[Federal Register Volume 60, Number 30 (Tuesday, February 14, 1995)]
[Notices]
[Pages 8389-8406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3526]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[BPD-793-NC]
RIN 0938-AG54


Medicare Program; Schedule of Limits on Home Health Agency Costs 
Per Visit

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice with comment period.

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SUMMARY: This notice with comment period sets forth a revised schedule 
of limits on home health agency costs that may be paid under the 
Medicare program for cost reporting periods beginning on or after July 
1, 1993. These limits replace the per-visit limits that were set forth 
in our July 8, 1993 notice with comment period (58 FR 36748). This 
notice also provides, in accordance with the provisions of the Omnibus 
Budget Reconciliation Act of 1993 (OBRA '93), that there will be no 
changes in the home health agency (HHA) cost limits for cost reporting 
periods beginning on or after July 1, 1994, and before July 1, 1996. In 
addition, this notice responds to public comments on the July 8, 1993 
notice with comment period, which originally set forth the HHA cost 
limits for cost reporting periods beginning on or after July 1, 1993, 
and on the January 6, 1994 notice with comment period (59 FR 760), 
which announced the elimination of the hospital based add-on effective 
for cost reporting periods beginning on or after October 1, 1993.

DATES: Effective date: The revised schedule of limits on HHA costs set 
forth in this notice is effective for cost reporting periods beginning 
on or after July 1, 1993.
    The OBRA '93 provision providing that there be no changes in the 
HHA cost limits for cost reporting periods beginning on or after July 
1, 1994, and before July 1, 1996, as set forth in this notice, is 
effective for cost reporting periods beginning on or after July 1, 
1994.
    Comment date: Written comments will be considered if we receive 
them at the appropriate address, as provided below, no later than 5:00 
p.m. on April 17, 1995.

ADDRESSES: Mail written comments (1 original and 3 copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: BPD-793-NC, P.O. Box 7571, 
Baltimore Maryland 21207-0517.
    If you prefer, you may deliver your comments (1 original and 3 
copies) to one of the following addresses: Room 309-G, Hubert H. 
Humphrey Building, 200 Independence Ave., SW., Washington DC 20201, or 
Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore 
Maryland 21207.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code BPD-793-NC. Comments received timely will be available for 
public inspection as they are received, beginning approximately 3 weeks 
after publication of a document, in Room 309-G of the Department's 
offices at 200 Independence Avenue, SW, Washington DC, on Monday 
through Friday of each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-
7890).
    Copies: To order copies of the Federal Register containing this 
document, send your request to: New Orders, Superintendent of 
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date 
of the issue requested and enclose a check or money order payable to 
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Register.

FOR FURTHER INFORMATION CONTACT: Michael Bussacca, (410) 966-4602.

SUPPLEMENTARY INFORMATION:

I. Background

A. History

    Section 1861(v)(1)(A) of the Social Security Act (the Act) 
authorizes the Secretary to set limits on allowable costs incurred by a 
provider of services for which payment may be made under the Medicare 
program. These limits are based on estimates of the costs necessary for 
the efficient delivery of needed health services. Under this 
[[Page 8390]] authority, we have maintained limits on home health 
agency (HHA) per-visit costs since 1979. The limits may be applied to 
direct and indirect overall costs or to the costs incurred for specific 
items or services furnished by the provider. Implementing regulations 
appear at 42 CFR 413.30. Additional statutory provisions governing the 
limits applicable to HHAs are contained at section 1861(v)(1)(L) of the 
Act. Section 1861(v)(1)(L)(i) of the Act specifies that the cost limits 
are not to exceed 112 percent of the mean of the labor-related and 
nonlabor per-visit costs for freestanding HHAs. For cost reporting 
periods beginning before October 1, 1993, section 1861(v)(1)(L)(ii) of 
the Act requires that the Secretary make an adjustment to the cost 
limits for the administrative and general (A&G) costs of hospital-based 
HHAs. Section 1861(v)(1)(L)(iii) of the Act requires that the Secretary 
establish HHA cost limits on an annual basis for cost reporting periods 
beginning on or after July 1 of each year.
    Accordingly, we published a notice with comment period that 
appeared in the July 8, 1993, issue of the Federal Register (58 FR 
36748), which set forth a schedule of limits on HHA costs for cost 
reporting periods beginning on or after July 1, 1993. The limits were 
computed using the actual cost per-visit data from cost reporting 
periods ending on or after June 30, 1989, and before May 31, 1991, and 
were adjusted by the latest estimates in the ``market basket'' index to 
reflect changes in the price of goods and services furnished by HHAs.

B. Omnibus Budget Reconciliation Act of 1993

    On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 
(OBRA '93) (Public Law 103-66) was enacted. Section 13564(a) of OBRA 
'93 amended section 1861(v)(1)(L)(iii) of the Act to provide that there 
be no changes in the HHA per-visit cost limits (except as may be 
necessary to take into account the elimination of the A&G add-on for 
hospital-based HHAs) for cost reporting periods beginning on or after 
July 1, 1994, and before July 1, 1996. In addition, section 13564(b) of 
OBRA '93 amended section 1861(v)(1)(L)(ii) of the Act to require that, 
effective for cost reporting periods beginning on or after October 1, 
1993, we no longer include a payment adjustment for A&G costs of 
hospital-based HHAs in computing the HHA limits. The A&G per-visit add-
on for hospital-based HHAs had been applied since 1980. Under this 
provision, hospital-based HHAs and freestanding HHAs will be treated 
identically for payment purposes.
    On January 6, 1994, we published a notice with comment period in 
the Federal Register to announce the elimination of the A&G add-on for 
hospital-based HHAs (59 FR 760). In that notice, we stated that in 
computing a hospital-based HHA's cost limits for cost reporting periods 
beginning on or after October 1, 1993, the A&G add-on amounts that were 
to apply, as set forth in Table II of the July 8, 1993 notice (58 FR 
36753), will not be used. We also stated that we would publish a 
separate Federal Register notice to explain the effects of the 
requirement under section 13564(a) of OBRA '93 that there be no changes 
in the per-visit cost limits for home health services for cost 
reporting periods beginning on or after July 1, 1994 and before July 1, 
1996.

II. Discussion of Public Comments

A. Response to Public Comments Received On the July 8, 1993 Notice With 
Comment Period

    We received 28 items of timely correspondence on our HHA cost 
limits notice issued in the Federal Register on July 8, 1993 (58 FR 
36748). A discussion of the comments we received on that notice and our 
responses to those comments is set forth below.
1. Cost Limits
    Comment: Many commenters stated that the per-discipline cost limits 
for skilled nursing and home health aides are inadequate. They believe 
that the cost limits are arbitrary and not at the level required by 
law. In addition, two commenters suggested that the limits effective 
July 1, 1993 should be phased in.
    Response: Section 1861(v)(1)(L) of the Act governs the methodology 
for computing the HHA limits. As noted in section I.A of this notice, 
section 1861(v)(1)(L)(i) of the Act specifies that the HHA per-visit 
cost limits are not to exceed 112 percent of the mean of the labor-
related and nonlabor per-visit costs for freestanding HHAs. Section 
1861(v)(1)(L)(iii) of the Act requires that we establish cost limits on 
an annual basis for cost reporting periods beginning on or after July 1 
of each year (except for cost reporting periods beginning on or after 
July 1, 1994, and before July 1, 1996) and that we use the current 
hospital wage index to calculate the limits.
    Thus, in calculating the limits, we use actual cost-per-visit data 
from the latest available settled Medicare cost reports. From those 
data, we compute an average per-visit cost for each Medicare covered 
home health service. The labor portion of the average per-visit cost is 
adjusted, using the current hospital wage index, to account for 
variations in area wage levels. We then apply a statistically valid 
methodology for eliminating outlier costs to the average per-visit 
costs for each service. The resulting average per-visit costs are 
increased by 112 percent, the maximum the statute allows. We believe 
the methodology used to calculate the cost limits correctly implements 
the statute and results in a statistically valid national average of 
the costs estimated to be necessary in the efficient delivery of needed 
home health services under the Medicare program.
    In summary, the implementation of the schedule of limits set forth 
in our July 8, 1993 notice and the methodology for developing the 
limits are in full compliance with statutory directives. In developing 
these limits, we have made no changes, beyond those directly required 
by OBRA '93, in the methodology used in setting the limits effective 
July 1, 1991 and July 1, 1992. Finally, the statute does not provide 
for a phase-in of the limits.
2. Database
    Comment: Several commenters questioned the database used to develop 
the cost limits. Some commenters raised concerns about the possible 
omission of providers from California. Others suggested that the 
provider database used to develop the limits was not representative 
because HCFA relies only on settled cost reports to compute the HHA 
cost limits.
    Response: The data used in the calculations of the cost limits 
effective July 1, 1993, were actual cost per-visit data extracted from 
settled Medicare cost reports, for cost reporting periods ending on or 
after June 30, 1989, and before May 31, 1991. This resulted in a 
database of 2602 freestanding agencies located throughout the country. 
Due to concerns with under-representation of HHAs, we reviewed the 
Provider of Services (POS) file to determine the number of HHAs that 
were Medicare-certified as of November, 1992 (the cut-off date of the 
HHA database used to develop the HHA cost limits effective for cost 
reporting periods beginning on or after July 1, 1993). Our review 
showed that the POS file contained all HHA providers of service, 
including terminated providers, existing providers, and new providers. 
However, the POS file does not indicate whether a HHA needs to file a 
cost report, or if a cost report is due from an HHA.
    Accordingly, we extended our review. We instructed the nine 
regional home health intermediaries (RHHIs) servicing the freestanding 
HHAs to review their [[Page 8391]] files for the time period of our 
data collection (before November 1992) to determine if any providers 
had been omitted erroneously when the intermediaries filed their cost 
report data for the HHA database. The RHHIs identified 309 freestanding 
``missing'' providers. Our review of the original database showed that 
it did not include data from Blue Cross and Blue Shield of California. 
All ``missing'' providers' cost data were entered into the database and 
were subject to an extensive edit process to validate the data. In 
addition, we reexamined the entire database to identify duplicates and 
as-submitted cost reports. This examination resulted in elimination of 
120 duplicate reports from freestanding HHAs and the elimination of 100 
hospital-based as-submitted cost reports. The revised database consists 
of 2911 freestanding providers.
    The following table shows the effects of the revised database on 
the per-discipline cost limits for Metropolitan Statistical Area (MSA) 
and non-MSA HHAs published in our July 8, 1993 notice. See section IV 
of this notice for a revised table of limits effective for cost 
reporting periods beginning on or after July 1, 1993, and before July 
1, 1994.

        Effect on Per-Visit Cost Limits for MSA and Non-MSA HHAs        
------------------------------------------------------------------------
                                                       Effect    Effect 
                                                         on        on   
                    Type of visit                      limits    limits 
                                                       for MSA  for non-
                                                        HHAs    MSA HHAs
------------------------------------------------------------------------
Skilled nursing care................................    $+0.72    $+0.75
Physical therapy....................................     -1.59     -0.02
Speech pathology....................................     -1.50     +0.02
Occupational therapy................................     -1.20     +0.54
Medical social services.............................     +0.06     -1.00
Home health aide....................................     +0.54     +0.26
------------------------------------------------------------------------

    The following table shows the effects of the revised database on 
the per-visit hospital-based add-on for MSA and non-MSA HHAs published 
in our July 8, 1993 notice. See section IV of this notice for a revised 
table of add-on amounts for hospital-based HHAs with cost reporting 
periods beginning on or after July 1, 1993, and before October 1, 1993.

           Effect on Per-Visit Add-On for MSA and Non-MSA HHAs          
------------------------------------------------------------------------
                                                               Effect on
                                                    Effect on  hospital-
                                                    hospital-  based add-
                   Type of visit                    based add-   on for 
                                                      on for    non-MSA 
                                                     MSA HHAs     HHAs  
------------------------------------------------------------------------
Skilled nursing care..............................     $+0.03     $+0.57
Physical therapy..................................      -0.22      +0.22
Speech pathology..................................      -0.07      +0.51
Occupational therapy..............................      -0.20      +1.03
Medical social services...........................      -1.14      +0.16
Home health aide..................................      +0.03      +0.25
------------------------------------------------------------------------

    We recognize that the conversion to a limited number of fiscal 
intermediaries and the lack of a internal HCFA system to track settled 
cost reports for HHAs resulted in missing providers. In the future, 
HCFA will request that each of the nine regional intermediaries submit 
a list of all HHAs that it is servicing at the time of data collection. 
Upon collecting the data, HCFA will cross-check the HHAs included in 
the database with the lists submitted by the intermediaries.
    Concerning the comment on the use of settled cost reports, all of 
the RHHIs met the Contractor Performance Evaluation (CPEP) standard for 
settling cost reports timely for FY 1991/1992. For example, in FY 1992, 
90 percent of freestanding HHA cost reports were settled timely by the 
RHHIs and would be available to be included in HCFA's database. Thus, 
the use of settled cost reports does not affect the representative 
nature of the database.
    Comment: Some commenters believe that the conversion to a limited 
number of intermediaries that specialize in handling home health claims 
and the exclusive use of settled cost reports in the database 
invalidate the rationale for excluding certain outliers from the 
database as a first step, before proceeding with the calculation of the 
cost limits. One commenter raised a series of specific questions about 
the outlier exclusion process, including what constitutes an outlier, 
how many agencies are classified as outliers, and whether all of an 
HHA's costs are excluded if the agency has a single outlier discipline?
    Response: The use of settled cost report data does not eliminate 
the need to exclude outliers from the database. Outliers are aberrant 
costs; these costs are not representative of industry norms. As in 
previous schedules of HHA cost limits, the elimination of cost per-
visit outliers continues to be necessary in developing the limits 
because the per-discipline cost data in our database are extracted from 
actual cost reports. Although these cost reports have been settled, the 
settlement process is designed to ensure that cost report data reflect 
actual costs associated with covered visits; it does not assess whether 
the actual costs are reasonable.
    The elimination of outliers is on a per-discipline basis. That is, 
we eliminate costs associated with a specific discipline that are 
statistical outliers. Based on our longstanding policy, we consider 
outliers to be those costs that are two standard deviations or more 
from the mean. Therefore, the high outliers, as well as the low 
outliers, are eliminated. All other per-discipline costs would be 
included in the computation of the per-discipline limits. In the table 
below we have listed the range of high and low per-visit costs for each 
discipline for both the labor and the nonlabor portions for both MSA 
limits and non-MSA limits. Only per-visit costs outside these ranges 
are considered outliers. We believe that using costs beyond these 
ranges, that is, outliers, to develop the per-visit limits subverts the 
statistical validity of the national average of estimated costs.

