[Federal Register Volume 64, Number 146 (Friday, July 30, 1999)]
[Notices]
[Pages 41684-41701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19479]



  Federal Register / Vol. 64, No. 146 / Friday, July 30, 1999 / 
Notices  

[[Page 41684]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HCFA-1056-N]
RIN 0938-AJ65


Medicare Program; Prospective Payment System and Consolidated 
Billing for Skilled Nursing Facilities--Update

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

ACTION: Notice.

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

SUMMARY: This notice sets forth the updates required in section 1888(e) 
of the Social Security Act (the Act), as added by section 4432 of the 
Balanced Budget Act of 1997, related to Medicare payments and 
consolidated billing for skilled nursing facilities.

EFFECTIVE DATE: This notice is effective October 1, 1999. This notice 
is a major rule as defined in Title 5, United States Code, section 
804(2). Pursuant to 5 U.S.C. section 801(a)(1)(A), we are submitting a 
report to the Congress on this notice on July 30, 1999.

FOR FURTHER INFORMATION CONTACT:
Dana Burley, (410) 786-4547 (for information related to the case-mix 
classification methodology).
John Davis, (410) 786-0008 (for information related to the Federal 
Rates).
Jackie Gordon, (410) 786-4517 (for information related to consolidated 
billing).
Steve Raitzyk, (410) 786-4599 (for information related to the facility-
specific transition rates).
Bill Ullman, (410) 786-5667 (for information related to coverage and 
level-of-care determinations).
Laurence Wilson, (410) 786-4603 (for general information).

SUPPLEMENTARY INFORMATION:

I. Background

A. Current System for Payment of Skilled Nursing Facility Services 
Under Part A of the Medicare Program

    Section 4432 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-
33) mandated the implementation of a per diem prospective payment 
system (PPS) for skilled nursing facilities (SNFs), covering all costs 
(routine, ancillary, and capital) of covered SNF services furnished to 
beneficiaries under Part A of the Medicare program effective for cost 
reporting periods beginning on or after July 1, 1998. Major elements of 
the system include:
    Rates: Per diem Federal rates were established for urban and rural 
areas using allowable costs from FY 1995 cost reports. These rates also 
included an estimate of the cost of services that before July 1, 1998, 
had been paid under Part B, but furnished to SNF residents during a 
Part A covered stay. Rates are case-mix adjusted using a resident 
classification system (Resource Utilization Groups, version III (RUG-
III)) based on resident assessments (using the Minimum Data Set (MDS) 
2.0). In addition, the Federal rates are adjusted by the hospital wage 
index to account for geographic variation in wages. Finally, the rates 
will be adjusted annually using an SNF market basket index.
     Transition: The SNF PPS includes a 3-year transition that 
blends a facility-specific payment rate with the Federal case-mix 
adjusted rate. The blend that is used changes each cost reporting 
period after a facility migrates to the new system. For most 
facilities, the facility-specific rate is based on allowable costs from 
FY 1995.
     Coverage: The PPS statute did not change Medicare's 
fundamental requirements for SNF coverage. However, because RUG-III 
classification is based, in part, on the resident's need for skilled 
nursing care and therapy, we have attempted where possible to 
coordinate claims review procedures with the outputs of resident 
assessment and RUG-III classifying activities. For example, we believe 
that an initial Medicare-required (5-day) assessment, properly 
completed, that places the resident in one of the upper 26 RUG-III 
classifications provides the basis for us to assume that the resident 
needed a covered level of SNF care upon admission and at least up until 
the assessment reference date for the initial Medicare-required 
assessment. We will, however, continue to make individual review 
determinations for claims of individuals who classify in the lower 18 
RUG-III categories.
     Consolidated Billing: The statute includes a billing 
provision that requires an SNF to submit consolidated Medicare bills 
for its residents for virtually all services that are covered under 
either Part A or Part B. The statute excludes a small list of services 
(primarily those of physicians and certain other types of 
practitioners). A related statutory provision requires SNFs to use HCFA 
Common Procedure Coding System (HCPCS) coding on all Part B bills, and 
specifies that they are to be paid an amount determined in accordance 
with the otherwise applicable Part B fee schedule for the particular 
item or service.
     Effective Date: The PPS is effective for cost reporting 
periods beginning on or after July 1, 1998. The law provides that the 
consolidated billing and coding requirements are effective for services 
and items furnished on or after July 1, 1998.
    An interim final rule implementing the SNF PPS was published in the 
Federal Register on May 12, 1998 (63 FR 26252) and the comment period 
was initially scheduled to close on July 13, 1998. A follow-up notice 
(63 FR 37498, July 13, 1998) extended the public comment period for an 
additional 60 days, and a second notice (63 FR 65561, November 27, 
1998) reopened the comment period for another 30 days. In addition, a 
correction notice was published (63 FR 53301, October 5, 1998) that 
made a number of minor technical and editorial corrections to the 
interim final rule. We also published a final rule found elsewhere in 
this Federal Register document that addressed comments on the May 12, 
1998 interim final rule. We have also issued several Program 
Memorandums on claims processing and billing under the SNF PPS that are 
available on the SNF PPS home page at the HCFA website on the Internet, 
at the following location: <www.hcfa.gov/medicare/snfpps.htm>

B. Requirements of the Balanced Budget Act of 1997 for Updating the 
Prospective Payment System for Skilled Nursing Facilities

    As described above, section 1888(e)(4)(H) of the Act requires that 
we publish in the Federal Register:
    1. The unadjusted Federal per diem rates to be applied to days of 
covered SNF services furnished during the fiscal year.
    2. The case-mix classification system to be applied with respect to 
these services during the fiscal year.
    3. The factors to be applied in making the area wage adjustment 
with respect to these services. In addition, in the interim final rule 
(May 12, 1998, 63 FR 26252), we indicated that we would announce any 
changes to the Medicare coverage guidelines or the RUG-III 
classifications.
    This notice updates the rates as mandated by the Social Security 
Act (the Act).

C. Skilled Nursing Facility Prospective Payment--General Overview

    As described above, the Medicare SNF PPS was implemented for cost 
reporting periods beginning on or after July 1, 1998. Under the PPS, 
SNFs are paid through per diem prospective case-mix adjusted payment 
rates applicable to all covered SNF services. These payment rates cover 
all the costs of

[[Page 41685]]

furnishing covered skilled nursing services (that is, routine, 
ancillary, and capital-related costs) other than costs associated with 
approved educational activities. Covered SNF services include 
posthospital SNF services for which benefits are provided under Part A 
and all items and services that, before July 1, 1998, had been paid 
under Part B (other than physician and certain other services 
specifically excluded under the BBA) but furnished to SNF residents 
during a Part A covered stay. (For a complete discussion of these 
provisions see the May 12, 1998 interim final rule (63 FR 26252).)
1. Payment Provisions--Federal Rate
    The statute sets forth a fairly prescriptive methodology for 
calculating the amount of payment under SNF PPS. The PPS utilizes per 
diem Federal payment rates based on mean SNF costs in a base year 
updated for inflation to the first effective period of the PPS. We 
developed the Federal payment rates using allowable costs from 
hospital-based and freestanding SNF cost reports for reporting periods 
beginning in fiscal year 1995. The data used in developing the Federal 
rates also incorporate an estimate of the amounts that would be payable 
under Part B for covered SNF services to individuals who were residents 
of a facility and receiving Part A covered services. In developing the 
rates for the initial period, we updated costs to the first effective 
year of PPS (15-month period beginning July 1, 1998) using a SNF market 
basket index, and standardized for facility differences in case-mix and 
for geographic variations in wages. Providers that received ``new 
provider'' exemptions from the routine cost limits were excluded from 
the database used to compute the Federal payment rates. In addition, 
costs related to payments for exceptions to the routine cost limits 
were excluded from the database used to compute the Federal rates. In 
accordance with the formula prescribed in the BBA, we set the Federal 
rates at a level equal to the weighted mean of freestanding costs plus 
50 percent of the difference between the freestanding mean and weighted 
mean of all SNF costs (hospital-based and freestanding) combined. We 
compute and apply separately payment rates for facilities located in 
urban and rural areas.
    The Federal rate also incorporates adjustments to account for 
facility case-mix using a resident classification system that accounts 
for the relative resource utilization of different patient types. This 
classification system, RUG-III, utilizes resident assessment data (from 
the Minimum Data Set or MDS) completed by SNFs to assign residents into 
one of 44 groups. The May 12, 1998 interim final rule (63 FR 26252) has 
a complete and detailed description of the RUG-III classification 
system.
    In addition, we adjust the portion of the Federal rate attributable 
to wage related costs by a wage index.
    For the initial period of PPS, the rates were published in the May 
12, 1998 interim final rule (63 FR 26252). The Federal rates reflected 
in this notice updates those rates by a factor equal to the SNF market 
basket index amounts minus 1 percentage point. Pursuant to section 
1888(e)(4)(E)(ii) of the Act, for fiscal years 2001 and 2002, we will 
inflate the rates each year in the same way, by increasing the current 
rates by the SNF market basket change minus 1 percentage point. For 
subsequent fiscal years, we will increase the rates by the applicable 
SNF market basket change.
2. Payment Provisions--Transition Period
    Beginning with a provider's first cost reporting period beginning 
on or after July 1, 1998, there is a transition period covering three 
cost reporting periods. During the transition phase, SNFs receive a 
payment rate comprising a blend between the Federal rate and a 
facility-specific rate based on each facility's fiscal year 1995 cost 
report. Under section 1888(e)(2)(E)(ii) of the Act, SNFs that received 
their first payment from Medicare on or after October 1, 1995 receive 
payment according to the Federal rates only.
    For SNFs subject to transition, the composition of the blended rate 
varies depending on the year of transition. For the first cost 
reporting period beginning on or after July 1, 1998, we make payment 
based on 75 percent of the facility-specific rate and 25 percent of the 
Federal rate. In the next cost reporting period, the rate consists of 
50 percent of the facility-specific rate and 50 percent of the Federal 
rate. In the following cost reporting period, the rate consists of 25 
percent of the facility-specific rate and 75 percent of the Federal 
rate. For all subsequent cost reporting periods, we base payments 
entirely on the Federal rates.
3. Payment Provisions--Facility-Specific Rate
    For most facilities, we compute the facility-specific payment rate 
utilized for the transition using the allowable costs of SNF services 
for cost reporting periods beginning in fiscal year 1995 (cost 
reporting periods beginning on or after October 1, 1994 and before 
October 1, 1995). Included in the facility-specific per diem rate for 
most facilities is an estimate of the amount that would be payable 
under Part B for covered SNF services furnished during fiscal year 1995 
to individuals who were residents of the facility and receiving Part A 
covered services under section 1888(e)(3)(A). The facility-specific 
rate, in contrast to the Federal rates, includes amounts paid to SNFs 
for exceptions to the routine cost limits. In addition, we also take 
into account ``new provider'' exemptions from the routine cost limits 
but only to the extent that routine costs do not exceed 150 percent of 
the routine cost limit.
    We update the facility-specific rate for each cost reporting after 
fiscal year 1995 to the first cost reporting period beginning on or 
after July 1, 1998 (the initial period of the PPS) by a factor equal to 
the SNF market basket percentage increase minus 1 percentage point. For 
fiscal years 1998 and 1999, we updated this rate by a factor equal to 
the SNF market basket increase minus 1 percentage point, and each 
subsequent year, we update it by the applicable SNF market basket 
increase.

