[Federal Register Volume 63, Number 28 (Wednesday, February 11, 1998)]
[Rules and Regulations]
[Pages 6864-6869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3362]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 412 and 413
[HCFA-1731-F]
RIN 0938-AG00
Medicare Program; Payment for Preadmission Services
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This final rule responds to public comments on the January 12,
1994, interim final rule with comment period that provided that
inpatient hospital operating costs include certain preadmission
services furnished by the hospital (or by an entity that is wholly
owned or operated by the hospital) to the patient up to 3 days before
the date of the patient's admission to that hospital. These provisions
implement amendments made to section 1886(a)(4) of the Social Security
Act by section 4003 of the Omnibus Budget Reconciliation Act of 1990.
EFFECTIVE DATE: These regulations are effective on March 13, 1998.
FOR FURTHER INFORMATION CONTACT: Sandy Hetrick, (410) 786-4542.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1886 of the Social Security Act (the Act) addresses
Medicare payment for hospital inpatient operating costs. Before the
enactment of section 4003 of Omnibus Budget Reconciliation Act of 1990
(Public Law 101-508), section 1886(a)(4) of the Act defined the
operating costs of inpatient hospital services to include ``all routine
operating costs, ancillary service operating costs, and special care
unit operating costs with respect to inpatient hospital services as
such costs are determined on an average per admission or per discharge
basis * * *.'' In 1966, the Medicare program established an
administrative policy regarding payment for services furnished before
admission to a hospital. Specifically, if a beneficiary with coverage
under Medicare Part A was furnished outpatient hospital services and
was thereafter admitted as an inpatient of the same hospital before
midnight of the next day, our longstanding policy provided that
outpatient hospital services furnished to the beneficiary were treated
as inpatient services and included in the hospital's Part A payment.
When the prospective payment system for hospitals was implemented
in 1983, the costs related to the longstanding policy concerning the
payment for preadmission outpatient services as inpatient services were
included in the base year costs used to calculate the standardized
payment amount and the diagnosis-related group (DRG) weighting factors.
(Hospitals excluded from payment under the prospective payment system
continue to be paid for inpatient hospital services they furnish, as
well as for the preadmission services described above, on the basis of
reasonable costs up to the ceiling on the allowable rate of the
increase for Medicare hospital inpatient operating costs, as set forth
in the Act.) Therefore, these preadmission services could not be billed
separately from the covered inpatient admission that follows, since
payment for them was included in the payment made under Part A for the
inpatient stay (that is, the DRG payment for hospitals under the
prospective payment system or, for excluded hospitals, the reasonable
cost payment subject to the rate-of-increase limit).
Section 4003(a) of Pub. L. 101-508 amended the statutory definition
of ``operating costs of inpatient hospital services'' at section
1886(a)(4) of the Act to include the costs of certain services
furnished prior to admission. These preadmission services are to be
included in the Part A payment for the subsequent inpatient stay. As
amended, section 1886(a)(4) of the Act defines the operating costs of
inpatient hospital services to include certain preadmission services
furnished by the hospital (or by an entity that is wholly owned or
operated by the hospital) to the patient up to 3 days before the date
of the patient's admission to the hospital.
The provisions of section 4003(b) of Public Law 101-508 provided
for implementation of the 3-day payment window in the following three
phases:
The first phase, effective from November 5, 1990 (the
enactment date of Public Law 101-508) through September 30, 1991,
included any services furnished during the day before the date of
admission regardless of
[[Page 6865]]
whether the services are related to the admission.
The second phase, which was effective on January 1, 1991,
and is ongoing, includes diagnostic services (including clinical
diagnostic laboratory tests) that are furnished during the 3 days
immediately preceding the date of admission.
The third phase, which was effective October 1, 1991, and
is ongoing, includes other services related to the inpatient admission
that are furnished during the 3 days immediately preceding the date of
admission.
On January 12, 1994, we published an interim final rule with
comment period (59 FR 1654) implementing section 4003 of Pub. L. 101-
508. To implement this provision, we revised the regulations at 42 CFR
412.2(c) for prospective payment hospitals and Sec. 413.40(c)(2) for
hospitals excluded from the prospective payment system. At the time of
publication of the interim final rule, the 3-day payment window applied
to hospitals under the prospective payment system as well as to
excluded hospitals.
