Federal Register, Volume 68 Issue 95 (Friday, May 16, 2003)

[Federal Register Volume 68, Number 95 (Friday, May 16, 2003)]
[Proposed Rules]
[Pages 26758-26783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-11854]

[[Page 26757]]

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

Part III

Department of Health and Human Services

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

Centers for Medicare & Medicaid Services

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

42 CFR Parts 409, 413, 440, and 483

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

Federal Register / Vol. 68, No. 95 / Friday, May 16, 2003 / Proposed
Rules

[[Page 26758]]

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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 413, 440, and 483

[CMS-1469-P]
RIN 0938-AL20

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

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

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would update the payment rates used under
the prospective payment system (PPS) for skilled nursing facilities
(SNFs), for fiscal year (FY) 2004, as required by statute. Annual
updates to the PPS rates are required by section 1888(e) of the Social
Security Act (the Act), as amended by the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of 1999 (BBRA), and the Medicare,
Medicaid, and State Children's Health Insurance Program (SCHIP)
Benefits Improvement and Protection Act of 2000 (BIPA), relating to
Medicare payments and consolidated billing for SNFs.

DATES: We will consider comments if we receive them at the appropriate
address, as provided below, no later than 5 p.m. on July 7, 2003.

ADDRESSES: Mail written comments (one original and three copies) to the
following address: Centers for Medicare & Medicaid Services, Department
of Health and Human Services, Attention: CMS-1469-P, PO Box 8013,
Baltimore, MD 21244-8013.
If you prefer, you may deliver your written comments (one original
and three copies) to one of the following addresses: Hubert H. Humphrey
Building, Room 443-G, 200 Independence Avenue, SW., Washington, DC
20201, or Centers for Medicare & Medicaid Services, Room C5-14-03, 7500
Security Boulevard, Baltimore, MD 21244-8013.
Comments mailed to those addresses designated for courier delivery
may be delayed and could be considered late. Because of staffing and
resource limitations, we cannot accept comments by facsimile (FAX)
transmission. Please refer to file code CMS-1469-P on each comment.
Comments received timely will be available for public inspection as
they are received, generally beginning approximately 3 weeks after
publication of this document, in Room C5-12-08 of the Centers for
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore,
Maryland, Monday through Friday of each week from 8:30 a.m. to 4 p.m.
Please call (410) 786-7197 to make an appointment to view comments.

FOR FURTHER INFORMATION CONTACT:
John Davis, (410) 786-0008 (for information related to the Wage Index,
and for information related to swing-bed providers).
Ellen Gay, (410) 786-4528 (for information related to the case-mix
classification methodology, and for information related to swing-bed
providers).
Bill Ullman, (410) 786-5667 (for information related to level of care
determinations, consolidated billing, and general information).

SUPPLEMENTARY INFORMATION:
Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, PO Box 371954, Pittsburgh, PA 15250-7954. The cost for each
copy is $9. Please specify the date of the issue requested and enclose
a check or money order payable to the Superintendent of Documents, or
enclose your Visa or Master Card number and expiration date. Credit
card orders can also be placed by calling the order desk at (202) 512-
1800 (or toll free at 1-888-293-6498) or by faxing to (202) 512-2250.
You can also view and photocopy the Federal Register document at most
libraries designated as Federal Depository Libraries and at many other
public and academic libraries throughout the country that receive the
Federal Register.
To assist readers in referencing sections contained in this
document, we are providing the following Table of Contents.

Table of Contents

I. Background
A. Current System for Payment of Skilled Nursing Facility
Services Under Part A of the Medicare Program
B. Requirements of the Balanced Budget Act of 1997 (the BBA) for
Updating the Prospective Payment System for Skilled Nursing
Facilities
C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999 (the BBRA)
D. The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (the BIPA)
E. Skilled Nursing Facility Prospective Payment--General
Overview
1. Payment Provisions--Federal Rates
2. Payment Provisions--Initial Transition Period
F. Skilled Nursing Facility Market Basket Index
II. Update of Payment Rates Under the Prospective Payment System for
Skilled Nursing Facilities
A. Federal Prospective Payment System
1. Costs and Services Covered by the Federal Rates
2. Methodology Used for the Calculation of the Federal Rates
B. Case-Mix Adjustment
C. Wage Index Adjustment to Federal Rates
D. Updates to the Federal Rates
E. Relationship of RUG-III Classification System to Existing
Skilled Nursing Facility Level-of-Care Criteria
F. Initial Three-year Transition Period
G. Example of Computation of Adjusted PPS Rates and SNF Payment
III. The Skilled Nursing Facility Market Basket Index
A. Use of the Skilled Nursing Facility Market Basket Percentage
B. Federal Rate Update Factor
IV. Consolidated Billing
V. Application of the SNF PPS to SNF Services Furnished by Swing-Bed
Hospitals
VI. Distinct Part Definition
A. Background
B. Proposed Revision
VII. Provisions of the Proposed Rule
VIII. Collection of Information Requirements
IX. Regulatory Impact Analysis
A. Overall Impact
B. Anticipated Effects
C. Alternatives Considered
D. Conclusion
Regulation Text
In addition, because of the many terms to which we refer by
abbreviation in this proposed rule, we are listing these
abbreviations and their corresponding terms in alphabetical order
below:

ADL Activity of Daily Living
AHE Average Hourly Earnings
ARD Assessment Reference Date
BBA Balanced Budget Act of 1997,
Pub.L. 105-33
BBRA Medicare, Medicaid and SCHIP
Balanced Budget Refinement Act of
1999, Pub.L. 106-113
BEA (U.S.) Bureau of Economic
Analysis
BIPA Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection Act of 2000, Pub.L.
106-554
CAH Critical Access Hospital
CFR Code of Federal Regulations
CMS Centers for Medicare & Medicaid
Services
CPT (Physicians') Current Procedural
Terminology
DRG Diagnosis Related Group
FI Fiscal Intermediary
FR Federal Register
FY Fiscal Year
GAO General Accounting Office
HCPCS Healthcare Common Procedure Coding
System
ICD-9-CM International Classification of
Diseases, Ninth Edition, Clinical
Modification

[[Page 26759]]

IFC Interim Final Rule with Comment
Period
MDS Minimum Data Set
MEDPAR Medicare Provider Analysis and
Review File
MIP Medicare Integrity Program
MSA Metropolitan Statistical Area
NECMA New England County Metropolitan
Area
OIG Office of the Inspector General
OMRA Other Medicare Required Assessment
PCE Personal Care Expenditures
PPI Producer Price Index
PPS Prospective Payment System
PRM Provider Reimbursement Manual
RAI Resident Assessment Instrument
RAP Resident Assessment Protocol
RAVEN Resident Assessment Validation
Entry
RFA Regulatory Flexibility Act, Pub.
L. 96-354
RIA Regulatory Impact Analysis
RUG Resource Utilization Groups
SCHIP State Children's Health Insurance
Program
SNF Skilled Nursing Facility
STM Staff Time Measure
UMRA Unfunded Mandates Reform Act, Pub.
L. 104-4

I. Background

On July 31, 2002, we published a notice in the Federal Register (67
FR 49798) that set forth updates to the payment rates used under the
prospective payment system (PPS) for skilled nursing facilities (SNFs),
for fiscal year (FY) 2003. Annual updates to the PPS rates are required
by section 1888(e) of the Social Security Act (the Act), as amended by
the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (the BBRA) and the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (the BIPA), relating to Medicare
payments and consolidated billing for SNFs.

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

Section 4432 of the Balanced Budget Act of 1997 (the BBA) amended
section 1888 of the Act to provide for the implementation of a per diem
PPS for SNFs, covering all costs (routine, ancillary, and capital-
related) of covered SNF services furnished to beneficiaries under Part
A of the Medicare program, effective for cost reporting periods
beginning on or after July 1, 1998. We propose to update the per diem
payment rates for SNFs for FY 2004. Major elements of the SNF PPS
include:
[sbull] Rates. Per diem Federal rates were established for urban
and rural areas using allowable costs from FY 1995 cost reports. These
rates also included an estimate of the cost of services that, before
July 1, 1998, had been paid under Part B but were furnished to Medicare
beneficiaries in a SNF during a Part A covered stay. The rates were
adjusted annually using a SNF market basket index. Rates were case-mix
adjusted using a classification system (Resource Utilization Groups,
version III (RUG-III)) based on beneficiary assessments (using the
Minimum Data Set (MDS) 2.0). The rates were also adjusted by the
hospital wage index to account for geographic variation in wages. (In
section II.C of this preamble, we discuss the wage index adjustment in
detail.) A correction notice was published on December 27, 2002 (67 FR
79123) that announced corrections to several of the wage factors.
Additionally, as noted in the July 31, 2002 update notice (67 FR
49798), section 101 of the BBRA and certain sections of the BIPA also
affect the payment rate.
[sbull] Transition. The SNF PPS included an initial 3-year, phased
transition that blended a facility-specific payment rate with the
Federal case-mix adjusted rate. For each cost reporting period after a
facility migrated to the new system, the facility-specific portion of
the blend decreased and the Federal portion increased in 25 percentage
point increments. For most facilities, the facility-specific rate was
based on allowable costs from FY 1995; however, since the last year of
the transition was FY 2001, all facilities were paid at the full
Federal rate by the following fiscal year (FY 2002). Therefore, we are
no longer including adjustment factors related to facility-specific
rates for the coming fiscal year.
[sbull] Coverage. The establishment of the SNF PPS did not change
Medicare's fundamental requirements for SNF coverage. However, because
RUG-III classification is based, in part, on the beneficiary's need for
skilled nursing care and therapy, we have attempted, where possible, to
coordinate claims review procedures involving level of care
determinations with the outputs of beneficiary assessment and RUG-III
classifying activities. We discuss this coordination in greater detail
in section II.E of this preamble. Another SNF benefit requirement is
that the SNF in which the services are furnished must be certified by
Medicare as meeting the requirements for program participation
contained in section 1819 of the Act. This provision of the law defines
a SNF as ``* * * an institution (or a distinct part of an institution).
* * *'' In section VI of this preamble, we discuss a clarification that
we propose to make in defining the term ``distinct part'' with respect
to SNFs.
In addition, we are taking this opportunity to make a technical
correction in a cross-reference that appears in Sec. 409.20(c) of the
regulations. Section 409.20 provides a general introduction to the
subsequent sections (Sec. 409.21 through Sec. 409.36) that set forth
the specific requirements pertaining to the SNF benefit. However, in
referring to the sections that follow, the cross-reference in Sec.
409.20(c) concerning terminology inadvertently omits a reference to
Sec. 409.21, and we would now correct that omission by revising the
cross-reference to read ``Sec. 409.21 through Sec. 409.36''.
[sbull] Consolidated Billing. The SNF PPS includes a consolidated
billing provision (described in greater detail in section IV of this
proposed rule) that requires a SNF to submit consolidated Medicare
bills for almost all of the services that its residents receive during
the course of a covered Part A stay. (In addition, this provision
places with the SNF the Medicare billing responsibility for physical,
occupational, and speech-language therapy that the resident receives
during a noncovered stay.) The statute excludes from the consolidated
billing provision a small list of services--primarily those of
physicians and certain other types of practitioners--which remain
separately billable to Part B by the outside entity that furnishes
them.
[sbull] Application of the SNF PPS to SNF services furnished by
swing-bed hospitals. Section 1883 of the Act permits certain small,
rural hospitals to enter into a Medicare swing-bed agreement, under
which the hospital can use its beds to provide either acute or SNF
care, as needed. For critical access hospitals (CAHs), Part A pays on a
reasonable cost basis for SNF services furnished under a swing-bed
agreement. However, in accordance with section 1888(e)(7) of the Act,
such services furnished by non-CAH rural hospitals are paid under the
SNF PPS, effective with cost reporting periods beginning on or after
July 1, 2002. A more detailed discussion of this provision appears in
section V of this proposed rule.

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

Section 1888(e)(4)(H) of the Act requires that we publish in the
Federal Register:
1. The unadjusted Federal per diem rates to be applied to days of
covered SNF services furnished during the FY.

[[Page 26760]]

2. The case-mix classification system to be applied with respect to
these services during the FY.
3. The factors to be applied in making the area wage adjustment
with respect to these services.
In the July 30, 1999 final rule (64 FR 41670), we indicated that we
would announce any changes to the guidelines for Medicare level of care
determinations related to modifications in the RUG-III classification
structure (see section II.E of this preamble).
Along with a number of other revisions discussed later in this
preamble, this proposed rule provides the annual updates to the Federal
rates as mandated by the Act.

C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (the BBRA)

There were several provisions in the BBRA that resulted in
adjustments to the SNF PPS. These provisions were described in detail
in the final rule that we published in the Federal Register on July 31,
2000 (65 FR 46770). In particular, section 101 of the BBRA provided for
a temporary 20 percent increase in the per diem adjusted payment rates
for 15 specified RUG-III groups (SE3, SE2, SE1, SSC, SSB, SSA, CC2,
CC1, CB2, CB1, CA2, CA1, RHC, RMC, and RMB). Under the law, this
temporary increase remains in effect until the later of October 1,
2000, or the implementation of case-mix refinements in the PPS. Section
101 also included a 4 percent across-the-board increase in the adjusted
Federal per diem payment rates each year for FYs 2001 and 2002,
exclusive of the 20 percent increase. Accordingly, this 4 percent
temporary increase has now expired.
We included further information on all of the provisions of the
BBRA that affect the SNF PPS in Program Memoranda A-99-53 and A-99-61
(December 1999), and Program Memorandum AB-00-18 (March 2000). In
addition, for swing-bed hospitals with more than 49 (but less than 100)
beds, section 408 of the BBRA provided for the repeal of certain
statutory restrictions on length of stay and aggregate payment for
patient days, effective with the end of the SNF PPS transition period
described in section 1888(e)(2)(E) of the Act. In the July 31, 2001
final rule (66 FR 39562), we made conforming changes to the regulations
in Sec. 413.114(d), effective for services furnished in cost reporting
periods beginning on or after July 1, 2002.

D. The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (the BIPA)

The BIPA also included several provisions that resulted in
adjustments to the PPS for SNFs. These provisions were described in
detail in the final rule that we published in the Federal Register on
July 31, 2001 (66 FR 39562) as follows:
[sbull] Section 203 of the BIPA exempted critical access hospital
(CAH) swing-beds from the SNF PPS; we included further information on
this provision in Program Memorandum A-01-09 (January 16, 2001).
[sbull] Section 311 of the BIPA eliminated the one percent
reduction in the SNF market basket that the statutory update formula
had previously specified for FY 2001, and changed the one percent
reduction specified for FYs 2002 and 2003 to a 0.5 percent reduction.
This section also required us to conduct a study of alternative case-
mix classification systems for the SNF PPS, and to submit a report to
the Congress by January 1, 2005.
[sbull] Section 312 of the BIPA provided for a temporary 16.66
percent increase in the nursing component of the case-mix adjusted
Federal rate for services furnished on or after April 1, 2001, and
before October 1, 2002. Accordingly, this temporary increase has now
expired. This section also required the General Accounting Office (GAO)
to conduct an audit of SNF nursing staff ratios and submit a report to
the Congress on whether the temporary increase in the nursing component
should be continued.
[sbull] Section 313 of the BIPA repealed the consolidated billing
requirement for services (other than physical, occupational, and
speech-language therapy) furnished to SNF residents during noncovered
stays, effective January 1, 2001.
[sbull] Section 314 of the BIPA adjusted the payment rates for all
of the rehabilitation RUGs to correct an anomaly under which the
existing payment rates for the RHC, RMC, and RMB rehabilitation groups
were higher than the rates for some other, more intensive
rehabilitation RUGs.
[sbull] Section 315 of the BIPA authorized us to establish a
geographic reclassification procedure that is specific to SNFs, but
only after collecting the data necessary to establish a SNF wage index
that is based on wage data from nursing homes.
We included further information on several of these provisions in
Program Memorandum A-01-08 (January 16, 2001).