II. Prospective Payment System for Skilled Nursing Facilities

    A. This notice sets forth a schedule of Federal prospective payment 
rates applicable to Medicare Part A SNF services beginning October 1, 
1999. This schedule incorporates per diem Federal rates designed to 
provide payment for all costs of services furnished to a Medicare 
resident of an SNF.
1. Cost and Services Covered by the Federal Rates
    The Federal rates apply to all costs (that is, routine, ancillary, 
and capital related costs) of covered skilled nursing services other 
than costs associated with operating approved educational activities as 
defined in 42 CFR 413.85. Under section 1888(e)(2) of the Act, covered 
SNF services include posthospital SNF services for which benefits are 
provided under Part A (the hospital insurance program) and all items 
and services (other than services excluded by statute) for which, 
before July 1, 1998, payment may be made under Part B (the 
supplementary medical insurance program) and that are furnished to SNF 
residents during a Part A covered stay. (These excluded service 
categories are discussed in greater detail in Section V.B.2 of the May 
12, 1998 interim final rule (63 FR 26252).)
2. Methodology Used for the Calculation of the Federal Rates
    The methodology to compute the Federal rates has not changed, 
except as we published in the final rule found

[[Page 41686]]

elsewhere is this Federal Register document, we have adjusted the 
unadjusted nursing case-mix component of the urban and rural Federal 
rates by +$0.32 and +$0.24, respectively. In addition, we adjusted the 
unadjusted non-case-mix by $0.25 for urban and $0.21 for rural. 
Additionally, as required by the Act, the data are updated using the 
latest market basket percentage minus 1 percentage point. For a 
complete listing of the multistep process, see the May 12, 1998 interim 
final rule (63 FR 26252).
    The SNF market basket is used to adjust each per diem amount 
forward to reflect cost increases occurring between the midpoint of the 
cost reporting period represented in the data and the midpoint of the 
period beginning October 1, 1999 and ending September 30, 2000 to which 
the payment rates apply. In accordance with section 1888(e)(4)(B) of 
the Act, the cost data are updated between the cost reporting period 
and the current period by a factor equivalent to the annual market 
basket index percentage minus 1 percentage point.

                                Table 1.--Unadjusted Federal Rate per Diem Urban
----------------------------------------------------------------------------------------------------------------
                                               Nursing--case-   Therapy--case-   Therapy--non-
               Rate component                       mix              mix            case mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount.............................         $111.89           $84.25           $11.12           $57.20
----------------------------------------------------------------------------------------------------------------


                                Table 2.--Unadjusted Federal Rate per Diem Rural
----------------------------------------------------------------------------------------------------------------
                                               Nursing--case-   Therapy--case-    Therapy-non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount.............................         $107.12           $97.33           $11.88           $58.25
----------------------------------------------------------------------------------------------------------------

B. Case-Mix Adjustment

    As required by the Act, any changes to the case-mix classification 
system to be applied with respect to services furnished for SNF 
Medicare SNF PPS residents must be published each August for the 
succeeding year. At this time, we are not making any changes or 
refinements to the case-mix or RUG-III classification system. The RUG-
III classification system is discussed in the May 12, 1998 interim 
final rule (63 FR 26252) and describes in detail the design and 
implementation of the case-mix and RUG-III classification system and 
assessment schedule for SNFs to submit MDSs.
    Application of the case-mix indices as described in the May 12, 
1998 interim final rule (63 FR 26252) to the updated per diem Federal 
rates presented in Tables 1 and 2 above, results in 44 separate RUG-III 
classification groups. The case-mix adjusted payment rates are listed 
separately for urban and rural SNFs (44 each) in Tables 3 and 4 below 
with the corresponding case-mix index values. The rates are listed in 
total and by component. The application of the wage index, described 
later in this section, is the final adjustment applied to the Federal 
rates. ]

                                         Table 3.--Case-Mix Adjusted Federal Rates and Associated Indices Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   Therapy non-  Non-case-
                       RUG III category                          Nursing      Therapy      Nursing      Therapy      case-mix       mix       Total rate
                                                                  index        index      component    component    component    component
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUC..........................................................         1.30         2.25      $145.46      $189.56  ...........        57.20       392.22
RUB..........................................................         0.95         2.25       106.30       189.56  ...........        57.20       353.06
RUA..........................................................         0.78         2.25        87.27       189.56  ...........        57.20       334.03
RVC..........................................................         1.13         1.41       126.44       118.79  ...........        57.20       302.43
RVB..........................................................         1.04         1.41       116.37       118.79  ...........        57.20       292.36
RVA..........................................................         0.81         1.41        90.63       118.79  ...........        57.20       266.62
RHC..........................................................         1.26         0.94       140.98        79.20  ...........        57.20       277.38
RHB..........................................................         1.06         0.94       118.60        79.20  ...........        57.20       255.00
RHA..........................................................         0.87         0.94        97.34        79.20  ...........        57.20       233.74
RMC..........................................................         1.35         0.77       151.05        64.87  ...........        57.20       273.12
RMB..........................................................         1.09         0.77       121.96        64.87  ...........        57.20       244.03
RMA..........................................................         0.96         0.77       107.41        64.87  ...........        57.20       229.48
RLB..........................................................         1.11         0.43       124.20        36.23  ...........        57.20       217.63
RLA..........................................................         0.80         0.43        89.51        36.23  ...........        57.20       182.94
SE3..........................................................         1.70  ...........       190.21  ...........        11.12        57.20       258.53
SE2..........................................................         1.39  ...........       155.53  ...........        11.12        57.20       223.85
SE1..........................................................         1.17  ...........       130.91  ...........        11.12        57.20       199.23
SSC..........................................................         1.13  ...........       126.44  ...........        11.12        57.20       194.76
SSB..........................................................         1.05  ...........       117.48  ...........        11.12        57.20       185.80
SSA..........................................................         1.01  ...........       113.01  ...........        11.12        57.20       181.33
CC2..........................................................         1.12  ...........       125.32  ...........        11.12        57.20       193.64
CC1..........................................................         0.99  ...........       110.77  ...........        11.12        57.20       179.09
CB2..........................................................         0.91  ...........       101.82  ...........        11.12        57.20       170.14
CB1..........................................................         0.84  ...........        93.99  ...........        11.12        57.20       162.31
CA2..........................................................         0.83  ...........        92.87  ...........        11.12        57.20       161.19
CA1..........................................................         0.75  ...........        83.92  ...........        11.12        57.20       152.24
IB2..........................................................         0.69  ...........        77.20  ...........        11.12        57.20       145.52
IB1..........................................................         0.67  ...........        74.97  ...........        11.12        57.20       143.29

[[Page 41687]]

 
IA2..........................................................         0.57  ...........        63.78  ...........        11.12        57.20       132.10
IA1..........................................................         0.53  ...........        59.30  ...........        11.12        57.20       127.62
BB2..........................................................         0.68  ...........        76.09  ...........        11.12        57.20       144.41
BB1..........................................................         0.65  ...........        72.73  ...........        11.12        57.20       141.05
BA2..........................................................         0.56  ...........        62.66  ...........        11.12        57.20       130.98
BA1..........................................................         0.48  ...........        53.71  ...........        11.12        57.20       122.03
PE2..........................................................         0.79  ...........        88.39  ...........        11.12        57.20       156.71
PE1..........................................................         0.77  ...........        86.16  ...........        11.12        57.20       154.48
PD2..........................................................         0.72  ...........        80.56  ...........        11.12        57.20       148.88
PD1..........................................................         0.70  ...........        78.32  ...........        11.12        57.20       146.64
PC2..........................................................         0.65  ...........        72.73  ...........        11.12        57.20       141.05
PC1..........................................................         0.64  ...........        71.61  ...........        11.12        57.20       139.93
PB2..........................................................         0.51  ...........        57.06  ...........        11.12        57.20       125.38
PB1..........................................................         0.50  ...........        55.95  ...........        11.12        57.20       124.27
PA2..........................................................         0.49  ...........        54.83  ...........        11.12        57.20       123.15
PA1..........................................................         0.46  ...........        51.47  ...........        11.12        57.20       119.79
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                         Table 4.--Case-Mix Adjusted Federal Rates and Associated Indices Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   Therapy non-  Non-case-
                       RUG III category                          Nursing      Therapy      Nursing      Therapy      case-mix       mix       Total rate
                                                                  index        index      component    component    component    component
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUC..........................................................         1.30         2.25      $139.26      $218.99  ...........       $58.25      $416.50
RUB..........................................................         0.95         2.25       101.76       218.99  ...........        58.25       379.00
RUA..........................................................         0.78         2.25        83.55       218.99  ...........        58.25       360.79
RVC..........................................................         1.13         1.41       121.05       137.24  ...........        58.25       316.54
RVB..........................................................         1.04         1.41       111.40       137.24  ...........        58.25       306.89
RVA..........................................................         0.81         1.41        86.77       137.24  ...........        58.25       282.26
RHC..........................................................         1.26         0.94       134.97        91.49  ...........        58.25       284.71
RHB..........................................................         1.06         0.94       113.55        91.49  ...........        58.25       263.29
RHA..........................................................         0.87         0.94        93.19        91.49  ...........        58.25       243.93
RMC..........................................................         1.35         0.77       144.61        74.94  ...........        58.25       277.80
RMB..........................................................         1.09         0.77       116.76        74.94  ...........        58.25       249.95
RMA..........................................................         0.96         0.77       102.84        74.94  ...........        58.25       236.03
RLB..........................................................         1.11         0.43       118.90        41.85  ...........        58.25       219.00
RLA..........................................................         0.80         0.43        85.70        41.85  ...........        58.25       185.80
SE3..........................................................         1.70  ...........       182.10  ...........        11.88        58.25       252.23
SE2..........................................................         1.39  ...........       148.90  ...........        11.88        58.25       219.03
SE1..........................................................         1.17  ...........       125.33  ...........        11.88        58.25       195.46
SSC..........................................................         1.13  ...........       121.05  ...........        11.88        58.25       191.18
SSB..........................................................         1.05  ...........       112.48  ...........        11.88        58.25       182.61
SSA..........................................................         1.01  ...........       108.19  ...........        11.88        58.25       178.32
CC2..........................................................         1.12  ...........       119.97  ...........        11.88        58.25       190.10
CC1..........................................................         0.99  ...........       106.05  ...........        11.88        58.25       176.18
CB2..........................................................         0.91  ...........        97.48  ...........        11.88        58.25       167.61
CB1..........................................................         0.84  ...........        89.98  ...........        11.88        58.25       160.11
CA2..........................................................         0.83  ...........        88.91  ...........        11.88        58.25       159.04
CA1..........................................................         0.75  ...........        80.34  ...........        11.88        58.25       150.47
IB2..........................................................         0.69  ...........        73.91  ...........        11.88        58.25       144.04
IB1..........................................................         0.67  ...........        71.77  ...........        11.88        58.25       141.90
IA2..........................................................         0.57  ...........        61.06  ...........        11.88        58.25       131.19
IA1..........................................................         0.53  ...........        56.77  ...........        11.88        58.25       126.90
BB2..........................................................         0.68  ...........        72.84  ...........        11.88        58.25       142.97
BB1..........................................................         0.65  ...........        69.63  ...........        11.88        58.25       139.76
BA2..........................................................         0.56  ...........        59.99  ...........        11.88        58.25       130.12
BA1..........................................................         0.48  ...........        51.42  ...........        11.88        58.25       121.55
PE2..........................................................         0.79  ...........        84.62  ...........        11.88        58.25       154.75
PE1..........................................................         0.77  ...........        82.48  ...........        11.88        58.25       152.61
PD2..........................................................         0.72  ...........        77.13  ...........        11.88        58.25       147.26
PD1..........................................................         0.70  ...........        74.98  ...........        11.88        58.25       145.11
PC2..........................................................         0.65  ...........        69.63  ...........        11.88        58.25       139.76
PC1..........................................................         0.64  ...........        68.56  ...........        11.88        58.25       138.69
PB2..........................................................         0.51  ...........        54.63  ...........        11.88        58.25       124.76
PB1..........................................................         0.50  ...........        53.56  ...........        11.88        58.25       123.69
PA2..........................................................         0.49  ...........        52.49  ...........        11.88        58.25       122.62
PA1..........................................................         0.46  ...........        49.48  ...........        11.88        58.25       119.41
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 41688]]

