[Federal Register Volume 65, Number 148 (Tuesday, August 1, 2000)]
[Rules and Regulations]
[Pages 47054-47211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19108]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 410, 412, 413, and 485
[HCFA-1118-F]
RIN 0938-AK09
Medicare Program; Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 2001 Rates
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: We are revising the Medicare hospital inpatient prospective
payment system for operating costs to: implement applicable statutory
requirements, including a number of provisions of the Medicare,
Medicaid, and State Children's Health Insurance Program Balanced Budget
Refinement Act of 1999 (Pub. L. 106-113); and implement changes arising
from our continuing experience with the system. In addition, in the
Addendum to this final rule, we describe changes to the amounts and
factors used to determine the rates for Medicare hospital inpatient
services for
[[Page 47055]]
operating costs and capital-related costs. These changes apply to
discharges occurring on or after October 1, 2000. We also set forth
rate-of-increase limits and make changes to our policy for hospitals
and hospital units excluded from the prospective payment systems.
We are making changes to the policies governing payments to
hospitals for the direct costs of graduate medical education, sole
community hospitals and critical access hospitals.
We are adding a new condition of participation on organ, tissue,
and eye procurement for critical access hospitals that parallels the
condition of participation that we previously published for all other
Medicare-participating hospitals.
Lastly, we are finalizing a January 20, 2000 interim final rule
with comment period (65 FR 3136) that sets forth the criteria to be
used in calculating the Medicare disproportionate share adjustment in
reference to Medicaid expansion waiver patient days under section 1115
of the Social Security Act.
DATES: The provisions of this final rule are effective October 1, 2000.
This rule is a major rule as defined in 5 U.S.C. 804(2). Pursuant to 5
U.S.C. 801(a)(1)(A), we are submitting a report to Congress on this
rule on August 1, 2000.
FOR FURTHER INFORMATION CONTACT:
Steve Phillips, (410) 786-4531,
Operating Prospective
Payment, Diagnostic
Related Groups, Wage
Index, Reclassifications, and Sole Community Hospital Issues
Tzvi Hefter, (410) 786-4487,
Capital Prospective
Payment, Excluded
Hospitals, Graduate
Medical Education and
Critical Access Hospital
Issues
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I. Background
A. Summary
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to pay for the capital-related costs of hospital inpatient
stays under a prospective payment system. Under these prospective
payment systems, Medicare payment for hospital inpatient operating and
capital-related costs is made at predetermined, specific rates for each
hospital discharge. Discharges are classified according to a list of
diagnosis-related groups (DRGs).
Certain specialty hospitals are excluded from the prospective
payment systems. Under section 1886(d)(1)(B) of the Act, the following
hospitals and hospital units are excluded from the prospective payment
systems: psychiatric hospitals and units, rehabilitation hospitals and
units, children's hospitals, long-term care hospitals, and cancer
hospitals. For these hospitals and units, Medicare payment for
operating costs is based on reasonable costs subject to a hospital-
specific annual limit.
Under sections 1820 and 1834(g) of the Act, payments are made to
critical access hospitals (CAHs) (that is, rural nonprofit hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services on a reasonable cost basis. Reasonable cost is
determined under the provisions of section 1861(v)(i)(A) of the Act and
existing regulations under 42 CFR Parts 413 and 415.
Under section 1886(a)(4) of the Act, costs of approved educational
activities programs are excluded from the operating costs of inpatient
hospital services. Hospitals with approved graduate medical education
(GME) programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act; the amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year.
The regulations governing the hospital inpatient prospective
payment system are located in 42 CFR Part 412. The regulations
governing excluded hospitals and hospital units are located in 42 CFR
Parts 412 and 413, and the GME regulations are located in 42 CFR Part
413.
On November 29, 1999, the Medicare, Medicaid, and State Children's
Health Insurance Program (SCHIP) Balanced Budget Refinement Act of
1999, Public Law 106-113, was enacted. Public Law 106-113 made a number
of changes to the Act affecting prospective payments to hospitals for
inpatient services and payments to excluded hospitals. This final rule
implements amendments enacted by Public Law 106-113 relating to FY 2001
payments for GME costs, disproportionate share hospitals (DSHs), sole
community hospitals (SCHs), and CAHs. These changes are addressed in
sections IV and VI of this preamble.
Other related provisions of Public Law 106-113 that pertain to
Medicare hospital inpatient payments with an effective date prior to
October 1, 2000, are addressed in an interim final rule with comment
period that is published elsewhere in this issue of the Federal
Register.
Public Law 106-113 also amended section 1886(j) of the Act, which
was added by section 4421 of the Balanced Budget Act of 1997 (Public
Law 105-33). Section 1886(j) of the Act provides for a fully
implemented prospective payment system for inpatient rehabilitation
hospitals and rehabilitation units, effective for cost reporting
periods beginning on or after October 1, 2002, with payment provisions
during a transitional period of October 1, 2000 to October 1, 2002
based on target amounts specified in section 1886(b) of the Act. We are
issuing a separate notice of proposed rulemaking to implement the
prospective payment system for inpatient rehabilitation hospitals and
units.
[[Page 47056]]
B. Summary of the Provisions of the May 5, 2000 Proposed Rule
On May 5, 2000, we published a proposed rule in the Federal
Register (65 FR 26282) that set forth proposed changes to the Medicare
hospital inpatient prospective payment system for operating costs for
FY 2001. In the proposed rule, we made no policy changes relating to
payments for capital-related costs under the hospital inpatient
prospective payment system in FY 2001. However, we did propose changes
to the amounts and factors used in determining the rates for capital-
related costs for FY 2001. The proposed rule also included changes
relating to payments for GME costs and payments to excluded hospitals
and units, SCHs, and CAHs.
The following is a summary of the major changes we proposed and the
issues we addressed in the May 5, 2000 proposed rule:
We proposed changes to the FY 2001 DRG classifications and
relative weights, as required by section 1886(d)(4)(C) of the Act.
We proposed an update to the FY 2001 hospital wage index,
using FY 1997 wage data. We also proposed to implement the second year
phaseout of Part A physician teaching-related costs, Part A certified
registered nurse anesthetist (CRNA) costs and resident costs from the
FY 2001 wage index calculation.
We discussed the impact of our policy on post acute care
transfers and set forth certain proposed changes concerning sole
community hospitals (SCHs), rural referral centers (RRCs), the indirect
medical education adjustment, the DSH adjustment and collection of data
on uncompensated costs for services furnished in hospitals, the
Medicare Geographic Classification Review Board (MGCRB)
classifications, and payment for the direct costs of GME.
We discussed FY 2001 as the last year of a 10-year
transition established to phase-in the prospective payment system for
capital-related costs for inpatient hospital services.
We discussed a number of proposals concerning excluded
hospital and hospital units and CAHs. The proposed changes addressed
limits on and adjustments to the proposed target amounts for FY 2001;
development of a prospective payment system for inpatient
rehabilitation hospitals and units; continuous improvement bonus
payments; clarification that the 5-percent threshold used in
calculating an excluded hospital's cost per discharge is based only on
Medicare inpatients discharged from the hospital-within-a-hospital; an
all-inclusive payment rate option for CAHs; and adding a new condition
of participation for CAHs relating to organ, tissue, and eye
procurement.
In the Addendum to the proposed rule, we set forth
proposed changes to the amounts and factors for determining the FY 2001
prospective payment rates for operating costs and capital-related
costs. We also addressed update factors for determining the rate-of-
increase limits for cost reporting periods beginning in FY 2001 for
hospitals and hospital units excluded from the prospective payment
system.
In Appendix A of the proposed rule, we set forth an
analysis of the impact of the proposed changes on affected entities.
In Appendix B of the proposed rule, we set forth the
technical appendix on the proposed FY 2001 capital cost model.
In Appendix C of the proposed rule, as required by section
1886(e)(3) (B) of the Act, we set forth our report to Congress on our
initial estimate of a recommended update factor for FY 2001 for
payments to hospitals included in the prospective payment systems, and
hospitals excluded from the prospective payment systems.
In Appendix D of the proposed rule, as required by
sections 1886(e)(4) and (e)(5) of the Act, we included our
recommendation of the appropriate percentage change for FY 2001 for:
--Large urban area and other area average standardized amounts (and
hospital-specific rates applicable to sole community and Medicare-
dependent, small rural hospitals) for hospital inpatient services paid
for under the prospective payment system for operating costs; and
--Target rate-of-increase limits to the allowable operating costs of
hospital inpatient services furnished by hospitals and hospital units
excluded from the prospective payment system.
In the proposed rule, we discussed recommendations by the
Medicare Payment Advisory Commission (MedPAC) concerning hospital
inpatient payment policies and presented our responses to those
recommendations. Under section 1805(b) of the Act, MedPAC is required
to submit a report to Congress that reviews and makes recommendations
on Medicare payment policies no later than March 1 of each year. This
year, MedPAC released a subsequent report in June containing additional
recommendations. We respond to those recommendations in section IV.E.
of this preamble.
C. Public Comments Received in Response to the Proposed Rule
We received a total of 290 timely items of correspondence
containing multiple comments on the proposed rule. Major issues
addressed by commenters included the creation of a new DRG for pancreas
and kidney transplants, the adequacy of the DRG for heart assist
devices, various aspects of the wage index calculation, rebasing of the
SCH payment rates, and reclassification of hospitals.
Summaries of the public comments received and our responses to
those comments are set forth below under the appropriate section
heading.
D. Final Rule for the January 20, 2000 Interim Final Rule
On January 20, 2000, we published in the Federal Register an
interim final rule with comment period (65 F 3136) to implement a
change in the Medicare DSH adjustment calculation policy in reference
to section 1115 expansion waiver days. The interim final rule set forth
the criteria to use in calculating the Medicare DSH adjustment for
hospitals for purposes of payment under the prospective payment system.
This final rule finalizes the policy in this interim final rule with
comment period. We discuss this policy in detail in Section IV.E.2. of
this preamble.
II. Changes to DRG Classifications and Relative Weights
A. Background
Under the prospective payment system, we pay for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case takes an individual hospital's
payment rate per case and multiplies it by the weight of the DRG to
which the case is assigned. Each DRG weight represents the average
resources required to care for cases in that particular DRG relative to
the average resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources. Changes to the DRG
classification system and the recalibration of the DRG
[[Page 47057]]
weights for discharges occurring on or after October 1, 2000, are
discussed below.
B. DRG Reclassification
1. General
Cases are classified into DRGs for payment under the prospective
payment system based on the principal diagnosis, up to eight additional
diagnoses, and up to six procedures performed during the stay, as well
as age, sex, and discharge status of the patient. The diagnosis and
procedure information is reported by the hospital using codes from the
International Classification of Diseases, Ninth Revision, Clinical
Modification (ICD-9-CM). Medicare fiscal intermediaries enter the
information into their claims processing systems and subject it to a
series of automated screens called the Medicare Code Editor (MCE).
These screens are designed to identify cases that require further
review before classification into a DRG.
After screening through the MCE and any further development of the
claims, cases are classified into the appropriate DRG by the Medicare
GROUPER software program. The GROUPER program was developed as a means
of classifying each case into a DRG on the basis of the diagnosis and
procedure codes and demographic information (that is, sex, age, and
discharge status). It is used both to classify past cases in order to
measure relative hospital resource consumption to establish the DRG
weights and to classify current cases for purposes of determining
payment. The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible DRG classification
changes and to recalibrate the DRG weights.
In the July 30, 1999 final rule (64 FR 41500), we discussed a
process for considering non-MedPAR data in the recalibration process.
In order for the use of particular data to be feasible, we must have
sufficient time to evaluate and test the data. The time necessary to do
so depends upon the nature and quality of the data submitted.
Generally, however, a significant sample of the data should be
submitted by August 1, approximately 8 months prior to the publication
of the proposed rule, so that we can test the data and make a
preliminary assessment as to the feasibility of using the data.
Subsequently, a complete database should be submitted no later than
December 1 for consideration in conjunction with the next year's
proposed rule, and as appropriate, in the recalibration in the final
rule following the proposed rule.
Currently, cases are assigned to one of 501 DRGs (including one DRG
for a diagnosis that is invalid as a discharge diagnosis and one DRG
for ungroupable diagnoses) in 25 major diagnostic categories (MDCs).
Most MDCs are based on a particular organ system of the body (for
example, MDC 6 (Diseases and Disorders of the Digestive System));
however, some MDCs are not constructed on this basis since they involve
multiple organ systems (for example, MDC 22 (Burns)).
In general, cases are assigned to an MDC based on the principal
diagnosis, before assignment to a DRG. However, there are presently
five DRGs to which cases are directly assigned on the basis of
procedure codes. These are the DRGs for liver, bone marrow, and lung
transplants (DRGs 480, 481, and 495, respectively) and the two DRGs for
tracheostomies (DRGs 482 and 483). Cases are assigned to these DRGs
before classification to an MDC.
Within most MDCs, cases are then divided into surgical DRGs (based
on a surgical hierarchy that orders individual procedures or groups of
procedures by resource intensity) and medical DRGs. Medical DRGs
generally are differentiated on the basis of diagnosis and age. Some
surgical and medical DRGs are further differentiated based on the
presence or absence of complications or comorbidities (CC).
Generally, the GROUPER does not consider other procedures; that is,
nonsurgical procedures or minor surgical procedures generally not
performed in an operating room are not listed as operating room (OR)
procedures in the GROUPER decision tables. However, there are a few
non-OR procedures that do affect DRG assignment for certain principal
diagnoses, such as extracorporeal shock wave lithotripsy for patients
with a principal diagnosis of urinary stones.
We proposed several changes to the DRG classification system for FY
2001 and discussed other issues concerning DRGs. The proposed changes,
the public comments we received concerning them, and the final DRG
changes are set forth below. Unless otherwise noted, the changes we are
implementing will be effective in the revised GROUPER software (Version
18.0) to be implemented for discharges on or after October 1, 2000.
(Also unless otherwise specified, our DRG analysis is based on the full
(100 percent) FY 1999 MedPAR file (bills received through December 31,
1999 for discharges in FY 1999).
2. MDC 5 (Diseases and Disorders of the Circulatory System)
In the August 29, 1997 final rule with comment period (62 FR
45974), we noted that, because of the many recent changes in heart
surgery, we were considering conducting a comprehensive review of the
MDC 5 surgical DRGs. In the July 31, 1998 final rule with comment
period (63 FR 40956), we did adopt some changes to the MDC 5 surgical
DRGs. Since that time, we have received inquiries on a continuing basis
regarding these DRGs. We have continued to review Medicare claims data
and, based on our analysis, we proposed several DRG changes in MDC 5 in
the May 5, 2000 proposed rule.
a. Heart Transplant (DRG 103). As previously stated, cases are
generally assigned to an MDC based on principal diagnosis and
subsequently assigned to surgical or medical DRGs included in that MDC.
However, cases involving liver, bone marrow, and lung transplants (DRGs
480, 481, and 495, respectively) and the two DRGs for tracheostomies
(DRGs 482 and 483) are directly assigned on the basis of procedure
codes. Cases assigned to these DRGs before classification to an MDC are
referred to as pre-MDC. However, cases involving heart transplants are
currently assigned first to MDC 5 and then to DRG 103.
Currently, when a bone marrow transplant and a heart transplant are
performed during the same admission, the case is assigned to DRG 481
(Bone Marrow Transplant). Because bone marrow transplant cases are
first classified to pre-MDC, while heart transplants are first assigned
to MDC 5, the bone marrow transplant assumes precedence in the
assignment of the case to a DRG. However, payment for DRG 481 is
substantially less than DRG 103. For FY 2000, the relative weight for
DRG 103 is 19.5100, while the relative weight for DRG 481 is 8.7285.
To ensure appropriate DRG assignment of these cases, we proposed
that the heart transplant DRG, which encompasses combined heart-lung
transplantation (ICD-9-CM procedure code 33.6) and heart
transplantation (ICD-9-CM procedure code 37.5) be assigned to pre-MDC.
In this way, cases involving a bone marrow transplant and a heart
transplant would be assigned to DRG 103 (DRG 103 would be reordered
higher in the pre-MDC surgical hierarchy, as discussed in section
II.B.5. of this preamble).
We received two comments in support of this proposed change and are
adopting it as final.
[[Page 47058]]
b. Heart Assist Devices. We continue to review data in MDC 5
(Diseases and Disorders of the Circulatory System) to determine if
cases are being assigned to the most appropriate DRG based on clinical
coherence and similar resource consumption. At the December 1, 1994
ICD-9-CM Coordination and Maintenance Committee meeting, we recommended
that new codes be created to capture single and bi-ventricular heart
assist systems.
These codes, 37.65 (Implant of an external, pulsatile heart assist
system) and 37.66 (Implant of an implantable, pulsatile heart assist
system), were adopted for use for discharges occurring on or after
October 1, 1995. However, code 37.66 was deemed investigational and was
not considered a covered procedure. Effective May 5, 1997, we revised
Medicare coverage of heart assist devices to allow coverage of a
ventricular assist device (code 37.66) used for support of blood
circulation postcardiotomy if certain conditions were met.
Due to some residual misunderstanding regarding this coverage
policy, we emphasize that this device was and will continue to be
listed as a noncovered procedure in the Medicare Code Editor (MCE), the
front-end software product in the GROUPER program that detects and
reports errors in the coding of claims data. The reason that this
device is listed in the MCE, in spite of the fact that its implantation
is covered, is because of the stringent conditions that must be met by
hospitals in order to receive payment.
In the August 29, 1997 final rule (62 FR 45973), we moved procedure
code 37.66 from DRGs 110 and 111 \1\ (Major Cardiovascular Procedures
with and without CCs, respectively) to DRG 108 (Other Cardiothoracic
Procedures). As stated in the July 31, 1998 final rule (63 FR 40956),
we moved procedure code 37.66 to DRGs 104 and 105 (Cardiac Valve and
Other Major Cardiothoracic Procedures with and without CCs,
respectively) for FY 1999.
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\1\ A single title combined with two DRG numbers is used to
signify pairs. Generally, the first DRG is for cases with CC and the
second DRG is for cases without CC. If a third number is included,
it represents cases with patients who are age 0-17. Occasionally, a
pair of DRGs is split between age 17 and age 0-17.
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In the July 30, 1999 final rule (64 FR 41498), we responded to a
comment suggesting that heart assist devices be assigned to DRG 103.
For the proposed rule we reviewed the 100 percent FY 1999 MedPAR file
containing bills through December 31, 1999, and found that there were a
total of 47 implantable heart assist system procedures performed on
Medicare beneficiaries. Of these cases, 13 (approximately 28 percent)
were assigned to DRG 103 (Heart Transplant) and four (approximately 9
percent) were assigned to DRG 483 (Tracheostomy Except for Face, Mouth
and Neck Diagnoses), and, therefore, were paid at significantly higher
rates than the remaining 30 cases. All of the procedure code 37.66
cases have extremely high charges, which is consistent with past
analysis, and all of these cases are subject to payment as cost
outliers.
Our data analysis indicated that the most cases in any one hospital
was 5, while 17 hospitals performed only one heart assist system
implant each. We reiterate that only heart transplant cases can be
properly assigned to the transplant DRG (August 29, 1997 final rule (62
FR 45974)). Since heart assist devices are used across DRGs, many not
involving a transplant, we did not propose to assign procedure code
37.66 to DRG 103.
In addition to the review of 37.66, we also looked at procedure
codes 37.62 (Implant of other heart assist system), 37.63 (Replacement
and repair of heart assist system), and 37.65 (Implant of an external,
pulsatile heart assist system). These cases are currently assigned to
DRGs 110 and 111 (Major Cardiovascular Procedures). We believe that
these procedures are similar both clinically and in terms of resource
utilization to procedure code 37.66, which is already assigned to DRGs
104 and 105. Therefore, we proposed to move codes 37.62, 37.63, and
37.65 from DRGs 110 and 111 to DRGs 104 and 105.
Comment: We received four comments on this proposal.
Two comments in favor of our proposal were received from national
associations concerned with health care delivery.
Two commenters requested reevaluation of the DRG assignment of
mechanical heart assist devices, particularly procedure code 37.66, and
suggested that a new DRG be created to classify this technology, or
that these cases be assigned to DRG 103 (Heart Transplant). The
commenters pointed out that the heart assist implantation procedure is
typically performed in the same medical centers by the same surgical
teams as the heart transplant procedure.
With respect to our past decision not to assign cases with
procedure code 37.66 to DRG 103, one commenter acknowledged our
analysis of 1996 MedPAR data showing the costs of these cases to be
more similar to DRGs 104 and 105 than DRG 103, but suggested that we
look at more recent data. The commenter also questioned our rationale
for not assigning these cases to DRG 103 on the basis that heart assist
devices are used across DRGs.
One commenter argued that, as all the cases with procedure code
37.66 were qualified as cost outliers, the misplacement of this
procedure is evident. This commenter also noted that use of this
procedure is likely to increase in the future and suggested that HCFA
position itself ahead of the curve by increasing payment now in
anticipation of this event. The commenter urged HCFA to examine the
option of combining code 37.66 with other clinically similar low-volume
procedures, and creating a new DRG that would more appropriately pay
these cases. This recommended new DRG could conceivably include codes
37.62, 37.63, and 37.65, as they are similar both clinically and in
terms of resource consumption.
Finally, one commenter expressed concern that the uncovered status
of procedure code 37.66 in the MCE may be resulting in inappropriate
payment denials. The commenter recommended that HCFA review the
procedures employed by fiscal intermediaries to override the MCE edits.
Response: We are adopting our proposed change to assign procedure
codes 37.62, 37.63, and 37.65 to DRGs 104 and 105.
With respect to the comments regarding procedure code 37.66, we
have continually considered the issue of DRG assignment of heart assist
devices since this technology was assigned an ICD-9-CM code in 1995,
and became a Medicare covered procedure (if specific conditions were
met) effective in 1997. As we noted in the proposed rule, these are
costly cases that are currently spread across several DRGs. Although
the outlier policy is intended to help hospitals offset unusually
costly cases, we are concerned when a particular procedure always
qualifies as an outlier case.
However, we do not believe it would be appropriate to redefine DRG
103 to include these cases at this time. The presently limited
incidence of these cases, with very few cases occurring at any
particular hospital over the course of a year, does not warrant
disrupting the clinical coherence of DRG 103. The fact that these cases
are spread across a number of DRGs indicates they do not represent a
clinically cohesive group of patients in terms of their associated
diagnoses or other procedures.
We will continue to monitor and evaluate these cases to determine
whether a better approach might be
[[Page 47059]]
identified, including the possibility of a new DRG for procedure codes
37.62, 37.63, 37.65, and 37.66. We note that the classification of
patients into DRGs is a constantly evolving process. As there are
changes in the coding system, data collection, medical technology, or
medical practice, all DRG definitions will be reviewed and potentially
revised.
Concerning the concept of HCFA positioning itself ``ahead of the
curve'' by anticipating increased use of heart assist devices and
raising payment accordingly, we are reluctant to attempt to predict
future trends in medical practice, especially when such predictions
would affect payments across all DRGs as a result of DRG recalibration.
We appreciate the industry's continued interest in this system, and
look forward to working together to arrive at equitable payments for
this and other new technologies.
With respect to the comment concerning fiscal intermediary
overrides of MCE edits listing procedure code 37.66 as noncovered, we
will instruct our fiscal intermediaries to be aware of this issue. We
are concerned that Medicare payment for this procedure be limited to
those cases for which coverage is appropriate and that payment is not
inappropriately denied.
c. Platelet Inhibitors. Effective October 1, 1998, procedure code
99.20 (Injection or infusion of platelet inhibitor) was created. The
use of platelet inhibitors have been shown to significantly decrease
the rate of acute vessel closure, as well as the rate of cardiac
complications and death.\2\ Platelet inhibitors are frequently
administered to patients undergoing percutaneous transluminal coronary
angioplasty (PTCA). In addition, patients admitted with unstable angina
may also benefit from platelet inhibitors.\2\ This procedure code is
designated as a non-OR procedure that does not affect DRG assignment
(platelet inhibitors are administered either through intravenous
injection or infusion).
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\2\ Topol EJ and Serruys PW. ``Frontiers in Interventional
Cardiology.'' Circulation.1998; 98: 1802. and Frishman W et al.
``Medical therapies for the Prevention of Restenosis after
Percutaneous Coronary Interventions.'' Curr Probl Cardology. 1998;
23: 555.
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For the past 2 years, a manufacturer of platelet inhibitors has
submitted data to support its position that cases involving platelet
inhibitor therapy receiving angioplasty should be reclassified from DRG
112 (Percutaneous Cardiovascular Procedures) to DRG 116 (Other
Permanent Cardiac Pacemaker Implant or PTCA with Coronary Artery Stent
Implant). Using the 100 percent FY 1999 MedPAR file that contains
discharges through September 30, 1999, we performed analysis for the
proposed rule of the cases for which procedure code 99.20 was reported.
There were a total of 37,222 cases spread across 123 DRGs.
The majority of the platelet inhibitor cases, 28,022 (75 percent of
all platelet inhibitor cases), are already assigned to DRG 116. The
average standardized charges for these cases are approximately $26,683,
compared to approximately $25,251 for DRG 116 overall. In DRG 112,
there were 4,310 platelet inhibitor cases (12 percent of all platelet
inhibitor cases) assigned. The average standardized charge for these
cases is approximately $22,786, compared to approximately $20,224 for
DRG 112 overall. Although the platelet inhibitor therapy cases that are
classified to DRG 112 do have somewhat higher charges than the average
case assigned to this DRG (11 percent, or $2,563), we found several
procedures in DRG 112 with average standardized charges higher than the
platelet inhibitor cases. For example, there were 1,560 cases in which
a single vessel PTCA or coronary atherectomy with thrombolytic agent
(procedure code 36.02) was performed with an average standardized
charge of approximately $25,181, and there were 4,951 cases in which a
multiple vessel PTCA or coronary atherectomy was performed, with or
without a thrombolytic agent (procedure code 36.05) with an average
standardized charge of approximately $23,608.
We also noted that there are several procedures assigned to DRG 112
that have average standardized charges lower than the average charges
for all cases in the DRG. For example, average charges for cases with
procedure code 37.34 (Catheter ablation of lesion or tissues of heart)
were $18,429.
There is always some variation in charges within a DRG. The
difference in variations of charges in DRG 112 is within the normal
range of charge variations.
Clinical homogeneity within DRGs has always been a fundamental
principle considered when assigning codes to appropriate DRGs.
Currently, DRG 116 includes cases involving the insertion of a
pacemaker as well as the insertion of coronary artery stents with PTCA.
On the other hand, cases assigned to DRG 112 involve less invasive
operating room and, in some cases, nonoperating room procedures.
The basis for DRG assignment has generally been the diagnosis of
the patient or the procedures performed. To the extent the use of a
particular technology becomes prevalent in the treatment of a
particular type of case, the DRG system is designed to account for any
increases or decreases in costs through recalibration. Hospitals
frequently benefit from this process while efficiency-enhancing
technology is being introduced. We believe that the update factors
established in section 1886(b)(3)(B)(i) of the Act, combined with the
potential for continuing improvements in hospital productivity, and
annual recalibration of the DRG weights, are adequate to finance
appropriate care of Medicare patients.
We also discussed in the proposed rule our analysis of cases where
platelet inhibitor therapy is targeted on acute coronary syndrome
patients without coronary intervention. These cases are assigned to DRG
124 (Circulatory Disorders Except Acute Myocardial Infarction with
Cardiac Catheterization and Complex Diagnosis) or DRG 140 (Angina
Pectoris). The concern is that both types of cases, those performed in
conjunction with coronary intervention and those without, be given an
equal focus in this evaluation.
Based on our analysis, we found 410 platelet inhibitor cases (1
percent) assigned to DRG 124. This is a small percentage of cases in
comparison to the overall total of 134,759 cases assigned to this DRG.
The platelet inhibitor cases had an average standardized charge of
approximately $17,378 compared to approximately $14,730 for DRG 124
overall. As we have indicated, there is always some variation in
charges within a DRG and this difference is within normal variation.
There were 66 platelet inhibitor cases (0.2 percent) assigned to
DRG 140. The average standardized charge for these cases is higher than
the overall DRG charge, approximately $8,992 and $5,657, respectively.
However, it represents a small percentage of the total (76,913) cases
assigned to DRG 140.
In summary, currently 75 percent of cases where code 99.20 is
present are assigned to DRG 116. The next most common DRG where these
cases are assigned is DRG 112 (12 percent). Cases assigned to DRG 116
generally involve implantation of a pacemaker or artery stent, while
cases assigned to DRG 112 involve percutaneous cardiovascular
procedures. Our analysis found a $3,897 difference between cases
involving platelet inhibitor therapy that were assigned to DRG 116 and
cases assigned to DRG 112, indicating a clinical distinction between
the cases grouping to the two DRGs. Finally, among platelet
[[Page 47060]]
inhibitor therapy cases that are assigned to DRG 112, our analysis
found that the average charges are well within the normal variation
around the overall average charges within the DRG. Based on these
findings, we believe it would be inappropriate to assign all cases
where procedure code 99.20 is present to DRG 116. Therefore, we did not
propose to change our current policy that specifies that assignment of
cases to this code does not affect the DRG assignment.
Comment: We received two comments on this issue. One commenter from
a national hospital association supported not assigning code 99.20 to
DRG 116. The other commenter argued that the analysis on which our
position was based is flawed. This commenter believed that perhaps as
many as five times the 37,222 cases we identified with ICD-9-CM
procedure code 99.20 actually exist in the data but the procedure was
not coded. To remedy this, the commenter suggested two options HCFA
could pursue. The first option would be to reexamine the data file with
the goal of excluding cases that appear to be miscoded. The commenter
suggested that HCFA might check total pharmacy charges in MedPAR and
exclude from the analysis cases without ICD-9-CM procedure code 99.20
that have pharmacy charges over a certain threshold (for example, a
threshold of $500). The second option would be to use outside data to
capture pharmacy information which would provide more reliable
information than coding with procedure code 99.20.
The commenter recommended that HCFA make a concerted effort,
perhaps through the Medicare fiscal intermediaries, to instruct
hospitals to use ICD-9-CM procedure code 99.20 on the claim of any case
that receives any of the three platelet inhibitors.
Response: We appreciate the support of the hospital association for
our position on this issue.
In response to the comment that the MedPAR data underreport
procedure code 99.20 because the data do not affect DRG assignment and
payment, we believe it is in hospitals' best interest to submit
accurate billing data that are utilized in the DRG reclassification and
recalibration of the DRG relative weights process.
We disagree with the recommendation that we exclude from our
analysis any bill with over $500 in pharmacy charges that does not
report procedure code 99.20. We question the analytical validity of
this approach, particularly given that many Medicare beneficiaries have
multiple chronic conditions requiring multiple medications. It is
simply not possible to determine coding accuracy by reviewing charge
data submitted on bills. The only way to identify coding errors would
be to review the actual medical records. To exclude cases with pharmacy
charges exceeding a certain predetermined threshold would likely skew
the results of any such analysis.
We remain open to considering and using non-MedPAR data to make DRG
changes if the data are reliable and validated. In the July 31, 1999
final rule (64 FR 41499), we described the timetable and process for
interested parties to submit non-MedPAR data.
With respect to the recommendation that we make a concerted effort
to ensure that hospitals use procedure code 99.20 appropriately, from
the inception of this procedure code, effective October 1, 1998, HCFA
has collaborated with the American Hospital Association (AHA) to
educate coders on platelet inhibitor therapy. An extensive article in
AHA's publication, Coding Clinic for ICD-9-CM, Fourth Quarter 1998,
identifies the platelet inhibitor drugs and includes instructions on
the appropriate code assignment. Coding instructions for platelet
inhibitors are also available via the 1998 regulatory updates
teleconference sponsored by AHA.
d. Extracorporeal Membrane Oxygenation. Extracorporeal Membrane
Oxygenation (ECMO) is a cardiopulmonary bypass technique that offers
long-term cardiopulmonary support to patients who have reversible
cardiopulmonary insufficiency that has not responded to conventional
management. It involves passing a patient's blood through an
extracorporeal membrane oxygenator that adds oxygen and removes carbon
dioxide. The oxygenated blood then is passed through a heat exchanger
to warm it to body temperature prior to returning it to the patient.
The process and equipment are similar to those used in open heart
surgery, but are continued over prolonged periods of time. ECMO
attempts to provide the patient with artificial cardiopulmonary
function while his or her own cardiopulmonary functions are incapable
of sustaining life.
Since ECMO involves the use of a device that sustains
cardiopulmonary function while the underlying condition is being
treated, it is important to identify and treat underlying conditions
leading to cardiopulmonary failure if the patient is to return to
normal cardiopulmonary function.
ECMO is assigned to procedure code 39.65 (Extracorporeal membrane
oxygenation (ECMO)). This code is not recognized as an OR procedure
within the DRG system and, therefore, does not affect payment. To
evaluate the appropriateness of payment under the current DRG
assignment, we have reviewed a 10-percent sample of Medicare claims in
the FY 1999 MedPAR file and found only 4 cases in which ECMO was used.
The charges for these cases ranged from $16,006 to $198,014. Since
medical literature indicates that ECMO is predominately used on
newborns and pediatric cases, this low number of claims is not
surprising. Only in recent years have some hospitals started to use
ECMO on adults. It is reserved for cases facing almost certain
mortality.
Because ECMO is a procedure clinically similar to a heart assist
device, we proposed that procedure code 39.65 be classified as an OR
procedure and be classified in DRGs 104 and 105 along with the heart
assist system procedures (as discussed in section II.B.2.b. of this
preamble). Those cases in which ECMO was provided, but for which the
principal diagnosis is not classified to MDC 5, would then be assigned
to DRG 468 (Extensive OR Procedure Unrelated to Principal Diagnosis).
This would be appropriate since it is possible that secondary
conditions or complications may arise during hospitalization that would
require the use of ECMO. The relatively high weight of DRG 468 would be
appropriate for these cases.
Comment: We received two comments in support of the proposal to
classify procedure code 39.65 as an OR procedure and then assign it to
DRGs 104 and 105. One of the commenters stated that most of the adult
patients receiving ECMO will fall within MDC 5 since ECMO is used for
patients with severe, but reversible, heart or lung disorders that have
not responded to the usual treatments of mechanical ventilation,
medicines, and extra oxygen. The commenter further stated that these
severely ill patients may continue on ECMO for a period of days or
weeks until the heart or lungs recover, or until the treatment is no
longer effective.
Response: We acknowledge the support of the commenters to classify
39.65 as an OR procedure and then assign it to DRGs 104 and 105 and are
adopting our proposal as final.
3. MDC 15 (Newborns and Other Neonates With Conditions Originating in
the Perinatal Period)
a. V05.8 (Vaccination for disease, NEC). DRG 390 (Neonate with
Other Significant Problems) contains newborn or neonate cases with
other significant
[[Page 47061]]
problems, not assigned to DRGs 385 through 389, DRG 391, or DRG 469. In
order to be classified into DRG 391 (Normal Newborn), the neonate must
have a principal diagnosis as listed under DRG 391 and either no
secondary diagnosis or a secondary diagnosis as listed under DRG 391.
Neonates with a secondary diagnosis of V05.8 (Vaccination for disease,
NEC) are currently classified to DRG 390. Although it would seem that
healthy newborns who receive vaccinations and have no other problems
would be assigned to DRG 391, code V05.8 is not included as one of the
secondary diagnoses under DRG 391, and therefore the case would not be
classified as a normal newborn (DRG 391). Code V05.8 is assigned to DRG
390 as a default, since it is not included under another complicated
neonate DRG or the normal newborn DRG.
In the proposed rule, we discussed our review of the
appropriateness of including diagnosis code V05.8 on the list of
acceptable secondary diagnoses under DRG 390 based on inquires that we
had received. We pointed out that by including V05.8 on the acceptable
secondary diagnosis list for DRG 390, newborns who receive vaccinations
are classified as having significant health problems. The inquirers
believed this incorrectly labels an otherwise healthy newborn as having
a significant medical condition. Providing a vaccination to a newborn
is performed to prevent the infant from contracting a disease.
We agreed with the inquirers that, absent any evidence of disease,
a newborn should not be considered as having a significant problem
simply because a preventative vaccination was provided. Therefore, we
proposed that V05.8 be removed from the list of acceptable secondary
diagnoses under DRG 390 and assigned as a secondary diagnosis under DRG
391. In doing so, these cases would no longer be classified to DRG 390.
Comment: We received two comments in support of our proposal to
remove code V05.8 from the list of acceptable secondary diagnoses under
DRG 390. These commenters agreed that a prophylactic vaccination should
not be classified as a significant problem. Newborns who receive these
prophylactic vaccinations should still be considered normal newborns.
We received no comments in opposition to the proposal.
Response: We are adopting the proposal to include V05.8 on the list
of acceptable secondary diagnoses under DRG 391 Normal Newborn. Codes
V05.3 (Viral hepatitis vaccination) and V05.4 (Varicella vaccination)
are already listed as acceptable secondary diagnoses under DRG 391.
b. Diagnosis code 666.02 (Third-stage postpartum hemorrhage,
delivered with postpartum complication). Diagnosis code 666.02 is
assigned to DRG 373 (Vaginal Delivery without Complicating Diagnoses).
This DRG was created for uncomplicated vaginal deliveries. However,
code 666.22 (Delayed and secondary postpartum hemorrhage, delivered
with postpartum complication) is assigned to DRG 372 (Vaginal Delivery
with Complicating Diagnoses). This means that mothers who have a
delayed and secondary postpartum hemorrhage would be assigned to DRG
372, while mothers who have a third-stage postpartum hemorrhage would
not be considered as a complicated delivery.
We believe a third-stage postpartum hemorrhage should be considered
a complicating diagnosis and, in order to categorize these cases more
appropriately, we proposed to move diagnosis code 666.02 from DRG 373
and assign it as a complicating diagnosis under DRG 372.
Comment: We received two comments supporting the proposal to
classify 666.02 as a complicating diagnosis under DRG 372. The
commenters agreed that a third-stage postpartum hemorrhage should be
classified as a complicated delivery. There were no comments submitted
in opposition to this change.
Response: We are adopting as final our proposal to classify 666.02
as a complication diagnosis under DRG 372.
c. Diagnosis Code 759.89 (Specified congenital anomalies, NEC)
(Alport's Syndrome). Alport's Syndrome (also referred to as hereditary
nephritis) is an inherited disorder involving damage to the kidney,
blood in the urine, and, in some cases, loss of hearing. It may also
include loss of vision. Patients who are not treated early enough or
who do not respond to treatment may progress to renal failure. A kidney
transplant is one treatment option for these cases. As with many of the
congenital anomalies, there is no unique ICD-9-CM code for this
condition. Alport's Syndrome, along with many other rare and diverse
congenital anomalies, is assigned to the rather nonspecific diagnosis
code 759.89 (Specific congenital anomalies, NEC). Examples include
William Syndrome, Brachio-Oto-Renal Syndrome, and Costello's Syndrome.
Each of these is a unique hereditary disorder affecting a variety of
body systems.
Patients can be diagnosed and treated for congenital anomalies
throughout their lives; treatment is not restricted to the neonatal
period. In our GROUPER, however, each diagnosis code is assigned to
just one MDC. In this case, diagnosis code 759.89 is assigned to MDC 15
(Newborns and Other Neonates with Conditions Originating in the
Perinatal Period) although the patient may be an adult.
In the proposed rule, we referred to a request from a physician
concerning renal transplants for patients with Alport's Syndrome. The
physician pointed out that when a patient with Alport's Syndrome is
admitted for a kidney transplant, the case is assigned to DRG 390
(Neonate with Other Significant Problems). In these instances, when the
principal diagnosis is code 759.89, the case is classified to MDC 15
although the patient may no longer be a newborn. The physician believed
that these cases should be assigned to DRG 302 (Kidney Transplant).
The inquirer suggested moving diagnosis code 759.89 to MDC 11
(Diseases and Disorders of the Kidney and Urinary Tract) so that when a
kidney transplant is performed, it will be assigned to DRG 302.
Although this seems quite appropriate for patients with Alport's
Syndrome found in diagnosis code 759.89, it does not work well for the
wide variety of patients also described by this code. Many others would
be inappropriately classified to MDC 11.
Alport's Syndrome cases with code 759.89 as a principal diagnosis
who receive a kidney transplant are assigned to DRG 468 (Extensive OR
Procedure Unrelated to Principal Diagnosis). This DRG has a FY 2000
relative weight of 3.6400. Also for FY 2000, DRG 302 (Kidney
Transplant) has a relative weight of 3.5669. Therefore, the payment
amounts are in fact comparable.
We discussed several options for resolving this issue:
(1) If the case is assigned a principal diagnosis code of renal
failure with Alport's Syndrome as a secondary diagnosis, the case could
be assigned to DRG 302. As this option would represent a change in the
sequencing of congenital anomaly codes and related complications, it
would have to be evaluated and subsequently approved by the Editorial
Advisory Board for Coding Clinic for ICD-9-CM. The Editorial Advisory
Board is comprised of representatives from the physician, coding, and
hospital industry. Final decisions on coding policy issues are made by
the representatives from the AHA, the American Health Information
Management Association, the National Center for Health Statistics, and
HCFA.
[[Page 47062]]
(2) A unique ICD-9-CM diagnosis code could be created for Alport's
Syndrome that could then be evaluated for possible assignment within
MDC 11. This issue has been referred to the National Center for Health
Statistics for consideration as a future coding modification.
One difficulty with this option is the large number of congenital
anomalies and the limited number of unused codes in this section of
ICD-9-CM. Each new code must be carefully evaluated for
appropriateness.
(3) A third option, which was already addressed, involves moving
diagnosis code 759.89 to MDC 11. The problem with this approach is that
many cases would then be misassigned to MDC 11 because the congenital
anomaly would not involve diseases of the kidney and urinary tract.
(4) A fourth option would be to leave the coding and DRG assignment
as they currently exist. Since few cases exist, the overall impact may
be minimal.
To evaluate the impact of leaving the DRG assignment as it
currently exists, in the proposed rule we examined data from a 10-
percent sample of Medicare cases in the FY 1999 MedPAR file. There were
95 cases assigned to a wide range of DRGs with code 759.89 as a
secondary diagnosis. There was only one case assigned to MDC 15 with a
principal diagnosis of code 759.89.
In the proposed rule, we recommended that diagnosis code 759.89
remain in MDC 15, since it encompasses such a wide variety of
conditions.
Comment: We received two comments in support of modifying the
coding advice for this particular congenital anomaly so that renal
failure is reported as the principal diagnosis and Alport's Syndrome is
reported as a secondary diagnosis. One commenter pointed out that a
distinction exists between those manifestations that are integral to
the congenital anomaly (and thus, according to the official coding
guidelines, would not be coded at all) and those that are not
considered integral. This commenter also supported the recommendation
for a change in guidelines that would allow sequencing a manifestation
that is not integral to the congenital anomaly as the principal
diagnosis. The other commenter indicated that while renal disease is
usually present in Alport's Syndrome, it does not always lead to renal
failure. The commenter also supported the reporting of renal failure as
the principal diagnosis, with Alport's Syndrome as a secondary
diagnosis.
Response: The coding and sequencing of Alport's Syndrome patients
with renal failure who are admitted for renal transplant were addressed
at the June 2000 meeting of the Editorial Advisory Board of Coding
Clinic for ICD-9-CM. Coding Clinic for ICD-9-CM is a publication of the
AHA. The issue specifically addressed was whether the code used for
Alport's Syndrome or the code for renal failure should be sequenced
first when the patient is admitted for a renal transplant for the renal
failure. In cases where manifestations are a key aspect of the
congenital anomaly, the congenital anomaly code is usually sequenced
first.
After careful evaluation, the Board determined that, in this
specific case, the code for renal failure would be sequenced first,
followed by the code for Alport's Syndrome. The Board also determined
that renal failure is not always present for patients with Alport's
Syndrome. These patients may, in fact, develop renal failure as a
result of other factors. Therefore, hospitals do not have to sequence
the congenital anomaly code first. By reporting renal failure as the
principal diagnosis, the case is appropriately assigned to DRG 302. The
Board's advice will be published in the third quarter 2000 issue of
Coding Clinic for ICD-9-CM and will be effective for discharges
occurring on or after September 1, 2000.
4. MDC 17 (Myeloproliferative Diseases and Disorders and Poorly
Differentiated Neoplasm)
Diagnosis code 273.8 (Disorders of plasma protein metabolism, NEC)
is assigned to DRG 403 (Lymphoma and Nonacute Leukemia with CC) and DRG
404 (Lymphoma and Nonacute Leukemia without CC). A disorder of plasma
protein metabolism does not mean one has a lymphoma with nonacute
leukemia. An individual can have a disorder of plasma protein
metabolism without having a lymphoma or leukemia.
In the proposed rule, we considered the appropriateness of
including diagnosis code 273.8 in DRGs 403 and 404. Disorders of plasma
protein metabolism are not lymphomas or leukemia, thus diagnosis code
273.8 is more closely related to DRG 413 (Other Myeloproliferative
Disorders or Poorly Differentiated Neoplasm Diagnoses with CC) and DRG
414 (Other Myeloproliferative Disorders or Poorly Differentiated
Neoplasm Diagnoses without CC).
We also examined charge data drawn from cases assigned to diagnosis
code 273.8 in a 10-percent sample of Medicare cases in the FY 1999
MedPAR file and found that the average charges for these cases were
also more closely related to DRGs 413 and 414 than to DRGs 403 and 404.
We proposed to move diagnosis code 273.8 from DRGs 403 and 404 to DRGs
413 and 414.
We also noted that diagnosis code 273.8 is included in the
following surgical DRGs that are performed on patients with lymphoma or
leukemia:
DRG 400 (Lymphoma and Leukemia with Major OR Procedure)
DRG 401 (Lymphoma and Nonacute Leukemia with Other OR
Procedure with CC)
DRG 402 (Lymphoma and Nonacute Leukemia with Other OR
Procedure without CC)
The same clinical issue would apply to these surgical DRGS
performed on patients with lymphoma and leukemia. Code 273.8 should be
assigned to the surgical DRGs for myeloproliferative disorders since
the cases are clinically similar and, as stated before, code 273.8 is
not clinically similar to lymphomas and leukemias. Therefore, we
proposed to remove code 273.8 from the surgical DRGs related to
lymphoma and leukemia (DRGS 400, 401, and 402) and assigned to the
following myeloproliferative surgical DRGS, based on the procedure
performed:
DRG 406 (Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Major OR Procedures with CC)
DRG 407 (Myeloproliferative Disorders Or Poorly
Differentiated Neoplasms with Major OR Procedures without CC)
DRG 408 (Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Other OR Procedures)
Comment: We received two comments supporting our proposal to remove
code 273.8 from the DRGs for lymphomas and leukemia (medical DRGs 403
and 404 as well as surgical DRGs 400 through 402). They supported
moving 273.8 to the DRGs for other myeloproliferative disorders
(medical DRGs 413 and 414 as well as surgical DRGs 406 through 408).
One commenter also pointed out that code 273.9 (Unspecified disorder of
plasma protein metabolism) is clinically similar to 273.8 and is also
included with the DRGs for lymphomas and leukemia. The commenter asked
if HCFA also planned to move 273.9 in a similar fashion to that
proposed for code 273.8 since they appear to be companion codes. The
commenter asserted that it was inappropriate to keep 273.9 in the DRGS
for lymphoma and leukemia.
Response: We agree that code 273.8 should be moved out of the DRGs
for lymphoma and leukemia and into the DRGs for other
myeloproliferative disorders. Also, we agree with the commenter who
stated that code 273.9
[[Page 47063]]
is clinically similar to 273.8 and should be treated in the same
manner. Each code would be more appropriately assigned to the DRGS for
other myeloproliferative disorders. Therefore, we are removing 273.9
from medical DRGS 403 and 404 and assigning it to DRGS 413 and 414. We
are adopting as final our proposal to remove 273.8 from medical DRGs
403 and 404 and assign it to medical DRGs 413 and 414. We are also
removing 273.8 and 273.9 from surgical DRGs 400, 401, and 402 and
assigning them to surgical DRGs 406, 407, and 408.
5. Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different DRG within the MDC to which the principal diagnosis is
assigned. Therefore, it is necessary to have a decision rule by which
these cases are assigned to a single DRG. The surgical hierarchy, an
ordering of surgical classes from most to least resource intensive,
performs that function. Its application ensures that cases involving
multiple surgical procedures are assigned to the DRG associated with
the most resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of DRG reclassification and recalibration, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications, to determine if the ordering of classes coincided
with the intensity of resource utilization, as measured by the same
billing data used to compute the DRG relative weights.
A surgical class can be composed of one or more DRGs. For example,
in MDC 11, the surgical class ``kidney transplant'' consists of a
single DRG (DRG 302) and the class ``kidney, ureter and major bladder
procedures'' consists of three DRGs (DRGs 303, 304, and 305).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one DRG. The methodology for determining the most resource-
intensive surgical class involves weighting each DRG for frequency to
determine the average resources for each surgical class. For example,
assume surgical class A includes DRGs 1 and 2 and surgical class B
includes DRGs 3, 4, and 5. Assume also that the average charge of DRG 1
is higher than that of DRG 3, but the average charges of DRGs 4 and 5
are higher than the average charge of DRG 2. To determine whether
surgical class A should be higher or lower than surgical class B in the
surgical hierarchy, we would weight the average charge of each DRG by
frequency (that is, by the number of cases in the DRG) to determine
average resource consumption for the surgical class. The surgical
classes would then be ordered from the class with the highest average
resource utilization to that with the lowest, with the exception of
``other OR procedures'' as discussed below.
This methodology may occasionally result in a case involving
multiple procedures being assigned to the lower-weighted DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER searches for the procedure in the
most resource-intensive surgical class, this result is unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average relative
weight is ordered above a surgical class with a higher average relative
weight. For example, the ``other OR procedures'' surgical class is
uniformly ordered last in the surgical hierarchy of each MDC in which
it occurs, regardless of the fact that the relative weight for the DRG
or DRGs in that surgical class may be higher than that for other
surgical classes in the MDC. The ``other OR procedures'' class is a
group of procedures that are least likely to be related to the
diagnoses in the MDC but are occasionally performed on patients with
these diagnoses. Therefore, these procedures should only be considered
if no other procedure more closely related to the diagnoses in the MDC
has been performed.
A second example occurs when the difference between the average
weights for two surgical classes is very small. We have found that
small differences generally do not warrant reordering of the hierarchy
since, by virtue of the hierarchy change, the relative weights are
likely to shift such that the higher-ordered surgical class has a lower
average weight than the class ordered below it.
Based on the preliminary recalibration of the DRGs, we proposed to
modify the surgical hierarchy as set forth below. As we stated in the
September 1, 1989 final rule (54 FR 36457), we were unable to test the
effects of proposed revisions to the surgical hierarchy and to reflect
these changes in the proposed relative weights because the revised
GROUPER software was unavailable at the time the proposed rule was
completed. Rather, we simulated most major classification changes to
approximate the placement of cases under the proposed reclassification,
then determined the average charge for each DRG. These average charges
then served as our best estimate of relative resource use for each
surgical class.
We proposed to revise the surgical hierarchy for the pre-MDC DRGs,
MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue), and MDC 10 (Endocrine, Nutritional, and Metabolic
Diseases and Disorders) as follows:
In the pre-MDC DRGs, we proposed to move DRG 103 (Heart
Transplant) from MDC 5 to pre-MDC. We proposed to reorder DRG 103
(Heart Transplant) above DRG 483 (Tracheostomy Except for Face, Mouth,
and Neck Diagnoses).
In the pre-MDC DRGs, we proposed to reorder DRG 481 (Bone
Marrow Transplant) above DRG 495 (Lung Transplant).
In MDC 8, we proposed to reorder DRG 230 (Local Excision
and Removal of Internal Fixation Devices of Hip and Femur) above DRGs
226 and 227 (Soft Tissue Procedures).
In MDC 10, we proposed to reorder DRG 288 (OR Procedures
for Obesity) above DRG 285 (Amputation of Lower Limb for Endocrine,
Nutritional, and Metabolic Disorders).
Comment: One commenter supported the surgical hierarchy proposals.
Another commenter opposed the reordering of DRG 230 above DRGs 226 and
227 in MDC 8. The commenter stated that, if both procedures are
performed during the same operative episode, reordering DRGs 226 and
227 above DRG 230 would more appropriately capture facility resources.
Response: Although local excision and removal of internal fixation
devices of hip and femur procedures may be less resource intensive than
many of the surgical procedures in DRGs 226 and 227, we proposed the
surgical hierarchy change because our data indicated cases of local
excision and removal of internal fixation devices of hip and femur are
more resource intensive than cases in DRGs 226 and 227. At the time of
our proposed surgical hierarchy change, the average standardized
charges for cases in DRG 230 were approximately $1,000 more than the
average standardized charges for cases in DRGs 226 and 227. We are
adopting the proposed surgical hierarchy change as final so that cases
with multiple procedures will be assigned to the higher-weighted DRG.
We will continue to monitor the MDC 8 surgical hierarchy as part of our
ongoing review.
Based on a test of the proposed revisions using the most recent
MedPAR file and the final GROUPER software, we have found that all the
proposed
[[Page 47064]]
revisions are still supported by the data and no additional changes are
indicated. Therefore, we are adopting these changes in this final rule.
6. Refinement of Complications and Comorbidities (CC) List
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered a valid CC in combination with a particular principal
diagnosis. Thus, we created the CC Exclusions List. We made these
changes for the following reasons: (1) To preclude coding of CCs for
closely related conditions; (2) to preclude duplicative coding or
inconsistent coding from being treated as CCs; and (3) to ensure that
cases are appropriately classified between the complicated and
uncomplicated DRGs in a pair. We developed this standard list of
diagnoses using physician panels to include those diagnoses that, when
present as a secondary condition, would be considered a substantial
complication or comorbidity. In previous years, we have made changes to
the standard list of CCs, either by adding new CCs or deleting CCs
already on the list. In the May 5, 2000 proposed rule, we proposed no
deletions of the diagnosis codes on the CC list.
In the May 19, 1987 proposed notice (52 FR 18877) concerning
changes to the DRG classification system, we explained that the
excluded secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another (as subsequently corrected
in the September 1, 1987 final notice (52 FR 33154)).
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for a condition should not be considered CCs for
one another.
Conditions that may not coexist, such as partial/total,
unilateral/bilateral, obstructed/unobstructed, and benign/malignant,
should not be considered CCs for one another.
The same condition in anatomically proximal sites should
not be considered CCs for one another.
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. The FY 1988 revisions were intended only
as a first step toward refinement of the CC list in that the criteria
used for eliminating certain diagnoses from consideration as CCs were
intended to identify only the most obvious diagnoses that should not be
considered complications or comorbidities of another diagnosis. For
that reason, and in light of comments and questions on the CC list, we
have continued to review the remaining CCs to identify additional
exclusions and to remove diagnoses from the master list that have been
shown not to meet the definition of a CC. See the September 30, 1988
final rule (53 FR 38485) for the revision made for the discharges
occurring in FY 1989; the September 1, 1989 final rule (54 FR 36552)
for the FY 1990 revision; the September 4, 1990 final rule (55 FR
36126) for the FY 1991 revision; the August 30, 1991 final rule (56 FR
43209) for the FY 1992 revision; the September 1, 1992 final rule (57
FR 39753) for the FY 1993 revision; the September 1, 1993 final rule
(58 FR 46278) for the FY 1994 revisions; the September 1, 1994 final
rule (59 FR 45334) for the FY 1995 revisions; the September 1, 1995
final rule (60 FR 45782) for the FY 1996 revisions; the August 30, 1996
final rule (61 FR 46171) for the FY 1997 revisions; the August 29, 1997
final rule (62 FR 45966) for the FY 1998 revisions; and the July 31,
1998 final rule (63 FR 40954) for the FY 1999 revisions. In the July
30, 1999 final rule (64 FR 41490), no modifications were made to the CC
Exclusions List for FY 2000 because we made no changes to the ICD-9-CM
codes for FY 2000.
In this final rule, we are making limited revisions of the CC
Exclusions List to take into account the changes that will be made in
the ICD-9-CM diagnosis coding system effective October 1, 2000. (See
section II.B.8. below, for a discussion of ICD-9-CM changes.) These
changes are being made in accordance with the principles established
when we created the CC Exclusions List in 1987.
Tables 6F and 6G in section V. of the Addendum to this final rule
contain the revised CC Exclusions List that is effective for discharges
occurring on or after October 1, 2000. Each table shows the principal
diagnoses along with changes to the excluded CCs. Each of these
principal diagnoses is shown with an asterisk and the additions or
deletions to the CC Exclusions List are provided in an indented column
immediately following the affected principal diagnosis.
CCs that were added to the list appear in Table 6F--Additions to
the CC Exclusions List. Beginning with discharges on or after October
1, 2000, the indented diagnoses will not be recognized by the GROUPER
as valid CCs for the asterisked principal diagnosis.
CCs that were deleted from the list are in Table 6G--Deletions from
the CC Exclusions List. Beginning with discharges on or after October
1, 2000, the indented diagnoses will be recognized by the GROUPER as
valid CCs for the asterisked principal diagnosis.
Copies of the original CC Exclusions List applicable to FY 1988 can
be obtained from the National Technical Information Service (NTIS) of
the Department of Commerce. It is available in hard copy for $92.00
plus $6.00 shipping and handling and on microfiche for $20.50, plus
$4.00 for shipping and handling. A request for the FY 1988 CC
Exclusions List (which should include the identification accession
number (PB) 88-133970) should be made to the following address:
National Technical Information Service, United States Department of
Commerce, 5285 Port Royal Road, Springfield, Virginia 22161; or by
calling (703) 487-4650.
Users should be aware of the fact that all revisions to the CC
Exclusions List (FYs 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996,
1997, 1998, 1999, and those in Tables 6F and 6G of this document) must
be incorporated into the list purchased from NTIS in order to obtain
the CC Exclusions List applicable for discharges occurring on or after
October 1, 2000. (Note: There was no CC Exclusions List in FY 2000
because we did not make changes to the ICD-9-CM codes for FY 2000.)
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with HCFA, is
responsible for updating and maintaining the GROUPER program. The
current DRG Definitions Manual, Version 17.0, is available for $225.00,
which includes $15.00 for shipping and handling. Version 18.0 of this
manual, which includes the final FY 2001 DRG changes, will be available
in October 2000 for $225.00. These manuals may be obtained by writing
3M/HIS at the following address: 100 Barnes Road, Wallingford,
Connecticut 06492; or by calling (203) 949-0303. Please specify the
revision or revisions requested.
We received no comments on the CC Exclusions List in the proposed
rule.
7. Review of Procedure Codes in DRGs 468, 476, and 477
Each year, we review cases assigned to DRG 468 (Extensive OR
Procedure Unrelated to Principal Diagnosis), DRG 476 (Prostatic OR
Procedure Unrelated to Principal Diagnosis), and DRG 477
[[Page 47065]]
(Nonextensive OR Procedure Unrelated to Principal Diagnosis) to
determine whether it would be appropriate to change the procedures
assigned among these DRGs.
DRGs 468, 476, and 477 are reserved for those cases in which none
of the OR procedures performed is related to the principal diagnosis.
These DRGs are intended to capture atypical cases, that is, those cases
not occurring with sufficient frequency to represent a distinct,
recognizable clinical group. DRG 476 is assigned to those discharges in
which one or more of the following prostatic procedures are performed
and are unrelated to the principal diagnosis:
60.0 Incision of prostate
60.12 Open biopsy of prostate
60.15 Biopsy of periprostatic tissue
60.18 Other diagnostic procedures on prostate and periprostatic
tissue
60.21 Transurethral prostatectomy
60.29 Other transurethral prostatectomy
60.61 Local excision of lesion of prostate
60.69 Prostatectomy NEC
60.81 Incision of periprostatic tissue
60.82 Excision of periprostatic tissue
60.93 Repair of prostate
60.94 Control of (postoperative) hemorrhage of prostate
60.94 Transurethral balloon dilation of the prostatic urethra
60.99 Other operations on prostate
All remaining OR procedures are assigned to DRGs 468 and 477, with
DRG 477 assigned to those discharges in which the only procedures
performed are nonextensive procedures that are unrelated to the
principal diagnosis. The original list of the ICD-9-CM procedure codes
for the procedures we consider nonextensive procedures, if performed
with an unrelated principal diagnosis, was published in Table 6C in
section IV. of the Addendum to the September 30, 1988 final rule (53 FR
38591). As part of the final rules published on September 4, 1990 (55
FR 36135), August 30, 1991 (56 FR 43212), September 1, 1992 (57 FR
23625), September 1, 1993 (58 FR 46279), September 1, 1994 (59 FR
45336), September 1, 1995 (60 FR 45783), August 30, 1996 (61 FR 46173),
and August 29, 1997 (62 FR 45981), we moved several other procedures
from DRG 468 to 477, and some procedures from DRG 477 to 468. No
procedures were moved in FY 1999, as noted in the July 31, 1998 final
rule (63 FR 40962), or in FY 2000, as noted in the July 30, 1999 final
rule (64 FR 41496).
a. Moving Procedure Codes from DRGs 468 or 477 to MDCs. We annually
conduct a review of procedures producing assignment to DRG 468 or DRG
477 on the basis of volume, by procedure, to determine the
appropriateness of moving procedure codes out of these DRGs into one of
the surgical DRGs for the MDC into which the principal diagnosis falls.
The data are arrayed two ways for comparison purposes. We look at a
frequency count of each major operative procedure code. We also compare
procedures across MDCs by volume of procedure codes within each MDC.
That is, using procedure code 57.49 (Other transurethral excision or
destruction of lesion or tissue of bladder) as an example, we
determined that this particular code accounted for the highest number
of major operative procedures (162 cases, or 9.8 percent of all cases)
reported in the sample of DRG 477. In addition, we determined that
procedure code 57.49 appeared in MDC 4 (Diseases and Disorders of the
Respiratory System) 28 times as well as in 9 other MDCs.
Using a 10-percent sample of the FY 1999 MedPAR file, we determined
that the quantity of cases in DRG 477 totaled 1,650. There were 106
instances where the major operative procedure appeared only once (6.4
percent of the time), resulting in assignment to DRG 477.
Using the same 10-percent sample of the FY 1999 MedPAR file, we
reviewed DRG 468. There were a total of 3,858 cases, with one major
operative code causing the DRG assignment 311 times (or 8 percent) and
230 instances where the major operative procedure appeared only once
(or 6 percent of the time).
Our medical consultants then identified those procedures occurring
in conjunction with certain principal diagnoses with sufficient
frequency to justify adding them to one of the surgical DRGs for the
MDC in which the diagnosis falls. Based on this year's review, we did
not identify any necessary changes in procedures under either DRG 468
or 477 and, therefore, did not propose to move any procedures from
either DRG 468 or DRG 477 to one of the surgical DRGs. We received no
comments on our review results and, therefore, we will not move any
procedures from these DRGs for FY 2001.
b. Reassignment of Procedures Among DRGs 468, 476, and 477. We also
conduct an annual review of a list of ICD-9-CM procedures that, when in
combination with their principal diagnosis code, result in assignment
to DRGs 468, 476, and 477, to ascertain if any of those procedures
should be moved from one of these DRGs to another of these DRGs based
on average charges and length of stay. We analyze the data for trends
such as shifts in treatment practice or reporting practice that would
make the resulting DRG assignment inappropriate. If our medical
consultants were to find these shifts, we would propose moving cases to
keep the DRGs clinically similar or to provide payment for the cases in
a similar manner. Generally, we move only those procedures for which we
have an adequate number of discharges to analyze the data. Based on
this year's review, we proposed not to move any procedures from DRG 468
to DRGs 476 or 477, from DRG 476 to DRGs 468 or 477, or from DRG 477 to
DRGs 468 or 476. We received no comments on this proposal, and
therefore are not moving any procedures from the DRGs indicated.
c. Adding Diagnosis Codes to MDCs. It has been brought to our
attention that an ICD-9-CM diagnosis code should be added to DRG 482
(Tracheostomy for Face, Mouth and Neck Diagnoses) to preserve clinical
coherence and homogeneity of the system. In the case of a patient who
has a facial infection (diagnosis code 682.0 (Other cellulitis and
abscess, Face)), the face may become extremely swollen and the
patient's ability to breathe might be impaired. It might be deemed
medically necessary to perform a temporary tracheostomy (procedure code
31.1) on the patient until the swelling subsides enough for the patient
to once again breathe on his or her own.
The combination of diagnosis code 682.0 and procedure code 31.1
resulted in assignment to DRG 483 (Tracheostomy Except for Face, Mouth
and Neck Diagnoses). The absence of diagnosis code 682.0 in DRG 483
forces the GROUPER algorithm to assign the case based solely on the
procedure code, without taking this diagnosis into account. Clearly
this was not the intent, as diagnosis code 682.0 should be included
with other face, mouth and neck diagnosis. We believe that cases such
as these would appropriately be assigned to DRG 482. Therefore, we
proposed to add diagnosis code 682.0 to the list of other face, mouth
and neck diagnoses already in the principal diagnosis list in DRG 482.
We received one comment in support of the proposed change, and are
adopting as final the proposal to add diagnosis code 682.0 to DRG 482.
8. Changes to the ICD-9-CM Coding System
As described in section II.B.1 of this preamble, the ICD-9-CM is a
coding system that is used for the reporting of diagnoses and
procedures performed on a patient. In September 1985, the ICD-9-CM
Coordination and Maintenance Committee was formed. This is a Federal
interdepartmental committee, co-chaired by the National Center for
[[Page 47066]]
Health Statistics (NCHS) and HCFA, charged with maintaining and
updating the ICD-9-CM system. The Committee is jointly responsible for
approving coding changes, and developing errata, addenda, and other
modifications to the ICD-9-CM to reflect newly developed procedures and
technologies and newly identified diseases. The Committee is also
responsible for promoting the use of Federal and non-Federal
educational programs and other communication techniques with a view
toward standardizing coding applications and upgrading the quality of
the classification system.
The NCHS has lead responsibility for the ICD-9-CM diagnosis codes
included in the Tabular List and Alphabetic Index for Diseases, while
HCFA has lead responsibility for the ICD-9-CM procedure codes included
in the Tabular List and Alphabetic Index for Procedures.
The Committee encourages participation in the above process by
health-related organizations. In this regard, the Committee holds
public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA)
(formerly American Medical Record Association (AMRA)), the AHA), and
various physician specialty groups as well as physicians, medical
record administrators, health information management professionals, and
other members of the public to contribute ideas on coding matters.
After considering the opinions expressed at the public meetings and in
writing, the Committee formulates recommendations, which then must be
approved by the agencies.
The Committee presented proposals for coding changes for FY 2000 at
public meetings held on June 4, 1998 and November 2, 1998. Even though
the Committee conducted public meetings and considered approval of
coding changes for FY 2000 implementation, we did not implement any
changes to ICD-9-CM codes for FY 2000 because of our major efforts to
ensure that all of the Medicare computer systems were compliant with
the year 2000. Therefore, the code proposals presented at the public
meetings held on June 4, 1998 and November 2, 1998, that (if approved)
ordinarily would have been included as new codes for October 1, 1999,
were held for consideration for inclusion in the annual update for FY
2001.
The Committee also presented proposals for coding changes for
implementation in FY 2001 at public meetings held on May 13, 1999 and
November 12, 1999, and finalized the coding changes after consideration
of comments received at the meetings and in writing by January 7, 2000.
Copies of the Coordination and Maintenance Committee minutes of the
1999 meetings can be obtained from the HCFA Home Page by typing http://www.hcfa.gov/medicare/icd9cm.htm. Paper copies of these minutes are no
longer available and the mailing list has been discontinued.
The ICD-9-CM code changes that have been approved will become
effective October 1, 2000. The new ICD-9-CM codes are listed, along
with their DRG classifications, in Tables 6A and 6B (New Diagnosis
Codes and New Procedure Codes, respectively) in section VI. of the
Addendum to this final rule. As we stated above, the code numbers and
their titles were presented for public comment at the ICD-9-CM
Coordination and Maintenance Committee meetings. Both oral and written
comments were considered before the codes were approved. In the May 5,
2000 proposed rule, we solicited comments only on the proposed DRG
classification of these new codes.
Further, the Committee has approved the expansion of certain ICD-9-
CM codes to require an additional digit for valid code assignment.
Diagnosis codes that have been replaced by expanded codes or other
codes, or have been deleted are in Table 6C (Invalid Diagnosis Codes).
These invalid diagnosis codes will not be recognized by the GROUPER
beginning with discharges occurring on or after October 1, 2000. For
codes that have been replaced by new or expanded codes, the
corresponding new or expanded diagnosis codes are included in Table 6A
(New Diagnosis Codes). No procedure codes were replaced by expanded
codes or other codes, and no procedure codes were deleted. Revisions to
diagnosis code titles appear in Table 6D (Revised Diagnosis Code
Titles), which also includes the DRG assignments for these revised
codes. Revisions to procedure code titles appear in Table 6E (Revised
Procedure Codes Titles).
Comment: One commenter questioned the DRG assignments in Table 6A
for new ICD-9-CM codes V45.74, V45.76, V45.77, V45.78 and V45.79. The
commenter pointed out that it has been HCFA's longstanding practice to
assign a new code to the same DRG or DRGs as its predecessor code. The
commenter had seen a draft conversion table prepared by the NCHS for
codes being revised October 1, 2000, and indicated that the conversion
table did not support the DRG assignments for these specific codes.
Response: The commenter is correct. HCFA bases DRG assignments on
the DRG assignment of the predecessor code. Tables 6A through 6E in the
proposed rule were prepared prior to NCHS' completion of the conversion
table. The DRG assignments were based on a mapping of codes V45.74,
V45.76, V45.77, and V45.78 from code V45.89. However, the correct
mapping on the conversion table now shows the following predecessor
codes:
------------------------------------------------------------------------
Previous
New Code Code Previous DRG
------------------------------------------------------------------------
V45.74.......................... 593.89 331, 332, 333
596.8 331, 332, 333
V45.76.......................... 518.89 101, 102
V45.77.......................... 602.8 352
607.89 352
608.89 352
620.8 358, 359, 369
621.8 358, 359, 369
622.8 358, 359, 369
V45.78.......................... 360.89 46, 47, 48
V45.79.......................... 255.8 300, 301
289.59 398, 399
388.8 73, 74
569.49 188, 189, 190
577.8 204
[[Page 47067]]
V45.89 467
------------------------------------------------------------------------
We have modified the DRG assignments for V45.74, V45.76, V45.77,
and V45.78 in Table 6A of this final rule according to the mapping
indicated in the third column in the preceding table. However, V45.79
has a number of predecessor codes appearing in multiple MDCs and, thus,
would not relate to any specific MDC. After discussions with NCHS, we
determined that this code should continue to use V45.89 as its
predecessor code for purposes of DRG assignment, since it is not
restricted to a specific body system. Therefore, the DRG assignment for
V45.79 was not changed in Table 6A.
9. Other Issues
a. Immunotherapy. Effective October 1, 1994, procedure code 99.28
(Injection or infusion of biologic response modifier (BRM) as an
antineoplastic agent) was created and designated as a non-OR procedure
that does not affect DRG assignment. This cancer treatment involving
biological response modifiers is also known as BRM therapy or
immunotherapy.
In response to a comment on the May 7, 1999 proposed rule, for the
FY 2000 final rule we analyzed cases for which procedure code 99.28 was
reported using the 100 percent FY 1998 MedPAR file. The commenter
requested that we create a new DRG for BRM therapy or assign cases in
which BRM therapy is performed to an existing DRG with a high relative
weight. The commenter suggested that DRG 403 (Lymphoma and Nonacute
Leukemia with CC) would be an appropriate DRG.
For the proposed rule, we analyzed all cases for which procedure
code 99.28 was reported. We identified 1,179 cases in 136 DRGs in 22
MDCs. No more than 141 cases were assigned to any one particular DRG.
Of the 1,179 cases, 141 cases (approximately 12 percent) were
assigned to DRG 403 in MDC 17. We found approximately one-half of these
cases had other procedures performed in addition to receiving
immunotherapy, such as chemotherapy, bone marrow biopsy, insertion of
totally implantable vascular access device, thoracentesis, or
percutaneous abdominal drainage, which may account for the increased
charges. There were 123 immunotherapy cases assigned to DRG 82
(Respiratory Neoplasms) in MDC 4 (Diseases and Disorders of the
Respiratory System). We noted that, in some cases, in addition to
immunotherapy, other procedures were performed, such as insertion of an
intercostal catheter for drainage, thoracentesis, or chemotherapy.
There were 84 cases assigned to DRG 416 (Septicemia, Age >17) in
MDC 18 (Infectious and Parasitic Diseases (Systemic or Unspecified
Sites)). The principal diagnosis for this DRG is septicemia and, in
addition to receiving treatment for septicemia, immunotherapy was also
given. There were 79 cases assigned to DRG 410 (Chemotherapy without
Acute Leukemia as Secondary Diagnosis) in MDC 17.
The cost of immunotherapy is averaged into the weight for these
DRGS and, based on our analysis, we did not believe a reclassification
of these cases was warranted. Due to the limited number of cases that
were distributed throughout 136 DRGs in 22 MDCs and the variation of
charges, we concluded that it would be inappropriate to classify these
cases into a single DRG.
Although there were 141 cases assigned to DRG 403, it would be
inappropriate to place all immunotherapy cases, regardless of
diagnosis, into a DRG that is designated for lymphoma and nonacute
leukemia. We establish DRGs based on clinical coherence and resource
utilization. Each DRG encompasses a variety of cases, reflecting a
range of services and a range of resources. Generally, then, each DRG
reflects some higher cost cases and some lower cost cases. To the
extent a new technology is extremely costly relative to the cases
reflected in the DRG relative weight, the hospital might qualify for
outlier payments, that is, additional payments over and above the
standard prospective payment rate.
We did not receive any comments regarding payment for immunotherapy
cases.
b. Pancreas Transplant. Effective July 1, 1999, Medicare covers
whole organ pancreas transplantation if the transplantation is
performed simultaneously with or after a kidney transplant (procedure
codes 55.69, Other kidney transplantation, and V42.0, Organ or tissue
replaced by transplant, Kidney) (Transmittal No. 115, April 1999). We
noted that when we published the notification of this coverage in the
July 30, 1999 final rule (64 FR 41497), we inadvertently made an error
in announcing the covered codes. We cited the incorrect codes for
pancreas transplantation as procedure code 52.80 (Pancreatic
transplant, not otherwise specified) and 52.83 (Heterotransplant of
pancreas). The correct procedure codes for pancreas transplantation are
52.80 (Pancreatic transplant, not otherwise specified) and 52.82
(Homotransplant of pancreas). The Coverage Issues Manual was revised to
reflect this change via Transmittal 124, April 2000, effective October
1, 2000.
Pancreas transplantation is generally limited to those patients
with severe secondary complications of diabetes, including kidney
failure. However, pancreas transplantation is sometimes performed on
patients with labile diabetes and hypoglycemic unawareness. Pancreas
transplantation for diabetic patients who have not experienced end-
stage renal failure secondary to diabetes is excluded from coverage.
Medicare also excludes coverage of transplantation of partial
pancreatic tissue or islet cells.
In the July 30, 1999 final rule (64 FR 41497), we indicated that we
planned to review discharge data to determine whether a new DRG should
be created, or existing DRGs modified, to further classify pancreas
transplantation in combination with kidney transplantation.
Under the current DRG classification, if a kidney transplant and a
pancreas transplant are performed simultaneously on a patient with
chronic renal failure secondary to diabetes with renal manifestations
(diagnosis codes 250.40 through 250.43), the case is assigned to DRG
302 (Kidney Transplant) in MDC 11 (Diseases and Disorders of the Kidney
and Urinary Tract). If a pancreas transplant is performed following a
kidney transplant (that is, during a different hospital admission) on a
patient with chronic renal failure secondary to diabetes with renal
manifestations, the case is assigned to DRG 468 (Extensive OR Procedure
Unrelated to Principal Diagnosis). This is because pancreas transplant
is not assigned to MDC 11, the MDC to which a principal diagnosis of
chronic renal failure secondary to diabetes is assigned.
For the proposed rule, using 100 percent of the data in the FY 1999
MedPAR file (which contains hospital bills received for FY 1999 through
[[Page 47068]]
December 31, 1999), we analyzed the cases for which procedure codes
52.80 and 52.83 were reported. We identified a total of 79 cases in 8
DRGs, in 3 MDCs, and in 1 pre-MDC. Of the 79 cases identified, 49 cases
were assigned to DRG 302, 14 cases were assigned to DRG 468, and 8
cases were assigned to DRG 191 (Pancreas, Liver and Shunt Procedures
with CC). The additional 8 cases were distributed over 5 other assorted
DRGs, and due to their disparity, were not considered in our
evaluation.
We examined our data to determine whether it was appropriate to
propose a new kidney and pancreas transplant DRG. We identified 49 such
dual transplant cases in the FY 1999 MedPAR file. We do not believe
this to be a sufficient sample size to warrant the creation of a new
DRG. Furthermore, we noted that nearly half of these cases occurred at
a hospital in Maryland, which is not paid under the prospective payment
system. The rest of the cases are spread across multiple hospitals,
with no single hospital having more than 5 cases in the FY 1999 MedPAR.
We received 261 comments on this issue, 244 of which were form
letters.
We will continue to monitor these dual transplant cases to
determine whether it may be appropriate in the future to establish a
new DRG. However, we are not establishing a new DRG for these cases for
FY 2001 and the current procedure code classification will remain in
effect.
Comment: All commenters called for the establishment of a unique
DRG recognizing the combined transplant of kidney and pancreas in the
same operative episode. Some commenters cited increased utilization of
hospital resources, especially operating-room time, recovery time, and
immunosuppressive drugs as justification for a separate DRG for a
combined pancreas-kidney transplant. One commenter forwarded to us
facility-specific charge data for four dual-transplant patients seen at
that center through December 1997.
Response: We stated in the proposed rule that there does appear to
be a difference between the charges for dual kidney-pancreas transplant
patients assigned to DRG 302 (Kidney Transplant) and those patients who
received only a kidney transplant. However, the numbers of dual
transplant cases in our database were insufficient to warrant
establishing a new DRG for dual transplants.
We point out that, given the low volume of these cases and their
infrequent occurrence in any particular hospital, we believe our
outlier policy will provide adequate protection for any extraordinarily
costly cases. Furthermore, there is always variation in terms of the
costs for cases within a DRG relative to the payments under the
prospective payment system for that DRG. Although examining these cases
in isolation from other DRG 302 cases appears to suggest that dual
transplants are more expensive, the nature of the prospective payment
system is such that hospitals are expected to be able to offset cases
where costs are greater than payments with those cases where payments
exceed costs.
We further point out that additional Medicare coverage of a
transplanted organ does not necessarily and immediately result in
creation of a unique DRG. A specific example of not creating a unique
DRG is the combined heart-lung transplant procedure. Effective for
discharges occurring on or after October 1, 1990, Medicare was able to
identify combined heart-lung transplant using ICD-9-CM code 33.6
(Combined heart-lung transplantation). Instead of assigning this new
code to its own specific DRG, however, it was combined with heart
transplant in DRG 103 (Heart Transplant). When DRG 495 (Lung
Transplant) was created for cases discharged on or after October 1,
1994, review of our data revealed that assignment of code 33.6 was more
clinically coherent with DRG 103 than DRG 495. Therefore, code 33.6 was
not moved into the new lung transplant DRG. Although this does not
indicate we will not create a distinct DRG for combined kidney and
pancreas transplants, it does show a precedent for allowing a
sufficient sample of cases to accumulate before deciding whether a new
DRG is necessary.
Finally, one of the risks of establishing a new DRG based on few
documentable cases is that a few extremely low-cost cases could
dramatically reduce the average charges in a year, thereby lowering the
relative weight and potentially underpaying cases in this DRG by a
significant amount.
Comment: Several commenters argued that combined pancreas and
kidney transplants are underpaid every time they are performed and
expressed concern that this lack of funding provides limited access to
this procedure for Medicare beneficiaries.
Response: We do not believe that beneficiaries' access will be
limited by our decision. In addition, it is a violation of a hospital's
Medicare provider agreement to place restrictions on the number of
Medicare beneficiaries it accepts for treatment unless it places the
same restrictions on all other patients.
Comment: One commenter argued that the incremental cost of the
pancreas transplant was insufficient to cause the claim to move into
outlier status.
Response: Our data show covered charges submitted by hospitals
ranging from a low of approximately $42,000 to a high in excess of
$182,000 for cases in DRG 302. Outlier payments are meant to alleviate
the financial effects of treating extraordinarily high-cost cases.
Therefore, the commenter may be correct in saying that some of the
cases with lower charges might not be further compensated by outlier
payments. However, other cases are further compensated to mitigate
losses experienced by hospitals.
Comment: One commenter stated we underrepresented the volume of
future dual transplants under Medicare, citing mid-year approval of
Medicare coverage for pancreas transplants, and noting that this is not
enough time to accurately reflect the numbers of procedures since
patients normally must accrue longer wait times before they receive
organ offers for transplant.
Response: It is true that we did not attempt to project the future
volume of combined kidney and pancreas transplant procedures. We
reported the number of actual hospital claims in our MedPAR data base,
submitted through December 1999, when we published the proposed rule in
the May 5, 2000 Federal Register (65 FR 26294). DRG categories and
payment are always based on actual historical hospital charge data, not
projected data. What must also be considered, however, is that dual
transplants would only appear in statistics concerning DRG 302, while
HCFA also covers pancreas transplants performed in separate operative
episodes, subsequent to kidney transplantation. Those pancreatic
transplants occurring after kidney transplant would appear in DRG 468,
or potentially other DRGs as well, depending on the principal
diagnosis.
Comment: Several commenters noted that the 1998 Annual Report of
United Network for Organ Sharing (UNOS) indicated there were 966
simultaneous kidney-pancreas transplants, and questioned HCFA's
reported 49 cases appearing in DRG 302 as being too low. One commenter,
citing the inability of HCFA to be able to identify cases of dual
kidney-pancreas transplants, pointed out the need for a specific DRG
for this category of patients. Another commenter noted that data were
lost because of the incorrect publication of ICD-9-CM code 52.83
(Heterotransplant
[[Page 47069]]
of pancreas) as being a covered procedure.
Response: Most patients who are experiencing end-stage renal
disease should be eligible for Medicare benefits. We note, however,
that none of the commenters submitted specific evidence contrary to our
finding that, outside of a single hospital in Maryland, no individual
hospital had more than five Medicare dual transplant cases during FY
1999.
Obviously one issue is the timing of the creation of the coverage
benefit, which was conferred for cases discharged on or after July 1,
1999. Cases transplanted prior to that date should not have appeared in
our data as covered procedures.
We recognize that 52.83 is an incorrect code, and have corrected
this typographical error in the Medicare Coverage Issues Manual, as
noted above. Interestingly, the original data reported in the proposed
notice contained 79 cases of pancreas transplant, but there were only 7
instances in which code 52.83 was reported. We believe that hospital
coders recognized the error in the original coverage instruction, and
chose to submit the less specific code 52.80 instead.
Comment: Several commenters asserted that it was contradictory for
us to argue that 49 cases is too few to establish a DRG but we
indicated in the May 5, 2000 proposed rule that there were 40 DRGs with
fewer than 10 cases per year.
Response: These low-volume DRGs are not new, but in most cases were
created very early during or even prior to the implementation of the
prospective payment system. Many of these DRGs are related to patient
categories that are rare in the Medicare population, such as age less
than 17 or labor and delivery during childbirth. The DRG relative-
weights for these DRGs are adjusted based on the overall change in the
DRG weights rather than through normal recalibration.
We do not believe our policy not to establish a new dual transplant
DRG for combined kidney and pancreas transplants is contradicted by the
existence of these low-volume DRGs. As the commenters indicated, the
number of combined kidney and pancreas transplants is likely to
increase in the next few years, and therefore it is important to ensure
an accurate and stable DRG payment is established.
Comment: Several commenters offered to work closely with HCFA to
identify cases and costs associated with this category of patients.
Response: We appreciate these offers and the cooperative spirit in
which they were presented. Our ability to evaluate and implement
potential DRG changes depends on the availability of validated,
representative data. We remain open to using non-MedPAR data if the
data are reliable and validated and enable us to appropriately measure
relative resource use. We will continue to monitor this category of
patients, and will address this issue in the FY 2002 proposed rule.
C. Recalibration of DRG Weights
We proposed to use the same basic methodology for the FY 2001
recalibration as we did for FY 2000 (July 30, 1999 final rule (64 FR
41498)). That is, we recalibrated the weights based on charge data for
Medicare discharges. However, we used the most current charge
information available, the FY 1999 MedPAR file. (For the FY 2000
recalibration, we used the FY 1998 MedPAR file.) The MedPAR file is
based on fully coded diagnostic and procedure data for all Medicare
inpatient hospital bills.
The final recalibrated DRG relative weights are constructed from FY
1999 MedPAR data (discharges occurring between October 1, 1998 and
September 30, 1999), based on bills received by HCFA through March
2000, from all hospitals subject to the prospective payment system and
short-term acute care hospitals in waiver States. The FY 1999 MedPAR
file includes data for approximately 11.0 million Medicare discharges.
The methodology used to calculate the DRG relative weights from the
FY 1999 MedPAR file is as follows:
To the extent possible, all the claims were regrouped
using the proposed DRG classification revisions discussed in section
II.B. of this preamble.
Charges were standardized to remove the effects of
differences in area wage levels, indirect medical education and
disproportionate share payments, and, for hospitals in Alaska and
Hawaii, the applicable cost-of-living adjustment.
The average standardized charge per DRG was calculated by
summing the standardized charges for all cases in the DRG and dividing
that amount by the number of cases classified in the DRG.
We then eliminated statistical outliers, using the same
criteria used in computing the current weights. That is, all cases that
are outside of 3.0 standard deviations from the mean of the log
distribution of both the charges per case and the charges per day for
each DRG are eliminated.
The average charge for each DRG was then recomputed
(excluding the statistical outliers) and divided by the national
average standardized charge per case to determine the relative weight.
A transfer case is counted as a fraction of a case based on the ratio
of its transfer payment under the per diem payment methodology to the
full DRG payment for nontransfer cases. That is, transfer cases paid
under the transfer methodology equal to half of what the case would
receive as a nontransfer would be counted as 0.5 of a total case.
We established the relative weight for heart and heart-
lung, liver, and lung transplants (DRGs 103, 480, and 495) in a manner
consistent with the methodology for all other DRGs except that the
transplant cases that were used to establish the weights were limited
to those Medicare-approved heart, heart-lung, liver, and lung
transplant centers that have cases in the FY 1999 MedPAR file.
(Medicare coverage for heart, heart-lung, liver, and lung transplants
is limited to those facilities that have received approval from HCFA as
transplant centers.)
Acquisition costs for kidney, heart, heart-lung, liver,
lung, and pancreas transplants continue to be paid on a reasonable cost
basis. Unlike other excluded costs, the acquisition costs are
concentrated in specific DRGs (DRG 302 (Kidney Transplant); DRG 103
(Heart Transplant); DRG 480 (Liver Transplant); DRG 495 (Lung
Transplant); and DRG 468 (Pancreas)). Because these costs are paid
separately from the prospective payment rate, it is necessary to make
an adjustment to prevent the relative weights for these DRGs from
including the acquisition costs. Therefore, we subtracted the
acquisition charges from the total charges on each transplant bill that
showed acquisition charges before computing the average charge for the
DRG and before eliminating statistical outliers.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. We proposed to use the same case threshold
in recalibrating the DRG weights for FY 2001. Using the FY 1999 MedPAR
data set, there were 40 DRGs containing fewer than 10 cases. We
computed the weights for these 40 low-volume DRGs by adjusting the FY
2000 weights of these DRGs by the percentage change in the average
weight of the cases in the other DRGs.
The weights developed according to the methodology described above,
using the DRG classification changes, resulted in an average case
weight that differs from the average case weight before recalibration.
Therefore, the new weights are normalized by an adjustment factor
(1.45507) so that the
[[Page 47070]]
average case weight after recalibration is equal to the average case
weight before recalibration. This adjustment is intended to ensure that
recalibration by itself neither increases nor decreases total payments
under the prospective payment system.
We received no comments on DRG recalibration.
Section 1886(d)(4)(C)(iii) of the Act requires that, beginning with
FY 1991, reclassification and recalibration changes be made in a manner
that assures that the aggregate payments are neither greater than nor
less than the aggregate payments that would have been made without the
changes. Although normalization is intended to achieve this effect,
equating the average case weight after recalibration to the average
case weight before recalibration does not necessarily achieve budget
neutrality with respect to aggregate payments to hospitals because
payment to hospitals is affected by factors other than average case
weight. Therefore, as we have done in past years and as discussed in
section II.A.4.a. of the Addendum to this final rule, we make a budget
neutrality adjustment to assure that the requirement of section
1886(d)(4)(C)(iii) of the Act is met.
III. Changes to the Hospital Wage Index
A. Background
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary must adjust the standardized amounts ``for area differences
in hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level.'' In
accordance with the broad discretion conferred under the Act, we
currently define hospital labor market areas based on the definitions
of Metropolitan Statistical Areas (MSAs), Primary MSAs (PMSAs), and New
England County Metropolitan Areas (NECMAs) issued by the Office of
Management and Budget (OMB). The OMB also designates Consolidated MSAs
(CMSAs). A CMSA is a metropolitan area with a population of one million
or more, comprising two or more PMSAs (identified by their separate
economic and social character). For purposes of the hospital wage
index, we use the PMSAs rather than CMSAs since they allow a more
precise breakdown of labor costs. If a metropolitan area is not
designated as part of a PMSA, we use the applicable MSA. Rural areas
are areas outside a designated MSA, PMSA, or NECMA. For purposes of the
wage index, we combine all of the rural counties in a State to
calculate a rural wage index for that State.
We note that, effective April 1, 1990, the term Metropolitan Area
(MA) replaced the term MSA (which had been used since June 30, 1983) to
describe the set of metropolitan areas consisting of MSAs, PMSAs, and
CMSAs. The terminology was changed by OMB in the March 30, 1990 Federal
Register to distinguish between the individual metropolitan areas known
as MSAs and the set of all metropolitan areas (MSAs, PMSAs, and CMSAs)
(55 FR 12154). For purposes of the prospective payment system, we will
continue to refer to these areas as MSAs.
Beginning October 1, 1993, section 1886(d)(3)(E) of the Act
requires that we update the wage index annually. Furthermore, this
section provides that the Secretary base the update on a survey of
wages and wage-related costs of short-term, acute care hospitals. The
survey should measure, to the extent feasible, the earnings and paid
hours of employment by occupational category, and must exclude the
wages and wage-related costs incurred in furnishing skilled nursing
services. As discussed below in section III.F of this preamble, we also
take into account the geographic reclassification of hospitals in
accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when
calculating the wage index.
B. FY 2001 Wage Index Update
The FY 2001 wage index values in section VI of the Addendum to this
final rule (effective for hospital discharges occurring on or after
October 1, 2000 and before October 1, 2001) are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 1997 (the FY 2000 wage index was
based on FY 1996 wage data).
The FY 2001 wage index includes the following categories of data
associated with costs paid under the hospital inpatient prospective
payment system (as well as outpatient costs), which were also included
in the FY 2000 wage index:
Salaries and hours from short-term, acute care hospitals.
Home office costs and hours.
Certain contract labor costs and hours.
Wage-related costs.
Consistent with the wage index methodology for FY 2000, the wage
index for FY 2001 also continues to exclude the direct and overhead
salaries and hours for services not paid through the inpatient
prospective payment system such as skilled nursing facility services,
home health services, or other subprovider components that are not
subject to the prospective payment system.
We calculate a separate Puerto Rico-specific wage index and apply
it to the Puerto Rico standardized amount. (See 62 FR 45984 and 46041.)
This wage index is based solely on Puerto Rico's data. Finally, section
4410 of Public Law 105-33 provides that, for discharges on or after
October 1, 1997, the area wage index applicable to any hospital that is
not located in a rural area may not be less than the area wage index
applicable to hospitals located in rural areas in that State.
Comment: One commenter believed that the FY 2001 wage calculation
does not allow for inflationary effects or existing contractual
increases, and recommended that we consider using a more recent
Medicare cost reporting year and allow for inflationary wage
adjustments.
Response: Due to the time period allowed for: (1) hospitals to
complete and submit their cost reports to their intermediaries, (2)
intermediaries to review and submit the cost reports to HCFA, (3)
intermediaries to perform a separate, detailed review of all wage data
and submit the results to HCFA, and (4) HCFA to compile a complete set
of all hospitals' wage data from a given Federal fiscal year, we do not
have available more recent reliable data to calculate the wage index.
As described in the proposed rule (65 FR 26299) and section III.E. of
this final rule, we adjust the wage data to a common period that
reflects the latest cost reporting period for the filing year. Because
the wage index is a relative measure, comparing area average hourly
wages to a national average hourly wage, we believe the wage index is
minimally impacted by inflationary effects beyond those accounted for
by adjusting the data to a common period.
C. FY 2001 Wage Index
Because the hospital wage index is used to adjust payments to
hospitals under the prospective payment system, it should, to the
extent possible, reflect the wage costs associated with the areas of
the hospital included under the hospital inpatient prospective payment
system. In response to concerns within the hospital community related
to the removal from the wage index calculation costs related to GME
(teaching physicians and residents) and certified registered nurse
anesthetists (CRNAs), which are paid by Medicare separately from the
prospective
[[Page 47071]]
payment system, in 1998 the AHA convened a workgroup to develop a
consensus recommendation on this issue. The workgroup recommended that
costs related to GME and CRNAs be phased out of the wage index
calculation over a 5-year period. Based upon our analysis of hospitals'
FY 1996 wage data, and consistent with the AHA workgroup's
recommendation, we specified in the July 30, 1999 final rule (64 FR
41505) that we would phase-out these costs from the calculation of the
wage index over a 5-year period, beginning in FY 2000. In keeping with
the decision to phase-out costs related to GME and CRNAs, the final FY
2001 wage index is based on a blend of 60 percent of an average hourly
wage including these costs, and 40 percent of an average hourly wage
excluding these costs.
Comment: We received one comment in support of our continued
transition of removing GME and CRNA costs from the wage index
calculation. We also received a comment from a national association
representing nurse anesthetists expressing concern that, as a result of
disparities in cost reporting systems and vague fiscal intermediary
instructions, CRNA costs that should be paid under Part B might still
be reported in hospitals' FY 1997 cost reports. The commenter also
stated that removing CRNA costs from the wage index eliminates a
payment mechanism for the indirect patient care activities performed by
CRNAs, resulting in a disincentive for hospitals to employ CRNAs. To
avoid any disruption in the ``continuous operations of hospitals,'' the
commenter recommended that, prior to implementing any changes to the
wage index calculation, HCFA should refine the Part A cost data
collection and cost reporting process and instruct the fiscal
intermediaries to provide all hospitals with ``explicit instructions as
to the appropriate reporting of CRNA costs.'' The commenter believed
this refinement to the cost data will identify and exclude only the
CRNA salary costs related to the rural hospital cost pass-through
provisions and allow Part A reimbursement for indirect patient care
which are not reimbursed under Medicare Part B. In keeping with the
general policy to exclude costs that are not paid through the Medicare
prospective payment system, the commenter also recommended that HCFA
exclude salaries reported under Medicare Part A for anesthesia
assistants.
Response: We note that the FY 2001 wage index is the second year of
the transition to eliminating Part A CRNA costs from the wage index. As
evidenced in the impact analysis in the May 5, 2000 proposed rule (65
FR 26415), eliminating these CRNA and GME costs has an insignificant
impact, with no category of hospitals impacted by more than 0.1
percent. Therefore, we do not believe it is necessary to delay further
removal of CRNA costs.
Payment for CRNA services is made under a fee schedule under
Medicare Part B (Supplementary medical insurance), with the sole
exception of payments to hospitals under the rural pass-through
provision. Although a hospital contracting for CRNA services would
include the costs on its cost report, the fiscal intermediary forwards
the information to the carrier for payment under the fee schedule. As
the commenter noted, this payment structure has been in place since
January 1, 1989. We believe that intermediaries and carriers are
generally well informed and experienced in the handling of these costs.
However, we will consider whether further clarification of our
instructions is necessary.
The commenter also stated that Medicare does not specifically
exclude anesthesia assistants, who are also reimbursed under Part B,
from the wage index. The cost report instructions for Worksheet A, Line
20, refer to nonphysician anesthetists, which include both CRNAs and
anesthesia assistants. We will consider whether our Worksheet S-3
instructions need to be revised to explicitly instruct hospitals to
remove the Part B costs associated with anesthesia assistants as well.
1. Teaching Physician Costs and Hours Survey
As discussed in the July 30, 1999 final rule, because the FY 1996
cost reporting data did not separate teaching physician costs from
other physician Part A costs, we instructed our fiscal intermediaries
to survey teaching hospitals to collect data on teaching physician
costs and hours payable under the per resident amounts (Sec. 413.86)
and reported on Worksheet A, Line 23 of the hospitals' cost report.
The FY 1997 cost reports also do not separately report teaching
physician costs. Therefore, we once again conducted a special survey to
collect data on these costs. (For the FY 1998 cost reports, we have
revised the Worksheet S-3, Part II so that hospitals can separately
report teaching physician Part A costs. Therefore, after this year, it
will no longer be necessary for us to conduct this special survey.)
The survey data collected as of mid-January 2000 were included in
the preliminary public use data file made available on the Internet in
February 2000 at HCFA's home page (http://www.hcfa.gov). At that time,
we had received teaching physician data for 459 out of 770 teaching
hospitals reporting physician Part A costs on their Worksheet S-3, Part
II. Also, in some cases, fiscal intermediaries reported that teaching
hospitals did not incur teaching physician costs. In early January
2000, we instructed fiscal intermediaries to review the survey data for
consistency with the Supplemental Worksheet A-8-2 of the hospitals'
cost reports. Supplemental Worksheet A-8-2 is used to apply the
reasonable compensation equivalency limits to the costs of provider-
based physicians, itemizing these costs by the corresponding line
number on Worksheet A.
When we notified the hospitals, through our fiscal intermediaries,
that they could review the survey data on the Internet, we also
notified hospitals that requests for changes to the teaching survey
data had to be submitted by March 6, 2000. We instructed fiscal
intermediaries to review the requests for changes received from
hospitals and submit necessary data revisions to HCFA by April 3, 2000.
We removed from the wage data the physician Part A teaching costs and
hours reported on the survey form for every hospital that completed the
survey. These data had been verified by the fiscal intermediary before
submission to HCFA.
