[Federal Register Volume 70, Number 87 (Friday, May 6, 2005)]
[Rules and Regulations]
[Pages 24168-24261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-8878]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Part 412



Medicare Program; Prospective Payment System for Long-Term Care 
Hospitals: Annual Payment Rate Updates, Policy Changes, and 
Clarification; Final Rule

  Federal Register / Vol. 70 , No. 87 / Friday, May 6, 2005 / Rules and 
Regulations  

[[Page 24168]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1483-F]
RIN 0938-AN28


Medicare Program; Prospective Payment System for Long-Term Care 
Hospitals: Annual Payment Rate Updates, Policy Changes, and 
Clarification

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

ACTION: Final rule.

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SUMMARY: This final rule updates the annual payment rates for the 
Medicare prospective payment system (PPS) for inpatient hospital 
services provided by long-term care hospitals (LTCHs). The payment 
amounts and factors used to determine the updated Federal rates that 
are described in this final rule have been determined based on the LTCH 
PPS rate year July 1, 2005 through June 30, 2006. The annual update of 
the long-term care diagnosis-related group (LTC-DRG) classifications 
and relative weights remains linked to the annual adjustments of the 
acute care hospital inpatient diagnosis-related group system, and will 
continue to be effective each October 1. The outlier threshold for July 
1, 2005 through June 30, 2006 is also derived from the LTCH PPS rate 
year calculations. We are adopting new labor market area definitions 
for the purpose of geographic classification and the wage index. We are 
also making policy changes and clarifications.

DATES: This final rule is effective July 1, 2005.

FOR FURTHER INFORMATION CONTACT: Tzvi Hefter, (410) 786-4487 (General 
information). Judy Richter, (410) 786-2590 (General information, 
transition payments, payment adjustments for special cases, and onsite 
discharges and readmissions, interrupted stays, co-located providers, 
and short-stay outliers). Michele Hudson, (410) 786-5490 (Calculation 
of the payment rates, relative weights and case-mix index, market 
basket update, and payment adjustments). Mark Zezza, (410) 786-7937 
(Calculation of the payment rates wage index, wage index, and payment 
adjustments). Ann Fagan, (410) 786-5662 (Patient classification 
system). Miechal Lefkowitz, (410) 786-5316 (High-cost outliers and 
budget neutrality). Linda McKenna, (410) 786-4537 (Payment adjustments, 
interrupted stay, and transition period).

Table of Contents

I. Background
    A. Legislative and Regulatory Authority
    B. Criteria for Classification as a LTCH
    1. Classification as a LTCH
    2. Hospitals Excluded from the LTCH PPS
    C. Transition Period for Implementation of the LTCH PPS
    D. Administrative Simplification Compliance Act and Health 
Insurance Portability and Accountability Act Compliance
II. Publication of Proposed Rulemaking
III. Summary of Major Contents of This Final Rule
    A. Update Changes
    B. Policy Changes
    C. MedPAC Report
    D. Impact
IV. Long-Term Care Diagnosis-Related Group (LTC-DRG) Classifications 
and Relative Weights
    A. Background
    B. Patient Classifications into DRGs
    C. Organization of DRGs
    D. Update of LTC-DRGs
    E. ICD-9-CM Coding System
    1. Uniform Hospital Discharge Data Set (UHDDS) Definitions
    2. Maintenance of the ICD-9-CM Coding System
    3. Coding Rules and Use of ICD-9-CM Codes in LTCHs
    F. Method for Updating the LTC-DRG Relative Weights
V. Changes to the LTCH PPS Rates and Changes in Policy for the 2006 
LTCH PPS Rate Year
    A. Overview of the Development of the Payment Rates
    B. Update to the Standard Federal Rate for the 2006 LTCH PPS 
Rate Year
    1. Standard Federal Rate Update
    a. Description of the Market Basket for the 2006 LTCH PPS Rate 
Year
    b. LTCH Market Basket Increase for the 2006 LTCH PPS Rate Year
    2. Standard Federal Rate for the 2006 LTCH PPS Rate year
    C. Calculation of LTCH Prospective Payments for the 2006 LTCH 
PPS Rate Year
    1. Adjustment for Area Wage Levels
    a. Background
    b. Labor-Related Share
    c. Revision of the LTCH PPS Geographic Classifications
    1. Current LTCH PPS Labor Market Areas Based on MSAs
    2. Core-Based Statistical Areas
    3. Revision of the Labor Market Areas
    a. New England MSAs
    b. Metropolitan Divisions
    c. Micropolitan Areas
    4. Implementation of the Revised Labor Market Areas Under the 
LTCH PPS
    d. Wage Index Data
    2. Adjustment for Cost-of-Living in Alaska and Hawaii
    3. Adjustment for High-Cost Outliers
    a. Background
    b. Cost-to-charge ratios (CCRs)
    c. Establishment of the Fixed-Loss Amount
    d. Reconciliation of Outlier Payments Upon Cost Report 
Settlement
    e. Application of Outlier Policy to Short-Stay Outlier Cases
    4. Adjustments for Special Cases
    a. General
    b. Adjustment for Short-Stay Outlier Cases
    5. Hospital-within-Hospitals and Satellites of LTCHs 
Notification Requirements
    6. Other Payment Adjustments
    7. Budget Neutrality Offset to Account for the Transition 
Methodology
    8. Extension of the Interrupted Stay Policy
    9. Onsite Discharges and Readmittances
VI. Computing the Adjusted Federal Prospective Payments for the 2005 
LTCH PPS Rate Year
VII. Transition Period
VIII. Payments to New LTCHs
IX. Method of Payment
X. MedPAC Recommendations/Monitoring
XI. Collection of Information Requirements
XII. Regulatory Impact Analysis

Acronyms

    Because of the many terms to which we refer by acronym in this 
proposed rule, we are listing the acronyms used and their corresponding 
terms in alphabetical order below:

BBA Balanced Budget Act of 1997, (Pub. L. 105-33).
BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance 
Program] Balanced Budget Refinement Act of 1999, (Pub. L. 106-113).
BIPA Medicare, Medicaid, and SCHIP [State Children's Health Insurance 
Program] Benefits Improvement and Protection Act of 2000, (Pub. L. 106-
554).
CBSA Core-Based Statistical Area.
CMS Centers for Medicare & Medicaid Services.
COPS Medicare conditions of participation.
DRGs Diagnosis-related groups.
FY Federal fiscal year.
HCRIS Hospital Cost Report Information System.
HHA Home health agency.
HIPAA Health Insurance Portability and Accountability Act, Pub. L. 104-
191.
IPF Inpatient Psychiatric Facility.
IPPS Acute Care Hospital Inpatient Prospective Payment System.
IRF Inpatient rehabilitation facility.
LTC-DRG Long-term care diagnosis-related group.
LTCH Long-term care hospital.
MedPAC Medicare Payment Advisory Commission.
MedPAR Medicare provider analysis and review file.
OSCAR Online Survey Certification and Reporting (System).
PPS Prospective Payment System.
QIO Quality Improvement Organization (formerly Peer Review Organization 
(PRO)).

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RY Rate Year (July 1 through June 30).
SNF Skilled nursing facility.
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, (Pub. L. 97-
248).

I. Background

A. Legislative and Regulatory Authority

    The Medicare, Medicaid, and SCHIP [State Children's Health 
Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA) (Pub. 
L. 106-113) and the Medicare, Medicaid, and SCHIP Benefits Improvement 
and Protection Act of 2000 (BIPA) (Pub. L. 106-554) provide for payment 
for both the operating and capital-related costs of hospital inpatient 
stays in long-term care hospitals (LTCHs) under Medicare Part A based 
on prospectively set rates. The Medicare prospective payment system 
(PPS) for LTCHs applies to hospitals described in section 
1886(d)(1)(B)(iv) of the Social Security Act (the Act), effective for 
cost reporting periods beginning on or after October 1, 2002.
    Section 1886(d)(1)(B)(iv)(I) of the Act defines a LTCH as ``a 
hospital which has an average inpatient length of stay (as determined 
by the Secretary) of greater than 25 days.'' Section 
1886(d)(1)(B)(iv)(II) of the Act also provides an alternative 
definition of LTCHs: specifically, a hospital that first received 
payment under section 1886(d) of the Act in 1986 and has an average 
inpatient length of stay (as determined by the Secretary) of greater 
than 20 days and has 80 percent or more of its annual Medicare 
inpatient discharges with a principal diagnosis that reflects a finding 
of neoplastic disease in the 12-month cost reporting period ending in 
FY 1997.
    Section 123 of the BBRA requires the PPS for LTCHs to be a per 
discharge system with a diagnosis-related group (DRG) based patient 
classification system that reflects the differences in patient 
resources and costs in LTCHs while maintaining budget neutrality.
    Section 307(b)(1) of the BIPA, among other things, mandates that 
the Secretary shall examine, and may provide for, adjustments to 
payments under the LTCH PPS, including adjustments to DRG weights, area 
wage adjustments, geographic reclassification, outliers, updates, and a 
disproportionate share adjustment.
    In a Federal Register document issued on August 30, 2002 (67 FR 
55954), we implemented the LTCH PPS authorized under BBRA and BIPA. 
This system uses information from LTCH patient records to classify 
patients into distinct long-term care diagnosis-related groups (LTC-
DRGs) based on clinical characteristics and expected resource needs. 
Payments are calculated for each LTC-DRG and provisions are made for 
appropriate payment adjustments. Payment rates under the LTCH PPS are 
updated annually and published in the Federal Register.
    The LTCH PPS replaced the reasonable cost-based payment system 
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) 
(Pub. L. 97-248) for payments for inpatient services provided by a LTCH 
with a cost reporting period beginning on or after October 1, 2002. 
(The regulations implementing the TEFRA reasonable cost-based payment 
provisions are located at 42 CFR part 413.) With the implementation of 
the prospective payment system for acute care hospitals authorized by 
the Social Security Amendments of 1983 (Pub. L. 98-21), which added 
section 1886(d) to the Act, certain hospitals, including LTCHs, were 
excluded from the PPS for acute care hospitals and were paid their 
reasonable costs for inpatient services subject to a per discharge 
limitation or target amount under the TEFRA system. For each cost 
reporting period, a hospital-specific ceiling on payments was 
determined by multiplying the hospital's updated target amount by the 
number of total current year Medicare discharges. The August 30, 2002 
final rule further details payment policy under the TEFRA system (67 FR 
55954).
    In the August 30, 2002 final rule, we presented an in-depth 
discussion of the LTCH PPS, including the patient classification 
system, relative weights, payment rates, additional payments, and the 
budget neutrality requirements mandated by section 123 of the BBRA. The 
same final rule that established regulations for the LTCH PPS under 42 
CFR part 412, subpart O, also contained LTCH provisions related to 
covered inpatient services, limitation on charges to beneficiaries, 
medical review requirements, furnishing of inpatient hospital services 
directly or under arrangement, and reporting and recordkeeping 
requirements.
    We refer readers to the August 30, 2002 final (67 FR 55954) rule 
for a comprehensive discussion of the research and data that supported 
the establishment of the LTCH PPS.
    On June 6, 2003, we published a final rule in the Federal Register 
(68 FR 34122) that set forth the 2004 annual update of the payment 
rates for the Medicare PPS for inpatient hospital services furnished by 
LTCHs. It also changed the annual period for which the payment rates 
are effective. The annual updated rates are now effective from July 1 
through June 30 instead of from October 1 through September 30. We 
refer to the July through June time period as a ``long-term care 
hospital rate year'' (LTCH PPS rate year). In addition, we changed the 
publication schedule for the annual update to allow for an effective 
date of July 1. The payment amounts and factors used to determine the 
annual update of the LTCH PPS Federal rate is based on a LTCH PPS rate 
year. While the LTCH payment rate update is effective July 1, the 
annual update of the LTC-DRG classifications and relative weights are 
linked to the annual adjustments of the acute care hospital inpatient 
diagnosis-related groups and are effective each October 1.
    On May 7, 2004 we published a final rule in the Federal Register 
(69 FR 25674) that set forth the 2005 LTCH PPS rate year annual update 
of the payment rates for the Medicare PPS for inpatient hospital 
services provided by LTCHs. We also discussed clarification of the 
procedures under which a satellite facility or remote location of a 
LTCH may be designated as a separately certified LTCH. In addition, the 
final rule included a provision to expand the existing interrupted stay 
policy at Sec.  412.531, and a revision to the procedure for computing 
the day count in the average length of stay calculation for Medicare 
patients for hospitals qualifying as LTCHs at Sec.  412.23(e)(3)(ii).

B. Criteria for Classification as a LTCH

1. Classification as a LTCH
    Under the existing regulations at Sec.  412.23(e)(1) and (e)(2)(i), 
which implement section 1886(d)(1)(B)(iv)(I) of the Act, to qualify to 
be paid under the LTCH PPS, a hospital must have a provider agreement 
with Medicare and must have an average Medicare inpatient length of 
stay of greater than 25 days. Alternatively, for cost reporting periods 
beginning on or after August 5, 1997, a hospital that was first 
excluded from the PPS in 1986, and can demonstrate that at least 80 
percent of its annual Medicare inpatient discharges in the 12-month 
cost reporting period ending in FY 1997 have a principal diagnosis that 
reflects a finding of neoplastic disease must have an average inpatient 
length of stay for all patients, including both Medicare and non-
Medicare inpatients, of greater than 20 days (Sec.  412.23(e)(2)(ii)).
    Regulations at Sec.  412.23(e)(3) provide that, subject to the 
provisions of paragraphs (e)(3)(ii) through (e)(3)(iv) of this section, 
the average Medicare inpatient length of stay, specified under Sec.  
412.23(e)(2)(i) is calculated by dividing the total number of covered

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and noncovered days of stay of Medicare inpatients (less leave or pass 
days) by the number of total Medicare discharges for the hospital's 
most recent complete cost reporting period. Section 412.23 also 
provides that subject to the provisions of paragraphs (e)(3)(ii) 
through (e)(3)(iv) of this section, the average inpatient length of 
stay specified under Sec.  412.23(e)(2)(ii) is calculated by dividing 
the total number of days for all patients, including both Medicare and 
non-Medicare inpatients (less leave or pass days) by the number of 
total discharges for the hospital's most recent complete cost reporting 
period.
    In the LTCH PPS final rule published on May 7, 2004, we specified 
the procedure for calculating a hospital's inpatient average length of 
stay for purposes of classification as a LTCH. That is, if a patient's 
stay includes days of care furnished during two or more separate 
consecutive cost reporting periods, the total days of a patient's stay 
would be reported in the cost reporting period during which the patient 
is discharged. (69 FR 25705). Therefore, we have revised the 
regulations at Sec.  412.23(e)(3)(ii) to specify that, effective for 
cost reporting periods beginning on or after July 1, 2004, in 
calculating a hospital's average length of stay, if the days of a stay 
of an inpatient involves days of care furnished during two or more 
separate consecutive cost reporting periods, the total number of days 
of the stay are considered to have occurred in the cost reporting 
period during which the inpatient was discharged.
    Effective for cost reporting periods beginning on or after July 1, 
2004, but before July 1, 2005, a one-year exception is provided in the 
event some providers failed to meet the 25-day ALOS criteria due to 
this change in policy. In these cases, the fiscal intermediary (FI) 
will do an additional calculation to determine if these providers meet 
the average length of stay methodology found in Sec.  412.23(e)(3)(i).
    FIs verify that LTCHs meet the average length of stay requirements. 
We note that the inpatient days of a patient who is admitted to a LTCH 
without any remaining Medicare days of coverage, regardless of the fact 
that the patient is a Medicare beneficiary, will not be included in the 
above calculation. Because Medicare would not be paying for any of the 
patient's treatment, data on the patient's stay would not be included 
in the Medicare claims processing systems. In order for both covered 
and noncovered days of a LTCH hospitalization to be included, a patient 
admitted to the LTCH must have at least one remaining benefit day as 
described in Sec.  409.61 (68 FR 34123).
    The FI's determination of whether or not a hospital qualified as an 
LTCH is based on the hospital's discharge data from the hospital's most 
recent complete cost reporting period (Sec.  412.23(e)(3)) and is 
effective at the start of the hospital's next cost reporting period 
(Sec.  412.22(d)). However, if the hospital does not meet the average 
length of stay requirement as specified in Sec.  412.23(e)(2)(i) and 
(ii), the hospital may provide the intermediary with data indicating a 
change in the average length of stay by the same method for the period 
of at least 5 months of the immediately preceding 6-month period (69 FR 
25676). Our interpretation of the current regulations at Sec.  
412.23(e)(3) was to allow hospitals to submit data using a period of at 
least 5 months of the most recent data from the immediately preceding 
6-month period.
    As we stated in the IPPS final rule, published August 1, 2003, 
prior to the implementation of the LTCH PPS, we did rely on data from 
the most recently submitted cost report for purposes of calculating the 
average length of stay. The calculation to determine whether an acute 
care hospital qualifies for LTCH status was based on total days and 
discharges for LTCH inpatients. However, with the implementation of the 
LTCH PPS, with respect to the average length of stay specified under 
Sec.  412.23(e)(2)(i), we revised Sec.  412.23(e)(3)(i) to only count 
total days and discharges for Medicare inpatients (68 FR 45464). In 
addition, the average length of stay specified under Sec.  
412.23(e)(2)(ii) is calculated by dividing the total number of days for 
all patients, including both Medicare and non-Medicare inpatients (less 
leave or pass days) by the number of total discharges for the 
hospital's most recent complete cost reporting period. As we pointed 
out in the IPPS final rule, we are unable to capture the necessary data 
from our present cost reporting forms. We have, therefore, notified 
fiscal intermediaries and LTCHs that until the cost reporting forms are 
revised, for purposes of calculating the average length of stay, we 
will be relying upon census data extracted from MedPAR files that 
reflect each LTCH's cost reporting period (68 FR 45464). Requirements 
for hospitals seeking classification as LTCHs that have undergone a 
change in ownership, as described in Sec.  489.18, are set forth in 
Sec.  412.23(e)(3)(iv).
    In the May 7, 2004 final rule (69 FR 25709), we revised the 
regulations at Sec.  412.23(e) to clarify our longstanding policy by 
stating that a satellite facility or remote location that voluntarily 
separates from its parent LTCH in order to become an independent LTCH 
must first be considered a State-licensed and Medicare-certified 
hospital before seeking classification as a LTCH. In this regard, a 
satellite facility or remote location that voluntarily wishes to become 
an independent LTCH is required to demonstrate that it meets the 
average length of stay requirements, as specified under Sec.  
412.23(e)(2)(i) and (ii), based on discharges that occur on or after 
the effective date of its participation under Medicare as a separate 
hospital. Once the satellite facility or remote location is Medicare 
certified, then the hospital may consider using the length of stay data 
accumulated as a hospital to satisfy the classification requirements 
for becoming a ``specialty'' hospital (in this case, a LTCH). That is, 
the hospital must demonstrate that it has a Medicare inpatient length 
of stay of greater than 25 days. The data used to calculate the 
Medicare average length of stay is based on discharges that occur after 
the satellite facility or remote location has established itself as a 
separate participating hospital. However, there is an exception to this 
policy for satellite facilities and remote locations of LTCHs that are 
affected by Sec.  413.65(e)(3) and that were in existence prior to the 
effective date of the provider-based location requirements; that is, 
cost reporting periods beginning on or after July 1, 2003. We will 
assign new Medicare provider numbers to former satellite facilities or 
remote locations that have become certified as Medicare participating 
hospitals. However, if these newly certified hospitals should fail the 
provider-based locations requirements under Sec.  413.65(e)(3), they 
may be classified as LTCHs if they meet specific conditions. Under this 
exception, calculation of the ALOS for purposes of qualifying as a LTCH 
are based on discharge data during the 5 months of the immediate 6 
months preceding the facility's separation from the main hospital. This 
provision only applies to those facilities or locations that became 
subject to the revised provider-based location rules on July 1, 2003, 
and that seek classification as LTCHs for Medicare payment purposes.
2. Hospitals Excluded From the LTCH PPS
    The following hospitals are paid under special payment provisions, 
as described in Sec.  412.22(c) and, therefore, are not subject to the 
LTCH PPS rules:
     Veterans Administration hospitals.

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     Hospitals that are reimbursed under State cost control 
systems approved under 42 CFR part 403.
     Hospitals that are reimbursed in accordance with 
demonstration projects authorized under section 402(a) of Public Law 
90-248 (42 U.S.C. 1395b-1) or section 222(a) of Public Law 92-603 (42 
U.S.C. 1395b-1 (note)) (statewide all-payer systems, subject to the 
rate-of-increase test at section 1814(b) of the Act).
     Nonparticipating hospitals furnishing emergency services 
to Medicare beneficiaries.

C. Transition Period for Implementation of the LTCH PPS

    In the August 30, 2002 final rule, we provided for a 5-year 
transition period from reasonable cost-based reimbursement to fully 
Federal prospective payment for LTCHs (67 FR 56038). However, LTCHs 
have the option to elect to be paid based on 100 percent of the Federal 
prospective payment. During the 5-year period, two payment percentages 
are to be used to determine a LTCH's total payment under the PPS. The 
blend percentages are as follows:

------------------------------------------------------------------------
                                                        Reasonable cost-
 Cost reporting periods beginning      Prospective           based
            on or after              payment  Federal    reimbursement
                                     rate  percentage   rate  percentage
------------------------------------------------------------------------
October 1, 2002...................                 20                 80
October 1, 2003...................                 40                 60
October 1, 2004...................                 60                 40
October 1, 2005...................                 80                 20
October 1, 2006...................                100                  0
------------------------------------------------------------------------

D. Administrative Simplification Compliance Act and Health Insurance 
Portability and Accountability Act Compliance

    Claims submitted to Medicare must comply with both the 
Administrative Simplification Compliance Act (ASCA), Pub. L. 107-105, 
and Health Insurance Portability and Accountability Act (HIPAA). 
Section 3 of ASCA requires the Medicare Program, subject to subsection 
(h), to deny payment under Part A or Part B for any expenses for items 
or services ``for which a claim is submitted other than in an 
electronic form specified by the Secretary.'' Subsection (h) provides 
that the Secretary shall waive such denial in two types of cases and 
may also waive such denial ``in such unusual cases as the Secretary 
finds appropriate.'' (Also, see 68 FR 48805 (August 15, 2003).) Section 
3 of ASCA operates in the context of the Administrative Simplification 
provisions of HIPAA, which include, among other provisions, the 
transactions and code sets standards requirements codified as 45 CFR 
parts 160 and 162, subparts A and I through R (generally known as the 
Transactions Rule). The Transactions Rule requires covered entities, 
including covered providers, to conduct covered electronic transactions 
according to the applicable transactions and code sets standards.

II. Publication of Proposed Rulemaking

    On February 3, 2005, we published a proposed rule in the Federal 
Register (70 FR 5724-5805) that set forth the proposed annual update to 
the payment rates for the Medicare prospective payment system (PPS) for 
inpatient hospital services provided by long-term care hospitals 
(LTCHs) for the 2006 LTCH PPS rate year. (The annual update of the LTC-
DRG classifications and relative weights for FY 2006 remains linked to 
the annual adjustments of the acute care hospital inpatient DRG system, 
which will be published by August 1, and will be effective October 1, 
2004.)
    In the February 3, 2005 LTCH PPS proposed rule, we discussed the 
annual update of LTC-DRG classifications and relative weights and 
specified that they remain linked to the annual adjustments of the 
acute care hospital inpatient DRG system, which are based on the annual 
revisions to the International Classification of Diseases, Ninth 
Revision, Clinical Modification (ICD-9-CM) codes, effective each 
October 1. (See section V. of this preamble.)
    In that same proposed rule, we proposed to adopt new labor market 
area definitions for LTCHs which are based on the new Core-Based 
Statistical Areas (CBSAs), announced by the OMB late in 2000, which are 
effective for acute care inpatient hospitals October 1, 2004 in the FY 
2005 IPPS final rule. The CBSAs were adopted for acute care hospitals 
under the IPPS (See section V.C.1. of this preamble.)
    We also proposed revisions to the wage index, the proposed excluded 
hospital with capital market basket that would be applied to the 
current standard Federal rate to determine the prospective payment 
rates, the applicable adjustments to payment rates, the proposed 
outlier threshold, the transition period, and the proposed budget 
neutrality factor. (See sections VII. through X. of this preamble.)
    We proposed to clarify our notification policy in Sec.  
412.22(e)(3) and (h) to require that when a LTCH or satellite of a LTCH 
informs its FI of its co-located status, it also is required to include 
the name, address and provider numbers of the other co-located 
hospitals (that is, acute care hospitals, IRFs, and IPFs). 
Additionally, we proposed to clarify and modify the notification 
requirement under Sec.  412.532. (Special payment provisions for 
patients who are transferred to onsite providers and readmitted to a 
long-term care hospital.)
    We also proposed to extend the surgical DRG exception to the 
``under arrangements'' requirement of the 3-day or less interruption of 
stay policy at Sec.  412.531(b)(1)(ii)(A)(1) through the 2006 rate 
year, from July 1, 2005 through June 30, 2006. We also propose to 
extend the surgical DRG exception to the ``under arrangements'' 
requirement for the 3-day or less interruption of stay policy at Sec.  
412.531(b)(1)(i)(C) from July 1, 2005 through June 30, 2006.
    We discussed the recommendations made in the June 2004 Medicare 
Payment Advisory Commission (MedPAC) Report concerning the definition 
of LTCHs and our continuing monitoring efforts to evaluate the LTCH 
PPS, including a review of the QIO's role. (See section X. of this 
preamble.)
    Lastly, we analyzed the impact of the proposed changes in the 
proposed rule on Medicare expenditures and on Medicare-participating 
LTCHs and Medicare beneficiaries. (See section XII. of this preamble.)
    We received a total of 13 timely items of correspondence containing 
multiple comments on the proposed rule. The major issues addressed by 
the commenters included: the reduction of the fixed loss amount 
pertaining to high-cost outliers, notification in writing to fiscal 
intermediaries regarding co-located status, adoption of

[[Page 24172]]

the CBSA designations, extension of the surgical DRGs and MedPAC/
monitoring issues.
    Summaries of the public comments received and our responses to 
those comments are described below under the appropriate heading.

III. Summary of the Major Contents of This Final Rule

    In this final rule, we set forth the annual update to the payment 
rates for the Medicare 2006 LTCH PPS rate year and make other policy 
changes. The following is a summary of the major areas that we are 
addressing in this final rule:

A. Update Changes

     In section IV. of this preamble, we discuss the annual 
update of the LTC-DRG classifications and relative weights and specify 
that they remain linked to the annual adjustments of the acute care 
hospital inpatient DRG system, which are based on the annual revisions 
to the International Classification of Diseases, Ninth Revision, 
Clinical Modification (ICD-9-CM) codes effective each October 1.
     In sections V. through X. of this preamble, we specify the 
factors and adjustments used to determine the LTCH PPS rates that are 
applicable to the 2006 LTCH PPS rate year, including revisions to the 
wage index, the excluded hospital with capital market basket that will 
be applied to the current standard Federal rate to determine the 
prospective payment rates, the applicable adjustments to payments, the 
outlier threshold, the short-stay outlier policy for certain LTCHs, the 
budget neutrality factor, Core-Based Statistical Areas (CBSAs), and 
MedPAC recommendations/monitoring.

B. Policy Changes

    In section IV.8. of this preamble, we are extending the surgical 
DRG exception in the 3-day or less interruption of stay policy at Sec.  
412.531(b)(1)(ii)(A)(1) and Sec.  412.531(b)((1)(i)(C) through the 2006 
rate year.
    In section V.C.5. of this preamble, we clarify our notification 
policy for co-located LTCHs and satellites of LTCHs in Sec.  
412.22(e)(3) and (h)(5). We require LTCH HwHs and LTCH satellites to 
inform their FI of their co-located status and also provide relevant 
identifying information concerning other co-located hospitals.
    In section V.C.9. of this preamble, we clarify and modify existing 
notification requirements for the purpose of implementing Sec.  
412.532.

C. MedPAC Report

    In section X. of this preamble, we discuss the recommendations made 
in the June 2004 MedPAC Report concerning the definition of LTCHs and 
our continuing monitoring efforts to evaluate the LTCH PPS, including a 
review of the QIO's role.

D. Impact

    In section XII. of this preamble, we analyze the impact of the 
changes in this final rule on Medicare expenditures and on Medicare-
participating LTCHs and Medicare beneficiaries.

IV. Long-Term Care Diagnosis-Related Group (LTC-DRG) Classifications 
and Relative Weights

A. Background

    Section 123 of BBRA specifically requires that the PPS for LTCHs be 
a per discharge system with a DRG-based patient classification system 
reflecting the differences in patient resources and costs in LTCHs 
while maintaining budget neutrality. Section 307(b)(1) of the BIPA 
modified the requirements of section 123 of the BBRA by specifically 
requiring that the Secretary examine ``the feasibility and the impact 
of basing payment under such a system [the LTCH PPS] on the use of 
existing (or refined) hospital DRGs that have been modified to account 
for different resource use of LTCH patients as well as the use of the 
most recently available hospital discharge data.''
    In accordance with section 307(b)(1) of BIPA and Sec.  412.515 of 
our existing regulations, the LTCH PPS uses information from LTCH 
patient records to classify patient cases into distinct LTC-DRGs based 
on clinical characteristics and expected resource needs. The LTC-DRGs 
used as the patient classification component of the LTCH PPS correspond 
to the hospital inpatient DRGs in the IPPS. We apply weights to the 
existing hospital inpatient DRGs to account for the difference in 
resource use by patients exhibiting the case complexity and multiple 
medical problems characteristic of LTCHs.
    In a departure from the IPPS, we use low volume LTC-DRGs (less than 
25 LTCH cases) in determining the LTC-DRG weights, since LTCHs do not 
typically treat the full range of diagnoses as do acute care hospitals. 
In order to deal with the large number of low volume DRGs (all DRGs 
with fewer than 25 cases), we group low volume DRGs into 5 quintiles 
based on average charge per discharge. (A listing of the current 
composition of low volume quintiles used in determining the FY 2005 
LTC-DRG relative weights appears in the FY 2005 IPPS final rule (August 
11, 2004; 69 FR 48986-48989).) We also take into account adjustments to 
payments for cases in which the stay at the LTCH is five-sixths of the 
geometric average length of stay and classify these cases as short-stay 
outlier cases. (A detailed discussion of the application of the Lewin 
Group model that was used to develop the LTC-DRGs appears in the August 
30, 2002 LTCH PPS final rule at 67 FR 55978.)

B. Patient Classifications Into DRGs

    Generally, under the LTCH PPS, Medicare payment is made at a 
predetermined specific rate for each discharge; that payment varies by 
the LTC-DRG to which a beneficiary's stay is assigned. Cases are 
classified into LTC-DRGs for payment based on the following six data 
elements:
    (1) Principal diagnosis.
    (2) Up to eight additional diagnoses.
    (3) Up to six procedures performed.
    (4) Age.
    (5) Sex.
    (6) Discharge status of the patient.
    As indicated in the August 30, 2002 LTCH PPS final rule, upon the 
discharge of the patient from a LTCH, the LTCH must assign appropriate 
diagnosis and procedure codes from the most current version of the 
International Classification of Diseases, Ninth Edition, Clinical 
Modification (ICD-9-CM). HIPAA, Pub. L. 104-191, transactions and code 
sets standards regulations (45 CFR parts 160 and 162) require that no 
later than October 16, 2003, all covered entities must comply with the 
applicable requirements of subparts A and I through R of part 162. 
Among other requirements, those provisions direct covered entities that 
electronically transmit institutional health care claim or equivalent 
encounter information, for instance, to use the ASC X12N 837 Health 
Care Claims: Institutional, Volumes 1 and 2, version 4010, and the 
applicable standard medical data code sets. (See 45 CFR 162.1002 and 45 
CFR 162.1102.)
    Medicare fiscal intermediaries enter the clinical and demographic 
information into their claims processing systems and subject this 
information to a series of automated screening processes called the 
Medicare Code Editor (MCE). These screens are designed to identify 
cases that require further review before assignment into a DRG can be 
made. During this process, the following types of cases are selected 
for further development:
     Cases that are improperly coded. (For example, diagnoses 
are shown that are inappropriate, given the sex of the

[[Page 24173]]

patient. Code 68.6, Radical abdominal hysterectomy, would be an 
inappropriate code for a male.)
     Cases including surgical procedures not covered under 
Medicare. (For example, organ transplant in a non-approved transplant 
center.)
     Cases requiring more information. (For example, ICD-9-CM 
codes are required to be entered at their highest level of specificity. 
There are valid 3-digit, 4-digit, and 5-digit codes. That is, code 
136.3, Pneumocystosis, contains all appropriate digits, but if it is 
reported with either fewer or more than 4 digits, the claim will be 
rejected by the MCE as invalid.)
     Cases with principal diagnoses that do not usually justify 
admission to the hospital. (For example, code 437.9, unspecified 
cerebrovascular disease. While this code is valid according to the ICD-
9-CM coding scheme, a more precise code should be used for the 
principal diagnosis.)
    After screening through the MCE, each claim will be classified into 
the appropriate LTC-DRG by the Medicare LTCH GROUPER. As indicated in 
August 30, 2002 LTCH PPS final rule, the Medicare GROUPER, which is 
used under the LTCH PPS, is specialized computer software, and is the 
same GROUPER software program used under the IPPS. The GROUPER software 
was developed as a means of classifying each case into a DRG on the 
basis of diagnosis and procedure codes and other demographic 
information (age, sex, and discharge status). Following the LTC-DRG 
assignment, the Medicare fiscal intermediary determines the prospective 
payment by using the Medicare PRICER program, which accounts for 
hospital-specific adjustments. As provided for under the IPPS, we 
provide an opportunity for the LTCH to review the LTC-DRG assignments 
made by the fiscal intermediary and to submit additional information 
within a specified timeframe (Sec.  412.513(c)).
    The GROUPER is used both to classify past cases in order to measure 
relative hospital resource consumption to establish the DRG weights and 
to classify current cases for purposes of determining payment. The 
records for all Medicare hospital inpatient discharges are maintained 
in the MedPAR file. The data in this file are used to evaluate possible 
DRG classification changes and to recalibrate the DRG weights during 
our annual update under both the IPPS (Sec.  412.60(e)) and the LTCH 
PPS (Sec.  412.517). As discussed in greater detail below in sections 
III.D. and E. of this preamble, with the implementation of section 
503(a) of the MMA, there is the possibility that one feature of the 
GROUPER software program may be updated twice during a Federal fiscal 
year (October 1 and April 1) as required by the statute for the IPPS 
(69 FR 48954-48957), August 11, 2004). Specifically, ICD-9 diagnosis 
and procedure codes for new medical technology may be created and added 
to existing DRGs in the middle of the Federal fiscal year on April 1. 
This policy change will have no effect, however, on the LTC-DRG 
relative weights which will continue to be updated only once a year 
(October 1), nor will there be any impact on Medicare payments under 
the LTCH PPS.

C. Organization of DRGs

    The DRGs are organized into 25 Major Diagnostic Categories (MDCs), 
most of which are based on a particular organ system of the body; the 
remainder involve multiple organ systems (such as MDC 22, Burns). 
Accordingly, the principal diagnosis determines MDC assignment. Within 
most MDCs, cases are then divided into surgical DRGs and medical DRGs. 
Surgical DRGs are assigned based on a surgical hierarchy that orders 
operating room (O.R.) procedures or groups of O.R. procedures by 
resource intensity. The GROUPER does not recognize all ICD-9-CM 
procedure codes as procedures that affect DRG assignment, that is, 
procedures which are not surgical (for example, EKG), or minor surgical 
procedures (for example, 86.11, Biopsy of skin and subcutaneous 
tissue).
    The medical DRGs are generally differentiated on the basis of 
diagnosis. Both medical and surgical DRGs may be further differentiated 
based on age, sex, discharge status, and presence or absence of 
complications or comorbidities (CC). We note that CCs are defined by 
certain secondary diagnoses not related to, or not inherently a part 
of, the disease process identified by the principal diagnosis. (For 
example, the GROUPER would not recognize a code from the 800.0x series, 
Skull fracture, as a CC when combined with principal diagnosis 850.4, 
Concussion with prolonged loss of consciousness, without return to 
preexisting conscious level.) In addition, we note that the presence of 
additional diagnoses does not automatically generate a CC, as not all 
DRGs recognize a comorbid or complicating condition in their 
definition. (For example, DRG 466, Aftercare without History of 
Malignancy as Secondary Diagnosis, is based solely on the principal 
diagnosis, without consideration of additional diagnoses for DRG 
determination.)
    In its June 2000 Report to Congress, MedPAC recommended that the 
Secretary ``* * * improve the hospital inpatient prospective payment 
system by adopting, as soon as practicable, diagnosis-related group 
refinements that more fully capture differences in severity of illness 
among patients,'' (Recommendation 3A, p. 63). We have determined it is 
not practical at this time to develop a refinement to inpatient 
hospital DRGs based on severity due to time and resource requirements. 
However, this does not preclude us from development of a severity-
adjusted DRG refinement in the future. That is, a refinement to the 
list of comorbidities and complications could be incorporated into the 
existing DRG structure. It is also possible that a more comprehensive 
severity adjusted structure may be created if a new code set is 
adopted. That is, if ICD-9-CM is replaced by ICD-10-CM (for diagnostic 
coding) and ICD-10-PCS (for procedure coding) or by other code sets, a 
severity concept may be built into the resulting DRG assignments. Of 
course any change to the code set would be adopted through the process 
established in the HIPAA Administrative Simplification Standards 
provisions.

D. Update of LTC-DRGs

    For FY 2005, the LTC-DRG patient classification system is based on 
LTCH data from the FY 2003 MedPAR file, which contained hospital bills 
data from the March 2004 update. The patient classification system 
consists of 520 DRGs that formed the basis of the FY 2005 LTCH PPS 
GROUPER. The 520 LTC-DRGs included two ``error DRGs.'' As in the IPPS, 
we include two error DRGs in which cases that cannot be assigned to 
valid DRGs will be grouped. These two error DRGs are DRG 469 (Principal 
Diagnosis Invalid as a Discharge Diagnosis) and DRG 470 (Ungroupable). 
(See the FY 2005 IPPS FY 2005 final rule (69 FR 48982-49000).) The 
other 518 LTC-DRGs are the same DRGs used in the IPPS GROUPER for FY 
2005 (Version 22.0).
    In the past, in the health care industry, annual changes to the 
ICD-9-CM codes were effective for discharges occurring on or after 
October 1 each year. Thus, the manual and electronic versions of the 
GROUPER software, which are based on the ICD-9-CM codes, were also 
revised annually and effective for discharges occurring on or after 
October 1 each year. As discussed earlier, the patient classification 
system for the LTCH PPS (LTC-DRGs) is based on the IPPS patient 
classification system

[[Page 24174]]

(CMS-DRGs), which had historically been updated annually and was 
effective for discharges occurring on or after October 1 through 
September 30 each year.
    Recently, the ICD-9-CM coding update process has been revised as 
discussed in greater detail in the FY 2005 IPPS final rule (69 FR 
48954). Specifically, section 503(a) of the MMA includes a requirement 
for updating ICD-9-CM codes twice a year instead of the current process 
of annual updates on October 1 of each year. This requirement is 
included as part of the amendments to the Act relating to recognition 
of new medical technology under the IPPS. Section 503(a) of the MMA 
amended section 1886(d)(5)(K) of the Act by adding a new clause (vii) 
which states that ``the Secretary shall provide for the addition of new 
diagnosis and procedure codes by April 1 of each year, but the addition 
of such codes shall not require the Secretary to adjust the payment (or 
diagnosis-related group classification) * * * until the fiscal year 
that begins after such date.'' This requirement will improve the 
recognition of new technologies under the IPPS by accounting for the 
GROUPER software at an earlier date. Despite the fact that aspects of 
the GROUPER software may be updated to recognize any new technology 
codes, there will be no impact on either LTC-DRG assignments or 
payments under the LTCH PPS. That is, no new LTC-DRGs will be created 
or deleted and the relative weights will remain the same.
    When we implemented the LTCH PPS, we established that the DRG-based 
patient classification system for the LTCH PPS would use the same 
GROUPER software as the IPPS (August 30, 2002, 67 FR 55954). IPPS 
updates occur each October 1, as set forth in Sec.  412.8(b). In the 
June 6, 2003 LTCH PPS final rule (68 FR 34125), when we revised the 
annual rate update for the LTCH PPS to a July 1 through June 30 
schedule, we specified that updates of the LTC-DRGs and re-weighting of 
LTC-DRG weights would remain linked to the IPPS GROUPER update which 
functions on an October 1 through September 30 schedule. Therefore, 
under this existing policy, during a LTCH PPS rate year, two versions 
of the GROUPER software are utilized for purposes of LTC-DRG creation 
or deletion and relative weight assignment during the LTCH PPS rate 
year that is established each July 1. The updated LTC-DRG 
classifications and relative weights in the GROUPER that were finalized 
on October 1, preceding the beginning of a LTCH rate year on July 1, 
are in effect with the new Federal rate from July 1 through September 
30. On October 1, the updated version of the GROUPER with respect to 
the LTC-DRG classifications and relative weights will be used from that 
October 1 through June 30.
    The updated DRGs and GROUPER software, used by both the IPPS and 
the LTCH PPS, are based on the ICD-9-CM codes updated. (The use of the 
ICD-9-CM codes in this manner is consistent with current usage and the 
HIPAA regulations.) As noted above, historically, these codes have been 
published annually in the IPPS proposed rule and final rule. Consistent 
with historical approaches taken in the IPPS and LTCH PPS, October 1 
will continue to be the effective date of revisions to the CMS DRGs and 
the LTC-DRGs. However, because of the statutory changes under Section 
503(a) of the MMA, new ICD-9-CM codes may become effective on both 
October 1 and April 1. In the past, the new or revised ICD-9-CM codes 
were not used by the industry for either the IPPS or the LTCH PPS until 
the beginning of the Federal fiscal year (effective for discharges 
occurring on or after October 1). Beginning with FY 2005, as we 
explained above, under the authority of Section 503(a) of the MMA which 
amends section 1886(d)(5)(K) of the Act, there is the potential for new 
ICD-9-CM codes to become effective both at the beginning of the Federal 
fiscal year, October 1, and also on April 1. As we have already noted, 
a full discussion along with a description of the implementation of 
this provision, was published in the Federal Register in the FY 2005 
IPPS final rule (69 FR 48954). We want to emphasize, however, that 
although it was established that the IPPS GROUPER, which is also used 
by the LTCH PPS, could be calibrated with respect to ICD-9-CM codes two 
times each year (October and April), as necessary, to allow the 
inclusion of new codes reflecting new medical technologies and 
procedures for patients in acute care hospitals. The inclusion of these 
new codes in April would not result in the creation or deletion of LTC-
DRGs or changes in the relative weights and, therefore, would not 
affect the DRG assigned by the GROUPER for LTC-DRGs, nor payments under 
the LTCH PPS.
    As noted above, updates to the GROUPER for both the IPPS and the 
LTCH PPS (with respect to relative weights and the creation or deletion 
of DRGs) are made in the annual IPPS proposed and final rules and are 
effective each October 1. We explained in the FY 2005 IPPS final rule 
(69 FR 48956), that since we do not publish a mid-year IPPS rule, April 
1 code updates discussed above will not be published in a mid-year IPPS 
rule. Rather, we will assign any new diagnostic or procedure codes to 
the same DRG in which its predecessor code was assigned, so that there 
will be no impact on the DRG assignment. Any proposed coding updates 
will be available through the websites indicated in the FY 2005 IPPS 
final rule (69 FR 48956) and provided below in section III.E.2. of this 
preamble and through the Coding Clinic for ICD-9-CM. Publishers and 
software vendors currently obtain code changes through these sources in 
order to update their code books and software systems. If new codes are 
implemented on April 1, revised code books and software systems, 
including the GROUPER software program, will be necessary because we 
must use current ICD-9-CM codes. Therefore, for purposes of the LTCH 
PPS, since each ICD-9-CM code must be included in the GROUPER algorithm 
to classify each case into a LTC-DRG, the GROUPER software program used 
under the LTCH PPS would need be revised to accommodate any new codes.
    As mentioned above, however, an April 1 update of the ICD-9-CM 
codes would only result in a change to the CMS DRG GROUPER software 
program effective April 1, so that it will recognize the new technology 
code and assign it to the appropriate DRG, but will not result in a 
change to the relative weights used under either the IPPS or the LTCH 
PPS, respectively. Consistent with our current practice, any changes to 
the DRGs or relative weights will be made at the beginning of the next 
Federal fiscal year (October 1).
    As specified in the May 7, 2004 LTCH PPS final rule (69 FR 25674) 
and the FY 2005 IPPS final rule (69 FR 48982), and discussed above, we 
annually update to the LTCH PPS payment rates effective from July 1 
through June 30 each year. As a result, the LTCH PPS currently uses two 
GROUPER software programs during a LTCH PPS rate year (July 1 through 
June 30): one GROUPER for 3 months (from July 1 through September 30); 
and an updated GROUPER for 9 months (from October 1 through June 30). 
The need to use two GROUPERs was based upon the October 1 effective 
date of the updated ICD-9-CM coding system. As previously discussed, 
new ICD-9-CM codes may result in changes to the structure of the DRGs 
caused by mapping the new codes to existing DRGs. In order for the 
industry to be on the same schedule (for both the IPPS and the LTCH 
PPS) for the use of the most current ICD-9-CM codes, it had been 
necessary for us to apply two

[[Page 24175]]

GROUPER programs under the LTCH PPS.
    With the potential addition of new codes effective on April 1, the 
LTCH PPS may now use three GROUPER programs during the LTCH PPS rate 
year (July 1 through June 30), if new diagnosis and procedure codes are 
added on April 1. Specifically, one GROUPER (GROUPER 1) would be used 
for the first 3 months (from July 1 through September 30); a second 
GROUPER (GROUPER 2) would be used for the next 6 months (from October 1 
through March 31); and the third GROUPER (GROUPER 3) would be used for 
the last 3 months (from April 1 through June 30). The need to use three 
GROUPER software programs during a single LTCH PPS rate year in the 
event of an April 1 ICD-9-CM code update is because it is necessary to 
use the updated ICD-9-CM codes (as explained above) in order to 
classify each case into a LTC-DRG for payment purposes. The change from 
GROUPER 1 to GROUPER 2 (on October 1) would coincide with the annual 
update to the LTC-DRGs and relative weights under Sec.  412.517, which 
would be effective for that entire Federal fiscal year, just as it has 
been since we implemented the LTCH PPS. The change from GROUPER 2 to 
GROUPER 3 (on April 1) would only update the CMS DRG structure by 
mapping the new code to an existing DRG, and would not result in the 
addition or deletion of any DRGs nor would it result in a change to the 
LTC-DRG relative weights. If no new diagnoses or procedure codes are 
added on April 1, however, there would be no need to update the GROUPER 
and we would continue to use 2 GROUPERS during the course of a LTCH PPS 
rate year as is currently done. But even with an April 1 update to the 
ICD-9-CM codes (and consequently the GROUPER software), only two sets 
of LTC-DRG relative weights will be used during a LTCH PPS rate year 
(July 1 through June 30), one set from July 1 though September 30 and a 
second set from October 1 through June 30, just as we have done since 
we moved the annual LTCH PPS update to July 1 (effective beginning July 
1, 2003).
    As we discussed in the FY 2005 IPPS final rule (69 FR 48956), in 
implementing section 503(a) of the MMA, there will only be an April 1 
update if new technology codes are requested and approved. In that same 
IPPS final rule, we specified that there are no new codes for April 1, 
2005 implementation. However, if new codes had been approved for April 
1, 2005 implementation, the subsequent changes to the DRG structure 
(that is, the mapping of the new codes to existing DRGs), but not to FY 
2005 LTC-DRG relative weights and, consequently, LTCH PPS payment 
rates, would have resulted in the use of a third GROUPER during the 
2005 LTCH PPS rate year. However, as noted above, since there are no 
new codes for April 1, 2005 implementation, and the next update to the 
ICD-9-CM coding system will not occur until October 1, 2005, only two 
GROUPER software programs will be used during the 2005 LTCH PPS rate 
year (July 1, 2004 through June 30, 2005): one GROUPER from July 1, 
2004 through September 30, 2004, and a second GROUPER from October 1, 
2004 through June 30, 2005.
    Discharges beginning on or after October 1, 2004 and before October 
1, 2005 (Federal FY 2005) are using Version 22.0 of the GROUPER 
software for both the IPPS and the LTCH PPS. Consistent with our 
current practice, any changes to the DRGs or relative weights will be 
made at the beginning of the Federal fiscal year (October 1). We will 
notify LTCHs of any revised LTC-DRG relative weights based on the final 
DRGs and the applicable GROUPER version for the IPPS that will be 
effective October 1, 2005. The proposed changes to the LTC-DRGs and 
relative weights based on the proposed Version 23.0 GROUPER, which 
would be effective beginning with discharges occurring on or after 
October 1, 2005, are discussed in the May 4, 2005 IPPS proposed rule. 
Furthermore, as discussed above, we would notify LTCHs of any revisions 
to the CMS GROUPER that would be implemented April 1, 2006.

E. ICD-9-CM Coding System

1. Uniform Hospital Discharge Data Set (UHDDS) Definitions
    Because the assignment of a case to a particular LTC-DRG will help 
determine the amount that will be paid for the case, it is important 
that the coding is accurate. Classifications and terminology used in 
the LTCH PPS are consistent with the ICD-9-CM and the UHDDS, as 
recommended to the Secretary by the National Committee on Vital and 
Health Statistics (``Uniform Hospital Discharge Data: Minimum Data Set, 
National Center for Health Statistics, April 1980'') and as revised in 
1984 by the Health Information Policy Council (HIPC) of the U.S. 
Department of Health and Human Services.
    We point out that the ICD-9-CM coding terminology and the 
definitions of principal and other diagnoses of the UHDDS are 
consistent with the requirements of the HIPAA Administrative 
Simplification Act of 1996 (45 CFR part 162). Furthermore, the UHDDS 
has been used as a standard for the development of policies and 
programs related to hospital discharge statistics by both governmental 
and nongovernmental sectors for over 30 years. In addition, the 
following definitions (as described in the 1984 Revision of the UHDDS, 
approved by the Secretary of Health and Human Services for use starting 
January 1986) are requirements of the ICD-9-CM coding system, and have 
been used as a standard for the development of the CMS-DRGs:
     Diagnoses are defined to include all diagnoses that affect 
the current hospital stay.
     Principal diagnosis is defined as the condition 
established after study to be chiefly responsible for occasioning the 
admission of the patient to the hospital for care.
     Other diagnoses (also called secondary diagnoses or 
additional diagnoses) are defined as all conditions that coexist at the 
time of admission, that develop subsequently, or that affect the 
treatment received or the length of stay or both. Diagnoses that relate 
to an earlier episode of care that have no bearing on the current 
hospital stay are excluded.
     All procedures performed will be reported. This includes 
those that are surgical in nature, carry a procedural risk, carry an 
anesthetic risk, or require specialized training.
    We provide LTCHs with a 60-day window after the date of the notice 
of the initial LTC-DRG assignment to request review of that assignment. 
Additional information may be provided by the LTCH to the fiscal 
intermediary as part of that review.
2. Maintenance of the ICD-9-CM Coding System
    The ICD-9-CM Coordination and Maintenance (C&M) Committee is a 
Federal interdepartmental committee, co-chaired by the National Center 
for Health Statistics (NCHS) and CMS, that is, charged with maintaining 
and updating the ICD-9-CM system. The C&M Committee is jointly 
responsible for approving coding changes, and developing errata, 
addenda, and other modifications to the ICD-9-CM to reflect newly 
developed procedures and technologies and newly identified diseases. 
The C&M Committee is also responsible for promoting the use of Federal 
and non-Federal educational programs and other communication techniques 
with a view toward standardizing coding applications and

[[Page 24176]]

upgrading the quality of the classification system.
    The NCHS has lead responsibility for the ICD-9-CM diagnosis codes 
included in the Tabular List and Alphabetic Index for Diseases, while 
CMS has lead responsibility for the ICD-9-CM procedure codes included 
in the Tabular List and Alphabetic Index for Procedures.
    The C&M Committee encourages participation by health-related 
organizations in the above process and holds public meetings for 
discussion of educational issues and proposed coding changes twice a 
year at the CMS Central Office located in Baltimore, Maryland. The 
agenda and dates of the meetings can be accessed on our Web site at: 
http://www.cms.gov/paymentsystems/icd9 paymentsystems/icd9.
    As discussed above, section 503(a) of the MMA includes a 
requirement for updating ICD-9-CM codes twice a year instead of the 
current process of annual updates on October 1 of each year. This 
requirement will improve the recognition of new technologies under the 
IPPS by accounting for them in the GROUPER software at an earlier date. 
Because this new statutory requirement could have a significant impact 
on health care providers, coding staff, publishers, system maintainers, 
and software systems, among others, we solicited comments on our 
proposed provisions to implement this requirement as part of the FY 
2005 IPPS proposed rule (69 FR 28220). We responded to comments and 
published our new policy regarding the updating of ICD-9-CM codes in 
the FY 2005 IPPS final rule (69 FR 48954-48957).
    While this new requirement states that the Secretary shall not 
adjust the payment of the DRG classification for any codes created for 
use on April 1, DRG software and other systems will have to be updated 
in order to recognize and accept the new codes. Because, as discussed 
above, the LTC-DRGs are the same DRGs used under the IPPS, this means 
that the Medicare GROUPER software program used under both the IPPS and 
the LTCH PPS would need to be revised to reflect ICD-9-CM codes, if any 
coding changes were implemented on April 1. Furthermore, although the 
CMS GROUPER software used under both the IPPS and the LTCH PPS would 
need to be revised to accommodate the new codes effective April 1, 
there would be no additions or deletions of DRGs nor would the relative 
weights used under the IPPS and the LTCH PPS, respectively, be changed 
until the annual update October 1 (to the extent that those changes are 
warranted), just as they have been historically updated. As the LTCH 
PPS is based on the IPPS, we will adopt the same approach used under 
the IPPS for potential April 1 ICD-9-CM coding changes. That is, we 
will assign any new diagnosis codes or procedure codes to the same DRG 
in which its predecessor code was assigned, so there will be no DRG 
impact in terms of potential DRG assignment until the following October 
1. We will maintain the current method of publicizing any new code 
changes, as noted below. Current addendum and code title information is 
published on the CMS Web page at: http://www.cms.hhs.gov/paymentsystem/icd9 paymentsystem/icd9. Summary tables showing new, revised, and deleted 
code titles are also posted on the following CMS Web page: http://www.cms.hhs.gov/medlearn/icd9code.asp. Information on ICD-9-CM 
diagnosis codes can be found at http://www.cdc.gov/nchs/icd9.htm. 
Information on new, revised, and deleted ICD-9-CM codes is also 
available in the AHA publication Coding Clinic for ICD-9-CM. AHA also 
distributes information to publishers and software vendors. We also 
send copies of all ICD-9-CM coding changes to our contractors for use 
in updating their systems and providing education to providers.
    If the April 1 changes are made to ICD-9-CM diagnosis or procedure 
codes, LTCHs will be required to obtain the new codes, coding books, or 
encoder updates, and make other system changes in order to capture and 
report the new codes. We indicated in the IPPS final rule that we were 
aware of the additional burden this will have on health care providers.
    It should be noted that any new codes created for April 1 
implementation will be limited to those diagnosis and procedure code 
revisions primarily needed to describe new technologies and medical 
services. However, we reiterate that the process for discussing updates 
to the ICD-9-CM has been an open process through the ICD-9-CM C&M 
Committee since 1995. Any requestor who makes a clear and convincing 
case for the need to update ICD-9-CM codes for purposes of the IPPS new 
technology add-on payment process through an April 1 update will be 
given the opportunity to present the merits of their proposed new code.
    To reiterate, at the October 2004 C&M Committee meeting, no new 
codes were proposed for update on April 1, 2005. While no DRG additions 
or deletions or changes to relative weights will occur prior to the 
usual October 1 update, in the event any new codes had been created to 
describe new technologies and medical services through an April 1, 2005 
update, under our policy, LTCH systems would have been expected to 
recognize and report those new codes through the channels as described 
above in this section.
    As discussed above, the ICD-9-CM coding changes that have been 
adopted by the C&M Committee could become effective either at the 
beginning of each Federal fiscal year, October 1, or, in the case of 
codes created to capture new technology, April 1 of each year. Coders 
will be expected to use the most current updated ICD-9-CM codes, as 
updated. Because we do not publish a mid-year IPPS rule, the currently 
accepted avenues of information dissemination will be used to inform 
all ICD-9-CM code users of any changes to the coding system. These 
avenues were described above in section IV.D. of this preamble and have 
been discussed at length in the FY 2005 IPPS final rule (69 FR 48956). 
Coders in LTCHs using the updated ICD-9-CM coding system will be on the 
same schedule as the rest of the health care industry. In the past, the 
updated ICD-9-CM was not available for use until October 1 of each 
year.
    Therefore, because the LTCH PPS and the IPPS uses the identical 
GROUPER software, the LTCH PPS will be directly affected by the 
statutory mandates directed at the IPPS, published in section 503(a) of 
the MMA. (We note that there is no statutory requirement in the LTCH 
PPS to make additional payments for new technology.) The practical 
effect of this provision is that the GROUPER software must accept new 
ICD-9 codes reflecting the incorporation of new technologies into 
inpatient treatment at an acute care hospital prior to the scheduled 
annual update of the GROUPER software. While DRG assignments would not 
change from October 1 through September 30, it is possible that there 
could be additional new ICD-9-CM diagnosis and procedure codes during 
that time, which would be assigned to predecessor DRGs (as described 
above). For both the IPPS and LTCH coders, it is possible that there 
will be ICD-9-CM codes in effect from October 1 through March 31, with 
additional ICD-9-CM codes in effect from April 1 through September 30. 
Presently, as there were no coding changes suggested for an April 1, 
2005 update, the ICD-9-CM coding set implemented on October 1, 2004 
will continue through September 30, 2005 (FY 2005).
    Of particular note to LTCHs are the invalid diagnosis codes (Table 
6C) and the invalid procedure codes (Table 6D) located in the annual 
proposed and final rules for the IPPS. Claims with invalid

[[Page 24177]]

codes are not processed by the Medicare claims processing system.
3. Coding Rules and Use of ICD-9-CM Codes in LTCHs
    We emphasize the need for proper coding by LTCHs. Inappropriate 
coding of cases can adversely affect the uniformity of cases in each 
LTC-DRG and produce inappropriate weighting factors at recalibration. 
We continue to urge LTCHs to focus on improved coding practices. 
Because of concerns raised by LTCHs concerning correct coding, we have 
asked the American Hospital Association (AHA) to provide additional 
clarification or instruction on proper coding in the LTCH setting. The 
AHA will provide this instruction via their established process of 
addressing questions through their publication ``Coding Clinic for ICD-
9-CM.'' Written questions or requests for clarification may be 
addressed to the Central Office on ICD-9-CM, American Hospital 
Association, One North Franklin, Chicago, IL 60606. A form for the 
question(s) is available to be downloaded and mailed on AHA's Web site 
at: http://www.ahacentraloffice.org. In addition, current coding 
guidelines are available at the National Center for Health Statistics 
(NCHS) Web site: http://www.cdc.gov/nchs.icd9.htm.
    In conjunction with the cooperating parties (AHA, the American 
Health Information Management Association (AHIMA), and NCHS), we 
reviewed actual medical records and are concerned about the quality of 
the documentation under the LTCH PPS, as was the case at the beginning 
of the IPPS. We fully believe that, with experience, the quality of the 
documentation and coding will improve, just as it did for the IPPS. As 
noted above, the cooperating parties have plans to assist their members 
with improvement in documentation and coding issues for the LTCHs 
through specific questions and coding guidelines. The importance of 
good documentation is emphasized in the revised ICD-9-CM Official 
Guidelines for Coding and Reporting: ``A joint effort between the 
attending physician and coder is essential to achieve complete and 
accurate documentation, code assignment, and reporting of diagnoses and 
procedures. The importance of consistent, complete documentation in the 
medical record cannot be overemphasized. Without such documentation, 
the application of all coding guidelines is a difficult, if not 
impossible, task.'' (Coding Clinic for ICD-9-CM, Fourth Quarter 2002, 
page 115.)
    To improve medical record documentation, LTCHs should be aware that 
if the patient is being admitted for continuation of treatment of an 
acute or chronic condition, guidelines at Section I.B.10 of the Coding 
Clinic for ICD-9-CM, Fourth Quarter 2002 (page 129) are applicable 
concerning selection of principal diagnosis. To clarify coding advice 
issued in the August 30, 2002 final rule (67 FR 55979), we would like 
to point out that at Guideline I.B.12, Late Effects, a late effect is 
considered to be the residual effect (condition produced) after the 
acute phase of an illness or injury has terminated (Coding Clinic for 
ICD-9-CM, Fourth Quarter 2002, page 129). Regarding whether a LTCH 
should report the ICD-9-CM code(s) for an unresolved acute condition 
instead of the code(s) for late effect of rehabilitation, we emphasize 
that each case must be evaluated on its unique circumstances and coded 
appropriately. Depending on the documentation in the medical record, 
either a code reflecting the acute condition or rehabilitation could be 
appropriate in a LTCH.
    Since implementation of the LTCH PPS, our Medicare fiscal 
intermediaries have been conducting training and providing assistance 
to LTCHs in correct coding. We have also issued manuals containing 
procedures as well as coding instructions to LTCHs and fiscal 
intermediaries. We will continue to conduct such training and provide 
guidance on an as-needed basis. We also refer readers to the detailed 
discussion on correct coding practices in the August 30, 2002 LTCH PPS 
final rule (67 FR 55979). Additional coding instructions and examples 
will be published in Coding Clinic for ICD-9-CM.

F. Method for Updating the LTC-DRG Relative Weights

    As discussed in the May 7, 2004 LTCH PPS final rule (68 FR 25681), 
under the LTCH PPS, each LTCH will receive a payment that represents an 
appropriate amount for the efficient delivery of care to Medicare 
patients. The system must be able to account adequately for each LTCH's 
case-mix in order to ensure both fair distribution of Medicare payments 
and access to adequate care for those Medicare patients whose care is 
more costly. Therefore, in accordance with Sec.  412.523(c), we adjust 
the standard Federal PPS rate by the LTC-DRG relative weights in 
determining payment to LTCHs for each case.
    Under this payment system, relative weights for each LTC-DRG are a 
primary element used to account for the variations in cost per 
discharge and resource utilization among the payment groups (Sec.  
412.515). To ensure that Medicare patients who are classified to each 
LTC-DRG have access to an appropriate level of services and to 
encourage efficiency, we calculate a relative weight for each LTC-DRG 
that represents the resources needed by an average inpatient LTCH case 
in that LTC-DRG. For example, cases in a LTC-DRG with a relative weight 
of 2 will, on average, cost twice as much as cases in a LTC-DRG with a 
weight of 1.
    As we discussed in the FY 2005 IPPS final rule (69 FR 48982), the 
LTC-DRG relative weights effective under the LTCH PPS for Federal FY 
2005 were calculated using the March 2004 update of FY 2003 MedPAR data 
and Version 22.0 of the CMS GROUPER software. We use total days and 
total charges in the calculation of the LTC-DRG relative weights.
    By nature, LTCHs often specialize in certain areas, such as 
ventilator-dependent patients and rehabilitation and wound care. Some 
case types (DRGs) may be treated, to a large extent, in hospitals that 
have, from a perspective of charges, relatively high (or low) charges. 
Distribution of cases with relatively high (or low) charges in specific 
LTC-DRGs has the potential to inappropriately distort the measure of 
average charges. To account for the fact that cases may not be randomly 
distributed across LTCHs, we use a hospital-specific relative value 
method to calculate relative weights. We believe this method removes 
this hospital-specific source of bias in measuring average charges. 
Specifically, we reduce the impact of the variation in charges across 
providers on any particular LTC-DRG relative weight by converting each 
LTCH's charge for a case to a relative value based on that LTCH's 
average charge. (See the FY 2005 IPPS final rule (69 FR 48984) for 
further information on the hospital-specific relative value 
methodology.)
    In order to account for LTC-DRGs with low volume (that is, with 
fewer than 25 LTCH cases), we grouped those low volume LTC-DRGs into 
one of five categories (quintiles) based on average charges, for the 
purposes of determining relative weights. For FY 2005 based on the FY 
2003 MedPAR data, we identified 172 LTC-DRGs that contained between 1 
and 24 cases. This list of low volume LTC-DRGs was then divided into 
one of the five low volume quintiles, each containing a minimum of 34 
LTC-DRGs (172/5 = 34 with 2 LTC-DRG as a remainder). Each of the low 
volume LTC-DRGs grouped to a specific quintile received the same 
relative

[[Page 24178]]

weight and average length of stay using the formula applied to the 
regular LTC-DRGs (25 or more cases), as described below. (See the FY 
2005 IPPS final rule (69 FR 48988-48989) for further explanation of the 
development and composition of each of the five low volume quintiles 
for FY 2005.)
    After grouping the cases in the appropriate LTC-DRG, we calculated 
the relative weights by first removing statistical outliers and cases 
with a length of stay of 7 days or less. Next, we adjusted the number 
of cases in each LTC-DRG for the effect of short-stay outlier cases 
under Sec.  412.529. The short-stay adjusted discharges and 
corresponding charges were used to calculate ``relative adjusted 
weights'' in each LTC-DRG using the hospital-specific relative value 
method described above. (See the FY 2005 IPPS final rule (69 FR 48989) 
for further details on the steps for calculating the LTC-DRG relative 
weights.)
    We also adjusted the LTC-DRG relative weights to account for 
nonmonotonically increasing relative weights. That is, we made an 
adjustment if cases classified to the LTC-DRG ``with comorbidities 
(CCs)'' of a ``with CC''/``without CC'' pair had a lower average charge 
than the corresponding LTC-DRG ``without CCs'' by assigning the same 
weight to both LTC-DRGs in the ``with CC''/``without CC'' pair. (See FY 
2005 IPPS final rule, 69 FR 48991-48992.) In addition, of the 520 LTC-
DRGs in the LTCH PPS for FY 2005, based on the FY 2003 MedPAR data, we 
identified 171 LTC-DRGs for which there were no LTCH cases in the 
database. That is, no patients who would have been classified to those 
DRGs were treated in LTCHs during FY 2003 and, therefore, no charge 
data were reported for those DRGs. Thus, in the process of determining 
the relative weights of LTC-DRGs, we were unable to determine weights 
for these 171 LTC-DRGs using the method described above. However, since 
patients with a number of the diagnoses under these LTC-DRGs may be 
treated at LTCHs beginning in FY 2005, we assigned relative weights to 
each of the 171 ``no volume'' LTC-DRGs based on clinical similarity and 
relative costliness to one of the remaining 349 (520 - 171 = 349) LTC-
DRGs for which we were able to determine relative weights, based on the 
FY 2003 claims data. (A list of the current no-volume LTC-DRGs and 
further explanation of their FY 2005 relative weight assignment can be 
found in the FY 2005 IPPS final rule (69 FR 48992-48999).)
    Furthermore, for FY 2005, we established LTC-DRG relative weights 
of 0.0000 for heart, kidney, liver, lung, and simultaneous pancreas/
kidney transplants (LTC-DRGs 103, 302, 480, 495, 512 and 513, 
respectively) because Medicare will only cover these procedures if they 
are performed at a hospital that has been certified for the specific 
procedures by Medicare and presently no LTCH has been so certified. If 
in the future, however, a LTCH applies for certification as a Medicare-
approved transplant center, we believe that the application and 
approval procedure would allow sufficient time for us to propose 
appropriate weights for the LTC-DRGs affected. At the present time, 
though, we included these six transplant LTC-DRGs in the GROUPER 
program for administrative purposes. As the LTCH PPS uses the same 
GROUPER program for LTCHs as is used under the IPPS, removing these 
DRGs would be administratively burdensome.
    As we stated in the FY 2005 IPPS final rule, we will continue to 
use the same LTC-DRGs and relative weights for FY 2005 until October 1, 
2005. Accordingly, Table 3 in the Addendum to this final rule lists the 
LTC-DRGs and their respective relative weights and arithmetic mean 
length of stay that we will continue to use for the period of July 1, 
2005 through September 30, 2005. (This table is the same as Table 11 of 
the Addendum to the FY 2005 IPPS final rule (69 FR 49738-49754), 
including the revisions to Table 11 published in the October 7, 2004 
correction notice (69 FR 60267-60271)). As we noted above, the next 
proposed update to the ICD-9-CM coding system is presented in the May 
4, 2005 FY 2006 IPPS proposed rule (since there were no April 1 updates 
to the ICD-9-CM coding system). The final update to the ICD-9-CM coding 
system that will be effective beginning October 1, 2005, and the final 
DRGs and GROUPER for FY 2006 that will be used for the IPPS and the 
LTCH PPS, effective October 1, 2005, will be presented in the IPPS FY 
2006 proposed and final rule in the Federal Register. The final LTC-DRG 
relative weights that will be established in the FY 2006 IPPS final 
rule will be used in determining payments for discharges occurring 
between October 1, 2005 and September 30, 2006 (We note that if there 
is an April 1, 2006 update to the ICD-9-CM coding system, there will be 
a change in the GROUPER software effective April 1, 2006; however, 
there would be no change to the LTC-DRG relative weights, as discussed 
above).