Since publication of the interim final rule, section 1886(a)(4) was
further amended by section 110 of the Social Security Act Amendments of
1994 (Pub. L. 103-432). That amendment revised the payment window for
hospitals excluded from the prospective payment system to include only
those services furnished during the 1 day (not 3 days) before a
patient's hospital admission. In the September 1, 1995 final rule
containing changes to the hospital inpatient prospective payment
system, we revised Sec. 413.40(c)(2) of the regulations to provide for
the 1-day payment window for hospitals and hospital units excluded from
the prospective payment system (60 FR 45840). We also noted that the
term ``day'' refers to the calendar day immediately preceding the date
of admission, not the 24-hour time period that immediately precedes the
hour of admission. (In this document, we will continue to refer to the
provision as the ``3-day payment window'' with the understanding that,
for excluded hospitals, the applicable period of the window is 1 day,
not 3.)
II. Provisions of the Interim Rule With Comment Period
In the January 12, 1994 interim final rule with comment period, we
specified that payment for inpatient operating costs includes certain
preadmission services furnished by the hospital or by an entity wholly
owned or operated by the hospital to the patient during the 3 days
immediately preceding the date of the patient's admission. We revised
Secs. 412.2(c)(5) and 413.40(c)(2) to provide that a hospital is
considered the sole operator of an entity if the hospital has exclusive
responsibility for conducting or overseeing the entity's routine
operations, regardless of whether the hospital also has policymaking
authority over the entity. In addition, we stated that ambulance
services are excluded from preadmission services subject to the payment
window. Finally, in Secs. 412.2(c)(5)(ii) and 413.40(c)(2)(ii), we
defined ``services related to the admission'' as those non diagnostic
services that are furnished in connection with the principal diagnosis
assigned to the inpatient admission. We specifically invited comment on
several other approaches to defining ``services related to the
admission.'' We suggested the following four alternatives:
Presume that all services provided during the 3 days
before admission are related.
Presume that certain services are never related to the
admission, for example, chronic maintenance dialysis.
Develop an inclusive list of services that are medically
related, against which all claims could be electronically screened.
Define services related to the principal diagnosis to
include any services that fall within the same major diagnostic
category (MDC).
III. Discussion of Public Comments
We received 11 comments in response to the interim final rule
published on January 12, 1994. The majority of the comments we received
responded to our definition of services related to the inpatient
admission and, thus, subject to the payment window. We received four
comments in support of our determination that ambulance services are
not subject to the payment window, even when furnished during the
preadmission period by the admitting hospital or by an entity that it
wholly owns or operates. One commenter expressed agreement with our
statement that ambulance services are distinct from the type of
hospital services that Congress designed the payment window provision
to address. All four commenters stated that many hospitals that operate
ambulance services do so at a financial loss, and that hospitals
continue to furnish the ambulance services primarily as a means of
ensuring access to hospital care for individuals who otherwise would be
unable to reach hospitals. According to the commenters, subjecting
hospitals that operate ambulance services to still greater fiscal
constraints under the payment window provision could have a major
adverse impact on their availability, particularly in remote rural
areas. We also received several comments suggesting that there are
other services that should always be excluded from the payment window.
Comment: We received three comments that questioned whether the 3-
day payment window provision was intended to apply to home health
services. One national organization made the point that home health
agencies should be exempt from these provisions on much the same basis
that ambulance services are. That is, home health services were never
included in the hospital inpatient payment. Therefore, they could not
be part of the services that hospitals have sought to unbundle in order
to maximize payment.
Two commenters believed that it is unfair to single out hospital-
based home health agencies for this provision while independent
agencies would be exempt. The commenters also believed that it would be
difficult to determine if the condition for which the home health
agency provided treatment is related to the admitting diagnosis and
that home health agencies would not know at the time they provided a
service that it would be subject to the payment window. They pointed
out that home health agencies have separate provider numbers and that
their bills are processed by regional fiscal intermediaries;
accordingly, including home health services on the payment window would
greatly increase administrative burden on both the provider and the
fiscal intermediaries.
Response: We agree with the commenters that home health services
are distinct from the types of services that Congress intended to
address in the payment window provision. The House Budget Committee
Report accompanying the payment window legislation explained that the
underlying objective of this provision is ``* * * to curb further
unbundling which has occurred since the introduction of the DRG payment
system. * * * '' (H.R. Budget Committee Report No. 881, 101st Cong., 2d
Sess. 250 (1990).) That report further states that the services
included in the window are not separately reimbursable under Part B.