               Home Health Agency Cost Limits Outliers Labor and Nonlabor Portions Highs and Lows               
----------------------------------------------------------------------------------------------------------------
                      Urban                          Labor low      Labor high     Nonlabor low    Nonlabor high
----------------------------------------------------------------------------------------------------------------
Skilled nursing care............................          $33.85         $131.24    $6.08 $36.06                
Physical therapy................................           33.02          132.78            5.37           31.69
Speech pathology................................           31.59          141.76            6.05           32.45
Occupational therapy............................           29.85          139.01            6.19           35.88
Medical social services.........................           31.43          252.36            6.09           58.58
Home health aide................................           16.16           75.30            2.87           19.21
                                                                                                                
                      Rural                                                                                     
                                                                                                                
Skilled nursing care............................           39.98          141.46            4.74           29.15
[[Page 8392]]                                                                                                   
                                                                                                                
Physical therapy................................           41.77          147.54            6.69           28.34
Speech pathology................................           40.28          160.19            7.36           37.65
Occupational therapy............................           35.69          161.74            6.22           30.35
Medical social services.........................           36.42          350.59            6.85           62.15
Home health aide................................           16.18           72.55            2.52           17.07
----------------------------------------------------------------------------------------------------------------

    Comment: Two commenters recommended that we use data from hospital-
based agencies in the calculation of the limits. The commenters believe 
that the calculation of the limits using only freestanding facilities 
does not reflect the higher costs associated with hospital-based HHAs.
    Response: Section 1861(v)(1)(L)(i) of the Act specifies that the 
Secretary is to establish a single schedule of HHA cost limits based on 
the cost experience of freestanding agencies. We have no discretion to 
include hospital-based providers in the calculation of the HHA limits.
    Comment: A commenter suggested that the use of settled cost reports 
ignores the higher claims presented before the Provider Reimbursement 
Review Board (PRRB) and that these claims should be included in the 
database for calculation of the HHA cost limits.
    Response: The use of settled cost reports in developing the HHA 
cost limits was established for cost reporting periods beginning on or 
after July 1, 1992 (see 57 FR 29411). Before July 1, 1992, HHA 
databases included data from both settled and as-submitted cost 
reports. We were able to begin using settled cost report data as a 
result of revised CPEP standards that required Medicare fiscal 
intermediaries to settle the HHA cost reports sooner than was required 
under former standards. Consequently, as explained in our July 1, 1992 
notice with comment period, settled data are available much sooner than 
in previous cost reporting periods, and we believe the data accurately 
reflect current conditions in the health care industry. The use of 
settled cost reports allows us to eliminate misstated data including 
nonallowable costs and noncovered visits that inevitably result from 
using as-submitted cost reports. (See 57 FR 29410.)
    Providers that file an appeal before the PRRB must have received a 
Notice of Program Reimbursement for the fiscal year in question, before 
filing the appeal. During the cost reporting periods ending on or after 
June 30, 1989, and before May 31, 1991, on an annual basis, fewer than 
2 percent of certified HHAs submitted appeals to the PRRB. If an appeal 
was decided before we develop the annual HHA per-visit cost limits, the 
final data would be entered into the database. In those cases in which 
the PRRB appeal and administrative review processes are not completed 
until after we have developed the annual HHA per-visit cost limits, the 
settled data from the cost reports in question would be entered. 
Including the adjusted data that may result from PRRB appeals into the 
database would have no significant effect on the calculation of the 
cost limits. Moreover, since the cost limits are set prospectively, it 
would be neither necessary nor administratively feasible to include 
adjusted data resulting from the completed appeals process into the HHA 
database used to develop the annual limits. We note that the HHA per-
visit limits constitute an estimated national average of costs, and 
individual providers are free to pursue exceptions to these averages 
where justified.
    Comment: Several commenters stated that the limits do not reflect 
the costs associated with the implementation of the Omnibus Budget 
Reconciliation Act of 1987 (OBRA '87) (Public Law 100-203) quality 
assurance provisions, specifically, the requirements for home health 
aide training and competency evaluation programs. They asserted that no 
additional amount has been added to the HHA limits to account for these 
costs.
    Response: Section 1891(a)(3) of the Act requires HHAs to comply 
with the requirements relating to home health aide training and 
competency programs, established by OBRA '87. The cost-per-visit data 
used in the calculations of the cost limits effective on July 1, 1993 
were extracted from settled Medicare cost reports for periods ending on 
or after June 30, 1989, and before May 31, 1991. We published 
regulations on August 14, 1989 at 42 CFR Sec. 484.36 to require that 
HHAs establish a competency evaluation program for home health aides by 
February 14, 1990 (see 54 FR 33357-33360 and 33372). Therefore, the 
costs associated with home health aide training and competency 
evaluation programs are included in this database. However, if a 
provider believes that it has incurred additional costs not included in 
the limits relating to home health aide training and competency 
evaluation programs, the provider may apply for an exception to the 
cost limits under the exceptions process outlined in Sec. 413.30. This 
situation could be recognized as an ``extraordinary circumstance'' 
exception under Sec. 413.30(f)(2).
    Comment: A commenter indicated that the database from which the HHA 
cost limits were developed was not available for public use when the 
regulation was issued on July 8, 1993.
    Response: It is our standard practice to make available to the 
public the database used to construct the cost limits. HCFA's Bureau of 
Data Management and Strategy annually publishes a ``Public Use Files 
Catalog'' that identifies available Medicare/Medicaid data files and 
gives instructions on how to obtain them. The database used to 
construct the cost limits outlined in the July 8, 1993 notice (that is, 
Medicare HHA Cycle 11 Data Set, containing data for cost reporting 
periods ending on June 30, 1989, and before May 31, 1991) was available 
from the Bureau of Data Management and Strategy, HCFA, to the public, 
on the date the regulation was published. The HHA database is available 
on tape or diskette for $680. For further information on obtaining data 
used in calculating the HHA cost limits, see section VI.C of this 
notice.
3. Market Basket
    Comment: Several commenters believe that the market basket factors 
that have been used to update the 1990 cost data seemed to understate 
home care market basket cost increases of between 5 to 7 percent for 
the 1992-1993 period and need to be updated for current weights and 
revised wage-price proxies. Specifically, the commenters believe that 
the market basket factors fail to account properly for increases in the 
Federal minimum wage, base rates for workers' compensation premiums, 
reimbursement for mileage, Federal gasoline tax, computers to submit 
claims via electronic media communications, additional A&G costs, 
[[Page 8393]] and FICA taxes. They indicated that there is evidence 
that the market basket factors now used to update the cost limits are 
too low and that appropriate alternatives exist and are being used to 
make budget projections for the Administration and Congress.
    Response: For the last several years, the HHA input price index 
(market basket) has increased at the fastest rate of all the market 
basket indices for the Medicare program. The increase in the market 
basket reflects the weights and wage-price proxies in the market basket 
to capture the special market conditions for HHA services (such as the 
shortage of several categories of licensed health professionals 
providing HHA services). The compensation and nonlabor proxies used in 
the market basket include the effects of taxes on the rates of 
increase. Wages and salaries include employer contributions (payroll 
taxes) for social insurance (old age, survivors, disability and 
hospital insurance). The wage and salary category also includes State 
unemployment insurance, supplemental unemployment insurance and 
workmen's compensation. The price proxies for transportation and 
utilities include the relevant sales taxes. Further, the price proxy 
for rental and leasing costs includes the impact of all costs including 
property taxes.
    The market basket factors used to update the cost limits are 
consistent with, but not identical to, the cost-per-visit budget 
projections for the Administration and Congress. The HHA market basket 
is designed to measure price inflation for inputs used to produce HHA 
services. It, therefore, does not take into account changes in the 
quantity, mix or intensity of services per visit. In contrast, the 
Administration's budget projections take into account the change in mix 
of types of visits and the effects of productivity changes on per-visit 
costs. Productivity changes are a major determinant of cost-per-visit 
increases and are specifically excluded from the HHA market basket.
    We believe that it would be appropriate to do a special study of 
the weighting and wage-price proxies for the HHA market basket. We 
intend to begin such a study in the near future, and we welcome public 
comments on data sources for weights and wage-price proxies.
4. Wage Index
    Comment: One commenter stated that the wage index factors used in 
the calculation of the cost limits effective July 1, 1993 are lower 
than the July 1, 1992 cost limits in almost all cases. In addition, the 
commenter stated that the Omnibus Budget Reconciliation Act of 1990 
(OBRA '90) mandates use of the most recent hospital wage index for 
calculation of the labor portion of the cost limits, but it also 
requires that aggregate payments to HHAs be budget neutral. The 
commenter asserted that the use of a lower budget neutrality factor 
than in the previous schedule of limits accounted in itself for a 
reduction of approximately 2.5 percent in the cost limits. In addition, 
the commenter noted that the budget neutrality factor of 2.7 percent 
used in calculating the limits effective July 1, 1993 is a considerable 
reduction from the 5.9 percent used in calculating the limits effective 
July 1, 1992 and fails to provide Congressionally mandated budget 
neutrality between the 1982 and the 1988 hospital wage indexes.
    Response: Section 4207(d)(1) of OBRA '90 amended section 
1861(v)(1)(L)(iii) of the Act to require that in establishing the HHA 
schedule of limits annually on July 1 of each year we are to use the 
current hospital wage index. To lessen the effect on individual HHAs 
that would have been caused by implementing this requirement 
immediately, section 4207(d)(3) of OBRA '90 provided for a 2-year 
transition period during which we would use a blend of 1982 and 1988 
hospital wage data. As required by section 1861(v)(1)(L)(iii) of the 
Act, the limits effective for cost reporting periods beginning on or 
after July 1, 1993, and before July 1, 1994, use the FY 1993 hospital 
wage index, that is the hospital wage index effective for hospital 
discharges on or after October 1, 1992, which is based entirely on 1988 
wage survey data (see 58 FR 36750). Thus, although the wage indices 
used in calculating the limits effective for cost reporting periods 
beginning on or after July 1, 1993 are in many cases lower than in the 
past, they reflect the latest available actual wages.
    Section 4207(d)(2) of OBRA '90 requires that, in updating the wage 
index used for establishing the HHA limits, aggregate payments will 
remain the same as they would have been if the wage index had not been 
updated. To meet this requirement, as explained in detail in our July 
8, 1993 notice with comment period, we determined that it was necessary 
to apply a budget neutrality adjustment factor of 1.027 (that is, an 
increase of 2.7 percent) to the labor-related portion of the cost 
limits (58 FR 36748-36749). However, for this notice, we have 
recalculated the budget neutrality adjustment factor and have 
determined that a factor of 1.067 should be applied (that is, a 6.7 
percent increase). The change in the budget neutrality adjustment is 
attributable to the revised limits that have resulted from our 
validation of the HHA database.
    Comment: A commenter stated that a persistent problem in the 
application of the cost limits that is made more difficult by the new 
limits are that HHAs, like hospitals, are sometimes assigned to the 
``wrong'' geographic area. The commenter suggested that we consider 
basing hospital wage indices on the wage levels paid by neighboring 
providers and that wage levels should be standardized according to some 
predefined occupational mix.
    Response: Under section 1886(d)(3)(E) of the Act, the Secretary 
annually establishes a wage index for the purposes of adjusting payment 
rates for hospital inpatient services to reflect wages in a geographic 
area relative to the national average. Section 1861(v)(1)(L)(iii) of 
the Act requires that, in establishing the HHA schedule of limits, the 
Secretary is to use the current hospital wage index.
    Almost from the beginning of the hospital prospective payment 
system, we have received comments from the hospital industry objecting 
to the use of labor market areas based on Metropolitan Statistical 
Areas (MSAs) established by the Office of Management and Budget to 
construct the wage index. The Prospective Payment Assessment Commission 
(ProPAC) has also recommended changes in how the labor market areas 
used to construct the hospital wage index should be defined. We 
recognize that, as currently structured, there are certain 
inefficiencies inherent in the MSA-based system. In light of these 
concerns, we have continued to examine a variety of options for 
revising wage index labor market areas.
    On May 27, 1994, we published a proposed rule in the Federal 
Register (59 FR 27708) that detailed changes to the hospital 
prospective payment system for FY 1995. In the proposed rule, we 
discussed in detail issues raised by commenters concerning a ``nearest 
neighbor'' approach to the wage index, as recommended by ProPAC, and 
our research and analysis on alternative methodologies for defining 
labor market areas (59 FR 27724 through 27732). These alternatives are 
still under review, and no final decision has been made at this time to 
use a different methodology in determining future payment rates.
5. Additional Costs/Exceptions
    Comment: A commenter suggested that new HHAs be exempt from the 
limits for the first two full year cost [[Page 8394]] reports, citing 
the exemptions presently granted for inpatient facilities (non-PPS 
hospitals and skilled nursing facilities). The commenter believes that 
this resulted in discrimination against the establishment of home 
health care services when the emphasis of health care is away from 
inpatient services and toward home care.
    Response: Prior to 1987, Sec. 413.40(f)(7) (formerly 
Sec. 405.460(f)(7)) granted an exception to the cost limits to minimize 
financial barriers to HHAs wanting to enter Medicare markets for the 
first time, especially in underserved areas. On June 4, 1987, we 
published a final rule with comment period (52 FR 21216) indicating 
that the exception for newly-established HHAs was eliminated. As 
discussed in detail in that final rule with comment period, evidence 
acquired from FY 1980 through FY 1985 indicated a changing composition 
of HHAs that suggested that financing was no longer a significant 
obstacle to entering the market place, and therefore the exception was 
rescinded. In fact, while hospital-based and proprietary agencies had 
access to financial resources and patient populations, nonprofit and 
free-standing agencies did not. We continue to believe that an 
exception for newly-established HHAs is not necessary to encourage the 
spread of HHAs services. Moreover, we note that the number of HHAs 
servicing Medicare beneficiaries has increased approximately 28 percent 
since 1987, from 5,857 to 7,473 as of March, 1994.
    Comment: Several commenters indicated that the recruitment and 
retention of occupational therapists and physical therapists, 
especially in rural areas, results in increased costs not incorporated 
in the HHA cost limits.
    In addition, one commenter indicated that the additional amount of 
$.18 allowed for the OSHA adjustment to account for new standards for 
universal precautions is not adequate to account for the actual, 
necessary and reasonable cost being incurred by HHAs after May 31, 
1991.
    The commenters believe that the failure to reflect these costs 
fully in the per-visit limits will reduce access and quality of care to 
beneficiaries.
    Response: If a provider can quantify the costs it incurs as a 
result of recruiting and retaining occupational therapists or physical 
therapists, or an OSHA add-on amount that exceeds the allowed $.18, the 
provider may apply for an exception to the cost limits under the 
exceptions process outlined in Sec. 413.30. These situations could be 
recognized as an ``extraordinary circumstances'' as defined in 
Sec. 413.30(f)(2). The HHA cost limits effective for cost reporting 
periods beginning on or after July 1, 1992 and on or after July 1, 1993 
allow a provider an adjustment for costs incurred for OSHA, upon 
presentation of documentation to the intermediary to substantiate the 
adjustment. If a provider exceeds the adjustment, an exception to the 
cost limits is made only to the extent that costs are reasonable, 
attributable to the circumstances specified, separately identified by 
the provider, and verified by the intermediary.
    Comment: Some of the commenters believe that filing for a waiver to 
seek an exception from the limits is time consuming, expensive and 
impractical.
    Response: The purpose of establishing the per-visit limits is to 
cover the costs necessary in the efficient delivery of needed health 
services. However, because the limits are not intended to take into 
account every cost, we have established an exceptions process for 
situations in which providers incur additional costs in excess of the 
cost limits. Providers may apply for an exception to the cost limits 
under the exceptions process outlined in Sec. 413.30. We believe that 
the exceptions process is a fair and equitable method for HHAs to 
substantiate costs exceeding the limit.
6. Administrative Procedure Act
    Comment: A commenter stated that the schedule of cost limits 
published on July 8, 1993 (58 FR 36748) is void because it is a product 
of retroactive rulemaking, which is not authorized by the Social 
Security Act and is prohibited by the Administrative Procedure Act 
(APA). Specifically, the rule had an effective date of July 1, 1993, 
but was not published in the Federal Register until July 8, 1993. 
Further, the commenter stated that the rule is void because it was 
issued in violation of the notice and comment requirements of the 
Medicare statute and APA. The commenter believes that we did not have 
``good cause'' to waive publication of a proposed notice and to waive 
the 30-day delayed effective date requirements of the APA. The 
commenter stated that HCFA failed to offer any explanation as to why 
the rule could not have been published earlier.
    Response: Section 1861(v)(1)(L)(iii) of the Act requires that the 
Secretary update the HHA cost limits on an annual basis for cost 
reporting periods beginning on or after July 1 of each year. On July 1, 
1993, the schedule of limits on HHA costs per visit, effective for cost 
reporting periods beginning on or after July 1, 1993, was filed with 
the Office of the Federal Register and was made available for public 
inspection (see 58 FR 36762 for file date). Under 44 U.S.C. section 
1507, the filing of the document is sufficient to give constructive 
notice of the contents of the document to a person subject to or 
affected by it.
    As explained in our July 8, 1993 notice with comment period, we 
used the same methodology to develop the schedule of limits that was 
used in setting the limits published on July 1, 1992. The cost limits 
were updated to reflect the cost increases occurring between the cost 
reporting periods for the data contained in the database and December 
31, 1993.
    Because the methodology used to develop the July 1, 1993 schedule 
of limits was previously published for public comment and because we 
are required by section 1861(v)(1)(L)(iii) of the Act to use the 
current hospital wage index, which was based on 1988 wage survey data, 
we determined that it would be impractical and unnecessary to request 
public comment before we implemented the cost limits effective for cost 
reporting periods beginning on or after July 1, 1993. Thus, we stated 
that it would be contrary to public interest, and we found good cause 
to waive publication of a proposed notice.
    In response to the comment on the waiver of the 30-day delayed 
effective date, as we explained in our July 8, 1993 notice with comment 
period, in order for HHAs to receive timely the benefits of the cost 
limits that are based on the updated wage index, it was necessary that 
the limits be effective for cost reporting periods beginning on or 
after July 1, 1993 as required by section 1861(v)(1)(L)(iii) of the Act 
(see 58 FR 36762).

