[Federal Register Volume 62, Number 86 (Monday, May 5, 1997)]
[Notices]
[Pages 24483-24491]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11521]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[BPD-816-N]
RIN 0938-AH14


Medicare Program; Update of the Reasonable Compensation 
Equivalent Limits for Services Furnished by Physicians

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

ACTION: Notice.

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SUMMARY: This notice sets forth updated payment limits on the amount of 
allowable compensation for services furnished by physicians to 
providers that are not covered by the prospective payment system or per 
resident payments for graduate medical education. These services are 
paid by Medicare on a reasonable cost basis. The revised reasonable 
compensation equivalent limits are based on updated economic index data 
and replace the limits that were published in the Federal Register on 
February 20, 1985 (50 FR 7123).

EFFECTIVE DATE: These limits are effective for cost reporting periods 
beginning on or after May 5, 1997.

FOR FURTHER INFORMATION CONTACT: Ward Pleines (410) 966-4528.

SUPPLEMENTARY INFORMATION:

I. Background

    Under the Medicare program, payment for services furnished by a 
physician is made under either the Hospital Insurance Program (Part A) 
or the Supplementary Medical Insurance Program (Part B), depending on 
the type of services furnished. Physicians' charges for medical or 
surgical services to individual Medicare patients generally are covered 
under Part B on a fee-for-service basis, under the Medicare physician 
fee schedule, in accordance with section 1848 of the Social Security 
Act (the Act). On the other hand, the compensation that physicians 
receive from or through a provider for services that benefit patients 
generally (for example, administrative services, committee work, 
teaching, and supervision) can be covered under Part A or Part B, 
depending on the provider's setting.
    Most hospitals are paid for inpatient hospital services under the 
prospective payment system. Before July 1, 1985, teaching hospitals 
were paid for graduate medical education (GME) costs on a reasonable 
cost basis. Section 9202 of the Consolidated Omnibus Budget 
Reconciliation Act (Public Law 99-272), enacted on April 7, 1986, added 
section (h) to section 1886 of the Act. That section changed the 
payment methodology for the direct costs of GME programs from a 
reasonable cost methodology to a methodology in which payment is fixed 
in advance based on the hospital's per resident amount. The change was 
effective for cost reporting periods beginning on or after July 1, 1985 
(42 CFR 413.86).
    The reasonable compensation equivalent (RCE) limits set forth in 
this notice do not apply to costs of physician compensation that are 
attributable to furnishing inpatient hospital services paid for under 
the hospital inpatient prospective payment system or that are 
attributable to GME costs. Further, compensation that a physician 
receives for activities that may not be paid for under either Part A or 
Part B are not considered in applying these limits. However, these 
limits will apply to the costs providers incur in compensating 
physicians for services to the provider in the following facilities:
     Hospitals and units of hospitals not subject to the 
prospective payment system, for both inpatient and outpatient services.
     Hospitals subject to the prospective payment system, but 
only for outpatient hospital services paid on a reasonable cost basis.
     Comprehensive outpatient rehabilitation facilities 
(CORFs).
     Skilled nursing facilities (SNFs).
    As required by section 1887(a)(2)(B) of the Act, allowable 
compensation for services furnished by physicians to providers that are 
paid by Medicare on a reasonable cost basis is subject to RCE limits. 
Under these limits, payment is determined based on the lower of the 
actual cost of the services to the provider (that is, the compensation 
of the physician, whatever the form) or a reasonable compensation 
equivalent. For purposes of applying the RCE limits, physician 
compensation costs means monetary payments, fringe benefits, deferred 
compensation and any other items of value (excluding office space or 
billing and collection services), a provider or other organization 
furnishes a physician in return for the physician's services (42 CFR 
405.481(a)).
    If a physician receives any compensation from a provider for his or 
her physician services to the provider (that is, those services that 
benefit patients generally), payment to those affected providers for 
the costs of such compensation is subject to the RCE limits. The RCE 
limits are not applied to payment for services that are identifiable 
medical or surgical services to individual patients and paid for under 
the physician fee schedule, even if the physician agrees to accept 
compensation (for example, from a hospital) for those services. 
(However, payment to teaching hospitals that have elected to be paid 
for these services on a reasonable cost basis in accordance with 
section 1861(b)(7) of the Act is subject to the limits.) The limits 
apply equally to all physician services to providers that are payable 
on a reasonable cost basis under Medicare.
    On March 2, 1983, we published in the Federal Register (48 FR 8902) 
the RCE limits (and the methodology used to calculate those limits) 
that were applicable to cost reporting periods beginning during 
calendar years 1982 and 1983. As part of that same publication, we 
issued regulations at Sec. 405.482 that established a general authority 
to develop, publish and apply limits.
    More specifically, Sec. 405.482(f) requires that before the start 
of a period to which a set of limits will be applied, we will publish a 
notice in the Federal

[[Page 24484]]

