[Federal Register Volume 62, Number 190 (Wednesday, October 1, 1997)]
[Notices]
[Pages 51536-51550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25983]


      

[[Page 51535]]

_______________________________________________________________________

Part VI





Department of Health and Human Services





_______________________________________________________________________



Health Care Financing Administration



_______________________________________________________________________



Medicare Program; Adjustments to Cost Limits for Skilled Nursing 
Facility Inpatient Routine Service Costs; Notice



Medicare Program; Schedules of Limits and Prospectively Determined 
Payment Rates for Skilled Nursing Facility Inpatient Routine Service 
Costs; Notice

  Federal Register / Vol. 62, No. 190 / Wednesday, October 1, 1997 / 
Notices  

[[Page 51536]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[BPD-895-FNC]
RIN 0938-AL15


Medicare Program; Schedules of Limits and Prospectively 
Determined Payment Rates for Skilled Nursing Facility Inpatient Routine 
Service Costs

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

ACTION: Final notice with comment period.

-----------------------------------------------------------------------

SUMMARY: This final notice with comment period sets forth an updated 
schedule of limits on skilled nursing facility (SNF) routine service 
costs for which payment may be made under the Medicare program and sets 
forth an updated schedule of payment rates for low Medicare volume SNFs 
that elect to receive prospectively determined payment rates for 
routine service costs. Section 1888(a) of the Social Security Act (the 
Act) requires that the Secretary update the per diem cost limits for 
SNF routine service costs for cost reporting periods beginning on or 
after October 1, 1995, and every 2 years thereafter. In addition, 
section 1888(d)(4) of the Act requires the Secretary to establish and 
publish prospectively determined payment rates at least 90 days prior 
to the beginning of the Federal fiscal year (FY) to which such rates 
are to be applied.

DATES: Effective date: The schedule of cost limits and the schedule of 
prospectively determined payment rates are effective for cost reporting 
periods beginning on or after October 1, 1997.
    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 December 1, 1997.

ADDRESSES: Mail written comments (an original and three copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: BPD-895-NC, P.O. Box 7517, 
Baltimore, MD 21244-0517.
    If you prefer, you may deliver your written comments (one original 
and three copies) to one of the following addresses: Room 309-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 
20201, or Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-
1850.
    Comments may also be submitted electronically to the following E-
mail address: [email protected]. E-mail comments must include the 
full name and address of the sender and must be submitted to the 
referenced address in order to be considered. All comments must be 
incorporated in the E-mail message because we may not be able to access 
attachments. Electronically submitted comments will be available for 
public inspection at the Independence Avenue address, below.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code BPD-895-NC. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 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 
the Superintendent of Documents, or enclose your Visa or Master Card 
number and expiration date. Credit card orders can also be placed by 
calling the order desk at (202) 512-1800 or by faxing to (202) 512-
2250. The cost for each copy is $8.00. As an alternative, you can view 
and photocopy the Federal Register document at most libraries 
designated as Federal Depository Libraries and at many other public and 
academic libraries throughout the country that receive the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Robert Kuhl, (410) 786-4597.

SUPPLEMENTARY INFORMATION:

I. Background

A. Authority for Establishing Cost Limits and Prospectively Determined 
Payment Rates

1. Cost Limits
    Sections 1861(v)(1)(A) and 1888 of the Act authorize the Secretary 
to set limits on allowable costs incurred by a provider of services for 
which payment may be made under Medicare. These limits are based on 
estimates of the costs necessary for the efficient delivery of needed 
health services. Section 1888(a) of the Act directs the Secretary to 
set limits on per diem inpatient routine service costs for hospital-
based and freestanding SNFs by urban or rural area. Implementing 
regulations appear at 42 CFR 413.30.
2. Prospectively Determined Payment Rates
    Most SNFs are paid on a reasonable cost basis up to the routine 
service per diem cost limits described in the previous paragraph. 
However, under section 1888(d) of the Act, for cost reporting periods 
beginning on or after October 1, 1986, a SNF with fewer than 1,500 
Medicare covered days in a given cost reporting period may choose to 
receive payment based on a prospectively determined payment rate in the 
subsequent cost reporting period. Implementing regulations appear at 42 
CFR Part 413, Subpart I.
    The rates for the low Medicare volume SNFs are established on a per 
diem basis and include payment for the cost of furnishing general 
inpatient routine services and capital-related costs associated with 
routine services. We are required to publish annual revisions to the 
rates at least 90 days before the beginning of the Federal FY to which 
the revised rates apply. In addition, under Sec. 413.312(a)(1)(i), we 
are required to base the revised rates on the same cost data used to 
develop the cost limits that are in effect for that Federal FY.

B. Previously Published Schedules of and Updates to Cost Limits and 
Rates

1. Effective for FY 1993
    We published a final notice with comment period on October 7, 1992 
(57 FR 46177) announcing a schedule of limits for freestanding and 
hospital-based SNFs effective for cost reporting periods beginning in 
FY 1993. In December 1992, we published section 2828 of the Medicare 
Provider Reimbursement Manual (HCFA Pub. 15-1), Transmittal Number 370, 
establishing rates effective for cost reporting periods beginning in FY 
1993. The same cost report, wage, and inflation data were used to 
develop these cost limits and rates. The cost reports used to develop 
the FY 1993 cost limits and rates covered cost reporting periods ending 
on or after June 30, 1989, through May 31, 1990, for freestanding SNFs 
and on or after October 31, 1988, through September 30, 1989, for 
hospital-based SNFs. The 1988 hospital wage data and Metropolitan 
Statistical Area (MSA) designations, based on pre-1990 census data as 
described in the April 1, 1991, notice (56 FR 13319), were used to 
develop the wage index that was applicable to the FY 1993 cost limits 
and rates. It has been our longstanding

[[Page 51537]]

policy not to make changes in the cost report data or recognize changes 
in the wage and MSA data until we publish a Federal Register notice 
announcing an update to the SNF cost limits.
2. Effective for FY 1994 and FY 1995
    Sections 13503(a)(1) and 13503(b) of the Omnibus Budget 
Reconciliation Act of 1993 (OBRA `93) (Public Law 103-66) required that 
there be no changes in the FY 1993 SNF routine cost limits and rates 
(including adjustments for changes in the wage index or applicable 
MSAs) established under section 1888 of the Act for cost reporting 
periods beginning during Federal FY 1994 and FY 1995. This 2-year 
freeze on the cost limits and rates resulted in a savings to the 
Medicare program. These provisions of OBRA `93 were implemented, for 
cost limits, in a final notice with comment period on January 6, 1994 
(59 FR 762) and, for rates, in section 2828 L of the Provider 
Reimbursement Manual (Transmittal 374, December 1993).
3. Effective for FY 1996
    Section 13503(a)(2) of OBRA '93 amended section 1888(a) of the Act 
and required that an update to the cost limits be provided for cost 
reporting periods beginning on or after October 1, 1995 (FY 1996), and 
every 2 years thereafter. However, during the FY 1996 legislative 
period, reconciliation legislation contained a provision to preserve 
the savings from the 2-year freeze by inflating the FY 1993 cost limits 
and rates to cost reporting periods beginning in FY 1996, except that 
inflation for FY 1994 and FY 1995 would not have been recognized. We 
did not believe that it would be appropriate to issue the required 
update to the cost limits and rates for cost reporting periods 
beginning in FY 1996 until the prospect of this provision becoming law 
was known. We determined in April 1996 (7 months into FY 1996) that the 
FY 1996 legislative period would not produce a law that included this 
provision.
    On May 3, 1996, we expedited the issuance of the required update to 
the FY 1996 cost limits and rates through a memorandum to all Associate 
Regional Administrators (ARAs) for Medicare. We instructed the ARAs to 
notify the intermediaries to implement this update. (This memorandum 
also included corrections to erroneous projected rates of inflation 
used to develop the FY 1990 and FY 1993 cost limits.) This memorandum 
contained the monthly inflation factors that were needed to extend the 
FY 1993 cost limits and rates to cost reporting periods beginning in FY 
1996.
    Our policy regarding the methodology used to provide the required 
update to the limits and rates for FY 1996 conformed with the update 
methodology described below Table IV of the October 7, 1992 notice, 
which extends the cost reporting periods affected by the FY 1993 limits 
by computing monthly inflation factors beyond those shown in Table IV. 
Intermediaries were using this methodology to compute limits and rates 
between October 1, 1995, and the issuance of the aforementioned 
memorandum. We explained that this update methodology would be used 
until a new schedule of limits or other provision is issued.
4. Effective for FY 1997
    Section 1888(a) of the Act did not require us to provide an update 
to the cost limits for FY 1997. Therefore, we trended the FY 1996 cost 
limits and rates to cost reporting periods beginning in FY 1997 using 
the latest available rates of inflation.
    On August 22, 1996, we issued a memorandum to all ARAs for Medicare 
to notify the intermediaries of the cost limits and monthly inflation 
factors for cost reporting periods beginning in FY 1997.
    On September 3, 1996, we published a final notice with comment 
period (61 FR 46466) announcing the schedule of rates effective for 
cost reporting periods beginning in FY 1997. That notice represented 
the first schedule of rates published in the Federal Register after the 
regulations implementing section 1888(d) were issued on July 21, 1995 
(60 FR 37590).

C. Cost Limits and Rates Effective for FY 1998

    This notice with comment period announces the schedule of cost 
limits and rates effective for cost reporting periods beginning in FY 
1998, as required under section 1888(a) of the Act. To meet the update 
requirement under section 1888(a), we trended the FY 1997 cost limits 
and rates to cost reporting periods beginning in FY 1998 using the 
latest rates of inflation.
    There is, however, increasing concern that post-1990 census data 
have not been used in determining MSA designations and wage index 
values since our last Federal Register notice was published on October 
7, 1992. We believe that the numerous changes to the MSA designations 
since we published the FY 1993 cost limits and rates should be 
recognized in determining the appropriate wage index values used in 
this notice. This notice presents the opportunity to implement these 
changes to the wage data and to the MSA designations and conforms with 
our longstanding policy to make such changes only in a Federal Register 
notice.
    This is the first time we have published a combined schedule of 
cost limits and rates. Combining the cost limits and rates in one 
notice is more economical in that they both utilize the same cost 
report data, wage index values, and rates of inflation. In addition, 
under section 1888(d) of the Act, an individual provider's 
prospectively determined rate may not exceed its applicable cost limit 
(see Section III.D. of this notice). This notice, containing cost 
limits and rates for cost reporting periods beginning in FY 1998, 
allows a provider to more conveniently determine its individual rate 
than in previous years.

