[Federal Register Volume 63, Number 154 (Tuesday, August 11, 1998)]
[Notices]
[Pages 42912-42938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20878]
[[Page 42911]]
_______________________________________________________________________
Part II
Department of Health and Human Services
_______________________________________________________________________
Health Care Financing Administration
_______________________________________________________________________
Medicare Program; Schedules of Per-Visit and Per-Beneficiary
Limitations on Home Health Agency Costs for Cost Reporting Periods
Beginning On or After October 1, 1998; Notice
Federal Register / Vol. 63, No. 154 / Tuesday, August 11, 1998 /
Notices
[[Page 42912]]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[HCFA-1035-NC]
Medicare Program; Schedules of Per-Visit and Per-Beneficiary
Limitations on Home Health Agency Costs for Cost Reporting Periods
Beginning On or After October 1, 1998
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice with comment period.
-----------------------------------------------------------------------
SUMMARY: This notice with comment period sets forth revised schedules
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, 1998. These limitations replace the limitations that were
set forth in our January 2, 1998 notice with comment period (63 FR 89)
and our March 31, 1998 final rule with comment period (63 FR 15718).
DATES: Effective Date: These schedules of limitations are effective for
cost reporting periods beginning on or after October 1, 1998.
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 October 13, 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-1035-NC, 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, DC 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-1035NC. Comments received timely will be available
for public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 309-G of
the Department's offices at 200 Independence Avenue, SW, Washington,
DC, on Monday through Friday of each week from 8:30 a.m. to 5:00 p.m.
(Phone: (202) 690-7890).
FOR FURTHER INFORMATION CONTACT: Michael Bussacca, (410) 786-4602.
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I. Background
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) costs since 1979.
Additional statutory provisions specifically governing the limitations
applicable to HHAs are contained at section 1861(v)(1)(L) of the Act.
Section 1861(v)(1)(L)(i)(IV) of the Act specifies that the per-
visit limits shall not exceed 105 percent of the median of the labor-
related and nonlabor per-visit costs for freestanding HHAs. The
reasonable costs used in the per-visit calculations will be updated by
the home health market basket excluding any change 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.
Section 1861(v)(1)(L)(v)(I) of the Act 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 fiscal 1994, the per-beneficiary limitation will be a
national per-beneficiary limitation which 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.
Payments by Medicare under this 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.
This notice with comment period sets forth cost limitations for
cost reporting periods beginning on or after October 1, 1998. As
required by section 1861(v)(1)(L)(iii) of the Act, we are
[[Page 42913]]
using the area wage index applicable under section 1886(d)(3)(E) of the
Act 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 service is rendered. For purposes of this notice, the
HHA wage index is based on the most recent published final hospital
wage index, that is, the preclassified hospital wage index effective
for hospital discharges on or after October 1, 1997, which uses FY 1994
wage data. As the statute also specifies, in applying the hospital wage
index to HHAs, no adjustments are to be made to account for hospital
reclassifications under section 1886(d)(8)(B) of the Act, decisions of
the Medicare Geographic Classification Board (MGCRB) under section
1886(d)(10) of the Act, or decisions by the Secretary.
II. Analysis of and Responses to Public Comments to the January 2,
1998 Per-Visit Limitation Notice
We received 24 items of timely correspondence on the January 2,
1998 notice with comment period. A large percentage of the commenters
also expressed concern over various aspects of the BBA `97 including
the per-beneficiary limitations and the surety bond requirement which
are not pertinent to the January 2, 1998 notice. Nonetheless, we will
address the comments regarding the per-beneficiary limitations under
section IV. of this notice. The issues not related to the limitations
will be taken into account under separate notices specific to those
issues. The comments pertaining to the per-visit limitations and our
responses are discussed below.
Comment: The hospital wage indices do not include wages and wage-
related data for home health services. The most appropriate measure
would be a home health agency specific wage index by geographic area.
Response: The use of the hospital wage indices is required by
statute. Section 1861(v)(1)(L)(iii) of the Act specifically states, in
part, ``the Secretary shall establish limits under this subparagraph
for cost reporting periods beginning on or after such date by utilizing
the area wage index applicable under section 1886 (d)(3)(E) and
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 service is furnished * * * '' Furthermore, in 1989 we
published a schedule of per-visit limitations using a home health
agency-specific wage index in the Federal Register (54 FR 27742). Even
though we placed a limit of 20 percent on the amount that HHAs cost
limitation may increase or decrease when compared to the prior year's
cost limitation which applied the hospital wage indices, the HHA
industry questioned the validity of the data used in developing the
HHA-specific wage indices. A change in legislation was pursued to
prohibit the use of a HHA-specific wage index. In 1991 we had to
republish the 1989 per-visit limitations in the Federal Register at 56
FR 12934 using the hospital wage indices as required by section 6222 of
the Budget Reconciliation Act of 1989, Pub. L. 99-239. From that time
forward we have been required to use the hospital wage indices in
developing the per-visit limitations.
Comment: Agencies may be forced into more stringent evaluations of
what patients are suitable for home care, rejecting those whose needs
are going to make them candidates for lengthy and expensive visits.
Overall quality of care to patients will fall as field staff are placed
under greater pressure to perform more visits in a given time at a
lower cost.
Response: We recognize that there will be valid circumstances not
anticipated by the per-visit limitation methodology that will cause an
agency to incur cost in excess of that allowed by the per-visit
limitation. We provide for those unique situations through the
exceptions process as ``atypical'' home health services at 42 CFR
413.30(f)(1). It is desirable for all agencies to monitor continually
the cost of providing each discipline and to take steps to control the
cost of any discipline as soon as there are indications that costs are
increasing. We believe that a per-visit limitation of 105 percent of
the median will give all agencies an added incentive to improve their
management controls with immediate and ongoing benefit to the Medicare
program and its beneficiaries through a reduction in cost and a
moderation in the future rate of increase in costs.
Comment: There are additional costs which the home health industry
must bear in order to meet new HCFA requirements such as implementation
of the home health patient Outcome and Assessment Information Set
(OASIS). There should be an add-on to the per-visit limitations in
recognition of the costs associated with implementing OASIS
requirements.
Response: We recognize that when agencies are required to implement
OASIS, the agencies will incur training costs that they would not have
otherwise incurred for this activity. These costs are almost
exclusively associated with training staff in the disciplines (skilled
nursing, physical, speech pathology, and occupational therapy) that
will be performing OASIS assessments at the start of care and on a
continuing basis. Accordingly, we have calculated for these disciplines
an adjustment factor to be applied to the labor portion of the per-
visit limitations applicable to these disciplines. This adjustment is
intended as an offset to foregone patient care time that will be
required for the necessary OASIS training and for gaining experience in
performing assessments during the year of implementation. This offset
is applied as an adjustment factor to be applied to the labor portion
of the affected disciplines. See section III.G. for a discussion of the
methodology used to calculate the adjustment factor.
Comment: The rise in utilization of home health has been due, in
part, to the implementation of the hospital prospective payment system
by hospitals which now discharge the patient quicker and sicker knowing
that the patient can be treated adequately at home and the realization
by physicians that home health care is useful, desirable, and
economical alternative to institutionalization.
Response: There are several reasons why home health utilization has
grown. Although it has been said that the hospital prospective payment
system has resulted in patients being discharged sicker and quicker,
and transferred to the home health setting, this is not the case
overall. A study published in The New England Journal of Medicine in
August 1996 found, ``less than a quarter of home health visits (22
percent) were preceded by a hospital stay within 30 days. Nearly half
the visits (43 percent.) were unassociated with an inpatient stay in
the previous six months.'' Also, the hospital prospective payment
system has been in existence since October 1983. Any impact on the
costs of services of providing home health care should have already
been reflected in our data base which is approximately ten years after
the implementation of the hospital prospective payment system.
Comment: The per-visit limitations should not be published and
applied on a retroactive basis.
Response: The statute is quite explicit in establishing both the
effective date of the per-beneficiary limitation, as well as the date
by which the per-visit limitations were to be published. As much
information as possible was disseminated to the home health trade
organizations regarding the impact of the limitations without
jeopardizing our rulemaking process. We were aware that
[[Page 42914]]
these home health trade organizations had been forwarding this
information to their home health care members as quickly as possible so
that agencies could estimate the effect of the per-visit on their
financial operations. To the extent possible we made as much
information available to the home health industry as we could for
preparation to the revised per-visit limitations.
Comment: The update factors proposed by HCFA appear to be
understated by approximately 4.5 percent.
Response: The update factors displayed in the notice which are
applied to the data used in developing the per-visit limitations are
reduced update factors as mandated by the statute. Section
1861(v)(1)(L)(iv) of the Act specifically 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, the update factors displayed in the
notice do not include the changes for this period of time.
Comment: A seventh discipline should be established to set out
chronic illness (such as insulin dependent diabetic and wound care)
skilled nursing services from other skilled nursing visits. This would
assist the definition of patient acuity and would create significant
savings to the Medicare program by developing a lower level of skilled
nursing visit category that would account for reduced time and effort
associated with chronic illness.
Response: The home health benefit as set forth in 1861(m) of the
Act sets forth the disciplines covered for home health services and
does not provide for a seventh discipline along the lines suggested by
the commenter.
Comment: The total impact on home health agencies of the reduction
in per-visit cost limitations has been understated due to HCFA's
separate analysis of the per-visit and the per-beneficiary limitations.
Response: The impact analysis on the revised per-visit limitation
notice is correct in that the analysis can only address the limitations
addressed in that notice. At the time the notice was published, the
per-beneficiary limitations were not calculated and the impact of both
the per-visit and the per-beneficiary limitations was unknown. We did,
however, address the dual impact of the revised per-visit limitations
and the new per-beneficiary limitations in the final rule with comment
for the per-beneficiary limitation which was published on March 31,
1998. This impact is addressed in the Federal Register published on
March 31, 1998 at 63 FR 15736.
Comment: After the adjustment of the labor and nonlabor portions
from 112 percent of the mean to 105 percent of the median, the amount
that would be paid under the labor portion is significantly smaller
than what the 1982 wage-index would indicate. Therefore, in order to
remain budget neutral, it would appear that a significantly larger
budget neutrality factor should be applied to raise the labor-related
portion back up to be in line with the 1982 wage-index base.
Response: Budget neutrality with respect to the wage index requires
that aggregate Medicare payments to home health agencies be equal to
the payments that would have been made had the 1982 wage index been
used. Because the level of the per-visit limitations was adjusted
downward from the previous per-visit limitations that were in effect, a
different distribution of HHAs are under the revised per-visit
limitations. These are the HHAs that largely affect the budget
neutrality adjustment factor. These HHAs would have been only slightly
better off using the 1982 wage index. Therefore, the adjustment factor
reflects the slight increase in payments to obtain budget neutrality.
Comment: HCFA has stated that fiscal year 1994 is the most current
information available for computation of the home health per-visit
limitations. Excluding the results of cost reports finalized after
October 10, 1995 from the data base seriously skews the cost per-visit
limitation calculations with older cost and per-visit data,
artificially lowering the median.
Response: Unlike the per-beneficiary limitations which require the
use of Federal FY 1994 as the base period for establishing the
limitations, neither the statute nor the Medicare regulations dictate
the data base to be used in establishing the per-visit limitations.
Moreover, we update the data base by rates of increase in the home
health market basket from the end of the FYs of the cost report data
used in the data base to the FY end to which the per-visit limitations
apply. In keeping with past practices, we updated the data base used
for the July 1997 notice in establishing the per-visit limitations. We
believe the per-visit limitations reflect the per-visit costs reported
by HHAs and these per-visit limitations have been updated appropriately
in accordance with the statute.
Comment: The home health market-basket index does not measure
specific costs.
Response: The home health market-basket is a measurement of costs
and inflation overall and is not a measurement of increase in agency-
specific costs.
III. Update of Per-Visit Limitations
The methodology used to develop the schedule of per-visit
limitations in this notice is the same as that used in setting the
limitations effective October 1, 1997. We are using the latest settled
cost report data from freestanding HHAs to develop the per-visit cost
limitations. We have updated the per-visit cost limitations to reflect
the expected cost increases between the cost reporting periods in the
data base and September 30, 1999 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.
A. Data Used
To develop the schedule of per-visit limitations effective for cost
reporting periods beginning on or after October 1, 1998, we extracted
actual cost per-visit data from the most recent settled Medicare cost
reports for periods beginning on or after January 1, 1994 and settled
by May 1998. The majority of the cost reports were from Federal fiscal
year 1996. We then adjusted the data using the latest available market
basket indexes to reflect expected cost increases occurring between the
cost reporting periods contained in our data base and September 30,
1999, 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. Therefore, we excluded this time period when
we adjusted the database for the market basket increases.
B. Wage Index
A wage index is used to adjust the labor-related portion of the
per-visit limitation to reflect differing wage levels among areas. In
establishing the per-visit 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 most recently published hospital wage index
(that is, the FY 1998 hospital wage index, which was published in the
Federal Register on August 29, 1997 (62
[[Page 42915]]
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 per-visit 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 per-visit
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) 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 recently published wages and wage-related costs
of hospitals located in the 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. The wage-index, as applied to the labor portion of the per-
visit 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.
C. Updating the Wage Index on a Budget-Neutral Basis
Section 4207(d)(2) of the Omnibus Budget Reconciliation Act of 1990
(OBRA '90) (Public Law 101-508) requires that, in updating the wage
index, aggregate payments to HHAs will remain the same as they would
have been if the wage index had not been updated. Therefore, overall
payments to HHAs are not affected by changes in the wage index values.
To comply with the requirements of section 4207(d)(2) of OBRA '90
that updating the wage index be budget neutral, we determined that it
is necessary to apply a budget neutrality adjustment factor of 1.03 to
the labor-related portion of the per-visit limitations effective for
cost reporting periods beginning on or after October 1, 1998. This
adjustment ensures that aggregate payments to HHAs are not affected by
the change to a wage index based on the hospital wage index published
on August 29, 1997.
To determine the adjustment factor, we analyzed both the data
obtained from the freestanding agencies used to determine the per-visit
limitations and the settled cost report data covering the same time
period for the provider-based agencies. For each agency in this data
base, we replaced their current wage index with the one corresponding
to the 1982 hospital wage index. Some Metropolitan Statistical Areas
(MSAs) that currently exist did not exist at the time this index was
created and therefore have no matching 1982 wage index. In the data
base we are currently using, these unmatchable MSAs represented 1.3
percent of the total visits. Since this percentage was small, we
deleted these agencies from the analysis. We then determined what
Medicare program payments would be using the 1982 wage index. Next, we
determined payments using the new wage index and adjusted the labor
portion of the payment by the factor necessary to match program
payments if the 1982 wage index was used. (See the example in section
VIII.B. of this notice regarding the adjustment of per-visit
limitations by the wage index and the budget neutrality factor.)
D. Standardization for Wage Levels
After adjustment by the market basket index, we divided each HHA's
per-visit costs into labor and nonlabor portions. The labor portion of
cost (77.668 percent as determined by the market basket) represents the
employee wage and benefit factor plus the contract services factor from
the market basket. We then divided the labor portion of per-visit cost
by the wage index applicable to the HHA's location to arrive at an
adjusted labor cost.