C. Wage Index Adjustment to Federal Rates

    Section 1888(e)(4)(G)(ii) of the Act requires that we provide for 
adjustments to the Federal rates to account for differences in area 
wage levels using ``an appropriate'' wage index as determined by the 
Secretary. In addition, as discussed in the final rule found elsewhere 
is this Fedreal Register document, it is our intent to evaluate a wage 
index based on SNF data once it becomes available. The SNF wage data 
are currently being collected and evaluated to determine if we can 
utilize them in the future. Once a wage index based on SNF data is 
developed, we will publish it for comment. However, in the interim, the 
BBA as well as many commenters urged us to incorporate the latest wage 
data available. We continue to believe that until a wage index based on 
SNF wage data is collected and analyzed, the hospital wage index wage 
data provide the best available measure of comparable wages that should 
be paid by SNFs. We believe, since hospitals and SNFs compete in the 
same labor market area, that the use of the hospital wage data results 
in an appropriate adjustment to the labor portion of the costs based on 
an appropriate wage index as required under section 1888(e) of the Act.
    For rates effective with this rule, we are using wage index values 
that are based on hospital wage data from cost reporting periods 
beginning in fiscal year 1996--the most recent hospital wage data 
available. Accordingly, the wage index values used in this rule are 
based on the same wage data as used to compute the FY 2000 wage index 
values for the hospital inpatient PPS.
    The computation of the wage index is identical to past years, and a 
detailed discussion can be found in the Federal Register published on 
May 12, 1998 (63 FR 26252).
    The SNF wage index values are based on the Metropolitan Statistical 
Area (MSA) designations in effect as of June 30, 1999. For purposes of 
computing SNF wage index values, we are not taking into account changes 
in geographic reclassifications for certain rural hospitals required 
under section 1886(d)(8)(B) of the Act or geographic reclassifications 
based on decisions of the Medicare Geographic Classification Review 
Board or the Secretary under section 1886(d)(8)-(10) of the Act. 
Accordingly, we continue to believe that the MSA (or non-MSA) 
designation provides the best method for determining the wage index 
values used for SNF payments, and physical location of hospitals is an 
appropriate basis upon which to construct the wage index.
    Table 5 at the end of this section presents the wage indices 
applicable to urban and rural areas for use in making geographic 
adjustments to the Federal rates. The wage index adjustment is applied 
to the labor-related portion of the Federal rate, which is 77.545 
percent of the total rate. The schedule of Federal rates below shows 
the Federal rates by labor-related and non-labor-related components. 
Instructions and an example related to the application of the wage 
index to the case-mix adjusted rates are provided following the table.
    As discussed above and in the interim final rule, until appropriate 
wage index based on SNF data is available, HCFA will use the latest 
available hospital wage index data in making annual updates to the 
payment rates. In making these annual updates, section 
1888(e)(4)(G)(ii) of the Act requires that the application of this wage 
index be made in a manner that does not result in aggregate payments 
that are greater or less than would otherwise be made in the absence of 
the wage adjustment. For the initial period of the SNF PPS, the 
adjustment required by this section was accounted for through the 
standardization of the per diem Federal rate components. By means of 
standardization, each rate component was adjusted for wage index and 
case-mix differences so that aggregate payments were unaffected by the 
presence of these payment adjustors. In this second PPS year (Federal 
rates effective October 1, 1999), we are updating the wage index 
applicable to SNF payments using the most recent hospital wage data and 
applying an adjustment to fulfill the budget neutrality requirement. 
This requirement will be met by multiplying each of the per diem rate 
components by the ratio of the volume weighted mean wage adjustment 
factor (using the wage index from the initial year) to the volume 
weighted mean wage adjustment factor, using the wage index for the 
fiscal year beginning October 1, 1999. The same volume weights are used 
in both the numerator and denominator and will be derived from 1997 
Medicare Provider Analysis and Review File (MedPAR) data. The wage 
adjustment factor used in this calculation is defined as the labor 
share of the rate component multiplied by the wage index plus the non-
labor share. The budget neutrality factor for FY 2000 is 0.9981 which 
is multiplied by each of the Federal rate components.

  Table 5.--Case-Mix Adjusted Federal Rates for Urban SNFs by Labor and
                           Non-Labor Component
------------------------------------------------------------------------
                                                                Total
        RUGs III category             Labor-     Non-labor-    federal
                                     related      related        rate
------------------------------------------------------------------------
RUC..............................      $304.15      $ 88.07      $392.22
RUB..............................       273.78        79.28       353.06
RUA..............................       259.02        75.01       334.03
RVC..............................       234.52        67.91       302.43
RVB..............................       226.71        65.65       292.36
RVA..............................       206.75        59.87       266.62
RHC..............................       215.09        62.29       277.38
RHB..............................       197.74        57.26       255.00
RHA..............................       181.25        52.49       233.74
RMC..............................       211.79        61.33       273.12
RMB..............................       189.23        54.80       244.03
RMA..............................       177.95        51.53       229.48
RLB..............................       168.76        48.87       217.63
RLA..............................       141.86        41.08       182.94
SE3..............................       200.48        58.05       258.53
SE2..............................       173.58        50.27       223.85
SE1..............................       154.49        44.74       199.23
SSC..............................       151.03        43.73       194.76
SSB..............................       144.08        41.72       185.80

[[Page 41689]]

 
SSA..............................       140.61        40.72       181.33
CC2..............................       150.16        43.48       193.64
CC1..............................       138.88        40.21       179.09
CB2..............................       131.94        38.20       170.14
CB1..............................       125.86        36.45       162.31
CA2..............................       124.99        36.20       161.19
CA1..............................       118.05        34.19       152.24
IB2..............................       112.84        32.68       145.52
IB1..............................       111.11        32.18       143.29
IA2..............................       102.44        29.66       132.10
IA1..............................        98.96        28.66       127.62
BB2..............................       111.98        32.43       144.41
BB1..............................       109.38        31.67       141.05
BA2..............................       101.57        29.41       130.98
BA1..............................        94.63        27.40       122.03
PE2..............................       121.52        35.19       156.71
PE1..............................       119.79        34.69       154.48
PD2..............................       115.45        33.43       148.88
PD1..............................       113.71        32.93       146.64
PC2..............................       109.38        31.67       141.05
PC1..............................       108.51        31.42       139.93
PB2..............................        97.23        28.15       125.38
PB1..............................        96.37        27.90       124.27
PA2..............................        95.50        27.65       123.15
PA1..............................        92.89        26.90       119.79
------------------------------------------------------------------------


  Table 6.--Case-Mix Adjusted Federal Rates for Rural SNFs by Labor and
                           Non-labor Component
------------------------------------------------------------------------
                                                                Total
        RUGs III category             Labor-     Non-Labor     federal
                                     related      related        rate
------------------------------------------------------------------------
RUC..............................      $322.97       $93.53      $416.50
RUB..............................       293.90        85.10       379.00
RUA..............................       279.77        81.02       360.79
RVC..............................       245.46        71.08       316.54
RVB..............................       237.98        68.91       306.89
RVA..............................       218.88        63.38       282.26
RHC..............................       220.78        63.93       284.71
RHB..............................       204.17        59.12       263.29
RHA..............................       188.38        54.55       242.93
RMC..............................       215.42        62.38       277.80
RMB..............................       193.82        56.13       249.95
RMA..............................       183.03        53.00       236.03
RLB..............................       169.82        49.18       219.00
RLA..............................       144.08        41.72       185.80
SE3..............................       195.59        56.64       252.23
SE2..............................       169.85        49.18       219.03
SE1..............................       151.57        43.89       195.46
SSC..............................       148.25        42.93       191.18
SSB..............................       141.60        41.01       182.61
SSA..............................       138.28        40.04       178.32
CC2..............................       147.41        42.69       190.10
CC1..............................       136.62        39.56       176.18
CB2..............................       129.97        37.64       167.61
CB1..............................       124.16        35.95       160.11
CA2..............................       123.33        35.71       159.04
CA1..............................       116.68        33.79       150.47
IB2..............................       111.70        32.34       144.04
IB1..............................       110.04        31.86       141.90
IA2..............................       101.73        29.46       131.19
IA1..............................        98.40        28.50       126.90
BB2..............................       110.87        32.10       142.97
BB1..............................       108.38        31.38       139.76
BA2..............................       100.90        29.22       130.12
BA1..............................        94.26        27.29       121.55
PE2..............................       120.00        34.75       154.75
PE1..............................       118.34        34.27       152.61
PD2..............................       114.19        33.07       147.26
PD1..............................       112.53        32.58       145.11

[[Page 41690]]

 
PC2..............................       108.38        31.38       139.76
PC1..............................       107.55        31.14       138.69
PB2..............................        96.75        28.01       124.76
PB1..............................        95.92        27.77       123.69
PA2..............................        95.09        27.53       122.62
PA1..............................        92.60        26.81       119.41
------------------------------------------------------------------------

    For any RUG-III group, to compute a wage-adjusted Federal payment 
rate, the labor-related portion of the payment rate is multiplied by 
the SNF's appropriate wage index factor listed in Table 7. The product 
of that calculation is added to the corresponding non-labor-related 
component. The resulting amount is the Federal rate applicable to a 
patient in that RUG-III group for that SNF. See the example below.
    XYZ SNF is located in State College, Pennsylvania. The per diem 
Federal rate applicable to an Ultra High Rehabilitation `A' patient 
(RUA) is calculated using the rates listed in Table 5 and the wage 
index factor found in Table 7. Accordingly, the computation of the 
adjusted per diem rate is made as follows:

(259.02  x  0.9138) + 75.01 = $311.70 per diem

    This Federal rate will be applicable to all patients in the RUA 
category for the XYZ SNF (effective October 1, 1999 through September 
30, 2000).

D. Updates to the Federal Rates

    In accordance with section 1888(e)(4)(H) of the Act, the payment 
rates here have been updated by the SNF market basket minus 1 
percentage point, which equals 2.1 percent. For each succeeding fiscal 
year, we will publish the rates in the Federal Register before August 1 
of the year preceding the affected Federal fiscal year.
    For the current fiscal year (FY 2000) through 2002, section 
1888(e)(4)(ii) of the Act requires the rates to be increased by a 
factor equal to the SNF market index change minus 1 percentage point. 
In addition, for subsequent fiscal years this section requires the 
rates to be increased by the applicable SNF market basket index 
increase.

                  Table 7.--Wage Index for Urban Areas
------------------------------------------------------------------------
                                                                  Wage
    Urban area (constituent counties or county equivalents)       index
------------------------------------------------------------------------
0040  Abilene, TX.............................................    0.8179
  Taylor, TX
0060  Aguadilla, PR...........................................    0.3814
  Aguada, PR
  Aguadilla, PR
  Moca, PR
0080  Akron, OH...............................................    1.0163
  Portage, OH
  Summit, OH
0120  Albany, GA..............................................    1.0372
  Dougherty, GA
  Lee, GA
0160  Albany-Schenectady-Troy, NY.............................    0.8754
  Albany, NY
  Montgomery, NY
  Rensselaer, NY
  Saratoga, NY
  Schenectady, NY
  Schoharie, NY
0200  Albuquerque, NM.........................................    0.8499
  Bernalillo, NM
  Sandoval, NM
  Valencia, NM
0220  Alexandria, LA..........................................    0.7869
  Rapides, LA
0240  Allentown-Bethlehem-Easton, PA..........................    1.0227
  Carbon, PA
  Lehigh, PA
  Northampton, PA
0280  Altoona, PA.............................................    0.9342
  Blair, PA
0320  Amarillo, TX............................................    0.8381
  Potter, TX
  Randall, TX
0380  Anchorage, AK...........................................    1.2859
  Anchorage, AK
0440  Ann Arbor, MI...........................................    1.1483
  Lenawee, MI
  Livingston, MI
  Washtenaw, MI
0450  Anniston, AL............................................    0.8462
  Calhoun, AL
0460  Appleton-Oshkosh-Neenah, WI.............................    0.8913
  Calumet, WI
  Outagamie, WI
  Winnebago, WI
0470  Arecibo, PR.............................................    0.4815
  Arecibo, PR
  Camuy, PR
  Hatillo, PR
0480  Asheville, NC...........................................    0.8884
  Buncombe, NC
  Madison, NC
0500  Athens, GA..............................................    0.9704
  Clarke, GA
  Madison, GA
  Oconee, GA
0520  Atlanta, GA.............................................    1.0050
  Barrow, GA
  Bartow, GA
  Carroll, GA
  Cherokee, GA
  Clayton, GA
  Cobb, GA
  Coweta, GA
  De Kalb, GA
  Douglas, GA
  Fayette, GA
  Forsyth, GA
  Fulton, GA
  Gwinnett, GA
  Henry, GA
  Newton, GA
  Paulding, GA
  Pickens, GA
  Rockdale, GA
  Spalding, GA
  Walton, GA
0560  Atlantic City-Cape May, NJ..............................    1.1310
  Atlantic City, NJ
  Cape May, NJ
0580  Auburn-Opelika, AL......................................    0.7748
  Lee, AL
 0600 Augusta-Aiken, GA-SC....................................    0.9013
  Columbia, GA
  McDuffie, GA
  Richmond, GA
  Aiken, SC
  Edgefield, SC
0640  Austin-San Marcos, TX...................................    0.9081
  Bastrop, TX
  Caldwell, TX
  Hays, TX
  Travis, TX
  Williamson, TX
0680 Bakersfield, CA..........................................    0.9618
  Kern, CA
0720  Baltimore, MD...........................................    0.9891
  Anne Arundel, MD
  Baltimore, MD
  Baltimore City, MD
  Carroll, MD
  Harford, MD
  Howard, MD
  Queen Annes, MD
0733  Bangor, ME..............................................    0.9609
  Penobscot, ME
0743  Barnstable-Yarmouth, MA.................................    1.3302
  Barnstable, MA
0760  Baton Rouge, LA.........................................    0.8707