Home health services are generally covered under Part A and, thus,
generally are not paid under Part B. Therefore, we are clarifying that
services provided by home health agencies are excluded from the payment
window provisions. In addition, we are clarifying that this exclusion
extends to
[[Page 6866]]
other services provided under Part A, that is, services furnished by
skilled nursing facilities and hospices. We have revised the
regulations at Secs. 412.2(c)(5) and 413.40(c)(2) to reflect this
policy. We note that diagnostic services provided by these facilities
that would be payable under Part B are subject to the window.
Comment: Three commenters requested that maintenance renal dialysis
not be subject to the payment window. These commenters noted that
patients must have dialysis on an ongoing basis. Because most patients
receive dialysis three times a week, for any hospitalization, the
patient will have at least one dialysis treatment falling in the
payment window period. Regardless of the reason for the
hospitalization, the patient would have received the dialysis
treatment.
One of the commenters expressed the opinion that inclusion of
dialysis services in the payment window provision would increase
administrative costs for hospital-owned dialysis units because, prior
to billing, they would have to research the diagnosis involved in every
hospitalization and decide whether or not it is ``related to
dialysis.'' The commenter stated that, in such cases, dialysis units
might seek payment or credit from the hospital rather than from
Medicare, and that this would disrupt billing patterns and subject
hospital-owned units to still greater fiscal constraints in the form of
further administrative costs. Another commenter believes that excluding
all outpatient chronic maintenance dialysis treatments would be easy to
implement and administer. A simple directive could be issued to all
Medicare contractors with instructions that dialysis services are not
subject to the payment window provision.
Response: We agree with the commenters that outpatient chronic
renal dialysis services are distinct from the type of hospital services
that Congress designed the payment window provision to address.
Maintenance dialysis must be provided to patients on a scheduled basis
as long as they suffer from end-stage renal disease. Thus, it is not an
inpatient service that hospitals have attempted to move outside the
inpatient stay and corresponding hospital prospective payment.
Therefore, in this rule, we are revising Secs. 412.2(c) and 413.40(c)
to exclude maintenance renal dialysis services from the preadmission
services that are subject to the payment window.
Comment: Only one commenter responded to our request for comment on
different approaches to defining ``services related to the inpatient
admission.'' The commenter suggested that one possible approach would
be to define certain preadmission services that are never considered to
be related to the admission. The commenter provided the following list
of preadmission services (in addition to maintenance renal dialysis)
that should always be considered not related to the subsequent
admission:
Outpatient chemotherapy.
Blood transfusions for chronic conditions (e.g.,
hemophilia and renal failure).
Physical therapy, occupational therapy, speech therapy,
other types of rehabilitative therapy, and respiratory therapy for
chronic or long-term care conditions.
Radiation therapy.
In addition, the commenter believed that any diagnostic tests
associated with these services should also be excluded from the window.
Response: We agree with the commenter that certain services should
not be subject to the provisions of the payment window. As noted above,
we have determined that Part A services (such as home health, hospice,
and skilled nursing facility services), ambulance services, and chronic
maintenance renal dialysis should be excluded from the payment window.
With regard to the additional services requested by the commenter
to be added to that list, we are not persuaded that these services
should be excluded from the payment window. Outpatient chemotherapy and
radiation therapy are time-limited treatments for specific medical
conditions. This is also true of the rehabilitation services listed by
the commenter. We do not believe that these services fall into the same
category as maintenance dialysis. We are also not convinced that blood
transfusions for chronic conditions should be excluded. These
transfusions are often related to a change in condition or an injury;
unlike dialysis, they are not generally provided to patients on a
weekly schedule. Therefore, we are not adding any of these services to
our list of exclusions. We note that we have defined services as being
related to the admission only when there is an exact match between the
ICD-9-CM diagnosis code assigned for both the preadmission services and
the inpatient stay. Concerning the request to exclude diagnostic
services associated with excluded services, we believe that the statute
requires that all diagnostic services be included in the payment
window.
Comment: One commenter stated that the hospital industry is making
new arrangements for the provision of health care. Many hospitals are
establishing facilities licensed as free-standing clinics, owned and
operated under a corporate umbrella, with a hospital responsible for
conducting or overseeing the clinic's routine operations. The commenter
requested that we address the difficulty of converting outpatient
charges for preadmission testing from the HCFA-1500 to the UB-92
inpatient hospital billing form.