E. Adjustment for ``Outliers'
We transformed all per-visit cost data into their natural
logarithms and grouped them by type of service and MSA, NECMA, or non-
MSA location, in order to determine the median cost and standard
deviation for each group. We then eliminated all ``outlier'' costs
which were all per-visit costs less than 10 dollars and per-visit costs
more than 800 dollars, retaining only those per-visit costs within two
standard deviations of the median in each service.
F. Basic Service Limitation
We calculate a basic service limitation to 105 percent of the
median labor and nonlabor portions of the per-visit costs of
freestanding HHAs for each type of service. (See Table 3a in section
VIII.)
G. Offset Adjustment for the Implementation of the Home Health Outcome
Assessment Information (OASIS)
When HHAs are required to use an assessment tool, such as OASIS,
for ongoing collection of quality of care data, they will incur costs
associated with this requirement. Any costs associated with a new type
of reporting system are not reflected in the database used to calculate
the per-visit limitations. We have, therefore, decided to provide an
offset adjustment factor to be applied to the labor-related component
of the per-visit limitations for skilled nursing, physical therapy,
speech pathology, and occupational therapy which should be the only
disciplines affected by this new requirement.
Since any new assessment performance tool will replace or be
integrated into an agency's existing assessment activities, we believe
that there will be no permanent ongoing incremental costs associated
with these types of assessment systems. This has been shown through
data derived from the ongoing Medicare Quality and Improvement
Demonstration using OASIS as an assessment tool. This demonstration
shows that the OASIS assessment requires either the same amount of time
or less time than the
[[Page 42916]]
patient assessment methods currently in use.
Absent other types of data, we are using the information from this
demonstration to derive an offset adjustment for any new assessment
tool that may be imposed on the HHAs effective during the per-visit
limitations effective for cost reporting periods beginning on or after
October 1, 1998. Data from the OASIS demonstration show that OASIS
implementation burden consists of foregone staff time that would
otherwise be devoted to patient care activities. There are three types
of costs associated with staff time for a typical 18-person staff. The
first would be training time for an agency coordinator who conducts
training or supervision of the clinical staff. This individual would
probably need to spend four hours reading the assessment tool training
manual and eight hours attending an assessment tool training session.
Training would also be necessary for staff who will be performing the
assessment process. The affected disciplines are skilled nursing,
physical therapy, speech pathology, and occupational therapy. Each
member of these disciplines would probably require four to six hours of
training. Since agencies currently conduct inservices for clinical
staff, usually on a monthly basis, the training for a new assessment
tool would replace at least one of these sessions. The incremental
training costs would be approximately half of the total costs, or two
to three hours per trained staff member.
The second type of costs would be increases in assessment time
during initial implementation. Experience from the demonstration
indicates that total visit time increases by approximately 15 minutes
during the first six to seven visits when newly trained staff have
begun to perform OASIS assessments. After this initial period of
becoming familiar with and acquiring experience with the new assessment
tool, there is no net increase in visit duration.
The third type of costs would be the costs associated with the
staff time to revise assessment forms and integrate OASIS elements. For
a typical 18-person professional staff this is estimated to require
sixteen hours of staff time: twelve hours of professional staff time
(skill nursing, physical therapy, etc. * * *) and 4 hours of clerical
time.
The adjustment factor is calculated in terms of per-FTE foregone
staff time spent on these training and form revision activities as
follows: (a) One hour for the agency coordinator--based on twelve hours
total training time allocated over an 18-person professional staff, (b)
three hours per staff for training, (c) two hours for increased
assessment time during the initial implementation--based on fifteen
minutes additional time for each of the first eight visits (rounded up
from 7) during which the assessments are performed, and (d) one hour of
supervisory time--based on sixteen hours of time spent revising
assessment forms allocated over an 18-person professional staff. These
four items total seven hours of time per-FTE during the year of OASIS
implementation. Using a normal work year of 2000 hours (50 weeks times
40 hours) less the seven hours for additional training time for a new
assessment program, the offset adjustment for foregone patient care
would be .35 percent (2000 hours divided by 1993 hours less one equals
.003513). This offset factor will be applied to the labor portion of
the skilled nursing, physical therapy, speech pathology and
occupational therapy per-visit limitations for both urban and nonurban
areas. This factor will only be applied to the labor portion of these
per-visit limitations for cost reporting periods beginning on or after
October 1, 1998 if HHAs are required to implement OASIS.
In addition to training and forms revision, agencies will incur
printing costs for the revised assessment forms. Data from the OASIS
demonstration show that for the typical HHA, i.e., one that has 486
admissions per year and an 18-person professional staff, printing the
new assessment forms will cost $280. Cost report data for 1994 and 1995
show that an HHA with 486, plus or minus 50, admissions, provides a
total of thirty thousand visits of all types annually to patients.
Allocating the $280 over 30 thousand visit yields an incremental cost
of .93 cents per visit, which for estimation purposes is rounded up to
one cent per visit for all disciplines.
The total offset adjustment is applied by first multiplying the
labor portion of the per-visit limitation for skill nursing, physical
therapy, speech pathology, and occupational therapy by the factor of
1.003513 for training and forms revision (the labor-portion is also
adjusted by the appropriate wage index and budget neutrality factor),
second, the non-labor portion is added to the adjusted labor-portion,
and third, one cent is added for printing costs. The OASIS adjustment
is only done after the implementation of OASIS is effective.
Because we believe that there will be no ongoing incremental costs
to perform assessments under a new protocol, this adjustment offset
will only apply to the labor component of the specified per-visit
limitations in the first year of implementation of a new assessment
tool.
While we have based this adjustment on the best data we have
available to us, we are concerned that we may not have captured all
relevant costs, particularly ongoing and automation costs. In part,
this is because our data is based on agencies whose costs in this
regard may not have been fully representative of agency costs
generally. Therefore, we are asking for specific comments, including
documented data, which would inform future decision making on this
issue.
IV. Analysis of and Responses to Public Comments to the March 31,
1998 Per-Beneficiary Final Rule
We received 125 comments with respect to the March 31, 1998 Federal
Register final rule with comment addressing the implementation of the
per-beneficiary limitations. A number of comments were on the statutory
requirements for which we do not have discretionary authority to change
or not implement. These included comments such as: do not apply the
per-beneficiary limitations for cost reporting periods beginning on or
after October 1, 1997, delay implementation of the per-beneficiary
limitations to October 1, 1998, repeal the statutory provisions
requiring the application of the per-beneficiary limitations, and the
use of fiscal year 1994 as a base year for establishing the per-
beneficiary limitations is inadequate and should not be used in
establishing the per-beneficiary limitations. These comments cannot be
adopted without legislative amendments to the Act pertaining to the
per-beneficiary limitations. The remaining comments are given below.
Comment: Agencies that have a per-beneficiary limitation lower than
the national per-beneficiary limitation should be allowed to have the
higher national per-beneficiary limitation apply.
Response: The statute is very specific with respect to how the per-
beneficiary limitations are to be calculated for agencies that have a
12-month cost reporting period ending in Federal fiscal year 1994
(``clause v'' agencies) and new agencies (``clause vi'' agencies). Once
the agency is classified as either a ``clause v'' or ``clause vi''
provider, the per-beneficiary limitation is established by statute. We
have no discretion to apply a most beneficial test.
Comment: The requirement to prorate the unduplicated census count
of Medicare beneficiaries when a beneficiary is serviced by more than
one HHA for cost reporting periods beginning on or after October 1,
1997
[[Page 42917]]
should also apply in determining the unduplicated census count of
Medicare beneficiaries for the base year, i.e., cost reporting periods
ending during Federal FY 1994.
Response: The statute does not provide for this. Section
1861(v)(1)(L)(vi)(II) of the Act, as added by section 4602(c) of the
BBA '97, states, ``For beneficiaries who use services furnished by more
than one home health agency, the per-beneficiary limitation shall be
prorated among the agencies.'' This provision is specific for services
furnished by HHAs for cost reporting periods beginning on or after
October 1, 1997. It applies to the application of the per-beneficiary
limitation and not the calculation of the per-beneficiary limitation.
Comment: Many agencies were required to operate under a new system
of reimbursement for a full six months before being told precisely what
the system was. HCFA should provide some form of leniency for those
agencies which have large overpayments due to the delay in publishing
the new limitations.
Response: We recognize that providers with cost reporting periods
that began prior to the publication of the per-beneficiary limitations
may have experienced some uncertainty in budgeting their costs.
Nonetheless, the BBA '97 is quite explicit in establishing both the
effective date of these provisions and the date by which these
limitations needed to be established. We made as much information as
possible available to the home health industry prior to the publication
of the limitations. We tried to make a smooth transition into the
interim payment system (IPS) for HHAs by providing such information
through major home health trade organizations. The IPS was highly
publicized through home health trade news articles such that the effect
of the IPS should have been anticipated by the home health industry.
While there were certain technical issues which could only be addressed
through the publication of the limitations, agencies could, to a large
degree, estimate the effect of the new limitations on the financial
operations. In fact, a trade organization developed computer software
packages for estimating the impact of the IPS. Even though the
limitations were not available prior to publication, we believe the
home health industry had sufficient advanced knowledge to properly
react to an estimated impact of the limitations on their operations. If
an agency had suspected that overpayments might result from the interim
payments received prior to the publication of the limitations, a
prudent agency would set the estimated overpayment aside as a potential
liability. This way, the agency would not put itself in a financial
hardship to pay back any overpayments resulting from the newly
published limitations.
Comment: The 1994 base period is not reflective of the sicker
patients being released from the hospitals due to the hospital
prospective payment system.
Response: As stated in the comments addressing the per-visit
limitations, although it has been said that the hospital prospective
payment system has resulted in patients being discharged quicker and
sicker and transferred to a home health setting, this is not the case
overall. A study published in The New England Journal of Medicine in
August 1996 found , ``less than a quarter of home health visits (22
percent) were preceded by a hospital stay within 30 days. Nearly half
the visits (43 percent) were unassociated with an inpatient stay in the
previous six months.'' Also, the hospital prospective payment system
has been in existence since October 1983. Any impact on the costs of
services of providing home health care should have already been
reflected in our data base which is approximately ten years after the
implementation of the hospital prospective payment system.
Comment: The IPS per-beneficiary limitation puts a cap on the
expenses a beneficiary can receive in one year.
Response: We cannot stress enough that the per-beneficiary
limitation is not a cap on an individual beneficiary's amount of
services or the costs of services. The per-beneficiary limitation is an
aggregate limitation on each agency's total costs. Agencies now have a
global budget that increases with the number of beneficiaries served
and promotes efficiency in planning and delivering total services to
all patients throughout the entire home health episodes. Applying the
per-beneficiary limitation in the aggregate, not just to an individual
patient, allows HHAs to balance the costs of caring for one patient
against the cost of caring for other patients. HHAs have the
flexibility to provide the appropriate amount of care (duration of
visits, number of visits, and skill level of care given) for all
patients within the aggregate per-beneficiary limitation.
Comment: Do not apply the freeze to inflation for the 1994-1996
period. This freeze should only apply to the per-visit limitations.
Response: The statute applies the freeze to both the per-visit and
the per-beneficiary limitations. Section 1861(v)(1)(L)(iv) of the Act
states, ``In establishing limits under this subparagraph for cost
reporting periods beginning after September 30,1997, the Secretary
shall not take into account any changes in the home health market
basket, as determined by the Secretary, with respect to cost reporting
periods which began on or after July 1, 1994, and before July 1,
1996.'' The amendment in section 4601 of the B.B.A. '97 to amend
section 1861(v)(1)(L) of the Act encompasses all limits established
under section 1861(v)(1)(L) of the Act, including the per-beneficiary
limitations. Therefore, the application of the freeze in the market
basket increases to both the per-visit limitations and the per-
beneficary limitations is in accordance with the statutory language.
Comment: The requirement to apply the wage-index based on the
location of the service furnished rather than the location of the HHA
should only apply to the per-visit limitations.
Response: Again the statute requires the wage index based upon the
location of the service furnished be applied to both the per-visit and
the per-beneficiary limitations. Section 1861(v)(1)(L) of the Act,
states in part, `` * * * the Secretary shall establish limits under
this subparagraph for cost reporting periods beginning on or after such
date by utilizing the area wage index applicable under section
1886(d)(3)(E) and 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 service is furnished * * * ''
This language encompasses all the limitations noted under section
1861(v)(1)(L) of the Act, which includes both the per-visit and the
per-beneficiary limitations.
Comment: HCFA should utilize the median amount for each census
region for new providers. This will be the best reflection of both
wages and utilization for agencies in a given area.
Response: Section 1861(v)(1)(L)(vi) of the Act as added by section
4602(c) of the B.B.A. '97, states, ``For new providers and those
providers without a 12-month cost reporting period ending in fiscal
year 1994, the per beneficiary limitation shall be equal to the median
of these limits (or the Secretary's best estimates thereof) applied to
other home health agencies as determined by the Secretary.'' The
statute clearly contemplates the use of a single, and therefore
national, median as the basis for the new provider limitation. The
statute requires the per-beneficiary limitation to be ``the median'' of
all the per-beneficiary limitations applied to the other HHAs, i.e.,
the per-beneficiary
[[Page 42918]]
limitations of the old providers. The statutory language refers to a
single median and not several medians, which would be the case if the
statute required a regional system suggested by commenters. Moreover,
in direct contrast to the language governing the per-beneficiary
limitation for old providers, section 1861(v)(1)(L)(vi) does not
contain any reference to a calculation based upon the home health
agency's census division.
Comment: The base year for the surviving provider number should be
utilized in computing the per-beneficiary limitation. Because the
agency still carries assets and liabilities of the agency it purchased,
the base year and resulting per-beneficiary limitation should be
considered an asset or a liability, as applicable.
Response: The per-beneficiary limitation is neither an asset nor a
liability for an HHA. The per-beneficiary limitation is a limit on the
amount of payments made by Medicare. The limitations are not intended
to be used as bargaining tools for selling or buying agencies.
Comment: Extend authorizations for exceptions to the new interim
payment system per-beneficiary limitations as well as the per-visit
limitations.
Response: As we stated in the March 31, 1998 Federal Register, we
do not believe that Congress intended the general rules at 42 CFR
413.30 to apply to the establishment of the per-beneficiary
limitations. The statute does not provide any such exceptions or
exemptions to the per-beneficiary limitations.
Comment: On page 15725 of the Federal Register the example
references index levels for the period of July 1998 through December
1998 from Table 6 for calculating the market basket increase. Table 6
in the March 31, 1998 Federal Register stops at November 1997.
Response: We apologize for the inadvertent omission of the index
levels for the months of December 1997 through September 1999. Table 6
at 63 FR 103 published on January 2, 1998 contains the same index
levels that are appropriate in calculating the applicable market basket
increase and the index levels for the months of December 1997 through
September 1999 can be obtained from that table.