[[Page 41691]]

 
  Ascension, LA
  East Baton Rouge, LA
  Livingston, LA
  West Baton Rouge, LA
084  Beaumont-Port Arthur, TX.................................    0.8624
  Hardin, TX
  Jefferson, TX
  Orange, TX
0860  Bellingham, WA..........................................    1.1394
  Whatcom, WA
0870  Benton Harbor, MI.......................................    0.8457
  Berrien, MI
0875  Bergen-Passaic, NJ......................................    1.2028
  Bergen, NJ
  Passaic, NJ
0880  Billings, MT............................................    1.0038
  Yellowstone, MT
0920  Biloxi-Gulfport-Pascagoula, MS..........................    0.7868
  Hancock, MS
  Harrison, MS
  Jackson, MS
0960  Binghamton, NY..........................................    0.8750
  Broome, NY
  Tioga, NY
1000  Birmingham, AL..........................................    0.8994
  Blount, AL
  Jefferson, AL
  St Clair, AL
  Shelby, AL
1010  Bismarck, ND............................................    0.7759
  Burleigh, ND
  Morton, ND
1020  Bloomington, IN.........................................    0.8593
  Monroe, IN
1040  Bloomington-Normal, IL..................................    0.8993
  McLean, IL
1080  Boise City, ID..........................................    0.9060
  Ada, ID
  Canyon, ID
1123  Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH........    1.1358
  Bristol, MA
  Essex, MA
  Middlesex, MA
  Norfolk, MA
  Plymouth, MA
  Suffolk, MA
  Worcester, MA
  Hillsborough, NH
  Merrimack, NH
  Rockingham, NH
  Strafford, NH
1125  Boulder-Longmont, CO....................................    0.9944
  Boulder, CO
1145  Brazoria, TX............................................    0.8516
  Brazoria, TX
1150  Bremerton, WA...........................................    1.1011
  Kitsap, WA
1240  Brownsville-Harlingen-San Benito, TX....................    0.9212
  Cameron, TX
1260  Bryan-College Station, TX...............................    0.8501
  Brazos, TX
1280  Buffalo-Niagara Falls, NY...............................    0.9604
  Erie, NY
  Niagara, NY
1303  Burlington, VT..........................................    1.0558
  Chittenden, VT
  Franklin, VT
  1Grand Isle, VT
1310  Caguas, PR..............................................    0.4561
  Caguas, PR
  Cayey, PR
  Cidra, PR
  Gurabo, PR
  San Lorenzo, PR
1320  Canton-Massillon, OH....................................    0.8771
  Carroll, OH
  Stark, OH
1350  Casper, WY..............................................    0.9199
  Natrona, WY
1360  Cedar Rapids, IA........................................    0.9018
  Linn, IA
1400  Champaign-Urbana, IL....................................    0.9163
  Champaign, IL
1440  Charleston-North Charleston, SC.........................    0.8988
  Berkeley, SC
  Charleston, SC
  Dorchester, SC
1480  Charleston, WV..........................................    0.9095
  Kanawha, WV
  Putnam, WV
1520  Charlotte-Gastonia-Rock Hill, NC-SC.....................    0.9433
  Cabarrus, NC
  Gaston, NC
  Lincoln, NC
  Mecklenburg, NC
  Rowan, NC
  Stanly, NC
  Union, NC
  York, SC
1540  Charlottesville, VA.....................................    1.0573
  Albemarle, VA
  Charlottesville City, VA
  Fluvanna, VA
  Greene, VA
1560  Chattanooga, TN-GA......................................    0.9731
  Catoosa, GA
  Dade, GA
  Walker, GA
  Hamilton, TN
  Marion, TN
1580  Cheyenne, WY............................................    0.8176
  Laramie, WY
1600  Chicago, IL.............................................    1.0872
  Cook, IL
  De Kalb, IL
  Du Page, IL
  Grundy, IL
  Kane, IL
  Kendall, IL
  Lake, IL
  McHenry, IL
  Will, IL
1620  Chico-Paradise, CA......................................    1.0390
  Butte, CA
1640  Cincinnati, OH-KY-IN....................................    0.9418
  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.........................    0.8090
  Christian, KY
  Montgomery, TN
1680  Cleveland-Lorain-Elyria, OH.............................    0.9688
  Ashtabula, OH
  Geauga, OH
  Cuyahoga, OH
  Lake, OH
  Lorain, OH
  Medina, OH
1720 Colorado Springs, CO.....................................    0.9218
  El Paso, CO
1740  Columbia, MO............................................    0.8904
  Boone, MO
1760  Columbia, SC............................................    0.9357
  Lexington, SC
  Richland, SC
1800  Columbus, GA-AL.........................................    0.8510
  Russell, AL
  Chattanoochee, GA
  Harris, GA
  Muscogee, GA
1840  Columbus, OH............................................    0.9907
  Delaware, OH
  Fairfield, OH
  Franklin, OH
  Licking, OH
  Madison, OH
  Pickaway, OH
1880  Corpus Christi, TX......................................    0.8702
  Nueces, TX
  San Patricio, TX
1890  Corvallis, OR...........................................    1.1087
  Benton, OR
1900  Cumberland, MD-WV.......................................    0.8801
  Allegany, MD
  Mineral, WV
1920  Dallas, TX..............................................    0.9606
  Collin, TX
  Dallas, TX
  Denton, TX
  Ellis, TX
  Henderson, TX
  Hunt, TX
  Kaufman, TX
  Rockwall, TX
1950  Danville, VA............................................    0.9061
  Danville City, VA
  Pittsylvania, VA
1960  Davenport-Moline-Rock Island, IA-IL.....................    0.8706
  Scott, IA
  Henry, IL
  Rock Island, IL
2000  Dayton-Springfield, OH..................................    0.9460
  Clark, OH
  Greene, OH
  Miami, OH
  Montgomery, OH
2020  Daytona Beach, FL.......................................    0.8987
  Flagler, FL
  Volusia, FL
2030  Decatur, AL.............................................    0.8679
  Lawrence, AL
  Morgan, AL
2040  Decatur, IL.............................................    0.8321
  Macon, IL

[[Page 41692]]

 
2080  Denver, CO..............................................    1.0189
  Adams, CO
  Arapahoe, CO
  Denver, CO
  Douglas, CO
  Jefferson, CO
2120  Des Moines, IA..........................................    0.8754
  Dallas, IA
  Polk, IA
  Warren, IA
2160  Detroit, MI.............................................    1.0421
  Lapeer, MI
  Macomb, MI
  Monroe, MI
  Oakland, MI
  St Clair, MI
  Wayne, MI
2180  Dothan, AL..............................................    0.7798
  Dale, AL
  Houston, AL
2190  Dover, DE...............................................    0.9335
  Kent, DE
2200  Dubuque, IA.............................................    0.8520
  Dubuque, IA
2240  Duluth-Superior, MN-WI..................................    1.0165
  St Louis, MN
  Douglas, WI
2281  Dutchess County, NY.....................................    1.0552
  Dutchess, NY
2290  Eau Claire, WI..........................................    0.8957
  Chippewa, WI
  Eau Claire, WI
2320  El Paso, TX.............................................    0.8947
  El Paso, TX
2330  Elkhart-Goshen, IN......................................    0.9379
  Elkhart, IN
2335  Elmira, NY..............................................    0.8533
  Chemung, NY
2340  Enid, OK................................................    0.7953
  Garfield, OK
2360  Erie, PA................................................    0.9023
  Erie, PA
2400  Eugene-Springfield, OR..................................    1.0603
  Lane, OR
2440  Evansville-Henderson, IN-KY.............................    0.8303
  Posey, IN
  Vanderburgh, IN
  Warrick, IN
  Henderson, KY
2520  Fargo-Moorhead, ND-MN...................................    0.8620
  Clay, MN
  Cass, ND
2560  Fayetteville, NC........................................    0.8494
  Cumberland, NC
2580  Fayetteville-Springdale-Rogers, AR......................    0.7773
  Benton, AR
  Washington, AR
2620  Flagstaff, AZ-UT........................................    1.0348
  Coconino, AZ
  Kane, UT
2640  Flint, MI...............................................    1.1020
  Genesee, MI
2650  Florence, AL............................................    0.7927
  Colbert, AL
  Lauderdale, AL
2655  Florence, SC............................................    0.8618
  Florence, SC
2670  Fort Collins-Loveland, CO...............................    1.0302
  Larimer, CO
2680  Ft Lauderdale, FL.......................................    1.0172
  Broward, FL
2700  Fort Myers-Cape Coral, FL...............................    0.8951
  Lee, FL
2710  Fort Pierce-Port St Lucie, FL...........................    0.9998
  Martin, FL
  St Lucie, FL
2720  Fort Smith, AR-OK.......................................    0.7844
  Crawford, AR
  Sebastian, AR
  Sequoyah, OK
2750  Fort Walton Beach, FL...................................    0.8713
  Okaloosa, FL
2760  Fort Wayne, IN..........................................    0.9096
  Adams, IN
  Allen, IN
  De Kalb, IN
  Huntington, IN
  Wells, IN
  Whitley, IN
2800  Forth Worth-Arlington, TX...............................    0.9835
  Hood, TX
  Johnson, TX
  Parker, TX
  Tarrant, TX
2840  Fresno, CA..............................................    1.0262
  Fresno, CA
  Madera, CA
2880  Gadsden, AL.............................................    0.8688
  Etowah, AL
2900  Gainesville, FL.........................................    1.0102
  Alachua, FL
2920  Galveston-Texas City, TX................................    0.9732
  Galveston, TX
2960  Gary, IN................................................    0.9390
  Lake, IN
  Porter, IN
2975  Glens Falls, NY.........................................    0.8606
  Warren, NY
  Washington, NY
2980  Goldsboro, NC...........................................    0.8333
  Wayne, NC
2985  Grand Forks, ND-MN......................................    0.9097
  Polk, MN
  Grand Forks, ND
2995  Grand Junction, CO......................................    0.9188
  Mesa, CO
3000  Grand Rapids-Muskegon-Holland, MI.......................    1.0135
  Allegan, MI
  Kent, MI
  Muskegon, MI
  Ottawa, MI
3040  Great Falls, MT.........................................    1.0459
  Cascade, MT
3060  Greeley, CO.............................................    0.9722
  Weld, CO
3080  Green Bay, WI...........................................    0.9132
  Brown, WI
3120  Greensboro-Winston-Salem-High Point, NC.................    0.9037
  Alamance, NC
  Davidson, NC
  Davie, NC
  Forsyth, NC
  Guilford, NC
  Randolph, NC
  Stokes, NC
  Yadkin, NC
3150  Greenville, NC..........................................    0.9500
  Pitt, NC
3160  Greenville-Spartanburg-Anderson, SC.....................    0.9188
  Anderson, SC
  Cherokee, SC
  Greenville, SC
  Pickens, SC
  Spartanburg, SC
3180  Hagerstown, MD..........................................    0.8842
  Washington, MD
3200  Hamilton-Middletown, OH.................................    0.8946
  Butler, OH
3240  Harrisburg-Lebanon-Carlisle, PA.........................    0.9917
  Cumberland, PA
  Dauphin, PA
  Lebanon, PA
  Perry, PA
3283  Hartford, CT............................................    1.1715
  Hartford, CT
  Litchfield, CT
  Middlesex, CT
  Tolland, CT
3285  Hattiesburg, MS.........................................    0.7634
  Forrest, MS
  Lamar, MS
3290  Hickory-Morganton-Lenoir, NC............................    0.9112
  Alexander, NC
  Burke, NC
  Caldwell, NC
  Catawba, NC
3320  Honolulu, HI............................................    1.1475
  Honolulu, HI
3350  Houma, LA...............................................    0.7837
  Lafourche, LA
  Terrebonne, LA
3360  Houston, TX.............................................    0.9387
  Chambers, TX
  Fort Bend, TX
  Harris, TX
  Liberty, TX
  Montgomery, TX
  Waller, TX
3400  Huntington-Ashland, WV-KY-OH............................    0.9757
  Boyd, KY
  Carter, KY
  Greenup, KY
  Lawrence, OH
  Cabell, WV
  Wayne, WV
3440  Huntsville, AL..........................................    0.8822
  Limestone, AL
  Madison, AL
3480  Indianapolis, IN........................................    0.9792
  Boone, IN
  Hamilton, IN
  Hancock, IN
  Hendricks, IN
  Johnson, IN
  Madison, IN
  Marion, IN
  Morgan, IN
  Shelby, IN
3500  Iowa City, IA...........................................    0.9607
  Johnson, IA
3520  Jackson, MI.............................................    0.8840

