[Federal Register Volume 63, Number 61 (Tuesday, March 31, 1998)]
[Rules and Regulations]
[Pages 15718-15738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8480]



[[Page 15717]]

_______________________________________________________________________

Part VIII





Department of Health and Human Services





_______________________________________________________________________



Health Care Financing Administration



_______________________________________________________________________



42 CFR Part 413



Medicare Program; Schedule of Per-Beneficiary Limitations on Home 
Health Agency Costs for Cost Reporting Periods; Final Rule

  Federal Register / Vol. 63, No. 61 / Tuesday, March 31, 1998 / Rules 
and Regulations  

[[Page 15718]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 413

[HCFA-1905-FC]
RIN 0938-AI84


Medicare Program; Schedule of Per-Beneficiary Limitations on Home 
Health Agency Costs for Cost Reporting Periods Beginning on or After 
October 1, 1997

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

ACTION: Final rule with comment period.

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

SUMMARY: This final rule with comment period sets forth, in accordance 
with section 4602 of the Balanced Budget Act of 1997, a new schedule of 
limitations on home health agency costs that may be paid under the 
Medicare program for cost reporting periods beginning on or after 
October 1, 1997. These limitations are in addition to the per-visit 
limitations that were set forth in our January 2, 1998 notice with 
comment period.

DATES: Effective Date: This rule is effective October 1, 1997.
    Applicability Date: The schedule of per-beneficiary limitations is 
applicable 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 
p.m. on June 1, 1998.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HCFA-1905-FC, P.O. Box 7517, 
Baltimore, Maryland 21207-0517.
    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, D.C. 20201, or
Room C5-09-26, Central Building, 7500 Security Boulevard, Baltimore, 
Maryland 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.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1905-FC.
    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, D.C., on Monday through Friday 
of each week from 8:30 a.m. to 5:00 p.m. (Phone: (202) 690-7890).
    Copies: To order copies of the Federal Register containing this 
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password required).

FOR FURTHER INFORMATION CONTACT: Michael Bussacca, (410) 786-4602.

SUPPLEMENTARY INFORMATION:

I. Background

A. Program History

    Section 1861(v)(1)(A) of the Social Security Act (the Act) 
authorizes the Secretary to establish limitations on allowable costs 
incurred by a provider of services that may be paid under the Medicare 
program, based on estimates of the costs necessary for the efficient 
delivery of needed health services. Under this authority, we have 
maintained limitations on home health agency (HHA) per-visit costs 
since 1979. Additional statutory provisions specifically governing the 
limitations applicable to HHAs are contained at section 1861(v)(1)(L) 
of the Act. These limits will be replaced by the establishment of a 
prospective payment system for home health services. However, section 
1861(v)(1)(L)(v) of the Act, as added by section 4602(c) of the 
Balanced Budget Act of 1997 (BBA '97), Pub. L. 105-33, requires the 
Secretary to establish an interim system of payment limitations prior 
to implementation of the prospective payment system. Payments by 
Medicare under this interim system of payment limitations must be the 
lower of an HHA's actual reasonable allowable costs, per-visit 
limitations in the aggregate, or a per-beneficiary limitation in the 
aggregate as described in sections 1861(v)(1)(L)(v)(I) and 
(v)(1)(L)(vi)(I) of the Act.
    Section 1861(v)(1)(L)(v)(I) requires the per-beneficiary annual 
limitation be a blend of: (1), an agency-specific per-beneficiary 
limitation based on 75 percent of 98 percent of the reasonable costs 
(including nonroutine medical supplies) for the agency's 12-month cost 
reporting period ending during Federal fiscal year (FY) 1994, and (2), 
a census region division per-beneficiary limitation based on 25 percent 
of 98 percent of the regional average of such costs for the agency's 
census division for cost reporting periods ending during FY 1994, 
standardized by the hospital wage index. The reasonable costs used in 
the per-beneficiary limitation calculations in 1 and 2 above will be 
updated by the home health market basket excluding any changes in the 
home health market basket with respect to cost reporting periods that 
began on or after July 1, 1994 and before July 1, 1996. This per-
beneficiary limitation based on the blend of the agency-specific and 
census region division per-beneficiary limitations will then be 
multiplied by the agency's unduplicated census count of beneficiaries 
(entitled to benefits under Medicare) to calculate the HHA's aggregate 
per-beneficiary limitation for the cost reporting period subject to the 
limitation.
    For new providers and providers without a 12-month cost reporting 
period ending in Federal fiscal year 1994, the per-beneficiary 
limitation will be equal to the median of these limitations applied to 
other HHAs as determined under section 1861(v)(1)(L)(v) of the Act.

[[Page 15719]]

B. Relevant Provisions of the Balanced Budget Act of 1997

    The BBA '97 made several changes that affect the amount of costs to 
be paid under Medicare for services provided by HHAs. The provisions of 
BBA '97 that we are implementing in this final rule with comment period 
are as follows.
1. Additions to Cost Limitations
    Section 1861(v)(1)(L)(v) was added to the Act by section 4602(c) of 
BBA `97 and requires the establishment of an interim system of 
limitations for services furnished by home health agencies.
    Payment will not exceed the lesser of reasonable costs or the 
aggregate effect of the per-visit limitations published on January 2, 
1998 (63 FR 89) or if lower, the aggregate per-beneficiary limitation 
as described in this final rule with comment.
    A per-beneficiary limitation for agencies with a 12-month cost 
reporting period ending during Federal FY 1994 is determined as 
follows: (1), an agency-specific per-beneficiary limitation based on 75 
percent of 98 percent of the reasonable costs (including nonroutine 
medical supplies) for the agency's 12-month cost reporting period 
ending during Federal fiscal year (FY) 1994, and (2), a census region 
division per-beneficiary limitation based on 25 percent of 98 percent 
of the regional average of such costs for the agency's census division 
for cost reporting periods ending during FY 1994, standardized by the 
hospital wage index. The reasonable costs used in the per-beneficiary 
limitation calculations in 1 and 2 above will be updated by the home 
health market basket excluding any changes in the home health market 
basket with respect to cost reporting periods that began on or after 
July 1, 1994 and before July 1, 1996. This per-beneficiary limitation 
based on the blend of the agency-specific and census region division 
per-beneficiary limitations will then be multiplied by the agency's 
unduplicated census count of beneficiaries (entitled to benefits under 
Medicare) to calculate the HHA's aggregate per-beneficiary limitation 
for the cost reporting period subject to the limitation.
    How these per-beneficiary limitations are determined is explained 
further in section V of this document.
2. New Providers and Providers Without a 12-Month Cost Reporting Period 
Ending in FY 1994
    Section 1861(v)(1)(L)(vi) was added to the Act by section 4602(c) 
of BBA '97 and requires the per-beneficiary limitation for new 
providers and those providers without a 12-month cost reporting period 
ending in FY 1994 be equal to the median of the section 
1861(v)(1)(L)(v) per-beneficiary limitations applied to other HHAs.
    Also, an HHA that had a 12-month cost reporting period ending 
during Federal FY 1994 and had altered its corporate structure or name 
will not be considered a new provider for purposes of determining the 
per-beneficiary limitation. Examples of an HHA that has altered its 
corporate structure but has kept its operational structure as a 
freestanding or provider-based HHA would be an agency that has gone 
from being a non-profit entity to a profit entity or an agency that has 
gone from being a subchapter S corporation to a proprietary individual. 
The most common occurrence of an agency changing its name would be a 
change in ownership whereby the new owners change the name of the 
agency but continue operating as a freestanding or provider-based HHA. 
The per-beneficiary limitation that applies to these types of changes 
will be determined under section 1861(v)(1)(L)(v).
3. Reduction in Market Basket Updates
    Section 1861(v)(1)(L)(iv) was added to the Act by section 4601(a) 
of BBA '97 and requires the Secretary not to take into account any 
changes in the home health market basket with respect to cost reporting 
periods which began on or after July 1, 1994 and before July 1, 1996 in 
establishing the section 1861(v)(1)(L) limitations for cost reporting 
periods beginning after September 30, 1997. This, in effect, reduces 
the factors for increasing the costs in the data base used in 
calculating the per-beneficiary limitations. These factors are set 
forth in section IV. of this document.
4. Application of the Wage Index Based on Site of Service Rendered
    Section 1861(v)(1)(L)(iii) was amended by section 4604(b) of BBA 
'97 to require that the utilization of the area wage index applicable 
under section 1886(d)(3)(E) of the Act be determined using the survey 
of the most recent available wages and wage-related costs of hospitals 
located in the geographic area in which the home health services are 
furnished. In effect, the regional component of the per-beneficiary 
limitation that will apply for the beneficiary receiving services from 
the HHA will be the appropriate census region per-beneficiary 
limitation and adjusted by the appropriate wage index for the 
geographic area where the beneficiary received home health services. A 
Program Memorandum (Rev. AB-97-18), published in September 1997, 
outlined the billing changes that are needed to properly implement this 
provision.
5. Effective Date
    Section 1861(v)(1)(L)(vii) of the Act was added by section 4602(c) 
of BBA '97.
    Beginning in FY 1998, the Secretary is required to establish the 
per-beneficiary limitations by August 1 of each year. However, for cost 
reporting periods beginning on or after October 1, 1997, the Secretary 
need only establish those limitations by April 1, 1998. In accordance 
with section 1861(v)(1)(L)(vii)(I), we are establishing by April 1, 
1998, the per-beneficiary limitations for cost reporting periods 
beginning on or after October 1, 1997.

II. Per-Beneficiary Limitations

    The cost report data used to develop the schedule of per-
beneficiary limitations set forth in this final rule are for cost 
reporting periods ending in Federal FY 1994, as required by section 
4602(c) of BBA '97. We have updated the per-beneficiary limitations to 
reflect the expected cost increases occurring between the cost 
reporting periods for the data contained in the database and September 
30, 1998 (excluding, as required by statute, any changes in the home 
health market basket for cost reporting periods beginning on or after 
July 1, 1994 and before July 1, 1996).
    The interim payment sets limitations according to two different 
methodologies. For agencies with cost reporting periods ending during 
Federal FY 1994, the limitation is based on 75 percent of 98 percent of 
the agencies' own reasonable costs and 25 percent of 98 percent of the 
average census region division costs. At the end of the agency's cost 
reporting period subject to the per-beneficiary limitations, the labor 
component of the census region division per-beneficiary limitation is 
adjusted by a wage index based on where the home health services are 
rendered.
    For new providers and providers without a cost reporting period 
ending during Federal FY 1994, the per-beneficiary limitation is based 
on the standardized national median of the blended agency-specific and 
census region division per-beneficiary limitations described above. 
This is done by simply arraying the agencies' per-beneficiary 
limitations and selecting the median case. This national per-
beneficiary limitation is then standardized for the effect of the wage 
index. The wage index is applied to the

[[Page 15720]]

labor component of the national per-beneficiary limitation at the end 
of the cost reporting period beginning on or after October 1, 1997, and 
is based on where the home health services are rendered.
    The detailed methodologies for calculating the per-beneficiary 
limitations and how they are applied to agencies' costs for cost 
reporting periods beginning on or after October 1, 1997 are described 
below.

A. Agency-Specific Rates

    Section 1861(v)(1)(L)(v)(I) of the Act requires that 75 percent of 
the per-beneficiary limitation be based on 98 percent of the reasonable 
costs for the agency's 12-month cost reporting period that ended during 
FY 1994. Reasonable costs are the lesser of the actual Medicare costs 
of the discipline services or the aggregate discipline limitation, plus 
nonroutine medical supplies. This amount is multiplied by 98 percent 
and divided by the HHA's Federal FY 1994 unduplicated census count of 
beneficiaries to calculate the agency-specific per-beneficiary amount. 
An intricate and important part of the agency-specific per-beneficiary 
computation is the use of the Federal FY 1994 unduplicated census count 
of beneficiaries. After BBA '97 was enacted, many HHAs and their trade 
association representatives asserted that the unduplicated census 
counts of beneficiaries, as reported on the Federal FY 1994 Medicare 
cost report, was frequently an incorrect figure. Even though this 
number was a statistic required to be reported to Medicare, it was 
apparently not carefully monitored by HHAs because it did not impact 
Medicare payments at that time.
    Through an analysis of our database to be used in establishing the 
regional per-beneficiary limitations, which includes the same cost 
reporting period used in establishing the agency-specific per-
beneficiary limitation, we confirmed that the unduplicated census count 
was not reliable. Based upon this determination, we generated a more 
accurate unduplicated census count from HCFA's Standard Analytical File 
(SAF), which is generated from our National Claims History File. The 
unduplicated census count was created from the SAF by matching all 
claims to each agency's cost reporting period ending in Federal FY 1994 
and identifying individual beneficiaries represented in the claims. 
Each beneficiary was counted only once for all the claim(s) identified 
for that cost reporting period for each agency. A list of HHAs and 
associated unduplicated census counts from the SAF has been 
disseminated to the intermediaries for calculating the agency-specific 
per-beneficiary limitations. If the intermediary has an HHA that has a 
12-month cost reporting period that ended in Federal FY 1994 and that 
agency was not on the list for an unduplicated census count from SAF, 
the intermediary must contact HCFA so that an unduplicated census count 
can be generated from SAF.

B. Regional Rates by Census Division

    Section 1861(v)(1)(L)(v)(I) of the Act requires that 25 percent of 
the per-beneficiary limitation be based on 98 percent of the 
standardized regional average of reasonable costs for the agency's 
census division for cost reporting periods ending during Federal FY 
1994. To develop the schedule of per-beneficiary limitations by census 
region, we extracted the totals of the Medicare allowable costs, the 
aggregate cost per-visit limitation, and the Medicare nonroutine 
medical supply costs from settled Medicare cost reports of all HHAs for 
cost reporting periods ending in Federal FY 1994. How this data was 
used in calculating the regional rates by census division is explained 
further in section V.B..
    Section 1861(v)(1)(L)(v)(I) requires that the costs used in 
calculating the per-beneficiary limitations be updated using the home 
health market basket index. However, section 1861(v)(1)(L)(iv) 
prohibits the Secretary from taking into account any changes in the 
home health market basket with respect to cost reporting periods which 
began on or after July 1, 1994 and before July 1, 1996. Therefore, we 
adjusted the database used in calculating the regional per-beneficiary 
limitations by the market basket index excluding any changes in the 
home health market basket with respect to cost reporting periods which 
began on or after July 1, 1994 and before July 1, 1996.