V. Changes to the LTCH PPS Rates and Changes in Policy for the 2006 
LTCH PPS Rate Year

A. Overview of the Development of the Payment Rates

    The LTCH PPS was effective for a LTCH's first cost reporting period 
beginning on or after October 1, 2002. Effective with that cost 
reporting period, LTCHs are paid, during a 5-year transition period, on 
the basis of an increasing proportion of the LTCH PPS Federal rate and 
a decreasing proportion of a hospital's payment under reasonable cost-
based payment system, unless the hospital makes a one-time election to 
receive payment based on 100 percent of the Federal rate (see Sec.  
412.533). New LTCHs (as defined at Sec.  412.23(e)(4)) are paid based 
on 100 percent of the Federal rate, with no phase-in transition 
payments.
    The basic methodology for determining LTCH PPS Federal prospective 
payment rates is set forth in the regulations at Sec.  412.515 through 
Sec.  412.532. Below we discuss the factors that will be used to update 
the LTCH PPS standard Federal rate for the 2006 LTCH PPS rate year that 
will be effective for LTCHs discharges occurring on or after July 1, 
2005 through June 30, 2006. When we implemented the LTCH PPS in the 
August 30, 2002 LTCH PPS final rule (67 FR 56029), we computed the LTCH 
PPS standard Federal payment rate for FY 2003 by updating the best 
available (FY 1998 or FY 1999) Medicare inpatient operating and capital 
costs per case data, using the excluded hospital market basket.
    Section 123(a)(1) of the BBRA requires that the PPS developed for 
LTCHs be budget neutral. Therefore, in calculating the standard Federal 
rate under Sec.  412.523(d)(2), we set total estimated LTCH PPS 
payments equal to estimated payments that would have been made under 
the reasonable cost-based payment methodology had the PPS for LTCHs not 
been implemented. Section 307(a) of the BIPA specified that the 
increases to the hospital-specific target amounts and cap on the target 
amounts for LTCHs for FY 2002 provided for by section 307(a)(1) of BIPA 
shall not be taken into account in the development and implementation 
of the LTCH PPS.
    Furthermore, as specified at Sec.  412.523(d)(1), the standard 
Federal rate is reduced by an adjustment factor to account for the 
estimated proportion of outlier payments under the LTCH PPS to total 
estimated LTCH PPS payments (8 percent). For further details on the 
development of the FY 2003 standard Federal rate, see the August 30,

[[Page 24179]]

2002 LTCH PPS final rule (67 FR 56027), for the 2004 LTCH PPS rate year 
rate, see the June 6, 2003 final rule (68 FR 34122-34190), and for the 
2005 LTCH PPS rate year rate, see the May 7, 2004 LTCH PPS final rule 
(69 FR 25674-25748). Under the existing regulations at Sec.  
412.523(c)(3)(ii), we update the standard Federal rate annually to 
adjust for the most recent estimate of the projected increases in 
prices for LTCH inpatient hospital services.

B. Update to the Standard Federal Rate for the 2006 LTCH PPS Rate Year

    As established in the May 7, 2004 LTCH PPS final rule (69 FR 
25683), based on the most recent estimate of the excluded hospital with 
capital market basket, adjusted to account for the change in the LTCH 
PPS rate year update cycle, the current LTCH PPS standard Federal rate 
which is effective from July 1, 2004 through June 30, 2005 (the 2005 
LTCH PPS rate year), is $36,833.69.
    In the discussion that follows, we explain how we developed the 
standard Federal rate for the 2006 LTCH PPS rate year. The standard 
Federal rate for the 2006 LTCH PPS rate year will be calculated based 
on the update factor of 1.034. Thus, the standard Federal rate for the 
2006 LTCH PPS rate year will increase 3.4 percent compared to the 2005 
LTCH PPS rate year standard Federal rate due to the final update to the 
LTCH PPS Federal rate established in this final rule.
1. Standard Federal Rate Update
    Under Sec.  412.523, the annual update to the LTCH PPS standard 
Federal rate must be equal to the percentage change in the excluded 
hospital with capital market basket. As we discussed in the August 30, 
2002 LTCH PPS final rule (67 FR 56087), in the future we may propose to 
develop a framework to update payments to LTCHs that would account for 
other appropriate factors that affect the efficient delivery of 
services and care provided to Medicare patients. As we discussed in the 
February 3, 2005 proposed rule (70 FR 5735), we have not yet collected 
sufficient data to allow for the analysis and development of an update 
framework under the LTCH PPS because the LTCH PPS has only been 
implemented for slightly more than 2 years (that is, for cost reporting 
periods beginning on or after October 1, 2002). Therefore, we did not 
address an update framework for the 2006 LTCH PPS rate year in that 
same proposed rule or in this final rule. However, we note that a 
conceptual basis for the proposal of developing an update framework in 
the future can be found in Appendix B of the August 30, 2002 LTCH PPS 
final rule (67 FR 56086).
a. Description of the Market Basket for LTCHs for the 2006 LTCH PPS 
Rate Year
    A market basket has historically been used in the Medicare program 
to account for price increases of the services furnished by providers. 
The market basket used for the LTCH PPS includes both operating and 
capital-related costs of LTCHs because the LTCH PPS uses a single 
payment rate for both operating and capital-related costs. The 
development of the LTCH PPS standard Federal rate is discussed in 
further detail in the August 30, 2002 LTCH PPS final rule (67 FR 
56027).
    Under the reasonable cost-based payment system, the excluded 
hospital market basket was used to update the hospital-specific limits 
on payment for operating costs of LTCHs. Currently, the excluded 
hospital market basket is based on operating costs from cost report 
data from FY 1997 and includes data from Medicare-participating long-
term care, rehabilitation, psychiatric, cancer, and children's 
hospitals. Since the costs of LTCH are included in the excluded 
hospital market basket, this market basket index, in part, also 
reflects the costs of LTCHs. However, in order to capture the total 
costs (operating and capital-related) of LTCHs, we added a capital 
component to the excluded hospital market basket for use under the LTCH 
PPS. We refer to this index as the excluded hospital with capital 
market basket.
    As we discussed in the August 30, 2002 LTCH PPS final rule (67 FR 
56016 and 56086), beginning with the implementation of the LTCH PPS in 
FY 2003, the excluded hospital with capital market basket, based on FY 
1992 Medicare cost report data, has been used for updating payments to 
LTCHs. In the May 7, 2004 LTCH PPS final rule (69 FR 25683), we revised 
and rebased the excluded hospital with capital market basket, using 
more recent data, that is, using FY 1997 base year data beginning with 
the 2004 LTCH PPS rate year. (For further details on the development of 
the FY 1997-based LTCH PPS market basket, see the May 7, 2004 LTCH PPS 
final rule (69 FR 25683)).
    In the August 30, 2002 LTCH PPS final rule (67 FR 56016 and 56085-
56086), we discussed why we believe the excluded hospital with capital 
market basket provides a reasonable measure of the price changes facing 
LTCHs. In the May 7, 2004 LTCH PPS final rule (69 FR 25682-25683), we 
discussed our research into the feasibility of developing a market 
basket specific to LTCH services. However, based on this research, we 
did not develop a market basket specific to LTCH services. In that same 
final rule, we explained why we continue to believe that the excluded 
hospital with capital market basket is the appropriate market basket 
for the LTCH PPS.
    As we explained in the February 3, 2005 proposed rule (70 FR 5737), 
for the reasons discussed in those final rules (August 30, 2002 and May 
7, 2004), we continue to believe that an excluded hospital with capital 
market basket adequately reflects the price changes facing LTCHs. We 
considered whether we would propose the use of a new ``Rehabilitation, 
Psychiatric and Long-Term Care (RPL) market basket'' instead of the 
existing excluded hospital with capital market basket for IRFs, IPFs, 
and LTCHs. The RPL market basket would have been based on the operating 
and capital costs of IRFs, IPFs, and LTCHs, which are almost all paid 
under a prospective payment systems. (We note that not all IPFs have 
begun to be paid under the IPF PPS yet because it was implemented for 
cost reporting periods beginning on or after January 1, 2005.) Because 
the development of the RPL market basket was not completed in time for 
us to consider proposing its use for the proposed 2006 LTCH PPS rate 
year update, we were unable to discuss it in the February 3, 2005 LTCH 
PPS proposed rule, and, therefore, we proposed to continue to use the 
excluded hospital with capital market basket. Thus, in that same 
proposed rule (70 FR 5737), we did not propose to revise the market 
basket used under the LTCH PPS because, as we explain above, we believe 
that the excluded hospital with capital market basket was the most 
appropriate market basket available at that time to use in determining 
the proposed update to the Federal rate for the 2006 LTCH PPS rate 
year.
    Therefore, although we are considering the development of the RPL 
market basket because we did not propose to use the RPL market basket 
under the LTCH PPS for the 2006 LTCH PPS rate year, we are not 
discussing its use under the LTCH PPS for the 2006 rate year in this 
final rule. We will consider proposing the use of the RPL market basket 
under the LTCH PPS in the future and will analyze its applicability for 
the LTCH PPS. We intend to present our analyses in the 2007 LTCH PPS 
rate year proposed rule. Any future revisions to the LTCH PPS market 
basket will be proposed and subject to public comment.

[[Page 24180]]

    We received no comments on our continued use of the FY 1997-based 
excluded hospital with capital market basket under the LTCH PPS. 
Accordingly, in this final rule, we will continue to use the FY 1997-
based excluded hospital with capital market basket as the LTCH PPS 
market basket for determining the update to the LTCH PPS standard 
Federal rate for the 2006 LTCH PPS rate year. Even though we did not 
receive any comments on our continued use of the FY 1997-based excluded 
hospital with capital market basket under the LTCH PPS, in future 
proposed rules, we will continue to solicit comments about issues 
particular to LTCHs that should be considered in relation to the 
appropriate market basket to use under the LTCH PPS and to encourage 
suggestions for additional data sources that may be available.
b. LTCH Market Basket Increase for the 2006 LTCH Rate Year
    As we discussed in the May 7, 2004 LTCH PPS final rule (69 FR 
25683), for the update to the 2005 LTCH PPS rate year, we calculated 
the estimated increase between the 2004 LTCH PPS rate year (July 1, 
2003 through June 30, 2004) and the 2005 LTCH PPS rate year (July 1, 
2004 through June 30, 2005) based on Global Insight's forecast of the 
revised and rebased FY 1997-based excluded hospital with capital market 
basket using data available through the fourth quarter of 2003. The 
market basket for the 2005 LTCH PPS rate year was 3.1 percent (69 FR 
25683).
    Consistent with our historical practice of estimating market basket 
increases based on Global Insight's forecast of the FY 1997-based 
excluded hospital with capital market basket, in the February 3, 2005 
proposed rule (70 FR 5735), we proposed a 3.1 percent update to the 
Federal rate based on the most recent available data at that time (that 
is, data through the third quarter of 2004). Global Insights, Inc. is a 
nationally recognized economic and financial forecasting firm that 
contracts with CMS to forecast components of the market basket. In this 
final rule, consistent with our historical practice of estimating 
market basket increases based on Global Insight's forecast of the FY 
1997-based excluded hospital with capital market basket, using more 
recent data through the first quarter of 2005, we are using a 3.4 
percent update to the Federal rate for the 2006 LTCH PPS rate year. In 
accordance with Sec.  412.523, this update will represent the most 
recent estimate of the increase in the excluded hospital with capital 
market basket for the 2006 LTCH PPS rate year.
2. Standard Federal Rate for the 2006 LTCH PPS Rate Year
    In the May 7, 2004 LTCH PPS final rule (69 FR 25683), we 
established a standard Federal rate of $36,833.69 for the 2005 LTCH PPS 
rate year that was based on the best available data and policies 
established in that final rule. In the February 3, 2005 proposed rule 
(70 FR 5736), we proposed a standard Federal rate of $37,975.53 for the 
2006 LTCH PPS rate year based on a proposed market basket update of 3.1 
percent. Since the proposed standard Federal rate for the 2006 LTCH PPS 
rate year had already been adjusted for differences in case-mix, wages, 
cost-of-living, and high-cost outlier payments, we did not propose to 
make any additional adjustments in the standard Federal rate for those 
factors.
    In this final rule, in accordance with Sec.  412.523, we are 
establishing a standard Federal rate of $38,086.04 based on the most 
recent estimate of the LTCH PPS market basket of 3.4 percent. Since the 
standard Federal rate for the 2006 LTCH PPS rate year has already been 
adjusted for differences in case-mix, wages, cost-of-living, and high-
cost outlier payments, we did not make any additional adjustments in 
the standard Federal rate for these factors.

C. Calculation of LTCH Prospective Payments for the 2006 LTCH PPS Rate 
Year

    The basic methodology for determining prospective payment rates for 
LTCH inpatient operating and capital-related costs is set forth in 
Sec.  412.515 through Sec.  412.532. In accordance with Sec.  412.515, 
we assign appropriate weighting factors to each LTC-DRG to reflect the 
estimated relative cost of hospital resources used for discharges 
within that group as compared to discharges classified within other 
groups. The amount of the prospective payment is based on the standard 
Federal rate, established under Sec.  412.523, and adjusted for the 
LTC-DRG relative weights, differences in area wage levels, cost-of-
living in Alaska and Hawaii, high-cost outliers, and other special 
payment provisions (short-stay outliers under Sec.  412.529 and 
interrupted stays under Sec.  412.531).
    In accordance with Sec.  412.533, during the 5-year transition 
period, payment is based on the applicable transition blend percentage 
of the adjusted Federal rate and the reasonable cost-based payment rate 
unless the LTCH makes a one-time election to receive payment based on 
100 percent of the Federal rate. A LTCH defined as ``new'' under Sec.  
412.23(e)(4) is paid based on 100 percent of the Federal rate with no 
blended transition payments (Sec.  412.533(d)). As discussed in the 
August 30, 2002 final rule (67 FR 56038), and in accordance with Sec.  
412.533(a), the applicable transition blends are as follows:

------------------------------------------------------------------------
                                                        Reasonable cost-
 Cost reporting periods beginning      Federal rate      based payment
            on or after                 percentage      rate percentage
------------------------------------------------------------------------
October 1, 2002...................                 20                 80
October 1, 2003...................                 40                 60
October 1, 2004...................                 60                 40
October 1, 2005...................                 80                 20
October 1, 2006...................                100                  0
------------------------------------------------------------------------

    Accordingly, for cost reporting periods beginning during FY 2005 
(that is, on or after October 1, 2004, and before September 30, 2005), 
blended payments under the transition methodology are based on 40 
percent of the LTCH's reasonable cost-based payment rate and 60 percent 
of the adjusted LTCH PPS Federal rate. For cost reporting periods that 
begin during FY 2006 (that is, on or after October 1, 2005 and before 
September 30, 2006), blended payments under the transition methodology 
will be based on 20 percent of the LTCH's reasonable cost-based payment 
rate and 80 percent of the adjusted LTCH PPS Federal rate.
1. Adjustment for Area Wage Levels
a. Background
    Under the authority of section 307(b) of the BBA, we established an 
adjustment to the LTCH PPS Federal rate to account for differences in 
LTCH area wage levels at Sec.  412.525(c). The labor-related share of 
the LTCH PPS Federal rate, estimated by the excluded

[[Page 24181]]

hospital with capital market basket, is adjusted to account for 
geographic differences in area wage levels by applying the applicable 
LTCH PPS wage index. The applicable LTCH PPS wage index is computed 
using wage data from inpatient acute care hospitals without regard to 
reclassification under section 1886(d)(8) or section 1886(d)(10) of the 
Act. Furthermore, as we discussed in the August 30, 2002 LTCH PPS final 
rule (67 FR 56015), we established a 5-year transition to the full wage 
adjustment. The applicable wage index phase-in percentages are based on 
the start of a LTCH's cost reporting period as shown in the following 
table:

------------------------------------------------------------------------
  Cost reporting periods beginning on or     Phase-in percentage of the
                   after                           full wage index
------------------------------------------------------------------------
October 1, 2002...........................  \1/5\th (20)
October 1, 2003...........................  \2/5\ths (40)
October 1, 2004...........................  \3/5\ths (60)
October 1, 2005...........................  \4/5\ths (80)
October 1, 2006...........................  \5/5\ths (100)
------------------------------------------------------------------------

    For example, for cost reporting periods beginning on or after 
October 1, 2004 and on or before September 30, 2005 (FY 2005), the 
applicable LTCH wage index value is three-fifths of the applicable full 
LTCH PPS wage index value. Similarly, for cost reporting periods 
beginning on or after October 1, 2005 and on or before September 30, 
2006 (FY 2006), the applicable LTCH wage index value will be four-
fifths of the applicable full LTCH PPS wage index value. As we 
established in the August 30, 2002 LTCH PPS final rule (67 FR 56018), 
the applicable full LTCH PPS wage index value is calculated from acute-
care hospital inpatient wage index data without taking into account 
geographic reclassification under sections 1886(d)(8) and (d)(10) of 
the Act.
    In that same final rule (67 FR 56018), we stated that we would 
continue to reevaluate LTCH data as they become available and would 
propose to adjust the phase-in if subsequent data support a change. As 
we discussed in the February 3, 2005 proposed rule (70 FR 5736), 
because the LTCH PPS has only been recently implemented (slightly over 
2 years) and because of the lag time in availability of cost report 
data, sufficient new data have not been generated that would enable us 
to conduct a comprehensive reevaluation of the appropriateness of 
adjusting the phase-in. However, as we discussed in that same proposed 
rule, we have reviewed the most recent cost report and claims data (FY 
2001-FY 2003) available and did not find any evidence to support a 
change in the 5-year phase-in of the wage index. Specifically, our 
statistical analysis still does not show a significant relationship 
between LTCHs' costs and their geographic location. Accordingly, in the 
February 3, 2005 proposed rule, we did not propose a change in the 
phase-in of the adjustment for area wage levels under Sec.  412.525(c).
    Comment: One commenter urges us to immediately implement 100 
percent area wage index adjustment instead of the existing five-year 
phase-in of the wage index adjustment.
    Response: As noted above, we have reevaluated our wage-index phase-
in policy and for the 2006 LTCH PPS rate year, we will not be 
implementing a full wage index adjustment for LTCHs. In the August 30, 
2002 LTCH PPS final rule in which we described our determinations 
regarding the inclusion of various payment adjustments in the new LTCH 
PPS, we included a highly detailed description of the full range of 
data analyses and reasoning upon which we based our decision to include 
a 5-year phase-in to a full wage-index adjustment for the LTCH PPS (67 
FR 55954 and 56015-56019). As we discussed in greater detail in that 
same final rule (67 FR 56018), ``the limitations in the current data 
from LTCHs and we noted that although ``* * * the statistical analysis 
did not show a significant relationship between LTCHs' costs and their 
geographic location, we believe that it is appropriate to include some 
adjustment for area wages.'' We also explained that the conceptual 
reasons for having a wage index adjustment support transitioning to a 
wage adjustment despite the data problems and issues with the 
regression analyis. Accordingly, we adopted the suggestion of one of 
our commenters and established a 5-year phase-in for the area-wage 
adjustment with an assurance to revisit relevant data as it became 
available and that we would propose to adjust the phase-in if 
subsequent data support a change. As we discussed in the May 7, 2004 
LTCH PPS final rule (69 FR 25684), because the LTCH PPS has only been 
recently implemented (slightly over 2 years) and because of the lag 
time in availability of cost report data, sufficient new data have not 
been generated that would enable us to conduct a comprehensive 
reevaluation of the appropriateness of adjusting the phase-in. In the 
August 30, 2002 LTCH PPS final rule (67 FR 56018), we stated that we 
would continue to reevaluate LTCH data as they become available and 
would propose to adjust the phase-in if subsequent data support a 
change. As we noted above and as we discussed in the February 3, 
proposed rule, upon review of the most recent data (FY 2001-FY 2003), 
we did not find any evidence to support a change in the 5-year phase-in 
of the wage index. Specifically, our statistical analysis still does 
not show a significant relationship between LTCHs' costs and their 
geographic location that would justify a full 100 percent 
implementation of an area wage index adjustment for LTCHs. Therefore, 
at this time, we are not adjusting the phase-in of the wage index 
adjustment in this final rule. The 5-year phase-in of the wage index 
adjustment will continue as shown in the table above (as we established 
in the August 30, 2002 final rule (67 FR 56015)).
    Finally, we note that section 505 of the MMA established new 
section 1886(d)(13) of the Act, which requires that the Secretary 
establish a process to make adjustments to the hospital wage index 
based on commuting patterns of hospital employees. We believe that this 
requirement for an ``out-commuting'' or ``out-migration'' adjustment 
applies specifically to the acute care hospitals paid under the IPPS. 
Therefore, we did not propose such an adjustment under the LTCH PPS in 
the February 3, 2005 proposed rule, nor are we establishing such an 
adjustment under the LTCH PPS in this final rule.
b. Labor-Related Share
    In the August 30, 2002 LTCH PPS final rule (67 FR 56016), we 
established a labor-related share of 72.885 percent based on the 
relative importance of the labor-related share of operating costs 
(wages and salaries, employee benefits, professional fees, postal 
services, and all other labor-intensive services) and capital costs of 
the excluded hospital with capital market basket based on FY 1992 data. 
In the March 7, 2003 proposed rule (68 FR 11249), in conjunction with 
our revision and rebasing of the excluded hospital with capital market 
basket from a FY 1992 to a FY 1997 base year, we discussed revising the 
labor-related share based on the relative importance of the labor-
related share of operating and capital costs of the excluded hospital 
with capital market basket based on FY 1997 data. However, in the June 
6, 2003 final rule (68 FR 34142), while we adopted the revised and 
rebased FY 1997-based LTCH PPS market basket as the LTCH PPS update 
factor for the 2004 LTCH PPS rate year, we decided not to update the 
labor-related share under the LTCH PPS pending further analysis of the 
current labor share methodology.
    In the August 1, 2002 IPPS final rule, we did not update the IPPS 
or excluded hospital labor-related shares for FY 2003 (67 FR 50041), 
and we discussed our research into the appropriateness of this

[[Page 24182]]

policy. Specifically, we discussed the methods that we were reviewing 
for establishing the labor-related share and our intention to continue 
to explore all options for alternative data and a methodology for 
determining the labor-related share. We also stated that we would 
propose to update the IPPS and excluded hospital labor-related shares, 
if necessary, once our research is complete.
    As we discussed in greater detail in the May 7, 2004 LTCH PPS final 
rule (69 FR 25685), the LTCH PPS was modeled after the IPPS for short-
term, acute care hospitals. Specifically, the LTCH PPS uses the same 
patient classification system (that is, the DRGs) as the IPPS, and many 
of the case-level and facility-level adjustments explored or adopted 
for the LTCH PPS are payment adjustments under the IPPS (69 FR 25686). 
In fact, LTCHs are certified as acute care hospitals to participate as 
a hospital in the Medicare program, and in general, qualify for payment 
under the LTCH PPS instead of the IPPS solely because their Medicare 
inpatient average length of stay is greater than 25 days (69 FR 25686). 
In addition, prior to qualifying as a LTCH, hospitals generally are 
paid under the IPPS during the period in which they demonstrate that 
they have an average Medicare inpatient length of stay of greater than 
25 days (69 FR 25686).
    The primary reason that we did not update the LTCH PPS labor-
related share for the 2004 and 2005 LTCH PPS rate years was the same 
reason that we explained for not updating the labor-related share under 
the IPPS for FY 2004 (see August 1, 2003; 68 FR 27226) and FY 2005 (see 
FY 2005 IPPS final rule (69 FR 49069)), which are equally applicable to 
the LTCH PPS. As we noted above, and as we explained in the May 7, 2004 
LTCH PPS final rule (69 R 5686), we did not revise the labor-related 
share under the IPPS based on the revised and rebased FY 1997 hospital 
market basket and the excluded hospital market basket because of data 
and methodological concerns. We indicated that we would conduct further 
analysis to determine the most appropriate methodology and data for 
determining the labor-related share.
    The IPPS labor-related share of 71.066 percent was established in 
the August 29, 1997 IPPS final rule (62 FR 45995), effective for IPPS 
discharges occurring on or after October 1, 1997 (FY 1998). This 
(71.066 percent) is the most recent estimate of ``the proportion (as 
estimated by CMS from time to time) of Federal rates'' under the IPPS 
adjusted to account for different area wage levels and labor-related 
costs (Sec.  412.62(k)). As also explained in the August 29, 1997 IPPS 
final rule (62 FR 45995), the labor-related portion of the IPPS 
operating standardized amounts is determined by summing the labor-
related items of the revised 1992-based operating prospective payment 
hospital market basket (that is, wages and salaries, employee benefits, 
professional fees, business services, computer and data processing 
services, postage, and all other labor intensive services). This is the 
same methodology used to determine the operating portion of the current 
LTCH PPS labor-related share established in the August 30, 2002 LTCH 
PPS final rule (67 FR 56016), which is effective for LTCH PPS 
discharges occurring in cost reporting periods beginning on or after 
October 1, 2002 (FY 2003). (Note, as discussed in the August 30, 2002 
LTCH PPS final rule (67 FR 56016), because the LTCH PPS standard 
Federal rate includes both operating and capital costs, the LTCH PPS 
labor-related share includes the labor-related share of capital costs 
as well as the labor-related share of operating costs.)
    As noted above, the IPPS labor-related share of 71.066 percent 
became effective for IPPS discharges occurring on or after October 1, 
1997. As we also discussed in the February 3, 2005 proposed rule (70 FR 
5737), for purposes of payment under the IPPS, section 403 of MMA 
amended section 1886(d) of the Act to provide that for discharges 
occurring on or after October 1, 2004, the Secretary must employ 62 
percent as the labor-related share under the IPPS, unless this ``would 
result in lower payments to a hospital than would otherwise be made.'' 
That is, beginning in FY 2005 under the IPPS, the labor-related share 
remains 71.066 percent for acute-care hospitals with a wage index 
greater than 1.0, while the labor-related share is equal to 62 percent 
for acute-care hospitals under the IPPS with a wage index less than or 
equal to 1.0 (69 FR 49070). This alternative labor-related share is 
only applicable to acute care hospitals paid under the IPPS and does 
not apply to LTCHs.
    The current LTCH PPS labor share (72.885 percent) was developed 
using the same methodology used to develop the existing IPPS labor 
share (71.066). The statutory alternative (62 percent) is limited to 
acute care hospitals paid under the IPPS and does not apply to 
hospitals paid under the LTCH PPS. Since we had not yet completed the 
research of the labor-share methodology used to establish the current 
IPPS labor-related share estimated by CMS from time (71.066 percent) 
and the current LTCH PPS labor-related share (72.885 percent), we did 
not change the LTCH PPS labor-share for the 2005 LTCH PPS rate year.
    Since we are continuing our research into updating the hospital 
labor-related share and because we have not implemented a change in the 
methodology for determining both the existing IPPS labor-related share 
estimated by CMS from time to time (as discussed in the FY 2005 IPPS 
final rule (69 FR 49069)) and the current LTCH PPS labor-related share, 
in the February 3, 2005 proposed rule, we did not propose to change the 
LTCH PPS labor-related share at this time. We received no comments on 
our proposal not to revise the labor-related share for the 2006 LTCH 
PPS rate year. Accordingly, under the broad authority in section 123 of 
the BBRA and section 307(b)(1) of BIPA, the labor-related share for the 
2006 LTCH PPS rate year will remain at 72.885 percent. As is the case 
under the IPPS, once our research on the labor-related share is 
complete, any future revisions to the LTCH PPS labor-related share will 
be proposed and subject to public comment in a future rule.
c. Revision of LTCH PPS Geographic Classifications
    As discussed in the August 30, 2002 LTCH PPS final rule, which 
implemented the LTCH PPS (67 FR 56015), in establishing an adjustment 
for area wage levels under Sec.  412.525(c), the labor-related portion 
of a LTCH's Federal prospective payment is adjusted by using an 
appropriate wage index. As set forth in Sec.  412.525(c), a LTCH's wage 
index is determined based on the location of the LTCH in an urban or 
rural area as defined in Sec.  412.62(f)(1)(ii) and (f)(1)(iii), 
respectively. An urban area, under the LTCH PPS, is defined at Sec.  
412.62(f)(1)(ii)(A) and (B). In general, an urban area is defined as a 
Metropolitan Statistical Area (MSA) or New England County Metropolitan 
Area (NECMA) as defined by the Office of Management and Budget (OMB). 
(In addition, a few counties located outside of MSAs are considered 
urban as specified at Sec.  412.62(f)(1)(ii)(B).) Under Sec.  
412.62(f)(1)(iii), a rural area is defined as any area outside of an 
urban area. The geographic classifications defined in Sec.  
412.62(f)(1)(ii) and (f)(1)(iii), respectively, were used under the 
IPPS from FYs 1984 through 2004 (Sec.  412.62(f) and Sec.  412.63(b)), 
and have been used under the LTCH PPS since it was implemented for cost 
reporting periods beginning on or after October 1, 2002 (FY 2003).
    Under the IPPS, the wage index is calculated and assigned to 
hospitals on the basis of the labor market area in

[[Page 24183]]

which the hospital is located or geographically reclassified to in 
accordance with sections 1886(d)(8) and (d)(10) of the Act. Under the 
LTCH PPS, the wage index is calculated using IPPS wage index data (as 
discussed below in section V.C.1.d of this preamble) on the basis of 
the labor market area in which the hospital is located, but without 
taking into account geographic reclassification under sections 
1886(d)(8) and (d)(10) of the Act. The applicable LTCH wage index value 
is assigned to a LTCH on the basis of the labor market area in which 
the LTCH is geographically located.
    The current LTCH PPS labor market areas are defined based on the 
definitions of MSAs, Primary MSAs (PMSAs), and NECMAs issued by the OMB 
(commonly referred to collectively as MSAs). These MSA definitions, 
which are discussed in greater detail below, are currently used under 
the LTCH PPS and other non-IPPS prospective payment systems (that is, 
the inpatient rehabilitation facility PPS (IRF PPS), the inpatient 
psychiatric facility PPS (IPF PPS), the home health agency PPS (HHA 
PPS), and the skilled nursing facility PPS (SNF PPS)). In the FY 2005 
IPPS final rule (67 FR 49026-49034), revised labor market area 
definitions were adopted under the IPPS (Sec.  412.64(b)), which were 
effective October 1, 2004. These new standards, called Core-Based 
Statistical Areas (CBSAs), were announced by the OMB late in 2000 and 
are discussed in greater detail below.
1. Current LTCH PPS Labor Market Areas Based on MSAs
    Below, we will provide a description of the current labor markets 
that have been used for area wage adjustments under the LTCH PPS since 
its implementation for cost reporting periods beginning on or after 
October 1, 2002. As we discussed in the February 3, 2005 proposed rule, 
previously, we have not described the labor market areas used under the 
LTCH PPS in detail, although we have published each area's wage index 
in tables, in the LTCH PPS final rules, each year and noted the use of 
the geographic area (MSA) in applying the wage index adjustment in LTCH 
PPS payment examples in the final regulation implementing the LTCH PPS 
(August 30, 2002, 67 FR 56037). The LTCH industry has also understood 
that the same labor market areas in use under the IPPS (from the time 
LTCH PPS was implemented, for cost reporting periods beginning on or 
after October 1, 2002) would be used under the LTCH PPS. As we also 
explained in the February 3, 2005 proposed rule, because OMB has 
adopted new statistical area definitions (as discussed in greater 
detail below) and we proposed to adopt new labor market area 
definitions based on these areas under the LTCH PPS (as discussed in 
greater detail below), we believe it is helpful to provide a more 
detailed description of the current LTCH PPS labor market areas, in 
order to better understand the change to the LTCH PPS labor market 
areas presented below in this final rule.
    As mentioned earlier, since the implementation of the LTCH PPS in 
the August 30, 2002 LTCH PPS final rule, we have used labor market 
areas to further characterize urban and rural areas as determined under 
Sec.  412.62(f)(1)(ii) and (iii). To this end, we have defined labor 
market areas under the LTCH PPS based on the definitions of MSAs, 
PMSAs, and NECMAs issued by the OMB, which is consistent with the IPPS 
approach (prior to the adoption of the new CBSA-based labor market 
areas under the IPPS rule beginning in FY 2005). Prior to modifying its 
statistical area definitions. The OMB also designates Consolidated MSAs 
(CMSAs). A CMSA is a metropolitan area with a population of one million 
or more, comprising two or more PMSAs (identified by their separate 
economic and social character). For purposes of the LTCH PPS wage 
index, we use the PMSAs rather than CMSAs because they allow a more 
precise breakdown of labor costs. If a metropolitan area is not 
designated as part of a PMSA, we use the applicable MSA.
    These different designations use counties as the building blocks 
upon which they are based. Therefore, under the LTCH PPS, hospitals are 
assigned to either an MSA, PMSA, or NECMA based on whether the county 
in which the LTCH is located is part of that area. All of the counties 
in a State outside a designated MSA, PMSA, or NECMA are designated as 
rural. Specifically, for purposes of calculating the wage index, we 
currently combine all of the counties in a State outside a designated 
MSA, PMSA, or NECMA together to calculate the statewide rural wage 
index for each State. The labor market area definitions currently used 
under the LTCH PPS are the same as those used for acute care inpatient 
hospitals under the IPPS prior to FY 2005 (69 FR 49026).
2. Core-Based Statistical Areas
    The OMB reviews its Metropolitan Area definitions preceding each 
decennial census. As discussed in the FY 2005 IPPS final rule (69 FR 
49027), in the fall of 1998, the OMB chartered the Metropolitan Area 
Standards Review Committee to examine the Metropolitan Area standards 
and develop recommendations for possible changes to those standards. 
Three notices related to the review of the standards, providing an 
opportunity for public comment on the recommendations of the Committee, 
were published in the Federal Register on the following dates: December 
21, 1998 (63 FR 70526); October 20, 1999 (64 FR 56628); and August 22, 
2000 (65 FR 51060).
    In the December 27, 2000 Federal Register (65 FR 82228), OMB 
announced its new standards. In that notice, OMB defines a CBSA, 
beginning in 2003, as ``a geographic entity associated with at least 
one core of 10,000 or more population, plus adjacent territory that has 
a high degree of social and economic integration with the core as 
measured by commuting ties. The standards designate and define two 
categories of CBSAs: MSAs and Micropolitan Statistical Areas.'' (65 FR 
82236)
    According to OMB, MSAs are based on urbanized areas of 50,000 or 
more population, and Micropolitan Statistical Areas (referred to in 
this discussion as Micropolitan Areas) are based on urban clusters of 
at least 10,000 population, but less than 50,000 population. Counties 
that do not fall within CBSAs (either MSAs or Micropolitan Areas) are 
deemed ``Outside CBSAs.'' In the past, the OMB defined MSAs around 
areas with a minimum core population of 50,000, and smaller areas were 
``Outside MSAs.'' On June 6, 2003, OMB announced the new CBSAs, 
comprised of MSAs and the new Micropolitan Areas based on Census 2000 
data. (A copy of the announcement may be obtained at the following 
Internet address: http://www.whitehouse.gov/omb/bulletins/fy04/b04-03.html.) The new CBSA designations recognize 49 new MSAs and 565 new 
Micropolitan Areas, and extensively revise the composition of many of 
the existing MSAs. There are 1,090 counties in MSAs under the new CBSA 
designations (previously, there were 848 counties in MSAs). Of these 
1,090 counties, 737 are in the same MSA as they were prior to the 
change in designations, 65 are in a different MSA, and 288 were not 
previously designated to any MSA. There are 674 counties in 
Micropolitan Areas. Of these, 41 were previously in an MSA, while 633 
were not previously designated to an MSA. There are five counties that 
previously were designated to an MSA but are no longer designated to 
either an MSA or a new Micropolitan Area: Carter County,

[[Page 24184]]

KY; St. James Parish, LA; Kane County, UT; Culpepper County, VA; and 
King George County, VA. For a more detailed discussion of the 
conceptual basis of the new CBSAs, refer to the FY 2005 IPPS final rule 
(67 FR 49026-49034).
3. Revision of the LTCH PPS Labor Market Areas
    In its June 6, 2003 announcement, OMB cautioned that these new 
definitions ``should not be used to develop and implement Federal, 
State, and local nonstatistical programs and policies without full 
consideration of the effects of using these definitions for such 
purposes. These areas should not serve as a general-purpose geographic 
framework for nonstatistical activities, and they may or may not be 
suitable for use in program funding formulas.''
    As discussed in the FY 2005 IPPS final rule (69 FR 49027), we have 
previously examined alternatives to the use of MSAs for the purpose of 
establishing labor market areas for Medicare wage indices in general. 
For purposes of the proposed changes to the LTCH PPS labor market 
areas, we examined the same alternatives to the use of MSAs as examined 
under the IPPS. In the May 27, 1994, IPPS proposed rule (59 FR 27724), 
we presented our latest research concerning possible future refinements 
to the labor market areas. Specifically, we discussed and solicited 
comment on the proposal by the Prospective Payment Assessment 
Commission (ProPAC), a predecessor organization to the MedPAC, for 
hospital-specific labor market areas based on each hospital's nearest 
neighbors, and our research and analysis on alternative labor market 
areas. Even though we found that none of the alternative labor market 
areas that we studied provided a distinct improvement over the use of 
MSAs, we presented an option using the MSA-based wage index, but 
generally giving a hospital's own wages a higher weight than under the 
current system. We also described for comment a State labor market 
option, under which hospitals would be allowed to design labor market 
areas within their own State boundaries.
    We described the comments we received in the June 2, 1995 IPPS 
proposed rule (60 FR 29219). Specifically, as we discussed in that same 
proposed rule, there was no consensus among the commenters on the 
choice for new labor market areas. Many individual hospitals that 
commented on that proposed rule expressed dissatisfaction with all of 
the proposals. However, several State hospital associations that 
commented on that proposed rule stated that the options merited further 
study. Therefore, at that time we contacted the association 
representatives that participated in our November 1993 meeting on labor 
market issues in which we solicited ideas for additional types of labor 
market research to conduct. None of the individuals we contacted 
suggested any ideas for further research. After considering these same 
options for the LTCH PPS, we conclude that there is no basis for 
believing that either the nearest neighbor option or the State labor 
market option would result in a wage index adjustment that would be 
more appropriate for LTCHs than the MSA-based wage index adjustment. As 
discussed in the June 2, 1995 IPPS proposed rule (60 FR 29219), these 
options could inappropriately reward the highest cost hospitals with 
higher wage indexes and there would likely be less than full consent by 
hospitals to participate in the alternative options, particularly if 
hospitals face lower reimbursement due to the change.
    Consequently, consistent with the approach taken under the IPPS, we 
have used MSAs to define labor market areas for purposes of Medicare 
wage indices in the LTCH PPS since its implementation for cost 
reporting periods beginning on or after October 1, 2002. In fact, MSAs 
are also used to define labor market areas for purposes of the wage 
index for many of the other Medicare payment systems (for example, IRF 
PPS, SNF PPS, HHA PPS, Outpatient PPS, and IPF PPS). While we recognize 
MSAs are not designed specifically to define labor market areas, we 
believe they do represent a reasonable and appropriate proxy for this 
purpose, because they are based upon characteristics we believe also 
generally reflect the characteristics of unified labor market areas. 
For example, CBSAs reflect a core population plus an adjacent territory 
that reflects a high degree of social and economic integration. This 
integration is measured by commuting ties, thus, demonstrating that 
these areas may draw workers from the same general areas. In addition, 
the most recent CBSAs reflect the most up to date information. The OMB 
reviews its Metropolitan Area definitions preceding each decennial 
census to reflect recent population changes and the CBSAs are based on 
the Census 2000 data. Our analysis and discussion here are focused on 
issues related to adopting the new CBSA-based designations to define 
labor market areas for purposes of the IPPS and for purposes of 
proposing them for LTCH PPS.
    Historically, Medicare PPSs have utilized Metropolitan Area 
definitions developed by OMB. The labor market areas currently used 
under the LTCH PPS (described above in section V.C.1.c.1. of this 
preamble) are based on the Metropolitan Area definitions issued by OMB. 
As noted above, OMB reviews its definitions preceding each decennial 
census to reflect more Metropolitan Area recent population changes. As 
discussed in greater detail above in section V.C.1.c.2., the CBSAs are 
the OMB's latest Metropolitan Area definitions based on the Census 2000 
data. As we discussed in the February 3, 2005 proposed rule (70 FR 
5739), because we believe that OMB's latest Metropolitan Area 
designations more accurately reflect the local economies and wage 
levels of the areas in which hospitals are currently located, under the 
LTCH PPS we proposed to adopt revised labor market area designations 
based on the OMB's CBSA designations which were adopted under the IPPS.
    Comment: Five commenters supported our proposed adoption of revised 
labor market area designations under the LTCH PPS based on the OMB's 
CBSA designations, stating that they believe that as the CBSA 
designations more precisely defines distinct labor market areas for 
LTCHs. We received no comments opposing the proposed revisions to the 
LTCH PPS labor market area definitions.
    Response: We appreciate the commenters' support for the adoption of 
the proposed changes to the LTCH PPS labor market area definitions 
based on OMB's new CBSA designations for, as noted above, and we agree 
with the commenters that the proposed changes to the LTCH PPS labor 
market area definitions would more precisely define distinct labor 
market areas for LTCHs. Accordingly, in this final rule, under the 
broad authority of section 123 of Pub. L. 106-113 and section 307(b)(1) 
of Pub. L. 106-554, we are adopting revised labor market area 
definitions under the LTCH PPS based on OMB's new CBSA designations, as 
discussed in greater detail below. When we implemented the wage index 
adjustment at Sec.  412.525(c) under the LTCH PPS in the August 30, 
2002 LTCH PPS final rule (67 FR 56016), we explained that the LTCH PPS 
wage index adjustment was intended to reflect the relative hospital 
wage levels in the geographic area of the hospital as compared to the 
national average hospital wage level. Because we believe that OMB's 
CBSA designations based on Census 2000 data reflect the most recent 
available geographic classifications (Metropolitan Area definitions), 
we are revising the labor market area definitions used under the LTCH 
PPS based on OMB's CBSA

[[Page 24185]]

designations to ensure that the LTCH PPS wage index adjustment most 
appropriately accounts for and reflects the relative hospital wage 
levels in the geographic area of the hospital as compared to the 
national average hospital wage level. Specifically, we are revising the 
LTCH PPS labor market definitions based on OMB's new CBSA designations 
(as discussed in greater detail below) effective for LTCH PPS 
discharges occurring on or after July 1, 2005. Accordingly, as we 
proposed in the February 3, 2005 proposed rule (70 FR 5739), we are 
revising Sec.  412.525(c) to specify that for discharges occurring on 
or after July 1, 2005, the application of the wage index under the LTCH 
PPS will be made on the basis of the location of the facility in an 
urban or rural area as defined in Sec.  412.64(b)(1)(ii)(A)-(C). (As a 
conforming change, as we proposed in the February 3, 2005 LTCH PPS 
proposed rule, we are also revising Sec.  412.525(c) to specify when 
the current labor area definitions in the existing Sec.  412.525(c) are 
applicable. We note that in this final rule, we are revising the final 
regulations text at Sec.  412.525(c)(1) to explicitly state that the 
current MSA-based labor area definitions are effective ``for cost 
reporting periods beginning on or after October 1, 2002, with respect 
to discharges occurring during the period covered by such cost reports 
but before July 1, 2005.'' We are clarifying the regulations text 
because we do not want the public to misinterpret the ``July 1, 2005'' 
date as referring to ``cost reporting periods'' when in fact it applies 
to ``discharges.'' In addition, we want to make it clear that the urban 
and rural definitions in Sec.  412.62(f)(1)(iii), respectively, apply 
to a LTCH's discharges occurring no earlier than the date upon which 
the LTCH became subject to the LTCH PPS. Although we did our best to 
convey this in the proposed regulations text presented in the February 
3, 2005 proposed rule, we believe that the regulations text could be 
improved to better reflect this clarification. While this revision is 
not a change in the policy presented in the February 3, 2005 LTCH PPS 
proposed rule (70 FR 5739), we believe that this language change more 
clearly articulates that the current MSA-based labor market definitions 
are effective for LTCH discharges occurring before July 1, 2005 that 
are subject to the LTCH PPS (that is, occurring in cost reporting 
periods beginning on or after October 1, 2002). We also note that these 
are the same labor market area definitions (based on the OMB's new CBSA 
designations) implemented for acute care inpatient hospitals under the 
IPPS at Sec.  412.64(b), which were effective for those hospitals 
beginning October 1, 2004 as discussed in the FY 2005 IPPS final rule 
(69 FR 49026).
    As discussed above in section V.C.1.b. of this preamble, the LTCH 
PPS was modeled after the IPPS for short-term acute care inpatient 
hospitals. The similarity between the IPPS and the LTCH PPS includes 
the adoption in the initial implementation of the LTCH PPS of the same 
labor market area definitions under the LTCH PPS that existed under the 
IPPS at that time, as well as the use of acute care inpatient 
hospitals' wage data in calculating the LTCH PPS wage index. Therefore, 
besides reflecting the most recent available geographic classifications 
and, consequently, more accurately reflecting the current labor markets 
(which is the primary reason for adopting OMB's new CBSA-based 
designations), we believe that this revision to the LTCH PPS labor 
market area definitions based on OMB's new CBSA-based designations is 
also consistent with our historical practice of modeling LTCH PPS 
policy after IPPS policy.
    Below, we discuss the composition of the LTCH PPS labor market 
areas based on the OMB's new CBSA designations, as we proposed in the 
February 3, 2005 proposed rule. It should be noted that OMB's new CBSA 
designations are comprised of several county-based area definitions as 
explained above, which include Metropolitan Areas, Micropolitan Areas, 
and areas ``outside CBSAs.'' Under the LTCH PPS, since the 
implementation of the LTCH PPS, we have used two types of labor market 
areas, urban and rural. As discussed in greater detail below, in this 
final rule, in adopting revised labor market areas under the LTCH PPS 
based on OMB's new CBSA-based designations, we will continue to have 2 
types of labor market areas (urban and rural). In the discussion that 
follows, we explain our recognition of Metropolitan Areas, which 
include New England MSAs and Metropolitan Divisions, as urban. We also 
explain our recognition of Micropolitan Areas and areas ``outside 
CBSAs'' as rural. The following discussion, which was presented in the 
February 3, 2005 proposed rule (70 FR 5739-5742), describes the 
methodology for mapping OMB's CBSA-based designations into the LTCH PPS 
(urban area or rural area) format.
a. New England MSAs
    As stated above, under the LTCH PPS, we currently use NECMAs to 
define labor market areas in New England, because these are county-
based designations rather than the 1990 MSA definitions for New 
England, which used minor civil divisions such as cities and towns. 
Under the current MSA definitions, NECMAs provided more consistency in 
labor market definitions for New England compared with the rest of the 
country, where MSAs are county-based. Under the new CBSAs, OMB has now 
defined the MSAs and Micropolitan Areas in New England on the basis of 
counties. OMB also established New England City and Town Areas, which 
are similar to the previous New England MSAs.
    In order to create consistency across all LTCH labor market areas, 
in the February 3, 2005 proposed rule (70 FR 5740), under the LTCH PPS, 
we proposed to use the county-based areas for all MSAs in the nation, 
including those in New England. The OMB has now defined the New England 
area based on counties, creating a city and town-based system as an 
alternative. As we explained in that same proposed rule, we believe 
that adopting county-based labor market areas for the entire country 
except those in New England would lead to inconsistencies in our 
designations. Adopting county-based labor market areas for the entire 
country provides consistency and stability in Medicare program payment 
because all of the labor market areas throughout the country, including 
New England, would be defined using the same system (that is, counties) 
rather than different systems in different areas of the country, and 
minimizes programmatic complexity.
    In addition, we have consistently employed a county-based system 
for New England for precisely that reason: To maintain consistency with 
the labor market definitions used throughout the country. Because we 
have never used cities and towns for defining LTCH labor market areas, 
employing a county-based system in New England maintains that 
consistent practice. We note that this is consistent with the 
implementation of the CBSA-based designations under the IPPS for New 
England (69 FR 49028). Accordingly, under the LTCH PPS we will use the 
New England MSAs as determined under the new CBSA-based labor market 
area definitions in defining the revised LTCH PPS labor market areas. 
We did not receive any comments regarding the proposed use of county-
based areas for all MSAs in the nation, including those in New England, 
in our proposal to make revisions to the LTCH PPS labor market area 
definitions based on OMB's CBSA designations. Therefore, under the 
broad authority of section 123 of Pub. L. 106-113 and section 307(b)(1) 
of Pub. L. 106-554, we are adopting this

[[Page 24186]]

policy as final as part of the changes to the LTCH PPS labor market 
area definitions we are establishing in this final rule for the reasons 
explained above.
b. Metropolitan Divisions
    Under the OMB's new CBSA designations, a Metropolitan Division is a 
county or group of counties within a CBSA that contains a core 
population of at least 2.5 million, representing an employment center, 
plus adjacent counties associated with the main county or counties 
through commuting ties. A county qualifies as a main county if 65 
percent or more of its employed residents work within the county and 
the ratio of the number of jobs located in the county to the number of 
employed residents is at least 0.75. A county qualifies as a secondary 
county if 50 percent or more, but less than 65 percent, of its employed 
residents work within the county and the ratio of the number of jobs 
located in the county to the number of employed residents is at least 
0.75. After all the main and secondary counties are identified and 
grouped, each additional county that already has qualified for 
inclusion in the MSA falls within the Metropolitan Division associated 
with the main/secondary county or counties with which the county at 
issue has the highest employment interchange measure. Counties in a 
Metropolitan Division must be contiguous. (65 FR 82236)
    The construct of relatively large MSAs being comprised of 
Metropolitan Divisions is similar to the current construct of CMSAs 
comprised of PMSAs. As noted above, in the past, the OMB designated 
CMSAs as Metropolitan Areas with a population of one million or more 
and comprised of two or more PMSAs. Under the LTCH PPS, we currently 
use the PMSAs rather than CMSAs to define labor market areas because 
they comprise a smaller geographic area with potentially varying labor 
costs due to different local economies. As we discussed in the February 
3, 2005 proposed rule (70 FR 5740), we believe that CMSAs may be too 
large of an area with a relatively large number of hospitals, to 
accurately reflect the local labor costs of all of the individual 
hospitals included in that relatively ``large'' area. A large market 
area designation increases the likelihood of including many hospitals 
located in areas with very different labor market conditions within the 
same market area designation. This variation could increase the 
difficulty in calculating a single wage index that would be relevant 
for all hospitals within the market area designation. Similarly, we 
believe that MSAs with a population of 2.5 million or greater may be 
too large of an area to accurately reflect the local labor costs of all 
of the individual hospitals included in that relatively ``large'' area. 
Furthermore, as indicated above, Metropolitan Divisions represent the 
closest approximation to PMSAs, the building block of the current LTCH 
PPS labor market area definitions, and, therefore, would most 
accurately maintain our current structuring of the LTCH PPS labor 
market areas. Therefore, as implemented under the IPPS (69 FR 49029), 
under the LTCH PPS we proposed to use the Metropolitan Divisions where 
applicable (as described below) under the new CBSA-based labor market 
area definitions. We did not receive any comments regarding our 
proposed use of Metropolitan Divisions under our proposed revisions to 
the LTCH PPS labor market area definitions based on OMB's new CBSA 
designations. Therefore, under the broad authority of section 123 of 
Pub. L. 106-113 and section 307(b)(1) of Pub. L. 106-554, we are 
adopting this policy as final as part of the changes we are making to 
the LTCH PPS labor market area definitions in this final rule for the 
reasons explained above.
    In addition to being comparable to the organization of the labor 
market areas under current MSA designations (that is, the use of PMSAs 
rather than CMSAs), we believe that using Metropolitan Divisions where 
applicable (as described below) under the LTCH PPS will result in a 
more accurate adjustment for the variation in local labor market areas 
for LTCHs. Specifically, if we recognize the relatively ``larger'' CBSA 
that comprises two or more Metropolitan Divisions as an independent 
labor market area for purposes of the wage index, it will be too large 
and will include the data from too many hospitals to compute a wage 
index that would accurately reflect the various local labor costs of 
all of the individual hospitals included in that relatively ``large'' 
CBSA. As mentioned earlier, a large market area designation increases 
the likelihood of including many hospitals located in areas with very 
different labor market conditions within the same market area 
designation. This variation could increase the difficulty in 
calculating a single wage index that would be relevant for all 
hospitals within the market area designation. Rather, by recognizing 
Metropolitan Divisions where applicable (as described below) under the 
new CBSA-based labor market area definitions under the LTCH PPS, we 
believe that in addition to more accurately maintaining the current 
structuring of the LTCH PPS labor market areas, the local labor costs 
will be more accurately reflected, thereby resulting in a wage index 
adjustment that better reflects the variation in the local labor costs 
of the local economies of the LTCHs located in these relatively 
``smaller'' areas.
    As discussed below, and in the February 3, 2005 proposed rule (70 
FR 5741), we describe where Metropolitan Divisions will be applicable 
under the new CBSA-based labor market area definitions under the LTCH 
PPS.
    Under OMB's new CBSA-based designations, there are 11 MSAs 
containing Metropolitan Divisions: Boston; Chicago; Dallas; Detroit; 
Los Angeles; Miami; New York; Philadelphia; San Francisco; Seattle; and 
Washington, DC. Although these MSAs were also CMSAs under the prior 
definitions, in some cases these areas have been significantly altered. 
Under the current LTCH PPS MSA designations, Boston is a single NECMA. 
Under the CBSA-based labor market area designations, it will be 
comprised of 4 Metropolitan Divisions. Los Angeles will go from 4 PMSAs 
under the current LTCH PPS MSA designations to 2 Metropolitan Divisions 
under the CBSA-based labor market area designations because 2 MSAs 
became separate MSAs. The New York CMSA will go from 15 PMSAs under the 
current LTCH PPS MSA designations down to only 4 Metropolitan Divisions 
under the CBSA-based labor market area designations. Five PMSAs in 
Connecticut under the current LTCH PPS MSA designations will become 
separate MSAs under the CBSA-based labor market area designations, and 
the number of PMSAs in New Jersey under the current LTCH PPS MSA 
designations will go from 5 to 2, with the consolidation of 2 New 
Jersey PMSAs (Bergen-Passaic and Jersey City) into the New York-Wayne-
White Plains, NY-NJ Division, under the CBSA-based labor market area 
designations. In San Francisco, under the CBSA-based labor market area 
designations, only 2 Divisions will remain where there were once 6 
PMSAs some of which are now separate MSAs under the current LTCH PPS 
labor market area designations.
    Under the current LTCH PPS labor market area designations, 
Cincinnati, Cleveland, Denver, Houston, Milwaukee, Portland, 
Sacramento, and San Juan are all designated as CMSAs, but will no 
longer be designated as CMSAs under the CBSA-based labor

[[Page 24187]]

market area designations. As noted previously, the population threshold 
to be designated a CMSA under the current LTCH PPS labor market area 
designations is one million. In most of these cases, counties currently 
in a PMSA under the current LTCH PPS labor market area designations 
will become separate, independent MSAs under the CBSA-based labor 
market area designations.
c. Micropolitan Areas
    Under the OMB's new CBSA-based designations, Micropolitan Areas are 
essentially a third area definition made up mostly of currently rural 
areas, but also include some or all of areas that are currently 
designated as an urban MSA. As discussed in greater detail in the FY 
2005 IPPS final rule (69 FR 49029), how these areas are treated would 
have significant impacts on the calculation and application of the wage 
index. Specifically, whether or not Micropolitan Areas are included as 
part of the respective statewide rural wage indices would impact the 
value of statewide rural wage index of any State that contains a 
Micropolitan Area because a hospital's classification as urban or rural 
affects which hospitals' wage data are included in the statewide rural 
wage index. As discussed above in section V.C.1.c.1., we combine all of 
the counties in a State outside a designated urban area together to 
calculate the statewide rural wage index for each State.
    In general, as discussed in the February 3, 2005 proposed rule (70 
FR 5741), including Micropolitan Areas as part of the statewide rural 
labor market area would result in an increase to the statewide rural 
wage index because hospitals located in those Micropolitan Areas 
typically have higher labor costs than other rural hospitals in the 
State. Alternatively, as discussed in greater detail below, if 
Micropolitan Areas would be recognized as independent labor market 
areas, because there would be so few hospitals in each labor market 
area, the wage indices for LTCHs in those areas could become relatively 
unstable as they would change considerably from year to year.
    Because we currently use MSAs to define urban labor market areas 
and we group all the hospitals in counties within each State that are 
not assigned to an MSA together into a statewide rural labor market 
area, we have used the terms ``urban'' and ``rural'' wage indexes in 
the past for ease of reference. However, the introduction of 
Micropolitan Areas by the OMB potentially complicates this terminology 
because these areas include many hospitals that are currently included 
in the statewide rural labor market areas.
    In the February 3, 2005 proposed rule (70 FR 5741), we proposed to 
treat Micropolitan Areas as rural labor market areas under the LTCH PPS 
for the reasons outlined below. That is, counties that are assigned to 
a Micropolitan area under the CBSA-based designations would be treated 
the same as other ``rural'' counties that are not assigned to either an 
MSA (Metropolitan Statistical Area) or a Micropolitan Area. We received 
no comments on our proposal to treat Micropolitian Areas as rural labor 
market areas under the LTCH PPS. Therefore, for the reasons discussed 
above and under the broad authority of section 123 of Pub. L. 106-113 
and section 307(b)(1) of Pub. L. 106-554, we are adopting this policy 
as final as part of the changes we are making to the LTCH PPS labor 
market area definitions in this final rule. Accordingly, in determining 
a LTCH's applicable wage index (based on IPPS hospital wage index data, 
as discussed in greater detail below in section V.C.d. of this 
preamble), a LTCH in a Micropolitan Area under the OMB's CBSA-based 
designations will be classified as ``rural'' and will be assigned the 
statewide rural wage index for the State in which it resides.
    In the FY 2005 IPPS final rule (69 FR 49029-49032), we discuss our 
evaluation of the impact of treating Micropolitan Areas as part of the 
statewide rural labor market area instead of treating Micropolitan 
Areas as independent labor market areas for hospitals paid under the 
IPPS. As an alternative to treating Micropolitan Areas as part of the 
statewide rural labor market area for purposes of the LTCH PPS, we 
examined treating Micropolitan Areas as separate (urban) labor market 
areas, just as we did when implementing the revised labor market areas 
under the IPPS. As discussed in that same final rule, one of the 
reasons Micropolitan Areas have such a dramatic impact on the wage 
index is, because Micropolitan Areas encompass smaller populations than 
MSAs, they tend to include fewer hospitals per Micropolitan Area. There 
were only 25 MSAs with one hospital in the MSA. However, under the new 
CBSA-based definitions, there are 373 Micropolitan Areas with one 
hospital, and 49 MSAs with only one hospital.
    This large number of labor market areas with only one hospital and 
the increased potential for dramatic shifts in the wage indexes from 1 
year to the next is a problem for several reasons. First, it creates 
instability in the wage index from year to year for a large number of 
hospitals. Second, it reduces the averaging effect (This averaging 
effect allows for more data points to be used to calculate a 
representative standard of measured labor costs within a market area.) 
lessening some of the incentive for hospitals to operate efficiently. 
This incentive is inherent in a system based on the average hourly 
wages for a large number of hospitals, as hospitals could profit more 
by operating below that average. In labor market areas with a single 
hospital, high wage costs are passed directly into the wage index with 
no counterbalancing averaging with lower wages paid at nearby competing 
hospitals. Third, it creates an arguably inequitable system when so 
many hospitals have wage indexes based solely on their own wages, while 
other hospitals' wage indexes are based on an average hourly wage 
across many hospitals.
    For the reasons noted above, and consistent with the treatment of 
these areas under the IPPS, we are not adopting Micropolitan Areas as 
independent labor market areas under the LTCH PPS, but instead, 
Micropolitan Areas, under the CBSA-based labor market area definitions, 
will be considered part of the statewide rural labor market area. 
Accordingly, the LTCH PPS statewide rural wage index will be determined 
using acute-care IPPS hospital wage data (the rationale for using IPPS 
hospital wage data is discussed in greater detail below in section 
V.C.1.d. of this preamble) from hospitals located in non-MSA areas (for 
example, rural areas, including Micropolitan Areas) and that statewide 
rural wage index will be assigned to LTCHs located in those non-MSA 
areas.
    Comment: One commenter brought to our attention the fact that that 
we included two Micropolitian Areas, Enid, OK (CBSA 21240) and 
Jamestown, NY (CBSA 27640), in our Table of proposed urban area wage 
indexes (as shown in Table 1 of the addendum to the February 3, 2005 
proposed rule (70 FR 5772)).
    Response: We thank the commenter for bringing this inadvertent 
error to our attention. We have removed those two Micropolitan areas 
(which we proposed to treat as rural) from Table 1 (urban area wage 
indexes) of the Addendum to this final rule. We also want to note that, 
despite this error, the statewide average rural wage indexes in Table 2 
for rural OK and NY, respectively, correctly included the wage data for 
these Micropolitan areas.