[[Page 41693]]

 
  Jackson, MI
3560  Jackson, MS.............................................    0.8387
  Hinds, MS
  Madison, MS
  Rankin, MS
3580  Jackson, TN.............................................    0.8600
  Chester, TN
  Madison, TN
3600  Jacksonville, FL........................................    0.8957
  Clay, FL
  Duval, FL
  Nassau, FL
  St Johns, FL
3605  Jacksonville, NC........................................    0.7852
  Onslow, NC
3610  Jamestown, NY...........................................    0.7857
  Chautaqua, NY
3620  Janesville-Beloit, WI...................................    0.9656
  Rock, WI
3640  Jersey City, NJ.........................................    1.1674
  Hudson, NJ
3660  Johnson City-Kingsport-Bristol, TN-VA...................    0.8853
  Carter, TN
  Hawkins, TN
  Sullivan, TN
  Unicoi, TN
  Washington, TN
  Bristol City, VA
  Scott, VA
  Washington, VA
3680  Johnstown, PA...........................................    0.8640
  Cambria, PA
  Somerset, PA
3700  Jonesboro, AR...........................................    0.7231
  Craighead, AR
3710  Joplin, MO..............................................    0.7678
  Jasper, MO
  Newton, MO
3720  Kalamazoo-Battlecreek, MI...............................    0.9981
  Calhoun, MI
  Kalamazoo, MI
  Van Buren, MI
3740  Kankakee, IL............................................    0.8598
  Kankakee, IL
3760  Kansas City, KS-MO......................................    0.9322
  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.............................................    0.9033
  Kenosha, WI
3810  Killeen-Temple, TX......................................    0.9932
  Bell, TX
  Coryell, TX
3840  Knoxville, TN...........................................    0.9199
  Anderson, TN
  Blount, TN
  Knox, TN
  Loudon, TN
  Sevier, TN
  Union, TN
3850  Kokomo, IN..............................................    0.8918
  Howard, IN
  Tipton, IN
3870  La Crosse, WI-MN........................................    0.8933
  Houston, MN
  La Crosse, WI
3880  Lafayette, LA...........................................    0.8339
  Acadia, LA
  Lafayette, LA
  St Landry, LA
  St Martin, LA
3920  Lafayette, IN...........................................    0.8809
  Clinton, IN
  Tippecanoe, IN
3960  Lake Charles, LA........................................    0.7966
  Calcasieu, LA
3980  Lakeland-Winter Haven, FL...............................    0.8816
  Polk, FL
4000  Lancaster, PA...........................................    0.9255
  Lancaster, PA
4040  Lansing-East Lansing, MI................................    0.9977
  Clinton, MI
  Eaton, MI
  Ingham, MI
4080  Laredo, TX..............................................    0.8323
  Webb, TX
4100  Las Cruces, NM..........................................    0.8590
  Dona Ana, NM
4120  Las Vegas, NV-AZ........................................    1.1258
  Mohave, AZ
  Clark, NV
  Nye, NV
4150  Lawrence, KS............................................    0.8222
  Douglas, KS
4200  Lawton, OK..............................................    0.9532
  Comanche, OK
4243  Lewiston-Auburn, ME.....................................    0.8899
  Androscoggin, ME
4280  Lexington, KY...........................................    0.8531
  Bourbon, KY
  Clark, KY
  Fayette, KY
  Jessamine, KY
  Madison, KY
  Scott, KY
  Woodford, KY
4320  Lima, OH................................................    0.8905
  Allen, OH
  Auglaize, OH
4360  Lincoln, NE.............................................    0.9670
  Lancaster, NE
4400  Little Rock-North Little Rock, AR.......................    0.8614
  Faulkner, AR
  Lonoke, AR
  Pulaski, AR
  Saline, AR
4420  Longview-Marshall, TX...................................    0.8738
  Gregg, TX
  Harrison, TX
  Upshur, TX
4480  Los Angeles-Long Beach, CA..............................    1.2051
  Los Angeles, CA
4520  Louisville, KY-IN.......................................    0.9381
  Clark, IN
  Floyd, IN
  Harrison, IN
  Scott, IN
  Bullitt, KY
  Jefferson, KY
  Oldham, KY
4600  Lubbock, TX.............................................    0.8411
  Lubbock, TX
4640  Lynchburg, VA...........................................    0.8814
  Amherst, VA
  Bedford City, VA
  Bedford, VA
  Campbell, VA
  Lynchburg City, VA
4680  Macon, GA...............................................    0.8530
  Bibb, GA
  Houston, GA
  Jones, GA
  Peach, GA
  Twiggs, GA
4720  Madison, WI.............................................    0.9729
  Dane, WI
4800  Mansfield, OH...........................................    0.8475
  Crawford, OH
  Richland, OH
4840  Mayaguez, PR............................................    0.4674
  Anasco, PR
  Cabo Rojo, PR
  Hormigueros, PR
  Mayaguez, PR
  Sabana Grande, PR
  San German, PR
4880  McAllen-Edinburg-Mission, TX............................    0.8120
  Hidalgo, TX
4890  Medford-Ashland, OR.....................................    1.0492
  Jackson, OR
4900  Melbourne-Titusville-Palm Bay, FL.......................    0.9296
  Brevard, Fl
4920  Memphis, TN-AR-MS.......................................    0.8244
  Crittenden, AR
  De Soto, MS
  Fayette, TN
  Shelby, TN
  Tipton, TN
4940  Merced, CA..............................................    1.0277
  Merced, CA
5000  Miami, FL...............................................    1.0233
  Dade, FL
5015  Middlesex-Somerset-Hunterdon, NJ........................    1.1122
  Hunterdon, NJ
  Middlesex, NJ
  Somerset, NJ
5080  Milwaukee-Waukesha, WI..................................    0.9845
  Milwaukee, WI
  Ozaukee, WI
  Washington, WI
  Waukesha, WI
5120  Minneapolis-St Paul, MN-WI..............................    1.0929
  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

[[Page 41694]]

 
5140  Missoula, MT............................................    0.9085
  Missoula, MT
5160  Mobile, AL..............................................    0.8267
  Baldwin, AL
  Mobile, AL
5170  Modesto, CA.............................................    1.0111
  Stanislaus, CA
5190  Monmouth-Ocean, NJ......................................    1.1258
  Monmouth, NJ
  Ocean, NJ
5200  Monroe, LA..............................................    0.8221
  Ouachita, LA
5240  Montgomery, AL..........................................    0.7703
  Autauga, AL
  Elmore, AL
  Montgomery, AL
5280  Muncie, IN..............................................    1.0834
  Delaware, IN
5330 Myrtle Beach, SC.........................................    0.8529
  Horry, SC
5345  Naples, FL..............................................    0.9839
  Collier, FL
5360  Nashville, TN...........................................    0.9449
  Cheatham, TN
  Davidson, TN
  Dickson, TN
  Robertson, TN
  Rutherford TN
  Sumner, TN
  Williamson, TN
  Wilson, TN
5380  Nassau-Suffolk, NY......................................    1.4074
  Nassau, NY
  Suffolk, NY
5483  New Haven-Bridgeport-Stamford-Waterbury-Danbury, CT.....    1.2356
  Fairfield, CT
  New Haven, CT
5523  New London-Norwich, CT..................................    1.2428
  New London, CT
5560  New Orleans, LA.........................................    0.9089
  Jefferson, LA
  Orleans, LA
  Plaquemines, LA
  St. Bernard, LA
  St. Charles, LA
  St. James, LA
  St. John The Baptist, LA
  St. Tammany, LA
5600  New York, NY............................................    1.4517
  Bronx, NY
  Kings, NY
  New York, NY
  Putnam, NY
  Queens, NY
  Richmond, NY
  Rockland, NY
  Westchester, NY
5640  Newark, NJ..............................................    1.1646
  Essex, NJ
  Morris, NJ
  Sussex, NJ
  Union, NJ
  Warren, NJ
5660  Newburgh, NY-PA.........................................    1.0908
  Orange, NY
  Pike, PA
5720  Norfolk-Virginia Beach-Newport News, VA-NC..............    0.8440
  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.............................................    1.5058
  Alameda, CA
  Contra Costa, CA
5790  Ocala, FL...............................................    0.9615
  Marion, FL
5800  Odessa-Midland, TX......................................    0.8873
  Ector, TX
  Midland, TX
5880  Oklahoma City, OK.......................................    0.8587
  Canadian, OK
  Cleveland, OK
  Logan, OK
  McClain, OK
  Oklahoma, OK
  Pottawatomie, OK
5910  Olympia, WA.............................................    1.0932
  Thurston, WA
5920  Omaha, NE-IA............................................    1.0455
  Pottawattamie, IA
  Cass, NE
  Douglas, NE
  Sarpy, NE
  Washington, NE
5945  Orange County, CA.......................................    1.1590
  Orange, CA
5960  Orlando, FL.............................................    0.9795
  Lake, FL
  Orange, FL
  Osceola, FL
  Seminole, FL
5990  Owensboro, KY...........................................    0.8104
  Daviess, KY
6015  Panama City, FL.........................................    0.9169
  Bay, FL
6020 Parkersburg-Marietta, WV-OH..............................    0.8414
  Washington, OH
  Wood, WV
6080  Pensacola, FL...........................................    0.8442
  Escambia, FL
  Santa Rosa, FL
6120  Peoria-Pekin, IL........................................    0.8349
  Peoria, IL
  Tazewell, IL
  Woodford, IL
6160  Philadelphia, PA-NJ.....................................    1.1160
  Burlington, NJ
  Camden, NJ
  Gloucester, NJ
  Salem, NJ
  Bucks, PA
  Chester, PA
  Delaware, PA
  Montgomery, PA
  Philadelphia, PA
6200  Phoenix-Mesa, AZ........................................    0.9464
  Maricopa, AZ
  Pinal, AZ
6240  Pine Bluff, AR..........................................    0.7697
  Jefferson, AR
6280  Pittsburgh, PA..........................................    0.9634
  Allegheny, PA
  Beaver, PA
  Butler, PA
  Fayette, PA
  Washington, PA
  Westmoreland, PA
6323  Pittsfield, MA..........................................    1.0255
  Berkshire, MA
6340  Pocatello, ID...........................................    0.8973
  Bannock, ID
6360  Ponce, PR...............................................    0.4971
  Guayanilla, PR
  Juana Diaz, PR
  Penuelas, PR
  Ponce, PR
  Villalba, PR
  Yauco, PR
6403  Portland, ME............................................    0.9475
  Cumberland, ME
  Sagadahoc, ME
  York, ME
6440  Portland-Vancouver, OR-WA...............................    1.0974
  Clackamas, OR
  Columbia, OR
  Multnomah, OR
  Washington, OR
  Yamhill, OR
  Clark, WA
6483  Providence-Warwick-Pawtucket, RI........................    1.0690
  Bristol, RI
  Kent, RI
  Newport, RI
  Providence, RI
  Washington, RI
6520  Provo-Orem, UT..........................................    0.9818
  Utah, UT
6560  Pueblo, CO..............................................    0.8853
  Pueblo, CO
6580  Punta Gorda, FL.........................................    0.9508
  Charlotte, FL
6600  Racine, WI..............................................    0.9216
  Racine, WI
6640  Raleigh-Durham-Chapel Hill, NC..........................    0.9544
  Chatham, NC
  Durham, NC
  Franklin, NC
  Johnston, NC
  Orange, NC
  Wake, NC
6660  Rapid City, SD..........................................    0.8363
  Pennington, SD
6680  Reading, PA.............................................    0.9436
  Berks, PA
6690  Redding, CA.............................................    1.1263
  Shasta, CA
6720  Reno, NV................................................    1.0655
  Washoe, NV
6740  Richland-Kennewick-Pasco, WA............................    1.1224
  Benton, WA
  Franklin, WA