E. Skilled Nursing Facility Prospective Payment--General Overview

We implemented the Medicare SNF PPS for cost reporting periods
beginning on or after July 1, 1998. Under the PPS, we pay SNFs through
prospective, case-mix adjusted per diem payment rates applicable to all
covered SNF services. These payment rates cover all the costs of
furnishing covered skilled nursing services (routine, ancillary, and
capital-related costs) other than costs associated with approved
educational activities. Covered SNF services include post-hospital
services for which benefits are provided under Part A and all items and
services that, before July 1, 1998, had been paid under Part B (other
than physician and certain other services specifically excluded under
the BBA) but furnished to Medicare beneficiaries in a SNF during a
covered Part A stay. A complete discussion of these provisions appears
in the May 12, 1998 interim final rule (63 FR 26252).
1. Payment Provisions--Federal Rate
The PPS uses per diem Federal payment rates based on mean SNF costs
in a base year updated for inflation to the first effective period of
the PPS. We developed the Federal payment rates using allowable costs
from hospital-based and freestanding SNF cost reports for reporting
periods beginning in FY 1995. The data used in developing the Federal
rates also incorporated an estimate of the amounts that would be
payable under Part B for covered SNF services furnished to individuals
during the course of a covered Part A stay in a SNF.
In developing the rates for the initial period, we updated costs to
the first effective year of PPS (the 15-month period beginning July 1,
1998) using a SNF market basket, and then standardized for the costs of
facility differences in case-mix and for geographic variations in
wages. Providers that received new provider exemptions from the routine
cost limits were excluded from the database used to compute the Federal
payment rates, as well as costs related to payments for exceptions to
the routine cost limits. In accordance with the formula prescribed in
the BBA, we set the Federal rates at a level equal to the weighted mean
of freestanding costs plus 50 percent of the difference between the
freestanding mean and weighted mean of all SNF costs (hospital-based
and freestanding) combined. We computed and applied separately the
payment rates for facilities located in urban and rural areas. In
addition, we adjusted the

[[Page 26761]]

portion of the Federal rate attributable to wage-related costs by a
wage index.
The Federal rate also incorporates adjustments to account for
facility case-mix, using a classification system that accounts for the
relative resource utilization of different patient types. This
classification system, Resource Utilization Groups, version III (RUG-
III), uses beneficiary assessment data from the Minimum Data Set (MDS)
completed by SNFs to assign beneficiaries to one of 44 RUG-III groups.
The May 12, 1998 interim final rule (63 FR 26252) included a complete
and detailed description of the RUG-III classification system, and a
further discussion appears in section II.B of this preamble.
The Federal rates in this proposed rule reflect an update to the
rates that we published in the July 31, 2002 Federal Register (67 FR
49798) equal to the full change in the SNF market basket index.
According to section 1888(e)(4)(E)(ii)(IV) of the Act, for FY 2004, we
would update the rate by adjusting the current rates by the full SNF
market basket index.
2. Payment Provisions--Initial Transition Period
The SNF PPS included an initial, phased transition from a facility-
specific rate (which reflected the individual facility's historical
cost experience) to the Federal case-mix adjusted rate. The transition
extended through the facility's first three cost reporting periods
under the PPS, up to, and potentially including, the one that began in
FY 2001. Furthermore, pursuant to section 102 of BBRA, a facility could
nonetheless elect to be paid entirely under the Federal rates.
Accordingly, starting with cost reporting periods beginning in FY
2002, we base payments entirely on the Federal rates and, as mentioned
previously in this preamble, we no longer include adjustment factors
related to facility-specific rates for the coming fiscal year.

F. Skilled Nursing Facility Market Basket Index

Section 1888(e)(5) of the Act requires us to establish a SNF market
basket index that reflects changes over time in the prices of an
appropriate mix of goods and services included in the covered SNF
services. The SNF market basket index is used to update the Federal
rates on an annual basis, and is discussed in greater detail in section
III of this preamble.

II. Update of Payment Rates Under the Prospective Payment System for
Skilled Nursing Facilities

A. Federal Prospective Payment System

This proposed rule sets forth a schedule of Federal prospective
payment rates applicable to Medicare Part A SNF services beginning
October 1, 2003. The schedule incorporates per diem Federal rates that
provide Part A payment for all costs of services furnished to a
beneficiary in a SNF during a Medicare-covered stay.
1. Costs and Services Covered by the Federal Rates
The Federal rates apply to all costs (routine, ancillary, and
capital-related costs) of covered SNF services other than costs
associated with approved educational activities as defined in Sec.
413.85. Under section 1888(e)(2) of the Act, covered SNF services
include post-hospital SNF services for which benefits are provided
under Part A (the hospital insurance program), as well as all items and
services (other than those services excluded by statute) that, before
July 1, 1998, were paid under Part B (the supplementary medical
insurance program) but furnished to Medicare beneficiaries in a SNF
during a Part A covered stay. (These excluded service categories are
discussed in greater detail in section V.B.2 of the May 12, 1998
interim final rule (63 FR 26295-97)).
2. Methodology Used for the Calculation of the Federal Rates
The proposed FY 2004 rates would reflect an update using the full
amount of the latest market basket index. The FY 2004 market basket
increase factor is 2.9 percent. Consistent with previous years, this
factor may be revised in the final rule when later forecast data are
available. For a complete description of the multi-step process, see
the May 12, 1998 interim final rule (63 FR 26252). We note that in
accordance with section 101(a) of the BBRA and section 314 of the BIPA,
the existing, temporary increase in the per diem adjusted payment rates
of 20 percent for certain specified RUGs (and 6.7 percent for certain
others) remains in effect until the implementation of case-mix
refinements. As we discuss elsewhere in this proposed rule, while we
are proceeding with our ongoing research in this area, we are not
proposing to implement case-mix refinements in this proposed rule.
We used the SNF market basket to adjust each per diem component of
the Federal rates forward to reflect cost increases occurring between
the midpoint of the Federal fiscal year beginning October 1, 2002, and
ending September 30, 2003, and the midpoint of the Federal fiscal year
beginning October 1, 2003, and ending September 30, 2004, to which the
payment rates apply. In accordance with section 1888(e)(4)(E)(ii)(IV)
of the Act, the payment rates for FY 2004 are updated by a factor equal
to the market basket index percentage increase to determine the payment
rates for FY 2004. The rates would be further adjusted by a wage index
budget neutrality factor, described later in this section. Tables 1 and
2 reflect the updated components of the unadjusted Federal rates for FY
2004.

Table 1.--Unadjusted Federal Rate Per Diem: Urban
----------------------------------------------------------------------------------------------------------------
Nursing--case- Therapy--case- Therapy--non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $125.15 $94.27 $12.42 $63.87
----------------------------------------------------------------------------------------------------------------

Table 2.--Unadjusted Federal Rate Per Diem: Rural
----------------------------------------------------------------------------------------------------------------
Nursing--case- Therapy--case- Therapy-non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $119.57 $108.70 $13.26 $65.06
----------------------------------------------------------------------------------------------------------------

[[Page 26762]]

B. Case-Mix Adjustment

Under the BBA, we must publish the SNF PPS case-mix classification
methodology applicable for the next Federal FY before August 1 of each
year. As noted in the following discussion, we are proceeding with our
ongoing research regarding possible refinements in the existing case-
mix classification system, but we are not proposing to implement the
refinements in this proposed rule.
As discussed previously in this preamble, section 101(a) of the
BBRA provided for a temporary 20 percent increase in the per diem
adjusted payment rates for 15 specified RUG-III groups. This
legislation specified that the 20 percent increase would be effective
for SNF services furnished on or after April 1, 2000, and would
continue until the later of: (1) October 1, 2000, or (2) implementation
of a refined case-mix classification system under section
1888(e)(4)(G)(i) of the Act that would better account for medically
complex patients.
In the SNF PPS proposed rule for FY 2001 (65 FR 19190, April 10,
2000), we proposed making an extensive, comprehensive set of
refinements to the existing case-mix classification system that
collectively would have significantly expanded the existing 44-group
structure. However, when our subsequent validation analyses indicated
that the refinements would afford only a limited degree of improvement
in explaining resource utilization relative to the significant increase
in complexity that they would entail, we decided not to implement them
at that time (see the FY 2001 final rule published July 31, 2000 (65 FR
46773)). Nevertheless, since the BBRA provision had demonstrated a
Congressional interest in improving the ability of the payment system
to account for the care furnished to medically complex patients in
SNFs, we continued to conduct research in this area.
The Congress subsequently enacted section 311(e) of the BIPA, which
directed us to conduct a study of the different systems for
categorizing patients in Medicare SNFs in a manner that accounts for
the relative resource utilization of different patient types, and to
issue a report with any appropriate recommendations to the Congress by
January 1, 2005. The lengthy timeframe for conducting the study, and
its broad mandate to consider various classification systems and the
full range of patient types, stood in sharp contrast to the BBRA
language regarding more incremental refinements to the existing case-
mix classification system under section 1888(e)(4)(G)(i) of the Act,
and made clear that implementing the latter type of refinements to the
existing system in order to better account for medically complex
patients need not await the completion of the more comprehensive
changes envisioned in the BIPA. Accordingly, we considered the
possibility of including such refinements as part of last year's annual
update of the SNF payment rates.
However, in the July 31, 2002 update notice (67 FR 49801), we
determined that, while the research gives a sound basis for developing
improvements to the SNF PPS, we need additional time to review and
analyze the implications. Therefore, we decided not to implement any
case-mix refinements at that time, leaving the current classification
system in place. This also left in place the temporary add-on payments
enacted in section 101(a) of the BBRA.
Accordingly, the payment rates set forth in this proposed rule
reflect the continued use of the 44-group RUG-III classification system
discussed in the May 12, 1998 interim final rule (63 FR 26252).
Consequently, in this proposed rule, we will also maintain the add-ons
to the Federal rates for the specified RUG-III groups required by
section 101(a) of the BBRA and subsequently modified by section 314 of
the BIPA. The case-mix adjusted payment rates are listed separately for
urban and rural SNFs in Tables 3 and 4, with the corresponding case-mix
values. These tables do not reflect the add-ons to the specified RUG-
III groups provided for in the BBRA, which are applied only after all
other adjustments (wage and case-mix) have been made.
Meanwhile, we are continuing to explore both short-term and longer-
range revisions to our case-mix classification methodology. In July
2001, we awarded a contract to the Urban Institute for performance of
research to aid us in making incremental refinements to the case-mix
classification system under section 1888(e)(4)(G)(i) of the Act and
starting the case-mix study mandated by section 311(e) of the BIPA. The
results of the research in which we are currently engaged will be
included in the report to the Congress that section 311(e) of the BIPA
requires us to submit by January 1, 2005. As we noted in the May 10,
2001 proposed rule (66 FR 23990), this research may also support a
longer term goal of developing more integrated approaches for the
payment and delivery system for Medicare post acute services generally.
This broader, ongoing research project will pursue several avenues in
studying various case-mix classification systems. We have encouraging
preliminary results from incorporating comorbidities and complications
into the classification strategy, and will thoroughly explore and
evaluate this and other approaches in our ongoing work.

BILLING CODE 4120-01-P

[[Page 26763]]

[GRAPHIC][TIFF OMITTED]TP16MY03.016

[[Page 26764]]

[GRAPHIC][TIFF OMITTED]TP16MY03.017

[[Page 26765]]

[GRAPHIC][TIFF OMITTED]TP16MY03.018

[[Page 26766]]

[GRAPHIC][TIFF OMITTED]TP16MY03.019

BILLING CODE 4120-01-C

[[Page 26767]]

C. Wage Index Adjustment to Federal Rates

Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
Federal rates to account for differences in area wage levels, using a
wage index that we find appropriate. Since the inception of a PPS for
SNFs, we have used hospital wage data in developing a wage index to be
applied to SNFs. We propose to continue that practice for FY 2004.
Section 315 of the BIPA authorizes us to establish a
reclassification system for SNFs, similar to the hospital methodology.
This geographic reclassification system cannot be implemented until we
have collected the data necessary to establish an area wage index for
SNFs based on their wage data. We presented a comprehensive discussion
of this wage data in the May 10, 2001 proposed rule (66 FR 23984) and
the July 31, 2001 final rule (66 FR 39562).
In the May 10, 2001 proposed rule, we published a wage index
prototype based on SNF data, along with the wage index based on the
hospital wage data that was used in the preceding year's final rule
(July 31, 2000, 65 FR 46770). In addition, we included a discussion of
the wage index computations for the SNF prototype. We also indicated
our concern about the reliability of the existing data used in
establishing a SNF wage index, in view of the significant variations in
the SNF-specific wage data and the large number of SNFs that are unable
to provide adequate wage and hourly data. Accordingly, we expressed the
belief that a wage index based on hospital wage data remains the best
and most appropriate to use in adjusting payments to SNFs, since both
hospitals and SNFs compete in the same labor markets.
In the July 31, 2001 final rule (66 FR 39579), we indicated that we
had decided not to adopt the SNF-specific wage index prototype from the
proposed rule, citing concerns such as the significant amount of
volatility in the data. In addition, while we acknowledged that
auditing all SNFs would provide more accurate and reliable data, we
observed that this would place a burden on providers in terms of
recordkeeping and completion of the cost report worksheet. We also
noted that adopting such an approach would require a significant
commitment of resources by us and by our contractors:

Developing a desk review and audit program similar to that
required in the hospital setting would require significant
resources. The fiscal intermediaries (FIs) that are involved in
preparing the hospital wage data currently spend considerable
resources to ensure the accuracy of the wage data submitted by
approximately 6,000 hospitals. This process involves editing,
reviewing, auditing, and performing desk reviews of the data.
Requiring FIs to do the same for the approximately 14,000 SNFs would
nearly triple the FIs' workload and budgets in this area. (66 FR
39579).

