubbers is a low-probability occurrence and the overall TS system safety function would still be available for the vast majority of anticipated challenges.
This proposal is one of the industry's initiatives being developed under the risk-informed technical specifications program. These initiatives are intended to maintain or improve safety through the incorporation of risk assessment and management techniques in TS, while reducing unnecessary burden and making technical specification requirements consistent with the Commission's other risk-informed regulatory requirements, in particular the Maintenance Rule.
The proposed change adds a new limiting condition of operation, LCO 3.0.8, to the TS. LCO 3.0.8 allows licensees to delay declaring an LCO not met for equipment, supported by snubbers unable to perform their associated support functions, when risk is assessed and managed. This new LCO 3.0.8 states: When one or more required snubbers are unable to perform their associated support function(s), any affected supported LCO(s) are not required to be declared not met solely for this reason if risk is assessed and managed, and:
a. The snubbers not able to perform their associated support function(s) are associated with only one train or subsystem of a multiple train or subsystem supported system or are associated with a single train or subsystem supported system and are able to perform their associated support function within 72 hours; or
b. The snubbers not able to perform their associated support function(s) are associated with more than one train or subsystem of a multiple train or subsystem supported system and are able to perform their associated support function within 12 hours.
At the end of the specified period the required snubbers must be able to perform their associated support function(s), or the affected supported system LCO(s) shall be declared not met.”
The proposed TS change is described in sections 1.0 and 2.0. The technical evaluation and approach used to assess its risk impact is discussed in section 3.0. The results and insights of the risk assessment are presented and discussed in section 3.1. Section 3.2 summarizes the staff's conclusions from the review of the proposed TS change.
In 10 CFR 50.36, the Commission established its regulatory requirements related to the content of TS. Pursuant to 10 CFR 50.36, TS are required to include items in the following five specific categories related to station operation: (1) Safety limits, limiting safety system settings, and limiting control settings; (2) limiting conditions for operation (LCOs); (3) surveillance requirements (SRs); (4) design features; and (5) administrative controls. The rule does not specify the particular requirements to be included in a plant's TS. As stated in 10 CFR 50.36(c)(2)(i), the “Limiting conditions for operation are the lowest functional capability or performance levels of equipment required for safe operation of the facility. When a limiting condition for operation of a nuclear reactor is not met, the licensee shall shut down the reactor or follow any remedial action permitted by the technical specification * * * .” TS section 3.0, on “LCO and SR Applicability,” provides details or ground rules for complying with the LCOs.
Snubbers are chosen in lieu of rigid supports in areas where restricting thermal growth during normal operation would induce excessive stresses in the piping nozzles or other equipment. Although they are classified as component standard supports, they are not designed to provide any transmission of force during normal plant operations. However, in the presence of dynamic transient loadings, which are induced by seismic events as well as by plant accidents and transients, a snubber functions as a rigid support. The location and size of the snubbers are determined by stress analysis based on different combinations of load conditions, depending on the design classification of the particular piping.
Prior to the conversion to the improved STS, TS requirements applied directly to snubbers. These requirements included:
• A requirement that snubbers be functional and in service when the supported equipment is required to be operable,
• A requirement that snubber removal for testing be done only during plant shutdown,
• A requirement that snubber removal for testing be done on a one-at-a-time basis when supported equipment is required to be operable during shutdown,
• A requirement to repair or replace within 72 hours any snubbers, found to be inoperable during operation in Modes 1 through 4, to avoid declaring any supported equipment inoperable,
• A requirement that each snubber be demonstrated operable by periodic visual inspections, and
• A requirement to perform functional tests on a representative sample of at least 10% of plant snubbers, at least once every 18 months during shutdown.
In the late 1980s, a joint initiative of the NRC and industry was undertaken to improve the STS. This effort identified the snubbers as candidates for relocation to a licensee-controlled document based on the fact that the TS requirements for snubbers did not meet any of the four criteria in 10 CFR 50.36(c)(2)(ii) for inclusion in the improved STS. The NRC approved the relocation without placing any restriction on the use of the relocated requirements. However, this relocation resulted in different interpretations between the NRC and the industry regarding its implementation. The NRC has stated, that since snubbers are supporting safety equipment that is in the TS, the definition of OPERABILITY must be used to immediately evaluate equipment supported by a removed snubber and, if found inoperable, the appropriate TS required actions must be entered. This interpretation has in practice eliminated the 72-hour delay to enter the actions for the supported equipment that existed prior to the conversion to the improved STS (the only exception is if the supported system has been analyzed and determined to be OPERABLE without the snubber). The industry has argued that since the NRC approved the relocation without placing any
• Performance of testing during crowded time period windows when the supported system is inoperable with the potential to reduce the snubber testing to a minimum since the snubber requirements that have been relocated from TS are controlled by the licensee,
• Performance of testing during crowded windows when the supported system is inoperable with the potential to increase the unavailability of safety systems, and
• Performance of testing and maintenance on snubbers affecting multiple trains of the same supported system during the 7 hours allotted before entering MODE 3 under LCO 3.0.3.
To remove the inconsistency in the treatment of snubbers among plants, the TSTF proposed a risk-informed TS change that introduces a delay time before entering the actions for the supported equipment, when one or more snubbers are found inoperable or removed for testing, if risk is assessed and managed. Such a delay time will provide needed flexibility in the performance of maintenance and testing during power operation and at the same time will enhance overall plant safety by:
• Avoiding unnecessary unscheduled plant shutdowns and, thus, minimizing plant transition and realignment risks,
• Avoiding reduced snubber testing and, thus, increasing the availability of snubbers to perform their supporting function,
• Performing most of the required testing and maintenance during the delay time when the supported system is available to mitigate most challenges and, thus, avoiding increases in safety system unavailability, and
• Providing explicit risk-informed guidance in areas in which that guidance currently does not exist, such as the treatment of snubbers impacting more than one redundant train of a supported system.
The industry submitted TSTF-372, Revision 4, “Addition of LCO 3.0.8, Inoperability of Snubbers” in support of the proposed TS change. This submittal (Ref. 1) documents a risk-informed analysis of the proposed TS change. Probabilistic risk assessment (PRA) results and insights are used, in combination with deterministic and defense-in-depth arguments, to identify and justify delay times for entering the actions for the supported equipment associated with inoperable snubbers at nuclear power plants. This is in accordance with guidance provided in Regulatory Guides (RGs) 1.174 and 1.177 (Refs. 2 and 3, respectively).
The risk impact associated with the proposed delay times for entering the TS actions for the supported equipment can be assessed using the same approach as for allowed completion time (CT) extensions. Therefore, the risk assessment was performed following the three-tiered approach recommended in RG 1.177 for evaluating proposed extensions in currently allowed CTs:
• The first tier involves the assessment of the change in plant risk due to the proposed TS change. Such risk change is expressed (1) by the change in the average yearly core damage frequency (ΔCDF) and the average yearly large early release frequency (ΔLERF) and (2) by the incremental conditional core damage probability (ICCDP) and the incremental conditional large early release probability (ICLERP). The assessed ΔCDF and ΔLERF values are compared to acceptance guidelines, consistent with the Commission's Safety Goal Policy Statement as documented in RG 1.174, so that the plant's average baseline risk is maintained within a minimal range. The assessed ICCDP and ICLERP values are compared to acceptance guidelines provided in RG 1.177, which aim at ensuring that the plant risk does not increase unacceptably during the period the equipment is taken out of service.
• The second tier involves the identification of potentially high-risk configurations that could exist if equipment in addition to that associated with the change were to be taken out of service simultaneously, or other risk-significant operational factors such as concurrent equipment testing were also involved. The objective is to ensure that appropriate restrictions are in place to avoid any potential high-risk configurations.
• The third tier involves the establishment of an overall configuration risk management program (CRMP) to ensure that potentially risk-significant configurations resulting from maintenance and other operational activities are identified. The objective of the CRMP is to manage configuration-specific risk by appropriate scheduling of plant activities and/or appropriate compensatory measures.
A simplified bounding risk assessment was performed to justify the proposed addition of LCO 3.0.8 to the TS. This approach was necessitated by (1) the general nature of the proposed TS changes (
• The accident sequences contributing to the risk increase associated with the proposed TS changes are assumed to be initiated by a seismically-induced loss-of-offsite-power (LOOP) event with concurrent loss of all safety system trains supported by the out-of-service snubbers. In the case of snubbers associated with more than one train (or subsystem) of the same system, it is assumed that all
• The LOOP event is assumed to occur due to the seismically-induced failure of the ceramic insulators used in the power distribution systems. These ceramic insulators have a high confidence (95%) of low probability (5%) of failure (HCLPF) of about 0.1g, expressed in terms of peak ground acceleration. Thus, a magnitude 0.1g earthquake is conservatively assumed to have 5% probability of causing a LOOP initiating event. The fact that no LOOP events caused by higher magnitude earthquakes were considered is justified because (1) the frequency of earthquakes decreases with increasing magnitude and (2) historical data (References 4 and 5) indicate that the mean seismic capacity of ceramic insulators (used in seismic PRAs), in terms of peak ground acceleration, is about 0.3g, which is significantly higher than the 0.1g HCLPF value. Therefore, the simplified analysis, even though it does not consider LOOP events caused by earthquakes of magnitude higher than 0.1g, bounds a detailed analysis which would use mean seismic failure probabilities (fragilities) for the ceramic insulators.
• Analytical and experimental results obtained in the mid-eighties as part of the industry's “Snubber Reduction Program” (References 4 and 6) indicated that piping systems have large margins against seismic stress. The assumption that a magnitude 0.1g earthquake would cause the failure of all safety system trains supported by the out-of-service snubbers is very conservative because safety piping systems could withstand much higher seismic stresses even when one or more supporting snubbers are out of service. The actual piping failure probability is a function of the stress allowable and the number of snubbers removed for maintenance or testing. Since the licensee controlled testing is done on only a small (about 10%) representative sample of the total snubber population, typically only a few snubbers supporting a given safety system out for testing at a time. Furthermore, since the testing of snubbers is a planned activity, licensees have flexibility in selecting a sample set of snubbers for testing from a much larger population by conducting configuration-specific engineering and/or risk assessments. Such a selection of snubbers for testing provides confidence that the supported systems would perform their functions in the presence of a design-basis earthquake and other dynamic loads and, in any case, the risk impact of the activity will remain within the limits of acceptability defined in risk-informed RGs 1.174 and 1.177.
• The analysis assumes that one train (or subsystem) of all safety systems is unavailable during snubber testing or maintenance (an entire system is assumed unavailable if a removed snubber is associated with both trains of a two-train system). This is a very conservative assumption for the case of corrective maintenance since it is unlikely that a visual inspection will reveal that one or more snubbers across all supported systems are inoperable. This assumption is also conservative for the case of the licensee-controlled testing of snubbers since such testing is performed only on a small representative sample.
• In general, no credit is taken for recovery actions and alternative means of performing a function, such as the function performed by a system assumed failed (
• The earthquake frequency at the 0.1g level was assumed to be 1E-3/year for Central and Eastern U.S. plants and 1E-1/year for West Coast plants. Each of these two values envelop the range of earthquake frequency values at the 0.1g level, for Eastern U.S. and West Cost sites, respectively (References 5 and 7).
• The risk impact associated with non-LOOP accident sequences (
• The risk impact of dynamic loadings other than seismic loads is not assessed. These shock-type loads include thrust loads, blowdown loads, waterhammer loads, steamhammer loads, LOCA loads and pipe rupture loads. However, there are some important distinctions between non-seismic (shock-type) loads and seismic loads which indicate that, in general, the risk impact of the out-of-service snubbers is smaller for non-seismic loads than for seismic loads. First, while
The results and insights from the implementation of the three-tiered approach of RG 1.177 to support the proposed addition of LCO 3.0.8 to the TS are summarized and evaluated in the following sections 3.1.1 to 3.1.3.
The bounding risk assessment approach, discussed in Section 3.0, was implemented generically for all U.S. operating nuclear power plants. Risk assessments were performed for two categories of plants, Central and East Coast plants and West Coast plants, based on historical seismic hazard curves (earthquake frequencies and associated magnitudes). The first category, Central and East Coast plants, includes the vast majority of the U.S. nuclear power plant population (Reference 7). For each category of plants, two risk assessments were performed:
• The first risk assessment applies to cases where all inoperable snubbers are associated with only one train (or subsystem) of the impacted safety systems. It was conservatively assumed that a single train (or subsystem) of each safety system is unavailable. It was also assumed that the probability of non-mitigation using the unaffected redundant trains (or subsystems) is 2%. This is a conservative value given that for core damage to occur under those conditions, two or more failures are required.
• The second risk assessment applies to the case where one or more of the inoperable snubbers are associated with multiple trains (or subsystems) of the same safety systems. It was assumed in this bounding analysis that all safety systems are unavailable to mitigate the accident, except for West Coast PWR plants. Credit for using F&B to provide core cooling is taken for plants having F&B capability (
The results of the performed risk assessments, in terms of core damage and large early release risk impacts, are summarized in Table 1. The first row lists the conditional risk increase, in terms of CDF (core damage frequency), ΔR
The assessed ΔCDF and ΔLERF values meet the acceptance criteria of 1E-6/year and 1E-7/year, respectively, based on guidance provided in RG 1.174. This conclusion is true without taking any credit for the removal of potential undesirable consequences associated with the current inconsistent treatment of snubbers (
The assessed ICCDP and ICLERP values are compared to acceptance guidelines provided in RG 1.177, which aim at ensuring that the plant risk does not increase unacceptably during the period the equipment is taken out of service. This comparison indicates that the addition of LCO 3.0.8 to the existing TS meets the RG 1.177 numerical guidelines of 5E-7 for ICCDP and 5E-8 for ICLERP. The small deviations shown for West Coast plants are acceptable because of the bounding nature of the risk assessments, as discussed in section 2.
The risk assessment results of Table 1 are also compared to guidance provided in the revised section 11 of NUMARC 93-01, Revision 2 (Reference 8), endorsed by RG 1.182 (Reference 9), for implementing the requirements of paragraph (a)(4) of the Maintenance Rule, 10 CFR 50.65. Such guidance is summarized in Table 2. Guidance regarding the acceptability of conditional risk increase in terms of CDF (
Guidance regarding the acceptability of ICCDP and ICLERP values for a specific planned configuration and the establishment of risk management actions is also provided in NUMARC 93-01. This guidance, as shown in Table 2, states that a specific plant configuration that is associated with ICCDP and ICLERP values below 1E-6 and 1E-7, respectively, is considered to require “normal work controls.” Table 1 shows that for the majority of plants (
The staff finds that the risk assessment results support the proposed addition of LCO 3.0.8 to the TS. The risk increases associated with this TS change will be insignificant based on guidance provided in RGs 1.174 and 1.177 and within the range of risks associated with normal maintenance activities. In addition, LCO 3.0.8 will remove potential undesirable consequences stemming from the current inconsistent treatment of snubbers in the TS, such as reduced frequency of snubber testing, increased safety system unavailability and the treatment of snubbers impacting multiple trains.
The second tier of the three-tiered approach recommended in RG 1.177 involves the identification of potentially high-risk configurations that could exist if equipment, in addition to that associated with the TS change, were to be taken out of service simultaneously. Insights from the risk assessments, in conjunction with important assumptions made in the analysis and defense-in-depth considerations, were used to identify such configurations. To avoid these potentially high-risk configurations, specific restrictions to the implementation of the proposed TS changes were identified.
For cases where all inoperable snubbers are associated with only one train (or subsystem) of the impacted systems (
• For PWR plants, at least one AFW train (including a minimum set of supporting equipment required for its successful operation) not associated with the inoperable snubber(s), must be available when LCO 3.0.8a is used.
• For BWR plants, one of the following two means of heat removal must be available when LCO 3.0.8a is used:
For cases where one or more of the inoperable snubbers are associated with multiple trains (or subsystems) of the same safety system (
• LCO 3.0.8b cannot be used at West Coast PWR plants with no F&B capability when a snubber whose non-functionality would disable more than one train of AFW in a seismic event of magnitude up to the plant's SSE is inoperable (it should be noted, however, that based on information provided by the industry, there is no plant that falls in this category)
• When LCO 3.0.8b is used at PWR plants, at least one AFW train (including a minimum set of supporting equipment required for its successful operation) not associated with the inoperable snubber(s), or some alternative means of core cooling (
• When LCO 3.0.8b is used at BWR plants, it must be verified that at least one success path exists, using equipment not associated with the inoperable snubber(s), to provide makeup and core cooling needed to mitigate LOOP accident sequences.
The third tier of the three-tiered approach recommended in RG 1.177 involves the establishment of an overall configuration risk management program (CRMP) to ensure that potentially risk-significant configurations resulting from maintenance and other operational activities are identified. The objective of the CRMP is to manage configuration-specific risk by appropriate scheduling of plant activities and/or appropriate compensatory measures. This objective is met by licensee programs to comply with the requirements of paragraph (a)(4) of the Maintenance Rule (10 CFR 50.65) to assess and manage risk resulting from maintenance activities, and by the TS requiring risk assessments and management using (a)(4) processes if no maintenance is in progress. These programs can support licensee decision making regarding the appropriate actions to manage risk whenever a risk-informed TS is entered. Since the 10 CFR 50.65(a)(4) guidance, the revised (May 2000) Section 11 of NUMARC 93-01, does not currently address seismic risk, licensees adopting this change must ensure that the proposed LCO 3.0.8 is considered with respect to other plant maintenance activities and integrated into the existing 10 CFR 50.65(a)(4) process whether the process is invoked by a TS or (a)(4) itself.
The option to relocate the snubbers to a licensee controlled document, as part of the conversion to Improved STS, has resulted in non-uniform and inconsistent treatment of snubbers. Some potential undesirable consequences of this inconsistent treatment of snubbers are:
• Performance of testing during crowded windows when the supported system is inoperable with the potential to reduce the snubber testing to a minimum since the relocated snubber requirements are controlled by the licensee.
• Performance of testing during crowded windows when the supported system is inoperable with the potential to increase the unavailability of safety systems.
• Performance of testing and maintenance on snubbers affecting multiple trains of the same supported system during the 7 hours allotted before entering MODE 3 under LCO 3.0.3.
To remove the inconsistency among plants in the treatment of snubbers, licensees are proposing a risk-informed TS change which introduces a delay time before entering the actions for the supported equipment when one or more snubbers are found inoperable or removed for testing. Such a delay time will provide needed flexibility in the performance of maintenance and testing during power operation and at the same time will enhance overall plant safety by (1) avoiding unnecessary unscheduled plant shutdowns, thus, minimizing plant transition and realignment risks; (2) avoiding reduced snubber testing, thus, increasing the availability of snubbers to perform their supporting function; (3) performing most of the required testing and maintenance during the delay time when the supported system is available to mitigate most challenges, thus, avoiding increases in safety system unavailability; and (4) providing explicit risk-informed guidance in areas in which that guidance currently does not exist, such as the treatment of snubbers impacting more than one redundant train of a supported system.
The risk impact of the proposed TS changes was assessed following the three-tiered approach recommended in RG 1.177. A simplified bounding risk assessment was performed to justify the proposed TS changes. This bounding assessment assumes that the risk increase associated with the proposed addition of LCO 3.0.8 to the TS is associated with accident sequences initiated by a seismically-induced LOOP event with concurrent loss of all safety system trains supported by the out-of-service snubbers. In the case of snubbers associated with more than one train, it is assumed that all affected trains of the supported system are failed. This assumption was introduced to allow the performance of a simple bounding risk assessment approach with application to all plants and was selected due to the lack of detailed plant-specific seismic risk assessments for most plants and the lack of fragility data for piping when one or more supporting snubbers are inoperable. The impact from the addition of the proposed LCO 3.0.8 to the TS on defense-in-depth was also evaluated in conjunction with the risk assessment results.
Based on this integrated evaluation, the staff concludes that the proposed addition of LCO 3.0.8 to the TS would lead to insignificant risk increases, if any. Indeed, this conclusion is true without taking any credit for the removal of potential undesirable consequences associated with the current inconsistent treatment of
1. Appropriate plant procedures and administrative controls will be used to implement the following Tier 2 Restrictions.
(a) At least one AFW train (including a minimum set of supporting equipment required for its successful operation) not associated with the inoperable snubber(s), must be available when LCO 3.0.8a is used at PWR plants.
(b) At least one AFW train (including a minimum set of supporting equipment required for its successful operation) not associated with the inoperable snubber(s), or some alternative means of core cooling (e.g., F&B, fire water system or “aggressive secondary cooldown” using the steam generators) must be available when LCO 3.0.8b is used at PWR plants.
(c) LCO 3.0.8b cannot be used by West Coast PWR plants with no F&B capability when a snubber, whose non-functionality would disable more than one train of AFW in a seismic event of magnitude up to the plant's SSE, is inoperable.
(d) BWR plants must verify, every time the provisions of LCO 3.0.8 are used, that at least one success path, involving equipment not associated with the inoperable snubber(s), exists to provide makeup and core cooling needed to mitigate LOOP accident sequences.
(e) Every time the provisions of LCO 3.0.8 are used licensees will be required to confirm that at least one train (or subsystem) of systems supported by the inoperable snubbers would remain capable of performing their required safety or support functions for postulated design loads other than seismic loads. LCO 3.0.8 does not apply to non-seismic snubbers. In addition, a record of the design function of the inoperable snubber (i.e., seismic vs. non-seismic), implementation of any applicable Tier 2 restrictions, and the associated plant configuration shall be available on a recoverable basis for staff inspection.
2. Should licensees implement the provisions of LCO 3.0.8 for snubbers, which include delay times to enter the actions for the supported equipment when one or more snubbers are out of service for maintenance or testing, it must be done in accordance with an overall CRMP to ensure that potentially risk-significant configurations resulting from maintenance and other operational activities are identified and avoided, as discussed in the proposed TS Bases. This objective is met by licensee programs to comply with the requirements of paragraph (a)(4) of the Maintenance Rule, 10 CFR 50.65, to assess and manage risk resulting from maintenance activities or when this process is invoked by LCO 3.0.8 or other TS. These programs can support licensee decisionmaking regarding the appropriate actions to manage risk whenever a risk-informed TS is entered. Since the 10 CFR 50.65(a)(4) guidance, the revised (May 2000) Section 11 of NUMARC 93-01, does not currently address seismic risk, licensees adopting this change must ensure that the proposed LCO 3.0.8 is considered in conjunction with other plant maintenance activities and integrated into the existing 10 CFR 50.65(a)(4) process. In the absence of a detailed seismic PRA, a bounding risk assessment, such as utilized in this Safety Evaluation, shall be followed.
In accordance with the Commission's regulations, the [] State official was notified of the proposed issuance of the amendment. The State official had [(1) no comments or (2) the following comments—with subsequent disposition by the staff].
The amendments change a requirement with respect to the installation or use of a facility component located within the restricted area as defined in 10 CFR part 20 and change surveillance requirements. [For licensees adding a Bases Control Program: The amendment also changes record keeping, reporting, or administrative procedures or requirements.] The NRC staff has determined that the amendments involve no significant increase in the amounts and no significant change in the types of any effluents that may be released offsite, and that there is no significant increase in individual or cumulative occupational radiation exposure. The Commission has previously issued a proposed finding that the amendments involve no-significant-hazards considerations, and there has been no public comment on the finding [FR]. Accordingly, the amendments meet the eligibility criteria for categorical exclusion set forth in 10 CFR 51.22(c)(9) [and (c)(10)]. Pursuant to 10 CFR 51.22(b), no environmental impact statement or environmental assessment need be prepared in connection with the issuance of the amendments.
The Commission has concluded, on the basis of the considerations discussed above, that (1) there is reasonable assurance that the health and safety of the public will not be endangered by operation in the proposed manner, (2) such activities will be conducted in compliance with the Commission's regulations, and (3) the issuance of the amendments will not be inimical to the common defense and security or to the health and safety of the public.
1. TSTF-372, Revision 4, “Addition of LCO 3.0.8, Inoperability of Snubbers,” April 23, 2004.
2. Regulatory Guide 1.174, “An Approach for Using Probabilistic Risk Assessment in Risk-Informed Decisions on Plant-Specific Changes to the Licensing Basis,” USNRC, August 1998.
3. Regulatory Guide 1.177, “An Approach for Plant-Specific, Risk-Informed Decisionmaking: Technical Specifications,” USNRC, August 1998.
4. Budnitz, R.J.
5. Advanced Light Water Reactor Utility Requirements Document, Volume 2, ALWR Evolutionary Plant, PRA Key Assumptions and Groundrules, Electric Power Research Institute, August 1990.
6. Bier V.M.
7. NUREG-1488, “Revised Livermore Seismic Hazard Estimates for Sixty-Nine Nuclear Power Plant Sites East of the Rocky Mountains,” April 1994.
8. NEI, Revised Section 11 of Revision 2 of NUMARC 93-01, May 2000.
9. Regulatory Guide 1.182, “Assessing and Managing Risk Before Maintenance Activities at Nuclear Power Plants,” May 2000.
The Following Example of an Application Was Prepared by the NRC Staff To Facilitate Use of the Consolidated Line Item Improvement Process (CLIIP). The Model Provides the Expected Level of Detail and Content for an Application To Revise Technical Specifications Regarding Missed
In accordance with the provisions of 10 CFR 50.90 [LICENSEE] is submitting a request for an amendment to the technical specifications (TS) for [PLANT NAME, UNIT NOS.].
The proposed amendment would modify TS requirements for inoperable snubbers by adding LCO 3.0.8, (and, in conjunction with the proposed change, TS requirements for a Bases control program consistent with TS Bases Control Program described in Section 5.5 of the applicable vendor's Standard Technical Specifications).
Attachment 1 provides a description of the proposed change, the requested confirmation of applicability, and plant-specific verifications. Attachment 2 provides the existing TS pages marked up to show the proposed change. Attachment 3 provides revised (clean) TS pages. Attachment 4 provides a summary of the regulatory commitments made in this submittal. (IF APPLICABLE: Attachment 5 provides the existing TS Bases pages marked up to show the proposed change (for information only).)
[LICENSEE] requests approval of the proposed License Amendment by [DATE], with the amendment being implemented [BY DATE OR WITHIN X DAYS].
In accordance with 10 CFR 50.91, a copy of this application, with attachments, is being provided to the designated [STATE] Official.
I declare under penalty of perjury under the laws of the United States of America that I am authorized by [LICENSEE] to make this request and that the foregoing is true and correct. (Note that request may be notarized in lieu of using this oath or affirmation statement).
If you should have any questions regarding this submittal, please contact [NAME, TELEPHONE NUMBER]
The proposed amendment would modify technical specifications (TS) requirements for inoperable snubbers by adding LCO 3.0.8.
The changes are consistent with Nuclear Regulatory Commission (NRC) approved Industry/Technical Specification Task Force (TSTF) STS change TSTF-372 Revision 4. The availability of this TS improvement was published in the
[LICENSEE] has reviewed the safety evaluation dated [DATE] as part of the CLIIP. This review included a review of the NRC staff's evaluation, as well as the supporting information provided to support TSTF-372. [LICENSEE] has concluded that the justifications presented in the TSTF proposal and the safety evaluation prepared by the NRC staff are applicable to [PLANT, UNIT NOS.] and justify this amendment for the incorporation of the changes to the [PLANT] TS.
[LICENSEE] is not proposing any variations or deviations from the TS changes described in the TSTF-372 Revision 4 or the NRC staff's model safety evaluation dated [DATE].
[LICENSEE] has reviewed the proposed no significant hazards consideration determination (NSHCD) published in the
As discussed in the notice of availability published in the
The licensee has established TS Bases for LCO 3.0.8 which provide guidance and details on how to implement the new requirements. LCO 3.0.8 requires that risk be managed and assessed. The Bases also state that while the Industry and NRC guidance on implementation of 10 CFR 50.65(a)(4), the Maintenance Rule, does not address seismic risk, LCO 3.0.8 should be considered with respect to other plant maintenance activities, and integrated into the existing Maintenance Rule process to the extent possible so that maintenance on any unaffected train or subsystem is properly controlled, and emergent issues are properly addressed. The risk assessment need not be quantified, but may be a qualitative assessment of the vulnerability of systems and components when one or more snubbers are not able to perform their associated support function. Finally, the licensee is expected to have a Bases Control Program consistent with Section 5.5 of the STS.
[LICENSEE] has reviewed the environmental evaluation included in the model safety evaluation dated [DATE] as part of the CLIIP. [LICENSEE] has concluded that the staff's findings presented in that evaluation are applicable to [PLANT] and the evaluation is hereby incorporated by reference for this application.
The following table identifies those actions committed to by [LICENSEE] in this document. Any other statements in this submittal are provided for information purposes and are not considered to be regulatory commitments. Please direct questions regarding these commitments to [CONTACT NAME].
Regulatory commitments—[LICENSEE] will establish the Technical Specification Bases for LCO 3.0.8 as adopted with the applicable license amendment.
Due date/event—[Complete, implemented with amendment OR within X days of implementation of amendment]
Securities and Exchange Commission (“Commission”).
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from section 22(d) of the Act, as well as certain disclosure requirements.
Edward D. Jones & Co., L.P. (“Edward Jones”)
The application was filed on February 4, 2005, and amended on April 5, 2005.
An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on May 24, 2005, and should be accompanied by proof of service on applicants, in the form of an affidavit, or for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary.
Secretary, Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Applicant, 12555 Manchester Road, St. Louis, MO 63131-3729.
Bruce R. MacNeil, Senior Counsel, at (202) 551-6817, or Todd F. Kuehl, Branch Chief, at (202) 551-6821 (Division of Investment Management, Office of Investment Company Regulation).
The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 20549-0102 (telephone (202) 942-8090).
1. Edward Jones, a Missouri limited partnership, is registered as a broker-dealer under the Securities Exchange Act of 1934. Edward Jones is one of the largest sellers of brokerage-sold mutual funds in the United States and has selling agreements with approximately 240 mutual fund families.
2. On December 20, 2004, Edward Jones entered into a Deferred Consideration Agreement (“Agreement”) with the United States Attorney's Office for the Eastern District of Missouri (“Office”). The Agreement states that the Office investigated the conduct of Edward Jones relating to revenue sharing payments made by certain mutual funds that were designated as preferred funds (“Preferred Funds”). Among other things, Edward Jones acknowledged in the Agreement that it recommended the Preferred Funds to its customers and did not provide disclosure about the receipt of revenue sharing to its customers.
3. The Agreement provides that the Office will delay consideration of any actions stemming from the investigation for a period of two years in consideration of, among other things, Edward Jones offering all of its customers who owned shares of any Preferred Funds on December 31, 2004 (“Eligible Customers”) the opportunity, for a period of 90 days, to sell their interests in the Preferred Funds and purchase shares of any other mutual fund with which Edward Jones has a selling agreement (the “Switch Funds”) without the payment of a front-end sales load (the “Switch”). In connection with the Switch, the front-end sales load will either be waived by a Switch Fund's principal underwriter and Edward Jones (the “NAV Switch Funds”)
1. Section 22(d) of the Act, in relevant part, prohibits any registered investment company, any principal underwriter and any dealer from selling a redeemable security except at a current public offering price described in the prospectus. Rule 22d-1 under the Act provides an exemption from section 22(d) allowing a mutual fund, its principal underwriter and dealers to sell shares at prices that reflect variations in, or elimination of, the sales load, if certain conditions are met. Rule 22d-1(a) requires that the mutual fund, its principal and dealer apply any scheduled variation uniformly to all offerees in the class specified. Rule 22d-1(b) requires the mutual fund to furnish to existing shareholders and prospective investors adequate information concerning any scheduled variation, as prescribed in applicable registration form requirements. Rule 22d-1(c) requires the mutual fund, before making any new sales load variation available to the purchasers of the fund's shares, to revise its registration statement to describe that new variation. Finally, rule 22d-1(d) requires the mutual fund to advise its existing shareholders of any new sales load variation within one year of the date when that variation is first made available to purchasers of the fund's shares.
2. Form N-1A is the registration statement used by mutual funds. Item 7(a)(2) of Form N-1A requires disclosure of waivers or variations of sales loads. Item 18(a) of Form N-1A requires additional disclosure of how a mutual fund's shares are offered to the public, including waivers or variations of sales loads.
3. Section 6(c) of the Act provides that the Commission may exempt any class of persons, securities or transactions, from any provision of the Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
4. Edward Jones requests an order pursuant to section 6(c) of the Act exempting it, the Switch Funds and their principal underwriters from section 22(d) of the Act to the extent necessary to implement the Switch, and exempting the Switch Funds from the requirements of Items 7(a)(2) and 18(a) of Form N-1A as they would apply to the elimination of the front-end sales load in connection with the Switch. Edward Jones states that the provisions of section 22(d) were intended to prevent disruption of orderly distribution by dealers selling shares at a discount and discrimination among investors resulting from different prices charged to different investors. Edward Jones states that the Switch does not implicate any of these concerns and that the requested relief meets the standards of section 6(c) of the Act.
5. Edward Jones states that it will ensure that the elimination of the front-end sales load in the Switch will be applied uniformly to all offerees in the class specified, as required by rule 22d-1(a). Edward Jones further states that each NAV Switch Fund will advise its existing shareholders of the front-end sales load elimination within one year of the Switch, as required by rule 22d-1(d). As a condition to the requested order, participation by an NAV Switch Fund in the Switch must receive prior approval of the NAV Switch Fund's board of directors, including a majority of the directors who are not interested persons. Edward Jones argues that compliance with the requirements of rule 22d-1(b) and (c) is unduly
Applicant agrees that any order granting the requested relief will be subject to the following conditions:
1. Prior to implementing the Switch, Applicant will obtain an undertaking in writing from each of the NAV Switch Funds that the NAV Switch Fund will comply with Rule 22d-1(d) under the Act with respect to the Switch.
2. Prior to an NAV Switch Fund's participating in the Free Switch, the board of directors or trustees of the NAV Switch Fund (“Board”), including a majority of the Board members who are not “interested persons,” as defined in Section 2(a)(19) of the Act, will review any sales load waiver proposed to be made by the NAV Switch Fund or its principal underwriter in connection with the Switch to determine whether the waiver is in the best interest of the NAV Switch Fund and its shareholders. To assist the Board in making this determination, the NAV Switch Fund's principal underwriter will provide the Board with such information as may reasonably be necessary to enable the Board to make an informed decision. The factors considered and the basis for the Board's determination will be reflected in the Board's minutes, which will be preserved for a period of not less than six years from the date of the NAV Switch Fund's participation in the Switch, the first two years in an easily accessible place.
For the Commission, by the Division of Investment Management, under delegated authority.
[70 FR22380, April 29, 2005].
Closed meeting.
450 Fifth Street, NW., Washington, DC.
Tuesday, May 3, 2005 at 2 p.m.
Cancellation of meeting.
The Closed Meeting scheduled for Tuesday, May 3, 2005 has been cancelled.
For further information please contact the Office of the Secretary at (202) 942-7070.
Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference.
Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by May 23, 2005, to the Secretary, Securities and Exchange Commission, Washington, DC 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After May 23, 2005, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.
E.ON AG (“E.ON”), a registered holding company under the Act, located at E.ON-Platz 1, 40479 Düsseldorf, Germany, and certain of its direct and indirect utility and nonutility subsidiary companies listed in the Application, including E.ON U.S. Holding GmbH (“E.ON U.S. Holding”), a registered holding company and a direct subsidiary of E.ON, also located at E.ON-Platz 1, 40479 Dülsseldorf, Germany, and the parent company of E.ON U.S. Investments Corp. (“E.ON U.S. Investments”), a registered holding company and parent of LG&E Energy LLC (“LG&E Energy”), a registered holding company and parent of Louisville Gas and Electric Company (“LG&E”) and Kentucky Utilities Company (“KU”), all located at 220 West Main Street, Louisville, Kentucky 40202 (collectively, “Applicants”), have filed an application, as amended (“Application”) under sections 6(a), 7, 9(a), 10, 12(b), 12(c), 12(d) and 13(b) of the Act and rules 20, 26, 42, 43, 45, 46, 52, 53, 87 and 90.
Applicants seek authority for certain financing transactions of E.ON and its associated companies during the period from the effective date of the order granting the Application through May 31, 2008 (“Authorization Period”). The Commission previously provided authorizations for E.ON and certain other entities in the E.ON group (“E.ON Group” or “Group”), on June 14, 2002, to undertake specific financing transactions, which authorizations expire on May 31, 2005 (“2002 Order”).
E.ON is headquartered in Düsseldorf, Germany, and most of its operations are located in Europe.
Applicants state that, unless otherwise noted, amounts expressed in United States dollars (“USD”) are unaudited and have been converted from Euros, for convenience, at an exchange rate of USD 1.2179 = EUR 1.00, the Noon Buying Rate of the Federal Reserve Bank of New York on June 30, 2004. For the six months ended June 30, 2004. E.ON reported consolidated revenues of EUR 25.594 billion (USD 31.171 billion) calculated in accordance with U.S. generally accepted accounting procedures (“US GAAP”). As of June 30, 2004, E.ON had total consolidated assets of EUR 113.958 billion (USD 138.789 billion).
E.ON states that, as a result of its decision to focus on power and gas, in the last few years, its core energy business has been reorganized into five new market units, each of which is focused on a market in which E.ON believes it has a strong competitive position: (1) Central Europe, led by E.ON Energie AG (“E.ON Energie”); (2) Pan-European Gas, led by E.ON Ruhrgas AG (“E.ON Ruhrgas”); (3) U.K., led by E.ON UK plc (“E.ON UK”); (4) Nordic, led by E.ON Nordic AB (“E.ON Nordic”); and (5) U.S. Midwest, led by LG&E Energy. E.ON's non-U.S. business segments (E.ON Energie in Central Europe; E.ON Ruhrgas leading Pan-European Gas; E.ON UK in the U.K.; and E.ON Nordic in Northern Europe) are comprised in part of foreign utility companies, as defined in section 33 of the Act (“FUCOs”).
E.ON U.S. Holding, the direct subsidiary of E.ON and parent of E.ON U.S. Investments Corp. (together, “Intermediate Companies”), which is the direct parent of LG&E Energy, the holding company for LG&E and KU, E.ON's United States utility subsidiaries (together, “Utility Subsidiaries”). E.ON U.S. Holding, E.ON U.S. Investments and LG&E Energy are registered holding companies. LG&E Energy owns LG&E and KU, as noted above.
The “to-be-divested” E.ON subsidiaries (“TBD Subsidiaries”) are those subsidiaries that E.ON is required to divest under the 2002 Order. Viterra AG (“Viterra”), E.ON's wholly owned real estate group, is engaged in two businesses: residential real estate and real estate development. E.ON currently holds a 42.9% interest in Degussa AG (“Degussa”), a specialty chemical company. In the 2002 Order, E.ON was required to divest Degussa, Viterra and five passive real estate investment vehicles managed by Viterra within five years and E.ON states that it continues to expect to meet that requirement.
Applicants state that E.ON follows a centralized financing policy and that, as a general rule, external financings will be undertaken at the E.ON level (or through finance subsidiaries under its guarantee).
Applicants request the following financing authorizations and authorizations for certain related actions, as described further in subsequent sections of this notice, beginning with the effective date of an order issued in this matter through May 31, 2008 (the Authorization Period).
1. For E.ON, authority to issue and sell equity and certain debt securities, directly or indirectly, in new financing transactions, in an aggregate amount of up to USD 75 billion at any one time outstanding (and which transactions are also subject to the E.ON External Limit, the E.ON Short-term Limit and the E.ON Guarantee Limit (all further described below)):
(a) Equity and unsecured long-term debt securities in an aggregate amount of up to USD 50 billion at any one time outstanding (exclusive of short-term debt and guarantees) (“E.ON External Limit”), including, but not limited to,
(i) Common stock and ADSs, preferred stock, preferred securities, equity-linked securities, options, warrants, purchase contracts, units, securities with call and put options and securities convertible into any of these securities;
(ii) Unsecured long-term debt, including, among other things, subordinated debt and bank borrowings;
(b) Unsecured short-term debt in an aggregate amount of up to USD 30 billion at any one time outstanding (“E.ON Short-term Limit”); and
(c) Guarantees, and other credit support, in an aggregate amount of up to USD 40 billion at any one time outstanding (exclusive of guarantees exempt under rules 45(b) and 58(a)(1)) (“E.ON Guarantee Limit”).
2. For E.ON (for itself and on behalf of its subsidiaries) and for its subsidiaries, authority to engage in currency and interest rate transactions for the purpose of hedging (“Hedging Interests”) and certain debt and equity transactions for the purpose of engaging in anticipatory hedging (“Anticipatory Hedging Transactions”), subject to certain limitations.
3. For E.ON and its subsidiaries, authority to continue utilizing certain profit and loss transfer agreements and the consolidated tax filing of E.ON and its German subsidiaries in the manner authorized by the 2002 Order.
4. For E.ON and the E.ON Group (other than the LG&E Group (described below)), authority to:
(a) Finance the TBD Subsidiaries and E.ON's nonutility subsidiaries not held within a FUCO group or the LG&E Energy Group (“Retained Nonutility Subsidiaries”) through capital contributions, loans, guarantees, purchases of equity or debt securities or other methods, subject to,
(i) An aggregate amount of up to USD 1 billion (through July 1, 2007) (the end of the divestiture period) for TBD Subsidiary investments (“TBD Investment Limit”);
(ii) An aggregate amount of up to USD 15 billion for Retained Nonutility Subsidiary investments (“Retained Nonutility Subsidiary Investment Limit”); and
(b) For the Retained Nonutility Subsidiaries, to finance their businesses and acquire new businesses (as permitted under the Act, the rules or by Commission order) through the issuance of equity, preferred stock and debt securities to third parties, subject to the Retained Nonutility Subsidiary Investment Limit.
5. For E.ON through the Intermediate Companies (E.ON U.S. Holding and E.ON U.S. Investments) and through the related financing subsidiaries, authority to finance the Intermediate Companies and LG&E Energy and its subsidiaries (including LG&E and KU) (together, “LG&E Energy Group”) by:
(a) Issuance and sale of securities to E.ON and associate companies (but not companies in the LG&E Energy Group (described below));
(b) For E.ON North America Inc. (“E.ON NA”) and Fidelia Corp. (“Fidelia”) (and any of their subsidiaries), issuance and sale of securities to third parties, such as banks, to finance the capital needs of the E.ON Group, including the LG&E Energy Group;
(c) For the Intermediate Companies and their subsidiaries, acquisition of securities of other Intermediate Companies and their subsidiaries and the LG&E Energy Group;
(d) For the Intermediate Companies and their subsidiaries, issuance of guarantees and other forms of credit support to or for the benefit of another Intermediate Company, its subsidiaries and the LG&E Energy Group, subject to an aggregate amount of up to USD 2 billion at any one time outstanding (exclusive of guarantees exempt under rules 45(b) and 58(a)(1)); and
(e) For the LG&E Energy Group, including LG&E and KU, authority,
(i) For LG&E Energy, to issue and sell short-term debt securities in an aggregate amount of up to USD 400 million;
(ii) For the Utility Subsidiaries, each of LG&E and KU,
(a) To issue and sell long-term debt securities having a maturity of two years or less in an aggregate amount of up to USD 400 million and USD 400 million, respectively;
(b) To issue and sell short-term debt securities in an aggregate amount of up to USD 200 million and USD 200 million, respectively;
(c) To continue to obtain secured intercompany loans from Fidelia in an aggregate amount of up to USD 275 million and USD 215 million, respectively;
(d) To guarantee, or provide other credit support, for the obligations of their subsidiaries and other companies in which they have invested (but not exempt wholesale generators, as defined in section 32 of the Act (“EWGs”), exempt telecommunications companies, as defined in section 34 of the Act (“ETCs”), or FUCOs), in an amount of up to USD 200 million and USD 200 million, respectively;
(iii) For LG&E Energy and its nonutility subsidiaries, to enter into intercompany loans in an aggregate amount of up to USD 1.5 billion (excluding amounts exempt under rules 45(b) and 52) at any one time outstanding (and LG&E Energy will not borrow from its subsidiaries);
(iv) For LG&E Energy, to issue guarantees and other credit support in an aggregate amount of up to USD 1.5 billion at any one time outstanding (excluding amounts exempt under rule 45(b) and separate from E.ON's External Limit and E.ON's Guarantee Limit); and
(v) For the LG&E Energy Group nonutility subsidiaries, to issue guarantees and other credit support in an additional aggregate amount of up to USD 1.5 billion, at any one time outstanding (exclusive of guarantees that may be exempt under rule 45(b) and separate from E.ON's External Limit and E.ON's Guarantee Limit).
6. For Applicants, to continue the existing money pools and intercompany financing arrangements.
7. For Applicants, authority to form financing entities (“Financing Entities,” as defined below) and engage in related transactions.
8. For Applicants, authority for each company in the E.ON Group (other than EWGs, FUCOs and ETCs), to acquire, redeem or retire its securities (or those of its direct and indirect subsidiaries), either outstanding presently or issued and sold in the future, from time to time.
9. For Applicants, to continue authority to change the terms of any E.ON Group company's authorized capital stock, issue additional shares, or alter of the terms of any existing authorized security.
10. For Applicants, authority to continue to pay dividends out of capital or unearned surplus.
11. For Applicants, authority to restructure, consolidate or otherwise reorganize, E.ON's nonutility holdings, which may include the acquisition, directly or indirectly, of securities of one or more intermediate subsidiaries (“Development Subsidiaries,” as defined below) organized exclusively for the purpose of acquiring, financing, divesting and/or holding the securities of one or more existing or future nonutility subsidiaries.
12. For Applicants, authority to continue to invest in EWGs and FUCOs up to an aggregate amount of USD 65 billion (“Aggregate EWG/FUCO Financing Limitation”).
13. For Applicants, authority to invest in energy-related companies doing business outside the U.S. (“Energy-Related Subsidiaries”) in an aggregate amount of up to USD 10 billion (“Energy-Related Subsidiary Investment Limit”).
Applicants represent that the following general terms will be applicable, where appropriate, to the external financing transactions requested to be authorized in the Application.
Applicants state that the effective cost of money on external debt securities and preferred stock or other types of preferred securities will not exceed the competitive market rates available at the time of issuance for securities having the same or reasonably similar terms and conditions issued by similar companies of reasonably comparable credit quality.
Applicants state that the maturity of long-term debt will be between one and 50 years after their issuance. Preferred securities and equity-linked securities will be redeemed no later than 50 years after their issuance, unless converted into common stock. Preferred stock issued directly by E.ON may be perpetual in duration. Short-term debt
Applicants state that the underwriting fees, commissions or other similar remuneration paid in connection with the non-competitive issue, sale or distribution of securities will not exceed the greater of: (i) 5% of the principal or total amount of the securities being issued; or (ii) issuance expenses that are generally paid at the time of the pricing for sales of the particular issuance, having the same or reasonably similar terms and conditions issued by similar companies of reasonably comparable credit quality.
E.ON and LG&E Energy, each on a consolidated basis, and LG&E and KU will maintain common stock equity as a percentage of total capitalization of at least 30%, as reflected in their most recent annual or semiannual report, in the case of E.ON, and, with respect to LG&E Energy and the Utility Subsidiaries, quarterly financial statements prepared in accordance with U.S. GAAP;
Applicants further represent that, except for securities issued for the purpose of funding money pool operations, no guarantees or other securities, other than common stock, may be issued in reliance upon the authorization granted by the Commission pursuant to the Application unless: (i) The security to be issued, if rated, is rated investment grade; (ii) all outstanding securities of the issuer that are rated, are rated investment grade; and (iii) all outstanding securities of E.ON that are rated, are rated investment grade. For purposes of this provision (“Investment Grade Condition”), a security will be deemed to be rated “investment grade” if it is rated investment grade by at least one nationally recognized statistical rating organization (“NRSRO”), as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of rule 15c3-1 under the Securities Exchange Act of 1934, as amended. In addition, Applicants request authorization as follows: (i) Notwithstanding that at any time the preferred stock of a Utility Subsidiary, if rated, may not be rated investment grade by an NRSRO, such Utility Subsidiary may nonetheless participate in the Utility Money Pool, borrow funds as secured intercompany loans from Fidelia and borrow funds as intercompany loans; and (ii) notwithstanding that at any time the securities of a nonutility subsidiary that are rated are not rated investment grade, such nonutility subsidiary may nonetheless participate in the U.S. Nonutility Money Pool and may borrow funds as intercompany loans. Applicants request that the Commission reserve jurisdiction over the issuance of any guarantee or other securities in reliance upon the authorization granted by the Commission pursuant to the Application at any time that the conditions set forth in clauses (i) through (iii) above are not satisfied.
Applicants state that the proceeds from the proposed financings will be used for general corporate purposes, including: (i) Financing investments by and capital expenditures of the E.ON Group; (ii) the funding of future investments in companies that are exempt under the Act or the rules or permitted by Commission order, including EWGs, FUCOs, TBD Subsidiaries, ETCs and Rule 58 Subsidiaries (as defined below); (iii) the repayment, redemption, refunding or purchase by any E.ON Group company of any of its own securities; (iv) financing or refinancing capital requirements of the E.ON Group; and (v) other lawful purposes. Applicants represent that no financing proceeds will be used to acquire the equity securities of any company unless the acquisition has been approved by the Commission or is in accordance with an available exemption under the Act or rules, including sections 32, 33, 34 and rule 58.
Applicants request the following authorizations during the Authorization Period as described below.
E.ON requests authorization to increase its capitalization through the issuance and sale of securities, including, but not necessarily limited to, common stock, preferred stock, preferred securities, equity-linked securities, options, warrants, purchase contracts, units (consisting of one or more purchase contracts, warrants, debt securities, shares of preferred stock, shares of common stock or any combination of such securities), long-term debt, subordinated debt, lease financing, bank borrowings, securities with call or put options, and securities convertible into any of these securities, up to an aggregate amount of new financing not to exceed USD 50 billion outstanding at any one time (exclusive of short-term debt and guarantees), the E.ON External Limit, during the Authorization Period;
E.ON requests authorization to issue and sell common stock, options, warrants or other stock purchase rights exercisable for common stock.
E.ON also requests authorization to issue preferred stock directly and/or issue, indirectly, through one or more financing subsidiaries, other forms of preferred securities (including, without
E.ON also requests authorization to issue unsecured long-term debt that may be issued directly through a public or private placement, or indirectly, through one or more financing subsidiaries, in the form of notes, convertible notes, medium-term notes or debentures under one or more indentures or long-term indebtedness under agreements with banks or other institutional lenders.
E.ON requests authority to issue and sell from time to time, directly or indirectly through one or more Financing Entities, unsecured short-term debt, including commercial paper and bank borrowings, in an aggregate principal amount at any time outstanding not to exceed USD 30 billion, the E.ON Short-term Limit;
E.ON requests further authorization to issue and sell, from time to time, directly or indirectly through one or more Financing Entities, unsecured short-term debt, an aggregate amount at any time outstanding of up to the E.ON Short-term Limit, in the form of commercial paper, notes issued to banks and other institutional lenders, and other forms of unsecured short-term indebtedness. Applicants state that short-term borrowings under credit lines will have original maturities of less than a year from the date of each borrowing. Applicants state that these transactions will be subject to the E.ON External Limit.
E.ON requests authorization to enter into, perform, purchase and sell financial instruments intended to manage the volatility of interest rates and currency exchange rates, including but not limited to swaps, caps, floors, collars and forward agreements or any other similar agreements (“Hedging Instruments”). E.ON would employ Hedging Instruments as a means of prudently managing the risk associated with any of the outstanding debt issued by it or any of its associate companies under the authority requested in the Application or an applicable exemption by, for example: (i) Converting variable rate debt to fixed rate debt; (ii) converting fixed rate debt to variable rate debt; (iii) limiting the impact of changes in interest rates resulting from variable rate debt; and (iv) providing an option to enter into interest rate swap transactions in future periods for planned issuances of debt securities.
E.ON also proposes to enter into Hedging Instruments with respect to anticipated debt or equity offerings (“Anticipatory Hedges”), subject to certain limitations and restrictions. Anticipatory Hedges would only be entered into on-exchange or off-exchange with Approved Counterparties, and would be used to fix and/or limit the interest rate or currency exchange rate risk associated with any proposed new issuance.
E.ON's subsidiaries also propose to enter into Hedging Instruments or Anticipatory Hedges to hedge interest rate or currency exposures, subject to the limitations described above.
E.ON requests authorization to provide guarantees with respect to debt securities or other contractual obligations of any subsidiary, as may be appropriate in the ordinary course of the subsidiary's business, up to an aggregate principal or nominal amount not to exceed USD 40 billion at any one time outstanding (the E.ON Guarantee Limit), exclusive of any guarantees and other forms of credit support that are exempt under rules 45(b) and 52(b);
E.ON requests authorization for the E.ON Group (other than the LG&E Energy Group) to charge each subsidiary (other than an LG&E Energy Group company), a fee for the period of time that a guaranty is outstanding, the fee to be based upon market rates, which take into account credit risk, where it may be necessary to operate its business efficiently under applicable regulations.
Applicants request that the Commission continue to authorize the profit and loss transfer agreements of E.ON and its German subsidiaries.
The E.ON Group (other than the LG&E Energy Group) request authorization to finance the TBD Subsidiaries and the Retained Nonutility Subsidiaries through capital contributions, loans, guarantees, purchase of equity or debt securities or other methods throughout the Authorization Period. The Retained Nonutility Subsidiaries also propose to finance their respective businesses and the acquisition of new businesses (as permitted under the Act or the rules or by Commission order), through the issuance of equity, preferred stock and debt securities to third parties.
Applicants propose that, in connection with the financing of the TBD Subsidiaries, they be authorized to make investments in an aggregate amount of up to USD 1 billion (the TBD
E.ON owns LG&E Energy through the Intermediate Companies, E.ON U.S. Holding and E.ON U.S. Investments, which are registered holding companies under the Act. E.ON U.S. Holding also owns Fidelia, a Financing Entity, and E.ON U.S. Investments owns E.ON NA and its subsidiaries, which also function as Financing Entities.
To finance the LG&E Energy Group and/or the Intermediate Companies and their subsidiaries, Applicants request authorization for the Intermediate Companies and their subsidiaries to issue and sell securities to E.ON and associate companies, but not companies in the LG&E Energy Group.
In addition, authorization is requested for E.ON NA and Fidelia (and any of their subsidiaries) to issue securities to third parties, such as banks, to finance the capital needs of the E.ON Group, including the LG&E Energy Group. Applicants also request authorization for the Intermediate Companies and their subsidiaries to acquire securities of other Intermediate Companies and their subsidiaries and the LG&E Energy Group companies.
The Intermediate Companies and their subsidiaries also seek authorization to issue guarantees, and other forms of credit support, to or for the benefit of another Intermediate Company, its subsidiaries and the LG&E Energy Group companies. Applicants state that, in no case would an Intermediate Company borrow, or receive any extension of credit or indemnity from any LG&E Energy Group company or its subsidiaries, except that an Intermediate Company may borrow from its direct or indirect Financing Entity that is not part of the LG&E Energy Group.
In addition, authority is requested for the Intermediate Companies, E.ON NA and Fidelia, and their respective subsidiaries, to guarantee the indebtedness or contractual obligations of, and to otherwise provide credit support to, their respective associated subsidiary companies up to an aggregate amount of external guarantees not exceed USD 2 billion outstanding (exclusive of any guarantees and other forms of credit support that are exempt under rules 45(b) and 52(b));
LG&E Energy requests authorization to obtain funds through the issuance of external short-term debt securities in an aggregate amount of up to USD 400 million, to meet its funding requirements.
LG&E and KU request authorization to issue certain long-term and short-term debt securities having maturities of two years or less in an aggregate amount of up to USD 400 million at any one time outstanding for each of LG&E and KU (to the extent their financing is not exempt under rule 52(a), or otherwise), as each may deem appropriate in light of its needs and market conditions at the time of issuance, subject to the applicable Financing Parameters.
Applicants also request that LG&E and KU be authorized, up to amounts of USD 275 million and USD 215 million, respectively, to obtain secured intercompany loans from Fidelia, as currently authorized, through the Authorization Period.
Utility Subsidiaries also seek authorization, up to an amount of USD 200 million in the case of LG&E and USD 200 million in the case of KU, to guarantee, or otherwise provide credit support for, the obligations of their subsidiaries and other companies in which they have invested (but not EWGs, ETCs or FUCOs), to the extent not exempt under rule 45. Applicants represent that any guarantee of an obligation of an EWG, FUCO or ETC will be undertaken only if the investment is authorized under sections 32, 33 or 34 of the Act, applicable rules, and/or Commission order.
Applicants request that the Utility Subsidiaries be permitted to charge each subsidiary a fee for each guarantee provided on the subsidiary's behalf that is not greater than the cost, if any, of the liquidity necessary to perform the guarantee. Applicants further state that guarantees issued by Utility Subsidiaries will not be secured by any utility assets.
E.ON, E.ON NA and Fidelia (or a special purpose financing subsidiary) request authorization to finance all or a portion of the capital needs of the LG&E Energy Group companies directly, or indirectly through other E.ON Group companies, including the Intermediate Companies, at the lowest practical cost. Companies in the LG&E Energy Group propose to borrow funds from other E.ON Group companies that may have available surplus funds.
Applicants state that, except for the secured intercompany loans, described above, the borrowings will be unsecured and, in all cases, the borrowings will only occur if the interest rate on the loan would result in an equal or lower cost of borrowing than the LG&E Energy Group company could obtain in a loan from E.ON or in the capital markets on its own.
Applicants request authorization for intercompany loans among LG&E Energy and its nonutility subsidiaries in an amount of up to USD 1.5 billion at any one time outstanding during the Authorization Period. Applicants state that this intrasystem financing amount would exclude financing exempt under rules 45(b) and 52. They further state that LG&E Energy will not borrow funds from its subsidiary companies and that the terms and conditions of intercompany loans available to any
Applicants also request authorization for LG&E Energy and the LG&E Energy Group nonutility subsidiaries to enter into guarantees, extend credit, obtain letters of credit, enter into guaranty-type expense agreements and otherwise to provide credit support for the obligations, from time to time, of the LG&E Energy Group companies during the Authorization Period, specifically:
(a) For LG&E Energy, in an aggregate amount of up to USD 1.5 billion outstanding at any one time (exclusive of guarantees that may be exempt under rule 45(b)); and
(b) For the LG&E Energy Group nonutility subsidiaries, in an additional aggregate amount of up to USD 1.5 billion outstanding at any one time (exclusive of guarantees that may be exempt under rule 45(b)).
Applicants state that these requests are separate from E.ON's External Limit and E.ON's Guarantee Limit.
Applicants request authorization to continue to operate three money pools.
Applicants state that Utility Subsidiaries' borrowings from the Utility Money Pool would be counted against their overall short-term borrowing limits stated above. The U.S. Nonutility Money Pool will be operated on substantially the same terms and conditions as the Utility Money Pool. The E.ON Nonutility Money Pool is administered by E.ON Finance GmbH (formerly Hibernia Industriewerte GmbH).
Applicants request authorization for each company in the E.ON Group, other than EWGs, FUCOs and ETCs, to acquire, redeem or retire its securities or those of its direct and indirect subsidiaries, which securities may be either outstanding presently or issued and sold in the future from time to time during the Authorization Period. Applicants state that these transactions will be undertaken at either the competitive market prices for the securities or at the stated price for those securities, as applicable, and that Utility Subsidiaries will acquire, retire or redeem securities only in accordance with rule 42.
Applicants also request authorization for the E.ON Group companies, except the EWGs, FUCOs and ETCs, to organize new or use existing corporations, trusts, partnerships or other entities (“Financing Entities”), to finance the business of the respective parent company or its subsidiaries. Applicants state that a Financing Entity would be used to finance the authorized or permitted businesses of its direct or indirect parent company (“Founding Parent”), including the businesses of the LG&E Energy Group, but in no event would a Financing Entity engage in prohibited upstream loans involving companies in the LG&E Energy Group.
In addition, Applicants request authorization to issue securities to a Financing Entity to evidence the transfer of financing proceeds by a Financing Entity to a company receiving financing. Applicants also request authorization to enter into support or expense agreements on market price terms with Financing Entities to pay the expenses of any of these entities.
Applicants request authority to change the terms of any subsidiary's authorized capital stock capitalization or other equity interests by an amount deemed appropriate by E.ON or any intermediate parent company;
Applicants request authorization that each of the TBD Subsidiaries, the Retained Nonutility Subsidiaries, the Intermediate Companies, and the LG&E Energy Group companies (excluding Utility Subsidiaries), be permitted to continue to pay dividends with respect to its capital stock, from time to time, out of capital and unearned surplus (to the extent permitted under the corporate law and state or national law applicable in the jurisdiction where each company is organized and the terms of any credit agreements and indentures that restrict the amount and timing of distributions to shareholders), through the Authorization Period. Applicants state that, in addition, none of the companies will declare or pay any dividend out of capital or unearned surplus unless it: (i) Has received excess cash as a result of the sale of some or all of its assets; (ii) has engaged in a restructuring or reorganization; and/or (iii) is returning capital to an associate company.
Applicants also request continued authority to restructure, consolidate or otherwise reorganize E.ON's nonutility holdings, including those in the LG&E Energy Group, from time to time, as may be necessary or appropriate in furtherance of the E.ON Group's authorized nonutility activities, and to maintain and support investment in the E.ON TBD Subsidiaries pending divestiture.
E.ON requests authorization to acquire, directly or indirectly, the securities of one or more intermediate subsidiaries (“Development Subsidiaries”) organized exclusively for the purpose of acquiring, financing, divesting and/or holding the securities of one or more existing or future nonutility subsidiaries. Applicants request authorization for the Development Subsidiaries to provide management, administrative, project development and operating services to direct or indirect subsidiaries at cost, in accordance with section 13 of the Act and the rules, including rules 90 and 91, to the extent transactions are not exempt, or authorized or permitted by Commission rule or order.
E.ON requests the Commission authorize continued investment in an aggregate amount of up to USD 65 billion in EWGs and FUCOs, the Aggregate EWG/FUCO Financing Limitation.
E.ON also seeks authorization to acquire and to invest up to USD 10 billion, the Energy-Related Subsidiary Investment Limit, of the divestiture proceeds during the Authorization Period in certain permitted nonutility businesses located primarily outside of the U.S.
For the Commission by the Division of Investment Management, pursuant to delegated authority.
The Commission collects fees under various provisions of the securities laws. section 6(b) of the Securities Act of 1933 (“Securities Act”) requires the Commission to collect fees from issuers on the registration of securities.
The Investor and Capital Markets Fee Relief Act (“Fee Relief Act”)
Section 6(b)(5) of the Securities Act requires the Commission to make an annual adjustment to the fee rate applicable under section 6(b) of the Securities Act in each of the fiscal years 2003 through 2011.
Section 6(b)(5) sets forth the method for determining the annual adjustment to the fee rate under section 6(b) for fiscal year 2006. Specifically, the Commission must adjust the fee rate under section 6(b) to a “rate that, when applied to the baseline estimate of the aggregate maximum offering prices for [fiscal year 2006], is reasonably likely to produce aggregate fee collections under [Section 6(b)] that are equal to the target offsetting collection amount for [fiscal year 2006].” That is, the adjusted rate is determined by dividing the “target offsetting collection amount” for fiscal year 2006 by the “baseline estimate of the aggregate maximum offering prices” for fiscal year 2006.
Section 6(b)(11)(A) specifies that the “target offsetting collection amount” for fiscal year 2006 is $689,000,000.
To make the baseline estimate of the aggregate maximum offering price for
Section 31(b) of the Exchange Act requires each national securities exchange to pay the Commission a fee at a rate, as adjusted by our order pursuant to section 31(j)(2), which currently is $41.80 per million of the aggregate dollar amount of sales of specified securities transacted on the exchange.
Section 31(j)(1) specifies the method for determining the annual adjustment for fiscal year 2006. Specifically, the Commission must adjust the rates under sections 31(b) and (c) to a “uniform adjusted rate that, when applied to the baseline estimate of the aggregate dollar amount of sales for [fiscal year 2006], is reasonably likely to produce aggregate fee collections under [Section 31] (including assessments collected under [Section 31(d)]) that are equal to the target offsetting collection amount for [fiscal year 2006].”
Section 31(
To make the baseline estimate of the aggregate dollar amount of sales for fiscal year 2006, the Commission is using the same methodology it developed in consultation with the CBO and OMB to project dollar volume for purposes of prior fee adjustments.
Section 6(b)(8)(A) of the Securities Act provides that the fiscal year 2006 annual adjustment to the fee rate applicable under section 6(b) of the Securities Act shall take effect on the later of October 1, 2005, or five days after the date on which a regular appropriation to the Commission for fiscal year 2006 is enacted.
Section 31(j)(4)(A) of the Exchange Act provides that the fiscal year 2006 annual adjustments to the fee rates applicable under sections 31(b) and (c) of the Exchange Act shall take effect on the later of October 1, 2005, or thirty days after the date on which a regular appropriation to the Commission for fiscal year 2006 is enacted.
Accordingly, pursuant to section 6(b) of the Securities Act and sections 13(e), 14(g) and 31 of the Exchange Act,
By the Commission.
With the passage of the Investor and Capital Markets Relief Act, Congress has, among other things, established a target amount of monies to be collected from fees charged to issuers based on the value of their registrations. This appendix provides the formula for determining such fees, which the Commission adjusts annually. Congress has mandated that the Commission determine these fees based on the “aggregate maximum offering prices,” which measures the aggregate dollar amount of securities
For 2006, the Commission has estimated the aggregate maximum offering prices by projecting forward the trend established in the previous decade. More specifically, an ARIMA model was used to forecast the value of the aggregate maximum offering prices for months subsequent to March 2005, the last month for which the Commission has data on the aggregate maximum offering prices.
The following sections describe this process in detail.
First, calculate the aggregate maximum offering prices (AMOP) for each month in the sample (March 1995—March 2005). Next, calculate the percentage change in the AMOP from month-to-month.
Model the monthly percentage change in AMOP as a first order moving average process. The moving average approach allows one to model the effect that an exceptionally high (or low) observation of AMOP tends to be followed by a more “typical” value of AMOP.
Use the estimated moving average model to forecast the monthly percent change in AMOP. These percent changes can then be applied to obtain forecasts of the total dollar value of registrations. The following is a more formal (mathematical) description of the procedure:
1. Begin with the monthly data for AMOP. The sample spans ten years, from March 1995 to March 2005. There are 3 months in the sample for which the data are omitted because of the impact of extraordinary events (
2. Divide each month's AMOP (column C) by the number of trading days in that month (column B) to obtain the average daily AMOP (AAMOP, column D).
3. For each month t, the natural logarithm of AAMOP is reported in column E.
4. Calculate the change in log (AAMOP) from the previous month as Δ
5. Estimate the first order moving average model Δ
6. For the month of April 2005, forecast Δ
7. Calculate forecasts of log (AAMOP). For example, the forecast of log (AAMOP) for June 2005 is given by FLAAMOP
8. Under the assumption that e
9. For June 2005, this gives a forecast AAMOP of $22.0 Billion (Column I), and a forecast AMOP of $484.0 Billion (Column J).
10. Iterate this process through September 2006 to obtain a baseline estimate of the aggregate maximum offering prices for fiscal year 2006 of $6,437,675,847,178.
1. Using the data from Table A, estimate the aggregate maximum offering prices between 10/1/05 and 9/30/06 to be $6,437,675,847,178.
2. The rate necessary to collect the target $689,000,000 in fee revenues set by Congress is then calculated as: $689,000,000 ÷ $6,437,675,847,178 = 0.00010703 (or $107.00 per million.).
With the passage of the Investor and Capital Markets Relief Act, Congress has, among other things, established a target amount of monies to be collected from fees charged to investors based on the value of their transactions. This appendix provides the formula for determining such fees, which the Commission adjusts annually, and may adjust semi-annually.
For 2006, the Commission has estimated dollar transaction volume by projecting forward the trend established in the previous decade. More specifically, dollar transaction volume was forecasted for months subsequent to March 2005, the last month for which the Commission has data on transaction volume.
The following sections describe this process in detail.
First, calculate the average daily dollar amount of sales (ADS) for each month in the sample (March 1995-March 2005). The monthly aggregate dollar amount of sales (exchange plus certain over-the-counter markets) is presented in column C of Table B.
Next, calculate the change in the natural logarithm of ADS from month-to-month. The average monthly percentage growth of ADS over the entire sample is 0.015 and the standard deviation 0.117. Assuming the monthly percentage change in ADS follows a random walk, calculating the expected monthly percentage growth rate for the full sample is straightforward. The expected monthly percentage growth rate of ADS is 2.3 percent.
Now, use the expected monthly percentage growth rate to forecast total dollar volume. For example, one can use the ADS for March 2005 ($136,873,904,911) to forecast ADS for April 2005 ($139,958,043,570 = $136,873,904,911 × 1.023).
The forecasts for total dollar volume are in column G of Table B. The following is a more formal (mathematical) description of the procedure:
1. Divide each month's total dollar volume (column C) by the number of trading days in that month (column B) to obtain the average daily dollar volume (ADS, column D).
2. For each month t, calculate the change in ADS from the previous month as Δ
3. Calculate the mean and standard deviation of the series {Δ
4. Assume that the natural logarithm of ADS follows a random walk, so that Δ
5. Under the assumption that Δ
6. For April 2005, this gives a forecast ADS of 1.023 × $136,873,904,911 = $139,958,043,570. Multiply this figure by the 21 trading days in April 2005 to obtain a total dollar volume forecast of $2,939,118,914,973.
7. For May 2005, multiply the April 2005 ADS forecast by 1.023 to obtain a forecast ADS of $143,111,676,201. Multiply this figure by the 21 trading days in May 2005 to obtain a total dollar volume forecast of $3,005,345,200,226.
8. Repeat this procedure for subsequent months.
1. Use Table B to estimate fees collected for the period 10/1/05 through 10/31/05. The projected aggregate dollar amount of sales for this period is $3,359,544,441,122. Projected fee collections at the current fee rate of 0.0000418 are $140,428,958.
2. Estimate the amount of assessments on securities futures products collected during 10/1/05 and 9/30/06 to be $110,180 by projecting a 2.3% monthly increase from a base of $6,889 in March 2005.
3. Subtract the amounts $140,428,958 and $110,180 from the target offsetting collection amount set by Congress of $1,435,000,000 leaving $1,294,460,862 to be collected on dollar volume for the period 11/1/05 through 9/30/06.
4. Use Table B to estimate dollar volume for the period 11/1/05 through 9/30/06. The estimate is $42,195,348,170,831. Finally, compute the fee rate required to produce the additional $1,294,460,862 in revenue. This rate is $1,294,460,862 divided by $42,195,348,170,831 or 0.0000306778.
5. Consistent with the system requirements of the exchanges and the NASD, round the result to the seventh decimal point, yielding a rate of .0000307 (or $30.70 per million).
On August 13, 2004, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) and on March 14, 2005, amended proposed rule change File No. SR-FICC-2004-17 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”).
FICC is amending the rules of the Government Securities Division (“GSD”) of FICC to modify the assessment process for late submissions of collateral allocations made through its GCF Repo service and to increase the types of securities that can be used by a member in satisfaction of collateral obligations.
On October 30, 1998, the Commission granted approval to FICC's predecessor, the Government Securities Clearing Corporation, to implement its GCF Repo service, which is a significant alternative financing vehicle to the delivery versus payment and tri-party repo markets.
Specifically, FICC is implementing a late fee schedule to replace the late fine schedule. FICC believes that late fee schedules are appropriate in situations where the member's lateness causes an operational burden on FICC but does not result in risk to FICC or its members.
Currently, GSD Rule 20 provides that a collateral allocation obligation may be satisfied with “comparable securities,” Treasury securities, and/or cash. “Comparable securities” are defined to include any securities that are represented by the same generic CUSIP number as the securities in question. Therefore, in the event that a member does not have enough of the collateral securities or the “comparable securities,” the only collateral that can be used is Treasury securities and/or cash.
GSD members have approached FICC and have asked that it amend rules to add certain additional collateral options. In response, FICC is amending its rules as set forth below:
(a) Ginnie Mae adjustable-rate mortgage obligations can be satisfied with Ginnie Mae fixed-rate mortgage backed securities and
(b) Fannie Mae and Freddie Mac adjustable-rate mortgage obligations can be satisfied with: (i) Fannie Mae and Freddie Mac fixed-rate mortgage-backed securities, (ii) Ginnie Mae fixed-rate mortgage-backed securities, and (iii) Ginnie Mae adjustable-rate mortgage obligations.
Section 17A(b)(3)(F) of the Act requires among other things that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions.
On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular Section 17A of the Act and the rules and regulations thereunder.
For the Commission by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Nasdaq filed this proposed rule change to make certain amendments to the Nasdaq Restated Certificate of Incorporation (the “Certificate”) and the Nasdaq By-Laws (the “By-Laws”) to phase out the current classified board structure and provide for the annual election of all members of the Nasdaq Board of Directors (the “Nasdaq Board”). Under the General Corporation Law of the State of Delaware (“Delaware law”), the proposed amendments to the Certificate must be approved by Nasdaq's stockholders. Nasdaq has submitted the text of the proposed amendments to the Certificate to its stockholders for approval at the 2005 annual meeting of stockholders (the “Annual Meeting”), which will be held on May 25, 2005. After Nasdaq's stockholders approve the proposed amendments to the Certificate, Nasdaq will immediately amend this rule filing to indicate such approval. In order to allow the amendment to take effect as approved by the stockholders, Nasdaq requests that, if the Commission finds that the proposed rule change is consistent with the Act, immediately after Nasdaq's stockholders approve of the proposed amendments to the Certificate, then the proposed rule change will be approved on May 25, 2005.
A. No change.
B. [The]
C. Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause shall only be filled by the Board. [Any director so chosen shall hold office until the next election of the class for which such directors shall have been chosen and until his successor shall be elected and qualified.] No decrease in the number of directors shall shorten the term of any incumbent director.
D. Except for Preferred Stock Directors, any director, or the entire Board, may be removed from office at any time, but only [for cause and only] by the affirmative vote of at least 66
E. No change.
Sec. 4.1-Sec. 4.3 No change.
Sec. 4.4 Except as otherwise provided by law, these By-Laws, or the Delegation Plan, after the first meeting of Nasdaq at which Directors are elected, [a class of] Directors of Nasdaq shall be elected each year at the annual meeting of the stockholders, or at a special meeting called for such purpose in lieu of the annual meeting. If the annual election of Directors is not held on the date designated therefore, the Directors shall cause such election to be held as soon thereafter as convenient.
Sec. 4.5 No change.
Sec. 4.6 Any or all of the Directors may be removed from office at any time[, but only for cause,] by the affirmative vote
Sec. 4.7-Sec. 4.16 No change.
In its filing with the Commission, Nasdaq 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. Nasdaq has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
Nasdaq seeks to phase out its current classified board structure and provide for the annual election of the entire Nasdaq Board. The Certificate provides in Article Fifth, paragraph B that the Nasdaq Board be divided into three classes, with one class elected at each annual meeting and members of each class serving three-year terms. The Certificate and Nasdaq's By-Laws provide, in accordance with Delaware law applicable to classified boards of directors, that directors may be removed only for cause. This system for electing directors was established in June 2000 while Nasdaq was still a wholly-owned subsidiary of NASD in anticipation of NASD's sale of a portion of its interest in Nasdaq in 2000 and 2001 that led to Nasdaq becoming a publicly traded corporation.
Nasdaq believes that the determination of whether a classified board of directors serves the interests of stockholders of a corporation requires an examination of all relevant factors by the directors and stockholders of the corporation. In light of Nasdaq's particular situation, including its unique role as regulator and operator of a securities market, Nasdaq believes that the annual election of directors may better serve its investors by enhancing accountability through more frequent elections. Nasdaq also believes that the size and diversified experience of the Nasdaq Board are likely to assist Nasdaq in retaining seasoned directors despite more frequent election. While a classified board generally may discourage takeover attempts because the extended terms of directors can delay a change in control of the board of directors, Nasdaq does not believe that there is a clear consensus on whether this is a positive or negative result for stockholders.
In order to ensure a smooth transition to the system of annual election of the entire Nasdaq Board, the proposed rule change would not shorten the terms of directors elected prior to the Annual Meeting. As a result, the terms of Class 2 directors, who are up for election at the Annual Meeting, would be for one year and would expire at the 2006 annual meeting if the amendment is approved by stockholders and the Commission. Class 1 and Class 3 directors would continue to serve until their current terms expire in 2007 and 2006, respectively, and annual election would apply to these directors thereafter. Directors elected by the Nasdaq Board to fill vacancies that may arise will serve for the remainder of the term of the class to which the director was elected. Beginning in 2007, the classification of the Nasdaq Board would end and all directors would be subject to annual election.
The proposed amendments to the Certificate also would delete the existing requirement which provides, in accordance with the provisions of Delaware law applicable to classified boards of directors, that directors may be removed only for cause. Under Delaware law, directors of companies that do not have classified boards may be removed by stockholders with or without cause. The Nasdaq Board has approved conforming amendments to the By-Laws that would be effective only in the event the proposed amendment is approved by the stockholders at the Annual Meeting and by the Commission. The conforming amendments are also included as proposed rule changes in this filing.
Nasdaq believes that the proposed rule change is consistent with the Act, including section 15A(b)(2) and (6) of the Act,
Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments were neither solicited nor received.
Within 35 days of the date of publication of this notice in the
A. By order approve such proposed rule change; or
B. Institute proceedings to determine whether the proposed rule change should be disapproved.
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. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an e-mail to
• Send paper comments in triplicate to Jonathan G. Katz, Secretary,
All submissions should refer to File Number SR-NASD-2005-054. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange seeks to extend its original financial listing standards pilot program (the “Pilot Program”)
In its filing with the Commission, the Exchange 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 Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
On January 29, 2004, the Commission granted accelerated approval to the Pilot Program on a six-month pilot basis through July 30, 2004.
On April 4, 2004, the Exchange filed File Number SR-NYSE-2004-20, which seeks permanent approval for the Pilot Program currently in effect with respect to the Exchange's original minimum listing standards and approval of the continued minimum listing standards as originally proposed in File Number SR-NYSE-2003-43. File Number SR-NYSE-2004-20 was published in the
The Exchange believes that the proposed rule change is consistent with Section 6(b)(5) of the Act
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.
Written comments were neither solicited nor received with respect to the proposed rule change.
Because the foregoing proposed rule change (1) does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) by its terms, does not become operative until 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, and the Exchange provided the Commission with written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission, it has become effective pursuant to section 19(b)(3)(A) of the Act
Although Rule 19b-4(f)(6) under the Act
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. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form
• Send an e-mail to
• Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
All submissions should refer to File Number SR-NYSE-2005-28. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is proposing to add Exchange Rule 6.94(e) to add provisions for declaring an away market unreliable when an away market is disconnected from the Intermarket Option Linkage (“Linkage”)
In its filing with the Commission, the Exchange 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 Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to codify the Exchange's current policy on declaring an away market unreliable when an away market is disconnected from Linkage. Currently, the Exchange relies on Exchange Rule 6.87(h)(4) to determine whether an away market is unreliable.
In order to clarify the Exchange's practices for declaring an away market unreliable, the Exchange is proposing to add Exchange Rule 6.94(e). Proposed Exchange Rule 6.94(e) is substantially similar to current Exchange Rule 6.87(h)(4), except that proposed Exchange Rule 6.94(e) adds provisions relating to declaring an away market unreliable when such away market is disconnected from Linkage. Proposed Exchange Rule 6.94(e)(A)(iii) would codify the Exchange's policy to declare an away market unreliable if such away market is disconnected from Linkage. The Exchange believes that declaring an away market that has been disconnected from Linkage unreliable is necessary to eliminate quotes from the National Best Bid or Offer (“NBBO”) calculation that are not readily available to PCX OTP Holders
The Exchange is also proposing to move the provisions for declaring an away market unreliable in Exchange Rule 6.87(h)(4) to proposed Exchange Rule 6.94 (Order Protection), because the Exchange believes Exchange Rule 6.94 is a more appropriate rule to address declaring an away market unreliable.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act
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.
The Exchange has neither solicited nor received written comments on the proposed rule change.
Within 35 days of the date of publication of this notice in the
(A) By order approve the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
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. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an e-mail to
• Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
All submissions should refer to File Number SR-PCX-2005-27. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
The General Advisory Committee to the United States Section of the IATTC was established pursuant to Section 4 of the Tuna Conventions Act of 1950 (16 U.S.C. 953, as amended), the implementing statute for the IATTC Convention. The goal of the Advisory Committee is to serve the U.S. Section to the IATTC, the Department of State, and other agencies of the U.S. Government as advisors on matters relating to international conservation and management of stocks of tuna and dolphins in the eastern tropical Pacific Ocean, and in particular on the development of U.S. policy and positions associated with such matters.
The Advisory Committee to the U.S. Section of the IATTC may be terminated only by law. In accordance with the provisions of the Federal Advisory Committee Act (Pub. L. 92-463), a new Charter must be issued on a biennial basis from the date the current Charter was approved and filed with Congress and the Library of Congress. The current Charter expired in 2004 due to staff changes.
The Committee is composed of representatives of the major U.S. tuna harvesting, processing, and marketing sectors. Additionally, Committee membership includes representatives of recreational fishing interests and environmental interests formulating specific U.S. policy recommendations and positions.
The Advisory Committee will continue to follow the procedure prescribed by the Federal Advisory Committee Act (FACA). Meetings will continue to be open to the public unless a determination is made in accordance with Section 10 of the FACA, 5 U.S.C. Secs. 552b(c)(1) and (4), that a meeting or a portion of the meeting should be closed to the public. Notice of each meeting continues to be provided for publication in the
The following Agreements were filed with the Department of Transportation under the provisions of 49 U.S.C. Sections 412 and 414. Answers may be filed within 21 days after the filing of the application.
Federal Railroad Administration, DOT.
Third notice and request for comments.
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Comments must be submitted on or before June 3, 2005.
Mr. Robert Brogan, Office of Planning and Evaluation Division, RRS-21, Federal Railroad Administration, 1120 Vermont Ave., NW., Mail Stop 17, Washington, DC 20590 (telephone: (202) 493-6292), or Mr. Victor Angelo, Office of Support Systems, RAD-20, Federal Railroad Administration, 1120 Vermont Ave., NW., Mail Stop 35, Washington, DC 20590 (telephone: (202) 493-6470). (These telephone numbers are not toll-free.)
The Paperwork Reduction Act of 1995 (PRA), Public Law 104-13, § 2, 109 Stat. 163 (1995) (codified as revised at 44 U.S.C. 3501-3520), and its implementing regulations, 5 CFR Part 1320, require Federal agencies to issue two notices seeking public comment on information collection activities before OMB may approve paperwork packages. 44 U.S.C. 3506, 3507; 5 CFR 1320.5, 1320.8(d)(1), 1320.12. On September 22, 2004, FRA published a 60-day notice in the
In response to the 60-day notice, the first comment (letter) came from The Brotherhood of Locomotive Engineers and Trainmen (BLET), which represents both locomotive engineers and trainmen. BLET expressed its wholehearted support for the proposed study. In his letter, Don M. Hahs, the President of BLET, observed:
BLET, and others, believe the collection of this data will provide greater insight into the probability of safety related injury associated with these [critical incident] events. Given the fact that the frequency of these events may result in locomotive engineers experiencing several of them in their careers, the FRA and industry can be benefited in understanding the scope of this concern. The proposed data collection and purpose for which it is being collected can provide non-regulatory and preemptive approaches that may mitigate the negative effects to safety and health associated with Post-Traumatic Stress.
Mr. M. Hahs further remarked:
The identification of “best practices” for Critical Incident Stress Debriefing programs, as proposed in the study, will allow the transportation community to learn a great deal. The eventual publication of the study has the potential to add to the body of research of this recognized problem and will add value for the scientific community with no burden to the society at large. Therefore, the BLET encourages FRA to move forward with the proposed study and seek approval from the Office of Management and Budget as soon as possible.
BLET did address the paperwork burden for this proposed collection of information. Mr. Hahs noted: “BLET considers the estimates of the burden of information collection activities, its methodologies, and assumptions to be valid.”
The Union Pacific Railroad also expressed its support for the project. In his comment (letter), Dr. Dennis W. Holland, Director, Occupational Health Psychology, Union Pacific Safety Department, stated the following:
The study is timely and of significant interest to the rail industry. UPRR is a pioneer in the development and implementation of Peer Support programs for employees involved in critical incidents. We believe the proposed study will benefit both the railroads and railroad labor by providing information on how best to respond to critical incidents. In addition, the information provided by the proposed study will enable railroad professionals to best use resources to assist employees dealing with tragic events.
There is no cost for materials to study participants, and the total burden hours are minimal. It should also be noted that FRA and its contractor, University of Denver, have been in contact with representatives of the Association of American Railroads (AAR), the BLET, and the United Transportation Union (UTU) from the beginning concerning the need for this study and the proposed procedures. These representatives have made several useful suggestions, which have been incorporated into the design of this study. Several useful suggestions were also provided, and used, by members of the CISD resource group—an entity established to assist in the development of this study. This resource group consists of representatives from the AAR, BLE, UTU, and several Class I and short line carriers. Finally, a team of epidemiologists and statisticians from reputable universities and establishments, including Yale University, the University of California at San Francisco, Colorado State University (Fort Collins), the University of Denver, the Denver VA Medical Center, the Centers for Disease Control and Prevention, and individuals from the U.S. Department of Transportation's Volpe National Transportation Systems Center, reviewed the sampling plan of the proposed study and offered useful recommendations and feedback.
Before OMB decides whether to approve this proposed collection of information, it must provide 30 days for public comment. 44 U.S.C. 3507(b); 5 CFR 1320.12(d). Federal law requires OMB to approve or disapprove paperwork packages between 30 and 60 days after the 30 day notice is published. 44 U.S.C. 3507 (b)-(c); 5 CFR 1320.12(d);
The summary below describe the nature of the information collection requirements (ICRs) and the expected burden. These requirements are being submitted for clearance by OMB as required by the PRA.
Send comments regarding these information collections to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 Seventeenth Street, NW., Washington, DC, 20503, Attention: FRA Desk Officer.
A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication of this notice in the
44 U.S.C. 3501-3520.
Graco Children's Products Inc. (Graco) has determined that certain child restraints that it produced in 2004 do not comply with S4.3(a) of 49 CFR 571.302, Federal Motor Vehicle Safety Standard (FMVSS) No. 302, “Flammability of interior materials.” Graco has filed an appropriate report pursuant to 49 CFR part 573, “Defect and Noncompliance Reports.”
Pursuant to 49 U.S.C. 30118(d) and 30120(h), Graco has petitioned for an exemption from the notification and remedy requirements of 49 U.S.C. Chapter 301 on the basis that this noncompliance is inconsequential to motor vehicle safety.
This notice of receipt of Graco's petition is published under 49 U.S.C. 30118 and 30120 and does not represent any agency decision or other exercise of judgment concerning the merits of the petition.
Affected are a total of approximately 450 Graco Comfort Sport convertible child restraints manufactured on December 27, 2004. S4.3(a) of FMVSS No. 302 requires that material “shall not burn * * * at a rate of more than 102 mm per minute.” Two nylon warning labels which are a component of these child restraints do not comply with this requirement.
Graco explains that the seat pad used on the Comfort Sport model contains two warning labels sewn onto the backside of the seat pad. Graco states:
The pad is an Easy Wash pad with flaps that allow for easy removal of the seat pad without disconnecting the harness. The labels are sewn to the backside of the two flaps. The label is manufactured of nylon material and when tested as a single material does not meet the requirements of * * * S4.3(a) . * * *
Graco believes that the noncompliance is inconsequential to motor vehicle safety and that no corrective action is warranted. Graco states that the risk of injury from the noncompliance is inconsequential for several reasons:
Location of labels on backside of pad. The labels are located on the backside of the pad and directly behind a child seated in the child restraint. This location is not directly accessible to any flame source. * * * The contribution of the labels to any flame spread is negligible.
Small size of labels. The labels are relatively small compared to the overall size of the seat pad. * * * The size of each label is 1
Seat pad and child restraint materials comply with FMVSS No. 302. The labels are the only material * * * that do not comply with FMVSS No. 302. * * * This overwhelming amount of material that complies . * * * affords the occupant(s) the necessary protection from any flammability hazard . * * *
Composite flammability testing complies. Although the label is not adhered to the pad at every point as specified by FMVSS No. 302 for composite testing, Graco has tested the labels in a composite * * * [and] it burns well within the accepted rate established by FMVSS No. 302.
Graco states that it is unaware of any complaints of a fire in this seat and consequently there has been no injury.
Interested persons are invited to submit written data, views, and arguments on the petition described above. Comments must refer to the docket and notice number cited at the beginning of this notice and be submitted by any of the following methods. Mail: Docket Management Facility, U.S. Department of Transportation, Nassif Building, Room
The petition, supporting materials, and all comments received before the close of business on the closing date indicated below will be filed and will be considered. All comments and supporting materials received after the closing date will also be filed and will be considered to the extent possible. When the petition is granted or denied, notice of the decision will be published in the
Comment closing date: June 3, 2005.