Response: We believe that the current procedures for billing
Medicare for preadmission services, as set forth in section 415.6 of
the Medicare Hospital Manual (HCFA-Pub. 10), are clear. When services
are furnished within the 3-day payment window, they are included on the
Part A bill, the HCFA-1450 (also known as the UB-92), for the inpatient
stay. They are not separately billed under Part B. The charges, revenue
codes, and ICD-9-CM diagnosis and procedure codes are all included on
the HCFA-1450.
In the context of this comment concerning hospital arrangements, we
would like to address the numerous telephone and written inquiries we
have received concerning the definition of an entity ``wholly owned or
operated'' by the hospital. The inquiries we have received include
descriptions of various ownership/operation arrangements and requests
to verify whether or not the 3-day payment window applies to each case.
In general, if a hospital has direct ownership or control over another
entity's operations, then services provided by that other entity are
subject to the 3-day window. However, if a third organization owns or
operates both the hospital and the entity, then the window provision
does not apply. The following are examples of how this general policy
is applied.
Arrangement: A hospital owns a physician clinic or a physician
practice that performs preadmission testing for the hospital.
Policy: A hospital-owned or hospital-operated physician clinic or
practice is subject to the payment window provision. The technical
portion of preadmission diagnostic services performed by the physician
clinic or practice must be included in the inpatient bill and may not
be billed separately. A physician's professional service is not subject
to the window.
Arrangement: Hospital A owns Hospital B, which in turn owns
Hospital C. Does the payment window apply if preadmission services are
performed at Hospital C and the patient is admitted to Hospital A?
Policy: Yes. We would consider that Hospital A owns both Hospital B
and Hospital C, and the payment window would apply in this situation.
[[Page 6867]]
Arrangement: Corporation Z owns Hospitals A and B. If Hospital A
performs preadmission services and the patient is subsequently admitted
as an inpatient to Hospital B, are the services subject to the payment
window?
Policy: No. The payment window does not apply to situations in
which both the admitting hospital and the entity that furnishes the
preadmission services are owned by a third entity. The payment window
includes only those situations in which the entity furnishing the
preadmission services is wholly owned or operated by the admitting
hospital itself.
Arrangement: A hospital refers its patient to an independent
laboratory for preadmission testing services. The laboratory does not
perform testing by arrangement with the admitting hospital. Are the
laboratory services subject to the payment window provisions?
Policy: No. The payment window does not apply to situations in
which the admitting hospital is not the sole owner or operator of the
entity performing the preadmission testing.
Arrangement: Hospital A is owned by Corporations Y and Z in a joint
venture. Corporation Z is the sole owner of Hospital B. Does the
payment window apply when one of these hospitals furnishes preadmission
services and the patient is admitted to the other hospital?
Policy: No. As noted above, the payment window provision does not
apply to situations in which both the admitting hospital and the entity
that furnishes the preadmission services are owned or operated by a
third entity.
Arrangement: A clinic is solely owned by Corporation Z and is
jointly operated by Corporation Z and Hospital A. Does the payment
window apply if preadmission services are furnished by the clinic and
the patient is subsequently admitted to Hospital A?
Policy: No. The payment window does not apply because Hospital A is
neither the sole owner nor operator of the clinic.
Comment: We received one comment on our interpretation of the
statutory language of section 1886(a)(4) of the Act. The commenter
asserted that we are reading the statute incorrectly, arguing that the
statute requires us to include in the payment window only those
diagnostic services related to the admission rather than all diagnostic
services furnished during the 3 days preceding an inpatient admission.
The commenter believes that since section 1886(a)(4) of the Act, as
amended, reads, ``if such services are diagnostic services (including
clinical diagnostic laboratory tests) or are other services related to
the admission'' (emphasis added), Congress meant that both diagnostic
and nondiagnostic services must be related to the admission in order to
be subject to the payment window. The commenter claims that the use of
the word ``other'' in ``other services related to the admission''
clearly indicates that the qualifier ``related to the admission'' also
applies to the first type of services listed, diagnostic services. The
commenter stated that by including all diagnostic services in the 3-day
window, we could be unfairly denying hospitals payment for separate
treatment that they have furnished.