II. Update of the SNF Schedule of Limits and the Schedule of 
Prospectively Determined Rates

    Under the authority cited in section I. of this notice, this final 
notice with comment period sets forth for cost reporting periods 
beginning in FY 1998: (1) an updated schedule of limits on SNF routine 
service costs for which payment may be made under the Medicare program; 
and (2) an updated schedule of prospectively determined payment rates 
for low Medicare volume SNFs that have elected to receive prospective 
payments for routine service costs.
    The cost limits set forth in Table I and the rates set forth in 
Tables II and III of this notice are based on the FY 1997 cost limits 
and rates, respectively, trended to cost reporting periods beginning in 
FY 1998, using the most recent projections of the rates of inflation or 
increase in the costs included in the SNF market basket.
    We are continuing to use the HCFA hospital wage data to account for 
area wage differences. This is necessary because industry-specific data 
needed to calculate a wage index for SNFs are not available. Under 
section 106 of the Social Security Act Amendments of 1994 (Public Law 
103-432), the Secretary was required to begin collecting data no later 
than October 31, 1995, on employee compensation and paid hours of 
employment in SNFs for the purpose of constructing a SNF wage index 
adjustment to the routine service cost limits. Until this data 
collection effort is completed and the data are analyzed, we believe 
that hospital wage data provide the best measure of comparable wages 
that would also be paid by SNFs, since hospitals and SNFs generally 
compete in the same labor

[[Page 51538]]

market for employees. We believe that the use of the hospital wage data 
results in an appropriate adjustment to the labor-portion of the costs 
based on an appropriate wage index as required under section 1888(a) of 
the Act.
    For the schedule of cost limits and rates effective with this 
notice, we are using wage index values that are based on hospital wage 
data from cost reporting periods beginning in FY 1993--the most recent 
hospital wage data in effect before the effective date of this notice 
and the most recent MSA designations. Accordingly, with the exception 
of those wage index values that may be affected by recent corrections 
to the 1993 wage data, the wage index values used in this notice are 
based on the same wage data as are used to compute the wage index 
values for the hospital prospective payment system for discharges 
occurring on or after October 1, 1996. (A detailed description of the 
methodology used to compute the hospital prospective payment wage index 
is set forth in the final rule published in the Federal Register on 
August 30, 1996 (61 FR 46166).) While these wage index values are based 
on the MSA designations in effect prior to the effective date of this 
notice, they do not, however, reflect changes in geographic 
classification for certain rural hospitals required under section 
1886(d)(8)(B) of the Act or geographic reclassifications based on 
decisions of the Medicare Geographic Classification Review Board or the 
Secretary under section 1886(d)(10) of the Act. Section 1886 of the Act 
applies to hospitals only. Accordingly, as in the past, it would not be 
appropriate to recognize changes in the geographic classification of 
hospitals for purposes of computing the SNF cost limits even though an 
SNF may be part of a medical complex that includes a reclassified 
hospital.

III. Provisions of the SNF Schedule of Cost Limits and Prospectively 
Determined Payment Rates

    The schedule of cost limits set forth below applies to all SNFs, 
including those low Medicare volume SNFs that are eligible to receive 
the optional prospectively determined payment rate for routine 
services. Under Sec. 413.314(d), the operational portion of an SNF's 
prospectively determined payment rate, excluding capital-related costs, 
cannot exceed its actual routine service cost limit (without regard to 
exceptions, exemptions, or retroactive adjustments) in effect at the 
time of the election to be paid a prospectively determined payment 
rate. The eligibility requirements for receiving prospectively 
determined payment rates are specified in subpart I of part 413.
    These schedules of cost limits and rates provide for the following:

A. Separate Groupings for Labor-Related and Nonlabor-Related Components 
of Per Diem Routine Service Costs

    We are retaining the same groupings for the labor-related and 
nonlabor-related components of per diem routine service costs as 
follows:
    1. As described in the October 7, 1992 notice for the FY 1993 cost 
limits, separate group means were computed for the labor-related and 
nonlabor-related components for hospital-based and freestanding SNFs in 
accordance with the MSA or non-MSA designation in effect with that 
notice. Each group mean was then multiplied by 112 percent.
    2. As described in the September 3, 1996 notice for the FY 1997 
rates, separate group means were computed for labor-related, nonlabor-
related, and capital-related components in accordance with the SNF's 
census region and MSA or non-MSA designation in effect with that 
notice. Each group mean was then multiplied by 105 percent.

B. Adjustment of SNF Labor-Related Data by the Wage Index

    We are using a wage index based on 1993 hospital wage data and 
post-1990 MSA designations, as discussed in section II of this notice, 
to adjust the labor-related portion of the cost limits and rates 
contained in this notice for area wage differences.

C. Use of SNF Market Basket

    We are trending the FY 1997 cost limits and rates to FY 1998 using 
projected cost increases by applying the SNF market basket index. This 
market basket index is used to adjust the SNF cost data to reflect cost 
increases occurring between the cost reporting periods represented in 
the data collection and the midpoints of the cost reporting periods to 
which the cost limits and rates apply.
    The market basket index is comprised of the most commonly used 
categories of SNF routine service expenses. The categories are based 
primarily on those used by the National Center for Health Statistics in 
its National Nursing Home Surveys.
    The categories of expenses are weighted according to the estimated 
proportion of SNF routine service costs attributable to each category. 
A detailed description of the market basket index is described in the 
October 7, 1992 notice for cost limits and the September 3, 1996 notice 
for the rates.
    In developing the market basket index, we obtained historical and 
projected (estimated) rates of change in the price of goods and 
services in each category. For cost limit purposes only, estimated 
rates of change may be revised, retroactively, based on actual (final) 
rates of change. As described in all previous schedules of cost limits, 
if the final rate of change in the market basket index for a calendar 
year differs from the estimated rate of change by at least 0.3 
percentage points, we will adjust the limits. Elsewhere in this issue 
of the Federal Register, we are proposing in a separate notice to 
eliminate this provision to adjust the limits.

D. Application of the Adjusted Hospital Wage Index to the Labor-Related 
Costs

    In developing the FY 1997 cost limits and rates, we applied the 
wage index to five categories of labor-related costs: wages, employee 
benefits, health service costs, business service costs, and 
miscellaneous costs. We continue to use this methodology in computing 
the FY 1998 cost limits and rates.
    For purposes of applying the wage index, employee benefits include 
such items as FICA tax, health insurance, life insurance, facility 
contributions to employee retirement funds, and all other compensation 
that the SNF records in the ``employee health and welfare'' cost center 
on its Medicare cost report. Health service costs include the costs of 
physician services that are purchased under arrangement from outside 
sources. Business service costs include costs of banking, contract 
laundry, telephone, and other services that SNFs purchase at retail 
from outside suppliers. Miscellaneous costs include various types of 
routine operating costs not allocated to any other category of the 
market basket.

E. Per Diem Add-On to the Cost Limits and Prospective Rates Effective 
for Cost Reporting Periods Beginning in FY 1998

    In the October 7, 1992 notice and the September 3, 1996 notice, we 
described a per diem add-on to the limits and rates, respectively. This 
per diem add-on was developed to take into account the costs associated 
with the additional requirements placed on SNFs by the nursing home 
reform provisions in section 1819 of the Act, including conducting 
nurse aide training and competency evaluation programs, and to 
recognize the additional costs due to the universal precaution 
requirements of the Occupational Safety and Health Administration 
(OSHA).

[[Page 51539]]

    The per diem add-on effective for FY 1997 will be trended to cost 
reporting periods beginning in FY 1998, using the latest market basket 
index. For cost limit purposes, the per diem add-on is $2.27 for cost 
reporting periods beginning on or after October 1, 1997. For rate 
purposes, the per diem add-on is $2.13 for cost reporting periods 
beginning on or after October 1, 1997.
    When HCFA updates the SNF cost limits and prospective rates using a 
later data base that includes the costs of complying with these 
additional requirements, a per diem add-on will no longer be needed 
because those updated limits and rates would include these costs.
    The following applies to the schedule of cost limits only:

F. Setting of Freestanding SNF Limits

    The FY 1997 cost limits for freestanding SNFs were set at 112 
percent of the average labor-related and average nonlabor-related costs 
of each group, as described in the October 7, 1992 notice. This 
methodology is prescribed by section 1888(a) of the Act. We continue to 
use this methodology to set the freestanding SNF cost limits contained 
in this notice.

G. Setting of Hospital-Based SNF Limits

    The FY 1997 cost limits for hospital-based SNFs were set at the 
freestanding SNF limit plus 50 percent of the difference between the 
freestanding SNF limit and 112 percent of the mean per diem routine 
service costs of hospital-based SNFs. This methodology for setting 
hospital-based SNF cost limits was described in the October 7, 1992 
notice and the January 6, 1994 notice. This methodology is prescribed 
by sections 1888(a) and (b) of the Act. We continue to use this 
methodology to set the hospital-based SNF cost limits contained in this 
notice.

H. Cost-of-Living Adjustments to the Limits for Alaska, Hawaii, Puerto 
Rico, and the Virgin Islands

    To avoid disadvantaging SNFs located in Alaska, Hawaii, Puerto 
Rico, and the Virgin Islands, we will continue to provide a cost-of-
living adjustment to the limits for these areas. This is an adjustment 
of the nonlabor-related component of the limit that applies to these 
areas, based on the amount of the most recently determined cost-of-
living differentials developed by the Office of Personnel Management. 
Since we adjust the labor-related component by the applicable wage 
index as discussed in section III.D. of this notice, this cost-of-
living adjustment will apply only to the nonlabor-related component.

I. Exception to Cost Limits

    A SNF may request an exception to the cost limits under the 
provisions of Sec. 413.30(f). The SNF must make the request to the 
appropriate Medicare fiscal intermediary in accordance with section 
2530 of the Provider Reimbursement Manual (HCFA Pub. 15-1). An 
adjustment may be granted if the costs in excess of the limit are 
reasonable, attributable to the circumstances specified in 
Sec. 413.30(f)(1) through (f)(8), separately identified by the SNF, and 
verified by the intermediary.

J. Use of Classification System for the Limits

    The classification system we use is based on whether a SNF is 
located within a MSA or in a New England County Metropolitan Area 
(NECMA) based on standards published in the Federal Register on March 
30, 1990 (55 FR 12154), using Bureau of the Census data or Bureau of 
Census estimates made after 1990. The latest standards for developing 
MSAs are the ones contained in the March 30, 1990 Federal Register.
    The following applies to the schedule of rates only:

K. Use of Classification System for the Rates

    We will retain the classification system based on grouping SNFs by 
census regions and by urban or rural area designation within the 
region. As required by sections 1883(d)(3) and 1886(d)(2)(D) of the 
Act, the term ``region'' means one of the 9 census divisions, 
comprising the 50 States and the District of Columbus, established by 
the Bureau of Census for Statistical and reporting purposes. The term 
``urban rate'' means an area within a MSA (as defined by the Office of 
Management and Budget (OMB), with exceptions for certain NECMAs, as 
described in a notice published in the Federal Register on April 1, 
1991 (56 FR 13319)). The term ``rural area'' means an area outside such 
an area (MSA).

IV. Methodology for Determining Per Diem Routine Service Cost Limits 
and Low Volume Prospective Payment Rates

A. Development of Base Cost Limits and Rates

    As discussed in section I of this notice, we trended the FY 1997 
cost limits and rates using the latest market basket index, as 
discussed in section III.C. of this notice. The annual percentage 
increases in the market basket over the previous year that we used for 
this projection in this notice are:


1993................................................................3.7
1994................................................................3.4
1995................................................................2.9
                                                                   1996
      ...........................................................1
                                                                    2.7
                                                                   1997
      ...........................................................1
                                                                    3.2
                                                                   1998
      ...........................................................1
                                                                    3.4
                                                                   1999
      ...........................................................1
                                                                    3.6

    1 Forecasted increase.

B. Calculation of SNF Limit

1. Components of Limit
    For each freestanding group, the freestanding limits for FY 1998 
are shown in Table I of this notice. We used the computation below to 
determine the hospital-based cost limits shown in Table I.