(49 U.S.C. 30118, 30120: delegations of authority at CFR 1.50 and 501.8)
Union Pacific Railroad Company (UP) has filed a notice of exemption under 49 CFR 1152 Subpart F—
UP 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 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 this exemption, any employee adversely affected by the abandonment shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 3, 2005, unless stayed pending reconsideration. Petitions to stay that do not involve environmental issues,
A copy of any petition filed with the Board should be sent to UP's representative: Mack H. Shumate, Jr., Union Pacific Railroad Company, 101 North Wacker Drive, Room 1920, Chicago, IL 60606.
If the verified notice contains false or misleading information, the exemption is void ab initio.
UP has filed an environmental and historic report which addresses the effects, if any, of the abandonment on the environment and historic resources. SEA will issue an environmental assessment (EA) by May 9, 2005. 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) 565-1539. [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 4, 2006, 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) has filed a notice of exemption under 49 CFR 1152 Subpart F-
UP has certified that: (1) No local traffic has moved over the line for at least 2 years; (2) there is no overhead traffic to be rerouted; (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 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 this exemption, any employee adversely affected by the abandonment shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 3, 2005, unless stayed pending reconsideration. Petitions to stay that do not involve environmental issues,
A copy of any petition filed with the Board should be sent to UP's representative: Mack H. Shumate, Jr., Senior General Attorney, 101 North Wacker Drive, Room 1920, Chicago, IL 60606.
If the verified notice contains false or misleading information, the exemption is void
UP has filed an environmental and historic report which addresses the abandonment's effects, if any, on the environment and historic resources. SEA will issue an environmental assessment (EA) by May 9, 2005. 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) 565-1539. [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 4, 2006, 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.
Internal Revenue Service (IRS), Treasury.
Notice.
This notice is provided in accordance with IRC section 6039G, as amended, by the Health Insurance Portability and Accountability Act (HIPPA) of 1996. This listing contains the name of each individual losing United States citizenship (within the meaning of section 877(a)) with respect to whom the Secretary received information during the quarter ending March 31, 2005.
Internal Revenue Service (IRS), Treasury.
Notice of open meeting.
In 1998 the Internal Revenue Service established the Electronic Tax Administration Advisory Committee (ETAAC). The primary purpose of ETAAC is for industry partners to provide an organized public forum for discussion of electronic tax administration issues in support of the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC offers constructive observations about current or proposed policies, programs, and procedures, and suggests improvements. Listed is a summary of the agenda along with the planned discussion topics.
The planned discussion topics are:
(1) Remarks from the Director of Electronic Tax Administration.
(2) Expanding E-Government: Partnering for a Results-Oriented Government.
(3) Filing Season Update.
(4) Draft 2005 Report to Congress Discussion.
Last-minute changes to these topics are possible and could prevent advance notice.
There will be a meeting of ETAAC on Thursday, May 19, 2005. This meeting will be open to the public, and will be in a room that accommodates approximately 40 people, including members of ETAAC and IRS officials. Seats are available to members of the public on a first-come, first-served basis.
The meeting will be held at the Madison Hotel (John Adams Meeting Room), 15 & M Streets, NW., Washington, DC 20005.
To have your name put on the guest list and to receive a copy of the agenda or general information about ETAAC, please contact Kim Logan on 202-283-1947 or at
ETAAC reports to the Director, Electronic Tax Administration, the executive responsible for the electronic tax administration program. Increasing participation by external stakeholders in the development and implementation of the strategy for electronic tax administration, will help achieve the IRS achieve the goal that paperless filing should be the preferred and most convenient method of filing tax and information returns.
ETAAC members are not paid for their time or services, but consistent with Federal regulations, they are reimbursed for their travel and lodging expenses to attend the public meetings, working sessions, and an orientation each year.
Internal Revenue Service (IRS) Treasury.
Notice.
An open meeting of the Area 6 committee of the Taxpayer Advocacy
The meeting will be held Thursday, May 19, 2005.
Dave Coffman at 1-888-912-1227, or 206-220-6096.
Notice is hereby given pursuant to Section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Area 6 Taxpayer Advocacy Panel will be held Thursday, May 19, 2005 from 1 p.m. Pacific Time to 2:30 p.m. Pacific Time via a telephone conference call. The public is invited to make oral comments. Individual comments will be limited to 5 minutes. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 206-220-6096, or write to Dave Coffman, TAP Office, 915 2nd Avenue, MS W-406, Seattle, WA 98174 or you can contact us at
The agenda will include the following: Various IRS issues.
Internal Revenue Service, Treasury.
Notice of alteration to a Privacy Act system of records.
In accordance with the requirements of the Privacy Act of 1974, as amended, 5 U.S.C. 552a, the Treasury Department, Internal Revenue Service, gives notice of a proposed alteration to the system of records, Treasury/IRS 60.000—Employee Protection System Records.
Comments must be received no later than June 3, 2005. The system of records will be effective June 13, 2005, unless comments are received which result in a contrary determination.
Comments should be sent to the Office of Governmental Liaison and Disclosure, Internal Revenue Service, 1111 Constitution Ave., NW., Washington, DC 20224. Comments will be made available for inspection and copying in the National Office room upon request. An appointment for inspecting the comments can be made by calling (202) 622-5164. This is not a toll free number.
Chief, Office of Employee Protection, Internal Revenue Service, 477 Michigan Avenue, Detroit, MI 48226, telephone (313) 628-3742. This is not a toll free number.
This gives notice of a proposed alteration to a Department of the Treasury, Internal Revenue Service system of records entitled “Treasury/IRS 60.000—Employee Protection System Records” which is subject to the Privacy Act of 1974, 5 U.S.C. 552a. The proposed alteration will add individuals who are potentially dangerous to IRS contractors to the system of records.
The Employee Protection System Records system of records was established to enhance the security and safety of Internal Revenue Service employees who are engaged in the assessment and collection of Federal taxes. This system consists of information furnished by Internal Revenue Service employees or other parties with respect to an individual who is involved in a tax administration matter before the Internal Revenue Service.
The records in this system are maintained for a period of five years, after which the records are reviewed to determine whether there is a need to maintain the information in the system. This system currently consists primarily of records of potentially dangerous taxpayers formerly maintained under the system of records entitled “Treasury/IRS 60.001—Assault and Threat Investigation Files, Inspection, and Records” pertaining to assaults, threats, and suicide threats maintained in the Treasury/IRS 60.007—Miscellaneous Information File, Inspection.
The alteration will add records to the system that will include reports of incidents of threats of harm to, or intimidation of, government contractors by individual taxpayers, threats of suicide made by a taxpayer in response to a contact by a government contractor, results of investigations into those incidents, determinations as to whether the taxpayer should be considered a potentially dangerous taxpayer or a taxpayer who should be approached with caution, and related correspondence.
The system notice was last published in its entirety in the
The report of an altered system of records, as required by 5 U.S.C. 552a(r) of the Privacy Act, has been submitted to the Committee on Government Reform of the House of Representatives, the Committee on Homeland Security and Governmental Affairs of the Senate, and the Office of Management and Budget, pursuant to Appendix I to OMB Circular A-130, “Federal Agency Responsibilities for Maintaining Records About Individuals,” dated November 30, 2000.
For the above reasons, the IRS proposes to amend its system of records as set forth below:
Employee Protection System Records
Description of the changes:
a. The first sentence is removed and in its place add the following sentence to read: “Individuals attempting to interfere with the administration of internal revenue laws through assaults, threats, suicide threats, filing or threats of filing frivolous criminal or civil legal action against Internal Revenue Service (IRS) employees or contractors or the employees' or contractors' immediate family members, or forcible interference of any officer, government contractor or employee while discharging the official duties at his/her position.”
b. Category (4) is amended by adding “or contractor” immediately after the words “employees” and is revised to read: “Individuals who have committed the acts set forth in any of the above criteria, but whose acts have been directed against employees or contractors of other governmental agencies at Federal, State, county, or local levels;”
Description of the changes: Category (8) is amended by adding “or contractors” immediately after the words “IRS employee” and is revised to
Description of the change: Remove the current entry and in its place add the following language: “This system of records documents reports by Internal Revenue Service employees of attempts by taxpayers to obstruct or impede Internal Revenue Service employees, contractors, or other law enforcement personnel in the performance of their official duties, investigations into the matters reported, and conclusions as to whether the taxpayers should be considered potentially dangerous taxpayers or should otherwise be approached with caution by employees or contractors of the Internal Revenue Service or any other law enforcement organization.”
Description of change: The period at the end of routine use (6) is replaced with a semicolon, “;” and the following routine use is added at the end thereof: “(7) Provide information to a government contractor to alert the contractor that a taxpayer may be potentially dangerous.”
Description of the change: Remove the current entry and in its place add the following to read: “Department of the Treasury personnel and records, newspapers and periodicals, taxpayers (witnesses and informants), state and local government agency personnel and records, and anonymous individuals. This system of records may also contain investigatory material compiled for criminal law enforcement purposes whose sources need not be reported.”
As required by section 9(a)(2) of the Federal Advisory Committee Act, the Department of Veterans Affairs (VA) hereby gives notice of the establishment of the Construction Advisory Board. The Secretary of Veterans Affairs has determined that establishing the Board is both in the public interest and essential to the conduct of VA business.
The Construction Advisory Board will provide advice and make recommendations to the Secretary on the nature and scope of the Department's construction process. In carrying out its responsibilities, the Board will focus or design approval, procurement and administration of construction contracts, quality assurance, and construction project management.
The Board is expected to submit its final report and recommendations not later than December 31, 2005.
By Direction of the Secretary.
Office of Research and Development.
Notice of government owned invention available for licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with 35 U.S.C. 207 and 37 CFR part 404 and/or CRADA Collaboration under 15 U.S.C. 3710a to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Robert W. Potts, Department of Veterans Affairs, Director, Technology Transfer Program, Office of Research and Development, 810 Vermont Avenue NW., Washington, DC 20420; fax: (202) 254-0473 e-mail at:
The invention available for licensing is: U.S. Provisional Patent Application No. 60/563,538 “A Method for Rapid Screening of Mad Cow Disease and Other Transmissible Spongiform Encephalopathies.”
Office of Research and Development.
Notice of government owned invention available for licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with 35 U.S.C. 207 and 37 CFR part 404 and/or CRADA Collaboration under 15 U.S.C. 3710a to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Robert W. Potts, Department of Veterans Affairs, Director, Technology Transfer Program, Office of Research and Development, 810 Vermont Avenue, NW., Washington, DC 20420; fax: 202-254-0473; e-mail at:
The invention available for licensing is: U.S. Provisional Patent Application No. 60/644,345 “Screening Tools for Discovery of Novel Anabolic Agents”.
Office of Research and Development.
Notice of government owned invention available for licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with 35 U.S.C. 207 and 37 CFR part 404 and/or CRADA Collaboration under 15 U.S.C. 3710a to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Robert W. Potts, Department of Veterans Affairs, Director, Technology Transfer Program, Office of Research and Development, 810 Vermont Avenue, NW., Washington, DC 20420; fax: (202) 254-0473; e-mail at:
The invention available for licensing is: U.S. Provisional Patent Application No. 60/646,710 “Compositions and Methods for Improving Muscle Mass and Muscle Tone”.
Office of Research and Development.
Notice of government owned invention available for licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with 35 U.S.C. 207 and 37 CFR part 404 and/or CRADA Collaboration under 15 U.S.C. 3710a to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Robert W. Potts, Department of Veterans Affairs, Director, Technology Transfer Program, Office of Research and Development, 810 Vermont Avenue, NW., Washington, DC 20420; fax: (202) 254-0473; e-mail at:
The invention available for licensing is:
International Patent Application No. PCT/US03/20065 “Methods for Detecting and Inactivating a Prion.”
Office of Research and Development, VA.
Notice of Government Owned Invention Available for Licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with 35 U.S.C. 207 and 37 CFR part 404 and/or CRADA Collaboration under 15 U.S.C. 3710a to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Robert W. Potts, Department of Veterans Affairs, Director, Technology Transfer Program, Office of Research and Development, 810 Vermont Avenue, NW., Washington, DC 20420; fax: (202) 254-0473; e-mail at:
The invention available for licensing is: U.S. Provisional Patent Application No. 60/640,170 “Regulation of MIF Activity by Interaction With its Protein Binding Domain.”
Office of Research and Development, VA.
Notice of Government Owned Invention Available for Licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with 35 U.S.C. 207 and 37 CFR part 404 or Cooperative Research and Development Agreement (CRADA) Collaboration under 15 U.S.C. 3710a to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Robert W. Potts, Department of Veterans Affairs, Director, Technology Transfer Program, Office of Research and Development, 810 Vermont Avenue, NW., Washington, DC 20420; fax: (202) 254-0473; e-mail at:
The invention available for licensing is: U.S. Provisional Patent Application No. 60/620,660 “Disimmortalizable Mammalian Chromaffin Cell Lines for Cell Therapy for Pain.”
Office of Research and Development, VA.
Notice of Government Owned Invention Available for Licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with 35 U.S.C. 207 and 37 CFR part 404 and/or CRADA Collaboration under 15 U.S.C. 3710a to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Robert W. Potts, Department of Veterans Affairs, Director, Technology Transfer Program, Office of Research and Development, 810 Vermont Avenue, NW., Washington, DC 20420; fax: (202) 254-0473; e-mail at:
The invention available for licensing is: U.S. Provisional Patent Application No. 60/623,002 “Assays for Identifying Agents That Inhibit Calcium Crystal-Comprising-Induced Entry of Matter Into a Cell.”
Office of Research and Development, VA.
Notice of Government Owned Invention Available for Licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with 35 U.S.C. 207 and 37 CFR part 404 and/or CRADA Collaboration under 15 U.S.C. 3710a to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Robert W. Potts, Department of Veterans Affairs, Director, Technology Transfer Program, Office of Research and Development, 810 Vermont Avenue NW., Washington, DC 20420; fax: (202) 254-0473; e-mail at:
The invention available for licensing is: U.S. Patent Application No. 10/927,616 “Inhibitor of Cardiac Tachyarrhythmias.”
In proposed rule document 05-8371 beginning on page 21684 in the issue of Wednesday, April 27, 2005, make the following correction:
On page 21685, in the first column, under the heading “
In notice document E5-1973 beginning on page 21474 in the issue of Tuesday, April 26, 2005, make the following correction:
On page 21474, in the first column, ~the docket number is corrected to read as set forth above.
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-related costs to implement changes arising from our continuing experience with these systems. In addition, in the Addendum to this proposed rule, we describe the proposed changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. 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 that are paid in full or in part on a reasonable cost basis subject to these limits. These proposed changes would be applicable to discharges occurring on or after October 1, 2005, with one exception: The proposed changes relating to submittal of hospital wage data by a campus or campuses of a multicampus hospital system (that is, the proposed changes to § 412.230(d)(2) of the regulations) would be effective upon publication of the final rule.
Among the policy changes that we are proposing to make are changes relating to: the classification of cases to the diagnosis-related groups (DRGs); the long-term care (LTC)-DRGs and relative weights; the wage data, including the occupational mix data, used to compute the wage index; rebasing and revision of the hospital market basket; applications for new technologies and medical services add-on payments; policies governing postacute care transfers, payments to hospitals for the direct and indirect costs of graduate medical education, submission of hospital quality data, payment adjustment for low-volume hospitals, changes in the requirements for provider-based facilities; and changes in the requirements for critical access hospitals (CAHs).
Comments will be considered if received at the appropriate address, as provided in the
In commenting, please refer to file code CMS-1500-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates, please):
You may submit electronic comments to
You may mail written comments (one original and two copies) to the following address only: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1500-P, P.O. Box 8011, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received before the close of the comment period.
If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members.
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201, or 7500 Security Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain proof of filing by stamping in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.
For comments that relate to information collection requirements, mail a copy of comments to the following addresses:
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
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 or medical services that have been approved for special add-on payments. To qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services 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 or medical service 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. (An MDH receives only 50 percent of the difference between the IPPS rate and its hospital-specific rates if the hospital-specific rate is higher than the IPPS rate. In addition, an MDH does not have the option of using FY 1996 as the base year for its hospital-specific 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 system established by the Secretary.” The basic methodology for determining capital prospective payments is set forth in our regulations at 42 CFR 412.308 and 412.312. Under the capital PPS, payments are adjusted by the same DRG for the case as they are under the operating IPPS. Similar adjustments are also made for IME and DSH as under the operating IPPS. In addition, hospitals may receive an outlier payment for those cases that have unusually high costs.
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 (referred to as inpatient psychiatric facilities (IPFs)), 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.
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 the adjusted facility Federal prospective payment rate for cost reporting periods beginning January 1, 2002 through September 30, 2002, to payment at 100 percent of the Federal rate effective for cost reporting periods beginning on or after October 1, 2002 (66 FR 41316, August 7, 2001; 67 FR 49982, August 1, 2002; and 68 FR 45674, August 1, 2003). The existing regulations governing payments under the IRF PPS are located in 42 CFR Part 412, Subpart P.
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 100 percent of the Federal rate 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 100 percent of the Federal rate (May 7, 2004 LTCH PPS final rule (69 FR 25674)). LTCHs may elect to be paid based on 100 percent of the Federal rate 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.
Under the authority of sections 124(a) and (c) of Pub. L. 106-113, inpatient psychiatric facilities (IPFs) (formerly psychiatric hospitals and psychiatric units of acute care hospitals) are paid under the new IPF PPS. Under the IPF PPS, some IPFs are transitioning from being paid for inpatient hospital services based on a blend of reasonable cost-based payment and a Federal per diem payment rate, effective for cost reporting periods beginning on or after January 1, 2005 (November 15, 2004 IPF PPS final rule (69 FR 66921)). For cost reporting periods beginning on or after July 1, 2008, IPFs will be paid 100 percent of the Federal per diem payment amount. The existing regulations governing payment under the IPF PPS are located in 42 CFR part 412, subpart N.
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 based
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.
On August 11, 2004, we published a final rule in the
In this proposed rule, we are setting forth proposed changes to the Medicare IPPS for operating costs and for capital-related costs in FY 2006. We also are setting forth proposed changes relating to payments for GME costs, payments to certain hospitals and units that continue to be excluded from the IPPS and paid on a reasonable cost basis, payments for DSHs, and requirements and payments for CAHs. The changes being proposed would be effective for discharges occurring on or after October 1, 2005, unless otherwise noted.
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, in section II. of this proposed rule, we are proposing annual adjustments to the DRG classifications and relative weights. 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.
The major DRG classification changes we are proposing include:
• Reassigning procedure code 35.52 (Repair of atrial septal defect with prosthesis, closed technique) from DRG 108 to DRG 518 (Percutaneous Cardiovascular Procedure Without Coronary Artery Stent or AMI);
• Reassigning procedure code 37.26 (Cardiac electrophysiologic stimulation and recording studies) from DRGs 535 and 536 to DRGs 515 (Cardiac Defibrillator Implant Without Cardiac Catheterization);
• Splitting DRG 209 into two new DRGs based on the presence or absence of the procedure codes for major joint replacement or reattachment of lower extremity and revision of hip or knee replacement, DRG 545 (Revision of Hip or Knee Replacement) and DRG 544 (Major Joint Replacement or Reattachment of Lower Extremity);
• Reassigning procedure code 26.12 (Open biopsy of salivary gland or duct) from DRG 468 to DRG 477 (Nonextensive O.R. Procedure Unrelated To Principal Diagnosis);
• Reassigning the principal diagnosis codes for curvature of the spine or malignancy from DRGs 497 and 498 to proposed new DRG 546 (Spinal Fusion Except Cervical with PDX of Curvature of the Spine or Malignancy);
• Splitting DRGs 516 and 526 into four new DRGs based on the presence or absence of a CC;
• Reassigning procedure code 39.65 (Extracorporeal membrane oxygenation [ECMO]) from DRGs 104 and 105 to DRG 541 (ECMO or Tracheostomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth and Neck Diagnoses With Major Operating Room Procedure).
We also are presenting our reevaluation of certain FY 2005 applicants for add-on payments for high-cost new medical services and technologies, and our analysis of FY 2006 applicants (including public input, as directed by Pub. L. 108-173, obtained in a town hall meeting).
We are proposing the annual update of the long-term care diagnosis-related group (LTC-DRG) classifications and relative weights for use under the LTCH PPS for FY 2006.
In section III. of this preamble, we are proposing revisions to the wage index and the annual update of the wage data. Specific issues addressed include the following:
• The FY 2006 wage index update, using wage data from cost reporting periods that began during FY 2002.
• The proposed occupational mix adjustment to the wage index that we began to apply effective October 1, 2004.
• The proposed revisions to the wage index based on hospital redesignations and reclassifications.
• The proposed adjustment to the wage index for FY 2006 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index.
• The timetable for reviewing and verifying the wage data that will be in effect for the proposed FY 2006 wage index.
In section IV. of this proposed rule, we are proposing rebasing and revising the hospital operating and capital market baskets to be used in developing the FY 2006 update factor for the operating prospective payment rates and the excluded hospital market basket to be used in developing the FY 2006 update factor for the excluded hospital rate-of-increase limits. We are also setting forth the data sources used to determine the revised market basket relative weights and choice of price proxies.
In section V. of this proposed rule, we discuss a number of provisions of the regulations in 42 CFR Parts 412 and 413 and set forth proposed changes concerning the following:
• Solicitation of public comments on two options for possible expansion of the current postacute care transfer policy.
• The reporting of hospital quality data as a condition for receiving the full annual payment update increase.
• Proposed changes in the payment adjustment for low-volume hospitals.
• Proposed IME adjustment for TEFRA hospitals that are converting to IPPS hospitals, and IME FTE resident caps for urban hospitals that are granted
• Proposed changes to implement section 951 of Pub. L. 108-173 relating to the provision of patient stay/SSI days data maintained by CMS to hospitals for the purpose of determining their DSH percentage.
• Proposed changes relating to hospitals' geographic classifications, including multicampus hospitals and urban group hospital reclassifications.
• Proposed changes and clarifications relating to GME, including GME initial residency period limitation, new teaching hospitals' participation in Medicare GME affiliated groups, and the GME FTE cap adjustment for rural hospitals;
• Solicitation of public comments on possible changes in requirements for provider-based entities relating to entities the location requirements for certain neonatal intensive care units as off-campus facilities;
• Discussion of the second year of implementation of the Rural Community Hospital Demonstration Program; and
• Clarification of the definition of a hospital as it relates to “specialty hospitals” participating in the Medicare program.
In section VI. of this proposed rule, we are not proposing any policy changes to the capital-related prospective payment system. For the readers' benefit, we discuss the payment policy requirements for capital-related costs and capital payments to hospitals.
In section VII. of this proposed rule, we discuss the proposed revisions and clarifications concerning excluded hospitals and hospital units, proposed policy changes relating to continued participation by CAHs located in counties redesignated under section 1886(d)(8)(B) of the Act (Lugar counties), and proposed policy changes relating to designation of CAHs as necessary providers.
In section VIII of this proposed rule, we discuss the proposed change in payment for blood clotting factor administered to inpatients with hemophilia for FY 2006.
In the Addendum to this proposed rule, we set forth proposed changes to the amounts and factors for determining the FY 2006 prospective payment rates for operating costs and capital-related costs. We also establish the proposed threshold amounts for outlier cases. In addition, we address the proposed update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2006 for hospitals and hospital units excluded from the PPS.
In Appendix A of this proposed rule, we set forth an analysis of the impact that the proposed changes would have on affected hospitals.
In Appendix B of this proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided our recommendations of the appropriate percentage changes for FY 2006 for the following:
• A single average standardized amount for all areas for hospital inpatient services paid under the IPPS for operating costs (and hospital-specific rates applicable to SCHs and MDHs).
• 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, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC's March 2005 recommendation concerning hospital inpatient payment policies addressed only the update factor for inpatient hospital operating costs and capital-related costs under the IPPS and for hospitals and distinct part hospital units excluded from the IPPS. This recommendation is addressed in Appendix B of this proposed rule. MedPAC issued a second Report to Congress: Physician-Owned Specialty Hospitals, March 2005, which addressed other issues relating to Medicare payments to hospitals for inpatient services. The recommendations on these issues from this second report are addressed in section IX. of this preamble. For further information relating specifically to the MedPAC March 2005 reports or to obtain a copy of the reports, contact MedPAC at (202) 220-3700 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 recalibration of the DRG weights for discharges occurring on or after October 1, 2005, are discussed below.
(If you choose to comment on issues in this section, please include the caption “DRG Reclassifications” at the beginning of your comment.)
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
The process of forming the DRGs was begun by dividing all possible principal diagnoses into mutually exclusive principal diagnosis areas referred to as Major Diagnostic Categories (MDCs). The MDCs were formed by physician panels as the first step toward ensuring that the DRGs would be clinically coherent. The diagnoses in each MDC correspond to a single organ system or etiology and, in general, are associated with a particular medical specialty. Thus, in order to maintain the requirement of clinical coherence, no final DRG could contain patients in different 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 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)). For FY 2005, cases are assigned to one of 519 DRGs in 25 MDCs. 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 2005, there are nine DRGs to which cases are directly assigned on the basis of ICD-9-CM procedure codes. These DRGs are for heart transplant or implant of heart assist systems, liver and/or intestinal transplants, bone marrow, lung, simultaneous pancreas/kidney, and pancreas transplants and for tracheostomies. Cases are assigned to these DRGs before they are classified to an MDC. The table below lists the current nine pre-MDCs.
Once the MDCs were defined, each MDC was evaluated to identify those additional patient characteristics that would have a consistent effect on the consumption of hospital resources. Since the presence of a surgical procedure that required the use of the operating room would have a significant effect on the type of hospital resources used by a patient, most MDCs were initially 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 that are 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, for example, extracorporeal shock wave lithotripsy for patients with a principal diagnosis of urinary stones.
Once the medical and surgical classes for an MDC were formed, each class of patients was evaluated to determine if complications, comorbidities, or the patient's age would consistently affect the consumption of hospital resources. Physician panels classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity.
A substantial complication or comorbidity was defined as a condition, which because of its presence with a specific principal diagnosis, would cause an increase in the length of stay by at least one day in at least 75 percent of the patients. Each medical and surgical class within an MDC was tested to determine if the presence of any substantial comorbidities or complications would consistently affect the consumption of hospital resources.
The actual process of forming the DRGs was, and continues to be, highly iterative, involving a combination of statistical results from test data combined with clinical judgment. In deciding whether to create a separate DRG, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients in the DRG. We evaluate patient care costs using average charges and length of stay as proxies for costs and rely on the judgment of our medical officers to decide whether patients are distinct or clinically similar to other patients in the DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average charges between the cases we are selecting for review and the remainder of cases in the DRG. We also consider variation in charges within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of charges or length of stay, or both. Further, we also consider the number of patients who will have a given set of characteristics and generally prefer not to create a new DRG unless it will include a substantial number of cases. As we explain in more detail in section IX. of this preamble, MedPAC has made a number of recommendations regarding the DRG system. As part of our review and analysis of MedPAC's recommendations, we will consider whether to establish guidelines for making DRG reclassification decisions.
A patient's 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). The MCE screens are designed to identify cases that require further review before classification into a DRG.
After patient information is screened through the MCE and any further development of the claim is conducted, the 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, the PRICER software calculates a base DRG payment. The PRICER calculates the payments for each case covered by the IPPS based on the DRG relative weight and additional factors associated with each hospital, such as IME and DSH adjustments. These additional factors increase the payment amount to hospitals above the base DRG payment.
The records for all Medicare hospital inpatient discharges are maintained in the Medicare Provider Analysis and
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 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 if included, 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 2006 for the FY 2006 GROUPER, version 23.0 and to the methodology used to recalibrate the DRG weights are set forth below. Unless otherwise noted in this proposed rule, our DRG analysis is based on data from the December 2004 update of the FY 2004 MedPAR file, which contains hospital bills received through December 31, 2004 for discharges in FY 2004.
In the FY 2005 IPPS final rule (69 FR 48976), we moved intestinal transplantation cases that were assigned to ICD-9-CM procedure code 46.97 (Transplant of intestine) out of DRG 148 (Major Small and Large Bowel Procedures with CC) and DRG 149 (Major Small and Large Bowel Procedures Without CC) and into DRG 480 (Liver Transplant). We also changed the title for DRG 480 to “Liver Transplant and/or Intestinal Transplant.” We moved these cases out of DRGs 148 and 149 because our analysis demonstrated that the average charges for intestinal transplants are significantly higher than the average charges for other cases in these DRGs. We stated at that time that we would continue to monitor these cases.
Based on our review of the FY 2004 MedPAR data, we found 959 cases assigned to DRG 480 with overall average charges of approximately $165,622. There were only three cases involving an intestinal transplant alone and one case in which both an intestinal transplant and a liver transplant were performed. The average charges for the intestinal transplant cases ($138,922) were comparable to the average charges for the liver transplant cases ($165,314), while the remaining combination of an intestinal transplant and a liver transplant case had much higher charges ($539,841), and would be paid as an outlier case. Therefore, we are not proposing any DRG modification for intestinal transplantation cases at this time.
We note that an institution that performs intestinal transplantation, in correspondence to us written following the publication of the FY 2005 IPPS final rule, agreed with our decision to move cases assigned to code 46.97 to DRG 480.
In 1996, the Food and Drug Administration (FDA) approved the use of tissue plasminogen activator (tPA), one type of thrombolytic agent that dissolves blood clots. In 1998, the ICD-9-CM Coordination and Maintenance Committee created code 99.10 (Injection or infusion of thrombolytic agent) in order to be able to uniquely identify the administration of thrombolytic agents. Studies have shown that tPA can be effective in reducing the amount of damage the brain sustains during an ischemic stroke, which is caused by blood clots that block blood flow to the brain. The use of tPA is approved for patients who have blood clots in the brain, but not for patients who have a bleeding or hemorrhagic stroke. Thrombolytic therapy has been shown to be most effective when used within the first 3 hours after the onset of a stroke, and it is contraindicated in hemorrhagic stroke. The presence or absence of code 99.10 does not currently influence DRG assignment. Since code 99.10 became effective, we have been monitoring the DRGs and cases in which this code can be found, particularly with respect to cardiac and stroke DRGs.
Last year, we met with representatives from several hospital stroke centers who recommended modification of the existing stroke DRGs 14 (Intracranial Hemorrhage or Cerebral Infarction) and 15 (Nonspecific CVA and Precerebral Occlusion Without Infarction) by using the administration of tPA as a proxy to identify patients who have severe strokes. The representatives stated that using tPA as a proxy for the more severely ill stroke patient would recognize the higher charges these cases generate because of their higher hospital resource utilization.
The stroke representatives made two suggestions concerning DRGs 14 and 15. First, they proposed modifying DRG 14 by renaming it “Ischemic Stroke Treatment with a Reperfusion Agent,” and including only those cases containing code 99.10. The remainder of stroke cases where the patient was not treated with a reperfusion agent would be included in DRG 15, which would be renamed “Hemorrhagic Stroke or Ischemic Stroke without a Reperfusion Agent.” Hemorrhagic stroke cases now found in DRG 14 that are not treated with a reperfusion agent would migrate to DRG 15.
The second suggestion was to leave DRGs 14 and 15 as they currently exist, and create a new DRG, with a recommended title “Ischemic Stroke Treatment with a Reperfusion Agent.” This suggested DRG would only include strokes caused by clots, not by hemorrhages, and would include the administration of tPA, identified by procedure code 99.10.
We have examined the MedPAR data for the cases in DRGs 14 and 15, and have divided the cases based on the presence of a principal diagnosis of hemorrhage or occlusive ischemia, and the presence of procedure code 99.10. The following table displays the results:
The above table shows that the average standardized charges for cases treated with a reperfusion agent are more than $16,000 and $10,000 higher than all other cases in DRGs 14 and 15, respectively. While these data suggest that patients treated with a reperfusion agent are more expensive than all other stroke patients, this conclusion is based on a small number of cases. At this time, we are not proposing a change to the stroke DRGs because of this concern. However, we believe it is possible that more patients are being treated with a reperfusion agent than indicated by our data because the presence of code 99.10 does not affect DRG assignment and may be underreported.
We invite public comment on the changes to DRGs 14 and 15 suggested by the hospital representatives. In addition, we are interested in public comment on the number of patients currently being treated with a reperfusion agent as well as the potential costs of these patients relative to others with strokes that are also included in DRGs 14 and 15.
In the FY 2004 IPPS final rule (68 FR 45353), we created DRG 528 (Intracranial Vascular Procedures With a Principal Diagnosis of Hemorrhage) in MDC 1. We received a comment at that time that suggested we create another DRG for intracranial vascular procedures for unruptured cerebral aneurysms. For the FY 2004 IPPS final rule (68 FR 45353) and the FY 2005 IPPS final rule (69 FR 48957), we evaluated the data for cases in the MedPAR file involving unruptured cerebral aneurysms assigned to DRG 1 (Craniotomy Age >17 With CC) and DRG 2 (Craniotomy Age >17 Without CC) and concluded that the average charges were consistent with those for other cases found in DRGs 1 and 2. Therefore, we did not propose a change to the DRG assignment for unruptured cerebral aneurysms.
We have reviewed the latest data for unruptured cerebral aneurysms cases. In our analysis of the FY 2004 MedPAR data, we found 1,136 unruptured cerebral aneurysm cases assigned to DRG 1 and 964 unruptured cerebral aneurysm cases assigned to DRG 2. Although the average charges for the unruptured cerebral aneurysm cases in DRG 1 ($53,455) and DRG 2 ($34,028) were slightly higher than the average charges for all cases in DRG 1 ($51,466) and DRG 2 ($30,346), we do not believe these differences are significant enough to warrant a change in these two DRGs at this time. Therefore, we are not proposing a change in the structure of these DRGs relating to unruptured cerebral aneurysm cases for FY 2006.
As part of our annual review of DRGs, for FY 2006, we performed a review of cases in the FY 2004 MedPAR file involving the implantation of a defibrillator in the following DRGs:
DRG 515 (Cardiac Defibrillator Implant Without Cardiac Catheterization).
DRG 535 (Cardiac Defibrillator Implant With Cardiac Catheterization With Acute Myocardial Infarction, Heart Failure, or Shock).
DRG 536 (Cardiac Defibrillator Implant With Cardiac Catheterization Without Acute Myocardial Infarction, Heart Failure, or Shock).
While conducting our review, we noted that there had been considerable comments from hospital coders on code 37.26 (Cardiac electrophysiologic stimulation and recording studies (EPS)), which is included in these DRGs. These comments from hospital coders were directed at both CMS and the American Hospital Association. The procedure codes for these three DRGs describe the procedures that are considered to be a cardiac catheterization. Code 37.26 is classified as a cardiac catheterization within these DRGs. Therefore, the submission of code
We have received a number of questions from hospital coders regarding the correct use of code 37.26. There is considerable confusion about whether or not code 37.26 should be reported when the procedure is performed as part of the defibrillator implantation. Currently, the ICD-9-CM instructs the coder not to report code 37.26 when a defibrillator is inserted. There is an inclusion term under the defibrillator code 37.94 (Implantation or replacement of automatic cardioverter/defibrillator, total system [AICD]) which states that EPS is included in code 37.94. We discussed modifying this instruction at the October 7-8, 2004 meeting of the ICD-9-CM Coordination and Maintenance Committee. We received a number of comments opposing a modification to the use of code 37.26 to also allow it to be reported with an AICD insertion. A report of this meeting can be found on the Web site:
We performed an analysis of cases within DRGs 535 and 536 with cardiac catheterization and with and without code 37.26 and with code 37.26 only reported without cardiac catheterization and found the following:
The data show that when code 37.26 is the only procedure reported from the list of cardiac catheterizations, the average charges and the average length of stay are considerably lower. For example, the average standardized charges for a defibrillator implant with only an EPS are $85,390.88 in DRG 536, while the average standardized charges for DRG 536 with a cardiac catheterization, but not an EPS, are $110,493.86. The average standardized charges for all cases in DRG 536 are $94,453.62. The data show similar findings for DRG 535, with lower lengths of stay and average charges when the only code reported from the cardiac catheterization list is an EPS. When we also consider that there may be some coding problems in the use of code 37.26, we believe it is appropriate to propose a modification to these DRGs.
Data reflected in the chart above show that the average standardized charges for DRG 515 were $83,659.76. These average charges are closer to those in DRG 536 with code 37.26 and without any other cardiac catheterization code reported. While the cases in DRG 535 with code 37.26 and without a cardiac catheterization have higher average charges than the average charges for cases in DRG 515, these cases have much lower average charges than the average charges for overall cases in DRG 535. For these reasons, we are proposing to remove code 37.26 from the list of cardiac catheterizations for DRGs 535 and 536. If a defibrillator is implanted and an EPS is performed with no other type of cardiac catheterization, the case would be assigned to DRG 515.
CMS issued a National Coverage Determination for implantable cardioverter defibrillators, effective January 27, 2005, that expands coverage and requires, in certain cases, that patient data be reported when the defibrillator is implanted for the clinical indication of primary prevention of sudden cardiac death. The submission of data on patients receiving an implantable cardioverter defibrillator for primary prevention to a data collection system is needed for the determination that the implantable cardioverter
We intend to transition from the temporary registry using the Quality Net Exchange to a more sophisticated follow-on registry that will have the ability to collect longitudinal data. Some providers have suggested that CMS increase reimbursement for implantable cardioverter defibrillators to compensate the provider for reporting data. ICD data reporting includes elements of patient demographics, clinical characteristics and indications, medications, provider information, and complications. Since these data elements are commonly found in patient medical records, it is CMS' expectation that these data are readily available to the individuals abstracting and reporting data. Therefore, we believe that increased reimbursement is not needed at this time.
In the FY 2005 IPPS final rule (69 FR 48971 through 48974), we addressed two comments from industry representatives about the DRG assignments for coronary artery stents. These commenters had expressed concern about whether the reimbursement for stents is adequate, especially for insertion of multiple stents. They also expressed concern about whether the current DRG structure represents the most clinically coherent classification of stent cases.
The current DRG structure incorporates stent cases into the following two pairs of DRGs, depending on whether bare metal or drug-eluting stents are used and whether acute myocardial infarction (AMI) is present:
• DRG 516 (Percutaneous Cardiovascular Procedures with AMI).
• DRG 517 (Percutaneous Cardiovascular Procedures with Nondrug-Eluting Stent without AMI).
• DRG 526 (Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with AMI).
• DRG 527 (Percutaneous Cardiovascular Procedures with Drug-Eluting Stent without AMI).
The commenters presented two recommendations for refinement and restructuring of the current coronary stent DRGs. One of the recommendations involved restructuring these DRGs to create two additional stent DRGs that are closely patterned after the existing pairs, and would reflect insertion of multiple stents with and without AMI. The commenters recommended incorporating either stenting code 36.06 (Insertion of nondrug-eluting coronary artery stent(s)) or code 36.07 (Insertion of drug-eluting coronary artery stent(s)) when they are reported along with code 36.05 (Multiple vessel percutaneous transluminal coronary angioplasty [PTCA] or coronary atherectomy performed during the same operation, with or without mention of thrombolytic agent). The commenter's first concern was that hospitals may be steering patients toward coronary artery bypass graft surgery in place of stenting in order to avoid significant financial losses due to what it considered the inadequate reimbursement for inserting multiple stents.
In our response to comments in the FY 2005 IPPS final rule, we indicated that it was premature to act on this recommendation because the current coding structure for coronary artery stents cannot distinguish cases in which multiple stents are inserted from those in which only a single stent is inserted. Current codes are able to identify performance of PTCA in more than one vessel by use of code 36.05. However, while this code indicates that PTCA was performed in more than one vessel, its use does not reflect the exact number of procedures performed or the exact number of vessels treated. Similarly, when codes 36.06 and 36.07 are used, they document the insertion of at least one stent. However, these stenting codes do not identify how many stents were inserted in a procedure, nor distinguish insertion of a single stent from insertion of multiple stents. Even the use of one of the stenting codes in conjunction with multiple-PTCA code 36.05 does not distinguish insertion of a single stent from multiple stents. The use of code 36.05 in conjunction with code 36.06 or code 36.07 indicates only performance of PTCA in more than one vessel, along with insertion of at least one stent. The precise numbers of PTCA-treated vessels, the number of vessels into which stents were inserted, and the total number of stents inserted in all treated vessels cannot be determined. Therefore, the capabilities of the current coding structure do not permit the distinction between single and multiple vessel stenting that would be required under the recommended restructuring of the coronary stent DRGs.
We agree that the DRG classification of cases involving coronary stents must be clinically coherent and provide for adequate reimbursement, including those cases requiring multiple stents. For this reason, we created four new ICD-9-CM codes identifying multiple stent insertion (codes 00.45, 00.46, 00.47, and 00.48) and four new codes identifying multiple vessel treatment (codes 00.40, 00.41, 00.42, and 00.43) at the October 7, 2004 ICD-9-CM Coordination and Maintenance Committee Meeting. These eight new codes can be found in Table 6B of this proposed rule. We have worked closely with the coronary stent industry and the clinical community to identify the most logical code structure to identify new codes for both multiple vessel and multiple stent use. Effective October 1, 2005, code 36.05 will be deleted and the eight new codes will be used in its place. Coders are encouraged to use as many codes as necessary to describe each case, using one code to describe the angioplasty or atherectomy, and one code each for the number of vessels treated and the number of stents inserted. Coders are encouraged to record codes accurately, as these data will potentially be the basis for future DRG restructuring. While we agree that use of multiple vessel and stent codes will provide useful information in the future on hospital costs associated with percutaneous coronary procedures, we believe it remains premature to proceed with a restructuring of the current coronary stent DRGs on the basis of the number of vessels treated or the number of stents inserted, or both, in the absence of data reflecting use of this new coding structure.
The commenter's second recommendation was that we distinguish “complex” from “noncomplex” cases in the stent DRGs by expanding the higher weighted DRGs (516 and 526) to include conditions other than AMI. The commenter recommended recognizing certain comorbid and complicating conditions, including hypertensive renal failure, congestive heart failure, diabetes, arteriosclerotic cardiovascular disease, cerebrovascular disease, and certain procedures such as multiple vessel angioplasty or atherectomy (as evidenced by the presence of procedure code 36.05), as indicators of complex cases for this purpose. Specifically, the commenters recommended replacing the current structure with the following four DRGs:
• Recommended restructured DRG 516 (Complex percutaneous
• Recommended restructured DRG 517 (Noncomplex percutaneous cardiovascular procedures with non-drug-eluting stents).
• Recommended restructured DRG 526 (Complex percutaneous cardiovascular procedures with drug-eluting stents).
• Recommended restructured DRG 527 (Noncomplex percutaneous cardiovascular procedures with drug-eluting stents).
The commenter argued that this structure would provide an improvement in both clinical and resource coherence over the current structure that classifies cases according to the type of stent inserted and the presence or absence of AMI alone, without considering other complicating conditions. The commenter also presented an analysis, based on previous MedPAR data, that evaluated charges and lengths of stay for cases with expected high resource use and reclassified cases into its recommended new structure of paired “complex” and “noncomplex” DRGs. The commenter's analysis showed some evidence of clinical and resource coherence in the recommended DRG structure. However, we did not adopt the proposal in the FY 2005 IPPS final rule. First, the data presented by the commenter still represented preliminary experience under a relatively new DRG structure. Second, the analysis did not reveal significant gains in resource coherence compared to existing DRGs for stenting cases. Therefore, we were reluctant to adopt this approach because of comments and concern about whether the overall level of payment in the coronary stent DRGs was adequate. However, we indicated that this issue deserved further study and consideration, and that we would conduct an analysis of this recommendation and other approaches to restructuring these DRGs with updated data in the FY 2006 proposed rule.
This year, we have analyzed the MedPAR data to determine the impact of certain secondary diagnoses or complicating conditions on the four DRGs cited above. Specifically, we examined the data in DRGs 516, 517, 526, and 527, based on the presence of coronary stents (codes 36.06 and 36.07) and the following additional diagnoses:
• Congestive heart failure (represented by codes 398.91 (Rheumatic heart failure (congestive)), 402.01 (Hypertensive heart disease, malignant, with heart failure), 402.11, (Hypertensive heart disease, benign, with heart failure), 402.91 (Hypertensive heart disease, unspecified, with heart failure), 404.01 (Hypertensive heart and renal disease, malignant, with heart failure), 404.03 (Hypertensive heart and renal disease, malignant, with heart failure and renal failure), 404.11 (Hypertensive heart and renal disease, benign, with heart failure), 404.13 (Hypertensive heart and renal disease, benign, with heart failure and renal failure), 404.91 (Hypertensive heart and renal disease, unspecified, with heart failure), 404.93 (Hypertensive heart and renal disease, unspecified, with heart failure and renal failure), 428.0 (Congestive heart failure, unspecified), and 428.1 (Left heart failure)).
• Arteriosclerotic cardiovascular disease (represented by code 429.2 (Cardiovascular disease, unspecified)).
• Cerebrovascular disease (represented by codes 430.0 (Subarachnoid hemorrhage), 431.0 (Intracerebral hemorrhage), 432.0 (Nontraumatic extradural hemorrhage), 432.1, Subdural hemorrhage, 432.9, (Unspecified intracranial hemorrhage), 433.01 (Occlusion and stenosis of basilar artery, with cerebral infarction), 433.11 (Occlusion and stenosis of carotid artery, with cerebral infarction), 433.21 (Occlusion and stenosis of vertebral artery, with cerebral infarction), 433.31 (Occlusion and stenosis of multiple and bilateral precerebral arteries, with cerebral infarction), 433.81 (Occlusion and stenosis of other specified precerebral artery, with cerebral infarction), 434.01 (Cerebral thrombosis with cerebral infarction), 434.11 (Cerebral embolism with cerebral infarction), 434.91 (Cerebral artery occlusion with cerebral infarction, unspecified), 436.0 (Acute, but ill-defined, cerebrovascular disease)).
• Secondary diagnosis of acute myocardial infarction (represented by codes 410.01 (Acute myocardial infarction of anterolateral wall, initial episode of care), 410.11 (Acute myocardial infarction of other anterior wall, initial episode of care), 410.21 (Acute myocardial infarction of inferolateral wall, initial episode of care), 410.31 (Acute myocardial infarction of inferoposterior wall, initial episode of care), 410.41 (Acute myocardial infarction of other inferior wall, initial episode of care), 410.51 (Acute myocardial infarction of other lateral wall, initial episode of care), 410.61 (True posterior wall infarction, initial episode of care), 410.71 (Subendocardial infarction, initial episode of care), 410.81 (Acute myocardial infarction of other specified sites, initial episode of care), 410.91 (Acute myocardial infarction of unspecified site, initial episode of care)).
• Renal failure (represented by codes 403.01 (Hypertensive renal disease, malignant, with renal failure), 403.11 (Hypertensive renal disease, benign, with renal failure), 403.91 (Hypertensive renal disease, unspecified, with renal failure), 585.0 (Chronic renal failure), V42.0 (Organ or tissue replaced by transplant, kidney), V45.1 (Renal dialysis status), V56.0 (Extracorporeal dialysis), V56.1 (Fitting and adjustment of extracorporeal dialysis catheter), V56.2 (Fitting and adjustment of peritoneal dialysis catheter)). Any renal failure with congestive heart failure will be captured in the 404.xx codes listed above.
We reviewed the cases in the four coronary stent DRGs and found that most of the additional or “complicated” cases did, in fact, have higher average charges in most instances. However, these results could potentially be duplicated for many DRGs, or sets of DRGs, within the PPS structure. That is, cases with selected complicating factors will tend to have higher average lengths of stay and average charges than cases without those complicating factors. Since cases with the selected complicating factors necessarily contain sicker patients, longer lengths of stay and higher average charges are to be expected. For example, cases in which patients with a cardiac condition also have renal failure are quite likely to consume higher resources than patients only with a cardiac condition. In addition, selectively recognizing the recommended secondary diagnoses or complicating conditions raises some issues related to the logic and structural integrity of the DRG system. Generally, we have taken into account the higher costs of cases with complications by maintaining a general list of comorbidities and complications (the CC) list), and, where appropriate, distinguishing pairs of DRGs by “with and without CCs.” (This system also specifies exclusions from each pair, to account for cases where a condition on the CC list is an expected and normal constituent of the diagnoses reflected in the paired DRGs.) In order to maintain the basic DRG body-system structure, we have not employed special lists of procedures and diagnoses from one MDC to make determinations about the structure of DRGs in another MDC. The recommended restructuring of the coronary stent DRGs is inconsistent with this principle and may create a new precedent of selecting specific comorbidities and complications to restructure DRGs. For example, the
Rather than establishing such a precedent, we are proposing to restructure the coronary stent DRGs on the basis of the standard CC list to differentiate cases that require greater resources. We believe this list to be more inclusive of true comorbid or complicating conditions than selection of specific secondary diagnosis codes. Therefore, restructuring these DRGs on this basis would result in a logical arrangement of cases with regard to both clinical coherence and resource consumption. We have compared the existing CC list with the list of the codes recommended by the commenter as secondary diagnoses. All of the recommended codes already appear on the CC list except for codes 429.2, 432.9, V56.1, and V56.2. Code 429.2 represents a very vague diagnosis (arteriosclerotic cardiovascular disease (ASCVD)). Code 432.9 represents a nonspecific principal diagnosis that is rejected by the MCE when reported as the principal diagnosis. Codes V56.1 and V56.2 describe conditions relating to dialysis for renal failure. Therefore, we believe that our proposal to utilize the existing CC list would encompass most of the cases on the recommended list, as well as other cases with additional CCs requiring additional resources. We have examined the MedPAR data for the cases in the coronary stent DRGs, distinguishing cases that include CCs and those that do not. The following table displays the results:
The data show a clear differentiation in average charges between the cases in DRG 516 and 526 “with CC” and those “without CC.” Therefore, the data suggest that a “with and without CC” split in DRG 516 and 526 is warranted. At the same time, the data do not show such a clear differentiation, in either average charges or lengths of stay, among the cases in DRGs 517 and 527.
Therefore, we are proposing to delete DRGs 516 and 526, and to substitute four new DRGs in their place. These new DRGs would be patterned after existing DRGs 516 and 526, except that they would be split based on the presence or absence of a secondary diagnosis on the existing CC list. Specifically, we are proposing to create DRG 547 (Percutaneous Cardiovascular Procedure with AMI with CC), DRG 548 (Percutaneous Cardiovascular Procedure with AMI without CC), DRG 549 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with AMI with CC), and DRG 550 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with AMI without CC). As we noted above, the MedPAR data do not support restructuring DRGs 517 and 527 based on the presence or absence of a CC. Therefore, we are proposing to retain these two DRGs in their current forms. We believe this revised structure will result in a more inclusive and comprehensive array of cases within MDC 5 without selectively recognizing certain secondary diagnoses as “complex.”
While we are proposing some restructuring of the coronary stent DRGs for FY 2006, it is important to note that we will continue to monitor and analyze clinical and resource trends in this area. For example, we have found indications in the current data that treatment may be moving toward use of drug-eluting stents, and away from use of bare metal stents. Specifically, cases in DRGs 516 and 517, which utilize bare metal stents, comprise only 44.4 percent, or less than half, of the cases in the four coronary stent DRGs in the MedPAR data we analyzed. As use of drug-eluting stents becomes the standard of treatment, we may consider over time whether to dispense with the distinction between these stents and the older bare metal stent technology in the structure of the coronary stent DRGs. In addition, we will continue to consider whether the structure of these DRGs ought to reflect differences in the number of vessels treated or the number of stents inserted, or both. As we discussed above, a new coding structure capable of identifying multiple vessel treatment and the insertion of multiple stents will go into effect on October 1, 2005. It remains premature to restructure the coronary stent DRGs on the basis of the number of vessels treated or the number of stents inserted, or both, until data reflecting the use of these new codes become available. However, we will analyze those data when they become available in order to determine whether a restructuring based on multiple vessel treatment or insertion of multiple stents, or both, is warranted. Our proposal to restructure two of the current coronary stent DRGs into paired “with and without CC” DRGs for FY 2006 does not preclude proposals in subsequent years to restructure the coronary stent DRGs in one or both of these ways.
Atrial fibrillation is a common heart rhythm disorder that can lead to a cardiovascular blood clot formation leading to increased risk of stroke. According to product literature, nearly all strokes are from embolic clots arising in the left atrial appendage of the heart: an appendage for which there is no useful function. Standard therapy uses anticoagulation drugs. However, these drugs may be contraindicated in certain patients and may cause complications such as bleeding. The underlying concept behind the left atrial appendage device is to block off the left atrial appendage, so that the blood clots formed therein cannot travel to other sites in the vascular system. The device is implanted using a percutaneous catheter procedure under fluoroscopy through the femoral vein. Implantation is performed in a hospital catheterization laboratory using standard transseptal technique, with the patient generally under local anesthesia. The procedure takes approximately 1 hour, and most patients stay overnight in the hospital.
In the FY 2005 IPPS final rule (69 FR 48978, August 11, 2004), we discussed the DRG assignment of new ICD-9-CM procedure code 37.90 (Insertion of left atrial appendage device) for clinical trials, effective for discharges occurring on or after October 1, 2004, to DRG 518 (Percutaneous Cardiovascular Procedure without Coronary Artery Stent or Acute Myocardial Infarction)). In that final rule, we addressed the DRG assignment of procedure code 37.90 in response to a comment from a manufacturer who suggested that placement of the code in DRG 108 (Other Cardiothoracic Procedures) was more representative of the complexity of the procedure than placement in DRG 518. The manufacturer indicated that the suggested placement of procedure code 37.90 in DRG 108 was justified because another percutaneous procedure, described by ICD-9-CM procedure code 35.52 (Repair of atrial septal defect with prosthesis, closed technique), was assigned to DRG 108. As we indicated in the FY 2005 final rule (69 FR 48978), this comment prompted us to examine data in the FY 2003 MedPAR file for cases of code 35.52 assigned to DRG 108 and DRG 518 in comparison to all cases assigned to DRG 108. We found the following:
Therefore, we concluded that procedure code 35.52 showed a decided similarity to the cases found in DRG 518, not DRG 108. At that time, we determined that we would analyze the cases for both clinical coherence and charge data as part of the IPPS FY 2006 process of identifying the most appropriate DRG assignment for procedure code 35.52.
We have now examined data from the FY 2004 MedPAR file and found results for cases assigned to DRG 108 and DRG 518 that are similar to last year's findings as indicated in the chart below:
From this comparison, we found that when an atrial septal defect is percutaneously repaired, and procedure code 35.52 is the only code reported in DRG 108, there is a significant discrepancy in both the average charges and the average length of stay between the cases with procedure code 35.52 reported in DRG 108 and the total cases in DRG 108. The total cases in DRG 108 have average charges of $51,744 greater than the 872 cases in DRG 108 reporting procedure code 35.52 as the only procedure. The total cases in DRG 108 also have an average length of stay of 7.39 days greater than the average length of stay for cases in DRG 108 with procedure code 35.52 reported. In comparison, the total cases in DRG 518 have average charges of only $1,988 lower than the cases in DRG 108 with only procedure code 35.52 reported. In addition, the length of stay in total cases in DRG 518 is more closely related to cases in DRG 108 with only procedure code 35.52 reported.
Based on our analysis of these data, we are proposing to move procedure code 35.52 out of DRG 108 and place it in DRG 518. We believe that this proposal would result in a more coherent group of cases in DRG 518 that reflect all percutaneous procedures.
In the August 1, 2002, final rule (67 FR 49989), we attempted to clinically and financially align ventricular assist device (VAD) procedures by creating DRG 525 (Heart Assist System Implant). We also noted that cases in which a heart transplant also occurred during the same hospitalization episode would continue to be assigned to DRG 103 (Heart Transplant).
After further data review during the next 2 years, we decided to realign the
In summary, these changes included—
• Moving code 37.66 (Insertion of implantable heart assist system) out of DRG 525 and into DRG 103.
• Renaming DRG 525 as “Other Heart Assist System Implant.”
• Moving code 37.62 (Insertion of non-implantable heart assist system) out of DRGs 104 and 105 and back into DRG 525.
DRG 525 currently consists of any principal diagnosis in MDC 5, plus the following surgical procedure codes:
• 37.52, Implantation of total replacement heart system *.
• 37.53, Replacement or repair of thoracic unit of total replacement heart system *.
• 37.54, Replacement or repair of other implantable component of total replacement heart system *.
• 37.62, Insertion of non-implantable heart assist system.
• 37.63, Repair of heart assist system.
• 37.65, Implant of external heart assist system.
* These codes represent noncovered services for Medicare beneficiaries. However, it is our longstanding practice to assign every code in the ICD-9-CM classification to a DRG. Therefore, they have been assigned to DRG 525.
Since that decision, we have been encouraged by a manufacturer to reevaluate DRG 525 for FY 2006. The manufacturer requested that we again review the data surrounding cases reporting code 37.65 and has suggested moving these cases into DRG 103. The manufacturer pointed out the following: Code 37.65 describes the implantation of an external heart assist system and is currently approved by the FDA as a bridge-to-recovery device. From the standpoint of clinical status, the patients in DRG 103 and receiving an external heart assist system are similar because their native hearts cannot support circulation, and absent a heart transplant, a mechanical pump is needed for patient survival. The surgical procedures for implantation of both an internal VAD and an external VAD are very similar. However, the external heart assist system (code 37.65) is a less expensive device than the implantable heart assist system (code 37.66). The manufacturer suggested that the payment differential between DRGs 103 and 525 is an incentive to choose the higher paying device, and asserted that only a subset of patients receiving an implantable heart assist system are best served by this device. The manufacturer also suggested that the initial use of the least expensive therapeutically appropriate device yields both the best clinical outcomes and the lowest total system costs.
We note that, under the DRG system, our intent is to create payments that are reflective of the average resources required to treat a particular case. Our goal is that physicians and hospitals should make treatment decisions based on the clinical needs of the patient and not financial incentives.
When we reviewed the FY 2004 MedPAR data, we were able to demonstrate the following comparisons:
The above table shows that the 37.8 percent of cases in DRG 525 that reported code 37.65 have average charges that are nearly $33,000 higher than the average charges for all cases in the DRG. However, the average charges for the subset of cases with code 37.65 in DRG 525 ($206,497) are more than $107,086 lower than the average charges for all cases in DRG 103 ($313,583). Furthermore, the average length of stay for the subset of patients in DRG 525 receiving an external heart assist system was 9.26 days compared to 37.5 days for the 633 cases in DRG 103.
We note that the analysis above presents the difference in average charges, not costs. Because hospitals' charges are higher than costs, the difference in hospital costs will be less than the figures shown here. Moving cases containing code 37.65 from DRG 525 to DRG 103 would have two consequences. The cases in DRG 103 reporting code 37.65 would be appreciably overreimbursed, which would be inconsistent with our goal of coherent reimbursement structure within the DRGs. In addition, the relative weight of DRG 103 would decrease by moving the less resource-intensive external heart procedures into the same DRG with the more expensive heart transplant cases. The net effect would be an underpayment for heart transplant cases. Alternatively, we also reconsidered our position on moving the insertion of an implantable heart assist system (code 37.66) back into
Stroke is the third leading cause of death in the United States and the leading cause of serious, long-term disability. Approximately 70 percent of all strokes occur in people age 65 and older. The carotid artery, located in the neck, is the principal artery supplying the head and neck with blood. Accumulation of plaque in the carotid artery can lead to stroke either by decreasing the blood flow to the brain or by having plaque break free and lodge in the brain or in other arteries to the head. The percutaneous transluminal angioplasty (PTA) procedure involves inflating a balloon-like device in the narrowed section of the carotid artery to reopen the vessel. A carotid stent is then deployed in the artery to prevent the vessel from closing or restenosing. A distal filter device (embolic protection device) may also be present, which is intended to prevent pieces of plaque from entering the bloodstream.
Effective July 1, 2001, Medicare covers PTA of the carotid artery concurrent with carotid stent placement when furnished in accordance with the FDA-approved protocols governing Category B Investigational Device Exemption (IDE) clinical trials. PTA of the carotid artery, when provided solely for the purpose of carotid artery dilation concurrent with carotid stent placement, is considered to be a reasonable and necessary service only when provided in the context of such clinical trials and, therefore, is considered a covered service for the purposes of these trials. Performance of PTA in the carotid artery when used to treat obstructive lesions outside of approved protocols governing Category B IDE clinical trials remains a noncovered service.
At the April 1, 2004 ICD-9-CM Coordination and Maintenance Committee meeting, we discussed creation of a new code or codes to identify carotid artery stenting, along with a concomitant percutaneous angioplasty or atherectomy (PTA) code for delivery of the stent(s). This subject was addressed in response to the need to identify carotid artery stenting for use in clinical trials in the upcoming fiscal year. Public comment confirmed the need for specific codes for this procedure. We established codes for carotid artery stenting procedures effective October 1, 2004, for patients who are enrolled in an FDA-approved clinical trial and are using on-label FDA approved stents and embolic protection devices.
New procedure codes 00.61 (Percutaneous angioplasty or atherectomy of precerebral (extracranial vessel(s)) and 00.63 (Percutaneous insertion of carotid artery stent(s)) were published in Table 6B, New Procedure Codes in the FY 2005 IPPS final rule (69 FR 49624).
Procedure code 00.61 was assigned to four MDCs and seven DRGs. The most likely scenario is that in which cases are assigned to MDC 1 (Diseases and Disorders of the Nervous System in DRGs 533 (Extracranial Procedures with CC) and 534 (Extracranial Procedures without CC). Cases may also be assigned to MDC 5 (Diseases and Disorders of the Circulatory System), MDC 21 (Injuries, Poisoning, and Toxic Effects of Drugs), and MDC 24 (Multiple Significant Trauma). Other less likely DRG assignments can be found in Table 6B in the Addendum to the FY 2005 IPPS final rule (69 FR 49624).
In the FY 2005 final rule, we indicated that we would continue to monitor DRGs 533 and 534 and procedure code 00.61 in combination with procedure code 00.63 in upcoming annual DRG reviews. For this proposed rule, we are using proxy codes to evaluate the costs and DRG assignments for carotid artery stenting because codes 00.61 and 00.63 were only approved for use beginning October 1, 2004, and because MedPAR data for this period are not yet available. We used procedure code 39.50 (Angioplasty or atherectomy of other noncoronary vessel(s)) in combination with procedure code 39.90 (Insertion of nondrug-eluting peripheral vessel stent(s)) in DRGs 533 and 534 as the proxy codes for coronary artery stenting. For this evaluation, we used principal diagnosis code 433.10 (Occlusion and stenosis of carotid artery, without mention of cerebral infarction) because this diagnosis most closely reflects the clinical trial criteria.
The following chart shows our findings:
The patients receiving a carotid stent (codes 39.50 and 39.90) represented 3.5 percent of all cases in DRG 534. On average, patients receiving a carotid stent had slightly shorter average lengths of stay than other patients in DRGs 533 and 534. While the average charges for patients receiving a carotid artery stent were higher than for other patients in DRG 534, in our view, the small number of cases and the magnitude of the difference in average charges are not sufficient to justify a change in the DRGs.
Because we have a paucity of data for the carotid stent device and its insertion, and no data utilizing procedure codes 00.61 and 00.63 in a clinical trial setting, we believe it is premature to revise the DRG structure at this time. We expect to revisit this analysis once data become available on the new codes for carotid artery stents.
Extracorporeal membrane oxygenation (ECMO) is a procedure to create a closed chest, heart-lung bypass system by insertion of vascular catheters. Patients receiving this procedure require mechanical ventilation. ECMO is performed for a small number of severely ill patients who are at high risk of dying without this procedure. Most often it is done for neonates with persistent pulmonary hypertension and respiratory failure for whom other treatments have failed, certain severely ill neonates receiving major cardiac procedures or diaphragmatic hernia repair, and certain older children and adults, most of whom are receiving major cardiac procedures.
We received several letters from institutions that perform ECMO. The commenters stated that, in the CMS GROUPER logic, this procedure has little or no impact on the DRG assignment in the newborn, pediatric, and adult population. According to these letters, patients receiving ECMO are highly resource intensive and should have a unique DRG that reflects the costs of these resources. The commenters recommended the creation of a new DRG for ECMO with a DRG weight equal to or greater than the DRG weight for tracheostomy.
ECMO is assigned to procedure code 39.65 (Extracorporeal membrane oxygenation). This code is classified as an O.R. procedure and is assigned to DRG 104 (Cardiac Valve and Other Major Cardiothoracic Procedure With Cardiac Catheterization) and DRG 105 (Cardiac Valve and Other Major Cardiothoracic Procedure Without Cardiac Catheterization). When ECMO is performed with other O.R. procedures, the case is assigned to the higher weighted DRG. For example, when ECMO and a tracheostomy are performed during the same admission, the case would be assigned to DRG 541 (Tracheostomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth, and Neck Diagnoses With Major O.R.).
We note that the primary focus of updates to the Medicare DRG classification system is changes relating to the Medicare patient population, not the pediatric patient population. Because ECMO is primarily a pediatric procedure and rarely performed in an adult population, we have few cases in our data to use to evaluate resource costs. We are aware that other insurers sometimes use Medicare's rates to make payments. We advise private insurers to make appropriate modifications to our payment system when it is being used for children or other patients who are not generally found in the Medicare population.
To evaluate the appropriateness of payment under the current DRG assignment, we have reviewed the FY 2004 MedPAR data and found 78 ECMO cases in 13 DRGs. The following table illustrates the results of our findings:
The average charges for all ECMO cases were approximately $258,821, and the average length of stay was approximately 20.7 days. The average charges for the ECMO cases are closer to the average charges for DRG 541 ($273,656) than to the average charges of DRG 104 ($147,766) and DRG 105 ($131,700). Of the 78 ECMO cases, 14 cases are already assigned to DRG 541. We believe that the data indicate that DRG 541 would be a more appropriate DRG assignment for cases where ECMO is performed. We further note that under the All Payer DRG System used in New York State, cases involving ECMO are assigned to the tracheostomy DRG. Thus, the assignment of ECMO cases to the tracheostomy DRG for Medicare would be similar to how these cases are grouped in another DRG system. For these reasons, we are proposing to reassign ECMO cases reporting code 39.65 to DRG 541. We are also proposing to change the title of DRG 541 to: “ECMO or Tracheostomy With Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth and Neck Diagnoses With Major O.R.”
In the FY 2003 IPPS final rule (67 FR 50242), we created two new codes for procedures involving an artificial anal sphincter, effective for discharges occurring on or after October 1, 2002: code 49.75 (Implantation or revision of artificial anal sphincter) is used to identify cases involving implantation or revision of an artificial anal sphincter and code 49.76 (Removal of artificial anal sphincter) is used to identify cases involving the removal of the device. In Table 6B of that final rule, we assigned both codes to one of four MDCs, based on principal diagnosis, and one of six DRGs within those MDCs: MDC 6 (Diseases and Disorders of the Digestive System), DRGs 157 and 158 (Anal and Stomal Procedures With and Without CC, respectively); MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast), DRG 267 (Perianal and Pilonidal Procedures); MDC 21 (Injuries, Poisonings, and Toxic Effects of Drugs), DRGs 442 and 443 (Other O.R. Procedures for Injuries With and without CC, respectively); and MDC 24 (Multiple Significant Trauma), DRG 486 (Other O.R. Procedures for Multiple Significant Trauma).
In the FY 2004 IPPS final rule (68 FR 45372), we discussed the assignment of these codes in response to a request we had received to consider reassignment of these two codes to different MDCs and DRGs. The requester believed that the average charges ($44,000) for these codes warranted reassignment. In the FY 2004 IPPS final rule, we stated that we did not have sufficient MedPAR data available on the reporting of codes 49.75 and 49.76 to make a determination on
For this FY 2006 proposed rule, we reviewed the FY 2004 MedPAR data for the presence of codes 49.75 and 49.76. We found that these two procedures are still of low incidence. Among the six possible DRG assignments, we found a total of 18 cases reported with codes 49.75 and 49.76 for the implant, revision, or removal of the artificial anal sphincter. We found 13 of these cases in DRGs 146 and 147 (compared to 12,558 total cases in these DRGs), and the remaining 5 cases in DRGs 442 and 443 (compared to 19,701 total cases in these DRGs).
We believe the number of cases with codes 49.75 and 49.76 in these DRGs is too low to provide meaningful data of statistical significance. Therefore, we are not proposing any further changes to the DRGs for these procedures at this time. Neither are we proposing to change the structure of DRGs 146 or 147 at this time.
Orthopedic surgeons representing the American Association of Orthopaedic Surgeons (AAOS) requested that we subdivide DRG 209 (Major Joint and Limb Reattachment Procedures of Lower Extremity) in MDC 8 by creating a new DRG for revision of lower joint procedures. The AAOS made a presentation at the October 7-8, 2004 meeting of the ICD-9-CM Coordination and Maintenance Committee meeting. A summary report of this meeting can be found at the CMS Web site:
The AAOS surgeons stated that cases involving patients who require a revision of a prior replacement of a knee or hip require significantly more resources than cases in which patients receive an initial joint replacement. They pointed out that total joint replacement is one of the most commonly performed and successful operations in orthopedic surgery. The surgeons mentioned that, in 2002, over 300,000 hip replacement and 350,000 knee replacement procedures were performed in the United States. They also pointed out that these procedures are a frequent reason for Medicare hospitalization. The surgeons stated that total joint replacements have been shown to be highly cost-effective procedures, resulting in dramatic improvements in quality of life for patients suffering from disabling arthritic conditions involving the hip or knee. In addition, they reported that the medical literature indicates success rates of greater than 90 percent for implant survivorship, reduction in pain, and improvement in function at a 10-year to 15-year followup. However, despite these excellent results with primary total joint replacement, factors related to implant longevity and evolving patient demographics have led to an increase in the volume of revision total joint procedures performed in the United States over the past decade.
Total hip replacement is an operation that is intended to reduce pain and restore function in the hip joint by replacing the arthritic hip joint with a prosthetic ball and socket joint. The prosthetic hip joint consists of a metal alloy femoral component with a modular femoral head made of either metal or ceramic (the “ball”) that articulates with a metal acetabular component with a modular liner made of either metal, ceramic, or high-density polyethylene (the “socket”).
The AAOS surgeons stated that in a normal knee, four ligaments help hold the bones in place so that the joint works properly. When a knee becomes arthritic, these ligaments can become scarred or damaged. During knee replacement surgery, some of these ligaments, as well as the joint surfaces, are substituted or replaced by the new artificial prostheses. Two types of fixation are used to hold the prostheses in place. Cemented designs use polymethyl methacrylate to hold the prostheses in place. Cementless designs rely on bone growing into the surface of the implant for fixation.
The surgeons stated that all hip and knee replacements have an articular bearing surface that is subject to wear (the acetabular bearing surface in the hip and the tibial bearing surface in the knee). Traditionally, these bearing surfaces have been made of metal-on-metal or metal-on-polyethylene, although newer materials (both metals and ceramics) have been used more recently. Earlier hip and knee implant designs had nonmodular bearing surfaces, but later designs included modular articular bearing surfaces to reduce inventory and potentially simplify revision surgery. Wear of the articular bearing surface occurs over time and has been found to be related to many factors, including the age and activity level of the patient. In some cases, wear of the articular bearing surface can produce significant debris particles that can cause peri-prosthetic bone resorption (also known and osteolysis) and mechanical loosening of the prosthesis. Wear of the bearing surface can also lead to instability or prosthetic dislocation, or both, and is a common cause of revision hip or knee replacement surgery.
Depending on the cause of failure of the hip replacement, the type of implants used in the previous surgery, the amount and quality of the patient's remaining bone stock, and factors related to the patient's overall health and anatomy, revision hip replacement surgery can be relatively straightforward or extremely complex. Revision hip replacement can involve replacing any part or all of the implant, including the femoral or acetabular components, and the bearing surface (the femoral head and acetabular liner), and may involve major reconstruction of the bones and soft tissues around the hip. All of these procedures differ significantly in their clinical indications, outcomes, and resource intensity.
The AAOS surgeons provided the following summary of the types of
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The surgeons stated that the current ICD-9-CM codes did not adequately capture the complex nature of revisions of hip and knee replacements. Currently, code 81.53 (Revision of hip replacement) captures all “partial” and “total” revision hip replacement procedures. Code 81.55 (Revision of knee replacement) captures all revision knee replacement procedures. These two codes currently capture a wide variety of procedures that differ in their clinical indications, resource intensity, and clinical outcomes.
An AAOS representative made a presentation at the October 7-8, 2004 ICD-9-CM Coordination and Maintenance Committee. Based on the comments received at the October 7-8, 2004 meeting and subsequent written comments, new ICD-9-CM procedure codes were developed to better capture the variety of ways that revision of hip and knee replacements can be performed: codes 00.70 through 00.73 and code 81.53 for revisions of hip replacements and codes 00.80 through 00.84 and code 81.55 for revisions of knee replacements. These new and revised procedure codes, which will be effective on October 1, 2005, can be found in Table 6B and Table 6F of this proposed rule. The commenters stated that claims data using these new and specific codes should provide improved data on these procedures for future DRG modifications.
However, the commenters requested that CMS consider DRG modifications based on current data using the existing revision codes. The commenters reported on a recently completed study comparing detailed hospital resource utilization and clinical characteristics in over 10,000 primary and revision hip and knee replacement procedures at 3 high volume institutions: The Massachusetts General Hospital, the Mayo Clinic, and the University of California at San Francisco. The purpose of this study was to evaluate differences in clinical outcomes and resource utilization among patients who underwent different types of primary and revision hip or knee replacement procedures. The study found significant differences in operative time, complication rates, hospital length of stay, discharge disposition, and resource utilization among patients who underwent different types of revision hip or knee replacement procedures.
Among revision hip replacement procedures, patients who underwent both femoral and acetabular component revision had longer operative times, higher complication rates, longer lengths of stay, significantly higher resource utilization, and were more likely to be discharged to a subacute care facility. Isolated femoral
In addition, the commenters indicated that the data showed that extensive bone loss around the implants and the presence of a peri-prosthetic fracture were the most significant predictors of higher resource utilization among all revision hip and knee replacement procedures, even when controlling for other significant patient and procedural characteristics.
For this proposed rule, we examined data in the FY 2004 MedPAR file on the current hip replacement procedures (codes 81.51, 81.52, 81.53) as well as the replacements and revisions of knee replacement procedures (codes 81.54 and 81.55) in DRG 209. We found that revisions were significantly more resource intensive than the original hip and knee replacements. We found average charges for revisions of hip and knee replacements were approximately $7,000 higher than average charges for the original joint replacements, as shown in the following charts. The average charges for revisions of hip replacements were 21 percent higher than the average charges for initial hip replacements. The average charges for revisions of knee replacements were 25 percent higher than for initial knee replacements.
We note that there were no cases in DRG 209 for reattachment of the foot, lower leg, or thigh (codes 84.29, 84.27, and 84.28).
To address the higher resource costs associated with hip and knee revisions relative to the initial joint replacement procedure, we are proposing to delete DRG 209, create a proposed new DRG 544 (Major Joint Replacement or Reattachment of Lower Extremity), and create a proposed new DRG 545 (Revision of Hip or Knee Replacement).
We are proposing to assign the following codes to the new proposed DRG 544:
• 81.51, Total hip replacement.
• 81.52, Partial hip replacement.
• 81.54, Total knee replacement.
• 81.56, Total ankle replacement.
• 84.26, Foot reattachment.
• 84.27, Lower leg/ankle reattach.
• 84.28, Thigh reattachment.
We are proposing to assign the following codes to the proposed new DRG 545:
• 00.70, Revision of hip replacement, both acetabular and femoral components.
• 00.71, Revision of hip replacement, acetabular component.
• 00.72, Revision of hip replacement, femoral component.
• 00.73, Revision of hip replacement, acetabular liner and/or femoral head only.
• 00.80, Revision of knee replacement, total (all components).
• 00.81, Revision of knee replacement, tibial component.
• 00.82, Revision of knee replacement, femoral component.
• 00.83, Revision of knee replacement, patellar component.
• 00.84, Revision of knee replacement, tibial insert (liner).
• 81.53, Revision of hip replacement, not otherwise specified.
• 81.55, Revision of knee replacement, not otherwise specified.
We agree with the commenters and the AAOS that the creation of a new DRG for revisions of hip and knee replacements should resolve payment issues for hospitals that perform the more difficult revisions of joint replacements. In addition, as stated earlier, we have worked with the orthopedic community to develop new procedure codes that better capture data on the types of revisions of hip and knee replacements. These new codes will be implemented on October 1, 2005. Once we receive claims data using these new codes, we will review data to determine if additional DRG modifications are needed. This effort may include assigning some of the revision codes, such as 00.83 and 00.84 to a separate DRG. As stated earlier, the AAOS has found that some of the procedures may not be as resource intensive. Therefore, the AAOS has requested that CMS closely examine data from the use of the new codes and consider future revisions.
In the FY 2005 IPPS final rule (69 FR 48938), we discussed the creation of new codes for vertebroplasty (81.65) and kyphoplasty (81.66), which went into effect on October 1, 2004. Prior to October 1, 2004, both of these surgical procedures were assigned to code 78.49 (Other repair or plastic operation on bone). For FY 2005, we assigned these codes to DRGs 233 and 234 (Other Musculoskeletal System and Connective Tissue O.R. Procedure With and Without CC, respectively) in MDC 8 (Table 6B of the FY 2005 final rule). (In the FY 2005 IPPS final rule (69 FR 48938), we indicated that new codes 81.65 and 81.66 were assigned to DRGs 223 and 234. We made a typographical error when indicating that these codes were assigned to DRG 223. Codes 81.65 and 81.66 have been assigned to DRGs
We stated in the FY 2005 IPPS final rule that we did not have data in the MedPAR file on kyphoplasty and vertebroplasty. Prior to October 1, 2004, both procedures were assigned in code 78.49, which was assigned to DRGs 233 and 234 in MDC 8. We stated that we would continue to review this area as part of our annual review of MedPAR data. While we do not have separate data for kyphoplasty because code 81.66 was not established until October 1, 2004, for this proposed rule, we did examine data on code 78.49, which includes both kyphoplasty and vertebroplasty procedures reported in DRGs 233 and 234. The following chart illustrates our findings:
We do not believe these data findings support moving cases represented by code 78.49 out of DRGs 233 and 234. While we cannot distinguish cases that are kyphoplasty from cases that are vertebroplasty, cases represented by code 78.49 have lower charges than do other cases within DRGs 233 and 234. Therefore, we are not proposing to change the DRG assignment of code 81.66 to DRGs 233 and 234 at this time. However, once specific charge data are available, we will consider whether further changes are warranted.
On October 1, 2003, the following ICD-9-CM codes were created to identify the number of levels of vertebra fused during a spinal fusion procedure:
• 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.
Prior to the creation of these codes, we received a comment recommending the establishment of new DRGs that would be differentiated based on the number of vertebrae fused. In the FY 2005 IPPS final rule (69 FR 48936), we stated that we did not yet have any reported cases utilizing these multiple level spinal fusion codes. We stated that we would wait until sufficient data were available prior to making a final determination on whether to create separate DRGs based on the number of vertebrae fused. We also stated that spinal fusion surgery was an area undergoing rapid changes.
Effective October 1, 2004, we created a series of codes that describe a new type of spinal surgery, spinal disc replacement. Our medical advisors describe these procedures as a more conservative approach for back pain than the spinal fusion surgical procedure. These codes are as follows:
• 84.60, Insertion of spinal disc prosthesis, not otherwise specified.
• 84.61, Insertion of partial spinal disc prosthesis, cervical.
• 84.62, Insertion of total spinal disc prosthesis, cervical.
• 84.63, Insertion of spinal disc prosthesis, thoracic.
• 84.64, Insertion of partial spinal disc prosthesis, lumbosacral.
• 84.65, Insertion of total spinal disc prosthesis, lumbosacral.
• 84.66, Revision or replacement of artificial spinal disc prosthesis, cervical.
• 84.67, Revision or replacement of artificial spinal disc prosthesis, thoracic.
• 84.68, Revision or replacement of artificial spinal disc prosthesis, lumbosacral.
• 84.69, Revision or replacement of artificial spinal disc prosthesis, not otherwise specified.
We also created the following two codes effective October 1, 2004, for these new types of spinal surgery that are also a more conservative approach to back pain than is spinal fusion:
• 81.65 Vertebroplasty.
• 81.66 Kyphoplasty.
We do not yet have data in the MedPAR file on these new types of procedures. Therefore, we cannot yet determine what effect these new types of procedures will have on the frequency of spinal fusion procedures.
However, we do have data in the MedPAR file on multiple level spinal procedures for analysis for this year's proposed rule. We examined data in the FY 2004 MedPAR file on spinal fusion cases in the following DRGs:
• DRG 496 (Combined Anterior/Posterior Spinal Fusion).
• DRG 497 (Spinal Fusion Except Cervical With CC).
• DRG 498 (Spinal Fusion Except Cervical Without CC).
• DRG 519 (Cervical Spinal Fusion With CC).
• DRG 520 (Cervical Spinal Fusion Without CC).
Multiple level spinal fusion is captured by code 81.63 (Fusion or refusion of 4-8 vertebrae) and code 81.64 (Fusion or refusion of 9 or more vertebrae). Code 81.62 includes the fusion of 2-3 vertebrae and is not considered a multiple level spinal fusion. Orthopedic surgeons stated at the October 7-8, 2004 ICD-9-CM Coordination and Maintenance Committee meeting that the most simple and common type of spinal fusion involves fusing either 2 or 3 vertebrae. These surgeons stated that there was not
We reviewed the Medicare charge data to determine whether the number of vertebrae fused or specific diagnoses have an effect on average length of stay and resource use for a patient. We found that, while fusing 4 or more levels of the spine results in a small increase in the average length of stay and a somewhat larger increase in average charges for spinal fusion patients, an even greater impact was made by the presence of a principal diagnosis of curvature of the spine or malignancy. The following list of diagnoses describes conditions that have a significant impact on resource use for spinal fusion patients:
• 170.2, Malignant neoplasm of vertebral column, excluding sacrum and coccyx.
• 198.5, Secondary malignant neoplasm of bone and bone marrow.
• 732.0, Juvenile osteochondrosis of spine.
• 733.13, Pathologic fracture of vertebrae.
• 737.0, Adolescent postural kyphosis.
• 737.10, Kyphosis (acquired) (postural).
• 737.11, Kyphosis due to radiation.
• 737.12, Kyphosis, postlaminectomy.
• 737.19, Kyphosis (acquired), other.
• 737.20, Lordosis (acquired) (postural).
• 737.21, Lordosis, postlaminectomy
• 737.22, Other postsurgical lordosis.
• 737.29, Lordosis (acquired), other.
• 737.30, Scoliosis [and kyphoscoliosis], idiopathic.
• 737.31, Resolving infantile idiopathic scoliosis.
• 737.32, Progressive infantile idiopathic scoliosis.
• 737.33, Scoliosis due to radiation.
• 737.34, Thoracogenic scoliosis.
• 737.39, Other kyphoscoliosis and scoliosis.
• 737.40, Curvature of spine, unspecified.
• 737.41, Curvature of spine associated with other conditions, kyphosis.
• 737.42, Curvature of spine associated with other conditions, lordosis.
• 737.43, Curvature of spine associated with other conditions, scoliosis.
• 737.8, Other curvatures of spine.
• 737.9, Unspecified curvature of spine.
• 754.2, Congenital scoliosis.
• 756.51, Osteogenesis imperfecta.
The majority of fusion patients with these diagnoses were in DRGs 497 and 498. The chart below reflects our findings. We also include in the chart statistics for cases in DRGs 497 and 498 with spinal fusion of 4 or more vertebrae and cases with a principal diagnosis of curvature of the spine or bone malignancy.
Thus, these diagnoses result in a significant increase in resource use. While the fusing of 4 or more vertebrae resulted in average charges of $77,352, the impact of a principal diagnosis of curvature of the spine or bone malignancy was substantially greater with average charges of $95,315.
Based on this analysis, we are proposing to create a new DRG for noncervical spinal fusions with a principal diagnosis of curvature of the spine and malignancies. The proposed new DRG would be: proposed new DRG 546 (Spinal Fusions Except Cervical With Principal Diagnosis of Curvature of the Spine or Malignancy). Cases included in this proposed new DRG would include all noncervical spinal fusions previously assigned to DRGs 497 and 498 that have a principal diagnosis of curvature of the spine or malignancy and would include the following codes listed above: 170.2, 198.5, 732.0, 733.13, 737.0, 737.10, 737.11, 737.12, 737.19, 737.20, 737.21, 737.22, 737.29, 737.30, 737.31, 737.32, 737.33, 737.34, 737.39, 737.40, 737.41, 737.42, 737.43, 737.8, 737.9, 754.2, and 756.51. The proposed DRG 546 would not include cases currently assigned to DRGs 496, 519, or 520 that have a principal diagnosis of curvature of the spine or malignancy. The structure of DRGs 496, 519, and 520 would remain the same.
As part of our meeting with the AAOS on DRG 209 in February 2005 (discussed under section II.B.6.a. of this preamble), the AAOS offered to work with CMS to analyze clinical issues and make revisions to the spinal fusion DRGs (DRGs 496 through 498 and 519 and 520). At this time, we are limiting our proposed changes to the spinal fusion DRGs for FY 2006 to the creation of the proposed DRG 546 discussed above. However, we look forward to working with the AAOS to obtain its clinical recommendations concerning our proposed changes and potential additional modifications to the spinal fusion DRGs. We are also soliciting comments from the public on our proposed changes and how to incorporate new types of spinal procedures such as kyphoplasty and spinal disc prostheses into the spinal fusion DRGs.
As we did for FY 2005, we received a request to consider the creation of a separate DRG for the diagnosis of severe sepsis for FY 2006. Severe sepsis is described by ICD-9-CM code 995.92 (Systemic inflammatory response syndrome due to infection with organ dysfunction). Patients admitted with sepsis currently are assigned to DRG 416 (Septicemia Age > 17) and DRG 417
In the FY 2005 IPPS final rule (69 FR 48939, August 11, 2004), we discussed a request that CMS modify DRGs 521 through 523 by removing the principal diagnosis code 292.82 (Drug-induced dementia) from these alcohol and drug abuse DRGs. These DRGs are as follows:
• DRG 521 (Alcohol/Drug Abuse or Dependence With CC).
• DRG 522 (Alcohol/Drug Abuse or Dependence With Rehabilitation Therapy Without CC).
• DRG 523 (Alcohol/Drug Abuse or Dependence Without Rehabilitation Therapy Without CC).
The commenter indicated that a patient who has a drug-induced dementia should not be classified to an alcohol/drug DRG. However, the commenter did not propose a new DRG assignment for code 292.82. Our medical advisors evaluated the request and determined that the most appropriate DRG classification for a patient with drug-induced dementia was within MDC 20. The medical advisors indicated that because the dementia is drug induced, it is appropriately classified to DRGs 521 through 523 in MDC 20. Therefore, we did not propose a new DRG classification for the principal diagnosis code 292.82.
In the FY 2005 IPPS final rule, we addressed a comment from an organization representing hospital coders that disagreed with our decision to keep code 292.82 in DRGs 521 through 523. The commenter stated that DRGs 521 through 523 are described as alcohol/drug abuse and dependence DRGs, and that drug-induced dementia can be caused by an adverse effect of a prescribed medication or a poisoning. The commenter did not believe that assignment to DRGs 521 through 523 was appropriate if the drug-induced dementia is due to one of these events and the patient is not alcohol or drug dependent. The commenter recommended that admissions for drug-induced dementia be classified to DRGs 521 through 523 only if there is a secondary diagnosis indicating alcohol/drug abuse or dependence.
The commenter recommended that drug-induced dementia that is due to the adverse effect of a drug or poisoning be classified to the same DRGs as other types of dementia, such as DRG 429 (Organic Disturbances and Mental Retardation). The commenter believed that when drug-induced dementia is caused by a poisoning, either accidental or intentional, the appropriate poisoning code would be sequenced as the principal diagnosis and, therefore, these cases would likely already be assigned to DRGs 449 and 450 (Poisoning and Toxic Effects of Drugs, Age Greater than 17, With and Without CC, respectively) and DRG 451 (Poisoning and Toxic Effects of Drugs, Age 0-17). The commenter stated that these would be the appropriate DRG assignments for drug-induced dementia due to a poisoning. We received a similar comment from a hospital organization.