[[Page 24188]]

4. Implementation of the Revised Labor Market Areas Under the LTCH PPS
    As we discussed in the February 3, 2005 proposed rule (70 FR 5742), 
consistent with our policy under the IPPS, we did not propose to adopt 
the new labor market area definitions themselves in a budget neutral 
manner. We did not receive any comments and, therefore, under the 
generally broad authority conferred upon the Secretary to develop the 
LTCH PPS under section 123 of Pub. L. 106-113 and section 307 of Pub. 
L. 106-554, are not adopting the new labor market area definitions 
under the LTCH PPS in a budget neutral manner, just as implemented 
under the IPPS.
    Furthermore, as we also discussed in that same proposed rule and as 
we discussed in the August 30, 2002 LTCH PPS final rule, under section 
123 of the BBRA, and section 307 of the BIPA, the Secretary generally 
has broad authority in developing the LTCH PPS, including whether and 
how to make adjustments to the LTCH PPS. In that same final rule we 
state that we will consider whether it is appropriate for us to propose 
a budget neutrality adjustment in the annual update of some aspects of 
the LTCH PPS under our broad discretionary authority under the statute 
to provide ``appropriate adjustments'' to the LTCH PPS. Until the 5-
year transition from cost-based reimbursement to prospective payment is 
complete, including the end of the phase-in of the wage index 
adjustment under Sec.  412.525(c), as we explained in the February 3, 
2005 proposed rule, we believe that it would not be appropriate to 
update any aspects of the LTCH PPS in a budget neutral manner. A 
primary reason for waiting until after the transition is complete 
before evaluating aspects of the LTCH PPS, including the budget 
neutrality issue, is that the data available to analyze such issues is 
very limited because the LTCH PPS is still relatively new and there is 
a lag time in data availability. Also, the fact that a number of LTCHs 
were and some still are transitioning to 100 percent of the Federal 
prospective payment rate may make the available data even less 
appropriate for an analysis, since hospitals may still be modifying 
their behavior based on their transition to prospective payment and our 
data may not yet replace any operational changes LTCHs may have made in 
response to prospective payment. Once the transition is complete, we 
will have a better opportunity to evaluate the impacts of the 
implementation of this new payment system based on a number of years of 
LTCH PPS data.
    To facilitate an understanding of the policies related to the 
change to the LTCH PPS labor market areas discussed above, in Table 4 
of the Addendum of this final rule, we are providing a listing of each 
LTCH's State and county location; existing labor market area 
designation; and its new CBSA-based labor market area designation based 
on the best available cost report data from HCRIS (FYs 1999-2003) and 
county information from our OSCAR database. Any questions or 
corrections (including additions or deletions) to the information 
provided in Table 4 should be e-mailed to the following CMS Web 
address: [email protected]. A link to this address can be found on 
the following CMS Web page http://www.cms.hhs.gov/providers/longterm/default.asp. We also note that a crosswalk file is available on the CMS 
Web page http://www.cms.hhs.gov/providers/longterm/frnotices.asp, which 
shows, by county, a crosswalk of the MSA-based labor market areas to 
the new CBSA-based labor-market areas adopted in this final rule.
    As we discussed in the February 3, 2005 proposed rule (70 FR 5743), 
when the revised labor market areas based on the OMB's new CBSA-based 
designations were adopted under the acute care hospital IPPS beginning 
on October 1, 2004, a transition to the new labor market area 
designations was established due to the scope and significant 
implications of these new boundaries and to buffer the subsequent 
significant impacts it may have on payments to numerous hospitals. As 
discussed in the FY 2005 IPPS final rule (69 FR 49032), during FY 2005, 
a blend of wage indexes is calculated for those acute care IPPS 
hospitals experiencing a drop in their wage indexes because of the 
adoption of the new labor market areas. Also, as described in that same 
final rule (69 FR 49032), under the IPPS, hospitals that previously 
were located in an urban MSA, but then became rural under the new CBSA-
based definitions are assigned the wage index value of the urban area 
to which they previously belonged, for 3 years (FYs 2005-2007).
    Also, in the February 3, 2005 proposed rule, we explained that we 
did not believe it was necessary to propose a transition policy for the 
revision to the LTCH PPS labor market area definitions because the 
impact of the revision to the labor market area definitions would only 
have a minimal impact on LTCH PPS payments (as explained below). 
Instead, under the LTCH PPS, we proposed to adopt the new CBSA-based 
labor market area definitions beginning with the 2006 LTCH PPS rate 
year without a transition period. As also discussed in greater detail 
below, we believe that this policy is appropriate because despite 
significant similarities between the LTCH PPS and the IPPS, there are 
clear distinctions between the payment systems, particularly regarding 
wage index issues.
    The most significant distinction upon which we have based this 
policy determination, as we discussed in the February 3, 2005 proposed 
rule, is that where acute care hospitals under the IPPS have been paid 
using full wage index adjusted payments since 1983 and had used the 
previous IPPS MSA-based labor market area designations for over 10 
years, under the LTCH PPS, a wage index adjustment is being phased-in 
over a 5-year period, and as noted above, most LTCHs are still in their 
FY 2004 cost reporting period (the vast majority of LTCHs start their 
cost reporting periods on July 1 or September 1), and are, therefore, 
in the 2nd year of the 5-year phase-in of the LTCH PPS wage index 
adjustment, and the applicable wage index value is \2/5\ths (40 
percent) of the applicable full LTCH PPS wage index adjustment. Since 
most LTCHs are only in the 2nd year of the 5-year phase-in of the wage 
index adjustment, for most LTCHs, the labor-related portion of the 
standard Federal rate is only adjusted by 40 percent of the applicable 
full wage index (that is, \2/5\th wage index value). The LTCH PPS wage 
index adjustment is made by multiplying the LTCH PPS standard Federal 
rate by the applicable wage index value, and the current LTCH PPS labor 
related-share is 72.885 percent. Consequently, for most LTCHs, only 29 
percent of the standard Federal rate is affected by the wage index 
adjustment (72.885 percent x 0.4 = 29.154 percent), and the revision to 
the labor market area definitions based on OMB's new CBSA-based 
designations will only have a minimal impact on LTCH PPS payments. 
Thus, the impact that the wage index can have on LTCH PPS payments is 
limited at this point, since only a small percentage of the LTCH PPS 
standard Federal rate is affected by the wage index (approximately 29 
percent in most cases, as explained above) because of the 5-year phase-
in of the wage index adjustment.
    Our initial analysis of the appropriateness of including a wage 
index adjustment in the March 22, 2002 proposed rule for the LTCH PPS 
(67 FR 13465) indicated that a wage adjustment did not lead to an 
increase in the accuracy of LTCH PPS payments because a statistical 
analysis did not show a significant relationship between LTCHs costs 
and their geographic location. However, based upon

[[Page 24189]]

comments, we revisited this proposed determination after additional 
data analysis and a more general policy evaluation, and we stated that 
we ``believe that the conceptual reasons for having an area wage 
adjustment support transitioning into a wage adjustment, 
notwithstanding the data problems and issues with the regression 
analysis'' (see August 30, 2002 LTCH PPS final rule (67 FR 56018)). 
However, given the lack of strong empirical evidence to support a wage 
index adjustment under the LTCH PPS, we provided for a 5-year 
transition to the full implementation of the wage index adjustment. We 
also noted that we would ``* * * continue to reevaluate LTCH data as 
they become available and would propose to adjust the phase-in if 
subsequent data support a change.'' In each subsequent LTCH PPS 
proposed and final rule since FY 2003, we have evaluated the most 
recent LTCH data available and still have found no empirical evidence 
to support a change in the 5-year phase-in of the wage index adjustment 
under the LTCH PPS.
    A wage index adjustment has been a stable feature of the acute care 
hospital IPPS since its 1983 implementation and, furthermore, the IPPS 
had utilized the prior MSA-based labor market area designation for over 
10 years. As explained in detail above, the proposed revisions to the 
labor market area definitions based on OMB's new CBSA designations 
would not have the same impact on the LTCH PPS, which has only been 
implemented since October 1, 2002, as it did on the IPPS. Given the 
clear distinction between the impact of the revisions to the labor 
market area definitions on the IPPS as compared to those same proposed 
revisions to the LTCH PPS, therefore, we believe that, although it is 
appropriate to adopt transition policies for acute care hospitals under 
the IPPS, it is also equally appropriate not to treat the impact of the 
proposed revisions to the LTCH PPS labor market area definitions in the 
same way under the LTCH PPS. We believe that the revision to the labor 
market area definitions based on OMB's new CBSA-based designations 
would only have a minimal impact on LTCH PPS payments.
    As we discussed in the February 3, 2005 proposed rule, because the 
impact of the revision to the labor market area definitions would only 
have a minimal impact on LTCH PPS payments (as explained above), we do 
not believe it is necessary to have a transition policy for the 
revision to the LTCH PPS labor market area definitions. In contrast, a 
transition policy to the revised IPPS labor market area definitions 
under the IPPS was appropriate because individual hospitals could 
experience a significant impact as a result of the new labor market 
definitions, especially because the full labor-related share of either 
71.066 percent or 62 percent (as discussed above in section V.C.1.b. of 
this preamble) of the IPPS standardized amount (that is, Federal rate) 
is affected by the IPPS wage index adjustment, which resulted in a more 
significant projected impact for acute care hospitals under the IPPS. 
Furthermore, as we explained in that same proposed rule, we do not 
believe that it is necessary to further transition any changes to the 
LTCH PPS wage index adjustment, including the revision of the labor 
market area definitions, because, in fact, the LTCH PPS wage index 
adjustment is still being phased-in over 5 years as established in the 
August 30, 2002 LTCH PPS final rule (67 FR 56018). Accordingly, in the 
February 3, 2005 proposed rule, we explained that, to the extent the 
new CBSA-based labor market area definitions are implemented, we would 
not expect them to have as significant of an impact on LTCHs, as they 
do for IPPS hospitals since the full wage index adjustment had been a 
stable factor of IPPS payment for over 20 years.
    Comment: One commenter believes that we should implement our 
proposed revisions to the LTCH PPS labor market area based on OMB's 
CBSA designations with the same transition as was implemented under the 
IPPS.
    Response: As discussed in the February 3, 2005 proposed rule, we 
did not provide for a transition policy under the LTCH PPS for changes 
to the labor market area definitions even though a transition policy 
was implemented under the IPPS. We believe it was necessary to provide 
additional protection to acute care hospitals that due to the new CBSA 
designations experienced reductions in their wage indices, given the 
scope and potentially significant implications of these new labor 
market areas. Moreover, as noted above, a wage index adjustment has 
been a stable feature of the acute care hospital IPPS almost since its 
implementation in 1983. The prior MSA-based labor market area 
designations were utilized in IPPS for over 10 years, thus, reinforcing 
our belief that a transition policy was appropriate.
    We recognize that, just like IPPS hospitals, many LTCHs would 
experience decreases in their wage index as a result of the labor 
market area changes. At the same time, a significant number of LTCHs 
may benefit from these changes. However, we believe that because we are 
in the midst of a 5-year transition to a full wage-index adjustment 
under the LTCH PPS, the effects of these newest CBSA-based changes to 
the LTCH PPS labor market areas definitions will be mitigated. 
Specifically, as noted above, many LTCHs are still in the early stages 
of the 5-year phase-in of the LTCH PPS wage index adjustment. In fact, 
many LTCHs are only in the 2nd year of the 5-year phase-in of the LTCH 
PPS wage index adjustment. Therefore, for most LTCHs, the labor-related 
portion of the standard Federal rate is only adjusted by 40 percent of 
the applicable full wage index (that is, \2/5\th wage index value). 
Also, as noted above, the LTCH PPS wage index adjustment is made by 
multiplying the LTCH PPS standard Federal rate by the applicable wage 
index value, and the current LTCH PPS labor related-share is 72.885 
percent. Consequently, for most LTCHs, only 29 percent of the standard 
Federal rate is affected by the wage index adjustment (72.885 percent x 
0.4 = 29.154 percent), and the proposed revision to the labor market 
area definitions based on OMB's new CBSA-based designations will only 
have a minimal impact on LTCH PPS payments.
    An additional distinction between the IPPS and the LTCH PPS 
regarding the wage index adjustment is that the IPPS policies that 
provide for a transition policy from MSA-based labor market areas to 
CBSA-based labor market areas were implemented in a budget neutral 
manner under the IPPS (69 FR 49034-49035 and 49275). However, as noted 
above, wage index changes are not budget neutral under the LTCH PPS; 
therefore, a transition policy similar to what was implemented for the 
IPPS would result in additional LTCH spending by the Medicare program. 
Therefore, as explained in more detail above, despite the fact that we 
have established a transition policy for the implementation of CBSA-
based labor market areas under the IPPS, we do not believe that it is 
either appropriate or necessary to establish a similar transition 
policy under the LTCH PPS. This is the case, in large part, because 
there are clear differences in the impact of the wage index adjustment 
between the IPPS and the LTCH PPS. Primarily, we would note that the 
full 100 percent wage index adjustment has been a feature of the IPPS 
since its beginning in 1983 where under the LTCH PPS, which has been in 
effect for cost reporting periods beginning on or after October 1, 
2002, many LTCHs are only in the 2nd year of a 5-year phase-in of a 
full wage index adjustment. Therefore,

[[Page 24190]]

even though there are many LTCHs that will experience decreases in 
their wage index as a result of the labor market changes, and there are 
a significant number of LTCHs that may benefit from the changes, we 
believe that the effects of the changes to the LTCH PPS labor market 
area definition resulting from the new CBSA-based designations will be 
mitigated because, presently, payments to LTCHs do not include a full 
wage index adjustment. Therefore, under the broad authority of section 
123 of Pub. L. 106-113 and section 307(b)(1) of Pub. L. 106-554, we are 
not providing for a transition period for purposes of implementing the 
new CBSA-based labor market area definitions.
    In addition, in the February 3, 2005 proposed rule (70 FR 5744), we 
proposed to revise Sec.  412.525(c) to clarify the application of the 
current adjustment for area wage levels under the LTCH PPS, which was 
originally established in the August 30, 2002 final rule (67 FR 56015-
56019). Specifically, we proposed to revise Sec.  412.525(c) to state 
that the labor portion of a LTCH's Federal prospective payment is 
adjusted to account for geographical differences in the area wage 
levels using an appropriate wage index (established by CMS). The wage 
index reflects the relative level of hospital wages and wage-related 
costs in the geographic area of the hospital compared to the national 
average level of hospital wages and wage-related costs. Currently, 
urban or rural area is determined in accordance with the definitions at 
Sec.  412.62(f)(1)(ii) and (iii). We received no comments on our 
proposed revisions to Sec.  412.525(c), and, therefore, are adopting 
those changes in this final rule. As we discussed above, because we are 
revising those definitions in this final rule, urban or rural area will 
be determined in accordance with the revisions to Sec.  412.525(c)(1) 
or the revisions to Sec.  412.525(c)(2), respectively. In addition, 
Sec.  412.525(c) will be revised to specify that the appropriate wage 
index (established by CMS) is updated annually. We note that this 
revision to the language in Sec.  412.525(c), which codifies our 
existing policy into regulations, is similar to the wage index 
adjustment codified in regulations under the IPPS at Sec.  412.64(h). 
As stated above, this clarification to Sec.  412.525(c) clearly 
outlines in regulations our established methodology for the application 
of the area wage adjustment under the LTCH PPS. As noted above, this 
methodology was established when we implemented the LTCH PPS (that is, 
cost reporting periods beginning on or after October 1, 2002) in the 
August 30, 2002 final rule (67 FR 56015).
d. Wage Index Data
    In the May 7, 2004 final rule (69 FR 25684), we established LTCH 
PPS wage index values for the 2005 LTCH PPS rate year calculated from 
the same data (generated in cost reporting periods beginning during FY 
2000) used to compute the FY 2004 acute care hospital inpatient wage 
index data without taking into account geographic reclassification 
under sections 1886(d)(8) and (d)(10) of the Act. The LTCH wage index 
values applicable for discharges occurring on or after July 1, 2004 
through June 30, 2005 are shown in Table 1 (for urban areas) and Table 
2 (for rural areas) in the Addendum to that final rule. Acute care 
hospital inpatient wage index data is also used to establish the wage 
index adjustment used in the IRF PPS, IPF PPS, HHA PPS, SNF PPS, and 
inpatient psychiatric facility PPS (IPF). As we discussed in the August 
30, 2002 LTCH PPS final rule (67 FR 56019), since hospitals that are 
excluded from the IPPS are not required to provide wage-related 
information on the Medicare cost report and because we would need to 
establish instructions for the collection of this LTCH data in order to 
establish a geographic reclassification adjustment under the LTCH PPS, 
the wage adjustment established under the LTCH PPS is based on a LTCH's 
actual location without regard to the urban or rural designation of any 
related or affiliated provider. Therefore, because complete LTCH wage-
related data are not currently available on the cost report, we do not 
have complete LTCH wage related data to use for the purposes of 
creating a LTCH wage index based on LTCH wage data, and since the labor 
market areas of acute care hospitals under the IPPS are similar to 
those of LTCHs, we believe wage data of acute care IPPS hospitals 
accurately capture the relationship between the wage related costs for 
LTCHs in an area as compared to the national average. Therefore, we 
believe IPPS acute care hospitals' wage data are the best available 
data to use for the wage index under the LTCH PPS.
    In the February 3, 2005 proposed rule, for the 2006 LTCH PPS rate 
year, we proposed to use acute care hospital inpatient wage index data 
generated from cost reporting periods beginning during FY 2001 without 
taking into account geographic reclassification under sections 
1886(d)(8) and (d)(10) of the Act to determine the applicable wage 
index values under the LTCH PPS because these data (FY 2001) are the 
most recent complete data. These data are the same FY 2001 acute care 
hospital inpatient wage data that were used to compute the FY 2005 wage 
indices currently used under the IPPS, SNF PPS, and HHA PPS. The 
proposed full wage index values applicable for LTCH PPS discharges 
occurring on or after July 1, 2005 through June 30, 2006 are shown in 
Tables 1 and 2 in the Addendum to that same proposed rule (70 FR 5772-
5806). As we noted in earlier in this section, we inadvertently 
included two Micropolitian Areas, Enid, OK (CBSA 21240) and Jamestown, 
NY (CBSA 27640) (which we proposed to treat as rural), in Table 1 
(proposed urban area wage indexes) of the Addendum to the February 3, 
2005 proposed rule. Despite this error, the proposed statewide average 
rural wage indexes in Table 2 of the Addendum to that same proposed 
rule for rural OK and NY, respectively, correctly included the wage 
data for these Micropolitan areas. We have removed these two geographic 
areas from Table 1 (urban area wage indexes) of the Addendum to this 
final rule. We received no comments on the proposed wage index values 
for 2006 LTCH PPS rate year. Accordingly, in this final rule, we are 
establishing wage index values for the 2006 LTCH PPS rate year 
calculated from the same data used to calculate the FY 2005 acute care 
hospital wage index used under the IPPS (generated in FY 2001) without 
taking into account geographic reclassification under sections 
1886(d)(8) and (d)(10) of the Act. The LTCH wage index values that will 
be applicable for discharges occurring on or after July 1, 2005 through 
June 30, 2006, are shown in Table 1 (for urban areas) and Table 2 (for 
rural areas) in the Addendum to this final rule. We note a labeling 
error published in prior years wage index tables used in the LTCH PPS. 
That labeling error was the listing of Stanly County, NC as one of the 
areas under MSA 1520 when, in fact, we consider Stanly County, NC to be 
a rural area in North Carolina. Stanly County wage data have always 
been correctly treated as rural in the actual creation of the LTCH wage 
index values, and it has only been the listing of Stanly County under 
MSA 1520 in prior years LTCH PPS index tables that was in error. 
Consequently, Table 1a in the Addendum to this final rule correctly 
removes Stanly County from the list of areas that fall under the MSA 
1520 wage index. As this is strictly a labeling correction that does 
not affect the actual computation of the wage index values, any LTCHs 
located in Stanly County,

[[Page 24191]]

NC, will continue to fall under, and use, the wage index for rural 
North Carolina. As we also noted above, we have removed the inadvertent 
inclusion of two Micropolitian Areas (which we are treating as rural), 
Enid, OK (CBSA 21240) and Jamestown, NY (CBSA 27640), from Table 1 
(urban area wage indexes) of the addendum this final rule).
    As noted above, a listing of each LTCH's State and county location; 
existing MSA-based labor market area designation; and its new CBSA-
based labor market area designation based on the best available cost 
report data (FYs 1999-2003) from HCRIS and county information from our 
OSCAR database, are shown in Table 4 of the Addendum to this final 
rule. As we also noted earlier in this section, we encourage LTCHs to 
review the county location and both the current and labor market area 
assignments for accuracy. Any questions or corrections (including 
additions or deletions) to the information provided in Table 4 should 
be emailed to the following CMS Web address: [email protected]. A 
link to this address can be found on the following CMS Web page http://www.cms.hhs.gov/providers/longterm/frnotices.asp. Also, as noted 
earlier, a crosswalk file is available on the CMS Web page http://www.cms.hhs.gov/providers/longterm/frnotices.asp which shows, by 
county, a crosswalk of the MSA-based labor market areas to the new 
CBSA-based labor-market areas adopted in this final rule.
    As discussed earlier in this section (V.C.1.a.), the applicable 
wage index phase-in percentages are based on the start of a LTCH's cost 
reporting period beginning on or after October 1st of each year during 
the 5-year transition period. Thus, for cost reporting periods 
beginning on or after October 1, 2004 and before October 1, 2005 (FY 
2005), the labor portion of the standard Federal rate would be adjusted 
by three-fifths of the applicable LTCH wage index value. For example, 
for a LTCH's discharges occurring during the 2006 LTCH PPS rate year 
(that is, July 1, 2005 through June 30, 2006) and occurring in the 
LTCH's cost reporting period beginning during FY 2005, the applicable 
wage index value would be three-fifths of the full FY 2005 acute care 
hospital inpatient wage index data, without taking into account 
geographic reclassification under sections 1886(d)(8) and (d)(10) of 
the Act (shown in Tables 1 and 2 of the Addendum to this final rule). 
Similarly, for a LTCH's discharges occurring during the 2006 LTCH PPS 
rate year (that is, July 1, 2005 through June 30, 2006) and occurring 
in the LTCH's cost reporting period beginning during FY 2006, the 
applicable wage index value will be four-fifths of the full FY 2005 
acute care hospital inpatient wage index data, without taking into 
account geographic reclassification under sections 1886(d)(8) and 
(d)(10) of the Act (shown in Tables 1 and 2 in the Addendum to this 
final rule).
    Because the phase-in of the wage index does not coincide with the 
LTCH PPS rate year (July 1st through June 30th), most LTCHs will 
experience a change in the wage index phase-in percentages during the 
LTCH PPS rate year. For example, during the 2006 LTCH PPS rate year, 
for a LTCH with a January 1st fiscal year, the three-fifths wage index 
would be applicable for the first 6 months of the 2006 LTCH PPS rate 
year (July 1, 2005 through December 31, 2005) and the four-fifths wage 
index would be applicable for the second 6 months of the 2006 LTCH PPS 
rate year (January 1, 2006 through June 30, 2006). We also note that 
some providers will still be in the second year of the 5-year phase-in 
of the LTCH wage index (that is, those LTCHs who began the second year 
of the 5-year phase-in during their cost reporting periods that began 
between July 1, 2004 and September 30, 2004). For the remainder of 
those LTCHs' FY 2004 cost reporting periods which will conclude during 
the first 3 months of the 2006 LTCH PPS rate year, the applicable wage 
index value will be two-fifths of the full FY 2005 acute care hospital 
inpatient wage index data, without taking into account geographic 
reclassification under sections 1886(d)(8) and (d)(10) of the Act as 
shown in Tables 1 and 2 in the Addendum to this final rule. Since there 
are no longer any LTCHs in their cost reporting period that began 
during FY 2003 (the first year of the 5-year wage index phase-in), we 
are no longer showing the \1/5\th wage index value in Tables 1 and 2 in 
the Addendum to this final rule.
2. Adjustment for Cost-of-Living in Alaska and Hawaii
    In the August 30, 2002 LTCH PPS final rule (67 FR 56022), we 
established, under Sec.  412.525(b), a cost-of-living adjustment (COLA) 
for LTCHs located in Alaska and Hawaii to account for the higher costs 
incurred in those States. (The inadvertent omission of Sec.  412.525(b) 
by the OFR noted in the May 7, 2004 LTCH PPS final rule (69 FR 25686) 
has been corrected in 42 CFR parts 400 to 429 revised as of October 1, 
2004). In the May 7, 2004 final rule (69 FR 25686), for the 2005 LTCH 
PPS rate year, we established that we make a COLA to payments for LTCHs 
located in Alaska and Hawaii by multiplying the standard Federal 
payment rate by the appropriate factor listed in Table I of that same 
final rule.
    In the February 3, 2005 proposed rule, for the 2006 LTCH PPS rate 
year, we proposed to make a COLA to payments to LTCHs located in Alaska 
and Hawaii by multiplying the standard Federal payment rate by the 
factors listed in Table I below. These factors are obtained from the 
U.S. Office of Personnel Management (OPM) and are currently used under 
the IPPS. In addition, in that same proposed rule, we proposed that if 
the OPM releases revised COLA factors before March 1, 2005, we would 
use them for the development of the payments for the 2006 LTCH rate 
year and publish them in the LTCH PPS final rule. The OPM has not 
revised the COLA factors for Alaska and Hawaii since the publication of 
the proposed rule. Therefore, we are using the proposed COLA factors 
published in the February 3, 2005 proposed rule for this final rule.
    We received no comments on the proposed COLA factors for LTCHs 
located in Alaska and Hawaii for the 2006 LTCH PPS rate year. 
Therefore, under Sec.  412.525(b) and the broad authority of section 
123 of Pub. L. 106-113 and section 307(b)(1) of Pub. L. 106-554, we are 
establishing the COLA factors for LTCHs located in Alaska and Hawaii, 
as shown below in Table I, for the 2006 LTCH PPS rate year.

    Table I.--Cost-of-Living Adjustment Factors for Alaska and Hawaii
                Hospitals for the 2006 LTCH PPS Rate Year
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Alaska:
  All areas...................................................      1.25
Hawaii:
  Honolulu County.............................................      1.25
  Hawaii County...............................................     1.165
  Kauai County................................................    1.2325
  Maui County.................................................    1.2375
  Kalawao County..............................................    1.2375
------------------------------------------------------------------------

3. Adjustment for High-Cost Outliers
a. Background
    Under Sec.  412.525(a), we make an adjustment for additional 
payments for outlier cases that have extraordinarily high costs 
relative to the costs of most discharges. Providing additional payments 
for outliers strongly improves the accuracy of the LTCH PPS in 
determining resource costs at the patient and hospital level. These 
additional payments reduce the financial losses that would otherwise be 
caused by treating patients who require more

[[Page 24192]]

costly care and, therefore, reduce the incentives to underserve these 
patients. We set the outlier threshold before the beginning of the 
applicable rate year so that total outlier payments are projected to 
equal 8 percent of estimated total payments under the LTCH PPS.
    Under Sec.  412.525(a), we make outlier payments for any discharges 
if the estimated cost of a case exceeds the adjusted LTCH PPS payment 
for the LTC-DRG plus a fixed-loss amount. The fixed-loss amount is the 
amount used to limit the loss that a hospital will incur under the 
outlier policy for a case with unusually high costs. This results in 
Medicare and the LTCH sharing financial risk in the treatment of 
extraordinarily costly cases. The LTCH's loss is limited to the fixed-
loss amount and a fixed percentage of costs above the marginal cost 
factor. We calculate the estimated cost of a case by multiplying the 
overall hospital cost-to-charge ratio by the Medicare allowable covered 
charge. In accordance with Sec.  412.525(a)(3), we pay outlier cases 80 
percent of the difference between the estimated cost of the patient 
case and the outlier threshold (the sum of the adjusted Federal 
prospective payment for the LTC-DRG and the fixed-loss amount).
    Under the LTCH PPS, we determine a fixed-loss amount, that is, the 
maximum loss that a LTCH can incur under the LTCH PPS for a case with 
unusually high costs before the LTCH will receive any additional 
payments. We calculate the fixed-loss amount by simulating estimated 
aggregate payments with and without an outlier policy. We set the 
fixed-loss amount at a level that would result in estimated total 
outlier payments being projected to be equal to 8 percent of projected 
total LTCH PPS payments. Currently, MedPAR claims data and cost-to-
charge ratios based on data from the latest available cost report data 
from the Hospital Cost Report Information System (HCRIS) and 
corresponding MedPAR claims data are used to establish a fixed-loss 
threshold amount under the LTCH PPS.
b. Cost-to-Charge Ratios (CCRs)
    As we noted above, we calculate the estimate of the cost of the 
case used in determining LTCH PPS outlier payments by multiplying the 
Medicare allowable charges for the case by the LTCH's overall CCR. As 
we established in the June 9, 2003 IPPS high-cost outlier final rule 
(68 FR 34494-34515), for discharges occurring on or after October 1, 
2003, FIs use either the most recent settled cost report or the most 
recent tentative settled cost report, whichever is from the later 
period, to determine a LTCH's CCR. As we specified in Program 
Memorandum Transmittal A-02-093 when we implemented the LTCH PPS and as 
codified in regulation at Sec.  412.525(a)(4)(ii) which incorporates 
Sec.  412.84(i)(3), for discharges occurring on or after August 8, 
2003, for LTCHs for which we are unable to compute an accurate CCR (for 
example, due to faulty or unavailable data), we assign the applicable 
statewide average CCR to the LTCH. (Currently, the applicable statewide 
average CCRs can be found in Tables 8A and 8B of the FY 2005 IPPS final 
rule (69 FR 49687-49688).)
    As set forth in Sec.  412.525(a)(4)(ii), by cross-referencing Sec.  
412.84(i)(3), currently, we apply the applicable statewide average CCR 
when a LTCH's CCR exceeds the maximum CCR threshold (ceiling) set forth 
at Sec.  412.84(i)(3)(ii). As we explained in the June 9, 2003 high-
cost outlier final rule (68 FR 34506-34507), CCRs above this range are 
probably due to faulty data reporting or entry. Therefore, these CCRs 
should not be used to identify and make payments for outlier cases 
because the data are clearly errors and should not be relied upon. We 
also have a similar policy regarding use of the statewide average CCR 
under the short-stay outlier policy at Sec.  412.529. Since CCRs are 
also used in determining short-stay outlier payments, the rationale for 
that policy mirrors that for high-cost outliers. (As specified in 
Transmittal 309 (October 1, 2004), the current LTCH PPS CCR ceiling is 
1.409, which is equal to the combined operating and capital CCR 
ceilings (69 FR 49278).)
    Currently, for discharges occurring on or after August 8, 2003, 
only a maximum CCR threshold (ceiling) is applied to a LTCH's CCR 
ratio. For discharges occurring on or after August 8, 2003, a minimum 
CCR threshold (floor) is no longer applicable (See June 8, 2003, 68 FR 
34506-34507). As discussed above, if a LTCH's CCR is above the ceiling, 
the applicable statewide average CCR is assigned to the LTCH. However, 
a LTCH's CCR is no longer raised to the applicable statewide average 
CCR if it falls below a minimum CCR threshold (floor) for discharges 
occurring on or after August 8, 2003, in order to prevent hospitals 
from receiving inappropriately high outlier payments. As we explained 
in the June 6, 2003 final rule, (68 FR 34143-34144), we believe that 
using the current combined IPPS operating and capital CCR ceiling for 
LTCHs is appropriate since LTCHs are certified as acute care hospitals 
that meet the criteria set forth in section 1861(e) of the Act to 
participate as a hospital in the Medicare program, and, in general, 
hospitals are paid as LTCHs only because their Medicare average length 
of stay is greater than 25 days in accordance with Sec.  412.23(e). 
Furthermore, as explained in that same final rule, prior to qualifying 
as a LTCH under Sec.  412.23(e)(2)(i), a hospital generally is paid as 
an acute care hospital under the IPPS during the period in which it 
demonstrates that it has an average length of stay of greater than 25 
days. (Refer to the June 9, 2003 high-cost outlier final rule (68 FR 
34506-34507) for further explanation of the establishment of the 
current CCR policy.)
c. Establishment of the Fixed-Loss Amount
    When we implemented the LTCH PPS, as discussed in the August 30, 
2002 final rule (67 FR 56022-56026), we established a fixed-loss amount 
so that total estimated outlier payments are projected to equal 8 
percent of total estimated payments under the LTCH PPS. To determine 
the fixed-loss amount, we estimate outlier payments and total LTCH PPS 
payments for each case using claims data from the MedPAR. Specifically, 
to determine the outlier payment for each case, we estimate the cost of 
the case by multiplying the Medicare covered charges from the claim by 
the LTCH's hospital specific CCR. In accordance with Sec.  
412.525(a)(3), if the estimated cost of the case exceeds the outlier 
threshold (the sum of the adjusted Federal prospective payment for the 
LTC-DRG and the fixed-loss amount), we pay an outlier payment equal to 
80 percent of the difference between the estimated cost of the case and 
the outlier threshold (the sum of the adjusted Federal prospective 
payment for the LTC-DRG and the fixed-loss amount).
    In the May 7, 2004 final rule, in calculating the fixed-loss amount 
that would result in outlier payments projected to be equal to 8 
percent of total estimated payments for the 2005 LTCH PPS rate year, we 
used claims data from the December 2003 update of the FY 2003 MedPAR 
files, as that was the best available data at that time. We calculated 
LTCHs' CCRs for determining the fixed-loss amount based on the latest 
available cost report data in HCRIS from FYs 1999 through 2002. Also, 
as we explained in that same final rule (68 FR 25687), we calculated a 
single fixed-loss amount for the 2005 LTCH PPS rate year based on 
Version 21.0 of the GROUPER, which was the version in effect as of the 
beginning of

[[Page 24193]]

the LTCH PPS rate year (that is, July 1, 2004, for the 2005 LTCH PPS 
rate year).
    We also applied the current outlier policy under Sec.  412.525(a) 
in determining the fixed-loss amount for the 2005 LTCH PPS rate year. 
Accordingly, we used the FY 2004 IPPS combined operating and capital 
CCR ceiling of 1.366 (as explained in the IPPS final rule, published 
August 1, 2003 (68 FR 45478)) to evaluate whether each LTCH's CCR 
exceeded the ceiling. (Our rationale for using the FY 2004 combined 
IPPS operating and capital CCR ceiling for LTCHs is stated above in 
section V.C.3.b. of this preamble.) As we discuss in greater detail 
below, in determining the fixed-loss amount for the 2005 LTCH PPS rate 
year, there were no LTCHs with missing CCRs or with CCRs in excess of 
the current ceiling and, therefore, there was no need to assign the 
applicable statewide average CCR to any LTCHs in determining the fixed-
loss amount (unless this was already done by the FI).
    For the 2005 LTCH PPS rate year, in the May 7, 2004 final rule (69 
FR 25689), we established a fixed-loss amount of $17,864. Thus, in the 
2005 LTCH PPS rate year, we pay an outlier case 80 percent of the 
difference between the estimated cost of the case and the outlier 
threshold (the sum of the adjusted Federal LTCH PPS payment for the 
LTC-DRG and the fixed-loss amount of $17,864).
    In the February 3, 2005 proposed rule (70 FR 5746-5749), we did not 
propose to change our established methodology for determining the 
fixed-loss amount. However, we proposed to use more recently available 
data to determine the fixed-loss amount for the 2006 LTCH PPS rate 
year, including the most recent available claims data and data from the 
Provider Specific File (PSF). Specifically, in that same proposed rule, 
for the 2006 LTCH PPS rate year, we used the September 2004 update of 
the FY 2003 MedPAR claims data to determine a proposed fixed-loss 
amount that would result in projected outlier payments being equal to 8 
percent of total projected LTCH PPS payments, based on the policies 
described in that proposed rule, because those data were the best LTCH 
data available at that time. As noted above, we determined the proposed 
fixed-loss amount based on the version of the GROUPER that will be in 
effect as of the beginning of the 2006 LTCH PPS rate year (July 1, 
2005), that is, Version 22.0 of the LTCH PPS GROUPER (69 FR 48982).
    As we explained in the February 3, 2005 proposed rule, in 
determining the LTCH PPS fixed-loss amount, CCRs are used to estimate 
the cost of each case by multiplying the Medicare covered charges from 
the claim by the appropriate CCR. Rather than using CCRs calculated 
from the latest available cost report data in HCRIS and corresponding 
claims data from the MedPAR data as we did when we determined the 2005 
LTCH PPS rate year fixed-loss amount (as noted above), in that proposed 
rule, for purposes of determining the proposed fixed-loss amount for 
the 2006 LTCH PPS rate year, we proposed to use CCRs from the PSF as 
they are based on the best available data for the LTCH PPS because, as 
we discuss in greater detail below, they are based on more recent data 
and were actually used to make LTCH PPS payment.
    The PSF contains CCRs computed by FIs in accordance with Program 
Memorandum Transmittal A-02-093 and Program Memorandum Transmittal A-
03-058, which reflects the changes made in the June 9, 2003 high-cost 
outlier final rule (68 FR 34494), including the use of either the most 
recently settled or tentatively settled cost report, whichever is 
later, to determine a LTCH's CCR. This also includes the assignment of 
the applicable statewide average CCR by the FI in cases where the FI 
was unable to compute a CCR (for example, due to faulty or unavailable 
data), or the CCR computed by the FI exceeded the applicable CCR 
ceiling. While FIs have been determining a CCR for each LTCH and 
entering it on the PSF (as instructed in Program Transmittal A-02-093 
and Program Memorandum Transmittal A-03-058) in order to determine the 
LTCH PPS payment for each discharge using the LTCH PPS PRICER software, 
we have only recently had access to the complete PSF data for all LTCHs 
due to the lag time in data availability (the LTCH PPS has only been in 
effect for slightly over 2 years, that is for cost reporting periods 
beginning on or after October 1, 2002). Thus, this is the first 
opportunity that we have had to use CCRs from the PSF in determining 
the fixed-loss amount.
    We proposed to use the CCRs from the PSF rather than computing CCRs 
from the latest MedPAR claims data and corresponding cost report data 
for purposes of determining the fixed-loss amount under the LTCH PPS 
because, as we discussed in the February 3, 2005 proposed rule, we 
believe that using these CCRs to estimate the cost of the case used in 
determining outlier payments would be more accurate than using our 
current source for obtaining CCRs to estimate the fixed-loss amount 
(that is, calculating CCRs from the latest cost report data in HCRIS 
and corresponding claims data in the MedPAR files, as explained above). 
Specifically, as we discuss in greater detail below, CCRs in the PSF 
are based on the most recently settled or tentatively settled cost 
report, whichever is later, whereas the CCRs computed from HCRIS and 
corresponding MedPAR data are several years old due to the lag time in 
data availability. Increasing the accuracy of the estimate of outlier 
payments that is used in determining the fixed-loss amount by using 
CCRs from the PSF rather than CCRs computed from HCRIS and 
corresponding MedPAR data would help ensure that outlier payments are 
projected to equal 8 percent of total estimated LTCH PPS payments as we 
established in the August 30, 2002 final rule (67 FR 56026). Using CCRs 
from the PSF should result in a more precise fixed-loss amount because 
these CCRs are based on more recent available data and, as explained 
above, these are the CCRs actually used by FIs to make LTCH PPS 
payments using the LTCH PPS PRICER software. As discussed in the 
February 3, 2005 proposed rule, the CCRs in the PSF also reflect the 
changes to the CCR and outlier policy made in the June 9, 2003 high-
cost outlier final rule (68 FR 34494), which includes the use of either 
the most recently settled or tentatively settled cost reports, 
whichever is later, by FIs to determine a LTCH's CCR. In addition, 
because all of the LTCHs with claims in the September 2004 update of 
the FY 2003 MedPAR files (which we used to determine the proposed 
fixed-loss amount) have an entry in the PSF, there were no LTCHs with 
missing CCRs, and, therefore, there was no need to assign the 
applicable statewide average CCR to any LTCHs in determining the fixed-
loss amount for the 2006 LTCH PPS rate year (unless this was already 
done by the FI when entering the CCR in the PSF). This results in a 
more accurate CCR for each LTCH, and therefore a more accurate estimate 
of the cost of each case for LTCHs that, in the past, were assigned the 
applicable statewide average CCR in determining the fixed-loss amount 
because the data needed to compute a CCR were unavailable. (We note 
that consistent with our established methodology for determining CCRs 
for the purposes of determining the fixed-loss amount, if, in the 
future, a LTCH were missing a CCR in the PSF, we would assign the 
applicable statewide average CCR.)
    We believe that CCRs from the PSF are a better approximation of the 
CCRs that would be used to determine LTCHs' LTCH PPS payments during 
the 2006

[[Page 24194]]

LTCH PPS rate year because these are the most recent available CCRs 
actually used to make LTCH PPS payments. The CCRs that we have 
previously used to estimate the fixed-loss amount, computed from cost 
report data in HCRIS and corresponding claims data in the MedPAR files, 
were not used by FIs to make LTCH payments. Data from the PSF have only 
recently become available for all LTCHs because the LTCH PPS has only 
been in effect for slightly over 2 years (that is, cost reporting 
periods beginning on or after October 1, 2002). Prior to the 
availability of PSF data, for purposes of determining the fixed-loss 
amount, CCRs were computed based on the best available data (that is, 
from cost report data in HCRIS and corresponding MedPAR claims data). 
However, because there is lag time between the submission of cost 
report data and the availability of that data in HCRIS, CCRs may have 
been computed from cost reports that were several years old. In 
addition, often the applicable statewide average CCR was assigned to 
LTCHs when cost report and corresponding claims data necessary to 
compute a CCR were unavailable. This change in the source of obtaining 
CCRs for computing the fixed-loss amount results in more up-to-date and 
generally lower CCRs. This is the same data source used for obtaining 
CCRs under the IPPS for determining the IPPS fixed-loss amount annually 
(FY 2005 IPPS final rule, 69 FR 49276).
    As stated above, in the February 3, 2005 proposed rule, we only 
proposed to change the data source for obtaining the CCRs used in 
determining the fixed-loss amount and not our established methodology 
for determining the fixed-loss amount or our established rules for 
determining CCRs for LTCH PPS payment purposes. In that same proposed 
rule, for purposes of determining the proposed 2006 LTCH PPS rate year 
fixed-loss amount that would result in projected outlier payments being 
equal to 8 percent of total projected LTCH PPS payments, we used CCRs 
from the June 2004 update of the PSF, and LTCH claims from the 
September 2004 update of the FY 2003 MedPAR files. Accordingly, based 
on the data and policies described in that proposed rule, we proposed a 
fixed-loss amount of $11,544 for the 2006 LTCH PPS rate year. Thus, we 
proposed to pay an outlier case 80 percent of the difference between 
the estimated cost of the case and the outlier threshold (the sum of 
the adjusted Federal LTCH payment for the LTC-DRG and the fixed-loss 
amount of $11,544).
    As we discussed in the February 3, 2005 proposed rule, the proposed 
fixed-loss amount of $11,544 for the 2006 LTCH PPS rate year is 
significantly lower than the current fixed-loss amount of $17,864 for 
the 2005 LTCH PPS rate year. This notable change in the fixed-loss 
amount is primarily due to the change in the source of LTCHs' CCRs that 
are used to estimate costs when estimating LTCH PPS payments 
(specifically, using CCRs from the PSF rather than computing them from 
HCRIS and corresponding MedPAR data). As we discussed in that same 
proposed rule and as we discuss in greater detail below, we believe 
that a decrease in the fixed-loss amount is appropriate and necessary 
to maintain that estimated outlier payments would equal 8 percent of 
estimated total LTCH PPS payments, as required under Sec.  412.525(a).
    Comment: Seven commenters supported our decision to use hospital-
specific CCRs, which resulted in a significant reduction in the 
proposed fixed-loss amount. One provider particularly endorsed the 
resulting reduction in the fixed-loss amount which, in the future, 
should help ensure that estimated outlier payments would equal 8 
percent of estimated total Medicare payments to LTCHs. Several of the 
hospitals that commented noted that since this change would effectively 
reduce the financial loss suffered by LTCHs in treating high-cost 
cases, it would be highly effective in encouraging LTCHs to provide 
treatment for the some of the sickest Medicare beneficiaries.
    Response: We appreciate the commenters' endorsement of our use of 
hospital-specific CCRs for purposes of determining the 2006 LTCH PPS 
rate year fixed-loss amount. As stated above, in proposing the revised 
outlier threshold, we have not proposed a change to our established 
methodology for determining the fixed-loss amount, we only proposed 
changing the data source.
    At the outset of the LTCH PPS, we used the best available data in 
calculating the CCRs, which were the latest available cost data in 
HCRIS and corresponding claims data from MedPAR. The most recently 
available claims data from the PSF that we proposed to use to update 
the CCRs have only recently become available for all LTCHs. The LTCH 
PPS has only been in effect for slightly over 2 years (that is, for 
cost reporting periods beginning on or after October 1, 2002) and 
because many LTCHs did not transition to the LTCH PPS until FY 2003, 
the PSF was not created until relatively recently. For the 2006 LTCH 
PPS rate year, in calculating the proposed fixed-loss amount under 
Sec.  412.525(a), we used the September 2004 update of the FY 2003 
MedPAR claims data because those data were the best available LTCH 
data.
    Therefore, in this final rule we are establishing that in 
determining a fixed-loss amount that would result in estimated outlier 
payments equal to 8 percent of estimated total LTCH PPS payments, we 
will use the CCRs from the latest available PSF. Consistent with our 
established policy, we will continue to assign the applicable statewide 
average CCRs if a LTCH's CCR is unavailable or exceeds the maximum CCR 
threshold (as discussed above). In this final rule, for purposes of 
determining the final 2006 LTCH PPS rate year fixed-loss amount, we are 
using CCRs from the December 2004 update of the PSF, which are the CCRs 
that were used by FIs to make LTCH PPS payments to LTCHs as of December 
31, 2004, and LTCH claims data from the December 2004 update of the FY 
2004 MedPAR files, as these are the best available data. As discussed 
above, the CCRs in the PSF also reflect the changes to the CCR and 
outlier policy made in the June 9, 2003 high-cost outlier final rule 
(68 FR 34494), which include the use of either the most recently 
settled or tentatively settled cost reports, whichever is later, by FIs 
to determine a LTCH's CCR. In addition, because all of the LTCHs with 
claims in the December 2004 update of the FY 2004 MedPAR files (which 
we used to determine the fixed-loss amount for the final 2006 LTCH PPS 
rate year) have an entry in the PSF, there were no LTCHs with missing 
CCRs, and, therefore, there was no need to assign the applicable 
statewide average CCR to any LTCHs in determining the fixed-loss amount 
(unless this was already done by the FI when entering the CCR in the 
PSF). (We note that consistent with our established methodology for 
determining CCRs for the purposes of determining the fixed-loss amount, 
if, in the future, a LTCH were missing a CCR in the PSF, we would 
assign the applicable statewide average CCR.)
    Based on the data and policies described in this final rule, we are 
establishing a fixed-loss amount of $10,501 for the 2006 LTCH PPS rate 
year. Thus, we will pay an outlier case 80 percent of the difference 
between the estimated cost of the case and the outlier threshold (the 
sum of the adjusted Federal LTCH payment for the LTC-DRG and the fixed-
loss amount of $10,501). We note that the fixed-loss amount of $10,501 
for the 2006 LTCH PPS rate year is lower than the proposed fixed-loss 
amount for the 2006 LTCH

[[Page 24195]]

PPS rate year of $11,544 and significantly lower than the current 
fixed-loss amount of $17,864 for the 2005 LTCH PPS rate year. As we 
discussed in the February 3, 2005 proposed rule, this notable change in 
the fixed-loss amount for the 2006 LTCH PPS rate year as compared to 
the 2005 LTCH PPS rate year is primarily due to the change in the 
source of LTCHs' CCRs used to estimate costs when estimating LTCH PPS 
payments (specifically, using CCRs from the PSF rather than computing 
them from HCRIS and corresponding MedPAR data). As described above, in 
the past we have used CCRs that were calculated using costs from the 
most recent available cost report data in HCRIS and corresponding 
charges from MedPAR claims data. As also noted above, often the 
statewide average CCR was assigned to LTCHs when data to compute a CCR 
was unavailable. However, for the 2006 LTCH PPS rate year, in 
determining the fixed-loss amount, we are using CCRs from the PSF 
because, as we discussed above, we believe that these CCRs will more 
closely approximate the CCRs that will be used to make payments to 
LTCHs during the 2006 LTCH PPS rate and will result in a more accurate 
estimate of the cost of each case used in determining outlier payments.
    As we noted above, CCRs from the PSF are based on more recent data 
and are generally lower than the CCRs computed from cost report data in 
HCRIS and corresponding claims data in the MedPAR files. Specifically, 
in comparing the best available data for 335 LTCHs, we found that 
almost 40 percent of LTCHs would experience a decrease in the CCR we 
used for computing the fixed-loss amount. Furthermore, for those LTCHs 
with a CCR in the PSF that is lower than CCRs used to determine the 
2005 LTCH PPS rate year fixed-loss amount, we found that the difference 
in the CCRs was more than a 75 percent decrease for some LTCHs for 
which the applicable statewide average CCR previously been assigned 
because we were unable to compute a CCR (for example, due to faulty or 
unavailable data).
    In determining estimated outlier payments (80 percent of costs 
beyond the fixed-loss amount), as discussed above, costs are estimated 
by multiplying the Medicare-covered charges for the case by the LTCH's 
CCR. When relatively lower CCRs are used to estimate costs from 
charges, the resulting estimated cost of each case is lower, thereby 
reducing estimated outlier payments since outlier payments are 
projected to equal 80 percent of the difference between the estimated 
cost of the case and the outlier threshold (the sum of the adjusted 
Federal prospective payment for the LTC-DRG and the fixed-loss amount). 
As we discussed in the February 3, 2005 proposed rule, lowering the 
fixed-loss amount results in more cases qualifying as outlier cases as 
well as an increase in the amount of the outlier payment for an outlier 
case because the maximum loss that a LTCH must incur before receiving 
an outlier payment (that is, the fixed-loss amount) will be smaller. 
Thus, in order to ensure that estimated outlier payments will be equal 
to 8 percent of estimated total LTCH PPS payments, the outlier fixed-
loss amount should be lowered.
    As stated above, we have established that under the LTCH PPS, 
outlier payments are estimated to be equal to 8 percent of estimated 
total LTCH PPS payments. As we discussed in the February 3, 2005 
proposed rule, an analysis of recent LTCH PPS claims indicates that the 
2004 and 2005 LTCH PPS rate year outlier fixed-loss amounts may have 
resulted in LTCH PPS outlier payments that fell below the estimated 8 
percent. Specifically, based on claims discharged during the 2004 LTCH 
PPS rate year (July 1, 2003 through June 30, 2004), we estimate that 
outlier payments equal about 6 percent of estimated total LTCH PPS 
payments.
    As an alternative to lowering the fixed-loss amount, as we 
discussed in the February 3, 2005 proposed rule, we examined adjusting 
the marginal cost factor (that is, the percentage that Medicare will 
pay of the estimated cost of a case that exceeds the sum of the 
adjusted Federal prospective payment for the LTC-DRG and the fixed-loss 
amount for LTCH PPS outlier cases (Sec.  412.525(a)(3)), as a means of 
ensuring that estimated outlier payments would be projected to equal 8 
percent of estimated total LTCH PPS payments. Under the LTCH PPS high-
cost outlier policy at Sec.  412.525(a)(3), the marginal cost factor is 
currently equal to 80 percent, as we established in the August 30, 2002 
final rule (67 FR 56022-56026). As we discuss in that same final rule, 
a marginal cost factor equal to 80 percent means that we pay the LTCH 
for an outlier case, 80 percent of the difference between the estimated 
cost of the case and the outlier threshold (the sum of the adjusted 
Federal rate for the LTC-DRG PPS payment and the fixed-loss amount).
    As we discussed in the August 30, 2002 final rule (67 FR 56023), 
the marginal cost factor is designed to share the financial risk of 
treating extremely costly LTCH cases between LTCHs and the Medicare 
program by providing ``a balance between the need to protect LTCHs 
financially, while encouraging them to treat expensive patients and 
maintain the incentives of a prospective payment system to improve the 
efficient delivery of care.'' Increasing the marginal cost factor from 
the established 80 percent, while maintaining the existing fixed-loss 
amount would increase total outlier payments because we would pay a 
larger percentage of the estimated costs that exceed the outlier 
threshold (the sum of the adjusted Federal rate for the LTC-DRG and the 
fixed-loss amount). For example, if we were to increase the marginal 
cost factor to 90 percent without lowering the fixed-loss amount, we 
would pay outlier cases an additional 10 percent (90 percent minus 80 
percent) of the estimated costs that exceed the outlier threshold (the 
sum of the adjusted Federal rate for the LTC-DRG and the fixed-loss 
amount).
    While this alternative would also help to ensure that outlier 
payments are projected to equal 8 percent of estimated total LTCH PPS 
payments, it would not maintain the existing balance between providing 
an incentive for LTCHs to treat expensive patients and improving the 
efficient delivery of care. It would significantly reduce the LTCHs' 
share of the financial risk in treating those costly patients. As we 
discussed in the August 30, 2002 final rule (67 FR 56023-56024), our 
analysis of payment-to-cost ratios for outlier cases showed that a 
marginal cost factor of 80 percent appropriately addresses outlier 
cases that are significantly more expensive than non-outlier cases, 
while simultaneously maintaining the integrity of the LTCH PPS.
    Lowering the fixed-loss amount from $17,864 to $10,501 will reduce 
the amount of the loss that a LTCH must incur under the LTCH PPS for a 
case with unusually high costs before the LTCH will receive any 
additional Medicare payments. However, as we explain above, we believe 
the 80 percent marginal cost factor continues to adequately maintain 
the LTCHs' share of the financial risk in treating those costly 
patients and ensure the efficient delivery of services. LTCHs will 
still have to first lose $10,501 before receiving any additional 
payment for treating an unusually costly case. We believe the fixed-
loss amount of $10,501 in conjunction with the requirement that the 
LTCH is responsible for 20 percent of all estimated costs incurred 
beyond the outlier threshold (the sum of the adjusted Federal rate for 
the LTC-DRG PPS payment and the fixed-loss amount) will be significant 
enough to avoid the ``incentive'' for LTCHs to allow cases to reach the 
outlier

[[Page 24196]]

threshold in order to receive an additional payment. Therefore, we 
believe the fixed-loss mount of $10,501 will sufficiently identify 
unusually costly LTCH cases while maintaining the integrity of the LTCH 
PPS. Consequently, under the broad authority of section 123 of Pub. L. 
106-113 and section 307(b)(1) of Pub. L. 106-554, we are adopting a 
fixed-loss amount of $10,501 that is calculated from CCRs derived from 
the best available claims data and CCRs from the PSF.
    Accordingly, we are not adjusting the marginal cost factor under 
the LTCH PPS high-cost outlier policy. Rather, as discussed in detail 
above, we believe that employing actual CCR data from the PSF for 
purposes of determining the fixed-loss amount will result in a more 
accurate estimate of LTCH PPS outlier payments. Therefore, a decrease 
in the fixed-loss amount is appropriate and necessary to maintain 
estimated outlier payments equal to 8 percent of estimated total 
estimated LTCH PPS payments, as required under Sec.  412.525(a).
    We note that the fixed-loss amount for the 2006 LTCH PPS rate year 
established in this final rule ($10,501) is less than the fixed-loss 
amount ($11,544) proposed in the February 3, 2005 proposed rule. This 
is primarily due to the fact that the average case-mix of the LTCH 
claims in the FY 2004 MedPAR files, which are being used to compute the 
final fixed-loss amount is higher than the average case-mix of the LTCH 
claims in the FY 2003 MedPAR files, which were used to compute the 
proposed fixed-loss amount. Specifically, based on the claims in the 
December 2004 update of the MedPAR files and version 22.0 of the 
GROUPER, we found that the average case-mix increased over 6 percent 
from FY 2003 to FY 2004. In addition, the final standard Federal rate 
of $38,086.04, which is based on the most recent estimate of the market 
basket update of 3.4 percent, is 0.3 percent higher than the proposed 
Federal rate of $37,975.53, which was based on the proposed market 
basket update of 3.1 percent, as discussed above in section V.B.1.b of 
this preamble. Both the increase in case-mix and the increase in the 
Federal rate result in slightly higher overall payments to LTCHs. 
Therefore, it is necessary for the fixed-loss amount to decrease 
slightly in order to ensure that estimated outlier payments remain 
equal to 8 percent of estimated total LTCH PPS payments.
    As we stated above, based on an analysis of recent LTCH claims 
data, we now estimate that actual outlier payments in the 2004 LTCH PPS 
rate year equal about 6 percent of actual total LTCH PPS payments. In 
this final rule, as discussed above, using the best data available at 
this time we are establishing a revised fixed-loss amount (outlier 
threshold) so that estimated outlier payments are projected to be 8 
percent of estimated total LTCH PPS payments in the 2006 LTCH PPS rate 
year; the revised outlier threshold is significantly lower than the 
current outlier threshold. We will continue to monitor outlier 
payments, including actual outlier payments in the 2006 LTCH PPS rate 
year. Although we do not adjust the outlier threshold for a given year 
to account for differences between projected payments and actual 
payments, we do examine actual payments for purposes of determining 
whether it might be necessary to refine our estimation methodology. In 
setting the outlier threshold for the 2007 LTCH PPS rate year, we will 
use the best data available at the time and also propose refinements to 
the estimation methodology if necessary and appropriate so that our 
projections for the 2007 LTCH PPS rate year are as accurate as 
possible.
    Comment: One commenter noted that the fixed-loss amount and, 
therefore, the outlier threshold has been decreasing since the start of 
the LTCH PPS. The commenter also noted that we indicated in the 
proposed rule that based on claims discharged during the 2004 LTCH PPS 
rate year, we estimated that outlier payments that were made during the 
2004 LTCH PPS rate year were approximately equal to 6 percent of 
estimated total LTCH PPS payments. The commenter suggests that this 6 
percent figure means that the ``process utilized by CMS to project 
[o]utlier payments has resulted in roughly 2 percent of the [o]utlier 
budget funding to not be paid to providers.'' The commenter suggests 
that CMS implement a one-time adjustment to account for the portion of 
outlier funds that have not been paid to LTCHs since the inception of 
the LTCH PPS and further that CMS implement a threshold that ensures 
that the entire 8 percent of estimated total LTCH PPS payments set 
aside for outlier payments for future years is paid to providers.
    Response: As discussed above, the progressive decrease in the 
fixed-loss amount has resulted from the fact that the CCRs that we have 
previously used to estimate the fixed-loss amount were determined based 
on cost report data in HCRIS and corresponding claims data in the 
MedPAR files, but that data were not used by FIs to make actual LTCH 
PPS payments. Data from the PSF, which are used to make outlier 
payments under the LTCH PPS, have only recently become available for 
all LTCHs. Also, as noted above, because there is lag time between the 
submission of cost report data in HCRIS and the availability of that 
data, CCRs may have been computed from cost reports that were several 
years old. Furthermore, for many LTCHs the applicable statewide average 
CCR was assigned to the LTCH when cost report and corresponding claims 
data to compute a CCR were unavailable. Accordingly, as our data 
sources have more accurately reflected actual LTCH PPS payments, the 
fixed-loss amount has been determined based on more recent CCR data and 
it has progressively decreased each year since the start of the LTCH 
PPS. As discussed above, the change in the fixed-loss amount for the 
2006 LTCH PPS rate year is primarily a result of using CCRs from the 
PSF to estimate costs under the LTCH PPS rather than computing CCRs 
from HCRIS and corresponding MedPAR data. (This is the same data source 
used for obtaining CCRs under the IPPS for determining the IPPS outlier 
fixed-loss amount (69 FR 49276, August 11, 2004).)
    As we noted in the February 3, 2005 proposed rule and reiterate in 
the discussion above, an analysis of recent LTCH PPS claims indicates 
that the outlier fixed-loss amounts established for the 2004 and 2005 
LTCH PPS rate years may have resulted in LTCH PPS outlier payments that 
fell below the estimated 8 percent in those rate years. We would remind 
the commenter that the decision to make estimated outlier payments 
equal to 8 percent of the estimated total payments under the LTCH PPS 
was based on data analyses by our contractors when we first designed 
the LTCH PPS effective for LTCH cost reporting periods beginning during 
FY 2003. The August 30, 2002 final rule (67 FR 56022-56027) details our 
determinations based on the results of the evaluations presented by 3M 
Health Information Systems and also an industry study commissioned by 
NALTH, as well as the original study by the RAND Corporation for the 
IPPS (57 FR 23640, June 4, 1992). As noted in that final rule, ``In 
order to determine the most appropriate outlier policy, we analyzed the 
extent to which the various options would reduce financial risk, reduce 
incentives to underserve costly beneficiaries, and improve the overall 
fairness of the system. We believed an outlier target of 8 percent 
would allow us to achieve a balance of the above stated goals.'' (57 FR 
56023).
    The regulations at Sec.  412.523(d)(1) specify that ``CMS adjusts 
the standard Federal rate by a reduction factor of 8

[[Page 24197]]

percent, the estimated proportion of outlier payments'' under the LTCH 
PPS as described in Sec.  412.525(a). This policy is similar to the 
policy for outliers under the IPPS. Under the IPPS there have been some 
years when outlier payments exceed the projected target percentage (5.1 
percent) and other years when they fall below. In the August 11, 2004 
final rule for the IPPS, we stated that ``[n]evertheless, consistent 
with the policy and statutory interpretations that we have maintained 
since the inception of the IPPS, we do not plan to make payments to 
ensure that the percentage of total outlier payments actually reflect 
the percentage target of total IPPS payments.'' (69 FR 49278)
    Each year we estimate, based on the best data available at the 
time, the amount Medicare will pay LTCHs under the LTCH PPS. Based on 
that estimate, and an estimate of the proposed outlier payments that 
would be paid, we establish a fixed-loss amount that will generate 
estimated outlier payments that would equal 8 percent of the estimated 
total payments under the LTCH PPS. Thus, we estimate the fixed-loss 
amount based on the best available data to us at the time. If 
ultimately it is determined that some of the estimated factors used to 
determine the fixed-loss amount were not accurate and, therefore, we 
ultimately pay either more or less than 8 percent as outlier payments, 
no adjustment to future LTCH PPS payments is appropriate. Therefore, a 
payment adjustment to providers that would represent the difference 
between estimated outlier payments and those that Medicare actually 
made since the start of the LTCH PPS would not be appropriate. We 
believe, however, that the use of the PSF for determining CCRs for 
purposes of calculating the fixed-loss amount, will most likely result 
in actual outlier payments that more closely equal the requirement for 
estimated outlier payments to equal 8 percent of estimated total LTCH 
PPS payments.
    Based on the data and policies described in this final rule, we are 
establishing a fixed-loss amount of $10,501 for the 2006 LTCH PPS rate 
year. Thus, we will pay an outlier case 80 percent of the difference 
between the estimated cost of the case and the outlier threshold (the 
sum of the adjusted Federal LTCH payment for the LTC-DRG and the fixed-
loss amount of $10,501). As also discussed above, consistent with our 
longstanding policy under both the IPPS and the LTCH PPS, we are not 
making any additional adjustments to the outlier policy at Sec.  
412.525(a) or to the standard Federal rate to account for any amount 
that actual outlier payments may have been more or less than 8 percent 
of estimated total LTCH PPS payments.
d. Reconciliation of Outlier Payments Upon Cost Report Settlement
    In the June 9, 2003 high-cost outlier final rule (68 FR 34508-
34512), consistent with the change made for acute care hospitals under 
the IPPS at Sec.  412.84(m), we established under Sec.  
412.525(a)(4)(ii), by cross-referencing Sec.  412.84(i)(4) and (m), 
that effective for LTCH PPS discharges occurring on or after August 8, 
2003, reconciliation of outlier payments may be made upon cost report 
settlement to account for differences between the actual CCR and the 
estimated CCR ratio for the period during which the discharge occurs. 
As is the case with the changes made to the outlier policy for acute 
care hospitals under the IPPS, the instructions for implementing these 
regulations are discussed in further detail in Program Memorandum 
Transmittal A-03-058. In addition, in that same final rule (68 FR 
34513), we established a similar change to the short-stay outlier 
policy at Sec.  412.529(c)(5)(ii).
    We also discussed in the June 9, 2003 high-cost outlier final rule 
(68 FR 34494-34515), consistent with the policy change for acute care 
hospitals under the IPPS at Sec.  412.84(i)(2), that, for LTCH PPS 
discharges occurring on or after October 1, 2003, FIs will use either 
the most recent settled cost report or the most recent tentative 
settled cost report, whichever is from the later period, to determine a 
LTCH's CCR. In addition, in that same final rule, we established a 
similar change to the short-stay outlier policy at Sec.  
412.529(c)(5)(iii).
e. Application of Outlier Policy to Short-Stay Outlier Cases
    As we discussed in the August 30, 2002 LTCH PPS final rule (67 FR 
56026), under some rare circumstances, a LTCH discharge could qualify 
as a short-stay outlier case (as defined under Sec.  412.529 and 
discussed in section VI.B.4. of this preamble) and also as a high-cost 
outlier case. In such a scenario, a patient could be hospitalized for 
less than five-sixths of the geometric average length of stay for the 
specific LTC-DRG, and yet incur extraordinarily high treatment costs. 
If the costs exceeded the outlier threshold (that is, the short-stay 
outlier payment plus the fixed-loss amount), the discharge would be 
eligible for payment as a high-cost outlier. Thus, for a short-stay 
outlier case in the 2006 LTCH PPS rate year, the high-cost outlier 
payment will be 80 percent of the difference between the estimated cost 
of the case and the outlier threshold (the sum of the fixed-loss amount 
of $10,501 and the amount paid under the short-stay outlier policy).
4. Adjustments for Special Cases
a. General
    As discussed in the August 30, 2002 LTCH PPS final rule (67 FR 
55995), under section 123 of Pub. L. 106-113, the Secretary generally 
has broad authority in developing the PPS for LTCHs, including whether 
(and how) to provide for adjustments to reflect variations in the 
necessary costs of treatment among LTCHs.
    Generally, LTCHs, as described in section 1886(d)(1)(B)(iv) of the 
Act, are distinguished from other inpatient hospital settings by 
maintaining an average inpatient length of stay of greater than 25 
days. However, LTCHs may have cases that have stays of considerably 
less than the average length of stay and that receive significantly 
less than the full course of treatment for a specific LTC-DRG. As we 
explained in the August 30, 2002 LTCH PPS final rule (67 FR 55954), 
these cases would be paid inappropriately if the hospital were to 
receive the full LTC-DRG payment. Below we discuss the payment 
methodology for these special cases.
b. Adjustment for Short-Stay Outlier Cases
    A short-stay outlier case may occur when a beneficiary receives 
less than the full course of treatment at the LTCH before being 
discharged. These patients may be discharged to another site of care or 
they may be discharged and not readmitted because they no longer 
require treatment. Furthermore, patients may expire early in their LTCH 
stay.
    Generally, LTCHs are defined by statute as having an average 
inpatient length of stay of greater than 25 days. We believe that a 
payment adjustment for short-stay outlier cases results in more 
appropriate payments because these cases most likely would not receive 
a full course of treatment in this short period of time and a full LTC-
DRG payment may not always be appropriate. Payment-to-cost ratios 
simulated for LTCHs, for the cases described above, show that if LTCHs 
receive a full LTC-DRG payment for those cases, they would be 
significantly ``overpaid'' for the resources they have actually 
expended.
    Under Sec.  412.529, in general, we adjust the per discharge 
payment to the least of 120 percent of the cost of the case, 120 
percent of the LTC-DRG specific per diem amount multiplied by the 
length of stay of that discharge, or the full LTC-DRG payment, for all 
cases

[[Page 24198]]

with a length of stay up to and including five-sixths of the geometric 
average length of stay of the LTC-DRG.
    As we noted in section VI.C.3. of this preamble, in the June 9, 
2003 high-cost outlier final rule (68 FR 34494-34515), we revised the 
methodology for determining CCRs for acute care hospitals under the 
IPPS because we became aware that payment vulnerabilities existed in 
the previous IPPS outlier policy. Consistent with the policy 
established for acute care hospitals under the IPPS at Sec.  412.84(i) 
and (m) in the June 9, 2003 high-cost outlier final rule (68 FR 34515), 
and similar to the policy change described above for LTCH PPS high-cost 
outlier payments at Sec.  412.525(a)(4)(ii), we established under Sec.  
412.529(c)(5)(ii) that for discharges on or after August 8, 2003, 
short-stay outlier payments are subject to the provisions in the 
regulations at Sec.  412.84(i)(1), (i)(3) and (i)(4), and (m).
    In addition, we also discussed in the June 9, 2003 high-cost 
outlier final rule (68 FR 34508-34513) that short-stay outlier payments 
are subject to the provisions in the regulations at Sec.  412.84(i)(2) 
for discharges on or after October 1, 2003 in accordance with Sec.  
412.529(c)(5)(iii). In addition, in that same final rule, we 
established that the applicable statewide average CCR is applied when a 
LTCH's CCR exceeds the ceiling or in certain other instances as 
specified in Sec.  412.84(i)(3). Thus, the applicable statewide average 
CCR is no longer applied when a LTCH's CCR falls below the floor. 
Furthermore, we also established that any reconciliation of payments 
for short-stay outliers may be made upon cost report settlement to 
account for differences between the estimated CCR and the actual CCR 
for the period during which the discharge occurs. In the June 6, 2003 
final rule for the 2004 LTCH PPS rate year (68 FR 34146-34148), for 
certain hospitals that qualify as LTCHs under section 
1886(d)(1)(B)(iv)(II) of the Act (``subclause (II)'' LTCHs) as added by 
section 4417(b) of Pub. L. 105-33, and implemented in Sec.  
412.23(e)(2)(ii), we established a temporary adjustment to the short-
stay outlier policy during the 5-year transition period. Under Sec.  
412.529(c)(4), effective for discharges from a ``subclause (II)'' LTCH 
occurring on or after July 1, 2003, the short-stay outlier percentage 
is 195 percent during the first year of the hospital's 5-year 
transition. For the second cost reporting period, the short-stay 
outlier percentage is 193 percent; for the third cost reporting period, 
the percentage is 165 percent; for the fourth cost reporting period, 
the percentage is 136 percent; and for the final cost reporting period 
of the 5-year transition (and future cost reporting periods), the 
short-stay outlier percentage is 120 percent, that is, the same as it 
is for all other LTCHs under the LTCH PPS.
    As we discussed in the June 6, 2003 final rule for the 2004 LTCH 
PPS rate year (68 FR 34147), we established this formula with the 
expectation that an adjustment to short-stay outlier payments during 
the transition will result in reducing the difference between payments 
and costs for a ``subclause (II)'' LTCH for the period of July 1, 2003 
through the end of the transition period, when the LTCH PPS will be 
fully phased-in.
    As we stated in that same final rule, we also expect that during 
this 5-year period, ``subclause (II)'' LTCHs will make every attempt to 
adopt the type of efficiency enhancing policies that generally result 
from the implementation of prospective payment systems in other health 
care settings. We did not propose any changes to the short-stay outlier 
policy in the February 3, 2005 proposed rule and did not receive any 
comments regarding the short-stay outlier policy at Sec.  412.529.
5. Hospital-Within-Hospitals and Satellites of LTCHs Notification 
Requirements
    In the August 30, 2002 LTCH PPS final rule, we established a 
notification requirement for LTCHS that were HwHs, as defined in Sec.  
412.22(e) and satellites of LTCHs, as defined in Sec.  412.22(h)(5), 
and for LTCHs and satellites of LTCHs that were subject to onsite 
provider payment adjustment under Sec.  412.532. At existing Sec.  
412.22(e)(3) and (h)(5), we require a LTCH HwH or a satellite of a 
LTCH, respectively, to notify its FI and CMS of its co-located status 
within 60 days of the start of its first cost reporting period under 
the LTCH PPS. At existing Sec.  412.532(i), we require the LTCH or 
satellite of a LTCH that is co-located with another hospital or a SNF 
to provide notification of its co-location within 60 days following the 
effective date of the regulations. We also established an additional 
notification requirement at Sec.  412.532(i) for a LTCH or a satellite 
of a LTCH subject to the onsite provider payment adjustment at Sec.  
412.532, to notify its FI and CMS within 60-days of a change in co-
located status. We intended that these regulations also require LTCHs 
and satellites of LTCHs to identify particular co-located Medicare 
providers.
    As we discussed in the February 3, 2005 proposed rule (70 FR 5750), 
it appears that this expectation is unclear in our present regulations. 
We have been informed by some of our regional offices and FIs that 
LTCHs and satellites of LTCHs, for which they are responsible, have in 
many cases neglected to specify the name(s), address(es), and Medicare 
provider number(s) of the co-located providers covered by Sec.  
412.22(e)(3), (h)(5), and Sec.  412.532, as applicable. Therefore, in 
that same proposed rule, with respect to Sec.  412.22(e)(3), we 
proposed to clarify our policy that a LTCH that occupies space in a 
building used by another hospital or in one or more entire buildings 
located on the same campus as buildings used by another hospital and 
that meets the criteria of paragraph (e)(1) or (e)(2) of Sec.  412.22 
must inform its FI and CMS in writing of its co-located status, as well 
as, provide the name(s), address(es), and the Medicare provider 
number(s) of the other co-located hospitals (that is, acute care 
hospitals, IRFs, and psychiatric facilities and units).
    We also proposed to clarify that with respect to Sec.  
412.22(h)(5), a satellite of a LTCH that occupies space in a building 
used by another hospital, or in one or entire buildings located on the 
same campus as buildings used by another hospital, and that meets the 
criteria of paragraphs (h)(1) through (h)(4) of Sec.  412.22 must 
notify its FI and CMS in writing of its co-location and identify by 
name(s), address(es), and Medicare provider number(s) those hospital(s) 
with which it is co-located. In addition, we proposed to clarify the 
notification requirements in Sec.  412.532 that apply to a LTCH or 
satellite of a LTCH. For example, we clarified that the notification 
requirements apply to a LTCH or a satellite of a LTCH that is co-
located with a SNF. Furthermore, since the existing regulation text at 
Sec.  412.22(e)(3)and (h)(5) required that the notification take place 
within 60 days of the LTCH's first cost reporting period beginning on 
or after October 1, 2002 and Sec.  412.532(i) required that the 
notification occur within 60 days of the effective date of the original 
regulation (cost reporting periods beginning on or after October 1, 
2002), and this timeframe for many providers has long since passed, we 
proposed to eliminate the specific timing requirement in favor of the 
on-going, prospective notification requirement described above, which 
is also clearer and more comprehensive. Therefore, we proposed to 
delete the phrase ``within 60 days of its first cost reporting period 
that begins on or after October 1, 2002'' at Sec.  412.22(e)(3) and 
(h)(5). We also proposed to delete the phrase ``within 60 days 
following the