C. Wage Index

    A wage index is used to adjust the labor-related portion of the 
standardized regional average per-beneficiary limitation to reflect 
differing wage levels among areas. In establishing the regional average 
per-beneficiary limitation, we used the FY 1998 hospital wage index, 
which is based on 1994 hospital wage data.
    Each HHA's labor market area is determined based on the definitions 
of Metropolitan Statistical Areas (MSAs) issued by the Office of 
Management and Budget (OMB). Section 1861(v)(1)(L)(iii) of the Act 
requires us to use the current hospital wage index (that is, the FY 
1998 hospital wage index, which was published in the Federal Register 
on August 29, 1997 (62 FR 46070)) without regard to whether such 
hospitals have been reclassified to a new geographic area, to establish 
the HHA cost limitations. Therefore, the schedule of standardized 
regional average per-beneficiary limitations reflects the MSA 
definitions that are currently in effect under the hospital prospective 
payment system.
    We are continuing to incorporate exceptions to the MSA 
classification system for certain New England counties that were 
identified in the July 1, 1992 notice (57 FR 29410). These exceptions 
have been recognized in setting hospital cost limitations for cost 
reporting periods beginning on and after July 1, 1979 (45 FR 41218), 
and were authorized under section 601(g) of the Social Security 
Amendments of 1983 (Public Law 98-11). Section 601(g) of Public Law 98-
21 requires that any hospital in New England that was classified as 
being in an urban area under the classification system in effect in 
1979 will be considered urban for purposes of the hospital prospective 
payment system. This provision is intended to ensure equitable 
treatment under the hospital prospective payment system. Under this 
authority, the following counties have been deemed to be urban areas 
for purposes of payment under the inpatient hospital prospective 
system:
     Litchfield County, CT in the Hartford, CT MSA.
     York County, ME and Sagadahoc County, ME in the Portland, 
ME MSA.
     Merrimack County, NH in the Boston-Brockton-Nashua, MA-NH 
MSA
     Newport County, RI in the Providence Fall-Warwick, RI MSA
    We are continuing to grant these urban exceptions for the purpose 
of applying the Medicare hospital wage index to the HHA standardized 
regional average per-beneficiary limitations. These exceptions result 
in the same New England County Metropolitan Area definitions for 
hospitals, skilled nursing facilities, and HHAs. In New England, MSAs 
are defined on town boundaries rather than on county lines but exclude 
parts of the four counties cited above that would be considered urban 
under the MSA definition. Under this notice, these four counties are 
urban under either definition, New England County Metropolitan Area or 
MSA.
    Section 1861(v)(1)(L)(iii), amended by section 4604(b) of BBA '97, 
requires the use of the area wage index applicable under section 
1886(d)(3)(E) of the Act and determined using the survey of the most 
recent available wages and wage-related costs of hospitals located in 
the

[[Page 15721]]

geographic area in which the home health service is furnished without 
regard to whether such hospitals have been reclassified to a new 
geographic area pursuant to section 1886(d)(8)(B) of the Act. Effective 
with cost reporting periods beginning on or after October 1, 1997, the 
wage-index, as applied to the labor portion of the regional per-
beneficiary limitation, must be based on the geographic location in 
which the home health service is actually furnished rather than the 
physical location of the HHA itself.

III. Determination of Old or New Home Health Agencies

    The per-beneficiary limitation determined under section 
1861(v)(1)(L)(v)(''clause v'' HHAs) will apply to all HHAs that have a 
12-month cost reporting period ending during FY 1994. There are, 
however, HHAs that had a 52/53 week cost reporting cycle that ended in 
Federal FY 1994, or a 13-month cost reporting period that ended during 
Federal FY 1994 (as allowed in accordance with Medicare principles of 
reimbursement). For purposes of determining the per-beneficiary 
limitation, these HHAs will be deemed to be ``clause v'' HHAs. Also, an 
HHA that had a 12-month cost reporting period ending in Federal FY 1994 
and altered its corporate structure or name is a ``clause v'' HHA for 
purposes of determining the per-beneficiary limitation.
    Section 1861(v)(1)(L)(vi) of the Act states that for new HHAs and 
agencies without a 12-month cost reporting that ended in FY 1994 
(``clause vi'' HHAs), the per-beneficiary limitation is the median of 
these limitations applied to other HHAs, as determined by the 
Secretary.

A. Less Than a Twelve-Month Cost Reporting Period During Federal FY 
1994

    Without exception, all HHAs that did not have a 12-month cost 
reporting period that ended in Federal FY 1994 will have the national 
per-beneficiary limitation applied to the agency's unduplicated census 
count of Medicare beneficiaries for the cost reporting period beginning 
on and after October 1, 1997. The national per-beneficiary limitation 
that applies to the unduplicated census count of Medicare beneficiaries 
for ``clause vi'' HHAs is in Table 3b.

B. HHAs Entering the Medicare Program After Federal FY 1994

    New HHAs that entered the Medicare program after Federal FY 1994 
will have the national per-beneficiary limitation applied to the 
unduplicated census count of Medicare beneficiaries for cost reporting 
periods beginning on or after October 1, 1997. A new HHA is one that 
did not have approval to participate in the Medicare program under 
present or previous ownership prior to October 1, 1993.

C. Other

    There are cases in which there could be changes in a ``clause v'' 
type HHA's operational structure, after Federal FY 1994, that could 
have an impact on the determination of the per-beneficiary limitation 
that is applicable to the HHA for cost reporting periods beginning on 
or after October 1, 1997. Examples of such changes are mergers, 
consolidations, and changes in ownership resulting in a change in the 
operational structure. The policies that apply when there are changes 
in the operational structure of an HHA after its cost reporting ended 
after FY 1994 are as follows:
1. Mergers or Consolidations of Like HHAs (Two or More Freestanding or 
Two or More Provider-Based Agencies) With Cost Reporting Periods Ending 
in Federal Fiscal Year 1994
    There could be cases in which the merger or consolidation of two or 
more like HHAs (freestanding or provider-based) would not alter the 
surviving HHA's corporate structure, but applying the surviving HHA's 
per-beneficiary limitation to the combined operational structure would 
not be appropriate. Therefore, if two or more like HHAs (two or more 
freestanding agencies or two or more provider-based agencies) that had 
cost reporting periods that ended in Federal FY 1994 merge or 
consolidate after Federal FY 1994, the per-beneficiary limitation will 
be recalculated based on an average of the agencies' Medicare costs 
weighted by their unduplicated census counts in Federal FY 1994. If the 
agencies have different cost reporting period year ends, the costs must 
be inflated to common year end dates. For example, HHA 1, with a cost 
reporting period that ended March 31, 1994, merged on December 1, 1996 
with HHA 2, with a cost reporting period that ended November 30, 1993. 
HHA 2's corporate structure did not change, but the operational 
structure changed with the inclusion of HHA 1. The Medicare allowable 
reasonable costs, the aggregate per-visit limitation, and the 
nonroutine medical supply costs of HHA 1 will be updated to November 
30, 1996. The Medicare allowable costs, the aggregate per-visit 
limitation, and the nonroutine medical supply costs of HHA 2 will be 
updated to November 30, 1996. The lesser of the combined updated 
Medicare allowable reasonable costs or the combined updated aggregate 
per-visit limitation, plus the combined updated nonroutine medical 
supply costs will be divided by the combined unduplicated patient 
census counts. The weighted average per-beneficiary amount will then be 
further updated to October 31, 1998 to derive the per-beneficiary 
limitation that applies to the HHA's cost reporting period which began 
November 1, 1997. The same procedures would apply if HHA 1 and HHA 2 
were subunits in Federal FY 1994.
2. Mergers or Consolidations When Only One of the HHAs Had a Cost 
Report That Ended in Federal Fiscal 1994
    There could be situations in which two or more HHAs merge or 
consolidate into one after Federal FY 1994 and only one of the HHAs had 
a cost reporting period ending in Federal FY 1994. The statute is 
specific as to what per-beneficiary limitation applies to agencies with 
cost reporting periods ending in Federal FY 1994 and what per-
beneficiary limitation applies to agencies that do not have a cost 
reporting period ending in Federal FY 1994. The two methodologies do 
not interrelate sufficiently to allow the application of a methodology 
similar to the methodology described in section III. C.1. above. 
Because the two methodologies do not interrelate, we have taken a 
position that we believe is equitable within the constraints of the 
statute. If HHAs merge or consolidate after Federal FY 1994 and only 
one of the HHAs had a cost reporting period that ended in Federal FY 
1994, the agency will be considered a ``clause vi'' agency with respect 
to applying the per-beneficiary limitation. That is, the per-
beneficiary limitation will be the national per-beneficiary limitation 
that applies to new agencies.
3. Complete Changes in the Operational Structure of the HHA
    There are situations when the costs of operations of the HHA could 
change either through a change of ownership or an internal 
reconfiguration of the operational structure within the same HHA after 
Federal FY 1994. Examples of this would be a freestanding agency 
becoming a provider-based agency or vice-versa. Even though this could 
be construed as an agency which has merely altered its corporate 
structure, the costs of operations are significantly different between 
a freestanding agency and a provider-based agency. We do not

[[Page 15722]]

believe the statute was intended to advantage or disadvantage different 
classes of agencies whose means of determining overhead costs are 
completely different. Generally, a freestanding agency has control over 
the overhead costs it incurs while a provider-based agency has little, 
if any, control over the overhead costs it incurs. Therefore, if 
``clause v'' freestanding HHAs become provider-based, and vice versa, 
through a change in ownership or other means, after Federal FY 1994, 
these agencies will be considered ``clause vi'' agencies with respect 
to applying the per-beneficiary limitation. We also noted that branches 
within HHAs generally do not have direct overhead costs specifically 
identified to them on the Medicare cost report. HHAs that have branches 
report costs on the Medicare cost report as a single agency. As such, 
the branch does not exist as an independent agency certified by 
Medicare. The branch is encompassed in the parent agency's 
certification. Therefore, when branches within HHAs that have a cost 
reporting period ending in Federal FY 1994 become subunits after 
Federal fiscal 1994, whereby they are certified under Medicare to 
operate as a freestanding HHA, these new subunits will be considered 
``clause vi'' agencies with respect to applying the per-beneficiary 
limitation.

IV. Market Basket

    The 1993-based cost categories and weights are listed in Table 1 
below.

 Table 1.--1993-Based Cost Categories, Basket Weights, and Price Proxies
------------------------------------------------------------------------
                                    1993-based                          
                                      market                            
          Cost category               basket           Price proxy      
                                      weight                            
------------------------------------------------------------------------
Compensation, including allocated       77.668                          
 Contract Services' Labor.                                              
    Wages and Salaries, Including       64.226  HHA Occupational Wage   
     allocated Contract Services'                Index.                 
     Labor.                                                             
    Employee benefits, including        13.442  HHA Occupational        
     allocated Contract Services'                Benefits Index.        
     Labor.                                                             
Operations & Maintenance.........        0.832  CPI-U Fuel & Other      
                                                 Utilities.             
Administrative & General,                9.569                          
 including allocated Contract                                           
 Services' Non-Labor                                                    
    Telephone....................        0.725  CPI-U Telephone.        
    Paper & Printing.............        0.529  CPI-U Household Paper,  
                                                 Paper Products &       
                                                 Stationery Supplies.   
    Postage......................        0.724  CPI-U Postage.          
    Other Administrative &               7.591  CPI-Services.           
     General, including Allocated                                       
     Contract Services Non-Labor.                                       
Transportation...................        3.405  CPI-U Private           
                                                 Transportation.        
Capital-Related..................        3.204                          
    Insurance....................        0.560  CPI-U Household         
                                                 Insurance.             
    Fixed Capital................        1.764  CPI-U Household         
                                                 Insurance.             
    Movable Capital..............        0.880  PPI Machinery &         
                                                 Equipment.             
Other Expenses, including                5.322  CPI-U All Items Less    
 allocated Contract Services' Non-               Food & Energy.         
 Labor..                                                                
                                  -------------                         
      Total......................      100.000                          
------------------------------------------------------------------------

V. Methodology for Determining Per-Beneficiary Limitation

A. Agency-Specific Per-Beneficiary Limitation

    Section 1861(v)(1)(L)(v) of the Act, in part, requires that 75 
percent of the per-beneficiary limitation be based on 98 percent of the 
reasonable costs for the agency's 12-month cost reporting period during 
Federal FY 1994. Reasonable costs are defined as the lesser of the 
actual Medicare aggregate costs of discipline services or the aggregate 
discipline per-visit limitation. The Medicare allowable costs of 
nonroutine supplies is added to this amount and multiplied by 98 
percent. The result of this computation is then divided by the HHA's 
Federal FY 1994 unduplicated census count of Medicare beneficiaries to 
derive the agency-specific limitation which will be 75 percent of the 
per-beneficiary limitation.
    The computation of the agency-specific per-beneficiary limitation 
is performed by the HHA's intermediary. For provider-based HHAs, the 
reasonable costs are the lesser of line 7, columns 8 and 9, or line 14 
columns 8 and 9, plus line 15, columns 8 and 9, as reported on 
Supplemental Worksheet H-5 (Form HCFA-2552-92-H (4/93)), of the 
Medicare cost report for the cost reporting period ending in Federal 
fiscal 1994, multiplied by 98 percent. The results are divided by the 
unduplicated census count of Medicare beneficiaries, as provided by 
HCFA. For freestanding HHAs, the reasonable costs are the lesser of 
line 7, column 9, or line 14, column 9, plus line 17, columns 7 and 8, 
as reported on Worksheet C (Form HCFA-1728-86 (6/76)) of the Medicare 
cost report for the cost reporting period ending during Federal FY 
1994, multiplied by 98 percent. The results are divided by the 
unduplicated census count for Medicare beneficiaries, as provided by 
HCFA.
    The agency-specific per-beneficiary limitation must also be 
adjusted using the latest available market basket factors to reflect 
expected cost increases occurring between the cost reporting period 
ending during Federal FY 1994 and the cost reporting period ending 
during FY 1998. The factors for inflating the agency-specific per-
beneficiary limitation are provided on Tables 2 and 5 or determined 
using Table 6.
    In establishing the agency-specific per-beneficiary limitation, it 
is important that the amount determined is an accurate reflection of 
the home health services provided to Medicare beneficiaries in Federal 
FY 1994. Because the per-beneficiary limitation required by section 
1861(v)(1)(L)(v)(I) of the Act is established, in part, using agency-
specific cost report data during Federal FY 1994, and the unduplicated 
census count of Medicare beneficiaries

[[Page 15723]]

as may have been reported on the cost report is not being used in the 
computation, we are allowing HHAs to request a review of the 
calculation of the agency-specific limitation which includes the number 
of unduplicated counts of Medicare beneficiaries used in the 
computation. HHAs will have 180 days from the notification date of the 
agency-specific per-beneficiary limitation to request a review from its 
intermediary that the number of unduplicated census counts of Medicare 
beneficiaries as provided by HCFA is incorrect or other data from the 
Federal FY 1994 cost report used in the calculation of the agency-
specific amount is/are incorrect. The HHA would bear the burden of 
proof to document its proffer of the appropriate number of unduplicated 
census counts of Medicare beneficiaries or the other appropriate data 
used in the calculation. An unduplicated census count of Medicare 
beneficiaries is a count of one for each Medicare patient receiving 
home health services from an HHA during its cost reporting period, 
regardless of the number of services or the number of different plans 
of care that the patient may have been under during the HHA's cost 
reporting period. If the agency can demonstrate to the satisfaction of 
the intermediary that a change should be made, the intermediary would 
appropriately recalculate the agency-specific per-beneficiary 
limitation. The intermediary must provide to the HHA its determination, 
in writing, whether or not an adjustment is provided.

