[Federal Register Volume 68, Number 80 (Friday, April 25, 2003)]
[Rules and Regulations]
[Pages 22268-22291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10015]



[[Page 22267]]

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Part IV





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 405, 412, 413, and 485



Medicare Program; Changes to the Hospital Inpatient Prospective Payment 
Systems and Fiscal Year 2003 Rates; Correction; Final Rule

  Federal Register / Vol. 68, No. 80 / Friday, April 25, 2003 / Rules 
and Regulations  

[[Page 22268]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 412, 413, and 485

[CMS-1203-CN]
RIN 0938-AL23


Medicare Program; Changes to the Hospital Inpatient Prospective 
Payment Systems and Fiscal Year 2003 Rates; Correction

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Correction of final rule.

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SUMMARY: This document corrects technical errors that appeared in the 
final rule published in the Federal Register on August 1, 2002 entitled 
``Medicare Program; Changes to the Hospital Inpatient Prospective 
Payment Systems and Fiscal Year 2003 Rates,'' including three technical 
errors in the wage index values. Except for the three wage index 
corrections, these technical corrections are effective retrospectively 
to October 1, 2002. The corrections to the wage index values are 
effective prospectively for discharges occurring on or after April 28, 
2003.

EFFECTIVE DATES: All corrections except those listed in items 12(b) and 
13 of section III of this notice are effective as of October 1, 2002. 
The corrections listed in items 12(b) and 13 of section III of this 
document are effective on April 28, 2003.

FOR FURTHER INFORMATION CONTACT: Margot Blige Holloway, (410) 786-4642.

SUPPLEMENTARY INFORMATION:

I. Background

    In FR Doc. 02-19292 of August 1, 2002 (67 FR 49982), there were a 
number of technical errors that are identified and corrected in the 
Correction of Errors section below. With the exception of three 
provisions related to correction of wage index values, the provisions 
in this correction notice are effective as if they had been included in 
the document published on August 1, 2002. Accordingly, these 
corrections are effective on October 1, 2002. The three corrected wage 
index values are effective prospectively with discharges occurring on 
or after April 28, 2003. The errors in these wage index values resulted 
from the inadvertent use of incorrect geographic reclassification 
designations or wage data or both in calculating these values.

II. Summary of the Corrections to the August 1, 2002 Final Rule

    This correction notice makes a number of changes to the August 1, 
2002 final rule. Because of the number of corrections and length of 
some of these corrections, we are summarizing the corrections in 
sections II.A. and II.B. of the notice. Sections II.A. and II.B. of the 
notice describe the corrections that are effective October 1, 2002 and 
April 28, 2003, respectively. Section III of this notice specifies the 
details of each correction to the August 1, 2002 final rule.

A. Corrections Effective October 1, 2002

    In section II.B.2.b of the final rule, we described the revisions 
to diagnostic related groups (DRGs) 14 and 15. Beginning on page 49988 
of the final rule, we presented the public comments and our responses 
to the proposed changes to these DRGs. However, we inadvertently 
omitted two comments regarding the proposed changes to DRGs 14 and 15. 
We apologize for this omission, as we fully intend to monitor these 
DRGs and the cases assigned to them. In addition, we discovered, and 
are correcting, typographical errors on pages 49994 and 50005.
    On page 50014 of the final rule, we discussed the new technology 
application for XigrisTM. In our discussion of our decision 
to approve the application to receive new technology add-on payments, 
we mistakenly listed the following criteria for use as ``FDA-listed 
indications and contraindications'';
    [sbull] Active internal bleeding;
    [sbull] Recent (within 3 months) hemorrhagic stroke;
    [sbull] Recent (within 2 months) intracranial or intraspinal 
surgery or severe head trauma;
    [sbull] Trauma with an increase risk of life-threatening bleeding;
    [sbull] Presence of an epidural catheter;
    [sbull] Intracranial neoplasm or mass lesion or evidence of 
cerebral herniation.
    We are correcting this error in section III of this notice and make 
note that the items in the list above are the FDA-labeled 
contraindications to the use of this drug. The FDA approval of 
XigrisTM also specified that its use is ``indicated for the 
reduction of mortality in adult patients with severe sepsis (sepsis 
associated with acute organ dysfunction) who have a high risk of 
death.'' In the study supporting the FDA approval of this drug risk of 
death was determined by the patient's Acute Physiology and Chronic 
Health Evaluation (APACHE II) score, which is commonly used in 
intensive care units to make this judgment. Patients with APACHE II 
scores of less than 25 were at a lower risk of death and had no 
advantage in mortality from the use of XigrisTM.
    On page 50053 of the final rule, we discussed the amendment to the 
definition of ``like hospital,'' which is used for purposes of 
determining sole community hospital (SCH) status. The amended 
definition of ``like hospital'' excludes any hospital that provides 8 
percent or less of the services furnished by the SCH. We also adopted 
inpatient days as the unit of measurement, as a proxy for measuring 
services. In the preamble discussion, there were references both to 
using Medicare inpatient days and total inpatient days as a proxy for 
measuring service overlap. It is total inpatient days, not Medicare 
inpatient days, that will be used as a proxy to measure service 
overlap. Accordingly, we are correcting the references regarding 
inpatient days and patient days that appeared on pages 50054 through 
50056 of the final rule. However, we note that the revision to the 
regulations at Sec.  412.92(c)(2) correctly reflects total inpatient 
days as the proxy for measuring service overlap.
    On page 50126 we are correcting a typographical error in the budget 
neutrality factor. Therefore, the figure ``0.994027'' will be corrected 
to read ``0.993209''.
    On September 30, 2002, we published a program memorandum, 
Transmittal A-02-092, to correct certain wage index values and hospital 
geographical classifications that we published incorrectly in the 
August 1, 2001 and August 1, 2002 final rules. The corrections were 
made to errors by CMS and the fiscal intermediaries in handling the 
data used to calculate certain average hourly wages, wage indexes, and 
capital geographic adjustment factors (GAFs) published in tables 2, 3A, 
4A, and 9. (The corrections are to items referenced on pages 50155, 
50199, 50212, and 50217).
    On pages 50223 through 50229 of the August 1, 2002 final rule, we 
published tables 4G and 4H. There are errors in the wage indexes listed 
in these tables as a result of the use of an incorrect data file. These 
changes are not retroactive decisions, but simply constitute 
corrections resulting from the mishandling of data. In section III of 
this notice, we will republish tables 4G and 4H to correct the errors 
made in the wage index values listed in those tables.
    On pages 50230 through 50239, we published table 5. This table 
contained several typographical errors (on pages 50236 and 50238, 
respectively) that we

[[Page 22269]]

will correct in section III of this notice. These changes are not 
retroactive decisions, but simply constitute corrections to 
typographical errors in the table.
    On pages 50264 through 50273, we published table 9. There are 
errors in several of the entries of the table and we are correcting 
these errors by identifying entries that should be deleted, added, or 
revised. These errors were brought to our attention after the 
publication of the August 1, 2002 final rule. The corrections to 
hospitals' reclassification status are effective with discharges 
occurring on or after October 1, 2002. These corrections make table 9 
consistent with the hospitals' actual payment designations. Therefore, 
they are not retroactive decisions, but simply constitute corrections 
to typographical errors in the table. The corrections to table 9 are 
specified in section III of this notice.
    Appendix A--Regulatory Impact Analysis (pages 50276 through 50288) 
provides a detailed analysis of the impact of the final rule on 
hospitals included and excluded from the acute care hospital inpatient 
prospective payment systems. We note that there are technical and 
typographical errors in some of the explanatory language and the tables 
in sections I through VIII of the appendix, pages 50276 through 50285. 
These technical errors do not affect payment amounts or payment 
methodology. Therefore, they are not retroactive decisions, but simply 
constitute corrections to technical and typographical errors in the 
impact analysis section of the final rule. Because of the number of 
changes to this section, we are correcting the errors by reprinting the 
sections with the corrected text and providing the following list of 
corrections:
    [sbull] On page 50276, the revisions are as follows:

--Second column, first paragraph, 13th and 14th lines, the phrase 
``$0.3 billion increase'' will be corrected to read ``$300 million 
increase'';
--Second column, third full paragraph, 4th and 5th lines, the phrase 
``and the effects on some may be significant'' will be corrected to 
read ``and that the effects on some hospitals may be significant'';
--Second column, fourth full paragraph, 9th through 11th lines, the 
phrase ``mandate any requirements for State, local, or tribal 
governments'' will be corrected to read ``result in any unfunded 
mandates for State, local, or tribal governments or the private sector 
as defined by section 202'';
--Third column, second full paragraph, 6th through 9th lines, the 
phrase ``to adequately compensate hospitals for their legitimate 
costs'' will be corrected to read ``to compensate hospitals adequately 
for their legitimate costs'';
--Third column, second full paragraph, 9th line, the phrase ``we share 
national goals'' will be corrected to read `` we share the national 
goal'';
--Third column, fourth full paragraph, 14th line, the phrase ``proposed 
rules, we solicited comments and'' will be corrected to read ``proposed 
rules, in the May 9, 2002 proposed rule, we solicited comments and'';
--Third column, seventh full paragraph, 4th through 7th lines, the 
sentence ``We did include overall savings estimates attributable to the 
provision in the preamble discussion.'' will be corrected to read ``We 
did consider overall savings estimates attributable to the provision in 
the preamble discussion. Furthermore, we have not provided such an 
analysis in the impact tables in this final rule because we have 
decided not to make revisions to the postacute care transfer policy at 
this time. As stated elsewhere in the preamble, we will continue to 
assess whether further expansions or refinements of the transfer policy 
may be warranted for FY 2004 or subsequent years, and, if so, how to 
design such refinements and assess their impact.'';

    [sbull] On page 50277, the revisions are as follows:

--First column, first paragraph, 11th through 12th lines, the phrase 
``of the beneficiary and make more decisions based on solvency'' will 
be corrected to read ``on the needs of the beneficiary and force them 
to make more decisions based on solvency'';
--First column, first full paragraph, 6th through 9th lines, the phrase 
``high outlier payments hospitals are receiving in FY 2002 
(approximately 7.2 percent of total DRG payments) compared to the FY 
2003 estimated 5.1 percent'' will be corrected to read ``high total of 
outlier payments hospitals are receiving in FY 2002 (approximately 6.9 
percent of total DRG payments) compared to the FY 2003 estimate of 5.1 
percent'';
--First column, second full paragraph, 9th line, the phrase ``the 
prospective payment method'' will be corrected to read ``the 
prospective payment methodology'';
--First column, the last paragraph, will be corrected to read as 
specified in section III of this notice.
--Third column, first full paragraph, 7th and 8th lines, the phrase 
``$0.3 billion'' will be corrected to read ``$300 million'';
--Third column, second full paragraph, 3rd line from the bottom, the 
phrase ``available source overall'' will be corrected to read 
``available data overall'';

    [sbull] On page 50278 the revisions are as follows:

--First column, second full paragraph, 4th line, the phrase ``This 
allows'' will be corrected to read ``This methodology allows'';
--First column, third full paragraph, last 3 lines, the phrase ``(MDHs) 
is also equal to the market basket increase of 3.5 percent minus 0.55 
percentage points (for an update of 2.95 percent).'' will be corrected 
to read ``(MDHs) are also equal to the market basket increase of 3.5 
percent minus 0.55 percentage points (for an update of 2.95 percent). 
We estimate the aggregate impact of this update will be to increase 
hospital payments by $500 million.'';

--First column, fourth full paragraph, 2nd line, the phrase ``changes 
in hospitals' '' will be corrected to read ``changes in a hospital's'';
--First column, fourth full paragraph, last line, the line will be 
corrected by adding the following sentence ``Because the impact of 
MGCRB reclassifications are budget neutral overall, the only impacts of 
these changes are on payments to individual hospitals and hospital 
groups.''
--First column, last paragraph, 3rd line, the figure ``7.2'' will be 
corrected to read ``6.9''.
--Second column, first paragraph, last line, the line will be corrected 
by adding the following sentence ``We estimate FY 2002 payments will be 
approximately $1.5 billion higher than if outlier payments had been 5.1 
percent of total DRG payments.''
--Second column, second full paragraph, last line, the line will be 
corrected by adding the following sentence ``We estimate the impact of 
this reduction will be to decrease aggregate payments by $1 billion.''
--Second column, seventh full paragraph, last line, the line will be 
corrected by adding the following sentence ``We estimate the higher DSH 
payments will increase overall Medicare payments to hospitals by $200 
million.''
    [sbull] On pages 50279 through 50280, Table I--Impact Analysis of 
Changes for FY 2003, Operating Prospective Payment System, we are 
correcting the numbering of the columns and some of the figures 
contained with the table. The corrected table is in section III of this 
notice.