In the FY 2005 IPPS final rule, we acknowledged that the commenters raised additional issues surrounding the DRG assignment for code 292.82 that should be considered. The commenters provided alternatives for DRG assignment based on sequencing of the principal diagnosis and reporting of additional secondary diagnoses. We recognized that patients may develop drug-induced dementia from drugs that are prescribed, as well as from drugs that are not prescribed. However, because dementia develops as a result of
In the FY 2005 IPPS final rule, we agreed to analyze this area for FY 2006 and to look at the alternative DRG assignments suggested by the commenters. For this proposed rule, we examined data from the FY 2004 MedPAR file on cases in DRGs 521 through 523 with a principal diagnosis of code 292.82. We found that there were only 134 cases reported with the principal diagnosis code 292.82 in DRGs 521 through 523 without a diagnosis of drug and alcohol abuse. The average standardized charges for cases with a principal diagnosis of code 292.82 that did not have a secondary diagnosis of drug/alcohol abuse or dependence were $12,244.35, compared to the average standardized charges for all cases in DRG 521, which were $10,543.69. There were no cases in DRG 522 with a principal diagnosis of code 292.82. We found only 24 cases in DRG 523 with a principal diagnosis of code 292.82. Given the small number of cases in DRG 522 and 523, and the similarity in average standardized charges between those cases in DRG 521 with a principal diagnosis of code 292.82 and without a secondary diagnosis of drug/alcohol abuse or dependence to the overall average for all cases in the DRG, we do not believe the data suggest that a modification to DRGs 521 through 523 is warranted. Therefore, we are not proposing changes to the current structure of DRGs 521 through 523 for FY 2006.
(If you choose to comment on issues in this section, please include the caption “Medicare Code Editor” at the beginning of your comment.)
As explained under section II.B.1. of this preamble, the Medicare Code Editor (MCE) is a software program that detects and reports errors in the coding of Medicare claims data. Patient diagnoses, procedure(s), discharge status, and demographic information go into the Medicare claims processing systems and are subjected to a series of automated screens. The MCE screens are designed to identify cases that require further review before classification into a DRG.
In the past, we have discussed and received comments concerning revision of the pediatric portions of the Medicare IPPS DRG classification system, that is, MDC 15 (Newborns and Other Neonates With Conditions Originating in the Perinatal Period). Most recently, we addressed these comments in both the FY 2005 proposed rule (69 FR 28210) and the FY 2005 IPPS final rule (69 FR 48938). In those rules, we indicated that we would be responsive to specific requests for updating MDC 15 on a limited, case-by-case basis.
We have recently received a request through the Open Door Forum to revise the MCE “newborn age edit” by removing over 100 codes located in Chapter 15 of ICD-9-CM that are identified as “newborn” codes. This request was made because these codes usually cause an edit or denial to be triggered when they are used on children greater than 1 year of age. However, the underlying issue with these particular edits is that other payers have adopted the CMS Medicare Code Editor in a wholesale manner, instead of adapting it for use in their own patient populations.
We acknowledge that Medicare DRGs are sometimes used to classify other patient groups. However, CMS' primary focus of updates to the Medicare DRG classification system is on changes relating to the Medicare patient population, not the pediatric or neonatal patient populations.
There are practical considerations regarding the assumption of a larger role for the Medicare DRG in the pediatric or neonatal areas, given the difference between the Medicare population and that of newborns and children. There are also challenges surrounding the development of DRG classification systems and applications appropriate to children. We do not have the clinical expertise to make decisions about these patients, and must rely on outside clinicians for advice. In addition, because newborns and other children are generally not eligible for Medicare, we must rely on outside data to make decisions. We recognize that there are evolving alternative classification systems for children and encourage payers to use the CMS MCE as a template while making modifications appropriate for pediatric patients.
Therefore, we would encourage those non-Medicare systems needing a more comprehensive pediatric system of edits to update their systems by choosing from other existing systems or programs that are currently in use. Because of our reluctance to assume expertise in the pediatric arena, we are not proposing to make the commenter's suggested changes to the MCE “newborn age edit” for FY 2006.
Last year, in our changes to the MCE, we inadvertently added code 796.6 (Abnormal findings on neonatal screening) to both the MCE edit for “Maternity Diagnoses—age 12 through 55”, and the MCE edit for “Diagnoses Allowed for Females Only”. We are proposing to remove code 796.6 from these two edits and add it to the “Newborn Diagnoses” edit.
We have received a request to remove two codes from the “Diagnoses Allowed for Males Only” edit, related to androgen insensitivity syndrome (AIS). AIS is a new term for testicular feminization. Code 257.8 (Other testicular dysfunction) is used to describe individuals who, despite having XY chromosomes, develop as females with normal female genitalia and mammary glands. Testicles are present in the same general area as the ovaries, but are undescended and are at risk for development of testicular cancer, so are generally surgically removed. These individuals have been raised as females, and would continue to be considered female, despite their XY chromosome makeup. Therefore, as AIS is coded to 257.8, and has posed a problem associated with the gender edit, we are proposing to remove this code from the “Males Only” edit in the MCE.
A similar clinical scenario can occur with certain disorders that cause a defective biosynthesis of testicular androgen. This disorder is included in code 257.2 (Other testicular hypofunction). Therefore, we also are proposing to remove code 257.2 from the “Male Only” gender edit in the MCE.
We have become aware of the possible need to add code 305.1 (Tobacco use disorder) to the MCE in order to make admissions for tobacco use disorder a noncovered Medicare service when code 305.1 is reported as the principal diagnosis. On March 22, 2005, CMS published a final decision memorandum and related national coverage determination (NCD) on smoking cessation counseling services on its Web site: (
Effective October 1, 2004, CMS adopted the use of code 00.61 (Percutaneous angioplasty or atherectomey of precerebral (extracranial) vessel(s) (PTA)) and code 00.63 (Percutaneous insertion of carotid artery stent(s). Both codes are to be recorded to indicate the insertion of a carotid artery stent or stents. At the time of the creation of the codes, the coverage indication for carotid artery stenting was only for patients in a clinical trial setting, and diagnostic code V70.7 (Examination of participation in a clinical trial) was required for payment of these cases. However, effective October 12, 2004, Medicare covers PTA of the carotid artery concurrent with the placement of an FDA-approved carotid stent for an FDA-approved indication when furnished in accordance with FDA-approved protocols governing post-approval studies. Therefore, as the coverage indication has changed, we are proposing to remove codes 00.61, 00.63, and V70.7 from the MCE noncovered procedure edit.
(If you choose to comment on issues in this section, please include the caption “Surgical Hierarchy” at the beginning of your comment.)
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
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 DRG 3, but the average charges of DRGs 4 and 5 are higher than the average charge of DRG 2. To determine whether surgical class A should be higher or lower than surgical class B in the surgical hierarchy, we would weight the average charge of each DRG in the class by frequency (that is, by the number of cases in the DRG) to determine average resource consumption for the surgical class. The surgical classes would then be ordered from the class with the highest average resource utilization to that with the lowest, with the exception of “other O.R. procedures” as discussed below.
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, in cases involving multiple procedures, this result is sometimes 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 to revise the surgical hierarchy for MDC 5 (Diseases and Disorders of the Circulatory System) and MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) as follows:
In MDC 5, we are proposing to reorder—
• DRG 116 (Other Permanent Cardiac Pacemaker Implant) above DRG 549 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent With AMI With CC).
• DRG 549 above DRG 550 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent With AMI Without CC).
• DRG 550 above DRG 547 (Percutaneous Cardiovascular Procedure With AMI With CC).
• DRG 547 above DRG 548 (Percutaneous Cardiovascular Procedure With AMI Without CC).
• DRG 548 above DRG 527 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent Without AMI).
• DRG 527 above DRG 517 (Percutaneous Cardiovascular Procedure With Non-Drug Eluting Stent Without AMI).
• DRG 517 above DRG 518 (Percutaneous Cardiovascular Procedure Without Coronary Artery Stent or AMI).
• DRG 518 above DRGs 478 and 479 (Other Vascular Procedures With and Without CC, respectively).
In MDC 8, we are proposing to reorder—
• DRG 496 (Combined Anterior/Posterior Spinal Fusion) above DRG 546 (Spinal Fusion Except Cervical With Principal Diagnosis of Curvature of the Spine or Malignancy).
• DRG 546 above DRGs 497 and 498 (Spinal Fusion Except Cervical With and Without CC, respectively).
• DRG 217 (Wound Debridement and Skin Graft Except Hand, For Musculoskeletal and Connective Tissue Disease) above DRG 545 (Revision of Hip or Knee Replacement).
• DRG 545 above DRG 544 (Major Joint Replacement or Reattachment).
• DRG 544 above DRGs 519 and 520 (Cervical Spinal Fusion With and Without CC, respectively).
(If you choose to comment on issues in this section, please include the caption “CC List” at the beginning of your comment.)
As indicated earlier in this preamble, under the IPPS DRG classification system, we have developed a standard list of diagnoses that are considered complications or comorbidities (CCs). Historically, we developed this list using physician panels that classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity. A substantial complication or comorbidity was defined as a condition that, because of its presence with a specific principal diagnosis, would cause an increase in the length of stay by at least 1 day in at least 75 percent of the patients.
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, but we have never conducted a comprehensive review of the list. There are currently 3,285 diagnosis codes on the CC list. There are 121-paired DRGs that are split on the presence or absence of a CC.
We have reviewed these paired DRGs and found that the majority of cases that are assigned to DRGs that have a CC split fall into the DRG with CC. While this fact is not new, we have found that a much higher proportion of cases are being grouped to the DRG with a CC than had occurred in the past. In our review of the DRGs included in Table 7b of the September 1, 1987
• Cases with CC: 61.9 percent.
• Cases without CC: 38.1 percent.
When we compared the above DRG 1986 data to the DRG 2004 data that were included in the DRGs Definitions Manual, GROUPER Version 22.0, we found the following:
• Cases with CC: 79.9 percent.
• Cases without CC: 20.1 percent.
(We used DRGs Definitions Manual, GROUPER Version 5.0, for this analysis because prior versions of the DRGs Definitions Manual used age as a surrogate for a CC and the split was “CC and/or age greater than 69”.)
The vast majority of patients being treated in inpatient settings have a CC as currently defined, and we believe that it is possible that the CC distinction has lost much of its ability to differentiate the resource needs of patients. The original definition used to develop the CC list (the presence of a CC would be expected to extend the length of stay of at least 75 percent of the patients who had the CC by at least one day) was used beginning in 1981 and has been part of the IPPS since its inception in 1983. There has been no substantive review of the CC list since its original development. In reviewing this issue, our clinical experts found several diseases that appear to be obvious candidates to be on the CC list, but currently are not:
Conversely, our medical experts believe the following conditions are examples of common conditions that are on the CC list, but are not likely to lead to higher treatment costs when present as a secondary diagnosis:
We note that the above conditions are examples only of why we believe the CC list needs a comprehensive review. In addition to this review, we note that these conditions may be treated differently under several DRG systems currently in use. For instance, ICD-9-CM code 414.12 (Dissection of coronary artery) is listed as a “Major CC” under the All Patient (AP) DRGs, GROUPER Version 21.0 and an “Extreme” CC under the All Patient Refined (APR) DRGs, GROUPER Version 20.0, but is not listed as a CC at all in GROUPER Version 22.0 of the DRGs Definitions Manual used by Medicare. Similarly, ICD-9-CM code 424.0 (Mitral valve disorder) is a CC under GROUPER Version 22.0 of the DRGs Definitions Manual for Medicare's DRG system, a minor CC under the GROUPER Version 20.0 of the APR-DRGs, and not a CC at all under GROUPER Version 21.0 of the AP-DRGs.
Given the long period of time that has elapsed since the original CC list was developed, the incremental nature of changes to it, and changes in the way inpatient care is delivered, we are planning a comprehensive and systematic review of the CC list for the IPPS rule for FY 2007. As part of this process, we plan to consider revising the standard for determining when a condition is a CC. For instance, we may use an alternative to classifying a condition as a CC based on how it affects the length of stay of a case. Similar to other aspects of the DRG system, we may consider the effect of a specific secondary diagnosis on the charges or costs of a case to evaluate whether to include the condition on the CC list. Using a statistical algorithm, we may classify each diagnosis based on its effect on hospital charges (or costs) relative to other cases when present as a secondary diagnosis to obtain better information on when a particular condition is likely to increase hospital costs. For example, Code 293.84 (Anxiety disorder in conditions classified elsewhere), which is currently listed as a CC, might be removed from the CC list if analysis of the data do not support the fact that it represents a significant increase in resource utilization, and a code such as 359.4 (Toxic myopathy), which is currently not listed as a CC, could be added to the CC list if the data support it. In addition to using hospital charge data as a basis for a review, we would expect to supplement the process with review by our medical experts. Further, we may also consider doing a comparison of the Medicare DRG CC list with other DRG systems such as the AP-DRGs and the APR-DRGs to determine how the same secondary diagnoses are treated under these systems.
By performing a comprehensive review of the CC list, we expect to revise the DRG classification system to better reflect resource utilization and remove conditions from the CC list that only have a marginal impact on a hospital's costs. We believe that a comprehensive review of the CC list would be consistent with MedPAC's recommendation that we improve the DRG system to better recognize severity. We will provide more detail about how we expect to undertake this analysis in the future, and any changes to the CC list will only be adopted after a notice and comment rulemaking that fully explains the methodology we plan to use in conducting this review. We encourage comment at this time regarding possible ways that more meaningful indicators of clinical severity and their implications for resource use can be incorporated into our comprehensive review and possible restructuring of the CC list.
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. We created the CC Exclusions List for the following reasons: (1) to preclude coding of CCs for closely related conditions; (2) to preclude duplicative 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. As we indicated above, we developed this 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 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 for FY 2006.
In the May 19, 1987 proposed notice (52 FR 18877) and the September 1, 1987 final notice (52 FR 33154), 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.
• 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. 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.
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, 2004. (See section II.B.13. of this preamble for a discussion of ICD-9-CM changes.) We are proposing these changes 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, 2005. 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, 2005, 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, 2005, 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 $152.50 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 22161; 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, 2001, 2002, 2003, 2004, and 2005) and those in Tables 6G and 6H of this proposed rule for FY 2006 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, 2005. (Note: There was no CC Exclusions List in FY 2000 because we did not make changes to the ICD-9-CM codes for FY 2000.)
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 22.0, is available for $225.00, which includes $15.00 for shipping and handling. Version 23.0 of this manual, which will include the final FY 2006 DRG changes, will be 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.
(If you choose to comment on issues in this section, please include the caption “DRGs 468, 476, and 477” at the beginning of your comment.)
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. [?USGPO Galley End:?][?USGPO Galley End:?]
• 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.
• 60.96, Transurethral destruction of prostate tissue by microwave thermotherapy.
• 60.97, Other transurethral destruction of prostate tissue by other thermotherapy.
• 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.
We annually conduct a review of procedures producing assignment to DRG 468 or DRG 477 on the basis of volume, by procedure, to see if it would be appropriate to move procedure codes out of these DRGs into one of the surgical DRGs for the MDC into which the principal diagnosis falls. The data are arrayed two ways for comparison purposes. We look at a frequency count of each major operative procedure code. We also compare procedures across MDCs by volume of procedure codes within each MDC.
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 procedures in DRGs 468 or 477 that should be removed to one of the surgical DRGs. Therefore, in this proposed rule, we are not proposing any changes for FY 2006.
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 three DRGs to another of the three DRGs based on average charges and the 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 to move 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.
It has come to our attention that procedure code 26.12 (Open biopsy of salivary gland or duct) is assigned to DRG 468 (Extensive O.R. Procedure Unrelated to Principal Diagnosis). We believe this to be an error, as code 26.31 (Partial sialoadenectomy), which is a more extensive procedure than code 26.12, is assigned to DRG 477. Therefore, we are proposing to correct this error by moving code 26.12 out of DRG 468 and reassigning it to DRG 477.
We are not proposing to move any procedure codes from DRG 476 to DRGs 468 or 477, or from DRG 477 to DRGs 468 or 476.
Based on our review this year, we are not proposing to add any diagnosis codes to MDCs.
As described in section II.B.1. of this preamble, the ICD-9-CM is a coding system 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 Official Version of the ICD-9-CM contains the list of valid diagnosis and procedure codes. (The Official Version of the ICD-9-CM is available from the Government Printing Office on CD-ROM for $25.00 by calling (202) 512-1800.) The Official Version of the ICD-9-CM is no longer available in printed manual form from the Federal Government; it is only available on CD-ROM. Users who need a paper version are referred to one of the many products available from publishing houses.
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 individual 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 2006 at a public meeting held on October 7-8, 2004, and finalized the coding changes after consideration of comments received at the meetings and in writing by January 12, 2005. Those coding changes are announced in Tables 6A through 6F of the Addendum to this proposed rule. The Committee held its 2005 meeting on March 31-April l, 2005. Proposed new codes for which there was a consensus of public support and for which complete tabular and indexing charges can be made by May 2005 will be included in the October 1, 2005 update to ICD-9-CM. These additional codes will be included in Tables 6A through 6F of the final rule.
Copies of the minutes of the procedure codes discussions at the Committee's October 7-8, 2004 meeting can be obtained from the CMS Web site:
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 2402, 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 Management, 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, 2005. 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 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, 2005. Table 6D contains invalid procedure codes. These invalid procedure codes will not be recognized by the GROUPER beginning with discharges occurring on or after October 1, 2005. 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 revised procedure code titles for FY 2006.
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 proposals for procedure codes that would describe new technology discussed and approved at the April meeting as part of the code revisions effective the following October. As stated previously, ICD-9-CM codes discussed at the March 31-April 1, 2005 Committee meeting that receive consensus and that can be finalized by May 2005 will be included in Tables 6A through 6F of the final rule.
Section 503(a) of Pub. L. 108-173 included a requirement for updating ICD-9-CM codes twice a year instead of a single update on October 1 of each year. This requirement was included as part of the amendments to the Act relating to recognition of new technology under the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act by adding a clause (vii) which states that the “Secretary shall provide for the addition of new diagnosis and procedure codes in April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosis-related group classification) * * * until the fiscal year that begins after such date.” This requirement improves the recognition of new technologies under the IPPS system by providing information on these new technologies at an earlier date. Data will be available 6 months earlier than would be possible with updates occurring only once a year on October 1.
While section 503(a) states that the addition of new diagnosis and procedure codes on April 1 of each year shall not require the Secretary to adjust the payment, or DRG classification under section 1886(d) of the Act until the fiscal year that begins after such date, we have to update the DRG software and other systems in order to recognize and accept the new codes. We also publicize the code changes and the need for a mid-year systems update by providers to capture the new codes. Hospitals also have to obtain the new code books and encoder updates, and make other system changes in order to capture and report the new codes.
The ICD-9-CM Coordination and Maintenance Committee holds its meetings in the Spring and Fall, usually in April and September, in order to update the codes and the applicable payment and reporting systems by October 1 of each year. Items are placed on the agenda for the ICD-9-CM Coordination and Maintenance Committee meeting if the request is received at least 2 months prior to the meeting. This requirement allows time for staff to review and research the coding issues and prepare material for discussion at the meeting. It also allows time for the topic to be publicized in meeting announcements in the
A discussion of this timeline and the need for changes are included in the December 4-5, 2003 ICD-9-CM Coordination and Maintenance Committee minutes. The public agreed that there was a need to hold the fall meetings earlier, in September or October, in order to meet the new implementation dates. The public provided comment that additional time would be needed to update hospital systems and obtain new code books and coding software. There was considerable concern expressed about the impact this new April update would have on providers.
In the FY 2005 IPPS final rule, we implemented section 503(a) by developing a mechanism for approving, in time for the April update, diagnoses and procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. We also established the following process for making these determinations. Topics considered during the Fall ICD-9-CM Coordination and Maintenance Committee meeting are considered for an April 1 update if a strong and convincing case is made by the requester at the Committee's public meeting. The request must identify the reason why a new code is needed in April for purposes of the new technology process. The participants at the meeting and those reviewing the Committee meeting summary report are provided the opportunity to comment on this expedited request. All other topics are considered for the October 1 update. Participants at the Committee meeting are encouraged to comment on all such requests. There were no requests for an expedited April l, 2005 implementation of an ICD-9-CM code at the October 7-8, 2004 Committee meeting. Therefore, there were no new ICD-9-CM codes implemented on April 1, 2005.
We believe that this process captures the intent of section 503(a). This requirement was included in the provision revising the standards and process for recognizing new technology under the IPPS. In addition, the need for approval of new codes outside the existing cycle (October 1) arises most frequently and most acutely where the new codes will capture new technologies that are (or will be) under consideration for new technology add-on payments. Thus, we believe this provision was intended to expedite data collection through the assignment of new ICD-9-CM codes for new technologies seeking higher payments.
Current addendum and code title information is published on the CMS Web page at:
CMS also sends copies of all ICD-9-CM coding changes to its contractors for use in updating their systems and providing education to providers.
These same means of disseminating information on new, revised, and deleted ICD-9-CM codes will be used to notify providers, publishers, software vendors, contractors, and others of any changes to the ICD-9-CM codes that are implemented in April. Currently, code titles are also published in the IPPS proposed and final rules. The code titles are adopted as part of the ICD-9-CM Coordination and Maintenance Committee process. The code titles are not subject to comment in the proposed or final rules. We will continue to publish the October code updates in this manner within the IPPS proposed and final rules. For codes that are implemented in April, we will assign the new procedure code to the same DRG in which its predecessor code was assigned so there will be no DRG impact as far as DRG assignment. This mapping was specified by Pub. L. 108-173. Any midyear coding updates will be available through the websites indicated above and through the
Acute intermittent porphyria is a rare metabolic disorder. The condition is described by code 277.1 (Disorders of porphyrin metabolism). Code 277.1 is assigned to DRG 299 (Inborn Errors of Metabolism) under MDC 10 (Endocrine, Nutritional, and Metabolic Diseases and Disorders).
In the FY 2005 final rule (69 FR 48981), we discussed the DRG assignment of acute intermittent porphyria. This discussion was a result of correspondence that we received during the comment period for the FY 2005 proposed rule in which the commenter suggested that Medicare hospitalization payments do not accurately reflect the cost of treatment. At that time, we indicated that we would take this comment into consideration when we analyzed the MedPAR data for this proposed rule for FY 2006.
Our review of the most recent MedPAR data shows a total of 1,370 cases overall in DRG 299, of which 471 had a principal diagnosis coded as 277.1. The average length of stay for all cases in DRG 299 was 5.17 days, while the average length of stay for porphyria cases with code 277.1 was 6.0 days. The average charges for all cases in DRG 299 were $15,891, while the average changes for porphyria cases with code 277.1 were $21,920. Based on our analysis of these data, we do not believe that there is a sufficient difference between the average charges and average length of stay for these cases to justify a change to the DRG assignment for treating this condition.
(If you choose to comment on issues in this section, please include the caption “DRG Weights” at the beginning of your comment.)
We are proposing to use the same basic methodology for the FY 2006 recalibration as we did for FY 2005 (FY 2005 IPPS final rule (69 FR 48981)). That is, we have recalibrated the DRG weights based on charge data for
The MedPAR file is based on fully coded diagnostic and procedure data for all Medicare inpatient hospital bills. The FY 2004 MedPAR data used in this final rule include discharges occurring between October 1, 2003 and September 30, 2004, based on bills received by CMS through December 31, 2004, from all hospitals subject to the IPPS and short-term acute care hospitals in Maryland (which are under a waiver from the IPPS under section 1814(b)(3) of the Act). The FY 2004 MedPAR file includes data for approximately 11,910,025 Medicare discharges. Discharges for Medicare beneficiaries enrolled in a Medicare+Choice managed care plan are excluded from this analysis. The data excludes CAHs, including hospitals that subsequently became CAHs after the period from which the data were taken.
The proposed methodology used to calculate the DRG relative weights from the FY 2004 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.
• 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 2004 MedPAR file. (Medicare coverage for heart, heart-lung, liver, and lung transplants is limited to those facilities that have received approval from CMS as transplant centers.)
• 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.
• 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, a transfer case receiving payment 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 proposed new weights are normalized by an adjustment factor of 1.47263 so that the average case weight after recalibration is equal to the average case weight before recalibration. This proposed adjustment is intended to ensure that recalibration by itself neither increases nor decreases total payments under the IPPS.
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 2006. Using the FY 2004 MedPAR data set, there are 41 DRGs that contain fewer than 10 cases. We are proposing to compute the weights for these low-volume DRGs by adjusting the FY 2005 weights of these DRGs by the percentage change in the average weight of the cases in the other DRGs.
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 making a budget neutrality adjustment to ensure that the requirement of section 1886(d)(4)(C)(iii) of the Act is met.
(If you choose to comment on issues in this section, please include the caption “LTC-DRGs” at the beginning of your comment.)
In the June 6, 2003 LTCH PPS final rule (68 FR 34122), we changed 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, because 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 final rule, we explained that the annual update of the long-term care diagnosis-related group (LTC-DRG) classifications and relative weights will continue to remain linked to the annual reclassification and recalibration of the CMS-DRGs used under the IPPS. In that same final rule, we specified that we will 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. Furthermore, we stated that we will publish the annual update of the LTC-DRGs in the proposed and final rules for the IPPS.
In the past, the annual update to the IPPS DRGs has been based on the annual revisions to the ICD-9-CM codes and was effective each October 1. As discussed in the FY 2005 IPPS final rule (69 FR 48954 through 48957) and in the February 3, 2005 LTCH PPS proposed rule (70 FR 5729 through 5733), with the implementation of section 503 (a) of Pub. L. 108-173, there is the possibility that one feature of the GROUPER software program may be updated twice during a Federal fiscal year (October 1 and April 1) as required by the statute for the IPPS. Specifically, ICD-9-CM diagnosis and procedure codes for new medical technology may be created and added to existing DRGs in the middle of the Federal fiscal year on April 1. This policy change will have no effect, however, on the LTC-DRG relative weights which will continue to be updated only once a year (October 1), nor will there be any impact on Medicare payments under the LTCH PPS. The use of the ICD-9-CM code set is also compliant with the current requirements of the Transactions and Code Sets Standards regulations at 45 CFR Parts 160 and 162, promulgated in accordance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191.
In the health care industry, historically annual changes to the ICD-9-CM codes were effective for discharges occurring on or after October 1 each year. Thus, the manual and electronic versions of the GROUPER software, which are based on the ICD-9-CM codes, were also revised annually and effective for discharges occurring on or after October 1 each year. As noted above, the patient classification system used under the LTCH PPS (LTC-DRGs) is based on the patient classification system used under the IPPS (CMS-DRGs), which historically had been updated annually and effective for discharges occurring on or after October 1 through September 30 each year. As mentioned above, the ICD-9-CM coding update process has been revised, as discussed in greater detail in the FY 2005 IPPS final rule (69 FR 48954 through 48957). Specifically, section 503(a) of Pub. L. 108-173 includes a requirement for updating ICD-9-CM codes as often as twice a year instead of the current process of annual updates on October 1 of each year. This requirement is included as part of the amendments to the Act relating to recognition of new medical technology under the IPPS. Section 503(a) of Pub L. 108-173 amended section 1886(d)(5)(K) of the Act by adding a new clause (vii) which states that “the Secretary shall provide for the addition of new diagnosis and procedure codes in [sic] April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosis-related group classification) * * * until the fiscal year that begins after such date.” This requirement will improve the recognition of new technologies under the IPPS by accounting for those ICD-9-CM codes in the MedPAR claims data at an earlier date. Despite the fact that aspects of the GROUPER software may be updated to recognize any new technology ICD-9-CM codes, as discussed in the February 3, 2005 LTCH PPS proposed rule (70 FR 5730 through 5733), there will be no impact on either LTC-DRG assignments or payments under the LTCH PPS at that time. That is, changes to the LTC-DRGs (such as the creation or deletion of LTC-DRGs) and the relative weights will continue to be updated in the manner and timing (October 1) as they are now.
As noted above and as described in the February 3, 2005 LTCH PPS proposed rule (70 FR 5730), updates to the GROUPER for both the IPPS and the LTCH PPS (with respect to relative weights and the creation or deletion of DRGs) are made in the annual IPPS proposed and final rules and are effective each October 1. We explained in the FY 2005 IPPS final rule (69 FR 48955 and 48956), that since we do not publish a midyear IPPS rule, April 1 code updates discussed above will not be published in a midyear IPPS rule. Rather, we will assign any new diagnostic or procedure codes to the same DRG in which its predecessor code was assigned, so that there will be no impact on the DRG assignments. Any proposed coding updates will be available through the websites indicated in the same rule and provided above in section II.B. of this preamble and through the
As we discussed in the FY 2005 IPPS final rule (69 FR 48956), in implementing section 503(a) of Pub. L. 108-173, there will only be an April 1 update if new technology codes are requested and approved. It should be noted that any new codes created for April 1 implementation will be limited to those diagnosis and procedure code revisions primarily needed to describe new technologies and medical services. However, we reiterate that the process of discussing updates to the ICD-9-CM has been an open process through the ICD-9-CM C&M Committee since 1995. Requestors will be given the opportunity to present the merits of their proposed new code and make a clear and convincing case for the need to update ICD-9-CM codes for purposes of the IPPS new technology add-on payment process through an April 1 update.
In addition, in the FY 2005 IPPS final rule (69 FR 48956), we stated that at the October 2004 ICD-9-CM Coordination and Maintenance Committee meeting, no new codes were proposed for an April 1, 2005 implementation, and the next update to the ICD-9-CM coding system would not occur until October 1, 2005 (FY 2006). Presently, as there were no coding changes suggested for an April 1, 2005 update, the ICD-9-CM coding set implemented on October 1, 2004 will continue through September 30, 2005 (FY 2005). The proposed update to the ICD-9-CM coding system for FY 2006 is discussed above in section II.B. of this preamble.
In this proposed rule, we are proposing revisions to the LTC-DRG classifications and relative weights and, to the extent that they are finalized, we will publish them in the corresponding IPPS final rule, to be effective October 1, 2005 through September 30, 2006 (FY 2006), using the latest available data. The proposed LTC-DRGs and relative weights for FY 2006 in this proposed rule are based on the proposed IPPS DRGs (GROUPER Version 23.0) discussed in section II. of this proposed rule.
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. L. 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 IPPS for acute care hospitals. Thus, in this proposed rule, we are proposing to use the IPPS GROUPER Version 23.0 for FY 2006 to process LTCH PPS claims for LTCH occurring from October 1, 2005 through September 30, 2006. The proposed changes to the CMS DRG classification system used under the IPPS for FY 2006 (GROUPER Version 23.0) are discussed in section II.B. of the preamble to this proposed rule.
Under the LTCH PPS, we determine relative weights for each of the CMS DRGs to account for the difference in resource use by patients exhibiting the
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 (see section II.B. of this preamble), cases are classified into LTC-DRGs for payment under the LTCH PPS based on the principal diagnosis, up to eight additional diagnoses, and up to six procedures performed during the stay, as well as age, sex, and discharge status of the patient. The diagnosis and procedure information is reported by the hospital using codes from the ICD-9-CM.
As discussed in section II.B. of this preamble, the CMS 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. (See section II.B. of this preamble for further discussion of surgical DRGs and medical DRGs.)
Because the assignment of a case to a particular LTC-DRG will help determine the amount that is paid for the case, it is important that the coding is accurate. As used under the IPPS, classifications and terminology used under 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 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 Transactions and Code Sets Standards under HIPAA (45 CFR Parts 160 and 162).
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.
Upon the discharge of the patient from a LTCH, the LTCH must assign appropriate diagnosis and procedure codes from the ICD-9-CM. Completed claim forms are to be submitted electronically 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 an LTC-DRG can be made.
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 LTCH PPS 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 LTC-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 relative 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.
As we stated in the August 30, 2002 LTCH PPS final rule (67 FR 55981), one of the primary goals for the implementation of the LTCH PPS is to pay each LTCH an appropriate amount for the efficient delivery of care to Medicare patients. The system must be able to account adequately for each LTCH's case-mix in order to ensure both fair distribution of Medicare payments and access to adequate care for those Medicare patients whose care is more costly. To accomplish these goals, we adjust the LTCH PPS standard Federal prospective payment system rate by the applicable LTC-DRG relative weight in determining payment to LTCHs for each case. 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 an LTC-DRG with a relative weight of 2 will, on average, cost twice as much as cases in an LTC-DRG with a weight of 1.
To calculate the proposed LTC-DRG relative weights for FY 2006 in this proposed rule, we obtained total Medicare allowable charges from FY 2004 Medicare hospital bill data from the December 2004 update of the MedPAR file, and we used the proposed Version 23.0 of the CMS GROUPER for IPPS (as discussed in section II.B. of this preamble) to classify cases. Consistent with the methodology under the IPPS, we are proposing to recalculate the FY 2006 LTC-DRG relative weights based on the best available data for this proposed rule.
As we discussed in the FY 2005 IPPS final rule (69 FR 48984), 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 Pub. L. 90-248 (42 U.S.C. 1395b-1) or section 222(a) of Pub. L. 92-603 (42 U.S.C. 1395b-1). Therefore, in the development of the proposed FY 2006 LTC-DRG relative weights, we have excluded the data of the 19 all-inclusive rate providers and the 3 LTCHs that are paid in accordance with demonstration projects that had claims in the FY 2003 MedPAR file.
In the FY 2005 IPPS final rule (6 FR 48984), we discussed coding inaccuracies that were found in the claims data for a large chain of LTCHs in the FY 2002 MedPAR file, which were used to determine the LTC-DRG relative weights for FY 2004. As we discussed in the same final rule, after notifying the large chain of LTCHs whose claims contained the coding inaccuracies to request that they resubmit those claims with the correct diagnosis, from an analysis of LTCH claims data from the December 2003 update of the FY 2003 MedPAR file, it appeared that such claims data no longer contain coding errors. Therefore, it was not necessary to correct the FY 2003 MedPAR data for the development of the FY 2005 LTC-DRGs and relative weights established in the same final rule.
As stated above, in this proposed rule, we are proposing to use the December 2004 update of the FY 2004 MedPAR file for the determination of the proposed FY 2006 LTC-DRG relative weights as these are the best available data. Based on an analysis of LTCH claims data from the December 2004 update of the FY 2004 MedPAR file, it appears that such claims data do not contain coding inaccuracies found previously in LTCH claims data. Therefore, it was not necessary to correct the FY 2004 MedPAR data for the development of the proposed FY 2006 LTC-DRGs and relative weights presented in this proposed rule.
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. This 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, we use a hospital-specific relative value method to calculate the LTC-DRG relative weights instead of the methodology used to determine the DRG relative weights under the 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, 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 under § 412.523, 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. Short-stay outliers under § 412.529 are cases with a length of stay that is less than or equal to five-sixths the average length of stay of the LTC-DRG. The average adjusted charge reflects the average intensity of the health care services delivered by a particular LTCH and the average cost level of that LTCH. The resulting ratio is multiplied by that LTCH's case-mix index to determine the standardized charge for the case.
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.
In order to account for LTC-DRGs with low-volume (that is, with fewer than 25 LTCH cases), in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55984), 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 2004 update of the FY 2004 MedPAR file, we identified 172 LTC-DRGs that contained between 1 and 24 cases. This list of proposed LTC-DRGs was then divided into one of the 5 low-volume quintiles, each containing a minimum of 34 LTC-DRGs (172/5 = 34 with 2 LTC-DRGs as the remainder). For FY 2006, we are proposing to make an assignment to a specific low-volume quintile by sorting the low-volume proposed LTC-DRGs in ascending order by average charge. For this proposed rule, this results in an assignment to a specific low volume quintile of the sorted 172 low-volume proposed LTC-DRGs by ascending order by average charge. Because the number of 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 low-
In order to determine the proposed relative weights for the proposed LTC-DRGs with low volume for FY 2006, in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55984), we are proposing to use the proposed five low-volume quintiles described above. The composition of each of the proposed five low-volume quintiles shown in the chart below would be used in determining the proposed LTC-DRG relative weights for FY 2006. We would determine a proposed relative weight and (geometric) average length of stay for each of the proposed five low-volume quintiles using the formula that we 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 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 2006 LTC-DRG relative weights are determined in accordance with the methodology established in the August 1, 2003 IPPS final rule (68 FR 45367). In summary, LTCH cases must be grouped in the appropriate LTC-DRG, while taking into account the low-volume proposed LTC-DRGs as described above, before the proposed FY 2006 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 2006 in this proposed rule by first removing statistical outliers and cases with a length of stay of 7 days or less, as discussed in greater detail below. 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, as also discussed in greater detail below. The short-stay adjusted discharges and corresponding charges are 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 2006 LTC-DRG relative weights.
The first step in the calculation of the proposed FY 2006 LTC-DRG relative weights is to remove statistical outlier cases. We define statistical outliers as cases that are outside of 3.0 standard deviations from the mean of the log distribution of both charges per case and the charges per day for each LTC-DRG. These statistical outliers are removed prior to calculating the proposed relative weights. We believe that they may represent aberrations in the data that distort the measure of average resource use. Including those LTCH cases in the calculation of the proposed relative weights could result in an inaccurate proposed relative weight that does not truly reflect relative resource use among the proposed LTC-DRGs.
The proposed FY 2006 LTC-DRG relative weights reflect the average of resources used on representative cases of a specific type. Generally, cases with a length of stay 7 days or less do not belong in a LTCH because these stays do not fully receive or benefit from treatment that is typical in a LTCH stay, and full resources are often not used in the earlier stages of admission to a LTCH. If we were to include stays of 7 days or less in the computation of the proposed FY 2006 LTC-DRG relative weights, the value of many proposed relative weights would decrease and, therefore, payments would decrease to a level that may no longer be appropriate.
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 2006 LTC-DRG relative weights, we remove LTCH cases with a length of stay of 7 days or less.
After removing cases with a length of stay of 7 days or less, we are left with cases that have a length of stay of greater than or equal to 8 days. The next step in the calculation of the proposed FY 2006 LTC-DRG relative weights is to adjust each LTCH's charges per discharge for those remaining cases for the effects of short-stay outliers as defined in § 412.529(a). (However, we note that even if a case was removed in Step 2 (that is, cases with a length of stay of 7 days or less), it was paid as a short-stay outlier if its length of stay was less than or equal to five-sixths of the average length of stay of the LTC-DRG, in accordance with § 412.529.)
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 FY 2005 IPPS final rule (69 FR 48991), counting short-
The process of calculating the proposed LTC-DRG relative weights using the hospital specific relative value methodology is iterative. First, for each LTCH case, we calculate a hospital-specific relative charge value by dividing the short-stay outlier adjusted charge per discharge (see step 3) of the LTCH case (after removing the statistical outliers (see step 1)) and LTCH cases with a length of stay of 7 days or less (see step 2) by the average charge per discharge for the LTCH in which the case occurred. The resulting ratio is then multiplied by the LTCH's case-mix index to produce an adjusted hospital-specific relative charge value for the case. An initial case-mix index value of 1.0 is used for each LTCH.
For each proposed LTC-DRG, the proposed FY 2006 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 proposed LTCH's average relative weight for all of its cases (case-mix) is calculated by dividing the sum of all the proposed LTCH's 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.
As explained in section II.B. of this preamble, the proposed FY 2006 CMS DRGs, which the proposed FY 2006 LTC-DRGs are based, contain “pairs” that are differentiated based on the presence or absence of CCs. The proposed LTC-DRGs with CCs are defined by certain secondary diagnoses not related to or inherently a part of the disease process identified by the principal diagnosis, but the presence of additional diagnoses does not automatically generate a CC. As we discussed in the FY 2005 IPPS final rule (69 FR 48991), the value of monotonically increasing relative weights rises as the resource use increases (for example, from uncomplicated to more complicated). The presence of CCs in a proposed LTC-DRG means that cases classified into a “without CC” proposed LTC-DRG are expected to have lower resource use (and lower costs). In other words, resource use (and costs) are expected to decrease across “with CC”/“without CC” pairs of proposed LTC-DRGs.
For a case to be assigned to a proposed LTC-DRG with CCs, 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” because only one principal diagnosis was coded. Since the LTCH PPS was only implemented for cost reporting periods beginning on or after October 1, 2002 (FY 2003) and LTCHs were previously paid under cost-based reimbursement, which is not based on patient diagnoses, coding by LTCHs 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 discussed 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, as discussed in the FY 2005 IPPS final rule (69 FR 48991 through 48992), based on FY 2003 claims data, we also found on occasion that the data suggested that cases classified to the LTC-DRG “with CCs” of a “with CC”/“without CC” pair have a lower average charge than the corresponding LTC-DRG “without CCs” for the FY 2005 LTC-DRG relative weights.
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 because, in general, cases classified into a “with CC” LTC-DRG are expected to have higher resource use (and higher cost) as discussed above. Therefore, previously when we determined the LTC-DRG relative weights in accordance with the methodology established in the August 30, 2002 LTCH PPS final rule (67 FR 55990), we grouped both the cases “with CCs” and “without CCs” together for the purpose of calculating the LTC-DRG relative weights for FYs 2003 through 2005. As we stated in that same final rule, we will 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.
There are three types of “with CC” and “without CC” pairs that could be 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 2004 update of the FY 2004 MedPAR file (the best available data at this time), we identified one of the three types of nonmonotonic LTC-DRG pairs.
The first category of nonmonotonically increasing proposed relative weights for FY 2006 proposed LTC-DRG pairs “with and without CCs” contains zero 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, did not fall into one of the 5 low-volume quintiles. For those nonmonotonic proposed LTC-DRG pairs, 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 second category of nonmonotonically increasing relative weights for proposed LTC-DRG pairs “with and without CCs” consists of one pair 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 is in a higher-weighted proposed low-volume quintile than the “with CC” proposed LTC-DRG. For those pairs, we would 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 within which low-volume quintile the “combined LTC-DRG” is grouped. Both proposed LTC-DRGs in the pair are then grouped into the same proposed low-volume quintile, and thus have the same proposed relative weight. In this proposed rule, for FY 2006, proposed LTC-DRGs 531 and 532 fall into this category.
The third category of nonmonotonically increasing relative weights for proposed LTC-DRG pairs “with and without CCs” consists of zero 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. 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. In this proposed rule, for FY 2006, there are no proposed LTC-DRGs that fall into this category.
As we stated above, we determine the proposed relative weight for each proposed LTC-DRG using charges reported in the December 2004 update of the FY 2004 MedPAR file. Of the 526 proposed LTC-DRGs for FY 2006, we identified 194 proposed LTC-DRGs for which there were no LTCH cases in the database. That is, based on data from the FY 2004 MedPAR file used in this proposed rule, no patients who would have been classified to those LTC-DRGs were treated in LTCHs during FY 2004 and, therefore, no charge data were reported for those proposed LTC-DRGs. Thus, in the process of determining the proposed LTC-DRG relative weights, we are unable to determine weights for these 194 proposed LTC-DRGs using the methodology described in steps 1 through 5 above. However, because patients with a number of the diagnoses under these proposed LTC-DRGs may be treated at LTCHs beginning in FY 2006, we assign proposed relative weights to each of the 194 “no volume” proposed LTC-DRGs based on clinical similarity and relative costliness to one of the remaining 332 (156—194 = 332) proposed LTC-DRGs for which we are able to determine proposed relative weights, based on FY 2004 claims data.
As there are currently no LTCH cases in these “no volume” proposed LTC-DRGs, we determine proposed relative weights for the 194 proposed LTC-DRGs with no LTCH cases in the FY 2004 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.
Our methodology for determining proposed relative weights for the proposed “no volume” LTC-DRGs is as follows: We crosswalk the proposed no volume LTC-DRGs by matching them to other similar proposed LTC-DRGs for which there were LTCH cases in the FY 2004 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 proposed no volume 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 proposed no volume 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 proposed no volume LTC-DRG is crosswalked to the proposed relative weights of each of the five quintiles and we assign the proposed no volume LTC-DRG the proposed relative weight of the proposed low-volume quintile with the closest weight. For this proposed rule, a list of the proposed no volume FY 2006 LTC-DRGs and the proposed FY 2006 LTC-DRG to which it is crosswalked in order to determine the appropriate proposed low-volume quintile for the assignment of a relative weight for FY 2006 is shown in the chart below.
To illustrate this methodology for determining the proposed relative weights for the 194 proposed LTC-DRGs with no LTCH cases, we are providing the following examples, which refer to the proposed no volume LTC-DRGs crosswalk information for FY 2006 provided in the chart above.
There were no cases in the FY 2004 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 3 for the purpose of determining the proposed FY 2006 relative weights, would display similar clinical and resource use. Therefore, we assign the same proposed relative weight of proposed LTC-DRG 178 of 0.7586 (proposed Quintile 3) for FY 2006 (Table 11 in the Addendum to this proposed rule) to proposed LTC-DRG 163.
There were no LTCH cases in the FY 2004 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 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 determined that the proposed low-volume quintile with the closest weight to proposed LTC-DRG 90 (0.5004) (refer to Table 11 in the Addendum to this proposed rule) would be proposed low-volume Quintile 1 (0. 4502) (refer to Table 11 in the Addendum to this proposed rule). Therefore, we assign proposed LTC-DRG 91 a proposed relative weight of 0.4502 for FY 2006.
Furthermore, we are proposing LTC-DRG relative weights of 0.0000 for heart, kidney, liver, lung, pancreas, and simultaneous pancreas/kidney transplants (LTC-DRGs 103, 302, 480, 495, 512, and 513, respectively) for FY 2006 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, 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 determine appropriate weights for the LTC-DRGs affected. At the present time, we would only include these six transplant LTC-DRGs in the GROUPER program for administrative purposes. Because we use the same GROUPER program for LTCHs as is used under the 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 LTC-DRGs and to determine the proposed relative weights in this proposed 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 2006.
(If you choose to comment on issues in this section, please include the caption “New Technology Applications” at the beginning of your comment.)
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)(vi) of the Act specifies that a medical service or technology will be considered new if it meets criteria established by the Secretary after notice and opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act specifies that the process must apply to a new medical service or technology if, “based on the estimated costs incurred with respect to discharges involving such service or technology, the DRG prospective payment rate otherwise applicable to such discharges under this subsection is inadequate.”
The regulations implementing this provision establish three criteria for new medical services and techniques to receive an additional payment. First, § 412.87(b)(2) defines when a specific medical service or technology will be considered new for purposes of new medical service or technology add-on payments. The statutory provision contemplated the special payment treatment for new medical services or technologies until such time as data are available to reflect the cost of the technology in the DRG weights through recalibration. There is a lag of 2 to 3 years from the point a new medical service or technology is first introduced on the market and when data reflecting the use of the medical service or technology are used to calculate the DRG weights. For example, data from discharges occurring during FY 2004 are used to calculate the proposed FY 2006 DRG weights in this proposed rule. Section 412.87(b)(2) provides that a “medical service or technology may be considered new within 2 or 3 years after the point at which data begin to become available reflecting the ICD-9-CM code assigned to the new medical service or technology (depending on when a new code is assigned and data on the new medical service or technology become available for DRG recalibration). After CMS has recalibrated the DRGs, based on available data, to reflect the costs of an otherwise new medical service or technology, the medical service or technology will no longer be considered ‘new’ under the criterion for this section.”
The 2-year to 3-year period during which a technology or medical service can be considered new would ordinarily begin with FDA approval, unless there was some documented delay in bringing the product onto the market after that approval (for instance, component production or drug production had been postponed until FDA approval due to shelf life concerns or manufacturing issues). After the DRGs have been recalibrated to reflect the costs of an otherwise new medical service or technology, the special add-on payment for new medical services or technology ceases (§ 412.87(b)(2)). For example, an approved new technology that received FDA approval in October 2004 and entered the market at that time may be eligible to receive add-on payments as a new technology until FY 2007 (discharges occurring before October 1, 2006), when data reflecting the costs of the technology would be used to recalibrate the DRG weights. Because the FY 2007 DRG weights will be calculated using FY 2005 MedPAR data, the costs of such a new technology would likely be reflected in the FY 2007 DRG weights.
Section 412.87(b)(3) further provides that, to receive special payment treatment, new medical services or technologies must be inadequately paid otherwise under the DRG system. To assess whether technologies would be inadequately paid under the DRGs, we establish thresholds to evaluate applicants for new technology add-on payments. In the FY 2004 IPPS final rule (68 FR 45385), we established the threshold at the geometric mean standardized charge for all cases in the DRG plus 75 percent of 1 standard deviation above the geometric mean standardized charge (based on the logarithmic values of the charges and transformed back to charges) 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). Table 10 in the Addendum to the FY 2004 IPPS final rule (68 FR 45648) listed the qualifying threshold by DRG, based on the discharge data that we used to calculate the FY 2004 DRG weights.
However, section 503(b)(1) of Pub. L. 108-173 amended section 1886(d)(5)(K)(ii)(I) of the Act to provide for “applying a threshold* * *that is the lesser of 75 percent of the standardized amount (increased to reflect the difference between cost and charges) or 75 percent of 1 standard deviation for the diagnosis-related group involved.” The provisions of section 503(b)(1) apply to classification for fiscal years beginning with FY 2005. We updated Table 10 from the October 6, 2003
Section 412.87(b)(1) of our existing regulations provides that a new technology is 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. For example, a new technology represents a substantial clinical improvement when it reduces mortality, decreases the number of hospitalizations or physician visits or reduces recovery time compared to the technologies previously available. (See the September 7, 2001 final rule (66 FR 46902) for a complete discussion of this criterion.)
The new medical service or technology add-on payment policy provides additional payments for cases with high costs involving eligible new medical services or 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 medical service or technology. Under § 412.88, Medicare pays a marginal cost factor of 50 percent for the costs of a new medical service or technology in excess of the full DRG payment. If the actual costs of a new medical service or technology case exceed the DRG payment by more than the 50-percent marginal cost factor of the new medical service or 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 Pub. L. 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, in
Section 503(d)(2) of Pub. L. 108-173 amended section 1886(d)(5)(K)(ii)(III) of the Act to provide that there shall be no reduction or adjustment in aggregate payments under the IPPS due to add-on payments for new medical services and technologies. Therefore, add-on payments for new medical services or technologies for FY 2005 and later years will not be budget neutral.
Applicants for add-on payments for new medical services or technologies for FY 2007 must submit a formal request, including a full description of the clinical applications of the medical service or technology and the results of any clinical evaluations demonstrating that the new medical service or technology represents a substantial clinical improvement, along with a significant sample of data to demonstrate the medical service or technology meets the high-cost threshold, no later than October 15, 2005. Applicants must submit a complete database no later than December 30, 2005. Complete application information, along with final deadlines for submitting a full application, will be available after publication of the FY 2006 final rule at our Web site:
Section 503(b)(2) of Pub. L. 108-173 amended section 1886(d)(5)(K) of the Act by adding a clause (viii) to provide for a mechanism for public input before publication of a notice of proposed rulemaking regarding whether a medical service or technology represents a substantial improvement or advancement. The revised process for evaluating new medical service and technology applications requires the Secretary to—
• Provide, before publication of a proposed rule, for public input regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of Medicare beneficiaries.
• Make public and periodically update a list of the services and technologies for which an application for add-on payments is pending.
• Accept comments, recommendations, and data from the public regarding whether a service or technology represents a substantial improvement.
• Provide, before publication of a proposed rule, for a meeting at which organizations representing hospitals, physicians, manufacturers, and any other interested party may present comments, recommendations, and data regarding whether a new service or technology represents a substantial clinical improvement to the clinical staff of CMS.
In order to provide an opportunity for public input regarding add-on payments for new medical services and technologies for FY 2006 before publication of this proposed rule, we published a notice in the
Approximately 45 participants registered and attended in person, while additional participants listened over an open telephone line. The participants focused on presenting data on the substantial clinical improvement aspect of their products, as well as the need for additional payments to ensure access to Medicare beneficiaries. In addition, we received written comments regarding the substantial clinical improvement criterion for the applicants. We have considered these comments in our evaluation of each new application for FY 2006 in this proposed rule. We have summarized these comments or, if applicable, indicated that no comments were received, at the end of the discussion of the individual applications.
Section 503(c) of Pub. L. 108-173 amended section 1886(d)(5)(K) of the Act by adding a new clause (ix) requiring that, before establishing any add-on payment for a new medical service or technology, the Secretary shall seek to identify one or more DRGs associated with the new technology, based on similar clinical or anatomical characteristics and the costs of the technology and assign the new technology into a DRG where the average costs of care most closely approximate the costs of care using the new technology. No add-on payment shall be made with respect to such a new technology.
At the time an application for new technology add-on payments is submitted, the DRGs associated with the new technology are identified. We only determine that a new technology add-on payment is appropriate when the reimbursement under these DRGs is not adequate for this new technology. The criterion for this determination is the cost threshold, which we discuss below. We discuss the assignments of several new technologies within the DRG payment system in section II.B. of this proposed rule.
In this proposed rule, we evaluate whether new technology add-on payments will continue in FY 2006 for the three technologies that currently receive such payments. In addition, we present our evaluations of eight applications for add-on payments in FY 2006. The eight applications for FY 2006 include two applications for products that were denied new technology add-on payments for FY 2005.
INFUSE
The FDA approved INFUSE
As we discussed in the September 7, 2001 final rule (66 FR 46915), an approval of a new technology for special payment should extend to all technologies that are substantially similar. Otherwise, our payment policy would bestow an advantage to the first applicant to receive approval for a particular new technology. In last year's final rule (69 FR 49008), we discussed another product, called OP-1 Putty, manufactured by Stryker Biotech, that promotes natural bone growth by using a closely related bone morphogenetic protein called rhBMP-7. (INFUSE
As noted above, the period for which technologies are eligible to receive new technology add-on payments is 2 to 3 years after the product becomes available on the market and data reflecting the cost of the technology are reflected in the DRG weights. The FDA approved INFUSE
Cardiac Resynchronization Therapy (CRT), also known as bi-ventricular pacing, is a therapy for chronic heart failure. A CRT implantable system provides electrical stimulation to the right atrium, right ventricle, and left ventricle to coordinate or resynchronize ventricular contractions and improve cardiac output.
In the FY 2005 IPPS final rule (69 FR 49016), we determined that cardiac resynchronization therapy with defibrillator (CRT-D) was eligible for add-on payments in FY 2005. Cases involving CRT-D that are eligible for new technology add-on payments are identified by either one of the following two ICD-9-CM procedure codes: 00.51 (Implantation of Cardiac Resynchronization Defibrillator, Total System (CRT-D)) or 00.54 (Implantation or Replacement of Pulse Generator Device Only (CRT-D)). InSync® Defibrillation System received FDA approval on June 26, 2002. However, another manufacturer, Guidant, received FDA approval for its CRT-D device on May 2, 2002. As we discussed in the September 7, 2001 final rule (66 FR 46915), an approval of a new technology for special payment should extend to all technologies that are substantially similar. Otherwise, our payment policy would bestow an advantage to the first applicant to receive approval for a particular new technology. We also noted that we would extend new technology add-on payments for the entire FY 2005 even though the 2-3 year period of newness ended in May 2005 for CRT-D since predictability is an important aspect of the prospective payment methodology and, therefore, we believe it is appropriate to apply a consistent payment methodology for new technologies throughout the fiscal year (69 FR 49016).
As noted in the FY 2005 IPPS final rule (69 FR 49014), because CRT-Ds were available upon the initial FDA approval in May 2002, we considered the technology to be new from this date. As a result, for FY 2006, the CRT-D will be beyond the 2-3 year period during which a technology can be considered new. Therefore, we are proposing to discontinue add-on payments for the CRT-D for FY 2006.
Medtronic, Inc. submitted an application for approval of the Kinetra® implantable neurostimulator device for new technology add-on payments for FY 2005. The Kinetra® device was approved by the FDA on December 16, 2003. The Kinetra® implantable neurostimulator is designed to deliver electrical stimulation to the subthalamic nucleus (STN) or internal globus pallidus (GPi) in order to ameliorate symptoms caused by abnormal neurotransmitter levels that lead to abnormal cell-to-cell electrical impulses in Parkinson's Disease and essential tremor. Before the development of Kinetra®, treating bilateral symptoms of patients with these disorders required the implantation of two neurostimulators (in the form of a product called Soletra
In December 2003, the FDA approved the device. Therefore, for FY 2006, Kinetra® qualifies under the newness criterion because FDA approval was within the statutory timeframe of 2 to 3 years and its costs are not yet reflected in the DRG weights. Because there were no data available to evaluate costs associated with Kinetra®, in the FY 2005 IPPS final rule, we conducted the cost analysis using Soletra
Last year, we used the same procedure codes to identify 187 cases involving the Soletra
We note that an ICD-9-CM code was approved for dual array pulse generator devices, effective October 1, 2004, for IPPS tracking purposes. The new ICD-9-CM code that will be assigned to this device is 86.95 (Insertion or replacement of dual array neurostimulator pulse generator), which includes dual array and dual channel generators for intracranial, spinal, and peripheral neurostimulators. The code will not separately identify cases with the Kinetra® device and will only be used to distinguish single versus dual channel-pulse generator devices. Because the code only became effective on October 1, 2004, we do not have any specific data regarding the costs of cases involving dual array pulse generator devices.
The manufacturer claimed that Kinetra® provides a range of substantial improvements beyond previously available technology. These include a reduced rate of device-related complications and hospitalizations or physician visits and less surgical trauma because only one generator implantation procedure is required. Kinetra® has a reed switch disabling function that physicians can use to prevent inadvertent shutoff of the device, as occurs when accidentally tripped by electromagnetic inference (caused by common products such as metal detectors and garage door openers). Kinetra® also provides significant patient control, allowing patients to monitor whether the device is on or off, to monitor battery life, and to fine-tune the stimulation therapy within clinician-programmed parameters. While Kinetra® provides the ability for patients to better control their symptoms and reduce the complications associated with the existing technology, it does not eliminate the necessity for two surgeries. Because the patients who receive the device are often frail, the implantation generally occurs in two phases: the brain leads are implanted in one surgery, and the generator is implanted in another surgery, typically on another day. However, implanting Kinetra® does reduce the number of potential surgeries compared to its predecessor (which requires two surgeries to implant the two single-lead arrays to the brain and an additional surgery for implantation of the second generator). Therefore, the Kinetra® device reduces the number of surgeries from 3 to 2.
Last year, we solicited comments on (1) the issue of whether the device is sufficiently different from the previously used technology to qualify as a substantially improved treatment for the same patient symptoms; (2) the cost of the device; and (3) the approval of the device for add-on payment, given the uncertainty over the frequency with which the patients receiving the device have the generator implanted in a second hospital stay, and the frequency with which this implantation occurs in an outpatient setting. In the response, we received sufficient evidence to demonstrate that Kinetra® does represent a substantial clinical improvement over the previous Soletra
Cases receiving Kinetra® for Parkinson's disease or essential tremor on or after October 1, 2004, are eligible to receive an add-on payment of up to $8,285, or half the cost of the device, which is approximately $16,570. These cases are identified by the presence of procedure codes 02.93 (Implantation or replacement of intracranial neurostimulator leads) and 86.95 (Insertion or replacement of dual array neurostimulator pulse generator). If a claim has only the procedure code identifying the implantation of the intracranial leads, or if the claim identifies only insertion of the generator, no add-on payment will be made.
This technology received FDA approval on December 16, 2003, and remains within the 2 to 3 year period during which it can be considered new. Therefore, we are proposing to continue add-on payments for Kinetra® Inplantable Neurostimulator for deep brain stimulation for FY 2006.
Bone Morphogenetic Proteins (BMPs) have been shown to have the capacity to induce new bone formation and, therefore, to enhance the healing of fractures. Using recombinant techniques, some BMPs (also referred to as rhBMPs) can be produced in large quantities. This innovation has cleared the way for the potential use of BMPs in a variety of clinical applications such as in delayed union and nonunion of fractured bones and spinal fusions. One such product, rhBMP-2, is developed as an alternative to bone graft with spinal fusions.
Medtronic Sofamor Danek (Medtronic) resubmitted an application (previously submitted for consideration for FY 2005) for a new technology add-on payment in FY 2006 for the use of INFUSE
Medtronic's first application for a new technology add-on payment for INFUSE
We note that Medtronic had ample opportunity, prior to the issuance of the FY 2005 IPPS final rule, to bring to our attention the fact that there was a similar product on the market that was being used in long bone fractures. We based our decision for FY 2005 on the record that was placed at our disposal by the applicant and by commenters during the comment period. Nevertheless, we have considered the issues raised by these two products again in the course of evaluating Medtronic's new application for approval of INFUSE
As part of its FY 2006 application, Medtronic advanced several arguments designed to demonstrate that OP-1 and INFUSE
Medtronic also pointed out that the FDA approved OP-1 for Humanitarian Device Exemption (HDE) status, whereas INFUSE
We do not believe that the different types of FDA approvals for the two products are relevant to distinguish between the two products in determining whether either product should be considered for new technology add-on payments under the IPPS. Manufacturers seek different types of FDA approval for many different reasons, including timing, the availability of adequate studies, the availability of resources to pursue research studies, and the size of the patient population that may be affected. The FDA has stated that the HDE approval process was established to address cases involving devices used in the treatment or diagnosis of diseases affecting fewer than 4,000 individuals in the United States per year: “A device manufacturer's research and development costs could exceed its market returns for diseases or conditions affecting small patient populations. FDA, therefore, developed and published [the regulation establishing the HDE process] to provide an incentive for the development of devices for use in the treatment or diagnosis of diseases affecting these populations.” (
For purposes of determining whether the use of rhBMPs for open tibia fracture represents a new technology, the crucial consideration is whether the costs of this technology are represented in the weights of the relevant DRGs. Cases that involve treatment of non-healed and acute tibia fractures fall into the same DRGs. We have identified 10,047 cases involving the use of rhBMPs in the FY 2004 MedPAR data file. This use includes the approved indications for INFUSE
• The technologies or services in question use the same, or a similar, mechanism of action to achieve the therapeutic outcome.
• The technologies or services are indicated for use in the same population for the same condition.
• The technologies or services achieve the same level of substantial improvement.
Medtronic has also argued that, according to its proposed criteria, OP-1 would fail on two of the three proposed tests for substantial similarity:
• According to Medtronic, the OP-1 implant “arguably” uses the same or a similar mechanism of action to achieve the therapeutic outcome.
• OP-1 and INFUSE
• Medtronic argues the products do not achieve the same level of substantial improvement (as discussed above).
• After receipt of all new applications for a fiscal year, CMS should publish a
• The new technology town hall meeting should include a discussion of products identified by manufacturers as “substantially similar” to other approved products or pending applications.
• CMS should publish initial findings about “substantial similarity” in the proposed hospital inpatient rule, with opportunity for public comment.
• CMS should publish ultimate findings in the inpatient final rule.
Alternatively, Medtronic suggested that, if a manufacturer identifies a product that may be substantially similar to a technology with an approved add-on payment, the manufacturer may choose to submit an application under the normal deadlines for the add-on payment program.
In addition, we note that commenters on the FY 2005 proposed rule placed a great deal of emphasis on the fact that many manufacturers developing new technologies are not aware of the existence of the add-on payment provision or lack the resources to apply for add-on payment. Therefore, commenters on that proposed rule argued that the regulations we have established are already too stringent and cumbersome, especially for small manufacturers to access the new
We note that Medtronic submitted data on 236 cases using INFUSE
However, because the costs of INFUSE
CHF Solutions, Inc. resubmitted an application (previously submitted for consideration for FY 2005) for the approval of the System 100 for new technology add-on payments for FY 2006. The System 100 is designed to remove excess fluid (primarily excess water) from patients suffering from severe fluid overload through the process of ultrafiltration. Fluid retention, sometimes to an extreme degree, is a common problem for patients with chronic congestive heart failure. This technology removes excess fluid without causing hemodynamic instability. It also avoids the inherent nephrotoxicity and tachyphylaxis associated with aggressive diuretic therapy, the mainstay of current therapy for fluid overload in congestive heart failure.
The System 100 consists of: (1) An S-100 console; (2) a UF 500 blood circuit; (3) an extended length catheter (ELC); and (4) a catheter extension tubing. The System 100 is designed to monitor the extracorporeal blood circuit and to alert the user to abnormal conditions. Vascular access is established via the peripheral venous system, and up to 4 liters of excess fluid can be removed in an 8-hour period.
On June 3, 2002, FDA approved the System 100 for use with peripheral venous access. On November 20, 2003, FDA approved the System 100 for expanded use with central venous access and catheter extension use for infusion or withdrawal circuit line with other commercially applicable venous catheters. According to the applicant, although the FDA first approved System 100 in June 2002, it was not used by hospitals until August 2002 because of the substantial amount of time necessary to market and sell the device to hospitals. The applicant presented data and evidence demonstrating that the System 100 was not marketed until August 2002.
We note the applicant submitted an application for FY 2005 and was denied new technology add-on payments. Our review indicated that the applicant did not present sufficient objective clinical evidence to determine that the System 100 meets the substantial clinical improvement criterion (such as a large prospective, randomized clinical trial) even though it is indicated for use in patients with congestive heart failure, a common condition in the Medicare population. However, for FY 2006, we are proposing to deny System 100 new technology add-on payments on the basis of our determination that it is no longer new. Technology is no longer considered new 2 to 3 years after data reflecting its costs begin to become available. Because data on the costs of the System 100 first became available in 2002, the costs are currently reflected in the DRG weights and the device is no longer new.
The applicant also submitted information for the cost and substantial clinical improvement criteria. As stated last year, it is important to note at the outset of the cost analysis that the console is reusable and is, therefore, a capital cost. Only the circuits and catheters are components that represent operating expenses. Section 1886(d)(5)(K)(i) of the Act requires that the Secretary establish a mechanism to recognize the costs of new medical services or technologies under the payment system established under subsection (d) of section 1886, which establishes the system for paying for the operating costs of inpatient hospital services. The system of payment for capital costs is established under section 1886(g) of the Act, which makes no mention of any add-on payments for a new medical service or technology. Therefore, it is not appropriate to include capital costs in the add-on payments for a new medical service or technology and these costs should also not be considered in evaluating whether a technology meets the cost criterion. The applicant has applied for add-on payments for only the circuits and catheter, which represent the operating expenses of the device. However, as stated in the FY 2005 IPPS final rule, we believe that the catheters cannot be considered new technology for this device. As a result, we considered only the UF 500 disposable blood circuit as relevant to the evaluation of the cost criterion.
The applicant submitted data from the FY 2003 MedPAR file in support of its application for new technology add-on payments for FY 2006. The applicant used a combination of diagnosis codes to determine which cases could potentially use the System 100. The applicant found 28,155 cases with the following combination of ICD-9-CM diagnosis codes: 428.0 through 428.9 (Heart Failure), 402.91 (Unspecified with Heart Failure), or 402.11 (Hypertensive Heart Disease with Heart Failure), in combination with 276.6 (Fluid Overload) and 782.3 (Edema). The 28,155 cases were found among 148 DRGs with 50.1 percent of cases mapped across DRGs 88, 89, 127, 277 and 316. The applicant eliminated those DRGs with less than 150 cases, which resulted in a total of 22,620 cases that could potentially use the System 100. The case-weighted average standardized charge across all DRGs was $13,619.32. The case-weighted threshold across all DRGs was $16,125.42. Although the case-weighted threshold is greater than the case-weighted standardized charge, it is necessary to include the standardized charge for the circuits used in each case. In order to establish the charge per circuit, the applicant submitted data regarding 76 actual cases that used the System 100. Based on these 76 cases, the standardized charge per circuit was $2,591. The applicant also stated that an average of two circuits are used per case. Therefore, adding $5,182 for the charge of the two
The applicant contended that the System 100 represents a substantial clinical improvement for the following reasons: It removes excess fluid without the use of diuretics; it does not lead to electrolyte imbalance, hemodynamic instability or worsening renal function; it can restore diuretic responsiveness; it does not adversely affect the renin-angiotensin system; it reduces length of hospital stay for the treatment of congestive heart failure, and it requires only peripheral venous access. The applicant also noted that there are some clinical trials that have demonstrated the clinical safety and effectiveness as well as cost effectiveness of the System 100 in treating patients with fluid overload.
However, as stated above, we are proposing to deny new technology add-on payments for the System 100 because it does not meet the newness criterion.
We received no public comments regarding this application for add-on payments.
DePuy Spine
On October 26, 2004, the FDA approved the CHARITE
We note that an ICD-9-CM code was effective October 1, 2004, for IPPS tracking purposes. The code assigned to the CHARITE
For analysis of the cost criterion, the applicant submitted two sets of data: one that used actual cases and one that used FY 2003 MedPAR cases. The applicant expects that cases using the CHARITE
In addition, as stated above, the applicant submitted cases from the FY 2003 MedPAR file. The applicant searched the MedPAR file for ICD-9-CM procedure codes 81.06, 81.07, and 81.08 in combination with diagnosis codes 722.10, 722.2, 722.5, 722.52, 722.6, 722.7, 722.73 and 756.12, to identify a patient population that could be eligible for the CHARITE
The applicant also contended that the CHARITE
We are continuing to review the information on whether the CHARITE
Despite the issues mentioned above, we are still considering whether it is appropriate to approve new technology add-on payment status for the CHARITE
We finally note that the applicant requested a DRG reassignment for cases of the CHARITE
We received no public comments regarding this application for new technology add-on payments.
Endovascular stent-grafting of the descending thoracic aorta (TA) provides a less invasive alternative to the traditional open surgical approach required for the management of descending thoracic aortic aneurysms. W.L. Gore & Associates, Inc. submitted an application for consideration of its Endovascular Graft Repair of the Thoracic Aorta (GORE TAG) for new technology add-on payments for FY 2006. The GORE TAG device is a tubular stent-graft mounted on a catheter-based delivery system, and it replaces the synthetic graft normally sutured in place during open surgery. The device is identified using ICD-9-CM procedure code 39.79 (Other endovascular repair (of aneurysm) of other vessels). The applicant has requested a unique ICD-9-CM procedure code.
At this point the time of the initial application, the FDA hads not yet approved this technology for general use. Subsequently, however, we were notified that FDA approval was granted on March 23, 2005. Although we discuss some of the data submitted with the application for new technology add-on payments below, we are unable to include a detailed analysis of cost data and substantial clinical improvement data in this proposed rule because FDA approval occurred too late for us to conduct a complete analysis.
The applicant submitted cost threshold information for the GORE TAG device. According to the manufacturer, cases using the GORE TAG device would fall into DRGs 110 and 111 (Major Cardiovascular Procedures With and Without CC, respectively). The applicant identified 185 cases in the FY 2003 MedPAR using procedure code 39.79 (Other endovascular repair (of aneurysm) of other vessels) and primary diagnosis codes 441.2 (Thoracic aneurysm, without mention of rupture), 441.1 (Thoracic aneurysm, ruptured), or 441.01 (Dissection of aorta, thoracic). The case-weighted standardized charge for 177 of these cases was $60,905. According to the manufacturer, the case-weighted cost threshold for these DRGs is $49,817. Based on this analysis, the manufacturer maintained that the technology meets our cost threshold.
The manufacturer argued that the GORE TAG represents a substantial clinical improvement over existing technology, primarily by avoiding the traditional open aneurysm repair procedure with its associated high morbidity and mortality. The applicant argued that a descending thoracic aorta aneurysm is a potentially life threatening condition that currently requires a major operative procedure for its treatment. The mortality and complication rates associated with this surgery are very high, and the surgery is frequently performed under urgent or emergent conditions. The applicant noted that such complications can increase the length of the hospital stay and can include neurological damage, paralysis, renal failure, pulmonary emboli, hemorrhage, and sepsis. The average time for patients undergoing surgical repair to return to normal activity is 3 to 4 months, but can be significantly longer.
In comparison, the applicant argued that endovascular stent-grafting done with the GORE TAG thoracic endoprosthesis is minimally invasive. The manufacturer noted that patients treated with the endovascular technique experience far less aneurysm-related mortality and morbidity, compared to those patients that receive the open procedure resulting in reduced overall length-of-stay, less intensive care unit days and less operative complications.
We received the following public comments, in accordance with section 503(b)(2) of Pub. L. 108-173, regarding this application for add-on payments.
Medtronic Neurological submitted an application for new technology add-on payments for its Restore® Rechargeable Implantable Neurostimulator. The Restore® Rechargeable Implantable Neurostimulator is designed to deliver electrical stimulation to the spinal cord for treatment of chronic, intractable pain.
Neurostimulation is designed to deliver electrical stimulation to the spinal cord to block the sensation of pain. The current technology standard for neurostimulators utilizes internal sealed batteries as the power source to generate the electrical current. These internal batteries have finite lives, and require replacement when their power has been completely discharged. According to the manufacturer, the Restore® Rechargeable Implantable Neurostimulator “represents the next generation of neurostimulator technology, allowing the physician to set the voltage parameters in such a way that fully meets the patient's requirements to achieve adequate pain relief without fear of premature depletion of the battery.” The applicant stated that the expected life of the Restore® rechargeable battery is 9 years, compared to an average life of 3 years for conventional neurostimulator batteries. The applicant stated that this represents a significant clinical improvement because patients can use any power settings that are necessary to achieve pain relief with less concern for battery depletion and subsequent battery replacement.
This device has not yet received approval for use by the FDA; however, another manufacturer has received approval for a similar device. (Advanced Bionics' Precision® Rechargeable Neurostimulator was approved by the FDA on April 27, 2004.)
Medtronic Neurological also provided data to determine whether the Restore® Rechargeable Implantable Neurostimulator meets the cost criterion. Medtronic Neurological stated that the cases involving use of the device would primarily fall into DRGs 499, 500, 531 and 532, which have a case-weighted threshold of $24,090. The manufacturer stated that the anticipated average standardized charge per case involving the Restore® technology is $59,265. This manufacturer derived this estimate by identifying cases in the FY 2003 MedPAR that reported procedure code 03.93 (Insertion or replacement of spinal neurostimulators). The manufacturer then added the total cost of the Restore® Rechargeable Implantable Neurostimulator to the average standardized charges for those cases. Of the applicable charges for the Restore® Rechargeable Implantable Neurostimulator, only the components that the applicant identified as new would be eligible for new technology add-on payments. Medtronic Neurological submitted information that distinguished the old and new components of the device and submitted data indicating that the neurostimulator itself is $17,995 and the patient recharger, antenna, and belt are $3,140. Thus, the total cost for new components would be $21,135, with a maximum add-on amount of $10,568 if the product were to be approved for new technology payments.
We note that we reviewed a technology for add-on payments for FY 2003 called Renew
The applicant also stated in its application for Restore® that cases where it is used will be identified by ICD-9-CM procedure code 03.93 (Insertion or replacement of spinal neurostimulators). As we discussed in the FY 2003 final rule (67 FR 50019), the Renew
Because FDA approval has not yet been received for this device, we are making no decision concerning the Restore® application at this time. We will make a formal determination if FDA approval occurs in sufficient time for full consideration in the final FY 2006 rule. However, we have reservations about whether this technology is new for purposes of the new technology add-on payments because of its similarity to other products that are also used to treat the same conditions. Although we recognize the benefits of a more easily rechargeable neurostimulator system, we believe that the Restore® device may not be sufficiently different from predecessor devices to meet the newness criterion for the new technology add-on payment. As we discussed above, similar products have been on the market since 1999. Therefore, these technologies are already represented in the DRG weights and are not considered new for the purposes of the new technology add-on payment provision. We welcome comments on this issue, specifically regarding how the Restore® device may or may not be significantly different from previous devices. We also seek comments on whether the product meets the cost and significant improvement criteria.
We received no public comments regarding this application for add-on payments.
Intraluminal Therapeutics submitted an application for the Safe Cross® Radio Frequency (RF) Total Occlusion Crossing System. This device performs the function of a guidewire during percutaneous transluminal angioplasty of chronic total occlusions of peripheral and coronary arteries. Using fiberoptic guidance and radiofrequency ablation, it is able to cross lesions where a standard guidewire is unsuccessful. On November 21, 2003, the FDA approved the Safe Cross® for use in iliac and superficial femoral arteries. The device was approved by the FDA for all native peripheral arteries except carotids in August 2004. In January 2004, the FDA approved the Safe Cross® for coronary arteries as well. Because the device is within the statutory timeframe of 2 to 3 years for all approved uses and data regarding the cost of this device are not yet reflected within the DRG weights, we consider the Safe Cross® to meet the newness criterion.
We note that the applicant submitted an application for a distinctive ICD-9-CM code. The applicant noted in its application that the device is currently coded with ICD-9-CM procedure codes 36.09 (Other removal of coronary artery obstruction) and 39.50 (Angioplasty or atherectomy of other noncoronary vessels).
As we stated in last year's final rule, section 1886(d)(5)(K)(i) of the Act requires that the Secretary establish a mechanism to recognize the costs of new medical services or technologies under the payment system established under subsection (d) of section 1886, which establishes the system for paying for the operating costs of inpatient hospital services. The system of payment for capital costs is established under section 1886(g) of the Act, which makes no mention of any add-on payments for a new medical service or technology. Therefore, it is not appropriate to include capital costs in the add-on payments for a new medical service or technology, and these costs should not be considered in evaluating whether a technology meets the cost criterion. As a result, we consider only the Safe Cross® crossing wire, ground pad, and accessories to be operating equipment that is relevant to the evaluation of the cost criterion.
The applicant submitted the following two analyses on the cost criterion. The first analysis contained 27 actual cases from two hospitals. Of these 27 cases, 25.1 percent of the cases were reported in DRGs 24 (Seizure and Headache Age >17 With CC), 107 (Coronary Bypass With Cardiac Catheterization), 125 (Circulatory Disorders Except AMI, With Cardiac Catheterization and Without Complex Diagnosis), 518 (Percutaneous Cardiovascular Procedure Without Coronary Artery Stent or AMI), and 526 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent With AMI); and 74.9 percent were reported in DRG 527 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent Without AMI). This resulted in a case-weighted threshold of $35,956 and a case-weighted average standardized charge of $40,319. Because the case-weighted average standardized charge is greater than the case-weighted threshold, the applicant maintained that the Safe Cross® meets the cost criterion.
The applicant also submitted cases from the FY 2003 MedPAR. The applicant found a total of 1,274,535 cases that could be eligible for the Safe Cross® using diagnosis codes 411 through 411.89 (Other acute and subacute forms of ischemic heart disease) or 414 through 414.19 (Other forms of chronic ischemic heart disease) in combination with any of the following procedure codes: 36.01 (Single vessel percutaneous transluminal coronary angioplasty (PTCA) or coronary atherectomy without mention of thrombolytic agent), 36.02 (Single vessel PTCA or coronary atherectomy with mention of thrombolytic agent), 36.05 (Multiple vessel PTCA or coronary atherectomy performed during the same operation with or without mention of thrombolytic agent), 36.06 (Insertion of nondrug-eluting coronary artery stent(s)), 36.07 (Insertion of drug-eluting coronary artery stent(s)) and 36.09 (Other removal of coronary artery obstruction). A total of 59.40 percent of these cases fell into DRG 517 (Percutaneous Cardiovascular Procedure With Nondrug-Eluting Stent Without AMI), 16.4 percent of cases into DRG 516 (Percutaneous Cardiovascular Procedure With AMI), and 16.2 percent of cases into DRG 527, while the rest of the cases fell into the remaining DRGs 124, 518 and 526. The average case-weighted standardized charge per case was $40,318. This amount included an extra $6,000 for the charges related to the Safe Cross®. The case-weighed threshold across the DRGs mentioned above was $35,955. Similar to the analysis above, because the case-weighted average standardized charge is greater than the case-weighted
The applicant maintained that the device meets the substantial clinical improvement criterion. The applicant explained that many traditional guidewires fail to cross a total arterial occlusion due to difficulty in navigating the vessel and to the fibrotic nature of the obstructing plaque. By using fiberoptic guidance and radiofrequency ablation, the Safe Cross® succeeds where standard guidewires fail. The applicant further maintained that in clinical trials where traditional guidewires failed, the Safe Cross® succeeded in 54 percent of cases of coronary artery chronic total occlusions (CTOs), and in 76 percent of cases of peripheral artery CTOs.
However, we note that we use similar standards to evaluate substantial clinical improvement in the IPPS and OPPS. The IPPS regulations provide that technology may be approved for add-on payments when it “represents an advance in medical technology that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries” (66 FR 46912). Under the OPPS, the standard for approval of new devices is “a substantial improvement in medical benefits for Medicare beneficiaries compared to the benefits obtained by devices in previously established (that is, existing or previously existing) categories or other available treatments” (67 FR 66782). Furthermore, the OPPS and IPPS employ identical language (for IPPS, see 66 FR 46914, and for OPPS, see 67 FR 66782) to explain and elaborate on the kinds of considerations that are taken into account in determining whether a new technology represents substantial improvement. In both systems, we employ the following kinds of considerations in evaluating particular requests for special payment for new technology:
• The device offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments.
• The device offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods. There must also be evidence that use of the device to make a diagnosis affects the management of the patient.
• Use of the device significantly improves clinical outcomes for a patient population as compared to currently available treatments. Some examples of outcomes that are frequently evaluated in studies of medical devices are the following:
In a letter to the applicant dated October 25, 2004, we denied approval of the Safe Cross® for pass-through payments for the OPPS on the basis that the technology did not meet the substantial clinical improvement criterion. In particular, we found that studies failed to show long-term or intermediate-term results, and the device had a relatively low rate of successfully opening occlusions. Since that initial determination, the applicant has requested reconsideration for pass-through payments under the IPPS. However, on the basis of the original findings under the OPPS, we do not now believe that the technology can qualify for new technology add-on payments under the IPPS. Therefore, we are proposing to deny new technology add-on payment for FY 2006 for Safe Cross® on the grounds that it does not appear to be a substantial clinical improvement over existing technologies. We welcome further information on whether this device meets the substantial clinical improvement criterion, and we will consider any further information prior to making our final determination in the final rule.
We received no public comments regarding this application for add-on payments.
Stryker Orthopaedics submitted an application for new technology add-on payments for the Trident® Ceramic Acetabular System. This system is used to replace the “ball and socket” joint of a hip when a total hip replacement is performed for patients suffering from arthritis or related conditions. The applicant stated that, unlike conventional hip replacement systems, the Trident® system utilizes alumina ceramic-on-ceramic bearing surfaces rather than metal-on-plastic or metal-on-metal. Alumina ceramic is the hardest material next to diamond. The Trident® System is a patented design that captures the ceramic insert in a titanium sleeve. This design increases the strength of the ceramic insert by 50 percent over other designs. The manufacturer stated that the alumina ceramic bearing of the device is a substantial clinical improvement because it is extremely hard and scratch resistant, has a low coefficient of friction and excellent wear resistance, has improved lubrication over metal or polyethylene, has no potential for metal ion release, and has less alumina particle debris. The manufacturer also stated that fewer hip revisions are needed when this product is used (2.7 percent of ceramic versus 7.5 percent for polyethylene). Stryker stated that the ceramic implant also causes less osteolysis (or bone loss from particulate debris). Due to these improvements over traditional hip implants, the manufacturer stated the Trident® Ceramic Acetabular System has demonstrated significantly lower wear versus the conventional plastic/metal system in the laboratory; therefore, it is anticipated that these improved wear characteristics will extend the life of the implant.
The Trident® Ceramic Acetabular System received FDA approval in February 3, 2003. However, this product was not available on the market until April 2003. The period that technologies are eligible to receive new technology add-on payment is no less than 2 years but not more than 3 years from the point the product comes on the market. At this point, we begin to collect charges reflecting the cost of the device in the MedPAR data. Because the device became available on the market in April 2003, charges reflecting the cost of the device may have been included in the data used to calculate the DRG weights in FY 2005 and the proposed DRG weights for FY 2006. Therefore, the technology may no longer be considered new for the purposes of new technology add-on payments. For this reason, we are proposing to deny add-on payments for the Trident® Ceramic Acetabular System for FY 2006.
Although we are proposing not to approve this application because the Trident® Ceramic Acetabular System does not meet the newness criterion, we note that the applicant submitted information on the cost and substantial clinical improvement criteria.
The applicant submitted cost threshold information for the Trident® Ceramic Acetabular System, stating that cases using the system would be
Regarding the issue of substantial clinical improvement, we recognize that the Trident® Ceramic Acetabular System represents an incremental advance in prosthetic hip technology. However, we also recognize that there are a number of other new prostheses available that utilize a variety of bearing surface materials that also offer increased longevity and decreased wear. For this reason, we do not believe that the Trident® system has demonstrated itself to be a clearly superior new technology.
We received the following public comments, in accordance with section 503(b)(2) of Pub. L. 108-173, regarding this application for add-on payments.
Boston Scientific submitted an application for the Wingspan
On January 9, 2004, the FDA designated the Wingspan
The manufacturer submitted data from MedPAR and non-MedPAR databases. The non-MedPAR data was from the 2003 patient discharge data from California's Office of Statewide Health Planning and Development database for hospitals in California and from the 2003 patient data from Florida's Agency for Health Care Administration for hospitals in Florida. The applicant identified cases that had a diagnosis code of 437.0 (Cerebral atherosclerosis), 437.1 (Other generalized ischemic cerebrovascular disease) or 437.9 (Unspecified) or any diagnosis code that begins with the prefix of 434 (Occlusion of cerebral arteries) in combination with procedure code 39.50 (Angioplasty or atherectomy of noncoronary vessel) or procedure code 39.90 (Insertion of nondrug-eluting, noncoronary artery stents). The applicant used procedure codes 39.50 and 39.90 because procedure codes 00.62 and 00.65 were not available until FY 2005. The applicant found cases in DRG 5 (Extracranial Vascular Procedures) (which previously existed under the Medicare IPPS DRG system prior to a DRG split) and in DRGs 533 (Extracranial Procedure with CC) and 534 (Extracranial Procedure Without CC). Even though DRG 5 was split into DRGs 533 and 534 in FY 2003, some hospitals continued to use DRG 5 for non-Medicare cases. The applicant found 22 cases that had an intracranial PTA with a stent. The average (nonstandardized) charge per case was $78,363.
The applicant also submitted data from the FY 2002 and FY 2003 MedPAR files. Using the latest data from the FY 2003 MedPAR and the same combination of diagnosis and procedure codes mentioned above to identify cases of intracranial PTA with stenting, the applicant found 116 cases in DRG 533 and 20 cases in DRG 534. The case-weighted average standardized charge per case was $51,173. The average case-weighted threshold was $25,394. Based on this analysis, the applicant maintained that the technology meets the cost criteria since the average case-weighted standardized charge per case
The applicant also maintained that the technology meets the substantial clinical improvement criterion. Currently, there is no available surgical or medical treatment for recurrent stroke that occurs despite optimal medical management. The Wingspan
We received no public comments regarding this application for add-on payments.
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 statistical areas established by the Office of Management and Budget (OMB). A discussion of the proposed FY 2006 hospital wage index based on the statistical areas, including OMB's revised definitions of Metropolitan Areas, appears under section III.B. of this preamble.
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 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. 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. The proposed adjustment for FY 2006 is discussed in section II.B. of the Addendum to this proposed rule.
As discussed below in section III.G. 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. 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. The proposed budget neutrality adjustment for FY 2006 is discussed in section II.B. of the Addendum to this proposed rule.
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 short-term, acute care hospitals participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index. A discussion of the proposed occupational mix adjustment that we are proposing to apply beginning October 1, 2005 (the proposed FY 2006 wage index) appears under section III.C. of this preamble.
(If you choose to comment on issues in this section, please include the caption “CBSAs” at the beginning of your comment.)
The wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. In accordance with the broad discretion under section 1886(d)(3)(E) of the Act, beginning with FY 2005, we define hospital labor market areas based on the Core-Based Statistical Areas (CBSAs) established by OMB and announced in December 2003 (69 FR 49027). OMB defines a CBSA, beginning in 2003, as “a geographic entity associated with at least one core of 10,000 or more population, plus adjacent territory that has a high degree of social and economic integration with the core as measured by commuting ties.” The standards designate and define two categories of CBSAs: Metropolitan Statistical Areas (MSAs) and Micropolitan Statistical Areas (65 FR 82235).
According to OMB, MSAs are based on urbanized areas of 50,000 or more population, and Micropolitan Statistical Areas (referred to in this discussion as Micropolitan Areas) are based on urban clusters with a population of at least 10,000 but less than 50,000. Counties that do not fall within CBSAs are deemed “Outside CBSAs.” In the past, OMB defined MSAs around areas with a minimum core population of 50,000, and smaller areas were “Outside MSAs.”
The general concept of the CBSAs is that of an area containing a recognized population nucleus and adjacent communities that have a high degree of integration with that nucleus. The purpose of the standards is to provide nationally consistent definitions for collecting, tabulating, and publishing Federal statistics for a set of geographic areas. CBSAs include adjacent counties that have a minimum of 25 percent commuting to the central counties of the area. (This is an increase over the minimum commuting threshold of 15 percent for outlying counties applied in the previous MSA definition.)