[[Page 24199]]

effective date of these regulations'' from Sec.  412.532(i). We also 
proposed to delete the phrase ``and within 60 days of a change in co-
located status'' from Sec.  412.532(i) because, as we explained in that 
same proposed rule, we believe that the proposed continuing 
notification requirement in the revised regulation text at Sec.  
412.22(e)(3)and (h)(5), as well as at Sec.  412.532(i), would include 
the obligation to notify CMS and the FI in writing of any changes in 
co-located status and the obligation to provide the requisite 
information detailed above. Accordingly, we proposed to revise each of 
the three notification provisions, to establish consistency and to 
clearly state the on-going requirement that a LTCH or satellite of a 
LTCH that is co-located with another hospital or a SNF inform their FIs 
and CMS in writing of the name(s), address(es), and Medicare provider 
number(s) of particular co-located Medicare providers.
    Comment: While three commenters agreed with the proposed 
clarification of the notification requirement, one of the commenters 
requested that there be no penalty for a provider who fails to meet the 
notification requirement.
    Response: While we thank these commenters for their support, we 
would point out that our notification requirements have existed since 
the implementation of the LTCH PPS. What we proposed in the February 3, 
2005 LTCH PPS proposed rule were clarifications of these requirements.
    In the August 30, 2002 LTCH PPS final rule, we stated that we would 
be monitoring HwHs and satellite facilities of LTCHs for compliance 
with existing regulations, growth in numbers and transfer patterns. To 
that end, we included a requirement in the regulations at Sec.  
412.22(e)(3) and (h)(5), respectively, that HwHs and satellites of 
LTCHs notify their FIs and CMS regional offices about their co-location 
with any other hospital, within 60 days following the initial effective 
date of the LTCH PPS. In addition, we provided for an additional 
requirement at Sec.  412.532(i), to have a LTCH (including a satellite 
of a LTCH) that is subject to the onsite provider payment adjustment 
notify its FI and CMS within 60 days of a change in its co-located 
status and within 60 days following the effective date of those 
regulations. We believed that Sec.  412.532(i) of the regulations also 
requires that a LTCH that is co-located with another hospital or a SNF 
identify particular Medicare co-located providers that are covered 
within the scope of Sec.  412.532(a), as applicable. Also, in the 
February 3, 2005 proposed rule (70 FR 5755), we proposed a revision to 
Sec.  412.532(i) to clarify that the notification requirement applies 
to situations where a LTCH, or a satellite of a LTCH, occupies space in 
a building used by a SNF or in one or more entire buildings located on 
the same campus as buildings used by a SNF. However, in the course of 
revising language in Sec.  412.532(i), while we clearly intended to 
apply the notification requirement to a LTCH or a satellite of a LTCH 
that is co-located with a SNF, we are concerned that the public may 
misinterpret the proposed regulation text to mean that a LTCH or a 
satellite of a LTCH which is co-located with a SNF need only provide 
notification if it meets the requirements in Sec.  412.22(e)(1) or 
(e)(2) or Sec.  412.22(h)(1) through (h)(4). However, since those 
regulations do not currently apply to a LTCH or a satellite of a LTCH 
which is co-located with a SNF, we believe the intent of this change, 
that is, to apply the notification requirement to a LTCH or a satellite 
of a LTCH that occupies space in a building used by a SNF or in one or 
more entire buildings located on the same campus as buildings used by a 
SNF, would not be met. This is clearly contrary to our intent as 
expressed in the February 3, 2005 proposed rule (70 FR 5755). 
Accordingly, we have restructured the paragraph to clarify that only a 
LTCH or a satellite of a LTCH that is co-located with another hospital 
(that is, onsite acute care hospital, an onsite IRF, or an onsite 
psychiatric facility or unit) is required to meet the specific criteria 
at Sec.  412.22(e)(1) or (e)(2) or Sec.  412.22(h)(1) through (h)(4). 
The regulation text as revised does not require these criteria to be 
met in the case of a SNF that is co-located with a LTCH or satellite of 
a LTCH for the notification requirement to apply.
    In addition, we had indicated in the February 3, 2005 proposed rule 
that a LTCH or a satellite of a LTCH would have to provide specific 
information about those providers specified at Sec.  412.532(a). In 
this final rule, we are making an editorial change to Sec.  412.532(i) 
by deleting the general reference to providers ``specified at paragraph 
(a)'' and in its place inserting the specific providers listed in 
paragraph (a) to which the particular provision applies.
    For the reasons explained previously, we are finalizing our 
proposed regulation text concerning the notification requirements (with 
some minor editorial clarifications) and our proposal to eliminate the 
specific timing requirements.
    We believe that these clarifications to the notification 
requirements establish consistency and clearly state the ongoing 
requirement that a LTCH HwHs and a satellite of a LTCH that is co-
located with another hospital or SNF notify their CMS regional office 
and FI in writing, supplying the requisite information. Since we did 
not receive any comments in opposition to our proposed clarifications, 
we are finalizing those clarifications with the editorial modifications 
discussed above. Therefore, in this final rule, we are revising each of 
the three notification provisions to establish consistency and to 
clearly state the on-going requirement that a LTCH or a satellite of a 
LTCH that is co-located with another hospital or a SNF inform their FI 
and CMS in writing of the name(s), address(es), and Medicare provider 
number(s) of particular co-located Medicare providers. While we did not 
propose a penalty for nonconformance with the notification 
requirements, we trust that, being aware of our monitoring activities 
with regard to this regulation, LTCHs would make every effort to comply 
with the notification requirements. As stated in the August 30, 2002 
LTCH PPS final rule, if we believe that LTCHs are not complying with 
this requirement, it may become necessary for us to revisit the 
existing regulations dealing with ownership and control of HwHs through 
notice and comment rulemaking.
6. Other Payment Adjustments
    As indicated earlier, we have broad authority under section 123 of 
Pub. L. 106-113, including whether (and how) to provide for adjustments 
to reflect variations in the necessary costs of treatment among LTCHs. 
Thus, in the August 30, 2002 LTCH PPS final rule (67 FR 56014-56027), 
we discussed our extensive data analysis and rationale for not 
implementing an adjustment for geographic reclassification, rural 
location, treating a disproportionate share of low-income patients 
(DSH), or indirect medical education (IME) costs. In that same final 
rule, we stated that we would collect data and reevaluate the 
appropriateness of these adjustments in the future once more LTCH data 
become available after the LTCH PPS is implemented.
    Because the LTCH PPS has only been implemented for a few years and 
there is a lag-time in data availability, sufficient new data have 
still not yet been generated that would enable us to conduct a 
comprehensive reevaluation of these payment adjustments. Nonetheless, 
we have reviewed the limited data that are available and have found no 
evidence to support additional proposed policy changes. Therefore, in 
the February 3, 2005 proposed rule, we did not propose to make any 
adjustments for geographic

[[Page 24200]]

reclassification, rural location, DSH, or IME. However, we will 
continue to collect and interpret new data as they become available in 
the future to determine if these data support proposing any additional 
payment adjustments.
    Comment: Three of the commenters who supported our proposed 
adoption of the revised labor market areas based on OMB's new CBSA 
designations urged us to allow LTCHs the same opportunity that exists 
for acute care hospitals of applying for geographic reclassification to 
neighboring counties for wage index purposes. To limit this option to 
acute care hospitals in the same labor market, they argue, puts LTCHs 
at a competitive disadvantage. In stating the value of consistency in 
the Medicare program, one commenter notes the automatic ``out-migration 
adjustment'' in section 505 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 for acute care hospitals in 
qualifying counties where hospital employees commute to higher wage 
index areas. The commenter urges us to, therefore, consider geographic 
reclassification for LTCHs, particularly one that could meet 
qualifications for reclassification to a neighboring urban CBSA under 
the criteria and conditions for geographic reclassification set forth 
in 42 CFR 412.230 through 234 through the Medicare Geographic 
Classification Review Board (MGCRB).
    Response: We appreciate the commenters' support for the adoption of 
OMB's new CBSA-based designations for the LTCH PPS and, as noted above, 
we will be finalizing that provision. However, we are not adopting the 
suggestion to establish a geographic reclassification procedure for 
LTCHs that parallels either the MGCRB set forth in section 1886(d)(10) 
of the Act and implemented at 42 CFR 412.230, or the recent ``out-
migration adjustment'' in section 505 of the MMA of 2003, which adds 
section 1886(d)(13) to the Act and is implemented at 42 CFR 
412.64(h)(5)(i). The Congress clearly targeted both of these 
provisions, as well as the reclassification provision set forth in 
section 1886(d)(8) of the Act, specifically for ``subsection (d)'' 
hospitals, that is, inpatient acute care hospitals. As we discuss 
below, we believe that the considerable administrative burdens inherent 
in establishing a reclassification process for a hospital system as 
authorized by the Congress for the approximately 4,500 ``subsection 
(d)'' hospitals nationwide, is neither reasonable nor appropriate for 
the LTCH system with only approximately 350 hospitals that are unevenly 
dispersed throughout the country.
    In the August 1, 2002 final rule for the LTCH PPS, in which we 
presented features of the new payment system and detailed explanation 
of the analytical foundations of our determinations, we stated that we 
were not implementing an adjustment for geographic reclassification in 
the LTCH PPS because our data supported ``neither an adjustment to 
account for differences in area wage levels nor an adjustment for LTCHs 
located in rural areas or large urban areas * * *'' In that final rule, 
we noted that ``* * * regression analysis indicated that wage 
adjustment for LTCHs would not increase the accuracy of payments'' (67 
FR 56019). Although we did provide for a 5-year phase-in of the wage 
adjustment for LTCHs in the August 1, 2002 final rule, we determined 
that we would not establish a geographic reclassification process for 
the initial years of the LTCH PPS. We cited the fact that excluded 
hospitals (that is, hospitals paid under the TEFRA payment system) were 
not required to provide wage-related information on the Medicare cost 
report (Worksheet S-3). At that point, we were not prepared to create 
instructions for data collection on LTCH wage-related costs or to 
develop the full range of application and determination procedures 
required in order to establish a new geographic reclassification 
system. Furthermore, in the August 1, 2002 final rule, where we 
established a 5-year phase-in to a full wage index for the new LTCH 
PPS, we sought consistency with area wage adjustments made to all other 
postacute providers (that is, the existing HHA, SNF, and IRF PPSs) in 
using ``pre-reclassification'' inpatient acute care hospital wage data 
without regard to any approved geographic reclassifications under 
section 1886(d)(8) or 1886(d)(10) of the Act. The resulting phased-in 
area wage adjustment for LTCHs is based on the provider's actual 
location, without regard to the urban or rural designation of any 
affiliated or related providers. In further discussing geographic 
reclassification, we noted that the administrative burden resulting 
from an attempt to develop an adjustment for geographic 
reclassification far outweighed any potential resulting benefits. The 
administrative burden of developing a geographic reclassification 
process would likely entail creating a provider application with an 
appropriate deadline (and engaging in Paperwork Reduction Act 
analysis), creating an entity to process, evaluate and determine 
provider applications, and establishing an appeals process for those 
who disagreed with the reclassification decision. Also, we would need 
to develop criteria for geographic reclassification as well as evaluate 
the effect of a reclassification provision in terms of budget 
neutrality. We would need to publish reclassification data in each 
payment notice and reclassification determinations would need to be 
completed by the effective date of each year's payment notice. We 
believe this administrative burden outweighs the benefit that would be 
received by the few LTCH hospitals that would receive reclassification 
under such a system. Thus, we reiterate our belief that it is neither 
reasonable nor cost-effective to establish a reclassification system 
under the LTCH PPS.
    In section XII. (Regulatory Impact Analysis) of the February 3, 
2005 proposed rule, we provided data in Table II of that section that 
indicated that the impact of the change from the 2005 LTCH PPS rate 
year to the 2006 LTCH PPS rate year for wage index changes for the LTCH 
PPS, which include the progression of the phase-in of the wage index 
and the proposed update in the wage index data, as well as the proposed 
change in the labor market area definitions, is, on average, a positive 
increase in payments of 0.1 percent. (The same table also indicates 
that the average percent change in payments per discharge from the 2005 
LTCH PPS rate year to the 2006 LTCH PPS rate year, as a result of all 
changes being proposed, is estimated to be an increase of 5.5 percent.) 
(70 FR 5764)
    Therefore, while we do understand that there are a few individual 
LTCHs and also one particular county near Boston that will experience 
more than a negligible negative impact because of the adoption of 
CBSAs, and, therefore, believe themselves to be at a competitive 
disadvantage with regard to hiring hospital personnel as compared to 
acute care hospitals in the same market, we continue to believe that, 
as described above, it is not administratively feasible to establish a 
geographic reclassification procedure for so few LTCHs. (Table II 
indicates that for LTCHs in New England, the average percent change in 
Medicare payments per discharge from the 2005 LTCH PPS rate year to the 
2006 LTCH PPS rate year is estimated to be an increase of 7.5 percent.) 
We believe that it is revealing of Congressional intent that existing 
reclassification provisions in the statute continue to be limited to 
short-term acute care or ``section (d)'' hospitals. Furthermore, the 
Congress has not deemed it appropriate to

[[Page 24201]]

mandate a geographical reclassification policy for any of the IPPS-
excluded hospital prospective payment systems. We do not believe that 
the small universe of LTCHs that are slightly negatively affected by 
the CBSA-based labor market area definitions as they apply to their 
wage index adjustment would justify the serious and considerable 
administrative burden entailed in establishing a geographic 
reclassification adjustment under the LTCH PPS.
7. Budget Neutrality Offset To Account for the Transition Methodology
    Under Sec.  412.533, we implemented a 5-year transition period for 
moving to 100 percent of the Federal prospective payment rate, during 
which a LTCH is paid an increasing percentage of the LTCH PPS Federal 
payment rate and a decreasing percentage of reasonable cost-based 
payment for each discharge. Furthermore, we allow a LTCH to elect to be 
paid based on 100 percent of the standard Federal rate in lieu of the 
blended methodology.
    The standard Federal rate was determined as if all LTCHs will be 
paid based on 100 percent of the standard Federal rate. As stated 
earlier, we provide for a 5-year transition period that allows LTCHs to 
receive payments based partially on the reasonable cost-based 
methodology. Section 123(a)(1) of the Pub. L. 106-113 requires that the 
Secretary shall develop a per discharge prospective payment system for 
LTCHs and such system shall ``maintain budget neutrality.'' 
Accordingly, as we established in the August 30, 2002 final rule (67 FR 
56033-56036), during the 5-year transition period, we reduce all LTCH 
Medicare payments (whether a LTCH elects payment based on 100 percent 
of the Federal rate or whether a LTCH is being paid under the 
transition blend methodology) to account for the cost of the transition 
methodology in the given LTCH PPS rate year. Specifically, we reduce 
all LTCH Medicare payments during the 5-year transition by a factor 
that is equal to 1 minus the ratio of the estimated reasonable cost-
based payments that would have been made if the LTCH PPS had not been 
implemented to the projected total Medicare program PPS payments (that 
is, payments made under the transition methodology and the option to 
elect payment based on 100 percent of the Federal rate).
    In the May 7, 2004 final rule (69 FR 25702), based on the best 
available data at that time, we projected that approximately 93 percent 
of LTCHs will be paid based on 100 percent of the standard Federal rate 
rather than receive payment under the transition blend methodology for 
the 2005 LTCH PPS rate year. Using the same methodology described in 
the August 30, 2002 LTCH PPS final rule (67 FR 56034), this projection, 
which used updated data and inflation factors, was based on our 
estimate that either--(1) A LTCH has already elected payment based on 
100 percent of the Federal rate prior to the start of the 2005 LTCH PPS 
rate year (July 1, 2004); or (2) a LTCH would receive higher payments 
based on 100 percent of the 2005 LTCH PPS rate year standard Federal 
rate compared to the payments it would receive under the transition 
blend methodology. Similarly, we projected that the remaining 7 percent 
of LTCHs will choose to be paid based on the applicable transition 
blend methodology (as set forth under Sec.  412.533(a)) because they 
would receive higher payments than if they were paid based on 100 
percent of the 2005 LTCH PPS rate year standard Federal rate.
    In that same final rule, based on the best available data at that 
time and policy revisions described in that same rule, we projected 
that the full effect of the remaining 4 years of the transition period 
(including the election option) would result in a cost to the Medicare 
program of $29 million. Specifically, for the 2005 LTCH PPS rate year, 
we estimated that the cost of the transition would be $15 million. In 
order to maintain budget neutrality, using the methodology established 
in the August 30, 2002 LTCH PPS final rule (67 FR 56034) based on 
updated data and the policies and rates discussed in the May 7, 2004 
LTCH PPS final rule, we established a 0.5 percent reduction (0.995) to 
all LTCH payments in the 2005 LTCH PPS rate year to account for the $15 
million estimated cost of the transition period methodology (including 
the option to elect payment based on 100 percent of the Federal rate) 
for the 2005 LTCH PPS rate year. Furthermore, we indicated that we 
would propose a budget neutrality offset for each of the remaining 
years of the transition period to account for the estimated costs for 
the respective LTCH PPS rate years.
    In the February 3, 2005 proposed rule (70 FR 5754), based on the 
best available data at that time, using the same methodology 
established in the August 30, 2002 LTCH PPS final rule (67 FR 56034), 
we projected that approximately 94 percent of LTCHs would be paid based 
on 100 percent of the standard Federal rate rather than receive payment 
under the transition blend methodology during the 2006 LTCH PPS rate 
year. This projection was based on our estimate that either: (1) A LTCH 
has already elected payment based on 100 percent of the Federal rate 
prior to the beginning of the 2006 LTCH PPS rate year (July 1, 2005); 
or (2) a LTCH would receive higher payments based on 100 percent of the 
standard Federal rate compared to the payments they would receive under 
the transition blend methodology. Similarly, we projected that the 
remaining 6 percent of LTCHs would choose to be paid based on the 
transition blend methodology at Sec.  412.533 because those payments 
are estimated to be higher than if they were paid based on 100 percent 
of the standard Federal rate.
    Based on the best available data and the policies described in the 
February 3, 2005 proposed rule, we projected that in the absence of a 
transition period budget neutrality offset, the full effect of the 
remaining 3 years of the transition period (including the election 
option) as compared to payments as if all LTCHs would be paid based on 
100 percent of the Federal rate would result in a cost to the Medicare 
program of $10 million as follows: $7 million in the 2006 LTCH PPS rate 
year; $3 million in the 2007 LTCH PPS rate year; and no cost in the 
2008 LTCH PPS rate year. As we explained in that same proposed rule, we 
are no longer projecting a small cost for the 2008 LTCH PPS rate year 
(July 1, 2007 through June 30, 2008) even though some LTCH's will have 
a cost reporting period for the 5th year of the transition period which 
will be concluding in the first 3 months of the 2008 LTCH PPS rate year 
because as we discussed above, based on the most available data, we are 
projecting that the vast majority of LTCHs would have made the election 
to be paid based on 100 percent of the Federal rate rather than the 
transition blend.
    Accordingly, using the methodology established in the August 30, 
2002 LTCH PPS final rule (67 FR 56034) based on updated data and the 
policies and rates discussed in the February 3, 2005 proposed rule, we 
proposed a 0.2 percent reduction (0.998) to all LTCHs' payments for 
discharges occurring on or after July 1, 2005 and through June 30, 
2006, to account for the estimated cost of the transition period 
methodology (including the option to elect payment based on 100 percent 
of the Federal rate) of the $7 million for the 2006 LTCH PPS rate year. 
We note that we did not receive any comments regarding our proposed 
budget neutrality factor to account for the cost of the transition 
period.
    Therefore, in this final rule, based on the most recent available 
data, using the same methodology established in the

[[Page 24202]]

August 30, 2002 LTCH PPS final rule (67 FR 56034), we are projecting 
that approximately 98 percent of LTCHs will be paid based on 100 
percent of the standard Federal rate rather than receive payment under 
the transition blend methodology during the 2006 LTCH PPS rate year. 
This projection, which uses updated data, is based on our estimate that 
either: (1) A LTCH has already elected payment based on 100 percent of 
the Federal rate prior to the beginning of the 2006 LTCH PPS rate year 
(July 1, 2005); or (2) a LTCH will receive higher payments based on 100 
percent of the standard Federal rate compared to the payments they 
would receive under the transition blend methodology. Similarly, we 
project that the remaining 2 percent of LTCHs will choose to be paid 
based on the transition blend methodology at Sec.  412.533 because 
those payments are estimated to be higher than if they were paid based 
on 100 percent of the standard Federal rate. The applicable transition 
blend percentage applies to the LTCH's entire cost reporting period 
beginning on or after October 1 (unless the LTCH elects payment based 
on 100 percent of the Federal rate).
    Based on the best available data and the policies described in this 
final rule, we are projecting that the full effect of the remaining 
years of the transition period (including the election option) as 
compared to payments as if all LTCHs would be paid based on 100 percent 
of the Federal rate will result in a negligible cost to the Medicare 
program. Specifically, based on the most recent available data, we 
estimate that the cost of the transition period methodology (including 
the option to elect payment based on 100 percent of the Federal rate) 
would be approximately $1 million in the 2006 LTCH PPS rate year and 
approximately $675 thousand in the 2007 LTCH PPS rate year. As stated 
above, to account for the cost of the transition methodology in a given 
LTCH PPS rate year during the 5-year transition, we reduce all LTCH 
Medicare payments by a factor that is equal to 1 minus the ratio of the 
estimated reasonable cost-based payments that would have been made if 
the LTCH PPS had not been implemented to the projected total Medicare 
program PPS payments (that is, payments made under the transition 
methodology and the option to elect payment based on 100 percent of the 
Federal rate). Because we estimate that the additional cost of the 
transition period methodology (including the option to elect payment 
based on 100 percent of the Federal rate) will be approximately $1 
million for the 2006 LTCH PPS rate year (and will be less than $1 
million for the 2007 LTCH PPS rate year) and because this amount is a 
small percentage of total LTCH PPS payments (estimated at over $3 
billion, as shown in the table below), the formula that we have used to 
establish the budget neutrality offset in prior years results in a 
factor (as described above) that we reduce all LTCH Medicare payments 
by to account for those additional costs of zero (as a function of 
rounding). In addition, as explained above, we are no longer projecting 
an additional cost to the Medicare program resulting from the 
transition period methodology (including the option to elect payment 
based on 100 percent of the Federal rate) for the 2008 LTCH PPS rate 
year.
    Accordingly, using the methodology established in the August 30, 
2002 LTCH PPS final rule (67 FR 56034), based on updated data and the 
policies and rates discussed in this final rule, we are establishing a 
0.0 percent reduction (a budget neutrality offset of 1.000) to all 
LTCHs' payments for discharges occurring on or after July 1, 2005 and 
through June 30, 2006, to account for the estimated cost of the 
transition period methodology (including the option to elect payment 
based on 100 percent of the Federal rate). As stated above, in order to 
maintain budget neutrality, we indicated that we will use a budget 
neutrality offset for each of the remaining years of the transition 
period to account for the estimated costs for the respective LTCH PPS 
rate years. In this final rule, based on the best available data, we 
estimate there would be a 0.0 percent budget neutrality offset to LTCH 
PPS payments during the remaining years of the transition period since, 
as explained above, we currently estimate that the additional cost to 
the Medicare program resulting from the transition period methodology 
is so small that the budget neutrality factor determined under our 
established methodology would round to zero.
    As we discussed in the August 30, 2002 LTCH PPS final rule (67 FR 
56036), consistent with the statutory requirement for budget neutrality 
in section 123(a)(1) of Pub. L. 106-113, we intended that estimated 
aggregate payments under the LTCH PPS for FY 2003 equal the estimated 
aggregate payments that would be made if the LTCH PPS were not 
implemented. Our methodology for estimating payments for purposes of 
the budget neutrality calculations uses the best available data at the 
time and necessarily reflect assumptions. As the LTCH PPS progresses, 
we are monitoring payment data and will evaluate the ultimate accuracy 
of the assumptions used in the budget neutrality calculations (for 
example, inflation factors, intensity of services provided, or 
behavioral response to the implementation of the LTCH PPS) described in 
the August 30, 2002 LTCH PPS final rule (67 FR 56027-56037). To the 
extent these assumptions significantly differ from actual experience, 
the aggregate amount of actual payments may turn out to be 
significantly higher or lower than the estimates on which the budget 
neutrality calculations were based.
    Section 123 of Pub. L. 106-113 and section 307 of Pub. L. 106-554 
provide broad authority to the Secretary in developing the LTCH PPS, 
including the authority for appropriate adjustments. Under this broad 
authority, as implemented in the regulations at Sec.  412.523(d)(3), we 
have provided for the possibility of making a one-time prospective 
adjustment to the LTCH PPS rates by October 1, 2006, so that the effect 
of any significant difference between actual payments and estimated 
payments for the first year of the LTCH PPS would not be perpetuated in 
the LTCH PPS rates for future years.
    In the May 7, 2004 LTCH PPS final (69 FR 25703-25704), based on the 
best available data at that time, we estimated that total Medicare 
program payments for LTCH services over the next 5 LTCH PPS rate years 
would be $2.96 billion for the 2005 LTCH PPS rate year; $2.98 billion 
for the 2006 LTCH PPS rate year; $2.95 billion for the 2007 LTCH PPS 
rate year; $3.01 billion for the 2008 LTCH PPS rate year; and $3.12 
billion for the 2009 LTCH PPS rate year.
    In the February 3, 2005 proposed rule, consistent with the 
methodology established in the August 30, 2002 LTCH PPS final rule (67 
FR 56036), based on the best available data at that time, we estimated 
that total Medicare program payments for LTCH services for the next 5 
LTCH PPS rate years would be $2.94 billion in the 2006 LTCH PPS rate 
year; $2.90 billion in the 2007 LTCH PPS rate year; $2.96 billion in 
the 2008 LTCH PPS rate year; $3.08 billion in the 2009 LTCH PPS rate 
year; and $3.24 billion in the 2010 LTCH PPS rate year. These estimates 
were based on the projection that 94 percent of LTCHs would elect to be 
paid based on 100 percent of the 2006 LTCH PPS rate year proposed 
standard Federal rate rather than the applicable transition blend, and 
our estimate of 2006 LTCH PPS rate year payments to LTCHs. These 
estimates were also based on our Office of the Actuary's most recent 
estimate of the excluded hospital with capital market basket for the 
2006 through 2010

[[Page 24203]]

LTCH PPS rate years and our Office of the Actuary's projection of the 
change in Medicare beneficiary fee-for-service enrollment for the 2006 
through 2010 LTCH PPS rate years (70 FR 5752).
    Comment: Two commenters requested that we include estimates of the 
impact of our recent payment adjustment for LTCH HwHs and satellites of 
LTCHs in our projections of future LTCH PPS payments.
    Response: The tables in section V.C.7. of this preamble and the 
impact analysis in section XII.B.5. have not factored in the estimated 
impact of the recent payment adjustment for LTCH HwHs and satellites of 
LTCHs that were established in the August 11, 2004 IPPS final rule and 
codified at Sec.  412.534. In that same final rule, we noted that 
quantifying the effect of the payment adjustment for LTCH HwHs and 
satellites under Sec.  412.534 on Medicare expenditures for the LTCH 
PPS was problematic because ``[w]e cannot estimate the numbers of 
existing entities that will be affected by these revisions, nor can we 
estimate the specific DRGs that will be affected at those hospitals'' 
(69 FR 49771). We expected some degree of behavioral changes in 
discharge and admission policies between host hospitals and their LTCH 
HwHs or LTCH satellites, but ``* * * we [also] do not know the number 
of new applications for either LTCH hospital-within-a-hospital or LTCH 
satellite status that would [be] subject to review under these new 
circumstances.'' (69 FR 49771) Additionally, we note that we adopted a 
``hold harmless'' policy the first year following the implementation of 
this policy (cost reporting periods beginning on or after October 1, 
2004). That is, LTCH HwHs and LTCH satellites are not subject to the 
payment adjustment if the percentage of discharges admitted by the LTCH 
HwH or satellite of the LTCH from the host hospital do not exceed the 
percentage of discharges admitted from the host in its FY 2004 cost 
reporting period (Sec.  412.534(f)(1)). Furthermore, under Sec.  
412.534(f), we have also provided for a transition to the full payment 
adjustment for a hospital that is paid under the provisions of subpart 
O on October 1, 2005 and whose qualifying period under Sec.  412.23(e) 
began on or before October 1, 2004. We know from comments that we 
received on the May 18, 2004 IPPS proposed rule (69 FR 28196) that 
there could be a considerable number of these LTCHs in formation and 
yet since they are presently acute care hospitals, they are receiving 
Medicare payments under the IPPS. No claims or cost reporting data have 
been submitted by these hospitals under the LTCH PPS because they are 
not LTCHs at this time and, therefore, our projections would be unable 
to capture data on this not-inconsiderable group of providers that 
would be affected by the payment adjustment.
    Since the publication of the August 11, 2004 final rule, however, 
we have compiled a more comprehensive list of HwHs and asked our Office 
of the Actuary to utilize the best available Medicare data in order to 
evaluate whether it could be used to create a preliminary estimate of 
the impact of the LTCH HwH and satellite payment adjustment on Medicare 
payments during the three years of the transition to the full payment 
adjustment (FYs 2006-2008). Presently, based on our best data available 
to us, we believe that there are approximately 170 HwHs, but, because 
of the lag time in the availability of discharge data, we do not have 
complete data on the percentage of each LTCH's discharges that were 
admitted from its host during FY 2004. However, we do have specific 
discharge pattern data from 48 HwHs and their hosts (for CY 2003) 
provided by a LTCH HwH chain.
    Our Office of the Actuary evaluated the available data on those 
LTCH HwHs to develop projections based on the specified yearly ceilings 
of admissions from the host during the transition (that is, 75 percent 
in FY 2006, 50 percent in 2007 and 25 percent in FY 2008) and 
extrapolated the results from these calculations to the remaining LTCH 
HwHs for which we lacked specific patient discharge pattern data. 
Because of the limited availability of hospital-specific admission and 
discharge data, those estimates were based on several assumptions, 
including behavioral changes by hosts that would result in fewer 
patients being discharged to the LTCH HwH and no additional increase in 
the number of LTCH patients.
    Although the actual result of these analyses, projections, and 
extrapolations initially indicated an estimated reduction in Medicare 
payments under the LTCH PPS, these estimates do not account for the 
possibility that there could be an increase in the number of non-
outlier patients discharged from host hospitals who were admitted to 
and receive Medicare covered services at another LTCH that was not co-
located with the host. Since these LTCHs that are not co-located with 
the host would also submit claims under the LTCH PPS for treating the 
Medicare beneficiaries admitted, at this point, we believe it would be 
inappropriate to project a significant reduction in payments to LTCHs 
under the LTCH PPS. Therefore, based on the data available at this 
time, we continue to believe that it is difficult to accurately 
quantify the impact on Medicare payments under the LTCH PPS resulting 
from the recent payment adjustment at Sec.  412.534. We believe that 
any attempt to include the impact of this particular policy in our 
projections of future LTCH PPS spending could undermine the credibility 
of these projections. For these reasons, while the effect of the change 
to the LTCH HwH and LTCH satellite policy has been considered, we do 
not believe that it is appropriate at this point to reduce our 
projection of LTCH PPS payments in this final rule.
    As we explained in detail in our August 11, 2004 final rule for the 
IPPS (69 FR 49196) we implemented the payment adjustment for LTCH HwHs 
and satellites at Sec.  412.534 because we believe that the co-location 
of LTCHs or LTCH satellites with other Medicare providers, particularly 
acute care hospitals, bore a ``strong resemblance * * * to LTCH units 
of acute care hospitals, a configuration precluded by statute.'' (69 FR 
49201, August 11, 2004) Although we are not presently capable of 
publishing reliable data projections that reflect the impact of this 
policy on the LTCH PPS, we continue to believe, as stated in the August 
11, 2004 final rule, ``* * * [t]o the extent that these policy 
revisions will eliminate hospital-within-hospital arrangements that 
circumvented our existing requirements, the Medicare program will avoid 
making unnecessary payments under the more costly'' LTCH prospective 
payment system (69 FR 49771).
    In this final rule, consistent with the methodology established in 
the August 30, 2002 LTCH PPS final rule (67 FR 56036), based on the 
most recent available data, we estimate that total Medicare program 
payments for LTCH services for the next 5 LTCH PPS rate years will be 
as follows:

------------------------------------------------------------------------
                                                             Estimated
                   LTCH PPS rate year                      payments  ($
                                                           in billions)
------------------------------------------------------------------------
2006....................................................            3.32
2007....................................................            3.38
2008....................................................            3.48
2009....................................................            3.63
2010....................................................            3.79
------------------------------------------------------------------------

    In accordance with the methodology established in the August 30, 
2002 LTCH PPS final rule (67 FR 56037), these estimates are based on 
the projection that 98 percent of LTCHs will elect to be paid based on 
100 percent of the 2006 LTCH PPS rate year proposed standard Federal 
rate rather than the applicable transition blend, and our estimate of 
2006 LTCH PPS rate year

[[Page 24204]]

payments to LTCHs using our Office of the Actuary's most recent 
estimate of the excluded hospital with capital market basket of 3.4 
percent for the 2006 LTCH PPS rate year, 3.0 percent for the 2007 LTCH 
PPS rate year, 2.8 for the 2008 LTCH PPS rate year, and 2.9 percent for 
the 2009 and 2010 LTCH PPS rate years. We also took into account our 
Office of the Actuary's projection that there will be a change in 
Medicare fee-for-service beneficiary enrollment of -1.0 percent in the 
2006 LTCH PPS rate year, -2.1 percent in the 2007 LTCH PPS rate year, -
1.0 percent in the 2008 LTCH PPS rate year, 0.3 percent in the 2009 and 
2010 LTCH PPS rate years. (We note that, based on the most recent 
available data, our Office of the Actuary is projecting a slight 
decrease in Medicare fee-for-service Part A enrollment, in part, 
because they are projecting an increase in Medicare managed care 
enrollment as a result of the implementation of several provisions of 
the MMA of 2003.)
    As we discussed in the May 7, 2004 LTCH PPS final rule (69 FR 
25704), because the LTCH PPS has only been recently implemented, 
sufficient new data have not been generated that would enable us to 
conduct a comprehensive reevaluation of our budget neutrality 
calculations. Accordingly, we did not make a one-time adjustment under 
Sec.  412.523(d)(3). In the February 3, 2005 proposed rule (70 FR 
5752), we explained that at this time, we still do not have sufficient 
new data to enable us to conduct a comprehensive reevaluation of our 
budget neutrality calculations. Therefore, we did not propose to make a 
one-time adjustment under Sec.  412.523(d)(3) so that the effect of any 
significant difference between actual payments and estimated payments 
for the first year of the LTCH PPS is not perpetuated in the PPS rates 
for future years.
    We note that we did not receive any comments on our proposal not to 
make a one-time adjustment under Sec.  412.523(d)(3) in the LTCH PPS 
rate year 2006. Accordingly, at this time, we are not making a one-time 
adjustment under Sec.  412.523(d)(3) so that the effect of any 
significant difference between actual payments and estimated payments 
for the first year of the LTCH PPS is not perpetuated into the LTCH PPS 
rates for future years. However, we will continue to collect and 
interpret new data as the data become available in the future to 
determine if such an adjustment should be proposed.
8. Extension of the Interrupted Stay Policy
    In the May 7, 2004 LTCH PPS final rule, we revised the definition 
of an ``interruption of a stay'' at Sec.  412.531 by establishing two 
distinct categories, ``[a] 3-day or less interruption of stay'' at 
(a)(1) and ``[a] greater than 3-day interruption of stay'' at (a)(2). 
The ``greater than 3-day interruption of stay'' which was directly 
based on the original ``interruption of stay'' policy that had been 
implemented at the start of the LTCH prospective payment system (August 
30, 2002 LTCH PPS final rule, 67 FR 56002) is defined as a stay at a 
LTCH during which a Medicare inpatient is discharged from the LTCH to 
an acute care hospital, an IRF, or a SNF (or swing bed) for a period of 
greater than 3 days, but is readmitted to the LTCH within the 
applicable fixed day period, that is, between 4 and 9 consecutive days 
for an acute care hospital, between 4 and 27 consecutive days for an 
IRF, and between 4 and 45 consecutive days for a SNF. In both the ``3-
day or less interruption of stay'' and the ``greater than 3-day 
interruption of stay'', the day count begins on the day of discharge 
from the LTCH, (which is also the day of admission to the other site of 
care). The payment features of the ``greater than 3-day'' policy itself 
govern the stay after day 4 once the ``3-day or less'' policy no longer 
applies.
    As defined in the previous paragraph, for purposes of Medicare 
payment to the LTCH, a greater than 3-day interruption of stay is 
treated as only one discharge from the LTCH and generates only one LTC-
DRG payment. However, under this policy, Medicare makes a separate 
payment to the intervening provider (that is, acute care hospital, IRF, 
or SNF) for the treatment or care given to the beneficiary during the 
interruption.
    In implementing this policy, we provided that, in the event a 
Medicare inpatient is discharged from a LTCH and is readmitted and the 
stay qualifies as an interrupted stay, the provider must cancel the 
claim generated by the original stay in the LTCH and submit one claim 
for the entire stay. (For further details, see Medicare Program 
Memorandum Transmittal A-02-093, September 2002.) On the other hand, if 
the patient stay exceeds the total fixed-day threshold at the other 
facility before being readmitted to the LTCH, two separate LTCH PPS 
payments would be made. One would be based on the principal diagnosis 
and length of stay for the first discharge from the LTCH and the other 
based on the principal diagnosis and length of stay for the second 
discharge from the LTCH. Depending upon their lengths of stay, both 
stays could result in payments as a short-stay outlier (Sec.  412.529), 
a full LTC-DRG, or even a high-cost outlier. Further, if the principal 
diagnosis is the same for both admissions, the hospital could receive 
two similar payments. It is also important to note that under the 
existing greater than 3-day interruption of stay policy, a separate 
Medicare payment is made to the intervening provider under that 
provider's payment system.
    The 3-day or less interruption of stay policy is defined at Sec.  
412.531(a)(1) as ``a stay at a long-term care hospital during which a 
Medicare inpatient is discharged from the long-term care hospital to an 
acute care hospital, IRF, SNF, or the patient's home and readmitted to 
the same long-term care hospital within 3-days of the discharge from 
the long-term care hospital. The 3-day or less period begins with the 
date of discharge from the long-term care hospital and ends not later 
than midnight of the third day.'' As discussed in detail in the May 7, 
2004 LTCH PPS final rule (69 FR 25691-25700), there are several 
components to this policy. First, only one LTC-DRG payment will be made 
to the LTCH for the patient who is discharged from the LTCH to an acute 
care hospital, IRF, SNF, or patient's home and readmitted to the same 
LTCH within 3 days. Secondly, any off-site tests or medical treatment, 
either inpatient or outpatient, delivered at an acute care hospital or 
an IRF, or care at a SNF, will be covered by the LTCH ``under 
arrangements'' if the patient is readmitted to the LTCH within 3 days. 
(We established a specific exception to the ``under arrangements'' 
requirement during the 2005 LTCH PPS rate year, which we will review 
below, at Sec.  412.531(b)(1)(ii)(A)(1), in the event that the 
treatment was grouped to a surgical DRG under the IPPS at an acute care 
hospital.)
    Existing regulations at Sec.  412.509(c) require a LTCH to furnish 
all necessary covered services for a Medicare beneficiary who is an 
inpatient of the hospital either directly or ``under arrangements'' (as 
defined in Sec.  409.3). The ``under arrangements'' policy set forth in 
Sec.  412.509 derives from the regulations at Sec.  411.15(m), which 
implement section 1862(a)(14) of the Act. Section 1862(a) of the Act 
specifies the services for which no payment may be made under Medicare 
Part A and Part B and also specifies the exception for certain services 
to be furnished ``under arrangements'' by providers. Under section 
1862(a)(14) of the Act, notwithstanding any other provision of

[[Page 24205]]

this title, ``no payment may be made under part A or part B for any 
expenses incurred for items or services which are other than 
physicians' services (as defined in regulations promulgated 
specifically for purposes of this paragraph), services described by 
section 1861(s)(2)(K) of the Act (certified nurse-midwife services, 
qualified psychologist services, and services of a certified registered 
nurse anesthetist, and which are furnished to an individual who is a 
patient of a hospital or critical access hospital by an entity other 
than the hospital or critical access hospital, unless the services are 
furnished under arrangements (as defined in section 1861(w)(1) of the 
Act)) with the entity made by the hospital or critical access 
hospital.'' Section 1861(w)(1) of the Act states that ``[t]he term 
``arrangements'' is limited to arrangements under which receipt of 
payment by the hospital, critical access hospital, skilled nursing 
facility, home health agency, or hospice program (whether in its own 
right or as agent), with respect to services for which an individual is 
entitled to have payment made under this title, discharges the 
liability of such individual or any other person to pay for the 
services.'' We believed the objective of these statutory provisions, 
which were implemented for inpatient acute care hospitals in 
regulations at Sec.  411.15(m) and subsequently at Sec.  412.509 for 
LTCHs, was to discharge financial liability for inpatients who may have 
received additional care off-premises and to assign payment 
responsibility for the care to the hospital that is being paid for that 
beneficiary's total care for that spell of illness.
    Over the years, we have often referred to this as the ``prohibition 
against unbundling'' for purposes of emphasizing that if a Medicare 
provider ``unbundles'' specific components of a beneficiary's total 
inpatient care (provided either ``directly'' or ``under arrangements'') 
and sends separate claims to Medicare for those tests or treatments, 
the provider would be acting in violation of the statute and applicable 
regulations. Since LTCHs treat patients with multicomorbidities who are 
often in need of a wide range of diagnostic and treatment modalities 
and lengthy hospitalizations, we believe that in this particular 
setting, this statutory requirement was particularly vulnerable to 
gaming. For that reason, in formulating the ``3-days or less 
interruption of stay policy'' at Sec.  412.531(a), we clarified the 
existing general unbundling prohibition and the unbundling prohibition 
as it applied to the interrupted stay policy under the LTCH PPS.
    As noted above, we were concerned that LTCH patients, under active 
treatment, were being inappropriately discharged to other treatment 
sites, receiving tests or procedures related to one of the diagnoses 
for which the patient was being hospitalized and which otherwise should 
have been provided at the LTCH either directly or ``under 
arrangements'' (Sec.  412.509) prior to being readmitted to the LTCH. 
This behavior resulted in another claim being submitted to Medicare by 
the other treatment site for those tests or procedures. Since it is a 
fundamental principle of all prospective payment systems that payments 
associated with specific diagnostic groups include all costs associated 
with rendering care to the type of patients treated, the behavior 
described above on the part of the LTCH would result in an additional 
and inappropriate Medicare payments for services delivered by an 
intervening provider.
    If a LTCH obtains, from another facility ``under arrangements,'' a 
specific test or procedure that is not available on the LTCH's premises 
for one of its inpatients, as contemplated by Sec.  412.509, a 
discharge and a subsequent readmission would therefore be unnecessary 
and inappropriate. This is true even if it is necessary to transport 
the patient to another facility to receive the arranged-for service. In 
this situation, generally, the LTCH would include the medically 
necessary test or procedure on its patient claim to Medicare which 
could have an effect on the assignment of the LTC-DRG and, thus, the 
Medicare payment to the LTCH, and the LTCH would be responsible for 
paying the provider directly for the test or procedure. Under the 3-day 
or less interruption of stay policy, if a LTCH patient is discharged to 
an acute care hospital, IRF, SNF, or patient's home and returns to the 
LTCH for further hospital-level care within 3 days, any Medicare-
covered services delivered during that interruption will be deemed to 
have been delivered ``under arrangements'' and included in the one 
episode of care for which Medicare will pay the LTCH. Furthermore, 
under Sec.  409.3, when services are furnished ``under arrangements,'' 
Medicare payments made to the provider that arranged for the services 
discharges the liability of the beneficiary or any other person to pay 
for those services.
    Our policy was premised on the belief that 3 days, in most 
instances, represented an appropriate interval for establishing whether 
or not the reason for the patient's readmission was directly connected 
to the original episode of care at the LTCH. Therefore, no additional 
claim can be submitted to Medicare by the other provider that actually 
furnished the test or procedure if the patient is readmitted to the 
LTCH within 3 days since the initial LTCH admission triggered a 
Medicare payment under the LTCH prospective payment system that has 
been calibrated to cover payment for all necessary Medicare covered 
services delivered to a beneficiary during that episode of care.
    Moreover, under this established policy, where the LTCH is required 
to pay for outpatient or inpatient medical treatment or care provided 
at an acute care hospital, an IRF or SNF during any days of the 3-day 
or less interruption, all days of the 3-day or less interruption that 
the patient is away from the LTCH will be included in that patient's 
day count at the LTCH. If the LTCH patient goes home during the 
interruption and receives no additional medical care prior to being 
readmitted to the LTCH, the intervening days will not be included in 
the day count because the LTCH did not deliver any services to the 
patient during those days either directly or ``under arrangement.''
    In the policy, as established in the May 7, 2004 LTCH PPS final 
rule, for LTCH rate year 2005, we did provide a limited exception to 
the prohibition against additional Medicare payments to an intervening 
provider under the less than 3-day interruption of stay policy at Sec.  
412.531(b)(1)(ii)(A)(1). Under this exception, during the 2005 LTCH PPS 
rate year, if a patient was discharged from a LTCH, admitted as an 
inpatient to an acute care hospital and readmitted to the same LTCH 
within 3 days, and if the treatment that was delivered at the acute 
care hospital was grouped to a surgical DRG, Medicare will pay the 
acute care hospital separately for that surgical treatment. We also 
provided in Sec.  412.531(b)(1)(i)(c) that the number of days that a 
beneficiary spends away from a LTCH during a 3-day or less interruption 
of stay during which a beneficiary receives a procedure that is grouped 
to a surgical DRG under the IPPS in an acute care hospital during the 
2005 LTCH PPS rate year is not included in determining the length of 
stay of the patient at the LTCH. We established this exception in 
response to comments on the original policy that we proposed in the 
January 30, 2004 proposed rule (69 FR 4768-4772) requesting that we 
take into consideration the following scenario: the occurrence of an 
emergency ``totally unrelated'' to a LTCH patient's admitting diagnoses 
that occurred and

[[Page 24206]]

requiring surgery at an acute inpatient hospital, followed by the 
readmission of the patient within 3-days to the LTCH for a continuation 
of treatment of the patient's initial medical problems.
    In our response to these concerns, we noted that the 3-day or less 
interruption of stay policy at 412.531 resulted from our concern that 
if a LTCH patient was discharged to an acute care hospital for only 1, 
2, or 3 days, followed by a readmission to the LTCH, there could be 
reason to believe that the treatment delivered, even if it was grouped 
to a surgical DRG, was not a major procedure because of the relatively 
short length of stay, and, therefore, should have been provided ``under 
arrangements.''
    In the May 7, 2004 LTCH PPS final rule, we stated that over the 
course of the first year of implementation of the revised 3-day or less 
interrupted stay policy, we would study relevant claims data in order 
to evaluate whether further proposed refinements to this policy would 
be warranted in this year's rule. Specifically, we stated that we would 
analyze new data to determine whether problems associated with LTCH 
interrupted stays equally affected all settings to which LTCH patients 
may have been discharged and subsequently readmitted and we would 
closely monitor patterns of discharges and readmissions under the first 
year of this policy. In order to pursue these analyses, we stated that 
we would be using relevant claims data as soon as they were available 
to determine whether our policy was producing its desired effect of 
reducing unnecessary and inappropriate Medicare payments while not 
compromising beneficiary access to medically necessary services. The 3-
day interruption of stay policy was first implemented on July 1, 2004, 
and, therefore, we do not yet have sufficient data to accomplish the 
above evaluations. Therefore, in the February 3, 2005 proposed rule (70 
FR 5754), we proposed to extend the surgical DRG exception in Sec.  
412.531(b)(1)(i)(C) and (b)(ii)(A)(1) through the 2006 LTCH rate year, 
from July 1, 2005 through June 30, 2006. As we explained in that same 
proposed rule, at that point, the policy will have been in effect for 
12 months, and we believe that we will be better able to evaluate 
whether this exception should be extended further as well as whether 
the overall policy requires modification in order to serve the overall 
goals of the Medicare program.
    Comment: Three commenters expressed strong support for our proposed 
one-year extension of the surgical DRG exception to our 3-days or less 
interrupted stay policy, noting that it prevents LTCHs from having to 
pay for costly surgical procedures ``under arrangements'' for patients 
who are otherwise being treated at LTCHs. One of the commenters urged 
us to make it a permanent feature of the policy.
    Response: We appreciate the commenters' support for our proposed 
policy. As noted above, we will be analyzing claims data over the next 
year to determine whether the surgical DRG exception to the ``under 
arrangements'' feature of the 3-day or less interrupted stay policy is 
actively accomplishing our goal of reducing unnecessary Medicare 
payments and to deter inappropriate Medicare payments while not 
compromising beneficiary access to medically necessary services. We 
believe that we will have sufficient data to evaluate continuation of 
the exception and also whether additional refinements to the overall 3-
day or less interruption of stay policy are warranted. We are 
particularly interested in analyzing data from LTCHs to determine 
whether there has been a significant increase in interruptions of 4-
days since the establishment of the policy. To the extent interruption 
of stay has increased to at least 4 days, this behavior may indicate 
inappropriate efforts to side-step the provisions of our 3-day or less 
interruption of stay policy. Therefore, as proposed, we are extending 
the surgical DRG exception through the 2006 LTCH PPS rate year, from 
July 1, 2005-June 30, 2006 in Sec.  412.531(b)(1)(i)(C) and 
(b)(ii)(A)(1).
9. Onsite Discharges and Readmittances
    Under Sec.  412.532, generally, if more than 5 percent of all 
Medicare discharges during a cost reporting period are patients who are 
discharged to an onsite SNF, IRF, or psychiatric facility, or to an 
onsite acute care hospital and who are then directly readmitted to the 
LTCH (including a satellite facility), only one LTC-DRG payment will be 
made to the LTCH for these type of discharges and readmittances during 
the LTCH's cost reporting period. Therefore, payment for the entire 
stay will be paid either as one full LTC-DRG payment or a short-stay 
outlier, depending on the duration of the entire LTCH stay.
    In applying the 5-percent threshold, we apply one threshold for 
discharges and readmittances with the co-located acute care hospital. 
There is also a separate 5-percent threshold for the aggregate of all 
discharges and readmittances to the LTCH from its co-located SNFs, 
IRFs, and psychiatric facilities. In the case of a LTCH that is co-
located with an acute care hospital, an IRF, or a SNF, the interrupted 
stay policy at Sec.  412.531 applies until the 5-percent threshold is 
reached. Once the applicable 5-percent threshold is reached, all LTCH 
discharges and readmittances from the co-located acute care hospital 
for that cost reporting period are paid as one discharge pursuant to 
Sec.  412.532. This means that once the 5-percent threshold has been 
reached, even if a discharged LTCH Medicare patient was readmitted to 
the LTCH following a stay in an acute care hospital of greater than 9 
days, if the facilities share a common location, the subsequent 
discharge from the LTCH will not represent a separate hospitalization 
for payment purposes. Under this policy, the total stay for a patient 
will include LTCH days prior to the interruption and, also, the days 
after the readmission to the LTCH that followed the interruption and 
Medicare will make one LTC-DRG payment when the patient is discharged 
during a cost reporting period. One LTC-DRG will be assigned based upon 
all patient diagnoses and care delivered to the patient during the 
entire LTCH stay and included on the discharge claim regardless of the 
length of stay at the acute care hospital during the interruption.
    Similarly, if the LTCH has exceeded its 5-percent threshold for all 
discharges to an onsite IRF, SNF, or psychiatric hospital or unit, 
which were readmitted to the LTCH from those providers, the subsequent 
LTCH discharge for those patients will not be treated as a separate 
discharge for Medicare payment purposes. (Unless the up to 3-day 
interrupted stay policy is applicable, payment to an acute care 
hospital under the IPPS, to the IRF under the IRF PPS, or to a SNF 
under the SNF PPS, will not be affected. Payments to the psychiatric 
facility also will not be affected.)
    In the August 30, 2002 LTCH PPS final rule, we established a 
notification requirement for LTCHs that were HwHs, as defined in Sec.  
412.22(e), and satellites of LTCHs, as defined at Sec.  412.22(h)(5), 
and for LTCHs and satellites of LTCHs that were subject to the onsite 
provider payment adjustment under Sec.  412.532 because they were co-
located with other Medicare providers, as specified in Sec.  
412.532(a). At existing Sec.  412.22(e)(3) and (h)(5), we require a 
LTCH HwH and a satellite of a LTCH, respectively, to notify its FI and 
CMS of its co-located status within 60 days of the start of its first 
cost reporting period under the LTCH PPS. At existing Sec.  412.532(i), 
we require the LTCH or satellite of a LTCH that is co-located with 
another hospital or a SNF to provide notification of its co-location 
within 60-days following the effective date of the regulations. We also

[[Page 24207]]

established an additional notification requirement at Sec.  412.532(i), 
for a LTCH or satellite of a LTCH, subject to the onsite provider 
payment adjustment at Sec.  412.532 to notify its FI and CMS within 60 
days of a change in co-located status. We intended that these 
regulations also require LTCHs and satellites of LTCH that are co-
located with other hospitals or SNFs to identify particular co-located 
Medicare providers.
    As we discussed in the February 3, 2005 proposed rule (70 FR 5750), 
it appears that this expectation is unclear in our present regulations. 
We have been informed by some of our regional offices and FIs that 
LTCHs and satellites of LTCHs, for which they are responsible, have in 
many cases neglected to specify the name(s), address(es), and Medicare 
provider number(s) of the co-located providers covered by Sec.  
412.22(e)(3), (h)(5), and Sec.  412.532, as applicable. Therefore, in 
that same proposed rule, with respect to Sec.  412.22(e)(3), we 
proposed to clarify our policy that a LTCH that occupies space in a 
building used by another hospital, or in one or more entire buildings 
located on the same campus as buildings used by a hospital and that 
meets the criteria of paragraph (e)(1) or (e)(2) of Sec.  412.22, must 
inform its FI and CMS in writing of its co-located status, as well as, 
provide the name(s), address(es), and the Medicare provider number(s) 
of the other co-located providers (that is, acute care hospitals, IRFs, 
and psychiatric facilities and units). We also proposed to clarify 
that, with respect to Sec.  412.22(h)(5), a satellite of a LTCH that 
occupies space in a building used by another hospital, or in one or 
more entire buildings located on the same campus as buildings used by 
another hospital, and that meets the criteria of paragraphs (h)(1) 
through (h)(4) of Sec.  412.22, must notify its FI and CMS in writing 
of its co-location and identify by name(s), address(es), and Medicare 
provider number(s), those hospital(s) with which it is co-located.
    In addition, we proposed to clarify the notification requirements 
in Sec.  412.532 that apply to a LTCH or satellite of a LTCH to which 
Sec.  412.532 applies. For example, we clarified that the notification 
requirements apply to a LTCH or a satellite of a LTCH that is co-
located with a SNF. Furthermore, since the existing regulation text at 
Sec.  412.22(e)(3) and (h)(5) required that the notification take place 
within 60 days of the LTCH's first cost reporting period beginning on 
or after October 1, 2002 and Sec.  412.532(i) required that the 
notification occur within 60 days of the effective date of the original 
regulation (cost reporting periods beginning on or after October 1, 
2002), and this timeframe for many providers has long since passed, we 
proposed to eliminate the specific timing requirement in favor of the 
on-going, prospective notification requirement described above, which 
is also clearer and more comprehensive. Therefore, we proposed to 
delete the phrase ``within 60 days of its first cost reporting period 
that begins on or after October 1, 2002'' at Sec.  412.22(e)(3) and 
(h)(5). We also proposed to delete the phrase ``within 60 days 
following the effective date of these regulations'' from Sec.  
412.532(i). We also proposed to delete the phrase ``and within 60 days 
of a change in co-located status'' from Sec.  412.532(i) because, as we 
explained in that same proposed rule, we believe that the proposed 
continuing notification requirement in the revised regulation text at 
Sec.  412.22(e)(3) and (h)(5), as well as at Sec.  412.532(i), would 
include the obligation to notify CMS and the FI in writing of any 
changes in co-located status and the obligation to provide the 
requisite information detailed above. We also proposed to clarify that 
the notification requirement in Sec.  412.532(i) applied to a LTCH or a 
satellite of a LTCH that is co-located with a SNF. Accordingly, we 
proposed to revise each of the three notification provisions, to 
establish consistency and to clearly state the on-going requirement 
that a LTCH and a satellite of a LTCH that is co-located with another 
hospital or a SNF inform their FIs and CMS in writing of the name(s), 
address(es), and Medicare provider number(s) of particular co-located 
Medicare providers.
    As discussed earlier in the comment and response in section V.C.8. 
of this preamble, several commenters agreed with our proposed 
clarification of the notification requirement. There were no comments 
on the proposed elimination of the specific timing requirement, that 
is, notification occurs within 60 days of the LTCH's first cost 
reporting period beginning on or after October 1, 2002 and the 
notification occurs within 60 days of the effective date of the 
original regulation (October 1, 2002) and that notification occurs 
within 60 days of a change in co-located status, nor were there 
comments regarding our clarification that the notification requirements 
apply to a LTCH or a satellite of a LTCH that is co-located with a SNF. 
As explained in detail earlier in this section of the preamble, we are 
finalizing our proposed notification requirements with some minor 
editorial modifications.

VI. Computing the Adjusted Federal Prospective Payments for the 2006 
LTCH PPS Rate Year

    In accordance with Sec.  412.525 and as discussed in section V.C. 
of this final rule, the standard Federal rate is adjusted to account 
for differences in area wages by multiplying the labor-related share of 
the standard Federal rate by the appropriate LTCH PPS wage index (as 
shown in Tables 1 and 2 of the Addendum to this final rule). The 
standard Federal rate is also adjusted to account for the higher costs 
of hospitals in Alaska and Hawaii by multiplying the nonlabor-related 
share of the standard Federal rate by the appropriate cost-of-living 
factor (shown in Table I in section V.C.2. of this preamble). In the 
May 7, 2004 final rule (69 FR 25674), we established a standard Federal 
rate of $36,833.69 for the 2005 LTCH PPS rate year. In February 3, 2005 
proposed rule, based on the best available data, previously established 
policies, and the proposed policies described in that rule, we proposed 
a standard Federal rate of $37,975.53 for the 2006 LTCH PPS rate year 
as discussed in section V.B. of this preamble. In this final rule, 
based on the best available data and the finalized policies described 
in this final rule, we are establishing a standard Federal rate of 
$38,086.04 for the 2006 LTCH PPS rate year as discussed in section 
IV.B. of this preamble. We illustrate the methodology used to adjust 
the Federal prospective payments for the 2006 LTCH PPS rate year in the 
following example: During the 2006 LTCH PPS rate year, a Medicare 
patient is in a LTCH located in Chicago-Naperville-Joliet, Illinois 
(CBSA 16974). This LTCH is in the third year of the wage index phase-
in, thus, the three-fifths wage index values are applicable. The three-
fifths wage index value for CBSA 16974 is 1.0521 (see Table 1 in the 
Addendum to this final rule). The Medicare patient is classified into 
LTC-DRG 9 (Spinal Disorders and Injuries), which has a relative weight 
of 1.0950 (see Table 3 in the Addendum to this final rule). To 
calculate the LTCH's total adjusted Federal prospective payment for 
this Medicare patient, we compute the wage-adjusted Federal prospective 
payment amount by multiplying the unadjusted standard Federal rate 
($38,086.04) by the labor-related share (72.885 percent) and the wage 
index value (1.0521). This wage-adjusted amount is then added to the 
nonlabor-related portion of the unadjusted standard Federal rate 
(27.115 percent; adjusted for cost of living, if applicable) to 
determine the adjusted Federal rate, which is then multiplied by the 
LTC-DRG relative

[[Page 24208]]

weight (1.0950) to calculate the total adjusted Federal prospective 
payment for the 2006 LTCH PPS rate year ($43,287.85). Finally, as 
discussed in section V.C.6. of this preamble, for the 2006 LTCH PPS 
rate year, there will be a 0.0 percent reduction (a budget neutrality 
offset of 1.000) to the total adjusted Federal prospective payment to 
account for the costs of the transition methodology.
    The following illustrates the components of the calculations in 
this example:

 
 
 
Unadjusted Standard Federal Prospective Payment Rate....      $38,086.04
Labor-Related Share.....................................         0.72885
                                                         ---------------
Labor-Related Portion of the Federal Rate...............    = $27,759.01
\3/5\ths Wage Index (CBSA 16974)........................          1.0521
                                                         ---------------
Wage-Adjusted Labor Share of Federal Rate...............    = $29,205.25
Nonlabor-Related Portion of the Federal Rate ($38,086.04    + $10,327.03
 x 0.27115).............................................
                                                         ---------------
Adjusted Federal Rate Amount............................    = $39,532.28
LTC-DRG 9 Relative Weight...............................        x 1.0950
                                                         ---------------
Total Adjusted Federal Prospective Payment (Before the      = $43,287.85
 Budget Neutrality Offset)..............................
Budget Neutrality Offset................................         x 1.000
                                                         ===============
    Total Federal Prospective Payment (Including the        = $43,287.85
     Budget Neutrality Offset)..........................
 

VII. Transition Period

    To provide a stable fiscal base for LTCHs, under Sec.  412.533, we 
implemented a 5-year transition period whereby a LTCH receives payment 
consisting of a portion based on reasonable cost principles and a 
portion based on the Federal prospective payment rate (unless the LTCH 
elects payments based on 100 percent of the Federal rate). As discussed 
in the August 30, 2002 final rule (67 FR 56038), we believe that a 5-
year phase-in provides LTCHs time to adjust their operations and 
capital financing to the LTCH PPS, which is based on prospectively 
determined Federal payment rates. Furthermore, we believe that the 5-
year phase-in of the LTCH PPS also allows LTCH personnel to develop 
proficiency with the LTC-DRG coding system, which will result in 
improvement in the quality of the data used for generating our annual 
determination of relative weights and payment rates.
    In accordance with Sec.  412.533, the transition period for all 
hospitals subject to the LTCH PPS begins with the hospital's first cost 
reporting period beginning on or after October 1, 2002 and extends 
through the hospital's last cost reporting period beginning before 
October 1, 2006. During the 5-year transition period, a LTCH's total 
payment under the LTCH PPS is based on two payment percentages--one 
based on reasonable cost-based (TEFRA) payments and the other based on 
the standard Federal prospective payment rate. The percentage of 
payment based on the LTCH PPS Federal rate increases by 20 percentage 
points each year, while the reasonable cost-based payment rate 
percentage decreases by 20 percentage points each year, for the next 2 
fiscal years. For cost reporting periods beginning on or after October 
1, 2006, Medicare payment to LTCHs will be determined entirely under 
the Federal rate. The blend percentages as set forth in Sec.  
412.533(a) are as follows:

------------------------------------------------------------------------
                                                              Reasonable
                                                  Federal        cost
 Cost reporting periods beginning on or after       rate      principles
                                                 percentage      rate
                                                              percentage
------------------------------------------------------------------------
October 1, 2002...............................           20           80
October 1, 2003...............................           40           60
October 1, 2004...............................           60           40
October 1, 2005...............................           80           20
October 1, 2006...............................          100            0
------------------------------------------------------------------------

    For cost reporting periods that begin on or after October 1, 2004, 
and before October 1, 2005 (FY 2005), the total payment for a LTCH is 
40 percent of the amount calculated under reasonable cost principles 
for that specific LTCH and 60 percent of the Federal prospective 
payment amount. For cost reporting periods that begin on or after 
October 1, 2005 and before October 1, 2006 (FY 2006), the total payment 
for a LTCH will be 20 percent of the amount calculated under reasonable 
cost principles for that specific LTCH and 80 percent of the Federal 
prospective payment amount. As we noted in the May 7, 2004 final rule 
(69 FR 25674), the change in the effective date of the annual LTCH PPS 
rate update from October 1 to July 1 has no effect on the LTCH PPS 
transition period as set forth in Sec.  412.533(a). That is, LTCHs paid 
under the transition blend under Sec.  412.533(a) will receive those 
blend percentages for the entire 5-year transition period (unless they 
elect payments based on 100 percent of the Federal rate). Furthermore, 
LTCHs paid under the transition blend will receive the appropriate 
blend percentages of the Federal and reasonable cost-based rate for 
their entire cost reporting period as prescribed in Sec.  412.533(a)(1) 
through (a)(5).
    The reasonable cost-based rate percentage is a LTCH specific amount 
that is based on the amount that the LTCH would have been paid (under 
TEFRA) if the PPS were not implemented. Medicare fiscal intermediaries 
will continue to compute the LTCH reasonable cost-based payment amount 
according to Sec.  412.22(b) of the regulations and sections 1886(d) 
and (g) of the Act.
    In implementing the PPS for LTCHs, one of our goals is to 
transition hospitals to full prospective payments as soon as 
appropriate. Therefore, under Sec.  412.533(c), we allow a LTCH, which 
is subject to a blended rate, to elect payment based on 100 percent of 
the Federal rate at the start of any of its cost reporting periods 
during the 5-year transition period rather than incrementally shifting 
from reasonable cost-based payments to prospective payments. Once a 
LTCH elects to be paid based on 100 percent of the Federal rate, it 
will not be able to revert to the transition blend. For cost reporting 
periods that began on or after December 1, 2002, and for the remainder 
of the 5-year transition period, a LTCH must notify its fiscal 
intermediary in writing of its election on or before the 30th day prior 
to the start of the LTCH's next cost reporting period. For example, a 
LTCH with a cost reporting period that begins on May 1, 2005, must 
notify its fiscal intermediary in writing of an election on or before 
April 1, 2005.
    Under Sec.  412.533(c)(2)(i), the notification by the LTCH to make 
the election must be made in writing to the Medicare fiscal 
intermediary. Under Sec. Sec.  412.533(c)(2)(ii) and (c)(2)(iii), the

[[Page 24209]]

intermediary must receive the request on or before the specified date 
(that is, on or before the 30th day before the applicable cost 
reporting period begins for cost reporting periods beginning on or 
after December 1, 2002 through September 30, 2006), regardless of any 
postmarks or anticipated delivery dates.
    Notifications received, postmarked, or delivered by other means 
after the specified date will not be accepted. If the specified date 
falls on a day that the postal service or other delivery sources are 
not open for business, the LTCH will be responsible for allowing 
sufficient time for the delivery of the request before the deadline. If 
a LTCH's notification is not received timely, payment will be based on 
the transition period blend percentages.