B. Response to Public Comments Received on the January 6, 1994 Notice 
With Comment Period

    We received 10 items of timely correspondence on our notice 
eliminating payment adjustments for the A&G costs of hospital-based 
HHAs. The comments we received on that notice and our responses to 
those comments are set forth below.
    Many of the comments we received on that notice addressed issues 
that we have already addressed in section II.A of this notice, 
particularly, the exclusion of hospital-based agencies from the 
database. Since we have already addressed these comments, we are not 
repeating our responses to the comments here.
1. Elimination of the A&G Add-on
    Comment: One commenter agreed that the A&G add-on should be 
eliminated. However, most commenters objected to [[Page 8395]] the 
elimination of the A&G add-on, emphasizing that the costs incurred by 
hospital-based and freestanding agencies are different. One commenter 
stated that although section 13564 of OBRA '93 eliminates the A&G add-
on, it does not preclude the Secretary from making the adjustments that 
are necessary to ensure fair payment to providers. In addition, another 
commenter believes that the elimination of the add-on should be phased-
in.
    Response: Section 13564(b) of OBRA '93 amended section 
1861(v)(1)(L)(ii) of the Act to require that, effective for cost 
reporting periods beginning on or after October 1, 1993, we no longer 
include a payment adjustment for the A&G costs of hospital-based HHAs 
in computing the HHA limits. Under this provision, for cost reporting 
periods beginning on or after October 1, 1993, hospital-based HHAs and 
free-standing HHAs will be treated identically for payment purposes. 
The statute does not provide for a phase-in period.
    Section 1861(v)(1)(L)(i)(III) of the Act defines fair payment to 
HHAs at some level determined by the Secretary, but not in excess of 
112 percent of the cost experience of freestanding providers. Section 
1861(v)(1)(L)(ii) of the Act provides the Secretary with the authority 
to provide for exceptions to the cost limits. Accordingly, if a 
provider quantifies and provides an explanation of costs that exceed 
the limits, it may apply for an exception to the cost limits under the 
exceptions process outlined in Sec. 413.30.
2. Reimbursement Methodology
    Comment: Two commenters indicated that the reimbursement 
methodology for HHAs should be assessed, including a review of the 
Medicare step-down cost methodology and the use of severity of illness 
to determine the cost of care and length of stay for post-acute versus 
community-based referrals. One commenter stated that the change in 
methodology, that is, the elimination of the hospital-based add-on, 
imposes a systematic error in accurately measuring costs of caring for 
home health patients. Another commenter stated that HCFA should wait 
for the results of the Federally funded demonstration projects that are 
currently evaluating home care reimbursement before any changes are 
made to the present home care reimbursement structure. The commenter 
stated that the information we obtain from these studies should be used 
to develop an appropriate industry-wide home care reimbursement system.
    Response: We agree that further study of the HHA reimbursement 
system is desirable. HCFA's Office of Research and Demonstrations is 
presently conducting a demonstration relating to prospective payment 
for HHAs. During the second phase of this demonstration, we intend to 
develop a prototype case-mix or severity adjustment to be tested under 
the demonstration for possible use in future payment methodologies. In 
addition, HCFA has begun the Medicare Home Health Initiative, which 
will review a variety of issues related to the home health benefit 
including those presented above.

III. Provisions of This Notice With Comment Period

A. Revised Schedule of Limits

    As discussed in section II.A.2 of this notice, we have identified 
problems with the validity of the database used to calculate the cost 
limits for cost reporting periods beginning on or after July 1, 1993, 
as set forth in our July 8, 1993 notice. Therefore, we are setting 
forth in this notice a revised schedule of limits on HHA costs that may 
be paid under the Medicare program for cost reporting periods beginning 
on or after July 1, 1993. We also are setting forth revised add-on 
amounts for hospital-based HHAs for cost reporting periods beginning on 
or after July 1, 1993, and before October 1, 1993.
    Before adopting this approach, which entails the retroactive 
application of the schedule of limits set forth in this notice, we 
considered three possible alternatives for dealing with the problems 
with the database used in the calculation of the cost limits effective 
July 1, 1993. One option was to take no action to revise the limits, in 
accordance with the provisions of section 13564(a) of OBRA '93, which 
explicitly prohibit any changes in the cost limits for HHAs for cost 
reporting periods beginning on or after July 1, 1994, and before July 
1, 1996. However, we believe that in enacting these provisions, 
Congress could not have envisioned that there would be errors in the 
database that would necessitate revisions to the limits. Thus, we do 
not believe that the revision of the limits under these circumstances 
is inconsistent with the statute. In addition, we do not believe that 
it is appropriate to base payments to HHAs on limits that are known to 
be based on a limited database and are estimated to result in lower 
Medicare payments to HHAs. (See section V of this notice for a 
discussion of its economic impact.)
    We also considered applying the changes to the cost limits 
prospectively, that is, effective upon publication of this notice. 
Although this option would avoid the administrative difficulties 
associated with implementing revised limits retroactively for cost 
reporting periods beginning on or after July 1, 1993, it still would 
not conform strictly to the OBRA '93 provisions prohibiting any changes 
in the cost limits until July 1, 1996. In addition, this option again 
would disadvantage HHAs by not assigning accurate limits effective for 
cost reporting periods beginning on or after July 1, 1993.
    Our remaining option was to apply the changes to the cost limits 
retroactively. That is, we would publish revised limits that would be 
effective for cost reporting periods beginning on or after July 1, 
1993, in place of the limits set forth in our July 8, 1993 notice. The 
statute allows us to set the cost limits at a maximum of 112 percent of 
the mean of per-visit costs for freestanding agencies. As in the past, 
for the cost limits applicable to cost reporting periods beginning on 
or after July 1, 1993, we set the limits at that maximum. Because we 
have identified errors in the database of costs for freestanding 
agencies, we believe that it is in keeping with the intent of the 
statute that these errors be rectified. Therefore, we believe it is 
appropriate, and consistent with the statute, to revise the limits for 
cost reporting periods beginning on or after July 1, 1993, so that they 
are based on 112 percent of the mean of the more accurate database of 
freestanding agencies' per-visit costs. Also, despite the 
administrative difficulties that may arise, we believe this option is 
in the best interests of HHAs. Therefore, we have determined that 
revising the limits, effective for cost reporting periods beginning on 
or after July 1, 1993 is the most appropriate course of action.
    Thus, the revised schedule of limits set forth in Table I of 
section IV of this notice replaces the per-visit limits set forth in 
our July 8, 1993 notice. As required by section 13564(a) of OBRA '93, 
these limits will remain in effect for cost reporting periods beginning 
before July 1, 1996. In addition, we are setting forth in Table II of 
section IV of this notice revised A&G add-on amounts for hospital-based 
HHAs to replace the add-on amounts set forth in our July 8, 1993 
notice. In accordance with section 1861(v)(1)(L)(ii) of the Act, as 
amended by section 13564 of OBRA '93, the intermediaries will make an 
adjustment for the A&G add-on in computing the adjusted limits for 
hospital-based HHAs with cost reporting periods beginning on or after 
July 1, 1993, and before October 1, 1993.
    For the convenience of the reader, we are republishing Tables IIIa, 
IIIb, and IV [[Page 8396]] that were published in our July 8, 1993 
notice. These tables contain the wage indices for urban and rural areas 
and cost reporting year adjustment factor and also are presented in 
section IV of this notice.
    The intermediaries will compute the adjusted limits using the wage 
index in Tables IIIa and IIIb set forth in section IV of this notice, 
and will notify each HHA that they service of its applicable cost per-
visit limits for each type of service. Each HHA's aggregate limit 
cannot be determined prospectively, but depends on each HHA's Medicare 
visits for each type of service and actual costs for the cost reporting 
period subject to this notice.
    The HHA costs that are subject to the limits include the cost of 
medical supplies routinely furnished in conjunction with patient care. 
Durable medical equipment, orthotics, prosthetics, and other medical 
supplies directly identifiable as services to an individual patient are 
excluded from per-visit costs and are paid without regard to this 
schedule of limits. (See Chapter IV of the Home Health Agency Manual 
(HCFA Pub. 11).)
    The intermediary will determine the limit for each HHA by 
multiplying the number of Medicare visits for each type of service 
furnished by the HHA by the respective per-visit cost limit. The sum of 
these amounts is compared to the HHA's total allowable costs.

    Example: HHA X, a free-standing agency located in Richmond VA, 
furnishes 5,000 covered skilled nursing visits, 2,000 covered 
physical therapy visits, and 4,000 covered home health aide visits 
to Medicare beneficiaries during its 12-month cost reporting period 
beginning on July 1, 1993.

    The Aggregate Cost Limit is Determined As Follows:

----------------------------------------------------------------------------------------------------------------
                                                                                Adjusted                        
                     Type of visit                         Visits    Nonlabor    labor     Adjusted   Aggregate 
                                                                     portion    portion     limit       limit   
----------------------------------------------------------------------------------------------------------------
Skilled Nursing Care...................................      5,000     $16.44     $74.72     $92.32     $461,600
Physical Therapy.......................................      2,000      16.52      75.28      92.96      185,920
Home Health Aide.......................................      4,000       8.33      37.65      46.57      186,280
Total Visits...........................................     11,000  .........  .........  .........  ...........
Aggregate Cost Limit...................................  .........  .........  .........  .........     $833,800
----------------------------------------------------------------------------------------------------------------

    As noted in section III.A of our July 8, 1993 notice, in order to 
account for OSHA's universal precaution requirements, we also will 
allow an additional adjustment to the aggregate cost limit of $.18 per 
visit for those HHAs that incur costs in complying with these 
requirements (see 58 FR 36749). An HHA must apply to its intermediary 
for the add-on amount. The agency must demonstrate that it will exceed 
its cost limit in order to be in compliance with the OSHA mandated 
requirements. The HHA must provide the intermediary with adequate 
documentation to support the add-on amount.
    Before the limits are applied during settlement of the cost report, 
the HHA's actual costs are reduced by the amount of individual items of 
cost (for example, administrative compensation and contract services) 
that are found to be excessive under the Medicare reasonable cost 
principles of provider payment. That is, the intermediary reviews the 
various reported costs, taking into account all Medicare payment 
principles (for example, the cost guidelines for physical therapy 
furnished under arrangement (see Sec. 413.106) and the limitation on 
costs that are substantially out of line with those of comparable HHAs 
(see Sec. 413.9)).