For the FY 2000 wage index, the AHA workgroup recommended that, if
reliable teaching physician data were not available for removing
teaching costs from hospitals' total physician Part A costs, HCFA
should remove 80 percent of the costs and hours reported by hospitals
attributable to physicians' Part A services. In calculating the FY 2000
wage index, if we did not receive survey data for a teaching hospital,
we removed 80 percent of the hospital's reported total physician Part A
costs and hours from the calculation. In the May 5, 2000 proposed rule,
for the FY 2001 wage index, we proposed a different approach. In some
instances, fiscal intermediaries had verified that teaching hospitals
do not have teaching physician costs; for these hospitals, it is not
necessary to adjust the hospitals' physician Part A costs. We conferred
with the fiscal intermediaries to distinguish teaching hospitals that
did not have teaching physician costs from teaching hospitals that had
not identified the portion of their physician Part A costs associated
with teaching physicians (that is, hospitals that did not complete the
teaching survey).
[[Page 47072]]
In calculating the final FY 2001 wage index, we removed 100 percent
of the physician Part A costs and hours (reported on Worksheet S-3,
Lines 4, 10, 12, and 18) in the FY 2001 wage index calculation for
those hospitals where the fiscal intermediary verifies that the
hospital has otherwise unidentified teaching physician costs included
in physician Part A costs and hours. For those teaching hospitals whose
fiscal intermediaries identified as having costs attributable to
teaching physicians but reported no physician Part A costs on the
Worksheet S-3, we removed 100 percent of Worksheet A, Line 23, Column
1. To determine the hours to be removed, the costs reported on Line 23
of the Worksheet A, Column 1 are divided by the national average hourly
wage for teaching physicians of $59.17 based upon the survey.
We note that Line 23 of Worksheet A, Column 1, flows directly into
hospitals' total salaries on Worksheet S-3, Part II. Line 23 contains
GME costs not directly attributable to residents' salaries or fringe
benefits. Therefore, these costs tend to be costs associated with
teaching physicians. To the extent a hospital fails to separately
identify the proportion of its Line 23, Worksheet A costs associated
with teaching physicians, we believe it is reasonable to remove all of
these costs under the presumption that they are all associated with
teaching physicians.
Thus, as we proposed in the May 5 proposed rule, for the FY 2001
wage index, we are either using the data submitted on the teaching
physician survey (837 hospitals), or, in the absence of such data,
removing 100 percent of physician Part A costs reported on Worksheet S-
3 (287 hospitals), or removing the amount reported on Line 23 of
Worksheet A, Column 1 (18 hospitals).
We received one comment in support of removing 100 percent of
physician Part A costs and hours from teaching hospitals where the
fiscal intermediary verifies that the hospital has otherwise
unidentifiable teaching costs included in physician Part A costs and
hours.
2. Nurse Practitioner and Clinical Nurse Specialist Costs
The current wage index includes salaries and wage-related costs for
nurse practitioners (NPs) and clinical nurse specialists (CNSs) who,
similar to physician assistants and CRNAs (unless at hospitals under
the rural pass-through exception for CRNAs), are paid under the
physician fee schedule. Over the past year, we have received several
inquiries from hospitals and fiscal intermediaries regarding NP costs
and how they should be handled for purposes of the hospital wage index.
Because Medicare generally pays for NP and CNS costs under Part B
outside the hospital prospective payment system, removing NP and CNS
Part B costs from the wage index calculation would be consistent with
our general policy to exclude, to the extent possible, costs that are
not paid through the hospital prospective payment system. Because NP
and CNS costs are not separately reported on the Worksheet S-3 for FYs
1997, 1998, and 1999, the FY 2000 Worksheet S-3 and cost reporting
instructions will be revised to allow for separate reporting of NP and
CNS Part A and Part B costs. We plan to exclude the Part B costs
beginning with the FY 2004 wage index. These services are pervasive in
both rural and urban settings. As such, because the wage index is a
relative measure, we believe there will be no significant overall
impact resulting from the removal of Part B costs for NPs and CNSs.
We did not receive any public comments on our plan to exclude NP
and CNS Part B costs from the wage index calculation, beginning with
the FY 2004 wage index.
3. Severance and Bonus Pay Costs
On October 6, 1999, we issued a memorandum to hospitals and fiscal
intermediaries regarding our policy on treatment of severance and bonus
pay costs in developing the wage index, effective beginning with the FY
2001 wage index. (The hospital cost report instructions also will be
amended to reflect our policy on these costs.) We stated that severance
pay costs may be included on Worksheet S-3 as salaries on Part II, Line
1, only if the associated hours are included. If the hospital has no
accounting of the hours, or if the costs are not based on hours, the
severance pay costs may not be included in the wage index. On the other
hand, bonus pay costs may be included in the cost report on Line 1 of
Worksheet S-3 with no corresponding hours. Due to the inquiries we
continue to receive from hospitals regarding the inclusion of severance
pay costs on cost reports, in the May 5 proposed rule, we clarified our
policy in this area.
Hospitals vary in their accounting of severance pay costs. Some
hospitals base the amounts to be paid on hours, for example, 80 hours
worth of pay. Others do not; for example, a 15-year employee may be
offered a $25,000 buyout package. Some hospitals record associated
hours; others do not. The Wage Index Workgroup has suggested that we
not include any severance pay costs in the wage index calculation, that
these costs are for terminated employees, and, therefore, they should
be considered an administrative rather than a salary expense.
Severance pay costs can be substantial amounts, particularly in
periods of downsizing. In the proposed rule, we state our view that, if
severance pay costs are included with no associated hours, the wage
index, which is a relative measure of wage costs across labor market
areas, would be distorted.
We included severance pay costs in the proposed FY 2001 wage index
as a salary cost to the extent that associated hours also were
reported. However, we solicited public comments on this issue. We
received two comments on this issue.
Comment: Two national hospital associations disagree with our
policy clarification that severance pay costs may be included on
Worksheet S-3, Part II, Line 1 as salaries only if associated hours are
included. These commenters argued that HCFA's wage index policy is that
wages and benefits are to be determined in accordance with generally
accepted accounting principles (GAAP) rather than Medicare cost
reimbursement principles and that under GAAP severance pay is
classified as salaries and wages. They also argued that, unless a
terminated employee continues to work or is still considered to be
employed by the provider after the last regular pay period that
additional hours should not be reported for severance pay. Further, for
employees receiving severance pay, ``there are no hours to report''
because ``their job has been eliminated and they are no longer employed
by the provider.''
Response: As indicated in the proposed rule, we exclude severance
pay costs from the wage index calculation if there are no associated
hours because we believe that inclusion of such costs might lead to a
distortion of the wage index. The wage index is a relative measure of
average hourly wages across geographic areas, and we believe that
severance pay costs (which might be significant) without associated
hours might inappropriately inflate the average hourly wage for a given
hospital or area for a given time period (which in turn would distort
the relative measure of wages across areas). For example, if we
included severance pay costs with no associated hours, then a hospital
might be more likely to qualify for geographic reclassification for
purposes of the wage index simply because it incurred significant
severance pay costs in a given year. In light of the comments, we will
continue to examine this issue to determine whether inclusion of
severance pay costs with no
[[Page 47073]]
associated hours would lead to a better measure of relative wages as
opposed to a distortion in the measure and to determine whether it is
feasible and appropriate to revise our policy on severance pay costs in
the future.
4. Health Insurance and Health-Related Costs
In the September 1, 1994 final rule (59 FR 45356), we stated that
health insurance, purchased or self-insurance, is a core wage-related
cost. Over the past year, we have received several inquiries from
hospitals and hospital associations requesting that we define
``purchased health insurance costs.'' In response, in the May 5
proposed rule, we clarified that, for wage index purposes, we define
``purchased health insurance costs'' as the premiums and administrative
costs a hospital pays on behalf of its employees for health insurance
coverage. ``Self-insurance'' includes the hospital's costs (not
charges) for covered services delivered to its employees, less any
amounts paid by the employees, and less the personnel costs for
hospital staff who delivered the services (these costs are already
included in the wage index). For purchased health insurance and self-
health insurance, the included costs must be for services covered in a
health insurance plan.
Also, in the September 1, 1994 final rule (59 FR 45357), we
addressed a comment about the inclusion of health-related costs in the
calculation of the wage index. Such health-related costs include
employee physical examinations, flu shots, and clinic visits, and other
services that are not covered by employees' health insurance plans but
are provided at no cost or at discounted rates to employees of the
hospital. In the May 5 proposed rule, we proposed to clarify that the
costs for these services may be included as an ``other'' wage-related
cost if (among other criteria), when all such health-related costs are
combined, the total of such costs is greater than one percent of the
hospital's total salaries (less excluded area salaries). As discussed
in the September 1, 1994 final rule, a cost may be allowable as an
``other wage-related cost'' if it meets certain criteria. Under one
criterion, the wage-related cost must be greater than one percent of
total salaries (less excluded area salaries). For purposes of applying
this 1-percent test with respect to the health-related costs at issue
here, we look at the combined total of the health-related costs (not
charges) for services delivered to its employees, less any amounts
employees paid, and less the personnel costs for hospital staff who
delivered the services (as these costs are already included in the wage
index).
Comment: We received several comments regarding our policy and
definitions for health insurance and health-related costs. Some
commenters interpreted the policy clarification in the proposed rule as
stating that self-insurance will no longer be included as core wage-
related costs. They believe that not including these costs is
inconsistent with the fundamental concept of core wage-related costs.
One commenter pointed to the 1994 HCFA/Industry workgroup which
established the list of core wage-related costs still in use, and
contended that ``(t)hese proposed changes are inconsistent with the
agreements reached in those original workgroup meetings.''
Response: As noted in the May 5 proposed rule, we previously stated
our policy regarding health insurance and health-related costs in the
FY 1995 final rule. We emphasize again in this final rule that, health
insurance costs, whether purchased or self-insured, is, and will
continue to be, a core wage-related cost. We did not propose a change
in this policy, nor are we implementing a change in this policy in this
final rule.
Comment: Some commenters objected to our statement in the proposed
rule that only health self-insurance costs (not charges, and exclusive
of any amounts paid by covered employees and less the personnel costs
for hospital staff who delivered the services) are allowable core wage-
related costs, and also argued that health self-insurance costs should
be determined in accordance with GAAP which would include charges and
personnel costs. They suggested that excluding costs that are
determined in accordance with GAAP would create major inconsistencies
among hospitals and inevitably result in major swings in the wage index
for individual MSAs.
Two commenters recommended that HCFA review this policy to avoid
creating disincentives to hospitals that develop cost-effective health-
insurance benefits; they asserted that there should be no
differentiation between purchased health insurance and self-funded
health insurance.
Response: We disagree with the commenters that we are unfairly and
inconsistently treating hospitals that self-insure by not allowing as a
wage-related cost the salary costs for employees who deliver the health
services. The personnel costs of delivering health care to all of a
hospital's patients are already included in the wage index through line
1 of Worksheet S-3, Part II. Accounting for these hospital personnel
costs on lines 13 or 14 for wage-related costs would falsely overstate
a hospital's average hourly wage. Unless a hospital actually incurs the
personnel costs twice, it is inappropriate to include the costs twice.
Our policy does not require the exclusion of staff personnel costs from
the premium costs for hospitals that purchase health insurance. As
defined above and in the proposed rule, purchased health insurance
costs include the premiums and administrative costs a hospital pays on
behalf of its employees for health insurance coverage. The commenters
suggested that the premium costs may include a hospital's staff
personnel costs. We believe it is appropriate to allow the entire
premium cost to a hospital as a wage-related cost if the intermediary
verifies that the amount is an actual cost to the hospital.
Nevertheless, we agree with the commenters that, overall, for
``wage-related costs'', the application of GAAP creates a more static
wage index and a better measure of relative wages across areas. For the
FY 2002 wage index, we will advise hospitals to apply GAAP for wage-
related costs, including health insurance and health-related costs.
However, for self-health insurance and health-related costs, personnel
costs associated with hospital staff that deliver the services to the
employees must continue to be excluded from wage-related costs, if the
costs are already included in the wage data as salaries on Worksheet S-
3, Part II, Line I.
Comment: One commenter recommended that the insurance plan
requirements be eliminated from our definition of health insurance
costs, stating that hospitals should be required to maintain adequate
records in support of the services they provide to their employees at
either no cost or below cost. In expressing the concern that employee
health benefits are ever-changing, the commenter recommended that not
only must HCFA's definition of insurance plans be specific but it
should also be implemented prospectively with sufficient clarification
to reduce inconsistency in interpretation by the fiscal intermediaries.
Response: We are concerned that adopting this recommendation would
make it difficult for intermediaries to accurately track benefits
provided to a hospital's employees, leading to greater disparity in the
treatment of these costs across hospitals. We will give further
consideration to the implications of this recommendation, however.
Comment: One commenter recommended that health-related costs, for
such items as ``employee physicals,
[[Page 47074]]
flu shots, and clinic visits'' should be included as a core wage-
related cost; therefore, the 1-percent threshold criteria for health
related costs should be eliminated.
Response: In the September 1, 1994 final rule, when we published
the list of core wage-related costs agreed upon by the workgroup, we
responded to comments specifically suggesting that health-related
services (as opposed to self-insured health services, which was clearly
on the original core list) be added to the core list. In our response,
we pointed out that the core list was developed in conjunction with the
hospital industry, to establish a list of commonly recognized costs
that contribute significantly to the wage costs of a hospital and are
readily identifiable in the hospital's records. Health-related benefits
was not included on the core list at that time. We continue to believe
these health-related benefits do not fit the criteria established by
the workgroup for identifying core wage-related costs.
5. Elimination of Wage Costs Associated With Rural Health Clinics and
Federally Qualified Health Centers
The current hospital wage index includes the salaries and wage-
related costs of hospital-based rural health clinics (RHCs) and
federally qualified health centers (FQHCs). However, Medicare pays for
these costs outside the hospital inpatient prospective payment system.
Effective January 1, 1998, under section 1833(f) of the Act, as amended
by section 4205 of Public Law 105-33, Medicare pays both hospital-based
and freestanding RHCs and FQHCs on a cost-per-visit basis. Medicare
cost reporting forms for RHCs and FQHCs were revised to reflect this
legislative change, beginning with cost reporting periods ending on or
after September 30, 1998 (the FY 1998 cost report). Other cost-
reimbursed outpatient departments, such as ambulatory surgical centers,
community mental health centers, and comprehensive outpatient
rehabilitation facilities, are presently excluded from the wage index.
Therefore, consistent with our wage index refinements that exclude, to
the extent possible, costs associated with services not paid under the
hospital inpatient prospective payment system, we believe it would be
appropriate to exclude all salary costs associated with RHCs and FQHCs
from the wage index calculation if we had feasible, reliable data for
such exclusion.
Because RHC and FQHC costs are not separately reported on the
Worksheet S-3 for FYs 1997, 1998, and 1999, we cannot exclude these
costs from the FY 2001, FY 2002, or FY 2003 wage indexes. Therefore, we
will revise the FY 2000 Worksheet S-3 to begin providing for the
separate reporting of RHC and FQHC salaries, wage-related costs, and
hours. We will evaluate the wage data for RHCs and FQHCs in developing
the FY 2004 wage index.
We received no public comments on this issue.
D. Verification of Wage Data From the Medicare Cost Report
The data for the FY 2001 wage index were obtained from Worksheet S-
3, Parts II and III of the FY 1997 Medicare cost reports. The data file
used to construct the wage index includes FY 1997 data submitted to
HCFA as of mid-July 2000. As in past years, we performed an intensive
review of the wage data, mostly through the use of edits designed to
identify aberrant data.
We asked our fiscal intermediaries to revise or verify data
elements that resulted in specific edit failures. The unresolved data
elements that were included in the calculation of the proposed FY 2001
wage index have been resolved and are reflected in calculation of the
final FY 2001 wage index. We note that, as part of this process to
identify aberrant data and correct any errors prior to the calculation
of the final FY 2001 wage index, we notified by letter those hospitals
that were leading to large variations in the wage indexes of their
labor market areas compared to the FY 2000 wage index. These hospitals
were instructed to review their data to identify the reason for the
large increases or decreases and notify their fiscal intermediary of
any necessary corrections. This resulted in several revisions to the
data.
Also, as part of our editing process, in the final wage index, we
removed data for 15 hospitals that failed edits. For eight of these
hospitals, we were unable to obtain sufficient documentation to verify
or revise the data because the hospitals are no longer participating in
the Medicare program or are in bankruptcy status. Two hospitals had
erroneous average hourly wages (negative and zero) after allocating
overhead to their excluded areas and, therefore, were removed from the
calculation. The data from the remaining five hospitals also failed the
edits and were removed. As a result, the final FY 2001 wage index is
calculated based on FY 1997 wage data for 4,950 hospitals.
E. Computation of the FY 2001 Wage Index
The method used to compute the FY 2001 wage index follows. We note
one technical change to the formula used to calculate the proposed wage
index. For the first time, in the proposed rule we subtracted line 13
of Worksheet S-3, Part III from total hours when determining the
excluded hours ratio used to estimate the amount of overhead attributed
to excluded areas. Although we continue to believe this is the correct
formula for determining this ratio, it resulted in very large and
inappropriate increases in the average hourly wages for some hospitals.
Therefore, in calculating the final FY 2001 wage index, we are not
subtracting line 13 of Worksheet S-3, Part III in the calculation.
Step 1--As noted above, we based the FY 2001 wage index on wage
data reported on the FY 1997 Medicare cost reports. We gathered data
from each of the non-Federal, short-term, acute care hospitals for
which data were reported on the Worksheet S-3, Parts II and III of the
Medicare cost report for the hospital's cost reporting period beginning
on or after October 1, 1996 and before October 1, 1997. In addition, we
included data from a few hospitals that had cost reporting periods
beginning in September 1996 and reported a cost reporting period
exceeding 52 weeks. These data were included because they did not have
a cost report begin during the period described above. However, we
generally describe these wage data as FY 1997 data. We note that, if a
hospital had more than one cost reporting period beginning during FY
1997 (for example, a hospital had two short cost reporting periods
beginning on or after October 1, 1996 and before October 1, 1997), we
included wage data from only one of the cost reporting periods, the
longest, in the wage index calculation. If there was more than one cost
reporting period and the periods were equal in length, we included the
wage data from the latest period in the wage index calculation.
Step 2--Salaries--The method used to compute a hospital's average
hourly wage is a blend of 60 percent of the hospital's average hourly
wage including all GME and CRNA costs, and 40 percent of the hospital's
average hourly wage after eliminating all GME and CRNA costs.
In calculating a hospital's average salaries plus wage-related
costs, including all GME and CRNA costs, we subtracted from Line 1
(total salaries) the Part B salaries reported on Lines 3 and 5, home
office salaries reported on
[[Page 47075]]
Line 7, and excluded salaries reported on Lines 8 and 8.01 (that is,
direct salaries attributable to skilled nursing facility services, home
health services, and other subprovider components not subject to the
prospective payment system). We also subtracted from Line 1 the
salaries for which no hours were reported on Lines 2, 4, and 6. To
determine total salaries plus wage-related costs, we added to the net
hospital salaries the costs of contract labor for direct patient care,
certain top management, and physician Part A services (Lines 9 and 10),
home office salaries and wage-related costs reported by the hospital on
Lines 11 and 12, and nonexcluded area wage-related costs (Lines 13, 14,
16, 18, and 20).
We note that contract labor and home office salaries for which no
corresponding hours are reported were not included. In addition, wage-
related costs for specific categories of employees (Lines 16, 18, and
20) are excluded if no corresponding salaries are reported for those
employees (Lines 2, 4, and 6, respectively).
We then calculated a hospital's salaries plus wage-related costs by
subtracting from total salaries the salaries plus wage-related costs
for teaching physicians, Part A CRNAs (Lines 2 and 16), and residents
(Lines 6 and 20).
Step 3--Hours--With the exception of wage-related costs, for which
there are no associated hours, we computed total hours using the same
methods as described for salaries in Step 2.
Step 4--For each hospital reporting both total overhead salaries
and total overhead hours greater than zero, we then allocated overhead
costs. First, we determined the ratio of excluded area hours (sum of
Lines 8 and 8.01 of Worksheet S-3, Part II) to revised total hours
(Line 1 minus the sum of Part II, Lines 3, 5, and 7). We then computed
the amounts of overhead salaries and hours to be allocated to excluded
areas by multiplying the above ratio by the total overhead salaries and
hours reported on Line 13 of Worksheet S-3, Part III. Finally, we
subtracted the computed overhead salaries and hours associated with
excluded areas from the total salaries and hours derived in Steps 2 and
3.
Step 5--For each hospital, we adjusted the total salaries plus
wage-related costs to a common period to determine total adjusted
salaries plus wage-related costs. To make the wage adjustment, we
estimated the percentage change in the employment cost index (ECI) for
compensation for each 30-day increment from October 14, 1996 through
April 15, 1998 for private industry hospital workers from the Bureau of
Labor Statistics' Compensation and Working Conditions. We use the ECI
because it reflects the price increase associated with total
compensation (salaries plus fringes) rather than just the increase in
salaries. In addition, the ECI includes managers as well as other
hospital workers. This methodology to compute the monthly update
factors uses actual quarterly ECI data and assures that the update
factors match the actual quarterly and annual percent changes. The
factors used to adjust the hospital's data were based on the midpoint
of the cost reporting period, as indicated below.
Midpoint of Cost Reporting Period
------------------------------------------------------------------------
Adjustment
After Before factor
------------------------------------------------------------------------
10/14/96........................... 11/15/96.............. 1.02848
11/14/96........................... 12/15/96.............. 1.02748
12/14/96........................... 01/15/97.............. 1.02641
01/14/97........................... 02/15/97.............. 1.02521
02/14/97........................... 03/15/97.............. 1.02387
03/14/97........................... 04/15/97.............. 1.02236
04/14/97........................... 05/15/97.............. 1.02068
05/14/97........................... 06/15/97.............. 1.01883
06/14/97........................... 07/15/97.............. 1.01695
07/14/97........................... 08/15/97.............. 1.01520
08/14/97........................... 09/15/97.............. 1.01357
09/14/97........................... 10/15/97.............. 1.01182
10/14/97........................... 11/15/97.............. 1.00966
11/14/97........................... 12/15/97.............. 1.00712
12/14/97........................... 01/15/98.............. 1.00451
01/14/98........................... 02/15/98.............. 1.00213
02/14/98........................... 03/15/98.............. 1.00000
03/14/98........................... 04/15/98.............. 0.99798
------------------------------------------------------------------------
For example, the midpoint of a cost reporting period beginning
January 1, 1997 and ending December 31, 1997 is June 30, 1997. An
adjustment factor of 1.01695 would be applied to the wages of a
hospital with such a cost reporting period. In addition, for the data
for any cost reporting period that began in FY 1997 and covers a period
of less than 360 days or more than 370 days, we annualized the data to
reflect a 1-year cost report. Annualization is accomplished by dividing
the data by the number of days in the cost report and then multiplying
the results by 365.
Step 6--Each hospital was assigned to its appropriate urban or
rural labor market area before any reclassifications under section
1886(d)(8)(B) or section 1886(d)(10) of the Act. Within each urban or
rural labor market area, we added the total adjusted salaries plus
wage-related costs obtained in Step 5 (with and without GME and CRNA
costs) for all hospitals in that area to determine the total adjusted
salaries plus wage-related costs for the labor market area.
Step 7--We divided the total adjusted salaries plus wage-related
costs obtained under both methods in Step 6 by the sum of the
corresponding total hours (from Step 4) for all hospitals in each labor
market area to determine an average hourly wage for the area.
Because the FY 2001 wage index is based on a blend of average
hourly wages, we then added 60 percent of the average hourly wage
calculated without removing GME and CRNA costs, and 40 percent of the
average hourly wage calculated with these costs excluded.
Step 8--We added the total adjusted salaries plus wage-related
costs obtained in Step 5 for all hospitals in the nation and then
divided the sum by the national sum of total hours from Step 4 to
arrive at a national average hourly wage (using the same blending
methodology described in Step 7). Using the data as described above,
the national average hourly wage is $21.7702.
Step 9--For each urban or rural labor market area, we calculated
the hospital wage index value by dividing the area average hourly wage
obtained in Step 7 by the national average hourly wage computed in Step
8.
Step 10--Following the process set forth above, we developed a
separate Puerto Rico-specific wage index for purposes of adjusting the
Puerto Rico standardized amounts. (The national Puerto Rico
standardized amount is adjusted by a wage index calculated for all
Puerto Rico labor market areas based on the national average hourly
wage as described above.) We added the total adjusted salaries plus
wage-related costs (as calculated in Step 5) for all hospitals in
Puerto Rico and divided the sum by the total hours for Puerto Rico (as
calculated in Step 4) to arrive at an overall average hourly wage of
$10.1902 for Puerto Rico.
For each labor market area in Puerto Rico, we calculated the Puerto
Rico-specific wage index value by dividing the area average hourly wage
(as calculated in Step 7) by the overall Puerto Rico average hourly
wage.
Step 11--Section 4410 of Public Law 105-33 provides that, for
discharges on or after October 1, 1997, the area wage index applicable
to any hospital that is located in an urban area may not be less than
the area wage index applicable to hospitals located in rural areas in
that State. Furthermore, this wage index floor is to be implemented in
such a manner as to assure that aggregate prospective payment system
payments are not greater or less than those that would have been made
in the year if this section did not apply. For FY 2001, this change
affects 193 hospitals in 34 MSAs. The MSAs affected by this
[[Page 47076]]
provision are identified in Table 4A by a footnote.
F. Revisions to the Wage Index Based on Hospital Redesignation
Under section 1886(d)(8)(B) of the Act, hospitals in certain rural
counties adjacent to one or more MSAs are considered to be located in
one of the adjacent MSAs if certain standards are met. Under section
1886(d)(10) of the Act, the Medicare Geographic Classification Review
Board (MGCRB) considers applications by hospitals for geographic
reclassification for purposes of payment under the prospective payment
system. Applications for MGCRB reclassification are now on the internet
at http://www.hcfa.gov/regs/appeals.
1. Provisions of Public Law 106-113
Under section 152(b) of Public Law 106-113, hospitals in certain
counties are deemed to be located in specified areas for purposes of
payment under the hospital inpatient prospective payment system, for
discharges occurring on or after October 1, 2000. For payment purposes,
these hospitals are to be treated as though they were reclassified for
purposes of both the standardized amount and the wage index. In the May
5 proposed rule we calculated FY 2001 wage indexes for hospitals in the
affected counties as if they were reclassified to the specified area.
For purposes of making payments under section 1886(d) of the Act
for FY 2001, section 152(b) provides the following:
Iredell County, North Carolina is deemed to be located in
the Charlotte-Gastonia-Rock Hill, North Carolina-South Carolina MSA;
Orange County, New York is deemed to be located in the New
York, New York MSA;
Lake County, Indiana and Lee County, Illinois are deemed
to be located in the Chicago, Illinois MSA;
Hamilton-Middletown, Ohio is deemed to be located in the
Cincinnati, Ohio-Kentucky-Indiana MSA;
Brazoria County, Texas is deemed to be located in the
Houston, Texas MSA;
Chittenden County, Vermont is deemed to be located in the
Boston-Worcester-Lawrence-Lowell-Brockton, Massachusetts-New Hampshire
MSA.
Section 152(b) also requires that these reclassifications be
treated for FY 2001 as though they are reclassification decisions by
the MGCRB. Therefore, in the May 5 proposed rule, we proposed that the
wage indexes for the areas to which these hospitals are reclassifying,
as well as the wage indexes for the areas in which they are located,
would be subject to all of the normal rules for calculating wage
indexes for hospitals affected by reclassification decisions by the
MGCRB, as described below.
In addition, we proposed that the reclassifications enacted by
section 152(b) pertain only to the hospitals located in the specified
counties, not to hospitals in other counties within the MSA or
hospitals reclassified into the MSA by the MGCRB.
Under section 154(b) of Public Law 106-113, the Allentown-
Bethlehem-Easton, Pennsylvania MSA wage index was calculated including
the wage data for Lehigh Valley Hospital. Section 154(b) states that,
for FY 2001, ``[n]otwithstanding any other provision of section 1886(d)
of the Social Security Act (42 U.S.C. 1395ww(d)), in calculating and
applying the wage indices under that section for discharges occurring
during fiscal year 2001, Lehigh Valley Hospital shall be treated as
being classified in the Allentown-Bethlehem-Easton Metropolitan
Statistical Area.'' We stated in the proposed rule that this statutory
language directs us to include Lehigh Valley Hospital's wage data in
the wage index calculation for the Allentown-Bethlehem-Easton MSA for
FY 2000 and FY 2001.
Section 1886(d)(8)(B) of the Act established that a hospital
located in a rural county adjacent to one or more urban areas is
treated as being located in the MSA to which the greatest number of
workers in the county commute, if the rural county would otherwise be
considered part of an MSA (or NECMAs), if the commuting rates used in
determining outlying counties were determined on the basis of the
aggregate number of resident workers who commute to (and, if applicable
under the standards, from) the central county or counties of all
contiguous MSAs. Through FY 2000, hospitals are required to use
standards published in the Federal Register on January 3, 1980, by the
Office of Management and Budget. For FY 2000, there were 27 hospitals
affected by this provision.
Section 402 of Public Law 106-113 amended section 1886(d)(8)(B) of
the Act to allow hospitals to elect to use the standards published in
the Federal Register on January 3, 1980 (1980 decennial census data) or
March 30, 1990 (1990 decennial census data) during FY 2001 and FY 2002.
As of FY 2003, hospitals will be required to use the standards
published in the Federal Register by the Director of the Office of
Management and Budget based on the most recent available decennial
population data.
We are in the process of working with the Office of Management and
Budget to identify the hospitals that would be affected by this
amendment. We will revise payments to hospitals in the affected
counties as soon as data is available. Hospitals will have this option
during FY 2001 and FY 2002. After FY 2002, hospitals will be required
to use data based on the 2000 decennial census. We refer the reader to
the September 30, 1988 final rule (53 FR 38499) for a complete
discussion of our approach to identify the outlying counties using the
standards published in the January 3, 1980 Federal Register.
Comment: We received three comments on our proposed policy to treat
hospitals reclassifying into an area containing one of the counties
reclassified by section 152(b) in a manner similar to any other
situation where a hospital reclassifies into an area where hospitals in
that area have been reclassified into another area. The commenters, all
hospitals that have been granted a reclassification into an area
containing a county reclassified by section 152(b), requested that they
should be permitted to reclassify along with the county identified by
section 152(b). They added that, in the event it was determined that
their preferred solution was not permissible, the wage index of the
area to which they were reclassified should be calculated by including
the wage data for the hospitals reclassified by section 152(b).
The commenters noted that they would be at a competitive
disadvantage by the section 152(b) reclassifications if they were
treated similar to other decisions by the MGCRB. In addition, they
believed that the Secretary has some discretion with respect to
calculating the wage indexes for areas with hospitals that have been
reclassified, noting that the legislation does not specifically direct
the Secretary to exclude reclassified hospitals from the calculation
for the area in which a hospital is actually located.
Response: We have reconsidered the methodology for calculating the
wage index applicable to hospitals reclassified into the MSAs that
contain the counties specified in section 152(b) of Public Law 106-113.
We continue to believe that the hospitals located in the counties
specified in section 152(b) should be distinguished from the hospitals
that were reclassified by the MGCRB into the MSAs containing those
counties. Congress provided special treatment for hospitals in the
counties specified in the statute, but it did not provide special
treatment for hospitals
[[Page 47077]]
reclassified to the MSAs that contain those counties. Moreover, under
the MGCRB process, hospitals are reclassified into MSAs as a whole, not
into specific counties within an MSA; for example, some hospitals were
reclassified by the MGCRB into the Newburgh, NY-PA MSA, which contains
Orange County, NY and one other county, but those hospitals were not
reclassified into Orange County itself. Thus, the benefits of section
152(b) apply only to the hospitals located in the counties specified by
Congress.
Consistent with one of the suggestions of the commenters, however,
we are revising the methodology reflected in the proposed rule with
respect to the calculation of the wage index values for the MSAs
containing the counties specified in section 152(b). The proposed rule
reflected our normally applicable policy with respect to
reclassifications, under which the wages of hospitals reclassified out
of an MSA would be excluded from the calculation of the wage index
value for that MSA; application of our normal rules might lead to an
unexpected decrease in the wage index value for an MSA arising from the
provisions of section 152(b). To address the unexpected decrease that
might otherwise occur, we believe that it is appropriate to calculate
the wage index values for the MSAs that contain the counties specified
in section 152(b) (e.g., the Newburgh MSA) by including the wages of
hospitals that were reclassified out of the area by section 152(b). We
believe that we should not exclude the wages of those hospitals because
Congress has provided special treatment for those hospitals, and we
believe that including the wages of the reclassified hospitals
appropriately reconciles the provisions of section 152(b) of Public Law
106-113, the MGCRB statutory and regulatory scheme, section
1886(d)(3)(E) of the Act, as well as the expectations of the hospitals
prior to the enactment of section 152(b).
Comment: We received one comment related to our proposed treatment
of Lehigh Valley Hospital's wage data under section 154(b) of Public
Law 106-113. For FY 2001, Lehigh Valley Hospital was reclassified by
the MGCRB to the Philadelphia MSA. The commenter argued that it was not
Congress' intent that Lehigh Valley Hospital should be precluded from
reclassifying.
The commenter also contended that the statutory language of section
154(b) could allow HCFA to permit Lehigh Valley Hospital to reclassify
to Philadelphia, while the hospital's wage data would still be used to
calculate the Allentown-Bethlehem-Easton MSA wage index. The commenter
stated that by indicating this provision that Lehigh Valley ``shall be
treated'' as being in the Allentown MSA, Congress did not intend to
prohibit Lehigh Valley from reclassifying. If this had been Congress'
intent, it would have been stated as such.
Response: In the proposed rule, we included Lehigh Valley
Hospital's wage data in the wage index calculation for the Allentown-
Bethlehem-Easton MSA. We also indicated that we believed the statutory
language of section 154(b) required us to apply the Allentown-
Bethlehem-Easton MSA wage index to Lehigh Valley Hospital for payments
during FY 2001. However, we note that, despite the language of section
154(b), the MGCRB did reclassify Lehigh Valley Hospital to the
Philadelphia MSA for FY 2001, and the HCFA Administrator did not
reverse that decision. This has the effect of leaving stand the
decision by the MGCRB to reclassify Lehigh Valley Hospital into the
Philadelphia MSA for purposes of calculating and applying the
Philadelphia wage index.
With respect to calculating the Allentown-Bethlehem-Easton MSA wage
index, section 154(b) requires that we include Lehigh Valley Hospital's
wage data in calculating the wage index for this MSA. We note that the
provision is effective ``(n)otwithstanding any other provision of
section 1886(d) of the Social Security Act.'' Therefore, although our
normal policy is to remove the wage data of a hospital reclassified out
of an area when calculating that area's wage index, section 154(b)
directs us to include Lehigh's wage data in calculating the wage index
for the A-B-E MSA.
2. Effects of Reclassification
The methodology for determining the wage index values for
redesignated hospitals is applied jointly to the hospitals located in
those rural counties that were deemed urban under section 1886(d)(8)(B)
of the Act and those hospitals that were reclassified as a result of
the MGCRB decisions under section 1886(d)(10) of the Act. Section
1886(d)(8)(C) of the Act provides that the application of the wage
index to redesignated hospitals is dependent on the hypothetical impact
that the wage data from these hospitals would have on the wage index
value for the area to which they have been redesignated. Therefore,
except as discussed above, as provided in section 1886(d)(8)(C) of the
Act, the wage index values were determined by considering the
following:
If including the wage data for the redesignated hospitals
would reduce the wage index value for the area to which the hospitals
are redesignated by 1 percentage point or less, the area wage index
value determined exclusive of the wage data for the redesignated
hospitals applies to the redesignated hospitals.
If including the wage data for the redesignated hospitals
reduces the wage index value for the area to which the hospitals are
redesignated by more than 1 percentage point, the redesignated
hospitals are subject to that combined wage index value.
If including the wage data for the redesignated hospitals
increases the wage index value for the area to which the hospitals are
redesignated, both the area and the redesignated hospitals receive the
combined wage index value.
The wage index value for a redesignated urban or rural
hospital cannot be reduced below the wage index value for the rural
areas of the State in which the hospital is located.
Rural areas whose wage index values would be reduced by
excluding the wage data for hospitals that have been redesignated to
another area continue to have their wage index values calculated as if
no redesignation had occurred.
Rural areas whose wage index values increase as a result
of excluding the wage data for the hospitals that have been
redesignated to another area have their wage index values calculated
exclusive of the wage data of the redesignated hospitals.
The wage index value for an urban area is calculated
exclusive of the wage data for hospitals that have been reclassified to
another area. However, geographic reclassification may not reduce the
wage index value for an urban area below the statewide rural wage index
value.
We note that, except for those rural areas in which redesignation
would reduce the rural wage index value, the wage index value for each
area is computed exclusive of the wage data for hospitals that have
been redesignated from the area for purposes of their wage index. As a
result, several urban areas listed in Table 4A have no hospitals
remaining in the area. This is because all the hospitals originally in
these urban areas have been reclassified to another area by the MGCRB.
These areas with no remaining hospitals receive the prereclassified
wage index value. The prereclassified wage index value will apply as
long as the area remains empty.
The final wage index values for FY 2001 are shown in Tables 4A, 4B,
4C, and 4F in the Addendum to this final rule. Hospitals that are
redesignated
[[Page 47078]]
should use the wage index values shown in Table 4C. Areas in Table 4C
may have more than one wage index value because the wage index value
for a redesignated urban or rural hospital cannot be reduced below the
wage index value for the rural area of the State in which the hospital
is located. When the wage index value of the area to which a hospital
is redesignated is lower than the wage index value for the rural area
of the State in which the hospital is located, the redesignated
hospital receives the higher wage index value; that is, the wage index
value for the rural area of the State in which it is located, rather
than the wage index value otherwise applicable to the redesignated
hospitals.
Tables 4D and 4E list the average hourly wage for each labor market
area, before the redesignation of hospitals, based on the FY 1997 wage
data. In addition, Table 3C in the Addendum to this final rule includes
the adjusted average hourly wage for each hospital based on the FY 1997
data as of July 2000 (reflecting the phase-out of GME and CRNA wages as
described at section III.C of this preamble). The MGCRB will use the
average hourly wage published in this final rule to evaluate a
hospital's application for reclassification for FY 2002 (unless that
average hourly wage is later revised in accordance with the wage data
correction policy described in Sec. 412.63(w)(2)). We note that in
adjudicating these wage index reclassifications the MGCRB will use the
average hourly wages for each hospital and labor market area that are
reflected in the final FY 2001 wage index.
We indicated in the proposed rule that, at the time the proposed
wage index was constructed, the MGCRB had completed its review of FY
2001 reclassification requests. The final FY 2001 wage index values
incorporate all 493 hospitals redesignated for purposes of the wage
index (hospitals redesignated under section 1886(d)(8)(B) or
1886(d)(10) of the Act, and section 152(b) Public Law 106-113) for FY
2001). Since publication of the May 5 proposed rule, the number of
reclassifications has changed because some MGCRB decisions were still
under review by the Administrator and because some hospitals decided to
withdraw their requests for reclassification.
Changes to the wage index that resulted from withdrawals of
requests for reclassification, wage index corrections, appeals, and the
Administrator's review process have been incorporated into the wage
index values published in this final rule. The changes affect not only
the wage index value for specific geographic areas, but also the wage
index value redesignated hospitals receive; that is, whether they
receive the wage index value for the area to which they are
redesignated, or a wage index value that includes the data for both the
hospitals already in the area and the redesignated hospitals. Further,
the wage index value for the area from which the hospitals are
redesignated is affected.
Comment: One commenter recommended that the average hourly wages
shown in Tables 4D and 4E should be consistent with the values shown in
Tables 4A and 4B. In support of this recommendation, the commenter
suggested that, because our policy for computing the wage index values
for urban areas excludes wages for hospitals that have reclassified to
another area, the average hourly wages shown in Table 4D should be
computed exclusive of the reclassified hospitals. The commenter
believed the recommended change has the potential of impacting a
hospital's efforts to reclassify because the hospital may not qualify
based on the ``unadjusted'' hourly wage currently shown in Table 4D.
Response: As discussed above and in the May 5 proposed rule (65 FR
26301), the average hourly wages in Tables 4D and 4E reflect the labor
market area average hourly wages before hospital redesignations. We
provide the unadjusted rather than adjusted average hourly wages
because the MGCRB must use unadjusted average hourly wages in
determining a hospital's eligibility for reclassification. A hospital
that wishes to apply for reclassification for the FY 2002 wage index
(deadline is September 1, 2000) should use the average hourly wage data
in Tables 3C, 4D, and 4E of the FY 2001 proposed and final rules to
determine whether it meets the requirements for reclassification. With
the exception of urban areas that receive the statewide rural wage
index value, an urban area's adjusted average hourly wage may be
calculated by multiplying the area wage index value in Table 4A by the
national average hourly wage.
Comment: One commenter questioned whether the number of hospitals
reclassified for the wage index for FY 2001 cited in the proposed rule
(586) was accurate.
Response: The correct number of wage index reclassifications for FY
2001 at the time the proposed rule was published was 386. As stated
above, the final number of wage index reclassifications is 490.
A. Wage Data Corrections
In the proposed rule, we stated that, to allow hospitals time to
evaluate the wage data used to construct the proposed FY 2001 hospital
wage index, we would make available in May 2000 a final public data
file containing the FY 1997 hospital wage data.
The final wage data file was released on May 5, 2000. As noted
above in section III.C. of this preamble, this file included hospitals'
teaching survey data as well as cost report data. As with the file made
available in February 2000, we made the final wage data file released
in May 2000 available to hospital associations and the public (on the
Internet). However, this file was made available only for the limited
purpose of identifying any potential errors made by HCFA or the fiscal
intermediary in the entry of the final wage data that the hospital
could not have known about before the release of the final wage data
public use file. It is not for the initiation of new wage data
correction requests.
If, after reviewing the May 2000 final data file, a hospital
believed that its wage data were incorrect due to a fiscal intermediary
or HCFA error in the entry or tabulation of the final wage data, it was
provided an opportunity to send a letter to both its fiscal
intermediary and HCFA, outlining why the hospital believed an error
exists and provide all supporting information, including dates. These
requests had to be received by us and the intermediaries no later than
June 5, 2000.
Changes to the hospital wage data were made only in those very
limited situations involving an error by the intermediary or HCFA that
the hospital could not have known about before its review of the final
wage data file. Specifically, neither the intermediary nor HCFA
accepted the following types of requests at this stage of the process:
Requests for wage data corrections that were submitted too
late to be included in the data transmitted to HCRIS on or before April
3, 2000.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the February 2000
wage data file.
Requests to revisit factual determinations or policy
interpretations made by the intermediary or HCFA during the wage data
correction process.
Verified corrections to the wage index received timely
(that is, by June 5, 2000) are incorporated into the final wage index
in this final rule, to be effective October 1, 2000.
We believe the wage data correction process provides hospitals with
sufficient opportunity to bring errors in
[[Page 47079]]
their wage data to the intermediary's attention. Moreover, because
hospitals had access to the final wage data by early May 2000, they had
the opportunity to detect any data entry or tabulation errors made by
the intermediary or HCFA before the development and publication of the
FY 2001 wage index and its implementation on October 1, 2000. If
hospitals avail themselves of this opportunity, the FY 2001 wage index
implemented on October 1 should be free of these errors. Nevertheless,
we retain the right to make midyear changes to the wage index under
very limited circumstances.
Specifically, in accordance with Sec. 412.63(w)(2), we may make
midyear corrections to the wage index only in those limited
circumstances in which a hospital can show (1) that the intermediary or
HCFA made an error in tabulating its data; and (2) that the hospital
could not have known about the error, or did not have an opportunity to
correct the error, before the beginning of FY 2001 (that is, by the
June 5, 2000 deadline). As indicated earlier, since a hospital had the
opportunity to verify its data, and the intermediary notified the
hospital of any changes, we do not foresee any specific circumstances
under which midyear corrections would be made. However, should a
midyear correction be necessary, the wage index change for the affected
area will be effective prospectively from the date the correction is
made.
Comment: One commenter expressed concern about the process used in
preparing the final wage index data, especially teaching survey data.
The commenter was concerned that errors would not be corrected before
the publication of the final rule. Without providing specific
information, the commenter further stated that it still believed that
there were a number of ``omission errors in the data'' and that the
situation would have been better handled if the data were corrected and
reposted.
Response: We acknowledge the commenter's concern and reiterate that
the purpose of making the wage data available for review on the
Internet is to allow hospitals time to evaluate the wage data used in
constructing the hospital wage index. We encourage hospitals to review
their data and to address and resolve issues in dispute prior to the
publication of the final wage index data file. We acknowledge that the
teaching physician data submitted by several providers were not
accurately reported in the public use wage index data file published on
May 5, 2000. Once we became aware of the errors, we took the necessary
steps to review and incorporate the appropriate data. The updated file
was then made available on our Internet website at: http://www.hcfa.gov/medicare/ippsmain.htm.
IV. Other Decisions and Changes to the Prospective Payment System
for Inpatient Operating Costs and Graduate Medical Education Costs
A. Expanding the Transfer Definition to Include Postacute Care
Discharges (Sec. 412.4)
In accordance with section 1886(d)(5)(I) of the Act, the
prospective payment system distinguishes between ``discharges,''
situations in which a patient leaves an acute care (prospective
payment) hospital after receiving complete acute care treatment, and
``transfers,'' situations in which the patient is transferred to
another acute care hospital for related care. Our policy, as set forth
in the regulations at Sec. 412.4, provides that, in a transfer
situation, full payment is made to the final discharging hospital and
each transferring hospital is paid a per diem rate for each day of the
stay, not to exceed the full DRG payment that would have been made if
the patient had been discharged without being transferred.
Effective with discharges on or after October 1, 1998, section
1886(d)(5)(J) of the Act required the Secretary to define and pay as
transfers all cases assigned to one of 10 DRGs (identified below)
selected by the Secretary if the individuals are discharged to one of
the following settings:
A hospital or hospital unit that is not a subsection
1886(d) hospital. (Section 1886(d)(1)(B) of the Act identifies the
hospitals and hospital units that are excluded from the term
``subsection (d) hospital'' as psychiatric hospitals and units,
rehabilitation hospitals and units, children's hospitals, long-term
care hospitals, and cancer hospitals.)
A skilled nursing facility (as defined at section 1819(a)
of the Act).
Home health services provided by a home health agency, if
the services relate to the condition or diagnosis for which the
individual received inpatient hospital services, and if the home health
services are provided within an appropriate period (as determined by
the Secretary).
Therefore, any discharge from a prospective payment hospital from
one of the selected 10 DRGs that is admitted to a hospital excluded
from the prospective payment system on the date of discharge from the
acute care hospital, on or after October 1, 1998, would be considered a
transfer and paid accordingly under the prospective payment systems
(operating and capital) for inpatient hospital services. Similarly, a
discharge from an acute care inpatient hospital paid under the
prospective payment system to a skilled nursing facility on the same
date would be defined as a transfer and paid as such. We consider
situations in which home health services related to the condition or
diagnosis of the inpatient admission are received within 3 days after
the discharge as a transfer.
The statute specifies that the Secretary select 10 DRGs based upon
a high volume of discharges to postacute care and a disproportionate
use of postacute care services. We identified the following DRGs with
the highest percentage of postacute care:
DRG 14 (Specific Cerebrovascular Disorders Except
Transient Ischemic Attack (Medical))
DRG 113 (Amputation for Circulatory System Disorders
Except Upper Limb and Toe (Surgical))
DRG 209 (Major Joint Limb Reattachment Procedures of Lower
Extremity (Surgical))
DRG 210 (Hip and Femur Procedures Except Major Joint
Procedures Age >17 with CC (Surgical))
DRG 211 (Hip and Femur Procedures Except Major Joint
Procedures Age >17 without CC (Surgical))
DRG 236 (Fractures of Hip and Pelvis (Medical))
DRG 263 (Skin Graft and/or Debridement for Skin Ulcer or
Cellulitis with CC (Surgical))
DRG 264 (Skin Graft and/or Debridement for Skin Ulcer or
Cellulitis without CC (Surgical))
DRG 429 (Organic Disturbances and Mental Retardation
(Medical))
DRG 483 (Tracheostomy Except for Face, Mouth and Neck
Diagnoses (Surgical))
Generally, we pay for transfers based on a per diem payment,
determined by dividing the DRG payment by the average length of stay
for that DRG. The transferring hospital receives twice the per diem
rate the first day and the per diem rate for each following day, up to
the full DRG payment. Of the 10 selected DRGs, 7 are paid under this
method. However, three DRGs exhibit a disproportionate share of costs
very early in the hospital stay. For these three DRGs, hospitals
receive one-half of the DRG payment for the first day of the stay and
one-half of the payment they would receive under the current transfer
payment method, up to the full DRG payment.
[[Page 47080]]
As required by section 1886(d)(5)(J)(iv) of the Act, we included in
the FY 2001 proposed rule published on May 5, 2000 (65 FR 26302), a
description of the effect of the provision to treat as transfers cases
that are assigned to one of the 10 selected DRGs and receive postacute
care upon their discharge from the hospital. Under contract with HCFA
(Contract No. 500-95-0006), Health Economics Research, Inc. (HER)
conducted an analysis of the impact on hospitals and hospital payments
of the postacute transfer provision. The analysis sought to obtain
information on four primary areas: How hospitals responded in terms of
their transfer practices; a comparison of payments and costs for these
cases; whether hospitals are attempting to circumvent the policy by
delaying postacute care or coding the patient's discharge status as
something other than a transfer; and what the next possible step is for
expanding the transfer payment policy beyond the current 10 selected
DRGs or the current postacute destinations.
In addition, in accordance with section 1886(d)(5)(J)(iv)(I) of the
Act, we included in the May 5, 2000 proposed rule for FY 2001 a
discussion of whether other postdischarge services should be added to
this postacute care transfer provision. Since FY 1999 was the first
year this policy was effective and because of pending changes to
payment policies for other postacute care settings such as hospital
outpatient departments, we have limited data to assess whether
additional postacute care settings should be included. We will continue
to closely monitor this issue as more data become available.
In its analysis, HER relied on HCFA's Standard Analytic Files
containing claims submission data through September 1999. However, the
second and third quarter submissions for calendar year 1999 were not
complete. It was decided that transfer cases would be identified by
linking acute hospital discharges with postacute records based on
Medicare beneficiary numbers and dates of discharge from the acute
hospital with dates of admission or provision of service by the
postacute provider. This method was used rather than selecting cases
based on the discharge status code on the claim even though this code
is being used for payment to these cases because we wanted to also
assess how accurately hospitals are coding this status. However, the
need to link acute and postacute episodes further limited the analytic
data, due to the greater time lag for collecting postacute records.
Therefore, much of HER's analysis focused on only the first two
quarters of FY 1999. The two preceding fiscal years served as a
baseline for purposes of comparison.
Since the publication of the May 5, 2000 proposed rule for FY 2001,
HER has updated the results of its study of the impact on hospitals and
hospital payments of the postacute transfer provision. In its revised
analysis, HER found that the volume of postacute transfers qualifying
for the lower per diem payment during the first 6 months of FY 1999
fell from 28 percent of total discharges under the 10 DRGs before the
implementation of the payment change to 18 percent. It appears this
decline was largely the result of a drop in the geometric mean length
of stay in two high-volume DRGs (DRGs 14 and 209) that reduced the
number of days qualifying a case for the per diem payment. In FY 1998,
the geometric mean length of stay was 5.1 days for DRG 14 and 5.3 days
for DRG 209. The geometric mean length of stay for both DRGs in FY 1999
was 4.9 days. To qualify for a per diem payment, a case's length of
stay must be less than the DRG's geometric mean length of stay minus
one day. Therefore, cases in these two DRGs with lengths of stay of
five days were counted as qualified for per diem payments under the
postacute care transfer rules in FY 1998 but not in FY 1999. Because
DRGs 14 and 209 account for approximately 65 percent of the cases in
the 10 DRGs, the drop in the threshold for qualifying cases contributed
significantly to the magnitude of the decline in qualifying cases
overall.
Correspondingly, HER found an increase in the volume and share of
postacute transfers that did not qualify for the lower per diem
payment. The share of long-stay postacute transfers paid under the full
DRG amount (e.g., those with a length of stay equal to at least one day
less than the geometric mean length of stay minus one day) increased
from 35 percent during the first half of FY 1998 to 43 percent during
the first 6 months of FY 1999. Again, some of this increase is
attributable to the drop in the geometric mean lengths of stay in DRGs
14 and 209.
According to HER, to some extent, the shift in the distribution of
postacute transfers from qualifying to nonqualifying cases may suggest
that hospitals have responded to the policy change by holding patients
longer before releasing them to a postacute care provider. Total
postacute transfers fell by 13 percent between the two payment periods,
suggesting that hospitals may also have responded by resuming the
provision of services that were previously performed by postacute care
providers, resulting in an elimination of some postacute transfers.
However, additional analysis would be necessary to separate the effects
of the drop in the geometric mean length of stay from the hospital
behavioral effects.
The study shows that the average length of stay of qualifying
postacute transfers rose slightly between the two payment periods, from
4.16 days before the policy change to 4.33 days after. In contrast, the
average length of stay of long-stay transfers and nontransfers for the
same set of DRGs fell between the two 6-month study periods, by 15.9
and 16.6 percent, respectively. This indicates that, overall, hospitals
were keeping cases slightly longer prior to transfer.
The figures on the impact of ``delayed'' transfers (for example,
those patients transferred to a postacute care provider beyond the 1 or
3 day qualifying time period) remain unchanged. HER found little
evidence that hospitals are responding to the policy change by
increasing the time interval between prospective payment system
discharge and postacute care admission or visit.
The study also did not find evidence that changes in prospective
payment system hospital treatment and discharge behavior are resulting
in increased lengths of stay or numbers of visits during the subsequent
postacute care episode. Average lengths of stay and number of visits at
postacute care providers following provider payment system discharge
actually fell between the two payment periods. It is likely that any
adverse effects of hospital behavior on patient care would have
manifested itself in greater postacute care lengths of stay and number
of visits following the implementation of the payment reform. HER found
no evidence of this.
The average cost of qualifying postacute transfers rose in real
terms by 2.4 percent after the policy change. According to HER, average
profits for qualifying postacute transfers fell from $3,496 per case
prior to the transfer policy change to $2,255 following the
implementation of the payment reform. Average payments with adjustments
for IME, DSH and outliers declined in real terms by 9.6 percent.
HER found that the postacute transfer policy resulted in a
reduction in expenditures of $239 million during the first half of FY
1999. Annualized over a 1-year period, the policy reform lowered annual
payments by an estimated $478 million. (In our estimate of the impacts
of this policy, we estimated the total impact to be $480
[[Page 47081]]
million (63 FR 40977).) The estimated annual savings resulting from the
policy change is equivalent to a 4.5 percent reduction in program
expenditures in the 10 pilot DRGs and a 0.5 percent reduction in
overall prospective payment system expenditures. The ``price'' effect
(for example, holding hospital treatment and admission patterns
constant) resulted in a savings of $276 million during the first half
of FY 1999 (or an estimated $552 million annually). However, the
decline in the number of transfers qualifying for the lower per diem,
as well as the longer lengths of stay of short-stay postacute transfer
cases, resulted in an offsetting reduction in savings of $37 million
during the first 6 months of FY 1999 (or $74 million annually). As
stated above, the combination of the positive ``price'' effect and the
negative ``volume'' effect led to a net savings of $239 million during
the first half of FY 1999 (or an estimated $478 million annually).
The study also examined the discharge destination codes as reported
on the acute care hospital claims against postacute care transfers
identified on the basis of a postacute care claim indicating the
patient qualifies as a transfer. This analysis found that, in 1998,
only 74 percent of transfer cases had discharge destination codes on
the acute care hospital claim that were consistent with whether there
was a postacute care claim for the case matching the date of discharge.
In FY 1999, the year the postacute care transfer policy went into
effect, this rate rose to 79 percent. This indicates that hospitals are
improving the accuracy of coding transfer cases.
Transfers to hospitals or units excluded from the prospective
payment system must have a discharge destination code (Patient Status)
of 05. Transfers to a skilled nursing facility must have a discharge
destination code of 03. Transfers to a home health agency must have a
discharge destination code of 06. If the hospital's continuing care
plan for the patient is not related to the purpose of the inpatient
hospital admission, a condition code 42 must be entered on the claim.
If the continuing care plan is related to the purpose of the inpatient
hospital admission, but care did not start within 3 days after the date
of discharge, a condition code 43 must be entered on the claim. The
presence of either of these condition codes in conjunction with
discharge destination code 06 will result in full payment rather than
the transfer payment amount. We intend to closely monitor the accuracy
of hospitals' discharge destination coding in this regard and take
whatever steps are necessary to ensure that accurate payment is made
under this policy.
Section 1886(d)(5)(J)(iv)(II) of the Act authorized but did not
require the Secretary to include as part of the proposed rule
additional DRGs to include under the postacute care transfer provision.
As part of ``The President's Plan to Modernize and Strengthen Medicare
for the 21st Century'' (July 2, 1999), the Administration committed to
not expanding the number of DRGs included in the policy until FY 2003.
Therefore, we did not propose any change to the postacute care settings
or the 10 DRGs.
HER did undertake an analysis of how additional DRGs might be
considered for inclusion under the policy. The analysis supports the
initial 10 DRGs selected as being consistent with the nature of the
Congressional mandate. According to HER, ``[t]he top 10 DRGs chosen
initially by HCFA exhibit very large PAC [postacute care] levels and
PAC discharge rates (except for DRG 264, Skin Graft and/or Debridement
for Skin Ulcer or Cellulitis without CC, which was paired with DRG
263). All 10 appear to be excellent choices based on the other criteria
as well. Most have fairly high short-stay PAC [postacute care] rates
(except possibly for Strokes, DRG 14, and Mental Retardation, DRG
429).''
Extending the policy beyond these initial DRGs, however, may well
require more extensive analysis and grouping of like-DRGs. One concern
raised in the analysis relates to single DRGs including multiple
procedures with varying lengths of stay. Because the transfer payment
methodology only considers the DRG overall geometric mean length of
stay for a DRG, certain procedures with short lengths of stay relative
to other procedures in the same DRG may be more likely to be treated as
transfers. The analysis also considers pairs of DRGs, such as DRGs 263
and 264, as well as larger bundles of DRGs (grouped by common elements
such as trauma, infections, and major organ procedures). According to
HER, ``[i]n extending the PAC transfer policy, it is necessary to go
beyond the flawed concept of a single DRG to discover multiple DRGs
with a common link that exhibit similar PAC statistics. Aggregation of
this sort provides a logical bridge in expanding the PAC transfer
policy that is easily justified to Congress and that avoids unintended
inequities in the way DRGs-and potentially hospitals-are treated under
this policy. Hospitals can be inadvertently penalized or not under the
current implementation criteria due to systematic differences in the
DRG mix.''
Finally, the HER report concludes with a discussion of the issues
related to potentially expanding the postacute care transfer policy to
all DRGs. On the positive side, HER points to the benefits of expanding
the policy to include all DRGs:
A simple, uniform formula-driven policy;
Same policy rationale exists for all DRGs-the statutory
provision requiring the Secretary to select only 10 DRGs was a
political compromise;
DRGs with little utilization of short-stay postacute care
would not be harmed by the policy;
Less confusion in discharge destination coding; and
Hospitals that happen to be disproportionately treating
the current 10 DRGs may be harmed more than hospitals with an
aggressive short-stay postacute care transfer policy for other DRGs.
According to HER, the negative implications of expanding the policy
to all DRGs include:
The postacute care transfer policy is irrelevant for many
DRGs;
Added burden for the fiscal intermediaries to verify
discharge destination codes;
Diluted program savings beyond the initial 10 DRGs;
Difficulty in identifying ongoing postacute care that
resumes after discharge; and
Heterogeneous procedures within single DRGs having varying
lengths of stay.
The HER report in final format may be obtained from the HCFA
website at: http://www.hcfa.gov/medicare/ippsmain.htm
Comment: One commenter observed that in our discussion in the
proposed rule (65 FR 26303) of postacute care transfers to a skilled
facility, we stated that ``(t)his would include cases discharged from
one of the 10 selected DRGs to a designated swing bed for skilled
nursing facilities.'' The commenter believed that HCFA clearly excluded
swing bed transfers from the postacute care transfer policy in the July
31, 1998 final rule and asked for clarification.
Response: The commenter is correct that we excluded swing bed
transfers from the postacute care transfer policy in the July 31, 1998
final rule (63 FR 40977). We are not changing the policy to include
swing beds at this time. The sentence in question was inadvertently
included in the proposed rule.
Comment: One commenter believed the transfer policy is contrary to
the
[[Page 47082]]
design of the prospective payment system and penalizes clinical
decision making by physicians in discharging their patients to the
appropriate level of care. The commenter suggested that the HER study
shows that the net outcome of the policy has been to pay hospitals less
and increase the complexity and administrative costs of the inpatient
prospective payment system. The commenter cited the disadvantages of
expanding the policy to all DRGs set forth in the HER report and
recommended that the Administration revisit this policy in light of the
findings of the researchers that care, not finances, is driving the
length of stay in these cases.
Response: We disagree with the commenter that the postacute
transfer policy penalizes clinical decisionmaking by physicians in
discharging their patients to the appropriate level of care, but rather
believe that the policy appropriately adjusts payments to hospitals to
reflect the amount of care actually provided in the acute care setting.
Furthermore, this policy does not require a change in physician
clinical decisionmaking nor in the manner in which physicians and
hospitals practice medicine. It simply addresses the appropriate level
of payments once those decisions have been made.
With respect to whether the provision is contrary to the original
intent of the prospective payment system, we believe it is entirely
consistent with the following statement made in the Federal Register
during the first year of the prospective payment system in response to
a comment concerning the hospital-to-hospital transfer policy: ``(t)he
rationale for per diem payments as part of our transfer policy is that
the transferring hospital generally provides only a limited amount of
treatment. Therefore, payment of the full prospective payment rate
would be unwarranted'' (49 FR 244). We also note that in its earliest
update recommendations, the Prospective Payment Assessment Commission
(MedPAC's predecessor organization) included what it called a site-of-
service substitution adjustment to account for the shifting of portions
of inpatient care to other settings. We believe this provision is an
appropriate and consistent response to the changing treatment practice
of the hospital industry.
Though we are not expanding the policy to include all DRGs at this
time, HER points to advantages as well as the disadvantages cited by
the commenter of doing so, including:
A simple, uniform formula-driven policy;
Same policy rationale exists for all DRGs--the statutory
provision requiring the Secretary to select only 10 DRGs was a
political compromise;
DRGs with little utilization of short-stay postacute care
would not be harmed by the policy;
Less confusion in discharge destination coding; and
Hospitals that happen to be disproportionately treating
the current 10 DRGs may be harmed more than hospitals with an
aggressive short-stay postacute care transfer policy for other DRGs.
Finally, we also believe that care, not finances, should drive the
length of stay and all other clinical decisions in these cases, and
that payments should be aligned with the care given in each provider
setting.
Comment: One commenter agreed with our decision to not expand the
number of DRGs subject to the postacute transfer policy. The commenter
believed that the policy should be revoked because the cost savings
have far exceeded the estimates relied on in developing the policy and,
more fundamentally, because it violates the notion of averaging that is
at the heart of an appropriate prospective payment system. The
commenter also believed that the introduction of prospective payment in
virtually all postacute settings obviates the need for this expansion
of transfer policy.
The commenter stated that the use of the geometric mean length of
stay to determine the payment amount does not fully consider the
medical practice patterns of physicians in different regions of the
country and appears to penalize those areas that already achieved a
lower length of stay.
Response: Since updating its study after the proposed rule was
published, HER reports that the policy resulted in savings of $478
million, remarkably close to our estimate of $480 million published in
the July 31, 1998 final rule (63 FR 40977). Furthermore, as we stated
in our previous response, we believe that the policy is entirely
consistent with the original intent of the prospective payment system.
We disagree with the commenter's belief that the introduction of
prospective payment systems to postacute settings obviates the need for
the transfer policy. The purpose of the policy is to align payments
with the care actually provided in the inpatient setting. The policy is
particularly appropriate for areas of the country where care has been
more aggressively shifted from acute to postacute settings.
B. Sole Community Hospitals (SCHs)(Secs. 412.63, 412.73, and 413.75,
proposed new Sec. 412.77, and Sec. 412.92)
Under the hospital inpatient prospective payment system, special
payment protections are provided to sole community hospitals (SCHs).
Section 1886(d)(5)(D)(iii) of the Act defines an SCH as, among other
things, a hospital that, by reason of factors such as isolated
location, weather conditions, travel conditions, or absence of other
hospitals (as determined by the Secretary), is the sole source of
inpatient hospital services reasonably available to Medicare
beneficiaries. The regulations that set forth the criteria a hospital
must meet to be classified as an SCH are located at Sec. 412.92(a).
Currently SCHs are paid based on whichever of the following rates
yields the greatest aggregate payment to the hospital for the cost
reporting period: The Federal national rate applicable to the hospital;
or the hospital's ``target amount''--that is, either the updated
hospital-specific rate based on FY 1982 costs per discharge, or the
updated hospital-specific rate based on FY 1987 costs per discharge.
Section 405 of Public Law 106-113, which amended section 1886(b)(3)
of the Act, provides that an SCH that was paid for its cost reporting
period beginning during 1999 on the basis of either its FY 1982 or FY
1987 target amount (the hospital-specific rate as opposed to the
Federal rate) may elect to receive payment under a methodology using a
third hospital-specific rate based on the hospital's FY 1996 costs per
discharge. This amendment to the statute means that, for cost reporting
periods beginning on or after October 1, 2000, eligible SCHs can elect
to use the allowable FY 1996 operating costs for inpatient hospital
services as the basis for their target amount, rather than either their
FY 1982 or FY 1987 costs.
We are aware that language in the Conference Report accompanying
Public Law 106-113 indicates that the House bill (H.R. 3075) would have
permitted SCHs that were being paid the Federal rate to rebase, not
SCHs that were paid on the basis of either their FY 1982 or FY 1987
target amount (H.R. Conf. Rep. No. 106-479, 106th Cong., 1st Sess. at
890 (1999)). The language of the section 405 amendment to section
1886(b)(3) (which added new subparagraph (I)(ii)) clearly limits the
option to substitute the FY 1996 base year to SCHs that were paid for
their cost reporting periods beginning during 1999 on the basis of the
target amount applicable to the hospital under section 1886(b)(3)(C).
[[Page 47083]]
In the May 5 proposed rule, we proposed that, when calculating an
eligible SCH's FY 1996 hospital-specific rate, we utilize the same
basic methodology used to calculate FY 1982 and FY 1987 bases. That
methodology is set forth in Secs. 412.71 through 412.75 of the
regulations and discussed in detail in several prospective payment
system documents published in the Federal Register on September 1, 1983
(48 FR 3977); January 3, 1984 (49 FR 256); June 1, 1984 (49 FR 23010);
and April 20, 1990 (55 FR 15150).
Since we anticipate that eligible hospitals will elect the option
to rebase using their FY 1996 cost reporting periods, we proposed that
our fiscal intermediaries would identify those SCHs that were paid for
their cost reporting periods beginning during 1999 on the basis of
their target amounts. For these hospitals, fiscal intermediaries would
calculate the FY 1996 hospital-specific rate as described below in this
section IV.B. If this rate exceeds a hospital's current target amount
based on the greater of the FY 1982 or FY 1987 hospital-specific rate,
the hospital will receive payment based on the FY 1996 hospital-
specific rate (based on the blended amounts described at section
1886(b)(3)(I)(i) of the Act) unless the hospital notifies its fiscal
intermediary in writing prior to the end of the cost reporting period
that it does not wish to be paid on the basis of the FY 1996 hospital-
specific rate. Thus, if a hospital does not notify its fiscal
intermediary before the end of the cost reporting period that it
declines the rebasing option, we would deem the lack of such
notification as an election to have section 1886(b)(3)(I) of the Act
apply to the hospital.
We further proposed that an SCH's decision to decline this option
for a cost reporting period will remain in effect for subsequent
periods until such time as the hospital notifies its fiscal
intermediary otherwise.
The FY 1996 hospital-specific rate will be based on FY 1996 cost
reporting periods beginning on or after October 1, 1995 and before
October 1, 1996, that are 12 months or longer. If the hospital's last
cost reporting period ending on or before September 30, 1996 is less
than 12 months, the hospital's most recent 12-month or longer cost
reporting period ending before the short period report would be
utilized in the computations. If a hospital has no cost reporting
period beginning in FY 1996, it would not have a hospital-specific rate
based on FY 1996.
For each hospital eligible for FY 1996 rebasing, the fiscal
intermediary will calculate a hospital-specific rate based on the
hospital's FY 1996 cost report as follows:
Determine the hospital's total allowable Medicare
inpatient operating cost, as stated on the FY 1996 cost report.
Divide the total Medicare operating cost by the number of
Medicare discharges in the cost reporting period to determine the FY
1996 base period cost per case. For this purpose, transfers are
considered to be discharges.
In order to take into consideration the hospital's
individual case-mix, divide the base year cost per case by the
hospital's case-mix index applicable to the FY 1996 cost reporting
period. This step is necessary to standardize the hospital's base
period cost for case-mix and is consistent with our treatment of both
FY 1982 and FY 1987 base-period costs per case. A hospital's case-mix
is computed based on its Medicare patient discharges subject to DRG-
based payment.
We proposed that the fiscal intermediary will notify eligible
hospitals of their FY 1996 hospital-specific rate prior to October 1,
2000. Consistent with our policies relating to FY 1982 and FY 1987
hospital-specific rates, we proposed to permit hospitals to appeal a
fiscal intermediary's determination of the FY 1996 hospital-specific
rate under the procedures set forth in 42 CFR part 405, subpart R,
which concern provider payment determinations and appeals. In the event
of a modification of base period costs for FY 1996 rebasing due to a
final nonappealable court judgment or certain administrative actions
(as defined in Sec. 412.72(a)(3)(i)), the adjustment would be
retroactive to the time of the intermediary's initial calculation of
the base period costs, consistent with the policy for rates based on FY
1982 and FY 1987 costs.
Section 405 prescribes the following formula to determine the
payment for SCHs that elect rebasing:
For discharges during FY 2001:
75 percent of the updated FY 1982 or FY 1987 former target
(identified in the statute as the ``subparagraph (C) target amount''),
plus
25 percent of the updated FY 1996 amount (identified in
the statute as the ``rebased target amount'').
For discharges during FY 2002:
50 percent of the updated FY 1982 or FY 1987 former
target, plus
50 percent of the updated FY 1996 amount.
For discharges during FY 2003:
25 percent of the updated FY 1982 or FY 1987 former
target, plus
75 percent of the updated FY 1996 amount.
For discharges during FY 2004 or any subsequent fiscal year, the
hospital-specific rate would be determined based on 100 percent of the
updated FY 1996 amount.
We proposed to add a new Sec. 412.77 and amend Sec. 412.92(d) to
incorporate the provisions of section 1886(b)(3)(I) of the Act, as
added by section 405 of Public Law 106-113.
Section 406 of Public Law 106-113 amended section
1886(b)(3)(B)(i)(XVI) of the Act to provide, for fiscal year 2001, for
full market basket updates to both the Federal and hospital-specific
payment rates applicable to sole community hospitals. In the May 5
proposed rule, we proposed to amend Secs. 412.63, 412.73, and 412.75 to
incorporate the amendment made by section 406 of Public Law 106-113.
We received several public comments on our proposal.
Comment: Several commenters discussed the difference between the
language in the statutory provision, which limits the updated 1996-
rebasing option to SCHs that were paid on the basis of their target
amount (hospital specific rate) in 1999, and the language of the
accompanying Conference report (H.R. Conf. Rep. No. 106-479, 106th
Cong., 1st Sess. at 890 (1999)). The Conference report indicated that
the House bill (H.R. 3075) would have permitted SCHs that were being
paid the Federal rate to rebase rather than SCHs that were paid on the
basis of either their FY 1982 or FY 1987 target amount. One commenter,
in particular, believed that despite the clear statutory language, HCFA
had the ability to allow leeway in determining which hospitals were
eligible to elect 1996 rebasing. In support of this view, the commenter
made the assertion that the Federal rate used in SCH payment
computations included outlier and disproportionate share payments (DSH)
as well as other special provisions. Therefore, the hospital-specific
rate should be compared to the base Federal rate of the geographic
area, without the add-ons, to determine which amount would yield the
largest payment. Additionally, the total Federal payments on the
hospital's cost report may exceed the hospital-specific payments in
some years, while falling below them in other years because of the
potential fluctuations of outliers and DSH payments. The commenter
argued, therefore, that to determine whether an SCH is to be paid on
the basis of the target amount, hospital-specific payments should be
compared to the base Federal payments without the addition of outliers
and DSH payments.
[[Page 47084]]
Response: We disagree with the commenter's argument. The commenter
is correct in saying that in any one year, the target amount may be
exceeded by calculations of the Federal rate. This is the reason why
the calculation is done yearly, so that the hospital may receive the
highest possible payment for that specific year based on a comparison
of what each payment scheme would generate for the hospital. The
statute clearly states the rebasing option is available to an SCH that,
for its cost reporting period beginning on or after October 1, 2000, is
paid on the basis of the target amount. As we stated in the proposed
rule, we are aware of the difference between this rebasing plan set
forth in section 405 of Public Law 106-113 and the one described in the
Conference Report, but the unambiguous language of the statute controls
over the language of the Conference Report.
Comment: One commenter pointed to an inconsistency between the text
of proposed Sec. 412.77 and the preamble to the proposed rule. The
preamble stated that, in the absence of notification to the contrary
from the hospital, the intermediary will base payment on the 1996
hospital specific rate, if this rate exceeds the 1982 or 1987 hospital-
specific rate. The proposed regulation language at Sec. 412.77(a)
indicated that, in the absence of notification, the hospital payment
would be based on the 1996 hospital specific rate without the
qualification that this rate would need to exceed the 1982 or 1987 base
year rates.
Response: We believe that the commenter's concern about
inconsistency may stem from a typographical error that appeared in the
text of proposed Sec. 412.77 in the proposed rule, that incorrectly
referenced Sec. 412.72, rather than revised Sec. 412.92. The payment
determination formula used for SCHs is set forth in Sec. 412.92(d),
which has been revised to include the 1996 rebasing option. That
formula clearly states that an SCH is paid based on whichever yields
the greatest aggregate payment for the cost reporting period: the
Federal payment rate, the 1982 or 1987 hospital-specific rate, or the
1996 hospital-specific rate. We have deleted the incorrect reference to
Sec. 412.72. In addition, for the sake of clarity, we have added a
sentence to Sec. 412.77(a)(1), further modified Sec. 412.92(d)(1), and
added a new Sec. 412.92(d)(2) (the existing paragraph (d)(2) is
redesignated as paragraph (d)(3)).
Comment: One commenter disagreed with the proposal that the
intermediary should include the 1996 hospital specific rate in its
payment calculations it if it is higher than either the 1982 or 1987
hospital specific rates, in the absence of notification to the
contrary. Rather, the commenter suggested that an eligible hospital be
required to state its choice to be paid on this basis.
Response: We believe that it is more efficient from an
administrative standpoint to require a hospital to notify its fiscal
intermediary if it chooses not to receive payment based on the (higher)
FY 1996 hospital-specific rate. The only time that a hospital that is
eligible for rebasing will be paid based on its 1996 amount is if that
amount is higher than either the 1982 or 1987 hospital specific rates
and also higher than the Federal rate. We do not know why a hospital
would elect not to receive payment based on the highest of its possible
choices. Therefore, rather than requiring a hospital to provide written
notification to the fiscal intermediary when its FY 1996 hospital-
specific rate is higher than its FY 1982 and FY 1987 hospital-specific
rates, we deem the hospital to have made an election to be paid based
on the FY 1996 hospital-specific rate, unless it notifies its fiscal
intermediary otherwise.
Comment: Two commenters requested a clarification as to the
proposed timing for a hospital that is eligible for payment based on
its 1996 hospital-specific rate to notify its intermediary of its
intention not to elect payment based on this rate.
Response: We agree that in the proposed rule the preamble and the
proposed regulation language were contradictory. Accordingly, we are
revising Sec. 412.77(a)(2) to require that an eligible hospital must
notify its intermediary of its intent not to elect payment based on its
FY 1996 hospital-specific rate prior to the end of the cost reporting
period for which the payments would otherwise be made. This schedule
will allow hospitals an opportunity to consider their options.
C. Rural Referral Centers (Sec. 412.96)
Under the authority of section 1886(d)(5)(C)(i) of the Act, the
regulations at Sec. 412.96 set forth the criteria a hospital must meet
in order to receive special treatment under the prospective payment
system as a rural referral center (RRC). For discharges occurring
before October 1, 1994, RRCs received the benefit of payment based on
the other urban amount rather than the rural standardized amount.
Although the other urban and rural standardized amounts were the same
for discharges beginning with that date, RRCs would continue to receive
special treatment under both the DSH payment adjustment and the
criteria for geographic reclassification.
As discussed in 62 FR 45999 and 63 FR 26317, under section 4202 of
Public Law 105-33, a hospital that was classified as an RRC for FY 1991
is to be classified as an RRC for FY 1998 and later years so long as
that hospital continued to be located in a rural area and did not
voluntarily terminate its RRC status. Otherwise, a hospital seeking RRC
status must satisfy applicable criteria. One of the criteria under
which a hospital may qualify as an RRC is to have 275 or more beds
available for use. A rural hospital that does not meet the bed size
requirement can qualify as an RRC if the hospital meets two mandatory
prerequisites (specifying a minimum case-mix index and a minimum number
of discharges) and at least one of three optional criteria (relating to
specialty composition of medical staff, source of inpatients, or
referral volume). With respect to the two mandatory prerequisites, a
hospital may be classified as an RRC if its--
Case-mix index is at least equal to the lower of the
median case-mix index for urban hospitals in its census region,
excluding hospitals with approved teaching programs, or the median
case-mix index for all urban hospitals nationally; and
Number of discharges is at least 5,000 per year, or if
fewer, the median number of discharges for urban hospitals in the
census region in which the hospital is located. (The number of
discharges criterion for an osteopathic hospital is at least 3,000
discharges per year.)
1. Case-Mix Index
Section 412.96(c)(1) provides that HCFA will establish updated
national and regional case-mix index values in each year's annual
notice of prospective payment rates for purposes of determining RRC
status. The methodology we use to determine the national and regional
case-mix index values is set forth in regulations at
Sec. 412.96(c)(1)(ii). The proposed national case-mix index value for
FY 2001 in the May 5 proposed rule included all urban hospitals
nationwide, and the regional values are the median values of urban
hospitals within each census region, excluding those with approved
teaching programs (that is, those hospitals receiving indirect medical
education payments as provided in Sec. 412.105). These values were
based on discharges occurring during FY 1999 (October 1, 1998 through
September 30, 1999) and include bills posted to HCFA's records through
March 2000.
[[Page 47085]]
We proposed that, in addition to meeting other criteria, hospitals
with fewer than 275 beds, if they are to qualify for initial RRC status
for cost reporting periods beginning on or after October 1, 2000, must
have a case-mix index value for FY 1999 that is at least--
1.3408; or
The median case-mix index value for urban hospitals
(excluding hospitals with approved teaching programs as identified in
Sec. 412.105) calculated by HCFA for the census region in which the
hospital is located. (See the table set forth in the May 5, 2000
proposed rule at 65 FR 26306.)
Based on the latest data available (FY 1999 bills received through
March 31, 2000), the median case-mix values by region are set forth in
the table below.
------------------------------------------------------------------------
Case-mix
Region index value
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT).................... 1.2289
2. Middle Atlantic (PA, NJ, NY)............................ 1.2385
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)..... 1.3113
4. East North Central (IL, IN, MI, OH, WI)................. 1.2623
5. East South Central (AL, KY, MS, TN)..................... 1.2661
6. West North Central (IA, KS, MN, MO, NE, ND, SD)......... 1.1822
7. West South Central (AR, LA, OK, TX)..................... 1.2813
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............... 1.3250
9. Pacific (AK, CA, HI, OR, WA)............................ 1.3036
------------------------------------------------------------------------
For the benefit of hospitals seeking to qualify as RRCs or those
wishing to know how their case-mix index value compares to the
criteria, we are publishing each hospital's FY 1999 case-mix index
value in Table 3C in section VI. of the Addendum to this final rule. In
keeping with our policy on discharges, these case-mix index values are
computed based on all Medicare patient discharges subject to DRG-based
payment.
2. Discharges
Section 412.96(c)(2)(i) provides that HCFA will set forth the
national and regional numbers of discharges in each year's annual
notice of prospective payment rates for purposes of determining RRC
status. As specified in section 1886(d)(5)(C)(ii) of the Act, the
national standard is set at 5,000 discharges. However, in the May 5
proposed rule, we proposed to update the regional standards. The
proposed regional standards were based on discharges for urban
hospitals' cost reporting periods that began during FY 1998 (that is,
October 1, 1997 through September 30, 1998). That is the latest year
for which we have complete discharge data available.
Therefore, we proposed that, in addition to meeting other criteria,
a hospital, if it is to qualify for initial RRC status for cost
reporting periods beginning on or after October 1, 2000, must have as
the number of discharges for its cost reporting period that began
during FY 1999 a figure that is at least--
5,000; or
The median number of discharges for urban hospitals in the
census region in which the hospital is located. (See the table set
forth in the May 5, 2000 proposed rule at 65 FR 26307.)
Based on the latest discharge data available for FY 1999, the final
median number of discharges for urban hospitals by census region areas
are as follows:
------------------------------------------------------------------------
Number of
Region discharges
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT).................... 6,725
2. Middle Atlantic (PA, NJ, NY)............................ 8,736
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)..... 7,911
4. East North Central (IL, IN, MI, OH, WI)................. 7,661
5. East South Central (AL, KY, MS, TN)..................... 6,883
6. West North Central (IA, KS, MN, MO, NE, ND, SD)......... 5,829
7. West South Central (AR, LA, OK, TX)..................... 5,385
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............... 8,026
9. Pacific (AK, CA, HI, OR, WA)............................ 6,268
------------------------------------------------------------------------
We note that the number of discharges for hospitals in each census
region is greater than the national standard of 5,000 discharges.
Therefore, 5,000 discharges is the minimum criterion for all hospitals.
We reiterate that an osteopathic hospital, if it is to qualify for
RRC status for cost reporting periods beginning on or after October 1,
2000, must have at least 3,000 discharges for its cost reporting period
that began during FY 1999.
We did not receive any comments on the RRC criteria.
D. Indirect Medical Education (IME) Adjustment(Sec. 412.105)
Section 1886(d)(5)(B) of the Act provides that prospective payment
hospitals that have residents in an approved graduate medical education
(GME) program receive an additional payment to reflect the higher
indirect operating costs associated with GME. The regulations regarding
the calculation of this additional payment, known as the indirect
medical education (IME) adjustment, are located at Sec. 412.105.
Section 111 of Public Law 106-113 modified the transition for the
IME adjustment that was established by Public Law 105-33. We are
publishing these changes in a separate interim final rule with comment
period that appears elsewhere in this issue of the Federal Register.
However, for discharges occurring during FY 2001, the adjustment
formula equation used to calculate the IME adjustment factor is 1.54
x [(1+r) \.405\-1]. (The variable r represents the hospital's
resident-to-bed ratio.)
In the proposed rule, we inadvertently omitted the revised
transition for the IME adjustment for FYs 2002 and thereafter.
Specifically, for discharges occurring on or after October 1, 2001, the
adjustment formula equation used to calculate the IME adjustment factor
is 1.35 x [(1+r)\.405\-1]. We are adding a new Sec. 412.105(d)(3)(vi)
to reflect this change.
In the July 30, 1999 final rule (64 FR 41517), we set forth certain
policies that affected payment for both direct and indirect GME. These
policies related to adjustments to full-time equivalent (FTE) resident
caps for new medical residency programs affecting both direct and
indirect GME programs; the adjustment to GME caps for certain hospitals
under construction prior to August 5, 1997 (the enactment date of
Public Law 105-33) to account for residents in new medical residency
training programs; and the temporary adjustment to FTE caps to reflect
residents affected by hospital closures. When we amended the
regulations under Sec. 413.86 for direct GME, we inadvertently did not
make the corresponding changes in Sec. 412.105 for IME. In the May 5
proposed rule, we proposed to make the following conforming changes:
To amend Sec. 412.105(f)(1)(vii) to provide for an
adjustment to the FTE caps for new medical residency programs as
specified under Sec. 413.86(g)(6).
To add a new Sec. 412.105(f)(1)(viii) related to the
adjustment to the FTE caps for newly constructed hospitals that sponsor
new residency programs in effect on or after January 1, 1995, and on or
before August 5, 1997, that either received initial accreditation by
the appropriate accrediting body or temporarily trained residents at
another hospital(s) until the facility was completed, to conform to the
provisions of Sec. 413.86(g)(7).
To add a new Sec. 412.105(f)(1)(ix) to specify that a
hospital may receive a
[[Page 47086]]
temporary adjustment to its FTE cap to take into account residents
added because of another hospital's closure if the hospital meets the
criteria listed under Sec. 413.86(g)(8).
In addition, we proposed to add a cross-reference to
``Sec. 413.86(d)(3)(i) through (v)'' in Sec. 412.105(g), and to correct
the applicable period in both Secs. 412.105(g) and 413.86(d)(3) by
revising the phrase ``For portions of cost reporting periods beginning
on or after January 1, 1998'' to read ``For portions of cost reporting
periods occurring on or after January 1, 1998''.
We received one public comment on the proposed changes to the IME
regulations.
Comment: One commenter recommended that the temporary adjustment
allowed to a hospital's FTE cap under the proposed
Sec. 412.105(f)(1)(ix) to account for residents added because of
another hospital's closure should be a permanent adjustment to maintain
the current level of trainees.
Response: In the proposed rule, we were merely making a conforming
change to the IME regulations based on a change in the GME regulations
in the July 30, 1999 final rule. As indicated in the July 30, 1999
final rule (65 FR 41522), we continue to believe that, when a hospital
assumes the training of additional residents because of another
hospital's closure, an adjustment to the hospital's FTE cap should only
be available for the period of time necessary to train those displaced
residents. At that time we provided for the temporary adjustment
because of hospitals' reluctance to accept additional residents from a
closed hospital without a temporary adjustment to their caps. We do not
believe currently there is justification for a permanent adjustment
because of the temporary training provisions for the displaced
residents.
E. Payments to DSH Hospitals (Sec. 412.106)
1. Changes to the DSH Formula
Effective for discharges beginning on or after May 1, 1986,
hospitals that treat a disproportionately large number of low-income
patients (as defined in section 1886(d)(5)(F) of the Act) receive
additional payments through the DSH adjustment. Section 4403(a) of
Public Law 105-33 amended section 1886(d)(5)(F) of the Act to reduce
the payment a hospital would otherwise receive under the current DSH
formula by 1 percent for FY 1998, 2 percent for FY 1999, 3 percent for
FY 2000, 4 percent for FY 2001, 5 percent for 2002, and 0 percent for
FY 2003 and each subsequent fiscal year. Subsequently, section 112 of
Public Law 106-113 modified the amount of the reductions under Public
Law 105-33 by changing the reduction to 3 percent for FY 2001 and 4
percent for FY 2002. The reduction continues to be 0 percent for FY
2003 and each subsequent fiscal year. In the May 5 proposed rule, we
proposed to revise Sec. 412.106(e) to reflect the changes in the
statute made by Public Law 106-113.
Section 112 of Public Law 106-113 also directs the Secretary to
require prospective payment system hospitals to submit data on the
costs incurred by the hospitals for providing inpatient and outpatient
hospital services for which the hospitals are not compensated,
including non-Medicare bad debt, charity care, and charges for medical
and indigent care to the Secretary as part of hospitals' cost reports.
These data are required for cost reporting periods beginning on or
after October 1, 2001. We will be revising our instructions to
hospitals for cost reports for FY 2002 to capture these data.
Comment: Several commenters provided positive reinforcement
concerning the impending collection of uncompensated care data via
offers of assistance in this effort. Also, commenters made the point
that, at this time, uncompensated care does not have a common national
definition.
Response: We are aware that uncompensated care does not currently
have a common national definition. One of our tasks will be to define
the reporting parameters so that the data will be reported in a uniform
manner. This is the main reason that we have not sought to use
uncompensated care data in the Medicare DSH adjustment calculation in
the past. We will keep these comments in mind as we proceed.
Comment: One commenter was concerned about the pending publication
of the Report to Congress on the Medicare DSH formula. This commenter
asked HCFA to complement its data collection efforts by issuing the
report as required by Public Law 105-33.
Response: We are in the process of completing this report and
intend to submit it to Congress in the near future.
2. DSH Adjustment Calculation: Change in the Treatment of Certain
Medicaid Patient Days in States With Section 1115 Expansion Waivers
On January 20, 2000, we published in the Federal Register an
interim final rule with comment period (65 FR 3136) to implement a
change in the Medicare DSH adjustment calculation policy in reference
to section 1115 expansion waiver days. That interim final rule set
forth criteria to use in calculating the Medicare DSH adjustment for
hospitals for purposes of payment under the prospective payment system.
Under section 1886(d)(5)(F) of the Act, an adjustment is made to
the hospital's inpatient prospective payment system payment for serving
a disproportionate share of low-income or Medicaid and Medicare
patients. The size of a hospital's Medicare DSH adjustment is based on
the sum of the percentage of patient days attributable to patients
eligible for both Medicare Part A and Supplemental Security Income
(SSI) and the percentage of patient days attributable to patients
eligible for Medicaid but not Medicare Part A.
Some States provide medical assistance (Medicaid) under a
demonstration project (also referred to as a section 1115 waiver).
Under policy in existence before the January 20, 2000 interim final
rule, hospitals were to include in the Medicare DSH calculation only
those days for populations under the section 1115 waiver who were or
could have been made eligible under a State Medicaid plan. Patient days
of the expanded eligibility groups, however, were not to be included in
the Medicare DSH calculation.
In the January 20, 2000 interim final rule with comment period, we
revised the policy, effective with discharges occurring on or after
January 20, 2000, to allow hospitals to include the patient days of all
populations eligible for Title XIX matching payments in a State's
section 1115 waiver in calculating the hospital's Medicare DSH
adjustment. This policy was reflected in a revision to Sec. 412.106 of
the regulations.
We received 11 public comments on the inclusion of Section 1115
waiver days in the Medicare disproportionate share adjustment
calculation.
Comment: Several commenters were concerned with the inclusion in
the January 20, 2000 interim final rule with comment period of
expansion waiver days in the Medicaid portion of the Medicare DSH
adjustment calculation. States without a Medicaid expansion waiver in
place believed that States that did have a Medicaid expansion waiver in
place received an unfair advantage. In addition, comments from
Pennsylvania hospitals supported the continued inclusion of general
assistance days in the Medicaid portion of the Medicare DSH adjustment
calculation as well as expansion waiver days. Finally, some commenters
urged HCFA to revise the
[[Page 47087]]
Medicare DSH adjustment calculation to include charity care days.
Response: While we initially determined that States under a
Medicaid expansion waiver could not include those expansion waiver days
as part of the Medicare DSH adjustment calculation, we have since
consulted extensively with Medicaid staff and have determined that
section 1115 expansion waiver days are utilized by patients whose care
is considered to be an approved expenditure under Title XIX. While this
does advantage States that have a section 1115 expansion waiver in
place, these days are considered to be Title XIX days by Medicaid
standards.
Some States operate under a section 1115 waiver without an
expansion (for example, Arizona). The days that are utilized by
patients under the section 1115 waiver are already part of the Medicaid
portion of the Medicare DSH adjustment calculation because the section
1115 waiver includes patients who otherwise would have been eligible
for Medicaid Title XIX.
General assistance days are days for patients covered under a
State-only or county-only general assistance program, whether or not
any payment is available for health care services under the program.
Charity care days are those days that are utilized by patients who
cannot afford to pay and whose care is not covered or paid by any
health insurance program. While we recognize that these days may be
included in the calculation of a State's Medicaid DSH payments, these
patients are not Medicaid-eligible under the State plan and are not
considered Title XIX beneficiaries. Therefore, Pennsylvania, and other
States that have erroneously included these days in the Medicare
disproportionate share adjustment calculation in the past, will be
precluded from including such days in the future. We would like to
point out that these States were held harmless from adverse action in
this matter for any cost reporting period beginning prior to December
31, 1999. We are in the process of preparing a Report to Congress on
the Medicare DSH adjustment calculation which presents various options
for calculating the adjustment.
Comment: One commenter was concerned about the inclusion of days in
the Medicaid portion of the Medicare DSH adjustment calculation for
additional States that are approved for expansion waivers in the
future. Also, this commenter questioned whether or not the expenditures
related to the expansion waiver days for Medicare DSH would be
considered in the budget neutrality evaluation prior to approval of the
expansion waiver application.
Response: As stated in the January 20, 2000 interim final rule with
comment period, days utilized under section 1115 expansion waivers will
be included in the Medicaid portion of the Medicare DSH adjustment
calculation. As a result, the days utilized under any approved section
1115 expansion waiver in the future would be included in this
calculation. However, the State will not be held accountable for the
expenditures associated with Medicare DSH in the budget neutrality test
for the section 1115 expansion waiver, as those payments are made from
the Medicare program, not the Medicaid program.
Comment: Several commenters were concerned that the inclusion of
section 1115 expansion waiver days was effective on January 20, 2000,
rather than on January 1, 2000. These same commenters pointed out that
the hold harmless provisions of Program Memorandum A-99-62 (December
1999) concern hospitals whose cost reporting periods begin on or prior
to December 31, 1999. Therefore, many hospitals may be paid differently
during different periods of the same cost report.
Response: We understand that discharges prior to January 20, 2000
will be handled one way, and discharges as of January 20, 2000 may be
paid differently. While we can enforce an existing policy for a
previous time period, we do not believe we can retroactively institute
new policy.
F. Medicare Geographic Classification Review Board (Secs. 412.256 and
412.276)
With the creation of the Medicare Geographic Classification Review
Board (MGCRB), beginning in FY 1991, under section 1886(d)(10) of the
Act, hospitals could request reclassification from one geographic
location to another for the purpose of using the other area's
standardized amount for inpatient operating costs or the wage index
value, or both (September 6, 1990 interim final rule with comment
period (55 FR 36754), June 4, 1991 final rule with comment period (56
FR 25458), and June 4, 1992 proposed rule (57 FR 23631)). Implementing
regulations in Subpart L of Part 412 (Sec. 412.230 et seq.) set forth
criteria and conditions for redesignations from rural to urban, rural
to rural, or from an urban area to another urban area with special
rules for SCHs and RRCs.
1. Provisions of Public Law 106-113
Section 401 of Public Law 106-113 amended section 1886(d)(8) of the
Act by adding subparagraph (E), which creates a mechanism, separate and
apart from the MGCRB, permitting an urban hospital to apply to the
Secretary to be treated as being located in the rural area of the State
in which the hospital is located. The statute directs the Secretary to
treat a qualifying hospital as being located in a rural area for
purposes of provisions under section 1886(d) of the Act. In addition,
section 401 of Public Law 106-113 went on to provide for such
reclassifications from urban to rural for purposes of Medicare payments
to outpatient departments and to hospitals that would qualify to become
critical access hospitals.
Regulations implementing section 1886(d)(8)(E) of the Act are
included in an interim final rule with comment period implementing
certain provisions of Public Law 106-111 published elsewhere in this
issue of the Federal Register. The statutory language of section
1886(d)(8)(E) of the Act does not address the issue of interactions
between changes in classification under section 1886(d)(8)(E) of the
Act and the MGCRB reclassification process under section 1886(d)(10) of
the Act. The Secretary has extremely broad authority under section
1886(d)(10) of the Act to establish criteria for reclassification under
the MGCRB process. Section 401 of Public Law 106-113 does not amend
section 1886(d)(10) of the Act to limit the agency's discretion under
the provision in any way, nor does section 1886(d)(8)(E) of the Act (as
added by section 401) refer to section 1886(d)(10) of the Act. However,
we note that in the Conference Report accompanying Public Law 106-113,
the language discussing the House bill (H.R. 3075, as passed) indicates
that: ``[H]ospitals qualifying under this section shall be eligible to
qualify for all categories and designations available to rural
hospitals, including sole community, Medicare dependent, critical
access, and referral centers. Additionally, qualifying hospitals shall
be eligible to apply to the Medicare Geographic Reclassification Review
Board for geographic reclassification to another area''.
In the May 5, 2000 proposed rule, we indicated that we are
concerned that section 1886(d)(8)(E) might create an opportunity for
some urban hospitals to take advantage of the MGCRB process by first
seeking to be reclassified as rural under section 1886(d)(8)(E) (and
receiving the benefits afforded to rural hospitals) and in turn seek
reclassification through the MGCRB back to the urban area for purposes
of their standardized amount and wage index and thus also receive the
higher payments that might result from being treated as being located
in an urban area. That is, we were concerned that
[[Page 47088]]
some hospitals might inappropriately seek to be treated as being
located in a rural area for some purposes and as being located in an
urban area for other purposes. In light of the Conference Report
language noted above discussing the House bill and what appears to be
the potential for inappropriately inconsistent treatment of the same
hospital on the other hand, in the May 5 proposed rule, we solicited
public comment on this issue, and indicated that we might impose a
limitation on such MGCRB reclassifications in this final rule for FY
2001, if such action appears warranted. We also sought specific
comments on how such a limitation, if any, should be imposed and
provided several examples and alternatives.
We received seven public comments on the interaction of urban to
rural reclassification under section 1886(d)(8)(E) and reclassification
under the MGCRB. Several additional comments were received regarding
specific aspects of implementation of section 1886(d)(8)(E) of the Act
(added by section 401 of Public Law 106-113). These issues are
addressed in the interim final rule with comment period, published
elsewhere in this issue of the Federal Register, that implements
certain provisions of Public Law 106-113.