The new CBSAs established by OMB comprised MSAs and the new Micropolitan Areas based on Census 2000 data. (A copy of the announcement may be obtained at the following Internet address:
The new area designations resulted in a higher wage index for some areas and lower wage index for others. Further, some hospitals that were previously classified as urban are now in rural areas. Given the significant payment impacts upon some hospitals because of these changes, we provided a transition period to the new labor market areas in the FY 2005 IPPS final rule (69 FR 49027 through 49034). As part of that transition, we allowed urban hospitals that became rural under the new definitions to maintain their assignment to the Metropolitan Statistical Area (MSA) where they were previously located for the 3-year period of FY 2005, FY 2006, and FY 2007. Specifically, these hospitals were assigned the wage index of the urban area to which they previously belonged. (For purposes of wage index computation, the wage data of these hospitals remained assigned to the statewide rural area in which they are located.) The hospitals receiving this transition will not be considered urban hospitals; rather they will maintain their status as rural hospitals. Thus, the hospital would not be eligible, for example, for a large urban add-on payment under the capital PPS. In other words, it is the wage index, but not the urban or rural status, of these hospitals that is being affected by this transition. The higher wage indices that these hospitals are receiving are also being taken into consideration in determining
FY 2006 will be the second year of this transition period. We will continue to assign the wage index for the urban area in which the hospital was previously located through FY 2007. In order to ensure this provision remains budget neutral, we will continue to adjust the standardized amount by a transition budget neutrality factor to account for these hospitals. Doing so is consistent with the requirement of section 1886(d)(3)(E) of the Act that any “adjustments or updates [to the adjustment for different area wage levels] * * * shall be made in a manner that assures that aggregate payments * * * are not greater or less than those that would have been made in the year without such adjustment.”
Beginning in FY 2008, these hospitals will receive their statewide rural wage index, although they will be eligible to apply for reclassification by the MGCRB, both during this transition period as well as in subsequent years.
In addition, in the FY 2005 IPPS final rule (69 FR 49032 through 49033), we provided a 1-year transition blend for hospitals that, due solely to the changes in the labor market definitions, experienced a decrease in their FY 2005 wage index compared to the wage index they would have received using the labor market areas included in calculating their FY 2004 wage index. Hospitals that experienced a decrease in their wage index as a result of adoption of the new labor market area changes received a wage index based on 50 percent of the CBSA labor market area definitions and 50 percent of the wage index that the provider would have received under the FY 2004 MSA boundaries (in both cases using the FY 2001 wage data). This blend applied to any provider experiencing a decrease due to the new definitions, including providers who were reclassifying under MGCRB requirements, section 1886(d)(8)(B) of the Act, or section 508 of Pub. L. 108-173. In the FY 2005 IPPS final rule (69 FR 49027 through 49033), we described the determination of this blend in detail. We noted that this blend would not prevent a decrease in wage index due to any reason other than adoption of CBSAs, nor did it apply to hospitals that benefited from a higher wage index due to the new labor market definitions.
Consistent with the FY 2005 IPPS final rule, we are proposing that hospitals receive 100 percent of their wage index based upon the new CBSA configurations beginning in FY 2006. Specifically, we will determine for each hospital a new wage index employing wage index data from FY 2002 hospital cost reports and using the CBSA labor market definitions.
(If you choose to comment on issues in this section, please include the caption “Occupational Mix Adjustment” at the beginning of your comment.)
As stated earlier, section 1886(d)(3)(E) of the Act 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, for application beginning October 1, 2004 (the FY 2005 wage index). The purpose of the occupational mix adjustment is to control for the effect of hospitals' employment choices on the wage index. For example, hospitals may choose to employ different combinations of registered nurses, licensed practical nurses, nursing aides, and medical assistants for the purpose of providing nursing care to their patients. The varying labor costs associated with these choices reflect hospital management decisions rather than geographic differences in the costs of labor.
In the FY 2005 IPPS final rule (69 FR 49034), we discussed in detail the data we used to calculate the occupational mix adjustment to the FY 2005 wage index. For the FY 2006 wage index, we are proposing to use the same CMS Wage Index Occupational Mix Survey and Bureau of Labor Statistics (BLS) data that we used for the FY 2005 wage index, with two exceptions. The CMS survey requires hospitals to report the number of total paid hours for directly hired and contract employees in occupations that provide the following services: nursing, physical therapy, occupational therapy, respiratory therapy, medical and clinical laboratory, dietary, and pharmacy. These services each include several standard occupational classifications (SOCs), as defined by the BLS' Occupational Employment Statistics (OES) survey. For the proposed FY 2006 wage index, we used revised survey data for 20 hospitals that took advantage of the opportunity we afforded hospitals to submit changes to their occupational mix data during the FY 2006 wage index data collection process (see discussion of wage data corrections process under section III.J. of this preamble). We also excluded survey data for hospitals that became designated as CAHs since the original survey data were collected and hospitals for which there are no corresponding cost report data for the proposed FY 2006 wage index. The proposed FY 2006 wage index includes occupational mix data from 3,563 out of 3,765 hospitals (94.6 percent response rate). The results of the occupational mix survey are included in the chart below:
For the proposed FY 2006 wage index, we are proposing to use the same methodology that we used to calculate the occupational mix adjustment to the FY 2005 wage index (69 FR 49042). We are proposing to use the following steps for calculating the proposed FY 2006 occupational mix adjustment factor and the occupational mix adjusted wage index:
An example of the occupational mix adjustment was included in the FY 2005 IPPS final rule (69 FR 49043).
For the FY 2005 final wage index, we used the unadjusted wage data for hospitals that did not submit occupational mix survey data. For calculation purposes, this equates to applying the national SOC mix to the wage data for these hospitals, because hospitals having the same mix as the Nation would have an occupational mix adjustment factor equaling 1.0000. In the FY 2005 IPPS final rule (69 FF 49035), we noted that we would revisit this matter with subsequent collections of the occupational mix data. Because we are using essentially the same survey data for the proposed FY 2006 occupational mix adjustment that we used for FY 2005, with the only exceptions as stated in section III.C.1. of this preamble, we are proposing to treat the wage data for hospitals that did not respond to the survey in this same manner for the proposed FY 2006 wage index.
In implementing an occupational mix adjusted wage index based on the above calculation, the proposed wage index values for 14 rural areas (29.8 percent) and 206 urban areas (53.5 percent) would decrease as a result of the adjustment. Six (6) rural areas (12.8 percent) and 111 urban areas (28.8 percent) would experience a decrease of 1 percent or greater in their wage index values. The largest negative impact for a rural area would be 1.9 percent and for an urban area, 4.3 percent. Meanwhile, 33 rural areas (70.2 percent) and 179 urban areas (46.5 percent) would experience an increase in their wage index values. Although these results show that rural hospitals would gain the most from an occupational mix adjustment to the wage index, their gains may not be as great as might have been expected. Further, it might not have been anticipated that almost one-third of rural hospitals would actually fare worse under the adjustment. Overall, a fully implemented occupational mix adjusted wage index would have a redistributive effect on Medicare payments to hospitals.
In the FY 2005 IPPS, we indicated that, for future data collections, we would revise the occupational mix survey to allow hospitals to provide both salaries and hours data for each of the employment categories that are included on the survey. We also indicated that we would assess whether future occupational mix surveys should be based on the calendar year or if the data should be collected on a fiscal year basis as part of the Medicare cost report. (One logistical problem is that cost
In our continuing efforts to meet the information needs of the public, we are providing three additional public use files for the proposed occupational mix adjusted wage index: (1) A file including each hospital's unadjusted and adjusted average hourly wage (FY 2006 Proposed Rule Occupational Mix Adjusted and Unadjusted Average Hourly Wage by Provider); (2) a file including each CBSA's adjusted and unadjusted average hourly wage (FY 2006 Proposed Rule Occupational Mix Adjusted and Unadjusted Average Hourly Wage and Pre-Reclassified Wage Index by CBSA); and (3) a file including each hospital's occupational mix adjustment factors by occupational category (Provider Occupational Mix Adjustment Factors for Each Occupational Category). These additional files are being released concurrently with the publication of this proposed rule and are posted on the Internet, at
(If you choose to comment on issues in this section, please include the caption “Wage Data” at the beginning of your comment.)
The proposed FY 2006 wage index values (effective for hospital discharges occurring on or after October 1, 2005 and before October 1, 2006) in section VI. 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 2002 (the FY 2005 wage index was based on FY 2001 wage data).
The proposed FY 2006 wage index includes the following categories of data associated with costs paid under the IPPS (as well as outpatient costs):
• Salaries and hours from short-term, acute care hospitals (including paid lunch hours and hours associated with military leave and jury duty).
• Home office costs and hours.
• Certain contract labor costs and hours (which includes direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services).
• Wage-related costs, including pensions and other deferred compensation costs.
The September 1, 1994
Since publication of the September 1, 1994 rule, we have periodically received inquiries for more specific guidance on developing wage-related costs for the wage index. In response, we have provided clarifications in the IPPS rules (for example, health insurance costs (66 FR 39859)) and in the cost report instructions (Provider Reimbursement Manual (PRM), Part II, Section 3605.2). Due to recent questions and concerns we received regarding inconsistent reporting and overreporting of pension and other deferred compensation plan costs, as a result of an ongoing Office of Inspector General review, we are clarifying in this proposed rule that hospitals must comply with the PRM, Part I, sections 2140. 2141, and 2142 and related Medicare program instructions for developing pension and other deferred compensation plan costs as wage-related costs for the wage index. The Medicare instructions for pension costs and other deferred compensation costs combine GAAPs, Medicare payment principles, and other Federal labor requirements. We believe that the Medicare instructions allow for consistent reporting among hospitals and for the development of reasonable deferred compensation plan costs for purposes of the wage index.
Beginning with the FY 2007 wage index, hospitals and fiscal intermediaries must ensure that pension, post-retirement health benefits, and other deferred compensation plan costs for the wage index are developed according to the above terms.
Consistent with the wage index methodology for FY 2005, the proposed wage index for FY 2006 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. The proposed FY 2006 wage index also excludes 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 (68 FR 45395). In addition, salaries, hours and wage-related costs of CAHs are excluded from the wage index, for the reasons explained in the FY 2004 IPPS final rule (68 FR 45397).
Data collected for the IPPS wage index are also currently used to calculate wage indices applicable to other providers, such as SNFs, home health agencies, and hospices. In addition, they are used for prospective payments to rehabilitation, psychiatric, and long-term care hospitals, and for hospital outpatient services.
In the August 11, 2004 final rule, we stated that a commenter had asked CMS to designate provider-based clinics as IPPS-excluded areas in order to remove the costs from the wage index (69 FR 49049). The commenter noted that provider-based clinics are like physician private offices, which are excluded from the wage index calculation, and that services provided in the provider-based clinics are paid for not through the IPPS, but rather under the hospital outpatient PPS. In response to the comment, we stated that we were not prepared to grant the commenter's request without first studying the issue, and that we would explore the matter of salaries related to provider-based clinics in a future rule.
Regulations at 42 CFR 413.65 describe the criteria and procedures for determining whether a facility or organization is provider-based. Historically, under the Medicare program, some providers, referred to as “main providers,” have functioned as single entities while owning and operating multiple provider-based departments, locations, and facilities that are treated as part of the main provider for Medicare purposes. Section 413.65(a)(2) defines various types of provider-based facilities, including “department of a provider.” A “department of a provider” means a facility or organization that is either created by, or acquired by, a main provider for the purposes of furnishing health care services of the same type as those furnished by the main provider under the name, ownership, and financial and administrative control of the main provider * * * a department
(If you choose to comment on issues in this section, please include the caption “Wage Data” at the beginning of your comment.)
The wage data for the proposed FY 2006 wage index were obtained from Worksheet S-3, Parts II and III of the FY 2002 Medicare cost reports. Instructions for completing the Worksheet S-3, Parts II and III are in the Provider Reimbursement Manual, Part I, sections 3605.2 and 3605.3. The data file used to construct the proposed wage index includes FY 2002 data submitted to us as of February 23, 2005. 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 2006 wage index, pending their resolution before calculation of the final FY 2006 index. We instructed the fiscal intermediaries to complete their data verification of questionable data elements and to transmit any changes to the wage data no later than April 15, 2005. 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 the data for 438 hospitals from our database: 402 hospitals became CAHs by the time we published the February public use file, and 28 hospitals were low Medicare utilization hospitals or failed edits that could not be corrected because the hospitals terminated the program or changed ownership. In addition, we removed the wage data for 8 hospitals with incomplete or inaccurate data resulting in zero or negative, or otherwise aberrant, average hourly wages. We have notified the fiscal intermediaries of these hospitals and will continue to work with the fiscal intermediaries to correct these data until we finalize our database to compute the final wage index. The data for these hospitals will be included in the final wage index if we receive corrected data that passes our edits. As a result, the proposed FY 2006 wage index is calculated based on FY 2002 wage data from 3,765 hospitals.
In constructing the proposed FY 2006 wage index, we include the wage data for facilities that were IPPS hospitals in FY 2002, even for those facilities that have since terminated their participation in the program as hospitals, 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 exclude the wage data for CAHs (as discussed in 68 FR 45397). The proposed wage index in this proposed rule excludes hospitals that are designated as CAHs by February 1, 2005, the date of the latest available Medicare CAH listing at the time we released the proposed wage index public use file on February 25, 2005.
(If you choose to comment on issues in this section, please include the caption “Wage Index” at the beginning of your comment.)
The method used to compute the proposed FY 2006 wage index without an occupational mix adjustment follows:
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.
For example, the midpoint of a cost reporting period beginning January 1, 2002 and ending December 31, 2002 is June 30, 2002. An adjustment factor of 1.03083 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 2002 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. Dividing the data by the number of days in the cost report and then multiplying the results by 365 accomplishes annualization.
(If you choose to comment on issues in this section, please include the caption “Blended Wage Index” at the beginning of your comments.)
For the final FY 2005 wage index, we used a blend of the occupational mix adjusted wage index and the unadjusted wage index. Specifically, we adjusted 10 percent of the FY 2005 wage index adjustment factor by a factor reflecting occupational mix. Given that 2003-2004 was the first time for the administration of the occupational mix survey, hospitals had a short timeframe for collecting their occupational mix survey data and documentation, the wage data were not in all cases from a 1-year period, and there was no baseline data for purposes of developing a desk review program, we found it prudent not to adjust the entire wage index factor by the occupational mix. However, we did find the data sufficiently reliable for applying an adjustment to 10 percent of the wage index. We found the data reliable because hospitals were given an opportunity to review their survey data and submit changes in the Spring of 2004, hospitals were already familiar with the BLS OES survey categories, hospitals were required to be able to provide documentation that could be used by fiscal intermediaries to verify survey data, and the results of our survey were consistent with the findings of the 2001 BLS OES survey, especially for nursing and physical therapy categories. In addition, we noted that we were moving cautiously with implementing the occupational mix adjustment in recognition of changing trends in hiring nurses, the largest group in the survey. We noted that some States had recently established floors on the minimum level of registered nurse staffing in hospitals in order to maintain licensure. In addition, in some rural areas, we believed that hospitals might be accounting for shortages of physicians by hiring more registered nurses. (A complete discussion of the FY 2005 wage index adjustment factor can be found in section III.G. of the FY 2005 IPPS final rule (69 FR 49052)).
In the FY 2005 final rule, we noted that while the statute required us to collect occupational mix data every 3 years, the statute does not specify how the occupational mix adjustment is to be constructed or applied. We are clarifying in this proposed rule that the October 1, 2004 deadline for implementing an occupational mix adjustment is not codified in section 1886(d)(3)(E) of the Act, which requires only a collection and measurement of occupational mix data, but rather stems from the effective date provisions in section 304(c) of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000, Pub. L. 106-554 (BIPA). Although we believe that applying the occupational mix to 10 percent of the wage index factor fully implements the occupational mix adjustment, we also interpret BIPA as requiring only that we
In addition, section 1886(d)(3)(E) of the Act provides broad authority for us to establish the factor we use to adjust hospital costs to take into account area differences in wage levels. The statute is clear that the wage index factor is to be “established by the Secretary.” The occupational mix is only one part of this wage index factor, which, for the most part, is calculated on the basis of average hourly wage data submitted by all hospitals in the United States. In exercising the Secretary's broad discretion to establish the factor that adjusts for geographic wage differences, in FY 2005 we adjusted 10 percent of such factor to account for occupational mix.
Indeed, we have often used percentage figures or blended amounts in exercising the Secretary's authority to establish the factor that adjusts for wage differences. For example, in the FY 2005 final rule, we implemented new mapping boundaries for assigning hospitals to the geographic labor market areas used for calculating the wage index. For hospitals that were harmed by the new geographic boundaries, we used a blended rate based on 50 percent of the wage index that would apply using the new geographic boundaries effective for FY 2005 and 50 percent of the wage index that would apply using the old geographic boundaries that were effective during FY 2004 (69 FR 49033). Similarly, beginning with FY 2000, we began phasing out costs related to GME and CRNAs from the wage index (64 FR 41505). Thus, for example, the FY 2001 wage index was based on a blend of 60 percent of an average hourly wage including these costs, and 40 percent of an average hourly wage excluding these costs (65 FR 47071).
For FY 2006, we are again proposing to adjust 10 percent of the wage index factor for occupational mix. In computing the occupational mix adjustment for the proposed FY 2006 wage index, we used the occupational mix survey data that we collected for the FY 2005 wage index, replacing the survey data for 20 hospitals that submitted revised data, and excluding the survey data for hospitals with no corresponding Worksheet S-3 wage data for FY 2006 wage index. While we considered adjusting 100 percent of the wage index by the occupational mix, we did not believe it was appropriate to use first-year survey data to make such a large adjustment. As hospitals gain additional experience with the occupational mix survey, and as we develop more information upon which to audit the data we receive, we expect to increase the portion of the wage index that is adjusted.
We also acknowledge the District Court opinion in
With 10 percent of the proposed FY 2006 wage index adjusted for occupational mix, the wage index values for 13 rural areas (27.7 percent) and 204 urban areas (53.0 percent) would decrease as a result of the adjustment. These decreases would be minimal; the largest negative impact for
The wage index values in Tables 4A, 4B, 4C, and 4F and the average hourly wages in Tables 2, 3A, and 3B in the Addendum to this proposed rule include the occupational mix adjustment.
(If you choose to comment on issues in this section, please include the caption “Hospital Redesignations and Reclassifications” at the beginning of your comment.)
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 must apply to the MGCRB to reclassify by September 1 of the year preceding the year during which reclassification is sought. 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. The MGCRB issues its decisions by the end of February for reclassifications that become effective for the following fiscal year (beginning October 1). The regulations applicable to reclassifications by the MGCRB are located 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 located at § 412.235.
Section 1886(d)(8)(B) of the Act requires the Secretary to treat a hospital located in a rural county adjacent to one or more urban areas as being located in the MSA to which the greatest number of workers in the county commute if: the rural county would otherwise be considered part of an urban area under the standards for designating MSAs if the commuting rates used in determining outlying counties were determined on the basis of the aggregate number of resident workers who commute to (and, if applicable under the standards, from) the central county or counties of
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. These requirements for determining the wage index values for redesignated hospitals is applicable both to the hospitals located in rural counties deemed urban under section 1886(d)(8)(B) of the Act and hospitals that were reclassified as a result of the MGCRB decisions under section 1886(d)(10) of the Act. Therefore, as provided in section 1886(d)(8)(C) of the Act,
• 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.
• 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 hospital is reclassified (subject to the rules described above) and the wage index calculation of the urban area where the hospital is physically located.
• 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.
Section 401(a) of Pub. L. 106-113 (the Balanced Budget Refinement Act of 1999) amended section 1886(d)(8) of the Act by adding paragraph (E). Section 401(a) created a mechanism that permits an urban hospital to apply to the Secretary to be treated, for purposes of subsection (d), as being located in the rural area of the State in which the hospital is located. A hospital that is granted redesignation under section 1886(d)(8)(E) of the Act, as added by section 401 of Pub. L. 106-113 is, therefore, treated as a rural hospital for
Last year, we became aware of an instance where the approved redesignation of an urban hospital as rural under section 1886(d)(8)(E) of the Act resulted in the hospital's data having an adverse impact on the rural wage index. We received a public comment noting that specific “hold harmless” provisions apply to reclassifications that occur under section 1886(d)(8)(B) and section 1886(d)(10) of the Act. That is, if a hospital is granted geographic reclassification under section 1886(d)(8)(B) or section 1886(d)(10) of the Act, there are certain rules that apply when the inclusion of the hospital's data results in a reduction of the reclassification area's wage index, and these rules are slightly different for urban areas versus rural areas. These rules are more fully described in the FY 2005 IPPS final rule (69 FR 49053). Generally stated, these rules prevent a rural area from being adversely affected as a result of reclassification. That is, if excluding the reclassifying hospitals' wage data would decrease the wage index of the rural area, the reclassifying hospitals are included in the rural area's wage index. Otherwise, the reclassifying hospitals are excluded. For hospitals reclassifying out of urban areas, the rules provide that the wage data for the reclassified urban hospital is included in the wage index calculation of the urban area where the hospital is physically located.
The commenter recommended that we revise our regulations and apply similar hold harmless provisions and treat hospitals redesignated under 1886(d)(8)(E) of the Act in the same manner as reclassifications under section 1886(d)(8)(B) and section 1886(d)(10) of the Act. In our continued effort to promote consistency, equity and to simplify our rules with respect to how we construct the wage indexes of rural and urban areas, we are persuaded that there is a need to modify our policy when hospital redesignations occur under section 1886(d)(8)(E) of the Act. Therefore, for the FY 2006 wage index, we are proposing to apply the hold harmless rule that currently applies when rural hospitals are reclassifying out of the rural area (from rural to urban) to situations where hospitals are reclassifying into the rural area (from urban to rural under section 1886(d)(8)(E) of the Act). Thus, the rule would be that the wage data of the urban hospital reclassifying into the rural area is included in the rural area's wage index, if including the urban hospital's data increases the wage index of the rural area. Otherwise, the wage data is excluded. Similarly, we are proposing to apply to these cases the rule that currently applies when urban hospitals reclassify under the MGCRB process. Thus, the wage data for an urban hospital reclassifying under section 1886(d)(8)(E) of the Act is always included in the wage index of the urban area where the hospital is located, and can also be included in the wage index of the rural area to which it is reclassifying (if doing so increases the rural area's wage index). We believe this proposal provides uniformity in the way geographic areas are treated under all types of reclassifications. In addition, our proposal promotes predictability by alleviating fluctuations in the wage indexes due to a section 401 redesignation.
We are including in the Addendum to this proposed rule Table 9C, which shows hospitals redesignated under section 1886(d)(8)(E) of the Act.
At the time this proposed rule was constructed, the MGCRB had completed its review of FY 2006 reclassification requests. There were 295 hospitals approved for wage index reclassifications by the MGCRB for FY 2006. Because MGCRB wage index reclassifications are effective for 3 years, hospitals reclassified during FY 2004 or FY 2005 are eligible to continue to be reclassified based on prior reclassifications to current MSAs during FY 2006. There were 395 hospitals reclassified for wage index for FY 2005, and 94 hospitals reclassified for wage index in FY 2004. Some of the hospitals that reclassified in FY 2004 and FY 2005 have elected not to continue their reclassifications in FY 2006 because, under the new labor market area definitions, they are now physically located in the areas to which they previously reclassified. Of all of the hospitals approved for reclassification for FY 2004, FY 2005, and FY 2006, 672 hospitals will be in a reclassification status for FY 2006.
Prior to FY 2004, hospitals had been able to apply to be reclassified for purposes of either the wage index or the standardized amount. Section 401 of Pub. L. 108-173 established that all hospitals will be paid on the basis of the large urban standardized amount, beginning with FY 2004. Consequently, all hospitals are paid on the basis of the same standardized amount, which made such reclassifications moot. Although there could still be some benefit in terms of payments for some hospitals under the DSH payment adjustment for operating IPPS, section 402 of Pub. L. 108-173 equalized DSH payment adjustments for rural and urban hospitals, with the exception that the rural DSH adjustment is capped at 12 percent (except that RRCs have no cap). (A detailed discussion of this application appears in section IV.I. of the preamble of the FY 2005 IPPS final rule (69 FR 49085.)
Beginning October 1, 1988, section 1886(d)(8)(B) of the Act required us to treat a hospital located in a rural county adjacent to one or more urban areas as being located in the MSA if certain criteria were met. Prior to FY 2005, the rule was that a rural county adjacent to one or more urban areas would be treated as being located in the MSA to which the greatest number of workers in the county commute, if the rural county would otherwise be considered part of an urban area under the standards published in the
On June 6, 2003, OMB announced the new CBSAs based on Census 2000 data. For FY 2005, we used OMB's 2000 CBSA standards and the Census 2000 data to identify counties qualifying for redesignation under section 1886(d)(8)(B) for the purpose of assigning the wage index to the urban area. We presented this listing, effective for discharges occurring on or after October 1, 2004 (FY 2005), in Chart 6 of the FY 2005 final rule (69 FR 49057). However, Chart 6 in the FY 2005 final rule contained a printing error in which we misidentified rural counties that qualified for redesignation under
In addition, we discovered that, in the FY 2005 IPPS final rule, we had erroneously printed the names of the entire Metropolitan Statistical Areas rather than the Metropolitan Division names. Because we recognized Metropolitan Divisions as MSAs in the FY 2005 IPPS final rule (69 FR 49029), we should have printed the division names for the following counties: Henry, FL; Starke, IN; Henderson, TX; Fannin, TX; and Island, WA.
The chart below contains the corrected listing of the rural counties designated as urban under section 1886(d)(8)(B) of the Act that we are proposing to use for FY 2006. We are proposing that, for discharges occurring on or after October 1, 2005, hospitals located in the first column of this chart will be redesignated for purposes of using the wage index of the urban area listed in the second column.
As in the past, hospitals redesignated under section 1886(d)(8)(B) of the Act are also eligible to be reclassified to a different area by the MGCRB. Affected hospitals are permitted to compare the reclassified wage index for the labor market area in Table 4C in the Addendum of this proposed rule into which they have been reclassified by the MGCRB to the wage index for the area to which they are redesignated under section 1886(d)(8)(B) of the Act. Hospitals may withdraw from an MGCRB reclassification within 45 days of the publication of this proposed rule.
Under section 508 of Pub. L. 108-173, a qualifying hospital could appeal the wage index classification otherwise applicable to the hospital and apply for reclassification to another area of the State in which the hospital is located (or, at the discretion of the Secretary, to an area within a contiguous State). We implemented this process through notices published in the
We show the reclassifications effective under the one-time appeal process in Table 9B in the Addendum to this proposed rule.
(If you choose to comment on issues in this section, please include the caption “Out-Migration Adjustment” at the beginning of your comment.)
In accordance with the broad discretion under section 1886(d)(13) of the Act, as added by section 505 of Pub. L. 108-173, beginning with FY 2005, we established a process to make adjustments to the hospital wage index based on commuting patterns of hospital employees. The process, outlined in the FY 2005 IPPS final rule (69 FR 49061), provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county but work in a different county (or counties) with a higher wage index. Such adjustments to the wage index are effective for 3 years, unless a hospital requests to waive the application of the adjustment. A county will not lose its status as a qualifying county due to wage index changes during the 3-year period, and counties will receive the same wage index increase for those 3 years. However, a county that qualifies in any given year may no longer qualify after the 3-year period, or it may qualify but receive a different adjustment to the wage index level. Hospitals that receive this adjustment to their wage index are not eligible for reclassification under section 1886(d)(8) or section 1886(d)(10) of the Act. Adjustments under this provision are not subject to the IPPS budget neutrality requirements at section 1886(d)(3)(E) or section 1886(d)(8)(D) of the Act.
Hospitals located in counties that qualify for the wage index adjustment are to receive an increase in the wage index that is equal to the average of the differences between the wage indexes of the labor market area(s) with higher wage indexes and the wage index of the resident county, weighted by the overall percentage of hospital workers residing in the qualifying county who are employed in any labor market area with a higher wage index. We have employed the prereclassified wage indexes in making these calculations.
We are proposing that hospitals located in the qualifying counties identified in Table 4J in the Addendum to this proposed rule that have not already reclassified through section 1886(d)(10) of the Act, redesignated through section 1886(d)(8) of the Act, received a section 508 reclassification, or requested to waive the application of the out-migration adjustment would receive the wage index adjustment listed in the table for FY 2006. We used the same formula described in the FY 2005 final rule (69 FR 49064) to calculate the out-migration adjustment. This proposed adjustment was calculated as follows:
The proposed adjustments calculated for qualifying hospitals are listed in Table 4J in the Addendum to this proposed rule. These proposed adjustments would be effective for each county for a period of 3 fiscal years. Hospitals that received the adjustment in FY 2005 will be eligible to retain that same adjustment for FY 2006 and FY 2007. For hospitals in newly qualified counties, adjustments to the wage index would be effective for 3 years, beginning with discharges occurring on or after October 1, 2005.
As previously noted, hospitals receiving the wage index adjustment under section 1886(d)(13)(F) of the Act are not eligible for reclassification under section 1886(d)(10) of the Act or reclassifications under section 508 of Pub. L. 108-173. Hospitals that wish to waive the application of this wage index adjustment must notify CMS within 45 days of the publication of this proposed rule. Waiver notification should be sent to the following address: Centers for Medicare and Medicaid Services, Center for Medicare Management, Attention: Wage Index Adjustment Waivers, Division of Acute Care, Room C4-08-06, 7500 Security Boulevard, Baltimore, MD 21244-1850. We will assume that hospitals that have been redesignated under section 1886(d)(8) of the Act or reclassified under section 886(d)(10) of the Act or under section 508 of Pub. L. 108-173 would prefer to keep their redesignation/reclassification unless they explicitly notify CMS that they would like to receive the out-migration adjustment instead. In addition, hospitals that wish to retain their redesignation/reclassification (instead of receiving the out-migration adjustment) for FY 2006 do not need to submit a formal request to CMS, and will automatically retain their redesignation/reclassification status for FY 2006. However, consistent with § 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. Hospitals that have been reclassified by the MGCRB (including reclassifications under section 508 of Pub. L. 108-173) may terminate an existing 3-year reclassification within 45 days of the publication of this proposed rule in order to receive the wage index adjustment under this provision. Hospitals that are eligible to receive the wage index adjustment and that withdraw their application for reclassification will then automatically receive the wage index adjustment listed in Table 4J in the Addendum to this proposed rule. The request for withdrawal of an application for reclassification or termination of an existing 3-year reclassification that would be effective in FY 2006 must be received by the MGCRB within 45 days of the publication of this proposed rule. Hospitals should carefully review the wage index adjustment that they would receive under this provision (as listed in Table 2 in the Addendum to this proposed rule) in comparison to the wage index adjustment that they would receive under the MGCRB reclassification (Table 9 in the Addendum to this proposed rule).
(If you choose to comment on issues in this section, please include the caption “Wage Index Data Corrections” at the beginning of your comment.)
In the FY 2005 IPPS final rule (68 FR 27194), we revised the process and timetable for application for development of the wage index, beginning with the FY 2005 wage index. The preliminary and unaudited Worksheet S-3 wage data and occupational mix survey files were made available on October 8, 2004 through the Internet on the CMS Web site at:
If a hospital wished to request a change to its data as shown in the October 8, 2004 wage and occupational mix data files, the hospital was to submit corrections along with complete, detailed supporting documentation to its fiscal intermediary by November 29, 2004. 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 index data file on the Internet, through the October 6, 2004 memorandum referenced above.
In the October 6, 2004 memorandum, we also specified that a hospital could only request revisions to the occupational mix data for the reporting period that the hospital used in its original FY 2005 wage index occupational mix survey. That is, a hospital that submitted occupational mix data for the 12-month reporting period could not switch to submitting data for the 4-week reporting period and vice versa. Further, a hospital could not submit an occupational mix survey for the periods beginning before January 1, 2003, or after January 11, 2004. In addition, a hospital that did not submit an occupational mix survey for the FY 2005 wage index was not permitted to submit a survey for the FY 2006 wage index.
The fiscal intermediaries notified the hospitals by mid-February 2005 of any changes to the wage index data as a result of the desk reviews and the resolution of the hospitals' late November 2004 change requests. The fiscal intermediaries also submitted the revised data to CMS by mid-February 2005. CMS published the proposed wage index public use files that included hospitals' revised wage data on February 25, 2005. In a memorandum also dated February 25, 2005, we instructed fiscal intermediaries to notify all hospitals regarding the availability of the proposed wage index public use files and the criteria and process for requesting corrections and revisions to the wage index data. Hospitals had until March 14, 2005 to submit requests to the fiscal intermediaries for reconsideration of adjustments made by the fiscal intermediaries as a result of the desk review, and to correct errors due to CMS's or the fiscal intermediary's mishandling of the wage index data. Hospitals were also required to submit sufficient documentation to support their requests.
After reviewing requested changes submitted by hospitals, fiscal intermediaries are to submit any additional revisions resulting from the hospitals' reconsideration requests by April 15, 2005. The deadline for a hospital to request CMS intervention in cases where the hospital disagrees with the fiscal intermediary's policy interpretations is April 22, 2005.
Hospitals should also examine Table 2 in the Addendum to this proposed rule. 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 2002 data used to construct the FY 2006 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 by February 23, 2005.
We will release a final wage index data public use file in early May 2005 to hospital associations and the public on the Internet at
Each request also must be sent to the fiscal intermediary. The fiscal 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 2005 wage index data file, changes to the hospital wage data will only be made in those very limited situations involving an error by the fiscal intermediary or CMS that the hospital could not have known about before its review of the final wage index 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 15, 2005.
• Requests for correction of errors that were not, but could have been, identified during the hospital's review of the February 25, 2005 wage index data file.
• Requests to revisit factual determinations or policy interpretations made by the fiscal intermediary or CMS during the wage index data correction process.
Verified corrections to the wage index received timely by CMS and the fiscal intermediaries (that is, by June 10, 2005) will be incorporated into the final wage index to be published by August 1, 2005, and to be effective October 1, 2005.
We created the processes described above to resolve all substantive wage index data correction disputes before we finalize the wage and occupational mix data for the FY 2006 payment rates. Accordingly, hospitals that do not meet the procedural deadlines set forth above will not be afforded a later opportunity to submit wage index data corrections or to dispute the fiscal 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 index data correction process described above provides hospitals with sufficient opportunity to bring errors in their wage index data to the fiscal intermediaries' attention. Moreover, because hospitals will have access to the final wage index data by early May 2005, they 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 final FY 2006 wage index by August 1, 2005, and the implementation of the FY 2006 wage index on October 1, 2005. If hospitals avail themselves of the opportunities afforded to provide and make corrections to the wage data, the wage index implemented on October 1 should be accurate. Nevertheless, in the event that errors are identified by hospitals and brought to our attention after June 10, 2005, we retain the right to make midyear changes to the wage index under very limited circumstances.
Specifically, in accordance with § 412.64(k)(1) of our existing regulations, we make midyear corrections to the wage index for an area only if a hospital can show that: (1) The fiscal intermediary or CMS made an error in tabulating its data; and (2) the requesting hospital could not have known about the error or did not have an opportunity to correct the error, before the beginning of the fiscal year. For purposes of this provision, “before the beginning of the fiscal year” means by the June deadline for making corrections to the wage data for the following fiscal year's wage index. 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 for the labor market area. As indicated earlier, since CMS makes the wage data available to a hospital on the CMS website prior to publishing both the proposed and final IPPS rules, and the fiscal intermediaries notify hospitals directly of any wage data changes after completing their desk reviews, we do not expect that midyear corrections would be necessary. However, under our current policy, 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 made.
We are proposing to revise § 412.64(k)(2) to specify that a change to the wage index can be made retroactive to the beginning of the Federal fiscal year only when: (1) The fiscal intermediary or CMS made an error in tabulating data used for the wage index calculation; (2) the hospital knew about the error and requested that the fiscal intermediary and CMS correct the error using the established process and within the established schedule for requesting corrections to the wage data, before the beginning of the fiscal year for the applicable IPPS update (that is, by the June 10, 2005 deadline for the FY 2006 wage index); and (3) CMS agreed that the fiscal intermediary or CMS made an error in tabulating the hospital's wage data and the wage index should be corrected. We are proposing this change because there may be instances in which a hospital identifies an error in its wage data and submits a correction request using all appropriate procedures and by the June deadline, CMS agrees that the fiscal intermediary or CMS caused the error in the hospital's wage data and that the wage index must be corrected, but CMS fails to publish or implement the corrected wage index value by the beginning of the Federal fiscal year. We believe that the above proposed revision to § 412.64(k)(2) is appropriate and fair. We also believe that unlike a generalized retroactive policy, the situations where this will occur will be minimal, thus minimizing the administrative burden associated with such retroactive corrections. In those circumstances where a hospital requests a correction to its wage data before CMS calculates the final wage index (that is, by the June deadline), and CMS acknowledges that the error in the hospital's wage data caused by CMS's or the fiscal intermediary's mishandling of the data, we believe that the hospital should not be penalized by our delay in publishing or implementing the correction. As with our current policy, this provision would not be available to a hospital seeking to revise another
We are proposing to make this change to § 412.64(k)(2) effective on October 1, 2005, that is, beginning with the FY 2006 wage index. We note that, as with prospective changes to the wage index, the proposed retroactive correction would be made irrespective of whether the change increases or decreases a hospital's payment rate. In addition, we note that the policy of retroactive adjustment would still apply in those instances where a judicial decision reverses a CMS denial of a hospital's wage data revision request.
In addition, we are proposing to correct the FY 2005 wage index retroactively (that is, from October 1, 2004) on a one-time only basis for a limited circumstance using the authority provided under section 903(a)(1) of Pub. L. 108-173. This provision authorizes the Secretary to make retroactive changes to items and services if failure to apply such changes would be contrary to the public interest. However, as indicated, our current regulations at § 412.64(k)(1) allow only for a prospective correction to the hospitals' area wage index values. We are proposing to correct the FY 2005 wage index retroactively in the limited circumstance where a hospital meets all of the following criteria: (1) The fiscal intermediary or CMS made an error in tabulating a hospital's FY 2005 wage index data; (2) the hospital informed the fiscal intermediary or CMS, or both, about the error, following the established schedule and process for requesting corrections to its FY 2005 wage index data; and (3) CMS agreed before October 1 that the fiscal intermediary or CMS made an error in tabulating the hospital's wage data and the wage index should be corrected by the beginning of the Federal fiscal year (that is, by October 1, 2004), but CMS was unable to publish the correction by the beginning of the fiscal year.
On December 30, 2004, we published in the
(If you choose to comment on issues in this section, please include the caption “Hospital Market Basket” at the beginning of your comment.)
Effective for cost reporting periods beginning on or after July 1, 1979, we developed and adopted a hospital input price index (that is, the hospital market basket for operating costs). Although “market basket” technically describes the mix of goods and services used to produce hospital care, this term is also commonly used to denote the input price index (that is, cost category weights and price proxies combined) derived from that market basket. Accordingly, the term “market basket” as used in this document refers to the hospital input price index.
The terms “rebasing” and “revising,” while often used interchangeably, actually denote different activities. “Rebasing” means moving the base year for the structure of costs of an input price index (for example, in this proposed rule, we are proposing to shift the base year cost structure for the IPPS hospital index from FY 1997 to FY 2002). “Revising” means changing data sources, or price proxies, used in the input price index.
The percentage change in the market basket reflects the average change in the price of goods and services hospitals purchase in order to furnish inpatient care. We first used the market basket to adjust hospital cost limits by an amount that reflected the average increase in the prices of the goods and services used to provide hospital inpatient care. This approach linked the increase in the cost limits to the efficient utilization of resources.
Since the inception of the IPPS, the projected change in the hospital market basket has been the integral component of the update factor by which the prospective payment rates are updated every year. An explanation of the hospital market basket used to develop the prospective payment rates was published in the
The hospital market basket is a fixed weight, Laspeyres-type price index that is constructed in three steps. First, a base period is selected (in this proposed rule, FY 2002) and total base period expenditures are estimated for a set of mutually exclusive and exhaustive spending categories based upon type of expenditure. Then the proportion of total operating costs that each category represents is determined. These proportions are called cost or expenditure weights. Second, each expenditure category is matched to an appropriate price or wage variable, referred to as a price proxy. In nearly every instance, these price proxies are price levels derived from publicly available statistical series that are published on a consistent schedule, preferably at least on a quarterly basis.
Finally, the expenditure weight for each cost category is multiplied by the level of its respective price proxy. The sum of these products (that is, the expenditure weights multiplied by their price levels) for all cost categories yields the composite index level of the market basket in a given period. Repeating this step for other periods produces a series of market basket levels over time. Dividing an index level for a given period by an index level for an earlier period produces a rate of growth in the input price index over that time period.
The market basket is described as a fixed-weight index because it describes the change in price over time of the same mix of goods and services purchased to provide hospital services in a base period. The effects on total expenditures resulting from changes in the quantity or mix of goods and services (intensity) purchased subsequent to the base period are not measured. For example, shifting a traditionally inpatient type of care to an outpatient setting might affect the volume of inpatient goods and services purchased by the hospital, but would not be factored into the price change measured by a fixed weight hospital market basket. In this manner, the market basket measures only the pure price change. Only when the index is rebased using a more recent base period would the quantity and intensity effects be captured in the cost weights. Therefore, we rebase the market basket periodically so the cost weights reflect changes in the mix of goods and services that hospitals purchase (hospital inputs) to furnish inpatient care between base periods. We last
The major source of expenditure data for developing the proposed rebased and revised hospital market basket cost weights is the FY 2002 Medicare cost reports. These cost reports are from IPPS hospitals only. They do not reflect data from hospitals excluded from the IPPS or CAHs. The IPPS cost reports yield seven major expenditure or cost categories: wages and salaries, employee benefits, contract labor, pharmaceuticals, professional liability insurance (malpractice), blood and blood products, and a residual “all other.”
In addition to the Medicare cost reports, other sources of data used in developing the market basket weights are the Benchmark Input-Output Tables (I-Os) created by the Bureau of Economic Analysis, U.S. Department of Commerce, and the Business Expenses Survey developed by the Bureau of the Census, U.S. Department of Commerce, from its Economic Census.
New data for these Census sources are scheduled for publication every 5 years, but often take up to 7 years after the reference year. Only an Annual I-O is produced each year, but the Annual I-O contains less industry detail than does the Benchmark I-O. When we rebased the market basket using FY 1997 data in the FY 2003 IPPS final rule, the 1997 Benchmark I-O was not yet available. Therefore, we did not incorporate data from that source into the FY 1997-based market basket (67 FR 50033). However, we did use a secondary source, the 1997 Annual Input-Output tables. The third source of data, the 1997 Business Expenditure Survey (now known as the Business Expenses Survey) was used to develop weights for the utilities and telephone services categories.
The 1997 Benchmark I-O data are a much more comprehensive and complete set of data than the 1997 Annual I-O estimates. The 1997 Annual I-O is an update of the 1992 I-O tables, while the 1997 Benchmark I-O is an entirely new set of numbers derived from the 1997 Economic Census. The 2002 Benchmark Input-Output tables are not yet available. Therefore, we are proposing to use the 1997 Benchmark I-O data in the proposed FY 2002-based market basket, to be effective for FY 2006. Instead of using the less detailed, less accurate Annual I-O data, we aged the 1997 Benchmark I-O data forward to FY 2002. The methodology we used to age the data involves applying the annual price changes from the price proxies to the appropriate cost categories. We repeat this practice for each year.
The “all other” cost category is further divided into other hospital expenditure category shares using the 1997 Benchmark Input-Output tables. Therefore, the “all other” cost category expenditure shares are proportional to their relationship to “all other” totals in the I-O tables. For instance, if the cost for telephone services were to represent 10 percent of the sum of the “all other” I-O (see below) hospital expenditures, then telephone services would represent 10 percent of the market basket's “all other” cost category.
After computing the FY 2002 cost weights for the proposed rebased hospital market basket, it is necessary to select appropriate wage and price proxies to reflect the rate-of-price change for each expenditure category. With the exception of the Professional Liability proxy, all the indicators are based on Bureau of Labor Statistics (BLS) data and are grouped into one of the following BLS categories:
• Producer Price Indexes—Producer Price Indexes (PPIs) measure price changes for goods sold in other than retail markets. PPIs are preferable price proxies for goods that hospitals purchase as inputs in producing their outputs because the PPIs would better reflect the prices faced by hospitals. For example, we use a special PPI for prescription drugs, rather than the Consumer Price Index (CPI) for prescription drugs because hospitals generally purchase drugs directly from the wholesaler. The PPIs that we use measure price change at the final stage of production.
• Consumer Price Indexes—Consumer Price Indexes (CPIs) measure change in the prices of final goods and services bought by the typical consumer. Because they may not represent the price faced by a producer, we used CPIs only if an appropriate PPI
• Employment Cost Indexes—Employment Cost Indexes (ECIs) measure the rate of change in employee wage rates and employer costs for employee benefits per hour worked. These indexes are fixed-weight indexes and strictly measure the change in wage rates and employee benefits per hour. Appropriately, they are not affected by shifts in employment mix.
We evaluated the price proxies using the criteria of reliability, timeliness, availability, and relevance. Reliability indicates that the index is based on valid statistical methods and has low sampling variability. Timeliness implies that the proxy is published regularly, at least once a quarter. Availability means that the proxy is publicly available. Finally, relevance means that the proxy is applicable and representative of the cost category weight to which it is applied. The CPIs, PPIs, and ECIs selected meet these criteria.
Chart 2 sets forth the complete proposed market basket including cost categories, weights, and price proxies. For comparison purposes, the corresponding FY 1997-based market basket is listed as well. A summary outlining the choice of the various proxies follows the chart.
For measuring the price growth of wages in the proposed FY 2002-based market basket, we are proposing to use the ECI for wages and salaries for civilian hospital workers as the proxy for wages in the hospital market basket. This same proxy was used for the 1997-based market basket.
The proposed FY 2002-based hospital market basket uses the ECI for employee benefits for civilian hospital workers. This is the same proxy that was used in the FY 1997-based market basket.
The ECI for compensation for professional and technical workers in private industry is applied to this category because it includes occupations such as management and consulting, legal, accounting and engineering services. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of gas fuels as measured by the PPI (Commodity Code #0552) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of commercial electric power as measured by the PPI (Commodity Code #0542) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of water and sewerage maintenance as measured by the CPI for all urban consumers (CPI Code #CUUR0000SEHG01) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The proposed FY 2002-based index uses the percentage change in the hospital professional liability insurance (PLI) premiums as estimated by the CMS Hospital Professional Liability Index, which we use as a proxy in the Medicare Economic Index (68 FR 63244), for the proxy of this category. Similar to the Physicians Professional Liability Index, we attempt to collect commercial insurance premiums for a fixed level of coverage, holding nonprice factors constant (such as a change in the level of coverage). In the FY 1997-based market basket, the same price proxy was used.
We continue to research options for improving our proxy for professional liability insurance. This research includes exploring various options for expanding our current survey, including the identification of another entity that would be willing to work with us to collect more complete and comprehensive data. We are also exploring other options such as third party or industry data that might assist us in creating a more precise measure of PLI premiums. At this time, we have not yet identified a preferred option. Therefore, we are not proposing to make any changes to the proxy in this proposed rule.
The percentage change in the price of prescription drugs as measured by the PPI (PPI Code #PPI283D#RX) is used as a proxy for this category. This is a special index produced by BLS and is the same proxy used in the 1997-based index.
The percentage change in the price of processed foods and feeds as measured by the PPI (Commodity Code #02) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of food purchased away from home as measured by the CPI for all urban consumers (CPI Code #CUUR0000SEFV) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of industrial chemical products as measured by the PPI (Commodity Code #061) is applied to this component. While the chemicals hospitals purchase include industrial as well as other types of chemicals, the industrial chemicals component constitutes the largest proportion by far. Thus, we believe that Commodity Code #061 is the appropriate proxy. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of medical and surgical instruments as
The percentage change in the price of photographic supplies as measured by the PPI (Commodity Code #1542) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of rubber and plastic products as measured by the PPI (Commodity Code #07) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of converted paper and paperboard products as measured by the PPI (Commodity Code #0915) is used. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of apparel as measured by the PPI (Commodity Code #381) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of machinery and equipment as measured by the PPI (Commodity Code #11) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of all finished goods less food and energy as measured by the PPI (Commodity Code #SOP3500) is applied to this component. Using this index removes the double-counting of food and energy prices, which are already captured elsewhere in the market basket. The same proxy was used in the FY 1997-based index. The weight for this cost category is higher than in the FY 1997-based index because the weight for blood and blood products (1.082) is added to it. In the FY 1997-based market basket, we included a separate cost category for blood and blood products, using the BLS PPI (Commodity Code #063711) for blood and derivatives as a price proxy. A review of recent trends in the PPI for blood and derivatives suggests that its movements may not be consistent with the trends in blood costs faced by hospitals. While this proxy did not match exactly with the product hospitals are buying, its trend over time appears to be reflective of the historical price changes of blood purchased by hospitals. However, an apparent divergence over recent periods led us to reevaluate whether the PPI for blood and derivatives was an appropriate measure of the changing price of blood. We ran test market baskets classifying blood in three separate cost categories: blood and blood products, contained within chemicals as was done for the FY 1992-based index, and within miscellaneous products. These categories use as proxies the following PPIs: The PPI for blood and blood products, the PPI for chemicals, and the PPI for finished goods less food and energy, respectively. Of these three proxies, the PPI for finished goods less food and energy moved most like the recent blood cost and price trends. In addition, the impact on the overall market basket by using different proxies for blood was negligible, mostly due to the relatively small weight for blood in the market basket. Therefore, we chose the PPI for finished goods less food and energy for the blood proxy because we believe it will best be able to proxy price changes (not quantities or required tests) associated with blood purchased by hospitals. We will continue to evaluate this proxy for its appropriateness and will explore the development of alternative price indexes to proxy the price changes associated with this cost.
The percentage change in the price of telephone services as measured by the CPI for all urban consumers (CPI Code # CUUR0000SEED) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the price of postage as measured by the CPI for all urban consumers (CPI Code # CUUR0000SEEC01) is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the ECI for compensation paid to service workers employed in private industry is applied to this component. The same proxy was used in the FY 1997-based market basket.
The percentage change in the all-items component of the CPI for all urban consumers (CPI Code # CUUR0000SA0) is applied to this component. The same proxy was used in the FY 1997-based market basket.
For further discussion of the rationales for choosing many of the specific price proxies, we refer the reader to the August 1, 2002 final rule (67 FR 50037).
3. Labor-Related Share
(If you choose to comment on issues in this section, please include the caption “Labor-Related Share” at the beginning of your comment.)
Under section 1886(d)(3)(E) of the Act, the Secretary estimates from time to time the proportion of payments that are labor-related. “The Secretary shall adjust the proportion (as estimated by the Secretary from time to time) of hospitals' costs which are attributable to wages and wage-related costs of the DRG prospective payment rates. * * *” We refer to the proportion of hospitals' costs that are attributable to wages and wage-related costs as the “labor-related share.”
The labor-related share is used to determine the proportion of the national PPS base payment rate to which the area wage index is applied. We are proposing to continue to use our current methodology of defining the labor-related share as the national average proportion of operating costs that are related to, influenced by, or vary with the local labor markets. We believe that the operating cost categories that are related to, influenced by, or vary with the local labor markets are wages and salaries, fringe benefits, professional fees, contract labor, and labor intensive services. Therefore, we are proposing to calculate the labor-related share by adding the relative weights for these operating cost categories. After we reviewed all cost categories in the proposed IPPS market basket using this definition of labor-related, we removed postage costs from the proposed FY 2002-based labor-related share because we no longer believe these costs are likely to vary with the local labor market. Using the cost category weights that we determined in section IV.B. of this preamble, we calculated a labor-related share of 69.731 percent, using the FY 2002-based PPS market basket. Accordingly, we are proposing to implement a labor-related share of 69.7 percent for discharges occurring on or after October 1, 2005. We note that section 403 of Pub. L. 108-173 amended sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act to provide that the Secretary must employ 62 percent as the labor-related share unless this employment “would result in lower payments than would otherwise be made.”
We also are proposing an update to the labor-related share for Puerto Rico. Consistent with our methodology for determining the national labor-related share, we are proposing to add the Puerto Rico-specific relative weights for wages and salaries, fringe benefits, and contract labor. Because there are no Puerto Rico-specific relative weights for professional fees and labor intensive services, we are proposing to use the national weights. Alternatively, we could apply the national labor-related share to the Puerto Rico-specific rate. We note that we are still reviewing our data and have not yet calculated the updated Puerto Rico-specific labor-related share percentage. Therefore, the labor-related and nonlabor-related portions of the Puerto Rico-specific standardized amount listed in Table 1C of the Addendum to this proposed rule reflect the current (FY 2005) labor-related share for Puerto Rico of 71.3 percent. Once we have calculated the updated labor-related share for Puerto Rico, we will post it on the CMS website at
Unlike the 1997 Annual I-O which was based on Standard Industrial Codes (SIC), the 1997 Benchmark I-O is categorized using the North American Industrial Classification System (NAICS). This change required us to classify all cost categories under NAICS, including a reevaluation of labor-related costs on the NAICS definitions. Chart 4 compares the FY 1992-based labor-related share, the current measure, with the FY 2002-based labor-related share. When we rebased the market basket to
Although we are proposing to continue to calculate the labor-related share by adding the relative weights of the labor-related operating cost categories, we continue to evaluate alternative methodologies. In the May 9, 2002
Our original analysis, which appeared in the May 9, 2002
Our finding that the average compensation share of costs for rural hospitals was higher than the average compensation for urban hospitals was validated consistently through our regression analysis. Regression analysis is a statistical technique that determines the relationship between a dependent variable and one or more independent variables. We tried several regression specifications in an effort to determine the proportion of costs that are influenced by the area wage index. Furthermore, MedPAC raised the possibility that regression may be an alternative to the current market basket methodology. Our initial regression specification (in log form) was Medicare operating cost per Medicare discharge as the dependent variable and the independent variables being the area wage index, the case-mix index, the ratio of residents per bed (as proxy for IME status), and a dummy variable that equals one if the hospital is located in a metropolitan area with a population of 1 million or more. (A dummy variable represents the presence or absence of a particular characteristic.) This regression produced a coefficient for all hospitals for the area wage index of 0.638 (which is equivalent to the labor share and can be interpreted as an elasticity because of the log specification) with an adjusted R-squared of 64.3. (Adjusted R-squared is a measure of how well the regression model fits the data.) While, on the surface, this appeared to be a reasonable result, this same specification for urban hospitals had a coefficient of 0.532 (adjusted R-squared = 53.2) and a coefficient of 0.709 (adjusted R-squared = 36.4) for rural hospitals. This highlighted some apparent problems with the specification because the overall regression results appear to be masking underlying problems. It did not seem reasonable that urban hospitals would have a labor share below their actual compensation share or that the discrepancy between urban and rural hospitals would be this large. When we standardized the Medicare operating cost per Medicare discharge for case mix, the fit, as measured by adjusted R-squared, fell dramatically and the urban/rural discrepancy became even larger.
Based on this initial result, we tried two modifications to the FY 1997 regressions to correct for the underlying problems. First, we edited the data differently to determine if a few reports were causing the inconsistent results. We found when we tightened the edits, the wage index coefficient was lower and the fit was worse. When we loosened the edits, we found higher wage index coefficients and still a worse fit. Second, we added additional variables to the regression equation to attempt to explain some of the variation that was not being captured. We found the best fit occurred when the following variables were added: The occupancy rate, the number of hospital beds, a dummy variable that equals one if the hospital is privately owned and zero otherwise, a dummy variable that equals one if the hospital is government-controlled and zero otherwise, the Medicare length-of-stay, the number of FTEs per bed, and the age of fixed
Subsequent to the work described above, we have undertaken the research necessary to reevaluate the current assumptions used in determining the labor-related share. We ran regressions applying the previous specifications to more recent data (FY 2001 and FY 2002), and, as described below, we ran regressions using alternative specifications. Once again we encourage comments on this research and any information that is available to help determine the most appropriate measure.
The first step in our regression analysis to determine the proportion of hospitals' costs that varied with labor-related costs was to edit the data, which had significant outliers in some of the variables we used in the regressions. We originally began with an edit that excluded the top and bottom 5 percent of reports based on average Medicare cost per discharge and number of discharges. We also used edits to exclude reports that did not meet basic criteria for use, such as having costs greater than zero for total, operating, and capital for the overall facility and just the Medicare proportion. We also required that the hospital occupancy rate, length-of-stay, number of beds, FTEs, and overall and Medicare discharges be greater than zero. Finally, we excluded reports with occupancy rates greater than one.
Our regression specification (in log form) was Medicare operating cost per Medicare discharge as the dependent variable (the same dependent variable we used in the regression analysis described in the May 9, 2002
The revised specification for FY 2002 produced a coefficient for all hospitals for compensation per FTE of 0.673 (which is roughly equivalent to the labor share and can be interpreted as an elasticity because of the log specification) with an adjusted R-squared of 63.7. The coefficient result for FY 2001 is 64.5, with an adjusted R-squared of 65.2. (For comparison, a separate regression for FY 2002 with the log area wage index and log case-mix index included in the set of regressors displays a log area wage index coefficient of 75.6 (adjusted R-squared = 67.7).) For FY 2001, the coefficient for the log area wage index is 72.3 (adjusted R-squared = 67.9). On the surface, these seem to be reasonable results. However, a closer look reveals some problems. In FY 2001, the coefficient for urban hospitals was 59.6 (adjusted R-squared = 57.3), and the coefficient for rural hospitals was 61.3 (adjusted R-squared = 50.6). On the other hand, in FY 2002, the coefficient for urban hospitals increased to 69.2 (adjusted R-squared = 55.9), and the coefficient for rural hospitals decreased to 58.2 (adjusted R squared = 46.0). The results for FY 2001 seem reasonable, but not when compared with the results for FY 2002. Furthermore, for FY 2002 the compensation share of costs for hospitals in rural areas was higher on average than the compensation share for hospitals in urban areas. Rural areas had an average compensation share of 63.3 percent, while urban areas had a share of 60.5 percent. This compares to a share of 61.2 percent for all hospitals.
Due to these problems, we do not believe the regression analysis is producing sound enough evidence at this point for us to make the decision to change from the current method for calculating the labor-related share. We continue to analyze these data and work on alternative specifications, including working with MedPAC, who in the past have done similar analysis in their studies of payment adequacy. Comments on this approach would be welcomed, given the difficulties we have encountered.
We also continue to look into ways to refine our market basket approach to more accurately account for the proportion of costs influenced by the local labor market. Specifically, we are looking at the professional fees and labor-intensive cost categories to determine if only a proportion of the costs in these categories should be considered labor-related, not the entire cost category. Professional fees include management and consulting fees, legal services, accounting services, and engineering services. Labor-intensive services are mostly building services, but also include other maintenance and repair services.
We conducted preliminary research into whether the various types of professional fees are more or less likely to be purchased in local labor markets. Through contact with a handful of hospitals in only two States, we asked for the percentages of their advertising, legal, and management and consulting services that they purchased in either local, regional, or national labor markets. The results were quite consistent across all of the hospitals, indicating most advertising and legal services are purchased in local or regional markets and nearly all management and consulting services are purchased in national labor markets. This suggested we may be appropriately reflecting advertising and legal services in the labor-related share, but we plan to investigate further whether management and consulting services are appropriately reflected. We do not believe that this limited effort produced enough evidence for us to change our methodology. However, we do plan to expand our efforts in this area to ensure we appropriately determine the labor-related share. We are soliciting data or studies that would be helpful in this analysis. We are unsure if we will be able to finish this analysis in time for inclusion in the FY 2006 IPPS final rule.
As mentioned previously, we are proposing to continue to calculate the labor-related share by adding the relative weights of the operating cost categories that are related to, influenced by, or vary with the local labor markets. These categories include wages and salaries, fringe benefits, professional fees, contract labor and labor-intensive services. Since we no longer believe that postage costs meet our definition of labor-related, we are excluding them from the labor-related share. Using this methodology, we calculated a labor-related share of 69.731. Therefore, we are proposing a labor-related share of 69.731.
(If you choose to comment on issues in this section, please include the caption “Excluded Hospital Market Basket” at the beginning of your comment.)
On August 7, 2001, we published a final rule in the
Prior to being paid under a PPS, IRFs, LTCHs, and IPFs were reimbursed solely under the reasonable cost-based system under § 413.40 of the regulations, which impose rate-of-increase limits. Children's and cancer hospitals and religious nonmedical health care institutions (RNHCIs) are still reimbursed solely under the reasonable cost-based system, subject to the rate-of-increase limits. Under these limits, an annual target amount (expressed in terms of the inpatient operating cost per discharge) is set for each hospital based on the hospital's own historical cost experience trended forward by the applicable rate-of-increase percentages. To the extent a LTCH or IPF receives a blend of reasonable cost-based payment and the Federal prospective payment rate amount, the reasonable cost portion of the payment is also subject to the applicable rate-of-increase percentage. Section 1886(b)(3)(B)(ii) of the Act sets the percentage increase of the limits, which in certain years was based upon the market basket percentage increase. Beginning in FY 2003 and subsequent years, the applicable rate-of-increase is the market basket percentage increase. The market basket currently (and historically) used is the excluded hospital operating market basket, representing the cost structure of rehabilitation, long-term care, psychiatric, children's, and cancer hospitals (FY 2003 final rule, 67 FR 50042).
Because IRFs, LTCHs, and some IPFs are now paid under a PPS, we are considering developing a separate market basket for these hospitals that contains both operating and capital costs. We would publish any proposal to use a revised separate market basket for each of these types of hospitals when we propose the nest update of their respective PPS rates. Children's and cancer hospitals are two of the remaining three types of hospitals excluded from the IPPS that are still being paid based solely on their reasonable costs, subject to target amounts. (RNHCIs, the third type of IPPS-excluded entity still subject to target amounts, are reimbursed under § 403.752(a) of the regulations.) Because there are a small number of children's and cancer hospitals and RNHCIs, which receive in total less than 1 percent of all Medicare payments to hospitals and because these hospitals provide limited Medicare cost report data, we are not proposing to create a separate market basket specifically for these hospitals. Under the broad authority in sections 1886(b)(3)(A) and (B), 1886(b)(3)(E), and 1871 of the Act, we are proposing to use the proposed FY 2002 IPPS operating market basket percentage increase to update the target amounts for children's and cancer hospitals reimbursed under sections 1886(b)(3)(A) and (b)(3)(E) of the Act and the market basket for RNHCIs under § 403.752(a) of the regulations. This proposal reflects our belief that it is best to use an index that most closely represents the cost structure of children's and cancer hospitals and RNHCIs. The FY 2002 cost weights for wages and salaries, professional liability, and “all other” for children's and cancer hospitals are noticeably closer to those in the IPPS operating market basket than those in the excluded hospital market basket, which is based on the cost structure of IRFs, LTCHs, IPFs, and children's and cancer hospitals and RNHCIs. Therefore, we believe it is more appropriate to use the IPPS operating market basket for children's and cancer hospitals and RNHCIs. However, when we compare the weights for LTCHs and IPFs to the weights for IPPS hospitals, we did not find them comparable. Therefore, we do not believe it is appropriate to use the IPPS market basket for LTCHs and IPFs.
For similar reasons, we are considering at some other date proposing a separate market basket to update the adjusted Federal payment amount for IRFs, LTCHs, and IPFs. We expect that these changes would be proposed in separate proposed rules for each of these three hospital types. We envision that these changes should apply to the adjusted Federal payment rate, and not the portion of the payment that is based on a facility-specific (or reasonable cost) payment to the extent such a hospital or unit is paid under a blend methodology. In other words, to the extent any of these hospitals are paid under a blend methodology whereby a percentage of the payment is based on reasonable cost principles, we would not propose to make changes to the existing methodology for developing the market basket for the reasonable cost portion of the payment because this portion of the payment is being phased out, if it is not already a nonexistent feature of the PPSs for IRFs, LTCHs, and IPFs. We do not believe that it makes sense to propose to create an entirely new methodology for creating the market basket index which updates the “reasonable cost” portion of a blend methodology since the “reasonable cost portion” will last at most for just 1 or 3 additional years (1 year for LTCHs paid under a blend methodology since LTCHs only have 1 year remaining in their transition, and 3 years for IPFs since IPFs paid under a blend methodology only have 3 years remaining under a blend methodology). However, the same cannot be said for the adjusted Federal payment amount. In the case of the IRF PPS, all IRFs are paid at 100 percent of the adjusted Federal payment amount and will continue to be paid based on 100 percent of this amount for perpetuity. In the LTCH PPS, most LTCHs (98 percent) are already paid at 100 percent of the adjusted Federal payment amount. In the case of the few LTCHs that are paid under a blend methodology for cost reporting periods beginning on or after October 1, 2006, payment will be based entirely on the adjusted Federal prospective payment rate. In the case of IPFs, new IPFs (as defined in § 412.426(c)) will be paid at 100 percent of the adjusted Federal prospective payment rate (the Federal per diem payment amount), while all others will
Chart 5 compares the updates for the FY 2002-based IPPS operating market basket, our proposed index used to update the target amounts for children's and cancer hospitals, and RNHCIs, with a FY 2002-based excluded hospital market basket that is based on the current methodology (that is, based on the cost structure of IRFs, LTCHs, IPFs, and children's and cancer hospitals). Although the percent change in the IPPS operating market basket is typically lower than the percent change in the FY 2002-based excluded hospital market basket (see charts), we believe it is important to propose using the market basket that most closely reflects the cost structure of children's and cancer hospitals. We invite comments on our proposal to use the proposed FY 2002 IPPS operating market basket to update the target amounts for children's and cancer hospitals reimbursed under sections 1886(b)(3)(A) and (b)(3)(E) of the Act and the market basket for RNHCIs under § 403.752(a) of the regulations.
Chart 5 shows the historical and forecasted updates under both the proposed FY 2002-based IPPS operating market basket and the proposed FY 2002-based excluded hospital market basket. The forecasts are based on Global Insight, Inc. 4th quarter, 2004 forecast with historical data through the 3rd quarter of 2004. Global Insight, Inc. is a nationally recognized economic and financial forecasting firm that contracts with CMS to forecast the components of the market baskets.
As we discuss in greater detail in Appendix B to this proposed rule, in the past, hospitals and hospital units excluded from the IPPS have been paid based on their reasonable costs, subject to TEFRA limits. However, some of these categories of excluded hospitals and hospital units are now paid under their own PPSs. Specifically, some LTCHs and most IPFs are or will be transitioning from reasonable cost-based payments (subject to the TEFRA limits) to prospective payments under their respective PPSs. Under the respective transition period methodologies for the LTCH PPS and the IPF PPS, which are described below, payment is based, in part, on a decreasing percentage of the reasonable cost-based payment amount, which is subject to the TEFRA limits and an increasing percentage of the Federal prospective payment rate. For those LTCHs and IPFs whose PPS payment is comprised in part of a reasonable cost-based payment will have those reasonable cost-based payment amounts limited by the hospital's TEFRA ceiling.
Effective for cost reporting periods beginning on or after October 1, 2002, LTCHs are paid under the LTCH PPS,
Under the broad authority of section 1886(b)(3)(A) and (b)(3)(B) of the Act, for LTCHs and IPFs that are transitioning to the fully Federal prospective payment rate, we are proposing to use the rebased FY 2002 based-excluded hospital market basket to update the reasonable cost-based portion of their payments. The proposed market basket update is described in detail below. We do not believe the IPPS operating market basket should be used for the proposed update to the reasonable cost-based portion of the payments to LTCHs or IPFs because this market basket does not reflect the cost structure of LTCHs and IPFs.
The major source of expenditure data for developing the proposed rebased and revised excluded hospital market basket cost weights is the FY 2002 Medicare cost reports. We choose FY 2002 as the base year because we believe this is the most recent, relatively complete year (with a 90-percent reporting rate) of Medicare cost report data. These cost reports are from rehabilitation, psychiatric, long-term care, children's, cancer, and religious nonmedical excluded hospitals. They do not reflect data from IPPS hospitals or CAHs. These are the same hospitals included in the FY 1997-based excluded hospital market basket, except for religious nonmedical hospitals. Due to insufficient Medicare cost report data for these excluded hospitals, their cost reports yield only four major expenditure or cost categories: Wages and salaries, pharmaceuticals, professional liability insurance (malpractice), and a residual “all other.”
Since the cost weights for the FY 2002-based excluded hospital market basket are based on facility costs, we are proposing to use those cost reports for IRFs, LTCHs, and children's, cancer, and RNHCIs whose Medicare average length of stay is within 15 percent (that is, 15 percent higher or lower) of the total facility average length of stay for the hospital. We are proposing to use a less stringent edit for Medicare length of stay for IPFs, requiring the average length of stay to be within 30 or 50 percent (depending on the total facility average length of stay) of the total facility length of stay. This allows us to increase our sample size by over 150 reports and produce a cost weight more consistent with the overall facility. The edit we applied to IPFs when developing the FY 1997-based excluded hospital market basket was based on the best available data at the time.
We believe that limiting our sample to hospitals with a Medicare average length of stay within a comparable range of the total facility average length of stay provides a more accurate reflection of the structure of costs for Medicare treatments. Our method results in including in our data set hospitals with a share of Medicare patient days relative to total patient days that was approximately three times greater than for those hospitals excluded from our sample. Our goal is to measure cost shares that are reflective of case-mix and practice patterns associated with providing services to Medicare beneficiaries.
Cost weights for benefits, contract labor and blood and blood products were derived using the proposed FY 2002-based IPPS market basket. This is necessary because these data are poorly reported in the cost reports for non-IPPS hospitals. For example, the ratio of the benefit cost weight to the wages and salaries cost weight was applied to the proposed excluded hospital wages and salaries cost weight to derive a benefit cost weight for the proposed excluded hospital market basket.
In addition to the Medicare cost reports, the other source of data used in developing the excluded hospital market basket weights is the Benchmark Input-Output Tables (I-Os) created by the Bureau of Economic Analysis, U.S. Department of Commerce.
New data for this source are scheduled for publication every 5 years, but often take up to 7 years after the reference year. Only an Annual I-O is produced each year, but the Annual I-O contains less industry detail than does the Benchmark I-O. When we rebased the excluded hospital market basket using FY 1997 data in the FY 2003 IPPS final rule, the 1997 Benchmark I-O was not yet available. Therefore, we did not incorporate data from that source into the FY 1997-based excluded hospital market basket (67 FR 50033). However, we did use a secondary source the 1997 Annual Input-Output tables. The third source of data, the 1997 Business Expenditure Survey (now known as the Business Expenses Survey), was used to develop weights for the utilities and telephone services categories.
The 1997 Benchmark I-O data are a much more comprehensive and complete set of data than the 1997 Annual I-O estimates. The 1997 Annual I-O is an update of the 1992 I-O tables, while the 1997 Benchmark I-O is an entirely new set of numbers derived from the 1997 Economic Census. The 2002 Benchmark Input-Output tables are not yet available. Therefore, we are proposing to use the 1997 Benchmark I-O data in the proposed FY 2002-based excluded hospital market basket, to be effective for FY 2006. Instead of using the less detailed, less accurate Annual I-O data, we aged the 1997 Benchmark I-O data forward to FY 2002. The methodology we used to age the data involves applying the annual price changes from the price proxies to the appropriate cost categories. We repeat this practice for each year.
The “all other” cost category is further divided into other hospital expenditure category shares using the 1997 Benchmark Input-Output tables. Therefore, the “all other” cost category expenditure shares are proportional to their relationship to “all other” totals in the I-O tables. For instance, if the cost for telephone services were to represent 10 percent of the sum of the “all other” I-O (see below) hospital expenditures, then telephone services would represent 10 percent of the market basket's “all other” cost category. The remaining detailed cost categories under the residual “all other” cost category were derived using the 1997 Benchmark Input-Output Tables aged to FY 2002 using relative price changes.
After computing the FY 2002 cost weights for the proposed rebased excluded hospital market basket, it is necessary to select appropriate wage and price proxies to reflect the rate-of-price change for each expenditure category. With the exception of the Professional Liability proxy, all the indicators are based on Bureau of Labor Statistics (BLS) data and are grouped into one of the following BLS categories:
• Producer Price Indexes—Producer Price Indexes (PPIs) measure price changes for goods sold in other than retail markets. PPIs are preferable price proxies for goods that hospitals purchase as inputs in producing their outputs because the PPIs would better reflect the prices faced by hospitals. For example, we use a special PPI for prescription drugs, rather than the Consumer Price Index (CPI) for prescription drugs because hospitals generally purchase drugs directly from the wholesaler. The PPIs that we use measure price change at the final stage of production.
• Consumer Price Indexes—Consumer Price Indexes (CPIs) measure change in the prices of final goods and services bought by the typical consumer. Because they may not represent the price faced by a producer, we used CPIs only if an appropriate PPI was not available, or if the expenditures were more similar to those of retail consumers in general rather than purchases at the wholesale level. For example, the CPI for food purchased away from home is used as a proxy for contracted food services.
• Employment Cost Indexes—Employment Cost Indexes (ECIs) measure the rate of change in employee wage rates and employer costs for employee benefits per hour worked. These indexes are fixed-weight indexes and strictly measure the change in wage rates and employee benefits per hour. Appropriately, they are not affected by shifts in employment mix.
We evaluated the price proxies using the criteria of reliability, timeliness, availability, and relevance. Reliability indicates that the index is based on valid statistical methods and has low sampling variability. Timeliness implies that the proxy is published regularly, at least once a quarter. Availability means that the proxy is publicly available. Finally, relevance means that the proxy is applicable and representative of the cost category weight to which it is applied. The CPIs, PPIs, and ECIs selected meet these criteria and, therefore, we believe they continue to be the best measure of price changes for the cost categories to which they are applied.
Chart 7 sets forth the complete proposed FY 2002-based excluded hospital market basket including cost categories, weights, and price proxies. For comparison purposes, the corresponding FY 1997-based excluded hospital market basket is listed as well. A summary outlining the choice of the various proxies follows the charts.
For measuring the price growth of wages in the proposed FY 2002-based excluded hospital market basket, we are proposing to use the ECI for wages and salaries for civilian hospital workers as the proxy for wages. This same proxy was used for the FY 1997-based excluded hospital market basket.
The proposed FY 2002-based excluded hospital market basket uses the ECI for employee benefits for civilian hospital workers. This is the same proxy that was used in the FY 1997-based excluded hospital market basket.
The ECI for compensation for professional and technical workers in private industry is applied to this category because it includes occupations such as management and consulting, legal, accounting and engineering services. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of gas fuels as measured by the PPI (Commodity Code #0552) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of commercial electric power as measured by the PPI (Commodity Code #0542) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of water and sewerage maintenance as measured by the CPI for all urban consumers (CPI Code # CUUR0000SEHG01) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The proposed FY 2002-based excluded hospital market basket uses the percentage change in the hospital professional liability insurance (PLI) premiums as estimated by the CMS Hospital Professional Liability Index for the proxy of this category. Similar to the Physicians Professional Liability Index, we attempt to collect commercial insurance premiums for a fixed level of coverage, holding nonprice factors constant (such as a change in the level of coverage). In the FY 1997-based excluded hospital market basket, the same price proxy was used.
We continue to research options for improving our proxy for professional liability insurance. This research includes exploring various options for expanding our current survey, including the identification of another entity that would be willing to work with us to collect more complete and comprehensive data. We are also exploring other options such as third party or industry data that might assist us in creating a more precise measure of PLI premiums. At this time, we have not yet identified a preferred option. Therefore, we are not proposing to make any changes to the proxy in this proposed rule.
The percentage change in the price of prescription drugs as measured by the PPI (PPI Code #PPI283D#RX) is used as a proxy for this category. This is a special index produced by BLS and is the same proxy used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of processed foods and feeds as measured by the PPI (Commodity Code #02) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of food purchased away from home as measured by the CPI for all urban consumers (CPI Code # CUUR0000SEFV) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of industrial chemical products as measured by the PPI (Commodity Code #061) is applied to this component. While the chemicals hospitals purchase include industrial as well as other types of chemicals, the industrial chemicals component constitutes the largest proportion by far. Thus, we believe that Commodity Code #061 is the appropriate proxy. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of medical and surgical instruments as measured by the PPI (Commodity Code #1562) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of photographic supplies as measured by the PPI (Commodity Code #1542) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of rubber and plastic products as measured by the PPI (Commodity Code #07) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of converted paper and paperboard products as measured by the PPI (Commodity Code #0915) is used. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of apparel as measured by the PPI (Commodity Code #381) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of machinery and equipment as measured by the PPI (Commodity Code #11) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of all finished goods less food and energy as measured by the PPI (Commodity Code #SOP3500) is applied to this component. Using this index removes the double-counting of food and energy prices, which are already captured elsewhere in the market basket. The same proxy was used in the FY 1997-based excluded hospital market basket. The weight for this cost category is higher than in the FY 1997-based index because it also includes blood and blood products. In the FY 1997-based excluded hospital market basket, we included a separate cost category for blood and blood products, using the BLS PPI (Commodity Code #063711) for blood and derivatives as a price proxy. A review of recent trends in the PPI for blood and derivatives suggests that its movements may not be consistent with the trends in blood costs faced by hospitals. While this proxy did not match exactly with the product hospitals are buying, its trend over time appears to be reflective of the historical price changes of blood purchased by hospitals. However, an apparent divergence over recent periods led us to reevaluate whether the PPI for blood and derivatives was an appropriate measure of the changing price of blood. We ran test market baskets classifying blood in three separate cost categories: blood and blood products, contained within chemicals as was done for the FY 1992-based index, and within miscellaneous products. These categories use as proxies the following PPIs: the PPI for blood and blood products, the PPI for chemicals, and the PPI for finished goods less food and energy, respectively. Of these three proxies, the PPI for finished goods less food and energy moved most like the recent blood cost and price trends. In addition, the impact on the overall market basket by using different proxies for blood was negligible, mostly due to the relatively small weight for blood in the market basket. Therefore, we chose the PPI for finished goods less food and energy for the blood proxy because we believe it will best be able to proxy price
The percentage change in the price of telephone services as measured by the CPI for all urban consumers (CPI Code #CUUR0000SEED) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the price of postage as measured by the CPI for all urban consumers (CPI Code #CUUR0000SEEC01) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the ECI for compensation paid to service workers employed in private industry is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
The percentage change in the all-items component of the CPI for all urban consumers (CPI Code #CUUR0000SA0) is applied to this component. The same proxy was used in the FY 1997-based excluded hospital market basket.
For further discussion of the rationale for choosing many of the specific price proxies, we refer the reader to the August 1, 2002 final rule (67 FR 50037).
Section 404 of Pub. L. 108-173 (MMA) requires CMS to report in this proposed rule the research that has been done to determine a new frequency for rebasing the hospital market basket. Specifically, section 404 states:
“(a)
“(b)
This section of the proposed rule discusses the research we have done to fulfill this requirement, and proposes a rebasing frequency that makes optimal use of available data.
Our past practice has been to monitor the appropriateness of the market basket on a consistent basis in order to rebase and revise the index when necessary. The decision to rebase and revise the index has been driven in large part by the availability of the data necessary to produce a complete index. In the past, we have supplemented the Medicare cost report data that are available on an annual basis with Bureau of the Census hospital expense data that are typically available only every 5 years (usually in years ending in 2 and 7). Because of this, we have generally rebased the index every 5 years. However, prior to the requirement associated with section 404 of Pub. L. 108-173, there was no legislative requirement regarding the timing of rebasing the hospital market basket nor was there a hard rule that we
The most recent rebasing of the hospital market basket was just 3 years ago, for the FY 2003 update. Since its inception with the hospital PPS in FY 1984, the hospital market basket has been rebased several times (FY 1987 update, FY 1991 update, FY 1997 update, FY 1998 update, and FY 2003 update). One of the reasons we believe it appropriate to rebase the index on a periodic basis is that rebasing (as opposed to revising, as explained in section IV.A. of this preamble) tends to have only a minor impact on the actual percentage increase applied to the PPS update. There are two major reasons for this: (1) The cost category weights tend to be relatively stable over shorter term periods (3 to 5 years); and (2) the update is based on a forecast, which means the individual price series tend not to grow as differently as they have in some historical periods.
We focused our research in two major areas. First, we reviewed the frequency and availability of the data needed to produce the market basket. Second, we analyzed the impact on the market basket of determining the market basket weights under various frequencies. We did this by developing market baskets that had base years for every year between 1997 and 2002, and then analyzed how different the market basket percent changes were over various periods. We used the results from these areas of research to assist in our determination of a new rebasing frequency. Based on this analysis, we are proposing to rebase the hospital market basket every 4 years. This would mean the next rebasing would occur for the FY 2010 update.
As we have described in numerous
Each Medicare-participating hospital submits a Medicare cost report to CMS on an annual basis. It takes roughly 2 years before “nearly complete” Medicare cost report data are available. For example, approximately 90 percent of FY 2002 Medicare cost report data were available in October 2004 (only 50 percent of FY 2003 data was available), although only 20 percent of these reports were settled. We choose FY 2002 as the base year because we believe this is the most recent, relatively complete year (with a 90 percent reporting rate) of Medicare cost report data. In developing the hospital market basket weights, we have used the Medicare cost reports to determine the weights for six major cost categories (wages, benefits, contract labor, pharmaceuticals, professional liability, and blood). In FY 2002, these six categories accounted for 68.5 percent of the hospital market basket. Therefore, it is possible to develop a new set of market basket weights for these categories on an annual basis, but with a substantial lag (for the FY 2006 update, we consider the latest year of historical data to be FY 2002).
The second source of data is the U.S. Department of Commerce, Bureau of Economic Analysis' Benchmark Input-Output (I-O) table. These data are published every 5 years with a more significant lag than the Medicare cost reports. For example, the 1997 Benchmark I-O tables were not published until the beginning of 2003. We have sometimes used data from a third data source, the Bureau of the Census' Business Expenses Survey (BES), which is also published every 5 years. The BES data are used as an input into the I-O data, and thus are published a few months prior to the release of the I-O. However, the BES contains only a fraction of the detail contained in the I-O.
Chart 9 below takes into consideration the expected availability of these major data sources and summarizes how they could be incorporated into the development of future market basket weights.
It would be necessary to age the I-O or BES data to the year for which cost report data are available using the price changes between those periods. While not a preferred method in developing the market basket weights, we have done this in the past when rebasing the index. We are proposing to age the 1997 Benchmark I-O data for this proposed rule.
As the table clearly indicates, the most optimal rebasing frequency from a data availability standpoint is every 5 years. That is, if we were to next rebase for the FY 2011 update, we could use the 2002 Benchmark I-O data that would recently be available. In order to match the Medicare cost report data that would be available at that time (FY 2007 data), we would have to age the I-O data to FY 2007. However, this would be aging the data only 5 years, whereas if the rebasing frequency was determined to be every 4 years, we would have to age 1997 I-O data to FY 2006. While aging data over 5 years is problematic (there can be significant utilization and intensity changes over that length period, as opposed to only a year or two), it would be significantly worse to age data over an 8-year or 9-year period. If we were on a 5-year rebasing frequency, for the FY 2016 update, we would use cost report data for FY 2012 and the newly available 2007 I-O data. Again, the I-O data would have to be aged only 5 years to match the cost report data.
We can look at the implications of determining a rebasing frequency of every 3 or 4 years. Considering a frequency of 3 years first, we would next rebase for the FY 2009 update using FY 2005 Medicare cost report data and 1997 I-O data (the same data currently being used in the proposed FY 2002-based market basket). This is problematic because the 1997 I-O data would need to be aged 8 years to match the cost report data. The next two rebasings would be for the FY 2012 update (using FY 2008 cost report data and 2002 I-O data) and FY 2015 (using FY 2011 cost report data and 2002 I-O data). This means that while we are making optimal use of the Medicare cost report data, we would be forced to use the same I-O data in consecutive rebasings and would have to age that data as much as 9 years to use the same year as the cost report data.
For a rebasing frequency of every 4 years, our next rebasing would be for the FY 2010 update using FY 2006 Medicare cost report data and 1997 I-O data. This is also problematic because the 1997 I-O data would need to be aged 9 years to match the cost report data. The next two rebasings would be for the FY 2014 update (using FY 2010 cost report data and 2002 I-O data) and FY 2018 (using FY 2014 cost report data and 2007 I-O data). Again, this frequency would make optimal use of the Medicare cost report data but would require aging of the I-O data between 7 and 9 years in order to match the cost report data.
It is clear from this analysis that neither the 3-year nor 4-year rebasing frequencies makes as good use of all the data as rebasing every 5 years. In addition, when comparing the 3-year and 4-year rebasing frequencies, no one method stands out as being significantly improved over another. Thus, this analysis does not lead us to draw any definitive conclusions as to a rebasing frequency more appropriate than every 5 years.
Our second area of research in determining a new rebasing frequency was to analyze the impact on the market basket of determining the market basket weights under various frequencies. We did this by using the current historical data that are available (both Medicare cost report and I-O) to develop market baskets with base year weights for each year between FY 1997 and FY 2002. We then analyzed how differently the market baskets moved over various historical periods.
Approaching the analysis this way allowed us to develop six hypothetical market baskets with different base years (FY 1997, FY 1998, FY 1999, FY 2000, FY 2001, and FY 2002). As we have done when developing the official market baskets, we used Medicare cost report data where available. Thus, cost report data were used to determine the weights for wages and salaries, benefits, contract labor, pharmaceuticals, blood and blood products, and all other costs. We used the 1997 Benchmark I-O data to fill out the remainder of the market basket weights (note that this produces a different index for FY 1997 than the official FY 1997-based hospital market basket that used the Annual 1997 I-O data), aging the data to the appropriate year to match the cost report data. This means the FY 2002-based index used in this analysis matches the FY 2002-based market basket we are proposing in this rule. Chart 10 shows the weights from these hypothetical market baskets:
Note that the weights remain relatively stable between periods. It is for this reason that we believe defining the market basket as a Laspeyres-type, fixed-weight index is appropriate. Because the weights in the market basket are generally for aggregated costs (for example, wages and salaries for all employees), there is not much volatility in the weights between periods, especially over shorter time spans. As the results of this analysis will show, it is for this reason that rebasing the market basket more frequently than every 5 years is expected to have little impact on the overall percent change in the hospital market basket.
Using these hypothetical market baskets, we can produce market basket percent changes over historical periods to determine what is the impact of using various base periods. In our analysis, we consider the hypothetical FY 1997-based index to be the benchmark measure and the other indexes to indicate the impact of rebasing over various frequencies. The hypothetical FY 2000-based index would reflect the impact of rebasing every 3 years, the hypothetical FY 2001-based index would reflect the impact of rebasing every 4 years, and the hypothetical FY 2002-based index would reflect the
It is clear from this comparison that there is little difference between the indexes, and, for some FYs, there would be no difference in the market basket update factor if we had rebased the market basket more frequently. In particular, there is no difference in the hypothetical indexes based between FY 2000 and FY 2002. This suggests that setting the rebasing frequency to 3, 4, or 5 years will have little or no impact on the resulting market basket. As we found when analyzing data availability, this portion of our research does not suggest that rebasing the market basket more frequently than every 5 years results in an improved market basket or that there is any noticeable difference between rebasing every 3 or 4 years.
Market basket rebasing is a 1-year to 2-year long process that includes data processing, analytical work, methodology reevaluation, and regulatory process. After developing a rebased and revised market basket, there are extensive internal review processes that a rule must undergo, both in proposed and final form. Once the proposed rule has been published, there is a 60-day comment period set aside for the public to respond to the proposed rule. After comments are received, we then need adequate time to research and reply to all comments submitted. The last part of the regulatory process is the 60-day requirement—the final rule must be published 60 days before the provisions of the rule can become effective.
We would like to rebase all of our indexes (PPS operating, PPS capital, excluded hospital with capital, SNFs, HHAs, and Medicare Economic Index) on a regular schedule. Therefore, if we were to choose a 3-year rebasing schedule, we would have to rebase more than one index at a time. This may potentially limit the amount of time we could devote to the market basket rebasing process. In addition, we recognize that, in the future, we may be required to develop additional market baskets that would require frequent rebasing.
Given the number of market baskets we are responsible for rebasing and revising, the regulatory process for each, and the availability of source data, we believe that while it is not necessary, rebasing and revising the hospital market baskets every 4 years is the most appropriate frequency to meet the legislative requirement.
The Capital Input Price Index (CIPI) was originally described in the September 1, 1992
We are proposing to revise and rebase the CIPI to a FY 2002 base year to reflect the more recent structure of capital costs in hospitals. Unlike the PPS operating market basket, we do not have FY 2002 Medicare cost report data available for the development of the capital cost weights, due to a change in the FY 2002 cost reporting requirements. Rather, we used hospital capital expenditure data for the capital cost categories of depreciation, interest, and other capital expenses for FY 2001 and aged these data to a FY 2002 base year using the relevant vintage-weighted price proxies. As with the FY 1997-based index, we have developed two sets of weights in order to calculate the proposed FY 2002-based CIPI. The first set of proposed weights identifies the proportion of hospital capital expenditures attributable to each expenditure category, while the second set of proposed weights is a set of relative vintage weights for depreciation
Both sets of proposed weights are developed using the best data sources available. In reviewing source data, we determined that the Medicare cost reports provided accurate data for all capital expenditure cost categories. We are proposing to use the FY 2001 Medicare cost reports for PPS hospitals, aged to FY 2002, excluding expenses from hospital-based subproviders, to determine weights for all three cost categories: depreciation, interest, and other capital expenses. We compared the weights determined from the Medicare cost reports to the 2002 Bureau of the Census' Business Expenses Survey and found the weights to be similar to those developed from the Medicare cost reports.