B. Census Division Standardized Regional Average Per-Beneficiary 
Limitations

    Section 1861(v)(1)(L)(v)(I) of the Act requires, in part, that 25 
percent of the per-beneficiary limitation be based on 98 percent of the 
standardized regional average of such costs for the agency's census 
division for cost reporting periods ending during Federal FY 1994 and 
such costs updated by the home health market basket index.
    The standardized regional average per-beneficiary limitations by 
census region were determined by extracting settled actual data from 
Medicare cost reports ending in Federal FY 1994 for freestanding and 
provider-based HHAs. The unduplicated census counts in the data file 
were replaced with the unduplicated census counts of Medicare 
beneficiaries generated using the SAF. Section 1861(v)(1)(L)(iii) of 
the Act, as amended by section 4604 of BBA '97, requires that we base 
the payments for home health services on the location where the 
services are provided. The file created from the SAF accumulated the 
number of beneficiaries in each MSA/non-MSA area serviced by each HHA. 
This file was created by matching all claims to each agency's cost 
reporting period to determine the unduplicated census counts by MSA/
non-MSA area. This file was merged with the cost report file and 
replaced the unduplicated census counts reported by the HHAs on the 
Medicare cost report. HHAs were grouped within their appropriate census 
region based on the HHAs' State and county code. Agencies not located 
in a census region, e.g. Puerto Rico, were grouped separately rather 
than arbitrarily assigned to a census region.
    In order to account for the statutory requirement that the wage 
index used in calculating the limitations be based on the location 
where the home health service was furnished rather than the location of 
the HHA, it was necessary to develop a wage-index weighted by the 
number of beneficiaries in each MSA/non-MSA in each census region. The 
unduplicated census counts of Medicare beneficiaries for each MSA/non-
MSA serviced by the HHA were multiplied by the appropriate wage index 
that applied to that MSA/non-MSA. The product of these computations 
were totaled for each HHA to yield a wage index adjusted unduplicated 
census count of Medicare beneficiaries. The lesser of the Medicare 
reasonable costs or aggregate per-visit limitation plus nonroutine 
medical supplies for each HHA were totaled for each census region. The 
total costs in each census region was divided by the total wage index 
adjusted unduplicated census counts of Medicare beneficiaries in each 
region to arrive at a standardized average cost per-beneficiary for the 
labor component. This approximates the same effect as though each HHA 
in the census region had its average costs per-beneficiary adjusted by 
its average wage-index for the beneficiaries serviced in its service 
areas. We then adjusted the average per-beneficiary limitations using 
the latest available market basket factors to reflect expected cost 
increases occurring between the cost reporting periods that ended in 
Federal FY 1994 and September 30, 1998 excluding any changes in the 
home health market basket with respect to cost reporting periods which 
began on or after, July 1, 1994 and before July 1, 1996 as shown in 
Table 2 below.
    The statute is silent with respect to the regional per-beneficiary 
limitation that would apply to Puerto Rico and Guam. Neither of these 
areas fall within the census divisions referred in the statute. We do 
not believe it was the intent of Congress to have HHAs in Puerto Rico 
and Guam subject to a blend of 75 percent agency-specific per 
beneficiary limitation and 25 percent of zero since they do not fall 
within the census divisions. Therefore, based on the HHAs in our data 
base that are located in Puerto Rico and Guam, we have developed 
regional per-beneficiary limitations specific to Puerto Rico and Guam 
using the same methodology as we used for the census divisions. These 
per-beneficiary limitations for which 25 percent of the per-beneficiary 
limitation will be based can be found on Table 3c.

C. National Per-Beneficiary Limitation

    Section 1861(v)(1)(L)(vi)(I) of the Act, as added by section 
4602(c) of BBA '97, requires that for new HHAs and HHAs without a 12-
month cost reporting period ending in Federal FY 1994, the per-
beneficiary limitation will be the median of these limitations applied 
to other HHAs. This means that we must establish a national per-
beneficiary limitation based on ``the median of these limits (or the 
Secretary's best estimates thereof) applied to other HHAs as determined 
by the Secretary'', referring back to the per-beneficiary limitations 
that apply to HHAs that have a cost reporting period ending in Federal 
FY 1994. This required us to calculate the per-beneficiary limitation 
for each HHA in our data base, blending the 75 percent agency-specific 
per-beneficiary component with the 25 percent census region per-
beneficiary component. Because the wage index will be applied to the 
labor component of the census region per-beneficiary limitation for 
``clause v'' HHAs in determining the aggregate per-beneficiary 
limitation, we adjusted the census region per-beneficiary limitations 
for the varying effects of the wage indexes. This adjustment 
methodology used a beneficiary-weighted wage adjustment factor based on 
the geographic location of beneficiaries in our data base as described 
in B. above. We blended the agency-specific per-beneficiary component 
with the standardized census region per-beneficiary component, arrayed 
the results, and established the median per-beneficiary amount. This is 
the ``unadjusted median per-beneficiary limitation''. In order to apply 
a wage index adjustment factor to the national per-beneficiary 
limitation, the median per-beneficiary limitation had to be adjusted to 
standardize the agency-specific per-beneficiary component in the same 
fashion as the census region per-beneficiary limitation component so 
that the final labor component to which the new agencies

[[Page 15724]]

would apply their appropriate wage indexes would be uniformly 
standardized in both its agency-specific per-beneficiary limitation 
component and its census region per-beneficiary component. To 
standardize the agency-specific per-beneficiary component of the median 
per-beneficiary limitation, we calculated an adjustment factor to apply 
to the median per-beneficiary limitations. The adjustment factor was 
determined by calculating the ratio of the fully standardized per-
beneficiary median (standardized for both the agency specific and the 
census region amounts) and the unadjusted blended median of the 
``clause v'' agencies. It is the labor component of this adjusted 
median of the per-beneficiary limitations for the agencies in our data 
base, standardized in both the 75 percent agency-specific per 
beneficiary limitation and the 25 percent census region per-beneficiary 
limitation components to which new agencies will apply their 
appropriate wage indexes.
    In summary, we calculated a national per-beneficiary limitation 
based on the median of the per-beneficiary limitations that apply to 
HHAs that have a cost reporting period ending during Federal FY 1994. 
To establish this national per-beneficiary limitation, we blended 75 
percent agency-specific per-beneficiary component with the 25 percent 
census region division per-beneficiary component for each agency in our 
data base, arrayed the results and determined the median. The 
application of this median per-beneficiary limitation requires that we 
apply a wage index to the labor component of the national per-
beneficiary limitation. In calculating the median to be used as the 
national per-beneficiary limitation for new agencies and agencies 
without a 12-month cost reporting period ending during Federal FY 1994, 
we recognized that the agency-specific component was not standardized 
for the effects of area wage differences. In order to apply a wage 
index, we determined an appropriate adjustment factor to apply to the 
national per-beneficiary limitation that effectively took out any 
differences in area wages for the agency-specific component of the 
median per-beneficiary limitation. The result is a fully standardized 
national per-beneficiary limitation.

D. Update of Data Base

    The data used to develop the per-beneficiary limitations and the 
national per-beneficiary limitation was adjusted using the latest 
available market basket factors to reflect expected cost increases 
occurring between the cost reporting periods contained in our database 
and September 30, 1998, excluding any changes in the home health market 
basket with respect to cost reporting periods which began on or after 
July 1, 1994 and before July 1, 1996. The following inflation factors 
were used in calculating the Census region and national per-beneficiary 
limitations:

 Table 2.--Factors for Inflating Database Dollars to September 30, 1998 
                    [Inflation adjustment factors 1]                    
------------------------------------------------------------------------
                Fiscal Year End                     1993         1994   
------------------------------------------------------------------------
October 31....................................      1.08619  ...........
November 30...................................      1.08349  ...........
December 31...................................      1.08080  ...........
January 31....................................  ...........      1.07813
February 28...................................  ...........      1.07550
March 31......................................  ...........       1.0729
April 30......................................  ...........      1.07046
May 31........................................  ...........      1.06800
June 30.......................................  ...........      1.06565
July 31.......................................  ...........      1.06354
August 31.....................................  ...........      1.06165
September 30..................................  ...........     1.05993 
------------------------------------------------------------------------
1 Source: The Home Health Agency Price Index, produced by HCFA. The     
  forecasts are from Standard and Poor's DRI 3rd QTR 1997; @USSIM/      
  TREND25YR0897@CISSIM/Control973 forecast exercise which has historical
  data through 1997:2.                                                  

    Multiplying nominal dollars for a given FY end by their respective 
inflation adjustment factor will express those dollars in the dollar 
levels for the FY ending September 30, 1998.
    The procedure followed to develop these tables, based on 
requirements from BBA '97, was to hold the June 1994 level for input 
price index constant through June 1996. From July 1996 forward, we 
trended the revised index forward using the percentage gain each month 
from the HCFA Home Health Agency Input Price Index.
    Thus, the monthly trend of the revised index is the same as that of 
the HCFA market basket for the period from July 1996 forward.

E. Short Period Adjustment Factors for Cost Reporting Periods 
Consisting of Fewer Than 12 Months

    HHAs with cost reporting periods beginning on or after October 1, 
1997 may have cost reporting periods that are less than 12 months in 
length. This may happen, for example, when a new provider enters the 
Medicare program after its selected FY has already begun, or when a 
provider experiences a change of ownership before the end of the cost 
reporting period. As explained in section V. of this preamble, the data 
used in calculating the census region and the national per-beneficiary 
limitations were updated to September 30, 1998. Therefore, the cost 
limitations published in this document are for a 12-month cost 
reporting period beginning October 1, 1997 and ending September 30, 
1998. For 12-month cost reporting periods beginning after October 1, 
1997 and before October 1, 1998, cost reporting period adjustment 
factors are provided in Table 5. However, when a cost reporting period 
consists of fewer than 12 months, adjustments must be made to the data 
that have been developed for use with 12-month cost reporting periods. 
To promote the efficient dissemination of cost limitations to agencies 
with cost reporting periods of fewer than 12 months, we are publishing 
an example and tables to enable intermediaries to calculate the 
applicable adjustment factors.
    Cost reporting periods of fewer than 12 months may not necessarily 
begin on the first of the month or end on the last day of the month. In 
order to simplify the process in calculating ``short

[[Page 15725]]

period'' adjustment factors, if the short cost reporting period begins 
before the sixteenth of the month, we will consider the period to have 
begun on the first of that month. If the start period begins on or 
after the sixteenth of the month, it will be considered to have begun 
at the beginning of the next month. Also, if the short period ends 
before the sixteenth of the month, we will consider the period to have 
ended at the end of the preceding month; if the short period ends on or 
after the sixteenth of the month, it will be considered to have ended 
at the end of that month.

Example

    1. After approval by its intermediary, a ``clause v'' HHA 
changed its FY end from June 30 to December 31. Therefore, the HHA 
had a short cost reporting period beginning on July 1, 1998 and 
ending on December 31, 1998. The cost reporting period ending during 
Federal FY 1994 would have been the cost reporting period ending on 
June 30, 1994. The per visit limitation that applies to this short 
period must be adjusted as follows:
    Step 1--From Table 6, sum the index levels for the months of 
July 1998 through December 1998: 6.63687
    Step 2--Divide the results from Step 1 by the number of months 
in short period: 6.6387  =1.106145
    Step 3--From Table 6, sum the index levels for the months in the 
common period of October 1997 through September 1998: 13:06926
    Step 4--Divide the results in Step 3 by the number of months in 
the common period: 13.06926  12 = 1.089105
    Step 5--Divide the results from Step 2 by the results from Step 
4. This is the adjustment factor to be applied to the published per-
beneficiary limitations: 1.106145  1.1089106 = 1.015646
    Step 6--Apply the results from Step 5 to the published per-
beneficiary limitations in the same manner as shown in the example 
in VIII.C.

VI. Exceptions or Adjustments to Per-beneficiary Limitation

    The Medicare regulations at 42 CFR 413.30 contain the general rules 
under which HCFA may establish limitations on provider costs, including 
provisions under which a provider may request a reclassification, 
exception, or exemption from the cost limitations under that section.
    We do not believe that the Congress intended these general rules to 
apply to the establishment of the per-beneficiary limitations. First, 
we note that unlike other provisions of the statute that provide 
specific language for exceptions or exemptions to the limitations on 
costs, the statute is silent with respect to providing exceptions or 
exemptions to the per-beneficiary limitations. Section 
1861(v)(1)(L)(ii) of the Act, which addresses the application of the 
per-visit limitations, is very specific that the Secretary may provide 
exemptions or exceptions to the per-visit limitations that are applied 
on a discipline basis. There is no similar language under sections 
1861(v)(1)(L)(v) and 1861(v)(1)(L)(vi) of the Act, which provides for 
the establishment of the per-beneficiary limitations. Moreover, it 
seems unlikely that Congress intended for exceptions or exemptions to 
apply to the per-beneficiary limitations since in establishing the mid-
session budget, there were no monies earmarked from the projected 
Medicare savings to pay for exemptions or exceptions to the per-
beneficiary limitation.
    Therefore, we are not allowing agencies to file for exceptions or 
exemptions to the per-beneficiary limitations.
    We are revising section 413.30(a) to recognize the addition of the 
per-beneficiary cost limitation as a limitation on costs. Also, we are 
revising section 413.30(c) to state that HHAs may not request a 
reclassification, an exception, or an exemption from the per-
beneficiary cost limitation.

VII. Review of the Agency-Specific Per-Beneficiary Limitation

    For HHAs with a cost reporting period ending during Federal FY 
1994, 75 percent of the per-beneficiary limitation is based on the 
Medicare data contained in that cost report.
    We recognize that for most HHAs, that cost report has been settled 
and unless the HHA has an appeal with respect to the cost settlement 
pending for that FY, the data contained within the agency-specific per-
beneficiary calculation has been settled. HHAs that have pending 
appeals (for example, an outstanding cost limitation exception to the 
per-visit limitation or appeals of adjustments resulting from Medicare 
principles of reimbursement) that may impact the cost reporting data 
used in calculation of the agency-specific portion of the per-
beneficiary limitation, will have the agency-specific per-beneficiary 
limitation recalculated when the appeal is favorably resolved on behalf 
of the HHA.
    There are, however, certain data used from the cost report in 
calculating the per-beneficiary limitations that do not impact the 
settlement of the cost report, that is, the use of the number of 
unduplicated census counts of Medicare beneficiaries whereby a 
reopening request of the cost report would not be warranted. This is 
particularly of concern since the unduplicated census counts on the 
Medicare cost reports have been alleged to be incorrect and HCFA will 
be providing the unduplicated census counts to be used by the 
intermediaries in calculating the agency-specific per-beneficiary 
limitation.
    Given the importance of the calculation of the agency-specific per-
beneficiary limitation, we are allowing HHAs 180 days after the date of 
the notice by the intermediary of the HHA's agency-specific per-
beneficiary limitation to request a review of the agency-specific per-
beneficiary calculation. The request may address the specific data used 
in calculating the agency-specific per-beneficiary limitation as shown 
on the Medicare cost report (that is, the lesser of Medicare reasonable 
costs or the aggregate per-visit limitation), the costs of nonroutine 
medical supplies, the unduplicated census count provided by HCFA, or 
the appropriate market basket increases, as provided in this document. 
This request for review may also address the calculation such as 
addition, subtraction, multiplication, or division. This request for 
review is not applicable to those cost report settlement appeals, which 
may have an impact on the data used in calculating the agency-specific 
per-beneficiary limitation and are pending under another authority 
under the Medicare regulations or statute. The agency's request must 
include sufficient documentation for the intermediary to determine that 
a recalculation of the agency-specific per-beneficiary limitation is 
warranted.
    After receipt of all the necessary documentation needed to make a 
sound determination on the agency's request, the intermediary must 
respond to the request within 90 days of receiving the fully documented 
request.