While we continue to believe that the development of a SNF-specific
wage index potentially could improve the accuracy of SNF payments, we
do not regard an undertaking of this magnitude as being feasible within
the current level of programmatic resources. However, we remain willing
to consider the adoption of a SNF-specific wage index should sufficient
staffing and budgetary resources to support it become available in the
future.
We also propose to continue use of the FY 2003 wage index to adjust
SNF PPS payments beginning October 1, 2003. The wage indexes published
on July 31, 2002 (67 FR 49798) have undergone a number of changes to
reflect certain changes in the data that were not foreseen prior to
publication. For example, the Killeen-Temple, Texas Metropolitan
Statistical Area (MSA) had two changes to its wage index during the
course of the year. While this is consistent with the regulations
governing mid-year corrections in the hospital wage index, it results
in uncertainty for SNFs in knowing the wage index that will be applied
to their payments at the beginning of the year. Such changes also
prevent us from calculating the most accurate wage index budget
neutrality factor, discussed later in this section. It is our intent
that, for each future year, we will use a wage index based on the most
recently published final hospital wage index data. In using the most
recently published final data, we can be assured that the wage index
published in each year's update will be used throughout the year to
adjust payments. Therefore, providers and other interested parties who
use the wage indexes to prepare budget and payment forecasts can be
assured that the wage index will not change, thus also assuring the
prospective nature of the SNF payment system. The policy of using the
most recently published hospital wage index would also conform to the
approach currently used in Medicare payment systems for other provider
types, including home health agencies (HHAs) and inpatient
rehabilitation hospitals.
The wage index adjustment would be applied to the proposed labor-
related portion of the Federal rate, which is 76.435 percent of the
total rate. This percentage reflects the labor-related relative
importance for FY 2004. The labor-related relative importance is
calculated from the SNF market basket, and approximates the labor-
related portion of the total costs after taking into account historical
and projected price changes between the base year and FY 2004. The
price proxies that move the different cost categories in the market
basket do not necessarily change at the same rate, and the relative
importance captures these changes. Accordingly, the relative importance
figure more closely reflects the cost share weights for FY 2004 than
the base year weights from the SNF market basket.
We calculate the labor-related relative importance for FY 2004 in
four steps. First, we compute the FY 2004 price index level for the
total market basket and each cost category of the market basket.
Second, we calculate a ratio for each cost category by dividing the FY
2004 price index level for that cost category by the total market
basket price index level. Third, we determine the FY 2004 relative
importance for each cost category by multiplying this ratio by the base
year (FY 1997) weight. Finally, we sum the FY 2004 relative importance
for each of the labor-related cost categories (wages and salaries,
employee benefits, nonmedical professional fees, labor-intensive
services, and capital-related expenses) to produce the FY 2004 labor-
related relative importance. Tables 5 and 6 show the Federal rates by
labor-related and non-labor-related components.

Table 5.--Case-Mix Adjusted Federal Rates for Urban SNFs by Labor and
Non-Labor Component
------------------------------------------------------------------------
Non-
RUG III category Total Labor labor
rate portion portion
------------------------------------------------------------------------
RUC.......................................... 438.68 335.31 103.37
RUB.......................................... 394.87 301.82 93.05
RUA.......................................... 373.60 285.56 88.04
RVC.......................................... 338.21 258.51 79.70
RVB.......................................... 326.95 249.90 77.05
RVA.......................................... 298.16 227.90 70.26
RHC.......................................... 310.17 237.08 73.09
RHB.......................................... 285.14 217.95 67.19
RHA.......................................... 261.36 199.77 61.59
RMC.......................................... 305.41 233.44 71.97
RMB.......................................... 272.87 208.57 64.30
RMA.......................................... 256.60 196.13 60.47
RLB.......................................... 243.33 185.99 57.34
RLA.......................................... 204.53 156.33 48.20
SE3.......................................... 289.05 220.94 68.11
SE2.......................................... 250.25 191.28 58.97
SE1.......................................... 222.72 170.24 52.48
SSC.......................................... 217.71 166.41 51.30
SSB.......................................... 207.70 158.76 48.94
SSA.......................................... 202.69 154.93 47.76
CC2.......................................... 216.46 165.45 51.01

[[Page 26768]]

CC1.......................................... 200.19 153.02 47.17
CB2.......................................... 190.18 145.36 44.82
CB1.......................................... 181.42 138.67 42.75
CA2.......................................... 180.16 137.71 42.45
CA1.......................................... 170.15 130.05 40.10
IB2.......................................... 162.64 124.31 38.33
IB1.......................................... 160.14 122.40 37.74
IA2.......................................... 147.63 112.84 34.79
IA1.......................................... 142.62 109.01 33.61
BB2.......................................... 161.39 123.36 38.03
BB1.......................................... 157.64 120.49 37.15
BA2.......................................... 146.37 111.88 34.49
BA1.......................................... 136.36 104.23 32.13
PE2.......................................... 175.16 133.88 41.28
PE1.......................................... 172.66 131.97 40.69
PD2.......................................... 166.40 127.19 39.21
PD1.......................................... 163.90 125.28 38.62
PC2.......................................... 157.64 120.49 37.15
PC1.......................................... 156.39 119.54 36.85
PB2.......................................... 140.12 107.10 33.02
PB1.......................................... 138.87 106.15 32.72
PA2.......................................... 137.61 105.18 32.43
PA1.......................................... 133.86 102.32 31.54
------------------------------------------------------------------------

Table 6.--Case-Mix Adjusted Federal Rates for Rural SNFs by Labor and
Non-Labor Component
------------------------------------------------------------------------
Non-
RUG III category Total Labor labor
rate portion portion
------------------------------------------------------------------------
RUC.......................................... 465.08 355.48 109.60
RUB.......................................... 423.23 323.50 99.73
RUA.......................................... 402.90 307.96 94.94
RVC.......................................... 353.44 270.15 83.29
RVB.......................................... 342.68 261.93 80.75
RVA.......................................... 315.18 240.91 74.27
RHC.......................................... 317.90 242.99 74.91
RHB.......................................... 293.98 224.70 69.28
RHA.......................................... 271.27 207.35 63.92
RMC.......................................... 310.18 237.09 73.09
RMB.......................................... 279.09 213.32 65.77
RMA.......................................... 263.55 201.44 62.11
RLB.......................................... 244.52 186.90 57.62
RLA.......................................... 207.46 158.57 48.89
SE3.......................................... 281.59 215.23 66.36
SE2.......................................... 244.52 186.90 57.62
SE1.......................................... 218.22 166.80 51.42
SSC.......................................... 213.43 163.14 50.29
SSB.......................................... 203.87 155.83 48.04
SSA.......................................... 199.09 152.17 46.92
CC2.......................................... 212.24 162.23 50.01
CC1.......................................... 196.69 150.34 46.35
CB2.......................................... 187.13 143.03 44.10
CB1.......................................... 178.76 136.64 42.12
CA2.......................................... 177.56 135.72 41.84
CA1.......................................... 168.00 128.41 39.59
IB2.......................................... 160.82 122.92 37.90
IB1.......................................... 158.43 121.10 37.33
IA2.......................................... 146.47 111.95 34.52
IA1.......................................... 141.69 108.30 33.39
BB2.......................................... 159.63 122.01 37.62
BB1.......................................... 156.04 119.27 36.77
BA2.......................................... 145.28 111.04 34.24
BA1.......................................... 135.71 103.73 31.98
PE2.......................................... 172.78 132.06 40.72
PE1.......................................... 170.39 130.24 40.15
PD2.......................................... 164.41 125.67 38.74
PD1.......................................... 162.02 123.84 38.18
PC2.......................................... 156.04 119.27 36.77
PC1.......................................... 154.84 118.35 36.49
PB2.......................................... 139.30 106.47 32.83
PB1.......................................... 138.11 105.56 32.55
PA2.......................................... 136.91 104.65 32.26
PA1.......................................... 133.32 101.90 31.42
------------------------------------------------------------------------

Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index in a manner that does not result in aggregate payments
that are greater or lesser than would otherwise be made in the absence
of the wage adjustment. In this sixth PPS year (Federal rates effective
October 1, 2003), we are reapplying, or applying, the wage index
applicable to SNF payments using the hospital wage data applicable to
FY 2003 payments (as discussed earlier in this section) and applying an
adjustment to fulfill the budget neutrality requirement. This
requirement will be met by multiplying each of the components of the
unadjusted Federal rates by a factor equal to the ratio of the volume
weighted mean wage adjustment factor (using the wage index from the
previous year) to the volume weighted mean wage adjustment factor,
using the wage index for the FY beginning October 1, 2003. The same
volume weights are used in both the numerator and denominator and will
be derived from 1997 Medicare Provider Analysis and Review File
(MEDPAR) data. The wage adjustment factor used in this calculation is
defined as the labor share of the rate component multiplied by the wage
index plus the non-labor share. Because the wage index applicable to FY
2004 is the same as that for FY 2003 and new data on the distribution
of days by MSA is not yet available, the proposed budget neutrality
factor for this year is 1.000. However, this may change in the final
rule. In order to give the public a sense of the magnitude of this
adjustment, last year's factor was 0.9997.
Finally, since we propose to use the FY 2003 wage index, we are
republishing it in this proposed rule. The wage index applicable to FY
2004 can be found in Table 7 and Table 8 of this proposed rule. The
tables reflect the mid-year corrections made to the hospital wage data
since the publication of the SNF update notice for FY 2003 payments
(please see our correction notice that was published in the Federal
Register on December 27, 2002 (67 FR 79123)).

Table 7.--Wage Index for Urban Areas
------------------------------------------------------------------------
Wage
Urban area (constituent counties or county equivalents) index
------------------------------------------------------------------------
0040 Abilene, TX.............................................. 0.7792
Taylor, TX
0060 Aguadilla, PR............................................ 0.4587
Aguada, PR
Aguadilla, PR
Moca, PR
0080 Akron, OH................................................ 0.9600
Portage, OH
Summit, OH
0120 Albany, GA............................................... 1.0594
Dougherty, GA
Lee, GA
0160 Albany-Schenectady-Troy, NY.............................. 0.8384
Albany, NY
Montgomery, NY
Rensselaer, NY
Saratoga, NY
Schenectady, NY
Schoharie, NY
0200 Albuquerque, NM.......................................... 0.9315
Bernalillo, NM
Sandoval, NM
Valencia, NM
0220 Alexandria, LA........................................... 0.7859
Rapides, LA
0240 Allentown-Bethlehem-Easton, PA........................... 0.9735
Carbon, PA
Lehigh, PA
Northampton, PA
0280 Altoona, PA.............................................. 0.9225
Blair, PA
0320 Amarillo, TX............................................. 0.9034
Potter, TX
Randall, TX
0380 Anchorage, AK............................................ 1.2358
Anchorage, AK
0440 Ann Arbor, MI............................................ 1.1103
Lenawee, MI
Livingston, MI
Washtenaw, MI
0450 Anniston, AL............................................. 0.8044
Calhoun, AL
0460 Appleton-Oshkosh-Neenah, WI.............................. 0.8997
Calumet, WI
Outagamie, WI
Winnebago, WI
0470 Arecibo, PR.............................................. 0.4337
Arecibo, PR
Camuy, PR
Hatillo, PR
0480 Asheville, NC............................................ 0.9876
Buncombe, NC
Madison, NC
0500 Athens, GA............................................... 1.0211
Clarke, GA
Madison, GA
Oconee, GA

[[Page 26769]]

0520 Atlanta, GA.............................................. 0.9991
Barrow, GA
Bartow, GA
Carroll, GA
Cherokee, GA
Clayton, GA
Cobb, GA
Coweta, GA
De Kalb, GA
Douglas, GA
Fayette, GA
Forsyth, GA
Fulton, GA
Gwinnett, GA
Henry, GA
Newton, GA
Paulding, GA
Pickens, GA
Rockdale, GA
Spalding, GA
Walton, GA
0560 Atlantic City-Cape May, NJ............................... 1.1017
Atlantic City, NJ
Cape May, NJ
0580 Auburn-Opelika, AL....................................... 0.8325
Lee, AL
0600 Augusta-Aiken, GA-SC..................................... 1.0264
Columbia, GA
McDuffie, GA
Richmond, GA
Aiken, SC
Edgefield, SC
0640 Austin-San Marcos, TX.................................... 0.9637
Bastrop, TX
Caldwell, TX
Hays, TX
Travis, TX
Williamson, TX
0680 Bakersfield, CA.......................................... 0.9877
Kern, CA
0720 Baltimore, MD............................................ 0.9929
Anne Arundel, MD
Baltimore, MD
Baltimore City, MD
Carroll, MD
Harford, MD
Howard, MD
Queen Annes, MD
0733 Bangor, ME............................................... 0.9664
Penobscot, ME
0743 Barnstable-Yarmouth, MA.................................. 1.3202
Barnstable, MA
0760 Baton Rouge, LA.......................................... 0.8294
Ascension, LA
East Baton Rouge, LA
Livingston, LA
West Baton Rouge, LA
0840 Beaumont-Port Arthur, TX................................. 0.8324
Hardin, TX
Jefferson, TX
Orange, TX
0860 Bellingham, WA........................................... 1.2282
Whatcom, WA
0870 Benton Harbor, MI........................................ 0.8965
Berrien, MI
0875 Bergen-Passaic, NJ....................................... 1.2150
Bergen, NJ
Passaic, NJ
0880 Billings, MT............................................. 0.9022
Yellowstone, MT
0920 Biloxi-Gulfport-Pascagoula, MS........................... 0.8757
Hancock, MS
Harrison, MS
Jackson, MS
0960 Binghamton, NY........................................... 0.8341
Broome, NY
Tioga, NY
1000 Birmingham, AL........................................... 0.9222
Blount, AL
Jefferson, AL
St. Clair, AL
Shelby, AL
1010 Bismarck, ND............................................. 0.7972
Burleigh, ND
Morton, ND
1020 Bloomington, IN.......................................... 0.8907
Monroe, IN
1040 Bloomington-Normal, IL................................... 0.9109
McLean, IL
1080 Boise City, ID........................................... 0.9310
Ada, ID
Canyon, ID
1123 Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH......... 1.1229
Bristol, MA
Essex, MA
Middlesex, MA
Norfolk, MA
Plymouth, MA
Suffolk, MA
Worcester, MA
Hillsborough, NH
Merrimack, NH
Rockingham, NH
Strafford, NH
1125 Boulder-Longmont, CO..................................... 0.9689
Boulder, CO
1145 Brazoria, TX............................................. 0.8535
Brazoria, TX
1150 Bremerton, WA............................................ 1.0944
Kitsap, WA
1240 Brownsville-Harlingen-San Benito, TX..................... 0.8880
Cameron, TX
1260 Bryan-College Station, TX................................ 0.8821
Brazos, TX
1280 Buffalo-Niagara Falls, NY................................ 0.9365
Erie, NY
Niagara, NY
1303 Burlington, VT........................................... 1.0052
Chittenden, VT
Franklin, VT
Grand Isle, VT
1310 Caguas, PR............................................... 0.4371
Caguas, PR
Cayey, PR
Cidra, PR
Gurabo, PR
San Lorenzo, PR
1320 Canton-Massillon, OH..................................... 0.8932
Carroll, OH
Stark, OH
1350 Casper, WY............................................... 0.9690
Natrona, WY
1360 Cedar Rapids, IA......................................... 0.9056
Linn, IA
1400 Champaign-Urbana, IL..................................... 1.0635
Champaign, IL
1440 Charleston-North Charleston, SC.......................... 0.9235
Berkeley, SC
Charleston, SC
Dorchester, SC
1480 Charleston, WV........................................... 0.8898
Kanawha, WV
Putnam, WV
1520 Charlotte-Gastonia-Rock Hill, NC-SC...................... 0.9875
Cabarrus, NC
Gaston, NC
Lincoln, NC
Mecklenburg, NC
Rowan, NC
Stanly, NC
Union, NC
York, SC
1540 Charlottesville, VA...................................... 1.0438
Albemarle, VA
Charlottesville City, VA
Fluvanna, VA
Greene, VA
1560 Chattanooga, TN-GA....................................... 0.8976
Catoosa, GA
Dade, GA
Walker, GA
Hamilton, TN
Marion, TN
1580 Cheyenne, WY............................................. 0.8628
Laramie, WY
1600 Chicago, IL.............................................. 1.1044
Cook, IL
De Kalb, IL
Du Page, IL
Grundy, IL
Kane, IL
Kendall, IL
Lake, IL
McHenry, IL
Will, IL
1620 Chico-Paradise, CA....................................... 0.9745
Butte, CA
1640 Cincinnati, OH-KY-IN..................................... 0.9381
Dearborn, IN
Ohio, IN
Boone, KY
Campbell, KY
Gallatin, KY
Grant, KY
Kenton, KY
Pendleton, KY
Brown, OH
Clermont, OH
Hamilton, OH
Warren, OH
1660 Clarksville-Hopkinsville, TN-KY.......................... 0.8406
Christian, KY
Montgomery, TN
1680 Cleveland-Lorain-Elyria, OH.............................. 0.9670
Ashtabula, OH
Geauga, OH
Cuyahoga, OH
Lake, OH
Lorain, OH
Medina, OH
1720 Colorado Springs, CO..................................... 0.9916
El Paso, CO
1740 Columbia, MO............................................. 0.8496

