[Federal Register Volume 67, Number 147 (Wednesday, July 31, 2002)]
[Notices]
[Pages 49798-49819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19373]
[[Page 49797]]
-----------------------------------------------------------------------
Part V
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare and Medicaid Services
-----------------------------------------------------------------------
Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities--Update; Notice
Federal Register / Vol. 67, No. 147 / Wednesday, July 31, 2002 /
Notices
[[Page 49798]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1202-N]
Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities--Update; Notice
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice updates the payment rates used under the
prospective payment system (PPS) for skilled nursing facilities (SNFs),
for fiscal year (FY) 2003, as required by statute. Annual updates to
the PPS rates are required by section 1888(e) of the Social Security
Act (the Act), as amended by the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 (the BBRA), and the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000 (the BIPA),
relating to Medicare payments and consolidated billing for SNFs.
EFFECTIVE DATE: This notice is effective on October 1, 2002.
FOR FURTHER INFORMATION CONTACT: Dana Burley, (410) 786-4547 (for
information related to the case-mix classification methodology).
John Davis, (410) 786-0008 (for information related to the Wage
Index).
Sheila Lambowitz, (410) 786-7605 (for information related to swing-
bed providers).
Bill Ullman, (410) 786-5667 (for information related to level of
care determinations, consolidated billing, and general information).
SUPPLEMENTARY INFORMATION: Because of the many terms to which we refer
by abbreviation in this notice, we are listing these abbreviations and
their corresponding terms in alphabetical order below:
ADL--Activity of Daily Living
AHE--Average Hourly Earnings
ARD--Assessment Reference Date
BBA--Balanced Budget Act of 1997, Pub.L. 105-33
BBRA--Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of
1999, Pub.L. 106-113
BEA--(U.S.) Bureau of Economic Analysis
BIPA--Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Pub.L. 106-554
CAH--Critical Access Hospital
CFR--Code of Federal Regulations
CMS--Centers for Medicare & Medicaid Services
CPT--(Physicians') Current Procedural Terminology
DRG--Diagnosis Related Group
FI--Fiscal Intermediary
FR--Federal Register
FY--Fiscal Year
GAO--General Accounting Office
HCPCS--Healthcare Common Procedure Coding System
ICD-9-CM--International Classification of Diseases, Ninth Edition,
Clinical Modification
IFC--Interim Final Rule with Comment Period
MDS--Minimum Data Set
MEDPAR--Medicare Provider Analysis and Review File
MIP--Medicare Integrity Program
MSA--Metropolitan Statistical Area
NECMA--New England County Metropolitan Area
OIG--Office of the Inspector General
OMRA--Other Medicare Required Assessment
PCE--Personal Care Expenditures
PPI--Producer Price Index
PPS--Prospective Payment System
PRM--Provider Reimbursement Manual
RAI--Resident Assessment Instrument
RAP--Resident Assessment Protocol
RAVEN--Resident Assessment Validation Entry
RFA--Regulatory Flexibility Act, Pub.L. 96-354
RIA--Regulatory Impact Analysis
RUG--Resource Utilization Groups
SCHIP--State Children's Health Insurance Program
SNF--Skilled Nursing Facility
STM--Staff Time Measure
UMRA--Unfunded Mandates Reform Act, Pub.L. 104-4
I. Background
On July 31, 2001, we published in the Federal Register (66 FR
39562) a final rule that set forth updates to the payment rates used
under the prospective payment system (PPS) for skilled nursing
facilities (SNFs), for fiscal year (FY) 2002. Annual updates to the PPS
rates are required by section 1888(e) of the Social Security Act (the
Act), as amended by the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (BBRA) and the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (BIPA), relating to
Medicare payments and consolidated billing for SNFs.
A. Current System for Payment of Skilled Nursing Facility Services
Under Part A of the Medicare Program
Section 4432 of the Balanced Budget Act of 1997 (BBA) amended
section 1888 of the Act to provide for the implementation of a per diem
PPS for SNFs, covering all costs (routine, ancillary, and capital-
related) of covered SNF services furnished to beneficiaries under Part
A of the Medicare program, effective for cost reporting periods
beginning on or after July 1, 1998. In this notice, we are updating the
per diem payment rates for SNFs, for FY 2003. Major elements of the SNF
PPS include:
Rates. Per diem Federal rates were established for urban
and rural areas using allowable costs from FY 1995 cost reports. These
rates also included an estimate of the cost of services that, before
July 1, 1998, had been paid under Part B but furnished to Medicare
beneficiaries in a SNF during a Part A covered stay. The rates were
adjusted annually using a SNF market basket index. Rates were case-mix
adjusted using a classification system (Resource Utilization Groups,
version III (RUG-III)) based on beneficiary assessments (using the
Minimum Data Set (MDS) 2.0). The rates were also adjusted by the
hospital wage index to account for geographic variation in wages. (In
section II.C of this notice, we discuss the wage index adjustment in
detail.) A correction notice was published on March 22, 2002 (67 FR
13278) that announced corrections to several of the wage factors.
Additionally, as noted in the July 31, 2001 final rule (66 FR 39562),
section 101 of the BBRA and sections 311, 312, and 314 of the BIPA also
affect the payment rate.
Transition. The SNF PPS included an initial 3-year, phased
transition that blended a facility-specific payment rate with the
Federal case-mix adjusted rate. For each cost reporting period after a
facility migrated to the new system, the facility-specific portion of
the blend decreased and the Federal portion increased in 25 percentage
point increments. For most facilities, the facility-specific rate was
based on allowable costs from FY 1995; however, since the last year of
the transition was FY 2001, all facilities were paid at the full
Federal rate by the following fiscal year (FY 2002). Therefore, we are
no longer including adjustment factors related to facility-specific
rates for the coming fiscal year.
Coverage. The establishment of the SNF PPS did not change
Medicare's fundamental requirements for SNF coverage; however, because
RUG-III classification is based, in part, on the beneficiary's need for
skilled nursing care and therapy, we have attempted, where possible, to
coordinate claims review procedures with the outputs of beneficiary
assessment and RUG-III classifying activities. We discuss this
coordination in greater detail in section II.E of this notice.
Consolidated Billing. The SNF PPS includes a consolidated
billing provision (described in greater detail in
[[Page 49799]]
section IV of this notice) that requires a SNF to submit consolidated
Medicare bills for almost all of the services that its residents
receive during the course of a covered Part A stay. In addition, this
provision places with the SNF the Medicare billing responsibility for
physical, occupational, and speech-language therapy that the resident
receives during a noncovered stay. The statute excludes a small list of
services from the consolidated billing provision (primarily those of
physicians and certain other types of practitioners).
Application of the SNF PPS to SNF services furnished by
swing-bed hospitals. Section 1883 of the Act permits certain small,
rural hospitals to enter into a Medicare swing-bed agreement, under
which the hospital can use its beds to provide either acute or SNF
care, as needed. Part A currently pays for SNF services furnished by
swing-bed hospitals on a cost-related basis. Section 1888(e)(7) of the
Act requires the SNF PPS to encompass these services no earlier than
cost reporting periods beginning on July 1, 1999, and no later than the
end of the SNF PPS transition period described in section 1888(e)(2)(E)
of the Act. A more detailed discussion of this provision appears in
section V of this notice.
B. Requirements of the Balanced Budget Act of 1997 (BBA) for Updating
the Prospective Payment System for Skilled Nursing Facilities
Section 1888(e)(4)(H) of the Act requires that we publish in the
Federal Register:
1. The unadjusted Federal per diem rates to be applied to days of
covered SNF services furnished during the FY.
2. The case-mix classification system to be applied with respect to
these services during the FY.
3. The factors to be applied in making the area wage adjustment
with respect to these services.
In the July 30, 1999 final rule (64 FR 41670), we indicated that we
would announce any changes to the guidelines for Medicare level of care
determinations related to modifications in the RUG-III classification
structure (see section II.E of this notice).
This notice provides the annual updates to the Federal rates as
mandated by the Act.
C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA)
There were several provisions in the BBRA that resulted in
adjustments to the SNF PPS. These provisions were described in detail
in the final rule that we published in the Federal Register on July 31,
2000 (65 FR 46770). In particular, section 101(a) of the BBRA provided
for a temporary, 20 percent increase in the per diem adjusted payment
rates for 15 specified RUG-III groups (SE3, SE2, SE1, SSC, SSB, SSA,
CC2, CC1, CB2, CB1, CA2, CA1, RHC, RMC, and RMB). Under the statute,
this temporary increase remains in effect until the later of October 1,
2000, or the implementation of case-mix refinements in the PPS. Section
101(d) included a 4 percent across-the-board increase in the adjusted
Federal per diem payment rates each year for FYs 2001 and 2002,
exclusive of the 20 percent increase.
We included further information on all of the provisions of the
BBRA that affect the SNF PPS in Program Memorandums A-99-53 and A-99-61
(December 1999), and Program Memorandum AB-00-18 (March 2000). In
addition, for swing-bed hospitals with more than 49 (but less than 100)
beds, section 408 of the BBRA provided for the repeal of certain
statutory restrictions on length of stay and aggregate payment for
patient days, effective with the end of the SNF PPS transition period
described in section 1888(e)(2)(E) of the Act. In the July 31, 2001
final rule (66 FR 39562), we made conforming changes to the regulations
at Sec. 413.114(d), effective for services furnished in cost reporting
periods beginning on or after July 1, 2002.
D. The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA)
The BIPA also included several provisions that resulted in
adjustments to the PPS for SNFs. These provisions were described in
detail in the final rule that we published in the Federal Register on
July 31, 2001 (66 FR 39562), as follows:
Section 203 of the BIPA exempted critical access hospital
(CAH) swing-beds from the SNF PPS; we included further information on
this provision in Program Memorandum A-01-09 (January 16, 2001).
Section 311 of the BIPA eliminated the one percentage
point reduction in the SNF market basket that the statutory update
formula had previously specified for FY 2001, changed the one
percentage point reduction specified for FY 2002 to a 0.5 percentage
point reduction, and established an update factor for FY 2003 of market
basket minus 0.5 percentage point. This section also required us to
conduct a study of alternative case-mix classification systems for the
SNF PPS, and to submit a report to the Congress by January 1, 2005.
Section 312 of the BIPA provided for a temporary 16.66
percent increase in the nursing component of the case-mix adjusted
Federal rate for services furnished on or after April 1, 2001, and
before October 1, 2002. This section also required the General
Accounting Office (GAO) to conduct an audit of SNF nursing staff ratios
and submit a report to the Congress on whether the temporary increase
in the nursing component should be continued.
Section 313 of the BIPA repealed the consolidated billing
requirement for services (other than physical, occupational, and
speech-language therapy) furnished to SNF residents during noncovered
stays, effective January 1, 2001.
Section 314 of the BIPA adjusted the payment rates for all
of the rehabilitation RUGs to correct an anomaly under which the
existing payment rates for the RHC, RMC, and RMB rehabilitation groups
were higher than the rates for some other, more intensive
rehabilitation RUGs.
Section 315 of the BIPA authorized us to establish a
geographic reclassification procedure that is specific to SNFs, but
only after collecting the data necessary to establish a SNF wage index
that is based on wage data from nursing homes.
We included further information on several of these provisions in
Program Memorandum A-01-08 (January 16, 2001).