     Cost Limit Data--Hospital-Based SNFs for Cost Reporting Periods    
                  Beginning on or After October 1, 1997                 
------------------------------------------------------------------------
                                                             Rural (non-
    112 percent of hospital-based mean cost     Urban (MSA)      MSA)   
------------------------------------------------------------------------
Labor.........................................      $166.13      $143.18
Nonlabor......................................        34.97        23.58
                                               -------------------------
    Total.....................................       201.10       166.76
------------------------------------------------------------------------


[[Page 51540]]


Calculation of 50 Percent of Difference Between 112 Percent of Hospital-
                 Based Mean Cost and Freestanding Limit                 
------------------------------------------------------------------------
                                                   Labor       Nonlabor 
------------------------------------------------------------------------
                               Urban (MSA)                              
------------------------------------------------------------------------
112 Percent of Hospital-Based Mean Cost.......      $166.13       $34.97
Freestanding Limit (Table I)..................       -91.23       -19.59
    Difference................................        74.90        15.38
    50 Percent of Difference..................        37.45         7.69
    Plus Freestanding Limit...................       +91.23       +19.59
Hospital-Based Limit (MSA)....................       128.68        27.28
------------------------------------------------------------------------
                             Rural (Non-MSA)                            
------------------------------------------------------------------------
112 Percent of Hospital-Based Mean Cost.......      $143.18       $23.58
Freestanding Limit (Table I)..................       -92.64       -15.64
    Difference................................        50.54         7.94
    50 Percent of Difference..................        25.27         3.97
    Plus Freestanding Limit...................       +92.64       +15.64
Hospital-Based Limit (Non-MSA)................       117.91        19.61
------------------------------------------------------------------------

2. Adjustment of Labor-Related Component by Wage Index
    To arrive at a labor-adjusted limit for each SNF, we multiply the 
labor-related component of the limit for the SNF's group by the wage 
index developed from wage levels for hospital workers in the area in 
which the SNF is located (see Tables IV and V of this notice). The 
adjusted limit that applies to a SNF is the sum of the nonlabor-related 
component, plus the adjusted labor-related component, plus the OBRA/
OSHA per diem add-on discussed in section III.E. of this notice.
    Example--Calculation of Adjusted Limit for a Freestanding SNF 
Located in Dallas, Texas:

Labor-Related Component.....................................    $ 91.23  (Table I).                             
Wage Index..................................................   x 0.9729  (Table IV).                            
                                                             -----------                                        
Adjusted Labor Component....................................      88.76                                         
Nonlabor-Related Component..................................     +19.59  (Table I).                             
OBRA/OSHA Per Diem Add-On...................................      +2.27  (Sec. III.E.).                         
                                                             -----------                                        
Adjusted Limit..............................................     110.62                                         
                                                                                                                

3. Adjustment for Cost Reporting Period
    If a facility has a cost reporting period beginning in a month 
after October 1, 1997, the intermediary increases the limit that 
otherwise would apply to the SNF by the factor from Table VI of this 
notice that corresponds to the month and year in which the cost 
reporting period begins. Each factor represents the compounded monthly 
increase derived from the projected annual increase in the market 
basket index and is used to account for inflation in costs that occur 
after the date on which the limits are effective.
    Example: The following is a computation of a revised limit for the 
previously cited SNF that has a cost reporting period that begins 
January 1, 1998. The base adjusted limit for the SNF is $110.62. The 
revised limit applicable to its cost reporting period $111.56, is 
computed as follows:


Individual SNF Adjusted Base Limit...........................    $110.62
Adjustment Factor from Table V...............................   x 1.0084
                                                                       6
                                                              ----------
Revised Limit................................................     111.56
                                                                        

    If a facility uses a cost reporting period that is not 12 months in 
duration, a special adjustment factor will be calculated. This is 
necessary because projections are computed to the midpoint of a cost 
reporting period and the adjustment factors in Table VI of this notice 
are based on an assumed 12-month reporting period. For cost reporting 
periods of other than 12 months, the calculation is done for the 
midpoint of the specific cost reporting period. The SNF's intermediary 
will obtain this adjustment factor from HCFA Central Office.

C. Calculation of the Routine Operating Portion of the Rates.

1. Adjustment of Labor-Related Component by Wage Index
    a. Urban SNFs. To arrive at a labor adjusted component for the 
rates, we multiply the labor-related component of the rate for the 
SNF's region (Table II of this notice) by the wage index developed from 
wage levels for hospital workers in the area in which the SNF is 
located (Table IV of this notice).
    b. Rural SNFs. To arrive at a labor adjusted component for the 
rates, we multiply the labor-related rate for the SNF's region (Table 
III of this notice) by the wage index developed from wage levels for 
hospital workers in the state in which the SNF is located (Table V of 
this notice).
2. Non-Labor-Related and OBRA/OSHA Per Diem Add-on
    The adjusted routine operating portion of the rate that applies to 
a SNF is the sum of the nonlabor-related component, plus the labor 
adjusted component, plus the OBRA/OSHA per diem add-on discussed in 
section III.E. of this notice.

[[Page 51541]]

3. Adjustment for Cost Reporting Period
    If a facility has a cost reporting period beginning in a month 
after October 1, 1997, the intermediary increases the adjusted routine 
operating portion of the rate that otherwise apply to the SNF by the 
factor from Table VI of this notice that corresponds to the month and 
year in which the cost reporting period begins. Each factor represents 
the compounded monthly increase derived from the annual increase in the 
market basket index and is used to account for inflation in costs that 
occur after the date on which the prospective payment rates are 
effective.
    If a facility uses a cost reporting period that is not 12 months in 
duration, a special adjustment factor is calculated. This is necessary 
because market basket increases are computed to the midpoint of a cost 
reporting period and the adjustment factors in Table VI of this notice 
are based on an assumed 12-month cost reporting period. For cost 
reporting periods of other than 12 months, the calculation is done for 
the midpoint of the specific cost reporting period. The SNF's 
intermediary obtains this adjustment factor from the HCFA Central 
Office.

D. Comparison of Provider's Prospective Payment Rate With Provider's 
Cost Limit

    Below is an example of the calculation of the prospectively 
determined payment rate for a provider, including a comparison of the 
adjusted routine operating portion of the rate with the applicable 
routine operating cost limit applicable to the specific provider. The 
capital-related component of the rate is added to the lower of the 
SNF's specific cost limit or its adjusted routine operating portion of 
the rate to arrive at the provider's actual prospectively determined 
payment rate.
    Example: In this case, the adjusted cost limit is less than the 
adjusted rate for a freestanding SNF located in Providence, Rhode 
Island (MSA Region 1), with a cost reporting period beginning January 
1, 1998. Therefore, the prospectively determined payment rate for this 
SNF is the adjusted limit plus the capital-related component of the 
rate ($134.93).

------------------------------------------------------------------------
                                      Labor-     Non-labor     Capital- 
                                     related      related      related  
                                    component    component    component 
------------------------------------------------------------------------
Limit (Table I)..................       $91.23       $19.59  ...........
Rate (Table II)..................       120.13        22.91       $10.00
------------------------------------------------------------------------


                                     Calculation of Prospective Payment rate                                    
----------------------------------------------------------------------------------------------------------------
                                                   Limit         Rate                   Rate source             
----------------------------------------------------------------------------------------------------------------
Labor-Related Component......................     $91.23       $120.13     (Chart above).                       
Wage Index...................................     x 1.1092      x 1.1092   (Table IV).                          
                                              ----------------------------                                      
Adjusted Labor Component.....................     101.19        133.25     .....................................
Non-Labor Component..........................      19.59         22.91     (Chart above).                       
OBRA/OSHA Add-on.............................      +2.27         +2.13     (Sec III.E.).                        
                                              ----------------------------                                      
Adjusted Limit/Rate..........................     123.05       $158.29     .....................................
Cost Reporting Year Adjustment Factor........     x 1.00846     x 1.00846  (Table VI).                          
                                              ----------------------------                                      
Revised Limit/Rate...........................     124.09        159.63     .....................................
Capital-Related Component....................     +10.00                   (Chart above).                       
                                              --------------                                                    
Prospectively Determined Payment Rate........     134.09                   .....................................
----------------------------------------------------------------------------------------------------------------

V. Schedule of Limits

    Under the authority of sections 1861(v)(1)(A) and 1888 of the Act, 
the following group per diem limits will apply to the adjusted SNF 
inpatient routine service costs paid for under Medicare for cost 
reporting periods beginning on or after October 1, 1997. Medicare 
fiscal intermediaries will compute the adjusted limits for SNFs using 
the methodology set forth in this notice and will notify each SNF of 
its applicable limit. These limits, as adjusted by the applicable wage 
indexes, cost reporting year adjustments, and adjusted by the OBRA/OSHA 
per diem add-on, will remain in effect for cost reporting periods 
beginning on or after October 1, 1997, until a new schedule of cost 
limits or other provision is issued.

                       Table I.--SNF Group Limits                       
         [Cost Reporting Periods Beginning On or After 10/1/97]         
------------------------------------------------------------------------
                                                   Labor-    Non-labor *
                   Location                       related      related  
                                                 component    component 
------------------------------------------------------------------------
Freestanding:                                                           
    MSA Limit.................................       $91.23       $19.59
    Non-MSA Limit.............................        92.64        15.64
Hospital-Based:                                                         
    MSA Limit.................................       128.68        27.28
    Non-MSA Limit.............................       117.91       19.61 
------------------------------------------------------------------------
* The nonlabor portion of the limits for SNFs located in the States of  
  Alaska and Hawaii, the Commonwealth of Puerto Rico, and the Virgin    
  Islands will be increased by the following cost-of-living adjustments:


[[Page 51542]]


                                                                        
                                                              Adjustment
                             Area                               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
                                                                        


  Table II.--Prospective Rates--MSA Locations Effective October 1, 1997 
------------------------------------------------------------------------
                                      Labor-     Nonlabor-     Capital- 
            Region \1\               related      related      related  
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH,                                         
 RI, VT).........................      $120.13       $22.91       $10.00
2. Middle Atlantic (PA, NJ, NY)..       115.86        20.94         9.79
3. South Atlantic (DE, DC, FL,                                          
 GA, MD, NC, SC, VA, WV).........       103.86        16.70         9.81
4. East North Central (IL, IN,                                          
 MI, OH, WI).....................        98.70        16.40         9.18
5. East South Central (AL, KY,                                          
 MS, TN).........................        99.28        14.61         7.32
6. West North Central (IA, KS,                                          
 MN, MO, NE, ND, SD).............       105.87        17.59        10.23
7. West South Central (AR, LA,                                          
 OK, TX).........................        92.64        14.47        10.06
8. Mountain (AZ, CO, ID, MT, NV,                                        
 NM, UT, WY).....................       110.22        18.83        13.04
9. Pacific (AK, CA, HI, OR, WA)..       100.30        20.56        8.40 
------------------------------------------------------------------------
\1\ There are 17 MSAs that have counties in two or more regions. For    
  each of these MSAs, the region in which a majority of the SNFs are    
  located determines the regional rate that is paid as shown below. This
  is the same methodology as that used to implement the requirements of 
  section 1886(d)(2)(D) of the Act as they apply to the hospital        
  prospective payment system.                                           

    The MSAs are as follows:

------------------------------------------------------------------------
                            MSA                                 Region  
------------------------------------------------------------------------
Chattanooga, TN-GA.........................................            5
Cincinnati, OH-KY-IN.......................................            4
Columbus, GA-AL............................................            3
Davenport-Rock Island-Moline, IA-IL........................            4
Duluth-Superior, MN-WI.....................................            6
Evansville-Henderson, IN-KY................................            4
Huntington-Ashland, WV-KY-OH...............................            3
Johnson City-Kingsport-Bristol, TN-VA......................            5
La Crosse, WI-MN...........................................            4
Louisville, KY-IN..........................................            5
Memphis, TN-AR-MS..........................................            5
Minneapolis-St. Paul, MN-WI................................            6
Parkersburg-Marietta, WV-OH................................            3
St. Louis, MO-IL...........................................            6
Steubenville-Weirton, OH-WV................................            4
Wheeling, WV-OH............................................            3
Wilmington-Newark, DE-NJ-MD................................            3
------------------------------------------------------------------------


  Table III.--Prospective Rates--Non-MSA Locations Effective October 1, 
                                  1997                                  
------------------------------------------------------------------------
                                      Labor-     Nonlabor-     Capital- 
              Region                 related      related      related  
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH,                                         
 RI, VT).........................      $129.68       $21.62       $10.58
2. Middle Atlantic (PA, NJ, NY)..       121.14        17.40         7.94
3. South Atlantic (DE, DC, FL,                                          
 GA, MD, NC, SC, VA, WV).........       114.52        15.56         9.19
4. East North Central (IL, IN,                                          
 MI, OH, WI).....................       108.02        15.08         8.28
5. East South Central (AL, KY,                                          
 MS, TN).........................       108.81        13.70         6.77
6. West North Central (IA, KS,                                          
 MN, MO, NE, ND, SD).............       111.41        14.83         6.66
7. West South Central (AR, LA,                                          
 OK, TX).........................       105.74        13.44         9.22
8. Mountain (AZ, CO, ID, MT, NV,                                        
 NM, UT, WY).....................       110.40        16.18         8.36
9. Pacific (AK, CA, HI, OR, WA)..       123.54        20.74        10.16
------------------------------------------------------------------------


[[Page 51543]]


                  Table IV.--Wage Index for Urban Areas                 
------------------------------------------------------------------------
                                                                  Wage  
   Urban area (constituent counties or county equivalents)       index  
------------------------------------------------------------------------
0040  Abilene, TX............................................     0.8048
  Taylor, TX                                                            
0060  Aguadilla, PR..........................................     0.4237
  Aguada, PR                                                            
  Aguadilla, PR                                                         
  Moca, PR                                                              
0080  Akron, OH..............................................     0.9853
  Portage, OH                                                           
  Summit, OH                                                            
0120  Albany, GA.............................................     0.8597
  Dougherty, GA                                                         
  Lee, GA                                                               
0160  Albany-Schenectady-Troy, NY............................     0.8624
  Albany, NY                                                            
  Montgomery, NY                                                        
  Rensselaer, NY                                                        
  Saratoga, NY                                                          
  Schenectady, NY                                                       
  Schoharie, NY                                                         
0200  Albuquerque, NM........................................     0.9344
  Bernalillo, NM                                                        
  Sandoval, NM                                                          
  Valencia, NM                                                          
0220  Alexandria, LA.........................................     0.8119
  Rapides, LA                                                           
0240  Allentown-Bethlehem-Easton, PA.........................     0.9992
  Carbon, PA                                                            
  Lehigh, PA                                                            
  Northampton, PA                                                       
0280  Altoona, PA............................................     0.9510
  Blair, PA                                                             
0320  Amarillo, TX...........................................     0.8730
  Potter, TX                                                            
  Randall, TX                                                           
0380  AK Anchorage, AK.......................................     1.3224
  Anchorage,                                                            
0440 Ann Arbor, MI...........................................     1.1662
  Lenawee, MI                                                           
  Livingston, MI                                                        
  Washtenaw, MI                                                         
0450  Anniston, AL...........................................     0.8023
  Calhoun, AL                                                           
0460  Appleton-Oshkosh-Neenah, WI............................     0.8890
  Calumet, WI                                                           
  Outagamie, WI                                                         
  Winnebago, WI                                                         
0470  Arecibo, PR............................................     0.4397
  Arecibo, PR                                                           
  Camuy, PR                                                             
  Hatillo, PR                                                           
0480  Asheville, NC..........................................     0.9334
  Buncombe, NC                                                          
  Madison, NC                                                           
0500  Athens, GA.............................................     0.9408
  Clarke, GA                                                            
  Madison, GA                                                           
  Oconee, GA                                                            
0520  Atlanta, GA............................................     1.0033
  Barrow, GA                                                            
  Bartow, GA                                                            
  Carroll, GA                                                           
  Cherokee, GA                                                          
  Clayton, GA                                                           
  Cobb, GA                                                              
  Coweta, GA                                                            
  DeKalb, 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                                                            
0560  Atlantic City-Cape May, NJ.............................     1.1077
  Atlantic City, NJ                                                     
  Cape May, NJ                                                          
0600  Augusta-Aiken, GA-SC...................................     0.8836
  Columbia, GA                                                          
  McDuffie, GA                                                          
  Richmond, GA                                                          
  Aiken, SC                                                             
  Edgefield, SC                                                         
0640  Austin-San Marcos, TX..................................     0.9254
  Bastrop, TX                                                           
  Caldwell, TX                                                          
  Hays, TX                                                              
  Travis, TX Williamson, TX                                             
0680  Bakersfield, CA........................................     1.0189
  Kern, CA                                                              
0720  Baltimore, MD..........................................     0.9798
  Anne Arundel, MD                                                      
  Baltimore, MD                                                         
  Baltimore City, MD                                                    
  Carroll, MD                                                           
  Harford, MD                                                           
  Howard, MD                                                            
  Queen Annes, MD                                                       
0733  Bangor, ME.............................................     0.9391
  Penobscot, ME                                                         
0743  Barnstable-Yarmouth, MA................................     1.3651
  Barnstable, MA                                                        
0760  Baton Rouge, LA........................................     0.8433
  Ascension, LA                                                         
  East Baton Rouge, LA                                                  
  Livingston, LA                                                        
  West Baton Rouge, LA                                                  
0840  Beaumont-Port Arthur, TX...............................     0.8576
  Hardin, TX                                                            
  Jefferson, TX                                                         
  Orange, TX                                                            
0860  Bellingham, WA.........................................     1.1317
  Whatcom, WA                                                           
0870  Benton Harbor, MI......................................     0.8506
  Berrien, MI                                                           
0875  Bergen-Passaic, NJ.....................................     1.1785
  Bergen, NJ                                                            
  Passaic, NJ                                                           
0880  Billings, MT...........................................     0.9086
  Yellowstone, MT                                                       
0920  Biloxi-Gulfport-Pascagoula, MS.........................     0.8554
  Hancock, MS                                                           
  Harrison, MS                                                          
  Jackson, MS                                                           
0960  Binghamton, NY.........................................     0.8822
  Broome, NY                                                            
  Tioga, NY                                                             
1000  Birmingham, AL.........................................     0.9036
  Blount, AL                                                            
  Jefferson, AL                                                         
  St. Clair, AL                                                         
  Shelby, AL                                                            
1010  Bismarck, ND...........................................     0.7923
  Burleigh, ND                                                          
  Morton, ND                                                            
1020  Bloomington, IN........................................     0.8652
  Monroe, IN                                                            
1040  Bloomington-Normal, IL.................................     0.8990
  McLean, IL                                                            
1080  Boise City, ID.........................................     0.9383
  Ada, ID                                                               
  Canyon, ID                                                            
1123  Boston-Worcester Lawrence-Lowell-......................     1.1613
  Brockton,MA-NH                                                        
  Bristol, MA                                                           
  Essex, MA                                                             
  Middlesex, MA                                                         
  Norfolk, MA                                                           
  Plymouth, MA                                                          
  Suffolk, MA                                                           
  Worcester, MA                                                         
  Hillsborough, NH                                                      
  Merrimack, NH                                                         
  Rockingham, NH                                                        
  Strafford, NH                                                         
1125  Boulder-Longmont, CO...................................     0.9522
  Boulder, CO                                                           
1145  Brazoria, TX...........................................     0.9201
  Brazoria, TX                                                          
1150  Bremerton, WA..........................................     1.0901
  Kitsap, WA                                                            
1240  Brownsville-Harlingen-San Benito, TX...................     0.8542
  Cameron, TX                                                           
1260  Bryan-College Station, TX..............................     0.8851
  Brazos, TX                                                            
1280  Buffalo-Niagara Falls, NY..............................     0.9107
  Erie, NY                                                              
  Niagara, NY                                                           
1303  Burlington, VT.........................................     1.0068
  Chittenden, VT                                                        
  Franklin, VT                                                          
  Grand Isle, VT                                                        
1310  Caguas, PR.............................................     0.4573
  Caguas, PR                                                            
  Cayey, PR                                                             
  Cidra, PR                                                             
  Gurabo, PR                                                            
  San Lorenzo, PR                                                       
1320  Canton-Massillon, OH...................................     0.8648
  Carroll, OH                                                           
  Stark, OH                                                             
1350  Casper, WY.............................................     0.8821
  Natrona, WY                                                           
1360  Cedar Rapids, IA.......................................     0.8458
  Linn, IA                                                              
1400  Champaign-Urbana, IL...................................     0.9391
  Champaign, IL                                                         
1440  Charleston-North Charleston, SC........................     0.8963
  Berkeley, SC                                                          
  Charleston, SC                                                        
  Dorchester, SC                                                        
1480  Charleston, WV.........................................     0.9526
  Kanawha, WV                                                           
  Putnam, WV                                                            
1520  Charlotte-Gastonia-Rock Hill, NC-SC....................     0.9620
  Cabarrus, NC                                                          
  Gaston, NC                                                            
  Lincoln, NC                                                           

[[Page 51544]]