VIII. Computing the Per-Beneficiary Limitation

    A. Agency-Specific Per-Beneficiary Limitation
    To arrive at the agency-specific limitation, which will represent 
75 percent of the total per-beneficiary limitation that is to apply to 
the unduplicated census count of the Medicare beneficiaries for cost 
reporting periods beginning on or after October 1, 1997, the 
intermediary will calculate as follows from data on the Medicare cost 
report for the cost reporting period ending during Federal FY 1994:
    For provider-based HHAs, the lesser of line 7, columns 8 and 9, or 
line 14, columns 8 and 9 plus line 15 columns 8 and 9, as reported on 
Supplemental Worksheet H-5 (Form HCFA-2552-92-H(4/93) OMB approval 
number 0938-0050, expiration date 08/31/2000), multiplied by 98 percent 
and the product divided by the unduplicated census count of Medicare 
beneficiaries,

[[Page 15726]]

as provided by HCFA, times the appropriate market basket increases from 
Tables 2 and 5; determined using Table 6.
    For freestanding HHAs, the lesser of line 7, column 9, or line 14, 
column 9, plus line 17, columns 7 and 8, as reported on Worksheet C 
(Form HCFA-1728-86 (6/76)), multiplied by 98 percent and the product 
divided by the unduplicated census count of Medicare beneficiaries, as 
provided by HCFA, times the appropriate market basket increases from 
Tables 2 and 5 or determined using Table 6.
    The product of the calculation of the agency-specific limitation is 
multiplied by 75 percent to arrive at the agency-specific portion of 
the per-beneficiary limitation.
    To arrive at the regional census division per-beneficiary 
limitation, which will represent 25 percent of the overall per-
beneficiary limitation, the HHA's intermediary first determines the 
adjusted labor-related component by multiplying the labor-related 
component of the appropriate regional census division per-beneficiary 
limitation where the beneficiary(s) received HHA services by the 
appropriate wage index based on where the beneficiary(s) received HHA 
services. The nonlabor component of the appropriate regional census 
division per-beneficiary limitation is added to the adjusted labor 
component and multiplied by 98 percent. The results are then multiplied 
by 25 percent. The 75 percent agency-specific portion is added to the 
25 percent adjusted regional census division portion to arrive at the 
adjusted per-beneficiary limitation, which will be multiplied by the 
total unduplicated patient census count of patients for whom services 
were furnished in that area.
    A separate per-beneficiary limitation has to be calculated for each 
MSA and/or nonMSA serviced by the HHA.
    The aggregate limitation for all MSA and/or non-MSA areas for each 
HHA will be compared to the lower of the Medicare reasonable costs or 
the aggregate per-visit limitation and the lowest amount after this 
comparison is the allowable Medicare reasonable costs for payment 
purposes. The following is an example of how the per-beneficiary 
limitations are calculated for ``clause v'' type agencies which provide 
services to Medicare beneficiaries in more than one MSA area. The 
aggregate per-beneficiary limitation calculation example is given at 
section IX.

Example: Calculation of Per-Beneficiary Limitations for an HHA 
Furnishing Services to Patients Both in Dallas, Texas and Patients in 
Rural Texas

Blended Per-Beneficiary Limitation for Services in Dallas MSA

Agency-Specific Component

    1. Agency-Specific Per-beneficiary Limitation $6,000. (As 
calculated by the intermediary)
    2. Adjusted Agency-Specific Per-beneficiary Limitation (Line 1 
x  .75)=$4,500.

Census Region Division Component

    3. Labor Portion of West South Central Region Per-beneficiary 
Limitation $4,456.47. (From Table 3a)
    4. Dallas, TX Wage Index .9703. (From Table 4a)
    5. Adjusted Labor Portion (Line 3 Times Line 4)= $4,324.11.
    6. Nonlabor Portion of West South Central Region Per-beneficiary 
Limitation $1,281.37. (From Table 3a)
    7. Adjusted West South Central Region Per-beneficiary Limitation 
(((Line 5 Plus Line 6)X .98) X .25)= $1,373.34.

Agency-Specific/Census Region Division Blended Per-Beneficiary 
Limitation

    8. Blended Per-beneficiary Limitation for HHA services furnished 
to Medicare beneficiaries in Dallas, Texas(Line 2 Plus Line 7) = 
$5,873.34.

Per-Beneficiary Limitation for Services in Rural Texas/Census 
Region Division Component

    9. Labor Portion of West South Central Region Per-beneficiary = 
$4,456.47. (From Table 3a)
    10. Rural Texas Wage Index = .7404. (From Table 4b)
    11. Adjusted Labor Portion (Line 9 X Line 10) = $3,299.57.
    12. Nonlabor portion of West South Central Region Per-
beneficiary Limitation = $1,281.37. (From Table 3a)
    13. Adjusted Per-beneficiary Limitation (((Line 11 Plus Line 
12)X .98) X.25) = $1,122.33.

Agency-Specific/Census Region Division Blended Per-Beneficiary 
Limitation

    14. Blended Rural Per-beneficiary Limitation for HHA services 
furnished to Medicare beneficiaries in rural Texas (Line 2 Plus Line 
13) = $5,622.33.

    The process shown in the above examples would have to be repeated 
for each MSA and/or non-MSA where the HHA has an unduplicated census 
count of Medicare beneficiaries which received HHA services.

B. National Per-Beneficiary Limitation

    New HHAs, HHAs without a 12-month cost reporting period ending 
during Federal FY 1994, and certain other HHAs described in section 
III.C. will be subject to a national per-beneficiary limitation.
    As with the census region division per-beneficiary limitations, the 
national per-beneficiary limitation has a labor-related component and a 
nonlabor component. To arrive at the adjusted national per-beneficiary 
limitation, which is to apply to each unduplicated census count of 
Medicare beneficiary based on where the HHA services were furnished, 
the intermediary first determines the adjusted labor-related component 
by multiplying the labor-related component of the national per-
beneficiary limitation by the appropriate wage index based on where the 
beneficiary received the HHA services.
    The sum of the adjusted labor-related component and nonlabor 
component is the adjusted national per-beneficiary limitation 
applicable to the unduplicated census count of Medicare beneficiaries 
in the area for which the wage index was used. The following is an 
example of the calculation of the per-beneficiary limitations for a new 
HHA providing services to Medicare beneficiaries in more than one MSA 
area.

Example: Calculation of Adjusted National Per-Beneficiary Limitations 
for a Provider-Based HHA Providing HHA Services to an Unduplicated 
Census Count of Medicare Beneficiaries of in Dallas, Texas, and an 
Unduplicated Census Count of Medicare Beneficiaries in Rural Texas

National Per-Beneficiary Limitation for Dallas, Texas

    1. Labor component of national per-beneficiary limitation = 
$2,607.07. (From Table 3b)
    2. Wage-index applicable to Dallas, Texas = .9703 (From Table 
4a)
    3. Adjusted labor component (Line 1 X Line 2) = $2,529.64.
    4. Nonlabor component of national per-beneficiary limitation 
$749.62. (From Table 4b)
    5. Adjusted national per-beneficiary limitation (Line 3 Plus 
Line 4) X .98 = $3,213.67.

National Per-Beneficiary Limitation for Rural Texas

    6. Labor component of national per-beneficiary limitation = 
$2,607.07. (From Table 4b)
    7. Wage index applicable to rural Texas = .7404. (From Table 4b)
    8. Adjusted labor component of national per-beneficiary (Line 6 
X Line 7) = $1,930.27.
    9. Nonlabor component of national per-beneficiary limitation = 
$749.62. (From Table 3b)
    10. Adjusted national per-beneficiary limitation ((Line 8 Plus 
Line 9) X .98) = $2,626.29.

C. Adjustment Factor for Reporting Year Beginning After October 1, 1997 
and Before October 1, 1998

    If an HHA has a 12-month cost reporting period beginning on or 
after November 1, 1997, the adjusted census region division per-
beneficiary

[[Page 15727]]

limitation or the adjusted national per-beneficiary limitation is again 
revised by an adjustment factor from Table 5 that corresponds to the 
month and year in which the cost reporting period begins. Each factor 
represents the compounded rate of monthly increase derived from the 
projected annual increase in the market basket index, and is used to 
account for inflation in costs that will occur after the date on which 
the per-beneficiary limitations become effective.
    In adjusting the agency-specific per-beneficiary limitation for the 
market basket increases since the end of the cost reporting period 
ending during Federal year 1994, the intermediary should increase the 
agency-specific per-beneficiary limitation to September 30, 1998. Thus, 
when the per-beneficiary limitation needs to be further adjusted for 
the cost reporting period, the adjusted blended per-beneficiary 
limitation can be adjusted by the same factor. For example, if the HHAs 
in the examples above had a cost reporting period beginning January 1, 
1998, its per-beneficiary limitations would be further adjusted as 
follows:
    Computation of Revised Per-Beneficiary Limitations Blended per-
beneficiary limitation for Dallas MSA = $5,873.34.

Adjustment factor from Table 5. 1.00781
Adjusted blended per-beneficiary limitation for Dallas MSA $5,919.21
National per-beneficiary limitation for Dallas, Texas = 3,213.67
Adjustment factor from Table 5. 1.00781
Adjusted national per-beneficiary limitation = $3,238.77

IX. Schedule of Per-Beneficiary Limitations

    The schedule of per-beneficiary limitations set forth below applies 
to cost reporting periods beginning on or after October 1, 1997. The 
intermediaries will compute the adjusted per-beneficiary limitations 
using the wage index(s) published in Tables 4a and 4b of section X. for 
each MSA and/or non MSA for which the HHA provides services to Medicare 
beneficiaries. The intermediary will notify each HHA it services of its 
applicable per-beneficiary limitation(s) for the area(s) where the HHA 
furnishes HHA services to Medicare beneficiaries. Each HHA's aggregate 
per-beneficiary limitation cannot be determined prospectively, but 
depends on each HHA's unduplicated census count of Medicare 
beneficiaries by location of the HHA services furnished for the cost 
reporting periods subject to this document.
    Section 1861(v)(1)(L)(vi)(II) of the Act as added by section 
4602(c) of BBA ``97, requires the per-beneficiary limitations to be 
prorated among HHAs for Medicare beneficiaries who use services 
furnished by more than one HHA. The per-beneficiary limitation will be 
prorated based on a ratio of the number of visits furnished to the 
individual beneficiary by the HHA during its cost reporting period to 
the total number of visits furnished by all HHAs to that individual 
beneficiary during the same period.
    The proration of the per-beneficiary limitation will be done based 
on the fraction of services the beneficiary received from the HHA. For 
example, if an HHA furnished 100 visits to an individual beneficiary 
during its cost reporting period ending September 30, 1998, and that 
same individual received a total of 400 visits during that same period, 
the HHA would count the beneficiary as a .25 unduplicated census count 
of Medicare patient for the cost reporting period ending September 30, 
1998.
    The HHA costs that are subject to the per-beneficiary limitations 
include the costs of nonroutine medical supplies furnished in 
conjunction with patient care. Durable medical equipment and drugs 
directly identifiable as services to an individual patient are excluded 
from the per-beneficiary limitations and are paid without regard to 
this schedule of per-beneficiary limitations.
    The intermediary will determine the aggregate per-beneficiary 
limitation for each HHA by multiplying the unduplicated census count of 
Medicare beneficiaries according to the location where the services are 
furnished by the HHA, by the respective per-beneficiary limitation. The 
sum of these amounts is compared to the lesser of the HHA's total 
allowable costs or the aggregate per-visit limitation plus the 
allowable Medicare costs of nonroutine medical supplies. An example of 
how the aggregate per-beneficiary limitation is computed for an HHA 
providing HHA services to Medicare beneficiaries in both Dallas, Texas 
and rural Texas is as follows:

    Example: HHA X, a HHA located in Dallas, TX, has unduplicated 
census count of 400 Medicare beneficiaries in the Dallas MSA and an 
unduplicated census count of 200 Medicare beneficiaries in rural 
Texas during its 12-month cost reporting period ending September 30, 
1998. For simplicity, we are using the same blended per-beneficiary 
limitation that is used in the example under VIII. A above. The 
aggregate per-beneficiary limitation is calculated as follows:

          Determining the Aggregate Per-Beneficiary Limitation          
------------------------------------------------------------------------
                                     Per       Unduplicated             
                                 beneficiary   census count     Total   
        MSA/non-MSA area          limitation   of Medicare    limitation
                                    (\1\)     beneficiaries             
------------------------------------------------------------------------
Dallas, TX.....................    $5,873.34           400    $2,349,336
Rural, TX......................     5,622.33           200     1,124,466
                                                            ------------
      Aggregate Limitation.....  ...........  .............   3,473,802 
------------------------------------------------------------------------
\1\ Blended per-beneficiary limitation adjusted by the appropriate wage 
  index.                                                                


   Table 3a.--Standardized Per-Beneficiary Limitation by Census Region  
                        Division, Labor/Nonlabor                        
------------------------------------------------------------------------
                                               Labor         Nonlabor   
         Census region division              component       component  
------------------------------------------------------------------------
New England (CT, ME, MA, NH, RI, VT)....       $2,670.73        $ 767.92
Middle Atlantic (NJ, NY, PA)............        1,979.21          569.08
South Atlantic (DE, DC, FL, GA, MD, NC,                                 
 SC, VA, WV)............................        2,985.69          858.48
East North Central (IL, IN, MI, OH, WI).        2,421.00          696.11

[[Page 15728]]

                                                                        
East South Central (AL, KY, MS, TN).....        4,590.61        1,319.94
West North Central (IA, KS, MN, MO, NE,                                 
 ND, SD)................................        2,325.36          668.62
West South Central (AR, LA, OK, TX).....        4,456.47        1,281.37
Mountain (AZ, CO, ID, MT, NV, NM, UT,                                   
 WY)....................................        2,936.88          844.44
Pacific (AK, CA, HI, OR, WA)............        2,275.12          654.17
------------------------------------------------------------------------


 Table 3b.--Standardized Per-Beneficiary Limitation for New Agencies and
  Agencies Without a 12-Month Cost Report Ending During Federal FY 1994 
------------------------------------------------------------------------
                                               Labor         Nonlabor   
                                             component       component  
------------------------------------------------------------------------
National................................       $2,607.07        $ 749.62
------------------------------------------------------------------------


 Table 3c.--Standardized Per-Beneficiary Limitations for Puerto Rico and
                                  Guam                                  
------------------------------------------------------------------------
                                               Labor         Nonlabor   
                                             component       component  
------------------------------------------------------------------------
Puerto Rico.............................       $1,940.26        $ 557.88
Guam....................................       $1,873.76        $ 538.76
------------------------------------------------------------------------