E. Skilled Nursing Facility Prospective Payment--General Overview
The Medicare SNF PPS was implemented for cost reporting periods
beginning on or after July 1, 1998. Under the PPS, SNFs are paid
through prospective, case-mix adjusted per diem payment rates
applicable to all covered SNF services. These payment rates cover all
the costs of furnishing covered skilled nursing services (routine,
ancillary, and capital-related costs) other than costs associated with
approved educational activities. Covered SNF services include post-
hospital services for which benefits are provided under Part A and all
items and services that, before July 1, 1998, had been paid under Part
B (other than physician and certain other services specifically
excluded under the BBA) but furnished to Medicare beneficiaries in a
SNF during a covered Part A stay. A complete discussion of these
provisions appears in the May 12, 1998 interim final rule (63 FR
26252).
1. Payment Provisions--Federal Rate
The PPS uses per diem Federal payment rates based on mean SNF costs
in a base year updated for inflation to the first effective period of
the PPS. We
[[Page 49800]]
developed the Federal payment rates using allowable costs from
hospital-based and freestanding SNF cost reports for reporting periods
beginning in FY 1995. The data used in developing the Federal rates
also incorporated an estimate of the amounts that would be payable
under Part B for covered SNF services furnished to individuals during
the course of a covered Part A stay in a SNF.
In developing the rates for the initial period, we updated costs to
the first effective year of PPS (15-month period beginning July 1,
1998) using a SNF market basket index, and then standardized for the
costs of facility differences in case-mix and for geographic variations
in wages. Providers that received new provider exemptions from the
routine cost limits were excluded from the database used to compute the
Federal payment rates, as well as costs related to payments for
exceptions to the routine cost limits. In accordance with the formula
prescribed in the BBA, we set the Federal rates at a level equal to the
weighted mean of freestanding costs plus 50 percent of the difference
between the freestanding mean and weighted mean of all SNF costs
(hospital-based and freestanding) combined. We computed and applied
separately the payment rates for facilities located in urban and rural
areas. In addition, we adjusted the portion of the Federal rate
attributable to wage-related costs by a wage index.
The Federal rate also incorporates adjustments to account for
facility case-mix, using a classification system that accounts for the
relative resource utilization of different patient types. This
classification system, Resource Utilization Groups, version III (RUG-
III), uses beneficiary assessment data from the Minimum Data Set (MDS)
completed by SNFs to assign beneficiaries to one of 44 RUG III groups.
The May 12, 1998 interim final rule (63 FR 26252) included a complete
and detailed description of the RUG-III classification system.
The Federal rates in this notice reflect an update to the rates
that we published in the July 31, 2001 Federal Register (66 FR 39562)
equal to the SNF market basket index minus 0.5 percentage point, as
well as the expiration of the temporary 16.66 percent adjustment to the
nursing component of the rates enacted in section 312 of the BIPA.
According to section 311 of the BIPA, for FY 2003, we are updating the
rate by adjusting the current rates by the SNF market basket index
minus 0.5 percentage point.
2. Payment Provisions--Initial Transition Period
The SNF PPS included an initial, phased transition from a facility-
specific rate (which reflected the individual facility's historical
cost experience) to the Federal case-mix adjusted rate. The transition
extended through the facility's first three cost reporting periods
under the PPS, up to and including the one that began in FY 2001.
Accordingly, starting with cost reporting periods beginning in FY 2002,
we base payments entirely on the Federal rates and, as mentioned
previously in this notice, we no longer include adjustment factors
related to facility-specific rates for the coming fiscal year.
F. Skilled Nursing Facility Market Basket Index
Section 1888(e)(5) of the Act requires us to establish a SNF market
basket index that reflects changes over time in the prices of an
appropriate mix of goods and services included in the covered SNF
services. The SNF market basket index is used to update the Federal
rates on an annual basis. As mentioned previously in this notice, the
final rule published on July 31, 2001 (66 FR 39562) revised and rebased
the market basket to reflect 1997 total cost data.
II. Update of Payment Rates Under the Prospective Payment System
for Skilled Nursing Facilities
A. Federal Prospective Payment System
This notice sets forth a schedule of Federal prospective payment
rates applicable to Medicare Part A SNF services beginning October 1,
2002. The schedule incorporates per diem Federal rates that provide
Part A payment for all costs of services furnished to a beneficiary in
a SNF during a Medicare-covered stay.
1. Costs and Services Covered by the Federal Rates
The Federal rates apply to all costs (routine, ancillary, and
capital-related costs) of covered SNF services other than costs
associated with approved educational activities as defined in
Sec. 413.85. Under section 1888(e)(2) of the Act, covered SNF services
include post-hospital SNF services for which benefits are provided
under Part A (the hospital insurance program), as well as all items and
services (other than those services excluded by statute) that, before
July 1, 1998, were paid under Part B (the supplementary medical
insurance program) but furnished to Medicare beneficiaries in a SNF
during a Part A covered stay. (These excluded service categories are
discussed in greater detail in section V.B.2. of the May 12, 1998
interim final rule (63 FR 26295-97)).
2. Methodology Used for the Calculation of the Federal Rates
The FY 2003 rates reflect an update using the latest market basket
index minus 0.5 percentage point. The FY 2003 market basket increase
factor is 3.1 percentage points, and subtracting 0.5 percentage point
yields an update increase of 2.6 percentage points. For a complete
description of the multi-step process, see the May 12, 1998 interim
final rule (63 FR 26252). We note that, in accordance with the statute,
the 4 percent across-the-board increase in the adjusted Federal per
diem payment rates that section 101(d) of the BBRA provided for FYs
2001 and 2002 will expire at the end of FY 2002. Similarly, section 312
of the BIPA provides that the temporary 16.66 percent increase in the
nursing component of the case-mix adjusted Federal rate will end
effective with services furnished on or after October 1, 2002. Further,
several other provisions of the BIPA affect the payment rates for SNFs,
as described in the previous section.
We used the SNF market basket index (minus 0.5 percentage point) to
adjust each per diem component of the Federal rates forward to reflect
cost increases occurring between the midpoint of the Federal fiscal
year beginning October 1, 2001, and ending September 30, 2002, and the
midpoint of the Federal fiscal year beginning October 1, 2002, and
ending September 30, 2003, to which the payment rates apply. The rates
are further adjusted by a wage index budget neutrality factor,
described later in this section. Tables 1 and 2 reflect the updated
components of the unadjusted Federal rates.
[[Page 49801]]
Table 1.--Unadjusted Federal Rate Per Diem Urban
----------------------------------------------------------------------------------------------------------------
Nursing-- Therapy-- Therapy-- non-
Rate component case-mix case-mix case- mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per diem amount................................. $121.59 $91.58 $12.06 $62.05
----------------------------------------------------------------------------------------------------------------
Table 2.--Unadjusted Federal Rate Per Diem Rural
----------------------------------------------------------------------------------------------------------------
Nursing-- Therapy-- Therapy-- non-
Rate component case-mix case-mix case- mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per diem amount................................. $116.17 $105.61 $12.88 $63.20
----------------------------------------------------------------------------------------------------------------
B. Case-Mix Refinements
Under the BBA, we must publish the SNF PPS case-mix classification
methodology applicable for the next Federal FY before August 1 of each
year. For the reasons discussed below, in this notice we continue to
utilize the existing case-mix classification methodology that employs
the 44-group RUG-III classification system.
As discussed previously in this preamble, section 101(a) of the
BBRA provided for a temporary, 20 percent increase in the per diem
adjusted payment rates for 15 specified RUG-III groups. This
legislation specified that the 20 percent increase would be effective
for SNF services furnished on or after April 1, 2000, and would
continue until the later of: (1) October 1, 2000, or (2) implementation
of a refined case-mix classification system under section
1888(e)(4)(G)(i) of the Act that would better account for medically
complex patients.
In the SNF PPS proposed rule for FY 2001 (65 FR 19190, April 10,
2000), we proposed making an extensive, comprehensive set of
refinements to the existing case-mix classification system that
collectively would have significantly expanded the existing 44-group
structure. However, when our subsequent validation analyses indicated
that the refinements would afford only a limited degree of improvement
in explaining resource utilization relative to the significant increase
in complexity that they would entail, we decided not to implement them
at that time (see the FY 2001 final rule, 65 FR 46773, July 31, 2000).
Nevertheless, since the BBRA provision had demonstrated a Congressional
interest in securing refinements to reimburse nursing homes more fairly
and accurately for the care of medically complex patients, we continued
to conduct research in this area.
The Congress subsequently enacted section 311(e) of the BIPA, which
directed us to conduct a study of the different systems for
categorizing patients in Medicare SNFs in a manner that accounts for
the relative resource utilization of different patient types, and to
issue a report with any appropriate recommendations to the Congress by
January 1, 2005. The lengthy timeframe for conducting the study, and
its broad mandate to consider various classification systems and the
full range of patient types, stood in sharp contrast to the BBRA
language regarding more incremental refinements to the existing case-
mix classification system under section 1888(e)(4)(G)(i) of the Act,
and made clear that implementing the latter type of refinements to the
existing system in order to better account for medically complex
patients need not await the completion of the more comprehensive
changes envisioned in the BIPA. Accordingly, we considered the
possibility of including such refinements as part of this year's annual
update of the SNF payment rates.
However, we determined that while the research gives a sound basis
for developing improvements to the SNF PPS, we need additional time to
review and analyze the implications. Therefore, we have decided not to
implement any case-mix refinements for FY 2003. Our decision to defer
implementing any case-mix refinements for the present leaves the
current classification system in place. Under the provisions of section
101(a) of the BBRA, this will result in SNFs continuing to receive an
estimated $1 billion in temporary add-on payments during FY 2003.
Accordingly, the payment rates set forth in this final rule reflect
the continued use of the 44-group RUG-III classification system
discussed in the May 12, 1998 interim final rule (63 FR 26252).
Consequently, we will also maintain the add-ons to the Federal rates
for the specified RUG-III groups required by section 101(a) of the BBRA
and subsequently modified by section 314 of the BIPA. The case-mix
adjusted payment rates are listed separately for urban and rural SNFs
in Tables 3 and 4, with the corresponding case-mix values. These tables
do not reflect the add-ons to the specified RUG-III groups provided for
in the BBRA, which are applied only after all other adjustments (wage
and case-mix) have been made.
Meanwhile, we will continue to explore both short-term and longer-
range revisions to our case-mix classification methodology. In July
2001, we awarded a contract to the Urban Institute for performance of
research to aid us in making incremental refinements to the case-mix
classification system under section 1888(e)(4)(G)(i) of the Act and
starting the case-mix study mandated by section 311(e) of the BIPA. The
results of the research in which we are currently engaged will be
included in the report to the Congress that section 311(e) of the BIPA
requires us to submit by January 1, 2005. As we noted in the May 10,
2001 proposed rule (66 FR 23990), this research may also support a
longer term goal of developing more integrated approaches for the
payment and delivery system for Medicare post acute services generally.
This broader, ongoing research project will pursue several avenues in
studying various case-mix classification systems. We have encouraging
preliminary results from incorporating comorbidities and complications
into the classification strategy, and will thoroughly explore and
evaluate this and other approaches in our ongoing work.
BILLING CODE 4120-01-P
[[Page 49802]]
[GRAPHIC] [TIFF OMITTED] TN31JY02.001
[[Page 49803]]
[GRAPHIC] [TIFF OMITTED] TN31JY02.002
[[Page 49804]]
C. Wage Index Adjustment to Federal Rates
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
Federal rates to account for differences in area wage levels, using a
wage index that we find appropriate. Since the inception of a PPS for
SNFs, we have used hospital wage data in developing a wage index to be
applied to SNFs. We are continuing that practice for FY 2003.
The wage index adjustment is applied to the labor-related portion
of the Federal rate, which is 76.128 percent of the total rate. This
percentage reflects the labor-related relative importance for FY 2003.