                                                                        
  Mecklenburg, NC                                                       
  Rowan, NC                                                             
  Union, NC                                                             
  York, SC                                                              
1540  Charlottesville, VA....................................     0.9155
  Albemarle, VA                                                         
  Charlottesville City, VA                                              
  Fluvanna, VA                                                          
  Greene, VA                                                            
1560  Chattanooga, TN-GA.....................................     0.8847
  Catoosa, GA                                                           
  Dade, GA                                                              
  Walker, GA                                                            
  Hamilton, TN                                                          
  Marion, TN                                                            
1580  Cheyenne, WY...........................................     0.7678
  Laramie, WY                                                           
1600  Chicago, IL............................................     1.0760
  Cook, IL                                                              
  DeKalb, IL                                                            
  DuPage, IL                                                            
  Grundy, IL                                                            
  Kane, IL                                                              
  Kendall, IL                                                           
  Lake, IL                                                              
  McHenry, IL                                                           
  Will, IL                                                              
1620  Chico-Paradise, CA.....................................     1.0417
  Butte, CA                                                             
1640  Cincinnati, OH-KY-IN...................................     0.9570
  Dearborn, IN                                                          
  Ohio, IN                                                              
  Boone, KY                                                             
  Campbell, KY                                                          
  Gallatin, KY                                                          
  Grant, KY                                                             
  Kenton, KY                                                            
  Pendleton, KY                                                         
  Brown, OH                                                             
  Clermont, OH                                                          
  Hamilton, OH                                                          
  Warren, OH                                                            
1660  Clarksville-Hopkinsville, TN-KY........................     0.7716
  Christian, KY                                                         
  Montgomery, TN                                                        
1680  Cleveland-Lorain-Elyria, OH............................     0.9886
  Ashtabula, OH                                                         
  Cuyahoga, OH                                                          
  Geauga, OH                                                            
  Lake, OH                                                              
  Lorain, OH                                                            
  Medina, OH                                                            
1720  Colorado Springs, CO...................................     0.9341
  El Paso, CO                                                           
1740  Columbia, MO...........................................     0.8899
  Boone, MO                                                             
1760  Columbia, SC...........................................     0.9160
Lexington, SC                                                           
Richland, SC                                                            
1800  Columbus, GA-AL Russell, AL............................     0.7779
  Chattanoochee, GA                                                     
  Harris, GA                                                            
  Muscogee, GA                                                          
1840  Columbus, OH...........................................     0.9681
  Delaware, OH                                                          
  Fairfield, OH                                                         
  Franklin, OH                                                          
  Licking, OH                                                           
  Madison, OH                                                           
  Pickaway, OH                                                          
1880  Corpus Christi, TX.....................................     0.8881
  Nueces, TX                                                            
  San Patricio, TX                                                      
1900  Cumberland, MD-WV......................................     0.8671
  Allegany, MD                                                          
  Mineral, WV                                                           
1920  Dallas, TX.............................................     0.9729
  Collin, TX                                                            
  Dallas, TX                                                            
  Denton, TX                                                            
  Ellis, TX                                                             
  Henderson, TX                                                         
  Hunt, TX                                                              
  Kaufman, TX                                                           
  Rockwall, TX                                                          
1950  Danville, VA...........................................     0.8497
  Danville City, VA                                                     
  Pittsylvania, VA                                                      
1960  Davenport-Rock Island-Moline, IA-IL....................     0.8388
  Scott, IA                                                             
  Henry, IL                                                             
  Rock Island, IL                                                       
2000  Dayton-Springfield, OH.................................     0.9559
  Clark, OH                                                             
  Greene, OH                                                            
  Miami, OH                                                             
  Montgomery, OH                                                        
2020  Daytona Beach, FL......................................     0.8871
  Flagler, FL                                                           
  Volusia, FL                                                           
2030  Decatur, AL............................................     0.8384
  Lawrence, AL                                                          
  Morgan, AL                                                            
2040  Decatur, IL............................................     0.7848
  Macon, IL                                                             
2080  Denver, CO.............................................     1.0166
  Adams, CO                                                             
  Arapahoe, CO                                                          
  Denver, CO                                                            
  Douglas, CO                                                           
  Jefferson, CO                                                         
2120  Des Moines, IA.........................................     0.8815
  Dallas, IA                                                            
  Polk, IA                                                              
  Warren, IA                                                            
2160  Detroit, MI............................................     1.0724
  Lapeer, MI                                                            
  Macomb, MI                                                            
  Monroe, MI                                                            
  Oakland, MI                                                           
  St. Clair, MI                                                         
  Wayne, MI                                                             
2180  Dothan, AL.............................................     0.7740
  Dale, AL                                                              
  Houston, AL                                                           
2190  Dover, DE..............................................     0.8997
  Kent, DE                                                              
2200  Dubuque, IA............................................     0.8112
  Dubuque, IA                                                           
2240  Duluth-Superior, MN-WI.................................     0.9416
  St. Louis, MN                                                         
  Douglas, WI                                                           
2281  Dutchess County, NY....................................     1.0589
  Dutchess, NY                                                          
2290  Eau Claire, WI.........................................     0.8678
  Chippewa, WI                                                          
  Eau Claire, WI                                                        
2320  El Paso, TX............................................     0.9464
  El Paso, TX                                                           
2330  Elkhart-Goshen, IN.....................................     0.8801
  Elkhart, IN                                                           
2335  Elmira, NY.............................................     0.8417
  Chemung, NY                                                           
2340  Enid, OK...............................................     0.7862
  Garfield, OK                                                          
2360  Erie, PA...............................................     0.9159
  Erie, PA                                                              
2400  Eugene-Springfield, OR.................................     1.1271
  Lane, OR                                                              
2440  Evansville-Henderson, IN-KY............................     0.8983
  Posey, IN                                                             
  Vanderburgh, IN                                                       
  Warrick, IN                                                           
  Henderson, KY                                                         
2520  Fargo-Moorhead, ND-MN..................................     0.9045
  Clay, MN                                                              
  Cass, ND                                                              
2560  Fayetteville, NC.......................................     0.9007
  Cumberland, NC                                                        
2580  Fayetteville-Springdale-Rogers, AR.....................     0.7220
  Benton, AR                                                            
  Washington, AR                                                        
2620  Flagstaff, AZ-UT.......................................     0.9019
  Coconino, AZ                                                          
  Kane, UT                                                              
2640 Flint, MI...............................................     1.1248
  Genesee, MI                                                           
2650  Florence, AL...........................................     0.7938
  Colbert, AL                                                           
  Lauderdale, AL                                                        
2655  Florence, SC...........................................     0.8594
  Florence, SC                                                          
2670  Fort Collins-Loveland, CO..............................     1.0562
  Larimer, CO                                                           
2680  Ft. Lauderdale, FL.....................................     1.0548
  Broward, FL                                                           
2700  Fort Myers-Cape Coral, FL..............................     0.9032
  Lee, FL                                                               
2710  Fort Pierce-Port St. Lucie, FL.........................     1.0169
  Martin, FL                                                            
  St. Lucie, FL                                                         
2720  Fort Smith, AR-OK......................................     0.7864
  Crawford, AR                                                          
  Sebastian, AR                                                         
  Sequoyah, OK                                                          
2750  Fort Walton Beach, FL..................................     0.9192
  Okaloosa, FL                                                          
2760  Fort Wayne, IN.........................................     0.8800
  Adams, IN                                                             
  Allen, IN                                                             
  DeKalb, IN                                                            
  Huntington, IN                                                        
  Wells, IN                                                             
  Whitley, IN                                                           
2800  Forth Worth-Arlington, TX..............................     1.0153
  Hood, TX                                                              
  Johnson, TX                                                           
  Parker, TX                                                            
  Tarrant, TX                                                           
2840  Fresno, CA.............................................     1.1183
  Fresno, CA                                                            
  Madera, CA                                                            
2880  Gadsden, AL............................................     0.8881

[[Page 51545]]

                                                                        
  Etowah, AL                                                            
2900  Gainesville, FL........................................     0.9434
  Alachua, FL                                                           
2920  Galveston-Texas City, TX...............................     1.0997
  Galveston, TX                                                         
2960  Gary, IN...............................................     0.9641
  Lake, IN                                                              
  Porter, IN                                                            
2975  Glens Falls, NY........................................     0.8562
  Warren, NY                                                            
  Washington, NY                                                        
2980  Goldsboro, NC..........................................     0.8393
  Wayne, NC                                                             
2985  Grand Forks, ND-MN.....................................     0.9011
  Polk, MN                                                              
  Grand Forks, ND                                                       
2995  Grand Junction, CO.....................................     0.8336
  Mesa, CO                                                              
3000  Grand Rapids-Muskegon-Holland, MI......................     1.0119
  Allegan, MI                                                           
  Kent, MI                                                              
  Muskegon, MI                                                          
  Ottawa, MI                                                            
3040  Great Falls, MT........................................     0.8681
  Cascade, MT                                                           
3060  Greeley, CO............................................     0.9690
  Weld, CO                                                              
3080  Green Bay, WI..........................................     0.9038
  Brown, WI                                                             
3120  Greensboro-Winston-Salem-High Point, NC................     0.9332
  Alamance, NC                                                          
  Davidson, NC                                                          
  Davie, NC                                                             
  Forsyth, NC                                                           
  Guilford, NC                                                          
  Randolph, NC                                                          
  Stokes, NC                                                            
  Yadkin, NC                                                            
3150  Greenville, NC.........................................     0.9078
  Pitt, NC                                                              
3160  Greenville-Spartanburg-Anderson, SC....................     0.8927
  Anderson, SC                                                          
  Cherokee, SC                                                          
  Greenville, SC                                                        
  Pickens, SC                                                           
  Spartanburg, SC                                                       
3180 Hagerstown, MD..........................................     0.9175
  Washington, MD                                                        
3200  Hamilton-Middletown, OH................................     0.9490
  Butler, OH                                                            
3240  Harrisburg-Lebanon-Carlisle, PA........................     1.0158
  Cumberland, PA                                                        
  Dauphin, PA                                                           
  Lebanon, PA                                                           
  Perry, PA                                                             
3283  Hartford, CT...........................................     1.2367
  Hartford, CT                                                          
  Litchfield, CT                                                        
  Middlesex, CT                                                         
  Tolland, CT                                                           
3285  Hattiesburg, MS........................................     0.7252
  Forrest, MS                                                           
  Lamar, MS                                                             
3290  Hickory-Morganton-Lenoir, NC...........................     0.8626
  Alexander, NC                                                         
  Burke, NC                                                             
  Caldwell, NC                                                          
  Catawba, NC                                                           
3320  Honolulu, HI...........................................     1.1461
  Honolulu, HI                                                          
3350  Houma, LA..............................................     0.7853
  Lafourche, LA                                                         
  Terrebonne, LA                                                        
3360  Houston, TX............................................     1.0000
  Chambers, TX                                                          
  Fort Bend, TX                                                         
  Harris, TX                                                            
  Liberty, TX                                                           
  Montgomery, TX                                                        
  Waller, TX                                                            
3400  Huntington-Ashland, WV-KY-OH...........................     0.9174
  Boyd, KY                                                              
  Carter, KY                                                            
  Greenup, KY                                                           
  Lawrence, OH                                                          
  Cabell, WV                                                            
  Wayne, WV                                                             
3440  Huntsville, AL.........................................     0.8206
  Limestone, AL                                                         
  Madison, AL                                                           
3480  Indianapolis, IN.......................................     0.9903
  Boone, IN                                                             
  Hamilton, IN                                                          
  Hancock, IN                                                           
  Hendricks, IN                                                         
  Johnson, IN                                                           
  Madison, IN                                                           
  Marion, IN                                                            
  Morgan, IN                                                            
  Shelby, IN                                                            
3500  Iowa City, IA..........................................     0.9361
  Johnson, IA                                                           
3520  Jackson, MI............................................     0.9045
  Jackson, MI                                                           
3560  Jackson, MS............................................     0.7884
  Hinds, MS                                                             
  Madison, MS                                                           
  Rankin, MS                                                            
3580  Jackson, TN............................................     0.8288
  Chester, TN                                                           
  Madison, TN                                                           
3600  Jacksonville, FL.......................................     0.9086
  Clay, FL                                                              
  Duval, FL                                                             
  Nassau, FL                                                            
  St. Johns, FL                                                         
3605  Jacksonville, NC.......................................     0.7055
  Onslow, NC                                                            
3610  Jamestown, NY..........................................     0.7670
  Chautaqua, NY                                                         
3620  Janesville-Beloit, WI..................................     0.8645
  Rock, WI                                                              
3640  Jersey City, NJ........................................     1.1382
  Hudson, NJ                                                            
3660  Johnson City-Kingsport-Bristol, TN-VA..................     0.8884
  Carter, TN                                                            
  Hawkins, TN                                                           
  Sullivan, TN                                                          
  Unicoi, TN                                                            
  Washington, TN                                                        
  Bristol City, VA                                                      
  Scott, VA                                                             
  Washington, VA                                                        
3680  Johnstown, PA..........................................     0.8398
  Cambria, PA                                                           
  Somerset, PA                                                          
3700  Jonesboro, AR..........................................     0.7220
  Craighead, AR                                                         
3710  Joplin, MO.............................................     0.7638
  Jasper, MO                                                            
  Newton, MO                                                            
3720  Kalamazoo-Battlecreek, MI..............................     1.0542
  Calhoun, MI                                                           
  Kalamazoo, MI                                                         
  Van Buren, MI                                                         
3740  Kankakee, IL...........................................     0.9115
  Kankakee, IL                                                          
3760  Kansas City, KS-MO.....................................     0.9478
  Johnson, KS                                                           
  Leavenworth, KS                                                       
  Miami, KS                                                             
  Wyandotte, KS                                                         
  Cass, MO                                                              
  Clay, MO                                                              
  Clinton, MO                                                           
  Jackson, MO                                                           
  Lafayette, MO                                                         
  Platte, MO                                                            
  Ray, MO                                                               
3800  Kenosha, WI............................................     0.9145
  Kenosha, WI                                                           
3810  Killeen-Temple, TX.....................................     1.0392
  Bell, TX                                                              
  Coryell, TX                                                           
3840  Knoxville, TN..........................................     0.8502
  Anderson, TN                                                          
  Blount, TN                                                            
  Knox, TN                                                              
  Loudon, TN                                                            
  Sevier, TN                                                            
  Union, TN                                                             
3850  Kokomo, IN.............................................     0.8590
  Howard, IN                                                            
  Tipton, IN                                                            
3870  La Crosse, WI-MN.......................................     0.8618
  Houston, MN                                                           
  La Crosse, WI                                                         
3880  Lafayette, LA..........................................     0.8163
  Acadia, LA                                                            
  Lafayette, LA                                                         
  St. Landry, LA                                                        
  St. Martin, LA                                                        
3920  Lafayette, IN..........................................     0.8781
  Clinton, IN                                                           
  Tippecanoe, IN                                                        
3960  Lake Charles, LA.......................................     0.8034
  Calcasieu, LA                                                         
3980  Lakeland-Winter Haven, FL..............................     0.8774
  Polk, FL                                                              
4000  Lancaster, PA..........................................     0.9583
  Lancaster, PA                                                         
4040  Lansing-East Lansing, MI...............................     1.0010
  Clinton, MI                                                           
  Eaton, MI                                                             
  Ingham, MI                                                            
4080  Laredo, TX.............................................     0.7073
  Webb, TX                                                              
4100  Las Cruces, NM.........................................     0.8497
  Dona Ana, NM                                                          
4120  Las Vegas, NV-AZ.......................................     1.0870
  Mohave, AZ                                                            
  Clark, NV                                                             