[[Page 41695]]

 
6760  Richmond-Petersburg, VA.................................    0.9545
  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............................    1.1210
  Riverside, CA
  San Bernardino, CA
6800  Roanoke, VA.............................................    0.8138
  Botetourt, VA
  Roanoke, VA
  Roanoke City, VA
  Salem City, VA
6820  Rochester, MN...........................................    1.1429
  Olmsted, MN
6840  Rochester, NY...........................................    0.9184
  Genesee, NY
  Livingston, NY
  Monroe, NY
  Ontario, NY
  Orleans, NY
  Wayne, NY
6880  Rockford, IL............................................    0.8783
  Boone, IL
  Ogle, IL
  Winnebago, IL
6895  Rocky Mount, NC.........................................    0.8735
  Edgecombe, NC
  Nash, NC
6920  Sacramento, CA..........................................    1.2284
  El Dorado, CA
  Placer, CA
  Sacramento, CA
6960  Saginaw-Bay City-Midland, MI............................    0.9287
  Bay, MI
  Midland, MI
  Saginaw, MI
6980  St Cloud, MN............................................    0.9421
  Benton, MN
  Stearns, MN
7000  St Joseph, MO...........................................    0.8943
  Andrews, MO
  Buchanan, MO
7040  St Louis, MO-IL.........................................    0.9052
  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
   Sullivan City, MO
7080  Salem, OR...............................................    0.9949
  Marion, OR
  Polk, OR
7120  Salinas, CA.............................................    1.4710
  Monterey, CA
7160  Salt Lake City-Ogden, UT................................    0.9854
  Davis, UT
  Salt Lake, UT
  Weber, UT
7200  San Angelo, TX..........................................    0.7845
  Tom Green, TX
7240  San Antonio, TX.........................................    0.8318
  Bexar, TX
  Comal, TX
  Guadalupe, TX
  Wilson, TX
7320  San Diego, CA...........................................    1.1930
  San Diego, CA
7360  San Francisco, CA.......................................    1.4001
  Marin, CA
  San Francisco, CA
  San Mateo, CA
7400  San Jose, CA............................................    1.3608
  Santa Clara, CA
7440  San Juan-Bayamon, PR....................................    0.4657
  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
  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..............    1.0470
  San Luis Obispo, CA
7480  Santa Barbara-Santa Maria-Lompoc, CA....................    1.0819
  Santa Barbara, CA
7485  Santa Cruz-Watsonville, CA..............................    1.3927
  Santa Cruz, CA
7490  Santa Fe, NM............................................    1.0437
  Los Alamos, NM
  Santa Fe, NM
7500  Santa Rosa, CA..........................................    1.3000
  Sonoma, CA
7510  Sarasota-Bradenton, FL..................................    0.9905
  Manatee, FL
  Sarasota, FL
7520  Savannah, GA............................................    0.9953
  Bryan, GA
  Chatham, GA
  Effingham, GA
7560  Scranton-Wilkes-Barre-Hazleton, PA......................    0.8372
  Columbia, PA
  Lackawanna, PA
  Luzerne, PA
  Wyoming, PA
7600  Seattle-Bellevue-Everett, WA............................    1.1290
  Island, WA
  King, WA
  Snohomish, WA
7610  Sharon, PA..............................................    0.8283
  Mercer, PA
7620  Sheboygan, WI...........................................    0.8202
  Sheboygan, WI
7640  Sherman-Denison, TX.....................................    0.9329
  Grayson, TX
7680  Shreveport-Bossier City, LA.............................    0.9049
  Bossier, LA
  Caddo, LA
  Webster, LA
7720  Sioux City, IA-NE.......................................    0.8549
  Woodbury, IA
  Dakota, NE
7760  Sioux Falls, SD.........................................    0.8776
  Lincoln, SD
  Minnehaha, SD
7800  South Bend, IN..........................................    0.9793
  St Joseph, IN
7840  Spokane, WA.............................................    1.0799
  Spokane, WA
7880  Springfield, IL.........................................    0.8684
  Menard, IL
  Sangamon, IL
7920  Springfield, MO.........................................    0.7991
  Christian, MO
  Greene, MO
  Webster, MO
8003  Springfield, MA.........................................    1.0677
  Hampden, MA
  Hampshire, MA
8050  State College, PA.......................................    0.9138
  Centre, PA
8080  Steubenville-Weirton, OH-WV.............................    0.8614
  Jefferson, OH
  Brooke, WV
  Hancock, WV
8120  Stockton-Lodi, CA.......................................    1.0518
  San Joaquin, CA
8140  Sumter, SC..............................................    0.8238
  Sumter, SC
8160  Syracuse, NY............................................    0.9412
  Cayuga, NY
  Madison, NY
  Onondaga, NY
  Oswego, NY
8200 Tacoma, WA...............................................    1.1478
  Pierce, WA
8240 Tallahassee, FL..........................................    0.8484
  Gadsden, FL
  Leon, FL
8280 Tampa-St Petersburg-Clearwater, FL.......................    0.9044
  Hernando, FL
  Hillsborough, FL
  Pasco, FL

[[Page 41696]]

 
  Pinellas, FL
8320 Terre Haute, IN..........................................    0.8570
  Clay, IN
  Vermillion, IN
  Vigo, IN
8360 Texarkana, AR-Texarkana, TX..............................    0.8135
  Miller, AR
  Bowie, TX
8400 Toledo, OH...............................................    0.9815
  Fulton, OH
  Lucas, OH
  Wood, OH
8440 Topeka, KS...............................................    0.9326
  Shawnee, KS
8480 Trenton, NJ..............................................    1.0102
  Mercer, NJ
8520 Tucson, AZ...............................................    0.8742
  Pima, AZ
8560 Tulsa, OK................................................    0.8086
  Creek, OK
  Osage, OK
  Rogers, OK
  Tulsa, OK
  Wagoner, OK
8600 Tuscaloosa, AL...........................................    0.8064
  Tuscaloosa, AL
8640 Tyler, TX................................................    0.9369
  Smith, TX
8680 Utica-Rome, NY...........................................    0.8298
  Herkimer, NY
  Oneida, NY
8720 Vallejo-Fairfield-Napa, CA...............................    1.3345
  Napa, CA
  Solano, CA
8735 Ventura, CA..............................................    1.1454
  Ventura, CA
8750 Victoria, TX.............................................    0.8378
  Victoria, TX
8760 Vineland-Millville-Bridgeton, NJ.........................    1.0517
  Cumberland, NJ
8780 Visalia-Tulare-Porterville, CA...........................    1.0411
  Tulare, CA
8800 Waco, TX.................................................    0.8075
  McLennan, TX
8840 Washington, DC-MD-VA-WV..................................    1.1053
  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.................................    0.8517
  Black Hawk, IA
8940 Wausau, WI...............................................    0.9445
  Marathon, WI
8960 West Palm Beach-Boca Raton, FL...........................    1.0012
  Palm Beach, FL
9000 Wheeling, OH-WV..........................................    0.7644
  Belmont, OH
  Marshall, WV
  Ohio, WV
9040 Wichita, KS..............................................    0.9421
  Butler, KS
  Harvey, KS
  Sedgwick, KS
9080 Wichita Falls, TX........................................    0.7652
  Archer, TX
  Wichita, TX
9140 Williamsport, PA.........................................    0.8449
  Lycoming, PA
9160 Wilmington-Newark, DE-MD.................................    1.1274
  New Castle, DE
  Cecil, MD
9200 Wilmington, NC...........................................    0.9707
  New Hanover, NC
  Brunswick, NC
9260 Yakima, WA...............................................    1.0332
  Yakima, WA
9270 Yolo, CA.................................................    0.9719
  Yolo, CA
9280 York, PA.................................................    0.9309
  York, PA
9320 Youngstown-Warren, OH....................................    0.9996
  Columbiana, OH
  Mahoning, OH
  Trumbull, OH
9340 Yuba City, CA............................................    1.0662
  Sutter, CA
  Yuba, CA
9360 Yuma, AZ.................................................    0.9924
  Yuma, AZ
------------------------------------------------------------------------


                  Table 7.--Wage Index for Rural Areas
------------------------------------------------------------------------
                                                                  Wage
                         Nonurban area                            index
------------------------------------------------------------------------
Alabama.......................................................    0.7390
Alaska........................................................    1.2057
Arizona.......................................................    0.8544
Arkansas......................................................    0.7236
California....................................................    0.9951
Colorado......................................................    0.8813
Connecticut...................................................    1.2413
Delaware......................................................    0.9166
Florida.......................................................    0.8986
Georgia.......................................................    0.8094
Guam..........................................................    0.7268
Hawaii........................................................    1.0726
Idaho.........................................................    0.8651
Illinois......................................................    0.8047
Indiana.......................................................    0.8396
Iowa..........................................................    0.7926
Kansas........................................................    0.7460
Kentucky......................................................    0.8043
Louisiana.....................................................    0.7381
Maine.........................................................    0.8639
Maryland......................................................    0.8631
Massachusetts.................................................    1.1369
Michigan......................................................    0.8815
Minnesota.....................................................    0.8669
Mississippi...................................................    0.7306
Missouri......................................................    0.7723
Montana.......................................................    0.8395
Nebraska......................................................    0.8007
Nevada........................................................    0.9097
New Hampshire.................................................    0.9905
New Jersey \1\................................................
New Mexico....................................................    0.8378
New York......................................................    0.8636
North Carolina................................................    0.8290
North Dakota..................................................    0.7647
Ohio..........................................................    0.8649
Oklahoma......................................................    0.7255
Oregon........................................................    0.9867
Pennsylvania..................................................    0.8524
Puerto Rico...................................................    0.4249
Rhode Island \1\..............................................
South Carolina................................................    0.8264
South Dakota..................................................    0.7576
Tennessee.....................................................    0.7650
Texas.........................................................    0.7471
Utah..........................................................    0.8906
Vermont.......................................................    0.9407
Virginia......................................................    0.7904
Virgin Islands................................................    0.6389
Washington....................................................    1.0446
West Virginia.................................................    0.8068
Wisconsin.....................................................    0.8759
Wyoming.......................................................   0.8859
------------------------------------------------------------------------
\1\ All counties within the State are classified urban.

E. Relationship of RUG-III Classification System to Existing Skilled 
Nursing Facility

Level-of-Care Criteria

    In the May 12, 1998 interim final rule (63 FR 26252), we described 
how the RUG-III classification system will make coverage determinations 
easier and more consistent. In the final rule as published elsewhere in 
this Federal Register document, we clarified how residents are 
classified and the determinations of coverage. A complete discussion of 
coverage and classification of patients is discussed in the final rule. 
We are not making any changes to the classifications or coverage in 
this notice.
    However, regulations at 42 CFR 413.345 provide that the information 
included in each update of the Federal payment rates in the Federal 
Register shall include the designation of those specific RUGs under the 
resident classification system that represent the required SNF level of 
care, as provided in Sec. 409.30. Accordingly, we hereby designate the 
upper 26 RUG-III groups for this purpose.