Comment: Under section 112 of the Provider Reimbursement Manual,
Part I, State health department home health agencies with subunits or
branches are permitted to file a combined cost report under the 7800
series of provider numbers. (1) How will those subunits and branches
that have separate provider numbers and separately bill that previously
filed a combined cost report be treated if some decide to no longer
file with the combined cost report? (2) How will the remaining agencies
that wish to file a combined report be treated? As clause ``v'' or
clause ``vi'', and will there be any adjustment to costs for the
agency-specific portion? (3) If combined State department home health
agencies that file a combined cost report has subunits, and a
beneficiary moves from one subunit to another, is that beneficiary
counted as one beneficiary in each of the subunits, or is it prorated?
Response: (1) State health departments with subunits are allowed to
file a combined Medicare cost report because of the administrative and
financial burden in filing separate Medicare cost reports for all the
agencies within the department. The State health departments were
allowed to obtain subunit provider numbers for the purposes of tracking
revenue and claims processing. Also, it is our understanding that the
State health departments did have the capability to segregate the costs
for each individual agency within the department. If State health
departments decide to start submitting individual Medicare cost reports
for the agencies within their department, they will not be allowed to
pick and choose individual agencies for which they would like to report
separately. The State agency health would have to rescind the 7800
series number and submit separate cost reports for all the agencies.
(2) Since the State health department filed a single cost report
for all the agencies under a 7800 number series, and the individual
subunits did not file a separate Medicare cost report for which an
agency-specific per-beneficiary limitation can be calculated, if the
units start filing separate Medicare cost reports under their own
numbers, they will be considered clause ``vi'' type providers.
Therefore, they will be subject to the national per-beneficiary
limitation.
(3) State health departments that file a single cost report under
the 7800 number for all its units will count a single beneficiary in
its unduplicated census count for the cost reporting period regardless
of the number of units that service that beneficiary. However, if the
subunits report separately and the beneficiary is serviced by more than
one subunit, the beneficiary must be prorated among the subunits
servicing the beneficiary.
Comment: How do you determine prorating between agencies when you
have one agency that was working hard and saw a patient on a limited
basis versus the other agency who maximized visits to reach the ceiling
of the beneficiary limitation and then discharged the patient?
Response: We cannot emphasize enough that the per-beneficiary
limitation is not a limitation on the amount of services a beneficiary
may receive or a limitation on the costs of an individual beneficiary.
The per-beneficiary limitation is applied to the total unduplicated
census count of the agency and compared to the lesser of the agency's
actual costs or per-visit limitation in the aggregate plus nonroutine
medical supplies. If an agency discharges a beneficiary with the
assumption that the beneficiary has exhausted its per-beneficiary
limitation and that beneficiary receives services from another agency,
each agency will have less than one beneficiary in its unduplicated
census count. For example, if agency ``A'' treats a Medicare
beneficiary and after 60 visits, discharges the patient and
subsequently the patient receives 40 visits from agency ``B'', agency
``A'' will count the beneficiary as .60 in its unduplicated census
count and agency ``B'' will count the beneficiary as .40 in its
unduplicated census count. Under a system based on medians and
averages, such as the per-beneficiary limitations, it should be
expected that some patients' costs and amount of services will be under
the average and some patients' costs and amounts of services will be
above the average.
Comment: The blend of an agency-specific component and a regional
census division component rewards agencies that had high costs in
Federal FY 1994 and penalizes agencies that had low costs in Federal FY
1994.
Response: By basing the per-beneficiary limitation on the HHA's own
cost experience, the per-beneficiary limitation should reflect the mix
of patients that the agency has been caring for in the past. This mix
of patients should not change drastically as compared to the mix of
patients for whom the HHA is currently providing care. While variation
does exist between agencies, it is a reflection of their actual cost
experience. All agencies were subject to the lower of their actual
costs or the aggregate per-visit limitation in FY 1994. It is the lower
of these amounts that is incorporated into the calculation of the per-
beneficiary limitations. If two agencies existing in the same area with
1994 base periods did not have a competitive advantage over each other
in 1994, it does not follow that one would have a competitive advantage
due to the application of a per-beneficiary
[[Page 42919]]
limitation. As stated before, the average per-beneficiary cost is a
reflection of the mix of patients that the HHA serviced in the base
period.
Comment: Home health agencies that have reclassified branches to
subunits should be allowed to use the parent agency's FY 1994 cost
report as the base for establishing the per-beneficiary limitation for
the new subunit.
Response: Branches within home health agencies are not providers as
recognized under Medicare principles of reimbursement. Branches within
home health agencies are part of and under the administrative control
of the parent home health agency. The branch itself does not have its
own administrative function or control. They are not independently
certified by Medicare as a provider nor are they required to file a
Medicare cost report. Because branches are not providers of service but
an intricate part of a provider, they will be considered new providers
if they become certified by Medicare as an independent provider of home
health services subsequent to Federal FY 1994.
Comment: HCFA should allow agencies which filed more than one cost
report during Federal FY 1994 to combine the cost reporting periods
when they equal or exceed a 12-month cost reporting period for
establishing the agency-specific per-beneficiary limitation.
Response: We do not agree. Medicare has always applied the
terminology of a 12-month cost reporting period as being twelve
consecutive months as reported in the Medicare cost report.
Comment: The impact analysis seems almost entirely focused on total
Medicare expenditures. It gives short shrift to the problems that will
be experienced by patients, HHAs, and other payers such as Medicaid. In
order to maintain costs below the per-beneficiary limitation, HHAs will
need to reduce the average number of visits provided to Medicare
beneficiaries below the levels patients received in 1997. The size of
this reduction was not estimated or its impact on Medicare
beneficiaries.
Response: The impact analysis did not discuss the impact on
beneficiaries because this payment system does not limit the amount of
services a beneficiary may receive from an agency. It is designed to
provide more efficient delivery of services. No beneficiary should be
denied services as a result of this payment system. These beneficiaries
continue to be eligible for Medicare home health benefits without a
specific day limit.
Comment: The use of a two-thirds offset in estimating the impact of
the aggregate per-beneficiary limitation on HHAs was not explained
adequately. What analysis was performed to justify such an offset?
Response: An impact analysis requires that we estimate the impact
of a change in policy. While there are questions about whether such an
impact analysis is needed for a notice that announces rates for a
statutorily mandated policy for which there is virtually no discretion,
if we are to estimate the impact of the home health policy, we need to
consider not just changes in Medicare payments that would be involved,
but also the incentives created by the new policy and how providers are
likely to react to the change in policy.
Home health is the highest cost Medicare service category which has
no cost-sharing. As a result, there is no direct financial consequences
to beneficiaries for use of home health services. Combined with the
fact that home health services are non-invasive and the patient does
not have to leave home to receive them, there are not the same kinds of
constraints on their use as with other medical services.
We believe that it is prudent to assume that because of the
incentives created by the B.B.A. '97 policy and the demonstrated
ability of the industry to respond, that there would be a response.
This does not necessarily mean that agencies will go out of business or
substitute care of Medicare beneficiaries from other payers or sources
of funds. It does mean that there would be changes in behavior to
recoup some of the financial effects that would otherwise occur with
the policy, such as an increase in users serving particularly low
users, or reducing the intensity of care in marginal cases, or reducing
services that should not be covered by Medicare. For the purposes of
this impact analysis, it is our judgement that a 50 percent offset for
the per-visit limitations and a 66 percent offset for the per-
beneficiary limitations is reasonable. To the extent that actual
expenditures differ from projections, after adjusting for other factors
affecting expenditure growth, we will review the offsets used for
future impact analysis.
Comment: Using HCFA's own analysis it is clear that agencies will
either have to go out of business or subsidize care of Medicare
beneficiaries from other payers or sources of funds. Layoffs of staff
and closures of HHAs will have a direct impact on access to care that
HCFA did not address.
Response: We did not address the impact on access to care due to
agency closures because we were not expecting this to be a necessary
reaction to the limitations as stated in the above response. We are
currently receiving many new applications from agencies wanting to
become Medicare certified. If there are any closures as a result of
this payment system, it is expected other new agencies or agency
expansions will offset these closures.
Comment: HCFA mentions that 15 percent of the Medicare savings are
attributable to payments to managed care plans in FY 1998 and 20
percent in FY 1999. It is unclear what this means. Are home health
services to managed care enrollees included in projected expenditures?
Does HCFA expect managed care organizations to reduce home health
services even though it is far below fee-for-service utilization?
Response: The impact notice mentions that some of the savings from
this system are attributable to payments to managed care plans.
Payments to Medicare managed care plans are based on fee-for-service
Medicare benefits. If we expect to pay less to home health agencies on
a fee-for-service basis, then the managed care rates will decrease.
Managed care payments, in total, are included as part of our cost
projections. Since payments to managed care plans are based on fee-for-
service use, there is no need to project managed care payments by type.
Since the B.B.A. '97 is directed toward changes in fee-for-service,
managed care plans are not expected to reduce home health services as a
result of this notice.
Comment: The impact section did not address the impact on per-visit
costs of reducing the average number of visits provided per patient. It
would seem logical that agencies' per-visit costs would increase as the
average reimbursed cost per patient decreases. This impact on per-visit
costs will drive agency per-visit costs higher which will result in a
greater proportion of agencies exceeding the per-visit cost limitations
than HCFA anticipates in its analysis.
Response: We believe that this system was implemented, in part,
because the number of visits per beneficiary had been increasing at
double-digit growth rate until 1996. However, the cost per-visit was
not increasing at a similar level. The impact of these limitations was
not expected to reduce the cost per-visit significantly.
Comment: The impact analysis is incomplete for two reasons. First,
the Regulatory Flexibility Act is insufficient since it does not
consider alternative interpretations of the HHA Interim Payment System
provision. Second, section 202 of the Unfunded Mandates Reform Act
requires its own assessment of costs and benefits.
[[Page 42920]]
Response: The HHA Interim Payment System provision, generally
section 4602 of the Balanced Budget Act of 1997, is narrowly
constructed such that it does not provide for exceptions or
consideration of options that reduce the burden on small entities. We
did not prepare a separate assessment of costs and benefits for
purposes of Section 202 of the Unfunded Mandates Reform Act because we
believe that this regulation did not meet the threshold requirement of
an annual expenditure by State, local, or tribal governments, in the
aggregate, or by private sector, of $100 million (adjusted annually for
inflation).
Comment: HCFA describes 1,158 new providers on the database as
those with December 1994 or December 1995 FY ends. These agencies may
not be representative of all new agencies and thus the database may be
limited in its use as a measure of the impact on new agencies.
Response: In order to meet the statutory dates for establishing the
limitation, we had a very limited time in which to collect data, but
obtained the most recent data available to assess the impact on new
agencies. Because of how new providers are defined, we are limited by
our resources in identifying all types of new providers. We believe
that the data base was sufficient to conduct a valid impact analysis.
Comment: We see no justification for the additional two percent
reduction to the per-beneficiary limitation for new agencies when
determining a specific agency's per-beneficiary limitation as shown on
page 15726 of the notice.
Response: The national per-beneficiary calculations at 63 FR 15726
should not be multiplied by 98 percent. The two percent reduction to
the per-beneficiary limitations has already been taken into account in
the calculations of the national per-beneficiary limitation. The
examples of the national per-beneficiary calculations at 63 FR 15726
should be $3,279.26 for the Dallas MSA and $2,679.89 for rural Texas.
We apologize for any inconveniences this may have caused.
Comment: The example of two merged agencies at 63 FR 15721 does not
explain the new November 1, 1997 beginning cost reporting period. The
date does not match either the agencies' previous cost reporting
periods or the merger date.
Response: The date in the example of the two merged agencies should
state that the weighted per-beneficiary limitation applies to the cost
reporting period which began December 1, 1997.
Comment: The counties listed for MSA region 8840--Washington, DC in
the March 31, 1998 Federal Register includes Charles County but those
in the January 2, 1998 Federal Register do not. Is Charles County,
Maryland in the Washington, DC region for the wage index for both the
per-beneficiary limitations and the per-visit limitations?
Response: Both Federal Registers at 63 FR 102 and 63 FR 15733 show
Charles, MD as part of the Washington, DC MSA.
Comment: Step 2 of the example at 63 FR 15725 depicts a divisor of
seven instead of six. Shouldn't the divisor be six?
Response: Yes, the divisor at step 2 of the example at 63 FR 15725
should be six.
Comment: HCFA should have made the database available when the
notice was published and should do so for all future cost limit or
payment rate notices. The database should be available for the full
comment period.
Response: We made every attempt to make the data available shortly
after the notice was published. Due to the limited time available after
finalizing the limits, we were unable to post the data to the Internet
until one month after the notice was published. We believe this allowed
sufficient time for analysis.
Comment: HCFA should make provider numbers and other requested data
available immediately.
Response: We believe it is not necessary to identify individual
providers in order to calculate the per-beneficiary limitations and
therefore did not include this information in our data base on the
public use file.
Comment: HCFA should provide a detailed explanation of how the
database was constructed. The discussion should include the method for
choosing agencies to include/exclude, the editing and verification
process, and an explanation of how denied claims were matched to
claims-based unduplicated census counts.
Response: We believe the calculations were explained fully in the
notice. Because the statute is very explicit about how the per-
beneficiary limitations are determined, we believe the explanations
provided in the notice are adequate.
Comment: All outlying areas, such as Guam, Puerto Rico, and the
Virgin Islands, should be combined into one category for purposes of
calculating the census division components.
Response: The statute did not refer specifically to Guam, Puerto
Rico, or the Virgin Islands in establishing per-beneficiary
limitations. These areas do not fall within any of the existing census
region divisions which are required by statute in establishing the
regional per-beneficiary limitations. In order to avoid advantaging or
disadvantaging any of the census division regions, we treated these
areas as separate areas in establishing the regional per-beneficiary
limitations. Puerto Rico and the Virgin Islands were combined as one
area and Guam as a separate area. We note that the wage indices for the
Virgin Islands and Guam were inadvertently omitted from the notice. The
wage index for the Virgin Islands is .4588 and the wage index for Guam
is .6516.
Comment: The standardization of the census division average per-
beneficiary costs by the appropriate wage indices should only be
applied to the labor-related component of the per-beneficiary rates.
Response: The standardization of the per-beneficiary limitations
was applied to the labor-related component of the average costs per
beneficiary. This adjustment methodology is explained on page 15723 of
the notice with respect to how the adjusted unduplicated census counts
of Medicare beneficiaries are used in the calculation of the per-
beneficiary limitations. We applied the labor-related component
percentage before calculating the wage-index weighted unduplicated
beneficiary counts.
Comment: Unless HCFA can provide a reasonable explanation for
including nonroutine supplies in the costs that were standardized by
the wage index, the cost of nonroutine supplies should have been
excluded from the standardization of these costs.
Response: When doing the standardization of the per-beneficiary
limitations, we do not separate out each individual component of costs
to determine the labor and nonlabor components. The labor-related and
nonlabor percentages are determined with respect to all costs incurred
by an HHA, and are applied to total costs accordingly.
Comment: HCFA should explain the reasons for not computing urban
and rural costs separately and weighting by patient rather than agency.
Response: The statute does not provide for establishing urban and
rural per-beneficiary limitations. Since the wage-index is applied
based on the location of the services rendered to the beneficiaries,
the standardization was done through a weighting of the beneficiaries
rather than the location of the HHA.