Comment: Several of our commenters urged HCFA to place no
restrictions on access to MGCRB reclassification for urban hospitals
that have elected to reclassify to rural under section 1886(d)(8)(E) of
the Act, citing the Conference Report as evidence of the Congressional
intent in enacting this provision. These commenters argued that these
now-rural hospitals should receive the same treatment as geographically
rural hospitals, noting that current Medicare policy permits
geographically rural hospitals to reclassify, under the MGCRB, to urban
areas for their wage index or standard payment amounts, or both. This
means that geographically rural hospitals can take advantage of both
rural as well as urban payment amounts. This same option, these
commenters asserted, should be available to urban hospitals that
petition for reclassification under section 1886(d)(8)(E).
Response: Under section 1886(d)(8)(E) of the Act, as added by
section 401 of the Public Law 106-113, a hospital located in an urban
area may file an application to be treated as being located in a rural
area for purposes of payment under section 1886(d) of the Act. The
issue here is whether a hospital that has been reclassified from an
urban area to a rural area under section 1886(d)(8)(E) of the Act
should be permitted to subsequently be reclassified under the MGCRB
process from the rural area to another area. As discussed below, we
believe that, for purposes of the MGCRB process, it is appropriate to
distinguish between hospitals that are reclassified as rural under
section 1886(d)(8)(E) of the Act and hospitals that are geographically
rural. However, in light of our understanding of the intent underlying
the language in the Conference Report for Public Law 106-113, we are
revising a policy relating to RRCs so that certain urban hospitals that
are not RRCs under current policy will be granted RRC status and can
receive special treatment under the MGCRB process.
Section 1886(d)(8)(E) of the Act, as added by section 401 of Public
Law 106-113, provides that, for purposes of section 1886(d) of the Act,
if a hospital files an application and meets applicable criteria, the
Secretary ``shall treat the hospital as being located in the rural area
* * * of the State in which the hospital is located.'' As discussed
above and in the proposed rule, a description of the House bill in the
Conference Report for Public Law 106-113 indicates that hospitals
reclassified as rural under section 1886(d)(8)(E) of the Act would be
``eligible to apply'' to the MGCRB for reclassification under the MGCRB
process. Significantly, however, the terms of section 1886(d)(8)(E) of
the Act do not refer to section 1886(d)(10) of the Act (which addresses
the MGCRB reclassification process), and section 401 of Public Law 106-
113 did not amend section 1886(d)(10) of the Act to limit the agency's
discretion under that provision in any way. Put another way, section
1886(d)(8)(E) of the Act does not contain any language indicating that
hospitals treated as rural under that provision can subsequently be
treated as urban under section 1886(d)(10) of the Act, and section
1886(d)(10) does not contain language indicating that the Secretary
must permit reclassification to an urban area of hospitals treated as
rural under section 1886(d)(8)(E) of the Act. Thus, under the statute,
the Secretary has broad discretion to determine when MGCRB
reclassification is appropriate and, in enacting section 401 of Public
Law 106-113, Congress did not enact any statutory amendments to limit
that discretion in any way.
The statutory language of section 1886(d)(8)(E) of the Act directs
the Secretary to treat qualifying hospitals, for purposes of section
1886(d) of the Act, ``as being located in the rural area * * * of the
State in which the hospital is located''. Section 1886(d) of the Act
encompasses the hospital wage index and the standardized amount.
Consistent with the statutory language, we are providing that a
hospital reclassified as rural under section 1886(d)(8)(E) of the Act
will be treated as being located in a rural area for purposes of
section 1886(d) of the Act, and cannot subsequently be reclassified
under the MGCRB process to an urban area (in order to be treated as
being located in an urban area for certain purposes under section
1886(d) of the Act).
This policy is consistent not only with the statutory language but
also with the policy considerations underlying the MGCRB process. The
MGCRB process permits a hospital to be reclassified from one geographic
area to another if it is significantly disadvantaged by its geographic
location and would be paid more appropriately if it were reclassified
to another area. We believe that it would be illogical to permit a
hospital that applied to be reclassified from urban to rural under
section 1886(d)(8)(E) of the Act because it was disadvantaged as an
urban hospital to then utilize a process that was established to enable
hospitals significantly disadvantaged by their rural or small urban
location to reclassify to another urban location. If an urban hospital
applies under section 1886(d)(8)(E) of the Act in order to be treated
as being located in a rural area, then it would be anomalous at best
for the urban hospital to subsequently claim that it is significantly
disadvantaged by the rural status for which it applied and should be
reclassified to an urban area.
Furthermore, permitting hospitals the option of seeking rural
reclassification under section 1886(d)(8)(E) of the Act for certain
payment advantages, coupled with the ability to pursue a subsequent
MGCRB reclassification back to an urban area, could have implications
beyond those originally envisioned under Public Law 106-113. In
particular, we are concerned about the potential interface between
rural reclassifications under section 401 and section 407(b)(2) of
Public Law 106-113, which authorizes a 30-percent expansion in a rural
hospital's resident full-time equivalent count for purposes of Medicare
payment for the indirect costs of medical education (IME) under section
1886(d)(5)(B) of the Act. (Reclassification from urban to rural under
section 1886(d)(8)(E) of the Act can affect IME payments to a hospital,
which are made under section 1886(d)(5)(B) of the Act, but not payments
for the direct costs of GME,
[[Page 47089]]
which are made under section 1886(h) of the Act.)
Congress clearly intended hospitals that become rural under section
1886(d)(8)(E) of the Act to receive some benefit as a result. For
example, some hospitals currently located in very large urban counties
are in fact fairly small, isolated hospitals. Some of these hospitals
will now be able to be designated a rural hospital and become eligible
to be designated a critical access hospital.
In addition, one of the criteria under section 1886(d)(8)(E) of the
Act is that the hospital would qualify as an SCH or an RRC if it were
located in a rural area. An SCH would be eligible to be paid on the
basis of the higher of its hospital-specific rate or the Federal rate.
On the other hand, the only benefit under section 1886(d) of the Act
for an urban hospital to become an RRC would be waiver of the proximity
requirements that are otherwise applicable under the MGCRB process, as
set forth in Sec. 412.230(a)(3).
We agree with the commenters that Congress contemplated that
hospitals might seek to be reclassified as rural under section
1886(d)(E) of the Act in order to become RRCs so that the hospital
would be exempt from the MGCRB proximity requirement and could be
reclassified by the MGCRB to another urban area. -
Therefore, we sought a policy approach that would appropriately
account for our concern that these urban to rural redesignations not be
utilized inappropriately, but would benefit hospitals seeking to
reclassify under the MGCRB process by achieving RRC status. We decided
to reconsider our application of section 4202(b) of Public Law 105-33,
which states, in part, ``Any hospital classified as a rural referral
center by the Secretary * * * for FY 1991 shall be classified as such a
rural referral center for fiscal year 1998 and each subsequent fiscal
year.'' In the August 29, 1997 final rule with comment period, we
reinstated RRC status for all hospitals that lost the status due to
triennial review or MGCRB reclassification, but not to hospitals that
lost RRC status because they were now urban for all purposes because of
the OMB designation of their geographic area as urban (62 FR 45999).
Our rationale at that time for not reinstating RRC status for these
hospitals was that a hospital had to be rural in order to qualify for
reinstatement as an RRC, and these hospitals were no longer located in
rural areas.
We are aware of several specific hospitals that were RRCs for FY
1991, but subsequently lost their status when the county in which they
were located became urban, and have expressed their wish to be
redesignated as an RRC in order to be eligible to reclassify. We
believe that the language in the Conference Report accompanying Public
Law 106-113 was intended to address these hospitals; that is, we
believe that the intent underlying this language (a description of the
House bill) was to allow certain urban hospitals to become RRCs (upon
reclassifying from urban to rural under section 1886(d)(8)(E) of the
Act) and then reclassify under the MGCRB process (as RRCs, the
hospitals would be exempt from the MGCRB's proximity requirements).
Accordingly, in light of section 1886(d)(8)(E) of the Act and the
language in the Conference Report, we have decided to revisit our
policy decision on section 4202(b) of Public Law 105-33. Effective as
of October 1, 2000, hospitals located in what is now an urban area, if
they were ever an RRC, will be reinstated to RRC status under section
4202(b) of Public Law 105-33. (In the August 27, 1997 final rule, we
indicated that we recognized there were hospitals that qualified for
RRC status after 1991 that lost their status in a subsequent year due
to MGCRB reclassification. Therefore, we determined that we would
permit any hospital that qualified as an RRC at any point that had lost
its RRC status as a result of MGCRB reclassification to be reinstated,
regardless of whether it was designated an RRC in 1991. Similarly, for
purposes of this policy, we will permit hospitals that previously
qualified as an RRC and that lost their status due to OMB redesignation
of the county in which they are located from rural to urban to be
reinstated as an RRC.) Such hospitals would benefit from the waiver of
the MGCRB's proximity requirements, as long as they are designated as
RRCs at the time the MGCRB acts on their application.
We are not permitting hospitals redesignated as rural under section
1886(d)(8)(E) of the Act to be eligible for subsequent reclassification
by the MGCRB, and are revising the regulations governing MGCRB
reclassifications (Sec. 412.230) accordingly.
Comment: Several commenters suggested alternative policy options
regarding the interaction of the distinct reclassification provisions
found under sections 1886(d)(8)(E) and 1886(d)(10) of the Act. First,
it was recommended that HCFA formulate a policy that would allow urban
hospitals reclassifying to rural under section 1886(d)(8)(E) of the Act
the same access to urban reclassification under the MGCRB process that
the law makes available to geographically rural hospitals. One
commenter posits two possible limitations on MGCRB reclassifications
for these now-rural hospitals. One possibility is that an urban
hospital that reclassifies to rural under section 1886(d)(8)(E) of the
Act be permitted to reclassify only to another MSA, but be precluded
from reclassifying back to the MSA in which it is situated. Second, the
commenter suggested that reclassifications under the MGCRB process be
restricted solely to the wage index for formerly urban hospitals that
have elected to reclassify to rural under section 1886(d)(8)(E) of the
Act.
Response: Although the alternatives suggested by the commenters
would limit to some degree the possible inappropriate incentives for
hospitals to become rural under section 1886(d)(8)(E) of the Act, we
are concerned that they would still allow these hospitals to receive
inappropriate payments, albeit on a more limited basis. Therefore, we
have not selected these alternative approaches.
Comment: One health system argued that preventing an urban hospital
that has reclassified to rural under section 1886(d)(8)(E) of the Act
from reclassifying through restricting the MGCRB process would reduce
the number of hospitals reclassifying as rural under section
1886(d)(8)(E) of the Act. The commenter further noted that even if we
permitted an urban hospital that reclassified to a rural area under
section 1886(d)(8)(E) of the Act to reclassify through the MGCRB
process, the hospital would suffer financial losses during the period
between when it was rural for all payment purposes and its
reclassification back to urban.
Response: We wish to emphasize that urban to rural reclassification
under section 1886(d)(8)(E) of the Act is entirely voluntary. Each
hospital anticipating that it may qualify under this provision should
determine the impact of Medicare payment policies if it were to
reclassify. As discussed above, we believe that our policies here are
consistent with the Secretary's broad authority under section
1886(d)(10) of the Act, the statutory language in section 1886(d)(8)(E)
of the Act, as well as our understanding of the intent underlying the
description of the House bill in the Conference Report.
2. Revised Thresholds Applicable to Rural Hospitals for Wage Index
Reclassifications
Existing Secs. 412.230(e)(1)(iii) and (e)(1)(iv) provide that
hospitals may obtain reclassification to another area for purposes of
calculating and applying
[[Page 47090]]
the wage index if the hospital's average hourly wages are at least 108
percent of the average hourly wages in the area where it is physically
located, and at least 84 percent of the average hourly wages in a
proximate area to which the hospital seeks reclassification. These
thresholds apply equally to urban and rural hospitals seeking
reclassification.
Historically, the financial performance of rural hospitals under
the prospective payment system has lagged behind that of urban
hospitals. Despite an overall increase in recent years of Medicare
inpatient operating profit margins, some rural hospitals continue to
struggle financially (as measured by Medicare inpatient operating
prospective payment system payments minus costs, divided by payments).
For example, during FY 1997, while the national average hospital margin
was 15.1 percent, it was 8.9 percent for rural hospitals. In addition,
approximately one-third of rural hospitals continue to experience
negative Medicare inpatient margins despite this relatively high
average margin.
In response to the lower margins of rural hospitals and the
potential for a negative impact on beneficiaries' access to care if
these hospitals were to close, we considered potential administrative
changes that could help improve payments for rural hospitals. One
approach in that regard would be to make it easier for rural hospitals
to reclassify for purposes of receiving a higher wage index. The
current thresholds for applying for wage index reclassification are
based on our previous analysis showing the average hospital wage as a
percentage of its area wage was 96 percent, and one standard deviation
from that average was equal to 12 percentage points (see the June 4,
1992 proposed rule (57 FR 23635) and the September 1, 1992 final rule
(57 FR 39770)). Because rural hospitals' financial performance has
consistently remained below that of urban hospitals, we now believe
that rural hospitals merit special dispensation with respect to
qualifying for reclassification for purposes of the wage index.
Therefore, we proposed to change those average wage threshold
percentages so more rural hospitals can be reclassified. Specifically,
we proposed to lower the upper threshold for rural hospitals to 106
percent and the lower threshold to 82 percent. The thresholds for urban
hospitals seeking reclassification for purposes of the wage index would
be unchanged. We note that rural hospitals comprised nearly 90 percent
of FY 2000 wage index reclassifications. Under the proposal, beginning
October 1, 2000, rural hospitals would be able to reclassify for the
wage index if, among other things, their average hourly wages are at
least 106 percent of the area in which they are physically located, and
at least 82 percent of the average hourly wages in the proximate area
to which it seeks reclassification.
Although it is difficult to estimate precisely how many additional
hospitals might qualify by lowering the thresholds because we do not
have data indicating which hospitals meet all of the other
reclassification criteria (e.g., proximity), our analysis indicated
that, if we were to raise the 108 percent threshold to 109 percent,
approximately 20 rural hospitals would no longer qualify. If the upper
threshold were to be raised to 110 percent, another 16 hospitals would
not qualify. On the other hand, increasing the lower threshold from 84
percent to 85 percent would result in only 2 rural hospitals becoming
ineligible to reclassify. Only 1 additional hospital would be affected
by raising the threshold to 86 percent. Based on this analysis, we
anticipated approximately 50 rural hospitals are likely to benefit from
the proposed change.
We believe this proposal, as adopted, achieves an appropriate
balance between allowing certain hospitals that are currently just
below the thresholds to become eligible for reclassification, while not
liberalizing the criteria so much that an excessive number of hospitals
begin to reclassify. Because these reclassifications are budget
neutral, nonreclassified hospitals' payments are negatively impacted by
reclassification.
We believe there are many factors associated with lower margins
among rural hospitals. We note that section 410 of Public Law 106-113
requires the Comptroller General of the United States to ``conduct a
study of the current laws and regulations for geographic
reclassification of hospitals to determine whether such
reclassification is appropriate for purposes of applying wage
indices.'' In addition, section 411 of Public Law 106-113 requires
MedPAC to conduct a study on the adequacy and appropriateness of the
special payment categories and methodologies established for rural
hospitals. We anticipate that the results of these studies will help
identify other areas to help improve payments for rural hospitals,
either through reclassifications or other means.
Comment: Commenters were unclear about the effective date for the
change in wage index thresholds for rural hospitals applying for
reclassification.
Response: The revised thresholds apply to applications submitted to
the MGCRB (by September 1, 2000) for reclassification for FY 2002.
These revised guidelines do not apply to decisions that have already
been issued by the MGCRB for FY 2001.
G. Payment for Direct Costs of Graduate Medical Education (Sec. 413.86)
1. Background
Under section 1886(h) of the Act, Medicare pays hospitals for the
direct costs of graduate medical education (GME). The payments are
based on the number of residents trained by the hospital. Section
1886(h) of the Act, as amended by section 4623 of Public Law 105-33,
caps the number of residents that hospitals may count for direct GME.
Section 9202 of the Consolidated Omnibus Reconciliation Act (COBRA)
of 1985 (Pub. L. 99-272) established a methodology for determining
payments to hospitals for the costs of approved GME programs at section
1886(h)(2) of the Act. Section 1886(h)(2) of the Act, as implemented in
regulations at Sec. 413.86(e), sets forth a payment methodology for the
determination of a hospital-specific, base-period per resident amount
(PRA) that is calculated by dividing a hospital's allowable costs of
GME for a base period by its number of residents in the base period.
The base period is, for most hospitals, the hospital's cost reporting
period beginning in FY 1984 (that is, the period of October 1, 1983
through September 30, 1984). The PRA is multiplied by the number of
full-time equivalent (FTE) residents working in all areas of the
hospital complex (or non-hospital sites, when applicable), and the
hospital's Medicare share of total inpatient days to determine
Medicare's direct GME payments. In addition, as specified in section
1886(h)(2)(D)(ii) of the Act, for cost reporting periods beginning on
or after October 1, 1993, through September 30, 1995, each hospital's
PRA for the previous cost reporting period is not adjusted for any FTE
residents who are not either a primary care or an obstetrics and
gynecology resident. As a result, hospitals with both primary care/
obstetrics and gynecology residents and non-primary care residents have
two separate PRAs for FY 1994 and, thereafter, one for primary care and
one for non-primary care. (Thus, for purposes of this proposed rule,
when we refer to a hospital's PRA, this amount is inclusive of any CPI-
U adjustments the hospital may have received since the hospital's base-
year, including any CPI-U adjustments the hospital may have received
because the hospital trains primary care/non-
[[Page 47091]]
primary care residents, as specified under existing
Sec. 413.86(e)(3)(ii)).
2. Use of National Average Per Resident Amount Methodology in Computing
Direct GME Payments
Section 311 of Public Law 106-113 amended section 1886(h)(2) of the
Act to establish a methodology for the use of a national average PRA in
computing direct GME payments for cost reporting periods beginning on
or after October 1, 2000 and on or before September 30, 2005.
Generally, section 311 establishes a ``floor'' and a ``ceiling'' based
on a locality-adjusted, updated, weighted average PRA. Each hospital's
PRA is compared to the floor and ceiling to determine whether its PRA
should be revised. Accordingly, in the May 5, 2000 proposed rule, we
proposed to implement section 311 by setting forth the prescribed
methodology for calculation of the weighted average PRA. We then
discussed the proposed steps for determining whether a hospital's PRA
will be adjusted based upon the proposed calculated weighted average
PRA, in accordance with the methodology specified under section 311 of
Public Law 106-113.
We proposed to calculate the weighted average PRA based upon data
from hospitals' cost reporting periods ending during FY 1997 (October
1, 1996 through September 30, 1997), as directed by section 311 of
Public Law 106-113. We accessed these FY 1997 cost reporting data from
the Hospital Cost Report Information System (HCRIS) and also obtained
the necessary data for those hospitals that are not included in HCRIS
(because they file manual cost reports), from those hospitals' fiscal
intermediaries. If a hospital had more than one cost reporting period
ending in FY 1997, we proposed to include all of its cost reports
ending in FY 1997 in our calculations. However, if a hospital did not
have a cost reporting period ending in FY 1997, such as a hospital with
a long cost reporting period beginning in FY 1996 and ending in FY
1998, the hospital is excluded from our calculations.
We have slightly revised the weighted average PRA in this final
rule because of changes in the data that have come to our attention
since the publication of the proposed rule. In the proposed rule, one
hospital was excluded from our calculations because it was a new
teaching hospital with no established PRA (the first year of training
for a new teaching hospital is paid for by Medicare on a cost basis; a
PRA is applied in calculating a hospital's payment beginning with the
hospital's second year of residency training) even though it did have a
cost reporting period ending during FY 1997. In the weighted average
calculation in this final rule, we have excluded one more hospital
because we learned that this hospital was also a new teaching hospital
in FY 1997 with no established PRA. We also have added one hospital to
the weighted average calculation because it was inadvertently excluded
in the calculation in the proposed rule. In addition, we found that the
data of two hospitals that were used in the weighted average
calculation in the proposed rule were incorrect, and we have made the
corrections for the weighted average calculation in this final rule.
The total number of hospitals that we include in our calculation is
unchanged from the proposed rule and remains at 1,235. Thirty-five of
these hospitals are hospitals with more than one cost report.
In accordance with section 311 of Public Law 106-113, we proposed
to calculate the weighted average PRA in the following manner:
Step 1: We determine each hospital's single PRA by adding each
hospital's primary care and non-primary care PRAs, weighted by its
respective FTEs, and dividing by the sum of the FTEs for primary care
and non-primary care residents.
Step 2: We standardize each hospital's single PRA by dividing it by
the 1999 geographic adjustment factor (GAF) (which is an average of the
three geographic index values (weighted by the national average weight
for the work component, practice expense component, and malpractice
component)) in accordance with section 1848(e) of the Act and 42 CFR
414.26 (which is used to adjust physician payments for the different
wage areas), for the physician fee schedule area in which the hospital
is located.
Step 3: We add all the standardized hospital PRAs (as calculated in
Step 2), each weighted by hospitals' respective FTEs, and then divide
by the total number of FTEs.
Based upon this three-step calculation, we determined the weighted
average PRA (for cost reporting periods ending during FY 1997) to be
$68,464. (The weighted average PRA calculated for the proposed rule was
$68,487.)
For cost reporting periods beginning on or after October 1, 2000
and on or before September 30, 2005 (FY 2001 through FY 2005), the
national average PRA is applied using the following three steps:
Step 1: Update the weighted average PRA for inflation. Under
section 1886(h)(2) of the Act, as amended by section 311 of Public Law
106-113, the weighted average PRA is updated by the estimated
percentage increase in the consumer price index for all urban consumers
(CPI-U) during the period beginning with the month that represents the
midpoint of the cost reporting periods ending during FY 1997 and ending
with the midpoint of the hospital's cost reporting period that begins
in FY 2001. Therefore, the weighted average standardized PRA ($68,464)
would be updated by the increase in CPI-U for the period beginning with
the midpoint of all cost reporting periods for hospitals with cost
reporting periods ending during FY 1997 (October 1, 1996), and ending
with the midpoint of the individual hospital's cost reporting period
that begins during FY 2001.
For example, Hospital A has a calendar year cost reporting period.
Thus, for Hospital A, the weighted average PRA is updated from October
1, 1996 to July 1, 2001, because July 1 is the midpoint of its cost
reporting period beginning on or after October 1, 2000. Or, for
example, if Hospital B has a cost reporting period starting October 1,
the weighted average PRA is updated from October 1, 1996 to April 1,
2001, the midpoint of the cost reporting period for Hospital B.
Therefore, the starting point for updating the weighted average PRA is
the same date for all hospitals (October 1, 1996), but the ending date
is different because it is dependent upon the cost reporting period for
each hospital.
Step 2: Adjust for locality. In accordance with section 1886(h)(2)
of the Act, as amended by section 311 of Public Law 106-113, once the
weighted average PRA is updated according to each hospital's cost
reporting period, the updated weighted average PRA (the national
average PRA) is further adjusted to calculate a locality-adjusted
national average PRA for each hospital. This is done by multiplying the
updated national average PRA by the 1999 GAF (as specified in the
October 31, 1997 Federal Register (62 FR 59257)) for the fee schedule
area in which the hospital is located.
Step 3: Determine possible revisions to the PRA. For cost reporting
periods beginning on or after October 1, 2000 and on or before
September 30, 2005, the locality-adjusted national average PRA, as
calculated in Step 2, is then compared to the hospital's individual
PRA. Based upon the provisions of section 1886(h)(2) of the Act, as
amended by section 311 of Public Law 106-113, a hospital's PRA is
revised, if appropriate, according to the following:
[[Page 47092]]
Floor--For cost reporting periods beginning in FY 2001, to
determine which PRAs (primary care and non-primary care separately) are
below the 70 percent floor, a hospital's locality-adjusted national
average PRA is multiplied by 70 percent. This resulting number is then
compared to the hospital's PRA that is updated for inflation to the
current cost reporting period. If the hospital's PRA would be less than
70 percent of the locality-adjusted national average PRA, the
individual PRA is replaced by 70 percent of the locality-adjusted
national average PRA for that cost reporting period and would be
updated for inflation in future years by the CPI-U.
We noted that there may be some hospitals with primary care and
non-primary care PRAs where both PRAs are replaced by 70 percent of the
locality-adjusted national average PRA. In these situations, the
hospital would receive identical PRAs; no distinction in PRAs would be
made for differences in inflation (because a hospital has both primary
care and non-primary care PRAs, each of which is updated as described
in Sec. 413.86(e)(3)(ii)) as of cost reporting periods beginning on or
after October 1, 2000.
For example, if the FY 2001 locality-adjusted national average PRA
for Area X is $100,000, then 70 percent of that amount is $70,000. If,
in Area X, Hospital A has a primary care FY 2001 PRA of $69,000 and a
non-primary care FY 2001 PRA of $67,000, both of Hospital A's FY 2001
PRAs are replaced by the $70,000 floor. Thus, $70,000 is the amount
that would be used to determine Hospital A's direct GME payments for
both primary care and non-primary care FTEs in its cost reporting
period beginning in FY 2001, and the $70,000 PRA would be updated for
inflation by the CPI-U in subsequent years.
Ceiling--For cost reporting periods beginning on or after
October 1, 2000 and on or before September 30, 2005 (FY 2001 through FY
2005), a ceiling that is equal to 140 percent of each locality-adjusted
national average PRA is calculated and compared to each individual
hospital's PRA. If the hospital's PRA is greater than 140 percent of
the locality-adjusted national average PRA, the PRA would be adjusted
depending on the fiscal year as follows:
a. FY 2001. For cost reporting periods beginning in FY 2001, each
hospital's PRA from the preceding cost reporting period (that is, the
PRA with which its direct GME payments were made in FY 2000) is
compared to the FY 2001 locality-adjusted national average PRA. If the
individual hospital's FY 2000 PRA exceeds 140 percent of the FY 2001
locality-adjusted national average PRA, the PRA is frozen at the FY
2000 PRA, and is not updated in FY 2001 by the CPI-U factor, subject to
the limitation in section IV.G.2.d. of this preamble.
For example, if the FY 2001 locality-adjusted national average PRA
``ceiling'' for Area Y is $140,000 (that is, 140 percent of $100,000,
the hypothetical locality-adjusted national average PRA), and if, in
this area, Hospital B has a FY 2000 PRA of $140,001, then for FY 2001,
Hospital B's PRA is frozen at $140,001 and is not updated by the CPI-U
for FY 2001.
b. FY 2002. For cost reporting periods beginning in FY 2002, the
methodology used to calculate each hospital's individual PRA would be
the same as described in section IV.G.2.a. above for FY 2001. Each
hospital's PRA from the preceding cost reporting period (that is, the
PRA with which its direct GME payments were made in FY 2001) is
compared to the FY 2002 locality-adjusted national average PRA. If the
individual hospital's FY 2001 PRA exceeds 140 percent of the FY 2002
locality-adjusted national average PRA, the PRA is frozen at the FY
2001 PRA, and is not updated in FY 2002 by the CPI-U factor, subject to
the limitation in section IV.G.2.d. of this preamble.
c. FY 2003, FY 2004, and FY 2005. For cost reporting periods
beginning in FY 2003, FY 2004, and FY 2005, if the hospital's PRA for
the previous cost reporting period is greater than 140 percent of the
locality-adjusted national average PRA for that same previous cost
reporting period (for example, for the cost reporting period beginning
in FY 2003, compare the hospital's PRA from the FY 2002 cost reporting
period to the locality-adjusted national average PRA from FY 2002),
then, subject to the limitation in section IV.G.2.d. of this preamble,
the hospital's PRA is updated in accordance with section
1886(h)(2)(D)(i) of the Act, except that the CPI-U applied is reduced
(but not below zero) by 2 percentage points.
For example, for purposes of Hospital A's FY 2003 cost report,
Hospital A's PRA for FY 2002 is compared to Hospital A's locality-
adjusted national average PRA ceiling for FY 2002. If, in FY 2002,
Hospital A's PRA is $100,001 and the FY 2002 locality-adjusted national
average PRA ceiling is $100,000, then for FY 2003, Hospital A's PRA is
updated with the FY 2003 CPI-U minus 2 percent. If, in this scenario,
the CPI-U for FY 2003 is 1.024, Hospital A would update its PRA in FY
2003 by 1.004 (the CPI-U minus 2 percentage points). However, if the
CPI-U factor for FY 2003 is 1.01 and subtracting 2 percentage points of
1.01 yields 0.99, the PRA for FY 2003 would not be updated, and would
remain $100,001.
We note that, while the language in section 1886(h)(2)(D)(iv)(I)
and in section 1886(h)(2)(D)(iv)(II) of the Act (the sections that
describe the adjustments to PRAs for hospitals that exceed 140 percent
of the locality-adjusted national average PRA) is very similar, the
language does differ. Section 1886(h)(2)(D)(iv)(I) of the Act states
that for a cost reporting period beginning during FY 2000 or FY 2001,
``if the approved FTE resident amount for a hospital for the preceding
cost reporting period exceeds 140 percent of the locality-adjusted
national average per resident amount * * * for that hospital and period
* * *, the approved FTE resident amount for the period involved shall
be the same as the approved FTE resident amount for such preceding cost
reporting period.'' (Emphasis added.) Section 1886(h)(2)(D)(iv)(II) of
the Act states that for a cost reporting period beginning during FY
2003, FY 2004, or FY 2005, ``if the approved FTE resident amount for a
hospital for the preceding cost reporting period exceeds 140 percent of
the locality-adjusted national average per resident amount * * * for
that hospital and preceding period, the approved FTE resident amount
for the period involved shall be updated * * *.'' (Emphasis added.)
Accordingly, for FYs 2001 and 2002, a hospital's PRA from the previous
cost reporting period is compared to the locality-adjusted national
average PRA of the current cost reporting period. For FY 2003, FY 2004,
or FY 2005, a hospital's PRA from the previous cost reporting period is
compared to the locality-adjusted national average PRA from the
previous cost reporting period.
d. General rule for hospitals that exceed the ceiling. For cost
reporting periods beginning in FY 2001 through FY 2005, if a hospital's
PRA exceeds 140 percent of the locality-adjusted national average PRA
and it is adjusted under any of the above criteria, the current year
PRA cannot be reduced below 140 percent of the locality-adjusted
national average PRA.
For example, to determine the PRA of Hospital A, in FY 2003,
Hospital A had a FY 2002 PRA of $100,001 and the FY 2002 locality-
adjusted national average PRA ceiling is $100,000. For FY 2003,
applying an update of the CPI-U factor minus 2 percentage points (for
example, 1.024 - .02 = 1.004 would yield an updated PRA of $100,401)
while the locality-adjusted national average PRA (before calculation of
the ceiling) is
[[Page 47093]]
updated for FY 2003 with the full CPI-U factor (1.024) so that the
ceiling of $100,000 is now increased to $102,400 (that is, $100,000 x
1.024 = $102,400). Therefore, applying the adjustment would result in a
PRA of $100,401, which is under the ceiling of $102,400 for FY 2003. In
this situation, for purposes of the FY 2003 cost report, Hospital A's
PRA equals $102,400.
We note that if the hospital's PRA does not exceed 140 percent of
the locality-adjusted national average PRA, the PRA is updated by the
CPI-U for the respective fiscal year. If a hospital's PRA is updated by
the CPI-U because it is less than 140 percent of the locality-adjusted
national average PRA for a respective fiscal year, and once updated,
the PRA exceeds the 140 percent ceiling for the respective fiscal year,
the updated PRA would still be used to calculate the hospital's direct
GME payments. Whether a hospital's PRA exceeds the ceiling is
determined before the application of the update factors; if a
hospital's PRA exceeds the ceiling only because of the application of
the update factors, the hospital's PRA would retain the CPI-U factors.
For example, if, in FY 2001, the locality-adjusted national average
PRA ceiling for Area Y is $140,000, and if, in this area, Hospital B
has a FY 2000 PRA of $139,000, then for FY 2001, Hospital B's PRA is
updated for inflation for FY 2001 because the PRA is below the ceiling.
However, once the update factors are applied, Hospital B's PRA is now
$142,000 (that is, above the $140,000 ceiling). In this scenario,
Hospital B's inflated PRA would be used to calculate its direct GME
payments because Hospital B has only exceeded the ceiling after the
application of the inflation factors.
PRAs greater than or equal to the floor and less than or
equal to the ceiling. For cost reporting periods beginning in FY 2001
through FY 2005, if a hospital's PRA is greater than or equal to 70
percent and less than or equal to 140 percent of the locality-adjusted
national average PRA, the hospital's PRA is updated using the existing
methodology specified in Sec. 413.86(e)(3)(i).
For cost reporting periods beginning in FY 2006 and thereafter, a
hospital's PRA for its preceding cost reporting period would be updated
using the existing methodology specified in Sec. 413.86(e)(3)(i).
We proposed to redesignate the existing Sec. 413.86(e)(4) as
Sec. 413.86(e)(5) and add the rules implementing section 1886(h)(2) of
the Act, as amended by section 311 of Public Law 106-113, in the
vacated Sec. 413.86(e)(4). Because we proposed to apply the methodology
for updating the PRA for inflation that is described in existing
Sec. 413.86(e)(3), we also proposed to amend Sec. 413.86(e)(3) to make
those rules applicable to the cost reporting periods (FY 2001 through
FY 2005) specified in the proposed Sec. 413.86(e)(4), and in subsequent
cost reporting periods.
In addition, we proposed to make a conforming change by amending
proposed redesignated Sec. 413.86(e)(5) to account for situations in
which hospitals do not have a 1984 base period and establish a PRA in a
cost reporting period beginning on or after October 1, 2000. We believe
there are two factors to consider when a new teaching hospital
establishes its PRA under proposed redesignated Sec. 413.86(e)(5).
First, for example, when calculating the weighted mean value of PRAs of
hospitals located in the same geographic area or the weighted mean of
the PRAs in the hospital's census region (as specified in
Sec. 412.62(f)(1)(i)), the hospitals' PRAs used to calculate the
weighted mean values are subject to the provisions of proposed
Sec. 413.86(e)(4), the national average PRA methodology. Second, the
resulting PRA established under proposed redesignated Sec. 413.86(e)(5)
also would be subject to the national average PRA methodology specified
in proposed Sec. 413.86(e)(4).
We also proposed to make a clarifying amendment to the proposed
redesignated Sec. 413.86(e)(5)(i)(B) to account for an oversight in the
regulations text when we amended our regulations on August 29, 1997 (62
FR 46004). In the preamble of the August 29, 1997 final rule, in
setting forth our policy on the determination of per resident amounts
for hospitals that did not have residents in the 1984 GME base period,
we stated that we would use a ``weighted'' average of the per resident
amounts for hospitals located in the same geographic area. However, we
inadvertently did not include a specific reference to ``weighted'' in
the language of the regulation text. Therefore, we are proposing to
specify that the ``weighted mean value'' of per resident amounts of
hospitals located in the same geographic wage area is used for
determining the base period for certain hospitals for cost reporting
periods beginning in the same fiscal years.
We received two public comments on the GME provisions included in
the proposed rule.
Comment: One commenter supported the implementation of section 311
of Public Law 106-113. Another commenter suggested that there is
ambiguity in our volunteer physician policy regarding the rotation of
residents to nonhospital sites. The commenter requested that we
explicitly state that, so long as the other criteria under the
nonhospital policy are met, hospitals may receive direct GME payments
for residents training in nonhospital sites when the hospitals do not
incur supervisory costs, if the written agreement, which is signed by
both the hospital and nonhospital site, indicates that the supervisory
physician has agreed to volunteer his or her time in supervising
activities.
Response: We did not propose to make any revisions to our policy
regarding training residents in nonhospital sites. Any changes in
policy regarding an adjustment for training at nonhospital sites would
need to go through the notice and comment procedures. We will consider
the merits of the commenter's recommendation for a change in policy for
a future proposed rulemaking.
H. Outliers: Miscellaneous Change
Under the provisions of section 1886(d)(5)(A)(i) of the Act, the
Secretary does not pay for day outliers for discharges from hospitals
paid under the prospective payment systems that occur after September
30, 1997. In the May 5 proposed rule, we proposed to make a conforming
change to Sec. 412.2(a) by deleting the reference to an additional
payment for both inpatient operating and inpatient capital-related
costs for cases that have an atypically long length of stay. We did not
receive any comments on this proposal and are adopting the change as
final.
V. The Prospective Payment System for Capital-Related Costs: The
Last Year of the Transition Period
Since FY 2001 is the last year of the 10-year transition period
established to phase in the prospective payment system for hospital
capital-related costs, for the readers' benefit, we are providing a
summary of the statutory basis for the system, the development and
evolution of the system, the methodology used to determine capital-
related payments to hospitals, and the policy for providing exceptions
payments during the transition period.
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' Under
the statute, the Secretary has broad authority in establishing and
implementing the capital prospective payment system. We initially
implemented the capital prospective payment system in the August 30,
1991 final rule (56 FR 43409), in which we
[[Page 47094]]
established a 10-year transition period to change the payment
methodology for Medicare inpatient capital-related costs from a
reasonable cost-based methodology to a prospective methodology (based
fully on the Federal rate).
The 10-year transition period established to phase in the
prospective payment system for capital-related costs is effective for
discharges occurring on or after October 1, 1991 (FY 1992) through
discharges occurring on or before September 30, 2001. For FY 2001,
hospitals paid under the fully prospective transition period
methodology will be paid 100 percent of the Federal rate and zero
percent of their hospital-specific rate, while hospitals paid under the
hold-harmless transition period methodology will be paid 85 percent of
their allowable old capital costs (100 percent for sole community
hospitals) plus a payment for new capital costs based on the Federal
rate. Fiscal year 2001 is the final year of the capital transition
period and, therefore, the last fiscal year for which a portion of a
hold-harmless hospital's capital costs per discharge will be paid on a
cost basis (except for new hospitals). In the proposed rule, we stated
that since fully prospective hospitals will be paid based on 100
percent of the Federal rate and zero percent of their hospital-specific
rate, we did not determine a proposed hospital-specific rate update for
FY 2001 in section IV of the Addendum of the proposed rule. However, it
has come to our attention that an update to the hospital-specific rate
is necessary on October 1, 2000, for hospitals with cost reporting
periods that do not coincide with the Federal fiscal year. Therefore,
the hospital-specific rate update for FY 2001 is shown in section IV of
the Addendum of this final rule. For cost reporting periods beginning
on or after October 1, 2001 (FY 2002), payment for capital-related
costs will be determined based solely on the capital standard Federal
rate. Hospitals that were defined as ``new'' for the purposes of
capital payments during the transition period (Sec. 412.30(b)) will
continue to be paid according to the applicable payment methodology
outlined in Sec. 412.324.
Generally, during the transition period, inpatient capital-related
costs are paid on a per discharge basis, and the amount of payment
depends on the relationship between the hospital-specific rate and the
Federal rate during the hospital's base year. A hospital with a base
year hospital-specific rate lower than the Federal rate is paid under
the fully prospective payment methodology during the transition period.
This method is based on a dynamic blend percentage of the hospital's
hospital-specific rate and the applicable Federal rate for each year
during the transition period. A hospital with a base period hospital-
specific rate greater than the Federal rate is paid under the hold-
harmless payment methodology during the transition period. A hospital
paid under the hold-harmless payment methodology receives the higher of
(1) a blended payment of 85 percent of reasonable cost for old capital
plus an amount for new capital based on a portion of the Federal rate
or (2) a payment based on 100 percent of the adjusted Federal rate. The
amount recognized as old capital is generally limited to the allowable
Medicare capital-related costs that were in use for patient care as of
December 31, 1990. Under limited circumstances, capital-related costs
for assets obligated as of December 31, 1990, but put in use for
patient care after December 31, 1990, also may be recognized as old
capital if certain conditions are met. These costs are known as
obligated capital costs. New capital costs are generally defined as
allowable Medicare capital-related costs for assets put in use for
patient care after December 31, 1990. Beginning in FY 2001, at the
conclusion of the transition period for the capital prospective payment
system, capital payments will be based solely on the Federal rate for
the vast majority of hospitals.
During the transition period, new hospitals are exempt from the
prospective payment system for capital-related costs for their first 2
years of operation and are paid 85 percent of their reasonable cost
during that period. The hospital's first 12-month cost reporting period
(or combination of cost reporting periods covering at least 12 months)
beginning at least 1 year after the hospital accepts its first patient
serves as the hospital's base period. Those base year costs qualify as
old capital and are used to establish its hospital-specific rate used
to determine its payment methodology under the capital prospective
payment system. Effective with the third year of operation, the
hospital is paid under either the fully prospective methodology or the
hold-harmless methodology. If the fully prospective methodology is
applicable, the hospital is paid using the appropriate transition blend
of its hospital-specific rate and the Federal rate for that fiscal year
until the conclusion of the transition period, at which time the
hospital will be paid based on 100 percent of the Federal rate. If the
hold-harmless methodology is applicable, the hospital will receive
hold-harmless payment for assets in use during the base period for 8
years, which may extend beyond the transition period.
The basic methodology for determining capital prospective payments
based on the Federal rate is set forth in Sec. 412.312. For the purpose
of calculating payments for each discharge, the standard Federal rate
is adjusted as follows:
(Standard Federal Rate) x (DRG Weight) x (GAF) x (Large Urban
Add-on, if applicable) x
(COLA Adjustment for Hospitals Located in Alaska and Hawaii) x (1 +
DSH Adjustment Factor + IME Adjustment Factor).
Hospitals may also receive outlier payments for those cases that
qualify under the thresholds established for each fiscal year. Section
412.312(c) provides for a single set of thresholds to identify outlier
cases for both inpatient operating and inpatient capital-related
payments.
During the capital prospective payment system transition period, a
hospital may also receive an additional payment under an exceptions
process if its total inpatient capital-related payments are less than a
minimum percentage of its allowable Medicare inpatient capital-related
costs for qualifying classes of hospitals. For up to 10 years after the
conclusion of the transition period, a hospital may also receive an
additional payment under a special exceptions process if certain
qualifying criteria are met and its total inpatient capital-related
payments are less than the 70 percent minimum percentage of its
allowable Medicare inpatient capital-related costs.
In accordance with section 1886(d)(9)(A) of the Act, under the
prospective payment system for inpatient operating costs, hospitals
located in Puerto Rico are paid for operating costs under a special
payment formula. Prior to FY 1998, hospitals in Puerto Rico were paid a
blended rate that consisted of 75 percent of the applicable
standardized amount specific to Puerto Rico hospitals and 25 percent of
the applicable national average standardized amount. However, effective
October 1, 1997, under amendments to the Act enacted by section 4406 of
Public Law 105-33, operating payments to hospitals in Puerto Rico are
based on a blend of 50 percent of the applicable standardized amount
specific to Puerto Rico hospitals and 50 percent of the applicable
national average standardized amount. In conjunction with this change
to the
[[Page 47095]]
operating blend percentage, effective with discharges on or after
October 1, 1997, we compute capital payments to hospitals in Puerto
Rico based on a blend of 50 percent of the Puerto Rico rate and 50
percent of the Federal rate.
Section 412.374 provides for the use of this blended payment system
for payments to Puerto Rico hospitals under the prospective payment
system for inpatient capital-related costs. Accordingly, for capital-
related costs, we compute a separate payment rate specific to Puerto
Rico hospitals using the same methodology used to compute the national
Federal rate for capital-related costs.
In the August 30, 1991 final rule, we established a capital
exceptions policy, which provides for exceptions payments during the
transition period (Sec. 412.348). Section 412.348 provides that, during
the transition period, a hospital may receive additional payment under
an exceptions process when its regular payments are less than a minimum
percentage, established by class of hospital, of the hospital's
reasonable capital-related costs. The amount of the exceptions payment
is the difference between the hospital's minimum payment level and the
payments the hospital would receive under the capital prospective
payment system in the absence of an exceptions payment. The comparison
is made on a cumulative basis for all cost reporting periods during
which the hospital is subject to the capital prospective payment
transition rules. The minimum payment percentages for regular capital
exceptions payments by class of hospitals for FY 2001 are:
For sole community hospitals, 90 percent;
For urban hospitals with at least 100 beds that have a
disproportionate share patient percentage of at least 20.2 percent or
that received more than 30 percent of their net inpatient care revenues
from State or local governments for indigent care, 80 percent;
For all other hospitals, 70 percent of the hospital's
reasonable inpatient capital-related costs.
The provision for regular exceptions payments will expire at the
end of the transition period. Payments will no longer be adjusted to
reflect regular exceptions payments at Sec. 412.348. Accordingly, for
cost reporting periods beginning on or after October 1, 2001, hospitals
will receive only the per discharge payment based on the Federal rate
for capital costs (plus any applicable DSH or IME and outlier
adjustments) unless a hospital qualifies for a special exceptions
payment under Sec. 412.348(g).
Under the special exceptions provision at Sec. 412.348(g), an
additional payment may be made for up to 10 years beyond the end of the
capital prospective payment system transition period for eligible
hospitals. The capital special exceptions process is budget neutral;
that is, even after the end of the capital prospective payment system
transition, we will continue to make an adjustment to the capital
Federal rate in a budget neutral manner to pay for exceptions, as long
as an exceptions policy is in force. Currently, the limited special
exceptions policy will allow for exceptions payments for 10 years
beyond the conclusion of the 10-year capital transition period or
through September 30, 2011.
VI. Changes for Hospitals and Hospital Units Excluded From the
Prospective Payment System
A. Limits on and Adjustments to the Target Amounts for Excluded
Hospitals and Units (Secs. 413.40(b)(4) and (g))
1. Updated Caps
Section 1886(b)(3) of the Act (as amended by section 4414 of Public
Law 105-33) establishes caps on the target amounts for certain existing
excluded hospitals and units for cost reporting periods beginning on or
after October 1, 1997 through September 30, 2002. The caps on the
target amounts apply to the following three classes of excluded
hospitals: Psychiatric hospitals and units, rehabilitation hospitals
and units, and long-term care hospitals.
A discussion of how the caps on the target amounts were calculated
can be found in the August 29, 1997 final rule with comment period (62
FR 46018); the May 12, 1998 final rule (63 FR 26344); the July 31, 1998
final rule (63 FR 41000), and the July 30, 1999 final rule (64 FR
41529). For purposes of calculating the caps on existing facilities,
the statute required us to calculate the national 75th percentile of
the target amounts for each class of hospital (psychiatric,
rehabilitation, or long-term care) for cost reporting periods ending
during FY 1996. Under section 1886(b)(3)(H)(iii) of the Act, the
resulting amounts are updated by the market basket percentage to the
applicable fiscal year. In establishing the caps on the target amounts
within each class of hospital for new hospitals, section 1886(b)(7)(C)
of the Act, as amended by section 4416 of Public Law 105-33, explicitly
instructed the Secretary to provide an appropriate adjustment to take
into account area differences in wage-related costs. However, since the
statutory language under section 4414 of Public Law 105-33 did not
provide for the Secretary to account for area differences in wage-
related costs in establishing the caps on the target amounts for
existing hospitals, HCFA did not account for wage-related differences
in establishing the caps on the target amounts for existing facilities
in FY 1998.
Section 121 of Public Law 106-113 amended section 1886(b)(3)(H) of
the Act to direct the Secretary to provide for an appropriate wage
adjustment to the caps on the target amounts for psychiatric hospitals
and units, rehabilitation hospitals and units, and long-term care
hospitals, effective for cost reporting periods beginning on or after
October 1, 1999, through September 30, 2002. Elsewhere in this issue of
the Federal Register we are publishing an interim final rule with
comment period implementing this provision for cost reporting periods
beginning on or after October 1, 1999 and before October 1, 2000. This
final rule addresses the wage adjusted caps on the target amounts for
excluded hospitals and units for cost reporting periods beginning on or
after October 1, 2000.
For purposes of calculating the caps on the target amounts, section
1886(b)(3)(H)(ii) of the Act requires the Secretary to first ``estimate
the 75th percentile of the target amounts for such hospitals within
such class for cost reporting periods ending during fiscal year 1996.''
Furthermore, section 1886(b)(3)(H)(iii), as added by Public Law 106-
113, requires the Secretary to provide for ``an appropriate adjustment
to the labor-related portion of the amount determined under such
subparagraph to take into account the differences between average wage-
related costs in the area of the hospital and the national average of
such costs within the same class of hospital.''
For cost reporting periods beginning in FY 2000, we update the FY
1996 wage-neutralized national 75th percentile target amount for each
class of hospital by the market basket increase through FY 2000. For
cost reporting periods beginning during FY 2001 and FY 2002, we update
the previous year's wage-neutralized national 75th percentile target
amount for each class of hospital by the applicable market basket
percentage increase. In determining the wage-neutralized 75th
percentile target amount for each class of hospital and consistent with
the broad authority conferred on the Secretary by section
1886(b)(3)(H)(iii) of the Act (as added by Pub. L. 106-113) to
determine the appropriate wage
[[Page 47096]]
adjustment, we accounted for differences in wage-related costs by
adjusting the caps on the target amounts for each class of hospital
(psychiatric, rehabilitation, and long-term care) using the
methodology, which is described in detail in the interim final rule
with comment period that implements the provisions of section 121
Public Law 106-113 that is published elsewhere in this issue of the
Federal Register.
As stated in the May 5, 2000 proposed rule, we wage neutralized
each hospital's FY 1996 target amount to account for area differences
in wage-related costs. For each class of hospitals, we determined the
labor-related portion of each hospital's FY 1996 target amount by
multiplying its target amount by the most recent actuarial estimate of
the labor-related portion of excluded hospital costs (or 0.71553). This
actuarial estimate of the labor-related share of PPS-excluded hospital
costs was revised in connection with other revisions to the PPS-
excluded hospital market basket published in the August 29, 1997 final
rule (62 FR 45996). Based on the relative weights of the labor cost
categories (wages and salaries, employee benefits, professional fees,
postal services, and all other labor intensive services), the labor-
related portion is 71.553 percent. The remaining 28.447 percent is the
nonlabor-related portion. Similarly, we determined the nonlabor-related
portion of each hospital's FY 1996 target amount by multiplying its
target amount by the actuarial estimate of the nonlabor-related portion
of costs (or 0.28447).
Next, as we stated in the May 5 proposed rule, we wage neutralize
each hospital's FY 1996 target amount by dividing the labor-related
portion of each hospital's FY 1996 target amount by the hospital's FY
1998 hospital wage index under the hospital inpatient prospective
payment system (see Sec. 412.63), as shown in Tables 4A and 4B of the
August 29, 1997 final rule (62 FR 46070). Each hospital's wage-
neutralized FY 1996 target amount was calculated by adding the
nonlabor-related portion of its target amount and the wage-neutralized
labor-related portion of its target amount. Then, the wage-neutralized
target amounts for hospitals within each class were arrayed in order to
determine the national wage-neutralized 75th percentile caps on the
target amounts for each class of hospital.
As stated in the May 5 proposed rule, this methodology for wage-
neutralizing the national 75th percentile of the target amounts is
identical to the methodology we utilized for the wage index adjustment
described in the August 29, 1997 final rule (62 FR 46020) to calculate
the wage-adjusted 110 percent of the national median target amounts for
new excluded hospitals and units. Again, we recognize that wages may
differ for prospective payment hospitals and excluded hospitals, but we
believe that the acute care hospital wage data utilized reflect area
differences in wage-related costs. Moreover, in light of the short
timeframe for implementing this provision, we used the wage data for
acute hospitals since they are the most feasible data source. Reliable
wage data for excluded hospitals and units are not available.
Comment: One commenter objected to our use of the FY 1998 hospital
wage index, which is based on FY 1994 wage data from Medicare cost
reports, to wage neutralize the labor-related portion of each
hospital's FY 1996 target amount in establishing area wage adjustments
to the caps on the target amounts for long-term care hospitals. The
commenter favored using the most current wage data (the FY 2001 wage
index, based on FY 1997 Medicare cost report data) to estimate wage
adjustments to the caps on the target amounts for excluded hospitals
and units.
Response: We reconsidered our methodology for wage-neutralizing
each hospital's FY 1996 target amount used in determining the wage-
neutralized national 75th percentile target amount for each class of
hospital. In the May 5, 2000 proposed rule, the labor-related portion
of each hospital's FY 1996 target amount was wage neutralized by
dividing it by the FY 1998 hospital inpatient prospective payment
system wage index. The FY 1998 hospital inpatient prospective payment
system wage index was calculated using FY 1994 wage data due to the 4-
year lag time in receiving the data used in the annual calculation of
the wage index. We have reconsidered this methodology and believe it is
appropriate to wage neutralize the labor-related portion of each
hospital's FY 1996 target amount by the FY 2000 hospital inpatient
prospective payment system wage index. The FY 2000 wage index is the
most current wage data available to wage neutralize each hospital's FY
1996 target amount, and the FY 2000 wage index was calculated based on
FY 1996 wage data and therefore reflects area differences in wage-
related FY 1996 costs. The FY 2001 wage index will be applied to the
wage-related portion of the cap to determine each hospital's FY 2001
wage-adjusted cap on its target amount.
In the May 5, 2000 proposed rule (65 FR 26314), we proposed the
labor-related and nonlabor-related shares of the wage-neutralized
national 75th percentile caps on the target amounts for FY 2001 as
follows:
------------------------------------------------------------------------
FY 2001 FY 2001
proposed proposed
Class of excluded hospital or unit labor- nonlabor-
related related
share share
------------------------------------------------------------------------
Psychiatric................................... $8,106 $3,223
Rehabilitation................................ 15,108 6,007
Long-Term Care................................ 29,312 11,654
------------------------------------------------------------------------
Taking into account the national 75th percentile of the target
amounts for cost reporting periods ending during FY 1996 (wage-
neutralized using the FY 2000 acute care wage index), the wage
adjustment provided for under Public Law 106-113, and the applicable
update factor based on the market basket percentage increase to FY
2001, we are establishing the labor-related and nonlabor-related
portions of the caps on the target amounts for FY 2001 using the
methodology outlined above as follows:.
------------------------------------------------------------------------
FY 2001 FY 2001
labor- nonlabor-
Class of excluded hospital or unit related related
share share
------------------------------------------------------------------------
Psychiatric................................... $8,131 $3,233
Rehabilitation................................ 15,164 6,029
Long-Term Care................................ 29,284 11,642
------------------------------------------------------------------------
These caps on the target amounts for FY 2001 reflect the use of the
FY 2000 wage index in determining the FY 1996 national wage-neutralized
75th percentile target amounts, updated to FY 2001 by the applicable
market basket percentage increase. The market basket percentage
increase for excluded hospitals and units for FY 2001 is currently
forecast at 3.4 percent. At the time the proposed rule was issued, the
market basket increase was forecast at 3.1 percent.
Finally, the cap on a hospital's FY 2001 target amount per
discharge is determined by adding the hospital's nonlabor-related
portion of the national 75th percentile target amount to its wage-
adjusted labor-related portion of the national 75th percentile target
amount. A hospital's wage-adjusted labor-related portion of the target
amount is calculated by multiplying the labor-related portion of the
wage-neutralized national 75th percentile target amount for the
hospital's class by the hospital's applicable wage index. For FY 2001,
a hospital's applicable wage index is the wage index under the hospital
inpatient prospective payment system (see Sec. 412.63). For cost
reporting periods beginning on or after October 1, 2000 and ending on
or before September 30, 2001 as shown in Tables 4A and 4B of this final
rule, a hospital's applicable wage index corresponds to the area in
which the hospital or unit is physically
[[Page 47097]]
located (MSA or rural area) and is not subject to prospective payment
system hospital reclassification under section 1886(d)(10) of the Act.
Comment: One commenter requested that HCFA provide long-term care
hospitals the opportunity to redesignate to another rural or urban area
under the standards outlined in Sec. 412.230 for prospective payment
system hospitals. The commenter believed that section 121 of Public Law
106-113 directs HCFA to make accurate area wage adjustments for
excluded hospitals and that, in the interest of equity, HCFA should
afford long-term care hospitals a process analogous to the MGCRB so
that these providers would be able to redesignate their wage area to a
rural or urban area. Additionally, the commenter recommended that long-
term care hospitals located in ``close proximity'' (as defined in
Sec. 412.230(b)) to a prospective payment system hospital that has been
allowed to reclassify its area wage index, should also be allowed to
reclassify to that wage area.
Response: Section 121 of Public Law 106-113 directs the Secretary
to make ``an appropriate adjustment'' to account for area wage-related
differences. As we stated in the May 5 proposed rule, long-term care
hospitals and psychiatric and rehabilitation hospitals and units which
are exempt from the prospective payment system are not subject to
prospective payment system hospital reclassification under section
1886(d)(10)(A) of the Act. This section establishes the MGCRB for the
purpose of evaluating applications from short-term acute care
providers. There is no equivalent statutory provision for HCFA to
develop an alternative board for long-term care hospitals or for
psychiatric and rehabilitation hospitals and units, or both.
While it would be feasible to allow units physically located in PPS
hospitals that have been reclassified by the MGCRB to use the wage-
index for the area to which that hospital has been reclassified, at the
present time there is no process in place to make reclassification
determinations for excluded free-standing providers. The wage-
adjustment to the cap on the target amounts for existing excluded
providers is only effective through FY 2002 and there is not enough
time to develop and implement a process to determine reclassification
for free-standing excluded providers. There are approximately 1000
free-standing excluded facilities (529 psychiatric, 196 rehabilitation
and 242 long-term care). Therefore, in the interest of equity, we
believe that in determining a hospital's wage-adjusted cap on its
target amount, it is appropriate for excluded hospitals and units to
use the wage index associated with the area in which it is physically
located (MSA or rural area) and prospective payment system
reclassification under section 1886(d)(10) of the Act is not
applicable. This policy is consistent with the determination of the
wage-adjusted caps on the target amounts for new excluded hospitals and
units, which are not subject to reclassification when applying the wage
index in the calculation of the cap. Additionally, skilled-nursing
facility and ambulatory surgical center payment systems both use the
acute-care inpatient hospital PPS wage index and do not allow for
reclassifications since there is no analogous determination process to
the MGCRB, which only has authority over PPS hospitals under section
1886(d)(10)(a) of the Act. Therefore, consistent with these policies
regarding the application of the acute care wage index to other types
of facilities, we are not implementing the commenter's recommendation
to permit reclassification of an excluded hospital's or unit's wage
index in determining the wage-adjusted cap on their target amount under
Sec. 41340(c)(4)(iii).
Comment: One commenter asserted that this is the first time HCFA
has applied area wage adjustments to excluded hospitals and units. The
commenter suggested that HCFA assess whether long-term care hospitals
have a different mix of occupations compared to short-term acute care
facilities and recommended that HCFA propose an appropriate adjustment
to the acute care wage index to account for the relative wage-related
costs for the occupational categories of long-term care hospitals or
establish a long-term care hospital specific area wage index. The
commenter noted that the acute care wage index includes some wage data
derived from hospital-based psychiatric and rehabilitation units, but
contains no data from long-term care hospitals. Also, the commenter
argued that HCFA did not meet the statutory requirements of section
1886(b)(3)(H) of the Act as amended by section 121 of Public Law 106-
113, which states that the Secretary shall provide for an appropriate
adjustment ``to take into account differences between average wage-
related costs in the area of the hospital and the national average of
such costs within the same class of hospital'' (emphasis added), since
the acute care wage index data are based on data exclusively from
short-term acute care hospitals.
Response: As stated in the May 5, 2000 proposed rule (65 FR 26314),
we recognize that wages may differ for prospective payment system acute
care hospitals and excluded hospitals, but we believe the acute care
wage index data accurately reflects area differences in wage-related
costs and they are the most feasible data source. For this reason the
acute care hospital wage index is used for the Medicare prospective
payment systems for outpatient facilities, skilled nursing facilities,
and home health facilities.
Currently, there is hospital specific wage data available to
develop a wage index based on data from excluded hospitals (or, as the
commenter specifically requested, a long-term care hospital exclusive
wage index). We may consider exploring the feasibility of developing a
wage index for excluded hospitals and units in the future. However, the
commenter has not presented any evidence that the acute care wage index
inappropriately reflects the differences in wage-related costs for
excluded hospital and units. We believe that the acute care wage index
provides for an appropriate adjustment to account for wage-related
costs in determining a hospital's wage-adjusted cap on its target
amount.
In the interim final rule with comment period implementing certain
provisions of Public Law 106-113 that we are publishing elsewhere in
this issue of the Federal Register we revised Secs. 413.40(c)(4)(i) and
(c)(4)(ii) to incorporate the changes in the formula used to determine
the limitation on the target amounts for excluded hospitals and units,
as provided for by section 121 of Public Law 106-113.
In response to the May 5, 2000 proposed rule, we received two
public comments relating to establishment of the wage-adjusted caps on
the target amounts for excluded hospitals and units.
Comment: One commenter believed that the provision for a wage-
adjustment to the national 75th percentile target amount cap placed on
hospitals excluded from the prospective payment system provided HCFA
with the broad authority to transition to a wage-adjusted cap over more
than one period. The commenter suggested that the wage-adjusted caps on
target amounts be phased-in over a period of time in a manner similar
to the removal of teaching physician costs from the wage index
calculation.
Response: Public Law 106-113, which was enacted November 29, 1999,
directed us to retroactively provide for
[[Page 47098]]
a wage adjustment for the national 75th percentile target amounts for
psychiatric and rehabilitation hospitals and units and for long-term
care hospitals as of October 1, 1999. The purpose of the wage-
adjustment to the 75th percentile cap on target amounts for excluded
providers is to account for area differences in wage-related costs. We
believe that the intent of this provision is to account for these wage
differences beginning with cost reporting periods starting during FY
2000. Phasing-in the wage-adjustment to the caps on the target amounts
would mitigate the purpose of the wage-adjustment because hospitals
located in areas with wage index values greater than one would not
receive the full intended benefit of the provision. Additionally, as we
stated in the interim final rule with comment that we are publishing
elsewhere in this issue of the Federal Register we estimate that most
providers (93.3 percent of psychiatric hospitals and units, 97.5
percent of rehabilitation hospitals and units, and 93.5 percent of
long-term care hospitals) are either not effected or are positively
effected by the wage adjustment to the caps on the target amounts.
Therefore, we believe it is inappropriate to phase in the wage-
adjustment to the caps on the target amounts as the commenter
recommended.
Additionally, the removal of the teaching physician costs on the
wage index is set for a 5-year phase-out, while the wage-adjusted caps
on national target amounts are only legislated to remain in effect from
FY 2000 to FY 2002. As such, the remaining period of time for which
these caps are in effect is too brief to warrant the administrative
resources that would be involved in such a transition. The 5-year
phase-out of the removal of teaching costs from the wage index was
implemented based on the recommendation of an industry group made up of
representatives from national and state hospital associations. While
one commenter advocated the phase-in of the wage-adjustment to the caps
on the target amounts, another commenter supported the complete
implementation of the wage-adjustment to the caps on the target amounts
effective FY 2000, since this adjustment reflects the higher cost
incurred by providers located in areas with higher than the national
average of labor expenditures.
Comment: One commenter commended the wage-adjustment to the caps on
the target amounts for psychiatric and rehabilitation hospital and
units and long-term care hospitals mandated by section 121 of Public
Law 106-113. The commenter supported the application of the acute care
wage index to the caps on the national target amounts since the wage
adjustment aids providers who incur costs higher than the national
average simply because they are located in marketplaces with higher
labor prices. The commenter also noted that the target amounts for
existing hospitals are now in line with the target amounts for new
hospitals, which have been wage adjusted since their implementation in
FY 1998 by Public Law 105-33. The commenter further suggested that, if
the three classes of hospitals have not been transitioned to
prospective payment systems by FY 2002, the wage adjustment to the
national target amounts for both new and existing providers should
remain in place.
Response: We agree with the comment and we believe that our
implementation of the wage adjustment is consistent with the statutory
provision in Public Law 106-113. However, regardless of whether the
prospective payment systems for these classes of providers have been
implemented, we will only be in a position to continue the use of the
wage-adjusted caps on the target amounts beyond FY 2002 if Congress
directs us to do so through additional legislation.
2. Updated Caps for New Excluded Hospitals and Units (Sec. 413.40(f))
Section 1886(b)(7) of the Act establishes a payment methodology for
new psychiatric hospitals and units, rehabilitation hospitals and
units, and long-term care hospitals. Under the statutory methodology,
for a hospital that is within a class of hospitals specified in the
statute and that first receives payment as a hospital or unit excluded
from the prospective payment system on or after October 1, 1997, the
amount of payment will be determined as follows:
For the first two 12-month cost reporting periods, the amount of
payment is the lesser of (1) the operating costs per case; or (2) 110
percent of the national median of target amounts for the same class of
hospitals for cost reporting periods ending during FY 1996, updated to
the first cost reporting period in which the hospital receives payments
and adjusted for differences in area wage levels. The amounts included
in the following table reflect the updated 110 percent of the wage
neutral national median target amounts for each class of excluded
hospitals and units for cost reporting periods beginning during FY
2001. These figures are updated to reflect the market basket increase
of 3.4 percent. For a new provider, the labor-related share of the
target amount is multiplied by the appropriate geographic area wage
index and added to the nonlabor-related share in order to determine the
per case limit on payment under the statutory payment methodology for
new providers.
------------------------------------------------------------------------
Labor- Nonlabor-
Class of excluded hospital or unit related related
share share
------------------------------------------------------------------------
Psychiatric................................... $6,611 $2,630
Rehabilitation................................ 13,002 5,169
Long-Term Care................................ 16,757 6,662
------------------------------------------------------------------------
3. Development of Prospective Payment System for Inpatient
Rehabilitation Hospitals and Units
Section 4421 of Public Law 105-33 added section 1886(j) to the Act.
Section 1886(j) of the Act mandates the phase-in of a case-mix adjusted
prospective payment system for inpatient rehabilitation services
(freestanding hospitals and units) for cost reporting periods beginning
on or after October 1, 2000 and before October 1, 2002. The prospective
payment system will be fully implemented for cost reporting periods
beginning on or after October 1, 2002. Section 1886(j) was amended by
section 125 of Public Law 106-113 to require the Secretary to use the
discharge as the payment unit under the prospective payment system for
inpatient rehabilitation services and to establish classes of patient
discharges by functional-related groups.
We will issue a separate notice of proposed rulemaking in the
Federal Register on the prospective payment system for inpatient
rehabilitation facilities. That document will discuss the requirements
in section 1886(j)(1)(A)(i) of the Act for a transition phase covering
the first two cost reporting periods under the prospective payment
system. During this transition phase, inpatient rehabilitation
facilities will receive a payment rate comprised of a blend of the
facility specific rate (the TEFRA percentage) based on the amount that
would have been paid under Part A with respect to these costs if the
prospective payment system would not be implemented and the inpatient
rehabilitation facility prospective payment rate (prospective payment
percentage). As set forth in sections 1886(j)(1)(C)(i) and (ii) of the
Act, the TEFRA percentage for a cost reporting period beginning on or
after October 1, 2000, and before October 1, 2001, is 66\2/3\ percent;
the prospective payment percentage is 33\1/3\ percent. For cost
reporting periods beginning on or after October 1, 2001 and before
October 1, 2002, the TEFRA percentage is 33\1/3\
[[Page 47099]]
percent and the prospective payment percentage is 66\2/3\ percent.
As provided in section 1886(j)(3)(A) of the Act, the prospective
payment rates will be based on the average inpatient operating and
capital costs of rehabilitation facilities and units. Payments will be
adjusted for case-mix using patient classification groups, area wages,
inflation, outlier status and any other factors the Secretary
determines necessary. We will propose to set the prospective payment
amounts in effect during FY 2001 so that total payments under the
system are projected to equal 98 percent of the amount of payments that
would have been made under the current payment system. Outlier payments
in a fiscal year may not be projected or estimated to exceed 5 percent
of the total payments based on the rates for that fiscal year.
4. Continuous Improvement Bonus Payment
Under Sec. 413.40(d)(4), for cost reporting periods beginning on or
after October 1, 1997, an ``eligible'' hospital may receive continuous
improvement bonus payments in addition to its payment for inpatient
operating costs plus a percentage of the hospital's rate-of-increase
ceiling (as specified in Sec. 413.40(d)(2)). An eligible hospital is a
hospital that has been a provider excluded from the prospective payment
system for at least three full cost reporting periods prior to the
applicable period and the hospital's operating costs per discharge for
the applicable period are below the lowest of its target amount,
trended costs, or expected costs for the applicable period. Prior to
enactment of Public Law 106-113, the amount of the continuous
improvement bonus payment was equal to the lesser of--
(a) 50 percent of the amount by which operating costs were less
than the expected costs for the period; or
(b) 1 percent of the ceiling.
Section 122 of Public Law 106-113 amended section 1886(b)(2) of the
Act to provide, for cost reporting periods beginning on or after
October 1, 2000, and before September 30, 2001, for an increase in the
continuous improvement bonus payment for long-term care and psychiatric
hospitals and units. Under section 1886(b)(2) of the Act, as amended, a
hospital that is within one of these two classes of hospitals
(psychiatric hospitals or units and long-term-care hospitals) will
receive the lesser of 50 percent of the amount by which the operating
costs are less than the expected costs for the period, or the increased
percentages mandated by statute as follows:
(a) For a cost reporting period beginning on or after October 1,
2000 and before September 30, 2001, 1.5 percent of the ceiling; and
(b) For a cost reporting period beginning on or after
October 1, 2001, and before September 30, 2002, 2 percent of the
ceiling.
We did not receive any public comments on our proposed revision of
Sec. 413.40(d)(4) to incorporate this provision of the statute and,
therefore, are adopting it as final.
5. Changes in the Types of Patients Served or Inpatient Care Services
That Distort the Comparability of a Cost Reporting Period to the Base
Year Are Grounds for Requesting an Adjustment Payment in Accordance
With Section 1886(b)(4) of the Act
Section 4419(b) of Public Law 104-33 requires the Secretary to
publish annually in the Federal Register a report describing the total
amount of adjustment (exception) payments made to excluded hospitals
and units, by reason of section 1886(b)(4) of the Act, during the
previous fiscal year. However, the data on adjustment payments made
during the previous fiscal year are not available in time to publish a
report describing the total amount of adjustment payments made to all
excluded hospitals and units in the subsequent year's final rule
published in the Federal Register.
The process of requesting, adjudicating, and awarding an adjustment
payment for a given cost reporting period occurs over a 2-year period
or longer. An excluded hospital or unit must first file its cost report
for the previous fiscal year with its intermediary within 5 months
after the close of the previous fiscal year. The fiscal intermediary
then reviews the cost report and issues a Notice of Program
Reimbursement (NPR) in approximately 2 months. If the hospital's
operating costs are in excess of the ceiling, the hospital may file a
request for an adjustment payment within 6 months from the date of the
NPR. The intermediary, or HCFA, depending on the type of adjustment
requested, then reviews the request and determines if an adjustment
payment is warranted. This determination is often not made until more
than 6 months after the date the request is filed. Therefore, it is not
possible to provide data in a final rule on adjustments granted for
cost reports ending in the previous Federal fiscal year, since those
adjustments have not even been requested by that time. However, in an
attempt to provide interested parties at least some relevant data on
adjustments, we are publishing data on requests for adjustments that
were processed by the fiscal intermediaries or HCFA during the previous
Federal fiscal year.
The table below includes the most recent data available from the
fiscal intermediaries and HCFA on adjustment payments that were
adjudicated during FY 1999. By definition these were for cost reporting
periods ending in years prior to FY 1998. The total adjustment payments
awarded to excluded hospitals and units during FY 1999 are $73,532,146.
The table depicts for each class of hospital, in aggregate, the number
of adjustment requests adjudicated, the excess operating cost over the
ceiling, and the amount of the adjustment payment.
----------------------------------------------------------------------------------------------------------------
Excess cost over Adjustment
Class of hospital Number ceiling payment
----------------------------------------------------------------------------------------------------------------
Psychiatric.................................................. 198 $100,861,663 $49,986,012
Rehabilitation............................................... 53 32,690,736 16,798,634
Long-term care............................................... 4 3,239,164 2,577,455
Children's................................................... 7 3,311,758 1,470,670
Cancer....................................................... 2 4,849,093 2,699,375
----------------------------------------------------------------------------------------------------------------
[[Page 47100]]
B. Responsibility for Care of Patients in Hospitals-Within-Hospitals
(Sec. 413.40(a)(3))
Effective October 1, 1999, for hospitals-within-hospitals, we
implemented a policy that allows for a 5-percent threshold for cases in
which a patient discharged from an excluded hospital-within-a-hospital
and admitted to the host hospital was subsequently readmitted to the
excluded hospital-within-a-hospital. With respect to these cases, if
the excluded hospital exceeds the 5-percent threshold, we do not
include any previous discharges to the prospective payment hospital in
calculating the excluded hospital's cost per discharge. That is, the
entire stay is considered one Medicare ``discharge'' for purposes of
payments to the excluded hospital. The effect of this rule, as
explained more fully in the May 7, 1999 proposed rule (64 FR 24716) and
in the July 30, 1999 final rule (64 FR 41490), is to prevent
inappropriate Medicare payment to hospitals having a large number of
such stays.
In the existing regulations at Sec. 413.40(a)(3), we state that the
5-percent threshold is determined based on the total number of
discharges from the hospital-within-a-hospital. We have received
questions as to whether, in determining whether the threshold is met,
we consider Medicare patients only or all patients (Medicare and non-
Medicare). To avoid any further misunderstanding, in the May 5, 2000
proposed rule, we indicated our intent to clarify the definition of
``ceiling'' in Sec. 413.40(a)(3) by specifying that the 5-percent
threshold is based on the Medicare inpatients discharged from the
hospital-within-a-hospital in a particular cost reporting period, not
on total Medicare and non-Medicare inpatient discharges.
We did not receive any public comments on our proposed
clarification of the definition of ``ceiling'' in Sec. 413.40(a)(3)
and, therefore, are adopting the revision as final.
C. Critical Access Hospitals (CAHs)
1. Election of Payment Method (Sec. 413.70)
Section 1834(g) of the Act, as in effect before enactment of Public
Law 106-113, provided that the amount of payment for outpatient CAH
services is the reasonable costs of the CAH in providing such services.
However, the reasonable costs of the CAH's services to outpatients
included only the CAH's costs of providing facility services, and did
not include any payment for professional services. Physicians and other
practitioners who furnished professional services to CAH outpatients
billed the Part B carrier for these services and were paid under the
physician fee schedule in accordance with the provisions of section
1848 of the Act.
Section 403(d) of Public Law 106-113 amended section 1834(g) of the
Act to permit the CAH to elect to be paid for its outpatient services
under another option. CAHs making this election would be paid amounts
equal to the sum of the following, less the amount that the hospital
may charge as described in section 1866(a)(2)(A) of the Act (that is,
Part A and Part B deductibles and coinsurance):
(1) For facility services, not including any services for which
payment may be made as outpatient professional services, the reasonable
costs of the CAH in providing the services; and
(2) For professional services otherwise included within outpatient
CAH services, the amounts that would otherwise be paid under Medicare
if the services were not included in outpatient CAH services.
Section 403(d) of Public Law 106-113 added section 1834(g)(3) to
the Act to further specify that payment amounts under this election are
be determined without regard to the amount of the customary or other
charge.
The amendment made by section 403(d) is effective for cost
reporting periods beginning on or after October 1, 2000.
In the May 5, 2000 proposed rule, we proposed to revise Sec. 413.70
to incorporate the provisions of section 403(d) of Public Law 106-113.
The existing Sec. 413.70 specifies a single set of reasonable cost
basis payment rules applicable to both inpatient and outpatient
services furnished by CAHs. As section 403(d) of Public Law 106-113
provides that, for outpatient CAH services, CAHs may elect to be paid
on a reasonable cost basis for facility services and on a fee schedule
basis for professional services, we proposed to revise the section to
allow for separate payment rules for CAH inpatient and outpatient
services.
We proposed to place the provisions of existing Sec. 413.70(a) and
(b) that relate to payment on a reasonable cost basis for inpatient
services furnished by a CAH under proposed Sec. 413.70(a). Proposed
Sec. 413.70(a)(2) also stated that payment to a CAH for inpatient
services does not include professional services to CAH inpatients and
is subject to the Part A hospital deductible and coinsurance determined
under 42 CFR Part 409, Subpart G.
We proposed to include under Sec. 413.70(b) the payment rules for
outpatient services furnished by CAHs, including the option for CAHs to
elect to be paid on the basis of reasonable costs for facility services
and on the basis of the physician fee schedule for professional
services. Under proposed Sec. 413.70(b)(2), we would retain the
existing provision that unless the CAH elects the option provided for
under section 403 of Public Law 106-113, payment for outpatient CAH
services is on a reasonable cost basis, as determined in accordance
with section 1861(v)(1)(A) of the Act and the applicable principles of
cost reimbursement in Parts 413 and 415 (except for certain payment
principles that do not apply; that is, the lesser of costs or charges,
RCE limits, any type of reduction to operating or capital costs under
Sec. 413.124 or Sec. 413.130(j)(7), and blended payment amounts for
ambulatory surgical center services, radiology services, and other
diagnostic services).
Under proposed Sec. 413.70(b)(3), we specified that any CAH that
elects to be paid under the optional method must make an annual request
in writing, and deliver the request for the election to the fiscal
intermediary at least 60 days before the start of the affected cost
reporting period. In addition, proposed Sec. 413.70(b)(3)(ii) stated
that if a CAH elects payment under this method, payment to the CAH for
each outpatient visit will be the sum of the following two amounts:
For facility services, not including any outpatient
professional services for which payment may be made on a fee schedule
basis, the amount would be the reasonable costs of the services as
determined in accordance with applicable principles of cost
reimbursement in 42 CFR Parts 413 and 415, except for certain payment
principles that would not apply as specified above; and
For professional services, otherwise payable to the
physician or other practitioner on a fee schedule basis, the amounts
would be those amounts that would otherwise be paid for the services if
the CAH had not elected payment under this method.
We also proposed in Sec. 413.70(b)(3)(iii) that payment to a CAH
for outpatient services would be subject to the Part B deductible and
coinsurance amounts, as determined under Secs. 410.152, 410.160, and
410.161. In proposed Sec. 413.70(c), we stated that final payment to
the CAH for its facility services to inpatients and outpatients
furnished during a cost reporting would be based on a cost report for
that period, as required under Sec. 413.20(b).
[[Page 47101]]
Comment: One commenter expressed concern about several CAH payment
issues on which we did not propose to change existing policy. These
comments related to payment for costs attributable to Medicare bed
debts, counting of beds toward the 15- and 25-bed maximums, and payment
for swing-bed services in CAHs.
Response: Because these comments dealt with matters beyond the
scope of the proposed rule, we have received them with interest and
will consider whether any changes in policy are needed at a later date.
We are adopting the proposed revisions to Sec. 413.70 as final. The
revised Sec. 413.70 includes at paragraph (b)(2)(iii) the text of a
paragraph (c) that was added in the interim final rule with comment
period that implemented certain provisions of Public Law 106-33
published elsewhere in this issue of the Federal Register. We did not
revise the text of this paragraph (c); we merely changed the paragraph
coding to fit it into the scheme of coding of the revised Sec. 413.70.
2. Condition of Participation: Organ, Tissue, and Eye Procurement
(Sec. 485.643)
Sections 1820(c)(2)(B) and 1861(mm) of the Act set forth the
criteria for designating a CAH. Under this authority, the Secretary has
established in regulations the minimum requirements a CAH must meet to
participate in Medicare (42 CFR Part 485, Subpart F).
Section 1905(a) of the Act provides that Medicaid payments may be
made for any other medical care, and any other type of remedial care
recognized under State law, specified by the Secretary. The Secretary
has specified CAH services as Medicaid services in regulations.
Specifically, the regulations at 42 CFR 440.170(g)(1)(i), define CAH
services under Medicaid as those services furnished by a provider
meeting the Medicare conditions of participation (CoP).
Section 1138 of the Act provides that a CAH participating in
Medicare must establish written protocols to identify potential organ
donors that: (1) Assure that potential donors and their families are
made aware of the full range of options for organ or tissue donation as
well as their rights to decline donation; (2) encourage discretion and
sensitivity with respect to the circumstances, views, and beliefs of
those families; and (3) require that an organ procurement agency
designated by the Secretary be notified of potential organ donors.
On June 22, 1998, as part of the Medicare hospital conditions of
participation under Part 482, subpart C, we added to the regulations at
Sec. 482.45, a condition that specifically addressed organ, tissue, and
eye procurement. However, Part 482 does not apply to CAHs, as CAHs are
a distinct type of provider with separate CoP under Part 485.
Therefore, in the proposed rule, we proposed to add a CoP for organ,
tissue, and eye procurement for CAHs at a new Sec. 485.643 that
generally parallels the CoP at Sec. 482.45 for all Medicare hospitals
with respect to the statutory requirement in section 1138 of the Act
concerning organ donation. CAHs are not full service hospitals and
therefore are not equipped to perform organ transplantations.
Therefore, we did not propose to include the standard applicable to
Medicare hospitals that CAHs must be a member of the Organ Procurement
and Transplantation Network (OPTN), abide by its rules and provide
organ transplant-related data to the OPTN, the Scientific Registry,
organ procurement agencies, or directly to the Department on request of
the Secretary.
The proposed CoP for CAHs included several requirements designed to
increase organ donation. One of these requirements is that a CAH must
have an agreement with the Organ Procurement Organization (OPO)
designated by the Secretary, under which the CAH will contact the OPO
in a timely manner about individuals who die or whose death is
imminent. The OPO will then determine the individual's medical
suitability for donation. In addition, the CAH must have an agreement
with at least one tissue bank and at least one eye bank to cooperate in
the retrieval, processing, preservation, storage, and distribution of
tissues and eyes, as long as the agreement does not interfere with
organ donation. The proposed CoP would require a CAH to ensure, in
collaboration with the OPO with which it has an agreement, that the
family of every potential donor is informed of its option to either
donate or not donate organs, tissues, or eyes. The CAH may choose to
have OPO staff perform this function, have CAH and OPO staff jointly
perform this function, or rely exclusively on CAH staff. Research
indicates that consent to organ donation is highest when the formal
request is made by OPO staff or by OPO staff and hospital staff
together. While we require collaboration, we also recognize that CAH
staff may wish to perform this function and may do so when properly
trained. Moreover, the CoP would require the CAH to ensure that CAH
employees who initiate a request for donation to the family of a
potential donor have been trained as designated requestors.
Finally, we proposed that the CoP would require the CAH to work
with the OPO and at least one tissue bank and one eye bank in educating
staff on donation issues, reviewing death records to improve
identification of potential donors, and maintaining potential donors
while necessary testing and placement of organs and tissues is
underway.
Because we were sensitive to the possible burden the proposed CoP
could place on CAHs, we invited public comments and information
concerning the following requirements: (1) Developing written protocols
for donations; (2) developing agreements with OPOs, tissue banks, and
eye banks; (3) referring all deaths to the OPO; (4) working
cooperatively with the designated OPO, tissue bank, and eye bank in
educating staff on donation issues, reviewing death records, and
maintaining potential donors. We note that the proposed requirement
allowed some degree of flexibiilty for the CAH. For example, the CAH
would have the option of using an OPO-approved education program to
train its own employees as routine requestors or deferring requesting
services to the OPO, the tissue bank, or the eye bank to provide
requestors.
We did not receive any public comments on the proposed CAH CoP on
organ, tissue, and eye procurement. We are adopting Sec. 485.643 as
final.
VII. MedPAC Recommendations
On March 1, 2000 the Medicare Payment Advisory Commission (MedPAC)
issued its annual report to Congress, including several recommendations
related to the inpatient operating payment system. Those related to the
inpatient prospective payment systems were: Congress should establish a
single set of payment adjustors for both the operating and capital
systems; HCFA should expand the definition of transfers which applies a
transfer policy to patients transferred to postacute settings; and,
Congress should reformulate the Medicare DSH adjustment. In the
proposed rule, we responded to these recommendations.
In addition, this year MedPAC published another report in June with
additional recommendations. Among the recommendations were: FY 2001
updates to the operating and capital payment rates; moving to refined
DRGs to better capture variations in patient severity; adopting DRG-
specific outlier offsets; Congress should provide the Secretary the
authority to adjust the
[[Page 47102]]
base payment amounts for anticipated coding changes; and, Congress
should fold inpatient direct GME into the prospective payment system
through a revised teaching hospital adjustment. A discussion of
MedPAC's update recommendation can be found in Appendix D of this final
rule.
A. Combined Operating and Capital Prospective Payment Systems
(Recommendation 3J: March Report)
Recommendation: The Congress should combine prospective payment
system operating and capital payment rates to create a single
prospective rate for hospital inpatient care. This change would require
a single set of payment adjustments--in particular, for indirect
medical education and disproportionate share hospital payments--and a
single payment update.
Response: We responded to a similar comment in the July 30, 1999
final rule (64 FR 41552), the July 31, 1998 final rule (63 FR 41013),
and the September 1, 1995 final rule (60 FR 45816). In those rules, we
stated that our long-term goal was to develop a single update framework
for operating and capital prospective payments and that we would begin
development of a unified framework. However, we have not yet developed
such a single framework as the actual operating system update has been
determined by Congress through FY 2002. In the meantime, we intend to
maintain as much consistency as possible with the current operating
framework in order to facilitate the eventual development of a unified
framework. We maintain our goal of combining the update frameworks at
the end of the 10-year capital transition period (the end of FY 2001)
and may examine combining the payment systems post-transition. Because
of the similarity of the update frameworks, we believe that they could
be combined with little difficulty.
In the discussion of its recommendation, MedPAC notes that it ``is
examining broad reforms to the prospective payment system, including
DRG refinement and modifications of the graduate medical education
payment and the IME and DSH adjustments. The Commission believes that a
combined hospital prospective payment rate should be established
whether or not broader reforms are undertaken. However, if the Congress
acts on any or all of the Commission's recommendations, it should
consider combining operating and capital payments as part of a larger
package.''
We agree that ultimately the operating and capital prospective
payment systems should be combined into a single system. However, we
believe that, because of MedPAC's ongoing analysis and the
Administration's pending DSH report to Congress, any such unification
should occur within the context of other system refinements.
B. Continuing Postacute Transfer Payment Policy (Recommendation 3K:
March Report)
Recommendation: The Commission recommends continuing the existing
policy of adjusting per case payments through an expanded transfer
policy when a short length of stay results from a portion of the
patient's care being provided in another setting.
Response: As noted in section IV.A. of this preamble, we have
undertaken (through a contract with HER) an analysis of the impact on
hospitals and hospital payments of the postacute transfer provision.
That analysis (based on preliminary data covering only approximately 6
months of discharge data) showed a minimal impact on the rate of short-
stay postacute transfers after implementation of the policy. However,
average profit margins as measured by HER declined from $3,496 prior to
implementation of the policy to $2,255 after implementation. We believe
these preliminary findings demonstrate that the postacute transfer
provision has had only marginal impact on existing practice patterns
while more closely aligning the payments to hospitals for these cases
with the costs incurred. Therefore, we agree with MedPAC's
recommendation that the policy should be continued.
C. Disproportionate Share Hospitals (DSH) (Recommendations 3L and 3M:
March Report)
Recommendation: To address longstanding problems and current legal
and regulatory developments, Congress should reform the
disproportionate share adjustment to: Include the costs of all poor
patients in calculating low-income shares used to distribute
disproportionate share payments, and use the same formula to distribute
payments to all hospitals covered by prospective payment.
Response: As we noted in section IV.E. of this preamble, Public Law
106-113 directed the Secretary to require subsection (d) hospitals (as
defined in section 1886(d)(1)(B) of the Act) to submit data on costs
incurred for providing inpatient and outpatient hospital services for
which the hospital is not compensated, including non-Medicare bad debt,
charity care, and charges for Medicaid and indigent care. These data
must be reported on the hospital's cost reports for cost reporting
periods beginning on or after October 1, 2001, and will provide
information that will enable MedPAC and us to evaluate potential
refinements to the DSH formula to address the issues referred to by
MedPAC.
Medicare fiscal intermediaries will audit these data to ensure
their accuracy and consistency. Our experience with administering the
current DSH formula leads us to believe that this auditing function
would necessarily be extensive, because the non-Medicare data that
would be collected have never before been collected and reviewed by
Medicare's fiscal intermediaries. The data would have to be determined
to be accurate and usable, and corrected if necessary.
We agree that the current statutory payment formula could be
improved, largely because of different threshold levels and different
formula parameters applicable to different groups of hospitals. We are
in the process of preparing a report to Congress on the Medicare DSH
adjustment that includes options for amending the statutory formula.
Comment: We received one comment regarding MedPAC's recommendation.
The commenter expressed the concern that any unrecoverable costs from
certified registered nurse anesthetist services in providing anesthesia
and related care to indigent patients may not be included in the bad
debt costs of hospitals.
Response: One of the difficulties in collecting uncompensated care
and non-Medicare bad debt data is defining exactly the types of data
being sought, particularly when there are no existing cost reporting
guidelines to follow. We will be working closely with the hospital
industry to identify and collect these data.
Recommendation: To provide further protection for the primarily
voluntary hospitals with mid-level low-income shares, the minimum
value, or threshold, for the low-income share that a hospital must have
before payment is made should be set to make 60 percent of hospitals
eligible to receive disproportionate share payments.
Response: Currently, fewer than 40 percent of all prospective
payment system hospitals receive DSH payments. Therefore, this
recommendation would entail significant redistributions of existing DSH
payments if implemented in a budget neutral manner. We are particularly
concerned about the effect of this recommendation on hospitals
receiving substantial DSH payments currently, including major teaching
hospitals and public hospitals. The analysis by MedPAC demonstrates
that
[[Page 47103]]
these hospitals would be negatively impacted, if more hospitals were
made eligible for DSH payments.
D. Severity-Adjusted DRGs (Recommendation 3A: June Report)
Recommendation: The Secretary should improve the hospital inpatient
prospective payment system by adopting, as soon as practicable, DRG
refinements that more fully capture differences in severity of illness
among patients. At the same time, she should make the DRG payment rates
more accurate by basing the DRG relative weights on the national
average of hospitals' relative values in each DRG.
Response: For its analysis, MedPAC used the severity
classifications from the all patient refined diagnosis related groups
(APR-DRG) system. According to MedPAC, under this system each patient
is initially assigned to 1 of 355 APR-DRGs. Each APR-DRG is broken into
four severity classes: minor, moderate, major or extreme. Assignment to
these classes within the APR-DRG is based on specific combinations of
secondary diagnoses, age, procedures, and other factors. This process
yields 1,420 distinct groups, compared with fewer than 500 DRGs. The
MedPAC points out that ``to avoid creating refined DRGs that might have
unstable relative weights, the Secretary should be selective in
adopting clinical distinctions similar to those reflected in the APR-
DRGs. This will require carefully weighing the benefits of more
accurate clinical and economic distinctions against the potential for
instability in relative weights based on small numbers of cases (p.
64).''
The MedPAC's predecessor, the Prospective Payment Assessment
Commission, made a similar recommendation in 1995. In the June 2, 1995
proposed rule (60 FR 29246), we agreed with the Commission's judgment
that adopting the severity DRGs would tend to reduce discrepancies
between payments and costs for individual cases and thereby improve
payment equity among hospitals. In the same rule, we also agreed with
the Commission that basing DRG weights on standardized charges results
in weights that are somewhat distorted as measures of the relative
costliness of treating a typical case in each DRG, and that the
hospital-specific relative value method of setting weights may reduce
or eliminate distortions present in the current system.
However, in our discussion on DRG refinements in the same rule (60
FR 29209) we reiterated our position published in the final rule on
September 1, 1992 (57 FR 39761) that we would not propose to make
significant changes to the DRG classification system, unless we are
able either to improve our ability to predict coding changes by
validating in advance the impact that potential DRG changes may have on
coding behavior, or to make methodological changes to prevent building
the inflationary effects of the coding changes into future program
payments. In addition, we would need specific legislative authority to
offset, through adjustments to the standardized amounts, any
significant anticipated increase in payments attributable to changes in
coding practices caused by significant changes to the DRG
classification system. Because we have not been granted this authority,
we do not believe it would be appropriate to adopt revised severity-
adjusted DRGs at this time.
E. DRG-Specific Outlier Offsets (Recommendation 3B: June Report)
Recommendation: Congress should amend the law to change the method
now used to finance outlier payments under the hospital inpatient
prospective payment system. Projected outlier payments in each DRG
should be financed through an offsetting adjustment to the relative
weight for the category, rather than the current flat adjustment to the
national average base payment amounts.
Response: Under this recommendation, outlier payments would be
financed through an offset to the relative weight of each DRG based on
the proportion of outlier cases in that DRG, rather than an overall
offset to the standardized amounts as is done currently. This would
more directly relate payments under each DRG to the proportion of
outlier cases occurring within that DRG.
Because the effects on DRG weights of implementing severity
refinements, changing the method used to calculate DRG relative
weights, and adopting DRG-specific outlier financing are interactive,
we believe that we should make appropriate changes concurrently.
Therefore, as stated in our response to recommendation 3A, we would not
recommend that Congress implement this recommendation until we are able
to offset, through adjustments to the standardized amounts, any
significant anticipated increase in payments attributable to changes in
coding practices caused by significant changes to the DRG
classification system.
In addition, we are concerned that any benefits of adopting the
Commission's recommendation would not outweigh the additional
complexity and variation it would add to the already complex process of
calculating outlier thresholds so that outlier payments are projected
to equal a certain percentage between 5 and 6 of DRG payments.
F. Gradual Implementation of DRG Refinement and DRG-Specific Outlier
Offsets (Recommendation 3C: June Report)
Recommendation: To avoid imposing extraordinary financial burdens
on individual providers, the Congress should ensure that the case-mix
measurement and outlier financing policies recommended earlier are
implemented gradually over a period of several years. Further, the
Congress should consider including protective policies, such as
exemptions or hold-harmless provisions, for providers in circumstances
in which vulnerable populations' access to care might be disrupted.
Response: The Commission's analyses show that implementing its
case-mix measurement and outlier financing recommendations would
substantially change PPS payments for many hospitals and may impose
heavy burdens on individual hospitals. The Commission believes that
many of these hospitals could accommodate the changes in an orderly way
under traditional phase-in mechanisms. The Commission also states that
some hospitals, including some groups of rural hospitals, may need
longer term relief from the financial impact of these changes. The
Commission suggests that this relief might include such approaches as
targeted additional payments, hold-harmless provisions, and temporary
or permanent exemptions.
We are concerned that implementing the Commission's recommendations
may increase the need for special payment exceptions for various
categories of hospitals to ensure continued access to care for many
Medicare beneficiaries. Before recommending implementation of these
refinements to the payment system, they must be examined to determine
how the changes would impact hospitals financially and strategies would
need to be developed for countering effects that could endanger
beneficiaries' access to quality health care.
G. Congress Should Grant the Secretary the Authority to Offset Payments
for Anticipated Coding Changes (Recommendation 3D: June Report)
Recommendation: The Congress should give the Secretary explicit
authority to adjust the hospital inpatient base payment amounts if
anticipated
[[Page 47104]]
coding improvements in response to refinements in case-mix measurement
are expected to increase aggregate payments by a substantial amount
during the forthcoming year. This adjustment should be separate from
the annual update. Further, the Congress should require the Secretary
to measure the extent of actual coding improvements based on the bills
providers submit for payment and make a timely adjustment to correct
any substantial forecast error.
Response: In the past, whenever significant refinements to the DRGs
have been implemented, there have been unanticipated payment increases
as hospitals have responded with changes to their coding practices,
resulting in more cases being assigned to higher-weighted DRGs than
estimated when the DRG relative weights were calculated. We anticipate
that a similar effect would occur following implementation of refined
DRGs.
Therefore, we agree with MedPAC's recommendation that Congress give
the Secretary explicit authority to adjust the hospital inpatient base
payment amounts if anticipated coding improvements in response to
refinements in case-mix measurement are expected to increase aggregate
payments by a substantial amount during the forthcoming year. We also
agree that adjustments to correct substantial forecast errors would be
appropriate.
H. Fold Inpatient Direct GME Costs Into the Prospective Payment System
(Recommendation 3E: June Report)
Recommendation: Congress should fold inpatient direct graduate
medical education costs into prospective payment system payment rates
through a revised teaching hospital adjustment. The new adjustment
should be set such that the subsidy provided to teaching hospitals
would be added to the IME adjustment. This recommendation should be
implemented with a reasonable transition to limit the impact on
hospitals of substantial changes in Medicare payments and to ensure
that beneficiaries have continued access to the services that teaching
hospitals provide.
Response: MedPAC cites two primary reasons for its recommendation:
to improve payment equity among teaching hospitals by eliminating the
wide variation in current hospital-specific GME payment amounts, and to
establish that GME payments are a part of patient care costs. MedPAC
proposes three options for folding direct GME costs into PPS in terms
of its impact on total payments: fold inpatient direct GME costs into
the prospective payment rates, holding aggregate payments and special
payments to teaching hospitals constant; fold inpatient direct GME
costs into the prospective payment rates, holding aggregate payments
constant, and redistributing teaching hospital subsidies across all
hospitals; and fold inpatient direct GME costs into prospective payment
rates with no constraint on aggregate payments and no teaching hospital
subsidy. The commission recommends the first option. While we do not
disagree with MedPAC's objectives, we believe that there are still some
significant issues related to these recommendations.
First, Congress has already taken steps towards addressing the
direct GME payment variation. Section 311 of the BBRA of 1999
established a 70 percent floor and a 140 percent ceiling based on a
national average per resident amount for direct GME payment purposes
for FYs 2001 through 2005. While we agree with the objective of
decreasing the variation in the current per resident amounts, the same
objective can be achieved by moving to a national, rather than
hospital-specific, per resident amount.
Second, MedPAC asserts that folding the direct GME payments into
the prospective payment system will establish that GME payments are
payments to account for the increased costs of inpatient care due to
residency training. However, we would note the current direct GME
payments are distributed on the basis of Medicare's patient share,
based on the percentage of total Medicare inpatient days to total
hospital inpatient days. It is unclear exactly how MedPAC's
recommendation would better associate GME payments with the increased
costs of patient care without rebasing the current IME adjustment to
more appropriately reflect the empirical estimate of those increased
costs, both direct and indirect. Furthermore, the current distribution
of IME payments is not directly linked to the involvement of residents
providing patient care, but instead is based on each Medicare
discharge, adjusted for the other payment factors. In addition, if the
recommended teaching adjustment is a mechanism for accounting for the
extra costs of inpatient training, it seems inappropriate to include
residents not training in inpatient settings in a payment for inpatient
care costs.
Third, MedPAC estimates show that the IME adjustment for operating
payments would be only 3.2 percent, if it were based on the empirical
relationship between costs and the ratio of residents to hospital beds.
This is significantly less than the adjustment of 5.5 percent, which is
the adjustment set for the end of the phase-in under current law.