[[Page 22270]]

    [sbull] On pages 50281 through 50283, we provide a detailed 
explanation of impact of the changes displayed in Table I. This 
explanation includes references to column numbers and to figures 
contained in Table I. We are correcting the numbering of the columns 
and some of the figures in the table; therefore, we will also correct 
these figures in our explanation of Table I. We also note the following 
corrections:
    [sbull] On page 50281,

--Third column, first full paragraph, line 9, the phrase ``80 percent 
with'' will be corrected to read ``80 percent of'';
--Third column, last paragraph, lines 8 and 9, the figures ``(343)'' 
and ``11'' will be corrected to read ``(344)'' and ``10'' respectively;
--Chart showing the ``percentage change in area wage index values'', 
third column of the chart, the figures ``11'' and ``343'' will be 
corrected to read ``10'' and ``344'' respectively;
--Third column, last paragraph, last two lines, the phrase ``greater 
than 5 percent or with increases of more than 10 percent'' will be 
corrected to read ``greater than 5 percent but less than 10 percent. 
There are no rural hospitals with decreases in their wage index value 
greater than 10 percent.'';

    [sbull] On page 50282,

--Chart at the top of the page, the figures ``2553'' and ``1975'' will 
be corrected to read ``2565'' and ``1985'' respectively;
--Second column, second full paragraph, lines 1 through 3, the sentence 
``The overall effect of geographic reclassification is required by 
section 1886(d)(8)(D) of the Act to be budget neutral.'' will be 
corrected to read ``Section 1886(d)(8)(D) of the Act requires that the 
overall effect of geographic reclassification is budget neutral.''
--Second column, second full paragraph, line 5, the figure ``0.990672'' 
will be corrected to read ``0.991095'';
--Second column, fourth full paragraph, lines 1 and 2, the sentence ``A 
positive impact is evident among of the most rural hospital groups.'' 
will be corrected to read ``Geographic reclassification has a positive 
impact on most of the rural hospital groups.'';
--Second column, last paragraph, lines 9 and 10, the phrase ``while 
rural reclassified hospitals are expected'' will be corrected to read 
``while rural reclassified hospitals are also expected'';
--Third column, first full paragraph, line 3, the phrase ``in this 
proposed rule'' will be corrected to read ``in this final rule'';
--Third column, first full paragraph, lines 6 and 7, the phrase 
``policy changes to date'' will be corrected to read ``policy 
changes'';
--Third column, second full paragraph, line 1, the phrase ``It 
includes'' will be corrected to read ``Column 7 includes'';
--Third column, second full paragraph, line 9, the figure ``7.2'' will 
be corrected read ``6.9''.
    [sbull] On page 50283,
--First column, third paragraph, lines 5 and 6, the phrase ``Hospitals 
in rural areas, meanwhile, experience'' will be corrected to read 
``Meanwhile, hospitals in rural areas experience'';
--Second column, first full paragraph--

    ++ Line 7, the phrase ``This is primarily due'' will be corrected 
to read ``These reductions are primarily due'';
    ++ Line 11, the phrase ``only hospital category'' will be corrected 
to read ``only rural hospital category'';
    ++ Line 14, the phrase ``updated wage data'' will be corrected to 
read ``updated wage index data'';
    ++ Line 14, the phrase ``In the East'' will be corrected to read 
``In the rural East'';
    ++ Line 16, the phrase ``Mountain and West'' will be corrected to 
read ``The rural Mountain and West'';

--Third column, first full paragraph, line 2, the phrase ``receive a'' 
will be corrected to read ``receive an overall'';

    [sbull] On pages 50283 through 50284, Table II--Impact Analysis of 
Changes for FY 2003 Operating Prospective Payment System, the table 
will be corrected to read as specified in section III of this notice.
    [sbull] On page 50285--

--First column, first paragraph, last line, the phrase ``from column 8 
of Table I will be corrected to read ``from column 7 of Table I'';
--First column, second full paragraph, the section entitled VII.A. 
Impact of Changes Relating to Payment for the Clinical Training Portion 
of Clinical Psychology Training Programs was inadvertently included in 
the final rule. Therefore, we are correcting this error by deleting the 
text of this section and renumbering sections VII.B. and VII.C. as 
sections VII.A. and VII.B. respectively. We are also making revisions 
to the heading of renumbered section VII.A. and to the discussions in 
the both of sections. Please see section III of this notice for the 
revised language;
--Second column, second paragraph, lines 7 through 9, the sentence 
``Currently, we have identified 622 hospitals that qualify under this 
provision'' will be corrected to read ``We have identified 622 
hospitals that currently qualify under this provision''.;
--Second column, third paragraph--

    ++ Line 5, the phrase ``appear to receive this adjustment'' will be 
corrected to read ``will receive pass-through payments'';
    ++ Lines 5 through 8, the sentence ``In order to be eligible, 
hospitals must employ the CRNA and the CRNA must agree not to bill for 
services under Part B.'' will be corrected to read ``That is, another 
approximately 600 rural hospitals have similar volumes to hospitals 
that currently receive the pass-through. However, because in order to 
be eligible to receive pass-through payments, the hospital must employ 
the CRNA and the CRNA must agree not to bill for services under Part B, 
we estimate that half the hospitals that would otherwise qualify based 
on volume of procedures are not eligible because they either do not 
employ the CRNA or the CRNA does not agree not to bill for services 
under Part B.'';
    ++ Lines 11 through 15, the sentence ``If one-half of these 
hospitals then met the other criteria, 45 additional hospitals would be 
eligible for these pass-through payments under this change'' will be 
corrected to read ``If one-half of these hospitals then met the other 
criteria (the CRNA is employed by the hospital and the CRNA does not 
bill for Part B), 45 additional hospitals would now be eligible for 
these pass-through payments under this change.'';

--Second column, fourth paragraph--

    ++ Line 5, the figure ``600'' will be corrected to read ``630'';
    ++ Line 7, the figure ``270'' will be corrected to read ``598''.

--Second column, after the fourth paragraph, we are adding a new 
section C to read as specified in section III of this notice.

B. Corrections Effective April 28, 2003

    This section summarizes three wage index corrections that result 
from our errors in the geographic reclassification designations and 
wage data that were used to calculate the FY 2003 wage indexes for 
three hospitals. Where errors are identified and corrections are made 
to the wage index, we believe it is appropriate to apply the revised 
wage index prospectively. As we stated in the January 3, 1984 final 
rule (49 FR 258), ``Application of a retroactive adjustment to the 
rates [for corrections in the wage index] would erode the basis of the 
prospective payment system that payment will be made at a 
predetermined, specified rate.'' Because we can only make prospective 
changes

[[Page 22271]]

to the wage index values, these corrections are effective for 
discharges occurring on or after April 28, 2003.
    On pages 50214 through 50221 of the August 1, 2002 final rule, we 
published table 4A. In addition, on pages 50221 through 50223, we 
published table 4C. These tables contain errors as a result of errors 
in the geographic reclassification designations or the wage data or 
both used to calculate the hospitals' wage index values. Items 12(b) 
and 13 of section III of this notice specify these corrections.

III. Correction of Errors

    In FR Doc. 02-19292 of August 1, 2002 (67 FR 49982), make the 
following corrections:
    1. On page 49989, in the first column, before the first full 
paragraph the following paragraphs are inserted:
    ``Comment: One commenter is opposed to the reassignment of code 436 
from DRG 14 to DRG 15, citing that this will create a need for 
additional government oversight due to an increase in adverse coding 
compliance issues. The commenter is concerned that if code 436 is moved 
from the higher weighted DRG, coders may increase the use of the 
physician query process in an effort to obtain the higher-weighted DRG 
14. The commenter states that CMS has previously expressed concerns 
regarding the physician query process, and the reassignment of this 
code may exacerbate the problem of ``leading'' physician queries. The 
commenter goes on to state that the Office of Inspector General (OIG) 
has previously identified DRG pair 14 and 15 as deserving of scrutiny 
for potential fraud and abuse issues, and that the movement of code 436 
may also result in escalated monitoring.
    Response: It is possible that this change will result in the need 
for additional government oversight due to an increase in adverse 
coding compliance issues. If a physician is not able to more 
specifically label a patient's stroke as hemorrhagic or occlusive and 
instead documents cerebrovascular accident (CVA), the expected code 
would be 436. Cases where the documentation supports code 436, but 
another code is present on the medical record, may be subject to 
additional scrutiny.
    Comment: A commenter has stated that placement of code 436 in DRG 
15 instead of the higher weighted DRG 14 places an unfair and adverse 
financial burden on struggling rural health care providers. The 
commenter notes that in facilities without computerized tomography (CT) 
or magnetic resonance imaging (MRI) scanning technology, physicians may 
be unwilling to document infarction or hemorrhage without confirming 
imaging studies. The commenter also notes that correct coding of 
lacunar infarction will result in DRG 14, when in fact a lacunar 
infarction may cause a sudden but often only minimal residual deficit, 
while a CVA could have much more severe residual deficits.
    Response: We have placed code 436 in DRG 15 strictly on the basis 
of historical hospital charge data, not with any punitive intent. We 
understand that strokes vary in the nature and intensity of their 
residual deficits. We also understand that very specific diagnostic 
tests or radiology examinations may be outside the scope of the 
treating facility and that physicians may opt to treat an obvious 
stroke patient without performing additional extensive studies that 
drive up the cost of medical care. We will continue to monitor the use 
of code 436, and will reexamine its DRG placement during the next 
fiscal year.''
    2. On page 49994, in the second column, first full paragraph, 
fourth line, the figure ``87.06'' is corrected to read ``86.07''.
    3. On page 50005, second column, lines 12 through 14, the phrase 
``The principal diagnosis will consist of any principal diagnosis in 
MDC 5 except AMI:'' is corrected to read ``New DRG 527 (Percutaneous 
Cardiovascular Procedure with Drug-Eluting Stent with AMI) will have a 
principal diagnosis of any principal diagnosis in MDC5 except AMI:''.
    4. On page 50014, first column, last paragraph, the paragraph is 
corrected to read as follows:
    ``Xigris TM was found to carry an increased risk of 
bleeding and for this reason the FDA listed the following 
contradictions to Xigris TM use on the approved label:
    [sbull] Active internal bleeding;
    [sbull] Recent (within 3 months) hemorrhagic stroke;
    [sbull] Recent (within 2 months) intracranial or intraspinal 
surgery or severe head trauma;
    [sbull] Trauma with an increased risk of life-threatening bleeding;
    [sbull] Presence of an epidural catheter; and
    [sbull] Intracranial neoplasm or mass lesion or evidence of 
cerebral herniation.
    In addition, patients with an APACHE II score of less than 25 were 
at lower risk of death and had no advantage in mortality from the use 
of XigrisTM.''
    5. On page 50054,
    a. First column, fourth full paragraph, lines 1 and 2, the phrase 
``Medicare inpatient days'' is corrected to read ``total inpatient 
days'';
    b. Second column, second full paragraph, lines 20 and 21, the 
phrase ``inpatient days'' is corrected to read ``total inpatient 
days''.
    6. On page 50055,
    a. First column, third full paragraph, line 12, the phrase 
``inpatient days'' is corrected to read ``total inpatient days'';
    b. First column, third full paragraph, line 23, the phrase ``The 
number of inpatient days'' is corrected to read ``The total number of 
inpatient days'';
    c. First column, last paragraph, lines 1 and 2, the phrase 
``Medicare inpatient days'' is corrected to read ``total inpatient 
days'';
    d. Second column, fourth full paragraph, line 13, the phrase 
``inpatient days'' is corrected to read ``total inpatient days''.
    7. On page 50056, first column, first partial paragraph, line 2, 
the phrase ``number of patient days'' is corrected to read ``total 
number of inpatient days''.
    8. On page 50126, third column, third paragraph, line 16, the 
figure ``0.994027'' is corrected to read ``0.993209''.
    9. On page 50155, in Table 2--Hospital Average Hourly Wage for 
Federal Fiscal Years 2001 (1997 Wage Data), 2002 (1998 Wage Data), and 
2003 (1999 Wage Data) Wage Indexes and 3-Year Average of Hospital 
Average Hourly Wages, line 12 (provider no. 140155),
    a. Fourth column, the figure ``13.0438'' is corrected to read 
``24.2907'';
    b. Fifth column, the figure ``17.2026'' is corrected to read 
``21.4743'';
    10. On page 50199, in Table 2--Hospital Average Hourly Wage for 
Federal Fiscal Years 2001 (1997 Wage Data), 2002 (1998 Wage Data), and 
2003 (1999 Wage Data) Wage Indexes and 3-Year Average of Hospital 
Average Hourly Wages, line 22 (provider no. 450054),
    a. Fourth column, the figure ``23.0492'' is corrected to read 
``25.3285'';
    b. Fifth column, the figure ``21.9091'' is corrected to read 
``22.6900'';
    11. On page 50212, in Table 3A--FY 2003 and 3-Year Average Hourly 
Wage for Urban Areas, second set of columns,
    a. Line 40 (Kankakee, IL),
    (1) Second column, the figure ``18.8681'' is corrected to read 
``25.0641''
    (2) Third column, the figure ``20.7325'' is corrected to read 
``22.8591''
    b. Line 43 (Killeen-Temple, TX),
    (1) Second column, the figure ``22.2296'' is corrected to read 
``24.1567''

[[Page 22272]]