Comment: HCFA should ensure that HHAs are reimbursed for additional
costs associated with new regulatory requirements, such as OASIS costs.
Response: The statute requires the per-beneficiary limitations to
be based
[[Page 42921]]
upon the costs incurred during a particular base year, the Federal FY
1994, and does not contemplate adjustments due to costs incurred
subsequent to the base year.
Comment: We received numerous comments concerning the definition of
new providers under the IPS. In particular, there are concerns over the
application of national per-beneficiary limitations when there are
mergers and consolidations of unlike agencies, i.e. provider-based and
freestanding or agencies without a FY ending during Federal year 1994
with agencies with a FY ending during Federal FY 1994. Various
scenarios were written in with respect to whether HCFA would find if
such scenarios constituted a merger or consolidation which took place
since Federal FY 1994. It was recommended that HCFA limit new provider
status to those agencies without a 12-month cost reporting ending
during Federal FY 1994 and providers that did not exist at the time of
passage of the B.B.A. '97.
Response: We do not believe the policies set forth in the Federal
Register were unreasonable with respect to new provider status under
the interim payment system. The policies are not intended to redefine
or impose new policies regarding HCFA's long standing policies
regarding mergers and consolidations. With respect to provider-based
agencies or freestanding agencies, we have always made a distinction
between the two types of providers. In May 1998 we issued a Program
Memorandum (Transmittal No. A-98-15) which clarified our policies
regarding provider-based and freestanding designation. In that
memorandum we state that the main purpose of provider or facility-based
designation is to accommodate the appropriate accounting and allocation
of costs where there is more than one type of provider activity taking
place within the same facility/organization. This cost allocation and
cost reimbursement more often than not results in Medicare program
payments that exceed what would have been paid for if the same services
were rendered by a free-standing entity.
Even though we believe our policies as stated in the March 31, 1998
Federal Register with respect to what is a ``clause vi'' agency are
reasonable, we have reevaluated our position based on comments and are
revising our interpretation as to what constitutes a new provider by
adding an alternative reading. In determining whether an agency is a
new or old provider, we will consider whether the agency's provider
number existed with a 12-month cost reporting period ending during
Federal FY 1994. In such a case, that agency can be considered an old
provider/clause v provider regardless of any changes that took place in
subsequent years. However, those agencies that did not have a 12-month
cost reporting period ending during Federal FY 1994 and those agencies
that were certified under Medicare with provider numbers that did not
exist with a 12-month cost reporting period ending during Federal FY
1994 will continue to be considered new providers/clause vi providers.
For greater detail on new providers, see section V.C. ``New
Providers.''
V. Update of the Per-Beneficiary Limitations
The methodologies and data used to develop the schedule of per-
beneficiary limitations set forth in this notice are the same as that
used in setting the per-beneficiary limitations that were effective for
cost reporting periods beginning on or after October 1, 1997. We have
updated the per-beneficiary limitations to reflect the expected cost
increases occurring between the cost reporting periods ended during
Federal FY 1994 and September 30, 1999, 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. Therefore, we
excluded this time period when we adjusted the database for the market
basket increases.
A. Data Used
The cost report data used to develop the schedule of per-
beneficiary limitations set forth in this notice are for cost reporting
periods ending in Federal FY 1994, as required by section 1861(v)(1)(L)
of the Act. 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, 1999
(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 system 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 labor component of the national
per-beneficiary limitation at the end of the cost reporting period
beginning on or after October 1, 1998, and is based on where the home
health services are rendered.
B. Wage Index
A wage index is used to adjust the labor-related portion of the
standardized regional average per-beneficiary limitation and the
national per-beneficiary limitation to reflect differing wage levels
among areas. In establishing the regional average per-beneficiary
limitation and national 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 schedules of standardized
regional average per-beneficiary limitations and the national per-
beneficiary limitation reflects the MSA definitions that are currently
in effect under the hospital prospective payment system.
As we did for the per-visit limitations, 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
[[Page 42922]]
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 and the national per-
beneficiary limitation. 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) 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 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. The wage-index, as applied to the labor portion of the
regional per-beneficiary limitation and the labor portion of the
national per-beneficiary limitation, must be based on the geographic
location in which the home health service is actually furnished.
C. New Providers
Section III. C. at 63 FR 15721 through 15722 provides the policy
with respect to the determination of whether an agency is a new agency
or an old agency for applying the per-beneficiary limitations.
Considering the number of comments and inquiries we have received
concerning the policies set forth in this section, particularly with
respect to what a ``clause vi'' provider is under the IPS, we have
reevaluated our position on this issue and are modifying some of the
policies.
In considering this policy we recognize there are many changes an
HHA may undergo including changes due to mergers, consolidations, and
changes in ownership. Regardless of what constitutes the change there
will be a surviving entity resulting from the change and the status of
the surviving entity will dictate how the agency will be treated under
the per-beneficiary limitations. We believe that providers fall within
the following groupings: (a) An HHA with an existing provider number
with a provider agreement with HCFA, (b) an HHA accepts assignment of
the provider agreement and provider number which had a FY 1994 base
year through a change in ownership after the FY 1994 base year, or, (c)
an HHA has gone through the certification process since the FY 1994
base period as a new provider and has a new provider number assigned
after the applicable FY 1994 base year. Under (a) or (b), if the
provider number existed as an HHA with a 12-month cost reporting period
ending during Federal FY 1994, that 12-month cost reporting period will
be the cost reporting period for calculating the agency-specific
component of the per-beneficiary limitation and considered an old
provider with an agency-specific per-beneficiary limitation. Under (c),
the agency will be a new provider and subject to the national per-
beneficiary limitation.
We are permitting providers that would be determined to be new
providers under the policies set forth in the March 31, 1998 final
notice, to elect to be considered an old provider under the policies
set forth above. Furthermore, providers that were determined to be new
providers under the March 31, 1998 policies may likewise choose to
continue to be considered new providers. These choices must be made and
conveyed to the agency's fiscal intermediary by October 1, 1998. We
note these designations of provider status is solely for purposes of
determining the per-beneficiary limitation. However, those providers
that elect to continue to be new providers pursuant to the March 31,
1998 final notice are subject to that continued new provider status for
so long as there are no changes after their October 1, 1998 election
that would affect their elected new provider option.
Our policy addressing HHA branches that become subunits set forth
at 63 FR 15722 is not affected by the change addressed above.
VI. 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
------------------------------------------------------------------------
------------------------------------------------------------------------
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, including 9.569 ......................
allocated Contract Services' Non-
labor.
Telephone...................... 0.725 CPI-U Telephone.
Paper & Printing............... 0.529 CPI-U Household Paper,
Paper Products &
Stationary Supplies.
Postage........................ 0.724 CPI-U Postage.
Other Administrative & General, 7.591 CPI-Services.
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 Owner's
Equivalent.
Movable Capital................ 0.880 PPI Machinery &
Equipment.
Other Expenses, including allocated 5.322 CPI-U All Items Less
Contract Services' Non-Labor. Food & Energy.
-------------
Total........................ 100.000 ......................
------------------------------------------------------------------------
[[Page 42923]]
VII. Update of Data Base
The data used to develop the cost per-visit limitations, the census
region per-beneficiary limitations and the national per-beneficiary
limitation were 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, 1999,
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 per-visit, the census region per-beneficiary limitations, and
national per-beneficiary limitations:
Table 2.--Factors for Inflating Database Dollars to September 30,1999
[Inflation Adjustment Factors \1\]
----------------------------------------------------------------------------------------------------------------
FY end 1993 1994 1995 1996 1997
----------------------------------------------------------------------------------------------------------------
October 31..................................... 1.11846 1.08387 1.08361 1.08169 1.05773
November 30.................................... 1.11568 1.08773 1.08361 1.08073 1.05507
December 31.................................... 1.11291 1.08650 1.08361 1.07955 1.05241
January 31..................................... ........... 1.11015 1.08553 1.08361 1.07816
February 28.................................... ........... 1.10741 1.08483 1.08361 1.07656
March 31....................................... ........... 1.10475 1.08428 1.08361 1.07477
April 30....................................... ........... 1.10215 1.08387 1.08361 1.07279
May 31......................................... ........... 1.09963 1.08361 1.08361 1.07064
June 30........................................ ........... 1.09709 1.08361 1.08361 1.06820
July 31........................................ ........... 1.09480 1.08361 1.08342 1.06566
August 31...................................... ........... 1.09276 1.08361 1.08304 1.06303
September 30................................... ........... 1.09090 1.08361 1.08246 1.06039
----------------------------------------------------------------------------------------------------------------
\1\ Source: The Home Health Agency Price Index, produced by HCFA. The forecasts are from Standard and Poor's DRI
1st QTR 1998; @USSIM/TREND25YR0298@CISSIM/Control981 forecast exercise which has historical data through
1998:1.
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.
A. 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,
1998 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. The data used in calculating the limitations were
updated to September 30, 1999. Therefore, the cost limitations
published in this notice are for a 12-month cost reporting period
beginning October 1, 1998 and ending September 30, 1999. For 12-month
cost reporting periods beginning after October 1, 1998 and before
October 1, 1999, 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 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 of the cost reporting 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, an HHA that had a 1994 base
year changed its FY end from June 30 to December 31. Therefore, the HHA
had a short cost reporting period beginning on July 1, 1999 and ending
on December 31, 1999. The cost reporting period ending during Federal
FY 1994 would have been the cost reporting period ending on June 30,
1994. The limitations that apply to this short period must be adjusted
as follows:
Step 1--From Table 6, sum the index levels for the months of July
1999 through December 1999: 6.82716.
Step 2--Divide the results from Step 1 by the number of months in
short period:
6.827166=1.13787.
Step 3--From Table 6, sum the index levels for the months in the
common period of October 1998 through September 1999: 13.45836.
Step 4--Divide the results in Step 3 by the number of months in the
common period:
13.4583612=1.12153.
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-visit
and per-beneficiary limitations:
1.137871.12153=1.0145693.
Step 6--Apply the results from Step 5 to the published limitations.
For example:
a. Urban skilled nursing per-visit labor portion
$88.44 x 1.0145693=$89.73.
b. Urban skilled nursing per-visit nonlabor portion
$19.73 x .0145693=$20.02.
[[Page 42924]]
c. West South Central Census region division labor portion per-
beneficiary limitation
$4,588.26 x 1.0145693=$4,655.11.
d. West South Central Census region division nonlabor portion per-
beneficiary limitation
$1,319.27 x 1.0145693=$1,338.49.
Step 7. Also apply the results from Step 5 to the calculated
agency-specific per-beneficiary amount which has been updated to
September 30, 1999 using Table 2.
B. Adjustment Factor for Reporting Year Beginning After October 1, 1998
and Before October 1, 1999
If an HHA has a 12-month cost reporting period beginning on or
after November 1, 1998, the per-visit limitation and the adjusted
census region division per-beneficiary limitation and the agency-
specific per-beneficiary limitation or the adjusted national per-
beneficiary limitations are 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 will increase the
agency-specific per-beneficiary limitation to September 30, 1999. That
way when the limitations need to be further adjusted for the cost
reporting period, all elements of the limitation calculations can be
adjusted by the same factor. For example, if an HHA providing services
in the Dallas MSA only and has a cost reporting period beginning
January 1, 1999, its occupational therapy per-visit limitation and its
per-beneficiary limitation would be further adjusted as follows:
Computation of Revised Per-Visit for Occupational Therapy
------------------------------------------------------------------------
------------------------------------------------------------------------
Adjusted per-visit limitation........................... $123.05 \1\
Adjustment from Table 5................................. 1.00720
Revised per-visit limitation............................ $123.94
------------------------------------------------------------------------
\1\ Adjusted by appropriate wage index applicable to the Dallas MSA and
the budget neutrality adjustment factor of 1.03.
Computation of Revised Per-beneficiary Limitations for an HHA With a
1994 Base Period
------------------------------------------------------------------------
------------------------------------------------------------------------
Agency-specific component inflated through December 31,
1999:
$5400.00 x .98 x .75............................ $3,969.00
West south central division component adjusted by the
Dallas MSA wage index:
$5,771.26 x .98 x .25........................... 1,413.96
Blended per-beneficiary limitation for Dallas-MSA....... $5,382.96
Adjustment factor from Table 5.......................... 1.00720
Adjusted blended per-beneficiary limitation for Dallas
MSA.................................................... $5,521.72
------------------------------------------------------------------------
Computation of Revised Per-beneficiary Limitation for a New Provider in
the Dallas MSA
------------------------------------------------------------------------
------------------------------------------------------------------------
National per-beneficiary limitation for Dallas MSA...... $3,376.61 \1\
Adjustment factor from Table 5.......................... 1.00720
Adjusted national per-beneficiary limitation............ $3,400.92
------------------------------------------------------------------------
\1\ Published limitation reflects 98 percent factor.
VIII. Schedules of Per-visit and Per-beneficiary Limitations
The schedules of limitations set forth below apply to cost
reporting periods beginning on or after October 1, 1998. The
intermediaries will compute the adjusted 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 limitations for the area(s) where the HHA furnishes HHA
services to Medicare beneficiaries. Each HHA's aggregate limitations
cannot be determined prospectively, but depends on each HHA's Medicare
utilization (visits and unduplicated census count) 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, 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, 1999, 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,
1999.
The HHA costs that are subject to the per-visit limitations include
the cost of medical supplies routinely furnished in conjunction with
patient care. Durable medical equipment orthotic, prosthetic, and other
medical supplies directly identifiable as services to an individual
patient are excluded from the per-visit costs and are paid without
regard to the per-visit schedule of limitations. (See Chapter IV of the
Home Health Agency Manual (HCFA Pub. II).) The HHA costs that are
subject to the per-beneficiary limitations include the costs of medical
supplies routinely furnished and nonroutine medical supplies furnished
in conjunction with patient care. Durable medical equipment directly
identifiable as services to an individual
[[Page 42925]]
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 limitations for each
HHA according to the location where the services are furnished by the
HHA. Medicare payment is based on the lower of the HHA's total
allowable Medicare costs plus the allowable Medicare costs of
nonroutine medical supplies, the aggregate per-visit limitation plus
the allowable Medicare costs of nonroutine medical supplies, or the
aggregate per-beneficiary limitation. An example of how the aggregate
limitations are computed for an HHA providing HHA service to Medicare
beneficiaries in both Dallas, Texas and rural Texas are as follows:
Example: HHA X, an HHA located in Dallas, TX, has 11,500 skilled
nursing visits, 4,300 physical therapy visits, 8,900 home health aide
visits and an unduplicated census count of 400 Medicare beneficiaries
in the Dallas MSA and 5,000 skilled nursing visits, 2,300 physical
therapy visits, 4,300 home health aide visits and an unduplicated
census count of 200 Medicare beneficiaries in rural Texas during its
12-month cost reporting period ending September 30, 1999. The
unadjusted agency-specific per-beneficiary amount for the base period
(cost reporting period ending September 30, 1994) is $4,825.00. The
aggregate limitations are calculated as follows:
Determining the Aggregate Per-Beneficiary Limitation
----------------------------------------------------------------------------------------------------------------
Unduplicated
census count Total per
MSA/Non-MSA area Per beneficiary limitation of Medicare beneficiary
beneficiaries limitation
----------------------------------------------------------------------------------------------------------------
Dallas, TX.................................. (4,825.00 x 1.09090 x .98 x .75) 400 2,113,080
plus ((4,588.36 x .9703) plus
1,319.21)) x .98 x .25.