B. No Changes in the Cost Limits

    As discussed in section I.B of this notice, section 13564(a) of 
OBRA '93 amended section 1861(v)(1)(L)(iii) of the Act to provide that 
there be no changes in the HHA per-visit cost limits (except as may be 
necessary to take into account the elimination of the A&G add-on for 
hospital-based HHAs) for cost reporting periods beginning on or after 
July 1, 1994, and before July 1, 1996. The effect of this provision is 
that a HHA's latest per-discipline cost limit for a period beginning on 
or after July 1, 1993, and before July 1, 1994, as calculated under 
this notice, without regard to subsequent adjustments under section 
1861(v)(1)(L)(ii) of the Act for exceptions, will remain in effect 
until its cost reporting period beginning on or after July 1, 1996. As 
explained in our January 6, 1994 notice with comment period, section 
13564(b) of OBRA '93 eliminated the A&G add-on for hospital-based HHAs. 
Accordingly, there will be no changes, besides those due to the 
elimination of the A&G add-on, to a HHA's cost limit for cost reporting 
periods beginning on or after July 1, 1994, and before July 1, 1996, to 
account for inflation, changes to the wage index or to MSA 
designations. Thus, in computing a provider's cost limit for cost 
reporting periods beginning on or after July 1, 1994, and before July 
1, 1996, the cost reporting period adjustment factors that were to 
apply for cost reporting periods beginning on or after July 1, 1994, 
will not be used. (In our July 8, 1993 notice with comment period, we 
specified that if we did not publish new limits to be effective on July 
1, 1994, the limits effective July 1, 1993 would continue in effect, 
but the last cost reporting year adjustment factor in Table IV would be 
multiplied by an inflation factor once for each month between June 1, 
1994, and the month in which the cost reporting period begins, until a 
new schedule of limits or other provision is issued (58 FR 36760). In 
accordance with section 13564(a) of OBRA '93, the inflation factor will 
not be used for cost reporting periods beginning on or after July 1, 
1994, and before July 1, 1996.) The revised schedule of per-visit 
limits set forth in Table I of section IV of this notice, which 
replaces the schedule of limits set forth in our July 8, 1993 notice, 
will be used to compute the limits. Revised Table II will be used to 
calculate the A&G add-on, when applicable. The wage indices in Tables 
IIIa and IIIb that were originally published in our July 8, 1993 notice 
and are republished in section IV of this notice will continue to be 
used to compute the limits.
    In the example below, a freestanding HHA in Dallas, Texas has a 
cost reporting period beginning date of January 1, 1994. As calculated 
under this notice, its cost limit for the 12-month period beginning 
January 1, 1994, for occupational therapy is $96.13. Under the 
provisions of this notice, the cost limit of $96.13 will remain in 
effect for its 12-month cost reporting periods beginning January 1, 
1995, and January 1, 1996. As explained above, the cost reporting 
period adjustment factors that would have been used under the July 8, 
1993 notice with comment period for calculating the limits for the 
HHA's new cost reporting periods beginning January 1, 1995, and January 
1, 1996, are not used. [[Page 8397]] Accordingly, the provider in this 
example will not have any change in its cost limit until its cost 
reporting period beginning January 1, 1997.

    Example: Calculation of Adjusted Limit for Occupational Therapy 
for a Freestanding HHA Located in Dallas, Texas: Computation of 
Revised Limit for Occupational Therapy:


                                                                        
                                                                        
                                                                        
Labor Related Component...............      $74.97    (Table I)         
Wage Index............................      x 0.9599  (Table IIIa)      
                                       --------------                   
Labor Portion.........................       71.96    ..................
Special Labor Adjustment for Budget         x 1.067   ..................
 Neutrality.                                                            
                                       --------------                   
Adjusted Labor Component..............       76.79    ..................
Nonlabor-Related Component............      +16.78    (Table I)         
OSHA Per Diem Add-On..................        +.18    ..................
                                       --------------                   
Adjusted Occupational Therapy Limit...       93.75    ..................
Cost Reporting Period Adjustment            x 1.0254  (Table IV)        
 Factor (January 1, 1994).                                              
                                       --------------                   
Inflation Adjusted Limit (Limit in           96.13    ..................
 Effect for January 1, 1994, January                                    
 1, 1995, and January 1, 1996).                                         
                                                                        

    As noted above, for cost reporting periods beginning on or after 
July 1, 1994, but before July 1, 1996, a freestanding HHA's cost limit 
will be its latest per-discipline cost limit for the period beginning 
on or after July 1, 1993, and before July 1, 1994, as calculated under 
this notice and without regard to any subsequent adjustments, such as 
an exception to the limit. Thus, if the HHA in the above example 
received an exception to its cost limit for its cost reporting period 
beginning January 1, 1993, its cost limit for the cost reporting period 
beginning January 1, 1994, would not include the exception amount for 
the previous period. To receive an exception or other adjustment to its 
cost limit, the HHA would need to submit a request to its fiscal 
intermediary in accordance with the procedures set forth in Sec. 413.30 
of our regulations.
    As explained in detail in our January 6, 1994 notice with comment 
period, a hospital-based HHA's cost limit is computed in an identical 
manner (59 FR 761) to the example above, since the A&G add-on for 
hospital-based HHAs is no longer applicable for cost reporting periods 
beginning on or after October 1, 1993.

C. Periods Other Than 12 Months

    The above methodology applies to providers with cost reporting 
periods of 12 months in duration. If a HHA's cost reporting period is 
not 12 months in duration, a special adjustment factor is calculated. 
This is necessary because inflation projections are computed to the 
midpoint of a cost reporting period, and the adjustment factors in 
Table IV (58 FR 36760) are based on 12-month reporting periods. For 
cost reporting periods of other than 12 months, the calculation must be 
made based on the midpoint of the specific cost reporting period. The 
HHA's intermediary obtains this adjustment factor from HCFA central 
office. This methodology results in a different cost limit than if a 
12-month adjustment factor were used. However, since the provisions of 
OBRA '93 require no changes in the cost limit on or after July 1, 1994, 
the limit calculated with the special adjustment factor will remain in 
place for subsequent cost reporting periods beginning before July 1, 
1996.

D. Providers Entering the Medicare Program

    For providers entering the Medicare program on or after July 1, 
1994, and before July 1, 1996, the applicable cost limit will be the 
cost limit for the identical period beginning on or after July 1, 1993, 
through June 30, 1994. (The only exception to this policy is that, as a 
result of the elimination of the A&G add-on for hospital-based HHAs 
effective for cost reporting periods beginning on or after October 1, 
1993, the A&G add-on amount is not included in the cost limit 
calculation for hospital-based HHAs that enter the program.) For 
example, if a provider enters the Medicare program on October 1, 1994, 
with a 12-month cost reporting period, its cost limit will be 
determined in the same manner as a cost limit for a period beginning 
October 1, 1993, and ending September 30, 1994. If the provider's cost 
reporting period is a short period, for example, a period beginning 
October 1, 1994, and ending December 31, 1994, the provider's cost 
limit will be determined in the same manner as a cost limit for a 
period beginning October 1, 1993, and ending December 31, 1993. In 
addition, whether the first period is a full 12-month period or a 
period other than 12 months, the cost limit determined for the first 
period will remain in effect until the provider's first cost reporting 
period beginning on or after July 1, 1996.

E. Next Update of Limits

    Before the enactment of OBRA '93, section 1861(v)(1)(L)(iii) of the 
Act required that the HHA per-discipline cost limits be updated on July 
1, 1994, and every year thereafter. Section 13564(a)(2) of OBRA '93 
amended that section of the Act to delay the next update until July 1, 
1996, and every year thereafter. Accordingly, there will be no changes 
to the HHA per-discipline cost limits effective under this notice for 
cost reporting periods beginning on or after July 1, 1993 for 
inflation, changes in the wage index, or geographic designation until 
July 1, 1996.

F. Adjustments to the Per-Visit Cost Limits

    Section 1861(v)(1)(L)(ii) of the Act provides for appropriate 
adjustments to the HHA per-discipline cost limits. These adjustments 
are set forth at Sec. 413.30(f) and include: exceptions to the limits 
for atypical services and extraordinary circumstances; and other 
provisions. Section 13564(a)(1) of OBRA '93 mandates that the effect of 
allowing no changes in the HHA per-visit cost limits for cost reporting 
periods beginning on or after July 1, 1994, and before July 1, 1996, 
not be considered in making adjustments to the per-visit cost limits 
under the exceptions process. Therefore, effective for cost reporting 
periods beginning on or after July 1, 1994, and before July 1, 1996, a 
provider may request an exception only for costs incurred above the 
amount that the limit would have been had the OBRA '93 provisions set 
forth in this notice regarding no changes in the cost limits not been 
enacted. Accordingly, for the purpose of determining the amount of an 
exception to the HHA per-discipline cost limits under the regulations 
at [[Page 8398]] Sec. 413.30(f), the difference between the amount of a 
provider's cost limit as determined by the provisions set forth in this 
notice, and the amount that a provider's cost limit would have been 
under this notice had the OBRA '93 provisions requiring no changes in 
the cost limits not been enacted, is not subject to an exception to the 
per-discipline cost limits. We note that this provision does not apply 
to the A&G add-on for hospital-based HHAs. That is, for cost reporting 
periods beginning on or after October 1, 1993, the A&G add-on for 
hospital-based HHAs will not be used in computing the amount that the 
hospital-based cost limit would have been had the OBRA '93 provisions 
requiring no changes in the limits not been enacted.
    The example below demonstrates the computation to determine the 
amount not subject to an exception under the provisions set forth in 
this notice. The provider's cost limit for occupational therapy is 
computed for the cost reporting period beginning January 1, 1994, in 
accordance with the provisions set forth in this notice, and this limit 
remains in effect until the cost reporting period beginning January 1, 
1996. In the example, the provider has requested an exception to its 
limit for the period beginning January 1, 1995. Again, we calculate 
what the limit would have been had the OBRA '93 provisions requiring no 
changes in the limits not been enacted. The difference between the 
actual limit and the amount the limit would have been ($5.14) is the 
amount not subject to an exception.
    Example: Calculation of Amount Not Subject to an Exception to 
the Limits for Occupational Therapy for a Freestanding HHA Located 
in Dallas, Texas

                                                                        
                                                                        
                                                                        
Labor Related Component...............      $74.97    (Table I)         
Wage Index............................      x 0.9599  (Table IIIa)      
                                       --------------                   
Labor Portion.........................      $71.96                      
Special Labor Adjustment for Budget         x 1.067   ..................
 Neutrality.                                                            
                                       --------------                   
Adjusted Labor Component..............      $76.79                      
Nonlabor-Related Component............      +16.78    (Table I)         
                                       --------------                   
OSHA Per Diem Add-On..................        +.18    ..................
                                       --------------                   
Limit Prior to Inflation Adjustment...      $93.75                      
Cost Reporting Period Adjustment            x 1.0254  (Table IV)        
 Factor.                                                                
                                       --------------                   
  (January 1, 1994)                                                     
Inflation Adjusted Limit (Limit in          $96.13                      
 Effect for January 1, 1994, January                                    
 1, 1995, and January 1, 1996).                                         
Cost Reporting Period Adjustment            x 1.0803  (Table IV)        
 Factor (January 1, 1995 for Exception                                  
 Purposes Only).                                                        
                                       --------------                   
  (Using the calculation procedures in                                  
   Table IV for cost reporting periods                                  
   beginning on January 1, 1995,                                        
   1.0475 is multiplied by 1.00442                                      
   seven times and the resulting                                        
   factor equals 1.0803.) (1.0475 x                                     
   (1.00442)\7\=1.0803).                                                
Inflation Adjusted Limit (January 1,       $101.27                      
 1994 for Exception Purposes Only).                                     
  Amount Not Subject to Exception                                       
   ($101.27-$96.13=$5.14)                                               
                                                                        

IV. Tables

           Table I.--Per Visit Limits for Home Health Agencies          
------------------------------------------------------------------------
                                                   Labor      Non-labor 
          Type of visit               Limit       portion     portion\1\
------------------------------------------------------------------------
MSA (NECMA) Location:                                                   
  Skilled Nursing Care...........       $91.16       $74.72       $16.44
  Physical Therapy...............        91.80        75.28        16.52
  Speech Pathology...............        93.18        76.30        16.88
  Occupational Therapy...........        91.75        74.97        16.78
  Medical Social Services........       129.62       105.99        23.63
  Home Health Aide...............        45.98        37.65         8.33
  Non-MSA Location:                                                     
  Skilled Nursing Care...........       $99.83       $84.88       $14.95
  Physical Therapy...............       105.55        89.71        15.84
  Speech Pathology...............       110.45        93.74        16.71
  Occupational Therapy...........       107.02        90.55        16.47
  Medical Social Services........       164.60       139.56        25.04
  Home Health Aide...............        46.30        39.36         6.94
------------------------------------------------------------------------
\1\Non-labor portion of limits for HHAs located in Alaska, Hawaii,      
  Puerto Rico, and the Virgin Islands are increased by multiplying them 
  by the following cost-of-living adjustment factors:                   


------------------------------------------------------------------------
                                                            Adjustment  
                        Location                              factor    
------------------------------------------------------------------------
Alaska..................................................           1.250
  Hawaii:                                                               
  Oahu..................................................           1.225
  Kauai.................................................           1.175
  Maui, Lanai, and Molokai..............................           1.200
  Hawaii (Island).......................................           1.150
Puerto Rico.............................................           1.100
Virgin Islands..........................................           1.125
------------------------------------------------------------------------