    (2) Third column, the figure ``21.1752'' is corrected to read 
``21.8355''.
    12. On pages 50214 through 50221, in Table 4A--Wage Index and 
Capital Geographic Adjustment Factor (GAF) for Urban Areas,
    a. On page 50217, second set of columns,
    (1) Line 26 (3740 Kankakee, IL),
    (a) Second column, the figure ``0.8204'' is corrected to read 
``1.0790'';
    (b) Third column, the figure ``0.8732'' is corrected to read 
``1.0534''.
    (2) Line 43 (3810 Killeen-Temple, TX),
    (a) Second column, the figure ``0.9570'' is corrected to read 
``1.0399'';
    (b) Third column, the figure ``0.9704'' is corrected to read 
``1.0272''.
    b. On page 50219,
    (1) First set of columns, line 52 (6340 Pocatello, ID),
    (a) Second column, the figure ``0.9674'' is corrected to read 
``0.9372'';
    (b) Third column, the figure ``0.9776'' is corrected to read 
``0.9566''.
    (2) Second set of columns, line 14 (6520 Provo-Orem, UT),
    (a) Second column, the figure ``0.9984'' is corrected to read 
``0.9879'';
    (b) Third column, the figure ``0.9989'' is corrected to read 
``0.9917''.
    13. On page 50222, in Table 4C--Wage Index and Capital Geographic 
Adjustment Factor (GAF) for Hospitals that are Reclassified,
    a. First set of columns, line 56 (Huntsville, AL)
    (1) Second column, the figure ``0.8771'' is corrected to read 
``0.8789'';
    (2) Third column, the figure ``0.9141'' is corrected to read 
``0.9154''.
    b. Third set of columns,
    (1) Line 4 (Pocatello, ID),
    (a) Second column, the figure ``0.9674'' is corrected to read 
``0.9175'';
    (b) Third column, the figure ``0.9776'' is corrected to read 
``0.9427''.
    (2) Line 8 (Provo-Orem, UT),
    (a) Second column, the figure ``0.9984'' is corrected to read 
``0.9879'';
    (b) Third column, the figure ``0.9989'' is corrected to read 
``0.9917''.
    14. On pages 50223 through 50229, in Table 4G, Pre-Reclassified 
Wage Index for Urban Areas, the table is corrected to read as follows:

         Table 4G.--Pre-Reclassified Wage Index for Urban Areas
------------------------------------------------------------------------
                                                                  Wage
               Urban area (constituent counties)                  index
------------------------------------------------------------------------
0040 Abilene, TX..............................................  ........
  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..............................    0.8542
  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..............................    0.9162
  Calumet, WI
  Outagamie, WI
  Winnebago, WI
0470 Arecibo, PR..............................................    0.4356
  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
  DeKalb, GA
  Douglas, GA
  Fayette, GA
  Forsyth, GA
  Fulton, GA
  Gwinnett, GA
  Henry, GA
  Newton, GA
  Paulding, GA
  Pickens, GA
  Rockdale, GA
  Spalding, GA
  Walton, GA
0560 Atlantic-Cape May, NJ....................................    1.1017
  Atlantic, 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..........................................    0.9899
  Kern, CA
0720 Baltimore, MD............................................    0.9929
  Anne Arundel, MD
  Baltimore, MD
  Baltimore City, MD
  Carroll, MD
  Harford, MD
  Howard, MD
  Queen Anne's, 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........................................    0.9042
  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...........................................    0.8542
  Broome, NY
  Tioga, NY
1000 Birmingham, AL...........................................    0.9222
  Blount, AL
  Jefferson, AL
  St. Clair, AL
  Shelby, AL
1010 Bismarck, ND.............................................    0.7972

[[Page 22273]]

 
  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 (NH         1.1288
 Hospitals)...................................................
  Bristol, MA
  Essex, MA
  Middlesex, MA
  Norfolk, MA
  Plymouth, MA
  Suffolk, MA
  Worcester, MA
  Hillsborough, NH
  Merrimack, NH
  Rockingham, NH
  Strafford, NH
1125 BoulderLongmont, 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
  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......................    0.9850
  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.............................................    0.9007
  Laramie, WY
1600 Chicago, IL..............................................    1.1044
  Cook, IL
  DeKalb, IL
  DuPage, IL
  Grundy, IL
  Kane, IL
  Kendall, IL
  Lake, IL
  McHenry, IL
  Will, IL
1620 Chico-Paradise, CA.......................................    0.9840
  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
  Cuyahoga, OH
  Geauga, 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
  Chattahoochee, 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 (WV Hospital)..........................    0.7975
  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........................................    0.9062
  Flagler, FL
  Volusia, FL
2030 Decatur, AL..............................................    0.8973
  Lawrence, AL
  Morgan, AL
2040 Decatur, IL..............................................    0.8204
  Macon, IL
2080 Denver, CO...............................................    1.0601
  Adams, CO
  Arapahoe, 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

[[Page 22274]]

 
2290 Eau Claire, WI...........................................    0.9162
  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...............................................    0.8542
  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 (IN Hospitals)...............    0.8755
  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
  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...............................................    1.0216
  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..........................................    0.8542
  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.............................................    1.2394
  Hartford, CT
  Litchfield, CT
  Middlesex, CT
  Tolland, CT
\3\ 285 \2\ Hattiesburg, MS...................................    0.7680
  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................................................    0.8385
  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
  Madison, TN
  Chester, TN
3600 Jacksonville, FL.........................................    0.9381
  Clay, FL
  Duval, FL
  Nassau, FL
  St. Johns, FL
3605 Jacksonville, NC.........................................    0.8666
  Onslow, NC
3610 Jamestown, NY............................................    0.8542
  Chautauqua, 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

[[Page 22275]]

 
  Bristol City, VA
  Scott, VA
  Washington, VA
3680 Johnstown, PA............................................    0.8462
  Cambria, PA
  Somerset, PA
3700 Jonesboro, AR............................................    0.7749
  Craighead, AR
3710 Joplin, MO...............................................    0.8613
  Jasper, MO
  Newton, MO
3720 Kalamazoo-Battlecreek, MI................................    1.0595
  Calhoun, MI
  Kalamazoo, MI
  Van Buren, MI
3740 Kankakee, IL.............................................    1.0790
  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.......................................    1.0399
  Bell, TX
  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............................................    0.8475
  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...........................................    0.8872
  Dona Ana, NM
4120 Las Vegas, NV-AZ.........................................    1.1521
  Mohave, AZ
  Clark, NV
  Nye, NV
4150 Lawrence, KS.............................................    0.7923
  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 \1\ 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, VA
  Bedford City, 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
  DeSoto, MS
  Fayette, TN
  Shelby, TN
  Tipton, TN
4940 Merced, CA...............................................    0.9840
  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

[[Page 22276]]

 
  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...................................    1.2394
  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
  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............................................    0.8814
  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...........................................    1.1288
  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...........................................    0.9879
  Utah, UT
6560 Pueblo, CO...............................................    0.9015
  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

[[Page 22277]]

 
  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
6960 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...........................................    0.8021
  Andrew, MO
  Buchanan, MO
7040 St. Louis, MOIL..........................................    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
  St. Louis City, MO
  Warren, MO
7080 Salem, OR................................................    1.0367
  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...............................................    0.8462
  Mercer, PA
7620 Sheboygan, WI............................................    0.9162
  Sheboygan, WI
7640 ShermanDenison, 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..........................................    1.1288
  Hampden, MA
  Hampshire, MA
8050 State College, PA........................................    0.8941
  Centre, PA
8080 Steubenville-Weirton, OH-WV (WV Hospitals)...............    0.8804
  Jefferson, OH
  Brooke, WV
  Hancock, WV
8120 Stockton-Lodi, CA........................................    1.0506
  San Joaquin, CA
8140 Sumter, SC...............................................    0.8607
  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..........................................    0.8814
  Gadsden, FL
  Leon, FL
8280 Tampa-St. Petersburg-Clearwater, FL......................    0.9065
  Hernando, FL
  Hillsborough, FL
  Pasco, FL
  Pinellas, FL
8320 Terre Haute, IN..........................................    0.8755
  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

[[Page 22278]]

 
8640 Tyler, TX................................................    0.9521
  Smith, TX
8680 Utica-Rome, NY...........................................    0.8542
  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...........................    0.9840
  Tulare, CA
8800 Waco, TX.................................................    0.8073
  McLennan, TX
8840 Washington, DC-MD-VA-WV..................................    1.0851
  District of Columbia, DC
  Calvert, MD
  Charles, MD
  Frederick, MD
  Montgomery, MD
  Prince Georges, MD
  Alexandria City, VA
  Arlington, VA
  Clarke, VA
  Culpeper, VA
  Fairfax, VA
  Fairfax City, VA
  Falls Church City, VA
  Fauquier, VA
  Fredericksburg City, VA
  King George, VA
  Loudoun, VA
  Manassas City, VA
  Manassas Park City, VA
  Prince William, VA
  Spotsylvania, VA
  Stafford, VA
  Warren, VA
  Berkeley, WV
  Jefferson, WV
8920 Waterloo-Cedar Falls, IA.................................    0.8315
  Black Hawk, IA
8940 Wausau, WI...............................................    0.9782
  Marathon, WI
8960 West Palm Beach-Boca Raton, FL...........................    0.9939
  Palm Beach, FL
9000 Wheeling, WV-OH..........................................    0.7975
  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.................................................    0.9840
  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
------------------------------------------------------------------------

    15. On page 50229, in Table 4H.--Pre-Reclassified Wage Index for 
Rural Areas, the table is corrected to read as follows:

         Table 4H.--Pre-Reclassified Wage Index for Rural Areas
------------------------------------------------------------------------
                       Nonurban area                          Wage index
------------------------------------------------------------------------
Alabama....................................................       0.7660
Alaska.....................................................       1.2293
Arizona....................................................       0.8493
Arkansas...................................................       0.7666
California.................................................       0.9840
Colorado...................................................       0.9015
Connecticut................................................       1.2394
Delaware...................................................       0.9128
Florida....................................................       0.8814
Georgia....................................................       0.8230
Hawaii.....................................................       1.0255
Idaho......................................................       0.8747
Illinois...................................................       0.8204
Indiana....................................................       0.8755
Iowa.......................................................       0.8315
Kansas.....................................................       0.7923
Kentucky...................................................       0.8079
Louisiana..................................................       0.7567
Maine......................................................       0.8874
Maryland...................................................       0.8946
Massachusetts..............................................       1.1288
Michigan...................................................       0.9000
Minnesota..................................................       0.9151
Mississippi................................................       0.7680
Missouri...................................................       0.8021
Montana....................................................       0.8481
Nebraska...................................................       0.8204
Nevada.....................................................       0.9577
New Hampshire..............................................       0.9796
New Jersey \1\.............................................  ...........
New Mexico.................................................       0.8872
New York...................................................       0.8542
North Carolina.............................................       0.8666
North Dakota...............................................       0.7788
Ohio.......................................................       0.8613
Oklahoma...................................................       0.7590
Oregon.....................................................       1.0303
Pennsylvania...............................................       0.8462
Puerto Rico................................................       0.4356
Rhode Island \1\...........................................  ...........
South Carolina.............................................       0.8607
South Dakota...............................................       0.7815
Tennessee..................................................       0.7877
Texas......................................................       0.7821
Utah.......................................................       0.9312
Vermont....................................................       0.9345
Virginia...................................................       0.8504
Washington.................................................       1.0179
West Virginia..............................................       0.7975
Wisconsin..................................................       0.9162
Wyoming....................................................      0.9007
------------------------------------------------------------------------
\1\ All counties within the State are classified as urban.

    16. On page 50236, in Table 5--List of Diagnosis-Related Groups 
(DRGs), Relative Weighting Factors, Geometric and Arithmetic Mean 
Length of Stay (LOS), the fourth column (DRG Title), line 59 (DRG 386) 
``Extreme Immaturity'' is corrected to read ``Extreme Immaturity or 
Respiratory Distress Syndrome Neonate''.
    17. On page 50238, in Table 5--List of Diagnosis-Related Groups 
(DRGs), Relative Weighting Factors, Geometric and Arithmetic Mean 
Length of Stay (LOS), the third column (Type), line 26 (DRG 473) 
``SURG'' is corrected to read ``MED''.
    18. On pages 50264 through 50273, Table 9--Hospital 
Reclassifications and Redesignations by Individual Hospital--FY2003 is 
corrected by--
    a. Adding the following entries (in numerical order):

----------------------------------------------------------------------------------------------------------------
                                                                                                  Standardized
                        Provider No.                           Actual MSA or   Wage index MSA      amount MSA
                                                                rural area    reclassification  reclassification
----------------------------------------------------------------------------------------------------------------
130018......................................................              13             6340   ................
240036......................................................            6980  ................             5120
----------------------------------------------------------------------------------------------------------------

    b. Deleting the following entries:

[[Page 22279]]



----------------------------------------------------------------------------------------------------------------
                                                                                                  Standardized
                        Provider No.                           Actual MSA or   Wage index MSA      amount MSA
                                                                rural area    reclassification  reclassification
----------------------------------------------------------------------------------------------------------------
390197......................................................            0240             6160   ................
390263......................................................            0240             6160   ................
460011......................................................              46             6520   ................
----------------------------------------------------------------------------------------------------------------

    c. Correcting the standardized amount MSA reclassification for the 
following entries:

----------------------------------------------------------------------------------------------------------------
                                                                                  Published         Corrected
                                                               Actual MSA or    standardized      standardized
                        Provider No.                            rural area       amount MSA        amount MSA
                                                                              reclassification  reclassification
----------------------------------------------------------------------------------------------------------------
340126......................................................              34             6640              6895
360175......................................................              36             1640              1840
470011......................................................              47  ................             1123
----------------------------------------------------------------------------------------------------------------

    d. Correcting the wage index MSA reclassification for the following 
entry:

----------------------------------------------------------------------------------------------------------------
                                                                               Published wage    Corrected wage
                        Provider No.                           Actual MSA or      index MSA         index MSA
                                                                rural area    reclassification  reclassification
----------------------------------------------------------------------------------------------------------------
010005......................................................              01             3440              1000
----------------------------------------------------------------------------------------------------------------

    19. On pages 50276 through 50285, the text beginning with section 
``I. Introduction'' and ending with section ``VIII. Impact of Policies 
Affecting Rural Hospitals'' is corrected to read as follows:

I. Introduction

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review) and the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Public Law 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Public Law 104-4), and Executive Order 13132.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). We have 
determined that this final rule is a major rule as defined in 5 U.S.C. 
804(2). We estimate the total impact of these changes for FY 2003 
payments compared to FY 2002 payments to be approximately a $300 
million increase.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $5 
million to $25 million in any 1 year. For purposes of the RFA, all 
hospitals and other providers and suppliers are considered to be small 
entities. Individuals and States are not included in the definition of 
a small entity.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis for any final rule that 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 603 of the RFA. With the exception of hospitals located in 
certain New England counties, for purposes of section 1102(b) of the 
Act, we define a small rural hospital as a hospital with fewer than 100 
beds that is located outside of a Metropolitan Statistical Area (MSA) 
or New England County Metropolitan Area (NECMA). Section 601(g) of the 
Social Security Amendments of 1983 (Public Law 98-21) designated 
hospitals in certain New England counties as belonging to the adjacent 
NECMA. Thus, for purposes of the acute care hospital inpatient 
prospective payment systems, we classify these hospitals as urban 
hospitals.
    It is clear that the changes being made in this document will 
affect both a substantial number of small rural hospitals as well as 
other classes of hospitals, and that the effects on some hospitals may 
be significant. Therefore, the discussion below, in combination with 
the rest of this final rule, constitutes a combined regulatory impact 
analysis and regulatory flexibility analysis.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (Public Law 
104-4) also requires that agencies assess anticipated costs and 
benefits before issuing a final rule, which has been preceded by a 
proposed rule, that may result in an expenditure in any one year by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $110 million. This final rule will not result in any 
unfunded mandates for State, local, or tribal governments or the 
private sector, as defined by section 202.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct

[[Page 22280]]

costs on State and local governments, preempts State law, or otherwise 
has Federalism implications. We have reviewed this final rule in light 
of Executive Order 13132 and have determined that it will not have any 
negative impact on the rights, roles, and responsibilities of State, 
local, or tribal governments.
    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by the Office of Management and Budget.