MedPAC asserts that approximately $1.5 billion of the IME payments to
teaching hospitals result from paying more than the empirical estimate
suggests. Under MedPAC's recommendation, the direct GME payments would
essentially be added to current IME payments. However, we feel that it
is inappropriate to revise the teaching adjustment in such a way that
would constitute a further add-on to the current IME payments which
MedPAC believes are excessive. Before such a change is adopted,
Congress should determine a more accurate level at which to set the IME
adjustment.
In addition, we note that MedPAC recommends folding the direct GME
costs into the prospective payment system based on the most recent cost
reports. The costs associated with GME, however, are no longer
routinely audited by the fiscal intermediaries. Any reconstitution of
the direct GME payment methodology based on recent cost reports would
require further extensive audit work by the fiscal intermediaries.
VIII. Other Required Information
A. Requests for Data From the Public
In order to respond promptly to public requests for data related to
the prospective payment system, we have set up a process under which
commenters can gain access to the raw data on an expedited basis.
Generally, the data are available in computer tape or cartridge format;
however, some files are available on diskette as well as on the
Internet at http://www.hcfa.gov/stats/pubfiles.html. In our May 5, 2000
proposed rule, we published a list of data files that are available for
purchase (65 FR 26318 through 26320).
B. Information Collection Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
[[Page 47105]]
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In the May 5, 2000 proposed rule, we solicited public comment on
each of the information collection requirements in Secs. 412.77,
412.92, and 485.643 described below.
Section 412.77, Determination of the hospital-specific rate for
inpatient operating costs for certain sole community hospitals based on
a Federal fiscal year 1996 base period, and Sec. 412.92, Special
treatment: sole community hospitals.
Sections 412.77(a)(2) and 412.92(d)(1)(ii) state that an otherwise
eligible hospital that elects not to receive payment based on its
hospital-specific rate as determined under Sec. 412.77 must notify its
fiscal intermediary of its decision prior to the beginning of its cost
reporting period beginning on or after October 1, 2000.
We estimate that it will take each hospital that notifies its
intermediary of its election not to receive payments based on its
hospital-specific rate as determined under Sec. 412.77 an hour to draft
and send its notice. However, we are unable at this time to determine
how many hospitals will make this election and, therefore, will need to
notify their intermediaries of their decision.
Section 485.643, Condition of participation: Organ, tissue, and eye
procurement.
It is important to note that because of the inherent flexibility of
this final regulation, the extent of the information collection
requirements is dependent upon decisions that will be made either by
the CAH or by the CAH in conjunction with the OPO or the tissue and eye
banks, or both. Thus, the paperwork burden on individual CAHs will vary
and is subject, in large part, to their decisionmaking.
The burden associated with the requirements of this section
include: (1) The requirement to maintain protocol documentation
demonstrating that the five requirements of this section have been met;
(2) the requirement for a CAH to notify an OPO, a tissue bank, or an
eye bank of any imminent or actual death; and (3) the time required for
a hospital to document and maintain OPO referral information.
We estimate that, on average, the requirement to maintain protocol
documentation demonstrating that the requirements of this section have
been met will impose one hour of burden on each CAH (on 161 CAHs) on an
annual basis, resulting in a total of 161 annual burden hours.
The CoP in this section will require CAHs to notify the OPO about
every death that occurs in the CAH. The average Medicare hospital has
approximately 165 beds and 200 deaths per year. However, by statute and
regulation, CAHs may use no more than 15 beds for acute care services.
Assuming that the number of deaths in a hospital is related to the
number of acute care beds, there should be approximately 18 deaths per
year in the average CAH. We estimate that the average notification
telephone call to the OPO takes 5 minutes. Based on this estimate, a
CAH would need approximately 90 minutes per year to notify the OPO
about all deaths and imminent deaths.
Under the CoP, a CAH may agree to have the OPO determine medical
suitability for tissue and eye donation or may have alternative
arrangements with a tissue bank and an eye bank. These alternative
arrangements could include the CAH's direct notification of the tissue
and eye bank of potential tissue and eye donors or direct notification
of all deaths. If a CAH chose to contact both a tissue bank and an eye
bank directly on all deaths, it could need an additional 180 minutes
per year (that is, 5 minutes per call) in order to call both the tissue
and eye bank directly. Again, the impact is small, and this regulation
permits the CAH to decide how this process will take place. We note
that many communities already have a one-phone call system in place. In
addition, some OPOs are also tissue banks or eye banks, or both. A CAH
that chooses to use the OPO's tissue and eye bank services in these
localities would need to make only one telephone call on every death.
We estimate that additional time would be needed by the CAH to
annotate the patient record or fill out a form regarding the
disposition of a call to the OPO, the tissue bank, or the eye bank, or
all three. This recordkeeping should take no more than 5 minutes to
record each disposition or call. Therefore, all of the paperwork burden
associated with the call(s) could add up to an additional 270 minutes
per year per CAH.
In summary, the information collection requirements of this section
would be a range of 3 to 6 hours per CAH annually.
We did not receive any comments on the proposed information
collection and recordkeeping requirements.
These new information collection and recordkeeping requirements
have been submitted to the Office of Management and Budget (OMB) for
review under the authority of PRA. These requirements will not be
effective until they have been approved by OMB.
The requirements associated with a hospital's application for a
geographic redesignation, codified in Part 412, are currently approved
by OMB under OMB approval number 0938-0573, with an expiration date of
September 30, 2002.
List of Subjects
42 CFR Part 410
Health facilities, Health professions, Kidney diseases,
Laboratories, Medicare, Rural areas, X-rays.
42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
42 CFR Part 485
Grant programs-health, Health facilities, Medicaid, Medicare,
Reporting and recordkeeping requirements.
42 CFR Chapter IV is amended as set forth below:
PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS
A. Part 410 is amended as follows:
1. The authority citation for Part 410 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Sec. 410.152 [Amended]
2. In Sec. 410.152, paragraph (k)(2), the cross-reference
``Sec. 413.70(c)'' is removed and ``Sec. 413.70(b)(2)(iii)(B)'' is
added in its place.
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
B. Part 412 is amended as follows:
1. The authority citation for Part 412 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. Section 412.2 is amended by revising the last sentence of
paragraph (a) to read as follows:
[[Page 47106]]
Sec. 412.2 Basis of payment.
(a) Payment on a per discharge basis. * * * An additional payment
is made for both inpatient operating and inpatient capital-related
costs, in accordance with subpart F of this part, for cases that are
extraordinarily costly to treat.
* * * * *
Sec. 412.4 [Amended]
3. In Sec. 412.4(f)(3), the reference to ``Sec. 412.2(e)'' is
removed and ``Sec. 412.2(b)'' is added in its place.
4. Section 412.63 is amended by:
A. Revising paragraph (s).
B. Redesignating paragraphs (t), (u), (v), and (w) as paragraphs
(u), (v), (w), and (x) respectively.
C. Adding a new paragraph (t).
Sec. 412.63 Federal rates for inpatient operating costs for fiscal
years after Federal fiscal year 1984.
* * * * *
(s) Applicable percentage change for fiscal year 2001. The
applicable percentage change for fiscal year 2001 is the percentage
increase in the market basket index for prospective payment hospitals
(as defined in Sec. 413.40(a) of this subchapter) for sole community
hospitals and the increase in the market basket index minus 1.1
percentage points for other hospitals in all areas.
(t) Applicable percentage change for fiscal year 2002. The
applicable percentage change for fiscal year 2002 is the percentage
increase in the market basket index for prospective payment hospitals
(as defined in Sec. 413.40(a) of this subchapter) minus 1.1 percentage
points for hospitals in all areas.
* * * * *
5. Section 412.73 is amended by:
A. Revising paragraph (c)(12).
B. Adding paragraphs (c)(13), (c)(14), and (c)(15).
Sec. 412.73 Determination of the hospital-specific rate based on a
Federal fiscal year 1982 base period.
* * * * *
(c) Updating base-year costs--* * *
(12) For Federal fiscal years 1996 through 2000. For Federal fiscal
years 1996 through 2000, the update factor is the applicable percentage
change for other prospective payment hospitals in each respective year
as set forth in Secs. 412.63(n) through (r).
(13) For Federal fiscal year 2001. For Federal fiscal year 2001,
the update factor is the percentage increase in the market basket index
for prospective payment hospitals (as defined in Sec. 413.40(a) of this
chapter).
(14) For Federal fiscal year 2002. For Federal fiscal year 2002,
the update factor is the percentage increase in the market basket index
for prospective payment hospitals (as defined in Sec. 413.40(a) of this
chapter) minus 1.1 percentage points.
(15) For Federal fiscal year 2003 and for subsequent years. For
Federal fiscal year 2003 and subsequent years, the update factor is the
percentage increase in the market basket index for prospective payment
hospitals (as defined in Sec. 413.40(a) of this chapter).
* * * * *
Sec. 412.75 [Amended]
6. In Sec. 412.75(d), the cross reference ``Sec. 412.73 (c)(5)
through (c)(12)'' is removed and ``Sec. 412.75(c)(15)'' is added in its
place.
Sec. 412.76 [Redesignated]
7. Section 412.76 is redesignated as a new Sec. 412.78.
8. A new Sec. 412.77 is added to read as follows:
Sec. 412.77 Determination of the hospital-specific rate for inpatient
operating costs for certain sole community hospitals based on a Federal
fiscal year 1996 base period.
(a) Applicability. (1) This section applies to a hospital that has
been designated as a sole community hospital, as described in
Sec. 412.92, that received payment for its cost reporting period
beginning during 1999 based on its hospital-specific rate for either
fiscal year 1982 under Sec. 412.73 or fiscal year 1987 under
Sec. 412.75, and that elects under paragraph (a)(2) of this section to
be paid based on a fiscal year 1996 base period. If the 1996 hospital-
specific rate exceeds the hospital-specific rates for either fiscal
year 1982 or 1987, unless the hospital elects to the contrary, this
rate will be used in the payment formula set forth under
Sec. 412.92(d)(1).
(2) Hospitals that are otherwise eligible for but elect not to
receive payment on the basis of their Federal fiscal year 1996 updated
costs per case must notify their fiscal intermediary of this decision
prior to the end of their cost reporting period beginning on or after
October 1, 2000, for which such payments would otherwise be made. If a
hospital does not make the notification to its fiscal intermediary
before the end of the cost reporting period, the hospital is deemed to
have elected to have section 1886(b)(3)(I) of the Act apply to the
hospital.
(3) This section applies only to cost reporting periods beginning
on or after October 1, 2000.
(4) The formula for determining the hospital-specific costs for
hospitals described under paragraph (a)(1) of this section is set forth
in paragraph (f) of this section.
(b) Based costs for hospitals subject to fiscal year 1996 rebasing.
(1) General rule. Except as provided in paragraph (b)(2) of this
section, for each hospital eligible under paragraph (a) of this
section, the intermediary determines the hospital's Medicare Part A
allowable inpatient operating costs, as described in Sec. 412.2(c), for
the 12-month or longer cost reporting period ending on or after
September 30, 1996 and before September 30, 1997, and computes the
hospital-specific rate for purposes of determining prospective payment
rates for inpatient operating costs as determined under Sec. 412.92(d).
(2) Exceptions. (i) If the hospital's last cost reporting period
ending before September 30, 1997 is for less than 12 months, the base
period is the hospital's most recent 12-month or longer cost reporting
period ending before the short period report.
(ii) If the hospital does not have a cost reporting period ending
on or after September 30, 1996 and before September 30, 1997, and does
have a cost reporting period beginning on or after October 1, 1995 and
before October 1, 1996, that cost reporting period is the base period
unless the cost reporting period is for less than 12 months. If that
cost reporting period is for less than 12 months, the base period is
the hospital's most recent 12-month or longer cost reporting period
ending before the short cost reporting period. If a hospital has no
cost reporting period beginning in fiscal year 1996, the hospital will
not have a hospital-specific rate based on fiscal year 1996.
(c) Costs on a per discharge basis. The intermediary determines the
hospital's average base-period operating cost per discharge by dividing
the total operating costs by the number of discharges in the base
period. For purposes of this section, a transfer as defined in
Sec. 412.4(b) is considered to be a discharge.
(d) Case-mix adjustment. The intermediary divides the average base-
period cost per discharge by the hospital's case-mix index for the base
period.
(e) Updating base-period costs. For purposes of determining the
updated base-period costs for cost reporting periods beginning in
Federal fiscal year 1996, the update factor is determined using the
methodology set forth in Sec. 412.73(c)(12) through (c)(15).
(f) DRG adjustment. The applicable hospital-specific cost per
discharge is multiplied by the appropriate DRG weighting factor to
determine the hospital-specific base payment amount
[[Page 47107]]
(target amount) for a particular covered discharge.
(g) Notice of hospital-specific rates. The intermediary furnishes a
hospital eligible for rebasing a notice of the hospital-specific rate
as computed in accordance with this section. The notice will contain a
statement of the hospital's Medicare Part A allowable inpatient
operating costs, the number of Medicare discharges, and the case-mix
index adjustment factor used to determine the hospital's cost per
discharge for the Federal fiscal year 1996 base period.
(h) Right to administrative and judicial review. An intermediary's
determination of the hospital-specific rate for a hospital is subject
to administrative and judicial review. Review is available to a
hospital upon receipt of the notice of the hospital-specific rate. This
notice is treated as a final intermediary determination of the amount
of program reimbursement for purposes of subpart R of part 405 of this
chapter.
(i) Modification of hospital-specific rate. (1) The intermediary
recalculates the hospital-specific rate to reflect the following:
(i) Any modifications that are determined as a result of
administrative or judicial review of the hospital-specific rate
determinations; or
(ii) Any additional costs that are recognized as allowable costs
for the hospital's base period as a result of administrative or
judicial review of the base-period notice of amount of program
reimbursement.
(2) With respect to either the hospital-specific rate determination
or the amount of program reimbursement determination, the actions taken
on administrative or judicial review that provide a basis for the
recalculations of the hospital-specific rate include the following:
(i) A reopening and revision of the hospital's base-period notice
of amount of program reimbursement under Secs. 405.1885 through
405.1889 of this chapter.
(ii) A prehearing order or finding issued during the provider
payment appeals process by the appropriate reviewing authority under
Sec. 405.1821 or Sec. 405.1853 of this chapter that resolved a matter
at issue in the hospital's base-period notice of amount of program
reimbursement.
(iii) An affirmation, modification, or reversal of a Provider
Reimbursement Review Board decision by the Administrator of HCFA under
Sec. 405.1875 of this chapter that resolved a matter at issue in the
hospital's base-period notice of amount of program reimbursement.
(iv) An administrative or judicial review decision under
Sec. 405.1831, Sec. 405.1871, or Sec. 405.1877 of this chapter that is
final and no longer subject to review under applicable law or
regulations by a higher reviewing authority, and that resolved a matter
at issue in the hospital's base-period notice of amount of program
reimbursement.
(v) A final, nonappealable court judgment relating to the base-
period costs.
(3) The adjustments to the hospital-specific rate made under
paragraphs (i)(1) and (i)(2) of this section are effective
retroactively to the time of the intermediary's initial determination
of the rate.
9. Section 412.92 is amended by:
A. Revising paragraph (d)(1).
B. Redesignating paragraph (d)(2) as paragraph (d)(3).
C. Adding a new paragraph (d)(2).
Sec. 412.92 Special treatment: sole community hospitals.
* * * * *
(d) Determining prospective payment rates for inpatient operating
costs for sole community hospitals--(1) General rule. For cost
reporting periods beginning on or after April 1, 1990, a sole community
hospital is paid based on whichever of the following amounts yields the
greatest aggregate payment for the cost reporting period:
(i) The Federal payment rate applicable to the hospitals as
determined under Sec. 412.63.
(ii) The hospital-specific rate as determined under Sec. 412.73.
(iii) The hospital-specific rate as determined under Sec. 412.75.
(iv) For cost reporting periods beginning on or after October 1,
2000, the hospital-specific rate as determined under Sec. 412.77
(calculated under the transition schedule set forth in paragraph (d)(2)
of this section), if the sole community hospital was paid for its cost
reporting period beginning during 1999 on the basis of the hospital-
specific rate specified in paragraph (d)(1)(ii) or (d)(1)(iii) of this
section, unless the hospital elects otherwise under Sec. 412.77(a)(1).
(2) Transition of FY 1996 hospital-specific rate. The intermediary
calculates the hospital-specific rate determined on the basis of the
fiscal year 1996 base period rate as follows:
(i) For Federal fiscal year 2001, the hospital-specific rate is the
sum of 75 percent of the greater of the hospital-specific rates
specified in paragraph (d)(1)(ii) or (d)(1)(iii) of this section, plus
25 percent of the hospital-specific rate specified in paragraph
(d)(1)(iv) of this section.
(ii) For Federal fiscal year 2002, the hospital-specific rate is
the sum of 50 percent of the greater of the hospital-specific rates
specified in paragraph (d)(1)(ii) or (d)(1)(iii) of this section plus
50 percent of the hospital-specific rate specified in paragraph
(d)(1)(iv) of this section.
(iii) For Federal fiscal year 2003, the hospital-specific rate is
the sum of 25 percent of the greater of the hospital-specific rates
specified in paragraph (d)(1)(ii) or (d)(1)(iii) of this section, plus
75 percent of the hospital-specific rate specified in paragraph
(d)(1)(iv) of this section.
(iv) For Federal fiscal year 2004 and any subsequent fiscal years,
the hospital-specific rate is 100 percent of the hospital-specific rate
specified in paragraph (d)(1)(iv) of this section.
* * * * *
10. Section 412.105 is amended by:
A. Revising paragraph (d)(3)(v).
B. Adding a new paragraph (d)(3)(vi).
C. Republishing paragraph (f)(1) introductory text and revising
paragraph (f)(1)(vii).
D. Adding new paragraphs (f)(1)(viii) and (f)(1)(ix).
E. Revising paragraph (g).
Sec. 412.105 Special treatment: Hospitals that incur indirect costs
for graduate medical education programs.
* * * * *
(d) Determination of education adjustment factor. * * *
(3) * * *
(v) For discharges occurring during fiscal year 2001, 1.54.
(vi) For discharges occurring on or after October 1, 2001, 1.35.
* * * * *
(f) Determining the total number of full-time equivalent residents
for cost reporting periods beginning on or after July 1, 1991. (1) For
cost reporting periods beginning on or after July 1, 1991, the count of
full-time equivalent residents for the purpose of determining the
indirect medical education adjustment is determined as follows:
* * * * *
(vii) If a hospital establishes a new medical residency training
program, as defined in Sec. 413.86(g)(9) of this subchapter, the
hospital's full-time equivalent cap may be adjusted in accordance with
the provisions of Secs. 413.86(g)(6)(i) through (iv) of this
subchapter.
(viii) A hospital that began construction of its facility prior to
August 5, 1997, and sponsored new medical residency training programs
on
[[Page 47108]]
or after January 1, 1995 and on or before August 5, 1997, that either
received initial accreditation by the appropriate accrediting body or
temporarily trained residents at another hospital(s) until the facility
was completed, may receive an adjustment to its full-time equivalent
cap in accordance with the provisions of Sec. 413.86(g)(7) of this
subchapter.
(ix) A hospital may receive a temporary adjustment to its full-time
equivalent cap to reflect residents added because of another hospital's
closure if the hospital meets the criteria specified in
Sec. 413.86(g)(8) of this subchapter.
* * * * *
(g) Indirect medical education payment for managed care enrollees.
For portions of cost reporting periods occurring on or after January 1,
1998, a payment is made to a hospital for indirect medical education
costs, as determined under paragraph (e) of this section, for
discharges associated with individuals who are enrolled under a risk-
sharing contract with an eligible organization under section 1876 of
the Act or with a Medicare+Choice organization under title XVIII, Part
C of the Act during the period, according to the applicable payment
percentages described in Secs. 413.86(d)(3)(i) through (d)(3)(v) of
this subchapter.
11. In Sec. 412.106, the introductory text of paragraph (e) is
republished and paragraphs (e)(4) and (e)(5) are revised to read as
follows:
Sec. 412.106 Special treatment: Hospitals that serve a
disproportionate share of low-income patients.
* * * * *
(e) Reduction in payment for FYs 1998 through 2002. The amounts
otherwise payable to a hospital under paragraph (d) of this section are
reduced by the following:
* * * * *
(4) For FY 2001, 3 percent.
(5) For FY 2002, 4 percent.
* * * * *
12. Section 412.230 is amended by:
A. Adding a new paragraph (a)(5)(iv).
B. Republishing the introductory text of paragraph (e)(1).
C. Revising paragraph (e)(1)(iii) and (e)(1)(iv).
Sec. 412.230 Criteria for an individual hospital seeking redesignation
to another rural area or an urban area.
(a) General. * * *
(5) Limitations on redesignation. * * *
(iv) An urban hospital that has been granted redesignation as rural
under Sec. 412.103 cannot receive an additional reclassification by the
MGCRB based on this acquired rural status as long as such redesignation
is in effect.
* * * * *
(e) Use of urban or other rural area's wage index--(1) Criteria for
use of area's wage index. Except as provided in paragraphs (e)(3) and
(e)(4) of this section, to use an area's wage index, a hospital must
demonstrate the following:
* * * * *
(iii) One of the following conditions apply:
(A) With respect to redesignations for Federal fiscal year 1994
through 2001, the hospital's average hourly wage is at least 108
percent of the average hourly wage of hospitals in the area in which
the hospital is located; or
(B) With respect to redesignations for Federal fiscal year 2002 and
later years, the hospital's average hourly wage is, in the case of a
hospital located in a rural area, at least 106 percent, and, in the
case of a hospital located in an urban area, at least 108 percent of
the average hourly wage of hospitals in the area in which the hospital
is located; and
(iv) One of the following conditions apply:
(A) For redesignations effective before fiscal year 1999, the
hospital's average hourly wage weighted for occupational categories is
at least 90 percent of the average hourly wages of hospitals in the
area to which it seeks redesignation.
(B) With respect to redesignations for fiscal year 1994 through
2001, the hospital's average hourly wage is equal to at least 84
percent of the average hourly wage of hospitals in the area to which it
seeks redesignation.
(C) With respect to redesignations for fiscal year 2002 and later
years, the hospital's average hourly wage is equal to, in the case of a
hospital located in a rural area, at least 82 percent, and in the case
of a hospital located in an urban area, at least 84 percent of the
average hourly wage of hospitals in the area to which it seeks
redesignation.
* * * * *
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES
C. Part 413 is amended as follows:
1. The authority citation for Part 413 is revised to read as
follows:
Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and
(n), 1871, 1881, 1883, and 1886 of the Social Security Act (42
U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n),
1395hh, 1395rr, 1395tt, and 1395ww).
2. In Sec. 413.40, paragraph (a)(3) is amended by revising
paragraph (B) of the definition of ``ceiling'' and paragraph (d)(4) is
revised, to read as follows:
Sec. 413.40 Ceiling on the rate of increase in hospital inpatient
costs.
(a) Introduction. * * *
(3) Definitions. * * *
Ceiling. * * *
(B) The hospital-within-a-hospital has discharged to the other
hospital and subsequently readmitted more than 5 percent (that is, in
excess of 5.0 percent) of the total number of Medicare inpatients
discharged from the hospital-within-a-hospital in that cost reporting
period.
* * * * *
(d) Application of the target amount in determining the amount of
payment. * * *
(4) Continuous improvement bonus payments. (i) For cost reporting
periods beginning on or after October 1, 1997 and ending before October
1, 2000, eligible hospitals (as defined in paragraph (d)(5) of this
section) receive payments in addition to those in paragraph (d)(2) of
this section, as applicable. These payments are equal to the lesser
of--
(A) 50 percent of the amount by which the operating costs are less
than the expected costs for the period; or
(B) 1 percent of the ceiling.
(ii) For cost reporting periods beginning on or after October 1,
2000, and ending before September 30, 2001, eligible psychiatric
hospitals and units and long-tern care hospitals (as defined in
paragraph (d)(5) of this section) receive payments in addition to those
in paragraph (d)(2) of this section, as applicable. These payments are
equal to the lesser of--
(A) 50 percent of the amount by which the operating costs are less
than the expected costs for the period; or
(B) 1.5 percent of the ceiling.
(iii) For cost reporting periods beginning on or after October 1,
2001, and before September 30, 2002, eligible psychiatric hospitals and
units and long-term care hospitals receive payments in addition to
those in paragraph (d)(5) of this section, as applicable. These
payments are equal to the lesser of--
(A) 50 percent of the amount by which the operating costs are less
than the expected costs for the periods; or
(B) 2 percent of the ceiling.
* * * * *
[[Page 47109]]
3. Section 413.70 is revised to read as follows:
Sec. 413.70 Payment for services of a CAH.
(a) Payment for inpatient services furnished by a CAH. (1) Payment
for inpatient services of a CAH is the reasonable costs of the CAH in
providing CAH services to its inpatients, as determined in accordance
with section 1861(v)(1)(A) of the Act and the applicable principles of
cost reimbursement in this part and in Part 415 of this chapter, except
that the following payment principles are excluded when determining
payment for CAH inpatient services:
(i) Lesser of cost or charges;
(ii) Ceilings on hospital operating costs; and
(iii) Reasonable compensation equivalent (RCE) limits for physician
services to providers.
(2) Payment to a CAH for inpatient services does not include any
costs of physician services or other professional services to CAH
inpatients, and is subject to the Part A hospital deductible and
coinsurance, as determined under subpart G of part 409 of this chapter.
(b) Payment for outpatient services furnished by a CAH--(1)
General. Unless the CAH elects to be paid for services to its
outpatients under the method specified in paragraph (b)(3) of this
section, the amount of payment for outpatient services of a CAH is the
amount determined under paragraph (b)(2) of this section.
(2) Reasonable costs for facility services. (i) Payment for
outpatient services of a CAH is the reasonable costs of the CAH in
providing CAH services to its outpatients, as determined in accordance
with section 1861(v)(1)(A) of the Act and the applicable principles of
cost reimbursement in this part and in Part 415 of this chapter, except
that the following payment principles are excluded when determining
payment for CAH outpatient services:
(A) Lesser of costs or charges;
(B) RCE limits;
(C) Any type of reduction to operating or capital costs under
Sec. 413.124 or Sec. 413.130(j)(7); and
(D) Blended payment amounts for ambulatory surgical services,
radiology services, and other diagnostic services;
(ii) Payment to a CAH under paragraph (b)(2) of this section does
not include any costs of physician services or other professional
services to CAH outpatients, and is subject to the Part B deductible
and coinsurance amounts, as determined under Secs. 410.152(k), 410.160,
and 410.161 of this chapter.
(iii) The following payment principles are used when determining
payment for outpatient clinical diagnostic laboratory tests.
(A) The amount paid is equal to 100 percent of the least of--
(1) Charges determined under the fee schedule as set forth in
section 1833(h)(1) or section 1834(d)(1) of the Act;
(2) The limitation amount for that test determined under section
1833(h)(4)(B) of the Act or the amount of the charges billed for the
test; or
(3) A negotiated rate established under section 1833(h)(6) of the
Act.
(B) Payment for outpatient clinical diagnostic laboratory tests is
not subject to the Medicare Part B deductible and coinsurance amounts,
as specified in Sec. 410.152(k) of this chapter.
(3) Election to be paid reasonable costs for facility services plus
fee schedule for professional services. (i) A CAH may elect to be paid
for outpatient services in any cost reporting period under the method
described in paragraphs (b)(3)(ii) and (b)(3)(iii) of this section.
This election must be made in writing, made on an annual basis, and
delivered to the intermediary at least 60 days before the start of each
affected cost reporting period. An election of this payment method,
once made for a cost reporting period, remains in effect for all of
that period and applies to all services furnished to outpatients during
that period.
(ii) If the CAH elects payment under this method, payment to the
CAH for each outpatient visit will be the sum of the following amounts:
(A) For facility services, not including any services for which
payment may be made under paragraph (b)(3)(ii)(B) of this section, the
reasonable costs of the services as determined under paragraph
(b)(2)(i) of this section; and
(B) For professional services otherwise payable to the physician or
other practitioner on a fee schedule basis, the amounts that otherwise
would be paid for the services if the CAH had not elected payment under
this method.
(iii) Payment to a CAH is subject to the Part B deductible and
coinsurance amounts, as determined under Secs. 410.152, 410.160, and
410.161 of this chapter.
(c) Final payment based on cost report. Final payment to the CAH
for CAH facility services to inpatients and outpatients furnished
during a cost reporting is based on a cost report for that period, as
required under Sec. 413.20(b).
4. Section 413.86 is amended by:
A. Revising the first sentence of paragraph (d)(3).
B. Revising the introductory text of paragraph (e)(3).
C. Redesignating paragraph (e)(4) as paragraph (e)(5).
D. Adding a new paragraph (e)(4).
E. Revising newly designated paragraph(e)(5)(i)(B).
F. Adding a new paragraph (e)(5)(iv).
Sec. 413.86 Direct graduate medical education payments.
* * * * *
(d) Calculating payment for graduate medical education costs. * * *
(3) Step Three. For portions of cost reporting periods occurring on
or after January 1, 1998, the product derived in step one is multiplied
by the proportion of the hospital's inpatient days attributable to
individuals who are enrolled under a risk-sharing contract with an
eligible organization under section 1876 of the Act and who are
entitled to Medicare Part A or with a Medicare+Choice organization
under Title XVIII, Part C of the Act. * * *
(e) Determining per resident amounts for the base period. * * *
(3) For cost reporting periods beginning on or after July 1, 1986.
Subject to the provisions of paragraph (e)(4) of this section, for cost
reporting periods beginning on or after July 1, 1986, a hospital's
base-period per resident amount is adjusted as follows:
* * * * *
(4) For cost reporting periods beginning on or after October 1,
2000 and ending on or before September 30, 2005. For cost reporting
periods beginning on or after October 1, 2000 and ending on or before
September 30, 2005, a hospital's per resident amount for each fiscal
year is adjusted in accordance with the following provisions:
(i) General provisions. For purposes of Sec. 413.86(e)(4)--
(A) Weighted average per resident amount. The weighted average per
resident amount is established as follows:
(1) Using data from hospitals' cost reporting periods ending during
FY 1997, HCFA calculates each hospital's single per resident amount by
adding each hospital's primary care and non-primary care per resident
amounts, weighted by its respective FTEs, and dividing by the sum of
the FTEs for primary care and non-primary care residents.
(2) Each hospital's single per resident amount calculated under
paragraph (e)(4)(i)(A)(1) of this section is standardized by the 1999
geographic adjustment factor for the physician fee schedule area (as
determined under Sec. 414.26 of this chapter) in which the hospital is
located.
[[Page 47110]]
(3) HCFA calculates an average of all hospitals' standardized per
resident amounts that are determined under paragraph (e)(4)(i)(A)(2) of
this section. The resulting amount is the weighted average per resident
amount.
(B) Primary care/obstetrics and gynecology and non-primary care per
resident amounts. A hospital's per resident amount is an amount
inclusive of any CPI-U adjustments that the hospital may have received
since the hospital's base year, including any CPI-U adjustments the
hospital may have received because the hospital trains primary care/
obstetrics and gynecology residents and non-primary care residents as
specified under paragraph (e)(3)(ii) of this section.
(ii) Adjustment beginning in FY 2001 and ending in FY 2005. For
cost reporting periods beginning on or after October 1, 2000 and ending
on or before September 30, 2005, a hospital's per resident amount is
adjusted in accordance with paragraphs (e)(4)(ii)(A) through
(e)(4)(ii)(C) of this section, in that order:
(A) Updating the weighted average per resident amount for
inflation. The weighted average per resident amount (as determined
under paragraph (e)(4)(i)(A) of this section) is updated by the
estimated percentage increase in the CPI-U during the period beginning
with the month that represents the midpoint of the cost reporting
periods ending during FY 1997 (that is, October 1, 1996) and ending
with the midpoint of the hospital's cost reporting period that begins
in FY 2001.
(B) Adjusting for locality. The updated weighted average per
resident amount determined under paragraph (e)(4)(ii)(A) of this
section (the national average per resident amount) is adjusted for the
locality of each hospital by multiplying the national average per
resident amount by the 1999 geographic adjustment factor for the
physician Fee schedule area in which each hospital is located,
established in accordance with Sec. 414.26 of this subchapter.
(C) Determining necessary revisions to the per resident amount. The
locality-adjusted national average per resident amount, as calculated
in accordance with paragraph (e)(4)(ii)(B) of this section, is compared
to the hospital's per resident amount is revised, if appropriate,
according to the following three categories:
(1) Floor. For cost reporting periods beginning on or after October
1, 2000 and on or before September 30, 2001, if the hospital's per
resident amount would otherwise be less than 70 percent of the
locality-adjusted national average per resident amount for FY 2001 (as
determined under paragraph (e)(4)(ii)(B) of this section), the per
resident amount is equal to 70 percent of the locality-adjusted
national average per resident amount for FY 2001. For subsequent cost
reporting periods, the hospital's per resident amount is updated using
the methodology specified under paragraph (e)(3)(i) of this section.
(2) Ceiling. If the hospital's per resident amount is greater than
140 percent of the locality-adjusted national average per resident
amount, the per resident amount is adjusted as follows for FY 2001
through FY 2005:
(i) FY 2001. For cost reporting periods beginning on or after
October 1, 2000 and on or before September 30, 2001, if the hospital's
FY 2000 per resident amount exceeds 140 percent of the FY 2001
locality-adjusted national average per resident amount (as calculated
under paragraph (e)(4)(ii)(B) of this section), then, subject to the
provision stated in paragraph (e)(4)(ii)(C)(2)(iv) of this section, the
hospital's per resident amount is frozen at the FY 2000 per resident
amount and is not updated for FY 2001 by the CPI-U factor.
(ii) FY 2002. For cost reporting periods beginning on or after
October 1, 2001 and on or before September 30, 2002, if the hospital's
FY 2001 per resident amount exceeds 140 percent of the FY 2002
locality-adjusted national average per resident amount, then, subject
to the provision stated in paragraph (e)(4)(ii)(C)(2)(iv) of this
section, the hospital's per resident amount is frozen at the FY 2001
per resident amount and is not updated for FY 2002 by the CPI-U factor.
(iii) FY 2003 through FY 2005. For cost reporting periods beginning
on or after October 1, 2002 and on or before September 30, 2005, if the
hospital's per resident amount for the previous cost reporting period
is greater than 140 percent of the locality-adjusted national average
per resident amount for that same previous cost reporting period (for
example, for cost reporting periods beginning in FY 2003, compare the
hospital's per resident amount from the FY 2002 cost report to the
hospital's locality-adjusted national average per resident amount from
FY 2002), then, subject to the provision stated in paragraph
(e)(4)(ii)(C)(2)(iv) of this section, the hospital's per resident
amount is adjusted using the methodology specified in paragraph
(e)(3)(i) of this section, except that the CPI-U applied for a 12-month
period is reduced (but not below zero) by 2 percentage points.
(iv) General rule for hospitals that exceed the ceiling. For cost
reporting periods beginning on or after October 1, 2000 and on or
before September 30, 2005, if a hospital's per resident amount exceeds
140 percent of the hospital's locality-adjusted national average per
resident amount and it is adjusted under any of the criteria
(e)(4)(ii)(C)(2)(i) through (iii) of this section, the current year per
resident amount cannot be reduced below 140 percent of the locality-
adjusted national average per resident amount.
(3) Per resident amounts greater than or equal to the floor and
less than or equal to the ceiling. For cost reporting periods beginning
on or after October 1, 2000 and on or before September 30, 2005, if a
hospital's per esident amount is greater than or equal to 70 percent
and less than or equal to 140 percent of the hospital's locality-
adjusted national average per resident amount for each respective
fiscal year, the hospital's per resident amount is updated using the
methodology specified in paragraph (e)(3)(i) of this section.
(5) Exceptions--(i) Base period for certain hospitals. * * *
(B) The weighted mean value of per resident amounts of hospitals
located in the same geographic wage area, as that term is used in the
prospective payment system under part 412 of this chapter, for cost
reporting periods beginning in the same fiscal years. If there are
fewer than three amounts that can be used to calculate the weighted
mean value, the calculation of the per resident amounts includes all
hospitals in the hospital's region as that term is used in
Sec. 412.62(f)(1)(i) of his chapter.
* * * * *
(iv) Effective October 1, 2000, the per resident amounts
established under paragraphs (e)(5)(i) through (iii) of this section
are subject to the provisions of paragraph (e)(4) of this section.
PART 485--CONDITIONS OF PARTICIPATION: SPECIALIZED PROVIDERS
D. Part 485 is amended as follows:
1. The authority citation for part 485 continues to read as
follows:
Authority: Sec. 1820 of the Act (42 U.S.C. 1395i-1114), unless
otherwise noted.
2. A new Sec. 485.643 is added to subpart F to read as follows:
Sec. 485.643 Condition of participation: Organ, tissue, and eye
procurement.
The CAH must have and implement written protocols that:
(a) Incorporate an agreement with an OPO designated under part 486
of this chapter, under which it must notify, in a timely manner, the
OPO or a third party designated by the OPO of individuals whose death
is imminent or
[[Page 47111]]
who have died in the CAH. The OPO determines medical suitability for
organ donation and, in the absence of alternative arrangements by the
CAH, the OPO determines medical suitability for tissue and eye
donation, using the definition of potential tissue and eye donor and
the notification protocol developed in consultation with the tissue and
eye banks identified by the CAH for this purpose;
(b) Incorporate an agreement with at least one tissue bank and at
least one eye bank to cooperate in the retrieval, processing,
preservation, storage and distribution of tissues and eyes, as may be
appropriate to assure that all usable tissues and eyes are obtained
from potential donors, insofar as such an agreement does not interfere
with organ procurement;
(c) Ensure, in collaboration with the designated OPO, that the
family of each potential donor is informed of its option to either
donate or not donate organs, tissues, or eyes. The individual
designated by the CAH to initiate the request to the family must be a
designated requestor. A designated requestor is an individual who has
completed a course offered or approved by the OPO and designed in
conjunction with the tissue and eye bank community in the methodology
for approaching potential donor families and requesting organ or tissue
donation;
(d) Encourage discretion and sensitivity with respect to the
circumstances, views, and beliefs of the families of potential donors;
(e) Ensure that the CAH works cooperatively with the designated
OPO, tissue bank and eye bank in educating staff on donation issues,
reviewing death records to improve identification of potential donors,
and maintaining potential donors while necessary testing and placement
of potential donated organs, tissues, and eyes take place.
(f) For purposes of these standards, the term ``Organ'' means a
human kidney, liver, heart, lung, or pancreas.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare-Hospital Insurance)
Dated: July 24, 2000.
Nancy Ann Min DeParle,
Administrator, Health Care, Financing Administration
Dated: July 24, 2000.
Donna E. Shalaa,
Secretary.
[Editorial Note: The following Addendum and appendixes will not
appear in the Code of Federal Regulations.]
Addendum--Schedule of Standardized Amounts Effective with Discharges
Occurring On or After October 1, 2000 and Update Factors and Rate-of-
Increase Percentages Effective With Cost Reporting Periods Beginning On
or After October 1, 2000
I. Summary and Background
In this Addendum, we are setting forth the amounts and factors
for determining prospective payment rates for Medicare inpatient
operating costs and Medicare inpatient capital-related costs. We are
also setting forth rate-of-increase percentages for updating the
target amounts for hospitals and hospital units excluded from the
prospective payment system.
For discharges occurring on or after October 1, 2000, except for
sole community hospitals, Medicare-dependent, small rural hospitals,
and hospitals located in Puerto Rico, each hospital's payment per
discharge under the prospective payment system will be based on 100
percent of the Federal national rate.
Sole community hospitals are paid based on whichever of the
following rates yields the greatest aggregate payment: the Federal
national rate, the updated hospital-specific rate based on FY 1982
cost per discharge, the updated hospital-specific rate based on FY
1987 cost per discharge, or, if qualified, 25 percent of the updated
hospital-specific rate based on FY 1996 cost per discharge, plus 75
percent of the updated FY 1982 or FY 1987 hospital-specific rate.
Section 405 of Public Law 106-113 amended section 1886(b)(3) of the
Act to allow a sole community hospital that was paid for its cost
reporting period beginning during FY 1999 on the basis of either its
FY 1982 or FY 1987 hospital-specific rate to elect to rebase its
hospital-specific ate based on its FY 1996 cost per discharge.
Section 404 of Public Law 106-113 amended section 1886(d)(5)(G)
of the Act to extend the special treatment for Medicare-dependent,
small rural hospitals. Medicare-dependent, small rural hospitals are
paid based on the Federal national rate or, if higher, the Federal
national rate plus 50 percent of the difference between the Federal
national rate and the updated hospital-specific rate based on FY
1982 or FY 1987 cost per discharge, whichever is higher.
For hospitals in Puerto Rico, the payment per discharge is based
on the sum of 50 percent of a Puerto Rico rate and 50 percent of a
Federal national rate.
As discussed below in section II of this Addendum, we are making
changes in the determination of the prospective payment rates for
Medicare inpatient operating costs for FY 2001. The changes, to be
applied prospectively, affect the calculation of the Federal rates.
In section III of this Addendum, we finalize our proposal to
discontinue listing updates to the payments per unit for blood
clotting factor provided to hospital inpatients who have hemophilia.
In section IV of this Addendum, we discuss our changes for
determining the prospective payment rates for Medicare inpatient
capital-related costs for FY 2001. Section V of this Addendum sets
forth our changes for determining the rate-of-increase limits for
hospitals excluded from the prospective payment system for FY 2001.
The tables to which we refer in the preamble to this final rule are
presented at the end of this Addendum in section VI.
II. Changes to Prospective Payment Rates For Inpatient Operating Costs
for FY 2001
The basic methodology for determining prospective payment rates
for inpatient operating costs is set forth at Sec. 412.63 for
hospitals located outside of Puerto Rico. The basic methodology for
determining the prospective payment rates for inpatient operating
costs for hospitals located in Puerto Rico is set forth at
Secs. 412.210 and 412.212. Below, we discuss the factors used for
determining the prospective payment rates. The Federal and Puerto
Rico rate changes will be effective with discharges occurring on or
after October 1, 2000. As required by section 1886(d)(4)(C) of the
Act, we must also adjust the DRG classifications and weighting
factors for discharges in FY 2001.
In summary, the standardized amounts set forth in Tables 1A and
1C of section VI of this Addendum reflect--
Updates of 2.3 percent for all areas (that is, the
market basket percentage increase of 3.4 percent minus 1.1
percentage points);
An adjustment to ensure budget neutrality as provided
for in sections 1886(d)(4)(C)(iii) and (d)(3)(E) of the Act by
applying new budget neutrality adjustment factors to the large urban
and other standardized amounts;
An adjustment to ensure budget neutrality as provided
for in section 1886(d)(8)(D) of the Act by removing the FY 2000
budget neutrality factor and applying a revised factor;
An adjustment to apply the revised outlier offset by
removing the FY 2000 outlier offsets and applying a new offset; and
An adjustment in the Puerto Rico standardized amounts
to reflect the application of a Puerto Rico-specific wage index.
The standardized amounts set forth in table 1E of section VI of
this Addendum, which apply to sole community hospitals, reflect
updates of 3.4 percent (that is, the full market basket percentage
increase) as provided for in section 406 of Public Law 106-113, but
otherwise reflect the same adjustments as the national standardized
amounts.
A. Calculation of Adjusted Standardized Amounts
1. Standardization of Base-Year Costs or Target Amounts
Section 1886(d)(2)(A) of the Act required the establishment of
base-year cost data containing allowable operating costs per
discharge of inpatient hospital services for each hospital. The
preamble to the September 1, 1983 interim final rule (48 FR 39763)
contains a detailed explanation of how base-year cost data were
established in the initial development of standardized amounts for
the prospective payment system and how they are used in computing
the Federal rates.
Section 1886(d)(9)(B)(i) of the Act required us to determine the
Medicare target amounts
[[Page 47112]]
for each hospital located in Puerto Rico for its cost reporting
period beginning in FY 1987. The September 1, 1987 final rule (52 FR
33043, 33066) contains a detailed explanation of how the target
amounts were determined and how they are used in computing the
Puerto Rico rates.
The standardized amounts are based on per discharge averages of
adjusted hospital costs from a base period or, for Puerto Rico,
adjusted target amounts from a base period, updated and otherwise
adjusted in accordance with the provisions of section 1886(d) of the
Act. Sections 1886(d)(2)(B) and (d)(2)(C) of the Act required us to
update base-year per discharge costs for FY 1984 and then
standardize the cost data in order to remove the effects of certain
sources of cost variations among hospitals. These effects include
case-mix, differences in area wage levels, cost-of-living
adjustments for Alaska and Hawaii, indirect medical education costs,
a payments to hospitals serving a disproportionate share of low-
income patients.
Under sections 1886(d)(2)(H) and (d)(3)(E) of the Act, in making
payments under the prospective payment system, the Secretary
estimates from time to time the proportion of costs that are wages
and wage-related costs. Since October 1, 1997, when the market
basket was last revised, we have considered 71.1 percent of costs to
be labor-related for purposes of the prospective payment system. The
average labor share in Puerto Rico is 71.3 percent. We are revising
the discharge-weighted national standardized amount for Puerto Rico
to reflect the proportion of discharges in large urban and other
areas from the FY 1999 MedPAR file.
Comment: One commenter asserted that our labor share of 71.1
percent is overstated and particularly disadvantageous to small
rural hospitals. The commenter questioned how we arrived at this
percentage when their informal survey of 300 hospitals found none
with salaries and benefits in excess of 56 percent of total
operating costs. The commenter proposed that HCFA should only
recognize costs that are included in the wage index survey on the
cost report when recalculating the labor share.
Response: We set forth the latest revision of the labor share
calculation in the August 29, 1997 final rule (62 FR 45993) after
considering comments in response to our proposal set forth in the
June 2, 1997 proposed rule (62 FR 29920). We feel that our current
methodology accurately captures, on average, the operating costs
faced by hospitals that are affected by local labor markets. It
should also be noted that the wage and benefit shares of the
prospective payment system's market basket are determined using the
wage index survey data provided in the Medicare Cost Reports.
However, we will take these comments into consideration when we
perform our next periodic revision of the hospital operating market
basket.
2. Computing Large Urban and Other Area Averages
Sections 1886(d)(2)(D) and (d)(3) of the Act require the
Secretary to compute two average standardized amounts for discharges
occurring in a fiscal year: one for hospitals located in large urban
areas and one for hospitals located in other areas. In addition,
under sections 1886(d)(9)(B)(iii) and (d)(9)(C)(i) of the Act, the
average standardized amount per discharge must be determined for
hospitals located in urban and other areas in Puerto Rico. Hospitals
in Puerto Rico are paid a blend of 50 percent of the applicable
Puerto Rico standardized amount and 50 percent of a national
standardized payment amount.
Section 1886(d)(2)(D) of the Act defines ``urban area'' as those
areas within a Metropolitan Statistical Area (MSA). A ``large urban
area'' is defined as an urban area with a population of more than 1
million. In addition, section 4009(i) of Public Law 100-203 provides
that a New England County Metropolitan Area (NECMA) with a
population of more than 970,000 is classified as a large urban area.
As required by section 1886(d)(2)(D) of the Act, population size is
determined by the Secretary based on the latest population data
published by the Bureau of the Census. Urban areas that do not meet
the definition of a ``large urban area'' are referred to as ``other
urban areas.'' Areas that are not included in MSAs are considered
``rural areas'' under section 1886(d)(2)(D) of the Act. Payment for
discharges from hospitals located in large urban areas will be based
on the large urban standardized amount. Payment for discharges from
hospitals located in other urban and rural areas will be based on
the other standardized amount.
Based on 1998 population estimates published by the Bureau of
the Census, 61 areas meet the criteria to be defined as large urban
areas for FY 2001. These areas are identified by a footnote in Table
4A.
3. Updating the Average Standardized Amounts
Under section 1886(d)(3)(A) of the Act, we update the area
average standardized amounts each year. In accordance with section
1886(d)(3)(A)(iv) of the Act, we are updating the large urban areas'
and the other areas' average standardized amounts for FY 2001 using
the applicable percentage increases specified in section
1886(b)(3)(B)(i) of the Act. Section 1886(b)(3)(B)(i)(XVI) of the
Act specifies an update factor for the standardized amounts for FY
2001 equal to the market basket percentage increase minus 1.1
percentage points for hospitals, except sole community hospitals, in
all areas. The Act, as amended by section 406 of Public Law 106-113,
specifies an update factor equal to the market basket percentage
increase for sole community hospitals.
The percentage change in the market basket reflects the average
change in the price of goods and services purchased by hospitals to
furnish inpatient care. The most recent forecast of the hospital
market basket increase for FY 2001 is 3.4 percent. Thus, for FY
2001, the update to the average standardized amounts equals 3.4
percent for sole community hospitals and 2.3 percent for other
hospitals.
As in the past, we are adjusting the FY 2000 standardized
amounts to remove the effects of the FY 2000 geographic
reclassifications and outliner payments before applying the FY 2001
updates. That is, we are increasing the standardized amounts to
restore the reductions that were made for the effects of geographic
reclassification and outliners. We then apply the new offsets to the
standardized amounts for outliners and geographic reclassifications
for FY 2001.
Although the update factors for FY 2001 are set by law, we are
required by section 1886(e)(3) of the Act to report to the Congress
our initial recommendation of update factors for FY2001 for both
prospective payment hospitals and hospitals excluded from the
prospective payment system. We have included our final
recommendations in Appendix C to this final rule.
4. Other Adjustments to the Average Standardized Amounts
a. Recalibration of DRG Weights and Updated Wage Index--Budget
Neutrality Adjustment. Section 1886(d)(4)(C)(iii) of the Act
specifies that, beginning in FY 1991, the annual DRG
reclassification and recalibration of the relative weights must be
made in a manner that ensures that aggregate payments to hospitals
are not affected. As discussed in section II of the preamble, we
normalized the recalibrated DRG weights by an adjustment factor, so
that the average case weight after recalibration is equal to the
average case weight prior to recalibration.
Section 1886(d)(3)(E) of the Act requires us to update the
hospital wage index on an annual basis beginning October 1, 1993.
This provision also requires us to make any updates or adjustments
to the wage index in a manner that ensures that aggregate payments
to hospitals are not affected by the change in the wage index.
To comply with the requirement of section 1886(d)(4)(C)(iii) of
the Act that DRG reclassification and recalibration of the relative
weights be budget neutral, and the requirement in section
1886(d)(3)(E) of the Act that the updated wage index be budget
neutral, we used historical discharge data to simulate payments and
compared aggregate payments using the FY 2000 relative weights and
wage index to aggregate payments using the FY 2001 relative weights
and wage index. The same methodology was used for the FY 2000 budget
neutrality adjustment. (See the discussion in the September 1, 1992
final rule (57 FR 39832).) Based on this comparison, we computed a
budget neutrality adjustment factor equal to 0.997225. We also
adjusted the Puerto Rico-specific standardized amounts to adjust for
the effects of DRG reclassification and recalibration. We computed a
budget neutrality adjustment factor for Puerto Rico-specific
standardized amounts equal to 0.999649. These budget neutrality
adjustment factors are applied to the standardized amounts without
removing the effects of the FY 2000 budget neutrality adjustments.
We do not remove the prior budget neutrality adjustment because
estimated aggregate payments after the changes in the DRG relative
weights and wage index should equal estimated aggregate payments
prior to the changes. If we removed the prior year adjustment, we
would not satisfy this condition.
In addition, we will continue to apply these same adjustment
factors to the hospital-specific rates that are effective for cost
[[Page 47113]]
reporting periods beginning in on or after October 1, 2000. (See the
discussion in the September 4, 1990 final rule (55 FR 6073).)
b. Reclassified Hospitals--Budget Neutrality Adjustment. Section
1886(d)(8)(B) of the Act provides that, effective with discharges
occurring on or after October 1, 1988, certain rural hospitals are
deemed urban. In addition, section 1886(d)(10) of the Act provides
for the reclassification of hospitals based on determinations by the
Medicare Georgraphic Classification Review Board (MGCRB). Under
section 1886(d)(10) of the Act, a hospital may be reclassified for
purposes of the standardized amount or the wage index, or both.
Under section 1886(d)(8)(D) of the Act, the Secretary is
required to adjust the standardized amounts so as to ensure that
aggregate payments under the prospective payment system after
implementation of the provisions of sections 1886(d)(8)(B) and (C)
and 1886(d)(10) of the Act are equal to the aggregate prospective
payments that would have been made absent these provisions. Section
152(b) of Public Law 106-113 requires reclassifications under that
subsection to be treated as reclassifications under section
1886(d)(10) of the Act. To calculate this budget neutrality factor,
we used historical discharge data to simulate payments, and compared
total prospective payments (including IME and DSH payments) prior to
any reclassifications to total prospective payments after
reclassifications. In the May 5, 2000 proposed rule, based on these
simulations, we applied an adjustment factor of 0.994270 to ensure
that the effects of reclassification are budget neutral. The final
budget neutrality adjustment factor is 0.993187.
The adjustment factor is applied to the standardized amounts
after removing the effects of the FY 2000 budget neutrality
adjustment factor. We note that the proposed FY 2001 adjustment
reflected wage index and standardized amount reclassifications
approved by the MGCRB or the Administrator as of February 29, 2000.
The effects of any additional reclassification changes that occurred
as a result of appeals and reviews of MGCRB decisions for FY 2001 or
hospitals' withdrawal of reclassification requests are reflected in
the final budget neutrality adjustment required under section
1886(d)(8)(D) of the Act and published in this final rule.
c. Outliers. Section 1886(d)(5)(A) of the Act provides for
payments in addition to the basic prospective payments for
``outlier'' cases, cases involving extraordinarily high costs (cost
outliers). Section 1886(d)(3)(B) of the Act requires the Secretary
to adjust both the large urban and other area national standardized
amounts by the same factor to account for the estimated proportion
of total DRG payments made to outlier cases. Similarly, section
1886(d)(9)(B)(iv) of the Act requires the Secretary to adjust the
large urban and other standardized amounts applicable to hospitals
in Puerto Rico to account for the estimated proportion of total DRG
payments made to outlier cases. Furthermore, under section
1886(d)(5)(A)(iv) of the Act, outlier payments for any year must be
projected to be not less than 5 percent nor more than 6 percent of
total payments based on DRG prospective payment rates.
i. FY 2001 outlier thresholds. For FY 2000, the fixed loss cost
outlier threshold was equal to the prospective payment for the DRG
plus $14,050 ($12,827 for hospitals that have not yet entered the
prospective payment system for capital-related costs). The marginal
cost factor for cost outliers (the percent of costs paid after costs
for the case exceed the threshold) was 80 percent. We applied an
outlier adjustment to the FY 2000 standardized amounts of 0.948859
for the large urban and other areas rates and 0.9402 for the capital
Federal rate.
For FY 2001, we proposed to establish a fixed loss cost outlier
threshold equal to the prospective payment rate for the DRG plus the
IME and DSH payments plus $17,250 ($15,763 for hospitals that have
not yet entered the prospective payment system for capital-related
costs). In addition, we proposed to maintain the marginal cost
factor for cost outliers at 80 percent. In setting the final FY 2001
outlier thresholds, we used updated data. In this final rule, we are
establishing a fixed loss cost outlier threshold equal to the
prospective payment rate for the DRG plus the IME and DSH payments
plus $17,550 ($16,036 for hospitals that have not yet entered the
prospective payment system for capital-related costs). In addition,
we are maintaining the marginal cost factor for cost outliers at 80
percent. As we have explained in the past, to calculate outlier
thresholds we apply a cost inflation factor to update costs for the
cases used to simulate payments. For FY 1999, we used a cost
inflation factor of minus 1.724 percent (a cost per case decrease of
1.724 percent). For FY 2000, we used a cost inflation factor of zero
percent. To set the proposed FY 2001 outlier thresholds, we used a
cost inflation factor of 1.0 percent. We are using a cost inflation
actor of 1.8 percent to set the final FY 2001 outlier thresholds.
This factor reflects our analysis of the best available cost report
data as well as calculations (using the best available data)
indicating that the percentage of actual outlier payments for FY
1999 is higher than we projected before the beginning of FY 1999,
and that the percentage of actual outlier payments for FY 2000 will
likely be higher than we projected before the beginning of FY 2000.
The calculations of ``actual'' outlier payments are discussed below.
ii. Other changes concerning outliers. In accordance with
section 1886(d)(5)(A)(iv) of the Act, we calculated outlier
thresholds so that outlier payments are projected to equal 5.1
percent of total payments based on DRG prospective payment rates. In
accordance with section 1886(d)(3)(E), we reduced the FY 2001
standardized amounts by the same percentage to account for the
projected proportion of payments paid to outliers.
As stated in the September 1, 1993 final rule (58 FR 46348), we
established outlier thresholds that are applicable to both inpatient
operating costs and inpatient capital-related costs. When we modeled
the combined operating and capital outlier payments, we found that
using a common set of thresholds resulted in a higher percentage of
outlier payments for capital-related costs than for operating costs.
We project that the thresholds for FY 2001 will result in outlier
payments equal to 5.1 percent of operating DRG payments and 5.9
percent of capital payments based on the Federal rate.
The proposed outlier adjustment factors applied to the standardized
amounts for FY 2001 were as follows:
------------------------------------------------------------------------
Operating Capital
standardized federal
amounts rate
------------------------------------------------------------------------
National..................................... 0.948865 0.9416
Puerto Rico.................................. 0.975408 0.9709
------------------------------------------------------------------------
The final outlier adjustment factors applied to the standardized
amounts for FY 2001 are as follows:
------------------------------------------------------------------------
Operating Capital
standardized federal
amounts rate
------------------------------------------------------------------------
National..................................... 0.948908 0.9409
Puerto Rico.................................. 0.974791 0.9699
------------------------------------------------------------------------
As in the proposed rule, we apply the outlier adjustment factors
after removing the effects of the FY 2000 outlier adjustment factors on
the standardized amounts.
Table 8A in section VI of this Addendum contains the updated
Statewide average operating cost-to-charge ratios for urban hospitals
and for rural hospitals to be used in calculating cost outlier payments
for those hospitals for which the fiscal intermediary is unable to
compute a reasonable hospital-specific cost-to-charge ratio. These
Statewide average ratios replace the ratios published in the July 30,
1999 final rule (64 FR 41620). Table 8B contains comparable Statewide
average capital cost-to-charge ratios. These average ratios will be
used to calculate cost outlier payments for those hospitals for which
the fiscal intermediary computes operating cost-to-charge ratios lower
than 0.200265 or greater than 1.298686 and capital cost-to-charge
ratios lower than 0.01262 greater than 0.16792. This range represents
3.0 standard deviations (plus or minus) from the mean of the log
distribution of cost-to-charge ratios for all hospitals. We note that
the cost-to-charge ratios in Tables 8A and 8B will be used during FY
2001 when hospital-specific cost-to-charge ratios based on the latest
settled cost report are either not available or outside the three
standard deviations range.
iii. FY 1999 and FY 2000 outlier payments. In the July 30, 1999
final rule (64 FR 41547), we stated that, based on available data, we
estimated that actual
[[Page 47114]]
FY 1999 outlier payments would be approximately 6.3 percent of actual
total DRG payments. This was computed by simulating payments using the
March 1998 bill data available at the time. That is, the estimate of
actual outlier payments did not reflect actual FY 1999 bills but
instead reflected the application of FY 1999 rates and policies to
available FY 1998 bills. Our current estimate, using available FY 1999
bills, indicates that actual outlier payments for FY 1999 were
approximately 7.6 percent of actual total DRG payments. We note that
the MedPAR file for FY 1999 discharges continues to be updated. Thus,
the data indicate that, for FY 1999, the percentage of actual outlier
payments relative to actual total payments is higher than we projected
before FY 1999 (and thus exceeds the percentage by which we reduced the
standardized amounts for FY 1999). In fact, the data indicate that the
proportion of actual outlier payments for FY 1999 exceeds 6 percent.
Nevertheless, consistent with the policy and statutory interpretation
we have maintained since the inception of the prospective payment
system, we do not plan to recoup money and make retroactive adjustments
to outlier payments for FY 1999.
We currently estimate that actual outlier payments for FY 2000 will
be approximately 6.2 percent of actual total DRG payments, higher than
the 5.1 percent we projected in setting outlier policies for FY 2000.
This estimate is based on simulations using the March 2000 update of
the provider-specific file and the March 2000 update of the FY 1999
MedPAR file (discharge data for FY 1999 bills). We used these data to
calculate an estimate of the actual outlier percentage for FY 2000 by
applying FY 2000 rates and policies to available FY 1999 bills.
Comment: Several commenters opposed the proposed change in the cost
outlier fixed loss amount from $14,050 to $17,250. The commenters
stated that our rationale for this change is that outlier payments were
approximately 7.5 percent of total actual DRG payments in FY 1999 and
are anticipated to be 6.1 percent in FY 2000. The commenters observed
that no additional payments were made in previous years when outlier
payments fell below 5.1 percent. The commenters stated that cost
outlier thresholds were adjusted as a result of changes made by Public
Law 105-33 and that the reason current payments exceed the 5.1 percent
target was due to these changes. The commenters also noted that the
majority of hospitals did not reap windfall profits on outlier cases,
merely mitigated their losses. The commenters characterized these
losses as particularly devastating as they come at a time when MedPAC's
analyses show that hospitals' financial performance is deteriorating.
One commenter suggested that the Secretary consider acting
independently of Congress by lowering the FY 2001 outlier threshold
without further reducing the standardized payment amount.
Response: We believe the commenters misunderstood the methodology
for calculating the FY 2001 outlier fixed loss amount. Under section
1886(d)(5)(A)(iv) of the Act, we are required to set the outlier
threshold at a level such that outlier payments are projected to be not
less than 5 percent nor more than 6 percent of total payments based on
DRG prospective payment rates. That FY 2000 outlier payments are now
anticipated to exceed 5.1 percent of total payments is an indication
that costs are rising faster than we predicted when setting the outlier
fixed loss amount prior to the beginning of FY 2000. This was one of
several factors taken into consideration when we estimated FY 2001
costs to model projected outlier payments for FY 2001. The outlier
fixed loss amount is set to meet the aforementioned statutory
requirement. Each year we set the outlier thresholds for the upcoming
fiscal year by making projections based on the best available data; we
do not make the thresholds more stringent simply because current data
indicate that, in a previous year, actual outlier payments turned out
to be more than we projected when we set the outlier thresholds for
that year. Thus, the change in the outlier fixed loss amount from
$14,050 (for FY 2000) to $17,250 (proposed FY 2001) reflects estimates
and projections about costs in FY 2001. We did not increase the outlier
fixed loss amount simply because we now expect that actual outlier
payments exceed 5.1 percent of actual total DRG payments for FY 1999
and FY 2000 respectively.
We do not concur with the commenters' assertion that changes to the
outlier methodology made by Public Law 105-33 caused current outlier
payments to exceed 5.1 percent. Public Law 105-33 did not change the
statutory requirement that projected outlier payments be between 5
percent and 6 percent of projected total payments based on DRG
prospective payment rates. Again, we believe that current outlier
payments are greater than expected in part because actual hospital
costs may be higher than reflected in the methodology used to set the
outlier threshold.
Finally, we believe in the concept of outlier payments as a
protection against the financial effects of treating extraordinarily
high-cost cases through an offsetting adjustment to the standardized
amounts according to the statutory requirements set forth as required
in sections 1886(d)(5)(A)(iv) and 1886(d)(3)(E) of the Act. These
sections of the Act require that outlier thresholds be calculated so
that outlier payments are projected to equal between 5 and 6 percent of
total payments based on DRG prospective payment rates and the
standardized amounts are to be reduced by the same percentage to
account for the projected proportion of payments paid to outliers.
5. FY 2001 Standardized Amounts
The adjusted standardized amounts are divided into labor and
nonlabor portions. Table 1A (Table 1E for sole community hospitals)
contains the two national standardized amounts that are applicable to
all hospitals, except hospitals in Puerto Rico. Under section
1886(d)(9)(A)(ii) of the Act, the Federal portion of the Puerto Rico
payment rate is based on the discharge-weighted average of the national
large urban standardized amount and the national other standardized
amount (as set forth in Table 1A). The labor and nonlabor portions of
the national average standardized amounts for Puerto Rico hospitals are
set forth in Table 1C. This table also includes the Puerto Rico
standardized amounts.
B. Adjustments for Area Wage Levels and Cost of Living
Tables 1A, 1C and 1E, as set forth in this Addendum, contain the
labor-related and nonlabor-related shares used to calculate the
prospective payment rates for hospitals located in the 50 States, the
District of Columbia, and Puerto Rico. This section addresses two types
of adjustments to the standardized amounts that are made in determining
the prospective payment rates as described in this Addendum.
1. Adjustment for Area Wage Levels
Sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act require
that we make an adjustment to the labor-related portion of the
prospective payment rates to account for area differences in hospital
wage levels. This adjustment is made by multiplying the labor-related
portion of the adjusted standardized amounts by the appropriate wage
index for the area in which the hospital is located. In section III of
this preamble, we discuss the data and methodology for the FY 2001 wage
index. The wage index is set forth in
[[Page 47115]]
Tables 4A through 4F of this Addendum.
2. Adjustment for Cost-of-Living in Alaska and Hawaii
Section 1886(d)(5)(H) of the Act authorizes an adjustment to take
into account the unique circumstances of hospitals in Alaska and
Hawaii. Higher labor-related costs for these two States are taken into
account in the adjustment for area wages described above. For FY 2001,
we are adjusting the payments for hospitals in Alaska and Hawaii by
multiplying the nonlabor portion of the standardized amounts by the
appropriate adjustment factor contained in the table below.
Table of Cost-of-Living Adjustment Factors, Alaska and Hawaii Hospitals
------------------------------------------------------------------------
------------------------------------------------------------------------
Alaska:
All areas.................................................. 1.25
Hawaii:
County of Honolulu......................................... 1.25
County of Hawaii........................................... 1.15
County of Kauai............................................ 1.225
County of Maui............................................. .1.225
County of Kalawao.......................................... 1.225
------------------------------------------------------------------------
The above factors are based on data obtained from the U.S. Office of
Personnel Management.
C. DRG Relative Weights
As discussed in section II of the preamble, we have developed a
classification system for all hospital discharges, assigning them into
DRGs, and have developed relative weights for each DRG that reflect the
resource utilization of cases in each DRG relative to Medicare cases in
other DRGs. Table 5 of section VI of this Addendum contains the
relative weights that we will use for discharges occurring in FY 2001.
These factors have been recalibrated as explained in section II of the
preamble.
D. Calculation of Prospective Payment Rates for FY 2001
General Formula for Calculation of Prospective Payment Rates for FY
2001
The prospective payment rate for all hospitals located outside of
Puerto Rico except sole community hospitals and Medicare-dependent,
small rural hospitals = Federal rate.
The prospective payment rate for sole community hospitals =
whichever of the following rates yields the greatest aggregate payment:
The Federal national rate, the updated hospital-specific rate based on
FY 1982 cost per discharge, the updated hospital-specific rate based on
FY 1987 cost per discharge, or, if the sole community hospital was paid
for its cost reporting period beginning during FY 1999 on the basis of
either its FY 1982 or FY 1987 hospital-specific rate and elects
rebasing, 25 percent of its updated hospital-specific rate based on FY
1996 cost per discharge plus 75 percent of its updated FY 1982 or FY
1987 hospital-specific rate.
Prospective payment rate for Medicare-dependent, small rural
hospitals = 100 percent of the Federal rate, or, if the greater of the
updated FY 1982 hospital-specific rate or the updated FY 1987 hospital-
specific rate is higher than the Federal rate, 100 percent of the
Federal rate plus 50 percent of the difference between the applicable
hospital-specific rate and the Federal rate.
Prospective payment rate for Puerto Rico = 50 percent of the Puerto
Rico rate + 50 percent of a discharge-weighted average of the national
large urban standardized amount and the Federal national other
standardized amount.
1. Federal Rate
For discharges occurring on or after October 1, 2000 and before
October 1, 2001, except for sole community hospitals, Medicare-
dependent, small rural hospitals and hospitals in Puerto Rico, the
hospital's payment is based exclusively on the Federal national rate.
The payment amount is determined as follows:
Step 1--Select the appropriate national standardized amount
considering the type of hospital and designation of the hospital as
large urban or other (see Table 1A or 1E1 in section VI of this
Addendum).
Step 2--Multiply the labor-related portion of the standardized
amount by the applicable wage index for the geographic area in which
the hospital is located (see Tables 4A, 4B, and 4C of section VI of
this Addendum).
Step 3--For hospitals in Alaska and Hawaii, multiply the nonlabor-
related portion of the standardized amount by the appropriate cost-of-
living adjustment factor.
Step 4--Add the amount from Step 2 and the nonlabor-related portion
of the standardized amount (adjusted, if appropriate, under Step 3).
Step 5--Multiply the final amount from Step 4 by the relative
weight corresponding to the appropriate DRG (see Table 5 of section VI
of this Addendum).
2. Hospital-Specific Rate (Applicable Only to Sole Community Hospitals
and Medicare-Dependent, Small Rural Hospitals)
Section 1886(b)(3)(C) of the Act, as amended by section 405 of
Public Law 106-113, provides that sole community hospitals are paid
based on whichever of the following rates yields the greatest aggregate
payment: the Federal national rate, the updated hospital-specific rate
based on FY 1982 cost per discharge, the updated hospital-specific rate
based on FY 1987 cost per discharge, or, if the sole community hospital
was paid for its cost reporting period beginning during FY 1999 on the
basis of either its FY 1982 or FY 1987 hospital-specific rate and
elects rebasing, 25 percent of its updated hospital-specific rate based
on FY 1996 cost per discharge plus 75 percent of the updated FY 1982 or
FY 1987 hospital-specific rate.
Section 1886(d)(5)(G) of the Act, as amended by section 404 of
Public Law 106-113, provides that Medicare-dependent, small rural
hospitals are paid based on whichever of the following rates yields the
greatest aggregate payment: the Federal rate or the Federal rate plus
50 percent of the difference between the Federal rate and the greater
of the updated hospital-specific rate based on FY 1982 and FY 1987 cost
per discharge.
Hospital-specific rates have been determined for each of these
hospitals based on either the FY 1982 cost per discharge, the FY 1987
cost per discharge or, for qualifying sole community hospitals, the FY
1996 cost per discharge. For a more detailed discussion of the
calculation of the hospital-specific rates, we refer the reader to the
September 1, 1983 interim final rule (48 FR 39772); the April 20, 1990
final rule with comment (55 FR 15150); and the September 4, 1990 final
rule (55 FR 35994).
a. Updating the FY 1982 and FY 1987 Hospital-Specific Rates for FY
2001. We are increasing the hospital-specific rates by 3.4 percent (the
hospital market basket rate of increase) for sole community hospitals
and by 2.3 percent (the hospital market basket percentage increase
minus 1.1 percentage points) for Medicare-dependent, small rural
hospitals for FY 2001. Section 1886(b)(3)(C)(iv) of the Act provides
that the update factor applicable to the hospital-specific rates for
sole community hospitals equal the update factor provided under section
1886(b)(3)(B)(iv) of the Act, which, for sole community hospitals in FY
2001, is the market basket rate of increase. Section 1886(b)(3)(D) of
the Act provides that the update factor applicable to the hospital-
specific rates for Medicare-dependent, small rural hospitals equal the
update factor provided under section 1886(b)(3)(B)(iv) of the Act,
which, for FY 2001, is the
[[Page 47116]]
market basket rate of increase minus 1.1 percentage points.
b. Calculation of Hospital-Specific Rate. For sole community
hospitals, the applicable FY 2001 hospital-specific rate is the greater
of the following: the hospital-specific rate for the preceding fiscal
year, increased by the applicable update factor (3.4 percent); or, if
the hospital qualifies to rebase its hospital-specific rate based on
cost per case in FY 1996 and elects rebasing, 75 percent of the
hospital-specific rate for the preceding fiscal year, increased by the
applicable update factor, plus 25 percent of its rebased FY 1996
hospital-specific rate updated through FY 2001. For Medicare-dependent,
small rural hospitals, the applicable FY 2001 hospital-specific rate is
calculated by increasing the hospital's hospital-specific rate for the
preceding fiscal year by the applicable update factor (2.3 percent),
which is the same as the update for all prospective payment hospitals,
except sole community hospitals. In addition, the hospital-specific
rate is adjusted by the budget neutrality adjustment factor (that is,
0.997225) as discussed in section II.A.4.a. of this Addendum. The
resulting rate is used in determining under which rate a sole community
hospital or Medicare-dependent, small rural hospital is paid for its
discharges beginning on or after October 1, 2000, based on the formula
set forth above.
3. General Formula for Calculation of Prospective Payment Rates for
Hospitals Located in Puerto Rico Beginning on or After October 1, 2000
and Before October 1, 2001
a. Puerto Rico Rate. The Puerto Rico prospective payment rate is
determined as follows:
Step 1--Select the appropriate adjusted average standardized amount
considering the large urban or other designation of the hospital (see
Table 1C of section VI of the Addendum).
Step 2--Multiply the labor-related portion of the standardized
amount by the appropriate Puerto Rico-specific wage index (see Table 4F
of section VI of the Addendum).
Step 3--Add the amount from Step 2 and the nonlabor-related portion
of the standardized amount.
Step 4--Multiply the result in Step 3 by 50 percent.
Step 5--Multiply the amount from Step 4 by the appropriate DRG
relative weight (see Table 5 of section VI of the Addendum).
b. National Rate. The national prospective payment rate is
determined as follows:
Step 1--Multiply the labor-related portion of the national average
standardized amount (see Table 1C of section VI of the Addendum) by the
appropriate national wage index (see Tables 4A and 4B of section VI of
the Addendum).
Step 2--Add the amount from Step 1 and the nonlabor-related portion
of the national average standardized amount.
Step 3--Multiply the result in Step 2 by 50 percent.
Step 4--Multiply the amount from Step 3 by the appropriate DRG
relative weight (see Table 5 of section VI of the Addendum).
The sum of the Puerto Rico rate and the national rate computed
above equals the prospective payment for a given discharge for a
hospital located in Puerto Rico.
III. Changes to the Payment Rates for Blood Clotting Factor for
Hemophilia Inpatients
For the past 2 years in the Federal Register (63 FR 41010 and 64 FR
41549), we have discussed section 4452 of Public Law 105-33, which
amended section 6011(d) of Public Law 101-239 to reinstate the add-on
payment for the costs of administering blood clotting factor to
Medicare beneficiaries who have hemophilia and who are hospital
inpatients for discharges occurring on or after October 1, 1997. In
these prior rules, we have described the payment policy that the
payment amount for clotting factors covered by this inpatient benefit
is equal to 85 percent of the AWP, subject to the Part A deductible and
coinsurance requirements, and specifically listed the updated add-on
payment amounts for each clotting factor, as described by HCFA's Common
Procedure Coding System (HCPCS). Because we are not changing the policy
established 2 years ago, we are discontinuing the practice of listing
these amounts in the annual proposed and final rules. Instead, the
program manuals will instruct fiscal intermediaries to follow this
policy and obtain the average wholesale price (AWP) for each relevant
HCPCS from either their corresponding local carrier or the Medicare
durable medical equipment regional carrier (DMERC) that has
jurisdiction in their area. Carriers already calculate the AWP based on
the median AWP of the several products available in each category of
factor.
The payment amounts will be determined using the most recent AWP
data available to the carrier at the time the intermediary performs
these annual update calculations.
These amounts are updated annually and are effective for discharges
beginning on or after October 1 of the current year through September
30 of the following year. Payment will be made for blood clotting
factor only if there is an ICD-9-CM diagnosis code for hemophilia
included on the bill.
Comment: One commenter disagreed with our proposal to have
individual Medicare contractors determine the payment allowance for the
pass-through amount payable for clotting factors for inpatients with
hemophilia. The commenter stated that individual Medicare contractors
would not maintain a uniform payment amount and this inconsistency
would result in wide disparities in reimbursement. The commenter
recommended that HCFA continue to set a standard national rate that
would be the same for everyone. The commenter also expressed concern
that updates in payment allowances for clotting factors would vary
widely among contractors.
Response: We continue to believe that our carriers are the most
appropriate entities to obtain the AWP for these factors, and are
therefore proceeding with our proposed change. While we do not
anticipate inconsistency in the payment allowances for these products
around the country, we do not want to jeopardize access to these
essential biologicals for Medicare beneficiaries who are hemophiliacs.
Therefore, we have determined that a more appropriate approximation for
the cost of clotting factor furnished on an inpatient basis is 95
percent of the AWP, consistent with the Part B benefit for the same
factors. This increase from 85 percent to 95 percent of the AWP will
assure access despite possible Medicare contractor variations in the
applicable AWP.
IV. Changes to Payment Rates for Inpatient Capital-Related Costs
for FY 2001
The prospective payment system for hospital inpatient capital-
related costs was implemented for cost reporting periods beginning on
or after October 1, 1991. Effective with that cost reporting period and
during a 10-year transition period extending through FY 2001, hospital
inpatient capital-related costs are paid on the basis of an increasing
proportion of the capital prospective payment system Federal rate and a
decreasing proportion of a hospital's historical costs for capital.
The basic methodology for determining capital Federal prospective
rates is set forth at Secs. 412.308 through 412.352. Below we discuss
the factors that we used to determine the capital
[[Page 47117]]
Federal rate and the hospital-specific rates and the hospital-specific
rates for FY 2001. The rates will be effective for discharges occurring
on or after October 1, 2000.
For FY 1992, we computed the standard Federal payment rate for
capital-related costs under the prospective payment system by updating
the FY 1989 Medicare inpatient capital cost per case by an actuarial
estimate of the increase in Medicare inpatient capital costs per case.
Each year after FY 1992, we update the standard capital Federal rate,
as provided in Sec. 412.308(c)(1), to account for capital input price
increases and other factors. Also, Sec. 412.308(c)(2) provides that the
capital Federal rate is adjusted annually by a factor equal to the
estimated proportion of outlier payments under the capital Federal rate
to total capital payments under the capital Federal rate. In addition,
Sec. 412.308(c)(3) requires that the capital Federal rate be reduced by
an adjustment factor equal to the estimated proportion of payments for
exceptions under Sec. 412.348. Furthermore, Sec. 412.308(c)(4)(ii)
requires that the capital Federal rate be adjusted so that the annual
DRG reclassification and the recalibration of DRG weights and changes
in the geographic adjustment factor are budget neutral. For FYs 1992
through 1995, Sec. 412.352 required that the capital Federal rate also
be adjusted by a budget neutrality factor so that aggregate payments
for inpatient hospital capital costs were projected to equal 90 percent
of the payments that would have been made for capital-related costs on
a reasonable cost basis during the fiscal year. That provision expired
in FY 1996. Section 412.308(b)(2) describes the 7.4 percent reduction
to the rate that was made in FY 1994, and Sec. 412.308(b)(3) describes
the 0.28 percent reduction to the rate made in FY 1996 as a result of
the revised policy of paying for transfers. In the FY 1998 final rule
with comment period (62 FR 45966), we implemented section 4402 of
Public Law 105-33, which requires that for discharges occurring on or
after October 1, 1997, and before October 1, 2002, the unadjusted
standard capital Federal rate is reduced by 17.78 percent. A small part
of that reduction will be restored effective October 1, 2002.
For each hospital, the hospital-specific rate was calculated by
dividing the hospital's Medicare inpatient capital-related costs for a
specified base year by its Medicare discharges (adjusted for
transfers), and dividing the result by the hospital's case mix index
(also adjusted for transfers). The resulting case-mix adjusted average
cost per discharge was then updated to FY 1992 based on the national
average increase in Medicare's inpatient capital cost per discharge and
adjusted by the exceptions payment adjustment factor and the budget
neutrality adjustment factor to yield the FY 1992 hospital-specific
rate. Since FY 1992, the hospital-specific rate has been updated
annually for inflation and for changes in the exceptions payment
adjustment factor. For FYs 1992 through 1995, the hospital-specific
rate was also adjusted by a budget neutrality adjustment factor.
Section 4402 of Public Law 105-33 also requires that fFor discharges
occurring on or after October 1, 1997, and before October 1, 2002, the
unadjusted hospital-specific rate is reduced by 17.78 percent. A small
part of this reduction will be restored effective October 1, 2002.
To determine the appropriate budget neutrality adjustment factor
and the exceptions payment adjustment factor, we developed a dynamic
model of Medicare inpatient capital-related costs, that is, a model
that projects changes in Medicare inpatient capital-related costs over
time. With the expiration of the budget neutrality provision, the model
is still used to estimate the exceptions payment adjustment and other
factors. The model and its application are described in greater detail
in Appendix B of this final rule.
In accordance with section 1886(d)(9)(A) of the Act, under the
prospective payment system for inpatient operating costs, hospitals
located in Puerto Rico are paid for operating costs under a special
payment formula. Prior to FY 1998, hospitals in Puerto Rico were paid a
blended rate that consisted of 75 percent of the applicable
standardized amount specific to Puerto Rico hospitals and 25 percent of
the applicable national average standardized amount. However, effective
October 1, 1997, as a result of section 4406 of Public Law 105-33,
operating payments to hospitals in Puerto Rico are based on a blend of
50 percent of the applicable standardized amount specific to Puerto
Rico hospitals and 50 percent of the applicable national average
standardized amount. In conjunction with this change to the operating
blend percentage, effective with discharges on or after October 1,
1997, we compute capital payments to hospitals in Puerto Rico based on
a blend of 50 percent of the Puerto Rico rate and 50 percent of the
capital Federal rate.
Section 412.374 provides for the use of this blended payment system
for payments to Puerto Rico hospitals under the prospective payment
system for inpatient capital-related costs. Accordingly, for capital-
related costs, we compute a separate payment rate specific to Puerto
Rico hospitals using the same methodology used to compute the national
Federal rate for capital.
A. Determination of Federal Inpatient Capital-Related Prospective
Payment Rate Update
In the July 30, 1999 final rule (64 FR 41551), we established a
capital Federal rate of $377.03 for FY 2000. In the proposed rule, we
stated that, as a result of the changes we proposed to the factors used
to establish the capital Federal rate, the proposed FY 2001 capital
Federal rate was $383.06. In this final rule, we are establishing a FY
2001 capital Federal rate of $382.03.
In the discussion that follows, we explain the factors that were
used to determine the FY 2001 capital Federal rate. In particular, we
explain why the FY 2001 capital Federal rate has increased 1.33 percent
compared to the FY 2000 capital Federal rate. We also estimate
aggregate capital payments will increase by 5.48 percent during this
same period. This increase is primarily due to the increase in the
number of hospital admissions, the increase in case-mix, and the
increase in the Federal blend percentage from 90 to 100 percent for
fully prospective payment hospitals.
Total payments to hospitals under the prospective payment system
are relatively unaffected by changes in the capital prospective
payments. Since capital payments constitute about 10 percent of
hospital payments, a 1 percent change in the capital Federal rate
yields only about 0.1 percent change in actual payments to hospitals.
Aggregate payments under the capital prospective payment transition
system are estimated to increase in FY 2001 compared to FY 2000.
1. Standard Capital Federal Rate Update
a. Description of the Update Framework. Under Sec. 412.308(c)(1),
the standard capital Federal rate is updated on the basis of an
analytical framework that takes into account changes in a capital input
price index and other factors. The update framework consists of a
capital input price index (CIPI) and several policy adjustment factors.
Specifically, we have adjusted the projected CIPI rate of increase as
appropriate each year for case-mix index-related changes, for
intensity, and for errors in previous CIPI forecasts. The proposed rule
reflected an update factor for FY 2001 under that framework of 0.9
percent, based on data available at that
[[Page 47118]]
time. Under the update framework, the final update factor for FY 2001
is 0.9 percent. This update factor is based on a projected 0.9 percent
increase in the CIPI, a 0.0 percent adjustment for intensity, a 0.0
percent adjustment for case-mix, a 0.0 percent adjustment for the FY
1999 DRG reclassification and recalibration, and a forecast error
correction of 0.0 percent. We explain the basis for the FY 2001 CIPI
projection in section II.D of this Addendum. In this section IV of the
Addendum, we describe the policy adjustments that have been applied.
The case-mix index is the measure of the average DRG weight for
cases paid under the prospective payment system. Because the DRG weight
determines the prospective payment for each case, any percentage
increase in the case-mix index corresponds to an equal percentage
increase in hospital payments.
The case-mix index can change for any of several reasons:
The average resource use of Medicare patients changes
(``real'' case-mix change);
Changes in hospital coding of patient records result in
higher weight DRG assignments (``coding effects''); and
The annual DRG reclassification and recalibration changes
may not be budget neutral (``reclassification effect'').
We define real case-mix change as actual changes in the mix (and
resource requirements) of Medicare patients as opposed to changes in
coding behavior that result in assignment of cases to higher weighted
DRGs but do not reflect higher resource requirements. In the update
framework for the prospective payment system for operating costs, we
adjust the update upwards to allow for real case-mix change, but remove
the effects of coding changes on the case-mix index. We also remove the
effect on total payments of prior changes to the DRG classifications
and relative weights, in order to retain budget neutrality for all
case-mix index-related changes other than patient severity. (For
example, we adjusted for the effects of the FY 1999 DRG
reclassification and recalibration as part of our FY 2001 update
recommendation.) We have adopted this case-mix index adjustment in the
capital update framework as well.
For FY 2001, we are projecting a 0.5 percent increase in the case-
mix index. We estimate that real case-mix increase will equal 0.5
percent in FY 2001. Therefore, the net adjustment for case-mix change
in FY 2001 is 0.0 percentage points.
Comment: One commenter stated that the magnitude of the upward
adjustment of 0.5 percent for real case-mix change and the downward
adjustment of 0.5 percent for projected case-mix change (a net case-mix
adjustment of 0.0 percent) for FY 2001 appears inconsistent with past
numbers published by HCFA. They recommend that we review our adjustment
for case-mix and provide a basis for these adjustment amounts.
Response: HCFA's Office of the Actuary estimates the projection of
total case-mix changes used in the capital and operating update
frameworks. The estimate of case-mix change for FY 2001 is the same as
the estimate of case-mix change for FY 2000 published in the July 30,
1999 final rule (64 FR 41551). This estimate of case-mix change for FY
2001 is also very close to what has been used for the past 5 years.
Past estimates of case-mix change have always assumed that most of the
case-mix change will be real, and therefore the net adjustments for
case-mix change have always been small or zero. Again this year, our
estimate assumes the same kind of relationship. Therefore, we believe
that our projection of a 0.5 percent increase in the case-mix index and
our estimate that real case-mix increase will equal 0.5 percent (for a
net case-mix adjustment of 0.0 percent) in FY 2001 is consistent with
past case-mix change update recommendations. As more experience
develops we may be able to develop a better estimate of the real part
of the case-mix increase.
We estimate that FY 1999 DRG reclassification and recalibration
will result in a 0.0 percent change in the case-mix when compared with
the case-mix index that would have resulted if we had not made the
reclassification and recalibration changes to the DRGs. Therefore, we
are making a 0.0 percent adjustment for DRG reclassification and
recalibration in the update recommendation for FY 2001.
The capital update framework contains an adjustment for forecast
error. The input price index forecast is based on historical trends and
relationships ascertainable at the time the update factor is
established for the upcoming year. In any given year there may be
unanticipated price fluctuations that may result in differences between
the actual increase in prices and the forecast used in calculating the
update factors. In setting a prospective payment rate under the
framework, we make an adjustment for forecast error only if our
estimate of the change in the capital input price index for any year is
off by 0.25 percentage points or more. There is a 2-year lag between
the forecast and the measurement of the forecast error. A forecast
error of 0.0 percentage points was calculated for the FY 1999 update.
That is, current historical data indicate that the FY 1999 CIPI used in
calculating the forecasted FY 1999 update factor did not overstate or
understate realized price increases. We therefore are making a 0.0
percent adjustment for forecast error in the update for FY 2001.
Under the capital prospective payment system framework, we also
make an adjustment for changes in intensity. We calculate this
adjustment using the same methodology and data as in the framework for
the operating prospective payment system. The intensity factor for the
operating update framework reflects how hospital services are utilized
to produce the final product, that is, the discharge. This component
accounts for changes in the use of quality-enhancing services, changes
in within-DRG severity, and expected modification of practice patterns
to remove cost-ineffective services.
We calculate case-mix constant intensity as the change in total
charges per admission, adjusted for price level changes (the CPI for
hospital and related services), and changes in real case-mix. The use
of total charges in the calculation of the proposed intensity factor
makes it a total intensity factor, that is, charges for capital
services are already built into the calculation of the factor.
Therefore, we have incorporated the intensity adjustment from the
operating update framework into the capital update framework. Without
reliable estimates of the proportions of the overall annual intensity
increases that are due, respectively, to ineffective practice patterns
and to the combination of quality-enhancing new technologies and
within-DRG complexity, we assume, as in the revised operating update
framework, that one-half of the annual increase is due to each of these
factors. The capital update framework thus provides an add-on to the
input price index rate of increase of one-half of the estimated annual
increase in intensity to allow for within-DRG severity increases and
the adoption of quality-enhancing technology.
For FY 2001, we have developed a Medicare-specific intensity
measure based on a 5-year average using FY 1995 through 1999 data. In
determining case-mix constant intensity, we found that observed case-
mix increase was 1.7 percent in FY 1995, 1.6 percent in FY 1996, 0.3
percent in FY 1997, -0.4 percent in FY 1998, and -0.3 percent in FY
1999. For FY 1995 and FY 1996, we estimate that real case-mix increase
was 1.0 to 1.4 percent each year. The estimate for those years is
supported by
[[Page 47119]]
past studies of case-mix change by the RAND Corporation. The most
recent study was ``Has DRG Creep Crept Up? Decomposing the Case Mix
Index Change Between 1987 and 1988'' by G. M. Carter, J. P. Newhouse,
and D. A. Relles, R-4098-HCFA/ProPAC (1991). The study suggested that
real case-mix change was not dependent on total change, but was usually
a fairly steady 1.0 to 1.5 percent per year. We use 1.4 percent as the
upper bound because the RAND study did not take into account that
hospitals may have induced doctors to document medical records more
completely in order to improve payment. Following that study, we
consider up to 1.4 percent of observed case-mix change as real for FY
1995 through FY 1999. Based on this analysis, we believe that all of
the observed case-mix increase for FY 1997, FY 1998, and FY 1999 is
real. The increases for FY 1995 and FY 1996 were in excess of our
estimate of real case-mix increase.
We calculate case-mix constant intensity as the change in total
charges per admission, adjusted for price level changes (the CPI for
hospital and related services), and changes in real case-mix. Given
estimates of real case-mix of 1.0 percent for FY 1995, 1.0 percent for
FY 1996, 0.3 percent for FY 1997, -0.4 percent for FY 1998, and -0.3
percent for FY 1999, we estimate that case-mix constant intensity
declined by an average 0.7 percent during FYs 1995 through 1999, for a
cumulative decrease of 3.6 percent. If we assume that real case-mix
increase was 1.4 percent for FY 1995, 1.4 percent for FY 1996, 0.3
percent for FY 1997, -0.4 percent for FY 1998, and -0.3 percent for FY
1999, we estimate that case-mix constant intensity declined by an
average 0.9 percent during FYs 1995 through 1999, for a cumulative
decrease of 4.5 percent. Since we estimate that intensity has declined
during that period, we are recommending a 0.0 percent intensity
adjustment for FY 2001.
We note that the operating recommendation addressed in Appendix C
of this final rule reflects the possible range that a negative
adjustment could span (-0.6 percent to 0.0 percent adjustment) based on
our analyses that intensity has declined during that 5-year period.
While the calculation of the adjustment for intensity is identical in
both the capital and the operating update frameworks, consistent with
past capital update recommendations and the FY 2001 operating
recommendation, we did not make a negative adjustment for intensity in
the FY 2001 capital update.
b. Comparison of HCFA and MedPAC Update Recommendations. MedPAC's
FY 2001 update recommendation for capital prospective payments was not
included in its March 2000 Report to Congress. In the May 5, 2000
proposed rule, we stated that we would address the comparison of HCFA's
update recommendation and MedPAC's update recommendation in this final
rule, once we have had the opportunity to review the data analyses that
substantiate MedPAC's recommendation.
In its June 2000 Report to Congress, MedPAC presented a combined
operating and capital update for hospital inpatient prospective payment
system payments for FY 2001, and recommended that Congress implement a
single combined (operating and capital) prospective payment system
rate. With the end of the transition to fully prospective capital
payments ending with FY 2001, both operating and capital prospective
system payments will be made using standard Federal rates adjusted by
hospital specific payment variables. Currently, section
1886(b)(3)(B)(i)(XVI) of the Act sets forth the FY 2001 percentage
increase in the prospective payment system operating cost standardized
amounts. The prospective payment system capital update is set under the
framework established by the Secretary outlined in Sec. 412.308(c)(1).
For FY 2001, MedPAC's update framework supports a combined
operating and capital update for hospital inpatient prospective payment
system payments of 3.5 percent to 4.0 percent (or between the increase
in the combined operating and capital market basket plus 0.6 percentage
points and the increase in the combined operating and capital market
basket plus 1.1 percentage points). MedPAC also notes that while the
number of hospitals with negative inpatient hospital margins have
increased in FY 1998 (mostly likely as the result of the implementation
of Pub. L. 105-33), overall high inpatient Medicare margins generally
offset hospital losses on other lines of Medicare services. MedPAC
continues to project positive (greater than 11 percentage points)
Medicare inpatient hospital margins through FY 2002.
MedPAC's FY 2001 combined operating and capital update framework
uses a weighted average of HCFA's forecasts of the operating (PPS Input
Price Index) and capital (CIPI) market baskets. This combined market
basket is used to develop an estimate of the change in overall
operating and capital prices. MedPAC calculated a combined market
basket forecast by weighting the operating market basket forecast by
0.92 and the capital market basket forecast by 0.08, since operating
costs are estimated to represent 92 percent of total hospital costs
(capital costs are estimated to represent the remaining 8 percent of
total hospital costs). MedPAC's combined market basket for FY 2001 is
estimated to increase by 2.9 percent, based on HCFA's March 2000
forecasted operating market basket increase of 3.1 percent and HCFA's
March 2000 forecasted capital market basket increase of 0.9 percent.
HCFA's Response to MedPAC's Recommendation: As we stated in the May
5, 2000 proposed rule (65 FR 26317), we responded to a similar comment
in the July 30, 1999 final rule (64 FR 41552), the July 31, 1998 final
rule (63 FR 41013), and the September 1, 1995 final rule (60 FR 45816).
In those rules, we stated that our long-term goal was to develop a
single update framework for operating and capital prospective payments
and that we would begin development of a unified framework. However, we
have not yet developed such a single framework as the actual operating
system update has been determined by Congress through FY 2002. In the
meantime, we intend to maintain as much consistency as possible with
the current operating framework in order to facilitate the eventual
development of a unified framework. We maintain our goal of combining
the update frameworks at the end of the 10-year capital transition
period (the end of FY 2001) and may examine combining the payment
systems post-transition. Because of the similarity of the update
frameworks, we believe that they could be combined with little
difficulty.
Our recommendation for updating the prospective payment system
capital Federal rate is supported by the following analyses that
measure changes in scientific and technological advances, practice
pattern changes, changes in case-mix, the effect of reclassification
and recalibration, and forecast error correction. MedPAC recommends a
3.5 to 4.0 percent combined operating and capital update for hospital
inpatient prospective payments. Under our existing capital update
framework, we are recommending a 0.9 percent update to the capital
Federal rate. For purposes of comparing HCFA's capital update
recommendation and MedPAC's update recommendation for FY 2001, we have
isolated the capital component of MedPAC's combined market basket
forecast, which was based on HCFA's March 2000 CIPI forecast of 0.9
percent. As a result, MedPAC's update recommendation for FY 2001 for
capital
[[Page 47120]]
payments is between 1.4 percent and 1.9 percent (see Table 1).
There are some differences between HCFA's and MedPAC's update
frameworks, which account for the difference in the respective update
recommendations. In it's combined FY 2001 update recommendation, MedPAC
uses HCFA's capital input price index (the CIPI) as the starting point
for estimating the change in prices since the previous year. HCFA's
CIPI includes price measures for interest expense, which are an
indicator of the interest rates facing hospitals during their capital
purchasing decisions. Previously, MedPAC's capital market basket did
not include interest expense; instead it included a financing policy
adjustment when necessary to account for the prolonged changes in
interest rates. HCFA's CIPI is vintage-weighted, meaning that it takes
into account price changes from past purchases of capital when
determining the current period update. In the past, MedPAC's capital
market basket was not vintage-weighted, and only accounted for the
current year price changes. This year, both HCFA's and MedPAC's FY 2001
update frameworks use HCFA's CIPI, which is currently forecast at 0.9
percent.
MedPAC and HCFA also differ in the adjustments they make in their
respective frameworks. (See Table 1 for a comparison of HCFA and
MedPAC's update recommendations.) MedPAC makes an adjustment for
scientific and technological advances, which is offset by a fixed
standard for productivity growth. HCFA has not adopted a separate
adjustment for capital science and technology or productivity and
efficiency. Instead, we have identified a total intensity factor, which
reflects scientific and technological advances, but we have not
identified an adequate total productivity measure. The Commission also
includes a site-of-care substitution adjustment (unbundling of the
payment unit) to account for the decline in the average length of
Medicare acute inpatient stays. This adjustment is designed to shift
funding along with associated costs when Medicare patients are
discharged to postacute settings that replace acute impatient days.
Other factors, such as technological advances that allow for a
decreased need in follow-up care and BBA mandated policy on payment for
transfer cases that limits payments within certain DRGs, are reflected
in the site-of-care substitution adjustment as well. A negative
intensity adjustment would capture the site-of-care substitution
accounted for in MedPAC's update framework. However, we did not make a
negative adjustment for intensity this year. We may examine the
appropriateness of adopting a negative intensity adjustment at a later
date.
For FY 2001, MedPAC recommends a 0.0 percent combined adjustment
for site-of-care substitutions. MedPAC recommends a 0.0 to a 0.5
percent combined adjustment for scientific and technological advances,
which was offset by a fixed productivity standard of 0.5 percent for FY
2001. We recommend a 0.0 percent intensity adjustment.
Additionally, MedPAC has included an adjustment for one-time
factors to account for significant costs incurred by hospitals for
unusual, non-recurring events or for the costs of major new regulatory
requirements. The Commission is not recommending any additional
allowance for FY 2001 and recommends a 0.0 percent combined adjustment
for one-time factors for FY 2001.