                                                                        
[[Page 8399]]                                                           
    Table II.--Add-On Amounts for Hospital-Based Home health Agencies   
------------------------------------------------------------------------
                                                   Labor      Non-labor 
          Type of visit             A&G Add-on    portion      portion  
------------------------------------------------------------------------
MSA (NECMA) Location:                                                   
  Skilled Nursing Care...........       $12.20        $9.99        $2.21
  Physical Therapy...............        11.30         9.25         2.05
  Speech Pathology...............        11.48         9.39         2.09
  Occupational Therapy...........        11.48         9.35         2.12
  Medical Social Services........        17.73        14.42         3.32
  Home Health Aide...............         5.50         4.50         1.00
  Non-MSA Location:                                                     
  Skilled Nursing Care...........       $14.99       $12.74        $2.25
  Physical Therapy...............        16.14        13.73         2.41
  Speech Pathology...............        16.09        13.67         2.42
  Occupational Therapy...........        17.00        14.36         2.64
  Medical Social Services........        24.20        20.41         3.80
  Home Health Aide...............         6.01         5.11         0.90
------------------------------------------------------------------------


                 Table IIIa.--Wage Index for Urban Areas                
------------------------------------------------------------------------
                                                                   Wage 
    Urban areas (constituent counties or county equivalents)      index 
------------------------------------------------------------------------
Abilene TX.....................................................   0.9183
  Taylor, TX                                                            
Aguadilla, PR..................................................   0.4549
  Aguada, PR                                                            
  Aguadilla, PR                                                         
  Isabella, PR                                                          
  Moca, PR                                                              
Akron, OH......................................................   0.9455
  Portage, OH                                                           
  Summit, OH                                                            
Albany, GA.....................................................   0.8017
  Dougherty, GA                                                         
  Lee, GA                                                               
Albany-Schenectady-Troy, NY....................................   0.8887
  Albany, NY                                                            
  Greene, NY                                                            
  Montgomery, NY                                                        
  Rensselaer, NY                                                        
  Saratoga, NY                                                          
  Schenectady, NY                                                       
Albuquerque, NM................................................   1.0083
  Bernalillo, NM                                                        
Alexandria, LA.................................................   0.8242
  Rapides, LA                                                           
Allentown-Bethlehem, PA-NJ.....................................   0.9957
  Warren, NJ                                                            
  Carbon, PA                                                            
  Lehigh, PA                                                            
  Northampton, PA                                                       
Altoona, PA....................................................   0.9201
  Blair, PA                                                             
Amarillo, TX...................................................   0.8703
  Potter, TX                                                            
  Randall, TX                                                           
Anaheim-Santa Ana, CA..........................................   1.2217
  Orange, CA                                                            
Anchorage, AK..................................................   1.4119
  Anchorage, AK                                                         
Anderson, IN...................................................   0.9544
  Madison, IN                                                           
Anderson, SC...................................................   0.7229
  Anderson, SC                                                          
Ann Arbor, MI..................................................   1.1815
  Washtenaw, MI                                                         
Anniston, AL...................................................   0.7899
  Calhoun, AL                                                           
Appleton-Oshkosh-Neenah, WI....................................   0.9142
  Calumet, WI                                                           
  Outagamie, WI                                                         
  Winnebago, WI                                                         
Arecibo, PR....................................................   0.3938
  Arecibo, PR                                                           
  Camuy, PR                                                             
  Hatillo, PR                                                           
  Quebradillas, PR                                                      
Asheville, NC..................................................   0.8760
  Buncombe, NC                                                          
Athens, GA.....................................................   0.8518
  Clarke, GA                                                            
  Jackson, GA                                                           
  Madison, GA                                                           
  Oconee, GA                                                            
Atlanta, GA....................................................   0.9557
  Barrow, GA                                                            
  Butts, GA                                                             
  Cherokee, GA                                                          
  Clayton, GA                                                           
  Cobb, GA                                                              
  Coweta, GA                                                            
  De Kalb, GA                                                           
  Douglas, GA                                                           
  Fayette, GA                                                           
  Forsyth, GA                                                           
  Fulton, GA                                                            
  Gwinnett, GA                                                          
  Henry, GA                                                             
  Newton, GA                                                            
  Paulding, GA                                                          
  Rockdale, GA                                                          
  Spalding, GA                                                          
  Walton, GA                                                            
Atlantic City, NJ..............................................   1.0464
  Atlantic , NJ                                                         
  Cape May, NJ                                                          
Augusta, GA-SC.................................................   0.9363
  Columbia, GA                                                          
  McDuffie, GA                                                          
  Richmond, GA                                                          
  Aiken, SC                                                             
Aurora-Elgin, IL...............................................   0.9626
  Kane, IL                                                              
  Kendall, IL                                                           
Austin, TX.....................................................   0.9560
  Hays, TX                                                              
  Travis, TX                                                            
  Williamson, TX                                                        
Bakersfield, CA................................................   1.0824
  Kern, CA                                                              
Baltimore, MD..................................................   1.0115
  Anne Arundel, MD                                                      
  Baltimore, MD                                                         
  Baltimore City, MD                                                    
  Carroll, MD                                                           
  Harford, MD                                                           
  Howard, MD                                                            
  Queen Annes, MD                                                       
Bangor, ME.....................................................   0.9027
  Penobscot, ME                                                         
Baton Rouge, LA................................................   0.9052
  Ascension, LA                                                         
  East Baton Rouge, LA                                                  
  Livingston, LA                                                        
  West Baton Rouge, LA                                                  
Battle Creek, MI...............................................   0.9480
  Calhoun, MI                                                           
Beaumont-Port Arthur, TX.......................................   0.9599
  Hardin, TX                                                            
  Jefferson, TX                                                         
  Orange, TX                                                            
Beaver County, PA..............................................   1.0124
  Beaver, PA                                                            
Bellingham, WA.................................................   1.0454
  Whatcom, WA                                                           
Benton Harbor, MI..............................................   0.8421
  Berrien, MI                                                           
Bergen-Passaic, NJ.............................................   1.0733
  Bergen, NJ                                                            
  Passaic, NJ                                                           
Billings, MT...................................................   0.9287
  Yellowstone, MT                                                       
Biloxi-Gulfport, MS............................................   0.8030
  Hancock, MS                                                           
  Harrison, MS                                                          
Binghamton, NY.................................................   0.9223
  Broome, NY                                                            
  Tioga, NY                                                             
Birmingham, AL.................................................   0.8734
  Blount, AL                                                            
  Jefferson, AL                                                         
  Saint Clair, AL                                                       
  Shelby, AL                                                            
  Walker, AL                                                            
Bismarck, ND...................................................   0.8845
  Burleigh, ND                                                          
  Morton, ND                                                            
Bloomington, IN................................................   0.8604
  Monroe, IN                                                            
[[Page 8400]]                                                           
                                                                        
Bloomington-Normal, IL.........................................   0.8723
  McLean, IL                                                            
Boise City, ID.................................................   0.9718
  Ada, ID                                                               
Boston-Lawrence-Salem-Lowell-Brockton, MA......................   1.1762
  Essex, MA                                                             
  Middlesex, MA                                                         
  Norfolk, MA                                                           
  Plymouth, MA                                                          
  Suffolk, MA                                                           
Boulder-Longmont, CO...........................................   1.0155
  Boulder, CO                                                           
Bradenton, FL..................................................   0.9225
  Manatee, FL                                                           
Brazoria, TX...................................................   0.9276
  Brazoria, TX                                                          
Bremerton, WA..................................................   0.9495
  Kitsap, WA                                                            
Bridgeport-Stamford-Norwalk-Danbury............................   1.1984
  Fairfield, CT                                                         
Brownsville-Harlingen, TX......................................   0.8592
  Cameron, TX                                                           
Bryan-College Station, TX......................................   0.9451
  Brazos, TX                                                            
Buffalo, NY....................................................   0.8873
  Erie, NY                                                              
Burlington, NC.................................................   0.7954
  Alamance, NC                                                          
Burlington, VT.................................................   0.9320
  Chittenden, VT                                                        
  Grand Isle, VT                                                        
Caguas, PR.....................................................   0.4461
  Caguas, PR                                                            
  Gurabo, PR                                                            
  San Lorenz, PR                                                        
  Aguas Buenas, PR                                                      
  Cayey, PR                                                             
  Cidra, PR                                                             
Canton, OH.....................................................   0.8776
  Carroll, OH                                                           
  Stark, OH                                                             
Casper, WY.....................................................   0.8855
  Natrona, WY                                                           
Cedar Rapids, IA...............................................   0.8938
  Linn, IA                                                              
Champaign-Urbana-Rantoul, IL...................................   0.8710
  Champaign, IL                                                         
Charleston, SC.................................................   0.8298
  Berkeley, SC                                                          
  Charleston, SC                                                        
  Dorchester, SC                                                        
Charleston, WV.................................................   0.9653
  Kanawha, WV                                                           
  Putnam, WV                                                            
Charlotte-Gastonia-Rock Hill, NC-SC............................   0.9432
  Cabarrus, NC                                                          
  Gaston, NC                                                            
  Lincoln, NC                                                           
  Mecklenburg, NC                                                       
  Rowan, NC                                                             
  Union, NC                                                             
  York, SC                                                              
Charlottesville, VA............................................   0.9576
  Albermarle, VA                                                        
  Charlottesville City, VA                                              
  Fluvanna, VA                                                          
  Greene, VA                                                            
Chattanooga, TN-GA.............................................   0.9161
  Catoosa, GA                                                           
  Dade, GA                                                              
  Walker, GA                                                            
  Hamilton, TN                                                          
  Marion, TN                                                            
  Sequatchie, TN                                                        
Cheyenne, WY...................................................   0.7876
  Laramie, WY                                                           
Chicago, IL....................................................   1.0475
  Cook, IL                                                              
  Du Page, IL                                                           
  McHenry, IL                                                           
Chico, CA......................................................   1.0937
  Butte, CA                                                             
Cincinnati, OH-KY-IN...........................................   0.9972
  Dearborn, IN                                                          
  Boone, KY                                                             
  Campbell, KY                                                          
  Kenton, KY                                                            
  Clermont, OH                                                          
  Hamilton, OH                                                          
  Warren, OH                                                            
Clarksville-Hopkinsville, TN-KY................................   0.7352
  Christian, KY                                                         
  Montgomery, TN                                                        
Cleveland, OH..................................................   1.0695
  Cuyahoga, OH                                                          
  Geauga, OH                                                            
  Lake, OH                                                              
  Medina, OH                                                            
Colorado Springs, CO...........................................   0.9777
  El Paso, CO                                                           
Columbia, MO...................................................   0.9468
  Boone, MO                                                             
Columbia, SC...................................................   0.8904
  Lexington, SC                                                         
  Richland, SC                                                          
Columbus, GA-AL................................................   0.7452
  Russell, AL                                                           
  Chattanoochee, GA                                                     
  Muscogee, GA                                                          
Columbus, OH...................................................   0.9634
  Delaware, OH                                                          
  Fairfield, OH                                                         
  Franklin, OH                                                          
  Licking, OH                                                           
  Madison, OH                                                           
  Pickaway, OH                                                          
  Union, OH                                                             
Corpus Christi, TX.............................................   0.8559
  Nueces, TX                                                            
  San Patricio, TX                                                      
Cumberland, MD-WV..............................................   0.8155
  Allegany, MD                                                          
  Mineral, WV                                                           
Dallas, TX.....................................................   0.9599
  Collin, TX                                                            
  Dallas, TX                                                            
  Denton, TX                                                            
  Ellis, TX                                                             
  Kaufman, TX                                                           
  Rockwall, TX                                                          
Danville, VA...................................................   0.7476
  Danville City, VA                                                     
  Pittsylvania, VA                                                      
Davenport-Rock Island-Moline, IA-IL............................   0.8640
  Scott, IA                                                             
  Henry, IL                                                             
  Rock Island, IL                                                       
Dayton-Springfield, OH.........................................   0.9686
  Clark, OH                                                             
  Greene, OH                                                            
  Miami, OH                                                             
  Montgomery, OH                                                        
Daytona Beach, FL..............................................   0.8907
  Volusia, FL                                                           
Decatur, AL....................................................   0.7457
  Lawrence, AL                                                          
  Morgan, AL                                                            
Decatur, IL....................................................   0.8253
  Macon, IL                                                             
Denver, CO.....................................................   1.0714
  Adams, CO                                                             
  Arapahoe, CO                                                          
  Denver, CO                                                            
  Douglas, CO                                                           
  Jefferson, CO                                                         
Des Moines, IA.................................................   0.9225
  Dallas, IA                                                            
  Polk, IA                                                              
  Warren, IA                                                            
Detroit, MI....................................................   1.0924
  Lapeer, MI                                                            
  Livingston, MI                                                        
  Macomb, MI                                                            
  Monroe, MI                                                            
  Oakland, MI                                                           
  Saint Clair, MI                                                       
  Wayne, MI                                                             
Dothan, AL.....................................................   0.7524
  Dale, AL                                                              
  Houston, AL                                                           
Dubuque, IA....................................................   0.8341
  Dubuque, IA                                                           
Duluth, MN-WI..................................................   0.9479
  St. Louis, MN                                                         
  Douglas, WI                                                           
Eau Claire, WI.................................................   0.8444
  Chippewa, WI                                                          
  Eau Claire, WI                                                        
El Paso, TX....................................................   0.8679
  El Paso, TX                                                           
Elkhart-Goshen, IN.............................................   0.8913
  Elkhart, IN                                                           
Elmira, NY.....................................................   0.8775
  Chemung, NY                                                           
Enid, OK.......................................................   0.8877
  Garfield, OK                                                          
Erie, PA.......................................................   0.9118
  Erie, PA                                                              
Eugene-Springfield, OR.........................................   1.0123
  Lane, OR                                                              
Evansville, IN-KY..............................................   0.9422
  Posey, IN                                                             
  Vanderburgh, IN                                                       
  Warrick, IN                                                           
  Henderson, KY                                                         
Fargo-Moorhead, ND-MN..........................................   0.9668
  Clay, MN                                                              
  Cass, ND                                                              
Fayetteville, NC...............................................   0.8262
  Cumberland, NC                                                        
Fayetteville-Springdale, AR....................................   0.7958
  Washington, AR                                                        
Flint, MI......................................................   1.1506
  Genesee, MI                                                           
Florence, AL...................................................   0.7648
  Colbert, AL                                                           
  Lauderdale, AL                                                        
Florence, SC...................................................  0.8395 
[[Page 8401]]                                                           
                                                                        