[[Page 26770]]

Boone, MO
1760 Columbia, SC............................................. 0.9307
Lexington, SC
Richland, SC
1800 Columbus, GA-AL.......................................... 0.8374
Russell, AL
Chattanoochee, GA
Harris, GA
Muscogee, GA
1840 Columbus, OH............................................. 0.9751
Delaware, OH
Fairfield, OH
Franklin, OH
Licking, OH
Madison, OH
Pickaway, OH
1880 Corpus Christi, TX....................................... 0.8729
Nueces, TX
San Patricio, TX
1890 Corvallis, OR............................................ 1.1453
Benton, OR
1900 Cumberland, MD-WV........................................ 0.7847
Allegany, MD
Mineral, WV
1920 Dallas, TX............................................... 0.9998
Collin, TX
Dallas, TX
Denton, TX
Ellis, TX
Henderson, TX
Hunt, TX
Kaufman, TX
Rockwall, TX
1950 Danville, VA............................................. 0.8859
Danville City, VA
Pittsylvania, VA
1960 Davenport-Moline-Rock Island, IA-IL 0.8835
Scott, IA
Henry, IL
Rock Island, IL
2000 Dayton-Springfield, OH................................... 0.9282
Clark, OH
Greene, OH
Miami, OH
Montgomery, OH
2020 Daytona Beach, FL........................................ 0.9071
Flagler, FL
Volusia, FL
2030 Decatur, AL.............................................. 0.8973
Lawrence, AL
Morgan, AL
2040 Decatur, IL.............................................. 0.8055
Macon, IL
2080 Denver, CO............................................... 1.0601
Adams, CO
Arapahoe, CO
Broomfield, CO
Denver, CO
Douglas, CO
Jefferson, CO
2120 Des Moines, IA........................................... 0.8791
Dallas, IA
Polk, IA
Warren, IA
2160 Detroit, MI.............................................. 1.0448
Lapeer, MI
Macomb, MI
Monroe, MI
Oakland, MI
St Clair, MI
Wayne, MI
2180 Dothan, AL............................................... 0.8137
Dale, AL
Houston, AL
2190 Dover, DE................................................ 0.9356
Kent, DE
2200 Dubuque, IA.............................................. 0.8795
Dubuque, IA
2240 Duluth-Superior, MN-WI................................... 1.0368
St Louis, MN
Douglas, WI
2281 Dutchess County, NY...................................... 1.0684
Dutchess, NY
2290 Eau Claire, WI........................................... 0.8952
Chippewa, WI
Eau Claire, WI
2320 El Paso, TX.............................................. 0.9265
El Paso, TX
2330 Elkhart-Goshen, IN....................................... 0.9722
Elkhart, IN
2335 Elmira, NY............................................... 0.8416
Chemung, NY
2340 Enid, OK................................................. 0.8376
Garfield, OK
2360 Erie, PA................................................. 0.8925
Erie, PA
2400 Eugene-Springfield, OR................................... 1.0944
Lane, OR
2440 Evansville-Henderson, IN-KY.............................. 0.8177
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY
2520 Fargo-Moorhead, ND-MN.................................... 0.9684
Clay, MN
Cass, ND
2560 Fayetteville, NC......................................... 0.8889
Cumberland, NC
2580 Fayetteville-Springdale-Rogers, AR....................... 0.8100
Benton, AR
Washington, AR
2620 Flagstaff, AZ-UT......................................... 1.0682
Coconino, AZ
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 Fort Worth-Arlington, TX................................. 0.9446
Hood, TX
Johnson, TX
Parker, TX
Tarrant, TX
2840 Fresno, CA............................................... 1.0169
Fresno, CA
Madera, CA
2880 Gadsden, AL.............................................. 0.8505
Etowah, AL
2900 Gainesville, FL.......................................... 0.9871
Alachua, FL
2920 Galveston-Texas City, TX................................. 0.9465
Galveston, TX
2960 Gary, IN................................................. 0.9584
Lake, IN
Porter, IN
2975 Glens Falls, NY.......................................... 0.8281
Warren, NY
Washington, NY
2980 Goldsboro, NC............................................ 0.8892
Wayne, NC
2985 Grand Forks, ND-MN....................................... 0.8897
Polk, MN
Grand Forks, ND
2995 Grand Junction, CO....................................... 0.9456
Mesa, CO.
3000 Grand Rapids-Muskegon-Holland, MI........................ 0.9525
Allegan, MI
Kent, MI
Muskegon, MI
Ottawa, MI
3040 Great Falls, MT.......................................... 0.8950
Cascade, MT
3060 Greeley, CO.............................................. 0.9237
Weld, CO
3080 Green Bay, WI............................................ 0.9502
Brown, WI
3120 Greensboro-Winston-Salem-High Point, NC.................. 0.9282
Alamance, NC
Davidson, NC
Davie, NC
Forsyth, NC
Guilford, NC
Randolph, NC
Stokes, NC
Yadkin, NC
3150 Greenville, NC........................................... 0.9100
Pitt, NC
3160 Greenville-Spartanburg-Anderson, SC...................... 0.9122
Anderson, SC
Cherokee, SC
Greenville, SC
Pickens, SC
Spartanburg, SC
3180 Hagerstown, MD........................................... 0.9268
Washington, MD
3200 Hamilton-Middletown, OH.................................. 0.9418
Butler, OH

[[Page 26771]]

3240 Harrisburg-Lebanon-Carlisle, PA.......................... 0.9223
Cumberland, PA
Dauphin, PA
Lebanon, PA
Perry, PA
3283 Hartford, CT............................................. 1.1549
Hartford, CT
Litchfield, CT
Middlesex, CT
Tolland, CT
3285 Hattiesburg, MS.......................................... 0.7659
Forrest, MS
Lamar, MS
3290 Hickory-Morganton-Lenoir, NC............................. 0.9028
Alexander, NC
Burke, NC
Caldwell, NC
Catawba, NC
3320 Honolulu, HI............................................. 1.1457
Honolulu, HI
3350 Houma, LA................................................ 0.8317
Lafourche, LA
Terrebonne, LA
3360 Houston, TX.............................................. 0.9892
Chambers, TX
Fort Bend, TX
Harris, TX
Liberty, TX
Montgomery, TX
Waller, TX
3400 Huntington-Ashland, WV-KY-OH............................. 0.9636
Boyd, KY
Carter, KY
Greenup, KY
Lawrence, OH
Cabell, WV
Wayne, WV
3440 Huntsville, AL........................................... 0.8903
Limestone, AL
Madison, AL
3480 Indianapolis, IN......................................... 0.9717
Boone, IN
Hamilton, IN
Hancock, IN
Hendricks, IN
Johnson, IN
Madison, IN
Marion, IN
Morgan, IN
Shelby, IN
3500 Iowa City, IA............................................ 0.9587
Johnson, IA
3520 Jackson, MI.............................................. 0.9532
Jackson, MI
3560 Jackson, MS.............................................. 0.8607
Hinds, MS
Madison, MS
Rankin, MS
3580 Jackson, TN.............................................. 0.9275
Chester, TN
Madison, TN
3600 Jacksonville, FL......................................... 0.9381
Clay, FL
Duval, FL
Nassau, FL
St. Johns, FL
3605 Jacksonville, NC......................................... 0.8239
Onslow, NC
3610 Jamestown, NY............................................ 0.7976
Chautaqua, NY
3620 Janesville-Beloit, WI.................................... 0.9849
Rock, WI
3640 Jersey City, NJ.......................................... 1.1190
Hudson, NJ
3660 Johnson City-Kingsport-Bristol, TN-VA.................... 0.8268
Carter, TN
Hawkins, TN
Sullivan, TN
Unicoi, TN
Washington, TN
Bristol City, VA
Scott, VA
Washington, VA
3680 Johnstown, PA............................................ 0.8329
Cambria, PA
Somerset, PA
3700 Jonesboro, AR............................................ 0.7749
Craighead, AR
3710 Joplin, MO............................................... 0.8613
Jasper, MO
Newton, MO
3720 Kalamazoo-Battle Creek, MI............................... 1.0595
Calhoun, MI
Kalamazoo, MI
Van Buren, MI
3740 Kankakee, IL............................................. 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............................................ 0.8452
Acadia, LA
Lafayette, LA
St. Landry, LA
St. Martin, LA
3920 Lafayette, IN............................................ 0.9278
Clinton, IN
Tippecanoe, IN
3960 Lake Charles, LA......................................... 0.7965
Calcasieu, LA
3980 Lakeland-Winter Haven, FL................................ 0.9357
Polk, FL
4000 Lancaster, PA............................................ 0.9078
Lancaster, PA
4040 Lansing-East Lansing, MI................................. 0.9726
Clinton, MI
Eaton, MI
Ingham, MI
4080 Laredo, TX............................................... 0.8472
Webb, TX
4100 Las Cruces, NM........................................... 0.8745
Dona Ana, NM
4120 Las Vegas, NV-AZ......................................... 1.1521
Mohave, AZ
Clark, NV
Nye, NV
4150 Lawrence, KS............................................. 0.8323
Douglas, KS
4200 Lawton, OK............................................... 0.8315
Comanche, OK
4243 Lewiston-Auburn, ME...................................... 0.9179
Androscoggin, ME
4280 Lexington, KY............................................ 0.8581
Bourbon, KY
Clark, KY
Fayette, KY
Jessamine, KY
Madison, KY
Scott, KY
Woodford, KY
4320 Lima, OH................................................. 0.9483
Allen, OH
Auglaize, OH
4360 Lincoln, NE.............................................. 0.9892
Lancaster, NE
4400 Little Rock-North Little Rock, AR........................ 0.9097
Faulkner, AR
Lonoke, AR
Pulaski, AR
Saline, AR
4420 Longview-Marshall, TX.................................... 0.8629
Gregg, TX
Harrison, TX
Upshur, TX
4480 Los Angeles-Long Beach, CA............................... 1.2001
Los Angeles, CA
4520 Louisville, KY-IN........................................ 0.9276
Clark, IN
Floyd, IN
Harrison, IN
Scott, IN
Bullitt, KY
Jefferson, KY
Oldham, KY
4600 Lubbock, TX.............................................. 0.9646
Lubbock, TX
4640 Lynchburg, VA............................................ 0.9219
Amherst, VA
Bedford City, VA
Bedford, VA
Campbell, VA
Lynchburg City, VA
4680 Macon, GA................................................ 0.9204
Bibb, GA
Houston, GA
Jones, GA
Peach, GA

[[Page 26772]]