X. Wage Indexes

                  Table 4a.--Wage Index for Urban Areas                 
------------------------------------------------------------------------
                        Urban area (constituent counties or             
                                county equivalents)           Wage index
------------------------------------------------------------------------
0040..................  Abilene, TX; Taylor, TX............       0.8287
0060..................  Aguadilla, PR; Aguada, PR;                0.4188
                         Aguadilla, PR; Moca, PR.                       
0080..................  Akron, OH; Portage, OH; Summit, OH.       0.9772
0120..................  Albany, GA; Dougherty, GA; Lee, GA.       0.7914
0160..................  Albany-Schenectady-Troy, NY;              0.8480
                         Albany, NY; Montgomery, NY;                    
                         Rensselaer, NY; Saratoga, NY;                  
                         Schenectady, NY; Schoharie, NY.                
0200..................  Albuquerque, NM; Bernalillo, NM;          0.9309
                         Sandoval, NM; Valencia, NM.                    
0220..................  Alexandria, LA; Rapides, LA........       0.8162
0240..................  Allentown-Bethlehem-Easton, PA;           1.0086
                         Carbon, PA; Lehigh, PA;                        
                         Northampton, PA.                               
0280..................  Altoona, PA; Blair, PA.............       0.9137
0320..................  Amarillo, TX; Potter, TX; Randall,        0.9425
                         TX.                                            
0380..................  AK Anchorage, AK; Anchorage........       1.2842
0440..................  Ann Arbor, MI; Lenawee, MI;               1.1785
                         Livingston, MI; Washtenaw, MI.                 
0450..................  Anniston, AL; Calhoun, AL..........       0.8266
0460..................  Appleton-Oshkosh-Neenah, WI;              0.8996
                         Calumet, WI; Outagamie, WI;                    
                         Winnebago, WI.                                 
0470..................  Arecibo, PR; Arecibo, PR; Camuy,          0.4218
                         PR; Hatillo, PR.                               
0480..................  Asheville, NC; Buncombe, NC;              0.9072
                         Madison, NC.                                   
0500..................  Athens, GA; Clarke, GA; Madison,          0.9087
                         GA; Oconee, GA.                                
0520..................  Atlanta, GA; Barrow, GA; Bartow,          0.9823
                         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;               1.1155
                         Atlantic City, NJ; Cape May, NJ.               
0600..................  Augusta-Aiken, GA-SC; Columbia, GA;       0.9333
                         McDuffie, GA; Richmond, GA; Aiken,             
                         SC; Edgefield, SC.                             
0640..................  Austin-San Marcos, TX; Bastrop, TX;       0.9133
                         Caldwell, TX; Hays, TX; Travis,                
                         TX; Williamson, TX.                            
0680..................  Bakersfield, CA; Kern, CA..........       1.0014
0720..................  Baltimore, MD; Anne Arundel, MD;          0.9689
                         Baltimore, MD; Baltimore City, MD;             
                         Carroll, MD; Harford, MD; Howard,              
                         MD; Queen Anne, MD.                            
0733..................  Bangor, ME; Penobscot, ME..........       0.9478
0743..................  Barnstable-Yarmouth, MA;                  1.4291
                         Barnstable, MA.                                
0760..................  Baton Rouge, LA; Ascension, LA;           0.8382
                         East Baton Rouge, LA; Livingston,              
                         LA; West Baton Rouge, LA.                      
0840..................  Beaumont-Port Arthur, TX; Hardin,         0.8593
                         TX; Jefferson, TX; Orange, TX.                 
0860..................  Bellingham, WA; Whatcom, WA........       1.1221
0870..................  Benton Harbor, MI; Berrien, MI.....       0.8634
0875..................  Bergen-Passaic, NJ; Bergen, NJ;           1.2156
                         Passaic, NJ.                                   
0880..................  Billings, MT; Yellowstone, MT......       0.9783
0920..................  Biloxi-Gulfport-Pascagoula, MS;           0.8415
                         Hancock, MS; Harrison, MS;                     
                         Jackson, MS.                                   
0960..................  Binghamton, NY; Broome, NY; Tioga,        0.8914
                         NY.                                            
1000..................  Birmingham, AL; Blount, AL;               0.9005
                         Jefferson, AL; St. Clair, AL;                  
                         Shelby, AL.                                    
1010..................  Bismarck, ND; Burleigh, ND; Morton,       0.7695
                         ND.                                            
1020..................  Bloomington, IN; Monroe, IN........       0.9128
1040..................  Bloomington-Normal, IL; McLean, IL.       0.8733

[[Page 15729]]

                                                                        
1080..................  Boise City, ID; Ada, ID; Canyon, ID       0.8856
1123..................  Boston-Worcester Lawrence-Lowell-         1.1506
                         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; Boulder, CO..       1.0015
1145..................  Brazoria, TX; Brazoria, TX.........       0.9341
1150..................  Bremerton, WA; Kitsap, WA..........       1.0999
1240..................  Brownsville-Harlingen-San Benito,         0.8740
                         TX; Cameron, TX.                               
1260..................  Bryan-College Station, TX; Brazos,        0.8571
                         TX.                                            
1280..................  Buffalo-Niagara Falls, NY; Erie,          0.9272
                         NY; Niagara, NY.                               
1303..................  Burlington, VT; Chittenden, VT;           1.0142
                         Franklin, VT; Grand Isle, VT;.                 
1310..................  Caguas, PR; Caguas, PR; Cayey, PR;        0.4459
                         Cidra, PR; Gurabo, PR; San                     
                         Lorenzo, PR.                                   
1320..................  Canton-Massillon, OH; Carroll, OH;        0.8961
                         Stark, OH.                                     
1350..................  Casper, WY; Natrona, WY............       0.9013
1360..................  Cedar Rapids, IA; Linn, IA.........       0.8529
1400..................  Champaign-Urbana, IL; Champaign, IL       0.8824
1440..................  Charleston-North Charleston, SC;          0.8807
                         Berkeley, SC; Charleston, SC;                  
                         Dorchester, SC.                                
1450..................  Charleston, WV; Kanawha, WV;              0.9142
                         Putnam, WV.                                    
1520..................  Charlotte-Gastonia-Rock Hill, NC-         0.9710
                         SC; Cabarrus, NC; Gaston, NC;                  
                         Lincoln, NC; Mecklenburg, NC;                  
                         Rowan, NC; Union, NC; York, SC.                
1540..................  Charlottesville, VA; Albemarle, VA;       0.9051
                         Charlottesville City, VA;                      
                         Fluvanna, VA; Greene, VA.                      
1560..................  Chattanooga, TN-GA; Catoosa, GA;          0.8658
                         Dade, GA; Walker, GA; Hamilton,                
                         TN; Marion, TN.                                
1580..................  Cheyenne, WY; Laramie, WY..........       0.7555
1600..................  Chicago, IL; Cook, IL; DeKalb, IL;        1.0860
                         DuPage, IL; Grundy, IL; Kane, IL;              
                         Kendall, IL; Lake, IL; McHenry,                
                         IL; Will, IL.                                  
1620..................  Chico-Paradise, CA; Butte, CA......       1.0429
1640..................  Cincinnati, OH-KY-IN; Dearborn, IN;       0.9474
                         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;          0.7852
                         Christian, KY; Montgomery, TN.                 
1680..................  Cleveland-Lorain-Elyria, OH;              0.9804
                         Ashtabula, OH; Cuyahoga, OH;                   
                         Geauga, OH; Lake, OH; Lorain, OH;              
                         Medina, OH.                                    
1720..................  Colorado Springs, CO; El Paso, CO..       0.9316
1740..................  Columbia, MO; Boone, MO............       0.9001
1760..................  Columbia, SC; Lexington, SC;              0.9192
                         Richland, SC.                                  
1800..................  Columbus, GA-AL; Russell, AL;             0.8288
                         Chattanoochee, GA; Harris, GA;                 
                         Muscogee, GA.                                  
1840..................  Columbus, OH; Delaware, OH;               0.9793
                         Fairfield, OH; Franklin, OH;                   
                         Licking, OH; Madison, OH;                      
                         Pickaway, OH.                                  
1880..................  Corpus Christi, TX; Nueces, TX; San       0.8945
                         Patricio, TX.                                  
1900..................  Cumberland, MD-WV; Allegany, MD;          0.8822
                         Mineral, WV.                                   
1920..................  Dallas, TX; Collin, TX; Dallas, TX;       0.9703
                         Denton, TX; Ellis, TX; Henderson,              
                         TX; Hunt, TX; Kaufman, TX;                     
                         Rockwall, TX.                                  
1950..................  Danville, VA; Danville City, VA;          0.8146
                         Pittsylvania, VA.                              
1960..................  Davenport-Rock Island-Moline, IA-         0.8405
                         IL; Scott, IA; Henry, IL; Rock                 
                         Island, IL.                                    
2000..................  Dayton-Springfield, OH; Clark, OH;        0.9584
                         Greene, OH; Miami, OH; Montgomery,             
                         OH.                                            
2020..................  Daytona Beach, FL; Flagler, FL;           0.8375
                         Volusia, FL.                                   
2030..................  Decatur, AL; Lawrence, AL; Morgan,        0.8286
                         AL.                                            
2040..................  Decatur, IL; Macon, IL.............       0.7915
2080..................  Denver, CO; Adams, CO; Arapahoe,          1.0386
                         CO; Denver, CO; Douglas, CO;                   
                         Jefferson, CO.                                 
2120..................  Des Moines, IA; Dallas, IA; Polk,         0.8837
                         IA; Warren, IA.                                
2160..................  Detroit, MI; Lapeer, MI; Macomb,          1.0825
                         MI; Monroe, MI; Oakland, MI; St.               
                         Clair, MI; Wayne, MI.                          
2180..................  Dothan, AL; Dale, AL; Houston, AL..       0.8070
2190..................  Dover, DE; Kent, DE................       0.9303
2200..................  Dubuque, IA; Dubuque, IA...........       0.8088
2240..................  Duluth-Superior, MN-WI; St. Louis,        0.9779
                         MN; Douglas, WI.                               
2281..................  Dutchess County, NY; Dutchess, NY..       1.0632
2290..................  Eau Claire, WI; Chippewa, WI; Eau         0.8764
                         Claire, WI.                                    
2320..................  El Paso, TX; El Paso, TX...........       1.0123
2330..................  Elkhart-Goshen, IN; Elkhart, IN....       0.9081
2335..................  Elmira, NY; Chemung, NY............       0.8247
2340..................  Enid, OK; Garfield, OK.............       0.7962
2360..................  Erie, PA; Erie, PA.................       0.8862
2400..................  Eugene-Springfield, OR; Lane, OR...       1.1435
2440..................  Evansville-Henderson, IN-KY; Posey,       0.8641
                         IN; Vanderburgh, IN; Warrick, IN;              
                         Henderson, KY.                                 
2520..................  Fargo-Moorhead, ND-MN; Clay, MN;          0.8837
                         Cass, ND.                                      
2560..................  Fayetteville, NC; Cumberland, NC...       0.8734
2580..................  Fayetteville-Springdale-Rogers, AR;       0.7461
                         Benton, AR; Washington, AR.                    
2620..................  Flagstaff, AZ-UT; Coconino, AZ;           0.9115
                         Kane, UT.                                      
2640..................  Flint, MI; Genesee, MI.............       1.1171
2650..................  Florence, AL; Colbert, AL;                0.7551
                         Lauderdale, AL.                                
2655..................  Florence, SC; Florence, SC.........       0.8711
2670..................  Fort Collins-Loveland, CO; Larimer,       1.0248
                         CO.                                            
2680..................  Ft. Lauderdale, FL; Broward, FL....       1.0448
2700..................  Fort Myers-Cape Coral, FL; Lee, FL.       0.8788
2710..................  Fort Pierce-Port St. Lucie, FL;           1.0257
                         Martin, FL; St. Lucie, FL.                     
2720..................  Fort Smith, AR-OK; Crawford, AR;          0.7769
                         Sebastian, AR; Sequoyah, OK.                   
2750..................  Fort Walton Beach, FL; Okaloosa, FL       0.8765
2760..................  Fort Wayne, IN; Adams, IN; Allen,         0.8901
                         IN; DeKalb, IN; Huntington, IN;                
                         Wells, IN; Whitley, IN.                        

[[Page 15730]]

                                                                        
2800..................  Forth Worth-Arlington, TX; Hood,          0.9979
                         TX; Johnson, TX; Parker, TX;                   
                         Tarrant, TX.                                   
2840..................  Fresno, CA; Fresno, CA; Madera, CA.       1.0607
2880..................  Gadsden, AL; Etowah, AL............       0.8815
2900..................  Gainesville, FL; Alachua, FL.......       0.9616
2920..................  Galveston-Texas City, TX;                 1.0564
                         Galveston, TX.                                 
2960..................  Gary, IN; Lake, IN; Porter, IN.....       0.9633
2975..................  Glens Falls, NY; Warren, NY;              0.8386
                         Washington, NY.                                
2980..................  Goldsboro, NC; Wayne, NC...........       0.8443
2985..................  Grand Forks, ND-MN; Polk, MN; Grand       0.8745
                         Forks, ND.                                     
2995..................  Grand Junction, CO; Mesa, CO.......       0.9090
3000..................  Grand Rapids-Muskegon-Holland, MI;        1.0147
                         Allegan, MI; Kent, MI; Muskegon,               
                         MI; Ottawa, MI.                                
3040..................  Great Falls, MT; Cascade, MT.......       0.8803
3060..................  Greeley, CO; Weld, CO..............       1.0097
3080..................  Green Bay, WI; Brown, WI...........       0.9097
3120..................  Greensboro-Winston-Salem-High             0.9351
                         Point, NC; Alamance, NC; Davidson,             
                         NC; Davie, NC; Forsyth, NC                     
                         Guilford, NC; Randolph, NC;                    
                         Stokes, NC; Yadkin, NC.                        
3150..................  Greenville, NC; Pitt, NC...........       0.9064
3160..................  Greenville-Spartanburg-Anderson,          0.9059
                         SC; Anderson, SC; Cherokee, SC;                
                         Greenville, SC; Pickens, SC;                   
                         Spartanburg, SC.                               
3180..................  Hagerstown, MD; Washington, MD.....       0.9681
3200..................  Hamilton-Middletown, OH; Butler, OH       0.8767
3240..................  Harrisburg-Lebanon-Carlisle, PA;          1.0187
                         Cumberland, PA; Dauphin, PA;                   
                         Lebanon, PA; Perry, PA.                        
3283..................  Hartford, CT; Hartford, CT;               1.2562
                         Litchfield, CT; Middlesex, CT;                 
                         Tolland, CT.                                   
3285..................  Hattiesburg, MS; Forrest, MS;             0.7192
                         Lamar, MS.                                     
3290..................  Hickory-Morganton-Lenoir, NC;             0.8686
                         Alexander, NC; Burke, NC;                      
                         Caldwell, NC; Catawba, NC.                     
3320..................  Honolulu, HI; Honolulu, HI.........       1.1816
3350..................  Houma, LA; Lafourche, LA;                 0.7854
                         Terrebonne, LA.                                
3360..................  Houston, TX; Chambers, TX; Fort           0.9855
                         Bend, TX; Harris, TX; Liberty, TX;             
                         Montgomery, TX; Waller, TX.                    
3400..................  Huntington-Ashland, WV-KY-OH; Boyd,       0.9160
                         KY; Carter, KY; Greenup, KY;                   
                         Lawrence, OH; Cabell, WV; Wayne,               
                         WV.                                            
3440..................  Huntsville, AL; Limestone, AL;            0.8485
                         Madison, AL.                                   
3480..................  Indianapolis, IN; Boone, IN;              0.9848
                         Hamilton, IN; Hancock, IN;                     
                         Hendricks, IN; Johnson, IN;                    
                         Madison, IN; Marion, IN; Morgan,               
                         IN; Shelby, IN.                                
3500..................  Iowa City, IA; Johnson, IA.........       0.9413
3520..................  Jackson, MI; Jackson, MI...........       0.9052
3560..................  Jackson, MS; Hinds, MS; Madison,          0.7760
                         MS; Rankin, MS.                                
3580..................  Jackson, TN; Madison, TN; Chester,        0.8522
                         TN.                                            
3600..................  Jacksonville, FL; Clay, FL; Duval,        0.8969
                         FL; Nassau, FL; St. Johns, FL.                 
3605..................  Jacksonville, NC; Onslow, NC.......       0.6973
3610..................  Jamestown, NY; Chautaqua, NY.......       0.7552
3620..................  Janesville-Beloit, WI; Rock, WI....       0.8824
3640..................  Jersey City, NJ; Hudson, NJ........       1.1412
3660..................  Johnson City-Kingsport-Bristol, TN-       0.9114
                         VA; Carter, TN; Hawkins, TN;                   
                         Sullivan, TN; Unicoi, TN;                      
                         Washington, TN; Bristol City, VA;              
                         Scott, VA; Washington, VA.                     
3680..................  Johnstown, PA; Cambria, PA;               0.8378
                         Somerset, PA.                                  
3700..................  Jonesboro, AR; Craighead, AR.......       0.7443
3710..................  Joplin, MO; Jasper, MO; Newton, MO.       0.7510
3720..................  Kalamazoo-Battlecreek, MI; Calhoun,       1.0668
                         MI; Kalamazoo, MI; Van Buren, MI.              
3740..................  Kankakee, IL; Kankakee, IL.........       0.8653
3760..................  Kansas City, KS-MO; Johnson, KS;          0.9564
                         Leavenworth, KS; Miami, KS;                    
                         Wyandotte, KS; Cass, MO; Clay, MO;             
                         Clinton, MO; Jackson, MO;                      
                         Lafayette, MO; Platte, MO; Ray, MO.            
3800..................  Kenosha, WI; Kenosha, WI...........       0.9196
3810..................  Killeen-Temple, TX; Bell, TX;             1.0252
                         Coryell, TX.                                   
3840..................  Knoxville, TN; Anderson, TN;              0.8831
                         Blount, TN; Knox, TN; Loudon, TN;              
                         Sevier, TN; Union, TN.                         
3850..................  Kokomo, IN; Howard, IN; Tipton, IN.       0.8416
3870..................  La Crosse, WI-MN; Houston, MN; La         0.8749
                         Crosse, WI.                                    
3880..................  Lafayette, LA; Acadia, LA;                0.8206
                         Lafayette, LA; St. Landry, LA; St.             
                         Martin, LA.                                    
3920..................  Lafayette, IN; Clinton, IN;               0.9174
                         Tippecanoe, IN.                                
3960..................  Lake Charles, LA; Calcasieu, LA....       0.7776
3980..................  Lakeland-Winter Haven, FL; Polk, FL       0.8806
4000..................  Lancaster, PA; Lancaster, PA.......       0.9481
4040..................  Lansing-East Lansing, MI; Clinton,        1.0088
                         MI; Eaton, MI; Ingham, MI.                     
4080..................  Laredo, TX; Webb, TX...............       0.7325
4100..................  Las Cruces, NM; Dona Ana, NM.......       0.8646
4120..................  Las Vegas, NV-AZ; Mohave, AZ;             1.0592
                         Clark, NV; Nye, NV.                            
4150..................  Lawrence, KS; Douglas, KS..........       0.8608
4200..................  Lawton, OK; Comanche, OK...........       0.9045
4243..................  Lewiston-Auburn, ME; Androscoggin,        0.9536
                         ME.                                            
4280..................  Lexington, KY; Bourbon, KY; Clark,        0.8390
                         KY; Fayette, KY; Jessamine, KY;                
                         Madison, KY; Scott, KY; Woodford,              
                         KY.                                            
4320..................  Lima, OH; Allen, OH; Auglaize, OH..       0.9185
4360..................  Lincoln, NE; Lancaster, NE.........       0.9231
4400..................  Little Rock-North Little Rock, AR;        0.8490
                         Faulkner, AR; Lonoke, AR; Pulaski,             
                         AR; Saline, AR.                                
4420..................  Longview-Marshall, TX; Gregg, TX;         0.8613
                         Harrison, TX; Upshur, TX.                      