  Florence, SC                                                          
Fort Collins-Loveland, CO......................................   1.0197
  Larimor, CO                                                           
Ft Lauderdale-Hollywood-Pompano Beach, FL......................   1.0314
  Broward, FL                                                           
Fort Myers-Cape Coral, FL......................................   0.9759
  Lee, FL                                                               
Fort Pierce, FL................................................   1.0996
  Martin, FL                                                            
  St. Lucie, FL                                                         
Fort Smith, AR-OK..............................................   0.7900
  Crawford, AR                                                          
  Sebastian, AR                                                         
  Sequoyah, OK                                                          
Fort Walton Beach, FL..........................................   0.8881
  Okaloosa, FL                                                          
Fort Wayne, IN.................................................   0.8967
  Allen, IN                                                             
  De Kalb, IN                                                           
  Whitley, IN                                                           
Forth Worth-Arlington, TX......................................   0.9708
  Johnson, TX                                                           
  Parker, TX                                                            
  Tarrant, TX                                                           
Fresno, CA.....................................................   1.0694
  Fresno, CA                                                            
Gadsden, AL....................................................   0.8166
  Etowah, AL                                                            
Gainesville, FL................................................   0.8763
  Alachua, FL                                                           
  Bradford, FL                                                          
Galveston-Texas City, TX.......................................   1.0129
  Galveston, TX                                                         
Gary-Hammond, IN...............................................   0.9853
  Lake, IN                                                              
  Porter, IN                                                            
Glens Falls, NY................................................   0.9193
  Warren, NY                                                            
  Washington, NY                                                        
Grand Forks, ND................................................   0.9539
  Grand Forks, ND                                                       
Grand Rapids, MI...............................................   0.9813
  Kent, MI                                                              
  Ottawa, MI                                                            
Great Falls, MT................................................   0.9951
  Cascade, MT                                                           
Greeley, CO....................................................   0.9320
  Weld, CO                                                              
Green Bay, WI..................................................   0.9547
  Brown, WI                                                             
Greensboro-Winston-Salem-High Point, NC........................   0.9128
  Davidson, NC                                                          
  Davie, NC                                                             
  Forsyth, NC                                                           
  Guilford, NC                                                          
  Randolph, NC                                                          
  Stokes, NC                                                            
  Yadkin, NC                                                            
Greenville-Spartanburg, SC.....................................   0.8887
  Greenville, SC                                                        
  Pickens, SC                                                           
  Spartanburg, SC                                                       
Hagerstown, MD.................................................   0.9121
  Washington, MD                                                        
Hamilton-Middletown, OH........................................   0.9347
  Butler, OH                                                            
Harrisburg-Lebanon-Carlisle, PA................................   0.9879
  Cumberland, PA                                                        
  Dauphin, PA                                                           
  Lebanon, PA                                                           
  Perry, PA                                                             
Hartford-Middletown-New Britain-Bristol, CT....................   1.1868
  Hartford, CT                                                          
  Middlesex, CT                                                         
  Tolland, CT                                                           
  Litchfield, CT                                                        
Hickory, NC....................................................   0.8735
  Alexander, NC                                                         
  Burke, NC                                                             
  Catawba, NC                                                           
Honolulu, HI...................................................   1.1534
  Honolulu, HI                                                          
Houma-Thibodaux, LA............................................   0.7315
  Lafourche, LA                                                         
  Terrebonne, LA                                                        
Houston, TX....................................................   1.0022
  Fort Bend, TX                                                         
  Harris, TX                                                            
  Liberty, TX                                                           
  Montgomery, TX                                                        
  Waller, TX                                                            
Huntington-Ashland, WV-KY-OH...................................   0.9400
  Boyd, KY                                                              
  Carter, KY                                                            
  Greenup, KY                                                           
  Lawrence, OH                                                          
  Cabell, WV                                                            
  Wayne, WV                                                             
Huntsville, AL.................................................   0.8799
  Madison, AL                                                           
Indianapolis, IN...............................................   0.9665
  Boone, IN                                                             
  Hamilton, IN                                                          
  Hancock, IN                                                           
  Hendricks, IN                                                         
  Johnson, IN                                                           
  Marion, IN                                                            
  Morgan, IN                                                            
  Shelby, IN                                                            
Iowa City, IA..................................................   0.9489
  Johnson, IA                                                           
Jackson, MI....................................................   0.9625
  Jackson, MI                                                           
Jackson, MS....................................................   0.7702
  Hinds, MS                                                             
  Madison, MS                                                           
  Rankin, MS                                                            
Jackson, TN....................................................   0.7878
  Madison, TN                                                           
Jacksonville, FL...............................................   0.9122
  Clay, FL                                                              
  Duval, FL                                                             
  Nassau, FL                                                            
  St. Johns, FL                                                         
Jacksonville, NC...............................................   0.7125
  Onslow, NC                                                            
Jamestown-Dunkirk, NY..........................................   0.7746
  Chautaqua, NY                                                         
Janesville-Beloit, WI..........................................   0.8432
  Rock, WI                                                              
Jersey City, NJ................................................   1.0728
  Hudson, NJ                                                            
Johnson City-Kingsport-Bristol, TN-VA..........................   0.8633
  Carter, TN                                                            
  Hawkins, TN                                                           
  Sullivan, TN                                                          
  Unicoi, TN                                                            
  Washington, TN                                                        
  Bristol City, VA                                                      
  Scott, VA                                                             
  Washington, VA                                                        
Johnstown, PA..................................................   0.8827
  Cambria, PA                                                           
  Somerset, PA                                                          
Joliet, IL.....................................................   1.0237
  Grundy, IL                                                            
  Will, IL                                                              
Joplin, MO.....................................................   0.7925
  Jasper, MO                                                            
  Newton, MO                                                            
Kalamazoo, MI..................................................   1.1765
  Kalamazoo, MI                                                         
Kankakee, IL...................................................   0.8454
  Kankakee, IL                                                          
Kansas City, KS-MO.............................................   0.9550
  Johnson, KS                                                           
  Leavenworth, KS                                                       
  Miami, KS                                                             
  Wyandotte, KS                                                         
  Cass, MO                                                              
  Clay, MO                                                              
  Jackson, MO                                                           
  Lafayette, MO                                                         
  Platte, MO                                                            
  Ray, MO                                                               
Kenosha, WI....................................................   0.8934
  Kenosha, WI                                                           
Killeen-Temple, TX.............................................   1.1250
  Bell, TX                                                              
  Coryell, TX                                                           
Knoxville, TN..................................................   0.8658
  Anderson, TN                                                          
  Blount, TN                                                            
  Grainger, TN                                                          
  Jefferson, TN                                                         
  Knox, TN                                                              
  Sevier, TN                                                            
  Union, TN                                                             
Kokomo, IN.....................................................   0.9452
  Howard, IN                                                            
  Tipton, IN                                                            
LaCrosse, WI...................................................   0.8920
  LaCrosse, WI                                                          
Lafayette, LA..................................................   0.8194
  Lafayette, LA                                                         
  St. Martin, LA                                                        
Lafayette, IN..................................................   0.8588
  Tippecanoe, IN                                                        
Lake Charles, LA...............................................   0.8341
  Calcasieu, LA                                                         
Lake County, IL................................................   0.9953
  Lake, IL                                                              
Lakeland-Winter Haven, FL......................................   0.8409
  Polk, FL                                                              
Lancaster, PA..................................................   0.9221
  Lancaster, PA                                                         
Lansing-East Lansing, MI.......................................   1.0242
  Clinton, MI                                                           
  Eaton, MI                                                             
  Ingham, MI                                                            
Laredo, TX.....................................................   0.7248
  Webb, TX                                                              
Las Cruces, NM.................................................   0.7877
  Dona Ana, NM                                                          
Las Vegas, NV..................................................   1.0588
  Clark, NV                                                             
[[Page 8402]]                                                           
                                                                        
Lawrence, KS...................................................   0.8901
  Douglas, KS                                                           
Lawton, OK.....................................................   0.8354
  Comanche, OK                                                          
Lewiston-Auburn, ME............................................   0.9021
  Androscoggin, ME                                                      
Lexington-Fayette, KY..........................................   0.8565
  Bourbon, KY                                                           
  Clark, KY                                                             
  Fayette, KY                                                           
  Jessamine, KY                                                         
  Scott, KY                                                             
  Woodford, KY                                                          
Lima, OH.......................................................   0.8030
  Allen, OH                                                             
  Auglaize, OH                                                          
Lincoln, NE....................................................   0.8920
  Lancaster, NE                                                         
Little Rock-North Little Rock, AR..............................   0.8373
  Faulkner, AR                                                          
  Lonoke, AR                                                            
  Pulaski, AR                                                           
  Saline, AR                                                            
Longview-Marshall, TX..........................................   0.8656
  Gregg, TX                                                             
  Harrison, TX                                                          
Lorain-Elyria, OH..............................................   0.8933
  Lorain, OH                                                            
Los Angeles-Long Beach, CA.....................................   1.2308
  Los Angeles, CA                                                       
Louisville, KY-IN..............................................   0.9291
  Clark, IN                                                             
  Floyd, IN                                                             
  Harrison, IN                                                          
  Bullitt, KY                                                           
  Jefferson, KY                                                         
  Oldham, KY                                                            
  Shelby, KY                                                            
Lubbock, TX....................................................   0.8766
  Lubbock, TX                                                           
Lynchburg, VA..................................................   0.8509
  Amherst, VA                                                           
  Campbell, VA                                                          
  Lynchburg City, VA                                                    
Macon-Warner Robins, GA........................................   0.8768
  Bibb, GA                                                              
  Huston, GA                                                            
  Jones, GA                                                             
  Peach, GA                                                             
Madison, WI....................................................   1.0270
  Dane, WI                                                              
Manchester-Nashua, NH..........................................   1.0219
  Hillsborough, NH                                                      
  Merrimack, NH                                                         
Mansfield, OH..................................................   0.8358
  Richland, OH                                                          
Mayaguez, PR...................................................   0.4752
  Anasco, PR                                                            
  Cabo Rojo, PR                                                         
  Hormigueros, PR                                                       
  Mayaguez, PR                                                          
  San German, PR                                                        
McAllen-Edinburg-Mission, TX...................................   0.7684
  Hidalgo, TX                                                           
Medford, OR....................................................   1.0005
  Jackson, OR                                                           
Melbourne-Titusville, FL.......................................   0.9162
  Brevard, FL                                                           
Memphis, TN-AR-MS..............................................   0.9023
  Crittenden, AR                                                        
  De Soto, MS                                                           
  Shelby, TN                                                            
  Tipton, TN                                                            
Merced, CA.....................................................   1.0270
  Merced, CA                                                            
Miami-Hialeah, FL..............................................   1.0147
  Dade, FL                                                              
Middlesex-Somerset-Hunterdon, NJ...............................   1.0903
  Hunterdon, NJ                                                         
  Middlesex, NJ                                                         
  Somerset, NJ                                                          
Midland, TX....................................................   1.0335
  Midland, TX                                                           
Milwaukee, WI..................................................   0.9680
  Milwaukee, WI                                                         
  Ozaukee, WI                                                           
  Washington, WI                                                        
  Waukesha, WI                                                          
Minneapolis-St Paul, MN-WI.....................................   1.0774
  Anoka, MN                                                             
  Carver, MN                                                            
  Chisago, MN                                                           
  Dakota, MN                                                            
  Hennepin, MN                                                          
  Isanti, MN                                                            
  Ramsey, MN                                                            
  Scott, MN                                                             
  Washington, MN                                                        
  Wright, MN                                                            
  St. Croix, WI                                                         
Mobile, AL.....................................................   0.8454
  Baldwin, AL                                                           
  Mobile, AL                                                            
Modesto, CA....................................................   1.1530
  Stanislaus, CA                                                        
Monmouth-Ocean, NJ.............................................   1.0058
  Monmouth, NJ                                                          
  Ocean, NJ                                                             
Monroe, LA.....................................................   0.7832
  Ouachita, LA                                                          
Montgomery, AL.................................................   0.7823
  Autauga, AL                                                           
  Elmore, AL                                                            
  Montgomery, AL                                                        
Muncie, IN.....................................................   0.8397
  Delaware, IN                                                          
Muskegon, MI...................................................   0.9680
  Muskegon, MI                                                          
Naples, FL.....................................................   1.0282
  Collier, FL                                                           
Nashville, TN..................................................   0.9360
  Cheatham, TN                                                          
  Davidson, TN                                                          
  Dickson, TN                                                           
  Robertson, TN                                                         
  Rutherford TN                                                         
  Sumner, TN                                                            
  Williamson, TN                                                        
  Wilson, TN                                                            
Nassau-Suffolk, NY.............................................   1.3167
  Nassau, NY                                                            
  Suffolk, NY                                                           
New Bedford-Fall River-Attleboro, MA...........................   0.9962
  Bristol, MA                                                           
New Haven-Waterbury-Meriden, CT................................   1.2046
  New Haven, CT                                                         
New London, London-Norwich.....................................   1.1525
  New London, CT                                                        
New Orleans, LA................................................   0.8967
  Jefferson, LA                                                         
  Orleans, LA                                                           
  St. Bernard, LA                                                       
  St. Charles, LA                                                       
  St. John The Baptist, LA                                              
  St. Tammany, LA                                                       
New York, NY...................................................   1.3431
  Bronx, NY                                                             
  Kings, NY                                                             
  New York City, NY                                                     
  Putnam, NY                                                            
  Queens, NY                                                            
  Richmond, NY                                                          
  Rockland, NY                                                          
  Westchester, NY                                                       
Newark, NJ.....................................................   1.1350
  Essex, NJ                                                             
  Morris, NJ                                                            
  Sussex, NJ                                                            
  Union, NJ                                                             
Niagara Falls, NY..............................................   0.8350
  Niagara, NY                                                           
Norfolk-Virginia Beach-Newport News, VA........................   0.8481
  Chesapeake City, VA                                                   
  Gloucester, VA                                                        
  Hampton City, VA                                                      
  James City Co., VA                                                    
  Newport News City, VA                                                 
  Norfolk City, VA                                                      
  Poquoson, VA                                                          
  Portsmouth City, VA                                                   
  Suffolk City, VA                                                      
  Virginia Beach City, VA                                               
  Williamsburg City, VA                                                 
  York, VA                                                              
Oakland, CA....................................................   1.4225
  Alameda, CA                                                           
  Contra Costa, CA                                                      
Ocala, FL......................................................   0.8580
  Marion, FL                                                            
Odessa, TX.....................................................   1.0835
  Ector, TX                                                             
Oklahoma City, OK..............................................   0.9195
  Canadian, OK                                                          
  Cleveland, OK                                                         
  Logan, OK                                                             
  McClain, OK                                                           
  Oklahoma, OK                                                          
  Pottawatomie, OK                                                      
Olympia, WA....................................................   1.0957
  Thurston, WA                                                          
Omaha, NE-IA...................................................   0.8953
  Pottawattamie, IA                                                     
  Douglas, NE                                                           
  Sarpy, NE                                                             
  Washington, NE                                                        
Orange County, NY..............................................   0.9815
  Orange, NY                                                            
Orlando, FL....................................................   0.9582
  Orange, FL                                                            
  Osceola, FL                                                           
  Seminole, FL                                                          
Owensboro, KY..................................................   0.8082
  Daviess, KY                                                           
Oxnard-Ventura, CA.............................................   1.2259
  Ventura, CA                                                           
Panama City, FL................................................   0.8598
  Bay, FL                                                               
Parkersburg-Marietta, WV-OH....................................  0.8505 
[[Page 8403]]                                                           
                                                                        