Register that sets forth the limits and explains how they were 
calculated. If the limits are merely updated by applying the most 
recent economic index data without revising the methodology, then the 
revised limits will be published in a notice in the Federal Register 
without prior publication of a proposal or public comment period.
    Thus, because we are calculating the 1997 limits using the same 
methodology that was used to calculate the limits published on March 2, 
1983 (48 FR 8919-8923), and February 20, 1985 (50 FR 7123), we are now 
publishing these revised limits in final in this notice. The 
methodology for establishing reasonable compensation equivalent limits 
is based on an internal working paper (``A Methodology for 
Determination of Reasonable FTE Compensation for Hospital-Based 
Physicians'' by James R. Cantwell and William J. Sobaski (Working Paper 
No. OR-32, revised December 1982)) developed by HCFA's Office of 
Research and Demonstrations. Copies of this paper are available on 
request from: ORD Publication, Office of Research and Demonstrations, 
Health Care Financing Administration, Room C3-20-11, 7500 Security 
Boulevard, Baltimore, MD 21244, (410) 786-6588.
    Our methodology for establishing reasonable levels of compensation 
includes five steps, as follows:
     We estimated the national average (mean) income for all 
physicians (Y in formula below) using 1979 physician net incomes from 
the American Medical Association (AMA) Periodic Survey of Physicians 
(PSP), published by the AMA in its Profile of Medical Practices, 1981.
     We then projected physicians' 1979 base net income levels 
to the appropriate future year to account for changes in net income 
levels occurring after the period for which we have data. To make this 
calculation, we needed to determine an appropriate inflation factor to 
project future year estimated net incomes on the basis of 1970 to 1980 
data. We believe we can achieve the most accurate projection by using 
the historical relationship (1970 through 1980) between physician 
incomes and the Consumer Price Index (CPI), and projecting this using 
forecasts of the CPI for future years.
     Third, we determined the relationship between average net 
income for all physicians (estimated in the first step, above) and net 
income of certain categories of specialist physicians that are commonly 
compensated by providers for services furnished to Medicare 
beneficiaries. This resulted in separate specialty adjusters for nine 
physician specialties.
     Using the specialty-specific adjusters, we also adjusted 
for differences in costs between types of geographic locations.
     Finally, we calculated the average hours practiced per 
year by specialty and location, which we then related to a standard 
full-time equivalent (FTE) work year of 2080 hours. We used these 
ratios to weight the specialty-location adjusters from the previous 
step.
    The updated RCE limits set forth in this notice were calculated 
using the forecasting equation that appears on page five of Working 
Paper No. OR-32, adjusted to reflect the rebasing of the CPI that 
occurred between 1967 and 1982-1984:

yt=a1D+a2CPIt

a1D represents special circumstances that might impact 
physician earnings other than the basic relationship with CPI
a2CPIt is the historic relationship of physician 
earnings to the CPI.
D=a dummy variable taking a value of 1 for years 1971 through 1973 and 
0 otherwise
CPI=Consumer Price Index for all urban consumers in year 1 (base year).

    For 1997, the estimating equation takes on the following values:

D=0
CPIt=162.0*

    *Calculated from the Congressional Budget forecasts of changes 
in CPI-U for 1996 and 1997 as presented in Table 1 of ``The Economic 
and Budget Outlook: An Update,'' August 1996, and adjusted by a 
multiplicative factor of 2.994225 to convert the current index value 
which uses 1982 through 1984 as 100, to one equivalent to the 1967-
based index value that was used in previous equations.

Therefore, when t=1995,
Yt=343.684 x 1.620 x 2.994225 x 100
Yt=$166,707.

    For 1997, $166,707 is the estimated net income for all physicians. 
After applying the specialty-locality adjusters, we are able to produce 
an array of estimated 1997 average annual FTE compensation levels for 
nine specialty categories by type of location. We are setting the 
updated RCE limits, adjusted by the proportion of an FTE year actually 
worked, at these annual incomes.

II. Application of RCE Limits

    We will use the RCE limits to compute Medicare payment when the 
physician is compensated by a provider that is subject to the RCE 
limits in some or all of its areas. We will also use these limits when 
the physician is compensated by any other related organization for 
physician administrative, supervisory, and other provider services paid 
under Medicare. In applying the RCE limits, the intermediary will 
assign each compensated physician to the most appropriate specialty 
category. If no specialty category is appropriate (for example, in 
determining the reasonable cost for an emergency room physician), the 
intermediary will use the reasonable compensation equivalent level for 
the ``Total'' category, which is based on income data for all 
physicians. The intermediary will determine the appropriate geographic 
area classification given in Table II of section IV of this notice.
    If the physician's contractual compensation covers all duties, 
activities, and services furnished to the provider and to its patients, 
and the physician is employed full-time, the appropriate specialty 
compensation limit will be used and adjusted by the physician's 
allocation agreement to arrive at the program's share of allowable 
costs as physician compensation costs. In the absence of an allocation 
agreement, we generally will assume that 100 percent of the 
compensation was related to services paid for under the physician fee 
schedule, and that there are no allowable costs for the physician's 
services to the provider.
    If a physician's compensation from the provider represents payment 
only for services that benefit patients generally (that is, the 
physician bills fees for all services furnished to individual 
patients), then the appropriate specialty compensation limit will be 
used. If a physician is employed by a provider to furnish services of 
general benefit to patients on other than a full time basis, the 
reasonable compensation limit will be adjusted upward or downward to 
reflect the percentage of time his or her actual hours related to a 
full work year of 2,080 hours.

III. Exceptions to the RCE Limits

    Some providers, particularly but not exclusively small or rural 
hospitals, may be unable to recruit or maintain an adequate number of 
physicians at a compensation level within the prescribed limits. In 
accordance with section 1887 (a)(2)(C) of the Act, if a provider is 
able to demonstrate to the intermediary its inability to recruit or 
maintain physicians at a compensation level allowable under the RCE 
limits (as documented, for example, by unsuccessful advertising through 
national medical or health care

[[Page 24485]]

publications), then the intermediary may grant an exception to the RCE 
limits established under these rules.