The labor-related relative importance is calculated from the SNF market
basket, and approximates the labor-related portion of the total costs
after taking into account historical and projected price changes
between the base year and FY 2003. The price proxies that move the
different cost categories in the market basket do not necessarily
change at the same rate, and the relative importance captures these
changes. Accordingly, the relative importance figure more closely
reflects the cost share weights for FY 2003 than the base year weights
from the SNF market basket.
We calculate the labor-related relative importance for FY 2003 in
four steps. First, we compute the FY 2003 price index level for the
total market basket and each cost category of the market basket.
Second, we calculate a ratio for each cost category by dividing the FY
2003 price index level for that cost category by the total market
basket price index level. Third, we determine the FY 2003 relative
importance for each cost category by multiplying this ratio by the base
year (FY 1997) weight. Finally, we sum the FY 2003 relative importance
for each of the labor-related cost categories (wages and salaries,
employee benefits, nonmedical professional fees, labor-intensive
services, and capital-related expenses) to produce the FY 2003 labor-
related relative importance. Tables 5 and 6 show the Federal rates by
labor-related and non-labor-related components.
BILLING CODE 4120-01-P
[[Page 49805]]
[GRAPHIC] [TIFF OMITTED] TN31JY02.003
[[Page 49806]]
[GRAPHIC] [TIFF OMITTED] TN31JY02.004
BILLING CODE 4120-01-C
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index in a manner that does not result in aggregate payments
that are greater or
[[Page 49807]]
lesser than would otherwise be made in the absence of the wage
adjustment. In this fifth PPS year (Federal rates effective October 1,
2002), we are applying the most recent wage index using the hospital
wage data, and applying an adjustment to fulfill the budget neutrality
requirement. This requirement will be met by multiplying each of the
components of the unadjusted Federal rates by a factor equal to the
ratio of the volume weighted mean wage adjustment factor (using the
wage index from the previous year) to the volume weighted mean wage
adjustment factor, using the wage index for the FY beginning October 1,
2002. The same volume weights are used in both the numerator and
denominator and will be derived from 1997 Medicare Provider Analysis
and Review File (MEDPAR) data. The wage adjustment factor used in this
calculation is defined as the labor share of the rate component
multiplied by the wage index plus the non-labor share. The budget
neutrality factor for this year is 0.9997.
The wage index applicable to FY 2003 can be found in Table 7 and
Table 8 of this notice.
Table 7.--Wage Index for Urban Areas
------------------------------------------------------------------------
Wage
Urban area (constituent counties or county equivalents) index
------------------------------------------------------------------------
0040 Abilene, TX.............................................. 0.7792
Taylor, TX
0060 Aguadilla, PR............................................ 0.4587
Aguada, PR
Aguadilla, PR
Moca, PR
0080 Akron, OH................................................ 0.9600
Portage, OH
Summit, OH
0120 Albany, GA............................................... 1.0594
Dougherty, GA
Lee, GA
0160 Albany-Schenectady-Troy, NY.............................. 0.8384
Albany, NY
Montgomery, NY
Rensselaer, NY
Saratoga, NY
Schenectady, NY
Schoharie, NY
0200 Albuquerque, NM.......................................... 0.9315
Bernalillo, NM
Sandoval, NM
Valencia, NM
0220 Alexandria, LA........................................... 0.7859
Rapides, LA
0240 Allentown-Bethlehem-Easton, PA........................... 0.9735
Carbon, PA
Lehigh, PA
Northampton, PA
0280 Altoona, PA.............................................. 0.9225
Blair, PA
0320 Amarillo, TX............................................. 0.9034
Potter, TX
Randall, TX
0380 Anchorage, AK............................................ 1.2358
Anchorage, AK
0440 Ann Arbor, MI............................................ 1.1103
Lenawee, MI
Livingston, MI
Washtenaw, MI
0450 Anniston, AL............................................. 0.8044
Calhoun, AL
0460 Appleton-Oshkosh-Neenah, WI.............................. 0.8997
Calumet, WI
Outagamie, WI
Winnebago, WI
0470 Arecibo, PR.............................................. .0.4337
Arecibo, PR
Camuy, PR
Hatillo, PR
0480 Asheville, NC............................................ 0.9876
Buncombe, NC
Madison, NC
0500 Athens, GA............................................... 1.0211
Clarke, GA
Madison, GA
Oconee, GA
0520 Atlanta, GA.............................................. 0.9991
Barrow, GA
Bartow, GA
Carroll, GA
Cherokee, GA
Clayton, GA
Cobb, GA
Coweta, GA
De Kalb, GA
Douglas, GA
Fayette, GA
Forsyth, GA
Fulton, GA
Gwinnett, GA
Henry, GA
Newton, GA
Paulding, GA
Pickens, GA
Rockdale, GA
Spalding, GA
Walton, GA
0560 Atlantic City-Cape May, NJ............................... 1.1017
Atlantic City, NJ
Cape May, NJ
0580 Auburn-Opelika, AL....................................... 0.8325
Lee, AL
0600 Augusta-Aiken, GA-SC..................................... 1.0264
Columbia, GA
McDuffie, GA
Richmond, GA
Aiken, SC
Edgefield, SC
0640 Austin-San Marcos, TX.................................... 0.9637
Bastrop, TX
Caldwell, TX
Hays, TX
Travis, TX
Williamson, TX
0680 Bakersfield, CA.......................................... 0.9877
Kern, CA
0720 Baltimore, MD............................................ 0.9929
Anne Arundel, MD
Baltimore, MD
Baltimore City, MD
Carroll, MD
Harford, MD
Howard, MD
Queen Annes, MD
0733 Bangor, ME............................................... 0.9664
Penobscot, ME
0743 Barnstable-Yarmouth, MA.................................. 1.3202
Barnstable, MA
0760 Baton Rouge, LA.......................................... 0.8294
Ascension, LA
East Baton Rouge, LA
Livingston, LA
West Baton Rouge, LA
0840 Beaumont-Port Arthur, TX................................. 0.8324
Hardin, TX
Jefferson, TX
Orange, TX
0860 Bellingham, WA........................................... 1.2282
Whatcom, WA
0870 Benton Harbor, MI........................................ 0.8965
Berrien, MI
0875 Bergen-Passaic, NJ....................................... 1.2150
Bergen, NJ
Passaic, NJ
0880 Billings, MT............................................. 0.9022
Yellowstone, MT
0920 Biloxi-Gulfport-Pascagoula, MS........................... 0.8757
Hancock, MS
Harrison, MS
Jackson, MS
0960 Binghamton, NY........................................... 0.8341
Broome, NY
Tioga, NY
1000 Birmingham, AL........................................... 0.9222
Blount, AL
Jefferson, AL
St. Clair, AL
Shelby, AL
1010 Bismarck, ND............................................. 0.7972
Burleigh, ND
Morton, ND
1020 Bloomington, IN.......................................... 0.8907
Monroe, IN
1040 Bloomington-Normal, IL................................... 0.9109
McLean, IL
1080 Boise City, ID........................................... 0.9310
Ada, ID
Canyon, ID
1123 Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH......... 1.1229
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..................................... 0.9689
Boulder, CO
1145 Brazoria, TX............................................. 0.8535
Brazoria, TX
1150 Bremerton, WA............................................ 1.0944
Kitsap, WA
1240 Brownsville-Harlingen-San Benito, TX..................... 0.8880
[[Page 49808]]
Cameron, TX
1260 Bryan-College Station, TX................................ 0.8821
Brazos, TX
1280 Buffalo-Niagara Falls, NY................................ 0.9365
Erie, NY
Niagara, NY
1303 Burlington, VT........................................... 1.0052
Chittenden, VT
Franklin, VT
Grand Isle, VT
1310 Caguas, PR............................................... 0.4371
Caguas, PR
Cayey, PR
Cidra, PR
Gurabo, PR
San Lorenzo, PR
1320 Canton-Massillon, OH..................................... 0.8932
Carroll, OH
Stark, OH
1350 Casper, WY............................................... 0.9690
Natrona, WY
1360 Cedar Rapids, IA......................................... 0.9056
Linn, IA
1400 Champaign-Urbana, IL..................................... 1.0635
Champaign, IL
1440 Charleston-North Charleston, SC.......................... 0.9235
Berkeley, SC
Charleston, SC
Dorchester, SC
1480 Charleston, WV........................................... 0.8898
Kanawha, WV
Putnam, WV
1520 Charlotte-Gastonia-Rock Hill, NC-SC....................... 0.9875
Cabarrus, NC
Gaston, NC
Lincoln, NC
Mecklenburg, NC
Rowan, NC
Stanly, NC
Union, NC
York, SC
1540 Charlottesville, VA...................................... 1.0438
Albemarle, VA
Charlottesville City, VA
Fluvanna, VA
Greene, VA
1560 Chattanooga, TN-GA........................................ 0.8976
Catoosa, GA
Dade, GA
Walker, GA
Hamilton, TN
Marion, TN
1580 Cheyenne, WY.............................................. 0.8628
Laramie, WY
1600 Chicago, IL............................................... 1.1044
Cook, IL
De Kalb, IL
Du Page, IL
Grundy, IL
Kane, IL
Kendall, IL
Lake, IL
McHenry, IL
Will, IL
1620 Chico-Paradise, CA....................................... 0.9745
Butte, CA
1640 Cincinnati, OH-KY-IN..................................... 0.9381
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.......................... 0.8406
Christian, KY
Montgomery, TN
1680 Cleveland-Lorain-Elyria, OH.............................. 0.9670
Ashtabula, OH
Geauga, OH
Cuyahoga, OH
Lake, OH
Lorain, OH
Medina, OH
1720 Colorado Springs, CO...................................... 0.9916
El Paso, CO
1740 Columbia, MO............................................. 0.8496
Boone, MO
1760 Columbia, SC............................................. 0.9307
Lexington, SC
Richland, SC
1800 Columbus, GA-AL.......................................... 0.8374
Russell, AL
Chattanoochee, GA
Harris, GA
Muscogee, GA
1840 Columbus, OH............................................. 0.9751
Delaware, OH
Fairfield, OH
Franklin, OH
Licking, OH
Madison, OH
Pickaway, OH
1880 Corpus Christi, TX....................................... 0.8729
Nueces, TX
San Patricio, TX
1890 Corvallis, OR............................................ 1.1453
Benton, OR
1900 Cumberland, MD-WV........................................ 0.7847
Allegany, MD
Mineral, WV
1920 Dallas, TX............................................... 0.9998
Collin, TX
Dallas, TX
Denton, TX
Ellis, TX
Henderson, TX
Hunt, TX
Kaufman, TX
Rockwall, TX
1950 Danville, VA............................................. 0.8859
Danville City, VA
Pittsylvania, VA
1960 Davenport-Moline-Rock Island, IA-IL...................... 0.8835
Scott, IA
Henry, IL
Rock Island, IL
2000 Dayton-Springfield, OH................................... 0.9282
Clark, OH
Greene, OH
Miami, OH
Montgomery, OH
2020 Daytona Beach, FL........................................ 0.9071
Flagler, FL
Volusia, FL
2030 Decatur, AL.............................................. 0.8973
Lawrence, AL
Morgan, AL
2040 Decatur, IL.............................................. 0.8055
Macon, IL
2080 Denver, CO............................................... 1.0601
Adams, CO
Arapahoe, CO
Broomfield, CO
Denver, CO
Douglas, CO
Jefferson, CO
2120 Des Moines, IA........................................... 0.8791
Dallas, IA
Polk, IA
Warren, IA
2160 Detroit, MI.............................................. 1.0448
Lapeer, MI
Macomb, MI
Monroe, MI
Oakland, MI
St. Clair, MI
Wayne, MI
2180 Dothan, AL............................................... 0.8137
Dale, AL
Houston, AL
2190 Dover, DE................................................ 0.9356
Kent, DE
2200 Dubuque, IA.............................................. 0.8795
Dubuque, IA
2240 Duluth-Superior, MN-WI................................... 1.0368
St. Louis, MN
Douglas, WI
2281 Dutchess County, NY...................................... 1.0684
Dutchess, NY
2290 Eau Claire, WI........................................... 0.8952
