[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]



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Part V





Department of Health and Human Services





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Centers for Medicare and Medicaid Services



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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  

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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.

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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
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                                                     Nursing--       Therapy--    Therapy--  non-
                 Rate component                      case-mix        case-mix       case-  mix     Non-case-mix
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Per diem amount.................................         $121.59          $91.58          $12.06          $62.05
----------------------------------------------------------------------------------------------------------------


                                Table 2.--Unadjusted Federal Rate Per Diem Rural
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                                                     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

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[GRAPHIC] [TIFF OMITTED] TN31JY02.002


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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

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[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