II. Objectives

    The primary objective of the acute care hospital inpatient 
prospective payment system is to create incentives for hospitals to 
operate efficiently and minimize unnecessary costs while at the same 
time ensuring that payments are sufficient to compensate hospitals 
adequately for their legitimate costs. In addition, we share the 
national goal of preserving the Medicare Trust Fund.
    We believe the changes in this final rule will further each of 
these goals while maintaining the financial viability of the hospital 
industry and ensuring access to high quality health care for Medicare 
beneficiaries. We expect these changes will ensure that the outcomes of 
this payment system are reasonable and equitable while avoiding or 
minimizing unintended adverse consequences.

III. Limitations of Our Analysis

    The following quantitative analysis presents the projected effects 
of our policy changes, as well as statutory changes effective for FY 
2003, on various hospital groups. We estimate the effects of individual 
policy changes by estimating payments per case while holding all other 
payment policies constant. We use the best data available, but we do 
not attempt to predict behavioral responses to our policy changes, and 
we do not make adjustments for future changes in such variables as 
admissions, lengths of stay, or case-mix. As we have done in previous 
proposed rules, in the May 9, 2002 proposed rule, we solicited comments 
and information about the anticipated effects of these changes on 
hospitals and our methodology for estimating payments.
    We received several comments on the impact analysis for our May 9, 
2002 proposed rule.
    Comment: Several commenters noted that the effects of the proposed 
expansion to the postacute transfer policy were not included in the May 
9, 2002 proposed rule impact tables. These commenters were concerned 
that the effect of implementing either of the two proposed expansions 
of this policy would result in an overall decrease in per case payments 
in FY 2003.
    Response: We did not analyze the postacute care transfer policy in 
the impact tables in the proposed rule because we did not propose a 
specific policy expansion. We did consider overall savings estimates 
attributable to the provision in the preamble discussion. Furthermore, 
we have not provided such an analysis in the impact tables in this 
final rule because we have decided not to make revisions to the 
postacute care transfer policy at this time. As stated elsewhere in the 
preamble, we will continue to assess whether further expansions or 
refinements of the transfer policy may be warranted for FY 2004 or 
subsequent years, and, if so, how to design such refinements and assess 
their impact.
    Comment: Several commenters noted the impact that the large, 
legislated decreases in IME payments and the update factor (market 
basket increase minus 0.55 percentage point) will have on many 
hospitals. They argued that these decreases in payments, in combination 
with our proposals and an update factor of less than inflation, will 
have an even larger overall impact than indicated in our impact tables. 
The commenters indicated that, in a time when other health care costs 
are escalating due to nursing shortages, rising drug and technology 
costs, and ``skyrocketing'' professional and general insurance 
premiums, hospitals cannot absorb a reduction in inpatient Medicare 
payments. They argued that decreasing payments and increasing costs 
will make hospitals less able to make decisions based solely on the 
needs of the beneficiary and force them to make more decisions based on 
solvency.
    Response: As the commenters pointed out, these reductions are 
legislated by Congress. However, as discussed further below, one of the 
biggest impacts on the changes in payments from FY 2002 to FY 2003 is 
the high total of outlier payments hospitals are receiving in FY 2002 
(approximately 6.9 percent of total DRG payments) compared to the FY 
2003 estimate of 5.1 percent. The net effect of this difference is to 
reduce the rate of change by 2.1 percentage points.

IV. Hospitals Included In and Excluded From the Acute Care Hospital 
Inpatient Prospective Payment System

    The prospective payment systems for hospital inpatient operating 
and capital-related costs encompass nearly all general short-term, 
acute care hospitals that participate in the Medicare program. There 
were 44 Indian Health Service hospitals in our database, which we 
excluded from the analysis due to the special characteristics of the 
prospective payment methodology for these hospitals. Among other short-
term, acute care hospitals, only the 67 such hospitals in Maryland 
remain excluded from the acute care hospital inpatient prospective 
payment system under the waiver at section 1814(b)(3) of the Act.
    There are approximately 631 critical access hospitals (CAHs). These 
small, limited service hospitals are paid on the basis of reasonable 
costs rather than under the acute care hospital inpatient prospective 
payment system. The remaining 20 percent are specialty hospitals that 
are excluded from the acute care hospital inpatient prospective payment 
system. These hospitals include psychiatric hospitals and units, 
rehabilitation hospitals and units, long-term care hospitals, 
children's hospitals, and cancer hospitals. The impacts of our final 
policy changes on these hospitals are discussed below.
    Thus, as of July 2002, we have included 4,230 hospitals in our 
analysis. This represents about 80 percent of all Medicare-
participating hospitals. The majority of this impact analysis focuses 
on this set of hospitals.

V. Impact on Excluded Hospitals and Hospital Units

    As of July 2002, there were 1,076 specialty hospitals excluded from 
the acute care hospital inpatient prospective payment system. Broken 
down by specialty, there were 486 psychiatric, 220 rehabilitation, 279 
long-term care, 80 children's, and 11 cancer hospitals. In addition, 
there were 1,427 psychiatric units and 962 rehabilitation units in 
hospitals otherwise subject to the acute care hospital inpatient 
prospective payment system. Under Sec.  413.40(a)(2)(i)(A), the rate-
of-increase ceiling is not applicable to the 67 specialty hospitals and 
units in Maryland that are paid in accordance with the waiver at 
section 1814(b)(3) of the Act.
    In the past, hospitals and units excluded from the acute care 
hospital inpatient prospective payment system have been paid based on 
their reasonable costs subject to limits as established by the Tax 
Equity and Fiscal Responsibility Act of 1982 (TEFRA). Hospitals that 
continue to be paid based on their reasonable costs are subject to 
TEFRA limits for FY 2003. For these hospitals, the proposed update is 
the percentage increase in the excluded hospital market basket 
(currently estimated at 3.5 percent).

[[Page 22281]]

    Inpatient rehabilitation facilities (IRFs) are paid under the IRF 
prospective payment system for cost reporting periods beginning on or 
after January 1, 2002. For cost reporting periods beginning during FY 
2003, the IRF prospective payment is based on 100 percent of the 
adjusted Federal IRF prospective payment amount, updated annually (see 
the August 7, 2001 final rule (66 FR 41316 through 41430)). Therefore, 
these hospitals are not impacted by this final rule.
    Effective for cost reporting periods beginning during FY 2003, we 
have proposed that long-term care hospitals would be paid under a long-
term care hospital prospective payment system, where long-term care 
hospitals receive payment based on a 5-year transition period (see the 
March 22, 2002 proposed rule (67 FR 13416 through 13494)). However, 
under this proposed payment system, a long-term care hospital may also 
elect to be paid at 100 percent of the Federal prospective rate at the 
beginning of any of its cost reporting periods during the 5-year 
transition period. For purposes of the update factor, the portion of 
the proposed prospective payment system transition blend payment based 
on reasonable costs for inpatient operating services would be 
determined by updating the long-term care hospital's TEFRA limit by the 
estimate of the excluded hospital market basket (or 3.5 percent).
    The impact on excluded hospitals and hospital units of the update 
in the rate-of-increase limit depends on the cumulative cost increases 
experienced by each excluded hospital or unit since its applicable base 
period. For excluded hospitals and units that have maintained their 
cost increases at a level below the rate-of-increase limits since their 
base period, the major effect will be on the level of incentive 
payments these hospitals and hospital units receive. Conversely, for 
excluded hospitals and hospital units with per-case cost increases 
above the cumulative update in their rate-of-increase limits, the major 
effect will be the amount of excess costs that would not be reimbursed.
    We note that, under Sec.  413.40(d)(3), an excluded hospital or 
unit whose costs exceed 110 percent of its rate-of-increase limit 
receives its rate-of-increase limit plus 50 percent of the difference 
between its reasonable costs and 110 percent of the limit, not to 
exceed 110 percent of its limit. In addition, under the various 
provisions set forth in Sec.  413.40, certain excluded hospitals and 
hospital units can obtain payment adjustments for justifiable increases 
in operating costs that exceed the limit. At the same time, however, by 
generally limiting payment increases, we continue to provide an 
incentive for excluded hospitals and hospital units to restrain the 
growth in their spending for patient services.

VI. Quantitative Impact Analysis of the Policy Changes Under the 
Hospital Inpatient Prospective Payment System for Operating Costs

A. Basis and Methodology of Estimates

    In this final rule, we are announcing policy changes and payment 
rate updates for the hospital inpatient prospective payment systems for 
operating and capital-related costs. We estimate the total impact of 
these changes for FY 2003 payments compared to FY 2002 payments to be 
approximately a $300 million increase. We have prepared separate impact 
analyses of the changes to each system. This section deals with changes 
to the operating prospective payment system.
    The data used in developing the quantitative analyses presented 
below are taken from the FY 2001 MedPAR file and the most current 
provider-specific file that is used for payment purposes. Although the 
analyses of the changes to the operating prospective payment system do 
not incorporate cost data, the most recently available hospital cost 
report data were used to categorize hospitals. Our analysis has several 
qualifications. First, we do not make adjustments for behavioral 
changes that hospitals may adopt in response to these policy changes. 
Second, due to the interdependent nature of the hospital inpatient 
prospective payment system, it is very difficult to precisely quantify 
the impact associated with each change. Third, we draw upon various 
sources for the data used to categorize hospitals in the tables. In 
some cases, particularly the number of beds, there is a fair degree of 
variation in the data from different sources. We have attempted to 
construct these variables with the best available data overall. For 
individual hospitals, however, some miscategorizations are possible.
    Using cases in the FY 2001 MedPAR file, we simulated payments under 
the operating prospective payment system given various combinations of 
payment parameters. Any short-term, acute care hospitals not paid under 
the acute care hospital inpatient prospective payment systems (Indian 
Health Service hospitals and hospitals in Maryland) are excluded from 
the simulations. The impact of payments under the capital prospective 
payment system, or the impact of payments for costs other than 
inpatient operating costs, are not analyzed in this section. Estimated 
payment impacts of FY 2003 changes to the capital prospective payment 
system are discussed in section IX. of this Appendix.
    The changes discussed separately below are the following:
    [sbull] The effects of the annual reclassification of diagnoses and 
procedures and the recalibration of the DRG relative weights required 
by section 1886(d)(4)(C) of the Act.
    [sbull] The effects of the changes in hospitals' wage index values 
reflecting wage data from hospitals' cost reporting periods beginning 
during FY 1999, compared to the FY 1998 wage data, and the effects of 
removing from the wage data the costs and hours associated with GME and 
CRNAs.
    [sbull] The effects of geographic reclassifications by the Medicare 
Geographic Classification Review Board (MGCRB) that will be effective 
in FY 2003.
    [sbull] The total change in payments based on FY 2003 policies 
relative to payments based on FY 2002 policies.
    To illustrate the impacts of the FY 2003 changes, our analysis 
begins with a FY 2003 baseline simulation model using: the FY 2002 DRG 
GROUPER (version 19.0); the FY 2002 wage index; and no MGCRB 
reclassifications. Outlier payments are set at 5.1 percent of total DRG 
plus outlier payments.
    Each final and statutory policy change is then added incrementally 
to this baseline model, finally arriving at an FY 2003 model 
incorporating all of the changes. This methodology allows us to isolate 
the effects of each change.
    Our final comparison illustrates the percent change in payments per 
case from FY 2002 to FY 2003. Six factors have significant impacts 
here. The first is the update to the standardized amounts. In 
accordance with section 1886(d)(3)(A)(iv) of the Act, as amended by 
section 301 of Public Law 106-554, we are updating the large urban and 
the other areas average standardized amounts for FY 2003 using the most 
recently forecasted hospital market basket increase for FY 2003 of 3.5 
percent minus 0.55 percentage points (for an update of 2.95 percent). 
Under section 1886(b)(3) of the Act, the updates to the hospital-
specific amounts for sole community hospitals (SCHs) and for Medicare-
dependent small rural hospitals (MDHs) are also equal to the market 
basket increase of 3.5 percent minus 0.55 percentage points (for an 
update of 2.95 percent). We estimate the aggregate impact of this 
update will be to increase hospital payments by $500 million.