Rural, TX................................... (4,825.00 x 1.09090 x .98 x .75) 200 1,004,852
plus ((4,588.36 x .7404) plus
1,319.21)) x .98 x .25.
Aggregate Limitation........................ ...................................... ............. 3,117,932
----------------------------------------------------------------------------------------------------------------
Determining the Aggregate Per-Visit Limitation
------------------------------------------------------------------------
Number of Per-visit
Area/type of visit visits limit \1\ Total limit
------------------------------------------------------------------------
Dallas-MSA:......................
Skilled nursing.............. 11,550 108.12 1,248,786
Physical therapy............. 4,300 121.08 520,644
Home health aide............. 8,900 45.14 401,746
Rural Texas:
Skilled nursing.............. 5,000 77.37 386,850
Physical therapy............. 2,300 88.95 204.585
Home health aide............. 4,300 43.06 185,158
Aggregate limitation............. ........... ........... 2,947,769
------------------------------------------------------------------------
\1\ The per-visit has been adjusted by the appropriate wage-index and
the budget neutrality adjustment factor of 1.03.
For the cost reporting period ending September 30, 1999, the HHA
incurred $2,850,000 in Medicare costs for the discipline services and
$325,000 for the costs of Medicare nonroutine medical supplies.
Medicare reimbursement for this HHA would be $3,117,932, which is the
lesser of the actual costs of $2,850,000 plus the costs of nonroutine
medical supplies of $325,000 ($3,175,000) or the aggregate per-visit
limitation of $2,947,769 plus the costs of nonroutine medical supplies
of $325,000 ($3,272,769) or the aggregate per-beneficiary limitation of
$3,117,932.
Before the limitations are applied during settlement of the cost
report, the HHA's actual costs are reduced by the amount of individual
items of costs (for example, administrative compensation and contract
services) that are found to be excessive under the Medicare principles
of provider payment. That is, the intermediary reviews the various
reported costs, taking into account all the Medicare payment
principles, for example, the cost guidelines for physical therapy
furnished under arrangements (see 42 CFR 413.106) and the limitation on
costs that are substantially out of line with those of comparable HHAs
(see 42 CFR 413.9).
Table 3A.--Per-Visit Limitations
------------------------------------------------------------------------
Per-visit Labor Nonlabor
Type of Visit limitation portion portion \1\
------------------------------------------------------------------------
MSA(NECMA) location:
Skilled nursing care......... 108.17 $88.4 $19.73
Physical therapy............. $121.14 98.82 22.32
Speech therapy............... 126.52 103.01 23.51
Occupational therapy......... 123.10 99.81 23.29
Medical social services...... 167.78 136.78 31.00
Home health aide............. 45.16 36.88 8.28
NonMSA location:
Skilled nursing care......... 94.97 74.13 20.84
Physical therapy............. 107.26 83.56 23.70
Speech therapy............... 107.97 83.99 23.98
Occupational therapy......... 108.15 84.05 24.10
[[Page 42926]]
Medical social services...... 130.69 101.38 29.31
Home health aides............ 43.84 34.21 9.63
------------------------------------------------------------------------
\1\ Nonlabor portion of per-visit limitations for HHAs located in
Alaska, Hawaii, Puerto Rico, and the Virgin Islands are increased by
multiplying them by the following cost-of-living adjustment factors.
------------------------------------------------------------------------
Adjustment
Location factor
------------------------------------------------------------------------
Alaska..................................................... 1.150
Hawaii:
County of Hawaii....................................... 1.225
County of Hawaii....................................... 1.150
County of Kauai........................................ 1.200
County of Maui......................................... 1.2225
County of Kalawao...................................... 1.225
Puerto Rico................................................ 1.100
Virgin Islands............................................. 1.125
------------------------------------------------------------------------
Table 3b.--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).......... $2,749.52 $790.58
Middle Atlantic (NJ, NY, PA).................. 2,037.88 585.96
South Atlantic (DE, DC, FL, GA, MD, NC, SC,
VA, WV)...................................... 3,073.90 883.84
East North Central (IL, IN, MI, OH, WI)....... 2,492.70 716.73
East South Central (AL, KY, MS, TN)........... 4,726.25 1,358.95
West North Central (IA, KS, MN, MO, NE, ND,
SD).......................................... 2,394.14 688.39
West South Central (AR, LA, OK, TX)........... 4,588.26 1,319.27
Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)..... 3,023.85 869.45
Pacific (AK, CA, HI, OR, WA).................. 2,342.45 673.53
------------------------------------------------------------------------
Table 3c.--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.................................... $2,684.47 $771.87
------------------------------------------------------------------------
Table 3d.--Standardized Per-Beneficiary Limitations for Puerto Rico and
Guam
------------------------------------------------------------------------
Labor Nonlabor
component component
------------------------------------------------------------------------
Puerto Rico................................... $1,996.22 $573.97
Guam.......................................... 1,929.22 554.71
------------------------------------------------------------------------
IX. Wage Indexes
Table 4a.--Wage Index for Urban Areas
------------------------------------------------------------------------
Wage
Urban area (Constituent counties or county equivalents) index
------------------------------------------------------------------------
0040 Abilene, TX............................................. 0.8287
Taylor, TX
0060 Aguadilla, PR........................................... 0.4188
Aguada, PR
Aguadilla, PR
Moca, PR
0080 Akron, OH............................................... 0.9772
Portage, OH
Summit, OH
0120 Albany, GA.............................................. 0.7914
Dougherty, GA
Lee, GA
0160 Albany-Schenectady-Troy, NY............................. 0.8480
Albany, NY
Montgomery, NY
Rensselaer, NY
Saratoga, NY
Schenectady, NY
Schoharie, NY
0200 Albuquerque, NM......................................... 0.9309
Bernalillo, NM
Sandoval, NM
Valencia, NM
0220 Alexandria, LA.......................................... 0.8162
[[Page 42927]]
Rapides, LA
0240 Allentown-Bethlehem-Easton, PA.......................... 1.0086
Carbon, PA
Lehigh, PA
Northampton, PA
0280 Altoona, PA............................................. 0.9137
Blair, PA
0320 Amarillo, TX............................................ 0.9425
Potter, TX
Randall, TX
0380 Anchorage, AK........................................... 1.2842
Anchorage, AK
0440 Ann Arbor, MI........................................... 1.1785
Lenawee, MI
Livingston, MI
Washtenaw, MI
0450 Anniston, AL............................................ 0.8266
Calhoun, AL
0460 Appleton-Oshkosh-Neenah, WI............................. 0.8996
Calumet, WI
Outagamie, WI
Winnebago, WI
0470 Arecibo, PR............................................. 0.4218
Arecibo, PR
Camuy, PR
Hatillo, PR
0480 Asheville, NC........................................... 0.9072
Buncombe, NC
Madison, NC
0500 Athens, GA.............................................. 0.9087
Clarke, GA
Madison, GA
Oconee, GA
0520 Atlanta, GA............................................. 0.9823
Barrow, GA
Bartow, GA
Carroll, GA
Cherokee, GA
Clayton, GA
Cobb, GA
Coweta, GA
DeKalb, GA
Douglas, GA
Fayette, GA
Forsyth, GA
Fulton, GA
Gwinnett, GA
Henry, GA
Newton, GA
Paulding, GA
Pickens, GA
Rockdale, GA
Spalding, GA
Walton, GA
0560 Atlantic City-Cape May, NJ.............................. 1.1155
Atlantic City, NJ
Cape May, NJ
0600 Augusta-Aiken, GA-SC.................................... 0.9333
Columbia, GA
McDuffie, GA
Richmond, GA
Aiken, SC
Edgefield, SC
0640 Austin-San Marcos, TX................................... 0.9133
Bastrop, TX
Caldwell, TX
Hays, TX
Travis, TX
Williamson, TX
0680 Bakersfield, CA......................................... 1.0014
Kern, CA
0720 Baltimore, MD........................................... 0.9689
Anne Arundel, MD
Baltimore, MD
Baltimore City, MD
Carroll, MD
Harford, MD
Howard, MD
Queen Anne, MD
0733 Bangor, ME.............................................. 0.9478
Penobscot, ME
0743 Barnstable-Yarmouth, MA................................. 1.4291
Barnstable, MA
0760 Baton Rouge, LA......................................... 0.8382
Ascension, LA
East Baton Rouge, LA
Livingston, LA
West Baton Rouge, LA
0840 Beaumont-Port Arthur, TX................................ 0.8593
Hardin, TX
Jefferson, TX
Orange, TX
0860 Bellingham, WA.......................................... 1.1221
Whatcom, WA
0870 Benton Harbor, MI....................................... 0.8634
Berrien, MI
0875 Bergen-Passaic, NJ...................................... 1.2156
Bergen, NJ
Passaic, NJ
0880 Billings, MT............................................ 0.9783
Yellowstone, MT
0920 Biloxi-Gulfport-Pascagoula, MS.......................... 0.8415
Hancock, MS
Harrison, MS
Jackson, MS
0960 Binghamton, NY.......................................... 0.8914
Broome, NY
Tioga, NY
1000 Birmingham, AL.......................................... 0.9005
Blount, AL
Jefferson, AL
St. Clair, AL
Shelby, AL
1010 Bismarck, ND............................................ 0.7695
Burleigh, ND
Morton, ND
1020 Bloomington, IN......................................... 0.9128
Monroe, IN
1040 Bloomington-Normal, IL.................................. 0.8733
McLean, IL
1080 Boise City, ID.......................................... 0.8856
Ada, ID
Canyon, ID
1123 Boston-Worcester Lawrence-Lowell-Brockton, MA-NH........ 1.1506
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.................................... 1.0015
Boulder, CO
1145 Brazoria, TX............................................ 0.9341
Brazoria, TX
1150 Bremerton, WA........................................... 1.0999
Kitsap, WA
1240 Brownsville-Harlingen-San Benito, TX.................... 0.8740
Cameron, TX
1260 Bryan-College Station, TX............................... 0.8571
Brazos, TX
1280 Buffalo-Niagara Falls, NY............................... 0.9272
Erie, NY
Niagara, NY
1303 Burlington, VT.......................................... 1.0142
Chittenden, VT
Franklin, VT
Grand Isle, VT
1310 Caguas, PR.............................................. 0.4459
Caguas, PR
Cayey, PR
Cidra, PR
Gurabo, PR
San Lorenzo, PR
1320 Canton-Massillon, OH.................................... 0.8961
Carroll, OH
Stark, OH
1350 Casper, WY.............................................. 0.9013
Natrona, WY
1360 Cedar Rapids, IA........................................ 0.8529
Linn, IA
1400 Champaign-Urbana, IL.................................... 0.8824
Champaign, IL
1440 Charleston-North Charleston, SC......................... 0.8807
Berkeley, SC
Charleston, SC
Dorchester, SC
1450 Charleston, WV.......................................... 0.9142
Kanawha, WV
Putnam, WV
1520 Charlotte-Gastonia-Rock Hill, NC-SC..................... 0.9710
Cabarrus, NC
Gaston, NC
Lincoln, NC
Mecklenburg, NC
Rowan, NC
Union, NC
York, SC
1540 Charlottesville, VA..................................... 0.9051
Albemarle, VA
Charlottesville City, VA
Fluvanna, VA
Greene, VA
1560 Chattanooga, TN-GA...................................... 0.8658
Catoosa, GA
Dade, GA
Walker, GA
Hamilton, TN
Marion, TN
1580 Cheyenne, WY............................................ 0.7555
Laramie, WY
1600 Chicago, IL............................................. 1.0860
Cook, IL
DeKalb, IL
DuPage, IL
Grundy, IL
[[Page 42928]]
Kane, IL
Kendall, IL
Lake, IL
McHenry, IL
Will, IL
1620 Chico-Paradise, CA...................................... 1.0429
Butte, CA
1640 Cincinnati, OH-KY-IN.................................... 0.9474
Dearborn, IN
Ohio, IN
Boone, KY
Campbell, KY
Gallatin, KY
Grant, KY
Kenton, KY
Pendleton, KY
Brown, OH
Clermont, OH
Hamilton, OH
Warren, OH
1660 Clarksville-Hopkinsville, TN-KY......................... 0.7852
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.................................... 0.9316
El Paso, CO
1740 Columbia, MO............................................ 0.9001
Boone, MO
1760 Columbia, SC............................................ 0.9192
Lexington, SC
Richland, SC
1800 Columbus, GA-AL......................................... 0.8288
Russell, AL
Chattanoochee, GA
Harris, GA
Muscogee, GA
1840 Columbus, OH............................................ 0.9793
Delaware, OH
Fairfield, OH
Franklin, OH
Licking, OH
Madison, OH
Pickaway, OH
1880 Corpus Christi, TX...................................... 0.8945
Nueces, TX
San Patricio, TX
1900 Cumberland, MD-WV....................................... 0.8822
Allegany, MD
Mineral, WV
1920 Dallas, TX.............................................. 0.9703
Collin, TX
Dallas, TX
Denton, TX
Ellis, TX
Henderson, TX
Hunt, TX
Kaufman, TX
Rockwall, TX
1950 Danville, VA............................................ 0.8146
Danville City, VA
Pittsylvania, VA
1960 Davenport-Rock Island-Moline, IA-IL..................... 0.8405
Scott, IA
Henry, IL
Rock Island, IL
2000 Dayton-Springfield, OH.................................. 0.9584
Clark, OH
Greene, OH
Miami, OH
Montgomery, OH
2020 Daytona Beach, FL....................................... 0.8375
Flagler, FL
Volusia, FL
2030 Decatur, AL............................................. 0.8286
Lawrence, AL
Morgan, AL
2040 Decatur, IL............................................. 0.7915
Macon, IL
2080 Denver, CO.............................................. 1.0386
Adams, CO
Arapahoe, CO
Denver, CO
Douglas, CO
Jefferson, CO
2120 Des Moines, IA.......................................... 0.8837
Dallas, IA
Polk, IA
Warren, IA
2160 Detroit, MI............................................. 1.0825
Lapeer, MI
Macomb, MI
Monroe, MI
Oakland, MI
St. Clair, MI
Wayne, MI
2180 Dothan, AL.............................................. 0.8070
Dale, AL
Houston, AL
2190 Dover, DE............................................... 0.9303
Kent, DE
2200 Dubuque, IA............................................. 0.8088
Dubuque, IA
2240 Duluth-Superior, MN-WI.................................. 0.9779
St. Louis, MN
Douglas, WI
2281 Dutchess County, NY..................................... 1.0632
Dutchess, NY
2290 Eau Claire, WI.......................................... 0.8764
Chippewa, WI
Eau Claire, WI
2320 El Paso, TX............................................. 1.0123
El Paso, TX
2330 Elkhart-Goshen, IN...................................... 0.9081
Elkhart, IN
2335 Elmira, NY.............................................. 0.8247
Chemung, NY
2340 Enid, OK................................................ 0.7962
Garfield, OK
2360 Erie, PA................................................ 0.8862
Erie, PA
2400 Eugene-Springfield, OR.................................. 1.1435
Lane, OR