VIII. Payments to New LTCHs

    Under Sec.  412.23(e)(4), for purposes of Medicare payment under 
the LTCH PPS, we define a new LTCH as a provider of inpatient hospital 
services that otherwise meets the qualifying criteria for LTCHs, set 
forth in Sec.  412.23(e)(1) and (e)(2), under present or previous 
ownership (or both), and its first cost reporting period as a LTCH 
begins on or after October 1, 2002. We also specify in Sec.  412.500 
that the LTCH PPS is applicable to hospitals with a cost reporting 
period that began on or after October 1, 2002.
    As we discussed in the August 30, 2002 final rule (67 FR 56040), 
this definition of new LTCHs should not be confused with those LTCHs 
first paid under the TEFRA payment system for discharges occurring on 
or after October 1, 1997, described in section 1886(b)(7)(A) of the 
Act, as added by section 4416 of the Balanced Budget Act of 1997 
(BBA'97) (Pub. L. 105-33). As stated in Sec.  413.40(f)(2)(ii), for 
cost reporting periods beginning on or after October 1, 1997, the 
payment amount for a ``new'' (post-FY 1998) LTCH is the lower of the 
hospital's net inpatient operating cost per case or 110 percent of the 
national median target amount payment limit for hospitals in the same 
class for cost reporting periods ending during FY 1996, updated to the 
applicable cost reporting period (see 62 FR 46019, August 29, 1997). 
Under the LTCH PPS, those ``new'' LTCHs that meet the definition of 
``new'' under Sec.  413.40(f)(2)(ii) and that have their first cost 
reporting period as a LTCH beginning prior to October 1, 2002, will be 
paid under the transition methodology described in Sec.  412.533.
    As noted above and in accordance with Sec.  412.533(d), new LTCHs 
will not participate in the 5-year transition from reasonable cost-
based reimbursement to prospective payment. As we discussed in the 
August 30, 2002 final rule (67 FR 56040), the transition period is 
intended to provide existing LTCHs time to adjust to payment under the 
new system. Since these new LTCHs with their first cost reporting 
periods as LTCHs beginning on or after October 1, 2002, would not have 
received payment under reasonable cost-based reimbursement for the 
delivery of LTCH services prior to the effective date of the LTCH PPS, 
we do not believe that those new LTCHs require a transition period in 
order to make adjustments to their operations and capital financing, as 
will LTCHs that have been paid under the reasonable cost-based 
methodology.

IX. Method of Payment

    Under Sec.  412.513, a Medicare LTCH patient is classified into a 
LTC-DRG based on the principal diagnosis, up to eight additional 
(secondary) diagnoses, and up to six procedures performed during the 
stay, as well as age, sex, and discharge status of the patient. The 
LTC-DRG is used to determine the Federal prospective payment that the 
LTCH will receive for the Medicare-covered Part A services the LTCH 
furnished during the Medicare patient's stay. Under Sec.  412.541(a), 
the payment is based on the submission of the discharge bill. The 
discharge bill also provides data to allow for reclassifying the stay 
from payment at the full LTC-DRG rate to payment for a case as a short-
stay outlier (under Sec.  412.529) or as an interrupted stay (under 
Sec.  412.531), or to determine if the case will qualify for a high-
cost outlier payment (under Sec.  412.525(a)).
    Accordingly, the ICD-9-CM codes and other information used to 
determine if an adjustment to the full LTC-DRG payment is necessary 
(for example, length of stay or interrupted stay status) are recorded 
by the LTCH on the Medicare patient's discharge bill and submitted to 
the Medicare fiscal intermediary for processing. The payment represents 
payment in full, under Sec.  412.521(b), for inpatient operating and 
capital-related costs, but not for the costs of an approved medical 
education program, bad debts, blood clotting factors, anesthesia 
services by hospital-employed nonphysician anesthetists or obtained 
under arrangement, or the costs of photocopying and mailing medical 
records requested by a Quality Improvement Organization (QIO), which 
are costs paid outside the LTCH PPS.
    As under the previous reasonable cost-based payment system, under 
Sec.  412.541(b), a LTCH may elect to be paid using the periodic 
interim payment (PIP) method described in Sec.  413.64(h) and may be 
eligible to receive accelerated payments as described in Sec.  
413.64(g).
    For those LTCHs that are paid during the 5-year transition based on 
the blended transition methodology in Sec.  412.533(a) for cost 
reporting periods that began on or after October 1, 2002, and before 
October 1, 2006, the PIP amount is based on the transition blend. For 
those LTCHs that are paid based on 100 percent of the standard Federal 
rate, the PIP amount is based on the estimated prospective payment for 
the year rather than on the estimated reasonable cost-based 
reimbursement. We exclude high-cost outlier payments that are paid upon 
submission of a discharge bill from the PIP amounts. In addition, Part 
A costs that are not paid for under the LTCH PPS, including Medicare 
costs of an approved medical education program, bad debts, blood 
clotting factors, anesthesia services by hospital-employed nonphysician 
anesthetists or obtained under arrangement, and the costs of 
photocopying and mailing medical records requested by a QIO, are 
subject to the interim payment provisions (Sec.  412.541(c)).
    Under Sec.  412.541(d), LTCHs with unusually long lengths of stay 
that are not receiving payment under the PIP method may bill on an 
interim basis (60 days after an admission and at intervals of at least 
60 days after the date of the first interim bill) and should include 
any high-cost outlier payment determined as of the last day for which 
the services have been billed.

X. MedPAC Recommendations/Monitoring

    The MedPAC's June 2004 Report to the Congress: Variation and 
Innovation in Medicare, contained a chapter on ``Defining Long-Term 
Care Hospitals.'' In this chapter, the Commission focused on a broad 
range of issues central to understanding LTCHs which, although rapidly 
increasing in number, is still the smallest of all provider categories, 
but the most costly to the Medicare program per beneficiary episode of 
care.
    The Commission identified particular problems such as growth of the 
LTCH industry, and high payment rates that appear to result from 
current payment incentives. Specifically the report states, ``[F]irst, 
the financial incentive of the acute and long-term care hospital PPSs 
are likely to encourage facilities to selectively retain and admit 
certain types of patients to minimize their costs. Acute hospitals have 
a financial incentive to transfer patients as quickly as possible if 
they are likely to become

[[Page 24210]]

high-cost outliers (to avoid losses on those patients). LTCHs have an 
incentive to admit patients with a given diagnosis who are likely to 
require fewer resources. Second, as the number of LTCHs grows, 
facilities may find it increasingly difficult to find patients who 
truly require LTCH-level care; this would lead to an increase in lower 
severity patients being cared for in LTCHs and higher Medicare 
spending. Finally, LTCH care is costly. The per case base rate in 
$37,000 and payments can be as high as $115,000 per case for the most 
complex patients.'' (pp. 127-8)
    The Commission also examined LTCHs in the June 2003 Report to the 
Congress, entitled, ``Monitoring post-acute care.'' Citing that Report, 
the Commission compared beneficiaries treated in LTCHs and other 
settings and determined that based on ``the 11 most common diagnoses in 
LTCHs, using descriptive analysis and controlling for diagnosis related 
group (DRG) and severity of illness * * * that patients in market areas 
with LTCHs had similar acute hospital lengths of stay [preceding the 
LTCH stay] whether they used these facilities or not.'' Further, 
``[p]atients who used LTCHs were three to five times less likely to use 
skilled nursing facility (SNF) care, suggesting that SNFs and long-term 
care hospitals may be substitutes.'' The June 2004 Report had also 
noted that `` * * * Medicare pays more for patients treated in LTCHs, 
compared with patients not treated in them'', but also concluded that 
this study, as well as the rapid and continuing growth in the number of 
LTCHs, the corresponding increases in Medicare spending, combined with 
the markedly uneven distribution of LTCHs throughout the country, 
raised additional issues for further research. (p. 122)
    In its June 2004 Report to the Congress, the Commission reported 
the results of this subsequent research, both qualitative and 
quantitative, which focused on the following questions: What role do 
long-term care hospitals play in providing care?; Where are clinically 
similar patients treated in areas without long-term care hospitals?; 
and How do Medicare payments and outcomes compare for LTCH patients 
versus those in other settings? (p. 122). The Commission's research 
utilized structured interviews with health care providers and hospital 
administrators; site visits and clinical presentations; and 
quantitative analyses of markets with and without LTCHs and patient-
level analyses to examine outcomes and per-episode impact on Medicare 
costs. Responses to these questions included the following assertions:
     LTCHs provide post-acute care to a small number of 
medically complex patients who are more stable than patients in an 
intensive care unit (ICU) but may still have unresolved underlying 
complex medical conditions.
     The use of LTCHs is associated with certain diagnoses, 
severity levels and the proximity of the facility.
     In areas without LTCHs, acute hospitals and SNFs are the 
principal substitutes of LTCHs.
     When LTCH care is not targeted to patients most likely to 
need this level of care, care for patients at a LTCH is more costly to 
Medicare than for similar patients in alternative settings. Conversely, 
when LTCH care is targeted to patients most likely to need this level 
of care, costs for those patients appear to be comparable to costs for 
those who use other settings (and costs for LTCH patients with 
tracheostomies save Medicare money) in large part because of fewer 
acute hospital readmissions for those patients. (pp. 121-134)
    The Commission's interpretations of its qualitative and 
quantitative research findings led to two specific recommendations:
    ``5A--The Congress and the Secretary should define long-term care 
hospitals by facility and patient criteria that ensure that patients 
admitted to these facilities are medically complex and have a good 
chance at improvement.
     Facility-level criteria should characterize this level of 
care by features such as staffing, patient evaluation and review 
processes, and mix of patients.
     Patient-level criteria should identify specific clinical 
characteristics and treatment modalities.
    5B--The Secretary should require the Quality Improvement 
Organizations to review long-term care hospital admissions for medical 
necessity and monitor that these facilities are in compliance with 
defining criteria.'' (p. 120).
    Since the publication of MedPAC's recommendations, we have 
discussed the implications of the Report with several trade 
associations that represent different facets of the LTCH industry (for 
example, older non-profit LTCHs; a for-profit chain that specializes in 
a particular case-mix; another for-profit chain which functions mainly 
in the HwH model).
    In response to the recommendation in MedPAC's June 2004 Report that 
the Secretary examine defining LTCHs by facility and patient criteria, 
we have awarded a contract to Research Triangle Institute (RTI), 
International for a thorough examination of the Commission's 
recommendations based on the performance of a wide variety of analytic 
tasks using CMS data files, and also utilizing information collected 
from physicians, providers, and LTCH trade associations. This contract, 
``Long Term Care Hospital (LTCH) Payment System Refinement/
Evaluation,'' will assist (CMS) in researching MedPAC's recommendations 
regarding the appropriate and cost-effective use of LTCHs in the 
Medicare program. With the recommendations of MedPAC's June 2004 Report 
to Congress as a point of departure, RTI, International will evaluate 
patient or facility level characteristics for LTCHs in order to 
identify and distinguish the role of these hospitals as a Medicare 
provider. This effort will be multi-faceted. Claims analysis of 
patients treated by LTCHs, as well as outlier patients treated at acute 
care hospitals will provide information to help direct this work, and 
several additional types of data sources will be used to evaluate these 
two issues, including administrative data such as Medicare claims as 
well as primary data collected through interviews, and a secondary 
analysis of existing regulatory requirements. As they gather 
information for the purposes of determining the feasibility of 
establishing LTCH patient and facility-level criteria, our contractor 
has been directed to include information from representatives, along 
with other stake-holders in the LTCH industry. Additionally, the 
contractor will examine the present role of QIOs in the Medicare 
program, focusing on their responsibilities regarding the LTCH PPS, as 
well as the potential for an expanded QIO role as suggested by MedPAC's 
recommendations. The goals of this research will be to document current 
practices related to the MedPAC recommendations, both in terms of 
provider certification, quality reviews, and hospital practice 
patterns.
    Specifically, the project itself will be completed in two phases. 
Phase I, which is presently being undertaken by the contractor, focuses 
on an analysis of LTCHs within the current Medicare system, their 
history as participating providers, their case-mix, the criteria used 
by QIOs to determine the appropriateness of treatment in LTCHs, and 
where similar patients are treated in areas that lack LTCHs. Prior 
analyses of these issues by other contractors will be utilized as well 
as preliminary discussions with MedPAC, other researchers, and the 
QIOs. Building on the work of Phase I, Phase II will continue to 
address the feasibility of MedPAC's proposed criteria by first 
investigating the appropriateness of patient level criteria to 
determine

[[Page 24211]]

whether there are distinctions between patients treated in LTCHs and 
other types of potential substitute providers (with particular 
attention to varying outcomes). Medicare claims data will be utilized 
for comparisons of LTCH patients and long-stay patients who are treated 
in acute care hospitals that have attained high cost outlier status. A 
separate analysis will be made for a subset of LTCH patients with 
diagnoses that are typically treated in IRFs. The contractor is then 
planning interviews with QIOs for the purpose of gathering information 
on assessment measures for each setting. Comparisons of these 
instruments will be made across regions for their usefulness as 
standardized patient screening or assessment tools. The contractors 
then plan to evaluate the outcomes of their research in the context of 
MedPAC's recommendation for the development of facility-level criteria, 
using claims, interviews, and document reviews. To the extent the 
analyses suggest that changes should be made that may affect LTCH 
payments, LTCH discharges, or the definition of LTCH, such proposed 
changes could necessitate some statutory or regulatory changes.
    In the August 30, 2002 final rule (67 FR 56014), we described an 
on-going monitoring component of the new LTCH PPS that would enable us 
to evaluate the impact of the new payment policies. Specifically, we 
discussed on-going analysis of the various policies that we believe 
would provide equitable payment for stays that reflect less than the 
full course of treatment and reduce the incentives for inappropriate 
admissions, transfers, or premature discharges of patients that are 
present in a discharge-based PPS. To this end, we have designed system 
features utilizing MedPAR data that will enable us and the fiscal 
intermediary to track beneficiary movement to and from a LTCH and track 
LTCH patients to and from another Medicare provider. We also stated our 
intent to collect and interpret data on changes in average lengths of 
stay under the LTCH PPS for specific LTC-DRGs and the impact of these 
changes on the Medicare program. As part of our data analysis, we have 
revisited a number of our original and even pre-LTCH PPS policies in 
order to address what we believed were behaviors by certain LTCHs that 
have led to inappropriate Medicare payments. In recent Federal Register 
publications, for example, we have proposed and subsequently finalized 
revisions to the interruption of stay policy (69 FR 25692, May, 2004), 
and we established a payment adjustment for LTCH HwHs and satellites 
(69 FR 49191, August 11, 2004).
    Also, in the June 6, 2003 final rule (68 FR 34157), we explained 
that, given that the only requirement that distinguishes a LTCH from 
other acute care hospitals is an average inpatient length of stay of 
greater than 25 days, we continue to be concerned about the extent to 
which LTCH services and patients differ from those services and 
patients treated in other Medicare covered settings (for example, SNFs 
and IRFs) and how the LTCH PPS will affect the access, quality, and 
costs across the health care continuum. Thus, we will be monitoring 
trends in the supply and utilization of LTCHs and Medicare's costs in 
LTCHs relative to other Medicare providers. For example, we intend to 
conduct medical record reviews of Medicare patients to monitor changes 
in service use (ventilator use, for example) over a LTCH episode of 
care and to assess patterns in the average length of stay at the 
facility level.
    We also are collecting data on patients staying for periods of 6 
months or longer in LTCHs and believe that QIOs will be evaluating 
whether or not such extensive stays may be indicative of LTCH patients 
who could be more appropriately served at a SNF.
    As we discussed in the June 6, 2003 final rule (68 FR 34157), the 
MedPAC endorsed this monitoring activity as a primary aspect of the 
design and on-going functioning of the LTCH PPS. Furthermore, as 
discussed earlier, the Commission, in its June, 2004 Report to the 
Congress, recommended that we develop facility and patient criteria for 
LTCH admission and treatment and require a review by QIOs to evaluate 
whether LTCH admissions meet criteria for medical necessity once the 
recommended facility and patient criteria are established.
    The involvement of QIOs in the LTCH PPS was established at the 
outset of the system at Sec.  412.508, and was described in the August 
30, 2002 final rule (67 FR 55975). Specific activities for QIOs 
regarding LTCHs are included in contracts awarded by our Office of 
Clinical Standards and Quality (OCSQ) detailing their scope(s) of work 
among which are reviewing random samples of LTCH records for medical 
necessity and coding for generating national payment error estimates; 
proposing projects to reduce improper payments utilizing the national 
payment error cause analysis or their own data collection. One 
direction that is being explored by OCSQ for this type of project is 
the identification of LTCHs that have specific diagnoses codes related 
to medically unnecessary admissions, or perhaps high levels of short-
stay outliers.
    In January 2004, QIOs began reviewing medical records for LTCH 
claims for the specific purpose of estimating a national payment error 
rate. Presently, QIOs review 116 LTCH cases each month for admission 
necessity, for acute care admission, and coding. A cause analysis will 
be done after the first year's sampling to discern patterns of improper 
payments for admission necessity and coding. The payment error 
estimates and some of these analyses will be included in the annual 
fee-for-service error report.
    We continue to be concerned that our policies must assure that 
LTCHs only treat patients for whom the LTCH level of care is 
appropriate in order to ensure that Medicare is a prudent purchaser of 
these very costly services. In addressing one aspect of the issue of 
whether patients in LTCHs truly need hospital-level of care, beginning 
in October 2004 and slated to end in July 2005 OCSQ has undertaken a 
study of LTCH short-stay outliers. Under the short-stay outlier policy 
at Sec.  412.529, when a LTCH patient stay is considered a short-stay 
outlier for Medicare payment purposes, the LTCH receives an adjusted 
(generally lower) payment when the covered days of care do not exceed 
\5/6\ of the (geometric) average length of stay for the particular LTC-
DRG assigned to the case. The study evaluates the extent of short-stay 
outliers and the possibility of retention of patients by the LTCH when 
the LTCH patient no longer requires hospital-level of care and could be 
effectively served in a SNF. Due to possible reductions in payment 
combined with a need to maintain an average length of stay of greater 
than 25 days to remain an LTCH, we believe that LTCHs may be retaining 
these patients beyond the short-stay outlier threshold in order to 
increase Medicare payments. The three QIOs located in States which 
house the majority of LTCHs are conducting reviews on six months of 
records from the monthly random sample for this study in order to 
assess this situation and to determine whether and to what extent 
patients are being retained at the LTCH beyond their need for hospital-
level care and whether retention can be linked to the increased payment 
for patients exceeding the short-stay outlier threshold. If it is 
determined that retaining LTCH patients unnecessarily beyond the short-
stay outlier threshold is a significant payment issue, OCSQ plans to 
add this review type to the standard QIO LTCH review.
    In addition to existing tasks and the above research study on 
short-stay

[[Page 24212]]

outliers, in accordance with the goals of our on-going monitoring 
program as well as MedPAC's June 2003 recommendations, we believe the 
QIO's findings will be invaluable in both identifying the most 
appropriate type of patients for treatment at a LTCH as well as to 
begin to explore measures of cost-effectiveness for LTCH services.
    Currently, we do not require LTCHs to submit any clinical or other 
quality data, thus, any measurement activity must be based solely on 
claims. General concerns that we have raised since the establishment of 
the LTCH PPS, however, and the analysis and very specific 
recommendations in the MedPAC's June 2004 Report have led us to 
question what level of additional data beyond current claims would be 
required for the creation of clinical quality measures for LTCHs. 
Furthermore, we are presently evaluating whether CMS's Quality 
Measurement and Health Assessment Group (QMHAG) will need to build a 
quality measurement program for the LTCH setting. (A quality 
measurement program would generally establish processes or a group of 
tasks or processes which, if completed satisfactorily, would indicate a 
level of compliance with program goals. Clinical quality measures for 
acute care hospitals based on voluntary data submission and for nursing 
homes and home health agencies based on a mandatory standardized data 
submission are currently being generated.)
    As in the acute care hospital, in order to establish a robust set 
of clinical quality measures for LTCHs, the domains would have to reach 
a broad population, be based on medical evidence, be scientifically 
valid, and be actionable. We are also considering measures that cut 
across other care delivery sites and are broadly focused around areas 
such as medication management or patient safety. We anticipate a mix of 
process and outcomes measures that would reflect expected care for each 
setting, but we also believe that the measures should not ultimately be 
limited to clinical measures, but should include measures of 
institutional procedures related to delivery of care systems and 
patients' actual experience of care. Moreover, as we consider ways to 
link payment to outcome or performance, it is essential that these 
measures be adequately risk adjusted.
    Therefore, in addition to pursuing our on-going monitoring program 
under the direction of our Office of Research, Development, and 
Information (ORDI), existing QIO monitoring and studies, and our 
considerations of expanding the QIO role in the LTCH PPS, as noted 
above, we have awarded a contract to RTI International for a thorough 
examination of the feasibility of implementing MedPAC's recommendations 
that are contained in the June 2004 Report to the Congress. The 
research contract was funded for FY 2005 and we anticipate that we will 
be able to make available RTI's findings in the FY 2007 LTCH PPS 
proposed rule.
    Comment: Several commenters agreed with the MedPAC recommendations 
that were published in the February 3, 2005 proposed rule, and support 
CMS' decision to engage RTI in a research study to examine the 
feasibility of implementing the MedPAC recommendations. In addition, 
the majority commented that CMS and RTI should work in a collaborative 
effort with the LTCH community which is also compiling critical data. 
One commenter stated his belief that there is a geographic diversity 
among LTCHs due to the continuum of care resources available in a given 
area of the country. In this respect, the commenter opposes any attempt 
to narrowly define LTCHs based upon a so-called ``LTCH Prototype.'' 
Furthermore, the commenter believes that in order to comprehend the 
variations in lengths of stay among LTCHs, we must look to external 
contributory factors as well as LTCH specific internal data. Two other 
commenters, while supporting CMS' proposal to develop a quality 
measurement program for LTCHs, suggest that CMS establish some type of 
expert panel comprised of, among others, LTCH professionals, physicians 
and respiratory therapists. Several commenters are concerned that 
MedPAC did not recommend examining the role of nursing facilities, many 
of which attempt to provide a level of service far above their intended 
role and capabilities in the continuum of care. They question whether 
these facilities provide the same level of care and quality provided by 
LTCHs.
    Response: We appreciate the commenters' support of our decision to 
have RTI assist us in examining potential criteria for assuring 
appropriate and cost effective use of LTCHs in the Medicare program. As 
you are aware, MedPAC identified particular problems, such as growth of 
the LTCH industry and high payment rates that appear to result from 
current payment incentives. Moreover, the Commission's interpretation 
of its qualitative and quantitative research findings led to two 
specific recommendations: ``5A--The Congress and the Secretary should 
define long-term care hospitals by facility and patient criteria that 
ensure that patients admitted to these facilities are medically complex 
and have a good chance at improvement * * *. 5B--The Secretary should 
require the Quality Improvement Organizations to review long-term care 
hospital admissions for medical necessity and monitor that these 
facilities are in compliance with defining criteria.'' As a result of 
MedPAC's recommendations, we awarded a contract to RTI International 
for a thorough examination of MedPAC's recommendations based on the 
performance of a wide variety of analytic tasks using our data files, 
and also utilizing information collected from physicians, providers, 
and LTCH trade associations. The information collected, both internally 
and externally, in this project is intended to provide information that 
will allow the Congress or the Secretary to develop criteria for 
distinguishing LTCHs from other acute care hospitals. We believe our 
role here is not to narrowly define the role of an LTCH, but rather to 
evaluate all information available to us in order to identify and 
distinguish the role of these hospitals as Medicare providers. Central 
to determining criteria for defining LTCHs is understanding differences 
between LTCHs and other types of post-acute providers and their 
patients. The contractor will use Medicare claims and payment data to 
examine the feasibility of patient level criteria and facility level 
criteria by studying differences between patients treated in LTCHs and 
other hospitals. As stated in the February 3, 2005 proposed rule, the 
contractor will examine the present role of QIOs in the Medicare 
program, focusing on their responsibilities regarding the LTCH PPS. The 
goals of this research is to document current practices related to the 
MedPAC recommendations, both in terms of provider certification, 
quality reviews, and hospital practice patterns.
    The project itself will be completed in two phases. Phase I, which 
is near completion, focuses on an analysis of LTCHs within the current 
Medicare system, their history as participating providers, their case-
mix, the criteria used by QIOs to determine the appropriateness of 
treatment in LTCHs, and determining where similar patients are being 
treated in areas that lack LTCHs. Prior analyses of these issues by 
other contractors will be utilized as well as preliminary discussions 
with MedPAC, other researchers, and the QIOs.
    Building on the work of Phase I, Phase II will continue to carry 
out the analysis of the feasibility of MedPAC's criteria and making 
recommendations for revising the policies affecting LTCHs. Medicare 
claims data will be

[[Page 24213]]

utilized for comparisons of LTCH patients and long-stay patients who 
are treated in acute care hospitals that have attained high-cost 
outlier status. A separate analysis will be made for a subset of LTCH 
patients with diagnoses that are typically treated in IRFs. The 
contractor is then planning site visits, discussions with LTCH 
professionals, physicians, and therapists, and interviews with QIOs. 
These visits and interviews will be useful for understanding the 
differences between the types of admissions treated at LTCHs as 
compared to other providers and whether they vary clinically or are a 
function of varying availability of substitute providers in a 
geographic area. The contractor then plans to evaluate the outcomes of 
its research in the context of MedPAC's recommendation for the 
development of facility-level criteria, using claims, interviews, and 
document reviews. To the extent the analyses suggest that changes 
should be made that may affect LTCH payments, LTCH discharges, or the 
definition of LTCH, such proposed changes may necessitate either 
statutory or regulatory changes, or both.
    In response to the commenters who expressed concern that MedPAC did 
not address the role of nursing facilities in the continuum of post-
acute care, the level of service that these facilities deliver, and 
whether they deliver the same level of care and quality delivered by 
LTCHs, we are not in a position to comment on the subjects which MedPAC 
chooses to evaluate. We would note, however, that the June 2003 MedPAC 
report did include a discussion of the use of SNFs following a 
beneficiary's acute care hospital stay as an alternative to 
hospitalization at a LTCH. (p. 81-84) MedPAC's June 2004 report also 
compared Medicare payments to SNFs, IRFs, and LTCHs for specific 
principal diagnoses and noted, among other findings, that ``The sharp 
decrease in probability of use of skilled nursing facilities by long-
term care hospital users suggests that SFNs and LTCHs are 
substitutes.'' The report also stated that ``Long term care hospital 
clinicians, however, are adamant that treatment provided in SNFs is not 
as intensive as care provided in LTCHs.'' (p. 126.) We would 
additionally assert that despite the fact that we have tasked RTI to 
focus on evaluating the development of facility and patient-level 
criteria for LTCHs and QIO review, we expect that the final report will 
also include some discussion of the distinctions between hospital-level 
care provided at LTCHs and the SNF-level care.

XI. Collection of Information Requirements

    The collection requirements associated with this final rule are 
exempt from the PRA as stipulated under Pub. L. 100-203, Section 4201.

XII. Regulatory Impact Analysis

A. Introduction

    We have examined the impact of this final 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 Act, the Unfunded Mandates Reform Act of 
1995 (UMRA) (Pub. L. 104-4), and Executive Order 13132.
1. Executive Order 12866
    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 one 
year). In this final rule, we are using the most recent estimate of the 
LTCH PPS market basket, updated claims data, and updated wage index 
values to estimate payments for the 2006 LTCH PPS rate year. Based on 
the best available data for 259 LTCHs, we estimate that the 3.4 percent 
increase to the standard Federal rate for the 2006 LTCH PPS rate year, 
in conjunction with the decrease in fixed-loss amount (discussed in 
section V.C.3. of this final rule) and the decrease in the transition 
period budget neutrality offset (discussed in section V.C.7. of this 
final rule), will result in an increase in payments from the 2005 LTCH 
PPS rate year of $169 million. (Section V.C.7. of this final rule 
includes an estimate of Medicare program payments for LTCH services.) 
Because the combined distributional effects and costs to the Medicare 
program are estimated to be greater than $100 million, this final rule 
is considered a major economic rule, as defined above.
2. Regulatory Flexibility Act (RFA)
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $26 
million or less in any 1 year. For purposes of the RFA, all hospitals 
are considered small entities according to the Small Business 
Administration's latest size standards with total revenues of $26 
million or less in any 1 year (for further information, see the Small 
Business Administration's regulation at 65 FR 69432, November 17, 
2000). Because we lack data on individual hospital receipts, we cannot 
determine the number of small proprietary LTCHs. Therefore, we assume 
that all LTCHs are considered small entities for the purpose of the 
analysis that follows. Medicare fiscal intermediaries are not 
considered to be small entities. Individuals and States are not 
included in the definition of a small entity.
    Currently, our database of 259 LTCHs includes the data for 62 non-
profit (voluntary ownership control) LTCHs and 189 proprietary LTCHs. 
The remaining 8 LTCHs are Government owned and operated. (See Table 
II.) The impact of the changes for the 2006 LTCH PPS rate year are 
discussed below in section XII.B.4.c of this final rule. The provisions 
of this final rule represent a 5.7 percent increase in estimated 
payments in the 2006 LTCH PPS rate year for all LTCHs (as shown in 
Table II below). We do not expect the incremental increase of 5.7 
percent to the LTCH PPS Medicare payment rates, including the 0.1 
percent incremental decrease due to the wage index changes (discussed 
in section V.C.1. of this final rule), to have a significant adverse 
effect on the overall revenues of most LTCHs. In addition, LTCHs also 
provide services to (and generate revenue from) patients other than 
Medicare beneficiaries. Accordingly, we certify that this final rule 
will not have a significant impact on a substantial number of small 
entities, in accordance with RFA.
3. Impact on Rural Hospitals
    Section 1102(b) of the Social Security Act requires us to prepare a 
regulatory impact analysis if a proposed or final rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a Metropolitan Statistical Area and has fewer than 100 beds. As 
discussed in detail below, the rates and policies set forth in this 
final rule will not have an adverse impact on

[[Page 24214]]

rural hospitals based on the data of the 16 rural hospitals in our 
database of the 259 LTCHs for which data were available.
4. Unfunded Mandates
    Section 202 of the UMRA requires that agencies assess anticipated 
costs and benefits before issuing any rule that may result in 
expenditure in any one year by State, local, or tribal governments, in 
the aggregate, or by the private sector, of $110 million or more. This 
final rule will not mandate any requirements for State, local, or 
tribal governments, nor will it result in expenditures by the private 
sector of $110 million or more in any one year.
5. Federalism
    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.
    We have examined this final rule under the criteria set forth in 
Executive Order 13132 and have determined that this final rule will not 
have any significant impact on the rights, roles, and responsibilities 
of State, local, or tribal governments or preempt State law, based on 
the 8 State and local LTCHs in our database of 259 LTCHs for which data 
were available.

B. Anticipated Effects of Payment Rate Changes

    We discuss the impact of the payment rate changes in this final 
rule below in terms of their fiscal impact on the Medicare budget and 
on LTCHs.
1. Budgetary Impact
    Section 123(a)(1) of Medicare, Medicaid and State Child Health 
Insurance Program (SCHIP) Balanced Budget Refinement Act of 1999 (BBRA) 
(Pub. L. 106-113) requires that the PPS developed for LTCHs ``maintain 
budget neutrality.'' Therefore, in calculating the standard Federal 
rate under Sec.  412.523(d)(2), we set total payments for FY 2003 under 
the LTCH PPS so that aggregate payments under the LTCH PPS are 
estimated to equal to the amount that would have been paid if this PPS 
had not been implemented. However, as discussed in greater detail in 
the August 30, 2002 final rule (67 FR 56033-56036), the FY 2003 LTCH 
PPS standard Federal rate ($34,956.15) was calculated as though all 
LTCHs would be paid based on 100 percent of the standard Federal rate 
in FY 2003. As discussed in section V.C.7. of this final rule, we apply 
a budget neutrality offset to payments to account for the monetary 
effect of the 5-year transition to full prospective payment under the 
LTCH PPS and the policy to permit LTCHs to elect, during the 
transition, to be paid based on 100 percent of the standard Federal 
rate rather than a blend of Federal prospective payments and reasonable 
cost-based payments. The amount of the offset is equal to 1 minus the 
ratio of the estimated payments based on 100 percent of the LTCH PPS 
Federal rate to the projected total Medicare program payments that will 
be made under the transition methodology and the option to elect 
payment based on 100 percent of the Federal prospective payment rate.
2. Impact on Providers
    The basic methodology for determining a LTCH PPS payment is set 
forth in the regulations at Sec.  412.515 through Sec.  412.525. In 
addition to the basic LTC-DRG payment (standard Federal rate x LTC-DRG 
relative weight), we make adjustments for differences in area wage 
levels, cost-of-living adjustment for Alaska and Hawaii, and short-stay 
outliers. Furthermore, LTCHs may also receive high-cost outlier 
payments for those cases that qualify based on the threshold 
established each rate year. Section 412.533 provides for a 5-year 
transition to payments based on 100 percent of the Federal prospective 
payment rate. During the 5-year transition period, payments to LTCHs 
are based on an increasing percentage of the LTCH PPS Federal rate and 
a decreasing percentage of payment based on reasonable cost-based 
methodology. Section 412.533(c) provides for a one-time opportunity for 
LTCHs to elect payments based on 100 percent of the LTCH PPS Federal 
rate.
    In order to understand the impact of the changes to the LTCH PPS 
discussed in this final rule on different categories of LTCHs for the 
2006 LTCH PPS rate year, it is necessary to estimate payments per 
discharge under the LTCH PPS rates and factors for the 2005 LTCH PPS 
rate year (see the May 7, 2005 final rule; 68 FR 25674) and to estimate 
payments per discharge that will be made under the LTCH PPS rates and 
factors for the 2006 LTCH PPS rate year, as discussed in the preamble 
of this final rule. To this end, we determined the percent change in 
payments per discharge of estimated 2005 LTCH PPS rate year payments to 
estimated 2006 LTCH PPS rate year payments for each category of LTCHs. 
In addition, for each category of LTCHs, we have included the estimated 
percent change in payments per discharge resulting from the LTCH PPS 
wage index changes (described in section V.C.1. of this final rule). 
The wage index changes for the 2006 LTCH PPS rate year include the 
change in the labor market area definitions, the update in the wage 
index data, and the established phase-in of the LTCH PPS wage index 
adjustment from the 2005 LTCH PPS rate year (LTCHs' FYs 2004 and 2005 
cost reporting periods) to the 2006 LTCH PPS rate year (LTCHs' FYs 2005 
and 2006 LTCH cost reporting periods).
    Hospital groups were based on characteristics provided in the 
Online Survey Certification and Reporting (System) (OSCAR) data, FYs 
2000 through 2003 cost report data, and Provider Specific File data. 
Hospitals with incomplete characteristics were grouped into the 
``unknown'' category. Hospital groups include:

--Location: Large Urban/Other Urban/Rural.
--Participation Date.
--Ownership Control.
--Census Region.
--Bed Size.

    To estimate the impacts among the various categories of providers 
during the LTCH PPS transition period, it is imperative that reasonable 
cost-based methodology payments and prospective payments contain 
similar inputs. More specifically, in the impact analysis showing the 
impact reflecting the applicable transition blend percentages of 
prospective payments and reasonable cost-based methodology payments and 
the option to elect payment based on 100 percent of the Federal rate 
(Table III below), we estimated payments only for those providers for 
whom we are able to calculate payments based on reasonable cost-based 
methodology. For example, if we did not have at least 2 years of 
historical cost data for a LTCH, we were unable to determine an update 
to the LTCH's target amount to estimate payment under reasonable cost-
based methodology.
    Using LTCH cases from the FY 2004 MedPAR file and cost data from 
FYs 1999 through 2002 to estimate payments under the current reasonable 
cost-based principles, we have obtained both case-mix and cost data for 
259 LTCHs. Thus, for the impact analyses reflecting the applicable 
transition blend percentages and the option to elect payment based on 
100 percent of the Federal rate (see Table II below), we used data from 
259 LTCHs. While currently there are more than 300 LTCHs, the most 
recent growth is predominantly in for-profit LTCHs that provide 
respiratory and ventilator-dependent patient care. We believe that the 
discharges from the FY 2004

[[Page 24215]]

MedPAR data for the 259 LTCHs in our database provide sufficient 
representation in the LTC-DRGs containing discharges for patients who 
received respiratory and ventilator-dependent care based on the 
relatively large number of LTCH cases in LTC-DRGs for these diagnoses. 
However, using cases from the FY 2004 MedPAR file we had case-mix data 
for 335 LTCHs. Cost data to determine current payments under reasonable 
cost-based methodology payments are not needed to simulate payments 
based on 100 percent of the Federal rate. Therefore, for the impact 
analyses reflecting fully phased-in prospective payments (see Table III 
below), we used data from 335 LTCHs.
    These impacts reflect the estimated ``losses'' or ``gains'' among 
the various classifications of LTCHs for the 2005 LTCH PPS rate year 
(July 1, 2004 through June 30, 2005) compared to the 2006 LTCH PPS rate 
year (July 1, 2005 through June 30, 2006). Prospective payments for the 
2005 LTCH rate year were based on the standard Federal rate of 
$36,833.69 and the hospitals' estimated case-mix based on FY 2004 LTCH 
claims data. Estimated prospective payments for the 2006 LTCH PPS rate 
year are based on the standard Federal rate of $38,086.04 and the same 
FY 2004 LTCH claims data.
3. Calculation of Prospective Payments
    To estimate payments under the LTCH PPS, we simulated payments on a 
case-by-case basis by applying the payment policy for short-stay 
outliers (as described in section V.C.4.b. of this final rule) and the 
adjustments for area wage differences (as described in section V.C.1. 
of this final rule) and for the cost-of-living for Alaska and Hawaii 
(as described in section V.C.2. of this final rule). Additional 
payments would also be made for high-cost outlier cases (as described 
in section V.C.3. of this final rule). As noted in section V.C.6. of 
this final rule, we are not making adjustments for rural location, 
geographic reclassification, indirect medical education costs, or a 
disproportionate share of low-income patients because sufficient new 
data have not been generated that would enable us to conduct a 
comprehensive reevaluation of these payment adjustments.
    For estimated 2005 LTCH PPS rate year payments, we used the 
applicable LTCH wage index values effective for discharges occurring on 
or after July 1, 2004 through June 30, 2005 based on the existing MSA-
based labor market area designations (see May 7, 2004 (69 FR 25685)). 
We adjusted for area wage differences for estimated 2005 LTCH PPS rate 
year payments by computing a weighted average of a LTCH's applicable 
wage index during the period from July 1, 2004, through June 30, 2005, 
because some providers may experience a change in the wage index phase-
in percentage during that period. For cost reporting periods beginning 
on or after October 1, 2003 and before September 30, 2004 (FY 2004), 
the labor portion of the Federal rate was adjusted by two-fifths of the 
applicable ``LTCH PPS wage index'' (that is, the FY 2004 IPPS wage 
index data without taking into account geographic reclassification, 
under sections 1886(d)(8) and (d)(10)) of the Act). For cost reporting 
periods beginning on or after October 1, 2004 and before September 30, 
2005 (FY 2005), the labor portion of the Federal rate was adjusted by 
three-fifths of the applicable LTCH PPS wage index. Therefore, during 
the 2005 LTCH PPS rate year (July 1, 2004 through June 30, 2005), a 
provider with a cost reporting period that began October 1, 2003, had 3 
months of payments under the two-fifths wage index value and 9 months 
of payment under the three-fifths wage index value. For this provider, 
for the purposes of estimating payments for the impact analyses, we 
computed a blended wage index of 25 percent (3 months/12 months) of the 
two-fifths wage index value and 75 percent (9 months/12 months) of the 
three-fifths wage index value. The applicable LTCH PPS wage index 
values for the 2005 LTCH PPS rate year are shown in Tables 1 and 2 of 
the Addendum to the May 7, 2004 final rule (69 FR 25722-25741).
    For estimated 2006 LTCH PPS rate year payments, we used the 
applicable LTCH wage index values effective for discharges occurring on 
or after July 1, 2005 through June 30, 2006 (as shown in Tables 1 and 2 
of the Addendum to this final rule) based on the CBSA-based labor 
market area designations (described in section V.C.1.c.1. of this final 
rule). Because some providers may experience a change in the wage index 
phase-in percentage during that period, we adjusted for area wage 
differences for estimated 2006 LTCH PPS rate year payments by computing 
a weighted average of a LTCH's applicable wage index during the period 
from July 1, 2005, through June 30, 2006. For cost reporting periods 
that began on or after October 1, 2004 and before September 30, 2005, 
the labor portion of the Federal rate is adjusted by three-fifths of 
the applicable LTCH PPS wage index (that is, as discussed in section 
V.C.1. of this final rule, the FY 2005 IPPS acute care hospital wage 
index data without taking into account geographic reclassification 
under sections 1886(d)(8) and (d)(10) of the Act). For cost reporting 
periods beginning on or after October 1, 2005 and before September 30, 
2006, the labor portion of the Federal rate will be adjusted by four-
fifths of the applicable LTCH PPS wage index. The applicable LTCH PPS 
wage index values for the 2006 LTCH PPS rate year are shown in Tables 1 
and 2 of the Addendum to this final rule.
    For estimated 2005 LTCH PPS rate year payments, for those LTCHs 
projected to receive payment under the transition blend methodology, we 
also calculated payments using the applicable transition blend 
percentages. During the 2005 LTCH PPS rate year, based on the 
transition blend percentages set forth in Sec.  412.533(a), some 
providers may experience a change in the transition blend percentage 
during the period from July 1, 2004 through June 30, 2005. For example, 
during the period from July 1, 2004 through June 30, 2005, a provider 
with a cost reporting period beginning on October 1, 2003 (which is 
paid under the 60/40 transition blend (60 percent of payments based on 
reasonable cost-based methodology and 40 percent of payments under the 
LTCH PPS) beginning October 1, 2003) has 3 months (July 1, 2004 through 
September 30, 2004) under the 60/40 blend and 9 months (October 1, 2004 
through June 30, 2005) of payment under the 40/60-transition blend (40 
percent of payments based on reasonable cost-based methodology and 60 
percent of payments under the LTCH PPS for cost reporting periods 
beginning during FY 2005). (The 40 percent/60 percent blend will 
continue until the provider's cost reporting period beginning on 
October 1, 2005 (FY 2006).)
    Similarly, during the 2006 LTCH PPS rate year, based on the 
transition blend percentages set forth in Sec.  412.533(a), some of the 
providers paid under the transition blend methodology may experience a 
change in the transition blend percentage during the period from July 
1, 2005 through June 30, 2006. For example, during the period from July 
1, 2005 through June 30, 2006, a provider with a cost reporting period 
beginning on October 1, 2004 (which is paid under the 40/60 transition 
blend would have 3 months (July 1, 2005 through September 30, 2005) 
under the 40/60 blend and 9 months (October 1, 2005 through June 30, 
2006) of payment under the 20/80-transition blend (20 percent of 
payments based on reasonable cost-based methodology and 80 percent of 
payments under the LTCH PPS for cost reporting periods beginning

[[Page 24216]]

during FY 2006). (The 20 percent/80 percent blend will continue until 
the provider's cost reporting period beginning on October 1, 2006 (FY 
2007).)
    In estimating blended transition payments, we estimated payments 
based on the reasonable cost-based methodology, in accordance with the 
requirements at section 1886(b) of the Act. For those providers who 
have not already made the election (as determined from PSF data) to be 
paid based on 100 percent of the Federal rate, we compared the 
estimated blended transition payment to the LTCH's estimated payment if 
it would elect payment based on 100 percent of the Federal rate. If we 
estimated that the LTCH would be paid more based on 100 percent of the 
Federal rate, we assumed that it would elect to bypass the transition 
methodology and to receive payments based on 100 percent of prospective 
payment.
    Then we applied the budget neutrality offset to payments to account 
for the effect of the 5-year transition methodology and election of 
payment based on 100 percent of the Federal rate on Medicare program 
payments (established in the August 30, 2002 final rule (67 FR 56034)). 
In estimating 2005 LTCH PPS rate year payments, we applied the 0.5 
percent (0.995) budget neutrality offset to payments to account for the 
effect of the 5-year transition methodology and election of payment 
based on 100 percent of the Federal rate on Medicare program payments 
(See the May 7, 2004 final rule (68 FR 25674)) to each LTCH's estimated 
payments under the LTCH PPS for the 2005 LTCH PPS rate year. Similarly, 
in estimating 2006 LTCH PPS rate year payments, we applied the 0.0 
percent (1.000) budget neutrality offset to payments to account for the 
effect of the 5-year transition methodology and election of payment 
based on 100 percent of the Federal rate on Medicare program payments 
(see section V.C.7 of this final rule) to each LTCH's estimated 
payments under the LTCH PPS for the 2006 LTCH PPS rate year. The impact 
shown below in Table II is based on our projection of using the best 
available data for 259 LTCHs that approximately 2 percent of LTCHs will 
be paid based on the transition blend methodology and 98 percent of 
LTCHs will elect payment based on 100 percent of the Federal rate.
    In Table III below, we also show the impact if the LTCH PPS were 
fully implemented; that is, as if there were an immediate transition to 
fully Federal prospective payments under the LTCH PPS for the 2005 LTCH 
PPS rate year and the 2006 LTCH PPS rate year. Accordingly, in the 
impact analysis shown in Table III., the respective budget neutrality 
adjustments to account for the 5-year transition methodology on LTCHs' 
Medicare program payments for the 2005 and 2006 LTCH PPS rate years 
(0.5 percent and the 0.0 percent, respectively) were not applied to 
LTCHs' estimated payments under the LTCH PPS.
    Tables II and III below illustrate the aggregate impact of the 
payment system among various classifications of LTCHs.
     The first column, LTCH Classification, identifies the type 
of LTCH.
     The second column lists the number of LTCHs of each 
classification type.
     The third column identifies the number of long-term care 
cases.
     The fourth column shows the estimated payment per 
discharge for the 2005 LTCH PPS rate year.
     The fifth column shows the estimated payment per discharge 
for the 2006 LTCH PPS rate year.
     The sixth column shows the percent change in estimated 
LTCH PPS payments based on the wage index changes from the 2005 LTCH 
PPS rate year to the 2006 LTCH PPS rate year (as discussed in section 
V.C.1. of this final rule).
     The seventh column shows the percent change of 2005 LTCH 
PPS rate year estimated payments compared to the 2006 LTCH PPS rate 
year estimated payments for all changes (as discussed in the preamble 
of this final rule).

[[Page 24217]]

[GRAPHIC] [TIFF OMITTED] TR06MY05.000


[[Page 24218]]


[GRAPHIC] [TIFF OMITTED] TR06MY05.001


[[Page 24219]]


4. Results
    Based on the most recent available data (as described above for 259 
LTCHs), we have prepared the following summary of the impact (as shown 
in Table II) of the LTCH PPS set forth in this final rule.
a. Location
    We evaluated each LTCH's location (urban or rural) based on the 
CBSA-based labor market area definitions described in section 
V.C.1.c.1. of this final rule. Based on the most recent available data, 
the vast majority of LTCHs are in urban areas. Approximately 6 percent 
of the LTCHs are identified as being located in a rural area, and 
approximately 4.4 percent of all LTCH cases are treated in these rural 
hospitals. Impact analysis in Table II shows that for rural LTCHs the 
percent change in estimated payments per discharge for the 2006 LTCH 
PPS rate year will increase 3.6 percent in comparison to the 2005 LTCH 
PPS rate year from all of the established changes, which reflects the 
estimated 2.3 percent decrease in payments per discharge from the wage 
index changes. The primary reason for the projected increase in 
payments per discharge for all changes for rural LTCHs is a combination 
of the 3.4 percent increase in the standard Federal rate, the decrease 
in the transition budget neutrality offset (discussed in section V.C.7. 
of this final rule), and a projected increase in outlier payments as a 
result of the decrease in outlier fixed-loss amount (discussed in 
section V.C.3. of this final rule), which results in more cases 
qualifying as outlier cases and receiving additional outlier payments. 
This projected increase in estimated payments per discharge for rural 
LTCHs is partially offset by a projected decrease in payments per 
discharge as a result of the changes in the wage index.
    Rural LTCHs are projected to experience a relatively large decrease 
in payments due to the wage index changes primarily because of the 
progression of the 5-year phase-in of the wage index adjustment. That 
is, because the wage index of most rural areas is less than 1.0, as 
rural LTCHs progress through the 5-year phase-in of the wage index 
adjustment (for example, the two-fifths wage index for cost reporting 
periods beginning during FY 2004 to the three-fifths wage index for 
cost reporting periods beginning during FY 2005), their wage index 
decreases, which results in a decrease in their payments. This would 
occur even if we had not revised the labor market area definitions 
based on OMB's CBSA designations. For example (as shown in Table 2 of 
the Addendum to this final rule), the three-fifths wage index for rural 
Arizona of 0.9362 is less than the two-fifths wage index for rural 
Arizona of 0.9574. In addition, we identified three LTCHs that are 
currently urban under the existing MSA-based labor market area 
designations that will become rural under the new CBSA-based labor 
market designations, and as a result, are projected to experience a 
relatively larger decrease in payments per discharge due to the changes 
in the wage index. (See Table II.)
    For urban LTCHs, the percent change in estimated payments per 
discharge for the 2006 LTCH PPS rate year are projected to increase 5.0 
percent in comparison to the 2005 LTCH PPS rate year from all changes, 
which reflects an estimated 0.0 percent change resulting from the wage 
index changes. Payments per discharge for the 2006 LTCH PPS rate year 
are projected to increase 4.8 percent for large urban LTCHs in 
comparison to the 2005 LTCH PPS rate year from all of the changes, 
including a projected 0.7 percent decrease from the wage index changes. 
We project that 2006 LTCH PPS rate year payments per discharge will 
increase 6.3 percent in comparison to the 2005 LTCH PPS rate year for 
other urban LTCHs, including a projected 0.3 percent increase for the 
wage index changes.
    As noted above and discussed in greater detail below, the projected 
increase in payments per discharge for all changes for both large and 
other urban LTCHs is largely due to the 3.4 percent increase to the 
standard Federal rate, the decrease in the transition budget neutrality 
offset, and a projected increase in outlier payments as a result of the 
decrease in the outlier fixed amount. These projected increases in 
payments per discharge reflecting all changes for LTCHs that are 
located in large urban areas are partially offset by a projected 
decrease in payments per discharge for the wage index changes. The 
projected decrease in payments per discharge based solely on the wage 
index changes are largely due to the progression of the 5-year phase-in 
of the wage index adjustment, as explained above, since the majority of 
LTCHs are in large urban areas with wage index values that are slightly 
less than 1.0. Large urban LTCHs are projected to experience a decrease 
in payments per discharge for the wage index changes because, in 
addition to the effect of the progression of the 5-year phase-in of the 
wage index adjustment, as explained above, the wage index for a few 
large urban areas, such as Houston, Texas, will be slightly lower under 
the new CBSA-based labor market area designations than they would be 
under the MSA-based labor market area designations. (See Table II.)
    As noted above, in addition to the update to the standard Federal 
rate, the estimated percent increase in payments per discharge for all 
changes from the 2005 LTCH PPS rate year to the 2006 LTCH PPS rate year 
is largely attributable to the decrease in the outlier fixed-loss 
amount (discussed in section V.C.3. of this final rule). For the 2005 
LTCH PPS rate year, the outlier fixed-loss amount is $17,864 (as 
established in the May 7, 2004 final rule). Therefore, currently a case 
qualifies for an additional LTCH PPS outlier payment if the estimated 
cost of the case exceeds the outlier threshold (the sum of the adjusted 
Federal LTCH payment for the LTC-DRG and the fixed-loss amount of 
$17,864). For the 2006 LTCH PPS rate year, the outlier fixed loss-
amount is $10,501. Therefore, a case would qualify for an additional 
LTCH PPS outlier payment if the estimated cost of the case exceeds the 
outlier threshold (the sum of the adjusted Federal LTCH payment for the 
LTC-DRG and the fixed-loss amount of $10,501). Therefore, we estimate 
that more cases will qualify as outlier cases (the estimated cost of 
the case exceeds the proposed outlier threshold) and will receive 
outlier payments, thereby increasing total estimated payments per 
discharge. In the aggregate, LTCHs are not expected to experience a 
significant impact as a result of the changes to the wage index. As 
discussed throughout this impact section, certain groups of hospitals 
are projected to benefit from the changes to the wage index while other 
groups of LTCHs are projected to be negatively impacted by the changes 
to the wage index. However, as a result of the aggregate effect of the 
update to the standard Federal rate combined with the decrease in the 
outlier fixed-loss amount, we estimate that all LTCH categories would 
experience an increase in payments.
b. Participation Date
    LTCHs are grouped by participation date into three categories: (1) 
Before October 1983; (2) between October 1983 and September 1993; and 
(3) between October 1993 and September 2002. At this time, we do not 
have sufficient cost report data for any of the LTCHs that began 
participating in the Medicare program after October 2002 (the 
implementation of the LTCH PPS), and, therefore, they are not included 
in the impact analysis shown below in Table II.

[[Page 24220]]

    Based on the most recent available data, the majority, 
approximately 70 percent, of the LTCH discharges are in LTCHs hospitals 
that began participating between October 1993 and September 2002, and 
we estimate that 2006 LTCH PPS rate year payments per discharge will 
increase 5.4 percent in comparison to the 2005 LTCH PPS rate year due 
to all changes, which includes the estimated 0.3 percent decrease in 
payments per discharge due to the wage index changes.
    Approximately 22 percent of the discharges are in LTCHs that began 
participating in Medicare between October 1983 and September 1993, and 
2006 LTCH PPS rate year payments per discharge are projected to 
increase 6.3 percent in comparison to the 2005 LTCH PPS rate year from 
all changes, which includes the estimated 0.2 percent increase in 
payments per discharge from the wage index changes. Payments per 
discharge for the 2006 LTCH PPS rate year are estimated to increase 7.0 
percent in comparison to the 2005 LTCH PPS rate year for LTCHs that 
began participating before October 1983 from all changes, including the 
estimated 1.1 percent increase in payments per discharge from the wage 
index changes. This increase in projected payments per discharge from 
the changes in the wage index for LTCHs that began participating before 
October 1983 is largely due to a combination of the change to the CBSA-
based labor market area definitions and the increase in the percentage 
of the wage index adjustment as required by the 5-year phase-in of the 
wage index adjustment (for example, two-fifths of the wage index 
adjustment for cost reporting periods beginning during FY 2004 
increasing to three-fifths of the wage index adjustment for cost 
reporting periods beginning during FY 2005.). (See Table II.)
    In addition, as discussed above, these increases in payments for 
the 2006 LTCH PPS rate year are also due to the decrease in the outlier 
fixed-loss amount (as discussed in section V.C.3. of this final rule). 
As a result, more cases would qualify as outlier cases (the estimated 
cost of the case exceeds the outlier threshold) and, therefore, will 
receive outlier payments, thereby increasing total estimated payments 
per discharge. As also noted above, in the aggregate LTCHs are not 
expected to experience a significant impact as a result of the changes 
to the wage index. While certain groups of LTCHs are projected to 
benefit from the changes to the wage index, other groups of LTCHs are 
projected to be negatively impacted by the changes to the wage index.
c. Ownership Control
    LTCHs are grouped into three categories based on ownership control 
type--(1) voluntary; (2) proprietary; and (3) government.
    Based on the most recent available data, approximately 3 percent of 
LTCHs are government owned and operated. We project that for these 
government owned and operated LTCHs, 2006 LTCH PPS rate year payments 
per discharge will increase 6.5 percent in comparison to the 2005 LTCH 
PPS rate year from all changes, including the estimated 0.5 percent 
decrease in payments per discharge from the wage index changes. This 
estimated decrease in estimated payments per discharge for the wage 
index changes is largely due to the current applicable percentage of 
the 5-year phase-in of the wage index adjustment, as explained above, 
since the majority of government run LTCHs are located in areas with 
wage index values that are less than 1.0. The majority (approximately 
73 percent) of LTCHs are proprietary. We project that 2006 LTCH PPS 
rate year payments per discharge for these proprietary LTCHs will 
increase 5.6 percent in comparison to the 2005 LTCH PPS rate year for 
all changes, including the estimated 0.2 percent decrease in payments 
per discharge from the wage index changes. Similarly, we project that 
2006 LTCH PPS rate year payments per discharge for voluntary LTCHs will 
increase 6.1 percent in comparison to the 2005 LTCH PPS rate year for 
all changes, including the estimated 0.1 percent increase in payments 
per discharge from the wage index changes. As noted above, in addition 
to the update to the standard Federal rate and the decrease in the 
budget neutrality offset, the estimated percent increase in payments 
per discharge for all changes from the 2005 LTCH PPS rate year to the 
2006 LTCH PPS rate year is largely attributable to the decrease in 
outlier fixed-loss amount (discussed in section IV.C.3. of this final 
rule), which will result in more cases qualifying as outlier cases (the 
estimated cost of the case exceeds the outlier threshold) and, 
therefore, will receive additional outlier payments, thereby increasing 
total estimated payments per discharge. (See Table II.)
d. Census Region
    Payments per discharge for the 2006 LTCH PPS rate year are 
estimated to increase for LTCHs located in all regions in comparison to 
the 2005 LTCH PPS rate year from all changes. Of the nine census 
regions, we project that the increase in 2006 LTCH PPS rate year 
payments per discharge in comparison to the 2005 LTCH PPS rate year 
will be the largest for LTCHs in the Pacific and New England regions. 
Specifically, 2006 LTCH rate year payments per discharge for LTCHs in 
the Pacific and New England regions are projected to increase 7.9 
percent and 7.5 percent, respectively, in comparison to the 2005 LTCH 
PPS rate year, which includes the estimated 1.5 percent and 1.4 percent 
increase, respectively, from the wage index changes for both areas. As 
explained above, these relatively large increases in payments from all 
changes for the 2006 LTCH PPS rate year for LTCHs in the New England 
and Pacific regions are mostly attributable to the decrease in the 
outlier fixed-loss amount (discussed in section V.C.3. of this final 
rule), which results in more cases qualifying as outlier cases (the 
estimated cost of the case exceeds the outlier threshold) and, 
therefore, will receive additional outlier payments, thereby increasing 
total estimated payments per discharge. Furthermore, in addition to the 
update to the standard Federal rate, we believe that many LTCHs in the 
New England and Pacific regions will experience an increase in payments 
because of an the annual percentage increase of the phase-in of the 
wage index adjustment, (two-fifths of the applicable LTCH PPS wage 
index for cost reporting periods beginning on or after October 1, 2003; 
three-fifths of the applicable wage index for cost reporting periods 
beginning on or after October 1, 2004; and four-fifths of the 
applicable wage index for cost reporting periods beginning on or after 
October 1, 2005) since most of the LTCHs in these regions are located 
in areas that have a wage index value of greater than 1.0. (See Table 
II.).
    We project that 2006 LTCH PPS rate year payments per discharge will 
increase the least for LTCHs in the Middle Atlantic region in 
comparison to the 2005 LTCH PPS rate year for all changes (4.5 
percent). We project that, for LTCHs located in the Middle Atlantic 
region, 2006 LTCH PPS payments per discharge will decrease slightly in 
comparison to the 2005 LTCH PPS rate year from the wage index changes 
(1.0 percent). We are projecting a slight decrease in payments per 
discharge from the wage index changes, which results in a slightly 
lower percent increase in payments per discharge from all changes, for 
LTCHs located in this region because of the progression of the 5-year 
phase-in of the wage index adjustment. Specifically, many LTCHs located 
in this area will

[[Page 24221]]

have a wage index value of less than 1.0. (See Table II.)
e. Bed Size
    LTCHs were grouped into six categories based on bed size--0-24 
beds, 25-49 beds, 50-74 beds, 75-124 beds, 125-199 beds, and 200+ beds.
    For all bed size categories, we are projecting an increase in 2006 
LTCH PPS rate year payments per discharge in comparison to the 2005 
LTCH PPS rate year from all changes. Most LTCHs are in bed size 
categories where 2006 LTCH PPS rate year payments per discharge are 
projected to increase at least 5 percent in comparison to the 2005 LTCH 
PPS rate year from all changes.
    We project that LTCHs with greater than 200 beds will have the 
largest increase in estimated 2006 LTCH PPS rate year payments per 
discharge in comparison to the 2005 LTCH PPS rate year from all changes 
(7.0 percent), including the estimated increase from the wage index 
changes of 1.0 percent. This increase in projected payments per 
discharge for all changes for LTCHs with greater than 200 beds is 
largely due to a combination of the 3.4 percent increase in the 
standard Federal rate, a decrease in the budget neutrality offset, a 
projected increase in outlier payments resulting from the decrease in 
outlier fixed-loss amount, as explained above, and the increase in 
projected payment per discharge from the wage index changes. This 
increase in projected payments per discharge from the changes in the 
wage index for LTCHs with greater than 200 beds is largely due to a 
combination of the change to the CBSA-based labor market area 
definitions and the increase in the percentage of the wage index 
adjustment as required by the 5-year phase-in of the wage index 
adjustment because most LTCHs with greater than 200 beds are located in 
an area with a wage index value of greater than 1.0. (See Table II.)
    Payments per discharge for the 2006 LTCH PPS rate year for LTCHs 
with 24-49 beds are projected to increase the least in comparison to 
the 2005 LTCH PPS rate year from all changes (5.0 percent), which 
includes the estimated decrease in payments per discharge from the wage 
indexes changes (-0.6 percent). This slight decrease in estimated 
payments per discharge from the wage index changes is largely due to 
the progression of the 5-year phase-in of the wage index adjustment (as 
explained above) since the majority of LTCHs with 25-49 beds are 
located in areas with a wage index value of less than 1.0. (See Table 
II.)
5. Effect on the Medicare Program
    Based on actuarial projections, we estimate that Medicare spending 
(total Medicare program payments) for LTCH services over the next 5 
years will be as follows:

------------------------------------------------------------------------
                                                           Estimated
                  LTCH PPS rate year                    payments  ($ in
                                                           billions)
------------------------------------------------------------------------
2006.................................................              $3.32
2007.................................................               3.38
2008.................................................               3.48
2009.................................................               3.63
2010.................................................               3.79
------------------------------------------------------------------------

    These estimates are based on the current estimate of the increase 
in the excluded hospital with capital market basket of 3.4 percent for 
the 2006 LTCH PPS rate year, 3.0 percent for the 2007, 2.8 for the 2008 
LTCH PPS rate year, 2.9 percent for the 2009 and 2010 LTCH PPS rate 
years. We estimate that there will be a change in Medicare fee-for 
service beneficiary enrollment of -1.0 percent in the 2006 LTCH PPS 
rate year, -2.1 percent in the 2007 LTCH PPS rate year, -1.0 percent in 
2008 LTCH PPS rate year, 0.3 percent in the 2009 and 2010 LTCH PPS rate 
years, and an estimated increase in the total number of LTCHs. (We note 
that, based on the most recent available data, our Office of the 
Actuary is projecting a decrease in Medicare fee-for-service Part A 
enrollment, in part, because of a projected increase in Medicare 
managed care enrollment as a result of the implementation of several 
provisions of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003.)
    Consistent with the statutory requirement for budget neutrality, as 
we discussed in the August 30, 2002 final rule that implemented the 
LTCH PPS, in developing the LTCH PPS, we intended for estimated 
aggregate payments under the LTCH PPS in FY 2003 would equal the 
estimated aggregate payments that would have been made if the LTCH PPS 
were not implemented. Our methodology for estimating payments for 
purposes of the budget neutrality calculations used the best available 
data and necessarily reflected assumptions. As we collect data from 
LTCHs, we continue to monitor payments and evaluate the ultimate 
accuracy of the assumptions used to calculate the budget neutrality 
calculations (that is, inflation factors, intensity of services 
provided, or behavioral response to the implementation of the LTCH 
PPS). As discussed above in section V.C.7. of the preamble of this 
final rule, because the LTCH PPS has only been implemented for about 
2.5 years, due to the lag time in the availability of data, at this 
time, we still do not have sufficient new cost report and claims data 
generated under the LTCH PPS to enable us to conduct a comprehensive 
reevaluation of our FY 2003 budget neutrality calculations.
    Section 123 of BBRA and section 307 of BIPA provide the Secretary 
with extremely broad authority in developing the LTCH PPS, including 
the authority for appropriate adjustments. In accordance with this 
broad authority, we may discuss in a future proposed rule a possible 
one-time prospective adjustment to the LTCH PPS rates to maintain 
budget neutrality so that the effect of the difference between actual 
payments and estimated payments for the first year of LTCH PPS is not 
perpetuated in the PPS rates for future years. As discussed above in 
section V.C.7. of this final rule, because the LTCH PPS was only 
recently implemented, we do not yet have sufficient complete data to 
determine whether such an adjustment is warranted.
6. Effect on Medicare Beneficiaries
    Under the LTCH PPS, hospitals receive payment based on the average 
resources consumed by patients for each diagnosis. We do not expect any 
changes in the quality of care or access to services for Medicare 
beneficiaries under the LTCH PPS, but we expect that paying 
prospectively for LTCH services will enhance the efficiency of the 
Medicare program.

C. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table IV below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of this final rule. This 
table provides our best estimate of the increase in Medicare payments 
under the LTCH PPS as a result of the changes presented in this final 
rule based on the data for 259 LTCHs in our database. All expenditures 
are classified as transfers to Medicare providers (that is, LTCHs).

      Table IV.--Accounting Statement: Classification of Estimated
Expenditures, From the 2005 LTCH PPS Rate Year to the 2006 LTCH PPS Rate
                                  Year
                              [In millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $169.

[[Page 24222]]

 
From Whom To Whom?                          Federal Government To LTCH
                                             Medicare Providers.
------------------------------------------------------------------------

    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

0
In accordance with the discussion in this preamble, the Centers for 
Medicare & Medicaid Services amends 42 CFR chapter IV, part 412 as set 
forth below:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

0
1. The authority citation for part 412 continues to read as follows:

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


0
2. Section 412.22 is amended by revising paragraphs (e)(3) and (h)(5) 
to read as follows:


Sec.  412.22  Excluded hospitals and hospital units: General rules.