[[Page 15731]]

                                                                        
4480..................  Los Angeles-Long Beach, CA; Los           1.2232
                         Angeles, CA.                                   
4520..................  Louisville, KY-IN; Clark, IN;             0.9507
                         Floyd, IN; Harrison, IN; Scott,                
                         IN; Bullitt, KY; Jefferson, KY;                
                         Oldham, KY.                                    
4600..................  Lubbock, TX; Lubbock, TX...........       0.8400
4640..................  Lynchburg, VA; Amherst, VA;               0.8228
                         Bedford, VA; Bedford City, VA;                 
                         Campbell, VA; Lynchburg City, VA.              
4680..................  Macon, GA; Bibb, GA; Houston, GA;         0.9227
                         Jones, GA; Peach, GA; Twiggs, GA.              
4720..................  Madison, WI; Dane, WI..............       1.0055
4800..................  Mansfield, OH; Crawford, OH;              0.8639
                         Richland, OH.                                  
4840..................  Mayaguez, PR; Anasco, PR; Cabo            0.4475
                         Rojo, PR; Hormigueros, PR;                     
                         Mayaguez, PR; Sabana Grande, PR;               
                         San German, PR.                                
4880..................  McAllen-Edinburg-Mission, TX;             0.8371
                         Hidalgo, TX.                                   
4890..................  Medford-Ashland, OR; Jackson, OR...       1.0354
4900..................  Melbourne-Titusville-Palm Bay, FL;        0.8819
                         Brevard, Fl.                                   
4920..................  Memphis, TN-AR-MS; Crittenden, AR;        0.8589
                         DeSoto, MS; Fayette, TN; Shelby,               
                         TN; Tipton, TN.                                
4940..................  Merced, CA; Merced, CA.............       1.0947
5000..................  Miami, FL; Dade, FL................       0.9859
5015..................  Middlesex-Somerset-Hunterdon, NJ;         1.1059
                         Hunterdon, NJ; Middlesex, NJ;                  
                         Somerset, NJ.                                  
5080..................  Milwaukee-Waukesha, WI; Milwaukee,        0.9819
                         WI; Ozaukee, WI; Washington, WI;               
                         Waukesha, WI.                                  
5120..................  Minneapolis-St. Paul, MN-WI; Anoka,       1.0733
                         MN; Carver, MN; Chisago, MN;                   
                         Dakota, MN; Hennepin, MN; Isanti,              
                         MN; Ramsey, MN; Scott, MN;                     
                         Sherburne, MN; Washington, MN;                 
                         Wright, MN; Pierce, WI; St. Croix,             
                         WI.                                            
5160..................  Mobile, AL; Baldwin, AL; Mobile, AL       0.8455
5170..................  Modesto, CA; Stanislaus, CA........       1.0794
5190..................  Monmouth-Ocean, NJ; Monmouth, NJ;         1.0934
                         Ocean, NJ.                                     
5200..................  Monroe, LA; Ouachita, LA...........       0.8414
5240..................  Montgomery, AL; Autauga, AL;              0.7671
                         Elmore, AL; Montgomery, AL.                    
5280..................  Muncie, IN; Delaware, IN...........       0.9173
5330..................  Myrtle Beach, SC; Horry, SC........       0.8072
5345..................  Naples, FL; Collier, FL............       1.0109
5360..................  Nashville, TN; Cheatham, TN;              0.9182
                         Davidson, TN; Dickson, TN;                     
                         Robertson, TN; Rutherford TN;                  
                         Sumner, TN; Williamson, TN;                    
                         Wilson, TN.                                    
5380..................  Nassau-Suffolk, NY; Nassau, NY;           1.3807
                         Suffolk, NY.                                   
5483..................  New Haven-Bridgeport-Stamford-            1.2618
                         Danbury-Waterbury, CT; Fairfield,              
                         CT; New Haven, CT.                             
5523..................  New London-Norwich, CT; New London,       1.2013
                         CT.                                            
5560..................  New Orleans, LA; Jefferson, LA;           0.9566
                         Orleans, LA; Plaquemines, LA; St.              
                         Bernard, LA; St. Charles, LA; St.              
                         James, LA; St. John Baptist, LA;               
                         St. Tammany, LA.                               
5600..................  New York, NY; Bronx, NY; Kings, NY;       1.4449
                         New York, NY; Putnam, NY; Queens,              
                         NY; Richmond, NY; Rockland, NY;                
                         Westchester, NY.                               
5640..................  Newark, NJ; Essex, NJ; Morris, NJ;        1.1980
                         Sussex, NJ; Union, NJ; Warren, NJ.             
5660..................  Newburgh, NY-PA; Orange, NY; Pike,        1.1283
                         PA.                                            
5720..................  Norfolk-Virginia Beach-Newport            0.8316
                         News, VA-NC; Currituck, NC;                    
                         Chesapeake City, VA; Gloucester,               
                         VA; Hampton City, VA; Isle of                  
                         Wight, VA; James City, VA;                     
                         Mathews, VA; Newport News City,                
                         VA; Norfolk City, VA; Poquoson                 
                         City, VA; Portsmouth City, VA;                 
                         Suffolk City, VA; Virginia Beach               
                         City VA; Williamsburg City, VA;                
                         York, VA.                                      
5775..................  Oakland, CA; Alameda, CA; Contra          1.5068
                         Costa, CA.                                     
5790..................  Ocala, FL; Marion, FL..............       0.9032
5800..................  Odessa-Midland, TX; Ector, TX;            0.8660
                         Midland, TX.                                   
5880..................  Oklahoma City, OK; Canadian, OK;          0.8481
                         Cleveland, OK; Logan, OK; McClain,             
                         OK; Oklahoma, OK; Pottawatomie, OK.            
5910..................  Olympia, WA; Thurston, WA..........       1.0901
5920..................  Omaha, NE-IA; Pottawattamie, IA;          0.9421
                         Cass, NE; Douglas, NE; Sarpy, NE;              
                         Washington, NE.                                
5945..................  Orange County, CA; Orange, CA......       1.1605
5960..................  Orlando, FL; Lake, FL; Orange, FL;        0.9397
                         Osceola, FL; Seminole, FL.                     
5990..................  Owensboro, KY; Daviess, KY.........       0.7480
6015..................  Panama City, FL; Bay, FL...........       0.8337
6020..................  Parkersburg-Marietta, WV-OH;              0.8046
                         Washington, OH; Wood, WV.                      
6080..................  Pensacola, FL; Escambia, FL; Santa        0.8193
                         Rosa, FL.                                      
6120..................  Peoria-Pekin, IL; Peoria, IL;             0.8571
                         Tazewell, IL; Woodford, IL.                    
6160..................  Philadelphia, PA-NJ; Burlington,          1.1398
                         NJ; Camden, NJ; Gloucester, NJ                 
                         Salem, NJ; Bucks, PA; Chester, PA;             
                         Delaware, PA; Montgomery, PA;                  
                         Philadelphia, PA.                              
6200..................  Phoenix-Mesa, AZ; Maricopa, AZ;           0.9606
                         Pinal, AZ.                                     
6240..................  Pine Bluff, AR; Jefferson, AR......       0.7826
6280..................  Pittsburgh, PA; Allegheny, PA;            0.9725
                         Beaver, PA; Butler, PA; Fayette,               
                         PA; Washington, PA; Westmoreland,              
                         PA.                                            
6323..................  Pittsfield, MA; Berkshire, MA......       1.0960
6340..................  Pocatelo, ID; Bannock ID...........       0.9586
6360..................  Ponce, PR; Guayanilla, PR; Juana          0.4589
                         Diaz, PR; Penuelas, PR; Ponce, PR;             
                         Villalba, PR; Yauco, PR.                       
6403..................  Portland, ME; Cumberland, ME;             0.9627
                         Sagadahoc, ME; York, ME.                       
6440..................  Portland-Vancouver, OR-WA;                1.1344
                         Clackamas, OR; Columbia, OR;                   
                         Multnomah, OR; Washington, OR;                 
                         Yamhill, OR; Clark, WA.                        
6483..................  Providence-Warwick-Pawtucket, RI;         1.1049
                         Bristol, RI; Kent, RI; Newport,                
                         RI; Providence, RI; Washington,                
                         RI; Statewide, RI.                             
6520..................  Provo-Orem, UT; Utah, UT...........       1.0073
6560..................  Pueblo, CO; Pueblo, CO.............       0.8450
6580..................  Punta Gorda, FL; Charlotte, FL.....       0.8725
6600..................  Racine, WI; Racine, WI.............       0.8934

[[Page 15732]]

                                                                        
6640..................  Raleigh-Durham-Chapel Hill, NC;           0.9818
                         Chatham, NC; Durham, NC; Franklin,             
                         NC; Johnston, NC; Orange, NC;                  
                         Wake, NC.                                      
6660..................  Rapid City, SD; Pennington, SD.....       0.8345
6680..................  Reading, PA; Berks, PA.............       0.9516
6690..................  Redding, CA; Shasta, CA............       1.1790
6720..................  Reno, NV; Washoe, NV...............       1.0768
6740..................  Richland-Kennewick-Pasco, WA;             0.9918
                         Benton, WA; Franklin, WA.                      
6760..................  Richmond-Petersburg, VA; Charles          0.9152
                         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;             1.1307
                         Riverside, CA; San Bernardino, CA.             
6800..................  Roanoke, VA; Botetourt, VA;               0.8402
                         Roanoke, VA; Roanoke City, VA;                 
                         Salem City, VA.                                
6820..................  Rochester, MN; Olmsted, MN.........       1.0502
6840..................  Rochester, NY; Genesee, NY;               0.9524
                         Livingston, NY; Monroe, NY;                    
                         Ontario, NY; Orleans, NY; Wayne,               
                         NY.                                            
6880..................  Rockford, IL; Boone, IL; Ogle, IL;        0.9081
                         Winnebago, IL.                                 
6895..................  Rocky Mount, NC; Edgecombe, NC;           0.9029
                         Nash, NC.                                      
6920..................  Sacramento, CA; El Dorado, CA;            1.2202
                         Placer, CA; Sacramento, CA.                    
6960..................  Saginaw-Bay City-Midland, MI; Bay,        0.9564
                         MI; Midland, MI; Saginaw, MI.                  
6980..................  St. Cloud, MN; Benton, MN; Stearns,       0.9544
                         MN.                                            
7000..................  St. Joseph, MO; Andrews, MO;              0.8366
                         Buchanan, MO.                                  
7040..................  St. Louis, MO-IL; Clinton, IL;            0.9130
                         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; Marion, OR; Polk, OR....       0.9935
7120..................  Salinas, CA; Monterey, CA..........       1.4513
7160..................  Salt Lake City-Ogden, UT; Davis,          0.9857
                         UT; Salt Lake, UT; Weber, UT.                  
7200..................  San Angelo, TX; Tom Green, TX......       0.7780
7240..................  San Antonio, TX; Bexar, TX; Comal,        0.8499
                         TX; Guadalupe, TX; Wilson, TX.                 
7320..................  San Diego, CA; San Diego, CA.......       1.2193
7360..................  San Francisco, CA; Marin, CA; San         1.4180
                         Francisco, CA; San Mateo, CA.                  
7400..................  San Jose, CA; Santa Clara, CA......       1.4332
7440..................  San Juan-Bayamon, PR; Aguas Buenas,       0.4625
                         PR; Barceloneta, PR; Bayamon, PR;              
                         Canovanas, PR; Carolina, PR;                   
                         Catano, PR; Ceiba, PR; Comerio,                
                         PR; Corozal, PR; Dorado, PR;                   
                         Fajardo, PR; Florida, PR;                      
                         Guaynabo, PR; Humacao, PR; Juncos,             
                         PR; Los Piedras, PR; Loiza, PR;                
                         Luguillo, PR; Manati, PR; 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           1.1374
                         Robles, CA; San Luis Obispo, CA.               
7480..................  Santa Barbara-Santa Maria-Lompoc,         1.0688
                         CA; Santa Barbara, CA.                         
7485..................  Santa Cruz-Watsonville, CA; Santa         1.4187
                         Cruz, CA.                                      
7490..................  Santa Fe, NM; Los Alamos, NM; Santa       1.0332
                         Fe, NM.                                        
7500..................  Santa Rosa, CA; Sonoma, CA.........       1.2815
7510..................  Sarasota-Bradenton, FL; Manatee,          0.9757
                         FL; Sarasota, FL.                              
7520..................  Savannah, GA; Bryan, GA; Chatham,         0.8638
                         GA; Effingham, GA.                             
7560..................  Scranton--Wilkes-Barre--Hazleton,         0.8539
                         PA; Columbia, PA; Lackawanna, PA;              
                         Luzerne, PA; Wyoming, PA.                      
7600..................  Seattle-Bellevue-Everett, WA;             1.1339
                         Island, WA; King, WA; Snohomish,               
                         WA.                                            
7610..................  Sharon, PA; Mercer, PA.............       0.8783
7620..................  Sheboygan, WI; Sheboygan, WI.......       0.7862
7640..................  Sherman-Denison, TX; Grayson, TX...       0.8499
7680..................  Shreveport-Bossier City, LA;              0.9381
                         Bossier, LA; Caddo, LA; Webster,               
                         LA.                                            
7720..................  Sioux City, IA-NE; Woodbury, IA;          0.8031
                         Dakota, NE.                                    
7760..................  Sioux Falls, SD; Lincoln, SD;             0.8712
                         Minnehaha, SD.                                 
7800..................  South Bend, IN; St. Joseph, IN.....       0.9868
7840..................  Spokane, WA; Spokane, WA...........       1.0486
7880..................  Springfield, IL; Menard, IL;              0.8713
                         Sangamon, IL.                                  
7920..................  Springfield, MO; Christian, MO;           0.7989
                         Greene, MO; Webster, MO.                       
8003..................  Springfield, MA; Hampden, MA;             1.0740
                         Hampshire, MA.                                 
8050..................  State College, PA; Centre, PA......       0.9635
8080..................  Steubenville-Weirton, OH-WV;              0.8645
                         Jefferson, OH; Brooke, WV;                     
                         Hancock, WV.                                   
8120..................  Stockton-Lodi, CA; San Joaquin, CA.       1.1496
8140..................  Sumter, SC; Sumter, SC.............       0.7842
8160..................  Syracuse, NY; Cayuga, NY; Madison,        0.9464
                         NY; Onondaga, NY; Oswego, NY.                  
8200..................  Tacoma, WA; Pierce, WA.............       1.1016
8240..................  Tallahassee, FL; Gadsden, FL; Leon,       0.8832
                         FL.                                            
8280..................  Tampa-St. Petersburg-Clearwater,          0.9103
                         FL; Hernando, FL; Hillsborough,                
                         FL; Pasco, FL; Pinellas, FL.                   
8320..................  Terre Haute, IN; Clay, IN;                0.8614
                         Vermillion, IN; Vigo, IN.                      
8360..................  Texarkana, AR-Texarkana, TX;              0.8664
                         Miller, AR; Bowie, TX.                         
8400..................  Toledo, OH; Fulton, OH; Lucas, OH;        1.0390
                         Wood, OH.                                      
8440..................  Topeka, KS; Shawnee, KS............       0.9438
8480..................  Trenton, NJ; Mercer, NJ............       1.0380
8520..................  Tucson, AZ; Pima, AZ...............       0.9180
8560..................  Tulsa, OK; Creek, OK; Osage, OK;          0.8074
                         Rogers, OK; Tulsa, OK; Wagoner, OK.            
8600..................  Tuscaloosa, AL; Tuscaloosa, AL.....       0.8187
8640..................  Tyler, TX; Smith, TX...............       0.9567