  Washington, OH                                                        
  Wood, WV                                                              
Pascagoula, MS.................................................   0.8720
  Jackson, MS                                                           
Pensacola, FL..................................................   0.8589
  Escambia, FL                                                          
  Santa Rosa, FL                                                        
Peoria, IL.....................................................   0.8704
  Peoria, IL                                                            
  Tazewell, IL                                                          
  Woodford, IL                                                          
Philadelphia, PA-NJ............................................   1.0908
  Burlington, NJ                                                        
  Camden, NJ                                                            
  Gloucester, NJ                                                        
  Bucks, PA                                                             
  Chester, PA                                                           
  Delaware, PA                                                          
  Montgomery, PA                                                        
  Philadelphia, PA                                                      
Phoenix, AZ....................................................   1.0387
  Maricopa, AZ                                                          
Pine Bluff, AR.................................................   0.7840
  Jefferson, AR                                                         
Pittsburgh, PA.................................................   1.0087
  Allegheny, PA                                                         
  Fayette, PA                                                           
  Washington, PA                                                        
  Westmoreland, PA                                                      
Pittsfield, MA.................................................   1.0739
  Berkshire, MA                                                         
Ponce, PR......................................................   0.4583
  Juana Diaz, PR                                                        
  Ponce, PR                                                             
Portland, ME...................................................   0.9254
  Cumberland, ME                                                        
  Sagadahoc, ME                                                         
  York, ME                                                              
Portland, OR...................................................   1.1529
  Clackamas, OR                                                         
  Multnomah, OR                                                         
  Washington, OR                                                        
  Yamhill, OR                                                           
Portsmouth-Dover-Rochester, NH.................................   1.0039
  Rockingham, NH                                                        
  Strafford, NH                                                         
Poughkeepsie, NY...............................................   1.0639
  Dutchess, NY                                                          
Providence-Pawtucket-Woonsocket, RI............................   1.0590
  Bristol, RI                                                           
  Kent, RI                                                              
  Newport, RI                                                           
  Providence, RI                                                        
  Washington, RI                                                        
Provo-Orem, UT.................................................   1.0189
  Utah, UT                                                              
Pueblo, CO.....................................................   0.8687
  Pueblo, CO                                                            
Racine, WI.....................................................   0.8814
  Racine, WI                                                            
Raleigh-Durham, NC.............................................   0.9448
  Durham, NC                                                            
  Franklin, NC                                                          
  Orange, NC                                                            
  Wake, NC                                                              
Rapid City, SD.................................................   0.8366
  Pennington, SD                                                        
Reading, PA....................................................   0.8778
  Berks, PA                                                             
Redding, CA....................................................   1.0507
  Shasta, CA                                                            
Reno, NV.......................................................   1.1571
  Washoe, NV                                                            
Richland-Kennewick, WA.........................................   0.9364
  Benton, WA                                                            
  Franklin, WA                                                          
Richmond-Petersburg, VA........................................   0.9379
  Charles City Co., VA                                                  
  Chesterfield, VA                                                      
  Colonial Heights City, VA                                             
  Dinwiddie, VA                                                         
  Goochland, VA                                                         
  Hanover, VA                                                           
  Henrico, VA                                                           
  Hopewell City, VA                                                     
  New Kent, VA                                                          
  Petersburg City, VA                                                   
  Powhatan, VA                                                          
  Prince George, VA                                                     
  Richmond City, VA                                                     
Riverside-San Bernardino, CA...................................   1.1391
  Riverside, CA                                                         
  San Bernardino, CA                                                    
Roanoke, VA....................................................   0.8251
  Botetourt, VA                                                         
  Roanoke, VA                                                           
  Roanoke City, VA                                                      
  Salem City, VA                                                        
Rochester, MN..................................................   1.0985
  Olmsted, MN                                                           
Rochester, NY..................................................   0.9671
  Livingston, NY                                                        
  Monroe, NY                                                            
  Ontario, NY                                                           
  Orleans, NY                                                           
  Wayne, NY                                                             
Rockford, IL...................................................   0.9245
  Boone, IL                                                             
  Winnebago, IL                                                         
Sacramento, CA.................................................   1.2280
  Eldorado, CA                                                          
  Placer, CA                                                            
  Sacramento, CA                                                        
  Yolo, CA                                                              
Saginaw-Bay City-Midland, MI...................................   1.0452
  Bay, MI                                                               
  Midland, MI                                                           
  Saginaw, MI                                                           
St. Cloud, MN..................................................   0.9382
  Benton, MN                                                            
  Sherburne, MN                                                         
  Stearns, MN                                                           
St. Joseph, MO.................................................   0.9376
  Buchanan, MO                                                          
St. Louis, MO-IL...............................................   0.9351
  Clinton, IL                                                           
  Jersey, IL                                                            
  Madison, IL                                                           
  Monroe, IL                                                            
  St. Clair, IL                                                         
  Franklin, MO                                                          
  Jefferson, MO                                                         
  St. Charles, MO                                                       
  St. Louis, MO                                                         
  St. Louis City, MO                                                    
  Sullivan City, MO                                                     
Salem, OR......................................................   1.0403
  Marion, OR                                                            
  Polk, OR                                                              
Salinas-Seaside-Monterey, CA...................................   1.2988
  Monterey, CA                                                          
Salt Lake City-Ogden, UT.......................................   0.9892
  Davis, UT                                                             
  Salt Lake, UT                                                         
  Weber, UT                                                             
San Angelo, TX.................................................   0.8107
  Tom Green, TX                                                         
San Antonio, TX................................................   0.8418
  Bexar, TX                                                             
  Comal, TX                                                             
  Guadalupe, TX                                                         
San Diego, CA..................................................   1.2095
  San Diego, CA                                                         
San Francisco, CA..............................................   1.4480
  Marin, CA                                                             
  San Francisco, CA                                                     
  San Mateo, CA                                                         
San Jose, CA...................................................   1.4840
  Santa Clara, CA                                                       
San Juan, PR...................................................   0.4967
  Barcelona, PR                                                         
  Bayoman, PR                                                           
  Canovanas, PR                                                         
  Carolina, PR                                                          
  Catano, PR                                                            
  Corozal, PR                                                           
  Dorado, PR                                                            
  Fajardo, PR                                                           
  Florida, PR                                                           
  Guaynabo, PR                                                          
  Humacao, PR                                                           
  Juncos, PR                                                            
  Los Piedras, PR                                                       
  Loiza, PR                                                             
  Luguillo, PR                                                          
  Manati, PR                                                            
  Naranjito, PR                                                         
  Rio Grande, PR                                                        
  San Juan, PR                                                          
  Toa Alta, PR                                                          
  Toa Baja, PR                                                          
  Trojillo Alto, PR                                                     
  Vega Alta, PR                                                         
  Vega Baja, PR                                                         
Santa Barbara-Santa Maria-Lompoc, CA...........................   1.1721
  Santa Barbara, CA                                                     
Santa Cruz, CA.................................................   1.2733
  Santa Cruz, CA                                                        
Santa Fe, NM...................................................   0.9102
  Los Alamos, NM                                                        
  Santa Fe, NM                                                          
Santa Rosa-Petaluma, CA........................................   1.2926
  Sonoma, CA                                                            
Sarasota, FL...................................................   0.9741
  Sarasota, FL                                                          
Savannah, GA...................................................   0.8294
  Chatham, GA                                                           
  Effingham, GA                                                         
Scranton, Wilkes Barre, PA.....................................   0.8916
  Columbia, PA                                                          
  Lackawanna, PA                                                        
  Luzerne, PA                                                           
  Monroe, PA                                                            
  Wyoming, PA                                                           
Seattle, WA....................................................   1.0827
  King, WA                                                              
  Snohomish, WA                                                         
Sharon, PA.....................................................  0.9024 
[[Page 8404]]                                                           
                                                                        
  Mercer, PA                                                            
Sheboygan, WI..................................................   0.8836
  Sheboygan, WI                                                         
Sherman-Denison, TX............................................   0.9052
  Grayson, TX                                                           
Shreveport, LA.................................................   0.9262
  Bossier, LA                                                           
  Caddo, LA                                                             
Sioux City, IA-NE..............................................   0.8470
  Woodbury, IA                                                          
  Dakota, NE                                                            
Sioux Falls, SD................................................   0.8797
  Minnehaha, SD                                                         
South Bend-Mishawaka, IN.......................................   1.0142
  St. Joseph, IN                                                        
Spokane, WA....................................................   1.0648
  Spokane, WA                                                           
Springfield, IL................................................   0.9258
  Menard, IL                                                            
  Sangamon, IL                                                          
Springfield, MO................................................   0.8050
  Christian, MO                                                         
  Greene, MO                                                            
Springfield, MA................................................   1.0290
  Hampden, MA                                                           
  Hampshire, MA                                                         
State College, PA..............................................   0.9861
  Centre, PA                                                            
Steubenville-Weirton, OH-WV....................................   0.8756
  Jefferson, OH                                                         
  Brooke, WV                                                            
  Hancock, WV                                                           
Stockton, CA...................................................   1.1566
  San Joaquin, CA                                                       
Syracuse, NY...................................................   0.9905
  Madison, NY                                                           
  Onondaga, NY                                                          
  Oswego, NY                                                            
Tacoma, WA.....................................................   1.0276
  Pierce, WA                                                            
Tallahassee, FL................................................   0.9183
  Gadsden, FL                                                           
  Leon, FL                                                              
Tampa-St. Petersburg-Clearwater, FL............................   0.9225
  Hernando, FL                                                          
  Hillsborough, FL                                                      
  Pasco, FL                                                             
  Pinellas, FL                                                          
Terre Haute, IN................................................   0.8791
  Clay, IN                                                              
  Vigo, IN                                                              
Texarkana-TX-AR................................................   0.7860
  Miller, AR                                                            
  Bowie, TX                                                             
Toledo, OH.....................................................   1.0160
  Fulton, OH                                                            
  Lucas, OH                                                             
  Wood, OH                                                              
Topeka, KS.....................................................   0.9265
  Shawnee, KS                                                           
Trenton, NJ....................................................   1.0094
  Mercer, NJ                                                            
Tucson, AZ.....................................................   0.9552
  Pima, AZ                                                              
Tulsa, OK......................................................   0.8542
  Creeks, OK                                                            
  Osage, OK                                                             
  Rogers, OK                                                            
  Tulsa, OK                                                             
  Wagoner, OK                                                           
Tuscaloosa, AL.................................................   0.8487
  Tuscaloosa, AL                                                        
Tyler, TX......................................................   0.9798
  Smith, TX                                                             
Utica-Rome, NY.................................................   0.8652
  Herkimer, NY                                                          
  Oneida, NY                                                            
Vallejo-Fairfield-Napa, CA.....................................   1.3150
  Napa, CA                                                              
  Solano, CA                                                            
Vancouver, WA..................................................   1.0755
  Clark, WA                                                             
Victoria, TX...................................................   0.8958
  Victoria, TX                                                          
Vineland-Millville-Bridgeton, NJ...............................   0.9720
  Cumberland, NJ                                                        
Visalia-Tulare-Porterville, CA.................................   1.0351
  Tulare, CA                                                            
Waco, TX.......................................................   0.7783
  McLennan, TX                                                          
Washington, DC-MD-VA...........................................   1.0928
  District of Columbia, DC                                              
  Calvert, MD                                                           
  Charles, MD                                                           
  Frederick, MD                                                         
  Montgomery, MD                                                        
  Prince Georges, MD                                                    
  Alexandria City, VA                                                   
  Arlington, VA                                                         
  Fairfax, VA                                                           
  Fairfax City, VA                                                      
  Falls Church City, VA                                                 
  Loudoun, VA                                                           
  Manassas City, VA                                                     
  Manassas Park City, VA                                                
  Prince William, VA                                                    
  Stafford, VA                                                          
Waterloo-Cedar Falls, IA.......................................   0.8884
  Black Hawk, IA                                                        
  Bremer, IA                                                            
Wausau, WI.....................................................   0.9709
  Marathon, WI                                                          
West Palm Beach-Boca Raton-Delray Beach, FL....................   1.0095
  Palm Beach, FL                                                        
Wheeling, WV-OH................................................   0.8035
  Belmont, OH                                                           
  Marshall, WV                                                          
  Ohio, WV                                                              
Wichita, KS....................................................   0.9770
  Butler, KS                                                            
  Harvey, KS                                                            
  Sedgwick, KS                                                          
Wichita Falls, TX..............................................   0.8139
  Wichita, TX                                                           
Williamsport, PA...............................................   0.8829
  Lycoming, PA                                                          
Wilmington, DE-NJ-MD...........................................   1.0825
  New Castle, DE                                                        
  Cecil, MD                                                             
  Salem, NJ                                                             
Wilmington, NC.................................................   0.8677
  New Hanover, NC                                                       
Worcester-Fitchburg-Leominster, MA.............................   1.0782
  Worcester, MA                                                         
Yakima, WA.....................................................   1.0070
  Yakima, WA                                                            
York, PA.......................................................   0.9008
  Adams, PA                                                             
  York, PA                                                              
Youngstown-Warren, OH..........................................   0.9826
  Mahoning, OH                                                          
  Trumbull, OH                                                          
Yuba City, CA..................................................   1.0220
  Sutter, CA                                                            
  Yuba, CA                                                              
Yuma, AZ.......................................................   0.8850
  Yuma, AZ                                                              
------------------------------------------------------------------------