MedPAC makes a two-part adjustment for case-mix changes, which
takes into account changes in case-mix in the past year. They recommend
a 0.5 percent combined adjustment for DRG coding change and a 0.0
percent combined adjustment for within-DRG complexity change. This
results in a combined total case mix adjustment of 0.5 percent. We
recommend a 0.0 percent total case-mix adjustment, since we are
projecting a 0.5 percent increase in the case-mix index and we estimate
that real case-mix increase will equal 0.5 percent in FY 2001.
We recommend a 0.0 percent adjustment for forecast error
correction. MedPAC's combined FY 2001 update recommendation includes a
0.1 percent adjustment for forecast error correction. However, they
noted that this forecast error adjustment is a result of the difference
between the forecasted FY 1999 operating market basket of 2.4 percent
and the actual FY 1999 operating market basket increase of 2.5 percent.
The FY 1999 capital market basket forecast was equal to the actual
observed increase of 0.7 percent for capital costs. Therefore, we have
included 0.0 percent adjustment for FY 1999 forecast error correction
in the comparison of MedPAC's and HCFA's update recommendations for FY
2001 shown below in Table 1.
We applied MedPAC's ratio of hospital capital costs to total
hospital costs (8 percent) to the adjustment factors in their update
framework for comparison with HCFA's capital update framework. The net
result of these adjustments is that MedPAC has recommended a 0.9 to 1.0
percent update to the capital Federal rate for FY 2001. MedPAC believes
that the annual updates to the capital and operating payments under the
prospective payment system should not differ substantially, even though
they are determined separately, since they correspond to costs
generated by providing the same inpatient hospital services to the same
Medicare patients. We describe the basis for our 0.9 percent total
capital update for FY 2001 in the preceding section. While our
recommendation is below the range recommended by MedPAC, in past years
our update recommendation has been above the lower limit of MedPAC's
update recommendation. For instance, for FY 2000 MedPAC's update
recommendation was -1.1 percent to 1.8 percent. HCFA's FY 2000 update
factor was 0.3 percent, which is 1.4 percentage points higher than the
lower limit of MedPAC's update recommendation. For FY 2001, our update
0.9 percent is only 0.5 percentage points below MedPAC's lower limit of
their recommendation.
Table 1.--HCFA's FY 2001 Update Factor and MedPAC's Recommendation
------------------------------------------------------------------------
HCFA's
update MedPAC's
factor recommendation
------------------------------------------------------------------------
Capital Input Price Index................. 0.9 0.9\1\
------------------------------------------------------------------------
Policy Adjustment Factors
------------------------------------------------------------------------
Intensity................................. 0.0 ...............
Science and Technology................ ........... 0.0 to 0.5
Intensity............................. ........... (\2\)
[[Page 47121]]
Real within DRG Change................ ........... (\3\)
-----------------------------
Site-of-Care Substitution................. ........... 0.0
-----------------------------
Subtotal.............................. 0.0 0.0 to 0.5
------------------------------------------------------------------------
Case-Mix Adjustment Factors
------------------------------------------------------------------------
Projected Case-Mix Change................. -0.5 ...............
Real Across DRG Change.................... 0.5 ...............
Coding Change............................. ........... 0.5
Real within DRG Change.................... \4\ 0.0
-----------------------------
Subtotal.............................. 0.0 0.5
=============================
One-Time Factors.......................... ........... 0.0
Effect of FY 1998 Reclassification and 0.0 ...............
Recalibration.
Forecast Error Correction................. 0.0 0.0
-----------------------------
Total Update.......................... 0.9 1.4 to 1.9
------------------------------------------------------------------------
\1\ Used HCFA's March 2000 capital market basket forecast in its
combined update recommendations.
\2\ Included in MedPAC's productivity offset in its science and
technology adjustment.
\3\ Included in MedPAC's case-mix adjustment.
\4\ Included in HCFA's intensity factor.
2. Outlier Payment Adjustment Factor
Section 412.312(c) establishes a unified outlier methodology for
inpatient operating and inpatient capital-related costs. A single set
of thresholds is used to identify outlier cases for both inpatient
operating and inpatient capital-related payments. Outlier payments are
made only on the portion of the capital Federal rate that is used to
calculate the hospital's inpatient capital-related payments (for
example, 100 percent for cost reporting periods beginning in FY 2001
for hospitals paid under the fully prospective payment methodology).
Section 412.308(c)(2) provides that the standard Federal rate for
inpatient capital-related costs be reduced by an adjustment factor
equal to the estimated proportion of outlier payments under the capital
Federal rate to total inpatient capital-related payments under the
capital Federal rate. The outlier thresholds are set so that operating
outlier payments are projected to be 5.1 percent of total operating DRG
payments. The inpatient capital-related outlier reduction factor
reflects the inpatient capital-related outlier payments that would be
made if all hospitals were paid 100 percent of the capital Federal
rate. For purposes of calculating the outlier thresholds and the
outlier reduction factor, we model payments as if all hospitals were
paid 100 percent of the capital Federal rate because, as explained
above, outlier payments are made only on the portion of the capital
Federal rate that is included in the hospital's inpatient capital-
related payments.
In the July 30, 1999 final rule, we estimated that outlier payments
for capital in FY 2000 would equal 5.98 percent of inpatient capital-
related payments based on the capital Federal rate (64 FR 41553).
Accordingly, we applied an outlier adjustment factor of 0.9402 to the
capital Federal rate. Based on the thresholds as set forth in section
II.A.4.d. of this Addendum, we estimate that outlier payments for
capital will equal 5.91 percent of inpatient capital-related payments
based on the capital Federal rate in FY 2001. Therefore, we are
establishing an outlier adjustment factor of 0.9409 to the capital
Federal rate. Thus, the projected percentage of capital outlier
payments to total capital standard payments for FY 2001 is lower than
the percentage for FY 2000.
The outlier reduction factors are not built permanently into the
rates; that is, they are not applied cumulatively in determining the
capital Federal rate. Therefore, the net change in the outlier
adjustment to the capital Federal rate for FY 2001 is 1.0007 (0.9409/
0.9402). The outlier adjustment increases the FY 2001 capital Federal
rate by 0.07 percent compared with the FY 2000 outlier adjustment.
3. Budget Neutrality Adjustment Factor for Changes in DRG
Classifications and Weights and the Geographic Adjustment Factor
Section 412.308(c)(4)(ii) requires that the capital Federal rate be
adjusted so that aggregate payments for the fiscal year based on the
capital Federal rate after any changes resulting from the annual DRG
reclassification and recalibration and changes in the GAF are projected
to equal aggregate payments that would have been made on the basis of
the capital Federal rate without such changes. We use the actuarial
model, described in Appendix B of this final rule, to estimate the
aggregate payments that would have been made on the basis of the
capital Federal rate without changes in the DRG classifications and
weights and in the GAF. We also use the model to estimate aggregate
payments that would be made on the basis of the capital Federal rate as
a result of those changes. We then use these figures to compute the
adjustment required to maintain budget neutrality for changes in DRG
weights and in the GAF.
For FY 2000, we calculated a GAF/DRG budget neutrality factor of
0.9985. In the proposed rule for FY 2001, we proposed a GAF/DRG budget
neutrality factor of 0.9986. In this final rule, based on calculations
using updated data, we are applying a factor of 0.9979. The GAF/DRG
budget neutrality factors are built permanently into the rates; that
is,
[[Page 47122]]
they are applied cumulatively in determining the capital Federal rate.
This follows from the requirement that estimated aggregate payments
each year be no more than they would have been in the absence of the
annual DRG reclassification and recalibration and changes in the GAF.
The incremental change in the adjustment from FY 2000 to FY 2001 is
0.9979. The cumulative change in the rate due to this adjustment is
0.9993 (the product of the incremental factors for FY 1993, FY 1994, FY
1995, FY 1996, FY 1997, FY 1998, FY 1999, FY 2000, and FY 2001: 0.9980
x 1.0053 x 0.9998 x 0.9994 x 0.9987 x 0.9989 x 1.0028 x
0.9985 x 0.9979 = 0.9993).
This factor accounts for DRG reclassifications and recalibration
and for changes in the GAF. It also incorporates the effects on the GAF
of FY 2001 geographic reclassification decisions made by the MGCRB
compared to FY 2000 decisions. However, it does not account for changes
in payments due to changes in the DSH and IME adjustment factors or in
the large urban add-on.
4. Exceptions Payment Adjustment Factor
Section 412.308(c)(3) requires that the standard capital Federal
rate for inpatient capital-related costs be reduced by an adjustment
factor equal to the estimated proportion of additional payments for
exceptions under Sec. 412.348 relative to total payments under the
hospital-specific rate and capital Federal rate. We use the model
originally developed for determining the budget neutrality adjustment
factor to determine the exceptions payment adjustment factor. We
describe that model in Appendix B to this final rule.
For FY 2000, we estimated that exceptions payments would equal 2.70
percent of aggregate payments based on the capital Federal rate and the
hospital-specific rate. Therefore, we applied an exceptions reduction
factor of 0.9730 (1 -0.0270) in determining the capital Federal rate.
In the May 5, 2000 proposed rule, we estimated that exceptions payments
for FY 2001 would equal 2.04 percent of aggregate payments based on the
capital Federal rate and the hospital-specific rate. Therefore, we
proposed an exceptions payment reduction factor of 0.9796 to the
capital Federal rate for FY 2001. The proposed exceptions reduction
factor for FY 2001 was 0.68 percent higher than the factor for FY 2000.
For this final rule, based on updated data, we estimate that exceptions
payments for FY 2001 will equal 2.15 percent of aggregate payments
based on the capital Federal rate and the hospital-specific rate. We
are, therefore, applying an exceptions payment reduction factor of
0.9785 (1 - 0.0215) to the capital Federal rate for FY 2001. The final
exceptions reduction factor for FY 2001 is 0.57 percent higher than the
factor for FY 2000 and 0.11 percent lower than the factor in the FY
2001 proposed rule.
The exceptions reduction factors are not built permanently into the
rates; that is, the factors are not applied cumulatively in determining
the capital Federal rate. Therefore, the net adjustment to the FY 2001
capital Federal rate is 0.9785/0.9730, or 1.0057.
5. Standard Capital Federal Rate for FY 2001
For FY 2000, the capital Federal rate was $377.03. As a result of
changes that we proposed to the factors used to establish the capital
Federal rate, we proposed that the FY 2001 capital Federal rate would
be $383.06. In this final rule, we are establishing the capital Federal
rate of $382.03. The capital Federal rate for FY 2001 was calculated as
follows:
The FY 2001 update factor is 1.0090; that is, the update
is 0.90 percent.
The FY 2001 budget neutrality adjustment factor that is
applied to the standard capital Federal payment rate for changes in the
DRG relative weights and in the GAF is 0.9979.
The FY 2001 outlier adjustment factor is 0.9409.
The FY 2001 exceptions payments adjustment factor is
0.9785.
Since the capital Federal rate has already been adjusted for
differences in case-mix, wages, cost-of-living, indirect medical
education costs, and payments to hospitals serving a disproportionate
share of low-income patients, we have made no additional adjustments in
the standard capital Federal rate for these factors other than the
budget neutrality factor for changes in the DRG relative weights and
the GAF.
We are providing a chart that shows how each of the factors and
adjustments for FY 2001 affected the computation of the FY 2001 capital
Federal rate in comparison to the FY 2000 capital Federal rate. The FY
2001 update factor has the effect of increasing the capital Federal
rate by 0.90 percent compared to the rate in FY 2000, while the
geographic and DRG budget neutrality factor has the effect of
decreasing the capital Federal rate by 0.21 percent. The FY 2001
outlier adjustment factor has the effect of increasing the capital
Federal rate by 0.07 percent compared to FY 2000. The FY 2001
exceptions reduction factor has the effect of increasing the capital
Federal rate by 0.57 percent compared to the exceptions reduction for
FY 2000. The combined effect of all the changes is to increase the
capital Federal rate by 1.33 percent for FY 2001 compared to the
capital Federal rate for FY 2000.
Comparison of Factors and Adjustments: FY 2000 Capital Federal Rate and FY 2001 Capital Federal Rate
----------------------------------------------------------------------------------------------------------------
Percent
FY 2000 FY 2001 Change change
----------------------------------------------------------------------------------------------------------------
Update factor \1\........................................... 1.0030 1.0090 1.0090 0.90
GAF/DRG Adjustment Factor \1\............................... 0.9985 0.9979 0.9979 -0.21
Outlier Adjustment Factor \2\............................... 0.9402 0.9409 1.0007 0.07
Exceptions Adjustment Factor \2\............................ 0.9730 0.9785 1.0057 0.57
Federal Rate................................................ $377.03 $382.03 1.0133 1.33
----------------------------------------------------------------------------------------------------------------
\1\ The update factor and the GAF/DRG budget neutrality factors are built permanently into the rates. Thus, for
example, the incremental change from FY 2000 to FY 2001 resulting from the application of the 0.9979 GAF/DRG
budget neutrality factor for FY 2001 is 0.9979.
\2\ The outlier reduction factor and the exceptions reduction factor are not built permanently into the rates;
that is, these factors are not applied cumulatively in determining the rates. Thus, for example, the net
change resulting from the application of the FY 2001 outlier reduction factor is 0.9409/0.9402, or 1.0007.
As stated previously in this section, the FY 2001 capital Federal
rate has increased 1.33 percent compared to the FY 2000 capital Federal
rate as a result of the combination of the FY 2001 factors and
adjustments applied to the
[[Page 47123]]
capital Federal rate. Specifically, the capital update factor increased
the FY 2001 capital Federal rate 0.90 percent over FY 2000. The
exceptions reduction factor increased 0.57 percent from 0.9730 for FY
2000 to 0.9785 for FY 2001, which results in an increase to the capital
Federal rate for FY 2001 compared to FY 2000. Also, the outlier
adjustment factor increased 0.07 percent from 0.9402 for FY 2000 to
0.9409 for FY 2001, which results in an increase to the capital Federal
rate for FY 2001 compared to FY 2000. The GAF/DRG adjustment factor
decreased 0.21 percent from 0.9986 for FY 2000 to 0.9979 for FY 2001,
which results in a decrease the capital Federal rate for FY 2001
compared to FY 2000. The effect of all of these changes is a 1.33
percent increase in the FY 2001 capital Federal rate compared to FY
2000.
We are also providing a chart that shows how the final FY 2001
capital Federal rate differs from the proposed FY 2001 capital Federal
rate.
Comparison of Factors and Adjustments: FY 2001 Proposed Capital Federal Rate and FY 2001 Final Capital Federal
Rate
----------------------------------------------------------------------------------------------------------------
Proposed FY Final FY Percent
2001 2001 Change change
----------------------------------------------------------------------------------------------------------------
Update Factor\1\............................................ 1.0090 1.0090 1.0000 0.00
GAF/DRG Adjustment Factor................................... 0.9986 0.9979 0.9992 -0.08
Outlier Adjustment Factor................................... 0.9416 0.9409 0.9992 -0.08
Exceptions Adjustment Factor................................ 0.9796 0.9785 0.9989 -0.11
Federal Rate................................................ $383.06 $382.03 0.9973 -0.27
----------------------------------------------------------------------------------------------------------------
6. Special Rate for Puerto Rico Hospitals
As explained at the beginning of section IV of this Addendum,
hospitals in Puerto Rico are paid based on 50 percent of the Puerto
Rico rate and 50 percent of the capital Federal rate. The Puerto Rico
rate is derived from the costs of Puerto Rico hospitals only, while the
capital Federal rate is derived from the costs of all acute care
hospitals participating in the prospective payment system (including
Puerto Rico). To adjust hospitals' capital payments for geographic
variations in capital costs, we apply a geographic adjustment factor
(GAF) to both portions of the blended rate. The GAF is calculated using
the operating prospective payment system wage index and varies
depending on the MSA or rural area in which the hospital is located. We
use the Puerto Rico wage index to determine the GAF for the Puerto Rico
part of the capital-blended rate and the national wage index to
determine the GAF for the national part of the blended rate.
Since we implemented a separate GAF for Puerto Rico in FY 1998, we
also apply separate budget neutrality adjustments for the national GAF
and for the Puerto Rico GAF. However, we apply the same budget
neutrality factor for DRG reclassifications and recalibration
nationally and for Puerto Rico. The Puerto Rico GAF budget neutrality
factor is 1.0037, while the DRG adjustment is 1.0001, for a combined
cumulative adjustment of 1.0037.
In computing the payment for a particular Puerto Rico hospital, the
Puerto Rico portion of the rate (50 percent) is multiplied by the
Puerto Rico-specific GAF for the MSA in which the hospital is located,
and the national portion of the rate (50 percent) is multiplied by the
national GAF for the MSA in which the hospital is located (which is
computed from national data for all hospitals in the United States and
Puerto Rico). In FY 1998, we implemented a 17.78 percent reduction to
the Puerto Rico rate as a result of Public Law 105-33.
For FY 2000, before application of the GAF, the special rate for
Puerto Rico hospitals was $174.81. With the changes we proposed to the
factors used to determine the rate, the proposed FY 2001 special rate
for Puerto Rico was $185.38. In this final rule, the FY 2001 capital
rate for Puerto Rico is $185.06.
B. Determination of Hospital-Specific Rate Update
Section 412.328(e) of the regulations provides that the hospital-
specific rate for FY 2001 be determined by adjusting the FY 2000
hospital-specific rate by the following factors:
1. Hospital-Specific Rate Update Factor
The hospital-specific rate is updated in accordance with the update
factor for the standard capital Federal rate determined under
Sec. 412.308(c)(1). For FY 2001, we are updating the hospital-specific
rate by a factor of 1.0090.
2. Exceptions Payment Adjustment Factor
For FYs 1992 through FY 2001, the updated hospital-specific rate is
multiplied by an adjustment factor to account for estimated exceptions
payments for capital-related costs under Sec. 412.348, determined as a
proportion of the total amount of payments under the hospital-specific
rate and the capital Federal rate. For FY 2001, we estimated in the
proposed rule that exceptions payments would be 2.04 percent of
aggregate payments based on the capital Federal rate and the hospital-
specific rate. Therefore, the proposed exceptions adjustment factor was
0.9796. In this final rule, we estimate that exceptions payments will
be 2.15 percent of aggregate payments based on the capital Federal rate
and hospital-specific rate. Accordingly, for FY 2001, we are applying
an exceptions reduction factor of 0.9785 to the hospital-specific rate.
The exceptions reduction factors are not built permanently into the
rates; that is, the factors are not applied cumulatively in determining
the hospital-specific rate. The net adjustment to the FY 2001 hospital-
specific rate is 0.9785/0.9730, or 1.0057.
3. Net Change to Hospital-Specific Rate
We are providing a chart to show the net change to the hospital-
specific rate. The chart shows the factors for FY 2000 and FY 2001 and
the net adjustment for each factor. It also shows that the cumulative
net adjustment from FY 2000 to FY 2001 is 1.0147, which represents an
increase of 1.47 percent to the hospital-specific rate. For each
hospital, the FY 2001 hospital-specific rate is determined by
multiplying the FY 2000 hospital-specific rate by the cumulative net
adjustment of 1.0147.
[[Page 47124]]
FY 2001 Update and Adjustments to Hospital-Specific Rates
----------------------------------------------------------------------------------------------------------------
Net Percent
FY 2000 FY 2001 adjustment change
----------------------------------------------------------------------------------------------------------------
Update Factor............................................... 1.0030 1.0090 1.0090 0.90
Exceptions Payment Adjustment Factor........................ 0.9730 0.9785 1.0057 0.57
Cumulative Adjustments...................................... 0.9759 0.9903 1.0147 1.47
----------------------------------------------------------------------------------------------------------------
Note: The update factor for the hospital-specific rate is applied cumulatively in determining the rates. Thus,
the incremental increase in the update factor from FY 2000 to FY 2001 is 1.0090. In contrast, the exceptions
payment adjustment factor is not applied cumulatively. Thus, for example, the incremental increase in the
exceptions reduction factor from FY 2000 to FY 2001 is 0.9785/0.9730, or 1.0057.
C. Calculation of Inpatient Capital-Related Prospective Payments for FY
2001
During the capital prospective payment system transition period, a
hospital is paid for the inpatient capital-related costs under one of
two payment methodologies--the fully prospective payment methodology or
the hold-harmless methodology. The payment methodology applicable to a
particular hospital is determined when a hospital comes under the
prospective payment system for capital-related costs by comparing its
hospital-specific rate to the capital Federal rate applicable to the
hospital's first cost reporting period under the prospective payment
system. The applicable capital Federal rate was determined by making
adjustments as follows:
For outliers, by dividing the standard capital Federal
rate by the outlier reduction factor for that fiscal year; and
For the payment adjustments applicable to the hospital, by
multiplying the hospital's GAF, disproportionate share adjustment
factor, and IME adjustment factor, when appropriate.
If the hospital-specific rate is above the applicable capital
Federal rate, the hospital is paid under the hold-harmless methodology.
If the hospital-specific rate is below the applicable capital Federal
rate, the hospital is paid under the fully prospective methodology.
For purposes of calculating payments for each discharge under both
the hold-harmless payment methodology and the fully prospective payment
methodology, the standard capital Federal rate is adjusted as follows:
(Standard Federal Rate) x (DRG weight) x (GAF) x (Large Urban
Add-on, if applicable) x (COLA adjustment for hospitals located in
Alaska and Hawaii) x (1 + Disproportionate Share Adjustment Factor +
IME Adjustment Factor, if applicable). The result is the adjusted
capital Federal rate.
Payments under the hold-harmless methodology are determined under
one of two formulas. A hold-harmless hospital is paid the higher of the
following:
100 percent of the adjusted capital Federal rate for each
discharge; or
An old capital payment equal to 85 percent (100 percent
for sole community hospitals) of the hospital's allowable Medicare
inpatient old capital costs per discharge for the cost reporting period
plus a new capital payment based on a percentage of the adjusted
capital Federal rate for each discharge. The percentage of the adjusted
capital Federal rate equals the ratio of the hospital's allowable
Medicare new capital costs to its total Medicare inpatient capital-
related costs in the cost reporting period.
Once a hospital receives payment based on 100 percent of the
adjusted capital Federal rate in a cost reporting period beginning on
or after October 1, 1994 (or the first cost reporting period after
obligated capital that is recognized as old capital under
Sec. 412.302(c) is put in use for patient care, if later), the hospital
continues to receive capital prospective payment system payments on
that basis for the remainder of the transition period.
Payment for each discharge under the fully prospective methodology
is based on the applicable transition blend percentage of the hospital-
specific rate and the adjusted capital Federal rate. Thus, for FY 2001
payments under the fully prospective methodology will be based on 100
percent of the adjusted capital Federal rate and zero percent of the
hospital-specific rate.
Hospitals also may receive outlier payments for those cases that
qualify under the thresholds established for each fiscal year. Section
412.312(c) provides for a single set of thresholds to identify outlier
cases for both inpatient operating and inpatient capital-related
payments. Outlier payments are made only on that portion of the capital
Federal rate that is used to calculate the hospital's inpatient
capital-related payments. For fully prospective hospitals, that portion
is 100 percent of the capital Federal rate for discharges occurring in
cost reporting periods beginning during FY 2001. Thus, a fully
prospective hospital will receive 100 percent of the capital-related
outlier payment calculated for the case for discharges occurring in
cost reporting periods beginning in FY 2001. For hold-harmless
hospitals that are paid 85 percent of their reasonable costs for old
inpatient capital, the portion of the capital Federal rate that is
included in the hospital's outlier payments is based on the hospital's
ratio of Medicare inpatient costs for new capital to total Medicare
inpatient capital costs. For hold-harmless hospitals that are paid 100
percent of the capital Federal rate, 100 percent of the capital Federal
rate is included in the hospital's outlier payments.
The outlier thresholds for FY 2001 are in section II.A.4.c. of this
Addendum. For FY 2001, a case qualifies as a cost outlier if the cost
for the case (after standardization for the indirect teaching
adjustment and disproportionate share adjustment) is greater than the
prospective payment rate for the DRG plus $17,550.
During the capital prospective payment system transition period, a
hospital also may receive an additional payment under an exceptions
process if its total inpatient capital-related payments are less than a
minimum percentage of its allowable Medicare inpatient capital-related
costs. The minimum payment level is established by class of hospital
under Sec. 412.348. The minimum payment levels for portions of cost
reporting periods occurring in FY 2001 are:
Sole community hospitals (located in either an urban or
rural area), 90 percent;
Urban hospitals with at least 100 beds and a
disproportionate share patient percentage of at least 20.2 percent or
that receive more than 30 percent of their net inpatient care revenues
from State or local governments for indigent care, 80 percent; and
All other hospitals, 70 percent.
Under Sec. 412.348(d), the amount of the exceptions payment is
determined by comparing the cumulative payments made to the hospital
under the capital prospective payment system to the
[[Page 47125]]
cumulative minimum payment levels applicable to the hospital for each
cost reporting period subject to that system. Any amount by which the
hospital's cumulative payments exceed its cumulative minimum payment is
deducted from the additional payment that would otherwise be payable
for a cost reporting period. New hospitals are exempted from the
capital prospective payment system for their first 2 years of operation
and are paid 85 percent of their reasonable costs during that period. A
new hospital's old capital costs are its allowable costs for capital
assets that were put in use for patient care on or before the later of
December 31, 1990, or the last day of the hospital's base year cost
reporting period, and are subject to the rules pertaining to old
capital and obligated capital as of the applicable date. Effective with
the third year of operation, we will pay the hospital under either the
fully prospective methodology, using the appropriate transition blend
in that Federal fiscal year, or the hold-harmless methodology. If the
hold-harmless methodology is applicable, the hold-harmless payment for
assets in use during the base period would extend for 8 years, even if
the hold-harmless payments extend beyond the normal transition period.
D. Capital Input Price Index
1. Background
Like the operating input price index, the Capital Input Price Index
(CIPI) is a fixed-weight price index that measures the price changes
associated with costs during a given year. The CIPI differs from the
operating input price index in one important aspect--the CIPI reflects
the vintage nature of capital, which is the acquisition and use of
capital over time. Capital expenses in any given year are determined by
the stock of capital in that year (that is, capital that remains on
hand from all current and prior capital acquisitions). An index
measuring capital price changes needs to reflect this vintage nature of
capital. Therefore, the CIPI was developed to capture the vintage
nature of capital by using a weighted-average of past capital purchase
prices up to and including the current year.
Using Medicare cost reports, American Hospital Association (AHA)
data, and Securities Data Company data, a vintage-weighted price index
was developed to measure price increases associated with capital
expenses. We periodically update the base year for the operating and
capital input prices to reflect the changing composition of inputs for
operating and capital expenses. Currently, the CIPI is based to FY 1992
and was last rebased in 1997. The most recent explanation of the CIPI
was discussed in the final rule with comment period for FY 1998
published on August 29, 1997 (62 FR 46050).
2. Forecast of the CIPI for Federal Fiscal Year 2001
We are forecasting the CIPI to increase 0.9 percent for FY 2001.
This reflects a projected 1.5 percent increase in vintage-weighted
depreciation prices (building and fixed equipment, and movable
equipment) and a 3.6 percent increase in other capital expense prices
in FY 2001, partially offset by a 1.2 percent decline in vintage-
weighted interest rates in FY 2001. The weighted average of these three
factors produces the 0.9 percent increase for the CIPI as a whole.
V. Changes to Payment Rates for Excluded Hospitals and Hospital
Units: Rate-of-Increase Percentages
The inpatient operating costs of hospitals and hospital units
excluded from the prospective payment system are subject to rate-of-
increase limits established under the authority of section 1886(b) of
the Act, which is implemented in regulations at Sec. 413.40. Under
these limits, a hospital-specific target amount (expressed in terms of
the inpatient operating cost per discharge) is set for each hospital,
based on the hospital's own historical cost experience trended forward
by the applicable rate-of-increase percentages (update factors). In the
case of a psychiatric hospital or hospital unit, a rehabilitation
hospital or hospital unit, or a long-term care hospital, the target
amount may not exceed the updated figure for the 75th percentile of
target amounts adjusted to take into account differences between
average wage-related costs in the area of the hospital and the national
average of such costs within the same class of hospital for hospitals
and units in the same class (psychiatric, rehabilitation, and long-term
care) for cost reporting periods ending during FY 1996. The target
amount is multiplied by the number of Medicare discharges in a
hospital's cost reporting period, yielding the ceiling on aggregate
Medicare inpatient operating costs for the cost reporting period.
Each hospital-specific target amount is adjusted annually, at the
beginning of each hospital's cost reporting period, by an applicable
update factor.
Section 1886(b)(3)(B) of the Act, which is implemented in
regulations at Sec. 413.40(c)(3)(vii), provides that for cost reporting
periods beginning on or after October 1, 1998 and before October 1,
2002, the update factor for a hospital or unit depends on the
hospital's or hospital unit's costs in relation to the ceiling for the
most recent cost reporting period for which information is available.
For hospitals with costs exceeding the ceiling by 10 percent or more,
the update factor is the market basket increase. For hospitals with
costs exceeding the ceiling by 10 percent or more, the update factor is
the market basket increase. For hospitals with costs exceeding the
ceiling by less than 10 percent, the update factor is the market basket
minus .25 percent for each percentage point by which costs are less
than 10 percent over the ceiling. For hospitals with costs equal to or
less than the ceiling but greater than 66.7 percent of the ceiling, the
update factor is the greater of 0 percent or the market basket minus
2.5 percent. For hospitals with costs that do not exceed 66.7 percent
of the ceiling, the update factor is 0.
The most recent forecast of the market basket increase for FY 2001
for hospitals and hospital units excluded from the prospective payment
system is 3.4 percent. Therefore, the update to a hospital's target
amount for its cost reporting period beginning in FY 2001 would be
between 0.9 and 3.4 percent, or 0 percent, depending on the hospital's
or unit's costs in relation to its rate-of-increase limit.
In addition, Sec. 413.40(c)(4)(iii) requires that for cost
reporting periods beginning on or after October 1, 1998 and before
October 1, 2002, the target amount for each psychiatric hospital or
hospital unit, rehabilitation hospital or hospital unit, and long-term
care hospital cannot exceed a cap on the target amounts for hospitals
in the same class.
Section 121 of Public Law 106-113 amended section 1886(b)(3)(H) of
the Act to direct the Secretary to provide for an appropriate wage
adjustment to the caps on the target amounts for psychiatric hospitals
and units, rehabilitation hospitals and units, and long-term care
hospitals, effective for cost reporting periods beginning on or after
October 1, 1999, through September 30, 2002. We are publishing an
interim final rule with comment period elsewhere in this issue of the
Federal Register that implements this provision for cost reporting
periods beginning on or after October 1, 1999 and before October 1,
2000. This final rule addresses the wage adjustment to the caps for
cost reporting periods beginning on or after October 1, 2000.
As discussed in section VI. of the preamble of this final rule,
under section 121 of Public Law 106-113, the cap on the target amount
per discharge is determined by adding the hospital's
[[Page 47126]]
nonlabor-related portion of the national 75th percentile cap to its
wage-adjusted, labor-related portion of the national 75th percentile
cap (the labor-related portion of costs equals 0.71553 and the
nonlabor-related portion of costs equals 0.28447). A hospital's wage-
adjusted, labor-related portion of the target amount is calculated by
multiplying the labor-related portion of the national 75th percentile
cap for the hospital's class by the wage index under the hospital
inpatient prospective payment system (see Sec. 412.63), without taking
into account reclassifications under sections 1886(d)(10) and (d)(8)(B)
of the Act.
For cost reporting periods beginning in FY 2001, in the May 5, 2000
proposed rule, we included the following proposed caps:
------------------------------------------------------------------------
Labor- Nonlabor-
Class of excluded hospital or unit related related
share share
------------------------------------------------------------------------
Psychiatric................................... $8,106 $3,223
Rehabilitation................................ 15,108 6,007
Long-Term Care................................ 29,312 11,654
------------------------------------------------------------------------
We have reconsidered the methodology that was originally used to
calculate the labor-related and nonlabor-related portions of the
proposed FY 2001 wage neutralized national 75th percentile caps on the
target amounts for each class of provider. Using the revised
methodology discussed previously in this final rule, we have calculated
revised labor-related and nonlabor-related portions of the wage-
neutralized 75th percentile caps for FY 2001 for each class of
hospital, updated by the market basket percentage increase of 3.4
percent. These revised caps are as follows:
------------------------------------------------------------------------
Labor- Nonlabor-
Class of excluded hospital or unit related related
share share
------------------------------------------------------------------------
Psychiatric................................... $8,131 $3,233
Rehabilitation................................ 15,164 6,029
Long-Term Care................................ 29,284 11,642
------------------------------------------------------------------------
Regulations at Sec. 413.40(d) specify the formulas for determining
bonus and relief payments for excluded hospitals and specify
established criteria for an additional bonus payment for continuous
improvement. Regulations at Sec. 413.40(f)(2)(ii) specify the payment
methodology for new hospitals and hospital units (psychiatric,
rehabilitation, and long-term care) effective October 1, 1997.
VI. Tables
This section contains the tables referred to throughout the
preamble to this final rule and in this Addendum. For purposes of this
final rule, and to avoid confusion, we have retained the designations
of Tables 1 through 5 that were first used in the September 1, 1983
initial prospective payment final rule (48 FR 39844). Tables 1A, 1C,
1D, 1E (a new table, as described in section II of this Addendum), 3C,
4A, 4B, 4C, 4D, 4E, 4F, 5, 6A, 6B, 6C, 6D, 6E, 6F, 6G, 7A, 7B, 8A, and
8B are presented below. The tables presented below are as follows:
Table 1A--National Adjusted Operating Standardized Amounts, Labor/
Nonlabor
Table 1C--Adjusted Operating Standardized Amounts for Puerto Rico,
Labor/Nonlabor
Table 1D--Capital Standard Federal Payment Rate
Table 1E--National Adjusted Operating Standardized Amounts for Sole
Community Hospitals (SCH), Labor/Nonlabor
Table 3C--Hospital Case Mix Indexes for Discharges Occurring in Federal
Fiscal Year 1999 and Hospital Average Hourly Wage for Federal Fiscal
Year 2001 Wage Index
Table 4A--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Urban Areas
Table 4B--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Rural Areas
Table 4C--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Hospitals That Are Reclassified
Table 4D--Average Hourly Wage for Urban Areas
Table 4E--Average Hourly Wage for Rural Areas
Table 4F--Puerto Rico Wage Index and Capital Geographic Adjustment
Factor (GAF)
Table 5--List of Diagnosis Related Groups (DRGs), Relative Weighting
Factors, Geometric Mean Length of Stay, and Arithmetic Mean Length of
Stay Points Used in the Prospective Payment System
Table 6A--New Diagnosis Codes
Table 6B--New Procedure Codes
Table 6C--Invalid Diagnosis Codes
Table 6D--Revised Diagnosis Code Titles
Table 6E--Revised Procedure Codes
Table 6F--Additions to the CC Exclusions List
Table 6G--Deletions to the CC Exclusions List
Table 7A--Medicare Prospective Payment System Selected Percentile
Lengths of Stay FY 99 MedPAR Update March 2000 GROUPER V18.0
Table 7B--Medicare Prospective Payment System Selected Percentile
Lengths of Stay FY 99 MedPAR Update March 2000 GROUPER V18.0
Table 8A--Statewide Average Operating Cost-to-Charge Ratios for Urban
and Rural Hospitals (Case Weighted) March 2000
Table 8B--Statewide Average Capital Cost-to-Charge Ratios (Case
Weighted) March 2000
Table 1a.--National Adjusted Operating Standardized Amounts, Labor/Nonlabor
----------------------------------------------------------------------------------------------------------------
Large urban areas Other areas
----------------------------------------------------------------------------------------------------------------
Labor-related Nonlabor-related Labor-related Nonlabor-related
----------------------------------------------------------------------------------------------------------------
$2,864.19 $1,164.21 $2,818.85 $1,145.78
----------------------------------------------------------------------------------------------------------------
Table 1c.--Adjusted Operating Standardized Amounts for Puerto Rico, Labor/Nonlabor
----------------------------------------------------------------------------------------------------------------
Large urban areas Other areas
---------------------------------------------------------------
Labor Nonlabor Labor Nonlabor
----------------------------------------------------------------------------------------------------------------
National........................................ $2,839.54 $1,154.19 $2,839.54 $1,154.19
Puerto Rico..................................... $1,374.71 $553.36 $1,352.95 $544.60
----------------------------------------------------------------------------------------------------------------
[[Page 47127]]
Table 1d.--Capital Standard Federal Payment Rate
------------------------------------------------------------------------
Rate
------------------------------------------------------------------------
National................................................... $382.03
Puerto Rico................................................ $185.06
------------------------------------------------------------------------
Table 1e.--National Adjusted Operating Standardized Amounts for Sole Community Hospitals, Labor/Nonlabor
----------------------------------------------------------------------------------------------------------------
Large urban areas Other areas
----------------------------------------------------------------------------------------------------------------
Labor-related Nonlabor-related Labor-related Nonlabor-related
----------------------------------------------------------------------------------------------------------------
$2,894.99 $1,176.73 $2,849.16 $1,158.10
----------------------------------------------------------------------------------------------------------------
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Table 4a.--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Urban Areas
------------------------------------------------------------------------
Wage
Urban area (constituent counties) index GAF
------------------------------------------------------------------------
0040 Abilene, TX................................... 0.8240 0.8758
Taylor, TX
0060 Aguadilla, PR................................. 0.4391 0.5692
Aguada, PR
Aguadilla, PR
Moca, PR
0080 Akron, OH..................................... 0.9736 0.9818
Portage, OH
Summit, OH
0120 Albany, GA.................................... 0.9933 0.9954
Dougherty, GA
Lee, GA
0160 Albany-Schenectady-Troy, NY................... 0.8549 0.8982
Albany, NY
Montgomery, NY
Rensselaer, NY
Saratoga, NY
Schenectady, NY
Schoharie, NY
0200 Albuquerque, NM............................... 0.9136 0.9400
Bernalillo, NM
Sandoval, NM
Valencia, NM
0220 Alexandria, LA................................ 0.8170 0.8707
Rapides, LA
0240 Allentown-Bethlehem-Easton, PA................ 1.0040 1.0027
Carbon, PA
Lehigh, PA
Northampton, PA
0280 Altoona, PA................................... 0.9346 0.9547
Blair, PA
0320 Amarillo, TX.................................. 0.8715 0.9101
Potter, TX
Randall, TX
0380 Anchorage, AK................................. 1.2865 1.1883
Anchorage, AK
0440 Ann Arbor, MI................................. 1.1254 1.0843
Lenawee, MI
Livingston, MI
Washtenaw, MI
0450 Anniston, AL.................................. 0.8284 0.8790
Calhoun, AL
0460 Appleton-Oshkosh-Neenah, WI................... 0.9052 0.9341
Calumet, WI
Outagamie, WI
Winnebago, WI
0470 Arecibo, PR................................... 0.4525 0.5810
Arecibo, PR
Camuy, PR
Hatillo, PR
0480 Asheville, NC................................. 0.9516 0.9666
Buncombe, NC
Madison, NC
0500 Athens, GA.................................... 0.9739 0.9821
Clarke, GA
Madison, GA
Oconee, GA
0520 \1\ Atlanta, GA............................... 1.0096 1.0066
Barrow, GA
Bartow, GA
Carroll, GA
Cherokee, GA
Clayton, GA
Cobb, GA
Coweta, GA
DeKalb, GA
Douglas, GA
Fayette, GA
Forsyth, GA
Fulton, GA
Gwinnett, GA
Henry, GA
Newton, GA
Paulding, GA
Pickens, GA
Rockdale, GA
Spalding, GA
Walton, GA
0560 Atlantic-Cape May, NJ......................... 1.1182 1.0795
Atlantic, NJ
Cape May, NJ
0580 Auburn-Opelika, AL............................ 0.8106 0.8661
Lee, AL
0600 Augusta-Aiken, GA-SC.......................... 0.9160 0.9417
Columbia, GA
McDuffie, GA
Richmond, GA
Aiken, SC Edgefield, SC
0640 \1\ Austin-San Marcos, TX..................... 0.9577 0.9708
Bastrop, TX
Caldwell, TX
Hays, TX
Travis, TX
Williamson, TX
0680 \2\ Bakersfield, CA........................... 0.9861 0.9905
Kern, CA
0720 \1\ Baltimore, MD............................. 0.9365 0.9561
Anne Arundel, MD
Baltimore, MD
Baltimore City, MD
Carroll, MD
Harford, MD
Howard, MD
Queen Anne's, MD
0733 Bangor, ME.................................... 0.9561 0.9697
Penobscot, ME
0743 Barnstable-Yarmouth, MA....................... 1.3839 1.2492
Barnstable, MA
0760 Baton Rouge, LA............................... 0.8842 0.9192
Ascension, LA
East Baton Rouge, LA
Livingston, LA
West Baton Rouge, LA
0840 Beaumont-Port Arthur, TX...................... 0.8744 0.9122
Hardin, TX
Jefferson, TX
Orange, TX
0860 Bellingham, WA................................ 1.1439 1.0964
Whatcom, WA
0870 \2\ Benton Harbor, MI......................... 0.9021 0.9319
Berrien, MI
0875 \1\ Bergen-Passaic, NJ........................ 1.1605 1.1073
Bergen, NJ
Passaic, NJ
0880 Billings, MT.................................. 0.9591 0.9718
Yellowstone, MT
0920 Biloxi-Gulfport-Pascagoula, MS................ 0.8236 0.8756
Hancock, MS
Harrison, MS
Jackson, MS
0960 Binghamton, NY................................ 0.8690 0.9083
Broome, NY
Tioga, NY
1000 Birmingham, AL................................ 0.8477 0.8930
Blount, AL
Jefferson, AL
St. Clair, AL
Shelby, AL
1010 Bismarck, ND.................................. 0.7897 0.8507
Burleigh, ND
Morton, ND
1020 Bloomington, IN............................... 0.8733 0.9114
Monroe, IN
1040 Bloomington-Normal, IL........................ 0.9156 0.9414
McLean, IL
1080 Boise City, ID................................ 0.9042 0.9334
Ada, ID
Canyon, ID
1123 \1\ \2\ Boston-Worcester-Lawrence-Lowell- 1.1204 1.0810
Brockton, MA-NH (MA Hospitals).....................
Bristol, MA
Essex, MA
Middlesex, MA
Norfolk, MA
Plymouth, MA
Suffolk, MA
Worcester, MA
Hillsborough, NH
Merrimack, NH
Rockingham, NH
Strafford, NH
1123 \1\ Boston-Worcester-Lawrence-Lowell-Brockton, 1.1160 1.0781
MA-NH (NH Hospitals)...............................
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.......................... 0.9731 0.9815
Boulder, CO
1145 Brazoria, TX................................. 0.8658 0.9060
Brazoria, TX
1150 Bremerton, WA................................. 1.0975 1.0658
Kitsap, WA
1240 Brownsville-Harlingen-San Benito, TX.......... 0.8722 0.9106
[[Page 47150]]
Cameron, TX
1260 Bryan-College Station, TX..................... 0.8237 0.8756
Brazos, TX
1280 \1\ Buffalo-Niagara Falls, NY................. 0.9580 0.9710
Erie, NY
Niagara, NY
1303 Burlington, VT................................ 1.0735 1.0498
Chittenden, VT
Franklin, VT
Grand Isle, VT
1310 Caguas, PR.................................... 0.4562 0.5842
Caguas, PR
Cayey, PR
Cidra, PR
Gurabo, PR
San Lorenzo, PR
1320 \2\ Canton-Massillon, OH...................... 0.8670 0.9069
Carroll, OH
Stark, OH
1350 \2\ Casper, WY................................ 0.8817 0.9174
Natrona, WY
1360 Cedar Rapids, IA.............................. 0.8736 0.9116
Linn, IA
1400 Champaign-Urbana, IL.......................... 0.9198 0.9444
Champaign, IL
1440 Charleston-North Charleston, SC............... 0.9067 0.9351
Berkeley, SC
Charleston, SC
Dorchester, SC
1480 Charleston, WV................................ 0.9240 0.9473
Kanawha, WV
Putnam, WV
1520 \1\ Charlotte-Gastonia-Rock Hill, NC-SC....... 0.9391 0.9579
Cabarrus, NC
Gaston, NC
Lincoln, NC
Mecklenburg, NC
Rowan, NC
Stanly, NC
Union, NC
York, SC
1540 Charlottesville, VA........................... 1.0789 1.0534
Albemarle, VA
Charlottesville City, VA
Fluvanna, VA
Greene, VA
1560 Chattanooga, TN-GA............................ 0.9833 0.9885
Catoosa, GA
Dade, GA
Walker, GA
Hamilton, TN
Marion, TN
1580 \2\ Cheyenne, WY.............................. 0.8817 0.9174
Laramie, WY
1600 \1\ Chicago, IL............................... 1.1146 1.0771
Cook, IL
DeKalb, IL
DuPage, IL
Grundy, IL
Kane, IL
Kendall, IL
Lake, IL
McHenry, IL
Will, IL
1620 Chico-Paradise, CA............................ 0.9918 0.9944
Butte, CA
1640 \1\ 1Cincinnati, OH-KY-IN..................... 0.9415 0.9596
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............... 0.8277 0.8785
Christian, KY
Montgomery, TN
1680 \1\ Cleveland-Lorain-Elyria, OH............... 0.9593 0.9719
Ashtabula, OH
Cuyahoga, OH
Geauga, OH
Lake, OH
Lorain, OH
Medina, OH
1720 Colorado Springs, CO.......................... 0.9697 0.9792
El Paso, CO
1740 Columbia, MO.................................. 0.8961 0.9276
Boone, MO
1760 Columbia, SC.................................. 0.9554 0.9692
Lexington, SC
Richland, SC
1800 Columbus, GA-AL............................... 0.8568 0.8996
Russell, AL
Chattahoochee, GA
Harris, GA
Muscogee, GA
1840 \1\ Columbus, OH.............................. 0.9619 0.9737
Delaware, OH
Fairfield, OH
Franklin, OH
Licking, OH
Madison, OH
Pickaway, OH
1880 Corpus Christi, TX............................ 0.8726 0.9109
Nueces, TX
San Patricio, TX
1890 Corvallis, OR................................. 1.1326 1.0890
Benton, OR
1900 \2\ Cumberland, MD-WV (MD Hospitals).......... 0.8651 0.9055
Allegany, MD
Mineral, WV
1900 Cumberland, MD-WV (WV Hospital)............... 0.8369 0.8852
Allegany, MD
Mineral, WV
1920 \1\ Dallas, TX................................ 0.9913 0.9940
Collin, TX
Dallas, TX
Denton, TX
Ellis, TX
Henderson, TX
Hunt, TX
Kaufman, TX
Rockwall, TX
1950 Danville, VA.................................. 0.8589 0.9011
Danville City, VA
Pittsylvania, VA
1960 Davenport-Moline-Rock Island, IA-IL........... 0.8898 0.9232
Scott, IA
Henry, IL
Rock Island, IL
2000 Dayton-Springfield, OH........................ 0.9442 0.9614
Clark, OH
Greene, OH
Miami, OH
Montgomery, OH
2020 Daytona Beach, FL............................. 0.9147 0.9408
Flagler, FL
Volusia, FL
2030 Decatur, AL................................... 0.8534 0.8971
Lawrence, AL
Morgan, AL
2040 \2\Decatur, IL................................ 0.8160 0.8700
Macon, IL
2080 \1\ Denver, CO................................ 1.0181 1.0124
Adams, CO
Arapahoe, CO
Denver, CO
Douglas, CO
Jefferson, CO
2120 Des Moines, IA................................ 0.9118 0.9387
Dallas, IA
Polk, IA
Warren, IA
2160 \1\ Detroit, MI............................... 1.0510 1.0347
Lapeer, MI
Macomb, MI
Monroe, MI
Oakland, MI
St. Clair, MI
Wayne, MI
2180 Dothan, AL.................................... 0.8013 0.8592
Dale, AL
Houston, AL
2190 Dover, DE..................................... 1.0078 1.0053
Kent, DE
2200 Dubuque, IA................................... 0.8746 0.9123
Dubuque, IA
2240 Duluth-Superior, MN-WI........................ 1.0043 1.0029
[[Page 47151]]
St. Louis, MN
Douglas, WI
2281 Dutchess County, NY........................... 0.9491 0.9649
Dutchess, NY
2290 \2\ Eau Claire, WI............................ 0.8880 0.9219
Chippewa, WI
Eau Claire, WI
2320 El Paso, TX................................... 0.9346 0.9547
El Paso, TX
2330 Elkhart-Goshen, IN............................ 0.9145 0.9406
Elkhart, IN
2335 Elmira, NY.................................... 0.8546 0.8980
Chemung, NY
2340 Enid, OK...................................... 0.8610 0.9026
Garfield, OK
2360 Erie, PA...................................... 0.8985 0.9293
Erie, PA
2400 Eugene-Springfield, OR........................ 1.0965 1.0651
Lane, OR
2440 \2\ Evansville-Henderson, IN-KY (IN Hospitals) 0.8602 0.9020
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY
2440 Evansville-Henderson, IN-KY (KY Hospitals).... 0.8173 0.8710
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY
2520 Fargo-Moorhead, ND-MN......................... 0.8749 0.9125
Clay, MN
Cass, ND
2560 Fayetteville, NC.............................. 0.8655 0.9058
Cumberland, NC
2580 Fayetteville-Springdale-Rogers, AR............ 0.7910 0.8517
Benton, AR
Washington, AR
2620 Flagstaff, AZ-UT.............................. 1.0686 1.0465
Coconino, AZ
Kane, UT
2640 Flint, MI..................................... 1.1205 1.0810
Genesee, MI
2650 Florence, AL.................................. 0.7652 0.8325
Colbert, AL
Lauderdale, AL
2655 Florence, SC.................................. 0.8777 0.9145
Florence, SC
2670 Fort Collins-Loveland, CO..................... 1.0647 1.0439
Larimer, CO
2680 \1\ Ft. Lauderdale, FL........................ 1.0152 1.0104
Broward, FL
2700 Fort Myers-Cape Coral, FL..................... 0.9247 0.9478
Lee, FL
2710 Fort Pierce-Port St. Lucie, FL................ 0.9622 0.9740
Martin, FL
St. Lucie, FL
2720 Fort Smith, AR-OK............................. 0.8052 0.8621
Crawford, AR
Sebastian, AR
Sequoyah, OK
2750 Fort Walton Beach, FL......................... 0.9607 0.9729
Okaloosa, FL
2760 Fort Wayne, IN................................ 0.8665 0.9065
Adams, IN
Allen, IN
De Kalb, IN
Huntington, IN
Wells, IN
Whitley, IN
2800 \1\ Forth Worth-Arlington, TX................. 0.9527 0.9674
Hood, TX
Johnson, TX
Parker, TX
Tarrant, TX
2840 Fresno, CA.................................... 1.0104 1.0071
Fresno, CA
Madera, CA
2880 Gadsden, AL................................... 0.8423 0.8891
Etowah, AL
2900 Gainesville, FL............................... 1.0074 1.0051
Alachua, FL
2920 Galveston-Texas City, TX...................... 0.9918 0.9944
Galveston, TX
2960 Gary, IN...................................... 0.9454 0.9623
Lake, IN
Porter, IN
2975 \2\ Glens Falls, NY........................... 0.8499 0.8946
Warren, NY
Washington, NY
2980 \2\ Goldsboro, NC............................. 0.8441 0.8904
Wayne, NC
2985 Grand Forks, ND-MN............................ 0.8954 0.9271
Polk, MN
Grand Forks, ND
2995 Grand Junction, CO............................ 0.9471 0.9635
Mesa, CO
3000 \1\ Grand Rapids-Muskegon-Holland, MI......... 1.0248 1.0169
Allegan, MI
Kent, MI
Muskegon, MI
Ottawa, MI
3040 Great Falls, MT............................... 0.9331 0.9537
Cascade, MT
3060 Greeley, CO................................... 0.9814 0.9872
Weld, CO
3080 Green Bay, WI................................. 0.9308 0.9521
Brown, WI
3120 \1\ Greensboro-Winston-Salem-High Point, NC... 0.9124 0.9391
Alamance, NC
Davidson, NC
Davie, NC
Forsyth, NC
Guilford, NC
Randolph, NC
Stokes, NC
Yadkin, NC
3150 Greenville, NC................................ 0.9384 0.9574
Pitt, NC
3160 Greenville-Spartanburg-Anderson, SC........... 0.9003 0.9306
Anderson, SC
Cherokee, SC
Greenville, SC
Pickens, SC
Spartanburg, SC
3180 Hagerstown, MD................................ 0.9409 0.9591
Washington, MD
3200 Hamilton-Middletown, OH....................... 0.9061 0.9347
Butler, OH
3240 Harrisburg-Lebanon-Carlisle, PA............... 0.9386 0.9575
Cumberland, PA
Dauphin, PA
Lebanon, PA
Perry, PA
3283 \1\ \2\ Hartford, CT.......................... 1.1715 1.1145
Hartford, CT
Litchfield, CT
Middlesex, CT
Tolland, CT
3285 \2\ Hattiesburg, MS........................... 0.7491 0.8205
Forrest, MS
Lamar, MS
3290 Hickory-Morganton-Lenoir, NC.................. 0.8755 0.9130
Alexander, NC
Burke, NC
Caldwell, NC
Catawba, NC
3320 Honolulu, HI.................................. 1.1866 1.1243
Honolulu, HI
3350 Houma, LA..................................... 0.8086 0.8646
Lafourche, LA
Terrebonne, LA
3360 \1\ Houston, TX............................... 0.9732 0.9816
Chambers, TX
Fort Bend, TX
Harris, TX
Liberty, TX
Montgomery, TX
Waller, TX
3400 Huntington-Ashland, WV-KY-OH.................. 0.9876 0.9915
Boyd, KY
Carter, KY
Greenup, KY
Lawrence, OH
Cabell, WV
Wayne, WV
3440 Huntsville, AL................................ 0.8932 0.9256
Limestone, AL
Madison, AL
3480 \1\ Indianapolis, IN.......................... 0.9787 0.9854
Boone, IN
Hamilton, IN
[[Page 47152]]
Hancock, IN
Hendricks, IN
Johnson, IN
Madison, IN
Marion, IN
Morgan, IN
Shelby, IN
3500 Iowa City, IA................................. 0.9657 0.9764
Johnson, IA
3520 Jackson, MI................................... 0.9134 0.9399
Jackson, MI
3560 Jackson, MS................................... 0.8812 0.9170
Hinds, MS
Madison, MS
Rankin, MS
3580 Jackson, TN................................... 0.8796 0.9159
Madison, TN
Chester, TN
3600 \1\ Jacksonville, FL.......................... 0.9208 0.9451
Clay, FL
Duval, FL
Nassau, FL
St. Johns, FL
3605 \2\ Jacksonville, NC.......................... 0.8441 0.8904
Onslow, NC
3610 \2\ Jamestown, NY............................. 0.8499 0.8946
Chautauqua, NY
3620 Janesville-Beloit, WI......................... 0.9585 0.9714
Rock, WI
3640 Jersey City, NJ............................... 1.1573 1.1052
Hudson, NJ
3660 Johnson City-Kingsport-Bristol, TN-VA......... 0.8328 0.8822
Carter, TN
Hawkins, TN
Sullivan, TN
Unicoi, TN
Washington, TN
Bristol City, VA
Scott, VA
Washington, VA
3680 Johnstown, PA................................. 0.8578 0.9003
Cambria, PA
Somerset, PA
3700 Jonesboro, AR................................. 0.7832 0.8459
Craighead, AR
3710 Joplin, MO.................................... 0.8148 0.8691
Jasper, MO
Newton, MO
3720 Kalamazoo-Battlecreek, MI..................... 1.0453 1.0308
Calhoun, MI
Kalamazoo, MI
Van Buren, MI
3740 Kankakee, IL.................................. 0.9902 0.9933
Kankakee, IL
3760 \1\ Kansas City, KS-MO........................ 0.9498 0.9653
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................................... 0.9611 0.9732
Kenosha, WI
3810 Killeen-Temple, TX............................ 1.0119 1.0081
Bell, TX
Coryell, TX
3840 Knoxville, TN................................. 0.8340 0.8831
Anderson, TN
Blount, TN
Knox, TN
Loudon, TN
Sevier, TN
Union, TN
3850 Kokomo, IN.................................... 0.9525 0.9672
Howard, IN
Tipton, IN
3870 La Crosse, WI-MN.............................. 0.9211 0.9453
Houston, MN
La Crosse, WI
3880 Lafayette, LA................................. 0.8490 0.8940
Acadia, LA
Lafayette, LA
St. Landry, LA
St. Martin, LA
3920 Lafayette, IN................................. 0.8834 0.9186
Clinton, IN
Tippecanoe, IN
3960 \2\ Lake Charles, LA.......................... 0.7713 0.8371
Calcasieu, LA
3980 Lakeland-Winter Haven, FL..................... 0.8928 0.9253
Polk, FL
4000 Lancaster, PA................................. 0.9259 0.9486
Lancaster, PA
4040 Lansing-East Lansing, MI...................... 0.9934 0.9955
Clinton, MI
Eaton, MI
Ingham, MI
4080 Laredo, TX.................................... 0.8168 0.8706
Webb, TX
4100 Las Cruces, NM................................ 0.8658 0.9060
Dona Ana, NM
4120 \1\ Las Vegas, NV-AZ.......................... 1.0796 1.0538
Mohave, AZ
Clark, NV
Nye, NV
4150 Lawrence, KS.................................. 0.8190 0.8722
Douglas, KS
4200 Lawton, OK.................................... 0.8996 0.9301
Comanche, OK
4243 Lewiston-Auburn, ME........................... 0.9036 0.9329
Androscoggin, ME
4280 Lexington, KY................................. 0.8866 0.9209
Bourbon, KY
Clark, KY
Fayette, KY
Jessamine, KY
Madison, KY
Scott, KY
Woodford, KY
4320 Lima, OH...................................... 0.9320 0.9529
Allen, OH
Auglaize, OH
4360 Lincoln, NE................................... 0.9666 0.9770
Lancaster, NE
4400 Little Rock-North Little Rock, AR............. 0.8906 0.9237
Faulkner, AR
Lonoke, AR
Pulaski, AR
Saline, AR
4420 Longview-Marshall, TX......................... 0.8922 0.9249
Gregg, TX
Harrison, TX
Upshur, TX
4480 \1\ Los Angeles-Long Beach, CA................ 1.2033 1.1351
Los Angeles, CA
4520 Louisville, KY-IN............................. 0.9350 0.9550
Clark, IN
Floyd, IN
Harrison, IN
Scott, IN
Bullitt, KY
Jefferson, KY
Oldham, KY
4600 Lubbock, TX................................... 0.8838 0.9189
Lubbock, TX
4640 Lynchburg, VA................................. 0.8867 0.9210
Amherst, VA
Bedford, VA
Bedford City, VA
Campbell, VA
Lynchburg City, VA
4680 Macon, GA..................................... 0.8974 0.9285
Bibb, GA
Houston, GA
Jones, GA
Peach, GA
Twiggs, GA
4720 Madison, WI................................... 1.0271 1.0185
Dane, WI
4800 Mansfield, OH................................. 0.8690 0.9083
Crawford, OH
Richland, OH
4840 Mayaguez, PR.................................. 0.4589 0.5866
Anasco, PR
Cabo Rojo, PR
Hormigueros, PR
Mayaguez, PR
Sabana Grande, PR
San German, PR
4880 McAllen-Edinburg-Mission, TX.................. 0.8566 0.8994
Hidalgo, TX
4890 Medford-Ashland, OR........................... 1.0344 1.0234
Jackson, OR
4900 Melbourne-Titusville-Palm Bay, FL............. 0.9688 0.9785
Brevard, Fl
[[Page 47153]]
4920 \1\ Memphis, TN-AR-MS......................... 0.8723 0.9107
Crittenden, AR
DeSoto, MS
Fayette, TN
Shelby, TN
Tipton, TN
4940 \2\ Merced, CA................................ 0.9861 0.9905
Merced, CA
5000 \1\ Miami, FL................................. 1.0059 1.0040
Dade, FL
5015 \1\ Middlesex-Somerset-Hunterdon, NJ.......... 1.0333 1.0227
Hunterdon, NJ
Middlesex, NJ
Somerset, NJ
5080 \1\ Milwaukee-Waukesha, WI.................... 0.9767 0.9840
Milwaukee, WI
Ozaukee, WI
Washington, WI
Waukesha, WI
5120 \1\ Minneapolis-St. Paul, MN-WI............... 1.1017 1.0686
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
5140 Missoula, MT.................................. 0.9332 0.9538
Missoula, MT
5160 Mobile, AL.................................... 0.8163 0.8702
Baldwin, AL
Mobile, AL
5170 Modesto, CA................................... 1.0396 1.0270
Stanislaus, CA
5190 \1\ Monmouth-Ocean, NJ........................ 1.1283 1.0862
Monmouth, NJ
Ocean, NJ
5200 Monroe, LA.................................... 0.8396 0.8872
Ouachita, LA
5240 Montgomery, AL................................ 0.7653 0.8326
Autauga, AL
Elmore, AL
Montgomery, AL
5280 Muncie, IN.................................... 1.0969 1.0654
Delaware, IN
5330 Myrtle Beach, SC.............................. 0.8440 0.8903
Horry, SC
5345 Naples, FL.................................... 0.9661 0.9767
Collier, FL
5360 \1\ Nashville, TN............................. 0.9490 0.9648
Cheatham, TN
Davidson, TN
Dickson, TN
Robertson, TN
Rutherford, TN
Sumner, TN
Williamson, TN
Wilson, TN
5380 \1\ Nassau-Suffolk, NY........................ 1.3932 1.2549
Nassau, NY
Suffolk, NY
5483 \1\ New Haven-Bridgeport-Stamford-Waterbury- 1.2034 1.1352
Danbury, CT........................................
Fairfield, CT
New Haven, CT
5523 New London-Norwich, CT........................ 1.2063 1.1371
New London, CT
5560 \1\ New Orleans, LA........................... 0.9295 0.9512
Jefferson, LA
Orleans, LA
Plaquemines, LA
St. Bernard, LA
St. Charles, LA
St. James, LA
St. John The Baptist, LA
St. Tammany, LA
5600 \1\ New York, NY.............................. 1.4651 1.2989
Bronx, NY
Kings, NY
New York, NY
Putnam, NY
Queens, NY
Richmond, NY
Rockland, NY
Westchester, NY
5640 \1\ Newark, NJ................................ 1.0757 1.0512
Essex, NJ
Morris, NJ
Sussex, NJ
Union, NJ
Warren, NJ
5660 Newburgh, NY-PA............................... 1.0847 1.0573
Orange, NY
Pike, PA
5720 \1\ Norfolk-Virginia Beach-Newport News, VA-NC 0.8422 0.8890
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 \1\ Oakland, CA............................... 1.4983 1.3190
Alameda, CA
Contra Costa, CA
5790 Ocala, FL.....................................
Marion, FL 0.9243 0.9475
5800 Odessa-Midland, TX............................ 0.9205 0.9449
Ector, TX
Midland, TX
5880 \1\ Oklahoma City, OK......................... 0.8822 0.9177
Canadian, OK
Cleveland, OK
Logan, OK
McClain, OK
Oklahoma, OK
Pottawatomie, OK
5910 Olympia, WA................................... 1.0677 1.0459
Thurston, WA
5920 Omaha, NE-IA.................................. 0.9572 0.9705
Pottawattamie, IA
Cass, NE
Douglas, NE
Sarpy, NE
Washington, NE
5945 \1\ Orange County, CA......................... 1.1411 1.0946
Orange, CA
5960 \1\ Orlando, FL............................... 0.9610 0.9731
Lake, FL
Orange, FL
Osceola, FL
Seminole, FL
5990 Owensboro, KY................................. 0.8159 0.8699
Daviess, KY
6015 Panama City, FL............................... 0.9010 0.9311
Bay, FL
6020 Parkersburg-Marietta, WV-OH (WV Hospitals).... 0.8274 0.8783
Washington, OH
Wood, WV
6020 \2\ Parkersburg-Marietta, WV-OH (OH Hospitals) 0.8670 0.9069
Washington, OH
Wood, WV
6080 \2\ Pensacola, FL............................. 0.8928 0.9253
Escambia, FL
Santa Rosa, FL
6120 Peoria-Pekin, IL.............................. 0.8646 0.9052
Peoria, IL
Tazewell, IL
Woodford, IL
6160 \1\ Philadelphia, PA-NJ....................... 1.0937 1.0633
Burlington, NJ
Camden, NJ
Gloucester, NJ
Salem, NJ
Bucks, PA
Chester, PA
Delaware, PA
Montgomery, PA
Philadelphia, PA
6200 \1\ Phoenix-Mesa, AZ.......................... 0.9669 0.9772
[[Page 47154]]
Maricopa, AZ
Pinal, AZ
6240 Pine Bluff, AR................................ 0.7791 0.8429
Jefferson, AR
6280 \1\ Pittsburgh, PA............................ 0.9741 0.9822
Allegheny, PA
Beaver, PA
Butler, PA
Fayette, PA
Washington, PA
Westmoreland, PA
6323 \2\ Pittsfield, MA............................ 1.1204 1.0810
Berkshire, MA
6340 Pocatello, ID................................. 0.9076 0.9358
Bannock, ID
6360 Ponce, PR..................................... 0.5006 0.6226
Guayanilla, PR
Juana Diaz, PR
Penuelas, PR
Ponce, PR
Villalba, PR
Yauco, PR
6403 Portland, ME.................................. 0.9748 0.9827
Cumberland, ME
Sagadahoc, ME
York, ME
6440 \1\ Portland-Vancouver, OR-WA................. 1.0910 1.0615
Clackamas, OR
Columbia, OR
Multnomah, OR
Washington, OR
Yamhill, OR
Clark, WA
6483 \1\ Providence-Warwick-Pawtucket, RI.......... 1.0864 1.0584
Bristol, RI
Kent, RI
Newport, RI
Providence, RI
Washington, RI
6520 Provo-Orem, UT................................ 1.0041 1.0028
Utah, UT
6560 \2\ Pueblo, CO................................ 0.8968 0.9281
Pueblo, CO
6580 Punta Gorda, FL............................... 0.9613 0.9733
Charlotte, FL
6600 Racine, WI.................................... 0.9246 0.9477
Racine, WI
6640 \1\ Raleigh-Durham-Chapel Hill, NC............ 0.9646 0.9756
Chatham, NC
Durham, NC
Franklin, NC
Johnston, NC
Orange, NC
Wake, NC
6660 Rapid City, SD................................ 0.8865 0.9208
Pennington, SD
6680 Reading, PA................................... 0.9152 0.9411
Berks, PA
6690 Redding, CA................................... 1.1664 1.1112
Shasta, CA
6720 Reno, NV...................................... 1.0550 1.0373
Washoe, NV
6740 Richland-Kennewick-Pasco, WA.................. 1.1460 1.0978
Benton, WA
Franklin, WA
6760 Richmond-Petersburg, VA....................... 0.9617 0.9736
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 \1\ Riverside-San Bernardino, CA.............. 1.1115 1.0751
Riverside, CA
San Bernardino, CA
6800 Roanoke, VA................................... 0.8782 0.9149
Botetourt, VA
Roanoke, VA
Roanoke City, VA
Salem City, VA
6820 Rochester, MN................................. 1.1315 1.0883
Olmsted, MN
6840 \1\ Rochester, NY............................. 0.9182 0.9432
Genesee, NY
Livingston, NY
Monroe, NY
Ontario, NY
Orleans, NY
Wayne, NY
6880 Rockford, IL.................................. 0.8819 0.9175
Boone, IL
Ogle, IL
Winnebago, IL
6895 Rocky Mount, NC............................... 0.8849 0.9197
Edgecombe, NC
Nash, NC
6920 \1\ Sacramento, CA............................ 1.1957 1.1302
El Dorado, CA
Placer, CA
Sacramento, CA
6960 Saginaw-Bay City-Midland, MI.................. 0.9575 0.9707
Bay, MI
Midland, MI
Saginaw, MI
6980 St. Cloud, MN................................. 1.0016 1.0011
Benton, MN
Stearns, MN
7000 St. Joseph, MO................................ 0.9071 0.9354
Andrew, MO
Buchanan, MO
7040 \1\ 1St. Louis, MO-IL......................... 0.9049 0.9339
Clinton, IL
Jersey, IL
Madison, IL
Monroe, IL
St. Clair, IL
Franklin, MO
Jefferson, MO
Lincoln, MO
St. Charles, MO
St. Louis, MO
St. Louis City, MO
Warren, MO
7080 Salem, OR..................................... 1.0132 1.0090
Marion, OR
Polk, OR
7120 Salinas, CA................................... 1.4502 1.2899
Monterey, CA
7160 \1\ Salt Lake City-Ogden, UT.................. 0.9811 0.9870
Davis, UT
Salt Lake, UT
Weber, UT
7200 San Angelo, TX................................ 0.8083 0.8644
Tom Green, TX
7240 \1\ San Antonio, TX........................... 0.8580 0.9004
Bexar, TX
Comal, TX
Guadalupe, TX
Wilson, TX
7320 \1\ San Diego, CA............................. 1.1784 1.1190
San Diego, CA
7360 \1\ San Francisco, CA......................... 1.4193 1.2710
Marin, CA
San Francisco, CA
San Mateo, CA
7400 \1\ San Jose, CA.............................. 1.3564 1.2321
Santa Clara, CA
7440 \1\ San Juan-Bayamon, PR...................... 0.4690 0.5954
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
[[Page 47155]]
Vega Alta, PR
Vega Baja, PR
Yabucoa, PR
7460 San Luis Obispo-Atascadero-Paso Robles, CA.... 1.0673 1.0456
San Luis Obispo, CA
7480 Santa Barbara-Santa Maria-Lompoc, CA.......... 1.0597 1.0405
Santa Barbara, CA
7485 Santa Cruz-Watsonville, CA.................... 1.4095 1.2650
Santa Cruz, CA
7490 Santa Fe, NM.................................. 1.0537 1.0365
Los Alamos, NM
Santa Fe, NM
7500 Santa Rosa, CA................................ 1.2646 1.1744
Sonoma, CA
7510 Sarasota-Bradenton, FL........................ 0.9809 0.9869
Manatee, FL
Sarasota, FL
7520 Savannah, GA.................................. 0.9697 0.9792
Bryan, GA
Chatham, GA
Effingham, GA
7560 \2\ Scranton--Wilkes-Barre--Hazleton, PA...... 0.8578 0.9003
Columbia, PA
Lackawanna, PA
Luzerne, PA
Wyoming, PA
7600 \1\ Seattle-Bellevue-Everett, WA.............. 1.1016 1.0685
Island, WA
King, WA
Snohomish, WA
7610 \2\ Sharon, PA................................ 0.8578 0.9003
Mercer, PA
7620 \2\ Sheboygan, WI............................. 0.8880 0.9219
Sheboygan, WI
7640 Sherman-Denison, TX........................... 0.8795 0.9158
Grayson, TX
7680 Shreveport-Bossier City, LA................... 0.8750 0.9126
Bossier, LA
Caddo, LA
Webster, LA
7720 Sioux City, IA-NE............................. 0.8473 0.8927
Woodbury, IA
Dakota, NE
7760 Sioux Falls, SD............................... 0.8790 0.9155
Lincoln, SD
Minnehaha, SD
7800 South Bend, IN................................ 1.0029 1.0020
St. Joseph, IN
7840 Spokane, WA................................... 1.0513 1.0349
Spokane, WA
7880 Springfield, IL............................... 0.8685 0.9080
Menard, IL
Sangamon, IL
7920 Springfield, MO............................... 0.8488 0.8938
Christian, MO
Greene, MO
Webster, MO
8003 \2\ Springfield, MA........................... 1.1204 1.0810
Hampden, MA
Hampshire, MA
8050 State College, PA............................. 0.9038 0.9331
Centre, PA
8080 \2\ Steubenville-Weirton, OH-WV (OH Hospitals) 0.8670 0.9069
Jefferson, OH
Brooke, WV
Hancock, WV
8080 Steubenville-Weirton, OH-WV (WV Hospitals).... 0.8548 0.8981
Jefferson, OH
Brooke, WV
Hancock, WV
8120 Stockton-Lodi, CA............................. 1.0629 1.0427
San Joaquin, CA
8140 \2\ Sumter, SC................................ 0.8370 0.8853
Sumter, SC
8160 Syracuse, NY.................................. 0.9594 0.9720
Cayuga, NY
Madison, NY
Onondaga, NY
Oswego, NY
8200 Tacoma, WA.................................... 1.1564 1.1046
Pierce, WA
8240 \2\ Tallahassee, FL........................... 0.8928 0.9253
Gadsden, FL
Leon, FL
8280 \1\ Tampa-St. Petersburg-Clearwater, FL....... 0.9099 0.9374
Hernando, FL
Hillsborough, FL
Pasco, FL
Pinellas, FL
8320 \2\ Terre Haute, IN........................... 0.8602 0.9020
Clay, IN
Vermillion, IN
Vigo, IN
8360 Texarkana, AR-Texarkana, TX................... 0.8427 0.8894
Miller, AR
Bowie, TX
8400 Toledo, OH.................................... 0.9664 0.9769
Fulton, OH
Lucas, OH
Wood, OH
8440 Topeka, KS.................................... 0.9117 0.9387
Shawnee, KS
8480 Trenton, NJ................................... 1.0137 1.0094
Mercer, NJ
8520 Tucson, AZ.................................... 0.8821 0.9177
Pima, AZ
8560 Tulsa, OK..................................... 0.8454 0.8914
Creek, OK
Osage, OK
Rogers, OK
Tulsa, OK
Wagoner, OK
8600 Tuscaloosa, AL................................ 0.8064 0.8630
Tuscaloosa, AL
8640 Tyler, TX..................................... 0.9404 0.9588
Smith, TX
8680 Utica-Rome, NY................................ 0.8560 0.8990
Herkimer, NY
Oneida, NY
8720 Vallejo-Fairfield-Napa, CA.................... 1.2266 1.1501
Napa, CA
Solano, CA
8735 Ventura, CA................................... 1.0479 1.0326
Ventura, CA
8750 Victoria, TX.................................. 0.8154 0.8696
Victoria, TX
8760 Vineland-Millville-Bridgeton, NJ.............. 1.0501 1.0340
Cumberland, NJ
8780 \2\ Visalia-Tulare-Porterville, CA............ 0.9861 0.9905
Tulare, CA
8800 Waco, TX...................................... 0.8314 0.8812
McLennan, TX
8840 \1\ Washington, DC-MD-VA-WV................... 1.0755 1.0511
District of Columbia, DC
Calvert, MD
Charles, MD
Frederick, MD
Montgomery, MD
Prince Georges, MD
Alexandria City, VA
Arlington, VA
Clarke, VA
Culpeper, 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...................... 0.8802 0.9163
Black Hawk, IA
8940 Wausau, WI.................................... 0.9426 0.9603
Marathon, WI
8960 \1\ 1West Palm Beach-Boca Raton, FL........... 0.9615 0.9735
Palm Beach, FL
9000 \2\ Wheeling, WV-OH (WV Hospitals)............ 0.8231 0.8752
Belmont, OH
Marshall, WV
[[Page 47156]]
Ohio, WV
9000 \2\ Wheeling, WV-OH (OH Hospitals)............ 0.8670 0.9069
Belmont, OH
Marshall, WV
Ohio, WV
9040 Wichita, KS................................... 0.9544 0.9685
Butler, KS
Harvey, KS
Sedgwick, KS
9080 Wichita Falls, TX............................. 0.7668 0.8337
Archer, TX
Wichita, TX
9140 \2\ Williamsport, PA.......................... 0.8578 0.9003
Lycoming, PA
9160 Wilmington-Newark, DE-MD...................... 1.1191 1.0801
New Castle, DE
Cecil, MD
9200 Wilmington, NC................................ 0.9402 0.9587
New Hanover, NC
Brunswick, NC
9260 \2\ Yakima, WA................................ 1.0434 1.0295
Yakima, WA
9270 Yolo, CA...................................... 1.0199 1.0136
Yolo, CA
9280 York, PA...................................... 0.9264 0.9490
York, PA
9320 Youngstown-Warren, OH......................... 0.9543 0.9685
Columbiana, OH
Mahoning, OH Trumbull, OH
9340 Yuba City, CA................................. 1.0706 1.0478
Sutter, CA
Yuba, CA
9360 Yuma, AZ...................................... 0.9529 0.9675
Yuma, AZ
------------------------------------------------------------------------
\1\ Large Urban Area.
\2\ Hospitals geographically located in the area are assigned the
statewide rural wage index for FY 2001.
Table 4b.--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Rural Areas
------------------------------------------------------------------------
Wage
Nonurban area index GAF
------------------------------------------------------------------------
Alabama............................................. 0.7528 0.8233
Alaska.............................................. 1.2392 1.1582
Arizona............................................. 0.8317 0.8814
Arkansas............................................ 0.7445 0.8171
California.......................................... 0.9861 0.9905
Colorado............................................ 0.8968 0.9281
Connecticut......................................... 1.1715 1.1145
Delaware............................................ 0.9074 0.9356
Florida............................................. 0.8928 0.9253
Georgia............................................. 0.8329 0.8823
Hawaii.............................................. 1.1059 1.0714
Idaho............................................... 0.8678 0.9075
Illinois............................................ 0.8160 0.8700
Indiana............................................. 0.8602 0.9020
Iowa................................................ 0.8030 0.8605
Kansas.............................................. 0.7605 0.8290
Kentucky............................................ 0.7931 0.8532
Louisiana........................................... 0.7713 0.8371
Maine............................................... 0.8766 0.9138
Maryland............................................ 0.8651 0.9055
Massachusetts....................................... 1.1204 1.0810
Michigan............................................ 0.9021 0.9319
Minnesota........................................... 0.8881 0.9219
Mississippi......................................... 0.7491 0.8205
Missouri............................................ 0.7707 0.8366
Montana............................................. 0.8688 0.9082
Nebraska............................................ 0.8109 0.8663
Nevada.............................................. 0.9232 0.9467
New Hampshire....................................... 0.9845 0.9894
New Jersey \1\...................................... ........ ........
New Mexico.......................................... 0.8497 0.8945
New York............................................ 0.8499 0.8946
North Carolina...................................... 0.8441 0.8904
North Dakota........................................ 0.7716 0.8373
Ohio................................................ 0.8670 0.9069
Oklahoma............................................ 0.7491 0.8205
Oregon.............................................. 1.0132 1.0090
Pennsylvania........................................ 0.8578 0.9003
Puerto Rico......................................... 0.4264 0.5578
Rhode Island \1\.................................... ........ ........
South Carolina...................................... 0.8370 0.8853
South Dakota........................................ 0.7570 0.8264
Tennessee........................................... 0.7838 0.8464
Texas............................................... 0.7507 0.8217
Utah................................................ 0.9037 0.9330
Vermont............................................. 0.9427 0.9604
Virginia............................................ 0.8189 0.8721
Washington.......................................... 1.0434 1.0295
West Virginia....................................... 0.8231 0.8752
Wisconsin........................................... 0.8880 0.9219
Wyoming............................................. 0.8817 0.9174
------------------------------------------------------------------------
\1\ All counties within the State are classified as urban.
Table 4c.--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Hospitals That Are Reclassified
------------------------------------------------------------------------
Wage
Area index GAF
------------------------------------------------------------------------
Abilene, TX......................................... 0.8240 0.8758
Akron, OH........................................... 0.9736 0.9818
Alexandria, LA...................................... 0.8170 0.8707
Amarillo, TX........................................ 0.8715 0.9101
Anchorage, AK....................................... 1.2865 1.1883
Ann Arbor, MI....................................... 1.1064 1.0717
Atlanta, GA......................................... 1.0096 1.0066
Atlantic-Cape May, NJ............................... 1.0822 1.0556
Augusta-Aiken, GA-SC................................ 0.9160 0.9417
Baton Rouge, LA..................................... 0.8734 0.9115
Benton Harbor, MI................................... 0.9021 0.9319
Bergen-Passaic, NJ.................................. 1.1605 1.1073
Billings, MT........................................ 0.9591 0.9718
Binghamton, NY...................................... 0.8690 0.9083
Birmingham, AL...................................... 0.8477 0.8930
Bismarck, ND........................................ 0.7897 0.8507
Bloomington-Normal, IL.............................. 0.9156 0.9414
Boise City, ID...................................... 0.9042 0.9334
Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH 1.1160 1.0781
(NH, RI, and VT Hospitals).........................
Burlington, VT...................................... 1.0550 1.0373
Casper, WY.......................................... 0.8817 0.9174
Champaign-Urbana, IL................................ 0.9084 0.9363
Charleston-North Charleston, SC..................... 0.9067 0.9351
Charleston, WV...................................... 0.8904 0.9236
Charlotte-Gastonia-Rock Hill, NC-SC................. 0.9391 0.9579
Chattanooga, TN-GA.................................. 0.9624 0.9741
Chicago, IL......................................... 1.1015 1.0684
Cincinnati, OH-KY-IN................................ 0.9415 0.9596
Clarksville-Hopkinsville, TN-KY..................... 0.8277 0.8785
Cleveland-Lorain-Elyria, OH......................... 0.9593 0.9719
Columbia, MO........................................ 0.8756 0.9130
Columbia, SC........................................ 0.9433 0.9608
Columbus, OH........................................ 0.9619 0.9737
Dallas, TX.......................................... 0.9913 0.9940
Danville, VA........................................ 0.8212 0.8738
Davenport-Moline-Rock Island, IA-IL................. 0.8898 0.9232
Dayton-Springfield, OH.............................. 0.9442 0.9614
Denver, CO.......................................... 1.0181 1.0124
Des Moines, IA...................................... 0.9011 0.9312
Dothan, AL.......................................... 0.8013 0.8592
Dover, DE........................................... 0.9769 0.9841
Duluth-Superior, MN-WI.............................. 1.0043 1.0029
Eau Claire, WI...................................... 0.8880 0.9219
Erie, PA............................................ 0.8985 0.9293
Eugene-Springfield, OR.............................. 1.0965 1.0651
Fargo-Moorhead, ND-MN............................... 0.8517 0.8959
Fayetteville, NC.................................... 0.8469 0.8924
Flagstaff, AZ-UT.................................... 1.0525 1.0357
Flint, MI........................................... 1.1058 1.0713
Florence, AL........................................ 0.7652 0.8325
Florence, SC........................................ 0.8777 0.9145
Fort Collins-Loveland, CO........................... 1.0647 1.0439
Ft. Lauderdale, FL.................................. 1.0152 1.0104
Fort Pierce-Port St. Lucie, FL...................... 0.9622 0.9740
Fort Smith, AR-OK................................... 0.7947 0.8544
Fort Walton Beach, FL............................... 0.9358 0.9556
Fort Wayne, IN...................................... 0.8665 0.9065
Forth Worth-Arlington, TX........................... 0.9527 0.9674
Gadsden, AL......................................... 0.8423 0.8891
Grand Forks, ND-MN.................................. 0.8954 0.9271
Grand Junction, CO.................................. 0.9471 0.9635
Grand Rapids-Muskegon-Holland, MI................... 1.0248 1.0169
Great Falls, MT..................................... 0.9331 0.9537
Greeley, CO......................................... 0.9573 0.9706
Green Bay, WI....................................... 0.9308 0.9521
Greensboro-Winston-Salem-High Point, NC............. 0.9124 0.9391
Greenville, NC...................................... 0.9172 0.9425
Greenville-Spartanburg-Anderson, SC................. 0.9003 0.9306
Harrisburg-Lebanon-Carlisle, PA..................... 0.9386 0.9575
[[Page 47157]]
Hartford, CT (MA Hospital).......................... 1.1420 1.0952
Hattiesburg, MS..................................... 0.7491 0.8205
Hickory-Morganton-Lenoir, NC........................ 0.8577 0.9002
Honolulu, HI........................................ 1.1866 1.1243
Houston, TX......................................... 0.9732 0.9816
Huntington-Ashland, WV-KY-OH........................ 0.9605 0.9728
Huntsville, AL...................................... 0.8779 0.9147
Indianapolis, IN.................................... 0.9787 0.9854
Jackson, MS......................................... 0.8698 0.9089
Jackson, TN......................................... 0.8796 0.9159
Jacksonville, FL.................................... 0.9208 0.9451
Jersey City, NJ..................................... 1.1573 1.1052
Johnson City-Kingsport-Bristol, TN-VA............... 0.8328 0.8822
Joplin, MO.......................................... 0.8148 0.8691
Kalamazoo-Battlecreek, MI........................... 1.0311 1.0212
Kansas City, KS-MO.................................. 0.9498 0.9653
Knoxville, TN....................................... 0.8340 0.8831
Kokomo, IN.......................................... 0.9525 0.9672
Lafayette, LA....................................... 0.8490 0.8940
Lansing-East Lansing, MI............................ 0.9934 0.9955
Las Cruces, NM...................................... 0.8510 0.8954
Las Vegas, NV-AZ.................................... 1.0796 1.0538
Lexington, KY....................................... 0.8712 0.9099
Lima, OH............................................ 0.9320 0.9529
Lincoln, NE......................................... 0.9666 0.9770
Little Rock-North Little Rock, AR................... 0.8791 0.9155
Longview-Marshall, TX............................... 0.8732 0.9113
Los Angeles-Long Beach, CA.......................... 1.2033 1.1351
Louisville, KY-IN................................... 0.9350 0.9550
Lynchburg, VA....................................... 0.8749 0.9125
Macon, GA........................................... 0.8974 0.9285
Madison, WI......................................... 1.0271 1.0185
Mansfield, OH....................................... 0.8690 0.9083
Memphis, TN-AR-MS................................... 0.8584 0.9007
Milwaukee-Waukesha, WI.............................. 0.9767 0.9840
Minneapolis-St. Paul, MN-WI......................... 1.1017 1.0686
Missoula, MT........................................ 0.9332 0.9538
Mobile, AL.......................................... 0.8163 0.8702
Monmouth-Ocean, NJ.................................. 1.1283 1.0862
Montgomery, AL...................................... 0.7653 0.8326
Myrtle Beach, SC (NC Hospital)...................... 0.8441 0.8904
Nashville, TN....................................... 0.9301 0.9516
New Haven-Bridgeport-Stamford-Waterbury-Danbury, CT. 1.2034 1.1352
New London-Norwich, CT.............................. 1.1926 1.1282
New Orleans, LA..................................... 0.9295 0.9512
New York, NY........................................ 1.4463 1.2875
Newburgh, NY-PA..................................... 1.0666 1.0451
Norfolk-Virginia Beach-Newport News, VA-NC.......... 0.8441 0.8904
Oakland, CA......................................... 1.4983 1.3190
Ocala, FL........................................... 0.9243 0.9475
Odessa-Midland, TX.................................. 0.9074 0.9356
Oklahoma City, OK................................... 0.8822 0.9177
Omaha, NE-IA........................................ 0.9572 0.9705
Orange County, CA................................... 1.1411 1.0946
Orlando, FL......................................... 0.9610 0.9731
Peoria-Pekin, IL.................................... 0.8646 0.9052
Philadelphia, PA-NJ................................. 1.0937 1.0633
Pine Bluff, AR...................................... 0.7680 0.8346
Pittsburgh, PA...................................... 0.9575 0.9707
Pittsfield, MA (VT Hospital)........................ 0.9914 0.9941
Pocatello, ID....................................... 0.8715 0.9101
Portland, ME........................................ 0.9629 0.9744
Portland-Vancouver, OR-WA........................... 1.0910 1.0615
Provo-Orem, UT...................................... 1.0041 1.0028
Raleigh-Durham-Chapel Hill, NC...................... 0.9646 0.9756
Rapid City, SD...................................... 0.8865 0.9208
Redding, CA......................................... 1.1664 1.1112
Reno, NV............................................ 1.0438 1.0298
Richland-Kennewick-Pasco, WA........................ 1.1147 1.0772
Roanoke, VA......................................... 0.8782 0.9149
Rochester, MN....................................... 1.1315 1.0883
Rockford, IL........................................ 0.8819 0.9175
Sacramento, CA...................................... 1.1957 1.1302
Saginaw-Bay City-Midland, MI........................ 0.9575 0.9707
St. Cloud, MN....................................... 1.0016 1.0011
St. Joseph, MO...................................... 0.8848 0.9196
St. Louis, MO-IL.................................... 0.9049 0.9339
Salinas, CA......................................... 1.4502 1.2899
Salt Lake City-Ogden, UT............................ 0.9811 0.9870
San Diego, CA....................................... 1.1784 1.1190
Santa Cruz-Watsonville, CA.......................... 1.3897 1.2528
Santa Fe, NM........................................ 1.0000 1.0000
Santa Rosa, CA...................................... 1.2398 1.1586
Seattle-Bellevue-Everett, WA........................ 1.1016 1.0685
Sherman-Denison, TX................................. 0.8795 0.9158
Sioux City, IA-NE................................... 0.8473 0.8927
South Bend, IN...................................... 1.0029 1.0020
Spokane, WA......................................... 1.0333 1.0227
Springfield, IL..................................... 0.8685 0.9080
Springfield, MO..................................... 0.8212 0.8738
Syracuse, NY........................................ 0.9594 0.9720
Tampa-St. Petersburg-Clearwater, FL................. 0.9099 0.9374
Texarkana, AR-Texarkana, TX......................... 0.8427 0.8894
Toledo, OH.......................................... 0.9664 0.9769
Topeka, KS.......................................... 0.9117 0.9387
Tucson, AZ.......................................... 0.8821 0.9177
Tulsa, OK........................................... 0.8454 0.8914
Tuscaloosa, AL...................................... 0.8064 0.8630
Tyler, TX........................................... 0.9141 0.9403
Victoria, TX........................................ 0.8154 0.8696
Washington, DC-MD-VA-WV............................. 1.0755 1.0511
Waterloo-Cedar Falls, IA............................ 0.8802 0.9163
Wausau, WI.......................................... 0.9426 0.9603
Wichita, KS......................................... 0.9262 0.9489
Rural Alabama....................................... 0.7528 0.8233
Rural Florida....................................... 0.8928 0.9253
Rural Illinois...................................... 0.8160 0.8700
Rural Louisiana..................................... 0.7713 0.8371
Rural Michigan...................................... 0.9021 0.9319
Rural Minnesota..................................... 0.8881 0.9219
Rural Missouri...................................... 0.7707 0.8366
Rural Montana....................................... 0.8688 0.9082
Rural Oregon........................................ 1.0132 1.0090
Rural Texas......................................... 0.7507 0.8217
Rural Washington.................................... 1.0434 1.0295
Rural West Virginia................................. 0.8231 0.8752
Rural Wisconsin..................................... 0.8880 0.9219
Rural Wyoming (NE Hospital)......................... 0.8671 0.9070
------------------------------------------------------------------------
Table 4d.--Average Hourly Wage for Urban Areas
------------------------------------------------------------------------
Average
Urban area hourly
wage
------------------------------------------------------------------------
Abilene, TX.................................................. 17.9387
Aguadilla, PR................................................ 9.5583
Akron, OH.................................................... 21.1962
Albany, GA................................................... 21.6247
Albany-Schenectady-Troy, NY.................................. 18.6106
Albuquerque, NM.............................................. 19.8899
Alexandria, LA............................................... 17.7452
Allentown-Bethlehem-Easton, PA............................... 21.8571
Altoona, PA.................................................. 20.3472
Amarillo, TX................................................. 18.9724
Anchorage, AK................................................ 27.8515
Ann Arbor, MI................................................ 24.5003
Anniston, AL................................................. 18.0347
Appleton-Oshkosh-Neenah, WI.................................. 19.7058
Arecibo, PR.................................................. 9.8505
Asheville, NC................................................ 20.7157
Athens, GA................................................... 21.2027
Atlanta, GA.................................................. 21.9792
Atlantic-Cape May, NJ........................................ 24.3440
Auburn-Opelika, AL........................................... 17.6461
Augusta-Aiken, GA-SC......................................... 19.9424
Austin-San Marcos, TX........................................ 20.8502
Bakersfield, CA.............................................. 21.0688
Baltimore, MD................................................ 20.3888
Bangor, ME................................................... 20.8150
Barnstable-Yarmouth, MA...................................... 30.1277
Baton Rouge, LA.............................................. 19.2487
Beaumont-Port Arthur, TX..................................... 19.0352
Bellingham, WA............................................... 24.9039
Benton Harbor, MI............................................ 18.8768
Bergen-Passaic, NJ........................................... 25.7937
Billings, MT................................................. 20.8676
Biloxi-Gulfport-Pascagoula, MS............................... 17.9290
Binghamton, NY............................................... 18.9175
Birmingham, AL............................................... 18.4002
Bismarck, ND................................................. 16.7742
Bloomington,IN............................................... 19.0130
Bloomington-Normal, IL....................................... 19.8003
Boise City, ID............................................... 19.6053
Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH............. 24.2959
Boulder-Longmont, CO......................................... 21.1843
Brazoria, TX................................................. 18.8483
Bremerton, WA................................................ 23.8918
Brownsville-Harlingen-San Benito, TX......................... 18.9870
[[Page 47158]]
Bryan-College Station, TX.................................... 17.9324
Buffalo-Niagara Falls, NY.................................... 20.8552
Burlington, VT............................................... 23.3707
Caguas, PR................................................... 9.9325
Canton-Massillon, OH......................................... 18.6867
Casper, WY................................................... 18.9923
Cedar Rapids, IA............................................. 19.0186
Champaign-Urbana, IL......................................... 20.0245
Charleston-North Charleston, SC.............................. 19.6765
Charleston, WV............................................... 20.1160
Charlotte-Gastonia-Rock Hill, NC-SC.......................... 20.4436
Charlottesville, VA.......................................... 23.4885
Chattanooga, TN-GA........................................... 21.4064
Cheyenne, WY................................................. 18.0869
Chicago, IL.................................................. 24.2653
Chico-Paradise, CA........................................... 21.5925
Cincinnati, OH-KY-IN......................................... 20.4967
Clarksville-Hopkinsville, TN-KY.............................. 17.8606
Cleveland-Lorain-Elyria, OH.................................. 20.8921
Colorado Springs, CO......................................... 21.1114
Columbia, MO................................................. 19.5074
Columbia, SC................................................. 20.7995
Columbus, GA-AL.............................................. 18.6521
Columbus, OH................................................. 20.9403
Corpus Christi, TX........................................... 18.9962
Corvallis, OR................................................ 24.6574
Cumberland, MD-WV............................................ 18.2190
Dallas, TX................................................... 21.5801
Danville, VA................................................. 18.6983
Davenport-Moline-Rock Island, IA-IL.......................... 19.3712
Dayton-Springfield, OH....................................... 20.5545
Daytona Beach, FL............................................ 20.0282
Decatur, AL.................................................. 18.5791
Decatur, IL.................................................. 17.6894
Denver, CO................................................... 22.1647
Des Moines, IA............................................... 19.8508
Detroit, MI.................................................. 22.8814
Dothan, AL................................................... 17.2926
Dover, DE.................................................... 21.9391
Dubuque, IA.................................................. 19.0397
Duluth-Superior, MN-WI....................................... 21.8388
Dutchess County, NY.......................................... 22.3121
Eau Claire, WI............................................... 19.1358
El Paso, TX.................................................. 20.3455
Elkhart-Goshen, IN........................................... 19.9093
Elmira, NY................................................... 18.6041
Enid, OK..................................................... 18.7450
Erie, PA..................................................... 19.5597
Eugene-Springfield, OR....................................... 23.8704
Evansville, Henderson, IN-KY................................. 17.7939
Fargo-Moorhead, ND-MN........................................ 19.0467
Fayetteville, NC............................................. 18.8418
Fayetteville-Springdale-Rogers, AR........................... 17.2213
Flagstaff, AZ-UT............................................. 23.2631
Flint, MI.................................................... 24.3942
Florence, AL................................................. 16.5808
Florence, SC................................................. 19.1069
Fort Collins-Loveland, CO.................................... 23.1791
Fort Lauderdale, FL.......................................... 22.0334
Fort Myers-Cape Coral, FL.................................... 20.1312
Fort Pierce-Port St. Lucie, FL............................... 20.7635
Fort Smith, AR-OK............................................ 17.5292
Fort Walton Beach, FL........................................ 20.9154
Fort Wayne, IN............................................... 18.8629
Fort Worth-Arlington, TX..................................... 20.7411
Fresno, CA................................................... 21.9976
Gadsden, AL.................................................. 18.3371
Gainesville, FL.............................................. 21.9311
Galveston-Texas City, TX..................................... 21.5917
Gary, IN..................................................... 20.5814
Glens Falls, NY.............................................. 18.2029
Goldsboro, NC................................................ 18.3380
Grand Forks, ND-MN........................................... 19.1930
Grand Junction, CO........................................... 19.8299
Grand Rapids-Muskegon-Holland, MI............................ 22.3091
Great Falls, MT.............................................. 19.7346
Greeley, CO.................................................. 21.3659
Green Bay, WI................................................ 20.0839
Greensboro-Winston-Salem-High Point, NC...................... 19.8775
Greenville, NC............................................... 20.4282
Greenville-Spartanburg-Anderson, SC.......................... 19.5991
Hagerstown, MD............................................... 20.4841
Hamilton-Middletown, OH...................................... 19.7254
Harrisburg-Lebanon-Carlisle, PA.............................. 20.4334
Hartford, CT................................................. 24.7589
Hattiesburg, MS.............................................. 16.3068
Hickory-Morganton-Lenoir, NC................................. 19.6096
Honolulu, HI................................................. 25.8269
Houma, LA.................................................... 17.6029
Houston, TX.................................................. 21.1868
Huntington-Ashland, WV-KY-OH................................. 21.4993
Huntsville, AL............................................... 19.4455
Indianapolis, IN............................................. 21.3060
Iowa City, IA................................................ 21.0244
Jackson, MI.................................................. 19.8852
Jackson, MS.................................................. 19.1842
Jackson, TN.................................................. 19.1498
Jacksonville, FL............................................. 20.0465
Jacksonville, NC............................................. 16.9298
Jamestown, NY................................................ 17.0195
Janesville-Beloit, WI........................................ 20.8677
Jersey City, NJ.............................................. 25.0412
Johnson City-Kingsport-Bristol, TN-VA........................ 18.0083
Johnstown, PA................................................ 19.2587
Jonesboro, AR................................................ 17.0500
Joplin, MO................................................... 17.7376
Kalamazoo-Battlecreek, MI.................................... 22.7571
Kankakee, IL................................................. 21.5573
Kansas City, KS-MO........................................... 20.6781
Kenosha, WI.................................................. 20.9242
Killeen-Temple, TX........................................... 22.0298
Knoxville, TN................................................ 18.1556
Kokomo, IN................................................... 20.7207
La Crosse, WI-MN............................................. 20.0533
Lafayette, LA................................................ 18.4838
Lafayette, IN................................................ 19.2317
Lake Charles, LA............................................. 16.1070
Lakeland-Winter Haven, FL.................................... 20.1126
Lancaster, PA................................................ 20.1576
Lansing-East Lansing, MI..................................... 21.6264
Laredo, TX................................................... 17.7822
Las Cruces, NM............................................... 18.8479
Las Vegas, NV-AZ............................................. 23.5027
Lawrence, KS................................................. 17.8290
Lawton, OK................................................... 19.5850
Lewiston-Auburn, ME.......................................... 19.6724
Lexington, KY................................................ 19.3007
Lima, OH..................................................... 20.2889
Lincoln, NE.................................................. 20.9569
Little Rock-North Little Rock, AR............................ 19.3875
Longview-Marshall, TX........................................ 19.4243
Los Angeles-Long Beach, CA................................... 26.1164
Louisville, KY-IN............................................ 20.3544
Lubbock, TX.................................................. 19.2404
Lynchburg, VA................................................ 19.3031
Macon, GA.................................................... 19.5357
Madison, WI.................................................. 22.3606
Mansfield, OH................................................ 18.9191
Mayaguez, PR................................................. 9.9900
McAllen-Edinburg-Mission, TX................................. 18.6487
Medford-Ashland, OR.......................................... 22.5185
Melbourne-Titusville-Palm Bay, FL............................ 21.0904
Memphis, TN-AR-MS............................................ 18.9896
Merced, CA................................................... 20.9989
Miami, FL.................................................... 21.8997
Middlesex-Somerset-Hunterdon, NJ............................. 24.1094
Milwaukee-Waukesha, WI....................................... 21.2638
Minneapolis-St. Paul, MN-WI.................................. 23.9833
Missoula, MT................................................. 20.1896
Mobile, AL................................................... 17.7700
Modesto, CA.................................................. 22.6325
Monmouth-Ocean, NJ........................................... 24.5529
Monroe, LA................................................... 18.2776
Montgomery, AL............................................... 16.6605
Muncie, IN................................................... 23.8791
Myrtle Beach, SC............................................. 18.3751
Naples, FL................................................... 21.0332
Nashville, TN................................................ 20.6601
Nassau-Suffolk, NY........................................... 30.3304
New Haven-Bridgeport-Stamford-Waterbury-Danbury, CT.......... 26.7711
New London-Norwich, CT....................................... 26.2605
New Orleans, LA.............................................. 20.2347
New York, NY................................................. 31.8954
Newark, NJ................................................... 25.7698
Newburgh, NY-PA.............................................. 23.6150
Norfolk-Virginia Beach-Newport News, VA-NC................... 18.3132
Oakland, CA.................................................. 32.6189
Ocala, FL.................................................... 20.1230
Odessa-Midland, TX........................................... 20.0403
Oklahoma City, OK............................................ 19.2048
Olympia, WA.................................................. 23.2441
Omaha, NE-IA................................................. 20.8374
Orange County, CA............................................ 24.9648
Orlando, FL.................................................. 20.9206
Owensboro, KY................................................ 17.7626
Panama City, FL.............................................. 19.6150
Parkersburg-Marietta, WV-OH.................................. 18.0122
Pensacola, FL................................................ 17.7997
Peoria-Pekin, IL............................................. 18.8206
Philadelphia, PA-NJ.......................................... 23.8095
Phoenix-Mesa, AZ............................................. 21.0494
Pine Bluff, AR............................................... 16.9610
Pittsburgh, PA............................................... 21.2070
Pittsfield, MA............................................... 22.3968
Pocatello, ID................................................ 19.7591
Ponce, PR.................................................... 10.8985
Portland, ME................................................. 21.2220
Portland-Vancouver, OR-WA.................................... 23.7513
Providence-Warwick, RI....................................... 23.6503
Provo-Orem, UT............................................... 21.8338
Pueblo, CO................................................... 19.1909
Punta Gorda, FL.............................................. 20.9268
Racine, WI................................................... 20.1287
Raleigh-Durham-Chapel Hill, NC............................... 21.0003
Rapid City, SD............................................... 19.2995
Reading, PA.................................................. 19.9251
Redding, CA.................................................. 25.3926
[[Page 47159]]
Reno, NV..................................................... 22.9669
Richland-Kennewick-Pasco, WA................................. 24.9481
Richmond-Petersburg, VA...................................... 20.9366
Riverside-San Bernardino, CA................................. 24.4685
Roanoke, VA.................................................. 19.0494
Rochester, MN................................................ 24.6337
Rochester, NY................................................ 19.9884
Rockford, IL................................................. 19.1994
Rocky Mount, NC.............................................. 19.2653
Sacramento, CA............................................... 26.0143
Saginaw-Bay City-Midland, MI................................. 20.8446
St. Cloud, MN................................................ 21.8042
St. Joseph, MO............................................... 19.7467
St. Louis, MO-IL............................................. 19.6997
Salem, OR.................................................... 22.1817
Salinas, CA.................................................. 31.5702
Salt Lake City-Ogden, UT..................................... 21.3500
San Angelo, TX............................................... 17.5980
San Antonio, TX.............................................. 18.6797
San Diego, CA................................................ 25.6544
San Francisco, CA............................................ 30.8184
San Jose, CA................................................. 29.7210
San Juan-Bayamon, PR......................................... 10.2110
San Luis Obispo-Atascadero-Paso Robles, CA................... 23.2360
Santa Barbara-Santa Maria-Lompoc, CA......................... 23.0707
Santa Cruz-Watsonville, CA................................... 30.5664
Santa Fe, NM................................................. 22.9400
Santa Rosa, CA............................................... 27.5311
Sarasota-Bradenton, FL....................................... 21.3554
Savannah, GA................................................. 21.1099
Scranton-Wilkes Barre-Hazleton, PA........................... 18.3332
Seattle-Bellevue-Everett, WA................................. 23.9393
Sharon, PA................................................... 17.2591
Sheboygan, WI................................................ 18.2407
Sherman-Denison, TX.......................................... 18.9273
Shreveport-Bossier City, LA.................................. 19.0499
Sioux City, IA-NE............................................ 18.4457
Sioux Falls, SD.............................................. 19.1359
South Bend, IN............................................... 21.7709
Spokane, WA.................................................. 22.8867
Springfield, IL.............................................. 18.9066
Springfield, MO.............................................. 18.4778
Springfield, MA.............................................. 23.1578
State College, PA............................................ 19.6769
Steubenville-Weirton, OH-WV.................................. 18.6092
Stockton-Lodi, CA............................................ 23.1397
Sumter, SC................................................... 18.0057
Syracuse, NY................................................. 20.7876
Tacoma, WA................................................... 25.1749
Tallahassee, FL.............................................. 18.6017
Tampa-St. Petersburg-Clearwater, FL.......................... 19.5532
Terre Haute, IN.............................................. 18.0773
Texarkana, AR-Texarkana, TX.................................. 18.2062
Toledo, OH................................................... 21.4050
Topeka, KS................................................... 19.8476
Trenton, NJ.................................................. 22.0690
Tucson, AZ................................................... 19.1447
Tulsa, OK.................................................... 18.4038
Tuscaloosa, AL............................................... 17.5550
Tyler, TX.................................................... 20.4737
Utica-Rome, NY............................................... 18.6360
Vallejo-Fairfield-Napa, CA................................... 27.9688
Ventura, CA.................................................. 24.0125
Victoria, TX................................................. 17.7514
Vineland-Millville-Bridgeton, NJ............................. 22.8607
Visalia-Tulare-Porterville, CA............................... 20.7921
Waco, TX..................................................... 18.1006
Washington, DC-MD-VA-WV...................................... 23.4147
Waterloo-Cedar Falls, IA..................................... 18.2949
Wausau, WI................................................... 20.5039
West Palm Beach-Boca Raton, FL............................... 21.0777
Wheeling, OH-WV.............................................. 16.8341
Wichita, KS.................................................. 20.7776
Wichita Falls, TX............................................ 16.6925
Williamsport, PA............................................. 18.2688
Wilmington-Newark, DE-MD..................................... 24.3629
Wilmington, NC............................................... 20.4690
Yakima, WA................................................... 21.5675
Yolo, CA..................................................... 22.2042
York, PA..................................................... 20.1674
Youngstown-Warren, OH........................................ 20.7757
Yuba City, CA................................................ 23.3065
Yuma, AZ..................................................... 20.7458
------------------------------------------------------------------------
Table 4e.--Average Hourly Wage for Rural Areas
------------------------------------------------------------------------
Average
Nonurban area hourly
wage
------------------------------------------------------------------------
Alabama...................................................... 16.3047
Alaska....................................................... 26.9769
Arizona...................................................... 18.1056
Arkansas..................................................... 16.2080
California................................................... 21.4673
Colorado..................................................... 19.5235
Connecticut.................................................. 25.5035
Delaware..................................................... 19.7543
Florida...................................................... 19.4165
Georgia...................................................... 18.1321
Hawaii....................................................... 24.0749
Idaho........................................................ 18.8912
Illinois..................................................... 17.7653
Indiana...................................................... 18.7277
Iowa......................................................... 17.4823
Kansas....................................................... 16.5568
Kentucky..................................................... 17.2663
Louisiana.................................................... 16.6925
Maine........................................................ 19.0838
Maryland..................................................... 18.8330
Massachusetts................................................ 24.3924
Michigan..................................................... 19.5659
Minnesota.................................................... 19.3332
Mississippi.................................................. 16.3073
Missouri..................................................... 16.7596
Montana...................................................... 18.9143
Nebraska..................................................... 17.6541
Nevada....................................................... 20.0985
New Hampshire................................................ 21.4334
New Jersey \1\............................................... .........