IV. Geographic Area Classifications for RCE Limits

    We adjust the RCE limits to account for differences in salary 
levels by location as well as by specialty. In our methodology for 
establishing limits, and in the limits as set forth in Table I, we have 
classified geographic areas into three types: nonmetropolitan areas, 
metropolitan areas less than one million, and metropolitan areas 
greater than one million.
    As we do for purposes of the hospital inpatient prospective payment 
system and the physician fee schedule, we use the most current 
Metropolitan Statistical Area (MSA) designations for purposes of 
establishing the RCE limits. In New England, we use New England County 
Metropolitan Areas (NECMAs) for this purpose.
    Table II identifies by type of location the geographic areas 
affected. It enables providers, physicians, Medicare fiscal 
intermediaries, and other members of the public to determine which RCE 
limit level will apply in specific areas. The table lists all MSAs and 
their constituent counties, and identifies whether their population is 
less than or greater than one million. (MSAs with populations greater 
than one million are designated by asterisks.) All counties not listed 
in Table II, and all other affected U.S. possessions and territories 
not part of a State, are considered rural areas.

  Table I.--Estimates of FTE Annual Average Net Compensation Levels for 
                                  1997*                                 
------------------------------------------------------------------------
                                              Metropolitan  Metropolitan
                                  Nonmetro-    areas less       areas   
           Specialty               politan      than one    greater than
                                    areas        million     one million
------------------------------------------------------------------------
Total..........................     $138,400      $148,400      $153,400
GP/FP..........................      123,400       118,400       120,000
Int. Med.......................      130,000       133,400       143,400
Surgery........................      158,400       176,700       180,000
Pediatrics.....................      113,400       131,700       121,700
OB/GYN.........................      173,400       168,400       170,000
Radiology......................      188,400       200,100       195,000
Psychiatry.....................      120,000       123,400       133,400
Anesthesiology.................      145,000       173,400       173,400
Pathology......................      180,000       190,000      186,700 
------------------------------------------------------------------------
*All figures are rounded to the nearest $100. est. CPI 1997=162.0.      

Table II.--Geographic Area Classification for RCE Limits

Abilene, TX
    Taylor, TX
Aguadilla, PR
    Aguada, PR
    Aguadilla, PR
    Moca, PR
Akron, OH
    Portage, OH
    Summit, OH
Albany, GA
    Dougherty, GA
    Lee, GA
Albany-Schenectady-Troy, NY
    Albany, NY
    Montgomery, NY
    Rensselaer, NY
    Saratoga, NY
    Schenectady, NY
    Schoharie, NY
Albuquerque, NM
    Bernalillo, NM
    Sandoval, NM
    Valencia, NM
Alexandria, LA
    Rapides, LA
Allentown-Bethlehem-Easton, PA
    Carbon, PA
    Lehigh, PA
    Northampton, PA
Altoona, PA
    Blair, PA
Amarillo, TX Potter, TX
    Randall, TX
Anchorage, AK
    Anchorage, AK
Ann Arbor, MI
    Lenawee, MI
    Livingston, MI
    Washtenaw, MI
Anniston, AL
    Calhoun, AL
Appleton-Oshkosh-Neenah, WI
    Calumet, WI
    Outagamie, WI
    Winnebago, WI
Arecibo, PR
    Arecibo, PR
    Camuy, PR
    Hatillo, PR
Asheville, NC
    Buncombe, NC
    Madison, NC
Athens, GA
    Clarke, GA
    Madison, GA
    Oconee, GA
*Atlanta, GA
    Barrow, GA
    Bartow, GA
    Carroll, 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
    Pickens, GA
    Rockdale, GA
    Spalding, GA
    Walton, GA
Atlantic City-Cape May, NJ
    Atlantic City, NJ
    Cape May, NJ
Augusta-Aiken, GA-SC
    Columbia, GA
    McDuffie, GA
    Richmond, GA
    Aiken, SC
    Edgefield, SC
Austin-San Marcos, TX
    Bastrop, TX
    Caldwell, TX
    Hays, TX
    Travis, TX
    Williamson, TX
Bakersfield, CA
    Kern, CA
*Baltimore, MD
    Anne Arundel, MD
    Baltimore, MD
    Baltimore City, MD
    Carroll, MD
    Harford, MD
    Howard, MD
    Queen Annes, MD
Bangor, ME
    Penobscot, ME
Barnstable-Yarmouth, MA

[[Page 24486]]