[[Page 51546]]

                                                                        
  Nye, NV                                                               
4150  Lawrence, KS...........................................     0.8597
  Douglas, KS                                                           
4200  Lawton, OK.............................................     0.8365
  Comanche, OK                                                          
4243  Lewiston-Auburn, ME....................................     0.9410
  Androscoggin, ME                                                      
4280  Lexington, KY..........................................     0.8293
  Bourbon, KY                                                           
  Clark, KY                                                             
  Fayette, KY                                                           
  Jessamine, KY                                                         
  Madison, KY                                                           
  Scott, KY                                                             
  Woodford, KY                                                          
4320  Lima, OH...............................................     0.8732
  Allen, OH                                                             
  Auglaize, OH                                                          
4360  Lincoln, NE............................................     0.9161
  Lancaster, NE                                                         
4400  Little Rock-North Little Rock, AR......................     0.8597
  Faulkner, AR                                                          
  Lonoke, AR                                                            
  Pulaski, AR                                                           
  Saline, AR                                                            
4420  Longview-Marshall, TX..................................     0.8645
  Gregg, TX                                                             
  Harrison, TX                                                          
  Upshur, TX                                                            
4480  Los Angeles-Long Beach, CA.............................     1.2343
  Los Angeles, CA                                                       
4520  Louisville, KY-IN......................................     0.9447
  Clark, IN                                                             
  Floyd, IN                                                             
  Harrison, IN                                                          
  Scott, IN                                                             
  Bullitt, KY                                                           
  Jefferson, KY                                                         
  Oldham, KY                                                            
4600  Lubbock, TX............................................     0.8510
  Lubbock, TX                                                           
4640  Lynchburg, VA..........................................     0.8052
  Amherst, VA                                                           
  Bedford City, VA                                                      
  Bedford, VA                                                           
  Campbell, VA                                                          
  Lynchburg City, VA                                                    
4680  Macon, GA..............................................     0.8824
  Bibb, GA                                                              
  Houston, GA                                                           
  Jones, GA                                                             
  Peach, GA                                                             
  Twiggs, GA                                                            
4720  Madison, WI............................................     1.0021
  Dane, WI                                                              
4800  Mansfield, OH..........................................     0.8524
  Crawford, OH                                                          
  Richland, OH                                                          
4840  Mayaguez, PR...........................................     0.4215
  Anasco, PR                                                            
  Cabo Rojo, PR                                                         
  Hormigueros, PR                                                       
  Mayaguez, PR                                                          
  Sabana Grande, PR                                                     
  San German, PR                                                        
4880  McAllen-Edinburg-Mission, TX...........................     0.8485
  Hidalgo, TX                                                           
4890  Medford-Ashland, OR....................................     1.0068
  Jackson, OR                                                           
4900  Melbourne-Titusville-Palm Bay, FL......................     0.9068
  Brevard, Fl                                                           
4920  Memphis, TN-AR-MS......................................     0.8166
  Crittenden, AR                                                        
  DeSoto, MS                                                            
  Fayette, TN                                                           
  Shelby, TN                                                            
  Tipton, TN                                                            
4940  Merced, CA.............................................     1.0660
  Merced, CA                                                            
5000  Miami, FL..............................................     0.9938
  Dade, FL                                                              
5015  Middlesex-Somerset-Hunterdon, NJ.......................     1.0883
  Hunterdon, NJ                                                         
  Middlesex, NJ                                                         
  Somerset, NJ                                                          
5080  Milwaukee-Waukesha, WI.................................     0.9645
  Milwaukee, WI                                                         
  Ozaukee, WI                                                           
  Washington, WI                                                        
  Waukesha, WI                                                          
5120  Minneapolis-St. Paul, MN-WI............................     1.0777
  Anoka, MN                                                             
  Carver, MN                                                            
  Chicago, MN                                                           
  Dakota, MN                                                            
  Hennepin, MN                                                          
  Isanti, MN                                                            
  Ramsey, MN                                                            
  Scott, MN                                                             
  Sherburne, MN                                                         
  Washington, MN                                                        
  Wright, MN                                                            
  Pierce, WI                                                            
  St. Croix, WI                                                         
5160  Mobile, AL.............................................     0.7981
  Baldwin, AL                                                           
  Mobile, AL                                                            
5170  Modesto, CA............................................     1.0600
  Stanislaus, CA                                                        
5190  Monmouth-Ocean, NJ.....................................     1.0833
  Monmouth, NJ                                                          
  Ocean, NJ                                                             
5200  Monroe, LA.............................................     0.8211
  Ouachita, LA                                                          
5240  Montgomery, AL.........................................     0.7876
  Autauga, AL                                                           
  Elmore, AL                                                            
  Montgomery, AL                                                        
5280  Muncie, IN.............................................     0.9714
  Delaware, IN                                                          
5330  Myrtle Beach, SC.......................................     0.7790
  Horry, SC                                                             
5345  Naples, FL.............................................     1.0199
  Collier, FL                                                           
5360  Nashville, TN..........................................     0.9081
  Cheatham, TN                                                          
  Davidson, TN                                                          
  Dickson, TN                                                           
  Robertson, TN                                                         
  Rutherford, TN                                                        
  Sumner, TN                                                            
  Williamson, TN                                                        
  Wilson, TN                                                            
5380  Nassau-Suffolk, NY.....................................     1.3547
  Nassau, NY                                                            
  Suffolk, NY                                                           
5483  New Haven-Bridgeport-Stamford-Danbury-.................     1.2704
  Waterbury,CT                                                          
  Fairfield, CT                                                         
  New Haven, CT                                                         
5523  New London-Norwich, CT.................................     1.2262
  New London, CT                                                        
5560  New Orleans, LA........................................     0.9294
  Jefferson, LA                                                         
  Orleans, LA                                                           
  Plaquemines, LA                                                       
  St. Bernard, LA                                                       
  St. Charles, LA                                                       
  St. James, LA                                                         
  St. John Baptist, LA                                                  
  St. Tammany, LA                                                       
5600  New York, NY...........................................     1.4154
  Bronx, NY                                                             
  Kings, NY                                                             
  New York, NY                                                          
  Putnam, NY                                                            
  Queens, NY                                                            
  Richmond, NY                                                          
  Rockland, NY                                                          
  Westchester, NY                                                       
5640  Newark, NJ.............................................     1.1762
  Essex, NJ                                                             
  Morris, NJ                                                            
  Sussex, NJ                                                            
  Union, NJ                                                             
  Warren, NJ                                                            
5660  Newburgh, NY-PA........................................     1.0803
  Orange, NY                                                            
  Pike, PA                                                              
5720  Norfolk-Virginia Beach-Newport News, VA-NC.............     0.8348
  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                                                              
5775  Oakland, CA............................................     1.4991
  Alameda, CA                                                           
  Contra Costa, CA                                                      
5790  Ocala, FL..............................................     0.9105
  Marion, FL                                                            
5800  Odessa-Midland, TX.....................................     0.8482
  Ector, TX                                                             
  Midland, TX                                                           
5880  Oklahoma City, OK......................................     0.8371
  Canadian, OK                                                          
  Cleveland, OK                                                         
  Logan, OK                                                             
  McClain, OK                                                           
  Oklahoma, OK                                                          
  Pottawatomie, OK                                                      
5910  Olympia, WA............................................     1.0689
  Thurston, WA                                                          

[[Page 51547]]