[[Page 22282]]

    A second significant factor that impacts changes in a hospital's 
payments per case from FY 2002 to FY 2003 is the change in MGCRB status 
from one year to the next. That is, hospitals reclassified in FY 2002 
that are no longer reclassified in FY 2003 may have a negative payment 
impact going from FY 2002 to FY 2003; conversely, hospitals not 
reclassified in FY 2002 that are reclassified in FY 2003 may have a 
positive impact. In some cases, these impacts can be quite substantial, 
so if a relatively small number of hospitals in a particular category 
lose their reclassification status, the percentage change in payments 
for the category may be below the national mean. This effect is 
alleviated, however, by section 304(a) of Public Law 106-554, which 
provided that reclassifications for purposes of the wage index are for 
a 3-year period. Because the impact of MGCRB reclassifications are 
budget neutral overall, the only impacts of these changes are on 
payments to individual hospitals and hospital groups.
    A third significant factor is that we currently estimate that 
actual outlier payments during FY 2002 will be 6.9 percent of total DRG 
payments. When the FY 2002 final rule was published, we projected FY 
2002 outlier payments would be 5.1 percent of total DRG plus outlier 
payments; the average standardized amounts were offset correspondingly. 
The effects of the higher than expected outlier payments during FY 2002 
(as discussed in the Addendum to this final rule) are reflected in the 
analyses below comparing our current estimates of FY 2002 payments per 
case to estimated FY 2003 payments per case. We estimate FY 2002 
payments will be approximately $1.5 billion higher than if outlier 
payments had been 5.1 percent of total DRG payments.
    Fourth, section 213 of Public Law 106-554 provides that all SCHs 
may receive payment on the basis of their costs per case during their 
cost reporting period that began during 1996. This option was to be 
phased in over 4 years. For FY 2003, the proportion of payments based 
on affected SCHs' FY 1996 hospital-specific amount increases from 50 
percent to 75 percent.
    Fifth, under section 1886(d)(5)(B)(ii) of the Act, the formula for 
IME is reduced beginning in FY 2003. The reduction is from 
approximately a 6.5 percent increase for every 10 percent increase in 
the resident-to-bed ratio during FY 2002 to approximately a 5.5 percent 
increase. We estimate the impact of this reduction will be to decrease 
aggregate payments by $1 billion.
    Comment: Numerous commenters expressed concern about the statutory 
reduction to the IME formula multiplier for FY 2003 of 1.35. The 
commenters stated that this cut in IME reimbursement will have an 
extremely detrimental impact on the teaching hospital community.
    Response: Congress establishes the IME formula multiplier for FY 
2003 by law. Any changes to the multiplier must be made through the 
legislative process.
    Comment: One commenter stated that the reduction to the IME formula 
multiplier was not considered in the impact analysis table (67 FR 
31670) in the proposed rule. The commenter requested that the large 
impact due to reduction in IME payments be acknowledged and weighed 
against the cost to hospitals that would be incurred by the proposed 
outlier reduction, transfer payment expansion, and the removal of 
resident salary costs from the wage index.
    Response: In the May 9, 2002 proposed rule at 67 FR 31670 and 
31671, we included several footnotes that explain the various 
calculations in the impact analysis for FY 2003. Footnote number 9 
states that the impact of the reduction in IME adjustment payments is 
reflected in column 8 of the table, which contains all FY 2003 changes. 
Thus, we have incorporated the reduction to the IME formula multiplier 
in the impact analysis of total Medicare hospital expenditures for FY 
2003, and have similarly done so in this final rule.
    Sixth, the disproportionate share hospital (DSH) adjustment 
increases in FY 2003 compared with FY 2002. In accordance with section 
1886(d)(5)(F)(ix) of the Act, during FY 2002, DSH payments that a 
hospital would otherwise receive were reduced by 3 percent. This 
reduction is no longer applicable beginning with FY 2003. We estimate 
the higher DSH payments will increase overall Medicare payments to 
hospitals by $200 million.
    Table I demonstrates the results of our analysis. The table 
categorizes hospitals by various geographic and special payment 
consideration groups to illustrate the varying impacts on different 
types of hospitals. The top row of the table shows the overall impact 
on the 4,230 hospitals included in the analysis. This number is 555 
fewer hospitals than were included in the impact analysis in the FY 
2002 final rule (66 FR 40087). Of this number, 437 are now CAHs and are 
excluded from our analysis.
    The next four rows of Table I contain hospitals categorized 
according to their geographic location: all urban, which is further 
divided into large urban and other urban; and rural. There are 2,620 
hospitals located in urban areas (MSAs or NECMAs) included in our 
analysis. Among these, there are 1,519 hospitals located in large urban 
areas (populations over 1 million), and 1,101 hospitals in other urban 
areas (populations of 1 million or fewer). In addition, there are 1,610 
hospitals in rural areas. The next two groupings are by bed-size 
categories, shown separately for urban and rural hospitals. The final 
groupings by geographic location are by census divisions, also shown 
separately for urban and rural hospitals.
    The second part of Table I shows hospital groups based on 
hospitals' FY 2003 payment classifications, including any 
reclassifications under section 1886(d)(10) of the Act. For example, 
the rows labeled urban, large urban, other urban, and rural show that 
the number of hospitals paid based on these categorizations after 
consideration of geographic reclassifications are 2,650, 1,576, 1,074, 
and 1,580, respectively.
    The next three groupings examine the impacts of the proposed 
changes on hospitals grouped by whether or not they have GME residency 
programs (teaching hospitals that receive an IME adjustment) or receive 
DSH payments, or some combination of these two adjustments. There are 
3,119 nonteaching hospitals in our analysis, 870 teaching hospitals 
with fewer than 100 residents, and 241 teaching hospitals with 100 or 
more residents.
    In the DSH categories, hospitals are grouped according to their DSH 
payment status, and whether they are considered urban or rural after 
MGCRB reclassifications. Hospitals in the rural DSH categories, 
therefore, represent hospitals that were not reclassified for purposes 
of the standardized amount or for purposes of the DSH adjustment. (They 
may, however, have been reclassified for purposes of the wage index.)
    The next category groups hospitals, considered urban after 
geographic reclassification, in terms of whether they receive the IME 
adjustment, the DSH adjustment, both, or neither.
    The next five rows examine the impacts of the proposed changes on 
rural hospitals by special payment groups (SCHs, rural referral centers 
(RRCs), and MDHs), as well as rural hospitals not receiving a special 
payment designation. The RRCs (160), SCHs (526), MDHs (241), and 
hospitals that are both SCH and RRC (76) shown

[[Page 22283]]

here were not reclassified for purposes of the standardized amount.
    The next two groupings are based on type of ownership and the 
hospital's Medicare utilization expressed as a percent of total patient 
days. These data are taken primarily from the FY 1999 Medicare cost 
report files, if available (otherwise FY 1998 data are used). Data 
needed to determine ownership status were unavailable for 177 
hospitals. Similarly, the data needed to determine Medicare utilization 
were unavailable for 126 hospitals.
    The next series of groupings concern the geographic 
reclassification status of hospitals. The first grouping displays all 
hospitals that were reclassified by the MGCRB for FY 2003. The next two 
groupings separate the hospitals in the first group by urban and rural 
status. The final row in Table I contains hospitals located in rural 
counties but deemed to be urban under section 1886(d)(8)(B) of the Act.

                                                    Table I.--Impact Analysis of Changes for FY 2003
                                      [Operating prospective payment system, [percent changes in payments per case]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Remove
                                                                    Num. of     DRG               Remove     GME &   DRG & WI       MGCRB        All FY
                                                                    Hosps.    changes  New wage    GME &   CRNA 100   changes  reclassfication    2003
                                                                      \1\       \2\    data \3\  CRNA 80/   percent     \6\          \7\         changes
                                                                                                  20 \4\      \5\                                  \8\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        (0)       (1)       (2)       (3)       (4)       (5)           (6)          (7)
------------------------------------------------------------------
By Geographic Location:
    All hospitals................................................     4,230       0.4       0.0       0.0       0.1       0.0           0.0          0.4
    Urban hospitals..............................................     2,620       0.5       0.0       0.0       0.1       0.0          -0.5          0.2
    Large urban areas (populations over 1 million)...............     1,519       0.4       0.0       0.0       0.0      -0.1          -0.5          0.2
    Other urban areas (populations of 1 million or fewer)........     1,101       0.5       0.0       0.1       0.1       0.1          -0.4          0.7
    Rural hospitals..............................................     1,610       0.1       0.2       0.1       0.1      -0.2           2.5          1.9
Bed Size (Urban):
    0-99 beds....................................................       645       0.3       0.0       0.1       0.1       0.0          -0.6          1.3
    100-199 beds.................................................       909       0.3      -0.2       0.1       0.1      -0.3          -0.5          0.8
    200-299 beds.................................................       523       0.5       0.0       0.1       0.1       0.0          -0.4          0.4
    300-499 beds.................................................       398       0.6      -0.2       0.0       0.1       0.0          -0.4         -0.1
    500 or more beds.............................................       145       0.6       0.2       0.0       0.0       0.2          -0.6         -0.6
    Bed Size (Rural):............................................
    0-49 beds....................................................       747      -0.3       0.3       0.1       0.1      -0.5           0.5          2.2
    50-99 beds...................................................       501      -0.1       0.2       0.1       0.1      -0.3           0.9          2.1
    100-149 beds.................................................       215       0.1       0.3       0.1       0.1      -0.1           2.9          1.9
    150-199 beds.................................................        78       0.2       0.2       0.1       0.1       0.0           4.9          1.8
    200 or more beds.............................................        69       0.6       0.1       0.1       0.1       0.2           4.0          1.4
Urban by Region:
    New England..................................................       135       0.3      -0.1       0.1       0.1       0.6          -0.1         -0.2
    Middle Atlantic..............................................       404       0.6      -0.4       0.0      -0.1      -0.5           0.0         -1.3
    South Atlantic...............................................       384       0.5       0.0       0.1       0.1       0.0          -0.6          0.7
    East North Central...........................................       429       0.5       0.1       0.0       0.1       0.0          -0.5          0.3
    East South Central...........................................       159       0.4      -0.1       0.0       0.0      -0.3          -0.7          0.7
    West North Central...........................................       178       0.5       0.2       0.1       0.1       0.3          -0.7          0.7
    West South Central...........................................       335       0.5       0.5       0.0       0.0       0.3          -0.7          1.0
    Mountain.....................................................       132       0.7       0.5       0.1       0.1       0.8          -0.6          1.7
    Pacific......................................................       417       0.3      -0.3       0.1       0.2      -0.3          -0.5          0.0
    Puerto Rico..................................................        47       0.3      -0.8       0.0       0.0      -0.7          -0.9          0.6
Rural by Region:
    New England..................................................        40       0.2       0.2       0.0       0.0      -0.2          -2.8          0.9
    Middle Atlantic..............................................        67       0.1      -0.5       0.0       0.0      -1.0           2.7          1.2
    South Atlantic...............................................       232       0.1       0.1       0.1       0.1      -0.3           2.9          1.5
    East North Central...........................................       215       0.3       0.1       0.1       0.1      -0.1           2.4          2.4
    East South Central...........................................       239      -0.1       0.7       0.1       0.1       0.2           2.5          2.0
    West North Central...........................................       279       0.3       0.4       0.0       0.0       0.2           1.6          2.2
    West South Central...........................................       285      -0.1       0.3   0.1 0.1      -0.3       3.3           1.9
    Mountain.....................................................       145       0.2       0.1       0.0       0.0      -0.3           1.2          2.0
    Pacific......................................................       103       0.1       0.3       0.1       0.1      -0.1           2.3          2.0
    Puerto Rico..................................................         5       0.1      -5.4       0.1       0.1      -5.6          -0.7         -2.7
By Payment Classification:
    Urban hospitals..............................................     2,650       0.5       0.0       0.0       0.1       0.0          -0.4          0.2
    Large urban areas (populations over 1 million)...............     1,576       0.4      -0.1       0.0       0.0      -0.1          -0.4         -0.2
    Other urban areas (populations of 1 million or fewer)........     1,074       0.5       0.0       0.1       0.1       0.1          -0.5          0.7
    Rural areas..................................................     1,580       0.1       0.2       0.1       0.1      -0.2           2.3          1.9
Teaching Status:
    Non-teaching.................................................     3,119       0.3       0.0       0.1       0.1      -0.1           0.3          1.3
    Fewer than 100 Residents.....................................       870       0.6      -0.1       0.0       0.1       0.0          -0.3          0.5
    100 or more Residents........................................       241       0.5       0.0       0.0       0.0       0.0          -0.3         -1.3
Urban DSH:
    Non-DSH......................................................     1,549       0.6       0.0       0.0       0.1       0.0           0.2          0.6

[[Page 22284]]