    Barnstable, MA
Baton Rouge, LA
    Ascension, LA
    East Baton Rouge, LA
    Livingston, LA
    West Baton Rouge, LA
Beaumont-Port Arthur, TX
    Hardin, TX
    Jefferson, TX
    Orange, TX
Bellingham, WA
    Whatcom, WA
Benton Harbor, MI
    Berrien, MI
*Bergen-Passaic, NJ
    Bergen, NJ
    Passaic, NJ
Billings, MT
    Yellowstone, MT
Biloxi-Gulfport-Pascagoula, MS
    Hancock, MS
    Harrison, MS
    Jackson, MS
Binghamton, NY
    Broome, NY
    Tioga, NY
Birmingham, AL
    Blount, AL
    Jefferson, AL
    St. Clair, AL
    Shelby, AL
Bismarck, ND
    Burleigh, ND
    Morton, ND
Bloomington, IN
    Monroe, IN
Bloomington-Normal, IL
    McLean, IL
Boise City, ID
    Ada, ID
    Canyon, ID
*Boston-Brockton-Nashua, MA-NH
    Bristol, MA
    Essex, MA
    Middlesex, MA
    Norfolk, MA
    Plymouth, MA
    Suffolk, MA
    Worcester, MA
    Hillsborough, NH
    Merrimack, NH
    Rockingham, NH
    Strafford, NH
Boulder-Longmont, CO
    Boulder, CO
Brazoria, TX
    Brazoria, TX
Bremerton, WA
    Kitsap, WA
Brownsville-Harlingen-San Benito, TX
    Cameron, TX
Bryan-College Station, TX
    Brazos, TX
*Buffalo-Niagara Falls, NY
    Erie, NY
    Niagara, NY
Burlington, VT
    Chittenden, VT
    Franklin, VT
    Grand Isle, VT
Caguas, PR
    Caguas, PR
    Cayey, PR
    Cidra, PR
    Gurabo, PR
    San Lorenzo, PR
Canton-Massillon, OH
    Carroll, OH
    Stark, OH
Casper, WY
    Natrona, WY
Cedar Rapids, IA
    Linn, IA
Champaign-Urbana, IL
    Champaign, IL
Charleston-North Charleston, SC
    Berkeley, SC
    Charleston, SC
    Dorchester, SC
Charleston, WV
    Kanawha, WV
    Putnam, WV
*Charlotte-Gastonia-Rock Hill, NC-SC
    Cabarrus, NC
    Gaston, NC
    Lincoln, NC
    Mecklenburg, NC
    Rowan, NC
    Union, NC
    York, SC
Charlottesville, VA
    Albemarle, VA
    Charlottesville City, VA
    Fluvanna, VA
    Greene, VA
Chattanooga, TN-GA
    Catoosa, GA
    Dade, GA
    Walker, GA
    Hamilton, TN
    Marion, TN
Cheyenne, WY
    Laramie, WY
*Chicago, IL
    Cook, IL
    De Kalb, IL
    Du Page, IL
    Grundy, IL
    Kane, IL
    Kendall, IL
    Lake, IL
    McHenry, IL
    Will, IL
Chico-Paradise, CA
    Butte, CA
*Cincinnati, OH-KY-IN
    Dearborn, IN
    Ohio, IN
    Boone, KY
    Campbell, KY
    Gallatin, KY
    Grant, KY
    Kenton, KY
    Pendleton, KY
    Brown, OH
    Clermont, OH
    Hamilton, OH
    Warren, OH
Clarksville-Hopkinsville, TN-KY
    Christian, KY
    Montgomery, TN
*Cleveland-Lorain-Elyria, OH
    Ashtabula, OH
    Cuyahoga, OH
    Geauga, OH
    Lake, OH
    Lorain, OH
    Medina, OH
Colorado Springs, CO
    El Paso, CO
Columbia, MO
    Boone, MO
Columbia, SC
    Lexington, SC
    Richland, SC
Columbus, GA-AL
    Russell, AL
    Chattanoochee, GA
    Harris, GA
    Muscogee, GA
*Columbus, OH
    Delaware, OH
    Fairfield, OH
    Franklin, OH
    Licking, OH
    Madison, OH
    Pickaway, OH
Corpus Christi, TX
    Nueces, TX
    San Patricio, TX
Cumberland, MD-WV
    Allegany, MD
    Mineral, WV
*Dallas, TX
    Collin, TX
    Dallas, TX
    Denton, TX
    Ellis, TX
    Henderson, TX
    Hunt, TX
    Kaufman, TX
    Rockwall, TX
Danville, VA
    Danville City, VA
    Pittsylvania, VA
Davenport-Rock Island-Moline, IA-IL
    Scott, IA
    Henry, IL
    Rock Island, IL
Dayton-Springfield, OH
    Clark, OH
    Greene, OH
    Miami, OH
    Montgomery, OH
Daytona Beach, FL
    Flagler, FL
    Volusia, FL
Decatur, AL
    Lawrence, AL
    Morgan, AL
Decatur, IL
    Macon, IL
*Denver, CO
    Adams, CO
    Arapahoe, CO
    Denver, CO
    Douglas, CO

[[Page 24487]]