Chippewa, WI
Eau Claire, WI
2320 El Paso, TX.............................................. 0.9265
El Paso, TX
2330 Elkhart-Goshen, IN....................................... 0.9722
Elkhart, IN
2335 Elmira, NY............................................... 0.8416
Chemung, NY
2340 Enid, OK................................................. 0.8376
Garfield, OK
2360 Erie, PA................................................. 0.8925
Erie, PA
2400 Eugene-Springfield, OR................................... 1.0944
Lane, OR
2440 Evansville-Henderson, IN-KY.............................. 0.8177
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY
2520 Fargo-Moorhead, ND-MN.................................... 0.9684
Clay, MN
Cass, ND
2560 Fayetteville, NC......................................... 0.8889
Cumberland, NC
2580 Fayetteville-Springdale-Rogers, AR....................... 0.8100
Benton, AR
Washington, AR
2620 Flagstaff, AZ-UT......................................... 1.0682
Coconino, AZ
[[Page 49809]]
Kane, UT
2640 Flint, MI................................................ 1.1135
Genesee, MI
2650 Florence, AL............................................. 0.7792
Colbert, AL
Lauderdale, AL
2655 Florence, SC............................................. 0.8780
Florence, SC
2670 Fort Collins-Loveland, CO................................ 1.0066
Larimer, CO
2680 Ft. Lauderdale, FL....................................... 1.0297
Broward, FL
2700 Fort Myers-Cape Coral, FL................................ 0.9680
Lee, FL
2710 Fort Pierce-Port St. Lucie, FL........................... 0.9823
Martin, FL
St. Lucie, FL
2720 Fort Smith, AR-OK........................................ 0.7895
Crawford, AR
Sebastian, AR
Sequoyah, OK
2750 Fort Walton Beach, FL.................................... 0.9693
Okaloosa, FL
2760 Fort Wayne, IN........................................... 0.9457
Adams, IN
Allen, IN
De Kalb, IN
Huntington, IN
Wells, IN
Whitley, IN
2800 Forth Worth-Arlington, TX................................ 0.9446
Hood, TX
Johnson, TX
Parker, TX
Tarrant, TX
2840 Fresno, CA............................................... 1.0169
Fresno, CA
Madera, CA
2880 Gadsden, AL.............................................. 0.8505
Etowah, AL
2900 Gainesville, FL.......................................... 0.9871
Alachua, FL
2920 Galveston-Texas City, TX................................. 0.9465
Galveston, TX
2960 Gary, IN................................................. 0.9584
Lake, IN
Porter, IN
2975 Glens Falls, NY.......................................... 0.8281
Warren, NY
Washington, NY
2980 Goldsboro, NC............................................ 0.8892
Wayne, NC
2985 Grand Forks, ND-MN....................................... 0.8897
Polk, MN
Grand Forks, ND
2995 Grand Junction, CO....................................... 0.9456
Mesa, CO
3000 Grand Rapids-Muskegon-Holland, MI........................ 0.9525
Allegan, MI
Kent, MI
Muskegon, MI
Ottawa, MI
3040 Great Falls, MT.......................................... 0.8950
Cascade, MT
3060 Greeley, CO.............................................. 0.9237
Weld, CO
3080 Green Bay, WI............................................ 0.9502
Brown, WI
3120 Greensboro-Winston-Salem-High Point, NC.................. 0.9282
Alamance, NC
Davidson, NC
Davie, NC
Forsyth, NC
Guilford, NC
Randolph, NC
Stokes, NC
Yadkin, NC
3150 Greenville, NC........................................... 0.9100
Pitt, NC
3160 Greenville-Spartanburg-Anderson, SC...................... 0.9122
Anderson, SC
Cherokee, SC
Greenville, SC
Pickens, SC
Spartanburg, SC
3180 Hagerstown, MD........................................... 0.9268
Washington, MD
3200 Hamilton-Middletown, OH.................................. 0.9418
Butler, OH
3240 Harrisburg-Lebanon-Carlisle, PA.......................... 0.9223
Cumberland, PA
Dauphin, PA
Lebanon, PA
Perry, PA
3283 Hartford, CT............................................. 1.1549
Hartford, CT
Litchfield, CT
Middlesex, CT
Tolland, CT
3285 Hattiesburg, MS.......................................... 0.7659
Forrest, MS
Lamar, MS
3290 Hickory-Morganton-Lenoir, NC............................. 0.9028
Alexander, NC
Burke, NC
Caldwell, NC
Catawba, NC
3320 Honolulu, HI............................................. 1.1457
Honolulu, HI
3350 Houma, LA................................................ 0.8317
Lafourche, LA
Terrebonne, LA
3360 Houston, TX.............................................. 0.9892
Chambers, TX
Fort Bend, TX
Harris, TX
Liberty, TX
Montgomery, TX
Waller, TX
3400 Huntington-Ashland, WV-KY-OH............................. 0.9636
Boyd, KY
Carter, KY
Greenup, KY
Lawrence, OH
Cabell, WV
Wayne, WV
3440 Huntsville, AL........................................... 0.8903
Limestone, AL
Madison, AL
3480 Indianapolis, IN......................................... 0.9717
Boone, IN
Hamilton, IN
Hancock, IN
Hendricks, IN
Johnson, IN
Madison, IN
Marion, IN
Morgan, IN
Shelby, IN
3500 Iowa City, IA............................................ 0.9587
Johnson, IA
3520 Jackson, MI.............................................. 0.9532
Jackson, MI
3560 Jackson, MS.............................................. 0.8607
Hinds, MS
Madison, MS
Rankin, MS
3580 Jackson, TN.............................................. 0.9275
Chester, TN
Madison, TN
3600 Jacksonville, FL......................................... 0.9381
Clay, FL
Duval, FL
Nassau, FL
St. Johns, FL
3605 Jacksonville, NC......................................... 0.8239
Onslow, NC
3610 Jamestown, NY............................................ 0.7976
Chautaqua, NY
3620 Janesville-Beloit, WI.................................... 0.9849
Rock, WI
3640 Jersey City, NJ.......................................... 1.1190
Hudson, NJ
3660 Johnson City-Kingsport-Bristol, TN-VA.................... 0.8268
Carter, TN
Hawkins, TN
Sullivan, TN
Unicoi, TN
Washington, TN
Bristol City, VA
Scott, VA
Washington, VA
3680 Johnstown, PA............................................ 0.8329
Cambria, PA
Somerset, PA
3700 Jonesboro, AR............................................ 0.7749
Craighead, AR
3710 Joplin, MO............................................... 0.8613
Jasper, MO
Newton, MO
3720 Kalamazoo-Battle Creek, MI............................... 1.0595
Calhoun, MI
Kalamazoo, MI
Van Buren, MI
3740 Kankakee, IL............................................. 0.8122
Kankakee, IL
3760 Kansas City, KS-MO....................................... 0.9736
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.............................................. 0.9686
Kenosha, WI
3810 Killeen-Temple, TX....................................... 0.9570
[[Page 49810]]
Coryell, TX
3840 Knoxville, TN............................................ 0.8970
Anderson, TN
Blount, TN
Knox, TN
Loudon, TN
Sevier, TN
Union, TN
3850 Kokomo, IN............................................... 0.8971
Howard, IN
Tipton, IN
3870 La Crosse, WI-MN......................................... 0.9400
Houston, MN
La Crosse, WI
3880 Lafayette, LA............................................ 0.8452
Acadia, LA
Lafayette, LA
St. Landry, LA
St. Martin, LA
3920 Lafayette, IN............................................ 0.9278
Clinton, IN
Tippecanoe, IN
3960 Lake Charles, LA......................................... 0.7965
Calcasieu, LA
3980 Lakeland-Winter Haven, FL................................ 0.9357
Polk, FL
4000 Lancaster, PA............................................ 0.9078
Lancaster, PA
4040 Lansing-East Lansing, MI................................. 0.9726
Clinton, MI
Eaton, MI
Ingham, MI
4080 Laredo, TX............................................... 0.8472
Webb, TX
4100 Las Cruces, NM........................................... 0.8745
Dona Ana, NM
4120 Las Vegas, NV-AZ......................................... 1.1521
Mohave, AZ
Clark, NV
Nye, NV
4150 Lawrence, KS............................................. 0.8323
Douglas, KS
4200 Lawton, OK............................................... 0.8315
Comanche, OK
4243 Lewiston-Auburn, ME...................................... 0.9179
Androscoggin, ME
4280 Lexington, KY............................................ 0.8581
Bourbon, KY
Clark, KY
Fayette, KY
Jessamine, KY
Madison, KY
Scott, KY
Woodford, KY
4320 Lima, OH................................................. 0.9483
Allen, OH
Auglaize, OH
4360 Lincoln, NE.............................................. 0.9892
Lancaster, NE
4400 Little Rock-North Little Rock, AR........................ 0.9097
Faulkner, AR
Lonoke, AR
Pulaski, AR
Saline, AR
4420 Longview-Marshall, TX.................................... 0.8629
Gregg, TX
Harrison, TX
Upshur, TX
4480 Los Angeles-Long Beach, CA............................... 1.2001
Los Angeles, CA
4520 Louisville, KY-IN........................................ 0.9276
Clark, IN
Floyd, IN
Harrison, IN
Scott, IN
Bullitt, KY
Jefferson, KY
Oldham, KY
4600 Lubbock, TX.............................................. 0.9646
Lubbock, TX
4640 Lynchburg, VA............................................ 0.9219
Amherst, VA
Bedford City, VA
Bedford, VA
Campbell, VA
Lynchburg City, VA
4680 Macon, GA................................................ 0.9204
Bibb, GA
Houston, GA
Jones, GA
Peach, GA
Twiggs, GA
4720 Madison, WI.............................................. 1.0467
Dane, WI
4800 Mansfield, OH............................................ 0.8900
Crawford, OH
Richland, OH
4840 Mayaguez, PR............................................. 0.4914
Anasco, PR
Cabo Rojo, PR
Hormigueros, PR
Mayaguez, PR
Sabana Grande, PR
San German, PR
4880 McAllen-Edinburg-Mission, TX............................. 0.8428
Hidalgo, TX
4890 Medford-Ashland, OR...................................... 1.0498
Jackson, OR
4900 Melbourne-Titusville-Palm Bay, FL........................ 1.0253
Brevard, Fl
4920 Memphis, TN-AR-MS........................................ 0.8920
Crittenden, AR
De Soto, MS
Fayette, TN
Shelby, TN
Tipton, TN
4940 Merced, CA............................................... 0.9742
Merced, CA
5000 Miami, FL................................................ 0.9802
Dade, FL
5015 Middlesex-Somerset-Hunterdon, NJ......................... 1.1213
Hunterdon, NJ
Middlesex, NJ
Somerset, NJ
5080 Milwaukee-Waukesha, WI................................... 0.9893
Milwaukee, WI
Ozaukee, WI
Washington, WI
Waukesha, WI
5120 Minneapolis-St Paul, MN-WI............................... 1.0903
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............................................. 0.9157
Missoula, MT
5160 Mobile, AL............................................... 0.8108
Baldwin, AL
Mobile, AL
5170 Modesto, CA.............................................. 1.0498
Stanislaus, CA
5190 Monmouth-Ocean, NJ....................................... 1.0674
Monmouth, NJ
Ocean, NJ
5200 Monroe, LA............................................... 0.8137
Ouachita, LA
5240 Montgomery, AL........................................... 0.7734
Autauga, AL
Elmore, AL
Montgomery, AL
5280 Muncie, IN............................................... 0.9284
Delaware, IN
5330 Myrtle Beach, SC......................................... 0.8976
Horry, SC
5345 Naples, FL............................................... 0.9754
Collier, FL
5360 Nashville, TN............................................ 0.9578
Cheatham, TN
Davidson, TN
Dickson, TN
Robertson, TN
Rutherford TN
Sumner, TN
Williamson, TN
Wilson, TN
5380 Nassau-Suffolk, NY....................................... 1.3357
Nassau, NY
Suffolk, NY
5483 New Haven-Bridgeport-Stamford-Waterbury-Danbury, CT...... 1.2408
Fairfield, CT
New Haven, CT
5523 New London-Norwich, CT................................... 1.1767
New London, CT
5560 New Orleans, LA.......................................... 0.9046
Jefferson, LA
Orleans, LA
Plaquemines, LA
St. Bernard, LA
St. Charles, LA
St. James, LA
St. John The Baptist, LA
St. Tammany, LA
5600 New York, NY............................................. 1.4414
Bronx, NY
Kings, NY
New York, NY
Putnam, NY
Queens, NY
Richmond, NY
Rockland, NY
Westchester, NY
5640 Newark, NJ............................................... 1.1381