                 Table IIIb.--Wage Index for Rural Areas                
------------------------------------------------------------------------
                      Non-urban areas                         Wage index
------------------------------------------------------------------------
ALABAMA....................................................       0.7121
ALASKA.....................................................       1.3372
ARIZONA....................................................       0.8724
ARKANSAS...................................................       0.6979
CALIFORNIA.................................................       1.0122
COLORADO...................................................       0.8382
CONNECTICUT................................................       1.1857
DELAWARE...................................................       0.8537
FLORIDA....................................................       0.8704
GEORGIA....................................................       0.7769
HAWAII.....................................................       0.9579
IDAHO......................................................       0.8917
ILLINOIS...................................................       0.7696
INDIANA....................................................       0.7830
IOWA.......................................................       0.7517
KANSAS.....................................................       0.7426
KENTUCKY...................................................       0.7781
LOUISIANA..................................................       0.7355
MAINE......................................................       0.8294
MARYLAND...................................................       0.8029
MASSACHUSETTS..............................................       1.1607
MICHIGAN...................................................       0.8893
MINNESOTA..................................................       0.8288
MISSISSIPPI................................................       0.6935
MISSOURI...................................................       0.7240
MONTANA....................................................       0.8226
NEBRASKA...................................................       0.6967
NEVADA.....................................................       0.9663
NEW HAMPSHIRE..............................................       0.9508
NEW JERSEY.................................................          \1\
NEW MEXICO.................................................       0.8289
NEW YORK...................................................       0.8371
NORTH CAROLINA.............................................       0.7992
NORTH DAKOTA...............................................       0.7688
OHIO.......................................................       0.8438
OKLAHOMA...................................................       0.7384
OREGON.....................................................       0.9643
PENNSYLVANIA...............................................       0.8620
PUERTO RICO................................................    \2\0.4316
RHODE ISLAND...............................................          \1\
SOUTH CAROLINA.............................................       0.7678
SOUTH DAKOTA...............................................       0.7179
TENNESSEE..................................................       0.7316
TEXAS......................................................       0.7578
UTAH.......................................................       0.8977
VERMONT....................................................       0.8997
VIRGINIA...................................................       0.7784
VIRGIN ISLANDS.............................................    \2\1.0000
WASHINGTON.................................................       0.9597
WEST VIRGINIA..............................................       0.8482
WISCONSIN..................................................       0.8459
WYOMING....................................................       0.8423
------------------------------------------------------------------------
\1\All counties within State are classified urban.                      
[[Page 8405]]                                                           
                                                                        
\2\Approximate value for area.                                          


           Table IV.--Cost Reporting Year Adjustment Factor\1\          
------------------------------------------------------------------------
                                                                 The    
          If the HHA cost reporting period begins             adjustment
                                                              factor is 
------------------------------------------------------------------------
August 1, 1993.............................................       1.0042
September 1, 1993..........................................       1.0085
October 1, 1993............................................       1.0126
November 1, 1993...........................................       1.0169
December 1, 1993...........................................       1.0211
January 1, 1994............................................       1.0254
February 1, 1994...........................................       1.0299
March 1, 1994..............................................       1.0340
April 1, 1994..............................................       1.0385
May 1, 1994................................................       1.0430
June 1, 1994...............................................       1.0475
------------------------------------------------------------------------
\1\Based on compounded projected market basket inflation rates of 5.10  
  percent for 1994 and 5.30 percent for 1995.                           

V. Impact Statement

    For notices such as this, we generally prepare a regulatory 
flexibility analysis that is consistent with the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 through 612) unless the Secretary certifies 
that this notice will not have a significant economic impact on a 
substantial number of small entities. For purposes of the RFA, all HHAs 
are treated as small entities.
    This notice with comment period sets forth a revised schedule of 
HHA per-visit cost limits and A&G add-on amounts for hospital-based 
HHAs for cost reporting periods beginning on or after July 1, 1993. (We 
note that, in accordance with section 13564(b) of OBRA '93, the A&G 
add-on for hospital-based HHAs is eliminated effective for cost 
reporting periods beginning on or after October 1, 1993.) In addition, 
this notice announces the provisions of section 13564(a) of OBRA '93, 
which provides for a delay in the updates of the HHA per-visit cost 
limits until cost reporting periods beginning on or after July 1, 1996.
    As discussed below, the aggregate impact of revising the schedule 
of limits effective for cost reporting periods beginning on or after 
July 1, 1993 is not significant. In contrast, the requirement under 
section 13564(a) of OBRA '93 that these limits remain in place for cost 
reporting periods beginning before July 1, 1996 will result in 
significant Federal cost savings. The impact of this OBRA '93 provision 
also is discussed further below. This notice explains the revised 
methodology for calculating the HHA per-visit cost limits that result 
from the provisions of OBRA '93. We do not believe that merely 
explaining the results of these provisions in this notice will have a 
significant effect on a substantial number of small entities. 
Therefore, we have determined and the Secretary certifies that a 
regulatory flexibility analysis under the RFA is not required.
    However, to the extent that a legislative provision being announced 
by a notice such as this may have a significant effect on beneficiaries 
or providers or may be viewed as controversial, we believe that we 
should address any potential concerns. In this instance, we believe it 
is desirable to inform the public of our estimate of the substantial 
budgetary effect of the statutory requirement that there be no update 
in the HHA per-visit cost limits until cost reporting periods beginning 
on or after July 1, 1996.

A. Effects of Revised Cost Limits for Cost Reporting Periods Beginning 
On or After July 1, 1993 and Before July 1, 1994

    In response to comments on the schedule of limits set forth in our 
July 8, 1993 notice with comment period, we decided to validate the 
database used in calculating the limits. As discussed in section II.A.2 
of this notice, we determined that data were missing from a large 
number of HHAs and that duplicate cost reports were used in the 
calculation of the hospital-based add-on. Consequently, it was 
necessary to recalculate the limits and add-on amounts effective for 
cost reporting periods beginning on or after July 1, 1993. This notice 
sets forth revised per-visit cost limits and add-on amounts for 
hospital-based HHAs for cost reporting periods beginning on or after 
July 1, 1993. Section II.A.2 of this notice contains tables that 
illustrate the effects of using the revised database to calculate the 
limits and the A&G add-on amounts. As the tables illustrate, the per-
visit cost limits and A&G add-on amounts change for each discipline. 
Most notable is the increase in the limits and add-on amounts for 
skilled nursing care and home health aide visits, since these visits 
constitute the great majority of covered HHA visits. We estimate that 
the aggregate impact of these changes on Medicare spending for HHA care 
will be as follows:

                  Table 1.--Impact of Revised Limits\1\                 
------------------------------------------------------------------------
                          Fiscal year                             Costs 
------------------------------------------------------------------------
1994...........................................................       10
1995...........................................................       10
1996...........................................................       10
1997...........................................................      10 
------------------------------------------------------------------------
\1\All figures are rounded to the nearest 10 million.                   

    We are unable to estimate the effects of these changes on 
individual HHAs. In general, we believe that most HHAs will experience 
small revenue increases under the revised limits; the degree of that 
increase will vary depending on the proportion of the HHA's revenues 
that come from the Medicare program, the distribution of services 
provided by the HHA, and the HHA's ability to operate with the cost 
limits.

B. Effect of Cost Limits On Cost Reporting Periods Beginning On or 
After July 1, 1994 and Before July 1, 1996

    In accordance with section 13564(a) of OBRA '93, this notice with 
comment period specifies that there will be no changes in the per-visit 
cost limits for home health services for cost reporting periods 
beginning on or after July 1, 1994, and before July 1, 1996, except as 
may be necessary to take into account the elimination of the A&G add-on 
for hospital-based HHAs. We estimate that this statutory provision will 
result in the following savings to the Medicare program:

        Table 2.--Impact of Delay in the Update of HHA Limits\1\        
------------------------------------------------------------------------
                          Fiscal year                            Savings
------------------------------------------------------------------------
1994..........................................................      $  0
1995..........................................................       130
1996..........................................................       330
1997..........................................................      100 
------------------------------------------------------------------------
\1\All figures are rounded to the nearest $10 million.                  

    As illustrated in Table 3 below, the delay in updating the cost 
limits until July 1, 1996, will result in an increase in the number of 
HHAs exceeding the HHA cost limits in all categories. Table 3 below 
shows the impact of these changes.

             Table 3.--Agencies Exceeding the Cost Limits\1\            
------------------------------------------------------------------------
                                                    Exceeding  Exceeding
                                          HHAs in      the        the   
                                           Model    limits as  limits as
                                                    of 7/1/93  of 7/1/95
------------------------------------------------------------------------
Freestanding HHAs......................       2992        763       1329
  Urban................................       2001        510        911
  Rural................................        991        253        418
Hospital-based HHAs....................       1053        408        856
  Urban................................        447        173        383
[[Page 8406]]                                                           
                                                                        
  Rural................................        606        235       473 
------------------------------------------------------------------------
\1\All figures are based on revised cost limits as published in this    
  notice for cost reporting periods beginning on or before July 1, 1993 
  and before July 1, 1994.                                              

    Again, we are unable to identify the effects of these provisions on 
individual HHAs. However, we anticipate that overall HHA payments for 
FY 1995 through FY 1997 will be approximately 0.9 percent, 2.0 percent, 
and 0.5 percent less, respectively, than they would have been in those 
years if the OBRA '93 provisions were not in effect. The effects of 
this reduction on the total revenues of individual HHAs will depend on 
the HHA's ability to operate within the cost limits and on the 
proportion of the HHA's revenues that come from the Medicare program. 
We estimate that the delay in updating the limits will not result in a 
significant number of facilities' total revenues being increased or 
reduced by 3 percent or more from the revised limits effective for cost 
reporting periods beginning on July 1, 1993, as set forth in this 
notice, adjusted for inflation.
    Section 1102(b) of the Act requires the Secretary to prepare a 
regulatory impact analysis if a notice such as this may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. Such an 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 with fewer than 100 beds 
located outside of a Metropolitan Statistical Area.
    We have not prepared a rural impact statement since we have 
determined and the Secretary certifies that this final notice will not 
have a significant economic impact on the operations of a substantial 
number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

VI. Other Required Information

A. Waiver of Proposed Notice and 30-Day Delay in the Effective Date

    In adopting notices such as this, we ordinarily publish a proposed 
notice in the Federal Register with a 60-day period for public comment 
as required under section 1871(b)(1) of the Act. We also normally 
provide a delay of 30 days in the effective date for documents such as 
this. However, we may waive these procedures if we find good cause that 
prior notice and comment or a delay in the effective date are 
impracticable, unnecessary, or contrary to the public interest.
    This notice revises the per-visit limits effective for cost 
reporting periods beginning on or after July 1, 1993. We believe the 
revised limits will be beneficial to HHAs. Moreover, we have revised 
the limits based on public comments on our July 8, 1993 notice with 
comment period.
    In addition, as discussed above, before the enactment of OBRA '93, 
section 1861(v)(1)(L)(iii) of the Act required that the HHA per-
discipline cost limits be updated annually no later than July 1 of each 
year. However, section 13564(a)(1) of OBRA '93 specifies that there be 
no changes in the HHA cost limits (except as may be necessary to take 
into account the elimination of the A&G add-on for hospital-based HHAs) 
for cost reporting periods beginning on or after July 1, 1994, and 
before July 1, 1996. Section 13564(a)(2) of OBRA '93 amended section 
1861(v)(1)(L)(iii) of the Act to delay the next required update of the 
HHA limits until July 1, 1996.
    Thus, in conformance with the clear direction of section 13564(a) 
of OBRA '93, this notice announces the new HHA provisions and explains 
the effects of these provisions on the methodology used in calculating 
the HHA cost limits. We have made no changes in this methodology beyond 
those directly required by OBRA '93. Moreover, section 13564(a) of OBRA 
'93 mandates that these provisions are effective beginning with cost 
reporting periods beginning on or after July 1, 1994. Because many of 
the provisions in this notice announce, and explain the impact of, 
changes made by statute that are already effective, we believe it is 
unnecessary to publish a proposed notice or delay the effective date.
    In summary, the only discretionary aspect of this notice is the 
revision of the schedule of HHA cost limits effective for cost 
reporting periods beginning on or after July 1, 1993. As noted above, 
this change is being made in response to public comment and is clearly 
beneficial to HHAs. Publishing a proposed rule or delaying the 
effective date would postpone the correction of errors in the database 
used to compute the HHA cost limits. Thus, we have concluded that in 
this instance, it would be impracticable, unnecessary, and contrary to 
the public interest to publish a proposed notice or to provide for a 
30-day delay in the effective date of this notice. Therefore, we find 
good cause to waive publication of a proposed notice and the 30-day 
delay in effective date. However, we are providing a 60-day period for 
public comment, as indicated at the beginning of this notice.

B. Paperwork Reduction Act

    This notice with comment period does not impose information 
collection requirements. Consequently, it need not be reviewed by the 
Office of Management and Budget under the authority of the Paperwork 
Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

C. Requests for Data From the Public

    In order to respond promptly to public requests for data used in 
calculating the HHA cost limits, we have set up a process under which 
commenters can gain access to the raw data on an expedited basis. The 
HHA database is available on computer tape format or diskette for $680. 
Anyone wishing to purchase data tapes or diskettes should submit a 
written request along with a company check or money order (payable to 
HCFA-PUF) to cover the cost, to the following address: Health Care 
Financing Administration, Public Use Files, Accounting Division, P.O. 
Box 7520, Baltimore, Maryland 21207-0520, (410) 597-5151.

D. Public Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the DATES 
section of this notice, and, if we proceed with a subsequent document, 
we will respond to the comments in that document.

    Authority: (Sections 1102, 1814(b), 1861(v)(1)(A) and (v)(1)(L), 
1866(a), and 1871 of the Social Security Act (42 U.S.C. 1302, 
1395f(b), 1395x(v)(1)(A) and (v)(1)(L), 1395cc(a), and 1395hh); 
section 13564(a) of Public Law 103-66 (42 U.S.C. 1395x(note)) and 42 
CFR 413.30.)

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance)

    Dated: October 11, 1994.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
    Dated: November 4, 1994.
Donna E. Shalala,
Secretary.
[FR Doc. 95-3526 Filed 2-13-95; 8:45 am]
BILLING CODE 4120-01-P