New Mexico................................................... 18.4985
New York..................................................... 18.5034
North Carolina............................................... 18.3772
North Dakota................................................. 16.7982
Ohio......................................................... 18.8756
Oklahoma..................................................... 16.3084
Oregon....................................................... 22.0574
Pennsylvania................................................. 18.6739
Puerto Rico.................................................. 9.2817
Rhode Island \1\............................................. .........
South Carolina............................................... 18.2215
South Dakota................................................. 16.4806
Tennessee.................................................... 17.0628
Texas........................................................ 16.3317
Utah......................................................... 19.6740
Vermont...................................................... 20.1891
Virginia..................................................... 17.8284
Washington................................................... 22.7144
West Virginia................................................ 17.9182
Wisconsin.................................................... 19.3321
Wyoming...................................................... 19.1944
------------------------------------------------------------------------
\1\ All counties within the State are classified as urban.
Table 4f.--Puerto Rico Wage Index and Capital Geographic Adjustment Factor (GAF)
----------------------------------------------------------------------------------------------------------------
Wage index-- GAF--
Area Wage index GAF reclass. reclass.
hospitals hospitals
----------------------------------------------------------------------------------------------------------------
Aguadilla, PR................................... 0.9380 0.9571 .............. ..............
Arecibo, PR..................................... 0.9667 0.9771 .............. ..............
Caguas, PR...................................... 0.9747 0.9826 .............. ..............
Mayaguez, PR.................................... 0.9803 0.9865 .............. ..............
Ponce, PR....................................... 1.0695 1.0471 .............. ..............
San Juan-Bayamon, PR............................ 1.0020 1.0014 .............. ..............
Rural Puerto Rico............................... 0.9108 0.9380 .............. ..............
----------------------------------------------------------------------------------------------------------------
[[Page 47160]]
Table 5.--List of Diagnosis Related Groups (DRGs), Relative Weighting Factors, Geometric and Arithmetic Mean
Length of Stay
----------------------------------------------------------------------------------------------------------------
Relative Geometric Arithmetic
DRG MDC Type DRG title weights mean LOS mean LOS
----------------------------------------------------------------------------------------------------------------
1.............. 01 SURG CRANIOTOMY AGE >17 EXCEPT 3.0970 6.3 9.1
FOR TRAUMA.
2.............. 01 SURG CRANIOTOMY FOR TRAUMA AGE 3.1142 7.3 9.7
>17.
3.............. 01 SURG *CRANIOTOMY AGE 0-17...... 1.9629 12.7 12.7
4.............. 01 SURG SPINAL PROCEDURES......... 2.2918 4.8 7.4
5.............. 01 SURG EXTRACRANIAL VASCULAR 1.4321 2.3 3.3
PROCEDURES.
6.............. 01 SURG CARPAL TUNNEL RELEASE..... .8246 2.2 3.2
7.............. 01 SURG PERIPH & CRANIAL NERVE & 2.5919 6.9 10.3
OTHER NERV SYST PROC W CC.
8.............. 01 SURG PERIPH & CRANIAL NERVE & 1.3948 2.1 3.0
OTHER NERV SYST PROC W/O
CC.
9.............. 01 MED SPINAL DISORDERS & 1.3134 4.7 6.6
INJURIES.
10............. 01 MED NERVOUS SYSTEM NEOPLASMS W 1.2273 4.9 6.7
CC.
11............. 01 MED NERVOUS SYSTEM NEOPLASMS W/ .8345 3.1 4.2
O CC.
12............. 01 MED DEGENERATIVE NERVOUS .8925 4.5 6.1
SYSTEM DISORDERS.
13............. 01 MED MULTIPLE SCLEROSIS & .7644 4.1 5.1
CEREBELLAR ATAXIA.
14............. 01 MED SPECIFIC CEREBROVASCULAR 1.2070 4.7 6.1
DISORDERS EXCEPT TIA.
15............. 01 MED TRANSIENT ISCHEMIC ATTACK .7480 2.9 3.6
& PRECEREBRAL OCCLUSIONS.
16............. 01 MED NONSPECIFIC 1.1652 4.7 6.2
CEREBROVASCULAR DISORDERS
W CC.
17............. 01 MED NONSPECIFIC .6539 2.6 3.4
CEREBROVASCULAR DISORDERS
W/O CC.
18............. 01 MED CRANIAL & PERIPHERAL NERVE .9600 4.3 5.6
DISORDERS W CC.
19............. 01 MED CRANIAL & PERIPHERAL NERVE .6963 2.9 3.7
DISORDERS W/O CC.
20............. 01 MED NERVOUS SYSTEM INFECTION 2.7744 7.9 10.6
EXCEPT VIRAL MENINGITIS.
21............. 01 MED VIRAL MENINGITIS.......... 1.4966 5.2 6.9
22............. 01 MED HYPERTENSIVE 1.0082 3.8 5.0
ENCEPHALOPATHY.
23............. 01 MED NONTRAUMATIC STUPOR & COMA .8027 3.2 4.2
24............. 01 MED SEIZURE & HEADACHE AGE >17 .9914 3.7 5.0
W CC.
25............. 01 MED SEIZURE & HEADACHE AGE >17 .6043 2.6 3.3
W/O CC.
26............. 01 MED SEIZURE & HEADACHE AGE 0- .6441 2.4 3.2
17.
27............. 01 MED TRAUMATIC STUPOR & COMA, 1.2912 3.2 5.1
COMA 1 HR.
28............. 01 MED TRAUMATIC STUPOR & COMA, 1.3102 4.5 6.3
COMA 1 HR AGE >17 W CC.
29............. 01 MED TRAUMATIC STUPOR & COMA, .7015 2.8 3.7
COMA 1 HR AGE 17 W/O CC.
30............. 01 MED *TRAUMATIC STUPOR & COMA, .3320 2.0 2.0
COMA 1 HR AGE 0-17.
31............. 01 MED CONCUSSION AGE >17 W CC... .8715 3.1 4.2
32............. 01 MED CONCUSSION AGE >17 W/O CC. .5422 2.1 2.7
33............. 01 MED *CONCUSSION AGE 0-17...... .2086 1.6 1.6
34............. 01 MED OTHER DISORDERS OF NERVOUS 1.0099 3.8 5.2
SYSTEM W CC.
35............. 01 MED OTHER DISORDERS OF NERVOUS .6027 2.7 3.4
SYSTEM W/O CC.
36............. 02 SURG RETINAL PROCEDURES........ .6639 1.2 1.4
37............. 02 SURG ORBITAL PROCEDURES........ 1.0016 2.6 3.7
38............. 02 SURG PRIMARY IRIS PROCEDURES... .4833 1.8 2.5
39............. 02 SURG LENS PROCEDURES WITH OR .5778 1.5 1.9
WITHOUT VITRECTOMY.
40............. 02 SURG EXTRAOCULAR PROCEDURES .8635 2.3 3.6
EXCEPT ORBIT AGE >17.
41............. 02 SURG *EXTRAOCULAR PROCEDURES .3380 1.6 1.6
EXCEPT ORBIT AGE 0-17.
42............. 02 SURG INTRAOCULAR PROCEDURES .6478 1.6 2.2
EXCEPT RETINA, IRIS &
LENS.
43............. 02 MED HYPHEMA................... .4977 2.6 3.4
44............. 02 MED ACUTE MAJOR EYE INFECTIONS .6337 4.1 5.0
45............. 02 MED NEUROLOGICAL EYE DISORDERS .7022 2.7 3.3
46............. 02 MED OTHER DISORDERS OF THE EYE .7749 3.5 4.6
AGE >17 W CC.
47............. 02 MED OTHER DISORDERS OF THE EYE .5085 2.5 3.3
AGE >17 W/O CC.
48............. 02 MED *OTHER DISORDERS OF THE .2977 2.9 2.9
EYE AGE 0-17.
49............. 03 SURG MAJOR HEAD & NECK 1.8301 3.5 5.0
PROCEDURES.
50............. 03 SURG SIALOADENECTOMY........... .8537 1.6 2.0
51............. 03 SURG SALIVARY GLAND PROCEDURES .7934 1.8 2.5
EXCEPT SIALOADENECTOMY.
52............. 03 SURG CLEFT LIP & PALATE REPAIR. .8410 1.6 2.1
53............. 03 SURG SINUS & MASTOID PROCEDURES 1.2118 2.3 3.7
AGE >17.
54............. 03 SURG *SINUS & MASTOID .4826 3.2 3.2
PROCEDURES AGE 0-17.
55............. 03 SURG MISCELLANEOUS EAR, NOSE, .9039 1.9 2.9
MOUTH & THROAT PROCEDURES.
56............. 03 SURG RHINOPLASTY............... .9451 2.1 3.1
57............. 03 SURG T&A PROC, EXCEPT 1.0704 2.5 4.0
TONSILLECTOMY &/OR
ADENOIDECTOMY ONLY, AGE
>17.
58............. 03 SURG *T&A PROC, EXCEPT .2740 1.5 1.5
TONSILLECTOMY &/OR
ADENOIDECTOMY ONLY, AGE 0-
17.
59............. 03 SURG TONSILLECTOMY &/OR .6943 1.8 2.5
ADENOIDECTOMY ONLY, AGE
>17.
60............. 03 SURG *TONSILLECTOMY &/OR .2087 1.5 1.5
ADENOIDECTOMY ONLY, AGE 0-
17.
61............. 03 SURG MYRINGOTOMY W TUBE 1.2660 2.8 4.8
INSERTION AGE >17.
62............. 03 SURG *MYRINGOTOMY W TUBE .2955 1.3 1.3
INSERTION AGE 0-17.
63............. 03 SURG OTHER EAR, NOSE, MOUTH & 1.3402 3.0 4.3
THROAT O.R. PROCEDURES.
64............. 03 MED EAR, NOSE, MOUTH & THROAT 1.2288 4.3 6.5
MALIGNANCY.
65............. 03 MED DYSEQUILIBRIUM............ .5385 2.3 2.9
[[Page 47161]]
66............. 03 MED EPISTAXIS................. .5590 2.5 3.2
67............. 03 MED EPIGLOTTITIS.............. .8105 2.8 3.5
68............. 03 MED OTITIS MEDIA & URI AGE >17 .6750 3.4 4.2
W CC.
69............. 03 MED OTITIS MEDIA & URI AGE >17 .5152 2.7 3.3
W/O CC.
70............. 03 MED OTITIS MEDIA & URI AGE 0- .4628 2.4 2.9
17.
71............. 03 MED LARYNGOTRACHEITIS......... .7712 3.0 3.9
72............. 03 MED NASAL TRAUMA & DEFORMITY.. .6428 2.6 3.3
73............. 03 MED OTHER EAR, NOSE, MOUTH & .7777 3.3 4.4
THROAT DIAGNOSES AGE >17.
74............. 03 MED *OTHER EAR, NOSE, MOUTH & .3358 2.1 2.1
THROAT DIAGNOSES AGE 0-17.
75............. 04 SURG MAJOR CHEST PROCEDURES.... 3.1331 7.8 10.0
76............. 04 SURG OTHER RESP SYSTEM O.R. 2.7908 8.4 11.3
PROCEDURES W CC.
77............. 04 SURG OTHER RESP SYSTEM O.R. 1.1887 3.5 5.0
PROCEDURES W/O CC.
78............. 04 MED PULMONARY EMBOLISM........ 1.3698 6.0 7.0
79............. 04 MED RESPIRATORY INFECTIONS & 1.6501 6.6 8.5
INFLAMMATIONS AGE >17 W
CC.
80............. 04 MED RESPIRATORY INFECTIONS & .9373 4.7 5.8
INFLAMMATIONS AGE >17 W/O
CC.
81............. 04 MED *RESPIRATORY INFECTIONS & 1.5204 6.1 6.1
INFLAMMATIONS AGE 0-17.
82............. 04 MED RESPIRATORY NEOPLASMS..... 1.3799 5.2 7.0
83............. 04 MED MAJOR CHEST TRAUMA W CC... .9808 4.4 5.6
84............. 04 MED MAJOR CHEST TRAUMA W/O CC. .5539 2.8 3.4
85............. 04 MED PLEURAL EFFUSION W CC..... 1.2198 4.9 6.4
86............. 04 MED PLEURAL EFFUSION W/O CC... .6984 2.9 3.8
87............. 04 MED PULMONARY EDEMA & 1.3781 4.8 6.3
RESPIRATORY FAILURE.
88............. 04 MED CHRONIC OBSTRUCTIVE .9317 4.2 5.2
PULMONARY DISEASE.
89............. 04 MED SIMPLE PNEUMONIA & 1.0647 5.0 6.0
PLEURISY AGE >17 W CC.
90............. 04 MED SIMPLE PNEUMONIA & .6590 3.6 4.2
PLEURISY AGE >17 W/O CC.
91............. 04 MED SIMPLE PNEUMONIA & .6890 2.8 3.4
PLEURISY AGE 0-17.
92............. 04 MED INTERSTITIAL LUNG DISEASE 1.1863 5.0 6.3
W CC.
93............. 04 MED INTERSTITIAL LUNG DISEASE .7309 3.3 4.1
W/O CC.
94............. 04 MED PNEUMOTHORAX W CC......... 1.1704 4.8 6.3
95............. 04 MED PNEUMOTHORAX W/O CC....... .6098 3.0 3.7
96............. 04 MED BRONCHITIS & ASTHMA AGE .7871 3.9 4.7
>17 W CC.
97............. 04 MED BRONCHITIS & ASTHMA AGE .5873 3.1 3.7
>17 W/O CC.
98............. 04 MED BRONCHITIS & ASTHMA AGE 0- .8768 3.2 4.7
17.
99............. 04 MED RESPIRATORY SIGNS & .7117 2.5 3.2
SYMPTOMS W CC.
100............ 04 MED RESPIRATORY SIGNS & .5437 1.8 2.2
SYMPTOMS W/O CC.
101............ 04 MED OTHER RESPIRATORY SYSTEM .8563 3.3 4.4
DIAGNOSES W CC.
102............ 04 MED OTHER RESPIRATORY SYSTEM .5550 2.1 2.7
DIAGNOSES W/O CC.
103............ PRE SURG HEART TRANSPLANT.......... 19.0098 30.7 51.8
104............ 05 SURG CARDIAC VALVE & OTHER 7.1843 8.9 11.7
MAJOR CARDIOTHORACIC PROC
W CARDIAC CATH.
105............ 05 SURG CARDIAC VALVE & OTHER 5.6567 7.4 9.3
MAJOR CARDIOTHORACIC PROC
W/O CARDIAC CATH.
106............ 05 SURG CORONARY BYPASS W PTCA.... 7.5203 9.3 11.2
107............ 05 SURG CORONARY BYPASS W CARDIAC 5.3762 9.2 10.3
CATH.
108............ 05 SURG OTHER CARDIOTHORACIC 5.6525 8.0 10.6
PROCEDURES.
109............ 05 SURG CORONARY BYPASS W/O PTCA 4.0198 6.8 7.7
OR CARDIAC CATH.
110............ 05 SURG MAJOR CARDIOVASCULAR 4.1358 7.1 9.5
PROCEDURES W CC.
111............ 05 SURG MAJOR CARDIOVASCULAR 2.2410 4.7 5.5
PROCEDURES W/O CC.
112............ 05 SURG PERCUTANEOUS 1.8677 2.6 3.8
CARDIOVASCULAR PROCEDURES.
113............ 05 SURG AMPUTATION FOR CIRC SYSTEM 2.7806 9.8 12.8
DISORDERS EXCEPT UPPER
LIMB & TOE.
114............ 05 SURG UPPER LIMB & TOE 1.5656 6.0 8.3
AMPUTATION FOR CIRC
SYSTEM DISORDERS.
115............ 05 SURG PRM CARD PACEM IMPL W 3.4711 6.0 8.4
AMI,HRT FAIL OR SHK,OR
AICD LEAD OR GNRTR PR.
116............ 05 SURG OTH PERM CARD PACEMAK IMPL 2.4190 2.6 3.7
OR PTCA W CORONARY ARTERY
STENT IMPLNT.
117............ 05 SURG CARDIAC PACEMAKER REVISION 1.2966 2.6 4.0
EXCEPT DEVICE REPLACEMENT.
118............ 05 SURG CARDIAC PACEMAKER DEVICE 1.4939 1.9 2.8
REPLACEMENT.
119............ 05 SURG VEIN LIGATION & STRIPPING. 1.2600 2.9 4.9
120............ 05 SURG OTHER CIRCULATORY SYSTEM 2.0352 4.9 8.1
O.R. PROCEDURES.
121............ 05 MED CIRCULATORY DISORDERS W 1.6194 5.5 6.7
AMI & MAJOR COMP,
DISCHARGED ALIVE.
122............ 05 MED CIRCULATORY DISORDERS W 1.0884 3.3 4.0
AMI W/O MAJOR COMP,
DISCHARGED ALIVE.
123............ 05 MED CIRCULATORY DISORDERS W 1.5528 2.8 4.6
AMI, EXPIRED.
[[Page 47162]]
124............ 05 MED CIRCULATORY DISORDERS 1.4134 3.3 4.4
EXCEPT AMI, W CARD CATH &
COMPLEX DIAG.
125............ 05 MED CIRCULATORY DISORDERS 1.0606 2.2 2.8
EXCEPT AMI, W CARD CATH W/
O COMPLEX DIAG.
126............ 05 MED ACUTE & SUBACUTE 2.5379 9.3 12.0
ENDOCARDITIS.
127............ 05 MED HEART FAILURE & SHOCK..... 1.0130 4.2 5.4
128............ 05 MED DEEP VEIN THROMBOPHLEBITIS .7651 5.0 5.8
129............ 05 MED CARDIAC ARREST, 1.0968 1.8 2.9
UNEXPLAINED.
130............ 05 MED PERIPHERAL VASCULAR .9471 4.7 5.9
DISORDERS W CC.
131............ 05 MED PERIPHERAL VASCULAR .5898 3.6 4.4
DISORDERS W/O CC.
132............ 05 MED ATHEROSCLEROSIS W CC...... .6707 2.4 3.1
133............ 05 MED ATHEROSCLEROSIS W/O CC.... .5663 1.9 2.4
134............ 05 MED HYPERTENSION.............. .5917 2.6 3.3
135............ 05 MED CARDIAC CONGENITAL & .9083 3.3 4.5
VALVULAR DISORDERS AGE
>17 W CC.
136............ 05 MED CARDIAC CONGENITAL & .6065 2.2 2.9
VALVULAR DISORDERS AGE
>17 W/O CC.
137............ 05 MED *CARDIAC CONGENITAL & .8192 3.3 3.3
VALVULAR DISORDERS AGE 0-
17.
138............ 05 MED CARDIAC ARRHYTHMIA & .8291 3.1 4.0
CONDUCTION DISORDERS W CC.
139............ 05 MED CARDIAC ARRHYTHMIA & .5141 2.0 2.5
CONDUCTION DISORDERS W/O
CC.
140............ 05 MED ANGINA PECTORIS........... .5740 2.2 2.7
141............ 05 MED SYNCOPE & COLLAPSE W CC... .7219 2.9 3.7
142............ 05 MED SYNCOPE & COLLAPSE W/O CC. .5552 2.2 2.7
143............ 05 MED CHEST PAIN................ .5402 1.8 2.2
144............ 05 MED OTHER CIRCULATORY SYSTEM 1.1668 3.8 5.4
DIAGNOSES W CC.
145............ 05 MED OTHER CIRCULATORY SYSTEM .6322 2.2 2.8
DIAGNOSES W/O CC.
146............ 06 SURG RECTAL RESECTION W CC..... 2.7430 8.9 10.2
147............ 06 SURG RECTAL RESECTION W/O CC... 1.6221 6.0 6.6
148............ 06 SURG MAJOR SMALL & LARGE BOWEL 3.4347 10.1 12.1
PROCEDURES W CC.
149............ 06 SURG MAJOR SMALL & LARGE BOWEL 1.5667 6.1 6.7
PROCEDURES W/O CC.
150............ 06 SURG PERITONEAL ADHESIOLYSIS W 2.8523 9.1 11.2
CC.
151............ 06 SURG PERITONEAL ADHESIOLYSIS W/ 1.3427 4.8 5.9
O CC.
152............ 06 SURG MINOR SMALL & LARGE BOWEL 1.9462 6.8 8.2
PROCEDURES W CC.
153............ 06 SURG MINOR SMALL & LARGE BOWEL 1.2080 4.9 5.5
PROCEDURES W/O CC.
154............ 06 SURG STOMACH, ESOPHAGEAL & 4.1475 10.1 13.3
DUODENAL PROCEDURES AGE
>17 W CC.
155............ 06 SURG STOMACH, ESOPHAGEAL & 1.3751 3.3 4.4
DUODENAL PROCEDURES AGE
>17 W/O CC.
156............ 06 SURG *STOMACH, ESOPHAGEAL & .8436 6.0 6.0
DUODENAL PROCEDURES AGE 0-
17.
157............ 06 SURG ANAL & STOMAL PROCEDURES W 1.2388 3.9 5.5
CC.
158............ 06 SURG ANAL & STOMAL PROCEDURES W/ .6638 2.1 2.6
O CC.
159............ 06 SURG HERNIA PROCEDURES EXCEPT 1.3347 3.8 5.0
INGUINAL & FEMORAL AGE
>17 W CC.
160............ 06 SURG HERNIA PROCEDURES EXCEPT .7837 2.2 2.7
INGUINAL & FEMORAL AGE
>17 W/O CC.
161............ 06 SURG INGUINAL & FEMORAL HERNIA 1.1017 2.9 4.2
PROCEDURES AGE >17 W CC.
162............ 06 SURG INGUINAL & FEMORAL HERNIA .6229 1.6 2.0
PROCEDURES AGE >17 W/O CC.
163............ 06 SURG HERNIA PROCEDURES AGE 0-17 .6921 2.4 2.9
164............ 06 SURG APPENDECTOMY W COMPLICATED 2.3760 7.1 8.4
PRINCIPAL DIAG W CC.
165............ 06 SURG APPENDECTOMY W COMPLICATED 1.2838 4.3 4.9
PRINCIPAL DIAG W/O CC.
166............ 06 SURG APPENDECTOMY W/O 1.4802 4.0 5.1
COMPLICATED PRINCIPAL
DIAG W CC.
167............ 06 SURG APPENDECTOMY W/O .8937 2.3 2.7
COMPLICATED PRINCIPAL
DIAG W/O CC.
168............ 03 SURG MOUTH PROCEDURES W CC..... 1.2141 3.2 4.7
169............ 03 SURG MOUTH PROCEDURES W/O CC... .7455 1.9 2.4
170............ 06 SURG OTHER DIGESTIVE SYSTEM 2.8686 7.7 11.2
O.R. PROCEDURES W CC.
171............ 06 SURG OTHER DIGESTIVE SYSTEM 1.1975 3.6 4.8
O.R. PROCEDURES W/O CC.
172............ 06 MED DIGESTIVE MALIGNANCY W CC. 1.3485 5.1 7.0
173............ 06 MED DIGESTIVE MALIGNANCY W/O .7700 2.8 3.9
CC.
174............ 06 MED G.I. HEMORRHAGE W CC...... .9985 3.9 4.8
175............ 06 MED G.I. HEMORRHAGE W/O CC.... .5501 2.5 2.9
176............ 06 MED COMPLICATED PEPTIC ULCER.. 1.1052 4.1 5.3
177............ 06 MED UNCOMPLICATED PEPTIC ULCER .8998 3.7 4.6
W CC.
178............ 06 MED UNCOMPLICATED PEPTIC ULCER .6604 2.6 3.1
W/O CC.
179............ 06 MED INFLAMMATORY BOWEL DISEASE 1.0576 4.7 6.0
180............ 06 MED G.I. OBSTRUCTION W CC..... .9423 4.2 5.4
181............ 06 MED G.I. OBSTRUCTION W/O CC... .5304 2.8 3.4
182............ 06 MED ESOPHAGITIS, GASTROENT & .7922 3.4 4.4
MISC DIGEST DISORDERS AGE
>17 W CC.
[[Page 47163]]
183............ 06 MED ESOPHAGITIS, GASTROENT & .5717 2.4 3.0
MISC DIGEST DISORDERS AGE
>17 W/O CC.
184............ 06 MED ESOPHAGITIS, GASTROENT & .5119 2.5 3.3
MISC DIGEST DISORDERS AGE
0-17.
185............ 03 MED DENTAL & ORAL DIS EXCEPT .8621 3.3 4.5
EXTRACTIONS &
RESTORATIONS, AGE >17.
186............ 03 MED *DENTAL & ORAL DIS EXCEPT .3216 2.9 2.9
EXTRACTIONS &
RESTORATIONS, AGE 0-17.
187............ 03 MED DENTAL EXTRACTIONS & .7649 2.9 3.8
RESTORATIONS.
188............ 06 MED OTHER DIGESTIVE SYSTEM 1.1005 4.1 5.6
DIAGNOSES AGE >17 W CC.
189............ 06 MED OTHER DIGESTIVE SYSTEM .5796 2.4 3.1
DIAGNOSES AGE >17 W/O CC.
190............ 06 MED OTHER DIGESTIVE SYSTEM .9884 4.1 6.0
DIAGNOSES AGE 0-17.
191............ 07 SURG PANCREAS, LIVER & SHUNT 4.3914 10.5 14.2
PROCEDURES W CC.
192............ 07 SURG PANCREAS, LIVER & SHUNT 1.7916 5.3 6.6
PROCEDURES W/O CC.
193............ 07 SURG BILIARY TRACT PROC EXCEPT 3.3861 10.3 12.6
ONLY CHOLECYST W OR W/O
C.D.E. W CC.
194............ 07 SURG BILIARY TRACT PROC EXCEPT 1.6191 5.6 6.8
ONLY CHOLECYST W OR W/O
C.D.E. W/O CC.
195............ 07 SURG CHOLECYSTECTOMY W C.D.E. W 2.9062 8.3 9.9
CC.
196............ 07 SURG CHOLECYSTECTOMY W C.D.E. W/ 1.6593 4.9 5.7
O CC.
197............ 07 SURG CHOLECYSTECTOMY EXCEPT BY 2.4544 7.2 8.7
LAPAROSCOPE W/O C.D.E. W
CC.
198............ 07 SURG CHOLECYSTECTOMY EXCEPT BY 1.2339 3.9 4.5
LAPAROSCOPE W/O C.D.E. W/
O CC.
199............ 07 SURG HEPATOBILIARY DIAGNOSTIC 2.3584 7.2 9.7
PROCEDURE FOR MALIGNANCY.
200............ 07 SURG HEPATOBILIARY DIAGNOSTIC 3.2262 7.0 10.8
PROCEDURE FOR NON-
MALIGNANCY.
201............ 07 SURG OTHER HEPATOBILIARY OR 3.4035 10.2 13.9
PANCREAS O.R. PROCEDURES.
202............ 07 MED CIRRHOSIS & ALCOHOLIC 1.3001 4.9 6.5
HEPATITIS.
203............ 07 MED MALIGNANCY OF 1.3250 5.0 6.7
HEPATOBILIARY SYSTEM OR
PANCREAS.
204............ 07 MED DISORDERS OF PANCREAS 1.2018 4.5 5.9
EXCEPT MALIGNANCY.
205............ 07 MED DISORDERS OF LIVER EXCEPT 1.2048 4.7 6.3
MALIG,CIRR,ALC HEPA W CC.
206............ 07 MED DISORDERS OF LIVER EXCEPT .6751 3.0 3.9
MALIG,CIRR,ALC HEPA W/O
CC.
207............ 07 MED DISORDERS OF THE BILIARY 1.1032 4.0 5.2
TRACT W CC.
208............ 07 MED DISORDERS OF THE BILIARY .6538 2.3 2.9
TRACT W/O CC.
209............ 08 SURG MAJOR JOINT & LIMB 2.0912 4.6 5.2
REATTACHMENT PROCEDURES
OF LOWER EXTREMITY.
210............ 08 SURG HIP & FEMUR PROCEDURES 1.8152 6.0 6.9
EXCEPT MAJOR JOINT AGE
>17 W CC.
211............ 08 SURG HIP & FEMUR PROCEDURES 1.2647 4.5 4.9
EXCEPT MAJOR JOINT AGE
>17 W/O CC.
212............ 08 SURG *HIP & FEMUR PROCEDURES .8472 11.1 11.1
EXCEPT MAJOR JOINT AGE 0-
17.
213............ 08 SURG AMPUTATION FOR 1.7726 6.4 8.7
MUSCULOSKELETAL SYSTEM &
CONN TISSUE DISORDERS.
214............ 08 SURG NO LONGER VALID........... .0000 .0 .0
215............ 08 SURG NO LONGER VALID........... .0000 .0 .0
216............ 08 SURG BIOPSIES OF 2.2042 7.1 9.8
MUSCULOSKELETAL SYSTEM &
CONNECTIVE TISSUE.
217............ 08 SURG WND DEBRID & SKN GRFT 2.9230 8.9 13.2
EXCEPT HAND,FOR
MUSCSKELET & CONN TISS
DIS.
218............ 08 SURG LOWER EXTREM & HUMER PROC 1.5337 4.2 5.4
EXCEPT HIP, FOOT, FEMUR
AGE >17 W CC.
219............ 08 SURG LOWER EXTREM & HUMER PROC 1.0255 2.7 3.3
EXCEPT HIP, FOOT, FEMUR
AGE >17 W/O CC.
220............ 08 SURG *LOWER EXTREM & HUMER PROC .5844 5.3 5.3
EXCEPT HIP, FOOT, FEMUR
AGE 0-17.
221............ 08 SURG NO LONGER VALID........... .0000 .0 .0
222............ 08 SURG NO LONGER VALID........... .0000 .0 .0
223............ 08 SURG MAJOR SHOULDER/ELBOW PROC, .9585 2.0 2.6
OR OTHER UPPER EXTREMITY
PROC W CC.
224............ 08 SURG SHOULDER, ELBOW OR FOREARM .7997 1.7 2.1
PROC, EXC MAJOR JOINT
PROC, W/O CC.
225............ 08 SURG FOOT PROCEDURES........... 1.0851 3.3 4.7
226............ 08 SURG SOFT TISSUE PROCEDURES W 1.4770 4.3 6.3
CC.
227............ 08 SURG SOFT TISSUE PROCEDURES W/O .8036 2.1 2.7
CC.
228............ 08 SURG MAJOR THUMB OR JOINT 1.0664 2.4 3.6
PROC,OR OTH HAND OR WRIST
PROC W CC.
229............ 08 SURG HAND OR WRIST PROC, EXCEPT .7169 1.8 2.4
MAJOR JOINT PROC, W/O CC.
[[Page 47164]]
230............ 08 SURG LOCAL EXCISION & REMOVAL 1.2490 3.4 5.1
OF INT FIX DEVICES OF HIP
& FEMUR.
231............ 08 SURG LOCAL EXCISION & REMOVAL 1.3825 3.2 4.8
OF INT FIX DEVICES EXCEPT
HIP & FEMUR.
232............ 08 SURG ARTHROSCOPY............... 1.0828 2.3 3.6
233............ 08 SURG OTHER MUSCULOSKELET SYS & 2.0890 5.3 7.7
CONN TISS O.R. PROC W CC.
234............ 08 SURG OTHER MUSCULOSKELET SYS & 1.2661 2.7 3.6
CONN TISS O.R. PROC W/O
CC.
235............ 08 MED FRACTURES OF FEMUR........ .7582 3.8 5.2
236............ 08 MED FRACTURES OF HIP & PELVIS. .7218 4.0 5.0
237............ 08 MED SPRAINS, STRAINS, & .5681 3.0 3.7
DISLOCATIONS OF HIP,
PELVIS & THIGH.
238............ 08 MED OSTEOMYELITIS............. 1.3496 6.4 8.6
239............ 08 MED PATHOLOGICAL FRACTURES & .9745 4.9 6.2
MUSCULOSKELETAL & CONN
TISS MALIGNANCY.
240............ 08 MED CONNECTIVE TISSUE 1.2712 4.9 6.6
DISORDERS W CC.
241............ 08 MED CONNECTIVE TISSUE .6177 3.1 3.9
DISORDERS W/O CC.
242............ 08 MED SEPTIC ARTHRITIS.......... 1.0724 5.1 6.6
243............ 08 MED MEDICAL BACK PROBLEMS..... .7262 3.7 4.7
244............ 08 MED BONE DISEASES & SPECIFIC .7155 3.7 4.8
ARTHROPATHIES W CC.
245............ 08 MED BONE DISEASES & SPECIFIC .4832 2.8 3.6
ARTHROPATHIES W/O CC.
246............ 08 MED NON-SPECIFIC ARTHROPATHIES .5570 2.9 3.6
247............ 08 MED SIGNS & SYMPTOMS OF .5696 2.6 3.5
MUSCULOSKELETAL SYSTEM &
CONN TISSUE.
248............ 08 MED TENDONITIS, MYOSITIS & .7864 3.7 4.8
BURSITIS.
249............ 08 MED AFTERCARE, MUSCULOSKELETAL .6913 2.6 3.8
SYSTEM & CONNECTIVE
TISSUE.
250............ 08 MED FX, SPRN, STRN & DISL OF .6929 3.3 4.3
FOREARM, HAND, FOOT AGE
>17 W CC.
251............ 08 MED FX, SPRN, STRN & DISL OF .4995 2.4 3.0
FOREARM, HAND, FOOT AGE
>17 W/O CC.
252............ 08 MED *FX, SPRN, STRN & DISL OF .2538 1.8 1.8
FOREARM, HAND, FOOT AGE 0-
17.
253............ 08 MED FX, SPRN, STRN & DISL OF .7253 3.7 4.7
UPARM,LOWLEG EX FOOT AGE
>17 W CC.
254............ 08 MED FX, SPRN, STRN & DISL OF .4413 2.6 3.2
UPARM,LOWLEG EX FOOT AGE
>17 W/O CC.
255............ 08 MED *FX, SPRN, STRN & DISL OF .2956 2.9 2.9
UPARM,LOWLEG EX FOOT AGE
0-17.
256............ 08 MED OTHER MUSCULOSKELETAL .7959 3.8 5.2
SYSTEM & CONNECTIVE
TISSUE DIAGNOSES.
257............ 09 SURG TOTAL MASTECTOMY FOR .9107 2.3 2.8
MALIGNANCY W CC.
258............ 09 SURG TOTAL MASTECTOMY FOR .7232 1.8 2.0
MALIGNANCY W/O CC.
259............ 09 SURG SUBTOTAL MASTECTOMY FOR .9068 1.8 2.8
MALIGNANCY W CC.
260............ 09 SURG SUBTOTAL MASTECTOMY FOR .6532 1.3 1.4
MALIGNANCY W/O CC.
261............ 09 SURG BREAST PROC FOR NON- .9362 1.7 2.2
MALIGNANCY EXCEPT BIOPSY
& LOCAL EXCISION.
262............ 09 SURG BREAST BIOPSY & LOCAL .8754 2.7 3.8
EXCISION FOR NON-
MALIGNANCY.
263............ 09 SURG SKIN GRAFT &/OR DEBRID FOR 2.1219 8.9 12.2
SKN ULCER OR CELLULITIS W
CC.
264............ 09 SURG SKIN GRAFT &/OR DEBRID FOR 1.1479 5.4 7.2
SKN ULCER OR CELLULITIS W/
O CC.
265............ 09 SURG SKIN GRAFT &/OR DEBRID 1.5309 4.3 6.6
EXCEPT FOR SKIN ULCER OR
CELLULITIS W CC.
266............ 09 SURG SKIN GRAFT &/OR DEBRID .8707 2.4 3.3
EXCEPT FOR SKIN ULCER OR
CELLULITIS W/O CC.
267............ 09 SURG PERIANAL & PILONIDAL 1.0792 3.1 5.2
PROCEDURES.
268............ 09 SURG SKIN, SUBCUTANEOUS TISSUE 1.1405 2.4 3.7
& BREAST PLASTIC
PROCEDURES.
269............ 09 SURG OTHER SKIN, SUBCUT TISS & 1.7004 5.8 8.3
BREAST PROC W CC.
270............ 09 SURG OTHER SKIN, SUBCUT TISS & .7670 2.3 3.3
BREAST PROC W/O CC.
271............ 09 MED SKIN ULCERS............... 1.0104 5.5 7.1
272............ 09 MED MAJOR SKIN DISORDERS W CC. .9994 4.8 6.3
273............ 09 MED MAJOR SKIN DISORDERS W/O .6179 3.2 4.2
CC.
274............ 09 MED MALIGNANT BREAST DISORDERS 1.2061 4.9 7.0
W CC.
275............ 09 MED MALIGNANT BREAST DISORDERS .5301 2.4 3.4
W/O CC.
276............ 09 MED NON-MALIGANT BREAST .6899 3.6 4.6
DISORDERS.
277............ 09 MED CELLULITIS AGE >17 W CC... .8396 4.7 5.7
278............ 09 MED CELLULITIS AGE >17 W/O CC. .5522 3.6 4.3
279............ 09 MED *CELLULITIS AGE 0-17...... .6644 4.2 4.2
280............ 09 MED TRAUMA TO THE SKIN, SUBCUT .6788 3.2 4.2
TISS & BREAST AGE >17 W
CC.
[[Page 47165]]
281............ 09 MED TRAUMA TO THE SKIN, SUBCUT .4729 2.4 3.1
TISS & BREAST AGE >17 W/O
CC.
282............ 09 MED *TRAUMA TO THE SKIN, .2570 2.2 2.2
SUBCUT TISS & BREAST AGE
0-17.
283............ 09 MED MINOR SKIN DISORDERS W CC. .6917 3.5 4.6
284............ 09 MED MINOR SKIN DISORDERS W/O .4336 2.5 3.2
CC.
285............ 10 SURG AMPUTAT OF LOWER LIMB FOR 1.9961 7.7 10.5
ENDOCRINE, NUTRIT, &
METABOL DISORDERS.
286............ 10 SURG ADRENAL & PITUITARY 2.1299 4.9 6.2
PROCEDURES.
287............ 10 SURG SKIN GRAFTS & WOUND DEBRID 1.8283 7.8 10.5
FOR ENDOC, NUTRIT & METAB
DISORDERS.
288............ 10 SURG O.R. PROCEDURES FOR 2.1607 4.5 5.7
OBESITY.
289............ 10 SURG PARATHYROID PROCEDURES.... .9914 2.0 3.1
290............ 10 SURG THYROID PROCEDURES........ .9193 1.8 2.4
291............ 10 SURG THYROGLOSSAL PROCEDURES... .5487 1.4 1.6
292............ 10 SURG OTHER ENDOCRINE, NUTRIT & 2.4538 6.9 10.0
METAB O.R. PROC W CC.
293............ 10 SURG OTHER ENDOCRINE, NUTRIT & 1.2289 3.6 5.1
METAB O.R. PROC W/O CC.
294............ 10 MED DIABETES AGE >35.......... .7589 3.6 4.7
295............ 10 MED DIABETES AGE 0-35......... .7587 2.9 3.9
296............ 10 MED NUTRITIONAL & MISC .8594 4.0 5.2
METABOLIC DISORDERS AGE
>17 W CC.
297............ 10 MED NUTRITIONAL & MISC .5179 2.8 3.5
METABOLIC DISORDERS AGE
>17 W/O CC.
298............ 10 MED NUTRITIONAL & MISC .5269 2.5 3.1
METABOLIC DISORDERS AGE 0-
17.
299............ 10 MED INBORN ERRORS OF .9632 4.0 5.6
METABOLISM.
300............ 10 MED ENDOCRINE DISORDERS W CC.. 1.0829 4.7 6.1
301............ 10 MED ENDOCRINE DISORDERS W/O CC .6133 2.9 3.7
302............ 11 SURG KIDNEY TRANSPLANT......... 3.4241 7.9 9.4
303............ 11 SURG KIDNEY, URETER & MAJOR 2.4602 7.0 8.5
BLADDER PROCEDURES FOR
NEOPLASM.
304............ 11 SURG KIDNEY, URETER & MAJOR 2.3407 6.4 8.9
BLADDER PROC FOR NON-
NEOPL W CC.
305............ 11 SURG KIDNEY, URETER & MAJOR 1.1825 3.1 3.8
BLADDER PROC FOR NON-
NEOPL W/O CC.
306............ 11 SURG PROSTATECTOMY W CC........ 1.2489 3.7 5.5
307............ 11 SURG PROSTATECTOMY W/O CC...... .6460 1.9 2.3
308............ 11 SURG MINOR BLADDER PROCEDURES W 1.6449 4.2 6.4
CC.
309............ 11 SURG MINOR BLADDER PROCEDURES W/ .9339 2.0 2.5
O CC.
310............ 11 SURG TRANSURETHRAL PROCEDURES W 1.1172 3.0 4.4
CC.
311............ 11 SURG TRANSURETHRAL PROCEDURES W/ .6174 1.6 1.9
O CC.
312............ 11 SURG URETHRAL PROCEDURES, AGE 1.0173 3.0 4.5
>17 W CC.
313............ 11 SURG URETHRAL PROCEDURES, AGE .6444 1.7 2.1
>17 W/O CC.
314............ 11 SURG *URETHRAL PROCEDURES, AGE .4953 2.3 2.3
0-17.
315............ 11 SURG OTHER KIDNEY & URINARY 2.0474 4.2 7.5
TRACT O.R. PROCEDURES.
316............ 11 MED RENAL FAILURE............. 1.3424 4.9 6.7
317............ 11 MED ADMIT FOR RENAL DIALYSIS.. .7395 2.1 3.2
318............ 11 MED KIDNEY & URINARY TRACT 1.1313 4.3 6.0
NEOPLASMS W CC.
319............ 11 MED KIDNEY & URINARY TRACT .6040 2.2 2.9
NEOPLASMS W/O CC.
320............ 11 MED KIDNEY & URINARY TRACT .8621 4.3 5.4
INFECTIONS AGE >17 W CC.
321............ 11 MED KIDNEY & URINARY TRACT .5686 3.2 3.8
INFECTIONS AGE >17 W/O CC.
322............ 11 MED KIDNEY & URINARY TRACT .4939 3.3 4.1
INFECTIONS AGE 0-17.
323............ 11 MED URINARY STONES W CC, &/OR .7996 2.4 3.2
ESW LITHOTRIPSY.
324............ 11 MED URINARY STONES W/O CC..... .4509 1.6 1.9
325............ 11 MED KIDNEY & URINARY TRACT .6460 3.0 3.9
SIGNS & SYMPTOMS AGE >17
W CC.
326............ 11 MED KIDNEY & URINARY TRACT .4297 2.1 2.7
SIGNS & SYMPTOMS AGE >17
W/O CC.
327............ 11 MED *KIDNEY & URINARY TRACT .3543 3.1 3.1
SIGNS & SYMPTOMS AGE 0-17.
328............ 11 MED URETHRAL STRICTURE AGE >17 .7455 2.8 3.9
W CC.
329............ 11 MED URETHRAL STRICTURE AGE >17 .5253 1.7 2.0
W/O CC.
330............ 11 MED *URETHRAL STRICTURE AGE 0- .3191 1.6 1.6
17.
331............ 11 MED OTHER KIDNEY & URINARY 1.0221 4.1 5.6
TRACT DIAGNOSES AGE >17 W
CC.
332............ 11 MED OTHER KIDNEY & URINARY .5997 2.5 3.3
TRACT DIAGNOSES AGE >17 W/
O CC.
333............ 11 MED OTHER KIDNEY & URINARY .8247 3.5 5.0
TRACT DIAGNOSES AGE 0-17.
334............ 12 SURG MAJOR MALE PELVIC 1.5591 4.2 4.9
PROCEDURES W CC.
335............ 12 SURG MAJOR MALE PELVIC 1.1697 3.2 3.4
PROCEDURES W/O CC.
336............ 12 SURG TRANSURETHRAL .8880 2.7 3.5
PROSTATECTOMY W CC.
337............ 12 SURG TRANSURETHRAL .6152 1.9 2.2
PROSTATECTOMY W/O CC.
338............ 12 SURG TESTES PROCEDURES, FOR 1.1900 3.5 5.3
MALIGNANCY.
339............ 12 SURG TESTES PROCEDURES, NON- 1.0769 3.0 4.6
MALIGNANCY AGE >17.
[[Page 47166]]
340............ 12 SURG *TESTES PROCEDURES, NON- .2835 2.4 2.4
MALIGNANCY AGE 0-17.
341............ 12 SURG PENIS PROCEDURES.......... 1.1709 2.1 3.2
342............ 12 SURG CIRCUMCISION AGE >17...... .8240 2.5 3.1
343............ 12 SURG *CIRCUMCISION AGE 0-17.... .1541 1.7 1.7
344............ 12 SURG OTHER MALE REPRODUCTIVE 1.1519 1.6 2.3
SYSTEM O.R. PROCEDURES
FOR MALIGNANCY.
345............ 12 SURG OTHER MALE REPRODUCTIVE .8800 2.6 3.8
SYSTEM O.R. PROC EXCEPT
FOR MALIGNANCY.
346............ 12 MED MALIGNANCY, MALE .9756 4.3 5.8
REPRODUCTIVE SYSTEM, W CC.
347............ 12 MED MALIGNANCY, MALE .5922 2.4 3.4
REPRODUCTIVE SYSTEM, W/O
CC.
348............ 12 MED BENIGN PROSTATIC .7142 3.2 4.2
HYPERTROPHY W CC.
349............ 12 MED BENIGN PROSTATIC .4380 2.0 2.6
HYPERTROPHY W/O CC.
350............ 12 MED INFLAMMATION OF THE MALE .6992 3.6 4.4
REPRODUCTIVE SYSTEM.
351............ 12 MED *STERILIZATION, MALE...... .2364 1.3 1.3
352............ 12 MED OTHER MALE REPRODUCTIVE .6858 2.8 3.8
SYSTEM DIAGNOSES.
353............ 13 SURG PELVIC EVISCERATION, 1.9292 5.3 6.7
RADICAL HYSTERECTOMY &
RADICAL VULVECTOMY.
354............ 13 SURG UTERINE, ADNEXA PROC FOR 1.5284 4.9 5.9
NON-OVARIAN/ADNEXAL MALIG
W CC.
355............ 13 SURG UTERINE, ADNEXA PROC FOR .9278 3.1 3.3
NON-OVARIAN/ADNEXAL MALIG
W/O CC.
356............ 13 SURG FEMALE REPRODUCTIVE SYSTEM .7846 2.1 2.4
RECONSTRUCTIVE PROCEDURES.
357............ 13 SURG UTERINE & ADNEXA PROC FOR 2.3628 6.9 8.5
OVARIAN OR ADNEXAL
MALIGNANCY.
358............ 13 SURG UTERINE & ADNEXA PROC FOR 1.2263 3.7 4.4
NON-MALIGNANCY W CC.
359............ 13 SURG UTERINE & ADNEXA PROC FOR .8593 2.6 2.8
NON-MALIGNANCY W/O CC.
360............ 13 SURG VAGINA, CERVIX & VULVA .8860 2.4 3.0
PROCEDURES.
361............ 13 SURG LAPAROSCOPY & INCISIONAL 1.2318 2.2 3.5
TUBAL INTERRUPTION.
362............ 13 SURG *ENDOSCOPIC TUBAL .3022 1.4 1.4
INTERRUPTION.
363............ 13 SURG D&C, CONIZATION & RADIO- .8136 2.5 3.5
IMPLANT, FOR MALIGNANCY.
364............ 13 SURG D&C, CONIZATION EXCEPT FOR .7530 2.6 3.6
MALIGNANCY.
365............ 13 SURG OTHER FEMALE REPRODUCTIVE 1.8425 4.9 7.3
SYSTEM O.R. PROCEDURES.
366............ 13 MED MALIGNANCY, FEMALE 1.2467 4.8 6.8
REPRODUCTIVE SYSTEM W CC.
367............ 13 MED MALIGNANCY, FEMALE .5676 2.4 3.2
REPRODUCTIVE SYSTEM W/O
CC.
368............ 13 MED INFECTIONS, FEMALE 1.1205 5.0 6.7
REPRODUCTIVE SYSTEM.
369............ 13 MED MENSTRUAL & OTHER FEMALE .5704 2.4 3.2
REPRODUCTIVE SYSTEM
DISORDERS.
370............ 14 SURG CESAREAN SECTION W CC..... 1.0631 4.4 5.7
371............ 14 SURG CESAREAN SECTION W/O CC... .7157 3.3 3.6
372............ 14 MED VAGINAL DELIVERY W .6077 2.7 3.5
COMPLICATING DIAGNOSES.
373............ 14 MED VAGINAL DELIVERY W/O .4169 2.0 2.3
COMPLICATING DIAGNOSES.
374............ 14 SURG VAGINAL DELIVERY W .7565 2.6 3.4
STERILIZATION &/OR D&C.
375............ 14 SURG *VAGINAL DELIVERY W O.R. .6860 4.4 4.4
PROC EXCEPT STERIL &/OR
D&C.
376............ 14 MED POSTPARTUM & POST ABORTION .5224 2.6 3.5
DIAGNOSES W/O O.R.
PROCEDURE.
377............ 14 SURG POSTPARTUM & POST ABORTION .8899 2.6 3.8
DIAGNOSES W O.R.
PROCEDURE.
378............ 14 MED ECTOPIC PREGNANCY......... .7664 2.0 2.3
379............ 14 MED THREATENED ABORTION....... .3959 2.0 3.1
380............ 14 MED ABORTION W/O D&C.......... .4843 1.8 2.2
381............ 14 SURG ABORTION W D&C, ASPIRATION .5331 1.5 1.9
CURETTAGE OR HYSTEROTOMY.
382............ 14 MED FALSE LABOR............... .2127 1.3 1.5
383............ 14 MED OTHER ANTEPARTUM DIAGNOSES .5137 2.7 3.9
W MEDICAL COMPLICATIONS.
384............ 14 MED OTHER ANTEPARTUM DIAGNOSES .3161 1.6 2.3
W/O MEDICAL COMPLICATIONS.
385............ 15 MED *NEONATES, DIED OR 1.3767 1.8 1.8
TRANSFERRED TO ANOTHER
ACUTE CARE FACILITY.
386............ 15 MED *EXTREME IMMATURITY OR 4.5400 17.9 17.9
RESPIRATORY DISTRESS
SYNDROME, NEONATE.
387............ 15 MED *PREMATURITY W MAJOR 3.1007 13.3 13.3
PROBLEMS.
388............ 15 MED *PREMATURITY W/O MAJOR 1.8709 8.6 8.6
PROBLEMS.
389............ 15 MED *FULL TERM NEONATE W MAJOR 1.8408 4.7 4.7
PROBLEMS.
390............ 15 MED NEONATE W OTHER .9471 3.0 4.0
SIGNIFICANT PROBLEMS.
391............ 15 MED *NORMAL NEWBORN........... .1527 3.1 3.1
392............ 16 SURG SPLENECTOMY AGE >17....... 3.1739 7.1 9.5
393............ 16 SURG *SPLENECTOMY AGE 0-17..... 1.3486 9.1 9.1
[[Page 47167]]
394............ 16 SURG OTHER O.R. PROCEDURES OF 1.5969 4.1 6.7
THE BLOOD AND BLOOD
FORMING ORGANS.
395............ 16 MED RED BLOOD CELL DISORDERS .8257 3.3 4.5
AGE >17.
396............ 16 MED RED BLOOD CELL DISORDERS 1.1573 2.5 3.8
AGE 0-17.
397............ 16 MED COAGULATION DISORDERS..... 1.2278 3.8 5.2
398............ 16 MED RETICULOENDOTHELIAL & 1.2750 4.7 6.0
IMMUNITY DISORDERS W CC.
399............ 16 MED RETICULOENDOTHELIAL & .6881 2.8 3.6
IMMUNITY DISORDERS W/O CC.
400............ 17 SURG LYMPHOMA & LEUKEMIA W 2.6309 5.8 9.1
MAJOR O.R. PROCEDURE.
401............ 17 SURG LYMPHOMA & NON-ACUTE 2.7198 7.8 11.2
LEUKEMIA W OTHER O.R.
PROC W CC.
402............ 17 SURG LYMPHOMA & NON-ACUTE 1.0985 2.8 4.0
LEUKEMIA W OTHER O.R.
PROC W/O CC.
403............ 17 MED LYMPHOMA & NON-ACUTE 1.7594 5.7 8.1
LEUKEMIA W CC.
404............ 17 MED LYMPHOMA & NON-ACUTE .8480 3.1 4.2
LEUKEMIA W/O CC.
405............ 17 MED *ACUTE LEUKEMIA W/O MAJOR 1.9120 4.9 4.9
O.R. PROCEDURE AGE 0-17.
406............ 17 SURG MYELOPROLIF DISORD OR 2.8275 7.6 10.3
POORLY DIFF NEOPL W MAJ
O.R.PROC W CC.
407............ 17 SURG MYELOPROLIF DISORD OR 1.3179 3.6 4.4
POORLY DIFF NEOPL W MAJ
O.R.PROC W/O CC.
408............ 17 SURG MYELOPROLIF DISORD OR 2.0008 4.8 7.7
POORLY DIFF NEOPL W OTHER
O.R.PROC.
409............ 17 MED RADIOTHERAPY.............. 1.1215 4.4 5.9
410............ 17 MED CHEMOTHERAPY W/O ACUTE .9468 2.9 3.7
LEUKEMIA AS SECONDARY
DIAGNOSIS.
411............ 17 MED HISTORY OF MALIGNANCY W/O .3305 2.0 2.3
ENDOSCOPY.
412............ 17 MED HISTORY OF MALIGNANCY W .4841 2.0 2.7
ENDOSCOPY.
413............ 17 MED OTHER MYELOPROLIF DIS OR 1.3645 5.3 7.3
POORLY DIFF NEOPL DIAG W
CC.
414............ 17 MED OTHER MYELOPROLIF DIS OR .7548 3.0 4.1
POORLY DIFF NEOPL DIAG W/
O CC.
415............ 18 SURG O.R. PROCEDURE FOR 3.5925 10.4 14.3
INFECTIOUS & PARASITIC
DISEASES.
416............ 18 MED SEPTICEMIA AGE >17........ 1.5278 5.5 7.4
417............ 18 MED SEPTICEMIA AGE 0-17....... 1.1717 3.7 6.0
418............ 18 MED POSTOPERATIVE & POST- 1.0074 4.8 6.2
TRAUMATIC INFECTIONS.
419............ 18 MED FEVER OF UNKNOWN ORIGIN .8709 3.7 4.8
AGE >17 W CC.
420............ 18 MED FEVER OF UNKNOWN ORIGIN .6057 3.0 3.6
AGE >17 W/O CC.
421............ 18 MED VIRAL ILLNESS AGE >17..... .6796 3.1 3.9
422............ 18 MED VIRAL ILLNESS & FEVER OF .7854 2.8 5.1
UNKNOWN ORIGIN AGE 0-17.
423............ 18 MED OTHER INFECTIOUS & 1.7250 5.9 8.2
PARASITIC DISEASES
DIAGNOSES.
424............ 19 SURG O.R. PROCEDURE W PRINCIPAL 2.2810 8.7 13.5
DIAGNOSES OF MENTAL
ILLNESS.
425............ 19 MED ACUTE ADJUSTMENT REACTION .7031 3.0 4.1
& PSYCHOLOGICAL
DYSFUNCTION.
426............ 19 MED DEPRESSIVE NEUROSES....... .5301 3.3 4.6
427............ 19 MED NEUROSES EXCEPT DEPRESSIVE .5637 3.3 5.0
428............ 19 MED DISORDERS OF PERSONALITY & .7342 4.4 7.1
IMPULSE CONTROL.
429............ 19 MED ORGANIC DISTURBANCES & .8530 4.9 6.7
MENTAL RETARDATION.
430............ 19 MED PSYCHOSES................. .7644 5.8 8.2
431............ 19 MED CHILDHOOD MENTAL DISORDERS .6392 4.8 6.6
432............ 19 MED OTHER MENTAL DISORDER .6546 3.2 4.8
DIAGNOSES.
433............ 20 MED ALCOHOL/DRUG ABUSE OR .2824 2.2 3.0
DEPENDENCE, LEFT AMA.
434............ 20 MED ALC/DRUG ABUSE OR DEPEND, .7256 3.9 5.1
DETOX OR OTH SYMPT TREAT
W CC.
435............ 20 MED ALC/DRUG ABUSE OR DEPEND, .4176 3.4 4.3
DETOX OR OTH SYMPT TREAT
W/O CC.
436............ 20 MED ALC/DRUG DEPENDENCE W .7433 10.3 12.9
REHABILITATION THERAPY.
437............ 20 MED ALC/DRUG DEPENDENCE, .6606 7.5 9.0
COMBINED REHAB & DETOX
THERAPY.
438............ 20 ................... NO LONGER VALID........... .0000 .0 .0
439............ 21 SURG SKIN GRAFTS FOR INJURIES.. 1.7092 5.3 8.2
440............ 21 SURG WOUND DEBRIDEMENTS FOR 1.9096 5.8 8.9
INJURIES.
441............ 21 SURG HAND PROCEDURES FOR .9463 2.2 3.3
INJURIES.
442............ 21 SURG OTHER O.R. PROCEDURES FOR 2.3403 5.4 8.3
INJURIES W CC.
443............ 21 SURG OTHER O.R. PROCEDURES FOR .9978 2.5 3.4
INJURIES W/O CC.
444............ 21 MED TRAUMATIC INJURY AGE >17 W .7243 3.2 4.2
CC.
445............ 21 MED TRAUMATIC INJURY AGE >17 W/ .5076 2.4 3.0
O CC.
446............ 21 MED *TRAUMATIC INJURY AGE 0-17 .2964 2.4 2.4
447............ 21 MED ALLERGIC REACTIONS AGE >17 .5166 1.9 2.5
448............ 21 MED *ALLERGIC REACTIONS AGE 0- .0975 2.9 2.9
17.
[[Page 47168]]
449............ 21 MED POISONING & TOXIC EFFECTS .8076 2.6 3.7
OF DRUGS AGE >17 W CC.
450............ 21 MED POISONING & TOXIC EFFECTS .4406 1.6 2.0
OF DRUGS AGE >17 W/O CC.
451............ 21 MED *POISONING & TOXIC EFFECTS .2632 2.1 2.1
OF DRUGS AGE 0-17.
452............ 21 MED COMPLICATIONS OF TREATMENT 1.0152 3.5 5.0
W CC.
453............ 21 MED COMPLICATIONS OF TREATMENT .4987 2.2 2.8
W/O CC.
454............ 21 MED OTHER INJURY, POISONING & .8593 3.2 4.6
TOXIC EFFECT DIAG W CC.
455............ 21 MED OTHER INJURY, POISONING & .4672 2.0 2.6
TOXIC EFFECT DIAG W/O CC.
456............ NO LONGER VALID........... .0000 .0 .0
457............ NO LONGER VALID........... .0000 .0 .0
458............ NO LONGER VALID........... .0000 .0 .0
459............ NO LONGER VALID........... .0000 .0 .0
460............ NO LONGER VALID........... .0000 .0 .0
461............ 23 SURG O.R. PROC W DIAGNOSES OF 1.2101 2.4 4.6
OTHER CONTACT W HEALTH
SERVICES.
462............ 23 MED REHABILITATION............ 1.2401 9.4 11.7
463............ 23 MED SIGNS & SYMPTOMS W CC..... .6936 3.3 4.3
464............ 23 MED SIGNS & SYMPTOMS W/O CC... .4775 2.4 3.1
465............ 23 MED AFTERCARE W HISTORY OF .5756 2.1 3.4
MALIGNANCY AS SECONDARY
DIAGNOSIS.
466............ 23 MED AFTERCARE W/O HISTORY OF .6840 2.3 3.9
MALIGNANCY AS SECONDARY
DIAGNOSIS.
467............ 23 MED OTHER FACTORS INFLUENCING .5112 2.3 4.1
HEALTH STATUS.
468............ EXTENSIVE O.R. PROCEDURE 3.6399 9.2 13.0
UNRELATED TO PRINCIPAL
DIAGNOSIS.
469............ **PRINCIPAL DIAGNOSIS .0000 .0 .0
INVALID AS DISCHARGE
DIAGNOSIS.
470............ **UNGROUPABLE............. .0000 .0 .0
471............ 08 SURG BILATERAL OR MULTIPLE 3.1957 5.0 5.7
MAJOR JOINT PROCS OF
LOWER EXTREMITY.
472............ NO LONGER VALID........... .0000 .0 .0
473............ 17 SURG ACUTE LEUKEMIA W/O MAJOR 3.5822 7.6 13.2
O.R. PROCEDURE AGE >17.
474............ NO LONGER VALID........... .0000 .0 .0
475............ 04 MED RESPIRATORY SYSTEM 3.6936 8.1 11.3
DIAGNOSIS WITH VENTILATOR
SUPPORT.
476............ SURG PROSTATIC O.R. PROCEDURE 2.2547 8.4 11.7
UNRELATED TO PRINCIPAL
DIAGNOSIS.
477............ SURG NON-EXTENSIVE O.R. 1.8204 5.4 8.1
PROCEDURE UNRELATED TO
PRINCIPAL DIAGNOSIS.
478............ 05 SURG OTHER VASCULAR PROCEDURES 2.3333 4.9 7.3
W CC.
479............ 05 SURG OTHER VASCULAR PROCEDURES 1.4326 2.8 3.6
W/O CC.
480............ PRE SURG LIVER TRANSPLANT.......... 9.4744 14.7 19.5
481............ PRE SURG BONE MARROW TRANSPLANT.... 8.6120 23.8 26.6
482............ PRE SURG TRACHEOSTOMY FOR FACE, 3.5785 10.0 12.9
MOUTH & NECK DIAGNOSES.
483............ PRE SURG TRACHEOSTOMY EXCEPT FOR 15.9677 33.7 41.2
FACE, MOUTH & NECK
DIAGNOSES.
484............ 24 SURG CRANIOTOMY FOR MULTIPLE 5.5606 8.8 13.1
SIGNIFICANT TRAUMA.
485............ 24 SURG LIMB REATTACHMENT, HIP AND 3.0998 7.7 9.5
FEMUR PROC FOR MULTIPLE
SIGNIFICANT TRA.
486............ 24 SURG OTHER O.R. PROCEDURES FOR 4.9048 8.1 12.2
MULTIPLE SIGNIFICANT
TRAUMA.
487............ 24 MED OTHER MULTIPLE SIGNIFICANT 2.0604 5.6 7.8
TRAUMA.
488............ 25 SURG HIV W EXTENSIVE O.R. 4.5574 11.5 17.0
PROCEDURE.
489............ 25 MED HIV W MAJOR RELATED 1.7414 6.0 8.6
CONDITION.
490............ 25 MED HIV W OR W/O OTHER RELATED .9680 3.7 5.1
CONDITION.
491............ 08 SURG MAJOR JOINT & LIMB 1.6685 2.9 3.5
REATTACHMENT PROCEDURES
OF UPPER EXTREMITY.
492............ 17 MED CHEMOTHERAPY W ACUTE 4.2467 10.9 16.1
LEUKEMIA AS SECONDARY
DIAGNOSIS.
493............ 07 SURG LAPAROSCOPIC 1.8180 4.3 5.7
CHOLECYSTECTOMY W/O
C.D.E. W CC.
494............ 07 SURG LAPAROSCOPIC 1.0388 2.0 2.5
CHOLECYSTECTOMY W/O
C.D.E. W/O CC.
495............ PRE SURG LUNG TRANSPLANT........... 8.6087 13.4 20.5
496............ 08 SURG COMBINED ANTERIOR/ 5.5532 7.8 10.0
POSTERIOR SPINAL FUSION.
497............ 08 SURG SPINAL FUSION W CC........ 2.9441 4.9 6.2
498............ 08 SURG SPINAL FUSION W/O CC...... 1.9057 2.8 3.4
499............ 08 SURG BACK & NECK PROCEDURES 1.4572 3.6 4.8
EXCEPT SPINAL FUSION W CC.
500............ 08 SURG BACK & NECK PROCEDURES .9805 2.2 2.7
EXCEPT SPINAL FUSION W/O
CC.
501............ 08 SURG KNEE PROCEDURES W PDX OF 2.6283 8.4 10.6
INFECTION W CC.
502............ 08 SURG KNEE PROCEDURES W PDX OF 1.4434 4.9 6.0
INFECTION W/O CC.
503............ 08 SURG KNEE PROCEDURES W/O PDX OF 1.2156 3.1 4.0
INFECTION.
504............ 22 SURG EXTENSIVE 3RD DEGREE BURNS 12.6064 24.1 30.5
W SKIN GRAFT.
[[Page 47169]]
505............ 22 MED EXTENSIVE 3RD DEGREE BURNS 2.0166 2.5 4.7
W/O SKIN GRAFT.
506............ 22 SURG FULL THICKNESS BURN W SKIN 4.4825 12.9 17.6
GRAFT OR INHAL INJ W CC
OR SIG TRAUMA.
507............ 22 SURG FULL THICKNESS BURN W SKIN 1.8560 6.6 9.3
GRFT OR INHAL INJ W/O CC
OR SIG TRAUMA.
508............ 22 MED FULL THICKNESS BURN W/O 1.3302 5.1 7.3
SKIN GRFT OR INHAL INJ W
CC OR SIG TRAUMA.
509............ 22 MED FULL THICKNESS BURN W/O .8071 4.1 6.2
SKIN GRFT OR INH INJ W/O
CC OR SIG TRAUMA.
510............ 22 MED NON-EXTENSIVE BURNS W CC 1.4088 5.2 7.9
OR SIGNIFICANT TRAUMA.
511............ 22 MED NON-EXTENSIVE BURNS W/O CC .6536 3.1 4.5
OR SIGNIFICANT TRAUMA.
----------------------------------------------------------------------------------------------------------------
* MEDICARE DATA HAVE BEEN SUPPLEMENTED BY DATA FROM 19 STATES FOR LOW VOLUME DRGS.
** DRGS 469 AND 470 CONTAIN CASES WHICH COULD NOT BE ASSIGNED TO VALID DRGS.
NOTE: GEOMETRIC MEAN IS USED ONLY TO DETERMINE PAYMENT FOR TRANSFER CASES.
NOTE: ARITHMETIC MEAN IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY.
NOTE: RELATIVE WEIGHTS ARE BASED ON MEDICARE PATIENT DATA AND MAY NOT BE APPROPRIATE FOR OTHER PATIENTS.
Table 6a.--New Diagnosis Codes
----------------------------------------------------------------------------------------------------------------
Diagnosis
code Description CC MDC DRG
----------------------------------------------------------------------------------------------------------------
007.5 Cyclosporiasis.............. N 6 182, 183,184
082.40 Unspecified ehrlichiosis.... N 18 423
082.41 Ehrlichiosis Chafiensis (E. N 18 423
Chafiensis).
082.49 Other ehrlichiosis.......... N 18 423
285.21 Anemia in end-stage renal N 16 395, 396
disease.
285.22 Anemia in neoplastic disease N 16 395, 396
285.29 Anemia of other chronic N 16 395, 396
illness.
294.10 Dementia in conditions N 19 429
classified elsewhere
without behavioral
disturbance.
294.11 Dementia in conditions N 19 429
classified elsewhere with
behavioral disturbance.
372.81 Conjunctivochalasis......... N 2 46, 47, 48
372.89 Other disorders of N 2 46, 47, 48
conjunctiva.
477.1 Allergic rhinitis, due to N 3 68, 69, 70
food.
493.02 Extrinsic asthma, with acute Y 4 96, 97, 98
exacerbation.
493.12 Intrinsic asthma, with acute Y 4 96, 97, 98
exacerbation.
493.22 Chronic obstructive asthma, Y 4 88
with acute exacerbation.
493.92 Unspecified asthma, with Y 4 96, 97, 98
acute exacerbation.
494.0 Bronchiectasis without acute N 4 88
exacerbation.
494.1 Bronchiectasis with acute Y 4 88
exacerbation.
558.3 Allergic gastroenteritis and N 6 182, 183, 184
colitis.
600.0 Hypertrophy (benign) of N 12 348, 349
prostate.
600.1 Nodular prostate............ N 12 348, 349
600.2 Benign localized hyperplasia N 12 348, 349
of prostate.
600.3 Cyst of prostate............ N 12 348, 349
600.9 Unspecified hyperplasia of N 12 348, 349
prostate.
645.10 Post term pregnancy, N 14 469
unspecified as to episode
of care or not applicable.
645.11 Post term pregnancy, N 14 370, 371, 372, 373, 374, 375
delivered, with or without
mention of antepartum
condition.
645.13 Post term pregnancy, N 14 383, 384
antepartum condition or
complication.
645.20 Prolonged pregnancy, N 14 469
unspecified as to episode
of care or not applicable.
645.21 Prolonged pregnancy, N 14 370, 371, 372, 373, 374, 375
delivered, with or without
mention of antepartum
condition.
645.23 Prolonged pregnancy, N 14 383, 384
antepartum condition or
complication.
692.75 Disseminated superficial N 9 283, 284
actinic porokeratosis
(DSAP).
707.10 Unspecified ulcer of lower Y 9 263, 264, 271
limb.
707.11 Ulcer of thigh.............. Y 9 263, 264, 271
707.12 Ulcer of calf............... Y 9 263, 264, 271
707.13 Ulcer of ankle.............. Y 9 263, 264, 271
707.14 Ulcer of heel and midfoot... Y 9 263, 264, 271
707.15 Ulcer of other part of foot. Y 9 263, 264, 271
707.19 Ulcer of other part of lower Y 9 263, 264, 271
limb.
727.83 Plica syndrome.............. N 8 248
781.91 Loss of height.............. N 1 34, 35
781.92 Abnormal posture............ N 1 34, 35
781.99 Other symptoms involving N 1 34, 35
nervous and musculoskeletal
systems.
783.21 Loss of weight.............. N 10 296, 297, 298
783.22 Underweight................. N 10 296, 297, 298
783.40 Unspecified lack of normal N 10 296, 297, 298
physiological development.
[[Page 47170]]
783.41 Failure to thrive........... N 10 296, 297, 298
783.42 Delayed milestones.......... N 10 296, 297, 298
783.43 Short stature............... N 10 296, 297, 298
783.7 Adult failure to thrive..... N 10 296, 297, 298
790.01 Precipitous drop in N 16 395, 396
hematocrit.
790.09 Other abnormality of red N 16 395, 396
blood cells.
792.5 Cloudy (hemodialysis) N 23 463, 464
(peritoneal) dialysis
effluent.
995.7 Other adverse food N 21 454, 455
reactions, not elsewhere
classified.
996.87 Complications of Y 21 452, 453
transplanted organ,
intestine.
V15.01 Allergy to peanuts.......... N 23 467
V15.02 Allergy to milk products.... N 23 467
V15.03 Allergy to eggs............. N 23 467
V15.04 Allergy to seafood.......... N 23 467
V15.05 Allergy to other foods...... N 23 467
V15.06 Allergy to insects.......... N 23 467
V15.07 Allergy to latex............ N 23 467
V15.08 Allergy to radiographic dye. N 23 467
V15.09 Other allergy, other than to N 23 467
medicinal agents.
V21.30 Unspecified low birth weight N 23 467
status.
V21.31 Low birth weight status, N 23 467
less than 500 grams.
V21.32 Low birth weight status, 500- N 23 467
999 grams.
V21.33 Low birth weight status, N 23 467
1000-1499 grams.
V21.34 Low birth weight status, N 23 467
1500-1999 grams.
V21.35 Low birth weight status, N 23 467
2000-2500 grams.
V26.21 Fertility testing........... N 23 467
V26.22 Aftercare following N 23 467
sterilization reversal.
V26.29 Other investigation and N 23 467
testing.
V42.84 Organ or tissue replaced by Y 23 467
transplant, intestines.
V45.74 Acquired absence of organ, N 11 331, 332, 333
other parts of urinary
tract.
V45.75 Acquired absence of organ, N 23 467
stomach.
V45.76 Acquired absence of organ, N 4 101, 102
lung.
V45.77 Acquired absence of organ, N 12 352
genital organs. 13 358, 359, 369
V45.78 Acquired absence of organ, N 2 46, 47, 48
eye.
V45.79 Other acquired absence of N 23 467
organ.
V49.81 Postmenopausal status (age- N 23 467
related) (natural).
V49.89 Other specified conditions N 23 467
influencing health status.
V56.31 Encounter for adequacy N 11 317
testing for hemodialysis.
V56.32 Encounter for adequacy N 11 317
testing for peritoneal
dialysis.
V58.83 Encounter for therapeutic N 23 465, 466
drug monitoring.
V67.00 Follow-up examination, N 23 465, 466
following unspecified
surgery.
V67.01 Following surgery, follow-up N 23 465, 466
vaginal pap smear.
V67.09 Follow-up examination, N 23 465, 466
following other surgery.
V71.81 Observation for suspected N 23 467
abuse and neglect.
V71.89 Observation for other N 23 467
specified suspected
conditions.
V76.46 Special screening for N 23 467
malignant neoplasms, ovary.
V76.47 Special screening for N 23 467
malignant neoplasms, Vagina.
V76.50 Special screening for N 23 467
malignant neoplasms,
unspecified intestine.
V76.51 Special screening for N 23 467
malignant neoplasms, colon.
V76.52 Special screening for N 23 467
malignant neoplasms, small
intestine.
V76.81 Special screening for N 23 467
malignant neoplasms,
nervous system.
V76.89 Special screening for other N 23 467
malignant neoplasm.
V77.91 Screening for lipoid N 23 467
disorders.
V77.99 Other and unspecified N 23 467
endocrine, nutritional,
metabolic, and immunity
disorders.
V82.81 Special screening for N 23 467
osteoporosis.
V82.89 Special screening for other N 23 467
specified conditions.
----------------------------------------------------------------------------------------------------------------
Table 6b.--New Procedure Codes
----------------------------------------------------------------------------------------------------------------
Procedure
code Description OR MDC DRG
----------------------------------------------------------------------------------------------------------------
39.71 Endovascular implantation of Y 5 110, 111
graft in abdominal aorta. 11 315
21 442, 443
24 486
[[Page 47171]]
39.79 Other endovascular graft Y 1 1, 2, 3
repair of aneurysm. 5 110, 111
11 315
21 442, 443
24 486
41.07 Autologous hematopoietic Y PRE 481
stem cell transplant with
purging.
41.08 Allogeneic hematopoietic Y PRE 481
stem cell transplant with
purging.
41.09 Autologous bone marrow Y PRE 481
transplant with purging.
46.97 Transplant of intestine..... Y 6 148, 149
7 201
17 400, 406, 407
21 442, 443
24 486
60.96 Transurethral destruction of Y 11 306, 307
prostate tissue by 12 1336, 337
microwave thermotherapy. UNR 476
60.97 Other transurethral Y 11 306, 307
destruction of prostate 12 336, 337
tissue by other UNR 476
thermotherapy.
99.75 Administration of N
neuroprotective agent.
----------------------------------------------------------------------------------------------------------------
Table 6c.--Invalid Diagnosis Codes
----------------------------------------------------------------------------------------------------------------
Diagnosis
code Description CC MDC DRG
----------------------------------------------------------------------------------------------------------------
294.1 Dementia in conditions N 19 429
classified elsewhere.
372.8 Other disorders of N 2 46, 47, 48
conjunctiva.
494 Bronchiectasis.............. Y 4 88
600 Hyperplasia of prostate..... N 12 348, 349
645.00 Prolonged pregnancy, N 14 469
unspecified as to episode
of care or not applicable.
645.01 Prolonged pregnancy, N 14 370, 371, 372, 373, 374, 375
delivered, with or without
mention of antepartum
condition.
645.03 Prolonged pregnancy, N 14 383, 384
antepartum condition or
complication.
707.1 Ulcer of lower limb, except Y 9 263, 264, 271
decubitus.
781.9 Other symptoms involving N 1 34, 35
nervous and musculoskeletal
systems.
783.2 Abnormal loss of weight..... N 10 296, 297, 298
783.4 Lack of expected normal N 10 296, 297, 298
physiological development.
790.0 Abnormality of red blood N 16 395, 396
cells.
V15.0 Allergy, other than to N 23 467
medicinal agents.
V26.2 Investigation and testing... N 23 467
V49.8 Other specified problems N 23 467
influencing health status.
V67.0 Follow-up examination N 23 465, 466
following surgery.
V71.8 Observation for other N 23 467
specified suspected
conditions.
V76.8 Special screening for N 23 467
malignant neoplasms, other
neoplasm.
V77.9 Other and unspecified N 23 467
endocrine, nutritional,
metabolic, and immunity
disorders.
V82.8 Special screening for other N 23 467
specified conditions.
----------------------------------------------------------------------------------------------------------------
Table 6d.--Revised Diagnosis Code Titles
----------------------------------------------------------------------------------------------------------------
Diagnosis
code Description CC MDC DRG
----------------------------------------------------------------------------------------------------------------
564.1 Irritable bowel syndrome.... N 6 182
183
184
V26.3 Genetic counseling and N 23 467
testing.
V76.49 Special screening for N 23 467
malignant, other sites.
----------------------------------------------------------------------------------------------------------------
Table 6e.--Revised Procedure Codes
----------------------------------------------------------------------------------------------------------------
Procedure
code Description OR MDC DRG
----------------------------------------------------------------------------------------------------------------
41.01 Autologous bone marrow Y PRE 481
transplant without purging.
41.04 Autologous hematopoietic Y PRE 481
stem cell transplant
without purging.
41.05 Allogeneic hematopoietic Y PRE 481
stem cell transplant
without purging.
[[Page 47172]]
86.59 Closure of skin and N
subcutaneous tissue other
sites.
----------------------------------------------------------------------------------------------------------------
Table 6f.--Additions to the CC Exclusions List
[CCs that are added to the list are in Table 6F--Additions to the CC
Exclusions List. Each of the principal diagnoses is shown with an
asterisk, and the revisions to the CC Exclusions List are provided in an
indented column immediately following the affected principal diagnosis.]
------------------------------------------------------------------------
------------------------------------------------------------------------
*0075 2818 70713 49312 01170 4870 01152 4829
00841 2824 70714 49322 01171 4950 01153 4830
00842 28260 70715 49392 01172 4951 01154 4831
00843 28261 70719 *49391 01173 4952 01155 4838
00844 28262 *4871 49302 01174 4953 01156 4841
00845 28263 4941 49312 01175 4954 01160 4843
00846 28269 *49300 49322 01176 4955 01161 4845
00847 2830 49302 49392 01180 4956 01162 4846
00849 28310 49312 *49392 01181 4957 01163 4847
*01790 28311 49322 49301 01182 4958 01164 4848
4941 28319 49392 49302 01183 4959 01165 485
*01791 2832 *49301 49311 01184 496 01166 486
4941 2839 49302 49312 01185 5060 01170 4870
*01792 2840 49312 49320 01186 5061 01171 4941
4941 2848 49322 49321 01190 5070 01172 4950
*01793 2849 49392 49322 01191 5071 01173 4951
4941 2850 *49302 49391 01192 5078 01174 4952
*01794 2851 49301 49392 01193 5080 01175 4953
4941 *29410 49302 *4940 01194 5081 01176 4954
*01795 2910 49311 01100 01195 515 01180 4955
4941 2911 49312 01101 01196 5160 01181 4956
*01796 2912 49320 01102 01200 5161 01182 4957
4941 2913 49321 01103 01201 5162 01183 4958
*28521 2914 49322 01104 01202 5163 01184 4959
2800 29181 49391 01105 01203 5168 01185 496
2814 29189 49392 01106 01204 5169 01186 5060
2818 2919 *49310 01110 01205 5171 01190 5061
2824 2920 49302 01111 01206 5172 01191 5070
28260 29211 49312 01112 01210 5178 01192 5071
28261 29212 49322 01113 01211 74861 01193 5078
28262 2922 49392 01114 01212 *4941 01194 5080
28263 29281 *49311 01115 01213 01100 01195 5081
28269 29282 49302 01116 01214 01101 01196 515
2830 29283 49312 01120 01215 01102 01200 5160
28310 29284 49322 01121 01216 01103 01201 5161
28311 29289 49392 01122 0310 01104 01202 5162
28319 2929 *49312 01123 11505 01105 01203 5163
2832 29381 49301 01124 11515 01106 01204 5168
2839 29382 49302 01125 1304 01110 01205 5169
2840 29383 49311 01126 1363 01111 01206 5171
2848 29384 49312 01130 481 01112 01210 5172
2849 *29411 49320 01131 4820 01113 01211 5178
2850 2910 49321 01132 4821 01114 01212 74861
2851 2911 49322 01133 4822 01115 01213 *496
*28522 2912 49391 01134 48230 01116 01214 4941
2800 2913 49392 01135 48231 01120 01215 *5061
2814 2914 *49320 01136 48232 01121 01216 4941
2818 29181 49302 01140 48239 01122 0310 *5064
2824 29189 49312 01141 48240 01123 11505 4941
28260 2919 49322 01142 48241 01124 11515 *5069
28261 2920 49392 01143 48249 01125 1304 4941
28262 29211 *49321 01144 48281 01126 1363 *5178
28263 29212 49302 01145 48282 01130 481 49302
28269 2922 49312 01146 48283 01131 4820 49312
2830 29281 49322 01150 48284 01132 4821 49322
28310 29282 49392 01151 48289 01133 4822 49392
28311 29283 *49322 01152 4829 01134 48230 *51889
28319 29284 49301 01153 4830 01135 48231 49302
2832 29289 49302 01154 4831 01136 48232 49312
2839 2929 49311 01155 4838 01140 48239 49322
2840 29381 49312 01156 4841 01141 48240 49392
2848 29382 49320 01160 4843 01142 48241 *5198
2849 29383 49321 01161 4845 01143 48249 49302
2850 29384 49322 01162 4846 01144 48281 49312
2851 *44023 49391 01163 4847 01145 48282 49322
*28529 70710 49392 01164 4848 01146 48283 49392
2800 70711 *49390 01165 485 01150 48284 *5199
2814 70712 49302 01166 486 01151 48289 49302
49312 *70712 V421
49322 70710 V426
49392 70711 V427
*5583 70712 V4281
[[Page 47173]]
00841 70713 V4282
00842 70714 V4283
00843 70715 V4289
00844 70719 V432
00845 *70713 *99689
00846 70710 V4284
00847 70711 *99791
00849 70712 99687
*6000 70713 *99799
5960 70714 99687
5996 70715 *V4284
6010 70719 V4284
6012 *70714 *V4289
6013 70710 V4284
6021 70711 *V429
78820 70712 V4284
78829 70713
*6001 70714
5960 70715
5996 70719
6010 *70715
6012 70710
6013 70711
6021 70712
78820 70713
78829 70714
*6002 70715
5960 70719
5996 *70719
6010 70710
6012 70711
6013 70712
6021 70713
78820 70714
78829 70715
*6003 70719
5960 *7078
5996 70710
6010 70711
6012 70712
6013 70713
6021 70714
78820 70715
78829 70719
*6009 *7079
5960 70710
5996 70711
6010 70712
6012 70713
6013 70714
6021 70715
78820 70719
78829 *7098
*70710 70710
70710 70711
70711 70712
70712 70713
70713 70714
70714 70715
70715 70719
70719 *74861
*70711 4941
70710 *99680
70711 99687
70712 V4284
70713 *99687
70714 99680
70715 99687
70719 V420
------------------------------------------------------------------------
[[Page 47174]]
Table 6g.--Deletions to the CC Exclusions List
[CCs that are deleted from the list are in Table 6G--Deletions to the CC
Exclusions List. Each of the principal diagnoses is shown with an
asterisk, and the revisions to the CC Exclusions List are provided in an
indented column immediately following the affected principal diagnosis.]