2440 Evansville-Henderson, IN-KY............................. 0.8641
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY
2520 Fargo-Moorhead, ND-MN................................... 0.8837
Clay, MN
Cass, ND
2560 Fayetteville, NC........................................ 0.8734
Cumberland, NC
2580 Fayetteville-Springdale-Rogers, AR...................... 0.7461
Benton, AR
Washington, AR
2620 Flagstaff, AZ-UT........................................ 0.9115
Coconino, AZ
Kane, UT
2640 Flint, MI............................................... 1.1171
Genesee, MI
2650 Florence, AL............................................ 0.7551
Colbert, AL
Lauderdale, AL
2655 Florence, SC............................................ 0.8711
Florence, SC
2670 Fort Collins-Loveland, CO............................... 1.0248
Larimer, CO
2680 Ft. Lauderdale, FL...................................... 1.0448
Broward, FL
2700 Fort Myers-Cape Coral, FL............................... 0.8788
Lee, FL
2710 Fort Pierce-Port St. Lucie, FL.......................... 1.0257
Martin, FL
St. Lucie, FL
2720 Fort Smith, AR-OK....................................... 0.7769
Crawford, AR
Sebastian, AR
Sequoyah, OK
2750 Fort Walton Beach, FL................................... 0.8765
Okaloosa, FL
2760 Fort Wayne, IN.......................................... 0.8901
Adams, IN
Allen, IN
DeKalb, IN
Huntington, IN
Wells, IN
Whitley, IN
2800 Forth Worth-Arlington, TX............................... 0.9979
Hood, TX
Johnson, TX
Parker, TX
Tarrant, TX
2840 Fresno, CA.............................................. 1.0607
Fresno, CA
Madera, CA
2880 Gadsden, AL............................................. 0.8815
Etowah, AL
2900 Gainesville, FL......................................... 0.9616
Alachua, FL
2920 Galveston-Texas City, TX................................ 1.0564
Galveston, TX
2960 Gary, IN................................................ 0.9633
Lake, IN
Porter, IN
2975 Glens Falls, NY......................................... 0.8386
Warren, NY
Washington, NY
2980 Goldsboro, NC........................................... 0.8443
Wayne, NC
2985 Grand Forks, ND-MN...................................... 0.8745
Polk, MN
Grand Forks, ND
2995 Grand Junction, CO...................................... 0.9090
Mesa, CO
3000 Grand Rapids-Muskegon-Holland, MI....................... 1.0147
Allegan, MI
[[Page 42929]]
Kent, MI
Muskegon, MI
Ottawa, MI
3040 Great Falls, MT......................................... 0.8803
Cascade, MT
3060 Greeley, CO............................................. 1.0097
Weld, CO
3080 Green Bay, WI........................................... 0.9097
Brown, WI
3120 Greensboro-Winston-Salem-High Point, NC................. 0.9351
Alamance, NC
Davidson, NC
Davie, NC
Forsyth, NC
Guilford, NC
Randolph, NC
Stokes, NC
Yadkin, NC
3150 Greenville, NC.......................................... 0.9064
Pitt, NC
3160 Greenville-Spartanburg-Anderson, SC..................... 0.9059
Anderson, SC
Cherokee, SC
Greenville, SC
Pickens, SC
Spartanburg, SC
3180 Hagerstown, MD.......................................... 0.9681
Washington, MD
3200 Hamilton-Middletown, OH................................. 0.8767
Butler, OH
3240 Harrisburg-Lebanon-Carlisle, PA......................... 1.0187
Cumberland, PA
Dauphin, PA
Lebanon, PA
Perry, PA
3283 Hartford, CT............................................ 1.2562
Hartford, CT
Litchfield, CT
Middlesex, CT
Tolland, CT
3285 Hattiesburg, MS......................................... 0.7192
Forrest, MS
Lamar, MS
3290 Hickory-Morganton-Lenoir, NC............................ 0.8686
Alexander, NC
Burke, NC
Caldwell, NC
Catawba, NC
3320 Honolulu, HI............................................ 1.1816
Honolulu, HI
3350 Houma, LA............................................... 0.7854
Lafourche, LA
Terrebonne, LA
3360 Houston, TX............................................. 0.9855
Chambers, TX
Fort Bend, TX
Harris, TX
Liberty, TX
Montgomery, TX
Waller, TX
3400 Huntington-Ashland, WV-KY-OH............................ 0.9160
Boyd, KY
Carter, KY
Greenup, KY
Lawrence, OH
Cabell, WV
Wayne, WV
3440 Huntsville, AL.......................................... 0.8485
Limestone, AL
Madison, AL
3480 Indianapolis, IN........................................ 0.9848
Boone, IN
Hamilton, IN
Hancock, IN
Hendricks, IN
Johnson, IN
Madison, IN
Marion, IN
Morgan, IN
Shelby, IN
3500 Iowa City, IA........................................... 0.9413
Johnson, IA
3520 Jackson, MI............................................. 0.9052
Jackson, MI
3560 Jackson, MS............................................. 0.7760
Hinds, MS
Madison, MS
Rankin, MS
3580 Jackson, TN............................................. 0.8522
Madison, TN
Chester, TN
3600 Jacksonville, FL........................................ 0.8969
Clay, FL
Duval, FL
Nassau, FL
St. Johns, FL
3605 Jacksonville, NC........................................ 0.6973
Onslow, NC
3610 Jamestown, NY........................................... 0.7552
Chautaqua, NY
3620 Janesville-Beloit, WI................................... 0.8824
Rock, WI
3640 Jersey City, NJ......................................... 1.1412
Hudson, NJ
3660 Johnson City-Kingsport-Bristol, TN-VA................... 0.9114
Carter, TN
Hawkins, TN
Sullivan, TN
Unicoi, TN
Washington, TN
Bristol City, VA
Scott, VA
Washington, VA
3680 Johnstown, PA........................................... 0.8378
Cambria, PA
Somerset, PA
3700 Jonesboro, AR........................................... 0.7443
Craighead, AR
3710 Joplin, MO.............................................. 0.7510
Jasper, MO
Newton, MO
3720 Kalamazoo-Battlecreek, MI............................... 1.0668
Calhoun, MI
Kalamazoo, MI
Van Buren, MI
3740 Kankakee, IL............................................ 0.8653
Kankakee, IL
3760 Kansas City, KS-MO...................................... 0.9564
Johnson, KS
Leavenworth, KS
Miami, KS
Wyandotte, KS
Cass, MO
Clay, MO
Clinton, MO
Jackson, MO
Lafayette, MO
Platte, MO
Ray, MO
3800 Kenosha, WI............................................. 0.9196
Kenosha, WI
3810 Killeen-Temple, TX...................................... 1.0252
Bell, TX
Coryell, TX
3840 Knoxville, TN........................................... 0.8831
Anderson, TN
Blount, TN
Knox, TN
Loudon, TN
Sevier, TN
Union, TN
3850 Kokomo, IN.............................................. 0.8416
Howard, IN
Tipton, IN
3870 La Crosse, WI-MN........................................ 0.8749
Houston, MN
La Crosse, WI
3880 Lafayette, LA........................................... 0.8206
Acadia, LA
Lafayette, LA
St. Landry, LA
St. Martin, LA
3920 Lafayette, IN........................................... 0.9174
Clinton, IN
Tippecanoe, IN
3960 Lake Charles, LA........................................ 0.7776
Calcasieu, LA
3980 Lakeland-Winter Haven, FL............................... 0.8806
Polk, FL
4000 Lancaster, PA........................................... 0.9481
Lancaster, PA
4040 Lansing-East Lansing, MI................................ 1.0088
Clinton, MI
Eaton, MI
Ingham, MI
4080 Laredo, TX.............................................. 0.7325
Webb, TX
4100 Las Cruces, NM.......................................... 0.8646
Dona Ana, NM
4120 Las Vegas, NV-AZ........................................ 1.0592
Mohave, AZ
Clark, NV
Nye, NV
4150 Lawrence, KS............................................ 0.8608
Douglas, KS
4200 Lawton, OK.............................................. 0.9045
Comanche, OK
4243 Lewiston-Auburn, ME..................................... 0.9536
Androscoggin, ME
4280 Lexington, KY........................................... 0.8390
Bourbon, KY
Clark, KY
Fayette, KY
Jessamine, KY
Madison, KY
Scott, KY
Woodford, KY
4320 Lima, OH................................................ 0.9185
Allen, OH
Auglaize, OH
4360 Lincoln, NE............................................. 0.9231
[[Page 42930]]
Lancaster, NE
4400 Little Rock-North Little Rock, AR....................... 0.8490
Faulkner, AR
Lonoke, AR
Pulaski, AR
Saline, AR
4420 Longview-Marshall, TX................................... 0.8613
Gregg, TX
Harrison, TX
Upshur, TX
4480 Los Angeles-Long Beach, CA.............................. 1.2232
Los Angeles, CA
4520 Louisville, KY-IN....................................... 0.9507
Clark, IN
Floyd, IN
Harrison, IN
Scott, IN
Bullitt, KY
Jefferson, KY
Oldham, KY
4600 Lubbock, TX............................................. 0.8400
Lubbock, TX
4640 Lynchburg, VA........................................... 0.8228
Amherst, VA
Bedford, VA
Bedford City, VA
Campbell, VA
Lynchburg City, VA
4680 Macon, GA............................................... 0.9227
Bibb, GA
Houston, GA
Jones, GA
Peach, GA
Twiggs, GA
4720 Madison, WI............................................. 1.0055
Dane, WI
4800 Mansfield, OH........................................... 0.8639
Crawford, OH
Richland, OH
4840 Mayaguez, PR............................................ 0.4475
Anasco, PR
Cabo 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...................................... 1.0354
Jackson, OR
4900 Melbourne-Titusville-Palm Bay, FL....................... 0.8819
Brevard, Fl
4920 Memphis, TN-AR-MS....................................... 0.8589
Crittenden, AR
DeSoto, MS
Fayette, TN
Shelby, TN
Tipton, TN
4940 Merced, CA.............................................. 1.0947
Merced, CA
5000 Miami, FL............................................... 0.9859
Dade, FL
5015 Middlesex-Somerset-Hunterdon, NJ........................ 1.1059
Hunterdon, NJ
Middlesex, NJ
Somerset, NJ
5080 Milwaukee-Waukesha, WI.................................. 0.9819
Milwaukee, WI
Ozaukee, WI
Washington, WI
Waukesha, WI
5120 Minneapolis-St. Paul, MN-WI............................. 1.0733
Anoka, MN
Carver, MN
Chisago, MN
Dakota, MN
Hennepin, MN
Isanti, MN
Ramsey, MN
Scott, MN
Sherburne, MN
Washington, MN
Wright, MN
Pierce, WI
St. Croix, WI
5160 Mobile, AL.............................................. 0.8455
Baldwin, AL
Mobile, AL
5170 Modesto, CA............................................. 1.0794
Stanislaus, CA
5190 Monmouth-Ocean, NJ...................................... 1.0934
Monmouth, NJ
Ocean, NJ
5200 Monroe, LA.............................................. 0.8414
Ouachita, LA
5240 Montgomery, AL.......................................... 0.7671
Autauga, AL
Elmore, AL
Montgomery, AL
5280 Muncie, IN.............................................. 0.9173
Delaware, IN
5330 Myrtle Beach, SC........................................ 0.8072
Horry, SC
5345 Naples, FL.............................................. 1.0109
Collier, FL
5360 Nashville, TN........................................... 0.9182
Cheatham, TN
Davidson, TN
Dickson, TN
Robertson, TN
Rutherford TN
Sumner, TN
Williamson, TN
Wilson, TN
5380 Nassau-Suffolk, NY...................................... 1.3807
Nassau, NY
Suffolk, NY
5483 New Haven-Bridgeport-Stamford-Danbury-Waterbury, CT..... 1.2618
Fairfield, CT
New Haven, CT
5523 New London-Norwich, CT.................................. 1.2013
New London, CT
5560 New Orleans, LA......................................... 0.9566
Jefferson, LA
Orleans, LA
Plaquemines, LA
St. Bernard, LA
St. Charles, LA
St. James, LA
St. John Baptist, LA
St. Tammany, LA
5600 New York, NY............................................ 1.4449
Bronx, NY
Kings, NY
New York, NY
Putnam, NY
Queens, NY
Richmond, NY
Rockland, NY
Westchester, NY
5640 Newark, NJ.............................................. 1.1980
Essex, NJ
Morris, NJ
Sussex, NJ
Union, NJ
Warren, NJ
5660 Newburgh, NY-PA......................................... 1.1283
Orange, NY
Pike, PA
5720 Norfolk-Virginia Beach-Newport News, VA-NC.............. 0.8316
Currituck, NC
Chesapeake City, VA
Gloucester, VA
Hampton City, VA
Isle of Wight, VA
James City, VA
Mathews, VA
Newport News City, VA
Norfolk City, VA
Poquoson City, VA
Portsmouth City, VA
Suffolk City, VA
Virginia Beach City, VA
Williamsburg City, VA
York, VA
5775 Oakland, CA............................................. 1.5068
Alameda, CA
Contra Costa, CA
5790 Ocala, FL.............................................. 0.9032
Marion, FL
5800 Odessa-Midland, TX...................................... 0.8660
Ector, TX
Midland, TX
5880 Oklahoma City, OK....................................... 0.8481
Canadian, OK
Cleveland, OK
Logan, OK
McClain, OK
Oklahoma, OK
Pottawatomie, OK
5910 Olympia, WA............................................. 1.0901
Thurston, WA
5920 Omaha, NE-IA............................................ 0.9421
Pottawattamie, IA
Cass, NE
Douglas, NE
Sarpy, NE
Washington, NE
5945 Orange County, CA....................................... 1.1605
Orange, CA
5960 Orlando, FL............................................. 0.9397
Lake, FL
Orange, FL
Osceola, FL
Seminole, FL
5990 Owensboro, KY........................................... 0.7480
Daviess, KY
6015 Panama City, FL......................................... 0.8337
[[Page 42931]]
Bay, FL
6020 Parkersburg-Marietta, WV-OH............................. 0.8046
Washington, OH
Wood, WV
6080 Pensacola, FL........................................... 0.8193
Escambia, FL
Santa Rosa, FL
6120 Peoria-Pekin, IL........................................ 0.8571
Peoria, IL
Tazewell, IL
Woodford, IL
6160 Philadelphia, PA-NJ..................................... 1.1398
Burlington, NJ
Camden, NJ
Gloucester, NJ
Salem, NJ
Bucks, PA
Chester, PA
Delaware, PA
Montgomery, PA
Philadelphia, PA
6200 Phoenix-Mesa, AZ........................................ 0.9606
Maricopa, AZ
Pinal, AZ
6240 Pine Bluff, AR.......................................... 0.7826
Jefferson, AR
6280 Pittsburgh, PA.......................................... 0.9725
Allegheny, PA
Beaver, PA
Butler, PA
Fayette, PA
Washington, PA
Westmoreland, PA
6323 Pittsfield, MA......................................... 1.0960
Berkshire, MA
6340 Pocatello, ID........................................... 0.9586
Bannock ID
6360 Ponce, PR............................................... 0.4589
Guayanilla, PR
Juana Diaz, PR
Penuelas, PR
Ponce, PR
Villalba, PR
Yauco, PR
6403 Portland, ME............................................ 0.9627
Cumberland, ME
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.......................................... 1.0073
Utah, UT
6560 Pueblo, CO.............................................. 0.8450
Pueblo, CO
6580 Punta Gorda, FL......................................... 0.8725
Charlotte, FL
6600 Racine, WI.............................................. 0.8934
Racine, WI
6640 Raleigh-Durham-Chapel Hill, NC.......................... 0.9818
Chatham, NC
Durham, NC
Franklin, NC
Johnston, NC
Orange, NC
Wake, NC
6660 Rapid City, SD.......................................... 0.8345
Pennington, SD
6680 Reading, PA............................................. 0.9516
Berks, PA
6690 Redding, CA............................................. 1.1790
Shasta, CA
6720 Reno, NV................................................ 1.0768
Washoe, NV
6740 Richland-Kennewick-Pasco, WA............................ 0.9918
Benton, WA
Franklin, WA
6760 Richmond-Petersburg, VA................................. 0.9152
Charles City County, VA
Chesterfield, VA
Colonial Heights City, VA
Dinwiddie, VA
Goochland, VA
Hanover, VA
Henrico, VA
Hopewell City, VA
New Kent, VA
Petersburg City, VA
Powhatan, VA
Prince George, VA
Richmond City, VA
6780 Riverside-San Bernardino, CA............................ 1.1307