Lease expenses are not broken out as a separate cost category in the CIPI, but are distributed among the cost categories of depreciation, interest, and other, reflecting the assumption that the underlying cost structure of leases is similar to capital costs in general. As was done in previous rebasings of the CIPI, we assumed 10 percent of lease expenses are overhead and assigned them to the other capital expenses cost category as overhead. The remaining lease expenses were distributed to the three cost categories based on the proportion of depreciation, interest, and other capital expenses to total capital costs excluding lease expenses.
Depreciation contains two subcategories: building and fixed equipment and movable equipment. The split between building and fixed equipment and movable equipment was determined using the Medicare cost reports. This methodology was also used to compute the FY 1997-based index.
Total interest expense cost category is split between government/nonprofit and profit interest. The FY 1997-based CIPI allocated 85 percent of the total interest cost weight to government/nonprofit interest, proxied by average yield on domestic municipal bonds, and 15 percent to for-profit interest, proxied by average yield on Moody's Aaa bonds (67 FR 50044). The methodology used to derive this split is explained in the June 2, 1995 issue of the
Chart 12 presents a comparison of the proposed FY 2002-based CIPI capital cost weights and the FY 1997-based CIPI capital cost weights.
Because capital is acquired and paid for over time, capital expenses in any given year are determined by both past and present purchases of physical and financial capital. The vintage-weighted CIPI is intended to capture the long-term consumption of capital, using vintage weights for depreciation (physical capital) and interest (financial capital). These vintage weights reflect the proportion of capital purchases attributable to each year of the expected life of building and fixed equipment, movable equipment, and interest. We used the vintage weights to compute vintage-weighted price changes associated with depreciation and interest expense.
Vintage weights are an integral part of the CIPI. Capital costs are inherently complicated and are determined by complex capital purchasing decisions, over time, based on such factors as interest rates and debt financing. In addition, capital is depreciated over time instead of being consumed in the same period it is purchased. The CIPI accurately reflects the annual price changes associated with capital costs, and is a useful simplification of the actual capital investment process. By accounting for the vintage nature of capital, we are able to provide an accurate, stable annual measure of price changes. Annual nonvintage price changes for capital are unstable due to the volatility of interest rate changes and, therefore, do not reflect the actual annual price changes for Medicare capital-related costs. CMS' CIPI reflects the underlying stability of the capital acquisition process and provides hospitals with the ability to plan for changes in capital payments.
To calculate the vintage weights for depreciation and interest expenses, we needed a time series of capital purchases for building and fixed equipment and movable equipment. We found no single source that provides the best time series of capital purchases by hospitals for all of the above components of capital purchases. The early Medicare cost reports did not have sufficient capital data to meet this need. While the AHA Panel Survey provided a consistent database back to 1963, it did not provide annual capital purchases. The AHA Panel Survey provided a time series of depreciation expenses through 1997 which could be used to infer capital purchases over time. From 1998 to 2001, hospital depreciation expenses were calculated by multiplying the AHA Annual Survey total hospital expenses by the ratio of depreciation to total hospital expenses from the Medicare cost reports. Beginning in 2001, the AHA Annual Survey began collecting depreciation expenses. We hope to be able to use these data in future rebasings.
In order to estimate capital purchases from AHA data on depreciation expenses, the expected life for each cost category (building and fixed equipment, movable equipment, and interest) is needed to calculate vintage weights. We used FY 2001 Medicare cost reports to determine the expected life of building and fixed equipment and movable equipment. The expected life of any piece of equipment can be determined by dividing the value of the asset (excluding fully depreciated assets) by its current year depreciation amount. This calculation yields the estimated useful life of an asset if depreciation were to continue at current year levels, assuming straight-line depreciation. From the FY 2001 cost reports, the expected life of building and fixed equipment was determined to be 23 years, and the expected life of movable equipment was determined to be 11 years. The FY 1997-based CIPI showed the same expected life for the two categories of depreciation.
Although we are proposing to use this methodology for deriving the useful life of an asset, we intend to conduct a further review of the methodology between the publication of this proposed rule and the final rule. We plan to review alternate data sources, if available, and analyze in more detail the hospital's capital cost structure reported in the Medicare cost reports.
We are proposing to use the building and fixed equipment and movable equipment weights derived from FY 2001 Medicare cost reports to separate the depreciation expenses into annual amounts of building and fixed equipment depreciation and movable equipment depreciation. Year-end asset costs for building and fixed equipment and movable equipment were determined by multiplying the annual depreciation amounts by the expected life calculations from the FY 2001 Medicare cost reports. We then calculated a time series back to 1963 of annual capital purchases by subtracting the previous year asset costs from the current year asset costs. From this capital purchase time series, we were able to calculate the vintage weights for building and fixed equipment and movable equipment. Each of these sets of vintage weights is explained in detail below.
For building and fixed equipment vintage weights, the real annual capital purchase amounts for building and fixed equipment derived from the AHA Panel Survey were used. The real annual purchase amount was used to capture the actual amount of the physical acquisition, net of the effect of price inflation. This real annual purchase amount for building and fixed equipment was produced by deflating the nominal annual purchase amount by the building and fixed equipment price proxy, the Boeckh Institutional Construction Index. Because building and fixed equipment have an expected life of 23 years, the vintage weights for building and fixed equipment are deemed to represent the average purchase pattern of building and fixed equipment over 23-year periods. With real building and fixed equipment purchase estimates available back to 1963, we averaged sixteen 23-year periods to determine the average vintage weights for building and fixed equipment that are representative of average building and fixed equipment purchase patterns over time. Vintage weights for each 23-year period are calculated by dividing the real building and fixed capital purchase amount in any given year by the total amount of purchases in the 23-year period. This calculation is done for each year in the 23-year period, and for each of the sixteen 23-year periods. We are proposing to use the average of each year across the sixteen 23-year periods to determine the 2002 average building and fixed equipment vintage weights for the FY 2002-based CIPI.
For movable equipment vintage weights, the real annual capital purchase amounts for movable equipment derived from the AHA Panel Survey were used to capture the actual amount of the physical acquisition, net of price inflation. This real annual purchase amount for movable equipment was calculated by deflating the nominal annual purchase amount by the movable equipment price proxy, the PPI for Machinery and Equipment. Based on our determination that movable equipment has an expected life of 11 years, the vintage weights for movable equipment represent the average expenditure for movable equipment over an 11-year period. With real movable equipment purchase estimates available back to 1963, twenty-eight 11-year periods were averaged to determine the average vintage weights for movable equipment that are representative of average movable equipment purchase patterns over time. Vintage weights for each 11-year period are calculated by dividing the real movable capital purchase amount for any given year by the total amount of purchases in the 11-year period. This calculation was done for each year in the 11-year period, and for
For interest vintage weights, the nominal annual capital purchase amounts for total equipment (building and fixed, and movable) derived from the AHA Panel and Annual Surveys were used. Nominal annual purchase amounts were used to capture the value of the debt instrument. Because we have determined that hospital debt instruments have an expected life of 23 years, the vintage weights for interest are deemed to represent the average purchase pattern of total equipment over 23-year periods. With nominal total equipment purchase estimates available back to 1963, sixteen 23-year periods were averaged to determine the average vintage weights for interest that are representative of average capital purchase patterns over time. Vintage weights for each 23-year period are calculated by dividing the nominal total capital purchase amount for any given year by the total amount of purchases in the 23-year period. This calculation is done for each year in the 23-year period and for each of the sixteen 23-year periods. We are proposing to use the average of each year across the sixteen 23-year periods to determine the average interest vintage weights for the FY 2002-based CIPI. The vintage weights for the FY 1997 CIPI and the proposed FY 2002 CIPI are presented in Chart 13.
After the capital cost category weights were computed, it was necessary to select appropriate price proxies to reflect the rate of increase for each expenditure category. Our proposed price proxies for the FY 2002-based CIPI are the same as those used in the FY 1997-based CIPI. We still believe these are the most appropriate proxies for
Global Insight, Inc. forecasts a 0.7 percent increase in the FY 2002-based CIPI for 2006, as shown in Chart 15. This is the result of a 1.3 percent increase in projected depreciation prices (building and fixed equipment, and movable equipment) and a 2.7 percent increase in other capital expense prices, partially offset by a 2.3 percent decrease in vintage-weighted interest rates in FY 2006, as indicated in Chart 15. Accordingly, we are proposing a 0.7 percent increase in the CIPI.
Rebasing the CIPI from FY 1997 to FY 2002 decreased the percent change in the FY 2006 forecast by 0.1 percentage point, from 0.8 to 0.7, as shown in Chart 12. The difference is caused mostly by changes in the relationships between the cost category weights within depreciation and interest. The fixed depreciation cost weight relative to the movable depreciation cost weight and the nonprofit/government interest cost weight relative to the for-profit interest cost weight are both less in the FY 2002-based CIPI. The changes in these relationships have a small effect on the FY 2002-based CIPI percent changes. However, when added together, they are responsible for a negative one-tenth percentage point difference between the FY 2002-based CIPI and the FY 1997-based CIPI.
(If you choose to comment on issues in this section, please include the caption “Postacute Care Transfers” at the beginning of your comment.)
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. The purpose of the IPPS transfer payment policy is to avoid providing an incentive for a hospital to transfer patients to another hospital early in the patients' 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.
2. Changes to DRGs Subject to the Postacute Care Transfer Policy (§§ 412.4(c) and (d))
Section 1886(d)(5)(J) of the Act provides that, effective for discharges on or after October 1, 1998, a “qualified discharge” from one of 10 DRGs selected by the Secretary to a postacute care provider would be treated as a transfer case. This section required the Secretary to define and pay as transfers all cases assigned to one of 10 DRGs selected by the Secretary, if the
• 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 that a patient discharged to home would be considered transferred to postacute care if the patient received home health services within 3 days after the date of discharge. In addition, in the July 31, 1998 final rule, we did not include patients transferred to a swing-bed for skilled nursing care in the definition of postacute care transfer cases (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 10 DRGs to be subject to the postacute care transfer rule starting in FY 1999.
Section 1886(d)(5)(J)(iv) of the Act authorizes the Secretary to expand the postacute care transfer policy for FY 2001 or subsequent fiscal years to additional DRGs based on a high volume of discharges to postacute care facilities and a disproportionate use of postacute care services. In the FY 2004 IPPS final rule (68 FR 45412), we expanded the postacute care transfer policy to include additional DRGs. We established the following criteria that a DRG must meet, for both of the 2 most recent years for which data are available, in order to be included under the postacute care transfer policy:
• At least 14,000 postacute care transfer cases;
• At least 10 percent of its postacute care transfers occurring before the geometric mean length of stay;
• A geometric mean length of stay of at least 3 days; and
• If a DRG is not already included in the policy, a decline in its geometric mean length of stay during the most recent 5-year period of at least 7 percent.
In the FY 2004 IPPS final rule, we identified 21 new DRGs that met these criteria. We also determined that one DRG from the original group of 10 DRGs (DRG 263) no longer met the volume criterion of 14,000 transfer cases. Therefore, we removed DRGs 263 and 264 (DRG 264 is paired with DRG 263) from the policy and expanded the postacute care transfer policy to include payments for transfer cases in the new 21 DRGs, effective October 1, 2003. As a result, a total of 29 DRGs were subject to the postacute care transfer policy in FY 2004. In the FY 2004 IPPS final rule, we indicated that we would review and update this list periodically to assess whether additional DRGs should be added or existing DRGs should be removed (68 FR 45413).
For FY 2005, we analyzed the available data from the FY 2003 MedPAR file. For the 2 most recent years of available data (FY 2002 and FY 2003), we found that no additional DRGs qualified under the four criteria set forth in the IPPS final rule for FY 2004. We also analyzed the DRGs included under the policy for FY 2004 to determine if they still met the criteria to remain under the policy. In addition, we analyzed the special circumstances arising from a change to one of the DRGs included under the policy in FY 2004.
In the FY 2005 IPPS final rule (69 FR 48942), we deleted DRG 483 (Tracheostomy With Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth, and Neck Diagnosis) and established the following new DRGs as replacements: DRG 541 (Tracheostomy With Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth and Neck Diagnoses With Major O.R. Procedure) and DRG 542 (Tracheostomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth and Neck Diagnoses Without Major O.R. Procedure). Cases in the existing DRG 483 were assigned to the new DRGs 541 and 542 based on the presence or absence of a major O.R. procedure, in addition to the tracheostomy code that was previously required for assignment to DRG 483. Specifically, if the patient's case involves a major O.R. procedure (a procedure whose code is included on the list that is assigned to DRG 468 (Extensive O.R. Procedure Unrelated to Principal Diagnosis), except for tracheostomy codes 31.21 and 31.29), the case is assigned to the DRG 541. If the patient does not have an additional major O.R. procedure (that is, if there is only a tracheostomy code assigned to the case), the case is assigned to DRG 542.
Based on data analysis, we determined that neither DRG 541 nor DRG 542 would have enough cases to meet the existing threshold of 14,000 transfer cases for inclusion in the postacute care transfer policy. Nevertheless, we believed the cases that would be incorporated into these two DRGs remained appropriate candidates for application of the postacute care transfer policy and that the subdivision of DRG 483 should not change the original application of the postacute care transfer policy to the cases once included in that DRG. Therefore, for FY 2005, we proposed alternate criteria to be applied in cases where DRGs do not satisfy the existing criteria, for discharges occurring on or after October 1, 2004 (69 FR 28273 and 28374). The proposed new criteria were designed to address situations such as those posed by the split of DRG 483, where there remain substantial grounds for inclusion of cases within the postacute care transfer policy, although one or more of the original criteria may no longer apply. Under the proposed alternate criteria, DRGs 430, 541, and 542 would have qualified for inclusion in the postacute care transfer policy.
In the response to comments on our FY 2005 proposal, we decided not to adopt the proposed alternate criteria for including DRGs under the postacute care transfer policy in the FY 2005 IPPS final rule. Instead we adopted the policy of simply grandfathering, for a period of 2 years, any cases that were previously included within a DRG that has split, when the split DRG qualified for inclusion in the postacute care transfer policy for both of the previous 2 years. Under this policy, the cases that were previously assigned to DRG 483 and that now fall into DRGs 541 and 542 continue to be subject to the policy. Therefore, effective for discharges on or after October 1, 2004, 30 DRGs, including new DRGs 541 and 542, are subject to the postacute care transfer policy. We indicated that we would monitor the frequency with which these
We note that some commenters also suggested that, in place of the proposed alternate criteria, we should adopt a policy of permanently applying the postacute care transfer policy to a DRG once it has initially qualified for inclusion in the policy. These commenters noted that removing DRGs from the postacute care transfer policy makes the payment system less stable and results in inconsistent incentives over time. They also argued that “a drop in the number of transfers to postacute care settings is to be expected after the transfer policy is applied to a DRG, but the frequency of transfers may well rise again if the DRG is removed from the policy.” We indicated that we would consider adopting this general policy once we had evaluated the experience with the specific cases that are subject to the grandfathering policy for FY 2005 and FY 2006.
In the May 18, 2004 proposed rule, we also called attention to the data concerning DRG 263, which was subject to the postacute care transfer policy until FY 2004. We removed DRG 263 from the postacute care transfer policy for FY 2004 because it did not have the minimum number of cases (14,000) transferred to postacute care (13,588 transfer cases in FY 2002, with more than 50 percent of transfer cases being short-stay transfers). The FY 2003 MedPAR data show that there were 15,602 transfer cases in the DRG in FY 2003, of which 46 percent were short-stay transfers. Because we removed the DRG from the postacute care transfer policy in FY 2004, it must meet all criteria to be included under the policy in subsequent fiscal years. Because the geometric mean length of stay for DRG 263 showed only a 6-percent decrease since 1999, DRG 263 did not qualify to be added to the policy for FY 2005 under the existing criteria that were included in last year's rule. DRG 263 would have qualified under the volume threshold and percent of short-stay transfer cases under the proposed new alternate criteria contained in the FY 2005 proposed rule. However, it still would not have met the proposed required decline in length of stay to qualify to be added to the policy for FY 2005. We indicated that we would continue to monitor the experience with DRG 263, especially in light of the comment that recommended a general policy of grandfathering cases that qualify under the criteria for inclusion in the postacute care transfer policy.
The table below displays the 30 DRGs that are included in the postacute care transfer policy, effective for discharges occurring on or after October 1, 2004.
For this year's proposed rule, we have conducted an extensive analysis of the FY 2003 and FY 2004 MedPAR data to monitor the effects of the postacute care transfer policy. We have also conducted an overall assessment of the postacute care transfer policy since its inception in FY 1999. Specifically, we have examined the relationship between rates of postacute care utilization and the geometric mean length of stay and the relationship between a high volume and a high proportion of postacute care transfers within a DRG in light of experience under the current policy. Specifically, we examined whether a decline in the geometric mean length of stay is associated with an increase in the volume and proportion of total cases in a DRG that are discharges to postacute care. We analyzed these data as part of determining whether to retain the criteria that a DRG must have a decline in the geometric mean length of stay of
Our current criteria for inclusion in the postacute care transfer policy include a requirement that, if a DRG is not already included in the policy, there must be a decline of at least 7 percent in the DRG's geometric mean length of stay during the most recent 5-year period. It has come to our attention that not all DRGs that experience an increase in postacute care utilization also experience a decrease in geometric mean length of stay. In fact, some DRGs with increases in postacute care utilization during the past several years have also experienced an increase in the geometric mean length of stay. The table below lists a number of DRGs that experienced increases in postacute care utilization and increases in the geometric mean length of stay from FY 2002 through FY 2004:
Our current criteria also include a requirement that a DRG have at least 14,000 total postacute care transfer cases in order to be included in the policy. We have examined the data on the numbers of transfers and the percentage of postacute care transfer cases across DRGs. Among the 30 DRGs currently included within the postacute care transfer policy, the percentage of postacute care transfer cases ranges from a low of 15 percent to a high of 76 percent. Among DRGs that are not currently included within the policy, many have a relatively high percentage of postacute care transfer cases in proportion to the total volume of cases for the DRG or a relatively high volume of discharges to postacute care facilities, or both. For this reason, we reviewed the data for all DRGs before proposing a change to the postacute care transfer payment policy. As part of this review, we found that:
• Of 550 DRGs, 26 have been deactivated and 17 have no cases in the FY 2004 MedPAR files. We are not proposing any changes for these DRGs because application of the postacute care transfer policy to them would have no effect.
• Of the remaining 507 DRGs, 220 have geometric mean lengths of stay that are less than 3.0 days. Because the transfer payment policy provides 2 times the per diem rate for the first day of care (due to the large proportion of charges incurred on the first day of a patient's treatment), including these DRGs in the transfer policy would be relatively meaningless as they would all receive a full DRG payment. For this reason, we are not proposing any
• Of the remaining 287 DRGs, 64 have fewer than 100 short-stay transfer cases. In addition, 39 of these 64 DRGs have fewer than 50 short-stay transfer cases. Consistent with the statutory guidance, we are not proposing any change to how we apply the postacute care transfer payment policy to these DRGs because we believe that these DRGs do not have a high volume of discharges to postacute care facilities or involve a disproportionate use of postacute care services.
Once we eliminated the DRGs cited above from consideration for the postacute care transfer policy, we examined the characteristics of the remaining 223 DRGs. We found that these DRGs had three common characteristics:
• The DRG had at least 2,000 total postacute care transfer cases.
• At least 20 percent of all cases in the DRG were discharged to postacute care settings.
• 10 percent of all discharges to postacute care were prior to the geometric mean length of stay for the DRG.
Consistent with the statutory guidance giving the Secretary the authority to make a DRG subject to the postacute care transfer policy based on a high volume of discharges to postacute care facilities and a disproportionate use of postacute care services, we believe these DRGs have characteristics that make them appropriate for inclusion in the postacute care transfer policy.
As a result of our analysis, we believe that it is appropriate to consider major revisions to the criteria for including a DRG within the postacute care transfer policy. First, our analysis calls into question the requirement that a DRG experience a decline in the geometric mean length of stay over the most recent 5-year period. Our findings that some DRGs with increases in postacute care utilization during the past several years have also experienced increases in geometric mean length of stay indicate that this criterion is no longer effective to identify those DRGs that should be subject to the postacute care transfer policy. In addition, our findings about the number of DRGs with relatively high volumes (at least 2,000 cases) and relatively high proportions (at least 20 percent) of postacute care utilization suggest that we should revise the requirement that a DRG have at least 14,000 total postacute care transfer cases to be included within the postacute care transfer policy.
Our analysis does confirm that it is appropriate to maintain the requirement that a DRG must have a geometric mean length of stay of at least 3.0 days in order to be included within the postacute care transfer policy. We believe that this policy should be retained because, under the transfer payment methodology, hospitals receive the entire payment for cases in these DRGs in the first 2 days of the stay. Lowering the limit below 3.0 days would, therefore, have no effect on payment for DRGs with geometric mean lengths-of-stay in this range. For the reasons discussed in the May 19, 2003 proposed rule (68 FR 27199) and because it is a common characteristic of DRGs with a large number of cases discharged to postacute care, we also continue to believe that it is appropriate to retain the criterion that at least 10 percent of all cases that are transferred to postacure care should be short-stay cases where the patient is transferred before the geometric mean length of stay for the DRG. We also continue to believe that both DRGs in a CC/non-CC pair should be subject to the postacute care transfer policy if one of the DRGs meets the criteria for inclusion. By including both DRGs in a CC/non-CC pair, our policy will preclude an incentive for hospitals to code cases in ways designed to avoid triggering the application of the policy, for example, by excluding codes that would identify a complicating or comorbid condition in order to assign a case to a non-CC DRG that is not subject to the policy.
Therefore, we are considering substantial revisions to the four criteria that are currently used to determine whether a DRG qualifies for inclusion in the postacute care transfer policy. The current criteria provide that, in order to be included within the policy, a DRG must have, for both of the 2 most recent years for which data are available:
• At least 14,000 total postacute care transfer cases;
• At least 10 percent of its postacute care transfers occurring before the geometric mean length of stay;
• A geometric mean length of stay of at least 3 days;
• If a DRG is not already included in the policy, a decline in its geometric mean length of stay during the most recent 5-year period of at least 7 percent; and
• If the DRG is one of a paired set of DRGs based on the presence or absence of a comorbidity or complication, both paired DRGs are included if either one meets the first three criteria above.
As a result of our analysis, we considered two options for revising the current criteria. Option 1 is to include all DRGs within the postacute care transfer policy. This option has the advantage of providing consistent treatment of all DRGs. However, as we discussed above, our analysis tends to indicate that, at a minimum, it may be appropriate to maintain the requirement that a DRG must have a geometric mean length of stay of at least 3.0 days because, under the transfer payment methodology, hospitals receive the entire payment for these DRGs in the first 2 days of the stay. Lowering the limit below 3.0 days, would therefore have little or no effect on payment for DRGs with geometric mean lengths of stay in this range.
Option 2 that we considered is to expand the application of the postacute care transfer policy by applying the policy to any DRG that meets the following criteria:
• The DRG has at least 2,000 postacute care transfer cases;
• At least 20 percent of the cases in the DRG are discharged to postacute care;
• Out of the cases discharged to postacute care, at least 10 percent occur before the geometric mean length of stay for the DRG;.
• The DRG has a geometric mean length of stay of at least 3.0 days;
• If the DRG is one of a paired set of DRGs based on the presence or absence of a comorbidity or complication, both paired DRGs are included if either one meets the first three criteria above.
Option 2 would expand the application of the postacute care transfer policy to 223 DRGs that have both a relatively high volume and a relatively high proportion of postacute care utilization. The proposed change would also avoid applying the postacute care transfer policy to DRGs with only a small number or proportion of cases transferred to postacute care. The table below shows the DRGs that would be included in the postacute care transfer policy under this option:
We believe that the analysis that we have conducted suggest that substantial revisions to the criteria for including a DRG within the postacute care transfer policy are warranted. In this proposed rule, we are formally proposing Option 2 as presented above. However, we invite comments on both of these options and on the analysis that we have presented.
The impact section in Appendix A of this proposed rule discusses our findings on the effects of adopting Option 2. The proposed DRG relative weights included in Tables 5 and 7 of the Addendum to this proposed rule also include the effect of changing the postacute care transfer policy as described in Option 2 above. We note that if we adopt either option discussed above, or a variation based on comments submitted, we would follow procedures similar to those that are currently followed for treating cases identified as transfers in the DRG recalibration process. That is, as described in the discussion of DRG recalibration in section II.C. of the preamble to this proposed rule, additional transfer cases would be counted as a fraction of a case based on the ratio of a hospital's transfer payment under the per diem payment methodology to the full DRG payment for nontransfer cases.
Section 1886(d)(5)(J)(i) of the Act recognizes that, in some cases, a substantial portion of the cost of care is incurred in the early days of the inpatient stay. Similar to the policy for
In previous years, we determined that DRGs 209 and 211 met this cost threshold and qualified to receive this special payment methodology. Because DRG 210 is paired with DRG 211, we include payment for cases in that DRG for the same reason we include paired DRGs in the postacute care transfer policy (to eliminate any incentive to code incorrectly in order to receive higher payment for those cases). The FY 2004 MedPAR data show that DRGs 209 and 211 continue to have charges on the first day of the stay that are higher than 50 percent of the average charges in the DRGs. In addition, several of the DRGs that may be added to the postacute care transfer policy under the options that we are considering may also meet the 50 percent threshold in their average charges. We have identified those additional DRGs that are subject to the special payment methodology in Tables 5 and 7 of the Addendum to this proposed rule.
(If you choose to comment on issues in this section, please include the caption “Hospital Quality Data” at the beginning of your document.)
Section 1886(b)(3)(B)(vii) of the Act, as added by section 501(b) of Pub. L. 108-173 revised the mechanism used to update the standardized amount of payment for inpatient hospital operating costs. Specifically, the statute provides for a reduction of 0.4 percentage points to the update percentage increase (also known as the market basket update) for each of FYs 2005 through 2007 for any “subsection (d) hospital” that does not submit data on a set of 10 quality indicators established by the Secretary as of November 1, 2003. The statute also provides that any reduction will apply only to the fiscal year involved, and will not be taken into account in computing the applicable percentage increase for a subsequent fiscal year. This measure establishes an incentive for IPPS hospitals to submit data on the quality measures established by the Secretary.
We initially implemented section 1886(b)(3)(B)(vii) of the Act in the FY 2005 IPPS final rule (August 11, 2004, 69 FR 49078) in continuity with the Department's Hospital Quality Initiative as described at the CMS Web site:
In July 2003, CMS began the National Voluntary Hospital Reporting Initiative (NVHRI), now known as the Hospital Quality Alliance (HQA): Improving Care through Information. Data from this initiative have been used to populate a professional Web site providing data to healthcare professionals. This website will be followed by the development of a consumer Web site in an easy-to-use format. The consumer Web site is intended to be an important tool for individuals to use in making decisions about health care options. This information will assist beneficiaries by providing comparison information for consumers who need to select a hospital. It will also serve as a way to encourage accountability of hospitals for the care they provide to patients.
The 10 measures that were employed in this voluntary initiative as of November 1, 2003, are:
These measures have been endorsed by the National Quality Forum (NQF) and are a subset of the same measures currently collected for the JCAHO by its accredited hospitals. The Secretary adopted collection of data on these 10 quality measures in order to: (1) provide useful and valid information about hospital quality to the public; (2) provide hospitals with a sense of predictability about public reporting expectations; (3) begin to standardize data and data collection mechanisms; and (4) foster hospital quality improvement. Many hospitals are currently participating in the National Voluntary Hospital Reporting Initiative (NVHRI), and are submitting data to the QIO Clinical Warehouse for that purpose.
Over the next several years, hospitals are encouraged to take steps toward the adoption of electronic medical records (EMRs) that will allow for reporting of clinical quality data from the electronic record directly to a CMS data repository. CMS intends to begin working toward creating measures specifications and a system or mechanism, or both, that will accept the data directly without requiring the transfer of the raw data into an XML file as currently exists. The Department is presently working cooperatively with other Federal agencies in the development of Federal health architecture data standards. CMS encourages hospitals that are developing systems to conform them to both industry standards and the Federal health architecture data standards, and to ensure that they would capture the data necessary for quality measures. Ideally, such systems will also provide point-of-care decision support that enables high levels of performance on the measures. Hospitals using EMRs to produce data on quality measures will be held to the same performance expectations as hospitals not using EMRs. We are exploring requirements for the submission of electronically produced data and other options to encourage the submission of such data, and invite comments on this issue.
The procedures for participating in the Reporting Hospital Quality Data for the Annual Payment Update (RHQDAPU) program created in accordance with section 501(b) of Pub. L. 108-173 can be found on the QualityNet Exchange at the Web site:
• The hospital must identify a QualityNet Exchange Administrator who follows the registration process and submits the information through the QIO. This must be done regardless of whether the hospital uses a vendor for transmission of data.
• All participants must first register with the QualityNet Exchange, regardless of the method used for data submission. If a hospital is currently participating in the voluntary reporting initiative, re-registration on QualityNet Exchange is unnecessary. However, the hospital must complete the Reporting Hospital Quality Data for Annual Payment Update Notice of Participation form. All hospitals must send this form to their QIOs.
• The hospital must collect data for all 10 measures and submit the data to the QIO Clinical Warehouse either using the CMS Abstraction & Reporting Tool (CART), the JCAHO Oryx Core Measures Performance Measurement System (PMS), or another third-party vendor that has met the measurement specification requirements for data transmission to QualityNet Exchange. The QIO Clinical Warehouse will submit the data to CMS on behalf of the hospitals. The submission will be done through QualityNet Exchange, which is a secure site that voluntarily meets or exceeds all current Health Insurance Portability and Accountability Act (HIPAA) requirements, while maintaining QIO confidentiality as required under the relevant regulations and statutes. The information in the Clinical Warehouse is considered QIO data and, therefore, is subject to the stringent QIO confidentiality regulations in 42 CFR Part 480.
For the first year of the program, FY 2005, hospitals were required to begin the submission of data by July 1, 2004, under the provisions of section 1886(b)(3)(B)(vii)(II) of the Act, as added by section 501(b) of Pub. L. 108-173. Because section 501(b) of Pub. L. 108-173 granted a 30-day grace period for submission of data for purposes of the FY 2005 update, hospitals were given until August 1, 2004, for completed submissions to be successfully accepted into the QIO Clinical Warehouse. Hospitals were required to submit data for the first calendar quarter of 2004. We received data from over 98 percent of the eligible hospitals.
For FY 2006, we are proposing that hospitals must continuously submit the required 10 measures each quarter according to the schedule found on the Web site at
New hospitals should begin collecting and reporting data immediately and complete the registration requirements for the RHQDAPU. New hospitals will be held to the same standard as established facilities when determining the expected number of discharges for the calendar quarters covered for each fiscal year. The annual payment updates would be based on the successful submission of data to CMS via the QIO Clinical Warehouse by the established deadlines.
For FY 2005, hospitals could withdraw from RHQDAPU at any time up to August 1, 2004. Hospitals withdrawing from the program did not receive the full market basket update and, instead, received a reduction of 0.4 percentage points in their update. By law, a hospital's actions each year will not affect its update in a subsequent year. Therefore, a hospital must meet the requirements for RHQDAPU each year the program is in effect. Failure of a hospital to receive the full update in one year does not affect its update in a succeeding year.
For the first year, FY 2005, there were no chart-audit validation criteria in place. Based upon our experience from the FY 2005 submissions, and upon our requirement for reliable and valid data, we are proposing to place the following additional requirements on hospitals for the data for the FY 2006 payment update. These requirements, as well as additional information on validation requirements, will be placed on QualityNet Exchange.
• The hospital must have passed our validation requirement of a minimum of 80 percent reliability, based upon our chart-audit validation process, for the third quarter data of calendar year 2004 in order to receive the full market basket update in FY 2006. These data were due to the clinical warehouse by February 15, 2005. We will use appropriate confidence intervals to determine if a hospital has achieved an 80-percent reliability. The use of confidence intervals will allow us to establish an appropriate range below the 80-percent reliability threshold that will demonstrate a sufficient level of validity to allow the data to still be considered valid. We will estimate the percent reliability based upon a review of five charts and then calculate the upper 95 percent confidence limit for that estimate. If this upper limit is above the required 80 percent, the hospital data will be considered validated. We are proposing to use the design specific estimate of the variance for the confidence interval calculation, which, in this case, is a single stage cluster sample, with unequal cluster sizes. (For reference, see Cochran, William G. (1977) Sampling Techniques, John Wiley & Sons, New York, chapter 3, section 3.12.)
We will use a two-step process to determine if a hospital is submitting valid data. At the first step, we will calculate the percent agreement for all of the variables submitted in all of the charts, whether or not they are related to the 10 measures. If a hospital falls below the 80 percent cutoff, we will then restrict the comparison to those variables associated with the 10 measures required under section 501(b) of Pub. L. 108-173. We will recalculate the percent agreement and the estimated 95 percent confidence interval and again compare to the 80 percent cutoff
Under the standard appeal process, all hospitals are given the detailed results of the Clinical Data Abstraction Center (CDAC) reabstraction along with their estimated percent reliability and the upper bound of the 95 percent confidence interval. If a hospital disagrees with any of the abstraction results from the CDAC, the hospital has 10 days to appeal these results to their QIO. The QIO will review the appeal with the hospital and, if the QIO review agrees with the hospitals original abstraction, the QIO will forward the appeal to the CDAC for a final determination. If the QIO does not agree with the hospital's appeal, then the original results stand. When the CDAC has made its final determination, the new results will be provided to the hospital through the usual processes and the validation described previously will be repeated. This process is described in detail at the following Web site:
We believe we have adopted the most suitable statistical tests for the hospital data we are trying to validate, but we invite public comments on this and any other approaches hospitals choose to comment on. We are particularly interested in comments from hospitals on the initial starting points for the passing threshold, the confidence interval established, and the sampling approach. Because we will be receiving data each quarter from hospitals, our information on the sampling methodology will improve with each quarter's submissions. We will analyze this information to determine if any changes in our methodology are required. We will make any necessary revisions to the sampling methodology and the statistical approach through manual issuances and other guidance to hospitals.
• The hospital must have two consecutive quarters of publishable data. The information collected by CMS through this rule will be displayed for public viewing on the Internet. Prior to this display, hospitals are permitted to preview their information as we have it recorded. In our previous experience, a number of hospitals requested that this information not be displayed due to errors in the submitted data that were not of the sort that could be detected by the normal edit and consistency checks. We acquiesced to these requests in the public interest and because of our own desire to present correct data. However, we still believe that the hospital bears the responsibility of submitting correct data that can serve as valid and reliable information. Therefore, in order to receive the full market basket update for IPPS, we are proposing to establish a requirement for two consecutive quarters of publishable data. We published the first quarter of calendar year 2004 data in November 2004. The first two quarters of calendar year 2004 data were published in March 2005. Our plans are to publish the first three quarters of calendar year 2004 in August 2005. For the FY 2006 update, we will expect that all hospitals receiving the full market basket update for FY 2006 to have published data for all of the required 10 measures for both the March and August 2005 publications. Allowances would be made for hospitals that do not treat a particular condition and for new hospitals that have not had the opportunity to provide the required data.
(If you choose to comment on issues in this section, please include the caption “Sole Community Hospitals and Medicare Dependent Hospitals” at the beginning of your comments.)
Under the IPPS, special payment protections are provided to a sole community hospital (SCH). Section 1886(d)(5)(D)(iii) of the Act defines an SCH as a hospital that, by reason of factors such as isolated location, weather conditions, travel conditions, absence of other like hospitals (as determined by the Secretary), or historical designation by the Secretary as an essential access community hospital, is the sole source of inpatient hospital services reasonably available to Medicare beneficiaries. The regulations that set forth the criteria that a hospital must meet to be classified as an SCH are located in § 412.92 of the regulations. Although SCHs and MDHs are paid under a special payment methodology, they are hospitals that are paid under section 1886(d) of the Act. Like all IPPS hospitals paid under section 1886(d) of the Act, SCHs and MDHs are paid for their discharges based on the DRG weights calculated under section 1886(d)(4) of the Act.
Effective with hospital cost reporting periods beginning on or after October 1, 2000, section 1886(d)(5)(D)(i) of the Act (as amended by section 6003(e) of Pub. L. 101-239) and section 1886(b)(3)(I) of the Act (as added by section 405 of Pub. L. 106-113 and further amended by section 213 of Pub. L. 106-554), provide that SCHs are paid based on whichever of the following rates yields the greatest aggregate payment to the hospital for the cost reporting period:
• The Federal rate applicable to the hospital;
• 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.
For purposes of payment to SCHs for which the FY 1996 hospital-specific rate yields the greatest aggregate payment, payments for discharges during FYs 2001, 2002, and 2003 were based on a
For each cost reporting period, the fiscal intermediary determines which of the payment options will yield the highest rate of payment. Payments are automatically made at the highest rate using the best data available at the time the fiscal intermediary makes the determination. However, it may not be possible for the fiscal intermediary to determine in advance precisely which of the rates will yield the highest payment by year's end. In many instances, it is not possible to forecast the outlier payments, the amount of the DSH adjustment, or the IME adjustment, all of which are applicable only to payments based on the Federal rate. The fiscal intermediary makes a final adjustment at the close of the cost reporting period to determine precisely which of the payment rates would yield the highest payment to the hospital.
If a hospital disagrees with the fiscal intermediary's determination regarding the final amount of program payment to which it is entitled, it has the right to appeal the fiscal intermediary's decision in accordance with the procedures set forth in subpart R of part 400, which concern provider payment determinations and appeals.
Under section 1886(d)(5)(G) of the Act, Medicare dependent hospitals (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. The regulations that set forth the criteria that a hospital must meet to be classified as an MDH are located in § 412.108.
Under section 1886(d)(4)(C)(i) of the Act, beginning in FY 1988 and for each fiscal year thereafter, the Secretary is required to adjust the DRG classifications and weighting factors established under sections 1886(d)(4)(A) and (d)(4)(B) of the Act to reflect changes in treatment patterns, technology, and other factors that may change the use of hospital resources. For discharges beginning in FY 1991, section 1886(d)(4)(C)(iii) of the Act requires the Secretary to ensure that adjustments to DRG classifications and weighting factors result in aggregate DRG payments that are budget neutral (not greater or less than the aggregate payments without the adjustments). In addition, section 1886(d)(3)(E) of the Act requires the Secretary to update the hospital wage index annually in a manner that does not affect aggregate payments to hospitals under section 1886(d) of the Act.
As discussed in the May 9, 1990 IPPS proposed rule (55 FR 19466), we normalize the proposed 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. While this adjustment is intended to ensure that recalibration does not affect total payments to hospitals under section 1886(d) of the Act, our analysis has indicated that the normalization adjustment does not achieve budget neutrality with respect to aggregate payments to hospitals under section 1886(d) of the Act. In order to comply with the requirement of section 1886(d)(4)(C)(iii) of the Act that the DRG reclassification changes and recalibration of the relative weights be budget neutral and the requirement of section 1886(d)(3)(E) of the Act that the updated wage index be implemented in a budget neutral manner, we compare the estimated aggregate payments using the current year's relative weights and wage index factors to aggregate payments using the prior year's weights and factors. Based on this comparison, we compute a budget neutrality adjustment factor. This budget neutrality adjustment factor is then applied to the standardized per discharge payment amount. Beginning in FY 1994, in applying the current year's budget neutrality adjustment factor to both the standard Federal rate and hospital-specific rates, we do not remove the prior years' budget neutrality adjustment factors because estimated aggregate payments after the changes in the DRG relative weights and wage index factors must equal estimated aggregate payments prior to the changes. If we removed the prior year adjustment, we would not satisfy this condition. (58 FR 30269)
We are bound by the Act to ensure that aggregate payments to hospitals under section 1886(d) of the Act are projected to neither increase nor decrease as a result of the annual updates to the DRG classifications and weighting factors and for the updated wage indices. However, we have broad authority under the statute to determine the method for implementing budget neutrality. We have maintained since 1991 that the budget neutrality adjustment is applied, as described above, to all hospitals paid under section 1886(d) of the Act, including those that are paid based on a hospital-specific rate. Thus, the budget neutrality factor applies to payments to SCHs and MDHs.
Hospitals that are paid under section 1886(d) of the Act based on a hospital-specific rate are subject to the DRG reclassification and recalibration factor component of the budget neutrality adjustment because, as IPPS hospitals, they are paid based on DRGs. As described above, changes in DRG relative weights from one year to the next affect aggregate SCH and MDH payments, which in turn affect total Medicare payments to hospitals under section 1886(d) of the Act. Because SCHs and MDHs are paid under section 1886(d) of the Act, we believe their DRG payments should be factored into the DRG reclassification and recalibration factor component of the budget neutrality adjustment to ensure that recalibration does not affect total payments to hospitals under section 1886(d) of the Act. Therefore, we continue to believe it is appropriate to apply the DRG reclassification and recalibration factor component of the budget neutrality adjustment to SCHs and MDHs. Furthermore, consistent with the requirement of section 1886(d)(4)(C)(iii) of the Act that DRG reclassification changes and recalibration of relative weights be budget neutral, we continue to believe it is appropriate to apply this adjustment without removing the previous year's adjustment factor.
In the May 9, 1990 proposed rule (55 FR 19466), we discussed the rationale behind our decision to apply the wage index portion of the budget neutrality adjustment factors to hospitals that are paid under section 1886(d) of the Act based on a hospital-specific rate. We described how, even though the wage index is only applicable to those hospitals that are paid based on the Federal rate, the changes in wage index can cause changes in the payment basis for some SCHs, and MDHs. That is, depending on the size of the increase in their wage index values, some hospitals that had been paid based on the hospital-specific rate could now be paid based on the Federal rate when the wage index-adjusted Federal rate exceeds the hospital-specific rate. In some instances, hospitals that had previously been paid based on the Federal rate may be paid based on the hospital-specific rate if the Federal rate is adjusted by a lower wage
Concerns have been raised that hospitals under section 1886(d) of the Act whose reimbursement is based on a hospital-specific rate should not be subject to the wage index component of the budget neutrality adjustment. Hospital-specific rates reflect the effects of hospitals' area wage levels and, therefore, are not adjusted by an area wage index. Accordingly, the concern is that a budget neutrality factor for changes in the wage index should not be applied to hospitals that are paid based on a hospital-specific rate. In addition, it has been suggested that the budget neutrality adjustment that CMS applies to hospitals paid on a hospital-specific rate should be similar to the budget neutrality adjustment made to hospitals in Puerto Rico. Hospitals in Puerto Rico that are paid under the IPPS are paid based on a blend of the national prospective payment rate and the Puerto Rico-specific prospective payment rate (42 CFR 412.212). Beginning in FY 1991, the Puerto Rico-specific standardized amount became subject to a budget neutrality adjustment. This budget neutrality adjustment included both the DRG reclassification and recalibration factor component and the wage index component. However, beginning in FY 1998, the Puerto Rico-specific rate has been subject only to the DRG reclassification and recalibration factor component of the budget neutrality adjustment (62 FR 46038) and not to the wage index component of the budget neutrality adjustment. In other words, beginning in FY 1998, the budget neutrality adjustment for the Puerto Rico-specific rate reflects only the DRG reclassification and recalibration factor component. This adjustment is computed, as described above, for all hospitals paid under section 1886(d) of the Act, without removing the previous year's budget neutrality adjustment.
We have considered the concern that it is inappropriate to apply a budget neutrality factor that includes a component for changes in the wage index to a hospital with a payment rate that is not adjusted by a wage index adjustment. In cases in which a hospital's payments are ultimately based on a hospital-specific rate, that portion of the payment is not adjusted by a wage index. We believe that our current policy is valid, for the reasons indicated above and in previous rulemaking documents, but we recognize that there are also valid grounds to review the regulations and consider other approaches. Accordingly, we are revisiting this policy. After further consideration of these issues, we are proposing to remove the wage index component from the budget neutrality adjustment applied to the hospital-specific rate for hospitals paid under section 1886(d) of the Act. The DRG reclassification and recalibration factor component of the budget neutrality adjustment would still apply to these hospitals, as payments to SCHs and MDHs are based on DRGs and affect total Medicare payments to hospitals under section 1886(d) of the Act. In applying this budget neutrality adjustment factor, which would include only the DRG reclassification and recalibration factor component, to the hospital-specific rate, we would not remove the prior years' budget neutrality adjustment factors. This would satisfy the statutory requirement that estimated aggregate payments after the changes in the DRG relative weights equal estimated aggregate payments prior to the changes. We are proposing that the wage index portion of the budget neutrality adjustment would not be applied to hospital-specific amounts, as these amounts are not adjusted by an area wage index. While this may result in a slightly higher budget neutrality adjustment applied to all other IPPS hospitals, because these hospitals actually are paid based on the revised wage indices and are affected by wage index changes, we believe this is appropriate. In addition, we note that in FY 1990 when this policy was first discussed, we did not calculate a budget neutrality factor that reflected only the DRG changes. Because we now calculate such a budget neutrality factor for Puerto Rico hospitals, it would not be administratively burdensome to apply the same budget neutrality factor to SCHs and MDHs.
We are proposing to add a new paragraph (f) to § 412.73, a new paragraph (i) to § 412.75, and a new paragraph (j) to § 412.77 relating to the computation of the hospital-specific rate to clarify our longstanding policy that CMS makes an adjustment to the hospital-specific rate to ensure that changes to the DRG reclassifications and recalibrations of the DRG relative weights are made in a manner so that aggregate payments to hospitals under section 1886(d) of the Act are not affected, and that this adjustment is made without removing the budget neutrality adjustment for the prior year. These provisions are cross-referenced in § 412.92 for SCHs and § 412.108 for MDHs for purposes of computing the hospital-specific rates for these hospitals. This proposed regulatory text will reflect the proposed changes to the way CMS applies the budget neutrality adjustment to hospitals paid under section 1886(d) of the Act based on the hospital-specific rate. Specifically, it would indicate that the budget neutrality adjustment made to hospitals paid under section 1886(d) of the Act based on the hospital-specific rate will only account for the DRG reclassification and recallibration factor component. The budget neutrality adjustment would no longer include the wage index factor component.
In the September 4, 1990 IPPS final rule (55 FR 36056), we made changes to the regulations at § 412.92 to incorporate the provisions of section 6003(e) of Pub. L. 101-239. Section 6003(e) of Pub. L. 101-239 provided for a permanent payment methodology for SCHs that recognized distortions in operating costs in years subsequent to the implementation of the IPPS and provided for opportunity for payment based on a new base year. As a result of this legislation, we deleted from the regulations a special provision that we had included under § 412.92(g) that provided for a payment adjustment to compensate SCHs reasonably for the increased operating costs resulting from the addition of new services or facilities.
We have discovered that, in making the changes to § 412.92 in the September 4, 1990 final rule to remove paragraph (g), we inadvertently failed to make a conforming change to paragraph (d)(3) that references the provisions of paragraph (g) relating to a payment adjustment for significant increases in a SCH's operating costs. In this proposed rule, we are proposing to make this technical correction by revising paragraph (d)(3).
(If you choose to comment on issues in this section, please include the
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 standardized amount rather than the rural standardized amount. Although the other urban and rural standardized amounts are the same for discharges occurring on or after October 1, 1994, rural referral centers continue to receive special treatment under both the DSH payment adjustment and the criteria for geographic reclassification.
Section 402 of Pub. L. 108-173 raised the DSH adjustment for other rural hospitals with less than 500 beds and rural referral centers. Other rural hospitals with less than 500 beds are subject to a 12-percent cap on DSH payments. Rural referral centers are not subject to the 12.0 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.
Section 4202(b) of Pub. L. 105-33 states, in part, “[a]ny hospital classified as a rural referral center by the Secretary * * * for fiscal year 1991 shall be classified as such a rural referral center for fiscal year 1998 and each subsequent year.” In the August 29, 1997 final rule with comment period (62 FR 45999), we also reinstated rural referral center status for all hospitals that lost the status due to triennial review or MGCRB reclassification, but not to hospitals that lost rural referral center status because they were now urban for all purposes because of the OMB designation of their geographic area as urban. However, subsequently, in the August 1, 2000 final rule (65 FR 47089), we indicated that we were revisiting that decision. Specifically, we stated that we would permit hospitals that previously qualified as a rural referral center and lost their status due to OMB redesignation of the county in which they are located from rural to urban to be reinstated as a rural referral center. Otherwise, a hospital seeking rural referral center status must satisfy the applicable criteria. For FYs 1984 through 2004, we used the definitions of “urban” and “rural” in § 412.63. For FY 2005 and subsequent years, the revised definitions of “urban” and “rural” in § 412.64 apply.
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 median case-mix index value for FY 2006 includes all urban hospitals nationwide, and the proposed regional values for FY 2006 are the median values of urban hospitals within each census region, excluding those hospitals with approved teaching programs (that is, those hospitals receiving indirect medical education payments as provided in § 412.105). These proposed values are based on discharges occurring during FY 2004 (October 1, 2003 through September 30, 2004) and include bills posted to CMS' records through December 2004.
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, 2005, rural hospitals with fewer than 275 beds must have a case-mix index value for FY 2004 that is at least—
• 1.3659; 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 2004 MedPAR file, which will contain data from additional bills through March 31, 2005.
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), which is the latest available cost report data we have at this time.
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, 2005, 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.
We reiterate that if an osteopathic hospital is to qualify for rural referral center status for cost reporting periods beginning on or after October 1, 2005, the hospital would be required to have at least 3,000 discharges for its cost reporting period that began during FY 2002.
In the FY 1998 IPPS final rule (62 FR 46028), we removed paragraph (f) from § 412.96. Paragraph (f) was removed when the requirement for triennial reviews of rural referral centers was terminated (62 FR 45998 through 45600, 46028 through 46029). However, we inadvertently failed to address all of the related cross-references to paragraph (f) in the entire § 412.96. Therefore, we are proposing to revise § 412.96 to remove paragraphs (h)(4) and (i)(4), consistent with the removal of paragraph (f).
(If you choose to comment on issues in this section, please include the caption “Low-Volume Hospital Payment Adjustment” at the beginning of your comment.)
Section 1886(d)(12) of the Act, as added by section 406 of Pub. L. 108-173, provides for a payment adjustment to account for the higher costs per discharge of low-volume hospitals under the IPPS. Section 1886(d)(12)(C)(i) of the Act defines a low-volume hospital as a “subsection (d) hospital * * * that the Secretary determines is located more than 25 road miles from another subsection (d) hospital and that has less than 800 discharges during the fiscal year.” Section 1886(d)(12)(C)(ii) of the Act further stipulates that the term “discharge” refers to total discharges, and not merely to Medicare discharges. Specifically, the term refers to the “inpatient acute care discharge of an individual regardless of whether the individual is entitled to benefits under part A.” Finally, the provision requires the Secretary to determine an applicable percentage increase for these low-volume hospitals based on the “empirical relationship” between “the standardized cost-per-case for such hospitals and the total number of discharges of these hospitals and the amount of the additional incremental costs (if any) that are associated with such number of discharges.” The statute thus mandates the Secretary to develop an empirically justifiable adjustment based on the relationship between costs and discharges for these low-volume hospitals. The statute also limits the adjustment to no more than 25 percent.
According to the analysis conducted for the FY 2005 IPPS final rule (69 FR 49099 through 49102), a 25 percent low-volume adjustment to all qualifying hospitals with less than 200 discharges was found to be most consistent with the statutory requirement to provide relief to low-volume hospitals where there is empirical evidence that higher incremental costs are associated with low numbers of total discharges. However, we acknowledged that the empirical evidence did not provide robust support for that conclusion and indicated that we would reexamine the empirical evidence for the FY 2006 IPPS final rule with the intention of modifying or even eliminating the adjustment if the empirical evidence indicates that it is appropriate to do so.
In the FY 2005 IPPS final rule (69 FR 49102), we indicated that our analysis showed that there are fewer than 100 hospitals with less than 200 total discharges. At that time, we were unable to determine how many of these hospitals also meet the requirement that a low-volume hospital be more than 25 road miles from the nearest IPPS hospital in order to qualify for the adjustment. Our data systems currently indicate that 10 hospitals are receiving the low-volume adjustment.
As indicated in the FY 2005 IPPS final rule, we have now conducted a more detailed multivariate analysis on the empirical basis for a low-volume adjustment for FY 2006. In order to further evaluate the need for a proposed change in the development of the low-volume adjustment, we replicated much of the analysis conducted for the FY 2005 IPPS final rule, using updated data. We again empirically modeled the relationship between hospital costs-per-case and total discharges in several ways. We used both regression analysis and straight-line statistics to examine this relationship.
We conducted three different regression analyses. For all of the analyses, we simulated the FY 2005 cost environment by inflating FY 2002 and FY 2003 hospital cost report data to FY 2005 using the full hospital market basket updates. We note that, at the time of this analysis, we only had cost report data from FY 2003 for approximately 57 percent of the IPPS hospitals. Therefore, we have placed a greater weight on the results from the simulated FY 2002 cost data, which are significantly more complete. We again simulated the FY 2005 payment environment because payments have undergone several changes between FY 2002 and FY 2003 and FY 2005, making the results of the earlier data less relevant. Furthermore, many of these policy changes may already have helped increase payments to low-volume hospitals. We were unable to simulate the FY 2006 environment because payment factors for FY 2006 were not available at the time of our analysis.
In the first regression analysis, we used a dummy variable approach to model the relationship between standardized costs and total discharges. Using FY 2002 cost data, we found some evidence for a low-volume payment adjustment for hospitals with up to 199 discharges, consistent with our current policy. Using FY 2003 cost data, the empirical evidence only supported an adjustment for hospitals with up to 99 total discharges.
We also used a descriptive analysis approach to understand empirically the relationship between costs and total discharges. We grouped all hospitals by their total discharges and compared the mean Medicare per discharge payment to Medicare per discharge cost ratios. Hospitals with less than 800 total discharges were split into 24 cohorts based on increments of 25 discharges. When using the FY 2002 cost report data, the mean payment-to-cost ratios were below one (implying that Medicare per discharge costs exceeded Medicare per discharge payments) for all cohorts of hospitals with less than 200 discharges, after which the ratio was consistently above one. When using the FY 2003 cost report data, the mean payment-to-cost ratios were below one for all but two cohorts up to those with less than 175 total discharges, after which the ratio was consistently above one. No obvious increasing trend in the ratios, from which it would be possible to infer a formula to generate adjustments for hospitals based upon the number of discharges, was evident. Because more than 70 percent of hospitals with less than 200 discharges had ratios below 0.80, this analysis supports applying the highest payment adjustment to all providers with less than 200 discharges that are eligible for the low-volume adjustment.
The second regression analysis modeled the Medicare per discharge cost to Medicare per discharge payment ratio as a function of total discharges. The cost-to-payment ratio model more explicitly accounts for the relative values of per discharge costs and per discharge payments. These models provided some evidence for a statistically significant negative relationship between the cost-to-payment ratio and total discharges. However, that result was limited to FY
The third regression analysis employed per discharge costs minus per discharge payments as the dependent variable and total discharges as an explanatory variable. The results of this analysis were similar to the other regression analyses: some evidence was provided for an adjustment with the FY 2002 data, but not with the FY 2003 data, simulated for FY 2005. In fact, the FY 2003 data results suggest (with a positive intercept and positive coefficient on total discharges) that payments are greater than costs for all hospitals, including the low-volume hospitals.
Based upon these multivariate analyses using the FY 2002 cost report data, a case can be made that hospitals with fewer than 200 total discharges have per discharge costs that are statistically significantly higher relative to their Medicare per discharge payments in comparison to hospitals with 200 or more total discharges. Therefore, we are proposing to extend the existing low-volume adjustment for FY 2006. That is, a low-volume adjustment would again be provided for qualifying hospitals with less than 200 discharges. As noted above, the descriptive data do not reveal any pattern that could provide a formula for calculating an adjustment in relation to the number of discharges. However, the descriptive analysis of the data does indicate that, for a large majority of the hospitals with less than 200 discharges, the maximum adjustment of 25 percent would be appropriate because, for example, the payment-to-cost ratios for more than 70 percent of these hospitals are 0.80 or less. The maximum adjustment of 25 percent would still leave most of these hospitals with payment-to-cost ratios below 1.00. Because a large majority of hospitals with less than 200 discharges have payment-to-cost ratios below 1.00, we are proposing to again provide hospitals with less than 200 total discharges in the most recent submitted cost report an adjustment of 25 percent on each Medicare discharge. This policy is consistent with the existing language in § 412.101(a) and (b).
However, the initial analysis of the FY 2003 data does not seem to provide strong empirical evidence for a relationship between Medicare per discharge costs and total discharges. Therefore, we will reevaluate the appropriateness of the low-volume adjustment in the FY 2007 proposed rule.
(If you choose to comment on issues in this section, please include the caption “IME Adjustment” at the beginning of your comment.)
Section 1886(d)(5)(B) of the Act provides that prospective payment hospitals that have residents in an approved graduate medical education (GME) program receive an additional payment to reflect the higher indirect costs of teaching hospitals relative to nonteaching hospitals. The regulations regarding the calculation of this additional payment, known as the indirect medical education (IME) adjustment, are located at § 412.105. The IME adjustment to the DRG payment is based in part on the applicable IME adjustment factor. The IME adjustment factor is calculated using a hospital's ratio of residents to beds, which is represented as r, and a formula multiplier, which is represented as c, in the following equation: c × [{1 + r}
The Balanced Budget Act of 1997 (Pub. L. 105-33) established a limit on the number of allopathic and osteopathic residents that a hospital may include in its full-time equivalent (FTE) count for direct GME and IME payment purposes. Under section 1886(h)(4)(F) of the Act, a hospital's unweighted FTE count of residents may not exceed the hospital's unweighted FTE count for its most recent cost reporting period ending on or before December 31, 1996. Under section 1886(d)(5)(B)(v) of the Act, the limit on the FTE resident count for IME purposes is effective for discharges occurring on or after October 1, 1997. A similar limit is effective for direct GME purposes for cost reporting periods beginning on or after October 1, 1997.
When these provisions were enacted, hospitals reported their weighted FTE resident count for direct GME and their unweighted FTE resident count for IME on the Medicare cost report. The cost report was subsequently modified to require reporting of unweighted FTE resident counts for both direct GME and IME. However, for cost reporting periods ending on or before December 31, 1996 (the cost report on which the FTE limit is based), hospitals were not required to report unweighted FTE resident counts for direct GME purposes. Therefore, a separate data collection effort was required to obtain the unweighted FTE resident counts. The fiscal intermediaries worked with hospitals to determine the unweighted FTE resident counts for direct GME for cost reporting periods ending on or before December 31, 1996, for purposes of implementing the FTE cap.
During this process, the fiscal intermediaries did not determine IME FTE resident counts for hospitals that were excluded from the IPPS (that is, psychiatric hospitals, LTCHs, rehabilitation hospitals, children's hospitals, and cancer hospitals) because these hospitals were not paid under the IPPS and, therefore, did not receive any IME payment adjustments. Only the FTE resident data related to direct GME payments were relevant for these excluded hospitals and, therefore, only those data were collected. However, it has come to our attention that some hospitals that were excluded from the IPPS during the cost reporting period ending on or before December 31, 1996 (that is, the cost reporting period during which the hospital's FTE resident limit was established under section 1886(h)(4)(F) of the Act for purposes of direct GME payments) have either failed to continue to qualify for exclusion from the IPPS or deliberately changed their operations in a way to become subject to the IPPS and, as a result, have subsequently become subject to the IME payment adjustment provisions of the IPPS. For example, a provider that was a rehabilitation hospital during its cost reporting period ending on December 31, 1996, but no longer meets the regulatory criteria to qualify as a rehabilitation hospital would become subject to the IPPS and be able to receive IME payments. However, because no IME FTE resident count for the cost reporting period ending on or before December 31, 1996, was determined, such a hospital does not have an unweighted FTE resident limit for IME.
To address this situation, we are proposing to incorporate in the regulations (proposed § 412.105(f)(1)(xiii)) CMS' existing policy in such situations which provides for the establishment of an IME FTE cap for a hospital that was excluded from the IPPS during its base year and that subsequently became subject to the IPPS. We are clarifying and proposing to adopt into regulations our existing policy that, in such a situation, the fiscal intermediary would determine an IME FTE cap for the hospital, applicable beginning with the
While calculation of the IME FTE cap for a TEFRA hospital that converts to an IPPS hospital may require that fiscal intermediaries obtain information from cost reporting periods that are closed, allowing a fiscal intermediary to obtain this information should not be understood as allowing a fiscal intermediary to reopen closed cost reports that are beyond the normal reopening period in order to carry out the provisions of this proposed regulation.
Finally, there may be situations where the data necessary to carry out this policy are not available. For example, under this proposal, if a children's hospital converts to an IPPS hospital on July 1, 2007, the fiscal intermediary may need to determine the count of FTE residents for IME purposes training at the hospital during the most recent cost reporting period ending on or before December 31, 1996, in order to establish an IME FTE cap for the hospital, effective for discharges occurring on or after October 1, 2007. However, the count of FTE residents for IME purposes from the cost reporting period ending on or before December 31, 1996, may no longer be available, as the minimum time that hospitals are required to retain records is 5 years from the date the hospital submits the cost report. We believe this problem may not occur with sufficient frequency to warrant specific regulatory action. We are specifically soliciting comments as to whether and how hospitals believe this is a problem that needs to be addressed.
In some cases, a hospital that was previously excluded from the IPPS may become subject to the IPPS as a result of a merger between two or more hospitals where the surviving hospital is subject to the IPPS (and not creating an IPPS hospital with an excluded unit). In such cases, CMS policy is that the FTE resident cap for the surviving hospital should reflect the combined FTE resident caps for the hospitals that merged. If two or more hospitals merge after the conclusion of each hospital's base year for purposes of calculating resident FTE caps, the surviving hospital's FTE resident cap is an aggregation of the FTE resident cap for each hospital participating in the merger. When a merger involves an IPPS-excluded hospital, the base year IME FTE count for the IPPS-excluded hospital has not been determined. We are clarifying and proposing to codify in regulations our existing policy that, in such cases, the fiscal intermediary would determine an IME FTE cap for the IPPS-excluded hospital for purposes of determining the merged hospital's IME FTE cap in accordance with § 412.105(f) of the regulations. Once this cap is determined, the aggregate IME FTE cap of the surviving entity may be calculated in accordance with existing CMS policy for mergers.
We note that we would compute an IME cap for an IPPS-excluded hospital only in cases of a merger between an IPPS-excluded hospital and an acute care IPPS hospital, where the entire surviving entity is subject to the IPPS. No such IME FTE cap would be computed for an IPPS-excluded hospital in instances where an IPPS-excluded hospital and an acute care IPPS hospital agree to form a Medicare GME affiliated group for purposes of aggregating FTE resident caps. In cases where an IPPS-excluded hospital enters into a Medicare GME affiliation agreement with other IPPS hospitals, the IPPS-excluded hospital can contribute only its direct GME FTE cap to the aggregate FTE cap for the group. This is because, as long as a hospital remains excluded from the IPPS, that hospital will not have an FTE resident cap established for purposes of IME. Under no circumstances may an IPPS-excluded hospital be considered to contribute any FTE residents to a Medicare GME affiliation group for purposes of the aggregate IME FTE resident cap. IPPS-excluded hospitals do not currently, and would not under this proposed policy, have an IME FTE resident cap.
In section V.I. of this preamble, we discuss situations in which an urban hospital may become rural under a reclassification request under section 1886(d)(8)(E) of the Act. Under section 1886(d)(8)(E) of the Act, an urban hospital may file an application to be treated as being located in a rural area. Becoming rural under this provision affects only payments under section 1886(d) of the Act. If the hospital is a teaching hospital, the hospital could not receive adjustments to its direct GME FTE cap because payments for direct GME are made under section 1886(h) of the Act and the section 1886(d)(8)(E) reclassifications affect only the payments that are made under section 1886(d) of the Act. Therefore, an urban hospital that reclassifies as rural under this provision may receive the 130-percent adjustment to its IME FTE resident cap. In addition, its IME FTE cap may be adjusted for any new programs (similar to a hospital that is actually located in an area designated as rural) under section 1886(d)(5)(B)(v) of the Act, as amended by section 407 of Pub. L. 106-113 (BBRA).
An urban hospital treated as rural under section 1886(d)(8)(E) of the Act may subsequently withdraw its election and return to its urban status under the regulations at § 412.103. We are proposing that, effective with discharges occurring on or after October 1, 2005, hospitals that rescind their section 1886(d)(8)(E) reclassifications and return to being urban would not be eligible for permanent increases in their IME caps. Rather, any adjustments the hospitals received to their IME caps due to their rural status would be forfeited upon returning to urban status. Although we read the relevant IME FTE cap provisions in section 1886(d)(5)(B) of the Act as effecting a permanent increase to the FTE cap, we believe we have the statutory authority under section 1886(d)(5)(I) of the Act to make necessary adjustments to these caps that we believe are appropriate. Section 1886(d)(5)(I)(i) of the Act grants the Secretary authority to provide by regulation for “such other exceptions and adjustments to such payment amounts under this subsection as the Secretary deems appropriate.” We believe it is appropriate that a section 1886(d)(8)(E) hospital forfeit the adjustments it received solely due to its reclassification to rural status when it returns to being urban. Otherwise, urban hospitals might reclassify to rural areas under section 1886(d)(8)(E) of the Act for a short period of time solely as a means of receiving an increase to their IME FTE caps. These hospitals could reclassify for as little as one year, simply in order to receive a permanent increase to their IME FTE caps. Because section 1886(d)(8)(E) hospitals have control over when they switch in and out of rural status, we believe any other policy would be subject to gaming and inappropriate usage of the section 1886(d)(8)(E) authority. In contrast, hospitals that become urban due to the OMB-revised labor area designations have no control in the matter, and therefore would not be subject to the same type of manipulation of payment rates we believe would exist with the section 1886(d)(8)(E) hospitals.
(We note that the above proposed policy would have no effect on rural track resident training programs.
For the reasons stated above, we are proposing to amend the regulations at § 412.105 by adding a new paragraph (f)(1)(xiv) to provide that a hospital that rescinds its section 1886(d)(8)(E) reclassification will forfeit any adjustments to its IME FTE cap it received due to its rural status. Thus, for example, a hospital that reclassified as rural under section 1886(d)(8)(e) of the Act with an IME FTE cap of 10 would have received a 130 percent adjustment to its IME cap (that is, 10 FTEs × 1.3). Furthermore, if this hospital, while reclassified as rural, started a new 3-year residency program with 2 residents in each program year, its FTE cap would have been increased by an additional 6 FTEs to 19 FTEs (that is, 13 FTEs + 6 FTEs). However, once this hospital rescinds its reclassification under section 1886(d)(8)(E) of the Act to become urban again, its IME FTE cap would return to 10 FTEs (its original pre-reclassification IME FTE cap).
(If you choose to comment on issues in this section, please include the caption “DSH Adjustment Data” at the beginning of your comment.)
Section 1886(d)(5)(F) of the Act provides for additional payments to subsection (d) hospitals that serve a disproportionate share of low-income patients. The Act specifies two methods for a hospital to qualify for the Medicare disproportionate share hospital (DSH) adjustment. Under the first method, hospitals that are located in an urban area and have 100 or more beds may receive a DSH payment adjustment if the hospital can demonstrate that, during its cost reporting period, more than 30 percent of its net inpatient care revenues are derived from State and local government payments for care furnished to indigent patients. These hospitals are commonly known as “Pickle hospitals.” The second method, which is also the most commonly used method for a hospital to qualify, is based on a complex statutory formula under which payment adjustments are based on the level of the hospital's DSH patient percentage, which is the sum of two fractions: the “Medicare fraction” and the “Medicaid fraction.” The Medicare fraction is computed by dividing the number of patient days that are furnished to patients who were entitled to both Medicare Part A and Supplemental Security Income (SSI) benefits by the total number of patient days furnished to patients entitled to benefits under Medicare Part A. The Medicaid fraction is computed by dividing the number of patient days furnished to patients who, for those days, were eligible for Medicaid but were not entitled to benefits under Medicare Part A by the number of total hospital patient days in the same period.
Section 951 of Pub. L. 108-173 requires the Secretary to arrange to furnish the data necessary for hospitals to compute the number of patient days used in calculating the disproportionate patient percentages. The provision is not specific as to whether it applies to the patient day data used to determine the Medicare fraction or the Medicaid fraction. We are interpreting section 951 to require the Secretary to arrange to furnish to hospitals the data necessary to calculate both the Medicare and Medicaid fractions. With respect to both the Medicare and Medicaid fractions, we also are interpreting section 951 to require CMS to arrange to furnish the personally identifiable information that would enable a hospital to compare and verify its records, in the case of the Medicare fraction, against the CMS' records, and in the case of the Medicaid fraction, against the State Medicaid agency's records. Currently, as explained in more detail below, CMS provides the Medicare SSI days to certain hospitals that request these data. Hospitals are currently required under the regulation at § 412.106(b)(4)(iii) to provide the data adequate to prove eligibility for the Medicaid, non-Medicare days.
As indicated above, the numerator of the Medicare fraction includes the number of patient days furnished by the hospital to patients who were entitled to both Medicare Part A and SSI benefits. This number is divided by the hospital's total number of patient days furnished to patients entitled to benefits under Medicare Part A. In order to determine the numerator of this fraction for each hospital, CMS obtains a data file from the Social Security Administration (SSA). CMS matches personally identifiable information from the SSI file against its Medicare Part A entitlement information for the fiscal year to determine the number of Medicare SSI days for each hospital during each fiscal year. These data are maintained in the MedPAR Limited Data Set (LDS) as described in more detail below and discussed in a notice published on August 18, 2000 in the
In accordance with section 951 of Pub. L. 108-173, we are proposing to change the process that we use to make Medicare data used in the DSH calculation available to hospitals. Currently, as stated above, CMS calculates the Medicare fraction for each section 1886(d) hospital using data from the MedPAR LDS (as established in a notice published in the August 18, 2000
Beginning with cost reporting periods that include December 8, 2004 (within one year of the date of enactment of Pub. L. 108-173), we are proposing to furnish MedPAR LDS data for a hospital's patients eligible for both SSI and Medicare at the hospital's request, regardless of whether there is a properly pending appeal relating to DSH payments. We are proposing to make the information available for either the Federal fiscal year or, if the hospital's fiscal year differs from the Federal fiscal year, for the months included in the two Federal fiscal years that encompass the hospital's cost reporting period. Under our proposal, the hospital could use these data to calculate and verify its Medicare fraction, and to decide whether it prefers to have the fraction determined on the basis of its fiscal year rather than a Federal fiscal year. The data set made available to hospitals would be the same data set CMS uses to calculate the Medicare fractions for the Federal fiscal year.
Because we interpret section 951 to require the Secretary to arrange to furnish these data, we do not believe that it will continue to be appropriate to charge hospitals to access the data. These proposed changes would require CMS to modify the current routine use for the MedPAR LDS to reflect changes in the data provided and the circumstances under which they are made available to hospitals. In a future
The numerator of the Medicaid fraction includes hospital inpatient days that are furnished to patients who, for those days, were eligible for Medicaid but were not entitled to benefits under Medicare Part A. Under the regulation at § 412.106(b)(4)(iii), hospitals are responsible for proving Medicaid eligibility for each Medicaid patient day and verifying with the State that patients were eligible for Medicaid on the claimed days. The number of Medicaid, non-Medicare days is divided by the hospital's total number of inpatient days in the same period. Total inpatient days are reported on the Medicare cost report. (This number is also available in the hospital's own records.)
Much of the data used to calculate the Medicaid fraction of the DSH patient percentage are available to hospitals from their own records or from the States. We recognize that Medicaid State plans are only permitted to use and disclose information concerning applicants and recipients for “purposes directly connected with the administration of the [State] plan” under section 1902(a)(7) of the Act. Regulations at 42 CFR 431.302 define these purposes to include establishing eligibility (§ 431.302(a)) and determining the amount of medical assistance (§ 431.302(b)). Thus, State plans are permitted under the currently applicable statutory and regulatory provisions governing the disclosure of individually identifiable data on Medicaid applicants and recipients to provide hospitals the data needed to meet their obligation under § 412.106(b)(4)(iii) in the context of either an “eligibility inquiry” with the State plan or in order to assist the hospital, and thus the State plan, in determining the amount of medical assistance.
In the process of developing a plan for implementing section 951 with respect to the data necessary to calculate the Medicaid fraction, we asked our regional offices to report on the availability of this information to hospitals and on any problems that hospitals face in obtaining the information that they need. The information we received suggested that, in the vast majority of cases, there are established procedures for hospitals or their authorized representatives to obtain the information needed for hospitals to meet their obligation under § 412.106(b)(4)(iii) and to calculate their Medicaid fraction. There is no uniform national method for hospitals to verify Medicaid eligibility for a specific patient on a specific day. For instance, some States, such as Arizona, have secure online systems that providers may use to check eligibility information. However, in most States, providers send a list of patients to the State Medicaid office for verification. Other States, such as Hawaii, employ a third party private company to maintain the Medicaid database and run eligibility matches for providers. The information that providers submit to State plans (or third party contractors) differs among States as well. Most States require the patient's name, date of birth, gender, social security number, Medicaid identification, and admission and discharge dates. States or the third parties may respond with either “Yes/No” or with more detailed Medicaid enrollment and eligibility information such as whether or not the patient is a dual-eligible, whether the patient is enrolled in a fee-for-service or HMO plan, and under which State assistance category the individual qualified for Medicaid.
We note that we have been made aware of at least one instance in which a State is concerned about providing hospitals with the requisite eligibility data. We understand that the basis for the State's objections is section 1902(a)(7) of the Act. The State is concerned that section 1902(a)(7) of the Act prohibits the State from providing eligibility data for any purpose other than a purpose related to State plan
In addition, we believe it is reasonable to continue to place the burden of furnishing the data adequate to prove eligibility for each Medicaid patient day claimed for DSH percentage calculation purposes on hospitals because, since they have provided inpatient care to these patients for which they billed the relevant payors, including the State Medicaid plan, they will necessarily already be in possession of much of this information. We continue to believe hospitals are best situated to provide and verify Medicaid eligibility information. Although we believe the mechanisms are currently in place to enable hospitals to obtain the data necessary to calculate their Medicaid fraction of the DSH patient percentage, there is currently no mandatory requirement imposed upon State Medicaid agencies to verify eligibility for hospitals. At this point, we believe there is no need to modify the Medicaid State plan regulations to require that State plans verify Medicaid eligibility for hospitals. However, should we find that States are not voluntarily providing or verifying Medicaid eligibility information for hospitals, we will consider amending the State plan regulations to add a requirement that State plans provide certain eligibility information to hospitals.
(If you choose to comment on issues in this section, please include the caption “Geographic Reclassifications” at the beginning of your comment.)
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)). As a result of legislative changes under section 402(b) of Pub. L. 108-7, Pub. L. 108-89, and section 401 of Pub. L. 108-173, the standardized amount reclassification criterion for large urban and other areas is no longer necessary or appropriate and has been removed from our reclassification policy (69 FR 49103). We implemented this provision in the FY 2005 IPPS final rule (69 FR 49103). As a result, hospitals can request reclassification for the purposes of the wage index only and not the standardized amount. Implementing regulations in Subpart L of Part 412 (§§ 412.230 et seq.) set forth criteria and conditions for reclassifications for purposes of the wage index from rural to urban, rural to rural, or from an urban area to another urban area, with special rules for SCHs and rural referral centers.
Under section 1886(d)(8)(E) of the Act, an urban hospital may file an application to be treated as being located in a rural area if certain conditions are met. The regulations implementing this provision are located under § 412.103.
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(d)(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 2006, the MGCRB used the 3-year average hourly wages published in Table 2 of the August 11, 2004 IPPS final rule (69 FR 49295). These average hourly wages are taken from data used to calculate the wage indexes for FY 2003, FY 2004, and FY 2005, based on cost reporting periods beginning during FY 1999, FY 2000, and FY 2001, respectively.
As discussed in section III.B. of this preamble, on June 6, 2003, the OMB announced the new CBSAs, comprised of Metropolitan Statistical Areas (MSAs) and Micropolitan Statistical Areas, based on Census 2000 data. Effective October 1, 2004, for the IPPS, we implemented new labor market areas based on the CBSA definitions of MSAs. In some cases, the new CBSAs resulted in previously existing MSAs being divided into two or more separate labor market areas. In the FY 2005 IPPS final rule (69 FR 48916), we acknowledged that the implementation of the new MSAs would have a considerable impact on hospitals. Therefore, we made every effort to implement transitional provisions that would mitigate the negative effects of the new labor market areas on hospitals that request reclassification to another area for purposes of the wage index and on all hospitals.
Subsequent to the publication of the FY 2005 IPPS final rule, we became aware of a situation in which, as a result of the new labor market areas, a multicampus hospital previously located in a single MSA is now located in more than one CBSA. Under our current policy, a multicampus hospital with campuses located in the same labor market area receives a single wage index. However, if the campuses are located in more than one labor market area, payment for each discharge is determined using the wage index value for the MSA (or metropolitan division, where applicable) in which the campus of the hospital is located. In addition, the current provision set forth in section 2779F of the Medicare State Operations Manual provides that, in the case of a merger of hospitals, if the merged facilities operate as a single institution, the institution must submit a single cost report, which necessitates a single provider identification number. This provision does not differentiate between merged facilities in a single wage index area or in multiple wage index areas. As a result, the wage index data for the merged facility is reported for the entire entity on a single cost report.
The current criteria for a hospital being reclassified to another wage area by the MGCRB do not address the circumstances under which a single campus of a multicampus hospital may seek reclassification. That is, a hospital must provide data from the CMS hospital wage survey for the average hourly wage comparison that is used to support a request for reclassification. However, because a multicampus hospital is required to report data for the entire entity on a single cost report, there is no wage survey data for the individual hospital campus that can be used in a reclassification application. In an effort to remedy this situation, for FY 2007 and subsequent year reclassifications, we are proposing to allow a campus of a multicampus hospital system that wishes to seek geographic reclassification to another labor market area to report campus-specific wage data using a supplemental Form S-3 (CMS' manual version of Worksheet S-3) for purposes of the wage data comparison. These data would then constitute the appropriate wage data under § 412.232(d)(2) for purposes of comparing the hospital's wages to the wages of hospitals in the area to which it seeks reclassification as well as the area in which it is located. Before the data could be used in a reclassification application, the
For FY 2006 reclassification applications, we are proposing to allow a campus of a multicampus hospital system to use the average hourly wage data submitted for the entire multicampus hospital system as its appropriate wage data under § 412.232(d)(2). We are establishing this special rule for FY 2006 reclassifications because the deadline for submitting an application to the MGCRB was September 1, 2004, and there no longer is an opportunity to provide a Supplemental Form S-3 that allocates the wage data by individual hospital campus. This special rule will be applied only to an individual campus of a multicampus hospital system that made an application for reclassification for FY 2006 and that otherwise meets all of the reclassification criteria. We do not believe that the special rule is necessary for reclassifications for FY 2007 because the deadline for making those applications has not yet passed and a hospital seeking reclassification will be able to provide the Supplemental Form S-3 that allocates the wage data by individual hospital campus. We are proposing to apply these new criteria to geographic reclassification applications that were received by September 1, 2004, and that will take effect for FY 2006.
We are proposing to revise the regulations at § 412.230(d)(2) by redesignating paragraph (d)(2)(iii) as paragraph (d)(2)(v) and adding new paragraph (d)(2))(iii) and (d)(2)(iv) to incorporate the proposed new criteria for multicampus hospitals.
In FY 2005 IPPS final rule (69 FR 49104), we set forth, under § 412.234(a)(3)(ii), revised criteria for urban hospitals to be reclassified as a group. After the publication of the final rule, we became aware that portions of our policy discussion with respect to the implementing decision were inadvertently omitted. This policy was corrected in the October 7, 2004, correction to the final rule (69 FR 60248). The correction specified that “hospitals located in counties that are in the same Combined Statistical Area (under the MSA definitions announced by the OMB on June 6, 2003); or in the same Consolidated Metropolitan Statistical Area (CMSA) (under the standards published by the OMB on March 30, 1990) as the urban area to which they seek redesignation qualify as meeting the proximity requirement for reclassification to the urban area to which they seek redesignation.”
In making the determination to revise our urban group reclassification policy, we took into consideration the magnitude of the changes that would have resulted from our adoption of the new labor market areas. The resulting policy was intended to preserve the reclassification opportunities for urban county groups; in other words, an eligible urban county group would have to meet either the CSA or CMSA criteria, but not both to be eligible for consideration.
As a result of adopting the new labor market area definitions, we reexamined the appropriateness of the FY 2005 changes with emphasis on determining whether including “* * * or in the same Consolidated Metropolitan Statistical Area (CMSA) (under the standards published by the OMB on March 30, 1990)” as a qualifying criterion, is necessary or consistent with our plans to fully implement the new labor area market definitions.
Based on our experiences now that the new labor market areas are in effect and since we revised the urban county group regulations, we no longer think it is necessary to retain use of a 1990-based standard as a criterion for determining whether an urban county group is eligible for reclassification. We believe it is reasonable to use the area definitions that are based on the most recent statistics; in other words, the CSA standard. Therefore, we are proposing to delete § 412.234(a)(3)(ii) to remove reference to the CMSA eligibility criterion. Beginning with FY 2006, we are proposing to require that hospitals must be located in counties that are in the same Combined Statistical Area (under the MSA definitions announced by the OMB on June 6, 2003) as the urban area to which they seek redesignation to qualify as meeting the proximity requirement for reclassification to the urban area to which they seek redesignation. We believe that this proposed change would improve the overall consistency of our policies by using a single labor market area definition for all aspects of the wage index and reclassification.
Under section 1886(d)(8)(E) of the Act, certain urban hospitals may file an application for reclassification as rural if the hospital meets certain criteria. One of these criteria is that the hospital is located in a rural census tract of a CBSA, as determined under the most recent version of the Goldsmith Modification as determined by the Office of Rural Health Policy. This provision is implemented in our regulations at § 412.103(a)(1).
The original Goldsmith Modification was developed using data from the 1980 census. In order to more accurately reflect current demographic and geographic characteristics of the Nation, the Office of Rural Health Policy, in partnership with the Department of Agriculture's Economic Research Service and the University of Washington, has developed the Rural-Urban Commuting Area codes (RUCAs) (69 FR 47518 through 47529, August 5, 2004). Rather than being limited to large area metropolitan counties (LAMCs), RUCAs use urbanization, population density, and daily commuting data to categorize every census tract in the country. RUCAs are the updated version of the Goldsmith Modification and are used to identify rural census tracts in all metropolitan counties.
We are proposing to update the Medicare regulations at § 412.103(a)(1) to incorporate this change in the identification of rural census tracts. We are also proposing to update the website and the agency location at which the RUCA codes are accessible.
In the FY 2005 IPPS final rule, in conjunction with changes made by various sections of Pub. L. 108-173 and changes in the OMB standards for defining labor market areas, we established a new § 412.64 governing rules for establishing Federal rates for inpatient operating costs for FY 2005 and subsequent years. In this new section, we included definitions of “urban” and “rural” for the purpose of determining the geographic location or classification of hospitals under the IPPS. These definitions were previous located in § 412.63(b), applicable to FYs 1985 through 2004, and in § 412.62(f), applicable to FY 1984. References to the definitions under § 412.62(f) and § 412.63(b), appear throughout 42 CFR Chapter IV. However, when we finalized the provisions of § 412.64, we inadvertently omitted updating some of these cross-references to reflect the change in the location of the two definitions for FYs 2005 and subsequent years. We are proposing to change the cross-references to the definitions of “urban” and “rural” to reflect their current locations in Subpart D of Part 412, as applicable.
(If you choose to comment on issues in this section, please include the caption “Graduate Medical Education” at the beginning of your comment.)
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 existing §§ 413.75 through 413.83, establishes a methodology for determining payments to hospitals for the costs of approved graduate medical education (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 beginning between October 1, 1983, through September 30, 1984). Medicare direct GME payments are calculated by multiplying the PRA times the weighted number of full-time equivalent (FTE) residents working in all areas of the hospital (and nonhospital sites, when applicable), and the hospital's Medicare share of total inpatient days. In addition, as specified in section 1886(h)(2)(D)(ii) of the Act, for cost reporting periods beginning on or after October 1, 1993, through September 30, 1995, each hospital-specific PRA for the previous cost reporting period is not updated for inflation for any FTE residents who are not either a primary care or an obstetrics and gynecology resident. As a result, hospitals that train primary care and obstetrics and gynecology residents, as well as nonprimary care residents in FY 1994 or FY 1995, have two separate PRAs: One for primary care and obstetrics and gynecology residents and one for nonprimary care residents.
Pub. L. 106-113 amended section 1886(h)(2) of the Act to establish a methodology for the use of a national average PRA in computing direct GME payments for cost reporting periods beginning on or after October 1, 2000, and on or before September 30, 2005. Pub. L. 106-113 established a “floor” for hospital-specific PRAs equal to 70 percent of the locality-adjusted national average PRA. In addition, the BBRA established a “ceiling” that limited the annual adjustment to a hospital-specific PRA if the PRA exceeded 140 percent of the locality-adjusted national average PRA. Section 511 of the BIPA (Pub. L. 106-554) increased the floor established by the BBRA to equal 85 percent of the locality-adjusted national average PRA. Existing regulations at § 413.77(d)(2)(iii) specify that, for purposes of calculating direct GME payments, each hospital-specific PRA is compared to the floor and the ceiling to determine whether a hospital-specific PRA should be revised.
Section 1886(h)(4)(F) of the Act established limits on the number of allopathic and osteopathic residents that hospitals may count for purposes of calculating direct GME payments. For most hospitals, the limits were the number of allopathic and osteopathic FTE residents training in the hospital's most recent cost reporting period ending on or before December 31, 1996.
As we have generally described above, the amount of direct GME payment to a hospital is based in part on the number of FTE residents the hospital is allowed to count for direct GME purposes during a year. The number of FTE residents, and thus the amount of direct GME payment to a hospital, is directly affected by CMS policy on how “initial residency periods” are determined for residents. Section 1886(h)(4)(C)(ii) of the Act, implemented at § 413.79(b)(1), provides that while a resident is in the “initial residency period” (IRP), the resident is weighted at 1.00. Section 1886(h)(4)(C)(iii) of the Act, implemented at § 413.79(b)(2), requires that if a resident is not in the resident's IRP, the resident is weighted at .50 FTE resident.
Section 1886(h)(5)(F) of the Act defines “initial residency period” as the “period of board eligibility,” and, subject to specific exceptions, limits the initial residency period to an “aggregate period of formal training” of no more than 5 years for any individual. Section 1886(h)(5)(G) of the Act generally defines “period of board eligibility” for a resident as “the minimum number of years of formal training necessary to satisfy the requirements for initial board eligibility in the particular specialty for which the resident is training.” Existing § 413.79(a) of the regulations generally defines “initial residency period” as the “minimum number of years required for board eligibility.” Existing § 413.79(a)(5) provides that “time spent in residency programs that do not lead to certification in a specialty or subspecialty, but that otherwise meet the definition of approved programs * * * is counted toward the initial residency period limitation.” Section 1886(h)(5)(F) of the Act further provides that “the initial residency period shall be determined, with respect to a resident, as of the time the resident enters the residency training program.”
The IRP is determined as of the time the resident enters the “initial” or first residency training program and is based on the period of board eligibility associated with that medical specialty. Thus, these provisions limit the amount of FTE resident time that may be counted for a resident who, after entering a training program in one specialty, switches to a program in a specialty with a longer period of board eligibility or completes training in one specialty training program and then continues training in a subspecialty (for example, cardiology and gastroenterology are subspecialties of internal medicine).
We understand that there are numerous programs, including anesthesiology, dermatology, psychiatry, and radiology, that require a year of generalized clinical training to be used as a prerequisite for the subsequent training in the particular specialty. For example, in order to become board eligible in anesthesiology, a resident must first complete a generalized training year and then complete 3 years of training in anesthesiology. This first year of generalized residency training is commonly known as the “clinical base year.” Often, the clinical base year requirement is fulfilled by completing either a preliminary year in internal medicine (although the preliminary year can also be in other specialties such as general surgery or family practice), or a transitional year program (which is not associated with any particular medical specialty).
In many cases, during the final year of medical school, medical students apply for training in specialty residency training programs. Typically, a medical student who wants to train to become a specialist is “matched” to both the clinical base year program and the specialty residency training program at the same time. For example, the medical student who wants to become an anesthesiologist will apply and “match” simultaneously for a clinical base year in an internal medicine program for year 1 and for an anesthesiology training program beginning in year 2.