Essex, NJ
Morris, NJ
Sussex, NJ
Union, NJ
[[Page 49811]]
Warren, NJ
5660 Newburgh, NY-PA.......................................... 1.1387
Orange, NY
Pike, PA
5720 Norfolk-Virginia Beach-Newport News, VA-NC................ 0.8574
Currituck, NC
Chesapeake City, VA
Gloucester, VA
Hampton City, VA
Isle of Wight, VA
James City, VA
Mathews, VA
Newport News City, VA
Norfolk City, VA
Poquoson City, VA
Portsmouth City, VA
Suffolk City, VA
Virginia Beach City VA
Williamsburg City, VA
York, VA
5775 Oakland, CA.............................................. 1.5072
Alameda, CA
Contra Costa, CA
5790 Ocala, FL................................................ 0.9402
Marion, FL
5800 Odessa-Midland, TX....................................... 0.9397
Ector, TX
Midland, TX
5880 Oklahoma City, OK........................................ 0.8900
Canadian, OK
Cleveland, OK
Logan, OK
McClain, OK
Oklahoma, OK
Pottawatomie, OK
5910 Olympia, WA.............................................. 1.0960
Thurston, WA
5920 Omaha, NE-IA............................................. 0.9978
Pottawattamie, IA
Cass, NE
Douglas, NE
Sarpy, NE
Washington, NE
5945 Orange County, CA........................................ 1.1474
Orange, CA
5960 Orlando, FL.............................................. 0.9640
Lake, FL
Orange, FL
Osceola, FL
Seminole, FL
5990 Owensboro, KY............................................ 0.8344
Daviess, KY
6015 Panama City, FL.......................................... 0.8865
Bay, FL
6020 Parkersburg-Marietta, WV-OH.............................. 0.8127
Washington, OH
Wood, WV
6080 Pensacola, FL............................................ 0.8610
Escambia, FL
Santa Rosa, FL
6120 Peoria-Pekin, IL......................................... 0.8739
Peoria, IL
Tazewell, IL
Woodford, IL
6160 Philadelphia, PA-NJ...................................... 1.0713
Burlington, NJ
Camden, NJ
Gloucester, NJ
Salem, NJ
Bucks, PA
Chester, PA
Delaware, PA
Montgomery, PA
Philadelphia, PA
6200 Phoenix-Mesa, AZ......................................... 0.9820
Maricopa, AZ
Pinal, AZ
6240 Pine Bluff, AR........................................... 0.7962
Jefferson, AR
6280 Pittsburgh, PA........................................... 0.9365
Allegheny, PA
Beaver, PA
Butler, PA
Fayette, PA
Washington, PA
Westmoreland, PA
6323 Pittsfield, MA........................................... 1.0235
Berkshire, MA
6340 Pocatello, ID............................................ 0.9372
Bannock, ID
6360 Ponce, PR................................................ 0.5169
Guayanilla, PR
Juana Diaz, PR
Penuelas, PR
Ponce, PR
Villalba, PR
Yauco, PR
6403 Portland, ME............................................. 0.9794
Cumberland, ME
Sagadahoc, ME
York, ME
6440 Portland-Vancouver, OR-WA................................ 1.0667
Clackamas, OR
Columbia, OR
Multnomah, OR
Washington, OR
Yamhill, OR
Clark, WA
6483 Providence-Warwick-Pawtucket, RI......................... 1.0854
Bristol, RI
Kent, RI
Newport, RI
Providence, RI
Washington, RI
6520 Provo-Orem, UT........................................... 0.9984
Utah, UT
6560 Pueblo, CO............................................... 0.8820
Pueblo, CO
6580 Punta Gorda, FL.......................................... 0.9218
Charlotte, FL
6600 Racine, WI............................................... 0.9334
Racine, WI
6640 Raleigh-Durham-Chapel Hill, NC........................... 0.9990
Chatham, NC
Durham, NC
Franklin, NC
Johnston, NC
Orange, NC
Wake, NC
6660 Rapid City, SD........................................... 0.8846
Pennington, SD
6680 Reading, PA.............................................. 0.9295
Berks, PA
6690 Redding, CA.............................................. 1.1135
Shasta, CA
6720 Reno, NV................................................. 1.0648
Washoe, NV
6740 Richland-Kennewick-Pasco, WA............................. 1.1491
Benton, WA
Franklin, WA
6760 Richmond-Petersburg, VA.................................. 0.9477
Charles City County, VA
Chesterfield, VA
Colonial Heights City, VA
Dinwiddie, VA
Goochland, VA
Hanover, VA
Henrico, VA
Hopewell City, VA
New Kent, VA
Petersburg City, VA
Powhatan, VA
Prince George, VA
Richmond City, VA
6780 Riverside-San Bernardino, CA............................. 1.1365
Riverside, CA
San Bernardino, CA
6800 Roanoke, VA.............................................. 0.8614
Botetourt, VA
Roanoke, VA
Roanoke City, VA
Salem City, VA
6820 Rochester, MN............................................. 1.2139
Olmsted, MN
6840 Rochester, NY............................................. 0.9194
Genesee, NY
Livingston, NY
Monroe, NY
Ontario, NY
Orleans, NY
Wayne, NY
6880 Rockford, IL 0.9625
Boone, IL
Ogle, IL
Winnebago, IL
6895 Rocky Mount, NC.......................................... 0.9228
Edgecombe, NC
Nash, NC
6920 Sacramento, CA........................................... 1.1500
El Dorado, CA
Placer, CA
Sacramento, CA
A6960 Saginaw-Bay City-Midland, MI............................ 0.9650
Bay, MI
Midland, MI
Saginaw, MI
6980 St. Cloud, MN............................................ 0.9700
Benton, MN
Stearns, MN
7000 St. Joseph, MO........................................... 0.9544
Andrews, MO
Buchanan, MO
7040 St. Louis, MO-IL......................................... 0.8855
Clinton, IL
Jersey, IL
Madison, IL
Monroe, IL
St. Clair, IL
Franklin, MO
Jefferson, MO
Lincoln, MO
St. Charles, MO
St. Louis, MO
[[Page 49812]]
St. Louis City, MO
Warren, MO
Sullivan City, MO
7080 Salem, OR................................................ 1.0500
Marion, OR
Polk, OR
7120 Salinas, CA.............................................. 1.4623
Monterey, CA
7160 Salt Lake City-Ogden, UT................................. 0.9945
Davis, UT
Salt Lake, UT
Weber, UT
7200 San Angelo, TX........................................... 0.8374
Tom Green, TX
7240 San Antonio, TX.......................................... 0.8753
Bexar, TX
Comal, TX
Guadalupe, TX
Wilson, TX
7320 San Diego, CA............................................ 1.1131
San Diego, CA
7360 San Francisco, CA........................................ 1.4142
Marin, CA
San Francisco, CA
San Mateo, CA
7400 San Jose, CA............................................. 1.4145
Santa Clara, CA
7440 San Juan-Bayamon, PR..................................... 0.4741
Aguas Buenas, PR
Barceloneta, PR
Bayamon, PR
Canovanas, PR
Carolina, PR
Catano, PR
Ceiba, PR
Comerio, PR
Corozal, PR
Dorado, PR
Fajardo, PR
Florida, PR
Guaynabo, PR
Humacao, PR
Juncos, PR
Los Piedras, PR
Loiza, PR
Luguillo, PR
Manati, PR
Morovis, PR
Naguabo, PR
Naranjito, PR
Rio Grande, PR
San Juan, PR
Toa Alta, PR
Toa Baja, PR
Trujillo Alto, PR
Vega Alta, PR
Vega Baja, PR
Yabucoa, PR
7460 San Luis Obispo-Atascadero-Paso Robles, CA............... 1.1271
San Luis Obispo, CA
7480 Santa Barbara-Santa Maria-Lompoc, CA..................... 1.0481
Santa Barbara, CA
7485 Santa Cruz-Watsonville, CA............................... 1.3646
Santa Cruz, CA
7490 Santa Fe, NM............................................. 1.0712
Los Alamos, NM
Santa Fe, NM
7500 Santa Rosa, CA........................................... 1.3046
Sonoma, CA
7510 Sarasota-Bradenton, FL................................... 0.9425
Manatee, FL
Sarasota, FL
7520 Savannah, GA............................................. 0.9376
Bryan, GA
Chatham, GA
Effingham, GA
7560 Scranton-Wilkes-Barre--Hazleton, PA...................... 0.8599
Columbia, PA
Lackawanna, PA
Luzerne, PA
Wyoming, PA
7600 Seattle-Bellevue-Everett, WA............................. 1.1474
Island, WA
King, WA
Snohomish, WA
7610 Sharon, PA............................................... 0.7869
Mercer, PA
7620 Sheboygan, WI............................................ 0.8697
Sheboygan, WI
7640 Sherman-Denison, TX...................................... 0.9255
Grayson, TX
7680 Shreveport-Bossier City, LA.............................. 0.8987
Bossier, LA
Caddo, LA
Webster, LA
7720 Sioux City, IA-NE........................................ 0.9046
Woodbury, IA
Dakota, NE
7760 Sioux Falls, SD.......................................... 0.9257
Lincoln, SD
Minnehaha, SD
7800 South Bend, IN........................................... 0.9802
St. Joseph, IN
7840 Spokane, WA.............................................. 1.0852
Spokane, WA
7880 Springfield, IL.......................................... 0.8659
Menard, IL
Sangamon, IL
7920 Springfield, MO.......................................... 0.8424
Christian, MO
Greene, MO
Webster, MO
8003 Springfield, MA.......................................... 1.0927
Hampden, MA
Hampshire, MA
8050 State College, PA........................................ 0.8941
Centre, PA
8080 Steubenville-Weirton, OH-WV.............................. 0.8804
Jefferson, OH
Brooke, WV
Hancock, WV
8120 Stockton-Lodi, CA........................................ 1.0506
San Joaquin, CA
8140 Sumter, SC............................................... 0.8273
Sumter, SC
8160 Syracuse, NY............................................. 0.9714
Cayuga, NY
Madison, NY
Onondaga, NY
Oswego, NY
8200 Tacoma, WA............................................... 1.0940
Pierce, WA
8240 Tallahassee, FL.......................................... 0.8504
Gadsden, FL
Leon, FL
8280 Tampa-St. Petersburg-Clearwater, FL...................... 0.9065
Hernando, FL
Hillsborough, FL
Pasco, FL
Pinellas, FL
8320 Terre Haute, IN.......................................... 0.8599
Clay, IN
Vermillion, IN
Vigo, IN
8360 Texarkana,AR-Texarkana, TX............................... 0.8088
Miller, AR
Bowie, TX
8400 Toledo, OH............................................... 0.9810
Fulton, OH
Lucas, OH
Wood, OH
8440 Topeka, KS............................................... 0.9199
Shawnee, KS
8480 Trenton, NJ.............................................. 1.0432
Mercer, NJ
8520 Tucson, AZ............................................... 0.8911
Pima, AZ
8560 Tulsa, OK................................................ 0.8332
Creek, OK
Osage, OK
Rogers, OK
Tulsa, OK
Wagoner, OK
8600 Tuscaloosa, AL........................................... 0.8130
Tuscaloosa, AL
8640 Tyler, TX................................................ 0.9521
Smith, TX
8680 Utica-Rome, NY........................................... 0.8465
Herkimer, NY
Oneida, NY
8720 Vallejo-Fairfield-Napa, CA............................... 1.3354
Napa, CA
Solano, CA
8735 Ventura, CA.............................................. 1.1096
Ventura, CA
8750 Victoria, TX............................................. 0.8756
Victoria, TX
8760 Vineland-Millville-Bridgeton, NJ......................... 1.0031
Cumberland, NJ
8780 Visalia-Tulare-Porterville, CA........................... 0.9418
Tulare, CA
8800 Waco, TX................................................. 0.8073
McLennan, TX
8840 Washington, DC-MD-VA-WV.................................. 1.0851
[[Page 49813]]
District of Columbia, DC
Calvert, MD
Charles, MD
Frederick, MD
Montgomery, MD
Prince Georges, MD
Alexandria City, VA
Arlington, VA
Clarke, VA
Culpepper, VA
Fairfax, VA
Fairfax City, VA
Falls Church City, VA
Fauquier, VA
Fredericksburg City, VA
King George, VA
Loudoun, VA
Manassas City, VA
Manassas Park City, VA
Prince William, VA
Spotsylvania, VA
Stafford, VA
Warren, VA
Berkeley, WV
Jefferson, WV
8920 Waterloo-Cedar Falls, IA................................. 0.8069
Black Hawk, IA
8940 Wausau, WI............................................... 0.9782
Marathon, WI
8960 West Palm Beach-Boca Raton, FL........................... 0.9939
Palm Beach, FL
9000 Wheeling, OH-WV.......................................... 0.7670
Belmont, OH
Marshall, WV
Ohio, WV
9040 Wichita, KS.............................................. 0.9520
Butler, KS
Harvey, KS
Sedgwick, KS
9080 Wichita Falls, TX........................................ 0.8498
Archer, TX
Wichita, TX
9140 Williamsport, PA......................................... 0.8544
Lycoming, PA
9160 Wilmington-Newark, DE-MD................................. 1.1173
New Castle, DE
Cecil, MD
9200 Wilmington, NC........................................... 0.9640
New Hanover, NC
Brunswick, NC
9260 Yakima, WA............................................... 1.0569