 
    100 or more beds.............................................     1,361       0.4       0.0       0.0       0.1      -0.1          -0.5          0.1
    Less than 100 beds...........................................       286       0.0       0.1       0.1       0.1      -0.3          -0.4          1.3
Rural DSH:
    Sole Community (SCH).........................................       470      -0.2       0.2       0.1       0.1      -0.5           0.2          2.1
    Referral Center (RRC)........................................       156       0.2       0.3       0.1       0.1       0.0           4.7          1.5
    Other Rural:
        100 or more beds.........................................        76       0.0       0.3       0.1       0.1      -0.1           1.3          1.7
        Less than 100 beds.......................................       332      -0.2       0.4       0.1       0.1      -0.2           0.6          2.1
Urban teaching and DSH:
    DSH..........................................................       757       0.5      -0.1       0.0       0.0       0.0          -0.6         -0.4
    Teaching and no DSH..........................................       284       0.7       0.0       0.0       0.0       0.1           0.0         -0.1
    No teaching and DSH..........................................       890       0.3       0.0       0.1       0.1      -0.1          -0.4          1.2
    No teaching and no DSH.......................................       719       0.5      -0.1       0.1       0.1       0.0          -0.4          0.8
Rural Hospital Types:
    Non special status hospitals.................................       577      -0.1       0.4       0.1       0.1      -0.1           1.2          1.9
    RRC..........................................................       160       0.3       0.2       0.1       0.1       0.1           6.1          1.1
    SCH..........................................................       526      -0.1       0.2       0.0       0.0      -0.5           0.2          2.1
    Medicare-dependent hospitals (MDH)...........................       241      -0.2       0.4       0.1       0.1      -0.3           0.6          2.4
    SCH and RRC..................................................        76       0.5       0.1       0.0       0.0       0.0           1.3          2.5
Type of Ownership:
    Voluntary....................................................     2,461       0.5       0.0       0.0       0.1       0.0          -0.1          0.4
    Proprietary..................................................       723       0.4       0.1       0.1       0.1       0.0          -0.1          0.4
    Government...................................................       869       0.2       0.2       0.1       0.1      -0.1           0.2          0.6
    Unknown......................................................       177       0.4      -0.2       0.0       0.1      -0.3          -0.5          0.3
Medicare Utilization as a Percent of Inpatient Days:
    0-25.........................................................       310       0.3      -0.1       0.1       0.1      -0.3          -0.3         -0.6
    25-50........................................................     1,613       0.5       0.0       0.0       0.1       0.0          -0.3          0.1
    50-65........................................................     1,677       0.4       0.0       0.1       0.1       0.0           0.3          1.0
    Over 65......................................................       504       0.3      -0.1       0.0       0.1      -0.3           0.6          0.6
    Unknown......................................................       126       0.9       0.1       0.0       0.0       0.3          -0.7          0.2
Hospitals Reclassified by the Medicare Geographic Classification
 Review Board: FY 2003 Reclassifications:
    All Reclassified Hospitals...................................       628       0.4       0.0       0.1       0.1       0.0           4.6          1.1
    Standardized Amount Only.....................................        28       0.2      -0.1       0.1       0.1      -0.3           1.3          0.9
    Wage Index Only..............................................       521       0.4       0.1       0.1       0.1       0.0           4.7          0.7
    Both.........................................................        38       0.4       0.0       0.1       0.1      -0.1           6.5          0.8
Non-reclassified Hospitals.......................................     3,605       0.4       0.0       0.0       0.1       0.0          -0.7          0.3
All Reclassified Urban Hospitals.................................       113       0.6      -0.2       0.0       0.1       0.1           4.6          0.1
    Standardized Amount Only.....................................        11       0.2      -0.9       0.1       0.1      -1.2           0.7          0.2
    Wage Index Only..............................................        87       0.7      -0.2       0.0       0.0       0.2           4.8         -0.1
    Both.........................................................        15       0.5       0.2       0.1       0.2       0.4           5.9          3.1
    Urban Non-reclassified Hospitals.............................     2,473       0.5       0.0       0.0       0.1       0.0          -0.7          0.2
All Reclassified Rural Hospitals.................................       515       0.3       0.2       0.1       0.1       0.0           4.6          1.7
    Standardized Amount Only.....................................        11       0.5       0.4       0.1       0.1       0.4           5.3          3.2
    Wage Index Only..............................................       485       0.3       0.2       0.1       0.1       0.0           4.5          1.7
    Both.........................................................        19       0.3      -0.1       0.1       0.1      -0.3           7.3          1.7
Rural Non-reclassified Hospitals.................................     1,094      -0.1       0.3       0.1       0.1      -0.3          -0.6          2.1
Other Reclassified Hospitals (Section 1886(D)(8)(B)).............        35      -0.1      -0.2       0.0       0.0      -0.9          -1.3          2.7
\1\ Because data necessary to classify some hospitals by category were missing, the total number of hospitals in each category may not equal the
  national total. Discharge data are from FY 2001, and hospital cost report data are from reporting periods beginning in FY 1999 and FY 1998.
\2\ This column displays the payment impact of the recalibration of the DRG weights based on FY 2001 MedPAR data and the DRG reclassification changes,
  in accordance with section 1886(d)(4)(C) of the Act.
\3\ This column displays the impact of updating the wage index with wage data from hospitals' FY 1999 cost reports.
\4\ This column displays the impact of an 80/20 percent blend of removing the labor costs and hours associated with graduate medical education (GME) and
  for the Part A costs of certified registered nurse anesthetists (CRNAs).
\5\ This column displays the impact of completely removing the labor costs and hours associated with GME and for the Part A costs of CRNAs.
\6\ This column displays the combined impact of the reclassification and recalibration of the DRGs, the updated and revised wage data used to calculate
  the wage index, the phase-out of GME and CRNA costs and hours, and the budget neutrality adjustment factor for DRG and wage index changes, in
  accordance with sections 1886(d)(4)(C)(iii) and 1886(d)(3)(E) of the Act. Thus, it represents the combined impacts shown in columns 1, 2, 3 and 4, and
  the FY 2003 budget neutrality factor of 0.993209.
\7\ Shown here are the effects of geographic reclassifications by the Medicare Geographic Classification Review Board (MGCRB). The effects demonstrate
  the FY 2003 payment impact of going from no reclassifications to the reclassifications scheduled to be in effect for FY 2003. Reclassification for
  prior years has no bearing on the payment impacts shown here.

[[Page 22285]]

 
\8\ This column shows changes in payments from FY 2002 to FY 2003. It incorporates all of the changes displayed in columns 5 and 6 (the changes
  displayed in columns 1, 2, 3, and 4 are included in column 5). It also displays the impact of the FY 2003 update, changes in hospitals'
  reclassification status in FY 2003 compared to FY 2002, and the difference in outlier payments from FY 2002 to FY 2003. It also reflects the gradual
  phase-in for some SCHs of the full 1996 hospital-specific rate. Finally, the impacts of the reduction in IME adjustment payments, and the increase in
  the DSH adjustment are shown in this column. The sum of these impacts may be different from the percentage changes shown here due to rounding and
  interactive effect.

B. Impact of the Changes to the DRG Reclassifications and Recalibration 
of Relative Weights (Column 1)

    In column 1 of Table I, we present the combined effects of the DRG 
reclassifications and recalibration, as discussed in section II. of the 
preamble to this final rule. Section 1886(d)(4)(C)(i) of the Act 
requires us to annually make appropriate classification changes and to 
recalibrate the DRG weights in order to reflect changes in treatment 
patterns, technology, and any other factors that may change the 
relative use of hospital resources.
    We compared aggregate payments using the FY 2002 DRG relative 
weights (GROUPER version 19.0) to aggregate payments using the FY 2003 
DRG relative weights (GROUPER version 20.0). We note that, consistent 
with section 1886(d)(4)(C)(iii) of the Act, we have applied a budget 
neutrality factor to ensure that the overall payment impact of the DRG 
changes (combined with the wage index changes) is budget neutral. This 
budget neutrality factor of 0.993209 is applied to payments in Column 
5. Because this is a combined DRG reclassification and recalibration 
and wage index budget neutrality factor, it is not applied to payments 
in this column.
    The DRG changes we are making will result in 0.4 percent higher 
payments to hospitals overall. This effect is largely attributable to 
the anticipated higher payments after April 28, 2003, for drug-eluting 
stents, as described in section II.B. of this final rule. Specifically, 
we created two new DRGs (526 and 527) to be effective April 28, 2003. 
The relative weights for these new DRGs are 14 and 16 percent higher, 
respectively, than the weights for current DRGs 516 and 517, the 
current DRGs for stents. Hospitals that are currently doing these 
procedures demonstrate positive impacts from this change.
    Another change is to DRGs 14 (retitled, Intracranial Hemorrhage and 
Stroke with Infarction) and 15 (retitled, Nonspecific Cerebrovascular 
Accident and Precerebral Occlusion without Infarction), and new DRG 524 
(Transient Ischemia). With the new configuration of these DRGs, over 
100,000 cases that previously would have been assigned to DRG 14 (with 
a FY 2003 relative weight of 1.2943) will now be assigned to DRG 15 
(with a FY 2003 relative weight of 0.9858).
    Urban hospitals with 300 or more beds, and rural hospitals with 200 
or more beds benefit from these changes. Rural hospitals with fewer 
than 50 beds would experience a 0.3 percent decrease due to these 
changes, and rural hospitals with between 50 and 99 beds would 
experience a 0.1 percent decrease. Among rural hospitals categorized by 
region, the East South Central and West South Central would experience 
a 0.1 percent decrease in payments. Among special rural hospital 
categories, SCHs would experience a 0.1 percent decrease and MDHs would 
experience a 0.2 percent decrease.

C. Impact of Wage Index Changes (Columns 2, 3, and 4)

    Section 1886(d)(3)(E) of the Act requires that, beginning October 
1, 1993, we annually update the wage data used to calculate the wage 
index. In accordance with this requirement, the wage index for FY 2003 
is based on data submitted for hospital cost reporting periods 
beginning on or after October 1, 1998 and before October 1, 1999. As 
with column 1, the impact of the new data on hospital payments is 
isolated in columns 2, 3, and 4 by holding the other payment parameters 
constant in the three simulations. That is, columns 2, 3, and 4 show 
the percentage changes in payments when going from a model using the FY 
2002 wage index (based on FY 1997 wage data before geographic 
reclassifications to a model using the FY 2003 pre-reclassification 
wage index based on FY 1998 wage data).
    The wage data collected on the FY 1999 cost reports are similar to 
the data used in the calculation of the FY 2002 wage index. Also, as 
described in section III.B. of this preamble, the FY 2003 wage index is 
calculated by removing 100 percent of hospitals' GME and CRNA costs 
(and hours). The FY 2002 wage index was calculated by blending 60 
percent of hospitals' average hourly wages, excluding GME and CRNA 
data, with 40 percent of average hourly wages including these data.
    Column 2 shows the impacts of updating the wage data using FY 1999 
cost reports. This column maintains the same 60/40 phaseout of GME and 
CRNA costs as the FY 2002 wage index, which is the baseline for 
comparison. Among regions, the largest impact of updating the wage data 
is seen in rural Puerto Rico (a 5.4 percent decrease). Rural hospitals 
in the East South Central region experience the next largest impact, a 
0.7 percent increase. Among urban hospitals, Puerto Rico and the Middle 
Atlantic regions would experience a 0.8 and 0.4 percent decreases, 
respectively. The Mountain region would experience a 0.5 percent 
increase.
    The next two columns show the impacts of removing the GME and CRNA 
data from the wage index calculation. Under the 5-year phaseout of 
these data, FY 2003 would have been the fourth year of the phaseout. 
This would have meant that, under the phaseout, the FY 2003 wage index 
would be calculated with 20 percent of the GME and CRNA data included 
and 80 percent of these data removed, and FY 2004 would begin the 
calculation with 100 percent of these data removed. However, we are 
removing 100 percent of GME and CRNA costs from the FY 2003 wage index. 
To demonstrate the impacts of this provision, we first show the impacts 
of moving to a wage index with 80 percent of these data removed (Column 
3), then show a wage index with 100 percent of these data removed 
(Column 4). As expected, the impacts in the two columns are similar, 
with some differences due to rounding. Generally, no group of hospitals 
is impacted by more than 0.2 percent by this change. Even among the 
hospital group most likely to be negatively impacted by this change, 
teaching hospitals with 100 or more residents, the net effect of 
removing 100 percent of GME and CRNA data is no change in payments.
    We note that the wage data used for the final wage index are based 
upon the data available as of July 2002 and, therefore, do not reflect 
revision requests received and processed by the fiscal intermediaries 
after that date.
    The following chart compares the shifts in wage index values for 
labor market areas for FY 2002 relative to FY 2003. This chart 
demonstrates the impact of the changes for the FY 2003 wage index, 
including updating to FY 1999 wage data and removing 100 percent of GME 
and CRNA data. The majority of labor market areas (344) experience less 
than a 5-percent change. A total of 10 labor market areas experience an 
increase of more than 5

[[Page 22286]]

percent and less than 10 percent. Three areas experience an increase 
greater than 10 percent. A total of 15 areas experience decreases of 
more than 5 percent and less than 10 percent. Finally, 1 area 
experiences a decline of 10 percent or more.