Twiggs, GA
4720 Madison, WI.............................................. 1.0467
Dane, WI
4800 Mansfield, OH............................................ 0.8900
Crawford, OH
Richland, OH
4840 Mayaguez, PR............................................. 0.4914
Anasco, PR
Cabo Rojo, PR
Hormigueros, PR
Mayaguez, PR
Sabana Grande, PR
San German, PR
4880 McAllen-Edinburg-Mission, TX............................. 0.8428
Hidalgo, TX
4890 Medford-Ashland, OR...................................... 1.0498
Jackson, OR
4900 Melbourne-Titusville-Palm Bay, FL........................ 1.0253
Brevard, Fl
4920 Memphis, TN-AR-MS........................................ 0.8920
Crittenden, AR
De Soto, MS
Fayette, TN
Shelby, TN
Tipton, TN
4940 Merced, CA............................................... 0.9742
Merced, CA
5000 Miami, FL................................................ 0.9802
Dade, FL
5015 Middlesex-Somerset-Hunterdon, NJ......................... 1.1213
Hunterdon, NJ
Middlesex, NJ
Somerset, NJ
5080 Milwaukee-Waukesha, WI................................... 0.9893
Milwaukee, WI
Ozaukee, WI
Washington, WI
Waukesha, WI
5120 Minneapolis-St. Paul, MN-WI.............................. 1.0903
Anoka, MN
Carver, MN
Chisago, MN
Dakota, MN
Hennepin, MN
Isanti, MN
Ramsey, MN
Scott, MN
Sherburne, MN
Washington, MN
Wright, MN
Pierce, WI
St. Croix, WI
5140 Missoula, MT............................................. 0.9157
Missoula, MT
5160 Mobile, AL............................................... 0.8108
Baldwin, AL
Mobile, AL
5170 Modesto, CA.............................................. 1.0498
Stanislaus, CA
5190 Monmouth-Ocean, NJ....................................... 1.0674
Monmouth, NJ
Ocean, NJ
5200 Monroe, LA............................................... 0.8137
Ouachita, LA
5240 Montgomery, AL........................................... 0.7734
Autauga, AL
Elmore, AL
Montgomery, AL
5280 Muncie, IN............................................... 0.9284
Delaware, IN
5330 Myrtle Beach, SC......................................... 0.8976
Horry, SC
5345 Naples, FL............................................... 0.9754
Collier, FL
5360 Nashville, TN............................................ 0.9578
Cheatham, TN
Davidson, TN
Dickson, TN
Robertson, TN
Rutherford, TN
Sumner, TN
Williamson, TN
Wilson, TN
5380 Nassau-Suffolk, NY....................................... 1.3357
Nassau, NY
Suffolk, NY
5483 New Haven-Bridgeport-Stamford-Waterbury-Danbury, CT...... 1.2408
Fairfield, CT
New Haven, CT
5523 New London-Norwich, CT................................... 1.1767
New London, CT
5560 New Orleans, LA.......................................... 0.9046
Jefferson, LA
Orleans, LA
Plaquemines, LA
St. Bernard, LA
St. Charles, LA
St. James, LA
St. John The Baptist, LA
St. Tammany, LA
5600 New York, NY............................................. 1.4414
Bronx, NY
Kings, NY
New York, NY
Putnam, NY
Queens, NY
Richmond, NY
Rockland, NY
Westchester, NY
5640 Newark, NJ............................................... 1.1381
Essex, NJ
Morris, NJ
Sussex, NJ
Union, NJ
Warren, NJ
5660 Newburgh, NY-PA.......................................... 1.1387
Orange, NY
Pike, PA
5720 Norfolk-Virginia Beach-Newport News, VA-NC............... 0.8574
Currituck, NC
Chesapeake City, VA
Gloucester, VA
Hampton City, VA
Isle of Wight, VA
James City, VA
Mathews, VA
Newport News City, VA
Norfolk City, VA
Poquoson City, VA
Portsmouth City, VA
Suffolk City, VA
Virginia Beach City, VA
Williamsburg City, VA
York, VA
5775 Oakland, CA.............................................. 1.5072
Alameda, CA
Contra Costa, CA
5790 Ocala, FL................................................ 0.9402
Marion, FL
5800 Odessa-Midland, TX....................................... 0.9397
Ector, TX
Midland, TX
5880 Oklahoma City, OK........................................ 0.8900
Canadian, OK
Cleveland, OK
Logan, OK
McClain, OK
Oklahoma, OK
Pottawatomie, OK
5910 Olympia, WA.............................................. 1.0960
Thurston, WA
5920 Omaha, NE-IA............................................. 0.9978
Pottawattamie, IA
Cass, NE
Douglas, NE
Sarpy, NE
Washington, NE
5945 Orange County, CA........................................ 1.1474
Orange, CA
5960 Orlando, FL.............................................. 0.9640
Lake, FL
Orange, FL
Osceola, FL
Seminole, FL
5990 Owensboro, KY............................................ 0.8344
Daviess, KY
6015 Panama City, FL.......................................... 0.8865
Bay, FL
6020 Parkersburg-Marietta, WV-OH.............................. 0.8127
Washington, OH
Wood, WV
6080 Pensacola, FL............................................ 0.8610
Escambia, FL
Santa Rosa, FL
6120 Peoria-Pekin, IL......................................... 0.8739
Peoria, IL
Tazewell, IL
Woodford, IL
6160 Philadelphia, PA-NJ...................................... 1.0713
Burlington, NJ
Camden, NJ
Gloucester, NJ
Salem, NJ
Bucks, PA
Chester, PA
Delaware, PA
Montgomery, PA
Philadelphia, PA
6200 Phoenix-Mesa, AZ......................................... 0.9820
Maricopa, AZ
Pinal, AZ
6240 Pine Bluff, AR........................................... 0.7962
Jefferson, AR
6280 Pittsburgh, PA........................................... 0.9365
Allegheny, PA
Beaver, PA
Butler, PA
Fayette, PA
Washington, PA
Westmoreland, PA
6323 Pittsfield, MA........................................... 1.0235
Berkshire, MA

[[Page 26773]]

6340 Pocatello, ID............................................ 0.9372
Bannock, ID
6360 Ponce, PR................................................ 0.5169
Guayanilla, PR
Juana Diaz, PR
Penuelas, PR
Ponce, PR
Villalba, PR
Yauco, PR
6403 Portland, ME............................................. 0.9794
Cumberland, ME
Sagadahoc, ME
York, ME
6440 Portland-Vancouver, OR-WA................................ 1.0667
Clackamas, OR
Columbia, OR
Multnomah, OR
Washington, OR
Yamhill, OR
Clark, WA
6483 Providence-Warwick-Pawtucket, RI......................... 1.0854
Bristol, RI
Kent, RI
Newport, RI
Providence, RI
Washington, RI
6520 Provo-Orem, UT........................................... 0.9984
Utah, UT
6560 Pueblo, CO............................................... 0.8820
Pueblo, CO
6580 Punta Gorda, FL.......................................... 0.9218
Charlotte, FL
6600 Racine, WI............................................... 0.9334
Racine, WI
6640 Raleigh-Durham-Chapel Hill, NC........................... 0.9990
Chatham, NC
Durham, NC
Franklin, NC
Johnston, NC
Orange, NC
Wake, NC
6660 Rapid City, SD........................................... 0.8846
Pennington, SD
6680 Reading, PA.............................................. 0.9295
Berks, PA
6690 Redding, CA.............................................. 1.1135
Shasta, CA
6720 Reno, NV................................................. 1.0648
Washoe, NV
6740 Richland-Kennewick-Pasco, WA............................. 1.1491
Benton, WA
Franklin, WA
6760 Richmond-Petersburg, VA.................................. 0.9477
Charles City County, VA
Chesterfield, VA
Colonial Heights City, VA
Dinwiddie, VA
Goochland, VA
Hanover, VA
Henrico, VA
Hopewell City, VA
New Kent, VA
Petersburg City, VA
Powhatan, VA
Prince George, VA
Richmond City, VA
6780 Riverside-San Bernardino, CA............................. 1.1365
Riverside, CA
San Bernardino, CA
6800 Roanoke, VA.............................................. 0.8614
Botetourt, VA
Roanoke, VA
Roanoke City, VA
Salem City, VA
6820 Rochester, MN............................................ 1.2139
Olmsted, MN
6840 Rochester, NY............................................ 0.9194
Genesee, NY
Livingston, NY
Monroe, NY
Ontario, NY
Orleans, NY
Wayne, NY
6880 Rockford, IL............................................. 0.9625
Boone, IL
Ogle, IL
Winnebago, IL
6895 Rocky Mount, NC.......................................... 0.9228
Edgecombe, NC
Nash, NC
6920 Sacramento, CA........................................... 1.1500
El Dorado, CA
Placer, CA
Sacramento, CA
A6960 Saginaw-Bay City-Midland, MI............................ 0.9650
Bay, MI
Midland, MI
Saginaw, MI
6980 St Cloud, MN............................................. 0.9700
Benton, MN
Stearns, MN
7000 St Joseph, MO............................................ 0.9544
Andrews, MO
Buchanan, MO
7040 St Louis, MO-IL.......................................... 0.8855
Clinton, IL
Jersey, IL
Madison, IL
Monroe, IL
St. Clair, IL
Franklin, MO
Jefferson, MO
Lincoln, MO
St. Charles, MO
St. Louis, MO
St. Louis City, MO
Warren, MO
Sullivan City, MO
7080 Salem, OR................................................ 1.0500
Marion, OR
Polk, OR
7120 Salinas, CA.............................................. 1.4623
Monterey, CA
7160 Salt Lake City-Ogden, UT................................. 0.9945
Davis, UT
Salt Lake, UT
Weber, UT
7200 San Angelo, TX........................................... 0.8374
Tom Green, TX
7240 San Antonio, TX.......................................... 0.8753
Bexar, TX
Comal, TX
Guadalupe, TX
Wilson, TX
7320 San Diego, CA............................................ 1.1131
San Diego, CA
7360 San Francisco, CA........................................ 1.4142
Marin, CA
San Francisco, CA
San Mateo, CA
7400 San Jose, CA............................................. 1.4145
Santa Clara, CA
7440 San Juan-Bayamon, PR..................................... 0.4741
Aguas Buenas, PR
Barceloneta, PR
Bayamon, PR
Canovanas, PR
Carolina, PR
Catano, PR
Ceiba, PR
Comerio, PR
Corozal, PR
Dorado, PR
Fajardo, PR
Florida, PR
Guaynabo, PR
Humacao, PR
Juncos, PR
Los Piedras, PR
Loiza, PR
Luguillo, PR
Manati, PR
Morovis, PR
Naguabo, PR
Naranjito, PR
Rio Grande, PR
San Juan, PR
Toa Alta, PR
Toa Baja, PR
Trujillo Alto, PR
Vega Alta, PR
Vega Baja, PR
Yabucoa, PR
7460 San Luis Obispo-Atascadero-Paso Robles, CA............... 1.1271
San Luis Obispo, CA
7480 Santa Barbara-Santa Maria-Lompoc, CA..................... 1.0481
Santa Barbara, CA
7485 Santa Cruz-Watsonville, CA............................... 1.3646
Santa Cruz, CA
7490 Santa Fe, NM............................................. 1.0712
Los Alamos, NM
Santa Fe, NM
7500 Santa Rosa, CA........................................... 1.3046
Sonoma, CA
7510 Sarasota-Bradenton, FL................................... 0.9425
Manatee, FL
Sarasota, FL
7520 Savannah, GA............................................. 0.9376
Bryan, GA
Chatham, GA
Effingham, GA
7560 Scranton-Wilkes-Barre-Hazleton, PA....................... 0.8599
Columbia, PA
Lackawanna, PA
Luzerne, PA
Wyoming, PA
7600 Seattle-Bellevue-Everett, WA............................. 1.1474
Island, WA
King, WA
Snohomish, WA

[[Page 26774]]

7610 Sharon, PA............................................... 0.7869
Mercer, PA
7620 Sheboygan, WI............................................ 0.8697
Sheboygan, WI
7640 Sherman-Denison, TX...................................... 0.9255
Grayson, TX
7680 Shreveport-Bossier City, LA.............................. 0.8987
Bossier, LA
Caddo, LA
Webster, LA
7720 Sioux City, IA-NE........................................ 0.9046
Woodbury, IA
Dakota, NE
7760 Sioux Falls, SD.......................................... 0.9257
Lincoln, SD
Minnehaha, SD
7800 South Bend, IN........................................... 0.9802
St. Joseph, IN
7840 Spokane, WA.............................................. 1.0852
Spokane, WA
7880 Springfield, IL.......................................... 0.8659
Menard, IL
Sangamon, IL
7920 Springfield, MO.......................................... 0.8424
Christian, MO
Greene, MO
Webster, MO
8003 Springfield, MA.......................................... 1.0927
Hampden, MA
Hampshire, MA
8050 State College, PA........................................ 0.8941
Centre, PA
8080 Steubenville-Weirton, OH-WV.............................. 0.8804
Jefferson, OH
Brooke, WV
Hancock, WV
8120 Stockton-Lodi, CA........................................ 1.0506
San Joaquin, CA
8140 Sumter, SC............................................... 0.8273
Sumter, SC
8160 Syracuse, NY............................................. 0.9714
Cayuga, NY
Madison, NY
Onondaga, NY
Oswego, NY
8200 Tacoma, WA............................................... 1.0940
Pierce, WA
8240 Tallahassee, FL.......................................... 0.8504
Gadsden, FL
Leon, FL
8280 Tampa-St Petersburg-Clearwater, FL....................... 0.9065
Hernando, FL
Hillsborough, FL
Pasco, FL
Pinellas, FL
8320 Terre Haute, IN.......................................... 0.8599
Clay, IN
Vermillion, IN
Vigo, IN
8360 Texarkana, AR-Texarkana, TX.............................. 0.8088
Miller, AR
Bowie, TX
8400 Toledo, OH............................................... 0.9810
Fulton, OH
Lucas, OH
Wood, OH
8440 Topeka, KS............................................... 0.9199
Shawnee, KS
8480 Trenton, NJ.............................................. 1.0432
Mercer, NJ
8520 Tucson, AZ............................................... 0.8911
Pima, AZ
8560 Tulsa, OK................................................ 0.8332
Creek, OK
Osage, OK
Rogers, OK
Tulsa, OK
Wagoner, OK
8600 Tuscaloosa, AL........................................... 0.8130
Tuscaloosa, AL
8640 Tyler, TX................................................ 0.9521
Smith, TX
8680 Utica-Rome, NY........................................... 0.8465
Herkimer, NY
Oneida, NY
8720 Vallejo-Fairfield-Napa, CA............................... 1.3354
Napa, CA
Solano, CA
8735 Ventura, CA.............................................. 1.1096
Ventura, CA
8750 Victoria, TX............................................. 0.8756
Victoria, TX
8760 Vineland-Millville-Bridgeton, NJ......................... 1.0031
Cumberland, NJ
8780 Visalia-Tulare-Porterville, CA........................... 0.9418
Tulare, CA
8800 Waco, TX................................................. 0.8073
McLennan, TX
8840 Washington, DC-MD-VA-WV.................................. 1.0851
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................................. 0.8069
Black Hawk, IA
8940 Wausau, WI............................................... 0.9782
Marathon, WI
8960 West Palm Beach-Boca Raton, FL........................... 0.9939
Palm Beach, FL
9000 Wheeling, OH-WV.......................................... 0.7670
Belmont, OH
Marshall, WV
Ohio, WV
9040 Wichita, KS.............................................. 0.9520
Butler, KS
Harvey, KS
Sedgwick, KS
9080 Wichita Falls, TX........................................ 0.8498
Archer, TX
Wichita, TX
9140 Williamsport, PA......................................... 0.8544
Lycoming, PA
9160 Wilmington-Newark, DE-MD................................. 1.1173
New Castle, DE
Cecil, MD
9200 Wilmington, NC........................................... 0.9640
New Hanover, NC
Brunswick, NC
9260 Yakima, WA............................................... 1.0569
Yakima, WA
9270 Yolo, CA................................................. 0.9434
Yolo, CA
9280 York, PA................................................. 0.9026
York, PA
9320 Youngstown-Warren, OH.................................... 0.9358
Columbiana, OH
Mahoning, OH
Trumbull, OH
9340 Yuba City, CA............................................ 1.0276
Sutter, CA
Yuba, CA
9360 Yuma, AZ................................................. 0.8589
Yuma, AZ
------------------------------------------------------------------------

Table 8.--Wage Index for Rural Areas
------------------------------------------------------------------------
Wage
Rural area index
------------------------------------------------------------------------
Alabama........................................................ 0.7660
Alaska......................................................... 1.2293
Arizona........................................................ 0.8493
Arkansas....................................................... 0.7666
California..................................................... 0.9899
Colorado....................................................... 0.9015
Connecticut.................................................... 1.2394
Delaware....................................................... 0.9128
Florida........................................................ 0.8827
Georgia........................................................ 0.8230
Guam........................................................... 0.9611
Hawaii......................................................... 1.0255
Idaho.......................................................... 0.8747
Illinois....................................................... 0.8204
Indiana........................................................ 0.8755
Iowa........................................................... 0.8315
Kansas......................................................... 0.7900
Kentucky....................................................... 0.8079
Louisiana...................................................... 0.7580
Maine.......................................................... 0.8874
Maryland....................................................... 0.8946
Massachusetts.................................................. 1.1288
Michigan....................................................... 0.9009
Minnesota...................................................... 0.9151
Mississippi.................................................... 0.7680
Missouri....................................................... 0.7881
Montana........................................................ 0.8481
Nebraska....................................................... 0.8204
Nevada......................................................... 0.9577
New Hampshire.................................................. 0.9839

[[Page 26775]]

New Jersey \1\................................................. .......
New Mexico..................................................... 0.8872
New York....................................................... 0.8542
North Carolina................................................. 0.8669
North Dakota................................................... 0.7788
Ohio........................................................... 0.8613
Oklahoma....................................................... 0.7590
Oregon......................................................... 1.0259
Pennsylvania................................................... 0.8462
Puerto Rico.................................................... 0.4356
Rhode Island \1\............................................... .......
South Carolina................................................. 0.8607
South Dakota................................................... 0.7815
Tennessee...................................................... 0.7877
Texas.......................................................... 0.7821
Utah........................................................... 0.9312
Vermont........................................................ 0.9345
Virginia....................................................... 0.8504
Virgin Islands................................................. 0.7845
Washington..................................................... 1.0179
West Virginia.................................................. 0.7975
Wisconsin...................................................... 0.9162
Wyoming........................................................ 0.9007
------------------------------------------------------------------------
\1\ All counties within the State are classified urban.