Prior to October 1, 2004, CMS' policy was that the IRP is determined for a
Effective with cost reporting periods beginning on or after October 1, 2004, to address programs that require a clinical base year, we revised our policy in the FY 2005 IPPS final rule (69 FR 49170 through 49174) concerning the IRP. Specifically, under the revised policy, if a hospital can document that a particular resident matches simultaneously for a first year of training in a clinical base year in one medical specialty, and for additional year(s) of training in a different specialty program, the resident's IRP will be based on the period of board eligibility associated with the specialty program in which the resident matches for the subsequent year(s) of training and not on the period of board eligibility associated with the clinical base year program. This change in policy is codified at § 413.79(a)(10) of the regulations.
This policy applies regardless of whether the resident completes the first year of training in a separately accredited transitional year program or in a preliminary (or first) year in another residency training program such as internal medicine.
In addition, because programs that require a clinical base year are nonprimary care specialties, we specified in § 413.79(a)(10) that the nonprimary care PRA would apply for the entire duration of the initial residency period. By treating the first year as part of a nonprimary care specialty program, the hospital will be paid at the lower nonprimary care PRA rather than the higher primary care PRA, even if the residents are training in a primary care program during the clinical base year.
In the FY 2005 IPPS final rule (69 FR 49170 and 49171), we also defined “residency match” to mean, for purposes of direct GME, a national process by which applicants to approved medical residency programs are paired with programs on the basis of preferences expressed by both the applicants and the program directors.
These policy changes, which were effective October 1, 2004, are only applicable to residents that simultaneously match in both a clinical base year program and a longer specialty residency program. We have become aware of situations where residents, upon completion of medical school, only match for a program beginning in the second residency year in an advanced specialty training program but fail to match for a clinical base year of training. Residents that match into an advanced program but fail to match into a clinical base year program may independently pursue unfilled residency positions in preliminary year programs after the match process is complete. However, because these residents do not “simultaneously match” into both a preliminary year and an advanced program, currently their IRP cannot be determined based on the period of board eligibility associated with the advanced program, as specified in § 413.79(a)(10). Rather, the IRP for such residents would continue to be determined based on the specialty associated with the preliminary year program. For example, a student in the final year of medical school may match into a radiology program that begins in the second residency year, but not match with any clinical base year program. Under our current policy, if subsequent to conclusion of the match process, this resident secured a preliminary year position in an internal medicine program, the resident would not have met the requirements at § 413.79(a)(10) for a simultaneous match and the IRP for this resident would be based on the length of time required to complete an internal medicine program (3 years) rather than the length of the radiology program (4 years).
The intent of the “simultaneous match” provision of § 413.79(a)(10) is to identify in a verifiable manner the specialty associated with the program in which the resident will initially train and seek board certification. It is also the intent of § 413.79(a)(10) that a resident's IRP would not change if the resident, after initially entering a training program in one specialty, changes programs to train in another medical specialty. The “simultaneous match” provisions of § 413.79(a)(10) allow CMS to
Therefore, we are proposing to revise § 413.79(a)(10) to state that, when a hospital can document that a resident matched in an advanced residency training program beginning in the second residency year prior to commencement of any residency training, the resident's IRP will be determined based on the period of board eligibility for the specialty associated with the advanced program, without regard to the fact that the resident had not matched for a clinical base year training program.
We note that this proposed policy change would not result in a policy to determine the IRP for all residents who must complete a clinical base year during the second residency training year based on the specialty associated with that second residency training year. That is, we
In the August 29, 1997 final rule (62 FR 46005 through 46006) and the May 12, 1998 final rule (63 FR 26331 through 23336), we established rules for applying the FTE resident limit (or “FTE cap”) for calculating Medicare direct GME and IME payments to hospitals. We added regulations, currently at § 413.79(e), to provide for an adjustment to the FTE cap for certain hospitals that begin training residents in new medical residency training programs. For purposes of this provision, a new program is one that receives initial accreditation or begins training residents on or after January 1, 1995. Although we refer only to the direct GME provision throughout the remainder of this discussion, a similar cap adjustment is made under § 412.105(f) for IME purposes. Therefore, this proposal applies to both IME and direct GME.
A new teaching hospital is one that had no allopathic or osteopathic residents in its most recent cost reporting period ending on or before December 31, 1996. Under § 413.79(e)(1), if a new teaching hospital establishes one or more new medical residency training programs, the hospital's unweighted FTE caps for both direct GME and IME will be based on the product of the highest number of FTE residents in any program year in the third year of the hospital's first new program and the number of years in which residents are expected to complete the program(s), based on the minimum number of years of training that are accredited for the type of program(s).
The regulations at § 413.79(e)(1)(iv) specify that hospitals in urban areas that qualify for an FTE cap adjustment for residents in newly approved programs under § 413.79(e)(1) are not permitted to be part of a Medicare GME affiliated group for purposes of establishing an aggregate FTE cap. (A Medicare GME affiliated group is defined in the regulations at § 413.75(b).) We established this policy because of our concern that hospitals with existing medical residency training programs could otherwise, with the cooperation of new teaching hospitals, circumvent the statutory FTE resident caps by establishing new medical residency programs in the new teaching hospitals solely for the purpose of affiliating with the new teaching hospitals to receive an upward adjustment to their FTE cap under an affiliation agreement. This would effectively allow existing teaching hospitals to achieve an increase in their FTE resident caps beyond the number allowed by their statutory caps.
In contrast, hospitals in rural areas that qualify for an adjustment under § 413.79(e)(1)(v) are allowed to enter into a Medicare GME affiliation. Although we recognize that rural hospitals would not be immune from the kind of “gaming” arrangement described above, we allow new rural teaching hospitals that begin training residents in new programs, and thereby increase their FTE cap, to affiliate because we understand that rural hospitals may not have a sufficient volume of patient care utilization at the rural hospital site to be able to support a training program that meets accreditation standards. Securing sufficient patient volumes to meet accreditation requirements may necessitate rotations of the residents to another hospital. Accordingly, the regulations allow new teaching hospitals in rural areas to enter into Medicare GME affiliation agreements. However, an affiliation is only permitted if the rural hospital provides training for at least one-third of the FTE residents participating in all of the joint programs of the affiliated hospitals because, as we stated in the May 12, 1998
Through comment and feedback from industry trade groups and hospitals, we understand that, while these rules were meant to prevent gaming on the part of existing teaching hospitals, they could also preclude affiliations that clearly are designed to facilitate additional training at the new teaching hospital.
For example, Hospital A had no allopathic or osteopathic residents in its most recent cost reporting period ending on or before December 31, 1996. As such, Hospital A's caps for direct GME and IME are both zero. Hospital A and Hospital B enter into a Medicare GME affiliation for the academic year beginning on July 1, 2003, and ending on June 30, 2004. On July 1, 2003, Hospital A begins training residents from an existing family medicine program located at Hospital B. This rotation will result in 5 FTE residents training at Hospital A. Through the affiliation agreement, Hospital A receives a positive adjustment of 5 FTE's for both its direct GME and IME caps. Hospital B receives a corresponding negative adjustment of 5 FTEs under the affiliation agreement. Hospital A's Board of Directors is interested in starting a new residency program in Internal Medicine that would begin training residents at Hospital A on July 1, 2005. If Hospital A establishes the new program, under existing Medicare regulations, Hospital A will have its direct GME and IME caps (which were both previously established at zero) permanently adjusted to reflect the additional residents training in the newly approved program in accordance with § 413.79(e)(1). However, under existing regulations, Hospital A may no longer enter into an affiliation with Hospital B after it receives the adjustment to its FTE caps under § 413.79(e)(1).
We are proposing to revise § 413.79(e)(1)(iv) so that new urban teaching hospitals that qualify for an adjustment under § 413.79(e)(1) may enter into a Medicare GME affiliation agreement under certain circumstances. Specifically, a new urban teaching hospital that qualifies for an adjustment to its FTE caps for a newly approved program may enter into a Medicare GME affiliation agreement, but only if the resulting adjustments to its direct GME and IME caps are “positive adjustments.” “Positive adjustment” means, for the purpose of this policy, that there is an
We remain concerned that hospitals with existing medical residency training programs could cooperate with a new teaching hospital to circumvent the statutory FTE caps by establishing new programs at the new teaching hospital, and, through a Medicare GME affiliation agreement, moving most or all of the new residency program to its own hospital, thereby receiving an upward adjustment to its FTE caps. For this reason, we are proposing to revise
Continuing the example shown above, under the proposed change in policy, Hospital A and Hospital B would be able to continue the Medicare GME affiliation agreement under which Hospital A trained residents from Hospital B's family practice program because Hospital A would receive an increase in its direct GME or IME caps under an affiliation after qualifying for a new program adjustment under § 413.79(e)(1). However, Hospital B would not be able to receive an increase in its caps as a result of a Medicare GME affiliation agreement with Hospital A.
Thus, we are proposing the above policy change to provide some flexibility to hospitals that are currently prohibited from entering into a Medicare GME affiliation agreement, while continuing to protect the statutory FTE resident caps from being undermined by gaming. We solicit comments on the proposed change.
As stated earlier under section V.I.1. of this preamble, Medicare makes both direct and indirect GME payments to hospitals for the training of residents. Direct GME payments are made in accordance with section 1886(h) of the Act, based generally on the hospital-specific PRA, the number of FTE residents a hospital trains, and the hospital's percentage of Medicare inpatient utilization. Indirect GME payments (referred to as IME) are made in accordance with section 1886(d)(5)(B) of the Act as an adjustment to DRG payment and are 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 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.
Effective October 1, 1997, Congress instituted caps on the number of allopathic and osteopathic residents a hospital is allowed to count for direct GME and IME purposes at sections 1886(h)(4)(F) (direct GME) and 1886(d)(5)(B)(v) (IME) of the Act. These caps were instituted in an attempt to end the implicit incentive for hospitals to increase the number of FTE residents. Dental and podiatric residents were not included in these statutorily mandated caps.
Congress provided certain exceptions for rural hospitals when establishing the 1996 caps “with the intent of encouraging physician training and practice in rural areas” (65 FR 47032). For example, the statute states at section 1886(h)(4)(H)(i) that, in promulgating rules regarding application of the FTE caps to training programs established after January 1, 1995, “the Secretary shall give special consideration to facilities that meet the needs of underserved rural areas.” Accordingly, in implementing this provision, we provided in the regulations under § 413.86(g)(6)(i)(C) (now § 413.79(e)(1)(iii)) that “except for rural hospitals, the cap will not be adjusted for new programs established more than 3 years after the first program begins training residents. In other words, only hospitals located in rural areas (that is, areas that are not designated as an MSA), receive adjustments to their unweighted FTE caps to reflect residents in new medical residency training programs past the third year after the first residency program began training in that hospital (62 FR 46006).
Section 413.79(e)(1) specifies the new program adjustment as the “product of the highest number of residents in any program year during the third year of the * * * program's existence * * * and the number of years in which residents are expected to complete the program based on the minimum accredited length for the type of program.” The regulation applies only to new programs (as defined under § 413.79(1)) established by rural hospitals, not for expansion of previously existing programs. For example, if a rural hospital has an unweighted FTE cap for direct GME of 100 and begins training residents in a new 3-year residency program that has 10 residents in each of its first 3 program years (for a total of 30 residents in the entire program in the program's third year), the hospital's direct GME FTE cap of 100 would be permanently adjusted at the conclusion of the third program year by 30, and the hospital's new FTE cap would be 130. A similar adjustment would be made to the hospital's FTE cap for IME in accordance with the regulations at § 412.105(f)(1)(iv)(A). However, the rural hospital would not be able to receive adjustments to its FTE cap for any expansion of a preexisting program.
In 1999, Congress passed an additional provision under section 407 of Pub. L. 106-113 (BBRA) to promote physician training in rural areas. Section 407 of the Pub. L. 106-113 amended the FTE caps provision at sections 1886(h)(4)(F) and 1886(d)(5)(B)(v) of the Act to provide that “effective for cost reporting periods beginning on or after April 1, 2000, [a rural hospital's FTE cap] is 130 percent of the unweighted FTE count * * * for those residents for the most recent cost reporting period ending on or before December 31, 1996.” In other words, the otherwise applicable FTE caps for rural hospitals were multiplied by 1.3 to encourage rural hospitals to expand preexisting residency programs. (As described above, even prior to the BBRA change, rural hospitals were able to receive FTE cap adjustments for new programs.) For example, a hospital that was rural as of April 1, 2000, and had a direct GME cap of 100 FTEs would receive a permanent cap adjustment of 30 FTEs (100 FTEs × 1.3 = 130 FTEs) and effective for cost reporting periods beginning on or after April 1, 2000, its FTE for direct GME would be 130. (A similar adjustment would be made to the FTE cap for IME for discharges occurring on or after April 1, 2000.)
We recently received questions regarding the application of the 130-percent FTE cap adjustment and the new program adjustment for rural hospitals in instances in which a rural teaching hospital is later redesignated as an urban hospital or reclassifies back to being an urban hospital after having been classified as rural. We are aware of two circumstances when a rural hospital may subsequently be reclassified as urban. The first circumstance involves labor market area changes, and the second involves urban hospitals, after having been reclassified as rural through section 1886(d)(8)(E) of the Act, that elect to be considered urban again. In both situations, if the hospital in question was a teaching hospital, its FTE caps would have been subject to the 130 percent and new program FTE cap adjustments while it was designated or classified as rural. The issue is whether the adjusted caps would continue to apply after the hospital becomes urban or returns to being treated as urban. Below we first address hospitals that lost their status as urban hospitals due to new labor market areas. We then address hospitals that rescinded their section 1886(d)(8)(E) reclassifications. (We note that reclassification by the MGCRB under section 1886(d)(10) of the Act, as well as reclassifications under section 1886(d)(8)(B) of the Act, are effective only for purposes of the wage index and would not affect the hospital's IME or direct GME payments).
In the FY 2005 IPPS final rule, we adopted the new CBSA-based labor market areas announced by OMB on June 6, 2003, and these areas became effective October 1, 2004. As a result of these new labor market areas, a number of hospitals that previously were located outside of an MSA and therefore considered rural are now located in a CBSA that is designated as urban and considered urban.
We believe that previously rural hospitals that received adjustments due to establishing new medical training programs should not now be required to forego such adjustments simply because they have now been redesignated as urban. Such hospitals added and received accreditation for new medical training programs under the assumption that such programs would effect a permanent increase in their FTE caps. Indeed, we believe it would be nonsensical to view the fact that these hospitals are now urban as causing them to lose the adjustments that stemmed directly from the permissible and encouraged establishment of new medical training programs. Such hospitals cannot reach back into the past and alter whether they added the new programs or not. Nor would it be reasonable to prohibit them from counting FTE residents training in new programs that they worked to accredit. (We note that the hospitals would not be required to close the programs. Rather, if they were not permitted to retain the adjustments to their FTE caps they received as a result of having established new programs, they would no longer be permitted to count FTE residents that exceeded their original, preadjustment FTE caps for purposes of direct GME and IME payments. The effect might be that the hospital would have to close the program(s) as a result of decreased Medicare funding, but the hospital would be free to continue to operate the programs(s).)
For these reasons, we believe the best reading of our regulation at § 413.79(e)(3), which states that if a hospital “is located in a rural area,” it may adjust its FTE cap to reflect residents training in new programs, is that hospitals were permitted to receive a
Similarly, we believe that rural hospitals that received the statutorily mandated 130 percent adjustment to their FTE caps would be disadvantaged if we were to rescind this adjustment due to new urban designation. Such hospitals expanded their already existing training programs under the assumption that these expansions would cause a permanent increase in their FTE caps. Many of these hospitals expanded their programs only once the BBRA became effective (in 2000). Thus, they have had only a few years to expand their programs and receive the cap adjustment mandated by statute. For these reasons, we believe it is permissible to read sections 1886(h)(4)(F)(i) and 1886(d)(5)(B)(v) of the Act as permitting a
We believe our interpretations are consistent with legislative intent. Congress provided for these FTE cap adjustments for rural hospitals with the intent of encouraging physician training and practice in rural areas. If rural hospitals had believed that new CBSAs would cause them to lose the adjustments, they would not have had the incentives Congress wished to increase the number of FTE residents training in their programs. These hospitals might have feared losing the adjustments as a result of new labor market areas, and therefore not carried out Congress' intent to expand their already existing residency training programs or add new residency training programs.
To provide an example of the how the above statutory interpretations would be applied, a hospital located in a rural area prior to October 1, 2004, with an unweighted direct GME FTE cap of 100 would have received a 30-percent increase in its FTE cap so that its adjusted cap was 130 FTEs. The rural hospital also could have received an adjustment for any new medical residency program. If this hospital, while rural, started a new 3-year residency program with 10 residents in each program year, its FTE cap would have been increased by an additional 30 FTEs to 160 FTEs (that is, (100 FTEs × 1.3) + 30 FTEs = 160 FTEs). Under our reading of the statute, if this hospital is now located in an urban area due to the new CBSAs, it would retain this cap of 160 FTEs.
We also believe that the statute should be interpreted as permitting urban hospitals with rural track training programs to retain the adjustment they received for such programs at § 413.79(k), even if the “rural” tracks as of October 1, 2004, are now located in urban areas due to the new OMB labor market areas. As explained in the FY 2001 IPPS final rule (66 FR 47033), we provided that an urban hospital that establishes a separately accredited medical residency training program in a rural area (that is, a rural track) may receive an adjustment to reflect the number of residents in that program (existing § 413.79(k)). Section 1886(h)(4)(H)(iv) of the Act states: “In the case of a hospital that is not located in a rural area but establishes separately accredited approved medical residency training programs (or rural tracks) in an (sic) rural area or has an accredited training program with an integrated rural track, the Secretary shall adjust the limitation under subparagraph (F) in an appropriate manner insofar as it applies to such programs in such rural areas in order to encourage the training of physicians in rural areas.”
Again, we believe that the reading that best carries out Congressional intent is one that allows the adjustment for rural tracks to remain permanent as long as the rural track training programs continue, even if the once-rural tracks
As stated above, a second situation exists where a hospital that is treated as rural returns to being urban under section 1886(d)(8)(E) of the Act (§ 412.103 of the regulations). Under this provision, an urban hospital may file an application to be treated as being located in a rural area. A hospital's reclassification as located in a rural area under this provision affects only payments under section 1886(d) of the Act. Accordingly, a hospital that is treated as rural under this provision can receive the FTE cap adjustments that any other rural hospital receives, but only to the FTE cap that applies for purposes of IME payments, which are made under section 1886(d) of the Act. The hospital could not receive adjustments to its direct GME FTE cap because payments for direct GME are made under section 1886(h) of the Act and the section 1886(d)(8)(E) reclassifications affect only the payments that are made under that section 1886(d) of the Act. Therefore, a hospital that reclassifies as rural under section 1886(d)(8)(E) of the Act may receive the 130-percent adjustment to its IME FTE cap and its IME FTE cap may be adjusted for any new programs, similar to hospitals that are actually located in a rural location. A hospital treated as rural under section 1886(d)(8)(E) of the Act may subsequently withdraw its election and return to its urban status under the regulations at § 412.103. We are proposing that, effective with discharges occurring on or after October 1, 2005, a different policy should apply for hospitals that reclassify under section 1886(d)(8)(E) of the Act than the policy that applies to rural hospitals redesignated as urban due to changes in labor market areas, as discussed in section IV.F.3 of this preamble.
• In the FY 2005 IPPS final rule (69 FR 49234), we redesignated the contents of § 413.86 as §§ 413.75 through 413.83. We also updated cross-references to § 413.86 that were located in various sections under 42 CFR Parts 400 through 499. We inadvertently did not capture all of the needed cross-reference changes. In this proposed rule, we are proposing to correct the additional cross-references in 42 CFR Parts 405, 412, 413, 415, 419, and 422 that were not made in the August 11, 2004 final rule.
• When we redesignated § 413.86 as §§ 413.75 through 413.83 in the FY 2005 IPPS final rule, we also made a corresponding redesignation of § 413.80 as § 413.89. We are proposing to correct cross-references to § 413.80 in 42 CFR Parts 412, 413, 417, and 419 to reflect the redesignation of this section as § 413.89.
(If you choose to comment on issues in this section, please include the caption “Provider-Based Entities” at the beginning of your comment.)
Since the beginning of the Medicare program, some providers, which we refer to as “main providers,” have functioned as a single entity while owning and operating multiple provider-based departments, locations, and facilities that were treated as part of the main provider for Medicare purposes. Having clear criteria for provider-based status is important because this designation can result in additional Medicare payments for services furnished at the provider-based facility, and may also increase the coinsurance liability of Medicare beneficiaries for those services.
To set forth Medicare policies with regard to the provider-based status of facilities and organizations, we have published a number of
• In a proposed rule published in the
• Before the regulations that were issued on April 7, 2000 could be implemented, Congress enacted the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), Pub. L. 106-544. Section 404 of BIPA delayed implementation of the April 7, 2000 provider-based rules with respect to many providers, and mandated changes in the criteria at § 413.65 for determining provider-based status.
• In order to conform our regulations to the requirements of section 404 of BIPA and to codify certain clarifications of provider-based policy that had previously been posted on the CMS Web site, we published another proposed rule on August 24, 2001 (66 FR 44672). After considering public comments on the August 24, 2001 proposed rule and making appropriate revisions, we published a final rule on November 30, 2001 setting forth the provider-based regulations (66 FR 59909).
• On May 9, 2002, we proposed further significant revisions to the provider-based regulations at § 413.65 (67 FR 31480). After considering public comments on the May 9, 2002 proposed rule and making appropriate revisions, on August 1, 2002, we published a final rule specifying the criteria that must be met to qualify for provider-based status (67 FR 50078). These regulations remain in effect and continue to be codified at § 413.65.
Following is a discussion of the major provisions of the provider-based regulations: Section 413.65(a) of the regulations describes the scope of that section and provides definitions of key terms used in the regulations. Paragraph (b) describes the procedure for making provider-based determinations, and paragraph (c) imposes requirements for reporting material changes in relationships between main providers and provider-based facilities or organizations. In paragraph (d), we
In § 413.65(a) (1)(ii), we list specific types of facilities and organizations for which determinations of provider-based status will not be made. We previously concluded that provider-based determinations should not be made for these facilities because the outcome of the determination (that is, whether a facility, unit, or department is found to be freestanding or provider-based) would not affect the methodology used to make Medicare or Medicaid payment, the scope of benefits available to a Medicare beneficiary in or at the facility, or the deductible or coinsurance liability of a Medicare beneficiary in or at the facility.
We have now concluded that, under the principle stated above, rural health clinics affiliated with hospitals having 50 or more beds should be added to the list of facilities for which provider-based status determinations are not made. Therefore, we are proposing to revise § 413.65(a)(1)(ii) to add rural health clinics with hospitals having 50 or more beds to the listing of the types of facilities for which a provider-based status determination will not be made. We believe this proposed revision to § 413.65(a)(1)(ii) is appropriate because all rural health clinics affiliated with hospitals having 50 or more beds are paid on the same basis as rural health clinics not affiliated with any hospital, and the scope of Medicare Part B benefits and beneficiary liability for Medicare Part B deductible and coinsurance amounts would be the same, regardless of whether the rural health clinic was found to be provider-based or freestanding.
In setting forth this proposal, we recognize that rural health clinics affiliated with hospitals report their costs using the hospital's cost report rather than by filing a separate rural health clinic cost report, and that whether or not a rural health clinic is hospital-affiliated will affect the selection of a fiscal intermediary for the clinic. However, we do not believe these administrative differences provide a sufficient reason to make provider-based determinations for such rural health clinics.
As we stated in the preamble to May 9, 2002 proposed rule for changes in the provider-based rules (67 FR 31485), we recognize that provider-based status is not limited to on-campus facilities or organizations and that facilities or organizations located off the main provider campus may also be sufficiently integrated with the main provider to justify a provider-based designation. However, the off-campus location of the facilities or organizations may make such integration harder to achieve, and such integration should not simply be presumed to exist. Therefore, to ensure that off-campus facilities or organizations seeking provider-based status are appropriately integrated, we have adopted certain requirements regarding the location of off-campus facilities or organizations. These requirements are set forth in § 413.65(e)(3). Section 413.65(e)(3) specifies that a facility or organization not located on the main campus of the potential main provider can qualify for provider-based status only if it is located within a 35-mile radius of the campus of the hospital or CAH that is the potential main provider, or meets any one of the following requirements.
• The facility or organization is owned and operated by a hospital or CAH that has a disproportionate share adjustment (as determined under § 412.106) greater than 11.75 percent or is described in § 412.106(c)(2) of the regulations which implement section 1886(e)(5)(F)(i)(II) of the Act and is—
• The facility or organization demonstrates a high level of integration with the main provider by showing that it meets all of the other provider-based criteria and demonstrates that it serves the same patient population as the main provider, by submitting records showing that, during the 12-month period immediately preceding the first day of the month in which the application for provider-based status is filed with CMS, and for each subsequent 12-month period—
Section 413.65(e)(3)(ii)(C) of the regulations allows new facilities or organizations to qualify as provider-based entities. Under this section, if a facility or organization is unable to meet the criteria in § 413.65(e)(3)(ii)(A) or (e)(3)(ii)(B) because it was not in operation during all of the 12-month period before the start of the period for which provider-based status is sought, the facility or organization may nevertheless meet the location requirement of paragraph (e)(3) of § 413.65 if it is located in a zip code area included among those that, during all of the 12-month period before the start of the period for which provider-based status is sought, accounted for at least 75 percent of the patients served by the main provider.
CMS has been advised that, in some cases, the location requirements in current regulations may inadvertently impede the delivery of intensive care services to newborn infants in areas where there is no nearby children's hospital with a neonatal intensive care unit (NICU). According to those who expressed this concern, hospitals participating in the Medicare program as children's hospitals establish off-site neonatal intensive care units (NICUs) which they operate and staff but which are located in space leased from other hospitals. The hospitals in which the offsite NICUs are housed typically are
We have received a suggestion that this configuration (that of a hospital participating in the Medicare program as a hospital whose inpatients are predominantly individuals under 18 years of age under section 1886(d)(1)(B)(iii) of the Act, establishing an offsite NICU which it operates and staffs but which is located in space leased from another hospital) can be very helpful in making neonatal intensive care more quickly available in areas where community hospitals are located. In addition, this configuration can offer relief to families who otherwise would be required to travel long distances to obtain this care for their infants. However, offsite NICUs would not be able to qualify for provider-based status under the location criteria in our current regulations if they are located more than 35 miles from the children's hospital that would be the main provider, are not owned and operated by a hospital meeting the requirements of § 413.65(e)(3)(i), and cannot meet either of the “75 percent tests” for service to the same patient population as the potential main provider that are specified in existing § 413.65(e)(3)(ii)(A) and § 413.65(e)(3)(ii)(B).
We understand the concern that requiring a patient to be transported to an NICU located on the campus of a distant children's hospital could create an unacceptable medical risk to the life of a newborn at a most critical time. To help us better understand this issue and determine what action, if any, CMS should take on it, we are soliciting specific public comment on the following question:
• Is the problem as described above actually occurring and, if so, in what locations? We are particularly interested in learning which areas of which States are experiencing such a problem, and in receiving specific information, such as the rates of transfer of newborns from community hospitals to children's hospital on-campus NICUs relative to adult or non-neonatal pediatric transfers for intensive care services, which describe the problem objectively. Such objective information will be much more useful than expressions of opinion or anecdotes.
We also wish to ask those who believe such a problem is currently occurring to comment on which of the following approaches would be most effective in resolving it. The proposed approaches on which we are soliciting specific comments are:
We also welcome suggestions for specific options other than those listed above.
a.
b.
c.
d.
Currently, the opening sentence of § 413.65(e)(3) states that a facility or organization for which provider-based status is sought must be located within a 35-mile radius of the campus of the hospital or CAH that is the potential main provider, except when the requirements in paragraph (e)(3)(i), (e)(3)(ii), or (e)(3)(iii) of that section are met. However, the regulation text that follows does not contain a paragraph designation as paragraph (e)(3)(iii). We are proposing to correct this error by redesignating existing paragraph (e)(3)(ii)(C) as paragraph (e)(3)(iv). We are also proposing to revise this sentence to state that the facility or organization must meet the requirements in paragraph (e)(3)(i), (e)(3)(ii), (e)(3)(iii), (e)(3)(iv) or, in the case of an RHC, paragraph (e)(3)(v) of § 413.65 and the requirements in paragraph (e)(3)(vi) of § 413.65.
We are proposing to revise the opening sentence of § 413.65(e)(3) to reflect the changes in the coding of this paragraph as described above.
We are also proposing to redesignate paragraph (v) of § 413.65(e)(3) as paragraph (e)(3)(vi) and correct a drafting error by adding the word “that” before “has fewer than 50 beds”. This proposed addition is a grammatical change that is intended only to clarify the size of the hospital with which a rural health clinic must have a provider-based relationship in order to qualify under the special location requirement in that paragraph.
e.
(If you choose to comment on issues in this section, please include the caption “Rural Community Hospital Demonstration Program” at the beginning of your comments.)
In accordance with the requirements of section 410A(a) of Pub. L. 108-173, the Secretary has established a 5-year demonstration (beginning with selected hospitals' first cost reporting period beginning on or after October 1, 2004) to test the feasibility and advisability of establishing “rural community hospitals” for Medicare payment purposes for covered inpatient hospital services furnished to Medicare beneficiaries. A rural community hospital, as defined in section 410A(f)(1), is a hospital that—
• Is located in a rural area (as defined in section 1886(d)(2)(D) of the Act) or treated as being so located under section 1886(d)(8)(E) of the Act;
• Has fewer than 51 beds (excluding beds in a distinct part psychiatric or rehabilitation unit) as reported in its most recent cost report;
• Provides 24-hour emergency care services; and
• Is not designated or eligible for designation as a CAH.
As we indicated in the FY 2005 IPPS final rule (69 FR 49078), in accordance with sections 410A(a)(2) and (4) of Pub. L. 108-173 and using 2002 data from the U.S. Census Bureau, we identified 10 States with the lowest population density from which to select hospitals: Alaska, Idaho, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Utah, and Wyoming. (Source: U.S. Census Bureau Statistical Abstract of the United States: 2003) Thirteen rural community hospitals located within these States are participating in the demonstration.
Under the demonstration, participating hospitals are paid the reasonable costs of providing covered inpatient hospital services (other than services furnished by a psychiatric or rehabilitation unit of a hospital that is a distinct part), applicable for discharges occurring in the first cost reporting period beginning on or after the October 1, 2004 implementation date of the demonstration program. Payment will be the lesser amount of reasonable cost or a target amount in subsequent cost reporting periods. The target amount in the second cost reporting period is defined as the reasonable costs of providing covered inpatient hospital services in the first cost reporting period, increased by the inpatient prospective payment update factor (as defined in section 1886(b)(3)(B) of the Act) for that particular cost reporting period. The target amount in subsequent cost reporting periods is defined as the preceding cost reporting period's target amount, increased by the inpatient prospective payment update factor (as defined in section 1886(b)(3)(B) of the Act) for that particular cost reporting period.
Covered inpatient hospital services means inpatient hospital services (defined in section 1861(b) of the Act) and includes extended care services furnished under an agreement under section 1883 of the Act.
Section 410A of Pub. L. 108-173 requires that “in conducting the demonstration program under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration program under this section was not implemented.” Generally, when CMS implements a demonstration on a budget neutral basis, the demonstration is budget neutral in its own terms; in other words, aggregate payments to the participating providers do not exceed the amount that would be paid to those same providers in the absence of the demonstration. This form of budget neutrality is viable when, by changing payments or aligning incentives to improve overall efficiency, or both, a demonstration may reduce the use of some services or eliminate the need for others, resulting in reduced expenditures for the demonstration participants. These reduced expenditures offset increased payments elsewhere under the demonstration, thus ensuring that the demonstration as a whole is budget neutral or yields savings. However, the small scale of this demonstration, in conjunction with the payment methodology, makes it extremely unlikely that this demonstration could be viable under the usual form of budget neutrality. Specifically, cost-based payments to 13 small rural hospitals are likely to increase Medicare outlays without producing any offsetting reduction in Medicare expenditures elsewhere. Therefore, a rural community hospital's participation in this demonstration is unlikely to yield benefits to the participant if budget neutrality were to be implemented by reducing other payments for these providers.
In order to achieve budget neutrality for this demonstration, we are proposing to adjust national inpatient PPS rates by an amount sufficient to account for the added costs of this demonstration. In other words, we apply budget neutrality
The data collection instrument for the demonstration has been approved by OMB under the title “Medicare Waiver Demonstration Application,” under OMB approval number 0938-0880, with a current expiration date of July 30, 2006.
(If you choose to comment on issues in this section, please include the caption “Specialty Hospitals” at the beginning of your comment.)
Section 1861(e) of the Act provides a definition for a “hospital” for purposes of participating in the Medicare program. In order to be a Medicare-participating hospital, an institution must, among other things, be primarily engaged in furnishing services to inpatients. This requirement is incorporated in our regulations on conditions of participation for hospitals at 42 CFR 482.1. An institution that applies for a Medicare provider agreement as a hospital but is unable to meet this requirement will have its application denied in accordance with our authority at 42 CFR 489.12. In addition, institutions that have a Medicare hospital provider agreement but are no longer primarily engaging in furnishing services to inpatients are subject to having their provider agreements terminated pursuant to 42 CFR 489.53. Although compliance with this requirement is not problematic for most hospitals, the issue of whether an institution is primarily engaged in providing care to inpatients has recently come to our attention in two arisen two contexts. First, an institution has applied to be certified as an “emergency hospital,” yet the institution has 29 outpatient beds for emergency patients, including observation and post-anesthesia care, and only 2 inpatient beds. Emergency treatment by nature does not usually involve overnight stays. Second, the issue has also arisen in the area of “specialty hospitals.” (For purposes of this discussion, “specialty hospitals” are those hospitals specifically defined as such in section 507 of Pub. L. 108-173 (MMA), that is, those hospitals that are primarily or exclusively engaged in the care and treatment of:
(i) Patients with a cardiac condition; (ii) patients with an orthopedic condition; or (iii) patients receiving a surgical procedure.)
“Specialty hospitals” are of interest partly because of section 507 of Pub. L. 108-173, which amended the hospital ownership exception to the physician self-referral prohibition statute, section 1877 of the Act. Prior to the enactment of Pub. L. 108-173, the “whole hospital” exception contained in section 1877(d)(3) of the Act allowed a physician to refer Medicare patients to a hospital in which the physician (or an immediate family member of the physician) had an ownership or investment interest, if the physician was authorized to perform services at the hospital and the ownership or investment interest was in the entire hospital and not a subdivision of the hospital. Section 507 of Pub. L. 108-173 added an additional criterion to the whole hospital exception, specifying that for the 18-month period beginning on December 8, 2003 and ending on June 8, 2005, physician ownership and investment interests in “specialty hospitals” would not qualify for the whole hospital exception. The term “specialty hospital” does not include any hospital determined by the Secretary to be in operation or “under development” as of November 18, 2003.
In our advisory opinions that we issue as to whether a requesting entity is subject to the 18-month moratorium described above, we inform the requesting entity that, among other things, it must meet the definition of a hospital that is contained in section 1861(e) of the Act. It has come to our attention that some institutions entities that describe themselves as surgical or orthopedic specialty hospitals may be primarily primarily engaged in furnishing services to outpatients, and thus would might not meet the definition of a hospital as contained in section 1861(e) of the Act. Therefore, although an institution entity may satisfy the “under development” criteria for purposes of being excepted from the moratorium on physician-owner referrals to specialty hospitals, if we were to determine such entity is not primarily engaged in inpatient care at the time it seeks certification to participate in the Medicare program, its application for a provider agreement as a hospital would will be denied and it would not be eligible for the whole hospital exception to the prohibition on physician self-referrals. Further, if we were to determine that a specialty hospital that is operating under an existing Medicare provider agreement but is not, or is no longer, primarily engaged in treating inpatients, the hospital is subject to having its provider agreement terminated; in this event, it could no longer take advantage of and lose the protection of the whole hospital exception.
(If you choose to comment on issues in this section, please include the caption “Capital-Related Costs” at the beginning of your comment.)
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, we are providing a summary of the statutory basis for the PPS for hospital capital-related costs and the methodology used to determine capital-related payments to hospitals. A discussion of the proposed rates and factors for FY 2006 (determined under our established methodology) can be found in section III. of the Addendum of this proposed rule.
Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient acute 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 hospital inpatient capital-related costs. We initially implemented the PPS for capital-related costs 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. For cost reporting periods beginning in FY 2002, capital PPS payments are based solely on the Federal rate for most acute care hospitals (other than certain new hospitals and hospitals receiving certain exception payments). The basic
(Standard Federal Rate) × (DRG Weight) × (Geographic Adjustment Factor (GAF)) × (Large Urban Add-on, if applicable) × (COLA Adjustment for hospitals located in Alaska and Hawaii) × (1 + Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if applicable)
Hospitals also may receive outlier payments for those cases that qualify under the thresholds established for each fiscal year as specified in § 412.312(c) of the regulations.
The 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 originally established for hospitals during the 10-year transition period, but as we discussed in the August 1, 2002 IPPS final rule (67 FR 50102), we revised the regulations at § 412.312 to specify that payments for extraordinary circumstances are also made for cost reporting periods after the transition period (that is, cost reporting periods beginning on or after October 1, 2001). Additional information on the exceptions payment for extraordinary circumstances in § 412.348(f) can be found in the FY 2005 IPPS final rule (69 FR 49185 through 49186).
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 percentage of its Medicare allowable capital-related costs depending on the class of hospital (§ 412.348(c)), but were available only during the 10-year transition period. After the end of the transition period, eligible hospitals can no longer receive this exception payment. However, even after the transition period, eligible hospitals receive additional payments under the special exceptions provisions at § 412.348(g), which guarantees all eligible hospitals a minimum payment of 70 percent of its Medicare allowable capital-related costs provided that special exceptions payments do not exceed 10 percent of total capital IPPS payments. Special exceptions payments may be made only for the 10 years from the cost reporting year in which the hospital completes its qualifying project, and the hospital must have completed the project 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).)
Under the PPS for capital-related costs, § 412.300(b) of the regulations defines a new hospital as a hospital that has operated (under current or previous ownership) for less than 2 years. (For more detailed information see the August 30, 1991 final rule (56 FR 43418).) During the 10-year transition period, a new hospital 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. Because we believe that special protection to new hospitals is also appropriate even after the transition period, as discussed in the August 1, 2002 IPPS final rule (67 FR 50101), we revised the regulations at § 412.304(c)(2) to provide that, for cost reporting periods beginning on or after October 1, 2002, 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. (Refer to the August 1, 2001 IPPS final rule (66 FR 39910) for a 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 exception payments.)
Section 412.374 provides for the use of a blended payment amount for prospective payments for capital-related costs to hospitals located in Puerto Rico. Accordingly, under the capital PPS, we compute a separate payment rate specific to Puerto Rico hospitals using the same methodology used to compute the national Federal rate for capital-related costs. In general, hospitals located in Puerto Rico are paid a blend of the applicable capital PPS Puerto Rico rate and the applicable capital PPS Federal rate.
Prior to FY 1998, hospitals in Puerto Rico were paid a blended capital PPS rate that consisted of 75 percent of the applicable capital PPS Puerto Rico specific rate and 25 percent of the applicable capital PPS Federal rate. However, effective October 1, 1997 (FY 1998), in conjunction with the change to the operating PPS blend percentage for Puerto Rico hospitals required by section 4406 of Pub. L. 105-33, we revised the methodology for computing capital PPS payments to hospitals in Puerto Rico to be based on a blend of 50 percent of the Puerto Rico rate and 50 percent of the Federal rate. Similarly, effective beginning in FY 2005, in conjunction with the change in operating PPS payments to hospitals in Puerto Rico for FY 2005 required by section 504 of Pub. L. 108-173, we again revised the methodology for computing capital PPS payments to hospitals in Puerto Rico to be based on a blend of 25 percent of the Puerto Rico rate and 75 percent of the Federal rate for discharges occurring on or after October 1, 2004.
(If you choose to comment on issues in this section, please include the caption “Excluded Hospitals and Units” at the beginning of your comment.)
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 cost reporting periods beginning on or after October 1, 1997 through September 30, 2002, for certain existing hospitals and hospital units excluded from the IPPS. Section 413.40(c)(4)(iii) of the implementing regulations states that “In the case of a psychiatric hospital or unit, rehabilitation hospital or unit, or long-term care hospital, the target amount is the lower of amounts specified in paragraph (c)(4)(iii)(A) or (c)(4)(iii)(B) of this section.” Accordingly, in general, for hospitals and units within these three classes of providers for the applicable 5-year period, the target amount is the lower of either: the hospital-specific target amount (§ 413.40(c)(4)(iii)(A)) or the 75th percentile cap (§ 413.40(c)(4)(iii)(B)). (We note that, in the case of LTCHs, for cost reporting periods beginning during
Questions have been raised as to whether § 413.40(c)(4)(iii) (specifically paragraph (c)(4)(iii)(A)) continues to apply beyond FY 2002. In order to clarify the policy for periods after FY 2002, we note that § 413.40(c)(4)(iii) applies only to cost reporting periods beginning on or after October 1, 1997 through September 30, 2002, for psychiatric hospitals and units, rehabilitation hospitals and units, and LTCHs. We discussed this applicable time period in the May 12, 1998
For cost reporting periods beginning on or after October 1, 2002, to the extent one of the above-mentioned excluded hospitals or units has all or a portion of its payment determined under reasonable cost principles, the target amounts for the reasonable cost-based portion of the payment are determined in accordance with section 1886(b)(3)(A)(ii) of the Act and the regulations at § 413.40(c)(4)(ii). Section 413.40(c)(4)(ii) states, “Subject to the provisions of [§ 413.40] paragraph (c)(4)(iii) of this section, for subsequent cost reporting periods, the target amount equals the hospital's target amount for the previous cost reporting period increased by the update factor for the subject cost reporting period unless the provisions of [§ 413.40] paragraph (c)(5)(ii) of this section apply.” Thus, since § 413.40(c)(4)(ii) indicates that the provisions of that paragraph are subject to the provisions of § 413.40(c)(4)(iii), which are applicable only for cost reporting periods beginning on or after October 1, 1997 through September 30, 2002, the target amount for FY 2003 is determined by updating the target amount for FY 2002 (the target amount from the previous period) by the applicable update factor. Accordingly, we are proposing to make a change to the language in § 413.40(c)(4)(iii) to clarify that the provisions of this paragraph relating to the caps on target amounts are for a specific period of time only, that is, cost reporting periods beginning on or after October 1, 1997, and before October 1, 2002.
The inpatient operating costs of children's hospitals and cancer hospitals that are excluded from the IPPS are subject to the rate-of-increase limits established under the authority of section 1886(b) of the Act and implemented in the regulations at § 413.40. Under these limits, an annual target amount (expressed in terms of the inpatient operating cost per discharge) is set for each hospital, based on the hospital's own historical cost experience, trended forward by the applicable percentage increase. This target amount is applied as a ceiling on the allowable costs per discharge for the hospital's cost reporting period. (We note that, in accordance with § 403.752(a) of the regulations, RNHCIs are also subject to the rate-of-increase limits established under § 413.40 of the regulations.)
Section 1886(b)(7) of the Act established the method for determining the payment amount for new rehabilitation hospitals and units, psychiatric hospitals and units, and LTCHs that first received payment as a hospital or unit excluded from the IPPS on or after October 1, 1997. However, effective for cost reporting periods beginning on or after October 1, 2002, this payment amount (or “new provider cap”) no longer applies to any new rehabilitation hospital or unit because they now are paid 100 percent of the Federal prospective rate under the IRF PPS.
In addition, LTCHs that meet the definition of a new LTCH under § 412.23(e)(4) are also paid 100 percent of the fully Federal prospective payment rate under the LTCH PPS. In contrast, those “new” LTCHs that meet the criteria under § 413.40(f)(2)(ii) (that is, that were not paid as an excluded hospital prior to October 1, 1997), but were paid as a LTCH before October 1, 2002, may be paid under the LTCH PPS transition methodology with the reasonable cost portion of the payment subject to § 413.40(f)(2)(ii). Finally, LTCHs that existed prior to October 1, 1997, may also be paid under the LTCH PPS transition methodology with the reasonable cost portion of the payment subject to § 413.40(c)(4)(ii). (The last LTCHs that were subject to the payment amount limitation for “new” LTCHs were new LTCHs that had their first cost reporting period beginning on September 30, 2002. In that case, the payment amount limitation remained applicable for the next 2 years—September 30, 2002 through September 29, 2003, and September 30, 2003 through September 29, 2004. This is because, under existing regulations at § 413.40(f)(2)(ii), a “new hospital” would be subject to the same payment (target amount) in its second cost reporting period that was applicable to the LTCH in its first cost reporting period. Accordingly, for these hospitals, the updated payment amount limitation that we published in the FY 2003 IPPS final rule (67 FR 50103) applied through September 29, 2004. Consequently, there is no longer a need to publish updated payment amounts for new (§ 413.40(f)(2)(ii)) LTCHs. A discussion of how the payment limitations were 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).
A freestanding inpatient rehabilitation hospital, an inpatient rehabilitation unit of an acute care hospital, and an inpatient rehabilitation unit of a CAH are referred to as IRFs. Effective for cost reporting periods beginning on or after October 1, 2002, this payment limitation is also 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.
For psychiatric hospitals and units, under the IPF PPS, there is a 3-year transition period during which existing IPFs will receive a blended payment of the Federal per diem payment amount and the payment amount that IPFs would receive under the reasonable cost-based payment (TEFRA) methodology. However, new IPFs (those facilities that under present or previous ownership (or both) have their first cost reporting period as an IPF begin on or after January 1, 2005, are paid the fully Federal per diem payment amount rather than a blended payment amount.
However, “new” IPFs that meet the criteria under § 413.40(f)(2)(ii) (that is, that were not paid as an excluded hospital prior to October 1, 1997), but were paid as an IPF before January 1, 2005, are paid under the IPF PPS transition methodology with the reasonable cost portion of the payment determined according to § 413.40(f)(2)(ii), that is, subject to the payment amount limitation. The last “new” IPFs that were subject to the payment amount limitation were IPFs that had their first cost reporting period beginning on December 31, 2004. For these hospitals, the payment amount limitation that was published in the FY 2005 IPPS final rule (69 FR 49189) for cost reporting periods beginning on or after October 1, 2004, and before January 1, 2005, remains applicable for the IPF's first two cost reporting periods. IPFs with a first cost reporting period beginning on or after January 1, 2005, are paid 100 percent of the Federal rate and are not subject to the payment amount limitation. Therefore, since the last IPFs eligible for a blended payment have a cost reporting period beginning on December 31, 2004, the payment limitation published for FY 2005 remains applicable for these IPFs, and publication of the updated payment amount limitation is no longer needed. We note that IPFs that existed prior to October 1, 1997, may also be paid under the IPF transition methodology with the reasonable cost portion of the payment subject to § 413.40(c)(4)(ii).
The payment limitations for new hospitals under TEFRA do not apply to new LTCHs, IRFs, or IPFs, that is, these hospitals with their first cost reporting period beginning on or after the date that the particular class of hospitals implemented their respective PPS. Therefore, for the reasons noted above, we are proposing to discontinue publishing Tables 4G and 4H (Pre-Reclassified Wage Index for Urban and Rural Areas, respectively) in the annual proposed and final IPPS rules.
Section 1886(j) of the Act, as added by section 4421(a) of Pub. L. 105-33, provided for 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 payments based entirely on the adjusted Federal prospective payment for cost reporting periods beginning on or after October 1, 2002. Section 1886(j) of the Act was amended by section 125 of Pub. L. 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 Pub. L. 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 Pub. L. 106-113, as modified by section 307(b) of Pub. L. 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.
We published in the
In accordance with section 124 of the BBRA and section 405(g)(2) of Pub. L. 108-173, we established a PPS for inpatient hospital services furnished in psychiatric hospitals and psychiatric units of acute care hospitals and CAHs (inpatient psychiatric facilities (IPFs)). On November 15, 2004, we issued in the
(If you choose to comment on issues in this section, please include the caption “Critical Access Hospitals” at the beginning of your comment.)
Section 1820 of the Act provides for the establishment of Medicare Rural Hospital Flexibility Programs (MRHFPs), 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 (CoPs) under 42 CFR Part 485, Subpart F, will be certified as CAHs by CMS. Regulations governing payments to CAHs for services to Medicare beneficiaries are located in 42 CFR Part 413.
Criteria for the designation of a CAH under the MRHFP at section 1820(c)(2)(b)(i) of the Act require that a hospital be located in a rural area as defined in section 1886(d)(2)(D) of the Act or be treated as being located in a rural area in accordance with section 1886(d)(8)(E) of the Act. The regulations at § 485.610 further define “rural area” for purposes of being a CAH. Under § 485.610(b), a CAH must meet any one of the following three location requirements. First, a CAH must not be located in an MSA as defined by the Office of Management and Budget, not be deemed to be located in an urban area under 42 CFR 412.63(b), and not be reclassified by CMS or the MGCRB as urban for purposes of the standardized payment amount, nor be a member of a group of hospitals reclassified to an urban area under 42 CFR 412.232. Second, if a CAH does not meet the first criterion, if located in an MSA, a CAH will be treated as rural if it has reclassified under 42 CFR 412.103. Third, as we stated in the FY 2005 IPPS final rule, if the CAH cannot meet either of the first two requirements and is located in a revised labor market area (CBSA) under the standards announced by OMB on June 6, 2003 and adopted by CMS effective October 1, 2004, it has until September 30, 2006, to meet one of the other classification requirements without losing its CAH status.
Under section 1886(d)(8)(B) of the Act, hospitals that are located in a rural county that is adjacent to one or more urban counties are considered to be located in the urban MSA to which the greatest number of workers in the county commute, if certain conditions, specified in section 1886(d)(8)(B) of the Act, are met. Regulations implementing this provision are set forth in 42 CFR 412.62(f)(1) (for FY 1984), 42 CFR 412.63(b)(3) (for FYs 1985 through 2004), and at 42 CFR 412.64(b)(3) (for FY 2005 and subsequent fiscal years). The provision (section 1886(d)(8)(B) of the Act) is referred to as the “Lugar provision” and the counties described by it are referred to as the “Lugar counties.”
As explained more fully in the FY 2005 IPPS final rule (69 FR 48916), certain counties that previously were not considered Lugar counties were, effective October 1, 2004, redesignated as Lugar counties as a result of the most recent census data and the new labor market area definitions announced by OMB on June 6, 2003. Some CAHs located in these newly designated Lugar counties are now unable to meet the rural location requirements described above, even though they were in full compliance with the location requirements in effect at the time they converted from short-term acute care hospital to CAH status.
We have received comments that suggest that it would be inappropriate for a facility to be required to terminate participation as a CAH and resume participating as a short-term acute care hospital because of a change in county classification that did not result from any change in functioning by the CAH. After consideration of these comments, we are clarifying our policy with respect to facilities located in Lugar counties. As we noted in the FY 2005 IPPS final rule, we believe it is appropriate to allow facilities located in counties that began to be considered part of MSAs effective October 1, 2004, as a result of data from the 2000 census and implementation of the new labor market area definitions announced by OMB on June 6, 2003, an opportunity to obtain rural designations under applicable State law or regulations from their State legislatures or regulatory agencies. Similarly, we believe that when a CAH's status as being located in a Lugar county occurs as a result of changes that the CAH did not originate and that were beyond its control, such as a change in the OMB standards for labor market area definitions, it is appropriate for the CAH to be allowed a reasonable opportunity to reclassify to rural status. Thus, we are clarifying our policy to note that CAHs in counties that were designated as Lugar counties effective October 1, 2004, because of implementation of the new labor market area definitions announced by OMB on June 6, 2003, are to be given the same reclassification opportunity. Of course, the opportunity to reclassify would not be available to a CAH if the CAH itself were to initiate some change, such as a redesignation as urban rather than rural under State law or regulations, which would invalidate a prior § 412.103 reclassification. As a result, we are proposing to make changes to § 485.610(b) of the regulations that would permit CAHs located in a county that, in FY 2004, was not part of a Lugar county, but as of FY 2005 was included in such a county as a result of the new labor market area definitions, to maintain their CAH status until September 30, 2006. These changes, if adopted in final form, would permit CAHs in newly designated Lugar counties to continue participating in Medicare as CAHs until September 30, 2006. We expect that this will provide these CAHs with sufficient time to seek reclassification as rural facilities under the current regulations at § 412.103. In other words, after October 1, 2006, these facilities must meet at least one of the criteria in § 412.103(a)(1) through (a)(3) to be eligible to reclassify from urban to rural status. Once the § 412.103 reclassification is approved, the facilities would meet the CAH rural location requirements in § 485.610(b)(2). In addition, consistent with the clarification of the policy, we are proposing to amend the regulations at § 412.103(a)(4) to reflect the proposed change in the text of the CAH location regulations at § 485.610(b)(3).
In addition, we are making a technical amendment to § 485.610(b)(1)(ii) by replacing the reference to 42 CFR 412.63(b) with 42 CFR 412.64(b). This proposed technical amendment would conform the regulations to reflect the rules governing geographic reclassification (found at § 412.64) that are already in place for fiscal years beginning on or after October 1, 2004 (69 FR 49242).
Section 405(h) of Pub. L. 108-173 amended section 1820(c)(2)(B)(i)(II) of the Act by adding language that terminated a State's authority to waive the location requirement for a CAH by designating the CAH as a necessary provider, effective January 1, 2006. Currently, a CAH is required to be located more than a 35-mile drive (or in the case of mountainous terrain or secondary roads, a 15-mile drive) from a hospital or another CAH, unless the CAH is certified by the State as a necessary provider of health care services to residents in the area. Under this provision, after January 1, 2006, States will no longer be able to designate a CAH based upon a determination that it is a necessary provider of health care. In addition, section 405(h) of Pub. L. 108-173 amended section 1820(h) of the Act to include a grandfathering provision for CAHs that are certified as necessary providers prior to January 1, 2006. In the FY 2005 IPPS final rule (69 FR 49220), we incorporated these amendments in our regulations at § 485.610 (c). Under that regulation, any CAH that is designated as a necessary provider in its State rural health plan prior to January 1, 2006, will be permitted to maintain its necessary provider designation. However, the regulations are limited to CAHs that were necessary providers as of January 1, 2006, and does not address the
The criteria used to qualify a CAH as a necessary provider were established by each State in its MRHFP. The State's MRHFP defined those CAHs that provide necessary services to a particular patient community in the event that the facility did not meet the required 35-mile (or 15-mile with stated exceptions) distance requirement from the nearest hospital or CAH. Each State's criteria are different, but the criteria share certain similarities and all define a necessary provider related to the facility location. Therefore, it becomes crucial to define whether the necessary provider designation remains pertinent in the event the certified CAH builds in a different location. Accordingly, the first step of this process is to determine whether building a new CAH facility in a different location is a replacement of an existing facility in essentially the same location, a relocation of the facility in a new location, or a cessation of business at one location and establishment of new business at another location.
(1)
(2)
In the event that CMS determines the rebuilding of the CAH in a different location to be a relocation, the provider agreement would continue to apply to the CAH at the new location. In addition to the relocation being within the same service area, serving the same population, the CAH would need to be providing essentially the same services with the same staff; that is, at least 75 percent of the same staff and 75 percent of the range of services are maintained in the new location as the same provider of services. We are proposing the use of a 75-percent threshold because we believe it indicates that the CAH that is relocating demonstrates that it will maintain a high level of involvement, as opposed to just a majority involvement, in the current community. We note that CMS has also used a 75-percent threshold in other provider designation policies such as the provider-based policies at § 413.65(e)(3)(ii).
In all cases of relocation, the CAH must continue to meet all of the CoPs found at 42 CFR Part 485, Subpart F, including location in a rural area as provided for at § 485.610.
(3)
Once it has been determined that constructing a new facility will cause the CAH to relocate, the second step is to determine if the CAH that has a necessary provider designation can maintain this designation after relocating.
We recognize that § 485.610(c) relating to location relative to other facilities or necessary provider certification states that, after January 1, 2006, the “necessary provider” designation will no longer be used to waive the mileage requirements. In addition, CMS policy regarding a change of size or location of a provider states that there may be situations where the facility relocation is so far removed from the originally approved site that we would conclude that this is a different provider or supplier, for example, it has different employees, services, and patients. Furthermore, the language of section 1820(c)(2)(i) of the Act allows a State to waive the mileage requirement and designate a facility as a necessary provider of health care services to residents in the area. We have interpreted “services to residents in the area” to mean that the necessary provider designation does not automatically follow the provider if the facility relocates to a different location because it is no longer furnishing “services to patients” in the area determined to need a necessary provider.
We do not intend to change this policy. Our proposal, noted below, is intended to establish a methodology to be used by all CMS Regional Offices in making such a decision consistent with the statutory provisions concerning necessary provider designation.
In this proposed rule, we are proposing to amend the regulations at § 485.610 to set forth the criteria by
(1) The relocated CAH has submitted an application to the State agency for relocation prior to the January 1, 2006, sunset date. If the CAH is applying under a grandfathered status under section 1820(h)(3) of the Act, the following items would need to be included in the application:
• A demonstration that the CAH will meet the same State criteria for the necessary provider designation that were established when the waiver was originally issued. For example, if the location waiver was granted because the CAH was located in a health professional shortage area (HPSA), the CAH must remain in that HPSA.
• Assurance that, after the relocation, the CAH will be servicing the same community and will be operating essentially the same services with essentially the same staff (that is, a demonstration that it is serving at least 75 percent of the same service area, with 75 percent of the same services offered, and staffed by 75 percent of the same staff, including medical staff, contracted staff, and employees). This is essentially the same criteria used in determining whether the CAH has relocated.
• Assurance that the CAH will remain in compliance with all of the CoPs at 42 CFR Part 485 in the new location. Compliance will be established with a full survey in the new location to include the Life Safety Code and would include any off-site locations and rehabilitation or psychiatric distinct part units.
• A demonstration that construction plans were “under development” prior to the effective date of Pub. L. 108-173 (December 8, 2003) in the application the CAH submits to continue using a necessary provider designation. Supporting documentation could include the drafting of architectural specifications, the letting of bids for construction, the purchase of land and building supplies, documented efforts to secure financing for construction, expenditure of funds for construction, and compliance with state requirements for construction such as zoning requirements, application for a certificate of need, and architectural review. However, we recognize that it may not have been feasible for a CAH to have completed all of these activities noted above as examples prior to December 8, 2003. Thus, we expect the CMS Regional Offices to consider all of the criteria and make case-by-case determinations of whether a relocated CAH continues to warrant necessary provider status. We note that we have also used the above documentation guidelines in Publication 100-20 for grandfathered specialty hospitals to determine if construction plans were “under development.”
In proposing these criteria, our intent in clarifying the sunset of the necessary provider designation provision is to allow CAHs to complete construction projects that were initiated prior to the enactment of Pub. L. 108-173, which we believe is consistent with the statutory language of section 405(h) of Pub. L. 108-173.
(2) In the application, the CAH demonstrates that the replacement will facilitate the access to care and improve the delivery of services to Medicare beneficiaries. We are soliciting comments on how a necessary provider CAH should demonstrate that the replacement will improve access to care.
These guidelines are meant to be applied to the relocated CAH that meets the CoP in the new location and wishes to maintain a necessary provider designation in order to meet the distance requirement at § 485.610(c). They are not meant to preclude a CAH from relocating at any time if the CAH does not seek to maintain the necessary provider designation. Any CAH may relocate at any time if the CAH meets the definition of relocation and can meet all the CoPs at 42 CFR part 485, subpart F, as determined by the CMS Regional Offices on a case-by-case basis.
Accordingly, we are proposing to revise § 485.610 of the regulations by adding a new paragraph (d) to incorporate this proposal. Specifically, the proposed new paragraph (d) would specify that a CAH may maintain its necessary provider certification provided for under § 485.610(c) if the new facility meets the requirements for either a replacement facility that is constructed within 250 yards of the current building or contiguous to the current CAH on land owned by the CAH prior to December 8, 2003; or as a relocated CAH if, at the relocated site, the CAH provides essentially (75 percent) the same services to the same service area with essentially the same staff. The CAH that plans to relocate must provide documentation demonstrating that its plans to rebuild in the relocated area were undertaken prior to December 8, 2003. We are also proposing that if a CAH that has a necessary provider certification from the State places a new facility in service on or after January 1, 2006, and does not meet either the requirements for a replacement facility or a relocated facility, as specified in the regulations, the action will be considered a cessation of business.
(If you choose to comment on issues in this section, please include the caption “Blood Clotting Factor” at the beginning of your comment.)
Section 1886(a)(4) of the Act excludes the costs of administering blood clotting factors to individuals with hemophilia from the definition of “operating costs of inpatient hospital services.” Section 6011(b) of Pub. L. 101-239 (the Omnibus Budget Reconciliation Act of 1989) states that the Secretary of Health and Human Services shall determine the payment amount made to hospitals under Part A of Title XVIII of the Act for the costs of administering blood clotting factors to individuals with hemophilia by multiplying a predetermined price per unit of blood clotting factor by the number of units provided to the individual. The regulations governing payment for blood clotting factor furnished to hospital inpatients are located in §§ 412.2(f)(8) and 412.115(b).
Consistent with the rates paid under section 1842(o) of the Act for Medicare Part B drugs (including blood clotting factor furnished to individuals who are not inpatients), in FY 2005, we made payments for blood clotting factors furnished to inpatients at 95 percent of average wholesale price (AWP). Section 303 of Pub. L. 108-173 established
To ensure consistency in payment for Medicare Part A and Medicare Part B drugs, we are proposing to revise §§ 412.2(f)(8) and 412.115(b) of the regulations governing the IPPS to specify that, for discharges occurring on or after October 1, 2005, the additional payment for the blood clotting factor administered to hemophilia inpatients is made based on the average sales price methodology specified in subpart K of 42 CFR part 414 and the furnishing fee specified in § 410.63.
The proposed payment amount per unit and the unit payment for the furnishing fee for blood clotting factor administered to hospital inpatients who have hemophilia that we are proposing to apply under the IPPS for FY 2006 are specified in section V. of the Addendum to this proposed rule.
(If you choose to comment on issues in this section, please include the caption “MedPAC Recommendations” at the beginning of your comment.)
We are required by section 1886(e)(4)(B) of the Act to respond to MedPAC's IPPS recommendations in our annual proposed IPPS rule. In March 2005, MedPAC released the following two reports to Congress, which included IPPS recommendations: “Report to Congress: Medicare Payment Policy” and “Report to Congress: Physician-Owned Specialty Hospitals.” We have reviewed each of these reports and have given them careful consideration in conjunction with the policies set forth in this document. These recommendations and our responses are set forth below. For further information relating specifically to the MedPAC reports or to obtain a copy of the reports, contact MedPAC at (202) 653-7220, or visit MedPAC's Web site at:
MedPAC's Recommendation 2A-1 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 B to this proposed rule.
• Refining the current DRGs to more fully capture differences in severity of illness among patients.
• Basing the DRG relative weights on the estimated cost of providing care rather than on charges.
• Basing the weights on the national average of hospitals' relative values in each DRG.
In making this recommendation, MedPAC recognized several implementation issues regarding potential low volume DRGs and potential changes in hospital coding and reporting behavior. In particular, MedPAC recommended that the Secretary project the likely effect of reporting improvements on total payments and make an offsetting adjustment to the standardized amounts.
We are planning a comprehensive and systematic review of the CC list for the IPPS rule for FY 2007. As part of this process, we will consider revising the standard for determining when a condition is a CC. For instance, we expect to use an alternative to the current method of classifying a condition as a CC based on how it affects the length of stay of a case. Similar to other aspects of the DRG system, we expect to consider the effect of a specific secondary diagnosis on the charges or costs of a case to evaluate whether to include the condition on the CC list.
Another option we are considering is a selective review of the specific DRGs, such as cardiac, orthopedic, and surgical DRGs, that are alleged to be overpaid and that create incentives for physicians to form specialty hospitals. We expect to selectively review particular DRGs based on statistical criteria such as the range or standard deviation among charges for cases included within the DRG. It is possible specific DRGs have high variation in resource costs and that a better recognition of severity would reduce incentives for hospitals to select the least costly and most profitable patients within these DRGs. Any analysis we perform would balance the goal of making payment based on an accurate coding system that recognizes severity of illness with the premise that the IPPS is a system of payment based on averages. We agree with MedPAC that, in refining the DRGs, we must continue to be mindful of issues such as the instability of small volume DRGs and the potential impact of changes in hospital coding and reporting behavior. As MedPAC noted, previous refinements to DRG definitions have led to unanticipated increases in payment because of more complete reporting of patients' diagnoses and procedures. As part of our analysis of possible refinements to the DRGs, we have concerns with our ability to account for the effect of changes in coding behavior on payment.
We are also considering the use of alternative DRG systems such as the all patient refined diagnosis related groups (APR-DRGs) in place of Medicare's current DRG system. The APR-DRGs have a greater number of DRGs that could relate payment rates more closely to patient resource needs, and thus reduce the advantages of selection of desirable patients within DRGs by specialty hospitals. However, any large change to the DRGs could have substantial effects across all hospitals. Therefore, we believe we must thoroughly analyze such options and
In response to MedPAC's recommendation that we improve payment accuracy by basing the DRG relative weights on the estimated cost of providing care rather than on charges, we note that we do not have access to any information that would provide a direct measure of the costs of individual discharges. Claims filed by hospitals do provide information on the charges for individual cases. At present, we use this information to set the relative weights for the DRGs. We obtain information on costs from the hospital cost reports, but this information is at best at the department level; it does not include information about the costs of individual cases. Consequently, the most straightforward way to estimate costs of an individual case is to calculate a cost-to-charge ratio for some body of claims (for example, for a hospital's radiology department), and then apply this ratio to the charges for that department.
However, this procedure is not without disadvantages because assignment of costs to departments is not uniform from hospital to hospital, given the variability of hospital accounting systems, and because cost information is not available until a year or more after claims information. In addition, the application of a cost-to-charge ratio that is uniform across any body of claims may result in biased estimates of individual costs if hospital charging behavior is not uniform. Thus, it is alleged that hospitals mark up lower cost services less than higher cost services, and to the extent they do so, application of a uniform cost-to-charge ratio will result in underestimates of the costs of higher cost services and vice versa. We use estimated costs, based on hospital-specific, department-level cost-to-charge ratios, in the hospital outpatient prospective payment system. The accuracy of this procedure has generated some concern, and without further analysis, the extent to which accuracy of inpatient payments would be improved by adopting this method is not obvious.
We will closely analyze the impact of such a change from the current charge-based DRG weights to cost-based DRG weights. We note that such a change is complex and would require further analysis. With this in mind, CMS will consider the following issues in performing this analysis:
• The effect of using cost-to-charge ratio data, which is frequently older than the claims data we use to set the charge-based weights, and the impact on these data of any changes in hospitals' charging behavior that resulted from the recent modifications to the outlier payment methodology (68 FR 34494; June 9, 2003);
• Whether using this method has different effects on DRGs that have experienced substantial technological change compared to DRGs with more stable procedures for care;
• The effect of using a routine cost-to-charge ratio and department-level ancillary cost-to-charge data as compared to either an overall hospital cost-to-charge ratio or a routine cost-to-charge ratio and an overall ancillary cost-to-charge ratio, particularly in considering earlier studies performed for the Prospective Payment Assessment Commission, the predecessor to MedPAC, indicating that an overall ancillary cost-to-charge ratio led to more accurate estimates of case level costs;
• Whether developing relative weights by estimating costs from charges multiplied by cost-to-charge ratios versus whether the sole use of charges improves payment accuracy; and
• How payments to hospitals would be affected by MedPAC's suggestion intended to simplify recalibration, to recalibrate weights based on costs every few years, and to calculate an adjustment to charge-based weights for the intervening periods.
In response to the recommendation that the Secretary should improve payment accuracy in the IPPS by basing the weights on the national average of hospitals' relative values in each DRG, we note that presently we set the relative weights using standardized charges (adjusted to remove the effects of differences in area wage costs and in IME and DSH payments). In contrast, MedPAC proposes that Medicare set the DRG relative weights using unstandardized, hospital-specific charges. Each hospital's unstandardized charges would become the basis for determining the relative weights for the DRGs for that hospital. These relative weights would be adjusted by the hospital's case-mix index when combining each hospital's relative weights to determine a national relative weight for all hospitals. This adjustment is designed to reduce the influence that a single hospital's charge structure could have on determining the relative weight when it provides a high proportion of the total, nationwide number of discharges in a particular DRG.
We will analyze the possibility of moving to hospital specific relative values while conducting the analysis outlined above in response to the recommendations regarding improved severity adjustment and using charges adjusted to estimated cost using cost-to-charge ratios to set the relative weights. We note that we use this method at present to set weights for the LTCH PPS. We use this method for LTCHs because of the small volume of providers and the possibility that only a few providers provide care for certain DRGs. The charges of one or a few hospitals could thus materially affect the relative weights for these DRGs. In this event, looking at relative values within hospitals first can smooth out the hospital-specific effects on DRG weights. A 1993 Rand Report on hospital specific relative values noted the possibility of DRG compression (or the undervaluing of high-cost cases and the overvaluing of low-cost cases) if we were to shift to a hospital-specific relative value method from the current method for determining DRG weights. We will need to consider whether the resultant level of compression is appropriate.
Finally, we believe that the recommendations made by MedPAC, or some variants of them, have significant promise in improving the accuracy of rates in the inpatient payment prospective payment system. We agree with MedPAC that they should be pursued even in the absence of concerns about the proliferation of specialty hospitals. However, until we have completed further analysis of these options and their effects, we cannot predict the extent to which they will provide payment equity between specialty and general hospitals. In fact, we must caution that any system that groups cases and provides a standard payment for cases in the group (that is, the IPPS among other Medicare payment systems) will always present some opportunities for providers to specialize in cases where they believe margins may be better. Improving payment accuracy should reduce these opportunities, and it may do so to the extent that Medicare payments no longer provide a significant impetus to further development of specialty hospitals.
MedPAC also made the following recommendations that we will address in our Report to Congress on Specialty Hospitals:
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 2002 used to create the FY 2006 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 includes each hospital's adjusted and unadjusted average hourly wage.
This file includes each CBSA's adjusted and unadjusted average hourly wage.
This file contains each hospital's occupational mix adjustment factors by occupational category.
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 Areas (MSAs).
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 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 costs, 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 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.
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 from an internal file used for the impact analysis of the changes to the prospective payment systems published in the
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 Mark Hartstein at (410) 786-4548.
Under the Paperwork Reduction Act of 1995 (PRA), we are required to provide 60-day notice in the
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
Therefore, we are soliciting public comments on each of these issues for the information collection requirements discussed below.
The following information collection requirements included in this proposed rule and their associated burdens are subject to the PRA.
Section 412.64(d)(2) requires hospitals to submit quality data on a quarterly basis to CMS, as specified by CMS. In this document, we are setting out the specific requirements related to the data that must be submitted. The burden associated with this section is the time and effort associated with collecting, copying and submitting this data. We estimate that there will be approximately 4,000 respondents per year. Of this number, approximately 3,600 hospitals are JCAHO accredited and are currently collecting measures and submitting data to the JCAHO on a quarterly basis. Of the JCAHO accredited hospitals, approximately 3,300 are collecting the same measures CMS will be collecting for public reporting. Therefore, there will be no additional burden for these hospitals. Only approximately 300 of the JCAHO accredited hospitals will need to collect an additional topic in addition to the data already collected for maintaining JCAHO accreditation. In addition, there are approximately 400 hospitals that do not participate in the JCAHO accreditation process. These hospitals will have the additional burden of collecting data on all three topics.
For JCAHO accredited hospitals that are not already collecting all of the required measures, we estimate it will take 25 hours per month per topic for collection. We expect the burden for all of these hospitals to total 102,000 hours per year, including time allotted for overhead. For non-JCAHO accredited hospitals, we estimate the burden to be 136,000 hours per year. This estimate also includes overhead. The total number of burden hours for all hospitals combined is 238,000. The number of responders will vary according to the level of voluntary participation. One hundred percent of the data may be collected electronically.
In the preamble to this proposed rule, we are proposing additional validation criteria to ensure that the quality data being sent to CMS are accurate. Our validation process requires participating hospitals to submit five charts per quarter. The burden associated with this requirement is the time and effort associated with collecting, copying, and submitting these charts. It will take approximately 2 hours per hospital to submit the 5 charts per quarter. There will be a total of approximately 19,000 charts (3,800 hospitals × charts per hospital) submitted by the hospitals to CMS per quarter for a total burden of 7,600 hours per quarter and a total annual burden of 30,400 hours.
Proposed § 413.65(b)(3)(i) requires potential main providers seeking a determination of provider-based status for a facility that is located on the campus of the potential main provider to submit an attestation stating that the facility meets the criteria in paragraph (d) of § 413.65 and, if it is a hospital, to also attest that it will fulfill the obligations of hospital outpatient departments and hospital-based entities described in paragraph (g) of § 413.65. We are also proposing to amend this paragraph to require that in the case of a facility that is operated as a joint venture, the potential main provider attest that it will comply with the requirements of paragraph (f) of § 413.65.
Proposed § 413.65(b)(3)(ii) provides that, if a facility is not located on the campus of the potential main provider, the potential main provider must submit an attestation stating that the facility meets the criteria in paragraph (d) and (e) of § 413.65 and, if it is a hospital, to also attest that it will fulfill the obligations of hospital outpatient departments and hospital-based entities described in paragraph (g) of § 413.65. If the facility is operated under a management contract, the potential main provider also attest that the facility meets the requirements of paragraph (h) of § 413.65.
Proposed § 413.65(e)(3) requires that a facility or organization for which provider-based status is sought that is not located on the campus of a potential main provider must (i) be located within a 35-mile radius of the campus of the hospital or CAH that is the potential main provider, or (ii) be owned and operated by a hospital or CAH that has a disproportionate share adjustment (as determined under § 412.106 of this chapter) greater than 11.75 percent and is described in § 412.106(c)(2) of this chapter implementing section 1886(e)(5)(F)(i)(II) of the Act and is (A) owned or operated by a unit of State or local government, (B) a public or nonprofit corporation formally granted governmental powers by a unit of State or local government; or (C) a private hospital having a contract with a State or local government that includes the operation of clinics located off the main campus of the hospital to assure access in a well-defined service area to health care services for low-income individuals who are not entitled to benefits under Medicare (or medical assistance under a Medicaid State plan), or (iii) demonstrate a high level of integration
Section 413.65(g)(7) provides that when a Medicare beneficiary is treated in a hospital outpatient department that is not located on the main provider's campus, the treatment is not required to be provided by the antidumping rules of section 489.24, and the beneficiary will incur a coinsurance liability for an outpatient visit to the hospital, as well as for the physician service the hospital must provide written notice to the beneficiary, before delivery of services of the amount of the beneficiary's potential financial liability. If the exact type and extent of care is not known, the hospital must provide written notice to the beneficiary that explains that the beneficiary will incur a coinsurance liability to the hospital that he or she would not incur if the facility were not provider-based, an estimate based on typical or average charges for visits to the facility, and a statement that the patient's actual liability will depend upon the actual services furnished by the hospital.
While the information collection requirements contained in this section are subject to the PRA, the burden associated with this requirement is currently approved under OMB approval no. 0938-0798.
In order to be considered a relocation, we are proposing under § 485.610(d)(2)(ii) to require a CAH to provide documentation demonstrating that its plans to rebuild in a relocated area were undertaken prior to December 8, 2003. This requirement does impose an information collection requirement. However, because this burden would be imposed on less than 10 CAHs, under 5 CFR 1320.2(c), these requirements are exempt from the PRA.
We have submitted a copy of this proposed rule to OMB for its review of the information collection requirements described above.
If you have any comments on the information collection and recordkeeping requirements, please mail the copies directly to the following:
Comments submitted to OMB may also be e-mailed to the following address:
Because of the large number of items of correspondence we normally receive on a proposed rule, we are not able to acknowledge or respond to them individually. However, in preparing the final rule, we will consider all comments concerning the provisions of this proposed rule that we receive by the date and time specified in the
Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medicare, Reporting and recordkeeping requirements, Rural area, X-rays.
Administrative practice and procedure, Health facilities, Medicare, Puerto Rico, Reporting and recordkeeping requirements.
Health facilities, Kidney diseases, Medicare, Puerto Rico, Reporting and recordkeeping requirements.
Health facilities, Health professions, Medicare, and reporting and recordkeeping requirements.
Hospitals, Medicare, Reporting and recordkeeping requirements.
Health maintenance organizations (HMO), Medicare+Choice, Provider sponsored organizations (PSO).
Grant programs-health, Health facilities, Medicaid, Medicare, Reporting and recordkeeping requirements.
For the reasons stated in the preamble of this proposed rule, the Centers for Medicare & Medicaid Services is proposing to amend 42 CFR chapter IV as follows:
A. Part 405 is amended as follows:
1. The authority citation for Part 405 continues to read as follows:
Secs. 1102, 1861, 1862(a), 1871, 1874, 1881, and 1886(k) of the Social Security Act (42 U.S.C. 1302, 1395x, 1395y(a), 1395hh, 1395kk, 1395rr, and 1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C. 263a).
2. In § 405.2468(f)(1), the reference “§ 413.86(b)” is removed and the reference “§ 413.75(b)” is added in its place.
B. Part 412 is amended 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. In § 412.1(a)(1), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
3. In § 412.2—
a. In paragraph (f)(7), remove the reference “§ 413.86” and add in its place the reference “§§ 413.75 through 413.83”.
b. At the end of paragraph (f)(8), add the following sentence: “For discharges occurring on or after October 1, 2005, the additional payment is made based on the average sales price methodology specified in Subpart K, Part 414 of this subchapter and the furnishing fee specified in § 410.63 of this subchapter.”
4. Section 412.64 is amended by revising paragraph (k)(2) to read as follows:
(k)
(2)(i) Except as provided in paragraph (k)(2)(ii) of this section, a midyear correction to the wage index is effective prospectively from the date the change is made to the wage index.
(ii) Effective October 1, 2005, a change to the wage index may be made retroactively to the beginning of the Federal fiscal year, if, for the fiscal year in question, CMS determines all of the following—
(A) The fiscal intermediary or CMS made an error in tabulating data used for the wage index calculation;
(B) The hospital knew about the error in its wage data and requested the fiscal intermediary and CMS to correct the error both within the established schedule for requesting corrections to the wage data (which is at least before the beginning of the fiscal year for the applicable update to the hospital inpatient prospective payment system) and using the established process; and
(C) CMS agreed before October 1 that the fiscal intermediary or CMS made an error in tabulating the hospital's wage data and the wage index should be corrected.
5. Section 412.73 is amended by adding a new paragraph (f) to read as follows:
(f)
6. Section 412.75 is amended by adding a new paragraph (i) to read as follows:
(i)
7. Section 412.77 is amended by—
a. Revising paragraph (a)(1).
b. Adding a new paragraph (j).
The revision and addition read as follows:
(a)
(j)
8. Section 412.90 is amended by revising paragraph (e)(1) to read as follows:
(e)
9. Section 412.92 is amended by—
a. In paragraph (a) introductory text, removing the reference “§ 412.83(b)” and adding in its place the reference “§ 412.64”.
b. Revising paragraph (d)(1)(i).
c. Revising paragraph (d)(3).
The revisions and addition read as follows:
(d)
(i) The Federal payment rate applicable to the hospitals as determined under subpart D of this part.
(3)
10. Section 412.96 is amended by—
a. Revising paragraph (b)(1) introductory text.
b. Revising paragraph (c) introductory text.
c. In paragraph (c)(1) introductory text, removing the reference “paragraph (g)” and adding in its place the reference “paragraph (h)”.
d. In paragraph (c)(2)(i), removing the reference “paragraph (h)” and adding in its place the reference “paragraph (i)”.
e. Revising paragraph (g)(1).
f. In the introductory text of paragraph (h), removing the phrase “paragraphs (g)(1) through (g)(4)” and adding in its place the phrase “paragraphs (h)(1) through (h)(4)”.
g. In paragraph (h)(2), removing the reference “(g)(1)” and adding in its place the reference “(h)(1)”.
h. Removing paragraph (h)(4).
i. In paragraph (i)(2), removing the reference “(h)(1)” and adding in its place the reference “(i)(1)”.
j. Removing paragraph (i)(4).
The revisions read as follows:
(b)
(1) The hospital is located in a rural area (as defined in subpart D of this part) and has the following number of beds, as determined under the provisions of § 412.105(b) available for use:
(c)
(g)
11. Section 412.103 is amended by revising paragraphs (a)(1) and (a)(4) to read as follows:
(a) * * *
(1) The hospital is located in a rural census tract of a Metropolitan Statistical Area (MSA) as determined under the most recent version of the Goldsmith Modification, the Rural-Urban Commuting Area codes, as determined by the Office of Rural Health Policy (ORHP) of the Health Resources and Services Administration, which is available via the ORHP Web site at:
(4) For any period after September 30, 2004 and before October 1, 2006, a CAH in a county that, in FY 2004, was not part of an MSA as defined by the Office of Management and Budget and was not considered to be urban under § 412.64(b)(3) of this chapter, but as of FY 2005 was included as part of an MSA or was considered to be urban under § 412.64(b)(3) of this chapter as a result of the most recent census data and implementation of the new MSA definitions announced by OMB on June 6, 2003, may be reclassified as being located in a rural area for purposes of meeting the rural location requirement under § 485.610(b) of this chapter if it meets any of the requirements in paragraphs (a)(1), (a)(2), or (a)(3) of this section.
12. Section 412.105 is amended by—
a. Adding a new paragraph (f)(1)(iv)(D).
b. Adding a new paragraph (f)(1)(xiii).
c. Adding a new paragraph (f)(1)(xiv).
The additions read as follows:
(f)
(iv) * * *
(D) A rural hospital redesignated as urban after September 30, 2004, as a result of the most recent census data and implementation of the new labor market area definitions announced by OMB on June 6, 2003, may retain the increases to its full-time equivalent resident cap that it received under paragraphs (f)(1)(iv)(A) and (f)(1)(vii) of this section while it was located in a rural area.
(xiii) For a hospital that was excluded from the hospital inpatient prospective payment system under Part 413 of this chapter and that subsequently changed to a hospital subject to the hospital inpatient prospective payment system for cost reporting periods ending on or before December 31, 1996, the total number of full-time equivalent residents for payment purposes is determined in accordance with the provisions of this paragraph (f). In the case of a merger of two or more hospitals, for purposes of this paragraph, the surviving hospital's number of full-time equivalent residents for payment purposes is equal to the aggregate number of the full-time equivalent resident count of each of the merged hospitals as determined in accordance with the provisions of this paragraph (f).
(xiv) Effective for discharges occurring on or after October 1, 2005, an urban hospital that reclassifies to a rural area under § 412.103 and then subsequently elects to revert back to urban classification will not be allowed to retain the adjustment to its IME FTE resident cap that it received as a result of being reclassified as rural.
13. Section 412.108 is amended by revising paragraph (c)(1) to read as follows:
(c)
(1) The Federal payment rate applicable to the hospital, as determined under subpart D of this part, subject to the regional floor defined in § 412.70(c)(6).
14. Section 412.109 is amended by revising paragraph (b)(2) to read as follows:
(b)
(2) Is not deemed to be located in an urban area under subpart D of this part.
15. In § 412.113—
a. In paragraph (b)(2), the reference “§ 413.86 of this chapter.” is removed and the reference “§§ 413.75 through 413.83 of this subchapter.” is added in its place.
b. In paragraph (b)(3), the reference “§ 413.86(c) of this chapter,” is removed and the reference “§ 413.75(c) of this subchapter,” is added in its place.
16. In § 412.115—
a. In paragraph (a), the reference “§ 413.80” is removed and the reference “§ 413.89” is added in its place.
b. At the end of paragraph (b), add the following sentence: “For discharges occurring on or after October 1, 2005, the additional payment is made based on the average sales price methodology specified in subpart K, part 414 of this chapter and the furnishing fee specified in § 410.63 of this subchapter.”
17. Section 412.230 is amended by—
a. Redesignating paragraph (d)(2)(iii) as paragraph (d)(2)(v).
b. Adding new paragraphs (d)(2)(iii) and (d)(2)(iv).
The additions read as follows:
(d)
(2)
(iii) For applications submitted for reclassifications effective in FY 2006, a campus of a multicampus hospital system may seek reclassification to another CBSA. As part of its reclassification request, the requesting entity may submit the composite wage data for the entire multicampus hospital system as its hospital-specific data.
(iv) For applications submitted for reclassifications effective in FY 2007 and subsequent years, a campus of a multicampus hospital system may seek reclassification to another CBSA. As part of its reclassification request, the requesting entity must submit campus-specific wage data for purposes of the wage index comparison.
18. Section 412.234 is amended by—
a. In paragraph (a)(3)(ii), removing the phrase “fiscal years 2006 and thereafter”
b. Adding a new paragraph (a)(3)(iii).
c. In paragraph (b)(1), removing the phrase “or NECMA”.
The addition reads as follows:
(a) * * *
(3) * * *
(iii) For Federal fiscal year 2007 and thereafter, hospitals located in counties that are in the same Consolidated Statistical Area (CSA) (under the MSA definitions announced by the OMB on June 6, 2003) as the urban area to which they seek redesignation qualify as meeting the proximity requirement for reclassification to the urban area to which they seek redesignation.
19. In § 412.278(b)(1), the phrase “Office of Payment Policy” is removed and the phrase “Hospital and Ambulatory Policy Group” is added in its place.
20. Section 412.304 is amended by revising paragraph (a) to read as follows:
(a)
21. In § 412.521—
a. Under paragraph (b)(2)(i), the reference “§§ 413.85, 413.86, and 413.87 of this subchapter.” is removed and the reference “§§ 413.75 through 413.83, 413.85, and 413.87 of this subchapter.” is added in its place.
b. Under paragraph (b)(2)(ii), the reference “§ 413.80” is removed and the reference “§ 413.89” is added in its place.
C. Part 413 is amended as follows:
1. The authority citation for Part 413 continued 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. In § 413.13 (d)(1), the reference “§ 413.80” is removed and the reference “§ 413.89” is added in its place.
3. Section 413.40 is amended by—
a. In paragraph(a)(3), under the definition of “Net inpatient operating costs”, removing the reference “§§ 413.85 and 413.86” and adding in its place the reference “§§ 413.75 through 413.83 and 413.85”.
b. Revising paragraph (c)(4)(iii).
(c)
(4)
(iii) For cost reporting periods beginning on or after October 1, 1997 through September 30, 2002, in the case of a psychiatric hospital or unit, rehabilitation hospital or unit, or long-term care hospital, the target amount is the lower of the amounts specified in paragraph (c)(4)(iii)(A) or paragraph (c)(4)(iii)(B) of this section.
4. Section 413.65 is amended by—
a. Reprinting the introductory text of paragraph (a)(1)(ii) and adding a new paragraph (a)(1)(ii)(L).
b. Revising the definition of “Provider-based entity” under paragraph (a)(2).
c. Revising paragraphs (b)(3)(i) and (b)(3)(ii).
d. Revising paragraphs (e)(1) introductory text and (e)(1)(i).
e. Revising paragraph (e)(3).
f. Revising paragraph (g)(7).
The addition and revision read as follows:
(a)
(1) * * *
(ii) The determinations of provider-based status for payment purposes described in this section are not made as to whether the following facilities are provider-based:
(L) Rural health clinics (RHCs) affiliated with hospitals having 50 or more beds.
(2)
(b)
(3)(i) Except as specified in paragraphs (b)(2) and (b)(5) of this section, if a potential main provider seeks a determination of provider-based status for a facility that is located on the campus of the potential main provider, the provider would be required to submit an attestation stating that the facility meets the criteria in paragraph (d) of this section and, if it is a hospital, also attest that it will fulfill the obligations of hospital outpatient departments and hospital-based entities described in paragraph (g) of this section. The provider seeking such a determination would also be required to maintain documentation of the basis for its attestations and to make that documentation available to CMS and to CMS contractors upon request. If the facility is operated as a joint venture, the provider would also have to attest that it will comply with the requirements of paragraph (f) of this section.
(ii) If the facility is not located on the campus of the potential main provider, the provider seeking a determination would be required to submit an attestation stating that the facility meets the criteria in paragraphs (d) and (e) of this section, and if the facility is operated under a management contract, the requirements of paragraph (h) of this section. If the potential main provider is a hospital, the hospital also would be required to attest that it will fulfill the obligations of hospital outpatient departments and hospital-based entities described in paragraph (g) of this section. The provider would be required
(e) * * *
(1)
(i) The business enterprise that constitutes the facility or organization is 100 percent owned by the main provider.
(3)
(i) The facility or organization is located within a 35-mile radius of the campus of the hospital or CAH that is the potential main provider.