[[Page 15733]]

                                                                        
8680..................  Utica-Rome, NY; Herkimer, NY;             0.8398
                         Oneida, NY.                                    
8720..................  Vallejo-Fairfield-Napa, CA; Napa,         1.3754
                         CA; Solano, CA.                                
8735..................  Ventura, CA; Ventura, CA...........       1.0946
8750..................  Victoria, TX; Victoria, TX.........       0.8474
8760..................  Vineland-Millville-Bridgeton, NJ;         1.0110
                         Cumberland, NJ.                                
8780..................  Visalia-Tulare-Porterville, CA;           0.9924
                         Tulare, CA.                                    
8800..................  Waco, TX; McLennan, TX.............       0.7696
8840..................  Washington, DC-MD-VA-WV; District         1.0911
                         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; Black           0.8640
                         Hawk, IA.                                      
8940..................  Wausau, WI; Marathon, WI...........       1.0545
8960..................  West Palm Beach-Boca Raton, FL;           1.0372
                         Palm Beach, FL.                                
9000..................  Wheeling, OH-WV; Belmont, OH;             0.7707
                         Marshall, WV; Ohio, WV.                        
9040..................  Wichita, KS; Butler, KS; Harvey,          0.9403
                         KS; Sedgwick, KS.                              
9080..................  Wichita Falls, TX; Archer, TX;            0.7646
                         Wichita, TX.                                   
9140..................  Williamsport, PA; Lycoming, PA.....       0.8548
9160..................  Wilmington-Newark, DE-MD; New             1.1538
                         Castle, DE; Cecil, MD.                         
9200..................  Wilmington, NC; New Hanover, NC;          0.9322
                         Brunswick, NC.                                 
9260..................  Yakima, WA; Yakima, WA.............       1.0102
9270..................  Yolo, CA; Yolo, CA.................       1.1431
9280..................  York, PA; York, PA.................       0.9415
9320..................  Youngstown-Warren, OH; Columbiana,        0.9937
                         OH; Mahoning, OH; Trumbull, OH.                
9340..................  Yuba City, CA; Sutter, CA; Yuba, CA       1.0324
9360..................  Yuma, AZ; Yuma, AZ.................       0.9732
------------------------------------------------------------------------


                  Table 4b.--Wage Index for Rural Areas                 
------------------------------------------------------------------------
                                                                  Wage  
                        Nonurban area                            Index  
------------------------------------------------------------------------
Alabama......................................................     0.7260
Alaska.......................................................     1.2302
Arizona......................................................     0.7989
Arkansas.....................................................     0.6995
California...................................................     0.9977
Colorado.....................................................     0.8129
Connecticut..................................................     1.2617
Delaware.....................................................     0.8925
Florida......................................................     0.8838
Georgia......................................................     0.7761
Hawaii.......................................................     1.0229
Idaho........................................................     0.8221
Illinois.....................................................     0.7644
Indiana......................................................     0.8161
Iowa.........................................................     0.7391
Kansas.......................................................     0.7203
Kentucky.....................................................     0.7772
Louisiana....................................................     0.7383
Maine........................................................     0.8468
Maryland.....................................................     0.8617
Massachusetts................................................     1.0718
Michigan.....................................................     0.8923
Minnesota....................................................     0.8179
Mississippi..................................................     0.6911
Missouri.....................................................     0.7205
Montana......................................................     0.8302
Nebraska.....................................................     0.7401
Nevada.......................................................     0.8914
New Hampshire................................................     0.9717
New Jersey \1\...............................................           
New Mexico...................................................     0.8070
New York.....................................................     0.8401
North Carolina...............................................     0.7937
North Dakota.................................................     0.7360
Ohio.........................................................     0.8434
Oklahoma.....................................................     0.7072
Oregon.......................................................     0.9975
Pennsylvania.................................................     0.8421
Puerto Rico..................................................     0.3939
Rhode Island \1\.............................................           
South Carolina...............................................     0.7921
South Dakota.................................................     0.6983
Tennessee....................................................     0.7353
Texas........................................................     0.7404
Utah.........................................................     0.8926
Vermont......................................................     0.9314
Virginia.....................................................     0.7782
Washington...................................................     1.0221
West Virginia................................................     0.7938
Wisconsin....................................................     0.8471
Wyoming......................................................    0.8247 
------------------------------------------------------------------------
\1\ All counties within the State are classified urban.                 


          Table 5.--Cost Reporting Year--Adjustment Factor \1\          
------------------------------------------------------------------------
                                                                  The   
           If the HHA cost reporting period begins            adjustment
                                                               factor is
------------------------------------------------------------------------
November 1, 1997............................................     1.00260
December 1, 1997............................................     1.00521
January 1, 1998.............................................     1.00781
February 1, 1998............................................     1.01042
March 1, 1998...............................................     1.01302
April 1, 1998...............................................     1.01563
May 1, 1998.................................................     1.01823
June 1, 1998................................................     1.02086
July 1, 1998................................................     1.02353
August 1, 1998..............................................     1.02626
September 1, 1998...........................................    1.02901 
------------------------------------------------------------------------
\1\ Based on compounded projected market basket inflation rates.        
Source: The Home Health Agency Input Price Index, produced by HCFA for  
  the period between 1983:1 and 2008:4. The forecasts are from Standard 
  and Poor's DRI 3rd QTR 1997: @USSIM/TREND25YR0897@CISSIM/Control973   
  forecast exercise which has historical data through 1997:2.           


 Table 6.--Monthly Index Levels for Calculating Inflation Factors to be 
                      Applied to Home Health Agency                     
------------------------------------------------------------------------
                                                                 Index  
              Per-beneficiary limitations--Month                 level  
------------------------------------------------------------------------
October 1992.................................................     .98566
November 1992................................................     .98800
December 1992................................................     .99099
January 1993.................................................     .99399
February 1993................................................     .99700
March 1993...................................................     .99933
April 1993...................................................    1.00166
May 1993.....................................................    1.00400
June 1993....................................................    1.00666
July 1993....................................................    1.00933
August 1993..................................................    1.01200
September 1993...............................................    1.01400
October 1993.................................................    1.01600
November 1993................................................    1.01800
December 1993................................................    1.02099
January 1994.................................................    1.02399

[[Page 15734]]

                                                                        
February 1994................................................    1.02700
March 1994...................................................    1.02866
April 1994...................................................    1.03033
May 1994.....................................................    1.03200
June 1994....................................................    1.03499
July 1994....................................................    1.03499
August 1994..................................................    1.03499
September 1994...............................................    1.03499
October 1994.................................................    1.03499
November 1994................................................    1.03499
December 1994................................................    1.03499
January 1995.................................................    1.03499
February 1995................................................    1.03499
March 1995...................................................    1.03499
April 1995...................................................    1.03499
May 1995.....................................................    1.03499
June 1995....................................................    1.03499
July 1995....................................................    1.03499
August 1995..................................................    1.03499
September 1995...............................................    1.03499
October 1995.................................................    1.03499
November 1995................................................    1.03499
December 1995................................................    1.03499
January 1996.................................................    1.03499
February 1996................................................    1.03499
March 1996...................................................    1.03499
April 1996...................................................    1.03499
May 1996.....................................................    1.03499
June 1996....................................................    1.03499
July 1996....................................................    1.03720
August 1996..................................................    1.03941
September 1996...............................................    1.04162
October 1996.................................................    1.04383
November 1996................................................    1.04604
December 1996................................................    1.04856
January 1997.................................................    1.05108
February 1997................................................    1.05361
March 1997...................................................    1.05582
April 1997...................................................    1.05803
May 1997.....................................................    1.06024
June 1997....................................................    1.06276
July 1997....................................................    1.06528
August 1997..................................................    1.06781
September 1997...............................................    1.07064
October 1997.................................................    1.07348
November 1997................................................    1.07633
------------------------------------------------------------------------

XI. Regulatory Impact Statement

A. Introduction

    HCFA has examined the impacts of this final rule with comment 
period as required by Executive Order 12866, the Regulatory Flexibility 
Act (RFA) (Pub. L. 96-354), and the Unfunded Mandates Reform Act of 
1995 (Pub. L. 104-4). Executive Order 12866 directs agencies to assess 
all costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects; distributive impacts; and equity). The RFA 
requires agencies to analyze options for regulatory relief for small 
businesses. For purposes of the RFA, States and individuals are not 
considered small entities. However, most providers, physicians, and 
health care suppliers are small entities, either by nonprofit status or 
by having revenues of 5 million or less annually. Approximately 25 
percent of HHAs are identified as Visiting Nurse Associations, combined 
in government and voluntary, and official health agency, and therefore, 
are considered small entities. Since the aggregate per-beneficiary 
limitation will reduce payments by approximately nine percent, we 
anticipate this rule will have a significant impact on a substantial 
number of small entities. We have examined the options for lessening 
the burden on small entities, however, the statute does not allow for 
any exceptions to the aggregate per-beneficiary limitation based on 
size of entity. Therefore, we are unable to provide any regulatory 
relief for small entities.
    Section 202 of the Unfunded Mandates Reform Act requires agencies 
to prepare an assessment of anticipated costs and benefits before 
proposing any rule that may result in an annual expenditure by State, 
local, or tribal governments, in the aggregate, or by private sector, 
of $100 million (adjusted annually for inflation). We believe that the 
costs associated with this final rule with comment fall below $100 
million both in the governmental and private sectors. Therefore, we are 
not preparing an assessment.
    We estimate that the impact of this final rule with comment period 
will be to decrease payments to home health agencies by approximately 
$1.06 billion in Federal FY 1998 and $2.14 billion in FY 1999, compared 
to the payment that would have been made in Federal FY 1998 if BBA '97 
had not been enacted. Therefore, this rule is a major rule as defined 
in Title 5, United States Code, section 804(2) and is a significant 
rule under Executive Order 12866.
    It is clear that the changes being made in this document will 
affect both a substantial number of small HHAs as well as other classes 
of HHAs, and the effects on some may be significant. Therefore, the 
discussion below, in combination with the rest of this final rule with 
comment period, constitutes a combined regulatory impact analysis and 
regulatory flexibility analysis. Nevertheless, in some markets new 
agency limits may be higher than the limit for older agencies as a 
result of the per-beneficiary limitation methodology required by the 
statute.

B. Explanation of Aggregate Beneficiary Limit

    HHA limits are set forth at sections 1861(v)(1)(A) and 
1861(v)(1)(L)of the Act. Section 1861(v)(1)(L)(v), as added to the Act 
by section 4602 of BBA '97, requires the Secretary to establish an 
interim system of limits before the implementation of a prospective 
payment system for home health services. Payments by Medicare under 
this interim system of limits will be the lower of an HHA's actual 
reasonable allowable costs, per visit limits in the aggregate, or a 
per-beneficiary limit as described in sections 1861(v)(1)(L)(v)(I) and 
1861(v)(1)(L)(vi)(I) of the Act.
    Section 1861(v)(1)(L)(v)(I) requires that the aggregate per-
beneficiary annual limit be determined as follows: blend of 75 percent 
on 98 percent of the reasonable costs (including nonroutine medical 
supplies) for the agency's 12-month cost reporting period ending during 
Federal FY 1994, and 25 percent on 98 percent of the standardized 
regional average of such costs for the agency's census division for 
cost reporting periods ending during Federal FY 1994 (both updated by 
the home health market basket excluding any changes in the home health 
market basket with respect to cost reporting periods which began on or 
after July 1, 1994 and before July 1, 1996). The results will be 
multiplied by the agency's unduplicated census count of beneficiaries 
(entitled to benefits under Medicare) for the cost reporting period 
subject to the limit. As stated in section II.A. of this preamble, we 
determined the unduplicated census count as reported on the Medicare 
cost report by HHA providers was not reliable. As a result, we 
generated an unduplicated census count from our Standard Analytical 
File which is generated from our National Claims History File.
    In regards to the home health market basket, section 
1861(v)(1)(L)(iv) was added to the Act by section 4601(a) of BBA '97, 
and requires the Secretary not to take into account any changes in the 
home health market basket with respect to cost reporting periods which 
began on or after July 1, 1994 and before July 1, 1996 in establishing 
the limitations for cost reporting periods beginning after September 
30, 1997.
    In regards to the wage index, the appropriate census region per-
beneficiary limitation will be the applicable census region where the 
beneficiary received services from the HHA and the applicable wage 
index will be the geographic area where the beneficiary received home 
health services.

[[Page 15735]]

    For new providers and providers without a 12-month cost reporting 
period ending in Federal FY year 1994, the per-beneficiary limitation 
will be equal to the median of these limits applied to other HHAs as 
determined in this document.
    For Medicare beneficiaries using more than one HHA, the per-
beneficiary limitation will be prorated among the agencies.