                                                                        
5920  Omaha, NE-IA...........................................     0.9480
  Pottawattamie, IA                                                     
  Cass, NE                                                              
  Douglas, NE                                                           
  Sarpy, NE                                                             
  Washington, NE                                                        
5945  Orange County, CA......................................     1.1966
  Orange, CA                                                            
5960  Orlando, FL............................................     0.9470
  Lake, FL                                                              
  Orange, FL                                                            
  Osceola, FL                                                           
  Seminole, FL                                                          
5990  Owensboro, KY..........................................     0.7575
  Daviess, KY                                                           
6015  Panama City, FL........................................     0.8061
  Bay, FL                                                               
6020  Parkersburg-Marietta, WV-OH............................     0.7877
  Washington, OH                                                        
  Wood, WV                                                              
6080  Pensacola, FL..........................................     0.8202
  Escambia, FL                                                          
  Santa Rosa, FL                                                        
6120  Peoria-Pekin, IL.......................................     0.8905
  Peoria, IL                                                            
  Tazewell, IL                                                          
  Woodford, IL                                                          
6160  Philadelphia, PA-NJ....................................     1.1237
  Burlington, NJ                                                        
  Camden, NJ                                                            
  Gloucester, NJ                                                        
  Salem, NJ                                                             
  Bucks, PA                                                             
  Chester, PA                                                           
  Delaware, PA                                                          
  Montgomery, PA                                                        
  Philadelphia, PA                                                      
6200  Phoenix-Mesa, AZ.......................................     0.9810
  Maricopa, AZ                                                          
  Pinal, AZ                                                             
6240  Pine Bluff, AR.........................................     0.7886
  Jefferson, AR                                                         
6280  Pittsburgh, PA.........................................     0.9701
  Allegheny, PA                                                         
  Beaver, PA                                                            
  Butler, PA                                                            
  Fayette, PA                                                           
  Washington, PA                                                        
  Westmoreland, PA                                                      
6323  Pittsfield, MA.........................................     1.0552
  Berkshire, MA                                                         
6340  Pocatelo, ID...........................................     0.8784
  Bannock ID                                                            
6360  Ponce, PR..............................................     0.4685
  Guayanilla, PR                                                        
  Juana Diaz, PR                                                        
  Penuelas, PR                                                          
  Ponce, PR                                                             
  Villalba, PR                                                          
  Yauco, PR                                                             
6403  Portland, ME...........................................     0.9619
  Cumberland, ME                                                        
  Sagadahoc, ME                                                         
  York, ME                                                              
6440  Portland-Vancouver, OR-WA..............................     1.1235
  Clackamas, OR                                                         
  Columbia, OR                                                          
  Multnomah, OR                                                         
  Washington, OR                                                        
  Yamhill, OR                                                           
  Clark, WA                                                             
6483  Providence-Warwick-Pawtucket, RI.......................     1.1092
  Bristol, RI                                                           
  Kent, RI                                                              
  Newport, RI                                                           
  Providence, RI                                                        
  Washington, RI                                                        
6520  Provo-Orem, UT.........................................     1.0116
  Utah, UT                                                              
6560  Pueblo, CO.............................................     0.8284
  Pueblo, CO                                                            
6580  Punta Gorda, FL........................................     0.8999
  Charlotte, FL                                                         
6600  Racine, WI.............................................     0.8835
  Racine, WI                                                            
6640  Raleigh-Durham-Chapel Hill, NC.........................     0.9728
  Chatham, NC                                                           
  Durham, NC                                                            
  Franklin, NC                                                          
  Johnston, NC                                                          
  Orange, NC                                                            
  Wake, NC                                                              
6660  Rapid City, SD.........................................     0.8455
  Pennington, SD                                                        
6680  Reading, PA............................................     0.9445
  Berks, PA                                                             
6690  Redding, CA............................................     1.1605
  Shasta, CA                                                            
6720  Reno, NV...............................................     1.1018
  Washoe, NV                                                            
6740  Richland-Kennewick-Pasco, WA...........................     0.9970
  Benton, WA                                                            
  Franklin, WA                                                          
6760  Richmond-Petersburg, VA................................     0.9194
  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                                                     
6780  Riverside-San Bernardino, CA...........................     1.1379
  Riverside, CA                                                         
  San Bernardino, CA                                                    
6800  Roanoke, VA............................................     0.8702
  Botetourt, VA                                                         
  Roanoke, VA                                                           
  Roanoke City, VA                                                      
  Salem City, VA                                                        
6820  Rochester, MN..........................................     1.0428
  Olmsted, MN                                                           
6840  Rochester, NY..........................................     0.9649
  Genesee, NY                                                           
  Livingston, NY                                                        
  Monroe, NY                                                            
  Ontario, NY                                                           
  Orleans, NY                                                           
  Wayne, NY                                                             
6880  Rockford, IL...........................................     0.8994
  Boone, IL                                                             
  Ogle, IL                                                              
  Winnebago, IL                                                         
6895  Rocky Mount, NC........................................     0.8955
  Edgecombe, NC                                                         
  Nash, NC                                                              
6920  Sacramento, CA.........................................     1.2351
  El Dorado, CA                                                         
  Placer, CA                                                            
  Sacramento, CA                                                        
6960  Saginaw-Bay City-Midland, MI...........................     0.9612
  Bay, MI                                                               
  Midland, MI                                                           
  Saginaw, MI                                                           
6980  St. Cloud, MN..........................................     0.9457
  Benton, MN                                                            
  Stearns, MN                                                           
7000  St. Joseph, MO.........................................     0.8551
  Andrews, MO                                                           
  Buchanan, MO                                                          
7040  St. Louis, MO-IL.......................................     0.9022
  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                                                            
7080  Salem, OR..............................................     0.9728
  Marion, OR                                                            
  Polk, OR                                                              
7120  Salinas, CA............................................     1.3803
  Monterey, CA                                                          
7160  Salt Lake City-Ogden, UT...............................     0.9677
  Davis, UT                                                             
  Salt Lake, UT                                                         
  Weber, UT                                                             
7200  San Angelo, TX.........................................     0.7577
  Tom Green, TX                                                         
7240  San Antonio, TX........................................     0.8390
  Bexar, TX                                                             
  Comal, TX                                                             
  Guadalupe, TX                                                         
  Wilson, TX                                                            
7320  San Diego, CA..........................................     1.2134
  San Diego, CA                                                         
7360  San Francisco, CA......................................     1.4260
  Marin, CA                                                             
  San Francisco, CA                                                     
  San Mateo, CA                                                         
7400  San Jose, CA...........................................     1.4519
  Santa Clara, CA                                                       
7440  San Juan-Bayamon, PR...................................     0.4506
  Aguas Buenas, PR                                                      
  Barceloneta, PR                                                       
  Bayamon, PR                                                           
  Canovanas, PR                                                         
  Carolina, PR                                                          
  Catano, PR                                                            
  Ceiba, PR                                                             
  Comerio, PR                                                           
  Corozal, PR                                                           
  Dorado, PR                                                            

[[Page 51548]]

                                                                        
  Fajardo, PR                                                           
  Florida, PR                                                           
  Guaynabo, PR                                                          
  Humacao, PR                                                           
  Juncos, PR                                                            
  Los Piedras, PR                                                       
  Loiza, PR                                                             
  Luguillo, PR                                                          
  Manati, PR                                                            
  Morovis, PR                                                           
  Naguabo, 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                                                           
7460  San Luis Obispo-Atascadero-Paso Robles, CA.............     1.1561
  San Luis Obispo, CA                                                   
7480  Santa Barbara-Santa Maria-Lompoc, CA...................     1.1242
  Santa Barbara, CA                                                     
7485  Santa Cruz-Watsonville, CA.............................     1.3520
  Santa Cruz, CA                                                        
7490  Santa Fe, NM...........................................     1.0823
  Los Alamos, NM                                                        
  Santa Fe, NM                                                          
7500  Santa Rosa, CA.........................................     1.2526
  Sonoma, CA                                                            
7510  Sarasota-Bradenton, FL.................................     0.9789
  Manatee, FL                                                           
  Sarasota, FL                                                          
7520  Savannah, GA...........................................     0.9649
  Bryan, GA                                                             
  Chatham, GA                                                           
  Effingham, GA                                                         
7560  Scranton--Wilkes-Barre--Hazleton, PA...................     0.8752
  Columbia, PA                                                          
  Lackawanna, PA                                                        
  Luzerne, PA                                                           
  Wyoming, PA                                                           
7600  Seattle-Bellevue-Everett, WA...........................     1.1384
  Island, WA                                                            
  King, WA                                                              
  Snohomish, WA                                                         
7610  Sharon, PA.............................................     0.8885
  Mercer, PA                                                            
7620  Sheboygan, WI..........................................     0.7764
  Sheboygan, WI                                                         
7640  Sherman-Denison, TX....................................     0.8614
  Grayson, TX                                                           
7680  Shreveport-Bossier City, LA............................     0.9359
  Bossier, LA                                                           
  Caddo, LA                                                             
  Webster, LA                                                           
7720  Sioux City, IA-NE......................................     0.8313
  Woodbury, IA                                                          
  Dakota, NE                                                            
7760  Sioux Falls, SD........................................     0.8620
  Lincoln, SD                                                           
  Minnehaha, SD                                                         
7800  South Bend, IN.........................................     0.9934
  St. Joseph, IN                                                        
7840  Spokane, WA............................................     1.0524
  Spokane, WA                                                           
7880  Springfield, IL........................................     0.8671
  Menard, IL                                                            
  Sangamon, IL                                                          
7920  Springfield, MO........................................     0.7823
  Christian, MO                                                         
  Greene, MO                                                            
  Webster, MO                                                           
8003  Springfield, MA........................................     1.0586
  Hampden, MA                                                           
  Hampshire, MA                                                         
8050  State College, PA......................................     0.9538
  Centre, PA                                                            
8080  Steubenville-Weirton, OH-WV............................     0.8266
  Jefferson, OH                                                         
  Brooke, WV                                                            
  Hancock, WV                                                           
8120  Stockton-Lodi, CA......................................     1.1330
  San Joaquin, CA                                                       
8140  Sumter, SC.............................................     0.7699
  Sumter, SC                                                            
8160  Syracuse, NY...........................................     0.9395
  Cayuga, NY                                                            
  Madison, NY                                                           
  Onondaga, NY                                                          
  Oswego, NY                                                            
8200  Tacoma, WA.............................................     1.0860
  Pierce, WA                                                            
8240  Tallahassee, FL........................................     0.8313
  Gadsden, FL                                                           
  Leon, FL                                                              
8280  Tampa-St. Petersburg-Clearwater, FL....................     0.9250
  Hernando, FL                                                          
  Hillsborough, FL                                                      
  Pasco, FL                                                             
  Pinellas, FL                                                          
8320  Terre Haute, IN........................................     0.8591
  Clay, IN                                                              
  Vermillion, IN                                                        
  Vigo, IN                                                              
8360  Texarkana, AR-Texarkana, TX............................     0.8503
  Miller, AR                                                            
  Bowie, TX                                                             
8400  Toledo, OH.............................................     1.0361
  Fulton, OH                                                            
  Lucas, OH                                                             
  Wood, OH                                                              
8440  Topeka, KS.............................................     1.0086
  Shawnee, KS                                                           
8480  Trenton, NJ............................................     1.0549
  Mercer, NJ                                                            
8520  Tucson, AZ.............................................     0.9068
  Pima, AZ                                                              
8560  Tulsa, OK..............................................     0.8095
  Creek, OK                                                             
  Osage, OK                                                             
  Rogers, OK                                                            
  Tulsa, OK                                                             
  Wagoner, OK                                                           
8600  Tuscaloosa, AL.........................................     0.7784
  Tuscaloosa, AL                                                        
8640  Tyler, TX..............................................     0.9996
  Smith, TX                                                             
8680  Utica-Rome, NY.........................................     0.8413
  Herkimer, NY                                                          
  Oneida, NY                                                            
8720  Vallejo-Fairfield-Napa, CA.............................     1.3947
  Napa, CA                                                              
  Solano, CA                                                            
8735  Ventura, CA............................................     1.1454
  Ventura, CA                                                           
8750  Victoria, TX...........................................     0.8393
  Victoria, TX                                                          
8760  Vineland-Millville-Bridgeton, NJ.......................     0.9993
  Cumberland, NJ                                                        
8780  Visalia-Tulare-Porterville, CA.........................     1.0151
  Tulare, CA                                                            
8800  Waco, TX...............................................     0.7772
  McLennan, TX                                                          
8840  Washington, DC-MD-VA-WV................................     1.0823
  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                                                         
8920  Waterloo-Cedar Falls, IA...............................     0.8705
  Black Hawk, IA                                                        
8940  Wausau, WI.............................................     1.0323
  Marathon, WI                                                          
8960  West Palm Beach-Boca Raton, FL.........................     1.0202
  Palm Beach, FL                                                        
9000  Wheeling, OH-WV........................................     0.7563
  Belmont, OH                                                           
  Marshall, WV                                                          
  Ohio, WV                                                              
9040  Wichita, KS............................................     0.9369
  Butler, KS                                                            
  Harvey, KS                                                            
  Sedgwick, KS                                                          
9080  Wichita Falls, TX......................................     0.8041
  Archer, TX                                                            
  Wichita, TX                                                           
9140  Williamsport, PA.......................................     0.8467
  Lycoming, PA                                                          
9160  Wilmington-Newark, DE-MD...............................     1.1315
  New Castle, DE                                                        
  Cecil, MD                                                             
9200  Wilmington, NC.........................................     0.9046
  New Hanover, NC                                                       
  Brunswick, NC                                                         