D. Updates to the Federal Rates

In accordance with section 1888(e)(4)(E) of the Act, the proposed
payment rates listed here reflect an update equal to the full SNF
market basket, which equals 2.9 percent. We will continue to publish
the rates, wage index, and case-mix classification methodology in the
Federal Register before August 1 preceding the start of each succeeding
fiscal year We discuss the Federal rate update factor in greater detail
in section III.B of this preamble.

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

As discussed in Sec. 413.345, we include in each update of the
Federal payment rates in the Federal Register the designation of those
specific RUGs under the classification system that represent the
required SNF level of care, as provided in Sec. 40930. This
designation reflects an administrative presumption under the current
44-group RUG-III classification system. Our presumption is that any
beneficiary who is correctly assigned to one of the upper 26 RUG-III
groups in the initial 5-day, Medicare-required assessment is
automatically classified as meeting the SNF level of care definition up
to the assessment reference date for that assessment.
Any beneficiary assigned to any of the lower 18 groups is not
automatically classified as either meeting or not meeting the
definition, but instead receives an individual level of care
determination using the existing administrative criteria This
presumption recognizes the strong likelihood that beneficiaries
assigned to one of the upper 26 groups during the immediate post-
hospital period require a covered level of care, which would be
significantly less likely for those beneficiaries assigned to one of
the lower 18 groups.
In this proposed rule, we are continuing the existing designation
of the upper 26 RUG-III groups for purposes of this administrative
presumption Accordingly, we are designating the following RUG-III
classifications:
[sbull] All groups within the Ultra High Rehabilitation category;
[sbull] All groups within the Very High Rehabilitation category;
[sbull] All groups within the High Rehabilitation category;
[sbull] All groups within the Medium Rehabilitation category;
[sbull] All groups within the Low Rehabilitation category;
[sbull] All groups within the Extensive Services category;
[sbull] All groups within the Special Care category; and
[sbull] All groups within the Clinically Complex category.

F. Initial Three-Year Transition Period

As noted previously, the rates that we now propose are for the
sixth year of the SNF PPS. As a result, the PPS is no longer operating
under the initial three-year transition period from facility-specific
to Federal rates; therefore, payment now equals 100 percent of the
adjusted Federal per diem rate

G. Example of Computation of Adjusted PPS Rates and SNF Payment

Using the model SNF (XYZ) described in Table 9, the following shows
the adjustments made to the Federal per diem rate to compute the
provider's actual per diem PPS payment. XYZ's 12-month cost reporting
period begins October 1, 2004. XYZ's total PPS payment would equal
$20,017. The Labor and Non-labor columns are derived from Table 5. In
addition, the adjustments for certain specified RUG-III groups enacted
in section 101(a) of the BBRA (as amended by section 314 of the BIPA)
remain in effect, and are reflected in Table 9.

Table 9.--SNF XYZ: Located in State College, PA
[Wage Index: 0.8941]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wage Adj. Percent Medicare
RUG group Labor index labor Non-labor Adj. rate adjustment days Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVC............................................................ $258.51 0.8941 $231.13 $79.70 $310.83 \1\ 14 $4,643
$331.66
RHA............................................................ 199.77 0.8941 178.61 61.59 240.20 \1\ 256.29 16 4,101
SSC............................................................ 166.41 0.8941 148.79 51.30 200.09 \2\ 240.11 30 7,203
IA2............................................................ 112.84 0.8941 100.89 34.79 135.68 135.68 30 4,070
---------------------
Total.................................................... ......... ......... ......... ......... ......... .......... 90 20,017
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Reflects a 6.7 percent adjustment from section 314 of the BIPA.
\2\ Reflects a 20 percent adjustment from section 101(a) of the BBRA.

III. The Skilled Nursing Facility Market Basket Index

Section 1888(e)(5)(A) of the Act requires us to establish an SNF
market basket index (input price index) that reflects changes over time
in the prices of an appropriate mix of goods and services included in
the SNF PPS. This proposed rule incorporates the latest available
projections of the SNF market basket index. The final rule will
incorporate updated projections based on the latest available
projections at that time. Accordingly, we have developed an SNF market
basket index that encompasses the most commonly used cost categories
for SNF routine services, ancillary services, and capital-related
expenses. In the July 31, 2001 Federal Register (66 FR 39562), we
included a complete discussion on the rebasing of the SNF market basket
to FY 1997. There are 21 separate cost categories and respective price
proxies. These cost

[[Page 26776]]

categories were illustrated in Table 10.A, Table 10.B, and Appendix A,
along with other relevant information, in the July 31, 2001 Federal
Register.
Each year, we calculate a revised labor-related share based on the
relative importance of labor-related cost categories in the input price
index. Table 10 summarizes the updated labor-related share for FY 2004.
The forecasted rates of growth used to compute the proposed SNF market
basket percentage described in section II.D of this proposed rule are
shown in Table 11.

Table 10.--FY 2004 Labor-Related Share
------------------------------------------------------------------------
FY 2003 FY 2004
Cost category relative relative
importance importance
------------------------------------------------------------------------
Wages and Salaries.............................. 54.796 55.143
Employee Benefits............................... 11.232 11.269
Nonmedical Professional Fees.................... 2.652 2.661
Labor-intensive Services........................ 4.124 4.137
Capital-related................................. 3.324 3.226
-------------
Total........................................... 76.128 76.435
------------------------------------------------------------------------

Table 11.--SNF Total Cost Market Basket Change FY 1998 Through FY 2004
------------------------------------------------------------------------
Skilled
nursing
facility
Fiscal years beginning October 1 total
cost
market
basket
------------------------------------------------------------------------
October 1997, FY 1998........................................ 2.8
October 1998, FY 1999........................................ 3.0
October 1999, FY 2000........................................ 4.0
October 2000, FY 2001........................................ 4.9
October 2001, FY 2002........................................ 3.4
October 2002, FY 2003........................................ 3.1
October 2003, FY 2004........................................ 2.9
------------------------------------------------------------------------
Source: (Table 10) Global Insights, Inc., DRI-WEFA, 4th Quarter, 2002.
Source: (Table 11) Global Insights Inc., DRI-WEFA, 4th Quarter, 2002.
@USAMACRO/MODTREND@CISSIM/CNTL25R2.SIM
Released by CMS, OACT, National Health Statistics Group.

A. Use of the Skilled Nursing Facility Market Basket Percentage

Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage as the percentage change in the SNF market basket index, as
described in the previous section, from the average index level of the
prior fiscal year to the average index level of the current fiscal
year. For the Federal rates established in this proposed rule, this
percentage increase in the SNF market basket index would be used to
compute the update factor occurring between FY 2003 and FY 2004. We
used the Global Insights, Inc. (formerly DRI-WEFA), 4th quarter 2002
forecasted percentage increase in the FY 1997-based SNF market basket
index for routine, ancillary, and capital-related expenses, described
in the previous section, to compute the update factor.

B. Federal Rate Update Factor

Section 1888(e)(4)(E)(ii)(IV) of the Act requires that the update
factor used to establish the FY 2004 Federal rates be at a level equal
to the full market basket percentage change. Accordingly, to establish
the update factor, we determined the total growth from the average
market basket level for the period of October 1, 2002 through September
30, 2003 to the average market basket level for the period of October
1, 2003 through September 30, 2004. Using this process, the update
factor for FY 2004 SNF Federal rates is 2.9 percent.
We used this revised update factor to compute the Federal portion
of the SNF PPS rate shown in Tables 1 and 2.

IV. Consolidated Billing

As established by section 4432(b) of the BBA, the consolidated
billing requirement places with the SNF the Medicare billing
responsibility for virtually all of the services that the SNF's
residents receive, except for a small number of services that the
statute specifically identifies as being excluded from this provision.
Section 103 of the BBRA amended this provision by further excluding a
number of high-cost, low probability services (identified by Healthcare
Common Procedure Coding System (HCPCS) codes) within several broader
categories that otherwise remained subject to the provision. Section
313 of the BIPA further amended this provision by repealing its Part B
aspect, that is, its applicability to services furnished to a resident
during a SNF stay that Medicare does not cover. (However, physical,
occupational, and speech-language therapy remain subject to
consolidated billing, regardless of whether the resident who receives
these services is in a covered Part A stay.)
To date, the Congress has enacted no further legislation affecting
the consolidated billing provision. However, as we noted in the
proposed rule of April 10, 2000 (65 FR 19232), section
1888(e)(2)(A)(iii) of the Act, as added by section 103 of the BBRA, not
only identified for exclusion from this provision a number of
particular service codes within four specified categories (that is,
chemotherapy items, chemotherapy administration services, radioisotope
services, and customized prosthetic devices), but `` * * * also gives
the Secretary the authority to designate additional, individual
services for exclusion within each of the specified service
categories.'' In that proposed rule, we also noted that the BBRA
Conference report (H.R. Conf. Rep. No. 106-479 at 854) characterizes
the individual services that this legislation targets for exclusion as
``* * * high-cost, low probability events that could have devastating
financial impacts because their costs far exceed the payment [SNFs]
receive under the prospective payment system * * *'' According to the
conferees, section 103(a) ``is an attempt to exclude from the PPS
certain services and costly items that are provided infrequently in
SNFs * * *'' By contrast, we noted that the Congress declined to
designate for exclusion any of the remaining services within those four
categories (thus leaving all of those services subject to SNF
consolidated billing), because they are relatively inexpensive and are
furnished routinely in SNFs.
As we further explained in the final rule of July 31, 2000 (65 FR
46790), any additional service codes that we might designate for
exclusion under our discretionary authority must meet the same criteria
that the Congress used in identifying the original codes excluded from
consolidated billing under section 103(a) of the BBRA: they must fall
within one of the four service categories specified in the BBRA, and
they also must meet the same standards of high cost and low probability
in the SNF setting. Accordingly, we characterized this statutory
authority to identify additional service codes for exclusion ``* * * as
essentially affording the flexibility to revise the list of excluded
codes in response to changes of major significance that may occur over
time (for example, the development of new medical technologies or other
advances in the state of medical practice)'' (65 FR 46791). In view of
the amount of time that has elapsed since we made that statement, we
believe it is appropriate at this point to invite public comments that
identify codes in any of these four service categories representing
recent medical advances that might meet the BBRA criteria for exclusion
from SNF consolidated billing.
We note that the original BBRA legislation (as well as the
implementing regulations) identified a set of excluded services by
means of specifying HCPCS codes that were in effect as of a particular
date (that is, July 1, 1999).

[[Page 26777]]

Identifying the excluded services in this manner made it possible for
us to utilize a Program Memorandum as the vehicle for accomplishing
routine updates of the excluded codes, in order to reflect any minor
revisions that might subsequently occur in the coding system itself
(for example, the assignment of a different code number to the same
service). Accordingly, for any new services that would actually
represent a substantive change in the scope of services that are
excluded from the SNF consolidated billing provision, we would identify
these additional excluded services by means of the HCPCS codes that are
in effect as of a specific date (in this case, October 1, 2002). By
making any new exclusions in this manner, we could similarly accomplish
routine future updates of these additional codes through the issuance
of a Program Memorandum.

V. Application of the SNF PPS to SNF Services Furnished by Swing-Bed
Hospitals

In the July 31, 2001 final rule (66 FR 39562), we announced the
conversion of swing-bed hospitals to the SNF PPS, effective with the
start of the provider's first cost reporting period beginning on or
after July 1, 2002. We selected this date consistent with the statutory
provision to integrate swing-bed hospitals into the SNF PPS by the end
of the SNF transition period, that is, June 30, 2002.
By July 31, 2003, the SNF PPS will cover all swing-bed hospitals.
Therefore, all rates and wage indexes outlined in earlier sections of
this notice for SNF PPS also apply to all swing-bed hospitals. A
complete discussion of assessment schedules, the MDS and the
transmission software, Raven-SB for Swing Beds can be found in the July
31, 2001 final rule (66 FR 39562). The latest changes in the MDS for
swing-bed hospitals are listed on our SNF PPS Web site, http:/
/.www.cms.hhs.gov/providers/snfpps/default.asp.

VI. Distinct Part Definition

While some SNFs function as separate, independent entities, we have
recognized since the inception of the Medicare program that it is also
possible for a SNF to operate as a component, or ``distinct part,'' of
a larger organization. As indicated in the discussion below, the
predominant organizational form for such distinct part SNFs has been
that of a component of a hospital that furnishes SNF services within
the larger hospital complex. However, most program requirements that
address SNF distinct parts have focused on operating and cost reporting
procedures, without precisely defining what a ``distinct part'' is. The
definition of a distinct part is particularly meaningful in today's
environment, since entities other than hospitals are increasingly
exploring diversification to provide SNF services. In addition, the
growing frequency of hospital mergers (in which each of the merging
hospitals brings its own distinct part SNF into the merger) has created
situations where the newly-merged hospital entity includes the merger
of components that are furnishing SNF services at two different
physical locations; that is, the creation of a ``composite'' distinct
part SNF. Moreover, such a hospital might additionally purchase a
freestanding SNF for use in placing those of its inpatients who are
ready for hospital discharge.
As a result of these changes in facility practices, it has become
increasingly important to document the assumptions used historically to
survey and certify distinct part units. The purpose of this portion of
the proposed rule is to clarify the definition of a ``distinct part,''
to provide more precise guidance to providers and State licensure and
certification agencies. This guidance will assist providers in
understanding the criteria that govern the financial and organizational
structure of such entities, which will facilitate the application and
certification process. In this proposed rule, we also explain how the
survey and certification requirements are being applied to distinct
parts in separate physical locations.
This proposal is not expected to have any adverse financial impact
on hospitals or other entities exploring or operating distinct part
SNFs. In fact, clarifying our expectations regarding operating criteria
could enable providers to identify as duplicative or unnecessary
certain procedures that they may have adopted before these
clarifications were available, but that are not actually required by
our programs. We are also evaluating ways to ensure that the survey and
certification process includes ongoing monitoring of changes in
distinct part status, and we invite comments on appropriate ways to
accomplish this.
Similarly, we do not anticipate any negative impact on beneficiary
access to care or on the quality of care furnished in distinct part
SNFs. Distinct part SNFs already operate under the same benefit,
eligibility, and coverage regulations as freestanding SNFs, and
beneficiaries who reside in a distinct part SNF also have the same
rights and protections as beneficiaries residing in freestanding SNFs.
In fact, in this proposed rule, we clarify how certain resident rights
and protections should be administered in composite distinct part SNFs.
We anticipate that this clarification of our expectations will promote
improved provider compliance with these program requirements.