------------------------------------------------------------------------
                                                 Number of labor market
                                                          areas
  Percentage change in area wage index values  -------------------------
                                                  FY 2002      FY 2003
------------------------------------------------------------------------
Increase more than 10 percent.................            2            3
Increase more than 5 percent and less than 10            26           10
 percent......................................
Increase or decrease less than 5 percent......          335          344
Decrease more than 5 percent and less than 10            10           15
 percent......................................
Decrease more than 10 percent.................            1            1
------------------------------------------------------------------------

    Among urban hospitals, 42 would experience an increase of between 5 
and 10 percent and 9 more than 10 percent. A total of 22 rural 
hospitals have increases greater than 5 percent, but none have greater 
than 10-percent increases. On the negative side, 55 urban hospitals 
have decreases in their wage index values of at least 5 percent but 
less than 10 percent. Two urban hospitals have decreases in their wage 
index values greater than 10 percent. There are 17 rural hospitals with 
decreases in their wage index values greater than 5 percent but less 
than 10 percent. There are no rural hospitals with decreases in their 
wage index value greater than 10 percent. The following chart shows the 
projected impact for urban and rural hospitals.

------------------------------------------------------------------------
                                                   Number of hospitals
  Percentage change in area wage index values  -------------------------
                                                   Urban        Rural
------------------------------------------------------------------------
Increase more than 10 percent.................            9            0
Increase more than 5 percent and less than 10            42           22
 percent......................................
Increase or decrease less than 5 percent......         2565         1985
Decrease more than 5 percent and less than 10            55           17
 percent......................................
Decrease more than 10 percent.................            2            0
------------------------------------------------------------------------

D. Combined Impact of DRG and Wage Index Changes--Including Budget 
Neutrality Adjustment (Column 5)

    The impact of DRG reclassifications and recalibration on aggregate 
payments is required by section 1886(d)(4)(C)(iii) of the Act to be 
budget neutral. In addition, section 1886(d)(3)(E) of the Act specifies 
that any updates or adjustments to the wage index are to be budget 
neutral. As noted in the Addendum to this final rule, we compared 
simulated aggregate payments using the FY 2002 DRG relative weights and 
wage index to simulated aggregate payments using the FY 2003 DRG 
relative weights and blended wage index. In addition, we are required 
to ensure that any add-on payments for new technology under section 
1886(d)(5)(K) of the Act are budget neutral. As discussed in section 
II.D. of this final rule, we are approving one new technology for add-
on payments in FY 2003. We estimate the total add-on payments for this 
new technology will be $74.8 million.
    We computed a wage and recalibration budget neutrality factor of 
0.993209. In Table I, the combined overall impacts of the effects of 
both the DRG reclassifications and recalibration and the updated wage 
index are shown in column 5. The 0.0 percent impact for all hospitals 
demonstrates that these changes, in combination with the budget 
neutrality factor, are budget neutral.
    In addition, section 4410 of Public Law 105-33 provides that, for 
discharges on or after October 1, 1997, the area wage index applicable 
to any hospital that is not located in a rural area may not be less 
than the area wage index applicable to hospitals located in rural areas 
in that State. This provision is required to be budget neutral. The 
impact of this provision, which is to increase overall payments by 0.1 
percent, is not shown in columns 1, 2, 3, and 4. It is included in the 
impacts shown in column 5.
    The changes in this column are the sum of the changes in columns 1, 
2, 3, and 4, combined with the budget neutrality factor and the wage 
index floor for urban areas. There also may be some variation of plus 
or minus 0.1 percentage point due to rounding.

E. Impact of MGCRB Reclassifications (Column 6)

    Our impact analysis to this point has assumed hospitals are paid on 
the basis of their actual geographic location (with the exception of 
ongoing policies that provide that certain hospitals receive payments 
on bases other than where they are geographically located, such as 
hospitals in rural counties that are deemed urban under section 
1886(d)(8)(B) of the Act). The changes in column 6 reflect the per case 
payment impact of moving from this baseline to a simulation 
incorporating the MGCRB decisions for FY 2003. These decisions affect 
hospitals' standardized amount and wage index area assignments.
    By February 28 of each year, the MGCRB makes reclassification 
determinations that will be effective for the next fiscal year, which 
begins on October 1. The MGCRB may approve a hospital's 
reclassification request for the purpose of using another area's 
standardized amount, wage index value, or both. The final FY 2003 wage 
index values incorporate all of the MGCRB's reclassification decisions 
for FY 2003. The wage index values also reflect any decisions made by 
the CMS Administrator through the appeals and review process.
    Section 1886(d)(8)(D) of the Act requires that the overall effect 
of geographic reclassification is budget neutral. Therefore, we applied 
an adjustment of 0.991095 to ensure that the effects of 
reclassification are budget neutral. (See section II.A.4.b. of the 
Addendum to this final rule.)
    As a group, rural hospitals benefit from geographic 
reclassification. Their payments rise 2.5 percent in column 6. Payments 
to urban hospitals decline 0.5

[[Page 22287]]

percent. Hospitals in other urban areas see a decrease in payments of 
0.4 percent, while large urban hospitals lose 0.5 percent. Among urban 
hospital groups (that is, bed size, census division, and special 
payment status), payments generally decline.
    Geographic reclassification has a positive impact on most of the 
rural hospital groups. The smallest increases among the rural census 
divisions are 1.2 and 1.6 percent for Mountain and West North Central 
regions, respectively. The largest increases are in the rural South 
Atlantic and West South Central regions. These regions receive 
increases of 2.9 and 3.3 percent, respectively.
    Among all the hospitals that were reclassified for FY 2003 
(including hospitals that received wage index reclassifications in FY 
2001 or FY 2002 that extend for 3 years), the MGCRB changes are 
estimated to provide a 4.6 percent increase in payments. Urban 
hospitals reclassified for FY 2003 are expected to receive an increase 
of 4.6 percent, while rural reclassified hospitals are also expected to 
benefit from the MGCRB changes with a 4.6 percent increase in payments. 
Overall, among hospitals that were reclassified for purposes of the 
standardized amount only, a payment increase of 1.3 percent is 
expected, while those reclassified for purposes of the wage index only 
show a 4.7 percent increase in payments. Payments to urban and rural 
hospitals that did not reclassify are expected to decrease slightly due 
to the MGCRB changes, decreasing by 0.7 for urban hospitals and 0.6 for 
rural hospitals. Those hospitals located in rural counties but deemed 
to be urban under section 1886(d)(8)(B) of the Act are expected to 
receive a decrease in payments of 1.3 percent.

F. All Changes (Column 7)

    Column 7 compares our estimate of payments per case, incorporating 
all changes reflected in this final rule for FY 2003 (including 
statutory changes), to our estimate of payments per case in FY 2002. 
This column includes all of the policy changes. Because the 
reclassifications shown in column 6 do not reflect FY 2002 
reclassifications, the impacts of FY 2003 reclassifications only affect 
the impacts from FY 2002 to FY 2003 if the reclassification impacts for 
any group of hospitals are different in FY 2003 compared to FY 2002.
    Column 7 includes the effects of the 2.95 percent update to the 
standardized amounts and the hospital-specific rates for MDHs and SCHs. 
It also reflects the 1.8 percentage point difference between the 
projected outlier payments in FY 2002 (5.1 percent of total DRG 
payments) and the current estimate of the percentage of actual outlier 
payments in FY 2002 (6.9 percent), as described in the introduction to 
this Appendix and the Addendum to this final rule.
    Section 213 of Public Law 106-554 provided that all SCHs may 
receive payment on the basis of their costs per case during their cost 
reporting period that began during 1996. For FY 2003, eligible SCHs 
that rebase receive a hospital-specific rate comprised of 25 percent of 
the higher of their FY 1982 or FY 1987 hospital-specific rate or their 
Federal rate, and 75 percent of their 1996 hospital-specific rate. The 
impact of this provision is modeled in column 7 as well.
    Under section 1886(d)(5)(B)(ii) of the Act, the formula for IME is 
reduced beginning in FY 2003. The reduction is from approximately a 6.5 
percent increase for every 10 percent increase in the resident-to-bed 
ratio during FY 2002 to approximately a 5.5 percent increase. We 
estimate the impact of this change to be a 0.9 percent reduction in 
hospitals' overall FY 2003 payments. The impact upon teaching hospitals 
would be larger.
    Finally, the DSH adjustment increases in FY 2003 compared with FY 
2002. In accordance with section 1886(d)(5)(F)(ix) of the Act, during 
FY 2002, DSH payments that the hospital would otherwise receive were 
reduced by 3 percent. This reduction is no longer applicable beginning 
with FY 2003. The estimated impact of this change is to increase 
overall hospital payments by 0.2 percent.
    There might also be interactive effects among the various factors 
comprising the payment system that we are not able to isolate. For 
these reasons, the values in column 7 may not equal the sum of the 
changes in columns 5 and 6, plus the other impacts that we are able to 
identify.
    The overall change in payments per case for hospitals in FY 2003 
increases by 0.4 percent. Hospitals in urban areas experience a 0.2 
percent increase in payments per case compared to FY 2002. Meanwhile, 
hospitals in rural areas experience a 1.9 percent payment increase. 
Hospitals in large urban areas experience a 0.2 percent decline in 
payments, largely due to the reduction in IME payments. The impact of 
the reduction in IME payments is most evident among teaching hospitals 
with 100 or more residents, who would experience a decrease in payments 
per case of 1.3 percent.
    Among urban census divisions, the largest payment increase was 1.7 
percent in the Mountain region. Hospitals in the urban Middle Atlantic 
would experience an overall decrease of 1.3 percent and hospitals in 
the New England region would experience a decrease of 0.2 percent. 
These reductions are primarily due to the combination of the negative 
impact on these hospitals of reducing IME and the lower outlier 
payments during FY 2003. The only rural hospital category experiencing 
overall payment decreases is Puerto Rico, where payments decrease by 
2.7 percent, largely due to the updated wage index data. In the rural 
East North Central region, payments appear to increase by 2.4 percent. 
The rural West North Central regions also benefited with a 2.2 percent 
increase.
    Among special categories of rural hospitals, those hospitals 
receiving payment under the hospital-specific methodology (SCHs, MDHs, 
and SCH/RRCs) experience payment increases of 2.1 percent, 2.4 percent, 
and 2.5 percent, respectively. This outcome is primarily related to the 
fact that, for hospitals receiving payments under the hospital-specific 
methodology, there are no outlier payments. Therefore, these hospitals 
do not experience negative payment impacts from the decline in outlier 
payments from FY 2002 to FY 2003 as do hospitals paid based on the 
national standardized amounts.
    Hospitals that were reclassified for FY 2003 are estimated to 
receive an overall 1.1 percent increase in payments. Urban hospitals 
reclassified for FY 2003 are anticipated to receive an increase of 0.1 
percent, while rural reclassified hospitals are expected to benefit 
from reclassification with a 1.7 percent increase in payments. Overall, 
among hospitals reclassified for purposes of the standardized amount, a 
payment increase of 0.9 percent is expected, while those hospitals 
reclassified for purposes of the wage index only show an expected 0.7 
percent increase in payments. Those hospitals located in rural counties 
but deemed to be urban under section 1886(d)(8)(B) of the Act are 
expected to receive an increase in payments of 2.7 percent.

[[Page 22288]]



                                Table II.--Impact Analysis of Changes for FY 2003
                             Operating prospective payment system, payments per case
----------------------------------------------------------------------------------------------------------------
                                                                              Average FY  Average FY
                                                                                 2002        2003       All FY
                                                                    Num. of     payment     payment      2003
                                                                    hosps.     per case    per case     changes
                                                                                  \1\         \1\
----------------------------------------------------------------------------------------------------------------
                                                                         (1)         (2)         (3)         (4)
-----------------------------------------------------------------
By Geographic Location:
    All hospitals...............................................       4,230       7,218       7,248         0.4
    Urban hospitals.............................................       2,620       7,718       7,731         0.2
    Large urban areas (populations over 1 million)..............       1,519       8,269       8,253        -0.2
    Other urban areas (populations of 1 million of fewer).......       1,101       7,002       7,053         0.7
    Rural hospitals.............................................       1,610       5,168       5,265         1.9
Bed Size (Urban):
    0-99 beds...................................................         645       5,309       5,378         1.3
    100-199 beds................................................         909       6,424       6,477         0.8
    200-299 beds................................................         523       7,394       7,425         0.4
    300-499 beds................................................         398       8,345       8,336        -0.1
    500 or more beds............................................         145      10,007       9,948        -0.6
Bed Size (Rural):
    0-49 beds...................................................         747       4,260       4,353         2.2
    50-99 beds..................................................         501       4,776       4,875         2.1
    100-149 beds................................................         215       5,106       5,204         1.9
    150-199 beds................................................          78       5,515       5,613         1.8
    200 or more beds............................................          69       6,750       6,846         1.4
Urban by Region:
    New England.................................................         135       8,224       8,206        -0.2
    Middle Atlantic.............................................         404       8,789       8,672        -1.3
    South Atlantic..............................................         384       7,311       7,364         0.7
    East North Central..........................................         429       7,293       7,315         0.3
    East South Central..........................................         159       6,956       7,004         0.7
    West North Central..........................................         178       7,358       7,407         0.7
    West South Central..........................................         335       7,103       7,175         1.0
    Mountain....................................................         132       7,417       7,543         1.7
    Pacific.....................................................         417       9,386       9,390         0.0
    Puerto Rico.................................................          47       3,319       3,340         0.6
Rural by Region:
    New England.................................................          40       6,405       6,460         0.9
    Middle Atlantic.............................................          67       5,267       5,328         1.2
    South Atlantic..............................................         232       5,245       5,325         1.5
    East North Central..........................................         215       5,139       5,264         2.4
    East South Central..........................................         239       4,746       4,841         2.0
    West North Central..........................................         279       5,223       5,340         2.2
    West South Central..........................................         285       4,536       4,620         1.9
    Mountain....................................................         145       5,789       5,905         2.0
    Pacific.....................................................         103       6,652       6,785         2.0
    Puerto Rico.................................................           5       2,753       2,679        -2.7
By Payment Classification:
    Urban hospitals.............................................       2,650       7,703       7,716         0.2
    Large urban areas (populations over 1 million)..............       1,576       8,196       8,183        -0.2
    Other urban areas (populations of 1 million of fewer).......       1,074       7,027       7,077         0.7
    Rural areas.................................................       1,580       5,155       5,252         1.9
Teaching Status:
    Non-teaching................................................       3,119       5,890       5,964         1.3
    Fewer than 100 Residents....................................         870       7,475       7,513         0.5
    100 or more Residents.......................................         241      11,352      11,202        -1.3
Urban DSH:
    Non-DSH.....................................................       1,549       6,567       6,604         0.6
    100 or more beds............................................       1,361       8,296       8,302         0.1
    Less than 100 beds..........................................         286       5,168       5,233         1.3
Rural DSH:
    Sole Community (SCH)........................................         470       4,942       5,048         2.1
    Referral Center (RRC).......................................         156       5,974       6,061         1.5
    Other Rural:
        100 or more beds........................................          76       4,517       4,592         1.7
        Less than 100 beds......................................         332       4,089       4,175         2.1
Urban teaching and DSH:
    Both teaching and DSH.......................................         757       9,177       9,144        -0.4
    Teaching and no DSH.........................................         284       7,773       7,766        -0.1
    No teaching and DSH.........................................         890       6,535       6,611         1.2
    No teaching and no DSH......................................         719       6,041       6,089         0.8
Rural Hospital Types:
    Non special status hospitals................................         577       4,261       4,344         1.9