(ii) The facility or organization is owned and operated by a hospital or CAH that has a disproportionate share adjustment (as determined under § 412.106 of this chapter) greater than 11.75 percent and is described in § 412.106(c)(2) of this chapter implementing section 1886(e)(5)(F)(i)(II) of the Act and is—
(A) Owned or operated by a unit of State or local government;
(B) A public or nonprofit corporation that is formally granted governmental powers by a unit of State or local government; or
(C) A private hospital that has a contract with a State or local government that includes the operation of clinics located off the main campus of the hospital to assure access in a well-defined service area to health care services for low-income individuals who are not entitled to benefits under Medicare (or medical assistance under a Medicaid State plan).
(iii) The facility or organization demonstrates a high level of integration with the main provider by showing that it meets all of the other provider-based criteria and demonstrates that it serves the same patient population as the main provider, by submitting records showing that, during the 12-month period immediately preceding the first day of the month in which the application for provider-based status is filed with CMS, and for each subsequent 12-month period—
(A) At least 75 percent of the patients served by the facility or organization reside in the same zip code areas as at least 75 percent of the patients served by the main provider; or
(B) At least 75 percent of the patients served by the facility or organization who required the type of care furnished by the main provider received that care from that provider (for example, at least 75 percent of the patients of an RHC seeking provider-based status received inpatient hospital services from the hospital that is the main provider).
(iv) If the facility or organization is unable to meet the criteria in paragraph (e)(3)(iii)(A) or paragraph (e)(3)(iii)(B) of this section because it was not in operation during all of the 12-month period described in paragraph (e)(3)(iii) of this section, the facility or organization is located in a zip code area included among those that, during all of the 12-month period described in paragraph (e)(3)(iii) of this section, accounted for at least 75 percent of the patients served by the main provider.
(v) Both of the following criteria are met:
(A) The facility or organization is an RHC that is otherwise qualified as a provider-based entity of a hospital that has fewer than 50 beds, as determined under § 412.105(b) of this chapter; and
(B) The hospital with which the facility or organization has a provider-based relationship is located in a rural area, as defined in Subpart D of Part 412 of this subchapter.
(vi) A facility or organization may qualify for provider-based status under this section only if the facility or organization and the main provider are located in the same State or, when consistent with the laws of both States, in adjacent States.
(g)
(7) When a Medicare beneficiary is treated in a hospital outpatient department that is not located on the main provider's campus, the treatment is not required to be provided by the antidumping rules in § 489.24 of this chapter, and the beneficiary will incur a coinsurance liability for an outpatient visit to the hospital as well as for the physician service, the following requirements must be met:
(i) The hospital must provide written notice to the beneficiary, before the delivery of services, of—
(A) The amount of the beneficiary's potential financial liability; or
(B) If the exact type and extent of care needed are not known, an explanation that the beneficiary will incur a coinsurance liability to the hospital that he or she would not incur if the facility were not provider-based, an estimate based on typical or average charges for visits to the facility, and a statement that the patient's actual liability will depend upon the actual services furnished by the hospital.
(ii) The notice must be one that the beneficiary can read and understand.
(iii) If the beneficiary is unconscious, under great duress, or for any other reason unable to read a written notice and understand and act on his or her own rights, the notice must be provided, before the delivery of services, to the beneficiary's authorized representative.
(iv) In cases where a hospital outpatient department provides examination or treatment that is required to be provided by the antidumping rules of § 489.24 of this chapter, notice, as described in this paragraph (g)(7), must be given as soon as possible after the existence of an emergency has been ruled out or the emergency condition has been stabilized.
5. Section 413.75 is amended in paragraph (b) by revising paragraph (1) under the definition of “Medicare GME affiliated group” to 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 subpart D of part 412 of this subchapter.
6. In § 413.77, under paragraph (e)(1)(iii), the reference “§ 412.62(f)(1)(i) of this chapter.” is removed and the reference “subpart D of part 412 of this subchapter”. is added in its place.
7. Section 413.79 is amended by—
a. Revising paragraph (a)(10).
b. Revising the introductory text of paragraph (c)(2).
c. In paragraph (c)(3)(i), removing the reference “§ 412.62(f)(iii)” and adding in its place the reference “subpart D of part 412 of this subchapter”.
d. Adding a new paragraph (c)(6).
e. Revising paragraph (e)(1)(iv).
f. In the introductory text of paragraph (k), removing the reference “(k)(6)” and adding in its place the reference “(k)(7)”.
g. Adding a new paragraph (k)(7).
The revisions and additions read as follows:
(a) * * *
(10) Effective for portions of cost reporting periods beginning on or after October 1, 2004, if a hospital can document that a resident simultaneously matched for one year of training in a particular specialty program, and for a subsequent year(s) of training in a different specialty program, the resident's initial residency period will be determined based on the period of board eligibility for the specialty associated with the program for which the resident matched for the subsequent year(s) of training. Effective for cost reporting periods beginning on or after October 1, 2005, if a hospital can document that a particular resident, prior to beginning the first year of residency training, matched in a specialty program for which training would begin at the conclusion of the first year of training, that resident's initial residency period will be determined in the resident's first year of training based on the period of board eligibility associated with the specialty program for which the resident matched for subsequent training year(s).
(c)
(2)
(6)
(e)
(1) * * *
(iv) An urban hospital that qualifies for an adjustment to its FTE cap under paragraph (e)(1) of this section is permitted to be part of a Medicare GME affiliated group for purposes of establishing an aggregate FTE cap only if the adjustment that results from the affiliation is an increase to the urban hospital's FTE cap.
(k)
(7) If an urban hospital had established a rural track training program under the provisions of this paragraph (k) with a hospital located in a rural area and that rural area subsequently becomes an urban area due to the most recent census data and implementation of the new labor market area definitions announced by OMB on June 6, 2003, the urban hospital may continue to adjust its FTE resident limit in accordance with this paragraph (k) for the rural track programs established prior to the adoption of such new labor market area definitions. In order to receive an adjustment to its FTE resident cap for a new rural track residency program, the urban hospital must establish a rural track program with hospitals that are designated rural based on the most recent geographical location designations adopted by CMS.
8. In § 413.87(d) introductory text, the reference “§ 413.86(d)(4)” is removed and the reference “§ 413.76(d)(4)” is added in its place.
9. In § 413.178—
a. In paragraph (a), the reference “§ 413.80(b)” is removed and the reference “§ 413.89(b)” is added in its place.
b. In paragraph (b), the reference “§ 413.80” is removed and the reference “§ 413.89” is added in its place.
D. Part 415 is amended as follows:
1. The authority citation for part 415 continued to read as follows:
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
2. In § 415.55(a)(5), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
3. In § 415.70(a)(2), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
4. In § 415.102(c)(1), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
5. In § 415.150(b), the reference “§ 413.86” is removed and the phrase “§§ 413.75 through 413.83” is added in its place.
6. In § 415.152—
a. In paragraph (2) of the definition of “Approved graduate medical education (GME) program”, the reference “§ 413.86(b)” is removed and the reference “§ 413.75(b)” is added in its place.
b. In the definition of “Teaching setting”, the reference “§ 413.86,” is removed and the reference “§§ 413.75 through 413.83,” is added in its place.
7. In § 415.160—
a. In paragraph (c)(2), the reference “§ 413.86” is removed and the reference “§ 413.78” is added in its place.
b. In paragraph (d)(2), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
8. In § 415.174(a)(1), the reference “§ 413.86.” is removed and the phrase “§§ 413.75 through 413.83.” is added in its place.
9. In § 415.200(a), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
10. In § 415.204(a)(2), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
11. In § 415.206(a), the reference “§ 413.86(f)(1)(iii)” is removed and the reference “§ 413.78” is added in its place.
12. In § 415.208—
a. In paragraph (b)(1), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
b. In paragraph (b)(4), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413. 83” is added in its place.
F. Part 419 is amended as follows:
1. The authority citation for part 419 continues to read as follows:
Secs. 1102, 1833(t), and 1871 of the Social Security Act (42 U.S.C. 1302, 1395l(t), and 1395hh).
2. In § 419.2—
a. In paragraph (c)(1), the reference “§ 413.86” is removed and the reference “§§ 413.75 through 413.83” is added in its place.
b. In paragraph (c)(6), the reference “§ 413.80(b)” is removed and the reference “§ 413.89(b)” is added in its place.
G. Part 422 is amended as follows:
1. The authority citation of part 422 continues to read as follows:
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
2. In § 422.214—
a. In paragraph (b), the phrase “§§ 412.105(g) and 413.86(d))” is removed and the phrase “§§ 412.105(g) and 413.76))” is added in its place.
b. In paragraph (b), the phrase “Section 413.86 (d)” is removed and the phrase “Section 413.76” is added in its place.
3. In § 422.216(a)(4), the reference “§§ 412.105(g) and 413.86(d)” is removed and the reference “§§ 412.105(g) and 413.76” is added in its place.
G. Part 485 is amended as follows:
1. The authority citation for Part 485 continues to read as follows:
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395(hh)).
2. Section 485.610 is amended by—
a. In paragraph (b)(1)(i), removing the reference “§ 412.62(f)” and adding in its place the reference “§ 412.64(b)”.
b. In paragraph (b)(1)(ii), removing the reference “§ 412.63(b)” and adding in its place the reference “§ 412.64(b)”.
c. Revising paragraph (b)(3).
d. Adding a new paragraph (d).
The revisions and additions read as follows:
(b) * * *
(3) Effective only for October 1, 2004 through September 30, 2006, the CAH does not meet the location requirements in either paragraph (b)(1) or paragraph (b)(2) of this section and is located in a county that, in FY 2004, was not part of a Metropolitan Statistical Area as defined by the Office of Budget Management and was not considered to be urban under § 412.63(b)(3) of this chapter, but as of FY 2005 was included as part of such an MSA or was considered to be urban under § 412.64(b)(3) of this chapter, as a result of the most recent census data and implementation of the new MSA definitions announced by OMB on June 6, 2003.
(d)
(1) A new construction of a CAH will be considered as a replacement facility if the construction is undertaken within 250 yards of the current building or contiguous to the current CAH on land owned by the CAH prior to December 8, 2003.
(2) A new facility CAH will be considered as a relocation of a CAH if, at the relocated site—
(i) The CAH serves at least 75 percent of the same service area that it served prior to its relocation, provides at least 75 percent of the same services that it provided prior to the relocation, and is staffed by 75 percent of the same staff (including medical staff, contracted staff, and employees); and
(ii) The CAH provides documentation demonstrating that its plans to rebuild in the relocated area were undertaken prior to December 8, 2003.
(3) If a CAH that has a necessary provider certification from the State places a new facility in service on or after January 1, 2006, and does not meet either the requirements in paragraph (d)(1) or paragraph (d)(2) of this section, the action will be considered a cessation of business as described in § 489.52(b)(3).
(If you choose to comment on issues in this section, please include the caption “Operating Payment Rates” at the beginning of your comment.)
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 the 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, 2005, 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 25 percent of a Puerto Rico rate that reflects base year average costs per case of Puerto Rico hospitals and 75 percent of the Federal national rate. (
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 2006. The proposed changes, to be applied
The basic methodology for determining prospective payment rates for hospital inpatient operating costs for FY 2005 and subsequent fiscal years is set forth at § 412.64. The basic methodology for determining the prospective payment rates for hospital inpatient operating costs for hospitals located in Puerto Rico for FY 2005 and subsequent fiscal years is set forth at §§ 412.211 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, 1B, 1C, and 1D of section VI. of this Addendum reflect—
• Equalization of the standardized amounts for urban and other areas at the level computed for large urban hospitals during FY 2004 and onward, as provided for under section 1886(d)(3)(A)(iv) of the Act, updated by the applicable percentage increase required under sections 1886(b)(3)(B)(i)(XIX) and 1886(b)(3)(B)(vii) of the Act.
• The two labor-related shares that are applicable to the standardized amounts, depending on whether the hospital's payments would be higher with a lower (in the case of a wage index below 1.0000) or higher (in the case of a wage index above 1.0000) labor share, as provided for under sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act;
• Updates of 3.2 percent for all areas (that is, the full market basket percentage increase of 3.2 percent, as required by section 1886(b)(3)(B)(i)(XIX) of the Act, and reflecting the requirements of section 1886(b)(3)(B)(vii) of the Act to reduce the applicable percentage increase by 0.4 percentage points for hospitals that fail to submit data, in a form and manner specified by the Secretary, relating to the quality of inpatient care furnished by the hospital;
• An adjustment to ensure the proposed DRG recalibration and wage index update and changes are budget neutral, as provided for under sections 1886(d)(4)(C)(iii) and 1886(d)(3)(E) of the Act, by applying new budget neutrality adjustment factors to the standardized amount;
• An adjustment to ensure the effects of the special transition measures adopted in relation to the implementation of new labor market areas are budget neutral;
• 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 2005 budget neutrality factor and applying a revised factor;
• An adjustment to apply the new outlier offset by removing the FY 2005 outlier offset and applying a new offset;
• An adjustment to ensure the effects of the rural community hospital demonstration required under section 410A of Pub. L. 108-173 are budget neutral, as required under section 410A(c)(2) of Pub. L. 108-173.
The national standardized amount is 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 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 and 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 section 1886(d)(3)(E) of the Act, the Secretary estimates, from time-to-time, the proportion of hospitals' costs that are attributable to wages and wage-related costs. The standardized amount is divided into labor-related and nonlabor-related amounts; only the proportion considered the labor-related amount is adjusted by the wage index. Section 403 of Pub. L. 108-173 revises the proportion of the standardized amount that is considered labor-related. Specifically, section 1886(d)(3)(E) of the Act (as amended by section 403 of Pub. L. 108-173) requires that 62 percent of the standardized amount be adjusted by the wage index, unless doing so would result in lower payments to a hospital than would otherwise be made. (Section 403(b) of Pub. L. 108-173 extended this provision to the Puerto Rico standardized amounts.) We are proposing to update the labor-related share to 69.7 percent for FY 2006, as discussed in section IV.B.3. of the preamble to this proposed rule. We note that the revised labor-related share that we are proposing for FY 2006 was determined to be 69.731, as discussed in section IV of the preamble to this proposed rule. We are proposing to continue with our previous methodology and round the labor-related share to 69.7 percent for purposes of establishing the labor-related and nonlabor-related portions of the standardized amount. As discussed in section IV. of the preamble to this proposed rule, we are also proposing to rebase the current labor-related share for the Puerto Rico-specific amounts for FY 2006. Since the proposed rebased Puerto Rico labor-related share has not yet been calculated, the proposed standardized amounts that appear in Table 1C of this Addendum for providers with a wage index greater than 1.0000 reflect the current (FY 2005) labor-related share for the Puerto Rico-specific amounts of 71.3 percent for FY 2006. However, in the final rule, if we adopt our proposal to rebase the labor-related share for Puerto Rico, these amounts would reflect this revised labor-related share. We are proposing to adjust 62 percent of the national standardized amount and 62 percent of the Puerto Rico-specific amount by the wage index for all hospitals whose wage indexes are less than or equal to 1.0000. For all hospitals whose wage values are greater than 1.0000, we are proposing to adjust the national standardized amount by a labor-related share of 69.7 percent.
Sections 1886(d)(3)(A)(iv) of the Act previously required the Secretary to compute the following 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 accordance with section 1886(b)(3)(B)(i) of the Act, the large urban average standardized amount was 1.6 percent higher than the other area average standardized amount. In addition, under sections 1886(d)(9)(B)(iii) and 1886(d)(9)(C)(i) of the Act, the average standardized amounts per discharge were determined for hospitals located in urban and rural areas in Puerto Rico.
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. Subsequently, Pub. L. 108-89 extended section 402(b) of Pub. L. 108-7 beginning with discharges on or after October 1, 2003 and before March 31, 2004. Finally, section 401(a) of Pub. L. 108-173 amended section 1886(d)(3)(A)(iv) of the Act to require that, beginning with FY 2004 and thereafter, an equal standardized amount is to be computed for all hospitals at the level computed for large urban hospitals during FY 2003, updated by the applicable percentage update. This provision in effect makes permanent the equalization of the standardized amounts at the level of the previous standardized amount for large urban hospitals. Section 401(c) of Pub. L. 108-173 also amended section 1886(d)(9)(A) of the Act to equalize the Puerto Rico-specific urban and rural area rates. Accordingly, we are providing in this proposed rule for a single national standardized amount and a
In accordance with section 1886(d)(3)(A)(iv)(II) of the Act, we are proposing to update the equalized standardized amount for FY 2006 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, as amended by section 501 of Pub. L. 108-173. 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 2006 is 3.2 percent. Thus, for FY 2006, the proposed update to the average standardized amount is 3.2 percent for hospitals in all areas.
Section 1886(b)(3)(B) of the Act specifies the mechanism used to update the standardized amount for payment for inpatient hospital operating costs. Section 1886(b)(3)(B)(vii) of the Act, as amended by section 501(b) of Pub. L. 108-173, provides for a reduction of 0.4 percentage points to the update percentage increase (also known as the market basket update) for each of FYs 2005 through 2007 for any “subsection (d) hospital” that does not submit data on a set of 10 quality indicators established by the Secretary as of November 1, 2003. The statute also provides that any reduction will apply only to the fiscal year involved, and will not be taken into account in computing the applicable percentage increase for a subsequent fiscal year. This measure establishes an incentive for hospitals to submit data on quality measures established by the Secretary. The proposed standardized amounts in Tables 1A through 1D of section VI. of this Addendum reflect these differential amounts.
Although the update factors for FY 2006 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 2006 for both IPPS hospitals and hospitals and hospital units excluded from the IPPS. Our 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 2006 standardized amount to remove the effects of the FY 2005 geographic reclassifications and outlier payments before applying the FY 2006 updates. We then apply the new offsets for outliers and geographic reclassifications to the standardized amount for FY 2006.
We do not remove the prior year's budget neutrality adjustments for reclassification and recalibration of the DRG weights and for updated wage data 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.
We are also proposing to adjust the standardized amount this year by an amount estimated to ensure that aggregate IPPS payments do not exceed the amount of payments that would have been made in the absence of the rural community hospital demonstration required under section 410A of Pub. L. 108-173. This demonstration is required to be budget neutral under section 410A(c)(2) of Pub. L. 108-173.
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. For FY 2006, we are proposing to continue to adjust 10 percent of the wage index factor for occupational mix. We describe the proposed occupational mix adjustment in section III.C. of the preamble to this proposed rule. Because section 1886(d)(3)(E) of the Act requires us to update the wage index on a budget neutral basis, we are including the effects of this proposed occupational mix adjustment on the wage index in our budget neutrality calculations.
In FY 2005, those urban hospitals that became rural under the new labor market area definitions were assigned the wage index of the urban area in which they were located under the previous labor market definitions for a 3-year period of FY 2005, FY 2006, and FY 2007. Because we are in the second year of this 3-year transition, we are proposing to adjust the standardized amounts for FY 2006 to ensure budget neutrality for this policy. We discuss this adjustment in section III.B. of the preamble to this proposed rule.
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. As discussed in the FY 2005 IPPS final rule (69 FR 49110), we are in the second year of the 3-year provision that uses an imputed wage index floor for States that have no rural areas and States that have geographic rural areas, but that have no hospitals actually classified as rural. We are also adjusting for the effects of this provision in our calculation of the wage update budget neutrality factor.
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 2004 discharge data to simulate payments and compared aggregate payments using the FY 2005 relative weights and wage index to aggregate payments using the proposed FY 2006 relative weights and wage index. The same methodology was used for the FY 2005 budget neutrality adjustment.
Based on this comparison, we computed a proposed budget neutrality adjustment factor equal to 1.002494. We also are proposing to adjust the Puerto Rico-specific standardized amount for the effect of DRG reclassification and recalibration. We computed a proposed budget neutrality adjustment factor for the Puerto Rico-specific standardized amount equal to 0.999003. These proposed budget neutrality adjustment factors are applied to the standardized amounts without removing the effects of the FY 2005 budget neutrality adjustments. In addition, as discussed in section V.C.2. of the preamble to this proposed rule, we are proposing to apply the same DRG reclassification and recalibration budget neutrality factor of 0.999003 to the hospital-specific rates that are effective for cost reporting periods beginning on or after October 1, 2005.
Using the same data, we calculated a transition budget neutrality adjustment to account for the “hold harmless” policy under which urban hospitals that became rural under the new labor market area definitions were assigned the wage index of the urban area in which they were located under the previous labor market area definitions for a 3-year period of FY 2005, FY 2006, and FY 2007 (
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
Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amount 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. (We note that neither the wage index reclassifications provided under section 508 of Pub. L. 108-173 nor the wage index adjustments provided under section 505 of Pub. L. 108-173 are budget neutral. Section 508(b) of Pub. L. 108-173 provides that the wage index reclassifications approved under section 508(a) of Pub. L. 108-173 “shall not be effected in a budget neutral manner.” Section 505(a) of Pub. L. 108-173 similarly provides that any increase in a wage index under that section shall not be taken into account “in applying any budget neutrality adjustment with respect to such index” under section 1886(d)(8)(D) of the Act.) To calculate this proposed budget neutrality factor, we used FY 2004 discharge data to simulate payments, and compared total IPPS payments prior to any reclassifications under sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act to total IPPS payments after such reclassifications. Based on these simulations, we are proposing to apply an adjustment factor of 0.992905 to ensure that the effects of this reclassification are budget neutral.
The proposed adjustment factor is applied to the standardized amount after removing the effects of the FY 2005 budget neutrality adjustment factor. We note that the proposed FY 2006 adjustment reflects FY 2006 wage index reclassifications approved by the MGCRB or the Administrator, and the effects of MGCRB reclassifications approved in FY 2004 and FY 2005 (section 1886(d)(10)(D)(v) of the Act makes wage index reclassifications effective for 3 years).
Section 1886(d)(5)(A) of the Act provides for payments in addition to the basic prospective payments for “outlier” 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.
In accordance with section 1886(d)(5)(A)(iv) of the Act, outlier payments for any year are 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 amount 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. More information on outlier payments may be found on the CMS Web site at
i. Proposed FY 2006 outlier fixed-loss threshold. For FY 2006, we are proposing a new methodology to calculate the outlier fixed-loss threshold. For FY 2004, we simulated outlier payments by applying FY 2004 rates and policies using cases from the FY 2002 MedPAR file. In order to determine the FY 2004 outlier fixed-loss threshold, it was necessary to inflate the charges on the MedPAR claims by 2 years, from FY 2002 to FY 2004. In order to determine the FY 2004 threshold, we used the 2-year average annual rate-of-change in charges per case to inflate FY 2002 charges to approximate FY 2004 charges. (We refer the reader to the FY 2004 IPPS final rule (67 FR 45476) for a complete discussion of the FY 2004 methodology.) In the IPPS proposed rule for FY 2005 (69 FR 28376), we proposed to use the same methodology we used for determining the FY 2004 outlier fix-loss threshold to determine the FY 2005 outlier threshold. We further noted that the rate-of-increase in the 2-year average annual rate-of-change in charges derived from the period before the changes we made to the policy affecting the applicable cost-to-charge ratios (68 FR 34494) and, therefore, they may have represented rates-of-increase that could be higher than the rates-of-increase under our new policy. As a result, we welcomed comments on the data we were using to update charges for purposes of the threshold and specifically encouraged commenters to provide recommendations for data that might better reflect current trends in charge increases.
In response to the many comments we received on this proposed FY 2005 methodology, in the IPPS final rule for FY 2005 (69 FR 49275), we revised that proposed methodology and used the following methodology to calculate the final FY 2005 outlier fixed-loss threshold. Instead of using the 2-year average annual rate-of-change in charges per case from FY 2001 to FY 2002 and FY 2002 to FY 2003, we used more recent data to determine the annual rate-of-change in charges for the FY 2005 outlier threshold. Specifically, we compared the rate-of-increase in charges from the first half-year of FY 2003 to the first half-year of FY 2004. We stated that we believed this methodology would result in a more accurate determination of the rate-of-change in charges per case between FY 2003 and FY 2005. Although a full year of data was available for FY 2003, we did not have a full year of FY 2004 data at the time we set the FY 2005 outlier threshold. Therefore, we stated that we believed it was optimal to employ comparable periods in determining the rate-of-change from one year to the next. We also stated that we believed this methodology was the best methodology for determining the rate-of-change in charges per case because it used the most recent charge data available. Using this methodology, we established a fixed-loss cost outlier threshold for FY 2005 equal to the prospective payment rate for the DRG, plus any IME and DSH payment, and any add-on payment for new technology, plus $25,800.
For FY 2006, we are proposing to use a new methodology to calculate the outlier threshold that will take into account the lower inflation in hospital charges that is occurring as a result of the June 9, 2003 outlier final rule (68 FR 34505), which changed our methodology for determining outlier payments by implementing the use of more current and accurate cost-to-charge ratios when paying for outliers. As we have done in the past, to calculate the proposed FY 2006 outlier thresholds, we simulated payments by applying proposed FY 2006 rates and policies using cases from the FY 2004 MedPAR files. Therefore, in order to determine the appropriate proposed FY 2006 outlier threshold, it was necessary to inflate the charges on the MedPAR claims by 2 years, from FY 2004 to FY 2006.
However, we are not proposing to inflate charges using a 2-year average annual rate-of-change in charges per case from FY 2002 to FY 2003 and FY 2003 to FY 2004 because of the distortion in FY 2002 and FY 2003 charge data caused by the exceptionally high rate of hospital charge inflation during those years. Instead, we are proposing to use more recent data that reflect changes under the new outlier policy. However, we will continue to consider other methodologies in the future when calculating the outlier threshold once we have 2 complete years of charge data under the new outlier policy.
Specifically, we are proposing to establish the proposed FY 2006 outlier threshold as follows: Using the latest data available, the 1-year average annualized rate-of-change in charges per case from the last quarter of FY 2003 in combination with the first quarter of FY 2004 (July 1, 2003 through December 31, 2003) to the last quarter of FY 2004 in combination with the first quarter of FY 2005 (July 1, 2004 through December 31, 2004) was 8.65 percent (1.0865), or 18.04 percent (1.1804) over 2 years. As we have done in the past, we are proposing to use hospital cost-to-charge ratios from the most recent Provider Specific File, in this case the December 2004 update, in establishing the proposed FY 2006 outlier threshold. This file includes cost-to-charge ratios that reflect implementation of the changes to the policy for determining the applicable cost-to-charge ratios that became effective August 8, 2003 (68 FR 34494).
Using this methodology, we are proposing to establish a fixed-loss cost outlier threshold for FY 2006 equal to the prospective payment rate for the DRG, plus any IME and DSH payments, and any add-on payments for new technology, plus $26,675. In addition, as stated in the June 9, 2003 outlier final rule (68 FR 34505), we believe the use of charge inflation is more appropriate than our previous methodology of cost inflation because charges tend to increase at a much faster rate than costs. Although charges have increased at a slower rate since the implementation of changes to our outlier payment methodology in 2003, we believe the use of charges is still appropriate because this trend is still evident.
As we did in establishing the FY 2005 outlier threshold (69 FR 49278), we are not including in the calculation of the outlier threshold the possibility that hospitals' cost-to-charge ratios and outlier payments may be reconciled upon cost report settlement. We believe that, due to the policy implemented in the June 9, 2003 outlier final rule, cost-to-charge ratios will no longer fluctuate significantly and, therefore, few hospitals, if any, will actually have these ratios reconciled upon cost report settlement. In addition, it is difficult to predict which specific hospitals will have cost-to-charge ratios and outlier payments reconciled in their cost reports in any given year. We also note that reconciliation occurs because hospitals' actual cost-to-charge ratios for the cost reporting period are different than the interim cost-to-charge ratios used to calculate outlier payments when a bill is processed. Our simulations assume cost-to-charge ratios accurately measure hospital costs and, therefore, are more reflective of post-reconciliation than pre-reconciliation outlier payments. As a result, we omitted any assumptions about the effects of reconciliation from the outlier threshold calculation.
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 lower percentage of outlier payments for capital-related costs than for operating costs. We project that the proposed thresholds for FY 2006 will result in outlier payments equal to 5.1 percent of operating DRG payments and 5.03 percent of capital payments based on the Federal rate.
In accordance with section 1886(d)(3)(B) of the Act, we reduced the proposed FY 2005 standardized amount by the same percentage to account for the projected proportion of payments paid to outliers.
The proposed outlier adjustment factors that would be applied to the standardized amount for FY 2006 are as follows:
We are proposing to apply the outlier adjustment factors to the FY 2006 rates after removing the effects of the FY 2005 outlier adjustment factors on the standardized amount.
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.
The June 9, 2003 outlier final rule (68 FR 34494) eliminated the application of the statewide average for hospitals whose cost-to-charge ratios fall below 3 standard deviations from the national mean cost-to-charge ratio. However, for those hospitals for which the fiscal intermediary computes operating cost-to-charge ratios greater than 1.220 or capital cost-to-charge ratios greater than 0.169, or hospitals for whom the fiscal intermediary is unable to calculate a cost-to-charge ratio (as described at § 412.84(i)(3) of our regulations), we are still using statewide average ratios to calculate costs to determine whether a hospital qualifies for outlier payments.
iii. FY 2004 and FY 2005 outlier payments. In the FY 2005 IPPS final rule, we stated that, based on available data, we estimated that actual FY 2004 outlier payments would be approximately 3.6 percent of actual total DRG payments (69 FR 49278, as corrected at 69 FR 60252). This estimate was computed based on simulations using the FY 2003 MedPAR file (discharge data for FY 2003 bills). That is, the estimate of actual outlier payments did not reflect actual FY 2004 bills, but instead reflected the application of FY 2004 rates and policies to available FY 2003 bills.
Our current estimate, using available FY 2004 bills, is that actual outlier payments for FY 2004 were approximately 3.5 percent of actual total DRG payments. Thus, the data indicate that, for FY 2004, the percentage of actual outlier payments relative to actual total payments is lower than we projected before FY 2004 (and, thus, is less than the percentage by which we reduced the standardized amounts for FY 2004). We note that, for FY 2005, the outlier threshold was lowered to $25,800 compared to $31,000 for FY 2004. The outlier threshold was lower in FY 2005 than FY 2004 as a result of slower growth in hospital charge inflation. We believe that this slower growth was due to changes in hospital charge practices following implementation of the outlier final rule published on June 9, 2003. 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 2004 are equal to 5.1 percent of total DRG payments.
We currently estimate that actual outlier payments for FY 2005 will be approximately 4.4 percent of actual total DRG payments, 0.7 percentage points lower than the 5.1 percent we projected in setting outlier policies for FY 2005. This estimate is based on simulations using the FY 2004 MedPAR file (discharge data for FY 2004 bills). We used these data to calculate an estimate of the actual outlier percentage for FY 2005 by applying FY 2005 rates and policies, including an outlier threshold of $25,800 to available FY 2004 bills.
Section 410A of Pub. L. 108-173 requires the Secretary to establish a demonstration that will modify reimbursement for inpatient services for up to 15 small rural hospitals. Section 410A(c)(2) of Pub. L. 108-173 requires that “in conducting the demonstration program under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration program under this section was not implemented.” As discussed in section V.K. of the preamble to this proposed rule, we are proposing to satisfy this requirement by adjusting national IPPS rates by a factor that is sufficient to account for the added costs of this demonstration. We estimate that the average additional annual payment that will be made to each participating hospital under the demonstration will be approximately $977,410. We based this estimate on the recent historical experience of the difference between inpatient cost and payment for hospitals that are participating in the demonstration. For 13 participating hospitals, the total annual impact of the demonstration program is estimated to be $12,706,334. The required adjustment to the Federal rate used in calculating Medicare inpatient prospective payments as a result of the demonstration is 0.999863.
In order to achieve budget neutrality, we are proposing to adjust national IPPS rates by an amount sufficient to account for the added costs of this demonstration. In other words, we are proposing to apply budget neutrality across the payment system as a whole rather than merely across the participants of this demonstration. We believe that the language of the statutory budget neutrality requirement permits the agency to implement the budget neutrality provision in this manner. This is because the statutory language requires that “aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration * * * was not implemented,” but does not identify the range across which aggregate payments must be held equal.
The adjusted standardized amount is divided into labor-related and nonlabor-related portions. Tables 1A and 1B in section VI. of this Addendum contain the national standardized amount that we are proposing to apply to all hospitals, except hospitals in Puerto Rico. The amounts shown in the two tables differ only in that the labor-related share applied to the standardized amounts in Table 1A is 69.7 percent, and the labor-related share applied to the standardized amounts in Table 1B is 62 percent. In accordance with sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act, we are applying the labor-related share of 62 percent, unless the application of that percentage would result in lower payments to a hospital than would otherwise be made. The effect of this proposed application is that the labor-related share of the standardized amount is 62 percent for all hospitals whose wage indexes are less than or equal to 1.0000.
As discussed in section IV.B.3. of the preamble to this proposed rule (reflecting the Secretary's current estimate of the proportion of costs that are attributable to wages and wage-related costs), we are proposing to set the labor-related share of the standardized amount at 69.7 percent for hospitals whose wage indexes are greater than 1.0000. In addition, Tables 1A and 1B include proposed standardized amounts reflecting the full 3.2 percent update for FY 2006, and proposed standardized amounts reflecting the 0.4 percentage point reduction to the update applicable for hospitals that fail to submit quality data consistent with section 501(b) of Pub. L. 108-173. (Tables 1C and 1D show the proposed standardized amounts for Puerto Rico for FY 2006, reflecting the different labor-related shares that apply, that is, 71.3 percent or 62 percent.)
The following table illustrates the proposed changes from the FY 2005 national average standardized amount. The first column shows the proposed changes from the FY 2005 standardized amounts for hospitals that satisfy the quality data submission requirement for receiving the full update (3.2 percent). The second column shows the proposed changes for hospitals receiving the reduced update (2.8 percent). The first row of the table shows the proposed updated (through FY 2005) average standardized amount after restoring the FY 2005 offsets for outlier payments, demonstration budget neutrality, the wage index transition budget neutrality and geographic reclassification budget neutrality. The DRG reclassification and recalibration and wage index budget neutrality factor is cumulative. Therefore, the FY 2005 factor is not removed from the amount in the table. We have added separate rows to this table to reflect the different labor-related shares that apply to hospitals.
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 (as set forth in Table 1A). The labor-related and nonlabor-related 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-related share applied to the Puerto Rico standardized amount is 71.3 percent, or 62 percent, depending on which is more advantageous to the hospital. (Section 1886(d)(9)(C)(iv) of the Act, as amended by section 403(b) of Pub. L. 108-173, provides that the labor-related share for hospitals in Puerto Rico will be 62 percent, unless the application of that percentage would result in lower payments to the hospital.)
Tables 1A through 1D, 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 the preamble to this proposed rule, we discuss the data and methodology for the proposed FY 2006 wage index. The proposed FY 2006 wage indexes are 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 2006, we are proposing to adjust the payments for hospitals in Alaska and Hawaii by multiplying the nonlabor-related portion of the standardized amount 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, 2005, we will publish them in the final rule and use them in determining FY 2006 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 2006. These factors have been recalibrated as explained in section II. of the preamble of this proposed rule.
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 corresponding amounts in Table 1A or Table 1B in section VI. of this Addendum.
The proposed prospective payment rate for SCHs equals the higher of the applicable Federal rate (from Table 1A or Table 1B) 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 25 percent of the Puerto Rico rate plus 75 percent of the applicable national rate from Table 1C or Table 1D in section VI. of this Addendum.
For discharges occurring on or after October 1, 2005 and before October 1, 2006, 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 applicable wage index (Table 1A for wage indexes greater than 1.0000 and Table 1B for wage indexes less than or equal to 1.0000) and whether the hospital has submitted qualifying quality data (full update for qualifying hospitals, update minus 0.4 percentage points for nonqualifying hospitals).
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 (
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 (
The Federal rate as determined in Step 5 may then be further adjusted if the hospital qualifies for either the IME or DSH adjustment.
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 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 the recalibration budget neutrality factor of 0.999003) as discussed in section V.C.2. of the preamble to this proposed rule. 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, 2005.
We are proposing to increase the hospital-specific rates by 3.2 percent (the hospital market basket percentage increase) for SCHs and MDHs for FY 2006. 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 2006, 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 2006, is the market basket rate-of-increase.
Under section 504 of Pub. L. 108-173, effective for discharges occurring on or after October 1, 2004, hospitals located in Puerto Rico are paid based on a blend of 75 percent of the national prospective payment rate and 25 percent of the Puerto Rico-specific rate.
The Puerto Rico prospective payment rate is determined as follows:
Step 1—Select the appropriate average standardized amount considering the applicable wage index (
Step 2—Multiply the labor-related portion of the standardized amount by the appropriate Puerto Rico-specific wage index (
Step 3—Add the amount from Step 2 and the nonlabor-related portion of the standardized amount.
Step 4—Multiply the amount from Step 3 by the appropriate DRG relative weight.
Step 5—Multiply the result in Step 4 by 25 percent (
The national prospective payment rate is determined as follows:
Step 1—Select the appropriate average standardized amount considering the applicable wage index (
Step 2—Add the amount from Step 1 and the nonlabor-related portion of the national average standardized amount.
Step 3—Multiply the amount from Step 2 by the appropriate DRG relative weight (
Step 4—Multiply the result in Step 3 by 75 percent.
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.
(If you choose to comment on issues in this section, please include the caption “Capital Payment Rate” at the beginning of your comment.)
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, hospitals were paid during a 10-year transition period (which extended through FY 2001) to change the payment methodology for Medicare acute care hospital inpatient capital-related costs from a reasonable cost-based methodology to a prospective methodology (based fully on the Federal rate).
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 2006, which would be effective for discharges occurring on or after October 1, 2005. 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 § 412.304(c)(2)) are paid based on 100 percent of the capital Federal rate. 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 capital standard Federal rate, as provided at § 412.308(c)(1), to account for capital input price increases and other factors. The regulations at § 412.308(c)(2) provide that the capital Federal rate is adjusted annually by a factor equal to the estimated proportion of outlier payments under the capital Federal rate to total capital payments under the capital Federal rate. In addition, § 412.308(c)(3) requires that the capital Federal rate be reduced by an adjustment factor equal to the estimated proportion of payments for (regular and special) exceptions under § 412.348. Section 412.308(c)(4)(ii) requires that the capital standard Federal rate be adjusted so that the effects of 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 capital 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 capital rate that was made in FY 1994, and § 412.308(b)(3) describes the 0.28 percent reduction to the capital rate made in FY 1996 as a result of the revised policy of paying for transfers. In FY 1998, we implemented section 4402 of Pub. L. 105-33, which required that, for discharges occurring on or after October 1, 1997, and before October 1, 2002, the unadjusted capital standard Federal rate is reduced by 17.78 percent. As we discussed in the FY 2003 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 FY 2002 IPPS final rule (66 FR 39911), beginning in FY 2002, 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)). Because, effective with cost reporting periods beginning in FY 2002, payments are no longer being made under the regular exception policy, 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 FY 2002 IPPS final rule (66 FR 40099).
Section 412.374 provides for the use of a blended payment system for payments to Puerto Rico hospitals under the PPS for acute care hospital inpatient capital-related costs. Accordingly, under the capital PPS, we compute a separate payment rate specific to Puerto Rico hospitals using the same methodology used to compute the national Federal rate for capital-related costs. In
As we discussed in the FY 2005 IPPS final rule (69 FR 49185), section 504 of Pub. L. 108-173 increased the national portion of the operating IPPS payments for Puerto Rico hospitals from 50 percent to 62.5 percent and decreased the Puerto Rico portion of the operating IPPS payments from 50 percent to 37.5 percent for discharges occurring on or after April 1, 2004 through September 30, 2004 (see the March 26, 2004 One-Time Notification (Change Request 3158)). In addition, section 504 of Pub. L. 108-173 provided that the national portion of operating IPPS payments for Puerto Rico hospitals is equal to 75 percent and the Puerto Rico portion of operating IPPS payments is equal to 25 percent for discharges occurring on or after October 1, 2004. Consistent with that change in operating IPPS payments to hospitals in Puerto Rico, for FY 2005 (as we discussed in the FY 2005 IPPS final rule), we revised the methodology for computing capital payments to hospitals located in Puerto Rico to be based on a blend of 25 percent of the Puerto Rico capital rate and 75 percent of the capital Federal rate for discharges occurring on or after October 1, 2004.
In the FY 2005 IPPS final rule (69 FR 49283) and corrected in a December 30, 2004 correction notice (69 FR 78532), we established a capital Federal rate of $416.53 for FY 2005.
In the discussion that follows, we explain the factors that were used to determine the proposed FY 2006 capital Federal rate. In particular, we explain why the proposed FY 2006 capital Federal rate would increase 0.7 percent compared to the FY 2005 capital Federal rate. We also estimate aggregate capital payments would decrease by 0.1 percent during this same period. This decrease is due to several factors, including a projected decrease in the number of Medicare fee-for-service hospital admissions, and a decrease in the proposed geographic adjustment factor (GAF) values (which are based on the proposed wage index values). Our Office of the Actuary projects a decrease in Medicare fee-for-service Part A enrollment, in part, because of a projected increase in Medicare managed care enrollment as a result of the implementation of several provisions of Pub. L. 108-173. We are projecting a slight increase in the proposed GAF values (based on the proposed wage index) for some hospitals as a result of the completion of the transition to the CBSA-based labor market area definitions (as discussed in section III. of the preamble of this proposed rule). Thus, we are projecting that capital PPS payments would remain relatively unchanged from FY 2005 to FY 2006.
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 IPPS are estimated to decrease slightly in FY 2006 compared to FY 2005, as discussed above.
Under § 412.308(c)(1), the capital 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 2006 under that framework is 0.7 percent based on the best data available at this time. The 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 2004 DRG reclassification and recalibration, and a forecast error correction of 0.0 percent. As discussed below in section III.C. of this Addendum, we believe that the CIPI is the most appropriate input price index for capital costs to measure capital price changes in a given year. We also explain the basis for the FY 2006 CIPI projection in that same section of this Addendum. Below we describe the proposed 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. The capital update framework includes the same case-mix index adjustment used in the former operating IPPS update framework (as discussed in the May 18, 2005 IPPS proposed rule for FY 2005 (69 FR 28816)). (We are no longer using an update framework in making a recommendation for updating the operating IPPS standardized amounts as discussed in section III. of Appendix B of this proposed rule.)
For FY 2006, we are projecting a 1.0 percent total increase in the case-mix index. We estimate that the real case-mix increase would also equal 1.0 percent in FY 2006. The net adjustment for change in case-mix is the difference between the projected increase in real case-mix and the projected total increase in real case-mix. Therefore, the net proposed adjustment for case-mix change in FY 2006 is 0.0 percentage points.
The capital update framework also contains an adjustment for the effects of DRG reclassification and recalibration. This adjustment is intended to remove the effect on total payments of prior year changes to the DRG classifications and relative weights, in order to retain budget neutrality for all case-mix index-related changes other than those due to patient severity. Due to the lag time in the availability of data, there is a 2-year lag in data used to determine the adjustment for the effects of DRG reclassification and recalibration. For example, we are adjusting for the effects of the FY 2004 DRG reclassification and recalibration as part of our proposed update for FY 2006. We estimate that FY 2004 DRG reclassification and recalibration would 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 proposing to make a 0.0 percent adjustment for DRG reclassification and recalibration in the update for FY 2006 to maintain budget neutrality.
The capital update framework also 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
Under the capital IPPS 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.
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 capital standard Federal 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 2002 and 2003, 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. For FYs 2004 and 2005, we found that the charge data appeared to be skewed (as discussed in greater detail below) and we established a 0.0 percent adjustment in each of those years. Furthermore, we stated that we would continue to apply a 0.0 percent adjustment for intensity until any increase in charges can be tied to intensity rather than attempts to maximize outlier payments.
Using the methodology described above, for FY 2006 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 1999 through 2004. We found that, over this period and in particular the last 4 years of this period (FYs 2000 through 2003), the charge data appear to be skewed. More specifically, we found a dramatic increase in hospital charges for FYs 2000 through 2004 without a corresponding increase in the hospital case-mix index. These findings are similar to the considerable increase in hospitals’ charges, which we found when we were determining the intensity factor in the FY 2004 and FY 2005 update recommendations as discussed in the FY 2004 IPPS final rule (68 FR 45482) and the FY 2005 IPPS final rule (69 FR 49285), respectively. 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.
As we discussed in the FY 2005 IPPS final rule (69 FR 49285), because our intensity calculation relies heavily upon charge data and we believe that these charge data may be inappropriately skewed, we established a 0.0 percent adjustment for intensity for FY 2005. We believed that it was appropriate to apply a zero intensity adjustment until we believe that any increase in charges can be tied to intensity rather than to attempts to maximize outlier payments. As discussed above, we believe that the most recently available charge data used to make this determination may still be inappropriately skewed. Therefore, we are proposing a 0.0 percent adjustment for intensity for FY 2006. In the past (FYs 1996 through 2001) when we found intensity to be declining, we believed a zero (rather than negative) intensity adjustment was appropriate. Similarly, we believe that it is appropriate to propose to apply a zero intensity adjustment for FY 2006 until any increase in charges can be tied to intensity rather than 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 2006 as shown in the table below.
In the past, MedPAC has included update recommendations for capital PPS in a Report to Congress. In its March 2005 Report to Congress, MedPAC did not make an update recommendation for capital PPS payments for FY 2006. However, in that same report, MedPAC made an update recommendation for hospital inpatient and outpatient services (page 40). MedPAC reviews inpatient and outpatient services together since they are so closely interrelated. MedPAC recommended an increase in the payment rate for the operating IPPS by the projected increase in the hospital market basket index, less 0.4 percent for FY 2006, based on their assessment of beneficiaries' access to care, volume of services, access to capital, quality of care, and the relationship of Medicare payments and costs. In addition, the Commission considered the efficient provision of services in making its FY 2006 update recommendations. (MedPAC's Report to the Congress: Medicare Payment Policy, March 2005, page 44.)
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 FY 2005 IPPS final rule (69 FR 49286), we estimate that outlier payments for capital will equal 4.94 percent of inpatient capital-related payments based on the capital Federal rate in FY 2005. 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 5.03 percent for inpatient capital-related payments based on the proposed Federal rate in FY 2006. Therefore, we are proposing to apply an outlier adjustment factor of 0.9497 to the capital Federal rate. Thus, the percentage of capital outlier payments to total capital standard payments for FY 2006 would be higher than the percentages for FY 2005.
The outlier reduction factors are not built permanently into the capital rates; that is, they are not applied cumulatively in determining the capital Federal rate. The proposed FY 2006 outlier adjustment of 0.9497 is a −0.09 percent change from the FY 2005 outlier adjustment of 0.9506. The net change in the proposed outlier adjustment to the capital Federal rate for FY 2006 is 0.9991 (0.9497/0.9506). Thus, the proposed outlier adjustment decreases the FY 2006 capital Federal rate by 0.09 percent compared with the FY 2005 outlier adjustment.
Section 412.308(c)(4)(ii) requires that the capital Federal rate be adjusted so that aggregate payments for the fiscal year based on the capital Federal rate after any changes resulting from the annual DRG reclassification and recalibration and changes in the GAF are projected to equal aggregate payments that would have been made on the basis of the capital Federal rate without such changes.
Since we implemented a separate GAF for Puerto Rico, we apply separate budget neutrality adjustments for the national GAF and the Puerto Rico GAF. 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 because the GAF for Puerto Rico was implemented in FY 1998.
In the past, we used the actuarial capital cost model (described in Appendix B of the FY 2002 IPPS final rule (66 FR 40099)) to estimate the aggregate payments that would have been made on the basis of the capital 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 2002, 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 2006, we compared (separately for the national capital rate and the Puerto Rico capital rate) estimated aggregate capital Federal rate payments based on the FY 2005 DRG relative weights and the average FY 2005 GAF (that is, the weighted average of the GAFs applied from October 2004 through December 2004 and the GAFs applied from January 2005 through September 2005) to estimated aggregate capital Federal rate payments based on the proposed FY 2006 relative weights and the proposed FY 2006 GAF. As we established in the FY 2005 IPPS final rule (69 FR 49287), the budget neutrality factors were 0.9914 for the national capital rate and 0.9895 for the Puerto Rico capital rate for discharges occurring on or after October 1, 2004 through December 31, 2004 (the first quarter of FY 2005). As a result of the corrections to the FY 2005 GAF values established in the December 30, 2004 correction notice (69 FR 78531), effective for January 1, 2005 through September 30, 2005 (the last three quarters of FY 2005), the budget neutrality factor for the national capital rate is 0.9912 and the budget neutrality factor for the Puerto Rico capital rate remained unchanged (0.9895). For FY 2005, the weighted average budget neutrality adjustment factors were 0.9912 (0.9914 ×
We then compared estimated aggregate capital Federal rate payments based on the FY 2005 DRG relative weights and the average FY 2005 GAF to estimated aggregate capital Federal rate payments based on the proposed FY 2006 DRG relative weights and the proposed FY 2006 GAF. The proposed incremental adjustment for DRG classifications and changes in relative weights is 0.9998 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 2005 are 0.9931 nationally and 1.013 for Puerto Rico. 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 2006 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 capital rate and the Puerto Rico capital 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 FY 2005 IPPS final rule (69 FR 49288), we calculated a GAF/DRG budget neutrality factor of 1.0006 for FY 2005. As we noted above, as a result of the revisions to the GAF effective for discharges occurring on or after January 1, 2005 established in the December 30, 2004 correction notice (69 FR 78351), we calculated a GAF/DRG budget neutrality factor of 1.0004 for discharges occurring in the remainder of FY 2005. For FY 2006, we are proposing a GAF/DRG budget neutrality factor of 1.0019. The GAF/
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 2006 geographic reclassification decisions made by the MGCRB compared to FY 2005 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 capital standard 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 FY 2002 IPPS final rule (66 FR 40099)) to determine the exceptions payment adjustment factor, which was applied to both the Federal and hospital-specific capital rates.
An adjustment for regular exception payments is no longer necessary in determining the proposed FY 2006 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 FY 2002 IPPS final rule (66 FR 39949), in FY 2002 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 2006 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 of assets test as described at § 412.348(g)(3); and (3) a project size requirement as described at § 412.348(g)(5).
Based on information compiled from our fiscal intermediaries, six hospitals have qualified for special exceptions payments under § 412.348(g). Since we have cost reports ending in FY 2004 for all of these hospitals, we calculated the proposed adjustment based on actual cost experience. Using data from cost reports ending in FY 2004 from the December 2004 update of the HCRIS data, we divided the capital special exceptions payment amounts for the six hospitals that qualified for special exceptions by the total capital PPS payment amounts (including special exception payments) for all hospitals. Based on the data from cost reports ending in FY 2004, this ratio is rounded to 0.0003. Because we have not received all cost reports ending in FY 2004, we also divided the FY 2004 special exceptions payments by the total capital PPS payment amounts for all hospitals with cost reports ending in FY 2003. This ratio also rounds to 0.0003. Because special exceptions are budget neutral, we are proposing to offset the capital Federal rate by 0.03 percent for special exceptions payments for FY 2006. Therefore, the proposed exceptions adjustment factor is equal to 0.9997 (1−0.0003) to account for special exceptions payments in FY 2006.
In the FY 2005 IPPS final rule (69 FR 49288), we estimated that total (special) exceptions payments for FY 2005 would equal 0.04 percent of aggregate payments based on the capital Federal rate. Therefore, we applied an exceptions adjustment factor of 0.9996 (1−0.0004) in determining the FY 2005 capital Federal rate. As we stated above, we estimate that exceptions payments in FY 2006 would equal 0.03 percent of aggregate payments based on the proposed FY 2006 capital Federal rate. Therefore, we are proposing to apply an exceptions payment adjustment factor of 0.9997 to the capital Federal rate for FY 2006. The proposed exceptions adjustment factor for FY 2006 is 0.01 percent higher than the factor for FY 2005 published in the FY 2005 IPPS final rule (69 FR 49288). The exceptions reduction factors are not built permanently into the capital rates; that is, the factors are not applied cumulatively in determining the capital Federal rate. Therefore, the proposed net change in the exceptions adjustment factor used in determining the proposed FY 2006 capital Federal rate is 1.0001 (0.9997/0.9996).
In the FY 2005 IPPS final rule (69 FR 49283) and corrected in a December 30, 2004 correction notice (69 FR 78532), we established a capital Federal rate of $416.53 for FY 2005. In this proposed rule, we are proposing to establish a capital Federal rate of $419.90 for FY 2006. The proposed capital Federal rate for FY 2006 was calculated as follows:
• The proposed FY 2006 update factor is 1.0070; that is, the update is 0.7 percent.
• The proposed FY 2006 budget neutrality adjustment factor that is applied to the capital standard Federal payment rate for changes in the DRG relative weights and in the GAF is 1.0019.
• The proposed FY 2006 outlier adjustment factor is 0.9497.
• The proposed FY 2006 (special) exceptions payment adjustment factor is 0.9997.
Because the proposed capital 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 capital standard Federal rate for these factors, other than the budget neutrality factor for changes in the DRG relative weights and the GAF.
We are providing a chart that shows how each of the proposed factors and adjustments for FY 2006 affected the computation of the proposed FY 2006 capital Federal rate in comparison to the average FY 2005 capital Federal rate. The proposed FY 2006 update factor has the effect of increasing the capital Federal rate by 0.70 percent compared to the average FY 2005 Federal rate. The proposed GAF/DRG budget neutrality factor has the effect of increasing the capital Federal rate by 0.19 percent. The proposed FY 2006 outlier adjustment factor has the effect of decreasing the capital Federal rate by 0.09 percent compared to the average FY 2005 capital Federal rate, and the proposed FY 2006 exceptions payment adjustment factor has the effect of increasing the capital Federal rate by 0.01 percent compared to the exceptions payment adjustment factor for the FY 2005 capital Federal rate. The combined effect of all the proposed changes is to increase the capital Federal rate by 0.81 percent compared to the average FY 2005 capital Federal rate.
Section 412.374 provides for the use of a blended payment system for payments to Puerto Rico hospitals under the PPS for acute care hospital inpatient capital-related costs. Accordingly, under the capital PPS, we compute a separate payment rate specific to Puerto Rico hospitals using the same methodology used to compute the national Federal rate for capital-related costs. Under the broad authority of section 1886(g) of the Act, as discussed in section VI. of the preamble of this proposed rule, beginning with discharges occurring on or after October 1, 2004, capital payments to hospitals in Puerto Rico are based on a blend of 25 percent of the Puerto Rico capital rate and 75 percent of the capital Federal rate. The Puerto Rico capital rate is derived from the costs of Puerto Rico hospitals only, while the capital Federal rate is derived from the costs of all acute care hospitals participating in the IPPS (including Puerto Rico).
To adjust hospitals' capital payments for geographic variations in capital costs, we apply a GAF to both portions of the blended capital rate. The GAF is calculated using the operating IPPS wage index and varies, depending on the labor market area 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 capital 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 above in section III.A.4. of this Addendum, for Puerto Rico, the proposed GAF budget neutrality factor is 1.0240, while the proposed DRG adjustment is 0.9998, for a combined cumulative adjustment of 1.0130.
In computing the payment for a particular Puerto Rico hospital, the Puerto Rico portion of the capital rate (25 percent) is multiplied by the Puerto Rico-specific GAF for the labor market area in which the hospital is located, and the national portion of the capital rate (75 percent) is multiplied by the national GAF for the labor market area 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 capital rate as a result of Pub. L. 105-33. In FY 2003, a small part of that reduction was restored.
For FY 2005, before application of the GAF, the special capital rate for Puerto Rico hospitals was $199.01 for discharges occurring on or after October 1, 2004 through September 30, 2005. With the changes we are proposing to the factors used to determine the capital rate, the proposed FY 2006 special capital rate for Puerto Rico is $205.64.
Because the 10-year capital PPS transition period ended 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 capital Federal rate in FY 2006. The applicable proposed capital Federal rate was determined by making adjustments as follows:
• For outliers, by dividing the proposed capital standard Federal rate by the proposed outlier reduction factor for that fiscal year; and
• For the payment adjustments applicable to the hospital, by multiplying the hospital's proposed GAF, disproportionate share adjustment factor, and IME adjustment factor, when appropriate.
For purposes of calculating payments for each discharge during FY 2006, the capital 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 capital 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 2006 are in section II.A.4.c. of this Addendum. For FY 2006, 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 $26,675.
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 SCHs, 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
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 were 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 hospitals under the appropriate transition methodology. If the hold-harmless methodology were 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. Under § 412.304(c)(2), for cost reporting periods beginning on or after October 1, 2002, we pay a new hospital 85 percent of its reasonable costs during the first 2 years of operation unless it elects to receive payment based on 100 percent of the capital Federal rate. Effective with the third year of operation, we pay the hospital based on 100 percent of the capital Federal rate (that is, the same methodology used to pay all other hospitals subject to the capital PPS).
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 capital 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 FY 2003 IPPS final rule (67 FR 50044). (We note that we are proposing a rebasing to FY 2002 in section IV. of the preamble of this proposed rule.)
Based on the latest forecast by Global Insight, Inc. (first quarter of 2005), we are forecasting the CIPI to increase 0.7 percent in FY 2006. This reflects a projected 1.3 percent increase in vintage-weighted depreciation prices (building and fixed equipment, and movable equipment) and a 2.7 percent increase in other capital expense prices in FY 2006, partially offset by a 2.3 percent decline in vintage-weighted interest expenses in FY 2006. The weighted average of these three factors produces the 0.7 percent increase for the CIPI as a whole in FY 2006.
(If you choose to comment on issues in this section, please include the caption “Excluded Hospitals Rate-of-Increase” at the beginning of your comment.)
As discussed in section VII. 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 (LTCHs) excluded from the IPPS are no longer subject to a cap on a hospital-specific target amount (expressed in terms of the inpatient operating cost per discharge under TEFRA) that is set for each hospital, based on the hospital's own historical cost experience trended forward by the applicable percentage increase. However, the inpatient operating costs of children's hospitals and cancer hospitals that are excluded from the IPPS continue to be subject to the rate-of-increase limits established under the authority of section 1886(b) of the Act and § 413.40 of the regulations. This target amount is applied as a ceiling on the allowable costs per discharge for the hospital's cost reporting period.
Effective for cost reporting periods beginning on or after October 1, 2002, rehabilitation hospitals and units are paid 100 percent of the adjusted Federal prospective payment rate under the IRP 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 LTCH DRG-based PPS. In implementing the LTCH PPS for existing LTCHs, we established a 5-year transition period from reasonable cost-based payments (subject to the TEFRA limit) to fully Federal prospective payment amounts during which a LTCH may receive a blended payment consisting of two payment components—one based on reasonable cost under the TEFRA payment system, and the other based on the standard Federal prospective payment rate. However, an existing LTCH may elect to be paid based on 100 percent of the standard Federal prospective payment rate during the transition period.
IPFs that have their first cost reporting period beginning on or after January 1, 2005, are not paid on a reasonable cost basis but paid under a prospective per diem payment system. As part of the PPS for existing IPFs, we have established a 3-year transition period during which IPFs will be paid based on a blend of reasonable cost-based payment (subject to the TEFRA limit) and the prospective per diem payment rate. For cost reporting periods beginning on or after January l, 2008, IPFs will be paid 100 percent of the Federal prospective per diem payment amount.
Excluded psychiatric hospitals and units as well as LTCHs that are paid under a blended methodology will have the reasonable cost-based portion of their payment subject to a hospital target amount and, if applicable, the payment amount limitation.
Section 1886(b)(7) of the Act established the method for determining the payment amount for new rehabilitation hospitals and units, psychiatric hospitals and units, and LTCHs that first received payment as a hospital or unit excluded from the IPPS on or after October 1, 1997. However, due to the implementation of the IRF PPS, effective for cost reporting periods beginning on or after October 1, 2002, this payment amount (or “new provider cap”) no longer applies to any new rehabilitation hospital or unit because they now are paid 100 percent of the Federal prospective rate under the IRF PPS. In addition, LTCHs that meet the definition of a new LTCH under § 412.23(e)(4) are paid 100 percent of the fully Federal prospective payment rate. In contrast, those “new” LTCHs that meet the criteria under § 413.40(f)(2)(ii) (that is, that were not paid as an excluded hospital prior to October 1, 1997, but were paid as a LTCH before October 1, 2002), may be paid under the LTCH PPS transition methodology, with the reasonable cost portion of the payment subject to § 413.40(f)(2)(ii). Finally, LTCHs that existed prior to October 1, 1997, may also be paid under the LTCH PPS transition methodology, with the reasonable cost portion subject to § 413.40(c)(4)(ii). (The last LTCHs that were subject to the payment amount limitation for “new” LTCHs were new LTCHs that had their first cost reporting period beginning on September 30, 2002. In that case, the payment amount limitation remained applicable for the next 2 years—September 30, 2002 through September 29, 2003, and September 30, 2003 through September 29, 2004. This is because, under existing regulations at § 413.40(f)(2)(ii), the “new hospital” would be subject to the same payment (target amount) in its second cost reporting period that was applicable to the LTCH in its first cost reporting period. Accordingly, for this hospital, the updated payment amount limitation that we published in the FY 2003 IPPS final rule (67 FR 50103) applied through September 29, 2004. Consequently, there is no longer a need to publish updated payment amounts for new (§ 413.40(f)(2)(ii)) LTCHs. A discussion of how the payment limitations were 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).
With the implementation of the LTCH PPS, payment limitations do not apply to any new LTCHs that meet the definition at § 412.23(e)(4) because they are paid 100 percent of the Federal prospective payment rate.
A freestanding inpatient rehabilitation hospital, an inpatient rehabilitation unit of an acute care hospital, and an inpatient rehabilitation unit of a CAH are referred to as IRFs. Effective for cost reporting periods beginning on or after October 1, 2002, this
Under the IPF PPS, there is a 3-year transition period during which existing IPFs will receive a blended payment of the Federal per diem payment amount and the payment amount that IPFs would receive under the reasonable cost-based payment (TEFRA) methodology. IPFs that were “new” under § 413.40(f)(2)(ii) (that is, that were not paid as an excluded hospital prior to October 1, 1997, but were paid as an IPF prior to January 1, 2005), would have the reasonable cost portion of the transition period payment subject to the payment amount limitation as determined according to § 413.40(f)(2)(ii). The last “new” IPFs that were subject to the payment amount limitation were IPFs that had their first cost reporting period beginning on December 31, 2004. For these hospitals, the payment amount limitation that was published in the FY 2005 IPPS final rule (69 FR 49189) for cost reporting periods beginning on or after October 1, 2004, and before January 1, 2005, remains applicable for the IPF's first two cost reporting periods. IPFs with a first cost reporting period beginning on or after January 1, 2005, are paid 100 percent of the Federal rate and are not subject to the payment amount limitation. Therefore, since the last IPFs eligible for a blended payment have a cost reporting period beginning on December 31, 2004, the payment limitation published for FY 2005 remains applicable for these IPFs, and publication of the updated payment amount limitation is no longer needed. We note that IPFs that existed prior to October 1, 1997, may also be paid under the IPF transition methodology with the reasonable cost portion of the payment subject to § 413.40(c)(4)(ii).
The payment limitations for new hospitals under TEFRA do not apply to new LTCHs, IRFs, or IPFs, that is, these hospitals with their first cost reporting period beginning on or after the date that the particular class of hospitals implemented the respective PPS. Therefore, for the reasons noted above, we are proposing to discontinue publishing Tables 4G and 4H (Pre-Reclassified Wage Index for Urban and Rural Areas, respectively) in the annual proposed and final IPPS rules.
(If you choose to comment on issues in this section, please include the caption “Payment for Blood Clotting Factor” at the beginning of your comments.)
As discussed in section VIII. of the preamble to this proposed rule, section 1886(a)(4) of the Act excludes the costs of administering blood clotting factors to individuals with hemophilia from the definition of “operating costs of inpatient hospital services.” Section 6011(b) of Pub. L. 101-239 (the Omnibus Budget Reconciliation Act of 1989) provides that the Secretary shall determine the payment amount made to hospitals under Part A of Title XVIII of the Act for the costs of administering blood clotting factors to individuals with hemophilia by multiplying a predetermined price per unit of blood clotting factor by the number of units provided to the individual. Currently, we use the average wholesale price (AWP) methodology used to determine rates paid for Medicare Part B drugs to price blood clotting factors administered to inpatients who have hemophilia under Medicare Part A. Section 303 of Pub. L. 108-173 amended the Act by adding section 1847A, which changed the drug pricing system under Medicare Part B. Effective January 1, 2005, section 1847A of the Act established a payment methodology based on average sales price (ASP) under which almost all Medicare Part B drugs and biologicals not paid on a cost or prospective basis are paid at 106 percent of the ASP.
In the FY 2005 IPPS final rule (69 FR 49292), we had instructed the fiscal intermediaries for FY 2005 to continue to use the Single Drug Pricer (SDP) to establish the pricing limits for the blood clotting factor administered to hemophilia inpatients at 95 percent of the AWP. We did not use the new ASP pricing methodology for Part A blood clotting factor in FY 2005 because the IPPS final rule was published in advance of final regulations implementing the ASP payment methodology for Part B drugs and biologicals. Final regulations establishing the ASP methodology and the furnishing fee for blood clotting factor under Medicare Part B were published on November 15, 2004 (69 FR 66299). Therefore, we believe that a consistent methodology should be used to pay for blood clotting factor administered under both Medicare Part A and Part B. For this reason, we are proposing for FY 2006 that the fiscal intermediaries make payment for blood clotting factor using 106 percent of ASP and make payment for the furnishing fee at $0.14 per individual unit (I.U.) that is currently used for Medicare Part B drugs. The ASP will be updated quarterly. The furnishing fee will be updated annually based on the consumer price index.
This section contains the tables referred to throughout the preamble to this proposed rule and in this Addendum. Tables 1A, 1B, 1C, 1D, 2, 3A, 3B, 4A, 4B, 4C, 4F, 4J, 5, 6A, 6B, 6C, 6D, 6E, 6F, 6G, 6H, 7A, 7B, 8A, 8B, 9A, 9B, 9C, 10, and 11 are presented below. The tables presented below are as follows:
The following list represents all hospitals that are eligible to have their wage index increased by the out-migration adjustment listed in this table. Hospitals cannot receive the out-migration adjustment if they are reclassified under section 1886(d)(10) of the Act or redesignated under section 1886(d)(8)(B) of the Act. Hospitals that have already been reclassified under section 1886(d)(10) of the Act or redesignated under section
(If you choose to comment on issues in this section, please include the caption “Impact Analyses” at the beginning of your comment.)
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). We estimate that the total impact of these proposed changes for FY 2006 payments compared to FY 2005 payments to be approximately a $2.40 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
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 previously defined 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). However, under the new labor market definitions, we no longer employ NECMAs to define urban areas in New England. Therefore, we now define a small rural hospital as a hospital with fewer than 100 beds that is located outside of a Metropolitan Statistical Area (MSA). 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 IPPS, we continue to 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 will 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 will 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 proposed changes in this proposed rule will 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 will 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 2006, on various hospital groups. We estimate the effects of individual 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 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 the 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. Any comments that we receive in response to this proposed rule will be addressed in the final rule.
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 35 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 46 such hospitals in Maryland remain excluded from the IPPS under the waiver at section 1814(b)(3) of the Act.
As of March 2005, there are 3,693 IPPS hospitals to be included in our analysis. This represents about 63 percent of all Medicare-participating hospitals. The majority of this impact analysis focuses on this set of hospitals. There are also approximately 974 critical access hospitals (CAHs). These small, limited service hospitals are paid on the basis of reasonable costs rather than under the IPPS. There are also 1,138 specialty hospitals and units 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.
As of March 2005, there were 1,138 specialty hospitals excluded from the IPPS. Of these 1,138 specialty hospitals, 467 psychiatric hospitals, 80 children's, 11 cancer hospitals, and 21 LTCHs that are paid under the LTCH PPS blend methodology are being paid, in whole or in part, on a reasonable cost basis subject to the rate-of-increase ceiling under § 413.40. The remaining providers—218 IRFs and 361 LTCHs are paid 100 percent of the Federal prospective rate under the IRF PPS and the LTCH PPS, respectively. In addition, there were 1,342 psychiatric units (paid on a blend of the IPF PPS per diem payment and the TEFRA reasonable cost-based payment) and 1,006 rehabilitation units (paid under the IRF PPS) in hospitals otherwise subject to the IPPS. Under § 413.40(a)(2)(i)(A), the rate-of-increase ceiling is not applicable to the 46 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 2006. For these hospitals, the proposed update is the percentage increase in the excluded hospital market basket, currently estimated at 3.4 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 2005, the IRF PPS is based on 100 percent of the adjusted Federal IRF prospective payment amount, updated annually. Therefore, these hospitals are not 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 a Federal prospective payment amount that is updated annually. LTCHs will receive a blended payment that consists of the Federal prospective payment rate and a reasonable cost-based payment rate 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 3.4 percent).
Section 124 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) required the development of a per diem prospective payment system (PPS) for payment of inpatient hospital services furnished in psychiatric hospitals and psychiatric units of acute care hospitals and
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 is 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 is the amount of excess costs that will 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. However, at the same time, 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 costs. Changes to the capital payments are discussed in section VIII. of this Appendix. 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 proposed changes for FY 2006 operating payments compared to FY 2005 operating payments to be approximately a $2.41 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 proposed changes to the operating prospective payment system. Our payment simulation model relies on the most recent available data to enable us to estimate the impacts on payments per case of certain changes we are proposing in this 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 proposed changes, 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 2004 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 the 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 2004 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 IPPS (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 2006 changes to the capital IPPS are discussed in section VIII of this Appendix.
The proposed changes discussed separately below are the following:
• The effects of the 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 2002, compared to the FY 2001 wage data.
• The effect of the proposed change in the way we use the wage data for hospitals that reclassify as rural under section 401 of the BBRA to compute wage indexes.
• The effect of the proposed wage and recalibration budget neutrality factors.
• The effect of the remaining labor market area transition for those hospitals that were urban under the old labor market area designations and are now considered rural hospitals.
• The effects of geographic reclassifications by the MGCRB that will be effective in FY 2006.
• The effects of section 505 of Pub. L. 108-173, which provides for an increase in a hospital's wage index if the hospital qualifies by meeting a threshold percentage of residents of the county where the hospital is located who commute to work at hospitals in counties with higher wage indexes.
• The total change in payments based on proposed FY 2006 policies and MMA-imposed changes relative to payments based on FY 2005 policies.
To illustrate the impacts of the proposed FY 2006 changes, our analysis begins with a FY 2006 baseline simulation model using: the proposed update of 3.2 percent; the FY 2005 DRG GROUPER (version 22.0); the CBSA designations for hospitals based on OMB's June 2003 MSA definitions; the FY 2005 wage index; and no MGCRB reclassifications. Outlier payments are set at 5.1 percent of total operating DRG and outlier payments.
Section 1886(b)(3)(B)(vii) of the Act, as added by section 501(b) of Pub. L. 108-173, provides that, for FYs 2005 through 2007, the update factors will be reduced by 0.4 percentage points for any hospital that does not submit quality data. For purposes of the FY 2006 simulations in this proposed impact analysis, we are assuming all hospitals will qualify for the full update.
Each proposed and statutory policy change is then added incrementally to this baseline model, finally arriving at an FY 2006 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 2005 to FY 2006. Three factors not discussed separately have significant impacts here. The first is the update to the standardized amount. In accordance with section 1886(b)(3)(B)(i) of the Act, we have updated standardized amounts for FY 2006 using the most recently forecasted hospital market basket increase for FY 2006 of 3.2 percent. (Hospitals that fail to comply with the quality data submission requirement to receive the full update will receive an update reduced by 0.4 percentage points to 2.8 percent.) Under section 1886(b)(3)(B)(iv) of the Act, the updates to the hospital-specific amounts for sole community hospitals (SCHs) and for Medicare-dependent small rural hospitals (MDHs) are also equal to the market basket increase, or 3.2 percent.
A second significant factor that impacts changes in hospitals' payments per case from FY 2005 to FY 2006 is the change in MGCRB status from one year to the next. That is, hospitals reclassified in FY 2005 that are no longer reclassified in FY 2006 may have a negative payment impact going from FY 2005 to FY 2006; conversely, hospitals not reclassified in FY 2005 that are reclassified in FY 2006 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
Table I displays the results of our analysis of proposed changes for FY 2006. 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 3,693 hospitals included in the analysis. This number is 204 fewer hospitals than were included in the impact analysis in the FY 2005 final rule (69 FR 49758 ).
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 2,537 hospitals located in urban areas included in our analysis. Among these, there are 1,399 hospitals located in large urban areas (populations over 1 million), and 1,138 hospitals in other urban areas (populations of 1 million or fewer). In addition, there are 1,156 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 2006 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 2,575, 1,410, 1,165, and 1,118, 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 2,615 nonteaching hospitals in our analysis, 841 teaching hospitals with fewer than 100 residents, and 237 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 for DSH purposes. 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 Medicare dependant hospitals (MDHs)), as well as rural hospitals not receiving a special payment designation. There were 134 RRCs, 405 SCHs, 158 MDHs, and 73 hospitals that are both SCH and RRC.
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 2002 Medicare cost report files, if available (otherwise FY 2001 data are used).
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 2006. The next two groupings separate the hospitals in the first group by urban and rural status. The final two rows in Table I contain hospitals located in rural counties but deemed to be urban under section 1886(d)(8)(B) of the Act and hospitals located in urban counties, but deemed to be rural under section 1886(d)(8)(E) of the Act.
In Column 2 of Table I, we present the effects of Option 2 for the proposed expansion of the postacute care transfer policy, as discussed in section V.A. of the preamble to this proposed rule. We compared aggregate payments using the FY 2005 DRG relative weights (GROUPER version 22.0) and Option 2 for the proposed expansion of the postacute care transfer policy to aggregate payments using the FY 2005 DRG relative weights (GROUPER version 22.0) and the FY 2005 postacute care transfer policy. The changes we are proposing are estimated to result in a 1.1 percent decrease in payments to hospitals overall. We estimate the total savings at approximately $880 million.
To simulate the impact of this proposed policy, we calculated two sets of transfer-adjusted discharges and case-mix index values for hospitals. The first set was based on the FY 2005 transfer policy rules and the second was based on Option 2 for the proposed expanded transfer policy discussed in the preamble to this proposed rule. Estimated payments were computed for both sets of data and were then compared. The transfer-adjusted discharge fraction is calculated in one of two ways, depending on the transfer payment methodology. Under the transfer payment methodology in place in FY 2005, 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. There are 88 DRGs (including 210, 211) that would qualify to receive the special payment consideration. DRG 209 which formerly received the special payment has been split into two new DRGs 544 and 545. Both DRG 544 and DRG 545 are included in the 88 special payment DRGs as they continue to qualify to 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, which represents a significant change from our prior policy, has a negative 1.1 percent payment impact overall among both urban and rural hospitals. There is only small variation among all of the hospital categories from this negative 1.1 percent impact. The areas that are most dramatically impacted are urban areas, with urban New England experiencing a 1.9 percent decline in payments and the Middle Atlantic experiencing a 1.2 percent decline. Although rural New England hospitals are losing 1.1 percent, most of the other rural regions lose less than 1 percent from this policy change. Urban areas tend to have a greater concentration of postacute care facilities to which to discharge patients than do rural areas and are, therefore, more likely to be impacted by this policy proposal.
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 2005 DRG relative weights (GROUPER version 22.0) to aggregate payments using the proposed FY 2006 DRG relative weights (GROUPER version 23.0). 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 1.002494 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 Column 3.
The major DRG classification changes we are proposing include: reassigning procedure code 35.52 (Repair of atrial septal defect with prosthesis, closed technique) from DRG 108 to DRG 518 (Percutaneous Cardiovascular Procedure Without Coronary Artery Stent or AMI); reassigning procedure code 37.26 (Cardiac electrophysiologic stimulation and recording studies) from DRGs 535 and 536 to DRGs 515 (Cardiac Defibrillator Implant Without Cardiac Catheterization); splitting DRG 209 into two new DRGs based on the presence or absence of the procedure codes for major joint replacement or reattachment of lower extremity and revision of hip or knee replacement, DRG 545 (Revision of Hip or Knee Replacement) and DRG 544 (Major Joint Replacement or Reattachment of Lower Extremity); reassigning procedure code 26.12 (Open biopsy of salivary gland or duct) from DRG 468 to DRG 477 (Non-Extensive O.R. Procedure Unrelated To Principal Diagnosis); reassigning the principal diagnosis codes for curvature of the spine or malignancy from DRGs 497 and 498 to new DRG 546 (Spinal Fusion Except Cervical with PDX of Curvature of the Spine or Malignancy); splitting DRGs 516 and 526 into four new DRGs based on the presence or absence of a CC, DRG 547 (Percutaneous Cardiovascular Procedure With AMI With CC), DRG 548 (Percutaneous Cardiovascular Procedure With AMI Without CC), DRG 549 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent With AMI With CC), DRG 550 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent With AMI Without CC); reassigning procedure code 39.65 (Extracorporeal membrane oxygenation [ECMO]) from DRGs 104 and 105 to DRG 541 (ECMO or Tracheostomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth and Neck Diagnoses With Major Operating Room Procedure).
In the aggregate, these proposed changes would result in a 0.1 percent increase in overall payments to hospitals. On average, the impacts of these changes on any particular hospital group are very small, with urban hospitals experiencing a 0.2 percent increase and rural hospitals experiencing a 0.1 percent decrease. The largest impact is a 0.4 percent increase among urban hospitals in New England. This is in part due to the residual effects of the proposed change to the postacute care transfer policy on the relative weights. Including a DRG in the postacute care transfer group reduces the number of cases in the DRG (cases that qualify as transfers are only counted as a fraction of a case) which in turn increases the average charge for the DRG and the weight.
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 2006 is based on data submitted for hospital cost reporting periods beginning on or after October 1, 2001 and before October 1, 2002. 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 2005 wage index, based on FY 2001 wage data, to a model using the FY 2006 pre-reclassification wage index, based on FY 2002 wage data. The FY 2005 wage index baseline incorporated a blended wage index of 50 percent of the MSA wage index and 50 percent of the CBSA wage index in areas where the CBSA wage index was lower than the MSA wage index to reflect the transition policy that was in effect in FY 2005. The wage data collected on the FY 2002 cost report is the same as the FY 2001 wage data that were used to calculate the FY 2005 wage index.
Column 4 shows the impacts of updating the wage data using FY 2002 cost reports. Overall, the new wage data will lead to a 0.4 percent decrease for all hospitals and for hospitals in urban areas. This decrease is due to both fluctuations in the wage data itself and the fact that the transition blended wage index, which benefited areas that were negatively impacted by the labor market
In looking at the wage data itself, the national average hourly wage increased 6.1 percent compared to FY 2005. Therefore, the only manner in which to maintain or exceed the previous year's wage index was to match the national 6.1 increase in average hourly wage. Of the 3,617 hospitals with wage index values in both FYs 2005 and 2006, 1,642, or 45.4 percent, also experienced an average hourly wage increase of 6.1 percent or more.
The following chart compares the shifts in wage index values for hospitals for FY 2006 relative to FY 2005. Among urban hospitals, 58 will experience an increase of between 5 percent and 10 percent and 24 will experience an increase of more than 10 percent. A total of 14 rural hospitals would experience increases greater than 5 percent, but none will experience increases of greater than 10 percent. On the negative side, 56 urban hospitals will experience decreases in their wage index values of at least 5 percent, but less than 10 percent. Fourteen urban hospitals will experience decreases in their wage index values greater than 10 percent.
The following chart shows the projected impact for urban and rural hospitals.
For the FY 2006 wage index, we are proposing to leave the wage data for a hospital redesignated as rural under section 1886(d)(8)(E) of the Act in the urban area in which the hospital is geographically located for purposes of calculating the wage index of those areas. We are proposing to move the wage data for these hospitals into the rural wage index only if it increases the wage index in the rural area. In this way, the rural floor is only affected by the wage data for these redesignated hospitals if it would increase the rural wage index and thus reset the rural floor at a higher value. Previously, the wage data for these redesignated hospitals was moved into the rural area wage index calculations regardless of whether it increased or decreased the rural wage index, and this caused the rural floor for several States to be lower than it would have been had the redesignated providers' data not been included.
Column 5 shows the impact of adopting this policy. In aggregate, this policy proposal has no effect on payments to providers. Hospitals in the urban New England region experience an increase in payments of 0.2 percent, which indicates that CBSAs in that region that receive the rural floor are now receiving a higher wage index. Hospitals in West North Central are shown to experience a 0.2 decline. However, when the redesignated data are added to the rural wage index, their rural floor increases and they do not actually experience a loss from this policy. Hospitals reclassified as rural under section 1886(d)(8)(E) of the Act will experience a 0.2 percent increase.
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 compared simulated aggregate payments using the FY 2005 DRG relative weights and wage index to simulated aggregate payments using the proposed FY 2006 DRG relative weights and blended wage index.
We computed a proposed wage and recalibration budget neutrality factor of 1.002494. The 0.0 percent impact for all hospitals demonstrates that these changes, in combination with the budget neutrality factor, are budget neutral. In Table I, the combined overall impacts of the effects of both the DRG reclassifications and recalibration and the updated wage index are shown in Column 6. The 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.
Among urban regions, the largest impacts are in the West North Central region and Puerto Rico, with 0.3 and 0.4 percent declines, respectively. The Pacific region experiences the largest increase of 1.1 percent. Among rural regions, the New England region benefits the most with a 1.3 percent increase, while the Mountain region experiences the largest decline (1.2 percent).
To help alleviate the decreased payments for urban hospitals that became rural under the new labor market area definitions, for purposes of the wage index, we adopted a policy in FY 2005 to allow them to maintain the wage index assignment of the MSA where they were located for the 3-year period FY 2005, FY 2006, and FY 2007. Column 7 shows the impact of the remaining labor market area transition, for those hospitals that were urban under the old labor market area designations and are now considered rural hospitals. Section 1886(d)(3)(E) of the Act specifies that any updates or adjustments to the wage index are to be budget neutral. Therefore, we applied an adjustment of 0.999529 to ensure that the effects of reclassification are budget neutral as indicated by the zero effect on payments to hospitals overall. The rural hospital row shows a 0.3 percent benefit from this provision as these hold harmless hospitals are now considered geographically rural.
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 8 reflect the per case payment impact of moving from this baseline to a simulation incorporating the MGCRB decisions for FY 2006. 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 wage index value. The proposed FY 2006 wage index values incorporate all of the MGCRB's reclassification decisions for FY 2006. The wage index values also reflect any decisions made by the CMS Administrator through the appeals and review process through February 28, 2005. 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 2006.
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 0.992905 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. We estimate that their payments will rise 2.0 percent in Column 8. Payments to urban hospitals will decline by 0.3 percent. Hospitals in other urban areas will experience an overall decrease in payments of 0.2 percent, while large urban hospitals will 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 all of the rural hospital groups. The smallest increase among the rural census divisions is 0.5 for the Mountain and New England regions. The largest increases are in the rural East South Central region, with an increase of 3.0 percent and in the West South Central region, which would experience an increase of 2.5 percent.
Urban hospitals reclassified for FY 2006 are expected to receive an increase of 2.3 percent, while rural reclassified hospitals are expected to benefit from the MGCRB changes with a 3.7 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 0.3 percent for rural hospitals.
Section 1886(d)(13) of the Act, as added by section 505 of Pub. L. 108-173, provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county, but work in a different area with a higher wage index. Hospitals located in counties that qualify for the payment adjustment are to receive an increase in the wage index that is equal to a weighted average of the difference between the wage index of the resident county and the higher wage index work area(s), weighted by the overall percentage of workers who are employed in an area with a higher wage index. Using our established criteria, 345 counties and 688 hospitals qualify to receive a commuting adjustment in FY 2006.
Due to the statutory formula to calculate the adjustment and the small number of counties that qualify, the impact on hospitals is minimal, with an overall impact on all hospitals of 0.1 percent.
Column 10 compares our estimate of payments per case, incorporating all changes reflected in this proposed rule for FY 2006 (including statutory changes), to our estimate of payments per case in FY 2005. This column includes all of the proposed policy changes. Because the reclassifications shown in Column 8 do not reflect FY 2005 reclassifications, the impacts of FY 2006 reclassifications only affect the impacts from FY 2005 to FY 2006 if the reclassification impacts for any group of hospitals are different in FY 2006 compared to FY 2005.
• Column 10 reflects all FY 2006 changes relative to FY 2005, shown in Columns 2 through 9 and those not applied until the final rates are calculated. The average increase for all hospitals is approximately 2.5 percent. This increase includes the effects of the proposed 3.2 percent market basket update. It also reflects the 0.7 percentage point difference between the projected outlier payments in FY 2005 (5.1 percent of total DRG payments) and the current estimate of the percentage of actual outlier payments in FY 2005 (4.4 percent), as described in the introduction to this Appendix and the Addendum to this proposed rule. As a result, payments are projected to be 0.7 percentage point lower in FY 2005 than originally estimated, resulting in a 0.7 percentage point greater increase for FY 2006 than would otherwise occur. In addition, the impact of section 505 adjustments accounted for a 0.1 percent increase. Payment decreases of 1.5 percent are primarily attributable to the impact of expanding the postacute care transfer policy (−1.1 percent). Indirect medical education formula changes for teaching hospitals under section 502 of Pub. L. 108-173, changes in payments due to the difference between the FY 2005 and FY 2006 wage index values assigned to providers reclassified under section 508 of Pub. L. 108-173, and changes in the incremental increase in payments from section 505 of Pub. L. 108-173 out migration adjustments account for the remaining −0.4 percent.
Section 213 of Pub. L. 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 2006, eligible SCHs receive 100 percent of their 1996 hospital-specific rate. In addition, in this proposed rule we are proposing to revise the budget neutrality adjustment applied to the hospital-specific rates to reflect only the payment changes resulting from DRG recalibration. Previously, we had also adjusted the hospital-specific rates to reflect payment changes based on area wage levels. The impact of this provision is modeled in Column 10 as well. In addition, section 402 of Pub. L. 108-173 increases the DSH adjustment for hospitals that serve a disproportionate share of low-income Medicare and Medicaid patients, which include rural hospitals and urban hospitals with fewer than 100 beds, SCHs, rural referral centers, and rural hospitals with less than 500 beds. The increase in DSH payments became effective for discharges occurring on or after April 1, 2004. As provided in the new Medicare law, the cap on DSH payment adjustments increased from 5.25 percent to 12 percent for urban hospitals with fewer than 100 beds, SCHs, and rural hospitals with less than 500 beds. There is no cap on rural referral centers, large urban hospitals over 100 beds, or rural hospitals over 500 beds.
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 10 may not equal the sum of the changes described above.
The overall change in payments per case for hospitals in FY 2006 would increase by 2.5 percent. Hospitals in urban areas would experience a 2.5 percent increase in payments per case compared to FY 2005. Hospitals in rural areas, meanwhile, would experience a 2.6 percent payment increase. Hospitals in large urban areas would experience a 2.4 percent increase in payments and hospitals in other urban areas would experience a 2.7 percent increase in payments.
Among urban census divisions, the largest payment increase would be 4.0 percent in the Pacific region. Hospitals in the urban East South Central and West South Central regions would experience the next largest overall increases of 3.0 percent and 3.1 percent, respectively. The smallest urban increase would occur in the New England region, with an increase of 1.0 percent.
Among rural regions in Column 10, no hospital category will experience overall payment decreases. The Pacific and Middle Atlantic regions will benefit the most, with 3.3 and 3.2 percent increases, respectively. The smallest increase will occur in the West South Central region, with 2.2 percent increases in payments.
Among special categories of rural hospitals in Column 10, those hospitals receiving payment under the hospital-specific methodology (SCHs, MDHs, and SCH/RRCs) would experience payment increases of 2.8 percent, 2.4 percent, and 2.7 percent, respectively. This outcome is primarily related to the fact that, for hospitals receiving payments under the hospital-specific methodology, there were several increases to payments made in relation to implementation of the Pub. L. 108-173.
Urban hospitals reclassified for FY 2006 are anticipated to receive an increase of 3.0 percent, while rural reclassified hospitals are expected to benefit from reclassification with a 2.8 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 1.4 percent.
Table II presents the projected impact of the proposed changes for FY 2006 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 2005 with the average estimated per case payments for FY 2006, 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 10 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 changes. Our estimates of the likely impacts associated with these other proposed changes are discussed below.