------------------------------------------------------------------------
------------------------------------------------------------------------
*01790 01135 48231 6021
494 01136 48232 78820
*01791 01140 48239 78829
494 01141 48240 *7071
*01792 01142 48241 7071
494 01143 48249 *7078
*01793 01144 48281 7071
494 01145 48282 *7079
*01794 01146 48283 7071
494 01150 48284 *7098
*01795 01151 48289 7071
494 01152 4829 *74861
*01796 01153 4830 494
494 01154 4831
*2941 01155 4838
2910 01156 4841
2911 01160 4843
2912 01161 4845
2913 01162 4846
2914 01163 4847
29181 01164 4848
29189 01165 485
2919 01166 486
2920 01170 4870
29211 01171 494
29212 01172 4950
2922 01173 4951
29281 01174 4952
29282 01175 4953
29283 01176 4954
29284 01180 4955
29289 01181 4956
2929 01182 4957
29381 01183 4958
29382 01184 4959
29383 01185 496
29384 01186 5060
*44023 01190 5061
7071 01191 5070
*4871 01192 5071
494 01193 5078
*494 01194 5080
01100 01195 5081
01101 01196 515
01102 01200 5160
01103 01201 5161
01104 01202 5162
01105 01203 5163
01106 01204 5168
01110 01205 5169
01111 01206 5171
01112 01210 5172
01113 01211 5178
01114 01212 74861
01115 01213 *496
01116 01214 494
01120 01215 *5061
01121 01216 494
01122 0310 *5064
01123 11505 494
01124 11515 *5069
01125 1304 494
01126 1363 *600
01130 481 5960
01131 4820 5996
01132 4821 6010
01133 4822 6012
01134 48230 6013
------------------------------------------------------------------------
Table 7a.--Medicare prospective Payment System, Selected Percentile Lengths of Stay
[FY99 MEDPAR update 03/00 Grouper V17.0]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number Arithmetic 10th 25th 50th 75th 90th
DRG discharges mean LOS percentile percentile percentile percentile percentile
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 35352 9.1033 2 3 6 12 19
2....................................... 7158 9.6855 3 5 7 12 19
4....................................... 6095 7.3505 1 2 5 9 16
5....................................... 95604 3.2875 1 1 2 4 7
6....................................... 341 3.2405 1 1 2 4 7
7....................................... 12148 10.2934 2 4 7 13 21
8....................................... 3705 3.0103 1 1 2 4 7
9....................................... 1657 6.4484 1 3 5 8 12
10...................................... 18437 6.5993 2 3 5 8 13
11...................................... 3331 4.1654 1 2 3 5 8
12...................................... 45110 6.0509 2 3 4 7 11
13...................................... 6256 5.0973 2 3 4 6 9
14...................................... 331649 5.9608 2 3 5 7 11
15...................................... 140366 3.6304 1 2 3 5 7
16...................................... 11170 6.1346 2 3 5 7 12
17...................................... 3453 3.3687 1 2 3 4 6
18...................................... 26134 5.5426 2 3 4 7 10
19...................................... 8011 3.7410 1 2 3 5 7
20...................................... 5780 10.2894 3 5 8 13 20
21...................................... 1368 6.8575 2 3 5 9 13
22...................................... 2519 4.9389 2 2 4 6 9
23...................................... 8375 4.2302 1 2 3 5 8
24...................................... 52871 5.0135 1 2 4 6 10
25...................................... 24604 3.3081 1 2 3 4 6
26...................................... 20 3.2000 1 1 2 3 7
27...................................... 3645 5.1084 1 1 3 6 12
28...................................... 10833 6.2260 1 3 5 8 13
29...................................... 3985 3.7064 1 2 3 5 7
31...................................... 3301 4.2293 1 2 3 5 8
32...................................... 1585 2.7356 1 1 2 3 5
34...................................... 19657 5.1974 1 2 4 6 10
35...................................... 5225 3.4195 1 2 3 4 6
36...................................... 4249 1.3641 1 1 1 1 2
37...................................... 1494 3.6921 1 1 3 5 8
38...................................... 115 2.5304 1 1 1 3 5
39...................................... 1160 1.9112 1 1 1 2 4
40...................................... 1765 3.5955 1 1 2 4 8
41...................................... 1 4.0000 4 4 4 4 4
42...................................... 2723 2.2277 1 1 1 3 5
[[Page 47175]]
43...................................... 86 3.3605 1 2 3 4 7
44...................................... 1237 4.9871 2 3 4 6 9
45...................................... 2509 3.2790 1 2 3 4 6
46...................................... 2971 4.5796 1 2 4 6 9
47...................................... 1180 3.3034 1 1 3 4 6
49...................................... 2245 4.9675 1 2 4 6 9
50...................................... 2587 1.9849 1 1 1 2 3
51...................................... 264 2.5303 1 1 1 3 6
52...................................... 198 2.1414 1 1 1 2 5
53...................................... 2594 3.6727 1 1 2 4 8
54...................................... 4 1.5000 1 1 1 1 3
55...................................... 1573 2.8843 1 1 1 3 6
56...................................... 533 3.0507 1 1 2 4 6
57...................................... 587 3.9642 1 1 2 4 8
59...................................... 115 2.5304 1 1 2 3 5
60...................................... 2 1.0000 1 1 1 1 1
61...................................... 212 4.8302 1 1 2 6 13
62...................................... 2 3.5000 2 2 5 5 5
63...................................... 3207 4.2728 1 2 3 5 9
64...................................... 3189 6.5124 1 2 4 8 14
65...................................... 31923 2.8964 1 1 2 4 5
66...................................... 6984 3.1714 1 1 3 4 6
67...................................... 482 3.5270 1 2 3 4 7
68...................................... 13482 4.1567 1 2 3 5 8
69...................................... 4254 3.2795 1 2 3 4 6
70...................................... 33 2.9091 1 2 3 4 5
71...................................... 105 3.8667 1 2 3 6 7
72...................................... 824 3.2961 1 2 3 4 6
73...................................... 6461 4.3439 1 2 3 5 8
75...................................... 39513 10.0058 3 5 8 12 20
76...................................... 40171 11.2717 3 5 9 14 21
77...................................... 2385 4.8776 1 2 4 7 10
78...................................... 30651 6.9464 3 5 6 8 11
79...................................... 183896 8.4642 3 4 7 11 16
80...................................... 8331 5.6766 2 3 5 7 10
81...................................... 5 9.2000 2 2 10 10 19
82...................................... 64149 6.9422 2 3 5 9 14
83...................................... 6603 5.5326 2 3 4 7 10
84...................................... 1549 3.3719 1 2 3 4 6
85...................................... 20158 6.3636 2 3 5 8 12
86...................................... 1940 3.7845 1 2 3 5 7
87...................................... 63294 6.2499 1 3 5 8 12
88...................................... 405792 5.2217 2 3 4 7 9
89...................................... 526310 6.0247 2 3 5 7 11
90...................................... 51516 4.2278 2 3 4 5 7
91...................................... 49 3.3469 1 2 3 4 5
92...................................... 13842 6.2457 2 3 5 8 12
93...................................... 1557 3.9878 1 2 3 5 7
94...................................... 12470 6.3005 2 3 5 8 12
95...................................... 1589 3.6916 1 2 3 5 7
96...................................... 65180 4.7269 2 3 4 6 8
97...................................... 31758 3.6849 1 2 3 5 7
98...................................... 20 4.7000 1 1 3 6 7
99...................................... 18316 3.2260 1 1 2 4 6
100..................................... 7279 2.2124 1 1 2 3 4
101..................................... 19889 4.4315 1 2 3 6 8
102..................................... 5030 2.7356 1 1 2 3 5
103..................................... 461 49.5466 9 12 30 68 118
104..................................... 33364 11.6306 3 6 10 15 22
105..................................... 29546 9.2855 4 5 7 11 17
106..................................... 3820 11.2010 5 7 9 13 19
107..................................... 91043 10.3489 5 7 9 12 17
108..................................... 5267 10.5590 3 5 8 13 20
109..................................... 61942 7.7332 4 5 6 9 13
110..................................... 55263 9.4599 2 5 8 11 18
111..................................... 7172 5.4762 2 4 5 7 8
112..................................... 61239 3.7597 1 1 3 5 8
113..................................... 44445 12.0916 3 6 9 15 24
114..................................... 8543 8.2800 2 4 7 10 16
115..................................... 14129 8.4099 1 4 7 11 16
[[Page 47176]]
116..................................... 309840 3.7279 1 1 3 5 8
117..................................... 3419 4.0433 1 1 2 5 9
118..................................... 6687 2.8065 1 1 1 3 6
119..................................... 1461 4.8542 1 1 3 6 12
120..................................... 36980 8.1173 1 2 5 10 18
121..................................... 164131 6.4386 2 3 5 8 12
122..................................... 81181 3.8293 1 2 3 5 7
123..................................... 41102 4.5805 1 1 3 6 11
124..................................... 135568 4.3735 1 2 3 6 8
125..................................... 75438 2.7854 1 1 2 4 5
126..................................... 5171 11.7343 3 6 9 14 23
127..................................... 683849 5.3364 2 3 4 7 10
128..................................... 11601 5.8042 3 4 5 7 9
129..................................... 4224 2.8570 1 1 1 3 7
130..................................... 89606 5.8064 2 3 5 7 10
131..................................... 27035 4.3769 1 3 4 6 7
132..................................... 153726 3.0483 1 1 2 4 6
133..................................... 7633 2.3958 1 1 2 3 4
134..................................... 33046 3.2976 1 2 3 4 6
135..................................... 7144 4.4709 1 2 3 5 9
136..................................... 1170 2.9103 1 1 2 4 6
138..................................... 192439 4.0078 1 2 3 5 8
139..................................... 77691 2.5071 1 1 2 3 5
140..................................... 76921 2.7133 1 1 2 3 5
141..................................... 86225 3.7087 1 2 3 5 7
142..................................... 42891 2.6783 1 1 2 3 5
143..................................... 186941 2.1669 1 1 2 3 4
144..................................... 79553 5.3212 1 2 4 7 11
145..................................... 6948 2.8094 1 1 2 4 5
146..................................... 11289 10.1758 5 7 9 12 17
147..................................... 2427 6.6135 3 5 6 8 10
148..................................... 135012 12.1210 5 7 10 14 22
149..................................... 17660 6.6535 4 5 6 8 10
150..................................... 20425 11.1526 4 7 9 14 20
151..................................... 4513 5.9280 2 3 5 8 10
152..................................... 4470 8.1953 3 5 7 10 14
153..................................... 1931 5.4604 3 4 5 7 8
154..................................... 29554 13.2574 4 7 10 16 25
155..................................... 6109 4.3495 1 2 3 6 8
156..................................... 2 28.0000 28 28 28 28 28
157..................................... 8234 5.4966 1 2 4 7 11
158..................................... 4427 2.6286 1 1 2 3 5
159..................................... 16536 5.0206 1 2 4 6 10
160..................................... 11065 2.7237 1 1 2 4 5
161..................................... 11551 4.1674 1 2 3 5 9
162..................................... 7067 1.9544 1 1 1 2 4
163..................................... 10 2.9000 1 1 3 3 6
164..................................... 4748 8.3981 4 5 7 10 14
165..................................... 1953 4.8561 2 3 5 6 8
166..................................... 3332 5.0789 2 3 4 6 9
167..................................... 2935 2.7097 1 2 2 3 5
168..................................... 1530 4.6556 1 2 3 6 9
169..................................... 810 2.4247 1 1 2 3 5
170..................................... 11351 11.1690 2 5 8 14 23
171..................................... 1132 4.8012 1 2 4 6 9
172..................................... 30708 6.9805 2 3 5 9 14
173..................................... 2516 3.8557 1 1 3 5 8
174..................................... 237582 4.8236 2 3 4 6 9
175..................................... 28223 2.9429 1 2 3 4 5
176..................................... 15708 5.2687 2 3 4 6 10
177..................................... 9539 4.5524 2 2 4 6 8
178..................................... 3601 3.1427 1 2 3 4 6
179..................................... 12290 6.0134 2 3 5 7 11
180..................................... 85528 5.3979 2 3 4 7 10
181..................................... 24458 3.4102 1 2 3 4 6
182..................................... 234044 4.3621 1 2 3 5 8
183..................................... 79010 2.9636 1 1 2 4 6
184..................................... 99 3.2525 1 2 3 4 5
185..................................... 4361 4.5015 1 2 3 6 9
186..................................... 2 4.5000 2 2 7 7 7
[[Page 47177]]
187..................................... 747 3.8220 1 2 3 5 8
188..................................... 75016 5.5813 1 2 4 7 11
189..................................... 11186 3.1402 1 1 2 4 6
190..................................... 70 5.9857 2 3 4 6 11
191..................................... 9437 14.1379 4 7 10 18 28
192..................................... 984 6.5996 2 4 6 8 11
193..................................... 5705 12.5550 5 7 10 15 23
194..................................... 763 6.7720 2 4 6 8 12
195..................................... 4898 9.8944 4 6 8 12 17
196..................................... 1197 5.6942 2 4 5 7 9
197..................................... 20367 8.7332 3 5 7 11 16
198..................................... 6123 4.5065 2 3 4 6 8
199..................................... 1745 9.6682 3 4 8 13 19
200..................................... 1084 10.7694 2 4 8 14 22
201..................................... 1483 13.8206 3 6 11 18 27
202..................................... 25781 6.5065 2 3 5 8 13
203..................................... 29166 6.6874 2 3 5 9 13
204..................................... 55210 5.8583 2 3 4 7 11
205..................................... 22715 6.2907 2 3 5 8 12
206..................................... 1792 3.8337 1 2 3 5 7
207..................................... 30992 5.1140 1 2 4 6 10
208..................................... 9690 2.8994 1 1 2 4 6
209..................................... 343780 5.1256 3 3 4 6 8
210..................................... 127326 6.8134 3 4 6 8 11
211..................................... 31422 4.9172 3 4 4 6 7
212..................................... 7 3.0000 2 2 2 3 4
213..................................... 8933 8.7283 2 4 7 11 17
216..................................... 5871 9.7808 2 4 7 12 20
217..................................... 17768 13.1592 3 5 9 16 28
218..................................... 21587 5.3674 2 3 4 6 10
219..................................... 19362 3.2518 1 2 3 4 5
220..................................... 3 2.3333 1 1 2 4 4
223..................................... 17578 2.5862 1 1 2 3 5
224..................................... 8041 2.0520 1 1 2 3 4
225..................................... 5639 4.7074 1 2 3 6 10
226..................................... 5033 6.3012 1 2 4 8 13
227..................................... 4462 2.6627 1 1 2 3 5
228..................................... 2477 3.5620 1 1 2 4 8
229..................................... 1092 2.4011 1 1 2 3 5
230..................................... 2116 5.0865 1 2 3 6 10
231..................................... 10738 4.8361 1 2 3 6 10
232..................................... 571 3.5692 1 1 2 4 9
233..................................... 4608 7.7129 2 3 6 10 16
234..................................... 2701 3.5724 1 2 3 4 7
235..................................... 5378 5.1264 1 2 4 6 10
236..................................... 38845 4.8570 1 3 4 6 9
237..................................... 1587 3.7284 1 2 3 5 7
238..................................... 7674 8.4730 3 4 6 10 16
239..................................... 51992 6.2172 2 3 5 8 12
240..................................... 11950 6.5921 2 3 5 8 13
241..................................... 2981 3.9410 1 2 3 5 7
242..................................... 2498 6.5524 2 3 5 8 12
243..................................... 85571 4.7006 1 3 4 6 9
244..................................... 11962 4.7800 1 2 4 6 9
245..................................... 4967 3.7246 1 2 3 4 7
246..................................... 1344 3.6384 1 2 3 4 7
247..................................... 15158 3.4474 1 1 3 4 7
248..................................... 9412 4.7385 1 2 4 6 9
249..................................... 10792 3.7782 1 1 3 5 8
250..................................... 3543 4.2484 1 2 3 5 8
251..................................... 2382 2.9866 1 1 3 4 5
252..................................... 1 2.0000 2 2 2 2 2
253..................................... 19064 4.6962 1 3 4 6 9
254..................................... 10447 3.2049 1 2 3 4 6
255..................................... 1 1.0000 1 1 1 1 1
256..................................... 5875 5.1384 1 2 4 6 10
257..................................... 16895 2.8284 1 2 2 3 5
258..................................... 15820 2.0011 1 1 2 2 3
259..................................... 3743 2.7919 1 1 1 3 6
260..................................... 4815 1.4332 1 1 1 2 2
[[Page 47178]]
261..................................... 1766 2.1682 1 1 1 2 4
262..................................... 686 3.7886 1 1 3 5 7
263..................................... 24706 11.6014 3 5 8 14 23
264..................................... 3910 6.9575 2 3 5 8 14
265..................................... 3905 6.6197 1 2 4 8 14
266..................................... 2557 3.3136 1 1 2 4 7
267..................................... 257 5.2140 1 1 3 6 12
268..................................... 915 3.6907 1 1 2 4 8
269..................................... 8941 8.2543 2 3 6 10 16
270..................................... 2767 3.2754 1 1 2 4 7
271..................................... 21233 7.1222 2 4 6 8 13
272..................................... 5503 6.3353 2 3 5 8 12
273..................................... 1346 4.2132 1 2 3 5 8
274..................................... 2381 6.9475 2 3 5 9 14
275..................................... 229 3.3886 1 1 2 4 7
276..................................... 1089 4.6272 1 2 4 6 9
277..................................... 84246 5.7203 2 3 5 7 10
278..................................... 28748 4.3341 2 3 4 5 7
279..................................... 5 5.4000 2 2 5 5 11
280..................................... 15232 4.1962 1 2 3 5 8
281..................................... 6791 3.0711 1 1 3 4 6
283..................................... 5370 4.5551 1 2 3 6 9
284..................................... 1858 3.1975 1 1 2 4 6
285..................................... 6174 10.4691 3 5 8 13 20
286..................................... 2009 6.2225 2 3 5 7 11
287..................................... 6029 10.5382 3 5 8 13 20
288..................................... 2316 5.6973 2 3 4 6 9
289..................................... 4349 3.1474 1 1 2 3 7
290..................................... 8262 2.4317 1 1 2 2 4
291..................................... 58 1.6379 1 1 1 2 2
292..................................... 4999 9.9930 2 4 7 13 21
293..................................... 326 5.0644 1 2 4 7 10
294..................................... 84584 4.7150 1 2 4 6 9
295..................................... 3506 3.8811 1 2 3 5 7
296..................................... 233633 5.2417 2 3 4 6 10
297..................................... 41115 3.4726 1 2 3 4 6
298..................................... 112 3.1429 1 2 2 4 6
299..................................... 1067 5.6148 1 2 4 6 11
300..................................... 15674 6.1301 2 3 5 8 12
301..................................... 3130 3.7089 1 2 3 5 7
302..................................... 7834 9.3957 4 5 7 11 16
303..................................... 19520 8.4840 4 5 7 10 15
304..................................... 12114 8.9145 2 4 7 11 18
305..................................... 2886 3.8486 1 2 3 5 7
306..................................... 7971 5.4874 1 2 3 7 12
307..................................... 2231 2.2761 1 1 2 3 4
308..................................... 7729 6.3946 1 2 4 8 14
309..................................... 3973 2.4896 1 1 2 3 5
310..................................... 23848 4.3651 1 2 3 5 9
311..................................... 8261 1.8895 1 1 1 2 3
312..................................... 1576 4.5184 1 1 3 6 10
313..................................... 633 2.1137 1 1 1 3 4
314..................................... 2 1.0000 1 1 1 1 1
315..................................... 28842 7.5038 1 1 5 10 17
316..................................... 97171 6.6773 2 3 5 8 13
317..................................... 1237 3.1997 1 1 2 3 6
318..................................... 5569 6.0084 1 3 4 7 12
319..................................... 468 2.8782 1 1 2 4 6
320..................................... 182681 5.3860 2 3 4 7 10
321..................................... 28362 3.8457 1 2 3 5 7
322..................................... 72 4.1111 1 2 3 5 7
323..................................... 16489 3.2195 1 1 2 4 7
324..................................... 7423 1.8792 1 1 1 2 3
325..................................... 7844 3.8986 1 2 3 5 7
326..................................... 2434 2.6619 1 1 2 3 5
327..................................... 8 8.2500 1 1 1 4 13
328..................................... 724 3.8909 1 1 3 5 8
329..................................... 106 2.0472 1 1 1 3 4
331..................................... 43627 5.5325 1 2 4 7 11
332..................................... 4854 3.2701 1 1 2 4 7
[[Page 47179]]
333..................................... 306 5.0163 1 2 3 6 10
334..................................... 12207 4.8955 2 3 4 6 8
335..................................... 11491 3.4115 2 3 3 4 5
336..................................... 40724 3.5245 1 2 3 4 7
337..................................... 30688 2.1779 1 1 2 3 3
338..................................... 1647 5.3024 1 2 3 7 12
339..................................... 1514 4.5594 1 1 3 6 10
340..................................... 1 1.0000 1 1 1 1 1
341..................................... 3866 3.2219 1 1 2 3 7
342..................................... 778 3.1221 1 2 2 4 6
344..................................... 3962 2.2532 1 1 1 2 4
345..................................... 1285 3.7681 1 1 2 5 8
346..................................... 4659 5.8032 1 3 4 7 11
347..................................... 399 3.3734 1 1 2 4 7
348..................................... 3125 4.2074 1 2 3 5 8
349..................................... 595 2.6101 1 1 2 3 5
350..................................... 6202 4.3955 2 2 4 5 8
352..................................... 651 3.8218 1 2 3 5 8
353..................................... 2646 6.7154 3 3 5 8 13
354..................................... 8252 5.8838 3 3 4 7 10
355..................................... 5732 3.3217 2 3 3 4 5
356..................................... 26097 2.4163 1 1 2 3 4
357..................................... 5799 8.5049 3 4 7 10 16
358..................................... 21776 4.3958 2 3 3 5 8
359..................................... 29307 2.8120 2 2 3 3 4
360..................................... 16206 2.9646 1 2 2 3 5
361..................................... 427 3.4637 1 1 2 4 7
362..................................... 2 2.0000 1 1 3 3 3
363..................................... 3100 3.4668 1 2 2 3 7
364..................................... 1626 3.5689 1 1 2 5 7
365..................................... 1936 7.2758 1 3 5 9 16
366..................................... 4266 6.7203 1 3 5 8 14
367..................................... 478 3.1695 1 1 2 4 7
368..................................... 2889 6.7196 2 3 5 8 13
369..................................... 2858 3.1963 1 1 2 4 6
370..................................... 1175 5.7174 3 3 4 5 9
371..................................... 1232 3.6445 2 3 3 4 5
372..................................... 942 3.4809 1 2 2 3 5
373..................................... 3992 2.2856 1 2 2 2 3
374..................................... 138 3.3696 1 2 2 3 5
375..................................... 6 2.6667 2 2 2 3 3
376..................................... 260 3.4577 1 2 2 4 7
377..................................... 54 3.8333 1 1 2 5 8
378..................................... 156 2.3333 1 1 2 3 4
379..................................... 370 3.0676 1 1 2 3 6
380..................................... 77 2.1688 1 1 2 2 4
381..................................... 179 1.9441 1 1 1 2 3
382..................................... 43 1.4884 1 1 1 2 2
383..................................... 1582 3.8957 1 1 3 5 8
384..................................... 128 2.2969 1 1 1 2 4
389..................................... 8 5.8750 3 3 4 8 10
390..................................... 20 3.9500 1 1 3 6 8
392..................................... 2524 9.4624 3 4 7 12 19
393..................................... 2 7.5000 7 7 8 8 8
394..................................... 1742 6.6791 1 2 4 8 15
395..................................... 81014 4.5335 1 2 3 6 9
396..................................... 20 3.8000 1 1 2 5 7
397..................................... 18191 5.2238 1 2 4 7 10
398..................................... 18207 5.9565 2 3 5 7 11
399..................................... 1633 3.5536 1 2 3 4 7
400..................................... 6897 9.0738 1 3 6 12 20
401..................................... 5881 11.1770 2 5 8 14 23
402..................................... 1501 3.9480 1 1 3 5 8
403..................................... 33467 8.0557 2 3 6 10 17
404..................................... 4520 4.2199 1 2 3 6 9
406..................................... 2572 10.3476 3 4 7 13 21
407..................................... 701 4.4051 1 2 4 6 8
408..................................... 2260 7.7088 1 2 5 10 18
409..................................... 3308 5.9344 2 3 4 6 11
410..................................... 41166 3.7183 1 2 3 5 6
[[Page 47180]]
411..................................... 13 2.3077 1 1 2 4 4
412..................................... 29 2.7241 1 1 2 3 6
413..................................... 6216 7.2497 2 3 6 9 14
414..................................... 721 4.0902 1 2 3 5 8
415..................................... 40206 14.2110 4 6 11 18 28
416..................................... 196848 7.3514 2 4 6 9 14
417..................................... 36 5.8889 1 1 4 6 13
418..................................... 22285 6.1233 2 3 5 7 11
419..................................... 15990 4.8206 2 2 4 6 9
420..................................... 3108 3.5618 1 2 3 4 6
421..................................... 12326 3.8695 1 2 3 5 7
422..................................... 98 5.2551 1 2 2 5 7
423..................................... 8137 8.1292 2 3 6 10 17
424..................................... 1368 13.4561 2 5 9 16 28
425..................................... 15108 4.0764 1 2 3 5 8
426..................................... 4357 4.5582 1 2 3 6 9
427..................................... 1679 4.9803 1 2 3 6 10
428..................................... 849 7.0813 1 2 4 8 15
429..................................... 27615 6.4861 2 3 5 8 12
430..................................... 58361 8.1902 2 3 6 10 16
431..................................... 297 6.5758 2 3 5 8 13
432..................................... 394 4.8020 1 2 3 5 9
433..................................... 5831 3.0045 1 1 2 4 6
434..................................... 22063 5.0861 1 2 4 6 9
435..................................... 14652 4.3057 1 2 4 5 8
436..................................... 3548 12.8503 4 7 11 17 25
437..................................... 9841 8.9511 3 5 8 11 15
439..................................... 1306 8.1646 1 3 5 10 17
440..................................... 5063 8.8766 2 3 6 10 19
441..................................... 585 3.2496 1 1 2 4 7
442..................................... 16061 8.2365 1 3 6 10 17
443..................................... 3586 3.3943 1 1 2 4 7
444..................................... 5210 4.2263 1 2 3 5 8
445..................................... 2276 2.9921 1 1 2 4 5
447..................................... 4891 2.5113 1 1 2 3 5
448..................................... 1 4.0000 4 4 4 4 4
449..................................... 26785 3.6730 1 1 3 4 7
450..................................... 6439 2.0449 1 1 1 2 4
451..................................... 1 1.0000 1 1 1 1 1
452..................................... 21849 4.9674 1 2 3 6 10
453..................................... 4499 2.8137 1 1 2 3 5
454..................................... 4999 4.5603 1 2 3 6 9
455..................................... 1083 2.6214 1 1 2 3 5
461..................................... 3396 4.6184 1 1 2 5 11
462..................................... 12718 11.5531 4 6 9 15 21
463..................................... 19068 4.2743 1 2 3 5 8
464..................................... 5509 3.0764 1 1 2 4 6
465..................................... 228 3.3509 1 1 2 3 7
466..................................... 1752 3.9258 1 1 2 4 8
467..................................... 1320 4.0485 1 1 2 4 7
468..................................... 58920 12.9558 3 6 10 17 26
471..................................... 11488 5.7349 3 4 5 6 9
473..................................... 7674 12.8610 2 3 7 19 32
475..................................... 109697 11.1882 2 5 9 15 22
476..................................... 4474 11.6623 2 5 10 15 22
477..................................... 25946 8.1242 1 3 6 10 17
478..................................... 111979 7.3211 1 3 5 9 15
479..................................... 22533 3.6234 1 2 3 5 7
480..................................... 500 19.4980 7 9 14 23 39
481..................................... 274 26.7372 16 19 23 31 43
482..................................... 6178 12.8124 4 7 10 15 24
483..................................... 43726 39.1790 14 21 32 49 71
484..................................... 340 13.0853 2 5 10 18 28
485..................................... 3002 9.4867 4 5 7 11 18
486..................................... 2127 12.1208 1 5 9 16 25
487..................................... 3666 7.6328 1 3 6 10 15
488..................................... 779 16.9718 4 7 12 21 34
489..................................... 14444 8.5516 2 3 6 10 18
490..................................... 5357 5.1286 1 2 4 6 10
491..................................... 11403 3.4912 2 2 3 4 6
[[Page 47181]]
492..................................... 2695 16.1221 4 5 9 26 34
493..................................... 54404 5.7190 1 3 5 7 11
494..................................... 27453 2.4829 1 1 2 3 5
495..................................... 156 20.5000 6 8 12 19 33
496..................................... 1293 10.0093 4 5 7 12 18
497..................................... 22769 6.2233 2 3 5 7 11
498..................................... 19358 3.4145 1 2 3 4 6
499..................................... 30924 4.7726 1 2 4 6 9
500..................................... 42404 2.6896 1 1 2 3 5
501..................................... 1959 10.5630 4 5 8 13 20
502..................................... 621 5.9775 2 3 5 7 10
503..................................... 5625 3.9733 1 2 3 5 7
504..................................... 124 30.4677 10 15 25 40 63
505..................................... 155 4.7161 1 1 2 6 12
506..................................... 968 17.5651 4 8 14 24 37
507..................................... 285 9.2491 2 4 7 13 19
508..................................... 648 7.1605 2 3 5 9 15
509..................................... 167 6.0719 1 2 4 8 12
510..................................... 1673 7.8171 2 3 5 9 17
511..................................... 605 4.4413 1 1 3 6 10
----------------
11001029
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 7b.--Medicare Prospective Payment System, Selected Percentile Lengths of Stay
[FY99 MEDPAR update 03/00 Grouper V.18.0]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number Arithmetic 10th 25th 50th 75th 90th
DRG discharges mean LOS percentile percentile percentile percentile percentile
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 35352 9.1033 2 3 6 12 19
2....................................... 7158 9.6855 3 5 7 12 19
4....................................... 6095 7.3505 1 2 5 9 16
5....................................... 95604 3.2875 1 1 2 4 7
6....................................... 341 3.2405 1 1 2 4 7
7....................................... 12147 10.2938 2 4 7 13 21
8....................................... 3706 3.0108 1 1 2 4 7
9....................................... 1657 6.4484 1 3 5 8 12
10...................................... 18433 6.5983 2 3 5 8 13
11...................................... 3335 4.1739 1 2 3 5 8
12...................................... 45110 6.0509 2 3 4 7 11
13...................................... 6256 5.0973 2 3 4 6 9
14...................................... 331649 5.9608 2 3 5 7 11
15...................................... 140366 3.6304 1 2 3 5 7
16...................................... 11166 6.1358 2 3 5 7 12
17...................................... 3457 3.3679 1 2 3 4 6
18...................................... 26127 5.5433 2 3 4 7 10
19...................................... 8018 3.7403 1 2 3 5 7
20...................................... 5780 10.2894 3 5 8 13 20
21...................................... 1368 6.8575 2 3 5 9 13
22...................................... 2519 4.9389 2 2 4 6 9
23...................................... 8375 4.2302 1 2 3 5 8
24...................................... 52856 5.0134 1 2 4 6 10
25...................................... 24619 3.3092 1 2 3 4 6
26...................................... 20 3.2000 1 1 2 3 7
27...................................... 3645 5.1084 1 1 3 6 12
28...................................... 10832 6.2250 1 3 5 8 13
29...................................... 3985 3.7064 1 2 3 5 7
31...................................... 3299 4.2301 1 2 3 5 8
32...................................... 1587 2.7360 1 1 2 3 5
34...................................... 19649 5.1979 1 2 4 6 10
35...................................... 5233 3.4204 1 2 3 4 6
36...................................... 4249 1.3641 1 1 1 1 2
37...................................... 1494 3.6921 1 1 3 5 8
38...................................... 115 2.5304 1 1 1 3 5
39...................................... 1160 1.9112 1 1 1 2 4
40...................................... 1765 3.5955 1 1 2 4 8
41...................................... 1 4.0000 4 4 4 4 4
42...................................... 2723 2.2277 1 1 1 3 5
43...................................... 86 3.3605 1 2 3 4 7
[[Page 47182]]
44...................................... 1237 4.9871 2 3 4 6 9
45...................................... 2509 3.2790 1 2 3 4 6
46...................................... 2970 4.5805 1 2 4 6 9
47...................................... 1181 3.3023 1 1 3 4 6
49...................................... 2245 4.9675 1 2 4 6 9
50...................................... 2587 1.9849 1 1 1 2 3
51...................................... 264 2.5303 1 1 1 3 6
52...................................... 198 2.1414 1 1 1 2 5
53...................................... 2594 3.6727 1 1 2 4 8
54...................................... 4 1.5000 1 1 1 1 3
55...................................... 1573 2.8843 1 1 1 3 6
56...................................... 533 3.0507 1 1 2 4 6
57...................................... 587 3.9642 1 1 2 4 8
59...................................... 115 2.5304 1 1 2 3 5
60...................................... 2 1.0000 1 1 1 1 1
61...................................... 212 4.8302 1 1 2 6 13
62...................................... 2 3.5000 2 2 5 5 5
63...................................... 3207 4.2728 1 2 3 5 9
64...................................... 3189 6.5124 1 2 4 8 14
65...................................... 31923 2.8964 1 1 2 4 5
66...................................... 6984 3.1714 1 1 3 4 6
67...................................... 482 3.5270 1 2 3 4 7
68...................................... 13468 4.1556 1 2 3 5 7
69...................................... 4268 3.2856 1 2 3 4 6
70...................................... 33 2.9091 1 2 3 4 5
71...................................... 105 3.8667 1 2 3 6 7
72...................................... 824 3.2961 1 2 3 4 6
73...................................... 6461 4.3439 1 2 3 5 8
75...................................... 39513 10.0058 3 5 8 12 20
76...................................... 40109 11.2755 3 5 9 14 21
77...................................... 2447 4.9775 1 2 4 7 10
78...................................... 30651 6.9464 3 5 6 8 11
79...................................... 183420 8.4683 3 4 7 11 16
80...................................... 8807 5.7434 2 3 5 7 10
81...................................... 5 9.2000 2 2 10 10 19
82...................................... 64149 6.9422 2 3 5 9 14
83...................................... 6599 5.5342 2 3 4 7 10
84...................................... 1553 3.3709 1 2 3 4 6
85...................................... 20150 6.3637 2 3 5 8 12
86...................................... 1948 3.7936 1 2 3 5 7
87...................................... 63294 6.2499 1 3 5 8 12
88...................................... 405792 5.2217 2 3 4 7 9
89...................................... 525499 6.0257 2 3 5 7 11
90...................................... 52326 4.2457 2 3 4 5 7
91...................................... 49 3.3469 1 2 3 4 5
92...................................... 13772 6.2509 2 3 5 8 12
93...................................... 1627 4.0412 1 2 3 5 7
94...................................... 12463 6.3016 2 3 5 8 12
95...................................... 1596 3.6942 1 2 3 5 7
96...................................... 65045 4.7268 2 3 4 6 8
97...................................... 31893 3.6895 1 2 3 5 7
98...................................... 20 4.7000 1 1 3 6 7
99...................................... 18262 3.2254 1 1 2 4 6
100..................................... 7333 2.2215 1 1 2 3 4
101..................................... 19863 4.4312 1 2 3 6 8
102..................................... 5056 2.7455 1 1 2 3 5
103..................................... 480 51.7875 9 13 31 70 121
104..................................... 33648 11.6443 3 6 10 15 22
105..................................... 29689 9.3034 4 5 7 11 17
106..................................... 3805 11.2100 5 7 9 13 19
107..................................... 90905 10.3450 5 7 9 12 17
108..................................... 5246 10.5442 3 5 8 13 20
109..................................... 61881 7.7309 4 5 6 9 13
110..................................... 55081 9.4414 2 5 8 11 18
111..................................... 7168 5.4788 2 4 5 7 8
112..................................... 61237 3.7595 1 1 3 5 8
113..................................... 44445 12.0916 3 6 9 15 24
114..................................... 8543 8.2800 2 4 7 10 16
115..................................... 14129 8.4099 1 4 7 11 16
116..................................... 309839 3.7278 1 1 3 5 8
[[Page 47183]]
117..................................... 3419 4.0433 1 1 2 5 9
118..................................... 6687 2.8065 1 1 1 3 6
119..................................... 1461 4.8542 1 1 3 6 12
120..................................... 36979 8.1175 1 2 5 10 18
121..................................... 164131 6.4386 2 3 5 8 12
122..................................... 81181 3.8293 1 2 3 5 7
123..................................... 41101 4.5805 1 1 3 6 11
124..................................... 135568 4.3735 1 2 3 6 8
125..................................... 75438 2.7854 1 1 2 4 5
126..................................... 5171 11.7343 3 6 9 14 23
127..................................... 683849 5.3364 2 3 4 7 10
128..................................... 11601 5.8042 3 4 5 7 9
129..................................... 4224 2.8570 1 1 1 3 7
130..................................... 89585 5.8066 2 3 5 7 10
131..................................... 27056 4.3774 1 3 4 6 7
132..................................... 153720 3.0483 1 1 2 4 6
133..................................... 7639 2.3961 1 1 2 3 4
134..................................... 33046 3.2976 1 2 3 4 6
135..................................... 7143 4.4714 1 2 3 5 9
136..................................... 1171 2.9086 1 1 2 4 6
138..................................... 192312 4.0086 1 2 3 5 8
139..................................... 77818 2.5076 1 1 2 3 5
140..................................... 76921 2.7133 1 1 2 3 5
141..................................... 86200 3.7088 1 2 3 5 7
142..................................... 42916 2.6786 1 1 2 3 5
143..................................... 186941 2.1669 1 1 2 3 4
144..................................... 79537 5.3212 1 2 4 7 11
145..................................... 6964 2.8153 1 1 2 4 6
146..................................... 11289 10.1758 5 7 9 12 17
147..................................... 2427 6.6135 3 5 6 8 10
148..................................... 134992 12.1212 5 7 10 14 22
149..................................... 17679 6.6565 4 5 6 8 10
150..................................... 20422 11.1531 4 7 9 14 20
151..................................... 4516 5.9289 2 3 5 8 10
152..................................... 4469 8.1962 3 5 7 10 14
153..................................... 1932 5.4596 3 4 5 7 8
154..................................... 29550 13.2586 4 7 10 16 25
155..................................... 6113 4.3496 1 2 3 6 8
156..................................... 2 28.0000 28 28 28 28 28
157..................................... 8234 5.4966 1 2 4 7 11
158..................................... 4427 2.6286 1 1 2 3 5
159..................................... 16531 5.0216 1 2 4 6 10
160..................................... 11070 2.7232 1 1 2 4 5
161..................................... 11547 4.1684 1 2 3 5 9
162..................................... 7071 1.9542 1 1 1 2 4
163..................................... 10 2.9000 1 1 3 3 6
164..................................... 4747 8.3994 4 5 7 10 14
165..................................... 1954 4.8547 2 3 5 6 8
166..................................... 3331 5.0793 2 3 4 6 9
167..................................... 2936 2.7101 1 2 2 3 5
168..................................... 1530 4.6556 1 2 3 6 9
169..................................... 810 2.4247 1 1 2 3 5
170..................................... 11351 11.1690 2 5 8 14 23
171..................................... 1132 4.8012 1 2 4 6 9
172..................................... 30705 6.9802 2 3 5 9 14
173..................................... 2519 3.8626 1 1 3 5 8
174..................................... 237539 4.8239 2 3 4 6 9
175..................................... 28266 2.9435 1 2 3 4 5
176..................................... 15708 5.2687 2 3 4 6 10
177..................................... 9537 4.5531 2 2 4 6 8
178..................................... 3603 3.1415 1 2 3 4 6
179..................................... 12290 6.0134 2 3 5 7 11
180..................................... 85505 5.3984 2 3 4 7 10
181..................................... 24481 3.4105 1 2 3 4 6
182..................................... 233949 4.3625 1 2 3 5 8
183..................................... 79105 2.9644 1 1 2 4 6
184..................................... 99 3.2525 1 2 3 4 5
185..................................... 4361 4.5015 1 2 3 6 9
186..................................... 2 4.5000 2 2 7 7 7
187..................................... 747 3.8220 1 2 3 5 8
[[Page 47184]]
188..................................... 75007 5.5817 1 2 4 7 11
189..................................... 11195 3.1401 1 1 2 4 6
190..................................... 70 5.9857 2 3 4 6 11
191..................................... 9434 14.1406 4 7 10 18 28
192..................................... 987 6.5968 2 4 6 8 11
193..................................... 5705 12.5550 5 7 10 15 23
194..................................... 763 6.7720 2 4 6 8 12
195..................................... 4898 9.8944 4 6 8 12 17
196..................................... 1197 5.6942 2 4 5 7 9
197..................................... 20365 8.7337 3 5 7 11 16
198..................................... 6125 4.5063 2 3 4 6 8
199..................................... 1745 9.6682 3 4 8 13 19
200..................................... 1084 10.7694 2 4 8 14 22
201..................................... 1483 13.8206 3 6 11 18 27
202..................................... 25781 6.5065 2 3 5 8 13
203..................................... 29166 6.6874 2 3 5 9 13
204..................................... 55210 5.8583 2 3 4 7 11
205..................................... 22715 6.2907 2 3 5 8 12
206..................................... 1792 3.8337 1 2 3 5 7
207..................................... 30984 5.1140 1 2 4 6 10
208..................................... 9698 2.9013 1 1 2 4 6
209..................................... 343780 5.1256 3 3 4 6 8
210..................................... 127278 6.8141 3 4 6 8 11
211..................................... 31470 4.9173 3 4 4 6 7
212..................................... 7 3.0000 2 2 2 3 4
213..................................... 8933 8.7283 2 4 7 11 17
216..................................... 5871 9.7808 2 4 7 12 20
217..................................... 17768 13.1592 3 5 9 16 28
218..................................... 21572 5.3690 2 3 4 6 10
219..................................... 19377 3.2517 1 2 3 4 5
220..................................... 3 2.3333 1 1 2 4 4
223..................................... 17575 2.5861 1 1 2 3 5
224..................................... 8044 2.0525 1 1 2 3 4
225..................................... 5639 4.7074 1 2 3 6 10
226..................................... 4927 6.3028 1 2 4 8 13
227..................................... 4410 2.6689 1 1 2 3 5
228..................................... 2477 3.5620 1 1 2 4 8
229..................................... 1092 2.4011 1 1 2 3 5
230..................................... 2274 5.0721 1 2 3 6 10
231..................................... 10738 4.8361 1 2 3 6 10
232..................................... 571 3.5692 1 1 2 4 9
233..................................... 4607 7.7141 2 3 6 10 16
234..................................... 2702 3.5718 1 2 3 4 7
235..................................... 5378 5.1264 1 2 4 6 10
236..................................... 38845 4.8570 1 3 4 6 9
237..................................... 1587 3.7284 1 2 3 5 7
238..................................... 7674 8.4730 3 4 6 10 16
239..................................... 51992 6.2172 2 3 5 8 12
240..................................... 11944 6.5936 2 3 5 8 13
241..................................... 2987 3.9404 1 2 3 5 7
242..................................... 2498 6.5524 2 3 5 8 12
243..................................... 85571 4.7006 1 3 4 6 9
244..................................... 11961 4.7800 1 2 4 6 9
245..................................... 4968 3.7246 1 2 3 4 7
246..................................... 1344 3.6384 1 2 3 4 7
247..................................... 15158 3.4474 1 1 3 4 7
248..................................... 9412 4.7385 1 2 4 6 9
249..................................... 10792 3.7782 1 1 3 5 8
250..................................... 3542 4.2490 1 2 3 5 8
251..................................... 2383 2.9862 1 1 3 4 5
252..................................... 1 2.0000 2 2 2 2 2
253..................................... 19051 4.6967 1 3 4 6 9
254..................................... 10460 3.2059 1 2 3 4 6
255..................................... 1 1.0000 1 1 1 1 1
256..................................... 5875 5.1384 1 2 4 6 10
257..................................... 16871 2.8291 1 2 2 3 5
258..................................... 15844 2.0016 1 1 2 2 3
259..................................... 3741 2.7928 1 1 1 3 6
260..................................... 4817 1.4330 1 1 1 2 2
261..................................... 1766 2.1682 1 1 1 2 4
[[Page 47185]]
262..................................... 686 3.7886 1 1 3 5 7
263..................................... 24706 11.6014 3 5 8 14 23
264..................................... 3910 6.9575 2 3 5 8 14
265..................................... 3904 6.6201 1 2 4 8 14
266..................................... 2558 3.3143 1 1 2 4 7
267..................................... 257 5.2140 1 1 3 6 12
268..................................... 915 3.6907 1 1 2 4 8
269..................................... 8938 8.2558 2 3 6 10 16
270..................................... 2770 3.2762 1 1 2 4 7
271..................................... 21233 7.1222 2 4 6 8 13
272..................................... 5501 6.3356 2 3 5 8 12
273..................................... 1348 4.2151 1 2 3 5 8
274..................................... 2381 6.9475 2 3 5 9 14
275..................................... 229 3.3886 1 1 2 4 7
276..................................... 1089 4.6272 1 2 4 6 9
277..................................... 84223 5.7207 2 3 5 7 10
278..................................... 28771 4.3340 2 3 4 5 7
279..................................... 5 5.4000 2 2 5 5 11
280..................................... 15227 4.1968 1 2 3 5 8
281..................................... 6796 3.0705 1 1 3 4 6
283..................................... 5368 4.5561 1 2 3 6 9
284..................................... 1860 3.1962 1 1 2 4 6
285..................................... 6166 10.4710 3 5 8 13 20
286..................................... 2009 6.2225 2 3 5 7 11
287..................................... 6029 10.5382 3 5 8 13 20
288..................................... 2324 5.7087 2 3 4 6 9
289..................................... 4349 3.1474 1 1 2 3 7
290..................................... 8262 2.4317 1 1 2 2 4
291..................................... 58 1.6379 1 1 1 2 2
292..................................... 4999 9.9930 2 4 7 13 21
293..................................... 326 5.0644 1 2 4 7 10
294..................................... 84584 4.7150 1 2 4 6 9
295..................................... 3506 3.8811 1 2 3 5 7
296..................................... 233520 5.2416 2 3 4 6 10
297..................................... 41231 3.4777 1 2 3 4 6
298..................................... 112 3.1429 1 2 2 4 6
299..................................... 1067 5.6148 1 2 4 6 11
300..................................... 15669 6.1305 2 3 5 8 12
301..................................... 3135 3.7107 1 2 3 5 7
302..................................... 7834 9.3957 4 5 7 11 16
303..................................... 19520 8.4840 4 5 7 10 15
304..................................... 12114 8.9145 2 4 7 11 18
305..................................... 2886 3.8486 1 2 3 5 7
306..................................... 7970 5.4877 1 2 3 7 12
307..................................... 2232 2.2764 1 1 2 3 4
308..................................... 7725 6.3969 1 2 4 8 14
309..................................... 3977 2.4891 1 1 2 3 5
310..................................... 23844 4.3654 1 2 3 5 9
311..................................... 8265 1.8897 1 1 1 2 3
312..................................... 1576 4.5184 1 1 3 6 10
313..................................... 633 2.1137 1 1 1 3 4
314..................................... 2 1.0000 1 1 1 1 1
315..................................... 28842 7.5038 1 1 5 10 17
316..................................... 97170 6.6773 2 3 5 8 13
317..................................... 1237 3.1997 1 1 2 3 6
318..................................... 5569 6.0084 1 3 4 7 12
319..................................... 468 2.8782 1 1 2 4 6
320..................................... 182655 5.3861 2 3 4 7 10
321..................................... 28388 3.8467 1 2 3 5 7
322..................................... 72 4.1111 1 2 3 5 7
323..................................... 16486 3.2195 1 1 2 4 7
324..................................... 7426 1.8796 1 1 1 2 3
325..................................... 7844 3.8986 1 2 3 5 7
326..................................... 2434 2.6619 1 1 2 3 5
327..................................... 8 8.2500 1 1 1 4 13
328..................................... 724 3.8909 1 1 3 5 8
329..................................... 106 2.0472 1 1 1 3 4
331..................................... 43621 5.5330 1 2 4 7 11
332..................................... 4860 3.2687 1 1 2 4 7
333..................................... 306 5.0163 1 2 3 6 10
[[Page 47186]]
334..................................... 12201 4.8961 2 3 4 6 8
335..................................... 11497 3.4117 2 3 3 4 5
336..................................... 40717 3.5248 1 2 3 4 7
337..................................... 30695 2.1778 1 1 2 3 3
338..................................... 1647 5.3024 1 2 3 7 12
339..................................... 1514 4.5594 1 1 3 6 10
340..................................... 1 1.0000 1 1 1 1 1
341..................................... 3866 3.2219 1 1 2 3 7
342..................................... 778 3.1221 1 2 2 4 6
344..................................... 3962 2.2532 1 1 1 2 4
345..................................... 1285 3.7681 1 1 2 5 8
346..................................... 4659 5.8032 1 3 4 7 11
347..................................... 399 3.3734 1 1 2 4 7
348..................................... 3125 4.2074 1 2 3 5 8
349..................................... 595 2.6101 1 1 2 3 5
350..................................... 6202 4.3955 2 2 4 5 8
352..................................... 651 3.8218 1 2 3 5 8
353..................................... 2646 6.7154 3 3 5 8 13
354..................................... 8251 5.8841 3 3 4 7 10
355..................................... 5733 3.3216 2 3 3 4 5
356..................................... 26097 2.4163 1 1 2 3 4
357..................................... 5799 8.5049 3 4 7 10 16
358..................................... 21754 4.3966 2 3 3 5 8
359..................................... 29329 2.8125 2 2 3 3 4
360..................................... 16206 2.9646 1 2 2 3 5
361..................................... 427 3.4637 1 1 2 4 7
362..................................... 2 2.0000 1 1 3 3 3
363..................................... 3100 3.4668 1 2 2 3 7
364..................................... 1626 3.5689 1 1 2 5 7
365..................................... 1936 7.2758 1 3 5 9 16
366..................................... 4266 6.7203 1 3 5 8 14
367..................................... 478 3.1695 1 1 2 4 7
368..................................... 2889 6.7196 2 3 5 8 13
369..................................... 2858 3.1963 1 1 2 4 6
370..................................... 1175 5.7174 3 3 4 5 9
371..................................... 1232 3.6445 2 3 3 4 5
372..................................... 952 3.4758 2 2 2 3 5
373..................................... 3982 2.2838 1 2 2 2 3
374..................................... 138 3.3696 1 2 2 3 5
375..................................... 6 2.6667 2 2 2 3 3
376..................................... 260 3.4577 1 2 2 4 7
377..................................... 54 3.8333 1 1 2 5 8
378..................................... 156 2.3333 1 1 2 3 4
379..................................... 370 3.0676 1 1 2 3 6
380..................................... 77 2.1688 1 1 2 2 4
381..................................... 179 1.9441 1 1 1 2 3
382..................................... 43 1.4884 1 1 1 2 2
383..................................... 1582 3.8957 1 1 3 5 8
384..................................... 128 2.2969 1 1 1 2 4
389..................................... 8 5.8750 3 3 4 8 10
390..................................... 20 3.9500 1 1 3 6 8
392..................................... 2524 9.4624 3 4 7 12 19
393..................................... 2 7.5000 7 7 8 8 8
394..................................... 1742 6.6791 1 2 4 8 15
395..................................... 81014 4.5335 1 2 3 6 9
396..................................... 20 3.8000 1 1 2 5 7
397..................................... 18191 5.2238 1 2 4 7 10
398..................................... 18199 5.9577 2 3 5 7 11
399..................................... 1641 3.5521 1 2 3 4 7
400..................................... 6893 9.0730 1 3 6 12 20
401..................................... 5865 11.1758 2 5 8 14 23
402..................................... 1503 3.9508 1 1 3 5 8
403..................................... 33074 8.0664 2 3 6 10 17
404..................................... 4484 4.2219 1 2 3 6 9
406..................................... 2574 10.3528 3 4 7 13 21
407..................................... 703 4.4040 1 2 4 6 8
408..................................... 2275 7.7354 1 2 5 10 18
409..................................... 3308 5.9344 2 3 4 6 11
410..................................... 41165 3.7184 1 2 3 5 6
411..................................... 13 2.3077 1 1 2 4 4
[[Page 47187]]
412..................................... 29 2.7241 1 1 2 3 6
413..................................... 6605 7.2450 2 3 6 9 14
414..................................... 761 4.0933 1 2 3 5 8
415..................................... 40206 14.2110 4 6 11 18 28
416..................................... 196848 7.3514 2 4 6 9 14
417..................................... 36 5.8889 1 1 4 6 13
418..................................... 22285 6.1233 2 3 5 7 11
419..................................... 15984 4.8204 2 2 4 6 9
420..................................... 3114 3.5649 1 2 3 4 6
421..................................... 12326 3.8695 1 2 3 5 7
422..................................... 98 5.2551 1 2 2 5 7
423..................................... 8137 8.1292 2 3 6 10 17
424..................................... 1368 13.4561 2 5 9 16 28
425..................................... 15108 4.0764 1 2 3 5 8
426..................................... 4357 4.5582 1 2 3 6 9
427..................................... 1679 4.9803 1 2 3 6 10
428..................................... 849 7.0813 1 2 4 8 15
429..................................... 27615 6.4861 2 3 5 8 12
430..................................... 58361 8.1902 2 3 6 10 16
431..................................... 297 6.5758 2 3 5 8 13
432..................................... 394 4.8020 1 2 3 5 9
433..................................... 5831 3.0045 1 1 2 4 6
434..................................... 22061 5.0864 1 2 4 6 9
435..................................... 14654 4.3052 1 2 4 5 8
436..................................... 3548 12.8503 4 7 11 17 25
437..................................... 9841 8.9511 3 5 8 11 15
439..................................... 1306 8.1646 1 3 5 10 17
440..................................... 5063 8.8766 2 3 6 10 19
441..................................... 585 3.2496 1 1 2 4 7
442..................................... 16061 8.2365 1 3 6 10 17
443..................................... 3586 3.3943 1 1 2 4 7
444..................................... 5206 4.2274 1 2 3 5 8
445..................................... 2280 2.9917 1 1 2 4 5
447..................................... 4891 2.5113 1 1 2 3 5
448..................................... 1 4.0000 4 4 4 4 4
449..................................... 26781 3.6732 1 1 3 4 7
450..................................... 6443 2.0449 1 1 1 2 4
451..................................... 1 1.0000 1 1 1 1 1
452..................................... 21847 4.9676 1 2 3 6 10
453..................................... 4501 2.8136 1 1 2 3 5
454..................................... 4997 4.5603 1 2 3 6 9
455..................................... 1085 2.6249 1 1 2 3 5
461..................................... 3397 4.6194 1 1 2 5 11
462..................................... 12718 11.5531 4 6 9 15 21
463..................................... 19065 4.2742 1 2 3 5 8
464..................................... 5511 3.0766 1 1 2 4 6
465..................................... 228 3.3509 1 1 2 3 7
466..................................... 1752 3.9258 1 1 2 4 8
467..................................... 1320 4.0485 1 1 2 4 7
468..................................... 58922 12.9489 3 6 10 17 26
471..................................... 11488 5.7349 3 4 5 6 9
473..................................... 7674 12.8610 2 3 7 19 32
475..................................... 109695 11.1883 2 5 9 15 22
476..................................... 4474 11.6623 2 5 10 15 22
477..................................... 25946 8.1242 1 3 6 10 17
478..................................... 111969 7.3211 1 3 5 9 15
479..................................... 22542 3.6236 1 2 3 5 7
480..................................... 500 19.4980 7 9 14 23 39
481..................................... 273 26.5641 16 19 23 31 41
482..................................... 6195 12.8199 4 7 10 15 24
483..................................... 43695 39.1662 14 22 32 49 71
484..................................... 340 13.0853 2 5 10 18 28
485..................................... 3002 9.4867 4 5 7 11 18
486..................................... 2127 12.1208 1 5 9 16 25
487..................................... 3666 7.6328 1 3 6 10 15
488..................................... 779 16.9718 4 7 12 21 34
489..................................... 14444 8.5516 2 3 6 10 18
490..................................... 5354 5.1291 1 2 4 6 10
491..................................... 11403 3.4912 2 2 3 4 6
492..................................... 2695 16.1221 4 5 9 26 34
[[Page 47188]]
493..................................... 54388 5.7197 1 3 5 7 11
494..................................... 27469 2.4832 1 1 2 3 5
495..................................... 156 20.5000 6 8 12 19 33
496..................................... 1293 10.0093 4 5 7 12 18
497..................................... 22761 6.2244 2 3 5 7 11
498..................................... 19366 3.4143 1 2 3 4 6
499..................................... 30892 4.7750 1 2 4 6 9
500..................................... 42436 2.6894 1 1 2 3 5
501..................................... 1959 10.5630 4 5 8 13 20
502..................................... 621 5.9775 2 3 5 7 10
503..................................... 5625 3.9733 1 2 3 5 7
504..................................... 124 30.4677 10 15 25 40 63
505..................................... 155 4.7161 1 1 2 6 12
506..................................... 968 17.5651 4 8 14 24 37
507..................................... 285 9.2491 2 4 7 13 19
508..................................... 648 7.1605 2 3 5 9 15
509..................................... 167 6.0719 1 2 4 8 12
510..................................... 1673 7.8171 2 3 5 9 17
511..................................... 605 4.4413 1 1 3 6 10
----------------
11001029
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 8a.--Statewide Average Operating Cost-to-Charge Ratios for Urban
and Rural Hospitals (Case Weighted) March 2000
------------------------------------------------------------------------
State Urban Rural
------------------------------------------------------------------------
ALABAMA............................................. 0.401 0.355
ALASKA.............................................. 0.470 0.723
ARIZONA............................................. 0.373 0.517
ARKANSAS............................................ 0.478 0.454
CALIFORNIA.......................................... 0.342 0.441
COLORADO............................................ 0.436 0.559
CONNECTICUT......................................... 0.495 0.503
DELAWARE............................................ 0.507 0.449
DISTRICT OF COLUMBIA................................ 0.521 ........
FLORIDA............................................. 0.363 0.381
GEORGIA............................................. 0.475 0.486
HAWAII.............................................. 0.409 0.554
IDAHO............................................... 0.549 0.571
ILLINOIS............................................ 0.425 0.509
INDIANA............................................. 0.532 0.544
IOWA................................................ 0.493 0.624
KANSAS.............................................. 0.444 0.652
KENTUCKY............................................ 0.478 0.493
LOUISIANA........................................... 0.410 0.496
MAINE............................................... 0.597 0.550
MARYLAND............................................ 0.759 0.821
MASSACHUSETTS....................................... 0.526 0.538
MICHIGAN............................................ 0.466 0.572
MINNESOTA........................................... 0.509 0.591
MISSISSIPPI......................................... 0.456 0.454
MISSOURI............................................ 0.413 0.507
MONTANA............................................. 0.524 0.572
NEBRASKA............................................ 0.468 0.623
NEVADA.............................................. 0.292 0.486
NEW HAMPSHIRE....................................... 0.541 0.579
NEW JERSEY.......................................... 0.401 ........
NEW MEXICO.......................................... 0.452 0.498
NEW YORK............................................ 0.529 0.611
NORTH CAROLINA...................................... 0.540 0.489
NORTH DAKOTA........................................ 0.622 0.661
OHIO................................................ 0.511 0.578
OKLAHOMA............................................ 0.423 0.509
OREGON.............................................. 0.607 0.582
PENNSYLVANIA........................................ 0.396 0.517
PUERTO RICO......................................... 0.479 0.579
RHODE ISLAND........................................ 0.522 ........
SOUTH CAROLINA...................................... 0.447 0.451
SOUTH DAKOTA........................................ 0.537 0.600
TENNESSEE........................................... 0.441 0.482
TEXAS............................................... 0.404 0.503
UTAH................................................ 0.504 0.619
VERMONT............................................. 0.623 0.595
VIRGINIA............................................ 0.466 0.498
WASHINGTON.......................................... 0.576 0.653
WEST VIRGINIA....................................... 0.575 0.532
WISCONSIN........................................... 0.551 0.621
WYOMING............................................. 0.475 0.682
------------------------------------------------------------------------
Table 8b.--Statewide Average Capital Cost-to-Charge Ratios (Case
Weighted) March 2000
------------------------------------------------------------------------
State Ratio
------------------------------------------------------------------------
ALABAMA....................................................... 0.040
ALASKA........................................................ 0.070
ARIZONA....................................................... 0.041
ARKANSAS...................................................... 0.050
CALIFORNIA.................................................... 0.036
COLORADO...................................................... 0.046
CONNECTICUT................................................... 0.036
DELAWARE...................................................... 0.051
DISTRICT OF COLUMBIA.......................................... 0.039
FLORIDA....................................................... 0.045
GEORGIA....................................................... 0.056
HAWAII........................................................ 0.043
IDAHO......................................................... 0.049
ILLINOIS...................................................... 0.042
INDIANA....................................................... 0.057
IOWA.......................................................... 0.056
KANSAS........................................................ 0.054
KENTUCKY...................................................... 0.046
LOUISIANA..................................................... 0.050
MAINE......................................................... 0.039
MARYLAND...................................................... 0.013
MASSACHUSETTS................................................. 0.055
MICHIGAN...................................................... 0.045
MINNESOTA..................................................... 0.049
MISSISSIPPI................................................... 0.045
MISSOURI...................................................... 0.046
MONTANA....................................................... 0.055
NEBRASKA...................................................... 0.054
NEVADA........................................................ 0.030
NEW HAMPSHIRE................................................. 0.061
NEW JERSEY.................................................... 0.036
NEW MEXICO.................................................... 0.044
NEW YORK...................................................... 0.051
NORTH CAROLINA................................................ 0.050
NORTH DAKOTA.................................................. 0.074
OHIO.......................................................... 0.050
OKLAHOMA...................................................... 0.048
OREGON........................................................ 0.049
PENNSYLVANIA.................................................. 0.040
PUERTO RICO................................................... 0.043
RHODE ISLAND.................................................. 0.030
SOUTH CAROLINA................................................ 0.047
SOUTH DAKOTA.................................................. 0.066
TENNESSEE..................................................... 0.051
TEXAS......................................................... 0.048
UTAH.......................................................... 0.049
VERMONT....................................................... 0.051
VIRGINIA...................................................... 0.058
WASHINGTON.................................................... 0.064
WEST VIRGINIA................................................. 0.047
WISCONSIN..................................................... 0.053
WYOMING....................................................... 0.057
------------------------------------------------------------------------
[[Page 47189]]
Appendix A--Regulatory Impact Analysis
I. Introduction
Section 804(2) of Title 5, United States Code (as added by
section 251 of Public Law 104-121), specifies that a major rule is
any rule that the Office of Management and Budget finds is likely to
result in--
An annual effect on the economy of $100 million or
more;
A major increase in costs or prices for consumers
individual industries, Federal, State or local government agencies
or geographic regions; or
Significant adverse effects on competition, employment,
investment, productivity, innovation or on the ability of United
States based enterprises to compete with foreign based enterprises
in domestic and export markets.
We estimate that the impact of this final rule relating to the
annual update in payment rates and policy changes for hospital
inpatient services and the implementation of the specified changes
under Public Law 106-113 will be to increase payments to hospitals
by approximately $1.5 billion in FY 2001. We estimate that the
impact of the final changes relating to the Medicare inpatient DSH
adjustment calculation (a finalization of the January 20, 2000
interim final rule) to be $350 million for FY 2001. Therefore, this
rule is a major rule as defined in Title 5, United States Code,
section 804(2).
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612), unless we certify that a final rule would not have a
significant economic impact on a substantial number of small
entities. For purposes of the RFA, we consider all hospitals to be
small entities.
Also, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis for any rule that may have a significant
impact on the operations of a substantial number of small rural
hospitals. Such an analysis must conform to the provisions of
section 603 of the RFA. With the exception of hospitals located in
certain New England counties, for purposes of section 1102(b) of the
Act, we define a small rural hospital as a hospital with fewer than
100 beds that is located outside of a Metropolitan Statistical Area
(MSA) or New England County Metropolitan Area (NECMA). Section
601(g) of the Social Security Amendments of 1983 (Pub. L. 98-21)
designated hospitals in certain New England counties as belonging to
the adjacent NECMA. Thus, for purposes of the hospital inpatient
prospective payment system, we classify these hospitals as urban
hospitals.
It is clear that the changes in this final rule will affect both
a substantial number of small rural hospitals as well as other
classes of hospitals, and the effects on some may be significant.
Therefore, the discussion below, in combination with the rest of
this final rule, constitutes a combined regulatory impact analysis
and regulatory flexibility analysis.
We have reviewed this final rule under the threshold criteria of
Executive Order 13132, Federalism, and have determined that the
final rule will not have any negative impact on the rights, roles,
and responsibilities of State, local, or tribal governments.
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 expenditure in any one year
by State, local or tribal governments, in the aggregate, or by the
private sector, of $100 million. This final rule does not mandate
any requirements for State, local, or tribal governments.
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.
II. Changes in the Final Rule
Since we published the proposed rule, the market basket
estimates for hospitals subject to the prospective payment system
and hospitals and units excluded from the system have both risen by
0.3 percentage points. With the exception of these changes, we are
generally implementing the policy and statutory provisions discussed
in the proposed rule.
III. Limitations of Our Analysis
As has been the case in our previously published regulatory
impact analyses, the following quantitative analysis presents the
projected effects of our policy changes, as well as statutory
changes effective for FY 2001, on various hospital groups. We
estimate the effects of individual policy changes by estimating
payments per case while holding all other payment policies 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 admissions,
lengths of stay, or case-mix.
We received no comments on the methodology used for the impact
analysis in the proposed rule.
IV. Hospitals Included In and Excluded From the Prospective Payment
System
The prospective payment systems for hospital inpatient operating
and capital-related costs encompass nearly all general, short-term,
acute care hospitals that participate in the Medicare program. There
were 45 Indian Health Service hospitals in our database, which we
excluded from the analysis due to the special characteristics of the
prospective payment method for these hospitals. Among other short-
term, acute care hospitals, only the 50 such hospitals in Maryland
remain excluded from the prospective payment system under the waiver
at section 1814(b)(3) of the Act. Thus, as of July 2000, we have
included 4,888 hospitals in our analysis. This represents about 80
percent of all Medicare-participating hospitals. The majority of
this impact analysis focuses on this set of hospitals.
The remaining 20 percent are specialty hospitals that are
excluded from the prospective payment system and continue to be paid
on the basis of their reasonable costs (subject to a rate-of-
increase ceiling on their inpatient operating costs per discharge).
These hospitals include psychiatric, rehabilitation, long-term care,
children's, and cancer hospitals. The impacts of our final policy
changes on these hospitals are discussed below.
V. Impact on Excluded Hospitals and Units
As of July 2000, there were 1,068 specialty hospitals excluded
from the prospective payment system and instead paid on a reasonable
cost basis subject to the rate-of-increase ceiling under
Sec. 413.40. Broken down by specialty, there were 529 psychiatric,
196 rehabilitation, 242 long-term care, 74 children's, 17 Christian
Science Sanatoria, and 10 cancer hospitals. In addition, there were
1,468 psychiatric units and 918 rehabilitation units in hospitals
otherwise subject to the prospective payment system. These excluded
units are also paid in accordance with Sec. 413.40. Under
Sec. 413.40(a)(2)(i)(A), the rate-of-increase ceiling is not
applicable to the 36 specialty hospitals and units in Maryland that
are paid in accordance with the waiver at section 1814(b)(3) of the
Act.
As required by section 1886(b)(3)(B) of the Act, the update
factor applicable to the rate-of-increase limit for excluded
hospitals and units for FY 2001 will be between 0 and 3.4 percent,
depending on the hospital's or unit's costs in relation to its limit
for the most recent cost reporting period for which information is
available.
The impact on excluded hospitals and units of the update in the
rate-of-increase limit depends on the cumulative cost increases
experienced by each excluded hospital or unit since its applicable
base period. For excluded hospitals and units that have maintained
their cost increases at a level below the percentage increases in
the rate-of-increase limits since their base period, the major
effect will be on the level of incentive payments these hospitals
and units receive. Conversely, for excluded hospitals and units with
per-case cost increases above the cumulative update in their rate-
of-increase limits, the major effect will be the amount of excess
costs that would not be reimbursed.
We note that, under Sec. 413.40(d)(3), an excluded hospital or
unit whose costs exceed 110 percent of its rate-of-increase limit
receives its rate-of-increase limit plus 50 percent of the
difference between its reasonable costs and 110 percent of the
limit, not to exceed 110 percent of its limit. In addition, under
the various provisions set forth in Sec. 413.40, certain excluded
hospitals and units can obtain payment adjustments for justifiable
increases in operating costs that exceed the limit. At the same
time, however, by generally limiting payment increases, we continue
to provide an incentive for excluded hospitals and units to restrain
the growth in their spending for patient services.
VI. Graduate Medical Education Impact of National Average Per Resident
Amount (PRA)
As discussed in section IV.G. of the preamble, this final rule
implements statutory provisions enacted by section 311 of Public Law
106-113 that establish a methodology for the use of a national
average PRA in computing direct graduate medical education (GME)
payments for cost reporting
[[Page 47190]]
periods beginning on or after October 1, 2000 and on or before
September 30, 2005. The methodology establishes a ``floor'' and
``ceiling'' based on a locality-adjusted, updated national average
PRA. Under section 1886(h)(2)(D)(iii) of the Act, as added by
section 311(a) of Public Law 106-113, the PRA for a hospital for the
cost reporting period beginning during FY 2001 cannot be below 70
percent of the locality-adjusted, updated national average PRA.
Thus, if a hospital's PRA for the cost reporting period beginning
during FY 2001 would otherwise be below the floor, the hospital's
PRA for that cost reporting period is equal to 70 percent of the
locality-adjusted, national average PRA. Under section
1886(h)(2)(D)(iv) of the Act, as added by section 311(a) of Public
Law 106-113, if a hospital's PRA exceeds 140 percent of the
locality-adjusted, updated national average PRA, the hospital's PRA
is frozen (for FYs 2001 and 2002) or subject to a 2-percent
reduction to the otherwise applicable update (for FYs 2003 through
2005). See section IV.G. of the preamble for a fuller explanation of
this policy.
For purposes of the final rule, we have calculated an estimated
impact of this policy on teaching hospitals' PRAs for FY 2001 making
assumptions about update factors and geographic adjustment factors
(GAF) for each hospital. Generally, utilizing FY 1997 data, we
calculated a floor and a ceiling and estimated the impact on
hospitals. This impact was then inflated to FY 2001 to estimate the
total impact on the Medicare program for FY 2001. The estimated
numbers for this impact should not be used by hospitals in
calculating their own individual PRAs; hospitals must use the
methodology stated in section IV.G. of this final rule to revise (if
appropriate) their individual PRAs.
In calculating this impact, we utilized Medicare cost report
data for all cost reports ending in FY 1997. We excluded hospitals
that file manual cost reports because we did not have access to
their Medicare utilization data. We also excluded all teaching
hospitals in Maryland because these hospitals are paid under a
Medicare waiver. For those hospitals that had two cost reporting
periods ending in FY 1997, we used the later of the two periods. A
total of 1,231 teaching hospitals were included in this analysis.
The impact in this final rule differs slightly from the impact
in the proposed rule because we have determined a different weighted
average PRA for this final rule, and we used the most recent CPI-U
update factors to determine the impact for FY 2001. An explanation
of why the weighted average PRA has changed for this final rule may
be found in section IV.G.2 of this preamble.
Utilizing the FY 1997 weighted average PRA of $68,464, we
calculated a FY 1997 70-percent floor of $47,925 and a FY 1997 140-
percent ceiling of $95,850. We then estimated that, for cost
reporting periods ending in FY 1997, 336 hospitals had PRAs that
were below $47,925 (27.3 percent of 1,231 hospitals), and 180
hospitals had PRAs above $95,850 (14.6 percent of 1,231 hospitals).
Thus, for example, to illustrate the extremes in impact for a
hospital with PRAs below the floor, Hospital A had a FY 1997 primary
care PRA of $22,000 and a non-primary care PRA of $20,000. When
these PRAs are replaced by a single PRA of $47,925, the hospital
gains approximately 110 percent in payments per resident. For a
hospital with PRAs above the ceiling, Hospital B had a FY 1997
primary care PRA of $150,000 and a non-primary care PRA of $148,000.
When these PRAs are frozen and not updated for inflation in FY 2001,
the percentage loss in payments per resident that year would be
equal to the CPI-U percentage that would otherwise have been used to
update the PRA.
For the 336 hospitals that had PRAs below the FY 1997 $47,925
floor, we estimated that the total cost to the Medicare program for
FY 2001 of applying the floor would be $33.2 million. For the 180
hospitals that had PRAs above the FY 1997 $95,850 ceiling, we
estimated that the total savings to the Medicare program for FY 2001
would be $16 million. Subtracting the estimated savings of $16
million from the estimated costs of $33.2 million yields an
estimated total net cost to the Medicare program for FY 2001 of
$17.2 million.
VII. Quantitative Impact Analysis of the Policy Changes Under the
Prospective Payment System for Operating Costs
A. Basis and Methodology of Estimates
In this final rule, we are announcing policy changes and payment
rate updates for the prospective payment systems for operating and
capital-related costs. We have prepared separate impact analyses of
the changes to each system. This section deals with changes to the
operating prospective payment system.
The data used in developing the quantitative analyses presented
below are taken from the FY 1999 MedPAR file and the most current
provider-specific file that is used for payment purposes. Although
the analyses of the changes to the operating prospective payment
system do not incorporate cost data, the most recently available
hospital cost report data were used to categorize hospitals. Our
analysis has several qualifications. First, we do not make
adjustments for behavioral changes that hospitals may adopt in
response to these policy changes. Second, due to the interdependent
nature of the prospective payment system, it is very difficult to
precisely quantify the impact associated with each change. Third, we
draw upon various sources for the data used to categorize hospitals
in the tables. In some cases, particularly the number of beds, there
is a fair degree of variation in the data from different sources. We
have attempted to construct these variables with the best available
source overall. For individual hospitals, however, some
miscategorizations are possible.
Using cases in the FY 1999 MedPAR file, we simulated payments
under the operating prospective payment system given various
combinations of payment parameters. Any short-term, acute care
hospitals not paid under the general prospective payment systems
(Indian Health Service hospitals and hospitals in Maryland) are
excluded from the simulations. Payments under the capital
prospective payment system, or payments for costs other than
inpatient operating costs, are not analyzed here. Estimated payment
impacts of FY 2001 changes to the capital prospective payment system
are discussed in section IX of this Appendix.
The final changes discussed separately below are the following:
The effects of the annual reclassification of diagnoses
and procedures and the recalibration of the diagnosis-related group
(DRG) relative weights required by section 1886(d)(4)(C) of the Act.
The effects of changes in hospitals' wage index values
reflecting the wage index update (FY 1997 data).
The effects of removing from the wage index the costs
and hours associated with teaching physicians paid under Medicare
Part A, residents, and certified registered nurse anesthetists
(CRNAs) during the second year of a 5-year phase-out, by calculating
a wage index based on 40 percent of hospitals' average hourly wages
after removing these costs and hours, and 60 percent of hospitals'
average hourly wages with these costs included.
The effects of geographic reclassifications by the
Medicare Geographic Classification Review Board (MGCRB) that will be
effective in FY 2001.
The total change in payments based on FY 2001 policies
relative to payments based on FY 2000 policies.
To illustrate the impacts of the FY 2001 final changes, our
analysis begins with a FY 2000 baseline simulation model using: the
FY 2000 DRG GROUPER (version 17.0); the FY 2000 wage index; and no
MGCRB reclassifications. Outlier payments are set at 5.1 percent of
total DRG plus outlier payments.
Each final and statutory policy change is then added
incrementally to this baseline model, finally arriving at an FY 2001
model incorporating all of the changes. This allows us to isolate
the effects of each change.
Our final comparison illustrates the percent change in payments
per case from FY 2000 to FY 2001. Five factors have significant
impacts here. The first is the update to the standardized amounts.
In accordance with section 1886(d)(3)(A)(iv) of the Act, we are
updating the large urban and the other areas average standardized
amounts for FY 2001 using the most recently forecasted hospital
market basket increase for FY 2001 of 3.4 percent minus 1.1
percentage points (for an update of 2.3 percent).
Under section 1886(b)(3) of the Act, as amended by section 406
of Public Law 106-113, the updates to the average standardized
amounts and the hospital-specific amounts for sole community
hospitals (SCHs) will be equal to the full market basket increase
for FY 2001. Consequently, the update factor used for SCHs in this
impact analysis is 3.4 percent. Under section 1886(b)(3)(D) of the
Act, the update factor for the hospital-specific amounts for MDHs is
equal to the market basket increase of 3.4 percent minus 1.1
percentage points (for an update of 2.3 percent).
A second significant factor that impacts changes in hospitals'
payments per case from FY 2000 to FY 2001 is a change in MGCRB
reclassification status from one year to the next. That is,
hospitals reclassified in FY 2000 that are no longer reclassified in
FY
[[Page 47191]]
2001 may have a negative payment impact going from FY 2000 to FY
2001; conversely, hospitals not reclassified in FY 2000 that are
reclassified in FY 2001 may have a positive impact. In some cases,
these impacts can be quite substantial, so if a relatively small
number of hospitals in a particular category lose their
reclassification status, the percentage change in payments for the
category may be below the national mean.
A third significant factor is that we currently estimate that
actual outlier payments during FY 2000 will be 6.2 percent of actual
total DRG payments. When the FY 2000 final rule was published, we
projected FY 2000 outlier payments would be 5.1 percent of total DRG
payments; the standardized amounts were offset correspondingly. The
effects of the higher than expected outlier payments during FY 2000
(as discussed in the Addendum to this final rule) are reflected in
the analyses below comparing our current estimates of FY 2000
payments per case to estimated FY 2001 payments per case.
Fourth, section 111 of Public Law 106-113 revised section
1886(d)(5)(B)(ii) of the Act so that the IME adjustment changes from
FY 2000 to FY 2001 from approximately a 6.5 percent increase for
every 10 percent increase in a hospital's resident-to-bed ratio
during FY 2000 to approximately a 6.2 percent increase in FY 2001.
Similarly, section 112 of Public Law 106-113 revised section
1886(d)(5)(F)(ix) of the Act so that the DSH adjustment for FY 2001
is reduced by 3 percent from what would otherwise have been paid
(this is the same percentage reduction that was applied in FY 2000).
Additionally, the January 20, 2000 interim final rule with comment
revised policy, effective with discharges occurring on or after
January 20, 2000, to allow hospitals to include the patient days of
all populations eligible for Title XIX matching payments in a
State's section 1115 waiver in calculating the hospital's Medicare
DSH adjustment.
Finally, section 405 of Public Law 106-113 provided that certain
SCHs may elect to receive payment on the basis of their costs per
case during their cost reporting period that began during FY 1996.
To be eligible, a SCH must have received payment on the basis of its
hospital-specific rate for its cost reporting period beginning
during 1999. For FY 2001, eligible SCHs that elect rebasing receive
a hospital-specific rate comprised of 75-percent of the higher of
their FY 1982 or FY 1987 hospital-specific rate, and 25-percent of
their FY 1996 hospital-specific rate.
Table I demonstrates the results of our analysis. The table
categorizes hospitals by various geographic and special payment
consideration groups to illustrate the varying impacts on different
types of hospitals. The top row of the table shows the overall
impact on the 4,888 hospitals included in the analysis. This number
is 34 fewer hospitals than were included in the impact analysis in
the FY 2000 final rule (64 FR 41624).
The next four rows of Table I contain hospitals categorized
according to their geographic location (all urban, which is further
divided into large urban and other urban, or rural). There are 2,752
hospitals located in urban areas (MSAs or NECMAs) included in our
analysis. Among these, there are 1,571 hospitals located in large
urban areas (populations over 1 million), and 1,181 hospitals in
other urban areas (populations of 1 million or fewer). In addition,
there are 2,136 hospitals in rural areas. The next two groupings are
by bed-size categories, shown separately for urban and rural
hospitals. The final groupings by geographic location are by census
divisions, also shown separately for urban and rural hospitals.
The second part of Table I shows hospital groups based on
hospitals' FY 2001 payment classifications, including any
reclassifications under section 1886(d)(10) of the Act. For example,
the rows labeled urban, large urban, other urban, and rural show
that the number of hospitals paid based on these categorizations
(after consideration of geographic reclassifications) are 2,833,
1,665, 1,168, and 2,055, respectively.
The next three groupings examine the impacts of the final
changes on hospitals grouped by whether or not they have residency
programs (teaching hospitals that receive an IME adjustment) or
receive DSH payments, or some combination of these two adjustments.
There are 3,770 nonteaching hospitals in our analysis, 876 teaching
hospitals with fewer than 100 residents, and 242 teaching hospitals
with 100 or more residents.
In the DSH categories, hospitals are grouped according to their
DSH payment status, and whether they are considered urban or rural
after MGCRB reclassifications. Hospitals in the rural DSH
categories, therefore, represent hospitals that were not
reclassified for purposes of the standardized amount or for purposes
of the DSH adjustment. (They may, however, have been reclassified
for purposes of the wage index.) The next category groups hospitals
considered urban after geographic reclassification, in terms of
whether they receive the IME adjustment, the DSH adjustment, both,
or neither.
The next five rows examine the impacts of the final changes on
rural hospitals by special payment groups (SCHs, rural referral
centers (RRCs), and MDHs), as well as rural hospitals not receiving
a special payment designation. The RRCs (150), SCHs (661), MDHs
(352), and SCH and RRCs (57) shown here were not reclassified for
purposes of the standardized amount. There are 26 RRCs, 1 MDH, 4
SCHs and 3 SCH and RRCs that will be reclassified as urban for the
standardized amount in FY 2001 and, therefore, are not included in
these rows.
The next two groupings are based on type of ownership and the
hospital's Medicare utilization expressed as a percent of total
patient days. These data are taken primarily from the FY 1998
Medicare cost report files, if available (otherwise FY 1997 data are
used). Data needed to determine ownership status or Medicare
utilization percentages were unavailable for 2 and 85 hospitals,
respectively. For the most part, these are new hospitals.
The next series of groupings concern the geographic
reclassification status of hospitals. The first three groupings
display hospitals that were reclassified by the MGCRB for both FY
2000 and FY 2001, or for only one of those 2 years, by urban and
rural status. The next rows illustrate the overall number of FY 2001
reclassifications, as well as the numbers of reclassified hospitals
grouped by urban and rural location. The final row in Table I
contains hospitals located in rural counties but deemed to be urban
under section 1886(d)(8)(B) of the Act.
Table I.--Impact Analysis of Changes for FY 2001 Operating Prospective Payment System
[Percent changes in payments per case)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Phase out
Number of DRG New wage of GME and DRG and WI MGCRB All FY
hosps.\1\ recalib.\2\ data \3\ CRNA costs changes reclassification 2001
\4\ \5\ \6\ changes
(0) (1) (2) (3) (4) (5) (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
(BY GEOGRAPHIC LOCATION):
ALL HOSPITALS......................................... 4,888 0.0 0.2 0.1 0.0 0.0 1.5
URBAN HOSPITALS....................................... 2,752 0.0 0.1 0.0 -0.1 -0.4 1.4
LARGE URBAN AREAS..................................... 1,571 0.0 0.1 0.0 -0.1 -0.5 1.3
OTHER URBAN AREAS..................................... 1,181 0.0 0.1 0.1 0.0 -0.3 1.5
RURAL HOSPITALS....................................... 2,136 0.2 0.6 0.1 0.6 2.5 2.5
BED SIZE (URBAN):
0-99 BEDS............................................. 716 0.2 0.1 0.1 0.3 -0.6 1.6
100-199 BEDS.......................................... 944 0.1 0.1 0.1 0.1 -0.5 1.5
200-299 BEDS.......................................... 548 0.1 0.1 0.1 -0.1 -0.4 1.3
300-499 BEDS.......................................... 401 0.0 0.0 0.1 -0.2 -0.4 1.1
[[Page 47192]]
500 OR MORE BEDS...................................... 143 -0.1 0.4 0.0 0.0 -0.4 1.6
BED SIZE (RURAL):
0-49 BEDS............................................. 1,233 0.2 0.6 0.1 0.6 0.2 3.1
50-99 BEDS............................................ 535 0.2 0.6 0.1 0.6 0.8 2.6
100-149 BEDS.......................................... 219 0.2 0.6 0.1 0.6 3.4 2.1
150-199 BEDS.......................................... 81 0.2 0.7 0.1 0.6 5.2 2.6
200 OR MORE BEDS...................................... 68 0.1 0.6 0.1 0.5 4.5 2.2
URBAN BY CENSUS DIVISION:
NEW ENGLAND........................................... 146 0.0 -0.9 0.1 -0.3 -0.2 0.9
MIDDLE ATLANTIC....................................... 421 0.1 0.1 -0.1 -0.2 -0.3 1.2
SOUTH ATLANTIC........................................ 404 0.0 0.0 0.1 -0.2 -0.6 1.1
EAST NORTH CENTRAL.................................... 463 0.0 0.5 0.0 0.2 -0.3 2.0
EAST SOUTH CENTRAL.................................... 161 0.0 -0.1 0.0 -0.5 -0.6 0.8
WEST NORTH CENTRAL.................................... 188 -0.1 0.3 0.0 -0.1 -0.6 1.4
WEST SOUTH CENTRAL.................................... 351 0.0 1.3 0.1 1.0 -0.6 2.3
MOUNTAIN.............................................. 133 0.0 0.3 0.1 0.0 -0.5 1.6
PACIFIC............................................... 440 0.0 -0.5 0.2 -0.6 -0.5 0.7
PUERTO RICO........................................... 45 0.1 -0.1 0.0 -0.1 -0.6 1.7
RURAL BY CENSUS DIVISION:
NEW ENGLAND........................................... 52 0.1 -0.1 0.0 -0.3 2.8 2.2
MIDDLE ATLANTIC....................................... 80 0.2 -0.1 0.0 -0.2 2.5 2.2
SOUTH ATLANTIC........................................ 277 0.2 1.0 0.1 1.0 2.9 2.8
EAST NORTH CENTRAL.................................... 283 0.2 0.6 0.1 0.5 2.2 2.6
EAST SOUTH CENTRAL.................................... 266 0.2 0.6 0.1 0.5 2.8 2.6
WEST NORTH CENTRAL.................................... 492 0.1 0.5 0.1 0.4 2.3 2.5
WEST SOUTH CENTRAL.................................... 340 0.2 1.0 0.1 1.0 3.0 2.1
MOUNTAIN.............................................. 201 0.2 0.4 0.1 0.3 1.6 2.7
PACIFIC............................................... 140 0.2 0.3 0.1 0.3 1.9 2.3
PUERTO RICO........................................... 5 0.2 0.3 -0.2 0.1 -0.7 0.2
(BY PAYMENT CATEGORIES):
URBAN HOSPITALS....................................... 2,833 0.0 0.1 0.0 -0.1 -0.4 1.4
LARGE URBAN........................................... 1,665 0.0 0.1 0.0 -0.1 -0.3 1.4
OTHER URBAN........................................... 1,168 0.0 0.2 0.1 0.0 -0.4 1.3
RURAL HOSPITALS....................................... 2,055 0.2 0.6 0.1 0.6 2.2 2.6
TEACHING STATUS:
NON-TEACHING.......................................... 3,770 0.1 0.2 0.1 0.2 0.3 1.6
FEWER THAN 100 RESIDENTS.............................. 876 0.0 0.2 0.0 -0.1 -0.3 1.4
100 OR MORE RESIDENTS................................. 242 -0.1 0.2 0.0 -0.2 -0.3 1.6
DISPROPORTIONATE SHARE HOSPITALS (DSH):
NON-DSH............................................... 3,070 0.1 0.1 0.1 -0.1 0.3 1.5
URBAN DSH
100 BEDS OR MORE.................................. 1,390 0.0 0.2 0.0 0.0 -0.4 1.5
FEWER THAN 100 BEDS............................... 72 0.1 0.4 0.1 0.4 -0.5 1.9
RURAL DSH
SOLE COMMUNITY (SCH).................................. 149 0.3 0.9 0.1 0.9 0.2 3.6
REFERRAL CENTERS (RRC)................................ 56 0.2 0.8 0.1 0.8 5.2 2.4
OTHER RURAL DSH HOSPITALS
100 BEDS OR MORE.................................. 48 0.3 1.1 0.1 1.1 1.4 2.9
FEWER THAN 100 BEDS................................... 103 0.3 0.9 0.1 1.0 0.3 2.3
URBAN TEACHING AND DSH:
BOTH TEACHING AND DSH................................. 726 0.0 0.2 0.0 0.0 -0.5 1.6
TEACHING AND NO DSH................................... 327 0.0 0.0 0.0 -0.4 -0.2 1.2
NO TEACHING AND DSH................................... 736 0.1 0.2 0.1 0.2 -0.3 1.3
NO TEACHING AND NO DSH................................ 1,044 0.1 0.0 0.1 -0.1 -0.3 1.0
RURAL HOSPITAL TYPES:
NONSPECIAL STATUS HOSPITALS........................... 835 0.2 0.9 0.1 0.9 1.0 2.4
RRC................................................... 150 0.2 0.8 0.1 0.7 6.1 2.4
SCH................................................... 661 0.2 0.4 0.1 0.3 0.2 3.3
MDH................................................... 352 0.2 0.7 0.1 0.6 0.3 2.7
SCH AND RRC........................................... 57 0.1 0.3 0.0 0.1 1.6 2.2
TYPE OF OWNERSHIP:
VOLUNTARY............................................. 2,840 0.0 0.2 0.0 0.0 -0.1 1.5
PROPRIETARY........................................... 745 0.1 0.2 0.1 0.1 -0.1 1.3
GOVERNMENT............................................ 1,301 0.1 0.2 0.1 0.0 0.2 1.8
UNKNOWN............................................... 2 0.0 0.5 0.1 0.3 -0.4 2.7
[[Page 47193]]
MEDICARE UTILIZATION AS A PERCENT OF INPATIENT DAYS:
0--25................................................. 381 0.0 0.2 0.1 .......... -0.3 1.8
25--50................................................ 1,830 0.0 0.1 0.0 -0.1 -0.3 1.4
50--65................................................ 1,893 0.1 0.3 0.1 0.2 0.2 1.6
OVER 65............................................... 699 0.1 0.2 0.1 0.1 0.3 1.4
UNKNOWN............................................... 85 -0.1 0.5 -0.1 0.1 -0.6 1.2
HOSPITALS RECLASSIFIED BY THE MEDICARE GEOGRAPHIC REVIEW
BOARD:
RECLASSIFICATION STATUS DURING FY 2000 AND FY 2001
RECLASSIFIED DURING BOTH FY 2000 AND FY 2001.......... 377 0.1 0.4 0.1 0.4 6.0 1.8
URBAN................................................. 53 0.0 -0.1 0.1 0.1 5.8 1.7
RURAL................................................. 324 0.1 0.6 0.1 0.5 6.2 1.9
RECLASSIFIED DURING FY 2001 ONLY...................... 149 0.1 0.4 0.1 0.3 4.8 7.1
URBAN................................................. 35 0.1 0.1 0.1 -0.1 4.7 6.6
RURAL................................................. 114 0.2 0.8 0.1 0.7 4.9 7.6
RECLASSIFIED DURING FY 2000 ONLY...................... 172 0.1 0.5 0.1 0.3 -0.9 -1.7
URBAN................................................. 70 0.0 0.4 0.1 0.1 -1.1 -0.8
RURAL................................................. 102 0.2 0.7 0.1 0.7 -0.5 -3.1
FY 2000 RECLASSIFICATIONS:
ALL RECLASSIFIED HOSPITALS............................ 527 0.1 0.4 0.1 0.4 5.8 3.0
STANDARDIZED AMOUNT ONLY.............................. 66 0.2 0.6 0.1 0.6 4.1 4.1
WAGE INDEX ONLY....................................... 386 0.1 0.5 0.1 0.4 4.8 0.6
BOTH.................................................. 46 0.2 0.1 0.1 0.0 4.3 2.6
NONRECLASSIFIED....................................... 4,364 0.0 0.2 0.0 0.0 -0.5 1.6
ALL URBAN RECLASSIFIED................................ 88 0.0 0.0 0.1 0.1 5.4 3.2
STANDARDIZED AMOUNT ONLY.............................. 17 0.2 0.0 0.0 -0.1 0.7 0.9
WAGE INDEX ONLY....................................... 38 0.0 -0.1 0.1 0.2 5.8 2.5
BOTH.................................................. 33 0.0 0.1 0.1 -0.1 6.2 5.1
NONRECLASSIFIED....................................... 2,638 0.0 0.1 0.0 -0.1 -0.7 1.3
ALL RURAL RECLASSIFIED................................ 439 0.1 0.6 0.1 0.5 5.9 2.9
STANDARDIZED AMOUNT ONLY.............................. 54 0.1 0.6 0.1 0.5 4.2 -0.1
WAGE INDEX ONLY....................................... 358 0.2 0.6 0.1 0.6 5.8 3.2
BOTH.................................................. 27 0.1 0.3 0.1 0.1 9.4 2.9
NONRECLASSIFIED....................................... 1,697 0.2 0.6 0.1 0.6 -0.5 2.2
OTHER RECLASSIFIED HOSPITALS (SECTION 1886(d)(8)(B)).. 26 0.2 -0.4 0.0 -0.4 1.0 1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Because data necessary to classify some hospitals by category were missing, the total number of hospitals in each category may not equal the
national total. Discharge data are from FY 1999, and hospital cost report data are from reporting periods beginning in FY 1997 and FY 1998.
\2\ This column displays the payment impact of the recalibration of the DRG weights based on FY 1999 MedPAR data and the DRG reclassification changes,
in accordance with section 1886(d)(4)(C) of the Act.
\3\ This column shows the payment effects of updating the data used to calculate the wage index with data from the FY 1997 cost reports.
\4\ This column displays the impact of removing 60 percent of the costs and hours associated with teaching physicians Part A, residents, and CRNAs from
the wage index calculation.
\5\ This column displays the combined impact of the reclassification and recalibration of the DRGs, the updated and revised wage data used to calculate
the wage index, and the budget neutrality adjustment factor for these two changes, in accordance with sections 1886(d)(4)(C)(iii) and 1886(d)(3)(E) of
the Act. Thus, it represents the combined impacts shown in columns 1, 2 and 3, and the FY 2001 budget neutrality factor of .997225.
\6\ Shown here are the effects of geographic reclassifications by the Medicare Geographic Classification Review Board (MGCRB). The effects demonstrate
the FY 2001 payment impact of going from no reclassifications to the reclassifications scheduled to be in effect for FY 2001. Reclassification for
prior years has no bearing on the payment impacts shown here.
\7\ This column shows changes in payments from FY 2000 to FY 2001. It incorporates all of the changes displayed in columns 4 and 5 (the changes
displayed in columns 1, 2, and 3 are included in column 4). It also displays the impact of the FY 2001 update (including the higher update for SCHs),
changes in hospitals' reclassification status in FY 2001 compared to FY 2000, the difference in outlier payments from FY 2000 to FY 2001, and the
reductions to payments through the IME adjustment taking effect during FY 2001. It also reflects section 405 of Public law 106-113, which permitted
certain SCHs to rebase for a 1996 hospital-specific rate. The sum of these columns may be different from the percentage changes shown here due to
rounding and interactive effects.
B. Impact of the Changes to the DRG Reclassifications and
Recalibration of Relative Weights (Column 1)
In column 1 of Table I, we present the combined effects of the
DRG reclassifications and recalibration, as discussed in section II
of the preamble to this final rule. Section 1886(d)(4)(C)(i) of the
Act requires us to annually make appropriate classification changes
and to recalibrate the DRG weights in order to reflect changes in
treatment patterns, technology, and any other factors that may
change the relative use of hospital resources.
We compared aggregate payments using the FY 2000 DRG relative
weights (GROUPER version 17) to aggregate payments using the
[[Page 47194]]
FY 2001 DRG relative weights (GROUPER version 18). Overall payments
are unaffected by the DRG reclassification and recalibration.
Consistent with the minor changes we made in the FY 2001 GROUPER,
the redistributional impacts of DRG reclassifications and
recalibration across hospital groups are very small (a 0.0 percent
impact for large and other urban hospitals; a 0.2 percent increase
for rural hospitals). Within hospital categories, the net effects
for urban hospitals are small positive changes for small hospitals
(a 0.2 percent increase for hospitals with fewer than 100 beds), and
small decreases for larger hospitals (a 0.1 percent decrease for
hospitals with more than 500 beds). Among rural hospitals, most
hospital categories experienced small positive changes, 0.2 percent
increases for hospitals with fewer than 200 beds and 0.1 percent
increases for hospitals with more than 200 beds.
The breakdown by urban census division shows that the small
decrease among urban hospitals is confined to the West North Central
region. Payments to urban hospitals in most other regions are
unchanged, while payments to urban hospitals in the Middle Atlantic
and Puerto Rico regions rise by 0.1 percent. All rural hospital
census divisions experience payment increases ranging from 0.1
percent for hospitals in New England and West North Central regions
to 0.2 percent for hospitals in the South Atlantic, Middle Atlantic,
East North Central, East South Central, West South Central, Pacific,
Mountain, and Puerto Rico regions.
C. Impact of Updating the Wage Data (Column 2)
Section 1886(d)(3)(E) of the Act requires that, beginning
October 1, 1993, we annually update the wage data used to calculate
the wage index. In accordance with this requirement, the wage index
for FY 2001 is based on data submitted for hospital cost reporting
periods beginning on or after October 1, 1996 and before October 1,
1997. As with the previous column, the impact of the new data on
hospital payments is isolated by holding the other payment
parameters constant in the two simulations. That is, column 2 shows
the percentage changes in payments when going from a model using the
FY 2000 wage index (based on FY 1996 wage data before geographic
reclassifications to a model using the FY 2001 prereclassification
wage index based on FY 1997 wage data). Section 152 of Public Law
106-113 reclassified certain hospitals for purposes of the wage
index and the standardized amounts. For purposes of this column,
these hospitals are located in their prereclassification geographic
location. The impacts of these statutory reclassifications are shown
in column 5, when examining the impacts of geographic
reclassification.
The wage data collected on the FY 1997 cost reports are similar
to the data used in the calculation of the FY 2000 wage index. For a
thorough discussion of the data used to calculate the wage index,
see section III.B. of this final rule.
The results indicate that the new wage data have an overall
impact of a 0.2 percent increase in hospital payments (prior to
applying the budget neutrality factor, see column 5). Rural
hospitals appear to benefit from the update as their payments
increase by 0.6 percent. These increases are attributable to
positive increases in the wage index values for the rural areas of
several States; California, Illinois, Indiana, Ohio, Texas and
Minnesota all had increases of approximately 3 percent in their
prereclassification wage index values.
Urban hospitals as a group are not significantly affected by the
updated wage data. Hospitals in both other urban areas and large
urban areas experienced a small positive increase (0.1 percent).
Urban hospitals in New England experienced a 0.9 percent decrease
from the updated wage data due to declines ranging from 5 to 1
percent in the wage index values for several MSAs in Connecticut and
Massachusetts. Urban hospitals in the Pacific census region
experience a 0.5 percent decline due to several MSAs in California
with prereclassified FY 2001 wage indexes that fall by 5 percent or
less.
The largest increases are seen in the rural census divisions.
Rural South Atlantic and West South Central regions experience the
greatest positive impact, 1.0 percent. Hospitals in five other
census divisions receive positive impacts of 0.5 or greater: East
North Central at 0.6, East South Central at 0.6, and West North
Central at 0.5. The following chart compares the shifts in wage
index values for labor market areas for FY 2000 relative to FY 2001.
This chart demonstrates the impact of the changes for the FY 2001
wage index relative to the FY 2000 wage index. The majority of labor
market areas (339) experience less than a 5 percent change. A total
of 21 labor market areas experience an increase of more than 5
percent with only 1 having an increase greater than 10 percent. A
total of 15 areas experience decreases of more than 5 percent. Of
those, only 1 decline by 10 percent or more.
------------------------------------------------------------------------
Number of labor market
areas
Percentage change in area wage index values -------------------------
FY 2000 FY 2001
------------------------------------------------------------------------
Increase more than 10 percent................. 8 1
Increase more than 5 percent and less than 10 22 20
percent......................................
Increase or decrease less than 5 percent...... 318 339
Decrease more than 5 percent and less than 10 17 14
percent......................................
Decrease more than 10 percent................. 5 1
------------------------------------------------------------------------
Among urban hospitals, 96 would experience an increase of
between 5 and 10 percent and 2 more than 10 percent. No rural
hospitals have increases greater than 5 percent. On the negative
side, 106 urban hospitals have decreases in their wage index values
of at least 5 percent but less than 10 percent. One urban hospital
has a decrease in their wage index value that is greater than 10
percent. Two rural hospitals have decreases in their wage index
values that are greater than 5 percent but less than 10 percent. The
following chart shows the projected impact for urban and rural
hospitals.
------------------------------------------------------------------------
Number of hospitals
Percentage change in area wage index values -------------------------
Urban Rural
------------------------------------------------------------------------
Increase more than 10 percent................. 2 0
Increase more than 5 percent and less than 10 96 0
percent......................................
Increase or decrease less than 5 percent...... 2547 2134
Decrease more than 5 percent and less than 10 106 2
percent......................................
Decrease more than 10 percent................. 1 0
------------------------------------------------------------------------
D. Impact of 5-Year Phase-Out of Teaching Physicians', Residents',
and CRNAs' Costs (Column 3)
As described in section III.C. of this preamble, the FY 2001
wage index is calculated by blending 60 percent of hospitals'
average hourly wages calculated without removing teaching physician
(paid under Medicare Part A), residents, or CRNA costs (and hours)
and 40 percent of average hourly wages calculated after removing
these costs (and hours). This constitutes the second year of a 5-
year phase-out of these costs and hours, where the proportion of the
calculation based upon average hourly wages after removing these
costs increases by 20 percentage points per year.
In order to determine the impact of moving from the 80/20 blend
percentage to the 60/40 blend percentage, we first estimated the
payments for FY 2001 using the FY 2001 prereclassified wage index
calculated using the 80/20 blend percentage (Column 2). We then
estimated what the payments for FY 2001 would have been if the 60/40
blend percentage was applied to the FY 2001 prereclassified wage
index. Column 3 compares the differences in these payment estimates
and shows that the 60/40 blend percentage does not significantly
impact overall payments (0.0 percent change). Although there were
165 labor market areas that experience a small percent decrease in
their wage index, most of the decreases were less than 3 percent.
E. Combined Impact of DRG and Wage Index Changes-- Including Budget
Neutrality Adjustment (Column 4)
The impact of DRG reclassifications and recalibration on
aggregate payments is required by section 1886(d)(4)(C)(iii) of the
Act to be budget neutral. In addition, section
[[Page 47195]]
1886(d)(3)(E) of the Act specifies that any updates or adjustments
to the wage index are to be budget neutral. As noted in the Addendum
to this final rule, we compared simulated aggregate payments using
the FY 2000 DRG relative weights and wage index to simulated
aggregate payments using the FY 2001 DRG relative weights and
blended wage index. Based on this comparison, we computed a wage and
recalibration budget neutrality factor of 0.997225. In Table I, the
combined overall impacts of the effects of both the DRG
reclassifications and recalibration and the updated wage index are
shown in column 4. The 0.0 percent impact for all hospitals
demonstrates that these changes, in combination with the budget
neutrality factor, are budget neutral.