In addition, the commenter believes that our interpretation is
contrary to Congressional intent since the House Budget Committee
Report states that the purpose of the provision is to ``curb further
unbundling which has occurred since the introduction of Medicare's
hospital DRG payment system.'' (H.R. Budget Comm. Rep. No. 881, 101st
Cong., 2d Sess. 250 (1990).) The commenter contends that since Congress
expanded the definition of ``operating costs of inpatient hospital
services'' as part of the legislation, it sought to prevent hospitals
from unbundling services that traditionally were included in an
inpatient hospital stay and had been included when the initial DRG
rates were set.
The commenter also asserted that the way Congress worded the three-
phase implementation period of the payment window legislation proves
that the legislation was intended to apply only to diagnostic services
related to the admission. Therefore, the commenter believes that both
diagnostic and nondiagnostic services must be related to the admission
in order to be subject to the window.
Response: We believe that our reading of the statute is the proper
one. Section 1886(a)(4) of the Act, as amended, defines ``operating
costs of inpatient hospital services'' to include certain preadmission
services ``if such services are diagnostic services (including
diagnostic laboratory tests) or are other services related to the
admission (as defined by the Secretary).'' (Emphasis added.) We believe
that the phrase ``related to the admission'' modifies the term ``other
services'' and not ``diagnostic services.''
A careful reading of the statute demonstrates that our
interpretation is the most natural reading of the statute, if not the
only reasonable one. It is significant that the language includes the
word ``are'' after the word ``or.'' The subject that relates to this
use of the word ``are'' is ``such services.'' Thus, the payment window
includes certain services ``if such services are diagnostic services
(including diagnostic laboratory tests) or [such services] are other
services related to the admission (as defined by the Secretary).'' The
most natural reading of this language is that the phrase ``related to
the admission'' modifies only ``other services.'' In fact, it is
difficult to see how this language is consistent with the commenter's
reading.
The commenter argues that all services must be ``related to the
admission'' to be included in the payment window. If Congress had
intended that result, Congress could have simply referred to ``services
related to the admission'' in section 1886(a)(4) of the Act. It would
not have been necessary for Congress to refer separately to diagnostic
services related to the admission and other services related to the
admission.
Even if the statute is not entirely clear, our interpretation is
certainly consistent with the language. Similarly, our interpretation
is consistent with the statutory language concerning the transition
from a 1-day window to a 3-day window. For these reasons, we believe
our interpretation of section 1886(a)(4) is the proper one, if not the
only reasonable one.
We note that, in Pub. L. 103-342, enacted on October 31, 1994,
Congress amended section 1886(a)(4) to clarify application of the
payment window to services furnished by hospitals excluded from the
prospective payment system, but did not address application of the
window to diagnostic services. If Congress had disagreed with our
interpretation concerning diagnostic services--as reflected in the
interim final rule published on January 12, 1994--Congress could have
further amended the statute to clarify its intent.
Finally, we would like to address the commenter's statement that,
by including all diagnostic services in the 3-day payment window, we
could be unfairly denying hospitals payment for separate treatment that
they have furnished. The vast majority of diagnostic services furnished
by a hospital, or an entity it owns or operates, to a patient who is
admitted to that hospital within 3 days are services that are related
to the admission. Thus, we believe there are few diagnostic services
unrelated to the admission for which hospitals would be unable to
receive a separate payment.
IV. Provisions of the Final Regulations
In this final rule, we are adopting the provisions as set forth in
the interim final rule with comment period with two revisions.
Specifically, as a result of
[[Page 6868]]
public comments, we are revising the regulations as follows:
We are revising paragraphs (c)(5) and (c)(5)(i) of
Sec. 412.2 and paragraphs (c)(2) and (c)(2)(i) of Sec. 413.40 to
provide that Part A services furnished by home health agencies, skilled
nursing facilities, and hospices are excluded from the payment window
provisions.
We are revising Sec. 412.2(c)(5)(iii) and
Sec. 413.40(c)(2)(iii) to exclude outpatient maintenance dialysis
services from the preadmission services that are subject to the payment
window.
V. Impact Statement
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 final rule such as this will not
have a significant economic impact on a substantial number of small
entities. For purposes of the RFA, we consider all hospitals to be
small entities.