Yakima, WA
9270 Yolo, CA................................................. 0.9434
Yolo, CA
9280 York, PA................................................. 0.9026
York, PA
9320 Youngstown-Warren, OH.................................... 0.9358
Columbiana, OH
Mahoning, OH
Trumbull, OH
9340 Yuba City, CA............................................ 1.0276
Sutter, CA
Yuba, CA
9360 Yuma, AZ................................................. 0.8589
Yuma, AZ
------------------------------------------------------------------------
Table 8.--Wage Index for Rural Areas
------------------------------------------------------------------------
Wage
Rural area index
------------------------------------------------------------------------
Alabama........................................................ 0.7660
Alaska......................................................... 1.2293
Arizona........................................................ 0.8493
Arkansas....................................................... 0.7666
California..................................................... 0.9899
Colorado....................................................... 0.9015
Connecticut.................................................... 1.2394
Delaware....................................................... 0.9128
Florida........................................................ 0.8827
Georgia........................................................ 0.8230
Guam........................................................... 0.9611
Hawaii......................................................... 1.0255
Idaho.......................................................... 0.8747
Illinois....................................................... 0.8204
Indiana........................................................ 0.8755
Iowa........................................................... 0.8315
Kansas......................................................... 0.7900
Kentucky....................................................... 0.8079
Louisiana...................................................... 0.7580
Maine.......................................................... 0.8874
Maryland....................................................... 0.8946
Massachusetts.................................................. 1.1288
Michigan....................................................... 0.9009
Minnesota...................................................... 0.9151
Mississippi.................................................... 0.7680
Missouri....................................................... 0.7881
Montana........................................................ 0.8481
Nebraska....................................................... 0.8204
Nevada......................................................... 0.9577
New Hampshire.................................................. 0.9839
New Jersey*....................................................
New Mexico..................................................... 0.8872
New York....................................................... 0.8542
North Carolina................................................. 0.8669
North Dakota................................................... 0.7788
Ohio........................................................... 0.8613
Oklahoma....................................................... 0.7590
Oregon......................................................... 1.0259
Pennsylvania................................................... 0.8462
Puerto Rico.................................................... 0.4356
Rhode Island*..................................................
South Carolina................................................. 0.8607
South Dakota................................................... 0.7815
Tennessee...................................................... 0.7877
Texas.......................................................... 0.7821
Utah........................................................... 0.9312
Vermont........................................................ 0.9345
Virginia....................................................... 0.8504
Virgin Islands................................................. 0.7845
Washington..................................................... 1.0179
West Virginia.................................................. 0.7975
Wisconsin...................................................... 0.9162
Wyoming........................................................ 0.9007
------------------------------------------------------------------------
* All counties within the State are classified urban.
D. Updates to the Federal Rates
In accordance with section 1888(e)(4)(E) of the Act and section 311
of the BIPA, the payment rates listed here reflect an update equal to
the SNF market basket minus 0.5 percentage points, which equals 2.6
percentage points. We will continue to publish the rates, wage index,
and case-mix classification methodology in the Federal Register before
August 1 preceding the start of each succeeding fiscal year.
E. Relationship of RUG-III Classification System to Existing Skilled
Nursing Facility Level-of-Care Criteria
As discussed in Sec. 413.345, we include in each update of the
Federal payment rates in the Federal Register the designation of those
specific RUGs under the classification system that represent the
required SNF level of care, as provided in Sec. 409.30. This
designation reflects an administrative presumption under the current
44-group RUG-III classification system that beneficiaries who are
correctly assigned to one of the upper 26 RUG-III groups in the initial
5-day, Medicare-required assessment are automatically classified as
meeting the SNF level of care definition up to that point.
Those beneficiaries assigned to any of the lower 18 groups are not
automatically classified as either meeting or not meeting the
definition, but instead receive an individual level of care
determination using the existing administrative criteria. This
presumption recognizes the strong likelihood that beneficiaries
assigned to one of the upper 26 groups during the immediate post-
hospital period require a covered level of care, which would be
significantly less likely for those beneficiaries assigned to one of
the lower 18 groups.
In this notice, we are continuing the existing designation of the
upper 26 RUG-III groups for purposes of this administrative
presumption, consisting of the following RUG-III classifications: all
groups within the Ultra High Rehabilitation category; all groups within
the Very High Rehabilitation category; all groups within the High
Rehabilitation category; all groups within the Medium Rehabilitation
category; all groups within the Low Rehabilitation category; all groups
within the Extensive Services category; all groups within the Special
Care category; and, all groups within the Clinically Complex category.
F. Initial Three-Year Transition Period
As noted previously, the rates that we are announcing in this
notice are for the fifth year of the SNF PPS. As a result, the PPS is
no longer operating under the initial three-year transition period from
facility-specific to Federal rates and, therefore, payment now equals
100 percent of the adjusted Federal per diem rate.
[[Page 49814]]
G. Example of Computation of Adjusted PPS Rates and SNF Payment
Using the XYZ SNF described in Table 9, the following shows the
adjustments made to the Federal per diem rate to compute the provider's
actual per diem PPS payment. XYZ's 12-month cost reporting period
begins October 1, 2002. XYZ's total PPS payment would equal $19,460.
The Labor and Non-labor columns are derived from Table 5. The 4 percent
adjustment to the Federal rates enacted in section 101(d) of the BBRA
and the 16.66 percent adjustment to the nursing component of the
Federal rates enacted in section 312 of the BIPA are no longer in
effect for FY 2003, and, thus, are not reflected in the table. However,
the adjustments for certain specified RUG-III groups enacted in section
101(a) of the BBRA (as amended by section 314 of the BIPA) remain in
effect, and are reflected in the table.
Table 9.--SNF XYZ: Located in State College, PA
[Wage Index: 0.8941]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Medicare
RUG group Labor Wage index Adj. labor Non-labor Adj. rate adjustment days Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVC..................................................... $250.14 0.8941 $223.65 $78.44 $302.09 \1\ $322.3 14 $4,513
3
RHA..................................................... 193.30 0.8941 172.83 60.62 233.45 \1\ 249.09 16 3,985
SSC..................................................... 161.02 0.8941 143.97 50.49 194.46 \2\ 233.35 30 7,001
IA2..................................................... 109.18 0.8941 97.62 34.24 131.86 131.86 30 3,956
-----------------------------------------------------------------------------------------------
Total................................................. .......... .......... .......... .......... .......... .......... 90 19,460
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Reflects a 6.7 percent adjustment from section 314 of the BIPA.
\2\ Reflects a 20 percent adjustment from section 101(a) of the BBRA.
III. The Skilled Nursing Facility Market Basket Index
Section 1888(e)(5)(A) of the Act requires us to establish a SNF
market basket index (input price index) that reflects changes over time
in the prices of an appropriate mix of goods and services included in
the SNF PPS. This notice incorporates the latest available projections
of the SNF market basket index. We have developed a SNF market basket
index that encompasses the most commonly used cost categories for SNF
routine services, ancillary services, and capital-related expenses. In
the July 31, 2001 Federal Register (66 FR 39562), we included a
complete discussion on the rebasing of the SNF market basket to FY
1997. There are 21 separate cost categories and respective price
proxies. These cost categories were illustrated in Tables 10.A, 10.B,
and Appendix A, along with other relevant information, in the July 31,
2001 Federal Register.
Each year, we calculate a revised labor-related share based on the
relative importance of labor-related cost categories in the input price
index. Table 10 summarizes the updated labor-related share for FY 2003.
The forecasted rates of growth used to compute the SNF market basket
percentage described in section II.D of this notice are shown in Table
11.
Table 10.--FY 2003 Labor-Related Share
------------------------------------------------------------------------
Relative importance
Cost category -----------------------
FY 2003 FY 2002
------------------------------------------------------------------------
Wages and salaries.............................. 54.796 54.185
Employee benefits............................... 11.232 10.988
Nonmedical professional fees.................... 2.652 2.667
Labor-intensive services........................ 4.124 4.107
Capital-related................................. 3.324 3.432
-----------------------
Total....................................... 76.128 75.379
------------------------------------------------------------------------
Table 11.--SNF Total Cost Market Basket Change FY 1998 Through FY 2004
------------------------------------------------------------------------
Fiscal years beginning October 1 Total \1\
------------------------------------------------------------------------
Fiscal year:
1998....................................................... 2.8
1999....................................................... 3.0
2000....................................................... 4.0
2001....................................................... 4.9
2002....................................................... 3.6
2003....................................................... 3.1
2004....................................................... 3.0
------------------------------------------------------------------------
\1\ Skilled Nursing Facility Total Cost market Basket.