    Jefferson, CO
Des Moines, IA
    Dallas, IA
    Polk, IA
    Warren, IA
*Detroit, MI
    Lapeer, MI
    Macomb, MI
    Monroe, MI
    Oakland, MI
    St. Clair, MI
    Wayne, MI
Dothan, AL
    Dale, AL
    Houston, AL
Dover, DE
    Kent, DE
Dubuque, IA
    Dubuque, IA
Duluth-Superior, MN-WI
    St. Louis, MN
    Douglas, WI
Dutchess County, NY
    Dutchess, NY
Eau Claire, WI
    Chippewa, WI
    Eau Claire, WI
El Paso, TX
    El Paso, TX
Elkhart-Goshen, IN
    Elkhart, IN
Elmira, NY
    Chemung, NY
Enid, OK
    Garfield, OK
Erie, PA
    Erie, PA
Eugene-Springfield, OR
    Lane, OR
Evansville-Henderson, IN-KY
    Posey, IN
    Vanderburgh, IN
    Warrick, IN
    Henderson, KY
Fargo-Moorhead, ND-MN
    Clay, MN
    Cass, ND
Fayetteville, NC
    Cumberland, NC
Fayetteville-Springdale-Rogers, AR
    Benton, AR
    Washington, AR
Flint, MI
    Genesee, MI
Florence, AL
    Colbert, AL
    Lauderdale, AL
Florence, SC
    Florence, SC
Fort Collins-Loveland, CO
    Larimer, CO
*Ft. Lauderdale, FL
    Broward, FL
Fort Myers-Cape Coral, FL
    Lee, FL
Fort Pierce-Port St. Lucie, FL
    Martin, FL
    St. Lucie, FL
Fort Smith, AR-OK
    Crawford, AR
    Sebastian, AR
    Sequoyah, OK
Fort Walton Beach, FL
    Okaloosa, FL
    Fort Wayne, IN
    Adams, IN
    Allen, IN
    DeKalb, IN
    Huntington, IN
    Wells, IN
    Whitley, IN
*Forth Worth-Arlington, TX
    Hood, TX
    Johnson, TX
    Parker, TX
    Tarrant, TX
Fresno, CA
    Fresno, CA
    Madera, CA
Gadsden, AL
    Etowah, AL
Gainesville, FL
    Alachua, FL
Galveston-Texas City, TX
    Galveston, TX
Gary, IN
    Lake, IN
    Porter, IN
Glens Falls, NY
    Warren, NY
    Washington, NY
Goldsboro, NC
    Wayne, NC
Grand Forks, ND-MN
    Polk, MN
    Grand Forks, ND
Grand Rapids-Muskegon-Holland, MI
    Allegan, MI
    Kent, MI
    Muskegon, MI
    Ottawa, MI
Great Falls, MT
    Cascade, MT
Greeley, CO
    Weld, CO
Green Bay, WI
    Brown, WI
*Greensboro-Winston-Salem-High Point, NC
    Alamance, NC
    Davidson, NC
    Davie, NC
    Forsyth, NC
    Guilford, NC
    Randolph, NC
    Stokes, NC
    Yadkin, NC
Greenville, NC
    Pitt, NC
    Greenville-Spartanburg-Anderson, SC
    Anderson, SC
    Cherokee, SC
    Greenville, SC
    Pickens, SC
    Spartanburg, SC
Hagerstown, MD
    Washington, MD
Hamilton-Middletown, OH
    Butler, OH
Harrisburg-Lebanon-Carlisle, PA
    Cumberland, PA
    Dauphin, PA
    Lebanon, PA
    Perry, PA
*Hartford, CT
    Hartford, CT
    Litchfield, CT
    Middlesex, CT
    Tolland, CT
Hickory-Morganton, NC
    Alexander, NC
    Burke, NC
    Caldwell, NC
    Catawba, NC
Honolulu, HI
    Honolulu, HI
Houma, LA
    Lafourche, LA
    Terrebonne, LA
*Houston, TX
    Chambers, TX
    Fort Bend, TX
    Harris, TX
    Liberty, TX
    Montgomery, TX
    Waller, TX
Huntington-Ashland, WV-KY-OH
    Boyd, KY
    Carter, KY
    Greenup, KY
    Lawrence, OH
    Cabell, WV
    Wayne, WV
Huntsville, AL
    Limestone, AL
    Madison, AL
*Indianapolis, IN
    Boone, IN
    Hamilton, IN
    Hancock, IN
    Hendricks, IN
    Johnson, IN
    Madison, IN
    Marion, IN
    Morgan, IN
    Shelby, IN
Iowa City, IA
    Johnson, IA
Jackson, MI
    Jackson, MI
Jackson, MS
    Hinds, MS
    Madison, MS
    Rankin, MS
Jackson, TN
    Madison, TN
Jacksonville, FL
    Clay, FL
    Duval, FL
    Nassau, FL
    St. Johns, FL
Jacksonville, NC
    Onslow, NC
Jamestown, NY
    Chautaqua, NY
Janesville-Beloit, WI
    Rock, WI

[[Page 24488]]

Jersey City, NJ
    Hudson, NJ
Johnson City-Kingsport-Bristol, TN-VA
    Carter, TN
    Hawkins, TN
    Sullivan, TN
    Unicoi, TN
    Washington, TN
    Bristol City, VA
    Scott, VA
    Washington, VA
Johnstown, PA
    Cambria, PA
    Somerset, PA
Joplin, MO
    Jasper, MO
    Newton, MO
Kalamazoo-Battlecreek, MI
    Calhoun, MI
    Kalamazoo, MI
    Van Buren, MI
Kankakee, IL
    Kankakee, IL
*Kansas City, KS-MO
    Johnson, KS
    Leavenworth, KS
    Miami, KS
    Wyandotte, KS
    Cass, MO
    Clay, MO
    Clinton, MO
    Jackson, MO
    Lafayette, MO
    Platte, MO
    Ray, MO
Kenosha, WI
    Kenosha, WI
Killeen-Temple, TX
    Bell, TX
    Coryell, TX
Knoxville, TN
    Anderson, TN
    Blount, TN
    Knox, TN
    Loudon, TN
    Sevier, TN
    Union, TN
Kokomo, IN
    Howard, IN
    Tipton, IN
La Crosse, WI-MN
    Houston, MN
    La Crosse, WI
    Lafayette, LA
    Acadia, LA
    Lafayette, LA
    St. Landry, LA
    St. Martin, LA
Lafayette, IN
    Clinton, IN
    Tippecanoe, IN
Lake Charles, LA
    Calcasieu, LA
Lakeland-Winter Haven, FL
    Polk, FL
Lancaster, PA
    Lancaster, PA
Lansing-East Lansing, MI
    Clinton, MI
    Eaton, MI
    Ingham, MI
Laredo, TX
    Webb, TX
Las Cruces, NM
    Dona Ana, NM
Las Vegas, NV-AZ
    Mohave, AZ
    Clark, NV
    Nye, NV
Lawrence, KS
    Douglas, KS
Lawton, OK
    Comanche, OK
Lewiston-Auburn, ME
    Androscoggin, ME
Lexington, KY
    Bourbon, KY
    Clark, KY
    Fayette, KY
    Jessamine, KY
    Madison, KY
    Scott, KY
    Woodford, KY
Lima, OH
    Allen, OH
    Auglaize, OH
Lincoln, NE
    Lancaster, NE
Little Rock-North Little Rock, AR
    Faulkner, AR
    Lonoke, AR
    Pulaski, AR
    Saline, AR
Longview-Marshall, TX
    Gregg, TX
    Harrison, TX
    Upshur, TX *Los Angeles-Long Beach, CA
Los Angeles, CA
Louisville, KY-IN
    Clark, IN
    Floyd, IN
    Harrison, IN
    Scott, IN
    Bullitt, KY
    Jefferson, KY
    Oldham, KY
Lubbock, TX
    Lubbock, TX
Lynchburg, VA
    Amherst, VA
    Bedford City, VA
    Bedford, VA
    Campbell, VA
    Lynchburg City, VA
Macon, GA
    Bibb, GA
    Houston, GA
    Jones, GA
    Peach, GA
    Twiggs, GA
Madison, WI
    Dane, WI
Mansfield, OH
    Crawford, OH
    Richland, OH
Mayaguez, PR
    Anasco, PR
    Cabo Rojo, PR
    Hormigueros, PR
    Mayaguez, PR
    Sabana Grande, PR
    San German, PR
McAllen-Edinburg-Mission, TX
    Hidalgo, TX
Medford-Ashland, OR Jackson, OR
Melbourne-Titusville-Palm Bay Fl
    Brevard, Fl
*Memphis, TN-AR-MS
    Crittenden, AR
    De Soto, MS
    Fayette, TN
    Shelby, TN
    Tipton, TN
Merced, CA
    Merced, CA
*Miami, FL
    Dade, FL
*Middlesex-Somerset-Hunterdon, NJ
    Hunterdon, NJ
    Middlesex, NJ
    Somerset, NJ
*Milwaukee, WI
    Milwaukee, WI
    Ozaukee, WI
    Washington, WI
    Waukesha, WI
*Minneapolis-St Paul, MN-WI
    Anoka, MN
    Carver, MN
    Chisago, MN
    Dakota, MN
    Hennepin, MN
    Isanti, MN
    Ramsey, MN
    Scott, MN
    Sherburne, MN
    Washington, MN
    Wright, MN
    Pierce, WI
    St. Croix, WI
Mobile, AL
    Baldwin, AL
    Mobile, AL
Modesto, CA
    Stanislaus, CA
Monmouth-Ocean, NJ
    Monmouth, NJ
    Ocean, NJ
Monroe, LA
    Ouachita, LA
Montgomery, AL
    Autauga, AL
    Elmore, AL
    Montgomery, AL
Muncie, IN
    Delaware, IN
Myrtle Beach, SC
    Horry, SC
Naples, FL
    Collier, FL
*Nashville, TN
    Cheatham, TN
    Davidson, TN
    Dickson, TN
    Robertson, TN
    Rutherford TN