* * * * *
    (e) * * *
* * * * *
    (3) Notification of co-located status. A long-term care hospital 
that occupies space in a building used by another hospital, or in one 
or more entire buildings located on the same campus as buildings used 
by another hospital and that meets the criteria of paragraphs (e)(1) or 
(e)(2) of this section must notify its fiscal intermediary and CMS in 
writing of its co-location and identify by name, address, and Medicare 
provider number those hospital(s) with which it is co-located.
* * * * *
    (h) * * *
* * * * *
    (5) Notification of co-located status. A satellite of a long-term 
care hospital that occupies space in a building used by another 
hospital, or in one or more entire buildings located on the same campus 
as buildings used by another hospital and that meets the criteria of 
paragraphs (h)(1) through (h)(4) of this section must notify its fiscal 
intermediary and CMS in writing of its co-location and identify by 
name, address, and Medicare provider number, those hospital(s) with 
which it is co-located.
* * * * *

0
3. Section 412.525 is amended by revising paragraph (c) to read as 
follows:


Sec.  412.525  Adjustments to the Federal prospective payments.

* * * * *
    (c) Adjustments for area levels. The labor portion of a long-term 
care hospital's Federal prospective payment is adjusted to account for 
geographical differences in the area wage levels using an appropriate 
wage index (established by CMS), which reflects the relative level of 
hospital wages and wage-related costs in the geographic area (that is, 
urban or rural area as determined in accordance with paragraph (c)(1) 
or (c)(2) of this section) of the hospital compared to the national 
average level of hospital wages and wage-related costs. The appropriate 
wage index (established by CMS) is updated annually.
    (1) For cost reporting periods beginning on or after October 1, 
2002, with respect to discharges occurring during the period covered by 
such cost reports but before July 1, 2005, the application of the wage 
index under the long-term care hospital prospective payment system is 
made on the basis of the location of the facility in an urban or rural 
area as defined in Sec.  412.62(f)(1)(ii) and (f)(1)(iii), 
respectively.
    (2) For discharges occurring on or after July 1, 2005, the 
application of the wage index under the long-term care hospital 
prospective payment system is made on the basis of the location of the 
facility in an urban or rural area as defined in Sec.  
412.64(b)(1)(ii)(A) through (C).
* * * * *

0
4. Section 412.531 is amended by revising paragraphs (b)(1)(i)(C) and 
(b)(1)(ii)(A)(1) to read as follows:


Sec.  412.531  Special payment provisions when an interruption of a 
stay occurs in a long-term care hospital.

* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (C) The number of days that a beneficiary spends away from a long-
term care hospital during a 3-day or less interruption of stay under 
paragraph (a)(1) of this section during which the beneficiary receives 
a procedure that is grouped to a surgical DRG under the inpatient 
prospective payment system in an acute care hospital during the 2005 
and 2006 long-term care hospital prospective payment system rate year 
is not included in determining the length of stay of the patient at the 
long-term care hospital.
* * * * *
    (ii) * * *
    (A) * * *
    (1) For a 3-day or less interruption of stay under paragraph (a)(1) 
of this section in which a long-term care hospital discharges a patient 
to an acute care hospital and the patient's treatment during the 
interruption is grouped into a surgical DRG under the acute care 
inpatient hospital prospective payment system, for the LTCH 2005 and 
2006 rate years, CMS also makes a separate payment to the acute care 
hospital for the surgical DRG discharge in accordance with paragraph 
(b)(1)(i)(C) of this section.
* * * * *

0
5. Section 412.532 is amended by revising paragraph (i) to read as 
follows:


Sec.  412.532  Special payment provisions for patients who are 
transferred to onsite providers and readmitted to a long-term care 
hospital.

* * * * *
    (i)(1) A long-term care hospital or a satellite of a long-term care 
hospital that meets the criteria of Sec.  412.22(e)(1) or (e)(2) or 
Sec.  412.22(h)(1) through (h)(4) that occupies space in a building 
used by another hospital or in one or more entire buildings located on 
the same campus as buildings used by another hospital and must notify 
its fiscal intermediary and CMS in writing of its co-location and 
identify by name(s), address(es), and Medicare provider number(s) the 
onsite acute care hospital, onsite IRF, or onsite psychiatric facility 
or unit with which it is co-located.
    (2) A long term care hospital or satellite of a long term care 
hospital that occupies space in a building used by a SNF or in one or 
more entire buildings located on the same campus as buildings used by a 
SNF must notify its fiscal intermediary and CMS in writing of its co-
located status and identify by name, address and Medicare provider 
number the SNF with which it is co-located.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance)


[[Page 24223]]


    Dated: April 21, 2005.
Mark McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: April 29, 2005.
Michael O. Leavitt,
Secretary.?>

[[Page 24224]]

    The following addendum will not appear in the Code of Federal 
Regulations.

Addendum

    This addendum contains the tables referred to throughout the 
preamble to this final rule. The tables presented below are as follows:

Table 1.--Long-Term Care Hospital Wage Index for Urban Areas (based on 
CBSA-based Labor Market Area Designations) for Discharges Occurring 
from July 1, 2005 through June 30, 2006
Table 2.--Long-Term Care Hospital Wage Index for Rural Areas (based on 
CBSA-based Labor Market Area Designations) for Discharges Occurring 
from July 1, 2005 through June 30, 2006
Table 3.--FY 2005 LTC-DRG Relative Weights, Geometric Mean Length of 
Stay, and Short-Stay Five-Sixths Average Length of Stay for Discharges 
Occurring from July 1, 2005 through September 30, 2006. (Note: This is 
the same information provided in Table 11 of the August 11, 2004 IPPS 
final rule (69 FR 49738-49754, as revised in the October 7, 2004 IPPS 
correction notice, 69 FR 60266-60271), which has been reprinted here 
for convenience.)
Table 4.--A Listing of Long-Term Care Hospitals' State and County 
Location; Current Labor Market Area Designation; and New CBSA-based 
Labor Market Area Designation

  Table 1.--Long-Term Care Hospital Wage Index for Urban Areas Based on CBSA Labor Market Areas for Discharges
                              Occurring From July 1, 2005 Through June 30, 2006 \1\
----------------------------------------------------------------------------------------------------------------
                                                                                   2/5ths     3/5ths     4/5ths
            CBSA code             Urban area  (constituent counties)  Full wage     wage       wage       wage
                                                                      index \2\  index \3\  index \4\  index \5\
----------------------------------------------------------------------------------------------------------------
10180...........................  Abilene, TX.......................     0.7850     0.9140     0.8710     0.8280
                                  Callahan County, TX...............
                                  Jones County, TX..................
                                  Taylor County, TX.................
10380...........................  Aguadilla-Isabela-San                  0.4280     0.7712     0.6568     0.5424
                                   Sebasti[aacute]n, PR.
                                  Aguada Municipio, PR..............
                                  Aguadilla Municipio, PR...........
                                  A[ntilde]asco Municipio, PR.......
                                  Isabela Municipio, PR.............
                                  Lares Municipio, PR...............
                                  Moca Municipio, PR................
                                  Rinc[oacute]n Municipio, PR.......
                                  San Sebasti[aacute]n Municipio, PR
10420...........................  Akron, OH.........................     0.9055     0.9622     0.9433     0.9244
                                  Portage County, OH................
                                  Summit County, OH.................
10500...........................  Albany, GA........................     1.1266     1.0506     1.0760     1.1013
                                  Baker County, GA..................
                                  Dougherty County, GA..............
                                  Lee County, GA....................
                                  Terrell County, GA................
                                  Worth County, GA..................
10580...........................  Albany-Schenectady-Troy, NY.......     0.8650     0.9460     0.9190     0.8920
                                  Albany County, NY.................
                                  Rensselaer County, NY.............
                                  Saratoga County, NY...............
                                  Schenectady County, NY............
                                  Schoharie County, NY..............
10740...........................  Albuquerque, NM...................     1.0485     1.0194     1.0291     1.0388
                                  Bernalillo County, NM.............
                                  Sandoval County, NM...............
                                  Torrance County, NM...............
                                  Valencia County, NM...............
10780...........................  Alexandria, LA....................     0.8171     0.9268     0.8903     0.8537
                                  Grant Parish, LA..................
                                  Rapides Parish, LA................
10900...........................  Allentown-Bethlehem-Easton, PA-NJ.     0.9501     0.9800     0.9701     0.9601
                                  Warren County, NJ.................
                                  Carbon County, PA.................
                                  Lehigh County, PA.................
                                  Northampton County, PA............
11020...........................  Altoona, PA.......................     0.8462     0.9385     0.9077     0.8770
                                  Blair County, PA..................
11100...........................  Amarillo, TX......................     0.9178     0.9671     0.9507     0.9342
                                  Armstrong County, TX..............
                                  Carson County, TX.................
                                  Potter County, TX.................
                                  Randall County, TX................
11180...........................  Ames, IA..........................     0.9479     0.9792     0.9687     0.9583
                                  Story County, IA..................
11260...........................  Anchorage, AK.....................     1.2165     1.0866     1.1299     1.1732
                                  Anchorage Municipality, AK........
                                  Matanuska-Susitna Borough, AK.....
11300...........................  Anderson, IN......................     0.8713     0.9485     0.9228     0.8970

[[Page 24225]]

 
                                  Madison County, IN................
11340...........................  Anderson, SC......................     0.8670     0.9468     0.9202     0.8936
                                  Anderson County, SC...............
11460...........................  Ann Arbor, MI.....................     1.1022     1.0409     1.0613     1.0818
                                  Washtenaw County, MI..............
11500...........................  Anniston-Oxford, AL...............     0.7881     0.9152     0.8729     0.8305
                                  Calhoun County, AL................
11540...........................  Appleton, WI......................     0.9131     0.9652     0.9479     0.9305
                                  Calumet County, WI................
                                  Outagamie County, WI..............
11700...........................  Asheville, NC.....................     0.9191     0.9676     0.9515     0.9353
                                  Buncombe County, NC...............
                                  Haywood County, NC................
                                  Henderson County, NC..............
                                  Madison County, NC................
12020...........................  Athens-Clarke County, GA..........     1.0202     1.0081     1.0121     1.0162
                                  Clarke County, GA.................
                                  Madison County, GA................
                                  Oconee County, GA.................
                                  Oglethorpe County, GA.............
12060...........................  Atlanta-Sandy Springs-Marietta, GA     0.9971     0.9988     0.9983     0.9977
                                  Barrow County, GA.................
                                  Bartow County, GA.................
                                  Butts County, GA..................
                                  Carroll County, GA................
                                  Cherokee County, GA...............
                                  Clayton County, GA................
                                  Cobb County, GA...................
                                  Coweta County, GA.................
                                  Dawson County, GA.................
                                  DeKalb County, GA.................
                                  Douglas County, GA................
                                  Fayette County, GA................
                                  Forsyth County, GA................
                                  Fulton County, GA.................
                                  Gwinnett County, GA...............
                                  Haralson County, GA...............
                                  Heard County, GA..................
                                  Henry County, GA..................
                                  Jasper County, GA.................
                                  Lamar County, GA..................
                                  Meriwether County, GA.............
                                  Newton County, GA.................
                                  Paulding County, GA...............
                                  Pickens County, GA................
                                  Pike County, GA...................
                                  Rockdale County, GA...............
                                  Spalding County, GA...............
                                  Walton County, GA.................
12100...........................  Atlantic City, NJ.................     1.0931     1.0372     1.0559     1.0745
                                  Atlantic County, NJ...............
12220...........................  Auburn-Opelika, AL................     0.8215     0.9286     0.8929     0.8572
                                  Lee County, AL....................
12260...........................  Augusta-Richmond County, GA-SC....     0.9154     0.9662     0.9492     0.9323
                                  Burke County, GA..................
                                  Columbia County, GA...............
                                  McDuffie County, GA...............
                                  Richmond County, GA...............
                                  Aiken County, SC..................
                                  Edgefield County, SC..............
12420...........................  Austin-Round Rock, TX.............     0.9595     0.9838     0.9757     0.9676
                                  Bastrop County, TX................
                                  Caldwell County, TX...............
                                  Hays County, TX...................
                                  Travis County, TX.................
                                  Williamson County, TX.............
12540...........................  Bakersfield, CA...................     1.0036     1.0014     1.0022     1.0029
                                  Kern County, CA...................
12580...........................  Baltimore-Towson, MD..............     0.9907     0.9963     0.9944     0.9926

[[Page 24226]]

 
                                  Anne Arundel County, MD...........
                                  Baltimore County, MD..............
                                  Carroll County, MD................
                                  Harford County, MD................
                                  Howard County, MD.................
                                  Queen Anne's County, MD...........
                                  Baltimore City, MD................
12620...........................  Bangor, ME........................     0.9955     0.9982     0.9973     0.9964
                                  Penobscot County, ME..............
12700...........................  Barnstable Town, MA...............     1.2335     1.0934     1.1401     1.1868
                                  Barnstable County, MA.............
12940...........................  Baton Rouge, LA...................     0.8319     0.9328     0.8991     0.8655
                                  Ascension Parish, LA..............
                                  East Baton Rouge Parish, LA.......
                                  East Feliciana Parish, LA.........
                                  Iberville Parish, LA..............
                                  Livingston Parish, LA.............
                                  Pointe Coupee Parish, LA..........
                                  St. Helena Parish, LA.............
                                  West Baton Rouge Parish, LA.......
                                  West Feliciana Parish, LA.........
12980...........................  Battle Creek, MI..................     0.9366     0.9746     0.9620     0.9493
                                  Calhoun County, MI................
13020...........................  Bay City, MI......................     0.9574     0.9830     0.9744     0.9659
                                  Bay County, MI....................
13140...........................  Beaumont-Port Arthur, TX..........     0.8616     0.9446     0.9170     0.8893
                                  Hardin County, TX.................
                                  Jefferson County, TX..............
                                  Orange County, TX.................
13380...........................  Bellingham, WA....................     1.1642     1.0657     1.0985     1.1314
                                  Whatcom County, WA................
13460...........................  Bend, OR..........................     1.0603     1.0241     1.0362     1.0482
                                  Deschutes County, OR..............
13644...........................  Bethesda-Frederick-Gaithersburg,       1.0956     1.0382     1.0574     1.0765
                                   MD.
                                  Frederick County, MD..............
                                  Montgomery County, MD.............
13740...........................  Billings, MT......................     0.8961     0.9584     0.9377     0.9169
                                  Carbon County, MT.................
                                  Yellowstone County, MT............
13780...........................  Binghamton, NY....................     0.8447     0.9379     0.9068     0.8758
                                  Broome County, NY.................
                                  Tioga County, NY..................
13820...........................  Birmingham-Hoover, AL.............     0.9157     0.9663     0.9494     0.9326
                                  Bibb County, AL...................
                                  Blount County, AL.................
                                  Chilton County, AL................
                                  Jefferson County, AL..............
                                  St. Clair County, AL..............
                                  Shelby County, AL.................
                                  Walker County, AL.................
13900...........................  Bismarck, ND......................     0.7505     0.9002     0.8503     0.8004
                                  Burleigh County, ND...............
                                  Morton County, ND.................
13980...........................  Blacksburg-Christiansburg-Radford,     0.7951     0.9180     0.8771     0.8361
                                   VA.
                                  Giles County, VA..................
                                  Montgomery County, VA.............
                                  Pulaski County, VA................
                                  Radford City, VA..................
14020...........................  Bloomington, IN...................     0.8587     0.9435     0.9152     0.8870
                                  Greene County, IN.................
                                  Monroe County, IN.................
                                  Owen County, IN...................
14060...........................  Bloomington-Normal, IL............     0.9111     0.9644     0.9467     0.9289
                                  McLean County, IL.................
14260...........................  Boise City-Nampa, ID..............     0.9352     0.9741     0.9611     0.9482
                                  Ada County, ID....................
                                  Boise County, ID..................
                                  Canyon County, ID.................
                                  Gem County, ID....................

[[Page 24227]]

 
                                  Owyhee County, ID.................
14484...........................  Boston-Quincy, MA.................     1.1771     1.0708     1.1063     1.1417
                                  Norfolk County, MA................
                                  Plymouth County, MA...............
                                  Suffolk County, MA................
14500...........................  Boulder, CO.......................     1.0046     1.0018     1.0028     1.0037
                                  Boulder County, CO................
14540...........................  Bowling Green, KY.................     0.8140     0.9256     0.8884     0.8512
                                  Edmonson County, KY...............
                                  Warren County, KY.................
14740...........................  Bremerton-Silverdale, WA..........     1.0614     1.0246     1.0368     1.0491
                                  Kitsap County, WA.................
14860...........................  Bridgeport-Stamford-Norwalk, CT...     1.2835     1.1134     1.1701     1.2268
                                  Fairfield County, CT..............
15180...........................  Brownsville-Harlingen, TX.........     1.0125     1.0050     1.0075     1.0100
                                  Cameron County, TX................
15260...........................  Brunswick, GA.....................     1.1933     1.0773     1.1160     1.1546
                                  Brantley County, GA...............
                                  Glynn County, GA..................
                                  McIntosh County, GA...............
15380...........................  Buffalo-Niagara Falls, NY.........     0.9339     0.9736     0.9603     0.9471
                                  Erie County, NY...................
                                  Niagara County, NY................
15500...........................  Burlington, NC....................     0.8967     0.9587     0.9380     0.9174
                                  Alamance County, NC...............
15540...........................  Burlington-South Burlington, VT...     0.9322     0.9729     0.9593     0.9458
                                  Chittenden County, VT.............
                                  Franklin County, VT...............
                                  Grand Isle County, VT.............
15764...........................  Cambridge-Newton-Framingham, MA...     1.1189     1.0476     1.0713     1.0951
                                  Middlesex County, MA..............
15804...........................  Camden, NJ........................     1.0675     1.0270     1.0405     1.0540
                                  Burlington County, NJ.............
                                  Camden County, NJ.................
                                  Gloucester County, NJ.............
15940...........................  Canton-Massillon, OH..............     0.8895     0.9558     0.9337     0.9116
                                  Carroll County, OH................
                                  Stark County, OH..................
15980...........................  Cape Coral-Fort Myers, FL.........     0.9371     0.9748     0.9623     0.9497
                                  Lee County, FL....................
16180...........................  Carson City, NV...................     1.0352     1.0141     1.0211     1.0282
                                  Carson City, NV...................
16220...........................  Casper, WY........................     0.9243     0.9697     0.9546     0.9394
                                  Natrona County, WY................
16300...........................  Cedar Rapids, IA..................     0.8975     0.9590     0.9385     0.9180
                                  Benton County, IA.................
                                  Jones County, IA..................
                                  Linn County, IA...................
16580...........................  Champaign-Urbana, IL..............     0.9527     0.9811     0.9716     0.9622
                                  Champaign County, IL..............
                                  Ford County, IL...................
                                  Piatt County, IL..................
16620...........................  Charleston, WV....................     0.8876     0.9550     0.9326     0.9101
                                  Boone County, WV..................
                                  Clay County, WV...................
                                  Kanawha County, WV................
                                  Lincoln County, WV................
                                  Putnam County, WV.................
16700...........................  Charleston-North Charleston, SC...     0.9420     0.9768     0.9652     0.9536
                                  Berkeley County, SC...............
                                  Charleston County, SC.............
                                  Dorchester County, SC.............
16740...........................  Charlotte-Gastonia-Concord, NC-SC.     0.9743     0.9897     0.9846     0.9794
                                  Anson County, NC..................
                                  Cabarrus County, NC...............
                                  Gaston County, NC.................
                                  Mecklenburg County, NC............
                                  Union County, NC..................
                                  York County, SC...................

[[Page 24228]]

 
16820...........................  Charlottesville, VA...............     1.0294     1.0118     1.0176     1.0235
                                  Albemarle County, VA..............
                                  Fluvanna County, VA...............
                                  Greene County, VA.................
                                  Nelson County, VA.................
                                  Charlottesville City, VA..........
16860...........................  Chattanooga, TN-GA................     0.9207     0.9683     0.9524     0.9366
                                  Catoosa County, GA................
                                  Dade County, GA...................
                                  Walker County, GA.................
                                  Hamilton County, TN...............
                                  Marion County, TN.................
                                  Sequatchie County, TN.............
16940...........................  Cheyenne, WY......................     0.8980     0.9592     0.9388     0.9184
                                  Laramie County, WY................
16974...........................  Chicago-Naperville-Joliet, IL.....     1.0868     1.0347     1.0521     1.0694
                                  Cook County, IL...................
                                  DeKalb County, IL.................
                                  DuPage County, IL.................
                                  Grundy County, IL.................
                                  Kane County, IL...................
                                  Kendall County, IL................
                                  McHenry County, IL................
                                  Will County, IL...................
17020...........................  Chico, CA.........................     1.0542     1.0217     1.0325     1.0434
                                  Butte County, CA..................
17140...........................  Cincinnati-Middletown, OH-KY-IN...     0.9516     0.9806     0.9710     0.9613
                                  Dearborn County, IN...............
                                  Franklin County, IN...............
                                  Ohio County, IN...................
                                  Boone County, KY..................
                                  Bracken County, KY................
                                  Campbell County, KY...............
                                  Gallatin County, KY...............
                                  Grant County, KY..................
                                  Kenton County, KY.................
                                  Pendleton County, KY..............
                                  Brown County, OH..................
                                  Butler County, OH.................
                                  Clermont County, OH...............
                                  Hamilton County, OH...............
                                  Warren County, OH.................
17300...........................  Clarksville, TN-KY................     0.8022     0.9209     0.8813     0.8418
                                  Christian County, KY..............
                                  Trigg County, KY..................
                                  Montgomery County, TN.............
                                  Stewart County, TN................
17420...........................  Cleveland, TN.....................     0.7844     0.9138     0.8706     0.8275
                                  Bradley County, TN................
                                  Polk County, TN...................
17460...........................  Cleveland-Elyria-Mentor, OH.......     0.9650     0.9860     0.9790     0.9720
                                  Cuyahoga County, OH...............
                                  Geauga County, OH.................
                                  Lake County, OH...................
                                  Lorain County, OH.................
                                  Medina County, OH.................
17660...........................  Coeur d'Alene, ID.................     0.9339     0.9736     0.9603     0.9471
                                  Kootenai County, ID...............
17780...........................  College Station-Bryan, TX.........     0.9243     0.9697     0.9546     0.9394
                                  Brazos County, TX.................
                                  Burleson County, TX...............
                                  Robertson County, TX..............
17820...........................  Colorado Springs, CO..............     0.9792     0.9917     0.9875     0.9834
                                  El Paso County, CO................
                                  Teller County, CO.................
17860...........................  Columbia, MO......................     0.8396     0.9358     0.9038     0.8717
                                  Boone County, MO..................
                                  Howard County, MO.................
17900...........................  Columbia, SC......................     0.9392     0.9757     0.9635     0.9514

[[Page 24229]]

 
                                  Calhoun County, SC................
                                  Fairfield County, SC..............
                                  Kershaw County, SC................
                                  Lexington County, SC..............
                                  Richland County, SC...............
                                  Saluda County, SC.................
17980...........................  Columbus, GA-AL...................     0.8690     0.9476     0.9214     0.8952
                                  Russell County, AL................
                                  Chattahoochee County, GA..........
                                  Harris County, GA.................
                                  Marion County, GA.................
                                  Muscogee County, GA...............
18020...........................  Columbus, IN......................     0.9388     0.9755     0.9633     0.9510
                                  Bartholomew County, IN............
18140...........................  Columbus, OH......................     0.9737     0.9895     0.9842     0.9790
                                  Delaware County, OH...............
                                  Fairfield County, OH..............
                                  Franklin County, OH...............
                                  Licking County, OH................
                                  Madison County, OH................
                                  Morrow County, OH.................
                                  Pickaway County, OH...............
                                  Union County, OH..................
18580...........................  Corpus Christi, TX................     0.8647     0.9459     0.9188     0.8918
                                  Aransas County, TX................
                                  Nueces County, TX.................
                                  San Patricio County, TX...........
18700...........................  Corvallis, OR.....................     1.0545     1.0218     1.0327     1.0436
                                  Benton County, OR.................
19060...........................  Cumberland, MD-WV.................     0.8662     0.9465     0.9197     0.8930
                                  Allegany County, MD...............
                                  Mineral County, WV................
19124...........................  Dallas-Plano-Irving, TX...........     1.0074     1.0030     1.0044     1.0059
                                  Collin County, TX.................
                                  Dallas County, TX.................
                                  Delta County, TX..................
                                  Denton County, TX.................
                                  Ellis County, TX..................
                                  Hunt County, TX...................
                                  Kaufman County, TX................
                                  Rockwall County, TX...............
19140...........................  Dalton, GA........................     0.9558     0.9823     0.9735     0.9646
                                  Murray County, GA.................
                                  Whitfield County, GA..............
19180...........................  Danville, IL......................     0.8392     0.9357     0.9035     0.8714
                                  Vermilion County, IL..............
19260...........................  Danville, VA......................     0.8643     0.9457     0.9186     0.8914
                                  Pittsylvania County, VA...........
                                  Danville City, VA.................
19340...........................  Davenport-Moline-Rock Island, IA-      0.8773     0.9509     0.9264     0.9018
                                   IL.
                                  Henry County, IL..................
                                  Mercer County, IL.................
                                  Rock Island County, IL............
                                  Scott County, IA..................
19380...........................  Dayton, OH........................     0.9303     0.9721     0.9582     0.9442
                                  Greene County, OH.................
                                  Miami County, OH..................
                                  Montgomery County, OH.............
                                  Preble County, OH.................
19460...........................  Decatur, AL.......................     0.8894     0.9558     0.9336     0.9115
                                  Lawrence County, AL...............
                                  Morgan County, AL.................
19500...........................  Decatur, IL.......................     0.8122     0.9249     0.8873     0.8498
                                  Macon County, IL..................
19660...........................  Deltona-Daytona Beach-Ormond           0.8898     0.9559     0.9339     0.9118
                                   Beach, FL.
                                  Volusia County, FL................
19740...........................  Denver-Aurora, CO.................     1.0904     1.0362     1.0542     1.0723
                                  Adams County, CO..................
                                  Arapahoe County, CO...............

[[Page 24230]]

 
                                  Broomfield County, CO.............
                                  Clear Creek County, CO............
                                  Denver County, CO.................
                                  Douglas County, CO................
                                  Elbert County, CO.................
                                  Gilpin County, CO.................
                                  Jefferson County, CO..............
                                  Park County, CO...................
19780...........................  Des Moines, IA....................     0.9266     0.9706     0.9560     0.9413
                                  Dallas County, IA.................
                                  Guthrie County, IA................
                                  Madison County, IA................
                                  Polk County, IA...................
                                  Warren County, IA.................
19804...........................  Detroit-Livonia-Dearborn, MI......     1.0349     1.0140     1.0209     1.0279
                                  Wayne County, MI..................
20020...........................  Dothan, AL........................     0.7537     0.9015     0.8522     0.8030
                                  Geneva County, AL.................
                                  Henry County, AL..................
                                  Houston County, AL................
20100...........................  Dover, DE.........................     0.9825     0.9930     0.9895     0.9860
                                  Kent County, DE...................
20220...........................  Dubuque, IA.......................     0.8748     0.9499     0.9249     0.8998
                                  Dubuque County, IA................
20260...........................  Duluth, MN-WI.....................     1.0340     1.0136     1.0204     1.0272
                                  Carlton County, MN................
                                  St. Louis County, MN..............
                                  Douglas County, WI................
20500...........................  Durham, NC........................     1.0363     1.0145     1.0218     1.0290
                                  Chatham County, NC................
                                  Durham County, NC.................
                                  Orange County, NC.................
                                  Person County, NC.................
20740...........................  Eau Claire, WI....................     0.9139     0.9656     0.9483     0.9311
                                  Chippewa County, WI...............
                                  Eau Claire County, WI.............
20764...........................  Edison, NJ........................     1.1136     1.0454     1.0682     1.0909
                                  Middlesex County, NJ..............
                                  Monmouth County, NJ...............
                                  Ocean County, NJ..................
                                  Somerset County, NJ...............
20940...........................  El Centro, CA.....................     0.8856     0.9542     0.9314     0.9085
                                  Imperial County, CA...............
21060...........................  Elizabethtown, KY.................     0.8684     0.9474     0.9210     0.8947
                                  Hardin County, KY.................
                                  Larue County, KY..................
21140...........................  Elkhart-Goshen, IN................     0.9278     0.9711     0.9567     0.9422
                                  Elkhart County, IN................
21300...........................  Elmira, NY........................     0.8445     0.9378     0.9067     0.8756
                                  Chemung County, NY................
21340...........................  El Paso, TX.......................     0.9181     0.9672     0.9509     0.9345
                                  El Paso County, TX................
21500...........................  Erie, PA..........................     0.8699     0.9480     0.9219     0.8959
                                  Erie County, PA...................
21604...........................  Essex County, MA..................     1.0662     1.0265     1.0397     1.0530
                                  Essex County, MA..................
21660...........................  Eugene-Springfield, OR............     1.0940     1.0376     1.0564     1.0752
                                  Lane County, OR...................
21780...........................  Evansville, IN-KY.................     0.8372     0.9349     0.9023     0.8698
                                  Gibson County, IN.................
                                  Posey County, IN..................
                                  Vanderburgh County, IN............
                                  Warrick County, IN................
                                  Henderson County, KY..............
                                  Webster County, KY................
21820...........................  Fairbanks, AK.....................     1.1146     1.0458     1.0688     1.0917
                                  Fairbanks North Star Borough, AK..
21940...........................  Fajardo, PR.......................     0.3939     0.7576     0.6363     0.5151
                                  Ceiba Municipio, PR...............

[[Page 24231]]

 
                                  Fajardo Municipio, PR.............
                                  Luquillo Municipio, PR............
22020...........................  Fargo, ND-MN......................     0.9114     0.9646     0.9468     0.9291
                                  Cass County, ND...................
                                  Clay County, MN...................
22140...........................  Farmington, NM....................     0.8049     0.9220     0.8829     0.8439
                                  San Juan County, NM...............
22180...........................  Fayetteville, NC..................     0.9363     0.9745     0.9618     0.9490
                                  Cumberland County, NC.............
                                  Hoke County, NC...................
22220...........................  Fayetteville-Springdale-Rogers, AR-    0.8636     0.9454     0.9182     0.8909
                                   MO.
                                  Benton County, AR.................
                                  Madison County, AR................
                                  Washington County, AR.............
                                  McDonald County, MO...............
22380...........................  Flagstaff, AZ.....................     1.0787     1.0315     1.0472     1.0630
                                  Coconino County, AZ...............
22420...........................  Flint, MI.........................     1.1178     1.0471     1.0707     1.0942
                                  Genesee County, MI................
22500...........................  Florence, SC......................     0.8833     0.9533     0.9300     0.9066
                                  Darlington County, SC.............
                                  Florence County, SC...............
22520...........................  Florence-Muscle Shoals, AL........     0.7883     0.9153     0.8730     0.8306
                                  Colbert County, AL................
                                  Lauderdale County, AL.............
22540...........................  Fond du Lac, WI...................     0.9897     0.9959     0.9938     0.9918
                                  Fond du Lac County, WI............
22660...........................  Fort Collins-Loveland, CO.........     1.0218     1.0087     1.0131     1.0174
                                  Larimer County, CO................
22744...........................  Fort Lauderdale-Pompano Beach-         1.0165     1.0066     1.0099     1.0132
                                   Deerfield Beach, FL.
                                  Broward County, FL................
22900...........................  Fort Smith, AR-OK.................     0.8283     0.9313     0.8970     0.8626
                                  Crawford County, AR...............
                                  Franklin County, AR...............
                                  Sebastian County, AR..............
                                  Le Flore County, OK...............
                                  Sequoyah County, OK...............
23020...........................  Fort Walton Beach-Crestview-           0.8786     0.9514     0.9272     0.9029
                                   Destin, FL.
                                  Okaloosa County, FL...............
23060...........................  Fort Wayne, IN....................     0.9807     0.9923     0.9884     0.9846
                                  Allen County, IN..................
                                  Wells County, IN..................
                                  Whitley County, IN................
23104...........................  Fort Worth-Arlington, TX..........     0.9472     0.9789     0.9683     0.9578
                                  Johnson County, TX................
                                  Parker County, TX.................
                                  Tarrant County, TX................
                                  Wise County, TX...................
23420...........................  Fresno, CA........................     1.0536     1.0214     1.0322     1.0429
                                  Fresno County, CA.................
23460...........................  Gadsden, AL.......................     0.8049     0.9220     0.8829     0.8439
                                  Etowah County, AL.................
23540...........................  Gainesville, FL...................     0.9459     0.9784     0.9675     0.9567
                                  Alachua County, FL................
                                  Gilchrist County, FL..............
23580...........................  Gainesville, GA...................     0.9557     0.9823     0.9734     0.9646
                                  Hall County, GA...................
23844...........................  Gary, IN..........................     0.9310     0.9724     0.9586     0.9448
                                  Jasper County, IN.................
                                  Lake County, IN...................
                                  Newton County, IN.................
                                  Porter County, IN.................
24020...........................  Glens Falls, NY...................     0.8467     0.9387     0.9080     0.8774
                                  Warren County, NY.................
                                  Washington County, NY.............
24140...........................  Goldsboro, NC.....................     0.8778     0.9511     0.9267     0.9022
                                  Wayne County, NC..................
24220...........................  Grand Forks, ND-MN................     0.9091     0.9636     0.9455     0.9273
                                  Polk County, MN...................

[[Page 24232]]

 
                                  Grand Forks County, ND............
24300...........................  Grand Junction, CO................     0.9900     0.9960     0.9940     0.9920
                                  Mesa County, CO...................
24340...........................  Grand Rapids-Wyoming, MI..........     0.9420     0.9768     0.9652     0.9536
                                  Barry County, MI..................
                                  Ionia County, MI..................
                                  Kent County, MI...................
                                  Newaygo County, MI................
24500...........................  Great Falls, MT...................     0.8810     0.9524     0.9286     0.9048
                                  Cascade County, MT................
24540...........................  Greeley, CO.......................     0.9444     0.9778     0.9666     0.9555
                                  Weld County, CO...................
24580...........................  Green Bay, WI.....................     0.9590     0.9836     0.9754     0.9672
                                  Brown County, WI..................
                                  Kewaunee County, WI...............
                                  Oconto County, WI.................
24660...........................  Greensboro-High Point, NC.........     0.9190     0.9676     0.9514     0.9352
                                  Guilford County, NC...............
                                  Randolph County, NC...............
                                  Rockingham County, NC.............
24780...........................  Greenville, NC....................     0.9183     0.9673     0.9510     0.9346
                                  Greene County, NC.................
                                  Pitt County, NC...................
24860...........................  Greenville, SC....................     0.9557     0.9823     0.9734     0.9646
                                  Greenville County, SC.............
                                  Laurens County, SC................
                                  Pickens County, SC................
25020...........................  Guayama, PR.......................     0.4005     0.7602     0.6403     0.5204
                                  Arroyo Municipio, PR..............
                                  Guayama Municipio, PR.............
                                  Patillas Municipio, PR............
25060...........................  Gulfport-Biloxi, MS...............     0.8950     0.9580     0.9370     0.9160
                                  Hancock County, MS................
                                  Harrison County, MS...............
                                  Stone County, MS..................
25180...........................  Hagerstown-Martinsburg, MD-WV.....     0.9715     0.9886     0.9829     0.9772
                                  Washington County, MD.............
                                  Berkeley County, WV...............
                                  Morgan County, WV.................
25260...........................  Hanford-Corcoran, CA..............     0.9296     0.9718     0.9578     0.9437
                                  Kings County, CA..................
25420...........................  Harrisburg-Carlisle, PA...........     0.9359     0.9744     0.9615     0.9487
                                  Cumberland County, PA.............
                                  Dauphin County, PA................
                                  Perry County, PA..................
25500...........................  Harrisonburg, VA..................     0.9275     0.9710     0.9565     0.9420
                                  Rockingham County, VA.............
                                  Harrisonburg City, VA.............
25540...........................  Hartford-West Hartford-East            1.1054     1.0422     1.0632     1.0843
                                   Hartford, CT.
                                  Hartford County, CT...............
                                  Litchfield County, CT.............
                                  Middlesex County, CT..............
                                  Tolland County, CT................
25620...........................  Hattiesburg, MS...................     0.7362     0.8945     0.8417     0.7890
                                  Forrest County, MS................
                                  Lamar County, MS..................
                                  Perry County, MS..................
25860...........................  Hickory-Lenoir-Morganton, NC......     0.9502     0.9801     0.9701     0.9602
                                  Alexander County, NC..............
                                  Burke County, NC..................
                                  Caldwell County, NC...............
                                  Catawba County, NC................
25980...........................  Hinesville-Fort Stewart, GA.......     0.7715     0.9086     0.8629     0.8172
                                  Liberty County, GA................
                                  Long County, GA...................
26100...........................  Holland-Grand Haven, MI...........     0.9388     0.9755     0.9633     0.9510
                                  Ottawa County, MI.................
26180...........................  Honolulu, HI......................     1.1013     1.0405     1.0608     1.0810
                                  Honolulu County, HI...............

[[Page 24233]]

 
26300...........................  Hot Springs, AR...................     0.9249     0.9700     0.9549     0.9399
                                  Garland County, AR................
26380...........................  Houma-Bayou Cane-Thibodaux, LA....     0.7721     0.9088     0.8633     0.8177
                                  Lafourche Parish, LA..............
                                  Terrebonne Parish, LA.............
26420...........................  Houston-Baytown-Sugar Land, TX....     0.9973     0.9989     0.9984     0.9978
                                  Austin County, TX.................
                                  Brazoria County, TX...............
                                  Chambers County, TX...............
                                  Fort Bend County, TX..............
                                  Galveston County, TX..............
                                  Harris County, TX.................
                                  Liberty County, TX................
                                  Montgomery County, TX.............
                                  San Jacinto County, TX............
                                  Waller County, TX.................
26580...........................  Huntington-Ashland, WV-KY-OH......     0.9564     0.9826     0.9738     0.9651
                                  Boyd County, KY...................
                                  Greenup County, KY................
                                  Lawrence County, OH...............
                                  Cabell County, WV.................
                                  Wayne County, WV..................
26620...........................  Huntsville, AL....................     0.8851     0.9540     0.9311     0.9081
                                  Limestone County, AL..............
                                  Madison County, AL................
26820...........................  Idaho Falls, ID...................     0.9059     0.9624     0.9435     0.9247
                                  Bonneville County, ID.............
                                  Jefferson County, ID..............
26900...........................  Indianapolis, IN..................     1.0113     1.0045     1.0068     1.0090
                                  Boone County, IN..................
                                  Brown County, IN..................
                                  Hamilton County, IN...............
                                  Hancock County, IN................
                                  Hendricks County, IN..............
                                  Johnson County, IN................
                                  Marion County, IN.................
                                  Morgan County, IN.................
                                  Putnam County, IN.................
                                  Shelby County, IN.................
26980...........................  Iowa City, IA.....................     0.9654     0.9862     0.9792     0.9723
                                  Johnson County, IA................
                                  Washington County, IA.............
27060...........................  Ithaca, NY........................     0.9589     0.9836     0.9753     0.9671
                                  Tompkins County, NY...............
27100...........................  Jackson, MI.......................     0.9146     0.9658     0.9488     0.9317
                                  Jackson County, MI................
27140...........................  Jackson, MS.......................     0.8291     0.9316     0.8975     0.8633
                                  Copiah County, MS.................
                                  Hinds County, MS..................
                                  Madison County, MS................
                                  Rankin County, MS.................
                                  Simpson County, MS................
27180...........................  Jackson, TN.......................     0.8900     0.9560     0.9340     0.9120
                                  Chester County, TN................
                                  Madison County, TN................
27260...........................  Jacksonville, FL..................     0.9537     0.9815     0.9722     0.9630
                                  Baker County, FL..................
                                  Clay County, FL...................
                                  Duval County, FL..................
                                  Nassau County, FL.................
                                  St. Johns County, FL..............
27340...........................  Jacksonville, NC..................     0.8401     0.9360     0.9041     0.8721
                                  Onslow County, NC.................
27500...........................  Janesville, WI....................     0.9583     0.9833     0.9750     0.9666
                                  Rock County, WI...................
27620...........................  Jefferson City, MO................     0.8338     0.9335     0.9003     0.8670
                                  Callaway County, MO...............
                                  Cole County, MO...................
                                  Moniteau County, MO...............

[[Page 24234]]

 
                                  Osage County, MO..................
27740...........................  Johnson City, TN..................     0.8146     0.9258     0.8888     0.8517
                                  Carter County, TN.................
                                  Unicoi County, TN.................
                                  Washington County, TN.............
27780...........................  Johnstown, PA.....................     0.8380     0.9352     0.9028     0.8704
                                  Cambria County, PA................
27860...........................  Jonesboro, AR.....................     0.8144     0.9258     0.8886     0.8515
                                  Craighead County, AR..............
                                  Poinsett County, AR...............
27900...........................  Joplin, MO........................     0.8721     0.9488     0.9233     0.8977
                                  Jasper County, MO.................
                                  Newton County, MO.................
28020...........................  Kalamazoo-Portage, MI.............     1.0676     1.0270     1.0406     1.0541
                                  Kalamazoo County, MI..............
                                  Van Buren County, MI..............
28100...........................  Kankakee-Bradley, IL..............     1.0603     1.0241     1.0362     1.0482
                                  Kankakee County, IL...............
28140...........................  Kansas City, MO-KS................     0.9629     0.9852     0.9777     0.9703
                                  Franklin County, KS...............
                                  Johnson County, KS................
                                  Leavenworth County, KS............
                                  Linn County, KS...................
                                  Miami County, KS..................
                                  Wyandotte County, KS..............
                                  Bates County, MO..................
                                  Caldwell County, MO...............
                                  Cass County, MO...................
                                  Clay County, MO...................
                                  Clinton County, MO................
                                  Jackson County, MO................
                                  Lafayette County, MO..............
                                  Platte County, MO.................
                                  Ray County, MO....................
28420...........................  Kennewick-Richland-Pasco, WA......     1.0520     1.0208     1.0312     1.0416
                                  Benton County, WA.................
                                  Franklin County, WA...............
28660...........................  Killeen-Temple-Fort Hood, TX......     0.9242     0.9697     0.9545     0.9394
                                  Bell County, TX...................
                                  Coryell County, TX................
                                  Lampasas County, TX...............
28700...........................  Kingsport-Bristol-Bristol, TN-VA..     0.8240     0.9296     0.8944     0.8592
                                  Hawkins County, TN................
                                  Sullivan County, TN...............
                                  Bristol City, VA..................
                                  Scott County, VA..................
                                  Washington County, VA.............
28740...........................  Kingston, NY......................     0.9000     0.9600     0.9400     0.9200
                                  Ulster County, NY.................
28940...........................  Knoxville, TN.....................     0.8548     0.9419     0.9129     0.8838
                                  Anderson County, TN...............
                                  Blount County, TN.................
                                  Knox County, TN...................
                                  Loudon County, TN.................
                                  Union County, TN..................
29020...........................  Kokomo, IN........................     0.8986     0.9594     0.9392     0.9189
                                  Howard County, IN.................
                                  Tipton County, IN.................
29100...........................  La Crosse, WI-MN..................     0.9289     0.9716     0.9573     0.9431
                                  Houston County, MN................
                                  La Crosse County, WI..............
29140...........................  Lafayette, IN.....................     0.9067     0.9627     0.9440     0.9254
                                  Benton County, IN.................
                                  Carroll County, IN................
                                  Tippecanoe County, IN.............
29180...........................  Lafayette, LA.....................     0.8306     0.9322     0.8984     0.8645
                                  Lafayette Parish, LA..............
                                  St. Martin Parish, LA.............
29340...........................  Lake Charles, LA..................     0.7935     0.9174     0.8761     0.8348

[[Page 24235]]

 
                                  Calcasieu Parish, LA..............
                                  Cameron Parish, LA................
29404...........................  Lake County-Kenosha County, IL-WI.     1.0342     1.0137     1.0205     1.0274
                                  Lake County, IL...................
                                  Kenosha County, WI................
29460...........................  Lakeland, FL......................     0.8930     0.9572     0.9358     0.9144
                                  Polk County, FL...................
29540...........................  Lancaster, PA.....................     0.9883     0.9953     0.9930     0.9906
                                  Lancaster County, PA..............
29620...........................  Lansing-East Lansing, MI..........     0.9658     0.9863     0.9795     0.9726
                                  Clinton County, MI................
                                  Eaton County, MI..................
                                  Ingham County, MI.................
29700...........................  Laredo, TX........................     0.8747     0.9499     0.9248     0.8998
                                  Webb County, TX...................
29740...........................  Las Cruces, NM....................     0.8784     0.9514     0.9270     0.9027
                                  Dona Ana County, NM...............
29820...........................  Las Vegas-Paradise, NV............     1.1378     1.0551     1.0827     1.1102
                                  Clark County, NV..................
29940...........................  Lawrence, KS......................     0.8644     0.9458     0.9186     0.8915
                                  Douglas County, KS................
30020...........................  Lawton, OK........................     0.8212     0.9285     0.8927     0.8570
                                  Comanche County, OK...............
30140...........................  Lebanon, PA.......................     0.8570     0.9428     0.9142     0.8856
                                  Lebanon County, PA................
30300...........................  Lewiston, ID-WA...................     0.9314     0.9726     0.9588     0.9451
                                  Nez Perce County, ID..............
                                  Asotin County, WA.................
30340...........................  Lewiston-Auburn, ME...............     0.9562     0.9825     0.9737     0.9650
                                  Androscoggin County, ME...........
30460...........................  Lexington-Fayette, KY.............     0.9359     0.9744     0.9615     0.9487
                                  Bourbon County, KY................
                                  Clark County, KY..................
                                  Fayette County, KY................
                                  Jessamine County, KY..............
                                  Scott County, KY..................
                                  Woodford County, KY...............
30620...........................  Lima, OH..........................     0.9330     0.9732     0.9598     0.9464
                                  Allen County, OH..................
30700...........................  Lincoln, NE.......................     1.0208     1.0083     1.0125     1.0166
                                  Lancaster County, NE..............
                                  Seward County, NE.................
30780...........................  Little Rock-North Little Rock, AR.     0.8826     0.9530     0.9296     0.9061
                                  Faulkner County, AR...............
                                  Grant County, AR..................
                                  Lonoke County, AR.................
                                  Perry County, AR..................
                                  Pulaski County, AR................
                                  Saline County, AR.................
30860...........................  Logan, UT-ID......................     0.9094     0.9638     0.9456     0.9275
                                  Franklin County, ID...............
                                  Cache County, UT..................
30980...........................  Longview, TX......................     0.8801     0.9520     0.9281     0.9041
                                  Gregg County, TX..................
                                  Rusk County, TX...................
                                  Upshur County, TX.................
31020...........................  Longview, WA......................     1.0224     1.0090     1.0134     1.0179
                                  Cowlitz County, WA................
31084...........................  Los Angeles-Long Beach-Glendale,       1.1732     1.0693     1.1039     1.1386
                                   CA.
                                  Los Angeles County, CA............
31140...........................  Louisville, KY-IN.................     0.9122     0.9649     0.9473     0.9298
                                  Clark County, IN..................
                                  Floyd County, IN..................
                                  Harrison County, IN...............
                                  Washington County, IN.............
                                  Bullitt County, KY................
                                  Henry County, KY..................
                                  Jefferson County, KY..............
                                  Meade County, KY..................

[[Page 24236]]

 
                                  Nelson County, KY.................
                                  Oldham County, KY.................
                                  Shelby County, KY.................
                                  Spencer County, KY................
                                  Trimble County, KY................
31180...........................  Lubbock, TX.......................     0.8777     0.9511     0.9266     0.9022
                                  Crosby County, TX.................
                                  Lubbock County, TX................
31340...........................  Lynchburg, VA.....................     0.9017     0.9607     0.9410     0.9214
                                  Amherst County, VA................
                                  Appomattox County, VA.............
                                  Bedford County, VA................
                                  Campbell County, VA...............
                                  Bedford City, VA..................
                                  Lynchburg City, VA................
31420...........................  Macon, GA.........................     0.9887     0.9955     0.9932     0.9910
                                  Bibb County, GA...................
                                  Crawford County, GA...............
                                  Jones County, GA..................
                                  Monroe County, GA.................
                                  Twiggs County, GA.................
31460...........................  Madera, CA........................     0.8521     0.9408     0.9113     0.8817
                                  Madera County, CA.................
31540...........................  Madison, WI.......................     1.0306     1.0122     1.0184     1.0245
                                  Columbia County, WI...............
                                  Dane County, WI...................
                                  Iowa County, WI...................
31700...........................  Manchester-Nashua, NH.............     1.0642     1.0257     1.0385     1.0514
                                  Hillsborough County, NH...........
                                  Merrimack County, NH..............
31900...........................  Mansfield, OH.....................     0.9189     0.9676     0.9513     0.9351
                                  Richland County, OH...............
32420...........................  Mayag[uuml]ez, PR.................     0.4493     0.7797     0.6696     0.5594
                                  Hormigueros Municipio, PR.........
                                  Mayag[uuml]ez Municipio, PR.......
32580...........................  McAllen-Edinburg-Pharr, TX........     0.8602     0.9441     0.9161     0.8882
                                  Hidalgo County, TX................
32780...........................  Medford, OR.......................     1.0534     1.0214     1.0320     1.0427
                                  Jackson County, OR................
32820...........................  Memphis, TN-MS-AR.................     0.9217     0.9687     0.9530     0.9374
                                  Crittenden County, AR.............
                                  DeSoto County, MS.................
                                  Marshall County, MS...............
                                  Tate County, MS...................
                                  Tunica County, MS.................
                                  Fayette County, TN................
                                  Shelby County, TN.................
                                  Tipton County, TN.................
32900...........................  Merced, CA........................     1.0575     1.0230     1.0345     1.0460
                                  Merced County, CA.................
33124...........................  Miami-Miami Beach-Kendall, FL.....     0.9870     0.9948     0.9922     0.9896
                                  Miami-Dade County, FL.............
33140...........................  Michigan City-La Porte, IN........     0.9332     0.9733     0.9599     0.9466
                                  LaPorte County, IN................
33260...........................  Midland, TX.......................     0.9384     0.9754     0.9630     0.9507
                                  Midland County, TX................
33340...........................  Milwaukee-Waukesha-West Allis, WI.     1.0076     1.0030     1.0046     1.0061
                                  Milwaukee County, WI..............
                                  Ozaukee County, WI................
                                  Washington County, WI.............
                                  Waukesha County, WI...............
33460...........................  Minneapolis-St. Paul-Bloomington,      1.1066     1.0426     1.0640     1.0853
                                   MN-WI.
                                  Anoka County, MN..................
                                  Carver County, MN.................
                                  Chisago County, MN................
                                  Dakota County, MN.................
                                  Hennepin County, MN...............
                                  Isanti County, MN.................
                                  Ramsey County, MN.................

[[Page 24237]]

 
                                  Scott County, MN..................
                                  Sherburne County, MN..............
                                  Washington County, MN.............
                                  Wright County, MN.................
                                  Pierce County, WI.................
                                  St. Croix County, WI..............
33540...........................  Missoula, MT......................     0.9618     0.9847     0.9771     0.9694
                                  Missoula County, MT...............
33660...........................  Mobile, AL........................     0.7995     0.9198     0.8797     0.8396
                                  Mobile County, AL.................
33700...........................  Modesto, CA.......................     1.1966     1.0786     1.1180     1.1573
                                  Stanislaus County, CA.............
33740...........................  Monroe, LA........................     0.7903     0.9161     0.8742     0.8322
                                  Ouachita Parish, LA...............
                                  Union Parish, LA..................
33780...........................  Monroe, MI........................     0.9506     0.9802     0.9704     0.9605
                                  Monroe County, MI.................
33860...........................  Montgomery, AL....................     0.8300     0.9320     0.8980     0.8640
                                  Autauga County, AL................
                                  Elmore County, AL.................
                                  Lowndes County, AL................
                                  Montgomery County, AL.............
34060...........................  Morgantown, WV....................     0.8730     0.9492     0.9238     0.8984
                                  Monongalia County, WV.............
                                  Preston County, WV................
34100...........................  Morristown, TN....................     0.7790     0.9116     0.8674     0.8232
                                  Grainger County, TN...............
                                  Hamblen County, TN................
                                  Jefferson County, TN..............
34580...........................  Mount Vernon-Anacortes, WA........     1.0576     1.0230     1.0346     1.0461
                                  Skagit County, WA.................
34620...........................  Muncie, IN........................     0.8580     0.9432     0.9148     0.8864
                                  Delaware County, IN...............
34740...........................  Muskegon-Norton Shores, MI........     0.9741     0.9896     0.9845     0.9793
                                  Muskegon County, MI...............
34820...........................  Myrtle Beach-Conway-North Myrtle       0.9022     0.9609     0.9413     0.9218
                                   Beach, SC.
                                  Horry County, SC..................
34900...........................  Napa, CA..........................     1.2531     1.1012     1.1519     1.2025
                                  Napa County, CA...................
34940...........................  Naples-Marco Island, FL...........     1.0558     1.0223     1.0335     1.0446
                                  Collier County, FL................
34980...........................  Nashville-Davidson-Murfreesboro,       1.0086     1.0034     1.0052     1.0069
                                   TN.
                                  Cannon County, TN.................
                                  Cheatham County, TN...............
                                  Davidson County, TN...............
                                  Dickson County, TN................
                                  Hickman County, TN................
                                  Macon County, TN..................
                                  Robertson County, TN..............
                                  Rutherford County, TN.............
                                  Smith County, TN..................
                                  Sumner County, TN.................
                                  Trousdale County, TN..............
                                  Williamson County, TN.............
                                  Wilson County, TN.................
35004...........................  Nassau-Suffolk, NY................     1.2907     1.1163     1.1744     1.2326
                                  Nassau County, NY.................
                                  Suffolk County, NY................
35084...........................  Newark-Union, NJ-PA...............     1.1687     1.0675     1.1012     1.1350
                                  Essex County, NJ..................
                                  Hunterdon County, NJ..............
                                  Morris County, NJ.................
                                  Sussex County, NJ.................
                                  Union County, NJ..................
                                  Pike County, PA...................
35300...........................  New Haven-Milford, CT.............     1.1807     1.0723     1.1084     1.1446
                                  New Haven County, CT..............
35380...........................  New Orleans-Metairie-Kenner, LA...     0.9103     0.9641     0.9462     0.9282
                                  Jefferson Parish, LA..............

[[Page 24238]]

 
                                  Orleans Parish, LA................
                                  Plaquemines Parish, LA............
                                  St. Bernard Parish, LA............
                                  St. Charles Parish, LA............
                                  St. John the Baptist Parish, LA...
                                  St. Tammany Parish, LA............
35644...........................  New York-Wayne-White Plains, NY-NJ     1.3311     1.1324     1.1987     1.2649
                                  Bergen County, NJ.................
                                  Hudson County, NJ.................
                                  Passaic County, NJ................
                                  Bronx County, NY..................
                                  Kings County, NY..................
                                  New York County, NY...............
                                  Putnam County, NY.................
                                  Queens County, NY.................
                                  Richmond County, NY...............
                                  Rockland County, NY...............
                                  Westchester County, NY............
35660...........................  Niles-Benton Harbor, MI...........     0.8847     0.9539     0.9308     0.9078
                                  Berrien County, MI................
35980...........................  Norwich-New London, CT............     1.1596     1.0638     1.0958     1.1277
                                  New London County, CT.............
36084...........................  Oakland-Fremont-Hayward, CA.......     1.5220     1.2088     1.3132     1.4176
                                  Alameda County, CA................
                                  Contra Costa County, CA...........
36100...........................  Ocala, FL.........................     0.9153     0.9661     0.9492     0.9322
                                  Marion County, FL.................
36140...........................  Ocean City, NJ....................     1.0810     1.0324     1.0486     1.0648
                                  Cape May County, NJ...............
36220...........................  Odessa, TX........................     0.9798     0.9919     0.9879     0.9838
                                  Ector County, TX..................
36260...........................  Ogden-Clearfield, UT..............     0.9216     0.9686     0.9530     0.9373
                                  Davis County, UT..................
                                  Morgan County, UT.................
                                  Weber County, UT..................
36420...........................  Oklahoma City, OK.................     0.8982     0.9593     0.9389     0.9186
                                  Canadian County, OK...............
                                  Cleveland County, OK..............
                                  Grady County, OK..................
                                  Lincoln County, OK................
                                  Logan County, OK..................
                                  McClain County, OK................
                                  Oklahoma County, OK...............
36500...........................  Olympia, WA.......................     1.1006     1.0402     1.0604     1.0805
                                  Thurston County, WA...............
36540...........................  Omaha-Council Bluffs, NE-IA.......     0.9754     0.9902     0.9852     0.9803
                                  Harrison County, IA...............
                                  Mills County, IA..................
                                  Pottawattamie County, IA..........
                                  Cass County, NE...................
                                  Douglas County, NE................
                                  Sarpy County, NE..................
                                  Saunders County, NE...............
                                  Washington County, NE.............
36740...........................  Orlando, FL.......................     0.9742     0.9897     0.9845     0.9794
                                  Lake County, FL...................
                                  Orange County, FL.................
                                  Osceola County, FL................
                                  Seminole County, FL...............
36780...........................  Oshkosh-Neenah, WI................     0.9099     0.9640     0.9459     0.9279
                                  Winnebago County, WI..............
36980...........................  Owensboro, KY.....................     0.8434     0.9374     0.9060     0.8747
                                  Daviess County, KY................
                                  Hancock County, KY................
                                  McLean County, KY.................
37100...........................  Oxnard-Thousand Oaks-Ventura, CA..     1.1105     1.0442     1.0663     1.0884
                                  Ventura County, CA................
37340...........................  Palm Bay-Melbourne-Titusville, FL.     0.9633     0.9853     0.9780     0.9706
                                  Brevard County, FL................

[[Page 24239]]

 
37460...........................  Panama City-Lynn Haven, FL........     0.8124     0.9250     0.8874     0.8499
                                  Bay County, FL....................
37620...........................  Parkersburg-Marietta, WV-OH.......     0.8288     0.9315     0.8973     0.8630
                                  Washington County, OH.............
                                  Pleasants County, WV..............
                                  Wirt County, WV...................
                                  Wood County, WV...................
37700...........................  Pascagoula, MS....................     0.7974     0.9190     0.8784     0.8379
                                  George County, MS.................
                                  Jackson County, MS................
37860...........................  Pensacola-Ferry Pass-Brent, FL....     0.8306     0.9322     0.8984     0.8645
                                  Escambia County, FL...............
                                  Santa Rosa County, FL.............
37900...........................  Peoria, IL........................     0.8886     0.9554     0.9332     0.9109
                                  Marshall County, IL...............
                                  Peoria County, IL.................
                                  Stark County, IL..................
                                  Tazewell County, IL...............
                                  Woodford County, IL...............
37964...........................  Philadelphia, PA..................     1.0865     1.0346     1.0519     1.0692
                                  Bucks County, PA..................
                                  Chester County, PA................
                                  Delaware County, PA...............
                                  Montgomery County, PA.............
                                  Philadelphia County, PA...........
38060...........................  Phoenix-Mesa-Scottsdale, AZ.......     0.9982     0.9993     0.9989     0.9986
                                  Maricopa County, AZ...............
                                  Pinal County, AZ..................
38220...........................  Pine Bluff, AR....................     0.8673     0.9469     0.9204     0.8938
                                  Cleveland County, AR..............
                                  Jefferson County, AR..............
                                  Lincoln County, AR................
38300...........................  Pittsburgh, PA....................     0.8736     0.9494     0.9242     0.8989
                                  Allegheny County, PA..............
                                  Armstrong County, PA..............
                                  Beaver County, PA.................
                                  Butler County, PA.................
                                  Fayette County, PA................
                                  Washington County, PA.............
                                  Westmoreland County, PA...........
38340...........................  Pittsfield, MA....................     1.0439     1.0176     1.0263     1.0351
                                  Berkshire County, MA..............
38540...........................  Pocatello, ID.....................     0.9601     0.9840     0.9761     0.9681
                                  Bannock County, ID................
                                  Power County, ID..................
38660...........................  Ponce, PR.........................     0.5006     0.8002     0.7004     0.6005
                                  Juana D[iacute]az Municipio, PR...
                                  Ponce Municipio, PR...............
                                  Villalba Municipio, PR............
38860...........................  Portland-South Portland-Biddeford,     1.0112     1.0045     1.0067     1.0090
                                   ME.
                                  Cumberland County, ME.............
                                  Sagadahoc County, ME..............
                                  York County, ME...................
38900...........................  Portland-Vancouver-Beaverton, OR-      1.1403     1.0561     1.0842     1.1122
                                   WA.
                                  Clackamas County, OR..............
                                  Columbia County, OR...............
                                  Multnomah County, OR..............
                                  Washington County, OR.............
                                  Yamhill County, OR................
                                  Clark County, WA..................
                                  Skamania County, WA...............
38940...........................  Port St. Lucie-Fort Pierce, FL....     1.0046     1.0018     1.0028     1.0037
                                  Martin County, FL.................
                                  St. Lucie County, FL..............
39100...........................  Poughkeepsie-Newburgh-Middletown,      1.1363     1.0545     1.0818     1.1090
                                   NY.
                                  Dutchess County, NY...............
                                  Orange County, NY.................
39140...........................  Prescott, AZ......................     0.9892     0.9957     0.9935     0.9914
                                  Yavapai County, AZ................

[[Page 24240]]

 
39300...........................  Providence-New Bedford-Fall River,     1.0929     1.0372     1.0557     1.0743
                                   RI-MA.
                                  Bristol County, MA................
                                  Bristol County, RI................
                                  Kent County, RI...................
                                  Newport County, RI................
                                  Providence County, RI.............
                                  Washington County, RI.............
39340...........................  Provo-Orem, UT....................     0.9588     0.9835     0.9753     0.9670
                                  Juab County, UT...................
                                  Utah County, UT...................
39380...........................  Pueblo, CO........................     0.8752     0.9501     0.9251     0.9002
                                  Pueblo County, CO.................
39460...........................  Punta Gorda, FL...................     0.9441     0.9776     0.9665     0.9553
                                  Charlotte County, FL..............
39540...........................  Racine, WI........................     0.9045     0.9618     0.9427     0.9236
                                  Racine County, WI.................
39580...........................  Raleigh-Cary, NC..................     1.0057     1.0023     1.0034     1.0046
                                  Franklin County, NC...............
                                  Johnston County, NC...............
                                  Wake County, NC...................
39660...........................  Rapid City, SD....................     0.8912     0.9565     0.9347     0.9130
                                  Meade County, SD..................
                                  Pennington County, SD.............
39740...........................  Reading, PA.......................     0.9215     0.9686     0.9529     0.9372
                                  Berks County, PA..................
39820...........................  Redding, CA.......................     1.1835     1.0734     1.1101     1.1468
                                  Shasta County, CA.................
39900...........................  Reno-Sparks, NV...................     1.0456     1.0182     1.0274     1.0365
                                  Storey County, NV.................
                                  Washoe County, NV.................
40060...........................  Richmond, VA......................     0.9397     0.9759     0.9638     0.9518
                                  Amelia County, VA.................
                                  Caroline County, VA...............
                                  Charles City County, VA...........
                                  Chesterfield County, VA...........
                                  Cumberland County, VA.............
                                  Dinwiddie County, VA..............
                                  Goochland County, VA..............
                                  Hanover County, VA................
                                  Henrico County, VA................
                                  King and Queen County, VA.........
                                  King William County, VA...........
                                  Louisa County, VA.................
                                  New Kent County, VA...............
                                  Powhatan County, VA...............
                                  Prince George County, VA..........
                                  Sussex County, VA.................
                                  Colonial Heights City, VA.........
                                  Hopewell City, VA.................
                                  Petersburg City, VA...............
                                  Richmond City, VA.................
40140...........................  Riverside-San Bernardino-Ontario,      1.0970     1.0388     1.0582     1.0776
                                   CA.
                                  Riverside County, CA..............
                                  San Bernardino County, CA.........
40220...........................  Roanoke, VA.......................     0.8415     0.9366     0.9049     0.8732
                                  Botetourt County, VA..............
                                  Craig County, VA..................
                                  Franklin County, VA...............
                                  Roanoke County, VA................
                                  Roanoke City, VA..................
                                  Salem City, VA....................
40340...........................  Rochester, MN.....................     1.1504     1.0602     1.0902     1.1203
                                  Dodge County, MN..................
                                  Olmsted County, MN................
                                  Wabasha County, MN................
40380...........................  Rochester, NY.....................     0.9281     0.9712     0.9569     0.9425
                                  Livingston County, NY.............
                                  Monroe County, NY.................
                                  Ontario County, NY................

[[Page 24241]]

 
                                  Orleans County, NY................
                                  Wayne County, NY..................
40420...........................  Rockford, IL......................     0.9626     0.9850     0.9776     0.9701
                                  Boone County, IL..................
                                  Winnebago County, IL..............
40484...........................  Rockingham County-Strafford            1.0221     1.0088     1.0133     1.0177
                                   County, NH.
                                  Rockingham County, NH.............
                                  Strafford County, NH..............
40580...........................  Rocky Mount, NC...................     0.8998     0.9599     0.9399     0.9198
                                  Edgecombe County, NC..............
                                  Nash County, NC...................
40660...........................  Rome, GA..........................     0.8878     0.9551     0.9327     0.9102
                                  Floyd County, GA..................
40900...........................  Sacramento--Arden-Arcade--             1.1700     1.0680     1.1020     1.1360
                                   Roseville, CA.
                                  El Dorado County, CA..............
                                  Placer County, CA.................
                                  Sacramento County, CA.............
                                  Yolo County, CA...................
40980...........................  Saginaw-Saginaw Township North, MI     0.9814     0.9926     0.9888     0.9851
                                  Saginaw County, MI................
41060...........................  St. Cloud, MN.....................     1.0215     1.0086     1.0129     1.0172
                                  Benton County, MN.................
                                  Stearns County, MN................
41100...........................  St. George, UT....................     0.9458     0.9783     0.9675     0.9566
                                  Washington County, UT.............
41140...........................  St. Joseph, MO-KS.................     1.0013     1.0005     1.0008     1.0010
                                  Doniphan County, KS...............
                                  Andrew County, MO.................
                                  Buchanan County, MO...............
                                  DeKalb County, MO.................
41180...........................  St. Louis, MO-IL..................     0.9076     0.9630     0.9446     0.9261
                                  Bond County, IL...................
                                  Calhoun County, IL................
                                  Clinton County, IL................
                                  Jersey County, IL.................
                                  Macoupin County, IL...............
                                  Madison County, IL................
                                  Monroe County, IL.................
                                  St. Clair County, IL..............
                                  Crawford County, MO...............
                                  Franklin County, MO...............
                                  Jefferson County, MO..............
                                  Lincoln County, MO................
                                  St. Charles County, MO............
                                  St. Louis County, MO..............
                                  Warren County, MO.................
                                  Washington County, MO.............
                                  St. Louis City, MO................
41420...........................  Salem, OR.........................     1.0556     1.0222     1.0334     1.0445
                                  Marion County, OR.................
                                  Polk County, OR...................
41500...........................  Salinas, CA.......................     1.3823     1.1529     1.2294     1.3058
                                  Monterey County, CA...............
41540...........................  Salisbury, MD.....................     0.9123     0.9649     0.9474     0.9298
                                  Somerset County, MD...............
                                  Wicomico County, MD...............
41620...........................  Salt Lake City, UT................     0.9561     0.9824     0.9737     0.9649
                                  Salt Lake County, UT..............
                                  Summit County, UT.................
                                  Tooele County, UT.................
41660...........................  San Angelo, TX....................     0.8167     0.9267     0.8900     0.8534
                                  Irion County, TX..................
                                  Tom Green County, TX..............
41700...........................  San Antonio, TX...................     0.9003     0.9601     0.9402     0.9202
                                  Atascosa County, TX...............
                                  Bandera County, TX................
                                  Bexar County, TX..................
                                  Comal County, TX..................
                                  Guadalupe County, TX..............