Riverside, CA
San Bernardino, CA
6800 Roanoke, VA............................................. 0.8402
Botetourt, VA
Roanoke, VA
Roanoke City, VA
Salem City, VA
6820 Rochester, MN........................................... 1.0502
Olmsted, MN
6840 Rochester, NY........................................... 0.9524
Genesee, NY
Livingston, NY
Monroe, NY
Ontario, NY
Orleans, NY
Wayne, NY
6880 Rockford, IL............................................ 0.9081
Boone, IL
Ogle, IL
Winnebago, IL
6895 Rocky Mount, NC......................................... 0.9029
Edgecombe, NC
Nash, NC
6920 Sacramento, CA.......................................... 1.2202
El Dorado, CA
Placer, CA
Sacramento, CA
6960 Saginaw-Bay City-Midland, MI............................ 0.9564
Bay, MI
Midland, MI
Saginaw, MI
6980 St. Cloud, MN........................................... 0.9544
Benton, MN
Stearns, MN
7000 St. Joseph, MO.......................................... 0.8366
Andrews, MO
Buchanan, MO
7040 St. Louis, MO-IL........................................ 0.9130
Clinton, IL
Jersey, IL
Madison, IL
Monroe, IL
St. Clair, IL
Franklin, MO
Jefferson, MO
Lincoln, MO
St. Charles, MO
St. Louis, MO
St. Louis City, MO
Warren, MO
7080 Salem, OR............................................... 0.9935
Marion, OR
Polk, OR
7120 Salinas, CA............................................. 1.4513
Monterey, CA
7160 Salt Lake City-Ogden, UT................................ 0.9857
Davis, UT
Salt Lake, UT
Weber, UT
7200 San Angelo, TX.......................................... 0.7780
Tom Green, TX
7240 San Antonio, TX......................................... 0.8499
Bexar, TX
Comal, TX
Guadalupe, TX
Wilson, TX
7320 San Diego, CA........................................... 1.2193
San Diego, CA
7360 San Francisco, CA....................................... 1.4180
Marin, CA
San Francisco, CA
San Mateo, CA
7400 San Jose, CA............................................ 1.4332
Santa Clara, CA
7440 San Juan-Bayamon, PR.................................... 0.4625
Aguas Buenas, PR
Barceloneta, PR
Bayamon, PR
Canovanas, PR
Carolina, PR
Catano, PR
Ceiba, PR
Comerio, PR
Corozal, PR
Dorado, PR
Fajardo, PR
Florida, PR
Guaynabo, PR
Humacao, PR
Juncos, PR
Los Piedras, PR
Loiza, PR
Luguillo, PR
Manati, PR
Morovis, PR
Naguabo, PR
Naranjito, PR
[[Page 42932]]
Rio Grande, PR
San Juan, PR
Toa Alta, PR
Toa Baja, PR
Trujillo Alto, PR
Vega Alta, PR
Vega Baja, PR
Yabucoa, PR
7460 San Luis Obispo-Atascadero-Paso Robles, CA.............. 1.1374
San Luis Obispo, CA
7480 Santa Barbara-Santa Maria-Lompoc, CA.................... 1.0688
Santa Barbara, CA
7485 Santa Cruz-Watsonville, CA.............................. 1.4187
Santa Cruz, CA
7490 Santa Fe, NM............................................ 1.0332
Los Alamos, NM
Santa Fe, NM
7500 Santa Rosa, CA.......................................... 1.2815
Sonoma, CA
7510 Sarasota-Bradenton, FL.................................. 0.9757
Manatee, FL
Sarasota, FL
7520 Savannah, GA............................................ 0.8638
Bryan, GA
Chatham, GA
Effingham, GA
7560 Scranton--Wilkes-Barre--Hazleton, PA.................... 0.8539
Columbia, PA
Lackawanna, PA
Luzerne, PA
Wyoming, PA
7600 Seattle-Bellevue-Everett, WA............................ 1.1339
Island, WA
King, WA
Snohomish, WA
7610 Sharon, PA.............................................. 0.8783
Mercer, PA
7620 Sheboygan, WI........................................... 0.7862
Sheboygan, WI
7640 Sherman-Denison, TX..................................... 0.8499
Grayson, TX
7680 Shreveport-Bossier City, LA............................. 0.9381
Bossier, LA
Caddo, LA
Webster, LA
7720 Sioux City, IA-NE....................................... 0.8031
Woodbury, IA
Dakota, NE
17760 Sioux Falls, SD........................................ 0.8712
Lincoln, SD
Minnehaha, SD
7800 South Bend, IN.......................................... 0.9868
St. Joseph, IN
7840 Spokane, WA............................................. 1.0486
Spokane, WA
7880 Springfield, IL......................................... 0.8713
Menard, IL
Sangamon, IL
7920 Springfield, MO......................................... 0.7989
Christian, MO
Greene, MO
Webster, MO
8003 Springfield, MA......................................... 1.0740
Hampden, MA
Hampshire, MA
8050 State College, PA....................................... 0.9635
Centre, PA
8080 Steubenville-Weirton, OH-WV............................. 0.8645
Jefferson, OH
Brooke, WV
Hancock, WV
8120 Stockton-Lodi, CA....................................... 1.1496
San Joaquin, CA
8140 Sumter, SC.............................................. 0.7842
Sumter, SC
8160 Syracuse, NY............................................ 0.9464
Cayuga, NY
Madison, NY
Onondaga, NY
Oswego, NY
8200 Tacoma, WA.............................................. 1.1016
Pierce, WA
8240 Tallahassee, FL......................................... 0.8832
Gadsden, FL
Leon, FL
8280 Tampa-St. Petersburg-Clearwater, FL..................... 0.9103
Hernando, FL
Hillsborough, FL
Pasco, FL
Pinellas, FL
8320 Terre Haute, IN......................................... 0.8614
Clay, IN
Vermillion, IN
Vigo, IN
8360 Texarkana, AR-Texarkana, TX............................. 0.8664
Miller, AR
Bowie, TX
8400 Toledo, OH.............................................. 1.0390
Fulton, OH
Lucas, OH
Wood, OH
8440 Topeka, KS.............................................. 0.9438
Shawnee, KS
8480 Trenton, NJ............................................. 1.0380
Mercer, NJ
8520 Tucson, AZ.............................................. 0.9180
Pima, AZ
8560 Tulsa, OK............................................... 0.8074
Creek, OK
Osage, OK
Rogers, OK
Tulsa, OK
Wagoner, OK
8600 Tuscaloosa, AL.......................................... 0.8187
Tuscaloosa, AL
8640 Tyler, TX............................................... 0.9567
Smith, TX
8680 Utica-Rome, NY.......................................... 0.8398
Herkimer, NY
Oneida, NY
8720 Vallejo-Fairfield-Napa, CA.............................. 1.3754
Napa, CA
Solano, CA
8735 Ventura, CA............................................. 1.0946
Ventura, CA
8750 Victoria, TX............................................ 0.8474
Victoria, TX
8760 Vineland-Millville-Bridgeton, NJ........................ 1.0110
Cumberland, NJ
8780 Visalia-Tulare-Porterville, CA.......................... 0.9924
Tulare, CA
8800 Waco, TX................................................ 0.7696
McLennan, TX
8840 Washington, DC-MD-VA-WV................................. 1.0911
District of Columbia, DC
Calvert, MD
Charles, MD
Frederick, MD
Montgomery, MD
Prince Georges, MD
Alexandria City, VA
Arlington, VA
Clarke, VA
Culpepper, VA
Fairfax, VA
Fairfax City, VA
Falls Church City, VA
Fauquier, VA
Fredericksburg City, VA
King George, VA
Loudoun, VA
Manassas City, VA
Manassas Park City, VA
Prince William, VA
Spotsylvania, VA
Stafford, VA
Warren, VA
Berkeley, WV
Jefferson, WV
8920 Waterloo-Cedar Falls, IA................................ 0.8640
Black Hawk, IA
8940 Wausau, WI.............................................. 1.0545
Marathon, WI
8960 West Palm Beach-Boca Raton, FL.......................... 1.0372
Palm Beach, FL
9000 Wheeling, OH-WV......................................... 0.7707
Belmont, OH
Marshall, WV
Ohio, WV
9040 Wichita, KS............................................. 0.9403
Butler, KS
Harvey, KS
Sedgwick, KS
9080 Wichita Falls, TX....................................... 0.7646
Archer, TX
Wichita, TX
9140 Williamsport, PA........................................ 0.8548
Lycoming, PA
9160 Wilmington-Newark, DE-MD................................ 1.1538
New Castle, DE
Cecil, MD
9200 Wilmington, NC.......................................... 0.9322
New Hanover, NC
Brunswick, NC
9260 Yakima, WA.............................................. 1.0102
Yakima, WA
9270 Yolo, CA................................................ 1.1431
Yolo, CA
9280 York, PA................................................ 0.9415
York, PA
9320 Youngstown-Warren, OH................................... 0.9937
Columbiana, OH
Mahoning, OH
Trumbull, OH
9340 Yuba City, CA........................................... 1.0324
[[Page 42933]]
Sutter, CA
Yuba, CA
9360 Yuma, AZ................................................ 0.9732
Yuma, AZ
------------------------------------------------------------------------
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
Guam......................................................... 0.6516
Virgin Islands............................................... 0.4588
------------------------------------------------------------------------
\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, 1998............................................ 1.00239
December 1, 1998............................................ 1.00478
January 1, 1999............................................. 1.00720
February 1, 1999............................................ 1.00964
March 1, 1999............................................... 1.01210
April 1, 1999............................................... 1.01456
May 1, 1999................................................. 1.01702
June 1, 1999................................................ 1.01948
July 1, 1999................................................ 1.02197
August 1, 1999.............................................. 1.02448
September 1, 1999........................................... 1.02701
------------------------------------------------------------------------
\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
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.................................................... 1.06370
July 1997.................................................... 1.06717
August 1997.................................................. 1.07065
September 1997............................................... 1.07317
October 1997................................................. 1.07569
November 1997................................................ 1.07822
December 1997................................................ 1.08074
January 1998................................................. 1.08327
February 1998................................................ 1.08580
March 1998................................................... 1.08769
April 1998................................................... 1.08958
May 1998..................................................... 1.09148
June 1998.................................................... 1.09494
July 1998.................................................... 1.09841
August 1998.................................................. 1.10189
September 1998............................................... 1.10441
October 1998................................................. 1.10693
November 1998................................................ 1.10946
December 1998................................................ 1.11230
January 1999................................................. 1.11514
February 1999................................................ 1.11798
March 1999................................................... 1.12019
April 1999................................................... 1.12240
May 1999..................................................... 1.12461
June 1999.................................................... 1.12776
July 1999.................................................... 1.13091
August 1999.................................................. 1.13408
September 1999............................................... 1.13660
October 1999................................................. 1.13912
November 1999................................................ 1.14165
December 1999................................................ 1.14480
January 2000................................................. 1.14795
February 2000................................................ 1.15112
March 2000................................................... 1.15332
April 2000................................................... 1.15553
May 2000..................................................... 1.15774
June 2000.................................................... 1.16120
July 2000.................................................... 1.16467
August 2000.................................................. 1.16816
September 2000............................................... 1.17099
October 2000................................................. 1.17383
------------------------------------------------------------------------
X. Regulatory Impact Statement
A. Introduction
HCFA has examined the impacts of this notice with comment as
required by Executive Order 12866, the Regulatory Flexibility Act (RFA)
(Pub. L. 96-354), and the Unfunded Mandates Reform Act
[[Page 42934]]
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. We anticipate this notice, in total,
will have a significant impact on a substantial number of small
entities based on the estimates shown below. We have examined the
options for lessening the burden on small entities, however, the
statute does not allow for any exceptions to these limitations based on
size of entity. Therefore, there are no options to lessen the
regulatory burden that are consistent with the statute.
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
there are no costs associated with this notice with comment that apply
to these governmental and private sectors. Therefore, the law does not
apply.
1. Effect of This Notice
This notice is a part of the HHA IPS. As a result of rebasing the
per-visit limitations, we estimate that there will be a cost to the
Medicare program of approximately $70 million in Federal FY 1999. We
estimate that the effect of the offset adjustment for the
implementation of OASIS data collection, as discussed in section III.G.
will result in negligible costs to the Medicare program. We note that
this estimate differs from that published in the Paperwork Reduction
Act section of the March 10, 1997 proposed rule on OASIS collection
requirements (62 FR 11035). This is due to several factors. Unlike the
OASIS proposed rule which calculated impacts based on total HHA costs
on an agency basis, the offset adjustment factor in this notice is
necessarily calculated on a per-visit, Medicare basis. Moreover, we
have based these estimates on actual data collected from the home
health PPS demonstration rather than using the general estimates of the
proposed OASIS rule. We believe using actual data which was not
available at the time the OASIS proposed rule was written produces a
more accurate estimate of cost impact.
We should also note, however, that the adjustment only incorporates
the incremental costs of data collection and not any incremental costs,
if any, which may be incurred for OASIS reporting because no reliable
cost data were available at this time. We are specifically requesting
comments on these costs. Also, we cannot determine the number of
providers affected by our revised new provider policy and therefore
cannot determine what the financial impact, if any, will be.
2. Effect on March 31, 1998 Final Rule With Comment Period
As stated in the March 31, 1998 final rule with comment period (63
FR 15718) for Federal FY 1999, we estimate that the imposition of the
per-beneficiary limitations will result in savings of $2.14 billion.