[[Page 24489]]

    Sumner, TN
    Williamson, TN
    Wilson, TN
*Nassau-Suffolk, NY
    Nassau, NY
    Suffolk, NY
*New Haven-Bridgeport-Stamford-Danbury-Waterbury, CT
    Fairfield, CT
    New Haven, CT
New London-Norwich, CT
    New London, CT
*New Orleans, LA
    Jefferson, LA
    Orleans, LA
    Plaquemines, LA
    St. Bernard, LA
    St. Charles, LA
    St. James, LA
    St. John The Baptist, LA
    St. Tammany, LA
*New York, NY
    Bronx, NY
    Kings, NY
    New York, NY
    Putnam, NY
    Queens, NY
    Richmond, NY
    Rockland, NY
    Westchester, NY
*Newark, NJ
    Essex, NJ
    Morris, NJ
    Sussex, NJ
    Union, NJ
    Warren, NJ
Newburgh, NY-PA
    Orange, NY
    Pike, PA
*Norfolk-Virginia Beach-Newport News, VA-NC
    Currituck, NC
    Chesapeake City, VA
    Gloucester, VA
    Hampton City, VA
    Isle of Wight, VA
    James City, VA
    Mathews, VA
    Newport News City, VA
    Norfolk City, VA
    Poquoson City, VA
    Portsmouth City, VA
    Suffolk City, VA
    Virginia Beach City VA
    Williamsburg City, VA
    York, VA
*Oakland, CA
    Alameda, CA
    Contra Costa, CA
    Ocala, FL
    Marion, FL
Odessa-Midland, TX
    Ector, TX
    Midland, TX
Oklahoma City, OK
    Canadian, OK
    Cleveland, OK
    Logan, OK
    McClain, OK
    Oklahoma, OK
    Pottawatomie, OK
Olympia, WA
    Thurston, WA
Omaha, NE-IA
    Pottawattamie, IA
    Cass, NE
    Douglas, NE
    Sarpy, NE
    Washington, NE
*Orange County, CA Orange, CA
*Orlando, FL
    Lake, FL
    Orange, FL
    Osceola, FL
    Seminole, FL
Owensboro, KY
    Daviess, KY
Panama City, FL Bay, FL
Parkersburg-Marietta, WV-OH
    Washington, OH
    Wood, WV
Pensacola, FL
    Escambia, FL
    Santa Rosa, FL
Peoria-Pekin, IL
    Peoria, IL
    Tazewell, IL
    Woodford, IL
*Philadelphia, PA-NJ
    Burlington, NJ
    Camden, NJ
    Gloucester, NJ
    Salem, NJ
    Bucks, PA
    Chester, PA
    Delaware, PA
    Montgomery, PA
    Philadelphia, PA
*Phoenix-Mesa, AZ
    Maricopa, AZ
    Pinal, AZ
Pine Bluff, AR
    Jefferson, AR
*Pittsburgh, PA
    Allegheny, PA
    Beaver, PA
    Butler, PA
    Fayette, PA
    Washington, PA
    Westmoreland, PA
Pittsfield, MA
    Berkshire, MA
Ponce, PR
    Guayanilla, PR
    Juana Diaz, PR
    Penuelas, PR
    Ponce, PR
    Villalba, PR
    Yauco, PR
Portland, ME
    Cumberland, ME
    Sagadahoc, ME
    York, ME
*Portland-Vancouver, OR-WA
    Clackamas, OR
    Columbia, OR
    Multnomah, OR
    Washington, OR
    Yamhill, OR
    Clark, WA
*Providence-Warwick, RI
    Bristol, RI
    Kent, RI
    Newport, RI
    Providence, RI
    Washington, RI
Provo-Orem, UT
    Utah, UT
Pueblo, CO
    Pueblo, CO
Punta Gorda, FL
    Charlotte, FL
Racine, WI
    Racine, WI
Raleigh-Durham-Chapel Hill, NC
    Chatham, NC
    Durham, NC
    Franklin, NC
    Johnston, NC
    Orange, NC
    Wake, NC
Rapid City, SD
    Pennington, SD
Reading, PA
    Berks, PA
Redding, CA
    Shasta, CA
Reno, NV
    Washoe, NV
Richland-Kennewick-Pasco, WA
    Benton, WA
    Franklin, WA
Richmond-Petersburg, VA
    Charles City County, VA
    Chesterfield, VA
    Colonial Heights City, VA
    Dinwiddie, VA
    Goochland, VA
    Hanover, VA
    Henrico, VA
    Hopewell City, VA
    New Kent, VA
    Petersburg City, VA
    Powhatan, VA
    Prince George, VA
    Richmond City, VA
*Riverside-San Bernardino, CA
    Riverside, CA
    San Bernardino, CA
Roanoke, VA
    Botetourt, VA
    Roanoke, VA
    Roanoke City, VA
    Salem City, VA
Rochester, MN
    Olmsted, MN
*Rochester, NY
    Genesee, NY
    Livingston, NY
    Monroe, NY
    Ontario, NY
    Orleans, NY
    Wayne, NY
Rockford, IL
    Boone, IL
    Ogle, IL
    Winnebago, IL