[[Page 24242]]

 
                                  Kendall County, TX................
                                  Medina County, TX.................
                                  Wilson County, TX.................
41740...........................  San Diego-Carlsbad-San Marcos, CA.     1.1267     1.0507     1.0760     1.1014
                                  San Diego County, CA..............
41780...........................  Sandusky, OH......................     0.9017     0.9607     0.9410     0.9214
                                  Erie County, OH...................
41884...........................  San Francisco-San Mateo-Redwood        1.4712     1.1885     1.2827     1.3770
                                   City, CA.
                                  Marin County, CA..................
                                  San Francisco County, CA..........
                                  San Mateo County, CA..............
41900...........................  San Germ[aacute]n-Cabo Rojo, PR...     0.5240     0.8096     0.7144     0.6192
                                  Cabo Rojo Municipio, PR...........
                                  Lajas Municipio, PR...............
                                  Sabana Grande Municipio, PR.......
                                  San Germ[aacute]n Municipio, PR...
41940...........................  San Jose-Sunnyvale-Santa Clara, CA     1.4722     1.1889     1.2833     1.3778
                                  San Benito County, CA.............
                                  Santa Clara County, CA............
41980...........................  San Juan-Caguas-Guaynabo, PR......     0.4645     0.7858     0.6787     0.5716
                                  Aguas Buenas Municipio, PR........
                                  Aibonito Municipio, PR............
                                  Arecibo Municipio, PR.............
                                  Barceloneta Municipio, PR.........
                                  Barranquitas Municipio, PR........
                                  Bayam[oacute]n Municipio, PR......
                                  Caguas Municipio, PR..............
                                  Camuy Municipio, PR...............
                                  Can[oacute]vanas Municipio, PR....
                                  Carolina Municipio, PR............
                                  Cata[ntilde]o Municipio, PR.......
                                  Cayey Municipio, PR...............
                                  Ciales Municipio, PR..............
                                  Cidra Municipio, PR...............
                                  Comer[iacute]o Municipio, PR......
                                  Corozal Municipio, PR.............
                                  Dorado Municipio, PR..............
                                  Florida Municipio, PR.............
                                  Guaynabo Municipio, PR............
                                  Gurabo Municipio, PR..............
                                  Hatillo Municipio, PR.............
                                  Humacao Municipio, PR.............
                                  Juncos Municipio, PR..............
                                  Las Piedras Municipio, PR.........
                                  Lo[iacute]za Municipio, PR........
                                  Manat[iacute] Municipio, PR.......
                                  Maunabo Municipio, PR.............
                                  Morovis Municipio, PR.............
                                  Naguabo Municipio, PR.............
                                  Naranjito Municipio, PR...........
                                  Orocovis Municipio, PR............
                                  Quebradillas Municipio, PR........
                                  R[iacute]o Grande Municipio, PR...
                                  San Juan Municipio, PR............
                                  San Lorenzo Municipio, PR.........
                                  Toa Alta Municipio, PR............
                                  Toa Baja Municipio, PR............
                                  Trujillo Alto Municipio, PR.......
                                  Vega Alta Municipio, PR...........
                                  Vega Baja Municipio, PR...........
                                  Yabucoa Municipio, PR.............
42020...........................  San Luis Obispo-Paso Robles, CA...     1.1118     1.0447     1.0671     1.0894
                                  San Luis Obispo County, CA........
42044...........................  Santa Ana-Anaheim-Irvine, CA......     1.1611     1.0644     1.0967     1.1289
                                  Orange County, CA.................
42060...........................  Santa Barbara-Santa Maria-Goleta,      1.0771     1.0308     1.0463     1.0617
                                   CA.
                                  Santa Barbara County, CA..........
42100...........................  Santa Cruz-Watsonville, CA........     1.4779     1.1912     1.2867     1.3823
                                  Santa Cruz County, CA.............

[[Page 24243]]

 
42140...........................  Santa Fe, NM......................     1.0909     1.0364     1.0545     1.0727
                                  Santa Fe County, NM...............
42220...........................  Santa Rosa-Petaluma, CA...........     1.2961     1.1184     1.1777     1.2369
                                  Sonoma County, CA.................
42260...........................  Sarasota-Bradenton-Venice, FL.....     0.9629     0.9852     0.9777     0.9703
                                  Manatee County, FL................
                                  Sarasota County, FL...............
42340...........................  Savannah, GA......................     0.9460     0.9784     0.9676     0.9568
                                  Bryan County, GA..................
                                  Chatham County, GA................
                                  Effingham County, GA..............
42540...........................  Scranton--Wilkes-Barre, PA........     0.8543     0.9417     0.9126     0.8834
                                  Lackawanna County, PA.............
                                  Luzerne County, PA................
                                  Wyoming County, PA................
42644...........................  Seattle-Bellevue-Everett, WA......     1.1492     1.0597     1.0895     1.1194
                                  King County, WA...................
                                  Snohomish County, WA..............
43100...........................  Sheboygan, WI.....................     0.8948     0.9579     0.9369     0.9158
                                  Sheboygan County, WI..............
43300...........................  Sherman-Denison, TX...............     0.9617     0.9847     0.9770     0.9694
                                  Grayson County, TX................
43340...........................  Shreveport-Bossier City, LA.......     0.9132     0.9653     0.9479     0.9306
                                  Bossier Parish, LA................
                                  Caddo Parish, LA..................
                                  De Soto Parish, LA................
43580...........................  Sioux City, IA-NE-SD..............     0.9070     0.9628     0.9442     0.9256
                                  Woodbury County, IA...............
                                  Dakota County, NE.................
                                  Dixon County, NE..................
                                  Union County, SD..................
43620...........................  Sioux Falls, SD...................     0.9441     0.9776     0.9665     0.9553
                                  Lincoln County, SD................
                                  McCook County, SD.................
                                  Minnehaha County, SD..............
                                  Turner County, SD.................
43780...........................  South Bend-Mishawaka, IN-MI.......     0.9447     0.9779     0.9668     0.9558
                                  St. Joseph County, IN.............
                                  Cass County, MI...................
43900...........................  Spartanburg, SC...................     0.9519     0.9808     0.9711     0.9615
                                  Spartanburg County, SC............
44060...........................  Spokane, WA.......................     1.0660     1.0264     1.0396     1.0528
                                  Spokane County, WA................
44100...........................  Springfield, IL...................     0.8738     0.9495     0.9243     0.8990
                                  Menard County, IL.................
                                  Sangamon County, IL...............
44140...........................  Springfield, MA...................     1.0176     1.0070     1.0106     1.0141
                                  Franklin County, MA...............
                                  Hampden County, MA................
                                  Hampshire County, MA..............
44180...........................  Springfield, MO...................     0.8557     0.9423     0.9134     0.8846
                                  Christian County, MO..............
                                  Dallas County, MO.................
                                  Greene County, MO.................
                                  Polk County, MO...................
                                  Webster County, MO................
44220...........................  Springfield, OH...................     0.8748     0.9499     0.9249     0.8998
                                  Clark County, OH..................
44300...........................  State College, PA.................     0.8461     0.9384     0.9077     0.8769
                                  Centre County, PA.................
44700...........................  Stockton, CA......................     1.0564     1.0226     1.0338     1.0451
                                  San Joaquin County, CA............
44940...........................  Sumter, SC........................     0.8520     0.9408     0.9112     0.8816
                                  Sumter County, SC.................
45060...........................  Syracuse, NY......................     0.9468     0.9787     0.9681     0.9574
                                  Madison County, NY................
                                  Onondaga County, NY...............
                                  Oswego County, NY.................
45104...........................  Tacoma, WA........................     1.1078     1.0431     1.0647     1.0862

[[Page 24244]]

 
                                  Pierce County, WA.................
45220...........................  Tallahassee, FL...................     0.8655     0.9462     0.9193     0.8924
                                  Gadsden County, FL................
                                  Jefferson County, FL..............
                                  Leon County, FL...................
                                  Wakulla County, FL................
45300...........................  Tampa-St. Petersburg-Clearwater,       0.9024     0.9610     0.9414     0.9219
                                   FL.
                                  Hernando County, FL...............
                                  Hillsborough County, FL...........
                                  Pasco County, FL..................
                                  Pinellas County, FL...............
45460...........................  Terre Haute, IN...................     0.8517     0.9407     0.9110     0.8814
                                  Clay County, IN...................
                                  Sullivan County, IN...............
                                  Vermillion County, IN.............
                                  Vigo County, IN...................
45500...........................  Texarkana, TX-Texarkana, AR.......     0.8413     0.9365     0.9048     0.8730
                                  Miller County, AR.................
                                  Bowie County, TX..................
45780...........................  Toledo, OH........................     0.9524     0.9810     0.9714     0.9619
                                  Fulton County, OH.................
                                  Lucas County, OH..................
                                  Ottawa County, OH.................
                                  Wood County, OH...................
45820...........................  Topeka, KS........................     0.8904     0.9562     0.9342     0.9123
                                  Jackson County, KS................
                                  Jefferson County, KS..............
                                  Osage County, KS..................
                                  Shawnee County, KS................
                                  Wabaunsee County, KS..............
45940...........................  Trenton-Ewing, NJ.................     1.0276     1.0110     1.0166     1.0221
                                  Mercer County, NJ.................
46060...........................  Tucson, AZ........................     0.8926     0.9570     0.9356     0.9141
                                  Pima County, AZ...................
46140...........................  Tulsa, OK.........................     0.8690     0.9476     0.9214     0.8952
                                  Creek County, OK..................
                                  Okmulgee County, OK...............
                                  Osage County, OK..................
                                  Pawnee County, OK.................
                                  Rogers County, OK.................
                                  Tulsa County, OK..................
                                  Wagoner County, OK................
46220...........................  Tuscaloosa, AL....................     0.8336     0.9334     0.9002     0.8669
                                  Greene County, AL.................
                                  Hale County, AL...................
                                  Tuscaloosa County, AL.............
46340...........................  Tyler, TX.........................     0.9502     0.9801     0.9701     0.9602
                                  Smith County, TX..................
46540...........................  Utica-Rome, NY....................     0.8295     0.9318     0.8977     0.8636
                                  Herkimer County, NY...............
                                  Oneida County, NY.................
46660...........................  Valdosta, GA......................     0.8341     0.9336     0.9005     0.8673
                                  Brooks County, GA.................
                                  Echols County, GA.................
                                  Lanier County, GA.................
                                  Lowndes County, GA................
46700...........................  Vallejo-Fairfield, CA.............     1.4279     1.1712     1.2567     1.3423
                                  Solano County, CA.................
46940...........................  Vero Beach, FL....................     0.9477     0.9791     0.9686     0.9582
                                  Indian River County, FL...........
47020...........................  Victoria, TX......................     0.8470     0.9388     0.9082     0.8776
                                  Calhoun County, TX................
                                  Goliad County, TX.................
                                  Victoria County, TX...............
47220...........................  Vineland-Millville-Bridgeton, NJ..     1.0573     1.0229     1.0344     1.0458
                                  Cumberland County, NJ.............
47260...........................  Virginia Beach-Norfolk-Newport         0.8894     0.9558     0.9336     0.9115
                                   News, VA-NC.
                                  Currituck County, NC..............
                                  Gloucester County, VA.............

[[Page 24245]]

 
                                  Isle of Wight County, VA..........
                                  James City County, VA.............
                                  Mathews County, VA................
                                  Surry County, VA..................
                                  York County, VA...................
                                  Chesapeake City, VA...............
                                  Hampton City, VA..................
                                  Newport News City, VA.............
                                  Norfolk City, VA..................
                                  Poquoson City, VA.................
                                  Portsmouth City, VA...............
                                  Suffolk City, VA..................
                                  Virginia Beach City, VA...........
                                  Williamsburg City, VA.............
47300...........................  Visalia-Porterville, CA...........     0.9975     0.9990     0.9985     0.9980
                                  Tulare County, CA.................
47380...........................  Waco, TX..........................     0.8146     0.9258     0.8888     0.8517
                                  McLennan County, TX...............
47580...........................  Warner Robins, GA.................     0.8489     0.9396     0.9093     0.8791
                                  Houston County, GA................
47644...........................  Warren-Farmington Hills-Troy, MI..     1.0112     1.0045     1.0067     1.0090
                                  Lapeer County, MI.................
                                  Livingston County, MI.............
                                  Macomb County, MI.................
                                  Oakland County, MI................
                                  St. Clair County, MI..............
47894...........................  Washington-Arlington-Alexandria,       1.1023     1.0409     1.0614     1.0818
                                   DC-VA-MD-WV.
                                  District of Columbia, DC..........
                                  Calvert County, MD................
                                  Charles County, MD................
                                  Prince George's County, MD........
                                  Arlington County, VA..............
                                  Clarke County, VA.................
                                  Fairfax County, VA................
                                  Fauquier County, VA...............
                                  Loudoun County, VA................
                                  Prince William County, VA.........
                                  Spotsylvania County, VA...........
                                  Stafford County, VA...............
                                  Warren County, VA.................
                                  Alexandria City, VA...............
                                  Fairfax City, VA..................
                                  Falls Church City, VA.............
                                  Fredericksburg City, VA...........
                                  Manassas City, VA.................
                                  Manassas Park City, VA............
                                  Jefferson County, WV..............
47940...........................  Waterloo-Cedar Falls, IA..........     0.8633     0.9453     0.9180     0.8906
                                  Black Hawk County, IA.............
                                  Bremer County, IA.................
                                  Grundy County, IA.................
48140...........................  Wausau, WI........................     0.9570     0.9828     0.9742     0.9656
                                  Marathon County, WI...............
48260...........................  Weirton-Steubenville, WV-OH.......     0.8280     0.9312     0.8968     0.8624
                                  Jefferson County, OH..............
                                  Brooke County, WV.................
                                  Hancock County, WV................
48300...........................  Wenatchee, WA.....................     0.9427     0.9771     0.9656     0.9542
                                  Chelan County, WA.................
                                  Douglas County, WA................
48424...........................  West Palm Beach-Boca Raton-Boynton     1.0362     1.0145     1.0217     1.0290
                                   Beach, FL.
                                  Palm Beach County, FL.............
48540...........................  Wheeling, WV-OH...................     0.7449     0.8980     0.8469     0.7959
                                  Belmont County, OH................
                                  Marshall County, WV...............
                                  Ohio County, WV...................
48620...........................  Wichita, KS.......................     0.9457     0.9783     0.9674     0.9566
                                  Butler County, KS.................
                                  Harvey County, KS.................

[[Page 24246]]

 
                                  Sedgwick County, KS...............
                                  Sumner County, KS.................
48660...........................  Wichita Falls, TX.................     0.8332     0.9333     0.8999     0.8666
                                  Archer County, TX.................
                                  Clay County, TX...................
                                  Wichita County, TX................
48700...........................  Williamsport, PA..................     0.8485     0.9394     0.9091     0.8788
                                  Lycoming County, PA...............
48864...........................  Wilmington, DE-MD-NJ..............     1.1049     1.0420     1.0629     1.0839
                                  New Castle County, DE.............
                                  Cecil County, MD..................
                                  Salem County, NJ..................
48900...........................  Wilmington, NC....................     0.9237     0.9695     0.9542     0.9390
                                  Brunswick County, NC..............
                                  New Hanover County, NC............
                                  Pender County, NC.................
49020...........................  Winchester, VA-WV.................     1.0496     1.0198     1.0298     1.0397
                                  Frederick County, VA..............
                                  Winchester City, VA...............
                                  Hampshire County, WV..............
49180...........................  Winston-Salem, NC.................     0.9401     0.9760     0.9641     0.9521
                                  Davie County, NC..................
                                  Forsyth County, NC................
                                  Stokes County, NC.................
                                  Yadkin County, NC.................
49340...........................  Worcester, MA.....................     1.0996     1.0398     1.0598     1.0797
                                  Worcester County, MA..............
49420...........................  Yakima, WA........................     1.0322     1.0129     1.0193     1.0258
                                  Yakima County, WA.................
49500...........................  Yauco, PR.........................     0.4493     0.7797     0.6696     0.5594
                                  Gu[aacute]nica Municipio, PR......
                                  Guayanilla Municipio, PR..........
                                  Pe[ntilde]uelas Municipio, PR.....
                                  Yauco Municipio, PR...............
49620...........................  York-Hanover, PA..................     0.9150     0.9660     0.9490     0.9320
                                  York County, PA...................
49660...........................  Youngstown-Warren-Boardman, OH-PA.     0.9237     0.9695     0.9542     0.9390
                                  Mahoning County, OH...............
                                  Trumbull County, OH...............
                                  Mercer County, PA.................
49700...........................  Yuba City, CA.....................     1.0363     1.0145     1.0218     1.0290
                                  Sutter County, CA.................
                                  Yuba County, CA...................
49740...........................  Yuma, AZ..........................     0.8871     0.9548     0.9323     0.9097
                                  Yuma County, AZ ..................
----------------------------------------------------------------------------------------------------------------
\1\ As discussed in section V.C.1.d. of the preamble of this final rule, because there are no longer any LTCHs
  in their cost reporting period that began during FY 2003 (the first year of the 5-year wage index phase-in),
  we are no longer showing the 1/5th wage index value. For further details on the 5-year phase-in of the wage
  index, see section V.C.1.of this final rule.
\2\ Wage index calculated using the same wage data used to compute the wage index used by acute care hospitals
  under the IPPS for Federal FY 2005 (that is, fiscal year 2001 audited acute care hospital inpatient wage data)
  without regard to reclassification under section 1886(d)(8) or section 1886(d)(10) of the Act.
\3\ Two-fifths of the full wage index value, applicable for a LTCH's cost reporting period beginning on or after
  October 1, 2003 through September 30, 2004 (Federal FY 2004). That is, for a LTCH's cost reporting period that
  begins during Federal FY 2004 and located in Chicago, Illinois (CBSA 16974), the 2/5ths wage index value is
  computed as ((2*1.0868) + 3))/5 = 1.0347. For further details on the 5-year phase-in of the wage index, see
  section V.C.1. of this final rule.
\4\ Three-fifths of the full wage index value, applicable for a LTCH's cost reporting period beginning on or
  after October 1, 2005 through September 30, 2006 (Federal FY 2005). That is, for a LTCH's cost reporting
  period that begins during Federal FY 2005 and located in Chicago, Illinois (CBSA 16974), the 3/5ths wage index
  value is computed as ((3*1.0868) + 2))/5 = 1.0521. For further details on the 5-year phase-in of the wage
  index, see section V.C.1. of this final rule.
\5\ Four-fifths of the full wage index value, applicable for a LTCH's cost reporting period beginning on or
  after October 1, 2006 through September 30, 2007 (Federal FY 2006). That is, for a LTCH's cost reporting
  period that begins during Federal FY 2006 and located in Chicago, Illinois (CBSA 16974), the 4/5ths wage index
  value is computed as ((4*1.0868) + 1))/5 = 1.0694. For further details on the 5-year phase-in of the wage
  index, see section V.C.1. of this final rule.


[[Page 24247]]


 Table 2.--Long-Term Care Hospital Wage Index (Based on CBSA Labor Market Areas) for Rural Areas for Discharges
                              Occurring From July 1, 2005 Through June 30, 2006 \1\
----------------------------------------------------------------------------------------------------------------
                                                                                   2/5ths     3/5ths     4/5ths
            CBSA code                        Nonurban area            Full wage     wage       wage       wage
                                                                      index \2\  index \3\  index \4\  index \5\
----------------------------------------------------------------------------------------------------------------
01..............................  Alabama...........................     0.7628     0.9051     0.8577     0.8102
02..............................  Alaska............................     1.1746     1.0698     1.1048     1.1397
03..............................  Arizona...........................     0.8936     0.9574     0.9362     0.9149
04..............................  Arkansas..........................     0.7406     0.8962     0.8444     0.7925
05..............................  California........................     1.0524     1.0210     1.0314     1.0419
06..............................  Colorado..........................     0.9368     0.9747     0.9621     0.9494
07..............................  Connecticut.......................     1.1917     1.0767     1.1150     1.1534
08..............................  Delaware..........................     0.9503     0.9801     0.9702     0.9602
10..............................  Florida...........................     0.8574     0.9430     0.9144     0.8859
11..............................  Georgia...........................     0.7733     0.9093     0.8640     0.8186
12..............................  Hawaii............................     1.0522     1.0209     1.0313     1.0418
13..............................  Idaho.............................     0.8227     0.9291     0.8936     0.8582
14..............................  Illinois..........................     0.8339     0.9336     0.9003     0.8671
15..............................  Indiana...........................     0.8653     0.9461     0.9192     0.8922
16..............................  Iowa..............................     0.8475     0.9390     0.9085     0.8780
17..............................  Kansas............................     0.8079     0.9232     0.8847     0.8463
18..............................  Kentucky..........................     0.7755     0.9102     0.8653     0.8204
19..............................  Louisiana.........................     0.7345     0.8938     0.8407     0.7876
20..............................  Maine.............................     0.9039     0.9616     0.9423     0.9231
21..............................  Maryland..........................     0.9220     0.9688     0.9532     0.9376
22..............................  Massachusetts \6\.................  .........  .........  .........  .........
23..............................  Michigan..........................     0.8786     0.9514     0.9272     0.9029
24..............................  Minnesota.........................     0.9330     0.9732     0.9598     0.9464
25..............................  Mississippi.......................     0.7635     0.9054     0.8581     0.8108
26..............................  Missouri..........................     0.7762     0.9105     0.8657     0.8210
27..............................  Montana...........................     0.8701     0.9480     0.9221     0.8961
28..............................  Nebraska..........................     0.9035     0.9614     0.9421     0.9228
29..............................  Nevada............................     0.9280     0.9712     0.9568     0.9424
30..............................  New Hampshire.....................     0.9940     0.9976     0.9964     0.9952
31..............................  New Jersey \6\....................  .........  .........  .........  .........
32..............................  New Mexico........................     0.8680     0.9472     0.9208     0.8944
33..............................  New York..........................     0.8151     0.9260     0.8891     0.8521
34..............................  North Carolina....................     0.8563     0.9425     0.9138     0.8850
35..............................  North Dakota......................     0.7743     0.9097     0.8646     0.8194
36..............................  Ohio..............................     0.8693     0.9477     0.9216     0.8954
37..............................  Oklahoma..........................     0.7686     0.9074     0.8612     0.8149
38..............................  Oregon............................     0.9914     0.9966     0.9948     0.9931
39..............................  Pennsylvania......................     0.8310     0.9324     0.8986     0.8648
40..............................  Puerto Rico \6\...................  .........  .........  .........  .........
41..............................  Rhode Island \6\..................  .........  .........  .........  .........
42..............................  South Carolina....................     0.8683     0.9473     0.9210     0.8946
43..............................  South Dakota......................     0.8398     0.9359     0.9039     0.8718
44..............................  Tennessee.........................     0.7869     0.9148     0.8721     0.8295
45..............................  Texas.............................     0.7966     0.9186     0.8780     0.8373
46..............................  Utah..............................     0.8287     0.9315     0.8972     0.8630
47..............................  Vermont...........................     0.9375     0.9750     0.9625     0.9500
49..............................  Virginia..........................     0.8049     0.9220     0.8829     0.8439
50..............................  Washington........................     1.0312     1.0125     1.0187     1.0250
51..............................  West Virginia.....................     0.7865     0.9146     0.8719     0.8292
52..............................  Wisconsin.........................     0.9492     0.9797     0.9695     0.9594
53..............................  Wyoming...........................     0.9182     0.9673     0.9509    0.9346
----------------------------------------------------------------------------------------------------------------
\1\ As discussed in section V.C.1.d. of the preamble of this final rule, because there are no longer any LTCHs
  in their cost reporting period that began during FY 2003 (the first year of the 5-year wage index phase-in),
  we are no longer showing the 1/5th wage index value. For further details on the 5-year phase-in of the wage
  index, see section V.C.1.of this final rule.
\2\ Wage index calculated using the same wage data used to compute the wage index used by acute care hospitals
  under the IPPS for Federal FY 2005 (that is, fiscal year 2001 audited acute care hospital inpatient wage data)
  without regard to reclassification under section 1886(d)(8) or section 1886(d)(10) of the Act.
\3\ Two-fifths of the full wage index value, applicable for a LTCH's cost reporting period beginning on or after
  October 1, 2003 through September 30, 2004 (Federal FY 2004). That is, for a LTCH's cost reporting period that
  begins during Federal FY 2004 and located in rural Illinois, the proposed 2/5ths wage index value is computed
  as ((2*0.8339) + 3))/5 = 0.9336. For further details on the 5-year phase-in of the wage index, see section
  V.C.1. of this final rule.
\4\ Three-fifths of the full wage index value, applicable for a LTCH's cost reporting period beginning on or
  after October 1, 2005 through September 30, 2006 (Federal FY 2005). That is, for a LTCH's cost reporting
  period that begins during Federal FY 2005 and located in rural Illinois, the 3/5ths wage index value is
  computed as ((3*0.8339) + 2))/5 = 0.9003. For further details on the 5-year phase-in of the wage index, see
  section V.C.1. of this final rule.
\5\ Four-fifths of the full wage index value, applicable for a LTCH's cost reporting period beginning on or
  after October 1, 2006 through September 30, 2007 (Federal FY 2006). That is, for a LTCH's cost reporting
  period that begins during Federal FY 2006 and located in rural Illinois, the 4/5ths wage index value is
  computed as ((3*0.8339) + 2))/5 = 0.8671. For further details on the 5-year phase-in of the wage index, see
  section V.C.1. of this final rule.
\6\ All counties within the State are classified as urban.


[[Page 24248]]


 Table 3.--FY 2005 LTC-DRGs, Relative Weights, Geometric Average Length
 of Stay, and 5/6ths of the Geometric Average Length of Stay (Effective
 for Discharges Occurring on or After October 1, 2004 Through September
                                30, 2005)
------------------------------------------------------------------------
                                                              5/6ths of
                                                 Geometric       the
                                     Relative     average     geometric
    LTC-DRG         Description       weight     length of     average
                                                    stay      length of
                                                                 stay
------------------------------------------------------------------------
1..............  \4\ CRANIOTOMY         1.1899         28.5         23.8
                  AGE >17 W CC.
2..............  \8\ CRANIOTOMY         1.1899         28.5         23.8
                  AGE >17 W/O CC.
3..............  \8\ CRANIOTOMY         1.1899         28.5         23.8
                  AGE 0-17.
6..............  \8\ CARPAL             0.6064         21.1         17.6
                  TUNNEL RELEASE.
7..............  PERIPH & CRANIAL       1.4458         36.7         30.6
                  NERVE & OTHER
                  NERV SYST PROC
                  W CC.
8..............  \2\ PERIPH &           0.6064         21.1         17.6
                  CRANIAL NERVE &
                  OTHER NERV SYST
                  PROC W/O CC.
9..............  SPINAL DISORDERS       1.0950         31.3         26.1
                  & INJURIES.
10.............  NERVOUS SYSTEM         0.9022         25.0         20.8
                  NEOPLASMS W CC.
11.............  \1\ NERVOUS            0.4586         16.9         14.1
                  SYSTEM
                  NEOPLASMS W/O
                  CC.
12.............  DEGENERATIVE           0.7416         25.6         21.3
                  NERVOUS SYSTEM
                  DISORDERS.
13.............  MULTIPLE               0.7820         24.6         20.5
                  SCLEROSIS &
                  CEREBELLAR
                  ATAXIA.
14.............  INTRACRANIAL           0.8189         25.9         21.6
                  HEMORRHAGE OR
                  STROKE W
                  INFARCT.
15.............  NONSPECIFIC CVA        0.7868         27.2         22.7
                  & PRECEREBRAL
                  OCCLUSION W/O
                  INFARCT.
16.............  NONSPECIFIC            0.8358         24.7         20.6
                  CEREBROVASCULAR
                  DISORDERS W CC.
17.............  \2\ NONSPECIFIC        0.6064         21.1         17.6
                  CEREBROVASCULAR
                  DISORDERS W/O
                  CC.
18.............  CRANIAL &              0.7755         24.8         20.7
                  PERIPHERAL
                  NERVE DISORDERS
                  W CC.
19.............  CRANIAL &              0.6583         21.1         17.6
                  PERIPHERAL
                  NERVE DISORDERS
                  W/O CC.
20.............  NERVOUS SYSTEM         1.0558         27.0         22.5
                  INFECTION
                  EXCEPT VIRAL
                  MENINGITIS.
21.............  \4\ VIRAL              1.1899         28.5         23.8
                  MENINGITIS.
22.............  \2\ HYPERTENSIVE       0.6064         21.1         17.6
                  ENCEPHALOPATHY.
23.............  NONTRAUMATIC           1.1225         26.6         22.2
                  STUPOR & COMA.
24.............  SEIZURE &              0.6740         22.4         18.7
                  HEADACHE AGE
                  >17 W CC.
25.............  \2\ SEIZURE &          0.6064         21.1         17.6
                  HEADACHE AGE
                  >17 W/O CC.
26.............  \8\ SEIZURE &          0.6064         21.1         17.6
                  HEADACHE AGE 0-
                  17.
27.............  TRAUMATIC STUPOR       1.1418         28.3         23.6
                  & COMA, COMA >1
                  HR.
28.............  TRAUMATIC STUPOR       0.9250         29.8         24.8
                  & COMA, COMA 1
                  HR AGE 17 W CC.
29.............  \3\ TRAUMATIC          0.8508         24.3         20.3
                  STUPOR & COMA,
                  COMA 1 HR AGE
                  17 W/O CC.
30.............  \8\ TRAUMATIC          0.8508         24.3         20.3
                  STUPOR & COMA,
                  COMA <1 HR AGE
                  0-17.
31.............  \2\ CONCUSSION         0.6064         21.1         17.6
                  AGE >17 W CC.
32.............  \8\ CONCUSSION         0.6064         21.1         17.6
                  AGE >17 W/O CC.
33.............  \8\ CONCUSSION         0.6064         21.1         17.6
                  AGE 0-17.
34.............  OTHER DISORDERS        0.8418         24.2         20.2
                  OF NERVOUS
                  SYSTEM W CC.
35.............  OTHER DISORDERS        0.6976         22.6         18.8
                  OF NERVOUS
                  SYSTEM W/O CC.
36.............  \8\ RETINAL            0.4586         16.9         14.1
                  PROCEDURES.
37.............  \8\ ORBITAL            0.4586         16.9         14.1
                  PROCEDURES.
38.............  \8\ PRIMARY IRIS       0.4586         16.9         14.1
                  PROCEDURES.
39.............  \8\ LENS               0.4586         16.9         14.1
                  PROCEDURES WITH
                  OR WITHOUT
                  VITRECTOMY.
40.............  \8\ EXTRAOCULAR        0.4586         16.9         14.1
                  PROCEDURES
                  EXCEPT ORBIT
                  AGE >17.
41.............  \8\ EXTRAOCULAR        0.4586         16.9         14.1
                  PROCEDURES
                  EXCEPT ORBIT
                  AGE 0-17.
42.............  \8\ INTRAOCULAR        0.4586         16.9         14.1
                  PROCEDURES
                  EXCEPT RETINA,
                  IRIS & LENS.
43.............  \1\ HYPHEMA.....       0.4586         16.9         14.1
44.............  \3\ ACUTE MAJOR        0.8508         24.3         20.3
                  EYE INFECTIONS.
45.............  \1\ NEUROLOGICAL       0.4586         16.9         14.1
                  EYE DISORDERS.
46.............  \2\ OTHER              0.6064         21.1         17.6
                  DISORDERS OF
                  THE EYE AGE >17
                  W CC.
47.............  \1\ OTHER              0.4586         16.9         14.1
                  DISORDERS OF
                  THE EYE AGE >17
                  W/O CC.
48.............  \8\ OTHER              0.4586         16.9         14.1
                  DISORDERS OF
                  THE EYE AGE 0-
                  17.
49.............  \8\ MAJOR HEAD &       1.1899         28.5         23.8
                  NECK PROCEDURES.
50.............  \8\                    1.1899         28.5         23.8
                  SIALOADENECTOMY.
51.............  \8\ SALIVARY           1.1899         28.5         23.8
                  GLAND
                  PROCEDURES
                  EXCEPT
                  SIALOADENECTOMY.
52.............  \8\ CLEFT LIP &        1.1899         28.5         23.8
                  PALATE REPAIR.
53.............  \8\ SINUS &            1.1899         28.5         23.8
                  MASTOID
                  PROCEDURES AGE
                  >17.
54.............  \8\ SINUS &            1.1899         28.5         23.8
                  MASTOID
                  PROCEDURES AGE
                  0-17.
55.............  \5\                    1.8658         38.6         32.2
                  MISCELLANEOUS
                  EAR, NOSE,
                  MOUTH & THROAT
                  PROCEDURES.
56.............  \8\ RHINOPLASTY.       1.1899         28.5         23.8
57.............  \8\ T&A PROC,          0.6064         21.1         17.6
                  EXCEPT
                  TONSILLECTOMY &/
                  OR
                  ADENOIDECTOMY
                  ONLY, AGE >17.
58.............  \8\ T&A PROC,          0.6064         21.1         17.6
                  EXCEPT
                  TONSILLECTOMY &/
                  OR
                  ADENOIDECTOMY
                  ONLY, AGE 0-17.
59.............  \8\                    0.6064         21.1         17.6
                  TONSILLECTOMY &/
                  OR
                  ADENOIDECTOMY
                  ONLY, AGE >17.
60.............  \8\                    0.6064         21.1         17.6
                  TONSILLECTOMY &/
                  OR
                  ADENOIDECTOMY
                  ONLY, AGE 0-17.
61.............  \8\ MYRINGOTOMY        0.6064         21.1         17.6
                  W TUBE
                  INSERTION AGE
                  >17.
62.............  \8\ MYRINGOTOMY        0.6064         21.1         17.6
                  W TUBE
                  INSERTION AGE 0-
                  17.
63.............  \4\ OTHER EAR,         1.1899         28.5         23.8
                  NOSE, MOUTH &
                  THROAT O.R.
                  PROCEDURES.
64.............  EAR, NOSE, MOUTH       1.2588         27.4         22.8
                  & THROAT
                  MALIGNANCY.
65.............  DYSEQUILIBRIUM..       0.3858         16.2         13.5
66.............  \8\ EPISTAXIS...       0.6064         21.1         17.6
67.............  \8\ EPIGLOTTITIS       1.1899         28.5         23.8

[[Page 24249]]

 
68.............  OTITIS MEDIA &         0.6115         21.3         17.8
                  URI AGE >17
                  W CC.
69.............  \2\ OTITIS MEDIA       0.6064         21.1         17.6
                  & URI AGE
                  >17 W/O CC.
70.............  \8\ OTITIS MEDIA       0.6064         21.1         17.6
                  & URI AGE 0-17.
71.............  \8\                    0.4586         16.9         14.1
                  LARYNGOTRACHEIT
                  IS.
72.............  \8\ NASAL TRAUMA       0.8508         24.3         20.3
                  & DEFORMITY.
73.............  OTHER EAR, NOSE,       0.9341         23.5         19.6
                  MOUTH & THROAT
                  DIAGNOSES AGE
                  >17.
74.............  \8\ OTHER EAR,         0.6064         21.1         17.6
                  NOSE, MOUTH &
                  THROAT
                  DIAGNOSES AGE 0-
                  17.
75.............  MAJOR CHEST            2.0661         31.9         26.6
                  PROCEDURES.
76.............  OTHER RESP             2.3823         41.6         34.7
                  SYSTEM O.R.
                  PROCEDURES W CC.
77.............  \5\ OTHER RESP         1.8658         38.6         32.2
                  SYSTEM O.R.
                  PROCEDURES W/O
                  CC.
78.............  PULMONARY              0.7424         22.0         18.3
                  EMBOLISM.
79.............  RESPIRATORY            0.9350         23.7         19.8
                  INFECTIONS &
                  INFLAMMATIONS
                  AGE >17 W CC.
80.............  RESPIRATORY            0.9215         26.7         22.3
                  INFECTIONS &
                  INFLAMMATIONS
                  AGE >17 W/O CC.
81.............  \8\ RESPIRATORY        0.6064         21.1         17.6
                  INFECTIONS &
                  INFLAMMATIONS
                  AGE 0-17.
82.............  RESPIRATORY            0.7591         19.9         16.6
                  NEOPLASMS.
83.............  \2\ MAJOR CHEST        0.6064         21.1         17.6
                  TRAUMA W CC.
84.............  \1\ MAJOR CHEST        0.4586         16.9         14.1
                  TRAUMA W/O CC.
85.............  \7\ PLEURAL            0.7852         22.0         18.3
                  EFFUSION W CC.
86.............  \7\ PLEURAL            0.7852         22.0         18.3
                  EFFUSION W/O CC.
87.............  PULMONARY EDEMA        1.6797         30.4         25.3
                  & RESPIRATORY
                  FAILURE.
88.............  CHRONIC                0.7334         20.1         16.8
                  OBSTRUCTIVE
                  PULMONARY
                  DISEASE.
89.............  SIMPLE PNEUMONIA       0.7762         21.2         17.7
                  & PLEURISY AGE
                  >17 W CC.
90.............  SIMPLE PNEUMONIA       0.7494         21.9         18.3
                  & PLEURISY AGE
                  >17 W/O CC.
91.............  \8\ SIMPLE             0.8508         24.3         20.3
                  PNEUMONIA &
                  PLEURISY AGE 0-
                  17.
92.............  INTERSTITIAL           0.7318         20.4         17.0
                  LUNG DISEASE W
                  CC.
93.............  \1\ INTERSTITIAL       0.4586         16.9         14.1
                  LUNG DISEASE W/
                  O CC.
94.............  PNEUMOTHORAX W         0.8348         21.3         17.8
                  CC.
95.............  \1\ PNEUMOTHORAX       0.4586         16.9         14.1
                  W/O CC.
96.............  BRONCHITIS &           0.7575         20.2         16.8
                  ASTHMA AGE >17
                  W CC.
97.............  BRONCHITIS &           0.5305         16.6         13.8
                  ASTHMA AGE >17
                  W/O CC.
98.............  \8\ BRONCHITIS &       0.4586         16.9         14.1
                  ASTHMA AGE 0-17.
99.............  RESPIRATORY            1.0648         25.8         21.5
                  SIGNS &
                  SYMPTOMS W CC.
100............  RESPIRATORY            0.9048         22.9         19.1
                  SIGNS &
                  SYMPTOMS W/O CC.
101............  \7\ OTHER              0.8737         21.9         18.3
                  RESPIRATORY
                  SYSTEM
                  DIAGNOSES W CC.
102............  \7\ OTHER              0.8737         21.9         18.3
                  RESPIRATORY
                  SYSTEM
                  DIAGNOSES W/O
                  CC.
103............  \6\ HEART              0.0000          0.0          0.0
                  TRANSPLANT OR
                  IMPLANT OF
                  HEART ASSIST
                  SYSTEM.
104............  \8\ CARDIAC            0.4586         16.9         14.1
                  VALVE & OTH
                  MAJOR
                  CARDIOTHORACIC
                  PROC W CARD
                  CATH.
105............  \8\ CARDIAC            0.4586         16.9         14.1
                  VALVE & OTH
                  MAJOR
                  CARDIOTHORACIC
                  PROC W/O CARD
                  CATH.
106............  \8\ CORONARY           0.4586         16.9         14.1
                  BYPASS W PTCA.
107............  \8\ CORONARY           0.4586         16.9         14.1
                  BYPASS W
                  CARDIAC CATH.
108............  \4\ OTHER              1.1899         28.5         23.8
                  CARDIOTHORACIC
                  PROCEDURES.
109............  \2\ CORONARY           0.6064         21.1         17.6
                  BYPASS W/O PTCA
                  OR CARDIAC CATH.
110............  \1\ MAJOR              0.4586         16.9         14.1
                  CARDIOVASCULAR
                  PROCEDURES W CC.
111............  \8\ MAJOR              0.4586         16.9         14.1
                  CARDIOVASCULAR
                  PROCEDURES W/O
                  CC.
113............  AMPUTATION FOR         1.3298         36.2         30.2
                  CIRC SYSTEM
                  DISORDERS
                  EXCEPT UPPER
                  LIMB & TOE.
114............  UPPER LIMB & TOE       1.1780         33.3         27.8
                  AMPUTATION FOR
                  CIRC SYSTEM
                  DISORDERS.
115............  \4\ PRM CARD           1.1899         28.5         23.8
                  PACEM IMPL W
                  AMI/HR/SHOCK OR
                  AICD LEAD OR
                  GNRTR.
116............  \5\ OTHER              1.8658         38.6         32.2
                  PERMANENT
                  CARDIAC
                  PACEMAKER
                  IMPLANT.
117............  \2\ CARDIAC            0.6064         21.1         17.6
                  PACEMAKER
                  REVISION EXCEPT
                  DEVICE
                  REPLACEMENT.
118............  \5\ CARDIAC            1.8658         38.6         32.2
                  PACEMAKER
                  DEVICE
                  REPLACEMENT.
119............  \1\ VEIN               0.4586         16.9         14.1
                  LIGATION &
                  STRIPPING.
120............  OTHER                  1.2014         32.6         27.2
                  CIRCULATORY
                  SYSTEM O.R.
                  PROCEDURES.
121............  CIRCULATORY            0.8293         21.8         18.2
                  DISORDERS W AMI
                  & MAJOR COMP,
                  DISCHARGED
                  ALIVE.
122............  \3\ CIRCULATORY        0.8508         24.3         20.3
                  DISORDERS W AMI
                  W/O MAJOR COMP,
                  DISCHARGED
                  ALIVE.
123............  CIRCULATORY            0.9890         18.6         15.5
                  DISORDERS W
                  AMI, EXPIRED.
124............  \3\ CIRCULATORY        0.8508         24.3         20.3
                  DISORDERS
                  EXCEPT AMI, W
                  CARD CATH &
                  COMPLEX DIAG.
125............  \5\ CIRCULATORY        1.8658         38.6         32.2
                  DISORDERS
                  EXCEPT AMI, W
                  CARD CATH W/O
                  COMPLEX DIAG.
126............  ACUTE & SUBACUTE       0.8439         24.6         20.5
                  ENDOCARDITIS.
127............  HEART FAILURE &        0.7597         21.6         18.0
                  SHOCK.
128............  \3\ DEEP VEIN          0.8508         24.3         20.3
                  THROMBOPHLEBITI
                  S.
129............  \2\ CARDIAC            0.6064         21.1         17.6
                  ARREST,
                  UNEXPLAINED.
130............  PERIPHERAL             0.7072         22.7         18.9
                  VASCULAR
                  DISORDERS W CC.
131............  PERIPHERAL             0.5718         20.6         17.2
                  VASCULAR
                  DISORDERS W/O
                  CC.
132............  ATHEROSCLEROSIS        0.7086         22.6         18.8
                  W CC.
133............  ATHEROSCLEROSIS        0.5629         19.4         16.2
                  W/O CC.
134............  HYPERTENSION....       0.6674         21.5         17.9

[[Page 24250]]

 
135............  CARDIAC                0.8908         24.6         20.5
                  CONGENITAL &
                  VALVULAR
                  DISORDERS AGE
                  >17 W CC.
136............  \3\ CARDIAC            0.8508         24.3         20.3
                  CONGENITAL &
                  VALVULAR
                  DISORDERS AGE
                  >17 W/O CC.
137............  \8\ CARDIAC            0.8508         24.3         20.3
                  CONGENITAL &
                  VALVULAR
                  DISORDERS AGE 0-
                  17.
138............  CARDIAC                0.7451         22.0         18.3
                  ARRHYTHMIA &
                  CONDUCTION
                  DISORDERS W CC.
139............  CARDIAC                0.5488         19.3         16.1
                  ARRHYTHMIA &
                  CONDUCTION
                  DISORDERS W/O
                  CC.
140............  \2\ ANGINA             0.6064         21.1         17.6
                  PECTORIS.
141............  \7\ SYNCOPE &          0.5304         22.5         18.8
                  COLLAPSE W CC.
142............  \7\ SYNCOPE &          0.5304         22.5         18.8
                  COLLAPSE W/O CC.
143............  \1\ CHEST PAIN..       0.4586         16.9         14.1
144............  \7\ OTHER              0.7913         21.8         18.2
                  CIRCULATORY
                  SYSTEM
                  DIAGNOSES W CC.
145............  \7\ OTHER              0.7913         21.8         18.2
                  CIRCULATORY
                  SYSTEM
                  DIAGNOSES W/O
                  CC.
146............  \8\ RECTAL             1.8658         38.6         32.2
                  RESECTION W CC.
147............  \8\ RECTAL             1.8658         38.6         32.2
                  RESECTION W/O
                  CC.
148............  MAJOR SMALL &          2.0460         35.1         29.3
                  LARGE BOWEL
                  PROCEDURES W CC.
149............  \1\ MAJOR SMALL        0.4586         16.9         14.1
                  & LARGE BOWEL
                  PROCEDURES W/O
                  CC.
150............  \5\ PERITONEAL         1.8658         38.6         32.2
                  ADHESIOLYSIS W
                  CC.
151............  \8\ PERITONEAL         1.8658         38.6         32.2
                  ADHESIOLYSIS W/
                  O CC.
152............  \5\ MINOR SMALL        1.8658         38.6         32.2
                  & LARGE BOWEL
                  PROCEDURES W CC.
153............  \8\ MINOR SMALL        1.8658         38.6         32.2
                  & LARGE BOWEL
                  PROCEDURES W/O
                  CC.
154............  \5\ STOMACH,           1.8658         38.6         32.2
                  ESOPHAGEAL &
                  DUODENAL
                  PROCEDURES AGE
                  >17 W CC.
155............  \8\ STOMACH,           1.8658         38.6         32.2
                  ESOPHAGEAL &
                  DUODENAL
                  PROCEDURES AGE
                  >17 W/O CC.
156............  \8\ STOMACH,           1.8658         38.6         32.2
                  ESOPHAGEAL &
                  DUODENAL
                  PROCEDURES AGE
                  0-17.
157............  \4\ ANAL &             1.1899         28.5         23.8
                  STOMAL
                  PROCEDURES W CC.
158............  \8\ ANAL &             1.1899         28.5         23.8
                  STOMAL
                  PROCEDURES W/O
                  CC.
159............  \3\ HERNIA             0.8508         24.3         20.3
                  PROCEDURES
                  EXCEPT INGUINAL
                  & FEMORAL AGE
                  >17 W CC.
160............  \8\ HERNIA             0.8508         24.3         20.3
                  PROCEDURES
                  EXCEPT INGUINAL
                  & FEMORAL AGE
                  >17 W/O CC.
161............  \5\ INGUINAL &         1.8658         38.6         32.2
                  FEMORAL HERNIA
                  PROCEDURES AGE
                  >17 W CC.
162............  \8\ INGUINAL &         0.4586         16.9         14.1
                  FEMORAL HERNIA
                  PROCEDURES AGE
                  >17 W/O CC.
163............  \8\ HERNIA             0.4586         16.9         14.1
                  PROCEDURES AGE
                  0-17.
164............  \8\ APPENDECTOMY       1.8658         38.6         32.2
                  W COMPLICATED
                  PRINCIPAL DIAG
                  W CC.
165............  \8\ APPENDECTOMY       1.8658         38.6         32.2
                  W COMPLICATED
                  PRINCIPAL DIAG
                  W/O CC.
166............  \8\ APPENDECTOMY       1.8658         38.6         32.2
                  W/O COMPLICATED
                  PRINCIPAL DIAG
                  W CC.
167............  \8\ APPENDECTOMY       1.8658         38.6         32.2
                  W/O COMPLICATED
                  PRINCIPAL DIAG
                  W/O CC.
168............  \4\ MOUTH              1.1899         28.5         23.8
                  PROCEDURES W CC.
169............  \8\ MOUTH              0.8508         24.3         20.3
                  PROCEDURES W/O
                  CC.
170............  \7\ OTHER              1.7448         33.3         27.8
                  DIGESTIVE
                  SYSTEM O.R.
                  PROCEDURES W CC.
171............  \7\ OTHER              1.7448         33.3         27.8
                  DIGESTIVE
                  SYSTEM O.R.
                  PROCEDURES W/O
                  CC.
172............  \7\ DIGESTIVE          0.8822         22.8         19.0
                  MALIGNANCY W CC.
173............  \7\ DIGESTIVE          0.8822         22.8         19.0
                  MALIGNANCY W/O
                  CC.
174............  \7\ G.I.               0.7067         21.9         18.3
                  HEMORRHAGE W CC.
175............  \7\ G.I.               0.7067         21.9         18.3
                  HEMORRHAGE W/O
                  CC.
176............  COMPLICATED            1.0124         23.3         19.4
                  PEPTIC ULCER.
177............  \3\                    0.8508         24.3         20.3
                  UNCOMPLICATED
                  PEPTIC ULCER W
                  CC.
178............  \1\                    0.4586         16.9         14.1
                  UNCOMPLICATED
                  PEPTIC ULCER W/
                  O CC.
179............  INFLAMMATORY           0.8728         23.4         19.5
                  BOWEL DISEASE.
180............  G.I. OBSTRUCTION       0.9438         22.2         18.5
                  W CC.
181............  \2\ G.I.               0.6064         21.1         17.6
                  OBSTRUCTION W/O
                  CC.
182............  ESOPHAGITIS,           0.8373         23.1         19.3
                  GASTROENT &
                  MISC DIGEST
                  DISORDERS AGE
                  >17 W CC.
183............  ESOPHAGITIS,           0.6992         20.7         17.3
                  GASTROENT &
                  MISC DIGEST
                  DISORDERS AGE
                  >17 W/O CC.
184............  \8\ ESOPHAGITIS,       0.6064         21.1         17.6
                  GASTROENT &
                  MISC DIGEST
                  DISORDERS AGE 0-
                  17.
185............  DENTAL & ORAL          0.8447         24.2         20.2
                  DIS EXCEPT
                  EXTRACTIONS &
                  RESTORATIONS,
                  AGE >17.
186............  \8\ DENTAL &           0.8508         24.3         20.3
                  ORAL DIS EXCEPT
                  EXTRACTIONS &
                  RESTORATIONS,
                  AGE 0-17.
187............  \8\ DENTAL             0.8508         24.3         20.3
                  EXTRACTIONS &
                  RESTORATIONS.
188............  OTHER DIGESTIVE        0.9751         24.0         20.0
                  SYSTEM
                  DIAGNOSES AGE
                  >17 W CC.
189............  OTHER DIGESTIVE        0.8839         22.9         19.1
                  SYSTEM
                  DIAGNOSES AGE
                  >17 W/O CC.
190............  \8\ OTHER              0.8508         24.3         20.3
                  DIGESTIVE
                  SYSTEM
                  DIAGNOSES AGE 0-
                  17.
191............  \5\ PANCREAS,          1.8658         38.6         32.2
                  LIVER & SHUNT
                  PROCEDURES W CC.
192............  \8\ PANCREAS,          1.8658         38.6         32.2
                  LIVER & SHUNT
                  PROCEDURES W/O
                  CC.
193............  \1\ BILIARY            0.4586         16.9         14.1
                  TRACT PROC
                  EXCEPT ONLY
                  CHOLECYST W OR
                  W/O C.D.E. W CC.
194............  \8\ BILIARY            0.4586         16.9         14.1
                  TRACT PROC
                  EXCEPT ONLY
                  CHOLECYST W OR
                  W/O C.D.E. W/O
                  CC.
195............  \8\                    1.8658         38.6         32.2
                  CHOLECYSTECTOMY
                  W C.D.E. W CC.
196............  \8\                    1.8658         38.6         32.2
                  CHOLECYSTECTOMY
                  W C.D.E. W/O CC.
197............  \5\                    1.8658         38.6         32.2
                  CHOLECYSTECTOMY
                  EXCEPT BY
                  LAPAROSCOPE W/O
                  C.D.E. W CC.
198............  \8\                    1.8658         38.6         32.2
                  CHOLECYSTECTOMY
                  EXCEPT BY
                  LAPAROSCOPE W/O
                  C.D.E. W/O CC.
199............  \8\                    0.8508         24.3         20.3
                  HEPATOBILIARY
                  DIAGNOSTIC
                  PROCEDURE FOR
                  MALIGNANCY.
200............  \3\                    0.8508         24.3         20.3
                  HEPATOBILIARY
                  DIAGNOSTIC
                  PROCEDURE FOR
                  NON-MALIGNANCY.

[[Page 24251]]

 
201............  \4\ OTHER              1.1899         28.5         23.8
                  HEPATOBILIARY
                  OR PANCREAS
                  O.R. PROCEDURES.
202............  CIRRHOSIS &            0.7217         23.3         19.4
                  ALCOHOLIC
                  HEPATITIS.
203............  MALIGNANCY OF          0.7867         20.9         17.4
                  HEPATOBILIARY
                  SYSTEM OR
                  PANCREAS.
204............  DISORDERS OF           0.8626         21.5         17.9
                  PANCREAS EXCEPT
                  MALIGNANCY.
205............  DISORDERS OF           0.7596         23.0         19.2
                  LIVER EXCEPT
                  MALIG,CIRR,ALC
                  HEPA W CC.
206............  \2\ DISORDERS OF       0.6064         21.1         17.6
                  LIVER EXCEPT
                  MALIG,CIRR,ALC
                  HEPA W/O CC.
207............  DISORDERS OF THE       0.6492         19.3         16.1
                  BILIARY TRACT W
                  CC.
208............  \1\ DISORDERS OF       0.4586         16.9         14.1
                  THE BILIARY
                  TRACT W/O CC.
209............  \5\ MAJOR JOINT        1.8658         38.6         32.2
                  & LIMB
                  REATTACHMENT
                  PROCEDURES OF
                  LOWER EXTREMITY.
210............  \5\ HIP & FEMUR        1.8658         38.6         32.2
                  PROCEDURES
                  EXCEPT MAJOR
                  JOINT AGE >17 W
                  CC.
211............  \8\ HIP & FEMUR        1.8658         38.6         32.2
                  PROCEDURES
                  EXCEPT MAJOR
                  JOINT AGE >17 W/
                  O CC.
212............  \8\ HIP & FEMUR        1.8658         38.6         32.2
                  PROCEDURES
                  EXCEPT MAJOR
                  JOINT AGE 0-17.
213............  AMPUTATION FOR         1.1696         33.9         28.3
                  MUSCULOSKELETAL
                  SYSTEM & CONN
                  TISSUE
                  DISORDERS.
216............  \5\ BIOPSIES OF        1.8658         38.6         32.2
                  MUSCULOSKELETAL
                  SYSTEM &
                  CONNECTIVE
                  TISSUE.
217............  WND DEBRID & SKN       1.3123         37.2         31.0
                  GRFT EXCEPT
                  HAND,FOR
                  MUSCSKELET &
                  CONN TISS DIS.
218............  \4\ LOWER EXTREM       1.1899         28.5         23.8
                  & HUMER PROC
                  EXCEPT
                  HIP,FOOT,FEMUR
                  AGE >17 W CC.
219............  \8\ LOWER EXTREM       1.1899         28.5         23.8
                  & HUMER PROC
                  EXCEPT
                  HIP,FOOT,FEMUR
                  AGE >17 W/O CC.
220............  \8\ LOWER EXTREM       1.1899         28.5         23.8
                  & HUMER PROC
                  EXCEPT
                  HIP,FOOT,FEMUR
                  AGE 0-17.
223............  \8\ MAJOR              1.1899         28.5         23.8
                  SHOULDER/ELBOW
                  PROC, OR OTHER
                  UPPER EXTREMITY
                  PROC W CC.
224............  \8\                    0.6064         21.1         17.6
                  SHOULDER,ELBOW
                  OR FOREARM
                  PROC,EXC MAJOR
                  JOINT PROC, W/O
                  CC.
225............  FOOT PROCEDURES.       1.0601         30.4         25.3
226............  \5\ SOFT TISSUE        1.8658         38.6         32.2
                  PROCEDURES W CC.
227............  \2\ SOFT TISSUE        0.6064         21.1         17.6
                  PROCEDURES W/O
                  CC.
228............  \3\ MAJOR THUMB        0.8508         24.3         20.3
                  OR JOINT
                  PROC,OR OTH
                  HAND OR WRIST
                  PROC W CC.
229............  \1\ HAND OR            0.4586         16.9         14.1
                  WRIST PROC,
                  EXCEPT MAJOR
                  JOINT PROC, W/O
                  CC.
230............  \5\ LOCAL              1.8658         38.6         32.2
                  EXCISION &
                  REMOVAL OF INT
                  FIX DEVICES OF
                  HIP & FEMUR.
232............  \8\ ARTHROSCOPY.       0.8508         24.3         20.3
233............  OTHER                  1.5135         34.5         28.8
                  MUSCULOSKELET
                  SYS & CONN TISS
                  O.R. PROC W CC.
234............  \3\ OTHER              0.8508         24.3         20.3
                  MUSCULOSKELET
                  SYS & CONN TISS
                  O.R. PROC W/O
                  CC.
235............  FRACTURES OF           0.7920         30.3         25.3
                  FEMUR.
236............  FRACTURES OF HIP       0.7348         26.9         22.4
                  & PELVIS.
237............  \1\ SPRAINS,           0.4586         16.9         14.1
                  STRAINS, &
                  DISLOCATIONS OF
                  HIP, PELVIS &
                  THIGH.
238............  OSTEOMYELITIS...       0.9329         28.9         24.1
239............  PATHOLOGICAL           0.6619         21.4         17.8
                  FRACTURES &
                  MUSCULOSKELETAL
                  & CONN TISS
                  MALIGNANCY.
240............  CONNECTIVE             0.7160         23.1         19.3
                  TISSUE
                  DISORDERS W CC.
241............  \1\ CONNECTIVE         0.4586         16.9         14.1
                  TISSUE
                  DISORDERS W/O
                  CC.
242............  SEPTIC ARTHRITIS       0.7943         26.2         21.8
243............  MEDICAL BACK           0.6072         22.3         18.6
                  PROBLEMS.
244............  BONE DISEASES &        0.5705         22.3         18.6
                  SPECIFIC
                  ARTHROPATHIES W
                  CC.
245............  BONE DISEASES &        0.5109         19.3         16.1
                  SPECIFIC
                  ARTHROPATHIES W/
                  O CC.
246............  NON-SPECIFIC           0.5884         21.4         17.8
                  ARTHROPATHIES.
247............  SIGNS & SYMPTOMS       0.5445         21.4         17.8
                  OF
                  MUSCULOSKELETAL
                  SYSTEM & CONN
                  TISSUE.
248............  TENDONITIS,            0.7830         24.3         20.3
                  MYOSITIS &
                  BURSITIS.
249............  AFTERCARE,             0.6907         23.9         19.9
                  MUSCULOSKELETAL
                  SYSTEM &
                  CONNECTIVE
                  TISSUE.
250............  \2\ FX, SPRN,          0.6064         21.1         17.6
                  STRN & DISL OF
                  FOREARM, HAND,
                  FOOT AGE >17 W
                  CC.
251............  \2\ FX, SPRN,          0.6064         21.1         17.6
                  STRN & DISL OF
                  FOREARM, HAND,
                  FOOT AGE >17 W/
                  O CC.
252............  \8\ FX, SPRN,          0.8508         24.3         20.3
                  STRN & DISL OF
                  FOREARM, HAND,
                  FOOT AGE 0-17.
253............  FX, SPRN, STRN &       0.8368         28.5         23.8
                  DISL OF
                  UPARM,LOWLEG EX
                  FOOT AGE >17 W
                  CC.
254............  FX, SPRN, STRN &       0.6956         27.1         22.6
                  DISL OF
                  UPARM,LOWLEG EX
                  FOOT AGE >17 W/
                  O CC.
255............  \8\ FX, SPRN,          0.8508         24.3         20.3
                  STRN & DISL OF
                  UPARM,LOWLEG EX
                  FOOT AGE 0-17.
256............  OTHER                  0.7491         23.3         19.4
                  MUSCULOSKELETAL
                  SYSTEM &
                  CONNECTIVE
                  TISSUE
                  DIAGNOSES.
257............  \8\ TOTAL              0.4586         16.9         14.1
                  MASTECTOMY FOR
                  MALIGNANCY W CC.
258............  \8\ TOTAL              0.4586         16.9         14.1
                  MASTECTOMY FOR
                  MALIGNANCY W/O
                  CC.
259............  \8\ SUBTOTAL           0.4586         16.9         14.1
                  MASTECTOMY FOR
                  MALIGNANCY W CC.
260............  \1\ SUBTOTAL           0.4586         16.9         14.1
                  MASTECTOMY FOR
                  MALIGNANCY W/O
                  CC.
261............  \5\ BREAST PROC        1.8658         38.6         32.2
                  FOR NON-
                  MALIGNANCY
                  EXCEPT BIOPSY &
                  LOCAL EXCISION.
262............  \3\ BREAST             0.8508         24.3         20.3
                  BIOPSY & LOCAL
                  EXCISION FOR
                  NON-MALIGNANCY.
263............  SKIN GRAFT &/OR        1.3568         39.1         32.6
                  DEBRID FOR SKN
                  ULCER OR
                  CELLULITIS W CC.
264............  SKIN GRAFT &/OR        1.0622         33.0         27.5
                  DEBRID FOR SKN
                  ULCER OR
                  CELLULITIS W/O
                  CC.
265............  SKIN GRAFT &/OR        1.4363         35.7         29.8
                  DEBRID EXCEPT
                  FOR SKIN ULCER
                  OR CELLULITIS W
                  CC.
266............  \3\ SKIN GRAFT &/      0.8508         24.3         20.3
                  OR DEBRID
                  EXCEPT FOR SKIN
                  ULCER OR
                  CELLULITIS W/O
                  CC.
267............  \5\ PERIANAL &         1.8658         38.6         32.2
                  PILONIDAL
                  PROCEDURES.
268............  \5\ SKIN,              1.8658         38.6         32.2
                  SUBCUTANEOUS
                  TISSUE & BREAST
                  PLASTIC
                  PROCEDURES.
269............  OTHER SKIN,            1.3904         38.4         32.0
                  SUBCUT TISS &
                  BREAST PROC W
                  CC.

[[Page 24252]]

 
270............  \3\ OTHER SKIN,        0.8508         24.3         20.3
                  SUBCUT TISS &
                  BREAST PROC W/O
                  CC.
271............  SKIN ULCERS.....       0.9572         28.4         23.7
272............  MAJOR SKIN             0.7956         25.0         20.8
                  DISORDERS W CC.
273............  \1\ MAJOR SKIN         0.4586         16.9         14.1
                  DISORDERS W/O
                  CC.
274............  MALIGNANT BREAST       0.9535         27.7         23.1
                  DISORDERS W CC.
275............  \1\ MALIGNANT          0.4586         16.9         14.1
                  BREAST
                  DISORDERS W/O
                  CC.
276............  \2\ NON-MALIGANT       0.6064         21.1         17.6
                  BREAST
                  DISORDERS.
277............  CELLULITIS AGE         0.6711         21.6         18.0
                  >17 W CC.
278............  CELLULITIS AGE         0.5277         19.0         15.8
                  >17 W/O CC.
279............  \8\ CELLULITIS         0.4586         16.9         14.1
                  AGE 0-17.
280............  TRAUMA TO THE          0.8840         27.1         22.6
                  SKIN, SUBCUT
                  TISS & BREAST
                  AGE >17 W CC.
281............  TRAUMA TO THE          0.8190         28.3         23.6
                  SKIN, SUBCUT
                  TISS & BREAST
                  AGE >17 W/O CC.
282............  \8\ TRAUMA TO          0.8508         24.3         20.3
                  THE SKIN,
                  SUBCUT TISS &
                  BREAST AGE 0-17.
283............  MINOR SKIN             0.7712         22.9         19.1
                  DISORDERS W CC.
284............  \1\ MINOR SKIN         0.4586         16.9         14.1
                  DISORDERS W/O
                  CC.
285............  AMPUTAT OF LOWER       1.2799         35.9         29.9
                  LIMB FOR
                  ENDOCRINE,NUTRI
                  T,& METABOL
                  DISORDERS.
286............  \8\ ADRENAL &          1.1899         28.5         23.8
                  PITUITARY
                  PROCEDURES.
287............  SKIN GRAFTS &          1.1090         32.4         27.0
                  WOUND DEBRID
                  FOR ENDOC,
                  NUTRIT & METAB
                  DISORDERS.
288............  \3\ O.R.               0.8508         24.3         20.3
                  PROCEDURES FOR
                  OBESITY.
289............  \8\ PARATHYROID        1.1899         28.5         23.8
                  PROCEDURES.
290............  \8\ THYROID            1.1899         28.5         23.8
                  PROCEDURES.
291............  \8\ THYROGLOSSAL       1.1899         28.5         23.8
                  PROCEDURES.
292............  \4\ OTHER              1.1899         28.5         23.8
                  ENDOCRINE,
                  NUTRIT & METAB
                  O.R. PROC W CC.
293............  \8\ OTHER              1.1899         28.5         23.8
                  ENDOCRINE,
                  NUTRIT & METAB
                  O.R. PROC W/O
                  CC.
294............  DIABETES AGE >35       0.7472         23.8         19.8
295............  \2\ DIABETES AGE       0.6064         21.1         17.6
                  0-35.
296............  NUTRITIONAL &          0.7973         23.7         19.8
                  MISC METABOLIC
                  DISORDERS AGE
                  >17 W CC.
297............  NUTRITIONAL &          0.6225         21.6         18.0
                  MISC METABOLIC
                  DISORDERS AGE
                  >17 W/O CC.
298............  \8\ NUTRITIONAL        0.6064         21.1         17.6
                  & MISC
                  METABOLIC
                  DISORDERS AGE 0-
                  17.
299............  \4\ INBORN             1.1899         28.5         23.8
                  ERRORS OF
                  METABOLISM.
300............  \7\ ENDOCRINE          0.7948         24.6         20.5
                  DISORDERS W CC.
301............  \7\ ENDOCRINE          0.7948         24.6         20.5
                  DISORDERS W/O
                  CC.
302............  \6\ KIDNEY             0.0000          0.0          0.0
                  TRANSPLANT.
303............  \4\                    1.1899         28.5         23.8
                  KIDNEY,URETER &
                  MAJOR BLADDER
                  PROCEDURES FOR
                  NEOPLASM.
304............  \4\                    1.1899         28.5         23.8
                  KIDNEY,URETER &
                  MAJOR BLADDER
                  PROC FOR NON-
                  NEOPL W CC.
305............  \2\                    0.6064         21.1         17.6
                  KIDNEY,URETER &
                  MAJOR BLADDER
                  PROC FOR NON-
                  NEOPL W/O CC.
306............  \4\                    1.1899         28.5         23.8
                  PROSTATECTOMY W
                  CC.
307............  \3\                    0.8508         24.3         20.3
                  PROSTATECTOMY W/
                  O CC.
308............  \4\ MINOR              1.1899         28.5         23.8
                  BLADDER
                  PROCEDURES W CC.
309............  \8\ MINOR              1.1899         28.5         23.8
                  BLADDER
                  PROCEDURES W/O
                  CC.
310............  \3\                    0.8508         24.3         20.3
                  TRANSURETHRAL
                  PROCEDURES W CC.
311............  \8\                    0.8508         24.3         20.3
                  TRANSURETHRAL
                  PROCEDURES W/O
                  CC.
312............  \4\ URETHRAL           1.1899         28.5         23.8
                  PROCEDURES, AGE
                  >17 W CC.
313............  \8\ URETHRAL           1.1899         28.5         23.8
                  PROCEDURES, AGE
                  >17 W/O CC.
314............  \8\ URETHRAL           0.6064         21.1         17.6
                  PROCEDURES, AGE
                  0-17.
315............  OTHER KIDNEY &         1.4618         34.2         28.5
                  URINARY TRACT
                  O.R. PROCEDURES.
316............  RENAL FAILURE...       0.9175         23.6         19.7
317............  ADMIT FOR RENAL        0.9238         22.1         18.4
                  DIALYSIS.
318............  \7\ KIDNEY &           0.7798         22.5         18.8
                  URINARY TRACT
                  NEOPLASMS W CC.
319............  \7\ KIDNEY &           0.7798         22.5         18.8
                  URINARY TRACT
                  NEOPLASMS W/O
                  CC.
320............  KIDNEY & URINARY       0.7798         22.5         18.8
                  TRACT
                  INFECTIONS AGE
                  >17 W CC.
321............  KIDNEY & URINARY       0.5721         21.9         18.3
                  TRACT
                  INFECTIONS AGE
                  >17 W/O CC.
322............  \8\ KIDNEY &           0.4586         16.9         14.1
                  URINARY TRACT
                  INFECTIONS AGE
                  0-17.
323............  \2\ URINARY            0.6064         21.1         17.6
                  STONES W CC, &/
                  OR ESW
                  LITHOTRIPSY.
324............  \1\ URINARY            0.4586         16.9         14.1
                  STONES W/O CC.
325............  \3\ KIDNEY &           0.8508         24.3         20.3
                  URINARY TRACT
                  SIGNS &
                  SYMPTOMS AGE
                  >17 W CC.
326............  \1\ KIDNEY &           0.4586         16.9         14.1
                  URINARY TRACT
                  SIGNS &
                  SYMPTOMS AGE
                  >17 W/O CC.
327............  \8\ KIDNEY &           0.4586         16.9         14.1
                  URINARY TRACT
                  SIGNS &
                  SYMPTOMS AGE 0-
                  17.
328............  \2\ URETHRAL           0.6064         21.1         17.6
                  STRICTURE AGE
                  >17 W CC.
329............  \8\ URETHRAL           0.6064         21.1         17.6
                  STRICTURE AGE
                  >17 W/O CC.
330............  \8\ URETHRAL           0.6064         21.1         17.6
                  STRICTURE AGE 0-
                  17.
331............  OTHER KIDNEY &         0.8240         22.9         19.1
                  URINARY TRACT
                  DIAGNOSES AGE
                  >17 W CC.
332............  OTHER KIDNEY &         0.6263         22.3         18.6
                  URINARY TRACT
                  DIAGNOSES AGE
                  >17 W/O CC.
333............  \8\ OTHER KIDNEY       0.6064         21.1         17.6
                  & URINARY TRACT
                  DIAGNOSES AGE 0-
                  17.
334............  \8\ MAJOR MALE         1.8658         38.6         32.2
                  PELVIC
                  PROCEDURES W CC.
335............  \8\ MAJOR MALE         1.8658         38.6         32.2
                  PELVIC
                  PROCEDURES W/O
                  CC.