However, the changes imposed through this notice to the per-visit
limitations will result in savings of $670 million instead of $740
million as stated in the March 31, 1998 final rule with comment period
(63 FR 15718). This is the result of rebasing the per-visit
limitations. The total savings from both limitations for Federal FY
1999 will be $2.81 billion rather than $2.88 billion as stated in the
March 31, 1998 rule.
This notice with comment is not a major rule as defined in Title 5,
United States Code, section 804(2) and is not an economically
significant rule under Executive Order 12866. However, we are preparing
a regulatory impact statement because this notice with comment is an
integral part of the HHA IPS.
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 notice with
comment, constitutes a combined regulatory impact analysis and
regulatory flexibility analysis.
B. Explanation of Per-Visit Limitations
Section 1861(v)(1)(L)(i) of the Act specifies that the per-visit
limitations not exceed 105 percent of the median of the labor-related
and nonlabor per-visit costs for freestanding HHAs. The reasonable
costs used in the per-visit calculations will be updated by the home
health market basket excluding any change 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.
The methodology used to develop the schedule of per-visit
limitations in this notice with comment is the same as that used in
setting the limitations effective October 1, 1997. We are using the
latest settled cost report data (as described in Section III. Update of
Per-Visit Limitations) from freestanding HHAs to develop the per-visit
limitations.
C. Explanation of Per-Beneficiary Limitations
Section 1861(v)(1)(L) requires the per-beneficiary 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 FFY 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 FFY 1994, standardized by the
hospital wage index. The reasonable costs used in the per-beneficiary
limitation calculations in one and two 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 by multiplied by the
agency's unduplicated census count of beneficiaries (entitled to
benefits under Medicare) to calculate the HHA's 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 FFY 1994, the per-beneficiary limitation will be a
national per-beneficiary limitation which 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.
The methodologies and data used to develop the schedule of per-
beneficiary limitations set forth in this notice are the same as that
used in setting the per-beneficiary limitations that were effective for
cost reporting periods beginning on or after October 1, 1997. We have
updated the per-beneficiary
[[Page 42935]]
limitations to reflect the expected cost increases occurring between
the cost reporting periods ended during FFY 1994 and September 30,
1999, 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. Therefore, we excluded this time period when
we adjusted the database for the market basket increases.
Payments by Medicare under this 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.
D. Effect on Home Health Agencies
This notice with comment period sets forth revised schedules 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, 1998. These limitations replace the limitations that were
set forth in our January 2, 1998 notice with comment period, per-visit
limitations, (63 FR 89) and our March 31, 1998 final rule with comment
period, per-beneficiary limitations, (63 FR 15718).
The following quantitative analysis presents the projected effects
of the statutory changes effective for FFY 1999. This notice with
comment period is necessary to implement the provisions of section
1861(v)(1)(L) of the Act, as amended by B.B.A. `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, 1999.
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 revision in the schedule of the
per-visit and per-beneficiary limitations. The total number of HHAs in
this table, 6,414, is based on HHA cost reports with a FFY 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
B.B.A. `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 for the per-beneficiary limitations and a 50 percent
reduction for the per-visit limitations.
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 per-visit limitation and therefore,
not be affected by the per-beneficiary limitation, before the
behavioral offsets are taken into account. Column four shows the
average percent of costs over the per-visit limitation for an agency in
that cell, including behavioral offsets. Column five shows the percent
of HHAs within a group that are projected to exceed the per-beneficiary
limitation and therefore, not be affected by the per-visit limitation,
before the behavioral offsets are taken into account. Column six shows
the average percent of costs over the per-beneficiary limitation for an
agency in that category, including behavioral offsets. It is important
to note that in determining the expected percentage of an agency's
costs exceeding the cost limitations, column four (percent of costs
exceeding visit limits) and column six (percent of costs exceeding
beneficiary limits) are not to be added together. Either the per-visit
limitation or the per-beneficiary limitation is exceeded, but not both.
Impact of the IPS HHA Limits, Effective 10/1/98
----------------------------------------------------------------------------------------------------------------
Percent of Percent of Percent of Percent of
agencies costs agencies costs
Number of exceeding exceeding exceeding exceeding
agencies visit visit beneficiary beneficiary
limits limits limits limits
----------------------------------------------------------------------------------------------------------------
BY: GEOGRAPHIC AREA:
ALL AGENCIES............................... 6414 29.8 4.1 60.2 9.8
FREESTANDING........................... 4308 23.9 3.9 67.5 11.2
HOSPITAL BASED......................... 2106 42.1 4.5 45.4 6.5
OLD AGENCIES........................... 5256 25.7 2.2 62.7 9.4
FREESTANDING....................... 3245 15.8 1.0 73.4 11.0
HOSPITAL BASED..................... 2011 41.7 4.5 45.4 6.4
NEW AGENCIES........................... 1158 48.6 19.5 49.3 12.6
FREESTANDING....................... 1063 48.5 20.4 49.6 12.8
HOSPITAL BASED..................... 95 49.5 5.3 46.3 9.2
ALL URBAN.................................. 4137 29.1 4.1 63.7 10.0
FREESTANDING........................... 3111 23.6 3.8 69.3 11.3
HOSPITAL BASED......................... 1026 46.0 5.0 46.5 6.6
OLD AGENCIES........................... 3272 24.4 2.2 67.1 9.7
FREESTANDING....................... 2292 15.2 1.0 75.9 11.1
HOSPITAL BASED..................... 980 45.8 4.9 46.4 6.6
NEW AGENCIES........................... 865 47.2 19.0 50.9
12.3.......................................
FREESTANDING....................... 819 47.0 19.7 51.0 12.5
HOSPITAL BASED..................... 46 50.0 6.1 47.8 8.8
ALL RURAL.................................. 2277 31.1 3.9 54.0 9.1
[[Page 42936]]
FREESTANDING........................... 1197 24.6 4.3 62.7 11.0
HOSPITAL BASED......................... 1080 38.3 3.3 44.4 6.1
OLD AGENCIES........................... 1984 27.9 1.9 55.4 8.5
FREESTANDING....................... 953 17.2 0.9 67.4 10.5
HOSPITAL BASED..................... 1031 37.8 3.3 44.3 6.0
NEW AGENCIES........................... 293 52.9 21.1 44.7 13.8
FREESTANDING....................... 244 53.7 22.7 44.7 14.1
HOSPITAL BASED..................... 49 49.0 3.6 44.9 10.1
BY: REGION:
OLD AGENCIES............................... 5256 25.7 2.2 62.7 9.4
NEW ENGLAND............................ 291 5.5 0.3 83.8 12.8
MIDDLE ATLANTIC........................ 443 19.4 1.8 72.2 9.0
SOUTH ATLANTIC......................... 739 24.1 1.7 65.4 9.9
EAST NORTH CENTRAL..................... 866 21.6 1.6 68.6 10.3
EAST SOUTH CENTRAL..................... 431 23.0 1.6 58.9 9.2
WEST NORTH CENTRAL..................... 728 26.6 2.4 58.2 9.7
WEST SOUTH CENTRAL..................... 936 30.1 3.1 56.3 8.6
MOUNTAIN............................... 354 37.0 3.4 50.0 7.4
PACIFIC................................ 428 39.3 4.9 56.8 7.3
NEW AGENCIES............................... 1158 48.6 19.5 49.3 12.6
NEW ENGLAND............................ 44 4.5 0.0 93.2 17.0
MIDDLE ATLANTIC........................ 51 49.0 21.9 47.1 5.1
SOUTH ATLANTIC......................... 44 56.8 25.5 43.2 7.3
EAST NORTH CENTRAL..................... 151 74.2 36.1 25.2 4.4
EAST SOUTH CENTRAL..................... 25 44.0 18.7 56.0 14.7
WEST NORTH CENTRAL..................... 117 65.8 17.9 29.1 9.9
WEST SOUTH CENTRAL..................... 484 39.3 16.4 59.9 16.5
MOUNTAIN............................... 103 45.6 22.0 49.5 8.8
PACIFIC................................ 138 52.9 19.8 43.5 10.1
----------------------------------------------------------------------------------------------------------------
E.1. Percent of Costs Exceeding Per Visit Limitations (Column Four)
Results from this column indicate that, for an HHA that reaches the
per-visit limitation first, the average percent of costs exceeding the
per-visit limitation for an HHA in the ``all agencies'' category is 4.1
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. All discussion of the analysis of the
per-visit limitation is based on the fact that HHAs in these categories
reached the per-visit limitation and therefore are not affected by the
per-beneficiary limitation.
For the old agencies category, (HHAs that filed a 12-month cost
report that ended during FFY 1994), the average percent of costs
exceeding the per-visit limitation is 2.2 percent. For the new agencies
category, (such as HHAs that did not have a 12-month cost reporting
period ended in FFY 1994 or that entered the Medicare program after FFY
1994), the average percent of costs exceeding the per-visit limitation
is 19.5 percent. Old agencies will not be affected as much by the per-
visit limitation the new agencies, on average, because the new agencies
have, in general, reported higher per-visit costs.
For the urban areas HHA category, the average percent of costs
exceeding the per-visit limitation is 4.1 percent, while the rural
areas HHA category is 3.9 percent. For the old agency census division
categories the average percent of costs exceeding the per-visit
limitation ranges from a low of 0.3 percent in the New England census
region to a high of 4.9 percent in the Pacific census region. The other
census regions fall between 1.6 percent and 3.4 percent.
For the new agency census region categories the average percent of
costs exceeding the per-visit limitation ranges from a low of 0.0
percent in the New England census region to a high of 36.1 percent in
the East North Central census region. The other census regions fall
between 16.4 percent and 25.5 percent.
E.2. Percent of Costs Exceeding Per-Beneficiary Limitation (Column Six)
Results from this column indicate that, for an HHA that reaches the
per-beneficiary limitation first, the average percent of costs
exceeding the per-beneficiary limitation for an HHA in the ``all
agencies'' category is 9.8 percent after the behavioral offset. All
discussion of the analysis of the per-beneficiary limitation is based
on the fact that HHAs in these categories reached the per-beneficiary
limitation and therefore are not affected by the per-visit limitation.
For the old agencies category, (HHAs that filed a 12-month cost
report that ended during FFY 1994), the average percent of costs
exceeding the per-beneficiary limitation is 9.4 percent. For the new
agencies category, (including 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 per-visit limitation is 12.6 percent. Old agencies will not be
affected as much by the per-beneficiary limitations as the new
agencies, on average, because the new agenices have, in general,
reported higher costs related to higher levels of utilization.
Moreover, the statutory provision for old providers which bases 75
percent of the limitation on their own cost experience would implicitly
result in less of an impact than experienced by the new providers whose
limitations are based on a national median. Also, we believe the
[[Page 42937]]
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.
For the urban areas HHA category, the average percent of costs
exceeding the per-visit limitation is 10.0 percent, while the rural
areas HHA category is 9.1 percent. For the old agency census division
categories the average percent of costs exceeding the per-beneficiary
limitation ranges from a low of 7.3 percent in the Pacific census
region to a high of 12.8 percent in the New England census region. The
other census regions fall between 7.4 percent and 10.3 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 more related to patterns of HHA practices.
For the new agency census region categories the average percent of
costs exceeding the per-beneficiary limitation ranges from a low of 4.4
percent in the East North Central census region to a high of 17.0
percent in the New England census region. The other census regions fall
between 5.1 percent and 16.5 percent. In general, newer agencies in
census regions that have exceptionally high cost histories are more
impacted due to their being limited to the national median.
Although there is considerable variation in these limitations, we
believe this is a 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 limitations is an
inherent result of beginning to draw unexplained variation among
providers closer to 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 per-beneficiary limitation, we
have estimated the combined impact of these limitations.
We estimate that in FFY 1999 and 2000, 30 percent of the HHAs will
be limited by the per-visit limitation while 60 percent will be limited
to the per-beneficiary limitation. It is important to note again that
an HHA is affected either by the per-visit limitation or the per-
beneficiary. They will not be affected by both.
Medicare payments to managed care plans are based on fee-for-
service Medicare benefits. Although we do not know what home health
services are supplied for these payments, we know how much we pay the
plans as a result of fee-for-service home health payments. Thus,
managed care payments are figured in as part of our cost/savings
estimates. Managed care plans are not expected to reduce home health
services as a result of this notice. For Federal FY 1999, we estimate
that 20 percent of the Medicare cost will be for payments to managed
care plans, our estimate for Federal FY 2000 is 26 percent.
We believe that the effect of this notice on State Medicaid
programs overall will be small. However, because of the flexibility and
variation in State Medicaid policies and service delivery systems as
well as differences in provider behavior in reaction to these limits,
it is impossible to predict which States will be affected or the
magnitude of the impact.
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. This
document does not impose information collection and recordkeeping
requirements. Consequently, it need not be reviewed by the Office of
Management and Budget under the authority of the Paperwork Reduction
Act of 1995.
XI. Other Required Information
A. Waiver of Proposed Notice
In adopting notices such as this, we ordinarily publish a proposed
notice in the Federal Register to provide a period for public comment
before the provisions of the notice take effect. However, we may waive
this procedure if for good cause we find that prior notice and comment
are impracticable, unnecessary or contrary to public interest. 5 U.S.C
553(b)(B).
Section 1861(v)(1)(L) of the Act requires that the Secretary
establish revised HHA cost limits for cost reporting periods beginning
on or after July 1, 1991 and annually thereafter (except for cost
reporting periods beginning on or after July 1, 1994 and before July 1,
1996). In accordance with the statute, we have used the same
methodology to develop the schedules of limits that were used in
setting the limits effective for cost reporting periods beginning on or
after October 1, 1997. These cost limits have been updated by the
appropriate market basket adjustment factor to reflect the cost
increases occurring between the cost reporting periods for the data
contained in the database and September 30, 1999, 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. In
addition, as required under section 1861(v)(1)(L) of the Act, we have
used the most recently published hospital wage index.
Therefore, for good cause we find that it was unnecessary to
undertake notice and comment procedures. Generally, the methodology
used to develop these schedules of limits is dictated by statute and
does not require the exercise of discretion. These methodologies have
also been previously published for public comment. It was also
necessary to inform HHAs of their new cost limitations in a timely
manner such that HHAs could benefit from the most recently published
wage index and updated market basket adjustment factor.
We also find that it was impracticable to provide notice and
comment procedures before publishing this notice. The per-beneficiary
limitations were published on March 31, 1998 with a 60-day comment
period. To fully respond to the comments and establish the limitation
by August 1, 1998, it was impracticable to publish a proposed notice.
Accordingly, for good cause, we waive prior notice and comment
procedures. However, we are providing a 60-day comment period for
public comment, as indicated at the beginning of this notice.
B. Public Comments
Because of the large number of items of correspondence we normally
receive on a notice 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 notice that we receive by the date
and time specified in the Dates section of this notice, and we will
respond to those comments in a subsequent document.
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)).
(Catalog of Federal Domestic Assistance Program No. 93.773
Medicare--Hospital Insurance)
[[Page 42938]]
Dated: July 28, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
Dated: July 30, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-20878 Filed 7-31-98; 3:03 pm]
BILLING CODE 4120-01-P