In section II.D. of the preamble of this proposed rule, we discuss the proposed changes in the LTC-DRG relative weights for FY 2006 based on the proposed version 23.0 of the CMS GROUPER (including the
In addition, based on an analysis of the most recent available LTCH claims data from the FY 2004 MedPAR file, we continue to observe that the proposed average LTC-DRG relative weight decreases due to an increase of relatively lower charge cases being assigned to LTC-DRGs with higher relative weights in the prior year. Contributing to this increase in these relatively lower charge cases being assigned to LTC-DRGs with higher relative weights in the prior year are improvements in coding practices, which are typically found when moving from a reasonable cost-based payment system to a PPS. The impact of including cases with relatively lower charges into LTC-DRGs that had a relatively higher relative weight in the version 22.0 (FY 2005) GROUPER is a decrease in the average relative weight for those LTC-DRGs in the proposed GROUPER version 23.0. We also found that there is over a 15 percent increase in the average LTCH charge across all LTC-DRGs from FY 2003 to FY 2004. For some LTC-DRGs in which the average charge within the LTC-DRG increase is less than 15 percent, the relative weights for those LTC-DRGs will decrease because the average charge for each of those LTC-DRGs is being divided by a larger number (that is, the average charge across all LTC-DRGs). For the reasons discussed above, we believe that the proposed changes in the LTC-DRG relative weights, which include a number of proposed LTC-DRGs with lower proposed relative weights, would result in approximately a 4.6 percent decrease in aggregate LTCH PPS payments.
We are no longer required to ensure that any add-on payments for new technology under section 1886(d)(5)(K) of the Act are budget neutral (see section II.E. of the preamble to this proposed rule). However, we are still providing an estimate of the payment increases here, as they will have a significant impact on total payments made in FY 2006. New technology add-on payments are limited to the lesser of 50 percent of the costs of the technology, or 50 percent of the costs in excess of the DRG payment for the case. Because it is difficult to predict the actual new technology add-on payment for each case, we are estimating the increase in payment for FY 2006 as if every claim with these add-on payments will receive the maximum add-on payment. As discussed in section II.E. of the preamble of this proposed rule, we are not proposing to approve any of the new technology applications that were filed for FY 2006. However, we are proposing to continue to make add-on payments in FY 2006 for an FY 2005 new technology: Kinetra
In section V.B. of the preamble to this proposed rule, we discuss our implementation of section 1886(b)(3)(B)(vii) of the Act, as added by section 501(b) of Pub. L. 108-173, which revised the mechanism used to update the standardized amount of payment for inpatient hospital operating costs. Specifically, section 1886(b)(3)(B)(vii) of the Act provides for a reduction of 0.4 percentage points to the update percentage increase (also known as the market basket update) for each of FYs 2005 through 2007 for any subsection (d) hospital that does not submit data on a set of 10 quality indicators established by the Secretary as of November 1, 2003. The statute also provides that any reduction will apply only to the year involved, and will not be taken into account in computing the applicable percentage increase for a subsequent fiscal year. We are unable to precisely estimate the effect of this provision because, while receiving the full update for those years is conditional upon the submission of quality data by a hospital, the submitted data must also be validated, as described in section V.B. above. The final date for submission of quality data for purposes of receiving the full adjustment in FY 2006 is May 15, 2005. Preliminary results indicate that over 98 percent of IPPS hospitals have submitted quality data. The QIOs are still in the process of validating that data and certifying those hospitals eligible to receive the full update for FY 2006. We have continued our efforts to ensure that QIOs provide assistance to all hospitals that wish to submit data. In the preamble to this proposed rule, we are proposing additional validation criteria to ensure that the quality data being sent to CMS are accurate. Our validation process requires participating hospitals to submit five charts per quarter. We reimburse each hospital for the cost of sending charts to the Clinical Data Abstraction Center at the rate of 12 cents per page for copying and approximately $4.00 per chart for postage. Based on our experience, the average size of a chart is 140 pages. Therefore, we estimate our expenditures for chart collection at $380,000 per quarter. Because we provide reimbursement to hospitals for the costs of chart submission, we believe that this requirement represents a minimal burden to participating hospitals. Based on test applications of these validation criteria to quality data that have been submitted thus far, we currently estimate that approximately 5 percent of hospitals will fail the edits and receive the reduced market basket update to the standardized amount. Based on this reduced payment to some hospitals, we estimate savings to the Medicare program of approximately $20 million for FY 2006.
In section V.E. of the preamble to this proposed rule, we discussed our proposed FY 2006 implementation of section 1886(d)(12) of the Act, as added by section 406 of Pub. L. 108-173, which provides for a payment adjustment to account for the higher costs per discharge of low-volume hospitals under the IPPS. For FY 2006, we are proposing to continue to apply the low-volume adjustment criteria that we specified in the FY 2005 IPPS final rule (69 FR 49099). Currently, our fiscal intermediaries have identified 10 providers that are eligible for the low-volume adjustment. We estimate that the impact of these providers receiving the additional 25 percent payment increase to be approximately $1.5 million.
In section V.F.2. of the preamble of this proposed rule, we discuss our proposal to incorporate into regulations our existing policy regarding the IME adjustment for TEFRA hospitals converting to IPPS hospitals. We establish an FTE resident cap for TEFRA hospitals converting to an IPPS hospital for IME payment purposes as if the hospital had been an IPPS hospital during the base year used to compute the hospital's direct GME FTE resident cap. We are only aware of four hospitals where this issue has arisen. The proposed addition to the regulations clarifies the established policy for computing an IME FTE resident cap for these hospitals. Because this is a proposal to clarify existing policy and codify it in regulations, there is no financial impact for FY 2006.
In section V.F.3. of the preamble to this proposed rule, we present our proposal to adjust the IME FTE resident caps of hospitals that rescind their section 1886(d)(8)(E) rural reclassifications so that they do not continue to receive the increase in the FTE resident cap that is applied for rural teaching hositals. The purpose of this policy is to prevent urban hospitals from reclassifying to rural areas under section 1886(d)(8)(E) of the Act for a short period of time, solely as a means of receiving a permanent increase to their IME FTE caps. The impact of this policy is that section 1886(d)(8)(E) hospitals may receive decreased IME payments if they return to urban status. This impact cannot be quantified because we are unable to determine the number of hospitals that would otherwise game the system in the absence of this proposal and we are not aware of any teaching hospitals that became rural under the provision of section 1886(d)(8)(E) of the Act that have subsequently reverted to urban status.
In section V.H. of the preamble of this proposed rule, we discuss the impact of our implementation of the new labor market areas on multicampus hospital systems. Under our current policy, a multicampus hospital with campuses located in the same labor market area receives a single wage index. However, if the campuses are located in more than one labor market area, payment for each discharge is determined using the wage index value for the labor market area in which the campus of the hospital is located. In addition, current provisions provide that, in the case of a merger of hospitals, if the merged facilities operate as a single institution, the institution must submit a single cost report, which necessitates a single provider identification number. This provision also does not differentiate between merged facilities in a single wage index area or in multiple wage index areas. As a result, the wage index data for the merged facility is reported for the entire entity on a single cost report.
The current criteria for a hospital being reclassified to another wage area by the MGCRB do not address the circumstances under which a single campus of a multicampus hospital may seek reclassification.
Specifically, we are proposing that for reclassification applications submitted for FY 2006 (that is, applications received by September 1, 2004), we would allow a campus or campuses of a multicampus hospital system to seek geographic reclassification on the basis of the average hourly wage data submitted for the entire hospital system. For reclassification applications that would take effect for FY 2007 (that is, applications received by September 1, 2005) and thereafter, a campus of a multihospital system could not use the wage data of the entire hospital system, but rather, would have the opportunity to separate out campus-specific wage data for purposes of seeking reclassification for such campus. We estimate that this proposal will apply to fewer than 12 multicampus hospital systems nationwide and, therefore, will not lead to additional program expenditures because hospital geographic reclassifications are budget neutral under section 1886(d)(8)(D) of the Act.
In section V.I.2. of the preamble to this proposed rule, we discuss our proposed changes related to the initial residency period for residents that match into an advanced residency program, but fail to match into a clinical base year of training. We are proposing that, in instances where a hospital can document that, prior to commencement of any residency training, a resident matched into an advanced program that begins in the second residency year, that resident's initial residency period will be determined based on the period of board eligibility for the advanced program, without regard to the fact that the resident had not matched for a clinical base year training program. For purposes of this proposed rule, we have estimated the impact of this proposed rule change for FY 2006, using assumptions about the national average per resident amount, the number of affected residents, and the national average Medicare utilization rate. We estimate that this provision will affect approximately 600 residents. Using a national average per resident amount of $92,000, and an average Medicare utilization rate of 35 percent, we estimate that, for FY 2006, the impact of treating those residents as a full FTE rather than .50 FTE, Medicare payments for direct GME will increase by approximately $9.7 million.
In section V.I.3. of the preamble to this proposed rule, we discuss our proposed changes related to new teaching hospitals' participation in Medicare GME affiliated groups. Under current regulations, a new teaching hospital located in an urban area that establishes an FTE resident cap under § 413.79(e) may not participate in a Medicare GME affiliated group. We are proposing to revise the regulations to allow a new teaching hospital located in an urban area to participate in a Medicare GME affiliated group, but only if any adjustments made by the Medicare GME affiliation agreement result in an increase to the new teaching hospital's adjusted resident FTE resident caps for purposes of IME and direct GME payment. There is no estimated increase in program payments related to this proposed change because any additional residents that would be counted at the new teaching hospitals as a result of this change could have been counted prior to the affiliation for Medicare GME payment purposes at the hospital that is losing slots under the affiliation agreement.
In section V.K. of the preamble to this proposed rule, we discuss our implementation of section 410A of Pub.L. 108-173 that required the Secretary to establish a demonstration that will modify reimbursement for inpatient services for up to 15 small rural hospitals. Section 410A(c)(2) requires that “in conducting the demonstration program under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration program under this section was not implemented.” As discussed in section V.K. of the preamble to this proposed rule, we are satisfying this requirement by adjusting national IPPS rates by a factor that is sufficient to account for the added costs of this demonstration. We estimate that the average additional annual payment for FY 2006 that will be made to each participating hospital under the demonstration will be approximately $977,410. We based this estimate on the recent historical experience of the difference between inpatient cost and payment for hospitals that have applied for the demonstration. For 13 participating hospitals, the total annual impact of the demonstration program is estimated to be $12,706,334. We describe the budget neutrality adjustment required for this purpose in the Addendum to this proposed rule.
In section VII.B.3. of the preamble to this proposed rule, we discuss the proposed change to the necessary provider provision as it applies to CAHs. As required by statute, no additional CAHs will be certified as a necessary provider on or after January 1, 2006. We are proposing to revise the regulations to allow some flexibility for those CAHs previously designated as necessary providers that embarked on a replacement facility project before the sunset provision was enacted on December 8, 2003, but find that they cannot be operational in the replacement facility by January 1, 2006. We are proposing that, when a CAH is determined to have relocated, it may continue to operate under its existing necessary provider designation that exempts CAHs from the distance from another provider requirement only if certain conditions are met. The proposed clarification to the sunset of the necessary provider provision is intended to allow CAHs to complete construction projects that were initiated prior to the enactment of Pub. L. 108-173. The Health Resources Services Administration (HRSA) estimates that this proposal will apply to fewer than six CAHs nationwide. The average cost of construction of a new 25 bed CAH is approximately $25 million. Given a depreciation schedule based on a 25 useful life and Medicare utilization of approximately 50 percent, the additional capital costs for six CAHs would be $3 million. However, the actual cost to the program would be further reduced since those 6 CAH are currently being reimbursed for their existing capital costs and also the increased operating costs that are associated with operating an aged facility. Accordingly, the budgetary impact for the proposed change on the affected CAHs is estimated at between $1 million and $2 million. Expressed on a per-facility basis, the budgetary impact of this proposed change is estimated at between $167,000 and $333,000 per CAH.
Fiscal year (FY) 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 capital Federal rate and their hospital-specific rate (
In accordance with § 412.312, the basic methodology for determining a capital PPS payment is:
(Standard Federal Rate) × (DRG weight) × (Geographic Adjustment Factor (GAF)) × (Large Urban Add-on, if applicable) × (COLA adjustment for hospitals located in Alaska and Hawaii) × (1 +3 Disproportionate Share (DSH) Adjustment Factor + Indirect Medical Education (IME) Adjustment Factor, if applicable).
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 2004 update of the FY 2004 MedPAR file and the December 2004 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 2004 update of the most recently available hospital cost report data (FY 2003) 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 IPPS, it is very difficult to precisely quantify the impact associated with each 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 individual hospitals, some miscategorizations are possible.
Using cases from the December 2004 update of the FY 2004 MedPAR file, we simulated payments under the capital PPS for FY 2005 and FY 2006 for a comparison of total payments per case. Any short-term, acute care hospitals not paid under the general IPPS (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 are no longer made under the regular exceptions provision under §§ 412.348(b) through (e). Therefore, we no longer use the actuarial capital cost model (described in Appendix B of the August 1, 2001 proposed rule (66 FR 40099)). We modeled payments for each hospital by multiplying the capital 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 1.0 percent in both FYs 2005 and 2006.
• We estimate that the Medicare discharges will be 13.5 million in FY 2005 and 13.3 million in FY 2006 for a 1.5 percent decrease from FY 2005 to FY 2006.
• The capital Federal 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 2006 update is 0.7 percent (see section III.A.1.a. of the Addendum to this proposed rule).
• In addition to the proposed FY 2006 update factor, the proposed FY 2006 capital Federal rate was calculated based on a proposed GAF/DRG budget neutrality factor of 1.0019, a proposed outlier adjustment factor of 0.9497, and a proposed (special) exceptions adjustment factor of 0.9997.
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 PPS transition period payment methodology. We are no longer including this information because all hospitals (except new hospitals under § 412.324(b) and under § 412.304(c)(2)) will be paid 100 percent of the capital Federal rate in FY 2006.
We used the actuarial model described above to estimate the potential impact of our changes for FY 2006 on total capital payments per case, using a universe of 3,693 hospitals. As described above, the individual hospital payment parameters are taken from the best available data, including the December 2004 update of the FY 2004 MedPAR file, the December 2004 update to the Provider-Specific File, and the most recent cost report data from the December 2004 update of HCRIS. In Table III, we present a comparison of total payments per case for FY 2005 compared to FY 2006 based on the proposed FY 2006 payment policies. Column 2 shows estimates of payments per case under our model for FY 2005. Column 3 shows estimates of payments per case under our model for FY 2006. Column 4 shows the total percentage change in payments from FY 2005 to FY 2006. The change represented in Column 4 includes the 0.7 percent update to the capital Federal rate, a 1.0 percent increase in case-mix, changes in the adjustments to the capital Federal rate (for example, the effect of the new hospital wage index on the GAF), 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 1.7 percent in FY 2006. In addition to the 0.7 percent increase due to the capital market basket update, this projected increase in capital payments per case is largely attributable to an estimated increase in outlier payments in FY 2006. Our comparison by geographic location shows that urban hospitals are expected to experience a 1.8 percent increase in IPPS capital payments per case, while rural hospitals are only expected to experience a 1.2 percent increase in capital payments per case. This difference is mostly due to a projection that urban hospitals would experience a larger increase in estimated outlier payments from FY 2005 to FY 2006 compared to rural hospitals.
All regions are estimated to receive an increase in total capital payments per case from FY 2005 to FY 2006. Changes by region vary from a minimum increase of 0.1 percent (Middle Atlantic rural region) to a maximum increase of 3.3 percent (Pacific urban region). The relatively small increase in projected capital payments per discharge for hospitals located in the Middle Atlantic rural region is largely attributable to the proposed changes in the GAF values (that is, the proposed GAFs for most of these hospitals for FY 2006 are lower than the weighted average of the GAFs for FY 2005) . The relatively large increase in capital payments per discharge for hospitals located in the Pacific urban region is largely due to the proposed changes in the GAF values (that is, the proposed GAFs for most of these hospitals for FY 2006 are higher than the average of the GAFs for FY 2005) and a larger than average increase in estimated outlier payments for FY 2006.
Hospitals located in Puerto Rico are expected to experience an increase in total capital payments per case of 1.0 percent. This slightly lower than average increase in payment per case for hospitals located in Puerto Rico is largely due to the proposed changes in the proposed GAF values (that is, the proposed GAFs for most of these hospitals for FY 2006 are higher than the average of the GAFs for FY 2005).
By type of ownership, government hospitals are projected to have the largest rate of increase of total payment changes (2.0 percent). Similarly, payments to voluntary and proprietary hospitals are expected to increase 1.6 percent and 1.8 percent, respectively. As noted above, this slightly larger projected increase in capital payments per case for government hospitals is mostly due to the larger than average increase in projected outlier payments for FY 2006 and a smaller than average decrease in the proposed GAF values.
Section 1886(d)(10) of the Act established the MGCRB. Previously, hospitals could apply for reclassification for purposes of the standardized amount, wage index, or both. Section 401(c) of Pub. L. 108-173 equalized the standardized amounts under the operating IPPS. Therefore, beginning in FY 2005, there is no longer reclassification for the purposes of the standardized amounts; hospitals may apply for reclassification for purposes of the wage index in FY 2006. Reclassification for wage index purposes also
To present the effects of the hospitals being reclassified for FY 2006 compared to the effects of reclassification for FY 2005, 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 2006 as a whole are projected to experience a 2.0 percent increase in payments. Payments to nonreclassified hospitals in FY 2006 are expected to increase 1.7 percent. Hospitals reclassified during both FY 2005 and FY 2006 are projected to experience an increase in payments of 1.3 percent. Hospitals reclassified during FY 2006 only are projected to receive an increase in payments of 3.2 percent. This relatively large increase is primarily due to the proposed changes in the GAF values (that is, the proposed GAFs for most of these hospitals for FY 2006 are higher than the average of the GAFs for FY 2005).
(If you choose to comment on issues in this section, please include the caption “Update Factors” at the beginning of your comment.)
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 update factors recommended by the Secretary in the proposed and final rule. Accordingly, this Appendix provides the recommendations of appropriate update factors for the IPPS standardized amount, the hospital-specific rates for SCHs and MDHs, and the rate-of-increase limits and Federal prospective payment amounts 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 2006 percentage increase in the operating cost standardized amount equal to the rate-of-increase in the hospital market basket for IPPS hospitals in all areas subject to the hospital submitting quality information under rules established by the Secretary under section 1886(b)(3)(B)(vii) of the Act. For hospitals that do not provide these data, the update is equal to the market
Section 1886(b)(3)(B)(iv) of the Act sets the FY 2006 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 for 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 3.2 percent.
Section 1886(b)(3)(B)(ii) of the Act sets the FY 2006 percentage increase in the rate-of-increase limits for various hospitals and hospital units excluded from the IPPS, that is, certain psychiatric hospitals and units (now referred to as inpatient psychiatric facilities (IPFs)), certain LTCHs, cancer hospitals, and children's hospitals, equal to 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 TEFRA limits. However, some of these categories of excluded hospitals and units are currently, or soon will be, paid under their own prospective payment systems. Currently, children's and cancer hospitals and RNHCIs are the remaining three types of hospitals still reimbursed fully under reasonable costs. Those psychiatric hospitals and units of hospitals not yet paid under a PPS are still reimbursed fully on a reasonable cost basis subject to TEFRA limits. In addition, those LTCHs and IPFs paid under a blend methodology have the TEFRA portion of that payment subject to the TEFRA limits. Hospitals and units that receive any reasonable cost-based payments will have those payments determined subject to the TEFRA limits for FY 2006.
As we discuss in section IV. of the preamble and in section IV. of the Addendum to this proposed rule, we are proposing to use the estimated FY 2006 IPPS operating market basket percentage increase (3.2 percent) to update the target limits for children's hospitals, cancer hospitals, and religious nonmedical institutions.
As described in greater detail below, under their respective PPSs, LTCHs and IPFs are in a transition period during which some LTCHs and IPFs are paid a blend of reasonable cost-based payments (subject to the TEFRA limits) and a Federal prospective payment amount. Under the respective transition period methodologies for the LTCH PPS and IPF PPS, which are described below, payment is based, in part, on a decreasing percentage of the reasonable cost-based payment amount. As we discuss in section IV. of the preamble of this proposed rule, we are proposing to rebase the market basket used to determine the reasonable cost-based payment amount for LTCHs and IPFs. We are proposing that the portion of payments to LTCHs and IPFs that are reasonable cost-based will be determined using the FY 2002-based excluded hospital market basket (currently estimated at 3.4 percent).
Effective for cost reporting periods beginning FY 2003, LTCHs are paid under the LTCH PPS, which was implemented with a 5-year transition period. (Refer to the August 30, 2002 final rule (67 FR 55954).) A 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 for inpatient operating services for FY 2006, the portion of the LTCH PPS transition blend payment that is based on reasonable costs would be determined by updating the LTCH's TEFRA limit by the current estimate of the FY 2002-based excluded hospital market basket (or 3.4 percent).
Effective for cost reporting periods beginning on or after January 1, 2005, IPFs are paid under the IPF PPS under which they receive payment based on a Federal per diem rate that is based on the sum of the average routine operating, ancillary, and capital costs for each patient day of psychiatric care in an IPF, adjusted for budget neutrality. During a transition period between January 1, 2005 and January 1, 2008, some IPFs are paid based on a blend of the reasonable cost-based payments, subject to the TEFRA limit, and the Federal per diem base rate. For cost reporting periods beginning on or after January 1, 2008, IPFs will be paid based on 100 percent of the Federal per diem rate. For purposes of the update factor for FY 2006, the portion of the IPF PPS transitional blend payment based on reasonable costs would be determined by updating the IPF's TEFRA limit by the current estimate of the FY 2002-based excluded hospital market basket (or 3.4 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, and thereafter, the Federal prospective payments to IRFs are based on 100 percent of the adjusted Federal IRF prospective payment amount, updated annually. (Refer to the July 30, 2004 final rule (69 FR 45721).)
Consistent with the current law, for FY 2006, for IPPS hospitals, we are recommending an update of 3.2 percent, which reflects the CMS Office of the Actuary's most recent (fourth quarter) 2004 forecast of the FY 2006 market basket increase. In previous years, in making a recommendation, we included an update framework that analyzed hospital productivity, scientific and technological advances, practice pattern changes, changes in case mix, the effects of reclassification on recalibration and forecast error correction. Although we have used this framework in past years, we are no longer including this analysis in our recommendation for the update. We are not discussing the framework because the productivity measure cannot be adequately computed for FY 2006 because of the anticipated effects on admissions due to the expected increases in enrollment in Medicare Advantage plans. The increased enrollment in Medicare Advantage plans has the effect of causing admissions to decline. However, we do not have information on how hospital employment will be affected for our methodology. Thus, in the absence of data to predict the effect of a decline in hospital admissions on hospital employment, we cannot appropriately reflect productivity in our framework. As a result, based on the discussion above, we believe it is appropriate to recommend an update of 3.2 percent, based on the Office of the Actuary's fourth quarter 2004 forecast of the FY 2006 market basket percentage increase.
We note that, although we are not using the framework for our recommendation to update the operating standardized amounts due to the reasons above, we continue to use the framework to calculate the capital standardized amounts as discussed in section III.A.1.a. of the Addendum to this proposed rule. This is due to the fact that the framework for the capital standardized amounts is calculated without a productivity factor and, therefore, the reasons discussed above do not apply to the update framework of the capital standardized amounts.
We also note that section 1886(e)(3) of the Act directs the Secretary to report to Congress an initial estimate of the recommendation of an appropriate payment inflation update for inpatient hospital services for the upcoming fiscal year. Earlier this year, the Secretary reported to Congress that the initial estimate of the recommendation of an update factor was 3.3 percent, which was the market basket update for the IPPS standardized amount in the President's FY 2006 budget. The difference between the Secretary's initial estimate and the update we are recommending in this proposed rule (3.2 percent) is due to the availability and use of more recent data for the market basket than were available at the time the Secretary's initial estimate was developed. In addition, the Secretary's initial estimate was based on the FY 1997-based hospital market basket, while the proposed update in this proposed rule (the current update recommendation) is based on the proposed FY 2002-based hospital market basket.
Aside from making a recommendation for IPPS hospitals, in accordance with section 1886(e)(4)(A) of the Act, it is necessary to make a recommendation of the update factor for all other types of hospitals. Consistent with current law, for FY 2006, for SCHs and MDHs, we are recommending an update of 3.2 percent, which reflects the CMS Office of the Actuary's most recent (fourth quarter) 2004 forecast of the FY 2006 market basket percentage increase.
Consistent with our proposal in section IV. of the preamble of this proposed rule, for FY 2006, for cancer hospitals, religious nonmedical health care institutions, and children's hospitals, we are recommending an update of 3.2 percent to the target limits. Consistent with our proposal in the February 3, 2005 LTCH PPS proposed rule (70 FR 5735), we are recommending an update factor of 3.1 percent for rate year (RY) 2006. For LTCHs that currently may be paid during a transition period a blend of reasonable cost-based payments (subject to the TEFRA limits) and Federal prospective payment amounts,
In the past, MedPAC has suggested specific adjustments to its update recommendation for each of the factors discussed under section III. of this Appendix. In its March 2005 Report to Congress, MedPAC assessed the adequacy of current payments and costs and the relationship between payments and an appropriate cost base, utilizing an established methodology used by the Commission in the past several years. MedPAC stressed that the issue at hand was whether payments were too high or too low, and not how they became either too high or too low.
In the first portion of MedPAC's analysis on the assessment of payment adequacy, the Commission reviewed the relationship between costs and payments. MedPAC's indicator of the relationship between payments and costs is the overall Medicare margin. The overall Medicare margin is calculated as the difference between payments and costs divided by payments. Based on the latest cost report data available, MedPAC estimated an inpatient hospital Medicare operating margin for FY 2003 of 1.3 percent (down from 5.9 percent and 9.8 percent for FY 2002 and FY 2001, respectively).
MedPAC also projected margins for FY 2005, 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 2005), 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.
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:
• 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 recommendation was to increase payments under the IPPS by the projected increase in the hospital market basket index, less 0.4 percent, for FY 2006. MedPAC noted that the indicators of payment adequacy present a mixed picture. MedPAC was concerned about the trend of falling hospital margins, which may result in hospitals having a limited financial cushion for dealing with pressures that may arise in the coming year. On the other hand, MedPAC stated that the current cost trend was unsustainable and may have been driven by a lack of cost containment. Therefore, MedPAC concluded that an update of the hospital market basket index minus 0.4 percent is appropriate.
In addition, because the operating and capital prospective payment systems remain separate, we are proposing to continue 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.
Office of the Assistant Secretary for Public and Indian Housing, HUD.
Notice of funding availability.
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1. This NOFA announces the availability of $525,000 for HOPE VI grantees to create Mentoring demonstration programs.
2. The maximum amount of each grant award is $175,000. It is anticipated that approximately 4 grant awards will be made.
3. All public housing authorities (PHAs) with HOPE VI Revitalization Grants are eligible to apply. PHAs that do not have a HOPE VI Revitalization grant or manage only a HCV program, tribal PHAs and tribally-designated housing entities are not eligible. PHAs that administer Family Self Sufficiency Programs are encouraged to apply.
4. The HOPE VI Mentoring demonstration program is a demonstration program that will assist HUD in determining if a Mentoring assistance model improves the results of self-sufficiency type programs (
5. There must be two separate, equally sized groups of resident families, a group that receives Mentoring services and a control group that does not.
6. Through these mentoring demonstration programs, PHAs with HOPE VI Revitalization grants will partner with grassroots, faith-based and other community-based organizations (FB&CBOs) that provide services to transitioning families (
7. A match of five percent of the total grant request is required.
8. Each applicant may submit only one application.
9. Application materials may be obtained over the Internet from the Grants.gov web site. Technical corrections and frequently asked questions will also be posted on this web site.
10. HUD's general policy requirements apply to all HUD federal financial assistance NOFAs for Fiscal Year (FY) 2005. These policies cover those NOFAs issued under HUD's Super Notice of Funding Availability (SuperNOFA) (70 FR 13576, published March 21, 2005) as well as those issued after publication of the SuperNOFA.
1. HOPE VI grantees are encouraged to work cooperatively with grassroots, faith-based and other community-based organizations as part of their Community and Supportive Services programs. FB&CBOs are vital entities in local neighborhoods and too often their strengths are not tapped as HOPE VI grantees work to help their residents achieve economic self-sufficiency. This NOFA will provide additional funding to HOPE VI grantees to study the development of innovative supportive service delivery through grassroots, faith-based and other community-based organizations.
2. The HOPE VI Mentoring demonstration program is a demonstration program that will assist HUD in determining if a mentoring assistance model improves the results of self-sufficiency type programs (
3. There must be two separate, equally-sized groups of resident families, a group that receives Mentoring services and a control group that does not. All participants in both groups will be chosen by random sampling of the current CSS-eligible participants.
4. Through these demonstration programs, PHAs with HOPE VI Revitalization grants will partner with grassroots, faith-based and other community-based organizations (FB&CBOs) that provide services to transitioning families (
5. Each HOPE VI grantee shall partner with at least two FB&CBOs.
6. Examples of HOPE VI grantee/FB&CBO partnership. A typical family might have five benchmarks, and as the family reaches each benchmark, the FB&CBO will be paid for that
7. The programs will be evaluated with the University or other research facility presently partnering with the PHA to evaluate the HOPE VI Revitalization program. The evaluation will entail outcome measures of a net change in earnings and a net change in the participant's credit rating, based on the resident's Fair Isaac Corporation (FICO) score from Equifax, Experian, and TransUnion.
The program authority for the HOPE VI Program is section 24 of the 1937 Act (42 U.S.C. 1437v). The funding authority for the Mentoring demonstration program comes from the several Appropriations Acts, from 1997 to 2001, (Public Laws 104-204, 105-65, 105-276, 106-74, and 106-377), under, “Revitalization of Severely Distressed Public Housing” (HOPE VI).
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a. Has a condition defined as a disability in section 223 of the Social Security Act;
b. Has a developmental disability as defined in section 102 of the Developmental Disabilities Assistance Bill of Rights Act; or
c. Is determined to have a physical, mental, or emotional impairment which:
(1) Is expected to be of long-continued and indefinite duration;
(2) Substantially impedes his or her ability to live independently; and
(3) Is of such a nature that such ability could be improved by more suitable housing conditions.
d. The term “person with disabilities” does not exclude persons who have acquired immunodeficiency syndrome AIDS) or any conditions arising from the etiologic agent for AIDS. In addition, no individual shall be considered a person with disabilities, for purposes of eligibility for low-income housing, solely because of any drug or alcohol dependence.
e. The definition provided above for persons with disabilities is the proper definition for determining program qualifications. However, the definition of a person with disabilities contained in section 504 of the Rehabilitation Act of 1973 and its implementing regulations must be used for purposes of reasonable accommodations.
A. A total of $525,000 is available for funding. HUD anticipates awarding up to four (4) grants as a part of this initial announcement. Each applicant may request up to $175,000. If funds remain after all grants are awarded, HUD may divide these funds equally among the grant recipients. This may result in grant amounts larger than $175,000. HUD reserves the right to award less than the requested amount of funds.
B. The grant term for funding shall be 18 months.
Eligible applicants include, and are limited to PHAs with current HOPE VI Revitalization grants that include Community and Supportive Services components and other economic development activities that promote the economic self-sufficiency of residents under the revitalization program, in accordance with Section 24(d)(1)(G) of the United States Housing Act of 1937 (42 U.S.C. 1437,
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If you have not met a threshold, or have not included in the application the complete, correct, required documentation that demonstrates the threshold has been met, the application will not be considered for funding.
a. Evaluation by Higher Education or Research Facility. The applicant must have an active agreement as of the publication date of this NOFA with a University or other research facility to review and evaluate results achieved by the applicant's HOPE VI Revitalization grant(s). The applicant must use the same University or other research facility to review and evaluate a grant from this NOFA. See Section IV.B. of this NOFA for required documentation.
b. Other Requirements and Procedures Applicable to All Program: The requirements and procedures listed in Section III.C. of the General Section apply to this NOFA.
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a. Demonstration. The HOPE VI Mentoring demonstration program is a demonstration program that will assist HUD in determining if a Mentoring assistance model improves the results of self-sufficiency type programs (
b. Random Sampling. There must be two separate, equally sized groups of resident families, a group that receives Mentoring services and a control group that does not. The two groups of residents must be chosen, at random, from an initial pool of residents that need similar levels of, and types of, FSS or CSS services. To the greatest extent possible, the initial pool of residents must be representative of the resident community as a whole,
c. Services to Residents. Mentoring demonstration programs under this NOFA should be developed to assist residents pursue their goals of increasing their income and improving their FICO credit rating through FSS and CSS programs, along with other goals such as: Participating in job training opportunities; gaining employment; achieving promotions in the workplace; completing GED, college, and other educational programs; participating in homeownership programs; graduating from HUD subsidized low-rent programs, or other indices of progress towards self-sufficiency.
d. Resident Assessment. Applicants must have a case management system in place that has assessed residents” needs and interests so that program activities and benchmarks can be designed to address their needs.
e. Goals and Outcomes. The Demonstration will compare five (5) specific indicators (
(1) Change in adjusted family income, adjusted for family size and other factors as established by HUD, and including factors specifically related to the applicant's FSS program (provided such factors apply to all participants, in both the Mentored and Control resident groups.). The HUD form 50058, “Family Report,” will be used in evaluation of this indicator; and
(2) Change in FICO credit rating. The FICO score to be tracked shall be the middle score of the scores assigned by each of the three major U.S. credit bureaus: Equifax, Trans Union and Experian.
f. Payment of Mentor FB&CBOs. The FB&CBOs will receive grant funds on a fee-for-service basis according to the number of benchmarks completed by participating HOPE VI residents. As the public housing resident family achieves each individual goal, payment for service will go to the sponsoring FB&CBO. Payment may not go to the individual mentor. Mentoring services may be donated or paid for by leverage and grant funds. If the Mentoring services are donated, their value as in-kind services should be included in this application as Leverage Resources. If the Mentoring services are to be paid for by leverage cash or grant funds, payment must be results-oriented, based upon the measured goals and outcomes in Section e. above. See “Funding Restrictions,” Section IV.E. of this NOFA.
g. Minimum FB&CBO Partners Required. Each HOPE VI grantee must partner with at least two FB&CBOs.
h. Non FB&CBO partners. Applicants should partner with local businesses, schools, libraries, banks, employment agencies, or other organizations, that will help mentors in providing support to those public housing families they will mentor. These organizations can provide additional expertise, volunteers, office supplies, training materials, software, equipment, and other resources.
3. Eligible Activities:
a. Mentoring demonstration programs and Services. Eligible activities for the Mentoring demonstration program are programs and services that are designed to meet residents' needs. Eligible activities may include, but are not limited to: assisting with job training and other employment-related activities in order to increase earnings; assisting with activities to improve credit scores; helping residents transition from welfare to work; counseling residents in attaining homeownership; assisting school-age children and youth with homework and other educational activities; providing guidance and preparatory programming to high school students (or other interested residents) for post-secondary education (college or trade schools); assisting adults with adult educational activities; offering training on such topics as parenting, consumer education, and family budgeting; assisting with transportation needs; and providing other services as deemed necessary by results obtained from case managers and resident surveys. See applicant's HUD-approved CSS plan for other eligible CSS activities. Innovative approaches that promote increased income, improved credit scores, sustained employment, homeownership or excellence in education will receive higher scores.
b. Mentoring demonstration program funds may be used to pay for the salary of a Mentoring Demonstration Program Coordinator (the PHA staff person who coordinates the Mentoring Demonstration Program). See section IV.F. for funding restrictions.
c. The PHA shall be responsible for ensuring that Mentoring demonstration program funds are used only for eligible activities. The PHA is responsible for ensuring that the mentoring demonstration program achieves the goals and objectives stated in this application and the subsequent grant agreement (if awarded), including the following activities:
(1) Marketing the program to residents;
(2) Meeting with case managers to assess participating residents' needs for supportive services (
(3) Designing and coordinating grant activities based on residents' needs;
(4) Monitoring the progress of program participants and evaluating the overall success of the program. A
(5) Determining payment levels and timing to FB&CBOs.
4. General Section References: The following subsections of Section III of the General Section are hereby incorporated by reference:
a. Additional Non-discrimination and Other Requirements;
(1) Civil Rights Laws, including the Americans with Disabilities Act of 1990 (42 U.S.C. 1201
(2) The Age Discrimination Act of 1974 (42 U.S.C. 6101
(3) Title IX of the Education Amendments Act of 1972 (20 U.S.C. 1681
b. Affirmatively Furthering Fair Housing;
c. Ensuring the Participation of Small Businesses, Small Disadvantaged Businesses, and Women-Owned Businesses;
d. Executive Order 13166, Improving Access to Services for Persons With Limited English Proficiency (LEP);
e. Executive Order 13279, “Equal Protection of the Laws for Faith-Based and Community Organizations;
f. Procurement of Recovered Materials;
g. Participation in HUD-Sponsored Program Evaluation;
h. Salary Limitation for Consultants;
i. OMB Circulars and Government-wide Regulations Applicable to Financial Assistance Programs;
j. Drug-Free Workplace; and
k. Safeguarding Resident/Client Files.
This section describes how you may obtain application forms, additional information about the General Section, this NOFA, and technical assistance.
1. Copies of this NOFA and related application forms may be downloaded from the Grants.gov Web site at
2. This announcement contains all an applicant will need to apply. Application kits will not be used with this NOFA. All the information you need to apply will be in the NOFA and available on
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a. How mentors and public housing residents will be recruited.
b. How mentors will be trained.
c. The methods of payment disbursements to FB&CBOs.
d. How the activities of the mentors will be documented.
e. Description of the voluntary and paid staffing.
f. How eligible participants will be selected for the mentoring demonstration program, including the control group.
g. How services will be made available to residents who have already been relocated, if relocated residents will be included in the mentoring and control groups.
h. How benchmarks will be established and evaluated.
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a. Leveraged funds and in-kind services (“Donations”) must be firmly committed. “Firmly committed” means that the amount of Match or leveraged resources and their dedication to the mentoring demonstration program activities must be explicit, in writing and signed by a person authorized to make the commitment. Letters of commitment or Memoranda of Understanding (MOU) must be on organization letterhead, and signed by a person authorized to make the stated commitment whether it is for cash or in-kind services. The letters of commitment or MOU must indicate the annual level and/or amount of commitment in dollars, and indicate how the commitment will relate to the proposed mentoring demonstration programs program. See Section IV.F of the General Section regarding the procedures for submitting third party documents.
b. Commitment documents must be submitted to HUD with the NOFA application. If a commitment document is not included in the application, the donation will not be counted toward the Match threshold or to the Leverage Resources factor. Missing commitment documents are not considered “technical deficiencies” and cannot be submitted after the submission date.
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a. TAB 1: Forms Required by HUD:
(1) Acknowledgement of Application Receipt (HUD-2993) (only use if you are granted a waiver to the electronic application submission requirement).
(2) HOPE VI Mentoring Demonstration Program Application Checklist.
(3) Application for Federal Assistance (SF-424).
(4) Grant Application Detailed Budget (HUD-424-CB).
(5) Grant Application Detailed Budget Worksheet (HUD-424-CBW), only the following categories: 1., 2., 3.a., 5., 6., 7., 9., and 10.
(6) Applicant/Recipient Disclosure/Update Report (HUD-2880).
(7) Disclosure of Lobbying Activities (SF-LLL), if applicable.
(8) Program Outcome Logic Model (HUD-96010).
(9) America's Affordable Communities Initiative (HUD-27300), if applicable.
(10) Client Comments and Suggestions (HUD 2994) (Optional).
(11) Facsimile Transmittal (HUD-96011).
Copies of these forms are included in Appendix B to the General Section.
b. TAB 2: Executive Summary.
c. TAB 3: Response for Rating Factor 1.
d. TAB 4: Response for Rating Factor 2.
e. TAB 5: Response for Rating Factor 3.
f. TAB 6: Response for Rating Factor 4.
g. TAB 7: Response for Rating Factor 5.
h. TAB 8: Response to Rating Factor 6.
i. TAB 9: Documentation of Match/Leverage Commitment:
(1) Letters or MOUs from partners attesting to leveraged donations; See Section IV.B. of this NOFA for documentation requirements (note that third party documents must be submitted using the process described in Section IV.F. of the General Section).
j. TAB 10: Documentation of evaluation partnership.
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Executive Order 12372 was issued to foster intergovernmental partnership and strengthen federalism by relying on state and local processes for the coordination and review of federal financial assistance and direct federal development. The order allows each state to designate an entity to perform a state review function. The official listing of state points of contact (SPOC) for this review process can be found at:
If your state has a SPOC, you should contact it to see if it is interested in reviewing your application prior to submission to HUD. Please make sure that you allow ample time for this review process when developing and submitting your application.
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a. Payment of wages and/or salaries to participants receiving supportive services and/or programs.
b. Purchase, lease, or rental of land, real property (including homeownership housing units) and other space with grant funds, match funds or leverage funds.
c. Purchase, lease, or rental of vehicles.
d. Purchase, lease, or rental of office equipment.
e. Cost of application preparation or other pre-award activities.
f. Construction, rehabilitation, revitalization, or modernization of housing units or other physical structures with grant funds, match funds or leverage funds.
g. Payment of Legal Fees.
h. Incurring other costs that are not allowable under the HOPE VI NOFA grant award and are not stated as allowable under this NOFA.
i. Payment may not go to the individual mentor. Payment may only go to the FB&CBO on a fee-for-service basis.
The FB&CBOs will receive grant funds on a fee-for-service basis according to the number of benchmarks completed by participating HOPE VI residents. As the public housing resident family achieves each individual goal, payment for service will go to the sponsoring FB&CBO. Mentoring services may be donated or paid for by leverage and grant funds. If the Mentoring services are to be paid for by leverage cash or grant funds, payment must be results-oriented, based upon the measured goals and outcomes in Section e. above. See “Funding Restrictions,” Section IV.E. of this NOFA.
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a. If the Mentoring services are donated, their value as in-kind services should be included in this application as Leverage Resources.
b. If the Mentoring services are to be paid for by leverage cash or grant funds, payment must be results-oriented, based upon the five (5) measured goals and outcomes referred to in “Program Requirements,” Section III.C.2. of this NOFA.
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This section provides the application submission and receipt instructions for HUD program applications. Please read the following instructions carefully and completely, as failure to comply with these procedures may disqualify your application. See Section IV.F. of the General Section for more detailed information.
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The factors for rating and ranking applicants and maximum points for each factor are provided below. The maximum number of points available for this program is one hundred.
(1) This factor evaluates the knowledge and experience of the proposed Mentoring Demonstration Program Coordinator, and other HOPE VI staff in designing and successfully managing programs similar to the program for which funding is being requested. Experience will be judged in terms of recent, relevant, and successful experience of the team to undertake eligible program activities. In rating this factor, HUD will consider experience within the last 5 years to be recent. Experience should relate specific activities and specific accomplishments.
(2) Scoring:
(a) If the application demonstrates and documents the success of the PHA's CSS or comparable program, the application will receive up to 13 points. Applicants must provide quantifiable evidence to support their assertion of success and show how this success is attributable to their staffing structure.
(b) If the application demonstrates and documents the PHA has implemented a CSS or comparable program, but do not yet have positive results to report, the application will receive up to 8 points. Applicants must provide quantifiable evidence to support their assertion of results and show how this is related to their staffing structure.
(c) If the application demonstrates the PHA has never implemented a CSS or comparable program, the application will receive zero points.
(1) The application will be evaluated based on the capacity of the designated partners (FB&CBOs), their experience in implementing similar programs, and their ability to assemble a team of mentors who will work with HOPE VI families. The application will also be evaluated on whether the FB&CBO partners will be able to quickly access enough qualified mentors, to deliver the proposed activities in a timely and effective fashion.
(2) Scoring:
(a) If, as of the application submission date, partners/FB&CBOs have staff in place, an identified group of individuals willing to become mentors, and have experience in implementing similar programs, the application will receive up to a maximum of 15 points;
(b) If, as of the application submission date, the partner/FB&CBO has an identified group of individuals willing to become mentors, but lacks either the experience or a staff person to
(c) If, as of the application submission date, the partner/FB&CBO has not identified group of individuals willing to become mentors, the application will receive zero points.
(1) Describe how the program will be managed; how HUD can be sure that there will be program and financial accountability; and describe staff or team members” roles and responsibilities. The applicant must provide the following:
(a) A complete description of the fiscal management structure, including fiscal controls that are in place;
(b) A description of goals, interim and final program outcomes, and their timeframes;
(c) A list of any findings (HUD Inspector General, management review, fiscal, etc.), material weaknesses, and methods used to address them.
(2) Scoring:
(a) If the application shows a fiscal management structure and controls that are adequate to manage a grant from this Mentoring NOFA, and does not have any outstanding findings, the applicant will receive up to 4 points.
(b) If the application shows a fiscal management structure and controls that are adequate to manage a grant from this NOFA, but has outstanding findings (or does not address findings), the applicant will receive up to 2 points.
(c) If the applicant does not describe its fiscal management structure and show that they are adequate, the applicant will receive 0 points.
In rating this factor HUD will consider:
(1) Description. Your response must describe in detail the specific mentoring services and activities you plan to offer, who will benefit from them and how they will benefit from them. You should tie specific services or activities to specific sub-groups within your public housing resident and low-income communities.
(2) Scoring:
(a) If you show a strong, comprehensive network of grassroots, faith-based and other community-based organizations that have the capacity to provide needed services to the participants, and describe how the services will benefit different participant sub-groups, you will receive up to 5 points.
(b) If you show a variety of individual faith-based and community organizations, courses or services that will benefit different participant sub-groups, but not a network that responds comprehensively to the range resident needs, you will receive up to 2 points.
(c) If you do not show the relationship of FB&CBOs, courses or services to planned participant goals and outcomes, you will receive 0 points.
(1) Description. This factor examines whether your overall application is logical, feasible, and likely to achieve its stated purpose during the term of the grant. You will be evaluated based on whether your application requests funds commensurate with the level of effort necessary to accomplish your goals and anticipated results.
(2) Scoring:
(a) If the application shows financial feasibility, the ability to work with the target group of residents and low-income families, a logical plan to provide mentoring services to the participants and that the amount of requested funds is commensurate with the level of effort necessary to accomplish your goals and anticipated results, the applicant will receive up to 10 points.
(b) If the application shows some but not all of the element described in 2.a. above, the applicant will receive up to 6 points.
(c) If the application shows only one element, or none of the elements described in 2.a. above, the applicant will receive up to 2 points.
(d) If the application as a whole is not logical and shows poor planning, the applicant will receive 0 points.
(1) Description. In order to receive points in this category, responses to the factors and Mentoring Demonstration Program plan must indicate the types of activities and training programs your FB&CBOs/mentors will offer which can help residents successfully transition from welfare to work and/or complete their desired goal. These activities should be geared to all members of the family.
(2) Scoring:
(a) If the applicant shows a comprehensive set of goals, courses/services that considers the needs of the entire family (every member) of participants, which may include the attainment of higher earnings, improved credit scores, permanent employment, buying a home, changing negative behaviors, and improving poor performance in school, the application will receive up to 10 points.
(b) If the applicant proposes goals, courses/services that consider the needs of fewer than every family member, the application will receive up to 5 points.
(c) If the applicant does not show that the program will contribute to resident self-sufficiency, the application will receive 0 points.
a. Description. This factor addresses your ability to secure community resources that can be combined with HUD's grant resources to achieve program purposes. In rating this factor, HUD will look at the extent to which you and your partner coordinate and leverage your services with other organizations serving the same or similar populations.
(1) Leverage may be cash or other resources or services that can be donated, and may include: In-kind services, contributions or administrative costs provided to the applicant; funds from federal sources (not including Public Housing or HOPE VI funds) as allowed by statute, including for example CDBG; funds from any state or local government sources; and funds from private contributions.
(2) Leveraged funds and in-kind services (“Donations”) must be firmly committed. “Firmly committed” means that the amount of leveraged resources and their dedication to the Mentoring Demonstration Program activities must be explicit, in writing and signed by a person authorized to make the commitment.
(3) Donations that were included in your HOPE VI NOFA application may not also be included in your Mentoring Demonstration Program NOFA application. In order to be counted toward this rating factor, the related commitment document must address services specific to this NOFA.
(4) If volunteer time is being donated, it should be calculated using the number of hours to be donated, multiplied by the normal professional rate for the local area or, if these are not applicable, the national minimum wage
(5) Points for this factor will be awarded based on the documented evidence of partnerships and firm commitments and the ratio of requested funding to the total proposed grant budget. See Section IV.B. of this NOFA for documentation requirements.
b. Scoring:
(1) Applicants that document firm commitments to obtain extra funding equal to 50% or more of the requested amount will receive the full 20 points.
(2) Applicants that document firm commitments to obtain extra funding equal to from 25% to 49.9% of the requested amount will receive 10 points.
(3) Applications that document firm commitments to obtain from 10% to 24.9% of the requested amount will receive 5 points
(4) Applications that document firm commitments to obtain less than 10% or less of the requested amount will receive 0 points.
a. Description. Under this rating factor, applicants must demonstrate how they propose to measure their success and outcomes. This rating factor requires that the applicant identify goals, interim and final program outcomes, and their timeframes. Required outcome measures must include, at a minimum:
(1) Changes in participants' income; and
(2) Changes in participants' credit ratings.
Timeframes for outcomes should take into account the due date of the required periodic report to HUD and items that will be planned into the Mentoring Demonstration Program.
Performance indicators should be objectively quantifiable and should measure actual achievements against anticipated achievements. The narrative should identify what you are going to measure, how you are going to measure it, and the steps you have in place to adjust your plans if outcomes are not met within the established 18-month grant term timeframe. The Logic Model will be used as part of the evaluation of this rating factor.
b. Scoring:
(1) If the applicant shows interim and final measurable outcomes and/or benchmarks, with timeframes, and plans for measuring the required outcomes in both the Mentored group and control group, and shows plans for adjusting the program, the application will receive up to 20 points.
(2) If the applicant shows interim and final measurable outcomes or benchmarks, with timeframes, and plans for measuring the required outcomes in both the Mentored group and control group but without plans for adjusting the program, the application will receive up to 10 points.
(3) If the application does not show periodic and final measurable outcomes or benchmarks, with timeframes, or does not show plans to measure the required outcomes, the application will receive 0 points.
a. Scoring:
(1) Applicants that can demonstrate that the participants in both the Mentored and the control groups will all be also enrolled in the PHA's Family Self-Sufficiency program within 60 days after the date of notification of grant award, will receive 2 Points.
(2) Applicants that will not enroll the participants in both the Mentored and control groups in a Family Self-Sufficiency program within 60 days after notification of grant award, will receive 0 points.
a. Description. HUD has adopted a wide-ranging energy action plan for improving energy efficiency in all program areas. See, “Participation in Energy Star,” Section V.B.2.h. of the General Section of the SuperNOFA. Promotion of Energy Star compliance is a HOPE VI Revitalization program requirement. See Section III.C. of this NOFA.
b. Scoring:
(1) You will receive 1 Point if your application demonstrates that you will include Energy Star in homeownership counseling.
(2) You will receive 0 Points if your application does not demonstrate that you will include Energy Star in homeownership counseling.
1. Two levels of review will be conducted:
a. A technical review by individual reviewers to confirm eligibility and rate the application based on the four rating factors provided in this section; and,
b. A technical review by a Review Committee to ensure uniform rating treatment by the individual reviewers. HUD will select for grant award the highest ranked application first and continue down in ranking until funds are exhausted.
2. Response to Factors as Narrative: The responses to the rating factors constitute the narrative portion of the application. The rating factor responses should include information and references to the Mentoring Demonstration Program Plan and other documentation in the application. The factors cover key personnel, target audience, services, and activities, how the services or activities match the needs of the target audience, program evaluation, and financial controls. A narrative separate from the rating factor responses will not be reviewed. Repeating information is not necessary.
3. Corrections to Deficient Applications:
a. Consistent with its regulations at 24 CFR part 4, subpart B, HUD will not consider any unsolicited information, you the applicant may want to provide after the application submission date. HUD may contact you to clarify an item in your application or to correct technical deficiencies. HUD may not seek clarification of items or responses that improve the substantive quality of your response to the rating factors. In order not to unreasonably exclude applications from being rated and ranked, HUD may contact applicants to ensure proper completion of the application and will do so on a uniform basis for all applicants. Examples of curable (correctable) technical deficiencies include failure to submit the proper certifications, failure to submit an application that contains a signature or, when required, an original signature, by an authorized official. In each case, HUD will notify you in writing of a technical deficiency. HUD will notify applicants by facsimile or by the United States Postal Service. It is very important that the fax number listed on the Application Receipt is correct so that the notification gets to the right person on your staff. Clarifications or corrections of technical deficiencies in accordance with the information requested by HUD must be submitted within seven calendar days of the date you receive HUD notification. (If the submission date falls on a Saturday, Sunday, or a federal holiday, your correction must be received by HUD on the next day that is not a Saturday, Sunday, or a federal holiday.) If the deficiency is not corrected within this time period, HUD will reject the application as incomplete and it will not be considered for funding.
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1. The HUD Reform Act prohibits HUD from notifying you as to whether or not you have been selected to receive a grant until it has announced all grant recipients. If your application has been found to be ineligible or if it did not receive enough Points to be funded, you will not be notified until the successful applicants have been notified. HUD will provide written notification to all applicants, whether or not they have been selected for funding.
2. Authorizing Document. The notice of award signed by the Assistant Secretary for Public and Indian Housing (grants officer) is the authorizing document. This notice will be delivered by fax and the U.S. Postal Service.
3. Grant Agreement. When you are selected to receive a Mentoring grant, HUD will send you a Grant Agreement, which constitutes the contract between you and HUD to carry out and fund public housing revitalization activities. Both you and HUD will sign the cover sheet of the grant agreement. It is effective on the date of HUD's signature.
4. Applicant Debriefing. HUD will provide an applicant a copy of the total score received by their application and the score received for each rating factor.
1. Timeliness of Development Activity. Grantees must proceed within a reasonable timeframe, to complete the goals and objectives within the 18-month grant term. The PHA is encouraged to plan for sustainability of successful aspects of its mentoring demonstration program. Such sustained activities may extend beyond the 18-month grant term (
2. Match.
a. Grantees will be required to show evidence that matching resources were actually received and used for their intended purposes. Sources of matching funds may be substituted after grant award, as long as the dollar requirement is met.
b. Grantees must pursue and enforce any commitment (including commitments for services) obtained from any public or private entity for any contribution or commitment to the project or surrounding area that was part of the match amount.
3. LOCCS Requirements. The grantee must record all obligations and expenditures in LOCCS.
4. Conflict of Interest in Grant Activities.
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(1) Standard. HUD may grant an exception to the prohibition in Section a. above on a case-by-case basis when it determines that such an exception will serve to further the purposes of HOPE VI and its effective and efficient administration.
(2) Procedure. HUD will consider granting an exception only after the grantee has provided a disclosure of the nature of the conflict, accompanied by:
(a) An assurance that there has been public disclosure of the conflict;
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(c) An opinion of the grantee's attorney that the interest for which the exception is sought does not violate state or local laws.
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(i) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the plan and demolition activities that would otherwise not be available;
(ii) Whether an opportunity was provided for open competitive bidding or negotiation;
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(v) Whether the interest or benefit was present before the affected person was in a position as described in Section (iii) above;
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(vii) Any other relevant considerations.
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6. Policy Requirements.
a.
(1) Administrative requirements applicable to PHAs are:
(a) 24 CFR part 85 (Administrative Requirements for Grants and Cooperative Agreements to State, Local, and Federally Recognized Indian Tribal Governments), as modified by 24 CFR 941 or successor part, subpart F, relating to the procurement of partners in mixed finance developments.
(b) OMB Circular A-87 (Cost Principles for State, Local, and Indian Tribal Governments);
(c) 24 CFR 85.26 (audit requirements).
(2) Administrative requirements applicable to nonprofit organizations are:
(a) 24 CFR part 84 (Grants and Agreements with Institutions of Higher Education, Hospitals, and other Nonprofit Organizations);
(b) OMB Circular A-122 (Cost Principles for Nonprofit Organizations);
(c) 24 CFR 84.26 (audit requirements).
(3) Administrative requirements applicable to for profit organizations are:
(a) 24 CFR part 84 (Grants and Agreements with Institutions of Higher Education, Hospitals, and other Nonprofit Organizations);
(b) 48 CFR part 31 (contract cost principles and procedures);
(c) 24 CFR 84.26 (audit requirements).
7. Environmental Exclusion. In accordance with 24 CFR 50.19(b)(3), (9), (12) and (13) of the HUD regulations, activities assisted under this program are categorically excluded from the requirements of the National Environmental Policy Act and are not subject to environmental review under the related laws and authorities.
8. Federalism Impact. Executive Order 13132 (captioned “Federalism”) prohibits, to the extent practicable and permitted by law, an agency from promulgating a regulation that has Federalism implications and either imposes substantial direct compliance costs on state and local governments and is not required by statute, or preempts state law, unless the relevant requirements of section 6 of the Executive Order are met. None of the provisions in this NOFA will have Federalism implications and they will not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive Order. As a result, the notice is not subject to review under the Order.
9. Accountability in the Provision of HUD Assistance. Section 102 of the Department of Housing and Urban Development Reform Act of 1989 (HUD Reform Act) and the regulations in 24 CFR part 4, subpart A contain a number of provisions that are designed to ensure greater accountability and integrity in the provision of certain types of assistance administered by HUD. On January 14, 1992, (57 FR 1942), HUD published a notice that also provides information on the implementation of section 102. HUD will comply with the documentation, public access, and disclosure requirements of section 102 with regard to the assistance awarded under this NOFA, as follows:
a.
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10. Section 103 HUD Reform Act. HUD will comply with section 103 of the Department of Housing and Urban Development Reform Act of 1989 and HUD's implementing regulations in subpart B of 24 CFR part 4 with regard to the funding competition. These requirements continue to apply until the announcement of the selection of successful applicants. HUD employees involved in the review of applications and in the making of funding decisions are limited by section 103 from providing advance information to any person (other than an authorized employee of HUD) concerning funding decisions, or from otherwise giving any applicant an unfair competitive advantage. Persons who apply for assistance in this competition should confine their inquiries to the subject areas permitted under section 103 and subpart B of 24 CFR part 4.
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The Byrd Amendment, which is implemented in regulations at 24 CFR part 87, prohibits applicants for federal contracts and grants from using appropriated funds to attempt to influence federal executive or legislative officers or employees in connection with obtaining such assistance, or with its extension, continuation, renewal, amendment, or modification. The Byrd Amendment applies to the funds that are the subject of this NOFA. Therefore, applicants must file a certification stating that they have not made and will not make any prohibited payments, and, if any payments or agreement to make payments of non-appropriated funds for these purposes have been made, a form SF-LLL disclosing such payments must be submitted.
The Lobbying Disclosure Act of 1995 (Pub. L. 104-65; approved December 19, 1995), which repealed section 112 of the HUD Reform Act, requires all persons and entities who lobby covered executive or legislative branch officials to register with the Secretary of the Senate and the Clerk of the House of Representatives and file reports concerning their lobbying activities.
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Technical Assistance. HUD staff is not permitted to assist in preparing your application. If you have a question or need clarification, you may call, fax, or write Ronald Ashford, Director, HOPE VI Community and Supportive Services, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 4130, Washington, DC 20410; telephone (202) 401-8812; fax (202) 401-2370. Persons with hearing or speech impairments may call the Federal Information Relay Service TYY at (800) 877-8339.
1. Frequently asked questions, clarifications, and any technical corrections will be posted to the HUD home page at
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Centers for Medicare & Medicaid Services (CMS), HHS.
Interim final rule with comment period.
This interim final rule with comment period revises the list of procedures that are covered when furnished in an ambulatory surgery center (ASC) in accordance with section 1833(i)(1) of the Social Security Act. We published our proposed deletions and additions in the
In this interim final rule, we respond to public comments and make final additions to and deletions from the current list of Medicare approved ambulatory surgical center (ASC) procedures.
In commenting, please refer to file code CMS-1478-IFC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates, please):
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Please allow sufficient time for mailed comments to be received before the close of the comment period.
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(Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.
For information on viewing public comments, see the beginning of the
Dana Burley, (410) 786-0378.
[If you choose to comment on issues in this section, please include the caption “Background” at the beginning of your comments.]
Section 1832(a)(2)(F)(i) of the Social Security Act (the Act) provides that benefits under the Medicare Supplementary Medical Insurance program (Part B) include payment for facility services furnished in connection with surgical procedures we specify and which are performed in an ambulatory surgical center (ASC). To participate in the Medicare program as an ASC, a facility must meet the standards specified in section 1832(a)(2)(F)(i) of the Act; in 42 CFR 416.25, which sets forth general conditions and requirements for ASCs; and, in 42 CFR 416, subpart C, which provides specific conditions for coverage for ASCs.
There are two primary elements in the total cost of performing a surgical procedure—the cost of the physician's professional services in performing the procedure and the cost of items and services furnished by the facility where the procedure is performed (for example, surgical supplies and equipment and nursing services). This interim final rule with comment period addresses the second element, the coverage and payment of facility fees for ASC services under the current payment system. As we note below, section 626(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted on December 8, 2003) requires that we develop a revised payment system for ASC facility services that would be implemented no earlier than January 1, 2006. This interim final rule addresses additions to and deletions from the list of Medicare approved ASC procedures before the implementation of that revised payment system.
Under the current ASC facility services payment system, the ASC payment rate is a standard overhead amount established on the basis of our estimate of a fair fee that takes into account the costs incurred by ASCs generally in providing facility services in connection with performing a specific procedure. The report of the Conference Committee accompanying section 934 of the Omnibus Budget Reconciliation Act of 1980 (OBRA) (Pub. L. 96-499), which enacted the ASC benefit in December 1980, states that this overhead factor is expected to be calculated on a prospective basis
To establish those reasonable estimated allowances for services furnished before implementation of the revised payment system mandated by the MMA, section 626(b)(1) of the MMA amended section 1833(i)(2)(A)(i) of the Act to require us to take into account the audited costs incurred by ASCs to perform a procedure, in accordance with a survey. Payment for ASC facility services is subject to the usual Medicare Part B deductible and coinsurance requirements, and the amounts paid by Medicare must be 80 percent of the standard fee.
Section 1833(i)(1) of the Act requires us to specify, in consultation with appropriate medical organizations, surgical procedures that can be safely performed in an ASC and to review and update the list of ASC procedures at least every two years.
Section 141(b) of the Social Security Act Amendments of 1994 (SSAA 1994) requires us to establish a process for reviewing the appropriateness of the payment amount provided under section 1833(i)(2)(A)(iii) of the Act for intraocular lenses (IOLs) for a class of new-technology IOLs. That process was the subject of a separate final rule entitled “Adjustment in Payment Amounts for New Technology Intraocular Lenses Furnished by Ambulatory Surgical Centers,” published on June 16, 1999 in the
Section 934 of the Omnibus Budget Reconciliation Act of 1980 amended sections 1832(a)(2) and 1833 of the Act to authorize the Secretary to specify surgical procedures that, although appropriately performed in an inpatient hospital setting, can also be performed safely on an ambulatory basis in an ASC, a hospital outpatient department, or a rural primary care hospital. The report accompanying the legislation explained that the Congress intended procedures currently performed on an ambulatory basis in a physician's office that do not generally require the more elaborate facilities of an ASC not be included in the list of covered procedures (H.R. Rep. No. 96-1167, at 390, reprinted in 1980 U.S.C.C.A.N. 5526, 5753). In a final rule published August 5, 1982 in the
Subsequently, in accordance with § 416.65(c), we published an update of the ASC list in the
During years when we do not update the list in the
Section 416.65(a) specifies general standards for procedures on the ASC list. ASC procedures are those surgical and medical procedures that are—
• Commonly performed on an inpatient basis but may be safely performed in an ASC;
• Not of a type that are commonly performed or that may be safely performed in physicians' offices;
• Limited to procedures requiring a dedicated operating room or suite and generally requiring a post-operative recovery room or short term (not overnight) convalescent room; and
• Not otherwise excluded from Medicare coverage.
Specific standards in § 416.65(b) limit ASC procedures to those that do not generally exceed 90 minutes operating time and a total of 4 hours recovery or convalescent time. If anesthesia is required, the anesthesia must be local or regional anesthesia, or general anesthesia of not more than 90 minutes duration.
Section 416.65(c) excludes from the ASC list procedures that generally result in extensive blood loss, that require major or prolonged invasion of body cavities, that directly involve major blood vessels, or that are generally emergency or life-threatening in nature.
In April 1987, we adopted quantitative criteria as tools for identifying procedures that were commonly performed either in a hospital inpatient setting or in a physician's office. Collectively, commenters responding to a notice published on February 16, 1984 in the
At the time, we believed that these utilization thresholds best reflected the legislative objectives of moving procedures from the more expensive hospital inpatient setting to the less expensive ASC setting without encouraging the migration of procedures from the less expensive physician's office setting to the ASC. We applied these quantitative standards not only to codes proposed for addition to the ASC list, but also to the codes that were currently on the list, to delete codes that did not meet the thresholds.
The trend towards performing surgery on an ambulatory or outpatient basis grew steadily, and by 1995, we discovered that a number of procedures that were on the ASC list at the time fell short of the 20 percent and 50 percent thresholds even though the procedures were obviously appropriate in the ASC setting. The most notable of these was cataract extraction with intraocular lens insertion, very few cases of which were being performed on an inpatient basis by the early 1990s. The thresholds would also have excluded from the ASC list certain newer procedures, such as CPT code 66825, Repositioning of intraocular lens prosthesis, requiring an incision (separate procedure), that were rarely performed on a hospital inpatient basis but that were appropriate for the ASC setting. Strict adherence to the same 20 percent and 50 percent thresholds both to add and remove procedures did not provide latitude for minor fluctuations in utilization across settings or errors that could occur in the
In an effort to avoid these anomalies but still retain a relatively objective standard for determining which procedures should comprise the ASC list, we adopted in the
In January 2003, the Office of the Inspector General (OIG) issued the results of a study entitled “Payments for Procedures in Outpatient Departments and Ambulatory Surgical Centers” (OEI-05-00-00340). The objective of that study was to determine the extent to which Medicare payments for the same procedures continue to vary between hospital outpatient departments and ambulatory surgical centers and to assess the effect of this variance on the Medicare program.
The OIG concluded, as a result of its study, that there should be a greater parity of payments for services performed in an outpatient setting and those performed in ASCs. The OIG based this conclusion both on its belief that the Congress intended Medicare to be a prudent purchaser of services and to pay only for those costs that are necessary for the efficient delivery of needed health services and on its finding that disparities in Medicare payment amounts for the same services furnished in ASCs and hospital outpatient departments resulted in an estimated $1.1 billion in additional Medicare program payments. The OIG also found that our failure to remove certain procedure codes from the list of ASC-approved procedures resulted in an estimated $8 to $14 million in additional Medicare program payments.
The OIG recommended that we—
• Seek authority to set rates that are consistent across sites and reflect only the costs necessary for the efficient delivery of health services;
• Conduct surveys and use timely ASC survey data to reevaluate ASC payment rates; and
• Remove the procedure codes that meet our criteria for removal from the ASC list of covered procedures. (In its final report, the OIG included a list of 72 CPT codes that it found, based on its analysis of calendar year 1999 data, met our criteria for deletion from the ASC list.)
In our response to the OIG's recommendations, we indicated that we would consider the OIG's first recommendation as we develop future legislative proposals. In response to the second recommendation, we indicated our concerns about using survey data as the basis for setting ASC payment rates and that we were considering how to implement the survey requirement. (Enactment of section 626(b) of the MMA repealing the survey requirement and mandating implementation of a revised payment system in accordance with certain requirements set forth in the MMA supersedes our earlier response to this OIG recommendation.)
Procedures on the ASC list are assigned to one of nine payment groups based on our estimate of the costs incurred by the facility to perform a procedure. Payment groups 1 through 8 were first implemented in September 1990, based on a survey of ASC costs conducted in 1986 (55 FR 4539). Payment group 9 was added on December 31, 1991 (56 FR 67666) to establish a payment rate for extracorporeal shockwave lithotripsy (ESWL). There is no clinical consistency among the procedures in a payment group. Rather, assignment to a payment group is based solely on an estimate of facility costs associated with performing the procedures.
In a proposed rule published on June 12, 1998 in the
We discuss in the final rule published on March 28, 2003 in the
Section 626(b) of MMA repeals the requirement that we conduct a survey of ASC costs as the basis for rebasing ASC rates and requires us to implement a revised payment system between January 1, 2006 and January 1, 2008, that takes into account recommendations in the report to the Congress that was to be submitted by January 1, 2005 by the Comptroller General of the United States. Since section 626(b)(1) amends section 1833(i)(2) of Act, we are required to base payment for ASC services on survey data before implementation of the revised payment system. Therefore, the additions to the ASC list in this interim final rule are assigned to one of the existing nine ASC payment groups and rates that are derived from data collected in the 1986 survey of ASC costs, updated for inflation. The payment group for each addition to the ASC list in this interim final rule is based on the payment group to which procedures currently on the list, which our medical advisors judged to be similar in terms of time and resource inputs, are assigned. As of April 1, 2004, in accordance with the requirements in section 626(a) of MMA and instructions that we issued to our contractors who process ASC claims in Transmittal 51, Change Request 3082, on February 6, 2004, the ASC payment rates are the following:
In the November 26, 2004 proposed rule, we proposed to delete 54 procedures from the ASC list based on the OIG recommendations. An additional 46 deletions were proposed based on data that indicated that either the physician office or the inpatient setting was the predominant site of service or based on recommendations from specialty organizations that there were beneficiary safety concerns associated with furnishing the procedure(s) in the ASC.
We also proposed to add to the list 25 procedures that were recommended by commenters and other interested parties.
[If you choose to comment on issues in this section, please include the caption “ANALYSIS OF AND RESPONSES TO PUBLIC COMMENTS RECEIVED ON THE NOVEMBER 26, 2004 PROPOSED RULE AND PROVISIONS OF THIS INTERIM FINAL RULE WITH COMMENT PERIOD” at the beginning of your comments.]
Summaries of the public comments and our responses to those comments are set forth in the various sections of this preamble under the appropriate headings.
We received a number of general public comments on our proposed changes to the ASC list.
They stated that there were several detrimental effects that would likely result from deletion of the codes as proposed. They believe that deleting the procedures will result in beneficiaries' decreased access to the most appropriate care, increased costs for the Medicare program and for beneficiaries because the procedures will have to be furnished in the more costly hospital outpatient department if the ASC is not an option, and creation of incentives to perform procedures in inappropriate settings.
In the June 1998 proposed rule, we proposed the addition of CPT code 50590, Extracorporeal shock wave lithotripsy to what would have been the highest payment group. The American Lithotripsy Society disagreed with the addition payment rate and, through litigation, avoided that addition. We now are embarking on development of a new payment system for ASCs, and so are not adopting any revisions to our rate-setting method before that development. At this time, we are updating the list of procedures on the ASC list, and it is beyond the scope of this rule to create payment groups that would provide payments closer to the costs of procedures that are either much more costly or much less costly than the existing highest and lowest ASC payment group.
In the November 26, 2004 ASC proposed rule, we proposed to delete 100 procedures from the ASC list, most of which were being performed in the office setting in more than half the number of cases. We also proposed to add 25 new procedures to the ASC list. Comments on the proposed rule indicate that the ASC cases for codes proposed for deletion from the ASC list will migrate to the outpatient hospital setting rather than to the physician office setting because the procedures performed in ASCs involve patients who need anesthesia, or who have significant comorbidities or anatomic abnormalities, or who require a sterile operating room.
Based in part on the convincing arguments and clinical evidence submitted by commenters, we are deleting only five procedures from the ASC list out of the original 100 procedures that we proposed to delete. We have noted minimal shifts among ambulatory sites of service over the past decade even though most of the codes that we proposed to delete have been on the ASC list throughout that period. In other words, the availability of these procedures in ASCs has not induced substantial shifts in the site of service. We are also adding 67 procedures to the ASC list, based on commenters' recommendations.
Over the past several years, the number of small, physician-owned specialty hospitals specializing in surgical and orthopedic services has grown rapidly. We have investigated this set of hospitals as part of our
Section 626 of the MMA requires and sets parameters for a revision to the ASC fee schedule. The existing fee schedule is comparatively crude, with only nine payment rates used for approximately 2500 different surgical procedures. Consequently, each payment cell spans a broad set of clinically heterogeneous services. In addition, the basic structure of rates has not been updated since 1990. This combination of factors has resulted, among other things, in incentives to perform procedures in a hospital outpatient setting rather than an ASC, or the converse, when payment rates for particular procedures diverge significantly from the resources consumed in connection with the procedures. Reforming the ASC fee schedule can materially reduce these divergences and mitigate inappropriate incentives from this quarter that favor proliferation of specialty hospitals.
The MMA requires that the new payment system be implemented after December 2005 and not later than 2008. GAO has prepared and is about to conduct a survey to determine the relative costs associated with procedures performed in ASCs as part of a report to Congress required under the MMA. We are to take into account the recommendations contained in the GAO report. Given the need to collect and analyze data and to complete full notice-and-comment rulemaking, we plan to implement the ASC payment reform January 1, 2008. Flowing from the MMA requirement that the GAO compare the relative costs of procedures furnished in ASCs to the relative costs of procedures furnished in hospital outpatient departments, we are exploring relating the ASC fee schedule to the outpatient prospective payment system, using the same or very similar ambulatory payment classifications. Linking the two systems could provide a mechanism for automatic updates of weights in the ASC system and reduce divergences between the two payments to an average percentage value.
In accordance with the statutory requirement that we review and update the ASC list at least every 2 years, we, in consultation with our medical advisors, reviewed the current ASC list against the criteria. In this review, we also considered deletions recommended by medical specialty societies and other commenters. Further, we reviewed the codes that the OIG recommended for deletion from the ASC list. In most cases, our medical advisors agreed that the procedures recommended by the OIG for deletion no longer met the criteria for ASC procedures, and we proposed to delete most of them from the ASC list. We removed the following seven procedures recommended for deletion by the OIG from the ASC list: CPT codes 21920, 42104, 51725, 56405, 56605, 62367, and 62368.
However, there were 11 procedures the OIG recommended for deletion that our medical advisors determined, for health and safety reasons, should be retained on the list:
We received no comments about this proposal, and we are making final our proposal to retain these procedures on the ASC list.
Based on our review of other procedures on the ASC list, we proposed to delete from the ASC list those listed in Table 2, for the reasons specified.
Rationale for deletion is indicated as follows:
1. Procedure is performed in physician's office more than 50 percent of the time.
2. Medical specialty organizations recommended deletion because of safety concerns.
3. Procedure is performed predominantly in the inpatient setting.
4. OIG recommended for deletion and CMS medical advisors concur.
As displayed in Table 2, among the codes we proposed to delete from the ASC list were CPT codes 52000, Cystourethroscopy, 52281, Cystourethroscopy, with calibration and/or dilation of urethral stricture or stenosis, with or without meatotomy, with or without injection procedure for cystography, and 55700, Biopsy, prostate; needle or punch, single or multiple, any approach. We proposed deletion of these codes from the list in response to the recommendations of the OIG. The study recommended that Medicare be a prudent purchaser of services and only pay for those that are necessary for the efficient delivery of needed health services. The OIG found that discrepancies in the payment amounts between services furnished in the ASC and in the hospital outpatient setting resulted in additional and unnecessary program payments. The OIG also asserted that retention of these codes was inconsistent with our criteria for procedures that are appropriately performed in an ASC. Based on their study findings, the OIG recommended that procedures be removed from the ASC list with the expectation that those deleted services would then be furnished in the physician office setting at a lower cost to Medicare.
These procedures have been on the list of Medicare-approved ASC procedures since its inception. However, in our review of the procedures on the ASC list for the biennial update, we found that the codes did not satisfy our criteria for inclusion on the list and, in addition, the OIG's report recommendation made it clear that we should propose removal of the procedures.
The commenters also questioned our estimated cost savings as a result of the deletions. They stated that the procedures would not shift from the ASC to the physician office as assumed by the OIG, but would instead shift to the hospital outpatient department in most cases. Further, they asserted that deletion of the codes from the ASC list will impose a barrier to access for those beneficiaries with limited access to a hospital outpatient facility. They asserted that the deletion of these codes would actually result in additional costs for the Medicare program.
We examined Medicare site of service data for the past 10 years and found that the pattern for the site of service for the procedures generally was stable. Consistently, the physician office is the predominant service setting even though the procedures were included on the ASC list. As exhibited in Table 3 below, in 1992, 70 percent of cystourethroscopies (52,000) were furnished in the physician office, 17.5 percent in the outpatient department and 3.3 percent in the ASC. The change in distribution across sites of service for this procedure from 1992 through 2003 is minimal. Generally, the data show a trend of decreasing volume in the hospital outpatient department accompanied by an increased volume in the physician office. With the exception of CY 2000, volume in the ASC setting has remained significantly less than 10 percent of the total cases.
We found similar patterns in the Medicare site of service data for the other two high volume urology procedures, CPT codes 52281 and 55700, that we proposed to delete. We believe that the relative stability of the utilization and site of service is evidence that the inclusion of the codes on the ASC list has not influenced the physician's selection of setting for performance of the procedures and provides strong evidence that there is a small but consistent population of beneficiaries for whom the ASC setting is the most appropriate for these procedures.
In light of the evidence presented to us in the comments, we agree with
If we accept the commenters' assertions that many of the procedures currently furnished in the ASC must be performed in a facility setting, as we have, we must reconsider the cost savings estimates that we assumed when we proposed deletion of these codes. If a significant portion of the procedures will migrate to the hospital outpatient department rather than to the physician office, then we may have diminished cost saving estimates compared to those included in our proposed rule, with resultant increased payment by the Medicare program rather than savings. See section IV of this interim final rule for a full discussion of cost savings estimates.
The commenters presented equally compelling clinical arguments opposing deletion of these procedures. They assert that it is often difficult to schedule these non-emergent procedures in outpatient departments but that the need for sterile conditions for the procedures requires a facility setting rather than the physician office. Many patients require heavy sedation or general anesthesia because of the delicate nature of many of the procedures, and need a facility setting due to Medicare patient comorbidities. Further, commenters cited a number of CPT coding definitions that make it impossible to identify important information about specific procedures that are performed. That is, one code describes a number of different procedures, some of which are significantly more complex than others reported using the same CPT code. For example, CPT code 31233, Nasal/sinus endoscopy, diagnostic with maxillary sinusoscopy (via inferior meatus or canine fossa puncture), describes a procedure that may be accomplished by either of two distinct approaches, one of which may require no anesthesia while the other (requiring insertion of a trochar through the roof of the patient's mouth) does require sedation in a facility setting.
Further, they assert that the deletion of the codes as proposed will not result in cost savings for the Medicare program but will result in diminished beneficiary access to appropriate care and to cost increases because the cases currently performed in the ASC will shift to hospital outpatient departments.
Further, we believe that the estimated cost savings included in the proposed rule may have been over-stated. Therefore, we performed cost analyses using predicted site of service distribution changes that we believe are more realistic than those we used in the proposed rule. A full discussion of the cost estimates is presented in section V of this rule.
Therefore, we will delete only the five codes about which we received no comments. CPT codes 21440, 23600, and 23620 are all procedures that are performed in the office setting more than half of the time. CPT code 69725 is performed as an inpatient procedure 100 percent of the time. The resources required to perform CPT code 53850 significantly exceed the highest ASC payment group. Therefore, we are making final our proposal to delete the five codes listed in Table 4.
In response to public comments and our medical staff review, we proposed to add the procedures displayed in Table 5 to the list of Medicare-approved ASC procedures.
CPT code 31500, Insert emergency airway, also will be removed from the list of additions to be made final. We will not add this procedure to the ASC list because it would be significantly overpaid even in the lowest ASC payment group. As discussed in our March 2003, final rule (68 FR 15270), our policy is not to add procedures for which significant overpayments would result.
However, we will make final our proposal to add the other codes in Table 5. The final list of all procedures to be added to the ASC list is in section II, Table 7.
We also received a large number of comments requesting that we add procedures to the ASC list in addition to those we proposed to add in the November 26, 2004 proposed rule. Following is a discussion of each of those requests.
• 45300 Proctosigmoidoscopy, rigid; diagnostic, with or without collection of specimen(s) by brushing or washing
• 45303 Proctosigmoidoscopy, rigid; diagnostic, with dilation (for example, balloon, guide wire, bougie)
• 45330 Sigmoidoscopy, flexible; diagnostic, with or without collection of specimen(s) by brushing or washing
• 46604 Anoscopy, diagnostic, with or without collection of specimen(s) by brushing or washing, with dilation (for example, balloon, guide wire, bougie)
• 46614 Anoscopy, diagnostic, with or without collection of specimen(s) by brushing or washing, with control bleeding (for example, injection, bipolar cautery, unipolar cautery, laser, heater probe)
• 46900 Destruction of lesion(s), anus, simple; chemical
• 46910 Destruction of lesion(s), anus, simple; electrodesiccation
• 46916 Destruction of lesion(s), anus, simple; cryosurgery
The commenter believes the codes should be added to the ASC list to afford more latitude to patients and physicians with regard to choice of site of service. They point out that although these procedures are usually performed in the physician office, there are circumstances under which a facility environment that is sterile and in which administration of general anesthesia is safe, is required. They believe that the ASC should be one of the options available.
The commenter asserted that, although these are usually furnished as inpatient procedures, the commenter believes that they meet the criteria for inclusion on the ASC list because they do not involve major or prolonged invasion of a body cavity, do not involve major blood loss, intra-operative time is less than 90 minutes, and recovery time is only 60 minutes.
The commenters stated that these procedures should be added to the list because they meet the criteria for inclusion. The intra-operative time is 15 to 20 minutes, recovery time is 40 to 60 minutes, no major blood vessels are encountered during the procedures, and anesthesia is rarely required. Further, commenters stated that, because CPT code 66821, Discission of secondary membranous cataract, laser surgery, is on the list, the other laser procedures should be included as well.
The commenter requested that we add these codes and create a new payment group to accommodate the costs for these procedures.
The commenter believes that the listed procedures are appropriate for performance in an ASC setting because they meet the clinical criteria for inclusion.
Specifically, the commenter stated that CPT codes 35470, 35471, 35473, and 35474 are less invasive than CPT
Similarly, based on their clinical judgment and site of service data, our clinical staff considers all of the other procedures on this list to be predominantly inpatient procedures and not appropriate for addition to the ASC list.
Generally, the commenter believes that the listed codes should be added to the ASC list because the physician should be allowed to select the most appropriate setting for performance of procedures. The commenter identified a few codes that are included on the ASC list that the commenter believes are comparable to several of the codes for which addition is being solicited. For example, the commenter indicates that because CPT code 58550, Laparoscopy surgical, with vaginal hysterectomy for uterus 250 grams or less, is included on the list, CPT codes 58552, 58553, and 58554 also should be included and that the inclusion of CPT code 51772, urethral pressure profile studies is an indication that CPT code 51741 should be added to the list.
The commenter believes that the physician should have the freedom to select the most appropriate site of service for performance of these procedures.
However, we agree with the commenters that CPT codes 19296, 19298, 57155, and 58346 meet our criteria and should be added to the ASC list. We also agree that uterine and breast brachytherapy are appropriate services for the ASC setting. While we are adding these procedure codes to the list, these codes alone do not comprise a brachytherapy procedure. Similar to the performance of prostate brachytherapy, the codes for uterine and breast brachytherapy are among several procedures that may be furnished in the performance of uterine or breast brachytherapy and do not include the application of seeds.
We are currently trying to resolve a number of payment options related to the performance of prostate brachytherapy and the extent to which those services could be paid for when furnished in an ASC under existing regulations related both to ASCs and other payment systems such as the Medicare physician fee schedule. The issues are very complex, and we are still exploring various options. Until we address them comprehensively through national instructions, payment for uterine or breast brachytherapy performed in an ASC is determined by local carriers.
Table 7: Final Additions to the ASC List, Effective July 2005
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 (44 U.S.C. 35).
We ordinarily publish this list and propose payment amounts for new items and propose deletions of items in a notice of proposed rulemaking, subject to public comments. We published such a notice in November 2004. In response to the proposed rule, we received and acted upon a large number of public comments. Commenters requested the addition of a number of procedures to the list; we have added a number of procedures to the list, and we have assigned them to payment groups. Despite the fact that we view these additions as logical outgrowths of our proposed rule, we have decided to provide an opportunity for public comment on the procedures and payment group assignments which were not contained in the proposed rule. Nonetheless, payment will be made, beginning July 5, 2005, based on the list and payment groups contained in this rule.
With respect to the procedures added to the ASC list since the proposed rule, we are waiving our usual notice and comment process. Those procedures will be used effective July 5, 2005 as though they had been included in the proposed rule. We believe that waiving the notice and comment process with respect to those procedures is in the public interest. If notice and comment were not waived, we could not add the procedures suggested by public comments to the list of procedures that may be performed in ASCs. This result could be detrimental to beneficiaries, who might be unable to receive the procedures in an ambulatory setting. Therefore, we find good cause to waive notice and opportunity for comment with regard to the changes being made to the ASC list which were not published in the proposed rule.
[If you choose to comment on issues in this section, please include the caption “REGULATORY IMPACT STATEMENT” at the beginning of your comments.]
We have examined the impact of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
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). Our actuary has prepared a fiscal impact estimate. As shown in the table below, for fiscal years 2005 through 2009, the estimated effect on Medicare program expenditures that result from the additions to and deletions from the ASC list made final in this rule are estimated to have zero impact in 2005, increasing to $5 million savings per year for 2006 through 2009. We expect the estimated savings to result from approximately 10 percent of
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 because of their nonprofit status or because they have revenues of $6 million to $29 million in any 1 year. According to small business associations, approximately 73 percent of all ASCs are considered small entities because they have revenues of $11.5 million or less. Individuals and States are not included in the definition of a small entity.
Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a final rule 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 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. This interim final rule does not have a significant impact on the operations of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local or tribal governments, in the aggregate, or by the private sector, of $110 million. This rule will not have an effect on the governments mentioned, and the private sector costs will be less than the $110 million threshold.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This rule will not have a substantial effect on State or local governments.
The entities affected by this interim final rule are Medicare certified ASCs, physician offices and clinics, hospitals, and beneficiaries. No other providers are affected. This rule will not affect State or local governments. There are more than 4,000 ASCs currently certified by Medicare, nearly three-quarters of which fit the definition of a “small entity”.
This interim final rule revises the ASC list by adding 67 procedures and deleting five. Professional societies, physicians, ASC administrators, and ASC associations recommended most of the codes proposed for addition to the ASC list. Currently, the procedures that we propose to add to the ASC list are performed predominantly in a hospital outpatient setting. Our medical advisors agree that the proposed additions meet the criteria for ASC procedures that are discussed in section II of this preamble and that they can be safely and appropriately performed in an ASC.
Currently, if a physician performed one of the 67 procedures before the effective date of this rule, Medicare would not allow payment to the ASC. Addition of these procedures to the ASC list may benefit ASCs because it will allow Medicare to pay the facility fee to the ASC when the procedures are furnished there. Further, the additional procedures may increase the number of beneficiaries to whom the ASC can offer its services.
Beneficiaries may benefit from the additions to the ASC list because they will have an additional service setting that they and their physicians may consider for elective surgical procedures and the copayment amounts for services furnished in the ASC setting may be lower than in the hospital outpatient department where many of these procedures currently are furnished.
We estimate that approximately 25 percent of the newly-added procedures that are currently furnished in the physician office will migrate to an ASC setting. This may increase Medicare program spending and beneficiary copayment amounts because the ASC facility fees for these procedures often exceed changes in the physician office setting.
To the extent that hospital outpatient utilization decreases and ASC utilization increases, the Medicare program will realize a savings because the ASC facility fee for most of the proposed additions to the ASC list is lower than the payment rate for the same procedures under the OPPS. Because hospitals perform a much higher volume of ambulatory surgeries overall than are performed in ASCs, we do not expect significant hospital revenue losses from procedures proposed for addition to the ASC list shifting to the ASC setting.
In addition, we are deleting five procedures from the existing ASC list. We proposed to delete these codes based on recommendations from physicians or specialty societies because the procedures do not meet our criteria; however, they do not represent a significant volume of procedures furnished in ASCs and so deleting them from the list will have no negative effect on ASCs or beneficiaries. As we explained above, three of the codes that we are proposing to delete are procedures that are being performed primarily in a physician office setting and do not require the more elaborate resources of an ASC to be safely performed, and one is furnished 100 percent of the time as an inpatient procedure. Therefore, we do not believe that deleting these procedures from the ASC list will limit beneficiary access or compromise patient safety. For the above reasons, we are not preparing analyses for either the RFA or section 1102(b) of the Act because we have determined, and we certify, that this interim final rule would not have a significant economic impact on a substantial number of small entities or a significant impact on the operations of a substantial number of small rural hospitals.
We are issuing this interim final rule to meet a statutory requirement to update the list of approved ASC procedures biennially. We last updated the ASC list effective July 1, 2003. We implement the biennial update of the list through notice in the
In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.
(Catalog of Federal Domestic Assistance Program No. 93.774, Medicare—Supplementary Medical Insurance Program)