In the interim final rule with comment period, we discussed in
detail the impact that implementation of section 4003 of Public Law
101-508 would have on hospitals. Section 4003 amended section
1886(a)(4) of the Act to include certain preadmission services,
furnished by the hospital, or by an entity that is wholly owned or
operated by the hospital, up to 3 days before the date of the patient's
admission. We stated that the interim final rule would result in
continuing Medicare program savings from terminating separate payment
under Part B for services performed up to 3 days before the date of
admission instead of 1 day, without an immediate, corresponding
increase in the DRG payments under Part A. We also noted that the
interim final rule would result in some savings to beneficiaries by
shifting payment for services from Part B outpatient to Part A
inpatient rates. Beneficiaries will not be responsible for copayment if
the same services are performed up to 3 days before the date of a
hospital admission and are folded into the hospital's inpatient
payment. This final rule will not have a significant impact for
purposes of the RFA because it merely responds to comments on the
interim final rule and makes a few clarifying changes. Therefore, we
have not prepared a regulatory flexibility analysis.
Section 1102(b) of the Social Security Act requires us to prepare a
regulatory impact analysis for any final rule that may have a
significant impact on the operation 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 believe
the 3-day payment window provisions will affect small rural hospitals
to a lesser degree than larger facilities where complex procedures are
performed and specialized medical conditions are treated requiring
additional preadmission testings. Therefore, we are not preparing a
rural impact statement since we have determined, and certify, that this
final rule will not have a significant impact on the operations of a
substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
VI. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995.
List of Subjects
42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
Accordingly, the interim rule amending 42 CFR chapter IV which was
published at 59 FR 1654, on January 12, 1994, is adopted as final with
the following changes:
A. Part 412 is amended as follows:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
1. The authority citation for part 412 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart A--General Provisions
2. In Sec. 412.2, the introductory text of paragraph (c) is
republished and paragraph (c)(5) is revised to read as follows:
Sec. 412.2 Basis of payment.
* * * * *
(c) Inpatient operating costs. The prospective payment system
provides a payment amount for inpatient operating costs, including--
* * * * *
(5) Preadmission services otherwise payable under Medicare Part B
furnished to a beneficiary during the 3 calendar days immediately
preceding the date of the beneficiary's admission to the hospital that
meet the following conditions:
(i) The services are furnished by the hospital or by an entity
wholly owned or operated by the hospital. An entity is wholly owned by
the hospital if the hospital is the sole owner of the entity. An entity
is wholly operated by a hospital if the hospital has exclusive
responsibility for conducting and overseeing the entity's routine
operations, regardless of whether the hospital also has policymaking
authority over the entity.
(ii) For services furnished after January 1, 1991, the services are
diagnostic (including clinical diagnostic laboratory tests).
(iii) For services furnished on or after October 1, 1991, the
services are furnished in connection with the principal diagnosis that
requires the beneficiary to be admitted as an inpatient and are not the
following:
(A) Ambulance services.
(B) Maintenance renal dialysis.
* * * * *
B. Part 413 is amended as follows:
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES
1. The authority citation for part 413 continues to read as
follows:
Authority: Secs. 1102, 1861(v)(1)(A), and 1871 of the Social
Security Act (42 U.S.C. 1302, 1395x(v)(1)(A), and 1395hh).
Subpart C--Limits on Cost Reimbursement
2. In Sec. 413.40, paragraph (c)(2) is revised to read as follows:
Sec. 413.40 Ceiling on the rate of increase in hospital inpatient
costs.
* * * * *
(c) Costs subject to the ceiling. * * *
* * * * *
(2) Preadmission services otherwise payable under Medicare Part B
[[Page 6869]]
furnished to a beneficiary during the calendar day immediately
preceding the date of the beneficiary's admission to the hospital that
meet the following conditions:
(i) The services are furnished by the hospital or any entity wholly
owned or operated by the hospital. An entity is wholly owned by the
hospital if the hospital is the sole owner of the entity. An entity is
wholly operated by a hospital if the hospital has exclusive
responsibility for conducting and overseeing the entity's routine
operations, regardless of whether the hospital also has policymaking
authority over the entity.
(ii) For services furnished after January 1, 1991, the services are
diagnostic (including clinical diagnostic laboratory tests).
(iii) For services furnished on or after October 1, 1991, the
services are furnished in connection with the principal diagnosis that
requires the beneficiary to be admitted as an inpatient and are not the
following:
(A) Ambulance services.
(B) Maintenance renal dialysis.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance)
Dated: October 17, 1997.
Nancy-Ann Min DeParle,
Deputy Administrator, Health Care Financing Administration.
Dated: December 11, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 98-3362 Filed 2-10-98; 8:45 am]
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