[[Page 41697]]

III. Three-Year Transition Period

    Under sections 1888(e)(1) and (2) of the Act, during a facility's 
first three cost reporting periods that begin on or after July 1, 1998 
(transition period), the facility's PPS rate will be equal to the sum 
of a percentage of an adjusted facility-specific per diem rate and a 
percentage of the adjusted Federal per diem rate. After the transition 
period, the PPS rate will equal the adjusted Federal per diem rate. The 
transition period payment method will not apply to SNFs that first 
received Medicare payments (interim or otherwise) on or after October 
1, 1995 under present or previous ownership; these facilities will be 
paid based on 100 percent of the Federal rate.
    The facility-specific per diem rate is the sum of the facility's 
total allowable Part A Medicare costs and an estimate of the amounts 
that would be payable under Part B for covered SNF services for cost 
reporting periods beginning in fiscal year 1995 (base year). The base 
year cost report used to compute the facility-specific per diem rate in 
the transition period may be settled (either tentative or final) or as 
submitted for Medicare payment purposes. Under section 1888(e)(3) of 
the Act, any adjustments to the base year cost report made as a result 
of settlement or other action by the fiscal intermediary, including 
cost limit exceptions and exemptions, or results of an appeal will 
result in a revision to the facility-specific per diem rate. The 
instructions for calculating the facility-specific per diem rate are 
described in detail in the May 12, 1998 interim final rule (63 FR 
26252). For providers that received payment under the RUG-III 
demonstration during a cost reporting period that began in calendar 
year 1997, we will determine their facility-specific per diem rate 
using the methodology described below. It is possible that some 
providers participated in the demonstration but did not have a cost 
reporting period that began in calendar year 1997. For those providers, 
we will determine their facility-specific per diem rate by using the 
calculations outlined in the May 12, 1998 Federal Register interim 
final rule (63 FR 26252, Section III, (A)1.(a), (b), or (c). As with 
the facility-specific per diem applicable to other providers, the 
allowable costs will be subject to change based on the settlement of 
the cost report used to determine the total payment under the 
demonstration. In addition, we derive a special market basket inflation 
factor to adjust the 1997 costs to the midpoint of the rate setting 
period (July 1, 1998 to September 30, 1999).
    Step 1. Determine the aggregate payment during the cost reporting 
period that began in calendar year 1997--RUG-III payment plus routine 
capital costs plus ancillary costs (other than occupational therapy, 
physical therapy, and speech pathology).
    Step 2. Divide the amount in Step 1. by the applicable total 
inpatient days for the cost reporting period.
    Step 3. Adjust the amount in Step 2. by 1.031532 (inflation 
factor)--Do not use 8.C. The amount in Step 3. is the facility-specific 
rate that is applicable for the facility's first cost reporting period 
beginning after July 1, 1998. A separate calculation for Part B 
services is not required.

Computation of the Skilled Nursing Facility Prospective Payment 
System Rate During the Transition

    For the first three cost reporting periods beginning on or after 
July 1, 1998 (transition period), an SNF's payment under the PPS is the 
sum of a percentage of the facility-specific per diem rate and a 
percentage of the Federal per diem rate. Under section 1888(e)(2)(C) of 
the Act, for the first cost reporting period in the transition period, 
the SNF payment will be the sum of 75 percent of the facility-specific 
per diem rate and 25 percent of the Federal per diem rate. For the 
second cost reporting period, the SNF payment will be the sum of 50 
percent of the facility-specific per diem rate and 50 percent of the 
Federal per diem rate. For the third cost reporting period, the SNF 
payment will be the sum of 25 percent of the facility-specific per diem 
rate and 75 percent of the Federal per diem rate. For all subsequent 
cost reporting periods beginning after the transition period, the SNF 
payment will be equal to 100 percent of the Federal per diem rate. See 
the example below.

Example of Computation of Adjusted PPS Rates and SNF Payment

    Using the XYZ SNF described in this section, the following shows 
the adjustments made to the facility-specific per diem rate and the 
Federal per diem rate to compute the provider's actual per diem PPS 
payment in the transition period. XYZ's 12-month cost reporting period 
begins October 1, 1999. (This is the provider's second cost reporting 
period under the transition).
Step 1
    Compute:

Facility-specific per diem rate--$570.00
Market Basket Adjustment (Table 8.C)  x  1.09929
Adjusted facility-specific rate--$626.60
Step 2
    Compute Federal per diem rate:
    SNF XYZ from above is located in State College, PA with a wage 
index of 0.9138.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Labor                    Adjusted     Nonlabor     Adjusted     Medicare
                          RUG group                              portion*   Wage index      labor       portion*       rate         days       Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVC..........................................................      $234.52       0.9138      $214.30       $67.41      $282.21           50      $14,111
RHC..........................................................       215.09       0.9138       196.55        62.29       258.84          100       25,884
                                                                                                                               -------------------------
    Total....................................................  ...........  ...........  ...........  ...........  ...........          150      39,995
--------------------------------------------------------------------------------------------------------------------------------------------------------
* From Table 5.

Step 3
    Apply transition period percentages:

Facility-specific per diem rate $626.60  x  150 days = $93,990
Times transition percentage (50 percent)--.50
Actual facility-specific PPS payment--$46,995
Federal PPS payment--$39,995
Times transition percentage (50 percent)--.50
Actual Federal PPS payment--$19,998
Step 4
    Compute total PPS payment:

XYZ's total PPS payment ($46,995 + $19,998)  $66,993

IV. The Skilled Nursing Facility Market Basket Index

    Section 1888(e)(5)(A) of the Act requires the Secretary to 
establish an SNF market basket index (input price index) that reflects 
changes over time in the prices of an appropriate mix of goods and 
services included in the SNF PPS. Accordingly, as described below, we 
have developed a SNF market basket

[[Page 41698]]

index that encompasses the most commonly used cost categories for SNF 
routine services, ancillary services, and capital-related expenses. In 
the May 12, 1998 Federal Register (63 FR 26252), we indicated that we 
were rebasing the SNF market basket based on fiscal year 1992. A 
complete discussion on the rebasing can be found in the May 12, 1998 
Federal Register (63 FR 26252).
    Each year we calculate a revised labor-related share based on the 
relative importance of labor-related cost categories in the input price 
index. There are 21 separate cost categories and respective price 
proxies. These cost categories were illustrated in Table 4.A, 4.B, and 
the appendix found in the May 12, 1998 Federal Register (63 FR 26252). 
Table 8.A below summarizes the updated 1992-based labor-related share.

           Table 8.--A Revised 1992-Based Labor-Related Share
------------------------------------------------------------------------
                                                                 1992-
                                                                 Based
                        Cost category                            market
                                                                 basket
                                                                 weight
------------------------------------------------------------------------
Wages and Salaries...........................................     56.647
Employee Benefits............................................     12.321
Nonmedical Professional Fees.................................      1.959
Labor-intensive Services.....................................      3.738
Capital-related..............................................      2.880
                                                              ----------
    Total....................................................     77.545
------------------------------------------------------------------------

    The forecasted rates of growth used to compute the projected SNF 
market basket percentages, described in the next section, are shown 
below in Table 8.B.

     Table 8.B.--Skilled Nursing Facility Total Cost Market Basket,
                      Forecasted Change, 1997--2001
------------------------------------------------------------------------
                                                               Skilled
                                                               nursing
                                                               facility
             Fiscal years beginning  October 1                total cost
                                                                market
                                                                basket
------------------------------------------------------------------------
October 1996, FY 1997......................................          2.4
October 1997, FY 1998......................................          2.8
October 1998, FY 1999......................................          2.8
October 1999, FY 2000......................................          2.9
October 2000, FY 2001......................................          2.7
Forecasted Average: 1997-2001..............................         2.7
------------------------------------------------------------------------
Source: Standard & Poor's DRI HCC, 1st QTR, 1999;@USSIM/TREND25YR0299
  @CISSIM/CONTROL991.
Released by HCFA, OACT, National Health Statistics Group.

Use of the Skilled Nursing Facility Market Basket Percentage

    Section 1888(e)(5)(B) of the Act defines the SNF market basket 
percentage as the percentage change in the SNF market basket index, 
described in the previous section, from the midpoint of the prior 
fiscal year (or period) to the midpoint of the fiscal year (or other 
period) involved. The facility-specific portion and Federal portion of 
the SNF PPS rates effective with this rule are based on cost reporting 
periods beginning in Federal fiscal year 1995 (base year). The 
percentage increases in the SNF market basket index will be used to 
compute the update factors to reflect cost increases occurring between 
the cost reporting periods represented in the base year and the 
midpoint of the fiscal year (or other period). We used the Standard & 
Poor's DRI CC, 1st quarter 1999 historical and forecasted percentage 
increases of the revised and rebased SNF market basket index for 
routine, ancillary, and capital-related expenses, described in the 
previous section, to compute the update factors. The update factors, as 
described below, will be used to adjust the base year costs for 
computing the facility-specific portion and Federal portion of the SNF 
PPS rates.

A. Facility-Specific Rate Update Factor

    Under section 1888(e)(3)(D)(i) of the Act, for the facility-
specific portion of the SNF PPS rate, we will update a facility's base 
year costs up to the period beginning October 1, 1999 and ending 
September 30, 2000 by the SNF market basket percentage, minus 1 
percentage point. We took the following steps to develop the 12-month 
cost reporting period facility-specific rate update factors shown in 
Table 8.C.
    For the facility rate, we developed factors to inflate data from 
cost reporting periods beginning October 1, 1994 through September 30, 
1995 to the period of October 1, 1999 through September 30, 2000. The 
years through FY 1999 were inflated at a rate of market basket minus 1 
percentage point, while FY 2000 was inflated at the full market basket 
rate of increase.
    1. We first determined the total growth from the midpoint of each 
12-month cost reporting period that began during the period from 
October 1, 1994 through September 30, 1995 to the midpoint of FY 2000.
    2. From this total growth we determined the average annual growth 
rate for each time span.
    3. We subtracted 1 percentage point from each average annual growth 
rate.
    4. These reduced average annual growth rates were converted to 
cumulative growth rates, using each original time span less 1 year at 
the reduced growth rate and with full market basket for the final year. 
(For example, if the time span were for 9 years, we would inflate at 
the market basket minus 1 percentage point annual rate for 8 years and 
at annual market basket rate for 1 additional year).

 Table 8.C.--Update Factors \1\ for Facility-Specific Portion of the SNF
  PPS Rates--Adjust to 12-Month Cost Reporting Periods Beginning On or
  After October 1, 1999 and Before October 1, 2000 From Cost Reporting
                Periods Beginning in FY 1995 (Base Year)
------------------------------------------------------------------------
                                   Adjust from 12-month
   If 12-month cost reporting     cost reporting period    Using update
period in initial period begins     in base year that        factor of
                                          begins
------------------------------------------------------------------------
October 1, 1999................  October 1, 1994........         1.09929
November 1, 1999...............  November 1, 1994.......         1.09745
December 1, 1999...............  December 1, 1994.......         1.09553
January 1, 2000................  January 1, 1995........         1.09378
February 1, 2000...............  February 1, 1995.......         1.09221
March 1, 2000..................  March 1, 1995..........         1.09082
April 1, 2000..................  April 1, 1995..........         1.08937
May 1, 2000....................  May 1, 1995............         1.08788
June 1, 2000...................  June 1, 1995...........         1.08634
July 1, 2000...................  July 1,1995............         1.08486
August 1, 2000.................  August 1, 1995.........         1.08344

[[Page 41699]]

 
September 1, 2000..............  September 1, 1995......         1.08209
------------------------------------------------------------------------
\1\ Source: Standard & Poor's DRI, 1st Qtr 1999; @USSIM/
  TREND25YR0299@CISSIM/CONTROL991.

    SNFs may have cost reporting periods that are fewer than 12 months 
in duration (short period). This may occur, for example, when a 
provider enters the Medicare program after its selected fiscal year has 
already begun or when a provider experiences a change of ownership 
before the end of the cost reporting period. Since short periods affect 
a small number of providers, relative to the total number of SNFs, and 
the facility-specific portion of the SNF PPS rate is subject to a 
transition period, we do not believe consideration of computing a 
``short period specific'' update factor is warranted. Accordingly, we 
will apply the following rules to short periods.
1. Short Period in Base Year
    First, select the later short period in the base year for the 
affected provider. Second, if necessary, adjust the beginning or end of 
the short period as follows. Short periods 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 of determining the short period update factor, if 
the short period begins before the 16th of the month, it will be 
adjusted to a beginning date of the 1st of that month. If the short 
period begins on or after the 16th of the month, it will be adjusted to 
the beginning of the next month. Also, if the short period ends before 
the 16th of the month, it will be adjusted to the end of the preceding 
month, or, if the short period ends on or after the 16th of the month, 
it will be adjusted to the end of that month. Third, determine the 
midpoint of the short period. Fourth, use the following midpoint 
guidelines to determine which 12-month update factor to use from Table 
8.C.