A. Background

As noted in section I.A of this preamble, services are covered
under the Part A SNF benefit only when furnished in a SNF that Medicare
has certified as meeting the requirements for program participation
contained in section 1819 of the Act. This section of the Act defines a
SNF in terms of being ``* * * an institution (or a distinct part of an
institution) * * *. '' The committee report that accompanied the
original Medicare legislation (cited below) contained the following
explanation of the distinct part concept as applied to ``posthospital
extended care facilities,'' or SNFs: ``* * * A posthospital extended
care facility could be an institution, such as a skilled nursing home,
or a distinct part of an institution, such as a ward or wing of a
hospital or a section of a facility another part of which might serve
as an old-age home.'' (Senate Finance Committee Rep. No. 404, 89th
Cong., 1st Sess. 31-32 (1965)).
Under the reasonable cost payment methodology that applied to
covered Part A SNF stays prior to the inception of the SNF PPS, a
determination that a SNF was a distinct part of a hospital (or
``hospital-based'') rather than a freestanding facility directly
affected the amount of the SNF's Medicare payment. This is because that
payment methodology set higher limits on routine service costs for
hospital-based SNFs than for freestanding facilities.
In the Federal Register of September 4, 1980 (45 FR 58701), we
defined a ``hospital-based SNF'' for this purpose as being an integral
and subordinate part of a hospital that is operated with other
departments of the hospital under common licensure, governance, and
professional supervision, with all services of both the hospital and
the SNF being fully integrated. In addition, we included the following
specific criteria:
[sbull] The SNF and hospital are subject to the bylaws and
operating decisions of a common governing board;
[sbull] The SNF and hospital are financially integrated as
evidenced by the cost report, which must reflect the certified or
noncertified SNF beds of the hospital, the allocation of hospital
overhead to the SNF through the required stepdown methodology, and
common billing for all services of both facilities.

[[Page 26778]]

[sbull] While colocation is not an essential factor, the distance
between the two facilities must be reasonable.
[sbull] The existence of a transfer agreement or a shared service
agreement between the SNF and the hospital does not determine a SNF to
be hospital-based and is not considered in determining the status of
the facility.
We recognize that the April 7, 2000 final rule for the PPS for
outpatient hospital services promulgated a set of criteria for use in
determining whether an entity is ``provider-based'' (65 FR 18504),
including several criteria that were similar to the 1980 hospital-based
criteria for SNFs. However, SNFs are not subject to the provider-based
regulations (see Sec. 413.65(a)(1)(ii)(D)).

B. Proposed Revision

It has been noted that the regulations at Sec. 413.65 already set
forth detailed criteria for determining provider-based status in other
settings, but that no similar regulations exist with regard to SNFs.
The need to clarify the criteria for identifying distinct parts is
especially pronounced in the context of survey and certification
procedures.
In addition, the concept of a distinct part is actually broader
than that of a ``hospital-based'' facility, in that the former can
encompass situations in which a SNF is a part of a larger institution
that is not a hospital (for example, a domiciliary or ``board and
care'' facility). Further, the distinct part concept applies to
Medicaid nursing facilities (NFs) as well as to SNFs, and involves not
only payment issues, but also the requirements specified in the
regulations at part 483, subpart B (the requirements for program
participation for long-term care facilities (that is, SNFs and NFs)).
Further, while the regulations at Sec. 483.5 (which define a long-term
care facility in this context) refer to the existence of ``distinct
part'' SNFs and NFs, they do not currently contain a specific
definition of this term.
Accordingly, in this proposed rule, we propose to add a number of
specific criteria that would serve to determine whether a SNF or NF can
be designated as a distinct part of a hospital or other entity, in the
requirements for participation for long-term care facilities in subpart
B of part 483. These proposed revisions would essentially reflect the
1980 ``hospital-based'' criteria discussed previously (which focus
primarily on such elements as common ownership and control, financial
integration, and location), and would also incorporate existing
criteria included in the State Operations Manual and in Survey and
Certification Letters into a single regulation. We also propose to make
a number of conforming changes elsewhere in subpart B of part 483 of
the regulations (specifically Sec. Sec. 483.10 and 483.12), as well as
to other distinct part references that appear in parts 413 and 440.
At Sec. 483.5, we would define a distinct part as a physically
identifiable component of an institution (for example, a hospital, or a
board and care facility) or institutional complex (for example, a
hospital or continuing care retirement community that includes various
subprovider units and occupies several buildings) that is certified as
meeting the applicable statutory requirements for SNFs or NFs in
sections 1819 or 1919 of the Act, respectively, as well as the
participation requirements for long-term care facilities set forth in
subpart B of part 483. A SNF or NF distinct part may be comprised of
one or more buildings or designated parts of buildings (that is, wings,
wards, or floors) that are located in the same physical area
immediately adjacent to the institution's main buildings, other areas
and structures that are not strictly contiguous to the main buildings
but are within close proximity of the main buildings, and any other
areas that we determine, on an individual basis, to be part of the
institution's campus. A distinct part must include all of the beds
within the designated area, and cannot consist of a random collection
of individual rooms or beds that are scattered throughout the physical
plant.
In addition, we would set forth a number of specific criteria for
use in determining whether a SNF or NF can be considered a distinct
part of a larger institution, as follows:
[sbull] The SNF or NF must be operated under common ownership and
control (that is, common governance) by the institution of which it is
a distinct part, as evidenced by the following:
(1) The SNF or NF is wholly owned by the institution of which it is
a distinct part;
(2) The SNF or NF is subject to the by-laws and operating decisions
of a common governing body;
(3) The institution of which the SNF or NF is a distinct part has
final responsibility for the distinct part's administrative decisions
and personnel policies, and final approval for the distinct part's
personnel actions; and
(4) The SNF or NF functions as an integral and subordinate part of
the institution to which it is based, with significant common resource
usage of buildings, equipment, personnel, and services.
[sbull] The administrator of the SNF or NF reports to and is
directly accountable to the management of the institution of which the
SNF or NF is a distinct part.
[sbull] The SNF or NF must have a designated medical director who
is responsible for implementing care policies and coordinating medical
care, and who is directly accountable to the management of the
institution of which it is a distinct part.
[sbull] The SNF or NF is financially integrated with the
institution of which it is a distinct part, as evidenced by the sharing
of income and expenses with that institution, and the reporting of its
costs on that institution's cost report.
[sbull] A single institution can have a maximum of only one
distinct part SNF and one distinct part NF. (If an institution
exercises the option to have both a distinct part SNF and a distinct
part NF, its SNF and NF distinct parts may overlap entirely, partially,
or not at all. Further, if the SNF and NF distinct parts partially
overlap, the area of overlap would not represent a separate, dually-
certified ``SNF/NF.'')
[sbull] An institution cannot designate itself as a SNF or NF
distinct part, but instead must submit a written request to us to
determine if it may be considered a distinct part, along with
documentation that demonstrates that it meets the criteria set forth
above. The effective date of approval of a distinct part is the date
that we determine all requirements (including enrollment with the
fiscal intermediary) are met for approval, and cannot be made
retroactive. If a distinct part is established without our notification
and approval, CMS will determine the distinct part has not been
appropriately designated as such from the date that the entity began
its operation. CMS must approve all proposed changes in the number of
beds in the approved distinct part. (Such modifications would be
subject to the applicable requirements governing changes in bed size or
location in SNFs and NFs, as set forth in section 2337 of the Provider
Reimbursement Manual, Part 1 (CMS Pub. 15-1), and in section 3202 of
the State Operations Manual (CMS Pub. 7).)
We note that our proposed definition of distinct parts does not
represent an additional burden on SNFs; rather, it would simply add
increased clarity and specificity to the process of determining
distinct part status. We believe that establishing more definitive
criteria in this area will actually help reduce the existing burden on
SNFs by adding greater clarity and predictability to the process of
determining a SNF's distinct part status.

[[Page 26779]]

Further, we note that the numerous requests that we have received
for clarification of the distinct part criteria have arisen, in part,
from a June 4, 1996, memorandum in which we reiterated our longstanding
interpretation that sections 1819(a) and 1919(a) of the Act allow for a
maximum of one distinct part SNF (and one distinct part NF) within a
single institution. We issued this memorandum in response to an
increasing number of situations involving the merger of two hospitals
on separate campuses, each of which brings its own distinct part SNF
into the merger. Under our policy of allowing only one distinct part
SNF per institution, such a merger would result in the creation of a
single distinct part SNF consisting of two noncontiguous units in
different locations (as opposed, for example, to a distinct part
consisting of noncontiguous wards, wings, or floors that are all
located within the same building or campus).
In this proposed rule, we refer to such a configuration as a
``composite distinct part.'' A composite distinct part could also be
created when a hospital that already has a distinct part SNF acquires
an additional nursing home that is not co-located on the hospital's
campus. This, in turn, has raised a number of questions and concerns
regarding the treatment of such entities under the survey and
certification process, which we now propose to address as well.
Accordingly, we propose to establish certain additional criteria
that would apply specifically to a composite distinct part SNF or NF of
a hospital, or of a nonhospital organization such as a continuing care
retirement community (CCRC). Under these criteria, a composite distinct
part would be treated as a single distinct part of the institution to
which it is based and, as such, would have only one provider agreement.
It should be noted that in establishing criteria specific to composite
distinct parts, it is not our intent to create a new category of
nursing homes, but rather, simply to address certain survey and
certification issues that arise from the use of this particular type of
configuration. By explicitly recognizing composite distinct parts, we
can help ensure that survey and other program oversight functions are
coordinated and uniformly administered. Since the designation of a
composite distinct part is not designed to supersede or replace
existing policies, the use of a composite SNF or NF configuration is
limited to facilities within the same State. Further, in order to
ensure quality of care and quality of life for all residents, the
constituent components of a composite distinct part would be required
to meet all of the participation requirements set forth in subpart B of
part 483 independently in each location.
We also wish to take this opportunity to provide clarification
regarding the logistics of applying the survey and certification
process to a composite distinct part that consists of components in
different locations. Specifically, we note that for such facilities,
surveyors will place particular emphasis on the following requirements,
which must be met independently in each location of the composite
distinct part:
[sbull] Posting of resident's rights (Sec. 483.10(b));
[sbull] Posting of names, addresses, and telephone numbers of all
pertinent State client advocacy groups (Sec. 483.10(b)(7)(iii));
[sbull] Prominently displayed facility information (Sec.
483.10(b)(10));
[sbull] Readily available survey results (Sec. 483.10(g));
[sbull] Organized resident and family groups (Sec. 483.15(c));
[sbull] Equal access by residents to activities and social services
(Sec. 483.15(b), Sec. 483.15(f), and Sec. 483.15(g));
[sbull] Except where waived, the services of a registered nurse for
at least 8 consecutive hours a day, 7 days a week (Sec. 483.30(b));
[sbull] Designating a person to serve as director of food services
who receives frequently scheduled consultation from a qualified
dietitian, unless a qualified dietitian is employed on a full-time
basis (Sec. 483.35(a)); and
[sbull] The physical environment requirements, including life
safety, and provisions for space and equipment in dining, health
services, recreation and program areas, to enable staff to provide
residents with needed services as required by these standards and as
identified in each resident's plan of care (Sec. 483.15(h) and Sec.
483.70).
We also propose to amend the regulations at Sec. 483.12, to
establish a resident's right to remain in (or return to) the same
location of the composite distinct part to which he or she was
originally admitted. To avoid any confusion regarding the distinct part
criteria applicable to SNFs, we would amend the provider-based
regulations at Sec. 413.65(a)(1)(ii)(D) to include a cross-reference
to the new distinct part criteria. Currently, the regulations at Sec.
413.65(a)(1)(ii)(D) indicate only that provider-based determinations
under these regulations do not apply to SNFs. We would amend Sec.
413.65(a)(1)(ii)(D) by adding a parenthetical statement indicating that
determinations for SNFs are made under the regulations at Sec. 483.5.
We are also taking this opportunity to correct a typographical
error that currently appears in the regulations text at Sec.
483.20(k)(1) (regarding the required comprehensive care plan for long-
term care facility residents), in which the word ``describe'' is
misspelled as ``describer.''

VII. Provisions of the Proposed Rule

In this proposed rule, we propose to make the following revisions
to the existing text of the regulations:
[sbull] In Sec. 409.20, we would make a technical correction to
the cross-reference that appears in paragraph (c).
[sbull] We would revise Sec. 483.5 to include specific definitions
of the terms ``distinct part'' and ``composite distinct part.'' In
addition, we would make conforming changes elsewhere in subpart B of
part 483 of the regulations, as well as in parts 413 and 440, and we
would correct a typographical error that currently appears in the
regulations text at Sec. 483.20(k)(1).

VIII. Collection of Information Requirements

This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

IX. Regulatory Impact Analysis

A. Overall Impact

We have examined the impacts of this proposed rule as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, (the Act) the
Unfunded Mandates Reform Act of 1995 (UMRA), (Pub. L. 104-4), and
Executive Order 13132.
Executive Order 12866 (as amended by Executive Order 13258, which
merely assigns responsibility of duties) 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).
This proposed rule is a major rule, as defined in Title 5, United
States Code, section 804(2), because we estimate the

[[Page 26780]]

impact of the update will be to increase payments to SNFs by
approximately $400 million. The update set forth in this proposed rule
applies to payments in FY 2004. Accordingly, the analysis that follows
describes the impact of this one fiscal year only. In accordance with
the requirements of the Act, we will publish a notice for each
subsequent fiscal year that will provide for an update to the payment
rates and that will include an associated impact analysis.
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 SNFs and most other providers and suppliers are small entities,
either by their nonprofit status or by having revenues of $11.5 million
or less in any 1 year. For purposes of the RFA, approximately 53
percent of SNFs are considered small businesses according to the Small
Business Administration's latest size standards with total revenues of
$11.5 million or less in any 1 year (for further information, see 65 FR
69432, November 17, 2000). Individuals and States are not included in
the definition of a small entity.
This proposed rule would update the SNF PPS rates published in the
July 31, 2002 update notice (67 FR 49798), thereby increasing aggregate
payments by an estimated $400 million. Accordingly, we certify that
this proposed rule would not have a significant impact on small
entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. For a
proposed rule, this analysis must conform to the provisions of section
603 of the RFA. For purposes of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is located outside of a
Metropolitan Statistical Area and has fewer than 100 beds. Because the
payment rates set forth in this proposed rule also affect rural
hospital swing-bed services, we believe that this proposed rule would
have an impact on small rural hospitals (this impact is discussed later
in this section). However, because this incremental increase in
payments for Medicare swing-bed services is relatively minor in
comparison to overall rural hospital revenues, this notice will not
have a significant impact on the overall operations of these small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in an expenditure in any 1 year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $110 million or more. This proposed rule would have
no substantial effect on State, local, or tribal governments. We
believe the private sector cost of this proposed rule falls below these
thresholds as well.
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 requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. As stated above, this proposed rule would have no
substantial effect on State and local governments.
The purpose of this proposed rule is not to initiate significant
policy changes with regard to the SNF PPS; rather, it is to provide an
update to the rates for FY 2004 and to address a number of policy
issues related to the PPS. We believe that the revisions and
clarifications mentioned elsewhere in the preamble (for example, with
respect to determining distinct part status) will have, at most, only a
negligible overall effect upon the regulatory impact estimate specified
in the rule. As such, these revisions would not represent an additional
burden to the industry.