[[Page 22289]]

 
    RRC.........................................................         160       5,677       5,740         1.1
    SCH.........................................................         526       5,280       5,393         2.1
    Medicare-dependent hospitals (MDH)..........................         241       4,048       4,146         2.4
    SCH and RRC.................................................          76       6,626       6,794         2.5
Type of Ownership:
    Voluntary...................................................       2,461       7,342       7,370         0.4
    Proprietary.................................................         723       6,945       6,971         0.4
    Government..................................................         869       6,809       6,850         0.6
    Unknown.....................................................         177       7,302       7,321         0.3
Medicare Utilization as a Percent of Inpatient Days:
    0-25........................................................         310       9,845       9,790        -0.6
    25-50.......................................................       1,613       8,267       8,271         0.1
    50-65.......................................................       1,677       6,257       6,318         1.0
    Over 65.....................................................         504       5,647       5,682         0.6
    Unknown.....................................................         126       8,992       9,015         0.2
Hospitals Reclassified by the Medicare Geographic Classification
 Review Board: FY 2002 Reclassifications:
    All Reclassified Hospitals..................................         628       6,530       6,603         1.1
        Standardized Amount Only................................          28       5,971       6,026         0.9
        Wage Index Only.........................................         521       6,749       6,798         0.7
        Both....................................................          38       5,901       5,950         0.8
All Nonreclassified Hospitals...................................       3,605       7,327       7,353         0.3
All Urban Reclassified Hospitals................................         113       8,610       8,618         0.1
Urban Nonreclassified Hospitals.................................          11       5,794       5,807         0.2
    Standardized Amount Only....................................          87       9,211       9,199        -0.1
    Wage Index Only.............................................          15       5,870       6,050         3.1
    Both........................................................       2,473       7,690       7,702         0.2
All Reclassified Rural Hospitals................................         515       5,721       5,819         1.7
    Standardized Amount Only....................................          11       4,848       5,003         3.2
    Wage Index Only.............................................         485       5,728       5,826         1.7
    Both........................................................          19       5,875       5,977         1.7
Rural Nonreclassified Hospitals.................................       1,094       4,516       4,611         2.1
Other Reclassified Hospitals (Section 1886(D)(8)(B))............          35       4,894       5,024        2.7
\1\ These payment amounts per case do not reflect any estimates of annual case-mix increase.

    Table II presents the projected impact of the changes for FY 2003 
for urban and rural hospitals and for the different categories of 
hospitals shown in Table I. It compares the estimated payments per case 
for FY 2002 with the average estimated per case payments for FY 2003, 
as calculated under our models. Thus, this table presents, in terms of 
the average dollar amounts paid per discharge, the combined effects of 
the changes presented in Table I. The percentage changes shown in the 
last column of Table II equal the percentage changes in average 
payments from column 7 of Table I.

VII. Impact of Specific Policy Changes

A. Impact of Changes Relating to EMTALA Provisions

    We will address the proposed changes relating to the EMTALA 
provisions in a separate final rule to be published at a later date.

B. Impact of Policy Changes Relating to Provider-Based Entities

    In section V.K. of the preamble of this final rule, we discuss our 
Medicare payment policy changes relating to determinations of provider-
based status for entities of main providers. These changes are intended 
to focus mainly on issues raised by the hospital industry surrounding 
the provider-based regulations and to allow for an orderly and uniform 
implementation strategy once the grandfathering provision for these 
entities expires on September 30, 2002.
    Because we believed it would be difficult to quantify the impact of 
these changes, in the May 9, 2002 proposed rule, we solicited comments 
on these issues.
    We faced two problems that prevented us from developing 
quantitative impact estimates. First, we do not know what level of 
inappropriate billing is now occurring. We know from anecdotal evidence 
that, in the past, many hospitals began billing for services of 
additional facilities as provider-based without seeking CMS approval or 
even notifying CMS of the existence of the facilities. While some of 
these facilities may have met provider-based criteria, others 
undoubtedly did not. Because we do not know what percentage of current 
payments to hospitals may be due to inappropriate billing, we do not 
have a baseline to use in projecting future savings from the revised 
regulations. Moreover, hospitals may furnish similar services at 
several locations but are not required to identify services at their 
various locations separately on their bills. Thus, even if a hospital 
voluntarily stops billing for a particular location's services as 
hospital services, it will be difficult to determine conclusively 
whether the reduction in payments resulted from this action or from 
unrelated factors, such as changes in utilization.
    As noted above, we attempted to solicit assistance from commenters 
in

[[Page 22290]]

dealing with the issue of determining the impact of these changes. 
However, we did not receive any comments that would help resolve this 
issue. Thus, we remain unable to accurately determine the number of 
cases that would be determined not to be provider-based or to estimate 
the dollar impact of these determinations.

VIII. Impact of Policies Affecting Rural Hospitals

A. Raising the Threshold To Qualify for the CRNA Pass-Through Payments

    In section V. of the preamble of this final rule, we are raising 
the maximum number of surgical procedures (including inpatient and 
outpatient procedures) requiring anesthesia services that a rural 
hospital may perform to qualify for pass'through payments for the costs 
of CRNAs to 800 from 500. We have identified 622 hospitals that 
currently qualify under this provision.
    To measure the impact of this provision, we determined that 
approximately half of the hospitals that would appear to be eligible 
based on the current number of procedures will receive pass-through 
payments. That is, another approximately 600 rural hospitals have 
similar volumes to hospitals that currently receive the pass-through. 
However, because in order to be eligible to receive pass-through 
payments, the hospital must employ the CRNA and the CRNA must agree not 
to bill for services under Part B, we estimate that half the hospitals 
that would otherwise qualify based on volume of procedures are not 
eligible because they either do not employ the CRNA or the CRNA does 
not agree not to bill for services under Part B. We estimate 
approximately 90 rural hospitals would qualify under the increased 
maximum volume threshold. If one-half of these hospitals then met the 
other criteria (the CRNA is employed by the hospital and the CRNA does 
not bill for Part B), 45 additional hospitals would now be eligible for 
these pass-through payments under this change.

B. Removal of Requirement for CAHs To Use State Resident Assessment 
Instrument

    In section VII. of the preamble of this final rule, we are 
eliminating the requirement that CAHs use the State resident assessment 
instrument (RAI) to conduct patient assessments. There are 
approximately 630 CAHs. The overwhelming majority of CAHs, 95 percent, 
or approximately 598 CAHs, provide SNF level care. The elimination of 
the requirement to use the State RAI will greatly reduce the burden on 
CAHs because facilities will no longer be required to complete an RAI 
document for each SNF patient (which would involve approximately 12,000 
admissions based on the most recent claims data). Facilities would have 
the flexibility to document the assessment data in the medical record 
in a manner appropriate for their facility. The elimination of the 
requirement for use of the State RAI will reduce the amount of time 
required to perform patient assessments and allow more time for direct 
patient care.

C. Exclusion of Limited-Service Specialty Hospitals From the Definition 
of Like Hospitals for Purposes of Granting SCH Status

    Section 1886(d)(5)(D)(iii) of the Act provides that, to qualify as 
an SCH, a hospital must be more than 35 road miles from another 
hospital. In addition, there are several other conditions under which a 
hospital may qualify as an SCH, including if it is the ``* * * sole 
source of inpatient hospital services reasonably available to 
individuals in a geographic area * * *'' because of factors such as the 
``* * * absence of other like hospitals. * * *'' We have defined a 
``like hospital'' in regulations as a hospital furnishing short-term, 
acute care (Sec.  412.92(c)(2)). ``Like hospital'' refers to a hospital 
paid under the acute care hospital inpatient prospective payment 
system.
    We have become aware that, in some cases, new specialty hospitals 
that offer a very limited range of services have opened within the 
service area of an SCH and may be threatening the special status of the 
SCH. For example, a hospital that offers only a select type of surgery 
on an inpatient basis would qualify under our existing rules as an SCH 
``like hospital'' if it met the hospital conditions of participation 
and was otherwise eligible for payment under the acute care hospital 
inpatient prospective payment system. Under our existing regulations, 
an SCH could lose its special status due to the opening of such a 
specialty hospital, even though there is little, if any, overlap in the 
types of services offered by the SCH and the specialty hospital. To 
prevent a hospital from losing its SCH status in such a situation, we 
are establishing criteria whereby a limited-service specialty hospital 
may be excluded from the definition of ``like hospital''. To determine 
whether a hospital qualifies as an SCH, the fiscal intermediary will 
make a determination whether a nearby hospital paid under the acute 
care hospital inpatient prospective payment system is a like hospital 
by comparing the total acute inpatient days of the SCH applicant 
hospital with the total acute inpatient days of the nearby hospital. If 
the total acute inpatient days of the nearby hospital are greater than 
8 percent of the total inpatient days reported by the SCH applicant 
hospital, the hospital is considered a like hospital for purposes of 
evaluating the application for SCH status. If the total acute inpatient 
days of the nearby hospital are 8 percent or less of the total acute 
inpatient days of the applicant hospital, the nearby hospital is not 
considered a like hospital for purposes of evaluating the application 
for SCH status under Sec.  412.92.
    The impact of this change would be: To allow some hospitals that 
are currently SCHs but whose status is jeopardized by the opening of a 
limited-service specialty hospital to retain their status; to allow 
hospitals that are applying for SCH status to exclude existing limited-
service specialty hospitals from the list of like hospitals in their 
service area; or to allow some hospitals that previously lost their SCH 
status due to a specialty hospital opening in their service area to 
regain that status. We note that this change is effective for cost 
reporting periods beginning on or after October 1, 2002. Therefore, 
hospitals that lost their SCH status and are able to regain that status 
as a result of this change cannot have that status applied 
retroactively to prior periods.
    We are unable to quantify precisely the impact of this policy 
change. However, we anticipate it will be minimal because we believe 
the criteria we have established will limit the application of this 
policy. We do not anticipate more than approximately 10 situations that 
will be affected by this change during FY 2003.

IX. Waiver of Proposed Rulemaking and Delay in Effective Date

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register to provide a period for public comment before the 
provisions of a notice take effect. However, we can waive this 
procedure, if we find good cause that notice and comment procedure is 
impracticable, unnecessary, or contrary to the public interest and 
incorporate a statement of the finding and the reasons for it into the 
notice issued.
    We find it unnecessary to undertake notice and comment rulemaking 
because this notice merely provides technical corrections to the 
preamble language of the final rule. In this notice, the technical 
corrections include

[[Page 22291]]

comments and responses that were inadvertently omitted from the August 
1, 2002 final rule. We have incorporated these comments and responses 
into this correction notice to assure the commenters that we received 
their comments on the proposed rule and that their comments were given 
full consideration before publication of the final rule. Additional 
technical corrections include, corrections to entries in various tables 
and charts, replacing data inadvertently published with the correct 
data, and also making a variety of grammatical corrections. These 
corrections are necessary to ensure that the final rule accurately 
reflects our prospective payment methodology and rates. In addition, 
these corrections ensure that correct wage index values are used to 
calculate payments to hospitals. In light of the very technical nature 
of these corrections, notice-and-comment procedures are both 
unnecessary and impracticable. Therefore, we find good cause to waive 
notice and comment procedures.
    In addition, the Administrative Procedure Act (APA) normally 
requires a 30-day delay in the effective date of a final rule. Because 
this notice simply makes technical modifications to a final rule that 
has previously gone through notice-and-comment rulemaking, we believe 
good cause also exists under APA to waive the 30-day delay in the 
effective date.

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

    Dated: April 17, 2003.
Ann C. Agnew,
Executive Secretary to the Department.
[FR Doc. 03-10015 Filed 4-24-03; 8:45 am]
BILLING CODE 4120-01-P