Source: (Table 10) Standard & Poor's DRI HCC, 2nd QTR.
Source: (Table 11) Global Insights Inc., DRI-WEFA, 2nd Qtr, 2002.
@USAMACRO/MODTREND@CISSIM/TL0502.SIM.
Released by CMS, OACT, National Health Statistics Group.
A. Use of the Skilled Nursing Facility Market Basket Percentage
Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage as the percentage change in the SNF market basket index, as
described in the previous section, from the average of the prior fiscal
year to the average of the current fiscal year. For the Federal rates
established in this notice, the percentage increase in the SNF market
basket index is used to compute the update factor occurring between FY
2002 and FY 2003. We used the 2nd quarter 2002 forecasted percentage
increases of the FY 1997 rebased SNF market basket index for routine,
ancillary, and capital-related expenses, described in the previous
section, to compute the update factors. Finally, we no longer compute
update factors to adjust a facility-specific portion of the SNF PPS
rates, because the three-year transition period from facility-specific
to full Federal rates that started with cost reporting periods
beginning in July of 1998 has expired.
B. Federal Rate Update Factor
Section 1888(e)(4)(E)(ii)(III) of the Act requires that the update
factor used to establish the FY 2003 Federal rates be at a level equal
to the market basket percentage change minus 0.5 percentage point.
Accordingly, to establish the update factor, we determined the total
growth from the average market basket level for the period of October
1, 2001 through September 30, 2002 to the average market basket level
for the period of October 1, 2002 through September 30, 2003. Using
this process, the update factor for FY 2003 SNF Federal rates is 2.6
percentage points (3.1 percentage points minus 0.5 percentage point).
We used this revised update factor to compute the Federal portion
of the SNF PPS rate shown in Tables 1 and 2.
[[Page 49815]]
IV. Consolidated Billing
As established by section 4432(b) of the BBA, the consolidated
billing requirement places with the SNF the Medicare billing
responsibility for virtually all of the services that the SNF's
residents receive, except for a small number of services that the
statute specifically identifies as being excluded from this provision.
Section 103 of the BBRA amended this provision by further excluding a
number of individual services, identified by Healthcare Common
Procedure Coding System (HCPCS) code, within several broader categories
that otherwise remained subject to the provision. Section 313 of the
BIPA further amended this provision by repealing its Part B aspect;
that is, its applicability to services furnished to a resident during a
SNF stay that Medicare does not cover. (However, physical,
occupational, and speech-language therapy remain subject to
consolidated billing, regardless of whether the resident who receives
these services is in a covered Part A stay.) In the final rule that we
published in the July 31, 2001 Federal Register (66 FR 39562), we
revised the consolidated billing regulations to reflect the most recent
(the BIPA) amendments. To date, the Congress has enacted no further
legislation affecting this provision. Accordingly, we do not include
any revisions to the consolidated billing regulations in this notice.
V. Application of the SNF PPS to SNF Services Furnished by Swing-
Bed Hospitals
In the July 31, 2001 final rule (66 FR 39562), we announced the
conversion of swing-bed hospitals to the SNF PPS, effective with the
start of the provider's first cost reporting period beginning on or
after July 1, 2002. We selected this date consistent with the statutory
provision to integrate swing-bed hospitals into the SNF PPS by the end
of the SNF transition period, June 30, 2002.
We note that the necessary training materials and support
structures were developed to assist swing-bed hospitals affected by
this change. The new 2-page customized Minimum Data Set (MDS) for
Swing-Bed Hospitals (SB-MDS) has been approved for use by OMB, and is
posted on our web site at http://www.cms.hhs.gov/providers/snfpps/snfpps_swing-bed.asp. The MDS data collection and transmission
software, RAVEN-SB, was customized to reflect the use of the new 2-page
form and is now in use.
Swing-bed hospitals must submit MDS assessments on the same
schedule as SNFs (the 5th, 14th, 30th, 60th, and 90th covered day of
the admission). Since the average swing-bed length of stay is only 9
days, most swing-bed hospitals will, on the average, only need to
complete and transmit one MDS record per stay. The transmission
requirements are similar to those used by SNFs, and swing-bed hospitals
have been notified of the program requirements for establishing dial-in
capability to transmit the SB-MDS records. The swing-bed transmission
system was customized to permit direct transmission to the swing-bed
data repository, and swing-bed hospitals have a dedicated Help Desk to
assist them with transmission and technical support issues.
As part of the implementation effort, we have evaluated MDS
policies and procedures applicable to SNFs to ensure their
applicability to swing-bed hospitals. In most cases, swing-bed
hospitals and SNFs follow the same procedures. However, whenever
possible, we streamlined those procedures to reflect the operational
needs of the swing-bed hospitals. For example, SNFs are required to
transmit their MDS records within 31 days of completion, which allows
for completion of Resident Assessment Protocols (RAPs), data editing,
and care planning. The system edits developed for the SB-MDS reflect
the shorter lengths of stay and the inapplicability of the MDS RAPs and
care planning components to swing-bed hospitals, and require
transmission within 14 days of completion. Finally, we developed and
distributed detailed training materials on MDS preparation,
transmission, and claims processing. These materials are posted on our
web site and updated regularly as new information becomes available.
Swing-bed hospitals may check the SNF PPS web site at http://www.cms.hhs.gov/providers/snfpps/snfpps_swing-bed.asp and http://www.cms.hhs.gov/medlearn/sbmds.asp to receive the latest information.
VI. Collection of Information Requirements
The current Medicare assessment requirements are based on section
4432(a) of the Balanced Budget Act of 1997 (BBA), which amended section
1888(e) of the Social Security Act (the Act) to mandate implementation
of a Medicare prospective payment system for SNFs. This section of the
Act requires annual adjustments to the PPS rates based on geographic
variation and SNF case-mix, and prescribes the methodology for updating
the rates in future years.
The PPS case-mix adjustments are derived from the clinical
information collected by providers about Medicare Part A covered
beneficiaries during their SNF stays, using the minimum data set (MDS).
As a result of a mandate contained in the nursing home reform
legislation in the Omnibus Budget Reconciliation Act of 1987 (OBRA
`87), a uniform MDS was required as a part of the comprehensive
resident assessment for all certified long-term care facilities. The
provisions of OBRA `87 require that certified long-term care facilities
collect information concerning all residents to support care planning
activities. Comprehensive assessments, using the MDS, are required at
admission (no later than 14 days following admission), annually, and
upon a significant change in a resident's condition. In addition,
quarterly reviews of each resident are required. A shorter version of
the MDS has been developed for these quarterly assessments.
With implementation of the SNF PPS, providers were required to
perform MDS assessments of all beneficiaries in Medicare Part A covered
stays on days 5, 14, 30, 60, and 90 of their Medicare covered stays.
The assessments required for the SNF PPS are in addition to those
required by the OBRA `87, although there is often overlap in the timing
of the required assessments so that one assessment may be used to
satisfy both the OBRA `87 and SNF PPS requirements. The time required
to complete the full version of the MDS is estimated to be 90 minutes.
Beginning July 1, 2002, a shorter version of the MDS, the Medicare PPS
Assessment Form (MPAF), became available for use to satisfy Medicare
assessment requirements. We announced the option of using this shorter
version in the Federal Register (67 FR 38128, May 31, 2002).
Performance of this version of the assessment is estimated to require
only 45 minutes of staff time.
When a Medicare SNF PPS assessment is due at the same time as an
OBRA-required assessment (for example, a 14-day Medicare SNF PPS
assessment combined with an initial admission assessment) providers
must meet the more stringent of the two sets of requirements. Thus, the
provider must perform an MDS that includes all of the MPAF items plus
any additional items required by the clinical assessment, in order to
meet both sets of standards. If the OBRA (or State) requirements call
for a full MDS, the full MDS may be submitted to satisfy the Medicare
SNF PPS requirements. When a full MDS assessment is required to
[[Page 49816]]
fulfill the dual requirements of a Medicare SNF PPS and OBRA,
completion time is estimated to be 90 minutes.
The total burden of the full MDS, which includes all administrative
time, as well as the time actually required by the assessment process,
is estimated to be 5,696,218 hours annually. The extent to which the
MPAF will be utilized is not known, so time saving associated with its
use is not factored into this estimate.
Swing-beds began transitioning into the Medicare SNF PPS on July 1,
2002 and are required to complete a modified version of the MDS, the
MDS-SB, which collects only the information needed to calculate the
RUG-III classifications for case-mix adjustment. The MDS-SB is the only
version of the MDS that is acceptable for use in Medicare SNF PPS
swing-bed facilities. There are no OBRA '87 requirements for swing-bed
providers. Completion of each MDS-SB assessment is estimated to require
30 minutes. The total burden, including the amount of time required for
the actual assessment process as well as administrative time, is
estimated to be 132,360 hours per year across all swing-bed providers.
These information collection requirements are currently approved by
OMB through December 31, 2002 under OMB numbers 0938-0739 for SNFs and
0938-0872 for swing-bed facilities. We are not proposing any changes to
these requirements in this notice.
VII. Regulatory Impact Analysis
We have examined the impacts of this notice as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, (the Act) the
Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4), and
Executive Order 13132.
Executive Order 12866 directs agencies to assess costs and benefits
of available regulatory alternatives and, when regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety effects,
distributive impacts, and equity). A regulatory impact analysis (RIA)
must be prepared for major rules with economically significant effects
($100 million or more annually). This notice is major, as defined in
Title 5, United States Code, section 804(2), because we estimate the
impact of the update will be to increase payments to SNFs by
approximately $400 million. The update set forth in this notice applies
to payments in FY 2003. Accordingly, the analysis that follows
describes the impact of this one year only. In accordance with the
requirements of the Act, we will publish a notice for each subsequent
FY that will provide for an update to the payment rates and include an
associated impact analysis.
The UMRA also requires (in section 202) that agencies prepare an
assessment of anticipated costs and benefits before developing any rule
that may result in an expenditure in any year by State, local, or
tribal governments, in the aggregate, or by the private sector, of $110
million or more. This notice will have no consequential effect on
State, local, or tribal governments. We believe the private sector cost
of this notice falls below these thresholds as well. Because this
notice does not impose unfunded mandates, as defined by section 202 of
UMRA, we have not prepared an assessment.
Executive Order 13132 (effective November 2, 1999) establishes
certain requirements that an agency must meet when it promulgates
regulations that impose substantial direct compliance costs on State
and local governments, preempt State law, or otherwise have Federalism
implications. As stated above, this notice will have no consequential
effect on State and local governments.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and governmental agencies.
Most SNFs and most other providers and suppliers are small entities,
either by virtue of their nonprofit status or by having revenues of
$11.5 million or less annually. For purposes of the RFA, all States and
tribal governments are not considered to be small entities, nor are
intermediaries or carriers. Individuals and States are not included in
the definition of a small entity.
This notice updates the SNF PPS rates and wage index published in
the July 31, 2001 final rule (66 FR 39562), thereby increasing
aggregate payments by an estimated $400 million. Although, as
illustrated in Table 12, the simultaneous expiration of several
temporary payment increases established under recent legislation
results in a net decrease in aggregate Medicare payments in FY 2003,
these decreases are not a result of this notice, but rather, are
specifically mandated in the legislation. Because Medicare is a
relatively minor payer for nursing home care (approximately 9 percent
of patient days compared to 65 percent for Medicaid), we do not expect
that the 2.6 percent rate increase and wage index update will have a
significant impact upon small entities overall. We note that some
individual providers may experience larger increases (or even
decreases) in payments than others due to changes in payments that
result from updating the wage index. However, we do not expect these
changes to affect small entities disproportionately. Accordingly, we
certify that this notice will not have a significant impact on small
entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 604 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area and has fewer
than 100 beds. Because the payment rates set forth in this notice also
affect rural hospital swing-bed services, we believe that this notice
will have an impact on small rural hospitals (this impact is discussed
later in this section). However, because this incremental increase in
payments for Medicare swing-bed services is relatively minor in
comparison to overall rural hospital revenues, this notice will not
have a significant impact on the overall operations of these small
rural hospitals.