------------------------------------------------------------------------
   If the midpoint of short
     period falls between         Use factor for this 12-month period
------------------------------------------------------------------------
March 16, 1995-April 15, 1995  October 1994-September 1995.
April 16, 1995-May 15, 1995..  November 1994-October 1995.
May 16, 1995-June 15, 1995...  December 1994-November 1995.
June 16, 1995-July 15, 1995..  January 1995-December 1995.
July 16, 1995-August 15, 1995  February 1995-January 1996.
August 16, 1995-September 15,  March 1995-February 1996.
 1995.
September 16, 1995-October     April 1995-March 1996.
 15, 1995.
October 16, 1995-November 15,  May 1995-April 1996.
 1995.
November 16, 1995-December     June 1995-May 1996.
 15, 1995.
December 16, 1995-January 15,  July 1995-June 1996.
 1996.
January 16, 1996-February 15,  August 1995-July 1996.
 1996.
February 16, 1996-March 15,    September 1995-August 1996.
 1996.
------------------------------------------------------------------------

2. Short Period Between Base Year and Initial Period
    A provider may experience a change of ownership or may receive 
proper approval to change its cost reporting period between the base 
year cost reporting period and the initial period. If this occurs, the 
base year cost reporting period may begin on a date that is different 
from that of the initial period. In these instances, use the beginning 
date of the initial period to determine the 12-month factor that 
corresponds to the beginning date of the ``adjusted to period'' in 
Table 8.C.

B. Federal Rate Update Factor

    To update each facility's costs up to the common period, we--
    1. Determined the total growth from the average market basket level 
for the period of July 1, 1998 through September 30, 1999 to the 
average market basket level for the period of October 1, 1999 through 
September 30, 2000.
    2. Calculated the rate of growth between the midpoints of the two 
periods.
    3. Calculated the annual average rate of growth for #2.
    4. Subtracted 1 percentage point from this annual average rate of 
growth.
    5. Using the annual average minus 1 percentage point rate of 
growth, determined the cumulative growth between the midpoints of the 
two periods specified above.
    This revised update factor was used to compute the Federal portion 
of the SNF PPS rate shown in Tables 1 and 2.

V. Regulatory Impact Analysis

    We have examined the impacts of this rule as required by Executive 
Order 12866 and the Regulatory Flexibility Act (RFA) (Pub. L. 96-354). 
Executive Order 12866 directs agencies to assess all costs and benefits 
of available regulatory alternatives and, if regulation is necessary, 
to select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts, and equity). A regulatory impact analysis (RIA) 
must be prepared for major rules with economically significant effects 
($100 million or more annually). This notice is a major rule as defined 
in Title 5, United States Code, section 804(2) because we estimate its 
impact will be to increase the payments to SNFs by approximately $120 
million in FY 2000. The update set forth in this notice applies to 
payments in FY 2000. Accordingly, the analysis that follows describes 
the impact of this 1 year only. In accordance with the requirements of 
Social Security Act, we will publish a notice for each subsequent 
fiscal year that will provide for an update to the

[[Page 41700]]

payment rates and include an associated impact analysis.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. The BBA did not allow options to implementing a SNF 
PPS. For purposes of the RFA, small entities include small businesses, 
nonprofit organizations, and governmental agencies. Most SNFs and most 
other providers and suppliers are small entities, either by nonprofit 
status or by having revenues of $5 million or less annually. For 
purposes of the RFA, all States and tribal governments are not 
considered to be small entities, nor are intermediaries or carriers. 
Individuals and States are not included in the definition of small 
entity. The policies contained in this notice update the SNF PPS rates 
by increasing the payment rates published in the May 12, 1998 interim 
final rule, but will not have a significant effect upon small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 50 beds. We are not preparing a 
rural impact statement since we have determined, and the Secretary 
certifies, that this notice will not have a significant economic impact 
on the operations of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in an annual expenditure by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $100 million. We believe that this notice will not mandate 
expenditures in that amount.
    This notice updates the SNF PPS rates contained in the interim 
final rule, titled ``Prospective Payment System and Consolidated 
Billing for Skilled Nursing Facilities,'' published on May 12, 1998 (63 
FR 26251). The following table presents the projected effects of the 
policy changes in the SNF PPS interim final rule, as well as statutory 
changes effective for FY 2000, on various skilled nursing facility 
categories. We estimate the effects of each policy change by estimating 
payments while holding all other payment variables constant. We use the 
best data available, but we do not attempt to predict behavioral 
responses to our policy changes, and we do not make adjustments for 
future changes in such variables as days or case mix.
    The data used for this analysis are the same data used to create 
the FY 1999 rates that were stipulated in our interim final rule 
published on May 12, 1998 (63 FR 26251). The final data set used in 
developing those rates was used here to estimate the effects of 
changing only one payment variable at a time. We would prefer to use 
more recent data in calculating the FY 2000 impact. However, it should 
be recalled that SNF PPS was phased-in instead of being implemented 
simultaneously in all SNFs nationwide. Consequently, we only have a 
partial database of SNF PPS claims and other data at the present time. 
Due to the phased-in manner in which SNFs came into the PPS, we believe 
that extrapolation of the current partial database of SNF PPS claims 
and other data as the basis of the methodology to calculate the FY 2000 
impact would produce less accurate results than the method we are 
using.
    Next year we anticipate having a full year of SNF PPS claims and 
other data and, under ordinary circumstances, we would be able to show 
the impact of the annual update for SNFs across the various RUG-III 
case-mix groups and associated payments. However, we also anticipate 
that certain events may combine that may limit the scope or accuracy of 
our impact analysis, because such an analysis is future oriented and, 
thus, very susceptible to forecasting errors due to other changes in 
the forecasted impact time period. Examples of such events may be newly 
legislated general Medicare program funding changes by the Congress, or 
changes specifically related to SNFs. In addition, changes to the 
Medicare program will continue to be made as a result of the Balanced 
Budget Act of 1997. Although these changes may not be specific to SNF 
PPS, due to the nature of the Medicare program the changes may 
interact, and the complexity of the interaction of these changes could 
make it very difficult to accurately predict the full scope of the 
impact upon SNFs.
    While the discussion above acknowledges the difficulties we 
anticipate encountering, we also want to state that our first and 
foremost concern has always been and will continue to be the effect of 
policy changes on beneficiaries' access to affordable quality health 
care. For example, if research indicates that refinements are necessary 
to the case mix classification system and the PPS rates, we will make 
the changes that ensure that the rates properly account for the 
intensity of resources involved in furnishing quality patient care. As 
discussed earlier, we are funding substantial research to examine the 
potential for refinements to the case mix methodology, including an 
examination of medication therapy, medically complex patients, and 
other non-therapy ancillary services.
    In addition to the above research efforts, we are proactively 
monitoring the impact of the Balanced Budget Act of 1997 to ensure that 
beneficiary access to quality SNF services is not compromised. That 
monitoring includes the gathering of extensive objective information 
using various sources from across the nation to help us determine how 
access to care and quality of care may be impacted by the rates, and 
what specific corrective actions may be necessary. As we accumulate 
data and learn more about the effects of the new payment system, we 
will report the results.
    As stated previously in this preamble, the aggregate increase in 
payments associated with this update is estimated to be $120 million. 
There are four areas of change that produce this increase for 
facilities.
     The effect of the Federal transition, which results in 
most facilities being paid at 50 percent the Federal rate and 50 
percent the facility-specific rate instead of the current 25 percent 
Federal rate and 75 percent facility-specific rate.
     The effect of the methodological change to the Federal 
rates described in the final rule to be published elsewhere in this 
Federal Register document. This resulted in increases of $.32 and $.24 
to the unadjusted urban and rural case-mix component of the Federal 
rates, respectively, and a $.25 and $.21 to the unadjusted urban and 
rural non-case-mix component of the Federal rates, respectively.
     The effect of changes to the wage index used in this 
year's rates as compared to last year's rates. This is budget neutral 
in total but may affect individual facilities in either direction.
     The total change in payments from FY 1999 levels to FY 
2000 levels. This includes all the previous changes in addition to the 
effect of the update to the rates.
    As can be seen from the table below, some of these areas result in 
increased aggregate payments and others tend to lower them. The four 
areas of change are as follows:
    The first row of the table includes the effects on all facilities. 
The next six rows show the effects on facilities split by hospital-
based or freestanding and urban or rural. The rest of the table shows 
the effects on urban or rural status by census region.

[[Page 41701]]

    The first column in the table shows the number of facilities in the 
database. The second column shows the effect of the transition to the 
Federal rates. This change has an overall effect of lowering payments 
by 1.4 percent with most of the lowering coming from hospital-based 
facilities. There are a few regions that have increased payments due to 
this provision but most have lower payments with the largest effect 
being in the West South Central region for both urban and rural 
facilities.
    The next column shows the effect of the rate increase associated 
with the methodological change to the Federal rates referred to above. 
As seen in the table, the add-on increases payments by 0.2 percent on 
average and is fairly constant for all types of facilities and their 
location. This consistency should be expected since the add-on is a 
constant amount for each provider.
    The next column shows the effect of the changes in the wage index 
in this year's rates. Since these changes were made budget-neutral, the 
total effect is no change. However, there is variation based on type of 
facility and location. Urban facilities have their payments reduced, 
although some regions do show slight increases. However, rural 
facilities have their payments increased with the largest effect in the 
West North Central region.
    The final column of the table shows the effect of all the changes 
on the FY 2000 payments. This includes all the previous changes and the 
update to this year's rates of market basket minus 1 percentage point 
as required by law. Therefore, it is assumed that payments will 
increase by 0.9 percent in total if there are no behavioral changes by 
the facilities. As can be seen from this table, the effects on specific 
types of providers and by location differ by much larger amounts.

----------------------------------------------------------------------------------------------------------------
                                                   Transition to     Add-on to    Change in wage   Total FY 2000
                                     Number of     federal rates   federal rates       index         change **
                                    facilities       (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Total...........................            9037            -1.4             0.2             0.0             0.9
Total urban.....................            6300            -1.4             0.2            -0.3             0.6
Total rural.....................            2737            -1.1             0.1             1.3             2.4
Hospital-based urban............             683            -6.1             0.1            -0.2            -4.2
Freestanding urban..............            5617            -0.5             0.2            -0.3             1.5
Hospital-based rural............             533            -4.6             0.1             0.9            -1.6
Freestanding rural..............            2204            -0.3             0.1             1.4             3.3
Urban by region:
    New England.................             630             3.3             0.2            -1.2             4.4
    Middle Atlantic.............             877             1.9             0.2             0.1             4.4
    South Atlantic..............             959            -3.0             0.1             0.4            -0.5
    East North Central..........            1232            -0.2             0.2            -0.2             1.9
    East South Central..........             212            -2.4             0.2             0.5             0.3
    West North Central..........             469            -1.6             0.2             0.4             1.1
    West South Central..........             519            -6.3             0.1            -0.5            -4.7
    Mountain....................             303            -4.6             0.1             0.2            -2.3
    Pacific.....................            1070            -2.9             0.1            -0.3            -1.1
Rural by region:
    New England.................              88             2.2             0.1             1.1             5.6
    Middle Atlantic.............             144             1.2             0.1             0.9             4.4
    South Atlantic..............             373            -1.5             0.1             1.4             2.1
    East North Central..........             561            -0.0             0.1             1.3             3.5
    East South Central..........             255            -2.3             0.1             1.6             1.4
    West North Central..........             581            -0.4             0.1             2.8             4.6
    West South Central..........             354            -4.4             0.1             1.0            -1.3
    Mountain....................             204            -1.9             0.1             2.1             2.4
    Pacific.....................             151            -0.2             0.1             0.6            2.6
----------------------------------------------------------------------------------------------------------------
** The effects of the various changes are not additive.

    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

    Authority: Section 1888(e) of the Social Security Act (42 U.S.C. 
1395yy (e)).

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

    Dated: June 17, 1999.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Approved: July 19, 1999.
Donna E. Shalala,
Secretary.
[FR Doc. 99-19479 Filed 7-29-99; 8:45 am]
BILLING CODE 4120-01-P