C. Effect on Home Health Agencies

    The following quantitative analysis presents the projected effects 
of the statutory changes effective for Federal FY 1998. As discussed 
below, the impact of this final rule with comment period will decrease 
payments to HHAs by approximately $1.06 billion in Federal FY 1998 
compared to payment that would have been made in Federal FY 1998 if BBA 
'97 had not been enacted. This is a reduction of approximately nine 
percent. This final rule with comment period is necessary to implement 
the provisions of section 1861(v)(1)(L) of the Act, as amended by BBA 
'97.
    The settled cost report data that we are using have been adjusted 
by the most recent market basket factors, excluding market basket 
increases for cost reporting periods beginning on or after July 1, 1994 
and before July 1, 1996, to reflect the expected cost increases 
occurring between the cost reporting periods for the data contained in 
the database and September 30, 1998.
    The cost limits for HHAs are statutorily driven and the impact of 
decreases in payments to HHAs have been reflected in the current law 
baseline of the mid-session review of the President's Federal FY 98 
budget.
    We are unable to identify the effects of the changes to the cost 
limits on individual HHAs. However, Table 7 below illustrates the 
proportion of HHAs that are likely to be affected by the limits. This 
table is a model of our estimate of the effects of the aggregate per-
beneficiary limit. The total number of HHAs in this table--6,414--is 
based on HHA cost reports with a Federal FY ending in 1994 and for new 
providers whose cost reports end on either December 31, 1994 or 
December 31, 1995. For both old and new providers, the length of the 
cost report is 12 months.
    This table takes into account the behaviors that we believe HHAs 
will engage in order to reduce the adverse effects of section 4602 of 
BBA '97 on their allowable costs. We believe these behavioral offsets 
might include an increase in the number of low cost beneficiaries 
served, a general decrease in the number of visits provided, and 
earlier discharge of patients who are not eligible for Medicare home 
health benefits because they no longer need skilled services but have 
only chronic, custodial care needs. We believe that, on average, these 
behavioral offsets will result in a 65-percent reduction in the effects 
these limits might otherwise have on an individual HHA.
    Our projected savings of $1.06 billion in Federal FY 1998 and $2.14 
billion in Federal FY 1999 are the savings that occur as a result of 
implementing section 4602 of the BBA including the behavioral offsets 
noted above. Column one of this table divides HHAs by a number of 
characteristics including their ownership, whether they are old or new 
agencies, whether they are located in an urban or rural area, and the 
census region they are located in.
    Column two shows the number of agencies that fall within each 
characteristic or group of characteristics, for example, there are 
1,197 rural freestanding HHAs in our database. Column three shows the 
percent of HHAs within a group that are projected to exceed the 
aggregate per-beneficiary limit before the behavioral offsets are taken 
into account. Column four shows the average percent of costs over the 
limits for an agency in that cell, including behavioral offsets.

                  Table 7.--HHA Limits Effective 10/1/97; Effects OF The Per-Beneficiary Limit                  
----------------------------------------------------------------------------------------------------------------
                                                                                                      Average   
                                                                                      Percent       percent of  
                              Area                                   Number of    exceeding per-       costs    
                                                                     agencies       beneficiary      exceeding  
                                                                                       limit           limit    
----------------------------------------------------------------------------------------------------------------
BY: AGENCY TYPE                                                                                                 
    ALL AGENCIES................................................            6414            57.9             9.3
        FREESTANDING............................................            4308            65.8            10.8
        HOSPITAL BASED..........................................            2106            41.8             6.2
        OLD AGENCIES............................................            5256            60.0             8.9
            FREESTANDING........................................            3245            71.3            10.4
            HOSPITAL BASED......................................            2011            41.8             6.1
        NEW AGENCIES............................................            1158            48.2            12.6
            FREESTANDING........................................            1063            48.8            12.8
            HOSPITAL BASED......................................              95            41.1             9.4
  BY: GEOGRAPHIC AREA                                                                                           
    ALL URBAN...................................................            4137            62.3             9.5
        FREESTANDING............................................            3111            68.2            10.8
        HOSPITAL BASED..........................................            1026            44.3             6.2
        OLD AGENCIES............................................            3272            65.5             9.1
            FREESTANDING........................................            2292            74.6            10.5
            HOSPITAL BASED......................................             980            44.4             6.2
        NEW AGENCIES............................................             865            49.9            12.4
            FREESTANDING........................................             819            50.3            12.6
            HOSPITAL BASED......................................              46            43.5             9.4
    ALL RURAL...................................................            2277            49.9             8.8
        FREESTANDING............................................            1197            59.5            10.6
        HOSPITAL BASED..........................................            1080            39.4             6.0
        OLD AGENCIES............................................            1984            51.0             8.3
            FREESTANDING........................................             953            63.5            10.1
            HOSPITAL BASED......................................            1031            39.4             5.9
        NEW AGENCIES............................................             293            43.0            13.3
            FREESTANDING........................................             244            43.9            13.6
            HOSPITAL BASED......................................              49            38.8             9.5
BY REGION:                                                                                                      

[[Page 15736]]

                                                                                                                
    OLD AGENCIES................................................            5256            60.0             8.9
        NEW ENGLAND.............................................             291            84.5            12.3
        MIDDLE ATLANTIC.........................................             443            71.3             9.0
        SOUTH ATLANTIC..........................................             739            62.7             9.2
        EAST NORTH CENTRAL......................................             866            65.4             9.6
        EAST SOUTH CENTRAL......................................             431            58.2             8.7
        WEST NORTH CENTRAL......................................             728            52.9             8.8
        WEST SOUTH CENTRAL......................................             936            54.1             8.2
        MOUNTAIN................................................             354            48.3             7.0
        PACIFIC.................................................             428            52.3             6.9
    NEW AGENCIES................................................            1158            48.2            12.6
        NEW ENGLAND.............................................              44            90.9            15.6
        MIDDLE ATLANTIC.........................................              51            35.3             4.7
        SOUTH ATLANTIC..........................................              44            40.9             7.1
        EAST NORTH CENTRAL......................................             151            23.2             4.4
        EAST SOUTH CENTRAL......................................              25            56.0            14.8
        WEST NORTH CENTRAL......................................             117            28.2            10.3
        WEST SOUTH CENTRAL......................................             484            60.3            16.6
        MOUNTAIN................................................             103            49.5             8.5
        PACIFIC.................................................             138            41.3            10.4
----------------------------------------------------------------------------------------------------------------

D. Percent of Costs Exceeding Limit (Column Four)

    Results from this column indicate that the average percent of costs 
exceeding the aggregate per-beneficiary limit for an HHA in the ``all 
agencies'' cell is 9.3 percent after the behavioral offset. This should 
not be surprising since the intent of section 4602 of the BBA is to 
control the soaring expenditures of the Medicare home health benefit 
which have been driven largely by increased utilization.
    For the old agencies cell (HHAs that filed a 12-month cost report 
that ended during Federal FY 1994), the average percent of costs 
exceeding the aggregate per-beneficiary limit is 8.9 percent. For the 
new agencies cell (HHAs that did not have a 12-month cost reporting 
period ended in Federal FY 1994 or that entered the Medicare program 
after Federal FY 1994), the average percent of costs exceeding the 
aggregate per-beneficiary limit is 12.6 percent. Old agencies will not 
be affected as much as the new agencies, on average, because the new 
agencies have, in general, reported higher costs related to higher 
levels of utilization. Moreover, the statutory provision basing \3/4\ 
of old provider limits on their own cost experience would implicitly 
result in less of an impact than experienced by the new providers whose 
limits are based on a national median.
    For the urban areas HHA cell, the average percent of costs 
exceeding the aggregate per-beneficiary limit is 9.5 percent, while the 
rural areas HHA cell is 8.8 percent. For the old agency census division 
cells the average percent of costs exceeding the aggregate per-
beneficiary limit ranges from a low of 6.9 percent in the Pacific 
census region to a high of 12.3 percent in the New England census 
region. The other census regions fall between 7.0 percent and 9.2 
percent. The differences between census regions reflect the pattern of 
highly disparate costs that have been reported historically between 
geographic areas which cannot be explained by differences in patient 
characteristics but appear related to patterns of HHA practices.
    For the new agency census region cells the average percent of costs 
exceeding the aggregate per-beneficiary limit ranges from a low of 4.4 
percent in the East North Central census region to a high of 16.6 
percent in the West South Central census region. The other census 
regions fall between 4.7 percent and 15.6 percent. In general, newer 
agencies in census regions that have exceptionally high cost histories 
are more impacted by their being limited to the national median.
    Although there is considerable variation in these limits, we 
believe this is a natural reflection of the wide variation in payments 
that have been recognized under the present cost reimbursement system. 
Moreover, we believe the differing impacts of these limits is an 
inherent result of beginning to draw unexplained variation among 
providers closer to national norms which existed prior to the rapid 
increase in home health expenditures of the post '93-'94 period.
    Because this rule limits payments to HHAs to the lesser of actual 
cost, the per-visit limitations, or the aggregate per-beneficiary 
limitation, we have estimated the combined impact of these limitations. 
(We note, that these estimates differ from those published on January 
2, 1998 in our per-visit limitation notice (63 FR 89) because of the 
interaction of the two limitations, which we could not calculate until 
we developed the database used in this rule.)
    We estimate that in both 1998 and 1999, 35 percent of the HHAs will 
be limited by the per-visit limitation and 58 percent of the HHAs will 
be limited by the per-beneficiary limitation. The estimated combined 
savings for 1998, however, will be $1.4 billion, of which $370 million 
is attributable to the per-visit limitation, and $1.06 billion is 
attributable to the per-beneficiary limitation. The estimated combined 
savings for 1999 will be $2.9 billion, of which $740 million is 
attributable to the per-visit limitation, and $2.14 billion is 
attributable to the per-beneficiary limitation.
    For FY 1998, 15 percent of the Medicare savings are attributable to 
payments to managed care plans and for FY 1999, 20 percent of the 
savings will be from payments to managed care plans.
    The per-beneficiary limitation may impact some State Medicaid 
programs. However, because of variation in State Medicaid policies and 
service delivery systems, it is impossible to predict which States will 
be affected or the magnitude of the impact, if any.

[[Page 15737]]

    Under the Paperwork Reduction Act of 1995, agencies are required to 
provide a 60-day notice in the Federal Register and solicit public 
comments before a collection of information requirement is submitted to 
the Office of Management and Budget for review and approval. We do not 
believe this final rule has any collection of information issues 
associated with it. Any collection of information requirements would be 
associated with modifications to the Home Health Agency Cost Report 
(HCFA Form 1728-94). These modifications are being handled in a 
separate collection of information.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

XII. Other Required Information

A. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register to provide a period for public comment before the 
provisions of the rule take effect. However, pursuant to 5 U.S.C. 
(United States Code) 553(b)(B) we may waive a notice of proposed 
rulemaking if we find good cause that notice and comment are 
impracticable, unnecessary, or contrary to the public interest. For 
good cause we find that it was impracticable to undertake notice and 
comment procedures between the date of enactment of the BBA '97 (August 
5, 1997) and the statutory deadline for establishing the per-
beneficiary limitations (April 1, 1998). The BBA '97 required the per-
beneficiary calculations be based on data obtained from HHA Medicare 
cost reports for cost reporting periods ending during the Federal FY 
'94. To comply with this statutory requirement we had to perform a 
special data collection from our fiscal intermediaries to obtain these 
cost report data.
    In addition, the BBA '97 required HCFA to use an unduplicated 
census count to calculate the aggregate per-beneficiary limitations. 
The primary source for this count was also the provider cost report for 
Federal FY 1994. Because the unduplicated census count on the provider 
cost report was determined to be unreliable, it was necessary to 
generate an unduplicated census count from the National Claims History 
Standard Analytical File. In addition, we preformed a special data 
collection because a significant number of FY 1994 cost reports were 
not available. The internal calculation of unduplicated beneficiary 
counts from 17 million records was a time-consuming effort that was 
necessary to generate the information needed to calculate these 
limitations. These counts could not be performed prior to the 
completion of the special data collection effort and verification of 
the existing database. An extraordinary amount of resources was 
necessary to construct an entirely new database to compute the new per-
beneficiary limitations. Significant programming efforts were necessary 
to match the individual beneficiaries to their applicable MSA areas. 
Specific matching efforts were also necessary to eliminate duplicate 
beneficiaries. These beneficiaries were then matched to the provider 
cost reports for each agency in the database.
    These lengthy procedures could not be completed before February 1, 
1998. Therefore, we believe in this instance, it was impracticable to 
publish a proposed rule and for good cause waive publication of a 
proposed regulation. We are however, providing a 60-day period for 
public comment.

B. Waiver of 30-Day Delay in Effective Date

    Generally, the Administrative Procedure Act, 5 U.S.C. 553(d), 
requires us to provide a 30-day delay before effectuation of a final 
rule, unless we find good cause to dispense with that delay. To the 
extent this requirement applies to this final rule, for good cause we 
waive the 30-day delay in effective date.
    As noted previously, these per-beneficiary limitations are 
effective for cost reporting periods beginning on or after October 1, 
1997. Section 1861(v)(1)(L)(vii) of the Act requires the Secretary to 
establish these per-beneficiary limitations by April 1, 1998 and 
requires that they apply to cost reporting periods beginning on or 
after October 1, 1997. That statutory requirement is clear. A 30-day 
delay in implementing these per-beneficiary limitations is 
impracticable. Therefore, we find that it is impracticable to provide 
for a 30-day delay in effective date and for good cause we waive the 
delay in effective date.

C. Effect of the Contract with America Advancement Act, Pub. L. 104-121

    Normally, under 5 U.S.C. 801, as added by section 251 of Pub. L. 
104-121, the effective date of a major rule is delayed 60 days for 
Congressional review. This has been determined to be a major rule under 
5 U.S.C. 804(2). However, as indicated in section XI.A. of the preamble 
to this final rule, for good cause, we find that prior notice and 
comment procedures are impracticable. Pursuant to 5 U.S.C. 808(2), a 
major rule shall take effect at such time as the Federal agency 
promulgating the rule determines if for good cause it finds that notice 
and public procedure is impracticable. Accordingly, under the exemption 
provided in 5 U.S.C. 808(2), these per-beneficiary limitations are 
effective for cost reporting periods beginning on or after October 1, 
1997.

D. Public Comments

    Because of the large number of items of correspondence we normally 
receive on a rule with comment period, we are not able to acknowledge 
or respond to them individually. However, we will consider all comments 
concerning the provisions of this rule that we receive by the date and 
time specified in the Dates section of this rule, and we will respond 
to those comments in a subsequent document.

List of Subjects in 42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Puerto Rico, 
Reporting and recordkeeping requirements.
    For the reasons set out in the preamble, 42 CFR, chapter IV, 
subchapter B, part 413 is amended as set forth below.

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 is revised to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).


Sec. 413.30  [Amended]

    2. In Sec. 413.30, the following amendments are made:
    a. In paragraph (a)(1), in the first sentence, the reference to 
``section 1861 (v)(1)(A)'' is revised to read ``sections 1861(v)(1)(A) 
and (v)(1)(L)''.
    b. In paragraph (a)(2), in the last sentence, after ``may be 
calculated on a'' add ``per beneficiary,''.
    c. In paragraph (c), in the first sentence, revise ``A provider'' 
to read ``Except for the per-beneficiary limitation that applies to 
HHAs, a provider''.

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

    Authority: Section 1861(v)(1)(L) of the Social Security Act (42 
U.S.C. 1395x(v)(1)(L)); section 4207(d) of Pub. L. 101-508 (42 
U.S.C. 1395x (note)).


[[Page 15738]]


    Dated: March 15, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: March 24, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-8480 Filed 3-30-98; 8:45 am]
BILLING CODE 4120-01-P