[[Page 24490]]

Rocky Mount, NC
    Edgecombe, NC
    Nash, NC
*Sacramento, CA
    El Dorado, CA
    Placer, CA
    Sacramento, CA
Saginaw-Bay City-Midland, MI
    Bay, MI
    Midland, MI
    Saginaw, MI
St. Cloud, MN
    Benton, MN
    Stearns, MN
St. Joseph, MO
    Andrews, MO
    Buchanan, MO
*St. Louis, MO-IL
    Clinton, IL
    Jersey, IL
    Madison, IL
    Monroe, IL
    St. Clair, IL
    Franklin, MO
    Jefferson, MO
    Lincoln, MO
    St. Charles, MO
    St. Louis, MO
    St. Louis City, MO
    Warren, MO
Salem, OR
    Marion, OR
    Polk, OR
Salinas, CA
    Monterey, CA
*Salt Lake City-Ogden, UT
    Davis, UT
    Salt Lake, UT
    Weber, UT
San Angelo, TX
    Tom Green, TX
*San Antonio, TX
    Bexar, TX
    Comal, TX
    Guadalupe, TX
    Wilson, TX
*San Diego, CA
    San Diego, CA
*San Francisco, CA
    Marin, CA
    San Francisco, CA
    San Mateo, CA
*San Jose, CA
    Santa Clara, CA
*San Juan-Bayamon, PR
    Aguas Buenas, PR
    Barceloneta, PR
    Bayamon, PR
    Canovanas, PR
    Carolina, PR
    Catano, PR
    Ceiba, PR
    Comerio, PR
    Corozal, PR
    Dorado, PR
    Fajardo, PR
    Florida, PR
    Guaynabo, PR
    Humacao, PR
    Juncos, PR
    Los Piedras, PR
    Loiza, PR
    Luguillo, PR
    Manati, PR
    Naranjito, PR
    Rio Grande, PR
    San Juan, PR
    Toa Alta, PR
    Toa Baja, PR
    Trujillo Alto, PR
    Vega Alta, PR
    Vega Baja, PR
    Yabucoa, PR
San Luis Obispo-Atascadero-Paso Robles, CA
    San Luis Obispo, CA
Santa Barbara-Santa Maria-Lompoc, CA
    Santa Barbara, CA
Santa Cruz-Watsonville, CA
    Santa Cruz, CA
Santa Fe, NM
    Los Alamos, NM
    Santa Fe, NM
Santa Rosa, CA
    Sonoma, CA
Sarasota-Bradenton, FL
    Manatee, FL
    Sarasota, FL
Savannah, GA
    Bryan, GA
Chatham, GA
    Effingham, GA
Scranton--Wilkes-Barre--Hazleton, PA
    Columbia, PA
    Lackawanna, PA
    Luzerne, PA
    Wyoming, PA
*Seattle-Bellevue-Everett, WA
    Island, WA
    King, WA
    Snohomish, WA
Sharon, PA
    Mercer, PA
Sheboygan, WI
    Sheboygan, WI
Sherman-Denison, TX
    Grayson, TX
Shreveport-Bossier City, LA
    Bossier, LA
    Caddo, LA
    Webster, LA
Sioux City, IA-NE
    Woodbury, IA
    Dakota, NE
Sioux Falls, SD
    Lincoln, SD
    Minnehaha, SD
South Bend, IN
    St. Joseph, IN
Spokane, WA
    Spokane, WA
Springfield, IL
    Menard, IL
    Sangamon, IL
Springfield, MO
    Christian, MO
    Greene, MO
    Webster, MO
Springfield, MA
    Hampden, MA
    Hampshire, MA
State College, PA
    Centre, PA
Steubenville-Weirton, OH-WV
    Jefferson, OH
    Brooke, WV
    Hancock, WV
Stockton-Lodi, CA
    San Joaquin, CA
Sumter, SC
    Sumter, SC
Syracuse, NY
    Cayuga, NY
    Madison, NY
    Onondaga, NY
    Oswego, NY
Tacoma, WA
    Pierce, WA
Tallahassee, FL
    Gadsden, FL
    Leon, FL
*Tampa-St. Petersburg-Clearwater, FL
    Hernando, FL
    Hillsborough, FL
    Pasco, FL
    Pinellas, FL
Terre Haute, IN
    Clay, IN
    Vermillion, IN
    Vigo, IN
Texarkana, AR-Texarkana, TX
    Miller, AR
    Bowie, TX
Toledo, OH
    Fulton, OH
    Lucas, OH
    Wood, OH
Topeka, KS
    Shawnee, KS
Trenton, NJ
    Mercer, NJ
Tucson, AZ
    Pima, AZ
Tulsa, OK
    Creek, OK
    Osage, OK
    Rogers, OK
    Tulsa, OK
    Wagoner, OK
Tuscaloosa, AL
    Tuscaloosa, AL
Tyler, TX
    Smith, TX
Utica-Rome, NY
    Herkimer, NY
    Oneida, NY
Vallejo-Fairfield-Napa, CA
    Napa, CA
    Solano, CA
Ventura, CA
    Ventura, CA
Victoria, TX
    Victoria, TX
Vineland-Millville-Bridgeton, NJ
    Cumberland, NJ
Visalia-Tulare-Porterville, CA
    Tulare, CA