[[Page 51549]]

                                                                        
9260  Yakima, WA.............................................     1.0026
  Yakima, WA                                                            
9270  Yolo, CA...............................................     1.1444
  Yolo, CA                                                              
9280  York, PA...............................................     0.9104
  York, PA                                                              
9320  Youngstown-Warren, OH..................................     0.9742
  Columbiana, OH                                                        
  Mahoning, OH                                                          
  Trumbull, OH                                                          
9340  Yuba City, CA..........................................     1.0414
  Sutter, CA                                                            
  Yuba, CA                                                              
9360  Yuma, AZ...............................................     0.9497
  Yuma, AZ                                                              
------------------------------------------------------------------------


                  Table V.--Wage Index for Rural Areas                  
------------------------------------------------------------------------
                                                                  Wage  
                        Nonurban area                            index  
------------------------------------------------------------------------
Alabama......................................................     0.7122
Alaska.......................................................     1.2444
Arizona......................................................     0.7928
Arkansas.....................................................     0.6954
California...................................................     1.0002
Colorado.....................................................     0.8092
Connecticut..................................................     1.2759
Delaware.....................................................     0.9447
Florida......................................................     0.8668
Georgia......................................................     0.7653
Hawaii.......................................................     1.0245
Idaho........................................................     0.8277
Illinois.....................................................     0.7553
Indiana......................................................     0.8124
Iowa.........................................................     0.7373
Kansas.......................................................     0.7107
Kentucky.....................................................     0.7753
Louisiana....................................................     0.7232
Maine........................................................     0.8317
Maryland.....................................................     0.8427
Massachusetts................................................     1.0070
Michigan.....................................................     0.8830
Minnesota....................................................     0.8144
Mississippi..................................................     0.6793
Missouri.....................................................     0.7261
Montana......................................................     0.8128
Nebraska.....................................................     0.7214
Nevada.......................................................     0.8775
New Hampshire................................................     0.9745
New Jersey 1.................................................  .........
New Mexico...................................................     0.8000
New York.....................................................     0.8558
North Carolina...............................................     0.7950
North Dakota.................................................     0.7358
Ohio.........................................................     0.8332
Oklahoma.....................................................     0.6942
Oregon.......................................................     0.9664
Pennsylvania.................................................     0.8453
Puerto Rico..................................................     0.4026
Rhode Island1................................................  .........
South Carolina...............................................     0.7668
South Dakota.................................................     0.7063
Tennessee....................................................     0.7341
Texas........................................................     0.7462
Utah.........................................................     0.8848
Vermont......................................................     0.8921
Virginia.....................................................     0.7713
Virgin Islands...............................................     0.5660
Washington...................................................     0.9933
West Virginia................................................     0.7904
Wisconsin....................................................     0.8430
Wyoming......................................................    0.8177 
------------------------------------------------------------------------
\1\ All counties within the State are classified urban.                 


          Table VI.--Cost Reporting Year Adjustment Factors \1\         
                       [Effective October 1, 1997]                      
------------------------------------------------------------------------
                                                                  The   
           If a SNF cost reporting period begins:             adjustment
                                                              factor is:
------------------------------------------------------------------------
Nov. 1, 1997................................................     1.00285
Dec. 1, 1997................................................     1.00560
Jan. 1, 1998................................................     1.00846
Feb. 1, 1998................................................     1.01149
Mar. 1, 1998................................................     1.01424
Apr. 1, 1998................................................     1.01729
May 1, 1998.................................................     1.02025
June 1, 1998................................................     1.02332
July 1, 1998................................................     1.02630
Aug. 1, 1998................................................     1.02939
Sept. 1, 1998...............................................    1.03249 
------------------------------------------------------------------------
\1\ Based on compounded projected market basket inflation rates of 3.4  
  percent for 1998 and 3.6 percent for 1999.                            

VI. 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 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 SNFs are considered to be 
small entities. Individuals and States are not included in the 
definition of a small entity.
    This final notice with comment period sets forth an updated 
schedule of limits on SNF routine service costs for which payment may 
be made under the Medicare program and sets forth an updated schedule 
of payment rates for low Medicare volume skilled nursing facilities 
that elect to receive prospectively determined payment rates for 
routine service costs. Section 1888(a) of the Act requires that the 
Secretary update the per diem cost limits for SNF routine service costs 
for cost reporting periods beginning on or after October 1, 1995, and 
every 2 years thereafter. In addition, section 1888(d)(4) of the Act 
requires the Secretary to establish and publish prospectively 
determined payment rates at least 90 days prior to the beginning of the 
Federal fiscal year to which such rates are to be applied.
    This final notice with comment period is the first time we are 
publishing a combined schedule of cost limits and rates. Combining the 
cost limits and rates in one notice is more economical in that they 
both utilize the same cost report data, wage index values, and rates of 
inflation. In addition, under section 1888(d) of the Act, an individual 
provider's prospectively determined rate may not exceed its applicable 
cost limit (see Section III.D. of this notice). This final notice with 
comment period, by containing both cost limits and rates for cost 
reporting periods beginning FY 1998, allows a provider to more 
conveniently determine its individual rate than in previous years.
    As required under section 1888(a) and 1888(d) of the Act 
respectively, this final notice with comment period sets forth a 
revised schedule of SNF per diem cost limits and prospectively 
determined payment rates for freestanding and hospital-based SNFs for 
cost reporting periods beginning in FY 1998. As explained in this 
notice, we have retained the same basic methodology used to compute the 
limits and rates effective for cost reporting periods beginning in FY 
1997, but we are revising the schedule of limits and rates to reflect 
more recent wage data, MSA designations, and inflation data.
    The estimated effects of this notice are that (1) the updated cost 
limits will result in a loss of savings to the Medicare program of $20 
million in FY 1998, and (2) the updated rates will have a negligible 
effect. These estimates are the effect of the updating the cost limits 
and rates to reflect more recent wage data, MSA designations, and 
inflation data compared to just updating the previous (FY 1997) cost 
limits or rates only for inflation.
    The table below shows the effect of updating the cost limits 
contained in this notice in comparison with updating the cost limits 
effective for FY 1997 by inflation (the market basket). Specifically, 
column (A) of the table shows the estimated total number of SNFs to 
which the cost limits effective for FY 1998 will apply. Column (B) 
shows the number of SNFs that would exceed the cost limits effective 
for FY 1997 updated only for inflation. Column (C) shows the number of 
SNFs that would exceed the cost limits contained in this notice. 
Implementing the cost limits contained in this notice, as

[[Page 51550]]

compared with maintaining the FY 1997 cost limits updated for 
inflation, will result in a small decrease in the number of SNFs with 
costs in excess of the limits.

------------------------------------------------------------------------
                                                              Number of 
                                    Total SNFs   Number of    SNFs over 
                                     to which    SNFs over     FY 1998  
                                      limits      FY 1997       limits  
                                    effective      limits     contained 
                                   for FY 1998  updated for    in this  
                                    will apply   inflation      notice  
                                    (column A)   (column B)   (column C)
------------------------------------------------------------------------
Freestanding SNFs:                                                      
    Urban (MSA)..................         4873         2353         2331
    Rural (non-MSA)..............         1638          900          878
Hospital-Based SNFs:               ...........  ...........  ...........
    Urban (MSA)..................          367          301          283
    Rural (non-MSA)..............          348          224          217
------------------------------------------------------------------------

    We are unable to identify the effects of these provisions on 
individual SNFs, but we expect that decreases in the number of SNFs 
exceeding the limits generally would result in increases in payments to 
those SNFs whose costs would previously have exceeded the limits but 
now fall under the limits. The effects of the increase in the limits on 
the total revenues of individual SNFs will depend on the SNF's ability 
to operate within the cost limits and on the proportion of its revenues 
that come from the Medicare program.
    For purposes of the RFA, it is our practice not to consider an 
economic impact to be significant unless the annual total costs or 
revenues of a substantial number of entities will be increased or 
decreased by at least 3 percent. Because Medicare payments generally do 
not account for a high proportion of SNF revenue, we believe that the 
updated SNF limits and rates will not result in a substantial number of 
SNFs experiencing significant increases in their total revenues. 
Therefore, we have determined, and we certify, that a regulatory 
flexibility analysis under the RFA is not required.
    Section 1102(b) of the Act requires us 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 that is located outside of a Metropolitan 
Statistical Area and has fewer than 50 beds.
    We have not prepared a rural impact statement since we have 
determined that this final notice with comment period 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.

VII. Waiver of Proposed Notice

    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. However, we may waive 
these procedures if we find good cause that prior notice and comment is 
impractical, unnecessary, or contrary to the public interest.
    As discussed in section II. of this notice, we have used the same 
methodology to develop this schedule of limits that was used in setting 
the limits published for public comment on October 7, 1992. As 
discussed above, section 13503(a)(2) of OBRA' 93 delayed the update to 
the schedule of limits until October 1, 1995 and then every 2 years. We 
have also used the same methodology to develop this schedule of rates 
that was used in setting the rates published for public comment on 
September 3, 1996. Section 13503(b) of OBRA' 93 delayed the update to 
the schedule of prospectively determined payment rates until October 1, 
1995. Thus, in conformance with the clear direction provided in 
sections 1861(v)(1) and 1888 of the Act and regulations at Secs. 413.30 
and 413.320, this notice announces the update to the schedule of limits 
for SNF routine service costs and the update to the schedule of 
prospectively determined payment rates for SNF inpatient cost, for cost 
reporting periods beginning on or after October 1, 1997. Because the 
statute directs that this schedule of limits and this schedule of rates 
are effective for cost reporting periods beginning October 1, 1997, and 
given that we are making no changes in the methodology used to develop 
these limits, we believe it is unnecessary to publish a proposed 
notice. Therefore, we find good cause to waive publication of a 
proposed notice. However, we are providing a 60-day period for public 
comment, as indicated at the beginning of this notice.

VIII. Response to 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: (Secs. 1102, 1814(b), 1861(v)(1), 1866(a), 1871, and 
1888 of the Social Security Act (42 U.S.C. 1302, 1395f(b), 
1395x(v)(1), 1395cc(a), 1395hh, and 1395yy); section 13503 of Pub. 
L. 103-66 (42 U.S.C. 1395x(v)(1)(B) and 1395yy (note)) and 42 CFR 
413.1, 413.24, 413.300 through 413.321).

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

    Dated: September 25, 1997.
Nancy-Ann Min DeParle,
Deputy Administrator, Health Care Financing Administration.

    Dated: September 25, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-25983 Filed 9-30-97; 8:45 am]
BILLING CODE 4120-01-P