B. Anticipated Effects

This proposed rule sets forth updates of the SNF PPS rates
contained in the July 31, 2002 update (67 FR 49798). The impact
analysis of this proposed rule represents the projected effects of the
changes in the SNF PPS from FY 2003 to FY 2004. We estimate the effects
by estimating payments while holding all other payment variables
constant. We use the best data available, but we do not attempt to
predict behavioral responses to these changes, and we do not make
adjustments for future changes in such variables as days or case-mix.
This analysis incorporates the latest estimates of growth in
service use and payments under the Medicare SNF benefit, based on the
latest available Medicare claims from 2001. We note that certain events
may combine to limit the scope or accuracy of our impact analysis,
because such an analysis is future-oriented and, thus, very susceptible
to forecasting errors due to other changes in the forecasted impact
time period. Some examples of such possible events are newly-legislated
general Medicare program funding changes by the Congress, or changes
specifically related to SNFs. In addition, changes to the Medicare
program may continue to be made as a result of the BBA, the BBRA, the
BIPA, or new statutory provisions. Although these changes may not be
specific to the SNF PPS, the nature of the Medicare program is such
that the changes may interact, and the complexity of the interaction of
these changes could make it difficult to predict accurately the full
scope of the impact upon SNFs.
As mentioned previously, we propose to continue use of the FY 2003
wage index to adjust SNF PPS payments beginning October 1, 2003, in
order to assure that the wage index published in each year's update
will be used throughout the year to adjust payments. Therefore, the
wage index has not changed and provides no additional impact on payment
rates.
In accordance with section 1888(e)(4)(E) of the Act, the payment
rates for FY 2004 are updated by a factor equal to the market basket
index percentage increase to determine the payment rates for FY 2004.
We note that in accordance with section 101(a) of the BBRA and section
314 of the BIPA, the existing, temporary increase in the per diem
adjusted payment rates of 20 percent for certain specified RUGs (and
6.7 percent for certain others) remains in effect until the
implementation of case-mix refinements. Because there have been no
other revisions or clarifications affecting the payment rates for this
proposed rule, the amount of the full market basket update is the only
impact on facility payment rates. This leads to an increase in payments
to SNFs of approximately $400 million (including approximately $6.4
million for swing-bed facilities, as discussed below), which is the
full impact of this proposed rule with respect to SNFs.
Since the impact is limited to the 2.9 percentage increase due to
the market basket update, the impact is the same for every facility
without regard to Census region, ownership type, or urban/rural
designation. For this reason, we have not included an impact table as
we have in previous years.
With regard to the specific impact on swing-bed providers, in the
July 31, 2002 update notice (67 FR 49798), we projected payments for
these providers under the SNF PPS by first using the MEDPAR analog to
assign 1999 claims records to a RUG-III group, then applying FY 2003
payment rates to calculate annual estimated payments.
For the purpose of this proposed rule, we have used the MEDPAR
analog classification, and estimated current SNF PPS reimbursement as
if the swing-bed providers were fully phased into the SNF PPS in FY
2002. Then, using the

[[Page 26781]]

same MEDPAR analog classifications, we applied the FY 2004 changes for
a fully phased-in swing-bed population. We estimate that the overall
impact on swing-bed facilities will be an increase in payments of
approximately 2.9 percent, or $6.4 million.

C. Alternatives Considered

Section 1888(e) of the Act establishes the SNF PPS for the payment
of Medicare SNF services for cost reporting periods beginning on or
after July 1, 1998. This section of the statute prescribes a detailed
formula for calculating payment rates under the SNF PPS, and does not
provide for the use of any alternative methodology. It specifies that
the base year cost data to be used for computing the RUG-III payment
rates must be from FY 1995 (October 1, 1994, through September 30,
1995.) In accordance with the statute, we also incorporated a number of
elements into the SNF PPS, such as case-mix classification methodology,
the MDS assessment schedule, a market basket index, a wage index, and
the urban and rural distinction used in the development or adjustment
of the Federal rates. Further, section 1888(e)(4)(H) of the Act
specifically requires us to publish the payment rates for each new
fiscal year in the Federal Register, and to do so prior to the August 1
that precedes the start of the new fiscal year. Accordingly, based upon
the prescriptive nature of the statute, we are not pursuing
alternatives.

D. Conclusion

For the reasons set forth in the preceding discussion, we are not
preparing analyses for either the RFA or section 1102(b) of the Act
because we have determined, and we certify, that this proposed rule
will not have a significant economic impact on a substantial number of
small entities or a significant impact on the operations of a
substantial number of small rural hospitals.
Finally, in accordance with the provisions of Executive Order
12866, this regulation was reviewed by the Office of Management and
Budget.

List of Subjects

42 CFR Part 409

Health facilities, Medicare.

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 440

Grants programs--health, Medicaid.

42 CFR Part 483

Grants programs--health, Health facilities, Health professions,
Health records, Medicaid, Medicare, Nursing homes, Nutrition, Reporting
and recordkeeping requirements, Safety.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as follows:

PART 409--HOSPITAL INSURANCE BENEFITS

1. The authority citation for part 409 continues to read as
follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

Subpart C--Posthospital SNF Care

2. In Sec. 409.20, the introductory text to paragraph (c) is
revised to read as follows:

Sec. 409.20 Coverage of services.

* * * * *
(c) * * *
In Sec. 409.21 through Sec. 409.36--.
* * * * *

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT
RATES FOR SKILLED NURSING FACILITIES

1. The authority citation for part 413 continues to read as
follows:

Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i) and
(n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act
(42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n),
1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww).

SUBPART E--PAYMENTS TO PROVIDERS

2. In Sec. 413.65, paragraph (a)(1)(ii)(D) is revised to read as
follows:

Sec. 413.65 Requirements for a determination that a facility or
organization has provider-based status.

(a) Scope and definitions. (1) Scope.
(ii) * * *
(D) Skilled nursing facilities (SNFs) (determinations for SNFs are
made in accordance with the criteria set forth in Sec. 483.5 of this
chapter).
* * * * *

PART 440--SERVICES: GENERAL PROVISIONS

1. The authority citation for part 440 continues to read as
follows:

Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).

Subpart A--Definitions

2. In Sec. 440.40, paragraph (a)(1)(ii)(A) is revised to read as
follows:

Sec. 440.40 Nursing facility services for individuals age 21 or older
(other than services in an institution for mental disease), EPSDT, and
family planning services and supplies.

(a) * * *
(1) * * *
(ii) * * *
(A) A facility or distinct part (as defined in Sec. 483.5(b) of
this chapter) that is certified to meet the requirements for
participation under subpart B of part 483 of this chapter, as evidenced
by a valid agreement between the Medicaid agency and the facility for
providing nursing facility services and making payments for services
under the plan; or
* * * * *
2. In Sec. 440.155(c), the introductory text is revised to read as
follows:

Sec. 440.155 Nursing facility services, other than in institutions
for mental diseases.

* * * * *
(c) ``Nursing facility services'' may include services provided in
a distinct part (as defined in Sec. 483.5(b) of this chapter) of a
facility other than a nursing facility if the distinct part (as defined
in Sec. 483.5(b) of this chapter)--
* * * * *

PART 483--REQUIREMENTS FOR STATES AND LONG TERM CARE FACILITIES

1. The authority citation for part 483 continues to read as
follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

Subpart B--Requirements for Long Term Care Facilities

2. Section 483.5 is revised to read as follows:

Sec. 483.5 Definitions.

(a) Facility defined. For purposes of this subpart, facility means
a skilled nursing facility (SNF) that meets the requirements of
sections 1819 (a), (b), (c), and (d) of the Act, or a nursing facility
(NF) that meets the requirements of sections 1919 (a), (b), (c), and
(d) of the Act. ``Facility'' may include a distinct part of an
institution (as defined in paragraph (b) of this section and specified
in Sec. 440.40 and Sec. 440.155 of this chapter), but does not
include an institution for the mentally retarded or persons with
related conditions

[[Page 26782]]

described in Sec. 440.150 of this chapter. For Medicare and Medicaid
purposes (including eligibility, coverage, certification, and payment),
the ``facility'' is always the entity that participates in the program,
whether that entity is comprised of all of, or a distinct part of, a
larger institution. For Medicare, a SNF (see section 1819(a)(1) of the
Act), and for Medicaid, a NF (see section 1919(a)(1) of the Act) may
not be an institution for mental diseases as defined in Sec. 435.1009
of this chapter.
(b) Distinct part.
(1) Definition. A distinct part SNF or NF is a physically
identifiable component of an institution (for example, a hospital) or
institutional complex (for example, a hospital that includes various
subprovider units and occupies several buildings) that meets the
requirements of this paragraph and of paragraph (b)(2) of this section,
and is certified as meeting the applicable statutory requirements for
SNFs or NFs in sections 1819 or 1919 of the Act, respectively. A SNF or
NF distinct part may be comprised of one or more buildings or
designated parts of buildings (that is, wings, wards, or floors) that
are: in the same physical area immediately adjacent to the
institution's main buildings; other areas and structures that are not
strictly contiguous to the main buildings but are located within close
proximity of the main buildings; and any other areas that CMS
determines on an individual basis, to be part of the institution's
campus. A distinct part must include all of the beds within the
designated area, and cannot consist of a random collection of
individual rooms or beds that are scattered throughout the physical
plant. The term ``distinct part'' also includes a composite distinct
part that meets the additional requirements of paragraph (c) of this
section.
(2) Requirements. In addition to meeting the participation
requirements for long-term care facilities set forth elsewhere in this
subpart, a SNF or NF also must meet all of the following requirements
in order to be designated as a distinct part of an institution for
payment or other purposes:
(i) The SNF or NF must be operated under common ownership and
control (that is, common governance) by the institution of which it is
a distinct part, as evidenced by the following:
(A) The SNF or NF is wholly owned by the institution of which it is
a distinct part.
(B) The SNF or NF is subject to the by-laws and operating decisions
of a common governing body.
(C) The institution of which the SNF or NF is a distinct part has
final responsibility for the distinct part's administrative decisions
and personnel policies, and final approval for the distinct part's
personnel actions.
(D) The SNF or NF functions as an integral and subordinate part of
the institution to which it is based, with significant common resource
usage of buildings, equipment, personnel, and services.
(ii) The administrator of the SNF or NF reports to and is directly
accountable to the management of the institution of which the SNF or NF
is a distinct part.
(iii) The SNF or NF must have a designated medical director who is
responsible for implementing care policies and coordinating medical
care, and who is directly accountable to the management of the
institution of which it is a distinct part.
(iv) The SNF or NF is financially integrated with the institution
of which it is a distinct part, as evidenced by the sharing of income
and expenses with that institution, and the reporting of its costs on
that institution's cost report.
(v) A single institution can have a maximum of only one distinct
part SNF and one distinct part NF.
(vi) An institution cannot designate itself as an SNF or NF
distinct part, but instead must submit a written request to CMS to
determine if it may be considered a distinct part, along with
documentation that demonstrates that it meets the criteria set forth
above. The effective date of approval of a distinct part is the date
that CMS determines all requirements (including enrollment with the
fiscal intermediary) are met for approval, and cannot be made
retroactive. If a distinct part is established without CMS's
notification and approval, CMS will determine the distinct part has not
been appropriately designated as such from the date that the entity
began its operation. CMS must approve all proposed changes in the
number of beds in the approved distinct part.
(c) Composite distinct part.
(1) Definition. A composite distinct part is a distinct part
consisting of two or more noncontiguous components that are not located
within the same campus, as defined in Sec. 413.65(a)(2) of this
chapter.
(2) Requirements. In addition to meeting the requirements of
paragraph (b) of this section, a composite distinct part also must meet
all of the following requirements:
(i) An SNF or NF that is a composite of more than one location will
be treated as a single distinct part of the institution to which it is
based. As such, the composite distinct part will have only one provider
agreement.
(ii) If there is a change of ownership of a composite distinct part
SNF or NF, the assignment of the provider agreement to the new owner
will apply to all of the approved locations that comprise the composite
distinct part SNF or NF.
(iii) If two or more hospitals (each with a distinct part SNF or
NF) merge, CMS must approve the existing SNFs or NFs as meeting the
requirements of this paragraph before they can be merged and considered
a single distinct part of the hospital that survives the merger. In
making such a determination, CMS will consider whether its approval or
disapproval of a proposed merger promotes the effective and efficient
use of public monies without sacrificing the quality of care.
(iv) To ensure quality of care and quality of life for all
residents, the various components of a composite distinct part must
meet all of the requirements for participation independently in each
location.
3. In Sec. 483.10, the following new paragraph (b)(12) is added to
read as follows:

Sec. 483.10 Resident rights.

* * * * *
(b) * * *
(12) Admission to a composite distinct part. In its admission
agreement, a facility that is a composite distinct part (as defined in
Sec. 483.5(c) of this subpart) must disclose its physical
configuration, including the various locations that comprise the
composite distinct part, and must specify the policies that apply to
room changes between its different locations under Sec. 483.12(a)(8)
of this subpart.
* * * * *
4. In Sec. 483.12, the following changes are made:
A. A new paragraph (a)(8) is added.
B. A new paragraph (b)(4) is added.
The additions read as follows:

Sec. 483.12 Admission, transfer, and discharge rights.

(a) * * *
(8) Room changes in a composite distinct part. Room changes in a
facility that is a composite distinct part (as defined in Sec.
483.5(c) of this subpart) must be limited to moves within the
particular building in which the resident resides, unless the resident
voluntarily agrees to move to another of the composite distinct part's
locations.
* * * * *
(b) * * *
(4) Readmission to a composite distinct part. When the nursing
facility

[[Page 26783]]

to which a resident is readmitted is a composite distinct part (as
defined in Sec. 483.5(c) of this subpart), the resident must be
permitted to return to an available bed in the particular location of
the composite distinct part in which he or she resided previously. If a
bed is not available in that location at the time of readmission, the
resident must be given the option to return to that location upon the
first availability of a bed there.
* * * * *

Sec. 483.20 [Amended]

3. In Sec. 483.20(k)(1), the word ``describer'' is revised to read
``describe''.

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

Dated: January 29, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: April 21, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-11854 Filed 5-8-03; 1:10 pm]
BILLING CODE 4120-01-P