[[Page 24491]]

Waco, TX
    McLennan, TX
*Washington, DC-MD-VA-WV
    District of Columbia, DC
    Calvert, MD
    Charles, MD
    Frederick, MD
    Montgomery, MD
    Prince Georges, MD
    Alexandria City, VA
    Arlington, VA
    Clarke, VA
    Culpepper, VA
    Fairfax, VA
    Fairfax City, VA
    Falls Church City, VA
    Fauquier, VA
    Fredericksburg City, VA
    King George, VA
    Loudoun, VA
    Manassas City, VA
    Manassas Park City, VA
    Prince William, VA
    Spotsylvania, VA
    Stafford, VA
    Warren, VA
    Berkeley, WV
    Jefferson, WV
Waterloo-Cedar Falls, IA
    Black Hawk, IA
Wausau, WI
    Marathon, WI
West Palm Beach-Boca Raton, FL
    Palm Beach, FL
Wheeling, OH-WV
    Belmont, OH
    Marshall, WV
    Ohio, WV
Wichita, KS
    Butler, KS
    Harvey, KS
    Sedgwick, KS
Wichita Falls, TX
    Archer, TX
    Wichita, TX
Williamsport, PA
    Lycoming, PA
Wilmington-Newark, DE-MD
    New Castle, DE
    Cecil, MD
Wilmington, NC
    New Hanover, NC
    Brunswick, NC
Yakima, WA
    Yakima, WA
Yolo, CA
    Yolo, CA
York, PA
    York, PA
Youngstown-Warren, OH
    Columbiana, OH
    Mahoning, OH
    Trumbull, OH
Yuba City, CA
    Sutter, CA
    Yuba, CA
Yuma, AZ
    Yuma, AZ

    *Population greater than one million.

V. Impact Statement

    Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612), we prepare a regulatory flexibility analysis unless we 
certify that a notice will not have a significant economic impact on a 
substantial number of small entities. For purposes of the RFA, all 
physicians are considered to be small entities. Individuals and States 
are not included in the definition of a small entity.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis for any notice that 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 that is located outside of a 
Metropolitan Statistical Area and has fewer than 50 beds.
    As noted above, we are updating the RCE limits by applying the most 
recent economic index data without revising the methodology. This 
notice announces an update of the limits, as required by regulations at 
42 CFR 405.482(f)(3), and does not alter any regulations or policy. As 
discussed above, the RCE limits apply only to providers paid on a 
reasonable cost basis, and to compensation a physician receives from a 
provider for services that benefit patients generally or otherwise but 
that are not eligible for payment under the physician fee schedule. 
Also, the limits do not apply to costs of physician compensation that 
are attributable to furnishing inpatient hospital services paid for 
under the hospital prospective payment system or that are attributable 
to GME costs. As a result of the application of the RCE limits, we 
estimate the costs associated with the updated limits for the next 5 
fiscal years as follows:

                                                                        
                          Update of RCE Limits*                         
------------------------------------------------------------------------
                          Fiscal year                             Costs 
------------------------------------------------------------------------
1997..........................................................      $ 30
1998..........................................................        40
1999..........................................................        50
2000..........................................................        50
2001..........................................................       50 
------------------------------------------------------------------------
*All figures are rounded to the nearest $5 million.                     

    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined, and we 
certify, that this notice will not have a significant economic impact 
on a substantial number of small entities or a significant impact on 
the operations of a substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

VI. Waiver of Prior Notice and 30-Day Delay in the Effective Date

    We are publishing this notice as a final notice without prior 
publication of a proposed notice for public comment. For the reasons 
discussed below, we believe that publishing a proposed notice is 
unnecessary.
    Section 405.482(f) permits us to publish revised RCE limits in 
final without prior publication of a proposal for public comment if the 
limits are merely updated by applying the most recent economic index 
data without revising the methodology. This notice does not implement 
any change in the methodology for determining the RCE limits.
    Therefore, we believe that publication of a proposal is 
unnecessary, and we find good cause to waive the procedure.
    We also normally provide a delay of 30 days in the effective date. 
However, if adherence to this procedure would be impractical, 
unnecessary, or contrary to public interest, we may waive the delay in 
the effective date. The RCE limits set forth in this notice are 
effective for cost reporting periods beginning on or after the date of 
publication of the notice in the Federal Register. As a practical 
matter, if we allowed a 30-day delay in the effective date of this 
notice, those providers with cost reporting periods beginning during 
those thirty days, and the physicians who are based in these providers, 
would be unable to take timely advantage of the increase in limits 
contained in this notice. This eventually would be contrary to the 
public interest. Therefore, we find good cause to waive the usual 30-
day delay in the effective date.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: December 20, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
    Dated: January 16, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-11521 Filed 5-2-97; 8:45 am]
BILLING CODE 4120-01-P