[[Page 24253]]

 
336............  \4\                    1.1899         28.5         23.8
                  TRANSURETHRAL
                  PROSTATECTOMY W
                  CC.
337............  \8\                    1.1899         28.5         23.8
                  TRANSURETHRAL
                  PROSTATECTOMY W/
                  O CC.
338............  \5\ TESTES             1.8658         38.6         32.2
                  PROCEDURES, FOR
                  MALIGNANCY.
339............  \1\ TESTES             0.4586         16.9         14.1
                  PROCEDURES, NON-
                  MALIGNANCY AGE
                  >17.
340............  \8\ TESTES             0.4586         16.9         14.1
                  PROCEDURES, NON-
                  MALIGNANCY AGE
                  0-17.
341............  \5\ PENIS              1.8658         38.6         32.2
                  PROCEDURES.
342............  \8\ CIRCUMCISION       0.4586         16.9         14.1
                  AGE >17.
343............  \8\ CIRCUMCISION       0.4586         16.9         14.1
                  AGE 0-17.
344............  \5\ OTHER MALE         1.8658         38.6         32.2
                  REPRODUCTIVE
                  SYSTEM O.R.
                  PROCEDURES FOR
                  MALIGNANCY.
345............  \5\ OTHER MALE         1.8658         38.6         32.2
                  REPRODUCTIVE
                  SYSTEM O.R.
                  PROC EXCEPT FOR
                  MALIGNANCY.
346............  MALIGNANCY, MALE       0.6556         20.8         17.3
                  REPRODUCTIVE
                  SYSTEM, W CC.
347............  \1\ MALIGNANCY,        0.4586         16.9         14.1
                  MALE
                  REPRODUCTIVE
                  SYSTEM, W/O CC.
348............  \2\ BENIGN             0.6064         21.1         17.6
                  PROSTATIC
                  HYPERTROPHY W
                  CC.
349............  \2\ BENIGN             0.6064         21.1         17.6
                  PROSTATIC
                  HYPERTROPHY W/O
                  CC.
350............  INFLAMMATION OF        0.7789         22.6         18.8
                  THE MALE
                  REPRODUCTIVE
                  SYSTEM.
351............  \8\                    0.4586         16.9         14.1
                  STERILIZATION,
                  MALE.
352............  \4\ OTHER MALE         1.1899         28.5         23.8
                  REPRODUCTIVE
                  SYSTEM
                  DIAGNOSES.
353............  \8\ PELVIC             1.8658         38.6         32.2
                  EVISCERATION,
                  RADICAL
                  HYSTERECTOMY &
                  RADICAL
                  VULVECTOMY.
354............  \8\                    1.8658         38.6         32.2
                  UTERINE,ADNEXA
                  PROC FOR NON-
                  OVARIAN/ADNEXAL
                  MALIG W CC.
355............  \8\                    1.8658         38.6         32.2
                  UTERINE,ADNEXA
                  PROC FOR NON-
                  OVARIAN/ADNEXAL
                  MALIG W/O CC.
356............  \8\ FEMALE             1.1899         28.5         23.8
                  REPRODUCTIVE
                  SYSTEM
                  RECONSTRUCTIVE
                  PROCEDURES.
357............  \8\ UTERINE &          1.1899         28.5         23.8
                  ADNEXA PROC FOR
                  OVARIAN OR
                  ADNEXAL
                  MALIGNANCY.
358............  \8\ UTERINE &          1.1899         28.5         23.8
                  ADNEXA PROC FOR
                  NON-MALIGNANCY
                  W CC.
359............  \8\ UTERINE &          1.1899         28.5         23.8
                  ADNEXA PROC FOR
                  NON-MALIGNANCY
                  W/O CC.
360............  \8\ VAGINA,            1.1899         28.5         23.8
                  CERVIX & VULVA
                  PROCEDURES.
361............  \8\ LAPAROSCOPY        0.4586         16.9         14.1
                  & INCISIONAL
                  TUBAL
                  INTERRUPTION.
362............  \8\ ENDOSCOPIC         0.4586         16.9         14.1
                  TUBAL
                  INTERRUPTION.
363............  \8\ D&C,               0.4586         16.9         14.1
                  CONIZATION &
                  RADIO-IMPLANT,
                  FOR MALIGNANCY.
364............  \8\ D&C,               0.4586         16.9         14.1
                  CONIZATION
                  EXCEPT FOR
                  MALIGNANCY.
365............  \5\ OTHER FEMALE       1.8658         38.6         32.2
                  REPRODUCTIVE
                  SYSTEM O.R.
                  PROCEDURES.
366............  MALIGNANCY,            1.0345         23.9         19.9
                  FEMALE
                  REPRODUCTIVE
                  SYSTEM W CC.
367............  \1\ MALIGNANCY,        0.4586         16.9         14.1
                  FEMALE
                  REPRODUCTIVE
                  SYSTEM W/O CC.
368............  INFECTIONS,            0.7168         22.5         18.8
                  FEMALE
                  REPRODUCTIVE
                  SYSTEM.
369............  \3\ MENSTRUAL &        0.8508         24.3         20.3
                  OTHER FEMALE
                  REPRODUCTIVE
                  SYSTEM
                  DISORDERS.
370............  \8\ CESAREAN           0.8508         24.3         20.3
                  SECTION W CC.
371............  \8\ CESAREAN           0.4586         16.9         14.1
                  SECTION W/O CC.
372............  \8\ VAGINAL            0.4586         16.9         14.1
                  DELIVERY W
                  COMPLICATING
                  DIAGNOSES.
373............  \8\ VAGINAL            0.4586         16.9         14.1
                  DELIVERY W/O
                  COMPLICATING
                  DIAGNOSES.
374............  \8\ VAGINAL            0.4586         16.9         14.1
                  DELIVERY W
                  STERILIZATION &/
                  OR D&C.
375............  \8\ VAGINAL            0.4586         16.9         14.1
                  DELIVERY W O.R.
                  PROC EXCEPT
                  STERIL &/OR D&C.
376............  \8\ POSTPARTUM &       0.4586         16.9         14.1
                  POST ABORTION
                  DIAGNOSES W/O
                  O.R. PROCEDURE.
377............  \8\ POSTPARTUM &       0.4586         16.9         14.1
                  POST ABORTION
                  DIAGNOSES W
                  O.R. PROCEDURE.
378............  \8\ ECTOPIC            0.8508         24.3         20.3
                  PREGNANCY.
379............  \8\ THREATENED         0.4586         16.9         14.1
                  ABORTION.
380............  \8\ ABORTION W/O       0.4586         16.9         14.1
                  D&C.
381............  \8\ ABORTION W         0.4586         16.9         14.1
                  D&C, ASPIRATION
                  CURETTAGE OR
                  HYSTEROTOMY.
382............  \8\ FALSE LABOR.       0.4586         16.9         14.1
383............  \8\ OTHER              0.4586         16.9         14.1
                  ANTEPARTUM
                  DIAGNOSES W
                  MEDICAL
                  COMPLICATIONS.
384............  \8\ OTHER              0.4586         16.9         14.1
                  ANTEPARTUM
                  DIAGNOSES W/O
                  MEDICAL
                  COMPLICATIONS.
385............  \8\ NEONATES,          0.4586         16.9         14.1
                  DIED OR
                  TRANSFERRED TO
                  ANOTHER ACUTE
                  CARE FACILITY.
386............  \8\ EXTREME            0.4586         16.9         14.1
                  IMMATURITY OR
                  RESPIRATORY
                  DISTRESS
                  SYNDROME,
                  NEONATE.
387............  \8\ PREMATURITY        0.4586         16.9         14.1
                  W MAJOR
                  PROBLEMS.
388............  \8\ PREMATURITY        0.4586         16.9         14.1
                  W/O MAJOR
                  PROBLEMS.
389............  \8\ FULL TERM          0.4586         16.9         14.1
                  NEONATE W MAJOR
                  PROBLEMS.
390............  \8\ NEONATE W          0.4586         16.9         14.1
                  OTHER
                  SIGNIFICANT
                  PROBLEMS.
391............  \8\ NORMAL             0.4586         16.9         14.1
                  NEWBORN.
392............  \8\ SPLENECTOMY        1.8658         38.6         32.2
                  AGE >17.
393............  \8\ SPLENECTOMY        1.8658         38.6         32.2
                  AGE 0-17.
394............  \4\ OTHER O.R.         1.1899         28.5         23.8
                  PROCEDURES OF
                  THE BLOOD AND
                  BLOOD FORMING
                  ORGANS.
395............  RED BLOOD CELL         0.7516         23.7         19.8
                  DISORDERS AGE
                  >17.
396............  \8\ RED BLOOD          0.6064         21.1         17.6
                  CELL DISORDERS
                  AGE 0-17.
397............  COAGULATION            0.7827         19.2         16.0
                  DISORDERS.
398............  RETICULOENDOTHEL       0.7520         21.4         17.8
                  IAL & IMMUNITY
                  DISORDERS W CC.
399............  \2\                    0.6064         21.1         17.6
                  RETICULOENDOTHE
                  LIAL & IMMUNITY
                  DISORDERS W/O
                  CC.
401............  \4\ LYMPHOMA &         1.1899         28.5         23.8
                  NON-ACUTE
                  LEUKEMIA W
                  OTHER O.R. PROC
                  W CC.

[[Page 24254]]

 
402............  \8\ LYMPHOMA &         0.8508         24.3         20.3
                  NON-ACUTE
                  LEUKEMIA W
                  OTHER O.R. PROC
                  W/O CC.
403............  LYMPHOMA & NON-        0.8996         22.0         18.3
                  ACUTE LEUKEMIA
                  W CC.
404............  \1\ LYMPHOMA &         0.4586         16.9         14.1
                  NON-ACUTE
                  LEUKEMIA W/O CC.
405............  \8\ ACUTE              0.4586         16.9         14.1
                  LEUKEMIA W/O
                  MAJOR O.R.
                  PROCEDURE AGE 0-
                  17.
406............  \5\ MYELOPROLIF        1.8658         38.6         32.2
                  DISORD OR
                  POORLY DIFF
                  NEOPL W MAJ
                  O.R.PROC W CC.
407............  \8\ MYELOPROLIF        1.1899         28.5         23.8
                  DISORD OR
                  POORLY DIFF
                  NEOPL W MAJ
                  O.R.PROC W/O CC.
408............  \4\ MYELOPROLIF        1.1899         28.5         23.8
                  DISORD OR
                  POORLY DIFF
                  NEOPL W OTHER
                  O.R.PROC.
409............  RADIOTHERAPY....       0.9104         22.6         18.8
410............  \4\ CHEMOTHERAPY       1.1899         28.5         23.8
                  W/O ACUTE
                  LEUKEMIA AS
                  SECONDARY
                  DIAGNOSIS.
411............  \8\ HISTORY OF         0.4586         16.9         14.1
                  MALIGNANCY W/O
                  ENDOSCOPY.
412............  \8\ HISTORY OF         0.4586         16.9         14.1
                  MALIGNANCY W
                  ENDOSCOPY.
413............  OTHER                  0.8807         20.7         17.3
                  MYELOPROLIF DIS
                  OR POORLY DIFF
                  NEOPL DIAG W CC.
414............  \2\ OTHER              0.6064         21.1         17.6
                  MYELOPROLIF DIS
                  OR POORLY DIFF
                  NEOPL DIAG W/O
                  CC.
415............  O.R. PROCEDURE         1.5485         36.5         30.4
                  FOR INFECTIOUS
                  & PARASITIC
                  DISEASES.
416............  SEPTICEMIA AGE         0.8961         23.9         19.9
                  >17.
417............  \8\ SEPTICEMIA         0.8508         24.3         20.3
                  AGE 0-17.
418............  POSTOPERATIVE &        0.8697         24.7         20.6
                  POST-TRAUMATIC
                  INFECTIONS.
419............  \4\ FEVER OF           1.1899         28.5         23.8
                  UNKNOWN ORIGIN
                  AGE >17 W CC.
420............  \4\ FEVER OF           1.1899         28.5         23.8
                  UNKNOWN ORIGIN
                  AGE >17 W/O CC.
421............  VIRAL ILLNESS          1.0125         25.1         20.9
                  AGE >17.
422............  \8\ VIRAL              0.6064         21.1         17.6
                  ILLNESS & FEVER
                  OF UNKNOWN
                  ORIGIN AGE 0-17.
423............  OTHER INFECTIOUS       0.9425         22.8         19.0
                  & PARASITIC
                  DISEASES
                  DIAGNOSES.
424............  \5\ O.R.               1.8658         38.6         32.2
                  PROCEDURE W
                  PRINCIPAL
                  DIAGNOSES OF
                  MENTAL ILLNESS.
425............  ACUTE ADJUSTMENT       0.5649         21.2         17.7
                  REACTION &
                  PSYCHOSOCIAL
                  DYSFUNCTION.
426............  DEPRESSIVE             0.5777         26.6         22.2
                  NEUROSES.
427............  \1\ NEUROSES           0.4586         16.9         14.1
                  EXCEPT
                  DEPRESSIVE.
428............  DISORDERS OF           0.6617         29.1         24.3
                  PERSONALITY &
                  IMPULSE CONTROL.
429............  ORGANIC                0.5767         24.4         20.3
                  DISTURBANCES &
                  MENTAL
                  RETARDATION.
430............  PSYCHOSES.......       0.4746         22.7         18.9
431............  CHILDHOOD MENTAL       0.4875         22.0         18.3
                  DISORDERS.
432............  \8\ OTHER MENTAL       0.4586         16.9         14.1
                  DISORDER
                  DIAGNOSES.
433............  \1\ ALCOHOL/DRUG       0.4586         16.9         14.1
                  ABUSE OR
                  DEPENDENCE,
                  LEFT AMA.
439............  SKIN GRAFTS FOR        1.0808         35.0         29.2
                  INJURIES.
440............  WOUND                  1.2254         32.2         26.8
                  DEBRIDEMENTS
                  FOR INJURIES.
441............  \2\ HAND               0.6064         21.1         17.6
                  PROCEDURES FOR
                  INJURIES.
442............  \7\ OTHER O.R.         1.4772         37.3         31.1
                  PROCEDURES FOR
                  INJURIES W CC.
443............  \7\ OTHER O.R.         1.4772         37.3         31.1
                  PROCEDURES FOR
                  INJURIES W/O CC.
444............  \7\ TRAUMATIC          0.8051         24.4         20.3
                  INJURY AGE >17
                  W CC.
445............  \7\ TRAUMATIC          0.8051         24.4         20.3
                  INJURY AGE >17
                  W/O CC.
446............  \8\ TRAUMATIC          0.8508         24.3         20.3
                  INJURY AGE 0-17.
447............  \3\ ALLERGIC           0.8508         24.3         20.3
                  REACTIONS AGE
                  >17.
448............  \8\ ALLERGIC           0.8508         24.3         20.3
                  REACTIONS AGE 0-
                  17.
449............  \2\ POISONING &        0.6064         21.1         17.6
                  TOXIC EFFECTS
                  OF DRUGS AGE
                  >17 W CC.
450............  \1\ POISONING &        0.4586         16.9         14.1
                  TOXIC EFFECTS
                  OF DRUGS AGE
                  >17 W/O CC.
451............  \8\ POISONING &        0.6064         21.1         17.6
                  TOXIC EFFECTS
                  OF DRUGS AGE 0-
                  17.
452............  COMPLICATIONS OF       0.9938         25.4         21.2
                  TREATMENT W CC.
453............  COMPLICATIONS OF       0.7085         22.0         18.3
                  TREATMENT W/O
                  CC.
454............  \3\ OTHER              0.8508         24.3         20.3
                  INJURY,
                  POISONING &
                  TOXIC EFFECT
                  DIAG W CC.
455............  \2\ OTHER              0.6064         21.1         17.6
                  INJURY,
                  POISONING &
                  TOXIC EFFECT
                  DIAG W/O CC.
461............  O.R. PROC W            1.2824         35.2         29.3
                  DIAGNOSES OF
                  OTHER CONTACT W
                  HEALTH SERVICES.
462............  REHABILITATION..       0.6569         23.2         19.3
463............  SIGNS & SYMPTOMS       0.6631         23.4         19.5
                  W CC.
464............  SIGNS & SYMPTOMS       0.5561         22.7         18.9
                  W/O CC.
465............  AFTERCARE W            0.6885         20.5         17.1
                  HISTORY OF
                  MALIGNANCY AS
                  SECONDARY
                  DIAGNOSIS.
466............  AFTERCARE W/O          0.7286         22.2         18.5
                  HISTORY OF
                  MALIGNANCY AS
                  SECONDARY
                  DIAGNOSIS.
467............  \2\ OTHER              0.6064         21.1         17.6
                  FACTORS
                  INFLUENCING
                  HEALTH STATUS.
468............  EXTENSIVE O.R.         2.1286         41.7         34.8
                  PROCEDURE
                  UNRELATED TO
                  PRINCIPAL
                  DIAGNOSIS.
469............  \6\ PRINCIPAL          0.0000          0.0          0.0
                  DIAGNOSIS
                  INVALID AS
                  DISCHARGE
                  DIAGNOSIS.
470............  \6\ UNGROUPABLE.       0.0000          0.0          0.0
471............  \8\ BILATERAL OR       0.8508         24.3         20.3
                  MULTIPLE MAJOR
                  JOINT PROCS OF
                  LOWER EXTREMITY.
473............  ACUTE LEUKEMIA W/      0.8622         20.7         17.3
                  O MAJOR O.R.
                  PROCEDURE AGE
                  >17.
475............  RESPIRATORY            2.1015         34.2         28.5
                  SYSTEM
                  DIAGNOSIS WITH
                  VENTILATOR
                  SUPPORT.
476............  \3\ PROSTATIC          0.8508         24.3         20.3
                  O.R. PROCEDURE
                  UNRELATED TO
                  PRINCIPAL
                  DIAGNOSIS.
477............  NON-EXTENSIVE          1.5653         35.2         29.3
                  O.R. PROCEDURE
                  UNRELATED TO
                  PRINCIPAL
                  DIAGNOSIS.
478............  OTHER VASCULAR         1.4010         33.3         27.8
                  PROCEDURES W CC.
479............  \2\ OTHER              0.6064         21.1         17.6
                  VASCULAR
                  PROCEDURES W/O
                  CC.

[[Page 24255]]

 
480............  \6\ LIVER              0.0000          0.0          0.0
                  TRANSPLANT.
481............  \8\ BONE MARROW        1.1899         28.5         23.8
                  TRANSPLANT.
482............  \8\ TRACHEOSTOMY       1.1899         28.5         23.8
                  FOR FACE,MOUTH
                  & NECK
                  DIAGNOSES.
484............  \8\ CRANIOTOMY         1.1899         28.5         23.8
                  FOR MULTIPLE
                  SIGNIFICANT
                  TRAUMA.
485............  \4\ LIMB               1.1899         28.5         23.8
                  REATTACHMENT,
                  HIP AND FEMUR
                  PROC FOR
                  MULTIPLE
                  SIGNIFICANT TRA.
486............  \5\ OTHER O.R.         1.8658         38.6         32.2
                  PROCEDURES FOR
                  MULTIPLE
                  SIGNIFICANT
                  TRAUMA.
487............  OTHER MULTIPLE         1.1431         24.7         20.6
                  SIGNIFICANT
                  TRAUMA.
488............  \5\ HIV W              1.8658         38.6         32.2
                  EXTENSIVE O.R.
                  PROCEDURE.
489............  HIV W MAJOR            0.9854         23.7         19.8
                  RELATED
                  CONDITION.
490............  HIV W OR W/O           1.0495         23.3         19.4
                  OTHER RELATED
                  CONDITION.
491............  \8\ MAJOR JOINT        1.8658         38.6         32.2
                  & LIMB
                  REATTACHMENT
                  PROCEDURES OF
                  UPPER EXTREMITY.
492............  \8\ CHEMOTHERAPY       1.1899         28.5         23.8
                  W ACUTE
                  LEUKEMIA OR W
                  USE OF HI DOSE
                  CHEMOAGENT.
493............  \4\ LAPAROSCOPIC       1.1899         28.5         23.8
                  CHOLECYSTECTOMY
                  W/O C.D.E. W CC.
494............  \8\ LAPAROSCOPIC       1.1899         28.5         23.8
                  CHOLECYSTECTOMY
                  W/O C.D.E. W/O
                  CC.
495............  \6\ LUNG               0.0000          0.0          0.0
                  TRANSPLANT.
496............  \3\ COMBINED           0.8508         24.3         20.3
                  ANTERIOR/
                  POSTERIOR
                  SPINAL FUSION.
497............  \3\ SPINAL             0.8508         24.3         20.3
                  FUSION EXCEPT
                  CERVICAL W CC.
498............  \8\ SPINAL             0.8508         24.3         20.3
                  FUSION EXCEPT
                  CERVICAL W/O CC.
499............  \4\ BACK & NECK        1.1899         28.5         23.8
                  PROCEDURES
                  EXCEPT SPINAL
                  FUSION W CC.
500............  \1\ BACK & NECK        0.4586         16.9         14.1
                  PROCEDURES
                  EXCEPT SPINAL
                  FUSION W/O CC.
501............  \4\ KNEE               1.1899         28.5         23.8
                  PROCEDURES W
                  PDX OF
                  INFECTION W CC.
502............  \4\ KNEE               1.1899         28.5         23.8
                  PROCEDURES W
                  PDX OF
                  INFECTION W/O
                  CC.
503............  \4\ KNEE               1.1899         28.5         23.8
                  PROCEDURES W/O
                  PDX OF
                  INFECTION.
504............  \8\ EXTENSIVE          1.8658         38.6         32.2
                  BURNS OF FULL
                  THICKNESS BURNS
                  WITH MECH VENT
                  96+HRS WITH
                  SKIN GRAFT.
505............  \3\ EXTENSIVE          0.8508         24.3         20.3
                  BURNS OF FULL
                  THICKNESS BURNS
                  WITH MECH VENT
                  96+HRS WITHOUT
                  SKIN GRAFT.
506............  \4\ FULL               1.1899         28.5         23.8
                  THICKNESS BURN
                  W SKIN GRAFT OR
                  INHAL INJ W CC
                  OR SIG TRAUMA.
507............  \8\ FULL               0.8508         24.3         20.3
                  THICKNESS BURN
                  W SKIN GRFT OR
                  INHAL INJ W/O
                  CC OR SIG
                  TRAUMA.
508............  FULL THICKNESS         0.8303         26.0         21.7
                  BURN W/O SKIN
                  GRFT OR INHAL
                  INJ W CC OR SIG
                  TRAUMA.
509............  \1\ FULL               0.4586         16.9         14.1
                  THICKNESS BURN
                  W/O SKIN GRFT
                  OR INH INJ W/O
                  CC OR SIG
                  TRAUMA.
510............  NON-EXTENSIVE          0.9301         26.8         22.3
                  BURNS W CC OR
                  SIGNIFICANT
                  TRAUMA.
511............  \2\ NON-               0.6064         21.1         17.6
                  EXTENSIVE BURNS
                  W/O CC OR
                  SIGNIFICANT
                  TRAUMA.
512............  \6\ SIMULTANEOUS       0.0000          0.0          0.0
                  PANCREAS/KIDNEY
                  TRANSPLANT.
513............  \6\ PANCREAS           0.0000          0.0          0.0
                  TRANSPLANT.
515............  \5\ CARDIAC            1.8658         38.6         32.2
                  DEFIBRILLATOR
                  IMPLANT W/O
                  CARDIAC CATH.
516............  \8\ PERCUTANEOUS       0.6064         21.1         17.6
                  CARDIOVASC PROC
                  W AMI.
517............  \3\ PERC CARDIO        0.8508         24.3         20.3
                  PROC W NON-DRUG
                  ELUTING STENT W/
                  O AMI.
518............  \2\ PERC CARDIO        0.6064         21.1         17.6
                  PROC W/O
                  CORONARY ARTERY
                  STENT OR AMI.
519............  \3\ CERVICAL           0.8508         24.3         20.3
                  SPINAL FUSION W
                  CC.
520............  \8\ CERVICAL           0.8508         24.3         20.3
                  SPINAL FUSION W/
                  O CC.
521............  \7\ ALCOHOL/DRUG       0.6011         22.2         18.5
                  ABUSE OR
                  DEPENDENCE W CC.
522............  \7\ ALC/DRUG           0.6011         22.2         18.5
                  ABUSE OR DEPEND
                  W
                  REHABILITATION
                  THERAPY W/O CC.
523............  \7\ ALC/DRUG           0.6011         22.2         18.5
                  ABUSE OR DEPEND
                  W/O
                  REHABILITATION
                  THERAPY W/O CC.
524............  TRANSIENT              0.6247         22.0         18.3
                  ISCHEMIA.
525............  \8\ OTHER HEART        1.8658         38.6         32.2
                  ASSIST SYSTEM
                  IMPLANT.
526............  \8\ PERCUTNEOUS        0.8508         24.3         20.3
                  CARDIOVASULAR
                  PROC W DRUG
                  ELUTING STENT W
                  AMI.
527............  \8\ PERCUTNEOUS        0.8508         24.3         20.3
                  CARDIOVASULAR
                  PROC W DRUG
                  ELUTING STENT W/
                  O AMI.
528............  \8\ INTRACRANIAL       1.1899         28.5         23.8
                  VASCULAR PROC W
                  PDX HEMORRHAGE.
529............  \4\ VENTRICULAR        1.1899         28.5         23.8
                  SHUNT
                  PROCEDURES W CC.
530............  \8\ VENTRICULAR        1.1899         28.5         23.8
                  SHUNT
                  PROCEDURES W/O
                  CC.
531............  \4\ SPINAL             1.1899         28.5         23.8
                  PROCEDURES W CC.
532............  \1\ SPINAL             0.4586         16.9         14.1
                  PROCEDURES W/O
                  CC.
533............  \5\ EXTRACRANIAL       1.8658         38.6         32.2
                  PROCEDURES W CC.
534............  \8\ EXTRACRANIAL       0.4586         16.9         14.1
                  PROCEDURES W/O
                  CC.
535............  \3\ CARDIAC            0.8508         24.3         20.3
                  DEFIB IMPLANT W
                  CARDIAC CATH W
                  AMI/HF/SHOCK.
536............  \5\ CARDIAC            1.8658         38.6         32.2
                  DEFIB IMPLANT W
                  CARDIAC CATH W/
                  O AMI/HF/SHOCK.
537............  LOCAL EXCIS &          1.2686         35.2         29.3
                  REMOV OF INT
                  FIX DEV EXCEPT
                  HIP & FEMUR W
                  CC.
538............  \3\ LOCAL EXCIS        0.8508         24.3         20.3
                  & REMOV OF INT
                  FIX DEV EXCEPT
                  HIP & FEMUR W/O
                  CC.
539............  \3\ LYMPHOMA &         0.8508         24.3         20.3
                  LEUKEMIA W
                  MAJOR OR
                  PROCEDURE W CC.
540............  \8\ LYMPHOMA &         0.6064         21.1         17.6
                  LEUKEMIA W
                  MAJOR OR
                  PROCEDURE W/O
                  CC.
541............  TRAC W MECH VENT       3.5184         56.2         46.8
                  96+HRS OR PDX
                  EXCEPT
                  FACE,MOUTH &
                  NECK DX WITH
                  MAJOR OR.
542............  TRAC W MECH VENT       2.9337         45.9         38.3
                  96+HRS OR PDX
                  EXCEPT
                  FACE,MOUTH &
                  NECK DX WITHOUT
                  MAJOR OR.

[[Page 24256]]

 
543............  \5\ CRANIOTOMY W       1.8658         38.6        32.2
                  IMPLANT OF
                  CHEMO AGENT OR
                  ACUTE COMPLEX
                  CNS PDX.
------------------------------------------------------------------------
\1\ Relative weights for these LTC-DRGs were determined by assigning
  these cases to low-volume quintile 1.
\2\ Relative weights for these LTC-DRGs were determined by assigning
  these cases to low-volume quintile 2.
\3\ Relative weights for these LTC-DRGs were determined by assigning
  these cases to low-volume quintile 3.
\4\ Relative weights for these LTC-DRGs were determined by assigning
  these cases to low-volume quintile 4.
\5\ Relative weights for these LTC-DRGs were determined by assigning
  these cases to low-volume quintile 5.
\6\ Relative weights for these LTC-DRGs were assigned a value of 0.0000.
 
\7\ Relative weights for these LTC-DRGs were determined after adjusting
  to account for nonmonotonicity (see step 5 above).
\8\ Relative weights for these LTC-DRGs were determined by assigning
  these cases to the appropriate low volume quintile because they had no
  LTCH cases in the FY 2003 MedPAR file.


    Table 4.--A Listing of Long-Term Care Hospitals' State and County
  Location; MSA-Based Labor Market Area Designation; and New CBSA-Based
                    Labor Market Area Designation \1\
------------------------------------------------------------------------
                                                 MSA-based    CBSA-based
 LTCH  provider                     SSA state      labor        labor
     number        Name of LTCH     and county  market area  market area
                                     code \2\       \3\          \4\
------------------------------------------------------------------------
012006.........  USA KNOLLWOOD           01480         5160        33660
                  PARK LTC
                  HOSPITAL.
012007.........  LONG TERM CARE          01500         5240        33860
                  HOSP OF
                  JACKSON, THE.
012008.........  SELECT SPECIALTY        01360         1000        13820
                  HOSP-BIRMINGHAM.
012009.........  LONG TERM CARE          01360         1000        13820
                  HOSPITAL AT
                  MEDICAL CENTER
                  EAST,THE.
032000.........  KINDRED HOSPITAL        03060         6200        38060
                  ARIZONA PHOENIX.
032001.........  SELECT SPECIALTY        03060         6200        38060
                  HOSPITAL
                  ARIZONA INC.
032002.........  KINDRED HOSPITAL-       03090         8520        46060
                  TUCSON.
032004.........  CORNERSTONE             03090         8520        46060
                  HOSPITAL OF
                  SOUTHEAST AZ.
032005.........  SELECT SPECIALTY        03060         6200        38060
                  HOSPITAL
                  ARIZONA INC.
042000.........  SELECT SPECIALTY        04590         4400        30780
                  HOSPITAL.
042004.........  ADVANCE CARE            04250           04        26300
                  HOSPITAL.
042005.........  SEMPERCARE              04590         4400        30780
                  HOSPITAL OF
                  LITTLE ROCK.
042006.........  SELECT                  04650         2720        22900
                  SPECIALITY
                  HOSPITAL-FORT
                  SMITH.
042007.........  SEMPERCARE              04340         6240        38220
                  HOSPITAL OF
                  PINE BLUFF.
042008.........  ADVANCE CARE            04650         2720        22900
                  HOSPITAL OF FT
                  SMITH.
042009.........  REGENCY HOSPITAL        04710         2580        22220
                  OF NORTHWEST
                  ARKANSAS.
052031.........  BARLOW HOSPITAL.        05200         4480        31084
052032.........  VENCOR HOSPITAL-        05200         4480        31084
                  LOS ANGELES.
052033.........  VENCOR HOSPITAL-        05440         6920        40900
                  SACRAMENTO.
052034.........  KINDRED HOSPITAL-       05000         5775        36084
                  SF BAY AREA.
052035.........  KINDRED HOSPITAL        05400         5945        42044
                  WESTMINSTER.
052036.........  KINDRED HOSPITAL-       05470         7320        41740
                  SAN DIEGO.
052037.........  VENCOR HOSPITAL-        05460         6780        40140
                  ONTARIO.
052038.........  KINDRED HOSPITAL-       05200         4480        31084
                  SAN GABRIEL
                  VALLEY.
052039.........  KINDRED HOSPITAL        05400         5945        42044
                  BREA.
052043.........  KENTFIELD               05310         7360        41884
                  REHABILITATION
                  HOSPITAL.
052044.........  CONTINENTAL             05470         7320        41740
                  REHABILITATION
                  HOSPITAL.
052045.........  VISTA SPECIALTY         05200         4480        31084
                  HOSPITAL OF SAN
                  GABRIEL VALLEY.
052046.........  PROMISE HOSPITAL        05200         4480        31084
                  OF EAST LOS
                  ANGELES.
062008.........  CMHIP-GENERAL           06500         6560        39380
                  HOSPITAL.
062009.........  KINDRED HOSPITAL        06150         2080        19740
                  DENVER.
062011.........  CRAIG HOSPITAL..        06020         2080        19740
062012.........  COLORADO ACUTE          06150         2080        19740
                  LONG TERM
                  HOSPITAL.
062013.........  SCCI HOSPITAL-          06150         2080        19740
                  AURORA.
062014.........  NORTH VALLEY            06400           06           06
                  REHAB HOSPITAL-
                  REHAB.
062015.........  SELECT SPECIALTY        06150         2080        19740
                  HOSPITAL.
062016.........  SEMPERCARE              06200         1720        17820
                  HOSPITAL OF
                  COLO SPRINGS.
072003.........  GAYLORD HOSPITAL        07040         5483        35300
                  INC.
072004.........  HOSPITAL FOR            07010         3283        25540
                  SPECIAL CARE.
082000.........  SELECT SPECIALTY        08010         9160        48864
                  HOSPITAL
                  WILMINGTON.
092002.........  MEDLINK HOSPITAL        09000         8840        47894
                  OF CAPITOL HILL.
092003.........  HADLEY MEMORIAL         09000         8840        47894
                  HOSPITAL.
102001.........  SELECT SPECIALTY        10120         5000        33124
                  HOSPITAL OF
                  MIAMI.
102003.........  SEMPERCARE              10470         5960        36740
                  HOSPITAL OF
                  ORLANDO.
102009.........  KINDRED HOSPITAL        10280         8280        45300
                  BAY AREA TAMPA.
102010.........  KINDRED HOSPITAL        10050         2680        22744
                  SOUTH FLORIDA.
102012.........  SPECIALITY              10150         3600        27260
                  HOSPITAL
                  JACKSONVILLE.

[[Page 24257]]

 
102013.........  KINDRED HOSPITAL        10280         8280        45300
                  CENTRAL TAMPA.
102015.........  KINDRED HOSPITAL        10090         3600        27260
                  NORTH FLORIDA.
102016.........  SISTER EMMANUEL         10120         5000        33124
                  HOSPITAL FOR
                  CONTINUING CARE.
102017.........  SEMPERCARE              10020         6015        37460
                  HOSPITAL OF
                  PANAMA CITY.
112000.........  ROOSEVELT WARM          11740           11        12060
                  SPRINGS INST
                  FOR REHAB.
112003.........  SHEPHERD SPINAL         11470         0520        12060
                  CENTER.
112004.........  KINDRED HOSPITAL        11470         0520        12060
                  - ATLANTA.
112005.........  WESLEY WOODS LTC        11370         0520        12060
112006.........  DECATUR HOSPITAL        11370         0520        12060
112007.........  WELLSTAR WINDY          11290         0520        12060
                  HILL HOSPITAL.
112008.........  SPECIALTY               11840         0600        12260
                  HOSPITAL-SELECT
                  AUGUSTA.
112009.........  SELECT SPECIALTY        11470         0520        12060
                  HOSPITAL-
                  ATLANTA.
112010.........  SPECIALTY               11460           11        40660
                  HOSPITAL AT
                  FLOYD MED CTR.
112011.........  SEMPERCARE              11220         7520        42340
                  HOSPITAL OF
                  SAVANNAH.
112012.........  COLUMBUS                11780         1800        17980
                  SPECIALTY
                  HOSPITAL INC.
112013.........  SEMPERCARE              11840         0600        12260
                  HOSPITAL OF
                  AUGUSTA.
112014.........  REGENCY HOSP OF         11470         0520        12060
                  SOUTH ATLANTA.
112015.........  SOUTHERN                11280         0520        12060
                  CRESCENT
                  HOSPITAL FOR
                  SPECIALTY CARE.
142006.........  THC CHICAGO INC         14170         1600        16974
                  DBA KINDRED
                  HOSP.
142008.........  THC CHICAGO INC         14141         1600        16974
                  DBA KINDRED
                  HOSP CHGO.
142009.........  THC CHICAGO INC         14141         1600        16974
                  DBA KINDRED
                  CHICAGO.
142010.........  RML SPECIALTY           14250         1600        16974
                  HOSPITAL.
152007.........  KINDRED HOSPITAL        15480         3480        26900
                  INDIANAPOLIS.
152008.........  KINDRED HOSPITAL        15400         3480        26900
                  INDIANAPOLIS
                  SOUTH.
152010.........  SELECT SPECIALTY        15480         3480        26900
                  HOSPITAL
                  INDIANAPOLIS.
152011.........  ST ELIZABETH ANN        15260           15           15
                  SETON HOSPITAL
                  INC.
152012.........  SELECT SPECIALTY        15440         2960        23844
                  HOSPITAL-
                  NORTHWEST IN.
152013.........  SELECT SPECIALTY        15480         3480        26900
                  HOSPITAL-BEECH
                  GROVE.
152014.........  SELECT SPECIALTY        15810         2440        21780
                  HOSPITAL-
                  EVANSVILLE.
152015.........  ST ELIZABETH ANN        15280         3480        26900
                  SETON HOSPITAL
                  OF CARMEL.
152016.........  SELECT SPECIALTY        15010         2760        23060
                  HOSPITAL-FT
                  WAYNE.
152018.........  OUR LADY OF             15700         7800        43780
                  PEACE HOSPITAL.
152019.........  SELECT SPECIALTY        15020           15        18020
                  HOSPITAL-
                  BLOOMINGTON.
152020.........  ST ELIZABETH ANN        15480         3480        26900
                  SETON HOSPITAL
                  OF INDIANAPOLIS.
152021.........  ST ELIZABETH ANN        15330         3850        29020
                  SETON HOSPITAL
                  OF KOKOMO.
152022.........  HEALTHSOUTH             15830         8320        45460
                  HOSPITAL OF
                  TERRE HAUTE.
152024.........  REGENCY HOSPITAL        15440         2960        23844
                  OF NORTHWEST
                  INDIANA.
172003.........  WICHITA                 17860         9040        48620
                  SPECIALTY
                  HOSPITAL.
172004.........  SPECIALTY               17450         3760        28140
                  HOSPITAL OF MID-
                  AMERICA.
172005.........  SELECT SPECIALTY        17986         3760        28140
                  HOSPITAL OF KS
                  CITY.
172006.........  SELECT SPECIALTY        17880         8440        45820
                  HOSPITAL OF
                  TOPEKA.
172007.........  SELECT SPECIALTY        17860         9040        48620
                  HOSPITAL
                  WICHITA.
182001.........  KINDRED HOSPITAL        18550         4520        31140
                  LOUISVILLE.
182002.........  CONTINUING CARE         18330         4280        30460
                  HOSP AT ST
                  JOSEPH EAST.
182003.........  SELECT SPECIALTY        18330         4280        30460
                  HOSPITAL
                  LEXINGTON.
182004.........  CARDINAL HILL           18180         1640        17140
                  SPECIALTY
                  HOSPITAL.
192004.........  ASCENSION               19020         0760        12940
                  HOSPITAL.
192006.........  CORNERSTONE             19070         7680        43340
                  HOSPITAL OF
                  BOSSIER CITY.
192007.........  ADVANCE CARE            19250         5560        35380
                  HOSPITAL.
192008.........  DIXON MEDICAL           19310         0760        12940
                  CENTER.
192009.........  KINDRED HOSPITAL        19350         5560        35380
                  NEW ORLEANS.
192010.........  LAGNIAPPE               19080         7680        43340
                  HOSPITAL.
192011.........  LIFECARE                19080         7680        43340
                  HOSPITAL INC.
192012.........  DUBUIS HOSPITAL         19390         0220        10780
                  OF ALEXANDRIA.
192013.........  CORNERSTONE             19090         3960        29340
                  HOSPITAL OF
                  SOUTHWEST LA.
192014.........  GENESIS                 19060           19           19
                  SPECIALTY
                  HOSPITAL.
192015.........  LIFE CARE               19430         5560        35380
                  HOSPITAL OF NEW
                  ORLEANS LLC.
192016.........  ST FRANCIS              19360         5200        33740
                  SPECIALTY
                  HOSPITAL.
192019.........  EXTENDED CARE OF        19090         3960        29340
                  SOUTHWEST
                  LOUISIANA.
192020.........  COMMUNITY               19270         3880        29180
                  REHABILITATION
                  OF LAFAYETTE.
192022.........  HEALTHSOUTH             19300           19           19
                  NORTH REHAB
                  HOSPITAL.
192023.........  SPECIALTY               19350         5560        35380
                  HOSPITAL OF NEW
                  ORLEANS.
192024.........  DUBUIS HOSPITAL         19090         3960        29340
                  OF LAKE CHARLES.
192025.........  DUBUIS HOSPITAL         19080         7680        43340
                  OF SHREVEPORT.
192026.........  COMMUNITY               19550           19        33740
                  SPECIALTY
                  HOSPITAL OF
                  NORTH LOUISIANA.
192028.........  PROFESSIONAL            19140           19           19
                  REHABILITATION
                  HOSPITAL.
192029.........  REHABILITATION          19270         3880        29180
                  HOSP OF
                  ACADIANA.
192030.........  SELECT SPECIALTY        19250         5560        35380
                  HOSPITAL.

[[Page 24258]]

 
192031.........  CORNERSTONE             19070         7680        43340
                  HOSPITAL WEST
                  MONROE.
192032.........  LOUISIANA               19270         3880        29180
                  EXTENDED CARE
                  HOSPITAL
                  LAFAYETTE.
192033.........  MEADOWBROOK             19270         3880        29180
                  SPECIALTY
                  HOSPITAL OF
                  LAFAYETTE.
192034.........  ST LANDRY               19480         3880           19
                  EXTENDED CARE
                  HOSPITAL LLC.
192035.........  LOUISISANA              19340           19           19
                  EXTENDED CARE
                  HOSPITAL OF
                  NATCHITOCHES.
192036.........  GULF STATES LTAC        19520           19           19
                  OF HAMMOND.
192037.........  ST ANNE                 19280         3350        26380
                  REHABILITATION
                  HOSPITAL.
192038.........  LIFE CARE               19350         5560        35380
                  HOSPITAL OF NEW
                  ORLEANS KENNER
                  REGIONAL.
192039.........  OASIS LONG TERM         19350         5560        35380
                  ACUTE CARE
                  HOSPITAL.
192040.........  SOUTHEAST               19520           19           19
                  REGIONAL
                  MEDICAL CENTER.
192041.........  CLINTON                 19180           19        12940
                  REHABILITATION
                  HOSPITAL.
192042.........  LOUISIANA               19060           19           19
                  EXTENDED CARE
                  HOSP.
192043.........  HEALTHSOUTH OF          19390         0220        10780
                  ALEXANDRIA INC.
192044.........  SEMPER CARE             19160         0760        12940
                  HOSPITAL OF
                  BATON ROUGE.
192045.........  CYPRESS                 19160         0760        12940
                  REHABILITAION
                  HOSPITAL.
192046.........  BOGALUSA                19580           19           19
                  COMMUNITY REHAB
                  HOSPITAL.
192047.........  HEALTHSOUTH             19350         5560        35380
                  SPECIALTY
                  HOSPITAL OF NEW
                  ORLEANS.
192048.........  DIXON MEDICAL           19510         5560        35380
                  CENTER AT
                  COVINGTON.
192049.........  PROMISE                 19160         0760        12940
                  SPECIALTY
                  HOSPITAL OF
                  BATON ROUGE.
222000.........  YOUVILLE REHAB          22090         1123        15764
                  CHRONIC DISEASE
                  HOSP.
222002.........  NORTHEAST               22150         1123        14484
                  SPECIALTY HOSP
                  BRAINTREE.
222006.........  LEMUEL SHATTUCK         22160         1123        14484
                  HOSP.
222007.........  HEBREW                  22160         1123        14484
                  REHABILITATION
                  CENTER FOR AGED.
222010.........  JEWISH MEMORIAL         22160         1123        14484
                  HOSPITAL.
222026.........  SHAUGHNESSY-            22040         1123        21604
                  KAPLAN REHAB
                  HOSP HOSP.
222027.........  NEW ENGLAND             22130         1123        14484
                  SINIAI HOSP &
                  REHAB CENTER.
222035.........  SPAULDING REHAB         22160         1123        14484
                  HOSP.
222043.........  SUNHEALTH               22020         1123        39300
                  SPECIALTY
                  HOSPITAL OF SOE
                  MA.
222044.........  VENCOR HOSPITAL         22040         1123        21604
                  NORTH SHORE.
222045.........  KINDRED HOSPITAL-       22160         1123        14484
                  BOSTON.
222046.........  PARK VIEW               22070         8003        44140
                  SPECIALTY
                  HOSPITAL.
232012.........  SELECT SPECIALTY        23240         2640        22420
                  HOSPITAL-FLINT.
232019.........  KINDRED HOSPITAL-       23810         2160        19804
                  DETROIT.
232020.........  BAY SPECIAL CARE        23080         6960        13020
                  CENTER.
232021.........  SELECT SPECIALTY        23600         3000        34740
                  HOSPITAL-
                  WESTERN MICH.
232023.........  SELECT SPECIALTY        23490         2160        47644
                  HOSP-MACOMB CTY
                  INC.
232024.........  SELECT SPECIALTY        23800         0440        11460
                  HOSPITAL-ANN
                  ARBOR.
232025.........  LAKELAND                23100         0870        35660
                  SPECIALTY HOSP
                  AT BERRIEN CTR.
232026.........  LIFECARE                23600         3000        34740
                  HOSPITALS OF
                  WESTERN
                  MICHIGAN.
232027.........  SCCI HOSPITAL-          23810         2160        19804
                  DETROIT.
232028.........  SELECT SPECIALTY        23120         3720        12980
                  HOSPITAL-BATTLE
                  CREEK.
232029.........  SPECTRUM HEALTH-        23400         3000        24340
                  KENT COMMUNITY
                  CAMP.
232030.........  ................  ...........         2160        47644
232031.........  SELECT SPECIALTY        23810         2160        19804
                  HOSPITAL-
                  WYANDOTTE.
232032.........  SELECT SPECIALTY        23810         2160        19804
                  HOSPITAL-NW
                  DETROIT.
232033.........  SELECT SPECIALTY        23720         6960        40980
                  HOSPITAL-
                  SAGINAW.
232034.........  BORGESS-PIPP            23020         3000           23
                  HEALTH CENTER.
232035.........  SELECT SPECIALTY        23380         3720        28020
                  HOSPITAL-
                  KALAMAZOO.
232036.........  CARELINK OF             23370         3520        27100
                  JACKSON, A
                  COMMUNITY-OWNED
                  SPECIALTY H.
242004.........  HEALTHEAST              24610         5120        33460
                  BETHESDA
                  LUTHERAN HOME.
242005.........  KINDRED HOSPITAL-       24260         5120        33460
                  MINNESOTA.
252003.........  RESTORATIVE CARE        25240         3560        27140
                  HOSPITAL,THE.
252005.........  SELECT SPECIALTY        25230         0920        25060
                  HOSPITAL-BILOXI.
252006.........  ................  ...........           25           25
252007.........  SELECT SPECIALTY        25240         3560        27140
                  HOSPITAL
                  JACKSON.
252008.........  PROMISE                 25740           25           25
                  SPECIALTY
                  HOSPITAL OF
                  VICKSBURG.
262001.........  MISSOURI                26540           26           26
                  REHABILITATION
                  CTR.
262010.........  KINDRED HOSPITAL-       26950         7040        41180
                  ST LOUIS.
262011.........  KINDRED HOSPITAL-       26470         3760        28140
                  KANSAS CITY.
262012.........  ALL SAINTS              26940         7040        41180
                  SPECIAL CARE
                  CENTER.
262013.........  SELECT SPECIALTY        26940         7040        41180
                  HOSPITAL.
282000.........  MADONNA                 28540         4360        30700
                  REHABILITATION
                  LTC HOSPITAL.
282001.........  SELECT SPECIALTY        28760         5920        36540
                  HOSPITAL-OMAHA.
292002.........  KINDRED HOSPITAL        29010         4120        29820
                  LAS VEGAS.
292003.........  HORIZON                 29010         4120        29820
                  SPECIALTY
                  HOSPITAL.
292004.........  TAHOE PACIFIC           29150         6720        39900
                  HOSPITAL-
                  MEADOWS.
292006.........  HEALTHSOUTH             29010         4120        29820
                  HOSPITAL AT
                  TENAYA.
292007.........  ................  ...........         4120        29820

[[Page 24259]]

 
312014.........  MATHENY SCHOOL &        31350         5015        20764
                  HOSPITAL,THE.
322002.........  KINDRED HOSPITAL        32000         0200        10740
                  ALBUQUERQUE.
322003.........  INTEGRATED              32000         0200        10740
                  SPECIALTY
                  HOSPITAL OF
                  ALBUQ.
342012.........  KINDRED HOSPITAL        34400         3120        24660
                  GREENSBORO.
342013.........  LIFECARE                34630         6895        40580
                  HOSPITALS OF NC.
342014.........  HIGHSMITH RAINEY        34250         2560        22180
                  MEMORIAL
                  HOSPITAL.
342015.........  CAROLINAS               34590         1520        16740
                  SPECIALTY
                  HOSPITAL 7TH
                  FLOOR SOUTH.
342016.........  SEMPERCARE              34330         3120        49180
                  HOSPITAL OF
                  WINSTON-SALEM.
342017.........  ASHVILLE                34100         0480        11700
                  SPECIALTY
                  HOSPITAL.
342018.........  SELECT SPECIALTY        34310         6640        20500
                  HOSPITAL DURHAM
                  INC.
352004.........  SCCI HOSPITAL-          35080         2520        22020
                  FARGO.
352005.........  SCCI HOSPITAL-          35290         1010        13900
                  CENTRAL DAKOTA.
362004.........  DRAKE CENTER INC        36310         1640        17140
362007.........  ST FRANCIS              36730           36           36
                  HEALTH CARE
                  CENTRE.
362014.........  REHABILITATION          36280         1680        17460
                  HOSPITAL AT
                  HEATHER HIL.
362015.........  GRACE HOSPITAL..        36170         1680        17460
362016.........  SELECT SPECIALTY        36780         0080        10420
                  HOSPITAL-
                  NORTHEAST OHIO,
                  INC.
362017.........  SELECT SPECIALTY        36250         1840        18140
                  HOSP-COLUMBUS.
362018.........  SELECT SPECIALTY        36250         1840        18140
                  HOSPITAL-
                  COLUMBUS.
362019.........  SELECT SPECIALTY        36310         1640        17140
                  HOSPITAL-CINC.
362020.........  SCCI HOSPITAL           36010         4320        30620
                  LIMA.
362021.........  SCCI HOSPITAL-          36710         4800        31900
                  MANSFIELD.
362022.........  SELECT SPECIALTY        36250         1840        18140
                  HOSPITAL-COL/.
362023.........  MAHONING VALLEY         36510         9320        49660
                  HOSPITAL.
362024.........  SELECT SPECIALTY        36510         9320        49660
                  HOSPITAL-
                  YOUNGSTOWN.
362025.........  SPECIALTY               36480         1680        17460
                  HOSPITAL OF
                  LORAIN.
362026.........  KINDRED HOSPITAL-       36170         1680        17460
                   CLEVELAND.
362027.........  SELECT                  36780         0080        10420
                  SPECIALITY
                  HOSPITAL-AKRON/
                  SHS, INC.
362028.........  LIFE CARE               36580         2000        19380
                  HOSPITAL OF
                  DAYTON.
362029.........  REGENCY HOSPITAL        36780         0080        10420
                  OF AKRON.
362030.........  DRAKE PAVILION,         36310         1640        17140
                  LLC.
362031.........  SELECT SPECIALTY        36610           36           36
                  HOSPITAL-
                  ZANESVILLE INC.
372004.........  KINDRED HOSPITAL        37540         5880        36420
                  OKLAHOMA CITY.
372005.........  EDMOND SPECIALTY        37540         5880        36420
                  HOSPITAL.
372006.........  SELECT SPECIALTY        37710         8560        46140
                  HOSPITAL-TULSA.
372007.........  HILLCREST               37710         8560        46140
                  SPECIALTY
                  HOSPITAL.
372008.........  SELECT SPECIALTY        37540         5880        36420
                  HOSPITAL-OKLA
                  CITY.
372009.........  SELECT SPECIALTY        37540         5880        36420
                  HOSPITAL-OKLA
                  CITY.
372011.........  CONTINUOUS CARE         37710         8560        46140
                  CENTER OF TULSA.
372012.........  SPECIALTY               37540         5880        36420
                  HOSPITAL OF
                  MIDWEST CITY.
372014.........  CONTINUOUS CARE         37730           37           37
                  CENTER OF
                  BARTLESVILLE.
372015.........  CENTRIS.........        37540         5880        36420
372016.........  INTEGRIS BASS           37230         2340           37
                  PAVILION.
372017.........  LANE FROST              37110           37           37
                  HEALTH AND
                  REHABILITATION
                  CENTER.
372020.........  ADVANCE CARE            37540         5880        36420
                  HOSPITAL OF
                  OKLAHOMA.
392024.........  LIFECARE                39010         6280        38300
                  HOSPITALS OF
                  PITTSBURGH INC.
392025.........  MERCY SPECIAL           39480         7560        42540
                  CARE HOSPITAL.
392026.........  GIRARD MEDICAL          39620         6160        37964
                  CENTER.
392027.........  KINDRED HOSPITAL        39640           39           39
                  PHILADELPHIA.
392028.........  KINDRED HOSPITAL-       39010         6280        38300
                  PITTSBURGH.
392029.........  SELECT SPECIALTY        39010         6280        38300
                  HOSPITAL O
                  PITTSBURGH.
392030.........  SELECT SPCIALTY         39000           39           39
                  HOSPITAL OF
                  PHILA/AEMC.
392031.........  SELECT SPECIALTY        39160         3680        27780
                  HOSPITAL OF
                  JOHNSTOWN.
392032.........  KINDRED HOSPITAL-       39620         6160        37964
                  DELAWARE COUNTY.
392033.........  GOOD SHEPHERD           39470         0240        10900
                  SPECIALTY
                  HOSPITAL.
392034.........  SCCI HOSPITAL           39590         0240        10900
                  EASTON.
392035.........  SCCI HOSPITAL           39280         3240        25420
                  HARRISBURG.
392036.........  SELECT SPECIALTY        39770         6280        38300
                  HOSPITAL OF
                  GREENSBRG.
392037.........  SELECT SPECIALTY        39320         2360        21500
                  HOSPITAL ERIE.
392038.........  HEALTHSOUTH             39270         3240        25420
                  REHAB HOSP FOR
                  SPECIAL SVS.
392039.........  SELECT SPECIALTY        39280         3240        25420
                  HOSPITAL CTR PA
                  (CP).
392040.........  SEMPERCARE              39440         4000        29540
                  HOSPITAL OF
                  LANCASTER.
392041.........  HEALTHSOUTH             39010         6280        38300
                  REHAB HOSP OF
                  GREATER PITT.
392042.........  KINDRED HOSPITAL-       39480         7560        42540
                  WYOMING VALLEY.
392043.........  KINDRED HOSPITAL        39010         6280        38300
                  AT HERITAGE
                  VALLEY.
392044.........  SELECT SPECIALTY        39010         6280        38300
                  HOSPITAL
                  PITTSBURGH UPMC.
412001.........  ELEANOR SLATER          41030         6483        39300
                  HOSPITAL.
422004.........  SPARTANBURG HOSP        42110           42           42
                  FOR RESTORATIVE
                  CARE.

[[Page 24260]]

 
422005.........  KINDRED HOSPITAL        42090         1440        16700
                  CHARLESTON.
422006.........  INTERMEDICAL            42390         1760        17900
                  HOSPITAL OF SC.
422007.........  REGENCY HOSPITAL        42200         2655        22500
                  OF FLORENCE.
422008.........  NORTH GREENVILLE        42220         3160        24860
                  LONG TERM ACUTE
                  CARE HOSPITAL.
432002.........  SELECT SPECIALTY        43490         7760        43620
                  HOSPITAL.
442007.........  KINDRED HOSPITAL-       44320         1560        16860
                  CHATTANOOGA.
442010.........  BAPTIST MEMORIAL        44780         4920        32820
                  RESTORATIVE
                  CARE HOSP.
442011.........  SELECT SPECIALTY        44180         5360        34980
                  HOSPITAL-
                  NASHVILLE.
442012.........  SELECT SPECIALTY        44460         3840        28940
                  HOSPITAL-
                  KNOXVILLE.
442013.........  METHODIST               44780         4920        32820
                  EXTENDED CARE
                  HOSPITAL.
442014.........  SELECT SPECIALTY        44780         4920        32820
                  HOSPITAL
                  MEMPHIS.
442015.........  SELECT SPECIALTY        44460         3840        28940
                  HOSPITAL-NORTH
                  KNOXVILLE.
442016.........  SELECT SPECIALTY        44810         3660        28700
                  HOSPITAL-
                  TRICITIES.
452015.........  KINDRED HOSPITAL        45390         1920        19124
                  DALLAS.
452016.........  KINDRED HOSPITAL        45130         7240        41700
                  SAN ANTONIO.
452017.........  BAYLOR CENTER           45390         1920        19124
                  FOR RESTORATIVE
                  CARE.
452018.........  HARRIS CONTINUED        45910         2800        23104
                  CARE HOSPITAL.
452019.........  KINDRED HOSPITAL        45910         2800        23104
                  FORT WORTH.
452022.........  SELECT SPECIALTY        45390         1920        19124
                  HOSPITAL-DALLAS.
452023.........  KINDRED HOSPITAL-       45610         3360        26420
                  HOUSTON.
452027.........  SCCI HOSPITAL           45610         3360        26420
                  HOUSTON CENTRAL.
452028.........  KINDRED HOSPITAL-       45910         2800        23104
                  TARRANT COUNTY.
452029.........  HENDRICK CENTER         45911         0040        10180
                  FOR EXTENDED
                  CARE.
452031.........  MEMORIAL                45020           45           45
                  SPECIALTY
                  HOSPITAL.
452032.........  CORNESTONE              45610         3360        26420
                  HOSPITAL OF
                  HOUSTON.
452034.........  CORNERSTONE             45940         0640        12420
                  HOSPITAL OF
                  AUSTIN.
452035.........  MESA HILL               45480         2320        21340
                  SPECIALTY
                  HOSPITAL.
452036.........  CORPUS CHRISTI          45830         1880        18580
                  SPECIALTY
                  HOSPITAL.
452038.........  TEXAS NEURO             45940         0640        12420
                  REHABILITATION
                  CENTER.
452039.........  KINDRED HOSPITAL        45610         3360        26420
452040.........  SPECIALTY               45130         7240        41700
                  HOSPITAL OF SAN
                  ANTONIO.
452041.........  TEXOMA MEDICAL          45564         7640        43300
                  CTR RESTORATIVE
                  CARE.
452042.........  DUBUIS HOSP OF          45700         0840        13140
                  BEAUMONT.
452043.........  GULF POINTE             45610         3360        26420
                  SPECIALITY
                  HOSPITAL.
452044.........  LIFECARE                45390         1920        19124
                  HOSPITAL OF
                  DALLAS.
452045.........  COMPASS HOSP OF         45130         7240        41700
                  SAN ANTONIO,THE.
452046.........  PLAZA SPECIALTY         45610         3360        26420
                  HOSP.
452049.........  SELECT SPECIALTY        45610         3360        26420
                  HOSPITAL-
                  HOUSTON HEIG.
452050.........  SOUTHWEST               45770         4600        31180
                  REGIONAL SPEC
                  HOSPITAL.
452051.........  EAST TEXAS MED          45892         8640        46340
                  CTR SPECIALTY
                  HOSP.
452053.........  CORNERSTONE             45940         0640        12420
                  HOSPITAL OF
                  CENTRAL TEXAS.
452054.........  PLANO SPECIALTY         45310         1920         9124
                  HOSPITAL.
452055.........  DUBUIS HOSPITAL         45610         3360        26420
                  OF HOUSTON.
452056.........  SCCI HOSPITAL OF        45948         8750        47020
                  VICTORIA.
452057.........  BEACON                  45610         3360        26420
                  SPECIALITY
                  HOSPITAL.
452059.........  LIFECARE                45130         7240        41700
                  HOSPITAL OF SAN
                  ANTONIO.
452060.........  SCCI HOSPITAL OF        45860         0320        11100
                  AMARILLO.
452061.........  DUBUIS HOSPITAL         45170         8360        45500
                  OF TEXARKANA.
452062.........  WARM SPRING             45562           45           45
                  SPECIALITY
                  HOSPTIAL AT
                  LULING.
452063.........  LIFECARE                45650         4880        32580
                  HOSPITALS OF
                  SOUTH TX INC.
452064.........  SCCI HOSPITAL-          45930         7200        41660
                  SAN ANGELO.
452066.........  PLUM CREEK              45860         0320        11100
                  SPECIALTY
                  HOSPITAL.
452067.........  IHS HOSPITAL AT         45390         1920        19124
                  DALLAS.
452068.........  IHS HOSPITAL AT         45960         9080        48660
                  WICHITA FALLS.
452071.........  KINDRED HOSPITAL-       45390         1920        19124
                  WHITE ROCK.
452072.........  MEMORIAL HERMANN        45610         3360        26420
                  CONTINUING CARE
                  HOSPI.
452073.........  SELECT SPECIALTY        45130         7240        41700
                  HOSPITAL SAN
                  ANTONIO.
452074.........  TRIUMPH HOSPITAL        45610         3360        26420
                  OF NORTH
                  HOUSTON.
452075.........  TRIUMPH HOSPITAL        45610         3360        26420
                  EAST HOUSTON.
452077.........  HOUSTON                 45610         3360        26420
                  REHABILITATION
                  ASSOCIATES.
452078.........  SELECT SPECIALTY        45390         1920        19124
                  HOSPITAL SOUTH
                  DALLAS.
452079.........  ................  ...........         2320        21340
452080.........  TRIUMPH HOSPITAL        45610         3360        26420
                  SOUTHWEST.
452081.........  TRIUMPH HOSPITAL        45610         3360        26420
                  NORTHWEST.
452082.........  DUBUIS HOSPITAL         45750           45           45
                  OF PARIS.
452083.........  GOLDEN SPECIALTY        45840         0840        13140
                  MEDICAL CENTER.
452084.........  SELECT SPECIALTY        45794         5800        33260
                  HOSPITAL OF
                  MIDLAND INC.
452085.........  REGENCY HOSPITAL        45451         5800        36220
                  OF ODESSA.

[[Page 24261]]

 
452086.........  DUBUIS HOSPITAL         45830         1880        18580
                  OF CORPUS
                  CHRISTI.
452087.........  SEMPERCARE              45570         4420        30980
                  HOSPITAL OF
                  LONGVIEW.
452088.........  KINDRED HOSPITAL        45910         2800        23104
                  FORT WORTH.
452089.........  SELECT SPECIALTY        45801         3360        26420
                  HOSPITAL CONROE.
452090.........  ................  ...........         7240        41700
462003.........  SOUTH DAVIS             46050         7160        36260
                  COMMUNITY
                  HOSPITAL.
462004.........  SALT LAKE               46180           46           46
                  SPECIALITY
                  MEDICAL CENTER.
492001.........  LAKE TAYLOR HOSP        49641         5720        47260
492007.........  HOSPITAL FOR            49641         5720        47260
                  EXTENDED
                  RECOVERY.
502001.........  REG HOSP FOR            50160         7600        42644
                  RESP AND
                  COMPLEX CARE.
502002.........  KINDRED HOSPITAL-       50160         7600        42644
                  SEATTLE.
512002.........  SELECT                  51190         1480        16620
                  SPECIALITY
                  HOSPITAL.
522004.........  KINDRED HSPTL           52390         5080        33340
                  MILWAUKEE.
522005.........  LAKEVIEW REHAB          52500         6600        39540
                  CTR.
522006.........  SELECT SPECIALTY        52390         5080        33340
                  HSPTL MILWAUKEE.
522007.........  LIFECARE HSPTLS         52390         5080       33340
                  OF MILWAUKEE.
------------------------------------------------------------------------
\1\ Missing values denote unavailable information.
\2\ First 2-digits are the SSA State code and the last 3-digits are the
  SSA county code.
\3\ Under the MSA-based labor market area designations, a 4-digit code
  denotes an urban area and a 2-digit code denotes a rural area.
\4\ Under the CBSA-based labor market area designations, a 5-digit code
  denotes an urban area and a 2-digit code denotes a rural area.

[FR Doc. 05-8878 Filed 4-29-05; 4:03 pm]
BILLING CODE 4120-01-P