A. Background
Section 1888(e) of the Act establishes the SNF PPS for the payment
of Medicare SNF services for cost reporting periods beginning on or
after July 1, 1998. This section specifies that the base year cost data
to be used for computing the RUG-III payment rates must be from FY 1995
(October 1, 1994, through September 30, 1995.) In accordance with the
statute, we also incorporated a number of elements into the SNF PPS,
such as case-mix classification methodology, the MDS assessment
schedule, a market basket index, a wage index, and the urban and rural
distinction used in the development or adjustment of the Federal rates.
This notice sets forth updates of the SNF PPS rates contained in
the July 31, 2001 final rule (66 FR 39562). Table 12 presents the
projected effects of the changes in the SNF PPS from FY 2002 to FY
2003, as well as statutory changes effective for FY 2002 and FY 2003.
In so doing, we estimate the effects of each change by estimating
payments while holding all other payment variables constant. We use the
best data available,
[[Page 49817]]
but we do not attempt to predict behavioral responses to these changes,
and we do not make adjustments for future changes in such variables as
days or case-mix.
This analysis incorporates the latest estimates of growth in
service use and payments under the Medicare SNF benefit, based on the
latest available Medicare claims data and MDS 2.0 assessment data from
1999. We note that certain events may combine to limit the scope or
accuracy of our impact analysis, because such an analysis is future-
oriented and, thus, very susceptible to forecasting errors due to other
changes in the forecasted impact time period. Some examples of such
possible events are newly legislated general Medicare program funding
changes by the Congress, or changes specifically related to SNFs. In
addition, changes to the Medicare program may continue to be made as a
result of the BBA, the BBRA, the BIPA, or new statutory provisions.
Although these changes may not be specific to SNF PPS, the nature of
the Medicare program is such that the changes may interact, and the
complexity of the interaction of these changes could make it difficult
to predict accurately the full scope of the impact upon SNFs.
B. Impact of the Notice
The purpose of this notice is not to initiate significant policy
changes with regard to the SNF PPS; rather, it is to provide an update
to the rates for FY 2003. As mentioned previously, we have decided not
to implement any case-mix refinements for FY 2003. Our decision to
defer implementing any case-mix refinements for the present leaves the
current classification system in place. Under the provisions of section
101(a) of the BBRA, this will result in SNFs continuing to receive an
estimated $1 billion in temporary add-on payments during FY 2003.
In updating the rates for FY 2003, we made a number of standard
annual revisions and clarifications mentioned elsewhere in this notice
(for example, the update to the wage and market basket indexes used for
adjusting the Federal rates). These revisions will increase payments to
SNFs by approximately $400 million.
In addition to the update, section 101(d)(1) of the BBRA and
section 312 of the BIPA, providing for temporary adjustments to the SNF
PPS payment rates, will expire by statute, on October 1, 2002. These
temporary adjustments together account for an estimated $1.4 billion
dollars per year in payments to the nursing home industry. The
expiration of these temporary add-ons results in a net decrease in
payments for SNFs in FY 2003.
The aggregate decrease in payments associated with this notice is
estimated to be $1 billion. There are three areas of change that
produce this net decrease in payment for facilities:
Section 312 of the BIPA temporarily increases the nursing
component of the Federal rates payments by 16.66 percent. This
provision results in $900 million in payments per year. The provision
expires by statute on October 1, 2002.
Section 101(d)(1) of the BBRA temporarily increases
payments for all RUG-III groups by 4 percent, and prohibits the
increases from being built into the base Federal rates. This provision
results in $500 million in payments per year. The provision expires by
statute on October 1, 2002.
The annual update in payments from FY 2002 levels to FY
2003 levels, resulting in a $400 million increase in payments per year.
The total change in Federal payments includes all of the previously
noted changes in addition to the effect of the annual update to the
rates and is illustrated in Table 12.
Table 12 only illustrates the impact of the changes on SNFs; it
does not apply to swing-bed hospital units. A discussion of the impact
on those providers follows.
In developing the impact analysis, we were able to increase
significantly the number of facilities included in the data. With the
end of the transition period, there is no longer a need to calculate
facility-specific rates using 1995 cost report information to estimate
current SNF payments. This has allowed us to expand the data base to
all SNFs submitting claims in FY 2001 (the latest available data) in
estimating the impact of annual updates.
The impacts are shown in Table 12. The breakdown of the various
categories of data in the table is as follows:
The first column shows the breakdown of all SNFs by urban or rural
status, hospital-based or freestanding status, and census region.
The first row of figures in the first column describes the
estimated effects of the various changes on all facilities. The next
six rows show the effects on facilities split by hospital-based,
freestanding, urban, and rural categories. The next twenty rows show
the effects on urban versus rural status by census region. The final
four rows show the effects on facilities by ownership type.
The second column in the table shows the number of facilities in
the impact database.
The third column shows the projected effect of eliminating the
16.66 percent add-on to the nursing portion of the Federal rate
mandated by the BIPA. As expected, this results in a decrease in
payments for all facilities; however, as seen in the table, the varying
effect results in a distributional impact. In addition, since this
increase only applies to the nursing portion of the payment rate, the
effect on total expenditures is less than 16.66 percent.
The fourth column of the table shows the effect of the annual
update to the wage index. The total impact of this change is zero
percent; however, there are distributional effects of the change.
The fifth column of the table shows the effect of all of the
changes on the FY 2003 payments. Section 101(d) of the BBRA increases
payments for all RUG-III groups by 4 percent and is the same for all
types of facilities. This temporary add-on expires October 1, 2002, and
is reflected in the total column. This includes all of the previous
changes, the expiration of the 4 percent add-on to the Federal rates,
and the increase to this year's payment rates by the market basket rate
less 0.5 percentage point, or 2.6 percentage points. The market basket
increase of 2.6 percentage points is also constant for all providers
and, though not shown individually, is included in the total column. It
is projected that aggregate payments will decrease by 9.1 percent in
total, assuming facilities do not change their care delivery and
billing practices in response.
As can be seen from this table, the combined effects of all of the
changes vary by specific types of providers and by location. For
example, freestanding facilities experience payment decreases, while
the decrease for hospital-based and rural providers is less
significant.
[[Page 49818]]
Table 12.--Projected Impact of FY 2003 Update to the SNF PPS
----------------------------------------------------------------------------------------------------------------
Eliminate add-
Number of on to nursing Wage index Total FY 2003
facilities rates change change*
(Percent) (Percent) (Percent)
----------------------------------------------------------------------------------------------------------------
Total....................................... 13,944 -7.4 0.0 -8.8
Urban..................................... 9,485 -7.5 -0.1 -9.0
Rural..................................... 4,459 -7.2 0.5 -8.1
Hospital-based urban...................... 1,049 -7.8 -0.1 -9.3
Freestanding urban........................ 7,885 -7.4 -0.1 -8.9
Hospital-based rural...................... 660 -7.6 0.5 -8.5
Freestanding rural........................ 3,500 -7.1 0.5 -8.0
Urban by region:
New England............................. 911 -7.6 -0.2 -9.2
Middle Atlantic......................... 1,469 -7.8 -0.8 -9.9
South Atlantic.......................... 1,522 -7.3 0.2 -8.5
East North Central...................... 1,823 -7.3 0.0 -8.7
East South Central...................... 410 -7.4 -0.3 -9.1
West North Central...................... 662 -7.5 0.3 -8.6
West South Central...................... 847 -7.4 0.6 -8.2
Mountain................................ 413 -7.2 0.7 -8.0
Pacific................................. 1,422 -7.5 0.0 -8.9
Rural by region:
New England............................. 129 -7.1 0.4 -8.1
Middle Atlantic......................... 238 -7.4 -0.9 -9.6
South Atlantic.......................... 627 -7.1 0.5 -8.0
East North Central...................... 845 -7.1 0.3 -8.2
East South Central...................... 479 -7.2 1.0 -7.7
West North Central...................... 1,045 -7.4 0.8 -8.1
West South Central...................... 605 -7.1 0.8 -7.8
Mountain................................ 303 -7.0 0.5 -7.9
Pacific................................. 188 -6.9 0.4 -7.9
Ownership:
Government.............................. 701 -7.8 -0.1 -9.3
Proprietary............................. 8,839 -7.4 0.0 -8.8
Voluntary............................... 3,514 -7.6 -0.1 -9.1
----------------------------------------------------------------------------------------------------------------
*Column 5 includes the effects of reducing payments by 4 percent across all providers (resulting from the
expiration of section 101(d) of the BBRA, effective October 1, 2002) and shows the effect of the market basket
update that increases payment by 2.6 percent across all providers.
D. Impact on Swing-Bed Providers
In the July 31, 2001 final rule (66 FR 39562), we projected
payments for swing-bed providers under the SNF PPS by first using the
MEDPAR analog to assign 1999 claims records to a RUGIII group, then
applying FY 2002 payment rates to calculate annual estimated payments.
For the purpose of this notice, we have used the MEDPAR analog
classification, and estimated current SNF PPS reimbursement as if the
swing-bed providers were fully phased into the SNF PPS in FY 2002.
Then, using the same MEDPAR analog classifications, we applied the FY
2003 changes for a fully phased-in swing-bed population. We estimate
that the overall impact on swing-bed facilities will be a decrease in
payments of approximately 9 percent, or $22 million.
We anticipate that the actual overall impact of the elimination of
the rate add-ons will be approximately equal to the 8.5 percent rate
decrease projected for rural hospital-based SNFs.
E. Other Options Considered
As discussed in section II.B of this notice, we determined that
while the research on case-mix refinements gives a sound basis for
developing case-mix refinements in the SNF PPS, we need additional time
to review and analyze the implications. Therefore, we have decided not
to implement any case-mix refinements for FY 2003. We are proceeding
with our research to evaluate both incremental and long-range
comprehensive changes in the case-mix classification system.
Finally, in accordance with the provisions of Executive Order
12866, this notice was reviewed by the Office of Management and Budget.
VIII. Federalism
We have reviewed this notice under the threshold criteria of
Executive Order 13132, Federalism, and we have determined that it does
not significantly affect the rights, roles, and responsibilities of
States.
IX. Waiver of Proposed Rulemaking
We ordinarily publish a proposed notice in the Federal Register to
provide a period for public comment before the provisions of a notice
such as this take effect. We can waive this procedure, however, if we
find good cause that a notice and comment period procedure is
impracticable, unnecessary, or contrary to the public interest and we
incorporate a statement of finding and its reasons in the notice
issued.
We believe it is unnecessary to undertake a proposed notice with
comment period as the statute requires annual updates to the SNF PPS
rates, the methodologies used to update the rates have been previously
subject to public comment, and this notice reflects the application of
previously established methodologies. Therefore, for good cause, we
waive prior notice and comment procedures.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare-Hospital Insurance Program; and No. 93.774, Medicare-
Supplementary Medical Insurance Program).
[[Page 49819]]
Dated: June 14, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: July 11, 2002.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-19373 Filed 7-26-02; 3:54 pm]
BILLING CODE 4120-01-P