For the most part, the changes in this column are the sum of the
changes in columns 1, 2, and 3, minus approximately 0.3 percent
attributable to the budget neutrality factor. There may be some
variation of plus or minus 0.1 percent due to rounding.
F. Impact of MGCRB Reclassifications (Column 5)
Our impact analysis to this point has assumed hospitals are paid
on the basis of their actual geographic location (with the exception
of ongoing policies that provide that certain hospitals receive
payments on bases other than where they are geographically located,
such as hospitals in rural counties that are deemed urban under
section 1886(d)(8)(B) of the Act). The changes in column 5 reflect
the per case payment impact of moving from this baseline to a
simulation incorporating the MGCRB decisions for FY 2001. As noted
below, these decisions affect hospitals' standardized amount and
wage index area assignments.
Beginning in 1998, by February 28 of each year, the MGCRB makes
reclassification determinations that will be effective for the next
fiscal year, which begins on October 1. The MGCRB may approve a
hospital's reclassification request for the purpose of using the
other area's standardized amount, wage index value, or both, or for
FYs 1999 through 2001, for purposes of qualifying for a DSH
adjustment or to receive a higher DSH payment.
The FY 2001 wage index values incorporate all of the MGCRB's
reclassification decisions for FY 2001. The wage index values also
reflect any decisions made by the HCFA Administrator through the
appeals and review process. Additional changes that resulted from
the Administrator's review of MGCRB decisions or a request by a
hospital to withdraw its application are reflected in this final
rule for FY 2001.
Section 152 of Public Law 106-113 reclassified certain hospitals
for purposes of the wage index and the standardized amounts. The
impacts of these statutory reclassifications are included in this
column.
The overall effect of geographic reclassification is required by
section 1886(d)(8)(D) of the Act to be budget neutral. Therefore, we
applied an adjustment of 0.993187 to ensure that the effects of
reclassification are budget neutral. (See section II.A.4.b. of the
Addendum to this final rule.)
As a group, rural hospitals benefit from geographic
reclassification. Their payments rise 2.5 percent, while payments to
urban hospitals decline 0.4 percent. Hospitals in other urban areas
see a decrease in payments of 0.3 percent, while large urban
hospitals lose 0.5 percent. Among urban hospital groups (that is,
bed size, census division, and special payment status), payments
generally decline.
A positive impact is evident among most of the rural hospital
groups. The largest decrease among the rural census divisions is 0.7
percent for Puerto Rico. The largest increases are in rural West
South Central and South Atlantic. These regions receive increases of
3.0 and 2.9 percent, respectively.
Among rural hospitals designated as RRCs, 179 hospitals are
reclassified for purposes of the wage index only, leading to the 6.1
percent increase in payments among RRCs overall. This positive
impact on RRCs is also reflected in the category of rural hospitals
with 150-199 beds, which has a 5.2 percent increase in payments.
Rural hospitals reclassified for FY 2000 and FY 2001 experience
a 6.2 percent increase in payments. This may be due to the fact that
these hospitals have the most to gain from reclassification and have
been reclassified for a period of years. Rural hospitals
reclassified for FY 2001 only experience a 4.9 percent increase in
payments, while rural hospitals reclassified for FY 2000 only
experience a 0.5 percent decrease in payments. Urban hospitals
reclassified for FY 2001 but not FY 2000 experience a 4.7 percent
increase in payments overall. Urban hospitals reclassified for FY
2000 but not for FY 2001 experience a 1.1 percent decline in
payments.
The FY 2001 Reclassification rows of Table I show the changes in
payments per case for all FY 2001 reclassified and nonreclassified
hospitals in urban and rural locations for each of the three
reclassification categories (standardized amount only, wage index
only, or both). The table illustrates that the largest impact for
reclassified rural hospitals is for those hospitals reclassified for
both the standardized amount and the wage index. These hospitals
receive a 9.4 percent increase in payments. In addition, rural
hospitals reclassified just for the wage index receive a 5.8 percent
payment increase. The overall impact on reclassified hospitals is to
increase their payments per case by an average of 5.9 percent for FY
2001.
The reclassification of hospitals primarily affects payment to
nonreclassified hospitals through changes in the wage index and the
geographic reclassification budget neutrality adjustment required by
section 1886(d)(8)(D) of the Act. Among hospitals that are not
reclassified, the overall impact of hospital reclassifications is an
average decrease in payments per case of about 0.5 percent. Rural
nonreclassified hospitals decrease by 0.5 percent, and urban
nonreclassified hospitals lose 0.7 percent (the amount of the budget
neutrality offset).
G. All Changes (Column 6)
Column 6 compares our estimate of payments per case,
incorporating all changes reflected in this final rule for FY 2001
(including statutory changes), to our estimate of payments per case
in FY 2000. It includes the effects of the 2.3 percent update to the
standardized amounts and the hospital-specific rates for MDHs and
the 3.4 percent update for SCHs. It also reflects the 1.1 percentage
point difference between the projected outlier payments in FY 2000
(5.1 percent of total DRG payments) and the current estimate of the
percentage of actual outlier payments in FY 2000 (6.2 percent), as
described in the introduction to this Appendix and the Addendum to
this final rule.
Another change affecting the difference between FY 2000 and FY
2001 payments arises from section 1886(d)(5)(B) of the Act, as
amended by Public Law 106-113. As noted in the introduction to this
impact analysis, for FY 2001, the IME adjustment is decreased from
last year (6.5 percent in FY 2000 and 6.2 percent in FY 2001).
We also note that column 6 includes the impacts of FY 2001 MGCRB
reclassifications compared to the payment impacts of FY 2000
reclassifications. Therefore, when comparing FY 2001 payments to FY
2000, the percent changes due to FY 2001 reclassifications shown in
column 5 need to be offset by the effects of reclassification on
hospitals' FY 2000 payments(column 7 of Table 1, July 30, 1999 final
rule (64 FR 41625)). For example, the impact of MGCRB
reclassifications on rural hospitals' FY 2001 payments was
approximately a 2.5 percent increase, offsetting most of the 2.6
percent increase in column 7 for FY 2000. Therefore, the net change
in FY 2001 payments due to reclassification for rural hospitals is
actually a decrease of 0.1 percent relative to FY 2000. However,
last year's analysis contained a somewhat different set of
hospitals, so this might affect the numbers slightly.
Finally, section 405 of Public Law 106-113 provided that certain
SCHs may elect to receive payment on the basis of their costs per
case during their cost reporting period that began during 1996. To
be eligible, a SCH must have received payment for cost reporting
periods beginning during 1999 on the basis of its hospital-specific
rate. For FY 2001, eligible SCHs that elect rebasing receive a
hospital-specific rate comprised of 75 percent of the higher of
their FY 1982 or FY 1987 hospital-specific rate, and 25 percent of
their 1996 hospital-specific rate. The impact of this provision is
modeled in column 6 as well.
There might also be interactive effects among the various
factors comprising the payment system that we are not able to
isolate. For these reasons, the values in column 6 may not equal the
sum of the changes in columns 4 and 5, plus the other impacts that
we are able to identify.
The overall payment change from FY 2000 to FY 2001 for all
hospitals is a 1.5 percent increase. This reflects the 2.3 percent
update for FY 2001 (3.4 percent for SCHs), the 1.0 percent lower
outlier payments in FY 2001 compared to FY 2000 (5.1 percent
compared to 6.2 percent); the change in the IME
[[Page 47196]]
adjustment (6.5 in FY 2000 to 6.2 in FY 2001); and the rebasing of
certain SCHs to their 1996 hospital-specific rate.
Hospitals in urban areas experience a 1.4 percent increase in
payments per case compared to FY 2000. The 0.4 percent negative
impact due to reclassification is offset by an identical negative
impact for FY 2000. Hospitals in rural areas, meanwhile, experience
a 2.5 percent payment increase. As discussed previously, this is
primarily due to the positive effect of the wage index and DRG
changes and reclassifications.
Among urban census divisions, payments increased between 0.7 and
2.3 percent between FY 2000 and FY 2001. The rural census division
experiencing the smallest increase in payments was Puerto Rico (0.2
percent). The largest increases by rural hospitals are in the South
Atlantic and Mountain regions, 2.8 and 2.7 percent, respectively.
Among other rural census divisions, the largest increases are in the
East South Central and the East North Central, both with 2.6.
Among special categories of rural hospitals, those hospitals
receiving payment under the hospital-specific methodology (SCHs,
MDHs, and SCH/RRCs) experience payment increases of 3.3 percent, 2.7
percent, and 2.2 percent, respectively. This outcome is primarily
related to the fact that, for hospitals receiving payments under the
hospital-specific methodology, there are no outlier payments.
Therefore, these hospitals do not experience negative payment
impacts from the decline in the percentage of outlier payments from
FY 2000 to FY 2001 (from 6.2 of total DRG payments to 5.1 percent)
as do hospitals paid based on the national standardized amounts.
The largest negative payment impacts from FY 2000 to FY 2001 are
among hospitals that were reclassified for FY 2000 and are not
reclassified for FY 2001. Overall, these hospitals lose 1.7 percent.
The urban hospitals in this category lose 0.8 percent, while the
rural hospitals lose 3.1 percent. On the other hand, hospitals
reclassified for FY 2001 that were not reclassified for FY 2000
would experience the greatest payment increases: 7.1 percent
overall; 7.6 percent for 114 rural hospitals in this category and
6.6 percent for 35 urban hospitals.
Table II.--Impact Analysis of Changes for FY 2000; Operating Prospective Payment System
[Payments per case]
----------------------------------------------------------------------------------------------------------------
Average FY Average FY
Number of 2000 2001 All
hospitals payment payment changes
(1) per case per case (4)
(2)\1\ (3)\1\
----------------------------------------------------------------------------------------------------------------
(BY GEOGRAPHIC LOCATION):
ALL HOSPITALS............................................... 4,888 6,783 6,885 1.5
URBAN HOSPITALS............................................. 2,752 7,354 7,454 1.4
LARGE URBAN AREAS........................................... 1,571 7,895 7,996 1.3
OTHER URBAN AREAS........................................... 1,181 6,650 6,747 1.5
RURAL HOSPITALS............................................. 2,136 4,544 4,658 2.5
BED SIZE (URBAN):
0-99 BEDS................................................... 716 4,947 5,025 1.6
100-199 BEDS................................................ 944 6,202 6,294 1.5
200-299 BEDS................................................ 548 7,042 7,132 1.3
300-499 BEDS................................................ 401 7,885 7,974 1.1
500 OR MORE BEDS............................................ 143 9,547 9,703 1.6
BED SIZE (RURAL):
0-49 BEDS................................................... 1,233 3,784 3,901 3.1
50-99 BEDS.................................................. 535 4,248 4,358 2.6
100-149 BEDS................................................ 219 4,648 4,746 2.1
150-199 BEDS................................................ 81 5,090 5,220 2.6
200 OR MORE BEDS............................................ 68 5,710 5,838 2.2
URBAN BY CENSUS DIVISION:
NEW ENGLAND................................................. 146 7,815 7,888 0.9
MIDDLE ATLANTIC............................................. 421 8,296 8,396 1.2
SOUTH ATLANTIC.............................................. 404 7,022 7,098 1.1
EAST NORTH CENTRAL.......................................... 463 7,006 7,144 2
EAST SOUTH CENTRAL.......................................... 161 6,627 6,683 0.8
WEST NORTH CENTRAL.......................................... 188 7,105 7,203 1.4
WEST SOUTH CENTRAL.......................................... 351 6,760 6,917 2.3
MOUNTAIN.................................................... 133 7,044 7,156 1.6
PACIFIC..................................................... 440 8,572 8,633 0.7
PUERTO RICO................................................. 45 3,156 3,209 1.7
RURAL BY CENSUS DIVISION:
NEW ENGLAND................................................. 52 5,468 5,586 2.2
MIDDLE ATLANTIC............................................. 80 4,910 5,016 2.2
SOUTH ATLANTIC.............................................. 277 4,680 4,813 2.8
EAST NORTH CENTRAL.......................................... 283 4,591 4,710 2.6
EAST SOUTH CENTRAL.......................................... 266 4,209 4,317 2.6
WEST NORTH CENTRAL.......................................... 492 4,348 4,458 2.5
WEST SOUTH CENTRAL.......................................... 340 4,061 4,144 2.1
MOUNTAIN.................................................... 201 4,863 4,995 2.7
PACIFIC..................................................... 140 5,583 5,712 2.3
PUERTO RICO................................................. 5 2,447 2,453 0.2
(BY PAYMENT CATEGORIES):
URBAN HOSPITALS............................................. 2,833 7,312 7,411 1.4
LARGE URBAN................................................. 1,665 7,797 7,905 1.4
OTHER URBAN................................................. 1,168 6,637 6,724 1.3
RURAL HOSPITALS............................................. 2,055 4,509 4,627 2.6
TEACHING STATUS:
NON-TEACHING................................................ 3,770 5,464 5,550 1.6
FEWER THAN 100 RESIDENTS.................................... 876 7,125 7,223 1.4
[[Page 47197]]
100 OR MORE RESIDENTS....................................... 242 10,828 11,001 1.6
DISPROPORTIONATE SHARE HOSPITALS (DSH):
NON-DSH..................................................... 3,070 5,810 5,895 1.5
URBAN DSH:
100 BEDS OR MORE........................................ 1,390 7,919 8,037 1.5
FEWER THAN 100 BEDS..................................... 72 4,927 5,019 1.9
RURAL DSH:
SOLE COMMUNITY (SCH).................................... 149 4,140 4,290 3.6
REFERRAL CENTERS (RRC).................................. 56 5,415 5,543 2.4
OTHER RURAL DSH HOSPITALS:
100 BEDS OR MORE........................................ 48 4,097 4,218 2.9
FEWER THAN 100 BEDS..................................... 103 3,714 3,798 2.3
URBAN TEACHING AND DSH:
BOTH TEACHING AND DSH................................... 726 8,826 8,962 1.6
TEACHING AND NO DSH..................................... 327 7,322 7,409 1.2
NO TEACHING AND DSH..................................... 736 6,311 6,395 1.3
NO TEACHING AND NO DSH.................................. 1,044 5,668 5,727 1
RURAL HOSPITAL TYPES:
NONSPECIAL STATUS HOSPITALS................................. 835 3,922 4,017 2.4
RRC......................................................... 150 5,257 5,382 2.4
SCH......................................................... 661 4,502 4,650 3.3
MDH......................................................... 352 3,784 3,885 2.7
SCH AND RRC................................................. 57 5,500 5,620 2.2
TYPE OF OWNERSHIP:
VOLUNTARY................................................... 2,840 6,945 7,079 1.5
PROPRIETARY................................................. 745 6,300 6,384 1.3
GOVERNMENT.................................................. 1,301 6,400 6,512 1.8
UNKNOWN..................................................... 2 3,406 3,499 2.7
MEDICARE UTILIZATION AS A PERCENT OF INPATIENT DAYS:
0--25....................................................... 381 9,013 9,172 1.8
25--50...................................................... 1,830 7,858 7,968 1.4
50--65...................................................... 1,893 5,910 6,007 1.6
OVER 65..................................................... 699 5,260 5,336 1.4
UNKNOWN..................................................... 85 9,997 10,116 1.2
HOSPITALS RECLASSIFIED BY THE MEDICARE GEOGRAPHIC REVIEW BOARD:
RECLASSIFICATION STATUS DURING FY 2000 AND FY 2001:
RECLASSIFIED DURING BOTH FY 2000 AND FY 2001................ 377 5,851 5,958 1.8
URBAN....................................................... 53 8,027 8,161 1.7
RURAL....................................................... 324 5,249 5,348 1.9
RECLASSIFIED DURING FY 2001 ONLY............................ 149 5,537 5,930 7.1
URBAN....................................................... 35 6,971 7,428 6.6
RURAL....................................................... 114 4,623 4,975 7.6
RECLASSIFIED DURING FY 2000 ONLY............................ 172 6,011 5,909 -1.7
URBAN....................................................... 70 7,454 7,394 -0.8
RURAL....................................................... 102 4,620 4,476 -3.1
FY 2000 RECLASSIFICATIONS:
ALL RECLASSIFIED HOSPITALS.................................. 527 5,776 5,948 3
STANDARDIZED AMOUNT ONLY.................................... 66 4,697 4,888 4.1
WAGE INDEX ONLY............................................. 386 5,878 5,913 0.6
BOTH........................................................ 46 6,295 6,457 2.6
NONRECLASSIFIED............................................. 4,364 6,912 7,019 1.6
ALL URBAN RECLASSIFIED...................................... 88 7,660 7,906 3.2
STANDARDIZED AMOUNT ONLY.................................... 17 5,333 5,379 0.9
WAGE INDEX ONLY............................................. 38 8,718 8,934 2.5
BOTH........................................................ 33 7,217 7,584 5.1
NONRECLASSIFIED............................................. 2,638 7,355 7,449 1.3
ALL RURAL RECLASSIFIED...................................... 439 5,128 5,275 2.9
STANDARDIZED AMOUNT ONLY.................................... 54 4,785 4,779 -0.1
WAGE INDEX ONLY............................................. 358 5,153 5,316 3.2
BOTH........................................................ 27 5,258 5,410 2.9
NONRECLASSIFIED............................................. 1,697 4,114 4,204 2.2
OTHER RECLASSIFIED HOSPITALS (SECTION 1886(d)(8)(B))........ 26 4,713 4,775 1.3
----------------------------------------------------------------------------------------------------------------
\1\ These payment amounts per case do not reflect any estimates of annual case-mix increase.
[[Page 47198]]
Table II presents the projected impact of the changes for FY
2001 for urban and rural hospitals and for the different categories
of hospitals shown in Table I. It compares the estimated payments
per case for FY 2000 with the average estimated per case payments
for FY 2001, as calculated under our models. Thus, this table
presents, in terms of the average dollar amounts paid per discharge,
the combined effects of the changes presented in Table I. The
percentage changes shown in the last column of Table II equal the
percentage changes in average payments from column 6 of Table I.
VIII. Impact of Organ, Tissue and Eye Procurement Condition of
Participation on CAHs
In this final rule, we are adding a CoP for organ, tissue and
eye procurement for CAHs. We estimate that the procurement costs for
organ, eyes, and tissue for CAHs is negligible. This estimate is
based on the following projections. There are several provisions in
this condition that will impact CAHs to a greater or lesser degree.
Specifically, CAHs are required to have written protocols; have
agreements with an OPO, a tissue bank, and an eye bank; refer all
deaths that occur in the CAH to the OPO or a third party designated
by the OPO; ensure that CAH employees who initiate a request for
donation to the family of a potential donor have been trained as a
designated requestor; and work cooperatively with the OPO, tissue
bank, and eye bank in educating CAH staff, reviewing death records,
and maintaining potential donors. It is important to note that
because of the inherent flexibility of this condition, the extent of
its economic impact is dependent upon decisions that will be made
either by the CAH or by the CAH in conjunction with the OPO or the
tissue and eye banks. Thus, the impact on individual CAHs will vary
and is subject in large part to their decision making. The impact
will also vary based on whether a CAH currently has an organ
donation protocol and its level of compliance with existing law and
regulations. For example, if a CAH was a Medicare hospital in
compliance with the hospital CoP for organ, tissue, and eye
procurement prior to converting to a CAH, there will be no
additional impact.
The first requirement in the CoP is that CAHs have and implement
written protocols that reflect the various other requirements of the
CoP. Currently, under section 1138 of the Act, CAHs must have
written protocols for organ donation. Most CAHs will need to rewrite
their existing protocols to conform with this regulation; however,
this is clearly not a requirement that imposes a significant
economic burden.
In addition, a CAH must have an agreement with its designated
OPO and with at least one tissue bank and at least one eye bank.
CAHs are required under section 1138 of the Act to refer all
potential donors to an OPO. Also, the OPO regulation at 42 CFR
486.306 requires, as a qualification for designation as an OPO, that
the OPO have a working relationship with at least 75 percent of the
hospitals in its service area that participate in the Medicare and
Medicaid programs and that have an operating room and the equipment
and personnel for retrieving organs. Therefore, some CAHs may
already have an agreement with their designated OPO. Although CAHs
may need to modify those existing agreements, the need to make
modifications would not impose a significant economic burden.
Although there is no statutory or regulatory requirement for a CAH
to have agreements with tissue and eye banks, we must assume some
CAHs have agreements with tissue and eye banks, since hospitals are
the source for virtually all tissues and eyes.
The CoP requires CAHs to notify the OPO about every death that
occurs in the CAH. The average Medicare hospital has approximately
165 beds and 200 deaths per year. However, by statute and
regulation, CAHs may use no more than 15 beds for acute care
services. Assuming that the number of deaths in a hospital is
related to the number of acute care beds, there should be
approximately 18 deaths per year in the average CAH. Thus, the
economic impact for a CAH of referring all deaths would be small.
Under the CoP, a CAH may agree to have the OPO determine medical
suitability for tissue and eye donation or may have alternative
arrangements with a tissue bank and an eye bank. These alternative
arrangements could include the CAH's direct notification of the
tissue and eye bank of potential tissue and eye donors or direct
notification of all deaths. Again, the impact is small, and the
regulation permits the CAH to decide how this process will take
place. We recognize that many communities already have a one-phone-
call system in place. In addition, some OPOs are also tissue banks
or eye banks or both. A CAH that chose to use the OPO's tissue and
eye bank services in these localities would need to make only one
telephone call on every death.
This CoP requires that the individual who initiates a request
for donation to the family of a potential donor must be an OPO
representative or a designated requestor. A designated requestor is
an individual who has taken a course offered or approved by the OPO
in the methodology for approaching families of potential donors and
requesting donation. The CAH would need to arrange for designated
requestor training. Most OPOs have trained designated requestors as
part of the hospital CoP for organ, tissue, and eye procurement.
Even if the CAH wants to have a sufficient number of designated
requestors to ensure that all shifts are covered, this provision of
the regulation would not have a significant economic impact on CAHs.
In addition, the CAH may be able to choose to have donation requests
initiated by the OPO, the tissue bank, or the eye bank staff rather
than CAH staff, in which case there is no economic impact.
The regulation requires a CAH to work cooperatively with the
OPO, a tissue bank, and an eye bank in educating CAH staff. We do
not believe education of CAH staff will demand a significant amount
of staff time. In addition, most OPOs already give educational
presentations for the staff in their hospitals.
The regulation requires a CAH to work cooperatively with the
OPO, a tissue bank, and an eye bank in reviewing death records. Most
OPOs currently conduct extensive CAH death record reviews. The CAH's
assistance is required only to provide lists of CAH deaths and
facilitate access to records.
Finally, the regulation requires a CAH to work cooperatively
with the OPO, a tissue bank, and an eye bank in maintaining
potential donors while necessary testing and placement of potential
donated organs and tissues take place. It is possible that because
of the CoP, some CAHs may have their first organ donors. Therefore,
we considered the impact on a CAH of maintaining a brain dead
potential donor on a ventilator until the organs can be placed. CAHs
with full ventilator capability should have no trouble maintaining a
potential donor until the organs are placed. However, some CAHs have
ventilator capability only so that a patient can be maintained until
he or she is transferred to a larger facility for treatment. These
CAHs would have the equipment and staffing to maintain a potential
donor until transfer to another facility occurs. Some CAHs do not
have ventilator capability and would be unable to maintain a
potential donor. However, CAHs without ventilator capability would
still be obligated to notify the OPO, or a third party designated by
the OPO, of all individuals whose death is imminent or who have died
in the CAH because there is a potential to obtain a tissue or an eye
donation. We do not believe there will be a significant impact on
CAHs no matter what their situation--full ventilator capability,
ventilator capability only for patients who are to be transferred to
a larger facility, or no ventilator capability.
Although, as stated previously, there are several requirements
in this CoP that will impact CAHs to a greater or lesser degree, we
assert that the potential benefits to beneficiaries exceed the
associated costs of requiring CAHs to comply with this standard. As
stated in the Hospital Conditions of Participation; Identification
of Potential Organ, Tissue, and Eye Donors and Transplant Hospitals'
Provision of Transplant-Related Data regulation published on June
22, 1998 in the Federal Register (63 FR 33872), there were 3.11
organs transplanted for every donor recovered. Further, we do not
believe there will be a significant impact on CAHs no matter what
their situation--full ventilator capability, ventilator capability
only for patients who are to be transferred to a larger facility, or
no ventilator capability. Based on a HCFA actuarial opinion, the
cost for CAHs to implement this requirement is negligible. We
reviewed the comprehensive analysis in the impact section for the
hospital CoP discussed in the above referenced regulation and
determined that the analysis and assumptions made at that time are
valid for this CAH CoP.
We expect that this regulation will increase tissue and eye
donations as well as organ donations. A study of the impact of the
Pennsylvania routine referral legislation on tissue and eye
donations was presented at the Fourth International Society for
Organ Sharing Congress and Transplant Congress in July 1997.
(Nathan, HM, Abrams, J. Sparkman BA, et al. ``Comprehensive State
Legislation Increases Organ and Tissue
[[Page 47199]]
Donations'') This study used data from the Delaware Valley
Transplant Program, the OPO for Southeastern Pennsylvania, and found
that although the maximum donor age was lowered from 66 to 60,
tissue donations increased 14 percent from 1994 through 1996. The
study also showed that eye donations increased 28 percent during the
same period, despite more restrictive donor criteria. This virtually
eliminated the waiting list for suitable corneas. North Carolina's
routine referral legislation became effective in October 1997. The
Carolina Organ Procurement Agency (one of three North Carolina OPOs)
has seen heart valve donations increase by 109 percent and other
tissue donations increase 114 percent through May 1998.
We did not receive any public comments on the impact of this
provision.
IX. Impact of Medicare Disproportionate Share Hospital (DSH) Adjustment
Calculation Policy Change in the Treatment of Certain Medicaid Patient
Days in States With 1115 Expansion Waivers
As discussed in the January 20, 2000 interim final rule with
comment period, we revised the policy for the Medicare
disproportionate share hospital adjustment provision set forth under
section 1886(d)(5)(F) of the Act to allow hospitals located in
states with section 1115 expansion waivers to include the patient
days of all populations eligible for title XIX matching payments
under a State's section 1115 waiver in calculating the hospital's
Medicare DSH adjustment.
There are currently eight States with section 1115 expansion
waivers (Delaware, Hawaii, Massachusetts, Missouri, New York,
Oregon, Tennessee, and Vermont). Under the provisions of this final
rule, hospitals in these eight States will be allowed to include in
the Medicaid percentage portion of their Medicare DSH calculation
the inpatient hospital days attributable to patients who are
eligible under the State's section 1115 expansion waiver. Because
our policy was that these days were not allowable prior to January
20, 2000, by allowing hospitals to begin to include these days in
their Medicare DSH calculation, the impact will be to increase the
DSH payments these hospitals will receive compared to what they
would receive absent this change.
We have estimated the impact of this change to be $270 million
in higher FY 2000 prospective payments system payments (total FY
2000 DSH payments are projected to be $4.6 billion), and $370
million in FY 2001 payments. Thus the total impact of this change
for the period from FY 2001 through FY 2005 is estimated to be $2.14
billion.
X. Impact of Changes in the Capital Prospective Payment System
A. General Considerations
We now have cost report data for the 7th year of the capital
prospective payment system (cost reports beginning in FY 1998)
available through the March 2000 update of the HCRIS. We also have
updated information on the projected aggregate amount of obligated
capital approved by the fiscal intermediaries. However, our impact
analysis of payment changes for capital-related costs is still
limited by the lack of hospital-specific data on several items.
These are the hospital's projected new capital costs for each year,
its projected old capital costs for each year, and the actual
amounts of obligated capital that will be put in use for patient
care and recognized as Medicare old capital costs in each year. The
lack of this information affects our impact analysis in the
following ways:
Major investment in hospital capital assets (for
example, in building and major fixed equipment) occurs at irregular
intervals. As a result, there can be significant variation in the
growth rates of Medicare capital-related costs per case among
hospitals. We do not have the necessary hospital-specific budget
data to project the hospital capital growth rate for individual
hospitals.
Our policy of recognizing certain obligated capital as
old capital makes it difficult to project future capital-related
costs for individual hospitals. Under Sec. 412.302(c), a hospital is
required to notify its intermediary that it has obligated capital by
the later of October 1, 1992, or 90 days after the beginning of the
hospital's first cost reporting period under the capital prospective
payment system. The intermediary must then notify the hospital of
its determination whether the criteria for recognition of obligated
capital have been met by the later of the end of the hospital's
first cost reporting period subject to the capital prospective
payment system or 9 months after the receipt of the hospital's
notification. The amount that is recognized as old capital is
limited to the lesser of the actual allowable costs when the asset
is put in use for patient care or the estimated costs of the capital
expenditure at the time it was obligated. We have substantial
information regarding fiscal intermediary determinations of
projected aggregate obligated capital amounts. However, we still do
not know when these projects will actually be put into use for
patient care, the actual amount that will be recognized as obligated
capital when the project is put into use, or the Medicare share of
the recognized costs. Therefore, we do not know actual obligated
capital commitments for purposes of the FY 2001 capital cost
projections. In Appendix B of this final rule, we discuss the
assumptions and computations that we employ to generate the amount
of obligated capital commitments for use in the FY 2001 capital cost
projections.
In Table III of this section, we present the redistributive
effects that are expected to occur between ``hold-harmless''
hospitals and ``fully prospective'' hospitals in FY 2001. In
addition, we have integrated sufficient hospital-specific
information into our actuarial model to project the impact of the FY
2001 capital payment policies by the standard prospective payment
system hospital groupings. While we now have actual information on
the effects of the transition payment methodology and interim
payments under the capital prospective payment system and cost
report data for most hospitals, we still need to randomly generate
numbers for the change in old capital costs, new capital costs for
each year, and obligated amounts that will be put in use for patient
care services and recognized as old capital each year. We continue
to be unable to predict accurately FY 2001 capital costs for
individual hospitals, but with the most recent data on hospitals'
experience under the capital prospective payment system, there is
adequate information to estimate the aggregate impact on most
hospital groupings.
B. Projected Impact Based on the FY 2001 Actuarial Model
1. Assumptions
In this impact analysis, we model dynamically the impact of the
capital prospective payment system from FY 2000 to FY 2001 using a
capital cost model. The FY 2001 model, as described in Appendix B of
this final rule, integrates actual data from individual hospitals
with randomly generated capital cost amounts. We have capital cost
data from cost reports beginning in FY 1989 through FY 1998 as
reported on the March 2000 update of HCRIS, interim payment data for
hospitals already receiving capital prospective payments through
PRICER, and data reported by the intermediaries that include the
hospital-specific rate determinations that have been made through
April 1, 2000 in the provider-specific file. We used these data to
determine the FY 2001 capital rates. However, we do not have
individual hospital data on old capital changes, new capital
formation, and actual obligated capital costs. We have data on costs
for capital in use in FY 1998, and we age that capital by a formula
described in Appendix B. Therefore, we need to randomly generate
only new capital acquisitions for any year after FY 1998. All
Federal rate payment parameters are assigned to the applicable
hospital.
For purposes of this impact analysis, the FY 2001 actuarial
model includes the following assumptions:
Medicare inpatient capital costs per discharge will
change at the following rates during these periods:
Average Percentage Change in Capital Costs Per Discharge
------------------------------------------------------------------------
Percentage
Fiscal year change
------------------------------------------------------------------------
1999....................................................... 3.12
2000....................................................... 3.31
2001....................................................... 2.95
------------------------------------------------------------------------
We estimate that the Medicare case-mix index will
increase by 0.5 percent in FY 2000 and in FY 2001.
The Federal capital rate and the hospital-specific rate
were updated in FY 1996 by an analytical framework that considers
changes in the prices associated with capital-related costs and
adjustments to account for forecast error, changes in the case-mix
index, allowable changes in intensity, and other factors. The FY
2001 update is 0.9 percent (see section IV. of the Addendum to this
final rule).
[[Page 47200]]
2. Results
We have used the actuarial model to estimate the change in
payment for capital-related costs from FY 2000 to FY 2001. Table III
shows the effect of the capital prospective payment system on low
capital cost hospitals and high capital cost hospitals. We consider
a hospital to be a low capital cost hospital if, based on a
comparison of its initial hospital-specific rate and the applicable
Federal rate, it will be paid under the fully prospective payment
methodology. A high capital cost hospital is a hospital that, based
on its initial hospital-specific rate and the applicable Federal
rate, will be paid under the hold-harmless payment methodology.
Based on our actuarial model, the breakdown of hospitals is as
follows:
Capital Transition Payment Methodology for FY 2001
----------------------------------------------------------------------------------------------------------------
Percent of Percent of
Type of hospital Percent of Percent of capital capital
hospitals discharges costs payments
----------------------------------------------------------------------------------------------------------------
Low Cost Hospital........................................... 67 62 56 61
High Cost Hospital.......................................... 33 38 44 39
----------------------------------------------------------------------------------------------------------------
A low capital cost hospital may request to have its hospital-
specific rate redetermined based on old capital costs in the current
year, through the later of the hospital's cost reporting period
beginning in FY 1994 or the first cost reporting period beginning
after obligated capital comes into use (within the limits
established in Sec. 412.302(e) for putting obligated capital into
use for patient care). If the redetermined hospital-specific rate is
greater than the adjusted Federal rate, these hospitals will be paid
under the hold-harmless payment methodology. Regardless of whether
the hospital became a hold-harmless payment hospital as a result of
a redetermination, we continue to show these hospitals as low
capital cost hospitals in Table III.
Assuming no behavioral changes in capital expenditures, Table
III displays the percentage change in payments from FY 2000 to FY
2001 using the above described actuarial model. With the Federal
rate, we estimate aggregate Medicare capital payments will increase
by 5.48 percent in FY 2001. This increase is noticeably higher than
last year's (3.64 percent) due to the combination of the increase in
the number of hospital admissions, the increase in case-mix, and the
increase in the Federal blend percentage from 90 percent to 100
percent and a decrease in the hospital-specific rate percentage from
10 percent to 0 percent for fully prospective payment hospitals.
Table III.--Impact of Proposed Changes for FY 2001 on Payments per Discharge
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent
Number of Adjusted Average Hopital Hold Exceptions Total change
hospitals Discharges federal federal specific harmless payment payment over FY
payment percent payment payment 2000
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2000 Payments per Discharge:
Low Cost Hospitals............................ 3,194 6,723,732 $574.73 90.41 $30.18 $2.95 $7.84 $615.72 .........
Fully Prospective......................... 3,020 6,252,299 571.02 90.00 32.46 ......... 7.45 610.93 .........
100% Federal Rate......................... 159 438,006 635.95 100.00 ......... ......... 3.42 639.38 .........
Hold Harmless............................. 15 33,426 467.66 54.25 ......... 594.40 139.14 1,201.21 .........
High Cost Hospitals........................... 1,598 4,078,374 650.66 97.86 ......... 19.26 13.05 682.97 .........
100% Federal Rate......................... 1,383 3,717,412 665.24 100.00 ......... ......... 6.98 672.22 .........
Hold Harmless............................. 215 360,962 500.42 75.67 ......... 217.62 75.58 793.63 .........
Total Hospitals......................... 4,792 10,802,106 603.40 93.30 18.79 9.11 9.81 641.11 .........
FY 2001 Payments per Discharge:
Low Cost Hospitals............................ 3,194 6,835,654 $637.91 99.74 ......... $2.42 $9.69 $650.02 5.57
Fully Prospective......................... 3,020 6,356,377 638.58 100.00 ......... ......... 9.20 647.78 6.03
100% Federal Rate......................... 159 445,296 638.34 100.00 ......... ......... 4.35 642.69 0.52
Hold Harmless............................. 15 33,981 506.60 60.11 ......... 486.54 170.96 1,164.09 -3.09
High Cost Hospitals........................... 1,598 4,146,181 653.32 98.38 ......... 15.35 21.47 690.15 1.05
100% Federal Rate......................... 1,394 3,793,349 664.47 100.00 ......... ......... 10.65 675.12 0.43
Hold Harmless............................. 204 352,832 533.52 80.86 ......... 180.41 137.76 851.69 7.32
Total Hospitals......................... 4,792 10,981,835 643.73 99.21 ......... 7.30 14.14 665.17 3.75
--------------------------------------------------------------------------------------------------------------------------------------------------------
We project that low capital cost hospitals paid under the fully
prospective payment methodology will experience an average increase
in payments per case of 6.03 percent, and high capital cost
hospitals will experience an average increase of 1.05 percent. These
results are due to the change in the blended percentages to the
payment system to 100 percent adjusted Federal rate and 0 percent
hospital-specific rate.
For hospitals paid under the fully prospective payment
methodology, the Federal rate payment percentage will increase from
90 percent to 100 percent and the hospital-specific rate payment
percentage will decrease from 10 to 0 percent in FY 2001. The
Federal rate payment percentage for hospitals paid under the hold-
harmless payment methodology is based on the hospital's ratio of new
capital costs to total capital costs. The average Federal rate
payment percentage for high cost hospitals receiving a hold-harmless
payment for old capital will increase from 75.67 percent to 80.86
percent. We estimate the percentage of hold-harmless hospitals paid
based on 100 percent of the Federal rate will increase from 86.55
percent to 87.23 percent. We estimate that the few remaining high
cost hold-harmless hospitals (204) will experience an increase in
payments of 7.32 percent from FY 2000 to FY 2001. This increase
reflects our estimate that exception payments per discharge will
increase 82.27 percent from FY 2000 to FY 2001 for high cost hold-
harmless hospitals. While we estimate that this group's regular
hold-harmless payments for old capital will decline by 17.10 percent
due to the retirement of old capital, we estimate that its high
overall capital costs will cause an increase in these hospitals'
exceptions payments from $75.58 per discharge in FY 2000 to $137.76
per discharge in FY 2001. This is primarily due to the estimated
decrease in outlier payments, which will cause an estimated increase
in exceptions payments to cover unmet capital costs.
We estimate that the average hospital-specific rate payment per
discharge will decrease from $32.46 in FY 2000 to $0.00 in FY 2001.
This decrease is due to the decrease in the hospital-specific rate
payment percentage from 10 percent in FY 2000 to 0 percent in FY
2001 for fully prospective payment hospitals.
We have made no changes in our exceptions policies for FY 2001.
As a result, the minimum payment levels would be--
90 percent for sole community hospitals;
80 percent for urban hospitals with 100 or more beds
and a disproportionate share patient percentage of 20.2 percent or
more; or
[[Page 47201]]
70 percent for all other hospitals.
We estimate that exceptions payments will increase from 1.53
percent of total capital payments in FY 2000 to 2.13 percent of
payments in FY 2001. The projected distribution of the exception
payments is shown in the chart below:
Estimated FY 2001 Exceptions Payments
------------------------------------------------------------------------
Percent of
Type of hospital Number of exceptions
hospitals payments
------------------------------------------------------------------------
Low Capital Cost.............................. 201 43
High Capital Cost............................. 214 57
-------------------------
Total..................................... 415 100
------------------------------------------------------------------------
C. Cross-Sectional Comparison of Capital Prospective Payment
Methodologies
Table IV presents a cross-sectional summary of hospital
groupings by capital prospective payment metholology. This
distribution is generated by our acturarial model.
Table IV.--Distribution by Method of Payment (Hold-Harmless/Fully Prospective) of Hospitals Receiving Capital
Payments (Estimated for FY 2001)
----------------------------------------------------------------------------------------------------------------
(2) Hold-harmless
-------------------------- (3)
(1) Total Percentage Percentage
No. of paid hold- Percentage paid fully
Hospitals harmless paid fully prospective
(A) federal (B) rate
----------------------------------------------------------------------------------------------------------------
By Geographic Location:
All hospitals........................................... 4,792 4.6 32.4 63.0
Large urban areas (populations over 1 million).......... 1,524 4.3 41.0 54.7
Other urban areas (populations of 1 million or fewer)... 1,149 5.8 39.5 54.7
Rural areas............................................. 2,119 4.1 22.4 73.5
Urban hospitals......................................... 2,673 4.9 40.4 54.7
0-99 beds........................................... 658 6.2 33.9 59.9
100-199 beds........................................ 929 7.2 45.5 47.3
200-299 beds........................................ 543 3.3 41.4 55.2
300-499 beds........................................ 400 0.8 37.0 62.3
500 or more beds.................................... 143 2.1 42.0 55.9
Rural hospitals......................................... 2,119 4.1 22.4 73.5
0-49 beds........................................... 1,220 2.9 16.6 80.6
50-99 beds.......................................... 531 6.8 26.7 66.5
100-149 beds........................................ 219 5.9 35.2 58.9
150-199 beds........................................ 81 2.5 25.9 71.6
200 or more beds.................................... 68 1.5 47.1 51.5
By Region:
Urban by Region......................................... 2,673 4.9 40.4 54.7
New England......................................... 145 0.7 25.5 73.8
Middle Atlantic..................................... 408 2.9 34.8 62.3
South Atlantic...................................... 398 5.5 51.8 42.7
East North Central.................................. 454 4.2 29.7 66.1
East South Central.................................. 154 8.4 46.1 45.5
West North Central.................................. 182 6.0 36.8 57.1
West South Central.................................. 328 8.8 58.2 32.9
Mountain............................................ 124 4.8 48.4 46.8
Pacific............................................. 435 4.1 36.3 59.5
Puerto Rico......................................... 45 2.2 26.7 71.1
Rural by Region......................................... 2,119 4.1 22.4 73.5
New England......................................... 52 0.0 23.1 76.9
Middle Atlantic..................................... 78 5.1 19.2 75.6
South Atlantic...................................... 276 2.2 33.3 64.5
East North Central.................................. 279 3.9 16.5 79.6
East South Central.................................. 265 3.4 32.8 63.8
West North Central.................................. 491 3.3 14.5 82.3
West South Central.................................. 334 4.5 26.3 69.2
Mountain............................................ 200 9.5 15.0 75.5
Pacific............................................. 139 5.0 23.7 71.2
By Payment Classification:
Large urban areas (populations over 1 million).......... 1,618 4.2 41.3 54.5
Other urban areas (populations of 1 million or fewer)... 1,136 6.0 38.8 55.2
Rural areas............................................. 2,038 4.1 21.8 74.1
Teaching Status:
Non-teaching........................................ 3,682 5.1 31.6 63.3
Fewer than 100 Residents............................ 871 2.9 35.9 61.2
100 or more Residents............................... 239 2.1 32.2 65.7
Disproportionate share hospitals (DSH): 2,988 4.7 28.3 67.0
By Geographic Location:
All hospitals........................................... 4,792 4.6 32.4 63.0
[[Page 47202]]
Non-DSH
Urban DSH:
100 or more beds................................ 1,379 4.6 42.5 52.9
Less than 100 beds.............................. 70 4.3 25.7 70.0
Rural DSH:
Sole Community (SCH/EACH)....................... 149 5.4 20.1 74.5
Referral Center (RRC/EACH)...................... 56 3.6 51.8 44.6
OTHER RURAL:
100 OR MORE BEDS............................ 48 ........... 39.6 60.4
Less than 100 beds.......................... 102 2.0 23.5 74.5
Urban teaching and DSH:
Both teaching and DSH............................... 720 2.5 36.7 60.8
Teaching and no DSH................................. 325 3.1 33.8 63.1
No teaching and DSH................................. 729 6.7 46.6 46.6
No teaching and no DSH.............................. 980 6.0 40.3 53.7
Rural Hospital Types:
Non special status hospitals........................ 819 1.5 24.1 74.5
RRC/EACH............................................ 150 2.7 36.0 61.3
SCH/EACH............................................ 661 8.5 18.2 73.4
Medicare-dependent hospitals (MDH).................. 351 1.4 16.5 82.1
SCH, RRC and EACH................................... 57 10.5 26.3 63.2
Type of Ownership:
Voluntary........................................... 2,520 4.5 32.4 63.1
Proprietary......................................... 655 7.2 57.1 35.7
Government.......................................... 1,093 4.1 19.2 76.7
Medicare Utilization as a Percent of Inpatient Days:
0-25................................................ 369 5.4 27.6 66.9
25-50............................................... 1,820 4.3 35.1 60.7
50-65............................................... 1,882 4.7 31.2 64.1
Over 65............................................. 688 4.8 32.1 63.1
----------------------------------------------------------------------------------------------------------------
As we explain in Appendix B of this final rule, we were not able
to use 96 of the 4,888 hospitals in our database due to insufficient
(missing or unusable) data. Consequently, the payment methodology
distribution is based on 4,792 hospitals. These data should be fully
representative of the payment methodologies that will be applicable
to hospitals.
The cross-sectional distribution of hospital by payment
methodology is presented by: (1) geographic location; (2) region;
and (3) payment classification. This provides an indication of the
percentage of hospitals within a particular hospital grouping that
will be paid under the fully prospective payment methodology and the
hold-harmless payment methodology.
The percentage of hospitals paid fully Federal (100 percent of
the Federal rate) as hold-harmless hospitals is expected to increase
to 32.4 percent in FY 2001.
Table IV indicates that 63.0 percent of hospitals will be paid
under the fully prospective payment methodology. (This figure,
unlike the figure of 67 percent for low cost capital hospitals in
the chart on ``Capital Transition Payment Methodology for FY 2001,''
in section VII.B.2. of this impact analysis takes into account the
effects of redeterminations. In other words, this figure does not
include low cost hospitals that, following a hospital-specific rate
redetermination, are now paid under the hold-harmless methodology.)
As expected, a relatively higher percentage of rural and
governmental hospitals (74.1 percent and 76.7 percent, respectively
by payment classification) are being paid under the fully
prospective payment methodology. This is a reflection of their lower
than average capital costs per case. In contrast, only 35.7 percent
of proprietary hospitals are being paid under the fully prospective
methodology. This is a reflection of their higher than average
capital costs per case. (We found at the time of the August 30, 1991
final rule (56 FR 43430) that 62.7 percent of proprietary hospitals
had a capital cost per case above the national average cost per
case.)
D. Cross-Sectional Analysis of Changes in Aggregate Payments
We used our FY 2001 actuarial model to estimate the potential
impact of our changes for FY 2001 on total capital payments per
case, using a universe of 4,792 hospitals. The individual hospital
payment parameters are taken from the best available data,
including: the April 1, 2000 update to the provider-specific file,
cost report data, and audit information supplied by intermediaries.
In Table V we present the results of the cross-sectional analysis
using the results of our actuarial model and the aggregate impact of
the FY 2001 payment policies. Columns 3 and 4 show estimates of
payments per case under our model for FY 2000 and FY 2001. Column 5
shows the total percentage change in payments from FY 2000 to FY
2001. Column 6 presents the percentage change in payments that can
be attributed to Federal rate changes alone.
Federal rate changes represented in Column 6 include the 1.33
percent increase in the Federal rate, a 0.5 percent increase in case
mix, changes in the adjustments to the Federal rate (for example,
the effect of the new hospital wage index on the geographic
adjustment factor), and reclassifications by the MGCRB. Column 5
includes the effects of the Federal rate changes represented in
Column 6. Column 5 also reflects the effects of all other changes,
including the change from 90 percent to 100 percent in the portion
of the Federal rate for fully prospective hospitals, the hospital-
specific rate update, changes in the proportion of new to total
capital for hold-harmless hospitals, changes in old capital (for
example, obligated capital put in use), hospital-specific rate
redeterminations, and exceptions. The comparisons are provided by:
(1) geographic location, (2) region, and (3) payment classification.
The simulation results show that, on average, capital payments
per case can be expected to increase 3.8 percent in FY 2001. The
results show that the effect of the Federal
[[Page 47203]]
rate change alone is to increase payments by 0.3 percent. In
addition to the increase attributable to the Federal rate change, a
3.5 percent increase is attributable to the effects of all other
changes.
Our comparison by geographic location shows an overall increase
in payments to hospitals in all areas. This comparison also shows
that urban and rural hospitals will experience slightly different
rates of increase in capital payments per case (3.6 percent and 4.6
percent, respectively). This difference is due to the lower rate of
increase for urban hospitals relative to rural hospitals (0.1
percent and 1.4 percent, respectively) from the Federal rate changes
alone. Urban hospitals are actually projected to gain slightly more
than rural hospitals (3.5 percent versus 3.2 percent, respectively)
from the effects of all other changes.
All regions are estimated to receive increases in total capital
payments per case, partly due to the increased share of payments
that are based on the Federal rate (from 90 to 100 percent). Changes
by region vary from a minimum of 2.6 percent increase (West South
Central urban region) to a maximum of 7.4 percent increase (Pacific
rural region).
By type of ownership, government hospitals are projected to have
the largest rate of increase of total payment changes (4.5 percent,
a 0.6 percent increase due to the Federal rate changes, and a 3.9
percent increase from the effects of all other changes). Payments to
voluntary hospitals will increase 3.7 percent (a 0.3 percent
increase due to Federal rate changes, and a 3.4 percent increase
from the effects of all other changes) and payments to proprietary
hospitals will increase 2.6 percent (a 0.1 percent decrease due to
Federal rate changes, and a 2.7 percent increase from the effects of
all other changes).
Section 1886(d)(10) of the Act established the MGCRB. Hospitals
may apply for reclassification for purposes of the standardized
amount, wage index, or both, and for purposes of DSH for FYs 1999
through 2001. Although the Federal capital rate is not affected, a
hospital's geographic classification for purposes of the operating
standardized amount does affect a hospital's capital payments as a
result of the large urban adjustment factor and the disproportionate
share adjustment for urban hospitals with 100 or more beds.
Reclassification for wage index purposes affects the geographic
adjustment factor, since that factor is constructed from the
hospital wage index.
To present the effects of the hospitals being reclassified for
FY 2001 compared to the effects of reclassification for FY 2000, we
show the average payment percentage increase for hospitals
reclassified in each fiscal year and in total. For FY 2001
reclassifications, we indicate those hospitals reclassified for
standardized amount purposes only, for wage index purposes only, and
for both purposes. The reclassified groups are compared to all other
nonreclassified hospitals. These categories are further identified
by urban and rural designation.
Hospitals reclassified for FY 2001 as a whole are projected to
experience a 5.2 percent increase in payments (a 2.0 percent
increase attributable to Federal rate changes and a 3.2 percent
increase attributable to the effects of all other changes). Payments
to nonreclassified hospitals will increase slightly less (3.8
percent) than reclassified hospitals (5.2 percent) overall. Payments
to nonreclassified hospitals will increase less than reclassified
hospitals due to the Federal rate changes (0.3 percent compared to
2.0 percent).
Table V.--Comparison of Total Payments per Case
[FY 2000 payments compared to FY 2001 payments]
----------------------------------------------------------------------------------------------------------------
Average FY Average FY Portion
Number of 2000 2001 attributable
hospitals payments/ payments/ All changes to federal
case case rate change
----------------------------------------------------------------------------------------------------------------
By Geographic Location:
All hospitals............................. 4,792 641 665 3.8 0.3
Large urban areas (populations over 1 1,524 745 772 3.6 0.0
million).................................
Other urban areas (populations of 1 1,149 629 653 3.7 0.4
million or fewer)........................
Rural areas............................... 2,119 429 449 4.6 1.4
Urban hospitals........................... 2,673 695 720 3.6 0.1
0-99 beds............................. 658 499 518 3.8 0.6
100-199 beds.......................... 929 610 630 3.4 0.3
200-299 beds.......................... 543 662 684 3.4 0.3
300-499 beds.......................... 400 726 754 3.8 -0.1
500 or more beds...................... 143 889 923 3.8 0.0
Rural hospitals........................... 2,119 429 449 4.6 1.4
0-49 beds............................. 1,220 358 378 5.8 2.0
50-99 beds............................ 531 409 429 4.9 1.4
100-149 beds.......................... 219 444 461 3.8 1.0
150-199 beds.......................... 81 467 489 4.7 1.8
200 or more beds...................... 68 526 547 3.9 1.0
By Region:
Urban by Region........................... 2,673 695 720 3.6 0.1
New England........................... 145 723 751 3.9 -0.1
Middle Atlantic....................... 408 769 797 3.7 -0.1
South Atlantic........................ 398 674 693 2.9 -0.2
East North Central.................... 454 660 692 4.9 0.8
East South Central.................... 154 638 660 3.4 -0.3
West North Central.................... 182 691 715 3.4 0.1
West South Central.................... 328 661 678 2.6 0.8
Mountain.............................. 124 687 723 5.3 0.3
Pacific............................... 435 780 804 3.1 -0.5
Puerto Rico........................... 45 293 311 6.1 2.3
Rural by Region........................... 2,119 429 449 4.6 1.4
New England........................... 52 525 544 3.6 0.2
Middle Atlantic....................... 78 450 469 4.1 0.8
South Atlantic........................ 276 443 462 4.4 1.8
East North Central.................... 279 432 459 6.2 1.6
East South Central.................... 265 395 411 4.2 1.5
West North Central.................... 491 420 440 4.6 1.5
West South Central.................... 334 391 404 3.4 1.0
Mountain.............................. 200 461 478 3.7 1.1
[[Page 47204]]
Pacific............................... 139 506 543 7.4 1.4
By Payment Classification:
All hospitals............................. 4,792 641 665 3.8 0.3
Large urban areas (populations over 1 1,618 736 763 3.6 0.1
million).................................
Other urban areas (populations of 1 1,136 628 650 3.5 0.2
million or fewer)........................
Rural areas............................... 2,038 425 446 4.8 1.5
Teaching Status:
Non-teaching.......................... 3,682 530 549 3.5 0.6
Fewer than 100 Residents.............. 871 669 694 3.7 0.3
100 or more Residents................. 239 979 1,022 4.4 -0.2
Urban DSH:
100 or more beds.................. 1,379 733 759 3.6 0.1
Less than 100 beds................ 70 570 604 5.9 0.5
Rural DSH:
Sole Community (SCH/EACH)......... 149 382 399 4.5 2.1
Referral Center (RRC/EACH)........ 56 490 506 3.2 1.0
Other Rural:
100 or more beds.............. 48 383 401 4.9 2.3
Less than 100 beds............ 102 343 360 5.0 1.9
Urban teaching and DSH:
Both teaching and DSH................. 720 807 838 3.8 0.1
Teaching and no DSH................... 325 699 728 4.1 0.2
No teaching and DSH................... 729 603 621 3.1 0.2
No teaching and no DSH................ 980 570 588 3.0 0.2
Rural Hospital Types:
Non special status hospitals.......... 819 376 394 5.0 1.7
RRC/EACH.............................. 150 493 515 4.3 1.4
SCH/EACH.............................. 661 425 448 5.5 1.5
Medicare-dependent hospitals (MDH).... 351 356 377 5.7 1.9
SCH, RRC and EACH..................... 57 499 516 3.5 0.6
Hospitals Reclassified by the Medicare
Geographic Classification Review Board:
Reclassification Status During FY00
and FY01:
Reclassified During Both FY00 and 377 546 569 4.1 0.9
FY01.............................
Reclassified During FY01 Only..... 149 531 579 9.1 6.0
Reclassified During FY00 Only..... 131 553 546 -1.2 -3.1
FY01 Reclassifications:
All Reclassified Hospitals........ 526 543 571 5.2 2.0
All Nonreclassified Hospitals..... 4,268 654 679 3.8 0.3
All Urban Reclassified Hospitals.. 88 701 746 6.3 2.3
Urban Nonreclassified Hospitals... 2,559 696 720 3.5 0.0
All Reclassified Rural Hospitals.. 438 488 510 4.7 1.9
Rural Nonreclassified Hospitals... 1,681 386 404 4.6 1.0
Other Reclassified Hospitals (Section 26 463 473 2.1 0.7
1886(D)(8)(B)).......................
Type of Ownership:
Voluntary............................. 2,520 655 680 3.7 0.3
Proprietary........................... 655 626 643 2.6 -0.1
Government............................ 1,093 576 602 4.5 0.6
Medicare Utilization as a Percent of
Inpatient Days:
0-25.................................. 369 801 838 4.7 0.1
25-50................................. 1,820 736 763 3.7 0.0
50-65................................. 1,882 568 590 3.8 0.6
Over 65............................... 688 512 528 3.2 0.7
----------------------------------------------------------------------------------------------------------------
Appendix B: Technical Appendix on the Capital Cost Model and Required
Adjustments
Under section 1886(g)(1)(A) of the Act, we set capital
prospective payment rates for FY 1992 through FY 1995 so that
aggregate prospective payments for capital costs were projected to
be 10 percent lower than the amount that would have been payable on
a reasonable cost basis for capital-related costs in that year. To
implement this requirement, we developed the capital acquisition
model to determine the budget neutrality adjustment factor. Even
though the budget neutrality requirement expired effective with FY
1996, we must continue to determine the recalibration and geographic
reclassification budget neutrality adjustment factor and the
reduction in the Federal and hospital-specific rates for exceptions
payments.
To determine these factors, we must continue to project capital
costs and payments.
We used the capital acquisition model from the start of
prospective payments for capital costs through FY 1997. We now have
7 years of cost reports under the capital prospective payment
system. For FY 1998, we developed a new capital cost model to
replace the capital acquisition model. This revised model makes use
of the data from these cost reports.
The following cost reports are used in the capital cost model
for this final rule: the March 31, 2000 update of the cost reports
for
[[Page 47205]]
PPS-IX (cost reporting periods beginning in FY 1992), PPS-X (cost
reporting periods beginning in FY 1993), PPS-XI (cost reporting
periods beginning in FY 1994), PPS-XII (cost reporting periods
beginning in FY 1995), PPS-XIII (cost reporting periods beginning in
FY 1996), PPS-XIV (cost reporting periods beginning in FY 1997), and
PPS-XV (cost reporting periods beginning in FY 1998). In addition,
to model payments, we use the April 1, 2000 update of the provider-
specific file, and the March 1994 update of the intermediary audit
file.
Since hospitals under alternative payment system waivers (that
is, hospitals in Maryland) are currently excluded from the capital
prospective payment system, we excluded these hospitals from our
model.
We developed FY 1992 through FY 2000 hospital-specific rates
using the provider-specific file and the intermediary audit file.
(We used the cumulative provider-specific file, which includes all
updates to each hospital's records, and chose the latest record for
each fiscal year.) We checked the consistency between the provider-
specific file and the intermediary audit file. We ensured that
increases in the hospital-specific rates were at least as large as
the published updates (increases) for the hospital-specific rates
each year. We were able to match hospitals to the files as shown in
the following table:
------------------------------------------------------------------------
Number of
Source hospitals
------------------------------------------------------------------------
Provider-Specific File Only................................ 173
Provider-Specific and Audit File........................... 4,715
------------
Total.................................................. 4,888
------------------------------------------------------------------------
One hundred forty-three of the 4,888 hospitals had unusable or
missing data, or had no cost reports available. For 42 of the 143
hospitals, we were unable to determine a hospital-specific rate from
the available cost reports. However, there was adequate cost
information to determine that these hospitals were paid under the
hold-harmless methodology. Since the hospital-specific rate is not
used to determine payments for hospitals paid under the hold-
harmless methodology, there was sufficient cost report information
available to include these 42 hospitals in the analysis. We were
able to estimate hospital-specific amounts for five additional
hospitals from the cost reports as shown in the following table:
------------------------------------------------------------------------
Number of
Cost report hospitals
------------------------------------------------------------------------
PPS-9...................................................... 1
PPS-12..................................................... 2
PPS-14..................................................... 1
PPS-15..................................................... 1
------------
Total.................................................. 5
------------------------------------------------------------------------
Hence we were able to use 47 of the 143 hospitals. We used 4,792
hospitals for the analysis. Ninety-six hospitals could not be used
in the analysis because of insufficient information. These hospitals
account for less than 0.5 percent of admissions. Therefore, any
effects from the elimination of their cost report data should be
minimal.
We analyzed changes in capital-related costs (depreciation,
interest, rent, leases, insurance, and taxes) reported in the cost
reports. We found a wide variance among hospitals in the growth of
these costs. For hospitals with more than 100 beds, the distribution
and mean of these cost increases were different for large changes in
bed-size (greater than 20 percent). We also analyzed
changes in the growth in old capital and new capital for cost
reports that provided this information. For old capital, we limited
the analysis to decreases in old capital. We did this since the
opportunity for most hospitals to treat ``obligated'' capital put
into service as old capital has expired. Old capital costs should
decrease as assets become fully depreciated and as interest costs
decrease as the loan is amortized.
The new capital cost model separates the hospitals into three
mutually exclusive groups. Hold-harmless hospitals with data on old
capital were placed in the first group. Of the remaining hospitals,
those hospitals with fewer than 100 beds comprise the second group.
The third group consists of all hospitals that did not fit into
either of the first two groups. Each of these groups displayed
unique patterns of growth in capital costs. We found that the gamma
distribution is useful in explaining and describing the patterns of
increase in capital costs. A gamma distribution is a statistical
distribution that can be used to describe patterns of growth rates,
with the greatest proportion of rates being at the low end. We use
the gamma distribution to estimate individual hospital rates of
increase as follows:
(1) For hold-harmless hospitals, old capital cost changes were
fitted to a truncated gamma distribution, that is, a gamma
distribution covering only the distribution of cost decreases. New
capital costs changes were fitted to the entire gamma distribution,
allowing for both decreases and increases.
(2) For hospitals with fewer than 100 beds (small), total
capital cost changes were fitted to the gamma distribution, allowing
for both decreases and increases.
(3) Other (large) hospitals were further separated into three
groups:
Bed-size decreases over 20 percent (decrease).
Bed-size increases over 20 percent (increase).
Other (no change).
Capital cost changes for large hospitals were fitted to gamma
distributions for each bed-size change group, allowing for both
decreases and increases in capital costs. We analyzed the
probability distribution of increases and decreases in bed size for
large hospitals. We found the probability somewhat dependent on the
prior year change in bed size and factored this dependence into the
analysis. Probabilities of bed-size change were determined. Separate
sets of probability factors were calculated to reflect the
dependence on prior year change in bed size (increase, decrease, and
no change).
The gamma distributions were fitted to changes in aggregate
capital costs for the entire hospital. We checked the relationship
between aggregate costs and Medicare per discharge costs. For large
hospitals, there was a small variance, but the variance was larger
for small hospitals. Since costs are used only for the hold-harmless
methodology and to determine exceptions, we decided to use the gamma
distributions fitted to aggregate cost increases for estimating
distributions of cost per discharge increases.
Capital costs per discharge calculated from the cost reports
were increased by random numbers drawn from the gamma distribution
to project costs in future years. Old and new capital were projected
separately for hold-harmless hospitals. Aggregate capital per
discharge costs were projected for all other hospitals. Because the
distribution of increases in capital costs varies with changes in
bed size for large hospitals, we first projected changes in bed size
for large hospitals before drawing random numbers from the gamma
distribution. Bed-size changes were drawn from the uniform
distribution with the probabilities dependent on the previous year
bed-size change. The gamma distribution has a shape parameter and a
scaling parameter. (We used different parameters for each hospital
group, and for old and new capital.)
We used discharge counts from the cost reports to calculate
capital cost per discharge. To estimate total capital costs for FY
1999 (the MedPAR data year) and later, we use the number of
discharges from the MedPAR data. Some hospitals had considerably
more discharges in FY 1999 than in the years for which we calculated
cost per discharge from the cost report data. Consequently, a
hospital with few cost report discharges would have a high capital
cost per discharge, since fixed costs would be allocated over only a
few discharges. If discharges increase substantially, the cost per
discharge would decrease because fixed costs would be allocated over
more discharges. If the projection of capital cost per discharge is
not adjusted for increases in discharges, the projection of
exceptions would be overstated. We address this situation by
recalculating the cost per discharge with the MedPAR discharges if
the MedPAR discharges exceed the cost report discharges by more than
20 percent. We do not adjust for increases of less than 20 percent
because we have not received all of the FY 1999 discharges, and we
have removed some discharges from the analysis because they are
statistical outliers. This adjustment reduces our estimate of
exceptions payments, and consequently, the reduction to the Federal
rate for exceptions is smaller. We will continue to monitor our
modeling of exceptions payments and make adjustments as needed.
The average national capital cost per discharge generated by
this model is the combined average of many randomly generated
increases. This average must equal the projected average national
capital cost per discharge, which we projected separately (outside
this model). We adjusted the shape parameter of the gamma
distributions so that the modeled average capital cost per discharge
matches our projected capital cost per discharge. The shape
parameter for old capital was not adjusted since we are
[[Page 47206]]
modeling the aging of ``existing'' assets. This model provides a
distribution of capital costs among hospitals that is consistent
with our aggregate capital projections.
Once each hospital's capital-related costs are generated, the
model projects capital payments. We use the actual payment
parameters (for example, the case-mix index and the geographic
adjustment factor) that are applicable to the specific hospital.
To project capital payments, the model first assigns the
applicable payment methodology (fully prospective or hold-harmless)
to the hospital as determined from the provider-specific file and
the cost reports. The model simulates Federal rate payments using
the assigned payment parameters and hospital-specific estimated
outlier payments. The case-mix index for a hospital is derived from
the FY 1999 MedPAR file using the FY 2001 DRG relative weights
included in section VI. of the Addendum to this final rule. The
case-mix index is increased each year after FY 1999 based on
analysis of past experiences in case-mix increases. Based on
analysis of recent case-mix increases, we estimate that case-mix
will increase 0.0 percent in FY 2000. We project that case-mix will
increase 0.0 percent in FY 2001. (Since we are using FY 1999 cases
for our analysis, the FY 1999 increase in case-mix has no effect on
projected capital payments.)
Changes in geographic classification and revisions to the
hospital wage data used to establish the hospital wage index affect
the geographic adjustment factor. Changes in the DRG classification
system and the relative weights affect the case-mix index.
Section 412.308(c)(4)(ii) requires that the estimated aggregate
payments for the fiscal year, based on the Federal rate after any
changes resulting from DRG reclassifications and recalibration and
the geographic adjustment factor, equal the estimated aggregate
payments based on the Federal rate that would have been made without
such changes. For FY 2000, the budget neutrality adjustment factors
were 1.00142 for the national rate and 1.00134 for the Puerto Rico
rate.
Since we implemented a separate geographic adjustment factor for
Puerto Rico, we applied separate budget neutrality adjustments for
the national geographic adjustment factor and the Puerto Rico
geographic adjustment factor. We applied the same budget neutrality
factor for DRG reclassifications and recalibration nationally and
for Puerto Rico. Separate adjustments were unnecessary for FY 1998
and earlier since the geographic adjustment factor for Puerto Rico
was implemented in FY 1998.
To determine the factors for FY 2001, we first determined the
portions of the Federal national and Puerto Rico rates that would be
paid for each hospital in FY 2001 based on its applicable payment
methodology. Using our model, we then compared, separately for the
national rate and the Puerto Rico rate, estimated aggregate Federal
rate payments based on the FY 2000 DRG relative weights and the FY
2000 geographic adjustment factor to estimated aggregate Federal
rate payments based on the FY 2000 relative weights and the FY 2001
geographic adjustment factor. In making the comparison, we held the
FY 2001 Federal rate portion constant and set the other budget
neutrality adjustment factor and the exceptions reduction factor to
1.00. To achieve budget neutrality for the changes in the national
geographic adjustment factor, we applied an incremental budget
neutrality adjustment of 0.99782 for FY 2001 to the previous
cumulative FY 2000 adjustment of 1.00142, yielding a cumulative
adjustment of 0.99924 through FY 2001. For the Puerto Rico
geographic adjustment factor, we applied an incremental budget
neutrality adjustment of 1.00365 for FY 2001 to the previous
cumulative FY 2000 adjustment of 1.00134, yielding a cumulative
adjustment of 1.00499 through FY 2001. We then compared estimated
aggregate Federal rate payments based on the FY 2000 DRG relative
weights and the FY 2001 geographic adjustment factors to estimated
aggregate Federal rate payments based on the FY 2001 DRG relative
weights and the FY 2001 geographic adjustment factors. The
incremental adjustment for DRG classifications and changes in
relative weights would be 1.00009 nationally and for Puerto Rico.
The cumulative adjustments for DRG classifications and changes in
relative weights and for changes in the geographic adjustment
factors through FY 2001 would be 0.99933 nationally and 1.00508 for
Puerto Rico. The following table summarizes the adjustment factors
for each fiscal year:
Budget Neutrality Adjustment for DRG Reclassifications and Recalibration and the Geographic Adjustment Factors
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Puerto Rico
-------------------------------------------------------------------------------------------------------------------
Incremental adjustment Incremental adjustment
Fiscal year --------------------------------------------- ---------------------------------------------
Geographic DRG Cumulative Geographic DRG Cumulative
adjustment reclassifications Combined adjustment reclassifications Combined
factor and recalibration factor and recalibration
--------------------------------------------------------------------------------------------------------------------------------------------------------
1992................................ ........... ................. ........... 1.00000 ........... ................. ........... ...........
1993................................ ........... ................. 0.99800 0.99800 ........... ................. ........... ...........
1994................................ ........... ................. 1.00531 1.00330 ........... ................. ........... ...........
1995................................ ........... ................. 0.99980 1.00310 ........... ................. ........... ...........
1996................................ ........... ................. 0.99940 1.00250 ........... ................. ........... ...........
1997................................ ........... ................. 0.99873 1.00123 ........... ................. ........... ...........
1998................................ ........... ................. 0.99892 1.00015 ........... ................. ........... 1.00000
1999................................ 0.99944 1.00335 1.00279 1.00294 0.99898 1.00335 1.00233 1.00233
2000................................ 0.99857 0.99991 0.99848 1.00142 0.99910 0.99991 0.99901 1.00134
2001................................ 0.99782 1.00009 0.99791 0.99933 1.00365 1.00009 1.00374 1.00508
--------------------------------------------------------------------------------------------------------------------------------------------------------
The methodology used to determine the recalibration and
geographic (DRG/GAF) budget neutrality adjustment factor is similar
to that used in establishing budget neutrality adjustments under the
prospective payment system for operating costs. One difference is
that, under the operating prospective payment system, the budget
neutrality adjustments for the effect of geographic
reclassifications are determined separately from the effects of
other changes in the hospital wage index and the DRG relative
weights. Under the capital prospective payment system, there is a
single DRG/GAF budget neutrality adjustment factor (the national
rate and the Puerto Rico rate are determined separately) for changes
in the geographic adjustment factor (including geographic
reclassification) and the DRG relative weights. In addition, there
is no adjustment for the effects that geographic reclassification
has on the other payment parameters, such as the payments for
serving low-income patients or the large urban add-on payments.
In addition to computing the DRG/GAF budget neutrality
adjustment factor, we used the model to simulate total payments
under the prospective payment system.
Additional payments under the exceptions process are accounted
for through a reduction in the Federal and hospital-specific rates.
Therefore, we used the model to calculate the exceptions reduction
factor. This exceptions reduction factor ensures that aggregate
payments under the capital prospective payment system, including
exceptions payments, are projected to equal the aggregate payments
that would have been made under the capital prospective payment
system without an exceptions process. Since changes in the level of
the payment rates change the level of payments under the exceptions
process, the exceptions reduction factor must be determined through
iteration.
In the August 30, 1991 final rule (56 FR 43517), we indicated
that we would publish each year the estimated payment factors
[[Page 47207]]
generated by the model to determine payments for the next 5 years.
The table below provides the actual factors for FYs 1992 through
2000, the final factors for FY 2001, and the estimated factors that
would be applicable through FY 2005. We caution that these are
estimates for FYs 2002 and later, and are subject to revisions
resulting from continued methodological refinements, receipt of
additional data, and changes in payment policy. We note that in
making these projections, we have assumed that the cumulative
national DRG/GAF budget neutrality adjustment factor will remain at
0.99933 (1.00508 for Puerto Rico) for FY 2001 and later because we
do not have sufficient information to estimate the change that will
occur in the factor for years after FY 2001.
The projections are as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal
Update Exceptions Budget DRG/GAF Outlier Federal rate (after
Fiscal year factor reduction neutrality adjustment adjustment rate outlier
factor factor factor \1\ factor adjustment reduction)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1992......................................................... N/A 0.9813 0.9602 ........... .9497 ........... 415.59
1993......................................................... 6.07 .9756 .9162 .9980 .9496 ........... 417.29
1994......................................................... 3.04 .9485 .8947 1.0053 .9454 \2\ .9260 378.34
1995......................................................... 3.44 .9734 .8432 .9998 .9414 ........... 376.83
1996......................................................... 1.20 .9849 N/A .9994 .9536 \3\ .9972 461.96
1997......................................................... 0.70 .9358 N/A .9987 .9481 ........... 438.92
1998......................................................... 0.90 .9659 N/A .9989 .9382 \4\ .8222 371.51
1999......................................................... 0.10 .9783 N/A 1.0028 .9392 ........... 378.10
2000......................................................... 0.30 .9730 N/A .9985 .9402 ........... 377.03
2001......................................................... 0.90 .9785 N/A .9979 .9409 ........... 382.03
2002......................................................... 0.90 \6\ 1.0000 N/A \5\ 1.0000 \5\ .9409 ........... 393.94
2003......................................................... 0.90 \6\ 1.0000 N/A 1.0000 .9409 \4\ 1.0255 407.64
2004......................................................... 0.80 \6\ 1.0000 N/A 1.0000 .9409 ........... 410.90
2005......................................................... 0.90 \6\ 1.0000 N/A 1.0000 .9409 ........... 414.60
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Note: The incremental change over the previous year.
\2\ Note: OBRA 1993 adjustment.
\3\ Note: Adjustment for change in the transfer policy.
\4\ Note: Balanced Budget Act of 1997 adjustment.
\5\ Note: Future adjustments are, for purposes of this projection, assumed to remain at the same level.
\6\ Note: We are unable to estimate exceptions payments for the year under the special exceptions provision (Sec. 412.348(g) of the regulations)
because the regular exceptions provision (Sec. 412.348(e)) expires.
Appendix C: Recommendation of Update Factors for Operating Cost Rates
of Payment for Inpatient Hospital Services
I. Background
Several provisions of the Act address the setting of update
factors for inpatient services furnished in FY 2001 by hospitals
subject to the prospective payment system and by hospitals or units
excluded from the prospective payment system. Section
1886(b)(3)(B)(i)(XVI) of the Act sets the FY 2001 percentage
increase in the operating cost standardized amounts equal to the
rate of increase in the hospital market basket minus 1.1 percent for
prospective payment hospitals in all areas. Section
1886(b)(3)(B)(iv) of the Act sets the FY 2001 percentage increase in
the hospital-specific rates applicable to sole community and
Medicare-dependent, small rural hospitals equal to the rate set
forth in section 1886(b)(3)(B)(i) of the Act. For Medicare-
dependent, small rural hospitals, the percentage increase is the
same update factor as all other hospitals subject to the prospective
payment system, or the rate of increase in the market basket minus
1.1 percentage points. Section 406 of Public Law 106-113 amended
section 1886(b)(3)(B)(i) of the Act to provide that, for sole
community hospitals, the rate of increase for FY 2001 is equal to
the market basket percentage increase.
Under section 1886(b)(3)(B)(ii) of the Act, the FY 2001
percentage increase in the rate-of-increase limits for hospitals and
units excluded from the prospective payment system ranges from the
percentage increase in the excluded hospital market basket less a
percentage between 0 and 2.5 percentage points, depending on the
hospital's or unit's costs in relation to its limit for the most
recent cost reporting period for which information is available, or
0 percentage point if costs do not exceed two-thirds of the limit.
In accordance with section 1886(d)(3)(A) of the Act, we are
updating the standardized amounts, the hospital-specific rates, and
the rate-of-increase limits for hospitals and units excluded from
the prospective payment system as provided in section 1886(b)(3)(B)
of the Act. Based on the second quarter 2000 forecast of the FY 2001
market basket increase of 3.4 percent for hospitals and units
subject to the prospective payment system, the update to the
standardized amounts is 2.3 percent (that is, the market basket rate
of increase minus 1.1 percent percentage points) for hospitals in
both large urban and other areas. The update to the hospital-
specific rate applicable to Medicare-dependent, small rural
hospitals is also 2.3 percent. The update to the hospital-specific
rate applicable to sole community hospitals is 3.4 percent. The
update for hospitals and units excluded from the prospective payment
system can range from the percentage increase in the excluded
hospital market basket (currently estimated at 3.4 percent) minus a
percentage between 0 and 2.5 percentage points, or 0 percentage
point, resulting in an increase in the rate-of-increase limit
between 0.9 and 3.4 percent, or zero percent (see section V of the
Addendum of this final rule).
Section 1886(e)(4) of the Act requires that the Secretary,
taking into consideration the recommendations of the Medicare
Payment Advisory Commission (MedPAC), recommend update factors for
each fiscal year that take into account the amounts necessary for
the efficient and effective delivery of medically appropriate and
necessary care of high quality. Under section 1886(e)(5) of the Act,
we are required to publish the update factors recommended under
section 1886(e)(4) of the Act. Accordingly, we published the FY 2001
update factors recommended by the Secretary in Appendix D of the May
5, 2000 proposed rule (65 FR 26434). In its March 1, 2000 report,
MedPAC did not make a specific update recommendation for FY 2001
payments for Medicare acute inpatient hospitals. However, in its
June 1, 2000 report, which was issued after the May 5, 2000 proposed
rule, MedPAC recommended a combined operating and capital update for
hospital inpatient prospective payment system payments for FY 2001.
We describe the basis of our FY 2001 update recommendation in
Appendix D of the May 5, 2000 proposed rule at 65 FR 26434. Our
responses to the MedPAC recommendations concerning the update
factors for FY 2001 are discussed below in section II of this
Appendix.
II. Secretary's Recommendations
Under section 1886(e)(4) of the Act, in the May 5, 2000 proposed
rule, we recommended that an appropriate update factor for the
standardized amounts was 2.0 percentage points for hospitals located
in large urban and other areas. We also recommended an update of 2.0
percentage points to the hospital-specific rate for Medicare-
dependent, small rural hospitals. In addition, we recommended an
update of 3.1 percentage points to the hospital-specific rate for
sole community hospitals. We believed these recommended update
factors would ensure that Medicare acts as a prudent purchaser and
provide incentives to hospitals for increased efficiency, thereby
contributing to the solvency of the Medicare Part A Trust Fund.
Also in the proposed rule, we recommended that hospitals
excluded from the prospective payment system receive an update of
between 0.6 and 3.1 percentage
[[Page 47208]]
points, or zero percentage points. The update for excluded hospitals
and units is equal to the increase in the excluded hospital
operating market basket less a percentage between 0 and 2.5
percentage points, or 0 percentage points, depending on the
hospital's or unit's costs in relation to its rate-of-increase limit
for the most recent cost reporting period for which information is
available. For the proposed rule, the market basket rate of increase
for excluded hospitals and units was forecast at 3.1 percent.
III. MedPAC Recommendations for Updating the Prospective Payment System
Operating Standardized Amounts
In its June 2000 Report to Congress, MedPAC presented a combined
operating and capital update for hospital inpatient prospective
payment system payments for FY 2001 and recommended that Congress
implement a single combined (operating and capital) prospective
payment system rate. With the end of the transition to fully
prospective capital payments ending with FY 2001, both operating and
capital prospective system payments will be made using standard
Federal rates adjusted by hospital specific payment variables.
Currently, section 1886(b)(3)(B)(i)(XVI) of the Act sets forth the
FY 2001 percentage increase in the prospective payment system
operating cost standardized amounts. The prospective payment system
capital update is set under the framework established by the
Secretary outlined in Sec. 412.308(c)(1).
For FY 2001, MedPAC's update framework supports a combined
operating and capital update for hospital inpatient prospective
payment system payments of 3.5 percent to 4.0 percent (or between
the increase in the combined operating and capital market basket
plus 0.6 percentage points and the increase in the combined
operating and capital market basket plus 1.1 percentage points).
MedPAC also notes that while the number of hospitals with negative
inpatient hospital margins have increased in FY 1998 (most likely as
the result of the implementation of Public Law 105-33), overall high
inpatient Medicare margins generally offset hospital losses on other
lines of Medicare services. MedPAC continues to project positive
(greater than 11 percentage points) Medicare inpatient hospital
margins through FY 2002.
MedPAC's FY 2001 combined operating and capital update framework
uses a weighted average of HCFA's forecasts of the operating
(prospective payment system input price index) and capital (CIPI)
market baskets. This combined market basket was used to develop an
estimate of the change in overall operating and capital prices.
MedPAC calculated a combined market basket forecast by weighting the
operating market basket forecast by 0.92 and the capital market
basket forecast by 0.08, since operating costs are estimated to
represent 92 percent of total hospital costs (capital costs are
estimated to represent the remaining 8 percent of total hospital
costs). MedPAC's combined market basket for FY 2001 is estimated to
increase by 2.9 percent, based on HCFA's March 2000 forecasted
operating market basket increase of 3.1 percent and HCFA's March
2000 forecasted capital market basket increase of 0.9 percent.
Response: As we stated in the May 5, 2000 proposed rule (65 FR
26317), we responded to a similar comment in the July 30, 1999 final
rule (64 FR 41552), the July 31, 1998 final rule (63 FR 41013), and
the September 1, 1995 final rule (60 FR 45816). In those rules, we
stated that our long-term goal was to develop a single update
framework for operating and capital prospective payments. However,
we have not yet developed such a single framework as the actual
operating system update has been determined by Congress through FY
2002. In the meantime, we intend to maintain as much consistency as
possible with the current operating framework in order to facilitate
the eventual development of a unified framework. We maintain our
goal of combining the update frameworks at the end of the 10-year
capital transition period (the end of FY 2001) and may examine
combining the payment systems post-transition. Because of the
similarity of the update frameworks, we believe that they could be
combined with little difficulty.
The update framework analysis is a largely empirical process
carried out by HCFA that quantifies changes in the hospital
productivity, scientific and technological advances, practice
pattern changes, hospital case mix, the effects of reclassification
on recalibration, and forecast error correction. The update
framework suggests an update for the prospective payment system
operating standardized amounts ranging from of 2.4 percent (market
basket minus 1 percent) to 2.9 percent (market basket minus 0.5
percent) is supported by the analyses outlined below.
A. Productivity
Service level productivity is defined as the ratio of total
service output to full-time equivalent employees (FTEs). While we
recognize that productivity is a function of many variables (for
example, labor, nonlabor material, and capital inputs), we use a
labor productivity measure since this update framework applies to
operating payment. To recognize that we are apportioning the short-
run output changes to the labor input and not considering the
nonlabor inputs, we weight our productivity measure for operating
costs by the share of direct labor services in the market basket to
determine the expected effect on cost per case.
Our recommendation for the service productivity component is
based on historical trends in productivity and total output for both
the hospital industry and the general economy, and projected levels
of future hospital service output. MedPAC's predecessor, the
Prospective Payment Assessment Commission (ProPAC), estimated
cumulative service productivity growth to be 4.9 percent from 1985
through 1989, or 1.2 percent annually. At the same time, ProPAC
estimated total output growth at 3.4 percent annually, implying a
ratio of service productivity growth to output growth of 0.35.
As stated in the proposed rule, since it was not possible at
that time to develop a productivity measure specific to Medicare
patients, we examined productivity (output per hour) and output
(gross domestic product) for the economy. Depending on the exact
time period, annual changes in productivity range from 0.3 to 0.35
percent of the change in output (that is, a 1.0 percent increase in
output would be correlated with a 0.3 to 0.35 percent change in
output per hour).
Under our framework, the recommended update is based in part on
expected productivity--that is, projected service output during the
year, multiplied by the historical ratio of service productivity to
total service output, multiplied by the share of labor in total
operating inputs, as calculated in the hospital market basket. This
method estimates an expected labor productivity improvement in the
same proportion to expected total service growth that has occurred
in the past and assumes that, at a minimum, growth in FTEs changes
proportionally to the growth in total service output. Thus, the
recommendation allows for unit productivity to be smaller than the
historical averages in years that output growth is relatively low
and larger in years that output growth is higher than the historical
averages. Based on the above estimates from both the hospital
industry and the economy, we have chosen to employ the range of
ratios of productivity change to output change of 0.30 to 0.35.
The expected change in total hospital service output is the
product of projected growth in total admissions (adjusted for
outpatient usage), projected real case-mix growth, expected quality-
enhancing intensity growth, and net of expected decline in intensity
due to reduction of cost-ineffective practice. Case-mix growth and
intensity numbers for Medicare are used as proxies for those of the
total hospital, since case-mix increases (used in the intensity
measure as well) are unavailable for non-Medicare patients. Thus,
expected output growth is simply the sum of the expected change in
intensity (0.0 percent), projected admissions change (1.6 percent
for FY 2001), and projected real case-mix growth (0.5 percent), or
2.1 percent. The share of direct labor services in the market basket
(consisting of wages, salaries, and employee benefits) is 61.4
percent.
Multiplying the expected change in total hospital service output
(2.1 percent) by the ratio of historical service productivity change
to total service growth of 0.30 to 0.35 and by the direct labor
share percentage 61.4, provides our productivity standard of -0.5 to
-0.4 percent. In past years, MedPAC made an adjustment for
productivity improvement to reflect the level of improvement in the
production of health care services, without affecting the quality of
those services. Typically, MedPAC made a downward adjustment in
their framework to reflect expected improvements in hospital
productivity. In their FY 2001 combined update framework, MedPAC did
not make an adjustment for productivity. Instead, MedPAC believes
that the costs associated with scientific and technological advances
should be financed partially through improvements in hospital
productivity. As a result, MedPAC offset its adjustment for
scientific and technological advances by a fixed standard of
expected productivity
[[Page 47209]]
growth of 0.5 percent for FY 2001. Our productivity adjustment of -
0.5 to -0.4 percent is within the range of MedPAC's fixed standard
of expected productivity growth of 0.5 percent used to offset its
scientific and technological advances adjustment for FY 2001.
B. Intensity
We base our intensity standard on the combined effect of three
separate factors: changes in the use of quality enhancing services,
changes in the use of services due to shifts in within-DRG severity,
and changes in the use of services due to reductions of cost-
ineffective practices. For FY 2001, we recommended an adjustment of
0.0 percent. The basis of this recommendation is discussed below. We
have no empirical evidence that accurately gauges the level of
quality-enhancing technology changes. A study published in the
Winter 1992 issue of the Health Care Financing Review,
``Contributions of case mix and intensity change to hospital cost
increases'' (pp. 151-163), suggests that one-third of the intensity
change is attributable to high-cost technology. The balance was
unexplained but the authors speculated that it is attributable to
fixed costs in service delivery.
Typically, a specific new technology increases cost in some uses
and decreases cost in others. Concurrently, health status is
improved in some situations while in other situations it may be
unaffected or even worsened using the same technology. It is
difficult to separate out the relative significance of each of the
cost-increasing effects for individual technologies and new
technologies.
Other things being equal, per-discharge fixed costs tend to
fluctuate in inverse proportion to changes in volume. Fixed costs
exist whether patients are treated or not. If volume is declining,
per-discharge fixed costs will rise, but the reverse is true if
volume is increasing.
Following methods developed by HCFA's Office of the Actuary for
deriving hospital output estimates from total hospital charges, we
have developed Medicare-specific intensity measures based on a 5-
year average using FYs 1995 through 1999 MedPAR billing data. Case-
mix constant intensity is calculated as the change in total Medicare
charges per discharge adjusted for changes in the average charge per
unit of service as measured by the CPI for hospital and related
services and changes in real case-mix. Thus, in order to measure
changes in intensity, one must measure changes in real case-mix.
For FYs 1995 through 1999, observed case-mix index change ranged
from a low of -0.3 percent to a high of 1.7 percent, with a 5-year
average change of 0.6 percent. Based on evidence from past studies
of case-mix change, we estimate that real case-mix change fluctuates
between 1.0 and 1.4 percent and the observed values generally fall
in this range, although some years the figures fall outside this
range. The average percentage change in charge per discharge was 3.6
percent and the average annual change in the CPI for hospital and
related services was 4.1 percent. Dividing the change in charge per
discharge by the quantity of the real case-mix index change and the
CPI for hospital and related services yields an average annual
change in intensity of -1.9 percent. Assuming the technology/fixed
cost ratio still holds (.33), technology would account for a -0.6
percent annual decline while fixed costs would account for a -1.3
percent annual decline. The decline in fixed costs per discharge
makes intuitive sense as volume, measured by total discharges, has
increased during the period. In the past, we have not recommended a
negative intensity adjustment. Although we did not recommend a
negative adjustment for FY 2001, we reflected the possible range
that such a negative adjustment could span, based on our analysis.
Accordingly, for FY 2001, we recommended an intensity adjustment
between 0 percent and -0.6 percent.
MedPAC does not make an adjustment for intensity per se, but its
combined update recommendation for FY 2001 includes two categories
that we consider to be comparable with our intensity recommendation.
MedPAC is recommending a 0.0 to 0.5 percent update for scientific
and technological advances to account for anticipated uses of
emerging technologies that enhance the quality of hospital services,
but increase costs of hospital care. The Commission recognized an
allowance for science and technological advances of 0.5 percent to
1.0 percent. However, with their productivity offset of 0.5 percent,
MedPAC's combined FY 2001 adjustment for science and technological
advances is 0.0 percent to 0.5 percent.
MedPAC's recommendation also takes into account the increasingly
apparent trend of some acute care providers to shift care to a post
acute care facility. While this can occur for many reasons and the
shifting of costs may maintain or improve quality of care for
Medicare beneficiaries, it leads to a redistribution of payments and
reduces the resources available for acute care providers to pay for
services to other Medicare beneficiaries. In the past two years,
MedPAC recommended a negative adjustment for site-of-care
substitution or unbundling of the payment unit. However, in light of
the financial pressures in the hospital industry during FYs 1998-
1999 since the implementation of Public Law 105-33, MedPAC
recommends a 0.0 percent adjustment for site-of-care substitution
for FY 2001. We agree with MedPAC that the site-of-care substitution
effect is real and that it is accounted for by our intensity
recommendation.
C. Change in Case-Mix
Our analysis takes into account projected changes in case-mix,
adjusted for changes attributable to improved coding practices. For
our FY 2001 update recommendation, we projected a 0.5 percent
increase in the case-mix index. We defined real case-mix as actual
changes in the mix (and resource requirements) of Medicare patients
as opposed to changes in coding behavior that results in assignment
of cases to higher weighted DRGs, but do not reflect greater
resource requirements. Unlike in past years, where we differentiated
between ``real'' case-mix increase and increases attributable to
changes in coding behavior, we do not feel changes in coding
behavior will impact the overall case-mix in FY 2001. As such, for
FY 2001, we estimate that real case-mix is equal to projected change
in case-mix. Thus, we recommended a 0.0 adjustment for case-mix.
MedPAC's analysis indicates that coding change has reduced case-
mix index growth. In the past, MedPAC has recommended a negative
adjustment when DRG coding changes has led to case-mix index growth.
However, MedPAC now believes that it is appropriate to include a
positive adjustment for DRG coding change in the FY 2001 update and
recommends a combined adjustment of 0.5 percent.
MedPAC also makes an adjustment for within DRG severity. In past
years, MedPAC has included an adjustment for increased case
complexity not captured by the DRG classification system. The
Commission recognizes that as the DRG system adjusts, it should
account for more of the variation in costs by DRG assignment,
leaving less within-DRG variation in case complexity and costliness.
Therefore, MedPAC recommended a combined adjustment of 0.0 for FY
2001. As a result, for FY 2001, MedPAC recommends a total combined
case-mix adjustment of 0.5 percent.
D. Effect of FY 1999 DRG Reclassification and Recalibration
We estimate that DRG reclassification and recalibration for FY
1999 resulted in a 0.0 percent change in the case-mix index when
compared with the case-mix index that would have resulted if we had
not made the reclassification and recalibration changes to the
GROUPER.
E. Forecast Error Correction
We make a forecast error correction if the actual market basket
changes differ from the forecasted market basket by 0.25 percentage
points or more. There is a 2-year lag between the forecast and the
measurement of forecast error. Our proposed update framework for FY
2001 did not reflect a forecast error correction because, for FY
1999, there was less than a 0.25 percentage point difference between
the actual market basket and the forecasted market basket.
MedPAC also made a recommendation in its FY 2001 combined update
framework to adjust for any error in the market basket forecasts
used to set FY 1999 payment rates.
MedPAC recommended a combined adjustment for FY 1999 forecast
error correction of 0.1 percent. However, they noted that this
forecast error adjustment is a result of the difference between the
forecasted FY 1999 operating market basket of 2.4 percent and the
actual FY 1999 operating market basket increase of 2.5 percent. The
FY 1999 capital market basket forecast was equal to the actual
observed increase of 0.7 percent for capital costs. Therefore, we
have included MedPAC's entire 0.1 percent adjustment for FY 1999
forecast error correction in the comparison of MedPAC and HCFA's
update recommendations for FY 2001 shown below in Table 1.
F. One Time Factors
MedPAC includes an adjustment for one-time factors in its update
framework to
[[Page 47210]]
account for significant costs incurred by hospitals for unusual
nonrecurring events. While MedPAC's update framework has not
explicitly considered such costs in the past, the Commission
believes Medicare should aid hospitals when incurring systematic and
substantial one-time costs will improve care for Medicare
beneficiaries. For its FY 2001 update recommendation, MedPAC
considered the costs of year 2000 improvements and the costs of
major new regulatory requirements. The Commission did not recommend
any additional allowance for these costs for FY 2001. Accordingly,
MedPAC recommended a 0.0 percent combined adjustment for one-time
factors in their update framework for FY 2001.
HCFA's update framework does not include an adjustment for one-
time factors. As we mentioned in last year's proposed rule, higher
input prices that hospitals incur to convert computer systems to be
compliant on January 1, 2000, were accounted for through the market
basket percentage increase.
Table 1.--Comparison of FY 2001 Update Recommendations
----------------------------------------------------------------------------------------------------------------
HCFA MedPAC
----------------------------------------------------------------------------------------------------------------
Market basket......................... MB MB\1\
----------------------------------------------------------------------------------------------------------------
Policy Adjustment Factors
----------------------------------------------------------------------------------------------------------------
Productivity.......................... -0.5 to -0.4 (\2\)
Site-Of-Service Substitution.......... (\3\) 0.0
Intensity............................. 0.0 to -0.6 ...................................
Science & Technology.................. ................................... 0.0 to 0.5
Practice Patterns..................... ................................... (\4\)
Real Within DRG Change................ ................................... (\5\)
-------------------------------------------------------------------------
Subtotal...................... -0.5 to -1.0 0.0 to 0.5
----------------------------------------------------------------------------------------------------------------
Case-Mix Adjustment Factors
----------------------------------------------------------------------------------------------------------------
Projected Case-Mix Change............. -0.5 ...................................
Real Across DRG Change................ 0.5 0.5
Real Within DRG Change................ (\3\) 0.0
-------------------------------------------------------------------------
Subtotal...................... 0.0 0.5
=========================================================================
Effect of FY 1999 Reclassification and 0.0 ...................................
Recalibration.
Forecast Error Correction............. 0.0 0.1
-------------------------------------------------------------------------
Total Recommendation Update....... MB -0.5 to MB -1.0 MB\1\ + 0.6 to MB\1\ +1.1
----------------------------------------------------------------------------------------------------------------
\1\ Used HCFA's March 2000 operating market basket forecast in its combined update recommendation.
\2\ Included in MedPAC's Science and Technology Adjustment.
\3\ Included in HHS' Intensity Factor.
\4\ Included in MedPAC's Productivity Measure in its Science and Technology Adjustment.
\5\ Included in MedPAC's Case-Mix Adjustment.
MedPAC's combined update recommendation of between 3.5 percent
and 4.0 percent for FY 2001 operating and capital payments is higher
than the current law amount as set forth by Public Law 105-33 and
the amount in the proposed rule. While the above analysis would
support a recommendation that the update be between than the
operating market basket minus 0.5 percentage points and the
operating market basket minus 1.0 percentage points, consistent with
current law we recommended an update of market basket increase minus
1.1 percentage points (or 2.3 percent). We note that this
approximates the lower bound of the range suggested by our framework
when accounting for a negative intensity change.
IV. Secretary's Final Recommendations for Updating the Prospective
Payment System Standardized Amounts
In recommending an update, the Secretary takes into account the
factors in the update framework, as well as other factors such as
the recommendations of MedPAC, the long-term solvency of the
Medicare Trust Funds, and the capacity of the hospital industry to
continually provide access to high-quality care to Medicare
beneficiaries through adequate reimbursement to health care
providers.
To ensure that beneficiaries continue to have access to high-
quality care and to allow more time to assess the full impact of
Public Law 105-33 and Public Law 106-113, the Secretary recommends
an update of 3.4 percent (full market basket) for FY 2001. We note
that this recommendation requires a change in law. The FY 2001
President's Budget Mid-Session Review, released on June 26, 2000,
included a proposal to provide for the full market basket update for
FY 2001. We will continue to evaluate our current framework to
ensure that the recommended update appropriately reflects current
trends in health care delivery and that Medicare acts as a prudent
purchaser providing incentives to hospitals for increased
efficiency, thereby contributing to the solvency of the Medicare
Part A Trust Fund.
We received one comment concerning our proposed update
recommendation.
Comment: One commenter stated that the continual update and
routine replacement of procedures with more sophisticated, higher
cost procedures is not picked up within the HCFA pricing system,
particularly the use of pharmaceuticals and other scientific and
technological advances. The commenter argued that the market basket
minus 1.1 percent update for FY 2001 does not recognize the true
impact of these factors on hospital-based payments, noting that from
FYs 1998 through 2000 the cumulative market basket rose
significantly higher than the Medicare operating prospective payment
system updates, which were mandated by Public Law 105-33.
Response: By design, the market basket captures only the pure
price change of inputs such as labor, materials, and capital that
are used to produce a constant quantity and quality of care. This is
done using price proxies that reflect the prices of the major inputs
hospitals utilize in providing care. For pharmaceuticals, the price
proxy used is the Producer Price Index (PPI) for pharmaceutical
preparations produced by Bureau of Labor Statistics. This price
proxy captures the price change of `new' pharmaceuticals after they
are introduced and the price changes between new drugs that replace
existing drugs or generic drugs that replace brand-name drugs.
The market basket appropriately does not recognize the
introduction or the increased
[[Page 47211]]
utilization of `new' scientific and technological advances. Instead,
these factors, including the increased use of `new' pharmaceutical
drugs, would be reflected in the intensity adjustment of the update
framework. Our intensity standard is partly based on changes in the
use of quality enhancing services or technology changes (along with
changes in case-mix). HCFA's update recommendation uses this
adjustment to account for the additional costs of adopting and
utilizing new advances that an efficient provider would face in
providing a high quality of patient care.
[FR Doc. 00-19108 Filed 7-31-00; 8:45 am]
BILLING CODE 4120-01-P